EXHIBIT 10.4
WAREHOUSING CREDIT AGREEMENT
AMONG
TEC ACQUISUB, INC.
and
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
and Such Other Financial Institutions
as Shall Become LENDERS Hereunder
and
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
as Agent
JUNE 30, 1993
WAREHOUSING CREDIT AGREEMENT
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS 1
1.1 Defined Terms 1
1.2 Accounting Terms 17
1.3 Other Terms 17
1.4 Schedules and Exhibits 18
SECTION 2. AMOUNT AND TERMS OF CREDIT 18
2.1 Commitment to Lend 18
2.1.1 Revolving Facility 18
(a) Facility Commitments 18
(b) Each Loan 19
2.1.2 Funding 20
2.1.3 Utilization of the Loans 20
2.2 Repayment and Prepayment 20
2.2.1 Repayment 20
2.2.2 Voluntary Prepayment 20
2.2.3 Mandatory Prepayments 21
2.3 Facility Fee 21
2.4 Calculation of Interest; Post-Maturity Interest 22
2.5 Manner of Payments 22
2.6 Payment on Non-Business Days 22
2.7 Application of Payments 22
2.8 Distribution of Payments 23
2.9 Agent's Right to Assume Funds Available
for Advance 23
2.10 Agent's Right to Assume Payments Will Be
Made by Borrower 23
2.11 Capital Requirements 23
2.12 Taxes 24
2.13 Single Loan 26
SECTION 3. CONDITIONS PRECEDENT TO LOANS 27
3.1 First Advance 27
(a) Corporate Documents 27
(b) Note 27
(c) Security Documents 27
(d) Equipment Purchase Agreement 27
(e) Opinions of Counsel 28
(f) Guaranties 28
(g) Lockbox Agreement 28
(h) Insurance 28
(i) Bringdown Certificate 28
(j) Accurate Information 28
(k) Fees and Costs 28
(l) Other Documents 28
3.2 All Loans 29
3.3 Further Conditions to All Loans 31
SECTION 4. BORROWER'S REPRESENTATIONS AND WARRANTIES 32
4.1 Existence and Power 32
4.2 Loan Documents and Note Authorized;
Binding Obligations 32
4.3 No Conflict; Legal Compliance 32
4.4 Financial Condition 33
4.5 Executive Offices 33
4.6 Litigation 33
4.7 Material Contracts 33
4.8 Consents and Approvals 33
4.9 Other Agreements 33
4.10 Employment and Labor Agreements 34
4.11 ERISA 34
4.12 Labor Matters 34
4.13 Margin Regulations 34
4.14 Taxes 34
4.15 Environmental Quality 34
4.16 Trademarks, Patents, Copyrights, Franchises
and Licenses 35
4.17 Full Disclosure 35
4.18 Other Regulations 35
4.19 Solvency. 35
4.20 Survival of Representations and Warranties 35
SECTION 5. BORROWER'S AFFIRMATIVE COVENANTS 36
5.1 Records and Reports 36
5.2 Existence; Compliance with Law 38
5.3 Insurance 39
5.4 Taxes and Other Liabilities 39
5.5 Inspection Rights; Assistance 39
5.6 Maintenance of Facilities; Modifications; Performance of
Leases 40
(a) Maintenance of Facilities 40
(b) Certain Modifications to the Equipment 40
(c) Performance of Leases 40
5.7 Supplemental Disclosure 40
5.8 Further Assurances 40
5.9 Lockbox 40
5.10 Environmental Laws 40
5.11 Equipment Purchase Agreement 41
SECTION 6. BORROWER'S NEGATIVE COVENANTS 41
6.1 Liens; Negative Pledges; and Encumbrances 41
6.2 Acquisitions 41
6.3 Limitations on Indebtedness 41
6.4 Disposition of Assets 42
6.5 Restricted Payments 42
6.6 Restriction on Fundamental Changes 42
6.7 Transactions with Affiliates 43
6.8 No Loans to Affiliates 43
6.9 No Investment 43
6.10 Maintenance of Business 43
6.11 No Modification to Leases 43
6.12 No Subsidiaries 43
6.13 Amendments of Charter Documents 43
6.14 Amendments of Equipment Purchase Agreement 43
6.15 Events of Default 43
6.16 ERISA 44
6.17 No Use of any Lender's Name 44
6.18 Certain Accounting Changes 44
SECTION 7. FINANCIAL COVENANTS OF BORROWER 44
7.1 Minimum Consolidated Tangible Net Worth 44
SECTION 8. EVENTS OF DEFAULT AND REMEDIES 45
8.1 Events of Default 45
8.2 Waiver of Default 48
8.3 Remedies 48
8.4 Set-Off 48
8.5 Rights and Remedies Cumulative 49
SECTION 9. AGENT 49
9.1 Appointment 49
9.2 Delegation of Duties 50
9.3 Exculpatory Provisions 50
9.4 Reliance by Agent 50
9.5 Notice of Default 51
9.6 Non-Reliance on Agent and Other Lenders 51
9.7 Indemnification 51
9.8 Agent in Its Individual Capacity 52
9.9 Resignation and Appointment of Successor Agent 52
SECTION 10. EXPENSES AND INDEMNITIES 52
10.1 Expenses 52
10.2 Indemnification 53
(a) General Indemnity 53
(b) Environmental Indemnity 54
(c) Survival; Defense 54
SECTION 11. MISCELLANEOUS 54
11.1 Survival 54
11.2 No Waiver by Agent or Lenders 55
11.3 Notices 55
11.4 Headings 55
11.5 Severability 55
11.6 Entire Agreement; Construction; Amendments
and Waivers 55
11.7 Reliance by Lenders 56
11.8 Marshalling; Payments Set Aside 56
11.9 No Set-Offs by Borrower 57
11.10 Binding Effect, Assignment 57
11.11 Counterparts 58
11.12 Equitable Relief 58
11.13 Written Notice of Claims; Claims Bar 58
11.14 Waiver of Punitive Damages 59
11.15 Governing Law 59
11.16 Consent to Jurisdiction 59
11.17 Waiver of Jury Trial 59
PAGE
INDEX OF EXHIBITS
Exhibit A Form of Revolving Promissory Note
Exhibit B Form of Borrowing Base Certificate
Exhibit C Form of Growth Fund Agreement
Exhibit D-1 Form of Guaranty (PLM Financial Services, Inc.)
Exhibit D-2 Form of Guaranty (PLM Transportation Equipment
Corporation)
Exhibit E Form of Security Agreement
Exhibit F-1 Form of Opinion of Counsel (Jackson, Tufts, Cole &
Black)
Exhibit F-2 Form of Opinion of Counsel (Stephen Peary)
Exhibit G Form of Compliance Certificate
Exhibit H Form of Lockbox Agreement
PAGE
INDEX OF SCHEDULES
Schedule A Commitments
Schedule 1.1 Amendments to Schedule A
Schedule 4.5 Executive Offices and Principal Places of Business
Schedule 4.6 Litigation
Schedule 4.7 Material Contracts
Schedule 4.8 Consent and Approvals
Schedule 4.15 Environmental Disclosures
Schedule 6.1 Existing Liens
PAGE
WAREHOUSING CREDIT AGREEMENT
THIS WAREHOUSING CREDIT AGREEMENT is entered into as of
June 30, 1993, by and between TEC AcquiSub, Inc., a California
special purpose corporation ("Borrower"), and First Union National
Bank of North Carolina ("FUNB") and each other financial
institution which may hereafter execute and deliver an instrument
of assignment with respect to this Agreement pursuant to Section
11.10 (any one individually, a "Lender," and collectively,
"Lenders"), and FUNB, as agent on behalf of Lenders (not in its
individual capacity, but solely as agent, "Agent").
RECITALS
A. Borrower desires to obtain from Lenders a revolving
credit facility in the principal amount set forth on Schedule A for
the purpose of financing the purchase of transportation equipment
for periods up to one hundred fifty (150) days, all as more
particularly described below; and
B. Lenders have agreed to make such credit available to
Borrower, but only upon the terms and subject to the conditions
hereinafter set forth and in reliance on the representations and
warranties set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and
the mutual covenants hereinafter set forth, and intending to be
legally bound, the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
1.1 Defined Terms. As used herein, the following terms have
the following meanings:
"Acquisition" means any transaction, or any series of related
transactions, by which Borrower directly or indirectly (a) acquires
any ongoing business or all or substantially all of the assets of
any Person or any division thereof, whether through a purchase of
assets, merger or otherwise, or (b) acquires (in one transaction or
as the most recent transaction in a series of transactions) control
of at least a majority of the stock of a corporation having
ordinary voting power for the election of directors, or (c)
acquires control of at least a majority of the ownership interests
in any partnership or joint venture.
"Advance" means any Advance made or to be made by any Lender
to Borrower as set forth in Section 2.1.1.
"Affiliate" means, with respect to any Person, (a) each Person
that, directly or indirectly, through one or more intermediaries,
owns or controls, whether beneficially or as a trustee, guardian or
other fiduciary, five percent (5.0%) or more of the stock having
ordinary voting power in the election of directors of such Person
or of the ownership interests in any partnership or joint venture,
(b) each Person that controls, is controlled by or is under common
control with such Person or any Affiliate of such Person, or (c)
each of such Person's officers, directors, joint venturers and
partners; provided, however, that in no case shall any Lender or
Agent be deemed to be an Affiliate of Borrower for purposes of this
Agreement. For the purpose of this definition, "control" of a
Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by
contract or otherwise.
"Agent" means FUNB solely when acting in its capacity as the
Agent under this Agreement or any of the other Loan Documents, and
any successor Agent.
"Agreement" means this Warehousing Credit Agreement dated as
of June 30, 1993, including all amendments, modifications and
supplements hereto, renewals, extensions or restatements hereof,
and all appendices, exhibits and schedules to any of the foregoing,
and shall refer to the Agreement as the same may be in effect from
time to time.
"Aircraft" means any corporate, commuter, or commercial
aircraft or helicopters, with modifications (as applicable) and
replacement or spare parts used in connection therewith, including,
without limitation, engines, rotables and propellers, and any
engines, rotables or propellers used on a stand-alone basis.
"Bank Affiliate" means a Person engaged primarily in the
business of commercial banking and that is an Affiliate of a Lender
or of a Person of which a Lender is an Affiliate.
"Bankruptcy Code" means the Bankruptcy Code of 1978, as
amended, as codified under Title 11 of the United States Code, and
the Bankruptcy Rules promulgated thereunder, as the same may be in
effect from time to time.
"Borrowing Base" means, as at and for any date of
determination, an amount not to exceed the lesser of:
(a) Eighty percent (80.0%) of the aggregate Invoice
Price of all Eligible Inventory then owned of record by
Borrower or any Marine Subsidiary or of record by an Owner
Trustee for the beneficial interest of Borrower or any Marine
Subsidiary, computed (i) with respect to any requested Loan,
as of the requested Funding Date (but excluding the item(s) of
equipment being financed with such Loan), and (ii) with
respect to the delivery of any monthly Borrowing Base
Certificate to be furnished pursuant to Section 5.1(c), as of
the last day of the calendar month for which such Borrowing
Base Certificate is furnished (provided that if any portion of
Borrower's, such Marine Subsidiary's or such Owner Trustee's
ownership interest in any such item of Eligible Inventory is
sold or assigned to one or more of the Equipment Growth Funds
such that Borrower, such Marine Subsidiary or such Owner
Trustee continues to retain less than the entire record or
beneficial ownership interest therein, then for the purpose of
computing the Borrowing Base under this clause (a), the
Invoice Price of such item of Eligible Inventory shall be
deemed to be equal to Borrower's or such Marine Subsidiary's
ratable portion of the Invoice Price of such item of Eligible
Inventory); or
(b) The sum of:
(i) thirty percent (30.0%) of the sum of the
aggregate net book value of (1) all Eligible Inventory then
owned of record by Borrower or any Marine Subsidiary or of
record by an Owner Trustee for the beneficial interest of
Borrower or any Marine Subsidiary, plus (2) all Equipment then
owned of record by Growth Fund or a wholly-owned Subsidiary of
Growth Fund organized for the purpose of holding legal or
record title to one or more marine vessels or to aircraft
rotables and spare parts or of record by an Owner Trustee for
the beneficial interest of Growth Fund, computed (x) with
respect to any requested Loan, as of the requested Funding
Date, and (y) with respect to the delivery of any monthly
Borrowing Base Certificate to be furnished pursuant to Section
5.1(c), as of the last day of the calendar month for which
such Borrowing Base Certificate is furnished (provided, that
for the purpose of computing the Borrowing Base under this
clause (b)(i), in the event that Borrower, any Marine
Subsidiary, any Owner Trustee or Growth Fund shall own less
than one hundred percent (100.0%) of the record or beneficial
interests in any item of Equipment, with one or more of the
other Equipment Growth Funds owning of record or beneficially
the remaining interests, there shall be included only
Borrower's, such Marine Subsidiary's, such Owner Trustee's or
Growth Fund's, as the case may be, ratable interest in such
item of Equipment), plus
(ii) one hundred percent (100.0%) of the
unrestricted cash available for purchase of Equipment by
Growth Fund; or
(c) The sum of:
(i) the present value of the aggregate non-
cancelable Eligible Lease payments due to Borrower or Growth
Fund over the twenty-four (24) month period, commencing
(1) with respect to any requested Loan, as of the first day of
the calendar month immediately succeeding the requested
Funding Date, and (2) with respect to the delivery of any
monthly Borrowing Base Certificate to be furnished pursuant to
Section 5.1(c), as of the first day of the immediately
succeeding calendar month (in each case discounted at a rate
equal to the Prime Rate plus one percent 1.0%), plus
(ii) the present value of fifty percent (50.0%)
of the aggregate current level of monthly Eligible Lease
payments due to Borrower or Growth Fund, computed (1) (A) with
respect to any requested Loan, as of the requested Funding
Date, and (B) with respect to the delivery of any monthly
Borrowing Base Certificate to be furnished pursuant to
Section 5.1(c), as of last day of the calendar month for which
such Borrowing Base Certificate is furnished, and (2) as if
such payments were made over the immediately succeeding
twenty-four (24) month period, commencing with the month
immediately succeeding the requested Funding Date or the date
of such monthly Borrowing Base Certificate, as the case may
be, of Trailers and cargo-containers and other specifically
approved items of Equipment which are on Utilization Leases
and not counted in clause (c)(i), above (in each case
discounted at a rate equal to the Prime Rate plus one percent
(1.0%)), not to exceed twenty percent (20.0%) of total
Borrowing Base availability; plus
(iii) one hundred percent (100.0%) of the
unrestricted cash available for the purchase of Equipment by
Growth Fund; or
(d) the sum of:
(i) one hundred percent (100.0%) of the
unrestricted cash available for the purchase of transportation
equipment by the Equipment Growth Funds, plus
(ii) eighty percent (80.0%) of the new net equity
raised by FSI for the Equipment Growth Funds as part of
syndicated public offerings over the immediately preceding
four calendar months (excluding the initial full month of such
syndication, which for EGF VII is June, 1993), computed
through the date as of which the applicable Borrowing Base
Certificate was delivered.
"Borrowing Base Certificate" means a certificate with
appropriate insertions setting forth the components of the
Borrowing Base as of the last day of the month for which such
certificate is submitted or as of a requested Funding Date, as the
case may be, which certificate shall be substantially in the form
set forth in Exhibit B and certified by a Responsible Officer of
Borrower.
"Business Day" means any day which is not a Saturday, Sunday
or a legal holiday under the laws of the States of California or
North Carolina or is not a day on which banking institutions
located in the States of California or North Carolina are
authorized or permitted by law or other governmental action to
close.
"Casualty Loss" means any of the following events with respect
to any item of Eligible Inventory: (a) the actual total loss or
compromised total loss of such item of Eligible Inventory; (b) such
item of Eligible Inventory shall become lost, stolen, destroyed,
damaged beyond repair or permanently rendered unfit for use for any
reason whatsoever; (c) the seizure of such item of Eligible
Inventory for a period exceeding sixty (60) days or the
condemnation or confiscation of such item of Eligible Inventory; or
(d) such item of Eligible Inventory shall be deemed under its lease
to have suffered a casualty loss as to the entire item of Eligible
Inventory.
"Charges" means all federal, state, county, city, municipal,
local, foreign or other governmental taxes, levies, assessments,
charges or claims, in each case then due and payable, upon or
relating to (a) the Loans hereunder, (b) Borrower's employees,
payroll, income or gross receipts, (c) Borrower's ownership or use
of any of its Properties or assets or (d) any other aspect of
Borrower's business.
"Closing" means the time at which each of the conditions
precedent set forth in Section 3 to the making of the first Loan
hereunder shall have been duly fulfilled or satisfied by Borrower.
"Closing Date" means the date on which Closing occurs, which
for purposes of this Agreement shall be deemed to be July 15, 1993.
"Code" means the Internal Revenue Code of 1986, as amended,
the Treasury Regulations adopted thereunder and the Treasury
Regulations proposed thereunder (to the extent Requisite Lenders,
in their sole discretion, reasonably determine that such proposed
regulations set forth the regulations that apply in the
circumstances), as the same may be in effect from time to time.
"Collateral" means the Collateral described in the Security
Agreement.
"Commitment" means with respect to each Lender the amounts set
forth on Schedule A and "Commitments" means all such amounts
collectively, as each may be amended from time to time upon the
execution and delivery of an instrument of assignment pursuant to
Section 11.10, which amendments shall be evidenced on Schedule 1.1.
"Commitment Termination Date" means July 13, 1994.
"Compliance Certificate" means a certificate signed by a
Responsible Officer of Borrower, substantially in the form set
forth in Exhibit G, with such changes therein as the Required
Lenders may from time to time reasonably request for the purpose of
having such certificate disclose the matters certified therein and
the method of computation thereof.
"Consolidated Intangible Assets" means for any Person, on a
consolidated basis, as at any date of determination, all intangible
assets of such Person, as determined and computed in accordance
with GAAP.
"Consolidated Net Worth" means, on a consolidated basis, as at
any date of determination, the difference between Consolidated
Total Assets and Consolidated Total Liabilities.
"Consolidated Tangible Net Worth" means, as at any date of
determination, the difference between Consolidated Net Worth and
Consolidated Intangible Assets.
"Consolidated Total Assets" means for any Person, on a
consolidated basis, as at any date of determination, all assets of
such Person, as determined and computed in accordance with GAAP.
"Consolidated Total Liabilities" means for any Person, on a
consolidated basis, as at any date of determination, all
liabilities of such Person, as determined and computed in
accordance with GAAP.
"Contingent Obligation" means, as to any Person, (a) any
Guaranty Obligation of that Person and (b) any direct or indirect
obligation or liability, contingent or otherwise, of that Person,
(i) in respect of any letter of credit or similar instrument issued
for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings, (ii) with respect
to the Indebtedness of any partnership or joint venture of which
such Person is a partner or a joint venturer, (iii) to purchase any
materials, supplies or other property from, or to obtain the
services of, another Person if the relevant contract or other
related document or obligation requires that payment for such
materials, supplies or other property, or for such services, shall
be made regardless of whether delivery of such materials, supplies
or other property is ever made or tendered, or such services are
ever performed or tendered, or (iv) in respect of any interest rate
protection contract that is not entered into in connection with a
bona fide hedging operation that provides offsetting benefits to
such Person. The amount of any Contingent Obligation shall
(subject, in the case of Guaranty Obligations, to the last sentence
of the definition of "Guaranty Obligation") be deemed equal to the
maximum reasonably anticipated liability in respect thereof, and
shall, with respect to clause (b)(iv) of this definition, be marked
to market on a current basis.
"Default Rate" has the meaning set forth in Section 2.4.
"Designated Deposit Account" means a demand deposit account
maintained by Borrower with FUNB designated by written notice from
Borrower to Agent.
"EGF" means PLM Equipment Growth Fund, a California limited
partnership.
"EGF II" means PLM Equipment Growth Fund II, a California
limited partnership.
"EGF III" means PLM Equipment Growth Fund III, a California
limited partnership.
"EGF IV" means PLM Equipment Growth Fund IV, a California
limited partnership.
"EGF V" means PLM Equipment Growth Fund V, a California
limited partnership.
"EGF VII" means PLM Equipment Growth & Income Fund VII, a
California limited partnership formed by Affiliates of PLMI which
has FSI as its sole general partner and will have its limited
partnership interests purchased by third party investors through a
registered public offering.
"Eligible Assignee" means (a) a commercial bank organized
under the laws of the United States, or any state thereof, and
having a combined capital and surplus of at least $100,000,000,
(b) a commercial bank organized under the laws of any other country
which is a member of the Organization for Economic Cooperation and
Development, or a political subdivision of any such country, and
having a combined capital and surplus of at least $100,000,000,
provided that such bank is acting through a branch or agency
located in the United States, and (c) any Bank Affiliate.
"Eligible Inventory" means all Trailers (less than ten (10)
years old), Aircraft (complying with Stage III noise reduction
requirements), Railcars (less than twenty (20) years old), cargo-
containers (less than ten (10) years old), marine vessels (less
than fifteen (15) years old) and, if approved by the Requisite
Lenders, other related Equipment, in each case that (a) is owned of
record by Borrower or a Marine Subsidiary or, subject to the
approval of Agent, any owner trust of which Borrower is the sole
beneficiary or owner, as applicable, or solely with respect to any
marine vessel registered in Liberia, the Bahamas, Hong Kong,
Singapore or other registry acceptable to Agent in its sole
discretion, any nominee entity of which Borrower or a Marine
Subsidiary is the sole beneficiary or direct or indirect owner;
(b) is purchased in whole or in part by Borrower or such owner
trust of which Borrower is the sole beneficiary (or nominee entity
of which Borrower is the sole beneficiary or direct or indirect
owner) with Loans from Lenders under this Agreement; (c) is subject
to a Lease acceptable to Agent in its sole discretion (as reviewed
in full in connection with each requested borrowing hereunder),
which Lease shall, at a minimum, (A) be non-cancelable, (B) be with
a lessee of acceptable credit quality as determined by Agent, and
(C) be of a firm term in excess of one (1) year, except that cargo-
containers and Trailers may be on Utilization Leases; (d) has a
value and marketability reasonably satisfactory to the Agent;
(e) was not previously financed with the proceeds of a Loan under
this Agreement; (f) would, except for the fact such item of
Equipment is not owned of record or beneficially by Growth Fund,
qualify as "Eligible Inventory" under and as defined in the Growth
Fund Agreement; and (g) is free and clear of all Liens, except
(i) any interest of a lessee thereof pursuant to a Lease entered
into with Borrower or a Marine Subsidiary or Borrower's or such
Marine Subsidiary's predecessor in interest or such owner trust or
nominee entity, as lessor, or (ii) as otherwise permitted by
Section 6.1, provided that any Liens of the type permitted under
clause (ii) encumbering any item of Equipment shall not secure
obligations in amount which materially impair the equity value in
such item of Equipment. Requisite Lenders in their sole
discretion, on a case by case basis, may approve other items or
types of Equipment for credit under "Eligible Inventory" from time
to time. "Eligible Inventory" shall include only Equipment
purchased by Borrower or such owner trust (or nominee entity) of
which Borrower is sole beneficiary, whether by sale or assignment
or otherwise, from independent third-parties not related to PLMI or
its Affiliates. Borrower may sell or assign a partial ownership
interest in any item of Eligible Inventory to one or more of the
Equipment Growth Funds in consideration of a purchase price, paid
in cash, equal to the ratable portion of the Invoice Price paid by
Borrower for such item of Eligible Inventory so sold or assigned
without causing the underlying item of Equipment to lose its status
as Eligible Inventory by virtue of such sale on the condition that,
and only on the condition that (x) a portion of the cash purchase
price, ratably related to the percentage of the Invoice Price of
such item of Eligible Inventory financed by a Loan advanced by
Lenders hereunder, shall be used to prepay such Loan in accordance
with Section 2.2.3(c) and (y) Agent shall continue to retain
possession of the Lease in respect of such item of Equipment.
Subject to the immediately preceding sentence, Equipment which is
Eligible Inventory will cease to be Eligible Inventory at any time
it no longer continues to meet all of the above requirements.
Eligible Inventory shall not include any Equipment that was
included in the borrowing base against which loans shall have
previously been made to Growth Fund under the Growth Fund
Agreement.
"Eligible Lease" means any Lease and any renewal of such Lease
(a) which relates to an item of Eligible Inventory financed by a
Loan advanced under this Agreement, (b) which relates to an item of
Equipment financed by a loan advanced under the Growth Fund
Agreement, (c) to which Growth Fund was a party as of the Closing
Date or (d) which is otherwise expressly approved by Agent, in its
reasonable discretion; provided, however, that in no event shall a
Lease be an "Eligible Lease" hereunder if the lessee thereunder is
in default or if the lessee is otherwise more than sixty (60) days
delinquent in making any payment due under the Lease.
"Employee Benefit Plan" means any Pension Plan and any
employee welfare benefit plan, as defined in Section 3(1) of ERISA,
that is maintained for the employees of Borrower or any ERISA
Affiliate of Borrower.
"Environmental Claims" means all claims, however asserted, by
any Governmental Authority or other Person alleging potential
liability or responsibility for violation of any Environmental Law
or for release or injury to the environment or threat to public
health, personal injury (including sickness, disease or death),
property damage, natural resources damage, or otherwise alleging
liability or responsibility for damages (punitive or otherwise),
cleanup, removal, remedial or response costs, restitution, civil or
criminal penalties, injunctive relief, or other type of relief,
resulting from or based upon (a) the presence, placement,
discharge, emission or release (including intentional and
unintentional, negligent and non-negligent, sudden or non-sudden,
accidental or non-accidental placement, spills, leaks, discharges,
emissions or releases) of any Hazardous Material at, in, or from
Property, whether or not owned by Borrower, or (b) any other
circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law.
"Environmental Laws" means all foreign, federal, state or
local laws, statutes, common law duties, rules, regulations,
ordinances and codes, together with all administrative orders,
directed duties, requests, licenses, authorizations and permits of,
and agreements with, any Governmental Authorities, in each case
relating to environmental, health, safety and land use matters,
including the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, the Clean Air Act, the Federal Water
Pollution Control Act of 1972, the Solid Waste Disposal Act, the
Federal Resource Conservation and Recovery Act, the Toxic
Substances Control Act and the Emergency Planning and Community
Right-to-Know Act.
"Environmental Permit" has the meaning set forth in Section
4.15.
"Equipment" means all items of transportation-related
equipment owned directly or beneficially by Borrower, by any Marine
Subsidiary or by Growth Fund and held for lease or rental, and
shall include items of equipment legal or record title to which is
held by any owner trust or nominee entity in which Borrower, any
Marine Subsidiary or Growth Fund holds the sole beneficial
interest.
"Equipment Growth Funds" means any and all of EGF, EGF II,
EGF III, EGF IV, EGF V, Growth Fund and EGF VII.
"Equipment Purchase Agreement" means that certain Agreement of
Purchase and Sale dated as of even date herewith, by and among
Growth Fund, Borrower and Agent.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, as the same may be in effect from time to time,
and any successor statute.
"ERISA Affiliate" means, as applied to any Person, any trade
or business (whether or not incorporated) which is a member of a
group of which that Person is a member and which is under common
control within the meaning of the regulations promulgated under
Section 414 of the Code.
"Event of Default" means any of the events set forth in
Section 8.1.
"Facility" means the total Commitments described in
Schedule A, as such Schedule A may be amended from time to time as
set forth on Schedule 1.1, for the three hundred sixty-four (364)
day revolving credit facility described in Section 2.1.1 to be
provided by Lenders to Borrower according to each Lender's Pro Rata
Share.
"Federal Funds Rate" means, for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Board
(including any such successor, "H.15(519)") for such day opposite
the caption "Federal Funds (Effective)". If on any relevant day
such rate is not yet published in H.15(519), the rate for such day
will be the rate set forth in the daily statistical release
designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by
the Federal Reserve Bank of New York (including any such successor,
the "Composite 3:30 p.m. Quotation") for such day under the caption
"Federal Funds Effective Rate". If on any relevant day the
appropriate rate for such previous day is not yet published in
either H.15(519) or the Composite 3:30 p.m. Quotation, the rate for
such day will be the arithmetic mean of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m.
(New York time) on that day by each of three leading brokers of
Federal funds transactions in New York City selected by Agent.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System and any successor thereto.
"Form 1001" has the meaning set forth in Section 2.12(f).
"Form 4224" has the meaning set forth in Section 2.12(f).
"FSI" means PLM Financial Services, Inc., a Delaware
corporation of which Borrower is an indirect Subsidiary.
"Funding Date" means with respect to any proposed borrowing
hereunder, the date funds are advanced to Borrower for any Loan.
"GAAP" means generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified
Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board (or agencies with similar
function of comparable stature and authority within the accounting
profession), or in such other statements by such other entity as
may be in general use by significant segments of the U.S.
accounting profession, which are applicable to the circumstances as
of the date of determination.
"Governmental Authority" means (a) any federal, state, county,
municipal or foreign government, or political subdivision thereof,
(b) any governmental or quasi-governmental agency, authority,
board, bureau, commission, department, instrumentality or public
body, (c) any court or administrative tribunal or (d) with respect
to any Person, any arbitration tribunal or other non-governmental
authority to whose jurisdiction that Person has consented.
"Growth Fund" means PLM Equipment Growth Fund VI, a California
limited partnership.
"Growth Fund Agreement" means the Warehousing Credit Agreement
dated as of even date herewith, by and among Growth Fund, and
Lenders, and Agent substantially in the form of Exhibit C hereto,
as the same may from time to time be amended, modified,
supplemented, renewed, extended or restated.
"Guaranties" means those certain Guaranties dated as of the
date hereof, substantially in the form of Exhibits D-1 and D-2
hereto, executed by FSI and TEC in favor of Lenders and Agent.
"Guaranty Obligation" means, as applied to any Person, any
direct or indirect liability of that Person with respect to any
Indebtedness, lease for capital equipment other than Eligible
Inventory, dividend, letter of credit or other obligation (the
"primary obligations") of another Person (the "primary obligor"),
including any obligation of that Person, whether or not contingent,
(a) to purchase, repurchase or otherwise acquire such primary
obligations or any property constituting direct or indirect
security therefor, or (b) to advance or provide funds (i) for the
payment or discharge of any such primary obligation, or (ii) to
maintain working capital or equity capital of the primary obligor
or otherwise to maintain the net worth or solvency or any balance
sheet item, level of income or financial condition of the primary
obligor, or (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of
such primary obligation, or (d) otherwise to assure or hold
harmless the holder of any such primary obligation against loss in
respect thereof. The amount of any Guaranty Obligation shall be
deemed equal to the stated or determinable amount of the primary
obligation in respect of which such Guaranty Obligation is made or,
if not stated or if indeterminable, the maximum reasonably
anticipated liability in respect thereof.
"Hazardous Materials" means all those substances which are
regulated by, or which may form the basis of liability under, any
Environmental Law, including all substances identified under any
Environmental Law as a pollutant, contaminant, hazardous waste,
hazardous constituent, special waste, hazardous substance,
hazardous material, or toxic substance, or petroleum or petroleum
derived substance or waste.
"Indebtedness" means, as to any Person, (a) all indebtedness
of such Person for borrowed money, (b) all leases of equipment of
such Person as lessee, (c) to the extent not included in clause
(b), above, all capital leases of such Person as lessee, (d) any
obligation of such Person for the deferred purchase price of
Property or services (other than trade or other accounts payable in
the ordinary course of business and not more than ninety (90) days
past due), (e) any obligation of such Person that is secured by a
Lien on assets of such Person, whether or not that Person has
assumed such obligation or whether or not such obligation is non-
recourse to the credit of such Person, (f) obligations of such
Person arising under acceptance facilities or under facilities for
the discount of accounts receivable of such Person and (g) any
obligation of such Person to reimburse the issuer of any letter of
credit issued for the account of such Person upon which a draw has
been made.
"Indemnified Liability" has the meaning set forth in
Section 10.3.
"Indemnified Person" has the meaning set forth in
Section 10.3.
"Investment" means, when used in connection with any Person,
any investment by or of that Person, whether by means of purchase
or other acquisition of stock or other securities of any other
Person or by means of loan or advance (other than advances to
employees for moving or travel expenses, drawing accounts and
similar expenditures in the ordinary course of business), capital
contribution, guaranty or other debt or equity participation or
interest, or otherwise, in any other Person, including any
partnership and joint venture interests of such Person in any other
Person or in any item of transportation-related equipment, owned by
a Person unaffiliated with Borrower and on lease to another third
party, in which Borrower acquires a right to share, directly or
indirectly.
"Investment Company Act" means the Investment Company Act of
1940, as amended (15 U.S.C. Sect. 80a-1 et seq.), as the same may be in
effect from time to time, or any successor statute thereto.
"Invoice Price" means the sum of the purchase price (including
modifications, as applicable), delivery charges, third party
brokerage fees and other reasonable closing costs, if any (provided
that delivery charges, third party brokerage fees and closing costs
shall be included in the computation of the "Invoice Price" only to
the extent that they do not, in the aggregate, exceed five percent
(5.0%) of the total purchase price), and all applicable taxes, paid
by Borrower for or with respect to any item of Eligible Inventory.
"IRS" means the Internal Revenue Service and any successor
thereto.
"Lease" means each and every item of chattel paper,
installment sales agreement, equipment lease or rental agreement
(including progress payment authorizations) relating to an item of
Equipment of which Borrower or Growth Fund is the lessor and in
respect of which the lessee and lease terms (including, without
limitation, as to rental rate, maturity and insurance coverage) are
acceptable to Agent, in its reasonable discretion. The term
"Lease" includes (a) all payments to be made thereunder, (b) all
rights of Borrower therein, and (c) any and all amendments,
renewals, extensions or guaranties thereof.
"Lending Office" means, with respect to any Lender, the office
or offices of the Lender specified as its lending office opposite
its name on the applicable signature page hereto, or such other
office or offices of the Lender as it may from time to time notify
Borrower and Agent.
"Lien" means any mortgage, pledge, hypothecation, assignment
for security, security interest, encumbrance, levy, lien or charge
of any kind, whether voluntarily incurred or arising by operation
of law or otherwise, affecting any Property, including any
agreement to grant any of the foregoing, any conditional sale or
other title retention agreement, any lease in the nature of a
security interest, and the filing of or agreement to file or
deliver any financing statement (other than a precautionary
financing statement with respect to a lease that is not in the
nature of a security interest) under the UCC or comparable law of
any jurisdiction.
"Loan" has the meaning set forth in Section 2.1.1.
"Loan Document" when used in the singular and "Loan Documents"
when used in the plural means any and all of this Agreement, the
Note, the Security Agreement, the Equipment Purchase Agreement, the
Lockbox Agreement and the Guaranties and any and all other
agreements, documents and instruments executed and delivered by or
on behalf or support of Borrower to Agent or any Lender or any of
their respective authorized designees evidencing or otherwise
relating to the Advances and the Liens granted to Agent, on behalf
of Lenders, with respect to the Advances, as the same may from time
to time be amended, modified, supplemented or renewed.
"Lockbox" has the meaning set forth in Section 5.9.1.
"Lockbox Agreement" means the Agreement of even date herewith
between Borrower, FUNB and Agent on behalf of Lenders,
substantially in the form of Exhibit H, relating to the Lockbox.
"Marine Subsidiary" means a wholly-owned Subsidiary of
Borrower organized for the purpose of holding record or beneficial
title to one or more marine vessels or aircraft rotables and spare
parts; provided that such Subsidiary shall continue to be deemed a
Marine Subsidiary if Borrower shall thereafter sell and transfer
partial, but not the entire, record or beneficial ownership
interest therein to one or more Equipment Growth Funds (but for
purposes of computing the Borrowing Base, such Marine Subsidiary's
record or beneficial title to its owned Equipment shall be deemed
to be limited to Borrower's continuing ratable ownership interest
in such Marine Subsidiary).
"Material Adverse Effect" means any set of circumstances or
events which (a) has or could reasonably be expected to have any
material adverse effect whatsoever upon the validity or
enforceability of any Loan Document, (b) is or could reasonably be
expected to be material and adverse to the condition (financial or
otherwise) or business operations of Borrower, FSI or TEC
(c) materially impairs or could reasonably be expected to
materially impair the ability of Borrower, FSI or TEC to perform
its Obligations, or (d) materially impairs or could reasonably be
expected to materially impair the ability of Agent or any Lender to
enforce any of its or their legal remedies pursuant to the Loan
Documents.
"Maturity Date" means, with respect to each Loan advanced by
Lenders hereunder, the date which is one hundred fifty (150) days
after the Funding Date of such Loan or such earlier or later date
as requested by Borrower and approved by the Requisite Lenders, in
their sole and absolute discretion; provided, however, in no event
shall any Maturity Date be a date which is later than the
Commitment Termination Date.
"Maximum Availability" has the meaning set forth in
Section 2.1.1.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA, and to which Borrower or any ERISA
Affiliate of Borrower is making, or is obligated to make,
contributions or has made, or been obligated to make, contributions
within the preceding five (5) years.
"Note" has the meaning set forth in Section 2.1.1(a)(i), and
any and all replacements, extensions, substitutions and renewals
thereof.
"Obligations" means all loans, advances, liabilities and
obligations for monetary amounts owing by Borrower to any Lender or
Agent, whether due or to become due, matured or unmatured,
liquidated or unliquidated, contingent or non-contingent, and all
covenants and duties regarding such amounts, of any kind or nature,
arising under any of the Loan Documents. This term includes,
without limitation, all principal, interest (including interest
that accrues after the commencement of a case or proceeding against
Borrower under the Bankruptcy Code), fees, including, without
limitation, any and all prepayment fees, facility fees, commitment
fees, arrangement fees, agent fees and attorneys' fees and any and
all other fees, expenses, costs or other sums chargeable to
Borrower under any of the Loan Documents.
"Opinions of Counsel" means the favorable written legal
opinions of Jackson, Tufts, Cole & Black, special counsel to
Borrower, and Stephen Peary, general counsel of FSI and TEC,
substantially in the form of Exhibits F-1 and F-2, respectively,
together with copies of any officer's certificate or legal opinion
of another counsel or law firm specifically identified and
expressly relied upon by such counsel in its opinion.
"Other Taxes" has the meaning set forth in Section 2.12(b).
"Overadvance" has the meaning set forth in Section
2.1.1(a)(iii).
"Owner Trustee" means any person acting in the capacity of
(a) a trustee for any owner trust or (b) a nominee entity, in each
case holding title to any Eligible Inventory pursuant to a trust or
similar agreement with Borrower or FSI.
"PBGC" means the Pension Benefit Guaranty Corporation and any
successor thereto.
"Pension Plan" means any employee pension benefit plan, as
defined in Section 3(2) of ERISA, that is maintained for the
employees of Borrower or any ERISA Affiliate of Borrower, other
than a Multiemployer Plan.
"Permitted Liens" has the meaning set forth in Section 6.1.
"Permitted Rights of Others" means, as to any Property in
which a Person has an interest, (a) an option or right to acquire
a Lien that would be a Permitted Lien, (b) the reversionary
interest of a lessor under a lease of such Property, and (c) an
option or right of the lessee under a lease of such Property to
purchase such Property at fair market value.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or Governmental
Authority.
"PLMI" means PLM International, Inc., a Delaware corporation.
"Potential Event of Default" means a condition or event which,
after notice or lapse of time or both, will constitute an Event of
Default.
"Prepayment Date" has the meaning set forth in Section 2.2.2.
"Prime Rate" means, at any time, the rate of interest per
annum publicly announced from time to time by FUNB as its prime
rate. Each change in the Prime Rate shall be effective as of the
opening of business on the day such change in the Prime Rate
occurs. The parties hereto acknowledge that the rate announced
publicly by FUNB as its Prime Rate is an index or base rate and
shall not necessarily be its lowest rate charged to FUNB's
customers or other banks.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, whether tangible or
intangible.
"Pro Rata Share" means, for any Lender, the proportion such
Lender's Commitment with respect to the Facility has to the
aggregate of all Commitments with respect to the Facility.
"Public Utility Holding Company Act" means the Public Utility
Holding Company Act of 1935, as amended (15 U.S.C. Sect. 79 et seq.) as
the same shall be in effect from time to time, and any successor
statute thereto.
"Railcar" means all railroad rolling stock, including, without
limitation, all coal, timber, plastic pellet, tank, hopper, flat
and box cars and locomotives.
"Regulations G, T, U and X" means, collectively, Regulations
G, T, U and X adopted by the Federal Reserve Board (12 C.F.R.
Parts 207, 220, 221 and 224, respectively) and any other regulation
in substance substituted therefor.
"Requisite Lenders" means any combination of Lenders whose
combined Pro Rata Share (and voting interest with respect thereto)
of all amounts outstanding under this Agreement, or, in the event
there are no amounts outstanding, the Commitments, is greater than
sixty percent (60.0%) of all such amounts outstanding or the total
Commitments, as the case may be.
"Responsible Officer" means any of the President, Executive
Vice President, Chief Financial Officer, Secretary or Corporate
Controller of Borrower having authority to request Loans or perform
other duties required hereunder.
"SEC" means the Securities and Exchange Commission and any
successor thereto.
"Security Agreement" means the Security Agreement to be
entered into as of even date herewith between Borrower and Agent,
on behalf of Lenders, substantially in the form of Exhibit E,
including all amendments, modifications and supplements thereto and
all appendices, exhibits and schedules to any of the foregoing, and
shall refer to the Security Agreement as the same may be in effect
from time to time.
"Security Documents" means the Security Agreement, each
chattel mortgage, ship mortgage or similar security agreement,
mortgage or other agreement or document entered into with respect
to this Agreement, each UCC-1 financing statement delivered
pursuant hereto and any and all other related documents.
"Senior Agreement" means the Third Amended and Restated Loan
Agreement dated as of October 28, 1992 by and between PLMI and the
lenders named therein and Bank of America National Trust and
Savings Association as agent for the lenders, including all
amendments, modifications and supplements thereto and restatements
thereof.
"Solvent" means, as to any Person at any time, that (a) the
fair value of the Property of such Person is greater than the
amount of such Person's liabilities (including disputed, contingent
and unliquidated liabilities) as such value is established and
liabilities evaluated for purposes of Section 101(31) of the
Bankruptcy Code; (b) the present fair saleable value of the
Property in an orderly liquidation 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; (c)
such Person is able to realize upon its Property and pay its debts
and other liabilities (including disputed, contingent and
unliquidated liabilities) as they mature in the normal course of
business; (d) such Person does not intend to, and does not believe
that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature; and (e) such
Person is not engaged in business or a transaction, and is not
about to engage in business or a transaction, for which such
Person's property would constitute unreasonably small capital.
"Subsidiary" means, with respect to any Person, any
corporation, association, partnership (other than Equipment Growth
Funds) or other business entity of which an aggregate of fifty
percent (50.0%) or more of the beneficial interest (in the case of
a partnership) or fifty percent (50.0%) or more of the outstanding
stock or other voting interest having ordinary voting power to
elect a majority of the directors, managers or trustees of such
Person (irrespective of whether, at the time, stock or other voting
interest of any other class or classes of such Person shall have or
might have voting power by reason of the happening of any
contingency) is at the time, directly or indirectly, owned legally
or beneficially by such Person and/or one or more Subsidiaries of
such Person.
"Taxes" has the meaning set forth in Section 2.12(a).
"TEC" means PLM Transportation Equipment Corporation, a
California corporation and a wholly-owned Subsidiary of FSI and of
which Borrower is a special purpose Subsidiary.
"Termination Event" means (a) a "reportable event" described
in Section 4043 of ERISA and the regulations issued thereunder
(other than a reportable event not subject to the provision for 30-
day notice to the PBGC under such regulations), or (b) the
withdrawal of Borrower, FSI or any of FSI's other Subsidiaries or
any of their ERISA Affiliates from a Pension Plan during a plan
year in which any of them was a "substantial employer" as defined
in Section 4001(a)(2) of ERISA, or (c) the filing of a notice of
intent to terminate a Pension Plan or the treatment of a Pension
Plan amendment as a termination under Section 4041 of ERISA, or
(d) the institution of proceedings to terminate a Pension Plan by
the PBGC, or (e) any other event or condition which might
constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension
Plan.
"Trailer" means (a) vehicles having a minimum length of twenty
(20) feet used in trailer or freight car service and constructed
for the transport of commodities or containers from point to point
and (b) associated equipment.
"UCC" means the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of North Carolina;
provided, however, in the event that, by reason of mandatory
provisions of law, any and all of the attachment, perfection or
priority of the Lien of Agent, on behalf of Lenders, in and to the
Collateral is governed by the Uniform Commercial Code as in effect
in a jurisdiction other than the State of North Carolina, the term
"UCC" shall mean the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating
to such attachment, perfection or priority and for purposes of
definitions related to such provisions.
"Utilization Leases" means Leases for Equipment held for lease
in pooling or similar arrangements where the actual rental payments
under such Lease is based on and for the actual period of
utilization of such item of Equipment rather than the Lease term.
1.2 Accounting Terms. Any accounting term used in this
Agreement shall have, unless otherwise specifically provided
herein, the meaning customarily given such term in accordance with
GAAP, and all financial data required to be submitted by this
Agreement shall be prepared and computed, unless otherwise
specifically provided herein, in accordance with GAAP. That
certain terms or computations are explicitly modified by the phrase
"in accordance with GAAP" shall in no way be construed to limit the
foregoing. In the event that GAAP changes during the term of this
Agreement such that the covenants contained in Section 7 would then
be calculated in a different manner or with different components,
(a) the parties hereto agree to amend this Agreement in such
respects as are necessary to conform those covenants as criteria
for evaluating Borrower's financial condition to substantially the
same criteria as were effective prior to such change in GAAP and
(b) Borrower shall be deemed to be in compliance with the covenants
contained in the aforesaid subsections during the sixty (60) day
period following any such change in GAAP if and to the extent that
Borrower would have been in compliance therewith under GAAP as in
effect immediately prior to such change.
1.3 Other Terms. All other undefined terms contained in this
Agreement shall, unless the context indicates otherwise, have the
meanings provided for by the UCC to the extent the same are used or
defined therein. The words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole,
including the Exhibits and Schedules hereto, all of which are by
this reference incorporated into this Agreement, as the same may
from time to time be amended, modified or supplemented, and not to
any particular section, subsection or clause contained in this
Agreement. The term "including" shall not be limiting or
exclusive, unless specifically indicated to the contrary. The term
"or" is disjunctive; the term "and" is conjunctive. The term
"shall" is mandatory; the term "may" is permissive. Wherever from
the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and plural, and
pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and the neuter.
1.4 Schedules and Exhibits. Any reference to a Section,"
"Subsection," "Exhibit," or "Schedule" shall refer to the relevant
Section or Subsection of or Exhibit or Schedule to this Agreement,
unless specifically indicated to the contrary.
SECTION 2. AMOUNT AND TERMS OF CREDIT.
2.1 Commitment to Lend.
2.1.1 Revolving Facility. Subject to the terms and
conditions of this Agreement and in reliance upon the
representations and warranties of Borrower set forth herein,
Lenders hereby agree to make Advances (as defined below) of
immediately available funds to Borrower, on a revolving basis, from
the Closing Date until the Business Day immediately preceding the
Commitment Termination Date, in the aggregate principal amount
outstanding at any time not to exceed the lesser of (a) the total
Commitments for the Facility less the aggregate principal amount
then outstanding under the Growth Fund Agreement and (b) the
Borrowing Base (such lesser amount being the "Maximum
Availability"), as more fully set forth in this Section 2.1.1.
(a) Facility Commitments.
(i) On the Funding Date requested by
Borrower, after Borrower shall have satisfied all applicable
conditions precedent set forth in Section 3, each Lender shall
advance immediately available funds to Agent (each such
advance being an "Advance") evidencing such Lender's Pro Rata
Share of a loan ("Loan"). Agent shall immediately advance
such immediately available funds to Borrower at the Designated
Deposit Account (or such other deposit account at FUNB or such
other financial institution as to which Borrower and Agent
shall agree at least three (3) Business Days prior to the
requested Funding Date) on the Funding Date with respect to
such Loan. Borrower shall pay interest accrued on the Loan at
the rates and in the manner set forth in Section 2.1.1(b).
Subject to the terms and conditions of this Agreement, the
unpaid principal amount of each Loan and all unpaid interest
and commitment fees accrued thereon, together with all other
fees, expenses, costs and other sums chargeable to Borrower
incurred in connection therewith shall be due and payable no
later than the Maturity Date of such Loan. Each Loan advanced
hereunder shall be evidenced by Borrower's revolving
promissory note, substantially in the form of Exhibit A (the
"Note").
(ii) The obligation of Lenders to make any
Loan from time to time hereunder shall be limited to the then
applicable Maximum Availability. For the purpose of
determining the amount of the Borrowing Base available at any
one time, the amount available shall be the total amount of
the Borrowing Base as set forth in the Borrowing Base
Certificate delivered to Agent pursuant to Section 3.2(a) with
respect to each requested Loan. Nothing contained in this
Agreement shall under any circumstance be deemed to require
any Lender to make any Advance under the Facility which, in
the aggregate principal amount, either (1) taking into account
such Lender's Pro Rata Share of the principal amounts
outstanding under this Agreement and the making of such
Advance exceeds the lesser of (A) such Lender's Commitment for
the Facility and (B) such Lender's Pro Rata Share of the
Borrowing Base, or (2) taking into account such Lender's Pro
Rata Share of the principal amounts outstanding under this
Agreement and under the Growth Fund Agreement and the making
of such Advance exceeds such Lender's Commitment for the
Facility.
(iii) If at any time and for any reason the
aggregate principal amount of the Loan(s) then outstanding
shall exceed the Maximum Availability (the amount of such
excess, if any, being an "Overadvance"), Borrower shall
immediately repay the full amount of such Overadvance,
together with all interest accrued thereon; provided, however,
that if such Overadvance occurs solely as a result of a
decrease in the amount of the Borrowing Base due solely to a
decrease in the computation of the Borrowing Base under either
clause (c) or (d), then, to the extent of such decrease,
Borrower shall not be required under this Section
2.1.1(a)(iii) to prepay such Overadvance but Lenders shall
have no obligation to make or fund any Loans or extend any
credit hereunder so long as such Overadvance condition shall
remain in effect.
(iv) Amounts borrowed by Borrower under
this Facility may be repaid and, prior to the Commitment
Termination Date and subject to the applicable terms and
conditions precedent to borrowings hereunder, reborrowed;
provided, however, that no Loan shall have a Maturity Date
which is later than the Commitment Termination Date.
(v) Each request for a Loan hereunder
shall constitute a reaffirmation by Borrower and the
Responsible Officer requesting the same that the
representations and warranties contained in this Agreement are
true, correct and complete in all material respects to the
same extent as though made on and as of the date of the
request, except to the extent such representations and
warranties specifically relate to an earlier date, in which
event they shall be true, correct and complete in all material
respects as of such earlier date.
(b) Each Loan. Subject to the terms and conditions
of this Agreement, each Loan shall bear interest on the sum of the
unpaid principal balance thereof outstanding on each day until such
Loan shall have been fully repaid at a rate per annum equal to one
percent (1.00%) in excess of the Prime Rate, as the same may
fluctuate on a daily basis. Interest on each Loan funded hereunder
shall be due and payable monthly in arrears on the first Business
Day of each month following the Funding Date of such Loan, with all
accrued but unpaid interest on such Loan being due and payable on
the date such Loan is repaid, whether by prepayment or at maturity,
and with all accrued but unpaid interest being due and payable on
the Maturity Date for such Loan.
Each Advance made by a Lender as part of a Loan hereunder and
all repayments of principal with respect to such Advance shall be
evidenced by notations made by such Lender on the books and records
of such Lender; provided, however, that the failure by such Lender
to make such notations shall not limit or otherwise affect the
obligations of Borrower with respect to the repayments of principal
or payments of interest on any Advance or Loan. The aggregate
unpaid amount of each Advance set forth on the books and records of
a Lender shall be presumptive evidence of such Lender's Pro Rata
Share of the principal amount owing and unpaid under the Note.
2.1.2 Funding. Promptly following the receipt of
such documents required pursuant to Section 3.2(a) and approval of
a Loan by the Agent, Agent shall notify by telephone, telecopier,
facsimile or telex each Lender of the principal amount (including
Lender's Pro Rata Share thereof) and Funding Date of the Loan
requested by Borrower. Not later than 1:00 p.m., North Carolina
time, on the Funding Date for any Loan, each Lender shall make an
Advance to Agent for the account of Borrower in the amount of its
Pro Rata Share of the Loan being requested by Borrower. Upon
satisfaction of the applicable conditions precedent set forth in
Section 3, all Advances shall be credited in immediately available
funds to the Designated Deposit Account.
2.1.3 Utilization of the Loans. The Loans made under
the Facility may be used solely for the purpose of acquiring the
specific items of Eligible Inventory approved by Requisite Lenders,
in their sole discretion, and against which Lenders have made
Advances; provided, however, in no event shall the proceeds of any
Loan be used to finance more than eighty percent (80.0%) of the
Invoice Price of any item of Eligible Inventory to be purchased
with the proceeds of such Loan. The parties hereto understand and
contemplate that the Loans are being requested to finance the
acquisition of items of Eligible Equipment and that only upon the
funding of such Loans and the acquisition of record by Borrower or
a Marine Subsidiary or by an Owner Trustee for the beneficial
interest of Borrower or a Marine Subsidiary in a single or back-to-
back transaction will the ownership requirements of Eligible
Inventory be satisfied.
2.2 Repayment and Prepayment.
2.2.1 Repayment. Unless prepaid pursuant to
Section 2.2.2, the principal amount of each Loan hereunder shall be
repaid by Borrower to Lenders not later than the Maturity Date of
such Loan.
2.2.2 Voluntary Prepayment. Borrower may in the
ordinary course of Borrower's business, on prior written notice, or
telephonic notice promptly confirmed in writing to Agent, which
notice shall be irrevocable, at any time and from time to time
prepay any Loan in whole or in part. Such prepayment of Loans
shall be in immediately available funds and delivered to Agent not
later than 1:00 p.m., North Carolina time, on the date for
prepayment stated in such notice (the "Prepayment Date"). With
respect to any prepayment under this Section 2.2.2, all interest on
the amount prepaid accrued up to but excluding the date of such
prepayment shall be due and payable on the Prepayment Date.
2.2.3 Mandatory Prepayments.
(a) In the event that any item of Eligible
Inventory shall be sold or assigned by Borrower or any Marine
Subsidiary, or the ownership interests (whether Stock or otherwise)
of Borrower in any Marine Subsidiary owning record or beneficial
title to any item of Eligible Inventory shall be sold or
transferred, then Borrower shall immediately prepay the Loan made
with respect to such Eligible Inventory so sold or assigned or with
respect to the Eligible Inventory owned by such Marine Subsidiary
so sold or transferred, together with accrued interest on such Loan
to the date of prepayment. The sale or assignment of Eligible
Inventory by an Owner Trustee, or the sale or assignment of
Borrower's or any Marine Subsidiary's beneficial interest in any
owner trust (or nominee entity) holding title to Eligible Inventory
shall be considered a sale or assignment, as the case may be, of
such Eligible Inventory by Borrower or such Marine Subsidiary, as
the case may be.
(b) In the event that any of the Eligible Inventory
shall have sustained a Casualty Loss, Borrower shall promptly
notify Agent and Lenders of such Casualty Loss and make
arrangements reasonably acceptable to the Agent to cause any and
all cash proceeds received by Borrower to be paid to Lenders as a
prepayment hereunder. To the extent not so prepaid, the Loan
funded with respect to such Eligible Inventory will nevertheless be
paid by Borrower as provided in Section 2.2.1.
(c) In the event Borrower, any Marine Subsidiary or
any Owner Trustee shall sell or assign any partial (i.e., less than
one hundred percent (100.0%)) interest in any item of Eligible
Inventory pursuant to Section 6.4, Borrower shall immediately
prepay the Loan made with respect to such Eligible Inventory in
which an interest has been so sold or assigned in an amount equal
to that portion of the purchase price paid for such partial
interest which is ratably related to the percentage of the Invoice
Price paid by Borrower, such Marine Subsidiary or Owner Trustee for
such item of Eligible Inventory when originally financed by such
Loan, together with all interest accrued on such Loan to the date
of prepayment. For example, if Borrower paid an Invoice Price of
$10,000,000 for an item of Eligible Inventory, of which $8,000,000
was financed with a Loan hereunder, if Borrower subsequently sells
to EGF VII a forty percent (40.0%) interest in such item of
Eligible Inventory for a purchase price of $4,000,000, Borrower
shall prepay the related Loan in the principal amount of
$3,200,000.
(d) In the event that the Growth Fund Agreement
shall be terminated for any reason, then Borrower shall immediately
prepay any and all amounts outstanding under this Agreement and the
Lenders' Commitments shall, without notice, immediately and
automatically terminate.
2.3 Facility Fee. FUNB, as the sole Lender as of the
Closing, acknowledges receipt of a facility fee of $125,000 paid in
consideration of FUNB's agreement to structure the extensions of
credit provided in this Agreement.
2.4 Calculation of Interest; Post-Maturity Interest. Interest
on the Loans shall be computed on the basis of a 365/366-day year
and the actual number of days elapsed in the period during which
such interest accrues. In computing interest on any Loan, the date
of the making of such Loan shall be included and the date of
payment shall be excluded. Each change in the interest rate on a
Loan based on changes in the Prime Rate shall be effective on the
effective date of such change and to the extent of such change.
Agent shall give Borrower notice of any such change in the Prime
Rate; provided, however, that any failure by Agent to provide
Borrower with notice hereunder shall not affect Agent's right to
make changes in the interest rate of any Loan based on changes in
the Prime Rate. Upon the occurrence and during the continuation of
any Event of Default under this Agreement, Advances under this
Agreement will at the option of Requisite Lenders bear interest at
a rate per annum which is two percentage points higher than the
rate of interest otherwise provided under this Agreement (the
"Default Rate"). This may result in the compounding of interest.
The imposition of a Default Rate will not constitute a waiver of
any Event of Default.
2.5 Manner of Payments. All repayments or prepayments of
principal and all payments of interest, fees, costs, expenses and
other sums chargeable to Borrower under this Agreement, the Note or
any of the other Loan Documents shall be in lawful money of the
United States of America in immediately available funds and
delivered to Agent, for the account of Lenders, not later than
1:00 p.m., North Carolina time, on the date due at First Union
National Bank of North Carolina, One First Union Center, 301 South
College Street, Charlotte, North Carolina 28288, Attention: Hanna
Carmody, or such other place as shall have been designated in
writing by Agent.
2.6 Payment on Non-Business Days. Whenever any payment to be
made under this Agreement, the Note or any of the other Loan
Documents shall be stated to be due on a day which is not a
Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall in such case be
included in the computation of the payment of interest thereon;
provided, however, that no Loan shall have remained outstanding
after the Maturity Date of such Loan.
2.7 Application of Payments. All payments to or for the
benefit of Lenders hereunder shall be applied in the following
order: (a) then due and payable fees as set forth in Section 2.3
and, at the direction of Borrower or upon prior notice given to
Borrower by Agent, other then due and payable fees, expenses and
costs; (b) then due and payable interest payments and mandatory
prepayments; and (c) then due and payable principal payments and
optional prepayments; provided that if an Event of Default shall
have occurred and be continuing, Lenders shall have the exclusive
right to apply any and all such payments against the then due and
owing Obligations of Borrower as Lenders may deem advisable. To
the extent Borrower fails to make payment required hereunder or
under any of the other Loan Documents, each Lender is authorized
to, and at its sole option may, make such payments on behalf of
Borrower. To the extent permitted by law, all amounts advanced by
any Lender hereunder or under other provisions of the Loan
Documents shall accrue interest at the same rate as Loans
hereunder.
2.8 Distribution of Payments. Agent shall immediately
distribute to each Lender, at such address as each Lender shall
designate, its respective interest in all repayments and
prepayments of principal and all payments of interest and all fees,
expenses and costs received by Agent on the same day and in the
same type of funds as payment was received. In the event Agent
does not distribute such payments on the same day received, if such
payments are received by Agent by 1:00 p.m., North Carolina time,
or if received after such time, on the next succeeding Business
Day, such payment shall accrue interest at the Federal Funds Rate.
2.9 Agent's Right to Assume Funds Available for Advances.
Unless Agent shall have been notified by any Lender no later than
the Business Day prior to the respective Funding Date of a Loan
that such Lender does not intend to make available to Agent an
Advance in immediately available funds equal to such Lender's Pro
Rata Share of the total principal amount of such Loan, Agent may
assume that such Lender has made such Advance to Agent on the date
of the Loan and Agent may, in reliance upon such assumption, make
available to Borrower a corresponding Advance. If Agent has made
funds available to Borrower based on such assumption and such
Advance is not in fact made to Agent by such Lender, Agent shall be
entitled to recover the corresponding amount of such Advance on
demand from such Lender. If such Lender does not promptly pay such
corresponding amount upon Agent's demand, Agent shall notify
Borrower and Borrower shall repay such Advance to Agent. Agent
also shall be entitled to recover from such Lender interest on such
Advance in respect of each day from the date such Advance was made
by Agent to Borrower to the date such corresponding amount is
recovered by Agent at the Federal Funds Rate. Nothing in this
Section 2.9 shall be deemed to relieve any Lender from its
obligation to fulfill its Commitment or to prejudice any rights
which Agent or Borrower may have against such Lender as a result of
any default by such Lender under this Agreement.
2.10 Agent's Right to Assume Payments Will be Made by
Borrower. Unless Agent shall have been notified by Borrower prior
to the date on which any payment to be made by Borrower hereunder
is due that Borrower does not intend to remit such payment, Agent
may, in its sole discretion, assume that Borrower has remitted such
payment when so due and Agent may, in its sole discretion and in
reliance upon such assumption, make available to each Lender on
such payment date an amount equal to such Lender's Pro Rata Share
of such assumed payment. If Borrower has not in fact remitted such
payment to Agent, each Lender shall forthwith on demand repay to
Agent the amount of such assumed payment made available to such
Lender, together with interest thereon in respect of each date from
and including the date such amount was made available by Agent to
such Lender to the date such amount is repaid to Agent at the
Federal Funds Rate.
2.11 Capital Requirements.
If any Lender determines that compliance with any law or
regulation or with any guideline or request from any central bank
or other Governmental Authority (whether or not having the force of
law) has or would have the effect of reducing the rate of return on
the capital of such Lender or any corporation controlling such
Lender as a consequence of, or with reference to, such Lender's
Commitments or its making or maintaining its Pro Rata Share of the
Loans below the rate which such Lender or such other corporation
could have achieved but for such compliance (taking into account
the policies of such Lender or corporation with regard to capital),
then Borrower shall from time to time, upon written demand by such
Lender (with a copy of such demand to Agent), immediately pay to
such Lender such additional amounts as shall be sufficient to
compensate such Lender or other corporation for such reduction. A
certificate submitted by such Lender to Borrower, stating that the
amounts set forth as payable to such Lender are true and correct,
shall be conclusive and binding for all purposes, absent manifest
error. Each Lender agrees promptly to notify Borrower and Agent of
any circumstances that would cause Borrower to pay additional
amounts pursuant to this section, provided that the failure to give
such notice shall not affect Borrower's obligation to pay any such
additional amounts.
2.12 Taxes.
(a) Subject to Subsection 2.12(g), any and all payments
by Borrower to each Lender or Agent under this Agreement shall be
made free and clear of, and without deduction or withholding for,
any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and Agent, such taxes
(including income taxes or franchise taxes) as are imposed on or
measured by each Lender's net income (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities
being hereinafter referred to as "Taxes").
(b) In addition, Borrower shall pay any present or
future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from any payment made
hereunder or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any other Loan
Documents (hereinafter referred to as "Other Taxes").
(c) Subject to Subsection 2.12(g), Borrower shall
indemnify and hold harmless each Lender and Agent for the full
amount of Taxes or Other Taxes (including any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this
Section 2.12) paid by such Lender or Agent and any liability
(including penalties, interest, additions to tax and expenses)
arising therefrom or with respect thereto, whether or not such
Taxes or Other Taxes were correctly or legally asserted. Payment
under this indemnification shall be made within thirty (30) days
from the date any Lender or Agent makes written demand therefor.
(d) If Borrower shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum
payable hereunder to any Lender or Agent, then, subject to
Subsection 2.12(g):
(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) such Lender or Agent, as the case may
be, receives an amount equal to the sum it would have received
had no such deductions been made;
(ii) Borrower shall make such deductions, and
(iii) Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority
in accordance with applicable law.
(e) Within thirty (30) days after the date of any
payment by Borrower of Taxes or Other Taxes, Borrower shall furnish
to Agent the original or a certified copy of a receipt evidencing
payment thereof, or other evidence of payment satisfactory to
Agent.
(f) Each Lender which is a foreign person (i.e., a
person other than a United States person for United States Federal
income tax purposes) shall:
(i) No later than the date upon which such
Lender becomes a party hereto deliver to Borrower through
Agent two (2) accurate and complete signed originals of IRS
Form 4224 or any successor thereto ("Form 4224"), or two
accurate and complete signed originals of IRS Form 1001 or any
successor thereto ("Form 1001"), as appropriate, in each case
indicating that such Lender is on the date of delivery thereof
entitled to receive payments of principal, interest and fees
under this Agreement free from withholding of United States
Federal income tax;
(ii) If at any time such Lender makes any
changes necessitating a new Form 4224 or Form 1001, with
reasonable promptness deliver to Borrower through Agent in
replacement for, or in addition to, the forms previously
delivered by it hereunder, two accurate and complete signed
originals of Form 4224; or two accurate and complete signed
originals of Form 1001, as appropriate, in each case
indicating that the Lender is on the date of delivery thereof
entitled to receive payments of principal, interest and fees
under this Agreement free from withholding of United States
Federal income tax;
(iii) Before or promptly after the occurrence of
any event (including the passing of time but excluding any
event mentioned in (ii) above) requiring a change in or
renewal of the most recent Form 4224 or Form 1001 previously
delivered by such Lender, deliver to Borrower through Agent
two accurate and complete original signed copies of Form 4224
or Form 1001 in replacement for the forms previously delivered
by the Lender; and
(iv) Promptly upon Borrower's or Agent's
reasonable request to that effect, deliver to Borrower or
Agent (as the case may be) such other forms or similar
documentation as may be required from time to time by any
applicable law, treaty, rule or regulation in order to
establish such Lender's tax status for withholding purposes.
(g) Borrower will not be required to pay any additional
amounts in respect of United States Federal income tax pursuant to
Subsection 2.12(d) to Lender for the account of any Lending Office
of such Lender:
(i) If the obligation to pay such additional
amounts would not have arisen but for a failure by such Lender
to comply with its obligations under Subsection 2.12(f) in
respect of such Lending Office;
(ii) If such Lender shall have delivered to
Borrower a Form 4224 in respect of such Lending Office
pursuant to Subsection 2.12(f) and such Lender shall not at
any time be entitled to exemption from deduction or
withholding of United States Federal income tax in respect of
payments by Borrower hereunder for the account of such Lending
Office for any reason other than a change in United States law
or regulations or in the official interpretation of such law
or regulations by any Governmental Authority charged with the
interpretation or administration thereof (whether or not
having the force of law) after the date of delivery of such
Form 4224; or
(iii) If such Lender shall have delivered to
Borrower a Form 1001 in respect of such Lending Office
pursuant to Subsection 2.12(f), and such Lender shall not at
any time be entitled to exemption from deduction or
withholding of United States Federal income tax in respect of
payments by Borrower hereunder for the account of such Lending
Office for any reason other than a change in United States law
or regulations or any applicable tax treaty or regulations or
in the official interpretation of any such law, treaty or
regulations by any Governmental Authority charged with the
interpretation or administration thereof (whether or not
having the force of law) after the date of delivery of such
Form 1001.
(h) If, at any time, Borrower requests any Lender to
deliver any forms or other documentation pursuant to
Subsection 2.12(f)(iv), then Borrower shall, on demand of such
Lender through Agent, reimburse such Lender for any costs and
expenses (including reasonable attorney fees) reasonably incurred
by such Lender in the preparation or delivery of such forms or
other documentation.
(i) If Borrower is required to pay additional amounts to
any Lender or Agent pursuant to Subsection 2.12(d), then such
Lender shall use its reasonable good faith efforts (consistent with
legal and regulatory restrictions) to change the jurisdiction of
its Lending Office so as to eliminate any such additional payment
by Borrower which may thereafter accrue if such change in the
judgment of such Lender is not otherwise disadvantageous to such
Lender.
2.13 Single Loan. All of the Obligations of Borrower to
Lenders and Agent arising under or in connection with this
Agreement, or any of the other Loan Documents, including, without
limitation, all Obligations of Borrower arising in respect of the
Loan shall constitute one general obligation of Borrower.
SECTION 3. CONDITIONS PRECEDENT TO LOANS.
3.1 First Advance. The obligation of each Lender to make the
first Advance hereunder is subject to the satisfaction of the
following conditions precedent:
(a) Corporate Documents. Agent shall have received, in
form and substance satisfactory to Lenders and their respective
counsel, the following:
(i) A certified copy of the records of all
actions taken by Borrower, TEC and FSI, including all
corporate resolutions of Borrower, TEC and FSI authorizing or
relating to the execution, delivery and performance of the
Loan Documents and the consummation of the transactions
contemplated hereby and thereby;
LMLE (A) Certified copies of the articles or
certificate of incorporation, as the case may be, bylaws and
any other charter or formation documents of Borrower, TEC and
FSI, certified by a Responsible Officer each of Borrower, TEC
and FSI, respectively, as being in full force and effect;
(iii) Copies of the most recent certificates of
(A) the Secretary of State of California, stating that
Borrower, TEC and FSI each are corporations in good legal
standing under the laws of the State of California, and
(B) the Secretary of State of Delaware, stating that FSI is a
corporation in good legal standing under the laws of the State
of Delaware;
(iv) Certificates of incumbency and signature
with respect to the authorized representatives of Borrower,
TEC and FSI executing the Loan Documents and requesting Loans;
and
(v) Such other documents relating to Borrower,
TEC or FSI as Lenders reasonably may request.
(b) Note. Agent shall have received the Note, in form
and substance satisfactory to Lenders, duly executed and delivered
by Borrower.
(c) Security Documents. Agent shall have received the
Security Agreement and each of the other Security Documents,
including a UCC-1 financing statement naming Borrower as debtor and
Agent as secured party to be filed with the Secretary of State of
California, as Agent shall reasonably request, in form and
substance satisfactory to Lenders, duly executed and delivered by
Borrower.
USE Equipment Purchase Agreement. Agent shall have
received the Equipment Purchase Agreement, in form and substance
satisfactory to Lenders, duly executed and delivered by Borrower
and Growth Fund.
(e) Opinions of Counsel.
(i) Agent shall have received an originally
executed legal opinion of Jackson, Tufts, Cole & Black, special
counsel to Borrower, on behalf of Borrower, FSI and TEC, in form
and substance satisfactory to Lenders, dated as of the Closing Date
and addressed to Lenders, together with copies of any officer's
certificate or legal opinion of other counsel or law firm
specifically identified and expressly relied upon by such counsel.
(ii) Agent shall have received an originally
executed legal opinion of Stephen Peary, general counsel of FSI and
TEC, on behalf of FSI and TEC, in form and substance satisfactory
to Lenders, dated as of the Closing Date and addressed to Lenders,
together with copies of any officer's certificate or legal opinion
of other counsel or law firm specifically identified and expressly
relied upon by such counsel.
(f) Guaranties. Agent shall have received the
Guaranties, in form and substance satisfactory to Lenders, duly
executed and delivered by FSI and by TEC.
(g) Lockbox Agreement. Agent shall have received the
Lockbox Agreement, in form and substance satisfactory to Lenders,
duly executed by Borrower.
(h) Insurance. Agent shall have received from Borrower,
in form and substance satisfactory to Lenders, evidence of
insurance required by Section 5.3.
(i) Bringdown Certificate. A certificate or
certificates, dated as of the Closing Date, of the Chief Financial
Officer or Corporate Controller of Borrower to the effect that (i)
the representations and warranties of Borrower contained in Section
4 are true, accurate and complete in all material respects as of
the Closing Date as though made on such date and (ii) no Event of
Default or Potential Event of Default under this Agreement has
occurred.
(j) Accurate Information. The information provided to
Lenders by or on behalf of Borrower, FSI and TEC, as well as the
representations and warranties of the various other parties as
contained in the Loan Documents shall be true, accurate and
complete in all material respects.
(k) Fees and Costs. Agent shall have received an amount
equal to the aggregate of Agent's good faith estimate of all fees
(including reasonable attorneys' fees), costs, expenses and other
disbursements incurred by Agent in connection with the Closing of
the transactions contemplated hereunder, including, without
limitation, this Agreement and each of the other Loan Documents,
which payment shall be subject to post-Closing adjustment following
receipt by Agent of all final invoices.
(l) Other Documents. Agent shall have received such
other documents, information and items from Borrower and FSI as
reasonably requested by Agent.
3.2 All Loans. Unless waived in writing by Requisite
Lenders, the obligation of any Lender to make any Advance is
subject to the satisfaction of the following further conditions
precedent:
(a) At least five (5) Business Days before each Loan
hereunder with respect to any acquisition of Equipment by Borrower,
Agent shall have received (i) a written request for such Loan,
signed by a Responsible Officer of Borrower; (ii) a Borrowing Base
Certificate; (iii) a description of the transaction, including
(A) a listing of all Equipment against which Borrower is requesting
that a Loan be made, identifying each item of Equipment by serial
number, registration number or other identifying mark, as
applicable, and indicating whether each such item is owned by
Borrower or by an Owner Trustee for the benefit of Borrower (and if
the latter, identifying such Owner Trustee and date of any
applicable trust or similar agreement), (B) the lessee, the date of
the lease and the lease termination date, (C) lessee financial
information, and (D) the terms of the underlying lease; and
(iv) other information as may be requested by the Agent to confirm
that such Equipment satisfies the criteria for Eligible Inventory.
(b) At least five (5) Business Days before each Loan
hereunder with respect to any acquisition of Equipment by Borrower,
Agent shall have received invoice and such other information
related to the purchase of each item of Equipment as Agent shall
reasonably request to confirm that the proceeds of the requested
Loan will not be used to finance more than eighty percent (80.0%)
of the Invoice Price of such Equipment.
(c) At least five (5) Business Days before each Loan
hereunder with respect to any acquisition of Equipment by Borrower,
Agent shall have received such documents and copies of instruments
of title as Agent shall reasonably request to confirm that upon the
consummation of such acquisition, Borrower shall have acquired of
record (or if such Equipment is to be acquired of record by an
Owner Trustee, the beneficial interest in) such Equipment free and
clear of any Liens or other encumbrances on title (other than
Permitted Liens).
(d) Approval of such requested Loan by Agent, after
review of the lessee, Equipment, Lease and any other material
circumstances relating to the Loan.
(e) Prior to the Funding Date of any such Loan, if
available, and in no event later than five (5) Business Days
following such Funding Date, Borrower shall have delivered to
Agent, on behalf of Lenders, the original executed counterparts of
each Lease or schedules thereto or other chattel paper, if any,
relating to such Equipment and Eligible Inventory (other than with
respect to Railcars if such Railcars are leased pursuant to a
master lease, in which event Borrower shall deliver to Agent the
applicable schedule(s) to such master lease), against which the
Loan is to be made.
(f) No event shall have occurred and be continuing or
would result from the making of any Loan on such Funding Date which
constitutes an Event of Default or Potential Event of Default under
this Agreement or under (and as separately defined in) the Growth
Fund Agreement, or which with notice or lapse of time or both would
constitute an Event of Default or Potential Event of Default under
this Agreement or under the Growth Fund Agreement.
(g) Agent shall have received a certificate, dated as of
the Funding Date, of the Chief Financial Officer or Corporate
Controller of Borrower to the effect that (i) all representations
and warranties contained in the Loan Documents are true, accurate
and complete in all material respects with the same effect as
though such representations and warranties had been made on and as
of such Funding Date (except to the extent such representations and
warranties specifically relate to an earlier date, in which case
they shall be true, accurate and complete in all material respects
as of such earlier date), (ii) Borrower shall have either available
cash or have received a capital contribution from TEC for the
purpose of funding at least twenty percent (20.0%) of the Invoice
Price of the Equipment to be financed with such requested Loan, and
if such a capital contribution has been made, attaching a
certificate of the Chief Financial Officer or Corporate Controller
of TEC to the effect that the making of such capital contributions
has not caused TEC to cease to be Solvent and (iii) from the
perspective of prudent portfolio diversity and management, given
Growth Fund's then existing portfolio, such Equipment is of a type,
model, age and condition consistent with the investment objectives
of Growth Fund.
(h) Agent shall have received a certificate, dated as of
the Funding Date of the Chief Financial Officer or Corporate
Controller of Borrower with respect to each Lease relating to an
item of Equipment being financed with such Loan to the effect that:
(i) The Lease constitutes the entire agreement of
the parties thereto and no party thereto shall be bound except in
accordance therewith;
(ii) No amendments, modifications, supplements or
addenda have been made to, or schedules attached to, the Lease
except as disclosed in such certificate and the sole original
thereof having been delivered to Agent;
(iii) No material default exists under the Lease as
of the date of the Loan;
(iv) The Lease constitutes the valid contract of
Borrower and each lessee that is a party to the Lease, and shall at
all times be enforceable against each such lessee in accordance
with its terms, subject to the limitations on enforceability
imposed by bankruptcy and creditors' rights laws and the general
principles of equity, and each party thereto has executed the Lease
with full power, authority and capacity to contract;
(v) Borrower is the sole owner and lessor of the
Equipment covered by the Lease;
(vi) The lessee is responsible for the payment of
all taxes, insurance and similar charges so that all Lease payments
will be net to Borrower (except with respect to Leases covering
time charters for marine vessels, railcars and trailers consistent
with industry standards for such type of leases);
(vii) Borrower has not and will not give or loan to
any lessee that is a party to the Lease, directly or indirectly,
any unpaid rent or other amount due or to become due under the
Lease; and
(viii) No rentals, fees, costs, expenses or charges
paid or payable by any lessee under the Lease violate any known
statute, rule, regulation, court ruling or other regulation or
limitation relating to the maximum fees, costs, expenses or charges
permitted in any state in which the Equipment is located or in
which the lessee is located, resides or is domiciled, or in which
the transaction was consummated, or in any other state which has
jurisdiction of the Equipment, Lease or lessee.
(i) The insurance required to be maintained by Borrower
pursuant to the Loan Documents shall be in full force and effect.
(j) Agent shall have received such other instruments and
documents as it may have reasonably requested from Borrower in
connection with the Loans to be made on such date.
3.3 Further Conditions to All Loans. Notwithstanding
anything to the contrary contained in this Agreement, unless waived
in writing by Requisite Lenders, no Lender shall have any
obligation hereunder to make any Advance if any of the following
events shall at any time after December 31, 1992 occur:
(a) PLMI shall have fallen in arrears by more than
$7,000,000 in the aggregate in terms of realized net proceeds from
the completed sales of its owned assets, whether of record or
beneficially through an owner trust or other nominee entity, in
accordance with the schedule for asset sales set forth in
Section 2.4 of the Senior Agreement.
(b) FSI and its wholly owned Subsidiary, PLM Securities
Corp., as the syndication sponsors of the Equipment Growth Funds,
shall have failed to raise at least $5,000,000 per month in net
equity proceeds from its public syndication offerings for the
Equipment Growth Funds for two (2) consecutive calendar months
(excluding any month which is an Equipment Growth Fund's initial
full month of equity syndication).
(c) FSI shall have ceased to be the sole general partner
of Growth Fund, whether due to the voluntary or involuntary
withdrawal, substitution, removal or transfer of FSI from or of all
or any portion of FSI's general partnership interest in Growth
Fund.
(d) Twenty five percent (25.0%) or more of the limited
partners (measured by such partners' percentage interest) of any
Equipment Growth Fund shall at any time vote to remove FSI as the
general partner of such Equipment Growth Fund, regardless of
whether FSI is actually removed.
(e) The Equipment Growth Funds of which FSI is the sole
general partner shall at any time fail to maintain unrestricted
cash balances totalling, in the aggregate, $10,000,000.
SECTION 4. BORROWER'S REPRESENTATIONS AND WARRANTIES.
Borrower hereby warrants and represents to Agent and each
Lender as follows, and agrees that each of said warranties and
representations shall be deemed to continue until full, complete
and indefeasible payment and performance of the Obligations and
shall apply anew to each borrowing hereunder:
4.1 Existence and Power. Borrower is a corporation, duly
organized, validly existing and in good standing under the laws of
the State of California and is duly qualified and licensed as a
foreign corporation and authorized to do business in each
jurisdiction within the United States where its ownership of
Property and assets or conduct of business requires such
qualification. Borrower has the corporate power and authority,
rights and franchises to own its Property and assets and to carry
on its business as now conducted. Borrower has the corporate power
and authority to execute, deliver and perform the terms of the Loan
Documents (to the extent either is a party thereto) and all other
instruments and documents contemplated hereby or thereby.
4.2 Loan Documents and Note Authorized; Binding Obligations.
The execution, delivery and performance of this Agreement and each
of the other Loan Documents to which Borrower is a party and
payment of the Note have been duly authorized by all necessary and
proper corporate action on the part of Borrower. The Loan
Documents constitute legally valid and binding obligations of
Borrower, enforceable against Borrower, to the extent Borrower is
a party thereto, in accordance with their respective terms, except
as enforcement thereof may be limited by bankruptcy, insolvency or
other laws affecting the enforcement of creditors' rights
generally.
4.3 No Conflict; Legal Compliance. The execution, delivery
and performance of this Agreement, and each of the other Loan
Documents and the execution, delivery and payment of the Note will
not: (a) contravene any provision of Borrower's articles of
incorporation or bylaws; (b) contravene, conflict with or violate
any applicable law or regulation, or any order, writ, judgment,
injunction, decree, determination or award of any Governmental
Authority, which contravention, conflict or violation, in the
aggregate, may have a Material Adverse Effect; or (c) violate or
result in the breach of, or constitute a default under any
indenture or other loan or credit agreement, or other agreement or
instrument to which Borrower is a party or by which Borrower, or
its Property and assets may be bound or affected. Borrower is not
in violation or breach of or default under any law, rule,
regulation, order, writ, judgment, injunction, decree,
determination or award or any contract, agreement, lease, license,
indenture or other instrument to which it is a party, the
non-compliance with, the violation or breach of or the default
under which would have a Material Adverse Effect.
4.4 Financial Condition. FSI's audited consolidated
financial statements as of December 31, 1992, copies of which
heretofore have been delivered to Agent by Borrower, and all other
financial statements and other data submitted in writing by
Borrower to Agent or any Lender in connection with the request for
credit granted by this Agreement, are true, accurate and complete
in all material respects, and said financial statements and other
data fairly present the consolidated financial condition of FSI, as
of the date thereof, and have been prepared in accordance with
GAAP, subject to fiscal year-end audit adjustments.
4.5 Executive Offices. The current location of Borrower's
chief executive offices and principal places of business is set
forth on Schedule 4.5.
4.6 Litigation. Except as set forth in Schedule 4.6, there
are no claims, actions, suits, proceedings or other litigation
pending or, to the best of Borrower's knowledge, after due inquiry,
threatened against Borrower, at law or in equity before any
Governmental Authority or, to the best of Borrower's knowledge,
after due inquiry, any investigation by any Governmental Authority
of Borrower's Properties or assets. Borrower has no Contingent
Obligations.
4.7 Material Contracts. Schedule 4.7 lists all currently
effective contracts and agreements (whether written or oral) to
which Borrower is a party. There are no material defaults under
any such contract or agreement by Borrower. Borrower has delivered
to Agent true and correct copies of all such contracts or
agreements (or, with respect to oral contracts or agreements,
written descriptions of the material terms thereof).
4.8 Consents and Approvals. No approval, authorization or
consent of any trustee or holder of any indebtedness or obligation
of Borrower or of any other Person under any such material
agreement, contract, lease or license or similar document or
instrument to which Borrower is a party or by which Borrower is
bound, is required to be obtained by Borrower in order to make or
consummate the transactions contemplated under the Loan Documents.
Except as set forth in Schedule 4.8, all consents and approvals of,
filings and registrations with, and other actions in respect of,
all Governmental Authorities required to be obtained by Borrower in
order to make or consummate the transactions contemplated under the
Loan Documents have been, or prior to the time when required will
have been, obtained, given, filed or taken and are or will be in
full force and effect.
4.9 Other Agreements. Borrower is not a party to and is not
bound by any agreement, contract, lease, license or instrument, and
is not subject to any restriction under its respective charter or
formation documents, which has, or is likely in the foreseeable
future to have, a Material Adverse Effect. Borrower has not
entered into and, as of the Closing Date does not contemplate
entering into, any material agreement or contract with any
Affiliate of Borrower on terms that are less favorable to Borrower
than those that might be obtained at the time from Persons who are
not such Affiliates.
4.10 Employment and Labor Agreements. There are no employment
agreements covering management of Borrower and there are no
collective bargaining agreements or other labor agreements covering
any employees of Borrower.
4.11 ERISA. Borrower does not have any Employee Benefit Plan
which is subject to ERISA.
4.12 Labor Matters. There are no strikes or other labor
disputes against or threatened against Borrower. All payments due
from Borrower on account of employee health and welfare insurance
which would have a Material Adverse Effect if not paid have been
paid or, if not due, accrued as a liability on the books of
Borrower.
4.13 Margin Regulations. Borrower does not own any "margin
security", as that term is defined in Regulations G and U of the
Federal Reserve Board, and the proceeds of the Loans under this
Agreement will be used only for the purposes contemplated
hereunder. None of the Loans will be used, directly or indirectly,
for the purpose of purchasing or carrying any margin security, for
the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any margin security or for
any other purpose which might cause any of the Loans under this
Agreement to be considered a "purpose credit" within the meaning of
Regulations G, T, U and X. Borrower will not take or permit any
agent acting on its behalf to take any action which might cause
this Agreement or any document or instrument delivered pursuant
hereto to violate any regulation of the Federal Reserve Board.
4.14 Taxes. All federal, state, local and foreign tax
returns, reports and statements required to be filed by Borrower
have been filed with the appropriate Governmental Authorities where
failure to file may have a Material Adverse Effect, and all
material Charges and other impositions shown thereon to be due and
payable by Borrower have been paid prior to the date on which any
fine, penalty, interest or late charge may be added thereto for
nonpayment thereof, or any such fine, penalty, interest, late
charge or loss has been paid, or Borrower is contesting its
liability therefore in good faith and has fully reserved all such
amounts according to GAAP in the financial statements provided to
Agent pursuant to Section 5.1. Borrower has paid when due and
payable all material Charges upon the books of Borrower and no
Government Authority has asserted any Lien against the Borrower
with respect to unpaid Charges. Proper and accurate amounts have
been withheld by Borrower from its employees for all periods in
full and complete compliance with the tax, social security and
unemployment withholding provisions of applicable federal, state,
local and foreign law and such withholdings have been timely paid
to the respective Governmental Authorities.
4.15 Environmental Quality.
(a) Except as specifically disclosed in Schedule 4.15,
the on-going operations of Borrower comply in all material respects
with all Environmental Laws.
(b) Except as specifically disclosed in Schedule 4.15,
Borrower has obtained all licenses, permits, authorizations and
registrations required under any Environmental Law ("Environmental
Permits") and necessary for its ordinary course operations, all
such Environmental Permits are in good standing, and Borrower is in
compliance with all material terms and conditions of such
Environmental Permits.
(c) Except as specifically disclosed in Schedule 4.15,
neither Borrower nor any of its present Property or operations is
subject to any outstanding written order from or agreement with any
Governmental Authority nor subject to any judicial or docketed
administrative proceeding, respecting any Environmental Law,
Environmental Claim or Hazardous Material.
(d) There are no Hazardous Materials or other conditions
or circumstances existing with respect to any Property, or arising
from operations prior to the Closing Date, of Borrower that would
reasonably be expected to give rise to any Environmental Claim with
a potential liability of Borrower in excess of $100,000 in the
aggregate from any such condition, circumstance or Property.
4.16 Trademarks, Patents, Copyrights, Franchises and Licenses.
Borrower possesses and owns all necessary trademarks, trade names,
copyrights, patents, patent rights, franchises and licenses which
are material to the conduct of its business as now operated.
4.17 Full Disclosure. As of the Closing Date, no information
contained in this Agreement, the other Loan Documents or any other
documents or written materials furnished by or on behalf of
Borrower to Agent or any Lender pursuant to the terms of this
Agreement or any of the other Loan Documents contains any untrue or
inaccurate statement of a material fact or omits to state a
material fact necessary to make the statement contained herein or
therein not misleading in light of the circumstances under which
made.
4.18 Other Regulations. Borrower is not: (a) a "public
utility company" or a "holding company," or an "affiliate" or a
"subsidiary company" of a "holding company," or an "affiliate" of
such a "subsidiary company," as such terms are defined in the
Public Utility Holding Company Act or (b) an "investment company,"
or an "affiliated person" of, or a "promoter" or "principal
underwriter" for, an "investment company," as such terms are
defined in the Investment Company Act. The making of the Loans
hereunder and the application of the proceeds and repayment thereof
by Borrower and the performance of the transactions contemplated by
this Agreement and the other Loan Documents will not violate any
provision of the Investment Company Act or the Public Utility
Holding Company Act, or any rule, regulation or order issued by the
SEC thereunder.
4.19 Solvency. Borrower is Solvent.
4.20 Survival of Representations and Warranties. So long as
any of the Commitments shall be available and until payment and
performance in full of the Obligations, the representations and
warranties contained herein shall have a continuing effect as
having been true when made.
SECTION 5. BORROWER'S AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any of the
Commitments shall be available and until full, complete and
indefeasible payment and performance of the Obligations, unless
Requisite Lenders shall otherwise consent in writing, Borrower
shall do or cause to have done all of the following:
5.1 Records and Reports. Maintain a system of accounting
administered in accordance with sound business practices to permit
preparation of financial statements in conformity with GAAP, and
deliver to Agent or caused to be delivered to Agent:
(a) As soon as practicable and in any event within
forty-five (45) days after the end of each quarterly accounting
period of Borrower, FSI and PLMI, except with respect to the final
fiscal quarter of each fiscal year, in which case as soon as
practicable and in any event within ninety (90) days after the end
of such fiscal quarter, consolidated and consolidating balance
sheets of FSI and PLMI and a balance sheet of Borrower as at the
end of such period and the related consolidated (and, as to
statements of income only for FSI, consolidating) statements of
income and stockholders' equity of Borrower and FSI and the related
consolidated statements of income, stockholders' equity and cash
flows of PLMI (and, as to statements of income only, consolidating)
for such quarterly accounting period, setting forth in each case in
comparative form the consolidated figures for the corresponding
periods of the previous year, all in reasonable detail and
certified by the Chief Financial Officer or Corporate Controller of
Borrower, FSI and PLMI that they (i) are complete and fairly
present the financial condition of Borrower, FSI and PLMI as at the
dates indicated and the results of their operations and changes in
their cash flow for the periods indicated, (ii) disclose all
liabilities of Borrower, FSI and PLMI that are required to be
reflected or reserved against under GAAP, whether liquidated or
unliquidated, fixed or contingent and (iii) have been prepared in
accordance with GAAP, subject to changes resulting from audit and
normal year-end adjustment;
(b) As soon as practicable and in any event within
ninety (90) days after the end of each fiscal year of Borrower, FSI
and PLMI, consolidated and consolidating balance sheets of FSI and
PLMI and a balance sheet of Borrower as at the end of such year and
the related consolidated (and, as to statements of income only for
FSI and PLMI, consolidating) statements of income, stockholders'
equity and cash flows of Borrower, FSI and PLMI for such fiscal
year, setting forth in each case, in comparative form the
consolidated figures for the previous year, all in reasonable
detail and (i) in the case of such consolidated financial
statements, accompanied by a report thereon of an independent
public accountant of recognized national standing selected by
Borrower, FSI and PLMI and satisfactory to Agent, which report
shall contain an opinion which is not qualified in any manner or
which otherwise is satisfactory to Requisite Lenders, in their sole
discretion, and (ii) in the case of such consolidating financial
statements, certified by the Chief Financial Officer or Corporate
Controller of FSI and PLMI;
(c) As soon as practicable, and in any event not later
than fifteen (15) days after the end of each calendar month, a
Borrowing Base Certificate dated as of the last day of such month,
duly executed by a Chief Financial Officer or Corporate Controller
of Borrower, with appropriate insertions;
(d) As soon as practicable, and in any event not later
than forty-five (45) days after the end of each fiscal quarter of
Borrower, a Compliance Certificate dated as of the last day of such
fiscal quarter, duly executed by a Chief Financial Officer or
Corporate Controller of Borrower, with appropriate insertions;
(e) At Agent's request, promptly upon receipt thereof,
copies of all reports submitted to Borrower, FSI, TEC or PLMI by
independent public accountants in connection with each annual,
interim or special audit of the financial statements of Borrower,
FSI, TEC or PLMI made by such accountants;
(f) (i) On the date six (6) months after the Closing
Date and thereafter upon Agent's reasonable request, which request
shall not be made more than once during any calendar year (unless
an Event of Default shall have occurred and be continuing, in which
event such limitation shall not apply), a report from Borrower's
insurance broker, in such detail as Agent may reasonably request,
as to the insurance maintained or caused to be maintained by
Borrower pursuant to this Agreement, demonstrating compliance with
the requirements hereof and thereof, and (ii) as soon as possible
and in no event later than fifteen (15) days prior to the
expiration date of any insurance policy of Borrower, a written
confirmation of such policy's renewal from Borrower's insurance
broker; provided, however, that Borrower shall give Agent prompt
written notice if changes affecting risk coverage will be made to
the insurance policy or if the policy will be cancelled;
(g) Promptly upon any officer of Borrower obtaining
knowledge (i) of any condition or event which constitutes an Event
of Default or Potential Event of Default under this Agreement,
(ii) that any Person has given any notice to Borrower, FSI, TEC or
PLMI or taken any other action with respect to a claimed default or
event or condition of the type referred to in Section 8.1(b),
(iii) of the institution of any litigation or of the receipt of
written notice from any Governmental Authority as to the
commencement of any formal investigation involving an alleged or
asserted liability of Borrower of any amount and of FSI, TEC or
PLMI equal to or greater than $500,000 or any adverse judgment in
any litigation involving a potential liability of Borrower of any
amount and of FSI, TEC or PLMI equal to or greater than $500,000,
or (iv) of a material adverse change in the business, operations,
properties, assets or condition (financial or otherwise) of
Borrower, FSI, TEC or PLMI, a certificate of a Responsible Officer
of Borrower, specifying the notice given or action taken by such
Person and the nature of such claimed default, Event of Default,
Potential Event of Default, event or condition and what action
Borrower, FSI, TEC or PLMI has taken, is taking and proposes to
take with respect thereto;
(h) Promptly upon becoming aware of the occurrence of
any (i) Termination Event in connection with any Pension Plan or
(ii) "prohibited transaction" (as such term is defined in ERISA and
the Code) in connection with any Employee Benefit Plan or any trust
created thereunder, a written notice specifying the nature thereof,
what action Borrower or any of its ERISA Affiliates has taken, is
taking or proposes to take with respect thereto, and, when known,
any action taken or threatened by the IRS or the PBGC with respect
thereto;
(i) With reasonable promptness, copies of (i) all
notices received by Borrower or any of its ERISA Affiliates of the
PBGC's intent to terminate any Pension Plan or to have a trustee
appointed to administer any Pension Plan, (ii) each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series)
filed by Borrower or any of its ERISA Affiliates with the IRS with
respect to each Pension Plan covering employees of Borrower, and
(iii) all notices received by Borrower or any of its ERISA
Affiliates from a Multiemployer Plan sponsor concerning the
imposition or amount of withdrawal liability pursuant to
Section 4202 of ERISA;
(j) Promptly upon receipt by Borrower any challenge by
the IRS to the qualification under Section 401 or 501 of the Code
of any Pension Plan;
(k) As soon as available and in no event later than five
(5) days after the same shall have been filed with the SEC, a copy
of each Form 8-K Current Report, Form 10-K Annual Report, Form 10-Q
Quarterly Report, Annual Report to Shareholders, Proxy Statement
and Registration Statement of PLMI;
(l) Upon the request of Agent, copies of all federal,
state, local and foreign tax returns and reports in respect of
income, franchise or other taxes on or measured by income
(excluding sales, use or like taxes) filed by or on behalf of
Borrower, FSI, TEC and PLMI; and
(m) Such other information respecting the condition or
operations, financial or otherwise, of Borrower and PLMI and its
Subsidiaries as Agent or any Lender may from time to time
reasonably request, and such information regarding the lessees
under Leases as Borrower from time to time receives or Agent or any
Lender reasonably requests.
All financial statements of Borrower, FSI and PLMI to be
delivered by Borrower, FSI and PLMI to Agent pursuant to this
Section 5.1 will be complete and correct and present fairly the
financial condition of Borrower, FSI and PLMI as of the date
thereof; will disclose all liabilities of Borrower, FSI and PLMI
that are required to be reflected or reserved against under GAAP,
whether liquidated or unliquidated, fixed or contingent; and will
have been prepared in accordance with GAAP. All tax returns
submitted to Agent by Borrower, FSI and PLMI will, to the best of
Borrower's, FSI's and PLMI's knowledge, after due inquiry, be true
and correct. Borrower, FSI and PLMI hereby agree that each time
either submits a financial statement or tax return to Agent,
Borrower, FSI and PLMI shall be deemed to represent and warrant to
Lenders that such financial statement or tax return complies with
all of the preceding requirements set forth in this paragraph.
5.2 Existence; Compliance with Law. Borrower shall preserve
and maintain its existence and all of its licenses, permits,
governmental approvals, rights, privileges and franchises necessary
or desirable in the normal conduct of its business as now conducted
or presently proposed to be conducted (including, without
limitation, its qualification to do business in each jurisdiction
in which such qualification is necessary or desirable in view of
its business); to conduct its business in an orderly and regular
manner; and comply with (a) the provisions of its articles of
incorporation and bylaws and (b) the requirements of all applicable
laws, rules, regulations or orders of any Governmental Authority
and requirements for the maintenance of Borrower's insurance,
licenses, permits, governmental approvals, rights, privileges and
franchises, except, in either case, to the extent that the failure
to comply therewith would not, in the aggregate, have a Material
Adverse Effect.
5.3 Insurance. Borrower shall maintain and keep in force
insurance of the types and in amounts then customarily carried in
lines of business similar to that of Borrower including, but not
limited to, fire, extended coverage, public liability, property
damage, environmental hazard and workers' compensation, in each
case carried with financially sound Persons and in amounts
satisfactory to the Requisite Lenders (subject to commercial
reasonableness as to each type of insurance); provided, however,
that the types and amounts of insurance shall not provide any less
coverage for Borrower than provided as of the Closing Date by the
existing blanket policies of insurance for PLMI and its
Subsidiaries. All such policies of property insurance carry
endorsements naming Agent as principal loss payee as to any
property owned by Borrower and all such policies as to liability
insurance shall carry endorsements naming Agent and each Lender as
an additional insured, and in each case indicating that (i) any
loss thereunder shall be payable to Agent or Lenders, as the case
may be, notwithstanding any action, inaction or breach of
representation or warranty by Borrower; (ii) there shall be no
recourse against any Lender for payment of premiums or other
amounts with respect thereto, and (iii) at least fifteen (15) days'
prior written notice of cancellation, lapse or material change in
coverage shall be given to Agent by the insurer.
5.4 Taxes and Other Liabilities. Promptly pay and discharge
all material Charges when due and payable, except (a) such as may
be paid thereafter without penalty or (b) such as may be contested
in good faith by appropriate proceedings and for which an adequate
reserve has been established and is maintained in accordance with
GAAP. Borrower shall promptly notify Agent of any material
challenge, contest or proceeding pending by or against Borrower or
against PLMI or any of its other Subsidiaries before any taxing
authority.
5.5 Inspection Rights; Assistance. At any reasonable time
and from time to time during normal business hours, permit Agent or
any Lender or any agent, representative or employee thereof, to
examine and make copies of and abstracts from the financial records
and books of account of Borrower and other documents in the
possession or under the control of Borrower relating to any
obligation of Borrower arising under or contemplated by this
Agreement, and to visit the offices of Borrower to discuss the
affairs, finances and accounts of Borrower with any of the officers
of Borrower, and, upon reasonable notice and during normal business
hours (unless an Event of Default or Potential Event of Default
shall have occurred and be continuing, in which event no notice is
required) to conduct audits of and appraise the Equipment. Such
audits and appraisals shall be subject to the lessee's right to
quiet enjoyment as set forth in the respective Lease.
5.6 Maintenance of Facilities; Modifications; Performance of
Leases.
(a) Maintenance of Facilities. Borrower shall keep its
Properties which are useful or necessary to Borrower in good repair
and condition, normal wear and tear excepted, and from time to time
make necessary repairs thereto, and renewals and replacements
thereof so that Borrower's Properties shall be fully and
efficiently preserved and maintained.
(b) Certain Modifications to the Equipment. Subject to
Section 5.6(a), Borrower shall promptly make, or cause to be made,
all modifications, additions and adjustments to the Eligible
Inventory as may from time to time be required by any Governmental
Authority having jurisdiction over the operation, safety or use
thereof.
(c) Performance of Leases. Borrower shall timely
perform in all material respects each of its covenants and
obligations under the Leases to which it is a party.
5.7 Supplemental Disclosure. From time to time as may be
necessary (in the event that such information is not otherwise
delivered by Borrower to Agent or Lenders pursuant to this
Agreement), so long as there are Obligations outstanding hereunder,
disclose to Agent in writing any material matter hereafter arising
which, if existing or occurring at the date of this Agreement,
would have been required to be set forth or described by Borrower
in this Agreement or any of the other Loan Documents (including all
Schedules and Exhibits hereto or thereto) or which is necessary to
correct any information set forth or described by Borrower
hereunder or thereunder or in connection herewith which has been
rendered inaccurate thereby.
5.8 Further Assurances. In addition to the obligations and
documents which this Agreement expressly requires Borrower to
execute, deliver and perform, Borrower shall execute, deliver and
perform any and all further acts or documents which Agent or
Lenders may reasonably require to effectuate the purposes of this
Agreement or any of the other Loan Documents.
5.9 Lockbox. Borrower shall unless otherwise directed in
writing by Agent, cause all remittances made by the obligor under
any Lease to be made to a lock box (the "Lockbox") maintained with
FUNB pursuant to the Lockbox Agreement. Unless otherwise directed
by Agent in writing, all invoices and other instructions submitted
by Borrower to the obligor relating to Lease payments shall
designate the Lockbox as the place to which such payments shall be
made.
5.10 Environmental Laws. Borrower shall conduct its
operations and keep and maintain its Property in material
compliance with all Environmental Laws.
5.11 Equipment Purchase Agreement. Borrower shall timely
perform each of its covenants and obligations under the Equipment
Purchase Agreement.
SECTION 6. BORROWER'S NEGATIVE COVENANTS.
So long as any of the Commitments shall be available and until
full, complete and indefeasible payment and performance of the
Obligations, unless Requisite Lenders shall otherwise consent in
writing, Borrower covenants and agrees as follows:
6.1 Liens; Negative Pledges; and Encumbrances. Borrower
shall not create, incur, assume or suffer to exist, and shall not
permit any Marine Subsidiary or Owner Trustee to create, incur,
assume or suffer to exist, any Lien of any nature upon or with
respect to any of their respective Property, whether now or
hereafter owned, leased or acquired, except (collectively, the
"Permitted Liens"):
(a) Liens granted in favor of Agent on behalf of Lenders
under the Security Agreement and the other Security Documents;
(b) Liens for Charges if payment shall not at the time
be required to be made in accordance with Section 5.4;
(c) Liens in respect of pledges, obligations or deposits
(i) under workers' compensation laws, unemployment insurance and
other types of social security or similar legislation, (ii) in
connection with surety, appeal and similar bonds incidental to the
conduct of litigation, (iii) in connection with bid, performance or
similar bonds and mechanics', laborers' and materialmen's and
similar statutory Liens not then delinquent; or (iv) incidental to
the conduct of the business of Borrower, any Marine Subsidiary or
any Owner Trustee and which were not incurred in connection with
the borrowing of money or the obtaining of advances or credit;
provided that the Liens permitted by this Section 6.1(c) do not in
the aggregate materially detract from the value of any assets or
property of or materially impair the use thereof in the operation
of the business of Borrower or any Owner Trustee; and provided
further that the adverse determination of any claim or liability,
contingent or otherwise, secured by any of such Liens would not
either individually or in the aggregate have a Material Adverse
Effect; and
(d) Permitted Rights of Others.
6.2 Acquisitions. Borrower shall not, and shall not permit
any Marine Subsidiary to, make any Acquisition or enter into any
agreement to make any Acquisition, except with respect to the
formation of Marine Subsidiaries and the purchase of Equipment in
the ordinary course of its or their respective business.
6.3 Limitations on Indebtedness. Borrower shall not, and
shall not permit any Marine Subsidiary or Owner Trustee to, create,
incur, assume or suffer to exist, any Indebtedness or Contingent
Obligation; provided, however, that this Section 6.3 shall not be
deemed to prohibit:
(a) The Obligations to Lenders and Agent arising under
this Agreement and the other Loan Documents; and
(b) With the prior written consent of Agent,
Indebtedness incurred in respect of the deferred purchase price for
an item of Eligible Inventory to be financed with the proceeds of
a Loan hereunder, but only to the extent that the incurrence of
such Indebtedness is customary in the industry with respect to the
purchase of this type of equipment.
6.4 Disposition of Assets. Borrower shall not, and shall not
permit any Marine Subsidiary or any Owner Trustee to, sell, assign
or otherwise dispose of, any of its or their respective assets,
except for full, fair and reasonable consideration, or enter or
permit any Marine Subsidiary or Owner Trustee to enter into any
sale and leaseback agreement covering any of its fixed or capital
assets. In this regard, Borrower shall not sell, assign or dispose
of, and shall not permit any Marine Subsidiary or Owner Trustee to
sell, assign or dispose of, any partial record or beneficial
ownership interest in any Eligible Inventory, except upon the
payment in cash of a purchase price equal to the ratable portion of
the Invoice Price paid by Borrower or such Marine Subsidiary or
Owner Trustee for such item of Eligible Inventory so sold, assigned
or otherwise disposed of, which cash purchase price will be subject
to mandatory prepayment pursuant to Section 2.2.3(c).
6.5 Restricted Payments. Borrower shall not declare or make
any dividend payment or other distribution of assets, properties,
cash, rights, obligations or securities on account of any shares of
any class of its capital stock, or purchase, redeem or otherwise
acquire for value any shares of its capital stock or any warrants,
rights or options to acquire such shares, now or hereafter
outstanding; except that Borrower may, (a) following the resale of
any item of Eligible Inventory to PLMI, any Equipment Growth Fund
or any third party and after having repaid in full the Loan
advanced by Lender to finance the acquisition of such Eligible
Inventory, dividend the remaining proceeds of such resale to TEC
and (b) no more frequently than monthly and in no event prior to
such time has Borrower shall have made payment in full of all
interest on the Loans funded hereunder accrued through the last day
of the previous calendar month, Borrower may dividend its net
profits (revenues less interest and operating expenses) to TEC.
6.6 Restriction on Fundamental Changes. Borrower shall not,
and shall not permit any Marine Subsidiary to, enter into any
transaction of merger, consolidation or recapitalization, directly
or indirectly, whether by operation of law or otherwise, or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, assign, transfer or otherwise
dispose of, in one transaction or a series of transactions, all or
any part of its business, Property or assets, whether now owned or
hereafter acquired, or acquire by purchase or otherwise all or
substantially all the business, Property or assets of, or stock or
other evidence of beneficial ownership of, any Person, except for
the formation of Marine Subsidiaries, the sale and transfer of all
of its ownership interest (whether Stock or otherwise) in any
Marine Subsidiary to an Equipment Growth Fund and the acquisition
or resale of Equipment in the ordinary course of business and as
contemplated by this Agreement.
6.7 Transactions with Affiliates. Borrower shall not, and
shall not permit any Marine Subsidiary to, directly or indirectly,
enter into or permit to exist any transaction (including, without
limitation, the purchase, sale, lease or exchange of any property
or the rendering of any service) with any of its Affiliates on
terms that are less favorable to Borrower or such Marine Subsidiary
than those that might be obtained at the time from Persons who are
not such Affiliates.
6.8 No Loans to Affiliates. Borrower shall not make any
loans to any of its Affiliates other than to its Marine
Subsidiaries.
6.9 No Investment. Borrower shall not make or suffer to
exist, or permit or suffer any of its Marine Subsidiaries to make
or suffer to exist, any Investment except the sharing arrangements
with respect to Equipment which are shared with Equipment Growth
Funds.
6.10 Maintenance of Business. Borrower shall not engage in
any business other than the purchase of transportation equipment
and the operation, leasing, remarketing and resale of such
equipment.
6.11 No Modification to Leases. Borrower shall not modify or
agree to modify any material term of any Lease to which it is a
party without the written consent of Agent, which consent will not
be unreasonably withheld. For purposes of this Section 6.11,
material Lease terms shall include, without limitation, terms
relating to lease payments, maturity and the amount and scope of
the lessee's insurance coverage.
6.12 No Subsidiaries. Borrower shall not create any
Subsidiaries except Marine Subsidiaries.
6.13 Amendments of Charter Documents. Borrower shall not
amend its articles of incorporation, bylaws and any other charter
documents or permit any Marine Subsidiary to amend its articles of
incorporation, bylaws or other charter documents.
6.14 Amendments of Equipment Purchase Agreement. Borrower
shall not, shall not cause to occur and shall not permit any
amendment, modification or supplement of any of the terms or
provisions of the Equipment Purchase Agreement.
6.15 Events of Default. Borrower shall not take or omit to
take any action, which act or omission would, with the lapse of
time, or otherwise constitute (a) a default, event of default
or Event of Default under any of the Loan Documents or (b) a
default or an event of default under any other material agreement,
contract, lease, license, mortgage, deed of trust or instrument to
which it is a party or by which it or any of its Properties or
assets is bound, which default or event of default may have a
Material Adverse Effect.
6.16 ERISA.
(a) Neither Borrower nor any ERISA Affiliate of Borrower
shall incur any obligation to contribute to a Pension Plan required
by a collective bargaining agreement or as a consequence of the
acquisition of an ERISA Affiliate, unless (i) Borrower or such
ERISA Affiliate shall notify Agent in writing that it intends to
incur such obligation and (ii) after Agent's receipt of such
notice, Requisite Lenders consent to the establishment or
maintenance of, or Borrower's incurring an obligation to contribute
to, the Pension Plan, which consent may not unreasonably be
withheld but may be subject to such reasonable conditions as
Requisite Lenders may require.
\US If Borrower or any ERISA Affiliate of Borrower
incurs any obligation to contribute to any Pension Plan, then
Borrower shall not (i) terminate, or permit such ERISA Affiliate to
terminate, any Pension Plan so as to result in any liability that
would have a Material Adverse Effect or (ii) make or permit such
ERISA Affiliate to make a complete or partial withdrawal (within
the meaning of Section 4201 of ERISA) from any Multiemployer Plan
so as to result in any liability that would have a Material Adverse
Effect.
6.17 No Use of any Lender's Name. Borrower shall not use or
authorize others to use any Lender's name or marks in any
publication or medium, including, without limitation, any
prospectus, without such Lender's advance written authorization.
6.18 Certain Accounting Changes. Borrower shall not change
its fiscal year end from December 31, nor make any change in its
accounting treatment and reporting practices except as required by
GAAP.
SECTION 7. FINANCIAL COVENANTS OF BORROWER.
Borrower covenants and agrees that, so long as the Commitments
hereunder shall be available, and until full, complete and
indefeasible payment and performance of the Obligations, including,
without limitation, all Loans evidenced by the Note, unless
Requisite Lenders shall otherwise consent in writing, Borrower
shall perform the following financial covenants. Borrower agrees
and understands that (except as expressly provided herein) all
covenants under this Section 7 shall be subject to quarterly
compliance (as measured on the last day of each fiscal quarter of
Borrower), and in each case review by Lenders of the respective
fiscal quarter's consolidated financial statements delivered to
Agent by Borrower pursuant to Section 5.1.
7.1 Minimum Consolidated Tangible Net Worth. Borrower at all
times maintain a Consolidated Tangible Net Worth of not less than
twenty percent (20.0%) of the net book value of Eligible Inventory.
SECTION 8. EVENTS OF DEFAULT AND REMEDIES.
8.1 Events of Default. The occurrence of any one or more of
the following shall constitute an Event of Default:
(a) Borrower, FSI or any Owner Trustee fails to pay any
sum due to Lenders or Agent arising under this Agreement, the Note
or any of the other Loan Documents when and as the same shall
become due and payable, whether by acceleration or otherwise and
such failure shall not have been cured to Lenders' satisfaction
within five (5) calendar days; or
(b) (i) Borrower or any Marine Subsidiary or any Owner
Trustee thereof defaults in the repayment of any principal of or
the payment of any interest on any Indebtedness of Borrower or such
Marine Subsidiary or Owner Trustee, or breaches any term of any
evidence of such Indebtedness or defaults in any payment in respect
of any Contingent Obligation, (ii) FSI, TEC or any Owner Trustee
thereof defaults in the repayment of any principal of or the
payment of any interest on any Indebtedness of FSI or TEC,
respectively, or breaches any term of any evidence of such
Indebtedness or defaults in any payment in respect of any
Contingent Obligations, in each case exceeding, in the aggregate
outstanding principal amount, $1,000,000, (iii) Borrower, any
Marine Subsidiary, FSI, TEC or any Owner Trustee breaches or
violates any term or provision of any evidence of such Indebtedness
or Contingent Obligation or of any such loan agreement, mortgage,
indenture, guaranty or other agreement relating thereto if the
effect of such breach is to permit acceleration under the
applicable instrument, loan agreement, mortgage, indenture,
guaranty or other agreement and such failure shall not have been
cured within the applicable cure period, or there is an
acceleration under the applicable instrument, loan agreement,
mortgage, indenture, guaranty or other agreement, or (iv) PLMI
defaults in the repayment of any principal of or the payment of any
interest on any Indebtedness, including, without limitation,
Indebtedness arising under or in respect of the Senior Agreement or
defaults in any payment in respect of any Contingent Obligation, in
each case exceeding, in the aggregate outstanding principal amount,
$1,000,000, or PLMI breaches or violates any term or provision of
any evidence of such Indebtedness or Contingent Obligation or of
any such loan agreement, mortgage, indenture, guaranty or other
agreement relating thereto with the result that such Indebtedness
or Contingent Obligation becomes or is caused to become then due
and payable in its entirety, whether by acceleration of otherwise;
or
(c) Borrower fails or neglects to perform, keep or
observe any of the covenants contained in Sections 2.1.3, 5.2, 5.3,
5.9, 5.11, 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.10, 6.11,
6.12, 6.13 and 6.14, or any of the financial covenants contained in
Section 7 of this Agreement; or
(d) Any representation or warranty made by or on behalf
of Borrower or FSI in this Agreement or any statement or
certificate at any time given in writing pursuant hereto or in
connection herewith shall be false, misleading or incomplete in any
material respect when made; or
(e) Except as provided in Sections 8.1(a) and (c),
Borrower, FSI or any Marine Subsidiary or Owner Trustee fails or
neglects to perform, keep or observe any covenant or provision of
this Agreement or of any of the other Loan Documents or any other
document or agreement executed by Borrower, FSI or any Marine
Subsidiary or Owner Trustee in connection therewith and the same
has not been cured to Requisite Lenders' satisfaction within thirty
(30) calendar days after Borrower, FSI or any Marine Subsidiary or
Owner Trustee shall become aware thereof, whether by written notice
from Agent or any Lender or otherwise; or
(f) Borrower, any Marine Subsidiary, FSI, TEC, PLMI or
any Owner Trustee or any other guarantor of any of Borrower's or
FSI's obligations to Lenders shall (i) cease to be Solvent,
(ii) admit in writing its inability to pay its debts as they
mature, (iii) make an assignment for the benefit of creditors,
(iv) apply for or consent to the appointment of a receiver,
liquidator, custodian or trustee for it or for a substantial part
of its Properties or business, or such a receiver, liquidator,
custodian or trustee otherwise shall be appointed and shall not be
discharged within sixty (60) days after such appointment; or
(g) Bankruptcy, insolvency, reorganization or
liquidation proceedings or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors shall be
instituted by or against Borrower, any Marine Subsidiary, FSI, TEC,
PLMI or any Owner Trustee or any other guarantor of any of
Borrower's or FSI's obligations to Lenders or any order, judgment
or decree shall be entered against Borrower, any Marine Subsidiary,
FSI, TEC, PLMI or any Owner Trustee or any other guarantor of any
of Borrower's or FSI's obligations to Lenders decreeing its
dissolution or division; provided, however, with respect to an
involuntary petition in bankruptcy, such petition shall not have
been dismissed within sixty (60) days after the filing of such
petition; or
(h) There shall have been a change in the assets,
liabilities, financial condition, operations, affairs or prospects
of Borrower, any Marine Subsidiary, FSI, TEC, PLMI or any Owner
Trustee or any other guarantor of any of Borrower's or FSI's
obligations to Lenders which, in the reasonable determination of
Requisite Lenders has, either individually or in the aggregate, had
a Material Adverse Effect; or
(i) There shall be a money judgment, writ or warrant of
attachment or similar process entered or filed against Borrower,
any Marine Subsidiary, FSI, TEC or any Owner Trustee which (net of
insurance coverage) remains unvacated, unbonded, unstayed or unpaid
or undischarged for more than sixty (60) days (whether or not
consecutive) or in any event later than five (5) calendar days
prior to the date of any proposed sale thereunder, which, together
with all such other unvacated, unbonded, unstayed, unpaid and
undischarged judgments or attachments against Borrower or any
Marine Subsidiary in any amount; against FSI exceeds in the
aggregate $500,000; against TEC exceeds in the aggregate $500,000;
or against any Owner Trustee exceeds in the aggregate $1,000,000;
or against any combination of the foregoing Persons exceeds in the
aggregate $1,000,000; or
(j) Any of the Loan Documents shall for any reason other
than the full, complete and indefeasible satisfaction of the
Obligations thereunder cease to be, or be asserted by Borrower,
FSI, TEC or any Marine Subsidiary or Owner Trustee not to be, a
legal, valid and binding obligation of Borrower, FSI, TEC or any
such Marine Subsidiary or Owner Trustee, respectively, enforceable
against such Person in accordance with its terms; or
(k) Without limiting the generality of, and in addition
to the events described in Section 8.1(a), the occurrence of any
"Event of Default" as defined under the Growth Fund Agreement or
any other loan or security document related to the Growth Fund
Agreement; or
(l) Borrower shall at any time fail either (i) to have
at least one member of its board of directors be an outside
independent director, not employed or otherwise engaged as an
officer, employee, consultant, director or in any other capacity by
PLMI or any of its Subsidiaries or (ii) to have (1) at least one
member of its board of directors be a Person who is not a member of
the board of directors of PLMI or any of its other Subsidiaries and
(2) at least one additional member of its board of directors be a
Person who is not an inside director, whether employed as an
officer or employee, of PLMI or any of its other Subsidiaries and
is not the Chairman of the Board of PLMI; or
(m) Any Equipment Growth Fund shall at any time acquire
record or beneficial title to any item of transportation equipment
through any Person other than Borrower or TEC; or
(n) A criminal proceeding shall have been filed in any
court naming Borrower or any Marine Subsidiary or Owner Trustee as
a defendant for which forfeiture is a potential penalty under
applicable federal or state law which, in the reasonable
determination of Requisite Lenders, may have a Material Adverse
Effect; or
(o) Any Governmental Authority enters a decree, order or
ruling ("Government Action") which will materially and adversely
affect Borrower's, any Marine Subsidiary's, FSI's, TEC's, or PLMI's
financial condition, operations or ability to perform or pay such
party's obligations arising under this Agreement or any instrument
or agreement executed pursuant to the terms of this Agreement or
which will similarly affect any Owner Trustee. Borrower or FSI
shall have thirty (30) days from the earlier of the date
(a) Borrower or FSI, as applicable, first discovers it is the
subject of Government Action or (b) a Lender or any agency gives
notice of Government Action to take such steps as are necessary to
obtain relief from the Government Action. For the purpose of this
paragraph, "relief from Government Action" means to discharge or to
obtain a dismissal of or release or relief from (i) any Government
Action so that the affected party or parties do not incur (v) any
monetary liability in the case of Borrower or any Marine
Subsidiary, (w) monetary liability of more than $500,000 in the
case of FSI, (x) monetary liability of more than $500,000 in the
case of TEC, (y) monetary liability of more than $1,000,000 in the
case of PLMI, or (z) monetary liability of more than $1,000,000, in
the aggregate, in the case of any combination of the foregoing
Persons, or (ii) any disqualification of or other limitation on the
operation of Borrower, any Marine Subsidiary, FSI, TEC, and PLMI,
or any of them, which in the reasonable determination of the
Requisite Lenders may have a Material Adverse Effect; or
(p) Any Governmental Authority, including, without
limitation, the SEC, shall enter a decree, order or ruling
prohibiting the Equipment Growth Funds from releasing or paying to
FSI any funds in the form of management fees, profits or otherwise
which, in the reasonable determination of Requisite Lenders, may
have a Material Adverse Effect.
8.2 Waiver of Default. An Event of Default may be waived
only with the written consent of Requisite Lenders, or if expressly
provided, of all Lenders. Any Event of Default so waived shall be
deemed to have been cured and not to be continuing; but no such
waiver shall be deemed a continuing waiver or shall extend to or
affect any subsequent like default or impair any rights arising
therefrom.
8.3 Remedies. Upon the occurrence and continuance of any
Event of Default or Potential Event of Default, Lenders shall have
no further obligation to advance money or extend credit to or for
the benefit of Borrower.
In addition, upon the occurrence and during the continuance of
an Event of Default, Lenders or Agent, on behalf of Lenders, may,
at the option of Requisite Lenders, do any one or more of the
following, all of which are hereby authorized by Borrower:
(a) Declare all or any of the Obligations of the
Borrower under this Agreement, the Note, the other Loan Documents
and any other instrument executed by Borrower pursuant to the Loan
Documents to be immediately due and payable, and upon such
declaration such obligations so declared due and payable shall
immediately become due and payable; provided that if such Event of
Default is under part (f) or (g) of Section 8.1, then all of the
Obligations shall become immediately due and payable forthwith
without the requirement of any notice or other action by Lenders or
Agent;
(b) Terminate this Agreement as to any future liability
or obligation of Agent or Lenders; and
(c) Exercise in addition to all other rights and
remedies granted hereunder, any and all rights and remedies granted
under the Loan Documents or otherwise available at law or in
equity.
8.4 Set-Off.
(a) During the continuance of an Event of Default, any
deposits or other sums credited by or due from any Lender to
Borrower, TEC or FSI (exclusive of deposits in accounts expressly
held in the name of third parties or held in trust for benefit of
third parties) may be set-off against the Obligations and any and
all other liabilities, direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising, of
Borrower, TEC or FSI to Lenders. Each Lender agrees to notify
promptly Borrower, TEC or FSI and Agent of any such set-off;
provided, that the failure to give such notice shall not affect the
validity of any such set-off.
(b) Each Lender agrees that if it shall, whether by
right of set-off, banker's lien or similar remedy pursuant to
Section 8.4(a), obtain any payment as a result of which the
outstanding and unpaid principal portion of the Commitments of such
Lender shall be less than such Lender's Pro Rata Share of the
outstanding and unpaid principal portion of the aggregate of all
Commitments, such Lender receiving such payment shall
simultaneously purchase from each other Lender a participation in
the Commitments held by such Lenders so that the outstanding and
unpaid principal amount of the Commitments and participations in
Commitments of such Lender shall be in the same proportion to the
unpaid principal amount of the aggregate of all Commitments then
outstanding as the unpaid principal amount under the Commitments of
such Lender outstanding immediately prior to receipt of such
payment was to the unpaid principal amount of the aggregate of all
Commitments outstanding immediately prior to such Lender's receipt
of such payment; provided, however, that if any such purchase shall
be made pursuant to this Section 8.4(b) and the payment giving rise
thereto shall thereafter be recovered, such purchase shall be
rescinded to the extent of such recovery and the purchase price
restored without interest. Borrower expressly consents to the
foregoing arrangements and agrees that any Lender holding a
participation in a Commitment deemed to have been so purchased may
exercise any and all rights of set-off, banker's lien or similar
remedy with respect to any and all moneys owing by Borrower to such
Lender as fully as if such Lender held a Commitment in the amount
of such participation.
8.5 Rights and Remedies Cumulative. The enumeration of the
rights and remedies of Agent and Lenders set forth in this
Agreement is not intended to be exhaustive and the exercise by
Agent and Lenders of any right or remedy shall not preclude the
exercise of any other rights or remedies, all of which shall be
cumulative, and shall be in addition to any other right or remedy
given hereunder or under the Loan Documents or that may now or
hereafter exist in law or in equity or by suit or otherwise. No
delay or failure to take action on the part of Agent and Lenders in
exercising any right, power or privilege shall operate as a waiver
hereof, nor shall any single or partial exercise of any such right,
power or privilege preclude other or further exercise thereof or
the exercise of any other right, power or privilege or shall be
construed to be a waiver of any Event of Default or Potential Event
of Default. No course of dealing between Borrower, Agent, and
Lenders or their respective agents or employees shall be effective
to change, modify or discharge any provision of this Agreement or
any of the Loan Documents or to constitute a waiver of any Event of
Default or Potential Event of Default.
SECTION 9. AGENT.
9.1 Appointment. Each of the Lenders hereby irrevocably
designates and appoints First Union National Bank of North Carolina
as the Agent of such Lender under this Agreement and the other Loan
Documents, and each such Lender irrevocably authorizes First Union
National Bank of North Carolina as the Agent for such Lender to
take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers
and perform such duties as are expressly delegated to the Agent by
the terms of this Agreement and such other Loan Documents, together
with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this
Agreement or such other Loan Documents, the Agent shall not have
any duties or responsibilities, except those expressly set forth
herein and therein, or any fiduciary relationship with any Lender,
and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or the
other Loan Documents or otherwise exist against Agent. To the
extent any provision of this Agreement permits action by Agent,
Agent shall, subject to the provisions of this Section 9, take such
action if directed in writing to do so by the Requisite Lenders.
9.2 Delegation of Duties. Agent may execute any of its
duties under this Agreement and the other Loan Documents by or
through agents or attorneys-in-fact and shall be entitled to advice
of counsel concerning all matters pertaining to such duties. Agent
shall not be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by it with reasonable care.
9.3 Exculpatory Provisions. Neither Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (a) liable for any action lawfully taken or
omitted to be taken by it or such Person under or in connection
with this Agreement or the other Loan Documents (except for its or
such Person's own gross negligence or willful misconduct), or
(b) responsible in any manner to any Lender for any recitals,
statements, representations or warranties made by Borrower or any
officer thereof contained in this Agreement or the other Loan
Documents or in any certificate, report, statement or other
document referred to or provided for in, or received by Agent under
or in connection with, this Agreement or the other Loan Documents
or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or the other Loan
Documents or for any failure of Borrower to perform its obligations
hereunder or thereunder. Agent shall not be under any obligation
to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions
of, this Agreement, or to inspect the Properties, books or records
of Borrower.
9.4 Reliance by Agent. Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing,
resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it
to be genuine and correct and to have been signed, sent or made by
the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to Borrower),
independent accountants and other experts selected by Agent. Agent
may deem and treat the payee of any promissory note issued pursuant
to this Agreement as the owner thereof for all purposes unless such
promissory note shall have been transferred in accordance with
Section 11.10 hereof. Agent shall be fully justified in failing or
refusing to take any action under this Agreement and the other Loan
Documents unless it shall first receive such advice or concurrence
of the Requisite Lenders as it deems appropriate or it shall first
be indemnified to its satisfaction by Lenders against any and all
liability and expense which may be incurred by it by reason of
taking or continuing to take any such action except for its own
gross negligence or willful misconduct. Agent shall in all cases
be fully protected in acting, or in refraining from acting, under
this Agreement in accordance with a request of the Requisite
Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all Lenders.
9.5 Notice of Default. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Event of Default or
Potential Event of Default hereunder unless Agent has received
notice from a Lender or Borrower referring to this Agreement,
describing such Event of Default or Potential Event of Default and
stating that such notice is a "notice of default". In the event
that Agent receives such a notice, Agent shall promptly give notice
thereof to Lenders. The Agent shall take such action with respect
to such Event of Default or Potential Event of Default as shall be
reasonably directed by the Requisite Lenders; provided that unless
and until Agent shall have received such directions, Agent may (but
shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Event of Default or Potential
Event of Default as it shall deem advisable in the best interests
of Lenders.
9.6 Non-Reliance on Agent and Other Lenders. Each Lender
expressly acknowledges that neither Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has
made any representations or warranties to it and that no act by
Agent hereinafter taken, including any review of the affairs of
Borrower, shall be deemed to constitute any representation or
warranty by Agent to any Lender. Each Lender represents to Agent
that it has, independently and without reliance upon Agent or any
other Lender, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation
into the business, operations, property, financial and other
condition and creditworthiness of Borrower and made its own
decision to make its Loans hereunder and enter into this Agreement.
Each Lender also represents that it will, independently and without
reliance upon Agent or any other Lender, and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions
in taking or not taking action under this Agreement and the other
Loan Documents, and to make such investigation as it deems
necessary to inform itself as to the business, operations,
property, financial and other condition and creditworthiness of
Borrower. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by Agent
hereunder or by the other Loan Documents, Agent shall not have any
duty or responsibility to provide any Lender with any credit or
other information concerning the business, operations, property,
financial and other condition or creditworthiness of Borrower which
may come into the possession of Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
9.7 Indemnification. Each Lender agrees to indemnify Agent
in its capacity as such (to the extent not reimbursed by Borrower
and without limiting the obligation of Borrower to do so), ratably
according to the respective amounts of their Pro Rata Share of the
Commitments, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any
time (including, without limitation, at any time following the
payment of the Loans) be imposed on, incurred by or asserted
against Agent in any way relating to or arising out of this
Agreement or the other Loan Documents, or any documents
contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or
omitted by Agent under or in connection with any of the foregoing;
provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements resulting solely from Agent's bad faith, gross
negligence or willful misconduct. The agreements in this Section
9.7 shall survive the repayment of the Loans and all other amounts
payable hereunder.
9.8 Agent in Its Individual Capacity. Agent and its
Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with Borrower as though Agent were
not Agent hereunder. With respect to Advances made or renewed by
it, Agent shall have the same rights and powers under this
Agreement and the other Loan Documents as any Lender and may
exercise the same as though it were not Agent, and the terms
"Lender" and "Lenders" shall include Agent in its individual
capacity.
9.9 Resignation and Appointment of Successor Agent. Agent
may resign at any time by giving thirty (30) days' prior written
notice thereof to Lenders and Borrower; provided, however, that the
retiring Agent shall continue to serve until a successor Agent
shall have been selected and approved pursuant to this Section 9.9.
Upon any such notice, Agent shall have the right to appoint a
successor Agent; provided, however, that if such successor shall
not be a signatory to this Agreement, such appointment shall be
subject to the consent of Requisite Lenders. Agent may be replaced
by the Requisite Lenders, with or without cause; provided, however,
that any successor agent shall be subject to Borrower's consent,
which consent shall not be unreasonably withheld. Upon the
acceptance of any appointment as an Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations under this Agreement. After any retiring
Agent's resignation hereunder as Agent, the provisions of this
Section 9 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement.
SECTION 10. EXPENSES AND INDEMNITIES.
10.1 Expenses. Borrower agrees to pay promptly on demand,
and, subject to Section 3.1, in any event within thirty (30) days
of the invoice date therefor, (a) all costs, expenses, charges and
other disbursements (including, without limitation, all reasonable
attorneys' fees and allocated expenses of outside counsel and
in-house legal staff) incurred by or on behalf of Agent or any
Lender in connection with the preparation of the Loan Documents and
all amendments and modifications thereof, extensions thereto or
substitutions therefor, and all costs, expenses, charges or other
disbursements incurred by or on behalf of Agent or any Lender
(including, without limitation all reasonable attorney's fees and
allocated expenses of outside counsel and in-house legal staff) in
connection with the furnishing of opinions of counsel (including,
without limitation, any opinions requested by Lenders as to any
legal matters arising hereunder) and of Borrower's performance of
and compliance with all agreements and conditions contained herein
or in any of the other Loan Documents on its part to be performed
or complied with; (b) all other costs, expenses, charges and other
disbursements incurred by or on behalf of Agent or any Lender in
connection with the negotiation, preparation, execution, adminis-
tration, continuation and enforcement of the Loan Documents, and
the making of the Loans hereunder; (c) all costs, expenses, charges
and other disbursements (including, without limitation, all
reasonable attorney's fees and allocated expenses of outside
counsel and in-house legal staff) incurred by or on behalf of Agent
or FUNB in connection with the assignment or attempted assignment
to any other Person of all or any portion of any Lender's interest
under this Agreement pursuant to Section 11.10; and (d) regardless
of the existence of an Event of Default or Potential Event of
Default, all legal, appraisal, audit, accounting, consulting or
other fees, costs, expenses, charges or other disbursements
incurred by or on behalf of Agent or any Lender in connection with
any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Lenders, Agent, Borrower or any other
Person) seeking to enforce any Obligations of, or collecting any
payments due from, Borrower under this Agreement and the Note, all
of which amounts shall be deemed to be part of the Obligations.
Notwithstanding anything to the contrary contained in this Section
10.1, so long as no Event of Default or Potential Event of Default
shall have occurred and be continuing, all appraisals of the
Eligible Inventory shall be at the expense of Lenders. If an Event
of Default or Potential Event of Default shall have occurred and be
continuing, such appraisals shall be at the expense of Borrower.
10.2 Indemnification. Whether or not the transactions
contemplated hereby shall be consummated:
(a) General Indemnity. Borrower shall pay, indemnify,
and hold each Lender, Agent and each of their respective officers,
directors, employees, counsel, agents and attorneys-in-fact (each,
an "Indemnified Person") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses or disbursements
(including reasonable attorney's fees and the allocated cost of in-
house counsel) of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of
this Agreement and any other Loan Documents, or the transactions
contemplated hereby and thereby, and with respect to any
investigation, litigation or proceeding (including any case, action
or proceeding before any court or other Governmental Authority
relating to bankruptcy, reorganization, insolvency, liquidation,
dissolution or relief of debtors or any appellate proceeding)
related to this Agreement or the Loans or the use of the proceeds
thereof, whether or not any Indemnified Person is a party thereto
(all the foregoing, collectively, the "Indemnified Liabilities");
provided, that Borrower shall have no obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities arising
from the gross negligence or willful misconduct of such Indemnified
Person.
(b) Environmental Indemnity.
(i) Borrower hereby agrees to indemnify,
defend and hold harmless each Indemnified Person, from and
against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses
or disbursements (including reasonable attorneys' fees and the
allocated cost of in-house counsel and internal environmental
audit or review services), which may be incurred by or
asserted against such Indemnified Person in connection with or
arising out of any pending or threatened investigation,
litigation or proceeding, or any action taken by any Person,
with respect to any Environmental Claim arising out of or
related to any Property owned, leased or operated by Borrower.
No action taken by legal counsel chosen by Agent or any Lender
in defending against any such investigation, litigation or
proceeding or requested remedial, removal or response action
(except for actions which constitute fraud, willful
misconduct, gross negligence or material violations of law)
shall vitiate or in any way impair Borrower's obligation and
duty hereunder to indemnify and hold harmless Agent and each
Lender. Agent and Lenders agree to use reasonable efforts to
cooperate with Borrower respecting the defense of any matter
indemnified hereunder, except insofar as and to the extent
that their respective interests may be adverse to Borrower's,
in Agent's and each Lenders' sole discretion.
(ii) In no event shall any site visit,
observation, or testing by Agent or any Lender be deemed a
representation or warranty that Hazardous Materials are or are
not present in, on, or under the site, or that there has been
or shall be compliance with any Environmental Law. Neither
Borrower nor any other Person is entitled to rely on any site
visit, observation, or testing by Agent or any Lender. Except
as otherwise provided by law, neither Agent nor any Lender
owes any duty of care to protect Borrower or any other Person
against, or to inform Borrower or any other party of, any
Hazardous Materials or any other adverse condition affecting
any site or Property. Neither Agent nor any Lender shall be
obligated to disclose to Borrower or any other Person any
report or findings made as a result of, or in connection with,
any site visit, observation, or testing by Agent or any
Lender.
(c) Survival; Defense. The obligations in this
Section 10.2 shall survive payment of all other Obligations. At
the election of any Indemnified Person, Borrower shall defend such
Indemnified Person using legal counsel satisfactory to such
Indemnified Person in such Person's sole discretion, at the sole
cost and expense of Borrower. All amounts owing under this
Section 10.2 shall be paid within thirty (30) days after written
demand.
SECTION 11. MISCELLANEOUS.
11.1 Survival. All covenants, agreements, representations and
warranties made herein shall survive the execution and delivery of
the Loan Documents and the making of the Loans hereunder.
11.2 No Waiver by Agent or Lenders. No failure or delay on
the part of Agent or any Lender in the exercise of any power, right
or privilege under this Agreement, the Note or any of the other
Loan Documents shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right
or privilege preclude other or further exercise thereof or of any
other right, power or privilege.
11.3 Notices. Except as otherwise provided in this 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 telex, facsimile, telecopy,
computer transmission 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, and addressed as set forth
on the signature pages to this Agreement or at such other address
as may be substituted by notice given as herein provided. The
giving of any notice required hereunder may be waived in writing by
the party entitled to receive such notice. 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 telex, facsimile, telecopy or
computer transmission (with appropriate answerback), 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.
11.4 Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose
or be given any substantive effect.
11.5 Severability. Whenever possible, each provision of this
Agreement, the Note and each of the other Loan Documents shall be
interpreted in such a manner as to be valid, legal and enforceable
under the applicable law of any jurisdiction. Without limiting the
generality of the foregoing sentence, in case any provision of this
Agreement, the Note or any of the other Loan Documents shall be
invalid, illegal or unenforceable under the applicable law of any
jurisdiction, the validity, legality and enforceability of the
remaining provisions, or of such provision in any other
jurisdiction, shall not in any way be affected or impaired thereby.
11.6 Entire Agreement; Construction; Amendments and Waivers.
(a) This Agreement, the Note and each of the other Loan
Documents dated as of the date hereof, taken together, constitute
and contain the entire agreement among Borrower, Lenders and Agent
and supersede any and all prior agreements, negotiations,
correspondence, understandings and communications between the
parties, whether written or oral, respecting the subject matter
hereof.
(b) This Agreement is the result of negotiations between
and has been reviewed by each of Borrower, the Lenders executing
this Agreement as of the Closing Date and Agent and their
respective counsel; accordingly, this Agreement shall be deemed to
be the product of the parties hereto, and no ambiguity shall be
construed in favor of or against Borrower, Lenders or Agent.
Borrower, Lenders and Agent agree that they intend the literal
words of this Agreement and the other Loan Documents and that no
parol evidence shall be necessary or appropriate to establish
Borrower's, any Lender's or Agent's actual intentions.
(c) No amendment, modification, discharge or waiver of
or consent to any departure by Borrower or FSI from, any provision
in this Agreement or any of the other Loan Documents relating to
(i) the definition of "Borrowing Base" or "Requisite Lenders," (ii)
any increase of the amount of any Commitment, (iii) any reduction
of principal, interest or fees payable hereunder, (iv) any
postponement of any date fixed for any payment or prepayment of
principal or interest hereunder or (v) this Section 11.6(c) shall
be effective without the written consent of all Lenders. Any and
all other amendments, modifications, discharges or waivers of, or
consents to any departures from any provision of this Agreement or
of any of the other Loan Documents shall not be effective without
the written consent of the Requisite Lenders. Any waiver or
consent with respect to any provision of the Loan Documents shall
be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on Borrower
in any case shall entitle Borrower to any other or further notice
or demand in similar or other circumstances. Any amendment,
modification, waiver or consent effected in accordance with this
Section 11.6 shall be binding upon each Lender then party hereto
and each subsequent Lender, and on Borrower.
11.7 Reliance by Lenders. All covenants, agreements,
representations and warranties made herein by Borrower shall,
notwithstanding any investigation by Lenders or Agent be deemed to
be material to and to have been relied upon by Lenders.
11.8 Marshalling; Payments Set Aside. Lenders shall be under
no obligation to marshall any assets in favor of Borrower or any
other person or against or in payment of any or all of the
Obligations. To the extent that Borrower makes a payment or
payments to Lenders or Agent, or Lenders or Agent, on behalf of
Lenders, enforce their or its Liens or exercises their or its
rights of set-off, and such payment or payments or the proceeds of
such enforcement or set-off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party
under Title 11 of the United States Code or under any other similar
federal or state law, common law or equitable cause, then to the
extent of such recovery the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full
force and effect as if such payment had not been made or such
enforcement or set-off had not occurred.
11.9 No Set-Offs by Borrower. All sums payable by Borrower
pursuant to this Agreement, the Note or any of the other Loan
Documents shall be payable without notice or demand and shall be
payable in United States Dollars without set-off or reduction of
any manner whatsoever.
11.10 Binding Effect, Assignment.
(a) This Agreement, the Note and the other Loan
Documents shall be binding upon and shall inure to the benefit of
the parties hereto and thereto and their respective successors and
assigns, except that Borrower may not assign its rights hereunder
or thereunder or any interest herein or therein without the prior
written consent of each Lender. Each Lender shall (i) have the
right in accordance with this Section 11.10 to sell and assign to
any Eligible Assignee all or any portion of its interest under this
Agreement, the Note and the other Loan Agreements subject to the
prior written consent of Borrower, which consent shall not be
unreasonably withheld, and (ii) to grant any participation or other
interest herein or therein, except that each potential participant
to which a Lender intends to grant any rights under Sections 2.11,
2.12, 5.1 or 10.2 shall be subject to the prior written consent of
Borrower, which consent shall not be unreasonably withheld;
provided, however, that no such sale, assignment or participation
grant shall result in requiring registration under the Securities
Act of 1933, as amended, or qualification under any state
securities law.
(b) Subject to the limitations of this Section 11.10(b),
each Lender may sell and assign, from time to time, all or any
portion of its Pro Rata Share of the Commitments to any of its
Affiliates or, with the approval of Borrower (which approval shall
not be unreasonably withheld), to any other financial institution
acceptable to Agent, subject to the assumption by such assignee of
the share of the Commitments so assigned. The assignment to such
Affiliate or other financial institution shall be evidenced by a
written instrument of assignment and assumption executed by the
assignor Lender (hereinafter from time to time referred to as the
"Assignor Lender") and such Affiliate or other financial
institution (which, upon such assignment shall become a Lender
hereunder (hereinafter from time to time referred to as the
"Assignee Lender")) containing terms mutually acceptable to them
and approved in writing as to form by Borrower (which approval
shall not be unreasonably withheld). The instrument of assignment
and assumption need not include any of the economic or financial
terms upon which such Assignee Lender receives the assignment from
the Assignor Lender, and such terms need not be disclosed to or
approved by Borrower; provided only that such terms do not diminish
the obligations undertaken by such Assignee Lender in the
instrument of assignment and assumption or increase the obligations
of Borrower under this Agreement. Upon execution of such
instrument of assignment and assumption, (i) the definition of
"Commitments" in Section 1 hereof and the Pro Rata Shares set forth
therein shall be deemed to be amended to reflect each Lender's
share of the Commitments, giving effect to the assignment and
(ii) the Assignee Lender shall, from the effective date of the
instrument of assignment and assumption, be subject to all of the
obligations, and entitled to all of the rights, of a Lender
hereunder, except as may be expressly provided to the contrary in
the instrument of assignment and assumption. To the extent the
obligations hereunder of the Assignor Lender are assumed by the
Assignee Lender, the Assignor Lender shall be relieved of such
obligations. Upon the assignment of any interest by any Assignor
Lender pursuant to this Section 11.10(b), such Assignor Lender
agrees to supplement Schedule 1.1 to show the date of such
assignment, the Assignor Lender, the Assignee Lender, the Assignee
Lender's address for notice purposes and the amount of the
Commitments so assigned.
(c) Subject to the limitations of this Section 11.10(c),
any Lender may also grant, from time to time, participation
interests in the interests of such Lender under this Agreement, the
Note and the other Loan Documents to any other financial
institution without notice to, or approval of, Borrower. The grant
of such a participation interest shall be on such terms as the
granting Lender determines are appropriate, provided only that
(i) the holder of such participation interest shall not have any of
the rights of a Lender under this Agreement except, if the
participation agreement expressly provides, rights under
Sections 2.11, 2.12, 5.1 and 10.2, and (ii) the consent of the
holder of such a participation interest shall not be required for
amendments or waivers of provisions of the Loan Documents other
than, if the participation agreement expressly provides, those
which (A) increase the monetary amount of any Commitment,
(B) decrease any fee or any other monetary amount payable to
Lenders, or (C) extend the date upon which any monetary amount is
payable to Lenders.
11.11 Counterparts. This Agreement and any amendments,
waivers, consents or supplements hereto may be executed in any
number of counterparts, and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall
constitute but one and the same instrument. Each such agreement
shall become effective upon the execution of a counterpart hereof
or thereof by each of the parties hereto or thereto, delivery of
each such counterpart to Agent.
11.12 Equitable Relief. Borrower recognize that, in the
event Borrower fails to perform, observe or discharge any of its
obligations or liabilities under this Agreement, the Note or any of
the other Loan Agreements, any remedy at law may prove to be
inadequate relief to Lenders or Agent; therefore, Borrower agrees
that Lenders or Agent, if Lenders or Agents so request, shall be
entitled to temporary and permanent injunctive relief in any such
case without the necessity of proving actual damages.
11.13 Written Notice of Claims; Claims Bar. BORROWER
HEREBY AGREES THAT IT SHALL GIVE PROMPT WRITTEN NOTICE OF ANY CLAIM
OR CAUSE OF ACTION IT BELIEVES IT HAS, OR MAY SEEK TO ASSERT OR
ALLEGE AGAINST ANY LENDER OR AGENT, WHETHER SUCH CLAIM IS BASED IN
LAW OR EQUITY, ARISING UNDER OR RELATED TO THIS AGREEMENT, THE NOTE
OR ANY OF THE OTHER LOAN DOCUMENTS OR TO THE LOANS CONTEMPLATED
HEREBY OR THEREBY OR ANY ACT OR OMISSION TO ACT BY ANY LENDER OR
AGENT WITH RESPECT HERETO OR THERETO, AND THAT IF IT SHALL FAIL TO
GIVE SUCH PROMPT NOTICE TO AGENT WITH REGARD TO ANY SUCH CLAIM OR
CAUSE OF ACTION, IT SHALL BE DEEMED TO HAVE WAIVED, AND SHALL BE
FOREVER BARRED FROM BRINGING OR ASSERTING SUCH CLAIM OR CAUSE OF
ACTION IN ANY SUIT, ACTION OR PROCEEDING IN ANY COURT OR BEFORE ANY
GOVERNMENTAL AUTHORITY.
11.14 Waiver of Punitive Damages. NOTWITHSTANDING
ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, BORROWER
HEREBY AGREES THAT IT SHALL NOT SEEK FROM LENDERS OR AGENT, UNDER
ANY THEORY OF LIABILITY, INCLUDING, WITHOUT LIMITATION, ANY THEORY
IN TORTS, ANY PUNITIVE DAMAGES.
11.15 Governing Law. Except as otherwise expressly
provided in any of the Loan Documents, in all respects, including
all matters of construction, validity and performance, this
Agreement and the Obligations arising hereunder shall be governed
by, and construed and enforced in accordance with, the laws of the
State of North Carolina applicable to contracts made and performed
in such state, without regard to the principles thereof regarding
conflict of laws, and any applicable laws of the United States of
America.
11.16 Consent to Jurisdiction. Borrower hereby
irrevocably consents to the personal jurisdiction of the state and
federal courts located in Mecklenburg County, North Carolina, in
any action, claim or other proceeding arising out of any dispute in
connection with this Agreement, the Note and the other Loan
Documents, any rights or obligations hereunder or thereunder, or
the performance of such rights and obligations. Borrower hereby
irrevocably consents to the service of a summons and complaint and
other process in any action, claim or proceeding brought by Agent
or any Lender in connection with this Agreement or the other Loan
Documents, any rights or obligations hereunder or thereunder, or
the performance of such rights and obligations, on behalf of itself
or its Property, in the manner specified in Section 11.3. Nothing
in this Section 11.17 shall affect the right of the Agent or any
Lender to serve legal process in any other manner permitted by
applicable law or affect the right of Agent or any Lender to bring
any action or proceeding against Borrower or its properties in the
courts of any other jurisdictions.
11.17 Waiver of Jury Trial. AGENT, EACH LENDER AND
BORROWER 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 AGREEMENT, THE NOTE OR
THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OF
THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
WITNESS the due execution hereof by the respective duly
authorized officers of the undersigned as of the date first written
above.
BORROWER TEC ACQUISUB, INC.
By /a/ Stephen Peary
Printed Name: Stephen Peary
Title: Vice President
Notice to be sent to:
TEC AcquiSub, Inc.
One Market
Steuart Street Tower, Suite 900
San Francisco, CA 94105
Attention:J. Michael Allgood
Vice President of Finance
and Chief Financial Officer
Telephone:415/896-1138
Facsimile:415/882-0860
With a copy to:
TEC AcquiSub, Inc.
One Market
Steuart Street Tower, Suite 900
San Francisco, CA 94105
Attention:General Counsel
Telephone:415/896-1138
Facsimile:415/882-0860
AGENT FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By /s/ Milton Anderson
Printed Name: Milton Anderson
Title: Vice President
Notice to be sent to:
First Union National Bank of North
Carolina
One First Union Center
301 South College Street
Charlotte, NC 28288
Attention:Milton Anderson,
Vice President
Telephone:704/383-5164
Facsimile:704/374-4092
LENDERS FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By /s/ Milton Anderson
Printed Name: Milton Anderson
Title: Vice President
Notice to be sent to:
First Union National Bank of North
Carolina
One First Union Center
301 South College Street
Charlotte, NC 28288
Attention:Milton Anderson,
Vice President
Telephone:704/383-5164
Facsimile:704/374-409
SCHEDULE A
(Commitments)
Pro
Rate
Lender Commitment Share
First Union National Bank $25,000,000 100.0%
of North Carolina
EXHIBIT 22.1
SUBSIDIARIES OF PLM INTERNATIONAL, INC.
PLM Financial Services, Inc. (Delaware)
PLM Investment Management Inc. (California)
PLM Transportation Equipment Corporation (California)
PLM Securities Corp. (California)
PLM Railcar Management Services, Inc. (Delaware)
PLM Railcar Management Services Canada, Ltd. (Alberta)
Transportation Equipment Indemnity Company, Ltd.
(Bermuda)
PLM Rental, Inc. (Delaware)
Note: All entities are 100% owned directly or indirectly
by PLM International, Inc.
EXHIBIT 24.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
PLM International, Inc.
We consent to incorporation by reference in the registration
statement (No. 1-10260) on Form S-8 of PLM International, Inc. of
our report dated March 25, 1994, relating to the consolidated
balance sheets of PLM International, Inc. and subsidiaries as of
December 31, 1993 and 1992, and the related consolidated statements
of operations, changes in shareholders' equity, and cash flows and
related schedules for each of the years in the three-year period
ended December 31, 1993, which report appears in the December 31,
1993 annual report on Form 10-K of PLM International, Inc.
/s/KPMG Peat Marwick
San Francisco, California
March 25, 1994
EXHIBIT 25.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby constitute and appoint Robert
N. Tidball, Stephen Peary, J. Michael Allgood and David J. Davis,
jointly and severally, his true and lawful attorneys-in-fact, each
with power of substitution, for him in any and all capacities, to
do any and all acts and things and to execute any and all
instruments which said attorneys, or any of them, may deem
necessary or advisable to enable PLM International, Inc. to comply
with the Securities Exchange Act of 1934, as amended (the "Act"),
and any rules and regulations thereunder, in connection with the
preparation and filing with the Securities and Exchange Commission
of annual reports on Form 10-K on behalf of PLM International,
Inc., including specifically, but without limiting the generality
of the foregoing, the power and authority to sign the name of the
undersigned, in any and all capacities, to such annual reports, to
any and all amendments thereto, and to any and all documents or
instruments filed as a part of or in connection therewith; and the
undersigned hereby ratifies and confirms all that each of the said
attorneys, or his substitute or substitutes, shall do or cause to
be done by virtue hereof. This Power of Attorney is limited in
duration until May 1, 1994 and shall apply only to the annual
reports filed with respect to the fiscal year ended December 31,
1993.
IN WITNESS WHEREOF, the undersigned has subscribed these
presents this __ day of March, 1994.
/s/ Allen V. Hirsch
Allen V. Hirsch
PAGE
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby constitute and appoint Robert
N. Tidball, Stephen Peary, J. Michael Allgood and David J. Davis,
jointly and severally, his true and lawful attorneys-in-fact, each
with power of substitution, for him in any and all capacities, to
do any and all acts and things and to execute any and all
instruments which said attorneys, or any of them, may deem
necessary or advisable to enable PLM International, Inc. to comply
with the Securities Exchange Act of 1934, as amended (the "Act"),
and any rules and regulations thereunder, in connection with the
preparation and filing with the Securities and Exchange Commission
of annual reports on Form 10-K on behalf of PLM International,
Inc., including specifically, but without limiting the generality
of the foregoing, the power and authority to sign the name of the
undersigned, in any and all capacities, to such annual reports, to
any and all amendments thereto, and to any and all documents or
instruments filed as a part of or in connection therewith; and the
undersigned hereby ratifies and confirms all that each of the said
attorneys, or his substitute or substitutes, shall do or cause to
be done by virtue hereof. This Power of Attorney is limited in
duration until May 1, 1994 and shall apply only to the annual
reports filed with respect to the fiscal year ended December 31,
1993.
IN WITNESS WHEREOF, the undersigned has subscribed these
presents this __ day of March, 1994.
/s/ Robert L. Pagel
Robert L. Pagel
PAGE
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby constitute and appoint Robert
N. Tidball, Stephen Peary, J. Michael Allgood and David J. Davis,
jointly and severally, his true and lawful attorneys-in-fact, each
with power of substitution, for him in any and all capacities, to
do any and all acts and things and to execute any and all
instruments which said attorneys, or any of them, may deem
necessary or advisable to enable PLM International, Inc. to comply
with the Securities Exchange Act of 1934, as amended (the "Act"),
and any rules and regulations thereunder, in connection with the
preparation and filing with the Securities and Exchange Commission
of annual reports on Form 10-K on behalf of PLM International,
Inc., including specifically, but without limiting the generality
of the foregoing, the power and authority to sign the name of the
undersigned, in any and all capacities, to such annual reports, to
any and all amendments thereto, and to any and all documents or
instruments filed as a part of or in connection therewith; and the
undersigned hereby ratifies and confirms all that each of the said
attorneys, or his substitute or substitutes, shall do or cause to
be done by virtue hereof. This Power of Attorney is limited in
duration until May 1, 1994 and shall apply only to the annual
reports filed with respect to the fiscal year ended December 31,
1993.
IN WITNESS WHEREOF, the undersigned has subscribed these
presents this __ day of March, 1994.
\s\ Robert N. Tidball
Robert N. Tidball
PAGE
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby constitute and appoint Robert
N. Tidball, Stephen Peary, J. Michael Allgood and David J. Davis,
jointly and severally, his true and lawful attorneys-in-fact, each
with power of substitution, for him in any and all capacities, to
do any and all acts and things and to execute any and all
instruments which said attorneys, or any of them, may deem
necessary or advisable to enable PLM International, Inc. to comply
with the Securities Exchange Act of 1934, as amended (the "Act"),
and any rules and regulations thereunder, in connection with the
preparation and filing with the Securities and Exchange Commission
of annual reports on Form 10-K on behalf of PLM International,
Inc., including specifically, but without limiting the generality
of the foregoing, the power and authority to sign the name of the
undersigned, in any and all capacities, to such annual reports, to
any and all amendments thereto, and to any and all documents or
instruments filed as a part of or in connection therewith; and the
undersigned hereby ratifies and confirms all that each of the said
attorneys, or his substitute or substitutes, shall do or cause to
be done by virtue hereof. This Power of Attorney is limited in
duration until May 1, 1994 and shall apply only to the annual
reports filed with respect to the fiscal year ended December 31,
1993.
IN WITNESS WHEREOF, the undersigned has subscribed these
presents this __ day of March, 1994.
/s/ Walter E. Hoadley
Walter E. Hoadley
PAGE
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby constitute and appoint Robert
N. Tidball, Stephen Peary, J. Michael Allgood and David J. Davis,
jointly and severally, his true and lawful attorneys-in-fact, each
with power of substitution, for him in any and all capacities, to
do any and all acts and things and to execute any and all
instruments which said attorneys, or any of them, may deem
necessary or advisable to enable PLM International, Inc. to comply
with the Securities Exchange Act of 1934, as amended (the "Act"),
and any rules and regulations thereunder, in connection with the
preparation and filing with the Securities and Exchange Commission
of annual reports on Form 10-K on behalf of PLM International,
Inc., including specifically, but without limiting the generality
of the foregoing, the power and authority to sign the name of the
undersigned, in any and all capacities, to such annual reports, to
any and all amendments thereto, and to any and all documents or
instruments filed as a part of or in connection therewith; and the
undersigned hereby ratifies and confirms all that each of the said
attorneys, or his substitute or substitutes, shall do or cause to
be done by virtue hereof. This Power of Attorney is limited in
duration until May 1, 1994 and shall apply only to the annual
reports filed with respect to the fiscal year ended December 31,
1993.
IN WITNESS WHEREOF, the undersigned has subscribed these
presents this __ day of March, 1994.
/s/ J. Alec Merriam
J. Alec Merriam