Exhibit 10.1
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of June 10, 2004 by and between
TIMEPAYMENT CORP. LLC, a Delaware limited liability company, and ACORN CAPITAL
GROUP, LLC, a Delaware limited liability company. The parties hereto hereby
agree as follows:
ARTICLE I: DEFINITIONS
Section 1.1. Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"Additional Collateral" means any additional collateral
pledged by any Obligor hereunder in which Lender has a first priority perfected
security interest and such additional collateral may include cash, securities,
Leases, letters of credit or any other assets acceptable to Lender in its sole
discretion.
"Account Control Agreement" means the Blocked Account
Agreement, dated as of the date hereof, among Borrower, Lender and the
depository bank party thereto, a copy of which is attached hereto as Exhibit B.
"Affiliate" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.
"Blocked Account" means the depository bank account of
Borrower at National City Bank, account number 981612062, which is subject to
the Account Control Agreement.
"Board" means the Board of Directors of Parent.
"Borrower" means TimePayment Corp. LLC, a Delaware limited
liability company.
"Borrower Security Agreement" means the Pledge and Security
Agreement, dated as of the date hereof, by Borrower in favor of Lender.
"Borrowing Base" means an amount equal to the sum of: (a)(i)
as of the Effective Date, 67% of the aggregate amount of all Eligible Lease
Receivables, and (ii) as of June 30, 2004, 70% of the aggregate amount of all
Eligible Lease Receivables, in each case, subject to Lender's satisfaction, in
its sole discretion, with information relating to the Borrowing Base contained
in reports delivered by Borrower pursuant to Section 5.1, in each case, less (b)
the Borrowing Base Reserves, if any, at the date of determination of the
Borrowing Base.
"Borrowing Base Reserves" means, at the time of any
determination of the Borrowing Base, such reserves as Lender may from time to
time determine, after consultation with Borrower, to establish, in the exercise
of its reasonable credit judgment.
"Business Day" means a day other than a Saturday, Sunday or
any day on which commercial banks in New York, New York are authorized or
required by law to close.
"Cash Deposit" means, from time to time, the amount of cash on
deposit in the Blocked Account.
"Change of Control" means at any time (a) any "person" or
"group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act)
shall become, or obtain rights (whether by means of warrants, options or
otherwise) to become, the "beneficial owner" (as defined in Rules 13(d)-3 and
13(d)-5 under the Exchange Act), directly or indirectly, of more than 35% of the
outstanding common stock of Parent; (b) the Board shall cease to consist of a
majority of Continuing Directors, (c) Xx. Xxxxxx shall cease to be a member of
the Board, unless a replacement reasonably acceptable to Lender is appointed
within 90 days following such cessation, or (d) a "change of control," "change
of control event" or similar circumstance or event shall occur under or pursuant
to agreements relating to Indebtedness which any Obligor is a party to,
including, without limitation, the Fleet Loan Agreement, or (e) Parent shall
cease to own, beneficially and of record, the full economic interest in, with
full voting and dispositive power, 100% of the total outstanding capital stock
of Borrower or shall cease to Control Borrower.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral" has the meaning set forth in Section 2.7.
"Collateral Extension Date" has the meaning set forth in
Section 2.7.
"Collateral Value" means, from time to time, (a) the value of
the Borrowing Base, plus (b) the Cash Deposit (if any), plus (c) the Value of
Additional Collateral.
"Commitment" means up to $8,000,000, as may be reduced from
time to time pursuant to the terms of this Agreement.
"Conditional Guaranty" means the Conditional Guaranty, dated
as of the date hereof, made by Parent and Leasecomm in favor of Lender, but
effective only upon satisfaction of certain conditions specified therein and in
Section 2.7.
"Conditional Security Agreement" means the Pledge and Security
Agreement, dated as of the date hereof, by Leasecomm and Parent in favor of
Lender, but effective only upon satisfaction of certain conditions specified
therein and in Section 2.7.
"Continuing Directors" means the directors of Parent on the
date hereof and each other director, if, in each case, such other director's
nomination for election to the Board is recommended by a majority of the then
Continuing Directors.
"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, other than administrative functions, whether through the ability to
exercise voting power, by contract or otherwise. "Controlling" and "Controlled"
have meanings correlative thereto.
"Credit Documents" means this Agreement, the Notes, the
Conditional Guaranty, the Conditional Security Agreement, the Account Control
Agreement, the Warrant Certificate, the Registration Rights Agreement, the
Borrower Security Agreement and any other documents hereafter delivered to
Lender by any Obligor evidencing, guarantying or securing the Obligations or the
Collateral.
"Default" means any event or condition which constitutes an
Event of Default or which upon notice, lapse of time or both would, unless cured
or waived, become an Event of Default.
"Dollars" or "$" refers to lawful money of the United States
of America.
"EBITDA" means for the applicable period, for the Borrower and
its Subsidiaries: the sum of (a) net income (or net loss), (b) interest expense,
(c) income tax expense, (d) depreciation expense, (e) amortization expense, (f)
all extraordinary non-cash losses otherwise deducted from the determination of
net income (or net loss) for such period (other than any such non-cash losses
that require an accrual or reserve for cash charges for any future period and
any write-downs or write-offs of accounts receivable) less all extraordinary
non-cash gains otherwise added in the determination of net income (or net loss)
for such period, and (g) all non-recurring losses or expenses deducted from the
determination of net income (or net loss) for such period to the extent such
losses or expenses were funded from capital contributions from any stockholder
of the Borrower, in each case determined on a consolidated basis in accordance
with GAAP for such period.
"Effective Date" means the date on which the conditions
specified in Section 4.1 are satisfied.
"Eligible Equipment" means Equipment: (a) to which Borrower
has good and marketable title; (b) which is not subject to any Lien other than
that in favor of Lender and in which Lender has a duly perfected first priority
security interest under the UCC; (c) which is subject to an Eligible Lease; and
(d) which is insured by either Borrower in accordance with current practice or
the lessee thereof in accordance with industry standards.
"Eligible Leases" means a Lease: (a) which is in full force
and effect; (b) the lessor under which is Borrower; (c) which is assignable by
the lessor thereunder; (d) which is non-cancelable and provides that the
lessee's obligations thereunder are absolute and unconditional, and not subject
to defense, deduction, set-off or claim and as to which no defenses, set-offs,
claims or counterclaims exist or have been asserted; (e) which is not subject to
any Liens other than that in favor of Lender and in which Lender has a duly
perfected first priority security interest under the UCC; (f) which is a Lease
characterized as a "finance lease" in accordance with GAAP; (g) the lessee under
which (i) is domiciled in the United States, (ii) is not the subject of and has
not taken any action described in subsections (h) or (i) of Section 6.1 and
(iii) has not otherwise been determined by Lender to be unacceptable; (h) which
is in the form of Annex B (a true and complete copy of which has been provided
to, and approved by, Lender) or a form otherwise approved by Lender; (i) under
which no payment is more than 60 days late or lessee has two or more currently
unpaid and outstanding payments; (j) under which no default has occurred other
than to the extent permissible under clause (i) immediately above; (k) which
covers Eligible Equipment; (l) which has not been modified, amended, restated or
otherwise rewritten with respect to terms of payment or in any other material
respect more than two times; and (m) the original of which has been delivered to
and/or is otherwise in the possession of Lender or its authorized designee.
"Eligible Lease Receivables" means as at the date of
determination thereof, the unpaid balance of rentals through the end of the
applicable term under an Eligible Lease.
"Equipment" means tangible equipment reasonably acceptable to
Lender, whether now or hereafter owned and leased to third party users by
Borrower; provided, however, that in no event shall Equipment include (i)
stand-alone software, (ii) fixtures, or (iii) any equipment custom designed for
any Person (except, in the case of clauses (ii) and (iii), electronic signage
and security monitoring systems).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event," as defined in
Section 4043 of ERISA of the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by Borrower or any ERISA Affiliate from
the Pension Benefit Guaranty Corporation or a plan administrator of any notice
relating to an intention to terminate any Plan or Plans or to appoint a trustee
to administer any Plan; (f) the incurrence by Borrower or any of its ERISA
Affiliates of any liability with respect to the withdrawal or partial withdrawal
from any Plan or Multiemployer Plan; or (g) the receipt by Borrower or any ERISA
Affiliate of any notice, or the receipt by any Multiemployer Plan from Borrower
or any ERISA Affiliate of any notice, concerning the imposition of liability to
a Multiemployer Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title
IV of ERISA or a determination that a Multiemployer Plan is, or is expected to
be, insolvent or in reorganization, within the meaning of Title IV of ERISA.
"Event of Default" has the meaning set forth in Article VII.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Final Maturity Date" means the first anniversary of the date
hereof or, subject to the conditions set forth in Section 2.2, any subsequent
anniversary of the date hereof.
"Fleet" means Fleet National Bank.
"Fleet Loan Agreement" means the Fourth Amended and Restated
Revolving Credit Agreement, dated August 22, 2000 by and between the lenders
party from time to time thereto, Fleet, as agent for such lenders, and
Leasecomm, as borrower.
"Fleet Waiver" means the Waiver Agreement dated as of June 3,
2004 by and between the Investors named therein and Parent.
"GAAP" means generally accepted accounting principles in the
United States of America as used to prepare the financial statements required to
be delivered hereunder.
"Governmental Authority" means the government of the United
States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Guarantors" means, collectively, Parent and Leasecomm (in
each case only pursuant to the Conditional Guaranty on and after the effective
date thereof) and each other Person acceptable to Lender who may from time to
time guaranty the Obligations.
"Indebtedness" of any Person means, without duplication, (a)
all obligations of such Person for borrowed money or with respect to loans or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services, (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g) all guarantees by such Person of Indebtedness of others, (h)
all the obligations of such Person to pay rent or other amounts under any lease
of (or other arrangement conveying the right to use) real or personal property,
or a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
(i) all obligations, contingent or otherwise, of such Person as an account party
in respect of letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor. The
Indebtedness of any Person shall not include current accounts payable incurred
in the ordinary course of business.
"Iron Mountain" means Iron Mountain Records Management, Inc.
"Iron Mountain Agreement" means the Customer Agreement dated
as of March 26, 2003 between Iron Mountain and Parent (as amended, supplemented
or otherwise modified from time to time).
"Iron Mountain Addenda" means the Second Addendum to the Iron
Mountain Agreement, dated June 10, 2004, by and among Iron Mountain, Parent,
Borrower and Lender (as amended, supplemented or otherwise modified from time to
time) and the Third Addendum to the Iron Mountain Agreement, dated June 10,
2004, by and among Iron Mountain, Parent, Borrower and Lender (as amended,
supplemented or otherwise modified from time to time).
"Lease" means a written lease agreement entered into by
Borrower as lessor with respect to Equipment.
"Leasecomm" means Leasecomm Corporation, a Massachusetts
corporation and subsidiary of Parent, and borrower under the Fleet Loan
Agreement.
"Lender" means Acorn Capital Group, LLC, a Delaware limited
liability company.
"Lien" means, with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, hypothecation, encumbrance, charge or security
interest in, on or of such asset, (b) the interest of a vendor or a lessor under
any conditional sale agreement, capital lease or title retention agreement (or
any financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loan" means, collectively, all loans made pursuant to Section
2.1.
"Material Adverse Effect" means, with respect to any event,
occurrence, circumstance or other matter of whatever nature, a material adverse
effect on (a) the business, assets, operations or financial condition of any
Obligor (exclusive of events, occurrences, circumstances and other matters
resulting from changes in general economic, civil or political conditions, legal
standards or regulatory conditions); or (b) the ability of any Obligor to
perform any material obligations under any Credit Document.
"Material Indebtedness" means Indebtedness (other than the
Loan or Indebtedness owing to another Obligor), of any one or more of the
Obligors in an aggregate principal amount exceeding (a) in the case of Borrower,
$100,000 and (b) in the case of all other Obligors, collectively, $500,000.
"Xx. Xxxxxx" means Xx. Xxxxxxx X. Xxxxxx, an individual.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Noteholders" means Lender and its successors and assigns
under Section 8.5 as holders of the Obligations.
"Notes" means the promissory note(s) of Borrower, executed and
delivered as provided in Section 2.5, together with all replacements thereof and
the substitutions therefor.
"Obligations" means any and all now existing or hereafter
arising obligations of any Obligor to Lender, whether primary or secondary,
direct or indirect, absolute or contingent, joint or several, secured or
unsecured, due or not, liquidated or unliquidated, arising by operation of law
or otherwise under any Credit Document whether for principal, interest, fees,
expenses or otherwise, together with all costs of collection or enforcement,
including, without limitation, reasonable attorneys' fees incurred in any
collection efforts or in any action or proceeding.
"Obligor" means each of Borrower and each Guarantor.
"Parent" means MicroFinancial Incorporated (f/k/a Xxxxx
Leasing Technologies, Inc.), a Massachusetts corporation, and the sole member of
each of Borrower and Leasecomm.
"Permitted Encumbrances" means: (a) Liens imposed by law for
taxes that are not yet due or are being contested in compliance with Section
5.4; (b) carriers', warehousemen's, mechanics', materialmen's, repairmen's and
other like Liens imposed by law, arising in the ordinary course of business and
securing obligations that are not overdue or are being contested in compliance
with Section 5.4; (c) deposits or pledges made in the ordinary course of
business in compliance with worker's compensation, unemployment insurance and
other social security laws or regulations; (d) deposits or pledges to secure the
performance of bids, trade contracts, leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature, in each
case in the ordinary course of business; (e) deposits or pledges made in
connection with casualty insurance maintained as permitted hereunder; (f) Liens
of or resulting from any judgment or award, the time for the appeal or petition
for rehearing of which has not yet expired, or in respect of which Borrower is
in good faith prosecuting an appeal or proceeding for a review or which is not
an Event of Default under Section 7.1(k); (g) easements, zoning restrictions,
right-of-way and similar encumbrances on real property imposed by law or arising
in the ordinary course of business that do not secure any monetary obligations
and do not materially detract from the value of the affected property or
interfere with the ordinary conduct of business of Borrower or any Subsidiary;
and (h) restrictions under federal and state securities laws on the transfer of
securities, provided, that the term "Permitted Encumbrances" shall not include
any Lien securing Indebtedness.
"Person" means any natural person, corporation, limited
liability company, limited partnership, trust, joint venture, association,
company, partnership, Governmental Authority or other entity.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, among Parent, Subordinated Lender and
Lender.
"Subordinated Conditional Guaranty" means the Conditional
Guaranty, dated as of the date hereof, made by Parent in favor of Subordinated
Lender.
"Subordinated Debt" means the Indebtedness evidenced by the
Subordinated Note and any and all other Indebtedness and obligations of Borrower
to Subordinated Lender under the Subordinated Note Purchase Agreement.
"Subordinated Lender" means American Pacific Financial
Corporation, together with its successors and assigns.
"Subordinated Loan Documents" means the Subordinated Note, the
Subordinated Note Purchase Agreement, the Subordinated Conditional Guaranty and
the Subordinated Warrant.
"Subordinated Note" means Borrower's Subordinated Promissory
Note dated as of the date hereof payable to the Subordinated Lender in the
original principal amount of $2,000,000.
"Subordinated Note Purchase Agreement" means the Note Purchase
Agreement, dated as of the date hereof, between Borrower and Subordinated
Lender.
"Subordinated Warrant" means the Warrant Certificate dated as
of the date hereof, by and between Parent and Subordinated Lender.
"Subsidiary" means, with respect to any Person (the "parent")
at any date, any entity the accounts of which would be consolidated with those
of the parent in the parent's consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of such date, as
well as any other entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or, in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, Controlled or held, or (b) that is, as of
such date, otherwise Controlled, by the parent or one or more subsidiaries of
the parent or by the parent and one or more subsidiaries of the parent.
"Transactions" means the execution, delivery, and performance
by the Obligors of the Credit Documents, the borrowing and repayment of the
Loan, the pledge, assignments or grant of the security interests pursuant to the
Credit Documents, the payment of interest and fees thereunder, the issuance to
Lender of warrants for the purchase of shares of Parent's common stock pursuant
to the Warrant Certificate (including the granting to Lender of certain
registration rights pursuant to the Registration Rights Agreement), and the use
of the proceeds of the Loan.
"Value" means, with respect to any Additional Collateral, the
value assigned by Lender in its reasonable discretion as the value against which
it may advance funds for such Additional Collateral.
"Warrant Certificate" means the Warrant Certificate, dated as
of the date hereof, by and between Parent and Lender.
Section 1.2. Terms Generally. The definitions of terms herein
shall apply equally to the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include," "includes," and
"including" shall be deemed to be followed by the phrase "without limitation."
The word "will" shall be construed to have the same meaning and effect as the
word "shall." Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented, replaced or otherwise modified (subject to
any restrictions on such amendments, supplements, replacements or modifications
set forth herein), (b) any reference herein to any Person shall be construed to
include such Person's successors and assigns, (c) the words "herein," "hereof,"
and "hereunder," and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, (d)
all references herein to Exhibits, Articles, Sections, and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits, and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
Section 1.3. Specified Times and Dates; Determinations. All
times specified in this Agreement shall be determined, unless specifically
herein to the contrary, on the basis of the prevailing time in New York City.
Unless specifically herein to the contrary, if any day or date specified in this
Agreement for any notice, action or event is not a Business Day, then the due
date for such notice, action or event shall be extended to the immediately
succeeding Business Day; provided that interest shall accrue on any payments due
by Borrower which are extended by the operation of this Section 1.3. Any
determination by Lender hereunder shall be presumptive evidence of the validity
and accuracy thereof.
ARTICLE II: THE LOAN
Section 2.1. Loan.
(a) Loan. Subject to the terms and conditions and relying upon
the representations and warranties herein set forth, Lender hereby agrees to
make loans to Borrower at any time and from time to time, on any Business Day on
or after the Effective Date and prior to the Final Maturity Date in an aggregate
principal amount at any time outstanding not to exceed the lesser of an amount
equal to the (i) Commitment, and (ii) Borrowing Base.
(b) Borrowing Procedure. All requests for loans shall be made
by Borrower by delivering a borrowing request certificate in the form of that
attached hereto as Annex A to Lender in writing at least two Business Days (or
such shorter period as shall be agreed to by Lender) before the requested
borrowing date for each loan. Such borrowing request shall be irrevocable and
shall specify certain information, including, without limitation: (i) the
requested borrowing date (which shall be a Business Day), (ii) the amount of
such loan, and (iii) that each of the conditions set forth under Section 4.3 has
been or will be satisfied as of the requested borrowing date. Subject to the
satisfaction of the conditions set forth under Section 4.3, to the extent
Borrower does not have sufficient cash to make an interest payment as a result
of the operation of Section 2.4(b), it shall be deemed to have delivered a
borrowing request to Lender on a timely basis for the amount of such interest
payment.
(c) Additional Terms. The Loan shall be made by Lender against
the delivery of the Note, payable to the order of Lender, as referred to herein.
Additional terms and conditions relating to the Loan are set forth in the Note.
The Note is hereby referenced and incorporated herein as if set forth in their
entirety.
Section 2.2. Repayment of Loan; Extension of Final Maturity.
Any principal of the Loan not previously paid shall be payable on the Final
Maturity Date. No later than 90 days prior to the then current Final Maturity
Date, Borrower may request that Lender extend the Final Maturity Date to a
Business Day which is up to one year after the then current Final Maturity Date.
Borrower acknowledges that Lender's decision shall be made in the sole and
absolute discretion of Lender and that Lender shall have no obligation to extend
the Final Maturity Date. No later than 30 days prior to the then current Final
Maturity Date, Lender shall notify Borrower of Lender's decision. If Lender
fails to so notify Borrower, Lender shall be deemed to have notified Borrower
that it shall not extend the Final Maturity Date. If Lender notifies Borrower
that it shall extend the Final Maturity Date, the Final Maturity Date shall be
extended if, and only if, on the then current Final Maturity Date, each of the
conditions specified in Section 4.2 shall be satisfied.
Section 2.3. Interest.
(a) General. The Loan shall bear interest on the unpaid
principal amount thereof from the Effective Date until payment of the Loan in
full. Interest shall be payable in arrears on the last day of each month
beginning on June 30, 2004. Any accrued interest that remains unpaid on the
Final Maturity Date shall be due and payable on the Final Maturity Date and any
accrued and unpaid interest on the Loan shall be payable in arrears on any date
that any principal of the Loan is paid or payable (on the principal amount so
paid or payable).
(b) Interest Rate. The interest rate for the Loan shall be
15.6% per annum.
(c) Default Interest. After the occurrence and during the
continuance of an Event of Default, to the extent permitted by applicable law,
Borrower shall pay on demand, on the outstanding principal amount of the Loan,
interest at a per annum rate equal to the interest rate applicable to the Loan
pursuant to Section 2.3(b) plus 1.00% per month.
(d) Maximum Interest Rate. Notwithstanding anything herein to
the contrary, in no event shall the interest charged hereunder exceed the
maximum rate of interest permitted under applicable law. Any payment made which
if treated as interest would cause the interest charged to exceed the maximum
rate permitted shall instead be held by Lender to the extent of such excess as
additional Collateral hereunder and applied to future interest payments as and
when such amount becomes due and payable hereunder.
(e) Calculations. Interest shall be calculated on the basis of
the actual days elapsed in a year of 360 days. In computing interest on the Loan
(or interest on such interest), the date of the making of the Loan shall be
included and the date of payment of the Loan shall be excluded.
Section 2.4. Prepayment of Loan; Termination or Reduction of
Commitment.
(a) Optional. Subject to Section 2.4(d) and except for
payments required under Sections 2.2 or 2.4(b), Borrower shall not have the
right to prepay the Loan until 180 days after the Effective Date at which time
Borrower may prepay the Loan in whole or in part subject to the terms and
conditions hereunder.
(b) Mandatory. On each day on which the total outstanding
principal amount of the Loan exceeds the lesser of (i) the Borrowing Base and
(ii) the Commitment, Borrower shall prepay an amount of the outstanding
principal of the Loan equal to the amount of such excess. Additionally, the
amounts on deposit in the Blocked Account shall be transferred to Lender as a
prepayment hereunder, (to be applied in the order specified in Section 2.6) in
accordance with the instructions set forth in the Account Control Agreement, (A)
on any Business Day on which the amount on deposit therein exceeds $10,000, and
(B) on each Monday of each calendar week (unless, in the case of this clause
(B), as of such day there has been a transfer pursuant to clause (A) within the
past five Business Days).
(c) Notices. Any prepayment other than those required under
Section 2.4(b) may only be made on at least two Business Days' (or such shorter
period as shall be agreed to by Lender) irrevocable prior written notice to
Lender.
(d) Prepayment Premium. In the event that Borrower makes any
prepayment of principal under the Loan prior to the date 180 days after the
Effective Date in excess of the amounts required under Section 2.4(b), Borrower
shall pay to Lender an additional amount equal to the amount of interest
Borrower would have paid Lender pursuant to the terms and conditions hereunder
with respect to such prepayment amount from the date of such prepayment until
the date 180 days after the Effective Date had Borrower not prepaid such amount.
Section 2.5. Notes. The Loan made by Lender shall be evidenced
by one or more Notes, duly executed by Borrower, delivered and payable to Lender
in an aggregate principal amount equal to the Commitment. Lender shall maintain
its records to reflect the amount and date of the Loan and of each payment of
principal and interest thereon. All such records shall be presumptive evidence
of the outstanding principal amount hereof; provided, however, that the failure
to make any notation to Lender's records shall not limit or otherwise affect the
obligations of Borrower to repay the Loan.
Section 2.6. Payments. Subject to the sweep provisions
described in Section 2.4(b), all payments by Borrower shall be payable on or
prior to 12:00 Noon on the due date thereof, in immediately available funds in
Dollars, without any set-off, counterclaim, withholding or deduction of any
kind. All payments shall be applied by Lender as follows: first, to the payment
of all accrued but unpaid fees, costs or expenses under the Credit Documents;
second, to the payment of all accrued but unpaid interest under the Credit
Documents; third, to the repayment of then outstanding principal amount of the
Loan; and fourth, the balance, if any, to Borrower or to whomsoever may be
entitled to such amounts as determined by Lender in its reasonable discretion.
Section 2.7. Guaranty and Collateral. The Obligations of each
Obligor under the Credit Documents shall be:
(a) guarantied by the Guarantors pursuant to the terms and
conditions of the Conditional Guaranty, and
(b) secured by the following collateral ("Collateral"):
(i) all assets of Borrower, including, without limitation,
each of the Leases and the Blocked Account (and all Cash Deposits
therein);
(ii) all assets of Parent and Leasecomm which are currently,
or hereafter become, Collateral or otherwise secure the obligations of
Leasecomm and Parent under the Fleet Loan Agreement;
provided, however, that such Conditional Guaranty and such security interest
shall not become effective until the earlier of the day (the "Collateral
Extension Date") that (A) all obligations under the Fleet Loan Agreement shall
have been discharged in full, or (B) Fleet releases its Liens on such Collateral
or otherwise consents to Lender having a Lien on such Collateral. On such date
Borrower shall cause Parent and Leasecomm to become parties to this Agreement as
Obligors by executing and delivering a Joinder to Credit Agreement in the form
of Schedule 2.7 attached hereto. As used herein the term "Collateral" (x) shall
mean, from and after the Effective Date, the collateral described in Section
2.7(b)(i) and (y) from and after the Collateral Extension Date, if any, shall
also include the additional collateral described in Section 2.7(b)(ii).
Section 2.8. Fees.
(a) Closing Fee. On the Effective Date, Lender has fully
earned a closing fee in the amount of 2.00% of the Commitment. The closing fee
required to be paid under this section shall be payable as follows: (a) 1.00% of
the Commitment ($80,000) paid by Borrower on the Effective Date, (b) 0.50% of
the Commitment ($40,000) paid 30 days after the Effective Date, and (c) the
balance of 0.50% of the Commitment ($40,000) paid 60 days after the Effective
Date. Borrower hereby authorizes Lender to deduct any amounts to be paid under
this Section in accordance with the provisions of Section 2.6 or from the
proceeds of any loan made on or after the date such amounts are to be paid by
Borrower in the event that a loan is made pursuant to Section 2.1 on or after
any such date.
(b) Extension Fee. In the event that Borrower requests, and
Lender authorizes, an extension of the Maturity Date pursuant to Section 2.2,
Borrower shall pay to Lender a renewal fee of 1.75% of the Commitment, payable
no later than ten (10) days prior to the then current (pre-extension) Final
Maturity Date.
(c) Unused Credit Fee. To the extent that there is any portion
of the Commitment unused during a monthly period beginning on the Effective Date
and ending on the Final Maturity Date, Borrower shall pay to Lender a fee in the
amount of 0.50% per annum against such unused amount, such fee to accrue
commencing on the Effective Date and to be paid by Borrower to Lender monthly in
arrears on each day that interest is payable under Section 2.3(a).
(d) Servicing Fee. Borrower shall pay to Lender a servicing
fee in the amount of $2,000 per month payable monthly in arrears on each day
that interest is payable under Section 2.3(a) during a period beginning on the
Effective Date and ending on the Final Maturity Date.
Section 2.9. Warrants and Registration Rights Agreement. As
partial consideration for Lender making the Loan to Borrower, Parent shall issue
to Lender warrants for the purchase of 100,000 shares of Parent's capital stock
pursuant to the terms and conditions of the Warrant Certificate (including
without limitation certain vesting, exercise and transfer restrictions) and
Lender shall be entitled to certain registration rights with respect to such
shares of Parent's capital stock as set forth under the Registration Rights
Agreement.
Section 2.10. Taxes. Any and all payments made by Borrower
hereunder shall be made free and clear of and without deduction for any present
or future taxes, levies, imposts, deductions, charges, or withholdings, and all
liabilities with respect thereto to the extent attributable to the Loan or the
Collateral, excluding (i) taxes imposed on net income and (ii) all income and
franchise taxes of the United States, any political subdivisions thereof, and
any state of the United States, and any political subdivisions thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder, (i) the sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.10) Lender receives an amount equal
to the sum it would have received had no such deductions been made, (ii)
Borrower shall make such deductions and (iii) Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law. Within 30 days after the date of any payment of Taxes,
Borrower will furnish Lender with evidence of payment thereof. Borrower hereby
indemnifies Lender for the full amount of Taxes (including, without limitation,
any Taxes imposed by any jurisdiction on amounts payable under this Section
2.10) paid by Lender and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally asserted. Payment pursuant to this indemnification
shall be made upon written demand thereof. The obligations of Borrower under
this paragraph shall survive the termination of this Agreement. Lender hereby
represents and warrants to Borrower that, as of the date hereof, no payments to
Lender hereunder are subject to any withholding taxes of the United States. In
the event, the Lender assigns its interest in this Agreement without the
approval of the Borrower, Borrower shall not be obligated to pay any assignee
any amounts under this Section in excess of any amounts Borrower would be
obligated. Any such assignee shall (x) provide Borrower with reasonably adequate
evidence that payments to such assignee hereunder are not subject to any
withholding taxes of the United States or (y) agree with Borrower that payments
to such assignee hereunder shall not be increased by the amount of any
applicable withholding taxes of the United States.
ARTICLE III: REPRESENTATIONS AND WARRANTIES
Each Obligor represents and warrants to Lender on the date
hereof and on the date of the making of any Loan that:
Section 3.1. Organization; Powers; Authorization;
Enforceability, Etc. Each Obligor is duly organized or formed, validly existing
and in good standing (if and to the extent applicable) under the laws of the
jurisdiction of its organization or formation, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in
every jurisdiction where such qualification is required. Borrower does not have
any Subsidiaries. The Transactions are within the powers of each Obligor and
have been duly authorized by all necessary action for each Obligor. Each Credit
Document has been duly executed and delivered by each Obligor party hereto and
constitutes a legal, valid and binding obligation of such Obligor enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law. The Transactions (a) do not require any
consent or approval of, registration or filing with, or any other action by, any
Governmental Authority, other than any approvals, consents, registrations or
filings necessary to perfect the liens and security interests created pursuant
to the Borrower Security Agreement and registrations, qualifications or filings
under applicable federal and state securities laws or regulations that may be
made after the date hereof, (b) will not, to any Obligor's knowledge, violate
any applicable law or regulation or the charter, by-laws, limited liability
company operating agreement or other organizational documents of any Obligor or
any order of any Governmental Authority binding on any Obligor, (c) will not
violate or result in a default under any indenture, agreement or other
instrument binding upon any Obligor or its assets, or give rise to a right
thereunder to require any payment to be made by such Obligor to the extent that
such violation (in each case, after giving effect to the Fleet Waiver), or such
default or right to payment could be reasonably expected to result in a Material
Adverse Effect, and (d) will not result in the creation or imposition of any
Lien on any asset of any Obligor other than pursuant to the Credit Documents.
Except as set forth on Schedule 3.1 attached hereto, there are no actions, suits
or proceedings by or before any arbitrator or Governmental Authority pending
against or, to the knowledge of any Obligor, threatened against or affecting any
Obligor (i) that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect, or
(ii) that involve the Credit Documents, the Collateral or the Transactions. Each
Obligor is in compliance with all laws, regulations and orders (including ERISA
and environmental laws, regulations and orders) of any Governmental Authority
applicable to it or its property and all indentures, agreements and other
instruments binding upon it or its property, to the extent that any
noncompliance therewith could be reasonably expected to result in a Material
Adverse Effect. No Default has occurred and is continuing.
Section 3.2. Financial Condition. Any financial statements,
balance sheets, cash flow statement or other financial reports furnished by any
Obligor to Lender present fairly the financial condition of such Obligor as of
the dates thereof. Any projections or pro forma financial information contained
in the materials referenced above are based on good faith estimates and
assumptions believed by the management of each Obligor to be reasonable at the
time made, it being recognized by Lender that such financial information as it
relates to future events is not to be viewed as fact and that actual results
during the period(s) covered by such financial information may differ from the
projected results set forth therein by a material amount.
Section 3.3. Licenses. Each Obligor is licensed and authorized
to carry on its business as now conducted under all applicable laws,
regulations, and orders of any Governmental Authority, except where the failure
to do so, individually or in the aggregate, could not be reasonably expected to
result in a Material Adverse Effect.
Section 3.4. Investment and Holding Company Status. No Obligor
or any of its Subsidiaries is (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
Section 3.5. Taxes. (a) Each Obligor has timely filed or
caused to be filed all tax returns and reports required to have been filed
(giving effect to any extensions) and has paid or caused to be paid all taxes
required to have been paid by it, except taxes that are being contested in
compliance with Section 5.5. The federal and state tax returns of each Obligor
delivered to Lender prior to the Effective Date are the true, correct and
complete tax returns of such Obligor as of the date thereof. (b) Borrower does
not intend to and shall not treat the Loan and related transactions as being a
"reportable transaction" (within the meaning of Treasury Regulation Section
1.6011-4). In the event Borrower determines to take any action inconsistent with
such intention or treatment, (i) it will promptly notify Lender thereof, and
(ii) Borrower acknowledges that Lender may treat the Loan as part of a
transaction that is subject to Internal Revenue Code section 6112 and the
Treasury Regulations thereunder, and that Lender will maintain lists and other
records to the extent required by such statute and regulations.
Section 3.6. Security Interests; Certain Information. Subject
to Liens permitted by this Agreement which have priority by operation of law and
to all liens granted by Parent and Leasecomm to Fleet for the benefit of the
lenders named in the Fleet Loan Agreement with respect to the Collateral
described in Section 2.7(b)(ii) hereof, Lender has a valid and perfected first
priority Lien on all of the Collateral and all filings and other actions
necessary for the perfection and first priority status of such Liens have been
duly made or taken and remain in full force and effect. The state of residence
or organization and any names used within the past five years of each Obligor is
set forth on Schedule 3.6. Each Obligor which has not made an organizational
filing in any jurisdiction has set forth on Schedule 3.6 its place of business,
if it has only one place of business, or its chief executive office, if it has
more than one place of business. No Obligor (as applicable) has any Subsidiaries
other than those set forth on Schedule 3.6 hereto.
Section 3.7. Environmental Matters. The operations of each
Obligor are and have been in compliance in all material respects with all
applicable federal, state or local environmental, health and safety statutes and
regulations since their respective effective dates and, none of the operations
of the Obligors is subject to any judicial or administrative proceeding alleging
any material violation of any federal, state or local environmental, health or
safety statute or regulation or are the subject of any federal, state or local
investigation evaluating whether any material remedial action is needed to
respond to a release of any hazardous or toxic waste, substance or constituent,
or of any other substance into the environment. No Obligor has filed any notice
under any federal, state or local law indicating past or present treatment,
storage or disposal of a hazardous or toxic waste, substance or constituent, or
other substance into the environment and has no material contingent liability in
connection with any release of any hazardous or toxic waste, substance or
constituent, or other substance into the environment.
Section 3.8. Disclosure. All agreements, instruments and
corporate or other restrictions, and all other matters known to any Obligor
pertaining to such Obligor, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect have been
disclosed to Lender. None of the written reports, financial statements,
certificates or other written information (other than financial projections and
pro forma information) furnished by or on behalf of any Obligor to Lender in
connection with the negotiation of the Credit Documents or delivered hereunder
(as modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
Section 3.9. Leases. With respect to each of the Eligible
Leases: (a) each is in full force and effect pursuant to the terms and
conditions thereto; (b) Borrower is the sole "lessor" thereunder; (c) each is
assignable by the lessor thereunder; (d) each is non-cancelable and provides
that the lessee's obligations thereunder are absolute and unconditional, and not
subject to defense, deduction, set-off or claim and as to which no defenses,
set-offs, claims or counterclaims exist or have been asserted; (e) none are
subject to any Liens other than Liens in favor of Lender and in which Lender has
a duly perfected first priority security interest under the UCC; (f) each is a
Lease characterized as a "finance lease" in accordance with GAAP; (g) the lessee
under each (i) is domiciled in the United States, and (ii) is not the subject of
and has not taken any action described in subsections (h) or (i) of Section 6.1;
(h) each is in a form substantially similar to that attached hereto as Annex B;
(i) no payment thereunder is more than 60 days late; (j) no lessee thereunder
has two or more currently unpaid and outstanding payments; (k) no default
thereunder has occurred other than to the extent permissible under clause (i)
and (j) immediately above; (l) each covers the leasing of Eligible Equipment
only; (m) none have been modified, amended, restated or otherwise rewritten with
respect to terms of payment or in any other material respect more than two
times; and (n) the original of each Eligible Lease which has already been
entered into has been delivered to and/or is otherwise in the possession of
Lender or its authorized designee.
ARTICLE IV: CONDITIONS
Section 4.1. Effective Date. The obligations of Lender to make
any Loan to Borrower hereunder shall not become effective until each of the
following conditions is satisfied:
(a) On the date on which any Loan is to be made:
(i) the representations and warranties set forth in
Article III and in any documents delivered herewith, shall be true
and correct with the same effect as though made on and as of such
date, except to the extent made as of a specific date and except as
to actions or changes in circumstances not prohibited hereunder;
(ii) each of the covenants set forth in Article V shall
have been complied with or performed in full as of such date; and
(iii) Borrower, Parent and Leasecomm shall be in
compliance with all the terms and provisions contained herein and in
the Credit Documents to be observed or performed, and no Default
shall have occurred and be continuing.
(b) Lender shall have also received the following documents:
(i) a counterpart of this Agreement executed by Borrower;
(ii) the initial Note executed by Borrower;
(iii) the Conditional Guaranty executed by Parent and
Leasecomm;
(iv) the Conditional Security Agreement executed by Parent
and Leasecomm and each "Exhibit A" thereto for each such party;
(v) the Borrower Security Agreement executed by Borrower
and "Exhibit A" thereto;
(vi) the Warrant Certificate executed by Parent;
(vii) the Registration Rights Agreement executed by Parent
and the Subordinated Lender;
(viii) the Account Control Agreement executed by the
depository bank party thereto and Borrower with reference to the
Blocked Account;
(ix) copies of the executed version of each Eligible
Lease;
(x) an aging report of all existing leases owned by
Leasecomm or Parent which secure, and are financed pursuant to, the
Fleet Loan Agreement;
(xi) consolidated balance sheet and statements of income,
retained earnings and cash flows for Parent's most recently ended
fiscal year and interim consolidated balance sheet and statements of
income, retained earnings and cash flows for Parent covering the
fiscal year ended December 31, 2004; and
(xii) the Iron Mountain Addenda executed by Iron Mountain,
Parent and Borrower.
(c) Lender shall have received lien searches against each of
the Obligors indicating that there are no Liens against any of the Collateral
other than (i) Fleet's Lien against the assets of Parent and Leasecomm granted
pursuant to the Fleet Loan Agreement and (ii) Permitted Encumbrances.
(d) Lender shall have completed to its satisfaction a
collateral audit no more than 10 days prior to the Effective Date and any other
due diligence.
(e) Borrower shall have received, and shall deliver to Lender,
satisfactory evidence of the closing under the Subordinated Loan Documents.
(f) Borrower shall deliver to Lender satisfactory evidence
that the Conditional Guaranty and the Conditional Security Agreement do not
violate the terms of the Fleet Loan Agreement.
(g) Lender shall have received evidence satisfactory to it
that all necessary governmental and other consents have been obtained by
Borrower and its Subsidiaries.
(h) Lender shall have received all fees and other amounts due
and payable on or prior to the Effective Date, including, to the extent
invoiced, reimbursement or payment of all out-of-pocket expenses required to be
reimbursed or paid by Borrower hereunder.
(i) Lender shall have received satisfactory legal opinions
regarding Borrower, Parent and Leasecomm as to the organization or formation,
existence and good standing (if and to the extent applicable) of Borrower,
Parent and Leasecomm, the authorization of the Transactions, the execution,
delivery and enforceability of the Credit Documents, the perfection of Lender's
security interest in the Collateral, no violations of law including margin
regulations, no violations of any contracts with Fleet and other legal matters
relating to Borrower, Parent and Leasecomm, the Credit Documents or the
Transactions, all in form and substance reasonably satisfactory to Lender and
its counsel.
(j) Lender shall have received such documents and certificates
regarding Borrower, Parent and Leasecomm as to the organization or formation,
existence and good standing (if and to the extent applicable) of Borrower,
Parent and Leasecomm, the authorization of the Transactions, the execution,
delivery and enforceability of the Credit Documents, the incumbency of
signatories, and other legal matters relating to Borrower, Parent and Leasecomm,
the Credit Documents or the Transactions, all in form and substance satisfactory
to Lender and its counsel.
(k) Lender shall be satisfied that no event has occurred which
could reasonably be expected to have a Material Adverse Effect.
Section 4.2. Conditions to Extension of Final Maturity Date.
The extension of the Final Maturity Date under Section 2.2 shall not become
effective unless each of the following conditions is satisfied on the then
current Final Maturity Date:
(a) the extension fee owed by Borrower pursuant to Section
2.8(b) shall be paid by Borrower to Lender in full;
(b) the Collateral shall continue to be acceptable to Lender
in its sole discretion;
(c) since the Effective Date, Borrower has paid all amounts
due and payable to Lender on or prior to the date such amounts were due;
(d) no Obligor shall be in default with respect to any
Material Indebtedness;
(e) the representations and warranties set forth in any Credit
Document shall be true and correct in all material respects with the same effect
as though made on and as of such date, except to the extent made as of a
specific date and except as to actions or changes in circumstances not
prohibited hereunder;
(f) Lender shall be satisfied that no event has occurred which
could reasonably be expected to have a Material Adverse Effect;
(g) each Obligor shall be in compliance in all respects with
all the terms, provisions, covenants and conditions contained herein and in each
of the other Credit Documents to be observed or performed;
(h) Borrower's actual fiscal performance for each fiscal
quarter ending after the Effective Date shall not have varied materially from
the fiscal projections for each such fiscal quarter set forth on Exhibit A
attached hereto;
(i) Lender, or its authorized designee, shall be in possession
of each Eligible Lease entered into as of such date;
(j) no Default shall have occurred and be continuing; and
(k) any other commercially reasonable condition to be
satisfied as determined in Lender's sole discretion.
Section 4.3. Additional Conditions to Loans. On the date on
which each loan under the Commitment is to be made: (a) Lender shall have
received a request for such loan executed by Borrower pursuant to Section
2.1(b); (b) the representations and warranties set forth in Article III hereof
and in any documents delivered herewith, shall be true and correct in all
material respects with the same effect as though made on and as of such date,
except to the extent made as of a specific date and except as to actions or
changes in circumstances not prohibited hereunder; (c) Lender shall be satisfied
that no event has occurred which could reasonably be expected to have a Material
Adverse Effect; (d) the Collateral Value shall equal or exceed the total
outstanding principal amount of the loans after giving effect to the loan to be
made; (e) the Borrowing Base shall equal or exceed the total outstanding
principal amount of the Loan after giving effect to the loan to be made; (f)
each Obligor shall be in compliance in all respects with all the terms and
provisions contained herein and in the Credit Documents to be observed or
performed; (g) Lender, or its authorized designee, shall be in possession of
each Eligible Lease entered into as of such date; and (h) no Default shall have
occurred and be continuing.
ARTICLE V: AFFIRMATIVE COVENANTS
Until the termination of the Commitment and the principal of
and interest on the Loan and all fees and other Obligations payable under the
Credit Documents shall have been paid in full, each Obligor covenants and agrees
with Lender that:
Section 5.1. Financial Statements, Reports and Other
Information
(a) Borrower will furnish to Lender on a monthly basis within
15 days after the end of each of Borrower's fiscal months:
(i) each of a servicing report, Lease aging report,
revenue report, residual accounts report and run-off model detailing
cash flow for such month;
(ii) compliance certification from an executive officer of
each of Parent and Borrower stating that (A) no Default has occurred
during such month or setting forth the details of the occurrence of
any Default and any action taken or proposed to be taken by Parent or
Borrower with respect thereto, (B) all covenants and conditions
contained in each Credit Document have been complied with or
performed in full as of such date, and (C) each of the reports
delivered pursuant to this Section 5.1(a)(i) and 5.1(b) present
fairly the financial condition of the Person described in such
reports and any information provided in such reports is true and
correct as of the date such information is furnished.
(b) Borrower will furnish to Lender on a monthly basis within
30 days after the end of each of Borrower's fiscal months internally prepared
financial statements and a report setting forth in detail the amount and nature
of all outstanding obligations of Borrower under the Fleet Loan Agreement as of
such date.
(c) Borrower will furnish to Lender with each borrowing
request made pursuant to Section 2.1(b) and also on a weekly basis within 5 days
after the end of each week a detailed report regarding the Borrowing Base and
also setting forth sales information, credit memo information, and collection
information for such week and any other information regarding the Collateral or
Borrowing Base for such week that Lender reasonably requests.
(d) Parent will furnish to Lender on an annual basis promptly
after the same becomes available, but in any event within 90 days of Parent's
fiscal year end, a consolidated balance sheet and statements of income, retained
earnings and cash flows as of and for such fiscal year accompanied by an
unqualified report by an independent public accounting firm reasonably
acceptable to Lender that such financial statements present fairly, in all
material respects, the financial position and results of operations and cash
flows of Borrower and its consolidated Subsidiaries as of such date and for such
periods in accordance with GAAP. The financial statements delivered pursuant
hereto shall be accompanied by a certification from an executive officer of
Parent that such financial statements present fairly the financial condition of
the Persons described in such financial statements and any information provided
in such financial statements is true and correct as of the date such information
is furnished.
(e) Promptly after the same becomes publicly available, copies
of all periodic and other reports, proxy statements and other materials filed by
Parent (and/or any Subsidiary of Parent) with the Securities and Exchange
Commission, or with any securities exchange, or distributed by Parent to its
shareholders generally, as the case may be.
(f) All financial statements, reports and information
regarding Parent, Leasecomm or Borrower provided in writing to Fleet (or the
bank group under the Fleet Loan Agreement) within two Business Days after the
time such financial statements, reports and information are provided to Fleet
(or the bank group under the Fleet Loan Agreement).
(g) Promptly following any request therefor, such other
information regarding the operations, business affairs and financial condition
of Parent, Borrower or any Subsidiary of Borrower or Parent, or compliance with
the terms of the Credit Documents, as Lender may reasonably request.
(h) On the date of the delivery of any financial statements or
projections under this Section 5.1, Borrower shall be deemed to have made a
representation to Lender that such financial statements shall present fairly the
financial condition of the Person described in such financial statements, and
any information provided pursuant to this Section 5.1 shall be true and correct
as of the date such information is furnished and, as to projections, that such
projections are based upon reasonable assumptions in light of prior performance.
Any projections or pro forma financial information contained in the materials
referenced above are based on good faith estimates and assumptions believed by
the management of each Obligor to be reasonable at the time made, it being
recognized by Lender that such financial information as it relates to future
events is not to be viewed as fact and that, subject to the requirements of
Section 5.12(a), actual results during the period(s) covered by such financial
information may differ from the projected results set forth therein by a
material amount.
Section 5.2. Notices of Material Events. Borrower will furnish
to Lender prompt written notice of the following: (a) the occurrence of any
Default; (b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting any Obligor
that, if adversely determined, could reasonably be expected to result in a
Material Adverse Effect; (c) written notice of Borrower's intent to pay in full
all of Borrower's obligations under the Fleet Loan Agreement no less than ten
(10) Business Days prior to such payment; and (d) any other development that
results in, or could reasonably be expected to result in, a Material Adverse
Effect. Each notice delivered under this Section 5.2 shall be accompanied by a
statement of Borrower setting forth the details of the event or development
requiring such notice and any action taken or proposed to be taken with respect
thereto.
Section 5.3. Existence. Each Obligor will do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence and the rights, licenses, permits, privileges and franchises
material to the conduct of its business.
Section 5.4. Payment of Obligations. Each Obligor will pay its
liabilities including tax liabilities, that, if not paid, could reasonably be
expected to result in a Material Adverse Effect before the same shall become
delinquent or in default, except where (a) the validity or amount thereof is
being contested in good faith by appropriate proceedings, (b) such Obligor has
set aside on its books adequate reserves with respect thereto and (c) the
failure to make payment pending such contest could not reasonably be expected to
result in a Material Adverse Effect.
Section 5.5. Maintenance of Properties; Insurance. Each
Obligor will (a) keep and maintain all property material to the conduct of its
business in good working order and condition, ordinary wear and tear excepted,
and (b) maintain, with financially sound and reputable insurance companies,
insurance in such amounts and against such risks as are customarily maintained
by companies engaged in the same or similar businesses operating in the same or
similar locations.
Section 5.6. Ownership and Control. Parent shall own,
beneficially and of record, the full economic interest in, with full voting and
dispositive power, 100% of the total outstanding capital stock of each of
Borrower and Leasecomm and shall Control each of Borrower and Leasecomm.
Section 5.7. Books and Records; Inspection Rights; Access. At
Borrower's expense, Borrower will keep proper books of record and account in
which full, true and correct entries are made of all dealings and transactions
in relation to its business and activities. Borrower will permit any
representatives designated by Lender, during normal business hours and upon
reasonable advance notice, to visit and inspect its properties, to examine and
make extracts from its books and records, and to directly discuss its affairs,
finances and condition with its partners or trustees (or its designee), officers
and independent accountants, as applicable.
Section 5.8. Compliance with Laws. Each Obligor will comply
with all laws, rules, regulations and orders of any Governmental Authority
applicable to it (including ERISA and environmental laws), except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
Section 5.9. Use of Proceeds. The proceeds of the Loan shall
be used by Borrower solely to finance Leases and the related revenues thereto
and the working capital needs of Borrower. No part of the proceeds of the Loan
will be used for the purpose, whether immediate, incidental or ultimate, of
buying or carrying Margin Stock. "Margin Stock" means "margin stock" as used and
defined in Regulation U of the Regulations of the Board of Governors of the
Federal Reserve System.
Section 5.10. Collateral Value; Leases. (a) Obligors agree
that the Borrowing Base shall equal or exceed the total outstanding principal
amount of the Loan at all times. Obligors agree that should the Borrowing Base
fall below the total outstanding principal amount of the Loan, Obligors shall
take one or more of the following actions necessary to increase the Collateral
Value to equal or exceed the total outstanding principal amount of the Loan at
such time: (i) make Cash Deposits, and/or (ii) pledge Additional Collateral. (b)
Borrower agrees to deliver to Iron Mountain (as contemplated by the Iron
Mountain Agreement and the Iron Mountain Addenda) all original executed copies
of each Eligible Lease (with copies to Lender) within two (2) Business Days of
execution thereof.
Section 5.11. Subsidiary Guarantors. Borrower shall cause each
and every Subsidiary and each Obligor shall cause each and every Affiliate of
Borrower which receives any money from Borrower, except as permitted under
Section 6.4, to be a party to this Agreement and to guaranty the Obligations.
Section 5.12. Financial Performance. EBITDA Minimum. For the
three months ended June 30, 2004, EBITDA loss shall not exceed $980,000; for the
six months ended September 30, 2004, EBITDA loss shall not exceed $950,000; for
the nine months ended December 31, 2004, EBITDA loss shall not exceed $750,000;
and for the 12 months ended Xxxxx 00, 0000, XXXXXX loss shall not exceed
$450,000.
Section 5.13. Blocked Account. As of the Effective Date,
Borrower shall have, in writing, instructed each lessee under the Leases to make
all payments under such lessees' respective Lease(s) directly to the Blocked
Account, and such instructions shall thereafter continue to be in full force and
effect. Borrower shall deposit into the Blocked Account promptly upon receipt,
but in any event within one (1) Business Day of receipt thereof, any amounts it
shall receive as payment under any Lease.
Section 5.14. Further Assurances. Each Obligor shall upon
request by Lender (a) promptly correct any material defect or error that may be
discovered in any Credit Document or in the execution, acknowledgement or
recordation thereof and (b) do, execute, acknowledge, deliver, record,
re-record, file, re-file, register and re-register any and all such further
acts, deeds, conveyances, security agreements, pledge agreements, mortgages,
deeds of trust, trust deeds, assignments, estoppel certificates, financing
statements and continuation thereof, termination statements, notices of
assignment, transfers, certificates, assurances and other instruments as Lender
may require from time to time in order (i) to carry out more effectively the
purposes of this Agreement or any other Credit Documents, (ii) to subject to the
Liens and security interests created by any of the Credit Documents any of the
Obligors' properties, rights or interests covered or now or hereafter intended
to be covered by any of the Credit Documents, (iii) to perfect and maintain the
validity, effectiveness and priority of any of the Credit Documents and the
Liens and security interests intended to be created thereby and (iv) better to
assure, convey, grant, assign, transfer, preserve, protect and confirm unto
Lender the rights granted or now or hereafter intended to be granted to Lender
under any Credit Document. Lender shall upon request by Borrower promptly
correct any material defect or error that may be discovered in any Credit
Document or in the execution, acknowledgement or recordation thereof.
ARTICLE VI: NEGATIVE COVENANTS
Until the termination of the Commitment and the principal of
and interest on the Loan and all fees payable hereunder have been paid in full,
each Obligor covenants and agrees with Lender that:
Section 6.1. Indebtedness. Other than Indebtedness permitted
under the Fleet Loan Agreement, no Obligor shall issue, incur or increase the
principal amount of any of its Indebtedness, except (a) for any Indebtedness to
Lender, (b) for the Subordinated Debt issued by Borrower on the Effective Date;
(c) for current liabilities for ordinary trade accounts payable, accrued payroll
and severance obligations payable on customary terms in the ordinary course of
business; (d) that Parent or Leasecomm may incur purchase money Indebtedness and
capital leases secured as provided in Section 6.7(c) in an aggregate principal
amount not exceeding $500,000 at any time; (e) that Parent or Leasecomm may
incur Indebtedness of any of their Subsidiaries (other than Borrower) secured by
Leases, Equipment and receivables relating to such Leases and Equipment, none of
which constitute part of the Collateral; (f) existing Indebtedness described on
Schedule 6.1 attached hereto; (g) that Parent or Leasecomm may incur
Indebtedness in respect of inter-company loans and advances among either Parent
or Leasecomm and its Subsidiaries which are not prohibited by Section 6.6; (h)
that Parent or Leasecomm may make Guarantees (including the Subordinated
Conditional Guaranty) of Indebtedness and other obligations incurred by any of
their Subsidiaries and permitted by the other provisions of this Section 6.1;
and (i) for Indebtedness of the Parent and Leasecomm in addition to the
foregoing, provided, however, that the aggregate amount of all such additional
Indebtedness at any one time outstanding shall not exceed $500,000 and the terms
of any such Indebtedness shall be satisfactory to Lender.
Section 6.2. Disposition of Assets. Borrower shall not
distribute, sell, transfer, lease or otherwise dispose of (in one transaction or
in a series of transactions) all, substantially all or any substantial part, of
its assets.
Section 6.3. Fundamental Changes
(a) Borrower shall not merge into or consolidate with any
other Person, or permit any other Person to merge into or consolidate with it,
or sell, transfer, lease or otherwise dispose of (in one transaction or in a
series of transactions) any material portion of its assets (in each case,
whether now owned or hereafter acquired) other than in the ordinary course of
business, or liquidate or dissolve.
(b) Borrower shall not engage to any material extent in any
business other than the business of leasing Equipment pursuant to Leases and
businesses reasonably related thereto.
(c) Borrower shall not amend, modify or change its certificate
of incorporation or by-laws or other organizational documents in any manner that
would be adverse to Lender.
(d) Borrower shall not create or acquire any Subsidiaries
without the prior written consent of the Lender.
Section 6.4. Transactions with Affiliates. Neither Borrower
nor any of its Subsidiaries shall sell, lease or otherwise transfer any property
or assets to, or purchase, lease or otherwise acquire any property or assets
from, or otherwise engage in any other transactions with, any of its Affiliates,
except in the ordinary course of business at prices and on terms and conditions
not less favorable to Borrower or such Subsidiary than could be obtained on an
arm's-length basis from unrelated third parties.
Section 6.5. Dividends. Neither Borrower nor any of its
Subsidiaries shall declare or pay any dividends, purchase, redeem, retire,
defease or otherwise acquire for value any of Borrower's or such Subsidiary's
capital stock or membership interests (as applicable) or any warrants, rights or
options to acquire such capital stock or membership interests (as applicable),
now or hereafter outstanding, return any capital to Borrower's or such
Subsidiary's stockholders or members (as applicable) as such, or make any
distribution or exchange of assets, capital stock, warrants, rights, options,
obligations or securities to Borrower's or such Subsidiary's stockholders or
members (as applicable), except that any Subsidiary of Borrower may make
dividends and distributions to Borrower.
Section 6.6. Investments. Borrower shall not make any loan or
advance to any Person, or purchase or otherwise acquire, or permit any of its
Subsidiaries to purchase or otherwise acquire, any capital stock or other equity
interest, warrants, rights, options, obligations or other securities of, make
any capital contribution to, or otherwise invest in, any Person, except for (a)
subject to Section 6.3(d), investments of Borrower and its Subsidiaries in
Persons that become wholly owned Subsidiaries and Guarantors after the date
hereof in accordance with the provisions of this Agreement; and (b)
reimbursements to employees and directors for expenses incurred in the ordinary
course of business.
Section 6.7. Liens. Borrower shall not (and shall not permit
any Subsidiary to), create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it, or assign or sell any
income or revenues (including accounts receivable or rights in respect of any
thereof), except:
(a) Permitted Encumbrances;
(b) any Lien existing on any property or asset prior to the
acquisition thereof by Borrower or any Subsidiary or existing on any property or
asset of any Person that becomes a Subsidiary after the date hereof prior to the
time such Person becomes a Subsidiary; provided that (i) such Lien is not
created in contemplation of or in connection with such acquisition or such
Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not apply
to any other property or assets of Borrower or any Subsidiary and (iii) such
Lien shall secure only those obligations which it secures on the date of such
acquisition or the date such Person becomes a Subsidiary, as the case may be and
extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof; and
(c) Liens on fixed or capital assets acquired, constructed or
improved by Borrower or any Subsidiary; provided that (i) such security
interests secure purchase money Indebtedness or capital leases permitted under
Section 6.1(e) or otherwise approved by Lender, (ii) such security interests and
the Indebtedness secured thereby are incurred prior to or within 90 days after
such acquisition or the completion of such construction or improvement, (iii)
the Indebtedness secured thereby does not exceed the cost of acquiring,
constructing or improving such fixed or capital assets and (iv) such security
interests shall not apply to any other property or assets of Borrower or any
Subsidiary.
Section 6.8. Restrictions with Respect to Collateral. With
respect to the grant of the security interest to Lender pursuant to the
Conditional Security Agreement, no Obligor shall assert (verbally, in writing or
otherwise) or take any other action nor shall it cooperate with or encourage any
other person to assert (verbally, in writing or otherwise) or take any other
action which would have the result of rendering the security interests granted
pursuant to the Conditional Security Agreement ab initio limited, reduced or
ineffective.
ARTICLE VII: EVENTS OF DEFAULT
Section 7.1. If any of the following events ("Events of
Default") shall occur:
(a) Borrower shall fail to pay any principal of the Loan when
and as the same shall become due and payable, whether at the due date thereof or
at a date fixed for prepayment thereof or otherwise;
(b) Borrower shall fail to pay any interest on the Loan, any
fee or any other amount (other than an amount referred to in clause (a) of this
Section 7.1) payable under any Credit Document when and as the same shall become
due and payable;
(c) any representation or warranty made or deemed made by or
on behalf of any Obligor in or in connection with any Credit Document or any
amendment or modification thereof, or in any report, certificate, financial
statement or other document furnished pursuant to or in connection with any
Credit Document or any amendment or modification hereof shall prove to have been
incorrect in any material respect when made or deemed made, except to the extent
made as of a specific date and except as to actions or changes in circumstances
not prohibited hereunder;
(d) any Obligor shall fail to observe or perform any covenant,
condition or agreement contained in Sections 5.1(d), 5.1(e), 5.2, 5.3, 5.6, 5.9,
5.10, 5.12, 5.13 or 5.14 or in Article VI;
(e) any Obligor shall fail to observe or perform any covenant,
condition or agreement contained in any Credit Document (other than those
specified in clause (a), (b), (c) or (d) of this Section 7.1) and such failure
shall continue for 30 days, provided such Obligor is diligently pursuing efforts
to make such cure;
(f) any Obligor shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material
Indebtedness, when and as the same shall become due and payable, after the
expiration of any grace or cure periods;
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled
maturity;
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation, reorganization or
other relief in respect of any Obligor or its debts, or of a substantial part of
its assets, under any federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for any Obligor or for a substantial part of its assets, and, in any such case,
such proceeding or petition shall continue undismissed for 60 days or an order
or decree approving or ordering any of the foregoing shall be entered;
(i) any Obligor shall (i) voluntarily commence any proceeding
or file any petition seeking liquidation, reorganization or other relief under
any federal, state or foreign bankruptcy, insolvency, receivership or similar
law now or hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition described
in clause (h) of this Section 7.1, (iii) apply for or consent to the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for any Obligor or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or (vi)
take any action for the purpose of effecting any of the foregoing;
(j) any Obligor shall become unable, admit in writing or fail
generally to pay its debts as they become due;
(k) one or more judgments for the payment of money in an
aggregate amount in excess of $100,000 shall be rendered against Borrower (or an
aggregate amount in excess of $250,000 shall be rendered against Parent or
Leasecomm) or any combination thereof and the same shall remain undischarged for
a period of 10 consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to attach or
levy upon any assets of any Obligor to enforce any such judgment;
(l) any Change of Control shall occur;
(m) an ERISA Event shall have occurred that, in the opinion of
Lender, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in a Material Adverse Effect;
(n) any material provision of any Credit Document shall, for
any reason, cease to be valid and binding on any Obligor, or any Obligor shall
so state in writing;
(o) any Credit Document shall, for any reason, cease to create
a valid Lien on any of the Collateral purported to be covered thereby or any
Lien granted to Lender shall cease to be a perfected first priority Lien, in
each case on or after the effective date of such Credit Document, or any Obligor
shall so state in writing; or
(p) any "default" or "event of default" under the Fleet Loan
Agreement, after giving effect to the Fleet Waiver;
then, and in every such event (other than an event with respect to Borrower
described in clause (h) or (i) of this Section 7.1), and at any time thereafter
during the continuance of such event, Lender may by notice to Borrower, take any
or all of the following actions, at the same or different times: (i) terminate
the Commitment, and thereupon the Commitment shall terminate immediately, and
(ii) declare the Loan then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loan so declared to be due and payable, together with accrued interest
thereon and all fees and other Obligations of Borrower accrued hereunder, shall
become due and payable immediately, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by Borrower; and in
case of any event with respect to Borrower described in clause (h) or (i) of
this Section 7.1, the Commitment shall automatically terminate and the principal
of the Loan then outstanding, together with accrued interest thereon and all
fees and other Obligations of Borrower accrued hereunder, shall automatically
become due and payable, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by Borrower.
ARTICLE VIII: MISCELLANEOUS
Section 8.1. Notices. Unless otherwise specified herein, all
notices hereunder to any party hereto shall be in writing and shall be given (a)
by personal delivery, (b) by certified mail, return receipt requested, (c) by
nationally recognized overnight courier (e.g., Federal Express) or (d) by
electronic facsimile transmission (with confirmation of successful transmission)
or by electronic mail (provided, however, that if a notice is given by facsimile
or electronic mail, a copy of such notice shall also be delivered by one of the
other delivery methods set forth in clauses (a), (b) and (c) above), in each
case addressed to such party at its address indicated on Schedule 3.6 or on the
signature pages hereof or to any other address specified by such party in
writing. All such notices, requests, demands and other communication shall be
deemed given upon the earlier of (i) receipt by the party to whom such notice is
directed (or a person of suitable age and discretion accepting such notice at
such address), (ii) refusal to accept delivery by the party to whom such notice
is directed (or by such other suitable person) or (iii) if mailed, the third
Business Day following the date of mailing.
Section 8.2. Waivers. Without limiting the generality of the
foregoing, the making of the Loan shall not be construed as a waiver of any
Default, regardless of whether Lender may have had notice or knowledge of such
Default at the time.
Section 8.3. Expenses; Indemnity; Damage Waiver.
(a) Expenses. Borrower shall pay all reasonable out-of-pocket
expenses incurred by Lender, including reasonable fees and disbursements of
counsel for Lender, in connection with (i) the preparation of the Credit
Documents, any amendments, modifications or waivers of the provisions thereto
requested or agreed to by any Obligor (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) the administration of
the Credit Documents, including any wire transfer fees and expenses in
connection with the addition or release of any Collateral, and (iii) the
enforcement or protection of Lender's rights in connection with any Credit
Document, including its rights under this Section 8.3, or in connection with the
Loan made hereunder, including in connection with any workout, restructuring or
negotiations in respect thereof.
(b) Collateral Audits. Borrower shall reimburse Lender for all
of Lender's expenses incurred in connection with Lender obtaining two (2) audits
of the Collateral per calendar year, including, without limitation, actual
out-of-pocket expenses incurred per analyst (at a daily fee not exceeding $750
per analyst plus actual out of pocket expenses) from audit-related activities
within the New York City metropolitan area; provided, however, that Borrower
shall reimburse Lender for all of Lender's expenses incurred in connection with
all audits of the Collateral performed after the occurrence of and during the
continuation of any Event of Default.
(c) Each Obligor shall indemnify, jointly and severally,
Lender and each Affiliate, director, officer, employee, agent and advisor of
Lender (each such Person being called an "Indemnitee") against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the reasonable fees and disbursements of counsel for
any Indemnitee (the "Losses"), incurred by or asserted against any Indemnitee
arising out of, in connection with, or as a result of, any actual or prospective
claim, litigation, investigation or proceeding relating to (i) the execution or
delivery of any Credit Document, the performance of the parties hereto of their
respective Obligations thereunder or the consummation of the Transactions or
(ii) the Loan or the use of the proceeds therefrom, in each case, whether based
on contract, tort or any other theory and regardless of whether any Indemnitee
is a party thereto; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that any Losses claimed by such
Indemnitee are determined by a final judgement of a court of competent
jurisdiction to have been incurred by reason of gross negligence, bad faith or
willful misconduct of such Indemnitee.
(d) To the extent permitted by applicable law, no Obligor
shall assert, and hereby waives, any claim against any Indemnitee, on any theory
of liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or as a
result of, any Credit Document or any agreement or instrument contemplated
thereby, the Transactions, the Loan or the use of the proceeds thereof.
(e) All amounts due under this Section 8.3 shall be payable
promptly after written demand therefor. The Obligations of the Obligors under
this Section 8.3 shall survive payment in full of the Loan.
Section 8.4. Amendments. Any term of this Agreement or any
other Credit Document may be amended, waived, discharged or terminated only by
an instrument in writing signed by each party to this Agreement or such Credit
Document. No notice to or demand on any Obligor shall be deemed to be a waiver
of the Obligations of any Obligor or of the right of Lender to take further
action without notice or demand as provided in this Agreement. No course of
dealing between any Obligor and Lender shall change, modify or discharge, in
whole or in part, this Agreement or any Obligations. No waiver of any term,
covenant or provision of this Agreement or any other Credit Document shall be
effective unless given in writing by Lender and if so given shall only be
effective in the specific instance in which given. In the event Lender shall
assign a portion of its interests under this Agreement or any other Credit
Document, then any such consents, waivers or amendments may be consented to by
lenders or assignees holding a majority in principal amount of the Loans and
Commitments except that each lender and assignee affected shall be required to
consent to any consents, waivers or amendments which (a) increase the
obligations of such lender or assignee, (b) reduce the principal amount,
interest rate or fees due to such lender or assignee, (c) extend, delay or
postpone the Final Maturity Date or due date of any payment of principal,
interest or fees due to such lender or assignee, (d) release the Guarantors or
(e) release all or substantially all of the Collateral.
Section 8.5. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that (a) no Obligor may
assign or otherwise transfer any of its rights or Obligations hereunder without
the prior written consent of Lender and (b) any assignment by Lender (or any
other Noteholder) of its rights or obligations hereunder (other than to an
Affiliate or any Person that acquires Lender or all or substantially all of the
assets of Lender) shall be subject to Borrower's consent, which consent shall
not be unreasonably withheld or delayed and shall not be required during the
existence of an Event of Default. Any attempted assignment or transfer by any
Obligor without the required consent (if any) shall be null and void.
Section 8.6. Replacement of Notes. Upon (a) request made by
Lender (or any other Noteholder) made following an assignment permitted under
Section 8.5 or (b) receipt of a Noteholders' affidavit or other evidence
reasonably satisfactory to Borrower of the loss theft, destruction or mutilation
of any Note and, in the case of any such loss, theft or destruction, upon
delivery of an indemnity agreement reasonably satisfactory to Borrower, and, in
the case of any such mutilation, upon the surrender of such Note for
cancellation, Borrower, at the expense of Lender (or such Noteholder), shall
execute and deliver, respectively, (a) new Notes appropriately reflecting such
assignment or (b) in lieu of such lost, stolen, destroyed, or mutilated Note, a
new Note of like tenor.
Section 8.7. Survival. All covenants, agreements,
representations and warranties made by any Obligor in any Credit Document and in
the certificates or other instruments delivered in connection with or pursuant
to any Credit Document shall be considered to have been relied upon by the other
parties hereto and shall survive the execution and delivery of each Credit
Document and the making of the Loan, regardless of any investigation made by any
such other party or on its behalf and notwithstanding that Lender may have had
notice or knowledge of any Default or incorrect representation or warranty at
the time any credit is extended hereunder, and shall continue in full force and
effect as long as the principal of or any accrued interest on the Loan or any
fee or any other amount payable under any Credit Document is outstanding and
unpaid. The provisions of Section 8.3 shall survive and remain in full force and
effect regardless of the consummation of the transactions contemplated hereby,
the repayment of the Loan or the termination of this Agreement or any provision
hereof.
Section 8.8. Right of Set-off. If any amount payable hereunder
or under any other Credit Document is not paid as and when due, each Obligor
hereby authorizes Lender and each Affiliate of Lender to proceed, to the extent
permitted by applicable law, without prior notice, by right of set-off, bankers'
lien, counterclaim or otherwise, against any assets of such Obligor in any
currency that may at any time be in the possession of Lender or such Affiliate,
at any branch or office, to the full extent of all amounts payable to Lender
hereunder or thereunder. Lender shall give prompt notice to such Obligor after
any exercise of Lender's rights under the preceding sentence, but the failure to
give such notice shall not affect the validity of any of Lender's actions.
Section 8.9. Severability. Any provision of any Credit
Document held to be invalid, illegal or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without effecting the validity, legality and
enforceability of the remaining provisions thereof; and the invalidity of a
particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.
Section 8.10. Governing Law; Jurisdiction; Consent to Service
of Process.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Each Obligor hereby
designates Xx. Xxxxxxxx XxXxxxxx, c/o Microfinancial Incorporated, 00X Xxxxxxxx
Xxx, Xxxxxx, XX 00000 as its agent to receive service of process in any action
or proceeding arising out of or relating to any Credit Document, and also as its
agent for the purposes of taking any action required to be taken under the terms
of the Credit Documents such as delivery of notices.
(b) EACH OBLIGOR HEREBY IRREVOCABLY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF ANY FEDERAL OR STATE COURT IN THE STATE OF NEW YORK
IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY
AND CONSENTS TO THE PLACING OF VENUE IN NEW YORK COUNTY OR OTHER COUNTY
PERMITTED BY LAW. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OBLIGOR HEREBY
WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, IN
ANY SUCH SUIT, ACTION OR PROCEEDING ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT
TO THE JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS
BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR
PROCEEDING IS IMPROPER, OR THAT ANY CREDIT DOCUMENT OR INSTRUMENT REFERRED TO
HEREIN MAY NOT BE LITIGATED IN OR BY SUCH COURTS. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH OBLIGOR AGREES NOT TO SEEK AND HEREBY WAIVES THE RIGHT TO
ANY REVIEW OF THE JUDGMENT OF ANY SUCH COURT BY ANY COURT OF ANY OTHER NATION OR
JURISDICTION WHICH MAY BE CALLED UPON TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT.
EXCEPT AS PROHIBITED BY LAW, EACH OBLIGOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO
A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH ANY CREDIT DOCUMENT.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 8.1. Nothing in
this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
Section 8.11. Headings. Article and Section headings and the
table of contents (if applicable) used herein are for convenience of reference
only, are not part of this Agreement and shall not affect the construction of,
or be taken into consideration in interpreting, this Agreement.
Section 8.12. Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. Delivery of an executed counterpart of a
signature page of this Agreement or of any other Credit Document by telecopy
shall be effective as delivery of a manually executed counterpart of this
Agreement or of such other Credit Document.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
Signature Page to Credit Agreement - Borrower
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
BORROWER:
TIMEPAYMENT CORP. LLC
By:
--------------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Signature Page to Credit Agreement - Lender
LENDER:
ACORN CAPITAL GROUP, LLC
By:
--------------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Notice Address:
--------------
Two Xxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxx
Telephone: 000.000.0000
Facsimile: 203.861.4250
State of_______________________)
) ss.
County of______________________)
On June _____, 2004, before me, a Notary Public, personally appeared
__________________, personally known to me or proved to me on the basis of
satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged to me that she executed the same in her authorized
capacity, and that by her signature on the instrument the person, or the entity
upon behalf of which the person acted, executed the instrument.
Witness my hand and official seal. SEAL
Signature:
----------------------------------
Commonwealth of Massachusetts )
) ss.
County of______________________)
On June _____, 2004, before me, a Notary Public, personally appeared
__________________, personally known to me or proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s)
on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
Witness my hand and official seal. SEAL
Signature:
----------------------------------
SCHEDULE 2.7
FORM OF JOINDER TO CREDIT AGREEMENT
[Date of Joinder to Credit Agreement]
Acorn Capital Group, LLC
Two Xxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxx
Re: Credit Agreement dated as of June 10, 2004 (as amended, supplemented,
replaced or otherwise modified from time to time, the "Credit Agreement")
between TimePayment Corp, LLC ("Borrower") and Acorn Capital Group, LLC
("Lender")
Ladies and Gentlemen:
1. Reference is made to the above-captioned Credit Agreement. Capitalized terms
not otherwise defined herein are used herein with the meanings assigned thereto
in the Credit Agreement.
2. As of the date hereof the conditions set forth in Section 2.7 of the Credit
Agreement have been satisfied, with the result that (1) the Conditional Guaranty
of the undersigned, Microfinancial Incorporated, a Massachusetts corporation and
Borrower' sole member ("Parent"), and Leasecomm Corporation, a Massachusetts
corporation ("Leasecomm"), in favor of Lender is effective as of the date hereof
and (b) each of Parent and Leasecomm is required to execute this Joinder to
Credit Agreement (this "Joinder") and thereby become a party to the Credit
Agreement as an "Obligor".
3. Therefore, by executing this Joinder, each of Parent and Leasecomm hereby
agrees to be bound by all provisions relating to an Obligor under, and as
defined in, the Credit Agreement. Parent and Leasecomm further agree, as of the
date first above written, that each reference in the Credit Agreement or any
other Credit Document to an "Obligor" or a "Guarantor" shall also mean and be a
reference to Parent and Leasecomm.
4. This Joinder shall be governed by and construed in accordance with the laws
of the State of New York.
IN WITNESS WHEREOF, Parent and Leasecom have caused this Joinder to be
executed by its duly authorized officer as of the day and year first above
written.
MICROFINANCIAL INCORPORATED
By:____________________________
Name:
Title:
LEASECOMM CORPORATION
By:_____________________________
Name:
Title:
