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EXHIBIT 10.15
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LOAN AND SECURITY AGREEMENT
DATED AS OF JULY 1, 1999
BETWEEN
CCI/TRIAD FINANCIAL HOLDING CORPORATION
AS BORROWER
AND
IFC CREDIT CORPORATION
AS LENDER
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$15,000,000
DISCOUNT LOAN FACILITY
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LOANS SECURED BY
LEASE RECEIVABLES, LEASES, AND
LEASED EQUIPMENT
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This LOAN AND SECURITY AGREEMENT is entered into as of July 1, 1999
between CCI/TRIAD FINANCIAL HOLDING CORPORATION ("SPE"), a California
corporation, as borrower, and IFC CREDIT CORPORATION, an Illinois corporation,
as lender ("Lender").
INTRODUCTION
A. Both SPE and Triad Systems Financial Corporation ("TSFC"), a
California corporation, are wholly owned subsidiaries of COOPERATIVE COMPUTING,
INC. d/b/a Triad Systems and CCI/Triad ("CCI/Triad"), a Delaware corporation.
CCI/Triad manufactures and TSFC purchases from CCI/Triad and leases to TSFC's
customers computer systems and software, all in accordance with an Operating and
Support Agreement among CCI/Triad, TSFC, SPE, and Lender.
B. TSFC has transferred by sale to SPE certain receivables due TSFC
under the leases, and TSFC has by an agreement substantially in the form of the
Sales, Assignment, and Security Interest Agreement attached hereto as Exhibit F
("Sale and Assignment Agreement") assigned to SPE certain of its rights and
interests in the Leases, computer systems, software, and equipment.
C. Lender engages in the business of equipment lease financing.
D. Lender is willing to lend to SPE amounts equal to the discounted
value of payments receivable under certain of the customer leases of computer
systems and software, upgrades and add-ons, or other equipment, and SPE is
willing to grant a security interest in the lease payments, the leased computer
systems and software, or other equipment and the interest of TSFC in the leases,
all subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the parties hereto
agree as follows;
1. DEFINITIONS
When used in capitalized form herein, the following terms shall have
the meanings indicated:
1.1 "Anniversary Date" - September 1, 2000.
1.2 "Business Day" - any day other than a Saturday, Sunday, or a
public or bank holiday or the equivalent for banks generally under the laws of
the State of Illinois.
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1.3 "Closing Date" - with respect to any Loan, the date on which
Lender makes a Loan to SPE under this Agreement.
1.4 "Collateral" - as defined in Section 6.1.
1.5 "Discount Facility" - the credit facility provided by Lender to
SPE pursuant to Section 2.
1.6 "Discount Facility Loan" - a Loan made by Lender to SPE under
the Discount Facility.
1.7 "Discount Facility Rate" - with respect to a Discount Facility
Loan, will be determined from time to time by mutual agreement of SPE and
Lender.
1.8 "Discount Facility Loan Value" - of a Lease at the time a
Discount Facility Loan is made, a percentage, to be determined by mutual
agreement between the parties, of each payment of Rent remaining unpaid under
the Lease at that time (but excluding any past due Rent), discounted from the
date each such payment is due to such time at the Discount Facility Rate with
respect to such Discount Facility Loan.
1.9 "Effective Date" - the date of this Agreement.
1.10 "Eligible Equipment" - new or remanufactured Equipment,
including but not limited to, computer systems and related components, software
and accessories manufactured or sold by CCI/Triad, having a Discount Facility
Loan Value of not less than One Thousand Dollars ($1,000.00), subject to an
Eligible Lease and not subject to a security interest or other encumbrance in
favor of any corporation, firm, or other person other than a security interest
in favor of Lender arising under this Agreement or a Security Supplement.
1.11 "Eligible Lease" - a full pay out net lease, substantially in
the form of Exhibit A, naming TSFC as lessor, that:
(a) has a noncancelable term of not less than 12 months
nor more than 84 months, excluding renewals or
extensions;
(b) provides for (i) Rent and casualty payments in
amounts sufficient to repay to Lender the Loan made
in respect of such lease and interest on such Loan at
the Discount Facility Rate, (ii) interest on late
payments under such lease at a rate not less than the
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Late Payment Rate, and (iii) all payments to be made
in United States dollars;
(c) provides that the lessor's right to receive payment
is absolute and not contingent upon the fulfillment
of any condition whatsoever other than the passage of
time;
(d) covers only Eligible Equipment subject to a security
interest in favor of Lender and includes all hardware
and any other systems required to operate any
included software;
(e) is not subject to any conditions, obligations of, or
any right or offset, counterclaim, or defense by, the
Lessee thereunder;
(f) is a Lease under which the Lessee is not in default;
and
(g) is in all other respects satisfactory to Lender.
1.12 "Equipment" - any and all Eligible Equipment leased to a Lessee
by TSFC under a Lease, located in the United States and made subject to a
security interest in favor of Lender by the execution and delivery by SPE to
Lender of a Security Supplement specifically describing such Eligible Equipment,
together with (i) all accessions, replacements, parts, repairs, fixtures, and
accessories incorporated therein or affixed thereto under the Lease and (ii) all
upgrades, add-ons, and additions incorporated therein or affixed thereto.
1.13 "Event of Default" - as defined in Section 11.1.
1.14 "Excess Proceeds" - of an item of Equipment, any excess of the
Remarketing Proceeds thereof over the sum of (i) the principal amount due on the
next Loan Repayment Date on the Discount Facility Loan applicable to the Lease
covering such Equipment plus (ii) all accrued and unpaid principal and interest
on such Loan plus (iii) the present value of all principal payments due on such
Loan after the next Loan Repayment Date, discounted at the same rate as Lender
has borrowed funds to make such Loan.
1.15 "Guaranty" - a guaranty, in the form of the guaranty that
comprises a part of Exhibit A, executed and delivered by a corporation, firm, or
other person (a "Guarantor") satisfactory to Lender and assigned to Lender as
security by the execution and delivery by SPE of a Security Supplement
specifically describing such guaranty.
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1.16 "Invoice Price" - with respect to any Equipment, the aggregate
invoice prices of CCI/Triad, as manufacturer or seller, net of taxes,
transportation cost, delivery cost, and any acquisition or other fees payable by
TSFC to CCI/Triad or any of its affiliates.
1.17 "Late Payment Rate" - with respect to a Discount Facility Loan,
two percent (2%) over the applicable Discount Facility Rate.
1.18 "Lease" - an Eligible Lease duly executed by the Lessee,
approved by Lender and assigned to Lender as security by the execution and
delivery by SPE to Lender of a Security Supplement specifically describing such
Eligible Lease.
1.19 "Lease Proceeds" - with respect to any Lease, all payments due
from or with respect to the Lessee, such Lease, or the Equipment subject to such
Lease, including, but not limited to, all Rent and any security deposits held by
TSFC, all casualty, early termination, purchase option, and indemnity payments,
and all insurance and sales or lease proceeds of and requisition payments for
the Equipment subject to such Lease.
1.20 "Lessee" - a United States-domiciled corporation, partnership,
or sole proprietorship that is the obligor for payment of Rent under a Lease.
1.21 "Loan" - any advance of funds to SPE by Lender under this
Agreement as evidenced by a Security Supplement.
1.22 "Loan Repayment Amount" - with respect to a Loan at any time,
the aggregate unpaid principal of, and accrued interest (including any interest
accrued at the Late Payment Rate) on, such Loan.
1.23 "Loan Repayment Date" - with respect to any Loan, the 20th day
of each calendar month, commencing with the first such day to occur after the
Closing Date for such Loan.
1.24 "Net Loss Pool" - as defined in Section 8.4.
1.25 "Obligations" - as defined in Section 6.1.
1.26 "Operating Agreement" - the Operating and Support Agreement
entered into among CCI/Triad, TSFC, SPE, and Lender, substantially in the form
of Exhibit B attached hereto.
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1.27 "Operative Documents" - this Agreement, each Security
Supplement, the Sale and Assignment Agreement, and the Operating Agreement.
1.28 "Prepayment Fee" - a fee equal to two percent (2%) of then
unpaid principal amount due Lender under any Lease that is prepaid pursuant to
Section 3.10. 1.29 "Proceeds" - of an item of Equipment, the sum of (i) the (a)
gross cash proceeds of sale of such item or (b) aggregate Rent obligation under
a re-lease of such item discounted at the applicable Discount Facility Rate, as
the case may be, plus (ii) any past due Rent and any other termination amount
paid by the Lessee, or by SPE on behalf of the Lessee, plus (iii) any security
deposit held by TSFC that reduces the Lessee's lease termination payment.
1.30 "Remarketing Expenses" - with respect to an item of Equipment,
the sum of (i) costs of repossessing, transporting, refurbishing, and
remarketing the item pursuant to Section 10, plus (ii) any applicable sales,
use, or similar taxes imposed in connection with the sale or re-lease of such
item and not paid by the purchaser or Lessee, plus (iii) in the case of a Lease
default, enforcement and collection costs.
1.31 "Remarketing Proceeds" - with respect to an item of Equipment,
the Proceeds minus the Remarketing Expenses.
1.32 "Rent" - under a Lease, the periodic charges specified in the
Lease for the use of the Equipment, excluding casualty or early termination,
purchase option and indemnity payments, and any amounts a Lessee may be required
to pay for taxes, license fees, assessments, or maintenance.
1.33 "Security Supplement" - a supplement hereto substantially in
the form of Exhibit "C", executed and delivered to Lender by SPE, describing
Equipment and Leases and subjecting the same to the security interest in favor
of Lender arising under Section 6.
1.34 "Standard Cost" - with respect to an item of Equipment at any
time, an amount equal to fifty percent (50%) of the Loan Repayment Amount of the
Lease calculated on the Loan Repayment Date.
1.35 "Tangible Net Worth" of TSFC - the gross book value of TSFC's
consolidated tangible assets less (a) reserves applicable thereto and (b) all of
TSFC's consolidated liabilities (including accrued and deferred income taxes),
other than indebtedness subordinated to TSFC's indebtedness to Lender in a
manner satisfactory to Lender. All determinations of the characterization of
assets and of the values comprising "Tangible Net Worth" shall be made in
accordance with generally accepted accounting principles consistently applied.
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1.36 "CCI/Triad" - Cooperative Computing, Inc., a Delaware
corporation, or any successor entity resulting from the sale or transfer of its
stock to another corporation, resulting from its merger, acquisition,
consolidation, or dissolution, or resulting from the transfer of all or
substantially all of its assets.
2. THE DISCOUNT FACILITY
2.1 Total Facility. Subject to the terms and conditions hereof, from
time to time, from (and including) the Effective Date to and excluding the
Anniversary Date, Lender may with respect to each Lease make a Loan to SPE in a
principal amount equal to the Discount Facility Loan Value; provided, however,
the aggregate principal amount of all Loans outstanding at any time shall not
exceed $15,000,000, and provided further that none of TSFC, SPE, nor CCI/Triad
suffer a material adverse financial change in its business or financial
condition during the term of this Agreement.
2.2 Interest Calculation. Interest on the Discount Facility Loans
shall be computed on the basis of a 360-day year of 12-30 day months.
2.3 Minimum Loan. The aggregate principal amount of the Loans made
on any Closing Date shall be not less than $1,000,000.
2.4 Payments. Lender shall pay the proceeds of the Loans in
immediately available funds on the Closing Dates for such Loans. SPE shall make
each payment due under this Agreement to Lender or Lender's assignee in
immediately available funds to the account or address specified by Lender or
such assignee.
3. THE LOANS
3.1 Requests for Loans. No later than ten (10) Business Days before
the Closing Date relating to a Discount Facility Loan requested by SPE, SPE
shall submit to Lender Eligible Leases, together with lease schedules and other
supporting documentation and the following:
(a) the name of each Lessee under such Eligible Leases,
together with (i) unless previously submitted to
Lender, financial statements, to the extent
available, of each such Lessee, if the equipment
value is over Fifty Thousand Dollars ($50,000.00), as
of the end of such Lessee's most recent fiscal year,
and any interim financial statements of such Lessee
readily available to
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TSFC, SPE, or CCI/Triad, all in form and substance
satisfactory to Lender, (ii) the payment history of
such Lessee under other leases entered into between
such Lessee and TSFC, and (iii) such additional
financial information pertaining to any Lessee as
Lender may request;
(b) the Rent schedule for each such Eligible Lease; and
(c) such other relevant information as Lender shall
reasonably require.
3.2 Approvals. Within ten (10) Business Days of receipt of all
information required to be submitted pursuant to Section 3.1, Lender shall
advise SPE in writing if, in its sole and unlimited discretion, Lender approves
the proposed Eligible Lease and, if Lender requires the credit support of a
Guarantor, the credit of the proposed Guarantor. If Lender fails to give such
advice within such ten (10) day period, Lender shall be deemed to have declined
such credit. Lender may revoke any credit approval prior to making the Discount
Facility Loan relating to a proposed Lease if, in Lender's judgment, the
proposed Lessee or Guarantor suffers a material adverse change in its business
or financial condition. Lender shall promptly return all credit packages to SPE
relative to any rejected lease transactions. Lender shall have no duty to
communicate rejections to proposed Lessees.
3.3 Disbursement of Discount Facility Loan. Subject to satisfaction
of the conditions precedent set forth in Section 4 and Section 5, Lender shall
make Discount Facility Loans on the Closing Date proposed in accordance with
this Section 3 to SPE with respect to Leases approved pursuant to Section 3.2.
The Discount Facility Loans made on the Closing Date shall be in an aggregate
principal amount equal to the aggregate Discount Facility Loan Values of the
Eligible Leases submitted by SPE pursuant to Section 3.1 and approved by Lender
pursuant to Section 3.2. If, for any reason, a Discount Facility Loan is not
made on a proposed Closing Date notwithstanding compliance by SPE with Sections
3.1, 4, and 5, the Closing Date may be rescheduled to a date, within ten (10)
Business Days of such Closing Date, mutually agreed upon in writing by Lender
and SPE.
3.4 Loan Payments and Amortizations. Each Discount Facility Loan
shall bear interest at the Discount Facility Rate determined for such Loan and
shall be evidenced by a Security Supplement that shall set forth the repayment
terms with respect to such Discount Facility Loan in a manner satisfactory to
Lender and shall identify the Lease(s) with respect to which such Discount
Facility Loan is made. Principal of, and accrued interest on, the Discount
Facility Loans shall be payable in accordance with the Security
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Supplement for such Discount Facility Loan. Each Discount Facility Loan shall be
amortized by the Lease Proceeds received by Lender with respect to the Leases
financed by such Loan, with such Lease Proceeds applied first to accrued and
unpaid interest, then to any other amounts due under such Loan, and then to
principal.
3.5 Upgrades and Additions. TSFC may, from time to time, agree with
a Lessee under a Lease that the Equipment subject to such Lease shall be
upgraded or that additional Eligible Equipment should be added to such Lease. If
TSFC and such Lessee amend such Lease to increase the Rent payable thereunder in
consideration of such upgrade or addition, SPE may request that Lender finance
the additional Lease Proceeds arising under such amendment (the "Lease
Amendment") attributable to such increase in Rent. Not later than ten (10)
Business Days after such request, Lender shall give SPE written advice as to
whether Lender, in its sole discretion, has elected to finance such additional
Lease Proceeds. If Lender fails to give such advice within such ten (10) day
period, Lender shall be deemed to have declined to finance such additional Lease
Proceeds and shall so advise SPE in writing. If Lender agrees to finance such
additional Lease Proceeds, Lender shall, subject to satisfaction of the
conditions precedent set forth in Sections 4 and 5, make a Discount Facility
Loan in an amount equal to the aggregate increase in Rent effected by the Lease
Amendment that remains unpaid as of the applicable Closing Date, but excluding
any such increase in Rent that is past due, discounted at the Discount Facility
Rate determined on the applicable Closing Date. The Closing Date with respect to
such Discount Facility Loan shall be a date agreed upon in writing by Lender and
SPE. If Lender agrees to make such a Discount Facility Loan, the Lease Amendment
shall be considered a "Lease" for all purposes of this Agreement (including,
without limitation, Section 5). If Lender declines to finance a Lease Amendment
and if SPE elects to finance such upgrades or additions through a source other
than Lender, SPE shall either prepay Lender in accordance with Section 3.6 or
substitute an Eligible Lease satisfactory to Lender for such existing Lease. If
Lender declines to finance a Lease Amendment and SPE elects not to substitute
the existing Lease and to finance the Lease Amendment itself, SPE agrees that
any security interest granted to it by Lessee shall be subject to and
subordinate to Lender's security interest in the applicable Equipment, as
upgraded, and the applicable Lease, as amended.
3.6 Optional Prepayment: Lender Refusal to Finance Upgrades or
Additions. If Lender elects not to finance increased Lease Proceeds related to
upgrades or additions pursuant to Section 3.5 and SPE elects to finance with
another source, SPE shall give Lender not less than ten (10) days prior written
notice of its requirement to prepay the Discount Facility Loan made to finance
the Lease in respect of which the upgrade or addition has been made. On the
first Loan Repayment Date to occur after the ten (10) day notice period has
elapsed, SPE shall pay to the Lender the sum of (i) the principal amount due on
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such Loan Repayment Date on the Discount Facility Loan applicable to the Lease
covering such Equipment plus (ii) all accrued and unpaid principal and interest
on such Loan plus (iii) the present value of all principal payments due on such
Loan thereafter, discounted at the same rate as Lender has borrowed funds to
make such Loan.
3.7 Mandatory Prepayment: Voluntary Termination of Lease. If a
Lessee voluntarily terminates a Lease before its scheduled expiration, SPE shall
prepay the Discount Facility Loan made to finance such Lease on the Loan
Repayment Date immediately following such termination. On such Loan Repayment
Date, SPE shall pay to Lender the sum of (i) the principal amount due on such
Loan Repayment Date on such Loan plus (ii) all accrued and unpaid principal and
interest on such Loan plus (iii) the present value of all principal payments due
on such Loan thereafter, discounted at the same rate as Lender has borrowed
funds to make such Loan.
3.8 Mandatory Prepayment: Casualty. If any Equipment subject to a
Lease is lost or damaged and cannot be repaired or replaced with substantially
similar Equipment by the first Loan Repayment Date occurring not less than
thirty (30) days after such loss or damage, SPE shall prepay the Discount
Facility Loan made to finance such Lease on such Loan Repayment Date. On such
Loan Repayment Date, SPE shall pay to Lender the sum of (i) the principal amount
due on such Loan Repayment Date on such Loan plus (ii) all accrued and unpaid
principal and interest on such Loan plus (iii) the present value of all
principal payments due on such Loan thereafter, discounted at the same rate as
Lender has borrowed funds to make such Loan.
3.9 Mandatory Prepayment: Rent Default. If any Rent under any Lease
financed or refinanced by a Discount Facility Loan shall remain unpaid for a
period of ninety (90) days from the date when due, SPE shall pay to Lender the
sum of (i) the principal amount due on such Loan Repayment Date on such Loan
plus (ii) all accrued and unpaid principal and interest on such Loan plus (iii)
the present value of all principal payments due on such Loan thereafter,
discounted at the same rate as Lender has borrowed funds to make such Loan,
subject to the Net Loss Pool in Section 8.4.
3.10 No Other Prepayments Permitted. No Discount Facility Loan may
be prepaid except as otherwise expressly provided in the Agreement unless SPE
pays on the next Loan Repayment Date the sum of (i) the principal amount due on
such Loan Repayment Date on such Loan plus (ii) all accrued and unpaid principal
and interest on such Loan plus (iii) the present value of all principal payments
due on such Loan thereafter, discounted at the same rate as Lender has borrowed
funds to make such Loan, together with the Prepayment Fee.
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3.11 Limited Recourse. Lender agrees that, except as provided in
this Section 3.11, Sections 3.6, 3.7, 3.8, 3.9, 3.12, 8, and 11, and Section 10
with respect to Remarketing Expenses, each Discount Facility Loan is nonrecourse
to SPE and that the repayment of each Discount Facility Loan shall be obtained
solely from the Lease Proceeds of the Leases, Proceeds of the Equipment, and the
other collateral in which Lender has been granted a security interest pursuant
to Section 6; provided, however, without limiting the foregoing exceptions, that
SPE shall be jointly and severally liable (without any limitation on recourse)
with TSFC (i) if (a) either TSFC or SPE shall fail to pay over to Lender any
Lease Proceeds received by TSFC or SPE and due Lender hereunder, in which case
SPE and TSFC shall be liable for the amount of the Lease Proceeds not so paid
over plus interest accrued thereon at the Late Payment Rate from the date the
Lease Proceeds were required to be paid over to Lender, or (b) the fees and
payments paid by a Lessee to SPE or TSFC upon termination of a Lease are less
than the sum of (1) the principal amount due on the next Loan Repayment Date on
the Discount Facility Loan applicable to such Lease plus (2) all accrued and
unpaid principal and interest on such Loan plus (3) the present value of all
principal payments due on such Loan thereafter, discounted at the same rate as
Lender has borrowed funds to make such Loan and (ii) for all payments required
to be made pursuant to Section 3.8, whether or not insurance proceeds received
by SPE or TSFC are at least equal to such payments.
3.12 Full Recourse. Notwithstanding anything set forth herein,
including, without limitation, any limitation on recourse against SPE, Discount
Facility Loans in the aggregate principal amount of $3,000,000 at any one time
outstanding may be with recourse to SPE. Such Loans shall be secured by Leases
that are Eligible Leases except that the creditworthiness of the Lessee may not
otherwise be acceptable to Lender. A Discount Facility Loan with recourse shall
be designated as such by mutual written agreement of Lender and SPE, as the case
may be, prior to the Closing Date of such Loans. Upon occurrence at any time of
any default under such Leases, SPE shall repay the Discount Facility Loan made
to finance such Leases on the Loan Repayment Date occurring not more than thirty
(30) days after such default. On such Loan Repayment Date, SPE shall pay the sum
of (i) the principal amount due on such Loan Repayment Date on such Loan plus
(ii) all accrued and unpaid principal and interest on such Loan plus (iii) the
present value of all principal payments due on such Loan thereafter, discounted
at the same rate as Lender has borrowed funds to make such Loan. The amounts
paid to Lender by SPE pursuant to this paragraph shall not be charged against
the Net Loss Pool.
4. CONDITIONS PRECEDENT TO THE INITIAL LOAN
Lender will not make the initial Loan hereunder until it has
received
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all of the following, in form and substance satisfactory to Lender:
4.1 Evidence of Authority of SPE. Resolutions of the Board of
Directors of SPE certified by the secretary or assistant secretary of SPE
authorizing the execution, delivery, and performance of each of the Operative
Documents to which SPE is a party and any other document required hereunder,
together with an incumbency certificate with respect to the officer or officers
of SPE executing any of such Operative Documents and any document required
hereunder.
4.2 Evidence of Authority of CCI/Triad. Resolutions of the Board of
Directors of CCI/Triad certified by the secretary or assistant secretary of
CCI/Triad authorizing the execution, delivery, and performance of the Operating
Agreement and any other document required thereunder, together with an
incumbency certificate with respect to the officer or officers of CCI/Triad
executing the Operating Agreement and any document required thereunder.
4.3 Evidence of Authority of TSFC. Resolutions of the Board of
Directors of TSFC certified by the secretary or assistant secretary of TSFC
authorizing the execution, delivery, and performance of each Operative Document
to which TSFC is a party and any other document required thereunder, together
with an incumbency certificate with respect to the officer or officers of TSFC
executing any of such Operative Documents and any document required thereunder.
4.4 Legal Opinion. The legal opinion of the General Counsel of
CCI/Triad, in form and substance satisfactory to Lender.
4.5 Operating Agreement. The Operating Agreement, duly executed by
CCI/Triad, TSFC, SPE, and Lender.
4.6 Financial Statements. The most recent consolidated financial
statements of Cooperative Computing Holding Company, Inc., which shall include
the results of operations of CCI/Triad and TSFC.
4.7 Insurance. Evidence of the insurance required by Section 8.3.
4.8 Agreement of Admission of Additional Secured Parties. Evidence
that the Agreement of Admission of Additional Secured Parties, in the form
previously executed by Lender has been duly executed and delivered by all of the
other parties thereto.
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5. CONDITIONS PRECEDENT TO ALL LOANS
Lender will not make any Loan hereunder (including the initial Loan)
unless on the date thereof:
5.1 Notice. SPE shall have given Lender verbal notice of each
Closing Date no later than five (5) Business Days prior to such Closing Date.
5.2 Operating Agreement. The Operating Agreement shall be in full
force and effect and no defaults or breaches shall exist thereunder as of the
applicable Closing Date.
5.3 Receipt of Certain Documents. Lender shall have received the
following, in form and substance satisfactory to Lender:
(a) Lease. An original, manually executed counterpart of
(i) each Lease financed on such Closing Date and (ii)
the related Lease Schedule substantially in the form
contained in Exhibit A, in each case duly executed by
TSFC as lessor and by the Lessee thereunder;
(b) Guaranty. If required by Lender, an original,
manually executed counterpart of each Guaranty duly
executed by the Guarantor;
(c) Financing Statements Filed Against Lessees. Evidence
of electronic filing receipts, a search report (from
Dun and Bradstreet or comparable reporting entity)
confirming the existence or copies (any of such
documentation with filing numbers and filing dates)
of duly executed and filed Uniform Commercial Code
financing statements on Form UCC-1 naming TSFC as
secured party and the Lessees under the Leases to be
financed on the Closing Date as debtors, identifying
as collateral the Equipment subject to such Leases,
and Lender as assignee thereon;
(d) Financing Statements to be Filed Against SPE. Copies
of duly executed Uniform Commercial Code financing
statements on form UCC-1, naming SPE as debtor and
Lender as secured party, and identifying as
collateral the Leases and any Guaranties and
Equipment to be assigned in sufficient number to be
filed in all jurisdictions as may be necessary, in
Lender's judgment, to perfect Lender's security
interest in such collateral, including, without
limitation, jurisdictions
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where SPE has its chief executive offices and
maintain its records in respect to the Leases;
(e) Supplement. A Security Supplement, duly executed by
SPE, relating to and describing the Lease, any
Guaranty, and the Equipment covered thereby;
(f) DELETED.
(g) Acceptance Supplement. A copy of the original
executed counterpart of the delivery and acceptance
certificate with respect to each Lease where the
Invoice Price exceeds Fifty Thousand Dollars
($50,000.00) (substantially in the form contained in
Exhibit A) containing a complete description of the
Equipment, duly executed by the Lessee thereunder;
and
(h) Evidence of Authority of Lessee. Copies of any
evidence of the authority of signers on behalf of the
Lessee to execute the Lease, including without
limitation, certificates as to resolutions,
incumbency, and any legal opinions.
(i) SPE Officer's Certificate. A certificate from a duly
authorized officer of SPE, dated as of such Closing
Date, stating that:
(i) all representations and warranties made by
SPE under this Agreement and under the other
Operative Documents are true and correct as
of the date of the certificate;
(ii) SPE is in compliance with all covenants made
under this Agreement and the other Operative
Documents;
(iii) no event has occurred and is continuing that
is, or with the passage of time or giving of
notice would be, an Event of Default or a
default under or breach of the Operative
Documents;
(iv) no material adverse change in its financial
condition has occurred since the latest
financials delivered to Lender; and
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(v) containing an express undertaking to give
immediate written notice to Lender if at any
time prior to the Anniversary Date any of
the above statements is no longer true.
(j) TSFC Officer's Certificate. A certificate from a duly
authorized officer of TSFC, dated as of such Closing
Date, stating that:
(i) all representations and warranties made by
TSFC under the Operating Agreement and the
Sale and Assignment Agreement are true and
correct as of the date of the certificate;
(ii) TSFC is in compliance with all covenants
made under the Operating Agreement and the
Sale and Assignment Agreement;
(iii) no event has occurred and is continuing that
is, or with the passage of time or giving of
notice would be, an Event of Default or a
default under or breach of the Operating
Agreement and the Sale and Assignment
Agreement;
(iv) no material adverse change in its financial
condition has occurred since the latest
financials delivered to Lender; and
(v) containing an express undertaking to give
immediate written notice to Lender if at any
time prior to the Anniversary Date any of
the above statements is no longer true.
(k) CCI/Triad Officer's Certificate. A certificate from a
duly authorized officer of CCI/Triad, dated as of
such Closing Date, stating that:
(i) all representations and warranties made by
CCI/Triad under the Operating Agreement are
true and correct as of the date of the
certificate;
(ii) CCI/Triad is in compliance with all
covenants made under the Operating
Agreement;
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(iii) no event has occurred and is continuing that
is, or with the passage of time or giving of
notice would be, an Event of Default or a
default under or breach of the Operating
Agreement;
(iv) no material adverse change in its financial
condition has occurred since the latest
financials delivered to Lender; and
(v) containing an express undertaking to give
immediate written notice to Lender if at any
time prior to the Anniversary Date any of
the above statements is no longer true.
(l) Other Documents. Such other documents, instruments or
agreements as Lender may reasonably request.
6. SECURITY AGREEMENT
6.1 Granting Clause. In order to induce Lender to make Loans from
time to time to SPE, and in order to secure (i) the prompt repayment of the
Loans, (ii) the strict performance and observance by SPE of the obligations to
be performed by it hereunder and under the other Operative Documents, and (iii)
all costs of litigation, collection, reasonable attorneys' fees, and other costs
expended or incurred in connection with the enforcement of Lender's rights
hereunder, under the other Operative Documents, and with respect to the Leases
and the Equipment (the obligations referred to in clauses (i) through (iii)
being collectively referred to as the "Obligations"), SPE hereby assigns,
pledges, and grants a continuing security interest to Lender in all of its
right, title and interest in and to the following described properties, assets,
and rights, whether now existing or hereafter acquired, and wherever located
(such properties, assets and rights collectively called the "Collateral"):
(a) each Lease (including schedules) and all of SPE's
rights thereunder, including the right to receive
payments (including Rent and security deposits) due
to SPE thereunder and the right to exercise rights
and remedies upon default;
(b) every item or component of Equipment subject to
Leases, together with (i) all accessions,
replacements, and substitutions thereto and therefor,
(ii) all upgrades, add-ons, and additions thereto and
therefor, and (iii) all of its rights in the software
and licenses related thereto;
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(c) each and every Guaranty, security interest, mortgage,
or other security securing the payment and
performance of the Lessee's obligations under the
Leases;
(d) all Lease Proceeds and Proceeds of items or
components of Equipment;
(e) all warranty and other rights SPE may have with
respect to the Leases against the manufacturer of the
Equipment; and
(f) the proceeds (whether cash or non-cash proceeds), and
products of all the properties, assets and rights
described in paragraphs (a), (b), (c), (d), and (e)
above, including without limitation all insurance
payments, whether or not Lender is the loss payee
thereof.
6.2 Appointment of Lender. If Lender assumes administration of
collection of Rent pursuant to Section 11.2, SPE hereby irrevocably appoints the
Lender as its attorney-in-fact (such power being coupled with an interest) to
do, in its sole and unlimited discretion, any or all of the following:
(a) to endorse or sign SPE's name on all checks,
collections receipts, UCCs, or other documents
related to the Collateral;
(b) to take possession of and open mail addressed to SPE
or TSFC relating to such collection and remove Rent
and proceeds and products of the Collateral;
(c) to ask, demand, collect, receive, xxx for, compound,
and give acquittance for any and all payments
assigned hereunder;
(d) to settle, adjust, or compromise any claim related to
the Collateral as fully as it could itself;
(e) to endorse its name on all checks and other
commercial paper given in payment or in part payment
thereof; and
(f) in its discretion, to file any claim or take any
other action or proceeding, either in Lender's own
name or in its name, or otherwise, that Lender may
deem
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necessary or appropriate to collect any and all sums
that may be or become due or payable in connection
with the Collateral or that may be necessary or
appropriate to protect the right, title, and interest
of Lender in and to the Collateral and the security
intended to be afforded thereby and hereby.
6.3 Further Assurances. SPE will upon written direction from Lender
and at the expense of SPE, do, execute, acknowledge, and deliver all and every
further acts, deeds, conveyances, instruments, transfers, and assurances
reasonably necessary or proper for the better assuring, conveying, assigning,
and confirming unto Lender all of the Collateral, whether now owned or hereafter
acquired, and shall not provide further assurances to any other lender that may
conflict with Lender's security interest or provide such lender with a security
interest superior to Lender's without first giving to Lender the same further
assurances. Notwithstanding the foregoing, the Lender shall reimburse SPE for
one-half of the costs of the Uniform Commercial Code financing statements
obtained pursuant to Section 5.3(c) relating to each Lease of Equipment
aggregating $10,000 or more. Such reimbursement shall occur concurrently with
the funding of the Discount Facility Loan relating to such Lease.
6.4 No Obligations Assumed by Lender. Lender does not assume, and
its interest in the Collateral shall not be subject to, any obligation or
liability of TSFC under any Lease or any other agreement between SPE, TSFC, or
CCI/Triad and a Lessee, any duty to collect money due thereunder or to enforce
collection thereof. Lender assumes no responsibility, obligation, or liability
for any representation, warranty, or obligation, express or implied, made by any
agent or employee of SPE, TSFC, or CCI/Triad to a Lessee in connection with any
Lease.
6.5 Release of Security Interest. Upon payment in full of all
amounts due on a Loan, and provided no Event of Default shall have occurred and
be continuing, Lender agrees to (i) release its security interest in the Lease
financed by such Loan and the Equipment subject thereto; (ii) deliver to SPE
such other documents relating to released Leases and Equipment prepared by SPE
as SPE may reasonably request, and (iii) deliver the foregoing items within ten
(10) days to SPE after receipt of termination payment.
6.6 Final Release by Lender. Upon repayment in full to Lender of all
Loans, and performance of all other Obligations, Lender will release its
security interest in the Collateral in the manner provided in Section 6.5.
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7. ADMINISTRATION
7.1 Authorization to Collect Rent. Until such time as there is an
Event of Default hereunder or SPE's authority to collect Lease Proceeds is
terminated pursuant to Section 11, SPE is authorized to and shall collect Lease
Proceeds from Lessees.
7.2 Collections. SPE will undertake such collections as an
independent contractor and not as Lender's agent, and in connection therewith
will at its sole cost and expense diligently perform all billing and collecting
of Lease Proceeds due and to become due with respect to Leases and Equipment
financed under Discount Facility Loans. SPE shall xxxx Lessees in accordance
with its standard billing procedures, provided that each invoice sent with
respect to any Lease subject to this Agreement shall segregate the amount due
thereunder for Rent, taxes, and any other amounts due. SPE shall not modify the
interest rate or lease term of any Lease without the prior written consent of
Lender.
7.3 Remittances. SPE shall, on or before the Loan Repayment Date of
each month, make payment to Lender of the amount due on each Discount Facility
Loan on such date regardless of whether or not any Rent under applicable Leases
shall have been collected by SPE. SPE's obligation to make remittances pursuant
to this Section 7.3 if all or a part of Rent is not received shall cease and be
of no further effect at such time as SPE shall have no further liability under
the provisions of Section 8.4 of this Agreement. Nothing herein shall limit
SPE's obligation to remit Lease Proceeds actually received on each Loan
Repayment Date to the extent that advance payments have not previously been made
prior to such Loan Repayment Date with respect to such Lease Proceeds.
7.4 Lease Receivables Statements. As soon as available, but no later
than the 20th day of each month, SPE shall cause TSFC to deliver to Lender a
list of all Leases then outstanding and a statement showing the aging of
receivables under and payments and collections received under such Leases, both
being complete and correct.
7.5 Net Loss Pool Statements. On the last Business Day of each
January, April, July, and October, SPE shall cause TSFC to provide Lender with a
quarterly statement as of such date of the Net Loss Pool described in Section
8.4, in the form attached hereto as Exhibit E.
7.6 Account Status Statements. As soon as available, but in any
event within 30 days of such change, SPE shall cause TSFC to deliver to Lender
any changes in account status for any Leases then outstanding that SPE or TSFC
becomes aware of from time to time. Account status shall be defined, but not
limited to, changes in Lessee billing address, equipment locations, equipment,
and legal name.
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8. INDEMNITIES, INSURANCE, FIRST LOSS
8.1 Indemnities. Notwithstanding anything set forth herein,
including, without limitation, any limitation on recourse against SPE, SPE shall
indemnify Lender and hold it safe and harmless from and against any and all
losses, claims, actions, suits, proceedings, costs, expenses (including
reasonable attorneys' fees), damages, and liabilities ("Indemnified Amount")
(other than Indemnified Amounts arising from or pertaining to the gross
negligence or willful misconduct by Lender) that may at any time be made,
brought, incurred, assessed, or adjudged against Lender arising from or
pertaining to:
(a) the use, maintenance, lease or operation of the
Equipment, including any bodily injury to persons or
damage or destruction of property;
(b) breach of any covenant or warranty made by SPE, TSFC,
or CCI/Triad relating to any Equipment or Lease or
maintenance of any Equipment, including qualification
of any Equipment for any tax benefit;
(c) any claim, action, or proceeding involving patent or
trademark infringement or copyright or trade secret
violations relating to the Equipment (including any
interest or penalty), whether or not such claim,
action, or proceeding involves a claim of
infringement or a combination or design patent;
(d) failure of Lender, for whatever reason, to have
obtained a first priority perfected purchase money
security interest in and lien on the Collateral,
including, without limitation, the Leases and the
Equipment, whether or not (i) the Equipment is deemed
to be an asset of a Lessee as the result of a Lease
being held to be a security agreement rather than a
true lease or (ii) Uniform Commercial Code financing
statements on form UCC-1 were filed against a Lessee
with respect to the Equipment under Section 5.3 (c);
(e) any misrepresentation made by any agent or employee
of SPE, TSFC, or CCI/Triad in the course of
negotiations regarding any Collateral;
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(f) any breach of any warranty or covenant, or any
misrepresentation, of SPE, TSFC, or CCI/Triad in any
Lease, any Operative Document or any certificate of
an officer of SPE, TSFC, or CCI/Triad delivered in
accordance therewith;
(g) failure of any Lease or Equipment to comply with
applicable laws, regulations or contractual
specifications or warranties, or to be an Eligible
Lease or Eligible Equipment, as the case may be;
(h) any dispute, claim, offset, or defense of any Lessee
(other than payment by, or discharge in bankruptcy
of, such Lessee) to the payment of any Lease
Proceeds;
(i) Lender having received from TSFC only a fax copy
(rather than the original, manually executed copy) of
any Lease or any Guaranty;
(j) failure of SPE, TSFC, or CCI/Triad to pay when due
any taxes for which any of them is liable; and
(k) any wrongful or negligent acts or omissions of SPE,
its agents or assigns, in carrying out SPE's
obligations under Section 7 or Section 10.
All of the indemnities set forth in this Section 8.1 shall survive
the cancellation or termination of this Agreement.
8.2 Indemnity Payment. Upon the occurrence of any of the events set
forth in Section 8.1, SPE unconditionally agrees to pay Lender, upon written
demand, the Indemnified Amount.
8.3 Insurance. With respect to all Equipment, SPE shall cause TSFC
to maintain in full effect, and shall deliver to Lender evidence of, (a)
liability insurance, including all-risk insurance, with a combined single limit
of at least Five Hundred Thousand Dollars ($500,000.00) per occurrence, naming
Lender as additional insured, (b) property damage insurance on all Equipment,
naming Lender as a loss payee, in an amount equal to actual cash value or
replacement value, with a deductible of not more than Two Hundred Thousand
Dollars ($200,000.00) per year for all Equipment and (c) such other insurance as
is usual in the business carried on by SPE, TSFC, and CCI/Triad, which insurance
shall be satisfactory to Lender as to amount, form, nature, and carrier.
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8.4 First Loss Provision. If any Rent under any Lease financed or
refinanced by a Discount Facility Loan shall remain unpaid for a period of
ninety (90) days from the date when due, SPE shall, on the next succeeding Loan
Repayment Date, upon written demand by Lender, pay to Lender the sum of (i) the
principal amount due on such Loan Repayment Date on such Loan plus (ii) all
accrued and unpaid principal and interest on such Loan plus (iii) the present
value of all principal payments due on such Loan thereafter, discounted at the
same rate as Lender has borrowed funds to make such Loan. The liability of SPE
under this Section 8.4 on any Loan Repayment Date shall not exceed (i) ten
percent (10%) of the aggregate initial principal amount of Loans (excluding full
recourse Loans made under Section 3.12) made under this Agreement as of such
Loan Repayment Date plus (ii) the aggregate Standard Cost of all Equipment
remarketed pursuant to Section 10 as of such Loan Repayment Date minus (iii) the
aggregate Loan Repayment Amounts paid by SPE to Lender pursuant to this Section
8.4 with respect to Discount Facility Loans as of such Loan Repayment Date minus
(iv) the aggregate of all cure amounts paid by SPE to Lender on behalf of
Lessees with respect to Leases financed by Discount Facility Loans that Lender
has demanded to be repaid under this Section 8.4 on such Loan Repayment Date to
the extent SPE has been unable to collect such amounts from such Lessees as of
such Loan Repayment Date ( the "Net Loss Pool"). The method of determining this
amount is described in Exhibit E. Lender's rights under this Section 8.4 shall
be cumulative and in addition to all other rights to receive payment of the
Discount Facility Loans pursuant to this Agreement. If, at any time, SPE's
liability under this Section 8.4 with respect to Leases financed by a Discount
Facility Loan shall have been reduced to zero, SPE shall thereafter have no
liability under this Section 8.4 with respect to that Discount Facility Loan.
8.5 Excess Proceeds. If, on any Loan Repayment Date, all or any
portion of the amount due with respect to any Discount Facility Loan shall not
have been paid to Lender due to the limitation on the liability of SPE set forth
in Section 8.4 and SPE thereafter realizes Excess Proceeds with respect to any
Equipment, the previously unpaid portion of the sum of (i) the principal amount
due on such Loan Repayment Date on such Loan plus (ii) all accrued and unpaid
principal and interest on such Loan plus (iii) the present value of all
principal payments due on such Loan thereafter, discounted at the same rate as
Lender has borrowed funds to make such Loan shall be promptly paid by SPE to
Lender to the extent of such Excess Proceeds.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS
SPE represents, warrants and covenants that:
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9.1 Due Organization. CCI/Triad, SPE and TSFC are corporations duly
organized and in good standing under the laws of the states of their respective
incorporations, and each is duly qualified or otherwise authorized to do
business wherever necessary to carry on its present business and operations and
to perform its respective obligations under each Operative Document and each
Lease to which it is a party.
9.2 Authority. Each of CCI/Triad, SPE and TSFC have the full power,
authority, and legal right to enter into and perform its obligations under each
Operative Document to which it is a party.
9.3 Principal Place of Business. As to each of SPE and TSFC,
respectively, its chief executive office is in Livermore, California and the
office where it maintains its records concerning the Collateral is in Austin,
Texas, and it will not change such principal place of business or remove from
such place where it maintains its records such records or any other records
relating to the Collateral or any Loan without at least thirty (30) days prior
written notice to Lender.
9.4 Binding Obligations. Each Operative Document has been duly
authorized and upon execution and delivery will constitute legal, valid, and
binding obligations enforceable against it, TSFC, and CCI/Triad in accordance
with the terms thereof.
9.5 Approvals and Consents. No stockholder approval, or approval or
consent of any trustee or holder of any indebtedness or obligation, or
authorization, consent, approval, or license by, exemption from or registration
with, any court or governmental department, commission, board, agency, or
instrumentality, domestic or foreign, is necessary in connection with the
execution, delivery, and performance of obligations other than Lender's under
the Operative Documents, and no consent of any owner, lessor, or mortgagee of
premises where any Equipment is located is needed to permit Lender or TSFC to
enforce the rights of TSFC under the Leases or, if required, the same have been
obtained and certified copies have been delivered to Lender.
9.6 Compliance with Laws. There is no law, governmental rule,
regulation, judgment, decree, or order binding on CCI/Triad, SPE or TSFC that
would be contravened by the execution and delivery of, and performance under,
the Operative Documents. The execution, delivery and performance of their
respective obligations under the Operative Agreements do not violate or
contravene any provisions of CCI/Triad's, SPE's or TSFC's articles of
incorporation, charter or bylaws, or any agreement or documents by which it or
its property is bound. Each of CCI/Triad, SPE, and TSFC will at all times comply
with, or cause to be complied with, all laws, statutes, rules, regulations,
orders, and directions of any governmental authority having jurisdiction over it
or its business that would have a materially adverse impact upon its business.
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9.7 Clear Ownership. The interests of SPE and TSFC combined are, and
will continue to be, the record and beneficial ownership of 100% of each Lease
and all Equipment subject to Leases in which TSFC is named as Lessor, free and
clear of all mortgages, deeds of trust, pledges, and other liens, security
interests, charges, or encumbrances, except for liens for taxes due but not yet
payable and liens in favor of Lender, and shall promptly deliver to Lender any
executed counterparts of Leases that were not delivered to Lender pursuant to
Section 5.3(a) and that have subsequently come into TSFC's or CCI/Triad's
possession. Notwithstanding the foregoing, TSFC and SPE shall be entitled to
transfer to CCI/Triad or a subsidiary corporation of CCI/Triad record and
beneficial ownership of any Equipment subject to Leases in which TSFC is named
as Lessor, provided that:
(a) SPE remains fully bound under this Agreement and the
other Operative Documents with respect to all
Obligations assumed by the assignee;
(b) the assignee assumes in writing the Obligations of
SPE under this Agreement and the other Operative
documents and recognizes the continuing validity and
priority of the lien of Lender in the Collateral; and
(c) the assignee executes any documentation reasonably
required by Lender to facilitate the foregoing
provisions of this Section 9.7.
9.8 Filings. This Agreement and the Uniform Commercial Code filings
made pursuant hereto create in favor of Lender a valid and perfected first
priority security interest in the Collateral securing the Obligations.
9.9 Actions. There are no actions, suits, proceedings, claims or
disputes pending or, to its knowledge, threatened against or affecting it or
TFSC or their respective properties before any court or governmental department,
commission, board, bureau, agency, or instrumentality, domestic or foreign,
that, if determined adversely to either of them, would have a materially adverse
effect on their respective condition (financial or other), business performance,
operations, properties, or prospects, their respective ability to perform their
respective obligations under the Operative Documents or the Leases, or Lender's
security interest in the Collateral.
9.10 Payment of Taxes. It has filed and will file all tax returns
(federal, state, and local) required to be filed and has paid all taxes shown
thereon to be due, including interest and penalties, unless it is contesting the
payment of certain taxes in good faith and has established adequate reserves
therefore.
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9.11 Notices. It will send to Lender copies of all significant
notices, including, but not limited to, any notices with respect to the terms of
any Lease, and other instruments or communications required or permitted to be
given by the Lessee under any Lease.
9.12 Further Assurances; Enforcement of Leases. SPE will: (a)
preserve and maintain its corporate existence and all rights, privileges, and
franchises now enjoyed and conduct its business in an orderly, efficient, and
customary manner; and (b) from time to time, at its own expense (subject to the
provisions of Section 6.3), take all actions reasonably necessary to establish,
preserve, protect, and perfect the rights created by this Agreement and the
other Operative Documents, including, without limitation, (i) the full and
punctual performance of all of its obligations under the Leases; (ii) the
enforcement of the Leases without waiver, amendment, or modification; (iii) the
exercise of any and all rights of the lessor under the Leases as may be
necessary or advisable to assure full compliance with the terms and provisions
thereof and to protect Lender's security interest in the Collateral; and (iv)
Lender's security interest in the Collateral.
9.13 Validity and Enforceability of Leases and Guaranties. Each
Eligible Lease and Guaranty submitted to Lender pursuant to Section 5.3 is
genuine and valid and is not subject to any offset, deduction, counterclaim, or
lien. No Rents with respect to the Leases have been prepaid except as set forth
in any such Lease. No default, event of default, or similar event has occurred
and is continuing under the Leases.
9.14 Leases Duly Entered Into. All parties to each Lease and
Guaranty have full authority and capacity to execute and deliver such Lease or
Guaranty, as the case may be. The entire agreement with each Lessee is embodied
solely in the executed counterparts of the applicable Lease and other
documentation furnished to Lender with respect to such Lease.
9.15 Equipment Description. Each Lease describes the Equipment
leased to the Lessee named in such Lease, the Rent required for such Equipment,
and any applicable early termination payments.
9.16 Leases Comply with Laws. Each Lease and the Equipment related
thereto complies with and does not violate applicable laws, regulations, or
contractual specifications or warranties, including without limitation, any
applicable laws relating to maximum rates of interest (whether or not imputed)
or similar charges and all required disclosures have been made with respect
thereto under federal truth-in-lending and truth-in-leasing regulations to the
extent applicable. The Equipment has been manufactured in accordance with
applicable laws.
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9.17 No Impairment of Value or Rights. It will not do anything that
might impair the value of any Lease or Equipment or any of the rights or
obligations of the parties hereto under any Lease.
9.18 No Lessor Liens. No Lease submitted to Lender pursuant to
Section 5.3, or any Equipment subject thereto, or any other of its rights
therein, has been assigned to, or be subject to, any lien or security interest
in favor of any person other than Lender.
9.19 Notifications. It will promptly notify Lender of:
(a) any Event of Default or event that, upon the lapse of
time or giving of notice, or both, would become an
Event of Default, or any event that is, or upon the
lapse of time or giving of notice, or both, would
become a default under or breach of any Operative
Document;
(b) any and all litigation or other matters or events
concerning it or any Lessee that has a reasonable
possibility of materially and adversely affecting its
or any Lessee's financial or other condition, its
business performance, operations, properties, or
prospects or adversely affecting or Lender's security
interest in the Collateral.
9.20 Books and Records Financial and Other Information. SPE shall
for itself, and as to TSFC, shall cause TSFC to:
(a) maintain adequate books, accounts, and records and
prepare all financial statements required hereunder
in accordance with generally accepted accounting
principles and practices consistently applied and in
compliance with the regulations of any governmental
regulatory body having jurisdiction over it;
(b) give Lender and its representatives, at all
reasonable times and upon reasonable notice, access
to all records, files, and books of accounting
pertaining to all transactions subject to this
Agreement and the other Operative Documents, and
permit Lender and its representatives to inspect,
audit, and make extracts therefrom;
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(c) upon the occurrence of an Event of Default or an
event that, upon the lapse of time or giving of
notice, or both, would become an Event of Default,
permit Lender to exercise the inspection rights of
TSFC under the Leases, on a non-exclusive basis;
(d) deliver to Lender in form and detail satisfactory to
Lender, and in such reasonable number of copies as
Lender may request:
(i) as soon as available, but no later than
forty-eight (48) days after the end of each
fiscal quarter, a quarterly financial
statement;
(ii) the lists of Lease receivables and
statements showing the aging of receivables
as required by Section 7.4;
(iii) the statement of first loss provision
required by Section 7.5;
(iv) such other information as Lender may
reasonably request; and
(e) deliver to Lender, in such reasonable number of
copies as Lender may request, as soon as available,
but no later than one hundred (100) days after the
end of each fiscal year, (I) the audited annual
financial statements of Cooperative Computing Holding
Company, Inc, which shall contain the results of
operations of CCI, and (ii) the annual financial
statements of TSFC, audited or reviewed if available,
or unaudited but signed by the principal financial
officer of TSFC.
9.21 Audit. It shall permit Lender, from time to time, upon
reasonable request and at Lender's sole expense, to conduct an audit of SPE's
and TSFC's accounting and operating procedures as they relate to the Leases,
provided such audit does not unreasonably interfere with SPE's or TSFC's normal
business operation.
9.22 Charges and Taxes. SPE shall make or arrange for all filings in
respect of and pay (or reimburse Lender for, upon presentation of an invoice)
all charges and local, state, or federal taxes (other than net income taxes of
the Lender or franchise taxes levied upon Lender's net income), license
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fees, or other assessments, charges, fines, and penalties, together with
interest payable with respect thereto, levied or imposed upon or in connection
with this Agreement, the other Operative Documents, the Leases, the Equipment,
the Rent, and the Proceeds. Upon request of Lender, SPE shall cause TSFC to
furnish Lender written evidence of such payment.
9.23 Financial Covenants.
(a) the Tangible Net Worth of TSFC shall be at least
$17,500,000.00;
(b) the ratio of TSFC's total consolidated debt
(including subordinated debt) to TSFC's Tangible Net
Worth shall be no greater than 3 to 1;
Compliance with Section 9.23 shall be made in accordance with
generally accepted accounting principles, consistently applied, as to both
classification and amounts.
9.24 Maximum Requests for Loans Per Month. It will make no more than
a combined total of three (3) requests for Loans, under Section 3.1, during each
thirty day period.
9.25 Original Counterparts. The Leases and Lease Schedules delivered
to Lender are originals and all other originals thereof are marked "duplicate
original" or "copy".
10. REPOSSESSION AND REMARKETING
10.1 Request to Repossess; Remarketing. In the event that SPE does
not perform its obligations under Section 8.4 by reason of the limitation on its
liability set forth therein, upon Lender's determination that a default exists
under a Lease financed or refinanced by a Discount Facility Loan, either through
notification by SPE or TSFC pursuant to Section 9.19 or otherwise, and that such
default remains uncured within the time, if any, for curing the same permitted
by the Lease, Lender, as secured party under this Agreement, may request SPE to
cause TSFC to act as Lender's agent, and upon such request TSFC will, as such
agent, use diligent efforts to repossess the Equipment subject to such Lease as
promptly and efficiently as is legally permissible. Thereafter, TSFC will
repair, service, refurbish, and update, as needed, and, for a period of one
hundred twenty (120) days or such other period as TSFC and Lender may agree upon
in writing from the date the Equipment is repossessed (the "Remarketing
Period"), attempt to sell or release such Equipment on a non-priority (but
non-discriminatory) basis and on such terms and conditions as
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reflect fair market value for similar equipment and are acceptable to Lender, in
its sole discretion. SPE shall cause TSFC to give no less priority to
remarketing Equipment pursuant to this Section 10.1 than it would similar
equipment owned, leased, or managed by TSFC. The obligations of TSFC to remarket
such Equipment for sale or lease shall include, but not be limited to, efforts
to sell such Equipment, preparation and supervision of the documentation of each
transaction, and an accounting of the activities referred to in this Section
10.1, including information relative to the status of negotiations for offers
made in respect of such Equipment.
If TSFC has not remarketed any Equipment at the conclusion of the
Remarketing Period, upon notice from Lender, TSFC's exclusive right to remarket
shall terminate and Lender shall have the right to remarket such Equipment on
terms and conditions satisfactory to it. If Lender remarkets the Equipment, it
shall retain Proceeds in an amount equal to the sum of (i) the principal amount
due on the next Loan Repayment Date on the Discount Facility Loan applicable to
the Lease covering such Equipment plus (ii) all accrued and unpaid principal and
interest on such Loan plus (iii) the present value of all principal payments due
on such Loan thereafter, discounted at the same rate as Lender has borrowed
funds to make such Loan and any Remarketing Expenses incurred by Lender and
shall remit the Excess Proceeds to SPE.
Nothing contained in this Section 10.1 shall be deemed to constitute
a release by Lender of its security interest in any of the Collateral. Lender
shall release its security interest in Equipment which has been sold pursuant to
this Section 10.1 upon receipt of the amounts specified in the preceding
paragraph.
10.2 Remarketing Expenses. Remarketing Expenses shall be for the
account of the party incurring such expenses and shall be recoverable from
Proceeds of such remarketing realized by the party remarketing the Equipment.
10.3 Assignment. The rights and obligations of any party under this
Section 10 may be assigned only with the written consent of all parties.
10.4 No Guaranty. Notwithstanding anything contained herein to the
contrary, the obligations and duties of SPE contained in this Section 10 shall
not be construed to include a guarantee by SPE that the Remarketing Proceeds
with respect to any Equipment will equal or exceed the Loan Repayment Amount
relating to such Equipment.
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11. EVENTS OF DEFAULT, REMEDIES
11.1 Events of Default. Any one of the following events shall
constitute an "Event of Default" hereunder:
(a) SPE shall fail to remit to Lender when due any Lease
Proceeds or Proceeds of an item of Equipment received
by SPE or TSFC, or shall fail to make any payment
required hereunder or under the other Operative
Documents, in each case within five (5) days of the
date due thereof;
(b) SPE shall fail to observe or perform any other
obligation hereunder or the other Operative
Documents, or under any other agreement between
Lender and SPE, that is not corrected or in the
process of being corrected within thirty (30) days of
written notice thereof from Lender;
(c) any covenant, representation, or warranty made by
SPE, TSFC, or CCI/Triad to Lender in any Operative
Document or in any certificate delivered pursuant
thereto shall be untrue in any material respect when
made or during any period of time for which it is
enforceable or shall be breached by SPE, TSFC, or
CCI/Triad; provided, however, to the extent that such
a breach occurs, and such breach relates to an
individual Lease only, such event shall not
constitute an Event of Default hereunder if SPE,
within thirty (30) days from receipt of demand by
Lender, repurchases the Lease pursuant to the terms
of the Mandatory Prepayment clause set forth at
Paragraph 3.7 herein.
d) an injunction, attachment or other legal process
shall issue against any material part of SPE's or
TSFC's property or a material judgment or lien shall
be filed against SPE or TSFC that is not stayed,
vacated, bonded, or otherwise discharged within
ninety (90) days after the date of entry thereof;
(e) SPE, TSFC, or CCI/Triad shall cease to do business as
a going concern, shall become bankrupt, shall make an
assignment for the benefit of creditors, or otherwise
take advantage of the bankruptcy or any other law for
the relief of debtors; a trustee or receiver for SPE,
TSFC, or CCI/Triad shall be appointed or there shall
be filed by or against SPE, TSFC, or CCI/Triad any
petition under any provision of the Federal
Bankruptcy
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Code, as amended, and, in the case of involuntary
proceedings only, such petition shall not be
dismissed, withdrawn, or otherwise eliminated within
ninety (90) days after the filing thereof;
(f) any ERISA plan of CCI/Triad, SPE, or TSFC shall
terminate, or CCI/Triad, SPE, or TSFC shall fully or
partially withdraw from such a plan or plan that
could result in liability of CCI/Triad, TSFC, or SPE
to the Pension Benefit Guaranty Corporation or to
such plan or plans in the aggregate amount of One
Million Dollars ($1,000,000) or more (in excess of
any applicable insurance).
11.2 Remedies. (a) If an Event of Default shall have occurred, and
such Event of Default had not been cured within an applicable cure period,
Lender shall have the right to do any or all of the following:
(i) accelerate the Loans;
(ii) complete and deliver to the Lessees the notices
received by Lender from SPE pursuant to Section
5.3(f) and to commence direct collection of Lease
Proceeds until such time as Lender has received the
total Loan Repayment Amount of all Loans due under
this Agreement;
(iii) (1) exercise any of the Lessor's rights under any of
the Leases, or (2) by written notice, require SPE to
exercise on behalf of Lender as secured party under
this Agreement any and all of the rights available to
the Lessor under any Lease to the extent not already
exercised by SPE, whereupon SPE shall immediately
take all requested action;
(iv) discontinue making Loans; or
(v) proceed against SPE, TSFC, CCI/Triad, or all of them,
for all rights and remedies Lender may have in law or
in equity under this Agreement or the Operative
Documents.
(b) Upon the occurrence of an Event of Default, or upon the failure
of a Lessee to perform its obligation under a Lease, Lender shall have and may
exercise all the rights and remedies of a secured party under the Illinois
Uniform
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Commercial Code (expressly including, but not limited to, those granted under
9-502(1) and 9-306 dealing with retention of cash proceeds); and any other
applicable laws (including but not limited to the right to assume direct
collection of any and all Lease Proceeds and retain any and all cash proceeds
collected under the Leases until such time that Lender has received the total
Loan Repayment Amount of all Loans due under this Agreement); provided, however,
that so long as Lessee under a Lease is not in default thereunder, Lender shall
not take any action or exercise any right that would disturb such Lessee's full
and quiet enjoyment of all of such Lessee's rights under that Lease. Lender will
give SPE reasonable notice of the time and place of any public sale of any
Collateral or of the time after which any public or private sale of such
Collateral or any other intended disposition thereof is to be made. Unless
otherwise provided by law, the requirement of reasonable notice shall be met if
such notice is delivered at least ten (10) days before or mailed, postage
prepaid, to SPE, at least twenty (20) days before the time of such sale or
disposition. Subject to applicable provisions of this Agreement, Collateral
proceeds including, but not limited to, the proceeds of any sale or disposition
of Collateral shall be applied: first, to the expense of settling all liens and
claims against such Collateral and all reasonable costs, charges and expenses
incurred by Lender in connection with the Event of Default, Lender's exercise of
remedies under this Section 11.2 (including without limitation those described
in Section 12.4), and in taking, removing, holding, preparing for sale, and
selling the Equipment; second, to the payment of the remaining total Loan
Repayment Amount of all Loans; third, to any other unpaid obligations of SPE
hereunder; or of TSFC or CCI/Triad under the Operative Documents; and fourth,
any remaining proceeds shall be paid to SPE.
(c) Notwithstanding the foregoing, Lender shall have the right to
discontinue making Loans at any time in its sole discretion, whether or not an
Event of Default has occurred.
(d) Nothing contained in this Section 11.2 shall entitle Lender to
recourse against SPE with respect to payment of the Loans that is not expressly
granted to Lender by this Agreement.
12. MISCELLANEOUS
12.1 General. Waiver of any particular default shall not be a waiver
of any other default. All Lender's rights are cumulative and not alternative. No
waiver or change modification or amendment in this Agreement or any other
Operative Document shall bind Lender or SPE unless an officer of Lender and SPE,
has agreed to such waiver or change modification or amendment in writing. Any
provision of this Agreement contrary to, prohibited by or invalid under
applicable laws or regulations shall be inapplicable and deemed omitted
herefrom, but shall not invalidate the remaining provisions hereof. No
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oral agreement, guaranty or warranty shall be binding. This Agreement shall be
governed by the internal laws of the State of Illinois.
12.2 Notices. All notices, demands, directions, consents, and
approvals hereunder shall be in writing and shall be delivered in person, by
telecopy, by overnight courier or by prepaid certified mail, addressed to the
party for whom it is intended, if to
CCI/Triad Financial Holding Corporation
0000 Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxx, President
Telecopy No. 925/373-2068
with a copy to:
CCI/Triad Financial Holding Corporation
0000 Xxx Xxxx Xxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx Xxxx Xxxxxx, General Counsel
Telecopy No. 512/328-6461
if to Lender:
IFC Credit Corporation
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxx
Telecopy No. 847/663-6704
and shall be deemed delivered on the day of actual receipt. Either party may
change its address for the receipt of notices, demands, directions, consents,
and approvals by notice duly given to the other party pursuant to this Section
12.2.
12.3 Waivers. Lender and SPE hereby respectively waives demand,
presentment, protest, and notice thereof with respect to any and all
instruments, notice of acceptance hereof, and all other demands and notices of
any description, except as expressly provided herein. No delay or omissions on
the part of either party in exercising any right, remedy, option, or notice of
default, except as any pertinent statute of limitations which may apply, on any
one occasion, shall be construed as a bar to or waiver of any other default,
right, remedy or option, or the same default, right, remedy or option on any
future occasion.
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12.4 Costs and Expenses. In any case where Lender or SPE is entitled
hereunder to reimbursement of costs and expenses, such costs and expenses shall
include interest on any judgment and court costs, reasonable legal fees, and
expenses (including allocated fees of internal counsel).
12.5 Successors; Assigns. This Agreement shall inure to the benefit
of and be binding upon Lender and SPE and their respective successors and
permitted assigns. Neither party may assign this Agreement without the other
party's consent, unless such assignment is to any wholly owned subsidiary,
parent, or affiliate of the assigning party
12.6 Entire Agreement. The terms and conditions herein contained
constitute the entire agreement between Lender and SPE with respect to the
subject matter hereof, except to the extent other agreements are referred to
herein or contemplated hereby or executed contemporaneously herewith, and
supersede all previous communications whether oral or written between Lender and
SPE with respect to such subject matter. No agreement or understanding varying
or extending any rights or obligations hereunder of either of the parties shall
be binding unless in a writing signed by a duly authorized officer or
representative of the party against which such variance or extension is sought
to be enforced.
12.7 Headings; Titles. The cover, table of contents, and titles for
Sections used in this Agreement are intended to be descriptive only and shall
not be deemed to limit, extend or in any way modify the meaning of the text of
this Agreement. References to integral sections without decimals include all
decimal sections within such integral sections.
12.8 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute but one and the same instrument.
12.9 Submission to Jurisdiction. To induce the Lender to make the
Loans, SPE irrevocably agrees that, subject to the Lender's sole and absolute
election, all suits, actions or other proceedings in any way, manner or respect,
arising out of or from or related to this Agreement, the Leases or any Operating
Document or any document executed in connection herewith or therewith, shall be
subject to litigation in courts having situs within Chicago, Illinois. SPE
hereby consents and submits to the jurisdiction of any local, state or federal
court located within said city and state. SPE hereby waives any right it may
have to trial by jury, to transfer or change the venue of any suit, action or
other proceeding brought against SPE by the Lender in accordance with this
Section, or to claim that any such proceeding has been brought in an
inconvenient forum.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed by their respective officers thereunder duly authorized as of the
day and year first above written.
CCI/TRIAD FINANCIAL HOLDING CORPORATION
By: /s/ XXXXXXX X. XXXXXX
Its: Executive Vice President
IFC CREDIT CORPORATION
By: /s/ XXXX X. XXXXXXXX
Its: EVP & CFO
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