EXHIBIT 10.7
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT, effective in all respects as of the 16th
day of August, 1995, by and between HARBOUR GROUP INVESTMENTS III, L.P., a
Delaware limited partnership, 0000 Xxxxxxx Xxxxxxxxx, Xx. Xxxxx, Xxxxxxxx
00000-0000 ("Holder") and X. Xxxxx Stiff, 000 Xxxx Xxxxxx Xxxxx, Xxxx Xxxx,
Xxxxxxxxx 00000 ("Participant").
RECITALS:
A. Holder has purchased or is about to purchase a 15% Subordinated
Note, Due August 31, 2003, in the original principal amount of $2,000,000
(the "Note") from TRAK International, Inc., a Delaware corporation
("Issuer"), pursuant to the loan documentation attached hereto and made a
part hereof by reference consisting of the following: the Note and the
Subordinated Note Purchase Agreement dated August 16, 1995 (collectively
called the "Loan Documents").
B. Participant desires to purchase and Holder desires to sell a pro
rata participation in the above-referenced loan, on a non-recourse basis, on
the terms and conditions more fully hereinafter set forth.
1. DEFINITIONS.
(a) "Loan" means the principal amount of the subject loan, and all
advances, disbursements and other extensions of credit (and any extensions or
renewals of time for payment thereof) made or to be made by Holder to or on
behalf of Issuer pursuant to the said Loan Documents;
(b) "Collateral" means and includes the Loan Documents, and any
opinions of counsel, corporate and/or partnership certifications, and all
other instruments and documents received by Holder from or on behalf of
Issuer or otherwise required by Holder in connection with the Loan, together
with all extensions, renewals or modifications thereof; and
(c) "Collections" means all money (net of collection expenses
reasonably incurred by Holder as set forth in Paragraph 5 hereof), from
whatever source derived, received by Holder from time to time on account of
the Loan or as proceeds of the Collateral.
2. SALE OF PARTICIPATION.
Holder hereby sells to participant, and Participant hereby purchases
from and agrees to pay Holder, for a three percent (3%) pro rata
participation in the Loan on the terms and conditions herein set forth. As
funds are advanced under the Loan, Holder and Participant will each advance
their fractional share of each advance. Participant's share of the Loan
shall be a fractional interest in the Loan to the extent of Participant's
actual contributions from time to time in the principal amount of the Loan
outstanding.
3. DOCUMENTATION.
Holder will retain the executed Loan Documents, true and correct copies
of which (as executed) have been heretofore or shall be delivered to
Participant, and shall make such Loan Documents available to Participant for
inspection at Holder's offices. Without Participant's prior consent, Holder
will not: (i) undertake to modify, extend, renew, amend or supplement the
Loan Documents or any of the Collateral , or (ii) release, waive or discharge
any obligations of the Issuer or the Collateral, except upon payment of the
Loan in accordance with the Loan Documents.
4. ADMINISTRATION.
(a) The Loan Documents and the Collateral shall be dealt with and
enforced by Holder, in Holder's own name, on behalf of Holder and
Participant. Holder will promptly notify Participant of any default in
payment under the Loan Documents which is not cured within thirty (30) days
of the due date of such payment and of any action proposed to be taken by
Holder in the administration of the Loan not in the ordinary course of
business. Holder will service the Loan in accordance with Holder's usual
practices and in conformity with the Loan Documents, in the ordinary course
of business, and Holder shall bear the usual servicing expenses except as is
hereinafter provided in Paragraph 5;
(b) When and as Holder shall be obligated to advance $2,000,000
under the Loan Documents, Participant shall make available to Holder on
demand $60,000, in immediately available funds or in other form reasonably
acceptable to Holder;
(c) Holder will receive and receipt for all Collections (on our
joint behalves) and will apply the same to Issuer's account, our respective
amounts in the Loan will be increased or reduced as each advance is made or
as principal is repaid. Participant's share of Collections will be remitted
to Participant as received by Holder, as Participant shall instruct.
Participant shall bear the risk of loss pro rata in accordance with its
fractional interest in the outstanding principal of the Loan without recourse
to Holder;
(d) Holder will not be liable to Participant for any action taken
or omitted, or for errors in judgment, except as the same may arise from
Holder's gross negligence or willful misconduct. Although Holder believes
the Loan to be collectible in accordance with the terms of the Loan
Documents, Holder does not assume or warrant and shall have no responsibility
or liability (expressed or implied) for the collectibility, enforceability,
adequacy, genuineness or validity of the Loan, Loan Documents or the
Collateral, or any credit or other information furnished by Holder to
Participant. Participant shall have independently determined the validity,
enforceability and adequacy of all matters involved in the Loan and the Loan
Documents and shall have made its own independent evaluation of Issuer and
other obligors under the Collateral prior to funding any portion of his
participation in the Loan.
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5. EXPENSES.
All collection expenses reasonably incurred by Holder in connection with
the Loan, other than in the ordinary course of servicing a loan not in
default, including but not limited to counsel fees, court costs and
disbursements, and all recoveries thereof, shall be shared pro rata by Holder
and Participant in accordance with our respective fractional interests in the
Loan at the time such expenses are incurred.
6. OTHER PROVISIONS.
(a) This Participation Agreement is non-transferable.
(b) Nothing herein contained confers to Participant or Holder any
interest in or subjects Participant or Holder to any liability on account of
the assets or liabilities of the other, except for Participant's interest in
the Loan confirmed herein;
(c) Holder reserves the right to purchase at its option (upon two
(2) days notice) the unpaid principal amount of Participant's participation,
at par plus accrued interest thereon to the date of such purchase, but Holder
agrees not to sell its participation in the Loan without Participant's prior
consent.
(d) This Participation Agreement may not be modified orally, shall
be governed in all respects by the laws of Missouri and shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns.
(e) All notices and other communications shall be given or
confirmed in writing and mailed to the addresses set forth on the first page
of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the day and year first hereinabove written.
HARBOUR GROUP INVESTMENTS III, L.P.,
a Delaware limited partnership
By: Harbour Group III Management Co., L.P., General Partner
By: HGM III Co., General Partner
by: /s/ Xxxxxx X. Xxxxxxxx
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Name:
Title:
/s/ X. Xxxxx Stiff
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X. Xxxxx Stiff
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