SECOND AMENDED AND RESTATED
WAREHOUSING CREDIT AGREEMENT
AMONG
TEC ACQUISUB, INC.
and
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
BANK OF MONTREAL
and Such Other Financial Institutions
as Shall Become LENDERS Hereunder
and
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
as Agent
December 2, 1997
SECOND AMENDED AND RESTATED
WAREHOUSING CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED WAREHOUSING CREDIT AGREEMENT is
entered into as of December 2, 1997, by and between TEC ACQUISUB, INC., a
California special purpose corporation ("Borrower"), and FIRST UNION NATIONAL
BANK OF NORTH CAROLINA ("FUNB"), BANK OF MONTREAL ("BMO") 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"). This Agreement amends, restates and supersedes the TEC AcquiSub
Agreement (as defined below) in its entirety.
RECITALS
A. Borrower, FUNB and Fleet Bank, N.A. (the "Prior Lenders") and Agent,
as agent for the Prior Lenders, entered into that Amended and Restated
Warehousing Credit Agreement dated as of September 21, 1995 as amended by that
Amendment No. 1 to Amended and Restated Warehousing Credit Agreement dated as of
May 31, 1996, each by and among Borrower, FUNB (as the sole Lender party
thereto) and Agent, and that Amendment No. 2 to Amended and Restated Warehousing
Credit Agreement dated as of November 5, 1996, that Amendment No. 3 to Amended
and Restated Warehousing Credit Agreement dated as of October 3, 1997 and that
Amendment No. 4 to Amended and Restated Warehousing Credit Agreement dated as of
November 3, 1997 (as so amended, the "TEC AcquiSub Agreement"), pursuant to
which the Prior Lenders have agreed to extend and make available to Borrower
certain advances of credit.
B. Borrower and FUNB, as the sole remaining Prior Lender having a
Commitment under the TEC AcquiSub Agreement, desire to amend and restate the TEC
AcquiSub Agreement to, among other things, increase the aggregate Commitments
set forth on Schedule A of the TEC AcquiSub Agreement, extend the Commitment
Termination Date and reduce the Applicable Margin, as more fully set forth
herein.
C. On the terms and conditions set forth below, BMO desires, as of and
from the Closing Date, to become a Lender under this Agreement.
D. 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. DEFINITIONSSECTION 1. DEFINITIONS.
1.1 Defined Terms1.1 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.
[OBJECT OMITTED]
0 "Adjustable LIBOR" means, for each Interest Period in respect of LIBOR Loans,
an interest rate per annum (rounded upward to the nearest 1/16th of one percent
(0.0625%)) determined pursuant to the following formula:
The Adjusted LIBOR shall be adjusted automatically as of the effective date of
any change in the Eurodollar Reserve Percentage.
"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.
"AFG" means American Finance Group, Inc., a Delaware corporation and a
wholly-owned Subsidiary of PLMI.
"AFG Agreement" means the Amended and Restated Warehousing Credit
Agreement dated November 3, 1997, by and among AFG, Lenders and Agent, as the
same from time to time may be amended, modified, supplemented, renewed, extended
or restated.
"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.
"Agent's Side Letter" means the side letter agreement dated November 3,
1997, by and among Borrower, AFG, each of the Growth Funds and Agent.
"Agreement" means this Second Amended and Restated Warehousing Credit
Agreement dated as of November 3, 1997, 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.
"Applicable Margin" means:
(a) with respect to Prime Rate Loans, zero percent (0.00%);
and
(b) with respect to LIBOR Loans, one and five-eighths percent
(1.625%).
"Assignment And Acceptance" has the meaning set forth in Section
11.10.2.
"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) an amount equal to 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 (provided, however, that there shall be
excluded from this clause (a) the aggregate Invoice Price of all items of
Eligible Inventory subject to a Lease under which any applicable lease or rental
payment is more than ninety (90) days past due), computed (1) with respect to
any requested Loan, as of the requested Funding Date (and shall include the
item(s) of Eligible Inventory to be acquired with the proceeds of the requested
Loan), and (2) with respect to the delivery of any monthly Borrowing Base
Certificate to be furnished pursuant to Section 5.1.3, 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) an amount equal to one hundred percent (100.0%) of the
unrestricted cash available for purchase of Equipment by Equipment Growth Funds,
computed (x) with respect to any requested Loan, as of the requested Funding
Date (and shall include the aggregate Invoice Price of all item(s) of Eligible
Inventory to be acquired with the proceeds of the requested Loan), and (y) with
respect to the delivery of any monthly Borrowing Base Certificate to be
furnished pursuant to Section 5.1.3, 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, in the event that Borrower, any Marine
Subsidiary or any Owner Trustee 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 or such Owner Trustee's, as the case may be, ratable interest in
such item of Equipment).
"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 and, with respect to LIBOR Loans, means any day on which dealings in
foreign currencies and exchanges may be carried on by Agent and Lenders in the
London interbank market.
"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.
"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 November 2, 1998.
"Compliance Certificate" means a certificate signed by a Responsible
Officer of Borrower, substantially in the form set forth in Exhibit C, with such
changes therein as the Requisite 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 Funded Debt" means for any Person, as measured at any
date of determination on a consolidated basis, the total amount of all interest
bearing obligations (including Indebtedness for borrowed money), capital lease
obligations as a lessee and the stated amount of all issued and undrawn letters
of credit.
"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 2.3.
"Designated Deposit Account" means a demand deposit account maintained
by Borrower with FUNB designated by written notice from Borrower to Agent.
"Dollars" and the sign "$" means lawful money of the United States of
America.
"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 VI" means PLM Equipment Growth Fund VI, a California limited
partnership.
"EGF VII" means PLM Equipment Growth & Income Fund VII, a California
limited partnership.
"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 and Aircraft engines (complying with (a) Stage III noise reduction
requirements or (b) with Stage II noise reduction requirements if the present
value of the Lease payments with respect to such Aircraft, discounted at a rate
equal to the Prime Rate, exceeds seventy percent (70.0%) of the purchase price
for such Aircraft paid by Borrower); and 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 any 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 amounts 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 Funds under the Growth Fund Agreement.
"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 4.15.2.
"Equipment" means all items of transportation-related equipment owned
directly or beneficially by Borrower, by any Marine Subsidiary or by any 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 Funds holds the sole beneficial
interest.
"Equipment Growth Funds" means any and all of EGF, EGF II, EGF III, EGF
IV, EGF V, EGF VI, EGF VII and Income Fund I.
"Equipment Purchase Agreement" means an equipment purchase agreement,
in form and substance satisfactory to Agent, between Borrower and any Growth
Fund, entered into for the benefit of Lenders, providing for the purchase by
such Growth Fund of the Equipment upon which a Loan has been made.
"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.
"Eurodollar Reserve Percentage" means the maximum reserve percentage
(expressed as a decimal, rounded upward to the nearest 1/100th of one percent
(0.01%)) in effect from time to time (whether or not applicable to any Lender)
under regulations issued by the Federal Reserve Board for determining the
maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency liabilities having a
term comparable to such Interest Period.
"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 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 2.14.6.
"Form 4224" has the meaning set forth in Section 2.14.6.
"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 Funds" means any and all of EGF IV, EGF V, EGF VI, EGF VII and
Income Fund I.
"Growth Fund Agreement" means the Third Amended and Restated
Warehousing Credit Agreement dated as of November 3, 1997, by among each of the
Growth Funds, FSI, Lenders and Agent, as the same may from time to time be
amended, modified, supplemented, renewed, extended or restated.
"Guaranty" means that certain Guaranty dated as of November 5, 1996,
executed by PLMI 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.
"Income Fund I" means Professional Lease Management Income Fund I,
L.L.C., a Delaware limited liability company.
"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 10.2.1.
"Indemnified Person" has the meaning set forth in Section 10.2.1.
"Interest Differential" means, with respect to any prepayment of a
LIBOR Loan on a day other than an Interest Payment Date on which such LIBOR Loan
matures, the difference between (a) the per annum interest rate payable with
respect to such LIBOR Loan as of the date of the prepayment and (b) the Adjusted
LIBOR on, or as near as practicable to, the date of the prepayment for a LIBOR
Loan commencing on such date and ending on the last day of the applicable
Interest Period. The determination of the Interest Differential by Agent shall
be conclusive in the absence of manifest error.
"Interest Payment Date" means, with respect to any LIBOR Loan, the last
day of each Interest Period applicable to such Loan and, with respect to Prime
Rate Loans, the first Business Day of each calendar month following the Funding
Date of such Prime Rate Loan.
"Interest Period" means, with respect to any LIBOR Loan, the one-month,
two-month or three-month period selected by the Borrower pursuant to Section 2,
in each instance commencing on the applicable Funding Date of the Loan;
provided, however, that any Interest Period which would otherwise end on a day
that is not a Business Day shall end on the next succeeding Business Day except
that in the instance of any LIBOR Loan, if such next succeeding Business Day
falls in the next calendar month, the Interest Period shall end on the next
preceding Business Day.
"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. ss.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 any 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.
"Lender's Side Letter" means the side letter agreement dated November
3, 1997, by and among Borrower, AFG, each of the Growth Funds and BMO.
"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.
"LIBOR" means, with respect to any Loan to be made, continued as or
converted into a LIBOR Loan, the London Inter-Bank Offered Rate (determined
solely by Agent), rounded upward to the nearest 1/16th of one percent (0.0625%),
at which Dollar deposits are offered to Agent by major banks in the London
interbank market at or about 11:00 a.m., London time, on the second Business Day
prior to the first day of the related Interest Period with respect to such Loan
in an aggregate amount approximately equal to the amount of such Loan and for a
period of time comparable to the number of days in the applicable Interest
Period. The determination of LIBOR by Agent shall be conclusive in the absence
of manifest error.
"LIBOR Loan" means a Loan that bears interest based on Adjusted LIBOR.
"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(a)(i).
"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 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.
"Lockbox Agreement" means the Lockbox Agreement dated May 31, 1996,
among Borrower, FUNB and Agent on behalf of Lenders, 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.
"Notice of Borrowing" means a notice given by Borrower to Agent in
accordance with Section 2.7, substantially in the form of Exhibit E, with
appropriate insertions.
"Notice of Conversion/Continuation" means a notice given by Borrower to
Agent in accordance with Section 2.8, substantially in the form of Exhibit F,
with appropriate insertions.
"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.
"Operating Agreement" means the Fifth Amended and Restated Operating
Agreement of Income Fund I, entered into as of January 24, 1995.
"Opinion of Counsel" means the favorable written legal opinion of Susan
Santo, general counsel of Borrower and TEC, substantially in the form of Exhibit
D.
"Other Taxes" has the meaning set forth in Section 2.14.2.
"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, limited liability company, 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.
"Prime Rate Loan" means any borrowing which bears interest at a rate
determined with reference to the Prime Rate.
"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. ss. 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.
"Reaffirmation of Guaranty" means the Acknowledgement and Reaffirmation
of Guaranty dated as of November 3, 1997, executed by PLMI in favor of Lenders
reaffirming its obligations under the Guaranty.
"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.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule, regulation, guideline or determination of an arbitrator
or of a Governmental Authority, in each case applicable to or binding upon the
Person or any of its property or to which the Person or any of its property is
subject.
"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-six and two-thirds percent (66 2/3%) of all
such amounts outstanding or the total Commitments, as the case may be;
provided, however, that in the event there are only two (2) Lenders,
Requisite Lenders means both Lenders.
"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 entered into as of
June 30, 1993, between Borrower and Agent, on behalf of Lenders, 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.
"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, limited liability company (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, units, 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, the
stock, units 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 2.14.1.
"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 Terms1.2 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 Terms1.3 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 Exhibits1.4 Schedules and Exhibits. Any reference to
a "Sections", "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.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 under the AFG Agreement or (b)
the Borrowing Base or (c) $35,000,000 (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 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 Commitment Termination Date. Each
Loan advanced hereunder by each Lender shall be evidenced by Borrower's
revolving promissory note, substantially in the form of Exhibit A (each, a
"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 3.2.1 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 portion 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
portion of the principal amounts outstanding under this Agreement, under the
Growth Fund Agreement, under the AFG 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 clause (b) of the
definition of Borrowing Base, as set forth on a Borrowing Base Certificate
delivered to Agent pursuant to Section 5.1.3, 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 made by Lenders hereunder shall, at Borrower's option in
accordance with the terms of this Agreement, be either in the form of a Prime
Rate Loan or a LIBOR 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 from the date when made, continued or
converted until such Loan shall have been fully repaid at a rate per annum equal
to the Prime Rate, as the same may fluctuate on a daily basis or the Adjusted
LIBOR, as the case may be plus the Applicable Margin. Interest on each Loan
funded hereunder shall be due and payable in arrears on each Interest Payment
Date, 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 Funding2.1.2 Funding. Promptly following the receipt of
such documents required pursuant to Section 3.2.1 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.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 Agent, in its
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 Inventory and that only upon the funding of such Loans and the
acquisition of record title 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 Repayment2.2.1 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 Prepayment2.2.2 Voluntary Prepayment. Subject
to Section 2.18, Borrower may in the ordinary course of Borrower's business,
upon at least three (3) Business Days' written notice, or telephonic notice
promptly confirmed in writing to Agent, which notice shall be irrevocable,
prepay any Loan in whole or in part. Such notice of prepayment shall specify the
date and amount of such prepayment and whether such prepayment is of Prime Rate
Loans or LIBOR Loans, or any combination thereof. Such prepayment of Loans,
together with any amounts required pursuant to Section 2.18, 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 and any amounts required
pursuant to Section 2.18. 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 6.5, 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 an Equipment Growth
Fund 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 or the AFG Agreement
shall be terminated for any reason as to any one or more of the Growth Funds or
as to AFG, as the case may be, 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 Calculation of Interest; Post-Maturity Interest2.3 Calculation of
Interest; Post-Maturity Interest. Interest on the Loans shall be computed on the
basis of a 365/366-day year for all Prime Rate Loans and a 360-day year for all
LIBOR Loans 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 of the Prime Rate Loans based on changes in the
Prime Rate and each change in the Adjusted LIBOR based on changes in the
Eurodollar Reserve Percentage 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 determined by adding two
percent (2.0%) to the Applicable Margin for such Loan (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.
2.4 Manner of Payments2.4 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: Hannah Carmody, or such
other place as shall have been designated in writing by Agent.
2.5 Payment on Non-Business Days2.5 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.
2.6Application of Payments. All payments to or for the benefit of
Lenders hereunder shall be applied in the following order: (a) at the direction
of Borrower or upon prior notice given to Borrower by Agent, 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.
2.7 Procedure for the Borrowing of Loans.
2.7.1 Notice of Borrowing. Each borrowing of Loans shall be made upon
Borrower's irrevocable written notice delivered to Agent in the form of a Notice
of Borrowing, executed by a Responsible Person of Borrower, with appropriate
insertions (which Notice of Borrowing must be received by Lender prior to 12:00
noon, Charlotte, North Carolina time, three (3) Business Days prior to the
requested Funding Date) specifying:
(a) the amount of the requested borrowing, which, if
a LIBOR Loan is requested, shall be not less than One Million Dollars
($1,000,000);
(b) the requested Funding Date, which shall be a
Business Day;
(c) whether the borrowing is to be comprised of one
or more LIBOR Loans or Prime Rate Loans; and
(d) the duration of the Interest Period applicable to
any such LIBOR Loans included in such Notice of Borrowing. If the Notice of
Borrowing shall fail to specify the duration of the Interest Period for any
borrowing comprised of LIBOR Loans, such Interest Period shall be three (3)
months.
2.7.2 Unavailability of LIBOR Loans. Unless Agent
shall otherwise consent, during the existence of an Event of Default or
Potential Event of Default, Borrower may not elect to have a Loan made as a
LIBOR Loan.
2.8 Conversion and Continuation Elections.
2.8.1 Election. Borrower may, upon irrevocable
written notice to Agent:
(a) elect to convert on any Business Day, any Prime
Rate Loan (or any portion thereof in an amount equal to at least One Million
Dollars ($1,000,000) into a LIBOR Loan; or
(b) elect to convert on any Interest Payment Date any
LIBOR Loan maturing on such Interest Payment Date (or any portion thereof) into
a Prime Rate Loan; or
(c) elect to continue on any Interest Payment Date
any LIBOR Loan maturing on such Interest Payment Date (or any portion thereof in
an amount equal to at least One Million Dollars ($1,000,000); provided, that if
the aggregate amount of LIBOR Loans outstanding to Borrower shall have been
reduced, by payment, prepayment, or conversion of portion thereof, to be less
than $1,000,000, such LIBOR Loans shall automatically convert into Prime Rate
Loans, and on and after such date the right of Borrower to continue such Loans
as, and convert such Loans into, LIBOR Loans shall terminate.
2.8.2 Notice of Conversion2.8.2 Notice of Conversion. Each
conversion or continuation of Loans shall be made upon Borrower's irrevocable
written notice delivered to Agent in the form of a Notice of
Conversion/Continuation, executed by a Responsible Person of Borrower, with
appropriate insertions (which Notice of Conversion/Continuation must be received
by Lender prior to 12:00 noon, Charlotte, North Carolina time, at least three
(3) Business Days in advance of the proposed conversion date or continuation
date specifying:
(a) the proposed conversion date or continuation
date;
(b) the aggregate amount of Loans to be converted or
continued;
(c) the nature of the proposed conversion or
continuation; and
(d) the duration of the requested Interest Period.
2.8.3 Interest Period. If upon the expiration of any Interest
Period applicable to any LIBOR Loan, Borrower has failed to select a new
Interest Period to be applicable to such LIBOR Loan, Borrower shall be deemed to
have elected to convert such LIBOR Loan into a Prime Rate Loan effective as of
the last day of such current Interest Period.
2.8.4 Unavailability of LIBOR Loans. Unless Agent shall
otherwise consent, during the existence of an Event of Default or Potential
Event of Default, Borrower may not elect to have a Loan converted into or
continued as a LIBOR Loan.
2.9 Discretion of Lenders as to Manner of Funding2.9 Discretion of
Lenders as to Manner of Funding. Notwithstanding any provision of this Agreement
to the contrary, each Lender shall be entitled to fund and maintain its funding
of all or any part of its LIBOR Loans in any manner it elects, it being
understood, however, that for the purposes of this Agreement all determinations
hereunder shall be made as if such Lender actually funded and maintained each
LIBOR Loan through the purchase of deposits having a maturity corresponding to
the maturity of the LIBOR Loan and bearing an interest rate equal to the LIBOR
rate (whether or not, in any instance, Lender shall have granted any
participations in such Loan). Each Lender may, if it so elects, fulfill any
commitment to make LIBOR Loans by causing a foreign branch or affiliate to make
or continue such LIBOR Loans; provided, however, that in such event such Loans
shall be deemed for the purposes of this Agreement to have been made by such
Lender, and the obligation of Borrower to repay such Loans shall nevertheless be
to such Lender and shall be deemed held by such Lender, to the extent of such
Loans, for the account of such branch or affiliate.
2.10 Distribution of Payments2.10 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.
2.11 Agent's Right to Assume Funds Available for Advances2.11 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 2.11 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.
2.12 Agent's Right to Assume Payments Will be Made by Borrower2.12
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.
2.13 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 Commitment 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.
2.14 Taxes.
2.14.1 No Deductions. Subject to Subsection 2.14.7, 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").
2.14.2 Miscellaneous Taxes2.14.2 Miscellaneous Taxes. 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").
2.14.3 Indemnity2.14.3 Indemnity. Subject to Subsection
2.14.7, 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 2.14) 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.
2.14.4 Required Deductions2.14.4 Required Deductions. 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 2.14.7:
(a) 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 2.14) 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;
(b) Borrower shall make such deductions, and
(c) Borrower shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable
law.
2.14.5 Evidence of Payment2.14.5 Evidence of Payment. 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.
2.14.6 Foreign Persons2.14.6 Foreign Persons. 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:
(a) 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;
(b) 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;
(c) 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
(d) 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.
2.14.7 Income Taxes2.14.7 Income Taxes. Borrower will not be
required to pay any additional amounts in respect of United States Federal
income tax pursuant to Subsection 2.14.4 to Lender for the account of any
Lending Office of such Lender:
(a) 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 2.14.6 in respect of such Lending Office;
(b) If such Lender shall have delivered to Borrower a
Form 4224 in respect of such Lending Office pursuant to Subsection 2.14.6 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
(c) If such Lender shall have delivered to Borrower a
Form 1001 in respect of such Lending Office pursuant to Subsection 2.14.6, 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.
2.14.8 Reimbursement of Costs2.14.8 Reimbursement of Costs.
If, at any time, Borrower requests any Lender to deliver any forms or other
documentation pursuant to Subsection 2.14.6(d), 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.
2.14.9 Jurisdiction2.14.9 Jurisdiction. If Borrower is
required to pay additional amounts to any Lender or Agent pursuant to Subsection
2.14.4, 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.
2.15 Illegality.
2.15.1LIBOR Loans. If any Lender shall determine that the
introduction of any Requirement of Law, or any change in any Requirement of Law
or in the interpretation or administration thereof, has made it unlawful, or
that any central bank or other Governmental Authority has asserted that it is
unlawful, for such Lender or its Lending Office to make LIBOR Loans, then, on
notice thereof by Lender to Borrower, the obligation of such Lender to make
LIBOR Loans shall be suspended until such Lender shall have notified Borrower
that the circumstances giving rise to such determination no longer exists.
2.15.2 Prepayment. If a Lender shall determine that it is
unlawful to maintain any LIBOR Loan, Borrower shall prepay in full all LIBOR
Loans of such Lender then outstanding, together with interest accrued thereon,
either on the last day of the Interest Period thereof if such Lender may
lawfully continue to maintain such LIBOR Loans to such day, or immediately, if
such Lender may not lawfully continue to maintain such LIBOR Loans, together
with any amounts required to be paid in connection therewith pursuant to Section
2.18.
2.15.3 Prime Rate Borrowing2.15.3Prime Rate Borrowing. If
Borrower is required to prepay any LIBOR Loan immediately as provided in Section
2.2.3, then concurrently with such prepayment, Borrower shall borrow, in the
amount of such prepayment, a Prime Rate Loan.
2.16 Increased Costs2.16 Increased Costs. If any Lender shall determine
that, due to either (a) the introduction of or any change (other than any change
by way of imposition of or increase in reserve requirements included in the
calculation of the LIBOR) in or in the interpretation of any Requirement of Law
or (b) the compliance with any guideline or request from any central bank or
other Governmental Authority (whether or not having the force of law), there
shall be any increase in the cost to such Lender of agreeing to make or making,
funding or maintaining any LIBOR Loans, then Borrower shall be liable, and shall
from time to time, upon demand therefor by such Lender, pay to such Lender such
additional amounts as are sufficient to compensate such Lender for such
increased costs.
2.17 Inability to Determine Rates2.17 Inability to Determine Rates. If
Agent shall have determined that for any reason adequate and reasonable means do
not exist for ascertaining the LIBOR for any requested Interest Period with
respect to a proposed LIBOR Loan or that the LIBOR applicable for any requested
Interest Period with respect to a proposed LIBOR Loan does not adequately and
fairly reflect the cost to Lenders of funding such Loan, Agent will forthwith
give notice of such determination to Borrower and each Lender. Thereafter, the
obligation of Lenders to make or maintain LIBOR Loans, as the case may be,
hereunder shall be suspended until Agent, upon instruction from the Requisite
Lenders, revokes such notice in writing. Upon receipt of such notice, Borrower
may revoke any Notice of Borrowing or Notice of Conversion/Continuation then
submitted. If Borrower does not revoke such notice, Lenders shall make, convert
or continue the Loans, as proposed by Borrower, in the amount specified in the
applicable notice submitted by Borrower, but such Loans shall be made, converted
or continued as Prime Rate Loans instead of LIBOR Loans, as the case may be.
2.18 Prepayment of LIBOR Loans2.18 Prepayment of LIBOR Loans. Borrower
agrees that in the event that Borrower prepays or is required to prepay any
LIBOR Loan by acceleration or otherwise or fails to draw down or convert to a
LIBOR Loan after giving notice thereof, it shall reimburse each Lender for its
funding losses due to such prepayment or failure to draw. Borrower and Lenders
hereby agree that such funding losses shall consist of the sum of the discounted
monthly differences for each month during the applicable or requested Interest
Period, calculated as follows for each such month:
2.18.1 Principal amount of such LIBOR Loan times (number of
days between the date of prepayment and the last day in the applicable Interest
Period divided by 360), times the applicable Interest Differential, plus
2.18.2 all actual out-of-pocket expenses (other than those
taken into account in the calculation of the Interest Differential) incurred by
Lenders and Agent (excluding allocation of any expense internal to Lenders and
Agent) and reasonably attributable to such payment, prepayment or failure to
draw down or convert as described above; provided that no prepayment fee shall
be payable (and no credit or rebate shall be required) if the product of the
foregoing formula is not a positive number.
SECTION 3. CONDITIONS PRECEDENT.
3.1 Effectiveness of this Agreement3.1 Effectiveness of this Agreement.
The effectiveness of this amended and restated Agreement is subject to the
satisfaction of the following conditions precedent:
3.1.1 Corporate Documents3.1.1 Corporate Documents. Agent
shall have received, in form and substance satisfactory to Lenders and their
respective counsel, the following:
(a) A certified copy of the records of all actions
taken by Borrower and PLMI, including all corporate resolutions of Borrower and
PLMI authorizing or relating to the execution, delivery and performance of this
Agreement and the other Loan Documents and the consummation of the transactions
contemplated hereby and thereby;
(b) A certificate of a Responsible Officer of each of
Borrower and PLMI, stating that (A) the articles or certificate of
incorporation, as the case may be, bylaws and any other formation documents of
Borrower and PLMI previously delivered to Agent in relation to the TEC AcquiSub
Agreement are true and accurate, remain in full force and effect and have not
been amended since the date thereof and (B) each of Borrower and PLMI are in
good standing under the laws of the state of its formation and each other
jurisdiction where its ownership of Property and assets or conduct of business
requires such qualification;
(c) Certificates of incumbency and signature with
respect to the authorized representatives of Borrower and PLMI executing this
Agreement and the other Loan Documents and requesting Loans; and
(d) Such other documents relating to Borrower or PLMI
as Lenders reasonably may request.
3.1.2 Notes. Agent shall have received the Notes, in form and
substance satisfactory to Lenders, duly executed and delivered by Borrower,
which Notes shall replace and supersede the existing Notes dated as of November
5, 1996, issued by Borrower to FUNB and Fleet.
3.1.3 Opinion of Counsel3.1.3 Opinion of Counsel. Agent shall
have received an originally executed Opinion of Counsel on behalf of Borrower
and PLMI, 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.
3.1.4 Reaffirmation of Guaranty3.1.4 Reaffirmation of
Guaranty. Agent shall have received the Reaffirmation of Guaranty duly executed
and delivered by PLMI.
3.1.5 Growth Fund Agreement3.1.5Growth Fund Agreement. Agent
shall have received the Growth Fund Agreement, duly executed and delivered by
each of the Growth Funds, and all conditions precedent to the effectiveness of
the Growth Fund Agreement shall have been satisfied.
3.1.6 AFG Agreement.3.1.6 AFG Agreement. Agent shall have
received the AFG Amendment, duly executed and delivered by AFG, and all
conditions precedent to the effectiveness of the AFG Agreement shall have been
satisfied.
3.1.7Bringdown 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.
3.1.8 Fees. Agent shall have received the Agent's Side Letter
and BMO shall have received the Lender's Side Letter, each duly executed by
Borrower, Guarantor, each of the Growth Funds and AFG, and Agent and BMO shall
have received the fees described in the Agent's Side Letter and the Lender's
Side Letter, respectively.
3.1.9 Other Documents. Agent shall have received such other
documents, information and items from Borrower and PLMI 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:
3.2.1 Notice of Borrowing. At least three (3) Business Days
before each Loan hereunder with respect to any acquisition of Equipment by
Borrower, Agent shall have received (a) a Notice of Borrowing; (b) a Borrowing
Base Certificate; (c) a description of the transaction, including (i) 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), (ii) the lessee, the date of the lease and the lease
termination date, (iii) lessee financial information, and (iv) the terms of the
underlying lease; and (d) other information as may be requested by the Agent to
confirm that such Equipment satisfies the criteria for Eligible Inventory.
3.2.2 Invoices. 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.
3.2.3 Title to Equipment. 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).
3.2.4 Approval of Loan. Approval of such requested Loan by
Agent, after review of the lessee, Equipment, Lease and any other material
circumstances relating to the Loan.
3.2.5 Leases. 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.
3.2.6 No Event of Default3.2.6 No Event of Default. 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.
3.2.7 Officer's Certificate3.2.7Officer's Certificate. 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 the Growth Funds' then
existing portfolio, such Equipment is of a type, model, age and condition
consistent with the investment objectives of the Growth Funds.
3.2.8 Officer's Certificate - Leases3.2.8Officer's Certificate
- - Leases. 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:
(a) The Lease constitutes the entire agreement of the
parties thereto and no party thereto shall be bound except in accordance
therewith;
(b) 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;
(c) No material default exists under the Lease as of
the date of the Loan;
(d) 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;
(e) Borrower is the sole owner and lessor of the
Equipment covered by the Lease;
(f) 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);
(g) 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
(h) 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.
3.2.9 Insurance. The insurance required to be maintained by
Borrower pursuant to the Loan Documents shall be in full force and effect.
3.2.10 Warranty of TEC AcquiSub. Agent shall have received
from Borrower its written representation and warranty that upon delivery of the
purchase price and the executed bill of sale or similar instrument of title, a
true and correct copy of which is to be attached, Borrower (or if an Owner
Trustee or Marine Subsidiary is to acquire record title, such Owner Trustee or
Marine Subsidiary) shall acquire good title to the item of Equipment against
which the Loan is to be made, free and clear of all Liens and other encumbrances
on title (other than Permitted Liens).
3.2.11 Other Instruments. 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 occur:
3.3.1 General Partner or Manager. FSI shall have ceased to be
the sole general partner of any Growth Fund or the sole manager of Income Fund
I, 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 any Growth Fund or capital contribution in Income Fund I.
3.3.2 Removal of General Partner or Manager. 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 or a majority in
interest of Class A members, as that term is defined in the Operating Agreement
of Income Fund I, of Income Fund I shall at any time vote to remove FSI as the
manager of Income Fund I, in each case, regardless of whether FSI is actually
removed.
3.3.3 Cash Balances. 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.
3.3.4 Purchaser. Borrower or its Subsidiaries, Growth Funds,
FSI or its Subsidiaries shall have ceased to be the purchaser of Eligible
Inventory for any Growth Fund.
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 it 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, with reasonable likelihood, have a Material Adverse Effect.
4.4 Financial Condition. FSI's audited consolidated financial
statements as of December 31, 1996, and Borrower's and FSI's unaudited
consolidated financial statements as of June 30, 1997, 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. There has been no material adverse
change in the business, properties or assets, operations, prospects,
profitability or financial or other condition of Borrower or FSI since December
31, 1996.
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.
4.10Employment 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, with reasonable
likelihood, 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 would, with
reasonable likelihood, 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 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.
4.15.1 Except as specifically disclosed in Schedule 4.15, the
on-going operations of Borrower comply in all material respects with all
Environmental Laws.
4.15.2 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.
4.15.3 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.
4.15.4 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 Licenses4.16
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 Disclosure4.17 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 Regulations4.18 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 Warranties4.20 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.
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:
5.1.1 Quarterly Statements. As soon as practicable and in any
event within sixty (60) 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
one hundred twenty (120) 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;
5.1.2 Annual Statements. As soon as practicable and in any
event within one hundred twenty (120) 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;
5.1.3 Borrowing Base Certificate. As soon as practicable, and
in any event not later than fifteen (15) days after the end of each calendar
month in which a Loan has been, or is outstanding, 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;
5.1.4 Compliance Certificate. 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 the Chief Financial Officer or Corporate
Controller of Borrower, with appropriate insertions;
5.1.5 Reports. 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;
5.1.6 Insurance Reports. (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 that such policy is in process of
renewal and is not terminated or subject to a notice of non-renewal from such
Borrower's insurance broker; provided, however, that Borrower shall give Agent
prompt written notice if changes affecting risk coverage will be made to such
policy or if the policy will be canceled;
5.1.7 Certificate of Responsible Officer. 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 8.1.2, (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;
5.1.8 Employee Benefit Plans. 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;
5.1.9 ERISA Notices. 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;
5.1.10 Pension Plans. 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;
5.1.11SEC Reports. 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;
5.1.12Tax Returns. 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
5.1.13 Additional Information. 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, with reasonable likelihood, 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.
5.6.1 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.
5.6.2 Certain Modifications to the Equipment. Subject to
Section 5.6.1, 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.
5.6.3Performance 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.
5.7Supplemental 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, upon the request of
Agent, which request may be made with respect to any Loan on or after the date
which is one hundred twenty (120) days after the Funding Date of such Loan,
deliver to Agent an Equipment Purchase Agreement with respect to the Equipment
against which such Loan was made.
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"):
6.1.1 Liens granted in favor of Agent on behalf of Lenders
under the Security Agreement and the other Security Documents;
6.1.2 Liens for Charges if payment shall not at the time be
required to be made in accordance with Section 5.4;
6.1.3 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 6.1.3 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, with reasonable likelihood, have a Material Adverse Effect; and
6.1.4 Permitted Rights of Others.
6.2 Acquisitions6.2 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 Indebtedness6.3 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:
6.3.1 The Obligations to Lenders and Agent arising under this
Agreement and the other Loan Documents; and
6.3.2 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 (provided that such
Indebtedness shall only be permitted under this clause (b) if, taking into
account the incurrence of such Indebtedness, Borrower shall not be in violation
of any of the financial covenants set forth in Section 7 if measured as of the
date of incurrence as determined by GAAP).
6.4 Use of Proceeds6.4 Use of Proceeds. Borrower and FSI shall not, and
shall not permit any Marine Subsidiary or Owner Trustee holding record title to
any Eligible Inventory for the beneficial interest of Borrower or FSI to, use
the proceeds of any Loan except for the purpose set forth in Recital B above and
shall not, and shall not permit any such Marine Subsidiary or such Owner Trustee
to, use the proceeds to repay any loans or advances made by any other Person.
6.5 Disposition of Assets6.5 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).
6.6 Restricted Payments6.6 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.
6.7 Restriction on Fundamental Changes6.7 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.
6.8 Transactions with Affiliates6.8 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.
6.9 No Loans to Affiliates6.9 No Loans to Affiliates. Borrower shall
not make any loans to any of its Affiliates other than to its Marine
Subsidiaries.
6.10 No Investment6.10 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.
6.11 Maintenance of Business6.11 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.
6.12 No Modification to Leases6.12 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 6.12, material Lease terms
shall include, without limitation, terms relating to lease payments, maturity
and the amount and scope of the lessee's insurance coverage.
6.13 No Subsidiaries. Borrower shall not create any Subsidiaries except
Marine Subsidiaries.
6.14Amendments 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.
6.15 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 would, with reasonable likelihood, have a
Material Adverse Effect.
6.16 ERISA.
6.16.1 Borrower shall not 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 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.
6.16.2 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, with reasonable likelihood, 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, with
reasonable likelihood, 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 permitted by GAAP; provided, however, that should
Borrower change its accounting treatment or reporting practices in a way that
would cause a change in the calculation, or in the results of a calculation, of
any of the financial covenants set forth in Section 7, below, then Borrower,
shall continue to calculate such covenants as if such accounting treatment or
reporting practice had not been changed unless otherwise agreed to by Requisite
Lenders.
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 shall 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.
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:
8.1.1 Failure to Make Payments. 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
8.1.2 Other Agreements. (a) 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,
(b) 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 (excluding, as
to FSI, any Contingent Obligations of FSI arising solely as a result of FSI's
status as a general partner of any Person other than Borrower), in each case
exceeding, in the aggregate outstanding principal amount, $2,000,000, (c)
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 (d) 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, $2,000,000, 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
8.1.3 Breach of Covenants. 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, 6.2, 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
8.1.4 Breach of Representations or Warranties. 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
8.1.5 Failure to Cure. Except as provided in Sections 8.1.1
and 8.1.3, 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
8.1.6 Insolvency. 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
8.1.7 Bankruptcy Proceedings. 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
8.1.8 Material Adverse Effect. 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
8.1.9 Judgments, Writs and Attachments. 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
8.1.10 Legal Obligations. 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
8.1.11 Growth Fund Agreement. Without limiting the generality
of, and in addition to the events described in Section 8.1.1, 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
8.1.12 AFG Agreement. Without limiting the generality of, and
in addition to the events described in Section 8.1.1, the occurrence of any
"Event of Default" as defined under the AFG Agreement or any other loan or
security document related to the AFG Agreement.
8.1.13 Board of Directors. 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
8.1.14 Criminal Proceedings. 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
8.1.15 Action by Governmental Authority. 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
8.1.16 Governmental Decrees. 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:
8.3.1 Declare all or any of the Obligations of 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 Section 8.1.6 or 8.1.7, 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;
8.3.2 Terminate this Agreement as to any future liability or
obligation of Agent or Lenders; and
8.3.3 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.
8.4.1 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.
8.4.2 Each Lender agrees that if it shall, whether by right of
set-off, banker's lien or similar remedy pursuant to Section 8.4.1, 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 8.4.2 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 Cumulative8.5 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 or any Lender 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 Duties9.2 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 Provisions9.3 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 Agent9.4 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 Default9.5 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 Lenders9.6 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 FSI 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 and FSI. 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 and FSI which may come into the possession of Agent
or any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
9.7 Indemnification9.7 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 Capacity9.8Agent 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 or FSI 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 Agent9.9 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, 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, administration,
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:
10.2.1 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.
10.2.2 Environmental Indemnity.
(a) 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.
(b) 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.
10.2.3 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.
11.6.1 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.
11.6.2 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.
11.6.3 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 11.6.3 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.
11.8Marshalling; 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.
11.10.1 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 no Borrower nor
FSI may assign its rights hereunder or thereunder or any interest herein or
therein without the prior written consent of each Lender. Each Lender shall (a)
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 (provided that any such
partial assignment shall not be for a principal amount of less than Five Million
Dollars ($5,000,000)) under this Agreement, the Notes and the other Loan
Documents, together with a ratable interest in the AFG Agreement and the Growth
Funds Agreement and the related Notes and other Loan Documents (as separately
described and defined in those agreements), subject to the prior written consent
of the affected Borrower, which consent shall not be unreasonably withheld, and
(b) 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 2.9, 2.10, 5.1 or 10.2 shall be subject to the prior written consent of
the affected 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.
11.10.2 Subject to the limitations of this Section 11.10.2,
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 the affected Borrower and FSI (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 an Assignment and Assumption in the form of Exhibit G ("Assignment and
Acceptance") 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")). The
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 such Borrower or
FSI; provided only that such terms do not diminish the obligations undertaken by
such Assignee Lender in the Assignment and Assumption or increase the
obligations of Borrowers or FSI under this Agreement. Upon execution of such
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 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
11.10.2, 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.
11.10.3 Subject to the limitations of this Section 11.10.3,
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 2.9, 2.10, 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 11.16
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. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
BORROWER AND FSI, BY EXECUTION HEREOF, AND THE AGENT AND EACH LENDER, BY
ACCEPTANCE HEREOF, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON THIS
AGREEMENT, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY
AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION WITH THIS AGREEMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF ANY PARTY WITH RESPECT HERETO. THIS PROVISION IS A MATERIAL
INDUCEMENT TO THE AGENT AND EACH LENDER TO ACCEPT THIS AGREEMENT AND THE NOTES
EXECUTED AND DELIVERED BY BORROWER PURSUANT TO THIS AGREEMENT.
11.18 BMO as Lender. Upon the Closing, BMO shall be a Lender for all
purposes of this Agreement and the other Loan Documents, and shall be entitled
to the rights and benefits and be subject to the obligations of a Lender under
and in accordance with and subject to the terms of this Agreement and the other
Loan Documents.
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
J. Michael Allgood
Chief Financial Officer
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
Printed Name:
Title:
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,
Director
Telephone: 704/383-5164
Facsimile: 704/374-4092
LENDERS FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By
Printed Name:
Title:
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,
Director
Telephone: 704/383-5164
Facsimile: 704/374-4092
BANK OF MONTREAL
By
Printed Name:
Title:
Notice to be sent to:
Bank of Montreal
===========================
Attention: ________________
Telephone: ________________
Facsimile: ________________
ACKNOWLEDGEMENT AND
REAFFIRMATION OF GUARANTY
SECTION 1. PLM International, Inc. ("PLMI") hereby acknowledges and
confirms that it has reviewed and approved the terms and conditions of this
Agreement.
SECTION 2. PLMI hereby consents to this Agreement and agrees that its
Guaranty of the Obligations of Borrower under the Agreement shall continue in
full force and effect, shall be valid and enforceable and shall not be impaired
or otherwise affected by the execution of this Agreement or any other document
or instrument delivered in connection herewith.
SECTION 3. PLMI represents and warrants that, after giving effect to
this Agreement, that all representations and warranties contained in its
Guaranty are true, accurate and complete as if made the date hereof.
GUARANTOR PLM INTERNATIONAL, INC.
By
J. Michael Allgood
Chief Financial Officer
SCHEDULE A
(COMMITMENTS)
Pro
Rate
Lender Commitment Share
First Union National Bank $35,000,000 70.0%
of North Carolina
Bank of Montreal $15,000,000 30.0%
WAREHOUSING CREDIT AGREEMENT
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS.........................................2
1.1 Defined Terms.......................................2
1.2 Accounting Terms....................................18
1.3 Other Terms.........................................18
1.4 Schedules and Exhibits..............................19
SECTION 2. AMOUNT AND TERMS OF CREDIT..........................19
2.1 Commitment to Lend..................................19
2.1.1 Revolving Facility........................19
(a) Facility Commitments..............19
(b) Each Loan.........................20
2.1.2 Funding...................................21
2.1.3 Utilization of the Loans..................21
2.2 Repayment and Prepayment............................21
2.2.1 Repayment.................................21
2.2.2 Voluntary Prepayment......................21
2.2.3 Mandatory Prepayments.....................22
2.3 Calculation of Interest; Post-Maturity Interest.....23
2.4 Manner of Payments..................................23
2.5 Payment on Non-Business Days........................23
2.6 Application of Payments.............................23
2.7 Procedure for the Borrowing of Loans................24
2.7.1 Notice of Borrowing.......................24
2.7.2 Unavailability of LIBOR Loans.............24
2.8 Conversion and Continuation Elections...............24
2.8.1 Election..................................24
2.8.2 Notice of Conversion......................25
2.8.3 Interest Period...........................25
2.8.4 Unavailability of LIBOR Loans.............25
2.9 Discretion of Lenders as to Manner of Funding.......25
2.10 Distribution of Payments............................25
2.11 Agent's Right to Assume Funds Available for Advances..26
2.12 Agent's Right to Assume Payments Will be Made by Borrower..26
2.13 Capital Requirements................................26
2.14 Taxes...............................................27
2.14.1 No Deductions.............................27
2.14.2 Miscellaneous Taxes.......................27
2.14.3 Indemnity.................................27
2.14.4 Required Deductions.......................27
2.14.5 Evidence of Payment.......................27
2.14.6 Foreign Persons...........................28
2.14.7 Income Taxes..............................28
2.14.8 Reimbursement of Costs....................29
2.14.9 Jurisdiction..............................29
2.15 Illegality..........................................29
2.15.1 LIBOR Loans...............................29
2.15.2 Prepayment................................29
2.15.3 Prime Rate Borrowing......................30
2.16 Increased Costs.....................................30
2.17 Inability to Determine Rates........................30
2.18 Prepayment of LIBOR Loans...........................30
SECTION 3. CONDITIONS PRECEDENT................................31
3.1 Effectiveness of this Agreement.....................31
3.1.1 Corporate Documents.......................31
3.1.2 Notes.....................................31
3.1.3 Opinion of Counsel........................31
3.1.4 Reaffirmation of Guaranty.................31
3.1.5 Growth Fund Agreement.....................32
3.1.6 AFG Agreement.............................32
3.1.7 Bringdown Certificate.....................32
3.1.8 Fees......................................32
3.1.9 Other Documents...........................32
3.2 All Loans...........................................32
3.2.1 Notice of Borrowing.......................32
3.2.2 Invoices..................................32
3.2.3 Title to Equipment........................33
3.2.4 Approval of Loan..........................33
3.2.5 Leases....................................33
3.2.6 No Event of Default.......................33
3.2.7 Officer's Certificate.....................33
3.2.8 Officer's Certificate - Leases............33
3.2.9 Insurance.................................34
3.2.10 Warranty of TEC AcquiSub..................34
3.2.11 Other Instruments.........................35
3.3 Further Conditions to All Loans.....................35
3.3.1 General Partner or Manager................35
3.3.2 Removal of General Partner or Manager.....35
3.3.3 Cash Balances.............................35
3.3.4 Purchaser.................................35
SECTION 4. BORROWER'S REPRESENTATIONS AND WARRANTIES...........35
4.1 Existence and Power.................................35
4.2 Loan Documents and Note Authorized; Binding Obligations...36
4.3 No Conflict; Legal Compliance.......................36
4.4 Financial Condition.................................36
4.5 Executive Offices...................................36
4.6 Litigation..........................................36
4.7 Material Contracts..................................37
4.8 Consents and Approvals..............................37
4.9 Other Agreements....................................37
4.10 Employment and Labor Agreements.....................37
4.11 ERISA...............................................37
4.12 Labor Matters.......................................37
4.13 Margin Regulations..................................37
4.14 Taxes...............................................38
4.15 Environmental Quality...............................38
4.16 Trademarks, Patents, Copyrights, Franchises and Licenses...39
4.17 Full Disclosure.....................................39
4.18 Other Regulations...................................39
4.19 Solvency............................................39
4.20 Survival of Representations and Warranties..........39
SECTION 5. BORROWER'S AFFIRMATIVE COVENANTS....................39
5.1 Records and Reports.................................39
5.1.1 Quarterly Statements......................39
5.1.2 Annual Statements.........................40
5.1.3 Borrowing Base Certificate................40
5.1.4 Compliance Certificate....................40
5.1.5 Reports...................................40
5.1.6 Insurance Reports.........................41
5.1.7 Certificate of Responsible Officer........41
5.1.8 Employee Benefit Plans....................41
5.1.9 ERISA Notices.............................41
5.1.10 Pension Plans.............................42
5.1.11 SEC Reports...............................42
5.1.12 Tax Returns...............................42
5.1.13 Additional Information....................42
5.2 Existence; Compliance with Law......................42
5.3 Insurance...........................................42
5.4 Taxes and Other Liabilities.........................43
5.5 Inspection Rights; Assistance.......................43
5.6 Maintenance of Facilities; Modifications; Performance of
Leases............................................. 43
5.6.1 Maintenance of Facilities.................43
5.6.2 Certain Modifications to the Equipment....43
5.6.3 Performance of Leases.....................44
5.7 Supplemental Disclosure.............................44
5.8 Further Assurances..................................44
5.9 Lockbox.............................................44
5.10 Environmental Laws..................................44
5.11 Equipment Purchase Agreement........................44
SECTION 6. BORROWER'S NEGATIVE COVENANTS.......................44
6.1 Liens; Negative Pledges; and Encumbrances...........44
6.2 Acquisitions........................................45
6.3 Limitations on Indebtedness.........................45
6.4 Use of Proceeds.....................................45
6.5 Disposition of Assets...............................46
6.6 Restricted Payments.................................46
6.7 Restriction on Fundamental Changes..................46
6.8 Transactions with Affiliates........................46
6.9 No Loans to Affiliates..............................47
6.10 No Investment.......................................47
6.11 Maintenance of Business.............................47
6.12 No Modification to Leases...........................47
6.13 No Subsidiaries.....................................47
6.14 Amendments of Charter Documents.....................47
6.15 Events of Default...................................47
6.16 ERISA...............................................47
6.17 No Use of Any Lender's Name.........................48
6.18 Certain Accounting Changes..........................48
SECTION 7. FINANCIAL COVENANTS OF BORROWER.....................48
7.1 Minimum Consolidated Tangible Net Worth.............48
SECTION 8. EVENTS OF DEFAULT AND REMEDIES......................48
8.1 Events of Default...................................48
8.1.1 Failure to Make Payments..................48
8.1.2 Other Agreements..........................49
8.1.3 Breach of Covenants.......................49
8.1.4 Breach of Representations or Warranties...49
8.1.5 Failure to Cure...........................49
8.1.6 Insolvency................................50
8.1.7 Bankruptcy Proceedings....................50
8.1.8 Material Adverse Effect...................50
8.1.9 Judgments, Writs and Attachments..........50
8.1.10 Legal Obligations...........................50
8.1.11 Growth Fund Agreement.......................50
8.1.12 AFG Agreement.............................51
8.1.13 Board of Directors..........................51
8.1.14 Criminal Proceedings........................51
8.1.15 Action by Governmental Authority............51
8.1.16 Governmental Decrees........................51
8.2 Waiver of Default...................................52
8.3 Remedies............................................52
8.4 Set-Off.............................................52
8.5 Rights and Remedies Cumulative......................53
SECTION 9. AGENT...............................................53
9.1 Appointment.........................................53
9.2 Delegation of Duties................................54
9.3 Exculpatory Provisions..............................54
9.4 Reliance by Agent...................................54
9.5 Notice of Default...................................55
9.6 Non-Reliance on Agent and Other Lenders.............55
9.7 Indemnification.....................................55
9.8 Agent in Its Individual Capacity....................56
9.9 Resignation and Appointment of Successor Agent......56
SECTION 10. EXPENSES AND INDEMNITIES..................................56
10.1 Expenses............................................56
10.2 Indemnification.....................................57
10.2.1 General Indemnity.........................57
10.2.2 Environmental Indemnity...................57
10.2.3 Survival; Defense.........................58
SECTION 11.MISCELLANEOUS..............................................58
11.1 Survival............................................58
11.2 No Waiver by Agent or Lenders.......................58
11.3 Notices.............................................58
11.4 Headings............................................59
11.5 Severability........................................59
11.6 Entire Agreement; Construction; Amendments and Waivers...59
11.7 Reliance by Lenders.................................60
11.8 Marshalling; Payments Set Aside.....................60
11.9 No Set-Offs by Borrower.............................60
11.10 Binding Effect, Assignment..........................60
11.11 Counterparts........................................62
11.12 Equitable Relief....................................62
11.13 Written Notice of Claims; Claims Bar................62
11.14 Waiver of Punitive Damages..........................62
11.15 Governing Law.......................................62
11.16 Consent to Jurisdiction.............................62
11.17 Waiver of Jury Trial................................63
11.18 BMO as Lender.......................................63
INDEX OF EXHIBITS
Exhibit A Form of Revolving Promissory Note
Exhibit B Form of Borrowing Base Certificate
Exhibit C Form of Compliance Certificate
Exhibit D Form of Opinion of Counsel
Exhibit E Form of Notice of Borrowing
Exhibit F Form of Notice of Conversion/Continuation
Exhibit G Form of Assignment and Acceptance
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