EXHIBIT 10.74
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WAREHOUSING LOAN AND SECURITY AGREEMENT
dated as of
December 20, 1998
between
CAPITAL ASSOCIATES INTERNATIONAL, INC.,
Borrower,
and
NATIONSBANC LEASING CORPORATION,
Lender.
Up to $15 Million of Lease-Collateralized Loans
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0292135.doc
TABLE OF CONTENTS
1. DEFINITIONS; REFERENCES....................................................1
1.01. Definitions....................................................1
1.02. Usage..........................................................6
2. MAKING LOAN ADVANCES; PAYMENTS.............................................6
2.01. Loan Advances..................................................6
2.02. Procedure for Making Advances..................................7
2.03. Deposit Toward Expenses; Facility Fee..........................7
2.04. Non-Use Fee....................................................7
2.05. LIBOR Charges..................................................7
3. SECURITY FOR BORROWER'S OBLIGATIONS........................................7
3.01. Grant of Security Interest.....................................7
3.02. Release of Security Interest...................................8
4. PAYMENTS OF PRINCIPAL, INTEREST, AND OTHER AMOUNTS.........................8
4.01. How Payments Are Made..........................................8
4.02. Right to Prepay................................................8
4.03. Mandatory Prepayments..........................................9
4.04. Interest on Past Due Amounts...................................9
4.05. Limit on Interest Payable......................................9
4.06. Application of Payments........................................9
4.07. Statements of Account..........................................9
5. BORROWER'S REPRESENTATIONS AND WARRANTIES..................................9
5.01. Corporate Standing............................................10
5.02. Corporate Powers..............................................10
5.03. Binding Effect................................................10
5.04. Litigation....................................................10
5.05. Financial Statements..........................................10
5.06. Taxes.........................................................10
5.07. Location of Offices...........................................11
5.08. Governmental Consents.........................................11
5.09. Absence of ERISA Liability....................................11
5.10. Investment Company Status.....................................11
5.11. Specific Representations re Assigned Leases...................11
6. BORROWER'S COVENANTS......................................................12
6.01. Financial Statements..........................................12
6.02. Inspection of Collateral and Records..........................13
6.03. Corporate Existence...........................................13
6.04. Merger, etc...................................................14
6.05. Compliance with ERISA.........................................14
6.06. Payment of Taxes..............................................14
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6.07. Maintenance of Insurance......................................14
6.08. Maintenance Property and Management...........................15
6.09. Agreements as to Leases.......................................15
6.10. Lease Status Reports..........................................15
6.11. Notice of Lease Default.......................................15
6.12. Verification of Leases........................................15
6.13. Liens.........................................................16
6.14. Specific Covenants re Assigned Leases.........................16
6.15 Collateral Reporting...........................................17
7. CONDITIONS PRECEDENT TO ADVANCES..........................................17
7.01. Conditions Precedent to the Initial Advance...................17
7.02. Conditions Precedent to All Advances..........................17
8. EVENTS OF DEFAULT; REMEDIES...............................................19
8.01. Events of Default.............................................19
8.02. Remedies......................................................20
9. BORROWER'S INDEMNITIES....................................................22
9.01. General Indemnity.............................................22
10. MISCELLANEOUS.............................................................24
10.01. No Waivers; Cumulative Remedies..............................24
10.02. Notices......................................................24
10.03. Transaction Expenses.........................................24
10.04. Amendments, Waivers, Consents, etc...........................24
10.05. Successors and Assigns.......................................25
10.06. Governing Law................................................25
10.07. Headings.....................................................25
10.08. Execution in Counterparts....................................25
10.09. Termination of Agreement.....................................25
10.10. Survival of Representations, Warranties, and Covenants.......25
10.11. Severability.................................................25
10.12. Further Assurances...........................................26
10.13. Commercial Transaction.......................................26
10.14. Time is of the Essence.......................................26
10.15. Entire Agreement.............................................26
10.16. Consent to Jurisdiction......................................26
10.17. Waiver of Trial by Jury......................................26
11. LIMITATION OF PERSONAL LIABILITY.........................................26
11.01. Limitation of Personal Liability.............................26
Exhibit A Lease Supplement
Exhibit B Partial Release Letter [ss. 10.09]
Exhibit C Form of Lease [ss. 1.01 - Eligible Lease]
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0292135.doc
WAREHOUSING LOAN AND SECURITY AGREEMENT
This Warehousing Loan and Security Agreement is entered into as of
December 20, 1998 by and between Capital Associates International, Inc.
("Borrower"), a Colorado corporation, and NationsBanc Leasing Corporation
("Lender"), a North Carolina corporation.
Borrower and Lender agree as follows:
1. DEFINITIONS; REFERENCES
1.01. DEFINITIONS. The following terms, when capitalized as below,
have the following meanings in this Agreement:
"Advance": a loan from Lender to Borrower with respect to a
particular Lease and the related Equipment Portion.
"Agreement": this Warehousing Loan and Security Agreement.
"Basic Documents": this Agreement, and each Supplement as
executed and delivered.
"Borrowing Base": the lesser of (1) $15 million, and (2) 100% of
the Lease Value (computed as of the date that the Borrowing Base is determined)
of the Eligible Leases that are risk- rated as "1", "2", or "3" pursuant to
Borrower's underwriting standards; provided, that (a) the aggregate amount of
Advances outstanding at any time for Eligible Leases risk-rated as "3" shall not
exceed the aggregate amount outstanding for those Eligible Leases that are
risk-rated "1" or "2", and (b) the aggregate amount of advances outstanding for
all Eligible Leases relating to any one Lessee risk-rated "3" shall not exceed
20% of all advances outstanding for Eligible Leases risk-rated "3".
In order to qualify as a "1" or "2", each Lessee must have a
corporate debt rating > BBB (S&P) or, if a Lessee's corporate debt is not rated,
such unrated Lessee's last audited fiscal year-end financial statement must
reflect the following minimum ratios:
* Free Operating Cash Flow/Total Debt no less than 8.4%.
* Funds From Operations/Total Debt no less than 34.7%.
* Operating Income/Sales no less than 15.4%.
* Total Debt/Capitalization no greater than 46.8%.
Unless otherwise expressly agreed by Lender, the Borrowing Base
excludes those transactions that: (i) relate to Borrower's vendor program
transactions that qualify under Borrower's Vendor Program Credit Review
Guidelines as outlined in Borrower's underwriting standards, or (ii) are credits
that otherwise rate as a "4" or higher but have been rated as "3" or lower due
to structural or credit enhancements, or (iii) are with a Lessee whose principal
line of business involves retailing or gaming, and (iv) are with a Lessee who
does not have a corporate debt rating > BB (S&P) or, in the event the Lessee's
corporate debt is not rated, such unrated Lessee's last audited fiscal year-end
financial statement do not reflect the following minimum ratios:
* Free Operating Cash Flow/Total Debt no less than 2.4%.
* Funds From Operations/Total Debt no less than 18.4%.
* Operating Income/Sales no less than 15.1%.
* Total Debt/Capitalization no greater than 55.8%.
For purposes of this definition:
Capitalization means Total Debt plus Equity plus the present value
(discounted at the then-prevailing Prime Rate) of future operating
lease obligations.
Equity means shareholders' equity (including preferred stock) plus
minority interest.
Free Operating Cash Flow means funds from operations minus capital
expenditures and minus {plus} the increase {decrease} in working
capital (excluding changes in cash, marketable securities, and
short-term debt).
Funds From Operations means net income from continuing operations plus
income taxes and nonrecurring items plus depreciation and amortization.
Operating Income means sales minus cost of goods manufactured (before
depreciation and amortization), selling, general and administrative,
and research and development costs.
Sales has the same meaning as under GAAP.
Total Debt means long-term debt plus current maturities, commercial
paper, and other short-term borrowings (unadjusted).
"Business Day": any day, other than a Saturday or Sunday, on
which commercial banks are generally open for business in Denver, Colorado, and
Atlanta, Georgia, and Lender is open for business in Atlanta, Georgia.
"Collateral": defined in ss. 3.01.
"Commitment": Lender's commitment to lend, for up to $15 million
principal amount of all Advances outstanding at any time.
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"Default": any event or condition that would become an Event of
Default upon the giving of notice or lapse of time or both, or any Event of
Default.
"Dollars" and "$": United States dollars.
"Eligible Equipment": equipment:
(1) that is either computer equipment, networking equipment,
telecommunications equipment, related peripherals, semiconductor
testing and manufacturing equipment, forklifts, office furniture
and equipment, material-handling equipment, or other equipment
acceptable to Lender;
(2) for which Borrower has good and marketable title;
(3) that is subject to an Eligible Lease;
(4) that is used in the normal course of business of the related
Lessee;
(5) that is insured against loss by either the Borrower or the
related Lessee (except that self-insurance is permitted by a
Lessee that is risk-rated as "1" or "2");
(6) that is in good working condition;
(7) that is located in the continental United States; and
(8) in which Lender has a perfected first-priority security
interest.
"Eligible Lease": a lease:
(1) under which Borrower has leased Eligible Equipment (with soft
costs not to exceed 25%) to a lessee (a "Lessee"), whether
Borrower is the initial lessor thereunder or is an assignee of
the original lessor, whether or not such lease would be a
"true lease" for federal income tax purposes (each a "Lease");
(2) that has no payments 60 or more days past-due and no other
default exists under the Lease;
(3) that is assignable and transferable without further consent (or,
if Lessee consent is required, such consent has been given in a
form satisfactory to Lender);
(4) under which rent and all other amounts are payable in U.S.
Dollars;
(5) that is non-cancellable (e.g., the Lessee's obligation
thereunder is absolute and not subject to any performance
obligations or other conditions on the part of Borrower);
(6) that is in full force and effect (and all Equipment leased
thereunder is in good working order and has been unconditionally
accepted by the Lessee thereunder);
(7) that has an initial maturity of no less than one year and no
greater than five years (if risk-rated as "3") and seven years
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(if risk-rated as "1" or "2"), unless explicitly consented to by
Lender (provided, that no Lease for Eligible Equipment
consisting of computer, networking, or other related equipment
shall have an initial maturity of more than 3 years);
(8) that contains terms and provisions that are substantially the
same as those in Exhibit C or that are otherwise acceptable to
Lender;
(9) for which the Lease and related Equipment are not subject to any
Lien; and
(10) that has been in the Borrowing Base less than 180 days and has
not previously been the subject of any Advance.
"Equipment Cost": Borrower's purchase price for an Equipment
Portion.
"Equipment Portion": the equipment leased to a Lessee under a
particular Lease.
"ERISA": defined in ss. 5.09.
"Event of Default": defined in ss. 8.01.
"Event of Loss" with respect to any item of property, any of the
following events: (i) the destruction or damage beyond economic repair of such
property or rendition of such property permanently unfit for normal use for any
reason whatsoever; (ii) any damage which results in an insurance settlement with
respect to such property on the basis of a total loss or a constructive or
compromised total loss; (iii) the condemnation, confiscation, or requisition of
title to such property; (iv) the loss, theft, disappearance, confiscation, or
seizure of such property by a governmental authority; (v) the requisition of use
of such property by a governmental authority for at least 90 days; or (vi) the
failure of such item to be fully covered by the insurance required by ss. 6.07
while subject to a Lease.
"Financed Amount" for a Lease: the present value (discounted at
the Interest Rate on its Funding Date) of the scheduled rental payments due
under that Lease after the Funding Date for the related Advance, but not to
exceed the Equipment Cost for that Lease.
"Funding Date": a date on which Lender makes an Advance.
"GAAP": generally accepted accounting principles as in effect in
the United States as of the date hereof and applied on a basis consistent with
that used in the preparation of the financial statements referred to in ss.
5.05, except for changes therein, with which Borrower's independent public
accountants concur, that are disclosed in the notes to the relevant financial
statements.
"Indemnitee": Lender, or any agent, employee, director,
successor, or permitted assignee of Lender.
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"Interest Rate": a floating interest rate, computed on the basis
of actual days elapsed and a 360-day year, equal to (1) the Prime Rate minus
0.25% per annum, or (2) if elected by Borrower by notice to Lender,
reserve-adjusted LIBOR (as determined by Lender) for the following one, two,
three, or six months (as elected by Borrower in such notice) plus 2.5% per
annum.
"Lease": defined in clause (1) of the definition of "Eligible
Lease".
"Lease Value" for a Lease: the present value (discounted at the
Interest Rate) of (1) the aggregate unpaid payments of basic rent under that
Lease, plus (2) the fixed purchase price (if any) that the related Lessee is
obligated to pay under the terms of that Lease (the sum of (1) and (2) not to
exceed 100% of the related Equipment's cost to Borrower).
"Lessee": the lessee under a Lease.
"Liabilities": defined in ss. 9.01.
"Lien": any mortgage, pledge, assignment, encumbrance, lien
(statutory or other), or other security interest of any kind or nature
whatsoever (including any conditional sale or other title retention agreement,
or any lease in the nature thereof).
"Maturity Date" for an Advance: the earliest of the following
dates: (1) the date that the related Lease is assigned to any third party
(whether outright or as security, and whether for discounting, securitization,
or other purposes), (2) the 180th day after the date of the Advance, and (3) the
date that Lender's Commitment to make Advances expires under ss. 2.01.
"Monthly Payment Date": the 5th day of the month, except that
any Monthly Payment Date that falls on a day which is not a Business Day shall
instead occur on the following Business Day.
"Officer's Certificate": a certificate signed in the name of
Borrower (or, with respect to ss. 6.04(c), of the Successor) by a financial
officer of Borrower (or the Successor).
"Permitted Lessee": the Person who, on the Funding Date
therefor, is the lessee under a Lease.
"Permitted Lien": any Lien referred to in clauses (a) through
(f) of ss. 6.13.
"Person": any individual, corporation, limited liability
company, partnership, joint venture, or other legal or governmental entity.
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"Prime Rate": the rate of interest publicly announced from time
to time by NationsBank, N.A., or its successor, as its "prime", "base", or
"reference" rate.
"S&P": Standard & Poor's Ratings Services.
"Secured Obligations": all of Borrower's obligations (of
whatever nature) under the Basic Documents, whether such obligations exist now
or arise in the future.
"Successor": defined in ss. 6.04(a).
"Supplement": defined in ss. 3.01.
"Termination": the expiration, cancellation, or other
termination of a Lease for any reason.
"Transferable Records": all logs, manuals, certificates, data,
and inspection, modification, and restoration records that are required to be
transferred with the possession or ownership of an Equipment Portion, or that
customarily are transferred with the possession or ownership of similar goods.
1.02. USAGE. Any agreement or instrument referred to inss. 1.01 means
such agreement or instrument as from time to time supplemented and amended.
"Including" means "including but not limited to". "Or" means one or more, or
all, of the alternatives listed or described. "Herein", "hereof", "hereunder",
etc. mean in, of, or under, etc. this Agreement (and not merely in, of, under,
etc. the section or provision where that reference appears). References to
sections, exhibits, and the like refer t ------ those in or attached to this
Agreement unless otherwise specified.
2. MAKING LOAN ADVANCES; PAYMENTS
2.01. LOAN ADVANCES. Subject to the satisfaction of the conditions
precedent set forth in ss. 7, and on the terms and conditions set forth in this
ss. 2, on the Funding Date for each Lease, Borrower shall borrow the related
Advance from Lender and Lender shall make that Advance to Borrower. The Financed
Amount for each Lease shall be at least $200,000. Each Advance shall equal the
Financed Amount for the related Lease. Each Advance shall bear interest at the
Interest Rate. Interest on each each Advance shall be payable on each Monthly
Payment Date while it is outstanding, and on its Maturity Date. To the extent
not paid earlier, the principal of each Advance shall be payable on its Maturity
Date. Unless terminated under ss. 8.02, Lender's Commitment to make Advances
pursuant to this Agreement shall expire at 2:00 p.m., Atlanta time, on the first
anniversary of the date of this Agreement. All Advances shall together comprise
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one loan. The total amount of all Advances outstanding at any time unde this
Agreement shall not exceed the Borrowing Base for any reason whatsoever.
2.02. PROCEDURE FOR MAKING ADVANCES. Borrower shall notify Lender, by
12:00 noon (Atlanta time) at least two Business Days before a proposed Funding
Date, of (a) the date proposed for that Funding Date, (b) the Equipment Cost,
rent, rent payment dates, and purchase option price (if any) for each Lease to
be financed on that Funding Date, and (c) a description (by type) of each
Equipment Portion to be financed on that Funding Date. Borrower shall include
with each such notice a copy of each lease or schedule proposed to be financed,
and if requested a copy of the related lease application, credit approval
report, credit bureau report, invoice(s), ▇▇▇▇(s) of sale, and other
documentation requested by Lender. Not later than 2:00 p.m. (Atlanta time) on
the appropriate Funding Date, upon fulfillment of the conditions set forth in
ss. 7, Lender will make the related Advance to Borrower, with general corporate
funds, pursuant to ss. 2.01, by wire transfer. There shall be no more than one
Funding Date per calendar week.
2.03. DEPOSIT TOWARD EXPENSES; Facility Fee. Borrower previously
delivered $5,000 to Lender. That money shall be applied toward transaction
expenses reimbursable by Borrower underss. 10.03 in connection with the initial
closing of this Agreement. Borrower shall pay to Lender, at the initial closing,
a fee of $30,000. That fee will be fully-earned and non-refundable when paid.
2.04. NON-USE FEE. As additional consideration for the credit facility
established in this Agreement, Borrower agrees to pay to Lender, on the first
Business Day of each January, April, July, and October, a fee of 0.2% per
360-day period (based on actual days elapsed) of (a) $15,000,000 minus (b) the
average outstanding principal balance of the loans outstanding underss. 2.01
during the previous calendar quarter or part thereof during which Commitment was
in effect.
2.05. LIBOR Charges. Borrower shall pay to Lender the following
amounts, as determined by Lender in its discretion, as to any Advance bearing a
LIBOR-based Interest Rate: (a) breakage charges attributable to repayment on a
date other than the LIBOR maturity date, whether or not Lender "match funds" or
internally funds the Advance, and (b) any increased costs allocated to such
Advance by Lender or its funding source and attributable to the LIBOR basis of
the Advance.
3. SECURITY FOR BORROWER'S OBLIGATIONS
3.01. GRANT OF SECURITY INTEREST. To secure payment and performance of
the Secured Obligations, Borrower hereby grants to Lender a security interest in
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all Borrower's right, title, and interest in and to the following property,
whether existing now or acquired in the future (the "Collateral"):
(a) the Leases;
(b) the Equipment Portions;
(c) all collateral, guarantees, and other security or rights
of Borrower relating to the Leases or the Equipment Portions;
(d) the Transferable Records; and
(e) all proceeds of any nature (including insurance and
rentals) in respect of the foregoing.
Borrower shall specifically subject each Lease and Equipment Portion to the Lien
of this Agreement on its Funding Date by means of a supplement substantially in
the form of Exhibit A to this Agreement (a "Supplement").
3.02. RELEASE OF SECURITY INTEREST. Upon Lender's receipt of payment
in full of all amounts due in connection with an Advance with respect to a Lease
and the related Equipment Portion, Lender shall release its security interest in
such Lease and Equipment Portion, shall return to Borrower or its designee the
chattel paper original of that Lease as previously delivered to Lender, and
shall take any other action required by sec. 10.09.
4. PAYMENTS OF PRINCIPAL, INTEREST, AND OTHER AMOUNTS
4.01. HOW PAYMENTS ARE MADE. Borrower shall make its payments and
prepayments of principal and interest due on the Advances, and all other amounts
payable by Borrower to Lender under the Basic Documents, to Lender at ▇.▇. ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Reference: Capital Associates Warehousing Line (or
at such other place in the United States as Lender from time to time specifies
to Borrower), by check (or, of requested by Lender, in immediately available
funds) and in Dollars, on the date when due. If any payment due under the Basic
Documents comes due on a day which is not a Business Day, such payment shall
instead be made on the following Business Day, and interest shall accrue at the
applicable rate to the day of payment. Borrower waives presentment, demand, and
all other notices in connection with payment or nonpayment.
4.02. RIGHT TO PREPAY. Unless a Default exists, Borrower shall have
the right to prepay the outstanding principal amount of any Advance at any time
in whole or in part. Upon any prepayment of any Advance, or any portion thereof,
under thisss. 4.02, Borrower shall pay all accrued and unpaid interest on the
prepaid principal of such Advance, or portion thereof, to the date of
prepayment.
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4.03. MANDATORY PREPAYMENTS. To the extent necessary to reduce the
amount of Advances outstanding at any time to the maximum amount then available
under ss. 2.01, Borrower shall pay to Lender, on demand, as a recourse
obligation, the amount of outstanding Advances in excess of that maximum amount.
If an Event of Loss or Termination occurs for a Lease, Borrower shall, within
five days after Borrower learns of such occurrence, give to Lender written
notice of such occurrence and shall, if Lender so elects, on or before (a) the
earlier of (i) the 10th day following the date of such notice, and (ii) five
days following the receipt of insurance proceeds with respect to any such Event
of Loss, or (b) such later date as Lender shall specify, pay to Lender an amount
that will be sufficient to prepay the Advance made in connection with the
related Lease and any accrued and unpaid interest and other charges hereunder
(if any) relating to that Advance. Upon acceleration of the Advances pursuant to
ss. 8.02, Borrower shall prepay all then-outstanding Advances.
4.04. INTEREST ON PAST DUE AMOUNTS. The interest rate on any amounts
that are past due (by acceleration or otherwise) and at any time outstanding
under any Advance or from Borrower under any other Basic Document shall (to the
extent permitted by law) be increased, from the due date until payment in full,
to a rate equal to 4% per annum above the Prime Rate, payable on demand.
4.05. LIMIT ON INTEREST PAYABLE. The amount of interest due or payable
under this Agreement or any related document shall not in any event exceed the
maximum allowable by applicable law, and this sentence shall override any
contrary provision in this Agreement or any related document.
4.06. APPLICATION OF PAYMENTS. Any payment that Lender receives from
Borrower under the Basic Documents shall be applied to the Secured Obligations
designated by Borrower at the time of payment, and to the extent not so
designated, shall be applied to the Secured Obligations in such order as Lender
elects, and Lender shall have the continuing and exclusive right to apply any
and all such non-designated payments to any portion of the Secured Obligations.
4.07. STATEMENTS OF ACCOUNT. Lender shall render a statement of
account monthly, and, absent manifest error, such statement shall bind Borrower
(unless Borrower notifies Lender in writing to the contrary within 10 days after
its receipt of that statement; and any such notice shall be deemed an objection
only to those items specifically objected to therein).
5. BORROWER'S REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
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5.01. CORPORATE STANDING. Borrower is a duly organized corporation
existing in good standing under the laws of Colorado, has the corporate power
and legal authority to own or lease its properties and to carry on its business
as now conducted and as now proposed to be conducted, and is duly qualified to
do business in all jurisdictions wherein the failure to qualify could have any
adverse effect on Borrower's financial condition or ability to perform its
obligations to Lender.
5.02. CORPORATE POWERS. Borrower's execution, delivery, and
performance of the Basic Documents to which it is (or is to become) a party are
within Borrower's corporate powers; and the Basic Documents to which it is (or
is to become) a party have been duly authorized by all necessary corporate
action on Borrower's part, and do not contravene, result in a breach of, or
require any consent under any law, judgment, decree, order, or contractual
restriction binding on Borrower or any agreement or instrument to which Borrower
is a party or to which it or any of its property is subject, the contravention
or breach of which, or the failure to obtain such consent, would have any
adverse effect on Borrower's financial condition or ability to perform its
obligations to Lender.
5.03. BINDING EFFECT. The Basic Documents to which Borrower is (or is
to become) a party are (or will be when executed and delivered) legal, valid,
and binding obligations of Borrower enforceable against Borrower in accordance
with their terms, except as may be limited by bankruptcy, insolvency, or other
similar laws affecting enforcement of creditors' rights generally and by
restrictions on the availability of equitable remedies.
5.04. LITIGATION. There are no pending or (to the best of Borrower's
knowledge) threatened actions or proceedings before any court or administrative
agency which may be expected to have a materially adverse effect on Borrower's
business or financial condition or which seek to question or set aside any of
the transactions herein contemplated.
5.05. FINANCIAL STATEMENTS. To Borrower's best knowledge, the audited
balance sheet as of May 31, 1998, as certified by KPMG Peat Marwick for Borrower
and its consolidated subsidiaries, and the related results of operations for the
year then ended, have been prepared in accordance with GAAP and fairly present
the financial condition of Borrower and its consolidated subsidiaries as of such
date and results of operations for such period, and since May 31, 1998, there
has been no materially advers change in Borrower's business, assets, operations,
or condition (financial or otherwise).
5.06. TAXES. Borrower has filed all tax returns which it is or was
required to file, and has paid all taxes shown to be due and payable on those
returns or on any assessment received by it, except such taxes of Borrower, if
any, as are being contested diligently in good faith, and by appropriate
proceedings, and as to which adequate reserves have been provided in accordance
with GAAP.
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5.07. LOCATION OF OFFICES. Borrower's chief executive office and
principal place of business, and the place where Borrower keeps its financial
records concerning the Collateral, is located at its address set forth inss.
10.02.
5.08. GOVERNMENTAL CONSENTS. Neither the execution, delivery, and
performance of any of the Basic Documents, nor the consummation of any of the
transactions contemplated thereby, requires the consent or approval of, giving
of notice to, registration with, or taking of any other action in respect of any
federal, state, or foreign governmental authority or agency (including any
judicial body) except for the filing of a UCC-1 financing statement for the
Leases with the Colorado Secretary of State, any necessary filings in other
jurisdictions with respect to Borrower's interest in the Equipment Portions, and
any necessary filings by Borrower against each Lessee.
5.09. ABSENCE OF ERISA LIABILITY. Each employee pension benefit plan
(as defined inss.3(2) of the Employee Retirement Income Security Act of 1974, as
from time to time amended ("ERISA")) of Borrower is in compliance with the
applicable provisions of ERISA and of the Internal Revenue Code of 1986, as from
time to time amended, in all respects, except to the extent that noncompliance
would not be materially adverse to Borrower's business, assets, financial
condition, or ability to perform its obligations under the Basic Documents.
5.10. INVESTMENT COMPANY STATUS. Borrower is not an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
5.11. SPECIFIC REPRESENTATIONS RE ASSIGNED LEASES. With respect to
each Lease subject to an Advance, that (a) the Lease is an Eligible Lease, is
genuine and in all respects what it purports to be, is enforceable according to
its terms, and (together with any master lease associated therewith) is and will
continue to be (except insofar as Lender otherwise consents in writing) the only
agreement executed in connection with the lease of the related Equipment
Portion; (b) all statements contained i the Lease agreement(s) are true as of
the date made; (c) except as specified in writing to Lender by Borrower before
the date of the related Advance, the Lessee has not paid any amount under or in
connection with the Lease before its scheduled due date; (d) the Lease
agreement(s) and the obligations evidenced thereby are, and, pursuant to the
terms and conditions of the Lease agreement(s), will continue to be, free and
clear of all defenses, set-offs, recoupment rights, counterclaims, Liens, and
claims of every kind and nature other than Permitted Liens; (e) Borrower has
good title to the related Equipment Portion and full right to enter into the
Lease; (f) the related Equipment Portion has been delivered to the Lessee in
satisfactory condition and has been unconditionally accepted by the Lessee under
11
the terms of the Lease agreement(s); (g) any and all sales taxes and other taxes
that may be payable with respect to this Agreement have been paid; (h) all
parties to the Lease agreement(s) have full capacity to contract; (i) Borrower
(and, to Borrower's knowledge, the Lessee) has observed and performed all the
covenants and obligations under the Lease agreement(s) required to be performed
by it, and Borrower shall remain liable to observe and to perform all the
covenants under the Lease agreement(s) required of it (and Lender shall not be
required or obligated in any manner to perform any of Borrower's covenants or
obligations under the Lease agreement(s) by reason of this Agreement or
otherwise); (j) Borrowe has no knowledge of any facts which impair the validity
of the Lease agreement(s) or make the Lease or the related Equipment Portion
less valuable than they appear; (k) except as specified in writing to Lender by
Borrower before the date of the related Advance, all filings, recordings, and
other legal requirements with respect to the related Equipment Portion, the
Lease, and the assignment thereof, and the perfection of all interests
contemplated by the Lease and the assignment thereof, have been complete and
complied with (or, to the extent such filings, recordings, or other legal
requirements are undertaken by Lender, Borrower will cooperate with Lender to
ensure completion and compliance of such filings, recordings, or requirements);
(l) the Lease arises out of a bona fide lease in the first instance of the
related Equipment Portion to the Lessee; (m) except as specified in writing to
Lender by Borrower before Lender makes the first Advance after Borrower becomes
aware of the default, no default or even or condition that would become a
default upon the giving of notice or lapse of time or both exists under the
Lease; and (n) except for sale-leasebacks as disclosed in writing to Lender by
Borrower before the date of the related Advance, prior to the execution of the
Lease, the Lessee did not have any direct or indirect interest in the related
Equipment Portion.
6. BORROWER'S COVENANTS
So long as any Advance, or any amount owed by Borrower under any
other Basic Document, remains outstanding or unpaid or Lender has any Commitment
hereunder:
6.01. FINANCIAL STATEMENTS. In addition to the reports required
▇▇▇▇.▇▇. 6.10 and 6.11, Borrower shall furnish to Lender:
(a) within 60 days after the end of each of the first three
quarters in each fiscal year, consolidated statements of operations of
Borrower and its consolidated subsidiaries for the period from the
beginning of the then-current fiscal year to the end of such quarterly
period, and balance sheets of Borrower and its consolidated
subsidiaries, on a consolidated basis, as of the end of such quarter
prepared in accordance with GAAP (other than with respect to footnotes)
and setting forth in each case in comparative form figures for the
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corresponding period in the preceding year, as provided in Borrower's
10-Q for the pertinent period (or with equivalent detail) and certified
by Borrower's chief financial officer (to his or her best knowledge),
subject to changes resulting from year-end adjustments;
(b) within 120 days after the end of each fiscal year,
consolidated statements of operations of Borrower and its consolidated
subsidiaries, for such year, and the balance sheets of Borrower and its
consolidated subsidiaries, on a consolidated basis, as of the end of
such year, setting forth in each case in comparative form corresponding
figures from the preceding annual audit, all in reasonable detail, and
certified to Borrower by its independent certified public accountants
and to Lender by a financial officer of Borrower (to his or her best
knowledge), as presenting fairly the financial position and results of
operations of Borrower and its consolidated subsidiaries and as having
been prepared in accordance with GAAP;
(c) within two Business Days after any officer of Borrower
obtains knowledge of any Default, an Officer's Certificate specifying
its nature, the period of its existence, and what action Borrower
proposes to take with respect to it; and
(d) promptly upon request, such other data or information
(financial or otherwise) regarding Borrower or the Collateral as Lender
from time to time reasonably requests.
6.02. INSPECTION OF COLLATERAL AND RECORDS. Borrower shall permit
(and shall cause each Lessee to permit) any person(s) from time to time
designated in writing by Lender, at Borrower's expense, to visit and inspect any
of the Collateral and Borrower's records with respect to the Collateral
(including Borrower's credit files with respect to any Lessee), at such times as
Lender reasonably requests, and to discuss Borrower's affairs, finances, and
accounts with Borrower's officers. No such inspection shall unreasonably
interfere with Borrower's (or any Lessee's) operations or maintenance. Lender
shall have no duty to make any such inspection and shall not incur any liability
or obligation by reason of not making any such inspection. In addition, Lender
may send auditors, at Borrower's expense, up to twice per calendar year, to
audit Borrower's books and records generally.
6.03. CORPORATE EXISTENCE. Except as permitted by ss. 6.04, Borrower
shall maintain its corporate existence in good standing in the jurisdiction of
its incorporation, from time to time, and in all jurisdictions where its
qualification is required by applicable law (except in any jurisdiction in which
the failure to qualify would have no materially adverse effect on its business
or on its ability to carry out its obligations under the Basic Documents to
which it is (or is to become) a party). Borrower shall preserve and renew its
rights (charter and statutory), patents, and franchises, unless Borrower
13
determines in good faith that the preservation thereof is no longer necessary or
desirable in the conduct of its business and that the loss thereof will not
adversely affect Lender's rights or Borrower's business, assets, operations,
condition (financial or otherwise).
6.04. MERGER, etc. Borrower shall not consolidate or merge with any
other Person, or convey, transfer, or lease all or substantially all of its
assets as an entirety to any Person, without Lender's prior written consent.
6.05. COMPLIANCE WITH ERISA.
(a) Borrower will, at all times, make prompt payment of
contributions that it is required to make to any employee benefit plan
to which it is a party as are necessary to meet the minimum funding
standards for such an employee benefit plan, as required by ERISA.
(b) Within two Business Days after the occurrence of any event
or circumstance (including any event which is classified as a
"Reportable Event" under ERISA) that might constitute grounds for
termination of an employee benefit plan to which Borrower is a party by
the Pension Benefit Guaranty Corporation or might result in the
appointment of a trustee by a United States District Court under ss.
4042 oF ERIsa to administer such employee benefit plan, Borrower will
provide Lender with an Officer's Certificate describing the event or
circumstance, stating the reasons (to the extent then known to
Borrower) for any such action by the Pension Benefit Guaranty
Corporation or a United States District Court, and specifying the
action Borrower proposes to take (or tentatively proposes to take) with
respect thereto. Borrower shall update such reasons and proposed course
of action upon Lender's request from time to time.
6.06. PAYMENT OF TAXES. Borrower shall pay and discharge all taxes,
assessments, and governmental charges upon it, its income, and its properties
before the date on which penalties attach thereto, except to the extent being
contested diligently and in good faith by appropriate proceedings, and provided
that Borrower maintains reasonable reserves on its books therefor.
6.07. MAINTENANCE OF INSURANCE.
(a) Borrower shall cause each Lessee to maintain, with insurers
of recognized favorable reputation and responsibility, all-risk
physical damage insurance covering each Equipment Portion leased by it,
which is of the type and form, and in an amount not less than that,
carried by prudent operators on similar equipment and is in an
aggregate amount not less than the then-outstanding principal of the
Advance for such Equipment Portion. Such insurance shall be of the type
usually carried by corporations engaged in the same or a similar
business as such Lessee, similarly situated with such Lessee and owning
and leasing similar items of equipment, and covering risks of the kind
customarily insured against by such corporations. Each Lessee may
14
self-insure, by way of deductible or premium adjustment provisions in
insurance policies or otherwise, the risks required to be insured
against, to the extent agreed by Lender. Any policies maintained in
accordance with this ss. 6.07 shall (1) name Borrowe as an additional
insured thereunder, and (2) provide that all payments at least up to
the principal amounts relating to the Equipment Portion(s) involved
shall be payable to Borrower, as loss payee.
(b) Borrower shall cause Lender to be named as an additional
assured and loss payee with respect to the Equipment in Borrower's
contingent insurance policies.
(c) Borrower shall apply any proceeds of insurance received as a
result of an Event of Loss with respect to any Equipment Portion to the
Secured Obligations relating to that Equipment Portion.
6.08. MAINTENANCE PROPERTY AND MANAGEMENT. Borrower shall maintain
its property in good working condition and its management reasonably
satisfactory to Lender.
6.09. AGREEMENTS AS TO LEASES. Borrower hereby covenants (1) not to
assign its rights to any Lease, Equipment Portion, or other item of Collateral,
to any person other than Lender, (2) not to amend, waive, or modify any
provision of any Lease agreement, or permit any assignment or subletting by any
Lessee, without Lender's prior written consent, and (3) to fulfill, perform, and
observe each and every condition and covenant of Borrower contained in the Lease
agreements (and to indemnify Lender against any setoff, counterclaim,
recoupment, or defense that any Lessee asserts to its obligations to make
payments under any Lease).
6.10. LEASE STATUS REPORTS. Borrower shall, monthly, furnish to
Lender a current schedule of the Leases which includes, with respect to each
Lease: (a) the name of the Lessee, (b) the amount and aging of the monthly
rental payment(s) due under the Lease, (c) the total of the remaining rental
payments, and (d) any then-existing default(s) thereunder.
6.11. NOTICE OF LEASE DEFAULT. Promptly, upon its obtaining knowledge
thereof, Borrower will notify Lender orally, confirmed promptly in writing, of
the occurrence of any default under any Lease if that default (if not waived)
would give Borrower the right to cancel that Lease or to accelerate the
obligations of the Lessee thereunder, or of any default by a Lessee of the type
described in ss. 8.01 (e) or (f) hereof, except that any default in making
scheduled rental payments shall be sufficiently disclosed if reflected in the
following monthly report under ss. 6.10.
6.12. VERIFICATION OF LEASES. Lender may, at any time in its sole
discretion, contact any or all Lessees in order to verify the validity and
status of the Leases. Upon Lender's request from time to time, Borrower shall
deliver to Lender a current list of addresses and telephone numbers of all
Lessees.
15
6.13. LIENS. Borrower will not directly or indirectly create, incur,
assume, or suffer to exist any Lien on or with respect to any Equipment Portion,
any Lease, or this Agreement except: (a) the rights of the parties to the Basic
Documents, including the Lien created by this Agreement; (b) the rights of
Permitted Lessees under Leases; (c) Liens for taxes, assessments, or other
governmental charges either not yet due or being contested in good faith (and
for the payment of which adequate reserve have been provided) by appropriate
proceedings, so long as such proceedings do not involve any material risk of the
sale, forfeiture, loss, or loss of use of any Equipment Portion; (d)
materialmen's, mechanics', workers', repairers', employees', or other like Liens
arising in the ordinary course of business for amounts the payment of which is
not yet due; (e) Liens arising out of any judgment or award that is, within 30
days after entry thereof, discharged, vacated, or appealed with execution
thereof stayed pending appeal; and (f) a transferee's rights resulting from
Lender's voluntary transfer of its rights in any Lease or Equipment Portion or
under this Agreement. Borrower will promptly take (or cause to be taken) such
action at its own expense as may be necessary duly to discharge any such Lien
not excepted by the preceding sentence.
6.14. SPECIFIC COVENANTS RE ASSIGNED LEASES. Borrower covenants and
agrees, with respect to each Lease subject to an Advance, that (a) any
requirement of new or further filings, recordings, or renewals with respect to
the related Equipment Portion, the Lease, and the assignment thereof shall be
complied with by Borrower; (b) Lender may undertake any such filing, recording,
or renewal (but Lender shall have no responsibility or obligation whatsoever for
any omission or invalid accomplishment thereof); (c) Borrower will not create
any Lien on the Lease or the related Equipment Portion other than as permitted
by ss. 6.13; (d) Borrower shall have no right to accept the return of or
repossess any Equipment Portion or waive, modify, or terminate any Lease or any
related guarantee in any way without Lender's prior written consent, except
Borrower may accept the return of equipment pursuant to the ordinary course of
Borrower's leasing business (in which event clauses (ii), (iii) and (iv) of
clause (e) below shall apply to such equipment); (e) if any of the related
Equipment Portion comes into Borrower's possession, Borrower will (i) promptly
notify Lender, (ii) keep the related Equipment Portion secure, in good repair,
and fully insured against all usual risks, naming Lender as an additional
insured and sole loss payee under the policy of insurance, (iii) hold the
related Equipment Portion for Lender's account and subject to Lender's
instructions, and (iv) not permit any of the related Equipment Portio to pass
into the possession, custody, or control of any person other than Borrower or
Lender; and (f) Borrower shall, until receipt of notice to the contrary from
Lender, collect all proceeds of the Lease and hold such proceeds separate and
distinct from other funds of Borrower, and Borrower shall remit such proceeds to
Lender on or before the applicable Maturity Date for the related Advance
16
(provided, that Borrower shall not be required to remit such proceeds to Lender
if such proceeds are received after the applicable Maturity Date under the
related Advance and Borrower has previously paid to Lender the applicable
payment under the related Advance).
6.15 COLLATERAL REPORTING. Borrower shall provide to Lender, on a
weekly basis, a borrowing base certificate in form acceptable to Lender.
Borrower shall provide to Lender such other collateral reports as Lender
requests from time to time.
7. CONDITIONS PRECEDENT TO ADVANCES
7.01. CONDITIONS PRECEDENT TO THE INITIAL ADVANCE. Lender's obligation
to make the initial Advance on the first Funding Date is subject to Lender's
receipt on or before such initial Funding Date of the following, in form and
substance satisfactory to Lender:
(a) a certificate of the Secretary or an Assistant Secretary of
Borrower, dated on or before the Funding Date, certifying attached
copies of the resolutions of Borrower's board of directors evidencing
approval of the transactions contemplated by the Basic Documents to
which it is (or is to become) a party, and showing the names and
specimen signature(s) (or copies thereof) of Borrower's officer(s)
authorized to sign this Agreement and the related documents to which it
is (or is to become) a party,
(b) a favorable opinion from Borrower's counsel; and
(c) the fee referred to in ss. 2.03.
7.02. CONDITIONS PRECEDENT TO ALL ADVANCES. Lender's obligation to
make each Advance (including the initial Advance) is subject to the additional
conditions precedent that:
(a) Lender shall have received the following, each dated as of
the pertinent Funding Date, in form and substance satisfactory to
Lender:
(1) an executed Supplement for the related Lease;
(2) the original chattel paper for that Lease, with a
certificate of Borrower certifying that it is the only chattel
paper for that Lease, that there is no amendment, modification,
waiver, or consent pertaining to that Lease (other than those,
if any, attached to that certificate), and that, to Borrower's
knowledge, no default exists with respect to that Lease and no
Event of Loss has occurred to any equipment included in the
related Equipment Portion; and
17
(3) such additional document(s) as Lender reasonably
requests;
(b) Borrower's representations and warranties in the Basic
Documents shall be true and accurate as though made on and as of such
Funding Date, and shall be confirmed by an officer's certificate from
Borrower's chief financial officer;
(c) no Default shall exist or shall result from Lender's
making such Advance;
(d) all filings, recordings, and other actions necessary to
establish, protect, preserve, and perfect Lender's interests under this
Agreement (including filings (1) in Colorado by Borrower in favor of
Lender, covering each Lease and Equipment Portion, and (2) (except as
otherwise specified pursuant toss. 5.11(k)) in the location of each
Equipment Portion, by Borrower in favor of Lender, covering the
Equipment Portion under each Lease then being financed) shall have been
duly made or taken;
(e) all necessary consents, approvals, licenses, permits,
declarations, or registrations then required in connection with the
execution, delivery, performance, validity, and enforceability of the
Basic Documents and the transactions contemplated thereby shall have
been obtained;
(f) Lender shall have received evidence satisfactory to it
that Borrower has good title to each Equipment Portion under each Lease
then being financed, and that such Lease and Equipment Portion are free
of any Lien other than any Permitted Lien (including, to the extent
necessary, evidence that Borrower's primary bank group has released or
terminated its Lien on such Lease and Equipment Portion);
(g) in Lender's reasonable judgment, since May 31, 1998, no
materially adverse change shall have occurred to Borrower's business,
financial condition, or operations,
(h) no regulatory change shall have occurred since November 1,
1998 that, in Lender's judgment, imposes or modifies any reserve,
special deposit, minimum capital, capital ratio, or similar
requirements relating to any extensions of credit or other assets of or
any deposits with or other liabilities of Lender or any of its
affiliates, or the manner in which Lender or any of its affiliates
funds (or allocates funds, on its books, for) investments in any of the
Leases or Advances,
(i) the lease proposed to be funded by that Advance involves
goods owned by Borrower, acceptable to Lender and located in the United
States, involves a lessee acceptable to Lender, and is otherwise
satisfactory to Lender in the reasonable exercise of its commercial
discretion, and
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(j) the Borrowing Base shall not be exceeded by that Advance.
8. EVENTS OF DEFAULT; REMEDIES
8.01. Events of Default. Each of the following shall constitute an
"Event of Default":
(a) Borrower fails to make any payment due from Borrower on any
Advance or under any other Basic Document within five days after it
becomes due;
(b) any representation or warranty made by Borrower in the
Basic Documents, or in any certificate or other document that it
furnishes pursuant to the Basic Documents, is incorrect in any material
respect when made;
(c) Borrower fails to provide Lender with the Officer's
Certificate required byss.6.01(c) or 6.05(b) within two Business Days
after any of Borrower's officers obtains notice of a Default or the
ERISA-related event or circumstance occurs, respectively;
(d) Borrower fails to perform any other covenant or agreement
in the Basic Documents, and (if remediable) such failure to perform
continues for 30 days after Borrower's receipt of notice of such
default from Lender;
(e) Borrower (1) applies for or consents to the appointment of
or the taking of possession by, a receiver, custodian, trustee, or
liquidator of itself or of all or a majority of its property, (2) makes
a general assignment for the benefit of its creditors, (3) commences a
voluntary case under the federal Bankruptcy Code (as now or hereafter
in effect), or (4) files a petition seeking to take advantage (as
debtor) of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or readjustment of debts;
(f) a proceeding or case is commenced, without Borrower's
application or consent, in any court of competent jurisdiction, seeking
(1) its liquidation, reorganization, dissolution, or winding-up, or the
composition or readjustment of its debts, (2) the appointment of a
trustee, receiver, custodian, liquidator, or the like of Borrower or of
all or a majority of its assets, or (3) similar relief in respect of
19
Borrower under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and
such proceeding or case continues undismissed, or an order, judgment,
or decree approving or ordering any of the foregoing is entered and
continues unstayed and in effect, for a period of 60 days; or an order
for relief against Borrower is entered in an involuntary case under the
federal Bankruptcy Code;
(g) recourse loan, lease, or deferred purchase obligations of
Borrower totalling more than $1.5 million are in default after the
expiration of any applicable grace period, if the effect of such
default is to permit such obligations to be accelerated or otherwise
declared to be due and payable prior to their stated maturity, or
Borrower defaults in the payment within 10 days after the stated
maturity of more than $1.5 million of recourse loan, lease, or deferred
purchase obligations;
(h) one or more judgment(s) is/are rendered by one or more
court(s) of competent jurisdiction against Borrower for a total of more
than $1.5 million and is/are not stayed or discharged, or fully bonded
against, within 30 days of the date of entry; or
(i) any "Reportable Event" with respect to Borrower under ERISA
shall have occurred, or any finding or determination shall be made with
respect to an employee benefit plan to which Borrower is a party under
ss. 4041(c) or (e) oF ERIsa, or any fact or circumstance shall occur
with respect to an employee benefit plan to which Borrower is a party,
that, in Lender's opinion, provides grounds for the commencement of any
proceeding under ss. 4042 OF Erisa, or any proceeding shall be
commence under ss. 4042 oF ERIsa with respect to an employee benefit
plan to which Borrower is a party; or
(j) a default exists under any other existing or future
agreement or instrument of Borrower's with or in favor of Lender or any
direct or indirect affiliate of Lender's.
8.02. REMEDIES.
(a) If an Event of Default (other than underss.8.01(e) or (f))
exists, Lender may declare all Advances and other Secured Obligations
to be immediately due and payable, whereupon all Advances and other
Secured Obligations shall become and be immediately due and payable
without presentment, demand, protest, or other notice of any kind, all
of which Borrower hereby waives, and the Commitment shall terminate. If
an Event of Default underss.8.01(e) or (f) occurs, all Advances and
other Secured Obligations automatically shall become immediately due
and payable and the Commitment automatically shall immediately
terminate, without presentment, demand, protest, or notice of any kind,
all of which Borrower hereby waives.
(b) If the unpaid balance of the Secured Obligations has
become (by declaration or otherwise) immediately due and payable, then,
20
and in every such case, Lender (1) may exercise any or all of the
rights and powers and pursue any and all of the remedies available to
it hereunder or available to a secured party under the Uniform
Commercial Code or any other provision of applicable law, (2) may
proceed to perform any and all of Borrower's obligations or exercise
any and all of Borrower's rights under any Lease as fully as Borrower
itself could, all without regard to the adequacy of security for the
indebtedness hereby secured and with or without bringing any legal
action or causing any receiver to be appointed by any court or other
judicial authority, and (3) may sell, assign, transfer, and deliver the
whole, or from time to time, to the extent permitted by law, any part
of the Collateral or any interest therein, at any private sale or
public auction with or without demand, advertisement, or notice (except
as herein required or as may be required by law) of the date(s),
time(s), and place(s) of sale and any adjournment(s) thereof, for cash
or credit or other property, for immediate or future delivery and for
such price(s) and on such terms as Lender in its discretion determines
or as are required by law. It is agreed that five Business Days' notice
to Borrower of the date(s), time(s), and place(s) (and terms, in the
case of a private sale) of any proposed sale by Lender of the
Collateral (or any part thereof or interest therein) is reasonable.
(c) If the unpaid balance of the Secured Obligations has
become (by declaration or otherwise) immediately due and payable,
Borrower shall promptly execute and deliver to Lender such instruments
of title and other documents as Lender deems necessary or advisable to
enable Lender (or an agent or representative designated by Lender), at
such time(s) and place(s) as Lender may specify, to obtain possession
of all or any part of the Collateral that Lender shall at the time be
entitled to possess hereunder. If Borrower fails to execute and deliver
any such instrument(s) or document(s) after demand by Lender, Lender
may (1) obtain a judgment conferring on Lender the right to immediate
possession of the Collateral and requiring Borrower to deliver such
instrument(s) or document(s) to Lender, and (2) pursue all or any part
of such Collateral wherever it may be found and enter any of the
premises of Borrower or any Lessee wherever such Collateral may be or
may be supposed to be and search for such Collateral and take
possession of and remove such Collateral.
(d) Upon every such taking of possession, Lender may, from time
to time, but shall have no obligation to, make all such expenditures
for maintenance, insurance, repairs, replacements, and alterations to
and of the Collateral as it deems proper, and all such expenditures
shall be Secured Obligations. In each such case, Lender shall have the
right to use, operate, store, or manage the Collateral as Lender deems
best, including the right to enter into any and all such agreements
with respect t the maintenance, operation, leasing, storage, or
disposition of the Collateral or any part thereof as Lender deems
appropriate; and Lender shall be entitled to collect and receive all
rents, revenues, income, and profits of the Collateral and every part
thereof, without prejudice, however, to the right of Lender under any
provision of this Agreement to collect and receive all cash held by, or
21
required to be deposited with, Lender hereunder. Such rents, revenues,
income, and profits shall be applied to pa the expenses of holding and
operating the Collateral, and of all maintenance, repairs,
replacements, and alterations, and to make all payments which Lender is
required or elects to make, if any, for taxes, assessments, insurance,
or other proper charges upon the Collateral or any part thereof
(including the employment of shipping personnel and accountants to
examine, inspect, and make reports upon the Collateral and the books
and records of Borrower relating thereto), and all other payments which
Lender i required or authorized to make under any provision of the
Basic Documents, as well as the out-of-pocket expenses of Lender
(including fees and commissions for remarketing or arranging financing
for the Collateral) with respect thereto, and any balance shall be
applied to interest on, then to other charges hereunder (if any) with
respect to, and then to the principal of the Secured Obligations, and
thereafter to Borrower unless otherwise required by law.
(e) Each and every right, power, and remedy given to Lender in
the Basic Documents shall be cumulative and shall be in addition to
every other right, power, and remedy in the Basic Documents now or
hereafter existing at law, in equity, or by statute, and each and every
right, power, and remedy may be exercised from time to time and as
often and in such order as Lender deems expedient, and the exercise or
the beginning of the exercise of any right, power, or remedy shall not
be construed to b a waiver of the right to exercise at the same time or
thereafter any other right, power, or remedy. No delay or omission by
Lender in exercising or pursuing any right, remedy, or power shall
impair any such right, power, or remedy or be construed to be a waiver
of any default on the part of Borrower or to be an acquiescence
therein.
(f) If Lender has proceeded to enforce any right, power, or
remedy under this Agreement by foreclosure, entry, or otherwise, and
such proceeding has been discontinued or abandoned for any reason or
has been determined adversely to Lender, Borrower and Lender shall be
restored to their former positions and rights hereunder with respect to
the Collateral, and all rights, remedies, and powers of Lender shall
continue as if no such proceedings had been taken.
(g) Anything to the contrary in this sec.8 notwithstanding,
Lender shall not disturb any Permitted Lessee's rights to any Equipment
Portion, except to the extent permitted by the related Lease.
9. BORROWER'S INDEMNITIES
9.01. GENERAL INDEMNITY. Borrower assumes liability for, and agrees
to indemnify each Indemnitee against, and on written demand to pay, or to
reimburse each Indemnitee for the payment of, any and all Liabilities, all
subject to the provisions of thisss. 9.01.
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"Liabilities" means any and all liabilities, obligations,
damages, penalties, claims, taxes, and expenses, including legal fees and
expenses, of whatsoever kind and nature imposed on, incurred by, or asserted
against any Indemnitee relating to or arising out of any Lease, any Equipment
Portion, any Basic Document, or the enforcement against Borrower of any of the
terms of the Basic Documents.
However, this ss. 9.01 shall not require Borrower to pay or indemnify
any Indemnitee under this section: (i) for any Liability to the extent resulting
from such Indemnitee's acts of gross negligence or willful misconduct; (ii) for
any cost or expense relating to the preparation, execution, delivery, or
enforcement of the Basic Documents (Borrower's duties in respect of such costs
and expenses being set forth in ss. 10.03); (iii) for any Liability that such
Indemnitee incurs to the extent resulting resulting from such Indemnitee's
breach of any of its representations, warranties, or covenants in any Basic
Document, or from its disturbance of any Permitted Lessee's rights under any
Lease (except to the extent permitted by the agreement(s) governing that Lease);
(iv) for any tax on Lender's net income imposed by any federal, state, or local
taxing authority in the United States; (v) for any Liability with respect to
transfer taxes or other expenses payable with respect to the transfer of
Lender's rights under the Basic Documents, other than a transfer after the
occurrence of an Event of Default; (vi) for any violation or purported violation
of any usury law, or (vii) for any Liability that, by virtue of ss. 11.01, is
non-recourse to Borrower personally.
Borrower shall be obligated under this ss.9.01 irrespective of whether
the Indemnitee is also indemnified with respect to the same matter under any
other Basic Document or other document by any other Person, and the Indemnitee
may proceed directly against Borrower under this ss.9.01 without first resorting
to any such rights of indemnification. Upon the payment in full of any
indemnities due and owing under this ss.9.01, Borrower shall be subrogated to
any right of the Indemnitee in respect of the matter against which indemnity has
been given. Borrower's indemnities in this section shall survive expiration or
termination of this Agreement and payment in full of the Advances.
Any payment or indemnity pursuant to this ss. 9.01 shall include the
amount, if any, necessary to hold the Indemnitee harmless on an after-tax basis
from all taxes required to be paid by such recipient with respect to such
payment or indemnity under laws of any federal, state, or local government or
taxing authority in the United States or by any foreign government or any
political subdivision or taxing authority thereof. The amount of any payment or
indemnity required under this section shall be determined by the Indemnitee
reasonably and in good faith. Upon Borrower's request and at Borrower's expense,
the Indemnitee will provide Borrower with a summary explanation of the basis for
the Indemnitee's computations.
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10. MISCELLANEOUS
10.01. NO WAIVERS; CUMULATIVE REMEDIES. No failure or delay in
exercising any power or right under any Basic Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power
preclude other or further exercise thereof or the exercise of any other right or
power under any Basic Document. No notice to or demand on any party in any case
shall, of itself, entitle such party to any other or further notice or demand in
similar or other circumstances.
10.02. NOTICES. All communications and notices provided for under this
Agreement shall be in writing (including telecopy), and shall be mailed by
certified mail (return receipt requested) or otherwise delivered to the parties
at the following addresses:
if to Lender: NationsBanc Leasing Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Sr. Vice President - Credi
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to Borrower: Capital Associates International, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Assistant Treasurer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or, as to each party, at such other address as it designates by notice to each
other party. Each such notice shall be effective upon delivery.
10.03. TRANSACTION EXPENSES. Borrower will pay, on demand, all
out-of-pocket expenses of Lender reasonably incurred in connection with the
preparation, execution, delivery, and enforcement of the Basic Documents, or in
connection with any scheduled closing that is postponed or cancelled, including:
(i) all fees and expenses of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, special counsel to Lender
(not to exceed $15,000 through the date of this Agreement); (ii) all UCC and
other filing and lien search fees; (iii) all fees and expenses (including legal
fees and expenses) of Lender in connection with actual or proposed amendments,
waivers, or consents to or under this Agreement or the other Basic Documents;
and (iv) all fees and expenses (including legal fees and expenses) of Lender in
connection with the actual or proposed enforcement of any Basic Document against
Borrower during the existence of any Default.
10.04. AMENDMENTS, WAIVERS, CONSENTS, etc. No provision of the Basic
Documents may be amended, terminated, waived, or otherwise modified except in
writing by Borrower and Lender.
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10.05. SUCCESSORS AND ASSIGNS. This Agreement shall bind and benefit
Lender and Borrower and their successors and assigns, except that Borrower may
not assign or transfer its rights under this Agreement without Lender's prior
written consent. Lender may at any time sell, assign, grant participation(s) in,
or otherwise transfer any Advance and Lender's rights relating to such Advance,
in whole or in part.
10.06. GOVERNING LAW. This Agreement shall be governed by the laws of
Georgia (excluding any conflict-of-laws rule that would apply the laws of any
other jurisdiction).
10.07. HEADINGS. Section headings used in t his Agreement are for
convenience only and are not a substantive part of this Agreement.
10.08. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
separate counterparts.
10.09. TERMINATION OF AGREEMENT. This Agreement and the security
interests created hereby shall terminate, and this Agreement shall be of no
further force or effect, upon the full and final payment of the Secured
Obligations (but, whether or not any loan balance exists, shall not terminate
before Lender's Commitment expires under ss. 2.01). Upon any such full and final
payment, Lender shall pay all excess money or other properties or proceeds
constituting part of the Collateral to Borrower, this Agreement and the security
interests created hereby shall terminate, and Lender shall execute and deliver
any instrument evidencing such termination as Borrower reasonably requests. This
Agreement and the security interests created hereby shall terminate as to any
Lease and Equipment Portion upon full and final payment of the Advance made in
connection with such Lease and Equipment Portion and the payment of all amounts
due under this Agreement with respect to such Lease or Equipment Portion, and
upon an such full and final payment, Lender shall execute and deliver a partial
release letter in the form of Exhibit B hereto and any other instruments
evidencing such termination as Borrower reasonably requests.
10.10. SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS. All
representations, warranties, and covenants in this Agreement or made in writing
in connection with this Agreement shall survive the execution and delivery of
this Agreement, and shall continue until all Advances have been fully and
finally paid, all Borrower's other obligations to Lender under this Agreement
have been fully and finally discharged, and Lender has terminated this Agreement
in writing.
10.11. SEVERABILITY. If any part of any provision contained in this
Agreement, or any document contemplated hereby, is or becomes invalid or
unenforceable under applicable law, that part shall be ineffective to the extent
of such invalidity only, without in any way affecting the remaining parts of
that provision or the remaining provisions.
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10.12. FURTHER ASSURANCES. Borrower shall duly execute and deliver (or
cause to be duly executed and delivered) any instrument, invoice, document,
waiver, consent, or other writing that Lender deems necessary or appropriate to
carry out the terms of this Agreement or any of the other Basic Documents.
10.13. COMMERCIAL TRANSACTION. Borrower hereby acknowledges that its
obligations hereunder arise out of a "commercial transaction" (as defined in
▇.▇.▇.▇.▇▇. 44-14-260(1), concerning foreclosure of interests in personal
property). BORROWER KNOWINGLY AND INTELLIGENTLY WAIVES ANY AND ALL RIGHTS IT MAY
HAVE TO ANY NOTICE OR POSTING OF A BOND BY LENDER PRIOR TO SEIZURE BY LENDER (OR
LENDER'S TRANSFERREES, ASSIGNS, OR SUCCESSORS IN INTEREST) OF THE COLLATERAL OR
ANY PORTION THEREOF. This is intended by Borrower as a "waiver" as defined in
O.C.G.A. ss. 44-14-260(3) (relating to foreclosure of interests in personal
property).
10.14. TIME IS OF THE ESSENCE. Time is of the essence of this
Agreement.
10.15. ENTIRE AGREEMENT. This Agreement (and, when executed and
delivered, each Supplement) shall embody the entire agreement and understanding
between the parties hereto and supersede all prior agreements and understandings
relating to the subject matter hereof.
10.16. CONSENT TO JURISDICTION. BORROWER HEREBY IRREVOCABLY SUBMITS TO
THE NONEXCLUSIVE JURISDICTION OF ANY FEDERAL OR STATE COURT SITTING IN ATLANTA,
GEORGIA, in any action or proceeding arising out of or relating to this
Agreement or any of the other documents or agreements described or contemplated
herein, and Borrower hereby irrevocably agrees that all claims in respect of
such action or proceeding may be heard and determined in any such federal or
state court. Service of copies of the summons on Borrower in any such action or
proceeding may be made by mailing or delivering a copy of such process to
Borrower in accordance with ss. 10.02.
10.17. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH WAIVE ALL
RIGHTS TO A TRIAL BY JURY in any action or proceeding relating to transactions
arising out of or relating to this Agreement or any of the other documents
described or contemplated herein.
11. LIMITATION OF PERSONAL LIABILITY
--------------------------------
11.01. LIMITATION OF PERSONAL LIABILITY. Notwithstanding anything to
the contrary contained in this Agreement or any other Basic Document, Lender
shall not seek any deficiency judgment against Borrower in any action to
foreclose the Lien of this Agreement, except (a) to the extent legally necessary
to recover against insurance, escrow, or other funds held by Lender, or
26
collateral in which Lender has a security interest, pursuant to the terms of the
Basic Documents, (b) to the extent of Borrower representations, warranties,
covenants, and other undertakings under the Basic Documents, other than the
covenants to repay the principal amount of the Advances at their Maturity
Date(s), or (c) to the extent of any obligation expressly stated to be
"recourse" to Borrower pursuant to this Agreement. Subject to the exceptions
noted in the preceding sentence, any judgment obtained in any suit brought under
the Loan Documents shall not be enforced personally against Borrower but may be
enforced against: (aa) the Collateral, (bb) any funds held by Lender pursuant to
any Basic Document, (cc) insurance and condemnation/confiscation awards and
proceeds, if any, and (dd) security and escrow deposits, if any. Nothing in this
paragraph shall: (aaa) operate to release or impair the Secured Obligations,
(bbb) preclude Lender from foreclosing upon the Collateral or any part thereof
in case of any default, or enforcing any of its other rights or remedies under
any Basic Document, at law, or in equity, except as such rights or remedies are
expressly limited hereby, (ccc) prejudice Lender's rights or remedies against
any other individual or entity now or hereafter liable under, or for the payment
of, any Basic Document, or Borrower or any individual or entity now or hereafter
liable under any lease, guaranty, bond, policy of insurance, or endorsement or
assignment of any note, or (ddd) prejudice Lender's rights as against Borrower
and its shareholders for fraud, waste, misapplication of insurance or trust
funds, including any security deposits or condemnation/confiscation awards or
proceeds that may come into Borrower's possession or control, or for any other
matter excepted above.
27
IN WITNESS WHEREOF, Borrower and Lender have executed this Warehousing
Loan and Security Agreement.
[Seal] CAPITAL ASSOCIATES INTERNATIONAL, INC.
Attest:
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ----------------------------------
-------------------------------------- ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
--------------------------------
NATIONSBANC LEASING CORPORATION
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
--------------------------------
