NON-RECOURSE PROMISSORY NOTE
$2,151,145.48 Chicago, Illinois
March 4, 1998
FOR VALUE RECEIVED, the undersigned Maker, promises to pay to the order of
Heller Financial, Inc. at its office at 500 West Monroe Street, Chicago,
Illinois 60661 or at such other place as the holder may appoint, the principal
sum of Two Million One Hundred Fifty One Thousand, One Hundred Forty Five and
48/10 Dollars ($2,151,145.48) together with interest on the principal balance
remaining from time to time unpaid payable in Thirty-six (36) consecutive
monthly installments, each in the amount of Sixty-seven thousand six hundred
ninety-six Dollars ($67,696.00), with the first such installment due on April 1,
1998, continuing on the same date of each month thereafter until paid in full.
Interest, prior to maturity, at the rate of Eight and Thirty-two One Hundredths
percent (8.32%) per annum on the basis of a year consisting of 360 days, is
included in the foregoing installments. If any installment due hereunder shall
not be paid within ten (10) days after such installment is due, Maker shall pay
to holder hereof (i) a "late charge" of five percent (5%) of such delinquent
amount to defray the cost of collection, plus (ii) interest after maturity
whether by acceleration or otherwise, at the rate of one and one-half percent
(1.5%) per month (or the maximum amount permitted by law, whichever is less)
plus reasonable attorneys' fees if placed with an attorney for collection.
Demand, presentment for payment, protest, notice of non-payment or protest, is
hereby waived by Maker.
If this Note is not dated when executed by the Maker, the holder is hereby
authorized, without notice to the Maker, to date this Note as of the date when
the loan evidenced hereby is made. Maker furthermore hereby authorizes holder to
insert the date of the first installment due hereunder. Holder's books and
records shall be dispositive of the date disbursement is made hereunder.
This Note is secured by and entitled to the benefits of both (i) for collateral
identification purposes the original copy of the Lease (including, without
limitation, the Equipment described thereon and the Proceeds thereof) and (ii)
the Security Agreement (Chattel Mortgage and Assignment of Lease) dated as of
the 4th day of March, 1998, and to which reference is made for a statement of
the nature and extent of the protection and security afforded, the rights of the
payee or holder hereof, and the rights and obligations of the undersigned,
including payment. Capitalized terms not otherwise defined herein shall have the
meanings set forth in the Security Agreement.
If a default shall occur under the Security Agreement or any Lease, this Note
may become or be declared due in the manner and with the effect provided for
herein and in the Security Agreement. Furthermore, except for any breach of the
warranties, representations and covenants contained in that certain Security
Agreement executed by the undersigned Maker to Heller Financial, Inc., the
undersigned Maker shall have no liability for the payment of the principal of,
or interest on, this Note, and any judgment obtained against the undersigned
Maker (except for a breach of warranty, representation or covenant or a breach
of any other obligation by the undersigned Maker under the Security Agreement)
may be enforced only against the Lessee, the related Lease(s), and the Equipment
described therein, that are the subject of the aforesaid Security Agreement.
Nothing herein shall be deemed to constitute, intended to be, or construed as, a
release or impairment of the indebtedness evidenced by this Note or of the
assignment(s) and security interest(s) created by the Security Agreement.
Maker may prepay the indebtedness evidenced hereby only as provided in said
Security Agreement.
All remedies conferred upon the holder of this Note or the Security Agreement
shall be cumulative and not exclusive, and such remedies may be exercised
concurrently or consecutively at the holder's option. The validity,
interpretation, enforcement and effect of this Note shall be governed by the
laws of the State of Illinois.
THIS NOTE SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE
OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE
OF ILLINOIS. MAKER DOES HEEREBY SUBMIT, AT HOLDER'S ELECTION, TO THE EXCLUSIVE
JURISDICTION AND VENUE OF ANY COURTS (FEDERAL, STATE OR LOCAL) HAVING A SITUS
WITHIN THE COUNTY OF COOK AND THE STATE OF ILLINOIS WITH RESPECT TO ANY DISPUTE,
CLAIM, OR SUIT WHETHER DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
NOTE, OR ANY OF MAKER'S OBLIGATIONS OR INDEBTEDNESS HEREUNDER. MAKER EXPRESSLY
WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO SERVICE BY CERTIFIED MAIL,
POSTAGE PREPAID, DIRECTED TO THE LAST KNOWN ADDRESS OF MAKER, WHICH SERVICE
SHALL BE DEEMED COMPLETED WITHIN TEN (10) DAYS AFTER THE DATE OF MAILING
THEREOF. MAKER HEREBY IRREVOCABLY WAIVES ANY CLAIM THAT THE COUNTY OF COOK,
STATE OF ILLINOIS IS AN INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK OF
VENUE AS WELL AS ANY RIGHT IT MAY NOW OR HEREAFTER HAVE TO REMOVE ANY SUCH
ACTION OR PROCEEDING, ONCE COMMENCED, TO ANOTHER COURT ON THE GROUNDS OF FORUM
NON CONVENIENS OR OTHERWISE. THE EXCLUSIVE CHOICE OF FORUM SET FORTH HEREIN
SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT BY HOLDER OF ANY JUDGMENT
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION BY HOLDER TO ENFORCE THE SAME
IN ANY OTHER APPROPRIATE JURISDICTION.
WAIVER OF JURY TRIAL. MAKER AND HOLDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
NOTE. MAKER AND HOLDER ALSO WAIVE ANY BOND OR SURETY OR SECURITY UPON SUCH BOND
WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF HOLDER. THIS WAIVER IS INTENDED
TO BE EFFECTIVE WITH RESPECT TO ALL DISPUTES WHICH ARISE OUT OF THIS NOTE OR
PERTAIN TO THE TRANSACTIONS CONTEMPLATED HEREBY. MAKER AND HOLDER EACH
ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH ALREADY HAS RELIED ON SUCH WAIVER IN ENTERING INTO THIS
NOTE AND THAT EACH WILL CONTINUE TO RELY ON SUCH WAIVER IN THEIR RELATED FUTURE
DEALINGS. MAKER AND HOLDER FURTHER WARRANT AND REPRESENT THAT EACH KNOWINGLY AND
VOLUNTARILY HAS WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, AND MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND SUCH WAIVER SET FORTH HEREIN SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE. IN THE EVENT OF
LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
IN WITNESS WHEREOF, the undersigned Maker has caused this Note to be duly
executed on the date first above written.
ATTEST: VARILEASE CORPORATION, Maker
/s/ Marjorie A. Biglin /s/ Gary F. Miller
- ----------------------------- ----------------------------
Marjorie A. Biglin Gary F. Miller
Assistant Secretary Senior Vice President
EXHIBIT A TO THE TRASNFEREE AGREEMENT
SECURITY AGREEMENT
(CHATTEL MORTGAGE AND ASSIGNMENT OF LEASE)
Security Agreement dated March 4, 1998, between VARILEASE CORPORATION, a
Michigan corporation ("Debtor"), having its principal place of business at 28525
Orchard Lake Road, Farmington Hills, MI 48334 and HELLER FINANCIAL, INC., a
Delaware corporation ("Secured Party"), having its principal place of business
at 500 West Monroe Street, Chicago, Illinois 60661.
WITNESSETH:
WHEREAS, Debtor is indebted to Secured Party pursuant to a promissory note dated
March 4, 1998, and any other promissory note made by Debtor ("Note"), and in
order to secure the payment of principal and interest on the Note, Debtor has
agreed to grant Secured Party a security interest in certain equipment and
assign its interest as lessor in Rental Schedule(s) No. 01 incorporating that
certain Master Lease dated February 10, 1998, ("Lease") by and between Debtor
and Oxford Health Plans, Inc. ("Lessee");
Now, Therefore, for valuable consideration, the parties hereto agree as follows:
1. SECURITY INTEREST IN EQUIPMENT. In order to induce Secured Party to make
loans to Debtor pursuant to the Note and in order to secure the payment of
principal and interest on the Note and rent and other sums due and to become due
under the Lease and any other indebtedness of every kind now or hereafter owing
from Debtor to Secured Party, created, incurred or arising directly or
indirectly out of the Note, the Lease, the Assignment and Security Agreement or
hereunder, whether direct or indirect, primary or secondary, fixed or
contingent, liquidated or unliquidated (hereafter referred to as the
"Indebtedness") and the performance and observance of all other obligations of
the Debtor contained herein and in the Lease, Debtor hereby grants to Secured
Party a security interest in all machinery, equipment and other personal
property and fixtures, together with all attachments, accessories and
replacements thereto and therefor (hereafter referred to as the "Equipment") and
all proceeds of the Equipment now or hereafter acquired by Debtor for lease to
Lessee under the Lease (to which Lease reference is hereby made for a more
specific description of the Equipment), subject, however, to the rights of the
Lessee under the Lease.
2. ASSIGNMENT OF LEASE. In order to further induce Secured party to make loans
to Debtor pursuant to the Note, and in order to further secure the payment of
the Indebtedness and the performance and observation of all other obligations of
the Debtor contained herein and in the Lease, Debtor hereby assigns, conveys,
transfers and sets over to Secured Party all right, title and interest now held
or hereafter acquired by the Debtor in and to the Equipment, the Lease and all
instruments and documents related thereto (all such instruments and documents,
whenever arising being hereafter called "Related Documents") and all proceeds of
the Lease, the Equipment and the Related Documents. The assignment of the Lease
to Secured Party by Debtor pursuant to this Security Agreement is being made for
collateral purposes only and Debtor shall be deemed the owner of the Equipment
for all purposes. The Equipment, the Lease and Related Documents; Debtor's
right, title and interest thereto; all books and records relating to the
foregoing, and all proceeds (including insurance proceeds) pertaining thereto
shall hereinafter collectively be referred to as the "Collateral."
3. REPRESENTATIONS AND WARRANTIES OF DEBTOR. Debtor hereby represents and
warrants to Secured Party, as of the date any Indebtedness is incurred, and
covenants thereafter, that:
(a) except for the security interest granted hereby (and the Lease to
which each item of Equipment is subject), Debtor is and will remain the
owner of, and has good title to, the Collateral, free and clear of all
liens, encumbrances, security interests and adverse claims, and Debtor
will defend the Collateral against all claims and demands of all
persons at any time claiming the same or any interest therein;
(b) (i) Debtor is legally organized and validly existing, in good
standing under the laws of its state of organization and is duly
qualified to do business and in good standing under the laws of each
jurisdiction where the nature of its business or the character of its
properties makes it necessary for it to so qualify to do business; (ii)
Debtor has full power and authority to execute and deliver this
Agreement, together with all Notes, Lease(s), agreements and
instruments evidencing Indebtedness, and to perform its obligations
thereunder; (iii) Debtor has full power and authority to own its
properties and carry on its business as now being conducted; and (iv)
this Agreement, each Note, and all other documents evidencing any of
the Indebtedness have been duly authorized, executed and delivered by
Debtor and constitute the valid, legal and binding Indebtedness of
Debtor, enforceable in accordance with their terms, and performance of
same by Debtor will not violate the terms of its Articles of
Incorporation, by-laws or any agreement, indenture, order or decree by
which Debtor is bound, nor cause default under any thereof;
(c) Secured Party has and will retain, so long as any Indebtedness are
outstanding, a first, prior and perfected security interest in the
Collateral; and
Debtor hereby further represents and warrants with respect to the Equipment, as
of the date any Indebtedness is incurred and covenants thereafter, so long as
any Indebtedness are outstanding, that;
(d) except for such financing statements as may have been heretofore
filed by Debtor as Secured Party and lessor under the Lease, no
financing statement covering the Leases and any Equipment or any
Proceeds thereof is on file in any public office and Debtor will
execute such Uniform Commercial Code financing statements (including
fixture filings, and filings made by Debtor against the Lessee,
describing the Lease and the Equipment, which filings shall have been
assigned to Secured Party by Debtor), in any case covering the
Collateral or a portion thereof as Secured Party may desire;
(e) Debtor will not sell the Equipment or otherwise transfer any
interest therein (except pursuant to the Lease) without written consent
of Secured Party, which consent shall not be unreasonably withheld; and
Debtor hereby further expressly represents and warrants with respect to the
Lease as of the date any Indebtedness is incurred and covenants thereafter, so
long as any Indebtedness are outstanding, that:
(f) all of the documents comprising the Lease are as respectively
described in Exhibit "A" herein, and the Lease and all documents or
instruments related thereto arise out of a bona fide lease of the
Equipment described, to the Lessee;
(g) prior to the execution of the Lease, the Lessee had no interest,
directly or indirectly, in the Equipment, or the Lessee has conveyed
any such interest or good title to the Equipment to Debtor;
(h) all rental and other payments under the Lease are to be made by the
Lessee in cash or cash equivalent in accordance with the terms of the
Lease;
(i) Except in accordance with the cure provisions of Section 6 hereof,
Debtor has not and will not give or loan to any Lessee, directly or
indirectly, any unpaid rent;
(j) the Lessee has not received, nor will the Lessee receive, from or
through Debtor, directly or indirectly, any part of the consideration
received by Debtor hereunder from Secured Party;
(k) Debtor shall have delivered the Original counterpart of the Lease
to Secured Party, and the counterparts in Debtor's and Lessee's
possession are marked to indicate that they are duplicate counterparts
and that the rental payments thereunder have been assigned to Secured
Party. Debtor will retain physical possession and control of the
original Master Lease in trust for the benefit of Secured Party,
subject to the following:
(i) Debtor will not sell, assign, pledge, encumber or
hypothecate the original Master Lease, or any interest
therein, without the prior written consent of Secured Party;
(ii) Debtor will not surrender, deliver, or part with
possession of the original Master Leases to any other party
without the prior written consent of Secured Party;
(iii) Debtor will store and safeguard the original Master
Lease and will use its best efforts, at all times, to protect
the original Master Lease from fire, theft, water, and smoke
damage, mutilation, alteration, and destruction;
(iv) Debtor may from time to time enter into additional
schedules to the Master Lease with Lessee without the prior
consent of Secured Party;
(v) Debtor may sell, assign, pledge or hypothecate Rental
Schedules other than the Schedule(s) assigned hereunder, or
the stream of rental payments therefrom, to parties other than
Secured Party. The interest, if any, that such other parties
may have in the Master Lease will be in pari passu with the
interests of Secured Party in the Master Lease, and Debtor
will advise all such other parties of the interest of Secured
Party in the Master Lease. Secured Party's interest in each
Rental Schedule assigned hereunder shall be and remain
superior in right to that of Debtor and to all other parties
interested in the original Master Lease;
(vi) Debtor will represent and surrender and deliver to
Secured Party, upon demand by Secured Party, the original
Master Lease in the event of default by Lessee under the Lease
and, furthermore, will advise Secured Party prior to the
surrender and delivery of the original Master Lease to any
other party in the event of a default by a Lessee on any
rental schedule held by any other party;
(l) upon due inquiry, Debtor knows of no default under the Lease, nor
of anything which would impair the value of the Lease, and Debtor will
not by any act or omission on its part cause any impairment of the
value or validity of the Lease, and will, promptly upon learning
thereof, give notice to Secured Party of the occurrence of any default
under the Lease;
(m) Debtor will not make any modifications to the Lease without the
prior written consent of Secured Party, which consent shall not be
unreasonably withheld; provided, that, as to any such modification
which results in a reduction of rental payments under the Lease, or a
prepayment of rental payments under the Lease, or in any other way
causes the present value of the Lease to Secured Party to be lessened,
it shall be a condition to the effectiveness of any such consent given
by Secured Party that Debtor shall promptly pay to Secured Party the
amount which Secured Party reasonably determines to be the amount of
said decreased value to Secured Party, as a partial prepayment of the
outstanding principal portion of the Indebtedness under the relevant
Note, together with any accrued late charges and interest thereon;
(n) the Lease constitutes the entire agreement of the parties thereto
and neither party shall be bound except in accordance therewith;
(o) the Lease constitutes the valid contract of Debtor and Lessee,
enforceable against the Lessee in accordance with its terms, and each
party thereto has executed the Lease with full power, authority and
capacity to contract;
(p) Debtor has performed, and so long as any Indebtedness remain
unperformed, Debtor will at all times continue to perform, its duties
and Indebtedness as lessor under the Lease;
(q) the obligation of Lessee to pay rent under the Lease is not, nor is
claimed to be, and will not be, nor will be claimed to be, subject to
any claims, defenses or rights of counterclaim or setoff against Debtor
or its assignee; and
(r) To the extent that the manufacturer of the Equipment has not been
paid for the Equipment, Debtor shall use the proceeds of the Note to
pay the manufacturer the applicable purchase price. If manufacturer has
been so paid, then the proceeds of the Note shall be used by Debtor to
reimburse it for payment of the applicable purchase price.
4. BREACH OF WARRANTIES. Notwithstanding anything contained herein to the
contrary, Secured Party shall have full recourse against Debtor for any material
breach of Debtor's representations and warranties contained in Section 3 hereof,
for any material breach of Debtor's covenants, as applicable, as more fully set
forth in Section 4 hereof, or for any damages suffered by Secured Party as a
result of any fraudulent conduct by Debtor not otherwise covered herein. Upon
such breach, Secured Party may, without notice or demand, declare the entire
unpaid balance of the Indebtedness to be immediately due and payable and
exercise its rights and remedies, to wit: (a) demand and receive from Debtor all
sums due and payable under the Note or hereunder, including all out-of-pocket
attorney's fees actually incurred by Secured Party; and (b) exercise any other
rights and remedies available to Secured Party under the Lease, or this Security
Agreement.
5. COVENANTS OF DEBTOR. Debtor further covenants and agrees with Secured Party
as follows:
(a) to keep the Equipment insured against all risks of the kinds
customarily insured against by companies similarly situated for the
full insurable value thereof, including, but not limited to, fire,
theft, vandalism, windstorm, explosion and extended coverage on the
Equipment, comprehensive general liability insurance in amounts
reasonably acceptable to Secured Party for property damage, personal
liability, bodily injury and medical, and to deliver evidence of such
coverage or all such policies to the Secured Party, with such companies
and in such amounts and by policies in such form as shall be
satisfactory to the Secured Party, which insurance policies shall, by
endorsement:
(i) name Secured Party as the sole loss payee;
(ii) provide that the policies will not be invalidated as
against Secured party because of any violation of a condition
or warranty of the policy or application therefor by Debtor;
and
(iii) provide that the policies may only be materially altered
or cancelled by the insurer after thirty (30) days' prior
written notice to Secured Party;
Debtor hereby appoints Secured Party attorney for Debtor to
prove and adjust any losses and to endorse any loss drafts, and Debtor
hereby assigns to Secured Party all sums which may become payable under
such insurance, including returned premiums and dividends as additional
security hereunder; and Debtor shall give immediate written notice to
Secured Party and to the insurers of any loss or damage to the
Equipment and shall promptly file proofs of loss with such insurers;
(b) to pay, as and when the same becomes due, all taxes, assessments,
license fees, registration fees, and governmental charges, local, state
or federal (including any interest and/or penalties thereon) of any and
every nature, special or otherwise, levied or assessed upon the
Equipment or any portion thereof, or upon the use or operation thereof,
or upon or in respect of Indebtedness or this Security Agreement, and
to file or cause to be filed with the appropriate authorities all
returns and/or reports incident thereto;
(c) not to sell, lease, transfer, encumber, grant security interests in
or otherwise dispose of the Equipment or any part hereof or any
interest therein, or attempt so to do, or suffer or permit any lien of
any kind to attach to any of the Equipment except in favor of the
Secured Party;
(d) not to remove or suffer or permit to be removed, any of the
Equipment from the locations specified in the Lease, or make any
modifications thereto without the prior written consent of the Secured
Party;
(e) at its sole expense, to (i) keep the Equipment in good and safe
operating order, repair and condition, and maintain and use same in a
safe and proper manner, in accordance with the requirements of any
federal, state, county, municipal, regulatory or other authority,
having jurisdiction thereof, (ii) pay for all fuel, service,
inspections, overhauls, replacements, substitutions, materials and
labor necessary or desirable for the proper use, repair, operation and
maintenance of the Equipment, and (iii) maintain in force and effect
all licenses and other approvals required in connection with the
conduct of its existing business;
(f) in case of any failure of the Debtor to keep the Equipment insured
and in good repair and operating condition, or to keep the same free
from liens, security interests, encumbrances or adverse claims, or to
pay taxes on or in respect thereof, as herein covenanted, or to fully
and punctually keep and perform any other covenant hereof, then in any
such case, Secured Party may (but shall not be required so to do) pay
or perform such obligation for Debtor; Debtor covenants to reimburse
Secured Party promptly for all sums paid or advanced for any such
purpose, and any other sums disbursed by Secured Party to protect the
Equipment or the lien and security interest of this Security Agreement,
together with all costs, expenses and attorneys' fees paid or incurred
by Secured Party, all with interest from the date of advancement until
repaid to Secured Party at the rate of one and one-half percent (1.5%)
per month (or the maximum per annum rate of interest permitted by law,
whichever is less);
(g) to pay all filing, recording, search and other expenses incurred by
the Secured Party with respect to the perfection of its security
interest in the Equipment and confirming the priority thereof;
(h) to execute and deliver such further documents (including Uniform
Commercial Code financing statements) and do such further acts and
things as Secured Party may reasonably request in order to fully effect
the purposes of this Security Agreement and Secured Party's rights in
the Equipment; and
(i) to preserve and protect the Equipment as personal property,
regardless of the manner or degree of its attachment to realty.
It is expressly understood that some of the undertakings contained in the
foregoing paragraph may have been assumed by the Lessee under the Lease, and
therefore performance by the Lessee of such undertakings shall be deemed to be
performance by Debtor. It is further expressly understood that, with respect to
the undertakings assumed by Lessee under the Lease, Secured Party shall have no
recourse to Debtor for the failure of either Debtor or Lessee to perform such
undertakings except as otherwise provided herein.
6. TAX ADMINISTRATION. Any and all sales, use, property or other taxes
applicable to or arising out of each Lease, the Equipment or the proceeds
thereof (sometimes collectively referred to as "Taxes"), are current and have
been paid by Debtor or the party obligated to make such payment as of the date
of this Agreement. Pursuant to the Leases, Debtor or Lessees will file all
property tax returns and pay the property taxes levied or assessed on the
Equipment. Debtor will bill the Lessees for all sales and use tax that is due
and payable during the terms of the Leases, and direct the Lessees to remit such
taxes to Secured Party. Secured Party agrees to remit any sales and use taxes it
receives from the Lessees to the appropriate taxing jurisdiction.
Notwithstanding the above, in the event Debtor or a Lessee shall fail to remit
the necessary property taxes to the taxing jurisdiction within the time
prescribed, or Debtor shall fail to timely bill the Lessees for the correct
amount of the sales and use tax due during the term of the Lease, Debtor shall
remit the amount of such overdue Taxes to Secured Party in Lessee's name, within
five (5) business days of written notification by Secured Party, and shall
indemnify and hold harmless Secured Party for all such overdue and/or unpaid
Taxes, and any fines, penalties and late charges related thereto.
7. DEFAULT. Subject to Debtor's right to cure as set forth in Section 7 of this
Security Agreement, the occurrence of any of the following events shall be an
event of default hereunder: (a) Debtor shall default in the payment of any
principal or interest or any other payment obligation under the Note for more
than ten (10) days after the due date, (b) Debtor shall default in the payment
or performance of any other term or condition hereunder, or under the Note or
Lease, and such default continues for more than ten (10) days after written
notice is given to Debtor, (c) any representation or warranty made herein by the
Debtor is false or misleading in any material respect at the time made, (d)
dissolution, termination of existence, insolvency, appointment of a receiver of
any part of the Property of, assignment for the benefit of creditors by, or the
commencement of any proceeding under any bankruptcy or insolvency laws by or
against Debtor, (e) loss, theft, or substantial damage to any of the Equipment,
or (f) a default by Lessee under the Lease.
8. RIGHT TO CURE. In the event of any default on the part of Lessee under the
Lease, Secured Party shall notify Debtor in writing of such default, and Debtor
may, within ten (10) days after receiving notice of such default, at Debtor's
option: (a) cure the default on behalf of the Lessee; or (b) assume and
immediately perform the obligations of the Lessee under the Lease to Secured
Party. In the event Debtor does not exercise either such option, Debtor will, at
the request of Secured Party, (i) cooperate with Secured Party in exercising
Secured Party's rights under the Lease, (ii) if Secured Party takes possession
of any Equipment, properly store such Equipment on Secured Party's behalf, and
(iii) assist in Secured Party's search for a satisfactory purchaser or lessee of
such Equipment.
9. REMEDIES OF SECURED PARTY. Upon the breach of any warranty made by Debtor
hereunder or upon the occurrence of an event of default hereunder which has not
been timely cured as provided in Section 7 of this Security Agreement, Secured
Party may, without notice or demand declare all liabilities secured hereby
immediately due and payable, and Secured Party shall have the rights and
remedies of a Secured Party under the Uniform Commercial Code and all other
remedies to which Secured Party is entitled by law or equity. Subject to the
then existing rights of Lessee, if any, under the Lease, Secured Party or its
representative may enter upon the premises where the Equipment may be and remove
same or maintain possession on such premises pending disposition thereof, all
without charge to or liability on the part of Secured Party, or, upon request of
Secured Party, Debtor agrees, at its expense to assemble the Equipment and to
deliver same to Secured Party at a place designated by Secured Party. Debtor's
obligation to assemble and deliver the Equipment is of the essence of this
Security Agreement and accordingly, upon application to a court of equity having
jurisdiction, Secured Party shall be entitled to a decree requiring specific
performance by Debtor of said obligation. DEBTOR HEREBY EXPRESSLY WAIVES ITS
RIGHTS, IF ANY, TO PRIOR NOTICE OF REPOSSESSION AND TO A JUDICIAL OR
ADMINISTRATIVE HEARING PRIOR TO REPOSSESSION. The proceeds of any sale or other
disposition of Equipment, less the expenses of retaking, holding, preparing for
disposition, disposing of Equipment and the like (including reasonable
attorneys' fees, collection agency fees and other legal expenses incurred by
Secured Party), shall be credited to the Indebtedness secured hereby, in such
order of preference as Secured Party may determine. Except as provided in
Section 9 below, the deficiency, if any, shall be paid by Debtor to Secured
Party forthwith, upon demand, with interest thereon at the rate of one and
one-half percent (1.5%) per month, but not exceeding the lawful maximum, if any.
Secured Party agrees to pay forthwith to Debtor any surplus remaining from the
Equipment after payment of all Indebtedness. Secured Party will give Debtor
reasonable notice of the time and place of any public sale thereof or of the
time after which any private sale or other intended disposition thereof is to be
made. The requirements of reasonable notice shall be met if such notice is
mailed, postage prepaid, to the address of Debtor shown at the beginning of this
Security Agreement at least five (5) days before the time of the sale or other
disposition.
10. RECOURSE TO DEBTOR. Notwithstanding any of the foregoing, Secured Party
acknowledges that except as provided in this Section, the Indebtedness is to be
repaid solely from the payments to be made by the Lessee under the Lease.
Provided that no breach of Debtor's representations, warranties and/or covenants
shall have occurred under Sections 3, 4 and 5 hereof, Secured Party shall have
no recourse against Debtor for any default in the payment of the Indebtedness or
any default by the Lessee under the Lease, and Secured Party's sole remedy in
the event of any such default shall be to exercise its rights and remedies under
the Lease and this Security Agreement.
11. PREPAYMENT. The Indebtedness may be prepaid upon the occurrence of: (a) a
casualty loss, in which event the voluntary prepayment shall be limited to that
portion of the Note proportionately equal to the portion of the Lease which is
terminated due to the casualty loss; or (b) a permitted early termination of the
Lease as negotiated between Debtor and the Lessee, in which event the voluntary
prepayment shall be limited to that portion of the Note proportionately equal to
the portion of the Lease which is terminated early. In addition, the Debtor may
voluntarily prepay the Note in full upon ten (10) days prior written notice to
Secured Party and upon payment to Secured Party of the sum of the unpaid
principal on the date of prepayment and all accrued but unpaid interest on the
Note to such date, together with a prepayment fee equal to the following
percentages of unpaid principal and accrued but unpaid interest on the Note:
Time of Prepayment Request Payment Fee (%)
- ---------------------------- --------------------------
Year 1 3%
Year 2 2%
Year 3 1%
After Year 3 1%
12. COLLECTION. Upon notice sent to Lessee by Debtor at Secured Party's
direction, Secured Party shall collect all Rental Payments to be made under the
Lease and shall apply such payments to the amount due and payable on the
Indebtedness. Provided that no default exists by Lessee or Debtor, Secured Party
agrees to pay to Debtor the portion of any Lease payment received by Secured
Party in excess of the rental payments set forth in the Lease. At such time as
the Indebtedness is paid in full, Debtor shall collect all further rental
payments made under the Lease.
13. REMITTANCES. If Debtor shall obtain possession of any item of Equipment (as
a result of its return, rejection or repossession), Debtor agrees to hold the
same subject to the security interest of Secured Party hereunder and to dispose
of such Equipment, at Debtor's expense, but for the account of Secured Party, in
such manner as Secured Party may direct.
14. NOTICES. All notices and demands required or permitted to be given or made
hereunder on any party shall be deemed duly given or made and received for
purposes of this Agreement when personally delivered or mailed, by registered
mail, return receipt requested, postage prepaid, to the party intended as the
recipient thereof at the address of such party set forth on the first page
hereof or at such other address as the intended recipient shall have provided
for such purpose in a notice given in accordance with the provisions of this
paragraph. If mailed, such notice shall be deemed delivered on the fifth
business day after mailing.
15. TERMINATION; NO WAIVER. This Agreement and the security interest of Secured
Party hereunder shall terminate when the Indebtedness has been paid in full, at
which time Secured Party shall reassign and deliver to Debtor, Secured Party's
interest in the Lease, the excess proceeds, if any, the Equipment and Related
Documents in which the Secured Party shall have any interest hereunder or which
shall then be held by Secured Party or in its possession and, if requested by
Debtor, Secured Party shall execute and file in each office in which any
financing statement relative to the Collateral, or any part thereof, shall have
been filed, a termination statement under the Uniform Commercial Code releasing
Secured Party's interest therein, all without recourse to or warranty by Secured
Party and at the cost and expense of Debtor.
16. NO WAIVER. Failure of the Secured Party to exercise any right or privilege
or the granting of any indulgence to Debtor or Lessee shall not be deemed to be
a waiver of such right or privilege. No waiver by Secured Party of any default
shall operate as a waiver of any other default or of the same default on a
future occasion. Debtor hereby irrevocably appoints Secured Party its true and
lawful attorney, with power of substitution, to endorse Debtor's name upon any
checks or other items of payment relating to the Lease or upon any documents
relating to the sale or other disposition of the Lease or Equipment and to do
all other things necessary in Secured Party's judgment to carry out the purposes
of this Security Agreement.
17. LATE CHARGE; BINDING CHARACTER; GOVERNING LAW. If any payment due from
Debtor to Secured Party is in default for more than ten (10) days, Debtor shall
pay to Secured Party a "late charge" of five percent (5.0%) per month (or the
maximum amount permitted by law, whichever is less) on the amount of said
payment in default. This Agreement shall be binding on and inure to the benefit
of Debtor and Secured Party, and their respective successors and assigns. None
of the terms or provisions hereof may be waived, altered, modified or amended,
except by an agreement in writing executed by Debtor and Secured Party. The
validity, interpretation, enforcement and effect of this Security Agreement
shall be governed by the laws of the State of Illinois.
18. HEADINGS. Section headings and titles used herein are for convenience only
and shall in no way be held to explain, modify, amplify or aid in the
interpretation of this Agreement.
19. JURISDICTION AND VENUE. DEBTOR DOES HEREBY SUBMIT, AT SECURED PARTY'S
ELECTION, TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY COURTS (FEDERAL, STATE
OR LOCAL) HAVING A SITUS WITHIN THE COUNTY OF COOK AND THE STATE OF ILLINOIS
WITH RESPECT TO ANY DISPUTE, CLAIM, OR SUIT WHETHER DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY RELATED NOTE OR ANY
OF DEBTOR'S OBLIGATIONS OR INDEBTEDNESS HEREUNDER. DEBTOR EXPRESSLY WAIVES
PERSONAL SERVICE OF PROCESS AND CONSENTS TO SERVICE BY CERTIFIED MAIL, POSTAGE
PREPAID, DIRECTED TO THE LAST KNOWN ADDRESS OF DEBTOR, WHICH SERVICE SHALL BE
DEEMED COMPLETED WITHIN TEN (10) DAYS AFTER THE DATE OF MAILING THEREOF. DEBTOR
HEREBY WAIVES ANY OBJECTION TO IMPROVER VENUE AND FORUM NON CONVENIENS.
20. WAIVER OF TRIAL BY JURY. DEBTOR AND SECURED PARTY HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS SECURITY AGREEMENT, THE RELATED NOTE OR ANY OF THE RELATED
DOCUMENTS. DEBTOR AND SECURED PARTY ALSO WAIVE ANY BOND OR SURETY OR SECURITY
UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF SECURED PARTY.
THIS WAIVER IS INTENDED TO BE EFFECTIVE WITH RESPECT TO ALL DISPUTES WHICH ARISE
OUT OF ANY OF THE LOAN DOCUMENTS OR PERTAIN TO THE TRANSACTIONS CONTEMPLATED
THEREBY. DEBTOR AND SECURED PARTY EACH ACKNOWLEDGE THAT THIS WAIVER IS A
MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH ALREADY HAS
RELIED ON SUCH WAIVER IN ENTERING INTO THIS NOTE AND THE OTHER LOAN DOCUMENTS
AND THAT EACH WILL CONTINUE TO RELY ON SUCH WAIVER IN THEIR RELATED FUTURE
DEALINGS. DEBTOR AND SECURED PARTY FURTHER WARRANT AND REPRESENT THAT EACH
KNOWINGLY AND VOLUNTARILY HAS WAIVED ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, AND MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND SUCH WAIVER SET FORTH HEREIN SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS SECURITY AGREEMENT, THE NOTE, OR THE OTHER LOAN DOCUMENTS. IN THE EVENT OF
LITIGATION, THIS SECURITY AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.
21. COUNTERPARTS. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original and all of which, taken together,
shall constitute but one and the same instrument.
In Witness Whereof, the parties hereto have caused this Agreement to be duly
executed and its corporate seal to be affixed hereto by its duly authorized
officers this _____ day of _________________, 19___.
VARILEASE CORPORATION
Debtor
Attest:
/s/ Gary F. Mller
/s/ Marjorie A. Biglin --------------------------------
- ------------------------------- Gary F. Miller
Marjorie A. Biglin Senior Vice President
Assistant Secretary
HELLER FINANCIAL, INC.
/s/ Robert Kelderhouse
--------------------------------
Vice President
TERM NOTE (LIMITED RECOURSE)
$1,581,452.26 Princeton, NJ
March 27, 1998
FOR VALUE RECEIVED and intending to be legally bound, the undersigned,
Varilease Corporation ("Borrower"), a Michigan corporation, with a place of
business at 28525 Orchard Lake Road, Farmington Hills, MI 48334, promises to
pay, in lawful money of the United States, to the order of Interpool, Inc. and
its assigns ("Lender"), at Lender's offices at 211 College Road East, Princeton,
NJ 08540, the sum of One Million Five Hundred Eighty-One Thousand Four Hundred
Fifty-Two and 26/100 ($1,581,452.26) Dollars in thirty-six (36) equal
consecutive monthly installments of principal and interest of $50,327.00 each
commencing on April 1, 1998 and on the first day of each month thereafter with a
final payment of the entire outstanding principal balance of the Loan and all
accrued but unpaid interest, fees, costs and expenses due on March 1, 2001. The
actual amount due and owing from time to time hereunder shall be evidenced by
Lender's records of disbursements and receipts with respect to the Loan which
shall be presumptive conclusive evidence of such amount.
Interest shall accrue on the unpaid principal amount outstanding
hereunder from time to time at the per annum rate equal to nine and one-half
percent (9.50%) ("Contract Rate"). Interest shall be calculated on a basis of a
year of 360 days but computed for the actual number of days elapsed. After the
occurrence of an Event of Default (as defined in the Loan Agreement) such rate
shall be increased to a per annum rate equal to three percent (3%) in excess of
the Contract Rate. In no event shall the amount of interest paid or agreed to be
paid to Lender hereunder exceed the highest lawful rate permissible under any
law which a court of competent jurisdiction may deem applicable hereto. In such
event, the interest rate shall automatically be reduced to the maximum rate
permitted by such law and Lender shall apply any such excess to principal, in
the inverse order of maturity.
This Term Note is the Note referred to in the Limited Recourse Loan and
Security Agreement between Borrower and Lender dated of even date herewith
("Loan Agreement"). This Term Note ("Note") shall evidence Borrower's obligation
to repay all sums advanced by Lender pursuant to this Note, provided however
that Borrower's obligations under this Note are with limited recourse as more
fully set forth below and in the Loan Agreement. If Borrower fails to make any
payment required hereunder or if an Event of Default occurs under the Loan
Agreement, Lender may declare Borrower in default hereunder and declare the
unpaid principal balance of this Note to be immediately due and payable. Lender
shall thereupon have the option at any time and from time to time to exercise
all rights and remedies set forth herein, and in the Loan Agreement, as well as
all rights and remedies otherwise available to Lender at law or in equity, to
collect the unpaid indebtedness hereunder and thereunder. This Note is secured
by the Collateral described in the Loan Agreement. This Note may be prepaid only
in accordance with the terms and conditions of the Loan Agreement.
Borrower hereby waives protest, demand, notice of nonpayment and all
other notices in connection with the delivery, acceptance, performance or
enforcement of this Note. Any failure or delay of Lender to exercise any right
hereunder shall not be construed as a waiver of the right to exercise the same
or any other right at any other time or times. The waiver by Lender of a breach
or default of any provision of this Note shall not operate or be construed as a
waiver of any subsequent breach or default thereof. Subject to the terms of the
Loan Agreement, Borrower agrees to reimburse Lender for all expenses, including,
without limitation, attorneys' fees, incurred by Lender to enforce the
provisions of this Note, to protect, preserve and defend Lender's rights under
the Loan Agreement, and collect Borrower's obligations hereunder as described in
the Loan Agreement.
Notwithstanding the entry of any judgment under this Note, the unpaid
principal balance under this Note shall continue to bear interest at the
applicable rate set forth above.
This Note shall be construed and governed by the laws of the State of
New Jersey, without regard to its otherwise applicable principles of conflict of
laws. The provisions of this Note are severable and the invalidity or
unenforceability of any provision shall not alter or impair the remaining
provisions of this Note. All capitalized terms not otherwise defined herein
shall have the respective meanings as set forth in the Loan Agreement.
BORROWER AND LENDER AS INDEPENDENT COVENANTS IRREVOCABLY WAIVE JURY
TRIAL AND THE RIGHT THERETO IN ANY AND ALL DISPUTES BETWEEN BORROWER AND LENDER
WHETHER HEREUNDER OR UNDER ANY OTHER AGREEMENTS, NOTES, PAPERS, INSTRUMENTS OR
DOCUMENTS HERETOFORE, NOW OR HEREAFTER EXECUTED.
Lender, and any subsequent holder of this Note, by acceptance of the
Note agrees that except as provided in the Loan Agreement, Borrower shall have
no personal liability or obligation with respect to payment of principal,
interest and other amounts payable under this Note and such amounts are payable
from the proceeds received by Lender (or the Lender's successors or assigns)
from Lender's right, title and interest in and to the Collateral.
IN WITNESS WHEREOF, and intending to be legally bound hereby, Borrower
has executed these presents the day and year first above written.
VARILEASE CORPORATION
By: /s/ Marjorie Biglin Attest: /s/ Jennifer Charles-Rentz
--------------------- ----------------------------
Name: Assistant Secretary
Title:Assistant Secretary
LIMITED RECOURSE
LOAN AND SECURITY AGREEMENT
AGREEMENT made this 27th day of March, 1998, by and among Varilease
Corporation ("Borrower"), a Michigan corporation and Interpool, Inc. ("Lender"),
a Delaware corporation.
B A C K G R O U N D
A. Borrower is in the business of leasing personal property to third
party lessees. Borrower desires to borrow funds on a limited recourse basis from
Lender and Lender is willing to lend such funds to Borrower under the terms and
provisions set forth below.
B. The parties desire to define the terms and conditions of the Loan as
defined in Section 2.2 and to reduce their agreements to writing.
NOW, THEREFORE, with the foregoing Background incorporated herein by
reference and intending to be legally bound, the parties hereto agree as
follows:
SECTION 1. Definitions
1.1 "Books and Records" means all of Borrower's original ledger cards,
payment schedules, credit applications, contract rights, liens, security
instruments, guarantees and other General Intangibles relating in any way to the
Lease(s) or Leased Property.
1.2 "Collateral" means the Lease(s), Leased Property and all now or
hereafter existing Books and Records and all cash and noncash proceeds, thereof,
including insurance proceeds.
1.3 "Contract Rate" shall have the meaning set forth in Section 2.3.
1.4 "Defaulted Lease" means any Lease where (i) the Lessee is in
default under the terms of such Lease, (ii) the Lease or Leased Property is
subject to any tax lien or security interest, lien or encumbrance other than
Lender's, except as otherwise consented to by Lender in writing, or (iii) the
Lessee has prepaid any amounts and such prepayment has not been delivered to
Lender within ten days of receipt by Borrower, or (iv) the Leased Property is
destroyed.
1.5 "Equipment" shall have the meaning ascribed thereto in the New
Jersey Uniform Commercial Code.
1.6 "GAAP" means generally accepted accounting principles and practices
at the time for companies engaged in similar businesses, consistently applied.
1.7 "General Intangibles" shall have the meaning ascribed thereto in
the New Jersey Uniform Commercial Code and shall include, but not be limited to,
all contract rights (including without limitation rights under remarketing
agreements), chattel paper, documents, instruments, books, records, ledgers,
journals, check books, print outs, designs, computer programs, computer tapes,
customer lists, causes of action, claims, goodwill, designs and plans, licenses,
license agreements, tax and all other types of refunds, returned and unearned
insurance premiums, rights and claims under insurance policies, patents, patent
application, trademarks, trade names, trade styles, trademark applications and
copyrights.
1.8 "Inventory" shall have the meaning ascribed thereto in the New
Jersey Uniform Commercial Code.
1.9 "Lease" means all of Borrower's Accounts, Documents, General
Intangibles, Instruments and Chattel Paper arising in connection with each and
every equipment lease and/or schedule to a master lease agreement identified on
Schedule "A" attached hereto and made a part hereof. The term "Lease" includes
(i) all payments to be made thereunder, (ii) all rights of Borrower therein, and
(iii) any and all amendments, renewals, extensions or guarantees thereof.
1.10 "Leased Property" means any property leased or to be leased by
Borrower to a Lessee pursuant to a Lease; the term "Leased Property" includes
all of Borrower's Inventory or Equipment so leased and any and all additions,
improvements, accessions, attachments, upgrades (except to the extent such
upgrades are severable without diminishing the value of the underlying Leased
Property), replacements and substitutions thereto and therefor.
1.11 "Lessee" means the lessee(s) or obligor(s) responsible for payment
and/or performance under a Lease.
1.12 "Liability" or "Liabilities" means all existing and future
recourse liabilities of Borrower to Lender, including without limitation, the
obligations of Borrower under Sections 2.5, and 12.4 of this Agreement and all
other recourse liabilities and obligations of every kind or nature whatsoever of
Borrower to Lender, whether now existing or hereafter incurred, joint or
several, matured or unmatured, direct or indirect, primary or secondary, related
or unrelated or due or to become due, including but not limited to, any
extensions, modifications, substitutions, increases and renewals thereof, and
substitutions therefor.
1.13 "New Jersey Uniform Commercial Code" shall mean the Uniform
Commercial Code as enacted in New Jersey as the same shall be amended from time
to time.
1.14 "Note" means all notes evidencing the Loan made by Lender to
Borrower hereunder, as may be amended, modified, replaced or restated from time
to time.
1.15 All other capitalized terms used but not defined herein shall have
the meanings ascribed thereto in the New Jersey Uniform Commercial Code unless
the text clearly indicates otherwise.
SECTION 2. The Loans
2.1 Preconditions to Loan. All of the following events must occur prior
to Lender making the Loan hereunder:
(a) The Board of Directors and, if stockholder
approval is deemed necessary, the stockholders of Borrower shall have adopted
appropriate general or specific resolutions authorizing the execution and
delivery of this Agreement and the taking of all action called for herein;
(b) Counsel for Borrower shall have furnished general
or specific opinions satisfactory to Lender that
include without limitation that the corporate action of Borrower referred to in
Section 2.1(a) is satisfactory to such counsel and that this Agreement has been
duly authorized, executed and delivered by the Borrower, and it constitutes, and
the Loan to Borrower hereunder will constitute, legal, valid and binding
obligations of Borrower in accordance with the terms of this Agreement;
(c) There must not exist an Event of Default or event
which with the lapse of time or notice or both would become an Event of Default
under Section 7;
(d) There has been no material adverse change in the
business, operations or condition (financial or otherwise) of Borrower since the
date of the most recent financial statement of Borrower delivered to the Lender;
(e) Borrower has delivered or caused to be delivered
such other documents, instruments and agreements reasonably required by Lender
or required by the terms of this Agreement; and
(f) Borrower shall have delivered the following to
Lender:
(i) A written statement setting forth the
Lessee and a description of the Lease and the Leased Property;
(ii) A fully executed counterpart of this
Agreement;
(iii) A Note executed by Borrower in form
and substance satisfactory to Lender;
(iv) Invoices showing the true cost of the
Leased Property net of any servicing or maintenance charges, brokers' fees or
similar type of "soft costs";
(v) Uniform Commercial Code financing
statements listing Lender as secured party and Borrower
as debtor, to be filed in all locations satisfactory to Lender;
(vi) Each original counterpart of each
Lease, together with, if Borrower is not the original lessor, an original
counterpart of an assignment of the Lease to Borrower by the original and
intermediary lessors thereof;
(vii) The original Certificate of Acceptance
evidencing that the Lessee has received and accepted the Leased Property;
(viii) The Notice and Acknowledgement of
Assignment of Lease executed and delivered by Lessee agreeing to pay Lender
directly;
(ix) All guaranties, agreements, sureties,
insurance policies, subordination agreements and opinions of counsel arising
pursuant to or in connection with, the Collateral;
(x) Such additional UCC financing statements
as Lender may request in number, form and substance satisfactory to Lender
necessary to perfect Lender's security interest in the Lease and Leased Property
including without limitation UCC-1 financing statements filed by Borrower, as
secured party, against Lessee, as Debtor, and assigned to Lender;
(xi) Such UCCs, federal tax lien, and
judgment searches as Lender requests showing that the Collateral is free and
clear of all liens, claims and encumbrances other than those granted to Lender
hereunder;
(xii) Such other agreements, instruments and
documents and information (financial or otherwise) concerning Borrower or Lessee
as Lender may reasonably request; and
(xiii) Evidence that Leased Property is
insured against all risks in form and amount, with an insurer satisfactory to
Lender, against fire (with extended coverage), liability and such other hazards
as are customary with companies in the same or similar business as the Lessee
and cause Lender's security interest as indicated in Section 3.1, to be endorsed
on all policies of insurance as lender loss payee, so that: (i) all payments for
losses will be paid solely to Lender; (ii) the policy shall cover and insure
Lender's interest in the Collateral notwithstanding any act or neglect of
Borrower or Lessee, and (iii) the Borrower shall furnish Lender upon request
with evidence of such insurance together with a certificate thereof requiring
not less than thirty (30) days written notice to Lender prior to cancellation or
termination.
2.2 Limited Recourse Loan. Upon the occurrence of all events set forth
in Section 2.1 above, and simultaneously with the execution hereof (the
"Closing") and of all instruments or documents necessary or in the opinion of
Lender proper to effectuate the intention of the parties hereto, the Lender
shall lend to Borrower the sum of $1,581,452.26 for the purpose of financing
Leases or Leased Property on a limited recourse basis ("Loan").
2.3 Interest. Interest on the outstanding principal balance of the Loan
will be paid monthly (with such payments coinciding with the lease payments on
the Collateral) at the per annum rate equal to nine and 50/100 percent (9.50%)
("Contract Rate"). Upon the occurrence of an Event of Default hereunder,
interest shall accrue on the outstanding principal balance of the Loan at a per
annum rate of three percent (3%) in excess of the Contract Rate except, however,
where any amount due by Lessee under the Lease is more than five (5) days past
due, interest on such amount shall accrue at the interest rate set forth in the
Lease. Interest shall be charged on a 360 day year counting the actual days
elapsed. Interest at the applicable rate shall be paid and continue to be paid
even after default, maturity, acceleration, recovery of judgment, Bankruptcy,
insolvency proceedings of any kind or the happening of any event or occurrence
similar or dissimilar. In no event shall any interest accrued pursuant to the
second sentence of this paragraph be a recourse liability of Borrower unless the
same accrued as a result of an Event of Default which gives rise to a Liability.
2.4 Invoices. Each month, Lessor under the Lease shall render to
Lessee, an invoice for the Lease payments due and owing. Lessee shall be
instructed to, and shall agree to, make all payments under the Lease directly to
Lender to be applied against the Loan balance.
2.5 Reimbursement of Expenses. It is anticipated that Borrower and
Lender will enter into a series of loan transactions on the date hereof
("Transactions") and in conjunction therewith Borrower shall pay Lender the
aggregate sum of $7,500 for all out of pocket expenses of any kind incurred by
Lender in connection with the Transactions, including reasonable attorneys fees,
UCC searches, the cost of filing financing statements, continuation, amendment
and termination statements, search fees and any other fees incurred solely in
connection with the negotiation, drafting and closing of the Transactions and
perfection of its security interest in the Collateral.
2.6 Use of Proceeds. The proceeds of the Loan shall be used solely to
finance or refinance Borrower's purchase of the Lease(s) or Leased Property.
2.7 Limited Recourse. Subject to the Lender's rights and Borrower's
recourse liability under Sections 2.5 and 12.4 or as otherwise agreed to between
Borrower and Lender from time to time, Lender's recourse against Borrower under
the Note shall be limited to the Collateral.
SECTION 3. Collateral
3.1 Security Interest. As security for repayment of the Loan and all
Liabilities of Borrower to Lender arising hereunder or under the Note, Borrower
grants to Lender a first priority security interest in, and assigns to Lender
the Collateral.
3.2 Financing Statements. Borrower will, from time to time, join with
Lender in executing financing statements, assignments and continuation
statements, under the Uniform Commercial Code covering the Collateral and any
portion thereof and such other instruments and documents as may be necessary to
perfect Lender's security interest in the Collateral or otherwise effectuate the
purposes of this Agreement. Borrower irrevocably grants to Lender a power of
attorney to execute for Borrower all such financing statements, and any
amendments thereto. Further, Borrower irrevocably authorizes the filing of a
carbon, photographic or other reproduction of this Agreement or of a financing
statement as a financing statement and agrees that such filing is sufficient as
a financing statement.
3.3 Sole Original Leases. Borrower shall deliver the sole original of
Counterpart 1 of each Lease Schedule to the Lender and all other existing copies
of such Leases shall be marked "copy" or "this lease has been assigned to
Interpool, Inc. as security for the obligations pursuant to that Limited
Recourse Loan and Security Agreement dated March 27, 1998." For purposes of this
paragraph the term "sole original of Counterpart 1 of each Lease Schedule" shall
not include a master lease agreement where a schedule to a master lease
agreement is assigned to the Lender and such schedule incorporates the terms of
such master lease agreement by reference and the schedule is a separate lease
for "chattel paper" purposes under the Uniform Commercial Code and possession of
such schedule constitutes possession of "chattel paper" under the Uniform
Commercial Code.
SECTION 4. Representations and Warranties
The Borrower represents and warrants to the Lender, which
representations and warranties shall survive the execution hereof and all action
hereunder as follows:
4.1 Borrower is a corporation duly organized, validly existing, and in
good standing under the laws of the State of its incorporation and has the power
to carry on its business as now constituted, is qualified as a foreign
corporation and is in good standing in other jurisdictions where the nature of
its business makes such qualification necessary.
4.2 The execution and delivery by Borrower of this Agreement and the
performance by it of the transactions herein contemplated are and will be within
its corporate powers, have been and will be duly authorized, and are not and
will not be in contravention of any order of court or other agency of
government, of law or the terms of its Articles of Incorporation, By-Laws, or of
any indenture, agreement or undertaking to which it is a party or by which it or
its property is bound, or be in conflict with, result in a breach of or
constitute (with due notice and/or lapse of time) a default under any such
indenture, agreement or undertaking, or result in the imposition of any lien,
charge or encumbrance of any nature on any of Borrower's properties.
4.3 This Agreement, the Note, all Leases and any assignment or other
document when delivered, will be the valid, legal and binding obligations of
Borrower, enforceable in accordance with their respective terms.
4.4 There are no suits in law or equity or proceedings before any
governmental instrumentality or agency against Borrower, now pending or to the
knowledge of Borrower's officers is there threatened or likely any litigation or
any proceedings against or affecting Borrower, the outcome of which might
materially and adversely affect the Collateral.
4.5 All Collateral is free and clear of all liens, claims, encumbrances
and security interests, except those granted to Lender hereunder.
4.6 All taxes, federal, state and local, due by Borrower have been paid
or accrued to date.
4.7 Borrower's tax identification number is as follows: 38-237-9524.
4.8 All operations of the Borrower have been carried on in accordance
with all applicable laws, statutes, ordinances, rules and regulations. No
investigation by any governmental authority, federal, state or local, is pending
or threatened against Borrower.
4.9 All places of business of Borrower are listed on Exhibit "4.9"
attached hereto and made a part hereof.
4.10 Within five (5) years prior to the Closing, Borrower has not
conducted business under or used any other name (whether corporate or assumed).
4.11 The following representations and warranties are made with respect
to each Lease and/or items of Leased Property and shall be true and correct at
the time each such Lease is assigned to Lender:
(a) Each Lease is genuine, based on contracts that
are enforceable in accordance with its terms against the Lessee and the Leased
Property named and referenced therein, constitutes the entire agreement for the
leasing of the Leased Property thereby covered, has not been altered or amended,
except as set forth in the related schedules, and Borrower's Books and Records
relating thereto are accurate, complete and genuine;
(b) The sole original of each Lease has been
delivered to Lender and any counterpart of any lease which has not been
delivered to the Lender bears the legend "Copy" or "This Lease has been assigned
to Interpool, Inc. as security for the obligations pursuant to that certain
Limited Recourse Loan and Security Agreement dated March 27 1998," or similar
language on the face thereof;
(c) Where the Lease consists of a Master Lease
Agreement and specific schedules which describe the terms of any specific items
to be leased pursuant to such schedule, delivery of the original schedule shall
constitute delivery of the original Lease, provided that the terms of the Master
Lease Agreement and the schedule make it clear that for purposes of "Chattel
Paper" under the Uniform Commercial Code, the sole original schedule delivered
to Lender is a separate lease and that possession of such schedule constitutes
possession of "Chattel Paper" under the Uniform Commercial Code;
(d) With respect to each Lease, unless Lender agrees
otherwise in writing, Borrower will file within ten (10) days of receipt by
Lessee of possession of Leased Property, such UCC financing statements (listing
Borrower as Secured Party, the Lessee as Debtor, Lender as Assignee and such
Leased Property as Collateral) in such locations as would be required by
applicable law (if Borrower were a Secured Party and Lessee were a Debtor) in
order to perfect a security interest in such Leased Property under the UCC in
favor of Lender as Borrower's Assignee;
(e) The original amount and unpaid balance of each
Lease shown on Borrower's Books and Records and on any statement or schedule
delivered to Lender in connection therewith is the true and correct amount
actually owed to Lender, no portion of which, except as specifically provided
for in the Lease, has been prepaid;
(f) The amounts due under the Leases are not and will
not be subject to any claim or reduction, counterclaim, setoff, recoupment, or
any other claim, allowance or adjustment and no Lease has been re-negotiated,
restructured or compromised except as renewed in the ordinary course of
business;
(g) All security agreements, title retention
instruments and other documents and instruments which are security for any
Lease, and/or each Lease, contained a correct and sufficient description of the
Leased Property covered thereby and all security interests granted therein to
Borrower (either directly or as assignee) have been properly perfected and
assigned to Lender;
(h) Borrower has not and will not enter into any
agreement with a Lessee of any Leased Property which
provides, directly or indirectly, for the crediting of any obligation or
liability of Borrower to such Lessee against future rentals accruing under the
Lease;
(i) Each item of Leased Property is in good
condition, ordinary wear and tear excepted, has not been lost, stolen, destroyed
or damaged;
(j) Each item of Leased Property has been delivered
to and, in all instances, unconditionally accepted by the Lessee and has not
been removed from service or the place of installation indicated in the Lease;
(k) Each Lease has been duly executed by the lessor
named therein and each Lessee, and is a valid, legal and binding obligation of
Borrower, and such Lessee, and is enforceable against Borrower and such Lessee
in accordance with its terms. Following the making of the Loan in accordance
with Borrower's instructions to Lender, Borrower, subject to the security
interest of Lender, will be the sole owner of the Collateral and has the
authority to assign all of its right, title and interest therein upon the terms
herein set forth;
(l) All costs, fees, and expenses incurred in making
and closing each of the Leases has been paid and each Lease is or will be
current at the time of the assignment thereof to Lender. No event exists which
with the giving of notice or the passage of time or both, will result in the
occurrence of a default of any obligation as expressed in any Lease;
(m) All rentals, fees, costs, expenses and charges
paid or payable by the Lessee under any Lease, including without limitation, any
brokerage and other fees paid to Borrower do not violate any laws relating to
the maximum fees, costs, expenses or charges that can be charged in any state in
which any Leased Property is located or in which the corresponding Lessee is
located, or in which a transaction was consummated, or in any other state which
may have jurisdiction with respect to any such Leased Property, Lease or Lessee;
(n) Lender has a first lien security interest in the
Collateral subject to no other security interest or other interest. Borrower has
taken all steps necessary to maintain Lender's first lien security interest in
the Collateral, including, if required, perfecting the Borrower's security
interest through filing financing statements, amendments thereto, or
assignments;
(o) Each item of Leased Property has been insured in
the ordinary course of Borrower's or the corresponding Lessee's business;
(p) Neither Borrower nor to the best of Borrower's
knowledge has any lessor or prior lender holding a security interest in any of
the Collateral received notice of a Bankruptcy, receivership, reorganization,
insolvency or financial embarrassment of any Lessee;
(q) No Lessee is a subsidiary, or affiliate of
Borrower, or under common control with Borrower or is an officer or employee of
Borrower;
(r) No Lease is a Defaulted Lease;
(s) No Lease constitutes a sublease of the
corresponding Leased Property.
SECTION 5. Affirmative Covenants
Borrower covenants with Lender as follows:
5.1 Borrower will take the necessary steps to preserve its rights to
conduct business in all jurisdictions in which the nature of its business shall
require qualifications to do business or where the failure to so qualify may
have a material adverse effect on the ability of Borrower or Lender to enforce
any Lease or realize on any Leased Property.
5.2 Borrower will notify Lender, in writing, not less than thirty (30)
days prior to any change in the location of the Chief Executive Office or if the
Collateral is moved to a location other than that specified in the corresponding
Lease.
5.3 Borrower will comply with and observe all laws, statutes,
ordinances, rules and regulations material to the operation of its business and
maintain all licenses and permits necessary for the operation of its business,
and Borrower will pay all taxes, assessments and governmental charges required
by law.
5.4 Borrower shall permit Lender, and any representative designated by
Lender, to visit and inspect any of Borrower's property, assets, Books and
Records, and finance and other records, including, without limitation, financial
statements and Leases, and to discuss Borrower's affairs, finances and accounts
as they relate to the Collateral with Borrower's agents, officers and employees
(including Borrower's independent accountants) at such reasonable times and as
often as Lender may reasonably request.
5.5 Unless Lender consents otherwise in writing, Borrower shall at all
times keep all Collateral free and clear of all liens, encumbrances and security
interests of every kind without limitation.
5.6 Borrower shall mark its Books and Records to indicate the Lender's
security interest in the Collateral, including the Lease(s) and, unless Lender
consents otherwise in writing, Borrower shall retain title at all times to the
Leased Property. However, where Lender consents in writing to an assignment of
any of Borrower's right, title and interest in the Lease and/or the Collateral,
(which consent shall not be unreasonably withheld) and provided Borrower
complies with the requirements of a Transferee Agreement (which Transferee
Agreement shall be the same in form and substance as that attached hereto as
Exhibit 5.6), Borrower may sell, assign or transfer its right, title and
interest, subject always to the prior rights of Lender, in the Lease and/or
Collateral.
5.7 Borrower shall join with Lender to notify all Lessee(s) of the
Lender's security interest in the Collateral and direct payment under the
Lease(s) to be made directly to Lender and Lender may, in its own name or in the
name of the Borrower collect, sue for and receive payment of any or all
Lease(s), and settle, compromise and adjust the same on any terms as may be
satisfactory to Lender, in its sole and absolute discretion for any reason or
without reason.
5.8 Borrower will immediately notify Lender of the institution or
threat of any litigation, administrative proceeding or investigation or any
other event or happening which might have a material adverse affect on the
Collateral or Borrower's or Lender's ability to enforce their respective rights
under the Lease(s).
5.9 Borrower shall, at Lender's request, within ninety (90) days after
the close of the fiscal year, furnish Lender with a complete financial audit
prepared by Borrower's independent certified public accounting firm acceptable
to Lender, including a balance sheet, income statement and statement of cash
flows prepared in accordance with GAAP.
SECTION 6. Negative Covenants
Borrower covenants with Lender that it will not:
6.1 Without the prior written consent of Lender, sell, assign or
transfer any portion of the Collateral. However, where Lender consents in
writing to an assignment of any of Borrower's right, title and interest in the
Lease and/or the Collateral, (which consent shall not be unreasonably withheld)
and provided Borrower complies with the requirements of a Transferee Agreement
(which Transferee Agreement shall be the same in form and substance as that
attached hereto as Exhibit 5.6), Borrower may sell, assign or transfer its
right, title and interest, subject always to the prior rights of Lender, in the
Lease and/or Collateral.
6.2 Without the prior written consent of Lender, liquidate, dissolve or
discontinue normal operations with the intention to liquidate, dissolve, sell,
lease, transfer or otherwise dispose of any substantial part of its assets.
Lender acknowledges that the Borrower anticipates a merger with other entities
that may occur during the term hereof, however, according to the terms thereof,
Varilease Corporation will be a wholly owned subsidiary and will continue to
operate in the same or like manner as prior to said merger.
6.3 Without the prior written consent of Lender, permit the removal,
other than in the ordinary course of business, of any Books and Records or
Leased Property from the place of business where presently located.
6.4 Without providing to Lender thirty (30) days prior written notice,
change its name or any trade style it uses, or adopt any new name or trade
style.
SECTION 7. Events of Default
The occurrence of any one or more of the following events with
respect to Borrower shall constitute an event of default ("Event of Default")
hereunder:
7.1 Termination of existence, business failure or the making of an
assignment for the benefit of creditors;
7.2 Non-payment of any sum or sums due to Lender or others hereunder or
otherwise when due or non-performance of any contractual obligation to Lender
including without limitation a breach of a Lease by the Lessee or Borrower that
results in a Lease becoming a Defaulted Lease;
7.3 Institution of Bankruptcy, arrangement, composition,
reorganization, liquidation or receivership proceedings, voluntary or
involuntary, or the appointment of a receiver, trustee, conservator,
sequestrator or other judicial representative, similar or dissimilar;
7.4 Any financial statements of Borrower, warranties or representations
herein, or in any other document or certificate heretofore or hereafter made by
Borrower are false, misleading, incomplete or incorrect in any material manner;
7.5 If Borrower has engaged in any activity which may reasonably result
in the forfeiture of any Collateral to any governmental entity, federal, state
or local; then, in any such event which is not cured within seven (7) days of
the earlier of receipt of notice from Lender of the Event of Default or Borrower
obtaining knowledge of the Event of Default, Lender, at its option may declare
the unpaid principal balance, accrued interest, and all other sums due to Lender
hereunder or otherwise immediately due and payable (except with respect to an
Event of Default arising under paragraph 7.1 or 7.3 above, in which case all of
Borrower's obligations and liabilities to Lender shall be automatically deemed
to be immediately due and payable).
SECTION 8. Remedies on Default
8.1 (a) Upon the occurrence of an Event of Default hereunder, Borrower
grants to Lender in addition to any rights, powers or remedies Lender may have
under any applicable law, all of which shall be cumulative, the right, subject
always to the rights of Lessees under the Leases, to do any or all of the
following (which list is given by way of example and is not intended to be an
exhaustive list of all rights and remedies):
(i) By its own means, with or without judicial
assistance, enter any of Borrower's premises or other locations where Collateral
is kept, and take possession of the Collateral, or render it unusable, or
dispose of the Collateral on such premises without any liability for rent,
storage, utilities or other sums, and Borrower shall not resist or interfere
with such action; and
(ii) Lender shall have all rights, remedies and
powers of Borrower under the Leases as lessor, including without limitation, the
right to collect and receive all rental, insurance proceeds and other payments,
payable pursuant to the Leases; amend or terminate any Lease; and take such
action upon default under any Lease, as any lessor may do, in Lender's or
Borrower's name, including without limitation repossession of any Leased
Property and commencement of suit, and to exercise any rights and remedies as
lessor under the Lease(s).
(b) Anything herein to the contrary notwithstanding,
the execution of this Agreement and the exercise by Lender of any of its rights
hereunder shall not (i) release Borrower from any of its duties or obligations
under the Leases, and (ii) shall not obligate Lender (x) to perform any of
Borrower's obligations or duties under the Leases, or (y) to take any action to
collect or enforce any claim for payment.
(c) Borrower hereby agrees that a notice received by
it at least ten (10) days before the time of any intended public sale or at the
time after which any private sale or other disposition of the Collateral is to
be made, shall be deemed to be commercially reasonable notice of such sale or
other disposition. If permitted by law, any Collateral which threatens to
speedily decline in value or which is sold on a recognized market may be sold
immediately by Lender without prior notice to Borrower.
8.2 Lender shall have the right to proceed against all or any portion
of the Collateral in any order and may apply such Collateral to the Liabilities
of Borrower to Lender in any order. All rights and remedies granted Lender
hereunder and under any agreement referred to herein, or otherwise available at
law or in equity, shall be deemed concurrent and cumulative, and not alternative
remedies, and Lender may proceed with any number of remedies at the same time
until all existing and future Liabilities of Borrower to Lender, are satisfied
in full. The exercise of any one right or remedy shall not be deemed a waiver or
release of any other right or remedy, and upon the occurrence of an Event of
Default, Lender may proceed against Borrower and/or the Collateral, at any time,
under any agreement, with any available remedy and in any order.
8.3 Notwithstanding anything to the contrary contained in this Section
8 or Section 7 above, the occurrence of an Event of Default due solely to the
non-payment of sums owed to Lender resulting from a Lease becoming a Defaulted
Lease shall constitute an Event of Default hereunder only with respect to the
Loan and Lender's recourse to Borrower with respect to amounts due under such
Loan shall be limited to the Collateral.
SECTION 9. Termination
9.1 Lender shall have the right to retain, until final payment in full
of all Liabilities of the Borrower all of the Collateral and all of its rights
with respect thereto; provided, however, that so long as no Event of Default has
occurred, Lender shall release its lien on Collateral at the time the Loan is
repaid in full. All terms, conditions and provisions of this Agreement shall
remain in full force and effect until such time as all sums owed Lender
hereunder are paid in full.
SECTION 10. Waivers
Borrower waives presentment, demand, protest, notice of default,
non-payment, partial payments and all other notices and formalities relating to
this Agreement other than notices specifically required hereunder. Borrower
consents to and waives notice of the granting of indulgences or extensions of
time or payment, the taking or releasing of security, the addition or release of
persons primarily or secondarily liable on or with respect to the Liabilities.
No delay by the Lender in exercising any right, power or remedy hereunder and no
indulgence given to Borrower in case of any default shall impair any such right
or power or be construed as a waiver of any default by Lender or any
acquiescence therein or as a violation or waiver of any of the terms or
provisions of this Agreement.
SECTION 11. Notices
All notices and other communications hereunder shall be in writing or
confirmed in writing, and they shall be deemed to have been duly delivered or
given, if hand delivered, if telecopied, if sent by nationally recognized
overnight courier, or if mailed via certified mail, return receipt requested
when delivered, as follows:
(a) If to Borrower:
Varilease Corporation
28525 Orchard Lake Road
Farmington Hills, MI 48334
Attention: Gary F. Miller, Senior Vice President
Telecopy:(248) 488-0162
(b) If to Lender:
Interpool, Inc.
211 College Road East
Princeton, NJ 08540
Attention:Raoul J. Witteveen, President
Telecopy: (609)951-0362
and
Interpool, Inc.
211 College Road East
Princeton, NJ 08540
Attention: Richard W. Gross, Senior Vice
President
Telecopy: (609)951-0362
and
MicroTech Leasing Corporation
211 College Road East
Princeton, NJ 08540
Attention: Allen M. Olinger, President
Telecopy: (609) 987-1011
SECTION 12. Miscellaneous
12.1 Borrower agrees that Lender may sell or assign this Loan or grant
participation(s) in this Loan and may without liability furnish information with
respect to this Loan to any prospective purchaser, assignee or participant(s).
12.2 Borrower hereby irrevocably appoints Lender as Borrower's attorney
in fact with full authority in the place and stead of Borrower and in the name
of Borrower, Lender or otherwise in Lender's discretion, to take any action and
to execute any instrument, agreement or document which Lender may reasonably
deem necessary or advisable to accomplish the purposes of this Agreement.
Without limiting the generality of the foregoing, Lender may:
(a) obtain and adjust insurance that Borrower or
Lessee is required to maintain;
(b) ask, demand, collect, sue for, recover, compound,
receive or give acquittance and receipts for money due and to become due under
or in respect of any of the Collateral;
(c) receive, endorse and collect any drafts or other
instruments, documents or chattel paper, in connection with (a) or (b) above;
(d) after the occurrence of an Event of Default, file
any claim or take any action or institute any proceedings which Lender may deem
necessary or desirable for the collection of any of the Collateral or otherwise
to enforce the rights of Lender with respect to any of the Collateral; and
(e) after the occurrence of an Event of Default, with
respect to a Defaulted Lease, execute in Borrower's name, a bill of sale
relating to any Collateral, transferring title to such Collateral to a third
party purchaser.
12.3 If Borrower fails to perform any agreement contained herein,
Lender may (but is not obligated to) perform or cause performance of, such
agreement, at Borrower's expense payable on demand.
12.4 (a) Borrower shall pay, on demand, all of Lender's costs and
expenses (including but not limited to all legal fees and costs) (i) in
connection with the negotiation or preparation of any extensions, modifications,
amendments, waivers or consents to this Agreement, any note, or any other
instrument, agreement or document in connection herewith (but not including the
Lease(s) or corresponding equipment schedules and agreements), and (ii) in
connection with the enforcement of any right, remedy or power pursuant to this
Agreement, any note or any other instrument, agreement, or document in
connection herewith as such rights pertain to the Liabilities. In no event shall
Borrower be personally liable for any of said costs or fees relating to a
default by the Lessee under the Lease which does not also constitute or result
in a breach of any representation, warranty or covenant made by Borrower to or
in favor of Lender; and
(b) Borrower shall indemnify, defend (with counsel
satisfactory to Lender) and hold harmless Lender against and in respect of (i)
any loss, damage or deficiency related to any breach of warranty or
representation or non-fulfillment of any agreement by Borrower under this
Agreement or any related instrument, agreement, document, schedule, exhibit or
other legal obligations in connection herewith, and (ii) all actions, suits,
proceedings, demands, assessments, judgments, costs, legal fees and expenses
incident to any of the foregoing. Any amount reasonably required to be paid
pursuant to the foregoing shall be paid by Borrower to Lender on demand and may
at Lender's option be deducted from or set off against any existing or future
debt, liability or obligation of Lender to Borrower relating to this
transaction. In no event shall Borrower be personally liable for any of said
costs or fees relating to a default by the Lessee under the Lease which does not
also constitute or result in a breach of any representation, warranty or
covenant made by Borrower to or in favor of Lender.
12.5 This Agreement and all rights hereunder shall be governed by the
substantive law of the State of New Jersey. This Agreement shall bind Lender and
Borrower and shall inure to the benefit of Lender and the terms "Lender" and
"Borrower" as used in this Agreement shall include the respective parties and
their respective successors and assigns.
12.6 The terms of this Agreement shall be in addition to those of any
other evidence of liability held by the Lender, all of which shall be construed
as complementary to each other, except as herein otherwise expressly provided
and such other agreements, instruments and documents not modified or superseded
pursuant to the terms hereof remain in full force and effect.
12.7 This Agreement contains the entire agreement between the parties
hereto and may not be modified or changed in any way except in writing signed by
all parties.
12.8 Any express waiver by Lender of any power, right, remedy,
obligation or duty shall not under any circumstances be deemed to constitute a
waiver of Lender's powers, rights or remedies upon the later occurrence or
reoccurrence of any event, transaction or matter. No course of dealing between
Lender and Borrower shall operate as or be deemed to constitute a waiver of
Lender's rights hereunder or affect the duties or obligations of Borrower.
12.9 All powers, rights and remedies of Lender hereunder shall be
cumulative and not exclusive of other powers, rights or remedies granted or
available to Lender under any applicable law unless specifically stated
otherwise.
12.10 All warranties, covenants and representations, whether
affirmative or negative, shall survive the making of this Agreement and the loan
of monies hereunder and each shall be deemed to be continuing in force and
effect and substantial and material in nature.
12.11 Borrower irrevocably consents to the exclusive jurisdiction of
the State Courts of New Jersey or the United States District Court for the
District of New Jersey in any and all actions and proceedings whether arising
hereunder or under any other agreement or undertaking and irrevocably agrees to
service of process by certified mail, return receipt requested to the address of
Borrower set forth herein.
12.12 Borrower waives and shall not interpose any objection of forum
non conveniens or to venue and waives any right to remove any proceeding
commenced in a state court to a federal court.
12.13 BORROWER AND LENDER AS INDEPENDENT COVENANTS IRREVOCABLY WAIVE
JURY TRIAL AND THE RIGHT THERETO IN ANY AND ALL DISPUTES BETWEEN BORROWER AND
LENDER WHETHER HEREUNDER OR UNDER ANY OTHER AGREEMENTS, NOTES, PAPERS,
INSTRUMENTS OR DOCUMENTS HERETOFORE, NOW OR HEREAFTER EXECUTED.
12.14 Headings preceding the text of the several Sections hereof are
for the convenience of reference only and shall not constitute a part of this
Agreement nor shall they affect its meaning, construction or effect.
12.15 This Agreement may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, and such
counterparts shall together constitute one and the same instrument.
12.16 All instruments, agreements and documents to be executed or
delivered by Borrower shall be in form and substance satisfactory to Lender in
its sole discretion.
12.17 Time is of the essence.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
LENDER: Interpool, Inc.
ATTEST:/s/ Kathleen Francis BY:/s/ Richard W. Gross
---------------------------- ----------------------------
Kathleen Francis Name:Richard W. Gross
Title:Senior Vice President
BORROWER: VARILEASE CORPORATION
ATTEST: /s/ Jennifer Charles-Rentz BY: /s/ Marjorie Biglin
-------------------------- ------------------------------
Name: Marjorie Biglin
Title: Assistant Secretary
SCHEDULE "A"
LEASES
TERM NOTE (LIMITED RECOURSE)
$1,581,452.26 Princeton, NJ
March 27, 1998
FOR VALUE RECEIVED and intending to be legally bound, the undersigned,
Varilease Corporation ("Borrower"), a Michigan corporation, with a place of
business at 28525 Orchard Lake Road, Farmington Hills, MI 48334, promises to
pay, in lawful money of the United States, to the order of Interpool, Inc. and
its assigns ("Lender"), at Lender's offices at 211 College Road East, Princeton,
NJ 08540, the sum of One Million Five Hundred Eighty-One Thousand Four Hundred
Fifty-Two and 26/100 ($1,581,452.26) Dollars in thirty-six (36) equal
consecutive monthly installments of principal and interest of $50,327.00 each
commencing on April 1, 1998 and on the first day of each month thereafter with a
final payment of the entire outstanding principal balance of the Loan and all
accrued but unpaid interest, fees, costs and expenses due on March 1, 2001. The
actual amount due and owing from time to time hereunder shall be evidenced by
Lender's records of disbursements and receipts with respect to the Loan which
shall be presumptive conclusive evidence of such amount.
Interest shall accrue on the unpaid principal amount outstanding
hereunder from time to time at the per annum rate equal to nine and one-half
percent (9.50%) ("Contract Rate"). Interest shall be calculated on a basis of a
year of 360 days but computed for the actual number of days elapsed. After the
occurrence of an Event of Default (as defined in the Loan Agreement) such rate
shall be increased to a per annum rate equal to three percent (3%) in excess of
the Contract Rate. In no event shall the amount of interest paid or agreed to be
paid to Lender hereunder exceed the highest lawful rate permissible under any
law which a court of competent jurisdiction may deem applicable hereto. In such
event, the interest rate shall automatically be reduced to the maximum rate
permitted by such law and Lender shall apply any such excess to principal, in
the inverse order of maturity.
This Term Note is the Note referred to in the Limited Recourse Loan and
Security Agreement between Borrower and Lender dated of even date herewith
("Loan Agreement"). This Term Note ("Note") shall evidence Borrower's obligation
to repay all sums advanced by Lender pursuant to this Note, provided however
that Borrower's obligations under this Note are with limited recourse as more
fully set forth below and in the Loan Agreement. If Borrower fails to make any
payment required hereunder or if an Event of Default occurs under the Loan
Agreement, Lender may declare Borrower in default hereunder and declare the
unpaid principal balance of this Note to be immediately due and payable. Lender
shall thereupon have the option at any time and from time to time to exercise
all rights and remedies set forth herein, and in the Loan Agreement, as well as
all rights and remedies otherwise available to Lender at law or in equity, to
collect the unpaid indebtedness hereunder and thereunder. This Note is secured
by the Collateral described in the Loan Agreement. This Note may be prepaid only
in accordance with the terms and conditions of the Loan Agreement.
Borrower hereby waives protest, demand, notice of nonpayment and all
other notices in connection with the delivery, acceptance, performance or
enforcement of this Note. Any failure or delay of Lender to exercise any right
hereunder shall not be construed as a waiver of the right to exercise the same
or any other right at any other time or times. The waiver by Lender of a breach
or default of any provision of this Note shall not operate or be construed as a
waiver of any subsequent breach or default thereof. Subject to the terms of the
Loan Agreement, Borrower agrees to reimburse Lender for all expenses, including,
without limitation, attorneys' fees, incurred by Lender to enforce the
provisions of this Note, to protect, preserve and defend Lender's rights under
the Loan Agreement, and collect Borrower's obligations hereunder as described in
the Loan Agreement.
Notwithstanding the entry of any judgment under this Note, the unpaid
principal balance under this Note shall continue to bear interest at the
applicable rate set forth above.
This Note shall be construed and governed by the laws of the State of
New Jersey, without regard to its otherwise applicable principles of conflict of
laws. The provisions of this Note are severable and the invalidity or
unenforceability of any provision shall not alter or impair the remaining
provisions of this Note. All capitalized terms not otherwise defined herein
shall have the respective meanings as set forth in the Loan Agreement.
BORROWER AND LENDER AS INDEPENDENT COVENANTS IRREVOCABLY WAIVE JURY
TRIAL AND THE RIGHT THERETO IN ANY AND ALL DISPUTES BETWEEN BORROWER AND LENDER
WHETHER HEREUNDER OR UNDER ANY OTHER AGREEMENTS, NOTES, PAPERS, INSTRUMENTS OR
DOCUMENTS HERETOFORE, NOW OR HEREAFTER EXECUTED.
Lender, and any subsequent holder of this Note, by acceptance of the
Note agrees that except as provided in the Loan Agreement, Borrower shall have
no personal liability or obligation with respect to payment of principal,
interest and other amounts payable under this Note and such amounts are payable
from the proceeds received by Lender (or the Lender's successors or assigns)
from Lender's right, title and interest in and to the Collateral.
IN WITNESS WHEREOF, and intending to be legally bound hereby, Borrower
has executed these presents the day and year first above written.
VARILEASE CORPORATION
By: /s/ Marjorie Biglin Attest: /s/ Jennifer Charles-Rentz
--------------------------- ------------------------------
Name: Marjorie Biglin
Title: Assistant Secretary
LIMITED RECOURSE
LOAN AND SECURITY AGREEMENT
AGREEMENT made this 27th day of March, 1998, by and among Varilease
Corporation ("Borrower"), a Michigan corporation and Interpool, Inc. ("Lender"),
a Delaware corporation.
B A C K G R O U N D
A. Borrower is in the business of leasing personal property to third
party lessees. Borrower desires to borrow funds on a limited recourse basis from
Lender and Lender is willing to lend such funds to Borrower under the terms and
provisions set forth below.
B. The parties desire to define the terms and conditions of the Loan as
defined in Section 2.2 and to reduce their agreements to writing.
NOW, THEREFORE, with the foregoing Background incorporated herein by
reference and intending to be legally bound, the parties hereto agree as
follows:
SECTION 1. Definitions
1.1 "Books and Records" means all of Borrower's original ledger cards,
payment schedules, credit applications, contract rights, liens, security
instruments, guarantees and other General Intangibles relating in any way to the
Lease(s) or Leased Property.
1.2 "Collateral" means the Lease(s), Leased Property and all now or
hereafter existing Books and Records and all cash and noncash proceeds, thereof,
including insurance proceeds.
1.3 "Contract Rate" shall have the meaning set forth in Section 2.3.
1.4 "Defaulted Lease" means any Lease where (i) the Lessee is in
default under the terms of such Lease, (ii) the Lease or Leased Property is
subject to any tax lien or security interest, lien or encumbrance other than
Lender's, except as otherwise consented to by Lender in writing, or (iii) the
Lessee has prepaid any amounts and such prepayment has not been delivered to
Lender within ten days of receipt by Borrower, or (iv) the Leased Property is
destroyed.
1.5 "Equipment" shall have the meaning ascribed thereto in the New
Jersey Uniform Commercial Code.
1.6 "GAAP" means generally accepted accounting principles and practices
at the time for companies engaged in similar businesses, consistently applied.
1.7 "General Intangibles" shall have the meaning ascribed thereto in
the New Jersey Uniform Commercial Code and shall include, but not be limited to,
all contract rights (including without limitation rights under remarketing
agreements), chattel paper, documents, instruments, books, records, ledgers,
journals, check books, print outs, designs, computer programs, computer tapes,
customer lists, causes of action, claims, goodwill, designs and plans, licenses,
license agreements, tax and all other types of refunds, returned and unearned
insurance premiums, rights and claims under insurance policies, patents, patent
application, trademarks, trade names, trade styles, trademark applications and
copyrights.
1.8 "Inventory" shall have the meaning ascribed thereto in the New
Jersey Uniform Commercial Code.
1.9 "Lease" means all of Borrower's Accounts, Documents, General
Intangibles, Instruments and Chattel Paper arising in connection with each and
every equipment lease and/or schedule to a master lease agreement identified on
Schedule "A" attached hereto and made a part hereof. The term "Lease" includes
(i) all payments to be made thereunder, (ii) all rights of Borrower therein, and
(iii) any and all amendments, renewals, extensions or guarantees thereof.
1.10 "Leased Property" means any property leased or to be leased by
Borrower to a Lessee pursuant to a Lease; the term "Leased Property" includes
all of Borrower's Inventory or Equipment so leased and any and all additions,
improvements, accessions, attachments, upgrades (except to the extent such
upgrades are severable without diminishing the value of the underlying Leased
Property), replacements and substitutions thereto and therefor.
1.11 "Lessee" means the lessee(s) or obligor(s) responsible for payment
and/or performance under a Lease.
1.12 "Liability" or "Liabilities" means all existing and future
recourse liabilities of Borrower to Lender, including without limitation, the
obligations of Borrower under Sections 2.5, and 12.4 of this Agreement and all
other recourse liabilities and obligations of every kind or nature whatsoever of
Borrower to Lender, whether now existing or hereafter incurred, joint or
several, matured or unmatured, direct or indirect, primary or secondary, related
or unrelated or due or to become due, including but not limited to, any
extensions, modifications, substitutions, increases and renewals thereof, and
substitutions therefor.
1.13 "New Jersey Uniform Commercial Code" shall mean the Uniform
Commercial Code as enacted in New Jersey as the same shall be amended from time
to time.
1.14 "Note" means all notes evidencing the Loan made by Lender to
Borrower hereunder, as may be amended, modified, replaced or restated from time
to time.
1.15 All other capitalized terms used but not defined herein shall have
the meanings ascribed thereto in the New Jersey Uniform Commercial Code unless
the text clearly indicates otherwise.
SECTION 2. The Loans
2.1 Preconditions to Loan. All of the following events must occur prior
to Lender making the Loan hereunder:
(a) The Board of Directors and, if stockholder
approval is deemed necessary, the stockholders of Borrower shall have adopted
appropriate general or specific resolutions authorizing the execution and
delivery of this Agreement and the taking of all action called for herein;
(b) Counsel for Borrower shall have furnished general
or specific opinions satisfactory to Lender that include without limitation that
the corporate action of Borrower referred to in Section 2.1(a) is satisfactory
to such counsel and that this Agreement has been duly authorized, executed and
delivered by the Borrower, and it constitutes, and the Loan to Borrower
hereunder will constitute, legal, valid and binding obligations of Borrower in
accordance with the terms of this Agreement;
(c) There must not exist an Event of Default or event
which with the lapse of time or notice or both would become an Event of Default
under Section 7;
(d) There has been no material adverse change in the
business, operations or condition (financial or otherwise) of Borrower since the
date of the most recent financial statement of Borrower delivered to the Lender;
(e) Borrower has delivered or caused to be delivered
such other documents, instruments and agreements reasonably required by Lender
or required by the terms of this Agreement; and
(f) Borrower shall have delivered the following to
Lender:
(i) A written statement setting forth the
Lessee and a description of the Lease and the Leased Property;
(ii) A fully executed counterpart of this
Agreement;
(iii) A Note executed by Borrower in form
and substance satisfactory to Lender;
(iv) Invoices showing the true cost of the
Leased Property net of any servicing or maintenance charges, brokers' fees or
similar type of "soft costs";
(v) Uniform Commercial Code financing
statements listing Lender as secured party and Borrower as debtor, to be filed
in all locations satisfactory to Lender;
(vi) Each original counterpart of each
Lease, together with, if Borrower is not the original lessor, an original
counterpart of an assignment of the Lease to Borrower by the original and
intermediary lessors thereof;
(vii) The original Certificate of Acceptance
evidencing that the Lessee has received and accepted the Leased Property;
(viii) The Notice and Acknowledgement of
Assignment of Lease executed and delivered by Lessee agreeing to pay Lender
directly;
(ix) All guaranties, agreements, sureties,
insurance policies, subordination agreements and opinions of counsel arising
pursuant to or in connection with, the Collateral;
(x) Such additional UCC financing statements
as Lender may request in number, form and substance satisfactory to Lender
necessary to perfect Lender's security interest in the Lease and Leased Property
including without limitation UCC-1 financing statements filed by Borrower, as
secured party, against Lessee, as Debtor, and assigned to Lender;
(xi) Such UCCs, federal tax lien, and
judgment searches as Lender requests showing that the Collateral is free and
clear of all liens, claims and encumbrances other than those granted to Lender
hereunder;
(xii) Such other agreements, instruments and
documents and information (financial or otherwise) concerning Borrower or Lessee
as Lender may reasonably request; and
(xiii) Evidence that Leased Property is
insured against all risks in form and amount, with an insurer satisfactory to
Lender, against fire (with extended coverage), liability and such other hazards
as are customary with companies in the same or similar business as the Lessee
and cause Lender's security interest as indicated in Section 3.1, to be endorsed
on all policies of insurance as lender loss payee, so that: (i) all payments for
losses will be paid solely to Lender; (ii) the policy shall cover and insure
Lender's interest in the Collateral notwithstanding any act or neglect of
Borrower or Lessee, and (iii) the Borrower shall furnish Lender upon request
with evidence of such insurance together with a certificate thereof requiring
not less than thirty (30) days written notice to Lender prior to cancellation or
termination.
2.2 Limited Recourse Loan. Upon the occurrence of all events set forth
in Section 2.1 above, and simultaneously with the execution hereof (the
"Closing") and of all instruments or documents necessary or in the opinion of
Lender proper to effectuate the intention of the parties hereto, the Lender
shall lend to Borrower the sum of $1,581,452.26 for the purpose of financing
Leases or Leased Property on a limited recourse basis ("Loan").
2.3 Interest. Interest on the outstanding principal balance of the Loan
will be paid monthly (with such payments coinciding with the lease payments on
the Collateral) at the per annum rate equal to nine and 50/100 percent (9.50%)
("Contract Rate"). Upon the occurrence of an Event of Default hereunder,
interest shall accrue on the outstanding principal balance of the Loan at a per
annum rate of three percent (3%) in excess of the Contract Rate except, however,
where any amount due by Lessee under the Lease is more than five (5) days past
due, interest on such amount shall accrue at the interest rate set forth in the
Lease. Interest shall be charged on a 360 day year counting the actual days
elapsed. Interest at the applicable rate shall be paid and continue to be paid
even after default, maturity, acceleration, recovery of judgment, Bankruptcy,
insolvency proceedings of any kind or the happening of any event or occurrence
similar or dissimilar. In no event shall any interest accrued pursuant to the
second sentence of this paragraph be a recourse liability of Borrower unless the
same accrued as a result of an Event of Default which gives rise to a Liability.
2.4 Invoices. Each month, Lessor under the Lease shall render to
Lessee, an invoice for the Lease payments due and owing. Lessee shall be
instructed to, and shall agree to, make all payments under the Lease directly to
Lender to be applied against the Loan balance.
2.5 Reimbursement of Expenses. It is anticipated that Borrower and
Lender will enter into a series of loan transactions on the date hereof
("Transactions") and in conjunction therewith Borrower shall pay Lender the
aggregate sum of $7,500 for all out of pocket expenses of any kind incurred by
Lender in connection with the Transactions, including reasonable attorneys fees,
UCC searches, the cost of filing financing statements, continuation, amendment
and termination statements, search fees and any other fees incurred solely in
connection with the negotiation, drafting and closing of the Transactions and
perfection of its security interest in the Collateral.
2.6 Use of Proceeds. The proceeds of the Loan shall be used solely to
finance or refinance Borrower's purchase of the Lease(s) or Leased Property.
2.7 Limited Recourse. Subject to the Lender's rights and Borrower's
recourse liability under Sections 2.5 and 12.4 or as otherwise agreed to between
Borrower and Lender from time to time, Lender's recourse against Borrower under
the Note shall be limited to the Collateral.
SECTION 3. Collateral
3.1 Security Interest. As security for repayment of the Loan and all
Liabilities of Borrower to Lender arising hereunder or under the Note, Borrower
grants to Lender a first priority security interest in, and assigns to Lender
the Collateral.
3.2 Financing Statements. Borrower will, from time to time, join with
Lender in executing financing statements, assignments and continuation
statements, under the Uniform Commercial Code covering the Collateral and any
portion thereof and such other instruments and documents as may be necessary to
perfect Lender's security interest in the Collateral or otherwise effectuate the
purposes of this Agreement. Borrower irrevocably grants to Lender a power of
attorney to execute for Borrower all such financing statements, and any
amendments thereto. Further, Borrower irrevocably authorizes the filing of a
carbon, photographic or other reproduction of this Agreement or of a financing
statement as a financing statement and agrees that such filing is sufficient as
a financing statement.
3.3 Sole Original Leases. Borrower shall deliver the sole original of
Counterpart 1 of each Lease Schedule to the Lender and all other existing copies
of such Leases shall be marked "copy" or "this lease has been assigned to
Interpool, Inc. as security for the obligations pursuant to that Limited
Recourse Loan and Security Agreement dated March 27, 1998." For purposes of this
paragraph the term "sole original of Counterpart 1 of each Lease Schedule" shall
not include a master lease agreement where a schedule to a master lease
agreement is assigned to the Lender and such schedule incorporates the terms of
such master lease agreement by reference and the schedule is a separate lease
for "chattel paper" purposes under the Uniform Commercial Code and possession of
such schedule constitutes possession of "chattel paper" under the Uniform
Commercial Code.
SECTION 4. Representations and Warranties
The Borrower represents and warrants to the Lender, which
representations and warranties shall survive the execution hereof and all action
hereunder as follows:
4.1 Borrower is a corporation duly organized, validly existing, and in
good standing under the laws of the State of its incorporation and has the power
to carry on its business as now constituted, is qualified as a foreign
corporation and is in good standing in other jurisdictions where the nature of
its business makes such qualification necessary.
4.2 The execution and delivery by Borrower of this Agreement and the
performance by it of the transactions herein contemplated are and will be within
its corporate powers, have been and will be duly authorized, and are not and
will not be in contravention of any order of court or other agency of
government, of law or the terms of its Articles of Incorporation, By-Laws, or of
any indenture, agreement or undertaking to which it is a party or by which it or
its property is bound, or be in conflict with, result in a breach of or
constitute (with due notice and/or lapse of time) a default under any such
indenture, agreement or undertaking, or result in the imposition of any lien,
charge or encumbrance of any nature on any of Borrower's properties.
4.3 This Agreement, the Note, all Leases and any assignment or other
document when delivered, will be the valid, legal and binding obligations of
Borrower, enforceable in accordance with their respective terms.
4.4 There are no suits in law or equity or proceedings before any
governmental instrumentality or agency against Borrower, now pending or to the
knowledge of Borrower's officers is there threatened or likely any litigation or
any proceedings against or affecting Borrower, the outcome of which might
materially and adversely affect the Collateral.
4.5 All Collateral is free and clear of all liens, claims, encumbrances
and security interests, except those granted to Lender hereunder.
4.6 All taxes, federal, state and local, due by Borrower have been paid
or accrued to date.
4.7 Borrower's tax identification number is as follows: 38-237-9524.
4.8 All operations of the Borrower have been carried on in accordance
with all applicable laws, statutes, ordinances, rules and regulations. No
investigation by any governmental authority, federal, state or local, is pending
or threatened against Borrower.
4.9 All places of business of Borrower are listed on Exhibit "4.9"
attached hereto and made a part hereof.
4.10 Within five (5) years prior to the Closing, Borrower has not
conducted business under or used any other name (whether corporate or assumed).
4.11 The following representations and warranties are made with respect
to each Lease and/or items of Leased Property and shall be true and correct at
the time each such Lease is assigned to Lender:
(a) Each Lease is genuine, based on contracts that
are enforceable in accordance with its terms against the Lessee and the Leased
Property named and referenced therein, constitutes the entire agreement for the
leasing of the Leased Property thereby covered, has not been altered or amended,
except as set forth in the related schedules, and Borrower's Books and Records
relating thereto are accurate, complete and genuine;
(b) The sole original of each Lease has been
delivered to Lender and any counterpart of any lease which has not been
delivered to the Lender bears the legend "Copy" or "This Lease has been assigned
to Interpool, Inc. as security for the obligations pursuant to that certain
Limited Recourse Loan and Security Agreement dated March 27, 1998," or similar
language on the face thereof;
(c) Where the Lease consists of a Master Lease
Agreement and specific schedules which describe the terms of any specific items
to be leased pursuant to such schedule, delivery of the original schedule shall
constitute delivery of the original Lease, provided that the terms of the Master
Lease Agreement and the schedule make it clear that for purposes of "Chattel
Paper" under the Uniform Commercial Code, the sole original schedule delivered
to Lender is a separate lease and that possession of such schedule constitutes
possession of "Chattel Paper" under the Uniform Commercial Code;
(d) With respect to each Lease, unless Lender agrees
otherwise in writing, Borrower will file within ten (10) days of receipt by
Lessee of possession of Leased Property, such UCC financing statements (listing
Borrower as Secured Party, the Lessee as Debtor, Lender as Assignee and such
Leased Property as Collateral) in such locations as would be required by
applicable law (if Borrower were a Secured Party and Lessee were a Debtor) in
order to perfect a security interest in such Leased Property under the UCC in
favor of Lender as Borrower's Assignee;
(e) The original amount and unpaid balance of each
Lease shown on Borrower's Books and Records and on any statement or schedule
delivered to Lender in connection therewith is the true and correct amount
actually owed to Lender, no portion of which, except as specifically provided
for in the Lease, has been prepaid;
(f) The amounts due under the Leases are not and will
not be subject to any claim or reduction, counterclaim, setoff, recoupment, or
any other claim, allowance or adjustment and no Lease has been re-negotiated,
restructured or compromised except as renewed in the ordinary course of
business;
(g) All security agreements, title retention
instruments and other documents and instruments which are security for any
Lease, and/or each Lease, contained a correct and sufficient description of the
Leased Property covered thereby and all security interests granted therein to
Borrower (either directly or as assignee) have been properly perfected and
assigned to Lender;
(h) Borrower has not and will not enter into any
agreement with a Lessee of any Leased Property which provides, directly or
indirectly, for the crediting of any obligation or liability of Borrower to such
Lessee against future rentals accruing under the Lease;
(i) Each item of Leased Property is in good
condition, ordinary wear and tear excepted, has not been lost, stolen, destroyed
or damaged;
(j) Each item of Leased Property has been delivered
to and, in all instances, unconditionally accepted by the Lessee and has not
been removed from service or the place of installation indicated in the Lease;
(k) Each Lease has been duly executed by the lessor
named therein and each Lessee, and is a valid, legal and binding obligation of
Borrower, and such Lessee, and is enforceable against Borrower and such Lessee
in accordance with its terms. Following the making of the Loan in accordance
with Borrower's instructions to Lender, Borrower, subject to the security
interest of Lender, will be the sole owner of the Collateral and has the
authority to assign all of its right, title and interest therein upon the terms
herein set forth;
(l) All costs, fees, and expenses incurred in making
and closing each of the Leases has been paid and each Lease is or will be
current at the time of the assignment thereof to Lender. No event exists which
with the giving of notice or the passage of time or both, will result in the
occurrence of a default of any obligation as expressed in any Lease;
(m) All rentals, fees, costs, expenses and charges
paid or payable by the Lessee under any Lease, including without limitation, any
brokerage and other fees paid to Borrower do not violate any laws relating to
the maximum fees, costs, expenses or charges that can be charged in any state in
which any Leased Property is located or in which the corresponding Lessee is
located, or in which a transaction was consummated, or in any other state which
may have jurisdiction with respect to any such Leased Property, Lease or Lessee;
(n) Lender has a first lien security interest in the
Collateral subject to no other security interest or other interest. Borrower has
taken all steps necessary to maintain Lender's first lien security interest in
the Collateral, including, if required, perfecting the Borrower's security
interest through filing financing statements, amendments thereto, or
assignments;
(o) Each item of Leased Property has been insured in
the ordinary course of Borrower's or the corresponding Lessee's business;
(p) Neither Borrower nor to the best of Borrower's
knowledge has any lessor or prior lender holding a security interest in any of
the Collateral received notice of a Bankruptcy, receivership, reorganization,
insolvency or financial embarrassment of any Lessee;
(q) No Lessee is a subsidiary, or affiliate of
Borrower, or under common control with Borrower or is an officer or employee of
Borrower;
(r) No Lease is a Defaulted Lease;
(s) No Lease constitutes a sublease of the
corresponding Leased Property.
SECTION 5. Affirmative Covenants
Borrower covenants with Lender as follows:
5.1 Borrower will take the necessary steps to preserve its rights to
conduct business in all jurisdictions in which the nature of its business shall
require qualifications to do business or where the failure to so qualify may
have a material adverse effect on the ability of Borrower or Lender to enforce
any Lease or realize on any Leased Property.
5.2 Borrower will notify Lender, in writing, not less than thirty (30)
days prior to any change in the location of the Chief Executive Office or if the
Collateral is moved to a location other than that specified in the corresponding
Lease.
5.3 Borrower will comply with and observe all laws, statutes,
ordinances, rules and regulations material to the operation of its business and
maintain all licenses and permits necessary for the operation of its business,
and Borrower will pay all taxes, assessments and governmental charges required
by law.
5.4 Borrower shall permit Lender, and any representative designated by
Lender, to visit and inspect any of Borrower's property, assets, Books and
Records, and finance and other records, including, without limitation, financial
statements and Leases, and to discuss Borrower's affairs, finances and accounts
as they relate to the Collateral with Borrower's agents, officers and employees
(including Borrower's independent accountants) at such reasonable times and as
often as Lender may reasonably request.
5.5 Unless Lender consents otherwise in writing, Borrower shall at all
times keep all Collateral free and clear of all liens, encumbrances and security
interests of every kind without limitation.
5.6 Borrower shall mark its Books and Records to indicate the Lender's
security interest in the Collateral, including the Lease(s) and, unless Lender
consents otherwise in writing, Borrower shall retain title at all times to the
Leased Property. However, where Lender consents in writing to an assignment of
any of Borrower's right, title and interest in the Lease and/or the Collateral,
(which consent shall not be unreasonably withheld) and provided Borrower
complies with the requirements of a Transferee Agreement (which Transferee
Agreement shall be the same in form and substance as that attached hereto as
Exhibit 5.6), Borrower may sell, assign or transfer its right, title and
interest, subject always to the prior rights of Lender, in the Lease and/or
Collateral.
5.7 Borrower shall join with Lender to notify all Lessee(s) of the
Lender's security interest in the Collateral and direct payment under the
Lease(s) to be made directly to Lender and Lender may, in its own name or in the
name of the Borrower collect, sue for and receive payment of any or all
Lease(s), and settle, compromise and adjust the same on any terms as may be
satisfactory to Lender, in its sole and absolute discretion for any reason or
without reason.
5.8 Borrower will immediately notify Lender of the institution or
threat of any litigation, administrative proceeding or investigation or any
other event or happening which might have a material adverse affect on the
Collateral or Borrower's or Lender's ability to enforce their respective rights
under the Lease(s).
5.9 Borrower shall, at Lender's request, within ninety (90) days after
the close of the fiscal year, furnish Lender with a complete financial audit
prepared by Borrower's independent certified public accounting firm acceptable
to Lender, including a balance sheet, income statement and statement of cash
flows prepared in accordance with GAAP.
SECTION 6. Negative Covenants
Borrower covenants with Lender that it will not:
6.1 Without the prior written consent of Lender, sell, assign or
transfer any portion of the Collateral. However, where Lender consents in
writing to an assignment of any of Borrower's right, title and interest in the
Lease and/or the Collateral, (which consent shall not be unreasonably withheld)
and provided Borrower complies with the requirements of a Transferee Agreement
(which Transferee Agreement shall be the same in form and substance as that
attached hereto as Exhibit 5.6), Borrower may sell, assign or transfer its
right, title and interest, subject always to the prior rights of Lender, in the
Lease and/or Collateral.
6.2 Without the prior written consent of Lender, liquidate, dissolve or
discontinue normal operations with the intention to liquidate, dissolve, sell,
lease, transfer or otherwise dispose of any substantial part of its assets.
Lender acknowledges that the Borrower anticipates a merger with other entities
that may occur during the term hereof, however, according to the terms thereof,
Varilease Corporation will be a wholly owned subsidiary and will continue to
operate in the same or like manner as prior to said merger.
6.3 Without the prior written consent of Lender, permit the removal,
other than in the ordinary course of business, of any Books and Records or
Leased Property from the place of business where presently located.
6.4 Without providing to Lender thirty (30) days prior written notice,
change its name or any trade style it uses, or adopt any new name or trade
style.
SECTION 7. Events of Default
The occurrence of any one or more of the following events with
respect to Borrower shall constitute an event of default ("Event of Default")
hereunder:
7.1 Termination of existence, business failure or the making of an
assignment for the benefit of creditors;
7.2 Non-payment of any sum or sums due to Lender or others hereunder or
otherwise when due or non-performance of any contractual obligation to Lender
including without limitation a breach of a Lease by the Lessee or Borrower that
results in a Lease becoming a Defaulted Lease;
7.3 Institution of Bankruptcy, arrangement, composition,
reorganization, liquidation or receivership proceedings, voluntary or
involuntary, or the appointment of a receiver, trustee, conservator,
sequestrator or other judicial representative, similar or dissimilar;
7.4 Any financial statements of Borrower, warranties or representations
herein, or in any other document or certificate heretofore or hereafter made by
Borrower are false, misleading, incomplete or incorrect in any material manner;
7.5 If Borrower has engaged in any activity which may reasonably result
in the forfeiture of any Collateral to any governmental entity, federal, state
or local; then, in any such event which is not cured within seven (7) days of
the earlier of receipt of notice from Lender of the Event of Default or Borrower
obtaining knowledge of the Event of Default, Lender, at its option may declare
the unpaid principal balance, accrued interest, and all other sums due to Lender
hereunder or otherwise immediately due and payable (except with respect to an
Event of Default arising under paragraph 7.1 or 7.3 above, in which case all of
Borrower's obligations and liabilities to Lender shall be automatically deemed
to be immediately due and payable).
SECTION 8. Remedies on Default
8.1 (a) Upon the occurrence of an Event of Default hereunder, Borrower
grants to Lender in addition to any rights, powers or remedies Lender may have
under any applicable law, all of which shall be cumulative, the right, subject
always to the rights of Lessees under the Leases, to do any or all of the
following (which list is given by way of example and is not intended to be an
exhaustive list of all rights and remedies):
(i) By its own means, with or without judicial
assistance, enter any of Borrower's premises or other locations where Collateral
is kept, and take possession of the Collateral, or render it unusable, or
dispose of the Collateral on such premises without any liability for rent,
storage, utilities or other sums, and Borrower shall not resist or interfere
with such action; and
(ii) Lender shall have all rights, remedies and
powers of Borrower under the Leases as lessor, including without limitation, the
right to collect and receive all rental, insurance proceeds and other payments,
payable pursuant to the Leases; amend or terminate any Lease; and take such
action upon default under any Lease, as any lessor may do, in Lender's or
Borrower's name, including without limitation repossession of any Leased
Property and commencement of suit, and to exercise any rights and remedies as
lessor under the Lease(s).
(b) Anything herein to the contrary notwithstanding,
the execution of this Agreement and the exercise by Lender of any of its rights
hereunder shall not (i) release Borrower from any of its duties or obligations
under the Leases, and (ii) shall not obligate Lender (x) to perform any of
Borrower's obligations or duties under the Leases, or (y) to take any action to
collect or enforce any claim for payment.
(c) Borrower hereby agrees that a notice received by
it at least ten (10) days before the time of any intended public sale or at the
time after which any private sale or other disposition of the Collateral is to
be made, shall be deemed to be commercially reasonable notice of such sale or
other disposition. If permitted by law, any Collateral which threatens to
speedily decline in value or which is sold on a recognized market may be sold
immediately by Lender without prior notice to Borrower.
8.2 Lender shall have the right to proceed against all or any portion
of the Collateral in any order and may apply such Collateral to the Liabilities
of Borrower to Lender in any order. All rights and remedies granted Lender
hereunder and under any agreement referred to herein, or otherwise available at
law or in equity, shall be deemed concurrent and cumulative, and not alternative
remedies, and Lender may proceed with any number of remedies at the same time
until all existing and future Liabilities of Borrower to Lender, are satisfied
in full. The exercise of any one right or remedy shall not be deemed a waiver or
release of any other right or remedy, and upon the occurrence of an Event of
Default, Lender may proceed against Borrower and/or the Collateral, at any time,
under any agreement, with any available remedy and in any order.
8.3 Notwithstanding anything to the contrary contained in this Section
8 or Section 7 above, the occurrence of an Event of Default due solely to the
non-payment of sums owed to Lender resulting from a Lease becoming a Defaulted
Lease shall constitute an Event of Default hereunder only with respect to the
Loan and Lender's recourse to Borrower with respect to amounts due under such
Loan shall be limited to the Collateral.
SECTION 9. Termination
9.1 Lender shall have the right to retain, until final payment in full
of all Liabilities of the Borrower all of the Collateral and all of its rights
with respect thereto; provided, however, that so long as no Event of Default has
occurred, Lender shall release its lien on Collateral at the time the Loan is
repaid in full. All terms, conditions and provisions of this Agreement shall
remain in full force and effect until such time as all sums owed Lender
hereunder are paid in full.
SECTION 10. Waivers
Borrower waives presentment, demand, protest, notice of default,
non-payment, partial payments and all other notices and formalities relating to
this Agreement other than notices specifically required hereunder. Borrower
consents to and waives notice of the granting of indulgences or extensions of
time or payment, the taking or releasing of security, the addition or release of
persons primarily or secondarily liable on or with respect to the Liabilities.
No delay by the Lender in exercising any right, power or remedy hereunder and no
indulgence given to Borrower in case of any default shall impair any such right
or power or be construed as a waiver of any default by Lender or any
acquiescence therein or as a violation or waiver of any of the terms or
provisions of this Agreement.
SECTION 11. Notices
All notices and other communications hereunder shall be in writing or
confirmed in writing, and they shall be deemed to have been duly delivered or
given, if hand delivered, if telecopied, if sent by nationally recognized
overnight courier, or if mailed via certified mail, return receipt requested
when delivered, as follows:
(a) If to Borrower:
Varilease Corporation
28525 Orchard Lake Road
Farmington Hills, MI 48334
Attention: Gary F. Miller, Senior Vice President
Telecopy:(248) 488-0162
(b) If to Lender:
Interpool, Inc.
211 College Road East
Princeton, NJ 08540
Attention:Raoul J. Witteveen, President
Telecopy: (609)951-0362
and
Interpool, Inc.
211 College Road East
Princeton, NJ 08540
Attention: Richard W. Gross, Senior Vice
President
Telecopy: (609)951-0362
and
MicroTech Leasing Corporation
211 College Road East
Princeton, NJ 08540
Attention: Allen M. Olinger, President
Telecopy: (609) 987-1011
SECTION 12. Miscellaneous
12.1 Borrower agrees that Lender may sell or assign this Loan or grant
participation(s) in this Loan and may without liability furnish information with
respect to this Loan to any prospective purchaser, assignee or participant(s).
12.2 Borrower hereby irrevocably appoints Lender as Borrower's attorney
in fact with full authority in the place and stead of Borrower and in the name
of Borrower, Lender or otherwise in Lender's discretion, to take any action and
to execute any instrument, agreement or document which Lender may reasonably
deem necessary or advisable to accomplish the purposes of this Agreement.
Without limiting the generality of the foregoing, Lender may:
(a) obtain and adjust insurance that Borrower or
Lessee is required to maintain;
(b) ask, demand, collect, sue for, recover, compound,
receive or give acquittance and receipts for money due and to become due under
or in respect of any of the Collateral;
(c) receive, endorse and collect any drafts or other
instruments, documents or chattel paper, in connection with (a) or (b) above;
(d) after the occurrence of an Event of Default, file
any claim or take any action or institute any proceedings which Lender may deem
necessary or desirable for the collection of any of the Collateral or otherwise
to enforce the rights of Lender with respect to any of the Collateral; and
(e) after the occurrence of an Event of Default, with
respect to a Defaulted Lease, execute in Borrower's name, a bill of sale
relating to any Collateral, transferring title to such Collateral to a third
party purchaser.
12.3 If Borrower fails to perform any agreement contained herein,
Lender may (but is not obligated to) perform or cause performance of, such
agreement, at Borrower's expense payable on demand.
12.4 (a) Borrower shall pay, on demand, all of Lender's costs and
expenses (including but not limited to all legal fees and costs) (i) in
connection with the negotiation or preparation of any extensions, modifications,
amendments, waivers or consents to this Agreement, any note, or any other
instrument, agreement or document in connection herewith (but not including the
Lease(s) or corresponding equipment schedules and agreements), and (ii) in
connection with the enforcement of any right, remedy or power pursuant to this
Agreement, any note or any other instrument, agreement, or document in
connection herewith as such rights pertain to the Liabilities. In no event shall
Borrower be personally liable for any of said costs or fees relating to a
default by the Lessee under the Lease which does not also constitute or result
in a breach of any representation, warranty or covenant made by Borrower to or
in favor of Lender; and
(b) Borrower shall indemnify, defend (with counsel
satisfactory to Lender) and hold harmless Lender against and in respect of (i)
any loss, damage or deficiency related to any breach of warranty or
representation or non-fulfillment of any agreement by Borrower under this
Agreement or any related instrument, agreement, document, schedule, exhibit or
other legal obligations in connection herewith, and (ii) all actions, suits,
proceedings, demands, assessments, judgments, costs, legal fees and expenses
incident to any of the foregoing. Any amount reasonably required to be paid
pursuant to the foregoing shall be paid by Borrower to Lender on demand and may
at Lender's option be deducted from or set off against any existing or future
debt, liability or obligation of Lender to Borrower relating to this
transaction. In no event shall Borrower be personally liable for any of said
costs or fees relating to a default by the Lessee under the Lease which does not
also constitute or result in a breach of any representation, warranty or
covenant made by Borrower to or in favor of Lender.
12.5 This Agreement and all rights hereunder shall be governed by the
substantive law of the State of New Jersey. This Agreement shall bind Lender and
Borrower and shall inure to the benefit of Lender and the terms "Lender" and
"Borrower" as used in this Agreement shall include the respective parties and
their respective successors and assigns.
12.6 The terms of this Agreement shall be in addition to those of any
other evidence of liability held by the Lender, all of which shall be construed
as complementary to each other, except as herein otherwise expressly provided
and such other agreements, instruments and documents not modified or superseded
pursuant to the terms hereof remain in full force and effect.
12.7 This Agreement contains the entire agreement between the parties
hereto and may not be modified or changed in any way except in writing signed by
all parties.
12.8 Any express waiver by Lender of any power, right, remedy,
obligation or duty shall not under any circumstances be deemed to constitute a
waiver of Lender's powers, rights or remedies upon the later occurrence or
reoccurrence of any event, transaction or matter. No course of dealing between
Lender and Borrower shall operate as or be deemed to constitute a waiver of
Lender's rights hereunder or affect the duties or obligations of Borrower.
12.9 All powers, rights and remedies of Lender hereunder shall be
cumulative and not exclusive of other powers, rights or remedies granted or
available to Lender under any applicable law unless specifically stated
otherwise.
12.10 All warranties, covenants and representations, whether
affirmative or negative, shall survive the making of this Agreement and the loan
of monies hereunder and each shall be deemed to be continuing in force and
effect and substantial and material in nature.
12.11 Borrower irrevocably consents to the exclusive jurisdiction of
the State Courts of New Jersey or the United States District Court for the
District of New Jersey in any and all actions and proceedings whether arising
hereunder or under any other agreement or undertaking and irrevocably agrees to
service of process by certified mail, return receipt requested to the address of
Borrower set forth herein.
12.12 Borrower waives and shall not interpose any objection of forum
non conveniens or to venue and waives any right to remove any proceeding
commenced in a state court to a federal court.
12.13 BORROWER AND LENDER AS INDEPENDENT COVENANTS IRREVOCABLY WAIVE
JURY TRIAL AND THE RIGHT THERETO IN ANY AND ALL DISPUTES BETWEEN BORROWER AND
LENDER WHETHER HEREUNDER OR UNDER ANY OTHER AGREEMENTS, NOTES, PAPERS,
INSTRUMENTS OR DOCUMENTS HERETOFORE, NOW OR HEREAFTER EXECUTED.
12.14 Headings preceding the text of the several Sections hereof are
for the convenience of reference only and shall not constitute a part of this
Agreement nor shall they affect its meaning, construction or effect.
12.15 This Agreement may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, and such
counterparts shall together constitute one and the same instrument.
12.16 All instruments, agreements and documents to be executed or
delivered by Borrower shall be in form and substance satisfactory to Lender in
its sole discretion.
12.17 Time is of the essence.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
LENDER: Interpool, Inc.
ATTEST: /s/ Kathleen Francis BY: /s/ Richard W. Gross
----------------------------- ------------------------------
Kathleen Francis
Assistant Secretary
Name: Richard W. Gross
Title: Senior Vice President
BORROWER: VARILEASE CORPORATION
ATTEST: /s/ Jennifer Charles-Rentz BY: /s/ Marjorie Biglin
----------------------- -------------------------------
Name: Marjorie Biglin
Title: Assistant Secretary
SCHEDULE "A"
LEASES
TERM NOTE (LIMITED RECOURSE)
$1,265,300.08 Princeton, NJ
March 27, 1998
FOR VALUE RECEIVED and intending to be legally bound, the undersigned,
Varilease Corporation ("Borrower"), a Michigan corporation, with a place of
business at 28525 Orchard Lake Road, Farmington Hills, MI 48334, promises to
pay, in lawful money of the United States, to the order of Interpool, Inc. and
its assigns ("Lender"), at Lender's offices at 211 College Road East, Princeton,
NJ 08540, the sum of One Million Two Hundred Sixty Five Thousand Three Hundred
and 08/100 ($1,265,300.08) Dollars in thirty-six (36) equal consecutive monthly
installments of principal and interest of $40,266.00 each commencing on April 1,
1998 and on the first day of each month thereafter with a final payment of the
entire outstanding principal balance of the Loan and all accrued but unpaid
interest, fees, costs and expenses due on March 1, 2001. The actual amount due
and owing from time to time hereunder shall be evidenced by Lender's records of
disbursements and receipts with respect to the Loan which shall be presumptive
conclusive evidence of such amount.
Interest shall accrue on the unpaid principal amount outstanding
hereunder from time to time at the per annum rate equal to nine and one-half
percent (9.50%) ("Contract Rate"). Interest shall be calculated on a basis of a
year of 360 days but computed for the actual number of days elapsed. After the
occurrence of an Event of Default (as defined in the Loan Agreement) such rate
shall be increased to a per annum rate equal to three percent (3%) in excess of
the Contract Rate. In no event shall the amount of interest paid or agreed to be
paid to Lender hereunder exceed the highest lawful rate permissible under any
law which a court of competent jurisdiction may deem applicable hereto. In such
event, the interest rate shall automatically be reduced to the maximum rate
permitted by such law and Lender shall apply any such excess to principal, in
the inverse order of maturity.
This Term Note is the Note referred to in the Limited Recourse Loan and
Security Agreement between Borrower and Lender dated of even date herewith
("Loan Agreement"). This Term Note ("Note") shall evidence Borrower's obligation
to repay all sums advanced by Lender pursuant to this Note, provided however
that Borrower's obligations under this Note are with limited recourse as more
fully set forth below and in the Loan Agreement. If Borrower fails to make any
payment required hereunder or if an Event of Default occurs under the Loan
Agreement, Lender may declare Borrower in default hereunder and declare the
unpaid principal balance of this Note to be immediately due and payable. Lender
shall thereupon have the option at any time and from time to time to exercise
all rights and remedies set forth herein, and in the Loan Agreement, as well as
all rights and remedies otherwise available to Lender at law or in equity, to
collect the unpaid indebtedness hereunder and thereunder. This Note is secured
by the Collateral described in the Loan Agreement. This Note may be prepaid only
in accordance with the terms and conditions of the Loan Agreement.
Borrower hereby waives protest, demand, notice of nonpayment and all
other notices in connection with the delivery, acceptance, performance or
enforcement of this Note. Any failure or delay of Lender to exercise any right
hereunder shall not be construed as a waiver of the right to exercise the same
or any other right at any other time or times. The waiver by Lender of a breach
or default of any provision of this Note shall not operate or be construed as a
waiver of any subsequent breach or default thereof. Subject to the terms of the
Loan Agreement, Borrower agrees to reimburse Lender for all expenses, including,
without limitation, attorneys' fees, incurred by Lender to enforce the
provisions of this Note, to protect, preserve and defend Lender's rights under
the Loan Agreement, and collect Borrower's obligations hereunder as described in
the Loan Agreement.
Notwithstanding the entry of any judgment under this Note, the unpaid
principal balance under this Note shall continue to bear interest at the
applicable rate set forth above.
This Note shall be construed and governed by the laws of the State of
New Jersey, without regard to its otherwise applicable principles of conflict of
laws. The provisions of this Note are severable and the invalidity or
unenforceability of any provision shall not alter or impair the remaining
provisions of this Note. All capitalized terms not otherwise defined herein
shall have the respective meanings as set forth in the Loan Agreement.
BORROWER AND LENDER AS INDEPENDENT COVENANTS IRREVOCABLY WAIVE JURY
TRIAL AND THE RIGHT THERETO IN ANY AND ALL DISPUTES BETWEEN BORROWER AND LENDER
WHETHER HEREUNDER OR UNDER ANY OTHER AGREEMENTS, NOTES, PAPERS, INSTRUMENTS OR
DOCUMENTS HERETOFORE, NOW OR HEREAFTER EXECUTED.
Lender, and any subsequent holder of this Note, by acceptance of the
Note agrees that except as provided in the Loan Agreement, Borrower shall have
no personal liability or obligation with respect to payment of principal,
interest and other amounts payable under this Note and such amounts are payable
from the proceeds received by Lender (or the Lender's successors or assigns)
from Lender's right, title and interest in and to the Collateral.
IN WITNESS WHEREOF, and intending to be legally bound hereby, Borrower
has executed these presents the day and year first above written.
VARILEASE CORPORATION
By: /s/ Marjorie Biglin Attest: /s/ Jennifer Charles-Rentz
------------------------------- -------------------------------
Name: Marjorie Biglin
Title: Assistant Secretary
LIMITED RECOURSE
LOAN AND SECURITY AGREEMENT
AGREEMENT made this 27th day of March, 1998, by and among Varilease
Corporation ("Borrower"), a Michigan corporation and Interpool, Inc. ("Lender"),
a Delaware corporation.
B A C K G R O U N D
A. Borrower is in the business of leasing personal property to third
party lessees. Borrower desires to borrow funds on a limited recourse basis from
Lender and Lender is willing to lend such funds to Borrower under the terms and
provisions set forth below.
B. The parties desire to define the terms and conditions of the Loan as
defined in Section 2.2 and to reduce their agreements to writing.
NOW, THEREFORE, with the foregoing Background incorporated herein by
reference and intending to be legally bound, the parties hereto agree as
follows:
SECTION 1. Definitions
1.1 "Books and Records" means all of Borrower's original ledger cards,
payment schedules, credit applications, contract rights, liens, security
instruments, guarantees and other General Intangibles relating in any way to the
Lease(s) or Leased Property.
1.2 "Collateral" means the Lease(s), Leased Property and all now or
hereafter existing Books and Records and all cash and noncash proceeds, thereof,
including insurance proceeds.
1.3 "Contract Rate" shall have the meaning set forth in Section 2.3.
1.4 "Defaulted Lease" means any Lease where (i) the Lessee is in
default under the terms of such Lease, (ii) the Lease or Leased Property is
subject to any tax lien or security interest, lien or encumbrance other than
Lender's, except as otherwise consented to by Lender in writing, or (iii) the
Lessee has prepaid any amounts and such prepayment has not been delivered to
Lender within ten days of receipt by Borrower, or (iv) the Leased Property is
destroyed.
1.5 "Equipment" shall have the meaning ascribed thereto in the New
Jersey Uniform Commercial Code.
1.6 "GAAP" means generally accepted accounting principles and practices
at the time for companies engaged in similar businesses, consistently applied.
1.7 "General Intangibles" shall have the meaning ascribed thereto in
the New Jersey Uniform Commercial Code and shall include, but not be limited to,
all contract rights (including without limitation rights under remarketing
agreements), chattel paper, documents, instruments, books, records, ledgers,
journals, check books, print outs, designs, computer programs, computer tapes,
customer lists, causes of action, claims, goodwill, designs and plans, licenses,
license agreements, tax and all other types of refunds, returned and unearned
insurance premiums, rights and claims under insurance policies, patents, patent
application, trademarks, trade names, trade styles, trademark applications and
copyrights.
1.8 "Inventory" shall have the meaning ascribed thereto in the New
Jersey Uniform Commercial Code.
1.9 "Lease" means all of Borrower's Accounts, Documents, General
Intangibles, Instruments and Chattel Paper arising in connection with each and
every equipment lease and/or schedule to a master lease agreement identified on
Schedule "A" attached hereto and made a part hereof. The term "Lease" includes
(i) all payments to be made thereunder, (ii) all rights of Borrower therein, and
(iii) any and all amendments, renewals, extensions or guarantees thereof.
1.10 "Leased Property" means any property leased or to be leased by
Borrower to a Lessee pursuant to a Lease; the term "Leased Property" includes
all of Borrower's Inventory or Equipment so leased and any and all additions,
improvements, accessions, attachments, upgrades (except to the extent such
upgrades are severable without diminishing the value of the underlying Leased
Property), replacements and substitutions thereto and therefor.
1.11 "Lessee" means the lessee(s) or obligor(s) responsible for payment
and/or performance under a Lease.
1.12 "Liability" or "Liabilities" means all existing and future
recourse liabilities of Borrower to Lender, including without limitation, the
obligations of Borrower under Sections 2.5, and 12.4 of this Agreement and all
other recourse liabilities and obligations of every kind or nature whatsoever of
Borrower to Lender, whether now existing or hereafter incurred, joint or
several, matured or unmatured, direct or indirect, primary or secondary, related
or unrelated or due or to become due, including but not limited to, any
extensions, modifications, substitutions, increases and renewals thereof, and
substitutions therefor.
1.13 "New Jersey Uniform Commercial Code" shall mean the Uniform
Commercial Code as enacted in New Jersey as the same shall be amended from time
to time.
1.14 "Note" means all notes evidencing the Loan made by Lender to
Borrower hereunder, as may be amended, modified, replaced or restated from time
to time.
1.15 All other capitalized terms used but not defined herein shall have
the meanings ascribed thereto in the New Jersey Uniform Commercial Code unless
the text clearly indicates otherwise.
SECTION 2. The Loans
2.1 Preconditions to Loan. All of the following events must occur prior
to Lender making the Loan hereunder:
(a) The Board of Directors and, if stockholder
approval is deemed necessary, the stockholders of Borrower shall have adopted
appropriate general or specific resolutions authorizing the execution and
delivery of this Agreement and the taking of all action called for herein;
(b) Counsel for Borrower shall have furnished general
or specific opinions satisfactory to Lender that include without limitation that
the corporate action of Borrower referred to in Section 2.1(a) is satisfactory
to such counsel and that this Agreement has been duly authorized, executed and
delivered by the Borrower, and it constitutes, and the Loan to Borrower
hereunder will constitute, legal, valid and binding obligations of Borrower in
accordance with the terms of this Agreement;
(c) There must not exist an Event of Default or event
which with the lapse of time or notice or both would become an Event of Default
under Section 7;
(d) There has been no material adverse change in the
business, operations or condition (financial or otherwise) of Borrower since the
date of the most recent financial statement of Borrower delivered to the Lender;
(e) Borrower has delivered or caused to be delivered
such other documents, instruments and agreements reasonably required by Lender
or required by the terms of this Agreement; and
(f) Borrower shall have delivered the following to
Lender:
(i) A written statement setting forth the
Lessee and a description of the Lease and the Leased Property;
(ii) A fully executed counterpart of this
Agreement;
(iii) A Note executed by Borrower in form
and substance satisfactory to Lender;
(iv) Invoices showing the true cost of the
Leased Property net of any servicing or maintenance charges, brokers' fees or
similar type of "soft costs";
(v) Uniform Commercial Code financing
statements listing Lender as secured party and Borrower as debtor, to be filed
in all locations satisfactory to Lender;
(vi) Each original counterpart of each
Lease, together with, if Borrower is not the original lessor, an original
counterpart of an assignment of the Lease to Borrower by the original and
intermediary lessors thereof;
(vii) The original Certificate of Acceptance
evidencing that the Lessee has received and accepted the Leased Property;
(viii) The Notice and Acknowledgement of
Assignment of Lease executed and delivered by Lessee agreeing to pay Lender
directly;
(ix) All guaranties, agreements, sureties,
insurance policies, subordination agreements and opinions of counsel arising
pursuant to or in connection with, the Collateral;
(x) Such additional UCC financing statements
as Lender may request in number, form and substance satisfactory to Lender
necessary to perfect Lender's security interest in the Lease and Leased Property
including without limitation UCC-1 financing statements filed by Borrower, as
secured party, against Lessee, as Debtor, and assigned to Lender;
(xi) Such UCCs, federal tax lien, and
judgment searches as Lender requests showing that the Collateral is free and
clear of all liens, claims and encumbrances other than those granted to Lender
hereunder;
(xii) Such other agreements, instruments and
documents and information (financial or otherwise) concerning Borrower or Lessee
as Lender may reasonably request; and
(xiii) Evidence that Leased Property is
insured against all risks in form and amount, with an insurer satisfactory to
Lender, against fire (with extended coverage), liability and such other hazards
as are customary with companies in the same or similar business as the Lessee
and cause Lender's security interest as indicated in Section 3.1, to be endorsed
on all policies of insurance as lender loss payee, so that: (i) all payments for
losses will be paid solely to Lender; (ii) the policy shall cover and insure
Lender's interest in the Collateral notwithstanding any act or neglect of
Borrower or Lessee, and (iii) the Borrower shall furnish Lender upon request
with evidence of such insurance together with a certificate thereof requiring
not less than thirty (30) days written notice to Lender prior to cancellation or
termination.
2.2 Limited Recourse Loan. Upon the occurrence of all events set forth
in Section 2.1 above, and simultaneously with the execution hereof (the
"Closing") and of all instruments or documents necessary or in the opinion of
Lender proper to effectuate the intention of the parties hereto, the Lender
shall lend to Borrower the sum of $1,265,300.08 for the purpose of financing
Leases or Leased Property on a limited recourse basis ("Loan").
2.3 Interest. Interest on the outstanding principal balance of the Loan
will be paid monthly (with such payments coinciding with the lease payments on
the Collateral) at the per annum rate equal to nine and 50/100 percent (9.50%)
("Contract Rate"). Upon the occurrence of an Event of Default hereunder,
interest shall accrue on the outstanding principal balance of the Loan at a per
annum rate of three percent (3%) in excess of the Contract Rate except, however,
where any amount due by Lessee under the Lease is more than five (5) days past
due, interest on such amount shall accrue at the interest rate set forth in the
Lease. Interest shall be charged on a 360 day year counting the actual days
elapsed. Interest at the applicable rate shall be paid and continue to be paid
even after default, maturity, acceleration, recovery of judgment, Bankruptcy,
insolvency proceedings of any kind or the happening of any event or occurrence
similar or dissimilar. In no event shall any interest accrued pursuant to the
second sentence of this paragraph be a recourse liability of Borrower unless the
same accrued as a result of an Event of Default which gives rise to a Liability.
2.4 Invoices. Each month, Lessor under the Lease shall render to
Lessee, an invoice for the Lease payments due and owing. Lessee shall be
instructed to, and shall agree to, make all payments under the Lease directly to
Lender to be applied against the Loan balance.
2.5 Reimbursement of Expenses. It is anticipated that Borrower and
Lender will enter into a series of loan transactions on the date hereof
("Transactions") and in conjunction therewith Borrower shall pay Lender the
aggregate sum of $7,500 for all out of pocket expenses of any kind incurred by
Lender in connection with the Transactions, including reasonable attorneys fees,
UCC searches, the cost of filing financing statements, continuation, amendment
and termination statements, search fees and any other fees incurred solely in
connection with the negotiation, drafting and closing of the Transactions and
perfection of its security interest in the Collateral.
2.6 Use of Proceeds. The proceeds of the Loan shall be used solely to
finance or refinance Borrower's purchase of the Lease(s) or Leased Property.
2.7 Limited Recourse. Subject to the Lender's rights and Borrower's
recourse liability under Sections 2.5 and 12.4 or as otherwise agreed to between
Borrower and Lender from time to time, Lender's recourse against Borrower under
the Note shall be limited to the Collateral.
SECTION 3. Collateral
3.1 Security Interest. As security for repayment of the Loan and all
Liabilities of Borrower to Lender arising hereunder or under the Note, Borrower
grants to Lender a first priority security interest in, and assigns to Lender
the Collateral.
3.2 Financing Statements. Borrower will, from time to time, join with
Lender in executing financing statements, assignments and continuation
statements, under the Uniform Commercial Code covering the Collateral and any
portion thereof and such other instruments and documents as may be necessary to
perfect Lender's security interest in the Collateral or otherwise effectuate the
purposes of this Agreement. Borrower irrevocably grants to Lender a power of
attorney to execute for Borrower all such financing statements, and any
amendments thereto. Further, Borrower irrevocably authorizes the filing of a
carbon, photographic or other reproduction of this Agreement or of a financing
statement as a financing statement and agrees that such filing is sufficient as
a financing statement.
3.3 Sole Original Leases. Borrower shall deliver the sole original of
Counterpart 1 of each Lease Schedule to the Lender and all other existing copies
of such Leases shall be marked "copy" or "this lease has been assigned to
Interpool, Inc. as security for the obligations pursuant to that Limited
Recourse Loan and Security Agreement dated March 27, 1998." For purposes of this
paragraph the term "sole original of Counterpart 1 of each Lease Schedule" shall
not include a master lease agreement where a schedule to a master lease
agreement is assigned to the Lender and such schedule incorporates the terms of
such master lease agreement by reference and the schedule is a separate lease
for "chattel paper" purposes under the Uniform Commercial Code and possession of
such schedule constitutes possession of "chattel paper" under the Uniform
Commercial Code.
SECTION 4. Representations and Warranties
The Borrower represents and warrants to the Lender, which
representations and warranties shall survive the execution hereof and all action
hereunder as follows:
4.1 Borrower is a corporation duly organized, validly existing, and in
good standing under the laws of the State of its incorporation and has the power
to carry on its business as now constituted, is qualified as a foreign
corporation and is in good standing in other jurisdictions where the nature of
its business makes such qualification necessary.
4.2 The execution and delivery by Borrower of this Agreement and the
performance by it of the transactions herein contemplated are and will be within
its corporate powers, have been and will be duly authorized, and are not and
will not be in contravention of any order of court or other agency of
government, of law or the terms of its Articles of Incorporation, By-Laws, or of
any indenture, agreement or undertaking to which it is a party or by which it or
its property is bound, or be in conflict with, result in a breach of or
constitute (with due notice and/or lapse of time) a default under any such
indenture, agreement or undertaking, or result in the imposition of any lien,
charge or encumbrance of any nature on any of Borrower's properties.
4.3 This Agreement, the Note, all Leases and any assignment or other
document when delivered, will be the valid, legal and binding obligations of
Borrower, enforceable in accordance with their respective terms.
4.4 There are no suits in law or equity or proceedings before any
governmental instrumentality or agency against Borrower, now pending or to the
knowledge of Borrower's officers is there threatened or likely any litigation or
any proceedings against or affecting Borrower, the outcome of which might
materially and adversely affect the Collateral.
4.5 All Collateral is free and clear of all liens, claims, encumbrances
and security interests, except those granted to Lender hereunder.
4.6 All taxes, federal, state and local, due by Borrower have been paid
or accrued to date.
4.7 Borrower's tax identification number is as follows: 38-237-9524.
4.8 All operations of the Borrower have been carried on in accordance
with all applicable laws, statutes, ordinances, rules and regulations. No
investigation by any governmental authority, federal, state or local, is pending
or threatened against Borrower.
4.9 All places of business of Borrower are listed on Exhibit "4.9"
attached hereto and made a part hereof.
4.10 Within five (5) years prior to the Closing, Borrower has not
conducted business under or used any other name (whether corporate or assumed).
4.11 The following representations and warranties are made with respect
to each Lease and/or items of Leased Property and shall be true and correct at
the time each such Lease is assigned to Lender:
(a) Each Lease is genuine, based on contracts that
are enforceable in accordance with its terms against the Lessee and the Leased
Property named and referenced therein, constitutes the entire agreement for the
leasing of the Leased Property thereby covered, has not been altered or amended,
except as set forth in the related schedules, and Borrower's Books and Records
relating thereto are accurate, complete and genuine;
(b) The sole original of each Lease has been
delivered to Lender and any counterpart of any lease which has not been
delivered to the Lender bears the legend "Copy" or "This Lease has been assigned
to Interpool, Inc. as security for the obligations pursuant to that certain
Limited Recourse Loan and Security Agreement dated March 27, 1998," or similar
language on the face thereof;
(c) Where the Lease consists of a Master Lease
Agreement and specific schedules which describe the terms of any specific items
to be leased pursuant to such schedule, delivery of the original schedule shall
constitute delivery of the original Lease, provided that the terms of the Master
Lease Agreement and the schedule make it clear that for purposes of "Chattel
Paper" under the Uniform Commercial Code, the sole original schedule delivered
to Lender is a separate lease and that possession of such schedule constitutes
possession of "Chattel Paper" under the Uniform Commercial Code;
(d) With respect to each Lease, unless Lender agrees
otherwise in writing, Borrower will file within ten (10) days of receipt by
Lessee of possession of Leased Property, such UCC financing statements (listing
Borrower as Secured Party, the Lessee as Debtor, Lender as Assignee and such
Leased Property as Collateral) in such locations as would be required by
applicable law (if Borrower were a Secured Party and Lessee were a Debtor) in
order to perfect a security interest in such Leased Property under the UCC in
favor of Lender as Borrower's Assignee;
(e) The original amount and unpaid balance of each
Lease shown on Borrower's Books and Records and on any statement or schedule
delivered to Lender in connection therewith is the true and correct amount
actually owed to Lender, no portion of which, except as specifically provided
for in the Lease, has been prepaid;
(f) The amounts due under the Leases are not and will
not be subject to any claim or reduction, counterclaim, setoff, recoupment, or
any other claim, allowance or adjustment and no Lease has been re-negotiated,
restructured or compromised except as renewed in the ordinary course of
business;
(g) All security agreements, title retention
instruments and other documents and instruments which are security for any
Lease, and/or each Lease, contained a correct and sufficient description of the
Leased Property covered thereby and all security interests granted therein to
Borrower (either directly or as assignee) have been properly perfected and
assigned to Lender;
(h) Borrower has not and will not enter into any
agreement with a Lessee of any Leased Property which provides, directly or
indirectly, for the crediting of any obligation or liability of Borrower to such
Lessee against future rentals accruing under the Lease;
(i) Each item of Leased Property is in good
condition, ordinary wear and tear excepted, has not been lost, stolen, destroyed
or damaged;
(j) Each item of Leased Property has been delivered
to and, in all instances, unconditionally accepted by the Lessee and has not
been removed from service or the place of installation indicated in the Lease;
(k) Each Lease has been duly executed by the lessor
named therein and each Lessee, and is a valid, legal and binding obligation of
Borrower, and such Lessee, and is enforceable against Borrower and such Lessee
in accordance with its terms. Following the making of the Loan in accordance
with Borrower's instructions to Lender, Borrower, subject to the security
interest of Lender, will be the sole owner of the Collateral and has the
authority to assign all of its right, title and interest therein upon the terms
herein set forth;
(l) All costs, fees, and expenses incurred in making
and closing each of the Leases has been paid and each Lease is or will be
current at the time of the assignment thereof to Lender. No event exists which
with the giving of notice or the passage of time or both, will result in the
occurrence of a default of any obligation as expressed in any Lease;
(m) All rentals, fees, costs, expenses and charges
paid or payable by the Lessee under any Lease, including without limitation, any
brokerage and other fees paid to Borrower do not violate any laws relating to
the maximum fees, costs, expenses or charges that can be charged in any state in
which any Leased Property is located or in which the corresponding Lessee is
located, or in which a transaction was consummated, or in any other state which
may have jurisdiction with respect to any such Leased Property, Lease or Lessee;
(n) Lender has a first lien security interest in the
Collateral subject to no other security interest or other interest. Borrower has
taken all steps necessary to maintain Lender's first lien security interest in
the Collateral, including, if required, perfecting the Borrower's security
interest through filing financing statements, amendments thereto, or
assignments;
(o) Each item of Leased Property has been insured in
the ordinary course of Borrower's or the corresponding Lessee's business;
(p) Neither Borrower nor to the best of Borrower's
knowledge has any lessor or prior lender holding a security interest in any of
the Collateral received notice of a Bankruptcy, receivership, reorganization,
insolvency or financial embarrassment of any Lessee;
(q) No Lessee is a subsidiary, or affiliate of
Borrower, or under common control with Borrower or is an officer or employee of
Borrower;
(r) No Lease is a Defaulted Lease;
(s) No Lease constitutes a sublease of the
corresponding Leased Property.
SECTION 5. Affirmative Covenants
Borrower covenants with Lender as follows:
5.1 Borrower will take the necessary steps to preserve its rights to
conduct business in all jurisdictions in which the nature of its business shall
require qualifications to do business or where the failure to so qualify may
have a material adverse effect on the ability of Borrower or Lender to enforce
any Lease or realize on any Leased Property.
5.2 Borrower will notify Lender, in writing, not less than thirty (30)
days prior to any change in the location of the Chief Executive Office or if the
Collateral is moved to a location other than that specified in the corresponding
Lease.
5.3 Borrower will comply with and observe all laws, statutes,
ordinances, rules and regulations material to the operation of its business and
maintain all licenses and permits necessary for the operation of its business,
and Borrower will pay all taxes, assessments and governmental charges required
by law.
5.4 Borrower shall permit Lender, and any representative designated by
Lender, to visit and inspect any of Borrower's property, assets, Books and
Records, and finance and other records, including, without limitation, financial
statements and Leases, and to discuss Borrower's affairs, finances and accounts
as they relate to the Collateral with Borrower's agents, officers and employees
(including Borrower's independent accountants) at such reasonable times and as
often as Lender may reasonably request.
5.5 Unless Lender consents otherwise in writing, Borrower shall at all
times keep all Collateral free and clear of all liens, encumbrances and security
interests of every kind without limitation.
5.6 Borrower shall mark its Books and Records to indicate the Lender's
security interest in the Collateral, including the Lease(s) and, unless Lender
consents otherwise in writing, Borrower shall retain title at all times to the
Leased Property. However, where Lender consents in writing to an assignment of
any of Borrower's right, title and interest in the Lease and/or the Collateral,
(which consent shall not be unreasonably withheld) and provided Borrower
complies with the requirements of a Transferee Agreement (which Transferee
Agreement shall be the same in form and substance as that attached hereto as
Exhibit 5.6), Borrower may sell, assign or transfer its right, title and
interest, subject always to the prior rights of Lender, in the Lease and/or
Collateral.
5.7 Borrower shall join with Lender to notify all Lessee(s) of the
Lender's security interest in the Collateral and direct payment under the
Lease(s) to be made directly to Lender and Lender may, in its own name or in the
name of the Borrower collect, sue for and receive payment of any or all
Lease(s), and settle, compromise and adjust the same on any terms as may be
satisfactory to Lender, in its sole and absolute discretion for any reason or
without reason.
5.8 Borrower will immediately notify Lender of the institution or
threat of any litigation, administrative proceeding or investigation or any
other event or happening which might have a material adverse affect on the
Collateral or Borrower's or Lender's ability to enforce their respective rights
under the Lease(s).
5.9 Borrower shall, at Lender's request, within ninety (90) days after
the close of the fiscal year, furnish Lender with a complete financial audit
prepared by Borrower's independent certified public accounting firm acceptable
to Lender, including a balance sheet, income statement and statement of cash
flows prepared in accordance with GAAP.
SECTION 6. Negative Covenants
Borrower covenants with Lender that it will not:
6.1 Without the prior written consent of Lender, sell, assign or
transfer any portion of the Collateral. However, where Lender consents in
writing to an assignment of any of Borrower's right, title and interest in the
Lease and/or the Collateral, (which consent shall not be unreasonably withheld)
and provided Borrower complies with the requirements of a Transferee Agreement
(which Transferee Agreement shall be the same in form and substance as that
attached hereto as Exhibit 5.6), Borrower may sell, assign or transfer its
right, title and interest, subject always to the prior rights of Lender, in the
Lease and/or Collateral.
6.2 Without the prior written consent of Lender, liquidate, dissolve or
discontinue normal operations with the intention to liquidate, dissolve, sell,
lease, transfer or otherwise dispose of any substantial part of its assets.
Lender acknowledges that the Borrower anticipates a merger with other entities
that may occur during the term hereof, however, according to the terms thereof,
Varilease Corporation will be a wholly owned subsidiary and will continue to
operate in the same or like manner as prior to said merger.
6.3 Without the prior written consent of Lender, permit the removal,
other than in the ordinary course of business, of any Books and Records or
Leased Property from the place of business where presently located.
6.4 Without providing to Lender thirty (30) days prior written notice,
change its name or any trade style it uses, or adopt any new name or trade
style.
SECTION 7. Events of Default
The occurrence of any one or more of the following events with
respect to Borrower shall constitute an event of default ("Event of Default")
hereunder:
7.1 Termination of existence, business failure or the making of an
assignment for the benefit of creditors;
7.2 Non-payment of any sum or sums due to Lender or others hereunder or
otherwise when due or non-performance of any contractual obligation to Lender
including without limitation a breach of a Lease by the Lessee or Borrower that
results in a Lease becoming a Defaulted Lease;
7.3 Institution of Bankruptcy, arrangement, composition,
reorganization, liquidation or receivership proceedings, voluntary or
involuntary, or the appointment of a receiver, trustee, conservator,
sequestrator or other judicial representative, similar or dissimilar;
7.4 Any financial statements of Borrower, warranties or representations
herein, or in any other document or certificate heretofore or hereafter made by
Borrower are false, misleading, incomplete or incorrect in any material manner;
7.5 If Borrower has engaged in any activity which may reasonably result
in the forfeiture of any Collateral to any governmental entity, federal, state
or local; then, in any such event which is not cured within seven (7) days of
the earlier of receipt of notice from Lender of the Event of Default or Borrower
obtaining knowledge of the Event of Default, Lender, at its option may declare
the unpaid principal balance, accrued interest, and all other sums due to Lender
hereunder or otherwise immediately due and payable (except with respect to an
Event of Default arising under paragraph 7.1 or 7.3 above, in which case all of
Borrower's obligations and liabilities to Lender shall be automatically deemed
to be immediately due and payable).
SECTION 8. Remedies on Default
8.1 (a) Upon the occurrence of an Event of Default hereunder, Borrower
grants to Lender in addition to any rights, powers or remedies Lender may have
under any applicable law, all of which shall be cumulative, the right, subject
always to the rights of Lessees under the Leases, to do any or all of the
following (which list is given by way of example and is not intended to be an
exhaustive list of all rights and remedies):
(i) By its own means, with or without judicial
assistance, enter any of Borrower's premises or other locations where Collateral
is kept, and take possession of the Collateral, or render it unusable, or
dispose of the Collateral on such premises without any liability for rent,
storage, utilities or other sums, and Borrower shall not resist or interfere
with such action; and
(ii) Lender shall have all rights, remedies and
powers of Borrower under the Leases as lessor, including without limitation, the
right to collect and receive all rental, insurance proceeds and other payments,
payable pursuant to the Leases; amend or terminate any Lease; and take such
action upon default under any Lease, as any lessor may do, in Lender's or
Borrower's name, including without limitation repossession of any Leased
Property and commencement of suit, and to exercise any rights and remedies as
lessor under the Lease(s).
(b) Anything herein to the contrary notwithstanding,
the execution of this Agreement and the exercise by Lender of any of its rights
hereunder shall not (i) release Borrower from any of its duties or obligations
under the Leases, and (ii) shall not obligate Lender (x) to perform any of
Borrower's obligations or duties under the Leases, or (y) to take any action to
collect or enforce any claim for payment.
(c) Borrower hereby agrees that a notice received by
it at least ten (10) days before the time of any intended public sale or at the
time after which any private sale or other disposition of the Collateral is to
be made, shall be deemed to be commercially reasonable notice of such sale or
other disposition. If permitted by law, any Collateral which threatens to
speedily decline in value or which is sold on a recognized market may be sold
immediately by Lender without prior notice to Borrower.
8.2 Lender shall have the right to proceed against all or any portion
of the Collateral in any order and may apply such Collateral to the Liabilities
of Borrower to Lender in any order. All rights and remedies granted Lender
hereunder and under any agreement referred to herein, or otherwise available at
law or in equity, shall be deemed concurrent and cumulative, and not alternative
remedies, and Lender may proceed with any number of remedies at the same time
until all existing and future Liabilities of Borrower to Lender, are satisfied
in full. The exercise of any one right or remedy shall not be deemed a waiver or
release of any other right or remedy, and upon the occurrence of an Event of
Default, Lender may proceed against Borrower and/or the Collateral, at any time,
under any agreement, with any available remedy and in any order.
8.3 Notwithstanding anything to the contrary contained in this Section
8 or Section 7 above, the occurrence of an Event of Default due solely to the
non-payment of sums owed to Lender resulting from a Lease becoming a Defaulted
Lease shall constitute an Event of Default hereunder only with respect to the
Loan and Lender's recourse to Borrower with respect to amounts due under such
Loan shall be limited to the Collateral.
SECTION 9. Termination
9.1 Lender shall have the right to retain, until final payment in full
of all Liabilities of the Borrower all of the Collateral and all of its rights
with respect thereto; provided, however, that so long as no Event of Default has
occurred, Lender shall release its lien on Collateral at the time the Loan is
repaid in full. All terms, conditions and provisions of this Agreement shall
remain in full force and effect until such time as all sums owed Lender
hereunder are paid in full.
SECTION 10. Waivers
Borrower waives presentment, demand, protest, notice of default,
non-payment, partial payments and all other notices and formalities relating to
this Agreement other than notices specifically required hereunder. Borrower
consents to and waives notice of the granting of indulgences or extensions of
time or payment, the taking or releasing of security, the addition or release of
persons primarily or secondarily liable on or with respect to the Liabilities.
No delay by the Lender in exercising any right, power or remedy hereunder and no
indulgence given to Borrower in case of any default shall impair any such right
or power or be construed as a waiver of any default by Lender or any
acquiescence therein or as a violation or waiver of any of the terms or
provisions of this Agreement.
SECTION 11. Notices
All notices and other communications hereunder shall be in writing or
confirmed in writing, and they shall be deemed to have been duly delivered or
given, if hand delivered, if telecopied, if sent by nationally recognized
overnight courier, or if mailed via certified mail, return receipt requested
when delivered, as follows:
(a) If to Borrower:
Varilease Corporation
28525 Orchard Lake Road
Farmington Hills, MI 48334
Attention: Gary F. Miller, Senior Vice President
Telecopy:(248) 488-0162
(b) If to Lender:
Interpool, Inc.
211 College Road East
Princeton, NJ 08540
Attention:Raoul J. Witteveen, President
Telecopy: (609)951-0362
and
Interpool, Inc.
211 College Road East
Princeton, NJ 08540
Attention: Richard W. Gross, Senior Vice
President
Telecopy: (609)951-0362
and
MicroTech Leasing Corporation
211 College Road East
Princeton, NJ 08540
Attention: Allen M. Olinger, President
Telecopy: (609) 987-1011
SECTION 12. Miscellaneous
12.1 Borrower agrees that Lender may sell or assign this Loan or grant
participation(s) in this Loan and may without liability furnish information with
respect to this Loan to any prospective purchaser, assignee or participant(s).
12.2 Borrower hereby irrevocably appoints Lender as Borrower's attorney
in fact with full authority in the place and stead of Borrower and in the name
of Borrower, Lender or otherwise in Lender's discretion, to take any action and
to execute any instrument, agreement or document which Lender may reasonably
deem necessary or advisable to accomplish the purposes of this Agreement.
Without limiting the generality of the foregoing, Lender may:
(a) obtain and adjust insurance that Borrower or
Lessee is required to maintain;
(b) ask, demand, collect, sue for, recover, compound,
receive or give acquittance and receipts for money due and to become due under
or in respect of any of the Collateral;
(c) receive, endorse and collect any drafts or other
instruments, documents or chattel paper, in connection with (a) or (b) above;
(d) after the occurrence of an Event of Default, file
any claim or take any action or institute any proceedings which Lender may deem
necessary or desirable for the collection of any of the Collateral or otherwise
to enforce the rights of Lender with respect to any of the Collateral; and
(e) after the occurrence of an Event of Default, with
respect to a Defaulted Lease, execute in Borrower's name, a bill of sale
relating to any Collateral, transferring title to such Collateral to a third
party purchaser.
12.3 If Borrower fails to perform any agreement contained herein,
Lender may (but is not obligated to) perform or cause performance of, such
agreement, at Borrower's expense payable on demand.
12.4 (a) Borrower shall pay, on demand, all of Lender's costs and
expenses (including but not limited to all legal fees and costs) (i) in
connection with the negotiation or preparation of any extensions, modifications,
amendments, waivers or consents to this Agreement, any note, or any other
instrument, agreement or document in connection herewith (but not including the
Lease(s) or corresponding equipment schedules and agreements), and (ii) in
connection with the enforcement of any right, remedy or power pursuant to this
Agreement, any note or any other instrument, agreement, or document in
connection herewith as such rights pertain to the Liabilities. In no event shall
Borrower be personally liable for any of said costs or fees relating to a
default by the Lessee under the Lease which does not also constitute or result
in a breach of any representation, warranty or covenant made by Borrower to or
in favor of Lender; and
(b) Borrower shall indemnify, defend (with counsel
satisfactory to Lender) and hold harmless Lender against and in respect of (i)
any loss, damage or deficiency related to any breach of warranty or
representation or non-fulfillment of any agreement by Borrower under this
Agreement or any related instrument, agreement, document, schedule, exhibit or
other legal obligations in connection herewith, and (ii) all actions, suits,
proceedings, demands, assessments, judgments, costs, legal fees and expenses
incident to any of the foregoing. Any amount reasonably required to be paid
pursuant to the foregoing shall be paid by Borrower to Lender on demand and may
at Lender's option be deducted from or set off against any existing or future
debt, liability or obligation of Lender to Borrower relating to this
transaction. In no event shall Borrower be personally liable for any of said
costs or fees relating to a default by the Lessee under the Lease which does not
also constitute or result in a breach of any representation, warranty or
covenant made by Borrower to or in favor of Lender.
12.5 This Agreement and all rights hereunder shall be governed by the
substantive law of the State of New Jersey. This Agreement shall bind Lender and
Borrower and shall inure to the benefit of Lender and the terms "Lender" and
"Borrower" as used in this Agreement shall include the respective parties and
their respective successors and assigns.
12.6 The terms of this Agreement shall be in addition to those of any
other evidence of liability held by the Lender, all of which shall be construed
as complementary to each other, except as herein otherwise expressly provided
and such other agreements, instruments and documents not modified or superseded
pursuant to the terms hereof remain in full force and effect.
12.7 This Agreement contains the entire agreement between the parties
hereto and may not be modified or changed in any way except in writing signed by
all parties.
12.8 Any express waiver by Lender of any power, right, remedy,
obligation or duty shall not under any circumstances be deemed to constitute a
waiver of Lender's powers, rights or remedies upon the later occurrence or
reoccurrence of any event, transaction or matter. No course of dealing between
Lender and Borrower shall operate as or be deemed to constitute a waiver of
Lender's rights hereunder or affect the duties or obligations of Borrower.
12.9 All powers, rights and remedies of Lender hereunder shall be
cumulative and not exclusive of other powers, rights or remedies granted or
available to Lender under any applicable law unless specifically stated
otherwise.
12.10 All warranties, covenants and representations, whether
affirmative or negative, shall survive the making of this Agreement and the loan
of monies hereunder and each shall be deemed to be continuing in force and
effect and substantial and material in nature.
12.11 Borrower irrevocably consents to the exclusive jurisdiction of
the State Courts of New Jersey or the United States District Court for the
District of New Jersey in any and all actions and proceedings whether arising
hereunder or under any other agreement or undertaking and irrevocably agrees to
service of process by certified mail, return receipt requested to the address of
Borrower set forth herein.
12.12 Borrower waives and shall not interpose any objection of forum
non conveniens or to venue and waives any right to remove any proceeding
commenced in a state court to a federal court.
12.13 BORROWER AND LENDER AS INDEPENDENT COVENANTS IRREVOCABLY WAIVE
JURY TRIAL AND THE RIGHT THERETO IN ANY AND ALL DISPUTES BETWEEN BORROWER AND
LENDER WHETHER HEREUNDER OR UNDER ANY OTHER AGREEMENTS, NOTES, PAPERS,
INSTRUMENTS OR DOCUMENTS HERETOFORE, NOW OR HEREAFTER EXECUTED.
12.14 Headings preceding the text of the several Sections hereof are
for the convenience of reference only and shall not constitute a part of this
Agreement nor shall they affect its meaning, construction or effect.
12.15 This Agreement may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, and such
counterparts shall together constitute one and the same instrument.
12.16 All instruments, agreements and documents to be executed or
delivered by Borrower shall be in form and substance satisfactory to Lender in
its sole discretion.
12.17 Time is of the essence.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
LENDER: Interpool, Inc.
ATTEST: /s/ Kathleen Francis BY: /s/ Richard W. Gross
---------------------------- ------------------------------
Kathleen Francis
Assistant Secretary
Name: Richard W. Gross
Title: Senior Vice President
BORROWER: VARILEASE CORPORATION
ATTEST: /s/ Jennifer Charles-Rentz BY: /s/ Marjorie Biglin
-------------------------------- ----------------------------
Name: Marjorie Biglin
Title: Assistant Secretary
SCHEDULE "A"
LEASES