EXHIBIT 10.1
EXECUTION COPY
REVOLVING CREDIT AGREEMENT
AMONG
THE LENDERS PARTY HERETO
THE CIT GROUP/COMMERCIAL SERVICES, INC., AS AGENT
AND
LEASECOMM CORPORATION
AND
TIMEPAYMENT CORP. LLC
DATED: AS OF SEPTEMBER 29, 2004
TABLE OF CONTENTS
SECTION I DEFINITIONS.............................................. 1
1.1 DEFINITIONS................................................. 1
1.2 RULES OF INTERPRETATION..................................... 16
SECTION II DESCRIPTION OF CREDIT................................... 17
2.1 REVOLVING CREDIT LOANS...................................... 17
2.2 THE NOTES................................................... 18
2.3 NOTICE AND MANNER OF BORROWING OR CONVERSION OF LOANS....... 18
2.4 FUNDING OF LOANS............................................ 19
2.5 INTEREST RATES AND PAYMENTS OF INTEREST..................... 20
2.6 FEES........................................................ 21
2.7 PAYMENTS AND PREPAYMENTS OF THE LOANS....................... 22
2.8 METHOD OF PAYMENT AND ALLOCATION OF PAYMENTS................ 23
2.9 INDEMNITY................................................... 24
2.10 COMPUTATION OF INTEREST AND FEES; DUE DATE................. 25
2.11 CHANGED CIRCUMSTANCES; ILLEGALITY.......................... 25
2.12 INCREASED COSTS............................................ 26
2.13 CAPITAL REQUIREMENTS....................................... 27
2.14 DEFAULTING LENDER; REPLACEMENT LENDER...................... 27
SECTION III CONDITIONS OF LOANS.................................... 28
3.1 CONDITIONS PRECEDENT TO INITIAL LOANS....................... 28
3.2 CONDITIONS PRECEDENT TO ALL LOANS........................... 29
SECTION IV REPRESENTATIONS AND WARRANTIES.......................... 30
4.1 ORGANIZATION; QUALIFICATION; BUSINESS....................... 30
4.2 CORPORATE AUTHORITY......................................... 30
4.3 VALID OBLIGATIONS........................................... 30
4.4 CONSENTS OR APPROVALS....................................... 31
4.5 TITLE TO PROPERTIES; ABSENCE OF ENCUMBRANCES................ 31
4.6 FINANCIAL STATEMENTS........................................ 31
4.7 CHANGES..................................................... 31
4.8 SOLVENCY.................................................... 31
4.9 DEFAULTS.................................................... 32
4.10 TAXES...................................................... 32
4.11 LITIGATION................................................. 32
4.12 SUBSIDIARIES............................................... 32
4.13 INVESTMENT COMPANY ACT..................................... 32
4.14 COMPLIANCE................................................. 32
4.15 ERISA...................................................... 33
4.16 ENVIRONMENTAL MATTERS...................................... 33
4.17 RESTRICTIONS ON THE BORROWER............................... 34
4.18 LABOR RELATIONS............................................ 34
4.19 MARGIN RULES............................................... 34
4.20 DISCLOSURE................................................. 34
SECTION V SECTION V AFFIRMATIVE COVENANTS.......................... 35
5.1 FINANCIAL STATEMENTS........................................ 35
5.2 CONDUCT OF BUSINESS......................................... 36
5.3 MAINTENANCE AND INSURANCE................................... 36
5.4 TAXES....................................................... 37
5.5 INSPECTION.................................................. 37
5.6 MAINTENANCE OF BOOKS AND RECORDS............................ 37
5.7 USE OF PROCEEDS............................................. 37
5.8 FURTHER ASSURANCES.......................................... 38
5.9 NOTIFICATION REQUIREMENTS................................... 38
5.10 ERISA REPORTS.............................................. 38
5.11 ENVIRONMENTAL COMPLIANCE................................... 39
5.12 LENDER'S CONSULTANT........................................ 39
5.13 USA PATRIOT ACT........................................... 39
5.14 IRON MOUNTAIN AGREEMENT.................................... 39
SECTION VI FINANCIAL COVENANTS..................................... 40
6.1 CONSOLIDATED TANGIBLE CAPITAL FUNDS......................... 40
6.2 BAD DEBT ALLOWANCE.......................................... 40
6.3 LIMITS OF DEALER BUSINESS CONCENTRATIONS.................... 40
6.4 MAXIMUM LEVERAGE RATIO...................................... 40
SECTION VII NEGATIVE COVENANTS..................................... 40
7.1 INDEBTEDNESS................................................ 40
7.2 CONTINGENT LIABILITIES...................................... 41
7.3 ENCUMBRANCES................................................ 41
7.4 SPECIAL PURPOSE SUBSIDIARIES................................ 42
7.5 MERGER; CONSOLIDATION; SALE OR LEASE OF ASSETS.............. 42
7.6 SUBSIDIARY STOCK; GUARANTEES................................ 43
7.7 RESTRICTED PAYMENTS......................................... 43
7.8 PAYMENTS ON SUBORDINATED DEBT............................... 43
7.9 INVESTMENTS; PURCHASES OF ASSETS............................ 43
7.10 ERISA COMPLIANCE........................................... 44
7.11 TRANSACTIONS WITH AFFILIATES............................... 44
7.12 FISCAL YEAR................................................ 44
7.13 UNDERWRITING PROCEDURES.................................... 44
7.14 AUTHORIZATION TO FILE FINANCING STATEMENTS................. 44
SECTION VIII DEFAULTS.............................................. 45
8.1 EVENTS OF DEFAULT........................................... 45
8.2 REMEDIES.................................................... 47
SECTION IX ASSIGNMENT; PARTICIPATION............................... 48
9.1 ASSIGNMENT.................................................. 48
9.2 PARTICIPATIONS.............................................. 49
SECTION X THE AGENT................................................ 50
10.1 APPOINTMENT OF AGENT; POWERS AND IMMUNITIES................ 50
10.2 ACTIONS BY AGENT........................................... 51
10.3 INDEMNIFICATION............................................ 51
10.4 REIMBURSEMENT.............................................. 51
10.5 NON-RELIANCE ON AGENT AND OTHER LENDERS.................... 52
10.6 RESIGNATION OR REMOVAL OF AGENT............................ 52
SECTION XI MISCELLANEOUS........................................... 53
11.1 NOTICES.................................................... 53
11.2 EXPENSES................................................... 54
11.3 MARSHALLING................................................ 54
11.4 INDEMNIFICATION............................................ 54
11.5 SURVIVAL OF COVENANTS, ETC................................. 55
11.6 SET-OFF.................................................... 55
11.7 NO WAIVERS................................................. 55
11.8 JOINT AND SEVERAL.......................................... 56
11.9 AMENDMENTS, WAIVERS, ETC................................... 56
11.10 BINDING EFFECT OF AGREEMENT............................... 57
11.11 CAPTIONS; COUNTERPARTS.................................... 57
11.12 ENTIRE AGREEMENT, ETC..................................... 57
11.13 WAIVER OF JURY TRIAL...................................... 57
11.14 GOVERNING LAW............................................. 57
11.15 SEVERABILITY.............................................. 58
11.16 CONFIDENTIALITY........................................... 58
11.17 LOST NOTE, ETC............................................ 58
Schedule 1 - Commitment of the Lenders
EXECUTION COPY
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT is made as of September 29, 2004 by and
among LEASECOMM CORPORATION, a Massachusetts corporation having its chief
executive office at 10M Commerce Way, Woburn, Massachusetts 01801 ("LEASECOMM"),
TIMEPAYMENT CORP. LLC, a Delaware limited liability company having its chief
executive office at 10M Commerce Way, Woburn, Massachusetts 01801
("TIMEPAYMENT"), (Leasecomm and TimePayment are hereafter together referred to
as the "BORROWER"); THE CIT GROUP/COMMERCIAL SERVICES, INC. having its head
office at 1211 Avenue of the Americas, New York, New York 10036 (together with
its successors, "CIT"); the other financial institutions from time to time party
hereto (together with CIT, the "LENDERS"); and THE CIT GROUP/COMMERCIAL
SERVICES, INC., as agent for the Lenders (in such capacity, the "AGENT").
WHEREAS, the Borrower has requested and CIT has agreed to establish a
revolving loan credit facility for the Borrower.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION I
DEFINITIONS
1.1 DEFINITIONS.
All capitalized terms used in this Agreement or in the Notes or in any
certificate, report or other document made or delivered pursuant to this
Agreement (unless otherwise defined therein) shall have the meanings assigned to
them below:
ACCOUNTING CHANGES. See Section 1.2.
ADJUSTED COST. The Original Cost less any dealer reserve, hold backs and
discounts to the Borrower, sales taxes, insurance, shipping, delivery, handling
and other similar charges applicable to any Equipment.
AFFECTED LENDER. See Section 2.11(a).
AFFILIATE. With reference to any Person, (including an individual, a
corporation, a partnership, a trust and a governmental agency or
instrumentality), (i) any director, officer or employee of that Person, (ii) any
other person controlling, controlled by or under direct or indirect common
control of that person, (iii) any other Person directly or indirectly holding 5%
or more of any class of the capital stock or other equity interests (including
options, warrants, convertible securities and similar rights) of that Person or
(iv) any other Person 5% or more of any class of whose capital stock or other
equity interests (including options, warrants, convertible securities and
similar rights) is held directly or indirectly by that Person.
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AGENT. See Preamble.
AGREEMENT. This Revolving Credit Agreement, including the Exhibits and
Schedules hereto, as the same may be supplemented or amended from time to time.
AMPAC SUBORDINATED DEBT shall mean the $2,000,000 unsecured Subordinated
Promissory Note dated as of June 10, 2004 between TimePayment Corp. LLC as
borrower and AMPAC Capital Solutions, LLC as subordinated lender.
BASE RATE. shall mean the rate of interest per annum announced by JP
Morgan Chase Bank N.A. from time to time as its prime rate in effect at its
principal office in the City of New York. Such rate is not intended to be the
lowest rate charged by JP Morgan Chase Bank to its borrowers.
Any change in the Base Rate of interest hereunder due to a change in the
JP Morgan Chase Bank N.A. prime rate will take effect as of the first day of the
following month following such change.
ASSIGNEE. See Section 9.1.
BASE RATE LOAN. Any Loan bearing interest determined with reference to the
Base Rate plus one and one-half (1 1/2%) percent per annum.
BORROWER. See Preamble.
BORROWER'S ACCOUNTANTS. Vitale Caturano & Company or such other
independent certified public accountants as are selected by the Borrower and
reasonably acceptable to the Agent.
BORROWING BASE. As at the date of any determination thereof, an amount
equal to the sum of:
(a) in the case of Eligible Leases which are Finance Leases (other than
Security Monitoring Agreements which are agreements of the Borrowers' dealers to
sell, service or install central station monitoring equipment and/or monitoring
services) or in the case of Eligible Installment Sales Contracts, the lesser of
(x) 100% of the Adjusted Cost of the Equipment subject to such Eligible Leases
or Eligible Installment Sales Contracts, or (y) 75% of the aggregate amount of
all Eligible Lease Receivables relating to all such Eligible Leases or Eligible
Installment Sales Contracts, discounted to present value by a percentage equal
to the Base Rate (which calculation shall not take into account rental payments
due or payable under such Eligible Leases or Eligible Installment Sales
Contracts beyond 60 months after the commencement date of such Eligible Leases
or Eligible Installment Sales Contracts); PLUS
(b) in the case of Eligible Leases which are Operating Leases (other
than Rental Contracts or Security Monitoring Agreements), the lesser of (x) 75%
of the aggregate Net Book Value of the Equipment subject to such Operating
Leases or (y) 75% of the aggregate amount of all Eligible Lease Receivables
relating to all such Eligible Leases, discounted to present value by a
percentage equal to the Base Rate (which calculation shall not take into account
rental
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payments due or payable under such Eligible Leases beyond 60 months after the
commencement date of such Eligible Leases); PLUS
(c) in the case of Eligible Installment Finance Contracts, an amount
equal to 75% of the aggregate amount of all Eligible Lease Receivables relating
to all such Eligible Installment Finance Contracts, discounted to present value
by a percentage equal to the Base Rate (which calculation shall not take into
account payments due or payable under such Eligible Installment Finance
Contracts beyond 60 months after the commencement date of such Eligible
Installment Finance Contracts); MINUS
(d) Borrowing Base Reserves, if any, at the date of determination of the
Borrowing Base;
PROVIDED, HOWEVER, that notwithstanding the foregoing, there shall be
excluded from the Borrowing Base (x) any Lease or Eligible Installment Finance
Contract to the extent that the Receivables due pursuant to such Lease or
Eligible Installment Finance Contract, when added to the Receivables due
pursuant to all other Leases and Eligible Installment Finance Contracts with
lessees and account debtors in the same state would exceed 20% of Gross Lease
Installments, (y) any Lease or Eligible Installment Finance Contract to the
extent that the Receivables due pursuant to such Lease or Eligible Installment
Finance Contract, when added to all other Receivables due from the same account
debtor, would exceed the lesser of (i) $1,000,000.00, or (ii) one percent (1%)
of the Commitments at such time (for purposes hereof, determination of the
calculation shall be made on a lease by lease and contract by contract basis but
the Borrowing Base shall include the aggregate of all such calculations), and
(z) all Leases or Eligible Installment Finance Contracts generated by or through
a particular Dealer if fifty (50%) percent of the said Leases or Eligible
Installment Finance Contracts generated by or through said Dealer are greater
than ninety (90) days past due. Provided further, however, that notwithstanding
the foregoing, the Borrowing Base shall not contain more than 15% in the
aggregate of Eligible Leases and Eligible Finance Contract with a credit grade
of Q, U or W.
BORROWING BASE MATURITY DATE. September 29, 2007.
BORROWING BASE REPORT. A report of a Borrowing Computation satisfactory to
the Agent in the form annexed hereto as EXHIBIT G and signed by any Responsible
Officer. CIT shall have the right, exercisable from time to time, to make
reasonable changes to the form of the Borrowing Base report upon thirty (30)
days advance written notice.
BORROWING BASE RESERVES. At the time of any determination of the Borrowing
Base, such reserves as the Agent may from time to time determine to establish,
in the exercise of its reasonable credit judgment based upon its review of the
financial information delivered pursuant to Section 5.1, the results of
inspection and reviews of books and records as contemplated by Section 5.5 and
other information concerning the business, operations and prospects of the
Borrower.
BORROWING COMPUTATION. See Section 2.4(c).
BUSINESS DAY. (i) For all purposes other than as covered by clause (ii)
below, any day other than a Saturday, Sunday or legal holiday on which banks in
New York, New York are
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open for the conduct of a substantial part of their commercial banking business;
and (ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, LIBOR Loans, any day that is a Business
Day described in clause (i) and that is also a day for trading by and between
banks in U.S. Dollar deposits in the interbank Eurodollar market.
CAPITAL EXPENDITURES. For any period, the aggregate amount of all payments
made by any Person directly or indirectly for the purpose of acquiring,
constructing or maintaining fixed assets, real property or equipment which, in
accordance with GAAP, would be added as a debit to the fixed asset account of
such Person, including, without limitation, Capitalized Lease Obligations, but
excluding therefrom the purchase of Equipment as inventory for the purpose of
being leased under an Operating Lease, expenditures made with the net proceeds
of insurance recoveries or exchange of equipment on a trade-in basis.
CAPITALIZED LEASE OBLIGATIONS. As to any Person, the obligations of such
Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP and, for purposes of this Agreement, the amount
of such obligations shall be the capitalized amount thereof, determined in
accordance with GAAP, consistently applied.
CERTIFICATE OF EXEMPTION. See Section 2.8.
CLOSING DATE. The first date on which the conditions set forth in Sections
3.1 and 3.2 have been satisfied and any Loans are to be made hereunder.
CODE. The Internal Revenue Code of 1986 and the rules and regulations
thereunder, collectively, as the same may from time to time be supplemented or
amended and remain in effect.
COLLATERAL. All of the property, rights and interests of the Borrower and
its Subsidiaries that are or are intended to be subject to the security
interests and liens created by the Security Documents.
COMMITMENT. With respect to any Lender, the maximum dollar amount which
such Lender has agreed to loan to the Borrower upon the terms and subject to the
conditions of this Agreement, initially as set forth on SCHEDULE 1 attached
hereto, as such Lender's Commitment may be modified from time to time as
provided in this Agreement, including termination or reduction of such
Commitment in accordance with Sections 2.1 and 8.2 hereof. SCHEDULE 1 shall be
amended from time to time to reflect any changes in the Commitments of the
Lenders.
CONSOLIDATED TANGIBLE CAPITAL FUNDS. The sum, with respect to the Parent
and its Subsidiaries, including the Borrower, on a consolidated basis, of (a)
the capital stock, (b) additional paid-in capital, (c) retained earnings and (d)
Subordinated Debt LESS (x) net organizational costs and net good will, and (y)
treasury stock.
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CONSUMER FINANCE LEASE. A Finance Lease between the Borrower, as lessor,
and a lessee who is an individual and who takes under the Lease primarily for
personal, family or household purposes.
DEALER. A Person who (i) is domiciled in the United States of America,
(ii) is not the subject of and has not taken any action described in subsections
(f) and (g) of Section 8.1 and (iii) is engaged in the business of selling
equipment or assigning agreements, contracts or leases and related equipment in
the United States of America.
DEALER AGREEMENT. An agreement between the Borrower and a Dealer,
substantially in the form of EXHIBIT F-1 hereto, setting forth the rights and
obligations of each with respect to an agreement, contract or lease that has
been assigned by such Dealer to the Borrower and which has not been modified,
amended, restated or otherwise rewritten in any respect more than two times.
DEBT ISSUE COSTS. Those amounts characterized as "debt issue costs" in
accordance with GAAP on the Initial Financial Statements or the most recent
financial statements delivered pursuant to Section 5.1(a) or (b) hereof.
DEFAULT. An Event of Default or event or condition that, but for the
requirement that time elapse or notice be given, or both, would constitute an
Event of Default.
DEFAULTING LENDER. See Section 2.14
DRAWDOWN DATE. The Business Day on which any Loan is made or is to be
made.
ELIGIBLE INSTALLMENT SALES CONTRACT. Any installment sales contract,
purchase money security agreement or other similar chattel paper (including any
and all schedules, supplements and amendments thereto and modifications thereof)
entered into by the Borrower or its predecessor in interest as seller and a
third party as buyer in connection with a sale of Equipment.
ELIGIBLE INSTALLMENT FINANCE CONTRACT. An Installment Finance Contract:
(a) which is in full force and effect;
(b) the assignee under which is the Borrower;
(c) to which the Borrower has good and marketable title, and which is
assignable by the Borrower;
(d) which is non-cancelable and provides that the third party obligor's
obligations thereunder are absolute and unconditional, and not subject to
defense, deduction, setoff or claim and as to which no defenses, setoffs, claims
or counterclaims exist or have been asserted, the form of which shall be
substantially in accordance with EXHIBIT H annexed hereto;
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(e) which is not subject to any Encumbrance other than that in favor of
the Agent for the benefit of the Lenders and in which the Agent has a duly
perfected first priority security interest under the UCC;
(f) the third party obligor under which (i) is domiciled in the United
States of America, (ii) is not the subject of and has not taken any action
described in subsections (f) and (g) of Section 8.1 and (iii) is not otherwise
been determined by the Agent to be unacceptable;
(g) which is in a form reasonably acceptable to the Agent;
(h) under which no payment is more than 90 days past due;
(i) under which no default has occurred other than to the extent
permissible hereunder; and
(j) which has not been modified, amended, restated or otherwise
rewritten more than two times.
ELIGIBLE INTEREST RATE CONTRACTS. Interest rate swap agreements, interest
rate collar agreements, options on any of the foregoing and any other agreements
or arrangements designed to provide protection against fluctuations in interest
rates, in each case purchased by the Borrower from a Lender with respect to
Loans and reasonably acceptable to the Agent.
ELIGIBLE LEASE. A Lease:
(a) Which is in full force and effect;
(b) The lessor under which is the Borrower;
(c) Which is assignable by the lessor thereunder;
(d) Which is non-cancelable and provides that the lessee's obligations
thereunder are absolute and unconditional, and not subject to defense,
deduction, set-off or claim and as to which no defenses, set-offs, claims or
counterclaims exist or have been asserted;
(e) Which is not subject to any Encumbrance other than that in favor of
the Agent for the benefit of the Lenders and in which the Agent has a duly
perfected first priority security interest under the UCC;
(f) Which is a Finance Lease or Operating Lease;
(g) The lessee under which (i) is domiciled in the United States of
America, (ii) is not the subject of and has not taken any action described in
subsections (f) and (g) of Section 8.1 and (iii) has not otherwise been
determined by the Agent to be unacceptable;
(h) Which is in a form substantially in accordance with EXHIBIT H
attached hereto;
(i) Under which no payment is more than 90 days past due;
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(j) Under which no default has occurred other than to the extent
permissible under clause (i) immediately above;
(k) Which is not a Consumer Finance Lease;
(l) Which, if an Operating Lease, has a present value of all Fixed
Rentals thereunder as of the date such Operating Lease is to be included in the
Borrowing Base of at least 75% of the Original Cost of the Equipment leased
thereunder; and
(m) which has not been modified, amended, restated or otherwise
rewritten with respect to terms of payment or in any other material respect more
than two times.
ELIGIBLE LEASE RECEIVABLES. As at the date of determination thereof, the
unpaid balance of Receivables through the applicable term under an Eligible
Lease, an Operating Lease an Eligible Installment Sales Contract or an Eligible
Installment Finance Contract.
ENCUMBRANCES. See Section 7.3.
ENVIRONMENTAL LAWS. Any and all applicable federal, state and local
environmental, health or safety statutes, laws, regulations, rules and
ordinances (whether now existing or hereafter enacted or promulgated), of all
governmental agencies, bureaus or departments to the extent the foregoing may
now or hereafter have jurisdiction over the Borrower or any of its Subsidiaries
and all applicable judicial and administrative and regulatory decrees, judgments
and orders, including common law rulings and determinations, relating to injury
to, or the protection of, real or personal property or human health or the
environment, including, without limitation, all requirements pertaining to
reporting, licensing, permitting, investigation, remediation and removal of
emissions, discharges, releases or threatened releases of Hazardous Materials
into the environment or relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of such Hazardous
Materials.
EQUIPMENT. All present and hereafter acquired equipment (as defined in the
UCC) including, without limitation, all machinery, equipment, furnishings and
fixtures, and all additions, substitutions and replacements thereof, wherever
located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto and all proceeds thereof of
whatever sort, and all guarantees, warranties and rights against manufacturers
under purchase agreements or otherwise and other parties in connection
therewith, all maintenance records and contracts relating thereto, and all
insurance thereon and all insurance proceeds payable in connection therewith.
ERISA. The Employee Retirement Income Security Act of 1974 and the rules
and regulations thereunder, collectively, as the same may from time to time be
supplemented or amended and remain in effect.
ERISA AFFILIATE. Any trade or business, whether or not incorporated, that
is treated as a single employer with the Borrower under Section 414(b), (c), (m)
or (o) of the Code and Section 4001(a)(14) of ERISA.
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ERISA EVENT. (a) Any "reportable event," as defined in Section 4043 of
ERISA or the regulations issued thereunder, with respect to a Pension Plan
unless the 30-day notice requirement with respect to such event has been waived
by the PBGC; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Pension Plan of an "accumulated
funding deficiency" (as defined in Section 412 of the Code or Section 302 of
ERISA), whether or not waived; (d) the filing pursuant to Section 412(d) of the
Code or Section 303(d) of ERISA of an application for a waiver of the minimum
funding standard with respect to any Pension Plan; (e) the incurrence of any
liability under Title IV of ERISA with respect to the termination of any Pension
Plan or the withdrawal or partial withdrawal of the Borrower or any of its ERISA
Affiliates from any Plan or Multiemployer Pension Plan; (f) the receipt by the
Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any
notice relating to the intention to terminate any Plan or Plans or to appoint a
trustee to administer any Pension Plan; (g) the receipt by the Borrower or any
ERISA Affiliate of any notice concerning the imposition of Withdrawal Liability
(as defined in Part I of Subtitle E of Title IV of ERISA) with respect to any
Multiemployer Plan or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA; (h) the occurrence of a "Prohibited Transaction" with respect to which
the Borrower or any of the Subsidiaries is a "disqualified person" (within the
meaning of Section 4975 of the Code) or with respect to which the Borrower or
any such Subsidiary could otherwise be liable; and (i) any other event or
condition with respect to a Plan or Multiemployer Plan that could reasonably be
expected to result in liability of the Borrower.
EVENT OF DEFAULT. Any event described in Section 8.1.
FINANCE LEASE. A Lease characterized as a "finance lease" in accordance
with GAAP.
FIXED RENTALS. The periodic rental payments under a Lease, the amounts of
which are fixed and do not vary from time to time based on usage, cash flow or
any other factor.
FOREIGN LENDER. See Section 2.9.
GAAP. Generally accepted accounting principles, consistently applied.
GROSS LEASE INSTALLMENTS. The aggregate Receivables due to the Borrower
from all leases of equipment.
GUARANTEES. As applied to the Parent and its Subsidiaries, all guarantees,
endorsements or other contingent or surety obligations with respect to
obligations of others whether or not reflected on the consolidated balance sheet
of the Borrower and their Subsidiaries, including any obligation to furnish
funds, directly or indirectly (whether by virtue of partnership arrangements, by
agreement to keep-well or otherwise), through the purchase of goods, supplies or
services, or by way of stock purchase, capital contribution, advance or loan, or
to enter into a contract for any of the foregoing, for the purpose of payment of
obligations of any other Person.
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HAZARDOUS MATERIAL. Any substance (i) the presence of which requires or
may hereafter require notification, investigation or remediation under any
Environmental Law; (ii) which is or becomes defined as a "hazardous waste",
"hazardous material" or "hazardous substance" or "pollutant" or "contaminant"
under any present or future Environmental Law or amendments thereto including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601 et seq.) and any applicable local statutes
and the regulations promulgated thereunder; (iii) which is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or
otherwise hazardous and which is or becomes regulated pursuant to any
Environmental Law by any governmental authority, agency, department, commission,
board, agency or instrumentality of the United States, any state of the United
States, or any political subdivision thereof to the extent any of the foregoing
has or had jurisdiction over the Borrower; or (iv) without limitation, which
contains gasoline, diesel fuel or other petroleum products, asbestos or
polychlorinated biphenyls ("PCB's").
INDEBTEDNESS. As applied to any Person, all (i) liabilities or
obligations, direct and contingent, which in accordance with GAAP would be
included in determining total liabilities as shown on the liability side of a
balance sheet of such Person at the date as of which Indebtedness is to be
determined, including, without limitation, lease obligations required to be
shown as a liability on the balance sheet of the lessee in accordance with
generally accepted accounting principles; (ii) liabilities or obligations of
others for which such Person is directly or indirectly liable, by way of
guaranty (whether by direct guaranty, suretyship, discount, endorsement,
take-or-pay agreement, agreement to purchase or advance or keep in funds or
other agreement having the effect of a guaranty) or otherwise; (iii) liabilities
or obligations secured by liens on any assets of such person, whether or not
such liabilities or obligations shall have been assumed by it; and (iv)
non-cancelable liabilities under all Operating Leases.
INITIAL FINANCIAL STATEMENTS. See Section 4.6.
INSTALLMENT FINANCE CONTRACT. Any agreement (including any and all
schedules, supplements and amendments thereto and modifications thereof) entered
into by the Borrower or its predecessor in interest as a service provider and a
third party as buyer in connection with the rendering of services to such third
party.
INTEREST EXPENSE. For any period, the consolidated interest expense
(including imputed interest on capitalized lease obligations) and amortized debt
discount on Indebtedness of the Parent and its Subsidiaries for such period.
INTEREST PERIOD. With respect to each LIBOR Loan, the period commencing on
the date of the making or continuation of or conversion to such LIBOR Loan and
ending one (1), two (2), three (3) or six (6) months thereafter, as the Borrower
may elect in the applicable Notice of Borrowing or Conversion, PROVIDED that:
(i) any Interest Period (other than an Interest Period determined
pursuant to clause (iii) below) that would otherwise end on a day that is
not a Business Day shall be extended to the next succeeding Business Day,
except that with respect to any Interest Period for a LIBOR Loan, if such
Business Day falls in the next calendar month, such Interest Period shall
end on the immediately preceding Business Day;
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(ii) any Interest Period for a LIBOR Loan that begins on the last
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (iii) below, end on the last
Business Day of a calendar month;
(iii) any Interest Period with respect to a Revolving Credit Loan
that would otherwise end after the Borrowing Base Maturity Date shall end
on the Borrowing Base Maturity Date;
(iv) notwithstanding clauses (iii) and (iv) above, no Interest
Period for a LIBOR Loan shall have a duration of less than one month, and
if any Interest Period applicable to a LIBOR Loan would be for a shorter
period, such Interest Period shall not be available hereunder; and
(v) for purposes of determining the availability of Interest
Periods, such Interest Periods shall be deemed available if (x) J.P.
Morgan Chase Bank quotes an applicable rate or CIT determines LIBOR, as
provided in the definition of LIBOR, (y) the LIBOR determined by J.P.
Morgan Chase Bank or CIT will adequately and fairly reflect the cost of
maintaining or funding its loans bearing interest at LIBOR, for such
Interest Period, and (z) such Interest Period will end on or before the
earlier of Anniversary Date or the last day of the then current term of
this Financing Agreement. If a requested Interest Period shall be
unavailable in accordance with the foregoing sentence, the Company shall
continue to pay interest on the Obligations at the applicable per annum at
the Base Rate.
INVENTORY. All of the Borrower's present and hereafter acquired inventory
(as defined in the UCC) and including, without limitation, all merchandise,
inventory and goods, and all additions, substitutions and replacements thereof,
wherever located, together with all goods and materials used or usable in
manufacturing, processing, packaging or shipping same in all stages of
production from raw materials through work-in-process to finished goods and all
proceeds thereof of whatever sort.
INVESTMENT. As applied to the Borrower and its Subsidiaries, the purchase
or acquisition of any share of capital stock, partnership interest, evidence of
indebtedness or other equity security of any other Person (including any
Subsidiary), any loan, advance or extension of credit (excluding Accounts
Receivable arising in the ordinary course of business) to, or contribution to
the capital of, any other Person (including any Subsidiary), any real estate
held for sale or investment, any securities or commodities futures contracts
held, any other investment in any other Person (including any other Borrower or
any Subsidiary), and the making of any commitment or acquisition of any option
to make an Investment.
LEASE. Any lease agreement, installment sales contract or other agreement
(including any and all schedules, supplements and amendments thereon and
modifications thereof) entered into or acquired by the Borrower or the Parent as
lessor or seller with respect to Equipment.
LENDERS. CIT, the other financial institutions parties hereto and listed
on Schedule 1 attached hereto and each other Person that may after the date
hereof become an Assignee and,
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thereby, a party to this Agreement as a "Lender" hereunder, but from and after
the effective date that any Person shall have assigned its entire Commitment
pursuant to Section 9.1, "Lenders" shall no longer include such Person.
LIBOR LOAN. Any Loan bearing interest at a rate determined with reference
to the LIBOR Rate.
LIBOR RATE. At any time of determination, and subject to availability, for
each applicable Interest Period, a variable rate of interest equal to: (a) at
CIT's election (i) the applicable LIBOR quoted to CIT by the J.P. Morgan Chase
Bank (or any successor thereof), or (ii) the rate of interest determined by CIT
at which deposits in U.S. dollars are offered for the relevant Interest Period
based on information presented on Telerate Systems at Page 3750 as of 11:00 A.M.
(London time) on the day which is two (2) Business Days prior to the first day
of such Interest Period, provided that, if at least two such offered rates
appear on the Telerate System at Page 3750 in respect of such Interest Period,
the arithmetic mean of all such rates (as determined by CIT) will be the rate
used; divided by (b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of Eurocurrency
Reserve Requirements in effect on the day which is two (2) Business Days prior
to the beginning of such Interest Period.
LIBOR RESERVE PERCENTAGE. For any Interest Period, the aggregate of the
maximum reserve percentages (including any marginal, special, emergency or
supplemental reserves), expressed as a decimal, established by the Board of
Governors of the Federal Reserve System and any other banking authority,
domestic or foreign, to which any Lender is subject with respect to
"Eurocurrency Liabilities" (as defined in regulations issued from time to time
by such Board of Governors). The LIBOR Reserve Percentage shall be adjusted
automatically on and as of the effective date of any change in any such reserve
percentage.
LOAN DOCUMENTS. This Agreement, the Notes, the Security Documents, the
Parent Guarantee, the Warrants, the Registration Rights Agreement, together with
any agreements, instruments or documents executed and delivered pursuant to or
in connection with any of the foregoing.
LOANS. The Revolving Credit Loans made or to be made by the Lenders to the
Borrower pursuant to Section II of this Agreement.
LONDON BANKING DAYS. Any day other than a Saturday, Sunday or legal
holiday on which banks in London, England are open for the conduct of a
substantial part of their banking business and that is also a day for trading by
and between banks in U.S. Dollar deposits in the interbank Eurodollar market.
MAJORITY LENDERS. (a) As of the Closing Date and as of any date as of
which there are less than four Lenders, the holders of seventy-five percent
(75%) of the outstanding principal amount of the Loans on such date; (b) as of
any date as of which there are four (4) Lenders, the holders of sixty-six and
two thirds percent (66 2/3%) of the outstanding principal amount of the Loans on
such date; and (c) as of any date as of which there are more than four Lenders,
the holders of fifty-one (51%) percent of the outstanding principal amount of
the Loans on such date.
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MATERIAL ADVERSE EFFECT means, with respect to any event, occurrence,
circumstance or other matter of whatever nature, a material adverse effect on
(a) the business, assets, operations or financial condition of the Borrower, its
Parent or Subsidiaries (if any) taken as a whole (exclusive of events,
occurrences, circumstances and other matters resulting from changes in general
economic, civil or political conditions, legal standards or regulatory
conditions); or (b) the ability of the Borrower, its Parent or Subsidiaries (if
any) to perform any material obligations under any Loan Document.
MAXIMUM LEVERAGE RATIO. The ratio of Total Outstandings on a consolidated
basis (excluding Subordinated Debt) to the sum of the capital stock, additional
paid in capital, retained earnings and Subordinated Debt.
MULTIEMPLOYER PLAN. Any plan which is a Multiemployer Plan as defined in
Section 4001(a)(3) of ERISA.
NET BOOK VALUE. At a particular date, as to any Eligible Equipment or
Eligible Inventory, the Original Cost of such Eligible Equipment or Eligible
Inventory less aggregate depreciation thereon calculated from the date of
acquisition thereof in accordance with the Borrower's standard accounting and
depreciation practices using the straight line method over the estimated life of
such Eligible Equipment or Eligible Inventory, with salvage value determined by
the Borrower in accordance with such practices.
NON-RECOURSE INDEBTEDNESS. Indebtedness of the Borrower or the Parent, as
the case may be, for which the remedy for nonpayment or non-performance of any
obligation or any default in respect thereof is strictly and absolutely limited
to any collateral securing such Indebtedness and in respect of which neither the
Borrower nor the Parent is subject to any personal liability.
NOTE RECORD. Any internal record, including a computer record, maintained
by any Lender with respect to any Loan.
NOTES. The Revolving Credit Notes.
NOTICE OF BORROWING OR CONVERSION. The notice, substantially in the form
of EXHIBIT B hereto, to be given by the Borrower to the Agent to request a Loan
or to convert an outstanding Loan of one Type into a Loan of another Type, in
accordance with Section 2.4.
OBLIGATIONS. Any and all obligations of the Borrower to the Agent and the
Lenders of every kind and description pursuant to or in connection with the Loan
Documents (including, without limitation, in connection with Revolving Credit
Loans) direct or indirect, absolute or contingent, primary or secondary, due or
to become due, now existing or hereafter arising, regardless of how they arise
or by what agreement or instrument, if any, and including obligations to perform
acts and refrain from taking action as well as obligations to pay money.
OPERATING LEASE. A Lease characterized as an "operating lease" in
accordance with GAAP.
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ORIGINAL COST. The Borrower's purchase price for any Equipment as invoiced
by the supplier thereof.
PARENT. MicroFinancial Incorporated (f/k/a Boyle Leasing Technologies,
Inc.), a Massachusetts corporation, and the sole stockholder of the Borrower.
PARENT GUARANTEE. The Guaranty made by the Parent in favor of the Agent
for the benefit of the Lenders, dated the Closing Date and guaranteeing all
Obligations.
PARENT STOCK PLEDGE AGREEMENT. The Stock Pledge Agreement, dated as of the
date hereof, granted to the Agent by the Parent as security for the Parent's
obligations in respect of the Parent Guaranty.
PARTICIPANT. See Section 9.2.
PBGC. The Pension Benefit Guaranty Corporation or any entity succeeding to
any or all of its functions under ERISA.
PENSION PLAN. Any Plan which is an "employee pension benefit plan" (as
defined in ERISA), other than a Multiemployer Plan that is subject to Section
412 of the Code or Section 302 of ERISA.
PERMITTED ENCUMBRANCES. See Section 7.3.
PERSON. Any individual, corporation, partnership, trust, unincorporated
association, business or other legal entity, any government or governmental
agency or political subdivision thereof, a court, and any other legal entity,
whether acting in an individual, fiduciary or other capacity.
PLAN. Any "employee pension benefit plan" or "employee welfare benefit
plan" (each as defined in ERISA) maintained by the Borrower or any Subsidiary.
PROHIBITED TRANSACTION. Any "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975 of the Code to which a statutory,
regulatory or administrative exemption is not applicable.
QUALIFIED INVESTMENTS. As applied to the Borrower and its Subsidiaries,
investments in (i) notes, bonds or other obligations of the United States of
America or any agency thereof that as to principal and interest constitute
direct obligations of or are guaranteed by the United States of America; (ii)
certificates of deposit, demand deposit accounts or other deposit instruments or
accounts maintained in the ordinary course of business with banks or trust
companies organized under the laws of the United States or any state thereof
that have capital and surplus of at least $100,000,000, (iii) commercial paper
that is rated not less than prime-one or A-1 or their equivalents by Moody's
Investors Service, Inc. or Standard & Poor's
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Corporation, respectively, or their successors, (iv) any repurchase agreement
secured by any one or more of the foregoing, and (v) advances to employees for
employee loans or for business related expenses to be incurred in the ordinary
course of business and consistent with past practices in an amount not to exceed
$500,000 in the aggregate outstanding at any one time, PROVIDED that no advances
or loan to any single employee shall exceed $100,000 in the aggregate.
RECEIVABLES. Any of the Borrower's accounts, accounts receivable, notes,
bills, drafts, acceptances, instruments, documents, chattel paper and other
debts, obligations and liabilities in whatever form owing to the Borrower from
any Person for goods sold or leased or for services rendered by the Borrower or
its predecessor in interest, or however otherwise established or created, all
guaranties and security therefor, any right, title and interest of the Borrower
in the goods or services which gave rise thereto, including rights to
reclamation and stoppage in transit and any rights of an unpaid seller of goods
or services; whether any of the foregoing be now existing or hereafter arising,
now or hereafter received by or owing or belonging to the Borrower.
REGISTRATION RIGHTS AGREEMENT. The Registration Rights Agreement, dated as
of the date hereof, by and among the Parent and the Holders (as defined
therein).
RENTAL CONTRACT. A Lease which is month-to-month and which is cancelable.
RESPONSIBLE OFFICER. The chief financial officer of the Borrower and any
other officer of the Borrower designated by the chief financial officer to sign
Borrowing Base Reports and Notices of Borrowing or Conversion.
RESTRICTED PAYMENT. Any dividend, distribution, loan, advance, guaranty,
extension of credit or other payment, whether in cash or property to or for the
benefit of any Person who holds an equity interest in the Borrower or any of its
Subsidiaries, whether or not such interest is evidenced by a security, and any
purchase, redemption, retirement or other acquisition for value of any capital
stock of the Borrower or any of its Subsidiaries, whether now or hereafter
outstanding, or of any options, warrants or similar rights to purchase such
capital stock or any security convertible into or exchangeable for such capital
stock.
REVOLVING CREDIT ASSIGNMENT OF LEASES. The assignment of leases, dated the
Closing Date, by the Borrower in favor of the Agent for the benefit of the
Lenders, as amended, supplemented and in effect from time to time, and any
supplement thereto in the form of Exhibit A to the Revolving Credit Assignment
of Leases as executed and delivered by the Borrower and the Agent from time to
time. In the event the Iron Mountain Agreement (or such other replacement
agreement reasonably acceptable to the Agent) is no longer in effect, or after
an Event of Default, thereafter at the Agent's option exercisable from time to
time, said Revolving Credit Assignment of Leases shall require each Lease to
bear a legend approved by Agent indicating such Lease is assigned to Agent.
REVOLVING CREDIT LOAN. See Section 2.1(a) hereof.
REVOLVING CREDIT NOTES. See Section 2.2.
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SECURITY AGREEMENT. The security agreement, dated the Closing Date,
between the Borrower and the Agent, as amended, supplemented and in effect from
time to time, and any supplement thereto in the form of Exhibit A to the
Security Agreement as executed and delivered by the Borrower and the Agent from
time to time.
SECURITY DOCUMENTS. The Revolving Credit Assignment of Leases, the
Security Agreement (All Assets), Security Agreement - Intellectual Property, the
Parent Security Agreement, the Parent Stock Pledge, and any additional documents
evidencing or perfecting the Agent's lien on the Collateral.
SPECIAL PURPOSE SUBSIDIARY. A subsidiary which is a special purpose
corporation for the securitization and financing of lease receivables, none of
the assets of which constitutes any part of the Collateral.
SUBORDINATED DEBT. Indebtedness of the Parent of any of its Subsidiaries,
including the Borrower, which is expressly subordinated and made junior to the
payment and performance in full of the Obligations and the Guaranteed
Obligations (as defined in the Parent Guaranty) including, without limitation,
(a) those certain subordinated capital notes of the Parent issued to those
subordinated note holders listed Exhibit C hereto, and (b) the AMPAC
Subordinated Debt.
SUBSIDIARY. Any corporation, association, joint stock company, business
trust or other similar organization of which 50% or more of the ordinary voting
power for the election of a majority of the members of the board of directors or
other governing body of such entity is held or controlled by the Parent, the
Borrower or a Subsidiary of the Parent or Borrower; or any other such
organization the management of which is directly or indirectly controlled by the
Parent, the Borrower or a Subsidiary of the Parent or Borrower through the
exercise of voting power or otherwise; or any joint venture, whether
incorporated or not, in which the Parent or Borrower has a 50% ownership
interest.
SUBSIDIARY GUARANTEES. Guarantees of all Obligations, in form and
substance satisfactory to the Agent, made by each Subsidiary of the Borrower
other than a Special Purpose Subsidiary.
TOTAL COMMITMENT. The sum of the Commitments of the Lenders as in effect
from time to time, as such Commitments may be modified from time to time,
including termination or reduction of such amount in accordance with Sections
2.1 and 8.2 hereof. It is understood and agreed that CIT will commit to fund
$30,000,000.00 pursuant to the terms of this Agreement and as Agent will, on a
best efforts basis, attempt to secure commitments for an additional lender or
lenders in the aggregate additional amount of up to $20,000,000.00. In no
instance shall CIT be required to fund in excess of $30,000,000.00.
TOTAL OUTSTANDINGS. At any time, the aggregate outstanding principal
balance of the Loans at the time.
TYPE. A Base Rate Loan or a LIBOR Loan.
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UCC. The Uniform Commercial Code as enacted in any state of the United
States or in the District of Columbia or the United States Virgin Islands
insofar as any such statute, as in effect from time to time, may be relevant to
the creation, perfection, continuation and enforcement of Encumbrances on
Collateral.
1.2 RULES OF INTERPRETATION.
(a) All terms of an accounting character used herein but not defined
herein shall have the meanings assigned thereto by GAAP applied on a consistent
basis. All calculations for the purposes of Section VI hereof shall be made in
accordance with GAAP, consistently applied.
That certain items or computations are explicitly modified by the phrase
"in accordance with GAAP" shall in no way be construed to limit the foregoing.
If any "Accounting Changes" (as defined below) occur and such changes result in
a change in the calculation of the financial covenants, standards or terms used
in this Agreement or any other Loan Document, then the Borrower, the Agent and
the Lenders agree to enter into negotiations in order to amend such provisions
of this Agreement so as to equitably reflect such Accounting Changes with the
desired result that the criteria for evaluating Borrower's and its Subsidiaries'
financial condition shall be the same after such Accounting Changes as if such
Accounting Changes had not been made; provided, however, that the agreement of
the Majority Lenders to any required amendments of such provisions shall be
sufficient to bind all Lenders. "Accounting Changes" means (i) changes in
accounting principles required by the promulgation of any rule, regulation,
pronouncement or opinion by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants (or successor thereto or any
agency with similar functions), (ii) changes in accounting principles concurred
in by the Borrower's certified public accountants; (iii) purchase accounting
adjustments under A.P.B. 16 or 17 and EITF 88 16, and the application of the
accounting principles set forth in FASB 109, including the establishment of
reserves pursuant thereto and any subsequent reversal (in whole or in part) of
such reserves; and (iv) the reversal of any reserves established as a result of
purchase accounting adjustments. If the Agent, the Borrower and the Majority
Lenders agree upon the required amendments, then after appropriate amendments
have been executed and the underlying Accounting Change with respect thereto has
been implemented, any reference to GAAP contained in the Agreement or in any
other Loan Document shall, only to the extent of such Accounting Change, refer
to GAAP, consistently applied after giving effect to the implementation of such
Accounting Change. If the Agent, the Borrower and the Majority Lenders cannot
agree upon the required amendments within thirty (30) days following the date of
implementation of any Accounting Change, then (i) all calculations of financial
covenants and other standards and terms in accordance with the Agreement and the
other Loan Documents shall be made without regard to the underlying Accounting
Change, and (ii) the Borrower shall deliver to the Agent and the Lenders (at the
same time the applicable financial statements are required to be delivered
hereunder) a reconciliation showing the differences between (a) such financial
statements prepared in accordance with GAAP giving effect to such Accounting
Change, and (b) such financial statements prepared in accordance with GAAP
without regard to the underlying Accounting Change.
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(b) A reference to any document or agreement shall include such document
or agreement as amended, modified or supplemented and in effect from time to
time in accordance with its terms and the terms of this Agreement.
(c) The singular includes the plural and the plural includes the
singular. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) The words "include", "includes" and "including" are not limiting.
(f) The words "herein", "hereof", "hereunder" and words of like import
shall refer to this Agreement as a whole and not to any particular section or
subdivision of this Agreement.
(g) All terms not specifically defined herein or by GAAP, which terms
are defined in the Uniform Commercial Code as in effect in the State of New
York, have the meanings assigned to them in such Uniform Commercial Code.
SECTION II
DESCRIPTION OF CREDIT
2.1 REVOLVING CREDIT LOANS.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, and in reliance upon the representations, warranties and covenants of
the Borrower herein, each of the Lenders agrees, severally and not jointly, to
make revolving credit loans (the "REVOLVING CREDIT LOANS") to the Borrower at
the Borrower's request from time to time from and after the Closing Date and
prior to the Borrowing Base Maturity Date, PROVIDED that the Total Outstandings
(after giving effect to all requested Revolving Credit Loans) shall not at any
time exceed the lesser of (i) the Borrowing Base and (ii) the Total Commitment,
and PROVIDED, FURTHER that the sum of the aggregate principal amount of
outstanding Revolving Credit Loans made by each Lender shall not at any time
(after giving effect to all requested Revolving Credit Loans) exceed such
Lender's Commitment, and PROVIDED, FURTHER, that the sum of the aggregate
principal amount of outstanding Revolving Credit Loans based on Eligible Leases
having original terms of more than 60 months shall not at any time (after giving
effect to all requested Revolving Credit Loans) exceed 15% of the aggregate
principal amount of all outstanding Revolving Credit Loans. Subject to the terms
and conditions of this Agreement, the Borrower may borrow, repay and prepay
amounts, up to the limits imposed by this Section 2.1, from time to time between
the Closing Date and the Borrowing Base Maturity Date upon request given to the
Agent pursuant to Section 2.4. Each request for a Revolving Credit Loan
hereunder shall constitute a representation and warranty by the Borrower that
the conditions set forth in Section 3.1, in the case of the initial Revolving
Credit Loans to be made on the Closing Date, and Section 3.2 in the case of all
other Revolving Credit Loans, have been satisfied as of the date of such
request. Additionally, at the Closing Date only, the Borrower shall have excess
Revolving Loan availability, of at least $5,000,000.00.
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(b) No LIBOR Loan shall be requested or made for less than $500,000 in
principal amount and in integral multiples of $100,000 in excess of such minimum
amount. No more than six (6) LIBOR Loans may be outstanding at any time.
(c) Upon the terms and subject to the conditions of this Agreement, the
Borrower may convert all or any part (in integral multiples of $500,000) of any
outstanding Loan into a Loan of another Type on any Business Day (which, in the
case of a conversion of an outstanding LIBOR Loan shall be the last day of the
Interest Period applicable to such LIBOR Loan). The Borrower shall give the
Agent prior notice of each such conversion (which notice shall be effective upon
receipt) in accordance with Section 2.4.
(d) All Commitments shall automatically terminate at 2:30 p.m. New York
time on the Borrowing Base Maturity Date.
2.2 THE NOTES. The Revolving Credit Loans shall be evidenced by separate
promissory notes for each Lender, each such note to be in substantially the form
of EXHIBIT A hereto, dated as of the Closing Date and completed with appropriate
insertions (each such note being referred to herein as a "Revolving Credit Note"
and collectively as the "Revolving Credit Notes"). One Revolving Credit Note
shall be payable to the order of each Lender in a principal amount equal to such
Lender's highest possible Commitment. The Borrower irrevocably authorizes each
of the Lenders to make or cause to be made, at or about the time of the Drawdown
Date of any Revolving Credit Loan or at the time of receipt of any payment of
principal on the Revolving Credit Notes, an appropriate notation on its Note
Record reflecting the making of such Revolving Credit Loan or (as the case may
be) the receipt of such payment. The outstanding amount of the Revolving Credit
Loans set forth on the Note Records shall be prima facie evidence of the
principal amount thereof owing and unpaid to such Lenders, but the failure to
record, or any error in so recording, any such amount on any Lender's Note
Record shall not limit or otherwise affect the obligations of the Borrower
hereunder or under any Revolving Credit Note to make payments of principal of or
interest on any Revolving Credit Note when due.
2.3 NOTICE AND MANNER OF BORROWING OR CONVERSION OF LOANS.
(a) Whenever the Borrower desires to obtain or continue a Loan hereunder
or convert an outstanding Loan of one Type into a Loan of another Type, the
Borrower shall give the Agent a written Notice of Borrowing or Conversion (or a
telephonic notice promptly confirmed by a written Notice of Borrowing or
Conversion), which Notice shall be irrevocable and which must be received no
later than 2:00 p.m. Boston time (i) one Business Day before the day on which
the requested Loan is to be made or continued as or converted to a Base Rate
Loan, and (ii) three Business Days before the day on which the requested Loan is
to be made or continued as or converted to a LIBOR Loan. Such Notice shall
specify (A) the effective date and amount of each such Loan or portion thereof
requested to be made, continued or converted, subject to the limitations set
forth in this Agreement, (B) the interest rate option requested to be applicable
thereto, and (C) the duration of the applicable Interest Period, if any (subject
to the provisions of the definition of the term "Interest Period"). If such
Notice fails to specify the interest rate option to be applicable to the
requested Loan, then the Borrower shall be deemed to have requested a Base Rate
Loan. If such written confirmation of any telephonic notification differs
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in any material respect from the action taken by the Agent, the records of the
Agent shall control absent manifest error, and shall be accompanied by a
Borrowing Base Report. If the Agent receives a Notice of Borrowing or Conversion
after the time specified in subsection (a) above, such Notice shall not be
effective. In no event shall the Borrower be permitted to request a LIBOR LOAN
or renew or convert to a LIBOR LOAN if an Event of Default has occurred under
any of the Loan Documents.
(b) Subject to the provisions of the definition of the term "Interest
Period" herein, the duration of each Interest Period for a LIBOR Loan shall be
as specified in the applicable Notice of Borrowing or Conversion. If no Interest
Period is specified in a Notice of Borrowing or Conversion with respect to a
requested LIBOR Loan, then the Borrower shall be deemed to have selected an
Interest Period of one month's duration for a requested LIBOR Loan. If the Agent
does not receive an effective Notice of Borrowing or Conversion with respect to
an outstanding LIBOR Loan, or if, when such Notice must be given prior to the
end of the Interest Period applicable to such outstanding Loan, the Borrower
shall have failed to satisfy any of the conditions hereof, the Borrower shall be
deemed to have elected to convert such outstanding LIBOR Loan in whole into a
Base Rate Loan on the last day of the then current Interest Period with respect
thereto.
(c) Each Notice of Borrowing or Conversion requesting borrowing of a
Revolving Credit Loan shall be accompanied by a Borrowing Base Report containing
a computation by the Borrower in form satisfactory to the Agent (hereinafter
referred to as a "BORROWING COMPUTATION") certified by a Responsible Officer,
setting forth (i) a complete description of the Equipment to be acquired or
financed with respect to which such Revolving Credit Loan has been requested,
(ii) the Original Cost and Adjusted Cost of such Equipment, (iii) a complete
description of the Leases covering such Equipment, (iv) the name of the lessees
under such Leases, (v) a statement that such Equipment and Leases, subject to
the acceptance by the Agent of such Equipment or the applicable lessee, satisfy
the conditions to qualify as Eligible Equipment Leases or Eligible Rental
Contracts, respectively, and (vi) such other information with respect to such
Equipment and Leases as is reasonably requested by the Agent in the Borrowing
Computation or otherwise. Within two Business Days after receipt of such
information in the form indicated above, the Agent shall notify the Borrower if
any of such Equipment or lessees are unacceptable to the Agent. In the event the
Agent does not so notify the Borrower, the Agent shall be deemed to have
accepted such Equipment and lessees. The acceptance or deemed acceptance of any
lessee under any Lease at any one time by the Agent shall not operate as an
acceptance of such lessee at any future time.
2.4 FUNDING OF LOANS.
(a) PRO RATA FUNDING. All Loans shall be made by the Lenders PRO RATA in
accordance with their respective Commitments, PROVIDED, HOWEVER that the failure
of any Lender to make any Loan shall not relieve any other Lender of its
obligation to lend hereunder (it being understood, however, that no Lender shall
be responsible for the failure of any other Lender to make any Loan required to
be made by such other Lender).
(b) NOTICE. The Agent shall promptly notify the Lenders of each Notice
of Borrowing or Conversion received pursuant to Section 2.4 and of each Lender's
portion of the
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requested Loan. Not later than 1:00 p.m. (New York time) on the proposed
Drawdown Date of such Loan, each Lender will make available to the Agent, at its
head office, in immediately available funds, the amount of such Lender's PRO
RATA share of the amount of such requested Loan. Upon receipt by the Agent of
such amount, and upon receipt of the documents required by Section 3 and the
reasonable satisfaction of the other conditions set forth therein (to the extent
applicable) the Agent shall make available to the Borrower the balance of such
Loan. The failure or refusal of any Lender to make available to the Agent at the
aforesaid time and place on any Drawdown Date the amount of its PRO RATA share
of any requested Loans shall not relieve any other Lender from its several
obligation hereunder to make available to the Agent the amount of such other
Lender's PRO RATA share of any requested Loans.
(c) ADVANCE BY AGENT. The Agent may, unless notified to the contrary by
any Lender prior to a Drawdown Date, assume that each Lender has made available
to the Agent on such Drawdown Date the amount of such Lender's PRO RATA share of
the Loans to be made on such Drawdown Date, and the Agent may (but it shall not
be required to), in reliance upon such assumption, make available to the
Borrower a corresponding amount. If any Lender makes available to the Agent such
amount on a date after such Drawdown Date, such Lender shall pay to the Agent on
demand an amount equal to the product of (i) the average, computed for the
period referred to in clause (iii) below, of the weighted average interest rate
paid by the Agent for federal funds acquired by the Agent during each day
included in such period, TIMES (ii) the amount of such Lender's PRO RATA share
of any such Loans TIMES (iii) a fraction, the numerator of which is the number
of days that elapse from and including such Drawdown Date to the date on which
the amount of such Lender's PRO RATA share of such Loans shall become
immediately available to the Agent, and the denominator of which is 365. A
statement of the Agent submitted to such Lender with respect to any amounts
owing under this paragraph shall be PRIMA FACIE evidence of the amount due and
owing to the Agent by such Lender. If the amount of such Lender's PRO RATA share
of such Loans is not made available to the Agent by such Lender within three (3)
Business Days following such Drawdown Date, the Agent shall be entitled to
recover such amount from the Borrower on demand, with interest thereon at the
rate per annum applicable to the Revolving Credit Loans made on such Drawdown
Date.
2.5 INTEREST RATES AND PAYMENTS OF INTEREST.
(a) BASE RATE LOANS. Each Base Rate Loan shall bear interest on the
outstanding principal amount thereof at a rate per annum equal to the Base Rate
plus one and one-half (1 1/2%) per annum, which rate shall change
contemporaneously with any change in the Base Rate. Such interest shall be
payable monthly in arrears on the first Business Day of each month, commencing
October 1, 2004, and when such Loan is due (whether at maturity, by reason of
acceleration or otherwise).
(b) LIBOR LOANS. Each LIBOR Loan shall bear interest on the outstanding
principal amount thereof, for each Interest Period applicable thereto, at a rate
per annum equal to the LIBOR Rate plus four (4%) percent per annum. Such
interest shall be payable for such Interest Period on the last day thereof and,
if such Interest Period is longer than three months, at intervals of three
months after the first day thereof.
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(c) DEFAULT INTEREST. If a material Event of Default shall occur, then
at the option of the Agent the unpaid balance of Loans shall bear interest, to
the extent permitted by law, compounded daily at an interest rate equal to two
(2%) percent per annum above the interest rate applicable to each such Loan in
effect on the day such Event of Default occurs, until such Event of Default is
cured or waived.
(d) ADDITIONAL INTEREST. So long as any Lender shall be required under
regulations of the Board of Governors of the Federal Reserve System (or any
other banking authority, domestic or foreign, to which such Lender is subject)
to maintain reserves with respect to liabilities or assets consisting of or
including "Eurocurrency Liabilities" (as defined in regulations issued from time
to time by such Board of Governors), the Borrower shall pay to the Agent for the
account of each such Lender additional interest on the unpaid principal amount
of each LIBOR Loan made by such Lender from the date of such Loan until such
principal amount is paid in full, at an interest rate per annum equal at all
times to the remainder (rounded, if necessary, to the nearest 1/8 of 1%)
obtained by subtracting (i) the LIBOR Rate for the Interest Period for such
LIBOR Loan from (ii) the rate obtained by dividing such LIBOR Rate by a
percentage equal to 100% minus the Eurodollar Reserve Percentage of such Lender
for such Interest Period. Such additional interest shall be determined by such
Lender and notified to the Borrower through the Agent, and shall be payable on
each date on which interest is payable on such LIBOR Loan.
(e) MAXIMUM INTEREST. All agreements between the Borrower and the
Lenders are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of maturity of the Obligations or
otherwise, shall the amount paid or agreed to be paid to the Lenders for the use
or the forbearance of the Obligations exceed the maximum permissible under
applicable law. As used herein, the term "applicable law" shall mean the law of
the State of New York in effect as of the date hereof provided, however, that in
the event there is a change in the law which results in a higher permissible
rate of interest, then the Loan Documents shall be governed by such new law as
of its effective date. In this regard, it is expressly agreed that it is the
intent of Borrower and the Lenders in the execution, delivery and acceptance of
the Loan Documents to contract in strict compliance with the laws of the State
of New York from time to time in effect. If, under or from any circumstances
whatsoever, fulfillment of any provision of any of the Loan Documents at the
time of performance of such provision shall be due, shall involve transcending
the limit of such validity prescribed by applicable law, then the obligation to
be fulfilled shall automatically be reduced to the limits of such validity, and
if under or from circumstances whatsoever the Lenders should ever receive as
interest an amount which would exceed the highest lawful rate, such amount which
would be excessive interest shall be applied to the reduction of the principal
balance of the Obligations and not to the payment of interest. This provision
shall control every other provision of all Loan Documents.
2.6 FEES.
(a) The Borrower shall pay to the Agent, payable at the end of each
month, an Unused Line Fee of one quarter of one percent (.25%) per annum
computed on the difference between the Total Commitment and the average daily
Revolving Loan balance due to Agent. For purposes of calculating the amount of
the Revolving Line of Credit for this Unused Line
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Fee, Revolving Line of Credit shall be the committed amount at the time of the
monthly calculation.
(b) The Borrower shall pay to the Agent a monthly Collateral Management
Fee in an amount to be determined based solely on fees incurred by the Agent
associated with the hiring or retention a Collateral Monitoring Agent for other
third party professional to monitor cash flow and collateral on behalf of the
Agent. Such Collateral Management Fee shall not exceed $9,000.00 per month (plus
reimbursable out-of-pocket expenses associated therewith) for the first six (6)
months with a reasonable downward adjustment thereafter.
2.7 PAYMENTS AND PREPAYMENTS OF THE LOANS.
(a) All Revolving Credit Loans, with all interests and costs hereunder
shall be due and payable on the Borrowing Base Maturity Date. Provided however,
so long as there is then no Event of Default, this Agreement shall automatically
renew annually thereafter on the anniversary of the Closing Date for one (1)
year periods unless either the Agent or the Borrower gives written notice of its
intent not to renew this Agreement at least one hundred eighty (180) days prior
to said anniversary date.
(b) LIBOR Loans may be prepaid at any time, subject to the provisions of
Section 2.10, upon three (3) Business Days' notice, and Base Rate Loans may be
prepaid at any time, without premium or penalty, upon one Business Day's notice.
Upon the written request of the Borrower given sixty (60) days in advance and in
conjunction with any such prepayment in full of all of the Revolving Credit
Loans, the Agent shall, simultaneously with receipt of such prepayment, release
the Agent's Encumbrance on such items of Collateral granted to the Agent
pursuant to the Security Documents, PROVIDED that (i) no Default shall have
occurred and be continuing, (ii) the Agent shall have received from the Borrower
a Borrowing Base Report demonstrating that upon such release the Borrower shall
be in compliance with the terms of Section 2.1 hereof, and (iii) the Agent shall
have received a certification from a Responsible Officer certifying that no
Default has occurred and is continuing, that the Borrower has complied with the
provisions of Section 7.4 hereof and Section 2(b)(ii) of the Security Agreement
and that upon such release and after giving effect thereto the Borrower shall be
in compliance with Section 2.1 hereof and no Default shall have occurred and be
continuing. Provided however, notwithstanding the terms hereof, should the
Borrower prepay the Loans in full and/or terminate this Agreement prior to the
eighteenth (18th) month anniversary of the initial funding hereunder, the
Borrower shall pay to the Agent, and the Agent shall earn, an early termination
fee of One Million Five Hundred Thousand ($1,500,000.00) Dollars. Provided
further, if the Agent does not arrange for commitments from other Lenders or
increase its own commitment to reach the full Fifty Million ($50,000,000.00)
Dollars Revolving Credit Loan Facility within ninety (90) days of the initial
funding hereunder, then, the Borrower may at any time thereafter terminate this
Agreement and prepay the entire Revolving Credit Loan balances without penalty
or premium. However, should the Agent subsequent to the ninety (90) day period
increase the commitment to the $50,000,000.00 facility (through other lenders or
for its own account) and Borrower has not provided prepayment or notice of
termination, then the Borrower's right to prepay and terminate this Agreement
without the payment of the $1,500,000.00 termination fee shall terminate.
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(c) If at any time the Total Outstandings exceed the lesser of (i) the
Borrowing Base and (ii) the Total Commitment, then the Borrower shall
immediately pay the amount of any such excess to the Agent for application to
the Loans.
2.8 METHOD OF PAYMENT AND ALLOCATION OF PAYMENTS.
(a) All payments by the Borrower hereunder and under any of the other
Loan Documents shall be made in lawful money of the United States in immediately
available funds, without set-off or counterclaim and free and clear of and
without deduction for any taxes, levies, imposts, duties, charges, fees,
deductions, withholdings, compulsory loans, restrictions or conditions of any
nature now or hereafter imposed or levied by any jurisdiction or any political
subdivision thereof or taxing or other authority therein unless the Borrower is
compelled by law to make such deduction or withholding. If any such obligation
is imposed upon the Borrower with respect to any amount payable by it hereunder
or under any of the other Loan Documents, the Borrower will pay to each Lender
such additional amount in Dollars as shall be necessary to enable such Lender to
receive the same net amount which such Lender would have received on such due
date had no such obligation been imposed upon the Borrower. The Borrower will
deliver promptly to each Lender certificates or other valid vouchers or other
evidence of payment reasonably satisfactory to the Agent for all taxes or other
charges deducted from or paid with respect to payments made by the Borrower
hereunder or under such other Loan Document. The Lenders may, and the Borrower
hereby authorizes the Lenders to, debit the amount of any payment not made by
such time to the demand deposit accounts of the Borrower with the Lenders or to
their Note Records.
Each Lender organized under the laws of a jurisdiction outside the United
States (each, a "Foreign Lender") as to which payments to be made under this
Agreement or under the Notes are exempt from United States withholding tax under
an applicable statute or tax treaty shall provide to the Borrower and the Agent
a properly completed and executed IRS Form W 8ECI or Form W 8BEN or other
applicable form, certificate or document prescribed by the IRS or the United
States certifying as to such Foreign Lender's entitlement to such exemption
(each, a "Certificate of Exemption"). Any foreign Person that seeks to become a
Lender under this Agreement shall provide a Certificate of Exemption to the
Borrower and the Agent prior to becoming a Lender hereunder. No foreign Person
may become a Lender hereunder if such Person fails to deliver a Certificate of
Exemption in advance of becoming a Lender.
(b) All payments of principal of and interest in respect of Revolving
Credit Loans shall be made to the Agent, for the benefit of the Lenders, PRO
RATA in accordance with their respective Commitments, and payments of any other
amounts due hereunder shall be made to the Agent to be allocated among the Agent
and the Lenders as their respective interests appear. All such payments shall be
made at the Agent's head office or at such other location that the Agent may
from time to time designate, in each case in immediately available funds.
(c) If the Commitments shall have been terminated or the Obligations
shall have been declared immediately due and payable pursuant to Section 8.2,
all funds received from or on behalf of the Borrower (including as proceeds of
Collateral) by any Lender in respect of Obligations (except funds received by
any Lender as a result of a purchase of a participant interest pursuant to
Section 2.8(d) below) shall be remitted to the Agent, and all such funds,
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together with all other funds received by the Agent from or on behalf of the
Borrower (including proceeds of Collateral) in respect of Obligations, shall be
applied by the Agent in the following manner and order: (i) first, to reimburse
the Agent and the Lenders, in that order, for any amounts payable pursuant to
Sections 11.2 and 11.3 hereof; (ii) second, to the payment of any fees due and
payable to the Agent; (iii) third, to the payment of interest due on the
Revolving Credit Loans; (iv) fourth, to the payment of the outstanding principal
balance of the Revolving Credit Loans; (v) fifth, to the payment of any other
Obligations payable by the Borrower; and (vii) any remaining funds shall be paid
to whoever shall be entitled thereto or as a court of competent jurisdiction
shall direct.
(d) Each of the Lenders and the Agent hereby agrees that if it should
receive any amount (whether by voluntary payment, by realization upon security,
by the exercise of the right of set-off or banker's lien, by counterclaim or
cross action, by the enforcement of any right under the Loan Documents, or
otherwise) in respect of principal of, or interest on, the Revolving Credit
Loans or any fees which are to be shared among the Lenders, which, as compared
to the amounts theretofore received by the other Lenders with respect to such
principal, interest or fees, is in excess of such Lender's PRO RATA share of
such principal, interest or fees, such Lender shall share such excess, less the
costs and expenses (including, reasonable attorneys' fees and disbursements)
incurred by such Lender in connection with such realization, exercise, claim or
action, PRO RATA with all other Lenders in proportion to their respective
Commitments, and such sharing shall be deemed a purchase (without recourse) by
such sharing party of participant interests in the Loans or such fees, as the
case may be, owed to the recipients of such shared payments to the extent of
such shared payments; provided, however, that if all or any portion of such
excess amount is thereafter recovered from such Lender, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
2.9 INDEMNITY. If the Borrower for any reason (including, without
limitation, pursuant to Sections 2.7(b), 2.11 and 8.2 hereof) makes any payment
of principal with respect to any LIBOR Loan on any day other than the last day
of an Interest Period applicable to such Loan, or fails to borrow or continue or
convert to a LIBOR Loan or fails to prepay a LIBOR Loan after having given
notice thereof, the Borrower shall pay to the Agent for the benefit of the
Lenders any amount required to compensate the Lenders for any additional losses,
costs or expenses which they may reasonably incur as a result of such payment or
failure, including, without limitation, any loss (including loss of anticipated
profits), costs or expense incurred by reason of the liquidation or
re-employment of deposits or other funds required by the Lenders to fund or
maintain such Loan. Without limiting the foregoing, the Borrower shall pay to
the Agent a "yield maintenance fee" in an amount computed as follows: the
current rate for United States Treasury securities (bills on a discounted basis
shall be converted to a bond equivalent) with a maturity date closest to the
expiration date of the Interest Period of the Loan as to which the prepayment is
made, shall be subtracted from the interest rate applicable (pursuant to Section
2.5(b) or (c)) to each LIBOR Loan in effect at the time of prepayment. If the
result is zero or a negative number, there shall be no yield maintenance fee. If
the result is a positive number, then the resulting percentage shall be
multiplied by the amount of the principal balance being prepaid. The resulting
amount shall be divided by 360 and multiplied by the number of days remaining in
the Interest Period of the Loan as to which the prepayment is made. Said amount
shall be reduced to present value calculated by using the above referenced
United States Treasury securities rate and the number of days remaining in the
Interest Period of the Loan as to which
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prepayment is made. The resulting amount shall be the yield maintenance fee due
to the Lenders upon the payment of a Loan under the circumstances described in
the first sentence of this Section. The Borrower shall pay such amount upon
presentation by the Agent of a statement setting forth the amount and the
Agent's (or the affected Lenders') calculation thereof pursuant hereto, which
statement shall be deemed true and correct absent manifest error. If the
Obligations are declared immediately due and payable pursuant to Section 8.2,
then any amount provided for in this Section shall be due and payable in the
same manner as though the Borrower had made a prepayment of the Loans.
2.10 COMPUTATION OF INTEREST AND FEES; DUE DATE.
(a) Interest and all fees payable hereunder shall be computed daily on
the basis of a year of 360 days and paid for the actual number of days for which
due.
(b) If the due date for any payment of principal is extended by
operation of law, interest shall be payable for such extended time. If any
payment required by this Agreement becomes due on a day that is not a Business
Day such payment may be made on the next succeeding Business Day (subject to
clause (i) of the definition of the term "Interest Rate Period"), and such
extension shall be included in computing interest and fees in connection with
such payment.
2.11 CHANGED CIRCUMSTANCES; ILLEGALITY.
(a) Notwithstanding any other provision of this Agreement, in the event
that:
(i) on any date on which the LIBOR Rate would otherwise be set the
Agent shall have determined in good faith (which determination shall be
final and conclusive) that adequate and fair means do not exist for
ascertaining the LIBOR Rate, or
(ii) at any time the Agent or any Lender shall have determined in
good faith (which determination shall be final and conclusive and, if made
by any Lender, shall have been communicated to the Agent in writing) that:
(A) the making or continuation of or conversion of any Loan to a
LIBOR Loan has been made impracticable or unlawful by (1) the occurrence
of a contingency that materially and adversely affects the interbank
Eurodollar market or (2) compliance by the Agent or such Lender in good
faith with any applicable law or governmental regulation, guideline or
order or interpretation or change thereof by any governmental authority
charged with the interpretation or administration thereof or with any
request or directive of any such governmental authority (whether or not
having the force of law); or
(B) the LIBOR Rate shall no longer represent the effective cost to
the Agent or such Lender for U.S. dollar deposits in the interbank market
for deposits in which it regularly participates;
then, and in any such event, the Agent shall forthwith so notify the Borrower
thereof. Until the Agent notifies the Borrower that the circumstances giving
rise to such notice no longer apply, the obligation of the Lenders to allow
selection by the Borrower of the Type of Loan affected by the
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contingencies described in this Section (herein called "AFFECTED LOANS") shall
be suspended. If, at the time the Agent so notifies the Borrower, the Borrower
has previously given the Agent a Notice of Borrowing or Conversion with respect
to one or more Affected Loans but such Loans have not yet gone into effect, such
notification shall be deemed to be a request for Base Rate Loans.
(b) In the event of a determination of illegality pursuant to subsection
(a)(ii)(A) above, the Borrower shall, with respect to the outstanding Affected
Loans, prepay the same, together with interest thereon and any amounts required
to be paid pursuant to Section 2.10, on such date as shall be specified in such
notice (which shall not be earlier than the date such notice is given) and may,
subject to the conditions of this Agreement, borrow a Loan of another Type in
accordance with Section 2.1 hereof by giving a Notice of Borrowing or Conversion
pursuant to Section 2.4 hereof.
2.12 INCREASED COSTS. In case any change in law, regulation, treaty or
official directive or the interpretation or application thereof by any court or
by any governmental authority charged with the administration thereof or the
compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law):
(i) subjects any Lender to any tax with respect to payments of
principal or interest or any other amounts payable hereunder by the
Borrower or otherwise with respect to the transactions contemplated hereby
(except for taxes on the overall net income of such Lender imposed by the
United States of America or any political subdivision thereof), or
(ii) imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit or similar requirement against assets held by, or
deposits in or for the account of, or loans by, any Lender (other than
such requirements as are already included in the determination of the
LIBOR Rate), or
(iii) imposes upon any Lender any other condition with respect to
its obligations or performance under this Agreement,
and the result of any of the foregoing is to increase the cost to the Lender,
reduce the income receivable by such Lender or impose any expense upon such
Lender with respect to any Loans or its obligations under this Agreement, such
Lender shall notify the Borrower and the Agent thereof. The Borrower agrees to
pay to such Lender the amount of such increase in cost, reduction in income or
additional expense as and when such cost, reduction or expense is incurred or
determined, upon presentation by such Lender of a statement in the amount and
setting forth in reasonable detail such Lender's calculation thereof and the
assumptions upon which such calculation was based, which statement shall be
deemed true and correct absent manifest error, provided, that the Borrower shall
not be obligated to pay any such amount which arose prior to the date that is
one hundred eighty (180) days preceding the date of such demand or is
attributable to periods prior to the date which is one hundred eighty (180) days
preceding the date of such demand. Each Lender agrees that, as promptly as
practicable after it becomes aware of any circumstances referred to above which
would result in any such increased cost, the affected Lender shall, to the
extent not inconsistent with such Lender's internal policies of
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general application or applicable law or regulation, use reasonable commercial
efforts to minimize costs and expenses incurred by it and payable to it by the
Borrower pursuant to this Section 2.12.
2.13 CAPITAL REQUIREMENTS. If after the date hereof any Lender reasonably
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any governmental
authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), has the effect of reducing the return on such Lender's or
such holding company's capital as a consequence of such Lender's commitment to
make Loans hereunder to a level below that which such Lender or such holding
company could have achieved but for such adoption, change or compliance (taking
into consideration such Lender's or such holding company's then existing
policies with respect to capital adequacy and assuming the full utilization of
such entity's capital) by any amount deemed by such Lender to be material, then
such Lender shall notify the Borrower and the Agent thereof. The Borrower agrees
to pay to such Lender the amount of such reduction of capital as and when such
reduction is determined, payable within 30 days after presentation by such
Lender of a statement in the amount and setting forth in reasonable detail such
Lender's calculation thereof and the assumptions upon which such calculation was
based (which statement shall be deemed true and correct absent manifest error)
unless within such 30 day period the Borrower shall have prepaid in full all
obligations to such Lender, in which event no amount shall be payable to such
Lender under this Section. In determining such amount, such Lender may use any
reasonable averaging and attribution methods.
2.14 DEFAULTING LENDER; REPLACEMENT LENDER. Within thirty (30) days after
(a) receipt by the Borrower of written notice and demand from any Lender (each,
an "Affected Lender") for payment of additional amounts or increased costs as
provided in Sections 2.8(a), 2.11, 2.12 or 2.13, or (b) any Lender (a
"Defaulting Lender") shall fail to advance its pro rata share of any Loans made
as provided under Section 2.4 hereof, the Borrower may, at its option, notify
the Agent and such Affected Lender or Defaulting Lender, as applicable, of its
intention to replace such Affected Lender or Defaulting Lender, as applicable.
So long as no Default or Event of Default has occurred and is continuing, the
Borrower, with the consent of the Agent (which consent shall not be unreasonably
withheld, conditioned or delayed), may obtain, at the Borrower's expense, a
replacement Lender (each, a "Replacement Lender") for the Affected Lender or
Defaulting Lender, as applicable, which Replacement Lender must be reasonably
satisfactory to the Agent. If the Borrower obtains a Replacement Lender within
sixty (60) days following notice of its intention to do so, any such Affected
Lender or Defaulting Lender must sell and assign its respective Loans and
Commitment to such Replacement Lender for an amount equal to the principal
balance of all Loans held by such Affected Lender or Defaulting Lender, as
applicable, including all accrued interest and fees with respect thereto and all
other amounts due to such Affected Lender or Defaulting Lender, as applicable,
through the date of such sale and such assignment shall not require the payment
of an assignment fee to the Agent; provided, the Borrower shall have reimbursed
any such Affected Lender for the additional amounts or increased costs that it
is entitled to receive under this Agreement through the date of such sale and
assignment. The foregoing notwithstanding, the Borrower shall not have the right
to obtain a Replacement Lender for an Affected Lender if the Affected Lender
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rescinds its demand for increased costs or additional amounts within fifteen
(15) days following its receipt of the Borrower's notice of intention to replace
such Affected Lender. Furthermore, if the Borrower gives a notice of intention
to replace and does not so replace such Affected Lender within sixty (60) days
thereafter, the Borrower's rights under this Section 2.14 shall terminate with
respect to such Affected Lender, if applicable, the Borrower shall promptly pay
any increased costs or additional amounts demanded by such Affected Lender
pursuant to the applicable provisions hereof.
SECTION III
CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL LOANS. The obligation of the Lenders
to make any Revolving Credit Loans is subject to the satisfaction, on or prior
to the Closing Date, of the following conditions:
(a) The Agent shall have received the following agreements, documents,
certificates and opinions in form and substance satisfactory to the Agent and
duly executed and delivered by the parties thereto:
(i) This Agreement;
(ii) The Revolving Credit Notes;
(iii) The Security Documents;
(iv) The Parent Guarantee;
(v) UCC-1 Financing Statements and UCC-3 Termination Statements;
(vi) Borrowing Base Report as of a date within five (5) Business
Days of the Closing Date;
(vii) Notice of Borrowing or Conversion as of the Closing Date;
(viii) A certificate of the Clerk or an Assistant Clerk of the
Borrower with respect to resolutions of the Board of Directors and/or
Manager(s) authorizing the execution and delivery of the Loan Documents
and identifying the officer(s) authorized to execute, deliver and take all
other actions required under this Agreement, and providing specimen
signatures of such officers, and certifying that neither the Articles of
Organization nor the Bylaws of the Borrower and/or Certificate of
Formation or Operating Agreement has been amended;
(ix) A certificate of the Secretary of State of each Borrower's
jurisdiction of incorporation as to legal existence and good standing of
each Borrower in such state and good standing in Massachusetts (foreign
registration);
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(x) An opinion addressed to the Lenders from Edwards & Angell,
counsel to the Borrower; and
(xi) Such other documents, instruments, opinions and certificates
and completion of such other matters, as the Agent may reasonably deem
necessary or appropriate.
(b) No litigation, arbitration, proceeding or investigation shall be
pending or threatened which questions the validity or legality of the
transactions contemplated by any Loan Document or seeks a restraining order,
injunction or damages in connection therewith, or which, in the judgment of the
Agent, might adversely affect the transactions contemplated hereby or except as
disclosed on EXHIBIT C hereto, might have a materially adverse affect on the
assets, business, financial condition or prospects of the Borrowers.
(c) All necessary filings and recordings against the Collateral shall
have been completed and the Agent's liens on the Collateral shall have been
perfected, as contemplated by the Security Documents.
(d) The Borrower shall have paid to the Agent all fees to be paid
hereunder (including pursuant to Section 2.6 hereof) on or prior to the Closing
Date.
3.2 CONDITIONS PRECEDENT TO ALL LOANS. The obligation of the Lenders to
make any Loan, including the initial Loans, or continue or convert Loans of one
Type to Loans of another Type is further subject to the following conditions:
(a) timely receipt by the Agent of the Notice of Borrowing or Conversion
and a Borrowing Base Report with respect to any Loan;
(b) the representations and warranties contained in Section IV shall be
true and accurate in all material respects on and as of the date of such Notice
of Borrowing and on the effective date of the making, continuation or conversion
of each Loan as though made at and as of each such date (except to the extent
that such representations and warranties expressly relate to an earlier date)
except for changes expressly permitted or contemplated by this Agreement;
(c) no Default shall have occurred and be continuing at the time of, and
immediately after the making of, such requested Loans;
(d) the resolutions referred to in Section 3.1 shall remain in full
force and effect;
(e) no change shall have occurred in any law or regulation or
interpretation thereof that, in the opinion of counsel for any Lender, would
make it illegal or against the policy of any governmental agency or authority
for such Lender to make Loans hereunder; and
(f) The Agent shall have received fully executed employment and
non-competition agreements of all key employees of the Borrower, Parent and
Subsidiaries.
The making, continuation or conversion of each Loan shall be deemed to be a
representation and warranty by the Borrower on the date of the making,
continuation or conversion of such Loan as
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to the accuracy of the facts referred to in subsection (b) of this Section 3.2
and of the satisfaction of all of the conditions set forth in this Section 3.2.
SECTION IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Lenders to enter into this Agreement
and to make Loans hereunder, the Borrower represents and warrants to the Agent
and the Lenders that except as set forth on EXHIBIT C attached hereto:
4.1 ORGANIZATION; QUALIFICATION; BUSINESS.
(a) Each of the Borrower and its Subsidiaries (i) is a corporation
and/or limited liability company duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, (ii) has all
requisite corporate power to own its property and conduct its business as now
conducted and as presently contemplated and (iii) is duly qualified and in good
standing as a foreign corporation and is duly authorized to do business in each
jurisdiction (all of which are listed on EXHIBIT C attached hereto) where the
nature of its properties or business requires such qualification, except where
the failure to be so qualified would not have a Material Adverse Effect on the
business, financial condition, assets or properties of the Borrower or of the
Borrower and its Subsidiaries taken as a whole.
(b) Since the date of the Initial Financial Statements, the Borrower has
continued to engage in substantially the same business as that in which it was
then engaged and is engaged in no unrelated business.
4.2 CORPORATE AUTHORITY. The execution, delivery and performance of the
Loan Documents and the transactions contemplated hereby are within the corporate
and/or liability company power and authority of each Borrower and have been
authorized by all necessary corporate and limited liability company proceedings,
and do not and will not (a) contravene any provision of the charter documents,
by-laws or Operating Agreement of either Borrower or any law, rule or regulation
applicable to the Borrower, (b) contravene any provision of, or constitute an
event of default or event that, but for the requirement that time elapse or
notice be given, or both, would constitute an event of default under, any other
agreement, instrument, order or undertaking binding on either Borrower, or (c)
result in or require the imposition of any Encumbrance on any of the properties,
assets or rights of either Borrower, except in favor of the Agent and the
Lenders.
4.3 VALID OBLIGATIONS. The Loan Documents and all of their respective
terms and provisions are the legal, valid and binding obligations of the
Borrower, enforceable in accordance with their respective terms except as
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally, and except as the
remedy of specific performance or of injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be brought. The
Security Documents have effectively created in favor of the Agent and the
Lenders legal, valid and enforceable security interests in the Collateral and
such security interests are fully perfected first
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priority security interests, except as to Permitted Encumbrances (as
applicable); provided that such representation regarding security interests,
priority and perfection shall not include those items of Collateral in which a
security interest may not be perfected by filing of a UCC-1 Financing Statement.
4.4 CONSENTS OR APPROVALS. The execution, delivery and performance of
the Loan Documents and the transactions contemplated herein do not require any
approval or consent of, or filing or registration with, any governmental or
other agency or authority, or any other Person, except under or as contemplated
by the Security Documents or as required of the Parent pursuant to any
securities regulations.
4.5 TITLE TO PROPERTIES; ABSENCE OF ENCUMBRANCES. Each of the Borrower
and its Subsidiaries has good title to all of the properties, assets and rights
of every name and nature now purported to be owned by it, including, without
limitation, such properties, assets and rights as are reflected in the Initial
Financial Statements (except such properties, assets or rights as have been
disposed of in the ordinary course of business since the date thereof), free
from all Encumbrances except Permitted Encumbrances, and, except as so
disclosed, free from all defects of title that might materially adversely affect
such properties, assets or rights, taken as a whole. All real property owned or
leased by the Borrower is described in EXHIBIT C hereto.
4.6 FINANCIAL STATEMENTS. Each Borrower has furnished to the Lenders the
Parent's consolidated balance sheets as of December 31, 2003, and its own
consolidated statements of income, changes in stockholders' equity and cash flow
for the fiscal year then ended and related footnotes, audited and certified by
the Borrower's Accountants. The Borrower has also furnished to the Lenders the
Parent's unaudited consolidated balance sheet as of June 30, 2004 and
consolidated statement of income for the three months ended June 30, 2004 (the
"INITIAL FINANCIAL STATEMENTS") in each case certified by the principal
financial officer of the Borrower, subject to normal, recurring year-end
adjustments that shall not in the aggregate be material in amount. All such
financial statements were prepared in accordance with GAAP (except, for such
quarterly statements, for the absence of footnotes and subject to year- end
adjustments) applied on a consistent basis throughout the periods specified and
present fairly the financial position of the Parent and its Subsidiaries as of
such dates and the results of the operations of the Parent and its Subsidiaries
for such periods. At the date hereof, the Borrower has no Indebtedness or other
material liabilities, debts or obligations, whether accrued, absolute,
contingent or otherwise, and whether due or to become due, including, but not
limited to, liabilities or obligations on account of taxes or other governmental
charges, that are not set forth on the Initial Financial Statements or on
EXHIBIT C hereto.
4.7 CHANGES. Between the date of the Initial Financial Statements and
the Closing Date, there have been no changes in the assets, liabilities,
financial condition, business or prospects of the Parent, the Borrower or any of
its Subsidiaries other than changes in the ordinary course of business, the
effect of which has not, in the aggregate, had a Material Adverse Effect.
4.8 SOLVENCY. The Borrower has and, after giving effect to the Loans,
will have, assets (both tangible and intangible) having a fair saleable value in
excess of the amount required to pay the probable liability on its then-existing
debts (whether matured or unmatured, liquidated
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or unliquidated, fixed or contingent); the Borrower has and will have access to
adequate capital for the conduct of its business and the discharge of its debts
incurred in connection therewith as such debts mature; the Borrower was not
insolvent immediately prior to the making of the Loans and immediately after
giving effect thereto, the Borrower will not be insolvent. These representations
shall be computed on a consolidated basis.
4.9 DEFAULTS. As of the date of this Agreement, no Default exists.
4.10 TAXES. The Borrower and each Subsidiary has filed all federal, state
and other tax returns required to be filed, and all material taxes, assessments
and other governmental charges due from the Borrower and each Subsidiary have
been fully paid, except for such taxes, assessments or charges that are being
contested in good faith by appropriate proceedings and with respect to which (a)
adequate reserves have been established and are being maintained in accordance
with GAAP and (b) no lien has been filed to secure such taxes, assessments or
charges. All such contests at the date hereof are described on EXHIBIT C hereto.
If the federal and state income tax returns of the Borrower, Parent or any
Subsidiary has been audited or otherwise examined by any federal or state taxing
authority, the Borrower will promptly pay (subject to its rights of appeal) all
taxes, assessments, fines, penalties and interest and notify Agent of said
results together with evidence of payment thereof. The Borrower and each
Subsidiary have established on their books reserves adequate for the payment of
all federal, state and other tax liabilities.
4.11 LITIGATION. There is no litigation, arbitration, proceeding or
investigation pending, or, to the knowledge of the Borrower's or any
Subsidiary's officers, threatened, against the Borrower or any Subsidiary that,
if adversely determined, may reasonably be expected to result in a material
judgment not fully covered by insurance (after giving effect to deductibles),
may reasonably be expected to result in a forfeiture of all or any substantial
part of the property of the Borrower or their Subsidiaries, or may reasonably be
expected to have a Material Adverse Effect.
4.12 SUBSIDIARIES. As of the date of this Agreement, all Special Purpose
Subsidiaries and all other Subsidiaries of the Borrower and Parent are listed on
EXHIBIT C hereto. The Borrower or a Subsidiary of the Borrower is the owner,
free and clear of all liens and encumbrances, of all of the issued and
outstanding stock of each Subsidiary subject only to all outstanding warrants
and pledges to CIT. All shares of such stock have been validly issued and are
fully paid and nonassessable, and no rights to subscribe to any additional
shares have been granted, and no options, warrants or similar rights are
outstanding.
4.13 INVESTMENT COMPANY ACT. Neither the Borrower nor any of its
Subsidiaries is subject to regulation under the Investment Company Act of 1940,
as amended.
4.14 COMPLIANCE. The Borrower has all necessary permits, approvals,
authorizations, consents, licenses, franchises, registrations and other rights
and privileges (including patents, trademarks, trade names and copyrights) to
allow it to own and operate its business without any violation of law or the
rights of others except to the extent that any such violation would not have a
Material Adverse Effect; and the Borrower and each Subsidiary are duly
authorized, qualified and licensed under and in compliance with all applicable
laws,
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regulations, authorizations and orders of public authorities, including, without
limitation, Environmental Laws, except to the extent that any such failure to be
so authorized, qualified, licensed or in compliance would not have a material
adverse effect on the business, financial condition or operation of the Borrower
and its Subsidiaries taken as a whole. The Borrower and each Subsidiary have
performed all obligations required to be performed by it under, and is not in
default under or in violation of, its Certificate of Formation, Certificate of
Incorporation or By-Laws, or any agreement, lease, mortgage, note, bond,
indenture, license or other instrument or undertaking to which it is a party or
by which any of it or any of its properties are bound, except for violations
none of which, either individually or in the aggregate, would have any Material
Adverse Effect.
4.15 ERISA. The Borrower and each of its Affiliates are in compliance in
all material respects with ERISA and the provisions of the Code applicable to
the Pension Plans; neither the Borrower nor any of its Affiliates have engaged
in a Prohibited Transaction which would subject the Borrower, any of its
Affiliates or any Pension Plan to a material tax or penalty imposed on a
Prohibited Transaction; no Pension Plan has incurred any "accumulated funding
deficiency" (as defined in ERISA); except as set forth in the Initial Financial
Statements, the aggregate fair market value of all assets of the Pension Plans
which are single-employer plans is at least equal to the aggregate present value
of all accrued benefits under such Pension Plans, both as determined in the most
recent actuarial reports for such Pension Plans using the actuarial assumptions
used for funding purposes therein; neither the Borrower nor any of its
Affiliates has incurred any liability to the Pension Benefit Guaranty
Corporation over and above premiums required by law; and neither the Borrower
nor any of its Affiliates has terminated any Pension Plan in a manner which
could result in the imposition of a lien on the property of the Borrower or any
of its Affiliates.
4.16 ENVIRONMENTAL MATTERS.
(a) The Borrower and each of its Subsidiaries have obtained all permits,
licenses and other authorizations which are required under all Environmental
Laws, except to the extent failure to have any such permit, license or
authorization would not have a Material Adverse Effect. The Borrower and each of
its Subsidiaries are in compliance with the terms and conditions of all such
permits, licenses and authorizations, and are also in compliance with all
applicable orders, decrees, judgments and injunctions, issued, entered,
promulgated or approved under any Environmental Law, except to the extent
failure to comply would not have a Material Adverse Effect.
(b) No written notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation or review is pending or, to the
best of the Borrower's knowledge, threatened by any governmental or other entity
with respect to any alleged failure by the Borrower or any of its Subsidiaries
to have any permit, license or authorization required in connection with the
conduct of its business or to comply with any Environmental Laws.
(c) No material oral or written notification of a release of a Hazardous
Material has been filed by or on behalf of the Borrower or any of its
Subsidiaries and no property now or previously owned, leased or used by the
Borrower or any of its Subsidiaries is listed or to the
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best of Borrower's knowledge proposed for listing on the National Priorities
List under the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, or on any similar state list of sites requiring
investigation or clean-up.
(d) There are no recorded liens or Encumbrances arising under or
pursuant to any Environmental Laws on any of the real property or properties
owned, leased or used by the Borrower or any of its Subsidiaries and no
governmental actions have been taken or, to the best of the Borrower's
knowledge, are in process which could subject any of such properties to such
liens or Encumbrances or, as a result of which the Borrower or any of its
Subsidiaries would be required to place any notice or restriction relating to
the presence of Hazardous Materials at any property owned by it in any deed to
such property.
4.17 RESTRICTIONS ON THE BORROWER. The Borrower is not party to or bound
by any contract, agreement or instrument, nor subject to any charter or other
corporate restriction which will, under current or foreseeable conditions, have
a Material Adverse Effect.
4.18 LABOR RELATIONS. There is (i) no unfair labor practice complaint
pending against the Borrower or any of its Subsidiaries or, to the best
knowledge of the Borrower, threatened, before the National Labor Relations
Board, and no grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against the Borrower or any of its
Subsidiaries or, to the best knowledge of the Borrower, threatened, except for
such complaints, grievances and arbitration proceedings which, if adversely
decided, would not have a Material Adverse Effect, (ii) no strike, labor
dispute, slowdown or stoppage pending against the Borrower or any of its
Subsidiaries or, to the best knowledge of the Borrower, threatened against the
Borrower or any of its Subsidiaries, except for any such labor action as would
not have a Material Adverse Effect, and (iii) to the best knowledge of the
Borrower, no union representation question existing with respect to the
employees of the Borrower or any of its Subsidiaries and, to the best knowledge
of the Borrower, no union organizing activities are taking place, except for any
such question or activities as would not have a Material Adverse Effect.
4.19 MARGIN RULES. The Borrower does not own or have any present
intention of purchasing or carrying, and no portion of any Loan shall be used
for purchasing or carrying, any "margin security" or "margin stock" as such
terms are used in Regulations G, U or X of the Board of Governor's of the
Federal Reserve System.
4.20 DISCLOSURE. No representation or warranty made by the Borrower in
any Loan Document and no document or information furnished to the Lenders by or
on behalf of or at the request of the Borrower in connection with any of the
transactions contemplated by the Loan Documents contains any untrue statement of
a material fact or omits to state any material fact necessary in order to make
the statements contained therein taken as a whole, not misleading in light of
the circumstances in which they are made. All projections provided to the Agent
and the Lenders are prepared based on estimates and assumptions, which the
Borrower believes to be reasonable and fair in light of current conditions and
current facts known to the Borrower and, as of the Closing Date, reflect the
Borrower's good faith and reasonable estimates of the future financial
performance of the Borrower for the period set forth therein. Such projections
are not
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facts and are not a guaranty of future performance, and actual results may
differ from the projections.
SECTION V
SECTION V AFFIRMATIVE COVENANTS
So long as the Lenders have any obligation to lend hereunder or any Loan
or other Obligation remains outstanding, the Borrower covenants as follows:
5.1 FINANCIAL STATEMENTS. The Borrower shall furnish to the Lenders:
(a) as soon as available to the Borrower, but in any event within 90
days after the end of each of fiscal year, the Parent's consolidated and
consolidating balance sheets as of the end of, and related consolidated
statements of income and retained earnings and consolidated statement of cash
flow for, such year, audited and certified by the Borrower's Accountants in the
case of such consolidated statements, and certified by the chief financial
officer of the Borrower in the case of such consolidating statements; and,
concurrently with such financial statements, a copy of the Borrower's
Accountants management report and a written statement by the Borrower's
Accountants that, in the making of the audit necessary for their report and
opinion upon such financial statements they have obtained no knowledge of any
Default or, if in the opinion of such accountants any such Default exists, they
shall disclose in such written statement the nature and status thereof and
provided that in issuing such statement the Borrower's Accountants shall not be
required to go beyond the scope of their audit;
(b) as soon as available to the Borrower, but in any event within 45
days after the end of each quarter, the Parent's consolidated balance sheet as
of the end of, and related consolidated statements of income, retained earnings
and cash flow for, the quarter then ended and portion of the year then ended,
certified by a Responsible Officer of the Borrower, subject to normal, recurring
year-end adjustments that shall not in the aggregate be material in amount;
(c) as soon as available, but in any event on a weekly basis, a
Borrowing Base Report, together with such other information regarding Eligible
Lease Receivables as the Agent may require;
(d) as soon as available, but in any event within 30 days after the
first day of each fiscal year, the Parent's and the Borrower's projections for
such fiscal year, prepared on a monthly basis and including consolidated balance
sheets and statements of income, retained earnings and cash flows;
(e) concurrently with the delivery of each financial statement pursuant
to subsections (a) and (b) of this Section 5.1, a report in substantially the
form of EXHIBIT D hereto signed on behalf of the Borrower by a Responsible
Officer;
(f) promptly after the receipt thereof by the Parent or the Borrower,
copies of any reports (including any so-called management letters) submitted to
the Parent or the Borrower by independent public accountants in connection with
any annual or interim review of the accounts of the Parent or the Borrower made
by such accountants;
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(g) promptly after the same are delivered to its stockholders or the
Securities and Exchange Commission, copies of all proxy statements, financial
statements and reports as the Parent or the Borrower shall send to its
stockholders or as the Parent or the Borrower may file with the Securities and
Exchange Commission or any governmental authority at any time having
jurisdiction over the Parent or the Borrower or their Subsidiaries;
(h) at least 30 days prior to the date any amendments or modifications
are made to the agreements and other instruments evidencing Indebtedness in
excess of $100,000.00 for borrowed money of the Borrower (other than
Obligations) which is not Subordinated Debt, notification setting forth in
detail the proposed amendments or modifications;
(i) promptly after the date on which the aggregate amount of Receivables
due from any individual account debtor exceeds $1,000,000.00, a detailed
breakdown of the obligations due from such account debtor in form satisfactory
to the Agent; and
(j) from time to time, such other financial data and information about
the Parent, the Borrower or their Subsidiaries (including, without limitation, a
report in substantially the form of EXHIBIT D hereto) as the Agent or the
Lenders may reasonably request.
5.2 CONDUCT OF BUSINESS. The Borrower and each of its Subsidiaries
shall:
(a) duly observe and comply in all material respects with all applicable
laws, regulations, decrees, orders, judgments and valid requirements of any
governmental authorities relative to its corporate existence, rights and
franchises, to the conduct of its business and to its property and assets
(including without limitation all Environmental Laws and ERISA), and shall
maintain and keep in full force and effect and comply with all licenses and
permits necessary in any material respect to the proper conduct of its business;
(b) maintain its corporate existence and remain or engage substantially
in the same business as that in which it is now engaged and in no unrelated
business.
5.3 MAINTENANCE AND INSURANCE. The Borrower shall maintain its
properties in good repair, working order and condition as required for the
normal conduct of its business. The Borrower shall maintain, or cause its
lessees to maintain, with responsible insurance companies such insurance on such
of its properties, in such amounts and against such risks as are customarily
maintained by similar businesses in the micro leasing industry; PROVIDED, that
the Borrower may continue to self-insure Equipment in the manner in which it is
currently conducting its business; and PROVIDED, FURTHER, that the Borrower
shall (x) not materially change the manner in which it self-insures Equipment
without the prior written consent of the Agent; or (y) file with the Agent upon
the request of the Agent a detailed list of the insurance then in effect,
stating, as applicable, the names of the insurance companies, the amounts and
rates of the insurance, dates of expiration thereof and the properties and risks
covered thereby each naming the Agent as "Mortgagee" and "Loss Payee" together
with a Lender's Loss Payable Endorsement; and (z) within 45 days after notice in
writing from the Agent, obtain such additional insurance as the Agent may
reasonably request including, without limitation, business interruption
coverages and general and product liability coverages naming the Agent as an
"additional insured".
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5.4 TAXES. The Borrower shall pay or cause to be paid all taxes,
assessments or governmental charges on or against it or any of its Subsidiaries
or its or their properties on or prior to the time when they become due; except
for any tax, assessment or charge that is being contested in good faith by
appropriate proceedings and with respect to which adequate reserves have been
established and are being maintained in accordance with GAAP and so long as no
Encumbrance shall have been filed to secure such tax, assessment or charge.
5.5 INSPECTION. The Borrower shall permit the Agent, any Lender and
their designees, at any reasonable time and at reasonable intervals of time, and
upon reasonable notice (or if a Default shall have occurred and is continuing,
at any time and without prior notice), to (i) visit and inspect the properties
of the Borrower and its Subsidiaries, (ii) examine and make copies of and take
abstracts from the books and records of the Borrower and its Subsidiaries, and
(iii) discuss the affairs, finances and accounts of the Borrower and its
Subsidiaries with their appropriate officers and (following the occurrence and
during the continuance of a Default hereunder) accountants, all at the
reasonable expense of the Borrower. Without limiting the generality of the
foregoing, the Borrower will permit periodic reviews (as determined by the
Agent) of the books and records of the Borrower and its Subsidiaries to be
carried out by the Agent's commercial finance examiners, provided that in the
absence of a Default or unless requested or required by regulatory authorities
or by official policy of any Lender, and the Agent may, in its sole discretion,
in lieu of such reviews by its own commercial finance examiners accept reports
of examinations of such books and records performed by commercial finance
examiners acting on behalf of other lenders to the Borrower to minimize
examination expense. The Borrower shall also permit the Agent to arrange for
verification of Eligible Lease Receivables, under reasonable procedures,
directly with any account debtors or by other methods. Absent an Event of
Default, the reimbursable expenses referred to above in this Section 5.5 shall
be limited only to those incurred by the Agent. In addition to the Collateral
Management Fee, the Borrower shall pay to the Agent Examination Fees of $850.00
per day per examiner plus out-of-pocket expenses. Absent an Event of Default,
said examination shall be limited to once annually and may be conducted by Agent
or other professionals retained by Agent.
5.6 MAINTENANCE OF BOOKS AND RECORDS. The Borrower and each of its
Subsidiaries shall keep adequate books and records of account, in which true and
complete entries will be made reflecting all of its business and financial
transactions, and such entries will be made in accordance with GAAP consistently
applied and applicable law.
5.7 USE OF PROCEEDS.
(a) The Borrower will use the proceeds of Loans solely to finance or
refinance Receivables arising from Leases, Installment Finance Contracts, for
portfolio purchases, Rental Contracts for the working capital needs of the
Borrower and for ongoing general corporate purposes. Initial proceeds of the
Loans may be applied to the repayment of the existing senior secured lender
debt.
(b) No portion of any Loan shall be used for the "purpose of purchasing
or carrying" any "margin stock" or "margin security" as such terms are used in
Regulations G, U and X of the Board of Governors of the Federal Reserve System,
or otherwise in violation of such regulations.
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5.8 FURTHER ASSURANCES. At any time and from time to time the Borrower
shall, and shall cause each of its Subsidiaries to, execute and deliver such
further instruments and take such further action as may reasonably be requested
by the Agent to effect the purposes of the Loan Documents.
5.9 NOTIFICATION REQUIREMENTS. The Borrower shall furnish to the Agent:
(a) immediately upon becoming aware of the existence of any condition or
event that constitutes a Default, written notice thereof specifying the nature
and duration thereof and the action being or proposed to be taken with respect
thereto;
(b) promptly upon becoming aware of any litigation seeking damages in
excess of $250,000 or of any investigative proceedings by a governmental agency
or authority commenced or threatened against the Borrower or any of its
Subsidiaries of which they have notice, the outcome of which would or might have
a Materially Adverse Effect, written notice thereof and the action being or
proposed to be taken with respect thereto;
(c) promptly upon becoming aware of any investigative proceedings by a
governmental agency or authority commenced or threatened against the Borrower or
any of its Subsidiaries regarding any potential material violation of
Environmental Laws or any spill, release, discharge or disposal of any Hazardous
Material and promptly after receipt of any notice of the type referred to in
Section 4.16, written notice thereof (together with a copy of any such notice)
and the action being or proposed to be taken with respect thereto; and
(d) promptly after any occurrence or after becoming aware of any
condition affecting the Borrower or any Subsidiary which could reasonably be
expected to result in a Material Adverse Effect, written notice thereof.
5.10 ERISA REPORTS.
(a) Each Plan shall comply in all material respects with ERISA and the
Code, except to the extent failure to comply in any instance would not have a
material adverse effect on the business, financial condition or operations of
the Borrower and its Subsidiaries taken as a whole.
(b) With respect to any Plan, the Borrower shall, or shall cause its
ERISA Affiliates to, furnish to the Agent promptly (i) as soon as possible and
in any event within 10 days after the Borrower or any of its ERISA Affiliates
knows that any ERISA Event has occurred or is expected to occur, a statement of
the chief financial officer of the Borrower describing such ERISA Event,
including copies of any notice concerning such ERISA Event received from the
PBGC, a plan administrator, or from a Multiemployer Plan sponsor, and the
action, if any, the Borrower or such ERISA Affiliate proposes to take with
respect thereto; and (ii) promptly after filing thereof, a copy of the annual
report of each Pension Plan (Form 5500 or comparable form) required to be filed
with the IRS and/or the Department of Labor. Promptly after the adoption of any
Pension Plan, the Borrower shall notify the Agent of such adoption.
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5.11 ENVIRONMENTAL COMPLIANCE.
(a) The Borrower and its Subsidiaries will comply in all material
respects with all applicable Environmental Laws in all jurisdictions in which
any of them operates now or in the future, and the Borrower and its Subsidiaries
will comply in all material respects with all such Environmental Laws that may
in the future be applicable to the Borrower's or any Subsidiary's business,
properties and assets.
(b) If the Borrower or any Subsidiary shall (i) receive notice that any
material violation of any Environmental Law may have been committed or is about
to be committed by the Borrower or any Subsidiary, (ii) receive notice that any
administrative or judicial complaint or order has been filed or is about to be
filed against the Borrower or any Subsidiary alleging a material violation of
any Environmental Law requiring the Borrower or any Subsidiary to take any
action in connection with the release of Hazardous Materials into the
environment or (iii) receive any notice from a federal, state or local
government agency or private party alleging that the Borrower or any Subsidiary
may be liable or responsible for any material amount of costs associated with a
response to or cleanup of a release of Hazardous Materials into the environment
or any damages caused thereby, the Borrower or such Subsidiary shall provide the
Agent with a copy of such notice within five (5) days after the Borrower or such
Subsidiary's receipt thereof. Within fifteen (15) days after the Borrower or any
Subsidiary has learned of the enactment or promulgation of any Environmental Law
which may result in any Material Adverse Effect, the Borrower or such Subsidiary
shall provide the Agent with notice thereof.
5.12 LENDER'S CONSULTANT. The Lender may retain a Collateral Management
Agent to monitor and establish: (i) a review of (A) any tax refund issues, (B)
establish collateral monitoring procedures with respect to the maintenance of
Collateral Lease reviews and (ii) the performance of field examinations and
monthly validation of financial statements. The Borrower shall pay all fees
therefore as set forth herein.
5.13 USA PATRIOT ACT. The Borrower and Parent warrants, represents and
covenants that they: (i) are familiar with, and comply with, the anti-money
laundering laws and guidelines ("AML Policies") of the Untied States of America;
(ii) acknowledge that your transactions with residents of the Untied States are
also subject to the AML Policies of the United States, including the USA Patriot
Act; (iii) will make all reasonable efforts to comply with all applicable AML
Policies, including, if appropriate, the USA Patriot Act; (iv) acknowledge that
our performance hereunder is subject to Lender's compliance with all applicable
AML Policies, including the USA Patriot Act; and (v) will provide all such
information about your ownership, officers, directors and business structure as
we may require.
5.14 IRON MOUNTAIN AGREEMENT. At all times during which any Loan or any
Obligation remains outstanding and unpaid, the Borrower will, at Borrowers' sole
cost and expense, maintain in full force and effect the Customer Agreement by
and between Iron Mountain Records Management, Inc. and the Parent dated March
26, 2003, as same has been amended by the Fourth Addendum to Customer Agreement
dated on or about the date hereof wherein among other terms the Agent has been
joined as a party thereto.
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SECTION VI
FINANCIAL COVENANTS
So long as any Loan or other Obligation remains outstanding or the Lenders
have any obligation to make any Loan hereunder, the Borrower covenants as
follows:
6.1 CONSOLIDATED TANGIBLE CAPITAL FUNDS. The Borrower shall maintain
Consolidated Tangible Capital funds of $42,500,000.00 during the entire term
that this Agreement shall be in full force and effect and/or any of the
Obligations remain outstanding and unpaid.
6.2 BAD DEBT ALLOWANCE. The Borrower shall at all times maintain a
balance sheet allowance for bad debt of the Parent and its Subsidiaries,
including the Borrower, of at least 9% of Gross Lease Installments.
6.3 LIMITS OF DEALER BUSINESS CONCENTRATIONS. Commencing 180 days after
the Closing Date and continuing until all Obligations are paid, no single Dealer
shall generate more than twenty (20%) percent of the then outstanding Eligible
Leases.
6.4 MAXIMUM LEVERAGE RATIO. The Borrower's Maximum Leverage Ratio shall
not exceed 3.0:1.0 during the entire term that this agreement shall be in full
force and effect and/or any of the Obligations remain outstanding and unpaid.
SECTION VII
NEGATIVE COVENANTS
So long as any Loan or other Obligation remains outstanding or the Lenders
have any obligation to make any Loan hereunder, the Borrower covenants as
follows:
7.1 INDEBTEDNESS. Neither the Borrower nor any of its Subsidiaries shall
create, incur, assume, guarantee or be or remain liable with respect to any
Indebtedness other than the following:
(a) Obligations;
(b) Indebtedness existing as of the date of this Agreement and disclosed
on EXHIBIT C hereto;
(c) Indebtedness for taxes, assessments or governmental charges to the
extent that payment therefor shall at the time not be required to be made in
accordance with Section 5.4;
(d) current liabilities on open account for the purchase price of
services, materials and supplies incurred by the Borrower in the ordinary course
of business (not as a result of borrowing), so long as all of such open account
Indebtedness shall be promptly paid and discharged when due or in conformity
with customary trade terms and practices, except for any such open account
Indebtedness which is being contested in good faith by the Borrower, as to
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which adequate reserves required by GAAP have been established and are being
maintained and as to which no Encumbrance has been placed on any property of the
Borrower or any of its Subsidiaries;
(e) Guarantees permitted under Section 7.2 hereof;
(f) Subordinated Debt;
(g) Accrued payroll and severance pay;
(h) intra-Borrower debt incurred in the ordinary course of business; and
(i) purchase money debt and capital leases incurred in the ordinary
course of business.
7.2 CONTINGENT LIABILITIES. Neither the Borrower nor any of its
Subsidiaries shall create, incur, assume, guarantee or be or remain liable with
respect to any Guarantees other than (i) Guarantees existing on the date of this
Agreement and disclosed on EXHIBIT C hereto, and (ii) Guarantees resulting from
the endorsement of negotiable instruments for deposit or collection in the
ordinary course of business.
7.3 ENCUMBRANCES. Neither the Borrower nor any of its Subsidiaries shall
create, incur, assume or suffer to exist any mortgage, pledge, security
interest, lien or other charge or encumbrance, including the lien or retained
security title of a conditional vendor upon or with respect to any of its
property or assets ("ENCUMBRANCES"), or assign or otherwise convey any right to
receive income, including the sale or discount of accounts receivable with or
without recourse, except the following ("PERMITTED ENCUMBRANCES"):
(a) Encumbrances in favor of the Agent or any of the Lenders to secure
Obligations;
(b) Encumbrances existing as of the date of this Agreement and disclosed
in EXHIBIT C hereto;
(c) liens for taxes, fees, assessments and other governmental charges to
the extent that payment of the same may be postponed or is not required in
accordance with the provisions of Section 5.4;
(d) landlords' and lessors' liens in respect of rent not in default or
liens in respect of pledges or deposits under workmen's compensation,
unemployment insurance, social security laws, or similar legislation (other than
ERISA) or in connection with appeal and similar bonds incidental to litigation;
mechanics', warehouseman's, laborers' and materialmen's and similar liens, if
the obligations secured by such liens are not then delinquent or are being
contested in good faith by appropriate proceedings, with adequate reserves
maintained in accordance with GAAP; deposits, pledges and other liens securing
the performance of bids, tenders, contracts (other than for the payment of
money); and deposits, pledges and other liens securing statutory obligations or
surety, indemnity, performance, or other similar bonds incidental to the conduct
of the Borrower's or a Subsidiary's business in the ordinary course and that do
not in the aggregate
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materially detract from the value of its property or materially impair the use
thereof in the operation of its business;
(e) judgment liens securing judgments unless (i) such liens are not
fully covered by insurance, and shall not have been in existence for a period
longer than 10 days after the creation thereof or, if a stay of execution shall
have been obtained, for a period longer than 10 days after the expiration of
such stay, or (ii) do not give rise to an Event of Default under Section 8.1
(f) rights of lessors under capital leases;
(g) easements, rights of way, restrictions and other similar charges or
Encumbrances relating to real property and not interfering in a material way
with the ordinary conduct of the Borrower' business or arising in the ordinary
course of business and not securing monetary obligations;
(h) liens constituting a renewal, extension or replacement of any
Permitted Encumbrance; or
(i) restrictions under federal and state securities laws regarding the
transfer of securities.
7.4 SPECIAL PURPOSE SUBSIDIARIES. It is specifically understood and
agreed that without the written authority of CIT, the establishment of Special
Purpose Subsidiaries of the Parent or Borrower for the purposes of the
disposition or transfer of assets for purposes of securitization of collateral
pools or other assets shall not be permitted during the first eighteen (18)
months after the Closing Date. Thereafter, upon advance written notice to Agent,
absent an Event of Default and subject to the provisions of section 7.5, the
Parent or Borrower may create a Special Purpose Subsidiary upon the following
terms and conditions:
(a) The purpose of said Subsidiary shall be for the sole purpose of the
securitization and sale of equipment portfolios.
(b) Copies of all constituent documents, transactional documents and
other documents reasonably requested by Agent shall be promptly delivered to
Agent.
7.5 MERGER; CONSOLIDATION; SALE OR LEASE OF ASSETS. Without the prior
written consent of the Agent, neither the Borrower nor any of its Subsidiaries
shall liquidate, merge or consolidate into or with any other person or entity,
or sell, lease or otherwise dispose of any assets or properties, other than the
disposition of scrap, waste and obsolete or unusable items and Qualified
Investments, in each case in the ordinary course of business. The merger of
Borrower Subsidiaries (if any) with Borrower shall be permitted. Sales of
equipment and lease portofolios shall be upon the following terms and
conditions:
(a) Said portfolios sales shall be only to Dealers that originated the
leases relative to the equipment in said portfolios.
(b) 100% of the proceeds of any such sale shall be applied to the
repayment of the Obligations.
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(c) The proceeds of such Sales in any given calendar year shall not
exceed $5,000,000.00 in the aggregate without the prior written consent of the
Agent.
(d) No repayment of Revolving Credit Notes from the proceeds of any such
sale shall permanently reduce the Revolving Credit Loan availability.
7.6 SUBSIDIARY STOCK; GUARANTEES. The Borrower shall not permit any of
its Subsidiaries to issue any additional shares of its capital stock or other
equity securities, any options therefor or any securities convertible thereto
other than to the Borrower. Except for existing warrants, neither the Borrower
nor any of its Subsidiaries shall sell, transfer or otherwise dispose of any of
the capital stock or other equity securities of a Subsidiary, except to the
Borrower or any of its wholly-owned Subsidiaries. The Borrower shall not create
or acquire any Subsidiary, except a Special Purpose Subsidiary, unless such
Subsidiary shall execute and deliver a Subsidiary Guarantee to the Agent.
7.7 RESTRICTED PAYMENTS. Neither the Borrower nor any of its
Subsidiaries shall pay, make, declare or authorize any Restricted Payment other
than:
(a) compensation paid to employees, officers and directors in the
ordinary course of business and consistent with prudent business practices
including severance pay and bonuses approved by the Board of Directors and
repurchase of employee stock in the event of the death or disability not to
exceed $100,000.00 per employee;
(b) dividends payable solely in common stock;
(c) dividends paid by any Subsidiary to the Borrower;
(d) cash dividends paid by the Borrower to the Parent not to exceed, in
the aggregate in any fiscal year, an amount equal to fifty percent (50%) of
Borrower's consolidated net income for the immediately preceding fiscal year,
PROVIDED that both at the time such cash dividend is declared or paid, and after
giving effect to the payment thereof, no Default shall have occurred and be
continuing.
7.8 PAYMENTS ON SUBORDINATED DEBT. The Borrower shall not make any
prepayment of principal or interest on, or any other payments in respect of
Subordinated Debt (as said debt has been amended) but may make regularly
scheduled payments of cash interest and principal payments on the Subordinated
Debt, until the Obligations have been paid in full. In the Event of Default
under any of the Loan Documents, such payments shall immediately terminate.
PROVIDED that immediately prior to making any such payment and after giving
effect thereto there shall not have occurred and be continuing any Default
Provided however, the AMPAC Subordinated Debt repayment shall be governed by the
terms of the $2,000,000.00 Subordinated Promissory Note dated as of June 10,
2004.
7.9 INVESTMENTS; PURCHASES OF ASSETS. Neither the Borrower nor any of
its Subsidiaries shall make or maintain any Investments or purchase or otherwise
acquire any material amount of assets other than:
(a) Investments existing on the date hereof in Subsidiaries;
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(b) Qualified Investments;
(c) Capital Expenditures;
(d) purchases of Equipment, Installment Finance Contracts, Leases,
security monitoring agreements and inventory in the ordinary course of business;
(e) normal trade credit extended in the ordinary course of business and
consistent with prudent business practice; and
(f) those acquisitions permitted under Section 7.4 herein.
7.10 ERISA COMPLIANCE. Neither the Borrower nor any of its ERISA
Affiliates nor any Plan shall (i) engage in any Prohibited Transaction which
would have a material adverse effect on the business, financial condition or
operations of the Borrower and its Subsidiaries taken as a whole, (ii) incur any
"accumulated funding deficiency" (within the meaning of Section 412(a) of the
Code and Section 302 of ERISA), whether or not waived, (iii) permit to exist any
material amount of "unfunded benefit liabilities" (within the meaning of Section
4001(a)(18) of ERISA), (iv) terminate any Pension Plan in a manner which could
result in the imposition of a lien on any property of the Borrower or any of its
Subsidiaries, (v) fail to make any required contribution to any Multiemployer
Plan or (vi) completely or partially withdraw from a Multiemployer Plan if such
complete or partial withdrawal will result in any material withdrawal liability
under Title IV of ERISA.
7.11 TRANSACTIONS WITH AFFILIATES. The Borrower will not, and will not
permit any of its Subsidiaries to, directly or indirectly, enter into any
purchase, sale, lease or other transaction with any Affiliate except (i)
transactions in the ordinary course of business on terms that are no less
favorable to the Borrower than those which might be obtained at the time in a
comparable arm's-length transaction with any Person who is not an Affiliate and
(ii) employment contracts with senior management of the Borrower entered into in
the ordinary course of business and consistent with prudent business practices.
Notwithstanding the foregoing, the Borrower will not, and will not permit any
Subsidiary to, directly or indirectly, pay any management, consulting, overhead,
indemnity, guarantee or other similar fee or charge to any Affiliate.
7.12 FISCAL YEAR. The Borrower and its Subsidiaries shall not change
their fiscal years without the prior written consent of the Agent.
7.13 UNDERWRITING PROCEDURES. The Borrower shall not make any material
change in its underwriting and credit approval procedures without the prior
written consent of the Majority Lenders.
7.14 AUTHORIZATION TO FILE FINANCING STATEMENTS. The Borrower Parent and
Subsidiaries hereby irrevocably authorize the Agent at any time and from time to
time during which any Loans are outstanding, to file, in any filing office in
any Uniform Commercial Code jurisdiction where the filing of an initial
financing statement is necessary or desirable to perfect the interests of the
Agent or the Lenders in the collateral for the Obligations and for the
obligations of the Borrower or Parent in respect of the Parent Guarantee, any
initial financing
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statements and amendments thereto that (a) indicate the collateral (i) as all
assets of the Borrower or Parent or words of similar effect, regardless of
whether any particularly asset comprised in the collateral falls within the
scope of Article 9 of the Uniform Commercial Code of the state of such
jurisdiction, or (ii) as being of an equal or lesser scope or with greater
detail, and (b) provide any other information required by part 5 of Article 9 of
the Uniform Commercial Code of the state of such other jurisdiction for the
sufficiency or filing office acceptance of any financing statement or amendment,
including whether each of the Borrower or Parent is in an organization, the type
of organization and any organization identification numbers issued to either of
the Borrower or Parent. Each of the Borrower or Parent agree to furnish any such
information to the Agent as soon as reasonably practicable upon the Agent's
request. Each of the Borrower or Parent also ratifies its authorization for the
Agent to have filed in any Uniform Commercial Code jurisdiction any like initial
financing statements or amendments thereto if filed prior to the date hereof.
SECTION VIII
DEFAULTS
8.1 EVENTS OF DEFAULT. There shall be an Event of Default hereunder if
any of the following events occurs:
(a) the Borrower or the Parent shall fail to pay any principal of any
Loan, or any interest, fees or other amounts owing under any Loan Document or in
respect of any Obligation when the same shall become due and payable, whether at
maturity or at any accelerated date of maturity or at any other date fixed for
payment;
(b) the Borrower or its Subsidiaries shall fail to perform or comply
with any term, covenant or agreement applicable to it contained in Sections 5.1,
5.2, 5.6, 5.7, 5.9, 5.11, 5.12, 6 and 7 of this Agreement. Provided however,
with respect to any default under Sections 5.1(d), 5.5, 5.12 and 6.3, the
Borrower shall have seven (7) business days to remedy such default.
(c) the Borrower or its Subsidiaries shall fail to perform any term,
covenant or agreement (other than as specified in subsections 8.1(a) or (b)
hereof) contained in this Agreement or any other Loan Document and such default
shall continue for 30 days; or
(d) any representation or warranty of the Borrower or its Subsidiaries
made in this Agreement or any other Loan Document or in any certificate
delivered hereunder or thereunder shall prove to have been false in any material
respect upon the date when made deemed to have been made; or
(e) unless deferred under Section 7.1(c) or 7.1(d) herein, the Borrower,
the Parent or any of their Subsidiaries shall fail to pay when due (after any
applicable period of grace) any amount payable under any Indebtedness exceeding
$100,000.00 in principal amount or under any agreement for the use of real or
personal property requiring aggregate payments in excess of $100,000.00 in any
twelve month period, or fail to observe or perform any term, covenant or
agreement evidencing or securing such Indebtedness or relating to such agreement
for the use of real or personal property; or
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(f) the Borrower, the Parent or any of its Subsidiaries shall (i) apply
for or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee, liquidator or similar official of itself or of all
or a substantial part of its property, (ii) be generally not paying its debts as
such debts become due, (iii) make a general assignment for the benefit of its
creditors, (iv) commence a voluntary case under the United States Bankruptcy
Code (as now or hereafter in effect), (v) take any action or commence any case
or proceeding under any law relating to bankruptcy, insolvency, reorganization,
winding-up or composition or adjustment of debts, or any other law providing for
the relief of debtors, (vi) fail to contest in a timely or appropriate manner,
or acquiesce in writing to, any petition filed against it in an involuntary case
under the United States Bankruptcy Code or other law, (vii) take any action
under the laws of its jurisdiction of incorporation or organization similar to
any of the foregoing, or (viii) take any corporate action for the purpose of
effecting any of the foregoing; or
(g) a proceeding or case shall be commenced against the Borrower, the
Parent or any of its Subsidiaries, without the application or consent of the
Borrower, the Parent or such Subsidiary in any court or competent jurisdiction,
seeking (i) the liquidation, reorganization, dissolution, winding up, or
composition or readjustment of its debts, (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like of it or of all or any substantial
part of its assets, or (iii) similar relief in respect of it, under any law
relating to bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debts or any other law providing for the relief of debtors, and
such proceeding or case shall continue undismissed, or unstayed and in effect,
for a period of 30 days; or an order for relief shall be entered in an
involuntary case under the Federal Bankruptcy Code, against the Borrower, the
Parent or such Subsidiary; or action under the laws of the jurisdiction of
incorporation or organization of the Borrower, the Parent or any of its
Subsidiaries similar to any of the foregoing shall be taken with respect to the
Borrower, the Parent or such Subsidiary and shall continue unstayed and in
effect for a period of 30 days; or
(h) a judgment or order for the payment of money shall be entered
against the Borrower or any of its Subsidiaries by any court, or a warrant of
attachment or execution or similar process shall be issued or levied against
property of the Borrower or such Subsidiary, that in the aggregate exceeds
$500,000.00 in value, the payment of which is not fully covered by insurance in
excess of any deductibles not exceeding $5,000.00 ($500,000.00 in the case of
Directors' and Officers' liability insurance coverage) in the aggregate, and
such judgment, order, warrant or process shall continue undischarged or unstayed
for 30 days; or
(i) the Borrower or any Affiliate shall fail to pay when due any
material amount that they shall have become liable to pay to the PBGC or to a
Pension Plan under Title IV of ERISA, unless such liability is being contested
in good faith by appropriate proceedings, the Borrower or the Affiliate, as the
case may be, has established and is maintaining adequate reserves in accordance
with GAAP and no lien shall have been filed to secure such liability; or the
PBGC shall institute proceedings under Title IV of ERISA to terminate or to
cause a trustee to be appointed to administer any such Pension Plan or Pension
Plans; or a condition shall exist by reason of which the PBGC would be entitled
to obtain a decree adjudicating that any such Pension Plan or Pension Plans must
be terminated; or
(j) any of the Loan Documents (including without limitation any Guaranty
executed pursuant to the Loan) shall be cancelled, terminated, revoked or
rescinded otherwise then in
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accordance with the express terms thereof or with the express prior written
agreement, consent or approval of the Lenders, or any action at law or in equity
or other legal proceeding to cancel, revoke or rescind any Loan Document shall
be commenced by or on behalf of the Borrower, or any court or other governmental
or regulatory authority or agency of competent jurisdiction shall make a
determination that, or shall issue a judgment, order, decree or ruling to the
effect that, any one or more of the Loan Documents is illegal, invalid or
unenforceable in accordance with the terms thereof; or
(k) any failure of Richard Latour to be at all times the duly elected
and acting chief executive officer of TimePayment Corp. LLC, the Parent and
Executive Vice President of Leasecomm Corporation or the imposition of any
material restriction on his right to exercise the powers and authority of such
office and to manage the business of the Borrower in a manner consistent with
past practices, unless, in the event of his ceasing to act as such chief
executive officer, a replacement reasonably acceptable to the Agent is appointed
within 60 days of such cessation; or
(l) any failure of James Jackson to be at all times the duly elected and
chief financial officer of the Borrower and Parent or the imposition of any
material restriction on his right to exercise the powers and authority of such
office and to manage the financial affairs of the Borrower in a manner
consistent with past practices, unless, in the event of his ceasing to act as
such chief financial officer, a replacement reasonably acceptable to the Agent
is appointed within 60 days of such cessation;
(m) more than one-third of the members of the Board of Directors of the
Parent or of the Borrower at the beginning of any year fail to remain in office
throughout such year, unless such former members of the Board of Directors are
replaced with Persons reasonably acceptable to the Agent within 60 days; or
(n) any default or event of default under any Subordinated Debt.
8.2 REMEDIES. Upon the occurrence of an Event of Default described in
subsections 8.1(f) and (g), immediately and automatically, and upon the
occurrence of any other Event of Default, at any time thereafter while such
Event of Default is continuing, at the option of the Agent or the Majority
Lenders and upon the Agent's declaration:
(a) the obligation of the Lenders to make any further Loans shall
terminate;
(b) the unpaid principal amount of the Loans together with accrued
interest and all other Obligations shall become immediately due and payable
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived; and
(c) the Agent and the Lenders may exercise any and all rights they have
under this Agreement, the other Loan Documents or at law or in equity, and
proceed to protect and enforce their respective rights by any action at law or
in equity or by any other appropriate proceeding.
No remedy conferred upon the Agent and the Lenders in the Loan Documents is
intended to be exclusive of any other remedy, and each and every remedy shall be
cumulative and shall be an addition to every other remedy given hereunder or now
or hereafter existing at law or in equity
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or by statute or by any other provision of law. Without limiting the generality
of the foregoing or of any of the terms and provisions of any of the Security
Documents, (i) if and when the Agent exercises remedies under the Security
Documents with respect to the Collateral, the Agent may, in its sole discretion,
determine which items and types of Collateral to dispose of and in what order
and may dispose of Collateral in any order the Agent shall select in its sole
discretion, and the Borrower consents to the foregoing and waives all rights of
marshalling with respect to all Collateral.
SECTION IX
ASSIGNMENT; PARTICIPATION
9.1 ASSIGNMENT.
(a) Each Lender shall have the right to assign at any time any portion
of its Commitment hereunder and its interests in the risk relating to the
Revolving Credit Loans in an amount equal to or greater than $5,000,000.00 to
other Lenders or to banks or financial institutions approved by the Agent (such
approval not to be unreasonably withheld or delayed) (each an "ASSIGNEE"),
provided that any Lender which proposes to assign less than its total Commitment
must retain a Commitment of at least $5,000,000.00, and provided, further, that
if no Default or Event of Default shall have occurred and be continuing, each
such Assignee which is not a Lender, an Affiliate of a Lender or a Federal
Reserve Bank shall be subject to prior approval by the Borrower (such approval
not to be unreasonably withheld or delayed) provided that (i) no Person proposed
to become a Lender after the Closing Date and determined by the Agent or, to the
extent no Event of Default exists at such time, by the Borrower in good faith to
be acting in the capacity of a vulture fund or distressed debt purchaser may be
an Assignee, and (ii) no Person or Affiliate of such Person proposed to become a
Lender after the Closing Date and that holds Subordinated Debt or capital stock
issued by the Parent may be an Assignee. Each such Assignee shall execute and
deliver to the Agent and the Borrower a counterpart joinder in the form of
EXHIBIT E hereto and shall pay to the Agent, solely for the account of the
Agent, an assignment fee of $3,500. Upon the execution and delivery of such
counterpart joinder, (a) such Assignee shall, on the date and to the extent
provided in such counterpart joinder, become a "Lender" party to this Agreement
and the other Loan Documents for all purposes of this Agreement and such other
Loan Documents and shall have all rights and obligations of a "Lender" with a
Commitment as set forth in such counterpart joinder, and the transferor Lender
shall, on the date and to the extent provided in such counterpart joinder, be
released from its obligations hereunder and under the other Loan Documents to a
corresponding extent (and, in the case of an assignment covering all of the
remaining portion of an assigning Lender's rights and obligations under this
Agreement, such transferor shall cease to be a party hereto but shall continue
to be entitled to the benefits of Section 11.3 and to any fees accrued for its
account hereunder and not yet paid); (b) the assigning Lender, if it holds any
Revolving Credit Notes, shall promptly surrender such Revolving Credit Notes to
the Agent for cancellation and delivery to the Borrower, provided that if the
assigning Lender has retained any Commitment, the Borrower shall execute and
deliver to the Agent for delivery to such assigning Lender a new Revolving
Credit Note in the amount of the assigning Lender's retained Commitment; (c) the
Borrower shall issue to such Assignee a Revolving Credit Note in the amount of
such Assignee's Commitment dated the Closing Date or such other date as may be
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specified by such Assignee and otherwise completed in substantially the form of
EXHIBIT A; (d) this Agreement shall be deemed appropriately amended to reflect
(i) the status of such Assignee as a party hereto and (ii) the status and rights
of the Lenders hereunder; and (e) the Borrower shall take such action as the
Agent may reasonably request to perfect any security interests or mortgages in
favor of the Lenders, including any Assignee which becomes a party to this
Agreement. For so long as no Event of Default exists hereunder, no Lender shall
make an assignment under this Section 9.1 unless and until the proposed assignee
specifically acknowledges it (i) is not subject to capital adequacy or similar
requirements under Section 2.13 hereof, (ii) does not require the payment of any
increased costs under Section 2.12 hereof, (iii) is not unable to fund LIBOR
Loans under Section 2.3 hereof, and (iv) will comply in all respects with the
provisions of Section 2.4 hereof.
(b) If the Assignee, or any Participant pursuant to Section 9.2 hereof,
is organized under the laws of a jurisdiction other than the United States or
any state thereof, such Assignee shall execute and deliver to the Borrower,
simultaneously with or prior to such Assignee's execution and delivery of the
counterpart joinder described above in Section 9.1(a), and such Participant
shall execute and deliver to the Lender granting the participation, a United
States Internal Revenue Service Form 4224 or Form 1001 (or any successor form),
appropriately completed, wherein such Assignee or Participant claims entitlement
to complete exemption from United States Federal Withholding Tax on all interest
payments hereunder and all fees payable pursuant to any of the Loan Documents.
The Borrower shall not be required to pay any increased amount to any Assignee
or other Lender on account of taxes to the extent such taxes would not have been
payable if the Assignee or Participant had furnished one of the Forms referenced
in this Section 9.1(b) unless the failure to furnish such a Form results from
(i) a condition or event affecting the Borrower or an act or failure to act of
the Borrower or (ii) the adoption of or change in any law, rule, regulation or
guideline affecting such Assignee or Participant occurring (x) after the date on
which any such Assignee executes and delivers the counterpart joinder, or (y)
after the date such Assignee shall otherwise comply with the provisions of
Section 9.1(a), or (z) after the date a Participant is granted its
participation.
(c) Any Lender may at any time pledge all or any portion of its rights
under the Loan Documents, including any portion of any Note, to any of the
twelve (12) Federal Reserve Banks organized under Section 4 of the Federal
Reserve Act, 12 U.S.C. Section 341. No such pledge or any enforcement thereof
shall release such Lender from its obligations under any of the Loan Documents.
9.2 PARTICIPATIONS. Each Lender shall have the right at any time and
from time to time, without the consent of or notice to the Borrower, to grant
participations to one or more banks or other financial institutions (each a
"PARTICIPANT") in all or any part of any Loans owing to such Lender and the Note
held by such Lender. Each Lender shall retain the sole right to approve, without
the consent of any Participant, any amendment, modification or waiver of any
provision of the Loan Documents, PROVIDED that the documents evidencing any such
participation may provide that, except with the consent of such Participant,
such Lender will not consent to (a) the reduction in or forgiveness of the
stated principal of or rate of interest on or commitment fee with respect to the
portion of any Loan subject to such participation, (b) the extension or
postponement of any stated date fixed for payment of principal or interest or
commitment fee with respect to the portion of any Loan subject to such
participation, (c) the
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waiver or reduction of any right to indemnification of such Lender hereunder, or
(d) except as otherwise permitted hereunder, the release of any Collateral.
Notwithstanding the foregoing, no participation shall operate to increase the
Total Commitment hereunder or otherwise alter the substantive terms of this
Agreement. In the event of any such sale by a Lender of participating interests
to a Participant, such Lender's obligations under this Agreement shall remain
unchanged, such Lender shall remain solely responsible for the performance
thereof, such Lender shall remain the holder of such Note for all purposes under
this Agreement and the Borrower and Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement.
SECTION X
THE AGENT
10.1 APPOINTMENT OF AGENT; POWERS AND IMMUNITIES.
(a) Each Lender hereby irrevocably appoints and authorizes the Agent to
act as its agent hereunder and under the other Loan Documents and to execute
such Loan Documents (other than this Agreement) and all other instruments
relating thereto. Each Lender irrevocably authorizes the Agent to take such
action on behalf of each of the Lenders and to exercise all such powers as are
expressly delegated to the Agent hereunder and in the other Loan Documents and
all related documents, together with such other powers as are reasonably
incidental thereto. The obligations of the Agent hereunder are only those
expressly set forth herein. The Agent shall not have any duties or
responsibilities or any fiduciary relationship with any Lender except those
expressly set forth in this Agreement.
(b) Neither the Agent nor any of its directors, officers, employees or
agents shall be responsible for any action taken or omitted to be taken by any
of them hereunder or in connection herewith, except for their own gross
negligence or willful misconduct. Without limiting the generality of the
foregoing, neither the Agent nor any of its Affiliates shall be responsible to
the Lenders for or have any duty to ascertain, inquire into or verify: (i) any
recitals, statements, representations or warranties made by the Borrower or any
of its Subsidiaries or any other Person whether contained herein or otherwise;
(ii) the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement, the other Loan Documents or any other document
referred to or provided for herein or therein; (iii) any failure by the Borrower
or any of its Subsidiaries or any other Person to perform its obligations under
any of the Loan Documents; (iv) the satisfaction of any conditions specified in
Section III hereof, other than receipt of the documents, certificates and
opinions specified in Section 3.1 hereof; (v) the existence, value,
collectibility or adequacy of the Collateral or any part thereof or the
validity, effectiveness, perfection or relative priority of the liens and
security interests of the Lenders therein; or (vi) the filing, recording,
re-filing, continuing or re-recording of any financing statement or other
document or instrument evidencing or relating to the security interests or liens
of the Lenders in the Collateral.
(c) The Agent may employ agents, attorneys and other experts, shall not
be responsible to any Lender for the negligence or misconduct of any such
agents, attorneys or experts selected by it with reasonable care and shall not
be liable to any Lender for any action
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taken, omitted to be taken or suffered in good faith by it in accordance with
the advice of such agents, attorneys and other experts. CIT, in its separate
capacity as a Lender shall have the same rights and powers under the Loan
Documents as any other Lender and may exercise or refrain from exercising the
same as though it were not the Agent, and CIT and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Borrower as if it were not the Agent.
10.2 ACTIONS BY AGENT.
(a) The Agent shall be fully justified in failing or refusing to take
any action under this Agreement as it reasonably deems appropriate unless it
shall first have received such advice or concurrence of the Lenders and shall be
indemnified to its reasonable satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
of the Loan Documents in accordance with a request of the Lenders, and such
request and any action taken or failure to act pursuant thereto shall be binding
upon the Lenders and all future holders of the Notes.
(b) Whether or not an Event of Default shall have occurred, the Agent
may from time to time exercise such rights of the Agent and the Lenders under
the Loan Documents as it determines may be necessary or desirable to protect the
Collateral and the interests of the Agent and the Lenders therein and under such
Loan Documents. In addition, the Agent may, without the consent of the Lenders,
release Collateral valued by the Agent, in its sole discretion, of not more than
$1,000,000 in any fiscal year.
(c) Neither the Agent nor any of its directors, officers, employees or
agents shall incur any liability by acting in reliance on any notice, consent,
certificate, statement or other writing (which may be a bank wire, telex,
facsimile or similar writing) reasonably believed by any of them to be genuine
or to be signed by the proper party or parties.
10.3 INDEMNIFICATION. Without limiting the obligations of the Borrower
hereunder or under any other Loan Document, the Lenders agree to indemnify the
Agent ratably in accordance with their respective Commitments, for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may at
any time be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of this Agreement or any other Loan Document or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or the enforcement of any of the terms hereof or
thereof or of any such other documents; PROVIDED, THAT no Lender shall be liable
for any of the foregoing to the extent they result from the gross negligence or
willful misconduct of the Agent.
10.4 REIMBURSEMENT. Without limiting the provisions of Section 10.3, the
Lenders and the Agent hereby agree that the Agent shall not be obliged to make
available to any Person any sum which the Agent is expecting to receive for the
account of that Person until the Agent has determined that it has received that
sum. The Agent may, however, disburse funds prior to determining that the sums
which the Agent expects to receive have been finally and unconditionally paid to
the Agent if the Agent wishes to do so. If and to the extent that the
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Agent does disburse funds and it later becomes apparent that the Agent did not
then receive a payment in an amount equal to the sum paid out, then any Person
to whom the Agent made the funds available shall, on demand from the Agent
refund to the Agent the sum paid to that Person. If the Agent in good faith
reasonably concludes that the distribution of any amount received by it in such
capacity hereunder or under the other Loan Documents might involve it in
liability, it may refrain from making distribution until its right to make
distribution shall have been adjudicated by a court of competent jurisdiction.
If a court of competent jurisdiction shall adjudge that any amount received and
distributed by the Agent is to be repaid, each Person to whom any such
distribution shall have been made shall either repay to the Agent its
proportionate share of the amount so adjudged to be repaid or shall pay over the
same in such manner and to such Persons as shall be determined by such court.
10.5 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender represents that
it has, independently and without reliance on the Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of the financial condition and affairs of the Borrower and
decision to enter into this Agreement and the other Loan Documents and agrees
that it will, independently and without reliance upon the Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own appraisals and decision in taking or not
taking action under this Agreement or any other Loan Document. The Agent shall
not be required to keep informed as to the performance or observance by the
Borrower of this Agreement, the other Loan Documents or any other document
referred to or provided for herein or therein or by any other Person of any
other agreement or to make inquiry of, or to inspect the properties or books of,
any Person. Except for notices, reports and other documents and information
expressly required to be furnished to the Lenders by the Agent hereunder, the
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning any Person which may come into the
possession of the Agent or any of its affiliates. Each Lender shall have access
to all documents relating to the Agent's performance of its duties hereunder at
such Lender's request. Unless any Lender shall promptly object to any action
taken by the Agent hereunder (other than actions to which the provisions of
Section 11.9(b) are applicable and other than actions which constitute gross
negligence or willful misconduct by the Agent), such Lender shall conclusively
be presumed to have approved the same.
10.6 RESIGNATION OR REMOVAL OF AGENT. The Agent may resign at any time by
giving thirty (30) days prior written notice thereof to the Lenders and the
Borrower. Upon any such resignation, the Lenders shall have the right to appoint
a successor Agent which, provided that no Default or Event of Default has
occurred and is continuing, shall be reasonably acceptable to the Borrower and
shall be a financial institution having a combined capital and surplus in excess
of $150,000,000. If no successor Agent shall have been so appointed by the
Lenders and shall have accepted such appointment within thirty (30) days after
the retiring Agent's giving of notice of resignation, then the retiring Agent
may, on behalf of the Lenders, appoint a successor Agent which, provided that no
Default or Event of Default has occurred and is continuing, shall be reasonably
acceptable to the Borrower and shall be a financial institution having a
combined capital and surplus in excess of $150,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder.
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After any retiring Agent's resignation, the provisions of this Agreement shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Agent.
SECTION XI
MISCELLANEOUS
11.1 NOTICES. Unless otherwise specified herein, all notices hereunder to
any party hereto shall be in writing and shall be deemed to have been given when
delivered by hand, or when sent by electronic facsimile transmission or by
telex, answer back received, or on the first Business Day after delivery to any
overnight delivery service, freight pre-paid, or three days after being sent by
certified or registered mail, return receipt requested, postage pre-paid, and
addressed to such party at its address indicated below:
If to the Borrower, c/o Leasecomm Corporation
10M Commerce Way
Woburn, Massachusetts 01801
Attention: President and Chief Financial Officer
with a copy to:
Gerald P. Hendrick, Esq.
Edwards & Angell
101 Federal Street Boston, MA 02110
Facsimile: (617) 439-4170
If to the Parent, at:
10M Commerce Way
Woburn, Massachusetts 01801
Attention: President and Chief Financial Officer
with a copy to:
Gerald P. Hendrick, Esq.
Edwards & Angell
101 Federal Street Boston, MA 02110
Facsimile: (617) 439-4170
If to Agent or CIT, at
1211 Avenue of the Americas
New York, New York 10036
Attention: Stephen M. Leavenworth, Senior Vice President
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with a copy to:
Burton Winnick, Esquire
Gadsby Hannah LLP
225 Franklin Street
Boston, MA 02110
Facsimile: (617) 204-8015
if to any other Lender, to its address set forth on Schedule 1 attached hereto;
or at any other address specified by such party in writing.
11.2 EXPENSES. The Borrower agrees to pay to the Agent upon written
demand therefor (i) an amount equal to any and all reasonable out-of-pocket
costs, expenses, and liabilities (including, without limitation, fees,
disbursements, expenses and liabilities of or relating to, commercial finance
examinations, collateral audits, appraisals, the Lender's consultants, or
Collateral Management Agent, collateral examinations referred to in this
Agreement, Uniform Commercial Code and other lien searches and filings fees, and
legal counsel) incurred or sustained by the Agent in connection with the
preparation of this Agreement, or the modification, amendment, approval, consent
or waiver hereof or thereof, the documents and instruments contemplated hereby,
the administration or interpretation of the Loan Documents, and (ii) from time
to time any and all reasonable out-of-pocket costs or expenses, legal fees,
disbursements and other expenses hereafter incurred or sustained by the Agent in
connection with the administration of credit extended by the Agent to the
Borrower, the preservation of or enforcement of their rights under the Loan
collateral, and/or in respect of any of the Borrower's, Parent's or other
obligations to the Agent. The Lenders and the Borrower authorize the Agent and
the Lenders to, with prior written notice to the Borrower, to debit any accounts
maintained by the Borrower with such any such Lender for any fees, expenses, or
other amounts due and payable by the Borrower or Parent hereunder, under this
Agreement or any of the other Loan Documents. On or after an Event of Default,
all of the aforementioned fees incurred by any of the Lenders shall also be
reimbursable to said Lenders.
11.3 MARSHALLING. Neither the Agent nor the Lenders shall be required to
marshal any present or future collateral security for the Borrower's or Parent's
obligations to the Agent or such Bank under the Loan Documents or to resort to
such collateral security or other assurances of payment in any particular order,
and all of their rights in respect of such collateral security shall be
cumulative and in addition to all other rights, however existing or arising. To
the extent that they lawfully may, the Borrower and Parent hereby agree that
they will not invoke any law relating to the marshalling of collateral which
might cause delay in or impede the Agent's or such Bank's rights under any
document, agreement or instrument evidencing or securing the Borrower's
obligations to the Agent and the Lenders under the Loan Documents and, to the
extent that it lawfully may, the Borrower hereby irrevocably waives the benefits
of all such laws.
11.4 INDEMNIFICATION. The Borrower agrees to indemnify and hold harmless
the Agent and the Lenders, as well as their respective shareholders, directors,
agents, officers, attorneys, subsidiaries and affiliates, from and against all
damages, losses, settlement payments, obligations, liabilities, claims, suits,
penalties, assessments, citations, directives, demands,
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judgments, actions or causes of action, whether statutorily created or under the
common law, and reasonable costs and expenses incurred, suffered, sustained or
required to be paid by an indemnified party by reason of or resulting from the
transactions contemplated hereby, except any of the foregoing which result from
the gross negligence or willful misconduct of the indemnified party. In any
investigation, proceeding or litigation, or the preparation therefor, the
Lenders shall select their own counsel and, in addition to the foregoing
indemnity, the Borrower agrees to pay promptly the reasonable fees and expenses
of such counsel. In the event of the commencement of any such proceeding or
litigation, the Borrower shall be entitled to participate in such proceeding or
litigation with counsel of its choice at its own expense, provided that such
counsel shall be reasonably satisfactory to the Agent. The covenants of this
Section 11.4 shall survive payment or satisfaction of payment of all amounts
owing with respect to the Notes or any other Loan Document.
11.5 SURVIVAL OF COVENANTS, ETC. Unless otherwise stated herein, all
covenants, agreements, representations and warranties made herein, in the other
Loan Documents or in any documents or other papers delivered by or on behalf of
the Borrower pursuant hereto shall be deemed to have been relied upon by the
Agent and the Lenders, notwithstanding any investigation heretofore or hereafter
made by any of them, and shall survive the making by the Lenders of the Loans as
herein contemplated, and shall continue in full force and effect so long as any
amount due under any Loan Document remains outstanding and unpaid or any Lender
has any obligation to make any Loans hereunder. All statements contained in any
certificate or other paper delivered by or on behalf of the Borrower pursuant
hereto or in connection with the transactions contemplated hereby shall
constitute representations and warranties by the Borrower hereunder.
11.6 SET-OFF. Regardless of the adequacy of any Collateral or other means
of obtaining repayment of the Obligations, any deposits, balances or other sums
credited by or due from the head office of any Lender or any of its branch
offices to the Borrower may, at any time and from time to time after the
occurrence of an Event of Default hereunder, without notice to the Borrower or
compliance with any other condition precedent now or hereafter imposed by
statute, rule of law, or otherwise (all of which are hereby expressly waived) be
set off, appropriated, and applied by such Lender against any and all
Obligations of the Borrower to such Lender or any of its affiliates in such
manner as the head office of such Lender or any of its branch offices in its
sole discretion may determine, and the Borrower hereby grants each such Lender a
continuing security interest in such deposits, balances or other sums for the
payment and performance of all such Obligations. ANY AND ALL RIGHTS TO REQUIRE
ANY LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHTS OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, BALANCES, OTHER SUMS AND PROPERTY OF THE
BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED. THE AGENT
WILL PROVIDE NOTICE TO THE BORROWER OF ANY SETOFF HEREUNDER.
11.7 NO WAIVERS. No failure or delay by the Agent or any Lender in
exercising any right, power or privilege hereunder or under the Notes or under
any other Loan Documents shall operate as a waiver thereof; nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. No waiver shall
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extend to or affect any Obligation not expressly waived or impair any right
consequent thereon. No course of dealing or omission on the part of the Agent or
the Lenders in exercising any right shall operate as a waiver thereof or
otherwise be prejudicial thereto. No notice to or demand upon the Borrower shall
entitle the Borrower to other or further notice or demand in similar or other
circumstances. The rights and remedies herein and in the Notes and the other
Loan Documents are cumulative and not exclusive of any rights or remedies
otherwise provided by agreement or law.
11.8 JOINT AND SEVERAL. The obligations of the Borrower under the Loan
Documents shall be joint and several.
11.9 AMENDMENTS, WAIVERS, ETC.
(a) Neither this Agreement nor the Revolving Credit Notes nor any other
Loan Documents nor any provision hereof or thereof may be amended, waived,
discharged or terminated except by a written instrument signed by the Agent on
behalf of the Lenders or, as the case may be, by the Lenders or the Majority
Lenders, and, in the case of amendments, by the Borrower.
(b) Except where this Agreement or any of the other Loan Documents
authorizes or permits the Agent to act alone and except as otherwise expressly
provided in this Section 11.9(b), any action to be taken (including the giving
of notice) by the Lenders may be taken, and any consent or approval required or
permitted by this Agreement or any other Loan Document to be given by the
Lenders may be given, and any term of this Agreement, any other Loan Document or
any other instrument, document or agreement related to this Agreement or such
other Loan Documents or mentioned therein may be amended, and the performance or
observance by any of the Borrower or any other Person of any of the terms
thereof and any Default or Event of Default (as defined in any of the
above-referenced documents or instruments) may be waived (either generally or in
a particular instance and either retroactively or prospectively), in each case
only with the written consent of the Majority Lenders; PROVIDED, HOWEVER, that
no such consent or amendment which affects the rights, duties or liabilities of
the Agent shall be effective without the written consent of the Agent.
Notwithstanding the foregoing, no amendment, waiver or consent shall do any of
the following unless in writing and signed by ALL of the Lenders: (i) increase
the Total Commitment (or subject the Lenders to any additional obligations) (ii)
reduce the principal of or interest on any of the Revolving Credit Notes
(including, without limitation, interest on overdue amounts) or any fees payable
hereunder, (iii) postpone any date (including the Borrowing Base Maturity Date)
fixed for any payment in respect of principal of or interest (including, without
limitation, interest on overdue amounts) on the Revolving Credit Notes, or any
fees payable hereunder, (iv) change the definition of "Majority Lenders" or the
number of Lenders which shall be required for the Lenders or any of them to take
any action under the Loan Documents; (v) change the definition of "Borrowing
Base" set forth in Section 1.1, amend Section 2.1(a) or waive the limitations
set forth in Section 2.1(a); (vi) amend this Section 11.9(b); (vii) change the
Commitment of any Lender, except as permitted under Section IX hereof; (viii)
except as permitted by Section 10.2(b) hereunder, release any Collateral; or
(ix) amend Sections 2.5 or 2.6 hereof.
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11.10 BINDING EFFECT OF AGREEMENT. This Agreement shall be binding upon
and inure to the benefit of the Borrower, the Lenders and their respective
successors and permitted assigns; PROVIDED that the Borrower may not assign or
transfer its rights or obligations hereunder.
11.11 CAPTIONS; COUNTERPARTS. The captions in this Agreement are for
convenience of reference only and shall not define or limit the provisions
hereof. This Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when so
executed and delivered shall be an original, but all of which together shall
constitute one instrument. In proving this Agreement it shall not be necessary
to produce or account for more than one such counterpart signed by the party
against whom enforcement is sought.
11.12 ENTIRE AGREEMENT, ETC. The Loan Documents and any other documents
executed in connection herewith or therewith express the entire understanding of
the parties with respect to the transactions contemplated hereby and supersede
all prior agreements (including the Existing Agreement and all term sheets) with
respect to the subject matter hereof, except for the letter agreements of even
date herewith between the Borrower and the Agent with respect to fees payable to
the Agent and to the Lenders, which letter agreements shall continue in full
force and effect and shall not be superseded by this Agreement or any of the
other Loan Documents.
11.13 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE LENDERS HEREBY
WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT
OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY OF THE OTHER
LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW, EACH OF
THE BORROWER AND THE LENDERS HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES. THE BORROWER (a) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF THE LENDERS HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
THE LENDERS WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVERS AND (b) ACKNOWLEDGES THAT THE LENDERS HAVE BEEN INDUCED TO ENTER INTO
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH EACH IS A PARTY BECAUSE OF,
AMONG OTHER THINGS, THE BORROWER'S WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.
11.14 GOVERNING LAW. THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS
ARE CONTRACTS UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL FOR ALL PURPOSES
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID STATE
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWER
CONSENTS TO THE JURISDICTION OF ANY OF THE FEDERAL OR STATE COURTS LOCATED IN
THE STATE OF NEW YORK IN CONNECTION WITH ANY SUIT TO ENFORCE THE RIGHTS OF THE
LENDERS UNDER THIS AGREEMENT OR ANY OF THE OTHER LOAN
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DOCUMENTS. THE BORROWER IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH ACTION BROUGHT IN THE COURTS
REFERRED TO IN THE PRECEDING SENTENCE AND IRREVOCABLY WAIVES AND AGREES NOT TO
PLEAD OR CLAIM IN ANY SUCH ACTION THAT SUCH ACTION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
11.15 SEVERABILITY. The provisions of this Agreement are severable and if
any one clause or provision hereof shall be held invalid or unenforceable in
whole or in part in any jurisdiction, then such invalidity or unenforceability
shall affect only such clause or provision, or part thereof, in such
jurisdiction, and shall not in any manner affect such clause or provision in any
other jurisdiction, or any other clause or provision of this Agreement in any
jurisdiction.
11.16 CONFIDENTIALITY. The Agent and the Lenders shall hold all
confidential information delivered by the Borrower to the Agent or any Lender
pursuant to this Agreement relating to the Borrower or its business in
accordance with such entity's customary procedures for handling confidential
information of this nature and in accordance with safe and sound business
practices and in any event may make disclosure to such of its respective
Affiliates, officers, directors, employees, agents and representatives as need
to know such information in connection with the Loans. If the Agent or any
Lender is otherwise a creditor of Borrower, the Agent or such Lender, as the
case may be, may use the information in connection with its other credits. The
Agent or any Lender may also make disclosure reasonably required by any bona
fide Participant, potential Assignee or potential Participant (each, a
"TRANSFEREE"), or as required or requested by any governmental authority or
representative thereof, or pursuant to legal process, or to its accountants,
lawyers and other advisors, and shall require any Transferee to agree, in a
writing to which the Borrower shall be the third party beneficiary, to hold all
such information as confidential to the extent required by the first sentence of
this Section 11.15.
11.17 LOST NOTE, ETC. Upon receipt of an affidavit of an officer of any
Lender as to the loss, theft, destruction or mutilation of any Note or any
Security Document which is not a public record and, in the case of any such
loss, theft, destruction or mutilation, upon cancellation of such Note or
Security Document, if available, the Borrowers will issue, in lieu thereof, a
replacement Note or other Security Document in the same principal amount thereof
and otherwise of like tenor.
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IN WITNESS WHEREOF, the undersigned have duly executed this Revolving
Credit Agreement under seal as of the date first set above.
LEASECOMM CORPORATION THE CIT GROUP/COMMERCIAL SERVICES,
INC., individually as a Lender and as Agent
By: /s/ Richard F. Latour By: /s/ Daniel B. Ciotti
---------------------------- ----------------------------------
Richard F. Latour, Executive Daniel B. Ciotti, Vice President
Vice President
TIMEPAYMENT CORP. LLC
By its Manager
By: /s/ Richard F. Latour
----------------------------
Richard F. Latour, Manager
MICROFINANCIAL INCORPORATED
By: /s/ Richard F. Latour
----------------------------
Richard F. Latour, President
EXECUTION COPY
SCHEDULE 1
COMMITMENTS OF THE LENDERS
LENDER COMMITMENT
THE CIT GROUP/COMMERCIAL
SERVICES, INC. $30,000,000