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EXHIBIT 10.7
---------------------
LOAN AND SECURITY AGREEMENT
dated as of January 1, 1997
between
CCI/TRIAD FINANCIAL HOLDING CORPORATION
as Borrower
and
METLIFE CAPITAL CORPORATION
as Lender
---------------------
$40,000,000
DISCOUNT LOAN FACILITY
---------------------
Loans Secured by Leases,
Lease Receivables and
Leased Equipment
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This LOAN AND SECURITY AGREEMENT is entered between CCI/TRIAD FINANCIAL
HOLDING CORPORATION ("SPE"), a California corporation, as borrower, and METLIFE
CAPITAL CORPORATION ("Lender"), a Delaware corporation, as Lender.
A. The "Anniversary Date" as defined in Section 1.1 shall be December 31, 1997.
B. The "Aggregate Maximum Loan Amount" of all loans, in accordance with Section
2.1, shall be Forty Million Dollars ($40,000,000).
C. The "Minimum loan Amount" of any single loan, in accordance with Section
2.3, shall be Two Hundred and Fifty Thousand Dollars ($250,000).
D. The "Maximum Full Recourse Amount" of all loans, in accordance with Section
3.12, shall be Forty Million Dollars ($40,000,000).
E. Notices to Lender in accordance with Section 12.2 shall be addressed as
follows:
Metlife Capital Corporation
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Executive Vice President, Vendor
All the Terms and conditions of THE MASTER LOAN AND SECURITY AGREEMENT FORM are
hereby incorporated by reference and made a part of this AGREEMENT, provided,
however the following Special Terms and Conditions (which supplement said
MASTER LOAN AND SECURITY AGREEMENT FORM Terms and Conditions) shall supersede
and replace any conflicting Terms and Conditions in THE MASTER LOAN AND
SECURITY AGREEMENT FORM. All Section numbers and
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references in this Schedule 1 document, refer to (or supplement) section
numbers and references in THE MASTER LOAN AND SECURITY AGREEMENT FORM.
SPECIAL TERMS AND CONDITIONS
This LOAN AND SECURITY AGREEMENT is effective as of January 1, 1997.
CCI/TRIAD FINANCIAL HOLDING CORPORATION
a California Corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
METLIFE CAPITAL CORPORATION
a Delaware Corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Vice President/Manager Vendor/
Indirect Group
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_____________________________________________
MASTER LOAN AND SECURITY AGREEMENT FORM
DATED AS OF JANUARY 1,1997
BETWEEN
CCI/TRIAD FINANCIAL HOLDING CORPORATION
AS BORROWER
AND
METLIFE CAPITAL CORPORATION
AS LENDER
_____________________________________________
$40,000,000
DISCOUNT LOAN FACILITY
__________________________________
LOANS SECURED BY
LEASE RECEIVABLES, LEASES, AND
LEASED EQUIPMENT
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TABLE OF CONTENTS
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 "Anniversary Date" . . . . . . . . . . . . . . . . . . . . . 1
1.2 "Business Day" . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 "Closing Date" . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 "Collateral" . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 "Discount Facility" . . . . . . . . . . . . . . . . . . . . 2
1.6 "Discount Facility Loan" . . . . . . . . . . . . . . . . . . 2
1.7 "Discount Facility Rate" . . . . . . . . . . . . . . . . . . 2
1.8 "Discount Facility Loan Value" . . . . . . . . . . . . . . . 2
1.9 "Effective Date" . . . . . . . . . . . . . . . . . . . . . . 2
1.10 "Eligible Equipment" . . . . . . . . . . . . . . . . . . . . 2
1.11 "Eligible Lease" . . . . . . . . . . . . . . . . . . . . . . 2
1.12 "Equipment" . . . . . . . . . . . . . . . . . . . . . . . . 3
1.13 "Event of Default" . . . . . . . . . . . . . . . . . . . . . 3
1.14 "Excess of Proceeds" . . . . . . . . . . . . . . . . . . . . 4
1.15 "Guaranty" . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.16 "Invoice Price". . . . . . . . . . . . . . . . . . . . . . . 4
1.17 "Late Payment Rate". . . . . . . . . . . . . . . . . . . . . 4
1.18 "Lease". . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.19 "Lease Proceeds" . . . . . . . . . . . . . . . . . . . . . . 4
1.20 "Lessee" . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.21 "Loan" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.22 "Loan Repayment Amount". . . . . . . . . . . . . . . . . . . 4
1.23 "Loan Repayment Date". . . . . . . . . . . . . . . . . . . . 5
1.24 "Net Loss Pool". . . . . . . . . . . . . . . . . . . . . . . 5
1.25 "Obligations". . . . . . . . . . . . . . . . . . . . . . . . 5
1.26 "Operating Agreement". . . . . . . . . . . . . . . . . . . . 5
1.27 "Operative Document" . . . . . . . . . . . . . . . . . . . . 5
1.28 "Prepayment Fee" . . . . . . . . . . . . . . . . . . . . . . 5
1.29 "Proceeds" . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.30 "Remarketing Expenses" . . . . . . . . . . . . . . . . . . . 5
1.31 "Remarketing Proceeds" . . . . . . . . . . . . . . . . . . . 6
1.32 "Rent" . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.33 "Security Supplement". . . . . . . . . . . . . . . . . . . . 6
1.34 "Standard Cost". . . . . . . . . . . . . . . . . . . . . . . 6
1.35 "Tangible Net Worth" . . . . . . . . . . . . . . . . . . . . 6
1.36 "CCI/Triad". . . . . . . . . . . . . . . . . . . . . . . . . 6
2. THE DISCOUNT FACILITY. . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 Total Facility . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Interest Calculation . . . . . . . . . . . . . . . . . . . . 7
2.3 Minimum Loan . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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3. THE LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 Requests for Loans . . . . . . . . . . . . . . . . . . . . . 7
3.2 Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 Disbursement of Discount Facility Loan . . . . . . . . . . . 8
3.4 Loan Payments and Amortizations. . . . . . . . . . . . . . . 8
3.5 Upgrades and Additions . . . . . . . . . . . . . . . . . . . 8
3.6 Optional Prepayment: Lender Refusal ro Finance Upgrades or
Additions. . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.7 Mandatory Prepayment: Termination of Lease . . . . . . . . . 9
3.8 Mandatory Prepayment: Casualty . . . . . . . . . . . . . . . 10
3.9 Mandatory Prepayment: Rent Default . . . . . . . . . . . . . 10
3.10 No Other Prepayments Permitted . . . . . . . . . . . . . . . 10
3.11 Limited Recorse" . . . . . . . . . . . . . . . . . . . . . . 10
3.12 Full Recourse. . . . . . . . . . . . . . . . . . . . . . . . 11
4. CONDITIONS PRECEDENT TO THE INITIAL LOAN . . . . . . . . . . . . . . 11
4.1 Evidence of Authority OF SPE . . . . . . . . . . . . . . . . 11
4.2 Evidence of Authority of CCI/Triad . . . . . . . . . . . . . 11
4.3 Operating Agreement. . . . . . . . . . . . . . . . . . . . . 11
4.4 Financing Statements . . . . . . . . . . . . . . . . . . . . 12
4.5 SPE Officer's Certificate. . . . . . . . . . . . . . . . . . 12
4.6 CCI/Triad Officer's Certificate. . . . . . . . . . . . . . . 12
4.7 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.8 Agreement of Admission of Additional Secured Parties . . . . 13
5. CONDITIONS PRECEDENT TO ALL LOANS. . . . . . . . . . . . . . . . . . 13
5.21 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.22 Operating Agreement. . . . . . . . . . . . . . . . . . . . . 13
5.23 Receipt of Certain Documents . . . . . . . . . . . . . . . . 13
(a) Lease. . . . . . . . . . . . . . . . . . . . . . . . . . 13
(b) Guaranty . . . . . . . . . . . . . . . . . . . . . . . . 13
(c) Financing Statements Filed Against Lessees . . . . . . . 13
(d) Financing Statements to be Filed Against TSFC. . . . . . 14
(e) Supplement . . . . . . . . . . . . . . . . . . . . . . . 14
(f) Notice of Assignment . . . . . . . . . . . . . . . . . . 14
(g) Acceptance Supplement. . . . . . . . . . . . . . . . . . 14
(h) Other Documents. . . . . . . . . . . . . . . . . . . . . 15
6. SECURITY AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.1 Granting Clause. . . . . . . . . . . . . . . . . . . . . . . 15
6.2 Appointment of Lender. . . . . . . . . . . . . . . . . . . . 16
6.3 Further Assurances . . . . . . . . . . . . . . . . . . . . . 17
6.4 No Obligations Assumed by Lender . . . . . . . . . . . . . . 17
6.5 Release of Security Interest . . . . . . . . . . . . . . . . 17
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6.6 Final Release by Lender. . . . . . . . . . . . . . . . . . . 17
7. ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.1 Authorization to Collect Rent. . . . . . . . . . . . . . . . 17
7.2 Collections. . . . . . . . . . . . . . . . . . . . . . . . . 17
7.3 Remittances. . . . . . . . . . . . . . . . . . . . . . . . . 18
7.4 Lease Receivables Statements . . . . . . . . . . . . . . . . 18
7.5 First Loss Provision Statements. . . . . . . . . . . . . . . 18
7.6 Account Status Statements. . . . . . . . . . . . . . . . . . 18
8. INDEMNITIES, INSURANCE, FIRST LOSS . . . . . . . . . . . . . . . . . 18
8.1 Total Facility . . . . . . . . . . . . . . . . . . . . . . . 18
8.2 Interest Calculation . . . . . . . . . . . . . . . . . . . . 20
8.3 Minimum Loan . . . . . . . . . . . . . . . . . . . . . . . . 20
8.4 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.5 Excess Proceeds. . . . . . . . . . . . . . . . . . . . . . . 21
9. REPRESENTATIONS, WARRANTIES AND COVENANTS. . . . . . . . . . . . . . 21
9.1 Due Organization . . . . . . . . . . . . . . . . . . . . . . 21
9.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.3 Principal Place of Business . . . . . . . . . . . . . . . . 21
9.4 Binding Obligations. . . . . . . . . . . . . . . . . . . . . 22
9.5 Approvals and Consents . . . . . . . . . . . . . . . . . . . 22
9.6 Compliance and Laws . . . . . . . . . . . . . . . . . . . . 22
9.7 Clear Ownership. . . . . . . . . . . . . . . . . . . . . . . 22
9.8 Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.9 Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.10 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . 23
9.11 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.12 Further Assurances; Enforcement of Leases. . . . . . . . . . 23
9.13 Validity and Enforceability of Leases and Guaranties . . . . 24
9.14 Leases Duly Entered Into . . . . . . . . . . . . . . . . . . 24
9.15 Equipment Description . . . . . . . . . . . . . . . . . . . 24
9.16 Leases Comply with Laws. . . . . . . . . . . . . . . . . . . 24
9.17 No Impairment of Value or Rights . . . . . . . . . . . . . . 24
9.18 No Lessor Liens. . . . . . . . . . . . . . . . . . . . . . . 24
9.19 Notifications. . . . . . . . . . . . . . . . . . . . . . . . 24
9.20 Books and Records Financial and Other Information. . . . . . 25
9.21 Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.22 Charges and Taxes. . . . . . . . . . . . . . . . . . . . . . 26
9.23 Financial Covenants. . . . . . . . . . . . . . . . . . . . . 26
9.24 Maximum Requests for Loans Per Month . . . . . . . . . . . . 27
10. REPOSSESSION AND REMARKETING . . . . . . . . . . . . . . . . . . . . 27
10.1 Request to Repossess; Remarketing. . . . . . . . . . . . . . 27
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10.2 Remarketing Expenses . . . . . . . . . . . . . . . . . . . . 28
10.3 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.4 No Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . 28
11. EVENTS OF DEFAULT, REMEDIES. . . . . . . . . . . . . . . . . . . . . 28
11.1 Events of Default. . . . . . . . . . . . . . . . . . . . . . 28
11.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 30
12. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.3 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.4 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . 32
12.5 Successors; Assigns. . . . . . . . . . . . . . . . . . . . . 32
12.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 33
12.7 Headings; Titles . . . . . . . . . . . . . . . . . . . . . . 33
12.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 33
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This MASTER LOAN AND SECURITY AGREEMENT FORM is entered into as of the
Effective Date stated in the Schedule 1 document entered into between CCI/TRIAD
FINANCIAL HOLDING CORPORATION ("SPE"), a California corporation, as borrower,
and the entity shown in the Schedule 1 document, as Lender ("Lender").
INTRODUCTION
A. Both SPE and Triad Systems Financial Corporation ("TSFC"), a California
corporation are wholly owned subsidiaries of COOPERATIVE COMPUTING, INC. dba
TRIAD SYSTEMS CORPORATION ("CCI/Triad"), a Delaware corporation. CCI/Triad
manufactures and TSFC purchases from CCI/Triad and leases to TSFC's customers
computer systems and software, all in accordance with an Operating and Support
Agreement among CCI/Triad, TSFC, SPE and Lender.
B. TSFC has transferred by sale to SPE certain receivables due TSFC under
the leases and TSFC has by an agreement substantially in the form of the Sale
and Assignment Agreement attached hereto as Exhibit F assigned to SPE certain
of its rights and interests in the Leases, computer systems, software and
equipment.
C. Lender engages in the business of equipment lease financing.
D. Lender is willing to lend to SPE amounts equal to the discounted value
of payments receivable under certain of the customer leases of computer systems
and software, upgrades and add-ons or other equipment, and SPE is willing to
grant a security interest in the lease payments, the leased computer systems
and software or other equipment and the interest of TSFC in the leases, all
subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the parties hereto
agree as follows;
1. DEFINITIONS
When used in capitalized form herein, the following terms shall have the
meanings indicated:
1.1 "Anniversary Date" - the date stated as the "Anniversary Date" in the
Schedule 1 document.
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1.2 "Business Day" - any day other than a Saturday, Sunday or a public or
bank holiday or the equivalent for banks generally under the laws of the State
of California.
1.3 "Closing Date" - with respect to any Loan, the date on which Lender
makes a Loan to SPE under this Agreement.
1.4 "Collateral" - as defined in Section 6.1.
1.5 "Discount Facility" - the credit facility provided by Lender to SPE
pursuant to Section 2.
1.6 "Discount Facility Loan" - a Loan made by Lender to SPE under the
Discount Facility.
1.7 "Discount Facility Rate" - with respect to a Discount Facility Loan -
will be determined from time to time by mutual agreement of SPE, and Lender.
1.8 "Discount Facility Loan Value" - of a Lease at the time a Discount
Facility Loan is made, a percentage to be determined by mutual agreement
between the parties, of each payment of Rent remaining unpaid under the Lease
at that time (but excluding any past due Rent), discounted from the date each
such payment is due to such time at the Discount Facility Rate with respect to
such Discount Facility Loan.
1.9 "Effective Date" - the date of this Agreement.
1.10 "Eligible Equipment" - new or remanufactured Equipment, including but
not limited to, computer systems and related components, software and
accessories manufactured or sold by CCI/Triad or another manufacturer or
seller, having a Discount Facility Loan Value of not less than One Thousand
Dollars ($1,000.00) subject to an Eligible Lease and not subject to a security
interest or other encumbrance in favor of any corporation, firm or other person
other than a security interest in favor of Lender arising under this Agreement
or a Security Supplement.
1.11 "Eligible Lease" - a full pay out net lease, substantially in the
form of Exhibit A-1, naming TSFC as lessor, that:
(a) has a noncancelable term of not less than 12 months nor more
than 84 months excluding renewals or extensions;
(b) provides for (i) Rent and casualty payments in amounts
sufficient to repay to Lender the Loan made
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in respect of such lease and interest on such Loan at the
Discount Facility Rate, (ii) interest on late payments under
such lease at a rate not less than the Late Payment Rate and
(iii) all payments to be made in United States dollars;
(c) provides that the lessor's right to receive payment is absolute
and not contingent upon the fulfillment of any condition
whatsoever other than the passage of time;
(d) covers only Eligible Equipment subject to a security interest
in favor of Lender and includes all hardware and any other
systems required to operate any included software;
(e) is not subject to any conditions, obligations of, or any right
or offset, counterclaim or defense by, the Lessee thereunder;
(f) is a Lease under which the Lessee is not in default, and;
(g) is in all other respects satisfactory to Lender.
1.12 "Equipment" - any and all Eligible Equipment leased to a Lessee by
TSFC under a Lease, located in the United States and made subject to a security
interest in favor of Lender by the execution and delivery by SPE to Lender of a
Security Supplement specifically describing such Eligible Equipment, together
with (i) all accessions, replacements, parts, repairs, fixtures and accessories
incorporated therein or affixed thereto under the Lease, and (ii) all upgrades,
add-ons and additions incorporated therein or affixed thereto to the extent
they have been financed by Lender under this Agreement.
1.13 "Event of Default" - as defined in Section 11.1.
1.14 "Excess Proceeds" - of an item of Equipment - any excess of (i) the
Remarketing Proceeds thereof, over (ii) the outstanding Loan Repayment Amount
applicable to a Lease.
1.15 "Guaranty" - a guaranty, in the form of the guaranty which comprises
a part of Exhibit A-1, executed and delivered by a corporation, firm or other
person (a "Guarantor") satisfactory to Lender, assigned to Lender as security
by the execution and delivery by SPE of a Security Supplement specifically
describing such guaranty.
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1.16 "Invoice Price" - with respect to any Equipment - the aggregate
invoice prices of CCI/Triad, as manufacturer or seller, or any other
manufacturer or seller, net of taxes, transportation cost, delivery cost and
any acquisition or other fees payable by TSFC to CCI/Triad or any of its
affiliates.
1.17 "Late Payment Rate" - with respect to a Discount Facility Loan - two
percent (2%) over the applicable Discount Facility Rate.
1.18 "Lease" - an Eligible Lease duly executed by the Lessee, approved by
Lender and assigned to Lender as security by the execution and delivery by SPE
to Lender of a Security Supplement specifically describing such Eligible Lease.
1.19 "Lease Proceeds" - with respect to any Lease - all payments due from
or with respect to the Lessee, such Lease or the Equipment subject to such
Lease, including, but not limited to, all Rent and any security deposits held
by TSFC, all casualty, early termination, purchase option and indemnity
payments, and all insurance and sales or lease proceeds of and requisition
payments for the Equipment subject to such Lease.
1.20 "Lessee" - a United States-domiciled corporation, partnership or sole
proprietorship that is the obligor for payment of Rent under a Lease.
1.21 "Loan" - any advance of funds to SPE by Lender under this Agreement
as evidenced by a Security Supplement.
1.22 "Loan Repayment Amount" - with respect to a Loan at any time - the
aggregate unpaid principal of, and accrued interest (including any interest
accrued at the Late Payment Rate) on, such Loan.
1.23 "Loan Repayment Date" - with respect to any Loan - the twentieth day
of each calendar month, commencing with the first such day to occur after the
Closing Date for such Loan.
1.24 "Net Loss Pool" - as defined in Section 8.4.
1.25 "Obligations" - as defined in Section 6.1.
1.26 "Operating Agreement" - the Operating and Support Agreement entered
into among CCI/Triad, TSFC, SPE, and Lender, substantially in the form of
Exhibit "B" attached hereto.
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1.27 "Operative Documents" - this Agreement, each Security Supplement and
the Operating Agreement.
1.28 "Prepayment Fee" - a fee equal to two percent (2%) of then unpaid
principal amount due Lender under any Lease which is prepaid pursuant to
Section 3.7.
1.29 "Proceeds" - of an item of Equipment - the sum of (i) the (a) gross
cash proceeds of sale of such item or (b) aggregate Rent obligation under a
re-lease of such item discounted at the applicable Discount Facility Rate, as
the case may be, plus (ii) any past due Rent and any other termination amount
paid by the Lessee, or by SPE on behalf of the Lessee, plus (iii) any security
deposit held by TSFC that reduces the Lessee's lease termination payment.
1.30 "Remarketing Expenses" - with respect to an item of Equipment - the
sum of (i) costs of repossessing, transporting, refurbishing and
remarketing the item pursuant to Section 10, plus (ii) any applicable sales,
use or similar taxes imposed in connection with the sale or re-lease of such
item and not paid by the purchaser or lessee, plus (iii) in the case of a Lease
default, enforcement and collection costs.
1.31 "Remarketing Proceeds" - with respect to an item of Equipment - the
Proceeds minus the Remarketing Expenses.
1.32 "Rent" - under a Lease, the periodic charges specified in the Lease
for the use of the Equipment, excluding casualty or early termination, purchase
option and indemnity payments and any amounts a Lessee may be required to pay
for taxes, license fees, assessments or maintenance.
1.33 "Security Supplement" - a supplement hereto substantially in the
form of Exhibit "C", executed and delivered to Lender by SPE, describing
Equipment and Leases and subjecting the same to the security interest in favor
of Lender arising under Section 6.
1.34 "Standard Cost" - with respect to an item of Equipment at any time -
an amount equal to fifty percent (50%) of the Loan Repayment Amount of the
Lease calculated on the Loan Repayment Date.
1.35 "Tangible Net Worth" of TSFC - the gross book value of TSFC's
consolidated tangible assets less (a) reserves applicable thereto and (b) all
of TSFC's consolidated liabilities (including accrued and deferred income
taxes) other than indebtedness subordinated, in a manner satisfactory to
Lender, to TSFC's indebtedness to Lender. All determinations of the
characterization of assets and of the values comprising "Tangible Net Worth"
shall be made in accordance with generally accepted accounting principles
consistently applied.
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1.36 "CCI/Triad" - Cooperative Computing, Inc. ("CCI/Triad"), a Delaware
corporation, or any successor entity resulting from the sale or transfer of the
stock of CCI/Triad to another corporation as a result of the merger,
acquisition, consolidation, or dissolution of CCI/Triad or resulting from the
transfer of all or substantially all of the assets of CCI/Triad.
2. THE DISCOUNT FACILITY
2.1 Total Facility. Subject to the terms and conditions hereof, from time
to time, from (and including) the Effective Date to and excluding the
Anniversary Date, Lender may with respect to each Lease, make a Loan to SPE in
a principal amount equal to the Discount Facility Loan Value; provided,
however, the aggregate principal amount of all Loans outstanding at any time
shall not exceed the "Aggregate Maximum Loan Amount" stated in the Schedule 1
document, and provided further that none of TSFC, SPE nor CCI/Triad suffer a
material adverse financial change in its business or financial condition during
the term of this Agreement.
2.2 Interest Calculation. Interest on the Discount Facility Loans shall
be computed on the basis of a 360-day year of 12-30 day months.
2.3 Minimum Loan. The aggregate principal amount of the Loans made on
any Closing Date shall be not less than the "Minimum Loan Amount" stated in the
Schedule 1 document
2.4 Payments. Lender shall pay the proceeds of the Loans in immediately
available funds on the Closing Dates for such Loans. SPE shall make each
payment due under this Agreement to Lender or Lender's assignee in immediately
available funds to the account or address specified by Lender or such assignee.
3. THE LOANS
3.1 Requests for Loans. No later than ten (10) Business Days before the
Closing Date relating to a Discount Facility Loan requested by SPE, SPE shall
submit to Lender Eligible Leases together with lease schedules and other
supporting documentation, and the following:
(a) the name of each Lessee under such Eligible Leases, together
with (i) unless previously submitted to Lender, financial
statements, to the extent available, of each such Lessee, if
the equipment value is over Fifty
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Thousand Dollars ($50,000.00), as of the end of such Lessee's
most recent fiscal year, and any interim financial statements
of such Lessee readily available to TSFC, SPE or CCI/Triad, all
in form and substance satisfactory to Lender, (ii) the payment
history of such Lessee under other leases entered into between
such Lessee and TSFC, and (iii) such additional financial
information pertaining to any Lessee as Lender may request;
(b) the Rent schedule for each such Eligible Lease; and
(c) such other relevant information as Lender shall reasonably
require.
3.2 Approvals. Within ten (10) Business Days of receipt of all
information required to be submitted pursuant to Section 3.1, Lender shall
advise SPE in writing if, in its sole and unlimited discretion, Lender approves
the proposed Eligible Lease and, if Lender requires the credit support of a
Guarantor, the credit of the proposed Guarantor. If Lender fails to give such
advice within such ten (10) day period, Lender shall be deemed to have declined
such credit. Lender may revoke any credit approval prior to making the
Discount Facility Loan relating to a proposed Lease if, in Lender's judgment,
the proposed Lessee or Guarantor suffers a material adverse change in its
business or financial condition. Lender shall promptly return all credit
packages to SPE relative to any rejected lease transactions.
3.3 Disbursement of Discount Facility Loan. Subject to satisfaction of
the conditions precedent set forth in Section 4 and Section 5, Lender shall
make Discount Facility Loans on the Closing Date proposed in accordance with
this Section 3. The Discount Facility Loans made on the Closing Date shall be
in an aggregate principal amount equal to the aggregate Discount Facility Loan
Values of the Eligible Leases submitted by SPE pursuant to Section 3.1 and
approved by Lender pursuant to Section 3.2. If, for any reason, a Discount
Facility Loan is not made on a proposed Closing Date notwithstanding compliance
by SPE with Section 3.1, the Closing Date may be rescheduled to a date, within
ten (10) Business Days of such Closing Date, mutually agreed upon in writing by
Lender and SPE.
3.4 Loan Payments and Amortizations. Each Discount Facility Loan shall
bear interest at the Discount Facility Rate determined for such Loan and shall
be evidenced by a Security Supplement which shall set forth the repayment terms
with respect to such Discount Facility Loan in a manner satisfactory to Lender
and shall identify the Lease(s) with respect to which such Discount Facility
Loan is made. Principal of, and accrued interest on, the
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Discount Facility Loans shall be payable in accordance with the Security
Supplement for such Discount Facility Loan. Each Discount Facility
Loan shall be amortized by the Lease Proceeds received by Lender with respect
to the Leases financed by such Loan, with such Lease Proceeds applied first to
accrued and unpaid interest, then to any other amounts due under such Loan, and
then to principal.
3.5 Upgrades and Additions. TSFC may, from time to time, agree with a
Lessee under a Lease that the Equipment subject to such Lease shall be upgraded
or that additional Eligible Equipment should be added to such Lease. If TSFC
and such Lessee amend such Lease to increase the Rent payable thereunder in
consideration of such upgrade or addition, SPE may request that Lender finance
the additional Lease Proceeds arising under such amendment ( the "Lease
Amendment") attributable to such increase in Rent. Not later than ten (10)
Business Days after such request, Lender shall give SPE written advice as to
whether Lender, in its sole discretion, has elected to finance such additional
Lease Proceeds. If Lender fails to give such advice within such ten (10) day
period, Lender shall be deemed to have declined to finance such additional
Lease Proceeds and shall so advise SPE in writing. If Lender agrees to finance
such additional Lease Proceeds, Lender shall, subject to satisfaction of the
conditions precedent set forth in Sections 4 and 5, make a Discount Facility
Loan in an amount equal to the aggregate increase in Rent effected by the Lease
Amendment which remains unpaid as of the applicable Closing Date, but excluding
any such increase in Rent which is past due, discounted at the Discount
Facility Rate determined on the applicable Closing Date. The Closing Date with
respect to such Discount Facility Loan shall be a date agreed upon in writing
by Lender and SPE. If Lender agrees to make such a Discount Facility Loan, the
Lease Amendment shall be considered a "Lease" for all purposes of this
Agreement (including, without limitation, Section 5). If SPE finances such
upgrades or additions through a source other than Lender and does not prepay in
accordance with Section 3.6, SPE agrees that any security interest granted to a
source other than Lender shall not conflict with Lender's security interest.
3.6 Optional Prepayment: Lender Refusal to Finance Upgrades or Additions.
If Lender elects not to finance increased Lease Proceeds related to upgrades or
additions pursuant to Section 3.5, SPE may give Lender not less than ten (10)
days prior written notice of its intention to prepay the Discount Facility Loan
made to finance the Lease in respect of which an upgrade or addition has been
made. On the first Loan Repayment Date to occur after the ten (10) day notice
period has elapsed, SPE shall (i) prepay the outstanding principal balance of
such Discount Facility Loan made to finance such Lease and (ii) pay all accrued
and unpaid interest on such Discount Facility Loan to the date of prepayment.
No Prepayment Fee shall be payable in respect of an optional prepayment made
pursuant to this Section 3.6.
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3.7 Mandatory Prepayment: Termination of Lease. If a Lessee voluntarily
terminates a Lease before its scheduled expiration, SPE shall prepay the
Discount Facility Loan made to finance such Lease on the Loan Repayment Date
immediately following such termination. On such Loan Repayment Date, SPE shall
pay to Lender (i) the Loan Repayment Amount with respect to the Loan made to
finance such Lease and (ii) the Prepayment Fee.
3.8 Mandatory Prepayment: Casualty. If any Equipment subject to a Lease
is lost or damaged, and cannot be repaired or replaced with substantially
similar Equipment by the first Loan Repayment Date occurring not less than
thirty (30) days after such loss or damage, SPE shall prepay the Discount
Facility Loan made to finance such Lease on such Loan Repayment Date. On such
Loan Repayment Date, SPE shall pay to Lender the Loan Repayment Amount with
respect to the Loan made to finance such Lease. No Prepayment Fee shall be
payable in respect to a mandatory prepayment made pursuant to this Section 3.8.
3.9 Mandatory Prepayment: Rent Default. If any Rent under any Lease
financed or refinanced by a Discount Facility Loan shall remain unpaid for a
period of ninety (90) days from the date when due, SPE shall prepay such Loan
up to the Net Loss Pool in accordance with Section 8.4. No Prepayment Fee
shall be payable in respect to a mandatory prepayment made pursuant to this
Section 3.9.
3.10 No Other Prepayments Permitted. No Discount Facility Loan may be
prepaid except as otherwise expressly provided in the Agreement unless SPE pays
together with the Loan Repayment Amount for such Discount Facility Loan the
Prepayment Fee.
3.11 Limited Recourse. Lender agrees that, except as provided in this
Section 3.11, Section 3.9, Section 3.12, Section 8, and Section 10 with respect
to Remarketing Expenses and Section 11, each Discount Facility Loan is
nonrecourse to SPE and that the repayment of each Discount Facility Loan shall
be obtained solely from the Lease Proceeds of the Leases, Proceeds of the
Equipment and the other collateral in which Lender has been granted a security
interest pursuant to Section 6; provided, however, that SPE shall be jointly
and severally liable (without any limitation on recourse) with TSFC (i) if (a)
either TSFC or SPE shall fail to pay over to Lender any Lease Proceeds received
by TSFC or SPE and due Lender hereunder, in which case SPE shall be liable for
the amount of the Lease Proceeds not so paid over plus interest accrued thereon
at the Late Payment Rate from the date the Lease Proceeds were required to be
paid over to Lender, or (b) the fees and payments paid by a Lessee to SPE or
TSFC upon termination of a Lease are less than the Loan Repayment Amount
relating to such Lease and (ii) for all payments required to
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be made pursuant to Section 3.8, whether or not insurance proceeds received by
SPE or TSFC are at least equal to such payments.
3.12 Full Recourse. Notwithstanding anything set forth herein,
including, without limitation, any limitation on recourse against SPE, Discount
Facility Loans in the aggregate principal amount of the "Maximum Full Recourse
Amount" stated in the Schedule 1 document at any one time outstanding may be
with recourse to SPE. Such Loans shall be secured by Leases which are Eligible
Leases except that the creditworthiness of the Lessee may not otherwise be
acceptable to Lender. A Discount Facility Loan with recourse shall be
designated as such by mutual written agreement of Lender and SPE, as the case
may be, prior to the Closing Date of such Loans. Upon occurrence at any time
of any default under such Leases, SPE shall repay the Discount Facility Loan
made to finance such Leases on the Loan Repayment Date occurring not more than
thirty (30) days after such default. On such Loan Repayment Date, SPE shall pay
(i) the outstanding principal balance of the Discount Facility Loan made to
finance such Leases, and (ii) all accrued and unpaid interest on such Discount
Facility Loan to the date of payment. No Prepayment Fee shall be payable in
respect of any such prepayment. The amounts paid to Lender by SPE pursuant to
this paragraph shall not be charged against the First Loss Provision defined in
Section 8.4.
4. CONDITIONS PRECEDENT TO THE INITIAL LOAN
Lender will not make the initial Loan hereunder until it has received all
of the following, in form and substance satisfactory to Lender:
4.1 Evidence of Authority of SPE. Certified resolutions of the Board of
Directors of SPE, authorizing the execution, delivery and performance of each
of the Operative Documents to which SPE is a party and any other document
required hereunder together with an incumbency certificate with respect to the
officer or officers of SPE executing any of such Operative Documents and any
document required hereunder.
4.2 Evidence of Authority of CCI/Triad. Certified resolutions of the
Board of Directors of CCI/Triad authorizing the execution, delivery and
performance of the Operating Agreement and any other document required
thereunder together with an incumbency certificate with respect to the officer
or officers of CCI/Triad executing the Operating Agreement and any document
required thereunder.
4.3 Operating Agreement. The Operating Agreement, duly executed by
CCI/Triad, TSFC, SPE, and Lender.
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4.4 Financial Statements. The most recent consolidated financial
statements of CCI/Triad and TSFC.
4.5 SPE Officer's Certificate. A certificate from a duly authorized
officer of SPE, dated as of the first Closing Date, stating that:
(a) all representations and warranties made by SPE under this
Agreement and under the Operating Agreement are true and
correct as of the date of the certificate;
(b) SPE is in compliance with all covenants made under this
Agreement; and
(c) no event has occurred and is continuing that is, or with the
passage of time or giving of notice would be, an Event of
Default or a default under or breach of the Operating
Agreement; and containing an express undertaking by SPE to give
immediate notice to Lender if at any time prior to the
Anniversary Date if any of the above statements are no longer
true.
4.6 CCI/Triad Officer's Certificate. A certificate from a duly
authorized officer of CCI/Triad, dated as of the first Closing Date, stating
that:
(a) all representations and warranties made by CCI/Triad under the
Operating Agreement are true and correct as of the date of the
certificate;
(b) CCI/Triad is in compliance with all covenants made under the
Operating Agreement;
(c) no event has occurred and is continuing that is, or with the
passage of time and/or giving of notice would be, a default
under or breach of the Operating Agreement; and
(d) containing an express undertaking by CCI/Triad to give
immediate written notice to Lender if at any time prior to the
Anniversary Date if any of the above statements is no longer
true.
4.7 Insurance. Evidence of the insurance required by Section 8.3.
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4.8 Agreement of Admission of Additional Secured Parties. Evidence that
the Agreement of Admission of Additional Secured Parties, in the form
previously executed by Lender has been duly executed and delivered by all of
the other parties thereto.
5. CONDITIONS PRECEDENT TO ALL LOANS
Lender will not make any Loan hereunder (including the initial Loan)
unless on the date thereof:
5.1 Notice. SPE shall have given Lender verbal notice of each Closing
Date no later than five (5) Business Days prior to such Closing Date.
5.2 Operating Agreement. The Operating Agreement shall be in full force
and effect and no defaults or breaches shall exist thereunder as of the
applicable Closing Date.
5.3 Receipt of Certain Documents. Lender shall have received the
following, in form and substance satisfactory to Lender:
(a) Lease. (i) A signed fax copy or original, manually executed
counterparts in the possession of CCI/Triad or TSFC on such
Closing Date of each Lease financed on such Closing Date and
the related Lease Schedule substantially in the form contained
in Exhibit "A-1", in each case duly executed by TSFC as lessor
and by the Lessee thereunder;
(b) Guaranty. If required by Lender, signed fax copy or original,
manually executed counterparts in the possession of CCI/Triad
or TSFC on such Closing Date of each Guaranty duly executed by
the Guarantor;
(c) Financing Statements Filed Against Lessees. Except in the case
of Leases of Equipment having an aggregate Invoice Price less
than Thirty-five Thousand Dollars ($35,000.00), evidence of
electronic filing receipts, a search report (from Dun and
Bradstreet or comparable reporting entity) confirming the
existence or copies (any of such documentation with filing
numbers and filing dates) of duly executed and filed Uniform
Commercial Code financing statements on form UCC-1 naming TSFC
as secured party and the Lessees under the Leases to be
financed on the
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Closing Date as debtors, identifying as collateral the
Equipment subject to such Leases.
(d) Financing Statements to be Filed Against SPE. Copies of duly
executed Uniform Commercial Code financing statements on form
UCC-1, naming SPE as debtor and Lender, as secured party, and
identifying as collateral the Leases and any Guaranties and
Equipment to be assigned in sufficient number to be filed in
all jurisdictions as may be necessary, in Lender's judgment, to
perfect Lender's security interest in such collateral,
including, without limitation, jurisdictions where SPE has its
chief executive offices and maintain its records in respect to
the Leases;
(e) Supplement. A Security Supplement, duly executed by SPE
relating to and describing the Lease, any Guaranty and the
Equipment covered thereby;
(f) Notice of Assignment. An original notice to the relevant
Lessee of the assignment to Lender of the relevant Lease,
signed by TSFC, substantially in the form of Exhibit "D";
(g) Acceptance Supplement. A copy of the original executed
counterpart of the delivery and acceptance certificate with
respect to each Lease where the Invoice Price exceeds Fifty
Thousand Dollars ($50,000.00) ( substantially in the form
contained in Exhibit "A-1") containing a complete description
of the Equipment, duly executed by the Lessee thereunder; and
(h) Other Documents. Such other documents, instruments or
agreements as Lender may reasonably request.
6. SECURITY AGREEMENT
6.1 Granting Clause. In order to induce Lender to make Loans from time
to time to SPE, and in order to secure (i) the prompt repayment of the Loans
and payment of all interest accrued thereon and any applicable Prepayment Fee
if any, (ii) the strict performance and observance by SPE of the obligations to
be performed by it hereunder and (iii) all costs of litigation, collection,
reasonable attorneys' fees and other costs expended or incurred in connection
with the enforcement of Lender's rights hereunder and with respect to
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the Leases and the Equipment (the obligations referred to in clauses (i)
through (iii) being collectively referred to as the "Obligations"), SPE hereby
assigns, pledges and grants a continuing security interest to Lender in all of
its right, title and interest in and to the following described properties,
assets and rights (such properties, assets and rights collectively called the
"Collateral"):
(a) each Lease and all of SPE's rights thereunder including the
right to receive payments (including Rent and security
deposits) due to SPE thereunder and the right to exercise
rights and remedies upon default;
(b) every item or component of Equipment subject to Leases,
together with (i) all accessions, replacements and
substitutions thereto and therefor and (ii) all upgrades,
add-ons and additions thereto and therefor to the extent they
have been financed by Lender under this Agreement, and (iii)
all of its rights in the software and licenses related thereto;
(c) each and every Guaranty, security interest, mortgage or other
security securing the payment and performance of the Lessee's
obligations under the Leases;
(d) all Lease Proceeds and Proceeds of items or components of
Equipment;
(e) all warranty and other rights SPE may have with respect to the
Leases against the manufacturer of the Equipment, and
(f) the proceeds (whether cash or non-cash proceeds), and products
of all the properties, assets and rights described in
paragraphs (a), (b),(c), (d) and (e) above including without
limitation, all insurance payments, whether or not Lender is
the loss payee thereof; in each case whether now owned or
hereafter acquired.
6.2 Appointment of Lender. If Lender assumes administration of
collection of Rent pursuant to Section 11.2, SPE irrevocably appoints the
Lender as its attorney-in-fact (such power being coupled with an interest) to
do, in its sole and unlimited discretion, any or all of the following:
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(a) to endorse or sign SPE's name on all checks, collections
receipts, UCCs or other documents related to the Leases;
(b) to take possession of and open mail addressed to SPE or TSFC
relating to such collection and remove Rent and proceeds and
products of the Collateral;
(c) to ask, demand, collect, receive, ▇▇▇ for, compound and give
acquittance for any and all payments assigned hereunder;
(d) to settle, adjust or compromise any claim thereunder as fully
as it could itself;
(e) to endorse its name on all checks and other commercial paper
given in payment or in part payment thereof; and
(f) in its discretion, to file any claim or take any other action
or proceeding, either in Lender's own name or in its name, or
otherwise, that Lender may deem necessary or appropriate to
collect any and all sums that may be or become due or payable
under the Leases or that may be necessary or appropriate to
protect the right, title and interest of Lender in and to the
Collateral and the security intended to be afforded thereby and
hereby.
6.3 Further Assurances. SPE will upon written direction from Lender and
at the expense of SPE, do, execute, acknowledge and deliver all and every
further acts, deeds, conveyances, instruments, transfers and assurances
reasonably necessary or proper for the better assuring, conveying, assigning
and confirming unto Lender all of the Collateral, whether now owned or
hereafter acquired and shall not provide further assurances to any other lender
which may conflict with Lender's security interest or provide such lender with
a security interest superior to Lender's without first giving to Lender the
same further assurances.
6.4 No Obligations Assumed by Lender. Lender does not assume, and its
interest herein shall not be subject to, any obligation or liability of TSFC
under any Lease or any other agreement between SPE, TSFC or CCI/Triad and a
lessee, any duty to collect money due thereunder or to enforce collection
thereof. Lender assumes no responsibility, obligation or liability for any
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representation, warranty or obligation, express or implied, made by any agent
or employee of SPE, TSFC, or CCI/Triad to a Lessee in connection with any
Lease.
6.5 Release of Security Interest. Upon payment in full of
all amounts due on a Loan and provided no Event of Default shall have occurred
and be continuing, Lender agrees to (i) release its security interest in the
Lease financed by such Loan and the Equipment subject thereto; (ii) deliver to
SPE such other documents relating to released Leases and Equipment prepared by
SPE as SPE may reasonably request, and (iii) deliver the foregoing items
within ten (10) days to SPE after receipt of termination payment.
6.6 Final Release by Lender. Upon repayment in full to Lender of all
Loans, and performance of all other Obligations, Lender will release its
security interest in the Collateral in the manner provided in Section 6.5.
7. ADMINISTRATION
7.1 Authorization to Collect Rent. Until such time as there is an Event
of Default hereunder or SPE's authority to collect Rent is terminated pursuant
to Section 11, SPE is authorized to and shall collect Rent from Lessees.
7.2 Collections. SPE will undertake such collections as an independent
contractor and not as Lender's agent, and in connection therewith will at its
sole cost and expense, diligently perform all billing and collecting for Rent
due and to become due with respect to Leases and Equipment financed under
Discount Facility Loans. SPE shall ▇▇▇▇ Lessees in accordance with a standard
billing procedures provided that each invoice sent with respect to any Lease
subject to this Agreement shall segregate the amount due thereunder for rent,
taxes and any other amounts due.
7.3 Remittances. SPE shall, on or before the Loan Repayment Date of each
month, make payment to Lender of the amount due on each Discount Facility Loan
on such date regardless of whether or not any Rent under applicable Leases
shall have been collected by SPE. SPE's obligation to make remittances
pursuant to this Section 7.3 shall cease and be of no further effect at such
time as SPE shall have no further liability under the provisions of Section 8.4
of this Agreement.
7.4 Financial Statements; Lease Receivables Statements. SPE shall provide
Lender with monthly financial statements relating to the immediately preceding
month. As soon as available, but no later than the twentieth day of each
month, SPE shall cause TSFC to deliver to Lender a list of all Leases then
outstanding, and a statement showing the aging of receivables
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under, payments and collections received under, such Leases, both being
complete and correct.
7.5 First Loss Provision Statements. On the last Business Day of each
January, April, July and October, SPE shall cause TSFC to provide Lender with a
quarterly statement as of such date of the First Loss Provision described in
Section 8.4, in the form attached hereto as Exhibit E..
7.6 Account Status Statements. As soon as available, SPE shall cause
TSFC to deliver to Lender any changes in account status for any Leases then
outstanding that TSFC becomes aware of from time to time. Account status shall
be defined, but not limited to, changes in Lessee billing address, equipment
locations, equipment, and/or legal name.
8. INDEMNITIES, INSURANCE, FIRST LOSS
8.1 Indemnities. Notwithstanding anything set forth herein, including,
without limitation, any limitation on recourse against SPE, SPE shall indemnify
Lender and hold it safe and harmless from and against any and all losses,
claims, actions, suits, proceedings, costs, expenses, damages and liabilities
("Indemnified Amount") (other than Indemnified Amounts arising from or
pertaining to the negligence or misconduct by Lender) that may at any time be
made, brought, incurred, assessed or adjudged against Lender arising from or
pertaining to:
(a) the use, maintenance or operation of the Equipment;
(b) breach of any covenant or warranty made by SPE, TSFC, or
CCI/Triad relating to any Equipment or Lease or maintenance of
any Equipment, including qualification of any Equipment for any
tax benefit;
(c) any claim, action or proceeding involving patent or trademark
infringement or copyright or trade secret violations relating
to the Equipment (including any interest or penalty) whether or
not such claim, action or proceeding involves a claim of
infringement or a combination or design patent;
(d) failure of Lender, for whatever reason, to have obtained a
first priority perfected purchase money security interest in
and lien on the Collateral, including, without limitation, the
Leases and the Equipment whether or not (i) the Equipment is
deemed to be an asset of a
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Lessee as the result of a Lease being held to be a security
agreement rather than a true lease or (ii) Uniform Commercial
Code financing statements on form UCC-1 were filed against a
Lessee with respect to the Equipment under Section 5.3 (c);
(e) any misrepresentation made by any agent or employee of SPE,
TSFC or CCI/Triad in the course of negotiations regarding any
Lease or Equipment;
(f) any breach of any warranty or covenant, or any
misrepresentation, of SPE, TSFC or CCI/Triad in any Lease, any
Operative Document or any certificate of an officer of SPE,
TSFC or CCI/Triad delivered in accordance therewith;
(g) failure of any lease or Equipment to comply with applicable
laws, regulations or contractual specifications or warranties,
or to be an Eligible Lease or Eligible Equipment, as the case
may be;
(h) any dispute, claim, offset, or defense of any Lessee (other
than payment by, or discharge in bankruptcy of, such Lessee) to
the payment of any Rent;
(i) Lender having received from TSFC only a fax copy (rather than
the original, manually executed copy) of any Lease or any
Guaranty;
(j) failure of SPE, TSFC or CCI/Triad to pay when due any taxes for
which any of them is liable; and
(k) any wrongful or negligent acts or omissions of SPE, its agents
or assigns, in carrying out SPE's obligations under Section 7
or Section 10.
All of the indemnities set forth in this Section 8.1 shall survive the
cancellation or termination of this Agreement.
8.2 Indemnity Payment. Upon the occurrence of any of the events set
forth in Section 8.1, SPE unconditionally agrees to pay Lender, upon written
demand, the Indemnified Amount.
8.3 Insurance. With respect to all Equipment, SPE shall cause TSFC to
maintain in full effect, and shall deliver to Lender evidence of, (a) liability
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insurance, including all-risk insurance, with a combined single limit of at
lease Five Hundred Thousand Dollars ($500,000.00) per occurrence, naming Lender
as additional insured, (b) property damage insurance on all Equipment, naming
Lender as a loss payee, in an amount equal to actual cash value or replacement
value, with a deductible of not more than Two Hundred Thousand Dollars
($200,000.00) per year for all Equipment and (c) such other insurance as is
usual in the business carried on by SPE, TSFC and CCI/Triad which insurance
shall be satisfactory to Lender as to amount, form, nature and carrier.
8.4 First Loss Provision. If any Rent under any Lease financed or
refinanced by a Discount Facility Loan shall remain unpaid for a period of
ninety (90) days from the date when due, SPE shall, on the next succeeding Loan
Repayment Date, upon written demand by Lender, pay to Lender the Loan Repayment
Amount of such Discount Facility Loan. The liability of SPE under this Section
8.4 on any Loan Repayment Date shall not exceed (i) ten percent (10%) of the
aggregate initial principal amount of Loans made under this Agreement as of
such Loan Repayment Date plus (ii) the aggregate Standard Cost of all Equipment
remarketed pursuant to Section 10 as of such Loan Repayment Date minus (iii)
the aggregate Loan Repayment Amounts paid by SPE to Lender pursuant to this
Section 8.4 with respect to Discount Facility Loans as of such Loan Repayment
Date minus (iv) the aggregate of all cure amounts paid by SPE to Lender on
behalf of Lessees with respect to Leases financed by Discount Facility Loans
which Lender has demanded to be repaid under this Section 8.4 on such Loan
Repayment Date to the extent SPE has been unable to collect such amounts from
such Lessees as of such Loan Repayment Date ( the "Net Loss Pool"). The method
of determining this amount is described in Exhibit "E". Lender's rights under
this Section 8.4 shall be cumulative and in addition to all other rights to
receive payment of the Discount Facility Loans pursuant to this Agreement. If,
at any time, SPE's liability under this Section 8.4 with respect to Leases
financed by a Discount Facility Loan shall have been reduced to zero, SPE shall
thereafter have no liability under this Section 8.4 with respect to that
Discount Facility Loan.
8.5 Excess Proceeds. If, on any Loan Repayment Date, all or any portion
of any Loan Repayment Amount shall not have been paid to Lender
pursuant to Section 8.4 due to the limitation on the liability of SPE set forth
in that Section and SPE thereafter realizes Excess Proceeds with respect to any
Equipment, the previously unpaid portion of all such Loan Repayment Amounts
shall be promptly paid by SPE to Lender to the extent of such Excess Proceeds.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS
SPE represents, warrants and covenants that:
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9.1 Due Organization. Both SPE and TSFC are a corporations duly organized
and validly existing in good standing under the laws of California, and each is
duly qualified or otherwise authorized to do business wherever necessary to
carry on its present business and operations and to perform its respective
obligations under each Operative Document and each Lease.
9.2 Authority. Both SPE and TSFC have the full power, authority and
legal right to enter into and perform its obligations under each Operative
Document.
9.3 Principal Place of Business. As to each of SPE and TSFC,
respectively, its chief executive office and the office where it maintains its
records concerning payments under the Leases is in Livermore, California, and
it will not change such principal place of business or remove therefrom such
records, or any other records relating to the Collateral or any Loan, without
at least thirty (30) days prior written notice to Lender.
9.4 Binding Obligations. Each Operative Document has been duly
authorized and upon execution and delivery will constitute legal, valid and
binding obligations, enforceable against it, TSFC and CCI/Triad in accordance
with the terms thereof.
9.5 Approvals and Consents. No stockholder approval, or approval or
consent of any trustee or holder of any indebtedness or obligation, or
authorization, consent, approval or license by, exemption from or registration
with, any court or governmental department, commission, board, agency or
instrumentality, domestic or foreign, is necessary in connection with the
execution, delivery and performance of obligations other than Lender's under
the Operative Documents, and no consent of any owner, lessor or mortgagee of
premises where any Equipment is located is needed to permit Lender or the
lessor to enforce the rights of the lessor under the Leases or, if required,
the same have been obtained and certified copies have been delivered to Lender.
9.6 Compliance with Laws. There is no law, governmental rule,
regulation, judgment, decree or order binding on it that would be contravened
by the execution and delivery of, and performance under, the Operative
Documents. It will at all times comply with, or cause to be complied with, all
laws, statutes, rules, regulations, orders and directions of any governmental
authority having jurisdiction over it or its business which would materially
have an adverse impact upon SPE's business.
9.7 Clear Ownership. The interests of SPE and TSFC combined are, and
will continue to be, the record and beneficial ownership of 100% of each Lease
and all Equipment subject to Leases in which TSFC is named as Lessor, free and
clear of all mortgages, deeds of trust, pledges and other liens, security
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interests, charges or encumbrances, except for liens for taxes due but not yet
payable and liens in favor of Lender, and shall promptly deliver to Lender any
executed counterparts of Leases which were not delivered to Lender pursuant to
Section 5.3(a) and which have subsequently come into TSFC's or CCI/Triad's
possession. Notwithstanding the foregoing, TSFC and SPE shall be entitled to
transfer to CCI/Triad or a subsidiary corporation of CCI/Triad record and
beneficial ownership of any Equipment subject to Leases in which TSFC is named
as Lessor, provided that:
(a) SPE remains fully bound under this Agreement with respect to
all Obligations, including the Obligations assumed by the
assignee;
(b) the assignee assumes in writing the Obligations of SPE under
this Agreement and recognizes the continuing validity and
priority of the lien of Lender in the Equipment; and
(c) the assignee executes any documentation reasonably required by
Lender to facilitate the foregoing provisions of this Section
9.7 and the Operating Agreement.
9.8 Filings. This Agreement and the Uniform Commercial Code filings made
pursuant hereto create in favor of Lender a valid and perfected first priority
security interest in the Collateral securing the Obligations.
9.9 Actions. There are no actions, suits, proceedings, claims or disputes
pending or, to its knowledge, threatened against or affecting it or TFSC or
their respective properties before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
that, if determined adversely to either of them, would have a material adverse
effect on their respective condition (financial or other), business
performance, operations, properties or prospects, their respective ability to
perform their respective obligations under the Operative Documents or the
Leases or Lender's security interest in the Collateral.
9.10 Payment of Taxes. It has filed and will file all tax returns
(federal, state and local) required to be filed and has paid all taxes shown
thereon to be due, including interest and penalties, unless it is contesting
the payment of certain taxes in good faith and has established adequate
reserves therefore.
9.11 Notices. It will send to Lender copies of all significant notices,
including, but not limited to, any notices with respect to the terms of any
Lease,
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and other instruments or communications required or permitted to be given by
the Lessee under any Lease.
9.12 Further Assurances; Enforcement of Leases. TSFC will: (a) preserve
and maintain its corporate existence and all rights, privileges and franchises
now enjoyed and conduct its business in an orderly, efficient and customary
manner; and (b) from time to time, at its own expense, take all actions
reasonably necessary to establish, preserve, protect and perfect the rights
created by this Agreement, including, without limitation, (i) the full and
punctual performance of all of its obligations under the Leases; (ii) the
enforcement of the Leases without waiver, amendment or modification; and (iii)
the exercise of any and all rights of the lessor under the Leases as may be
necessary or advisable to assure full compliance with the terms and provisions
thereof and to protect Lender's security interest in the Collateral.
9.13 Validity and Enforceability of Leases and Guaranties. Each Eligible
Lease and Guaranty submitted to Lender pursuant to Section 5.3 is genuine,
valid and enforceable and is not subject to any offset, deduction, counterclaim
or lien.
9.14 Leases Duly Entered Into. All parties to each Lease and Guaranty
have full authority and capacity to execute and deliver such Lease or
Guaranty, as the case may be. The entire agreement with each Lessee is
embodied solely in the executed counterparts of the applicable Lease and other
documentation furnished to Lender with respect to such Lease.
9.15 Equipment Description. Each Lease describes the Equipment leased to
the Lessee named in such Lease, the Rent required for such Equipment and any
applicable early termination payments.
9.16 Leases Comply with Laws. Each Lease complies with and does not
violate applicable laws, regulations or contractual specifications or
warranties, including without limitation, any applicable laws relating to
maximum rates of interest (whether or not imputed) or similar charges and all
required disclosures have been made with respect thereto under federal
truth-in-lending and truth-in-leasing regulations to the extent applicable.
9.17 No Impairment of Value or Rights. It will not do anything that might
impair the value of any Lease or Equipment or any of the rights or obligations
of the parties hereto under any Lease.
9.18 No Lessor Liens. No Lease submitted to Lender pursuant to Section
5.3, or any Equipment subject thereto, or any other of its rights therein, has
been assigned to, or be subject to, any lien or security interest in favor of,
any person other than Lender.
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9.19 Notifications. It will promptly notify Lender of:
(a) any Event of Default or event which, upon the lapse of time or
giving of notice, or both, would become an Event of Default, or
any event which is, or upon the lapse of time or giving of
notice, or both, would become a default under or breach of the
Operating Agreement;
(b) any and all litigation or other matters or events concerning it
or any Lessee that has a reasonable possibility of materially
and adversely affecting its or any Lessee's financial or other
condition, its business performance, operations, properties or
prospects or adversely affecting or Lender's security interest
in the Collateral.
9.20 Books and Records Financial and Other Information. SPE shall for
itself, and as to TSFC, shall cause TSFC to:
(a) maintain adequate books, accounts and records and prepare all
financial statements required hereunder in accordance with
generally accepted accounting principles and practices
consistently applied and in compliance with the regulations of
any governmental regulatory body having jurisdiction over it;
(b) give Lender and its representatives, at all reasonable times
and upon reasonable notice, access to all records, files and
books of accounting pertaining to all transactions subject to
this Agreement, and permit Lender and its representatives to
inspect, audit and make extracts therefrom;
(c) upon the occurrence of an Event of Default or an event which,
upon the lapse of time or giving of notice, or both, would
become an Event of Default, permit Lender to exercise the
inspection rights of TSFC under the Leases, on a non-exclusive
basis;
(d) deliver to Lender in form and detail satisfactory to Lender,
and in such reasonable number of copies as Lender may request:
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(i) as soon as available, but no later than thirty (30) days
after the end of each fiscal quarter, a quarterly
financial statement;
(ii) the lists of Lease receivables and statements showing the
aging of receivables as required by Section 7.4;
(iii) the statement of first loss provision required by Section
7.5;
(iv) such other information as Lender may reasonably request;
and
(e) Deliver to Lender, in such reasonable number of copies as
Lender may request, as soon as available, but no later than
ninety (90) days after the end of each fiscal year, (I) the
audited annual financial statements of CCI and (ii) the annual
financial statements of TSFC, audited or reviewed if available,
or unaudited but signed by the principal financial officer of
TSFC.
9.21 Audit. It shall permit Lender, from time to time, upon reasonable
request and at Lender's sole expense, to conduct an audit of SPE's and/or
TSFC's accounting and operating procedures as they relate to the Leases,
provided such audit does not unreasonably interfere with SPE's or TSFC's normal
business operation.
9.22 Charges and Taxes. SPE shall make or arrange for all filings in
respect of and pay (or reimburse Lender for, upon presentation of an invoice)
all charges and local, state or federal taxes (other than net income taxes of
the Lender or franchise taxes levied upon Lender's net income), license fees,
or other assessments, charges, fines and penalties, together with interest
payable with respect thereto, levied or imposed upon or in connection with this
Agreement, the Leases, the Equipment, the Rent and the Proceeds. Upon request
of Lender, SPE shall cause TSFC to furnish Lender written evidence of such
payment.
9.23 Financial Covenants.
(a) the Tangible Net Worth of TSFC shall at all times at or prior
to the Anniversary Date be at least $17,500,000.00;
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(b) the ratio of TSFC's total consolidated debt (including
subordinated debt) to TSFC's Tangible Net Worth shall at all
times at or prior to the Anniversary Date be no greater than 3
to 1;
Compliance with Section 9.23 shall be made in accordance with generally
accepted accounting principles, consistently applied, as to both classification
and amounts.
9.24 Maximum Requests for Loans Per Month. It will make no more than a
combined total of three (3) requests for Loans, under Section 3.1, during each
thirty day period.
10. REPOSSESSION AND REMARKETING
10.1 Request to Repossess; Remarketing. In the event that SPE does not
perform its obligations under Section 8.4 by reason of the limitation on its
liability set forth therein, upon Lender's determination that a default exists
under a Lease financed or refinanced by a Discount Facility Loan, either
through notification by SPE or TSFC pursuant to Section 9.19 or otherwise, and
that such default remains uncured within the time, if any, for curing the same
permitted by the Lease, Lender, as secured party under this Agreement, may
request SPE to cause TSFC to act as Lender's agent, and upon such request TSFC
will, as such agent, use diligent efforts to repossess the Equipment subject to
such Lease as promptly and efficiently as is legally permissible. Thereafter
TSFC will refurbish and update, as needed, and, for a period of one hundred
twenty (120) days or such other period as TSFC and Lender may agree upon in
writing from the date the Equipment is repossessed (the "Remarketing Period"),
attempt to sell or release such Equipment on a non-priority (but
non-discriminatory) basis and on such terms and conditions as reflect fair
market value for similar equipment and are acceptable to Lender, in its sole
discretion. SPE shall cause TSFC to give no less priority to remarketing
Equipment pursuant to this Section 10.1 than it would similar equipment owned,
leased or managed by TSFC. The obligations of TSFC to remarket such Equipment
for sale or lease shall include, but not be limited to, efforts to sell such
Equipment, preparation and supervision of the documentation of each transaction
and an accounting of the activities referred to in this Section 10.1, including
information relative to the status of negotiations for offers made in respect
of such Equipment.
If TSFC has not remarketed any Equipment at the conclusion of the
Remarketing Period, upon notice from Lender, TSFC's exclusive right to remarket
shall terminate and Lender shall have the right to remarket such Equipment on
terms and conditions satisfactory to it. If Lender remarkets the
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Equipment, it shall retain Proceeds in an amount equal to the Loan Repayment
Amount applicable to the Loan financing the Lease to which such Equipment was
subject and any Remarketing Expenses incurred by Lender and shall remit the
Excess Proceeds to SPE.
Nothing contained in this Section 10.1 shall be deemed to constitute a
release by Lender of its security interest in any of the Collateral. Lender
shall release its security interest in Equipment which has been sold pursuant
to this Section 10.1.
10.2 Remarketing Expenses. Remarketing Expenses shall be for the
account of the party incurring such expenses and shall be recoverable from
Proceeds of such remarketing realized by the party remarketing the Equipment.
10.3 Assignment. The rights and obligations of any party under this
Section 10 may be assigned only with the written consent of all parties.
10.4 No Guaranty. Notwithstanding anything contained herein to the
contrary, the obligations and duties of SPE contained in this Section 10 shall
not be construed to include a guarantee by SPE that the Remarketing Proceeds
with respect to any Equipment will equal or exceed the Loan Repayment Amount
relating to such Equipment.
11. EVENTS OF DEFAULT, REMEDIES
11.1 Events of Default. Any one of the following events shall constitute
an "Event of Default" hereunder:
(a) SPE shall fail to remit to Lender when due any Lease Proceeds or
Proceeds of an item of Equipment received by SPE or TSFC, or
shall fail to make any payment required hereunder, in each case
within five (5) days of the date due thereof;
(b) SPE shall fail to observe or perform any other obligation
hereunder, or under any other agreement between Lender and SPE,
which is not corrected or in the process of being corrected
within thirty (30) days of written notice thereof from Lender;
(c) any covenant, representation or warranty made by SPE, TSFC or
CCI/Triad to Lender in any Operative Document or in any
certificate delivered pursuant thereto shall be untrue in any
material respect when
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made or during any period of time for which it is enforceable
or shall be breached by SPE, TSFC or CCI/Triad.
Notwithstanding the foregoing, to the extent that such a breach
occurs, and such breach relates to an individual Lease, SPE
shall have thirty (30) days from receipt of demand by Lender to
repurchase the Lease pursuant to the terms of the Mandatory
Prepayment clause set forth at Paragraph 3.7 herein. SPE's
failure to repurchase such a Lease within said thirty (30) day
period shall then constitute an Event of Default under this
subparagraph (c).
(d) an injunction, attachment or other legal process shall issue
against any material part of SPE's or TSFC's property or a
material judgment or lien shall be filed against SPE or TSFC
which is not stayed, vacated, bonded, or otherwise discharged
within ninety (90) days after the date of entry thereof;
(e) SPE, TSFC or CCI/Triad shall cease to do business as a going
concern, shall become bankrupt, shall make an assignment for
the benefit of creditors or otherwise take advantage of the
bankruptcy or any other law for the relief of debtors; a
trustee or receiver for SPE, TSFC or CCI/Triad shall be
appointed or there shall be filed by or against SPE, TSFC or
CCI/Triad any petition under any provision of the Federal
Bankruptcy Code, as amended, and such petition shall not be
dismissed, withdrawn, or otherwise eliminated within ninety
(90) days after the filing thereof;
(f) any ERISA plan of CCI/Triad, SPE or TSFC shall terminate, or
CCI/Triad, SPE or TSFC shall fully or partially withdraw from
such a plan or plan which could result in liability of
CCI/Triad, TSFC or SPE to the Pension Benefit Guaranty
Corporation or to such plan or plans in the Aggregate amount of
One Million Dollars ($1,000,000) or more (in excess of any
applicable insurance).
11.2 Remedies. (a) If an Event of Default shall have occurred, and such
Event of Default had not been cured within an applicable cure period, and
further upon notice of such Event of Default to SPE ,Lender shall have the
right to do any or all of the following:
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(i) complete and deliver to the Lessees the notices received
by Lender from SPE pursuant to Section 5.3(f) and to
commence direct collection of the Rents until such time as
Lender has received the total Loan Repayment Amount of all
Loans due under the Agreement;
(ii) (1) exercise of any of the Lessor's rights under any of
the Leases, or (2) by written notice, require SPE to
exercise on behalf of Lender as secured party under this
Agreement any and all of the rights available to the
Lessor under any Lease to the extent not already exercised
by SPE, whereupon SPE shall immediately take all requested
action;
(iii) discontinue making Loans; or
(iv) proceed against SPE, TSFC, CCI/Triad or all of them, for
all rights and remedies Lender may have in law or in
equity under this Agreement and/or the Operating
Agreement.
(b) Upon the occurrence of an Event of Default, or upon the failure
of a Lessee to perform its obligation under a Lease, Lender
shall have and may exercise all the rights and remedies of a
secured party under the California Uniform Commercial Code
(expressly including, but not limited to, those granted under
9-502(1) and 9-306 dealing with retention of cash proceeds);
and any other applicable laws (including but not limited to the
right to assume direct collection of any and all Leases and
retain any and all cash proceeds collected under the leases
until such time that Lender has received the total Loan
Repayment Amount of all Loans due under this Agreement);
provided, however, that so long as Lessee under a Lease is not
in default thereunder, Lender shall not take any action or
exercise any right that would disturb such Lessee's full and
quiet enjoyment of all of such Lessee's rights under that
Lease. Lender will give SPE reasonable notice of the time and
place of any public sale of any Collateral or of the time after
which any public or private sale of such Collateral or any
other intended disposition thereof is to be made. Unless
otherwise provided by law, the requirement of reasonable notice
shall be met if such notice is delivered at least ten (10) days
before or mailed, postage prepaid, to SPE, at least twenty (20)
days before the time of such sale or disposition. Subject to
applicable provisions of this Agreement, Collateral proceeds
including, but not limited to, the proceeds of any sale or
disposition of Collateral shall be applied: first, to the
expense of settling all liens and claims against such
Collateral and all reasonable costs, charges and expenses
incurred by Lender in connection with the Event of Default,
Lender's exercise of remedies under this Section 11.2
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(including without limitation those described in Section 12.4),
and in taking, removing, holding, preparing for sale and
selling the Equipment; second, to the payment of the remaining
total Loan Repayment Amount of all Loans; third, to any other
unpaid obligations of SPE hereunder; or of TSFC, or CCI/Triad
under the Operating Agreement and fourth, any remaining
proceeds shall be paid to SPE.
(c) Notwithstanding the foregoing, Lender shall have the right to
discontinue making Loans at any time in its sole discretion,
whether or not an Event of Default has occurred.
(d) Nothing contained in this Section 11.2 shall entitle Lender to
recourse against SPE with respect to payment of the Loans which
is not expressly granted to Lender by this Agreement.
12. MISCELLANEOUS
12.1 General. Waiver of any particular default shall not be a waiver of
any other default. All Lender's rights are cumulative and not alternative. No
waiver or change modification or amendment in this Agreement shall bind Lender
or SPE unless an officer of Lender and SPE, has agreed to such waiver or
change modification or amendment in writing. Any provision of this Agreement
contrary to, prohibited by or invalid under applicable laws or regulations
shall be inapplicable and deemed omitted herefrom, but shall not invalidate the
remaining provisions hereof. No oral agreement, guaranty or warranty shall be
binding. This Agreement shall be governed by the laws of California.
12.2 Notices. All notices, demands, directions, consents and approvals
hereunder shall be in writing and shall be delivered in person, by telecopy, by
overnight courier or by prepaid certified mail, addressed to the party for whom
it is intended, if to
CCI/Triad Financial Holding Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, President
Telecopy No. ▇▇▇-▇▇▇-▇▇▇▇
with a copy to Corporate Counsel;
if to Lender, the party stated in Section E. Of the Schedule 1 document,
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and shall be deemed delivered on the day of actual receipt. Either party may
change its' address for the receipt of notices, demands, directions, consents,
and approvals by notice duly given to the other party pursuant to this Section
12.2.
Notices may also effectively be given by transmitting over electronic
devices such as facsimile machine, if either party to whom such notice is being
sent has such device in its office. Notices given by electronic transmitting
devices shall be deemed effective on the date of transmission.
12.3 Waivers. Lender and SPE hereby respectively waives demand,
presentment, protest and notice thereof with respect to any and all
instruments, notice of acceptance hereof, and all other demands and notices of
any description, except as expressly provided herein. No delay or omissions on
the part of either party in exercising any right, remedy, option, or notice of
default, except as any pertinent statute of limitations which may apply, on any
one occasion, shall be construed as a bar to or waiver of any other default,
right, remedy or option, or the same default, right, remedy or option on any
future occasion.
12.4 Costs and Expenses. In any case where Lender or SPE is entitled
hereunder to reimbursement of costs and expenses, such costs and expenses shall
include interest on any judgment and court costs, reasonable legal fees and
expenses (including allocated fees of internal counsel).
12.5 Successors; Assigns. This Agreement shall inure to the benefit of
and be binding upon Lender and SPE and their respective successors and
permitted assigns. Neither party may assign this Agreement without the other
party's consent, unless such assignment is to any wholly owned subsidiary,
parent or affiliate of the assigning party. If either party does not consent to
such proposed assignment, SPE shall have the option to prepay the outstanding
aggregate Loan Repayment Amount to Lender at a price to be determined by mutual
agreement of the parties.
12.6 Entire Agreement. The terms and conditions herein contained
constitute the entire agreement between Lender and SPE with respect to the
subject matter hereof, except to the extent other agreements are referred to
herein or contemplated hereby or executed contemporaneously herewith, and
supersede all previous communications whether oral or written between Lender
and SPE with respect to such subject matter. No agreement or understanding
varying or extending any rights or obligations hereunder of either of the
parties shall be binding unless in a writing signed by a duly authorized
officer or representative of the party against which such variance or extension
is sought to be enforced.
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12.7 Headings; Titles. The cover, table of contents and titles for
Sections used in this Agreement are intended to be descriptive only and shall
not be deemed to limit, extend or in any way modify the meaning of the text of
this Agreement. References to integral sections without decimals include all
decimal sections within such integral sections.
12.8 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute but one and the same instrument.
-------------------------------END----------------------------
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EXHIBIT A
TO
LOAN AND SECURITY AGREEMENT
SUBORDINATION AGREEMENT
1. Each of the undersigned secured parties (collectively known herein
as "Secured Parties" and individually known herein as "Secured Party"),
understands that each of the other Secured Parties presently holds or asserts,
and/or may hereafter hold or assert, ownership and/or security interests in
property of TRIAD SYSTEMS FINANCIAL CORPORATION ("TSFC") and/or CCI/TRIAD
FINANCIAL HOLDING CORPORATION ("SPE"), in respect of various lease financing
arrangements between SPE, TSFC, COOPERATIVE COMPUTING, INC. ("CCI"), and each
of the other Secured Parties.
2. Each of the Secured Parties will from time to time acquire or
discount, and in connection therewith, acquire, from any one or more of SPE,
TSFC and/or CCI, chattel paper, including but not limited to leases of
equipment, related lease documents, and any related credit support documents.
3. Definitions:
(a) As used herein "Paper" means and includes all
chattel paper at any time or times, heretofore or hereafter,
acquired or to be acquired by a Secured Party from any one or
more of SPE, CCI and/or TSFC, pursuant to a discounting or
other financing agreement, or upon sale, or by purchase,
including but not limited to leases of property, related lease
documents and related credit support documents; and in all
events said term shall include, without limitation, any and
all interest of the Secured Party in such chattel paper and/or
such documents including, without limitation, all rights,
claims, benefits and other interests at any time or times
existing or arising in, to or under, or in relation to such
chattel paper and/or such documents.
(b) As used herein, the term "Equipment" means and
includes all personal property at any time or times,
heretofore or hereafter, leased or to be leased under a lease
or leases included in any of the Paper of a Secured Party,
whether or not such property may be or become fixtures.
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(c) As used herein, the term "Superior Secured Party"
means and includes a Secured Party whose right, title to and
interest (including, without limitation, ownership interests
and/or security interests) in such Superior Secured Party's
Paper and Equipment is or becomes, by virtue of the express
provisions of this Agreement hereinafter set forth, superior
to and acquires hereby priority over any and all interests
(including, without limitation, ownership interests and/or
security interests) which the other Secured Parties may at any
time or time have, hold or assert therein.
4. Each Secured Party hereby agrees with the other Secured
Parties that all of its right, title to and interest (including, without
limitation, ownership interests and/or security interests) in all property
(including, without limitation, the Paper of the other Secured Parties and/or
the Equipment of the other Secured Parties) which it acquires or discounts at
any time or from time to time, from any one or more of SPE, CCI and/or TSFC,
shall be or remain fully subordinated to the interest therein of the other
Secured Parties and/or completely released with respect thereto in accordance
with and only in accordance with, the following provisions:
Each Secured Party agrees that,
(i) by its execution of this Agreement, any and all
right, title to and interest (including, without
limitation, ownership interests and/or security
interests) which such Secured Party may at any time
or times have, hold or assert in any Paper and/or
Equipment of another Secured party and all proceeds
thereof shall be and remain, or shall thereby
become and remain, fully and effectively
subordinated to all of such other Secured Party's
interests therein, including, without limitation,
such other Secured Party's title thereto, ownership
thereof, and/or any and all other rights, claims,
benefits and other interests of such other Secured
Party therein at any time or times existing or
arising;
(ii) this subordination shall be or become effective in
each instance, and a Secured Party shall be or
become a Superior Secured Party, by virtue of, and
only by virtue of, delivery (whether heretofore or
hereafter) to the Superior Secured Party, by
virtue of, and only by virtue of, delivery
(whether heretofore or hereafter) to the Superior
Secured Party by any one or more of SPE, CCI or
TSFC and possession (whether heretofore or
hereafter) by such Superior Secured Party of an
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executed form of assignment of an item of the Paper of the Superior
Secured Party and the single original executed item of the Paper
(whether heretofore or hereafter), so marked, identifying or
describing the property subject thereto:
(iii) a Superior Secured Party's ownership interest and/or security interest
in its Paper and Equipment is or shall be superior to and have
priority over any and all interests (including, without limitation,
ownership interests and/or security interest) which the other Secured
Parties may at any time or times have, hold or assert therein,
irrespective of the time or order of attachment or the time or order
of perfection of any such ownership interest and/or security
interests, or the time of filing financing statements, or the time of
giving or failing to give notice of acquisition of purchase money or
other ownership interests and or security interest;
(iv) if a Secured Party is or becomes a Superior Secured Party with
respect to any Paper, such Superior Secured Party shall automatically
and simultaneously be or becomes a Superior Secured Party with respect
to any Equipment leased or to be leased under a lease or leases
included in any such Paper;
(v) this subordination is or shall be applicable to the Paper and
Equipment of each Secured Party.
5. Any Secured Party may unilaterally withdraw from this Agreement as to
future transactions effective upon (i) not less than twenty (20) days written
notice thereof to all other Parties hereto and (ii) its effectuation of a
complete termination and release from any and all financing statements and/or
other filed or recorded security documents which such Secured Party may hold in
connection with any one or more of SPE, TSFC and/or CCI, of all Paper and
Equipment excepting only such Paper and Equipment held by such Secured Party as
of the date of withdrawal and as to which such Secured Party holds a ownership
interest and/or security interest therein
Any such within from this Agreement by a Secured Party shall have
no effect upon, or alter the rights of the other Secured Parties respecting
transactions occurring prior to the effective date of the withdrawal, except as
expressly set forth in this Agreement.
43
6. Each Secured Party agrees that, if and to the extent requested by any
superior Secured Party with respect to the Paper and Equipment of such Superior
Secured Party as to which the ownership interests and/or Security interests of
all the Secured Parties except such Superior Secured Party have been or are
subordinated pursuant to this Agreement, it will effectively and completely
release all of its ownership interest and/or Security interests at any time
existing or arising in the property designated by such request, and will
promptly execute and deliver such documents and instruments as may be
necessary to exclude or release such designated property from any and all
financing statements and/or other filed or recorded security documents which it
may hold affecting such Superior Secured Party's ownership interests and/or
security interests therein.
7. Until all obligations of SPE, TSFC and/or CCI to a Superior Secured
Party with respect to any ownership interest and/or which are secured by a
security interest in any Paper or Equipment of the Superior Secured Party have
been fully discharged, each other Secured Party agrees that it will not
knowingly receive, accept or retain, or take any action affecting, such Paper
or Equipment of such Superior Secured Party.
8. It is expressly acknowledged by each of the Secured Parties that any
one or more of SPE, CCI and/or TSFC intend, from time to time hereafter, to
enter into various lease financing arrangements with one or more parties other
than the Secured Parties, and that such other parties are likely to require, as
a condition to entering into such lease financing arrangements with any one or
more of SPE, CCI and/or TSFC, that this Agreement be amended so as to permit
such other parties to become parties to this Agreement, as additional Secured
Parties. Each of the Secured Parties agrees, promptly upon request of SPE, CCI
and/or TSFC, from time to time hereafter, to execute and deliver amendments to
this Agreement, in the form of Exhibit "A", together with such other documents
or instruments as are necessary or incident thereto, providing for the
admission of one or more additional parties or Secured Parties hereunder, and
for the entitlement of such other parties or Secured Parties to become Superior
Secured Parties, but only in accordance with the express conditions and
provisions of this Agreement.
9. No delay on the part of any Secured Party in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise by any Secured Party of any right or remedy shall preclude other or
further exercise thereof, or the exercise of any other right or remedy.
10. This Agreement supersedes and replaces all previous subordination
agreements between the Secured Parties with respect to any Paper and Equipment
of the Secured Parties.
44
11. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which shall constitute a single
agreement.
ASSENT:
TRIAD SYSTEMS FINANCIAL COOPERATIVE COMPUTING, INC.
CORPORATION
By: By:
------------------------ ------------------------
Title: Title:
--------------------- ---------------------
CCI/TRIAD FINANCIAL
HOLDING CORPORATION
By:
------------------------
Title:
---------------------
BA CREDIT CORPORATION MITSUI VENDOR LEASING
U.S.A., INC.
By: By:
------------------------ ------------------------
Title: Title:
--------------------- ---------------------
NEWCOURT FINANCIAL ▇▇▇▇▇▇ FINANCIAL, INC.
U.S.A, INC.
By: By:
------------------------ ------------------------
Title: Title:
--------------------- ---------------------
MELLON US LEASING, NORWEST EQUIPMENT
A DIVISION OF FINANCE, INC.
MELLON LEASING CORPORATION
By: By:
------------------------ ------------------------
Title: Title:
--------------------- ---------------------
45
METLIFE CAPITAL CORPORATION SANWA BUSINESS CREDIT
CORPORATION
By: By:
------------------------ ------------------------
Title: Title:
--------------------- ---------------------
46
EXHIBIT B
TO
LOAN AND SECURITY AGREEMENT
OPERATING AND SUPPORT AGREEMENT
OPERATING AND SUPPORT AGREEMENT entered into as of ____________, 199___ among
COOPERATIVE COMPUTING, INC. dba TRIAD SYSTEMS CORPORATION, a Delaware
corporation ("CCI/Triad"), its wholly-owned subsidiaries, TRIAD SYSTEMS
FINANCIAL CORPORATION, a California corporation ("TSFC"), CCI/TRIAD FINANCIAL
HOLDING CORPORATION , a California corporation ("SPE") and
__________________________________, a _____________ corporation ("Lender").
INTRODUCTION
1. CCI/Triad is in the business of manufacturing and marketing computer
systems ("System(s)"), and providing servicing therefor.
2. TSFC is in the business of purchasing Systems for the purpose of
leasing the same to the end-users thereof, some part of which leases are sold
and transferred to SPE for good consideration.
3. TSFC, from time to time, enters into sale and collection assignment
agreements with SPE under which TSFC sells to SPE receivables due TSFC under
the leases and assigns a security interest in the leases, and the equipment
subject to such leases.
4. SPE has entered into a Loan and Security Agreement dated as of
_____________, 199___ with Lender (the "Loan and Security Agreement") pursuant
to which Lender agrees to lend to SPE the discounted value of certain lease
receivables and SPE agrees, in order to secure repayment of such loans, to
grant to Lender a security interest in such receivables, the related leased
equipment and the related leases.
NOW, THEREFORE, in consideration of the mutual covenants of the parties,
it is agreed as follows:
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47
1. Definitions. As used herein, the following terms shall have the
meanings set forth below:
(a) "Lease" shall have the same meaning as defined in Section 1.18 of
the Loan and Security Agreement.
(b) "Customer" shall mean any person who leases a System under a Lease.
(c) "CCI/Triad" shall have the same meaning as defined in Section 1.36
of the Loan and Security Agreement.
(d) "Obligations" shall have the same meaning as defined in Section 6.1
of the Loan and Security Agreement.
2. Marketing Opportunity. TSFC agrees that CCI/Triad may offer to its
Customers interested in leasing a System the alternative of entering into a
Lease with TSFC upon such terms as shall be fixed from time to time by TSFC.
TSFC shall have and retain the right to reject any Customer interested in
acquiring a System, but if TSFC and the Customer enter into a Lease with
respect to a System, then CCI/Triad agrees to sell to TSFC such System on the
terms and conditions hereinafter set forth.
3. Sale of System. If TSFC and a Customer enter into a Lease with respect
to a System, then CCI/Triad agrees to sell such System to TSFC, to install the
System at the location designated by Customer, and to provide all installation
and initial services required to obtain the acceptance by Customer of said
System.
4. Price. The sales price of any System sold by CCI/Triad to TSFC in
accordance with this Agreement shall be CCI/Triad's usual list price for the
System, less any discount, acceptable to CCI/Triad, agreed upon in writing
between TSFC and the Customer, plus all insurance, transportation, customs,
license, registration, sales, use, excise, or other taxes or assessments and,
if applicable, all costs arising from the exportation of a System from the
United States of America and its importation and sale or lease and installation
into the country of destination. Such price shall include all installation,
cables, instruments, and related services in connection with the normal
installation of a System by CCI/Triad.
5. Payment Terms. CCI/Triad will invoice TSFC for the sales price set
forth in Paragraph 4 within ten (10) days after the date of acceptance of the
System by the Customer. The invoice shall conclusively establish the sale by
CCI/Triad to TSFC of all CCI/Triad's right, title and interest in and to the
equipment described in the invoice. The invoice shall further constitute
2
48
confirmation by CCI/Triad of the representation and warranty by CCI/Triad to
TSFC and its respective successors and assigns, that (i) CCI/Triad had good and
valid title to the equipment and software described in the invoice, free of all
liens, security interests, encumbrances, pledges, charges and claims of any
kind; (ii) CCI/Triad will defend the title to that equipment and software
against all claims and demands of all persons whomsoever; and (iii) no consent
by any person is required for the assignment and other transfers made by the
Agreement, or, if any such consent is required, such consent has been duly
obtained.
6. TSFC's Transfer to SPE. TSFC will sell and transfer to SPE certain of
its rights and interests in the Leases, computer systems, software and
equipment, as appropriate to provide security for the Loan and Security
Agreement.
7. Warranty. CCI/Triad warrants to TSFC and Lender only that the Systems
to be delivered hereunder, at the time of delivery and for a period of ninety
(90) days thereafter, will be free from defects in material and workmanship.
CCI/Triad's liability under the foregoing warranty shall be limited to the
repair or replacement, at its option and expense, of any defective or non
conforming part of the System, F.O.B. manufacture or repair site. CCI/Triad
makes no other warranty or representation to TSFC, SPE, Lender or any Customer,
whether express or implied, including any implied warranties of merchantability
or fitness for a particular purpose. TSFC is authorized to extend to the
Customer the foregoing warranty provision and agrees that no Lease entered into
by it shall contain any warranty other than the foregoing.
8. Software. CCI/Triad grants to TSFC and SPE a non-exclusive license,
with the right to relicense any Customer, to use (and to assign a security
interest therein to Lender) any and all software required to operate, a System
sold hereunder.
9. Patents. CCI/Triad agrees and authorizes TSFC and SPE to agree on the
behalf and for the account of CCI/Triad that CCI/Triad will defend, at its own
expense, any action or proceeding brought against a Customer to establish that
all or part of a System (including software) constitutes an infringement of or
violation of any lawful patent or copyright and will pay any damages or cost
awarded therein against any Customer by reason of any such infringement,
including reasonable legal fees and expenses incurred by Lender provided that
CCI/Triad shall be informed in writing of any such proceeding as soon as is
practicable after its commencement and given the right to control the defense
thereof. If any part of the System is found by final judgment of any competent
tribunal to infringe or violate any patent or copyright, and the use thereof is
enjoined, then CCI/Triad shall, within ninety (90) days, at its sole election
and expense, either (i) obtain authorization for the Customer or Lender or its
3
49
assignee to continue using the part thereof so enjoined, or (ii) replace the
part thereof so enjoined with a comparable, non infringing part, or (iii)
modify the part thereof so enjoined to eliminate the infringement, or (iv)
remove the System and repurchase the System for the unpaid portion of the
purchase price or the unamortized portion of the capitalized value of the Lease
related thereto, whichever is applicable. The foregoing states CCI/Triad's
whole complete responsibility or liability with respect thereto.
10. Insurance. CCI/Triad agrees to maintain adequate insurance on any
System sold hereunder for the full value thereof until such date as TSFC
acquires title to the System.
11. Support.
(a) CCI/Triad represents to Lender that it owns 100% of the stock of
TSFC and TSFC owns 100% of SPE, and CCI/Triad agrees that it will maintain its
existing control of TSFC and TSFC agrees it will maintain its existing control
of SPE.
(b) CCI/Triad and TSFC each agree that they each will cause SPE to
comply in a timely manner with its Obligations herein and under the Loan and
Security Agreement by making equity contributions or subordinated loans to SPE
in amounts sufficient to enable SPE to comply with such Obligations.
(c) SPE, TSFC and CCI/Triad authorize Lender, without notice or
demand, and without affecting their respective liabilities hereunder, from time
to time, to:
(i) renew, compromise, extend, accelerate or otherwise change the
time for payment of, or otherwise change the terms of the Obligations of
Lessees under Leases assigned to Lender or the Obligations or any part thereof;
(ii) take and hold security for such Obligations or the
Obligations, and exchange, enforce, waive and release any such security; and
(iii) apply such security and direct the order and manner of sale
thereof as Lender, in its discretion, may determine. Lender may, without
notice, assign its rights in this Agreement in whole or in part.
(d) (i) SPE, TSFC and CCI/Triad each respectively waive any right to
require Lender to (a) proceed against any other party, or (b) proceed against
or exhaust any security held from SPE or (c) pursue any other remedy in
Lender's power whatsoever. SPE, TSFC and CCI/Triad each respectively waive any
defense arising by reason of the cessation from any cause whatsoever of
4
50
the liability of any other person. Until all the Obligations of Customers
under Leases assigned to Lender and the Obligations shall have been paid in
full, SPE, TSFC and CCI/Triad each respectively waive any interest in the
security held by Lender and any benefit, and any right to participate in, any
security now or hereafter held by Lender.
(ii) SPE, TSFC and CCI/Triad each respectively waive all
presentments, demands for performance, notices of non-performance, protests,
notices of dishonor, and notices of acceptance of this Agreement, and each
respectively waives the benefit of any statute of limitations affecting its
liability hereunder or the enforcement thereof.
(e) CCI/Triad agrees that it shall assume all liability for, and shall
indemnify and hold harmless TSFC, Lender and their respective assignees from
any and all claims, actions, suits, proceedings, costs, expenses, damages and
liabilities, including attorneys' fees, arising out of or relating to any
negligent acts of TSFC claimed to have been committed in connection with the
sale or lease of Systems to Customers or such assignees.
12. Term. This Agreement shall continue in effect until terminated by
mutual agreement of the parties; provided, however, that any party may
terminate this Agreement upon three (3) months' written notice of such
termination to the other parties, but no such termination shall have the effect
of terminating any of the rights, obligations or liabilities of any party with
respect to Systems theretofore sold and purchased pursuant hereto.
Notwithstanding the foregoing, this Agreement shall remain in full force and
effect, and may not be terminated, as long as any Lease assigned by SPE to
Lender pursuant to the Loan and Security Agreement remains in effect.
13. Further Assurance. The parties hereto shall cooperate with each other
in the preparation and execution of such documents and the taking of such
actions as may be reasonably necessary to carry out the provisions and purposes
of this Agreement.
14. Compensation. TSFC agrees to perform such services (including
billing, for the account of SPE, of amounts due under Agreements) and provide
such facilities for SPE as are reasonably required to conduct the business of
SPE. SPE agrees to compensate TSFC for its services at reasonable fees as
mutually agreed from time to time.
15. Remarketing Support. CCI/Triad and TSFC each agrees to provide
remarketing support to SPE to enable it to perform its Obligations under
Section 10 of the Loan and Security Agreement.
5
51
16. Notices. All notices given or made hereunder shall be deemed to have
been given when made in writing and hand delivered to, or deposited in the
mail, first class postage prepaid, addressed to, the other parties as follows
(or such other address as any party hereto may from time to time designate in
writing to the others):
Cooperative Computing, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
with a copy to Corporate Counsel
Triad Systems Financial Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
with a copy to Corporate Counsel
CCI/Triad Financial Holding Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
with a copy to Corporate Counsel
(Lender)____________________________
____________________________________
____________________________________
Attention: ________________________
17. Successors; Assigns. Neither CCI/Triad nor TSFC shall assign its
obligations hereunder without the consent of the other parties hereto. This
Agreement shall inure to the benefit of the successors and assigns of
CCI/Triad, TSFC and Lender.
18. Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of California.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunder duly authorized as of the day
and year first above written.
6
52
COOPERATIVE COMPUTING, INC. ('CCI/Triad")
By:_______________________________
Its:_______________________________
TRIAD SYSTEMS FINANCIAL CORPORATION ("TSFC")
By:_______________________________
Its:_______________________________
CCI/TRIAD FINANCIAL HOLDING CORPORATION("SPE")
By:________________________________
Its:_________________________________
____________________________________ ("Lender")
By:_________________________________
Its:_________________________________
7
53
EXHIBIT C
TO
LOAN AND SECURITY AGREEMENT
SECURITY SUPPLEMENT NO. _____
Security Supplement No. ______, dated ____________, 19___ by CCI/TRIAD
FINANCIAL HOLDING CORPORATION as borrower ("Debtor") under a Loan and Security
Agreement dated as of ________________, 199__ (the "Agreement") with
___________________________, as lender ("Secured Party"). Capitalized terms
used herein are used with the meaning given in the Agreement.
RECITALS
A. The Agreement provides for the execution and delivery from time to time
of Security Supplements thereto substantially in the form hereof, each of which
shall particularly describe Rent, Equipment, Leases, and other property to be
assigned and included in the Collateral under the Agreement.
B. The Agreement relates to the Equipment, the Leases, all Rents and other
payments due from Lessees thereunder, and other property described therein.
NOW THEREFORE, THIS SUPPLEMENT WITNESSETH:
1. Debtor confirms that the Equipment described in the Schedule hereto has
been delivered to the Lessee(s) named in the Schedule, is located on the
properties described in the relevant Leases, and is part of the Collateral
under the Agreement, subject to the security interest with respect thereto
granted thereby.
2. In consideration of and in order to induce Secured Party to make Loans
to Debtor, and in order to secure (a) the prompt repayment of the Loans and
payment of all interest accrued thereon, (b) the strict performance and
observance by Debtor of the obligations to be performed by it under the
Agreement and (c) all costs of litigation, collection (including attorneys
fees) or other costs expended or incurred in connection with the enforcement of
Secured Party's rights under the Agreement (collectively, the ("Obligations"):
1
54
GRANTING CLAUSE
Debtor hereby grants a security interest in favor of Secured Party in all
of the Leases, Guaranties and Equipment described in the Schedule hereto to the
full extent set forth in Section 6 of the Agreement.
3. Debtor has full power and authority to execute this Security
Supplement.
4. If any assigned moneys are received by Debtor, the same will be
delivered to Secured Party as provided in the Agreement.
5. Debtor hereby confirms as of the date hereof its representations and
warranties contained in Sections 9(b) and 9(c) of the Agreement.
6. This Security Supplement shall be construed as supplemental to the
Agreement and shall form a part thereof. As supplemented hereby, the Agreement
is in all respects ratified, approved and confirmed, and the Agreement and this
Security Supplement shall together constitute one and the same instrument.
7. This Security Supplement is being delivered in, and shall in all
respects be governed by and construed in accordance with, the laws of
California.
8. This Security Supplement may be executed in separate counterparts, each
of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same Security
Supplement.
IN WITNESS WHEREOF, Debtor has caused this Security Supplement to be duly
executed by one of its officers thereunto duly authorized, as of the day and
year first above written.
CCI/TRIAD FINANCIAL HOLDING CORPORATION
By:______________________________
Title:___________________________
Accepted:
___________________________
By:
Title:
2
55
EXHIBIT D
TO
LOAN AND SECURITY AGREEMENT
NOTICE OF ASSIGNMENT
[Date]
TO: [Name and Address of Lessee]
You are currently leasing from Triad Systems Financial Corporation
("TSFC") a computer system or systems, equipment and/or software. Notice is
hereby given that, pursuant to a Loan and Security Agreement dated as of
____________, 199__ between TSFC's assignee, CCI/Triad Financial Holding
Corporation, and ___________________________ ("Lender"), a security interest in
your lease and the related equipment was granted to Lender. As provided in
your lease, you are hereby directed to make all payments of rent and other
amounts due under your lease directly to
__________________________________________ or at such other address as Lender
may direct.
Very truly yours,
TRIAD SYSTEMS FINANCIAL CORPORATION
By: ______________________________
Name: ___________________________
Title: __________________________
1
56
EXHIBIT E
TO
LOAN AND SECURITY AGREEMENT
ACCOUNTING FOR REPOSSESSED AND REMARKETED
EQUIPMENT AND FIRST LOSS BALANCE
[letterhead of SPE ]
[Date]
[Address]
Re: Statement of Activity and First Loss Balance for the Quarterly Period
Ending _____________________. 19 ______
Gentlemen:
This statement is delivered pursuant to the Loan and Security Agreement dated
as of ___________, 199___ between you and our assignee, CCI/Triad Financial
Holding Corporation ("SPE"), (the "Agreement"; defined terms therein being used
herein as so defined).
1A. First Loss "NET LOSS POOL" ("NLP') as of beginning of the above statement
period ("Period').
1B. Ten percent (10%) of the aggregate principal amount of Loans made during
the Period.
2. Standard Cost of all Equipment remarketed during the Period.
1
57
3. Unreimbursed amounts paid by SPE to Lender on behalf of Lessees during the
Period.
4. Subtotal Debits and Credits during the Period.
5. Net Loss Pool balance at ________________, 19___.
(See attached sample report format.)
2
58
EXHIBIT F
TO
LOAN AND SECURITY AGREEMENT
SALE AND ASSIGNMENT AGREEMENT
SALE AND ASSIGNMENT AGREEMENT entered into as of January 1, 1997 between TRIAD
SYSTEMS FINANCIAL CORPORATION, a California corporation ("TSFC"), and CCI/TRIAD
FINANCIAL HOLDING CORPORATION, a California corporation ("FHC").
INTRODUCTION
1. Cooperative Computing, Inc., a Delaware corporation doing business as
Triad Systems Corporation and the parent corporation of TSFC and FHC
("CCI/Triad"), is in the business of manufacturing and marketing computer
systems ("System(s)"), and providing servicing therefor.
2. TSFC is in the business of purchasing Systems from CCI/Triad and other
personal property from other vendors for the purpose of leasing the same to the
end-users thereof ("Customer(s)" or "Lessee(s)").
3. FHC is in the business of purchasing from TSFC lease receivables
consisting of the periodic rental payments due under leases entered into by TSFC
with its customers and financing such purchases with loans from various funding
sources, secured by a continuing security interest in, among other things, such
receivables and all of FHC's and TSFC's right, title and interest in and to
such leases and in the related Systems, software and other equipment.
4. FHC has entered into a Loan and Security Agreement dated as of January
1, 1997 (the "Loan and Security Agreement"), with ▇▇▇▇▇▇ FINANCIAL, INC.
("Lender"), pursuant to which Lender has agreed to lend to FHC the discounted
value of certain of such lease receivables and FHC has agreed, in order to
secure repayment of such loans, to grant to Lender such security interests.
Capitalized terms used herein are used with the meanings given in the Loan and
Security Agreement.
5. TSFC desires to sell to FHC, and FHC desires to purchase from TSFC, the
lease receivables consisting of the Rent set forth on Schedule A hereto (the
"Specified Rent") under the Leases referred to therein (the "Specified
Leases"), and in that connection TSFC will grant to FHC a continuing security
interest in the Specified Leases, the related Equipment (the "Specified
Equipment") and
59
other Collateral pertaining thereto (collectively, the "Specified Collateral"),
all on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
of the parties, it is agreed as follows:
1. Additional Definitions. As used herein, the terms "Specified Eligible
Equipment", "Specified Eligible Lease", "Specified Guaranty", "Specified Lease
Proceeds" and "Specified Proceeds" shall mean Eligible Equipment, Eligible
Lease, Guaranty, Lease Proceeds and Proceeds, respectively, pertaining to the
Specified Leases and the Specified Equipment referred to in Schedule A hereto.
2. Sale. TSFC hereby sells and assigns to FHC, and FHC hereby purchases
from TSFC, the Specified Rents for the purchase price set forth in Schedule A
hereto. TSFC expressly retains and reserves its interest in the Specified
Leases and the Specified Equipment, subject, however, to the security interest
therein granted in Section 3.
3. Security Interest. In order to induce FHC to purchase the Specified
Rents and to enable FHC to comply with its obligations under Section 6 of the
Loan and Security Agreement, TSFC hereby assigns, pledges and grants a
continuing security interest to FHC in all of its right, title and interest in
and to the following described properties, assets and rights (such properties,
assets and rights collectively called the "Specified Collateral"):
(a) each Specified Lease and all of TSFC's rights thereunder including the
right to receive payments (including Rent and security deposits) due to TSFC
thereunder and the right to exercise rights and remedies upon default;
(b) every item or component of Specified Equipment subject to Specified
Leases, together with (i) all accessions, replacements and substitutions
thereto and therefor and (ii) all upgrades, add-ons and additions thereto and
therefor to the extent they have been financed by Lender under the Loan and
Security Agreement, and (iii) all of its rights in the software and licenses
related thereto;
(c) each and every Specified Guaranty, security interest, mortgage or
other security (including security deposits) securing the payment and
performance of the Lessees' obligations under the Specified Leases;
(d) all Specified Lease Proceeds and Proceeds of items or components of
Specified Equipment;
60
(e) all warranty and other rights TSFC may have with respect to
the Specified Leases and the Specified Equipment subject thereto
against the manufacturer(s) of the Specified Equipment; and
(f) the proceeds (whether cash or non-cash proceeds), and products
of all the properties, assets and rights described in paragraphs (a),
(b), (c), (d), and (e) above including without limitation, all
insurance payments, whether or not FHC or Lender is the loss payee
thereof; in each case whether now owned or hereafter acquired.
TSFC acknowledges that FHC will assign, pledge and grant to Lender the
foregoing security interest, pursuant to Section 6 of the Loan and Security
Agreement, as security for FHC's Obligations.
4. Representations, Warranties and Covenants of TSFC. TSFC
represents, warrants and covenants that:
4.1 Due Organization. It is a corporation duly organized and validly
existing in good standing under the laws of its jurisdiction of incorporation,
and is duly qualified or otherwise authorized to do business wherever necessary
to carry on its present business and operations and to perform its obligations
under this Agreement and each Specified Lease.
4.2 Authority. It has the full power, authority and legal right to
enter into and perform its obligations under this Agreement.
4.3 Principal Place of Business. Its chief executive office and the
office where it maintains its records concerning payments under the Specified
Leases is in Livermore, California, and it will not change such principal place
of business or remove therefrom such records, or any other records relating to
the Collateral or any Loan, or change its name, identity or corporate
structure, without at least thirty (30) days prior written notice to Lender.
4.4 Binding Obligation. This Agreement has been duly authorized,
executed and delivered by TSFC and constitutes the legal, valid and binding
obligation of TSFC, enforceable against it in accordance with its terms.
4.5 Approvals and Consents. No stockholder approval, or approval or
consent of any trustee or holder of any indebtedness or obligation, or
authorization, consent, approval or license by, exemption from or registration
with, any court or governmental department, commission, board, agency or
instrumentality, domestic or foreign, is necessary in connection with the
execution, delivery and performance of the obligations of TSFC under this
Agreement, and no consent of any owner, lessor or mortgagee of premises where
any Specified Equipment is located is needed to permit any of Lender,
61
FHC or TSFC to enforce the rights of the lessor under the Specified Leases or,
if required, the same have been obtained and certified copies have been
delivered to Lender.
4.6 Compliance with Laws. There is no law, governmental rule,
regulation, judgment, decree or order binding on it that would be contravened
by the execution and delivery of, and performance under, this Agreement by
TSFC. TSFC will at all times comply with, or cause to be complied with, all
laws, statutes, rules, regulations, orders and directions of any governmental
authority having jurisdiction over it or its business if not complied with,
would have a material adverse effect on its business, condition (financial or
other), performance, operations, properties or prospects or on its ability to
perform its obligations under this Agreement or the Specified Leases.
4.7 Clear Ownership. The interest of FHC and TSFC combined are, and
will continue to be, the record and beneficial ownership of 100% of each
Specified Lease and all Specified Equipment subject to Specified Leases in
which TSFC is named as Lessor free and clear of all mortgages, deeds of trust,
pledges and other liens, security interests, charges or encumbrances, except
for liens for taxes due but not yet payable and liens in favor of Lender and
TSFC shall promptly deliver to Lender any executed counterparts of Specified
Leases which were not delivered to Lender pursuant to Section 5.3(a) of the
Loan and Security Agreement and which have subsequently come into possession of
it. Notwithstanding the foregoing, TSFC shall be entitled to transfer to
CCI/Triad or another subsidiary corporation of CCI/Triad record and beneficial
ownership of any Specified Equipment, subject to Specified Leases in which
TSFC is named as Lessor, provided that:
(a) TSFC remains fully bound under this Agreement with respect to all
obligations hereunder, including the obligations assumed by the
assignee;
(b) TSFC has complied with any and all requirements under the
applicable Specified Lease or Leases with respect to such transfer;
(c) the assignee assumes in writing the obligations of TSFC under
this Agreement, subject to all the terms and conditions hereof and
Lender's rights and remedies under the Loan and Security Agreement,
and recognizes the continuing validity and priority of the lien of
Lender in the Specified Equipment;
(d) the assignee executes any documentation reasonably required by
Lender to facilitate the foregoing provisions of this Section 4.7
and the Operating Agreement; and
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(e) the assignee and TSFC execute and file all Uniform Commercial Code
financing statements and assignment statements necessary or appropriate, in
Lender's sole judgment, to continue, perfect and protect Lender's first
priority security interest in the Specified Collateral hereunder.
4.8 Filings. This Agreement and the Uniform Commercial Code filings made
pursuant hereto create in favor of FHC a valid and perfected first priority
security interest in the Specified Collateral and, upon assignment to Lender,
create in favor of Lender a valid and perfected first priority security
interest in the Specified Collateral securing the Obligations.
4.9 Actions. There are no actions, suits, proceedings, claims or disputes
pending or, to its knowledge, threatened against or affecting TSFC or its
properties before any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, that, if determined
adversely to it, would have a material adverse effect on its business,
condition (financial or other), performance, operations, properties or
prospects, its ability to perform its obligations under this Agreement or the
Specified Leases or FHC's or Lender's security interest in the Specified
Collateral.
4.10 Payment of Taxes. TSFC has filed and will file all tax returns
(federal, state and local) required to be filed and has paid all taxes shown
thereon to be due, including interest and penalties, unless it is contesting
the payment of certain taxes in good faith and has established adequate
reserves therefor.
4.11 Notices. It will send to FHC and Lender copies of all significant
notices, including, but not limited to, any notices with respect to the terms
of any Specified Lease, and other instruments or communications required or
permitted to be given by the Lessee under any Specified Lease.
4.12 Further Assurances; Enforcement of Leases. TSFC will: (a) preserve
and maintain its corporate existence and all rights, privileges and franchises
now enjoyed and conduct its businesses in an orderly, efficient and customary
manner; and (b) from time to time, at its own expense, take all actions
reasonably necessary to establish, preserve, protect and perfect the rights
created by this Agreement, including, without limitation, (i) the full and
punctual performance of all of its obligations under the Specified Leases; (ii)
the enforcement of the Specified Leases without waiver, amendment or
modification; and (iii) the exercise of any and all rights of the lessor under
the Specified Leases as may be necessary or advisable to assure full compliance
with the terms and provisions thereof and to protect FHC's and Lender's
security interest in the Specified Collateral.
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4.13 Validity and Enforceability of Specified Leases and Specified
Guaranties. Each Specified Eligible Lease and Specified Guaranty is genuine,
valid and enforceable and is not subject to any offset, deduction, counterclaim
or lien.
4.14 Specified Leases Duly Entered Into. All parties to each
Specified Lease and Specified Guaranty have full power, authority and legal
right to enter into and perform its obligations under such Specified Lease or
Specified Guaranty, as the case may be. Each Specified Lease and Specified
Guaranty will be duly authorized, executed and delivered by the parties
thereto, will constitute legal, valid and binding obligations of the parties
thereto, enforceable in accordance with their respective terms and are in full
force and effect on the date of this Agreement, and no default thereunder
exists on such date. The entire agreement with each Lessee is embodied solely
in the executed counterparts of the applicable Specified Lease and other
documentation furnished to Lender with respect to such Specified Lease.
4.15 Equipment Description. Each Specified Lease describes the
Specified Equipment leased to the Lessee named in such Specified Lease, the
Specified Rent required for such Specified Equipment and any applicable early
termination payments.
4.16 Specified Leases Comply with Laws. Each Specified Lease complies
with and does not violate applicable laws, regulations or contractual
specifications or warranties, including without limitation, any applicable laws
relating to maximum rates of interest (whether or not imputed) or similar
charges and all required disclosures have been made with respect thereto under
federal truth-in-lending and truth-in-leasing regulations to the extent
applicable.
4.17 No Impairment of Value or Rights. TSFC will not do anything that
might impair the value of any Specified Lease or Specified Equipment or any of
the rights or obligations of the parties hereto under any Specified Lease.
4.18 No Lessor Liens. No Specified Lease or any Specified Equipment
subject thereto, or any other of its rights therein, has been assigned to, or
is subject to, any lien or security interest in favor of, any person other than
FHC and Lender.
4.19 Notifications. TSFC will promptly notify FHC and Lender of:
(a) any Event of Default or event which, upon the lapse of time or giving
of notice, or both, would become an Event of Default, or any event which
is, or upon the lapse of time or giving of notice, or both, would become a
default under or breach of the Operating Agreement;
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(b) any and all litigation or other matters or events concerning it or
any Lessee that has a reasonable possibility of materially and adversely
affecting its or any Lessee's business, condition (financial or other),
performance, operations, properties or prospects or adversely affecting
Lender's security interest in the Specified Collateral.
4.20 Books and Records; Financial and Other Information. TSFC shall:
(a) maintain adequate books, accounts and records and prepare all
financial statements required hereunder in accordance with generally
accepted accounting principles and practices consistently applied and in
compliance with the regulations of any governmental regulatory body having
jurisdiction over it;
(b) give Lender and its representatives, at all reasonable times and upon
reasonable notice, access to all records, files and books of accounting
pertaining to all transactions subject to this Agreement, and permit Lender
and its representatives to inspect, audit and make extracts therefrom; and
(c) upon the occurrence of an Event of Default or an event which, upon the
lapse of time or giving of notice, or both, would become an Event of
Default, permit Lender to exercise TSFC's inspection rights under the
Specified Leases, on a non-exclusive basis.
4.21 Audit. TSFC shall permit Lender, and shall cause CCI/Triad to
permit Lender, from time to time, upon reasonable request and at Lender's sole
expense, to conduct an audit of TSFC'S and CCI/Triad's accounting and operating
procedures as they relate to the Specified Leases, provided such audit does not
unreasonably interfere with TSFC's or CCI/Triad's normal business operations.
4.22 Charges and Taxes. TSFC shall make all filings in respect of and
pay (or reimburse Lender for, upon presentation of an invoice) all charges and
local, state or federal taxes (other than net income taxes of Lender or
franchise taxes levied upon Lender's net income), license fees, or other
assessments, charges, fines and penalties, together with interest payable with
respect thereto, levied or imposed upon or in connection with this Agreement,
the Specified Leases, the Specified Equipment, the Specified Rent and the
Specified Proceeds. Upon request of FHC or Lender, TSFC shall furnish Lender
written evidence of such payment.
5. Representations, Warranties and Covenants of FHC. FHC
represents, warrants and covenants that:
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5.1 Due Organization. It is a corporation duly organized and validly
existing in good standing under the laws of its jurisdiction of incorporation,
and is duly qualified or otherwise authorized to do business wherever necessary
to carry on its present business and operations and to perform its obligations
under this Agreement.
5.2 Authority. It has the full power, authority and legal right to enter
into and perform its obligations under this Agreement.
5.3 Binding Obligation. This Agreement has been duly authorized, executed
and delivered by FHC and constitutes the legal, valid and binding obligation of
FHC, enforceable against it in accordance with its terms.
5.4 Approvals and Consents. No stockholder approval, or approval or
consent of any trustee or holder of any indebtedness or obligation, or
authorization, consent, approval or license by, exemption from or registration
with, any court or governmental department, commission, board, agency or
instrumentality, domestic or foreign, is necessary in connection with the
execution, delivery and performance of the obligations of HFC under this
Agreement.
5.5 Compliance with Laws. There is no law, governmental rule, regulation,
judgment, decree or order binding on it that would be contravened by the
execution and delivery of, and performance under, this Agreement by FHC. FHC
will at all times comply with, or cause to be complied with, all laws,
statutes, rules, regulations, orders and directions of any governmental
authority having jurisdiction over it or its business if not complied with,
would have a material adverse effect on its business, condition (financial or
other), performance, operations, properties or prospects or on its ability to
perform its obligations under this Agreement.
6. Indemnities.
(a) TSFC shall indemnify, protect and defend FHC and Lender and hold each
of them safe and harmless from and against any and all losses, claims, demands,
penalties, actions, suits, proceedings, costs, expenses (including reasonable
attorneys' fees), damages and liabilities ("Indemnified Amount") (other than
Indemnified Amounts arising from or pertaining to the gross negligence or
willful misconduct by FHC or Lender) that may at any time be made, brought,
incurred, assessed or adjudged against Lender arising from or pertaining to:
(i) the manufacture, purchase, license, subscription, financing,
ownership, delivery, rejection, nondelivery, possession, use, dismantling,
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transportation, storage, operation, maintenance, repair, return or other
disposition of the Specified Equipment;
(ii) breach of any covenant or warranty made by TSFC or CCI/Triad relating to
any Specified Equipment or Specified Lease or maintenance of any Specified
Equipment, including qualification of any Specified Equipment for any tax
benefit;
(iii) any claim, action or proceeding involving patent or trademark
infringement or copyright or trade secret violations relating to the Specified
Equipment (including any interest or penalty) whether or not such claim, action
or proceeding involves a claim of infringement or a combination or design
patent;
(iv) failure of FHC, and, pursuant to the Loan and Security Agreement, Lender,
for whatever reason, to have obtained a first priority perfected purchase money
security interest in and lien on the Specified Collateral, including, without
limitation, the Specified Leases and the Specified Equipment whether or not (A)
the Specified Equipment is deemed to be an asset of a Lessee as the result of a
Specified Lease being held to be a security agreement rather than a true lease
or (B) Uniform Commercial Code financing statements of form UCC-1 were filed
against a Lessee with respect to the Specified Equipment under Section 5.3(c)
of the Loan and Security Agreement;
(v) any misrepresentation made by any agent or employee of TSFC or CCI/Triad
in the course of negotiations regarding any Specified Lease or Specified
Equipment;
(vi) any breach of any warranty or covenant, or any misrepresentation, of TSFC
or CCI/Triad in any Specified Lease, any Operative Document or any certificate
of an officer of TSFC or CCI/Triad delivered in accordance therewith;
(vii) failure of any Specified Lease or Specified Equipment to comply with
applicable laws, regulations or contractual specifications or warranties, or to
be an Specified Eligible Lease or Specified Eligible Equipment, as the case may
be;
(viii) any dispute, claim, offset, or defense of any Lessee (other than payment
by, or discharge in bankruptcy of, such Lessee) to the payment of any Specified
Rent;
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(ix) FHC having received from TSFC, and accordingly Lender having received
from FHC, only a fax copy (rather that the original, manually executed
copy) of any Specified Lease or any Specified Guaranty;
(x) failure of TSFC or CCI/Triad to pay when due any taxes for which it is
liable; and
(xi) any wrongful or negligent acts or omissions of TSFC, its agents or
assigns, in carrying out its obligations, upon the request of FHC or Lender
or pursuant to the Servicing Agreement, under Section 7 or Section 10 of
the Loan and Security Agreement.
TSFC shall assume, at its expense, full responsibility for the defense and
satisfaction of the foregoing, with counsel reasonably satisfactory to FHC and
Lender. All of the indemnities set forth in this Section 6(a) shall survive the
cancellation or termination of this Agreement and the Loan and Security
Agreement.
(b) Upon the occurrence of any of the events set forth in Section 6(a),
TSFC unconditionally agrees to pay FHC or Lender, upon written demand, the
Indemnified Amount.
7. Further Assurance. The parties hereto shall cooperate with each other
in the preparation and execution of such documents and the taking of such
actions as may be reasonably necessary to carry out the provisions and purposes
of this Agreement.
8. Notices. All notices, demands, directions, consents and approvals
hereunder shall be in writing and shall be delivered in person, by telecopy, by
overnight courier or by prepaid certified mail, addressed to the party for
whom it is intended, if to:
Triad Systems Financial Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President
Telecopy No. 510/449-6962
CCI/Triad Financial Holding Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President
Telecopy No. 510/449-6962
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Any party may change its address for the receipt of notices, demands,
directions, consents and approvals by notice duly given to the other parties
pursuant to this Section 8.
9. Successors; Assigns. Neither TSFC nor FHC shall assign its
obligations hereunder without the consent of Lender. This Agreement shall be
binding upon, and inure to the benefit of, the parties hereto and their
successors and permitted assigns; the representations, warranties and
covenants of TSFC in this Agreement shall specifically inure to the benefit of
Lender, as assignee of FHC.
10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of California.
11. Entire Agreement. The terms and conditions herein contained
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof, except to the extent that other agreements are referred
to herein or contemplated hereby or executed contemporaneously herewith, and
supersede all previous communications whether oral or written among the parties
hereto with respect to such subject matter. No agreement or understanding
varying or extending any rights or obligations hereunder of any of the parties
shall be binding unless in a writing signed by a duly authorized officer or
representative of the party against which such variance or extension is sought
to be enforced.
In WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunder duly authorized as of the day
and year first above written.
TRIAD SYSTEMS FINANCIAL
CORPORATION
By: __________________________
Its: _________________________
CCI/TRIAD FINANCIAL HOLDING
CORPORATION
By: __________________________
Its: _________________________
