EXHIBIT 10.32
LOAN AND SECURITY AGREEMENT
BANKVEST CAPITAL CORP.
AND
LEASEVEST CAPITAL CORP.
WITH
PNC BANK, NATIONAL ASSOCIATION
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS AND INTERPRETATION 1
1.1 Terms Defined 1
1.2 Accounting Principles 7
SECTION 2. THE LOANS 7
2.1 Credit Facility - Description 7
2.2 Advances and Payments 8
2.3 Preconditions to Advances and Assignment of Leases and Leased Property 8
2.4 Credit Facility Interest 10
2.5 Additional Interest Provisions. 10
2.6 Fees 11
2.7 Prepayments 11
2.8 Use of Proceeds 12
2.9 Capital Adequacy 12
SECTION 3. COLLATERAL 13
3.1 Description 13
3.2 Lien Documents 13
3.3 Other Actions 13
3.4 Searches 14
3.5 Filing Security Agreement 14
3.6 Power of Attorney 14
SECTION 4. CLOSING AND CONDITIONS PRECEDENT TO ADVANCES 14
4.1 Resolutions, Opinions, and Other Documents 15
4.2 Absence of Certain Events 15
4.3 Warranties and Representations at Closing 15
4.4 Compliance with this Agreement 16
4.5 Officers' Certificate 16
4.6 Closing 16
4.7 Non-Waiver of Rights 16
SECTION 5. REPRESENTATIONS AND WARRANTIES 16
5.1 Corporate Organization and Validity 16
5.2 Places of Business 17
5.3 Pending Litigation 17
5.4 Title to Collateral 17
5.5 Governmental Consent 18
5.6 Taxes 18
5.7 Financial Statements 18
5.8 Full Disclosure 18
5.9 Subsidiaries 18
5.10 Guarantees, Contracts, etc. 18
5.11 Government Regulations, etc. 19
i
5.12 Names 19
5.13 Other Associations 19
5.14 Environmental Matters 20
5.15 Capital Stock 20
5.16 Solvency 20
5.17 Leases and Leased Property 20
5.18 Interrelatedness of Borrowers 24
SECTION 6. BORROWER'S AFFIRMATIVE COVENANTS 24
6.1 Payment of Taxes and Claims 24
6.2 Maintenance of Insurance, Financial Records
and Corporate Existence 24
6.3 Business Conducted 25
6.4 Litigation 25
6.5 Taxes 26
6.6 Bank Accounts 26
6.7 Employee Benefit Plans 26
6.8 Warranties for Future Advances 26
6.9 Financial Covenants 27
6.10 Financial and Business Information 28
6.11 Officers' Certificates 29
6.12 Inspection 30
6.13 Tax Returns and Reports 30
6.14 Material Adverse Developments 30
6.15 Places of Business 30
6.16 Sale of Collateral 30
SECTION 7. BORROWER'S NEGATIVE COVENANTS: 31
7.1 Merger, Consolidation, Dissolution or Liquidation 31
7.2 Liens and Encumbrances 31
7.3 Negative Pledge 31
7.4 Transactions With Affiliates or Subsidiaries 31
7.5 Guarantees 32
7.6 Distributions, Redemptions and Other Indebtedness 32
7.7 Use of Lender's Name 32
7.8 Change of Ownership Interests/Change in Management 32
7.9 Loans and Investments 32
SECTION 8. DEFAULT 33
8.1 Events of Default 33
8.2 Cure 35
8.3 Rights and Remedies on Default 35
8.4 Nature of Remedies 36
8.5 Set-Off 36
SECTION 9. MISCELLANEOUS 37
9.1 GOVERNING LAW 37
9.2 Integrated Agreement 37
9.3 Waiver 37
9.4 Time 38
ii
9.5 Expenses of Lender 38
9.6 Brokerage 38
9.7 Notices 38
9.8 Headings 39
9.9 Survival 39
9.10 Successors and Assigns 40
9.11 Duplicate Originals 40
9.12 Modification 40
9.13 Signatories 40
9.14 Third Parties 40
9.15 Discharge of Taxes, Borrower's Obligations, Etc. 40
9.16 Consent to Jurisdiction 40
9.17 Waiver of Jury Trial 41
9.18 Information to Participant 41
9.19 Obligations Joint and Several 41
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EXHIBIT LIST
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Exhibit 2.1(a) -- Form of Term Note
Exhibit 2.1(c) -- Form of Advance Rate Certificate
Exhibit 2.3(c) -- Form of Collateral Report
Exhibit 2.3(d) -- Form of Assignment Agreement
Exhibit 5.1 -- Borrowers' States of Qualifications
Exhibit 5.2 -- Places of Business
Exhibit 5.3 -- Judgments, Proceedings, Litigation and
Orders
Exhibit 5.7 -- Borrowers' Federal Tax Identification
Numbers
Exhibit 5.9 -- Subsidiaries and Affiliates
Exhibit 5.10 -- Existing Guaranties, Investments and
Borrowings, Leases and Employment Agreements
Exhibit 5.12 -- Schedule of Names
Exhibit 5.13 -- Other Associations
Exhibit 5.14 -- Environmental Matters
Exhibit 5.15 -- Capital Stock
Exhibit 5.17 -- Leases and Leased Property
Exhibit 6.11 -- Officers' Certificates
Exhibit 7.4 -- Transactions with Affiliates
LOAN AND SECURITY AGREEMENT
---------------------------
This Loan and Security Agreement ("Agreement") is dated as of this 9th day
of May, 1997, by and among BANKVEST CAPITAL CORP. ("BankVest"), LEASEVEST
CAPITAL CORP. (LeaseVest") (collectively, the "Borrowers" and individually, each
a "Borrower") and PNC BANK, NATIONAL ASSOCIATION, a national banking association
("Lender").
BACKGROUND
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A. Borrowers are in the business of leasing personal property to Lessees
or otherwise financing the purchase of personal property for third party
purchasers pursuant to leases or installment sale agreements. Borrowers wish,
from time to time, to obtain advances up to the Maximum Credit Limit. Lender is
willing to make loans and grant extensions of credit to Borrowers under the
terms and provisions hereinafter set forth.
B. The parties desire to define the terms and conditions of their
relationship to writing.
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
SECTION 1. DEFINITIONS AND INTERPRETATION
1.1 Terms Defined : As used in this Agreement, the following terms have
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the following respective meanings:
Account - Any right to payment for goods sold or leased or for
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services rendered which is not evidenced by an instrument or chattel paper,
whether or not it has been earned by performance.
Adjusted Debt to Tangible Net Worth Ratio - At any time means the
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ratio of (i) total Senior Liabilities less Nonrecourse Debt to (ii) Borrowers'
Tangible Net Worth.
Advance(s) - Any monies advanced or credit, including Term Loans,
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extended to Borrowers by Lender under the Credit Facility.
Advance Rate - As of any date of determination, an amount equal to the
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lesser of the aggregate amount, with respect to the Specific Lease Collateral
corresponding to a related Term Loan, of the lesser of the following for each
such Lease, as determined on a lease-by-lease basis, (i) one hundred percent
(100%) of the original cost of the Leased Property corresponding to such Lease,
less advance payments and security deposits, or (ii) ninety percent (90%) of the
net present value of the remaining scheduled Lease
payments due under such Lease, discounted at the Applicable Rate corresponding
to such Term Loan.
Advance Rate Certificate - Section 2.1(c).
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Affiliate - As to any person, each other person that directly, or
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indirectly, through one or more intermediaries, controls or is controlled by, or
is under common control with, the person in question.
Agreement - This Loan and Security Agreement, as it may hereafter be
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amended, supplemented or replaced from time to time.
Applicable Rate - Section 2.4.
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Assignment Agreement - Section 2.3(d).
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Authorized Officer - Any officer or partner of a Borrower authorized
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by specific resolution of each Borrower to request Advances as set forth in the
incumbency certificate referred to in Section 4.1(d) of this Agreement.
Books and Records - All of Borrowers' original ledger cards, payment
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schedules, credit applications, Contract Rights, liens, security instruments,
guarantees and other General Intangibles relating in any way to the Leases or
Leased Property.
Business Day - Any day that is not a Saturday or Sunday or day on
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which Lender is required or permitted to close.
Chattel Paper - The meaning ascribed thereto in the Pennsylvania
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Uniform Code.
Closing - Section 4.6.
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Closing Date - Section 4.6.
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Collateral - All now or hereafter existing Leases and Leased Property,
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Books and Records and all cash and noncash proceeds, thereof, including, without
limitation, insurance proceeds.
Contract Rights - All rights under contracts not yet earned by
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performance.
Credit Facility - Section 2.1.
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Current Term - The Initial Term during the period of the Initial Term,
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and any renewal or extended term during the term thereof, if Lender elects, in
its sole discretion to renew or extend the Credit Facility.
Defaulted Lease - Any Lease where the Lease fails, at any time, to be
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an Eligible Lease, provided however, that any new criteria established pursuant
to clause (12) of the definition of Eligible Lease shall only be applicable on a
prospective basis and
shall not, in and of itself, convert an existing Eligible Lease into a Defaulted
Lease.
De Minimis Delinquency - The greater of (i) Ten Dollars ($10) or (ii)
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ten percent (10%) of one month=s Lease payment.
Distribution -
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(1) Dividends or other distributions on capital stock of either
Borrower; and
(2) The redemption, repurchase or acquisition of such stock or of
warrants, rights or other options to purchase such stock.
Documents - The meaning ascribed thereto in the Pennsylvania Uniform
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Code.
Eligible Lease(s) - All items of Specific Lease Collateral which meet
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all of the following specifications: (1) are not subject to any Lien, security
interest or prior assignment other than Lender's security interest and the
rights of the Lessees thereunder; (2) are valid and enforceable Leases,
representing the undisputed obligation of each Lessee, with rentals due
thereunder not more than 59 days contractually past due, without giving effect
to any De Minimis Delinquency; (3) are not subject to any defense, set off,
counterclaim, deduction, or allowance or adjustment; (4) provide for the lease
of Leased Property which has not been returned, rejected, lost or damaged; (5)
arose in the ordinary course of Borrowers' business; (6) neither Borrower has
received notice of bankruptcy, receivership, reorganization, insolvency or
material adverse change in the financial condition of the Lessee; (7) the Lessee
is not a Subsidiary or Affiliate of Borrowers, does not control Borrowers, and
is not under the control of or under common control with either Borrower; (8)
are Leases which comply with all general representations and warranties set
forth in Section 5.17 hereof; (9) are Leases with stated terms of not greater
than 60 months; (10) are Leases payable in equal consecutive installments no
less frequently than quarterly; (11) the Leased Property corresponding thereto
does not have an original cost in excess of $250,000; and (12) such other
criteria as may be reasonably established by Lender, from time to time.
Equipment - The meaning ascribed thereto in the Pennsylvania Uniform
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Commercial Code.
ERISA - The Employee Retirement Income Security Act of 1974, as the
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same may be amended, from time to time.
Event of Default - Section 8.1.
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Expenses - Section 9.5.
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Facility Fee - Section 2.6(a)
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Financial Statements - The consolidated financial statements of
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Borrowers prepared in accordance with GAAP.
GAAP - Generally accepted accounting principles as in effect on the
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Closing Date, as may be amended from time to time.
General Intangibles - The meaning ascribed thereto in the Pennsylvania
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Uniform Commercial Code and shall include, but not be limited to, all Contract
Rights (including without limitation, all rights under any remarketing
agreements), chattel paper, documents, instruments, books, records, ledgers,
journals, check books, printouts, blue prints, designs, computer programs,
computer tapes, punch cards, formulae, drawings, customer lists, choses in
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.
Hazardous Substance - Section 5.14.
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Initial Term - Section 2.1(b).
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Instruments - The meaning ascribed thereto in the Pennsylvania Uniform
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Code.
Inventory - The meaning ascribed thereto in the Pennsylvania Uniform
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Commercial Code and shall include all additions, improvements, accessions,
attachments, upgrades, replacements and substitutions thereto or therefor.
IRS - Section 6.7.
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Lease(s) - All of each Borrower's Accounts, Documents, General
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Intangibles, Instruments and Chattel Paper arising in connection with each and
every equipment lease and/or schedule to a master lease agreement, assigned to
Lender, or now or hereafter designated on any schedule or Assignment Agreement
as being assigned to Lender. The term "Lease" includes (i) all payments to be
made thereunder, (ii) all rights of such Borrower therein, and (iii) any and all
amendments, renewals, extensions or guarantees thereof.
Leased Property - Any property leased or to be leased or financed by a
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Borrower pursuant to a Lease; the term "Leased Property" includes all of such
Borrower's Inventory or Equipment so leased and any and all additions,
improvements, accessions, attachments, upgrades, replacements and substitutions
thereto and therefor.
Lessee - The lessee(s) or obligor(s) responsible for payment and/or
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performance under a Lease.
Liabilities - All liabilities of every kind of Borrowers as would be
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shown on Borrowers' consolidated Financial Statements prepared in accordance
with GAAP.
Lien - Any interest of any kind or nature in property securing an
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obligation owed to, or a claim of any kind or nature in property by, a Person
other than the owner of the Property, whether such interest is based on the
common law, statute, regulation or contract, and including, but not limited to,
a security interest or lien arising from a mortgage, encumbrance, pledge,
conditional sale or trust receipt, a lease, consignment or bailment for security
purposes, a trust, or an assignment.
Loans - Collectively, the Term Loans.
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Loan Documents - This Agreement, any and all Term Note(s) and all
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agreements, instruments and documents executed and/or delivered from time to
time in connection therewith, all as may be amended or replaced from time to
time.
Maturity Date - The last day of the Current Term.
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Maximum Credit Limit - Five Million ($5,000,000) Dollars.
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Net Income - The consolidated net income after taxes of Borrowers as
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such would appear on Borrowers' consolidated statement of income, prepared in
accordance with GA"P.
Net Loss - Borrowers' Net Income expressed as a loss.
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Net Lease Receivables - Section 6.9(b).
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Nonrecourse Debt - All Liabilities of Borrowers which are non-recourse
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in nature and treated as non-recourse obligations on Borrowers' Financial
Statements.
Obligations - All existing and future liabilities and obligations of
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every kind or nature at any time owing by Borrowers to Lender, whether joint or
several, related or unrelated, primary or secondary, matured or contingent, due
or to become due, and whether principal, interest, fees or Expenses, including,
without limitation, obligations in respect of the Credit Facility and this
Agreement and any extensions, modifications, substitutions, increases and
renewals thereof, and the payment of all reasonable amounts advanced by Lender
to preserve, protect and enforce rights hereunder and in the Collateral and all
Expenses incurred by Lender in connection therewith.
PBGC - Section 6.7.
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Pennsylvania Uniform Commercial Code or UCC - The Uniform Commercial
-------------------------------------------
Code as enacted in Pennsylvania, as the same shall be amended from time to time.
Person - An individual, partnership, corporation, trust,
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unincorporated association or organization, joint venture or any other entity.
Property - Any interest of Borrowers in any kind of property or asset,
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whether real, personal or mixed, or tangible or intangible.
Senior Liabilities - All liabilities of Borrowers, as shown on the
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Financial Statements, other than that portion of the Subordinated Debt which is
not due and payable within 12 months of the date of determination.
Specific Lease Collateral - All Leases and corresponding Leased
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Property specifically relating to, pledged as collateral for, and used to
determine the Advance Rate corresponding to, a Term Loan.
Subordinated Debt - All indebtedness of Borrower as described in that
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certain Securities Purchase Agreement and Note between BankVest Capital Corp.
and Whitney Subordinated Debt Fund, L.P. dated February 28, 1997, and other
indebtedness specifically subordinated to the Obligations in a manner which
provides that the holders of such indebtedness shall have no greater rights than
those afforded the holders of the indebtedness under the Subordination
Agreement, including, without limitation, the right to receive payments.
Subordination Agreement - The Securities Purchase Agreement and Note
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between BankVest Capital Corp. and Whitney Subordinated Debt Fund, L.P. dated
February 28, 1997.
Subsidiary - Any corporation more than fifty percent (50%) of whose
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voting stock is legally and beneficially owned by Borrower or owned by a
corporation more than fifty percent (50%) of whose voting stock is legally and
beneficially owned by Borrower.
Tangible Net Worth - At any time means the amount of stockholders
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equity on a consolidated basis (excluding trademarks, goodwill, covenants not to
compete, deferred closing costs and all other intangible assets as that term is
defined under GA"P) plus that portion of the Subordinated Debt not due and
payable within one year of the date of determination.
Term Loan(s) - Section 2.1(a).
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Term Notes - Section 2.1(a)(i).
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Unmatured Event of Default - An event or condition which with the
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passage of time, the giving of notice, or both would become an Event of Default.
Unused Line Fee - Section 2.6(b).
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1.2 Accounting Principles : Where the character or amount of any asset
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or liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, this shall be done in accordance with GAAP, to the
extent applicable, except as otherwise expressly provided in this Agreement.
SECTION 2. THE LOANS
2.1 Credit Facility - Description:
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(a) Subject to the terms and conditions of this Agreement, Lender
hereby establishes for the joint and several benefit of Borrowers credit
facility ("Credit Facility") which shall include Advances to be extended by
Lender from time to time to or for the benefit of Borrowers hereunder in the
form of term loans ("Term Loans"). The aggregate outstanding principal amount
of all Term Loans, at any time, shall not exceed the Maximum Credit Limit.
Subject to such limitation, the outstanding balance under the Credit Facility
may fluctuate from time to time, to be reduced by repayments made by Borrower,
to be increased by future Term Loans which may be made by Lender. In no event
shall the initial principal amount of any Term Loan be less than $200,000. The
Obligations of each Borrower under the Credit Facility and this Agreement shall
at all times be joint and several, absolute and unconditional.
(i) In conjunction with each Term Loan, Borrowers shall
execute and deliver a promissory note to Lender for the total principal amount
of such Term Loan (collectively, as may be amended, modified or replaced from
time to time, the "Term Notes"). Each Term Note shall evidence Borrowers'
absolute and unconditional obligation to repay Lender for the Term Loan with
interest as herein and therein provided. Each and every Term Loan under the
Credit Facility shall be evidenced by separate Term Notes, which are deemed
incorporated herein by reference and made a part hereof. All Term Notes shall be
substantially in the form set forth in Exhibit "2.1(a)" attached hereto and made
a part hereof.
(ii) Term Loans shall only be made available as permanent
financing for Specific Lease Collateral.
(iii) Each Term Loan, together with accrued interest, shall be
repaid in monthly installments (not to exceed 60 months) as set by Lender at the
time Borrowers request such a Term Loan. The principal amount of each Term Loan
shall not exceed the aggregate of the Advance Rate with respect to each item of
Specific Lease Collateral corresponding to such Term Loan.
(b) The term ("Initial Term") of the Credit Facility shall expire on
May 9, 1998. After the Maturity Date no further Advances shall be available
from Lender.
(c) Borrowers shall deliver with each borrowing request; a
certificate in the form of Exhibit "2.1(c)" attached hereto and made a part
hereof ("Advance Rate Certificate"), executed by an Authorized Officer,
calculating the Advance Rate with respect to the requested Term Loan.
2.2 Advances and Payments:
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(a) Except to the extent otherwise set forth in this Agreement, all
payments of principal and of interest on the Credit Facility, the Facility Fee,
Unused Line Fee, the Expenses, and all other charges and any other Obligations
of Borrowers hereunder, shall be made to Lender at its main Philadelphia banking
office, PNC Bank Center, 1600 Market Street, 31st Floor, Philadelphia, PA 19103,
Attention Sandra L. McCollum, in United States dollars, in immediately available
funds. Lender shall have the unconditional right and discretion from time to
time to charge Borrower's deposit account for all of Borrower's Obligations
under this Agreement including without limitation, interest, principal, fees and
reimbursement of Expenses if any or all of such Obligations are not paid within
five (5) days of the due date thereof.
(b) (i) Advances which may be made by Lender from time to time
under the Credit Facility shall be made available by crediting such proceeds to
Borrowers' operating account with Lender.
(ii) All Advances requested by Borrowers must be requested by
11:00 A.M. Philadelphia time, three (3) Business Days prior to the date of such
requested Advance. All requests or confirmation of requests for an Advance are
to be in writing and may be sent by telecopy or facsimile transmission provided
that Lender shall have the right to require that receipt of such request not be
effective unless confirmed via telephone with Lender. Subject to satisfaction of
the terms and conditions hereof, the requested Advance shall be made available
to Borrowers by crediting such amount to Borrowers' operating account with
Lender on the day the requested Advance is to be made.
2.3 Preconditions to Advances and Assignment of Leases and Leased Property
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Before Lender will make any Advance to Borrowers:
(i) Each Borrower will deliver to Lender the following (dated and
signed) in form and substance satisfactory to Lender:
(a) A written borrowing request setting forth the requested
date of the Advance (but no sooner than three (3) Business Days after Lender
receives the request), the requested advance amount, an Advance Rate Certificate
in the form attached hereto as Exhibit "2.1(c)", any information required by
this
Agreement and such other information as Lender shall reasonably request.
(b) A Term Note in the principal amount equal to the requested
Term Loan,
(c) A description of the collateral package, which shall
include, a description of the Lessee, the Leased Property, the net cost of the
Leased Property, the net remaining principal balance under the Lease(s), and the
terms of and rentals owed under each Lease, in the form attached hereto as
Exhibit "2.3(c)" ("Collateral Report") and such other information which Lender
shall reasonably request,
(d) An Assignment Agreement signed by such Borrower assigning
Borrower's right, title and interest in and to the Leased Property and Leases to
Lender, in the form attached hereto as Exhibit "2.3(d)" ("Assignment
Agreement"),
(e) Invoices showing Lessor's itemized cost of the Leased
Property along with confirmation that full payment for the Leased Property has
been made to the vendor,
(f) If requested by Lender, additional Uniform Commercial Code
("UCC") financing statements covering the Collateral listing Lender as secured
party and each Borrower as debtor, to be filed in locations reasonably required
by Lender,
(g) Copies of all UCC-1 financing statements filed by a Borrower
against Lessee(s) and any acknowledgment copies or recording information such
Borrower has received back from the recording offices along with UCC-3
assignments with respect to the Specific Lease Collateral corresponding to the
Term Loan, assigning such Borrower's interest to Lender, all as may be required
by Section 5.17 below,
(h) The sole original of each Lease (as described in Sections
5.17(b) and 5.17(c) below) along with all schedules duly assigned to Lender
along with, if applicable, a certified copy of the corresponding Master Lease
Agreement,
(i) Evidence that each item of Leased Property, with an initial
cost in excess of $100,000, is insured against such risks, in such amounts, with
such insurance, and on such terms and conditions as shall be satisfactory to
Lender, including but not limited to, provisions naming Lender as lender loss
payee and preventing cancellation or modification of the insurance coverage
without at least thirty (30) days prior notice to Lender ("Insurance Coverage"),
(j) A certificate of acceptance or other document evidencing
that the Lessee has received and accepted the Leased Property, and
(k) An undated notice signed by Borrowers directing each Lessee
to pay all sums due or to become due under each Lease directly to Lender
("Lessee Notice") to be used only following the occurrence of an Event of
Default. Lender will hold the Lessee Notices in escrow and will not release
them, unless and until an Event of Default shall have occurred.
(l) Such financial information concerning any of the Leases,
Borrowers or any Lessee as Lender may reasonably request, and
(m) Such other instruments, agreements and documents as Lender
reasonably requests to carry out the intent of the parties to this Agreement.
(ii) No Event of Default or Unmatured Event of Default shall have
occurred hereunder.
2.4 Credit Facility Interest: The unpaid principal balance of each Term
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Loan shall bear interest at a fixed rate of interest equal to 215 basis points
in excess of the then existing yield to maturity of the United States Treasury
Obligation with a maturity nearest the scheduled maturity of the corresponding
Term Loan (based on the weighted average life of the corresponding Specific
Lease Collateral), at the time such Term Loan is requested ("Applicable Rate").
Interest on Term Loans shall be due and payable in arrears on the first day of
each calendar month commencing the first full month following the Closing Date.
2.5 Additional Interest Provisions.
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(a) Calculation of Interest: Interest on the Loans shall be based on
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a three hundred sixty (360) day year comprised of twelve 30-day months and
charged for the actual number of days elapsed.
(b) Default Rate: After the occurrence and during the continuance of
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an Event of Default hereunder, the per annum effective rate of interest on all
Term Loans outstanding under the Credit Facility, shall be increased to a rate
equal to two (2%) percentage points in excess of the Applicable Rate.
(c) Continuation of Interest Charges: All contractual rates of
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interest chargeable on outstanding Loans, shall continue to accrue and be paid
even after default, maturity, acceleration, judgment, bankruptcy, insolvency
proceedings of any kind or the happening of any event or occurrence similar or
dissimilar.
(f) Applicable Interest Limitations: In no contingency or event
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whatsoever shall the aggregate of all amounts deemed interest hereunder and
charged or collected pursuant to the terms of this Agreement exceed the highest
rate permissible under any law which a court of competent jurisdiction shall, in
a final determination, deem applicable hereto. In the event that such court
determines Lender has charged or received interest hereunder in excess of the
highest applicable rate, Lender shall in its sole discretion, apply and set off
such excess interest received by Lender against other Obligations due or to
become due and such rate shall automatically be reduced to the maximum rate
permitted by such law.
2.6 Fees:
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(a) Facility Fee: As of Closing, Borrower shall have paid to Lender a
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$5,000 non-refundable facility fee ("Facility Fee").
(b) Unused Line Fee: Commencing on the six (6) month anniversary of
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the date of this Agreement and continuing so long as this Agreement has not been
terminated pursuant to the terms hereof, Borrower shall unconditionally pay to
Lender a non-refundable fee ("Unused Line Fee") equal to three eighths of one
percent (.375%) per annum of the average daily unused portion of the Credit
Facility calculated by subtracting the average daily outstanding balance of all
Loans from the then current amount of the Maximum Credit Limit. The Unused Line
Fee shall be computed and paid on a quarterly basis, in arrears, on the first
day of each January, April, July and October, with the first payment being due
on January 1, 1998.
2.7 Prepayments:
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Upon any prepayment by or on behalf of the Borrowers (whether
voluntary, on default or otherwise), the Lender may require, if it so elects,
the Borrowers to pay the Lender as compensation for the cost of having advanced
or being prepared to advance fixed rate funds hereunder an amount equal to the
Cost of Prepayment. "Cost of Prepayment" means an amount equal to the present
value, if positive, of the product of (a) the difference between (i) the yield,
on the beginning date of the applicable interest period, of a U.S. Treasury
obligation with a maturity similar to the applicable interest period minus (ii)
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the yield on the prepayment date, of a U.S. Treasury obligation with a maturity
similar to the remaining maturity of the applicable interest period, and (b) the
principal amounts to be prepaid, and (c) the number of years, including
fractional years, from the prepayment date to the end of the applicable interest
period. The yield on any U.S. Treasury obligation shall be determined by
reference to Federal Reserve Statistical Release H.15(519) "Selected Interest
Rates". For purposes of making present value calculations, the yield to
maturity of a similar maturity U.S. Treasury obligation on the prepayment date
shall be deemed the discount rate. The Cost of Prepayment shall also apply to
any payments made after acceleration of the maturity date of this Note while a
Fixed Rate is in effect. Borrowers agree that this fee payable to Lender is a
reasonable estimate of its damages and not a penalty.
(b) Proceeds of Collateral: Borrowers shall, promptly upon receipt of
----------------------
the proceeds from the sale or other disposition of any Specific Lease Collateral
relating to a Term Loan, pay to Lender an amount equal to that portion of the
Term Loan corresponding to such Specific Lease Collateral, for application
against the outstanding amount of such Term Loan. Prior to the occurrence of an
Event of Default, proceeds of Specific Lease Collateral relating to a Term Loan
shall first be applied to accrued and unpaid interest, fees, costs, Expenses
related to the Credit Facility, and then to the outstanding balance of such Term
Loan in the inverse order of Maturity. Following the occurrence of an Event of
Default, all proceeds from the Collateral and all payments received pursuant to
the terms of the Leases shall be immediately delivered to Lender and Lender may
apply such proceeds to any of Borrowers' Obligations in such order as Lender may
decide in its sole discretion.
(c) Replacement of Defaulted Leases: Upon a Lease constituting
-------------------------------
Specific Lease Collateral relating to a Term Loan, becoming a Defaulted Lease,
Borrowers shall, at Borrower's option, within twenty (20) days of becoming aware
that such Lease is a
Defaulted Lease, either immediately prepay such Term Loan in accordance with
subsection (b) above or replace such Lease with a new lease with an Advance Rate
equal to at least the Advance Rate (calculated as of the date such Lease became
a Defaulted Lease) of the Lease being replaced, in form and substance and with a
Lessee with creditworthiness satisfactory to Lender. In addition, Borrowers
shall execute such agreements and documents and take such action as Lender
requests in order to effectuate the exchange and protect and perfect Lender's
security interest in the new Lease. So long as no Event of Default has occurred
and is continuing, upon any Defaulted Lease being prepaid or replaced, Lender
shall execute such documentation as is reasonably necessary to release its
security interest in such Defaulted Lease and the related Leased Property and
return the original of such Defaulted Lease to such Borrower.
2.8 Use of Proceeds: The extensions of credit under and proceeds of the
---------------
Credit Facility shall be used to enable Borrower to purchase Leased Property and
finance Leases associated with such Leased Property.
2.9 Capital Adequacy: If any present or future law, governmental rule,
----------------
regulation, policy, guideline, directive or similar requirement (whether or not
having the force of law) imposes, modifies, or deems applicable any capital
adequacy, capital maintenance or similar requirement which affects the manner in
which Lender allocates capital resources to its obligations (including any
obligations hereunder), and as a result thereof, in the opinion of Lender, the
rate of return on Lender's capital with regard to the Loans is reduced to a
level below that which Lender could have achieved but for such circumstances,
then in such case and upon notice from Lender to Borrowers, from time to time,
Borrowers shall pay Lender such additional amount or amounts as shall compensate
Lender for such reduction in its rate of return. Such notice shall contain the
statement of Lender with regard to any such amount or amounts which shall, in
the absence of manifest error, be binding upon Borrowers. In determining such
amount, Lender may use any reasonable method of averaging and attribution that
it deems applicable.
SECTION 3. COLLATERAL
3.1 Description: As security for the payment of the Obligations, and
-----------
satisfaction by Borrowers of all covenants and undertakings contained in this
Agreement and the other Loan Documents each Borrower hereby assigns and grants
to Lender a continuing first lien on and security interest in, upon and to the
Collateral.
3.2 Lien Documents: At Closing and thereafter as Lender deems necessary,
--------------
each Borrower shall execute and deliver to Lender, or shall have executed and
delivered (all in form and substance reasonably satisfactory to Lender):
(a) Financing Statements - Financing statements pursuant to the UCC,
--------------------
which Lender may file in any jurisdiction where any Collateral is or may be
located and in any other jurisdiction that Lender deems appropriate; and
(b) Other Agreements - Any other agreements, documents, instruments
----------------
and writings, including, without limitation, security agreements and Assignment
Agreements, reasonably required by Lender to evidence, perfect or protect
Lender's liens and security interest in the Collateral or as Lender may
reasonably request from time to time.
3.3 Other Actions: In addition to the foregoing, Borrowers shall do
-------------
anything further that may be lawfully and reasonably required by Lender to
perfect its security interests and to effectuate the intentions and objectives
of this Agreement, including, but not limited to, the execution and delivery of
lockbox agreements, continuation statements, amendments to financing statements,
security agreements, contracts and any other documents required hereunder. At
Lender's request, Borrowers shall also immediately deliver (with execution by
each Borrower of all necessary documents or forms to reflect Lender's Lien
thereon) to Lender, all items for which Lender must or may receive possession to
obtain a perfected security interest, including without limitation, all Leases,
notes, certificates and documents of title, chattel paper, warehouse receipts,
instruments, and any other similar instruments constituting Collateral.
3.4 Searches: Lender shall, prior to or at Closing, and thereafter as
--------
Lender may determine from time to time, at Borrowers' expense, obtain the
following searches (the results of which are to be consistent with the
warranties made by Borrower's in this Agreement):
(a) UCC Searches: UCC searches with the Secretary of State and local
------------
filing office of each state where Borrowers maintain their chief executive
office, a place of business, or assets;
(b) Judgments, Etc.: Judgment, federal tax lien and corporate tax
---------------
lien searches, in all applicable filing offices of each state searched under
subparagraph (a) above.
Borrowers shall, prior to or at Closing and at their expense, obtain
and deliver to Lender good standing certificates
showing Borrowers to be in good standing in their state(s) of incorporation and
in each other state or foreign country in which they are doing and presently
intend to do business for which the failure to be so qualified might have
material adverse effect on Borrowers' business, financial condition, Property or
Lender's rights hereunder.
3.5 Filing Security Agreement: A carbon, photographic or other
-------------------------
reproduction or other copy of this Agreement or of a financing statement is
sufficient as and may be filed in lieu of a financing statement.
3.6 Power of Attorney: Each of the officers of Lender is hereby
-----------------
irrevocably made, constituted and appointed the true and lawful attorney for
Borrowers (without requiring any of them to act as such) with full power of
substitution to do the following: (1) endorse the name of a Borrower(s) upon any
and all checks, drafts, money orders and other instruments for the payment of
monies that are payable to Borrower(s) and constitute collections on the
Collateral; (2) execute in the name of Borrowers, or either of them, any
financing statements, schedules, assignments, instruments, documents and
statements that Borrowers are obligated to give Lender hereunder or are
necessary to perfect Lender's security interest or Lien in the Collateral; (3)
verify validity, amount or any other matter relating to the Collateral by mail,
telephone, telecopy or otherwise; provided however, that prior to an Event of
Default, any such activity shall be performed only after prior notice to
Borrowers and in a manner reasonably satisfactory to the parties; and (4)
following the occurrence of an Event of Default, do such other and further acts
and deeds in the name of Borrowers that Lender may reasonably deem necessary or
desirable to enforce any Lease or other Collateral.
SECTION 4. CLOSING AND CONDITIONS PRECEDENT TO ADVANCES
Closing under this Agreement and the making of each Advance are subject to
the following conditions precedent (all documents to be in form and substance
satisfactory to Lender and Lender's counsel):
4.1 Resolutions, Opinions, and Other Documents: Prior to the Closing,
------------------------------------------
Borrowers shall have delivered to Lender the following:
(a) this Agreement properly executed;
(b) each document and agreement required to be executed under any
provision of this Agreement or any related agreement;
(c) certified copies of (i) resolutions of each Borrower's board of
directors authorizing the execution of this Agreement and each instrument,
agreement and document required to be
delivered by any Section hereof and (ii) each Borrower's Articles of
Incorporation and By-laws;
(d) an incumbency certificate identifying all Authorized Officers of
each Borrower, with specimen signatures;
(e) a written opinion of Borrowers' independent counsel addressed to
Lender;
(f) certification by Borrowers' chief financial officer that there
has not occurred any material adverse change in the operations and condition
(financial or otherwise) of Borrowers since December 31, 1996;
(g) payment by Borrowers of all Expenses associated with the Credit
Facility incurred to the Closing Date and the Facility Fee;
(h) Uniform Commercial Code, judgment, federal and state tax lien
searches against each Borrower, at each Borrower's expense, showing that the
Collateral is not subject to any Liens, together with Good Standing and
Corporate Tax Lien Search Certificates showing no tax Liens on either Borrower's
Property and showing each Borrower to be in good standing in each jurisdiction
where the failure to so qualify might have a material adverse affect on
Borrowers' business, financial condition, Property or Lender's rights hereunder;
and
(i) Copies of the Subordination Agreement(s) with respect to the
Subordinated Debt.
4.2 Absence of Certain Events: At the Closing Date and prior to each
-------------------------
Advance, no Event of Default or Unmatured Event of Default hereunder shall have
occurred and be continuing.
4.3 Warranties and Representations at Closing: The warranties and
-----------------------------------------
representations contained in Section 5 as well as any other Section of this
Agreement shall be true and correct in all material respects on the Closing Date
and at the time of each Advance with the same effect as though made on and as of
that date. Neither Borrower shall have taken any action or permitted any
condition to exist which would have been prohibited by any Section hereof.
4.4 Compliance with this Agreement: Each Borrower shall have performed
------------------------------
and complied with all agreements, covenants and conditions contained herein
including, without limitation, the provisions of Sections 6 and 7 hereof, which
are required to be performed or complied with by such Borrower before or at the
Closing Date and as of the date of each Advance.
4.5 Officers' Certificate: Lender shall have received a certificate
---------------------
dated the Closing Date and signed by the chief financial officer of Borrowers
certifying that all of the conditions specified in this Section have been
fulfilled.
4.6 Closing: Subject to the conditions of this Section 4, the Credit
-------
Facility shall be made available on the date ("Closing Date") this Agreement is
executed and the conditions contained in Section 4.1 hereof are satisfied (the
"Closing").
4.7 Non-Waiver of Rights: By completing the Closing hereunder, or by
--------------------
making Advances hereunder, Lender does not thereby waive a breach of any
warranty, representation or covenant made by Borrowers, or either of them,
hereunder or any agreement, document, or instrument delivered to Lender or
otherwise referred to herein, and any claims and rights of Lender resulting from
any breach or misrepresentation by either Borrower are specifically reserved by
Lender.
SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce Lender to complete the Closing and make the initial Advances
under the Credit Facility to Borrowers, Borrowers warrant and represent to
Lender that:
5.1 Corporate Organization and Validity:
-----------------------------------
(a) Each Borrower is a corporation duly organized and validly existing
under the laws of its state of incorporation, is duly qualified, is validly
existing and in good standing and has lawful power and authority to engage in
the business it conducts in each state and other jurisdiction where the nature
and extent of its business requires qualification, except where the failure to
so qualify would not have a material adverse effect on such Borrower's business,
financial condition, Property or prospects. A list of all states and other
jurisdictions where each Borrower is qualified to do business is attached hereto
as Exhibit "5.1" and made a part hereof.
(b) The making and performance of this Agreement and related
agreements, and each document required by any Section hereof will not violate
any law, government rule or regulation, or the charter, minutes or bylaw
provisions of either Borrower or violate or result in a default (immediately or
with the passage of time) under any contract, agreement or instrument to which
such Borrower is a party, or by which it is bound. Borrowers are not in
violation of nor have knowingly caused any Person to violate any term of any
agreement or instrument to which they or such Person is a party or by which they
may be bound or of their charters, minutes
or bylaws which violation could have a material adverse effect on either
Borrower's business, financial condition, Property or prospects.
(c) Each Borrower has all requisite corporate power and authority to
enter into and perform this Agreement and to incur the obligations herein
provided for, and has taken all proper and necessary corporate action to
authorize the execution, delivery and performance of this Agreement, and the
documents and related agreements required hereby.
(d) This Agreement, any and all Term Notes and all related agreements
and documents required to be executed and delivered by Borrowers hereunder, when
delivered, will be valid and binding upon each Borrower and enforceable in
accordance with their respective terms, subject to the effect of bankruptcy,
reorganization, insolvency and other laws affecting the rights of creditors
generally.
5.2 Places of Business: The only places of business of Borrowers, and
------------------
the places where they keep and intend to keep their Books and Records concerning
the Collateral, are at the addresses listed in Exhibit "5.2" attached hereto and
made a part hereof.
5.3 Pending Litigation: There are no judgments or judicial or
------------------
administrative orders, proceedings or investigations (civil or criminal)
pending, or to the knowledge of either Borrower, threatened, against Borrower(s)
in any court or before any governmental authority or arbitration board or
tribunal except as shown in Exhibit "5.3" attached hereto and made a part
hereof, none of which may materially and adversely affect the business,
financial condition, Property or prospects of Borrowers, or the ability of
Borrowers to perform under this Agreement. Neither Borrower is in default with
respect to any order of any court, governmental authority, regulatory agency or
arbitration board or tribunal. No executive officer of either Borrower has been
indicted or convicted in connection with or is engaging in any criminal conduct,
or is currently subject to any lawsuit or proceeding or under investigation in
connection with any anti-racketeering or other conduct or activity.
5.4 Title to Collateral: Each Borrower has good and marketable title in
-------------------
fee simple (or its equivalent under applicable law) to all the Collateral it
respectively purports to own (or holds a first priority perfected security
interest in the portion of the Collateral constituting Leased Property) free
from Liens, except those of Lender, and free from the claims of any other Person
other than the corresponding Lessees or the original lessor, if applicable.
5.5 Governmental Consent: Neither the nature of Borrowers or of their
--------------------
business or Property, nor any relationship between Borrowers and any other
Person, nor any circumstance affecting Borrowers in connection with the issuance
or delivery of any and all Term Notes, is such as to require a consent, approval
or authorization of, or filing, registration or qualification with, any
governmental authority on the part of either Borrower in connection with the
execution and delivery of this Agreement or the issuance or delivery of any and
all Term Notes or other documents contemplated hereby.
5.6 Taxes: All tax returns required to be filed by Borrowers, or either
-----
of them, in any jurisdiction have in fact been filed, and all taxes,
assessments, fees and other governmental charges upon Borrowers, or upon any of
their Property income or franchises, which are shown to be due and payable on
such returns have been paid, except for those taxes being contested in good
faith with due diligence by appropriate proceedings for which appropriate
reserves have been maintained under GAAP. Borrowers are not aware of any
proposed additional tax assessment or tax to be assessed against or applicable
to either Borrower that might have a material adverse effect on Borrowers'
business, financial condition, Property or prospects.
5.7 Financial Statements: Borrowers' annual consolidated audited
--------------------
balance sheet as of June 30, 1996, the quarterly unaudited consolidated balance
sheet as of December 31, 1996 and the related income statements and statements
of cash flows as of such dates, all accompanied by reports thereon from
Borrowers' independent certified public accountants, (complete copies of which
have been delivered to Lender), have been prepared in accordance with GAAP and
present fairly, accurately and completely the financial position of Borrowers as
of such dates and the results of its operations for such periods. The fiscal
year for Borrowers currently ends on June 30. Borrowers federal tax
identification numbers are set forth on Exhibit A5.7" attached hereto and made a
part hereof.
5.8 Full Disclosure: Neither the financial statements referred to in
---------------
Section 5.7, nor this Agreement or related agreements and documents or any
written statement furnished by a Borrower to Lender in connection with the
negotiation of the Credit Facility and contained in any financial statements or
documents relating to a Borrower contain any untrue statement of a material fact
or omit a material fact necessary to make the statements contained therein or
herein not misleading.
5.9 Subsidiaries: Borrowers have no Subsidiaries or Affiliates, except
------------
as listed on Exhibit "5.9" attached hereto and made a part hereof.
5.10 Guarantees, Contracts, etc.:
---------------------------
(a) Neither Borrower owns nor holds equity or long term debt
investments in, has any outstanding advances to, or serves as guarantor, surety
or accommodation maker for the obligations of, or has any outstanding borrowings
from, any Person except as described in Exhibit "5.10", attached hereto and a
made part hereof.
(b) Neither Borrower is a party to any contract or agreement, or
subject to any charter or other corporate restriction, which materially and
adversely affects its business, financial condition, Property or prospects.
(c) Except as otherwise specifically provided in this Agreement,
neither Borrower has agreed or consented to cause or permit any of the
Collateral whether now owned or hereafter acquired to be subject in the future
(upon the happening of a contingency or otherwise) to a Lien not permitted by
this Agreement.
5.11 Government Regulations, etc.:
----------------------------
(a) Borrowers have obtained all licenses, permits, franchises and
other governmental authorizations necessary for the ownership of their Property
and for the conduct of their business, where the failure to obtain would have a
material adverse effect on the business, financial condition, Property or
prospects of either Borrower.
(b) Neither Borrower is in violation of, has not received written
notice that it is in violation of, or has knowingly caused any Person to
violate, any applicable statute, regulation or ordinance of the United States of
America, or of any state, city, town, municipality, county or of any other
jurisdiction, or of any agency, or department thereof, (including without
limitation, environmental laws and regulations), which may materially and
adversely affect Borrowers' business, financial condition, Property or
prospects.
(c) Borrowers are current with all reports and documents required to
be filed with any state or federal securities commission or similar agency and
is in full compliance in all material respects with all applicable rules and
regulations of such commissions.
5.12 Names: Within five (5) years prior to the Closing Date, neither
-----
Borrower has conducted business under or used any other name (whether corporate
or assumed) except for the names shown on Exhibit "5.12", attached hereto and
made a part hereof. Each trade name of Borrower represents a division or
trading style of
such Borrower and not a separate corporate subsidiary, affiliate or independent
entity.
5.13 Other Associations: Neither Borrower is engaged nor has an
------------------
interest in any joint venture or partnership with any other Person except as
described on Exhibit "5.13" hereto and made a part hereof.
5.14 Environmental Matters: Except as disclosed on Exhibit "5.14"
---------------------
attached hereto and made a part hereof, Borrowers have no knowledge of the
presence of any Hazardous Substances on any of the real property where either
Borrower conducts operations or has its personal property, or of any spills,
releases, discharges or disposal of Hazardous Substances that have occurred, are
presently occurring on any other real property as a result of the conduct,
action or activities of either Borrower.
As used herein, the term "Hazardous Substances" means any substances
defined or designated as hazardous or toxic waste, hazardous or toxic material,
hazardous or toxic substance or similar term, by any environmental statute, rule
or regulation of any governmental entity presently in effect and applicable to
such real property.
5.15 Capital Stock: The authorized and outstanding shares of capital
-------------
stock of Borrowers are as set forth on Exhibit "5.15" attached hereto and made a
part hereof. All of the capital stock of Borrowers has been duly and validly
authorized and issued and is fully paid and non-assessable and has been sold and
delivered to the holders thereof in compliance with, or under valid exemption
from, all Federal and state laws and the rules and regulations of all regulatory
bodies thereof governing the sale and delivery of securities. Except for the
rights and obligations set forth in Exhibit "5.15", there are no subscriptions,
warrants, options, calls, commitments, rights or agreements by which a Borrower
or any of their shareholders is bound relating to the issuance, transfer, voting
or redemption of shares of its capital stock or any pre-emptive rights held by
any Person with respect to the shares of capital stock of such Borrower. Except
as set forth in Exhibit "5.15", Borrower has not issued any securities
convertible into or exchangeable for shares of its capital stock or any options,
warrants or other rights to acquire such shares or securities convertible into
or exchangeable for such shares.
5.16 Solvency: Borrowers on a consolidated basis are solvent, able to
--------
pay their debts as they become due, and have capital sufficient to carry on
their business and all business in which Borrowers are about to engage, and now
own Property having a value both at fair valuation and at present fair salable
value greater than the amount required to pay their debts. Borrowers will not
be
rendered insolvent by the execution and delivery of this Agreement or any of the
other documents executed in connection with this Agreement or by the
transactions contemplated hereunder or thereunder.
5.17 Leases and Leased Property: Each Lease constituting Specific Lease
--------------------------
Collateral securing a Term Loan and the Leased Property associated therewith
shall, at all times when such Leases constitute Specific Lease Collateral, be in
compliance with all of the following representations:
(a) Each Lease is in substantially the same form as one of the forms
attached hereto as Exhibit "5.17", unless otherwise agreed to by Lender in
writing, and 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 Borrowers' Books and Records relating thereto are
accurate, complete and genuine;
(b) The sole original of each Lease has been delivered to Lender, and
any other originally signed counterparts of each Lease shall contain a legend
stating that the Lease has been assigned to PNC Bank, National Association,
pursuant to that certain Loan and Security Agreement dated May 9, 1997 or
contain similar language specifying that such counterpart is not an original for
"chattel paper" purposes under the UCC;
(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, the sole original schedule shall constitute the sole original
Lease, provided that the terms of the Master Lease Agreement and the schedule
make it clear that the sole original schedule is a separate lease for "Chattel
Paper" purposes under the UCC and that possession of such schedule constitutes
possession of "Chattel Paper" under the UCC;
(d) Except as otherwise consented to by Lender in writing, no more
than $250,000 of the Credit Facility is secured by Leases with the same Lessee
or affiliated entities;
(e) The original amount and unpaid balance of each Lease shown on
Borrowers' Books and Records and on any statement or schedule delivered to
Lender in connection therewith is the true and correct amount actually owed to
the designated Borrower, no portion of which, except as specifically provided
for in the Lease, has been prepaid;
(f) The amount due under each Lease is not subject to, and the terms
of each Lease provide that the Lessee may not assert, any claim or reduction,
counterclaim, setoff, recoupment, or any other claim, allowance or adjustment
and no Lease has been re-negotiated, restructured or compromised;
(g) All security agreements, title retention instruments and other
documents and instruments which are security for any Lease, and/or each Lease
contain a correct and sufficient description of the Leased Property covered
thereby and all security interests granted therein to the designated Borrower
(either directly or as assignee), if applicable, subject to Section 5.17(o)
below, have been properly perfected and assigned to Lender;
(h) Neither Borrower has nor will it 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 such Borrower to such Lessee against
future rentals accruing under the Lease;
(i) Each item of Leased Property has been delivered to and, in all
instances, accepted by the Lessee and has not been removed from service and is
in good condition, ordinary wear and tear accepted, has not been returned,
rejected, lost, stolen, destroyed or damaged;
(j) Each Lease has been duly executed by the designated Borrower (or,
as applicable, duly assigned to Borrower by a third party lessor) and each
Lessee, is a valid, legal and binding obligation of such Borrower, and such
Lessee, and is enforceable against such Borrower and such Lessee in accordance
with its terms. Such Borrower is the sole owner of each of the Leases and has
the authority to assign all of its right, title and interest therein upon the
terms herein set forth;
(k) Borrowers have made an adequate credit investigation of each
Lessee and approved each Lessee in accordance with their Credit Guidelines in
effect as of December 23, 1996, or any subsequent versions of such guidelines
which may be approved by Lender, and have determined that the credit is
satisfactory and Lender has approved the credit, following its own credit
review. Each Lease must be representative of Borrowers' overall lease portfolio
with regard to credit quality, equipment type, structure and yield, geographical
considerations, transaction size and vendor relationships;
(l) All costs, fees, and expenses incurred in making and closing each
of the Leases has been paid and each Lease is not more than 59 days
contractually past due and will be not more than thirty (30) days contractually
past due at the time of the
assignment thereof to Lender, without giving effect to any De Minimis
Delinquency. No default exists or 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 a Borrower do not violate any laws relating to the maximum
fees, costs, expenses or charges that can be charged in any state under the laws
governing, or applicable to, such Lease, Leased Property or Lessee with respect
to those matters of law.
(n) Lender has a first perfected lien and security interest in all of
Borrowers' right, title and interest in and to the Collateral, including,
without limitation, each Lease, subject to no other Lien, it being understood
however, that in the event a Lease is not a "true lease," Borrowers' perfection
of their underlying security interest in the Leased Property is subject to the
filing exceptions set forth in Section 5.17(o) below. Each Borrower has taken
and in the future, shall take all steps necessary to maintain Lender's first
perfected lien and security interest in the Collateral, including, if required,
but subject to Section 5.17(o) below, perfecting such Borrower's security
interest (in the event the Lease is not a "true lease") through filing financing
statements, amendments thereto, or assignments and/or continuations thereof and
recording of the documentation necessary to perfect such Borrower's lien;
(o) For each Lease where the corresponding Leased Property has a cost
in excess of $25,000, Borrowers have filed such UCC financing statements
(listing the designated Borrower as secured party, Lessee as debtor, and such
Leased Property as collateral), in such locations as would be required by
applicable law (if such Borrower were a secured party and Lessee were a debtor)
in order to perfect a security interest in such Leased Property under the UCC or
otherwise, in favor of Lender, as such Borrower=s assignee; provided however,
that Borrowers shall not be required to file such financing statements if the
corresponding Lessee is an investment grade company with a rating of BBB or
higher as defined by Standard & Poor's Rating Service, and provided further that
the aggregate amount due under such Leases shall not exceed 10% of the Maximum
Credit Limit;
(p) For each item of Leased Property constituting Specific Lease
Collateral with an initial cost in excess of $100,000, Lender is named as
assignee on all UCC-1 Financing Statements so filed or Borrowers have delivered
a separate UCC-3
Financing Statement assigning their interest to Lender to be filed by Lender;
(r) Each Lease is a Atriple net lease@ and is valid and enforceable
and presents the undisputed obligation of the Lessee named therein and is not
more than fifty-nine (59) days contractually past due, without giving effect to
any De Minimis Delinquency;
(s) Each item of Leased Property, with an initial cost in excess of
$50,000, has been insured in the ordinary course of Borrowers' or the
corresponding Lessee's business;
(t) Neither Borrower has received notice of a bankruptcy,
receivership, reorganization or insolvency of any Lessee;
(u) No Lessee is a governmental entity (unless Lender consents
otherwise in writing) or is a subsidiary or affiliate of either Borrower, or
under common control with either Borrower or is an officer or employee of
Borrowers;
(v) The Lessee is not otherwise in default under the corresponding
Lease; and
(w) No Lease provides for the lease of Leased Property, ownership of
which is evidenced by certificate of title.
5.18 Interrelatedness of Borrowers: The business operations of each
-----------------------------
Borrower are interrelated and complement one another, and such companies have a
common business purpose, with inter-company bookkeeping and accounting
adjustments used to separate their respective Properties, Liabilities, and
transactions. The proceeds of Loans under the Agreement will directly or
indirectly benefit each Borrower hereunder severally and jointly, regardless of
which Borrower requests or receives part or all of the proceeds of such Loans.
SECTION 6. BORROWER'S AFFIRMATIVE COVENANTS
Each Borrower covenants that until all of Borrowers' Obligations to Lender
are paid and satisfied in full and the Credit Facility has been terminated:
6.1 Payment of Taxes and Claims: Each Borrower shall pay, before they
---------------------------
become delinquent, all taxes, assessments and governmental charges or levies
imposed upon it or upon each Borrower's Property.
6.2 Maintenance of Insurance, Financial Records
--------------------------------------------
and Corporate Existence:
-----------------------
(a) Property Insurance - Each Borrower shall maintain or caused to be
------------------
maintained fire, flood, casualty and such other hazard insurance in such
amounts, with such deductibles and with such insurers as are customarily used by
companies operating in the same industry as Borrowers or the corresponding
Lessee. At or prior to Closing, each Borrower shall furnish Lender with copies
of original policies of insurance certified as true and correct and being in
full force and effect as of the Closing Date or such other evidence of insurance
as Lender may require. In the event that either Borrower fails to procure or
cause to be procured any such insurance or to timely pay or cause to be paid the
premium(s) on any such insurance, Lender may with prior notice to Borrowers, do
so for such Borrower, but Borrowers shall continue to be liable for the same.
Such policies shall expressly provide that the requisite insurance cannot be
altered or canceled without thirty (30) days prior written notice to Lender.
Each Borrower further covenants that all insurance premiums owing under its
current casualty policy have been paid. Borrowers also agrees to notify Lender,
promptly, upon either Borrower's receipt of a notice of termination,
cancellation, or non-renewal from its insurance company of any such policy.
(b) Public Liability Insurance - Each Borrower shall maintain and
--------------------------
shall deliver to Lender upon Lender's request, evidence of public liability
insurance in such amounts as is customary for companies in the same or similar
businesses located in the same or similar area.
(c) Financial Records - Borrowers shall keep current and accurate
-----------------
books of records and accounts in which full and correct entries will be made of
all of its business transactions, and will reflect in its financial statements
adequate accruals and appropriations to reserves, all in accordance with GAAP.
Borrowers shall not change their respective fiscal year end date without the
prior written consent of Lender.
(d) Corporate Existence and Rights - Borrowers shall do (or cause to
------------------------------
be done) all things necessary to preserve and keep in full force and effect
their existence, good standing, rights and franchises.
(e) Compliance with Laws - Borrowers shall be in compliance with any
--------------------
and all laws, ordinances, governmental rules and regulations, and court or
administrative orders or decrees to which it is subject, whether federal, state
or local, (including without limitation environmental or environmental-related
laws, statutes, ordinances, rules, regulations and notices), and shall obtain
and maintain any and all licenses, permits, franchises or
other governmental authorizations necessary to the ownership of their Property
or to the conduct of their businesses, which violation or failure to obtain may
materially adversely affect the business, Property, financial conditions or
prospects of either Borrower.
6.3 Business Conducted: Borrowers shall continue in the business
------------------
presently operated by them using their best efforts to maintain their customers
and goodwill. Neither Borrower shall engage, directly or indirectly, in any
material respect in any line of business substantially different from the
businesses conducted by them immediately prior to the Closing Date.
6.4 Litigation: Borrowers shall give prompt notice to Lender of any and
----------
all litigation claiming, in the aggregate, in excess of $250,000 from
Borrowers', or either of them, or which may otherwise have a material adverse
effect on the business, financial condition, Property or prospects of either
Borrower.
6.5 Taxes: Borrowers shall pay all taxes (other than taxes based upon
-----
or measured by Lender's income or revenues), if any, in connection with the
Loans and/or the recording of any financing statements or other Loan Documents.
The Obligations of Borrowers under this section shall survive the payment of
Borrowers' Obligations under this Agreement and the termination of this
Agreement. Borrowers shall cause to be paid all taxes incurred in connection
with any of the Leases or the acquisition, sale or lease of any of the Leased
Property.
6.6 Bank Accounts: Borrowers shall maintain a depository and a lockbox
-------------
account with Lender.
6.7 Employee Benefit Plans: Borrowers have funded all Pension Plan(s)
----------------------
in a manner that satisfies the minimum funding requirements of Section 302 of
ERISA and will (a) fund all such Pension Plan(s) in a manner that will satisfy
the minimum funding standards of Section 302 of ERISA, or will promptly satisfy
any accumulated funding deficiency that arises under Section 302 of ERISA, (b)
furnish Lender, promptly upon Lender's request of the same, with copies of all
reports or other statements filed with the United States Department of Labor,
the Pension Benefit Guaranty Corporation ("PBGC") or the Internal Revenue
Service ("IRS") with respect to all Pension Plan(s), or which either Borrower,
or any member of a Controlled Group, may receive from the United States
Department of Labor, the IRS or the PBGC, with respect to all such Pension
Plan(s), and (c) promptly advise Lender of the occurrence of any reportable
event (as defined in Section 4043 of ERISA, other than a reportable event for
which the thirty (30) day notice requirement has been waived by the PBGC) or
prohibited transaction (under Section 406 of ERISA or Section 4975 of the
Internal Revenue
Code) with respect to any such Pension Plan(s) and the action which Borrowers
propose to take with respect thereto. Borrowers will make all contributions when
due with respect to any multi-employer pension plan in which they participate
and will promptly advise Lender (i) upon its receipt of notice of the assertion
against either Borrower of a claim for withdrawal liability, (ii) upon the
occurrence of any event which, to the best of Borrowers' knowledge, would
trigger the assertion of a claim for withdrawal liability against either
Borrower, and (iii) upon the occurrence of any event which, to the best of
Borrowers' knowledge, would place either Borrower in a Controlled Group as a
result of which any member (including either Borrower) thereof may be subject to
a claim for withdrawal liability, whether liquidated or contingent.
6.8 Warranties for Future Advances: Each request by Borrowers for an
------------------------------
Advance under the Credit Facility in any form following the Closing Date shall
constitute an automatic representation and warranty by Borrowers to the effect
that:
(a) There has been no material adverse change in either Borrower's
operations or condition (financial or otherwise) since the date of delivery of
Borrowers' then most recent Financial Statements.
(b) No Event of Default which has not been cured or waived, or
Unmatured Event of Default, then exists;
(c) Each Advance is within and complies with the terms and conditions
of this Agreement including without limitation the notice provisions contained
in Section 2.3 hereof;
(d) No Lien, other than Permitted Liens, including, without
limitation, any federal tax Lien, has been imposed on either Borrower which may,
in any way, take priority over Lender's security interests in Liens or on any
Collateral; and
(e) Each representation and warranty set forth in Section 5 of this
Agreement is then true and correct in all material respects; provided that
Borrowers may update Exhibits "5.1", "5.3", "5.9", "5.10", "5.13", "5.14" and
"5.15" so that such Exhibits accurately reflect the state of Borrowers' affairs
as of the date of a request for an Advance by giving written notice thereof to
Lender, and further provided that such updated Exhibits do not reflect events or
conditions which constitute violations of Section 6 or 7 hereof or otherwise
reflect material adverse developments.
6.9 Financial Covenants: Borrowers shall maintain and comply with the
-------------------
following financial covenants as reflected on and computed from their Financial
Statements:
(a) Adjusted Debt to Tangible Net Worth Ratio: Borrowers shall have
-----------------------------------------
and maintain at all times an Adjusted Debt to Tangible Net Worth Ratio on a
consolidated basis, measured quarterly as of the last day of each fiscal
quarter, of not more than 6 to 1.
(b) Delinquency Rate: Borrowers shall have and maintain at all times
----------------
a Delinquency Rate (as defined below), measured monthly as of the last day of
each calendar month, of no greater than seven percent (7.0%) of the Net Lease
Receivables comprising of Borrowers' entire combined lease portfolio. "Net Lease
Receivables" shall mean the aggregate of the scheduled future lease payments
comprising of Borrowers' entire combined lease portfolio
plus the estimated residual value of the personal property leased pursuant
thereto, plus indirect initial costs, less unearned lease income and allowance
for doubtful accounts. "Delinquency Rate" shall mean the percentage of
Borrowers' entire combined lease portfolio, expressed in dollars, relating to
leases which are more than thirty (30) days contractually delinquent, without
giving effect to any De Minimis Delinquency, expressed as a percentage of the
aggregate Net Lease Receivables.
(c) Net Income: Borrowers shall have and maintain Net Income on a
----------
consolidated basis, calculated on a rolling four quarter basis and measured
quarterly at the end of each fiscal quarter of not less than $1.00 provided that
Borrowers shall not permit a Net Loss to occur during any one fiscal quarter in
excess of $100,000.
(d) Bad Debt Reserve: Borrowers shall maintain a bad debt reserve of
----------------
at least 1.8% of the aggregate Net Lease Receivables.
6.10 Financial and Business Information: Borrowers shall deliver to Lender
----------------------------------
the following:
(a) Financial Statements and Collateral Reports: such data, reports,
-------------------------------------------
statements and information, financial or otherwise, as Lender may reasonably
request, including, without limitation:
(i) within ninety (90) days after the end of each fiscal year of
Borrowers, deliver to Lender, Financial Statements of Borrowers for such year
including the balance sheet of Borrowers as at the end of such fiscal year and a
statement of cash flows and income statement for such fiscal year, all on a
consolidated and consolidating basis, setting forth in the consolidated
statements in comparative form, the corresponding figures as at the end of and
for the previous fiscal year, all in reasonable detail, including all supporting
schedules, and audited and certified by independent public accountants of
recognized standing, selected by Borrowers and reasonably satisfactory to the
Lender, to have been prepared in accordance with GAAP, and such independent
public accountants shall also provide an unqualified opinion that the Financial
Statements present fairly the Borrowers' financial condition. Such independent
accountants shall also provide a statement certifying that nothing has come to
their attention to cause them to believe that calculations contained in the
compliance certificate are inaccurate.
(ii) within fifteen (15) days of the end of each calendar month,
deliver to Lender, Borrowers' receivables aging report which shall include an
aging summary of each Borrower's entire lease portfolio, including the Leases
and a complete aging
report for all Leases pledged to Lender, along with a covenant compliance
certificate, and a report certifying that each Lease constituting Specific Lease
Collateral continues to be an Eligible Lease, or if this is not the case,
identifying those Leases which have become Defaulted Leases and what
arrangements have been made to prepay the corresponding Term Loan or substitute
the Defaulted Lease(s), as required by Section 2.7(c) above, and such other
reports as Lender reasonably deems necessary, certified by Borrowers' chief
financial officer as true and correct, all in form and substance reasonably
satisfactory to Lender; and
(iii) within forty-five (45) days after the end of each fiscal
quarter, deliver to Lender Borrowers' internally prepared quarterly consolidated
and consolidating Financial Statements, including balance sheet, income
statement and statements of cash flows.
(b) Notice of Event of Default - promptly upon becoming aware of the
--------------------------
existence of any condition or event which constitutes a default or an Event of
Default or Unmatured Event of Default under this Agreement, a written notice
specifying the nature and period of existence thereof and what action Borrowers
are taking (and propose to take) with respect thereto;
(c) Notice of Claimed Default - promptly upon receipt by either
-------------------------
Borrower, notice of default, oral or written, given to such Borrower by any
creditor for borrowed money; and
(d) Securities and Other Reports - if either Borrower shall be
----------------------------
required to file reports with the Securities and Exchange Commission, promptly
upon its becoming available, one copy of each financial statement, report,
notice or proxy statement sent by such Borrower to stockholders generally, and,
a copy of each regular or periodic report, and any registration statement, or
prospectus in respect thereof, filed by such Borrower with any securities
exchange or with federal or state securities and exchange commissions or any
successor agency.
6.11 Officers' Certificates: Along with the set of Financial Statements
----------------------
delivered to Lender at the end of each fiscal quarter and fiscal year pursuant
to Section 6.10(a) hereof, Borrowers shall deliver to Lender a certificate (in
the form of Exhibit "6.11" attached hereto and made a part hereof) from the
chief financial officer of Borrowers (and as to certificates accompanying the
annual statements of Borrowers, also certified by Borrowers' independent
certified public accountant) setting forth:
(a) Covenant Compliance - the information (including detailed
-------------------
calculations) required in order to establish whether Borrowers are in compliance
with the requirements of Sections 6.9
as of the end of the period covered by the financial statements then being
furnished (and any exhibits appended thereto) under Section 6.10; and
(b) Event of Default - that the signer in his capacity as an officer
----------------
of Borrowers has reviewed the relevant terms of this Agreement, and has made (or
caused to be made under his supervision) a review of the transactions and
conditions of Borrowers from the beginning of the accounting period covered by
the Financial Statements being delivered therewith to the date of the
certificate, and that such review has not disclosed the existence during such
period of any condition or event which constitutes an Event of Default or
Unmatured Event of Default or if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action Borrowers
have taken or propose to take with respect thereto.
6.12 Inspection: Borrowers will permit any of Lender's officers or other
----------
representatives to visit and inspect any of Borrowers' locations or where any
Collateral is kept during regular business hours, to examine all of Borrowers'
books of account, records, reports and other papers, to make copies and extracts
therefrom and to discuss its affairs, finances and accounts with its officers,
employees and independent certified public accountants. All such inspections
(anticipated to be performed at least twice each year) shall be at Borrowers'
expense at the standard rates charged by Lender for such activities (plus
Lender's out-of-pocket expenses); provided, however, that prior to the
occurrence of an Event of Default or Unmatured Event of Default, Borrowers shall
not be responsible for fees and costs associated with the field examinations in
an amount in excess of $8,000 plus the actual out of pocket costs incurred, in
any one calendar year.
6.13 Tax Returns and Reports: At Lender's request from time to time,
-----------------------
Borrowers shall promptly furnish Lender with copies of the annual federal and
state income tax returns of Borrowers.
6.14 Material Adverse Developments: Borrowers agree that immediately
-----------------------------
upon becoming aware of any development or other information which would
reasonably be expected to materially and adversely affect their businesses,
financial condition, Property, prospects or its ability to perform under this
Agreement, they shall give to Lender telephonic or facsimile notice specifying
the nature of such development or information and such anticipated effect. In
addition, such verbal communication shall be confirmed by written notice thereof
to Lender on the next business day after such verbal notice is given.
6.15 Places of Business: Borrowers shall give thirty (30) days prior
------------------
written notice to Lender of any changes in the location of any of their
respective places of business, of the places where
Books and Records are kept, or the establishment of any new, or the
discontinuance of any existing place of business.
6.16 Sale of Collateral: Borrowers shall mark their Books and Records
------------------
to indicate Lender's security interest in the Collateral, including the Leases
and Leased Property and, unless Lender consents otherwise in writing, a Borrower
shall retain title at all times to the Leased Property; provided however, that
so long as no Event of Default or Unmatured Event of Default has occurred,
Borrowers may, subject to the prepayment provisions set forth herein, sell
Leases and Leased Property. So long as no Event of Default or Unmatured Event
of Default has occurred, upon receipt of the proceeds (if required) from the
sale of such Leases and/or Leased Property, or upon a Lease having been paid-out
in full, Lender shall execute such documentation as is reasonably necessary to
release its security interest in such Leases and/or Lease Property and return
such original Lease(s) to Borrowers within twenty (20) days of their request
therefor.
SECTION 7. BORROWER'S NEGATIVE COVENANTS:
Each Borrower covenants that until all of Borrowers' Obligations to Lender
are paid and satisfied in full and the Credit Facility has been terminated,
that:
7.1 Merger, Consolidation, Dissolution or Liquidation:
-------------------------------------------------
(a) Borrowers shall not sell, lease, license, transfer or otherwise
dispose of its Property other than Property sold in the ordinary course or
ordinary operation of Borrower's business (which shall include sales in
conjunction with securitization transactions and other sales, transfers or
assignments arising in conjunction with financing transactions), without
Lender's prior written consent.
(b) Borrowers shall not merge or consolidate with, or acquire, any
other Person or commence a dissolution or liquidation unless (i) BankVest is the
surviving entity; and (ii) after giving effect to the transaction, the covenants
of the Loans Documents shall not be violated, including, without limitation,
those relating to leverage and management; and (iii) such merger or acquisition
shall be with a Person in the same or similar business as Borrowers.
Notwithstanding the above, nothing shall prohibit the merger of any subsidiary
of BankVest into BankVest or into another subsidiary.
7.2 Liens and Encumbrances: Borrowers shall not: (i) execute a negative
----------------------
pledge agreement with any Person covering any of the Collateral, or (ii) cause
or permit or agree or consent to cause or permit in the future (upon the
happening of a contingency or
otherwise) the Collateral, whether now owned or hereafter acquired, to be
subject to a Lien other than the Lien of Lender hereunder.
7.3 Negative Pledge: Borrowers shall not pledge, grant or permit any
---------------
Lien to exist on the common stock of any Subsidiaries or any of their Affiliates
other than a Lien on the Stock of LeaseVest previously granted to First Bank of
Boston.
7.4 Transactions With Affiliates or Subsidiaries:
--------------------------------------------
(a) Borrowers shall not enter into any transaction with any
Subsidiary or other Affiliate including, without limitation, the purchase, sale,
lease or exchange of Property, or the loaning or giving of funds to any
Affiliate or any Subsidiary, unless (i) except for those transactions described
in Exhibit 7.4 hereto, such Subsidiary or Affiliate is engaged in a business
substantially related to the business conducted by Borrowers and the transaction
is in the ordinary course of and pursuant to the reasonable requirements of
Borrowers' business and upon terms substantially the same and no less favorable
to Borrowers as it would obtain in a comparable arm's-length transactions with
any Person not an Affiliate or a Subsidiary, and (ii) so long as such
transaction is not prohibited hereunder.
(b) Subject in any event to the limitations of Section 7.4(a) above,
Borrowers shall not create or acquire any Subsidiary unless such Subsidiary
engages in a business substantially related to the business of Borrowers as
conducted immediately prior to the Closing Date.
7.5 Guarantees: Excepting the endorsement in the ordinary course of
----------
business of negotiable instruments for deposit or collection and the guaranty of
the liabilities described in Exhibit A5.10" hereto, neither Borrower shall
become or be liable, directly or indirectly, primary or secondary, matured or
contingent, in any manner, whether as guarantor, surety, accommodation maker, or
otherwise, for the existing or future indebtedness of any kind of any other
Person other than a Borrower hereunder.
7.6 Distributions, Redemptions and Other Indebtedness: Borrowers shall
-------------------------------------------------
not declare or pay or make any forms of Distribution other than Distributions in
the form of stock of BankVest, provided, however, that prior to the occurrence
of an Unmatured Event of Default or an Event of Default, BankVest may make cash
Distributions to its shareholders in an amount not to exceed 30% of Borrowers'
Net Income; provided further that notwithstanding the foregoing, nothing herein
shall prohibit Distributions from any subsidiary of BankVest to BankVest, or
Distributions required pursuant to that certain Agreement dated May
30, 1996 by and among BankVest, Primus Capital Fund III Limited Partnership and
PNC Venture Capital Corporation.
7.7 Use of Lender's Name: Borrowers shall not use Lender's name (or the
--------------------
name of any of Lender's Affiliates) in connection with any of its business
operations except to identify the existence of the Credit Facility. Nothing
herein contained is intended to permit or authorize Borrowers to make any
contract on behalf of Lender.
7.8 Change of Ownership Interests/Change in Management: BankVest shall
--------------------------------------------------
continue to own 100% of the voting stock of LeaseVest and Paul Gass and John
Colton will, at all times, remain as President and Executive Vice President
respectively of Borrowers and shall continue to own at least 23% of the
aggregate voting interest of all classes of capital stock of BankVest.
7.9 Loans and Investments: Borrowers shall not have outstanding any
---------------------
loans, advances, extensions of credit or capital contributions to or investments
in any Person(s) in an aggregate amount in excess of $300,000, except as made in
the ordinary course of Borrowers' business.
SECTION 8. DEFAULT
8.1 Events of Default: Each of the following events shall constitute an
-----------------
event of default ("Event of Default") and Lender shall thereupon have the option
to declare the Obligations immediately due and payable, all without demand,
notice, presentment or protest or further action of any kind (it also being
understood that the occurrence of any of the events or conditions set forth in
subparagraphs (j), (k) or (l) shall automatically cause an acceleration of the
Obligations):
(a) Payments - if Borrowers fail to make any payment of principal or
--------
interest on the date when such payment is due and payable, whether upon
maturity, acceleration, demand or otherwise; or
(b) Other Charges - if Borrowers fail to pay any other charges,
-------------
fees, Expenses or other monetary obligations owing to Lender arising out of or
incurred in connection with this Agreement on the date when such payment is due
and payable, whether upon maturity, acceleration, demand or otherwise; or
(c) Particular Covenant Defaults - if Borrowers, or either of them,
----------------------------
fail to perform, comply with or observe any covenant or undertaking contained in
this Agreement; provided however, that solely with respect to those covenants
contained in
Sections 6.1, 6.2, 6.5, 6.7, 6.9(d), 6.10 and 6.11, Borrowers shall have 10 days
from the date of such failure, to comply with or observe such covenant; or
(d) Financial Information - if any statement, report, financial
---------------------
statement, or certificate made or delivered by Borrowers or either of them, or
any of their officers, employees or agents, to Lender is not true and correct,
in all material respects, when made; or
(e) Uninsured Loss - if there shall occur any uninsured damage to or
--------------
loss, theft, or destruction in excess of $250,000 with respect to any portion of
any Collateral; or
(f) Warranties or Representations - if any warranty, representation
-----------------------------
or other statement by or on behalf of Borrowers, or either of them, contained in
or pursuant to this Agreement, or in any document, agreement or instrument
furnished in compliance with, relating to, or in reference to this Agreement, is
false, erroneous, or misleading in any material respect when made; or
(g) Agreements with Others - if Borrowers, or either of them, shall
----------------------
default beyond any grace period under any agreement with any creditor for
borrowed money in excess of $250,000, and (i) such default consists of the
failure to pay any principal, premium or interest with respect to such
indebtedness or (ii) such default consists of the failure to perform any
covenant or agreement with respect to such indebtedness, if the effect of such
default is to cause such Borrower's obligations which are the subject thereof to
become due prior to its maturity date or prior to its regularly scheduled date
of payment; or
(h) Other Agreements with Lender - if Borrowers, or either of them,
----------------------------
breach or violate the terms of, or if a default or an event of default, occurs
under, any other existing or future agreement (related or unrelated) between or
among Borrowers, or either of them, and Lender; or
(i) Judgments - if any final judgment for the payment of money in
---------
excess of $250,000 which is not fully and unconditionally covered by insurance
or for which Borrowers have not established a cash or cash equivalent reserve in
the amount of such judgment shall be rendered; or
(j) Assignment for Benefit of Creditors, etc. - if either Borrower
----------------------------------------
makes or proposes an assignment for the benefit of creditors generally, offers a
composition or extension to creditors, or makes or sends notice of an intended
bulk sale of any business or assets now or hereafter owned or conducted by such
Borrower which might materially and adversely affect such Borrower; or
(k) Bankruptcy, Dissolution, etc. - upon the commencement of any
----------------------------
action for the dissolution or liquidation of either Borrower, or the
commencement of any proceeding to avoid any transaction entered into by either
Borrower, or the commencement of any case or proceeding for reorganization or
liquidation of either Borrower's debts under the Bankruptcy Code or any other
state or federal law, now or hereafter enacted for the relief of debtors,
whether instituted by or against such Borrower; provided, however, that such
Borrower shall have forty-five (45) days to obtain the dismissal or discharge of
involuntary proceedings filed against it, it being understood that during such
forty-five (45) day period, Lender shall not be obligated to make Advances
hereunder and Lender may seek adequate protection in any bankruptcy proceeding;
or
(l) Receiver - upon the appointment of a receiver, liquidator,
--------
custodian, trustee or similar official or fiduciary for either Borrower or for
any of either Borrower's Property; or
(m) Execution Process, Seizure, etc. - the issuance of any execution
-------------------------------
or distraint process against either Borrower, or any Property of either
Borrower is seized by any governmental entity, federal, state or local; or
(n) Termination of Business - if Borrowers cease any material
-----------------------
portion of their business operations as presently conducted; or
(o) Pension Benefits, etc. - if Borrowers fail to comply with ERISA,
----------------------
so that grounds exist to permit the appointment of a trustee under ERISA to
administer Borrowers' employee plans or to allow the Pension Benefit Guaranty
Corporation to institute proceedings to appoint a trustee to administer such
plan(s), or to permit the entry of a Lien to secure any deficiency or claim; or
(p) Investigations - any indication or evidence received by Lender
--------------
that reasonably leads it to believe either Borrower may have directly or
indirectly been engaged in any type of activity which, would be reasonably
likely to result in the forfeiture of any Property of Borrowers, or either of
them, to any governmental entity, federal, state or local.
8.2 Cure - Nothing contained in this Agreement or the Loan Documents
----
shall be deemed to compel Lender to accept a cure of any Event of Default
hereunder.
8.3 Rights and Remedies on Default:
------------------------------
(a) In addition to all other rights, options and remedies granted or
available to Lender under this Agreement or the Loan Documents, or otherwise
available at law or in equity, upon or at any time the occurrence and during the
continuance of an Event of Default or Unmatured Event of Default, Lender may, in
its discretion and without effecting the otherwise discretionary nature of the
Credit Facility, withhold or cease making Advances under the Credit Facility.
(b) In addition to all other rights, options and remedies granted or
available to Lender under this Agreement or the Loan Documents (each of which is
also then exercisable by Lender), Lender may, in its discretion, upon or at any
time after the occurrence and during the continuance of an Event of Default,
terminate the Credit Facility.
(c) In addition to all other rights, options and remedies granted or
available to Lender under this Agreement or the Loan Documents (each of which is
also then exercisable by Lender), Lender may, upon or at any time after the
occurrence of an Event of Default, exercise all rights under the UCC and any
other applicable law or in equity, and under all Loan Documents permitted to be
exercised after the occurrence of an Event of Default, including the following
rights and remedies (which list is given by way of example and is not intended
to be an exhaustive list of all such rights and remedies):
(i) The right to take possession of, and notify all Lessees of
the Lender's security interest in the Collateral and require payment under the
Leases to be made directly to Lender, and Lender may, in its own name or in the
name of either Borrower, exercise all rights of lessor under the Leases and
collect, sue for and receive payment on all Leases, 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 and Lender may do all of
the foregoing with or without judicial process (including without limitation
notifying the United States postal authorities to redirect mail addressed to
Borrowers, or either of them, to an address designated by Lender); or
(ii) By its own means or with judicial assistance, subject to
the rights of the Lessees, enter Borrowers' premises or location of Collateral
and take possession of the Collateral, or render it unusable, or dispose of the
Collateral on such premises in compliance with subsection (e) below, without any
liability for rent, storage, utilities or other sums, and Borrowers shall not
resist or interfere with such action; or
(iii) Require Borrowers at Borrowers' expense, subject to the
rights of the Lessees, to assemble all or any part of the Collateral and make it
available to Lender at any place designated by Lender; or
(iv) The right to reduce or modify the Maximum Credit Limit or
the Advance Rates or to modify the terms and conditions upon which Lender may be
willing to consider making Advances under the Credit Facility.
(e) Each Borrower hereby agrees that a notice received by it at
least ten (10) days before the time of any intended public sale or of the time
after which any private sale or other disposition of the Collateral is to be
made, shall be deemed to be reasonable notice of such sale or other disposition.
If permitted by applicable 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 such Borrower. Each Borrower covenants and
agrees not to interfere with or impose any obstacle to Lender's exercise of its
rights and remedies with respect to the Collateral, after the occurrence of an
Event of Default hereunder.
8.4 Nature of Remedies: All rights and remedies granted Lender hereunder
------------------
and under the Loan Documents, 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 Obligations
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 Lender, upon or at
any time after the occurrence of an Event of Default, may proceed against
Borrowers, or either of them, at any time, under any agreement, with any
available remedy and in any order.
8.5 Set-Off: Subject to the terms of that certain Lockbox Service
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Agreement dated as of September 30, 1996, if any bank account of Borrowers, or
either of them, with Lender, or any participant is attached or otherwise liened
or levied upon by any third party, Lender (and such participant) shall have and
be deemed to have, without notice to Borrowers, the immediate right of set-off
and may apply the funds or amount thus set-off against any of Borrowers'
Obligations hereunder.
SECTION 9. MISCELLANEOUS
9.1 GOVERNING LAW: THIS AGREEMENT, AND ALL RELATED AGREEMENTS AND
-------------
DOCUMENTS, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE
LAWS OF THE COMMONWEALTH OF PENNSYLVANIA. THE PROVISIONS OF THIS AGREEMENT, THE
OTHER LOAN
DOCUMENTS AND ALL OTHER AGREEMENTS AND DOCUMENTS REFERRED TO HEREIN ARE TO BE
DEEMED SEVERABLE, AND THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION SHALL
NOT AFFECT OR IMPAIR THE REMAINING PROVISIONS WHICH SHALL CONTINUE IN FULL FORCE
AND EFFECT.
9.2 Integrated Agreement: All Term Notes, the other Loan Documents, all
--------------------
related agreements, and this Agreement shall be construed as integrated and
complementary of each other, and as augmenting and not restricting Lender's
rights and remedies. If, after applying the foregoing, an inconsistency still
exists, the provisions of this Agreement shall constitute an amendment thereto
and shall control.
9.3 Waiver:
------
(a) No omission or delay by Lender in exercising any right or power
under this Agreement or any related agreements and documents will impair such
right or power or be construed to be a waiver of any default, or Event of
Default or an acquiescence therein, and any single or partial exercise of any
such right or power will not preclude other or further exercise thereof or the
exercise of any other right, and as to each Borrower no waiver will be valid
unless in writing and signed by Lender and then only to the extent specified.
(b) Borrowers release and shall indemnify, defend and hold harmless
Lender, and its respective officers, employees and agents, of and from any
claims, demands, liabilities, obligations, judgments, injuries, losses, damages
and costs and expenses (including, without limitation, reasonable legal fees)
resulting from (i) acts or conduct of Borrowers, or either of them, or under,
pursuant or related to this Agreement and the other Loan Documents, (ii)
Borrowers' breach or violation of any representation, warranty, covenant or
undertaking contained in this Agreement or the other Loan Documents, and (iii)
Borrowers' failure to comply with any or all laws, statutes, ordinances,
governmental rules, regulations or standards, whether federal, state or local,
or court or administrative orders or decrees, (including without limitation
environmental laws, etc.) and all costs, expenses, fines, penalties or other
damages resulting therefrom, unless resulting from acts or conduct of Lender
constituting willful misconduct or gross negligence.
9.4 Time: Whenever Borrowers shall be required to make any payment, or
----
perform any act, on a day which is not a Business Day, such payment may be made,
or such act may be performed, on the next succeeding Business Day. Time is of
the essence in Borrowers' performance under all provisions of this Agreement and
all related agreements and documents.
9.5 Expenses of Lender: At Closing and from time to time thereafter,
------------------
Borrowers will pay all expenses of Lender on demand (including, without
limitation, search costs, audit fees, appraisal fees, environmental fees and the
fees and expenses of legal counsel for Lender) relating to this Agreement, and
all related agreements and documents, including, without limitation, expenses
incurred in the analysis, negotiation, preparation, closing, administration and
enforcement of this Agreement and the other Loan Documents, the enforcement,
protection and defense of the rights of Lender in and to the Loans and
Collateral or otherwise hereunder, and any reasonable expenses relating to
extensions, amendments, waivers or consents pursuant to the provisions hereof,
or any related agreements and documents or relating to agreements with other
creditors, or termination of this Agreement (collectively, the "Expenses");
provided, however, that Borrowers shall not be responsible for Expenses incurred
with the negotiation and preparation of this Agreement through the Closing Date,
in excess of $12,000.
9.6 Brokerage: This transaction was brought about and entered into by
---------
Lender and Borrowers acting as principals and without any brokers, agents or
finders being the effective procuring cause hereof. Borrowers represent that
neither of them have committed Lender to the payment of any brokerage fee,
commission or charge in connection with this transaction. If any such claim is
made on Lender by any broker, finder or agent or other person, Borrowers hereby
indemnify, defend and hold harmless Lender against such claim and further will
defend, with counsel satisfactory to Lender, any action or actions to recover on
such claim, at Borrowers' own cost and expense, including Lender's reasonable
counsel fees. Borrowers further agree that until any such claim or demand is
adjudicated in Lender's favor, the amount demanded shall be deemed an Obligation
of Borrowers under this Agreement.
9.7 Notices:
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(a) Any notices or consents required or permitted by this Agreement
shall be in writing and shall be deemed given if delivered in person or if sent
by telecopy or by nationally recognized overnight courier, or via first class,
Certified or Registered mail, postage prepaid, as follows, unless such address
is changed by written notice hereunder:
If to Lender to: PNC Bank, National Association
Lease Finance Group
1600 Market Street, 31st Floor
Philadelphia, PA 19103
Attn: Sandra L. McCollum
Assistant Vice President
Telecopy No.: 215/585-4769
With copies to: Blank Rome Comisky & McCauley
Four Penn Center Plaza
Philadelphia, PA 19103
Attn: Mark I. Rabinowitz, Esquire
Telecopy No.: 215/569-5555
If to Borrowers to: BankVest Capital Corp.
114 Turnpike Road
Westboro, MA 01581
Attn: Paul Gass, President
Telecopy No.: 508/870-0260
With copies to: Goldstein & Manello, P.C.
265 Franklin Street
Boston, MA 02110-3192
Attn: Richard J. Snyder
Telecopy No.: 617/946-8118
(b) Any notice sent by Lender or Borrowers by any of the above
methods shall be deemed to be given when so received.
(c) Lender shall be fully entitled to rely upon any facsimile
transmission or other writing purported to be sent by any Authorized Officer
(whether requesting an Advance or otherwise) as being genuine and authorized.
9.8 Headings: The headings of any paragraph or Section of this
--------
Agreement are for convenience only and shall not be used to interpret any
provision of this Agreement.
9.9 Survival: All warranties, representations, and covenants made by
--------
Borrowers, or either of them, herein, or in any agreement referred to herein or
on any certificate, document or other instrument delivered by it or on its
behalf under this Agreement, shall be considered to have been relied upon by
Lender, and shall survive the delivery to Lender of any and all Notes,
regardless of any investigation made by Lender or on its behalf. All statements
in any such certificate or other instrument prepared and/or delivered for the
benefit of Lender shall constitute warranties and representations by Borrowers
hereunder. Except as otherwise expressly provided herein, all covenants made by
Borrowers, or either of
them, hereunder or under any other agreement or instrument shall be deemed
continuing until all Obligations are satisfied in full.
9.10 Successors and Assigns: This Agreement shall inure to the benefit of
----------------------
and be binding upon the successors and assigns of each of the parties.
Borrowers may not transfer, assign or delegate any of their duties or
obligations hereunder.
9.11 Duplicate Originals: Two or more duplicate originals of this
-------------------
Agreement may be signed by the parties, each of which shall be an original but
all of which together shall constitute one and the same instrument. This
Agreement may be executed in counterparts, all of which counterparts taken
together shall constitute one completed fully executed document.
9.12 Modification: No modification hereof or any agreement referred to
------------
herein shall be binding or enforceable unless in writing and signed by Borrowers
and Lender.
9.13 Signatories: Each individual signatory hereto represents and
-----------
warrants that he is duly authorized to execute this Agreement on behalf of his
principal and that he executes the Agreement in such capacity and not as a
party.
9.14 Third Parties: No rights are intended to be created hereunder, or
-------------
under any related agreements or documents for the benefit of any third party
donee, creditor or incidental beneficiary of Borrowers, or either of them.
Nothing contained in this Agreement shall be construed as a delegation to Lender
of Borrowers' duty of performance, including, without limitation, a Borrower's
duties under any Lease, account or contract with any other Person.
9.15 Discharge of Taxes, Borrower's Obligations, Etc.: Lender, in its
------------------------------------------------
sole discretion, shall have the right at any time, and from time to time, with
prior notice to Borrowers, if Borrowers fail to do so five (5) Business Days
after requested in writing to do so by Lender, to: (a) pay for the performance
of any of Borrowers' Obligations hereunder, and (b) discharge taxes or Liens, at
any time levied or placed on any of either Borrower's Property in violation of
this Agreement unless such Borrower is in good faith with due diligence by
appropriate proceedings contesting such taxes or Liens and maintaining proper
reserves therefor in accordance with GAAP. Expenses and advances shall be
deemed Advances hereunder and shall bear interest at the highest Applicable Rate
applied to any Term Loan until reimbursed to Lender. Such payments and advances
made by Lender shall not be construed as a waiver by Lender of an Event of
Default under this Agreement.
9.16 Consent to Jurisdiction: Each Borrower and Lender hereby irrevocably
-----------------------
consent to the jurisdiction of the Courts of Common Pleas of Philadelphia,
Commonwealth of Pennsylvania or the United States District Court for the Eastern
District of Pennsylvania in any and all actions and proceedings whether arising
hereunder or under any other agreement or undertaking. Each Borrower
irrevocably agrees to service of process by certified mail, return receipt
requested to the address of the appropriate party set forth herein.
9.17 Waiver of Jury Trial: EACH BORROWER AND LENDER HEREBY WAIVE ANY AND
--------------------
ALL RIGHTS IT MAY HAVE TO A JURY TRIAL IN CONNECTION WITH ANY LITIGATION
COMMENCED BY OR AGAINST LENDER WITH RESPECT TO RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO OR UNDER THE LOAN DOCUMENTS .
9.18 Information to Participant: Lender may divulge to any participant,
--------------------------
co-lender or assignee or prospective participant,
co-lender or assignee it may obtain in the Credit Facility, or any portion
thereof, all information, and furnish to such Person copies of any reports,
financial statements, certificates, and documents obtained under any provision
of this Agreement, or related agreements and documents.
9.19 Obligations Joint and Several: All Obligations of Borrowers
-----------------------------
hereunder and under the Loan Documents are joint and several.
IN WITNESS WHEREOF, the undersigned parties have executed this Agreement
the day and year first above written.
BORROWERS:
BANKVEST CAPITAL CORP.
By:________________________________
Title:
Attest:____________________________
(Corporate Seal)
LEASEVEST CAPITAL CORP.
By:________________________________
Title:
Attest:____________________________
(Corporate Seal)
LENDER:
PNC BANK, NATIONAL ASSOCIATION
By:________________________________
Title:
TERM NOTE
---------
$_______________ Philadelphia, PA
____________, 199_
FOR VALUE RECEIVED and intending to be legally bound, the undersigned,
BankVest Capital Corp. and LeaseVest Capital Corp. (collectively, the
"Borrowers" and individually, each a "Borrower"), each with a place of business
at 114 Turnpike Road, Westboro, Massachusetts 01581, jointly and severally
promise to pay, in lawful money of the United States, to the order of PNC Bank,
National Association. ("Lender"), at Lender's offices at 1600 Market Street,
31st Floor, Philadelphia, Pennsylvania, 19103, the sum of __________________
($____________) Dollars in __________ (___) consecutive monthly installments of
principal of $_______________ each plus interest as set forth in the repayment
schedule in Exhibit A (attached hereto and made a part hereof), commencing on
the _______ day of the month immediately following the date of this Note and on
the ______ 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 ______. 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 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 ___________________
("Applicable 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 two (2%) percent in excess of the
Applicable 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 first to principal,
in the inverse order of maturity and then to any remaining Obligation in such
order as Lender may determine.
This Term Note is one of the Notes referred to in the Loan and Security
Agreement dated May 9, 1997 between Borrowers and Lender (as it may hereafter be
supplemented, amended, extended, or replaced from time to time, the "Loan
Agreement"). This Term Note ("Note") shall evidence Borrowers' absolute and
unconditional obligation to repay all sums advanced by Lender pursuant to this
Note. If Borrowers fail to make any payment hereunder when due or if an Event of
Default occurs under the Loan Documents, Lender may declare Borrowers 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 other Loan Documents, 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.
Each Borrower hereby waives presentment for payment, protest, demand,
notice of nonpayment or dishonor and all other notices (except as specifically
set forth in the Loan Agreement) 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. Borrowers
agree 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 Borrowers' 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 Commonwealth
of Pennsylvania, without regard to its otherwise applicable principles of
conflict of laws. The provisions of this Note are joint and 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.
JURY TRIAL IS WAIVED BY EACH BORROWER IN CONNECTION WITH ANY CONTROVERSY OR
PROCEEDING INVOLVING THE RIGHTS OF THE PARTIES TO THIS NOTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE.
2
IN WITNESS WHEREOF, and intending to be legally bound hereby, Borrowers
have executed these presents the day and year first above written.
BANKVEST CAPITAL CORP.
Attest:____________________ By:______________________________
LEASEVEST CAPITAL CORP.
Attest:____________________ By: _____________________________
3