LOAN AGREEMENT
dated as of October 31, 1997
by
and
between
THE FIFTH THIRD BANK OF NORTHERN KENTUCKY, INC.
as the Lender
and
TECHNOLOGY INTEGRATION FINANCIAL SERVICES, INC.
as the Borrower
Table of Contents
Page
SECTION I - Definitions. . . . . . . . . . . . . . . . . .
1
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SECTION II - Purposes. . . . . . . . . . . . . . . . . . .
1
SECTION III - The Revolving Credit Loans . . . . . . . . .
2
3.01 Revolving Credit Loans. . . . . . . . . . .
2
3.02 Maximum Amount. . . . . . . . . . . . . . .
2
3.03 Purposes of the Revolving Credit Loans. . .
2
3.04 Procedures and Conditions . . . . . . . . .
2
3.05 Notation of Disbursements and Payments. . .
5
3.06 Optional and Mandatory Revolving Credit
Loan Note Principal Payment . . . . . . . .
5
3.07 Revolving Credit Loan Note Interest Payments
6
3.08 Mandatory Prepayments; Collateral
Substitution 6
3.09 Termination of Revolving Credit . . . . . .
7
3.10 Extension of Revolving Credit . . . . . . .
7
SECTION IV - The Draw Facility . . . . . . . . . . . . . .
7
4.01 Amount of Draw Facility . . . . . . . . . .
7
4.02 Term of the Draw Facility . . . . . . . . .
7
4.03 Termination of Draw Facility . . . . . . .
7
4.04 Extension of Draw Facility . . . . . . . .
8
4.05 Purposes of the Draw Facility . . . . . . .
8
4.06 Procedures and Conditions . . . . . . . . .
8
4.07 Notation of Disbursements and Payments. . .
11
4.08 Non-Revolving . . . . . . . . . . . . . . .
11
4.09 Interest Rate on the Draw Facility Notes .
11
4.10 Payment of Interest and Principal on
the Draw Facility Notes . . . . . . . . . .
11
4.11 Term of Draw Facility Notes . . . . . . . .
11
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4.12 Mandatory Prepayments on Draw Facility
Notes . . . . . . . . . . . . . . . . . . .
12
SECTION V - Security for the Revolving Credit Loans. . . .
12
5.01 Security for the Revolving Credit Loans . .
12
SECTION VI - Conditions Precedent. . . . . . . . . . . . .
13
6.01 Conditions Precedent . . . . . . . . . . .
13
6.02 Conditions Precedent to Subsequent
Disbursements . . . . . . . . . . . . . . .
15
SECTION VII - General Covenants. . . . . . . . . . . . . .
15
7.01 Insurance . . . . . . . . . . . . . . . . .
15
7.02 Taxes and Other Payment Obligations . . . .
16
7.03 Financial Statements. . . . . . . . . . . .
17
7.04 Financial Records . . . . . . . . . . . . .
18
7.05 Properties. . . . . . . . . . . . . . . . .
18
7.06 Corporate Existence and Good Standing . . .
18
7.07 Notice Requirements . . . . . . . . . . . .
18
7.08 Compliance with Law . . . . . . . . . . . .
19
7.09 Liens . . . . . . . . . . . . . . . . . . .
19
7.10 Letters of Credit . . . . . . . . . . . . .
20
7.11 Articles of Incorporation and Bylaws. . . .
20
7.12 Mergers, Sales, Transfers and Other
Dispositions of Assets. . . . . . . . . . .
20
7.13 Loans . . . . . . . . . . . . . . . . . . .
21
7.14 Financial Covenants . . . . . . . . . . . .
21
7.15 Location of Inventory . . . . . . . . . . .
21
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7.16 Control and Operation . . . . . . . . . . .
22
7.17 Lockbox . . . . . . . . . . . . . . . . . .
22
7.18 Compliance with Other Borrower Documents. .
23
SECTION VIII - Representations and Warranties. . . . . . .
23
8.01 Corporate Organization and Existence. . . .
23
8.02 Right to Act. . . . . . . . . . . . . . . .
23
8.03 No Conflicts. . . . . . . . . . . . . . . .
23
8.04 Authorization . . . . . . . . . . . . . . .
24
8.05 Litigation and Taxes. . . . . . . . . . . .
24
8.06 Financial Statements. . . . . . . . . . . .
24
8.07 Compliance with Contractual Obligations,
Laws and Judgments. . . . . . . . . . . . .
25
8.08 Location of Inventory . . . . . . . . . . .
25
8.09 No Undisclosed Liabilities or Guaranties. .
25
8.10 Title to Properties . . . . . . . . . . . .
25
8.11 Trademarks and Permits. . . . . . . . . . .
25
8.12 Disclosure. . . . . . . . . . . . . . . . .
26
SECTION IX - Events of Default . . . . . . . . . . . . . .
26
9.01 Failure to Pay. . . . . . . . . . . . . . .
26
9.02 [INTENTIONALLY OMITTED] . . . . . . . . . .
26
9.03 Notice Required . . . . . . . . . . . . . .
26
9.04 Falsity of Representation or Warranty . . .
26
9.05 Judgments . . . . . . . . . . . . . . . . .
27
9.06 Adverse Financial Change. . . . . . . . . .
27
9.07 Other Obligations to the Lender and its
Affiliates. . . . . . . . . . . . . . . . .
27
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9.08 Dissolution or Termination of Existence . .
27
9.09 Solvency. . . . . . . . . . . . . . . . . .
27
SECTION X - Remedies Upon Default. . . . . . . . . . . . .
28
10.01 Right to Offset . . . . . . . . . . . . . .
28
10.02 Enforcement of Rights . . . . . . . . . . .
29
10.03 Rights Under Security Instruments . . . . .
29
10.04 Cumulative Remedies . . . . . . . . . . . .
29
SECTION XI - Fees and Expenses . . . . . . . . . . . . . .
29
11.01 Transactions Expenses . . . . . . . . . . .
29
11.02 Enforcement Expenses. . . . . . . . . . . .
30
SECTION XII - Miscellaneous Provisions . . . . . . . . . .
30
12.01 Banking Days. . . . . . . . . . . . . . . .
30
12.02 Term of this Agreement. . . . . . . . . . .
30
12.03 No Waivers. . . . . . . . . . . . . . . . .
30
12.04 Course of Dealing . . . . . . . . . . . . .
31
12.05 Waivers by the Borrower . . . . . . . . . .
31
12.06 Severability. . . . . . . . . . . . . . . .
31
12.07 Time of the Essence . . . . . . . . . . . .
31
12.08 Benefit and Binding Effect. . . . . . . . .
31
12.09 Further Assurances. . . . . . . . . . . . .
31
12.10 Incorporation by Reference. . . . . . . . .
31
12.11 Entire Agreement; No Oral Modifications . .
31
12.12 Headings. . . . . . . . . . . . . . . . . .
32
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12.13 Governing Law . . . . . . . . . . . . . . .
32
12.14 Assignments . . . . . . . . . . . . . . . .
32
12.15 Multiple Counterparts . . . . . . . . . . .
32
12.16 Notices . . . . . . . . . . . . . . . . . .
33
12.17 Survival of Covenants . . . . . . . . . . .
34
12.18 Consent to Jurisdiction and Venue . . . . .
34
12.19 Acknowledgement . . . . . . . . . . . . . .
34
Exhibit
1 Definitions
2 Financial Covenants
3 List of Prohibited Parties
Annexes
A Form of Assignment
B Form of Guaranty Agreement
C Form of Revolving Credit Note
D Form of Security Agreement
E Form of Draw Facility Note
F Form of Opinion of Counsel
Schedules
8.09 Borrower's Contingent Liabilities
8.10 Encumbrances on the Borrower's Properties
LOAN AGREEMENT
This is a Loan Agreement (this "Agreement") dated as of
October 31, 1997, between THE FIFTH THIRD BANK OF NORTHERN
KENTUCKY, INC., a Kentucky banking corporation (the
"Lender"), and TECHNOLOGY INTEGRATION FINANCIAL SERVICES,
INC., a Kentucky corporation formerly known as Xxxxxxx
Computer Leasing Company, Inc., (the "Borrower").
Recitals
WHEREAS, the Borrower has requested, and the
Lender has agreed to such request, that the Lender provide a
warehouse revolving credit facility (the "Revolving Credit")
not to exceed Five Million Dollars ($5,000,000.00) and a
draw loan facility (the "Draw Facility") not to exceed
Fifteen Million Dollars ($15,000,000.00); and
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NOW, THEREFORE, the undersigned parties for full and
valid consideration, desire to enter into this Agreement to
and set forth the terms and conditions of the Revolving
Credit and the Draw Facility.
SECTION I
Definitions
Capitalized terms not otherwise defined herein shall
have the meanings given them in the exhibit attached as
Exhibit 1 to this Agreement which is hereby incorporated
into this Agreement as if set out in full in this Section.
The meanings assigned to capitalized terms, whether defined
herein or in Exhibit 1, shall be equally applicable to both
the singular and plural forms of the terms defined.
SECTION II
Purposes
2.01 Revolving Credit Purpose. The purpose of the
Revolving Credit shall be to provide short term financing,
not to exceed ninety (90) days, to the Borrower to enable
the Borrower to fund Eligible Customer Leases.
2.02 Draw Facility Purpose. The purpose of the Draw
Facility will be to convert, at least every ninety (90)
days, the principal outstanding under the Revolving Credit
to long term, amortizing loans. Draws will be made on the
Draw Facility to pay down the Revolving Credit, with each
draw on the Draw Facility being set up as a separate loan
(each a "Draw Loan"), evidenced by a separate promissory
note (each a "Draw Facility Note").
SECTION III
The Revolving Credit
3.01 Revolving Credit .
(a) Subject to the terms and conditions of this
Agreement, so long as the Revolving Credit remains in effect
and is not terminated, and no Unmatured Default or Event of
Default has occurred, the Lender shall grant the Borrower
such disbursements as the Borrower may request from time to
time in accordance with the provisions of this Agreement.
The unpaid principal balance of each disbursement shall bear
interest at an annual rate equal to the Lending Rate from
the date that disbursement is made pursuant to this
Agreement until the entire principal balance of that
disbursement has been paid in full. The Revolving Credit
shall be evidenced by and payable in accordance with the
terms of the Revolving Credit Note and on the terms of this
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Agreement. In the event of any discrepancy between the
terms of the Revolving Credit Note and this Agreement, the
terms of the Revolving Credit Note shall prevail.
(b) The "Lending Rate" for the Revolving Credit
shall be the annual rate of interest as determined by the
terms and conditions set forth in the Revolving Credit Note.
3.02 Maximum Amount. At no time shall the aggregate
unpaid principal balance of the Revolving Credit at any time
exceed Five Million Dollars ($5,000,000.00).
3.03 Term of the Revolving Credit. The Revolving
Credit is effective as of the date of this Agreement, and
unless the Revolving Credit is sooner terminated or extended
as provided in this Agreement, shall continue in effect
until October 1, 1998. Unless sooner terminated or
extended, the Revolving Credit shall terminate on October 1,
1998 and thereafter the Borrower shall not be entitled to
any additional disbursements, draws or advances on the
Revolving Credit.
3.04 Procedures and Conditions. Each disbursement
under the Revolving Credit obtained by the Borrower shall be
subject to the following terms and conditions:
(a) General.
(1) Each disbursement obtained by the
Borrower shall be in the minimum principal sum of Ten
Thousand Dollars ($10,000.00).
(2) The Borrower may obtain disbursements
only in connection with Eligible Customer Leases.
(3) The Borrower's right to obtain the
requested disbursement is subject to the Borrower's
compliance with the Assignment in connection with all of the
Customer Leases and Related Documents described in the
Security Agreement delivered under Subsection (c)(2).
(4) The Borrower hereby authorizes the
treasurer of the Borrower, and any person designated by the
board of directors of the Borrower pursuant to a resolution
which has been certified to the Lender by the corporate
secretary or an assistant corporate secretary of the
Borrower, to make either an oral or a written request for
disbursement. As long as the Lender believes in good faith
that the person actually making any oral request for
disbursement is, in fact, such treasurer or other person
designated by the Borrower's board of directors, then any
disbursement made as a result of the request for
disbursement shall be deemed to have been made pursuant to a
valid and authorized request for disbursement, regardless of
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whether the maker of the request for disbursement was truly
who he or she claimed to be.
(5) The Borrower shall not be entitled to
obtain any disbursement if any Event of Default or Unmatured
Default shall exist at the time of the making of the request
for disbursement, or would exist upon the making of the
disbursement requested, even if the Lender does not elect to
terminate the disbursement as a result of such Event of
Default or Unmatured Default. The Lender agrees to provide
the Borrower with notice of any determination by the Lender
to refuse to make additional advances of the Revolving
Credit because of the existence of an Unmatured Default as
soon as practicable following any such determination, and
the Lender acknowledges that the Borrower shall again be
entitled to advances of the Revolving Credit if, in such
event, such Unmatured Default is cured prior to the
occurrence of any Event of Default.
(6) The Borrower shall not be entitled to
obtain any requested disbursement if immediately after the
disbursement were to be made, a mandatory prepayment would
be required under Section 3.08 below. The Borrower also
shall not be entitled to obtain any disbursement if
immediately after the disbursement were to be made, the
aggregate of the unpaid principal balance of the Revolving
Credit would exceed the maximum amount permitted under
Section 3.02.
(7) All disbursements shall be made in
strict compliance with the terms and provisions of this
Agreement, unless the Lender elects in its sole discretion
to waive any of those terms and conditions. The waiver of
any terms and conditions with respect to any one
disbursement shall not constitute a waiver of
the same or any other terms or conditions with respect to
any other disbursement.
(8) Each request by the Borrower for a
disbursement hereunder shall constitute the making of the
following representations and warranties by the Borrower to
the Lender:
(A) That the Borrower is then, and at
the time the disbursement actually is made will be, entitled
under this Agreement to obtain that disbursement; and
(B) That all of the respective
covenants, agreements, representations and warranties made
by the Borrower in this Agreement, the Security Agreement,
and in any writing delivered to the Lender by or on behalf
of the Borrower are true, correct and complete in all
material respects, and have been complied with in all
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material respects (to the extent required by the terms
thereof) as of such dates. For purposes of this
representation and warranty, the Borrower is representing
and warranting solely with respect to its respective
covenants, agreements, representations and warranties
contained in the Borrower Documents and in any other writing
expressly stating further covenants, agreements,
representations and warranties of such Person, which is
signed by such Person and delivered to the Lender, by or on
behalf of such Person.
(b) [INTENTIONALLY OMITTED]
(c) Funding. Whenever the Borrower desires to
obtain a disbursement of the Revolving Credit pursuant to
this Agreement, the Borrower shall cause an authorized
representative to:
(1) Request from the Lender a disbursement
either orally or in writing, not less than three (3)
business days prior to the date on which the Borrower
desires that the Revolving Credit be disbursed, stating with
specificity (A) the amount of the disbursement requested,
the amount of which shall not exceed the Borrower's Cost,
and (B) the day on which the Borrower desires the funds to
be made available (the "Funding Date");
(2) Deliver to the Lender on or before the
Funding Date, an original, fully executed Assignment of
Customer Leases and Related Documents (as defined in the
Security Agreement) which describes, with such information
and in such detail as the Lender may reasonably require from
time to time, the specific Customer Leases and Related
Documents that are being assigned in connection with that
particular disbursement, as well as the original Customer
Leases being assigned to the Lender;
(3) Deliver to the Lender on or before the
Funding Date, evidence satisfactory to the Lender, in its
discretion, that the Borrower has created and perfected a
first priority security interest in each and every item of
Leased Equipment leased pursuant to the Customer Lease
assigned to the Lender pursuant to the Security Agreement,
unless this requirement is waived in writing by Lender;
(4) Such information and documentation as
is acceptable to the Lender conclusively establishing the
Borrower's cost of the Leased Equipment to be leased to the
respective Customer ("Borrower's Costs"); and
(5) Deliver to the Lender on or before the
Funding Date with respect to each Customer, all of the
documentation and information reasonably requested by
Lender.
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3.05 Notation of Disbursements and Payments.
Disbursements of, and payments of principal with respect to,
the Revolving Credit shall be evidenced by notations by the
Lender on its electronic data processing equipment, showing
the date and amount of each advance and each payment of
principal. The principal amount outstanding under the
Revolving Credit from time to time shall also be recorded by
the Lender on that electronic data processing equipment.
The Lender shall give the Borrower monthly written notices
of the outstanding principal balance of the Revolving Credit
not fewer than five (5) days prior to the date on which each
monthly interest payment is due under the Revolving Credit
and shall further disclose the applicable interest rates.
The Borrower agrees and acknowledges that the Lender's
undertaking is for the convenience of the Borrower only, and
that the Lender's failure to provide the principal balance
and interest rate shall not excuse the Borrower from making
any payment or otherwise taking or refraining from any
action that the Borrower would otherwise be required to take
or refrain from taking under this Agreement and/or any other
Borrower Document. The aggregate amount of all
disbursements of the Revolving Credit made and shown on the
Lender's electronic data processing equipment, over all of
the payments of principal made by the Borrower and recorded
on the Lender's electronic data processing equipment, shall
be prima facie evidence of the outstanding principal balance
due under the Revolving Credit.
3.06 Optional and Mandatory Revolving Credit Loan Note
Principal Payment.
(a) The Borrower may make optional prepayments
of principal of the Revolving Credit from time to time
without penalty or additional interest. All payments of
principal of the Revolving Credit shall replenish the
Revolving Credit (up to but not exceeding the maximum amount
provided in Section 3.02), and may be reborrowed (in
accordance with and subject to this Agreement) once repaid.
(b) The Borrower shall pay to the Lender, on the
last calendar day of each March, June, September and
December during the term of this Agreement the outstanding
principal balance of the Revolving Credit as of such date.
For purposes of making such principal payments due on the
last calendar day of March, June, September and December,
Borrower may request a draw on the Draw Facility, in
accordance with and subject to Section IV below, for the
sole and limited purpose of paying in full the principal
outstanding on the Revolving Credit as of such date and
converting such indebtedness into long term financing. The
amount of principal available under the Revolving Credit
shall be replenished in an amount equal to the amount drawn
on the Draw Facility, provided however, that at no time
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shall the maximum amount available under the Revolving
Credit exceed Five Million Dollars ($5,000,000.00).
3.07 Revolving Credit Interest Payments. The Borrower
shall pay all accrued but unpaid interest on the outstanding
principal balance of the Revolving Credit on the 10th day of
each calendar month, beginning on November 10, 1997, and on
the 10th day of each calendar month thereafter during such
time as any principal balance of the Revolving Credit
remains unpaid. At least five (5) days before the date upon
which each interest payment of the Revolving Credit is due,
the Lender shall give the Borrower notice of the amount of
the payment due and the total balance outstanding of all
disbursement of the Revolving Credit. Any failure by the
Lender to give such notice shall not relieve the Borrower of
the obligation to make the payment then due.
3.08 Mandatory Prepayments; Collateral Substitution.
If (a) either (i) payments of $150,000 or more in the
aggregate due under Customer Leases assigned to the Lender
pursuant to the Security Agreement (each an "Assigned
Lease") or (ii) fifteen percent (15%) or more of the regular
monthly lease payments due the Borrower under the Assigned
Leases, are more than ninety (90) days past due, or (b) the
Customer obligor(s) on fifteen percent (15%) of the total,
aggregate dollars volume of Assigned Leases institutes
bankruptcy, insolvency, reorganization, liquidation or
receivership proceedings, or has a petition for any such
proceeding filed against it and does not contest such filing
within thirty (30) days thereafter, or (c) an Assigned Lease
has not been assigned and delivered to the Lender under the
Security Agreement, or (d) except as provided in Section
3.04(c)(3) above, the Borrower fails to create, perfect or
maintain a first perfected security interest in any Leased
Equipment securing an Assigned Lease, or (e) any of the
representations or warranties contained in the Security
Agreement related to the Assigned Lease shall be or become
materially untrue, then such Assigned Leases shall no longer
constitute Eligible Collateral and shall be deemed
ineligible collateral ("Ineligible Collateral"). Within ten
(10) days of the occurrence of an Assigned Lease becoming
Ineligible Collateral (an "Occurrence"), the Borrower shall
provide the Lender written notice of an Occurrence. Within
thirty (30) days of an Occurrence, the Borrower shall,
unless it corrects the event resulting in the Occurrence,
eliminate the Ineligible Collateral from the Collateral
securing the Revolving Credit by (1) prepaying all principal
and all accrued but unpaid interest on the Revolving Credit
related to the Ineligible Collateral, or (2) substituting by
assignment a new Customer Lease satisfactory to the Lender,
as determined in the Lender's sole discretion.
3.09 Termination of Revolving Credit. The Lender
shall have the right, at its sole option and absolute
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discretion, to terminate the Revolving Credit upon the
occurrence of any Event of Default
and upon giving the Borrower notice of termination. The
termination of the Revolving Credit shall not in any way
release the Borrower from its obligations under this
Agreement and the other Borrower Documents, nor shall it
terminate this Agreement or the other Borrower Documents,
and the security shall continue in full force and effect
until all amounts owed by the Borrower to the Lender on the
Revolving Credit, the Draw Facility and the Draw Facility
Notes, including, without limitation, interest, penalties,
and other charges, shall have been paid in full.
3.10 Extension of Revolving Credit. The Lender is
under no duty to extend the period of the Revolving Credit
beyond October 1, 1998. Before, at or after the termination
of the Revolving Credit, the Lender may extend the term of
the Revolving Credit on a basis and with terms and
conditions satisfactory to the Lender in its sole
discretion, for one or more successive one year terms. Any
such extension must be done in writing signed by the Lender
and specifically providing for an extension of the Revolving
Credit in order to be binding on the Lender. Upon any
extension of the period of the Revolving Credit, the
Security Agreement, the Guaranty Agreement and the other
Borrower Documents shall remain in effect and shall continue
to apply to the Revolving Credit, as extended, until the
Revolving Credit, as extended, renewed or replaced, shall
have been paid in full.
SECTION IV
The Draw Facility
The Lender hereby establishes a non-revolving draw
facility (the "Draw Facility") in favor of the Borrower as
follows:
4.01 Amount of Draw Facility. The maximum principal
amount of the Draw Facility shall not exceed Fifteen Million
Dollars ($15,000,000.00).
4.02 Term of the Draw Facility. The Draw Facility is
effective as of the date of this Agreement, and unless the
Draw Facility is sooner terminated or extended as provided
in this Agreement, shall continue in effect until October 1,
1998. Unless sooner terminated or extended, the Draw
Facility shall terminate on October 1, 1998, and thereafter
the Borrower shall not be entitled to obtain any additional
draws or advances on the Draw Facility.
4.03 Termination of Draw Facility. The Lender shall
have the right, at its sole option and absolute discretion,
to terminate the Draw Facility upon the occurrence of any
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Event of Default and upon giving the Borrower notice of
termination. The termination of the Draw Facility shall not
in any way release the Borrower from its obligations under
this Agreement and the other Borrower Documents, nor shall
it terminate this Agreement or the other Borrower Documents,
and the security shall continue in full force and effect
until all amounts owed by the Borrower to the Lender on the
Revolving Credit, the Draw Facility or the Draw Facility
Notes, including, without limitation, interest, penalties,
and other charges, shall have been paid in full.
4.04 Extension of Draw Facility. The Lender is under
no duty to extend the period of the Draw Facility beyond
October 1, 1998. Before, at or after the termination of the
Draw Facility, the Lender may extend the term of the Draw
Facility, on a basis and with terms and conditions
satisfactory to the Lender in its sole discretion, for one
or more successive one year terms. Any such extension must
be done in a writing signed by the Lender and specifically
providing for an extension of the Draw Facility in order to
be binding on the Lender. Upon any extension of the period
of the Draw Facility, the Security Agreement, the Guaranty
Agreement and the other Borrower Documents shall remain in
effect and shall continue to apply to the Draw Facility, as
extended, until the Draw Facility, as extended, renewed or
replaced, shall have been paid in full. The failure of the
Lender to extend the Draw Facility shall not, in itself, act
as an acceleration of the Draw Facility Notes (as defined
below).
4.05 Purposes of the Draw Facility. Proceeds of the
Draw Facility shall be used by the Borrower strictly and
solely to pay down the principal outstanding on the
Revolving Credit, as provided in Section 3.06 above, and
refinance such principal in accordance with the terms and
conditions of a Draw Facility Note.
4.06 Procedures and Conditions. Each draw on the Draw
Facility that is requested by the Borrower shall be subject
to the following terms and conditions:
(a) General.
(1) Each draw by the Borrower on the Draw
Facility pursuant to Section 3.06(b) shall be secured by the
Eligible Customer Leases previously assigned to the Lender
as security for the respective disbursements of the
Revolving Credit. Each draw made by the Borrower on the
Draw Facility shall be evidenced by a separate Draw Facility
Note dated as of the date of such draw in a principal amount
equal to such draw. Borrower agrees to pay the Lender a
note processing fee of One Hundred Dollars ($100.00) for
each Draw Facility Note established hereunder.
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(2) The Borrower may obtain draws on the
Draw Facility only in connection with principal payments
required to be made on the Revolving Credit as provided in
Section 3.06(b) above.
(3) The Borrower's right to obtain the
requested draw on the Draw Facility is subject to the
Borrower's continued compliance with the Security Agreement
in connection with all of the Customer Leases and Related
Documents described in the Security Agreement.
(4) The Borrower hereby authorizes the
treasurer of the Borrower, and any person designated by the
board of directors of the Borrower pursuant to a resolution
which has been certified to the Lender by the corporate
secretary or an assistant corporate secretary of the
Borrower, to make either an oral or a written request for
disbursement. As long as the Lender believes in good faith
that the person actually making any oral request for
disbursement is, in fact, such treasurer or other person
designated by the Borrower's board of directors, then any
draw made as a result of the request for a draw on the Draw
Facility shall be deemed to a have been made pursuant to a
valid and authorized request for a draw on the Draw
Facility, regardless of whether the maker of the request for
the draw was truly who he or she claimed to be.
(5) The Borrower shall not be entitled to
obtain any draw on the Draw Facility if any Event of Default
or Unmatured Default shall exist at the time of the making
of the request for the draw, or would exist upon the making
of the draw on the Draw Facility requested, even if the
Lender does not elect to terminate the Draw Facility as a
result of such Event of Default or Unmatured Default. The
Lender agrees to provide the Borrower with notice of any
determination by the Lender to refuse to make additional
draws of the Draw Facility because of the existence of an
Unmatured Default as soon as practicable following any such
determination, and the Lender acknowledges that the Borrower
shall again be entitled to request draws of the Draw
Facility if, in such event, such Unmatured Default is cured
prior to the occurrence of any Event of Default.
(6) The Borrower shall not be entitled to
obtain any draw on the Draw Facility if immediately after
the draw were to be made, a mandatory prepayment would be
required under Section 4.12 below. The Borrower also shall
not be entitled to obtain any draw on the Draw Facility if
immediately after the draw were to be made, the aggregate of
the unpaid principal balance of the Draw Facility would
exceed the maximum amount permitted under Section 4.01.
(7) All draws on the Draw Facility shall be
made in strict compliance with the terms and provisions of
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this Agreement, unless the Lender elects in its sole
discretion to waive any of those terms and conditions. The
waiver of any terms and conditions with respect to any one
draw shall not constitute a waiver of the same or any other
terms or conditions with respect to any other draw.
(8) Each request by the Borrower for a draw
hereunder shall constitute the making of the following
representations and warranties by the Borrower to the
Lender:
(A) That the Borrower is then, and at
the time the draw actually is made will be, entitled under
this Agreement to obtain that draw; and
(B) That all of the respective
covenants, agreements, representations and warranties made
by the Borrower in this Agreement, the Security Agreement,
and in any writing delivered to the Lender by or on behalf
of the Borrower are true, correct and complete in all
material respects, and have been complied with in all
material respects (to the extent required by the terms
thereof) as of such dates. For purposes of this
representation and warranty, the Borrower is representing
and warranting solely with respect to its covenants,
agreements, representations and warranties contained in the
Borrower Documents and in any other writing expressly
stating further covenants, agreements, representations and
warranties of such Person, which is signed by such Person
and delivered to the Lender, by or on behalf of such Person.
(b) [INTENTIONALLY OMITTED]
(c) Funding. Whenever the Borrower desires to
obtain a draw on the Draw Facility pursuant to this
Agreement, the Borrower shall cause an authorized
representative to:
(1) Request from the Lender a draw,
either orally or in writing, not less than three (3)
business days prior to the date on which the Borrower
desires that the draw be disbursed, stating with specificity
(A) the amount of the draw requested, the amount of which
shall not exceed the principal amount then outstanding on
the Revolving Credit as of the Funding Date, and (B) the day
on which the Borrower decides the funds are to be made
available (the "Funding Date"), which shall be either the
last calendar day of March, June, September or December;
(2) Deliver to the Lender, if the
Borrower has not already done so, on or before the Funding
Date, an Assignment of Customer Leases and Related Documents
(as defined in the Security Agreement) which describes with
such information and in such detail as the Lender may
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require from time to time, the specific Customer Leases and
Related Documents that are being assigned in connection with
that particular Draw Facility Note;
(3) Deliver to the Lender, if the
Borrower has not already done so, on or before the Funding
Date, evidence satisfactory to the Lender, in its sole
discretion, that the Borrower has created and perfected a
first priority security interest in each item of Leased
Equipment leased pursuant to a Customer Lease assigned to
the Lender pursuant to the Security Agreement;
(4) Deliver to the Lender, if the
Borrower has not already done so, on or before the Funding
Date with respect to each Customer, all of the documentation
and information identified in this section to the extent not
previously submitted to the Lender; and
(5) Such other documentation that the
Lender may reasonably require.
4.07 Notation of Disbursements and Payments.
Disbursements of principal with respect to the Draw Facility
shall be evidenced by notations by the Lender on its
electronic data processing equipment, showing the date and
amount of each advance of principal. The principal amount
outstanding under each Draw Facility Note from time to time
shall also be recorded by the Lender on that electronic data
processing equipment.
4.08 Non-Revolving. The Draw Facility is a non-
revolving credit facility, and the amount of principal
repaid on the Draw Facility Notes shall not be available to
be reborrowed or redrawn under the Draw Facility or under
the respective Draw Facility Note.
4.09 Interest Rate on the Draw Facility Notes. At the
time there is a draw on the Draw Facility and a
corresponding Draw Facility Note is executed, the Borrower
shall have the option of choosing one of the five (5)
methods of determining the per annum interest rate that will
accrue on such loan that are set forth in the Draw Facility
Note. Other terms and conditions of the Draw Facility
Notes, which shall be in a form substantially similar to
Annex E attached hereto, with appropriate insertions, are
incorporated herein by reference, specifically including but
not limited to terms concerning the calculation of interest
and when interest is to be paid.
4.10 Payment of Interest and Principal on the Draw
Facility Notes. There shall be monthly interest and
principal payments on a respective Draw Facility Note. The
principal payments shall be equal payments amortized over
the term of the respective Draw Facility Note. The monthly
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aggregate lease payments received by the Borrower on the
Assigned Leases securing the respective Draw Facility Notes
shall be applied first to any accrued but unpaid interest,
and all remaining lease payments shall then be applied to
the principal payment due on such Draw Facility Note.
Payments shall be due on the dates set forth in the
respective Draw Facility Note.
4.11 Term of Draw Facility Notes. The term of each
respective Draw Facility Note shall be for a period not to
exceed three (3) years without the Lender's prior consent,
which term shall commence on the execution date of such Draw
Facility Note.
4.12 Mandatory Prepayments on Draw Facility Notes. If
(a) either (i) payments of $150,000 or more in aggregate due
under one or more Customer Leases assigned to the Lender to
secure a Draw Facility Note pursuant to the Assignment (an
"Assigned Lease") or (ii) fifteen percent (15%) or more of
the regular monthly lease payments due the Borrower under
the Assigned Leases, are more than ninety (90) days past
due, or (b) the Customer obligor(s) on fifteen percent (15%)
of the total, aggregate dollars volume of Assigned Leases
institutes bankruptcy, insolvency, reorganization,
liquidation or receivership proceedings, or has a petition
for any such proceedings filed against it and does not
contest such filing within thirty (30) days thereafter, or
(c) an Assigned Lease had not been assigned and delivered to
the Lender under the Security Agreement, or (d) except as
provided in Section 3.04(c)(3) above, the Borrower fails to
create, perfect or maintain a first priority security
interest in any Leased Equipment securing an Assigned Lease,
or (e) any of the representations or warranties contained in
the Security Agreement related to the Assigned Lease shall
be or become materially untrue, then such Assigned Leases
shall no longer constitute Eligible Collateral and shall be
deemed ineligible collateral ("Ineligible Collateral").
Within (10) days of the occurrence of an Assigned Lease
becoming Ineligible Collateral (an "Occurrence"), the
Borrower shall provide the Lender written notice of an
Occurrence. Within thirty (30) days of an Occurrence, the
Borrower shall, unless it corrects the event resulting in
the Occurrence, eliminate the Ineligible Collateral from the
Collateral securing the respective Draw Facility Note by (1)
prepaying all principal and all accrued but unpaid interest
on the respective Draw Facility Note related to the
Ineligible Collateral, or (2) substituting by assignment a
new Eligible Customer Lease satisfactory to the Lender, as
determined in the Lender's sole discretion. Furthermore, in
the event any Customer makes a prepayment on a respective
Eligible Customer Lease, then the Borrower shall make a
principal prepayment on the respective Draw Facility Note in
an amount equal to the amount prepaid by the Customer.
Provided however, in the event the Borrower makes a
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prepayment, such prepayment shall not change any such
payment due date or the amount on the regularly scheduled
installment of
principal due on the respective Draw Facility Note.
SECTION V
5.01 Security for the Loans. The Revolving Credit and
the Draw Facility Loans are and shall be individually and
collectively secured by and entitled to the benefits of all
of the following:
(a) Right of Offset. The right of offset
provided in Section 10.01 of this Agreement.
(b) Security Interest in the Collateral. A
security interest granted by the Borrower in the Collateral,
pursuant to the Security Agreement substantially in the form
attached hereto as Annex D.
(c) Guaranty. By the payment guaranty of the
Guarantor pursuant to the Guaranty Agreement substantially
in the form attached hereto as Annex B.
SECTION VI
Conditions Precedent
6.01 Conditions Precedent. The Lender's obligation to
provide the Borrower with draws under the Revolving Credit
and/or the Draw Facility shall be conditioned upon the
fulfillment of all the following conditions:
(a) Resolutions. The Borrower and the Guarantor
shall have each furnished the Lender with a certified copy
of the resolutions of their respective board of directors
(1) authorizing the execution of the following documents to
which they are parties: this Agreement, the Revolving
Credit Note, the Draw Facility Notes, the Security
Agreement, the Guaranty Agreement, and any other documents,
instruments and agreements referred to herein which are
required to be executed and delivered by the Borrower or the
Guarantor and (2) authorizing consummation of the
transactions contemplated by, and performance of this
Agreement.
(b) Opinion of Counsel. The Borrower shall have
furnished the Lender, at the Borrower's expense, with the
legal opinion of Xxxxxxxxx and Dreidame, as counsel for the
Borrower and Guarantor addressed to the Lender, dated as of
the Date hereof, satisfactory to the Lender and its counsel
and substantially in the form attached hereto as Annex F.
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(c) Certificate of Incumbency. The Borrower and
the Guarantor shall have furnished the Lender with
certificates of their respective secretaries certifying the
names of the respective officers of the Borrower and
Guarantor authorized to sign the Borrower Documents,
together with the true signatures of such officers.
(d) Executed Agreements. The Borrower and the
Guarantor shall have duly executed each of the following
documents to which they are parties and shall have delivered
to the Lender the following:
(1) this Agreement;
(2) the Revolving Credit Note and the Draw
Facility Notes (each to be executed
and delivered at the time of the related advance
of funds);
(3) the Security Agreement;
(4) the Guaranty Agreement; and
(5) such financing statements or other
documents for filing with public
officials with respect to the Assignment
and the Security Agreement as the Lender
may request.
(e) Representations and Warranties. Each and
every representation and warranty made by or on behalf of
the Borrower, the Guarantor or either of them at the time of
or after the execution of this Agreement relating to the
Borrower Documents to which they are a party or the
transactions contemplated thereby shall be substantially
true, complete and correct on and as of the date draw or
disbursement is to be made under the Revolving Credit and/or
the Draw Facility.
(f) No Defaults. There shall exist no Event of
Default or Unmatured Default which has not been cured to the
Lender's satisfaction.
(g) No Change in the Borrower's or the
Guarantor's Condition. There shall have been no material
adverse change in the condition, financial or otherwise, of
the Borrower and the Guarantor, from that existing on the
date of the financial statements described in Section 8.06
of this Agreement. For purposes hereof, "material adverse
change" shall mean a 25% or greater decrease in the Tangible
Net Worth of the Guarantor and the Borrower on an aggregate
basis.
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(h) Documentation. The Borrower shall have
complied with Section 3.04 of this Agreement in all
respects, and delivered all documents and instruments
required thereby.
(i) Recordings and Filings. All financing
statements or other instruments as the Lender may reasonably
request have been executed and delivered by the Borrower and
filed or recorded in such public offices as the Lender may
request to perfect and maintain the perfection of the
security interests which secure the Revolving Credit and/or
the Draw Facility.
(j) Assurances and Opinions for Property Outside
Kentucky. The Lender shall have received reports of
searches of personal property records from the appropriate
reporting agency in the states outside of Kentucky in which
any Collateral is located, which do not disclose any
security interest in the Collateral or any purchase money
security interests existing as of the date of this Agreement
except as disclosed on Schedule 8.10, that is prior to the
Lender's security interest in such Collateral, on or after
the perfection of the Lender's security interest in such
Collateral. The Lender may obtain such reports, but the
Borrower shall pay all reasonable costs associated with
obtaining them.
(k) Insurance Certificates. The Lender shall
have received the certificates of insurance required by
Section 7.01 of this Agreement.
(l) Counsel Fees. The Borrower shall have paid
the Lender's counsel fees and expenses in accordance with
Section X of this Agreement.
(m) [INTENTIONALLY OMITTED]
6.02 Conditions Precedent to Subsequent Disbursements.
The Lender's obligation to make disbursements of Revolving
Credit and/or the Draw Facility after the first disbursement
shall be conditioned upon the fulfillment prior to the
making of each such disbursement, of the conditions set out
in Section 6.01 of this Agreement and to the further
condition that the representations set out in Section
3.04(a)(8) are true, complete and correct.
SECTION VII
General Covenants
During the term of this Agreement, the Borrower shall
comply with all of the following provisions:
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7.01 Insurance. The Borrower shall maintain insurance
as follows:
(a) Casualty Insurance. Maintain
and/or cause to be maintained insurance policies on all real
and personal property of Borrower (including, but not by way
of limitation, the Collateral and other security for the
obligations provided for herein) with reputable carriers
acceptable to the Lender to such extent and against such
hazards and liabilities as is commonly maintained by
companies similarly situated, such policies to specify the
Lender as the "loss payee" of Borrower and carry
endorsements that require thirty (30) days advance notice to
the Lender of any alteration to or cancellation of same, and
at least annually (and more frequently if requested by the
Lender) provide the Lender with certificates of insurance or
other satisfactory evidence thereof.
(b) Liability Insurance. Maintain in
full force and effect such liability insurance with respect
to the activities of Borrower and other insurance as is
commonly maintained by similar companies and as may be
reasonably required by Lender, all such insurance to be
provided by reputable carriers acceptable to Lender.
(c) General Insurance Requirements.
(1) All insurance shall provide
that any loss thereunder shall be payable notwithstanding
any action, inaction, breach of warranty or condition,
breach of declarations, misrepresentation or negligence of
the Borrower.
(2) Prior to the expiration date
of any policy of insurance maintained pursuant to this
Agreement, the Borrower shall provide the Lender with a
certificate of insurance evidencing the acquisition of a new
policy, or an extension or renewal of an existing policy,
evidencing the Borrower's due compliance with this section.
(3) If the Borrower fails to
acquire any policy of insurance required to be maintained
pursuant to this section, or fails to renew or replace any
such policy at least ten (10) days prior to the expiration
thereof, or fails to keep any such policy in full force and
effect, the Lender shall have the option (but not the
obligation) to pay the premiums on any such policy of
insurance or to take out new insurance in amount, type,
coverage and terms satisfactory to the Lender, after first
notifying the Borrower of the Lender's intent to pay it.
Any amount paid therefor by the Lender shall be immediately
due and payable to the Lender by the Borrower upon demand.
No exercise by the Lender of such option shall in any way
affect the provisions of this Agreement, including the
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provision that failure by the Borrower to maintain the
prescribed insurance shall constitute an Event of Default.
7.02 Taxes and Other Payment Obligations.
(a) The Borrower shall pay and discharge, or
cause to be paid and discharged, before any of them become
in arrears, all taxes, assessments, governmental charges,
levies, and claims for labor, materials or supplies which if
unpaid might become a lien or charge upon any of their
property, and all of their other debts, obligations and
liabilities.
(b) The Borrower may refrain from paying any
amount it would be required to pay pursuant to subparagraph
(a) of this section if the validity or amount thereof is
being contested in good faith by appropriate proceedings
timely instituted which shall operate to prevent the
collection or enforcement of the obligation contested,
provided that if the Borrower engaged in such a contest,
shall have set aside on its books appropriate reserves with
respect thereto. If the validity or amount of any such
obligations in excess of Fifty Thousand Dollars ($50,000.00)
shall be contested pursuant to the provisions of this
subparagraph, the Borrower shall notify the Lender
immediately upon the institution of the proceedings
contesting the obligation.
7.03 Financial Statements.
(a) Statements. As soon as available, and in
any event within ninety (90) days after the end of each
fiscal year of the Guarantor, the Guarantor shall furnish to
the Lender a copy of its annual audited consolidated
financial statements of Guarantor (specifically including
but not limited to Borrower) prepared in accordance with
generally accepted accounting principle applied on a basis
consistent with that of preceding fiscal year, with detail
consistent with past financial statements ((i) including, at
a minimum, a profit and loss statement with proper
footnotes, a balance sheet, statement of retained earnings
and sources and application of funds), and signed by an
independent certified public accountant; (ii) as filed at
the time with SEC, but in any event within seventy five (75)
days after the last day of each fiscal quarter, a copy of
its Form 10-Q with attached balance sheet and income
statement for such quarters.
(b) Additional Corporate Financial Information.
The Borrower shall deliver to the Lender:
(1) Within ten (10) days after the filing
thereof in the office of the Secretary of State of the
E-23
Commonwealth of Kentucky, certified copies of all amendments
to the Borrower's Articles of Incorporation.
(2) Such additional information with respect
to its financial condition as may be reasonably requested by
the Lender from time to time.
(c) Lease Register. Within fifteen (15) days
after the end of each fiscal month, the Borrower shall
deliver to the Lender a lease register covering all Assigned
Leases which are current (the "Current Register") and a
separate lease register covering all Assigned Leases which
are delinquent (the "Delinquent Lease Register"). The
Current Register shall set forth the name of each Customer
obligor on an Assigned Lease who is current as of the last
day of the immediately preceding month, the total payment
made by each of those Customers during that month, and the
remaining lease balance at the end of the month owed by each
of those Customers under its respective Assigned Lease. The
Delinquent Register shall set forth the name of the each
Customer obligor on an Assigned Lease who is delinquent as
of the last day of the immediately preceding month, the
amount of the delinquent payment or payments which each of
those Customers has failed to make, the duration of each
delinquent payment and the remaining lease balance at the
end of the month owed by each of those Customers under its
respective Assigned Lease.
7.04 Financial Records. The Borrower shall maintain a
standard modern system of accounting in which full, true and
correct entries shall be made of all dealings or
transactions in relation to its business and affairs in
accordance with generally accepted accounting principles
applied on a basis consistent with prior years and, without
limitation, making appropriate accruals.
7.05 Properties. The Borrower shall maintain its
facilities, if any, and other fixed assets in good
condition, subject only to normal wear and tear (fire and
other acts of God excepted), and make all necessary and
proper repairs, renewals and replacements. The Borrower
shall comply with all material leases and other material
agreements in order to prevent loss or forfeiture, unless
compliance is being contested in good faith by appropriate
proceedings timely instituted which shall operate to prevent
enforcement of the loss or forfeiture. The Lender shall
have the right to inspect the Borrower's facilities, if any,
and other fixed assets at all reasonable times, and from
time to time.
7.06 Corporate Existence and Good Standing. The
Borrower shall preserve its corporate existence in good
standing and shall be and remain qualified to do business
and in good standing in all states and countries in which
E-24
the nature and conduct of its business operations requires
qualification and in which the failure to be so qualified
would have a materially adverse affect on the business
operation and financial condition of the Borrower taken as a
whole.
7.07 Notice Requirements.
(a) Default. The Borrower shall cause its
President, or in his absence an officer of the Borrower
designated by it, to notify the Lender in writing within
five (5) days, after the Borrower, or any of the Borrower's
officers or directors, has notice of any Event of Default or
Unmatured Default or has notice that any representation or
warranty made in this Agreement, or in any related document
or instrument, for any reason was not true and complete and
not misleading in any material respect when made. Such
notice shall specify the nature of such Event of Default or
Unmatured Default and the action the Borrower has taken or
will take to correct it.
(b) Material Litigation. The Borrower promptly
shall notify the Lender in writing of the institution or
existence of any litigation or administrative proceeding to
which the Borrower may be or become a party which might
involve any material risk of any judgment or liability which
(1) would be in excess of Five Hundred Thousand Dollars
($500,000.00), (2) would otherwise result in any material
adverse change in the Borrower's business, assets or
condition, financial or otherwise or (3) would monetarily
affect the Lender's Security interest in the Collateral.
(c) Other Information. From time to time, upon
request by the Lender, the Borrower shall furnish to the
Lender such information regarding the Borrower's business,
assets and condition, financial or otherwise, as the Lender
may reasonably request. The Lender shall have the right
during reasonable business hours to examine all of the
Borrower's business and financial books and records and to
make notes and abstracts therefrom, to make an independent
examination of the Borrower's books and records for the
purposes of verifying the accuracy of reports delivered by
the Borrower and ascertaining compliance with this
Agreement.
7.08 Compliance with Law. The Borrower shall comply
in all material respects with (a) all valid and applicable
statutes, rules and regulations of the United States of
America, of the States thereof and their counties,
municipalities and other subdivisions and of any other
jurisdiction applicable to the Borrower; (b) the orders,
judgments and decrees of all courts or administrative
agencies with jurisdiction over the Borrower; or its
business; and (c) the provisions of licenses issued to the
E-25
Borrower pursuant thereto, except where compliance therewith
shall be currently contested in good faith by appropriate
proceedings, timely instituted, which shall operate to stay
any order with respect to such non-compliance.
7.09 Liens. Except for security interests previously
granted by the Borrower to the Lender and those disclosed in
Section 8.10(c) of this Agreement, and except for liens
permitted in this Agreement or the other Borrower Documents,
the Borrower shall not (a) create or incur or suffer to be
created or incurred or to exist any encumbrance, mortgage,
pledge, lien, charge, restriction or other security interest
of any kind upon any of the Collateral, whether owned or
held on the date of this Agreement or acquired thereafter,
or upon the income or profits therefrom, or (b) transfer any
such Collateral or the income or profits therefrom for the
purpose of subjecting the same to payment of indebtedness or
performance of any other obligation except payments made in
accordance with Section 7.02 of this Agreement or payments
made to the Lender in accordance with the terms and
provisions of this Agreement, or (c) acquire, or agree or
have an option to acquire, any Collateral upon conditional
sale or other title retention or purchase money security
agreement, device or arrangement, or (d) sell or transfer
(except Inventory sold in the ordinary course of business),
assign, or pledge any Collateral, with or without recourse.
The Borrower may incur or create, or suffer to be incurred
or created or to exist, the following liens (the "Permitted
Liens") without violating the provisions of this Section
7.09:
(1) Statutory liens to secure claims for labor,
material or supplied to the extent that payment thereof
shall not at the time be required to be made in accordance
with Section 7.02 of this Agreement.
(2) Deposits or pledges made in connection with,
or to secure payment of, workers' compensation, unemployment
insurance, old age pensions or other social security, or in
connection with contests, to the extent that payment thereof
shall not at that time be required to be made in accordance
with Section 7.02 of this Agreement.
(3) Statutory liens for taxes or assessments or
governmental charges or levies if payment shall not at the
time be required to be made in accordance with Section 7.02
of this Agreement.
(4) Purchase money liens or security interests
in property acquired by the Borrower and granted to vendors
and lending institutions, which arise in the ordinary course
of business, including but not necessarily limited to any
Inventory acquired by Borrower through financing obtained on
a non-recourse basis from such vendors and/or lending
E-26
institutions (including but not limited to the Lender and
its affiliates).
(5) Statutory liens (and contractual liens that
provide to the secured party no greater rights than
equivalent statutory liens) to secure payment of rent or
lease payments with respect to leases of real property to
the extent that such payments shall not at the time be
required to be made in accordance with Section 7.02 of this
Agreement.
(6) Liens granted in the normal course of
business to procure bid, performance or surety bonds (so
long as any of the liens noted in Subsections 1, 3, 5 and 6
herein, separately or in the aggregate, do not materially
adversely offset the property or operations of the Borrower
or materially diminish the Collateral or Lender's interest
therein).
Lender agrees that, in the event any promissory
note is paid in full as a result of the Borrower obtaining
non-recourse financing from a lending institution (including
but not limited to affiliates of the Lender), the Lender
shall subordinate its security interest in the specific
item(s) of Leased Equipment and the Assigned Leases securing
such promissory note to such lending institution.
7.10 Letters of Credit. Without the Lender's prior
written consent which shall not be unreasonably withheld,
the Borrower shall not have outstanding any letters of
credit upon which the Borrower is the obligor or guarantor.
7.11 Articles of Incorporation and Bylaws. Without
the Lender's prior written consent, which shall not be
withheld or delayed unreasonably the Borrower shall not make
any changes in or amendments to its articles of
incorporation.
7.12 Mergers, Sales, Transfers and Other Dispositions
of Assets.
(a) Except as set forth in Subsection (b) of
this Section, the Borrower shall not do any of the following
without the Lender's prior written consent, which shall not
be unreasonably withheld or delayed:
(1) Be a party to any consolidation,
reorganization (including without limitation those types
referred to in Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Internal
Revenue Code of 1986, as amended), "stock-swap" or merger;
(2) Sell or otherwise transfer any material
part of its assets;
E-27
(3) Purchase all or a substantial part of
the capital stock or assets of any corporation or other
business enterprise;
(4) Effect any change in their respective
capital structure;
(5) Sell, assign, or otherwise dispose of,
with or without recourse, settle or compromise any of its
Accounts Receivable or notes receivable or other
intangibles, except the endorsement of negotiable
instruments for the purpose of collection in the ordinary
course of business and as permitted in Section 12 of the
Security Agreement; or
(6) Liquidate or dissolve or take any
action with a view toward liquidation or dissolution.
(b) Without the Lender's prior written consent,
the Borrower may sell or otherwise transfer from time to
time its property, tangible or intangible, in the normal
course of business or involving the sale of damaged,
obsolete or discontinued assets.
7.13 Loans. The Borrower shall not make any loan or
advance any funds whatsoever to any business, entity, party
or individual, except advances not to exceed One Hundred
Thousand Dollars
($100,000.00) in the aggregate at any one time outstanding.
7.14 Financial Covenants. The Borrower shall at all
times comply with the financial covenants set forth in
Exhibit 2 to this Agreement.
7.15 Location of Inventory. The initial location of
the Leased Equipment will be disclosed by Borrower to the
Lender at the time the Assigned Lease is assigned to Lender.
Borrower and Lender acknowledge that a portion of the Leased
Equipment are and will be mobile goods, and will be moved
from one jurisdiction to another and Borrower will be unable
to inform Lender as to such movement. Borrower will use its
best efforts, if it has actual knowledge of the relocation
of any Inventory (including but not limited to Leased
Equipment) to:
(a) Notify the Lender of the location to which
the Inventory is being moved, located or relocated;
(b) Pay the Lender's reasonable expenses
incurred in obtaining searches of the public records of such
proposed Inventory locations, or reimbursing the Lender for
its reasonable expenses in obtaining such record searches;
and
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(c) File or causing to be filed such financing
statements or other documents as the Lender may require with
such public authorities as the Lender shall deem necessary
to perfect and protect the Lender's security interest in the
Borrower's Inventory.
7.16 Control and Operation. Borrower shall remain as
a wholly owned subsidiary of the Guarantor and the
Guarantor shall be managed by persons reasonably acceptable
to the Lender.
7.17 Lockbox.
(a) On or before the tenth (10th) day following
the assignment of an Assigned Lease to the Lender, the
Borrower shall notify each obligor of the Assigned Lease of
the Lender's security interest in the Assigned Lease created
pursuant to the Assignment and direct each obligor to remit
all future payments or other amounts provided in such
Assigned Lease directly to a post office box designated by
the Lender (the "Lockbox"). The Borrower may, from time to
time, direct particular obligors of Assigned Leases to remit
specific payments directly to the Borrower as part of the
Borrower's usual and customary procedures for collecting
payments from obligors whose payments are or have been paid
late or otherwise require special handling or attention as a
collection matter.
(b) If any Unmatured Default or Event of Default
has occurred and is continuing, the Lender may, at its
option, have sole access to, and control and power of
withdrawal over the Lockbox and use the proceeds from any
payments collected through the Lockbox, beginning twenty-
four (24) hours after such Unmatured Default or Event of
Default and while it is continuing, to satisfy any
Indebtedness of the Borrower to the Lender. In the event of
such satisfaction, the Lender shall credit the proceeds as
payment of the Revolving Credit, the Draw Facility Notes,
and other Indebtedness first to reasonable costs incurred by
Lender, then to interest, then to principal, but otherwise,
as the Lender may desire, in its discretion. Any credit
given to the Borrower in cash or solvent credit for the
conditional upon final payment to the Borrower in cash or
solvent credit for the items, and if any item is not paid
the amount of any credit given for it shall be charged to
the Borrower whether or not the item is returned, and such
amount shall be a part of the obligations secured by the
Security Agreement and the Guaranty Agreement.
7.18 Compliance with Other Borrower Documents. The
Borrower shall pay the Revolving Credit Note and the Draw
Facility Notes, in accordance with their respective terms,
and the Borrower shall comply with the provisions of the
Security Agreement and all other Borrower Documents. The
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Guarantor shall comply with the provisions of the Guaranty
Agreement.
7.19 Depository Account. The Borrower shall
contemporaneously with the execution hereof open a non-
interest bearing depository account with the Lender and
shall at all times maintain a minimum average daily balance
of $200,000 in said account until the latter of (i) all
amounts outstanding under the Revolving Credit Note are paid
in full or (ii) the Lender is no longer obligated to
disburse sums under the Revolving Credit pursuant to this
Agreement.
SECTION VIII
Representations and Warranties
To induce the Lender to enter into this Agreement and
to make the Revolving Credit and the Draw Facility, the
Borrower represents and warrants to the Lender as follows
(which warranties and representations shall be deemed to be
remade and restated in full (subject only to changes of
circumstances which (1) are fully disclosed by the Borrower
to the Lender in writing, describing the changed
circumstances, and (2) do not result in any material
violation of any condition, provision, promise and/or
covenant of this Agreement, or otherwise result in an
Unmatured Default or an Event of Default) whenever a
disbursement under the Revolving Credit or Draw Facility is
requested by the Borrower):
8.01 Corporate Organization and Existence. The
Borrower is a corporation duly organized, validly existing,
and in good standing under the laws of the Commonwealth of
Kentucky. The Borrower has all necessary power and
authority to carry on its business conducted on the date of
this Agreement. The Borrower is qualified to do business as
a foreign corporation, is in good standing, in all states
and in all foreign countries in which it is required to be
so qualified pursuant to Section 7.06 hereof, and is duly
authorized, qualified and licensed under all laws,
regulations, ordinances or orders of public authorities to
carry on its business in the places and in the manner
conducted on the date of this Agreement.
8.02 Right to Act. No registration with or consent or
approval of any governmental agency of any kind is required
for the execution, delivery performance and enforceability
of the Borrower Documents. The Borrower has full power and
authority, corporate and otherwise, to execute, deliver and
perform the Borrower Documents to which it is a party.
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8.03 No Conflicts. The Borrower's execution, delivery
and performance of the Borrower Documents to which it is a
party does not, and will not, (a) violate any existing
provision of the articles of incorporation or bylaws of the
Borrower, or any law, rule, regulation, or judgment, order
or decree applicable to the Borrower, or (b) otherwise
constitute a default, or result in the imposition of any
lien under (1) any existing contract or other obligation
binding upon the Borrower or its respective property, with
or without the passage of time or the giving of notice or
both, or (2) any law, rule or regulation applicable to the
Borrower or its business, or (3) any judgment, order or
decree of any court or administrative agency applicable to
the Borrower or its business.
8.04 Authorization. The execution, delivery and
performance by the Borrower of the Borrower Documents to
which it is a party has been duly authorized, and the
Borrower Documents have been duly executed and delivered and
constitute legal, valid and binding obligations enforceable
against the Borrower.
8.05 Litigation and Taxes.
(a) Except for those matters described in the
financial statements referenced in Section 8.06 of this
Agreement, there is no litigation, at law or in equity, or
any proceeding before any federal, state or municipal court,
board or other governmental or administrative agency
pending, or to the knowledge of the Borrower, threatened
which is likely to involve any material judgment or
liability against the Borrower or which might otherwise
result in any material adverse change in the Borrower's
business, assets or condition, financial or otherwise. No
judgment, decree or order of any federal, state or municipal
court, board or other governmental or administrative agency
has been issued against the Borrower or any of its assets
which has, or might have, a material adverse effect on the
Borrower's business, assets or condition, financial or
otherwise.
(b) The Borrower has filed all tax returns which
are required to be filed and has paid, or made adequate
provision for the payment of, all taxes which have or may
become due pursuant to such returns or pursuant to
assessments received. The Borrower knows of no material
additional assessments for which adequate reserves have not
been established, and the Borrower has made adequate
provision for all current taxes.
8.06 Financial Statements. The Borrower's most recent
financial statements of the type described in Subsections
(a), (b) and (c) of Section 7.03 and dated as of their
respective dates, have been furnished to the Lender. Those
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financial statements are true and complete, have been
prepared in accordance with generally accepted accounting
principles, do not omit reference to any material contingent
liabilities of any kind, and fairly present the financial
condition of the Borrower as of the date of the financial
statements.
8.07 Compliance with Contractual Obligations, Laws and
Judgments.
(a) The Borrower is not in default in the
payment, performance, observance or fulfillment of any of
the material obligations, covenants or conditions contained
in any lease, indenture, mortgage, deed of trust, promissory
note, agreement or undertaking to which it is a party or by
which its assets are bound.
(b) The Borrower has not violated any applicable
statute, regulation or ordinance of the United States of
America or of any state, municipality or any other
subdivision, jurisdiction or agency thereof, in any respect
materially and adversely affecting the Borrower's business,
property, assets, operations or conditions, financial or
otherwise.
(c) The Borrower is not in default with respect
to any judgment, order, writ, injunction, decree or demand
of any court, arbitrator or governmental agency or body.
8.08 Location of Inventory. The Borrower's Inventory
is located at the locations set out on Schedule 1 to the
Security Agreement.
8.09 No Undisclosed Liabilities or Guaranties. The
Borrower has no material liabilities, direct or contingent,
except as disclosed or referred to in the financial
statements referred to in Section 8.06 of this Agreement or
incurred by the Borrower after such date and not prohibited
by the express terms of this Agreement, nor has the Borrower
guaranteed, or otherwise become responsible for, the
material obligations of any Person, other than as set out on
Schedule 8.09 of this Agreement or otherwise not in
contravention of any of the Borrower Documents.
8.10 Title to Properties. The Borrower has good and
marketable title to all of its property and assets of all
character, free and clear of all mortgages, liens and
encumbrances except (a) encumbrances granted to the Lender,
(b) minor irregularities in title which do not materially
interfere with the use and enjoyment by the Borrower of such
properties and assets in the normal course of business as
presently conducted, or materially impair the value thereof
for such business, (c) those encumbrances described on
Schedule 8.10 to this Agreement, (d) those Permitted Liens
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permitted in Section 7.09, and (e) any other encumbrances
permitted under the express terms of the Borrower Documents.
8.11 Trademarks and Permits. The Borrower possesses
adequate licenses, patents, copyrights, trademarks and trade
names to conduct its businesses as now conducted. Neither
the Borrower nor any of its officers, directors or employees
has received notice or has knowledge of any claim that the
Borrower has violated any other Person's license, patent,
copyright, trademark or trade name, or that the Borrower's
licenses, patents, copyrights, trademarks or trade names are
currently being infringed. The Borrower has all
governmental permits, certificates, consents and franchises
necessary to carry on its businesses as now conducted and to
own or lease and operate its properties as now owned, leased
or operated. All such governmental permits, certificates,
consents and franchises are valid, and in effect, and the
Borrower is not in violation thereof, and none of them
contains any term, provision, condition or limitation more
burdensome than generally applicable to persons engaged in
the same or similar business.
8.12 Disclosure. Neither this Agreement, nor any
agreement, document, certificate or statement furnished to
the Lender by or on behalf of the Borrower in connection
with the transactions contemplated by this Agreement
contains any untrue statement of any material fact or omits
to state any material fact necessary to make the statements
contained herein or therein not misleading. There is no
fact known to the Borrower which materially and adversely
affects, or in the future is likely to materially and
adversely affect, the Borrower's business, operations,
affairs or condition, financial or otherwise, which has not
been disclosed to the Lender.
SECTION IX
Events of Default
The occurrence of any one or more of the following
shall constitute an Event of Default under this Agreement
(an "Event of Default"):
9.01 Failure to Pay. If the Borrower shall fail to
pay in full any installment of principal or interest on the
Revolving Credit or any Draw Facility Note, or payments
required by Section III and/or IV of this Agreement, within
five (5) calendar days after Lender has sent written notice
to the Borrower that such payment has become due and is
unpaid.
9.02 [INTENTIONALLY OMITTED]
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9.03 Notice Required. If any Event of Default occurs
under any other Loan Document or the obligor with respect to
any term, obligation, covenant, agreement, condition or
other provision (other than those referred to in Section
9.01 hereof) contained or referred to in this Agreement
shall fail to observe, perform or comply with those
provisions, and such occurrence or failure shall not have
been fully corrected to Lender's reasonable satisfaction
within thirty (30) calendar days after the Lender has sent
written notice thereof to the Borrower.
9.04 Falsity of Representation or Warranty. If any
representation or warranty or other statement of fact
contained in any of the Borrower Documents or in any
writing, certificate, report or statement at any time
furnished the Lender by or on behalf of the Borrower or the
Guarantor pursuant to or in connection with this Agreement,
the Revolving Credit or the Draw Facility shall have been
false or misleading in any material respect or which shall
omit a material fact, whether or not made with knowledge, at
the time it was made.
9.05 Judgments. If a final judgment or judgments for
the payment of money in excess of the sum of One Million
Dollars ($1,000,000.00) in the aggregate, or with respect to
property with a value in excess of such amount, shall be
rendered against the Borrower or Guarantor and such judgment
or judgments shall remain unsatisfied for a period of thirty
(30) consecutive days after the entry thereof and within
that thirty (30) days has not been (a) stayed pending
appeal, or (b) discharged.
9.06 Adverse Financial Change. If there should be any
material adverse change in the financial condition of the
Borrower and Guarantor as determined on an aggregate basis
in the Lender's reasonable discretion, from their respective
financial conditions as shown on the financial statements
referred to in Section 8.06 of this Agreement, and such
adverse change is not fully corrected to Lender's reasonable
satisfaction within thirty (30) days after notice with
respect thereto has been sent from the Lender. "Material
adverse change" as used herein shall have the meaning
ascribed to such term in Section 6.01(g) of this Agreement.
9.07 Other Obligations to the Lender and its
Affiliates. If the Borrower or Guarantor shall fail to
observe, perform or comply with the terms, obligations,
covenants, agreements, conditions or other provisions of any
material agreement, document or instrument other than this
Agreement and the other Borrower Documents which the Lender
or any of its affiliates has entered into with the Borrower
or Guarantor, as applicable, and which involves Indebtedness
to the Lender or any of its affiliates and such failure
shall not have been fully corrected to Lender's reasonable
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satisfaction after notice with respect thereto has been sent
from Lender.
9.08 Dissolution or Termination of Existence. If the
Borrower or Guarantor or any Person affiliated with either
of them, takes any action that is intended to result in the
termination, dissolution or liquidation of the Borrower or
Guarantor.
9.09 Solvency.
(a) If the Borrower or Guarantor shall (1) have
an order of relief entered in any proceeding filed by it, as
the case may be, under the federal bankruptcy laws (as in
effect on the date of this Agreement or as they may be
amended from time to time); (2) admit its inability to pay
its debts generally as they become due; (3) become insolvent
in that its total assets are in the aggregate worth less
than all of its liabilities or it is unable to pay its debts
generally as they become due; (4) make a general assignment
for the benefit of creditors; (5) file a petition, or admit
(by answer, default or otherwise) the material allegations
of any petition filed against it, in bankruptcy under the
federal bankruptcy laws (as in effect on the date of this
Agreement or as they may be amended from time to time), or
under any other law for the relief of debtors, or for the
discharge, arrangement or compromise of their debts; or (6)
consent to the appointment of a receiver, conservator,
trustee or liquidator of all or part of its assets.
(b) If a petition shall have been filed against
the Borrower in proceedings under the federal bankruptcy
laws (as in effect on the date of this Agreement, or as they
may be amended from time to time), or under any other laws
for the relief of debtors, or for the discharge, arrangement
or compromise of their debts, or an order shall be entered
by any court of competent jurisdiction appointing a
receiver, conservator, trustee or liquidator of all or part
of the Borrower's assets, and such petition or order is not
dismissed or stayed within sixty (60) consecutive days after
entry thereof.
SECTION X
Remedies Upon Default
Notwithstanding anything to the contrary, if any Event
of Default under this Agreement occurs, the Lender, in its
sole discretion, and without notice to the Borrower, may (a)
terminate the Revolving Credit and/or the Draw Facility, and
the Lender shall be under no further obligation to grant any
further disbursements or drawings under either the Draw
Facility or the Revolving Credit to the Borrower, (b)
declare the entire unpaid balance of the Revolving Credit
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Note, the Draw Facility Notes, and all other obligations of
the Borrower under this Agreement to be immediately due and
payable in full, without any presentment, demand or notice
of any kind, all of which are hereby waived by the Borrower.
In addition, upon the occurrence of any Event of Default,
and at any time thereafter, unless all Events of Default
have been remedied to the full satisfaction of the Lender or
waived in a writing signed by the Lender specifically
providing the waiver, the Lender shall have all of the
following rights and remedies and it may exercise one or
more of them singularly or in conjunction with others.
10.01 Right to Offset. The Lender shall have the
right to set off against, or appropriate and apply toward
the payment of, the obligations of the Borrower to the
Lender, pursuant to this Agreement or as evidenced by the
Draw Facility Notes or the Revolving Credit Note whether
such obligations shall have matured in due course or by
acceleration, any and all deposit balances and other sums
and indebtedness then held or owed by the Lender to or for
the credit or account of the Borrower. Such offsets
following an Event of Default may occur without notice to or
demand upon the Borrower or any other person, all of such
notices and demands being hereby waived.
10.02 Enforcement of Rights. The Lender shall have
the right, to proceed to protect and enforce its rights by
suit in equity, action at law or other appropriate
proceedings either for specific performance of any covenant
or condition contained in any of the Borrower Documents, or
in aid of the exercise of any power granted in any of the
Borrower Documents.
10.03 Rights Under Security Instruments. The Lender
shall also have all rights and remedies granted it under any
and all agreements, including without limitation, the
Security Agreement, and the Guaranty Agreement, securing or
intending to secure the Borrower's obligations under the
Draw Facility Notes, the Revolving Credit Note, or any other
indebtedness or obligation of the Borrower under the
Borrower Documents.
10.04 Cumulative Remedies. All of the rights and
remedies of the Lender upon occurrence of an Event of
Default shall be cumulative to the greatest extent permitted
by law, may be exercised successively or concurrently, from
time to time, and shall be in addition to all of those
rights and remedies afforded the Lender at law, or in
equity, or in bankruptcy. Notwithstanding the foregoing,
the Lender shall be entitled to recover from the cumulative
exercise of all remedies an amount no greater than the sum
of (a) the outstanding principal amount of all Draw Facility
Notes and the Revolving Credit Note, (b) all accrued but
unpaid interest with respect to the principal amount of the
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Draw Facility Notes and the Revolving Credit Note, (c) any
other amounts that the Borrower is required by this
Agreement to pay to the Lender (for example, and without
limitation, the reimbursement of expenses and legal fees,
and late charges), and (d) any costs, expenses or damages
which the Lender is otherwise permitted to recover by the
terms of this Agreement. Any exercise of any right or
remedy shall not be deemed to be an election of that right
or remedy to the exclusion of any other right or remedy.
SECTION XI
Fees and Expenses
11.01 Transactions Expenses. The Borrower shall pay
to the Lender $5,000.00 for the Lender's attorneys' fees
incurred in preparing the Borrower Documents and shall pay
up to $500.00 for other out-of-pocket expenses and any and
all costs and fees incurred by Lender in connection with the
initial recording or filing of any documents or instruments
in any public office, pursuant to or as a consequence of
this Agreement, or to initially perfect or protect any
security for the Draw Facility and/or the Revolving Credit.
The Borrower shall also pay to the Lender upon demand all
reasonable out-of-pocket expenses subsequently incurred from
time to time in the administration of the Revolving Credit
and the Draw Facility, including, without limitation, any
out-of-pocket expenses (including, but not limited to,
reasonable attorneys' fees), filing fees, recording fees or
other costs incurred by the Lender if any of the Borrower
Documents should be amended, extended and/or renewed from
time to time.
11.02 Enforcement Expenses. If any Event of Default
shall occur under this Agreement, or any default shall occur
under any of the Borrower Documents or any related
documents, the Borrower shall pay to the Lender, to the
extent allowable by applicable law, such amounts as shall be
sufficient to reimburse the Lender fully for all of its
costs and expenses incurred in enforcing its rights and
remedies under the Borrower Documents and any related
documents, including without limitation the Lender's
reasonable attorney's fees and court costs. Such amounts
shall be deemed to be included in the obligations secured by
the Security Agreement and the Guaranty Agreement.
SECTION XII
Miscellaneous Provisions
12.01 Banking Days. If any provision of this
Agreement or any of the other Borrower Documents requires
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that the Borrower make any payment, or otherwise perform any
act, on a day on which the Lender is not open for business,
then that payment or action shall be deemed to be due on the
first day thereafter that the Lender is open for business.
12.02 Term of the Agreement. The term of this
Agreement shall commence as of the date hereof, and continue
until all obligations of the Borrower under the Draw
Facility and the Revolving Credit and accrued but unpaid
interest thereon shall have been paid in full (regardless of
the fact that Lender may have elected not to extend the
Revolving Credit and/or the Draw Facility) and the Borrower
shall have paid or performed all of its obligations
hereunder.
12.03 No Waivers. Failure of delay by the Lender in
exercising any rights shall not be deemed to be or operate
as a waiver of that right, nor shall any right be exclusive
of any other right referred to in this Agreement, or in any
other related document, or available at law or in equity, by
statute or otherwise. Any single or partial exercise of any
right shall not preclude the further exercise of that right.
Every right of the Lender shall continue in full force and
effect until such right is specifically waived in a writing
signed by the Lender.
12.04 Course of Dealing. No course of dealing between
the Borrower and Lender shall operate as a waiver of any of
the Lender's rights under any of the Borrower Documents.
12.05 Waivers by the Borrower. The Borrower hereby
waives, to the extent permitted by applicable law, (a) all
presentments, demands for performances, notices of
nonperformance (except to the extent specifically required
by this Agreement or any other of the Borrower Documents),
protests, notices of protest and notices of dishonor in
connection with the Draw Facility Notes and the Revolving
Credit Note (b) any requirement of diligence or promptness
on the part of the Lender in enforcement of its rights under
the provisions of any of the Borrower Documents, and (c) any
requirement of marshalling assets or proceeding against
persons or assets in any particular order.
12.06 Severability. If any part, term or provision of
the Agreement is held by any court to be unenforceable or
prohibited by any law applicable to this Agreement, the
rights and obligations of the parties shall be construed and
enforced with that part, term or provision limited so as to
make it enforceable to the greatest extent allowed by law,
or, if it is totally unenforceable, as if this Agreement did
not contain that particular part, term or provision.
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12.07 Time of the Essence. Time shall be of the
essence in the performance of all of the Borrower's
obligations under the Borrower Documents.
12.08 Benefit and Binding Effect. This Agreement
shall incur to the benefit of the Lender, its successors and
assigns, and all obligations of the Borrower shall bind its
respective successors and, if and to the extent assignment
is otherwise permitted by this Agreement, its assigns.
12.09 Further Assurances. The Borrower shall sign
such financing statements or other documents or instruments
as the Lender may request from time to time to more fully
create, perfect, continue, maintain or terminate the rights
and security interests intended to be granted or created
pursuant to this Agreement and the other Borrower Documents.
12.10 Incorporation by References. All schedules,
annexes, exhibits or other attachments to this Agreement are
incorporated into this Agreement as if set out in full at
the first place in this Agreement that reference is made
thereto.
12.11 Entire Agreement; No Oral Modifications. This
Agreement, the schedules, annexes and exhibits hereto, and
the documents and instruments referred to herein constitute
the entire agreement of the parties with respect to the
subject matter hereof, and supersede all prior
understandings with respect to the subject matter hereof.
No change, modification, addition or termination of this
Agreement or any of the Borrower Documents shall be
enforceable unless in writing and signed by the party
against whom enforcement is sought.
12.12 Headings. The headings used in this Agreement
are included for ease of reference only and shall not be
considered in the interpretation or construction of this
Agreement.
12.13 Governing Law. This Agreement and the related
documents and instruments shall be governed by and construed
in accordance with the laws of the Commonwealth of Kentucky,
except to the extent that the laws of any other state,
province or country where the Collateral is located require
that the laws of such other state, province or country shall
govern the creation, perfection or enforcement of the
Lender's rights and security interests in such Collateral.
12.14 Assignments. The Borrower may not assign its
rights under this Agreement to any other party. Any
attempted assignment shall be a default under this Agreement
and shall be null and void. The Lender shall have the right
and ability to sell, assign or transfer all or any part of
its rights and/or obligations under this Agreement, and/or
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to participate its rights and obligations under this
Agreement with other lenders, and/or to sell participation
or participating interests in its rights and/or obligations
under this Agreement (provided however, that should the
Lender assign, prior to October 1, 1998, its rights or
obligations hereunder, in whole or in part, to any lender
unacceptable to Borrower, and should Borrower terminate its
ability to seek further draws under the Revolving Credit,
the Lender will reimburse one-half of the legal fees
incurred by the Borrower in connection herewith). In
furtherance thereof, the Lender shall have the right to
provide to any Person who expresses an interest in becoming
such a buyer, assignee, transferee, participant and/or
purchaser, or who actually does become such a buyer,
assignee, transferee, participant, and/or purchaser, such
information concerning the financial, business and other
affairs of the Borrower as the Lender may deem appropriate
in the circumstances. The Borrower hereby authorizes all
such disclosures. Provided however, anything in the
foregoing to the contrary notwithstanding, that Lender shall
not sell, assign or transfer any or all of its rights
hereunder to, nor participate its rights and obligations
hereunder with, nor provide any information concerning the
financial, business or other officers of the Borrower or the
Guarantor to those parties listed on Exhibit 3 attached
hereto.
12.15 Multiple Counterparts.
(a) This Agreement may be signed by each party
upon a separate copy, and in such case one counterpart of
this Agreement shall consist of enough of such copies to
reflect the signature of each party.
(b) This Agreement may be executed in two or
more counterparts, each of which shall be deemed an
original, and it shall not be necessary in making proof of
this Agreement or the terms thereof to produce or account
for more than one of such counterparts.
12.16 Notices.
(a) Any requirement of the Uniform Commercial
Code or other applicable law of reasonable notice shall be
met if such notice is given at least ten (10) business days
before the time of sale, disposition or other event or thing
giving rise to the requirement of notice.
(b) Except as provided in Subsection (c) below,
all notices or communications under this Agreement shall be
in writing and shall be hand-delivered, sent by courier, or
mailed to the parties addressed as follows, and any notice
so addressed and (1) hand-delivered, shall be deemed to have
been given when so delivered, or (2) mailed by registered or
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certified mail, return receipt requested, shall be deemed to
have been given when mailed, or (3) delivered to a
recognized shall package overnight courier service to the
address of the intended recipient with shipping prepaid,
shall be deemed to have been given when so delivered to such
courier.
(1) If to the Borrower:
Technology Integration
Financial Services, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxx
with a copy to:
Xxxxx X. Xxxxx, III, Esq.
Xxxxxxxxx & Dreidame Co.,
LPA
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxx 00000
(2) If to the Lender:
The Fifth Third Bank of
Northern Kentucky, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxxxx
with a copy to:
R. Xxxxxxx Xxxxxxxxx, Esq.
Adams, Brooking, Xxxxxxx,
Woltermann & Xxxxxx
000 Xxxxxxx Xxxxxx
P.O. Box 861
Covington, KY 41012-0861
(c) The Borrower and the Lender may at any
time, and from time to time, change the address or addresses
to which notice shall be mailed by written notice setting
forth the changed address or addresses.
12.17 Survival of Covenants. All covenants,
agreements, warranties and representations made by the
Borrower herein shall survive the making of each draw and/or
disbursement of the Revolving Credit and the Draw Facility.
12.18 Consent to Jurisdiction and Venue. The Borrower
consents to one or more actions being instituted and
maintained in the Xxxxx County, Kentucky, Circuit Court to
enforce this Agreement and/or one or more of the other
Borrower Documents, and waives any objection to any such
action based upon lack of personal or subject matter
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jurisdiction or improper venue. The Borrower agrees that
any process or other legal summons in connection with any
such action or proceeding may be served by mailing a copy
thereof by certified mail, or any substantially similar form
of mail, addressed to the Borrower, as the case may be, as
provided in Section 12.16 above.
12.19 Acknowledgment. The Borrower acknowledges that
it has received a copy of this Agreement and each of the
other Borrower Documents, as fully executed by the parties
thereto. The Borrower acknowledges that it (a) HAS READ
THIS AGREEMENT AND THE OTHER BORROWER DOCUMENTS OR HAS
CAUSED SUCH DOCUMENTS TO BE EXAMINED BY THEIR RESPECTIVE
REPRESENTATIVES OR ADVISORS; (b) is thoroughly familiar with
the transactions contemplated in this Agreement and the
other Borrower Documents; and (c) has had the opportunity to
ask such questions or representatives of the Lender, and
receive answers thereto, concerning the terms and conditions
of the transactions contemplated in this Agreement and the
other Borrower Documents as it deems necessary in connection
with its decision to enter into this Agreement.
IN WITNESS WHEREOF, the Borrower and the Lender have
signed this Agreement as of the date set forth in the
preamble hereto, but actually on the dates set forth below.
THE FIFTH THIRD BANK OF NORTHERN
KENTUCKY, INC.
By:
Title:
__________________________________
TECHNOLOGY INTEGRATION FINANCIAL
SERVICES, INC.
By:
Title:___________________________________
COMMONWEALTH OF KENTUCKY )
)ss
COUNTY OF )
The foregoing instrument was acknowledged before me
this day of November, 1997 by Xxxxx Xxxxxxx, a vice
president of The Fifth Third Bank of Northern Kentucky,
E-42
Inc., a state banking corporation, on behalf of the
corporation.
Notary Public
Commission expires:
COMMONWEALTH OF KENTUCKY )
)ss
COUNTY OF )
The foregoing instrument was acknowledged before me
this day of November, 1997 by ____________________,
_________ of Technology Integration Financial Services,
Inc., a Kentucky
corporation, on behalf of the corporation.
Notary Public
Commission expires:
C:\WPDOCS\XXXXXXX\LOANAGR.CLE
EXHIBIT 2
FINANCIAL COVENANTS
None
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___________________________________
Borrower's Signature
EXHIBIT 3
LIST OF PROHIBITED PARTIES
The Provident Bank
PNC Bank
E-44
___________________________________
Borrower's Signature
SCHEDULE 8.09
BORROWER'S CONTINGENT LIABILITIES
E-45
___________________________________
Borrower's Signature
SCHEDULE 8.10
ENCUMBRANCES ON THE BORROWER'S PROPERTIES
E-46
___________________________________
Borrower's Signature
ANNEX A
FORM OF ASSIGNMENT
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_________________________________
Borrower's Signature
ANNEX B
FORM OF GUARANTY AGREEMENT
E-48
_________________________________
Borrower's Signature
ANNEX C
FORM OF REVOLVING CREDIT NOTE
E-49
_________________________________
Borrower's Signature
ANNEX D
FORM OF SECURITY AGREEMENT
E-50
_________________________________
Borrower's Signature
ANNEX E
FORM OF DRAW FACILITY NOTE
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_________________________________
Borrower's Signature
ANNEX F
FORM OF OPINION OF COUNSEL
E-52
_________________________________
Borrower's Signature
??
E-53
