<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 6, 1998
REGISTRATION NO. 333-64817
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
PRE-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
BANKVEST CAPITAL CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 7394 043124117
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NUMBER)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
----------------
200 NICKERSON ROAD
MARLBORO, MA 01752
508-485-8080
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPALEXECUTIVE OFFICES)
----------------
PAUL S. GASS
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
BANKVEST CAPITAL CORP.
200 NICKERSON ROAD
MARLBORO, MA 01752
508-485-8080
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
----------------
COPIES TO:
RICHARD J. SNYDER, ESQ. STANLEY KELLER, ESQ.
GOLDSTEIN & MANELLO, P.C. PALMER & DODGE LLP
265 FRANKLIN STREET ONE BEACON STREET
BOSTON, MA 02110 BOSTON, MA 02108-3109
PHONE: (617) 946-8000 PHONE: (617) 573-0100
FAX: (617) 439-8988 FAX: (617) 227-4420
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, list the Securities Act registration statement number
of the earlier effective registration statement for the same offering and check
the following box. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
BankVest Capital Corp. incorporates by reference herein Part I of the
Registration Statement (File No. 333-64817) as filed with the Securities and
Exchange Commission on September 30, 1998.
This Pre-Effective Amendment No. 1 is being filed solely to amend the exhibit
list and to file additional exhibits not included in the Registration Statement
filed on September 30, 1998.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable in connection with the sale of
the Common Stock being registered hereby. All amounts are estimates except the
SEC registration fee and the NASD filing fee:
<TABLE>
<CAPTION>
AMOUNT TO BE
PAID BY
COMPANY
------------
<S> <C>
SEC Registration Fee......................................... $12,552
NASD Filing Fee.............................................. 4,755
Nasdaq Listing Fee...........................................
Printing, Postage and Mailing................................
Legal Fees and Expenses......................................
Accounting Fees and Expenses.................................
Blue Sky Fees and Expenses...................................
Custodial Fees...............................................
Transfer Agent and Registrar Fees............................
Miscellaneous................................................
-------
Total.................................................... $
=======
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Restated Articles of Organization of the Company, as amended (Exhibit
3.1 hereto) and the Restated Bylaws (Exhibit 3.2 hereto) provide for
indemnification of the Company's directors and officers unless such
indemnification is prohibited by the Massachusetts Business Corporation Law.
The Massachusetts Business Corporation Law generally permits indemnification
of the Company's directors and officers for liabilities and expenses that they
may incur in such capacities, except with respect to any matter that the
indemnified person shall have been adjudicated in any proceeding not to have
acted in good faith in the reasonable belief that his or her action was in the
best interest of the Company.
The Underwriting Agreement (Exhibit 1.1 hereto) provides for cross-
indemnification between the Company and the Selling Stockholders and the
Underwriters with respect to certain matters and liabilities, including
matters and liabilities under the Securities Act of 1933, as amended.
The Company also maintains directors and officers liability insurance for
the benefit of its directors and officers.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since September, 1995, the Company has issued and sold the unregistered
securities set forth below. The following information reflects: (i) a two for
one Common Stock split effective on November 14, 1995; (ii) a two for one
Common Stock split effective on June 17, 1998; (iii) a three for two Common
Stock split to be effected prior to or simultaneously with the completion of
this Offering; (iv) the reclassification of Class A Common Stock as Common
Stock; and (v) the reclassification of Class B Common Stock as Non-Voting
Common Stock.
1. From December 1995 through June 1996, the Company issued and sold to
certain investors and employees an aggregate of 486,000 shares of Common Stock
for a purchase price of $4.17 per share, together with warrants, exercisable
for an aggregate of 48,600 shares of Common Stock at an exercise price of
$4.58 per share.
II-1
<PAGE>
Consideration for such shares of Common Stock was paid in cash, except for
120,000 shares of Common Stock sold to certain employees of the Company, which
shares were paid for by way of a 10% cash down payment and the balance by
delivery to the Company of non-recourse promissory notes and stock pledge
agreements. Each promissory note originally bore interest at 8.0% per annum
which was subsequently reduced to 6.0% per annum on April 10, 1998. Interest
is payable on the first anniversary date of the promissory note and on each
anniversary thereafter until the fifth anniversary when principal and all
accrued and unpaid interest becomes payable in full.
2. In May 1996, the Company issued and sold to Primus 30,000 shares of Class
A Preferred Stock and a warrant to purchase 72,000 shares of Common Stock at
an exercise price of $4.58 per share, for the aggregate price of $3,000,000
which was paid in cash. The Class A Preferred Stock is convertible into
720,000 shares of Common Stock.
3. In May 1996, the Company issued and sold to PNC 30,000 shares of Class B
Preferred Stock and warrants to purchase 72,000 shares of Non-Voting Common
Stock at an exercise price of $4.58 per share, for the aggregate price of
$3,000,000 which was paid in cash. The Class B Preferred Stock is convertible
into 720,000 shares of Non-Voting Common Stock.
4. In February 1997, the Company issued to Whitney the Subordinated Note in
the principal amount of $15.0 million which bears interest at 10.101% per
annum and warrants to purchase an aggregate of 515,076 shares of Common Stock
at an exercise price of $5.00 per share.
5. In November 1997, the Company issued and sold an aggregate of 131,250
shares of Common Stock for a purchase price of $6.67 per share to certain
employees. Consideration for such shares of Common Stock was paid by way of a
10% cash down payment and the balance by delivery to the Company of non-
recourse promissory notes and stock pledge agreements. The promissory notes
originally bore interest at 8.0% per annum, which was subsequently reduced to
6.0% per annum on April 10, 1998. Interest is payable on the first anniversary
date of the promissory note and thereafter on each anniversary until the fifth
anniversary when principal and all accrued and unpaid interest becomes payable
in full.
6. In December 1997, the Company issued and sold 32,010 and 20,817 shares of
Common Stock to Primus and Whitney, respectively, at a purchase price of $6.67
per share and 32,010 shares of Non-Voting Common Stock to PNC at a purchase
price of $6.67 per share.
7. On May 28, 1998, the Company issued and sold to Primus 37,500 shares of
Class C Preferred Stock for the price of $3,750,000 which was paid in cash.
The Class C Preferred Stock is convertible into 523,500 shares of Common
Stock.
8. On May 28, 1998, the Company issued and sold to PNC 37,500 shares of
Class D Preferred Stock for the price of $3,750,000 which was paid in cash.
The Class D Preferred Stock is convertible into 523,500 shares of Non-Voting
Common Stock.
9. Effective as of July 3, 1998, the Company issued and sold to a former
employee 18,000 shares of Common Stock upon exercise of such former employee's
options under the 1995 Plan for an aggregate price of $32,070.
There was no underwriter involved in connection with any transaction set
forth above. The foregoing issuances of securities were made in each case in
reliance on an exemption from registration under the Securities Act, under
Section 4(2) thereof or on Regulation D promulgated thereunder. In all of such
transactions, the recipients of securities represented their intention to
acquire the securities for investment only and not with a view to or for sale
in connection with any distribution thereof, and appropriate legends were
affixed to the securities issued. All of the foregoing securities are deemed
restricted securities for the purposes of the Securities Act. The proceeds
from such sales were used for working capital and general corporate purposes.
II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
*1.1 --Form of Underwriting Agreement
+3.1 --Restated Articles of Organization of the Company, as amended
+3.2 --Amended and Restated Bylaws of the Company
*4.1 --Specimen Common Stock certificates
+4.2 --Agreement of Recapitalization dated , 1998 by and among the
Company, Primus, PNC Whitney and certain other stockholders of the
Company
++4.3 --Amended and Restated Stockholders Agreement dated as of May 28, 1998
by and among the Company, Primus, PNC Whitney and certain other
stockholders of the Company
++4.4 --Amended and Restated Registration Rights Agreement dated February
28, 1997 by and among the Company, Primus, PNC and Whitney, as
amended by that certain First Amendment to Amended and Restated
Registration Rights Agreement dated May 28, 1998
++4.5 --Purchase Agreement dated as of May 30, 1996, by and among the
Company, Primus and PNC as amended by Amendment No. 1 dated as of
February 28, 1997
++4.6 --Purchase Agreement dated as of May 28, 1998 by and among the
Company, Primus and PNC
*4.7 --Common Stock Purchase Warrants dated as of May 30, 1996 between the
Company and Primus, as amended and restated by that certain Amended
and Restated Common Stock Purchase Warrants dated as of , 1997.
++4.8 --Securities Purchase Agreement dated as of February 28, 1998 by and
between the Company and Whitney
++4.9 --10.101% Subordinated Promissory Note of the Company dated February
28, 1997 held by Whitney
++4.10 --Vested Warrant dated February 28, 1997 held by Whitney
++4.11 --Vesting Warrant dated February 28, 1997 held by Whitney
++4.12 --Put and Call Agreement dated as of February 28, 1997 by and between
the Company and Whitney
*5.1 --Opinion of Goldstein & Manello, P.C.
*10.1 --BankVest Capital Corp. 1995 Stock Option Plan
*10.2 --BankVest Capital Corp. 1998 Employee Stock Ownership Plan
*10.3 --Employment Agreement between Paul S. Gass and the Company
*10.4 --Employment Agreement between Joseph Bannick and the Company
*10.5 --Employment Agreement between Lewis Caliento and the Company
*10.6 --Employment Agreement between John P. Colton and the Company
*10.7 --Employment Agreement between Charles Cross and the Company
*10.8 --Employment Agreement between Kellie D. Jacques and the Company
*10.9 --Employment Agreement between Michael Karman and the Company
*10.10 --Employment Agreement between Sandra T. King and the Company
*10.11 --Severance Agreement between Cathy F. Sutton and the Company
*10.12 --Form of Stock Option Agreement in connection with 1995 Plans
*10.13 --Real Estate Lease between Glenborough Corp. and the Company
(Marlboro, MA)
++10.14 --Receivables Purchase Agreement dated as of August 15, 1997 among
BVFU Funding Corp., the Company, Variable Funding Capital
Corporation, First Union Capital Markets Corp., First Union National
Bank of North Carolina and Northwest Bank Minnesota, N.A
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
*10.15 --Purchase Agreement dated August 15, 1997 between BVFU and BV
++10.16 --Lease Receivables Sale and Contribution Agreement dated September
30, 1996 by and among BV Funding Corp., BankVest Capital Corp. and
LeaseVest Capital Corp.
++10.17 --Lease Receivables Purchase Agreement dated as of September 30, 1996
among BV Funding Corp. BankVest Capital Corp., EagleFunding Capital
Corporation and BankBoston (f/k/a The First National Bank of Boston),
as amended by Amendment No. 1 dated February 28, 1997, as amended by
Amendment No. 2 dated June 30, 1997, as amended by Amendment No. 3
dated December 7, 1997, as amended by Amendment No. 4 dated January
7, 1998, and as amended by Amendment No. 5 dated by May 1, 1998
*10.18 --Revolving Credit Agreement dated as of June 18, 1998 by and between
BankVest Capital Corp. and Middlesex Savings Bank
*10.19 --$1,000,000 Revolving Credit Note to Middlesex Savings Bank dated as
of June 18, 1998
*10.20 --Line of Credit Agreement dated as of October 31, 1995 by and between
Framingham Savings Bank and BankVest Capital Corp.
*10.21 --$2,000,000 Promissory Note--Demand (Variable Rate) to Framingham
Savings Bank dated October 31, 1995
*10.22 --Loan and Security Agreement dated as of December 9, 1996 by and
between MetroWest Bank and BankVest Capital Corp.
*10.23 --$2,000,000 Promissory Note--Monthly Installment to MetroWest Bank
dated December 9, 1996
*10.24 --Loan Agreement dated as of December 9, 1996 by and between MetroWest
Bank and BankVest Capital Corp.
*10.25 --$3,000,000 Promissory Note--Demand to MetroWest Bank dated December
9, 1996
*10.26 --Security Agreement dated as of December 9, 1996 by and between
MetroWest Bank and BankVest Capital Corp.
*10.27 --$500,000 Promissory Note--Monthly Installment to MetroWest Bank
dated December 9, 1996
*10.28 --Line of Credit Agreement dated as of February 5, 1998 by and between
MetroWest Bank and BankVest Capital Corp.
*10.29 --$5,000,000 Promissory Note--Demand to MetroWest Bank dated February
5, 1998
*10.30 --$2,500,000 Promissory Note to MetroWest Bank dated September 2, 1998
*10.31 --Loan and Security Agreement dated as of December 27, 1996 by and
between Century Bank and Trust Company and BankVest Capital Corp.
++10.32 --Loan and Security Agreement dated as of May 9, 1997 by and among
BankVest Capital Corp., LeaseVest Capital Corp., and PNC Bank, N.A.
++10.33 --Revolving Credit Agreement dated as of September 12, 1996, by and
between BankVest Capital Corp., LeaseVest Capital Corp. and
BankBoston, N.A. (f/k/a The First National Bank of Boston)
++10.34 --Amendment to Revolving Credit Agreement dated January 1, 1997 by and
between BankVest Capital Corp., LeaseVest Capital Corp. and
BankBoston, N.A. (f/k/a The First National Bank of Boston)
++10.35 --Amendment No. 2 to Revolving Credit Agreement and Security Agreement
dated December 5, 1997 by and between BankVest Capital Corp.,
LeaseVest Capital Corp. and BankBoston, N.A. (f/k/a The First
National Bank of Boston)
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
++10.36 --Amendment No. 3 to Revolving Credit Agreement and Security Agreement
dated December 24, 1997 by and between BankVest Capital Corp.,
LeaseVest Capital Corp. and BankBoston, N.A. (f/k/a The First
National Bank of Boston)
++10.37 --$20,000,000 Amended and Restated Revolving Credit Note to BankBoston
(f/k/a The First National Bank of Boston) dated December 5, 1997 of
BankVest Capital Corp.
*10.38 --MetroWest Bank Line of Credit Agreement dated February 5, 1998 by
and between MetroWest Bank and BankVest Capital Corp.
*10.39 --$5,000,000 Promissory Note--Demand to MetroWest Bank dated as of
February 5, 1998 of BankVest Capital Corp.
++10.40 --Revolving Credit Facility, dated as of August 21, 1998, by and
between BankVest Capital Corp. and Fleet Bank, N.A.
++10.41 --$15,000,000 Revolving Credit Note to Fleet Bank, N.A. dated as of
August 21, 1998
++10.42 --Amended and Restated Master Sale of Chattel Paper And Security
Agreement dated as of March 19, 1996, among European American Bank,
BankVest Capital Corp. and LeaseVest Capital Corp.
*10.43 --Amendment dated as of January 14, 1997 to Amended and Restated
Master Sale of Chattel Paper And Security Agreement dated as of March
21, 1996, among European American Bank, BankVest Capital Corp. and
LeaseVest Capital Corp.
++10.44 --Second Amendment dated as of June 30, 1997 to Amended and Restated
Master Sale of Chattel Paper And Security Agreement dated as of March
21, 1996, among European American Bank, BankVest Capital Corp. and
LeaseVest Capital Corp.
++10.45 --Third Amendment dated as of January , 1998 to Amended and Restated
Master Sale of Chattel Paper And Security Agreement dated as of March
21, 1996, among European American Bank, BankVest Capital Corp. and
LeaseVest Capital Corp.
*10.46 --Master Agreement dated November 27, 1995 between First Sierra
Financial, Inc. and BankVest Capital Corp.
*10.47 --First Amendment dated April 10, 1997 to Master Agreement dated
November 27, 1995 between First Sierra Financial, Inc. and BankVest
Capital Corp.
++10.48 --Loan and Security Agreement dated as of August 7, 1995 between
BankVest Capital Corp. and Heller Financial, Inc.
++10.49 --First Amendment dated as of February 12, 1996 to Loan and Security
Agreement, dated as of August 7, 1995 by and between Heller
Financial, Inc. and BankVest Capital Corp.
++10.50 --Second Amendment dated as of June 24, 1996 to Loan and Security
Agreement, dated as of August 7, 1995 by and between Heller
Financial, Inc. and BankVest Capital Corp.
++10.51 --Third Amendment dated as of July 11, 1997 to Loan and Security
Agreement, dated as of August 7, 1995 by and between Heller
Financial, Inc. and BankVest Capital Corp.
*10.52 --Purchase and Sale Agreement, dated as of August 7, 1995 by and
between Heller Financial Leasing, Inc. and BankVest Capital Corp.
++10.53 --First Amendment dated as of February 12, 1996 to Purchase and Sale
Agreement, dated as of August 7, 1995 by and between Heller Financial
Leasing, Inc. and BankVest Capital Corp.
++10.54 --Second Amendment dated as of June 24, 1996 to Purchase and Sale
Agreement, dated as of August 7, 1995 by and between Heller Financial
Leasing, Inc. and BankVest Capital Corp.
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
++10.55 --Third Amendment dated as of July 11, 1997 to Purchase and Sale
Agreement, dated as of August 7, 1995 by and between Heller Financial
Leasing, Inc. and BankVest Capital Corp.
++10.56 --Sale of Chattel Paper and Security Agreement dated as of March 28,
1996 by and between UJB Leasing Corporation and BankVest Capital
Corp.
++10.57 --First Amendment dated as of June 1, 1997 to Sale of Chattel Paper
and Security Agreement by and between Summit Leasing Corporation
(f/k/a UJB Leasing Corporation) and BankVest Capital Corp.
++10.58 --Second Amendment to Sale of Chattel Paper and Security Agreement by
and between Summit Leasing Corporation (f/k/a UJB Leasing
Corporation) and BankVest Capital Corp.
*10.59 --Master Sale and Assignment Agreement dated as of November 21, 1997
by and between BankVest Capital Corp., LeaseVest Capital Corp., and
Marquette National Bank
*10.60 --Receivables Purchase Agreement dated as of September , 1998 among
BVFU Funding LLC, BankVest Capital Corp., the Investors, Variable
Funding Capital Corporation, First Union Capital Markets, First Union
National Bank of North Carolina and Norwest Bank Minnesota, N.A.
*10.61 --Purchase Agreement, dated as of September , 1998 between BVFU and
BankVest Capital Corp.
*10.62 --Purchase and Assignment Agreement, dated as of September , 1998
between BVFU Funding Corp. and BVFU Funding LLC
*10.63 --Lease Receivables Sale and Contribution Agreement dated as of
September , 1998 by and among BVC Funding LLC, LeaseVest Capital
Corp. and BankVest Capital Corp.
*10.64 --Lease Receivables Purchase Agreement dated as of September , 1998
by and among BVC Funding LLC, BankVest Capital Corp., Eagle Funding
Capital Corporation and BankBoston, N.A.
*10.65 --Transfer and Sale Agreement dated as of , 1998, by and among
BankVest Capital Corp., BVFU, BFC, VFCC, Eagle and the BV Equipment
Lease Company 1998-1, LLC
*10.66 --Indenture dated as of , 1998 by and between BV Equipment Lease
Company 1998-1, LLC and Norwest
+11.1 --Computation of earnings per share
++16.1 --Letter from PricewaterhouseCoopers LLP
*21.1 --Subsidiaries of the Company
+23.1 --Consent of Deloitte & Touche LLP
*23.2 --Consent of Goldstein & Manello, P.C. (contained in Exhibit 5.1
hereto)
+24.1 --Powers of Attorney
+27.1 --Financial Data Schedule
</TABLE>
- --------
*To be filed by amendment.
+Filed on September 30, 1998.
++Filed herewith.
II-6
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned Company hereby undertakes:
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(b) The undersigned Registrant hereby undertakes:
(1) To provide to the underwriters at the closing specified in the
underwriting agreement, certificates in such denominations and registered
in such names as required by the underwriters to permit prompt delivery to
each purchaser.
(2) That, for purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Company pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(3) That, for purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-7
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS PRE-EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION STATEMENT
TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN
THE TOWN OF MARLBORO, COMMONWEALTH OF MASSACHUSETTS, ON THE 6TH DAY OF
OCTOBER, 1998.
Bankvest Capital Corp.
/s/ Paul S. Gass
By: _________________________________
PAUL S. GASS
PRESIDENT, CHIEF EXECUTIVE
OFFICER AND CHAIRMAN OF THE BOARD
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS PRE-
EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY
THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Paul S. Gass President, Chief Executive October 6, 1998
______________________________________ Officer and Chairman of
PAUL S. GASS the Board of Directors
(Principal Executive
Officer)
Kellie D. Jacques* Senior Vice President, October 6, 1998
______________________________________ Chief Financial Officer,
KELLIE D. JACQUES Treasurer and Director
(Principal Financial and
Accounting Officer)
John P. Colton* Executive Vice President October 6, 1998
______________________________________ and Director
JOHN P. COLTON
James H. Fordyce* Director October 6, 1998
______________________________________
JAMES H. FORDYCE
James D. Gerson* Director October 6, 1998
______________________________________
JAMES D. GERSON
Sandra T. King* Director October 6, 1998
______________________________________
SANDRA T. KING
Kevin J. McGinty* Director October 6, 1998
______________________________________
KEVIN J. MCGINTY
</TABLE>
/s/ Paul S. Gass
*By: _______________________
PAUL S. GASS
ATTORNEY-IN-FACT
II-8
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
*1.1 --Form of Underwriting Agreement
+3.1 --Restated Articles of Organization of the Company, as amended
+3.2 --Amended and Restated Bylaws of the Company
*4.1 --Specimen Common Stock certificates
+4.2 --Agreement of Recapitalization dated , 1998 by and among the
Company, Primus, PNC Whitney and certain other stockholders of the
Company
++4.3 --Amended and Restated Stockholders Agreement dated as of May 28, 1998
by and among the Company, Primus, PNC Whitney and certain other
stockholders of the Company
++4.4 --Amended and Restated Registration Rights Agreement dated February
28, 1997 by and among the Company, Primus, PNC and Whitney, as
amended by that certain First Amendment to Amended and Restated
Registration Rights Agreement dated May 28, 1998
++4.5 --Purchase Agreement dated as of May 30, 1996, by and among the
Company, Primus and PNC as amended by Amendment No. 1 dated as of
February 28, 1997
++4.6 --Purchase Agreement dated as of May 28, 1998 by and among the
Company, Primus and PNC
*4.7 --Common Stock Purchase Warrants dated as of May 30, 1996 between the
Company and Primus, as amended and restated by that certain Amended
and Restated Common Stock Purchase Warrants dated as of , 1997.
++4.8 --Securities Purchase Agreement dated as of February 28, 1998 by and
between the Company and Whitney
++4.9 --10.101% Subordinated Promissory Note of the Company dated February
28, 1997 held by Whitney
++4.10 --Vested Warrant dated February 28, 1997 held by Whitney
++4.11 --Vesting Warrant dated February 28, 1997 held by Whitney
++4.12 --Put and Call Agreement dated as of February 28, 1997 by and between
the Company and Whitney
*5.1 --Opinion of Goldstein & Manello, P.C.
*10.1 --BankVest Capital Corp. 1995 Stock Option Plan
*10.2 --BankVest Capital Corp. 1998 Employee Stock Ownership Plan
*10.3 --Employment Agreement between Paul S. Gass and the Company
*10.4 --Employment Agreement between Joseph Bannick and the Company
*10.5 --Employment Agreement between Lewis Caliento and the Company
*10.6 --Employment Agreement between John P. Colton and the Company
*10.7 --Employment Agreement between Charles Cross and the Company
*10.8 --Employment Agreement between Kellie D. Jacques and the Company
*10.9 --Employment Agreement between Michael Karman and the Company
*10.10 --Employment Agreement between Sandra T. King and the Company
*10.11 --Severance Agreement between Cathy F. Sutton and the Company
*10.12 --Form of Stock Option Agreement in connection with 1995 Plans
*10.13 --Real Estate Lease between Glenborough Corp. and the Company
(Marlboro, MA)
++10.14 --Receivables Purchase Agreement dated as of August 15, 1997 among
BVFU Funding Corp., the Company, Variable Funding Capital
Corporation, First Union Capital Markets Corp., First Union National
Bank of North Carolina and Northwest Bank Minnesota, N.A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
*10.15 --Purchase Agreement dated August 15, 1997 between BVFU and BV
++10.16 --Lease Receivables Sale and Contribution Agreement dated September
30, 1996 by and among BV Funding Corp., BankVest Capital Corp. and
LeaseVest Capital Corp.
++10.17 --Lease Receivables Purchase Agreement dated as of September 30, 1996
among BV Funding Corp. BankVest Capital Corp., EagleFunding Capital
Corporation and BankBoston (f/k/a The First National Bank of Boston),
as amended by Amendment No. 1 dated February 28, 1997, as amended by
Amendment No. 2 dated June 30, 1997, as amended by Amendment No. 3
dated December 7, 1997, as amended by Amendment No. 4 dated January
7, 1998, and as amended by Amendment No. 5 dated by May 1, 1998
*10.18 --Revolving Credit Agreement dated as of June 18, 1998 by and between
BankVest Capital Corp. and Middlesex Savings Bank
*10.19 --$1,000,000 Revolving Credit Note to Middlesex Savings Bank dated as
of June 18, 1998
*10.20 --Line of Credit Agreement dated as of October 31, 1995 by and between
Framingham Savings Bank and BankVest Capital Corp.
*10.21 --$2,000,000 Promissory Note--Demand (Variable Rate) to Framingham
Savings Bank dated October 31, 1995
*10.22 --Loan and Security Agreement dated as of December 9, 1996 by and
between MetroWest Bank and BankVest Capital Corp.
*10.23 --$2,000,000 Promissory Note--Monthly Installment to MetroWest Bank
dated December 9, 1996
*10.24 --Loan Agreement dated as of December 9, 1996 by and between MetroWest
Bank and BankVest Capital Corp.
*10.25 --$3,000,000 Promissory Note--Demand to MetroWest Bank dated December
9, 1996
*10.26 --Security Agreement dated as of December 9, 1996 by and between
MetroWest Bank and BankVest Capital Corp.
*10.27 --$500,000 Promissory Note--Monthly Installment to MetroWest Bank
dated December 9, 1996
*10.28 --Line of Credit Agreement dated as of February 5, 1998 by and between
MetroWest Bank and BankVest Capital Corp.
*10.29 --$5,000,000 Promissory Note--Demand to MetroWest Bank dated February
5, 1998
*10.30 --$2,500,000 Promissory Note to MetroWest Bank dated September 2, 1998
*10.31 --Loan and Security Agreement dated as of December 27, 1996 by and
between Century Bank and Trust Company and BankVest Capital Corp.
++10.32 --Loan and Security Agreement dated as of May 9, 1997 by and among
BankVest Capital Corp., LeaseVest Capital Corp., and PNC Bank, N.A.
++10.33 --Revolving Credit Agreement dated as of September 12, 1996, by and
between BankVest Capital Corp., LeaseVest Capital Corp. and
BankBoston, N.A. (f/k/a The First National Bank of Boston)
++10.34 --Amendment to Revolving Credit Agreement dated January 1, 1997 by and
between BankVest Capital Corp., LeaseVest Capital Corp. and
BankBoston, N.A. (f/k/a The First National Bank of Boston)
++10.35 --Amendment No. 2 to Revolving Credit Agreement and Security Agreement
dated December 5, 1997 by and between BankVest Capital Corp.,
LeaseVest Capital Corp. and BankBoston, N.A. (f/k/a The First
National Bank of Boston)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
++10.36 --Amendment No. 3 to Revolving Credit Agreement and Security Agreement
dated December 24, 1997 by and between BankVest Capital Corp.,
LeaseVest Capital Corp. and BankBoston, N.A. (f/k/a The First
National Bank of Boston)
++10.37 --$20,000,000 Amended and Restated Revolving Credit Note to BankBoston
(f/k/a The First National Bank of Boston) dated December 5, 1997 of
BankVest Capital Corp.
*10.38 --MetroWest Bank Line of Credit Agreement dated February 5, 1998 by
and between MetroWest Bank and BankVest Capital Corp.
*10.39 --$5,000,000 Promissory Note--Demand to MetroWest Bank dated as of
February 5, 1998 of BankVest Capital Corp.
++10.40 --Revolving Credit Facility, dated as of August 21, 1998, by and
between BankVest Capital Corp. and Fleet Bank, N.A.
++10.41 --$15,000,000 Revolving Credit Note to Fleet Bank, N.A. dated as of
August 21, 1998
++10.42 --Amended and Restated Master Sale of Chattel Paper And Security
Agreement dated as of March 19, 1996, among European American Bank,
BankVest Capital Corp. and LeaseVest Capital Corp.
*10.43 --Amendment dated as of January 14, 1997 to Amended and Restated
Master Sale of Chattel Paper And Security Agreement dated as of March
21, 1996, among European American Bank, BankVest Capital Corp. and
LeaseVest Capital Corp.
++10.44 --Second Amendment dated as of June 30, 1997 to Amended and Restated
Master Sale of Chattel Paper And Security Agreement dated as of March
21, 1996, among European American Bank, BankVest Capital Corp. and
LeaseVest Capital Corp.
++10.45 --Third Amendment dated as of January , 1998 to Amended and Restated
Master Sale of Chattel Paper And Security Agreement dated as of March
21, 1996, among European American Bank, BankVest Capital Corp. and
LeaseVest Capital Corp.
*10.46 --Master Agreement dated November 27, 1995 between First Sierra
Financial, Inc. and BankVest Capital Corp.
*10.47 --First Amendment dated April 10, 1997 to Master Agreement dated
November 27, 1995 between First Sierra Financial, Inc. and BankVest
Capital Corp.
++10.48 --Loan and Security Agreement dated as of August 7, 1995 between
BankVest Capital Corp. and Heller Financial, Inc.
++10.49 --First Amendment dated as of February 12, 1996 to Loan and Security
Agreement, dated as of August 7, 1995 by and between Heller
Financial, Inc. and BankVest Capital Corp.
++10.50 --Second Amendment dated as of June 24, 1996 to Loan and Security
Agreement, dated as of August 7, 1995 by and between Heller
Financial, Inc. and BankVest Capital Corp.
++10.51 --Third Amendment dated as of July 11, 1997 to Loan and Security
Agreement, dated as of August 7, 1995 by and between Heller
Financial, Inc. and BankVest Capital Corp.
*10.52 --Purchase and Sale Agreement, dated as of August 7, 1995 by and
between Heller Financial Leasing, Inc. and BankVest Capital Corp.
++10.53 --First Amendment dated as of February 12, 1996 to Purchase and Sale
Agreement, dated as of August 7, 1995 by and between Heller Financial
Leasing, Inc. and BankVest Capital Corp.
++10.54 --Second Amendment dated as of June 24, 1996 to Purchase and Sale
Agreement, dated as of August 7, 1995 by and between Heller Financial
Leasing, Inc. and BankVest Capital Corp.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
++10.55 --Third Amendment dated as of July 11, 1997 to Purchase and Sale
Agreement, dated as of August 7, 1995 by and between Heller Financial
Leasing, Inc. and BankVest Capital Corp.
++10.56 --Sale of Chattel Paper and Security Agreement dated as of March 28,
1996 by and between UJB Leasing Corporation and BankVest Capital
Corp.
++10.57 --First Amendment dated as of June 1, 1997 to Sale of Chattel Paper
and Security Agreement by and between Summit Leasing Corporation
(f/k/a UJB Leasing Corporation) and BankVest Capital Corp.
++10.58 --Second Amendment to Sale of Chattel Paper and Security Agreement by
and between Summit Leasing Corporation (f/k/a UJB Leasing
Corporation) and BankVest Capital Corp.
*10.59 --Master Sale and Assignment Agreement dated as of November 21, 1997
by and between BankVest Capital Corp., LeaseVest Capital Corp., and
Marquette National Bank
*10.60 --Receivables Purchase Agreement dated as of September , 1998 among
BVFU Funding LLC, BankVest Capital Corp., the Investors, Variable
Funding Capital Corporation, First Union Capital Markets, First Union
National Bank of North Carolina and Norwest Bank Minnesota, N.A.
*10.61 --Purchase Agreement, dated as of September , 1998 between BVFU and
BankVest Capital Corp.
*10.62 --Purchase and Assignment Agreement, dated as of September , 1998
between BVFU Funding Corp. and BVFU Funding LLC
*10.63 --Lease Receivables Sale and Contribution Agreement dated as of
September , 1998 by and among BVC Funding LLC, LeaseVest Capital
Corp. and BankVest Capital Corp.
*10.64 --Lease Receivables Purchase Agreement dated as of September , 1998
by and among BVC Funding LLC, BankVest Capital Corp., Eagle Funding
Capital Corporation and BankBoston, N.A.
*10.65 --Transfer and Sale Agreement dated as of , 1998, by and among
BankVest Capital Corp., BVFU, BFC, VFCC, Eagle and the BV Equipment
Lease Company 1998-1, LLC
*10.66 --Indenture dated as of , 1998 by and between BV Equipment Lease
Company 1998-1, LLC and Norwest
+11.1 --Computation of earnings per share
++16.1 --Letter from PricewaterhouseCoopers LLP
*21.1 --Subsidiaries of the Company
+23.1 --Consent of Deloitte & Touche LLP
*23.2 --Consent of Goldstein & Manello, P.C. (contained in Exhibit 5.1
hereto)
+24.1 --Powers of Attorney
+27.1 --Financial Data Schedule
</TABLE>
- --------
*To be filed by amendment.
+Filed on September 30, 1998.
++Filed herewith.
<PAGE>
Exhibit 4.3
[EXECUTION COPY]
BANKVEST CAPITAL CORP.
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
----------------------
THIS AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this "Agreement") is
---------
made as of May 28, 1998, by and among BankVest Capital Corp., a Massachusetts
corporation (the "Company"), each of the Persons listed on the Schedule of
------- -----------
Investors attached hereto (the "Investors") and each of the Persons listed on
- --------- ---------
the Schedule of Existing Stockholders attached hereto (collectively, the
---------------------------------
"Existing Stockholders"). The Investors and the Existing Stockholders are
---------------------
collectively referred to herein as the "Stockholders" and individually as a
------------
"Stockholder." Except as otherwise provided herein, capitalized terms used
- ------------
herein are defined in paragraph 9 hereof.
WHEREAS, Primus and PNC have heretofore purchased from the Company,
pursuant to a Purchase Agreement dated as of May 30, 1996 by and among the
Company, Primus and PNC (the "1996 Purchase Agreement"), (i) in the case of
-----------------------
Primus, 30,000 shares of the Company's Class A Convertible Preferred Stock, par
value $1.00 per share (the "Class A Preferred"), and a warrant (the "Class A
----------------- -------
Warrant") to purchase an aggregate of 24,000 shares of the Company's Class A
- -------
Common Stock, par value $1.00 per share (the "Class A Common"), and (ii) in the
--------------
case of PNC, 30,000 shares of the Company's Class B Convertible Preferred Stock,
par value $1.00 per share (the "Class B Preferred" and together with the Class A
-----------------
Preferred, the "Junior Preferred Stock"), and a warrant (the "Class B Warrant
---------------------- ---------------
and, together with the Class A Warrant, the "Warrants") to purchase an aggregate
--------
of 24,000 shares of the Company's Class B Common Stock, par value $1.00 per
share (the "Class B Common" and, together with the Class A Common, the "Common
-------------- ------
Stock"), and in connection therewith, among other things, the Company, Primus,
- -----
PNC and the Existing Stockholders entered into that certain Stockholders
Agreement, dated as of May 30, 1996 (the "Stockholders Agreement");
----------------------
WHEREAS, the Company has heretofore issued and sold to Whitney
Subordinated Debt Fund, L.P. ("WSDF") pursuant to a Securities Purchase
----
Agreement dated as of February 28, 1997 by and between the Company and WSDF (the
"WSDF Purchase Agreement"), (i) a warrant (the "Vested Warrant") to purchase
----------------------- --------------
118,038 shares of Class A Common, (ii) a warrant (the "Vesting Warrant") to
---------------
purchase under certain circumstances an additional 53,654 shares of Class A
Common, and in connection therewith, among other things, the Company, Primus,
PNC, WSDF and the Existing Stockholders entered into a First Amendment to
Stockholders Agreement dated as of February 28, 1997 (the "Amended Stockholders
--------------------
Agreement, and together with the Stockholders Agreement, the "Original
- --------- --------
Agreement");
WHEREAS, certain of the parties to this Agreement are parties to a
Purchase Agreement of even date herewith (the "1998 Purchase Agreement"),
-----------------------
whereby Primus and PNC will purchase from the Company (i) in the case of Primus,
37,500 shares of the Company's Class C Convertible Preferred Stock, par value
$1.00 per share (the "Class C Preferred") and (ii) in the case
-----------------
<PAGE>
of PNC, 37,500 shares of the Company's Class D Convertible Preferred Stock, par
value $1.00 per share (the "Class D Preferred" and together with the Class C
-----------------
Preferred, the "Senior Preferred Stock");
----------------------
WHEREAS, in order to induce the Primus and PNC to enter into the 1998
Purchase Agreement, the Company has agreed to provide the certain rights as set
forth in this Agreement;
WHEREAS, the execution and delivery of this Agreement is a condition
to the Closing under the 1998 Purchase Agreement; and
WHEREAS, the parties hereto desire to enter into this Agreement to
amend and restate the Original Agreement in its entirety for the purpose, among
other things, of (i) establishing the composition of the Company's Board of
Directors (the "Board"), (ii) assuring continuity in the management and
-----
ownership of the Company and (iii) limiting the manner and terms by which the
Existing Stockholders' Stockholder Shares may be transferred.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties to this Agreement hereby agree to amend and
restate the Original Agreement as follows:
1. Board of Directors.
------------------
(a) From and after the Closing (as defined in the 1996 Purchase
Agreement) and until the provisions of this paragraph 1 cease to be effective,
each holder of Stockholder Shares under this Agreement shall vote all of his or
its Stockholder Shares which are voting shares and any other voting securities
of the Company over which such holder has voting control and shall take all
other necessary or desirable actions within his or its control (whether in his
or its capacity as a stockholder, director, member of a board committee or
officer of the Company or otherwise, and including, without limitation,
attendance at meetings in person or by proxy for purposes of obtaining a quorum
and execution of written consents in lieu of meetings), and the Company shall
take all necessary or desirable actions within its control (including, without
limitation, calling special board and stockholder meetings), so that:
(i) subject to paragraph 1(f) below, the authorized number of
directors on the Board shall be established at seven directors;
(ii) the following individuals shall be elected to the Board:
(A) one representative (an "Investor Director") who shall
-----------------
be designated by the Investors holding a majority of the Stockholder
Shares issued to Primus (pursuant to both the 1996 Purchase Agreement
and the 1998 Purchase Agreement) (it being understood, however, that
if the Class B Preferred or the Class D Preferred held by PNC is
converted into Class A Preferred or Class C Preferred
-2-
<PAGE>
pursuant to Section 7 of Part D of the Restated Articles or Section 7
of Part E of the Restated Articles, respectively, the Investor
Director designated by the Investors holding a majority of the
Stockholder Shares issued to Primus shall thereafter be designated
jointly by the Investors holding a majority of the Stockholder Shares
issued to Primus and PNC (voting together);
(B) three representatives designated by Paul S. Gass (who
shall initially be Paul S. Gass ("Gass"), John P. Colton ("Colton")
---- ------
and Kellie D. Jacques) (the "Gass Directors");
--------------
(C) two representatives (who shall initially be Sandra King
and James Gerson) mutually designated by the Investors (determined by
a vote of the Investors owning a majority of the Stockholder Shares
held by all Investors) and Gass, with the understanding that the
Investors (as a group) and Gass shall have equal rights to recommend
candidates submitted for joint approval to fill these directorships;
provided that at any time the Investors and Gass are unable to reach
-------- ----
agreement upon a representative or representatives under this clause
(C), any such directorship(s) shall remain vacant until such parties
mutually agree on a representative or representatives; and
(D) one representative designated by WSDF (also, an
"Investor Director"), so long as the obligations of the Company
-----------------
relating to the indebtedness evidenced by the WSDF Note remain
outstanding, or WSDF, together with affiliates of WSDF, hold in the
aggregate at least 50% of the Stockholders Shares held by such Persons
on the date hereof.
(iii) the composition of the board of directors of each of the
Company's Subsidiaries (a "Sub Board") shall be the same as that of the
---------
Board;
(iv) (A) the Compensation Committee established by the Board
shall include the Investor Directors; (B) the Stock Option Committee
established by the Board shall include the Investor Directors; and (C) any
other committees established by the Board or a Sub Board shall be
established only upon the approval of a majority of the members of the
Board and shall include the Investor Directors;
(v) (A) the removal from the Board or a Sub Board (with or
without cause) of any Investor Director shall be at the written request of
the Investor(s) that designated such Investor Director pursuant to
subparagraph (ii)(A) or (ii)(D) above, as the case may be (determined on
the basis of a vote of the holders of a majority of the Stockholder Shares
held by such Investors), but only upon such written request and under no
other circumstances, (B) the removal from the Board or a Sub Board (with or
without cause) of any Gass Director shall be at Gass' written request, but
only upon such written request and under no other circumstances, and (C)
the removal from the Board or a Sub
-3-
<PAGE>
Board (with or without cause) of any director designated pursuant to
subparagraph (ii)(C) above shall be at the written request of the Investors
(determined on the basis of a vote of the holders of a majority of the
Stockholder Shares held by the Investors) and Gass, but only upon such
written request and under no other circumstances; and
(vi) (A) in the event that any Investor Director ceases to serve
as a member of the Board or a Sub Board during his term of office, the
resulting vacancy on the Board or the Sub Board shall be filled by a
representative designated by the Investor(s) that designated such Investor
Director as provided hereunder, (B) in the event that any Gass Director
ceases to serve as a member of the Board or a Sub Board during his term of
office, the resulting vacancy on the Board or the Sub Board shall be filled
by a representative designated by Gass as provided hereunder, and (C) in
the event that any director designated pursuant to subparagraph (ii)(C)
above ceases to serve as a member of the Board or a Sub Board during his
term of office, the resulting vacancy on the Board or the Sub Board shall
be filled by a representative designated as provided in subparagraph
(ii)(C) above.
(b) The Company shall pay the reasonable out-of-pocket expenses
incurred by each director in connection with attending the meetings of the
Board, any Sub Board and any committee thereof. In addition, the Company shall
pay to the Investor Directors the same compensation for serving on the Board or
any Sub Board as it pays to any other director(s). So long as any Investor
Director serves on the Board, the Company's Articles of Organization and Bylaws
shall provide for indemnification and exculpation of directors to the fullest
extent permitted under applicable law.
(c) The rights of the Investors under this paragraph 1 shall
terminate at such time as the Investors hold in the aggregate less than 50% of
the Stockholder Shares held by such Persons on the date hereof.
(d) The rights of Gass under this paragraph 1 shall terminate at such
time as Gass and his Permitted Transferees (as defined in paragraph 4(d)) hold
in the aggregate less than 50% of the Stockholder Shares held by Gass on the
date hereof.
(e) Except as otherwise provided in subparagraph (ii)(C) above, if
any party fails to designate a representative to fill a directorship pursuant to
the terms of this paragraph 1, the individual previously holding such
directorship shall be elected to such position, or if such individual fails or
declines to serve, the election of an individual to such directorship shall be
accomplished in accordance with the Company's Bylaws and applicable law;
provided that the Stockholders shall vote to remove such individual if the party
- -------- ----
which failed to designate such directorship so directs.
(f) Notwithstanding anything to the contrary contained in this
paragraph 1, in the event the holder or holders of the Class A Preferred
exercise their right to elect a director or directors to the Board upon the
occurrence of an Event of Noncompliance of the type described in Sections
9A(ii), 9A(iii), 9A(vi) or 9A(viii) of Part D of the Restated Articles, the
provisions of this
-4-
<PAGE>
paragraph 1 shall remain in effect; provided that the size of the Board shall be
-------- ----
increased by the number of directors who are elected by the holders of the Class
A Preferred in accordance with Part D of the Restated Articles.
2. Representations and Warranties. Each Stockholder represents and
------------------------------
warrants that (i) this Agreement has been duly authorized, executed and
delivered by such Stockholder and constitutes the valid and binding obligation
of such Stockholder, enforceable in accordance with its terms, and (ii) such
Stockholder has not granted and is not a party to any proxy, voting trust or
other agreement which is inconsistent with, conflicts with or violates any
provision of this Agreement. No holder of Stockholder Shares shall grant any
proxy or become party to any voting trust or other agreement which is
inconsistent with, conflicts with or violates any provision of this Agreement.
3. Retention of Stockholder Shares. Until May 30, 1999, Gass shall
-------------------------------
not sell, transfer, assign, pledge or otherwise dispose of (whether with or
without consideration and whether voluntarily or involuntarily or by operation
of law) (a "Transfer") any interest in any Stockholder Shares held by such
--------
Person on the date hereof; provided that nothing contained in this paragraph 3
-------- ----
shall prohibit Gass from transferring Stockholder Shares as permitted by
paragraph 4(d) hereof; and provided further that the provisions of this
-------- -------
paragraph 3 shall terminate and cease to be effective upon the consummation of a
Qualified Public Offering or a Sale of the Company.
4. Restrictions on Transfer of Stockholder Shares.
----------------------------------------------
(a) Transfer of Stockholder Shares by Existing Stockholders. No
-------------------------------------------------------
Existing Stockholder shall Transfer any interest in his or its Stockholder
Shares, except pursuant to (i) a Sale of the Company or a Public Sale (an
"Exempt Transfer") or (ii) the provisions of this paragraph 4. Prior to making
---------------
any transfer other than an Exempt Transfer, the transferring Existing
Stockholder (the "Transferring Existing Stockholder") shall deliver written
---------------------------------
notice (the "Sale Notice") to the Company and the Investors and (if the
-----------
Transferring Existing Stockholder is other than Gass) to Gass. The Sale Notice
shall disclose in reasonable detail the identity of the prospective
transferee(s), the number of shares to be transferred and the terms and
conditions of the proposed Transfer. The Transferring Existing Stockholder
shall not consummate any Transfer until 45 days after the Sale Notice has been
given to the Company and the Investors and (if the Transferring Existing
Stockholder is other than Gass) to Gass (the "Election Period"), unless the
---------------
parties to the Transfer have been finally determined pursuant to this paragraph
4 prior to the expiration of such 45-day period (the date of the first to occur
of such events under this paragraph 4 being referred to herein as the
"Authorization Date").
------------------
(b) First Refusal Rights Applicable to Existing Stockholders. The
--------------------------------------------------------
Company may elect to purchase all or any portion of a Transferring Existing
Stockholder's Stockholder Shares to be transferred upon the same terms and
conditions as those set forth in the Sale Notice by delivering a written notice
of such election to such Existing Stockholder, the Investors and (if the
Transferring Existing Stockholder is other than Gass) to Gass within 20 days
after the Sale Notice has been delivered to the Company. If the Company has not
elected to purchase all of such Existing
-5-
<PAGE>
Stockholder's Stockholder Shares, the Investors may elect to purchase all or any
portion of such Transferring Existing Stockholder's Stockholder Shares not
elected to be purchased by the Company (the "Available Shares") upon the same
----------------
terms and conditions as those set forth in the Sale Notice by delivering written
notice of such election to such Transferring Existing Stockholder within 30 days
after the Sale Notice has been given to the Investors. If more than one Investor
elects to purchase the Available Shares, the Available Shares to be sold shall
be allocated among the Investors pro rata according to the number of Stockholder
Shares owned by each such Investor. If the Company and the Investors do not
elect to purchase all of the Stockholder Shares specified in the Sale Notice,
Gass may elect to purchase all or any portion of such Transferring Existing
Stockholder's Stockholder Shares not elected to be purchased by the Company and
the Investors upon the same terms and conditions as those set forth in the Sale
Notice by delivering written notice of such election to such Transferring
Existing Stockholder within 35 days after the Sale Notice has been given to
Gass. If the Company, the Investors and Gass do not elect to purchase all of the
Stockholder Shares specified in the Sale Notice, the Transferring Existing
Stockholder may Transfer the Stockholder Shares specified in the Sale Notice,
subject to the provisions of paragraph 4(c) below, at a price and on terms no
more favorable to the transferee(s) thereof than specified in the Sale Notice
during the 60-day period immediately following the Authorization Date. Any
Stockholder Shares not transferred within such 60-day period shall be subject to
the provisions of this paragraph 4 upon subsequent transfer. If the Company, the
Investors or Gass have elected to purchase Stockholder Shares hereunder, the
Transfer of such shares shall be consummated as soon as practical after the
delivery of the election notice(s) to the Transferring Existing Stockholder, but
in any event within 15 days following the Authorization Date.
(c) Participation Rights Applicable to Existing Stockholders. If the
--------------------------------------------------------
Company, the Investors and Gass have not elected to purchase all of the
Stockholder Shares specified in the Sale Notice pursuant to paragraph 4(b)
above, each Investor may elect to participate in the Transfer contemplated by a
Transferring Existing Stockholder by delivering written notice to the
Transferring Existing Stockholder within 40 days after receipt by the Investors
of the Sale Notice. If any Investor has elected to participate in such
Transfer, the Transferring Existing Stockholder and the Investors electing to
participate therein shall be entitled to sell in the contemplated Transfer, at
the same price and on the same terms, a number of Stockholder Shares equal to
the product of (i) the quotient determined by dividing the percentage of
Stockholder Shares owned by such Person by the aggregate percentage of
Stockholder Shares owned by the Transferring Existing Stockholder and the
Investors participating in such sale and (ii) the number of Stockholder Shares
to be sold in the contemplated Transfer.
For example, if the Sale Notice contemplated a sale of 100 Stockholder Shares by
- -----------
the Transferring Existing Stockholder, and if the Transferring Existing
Stockholder at such time owns 30% of all Stockholder Shares and if one Investor
elects to participate and owns 20% of all Stockholder Shares, the Transferring
Existing Stockholder would be entitled to sell 60 shares (30% / 50% x 100
shares) and the Investor would be entitled to sell 40 shares (20% / 50% x 100
shares).
-6-
<PAGE>
Each Transferring Existing Stockholder shall use his or its best efforts to
obtain the agreement of the prospective transferee(s) to the participation of
the Investors in any contemplated Transfer and shall not transfer any of his or
its Stockholder Shares to any prospective transferee if such prospective
transferee declines to allow the participation of the Investors or, as provided
below, the inclusion of the Senior Preferred Stock, the Junior Preferred Stock
and/or the Warrants in connection therewith. Any Investor may participate in a
sale of Common Stock pursuant to this paragraph 4(c) by tendering shares of
Senior Preferred Stock or Junior Preferred Stock convertible into the
appropriate number of shares of Common Stock and/or Warrants exercisable for the
appropriate number of shares of Common Stock (it being understood, however, that
if any portion of the Warrants are included in any Transfer of Stockholder
Shares under this paragraph 4(c), the purchase price for the Warrants shall be
equal to the full purchase price determined hereunder for the Stockholder Shares
covered by the portion of the Warrants to be transferred, reduced by the
aggregate exercise price for such shares).
(d) Permitted Transfers. The restrictions set forth in this paragraph
-------------------
4 shall not apply with respect to any Transfer of Stockholder Shares by (i) an
Existing Stockholder (A) pursuant to applicable laws of descent and distribution
or (B) among such Existing Stockholder's Family Group (collectively referred to
herein as "Permitted Transferees") and (ii) Gass to persons identified by Gass
---------------------
as key employees of the Company; provided that such restrictions shall continue
-------- ----
to be applicable to the Stockholder Shares after any such Transfer and the
transferees of such Stockholder Shares shall agree in writing to be bound by the
provisions of this Agreement as a condition precedent to any such Transfer. For
purposes of this Agreement, "Family Group" means an Existing Stockholder's
------------
spouse and descendants (whether natural or adopted) and any trust solely for the
benefit of the Existing Stockholder and/or an Existing Stockholder's spouse
and/or descendants.
5. Holdback Agreement. No Existing Stockholder shall effect any
------------------
public sale or distribution of any Stockholder Shares or of any other capital
stock or equity securities of the Company, or any securities convertible into or
exchangeable or exercisable for such stock or securities, during the seven days
prior to and the 90-day period beginning on the effective date of any
underwritten Demand Registration or any underwritten Piggyback Registration (as
such terms are defined in the Registration Agreement) unless the underwriters
managing the registration otherwise agree. The restrictions on the transfer of
Stockholder Shares set forth in this paragraph 5 shall continue with respect to
each Stockholder Share until the date on which such Stockholder Share has been
transferred in a Public Sale.
6. Put Arrangements.
----------------
(a) Put Notice. At any time after the first to occur of (i) May 30,
----------
2001, but only in connection with the Stockholder Shares as defined pursuant to
clauses (ii), (iii) and (iv) and clause (ix) as it relates to such clauses of
the definition of Stockholder Shares, (ii) the fifth anniversary of the Closing
(as defined in the 1998 Purchase Agreement) but only in connection with the
Stockholder Shares as defined pursuant to clauses (vi), (vii) and (viii) and
clause (ix) as it relates to such clauses of the definition of Stockholder
Shares, (iii) the occurrence of an Event of
-7-
<PAGE>
Noncompliance of the type described in Sections 9A(ii), 9A(vi) or 9A(viii) of
Part D and Part E of the Restated Articles or (iv) the termination of Gass'
employment with the Company for any reason or the failure of Gass to devote his
full time and attention to the business and affairs of the Company, any Investor
that holds Senior Preferred Stock or Junior Preferred Stock shall have the right
to require the Company to repurchase (in cash) all or any portion of the
applicable Stockholder Shares held by such Investor at a price equal to the Put
Price (the "Put") by delivering a written notice to the Company specifying the
---
number and type of Stockholders Shares to be purchased (the "Put Notice"). Upon
----------
receipt of the Put Notice, the Company shall give written notice of the exercise
of the Put to each of the other Investors, and each such other Investor shall
have the right (including in the case of clause (i) above, the Investors holding
Stockholder Shares as defined pursuant to clauses (vi), (vii) and (viii) and
clause (ix) as it relates to such clauses of the definition of Stockholder
Shares), within 20 days after receipt of such notice, to participate in the Put
by delivering a written notice (the "Participation Notice") to the Company
--------------------
specifying the number and type of Stockholders Shares to be repurchased. The
right to initiate and/or participate in the Put shall inure to the benefit of
all transferees of the Investor's Stockholder Shares (other than transferees in
a Public Sale). All Investors participating in a Put are referred to herein as
the "Participating Investors."
-----------------------
(b) Put Closing. Upon the delivery of the Put Notice, the Company and
-----------
the Participating Investors shall in good faith promptly determine the Put Price
as provided hereunder and, subject to the provisions hereof, within ten days
after the determination of the Put Price the Company shall purchase and the
Participating Investors shall sell the number of Stockholder Shares specified in
the Put Notice and (as applicable) each Participation Notice at a mutually
agreeable time and place (the "Put Closing"). At the Put Closing, each
-----------
Participating Investor shall deliver to the Company certificates representing
such Investor's shares of Senior Preferred Stock, Junior Preferred Stock, Common
Stock and/or Warrants to be repurchased by the Company free and clear of all
liens and encumbrances and duly endorsed in blank or accompanied by duly
executed forms of assignment, and the Company shall deliver to each such
Investor an amount equal to the Put Price as determined pursuant to paragraph
6(c) below by wire transfer of immediately available funds to an account
designated by each such Investor; provided that if and to the extent any such
-------- ----
purchase for cash is prohibited by the provisions of the Business Corporation
Law of Massachusetts or would result in an event of default under any of the
Company's material financing agreements or if such purchase is prohibited by any
lending institution under such financing agreements in accordance with the terms
thereof, the amount of the Put Price which is not able to be paid in cash shall
be paid for by the issuance of subordinated promissory notes in form and
substance satisfactory to such Investors with the principal amount payable in
three equal annual installments beginning on the first anniversary of issuance,
bearing interest (payable quarterly) at a floating rate per annum equal to the
interest rate per annum announced from time to time in the Wall Street Journal
-------------------
as the current prime rate plus 400 basis points; provided further that such
-------- -------
Investors shall be entitled to rescind any portion of the exercised Put if any
portion of the aggregate Put Price would be payable by a note (subject to
subsequent exercise of the Put at any time following such rescission). If an
Investor delivers to the Company all or any portion of its Warrants in
satisfaction of the sale of such Investor's
-8-
<PAGE>
Stockholder Shares hereunder, the Put Price payable to such Investor shall be
reduced by the aggregate exercise price of such portion of the Warrants.
(c) Put Price. The Stockholder Shares to be purchased by the Company
---------
from each Investor pursuant to the Put shall be purchased at a price (the "Put
---
Price") equal to the greater of (i) aggregate amount that such Investor would
- -----
have received in respect of such Investor's Stockholder Shares included in the
Put pursuant to the rights and preferences set forth in the Restated Articles as
in effect immediately prior to the delivery of such Investor's Put Notice or
Participation Notice (the "Put Date") assuming that the Company was completely
--------
liquidated as of the Put Date and the aggregate amount to be distributed among
the holders of the Company's outstanding Senior Preferred Stock, Junior
Preferred Stock and Common Stock (including Common Stock issuable upon exercise
of the Warrants) was equal to the Market Value of the Company or (ii) the
product of (A) the sum of (x) eight multiplied by the Company's EBT for its most
recently completed fiscal year as reflected on the Company's audited
consolidated income statement for such fiscal year, plus (y) the amount of cash
and cash equivalents stated on the Company's consolidated balance sheet as of
the end of such fiscal year, less (z) the outstanding principal amount of all
indebtedness for borrowed money on the Company's consolidated balance sheet as
of the end of such fiscal year (other than borrowing for seasonal working
capital requirements), multiplied by (B) a fraction, the numerator of which
shall be the number of such Investor's Stockholder Shares to be repurchased and
the denominator of which shall be the total number of shares of Common Stock
then outstanding, assuming full exercise of the Warrants and conversion of all
outstanding Senior Preferred Stock and Junior Preferred Stock.
7. Legend. Each certificate evidencing Stockholder Shares and each
------
certificate issued in exchange for or upon the transfer of any Stockholder
Shares (if such shares remain Stockholder Shares after such transfer) shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO AN AMENDED AND RESTATED STOCKHOLDERS AGREEMENT DATED AS
OF MAY 28, 1998, AMONG THE ISSUER OF SUCH SECURITIES (THE
"COMPANY") AND CERTAIN OF THE COMPANY'S STOCKHOLDERS, AS
-------
AMENDED AND MODIFIED FROM TIME TO TIME. A COPY OF SUCH
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT SHALL BE
FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER
HEREOF UPON WRITTEN REQUEST."
The Company shall imprint such legend on certificates evidencing Stockholder
Shares outstanding as of the date hereof. The legend set forth above shall be
removed from the certificates evidencing any shares which cease to be
Stockholder Shares in accordance with paragraph 9 hereof.
-9-
<PAGE>
8. Transfers; Future Sales. Prior to any holder of Stockholder
-----------------------
Shares Transferring any Stockholder Shares (other than pursuant to an Exempt
Transfer), such holder shall cause the prospective transferee to be bound by
this Agreement and to execute and deliver to the Company and the other holders
of Stockholder Shares a counterpart of this Agreement. Transferees of
Stockholder Shares held by Investors shall be deemed to be Investors hereunder.
Transferees of Stockholder Shares held by Existing Stockholders (other than, in
each case, the Investors) shall be deemed to be Existing Stockholders hereunder.
The Company shall not issue or sell any of the Company's equity securities (or
options or other rights to acquire such equity securities or securities
convertible into or exchangeable for such equity securities) to any Person
(other than pursuant to a Public Offering) if after any such issuance or sale
the Stockholders would own less than 50% of the Class A Common on a fully-
diluted basis, unless prior to the consummation of such issuance or sale and as
a condition thereto the Company shall cause the prospective transferee or
transferees to be bound by the provisions of paragraph 1 of this Agreement and
to execute and deliver to the Company and the other holders of Stockholder
Shares a counterpart of this Agreement as the same relates to paragraph 1
hereof.
9. Definitions.
-----------
"EBT" means the Company's consolidated net income for any accounting
---
period, plus the amount of the provision for federal, state and local income
taxes for such period determined on a consolidated basis in accordance with
generally accepted accounting principles consistently applied.
"Market Value" means the fair market value of the Company's entire
------------
equity determined on a going concern basis as between a willing buyer and a
willing seller and taking into account all relevant factors determinative of
value. Unless otherwise agreed by the Company and the Participating Investors
owning a majority of the Stockholder Shares held by all Participating Investors,
Market Value shall be determined by an investment banking firm reasonably
acceptable to the Company and the Participating Investors owning a majority of
the Stockholder Shares held by all Participating Investors, which firm shall
submit to the Company and the Participating Investors a written report setting
forth such determination. If the parties are unable to agree on an investment
banking firm within 15 days after delivery of a Put Notice, a firm shall be
selected by lot from the top-tier New York-based investment banking firms, after
the Company and the Participating Investors owning a majority of the Stockholder
Shares held by all Participating Investors have each eliminated one such firm.
The expenses of such firm shall be borne by the Company, and the determination
of such firm shall be final and binding upon all parties, except that after the
determination of Market Value following the exercise of the Put, any
Participating Investor may rescind its exercise thereof (subject to subsequent
exercise so long as at least 180 days has elapsed from the date of such
rescission and the date of such subsequent exercise).
"Person" means an individual, a partnership, a corporation, a limited
------
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
-10-
<PAGE>
"PNC" means PNC Venture Corp., a Delaware corporation.
---
"Primus" means Primus Capital Fund III Limited Partnership, an Ohio
------
limited partnership.
"Public Sale" means any sale of Stockholder Shares to the public
-----------
pursuant to an offering registered under the Securities Act or to the public
through a broker, dealer or market maker pursuant to the provisions of Rule 144
adopted under the Securities Act.
"Qualified Public Offering" has the meaning set forth in Part E of the
-------------------------
Restated Articles.
"Registration Agreement" means that certain Amended and Restated
----------------------
Registration Rights Agreement by and among the Company, Primus, PNC and WSDF
dated as of February 28, 1997 and as amended by that certain First Amendment to
Amended and Restated Registration Rights Agreement by and among the Company,
Primus and PNC dated as of the date hereof.
"Restated Articles" means the Company's amended and restated Articles
-----------------
of Organization as in effect on the date hereof.
"Sale of the Company" means the sale of the Company to one or more
-------------------
parties pursuant to which such party or parties acquire (i) capital stock of the
Company possessing the voting power under normal circumstances to elect a
majority of the Company's board of directors (whether by merger, consolidation
or sale or transfer of the Company's capital stock) or (ii) all or substantially
all of the Company's assets determined on a consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
"Stockholder Shares" means, without duplication, (i) any Class A
------------------
Common purchased or otherwise acquired by any Stockholder, (ii) any Class A
Common issued or issuable upon conversion of the Class A Preferred or upon
exercise of the Class A Warrant, (iii) any Class A Common issued or issuable
upon conversion of the Class B Common issued or issuable upon conversion of the
Class B Preferred or exercise of the Class B Warrant or exercise of the
Contingent Warrants (as defined in the 1996 Purchase Agreement), if any, issued
pursuant to the 1996 Purchase Agreement, (iv) any Class A Common issued or
issuable upon conversion of the Class A Preferred issued or issuable upon
conversion of the Class B Preferred, (v) any Class A Common issued or issuable
upon exercise of the Vested Warrant or the Vesting Warrant, (vi) any Class A
Common issued or issuable upon conversion of the Class C Preferred, (vii) any
Class A Common issued or issuable upon conversion of the Class B Common issued
or issuable upon conversion of the Class D Preferred or exercise of the
Contingent Warrants (as defined in the 1998 Purchase Agreement), if any, issued
pursuant to the 1998 Purchase Agreement, (viii) any Class A Common issued or
issuable upon conversion of the Class C Preferred issued or issuable upon
conversion of the Class D Preferred, (ix) any Common Stock issued or issuable
with respect to the securities referred to in
-11-
<PAGE>
clauses (i) through (vii), inclusive, above by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. For purposes of this Agreement, any
Person who holds Senior Preferred Stock, Junior Preferred Stock, Warrants, the
Vested Warrant or the Vesting Warrant, shall be deemed to be the holder of the
Stockholder Shares obtainable upon conversion of the Senior Preferred Stock,
Junior Preferred Stock or exercise of the Warrants, the Vested Warrant or the
Vesting Warrant, respectively, in connection with the transfer thereof or
otherwise (regardless of any restriction or limitation on the conversion of the
Senior Preferred Stock, Junior Preferred Stock or exercise of the Warrants, the
Vested Warrant or the Vesting Warrant), such Stockholder Shares shall be deemed
to be in existence, and such Person shall be entitled to exercise the rights of
a holder of Stockholder Shares hereunder. As to any particular Stockholder
Shares, such shares shall cease to be Stockholder Shares when they have been (a)
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering them or (b) distributed to the public
through a broker, dealer or market maker pursuant to Rule 144 under the
Securities Act (or any similar provision then in force) or (c) repurchased by
the Company or any Subsidiary.
"Subsidiary" means, with respect to any Person, any corporation,
----------
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the limited liability company, partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control the managing director or general partner
of such limited liability company, partnership, association or other business
entity.
"WSDF Note" means that certain subordinated promissory note, dated
---------
February 28, 1997 and due February 27, 2005, in the principal amount of
$15,000,000, issued by the Company and payable to WSDF.
10. Termination of Agreement. This Agreement (other than the
------------------------
provisions of paragraph 5 hereof) shall terminate upon the consummation of a
Qualified Public Offering.
11. Transfers in Violation of this Agreement. Any Transfer or
----------------------------------------
attempted Transfer of any Stockholder Shares in violation of any provision of
this Agreement shall be void, and the Company shall not record such Transfer on
its books or treat any purported transferee of such Stockholder Shares as the
owner of such shares for any purpose.
-12-
<PAGE>
12. Amendment and Waiver. Except as otherwise provided herein, no
--------------------
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the Stockholders unless such modification,
amendment or waiver is approved in writing by the Company, the Investors holding
at least 662/3% of the Stockholder Shares held by the Investors and the Existing
Stockholders holding at least 662/3% of the Stockholder Shares held by the
Existing Stockholders. The failure of any party to enforce any of the
provisions of this Agreement shall in no way be construed as a waiver of such
provisions and shall not affect the right of such party thereafter to enforce
each and every provision of this Agreement in accordance with its terms.
13. Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
14. Entire Agreement. Except as otherwise expressly set forth
----------------
herein, this Agreement embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
15. Successors and Assigns. Except as otherwise provided herein,
----------------------
this Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Stockholders and any subsequent
holders of Stockholder Shares and the respective successors and assigns of each
of them, so long as they hold Stockholder Shares.
16. Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same agree ment.
17. Remedies. The Company and the Stockholders shall be entitled to
--------
enforce their rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in their favor. The parties hereto agree and acknowledge
that money damages would not be an adequate remedy for any breach of the
provisions of this Agreement and that the Company and any Stockholder may in its
sole discretion apply to any court of law or equity of competent jurisdiction
for specific performance and/or injunctive relief (without posting a bond or
other security) in order to enforce or prevent any violation of the provisions
of this Agreement.
-13-
<PAGE>
18. Notices. Any notice provided for in this Agreement shall be in
-------
writing and shall be either personally delivered, or mailed first class mail
(postage prepaid) or sent by reputable overnight courier service (charges
prepaid) to the Company at the address set forth below and to any other
recipient at the address indicated on the schedules hereto and to any subsequent
holder of Stockholder Shares subject to this Agreement at such address as
indicated by the Company's records, or at such address or to the attention of
such other person as the recipient party has specified by prior written notice
to the sending party. Notices shall be deemed to have been given hereunder when
delivered personally, three days after deposit in the U.S. mail and one day
after deposit with a reputable overnight courier service. The Company's address
is:
BankVest Capital Corp.
200 Nickerson Road
Marlboro, Massachusetts 01752
Attention: President
with a copy to:
--------------
Goldstein & Manello, P.C.
265 Franklin Street
Boston, Massachusetts 02110
Attention: Richard J. Snyder, Esq.
19. Governing Law. The Business Corporation Law of Massachusetts
-------------
shall govern all issues and questions concerning the relative rights of the
Company and its stockholders. All other issues and questions concerning the
construction, validity, interpretation and enforceability of this Agreement and
the exhibits and schedules hereto shall be governed by, and construed in
accordance with, the laws of The Commonwealth of Massachusetts, without giving
effect to any choice of law or conflict of law rules or provisions (whether of
The Commonwealth of Massachusetts or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than The Commonwealth of
Massachusetts.
20. Business Days. If any time period for giving notice or taking
-------------
action hereunder expires on a day which is a Saturday, Sunday or legal holiday
in the state in which the Company's chief-executive office is located, the time
period shall automatically be extended to the business day immediately following
such Saturday, Sunday or legal holiday.
21. Descriptive Headings. The descriptive headings of this Agreement
--------------------
are inserted for convenience only and do not constitute a part of this
Agreement.
* * * * *
-14-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amended and
Restated Stockholders Agreement as of the date first written above.
BANKVEST CAPITAL CORP.
By ______________________________________________
Its ______________________________________________
PRIMUS CAPITAL FUND III LIMITED PARTNERSHIP
By: Primus Venture Partners III Limited Partnership,
its general partner
By: Primus Venture Partners, Inc., its general partner
By ______________________________________________
Its ______________________________________________
PNC VENTURE CORP
By ______________________________________________
Its ______________________________________________
WHITNEY SUBORDINATED DEBT FUND, L.P.
By ______________________________________________
Its ______________________________________________
<PAGE>
[SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS AGREEMENT CONTINUED]
EXISTING STOCKHOLDERS
______________________________________________
PAUL S. GASS
______________________________________________
JOHN P. COLTON
______________________________________________
JAMES D. GERSON
______________________________________________
KELLIE D. JACQUES
______________________________________________
MICHAEL P. KARMAN
______________________________________________
CATHY F. SUTTON
<PAGE>
SCHEDULE OF INVESTORS
---------------------
Primus Capital Fund III Limited Partnership
5900 Landerbrook Drive
Suite 200
Cleveland, Ohio 44124
Attention: Kevin J. McGinty
with a copy to:
- --------------
Kirkland & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attention: Ted H. Zook
PNC Venture Corp
c/o PNC Equity Management Corp.
3150 CNG Tower
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222
Attention: Gary J. Zentner
with a copy to:
- --------------
Kirkland & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attention: Ted H. Zook
Whitney Subordinated Debt Fund, L.P.
177 Broad Street
Stamford, Connecticut 06901
Attention: Mr. James H. Fordyce
Mr. Daniel J. O'Brien
with a copy to:
- --------------
Morrison Cohen Singer & Weinstein, LLP
750 Lexington Avenue
New York, New York 10022
Attention: David A. Scherl, Esq.
<PAGE>
SCHEDULE OF EXISTING STOCKHOLDERS
---------------------------------
Name and Address
- ----------------
Paul S. Gass
555 Concord Road
Sudbury, MA 01776
John P. Colton
141 Cole Avenue
Providence, RI 02906
James D. Gerson
19 West 95th Street
New York, NY 10025
Kellie D. Jacques
364 Ocean Avenue
Unit 7111
Revere, MA 02151
Michael P. Karman
89 Nimrod Drive
Concord, MA 02053
Cathy F. Sutton
216 Main Street
Medway, MA 02053
<PAGE>
EXHIBIT 4.4
EXECUTION COPY
--------------
BANKVEST CAPITAL CORP.
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
--------------------------------------------------
THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT is made as of
February 28, 1997, by and among BankVest Capital Corp., a Massachusetts
corporation (the "COMPANY"), Primus Capital Fund III Limited Partnership, an
Ohio limited partnership ("PRIMUS"), PNC Venture Corp, a Delaware corporation
("PNC"), and Whitney Subordinated Debt Fund, LP ("WSDF") and amends and restates
the Registration Agreement (the "ORIGINAL AGREEMENT") made as of May 30, 1996 by
and among the Company, Primus and PNC.
The Company, Primus and PNC are parties to a Purchase Agreement dated as of
May 30, 1996 (the "PRIMUS/PNC PURCHASE AGREEMENT"). In order to induce Primus
and PNC to enter into the Primus/PNC Purchase Agreement, the Company agreed to
provide the registration rights set forth in the Original Agreement and the
execution and delivery thereof was a condition to the Closing under the
Primus/PNC Purchase Agreement.
The Company and WSDF are parties to a Securities Purchase Agreement of even
date herewith (the "WSDF PURCHASE AGREEMENT"). In order to induce WSDF to enter
into the WSDF Purchase Agreement and to induce Primus and PNC to consent to the
transactions contemplated therein, the Company has agreed to provide the
registration rights set forth in this Amended and Restated Registration Rights
Agreement. The execution and delivery of this Amended and Restated Registration
Rights Agreement is a condition to the Closing under the WSDF Purchase
Agreement.
Unless otherwise provided in this Agreement, capitalized terms used herein
shall have the meanings set forth in paragraph 9 hereof.
The parties hereto hereby agree as follows:
1. DEMAND REGISTRATIONS.
--------------------
(a) Requests for Registration. At any time after the third
-------------------------
anniversary of the Closing under the Primus/PNC Purchase Agreement or such
earlier time as the Company has completed a public offering of its Common Stock
under the Securities Act, the holders of a majority of the Primus/PNC
Registrable Securities and the holders of a majority of the WSDF Registrable
Securities may each request registration under the Securities Act of all or any
portion of their Registrable Securities on Form S-1 or any similar long-form
registration ("LONG-FORM REGISTRATIONS"), and the holders of at least 25% of the
Primus/PNC Registrable Securities and the holder of at least 25% of the WSDF
Registrable Securities may each request registration under the Securities Act of
all or any portion of their Registrable Securities on Form S-2 or S-3 or any
similar short-form registration ("SHORT-FORM REGISTRATIONS") if available. All
registrations requested pursuant to this paragraph 1(a) are referred to herein
as "DEMAND REGISTRATIONS". Each request for
<PAGE>
a Demand Registration shall specify the approximate number of Registrable
Securities requested to be registered and the anticipated per share price range
for such offering. Within ten days after receipt of any such request, the
Company shall give written notice of such requested registration to all other
holders of Registrable Securities and shall, subject to paragraph 1(d) below,
include in such registration all Registrable Securities with respect to which
the Company has received written re quests for inclusion therein within 15 days
after the receipt of the Company's notice.
(b) Long-Form Registrations. The holders of Primus/PNC Registrable
-----------------------
Securities and the holders of WSDF Registrable Securities shall each be entitled
to request two Long-Form Registrations in which the Company shall pay all
Registration Expenses ("COMPANY-PAID LONG-FORM REGISTRATIONS"). A registration
shall not count as one of the permitted Company-paid Long-Form Registrations
until it has become effective, and neither the last or any subsequent Company-
paid Long-Form Registration shall count as one of the permitted Company-paid
Long-Form Registrations unless the holders of Registrable Securities are able to
register and sell at least 90% of the Registrable Securities requested to be
included in such registration; provided that in any event the Company shall pay
-------- ----
all Registration Expenses in connection with any registration initiated as a
Company-paid Long-Form Registration whether or not it has become effective and
whether or not such registration has counted as one of the permitted Company-
paid Long-Form Registrations.
(c) Short-Form Registrations. In addition to the Long-Form
------------------------
Registrations provided pursuant to paragraph 1(b), the holders of Registrable
Securities shall be entitled to request an unlimited number of Short-Form
Registrations in which the Company shall pay all Registration Expenses. Demand
Registrations shall be Short-Form Registrations whenever the Company is
permitted to use any applicable short form. After the Company has become
subject to the reporting requirements of the Securities Exchange Act, the
Company shall use its best efforts to make Short-Form Registrations on Form S-3
available for the sale of Registrable Securities.
(d) Priority on Demand Registrations. The Company shall not include
--------------------------------
in any Demand Registration any securities which are not Registrable Securities
without the prior written consent of the holders of a majority of the Primus/PNC
Registrable Securities and a majority of the WSDF Registrable Securities
included in such registration. If a Demand Registration is an underwritten
offering and the managing underwriters advise the Company in writing that in
their opinion the number of Registrable Securities and/or, if permitted
hereunder, other securities requested to be included in such offering exceeds
the number of Registrable Securities and other securities, if any, which can be
sold in an orderly manner in such offering within a price range acceptable to
the holders of a majority of the Registrable Securities initially requesting
registration, the Company shall include in such registration prior to the
inclusion of any securities which are not Registrable Securities the number of
Registrable Securities requested to be included which in the opinion of such
underwriters can be sold in an orderly manner within the price range of such
offering, Pro Rata among the respective holders thereof. Any Persons other than
holders of Registrable Securities who participate in Demand Registrations which
are not at the Company's expense must pay their share of the Registration
Expenses as provided in paragraph 5 hereof.
-2-
<PAGE>
(e) Restrictions on Registrations. The Company shall not be
------------------------------
obligated to effect any Long-Form Registration within 180 days after the
effective date of a previous Long-Form Registration. The Company may postpone
for up to 90 days the filing or the effectiveness of a registration statement
for a Demand Registration if the Company's board of directors determines in its
reasonable good faith judgment that such Demand Registration would reasonably be
expected to have a material adverse effect on any proposal or plan by the
Company to engage in any acquisition of assets (other than in the ordinary
course of business) or any merger, consolidation, tender offer, reorganization
or similar transaction; provided that in such event, the holders of Registrable
-------- ----
Securities initially requesting such Demand Registration shall be entitled to
withdraw such request and, if such request is withdrawn, such Demand
Registration shall not count as one of the permitted Demand Registrations
hereunder and the Company shall pay all Registration Expenses in connection with
such registration. The Company may delay a Demand Registration hereunder only
once in any twelve-month period.
(f) Other Registration Rights. Except as provided in this Agreement,
-------------------------
the Company shall not grant to any Persons the right to request the Company to
register any equity securities of the Company, or any securities convertible or
exchangeable into or exercisable for such securities, without the prior written
consent of the holders of a majority of the Primus/PNC Registrable Securities
and a majority of the WSDF Registrable Securities; provided that the Company may
-------- ----
grant rights to other Persons to participate in Piggyback Registrations so long
as such rights are subordinate to the rights of the holders of Registrable
Securities with respect to such Piggyback Registrations.
2. PIGGYBACK REGISTRATIONS.
-----------------------
(a) Right to Piggyback. Whenever the Company proposes to register
------------------
any of its securities under the Securities Act (other than pursuant to a Demand
Registration) and the registration form to be used may be used for the
registration of Registrable Securities (a "PIGGYBACK REGISTRATION"), the Company
shall give prompt written notice to all holders of Registrable Securities of its
intention to effect such a registration and shall, subject to paragraphs 2(c)
and 2(d) below, include in such registration all Registrable Securities with
respect to which the Company has received written requests for inclusion therein
within 20 days after the receipt of the Company's notice.
(b) Piggyback Expenses. The Registration Expenses of the holders of
------------------
Registrable Securities shall be paid by the Company in all Piggyback
Registrations.
(c) Priority on Primary Registrations. If a Piggyback Registration
---------------------------------
is an underwritten primary registration on behalf of the Company, and the
managing underwriters advise the Company in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number which can be sold in such offering without adversely affecting the
marketability of the offering, the Company shall include in such registration
(i) first, the securities the Company proposes to sell, (ii) second, the
Registrable Securities requested to be included in such registration, Pro Rata
among the holders of such Registrable Securities, and (iii) third, other
securities requested to be included in such registration.
-3-
<PAGE>
(d) Priority on Secondary Registrations. If a Piggyback Registration
-----------------------------------
is an underwritten secondary registration on behalf of holders of the Company's
securities, and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering without
adversely affecting the marketability of the offering, the Company shall include
in such registration (i) first, the securities requested to be included therein
by the holders requesting such registration and the Registrable Securities
requested to be included in such registration, pro rata among the holders of
such securities on the basis of the number of securities owned by each of the
holders requesting such registrations and the holders of Registrable Securities,
and as among the holders of Registrable Securities, Pro Rata among the holders
of such Registrable Securities, and (ii) second, other securities requested to
be included in such registration.
(e) Other Registrations. If the Company has previously filed a
-------------------
registration statement with respect to Registrable Securities pursuant to
paragraph 1 or pursuant to this paragraph 2, and if such previous registration
has not been withdrawn or abandoned, the Company shall not file or cause to be
effected any other registration of any of its equity securities or securities
convertible or exchangeable into or exercisable for its equity securities
under the Securities Act (except on Form S-8 or any successor form), whether on
its own behalf or at the request of any holder or holders of such securities,
until a period of at least 90 days has elapsed from the effective date of such
previous registration.
3. HOLDBACK AGREEMENTS.
-------------------
(a) Each holder of Registrable Securities shall not effect any public
sale or distribution (including sales pursuant to Rule 144) of equity securities
of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven days prior to and the 90-day
period beginning on the effective date of any underwritten Demand Registration
(except as part of such underwritten registration), unless the underwriters
managing the registered public offering otherwise agree.
(b) The Company (i) shall not effect any public sale or distribution
of its equity securities, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven days prior to and during the
90-day period beginning on the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration (except as part of such
underwritten registration or pursuant to registrations on Form S-8 or any
successor form), unless the underwriters managing the registered public offering
otherwise agree, and (ii) shall cause each holder of at least 2% of its Common
Stock, or any securities convertible into or exchangeable or exercisable for
Common Stock, purchased from the Company at any time after the date of this
Agreement (other than in a registered public offering) to agree not to effect
any public sale or distribution (including sales pursuant to Rule 144) of any
such securities during such period (except as part of such underwritten
registration, if otherwise permitted), unless the underwriters managing the
registered public offering otherwise agree.
4. REGISTRATION PROCEDURES. Whenever the holders of Registrable
-----------------------
Securities have requested that any Registrable Securities be registered pursuant
to this Agreement, the Company
-4-
<PAGE>
shall use its best efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended method of disposition
thereof (including the registration of Preferred Stock, Nonvoting Common Stock
and Warrants held by a holder of Registrable Securities requesting registration
as to which the Company has received reasonable assurances that only Registrable
Securities shall be distributed to the public), and pursuant thereto the Company
shall as expeditiously as possible:
(a) prepare and file with the Securities and Exchange Commission a
registration statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become effective; provided
--------
that before filing a registration statement or prospectus or any amendments or
- ----
supplements thereto, the Company shall furnish to the counsel selected by the
holders of a majority of the Primus/PNC Registrable Securities and to the
counsel selected by the holders of a majority of the WSDF Registrable Securities
covered by such registration statement copies of all such documents proposed to
be filed (which documents shall be subject to the review and comment of such
counsel);
(b) notify each holder of Registrable Securities of the effectiveness
of each registration statement filed hereunder and prepare and file with the
Securities and Exchange Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period of not less
than nine months and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration statement;
(c) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any seller reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller; provided that the Company shall not be required to (i) qualify generally
-------- ----
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction; and provided further that anything in this Agreement to the
-------- -------
contrary notwithstanding with respect to the bearing of expenses, if any
jurisdiction in which the Registrable Securities shall be qualified shall
require that expenses incurred in connection with the qualification of such
Registrable Securities in that jurisdiction be borne by the sellers of
Registrable Securities, then such expenses shall be payable by such sellers of
Registrable Securities Pro Rata to the extent required by such jurisdiction;
-5-
<PAGE>
(e) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company shall
prepare a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not contain an untrue statement of a material fact or omit to state any
fact necessary to make the statements therein not misleading;
(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed, to be listed on the NASD automated quotation
system and, if listed on the NASD automated quotation system, use its best
efforts to secure designation of all such Registrable Securities covered by such
registration statement as a NASDAQ "national market system security" within
the meaning of Rule 11Aa2-1 of the Securities and Exchange Commission or,
failing that, to secure NASDAQ authorization for such Registrable Securities
and, without limiting the generality of the foregoing, to arrange for at least
two market makers to register as such with respect to such Registrable
Securities with the NASD;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
a majority of the Primus/PNC Registrable Securities or a majority of the WSDF
Registrable Securities being sold or the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such Registrable
Securities (including effecting a stock split or a combination of shares);
(i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(j) otherwise use its best efforts to comply with all applicable
rules and regulations of the Securities and Exchange Commission, and make
available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months beginning with
the first day of the Company's first full calendar quarter after the effective
date of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) permit any holder of Registrable Securities which holder, in its
sole and exclusive judgment, might be deemed to be an underwriter or a
controlling person of the Company,
-6-
<PAGE>
to participate in the preparation of such registration or comparable statement
and to require the insertion therein of material, furnished to the Company in
writing, which in the reasonable judgment of such holder and its counsel should
be included;
(l) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, the Company shall use its best efforts promptly to obtain the
withdrawal of such order;
(m) use its best efforts to cause such Registrable Securities covered
by such registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the sellers
thereof to consummate the disposition of such Registrable Securities; and
(n) obtain a cold comfort letter from the Company's independent
public accountants in customary form and covering such matters of the type
customarily covered by cold comfort letters as the holders of a majority of the
Primus/PNC Registrable Securities or holders of a majority of the WSDF
Registrable Securities being sold reasonably request; provided that such
-------- ----
Registrable Securities constitute at least 10% of the securities covered by such
registration statement).
5. REGISTRATION EXPENSES.
---------------------
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws, printing expenses, messenger and delivery expenses, fees and disbursements
of custodians, and fees and disbursements of counsel for the Company and all
independent certified public accountants, underwriters (excluding discounts and
commissions) and other Persons retained by the Company (all such expenses being
herein called "REGISTRATION EXPENSES"), shall be borne as provided in this
Agreement, except that the Company shall, in any event, pay its internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit or quarterly review, the expense of any liability insurance and
the expenses and fees for listing the securities to be registered on each
securities exchange on which similar securities issued by the Company are then
listed or on the NASD automated quotation system.
(b) In connection with each Demand Registration and each Piggyback
Registration, the Company shall reimburse the holders of Registrable Securities
included in such registration for the reasonable fees (not to exceed $25,000
with respect to each such Demand and Piggyback Registration) and disbursements
of one counsel chosen by the holders of a majority of the Primus/PNC Registrable
Securities or the WSDF Registrable Securities initially requesting such
registration and the reasonable fees (not to exceed $15,000 with respect to each
such Demand and Piggyback Registration, and disbursements of one counsel chosen
by the holders of a majority of the holders of the other of the Primus/PNC
Registrable Securities or the WSDF Registrable
-7-
<PAGE>
Securities) and for the reasonable fees and disbursements of each additional
counsel retained by any holder of Registrable Securities for the purpose of
rendering a legal opinion on behalf of such holder in connection with any
underwritten Demand Registration or Piggyback Registration.
(c) To the extent Registration Expenses are not required to be paid
by the Company, each holder of securities included in any registration hereunder
shall pay those Registration Expenses allocable to the registration of such
holder's securities so included, and any Registration Expenses not so allocable
shall be borne by all sellers of securities included in such registration in
proportion to the aggregate selling price of the securities to be so registered.
6. INDEMNIFICATION.
---------------
(a) The Company agrees to indemnify, to the extent permitted by law,
each holder of Registrable Securities, its officers and directors and each
Person who controls such holder (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses caused by any
untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by such holder expressly for use
therein or by such holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such holder with a sufficient number of copies of the
same. In connection with an underwritten offering, the Company shall indemnify
such underwriters, their officers and directors and each Person who controls
such underwriters (within the meaning of the Securities Act) to the same extent
as provided above with respect to the indemnification of the holders of
Registrable Securities.
(b) In connection with any registration statement in which a holder
of Registrable Securities is participating, each such holder shall furnish to
the Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, shall indemnify the Company and
the underwriter, and their directors and officers and each Person who controls
the Company or the underwriter, as the case may be (within the meaning of the
Securities Act), against any losses, claims, damages, liabilities and expenses
resulting from any untrue or alleged untrue statement of material fact contained
in the registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such untrue statement or
omission is contained in any information or affidavit so furnished in writing by
such holder; provided that the obligation to indemnify shall be individual, not
-------- ----
joint and several, for each holder and shall be limited to the net amount of
proceeds received by such holder from the sale of Registrable Securities
pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder shall (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification (provided that the failure to give prompt notice
-------- ----
shall not impair any Person's right to indemnification
-8-
<PAGE>
hereunder to the extent such failure has not prejudiced the indemnifying party)
and (ii) unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist with
respect to such claim, permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party. If
such defense is assumed, the indemnifying party shall not be subject to any
liability for any settlement made by the indemnified party without its consent
(but such consent shall not be unreasonably withheld). An indemnifying party who
is not entitled to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim (provided,
--------
however, if the Company is the indemnifying party, the Company shall be
- -------
obligated to pay the fees and expenses for counsel for all parties indemnified
whose liability is derived from Primus/PNC Registrable Securities and one
counsel for all parties indemnified whose liability is derived from WSDF
Registrable Securities), unless in the reasonable judgment of any indemnified
party a conflict of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such claim.
(d) The indemnification provided for under this Agreement shall
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling Person
of such indemnified party and shall survive the transfer of securities. The
Company also agrees to make such provisions, as are reasonably requested by any
indemnified party, for contribution to such party in the event the Company's
indemnification is unavailable for any reason.
7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
-------------------------------------------
participate in any registration hereunder which is underwritten unless such
Person (i) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements; provided that no
-------- ----
holder of Registrable Securities included in any underwritten registration shall
be required to make any representations or warranties to the Company or the
underwriters (other than representations and warranties regarding such holder
and such holder's intended method of distribution) or to undertake any
indemnification obligations to the Company and the underwriters with respect
thereto, except as otherwise provided in paragraph 6 hereof.
8. RULE 144 REPORTING. The Company agrees with Primus, PNC and WSDF as
------------------
follows:
(a) The Company shall make and keep public information available as
those terms are understood and defined in Rule 144 under the Securities Act, at
all times from and after 90 days following the effective date of the first
registration of the Company under the Securities Act of an offering of its
securities to the general public.
(b) The Company shall file with the Commission in a timely manner all
reports and other documents as the Commission may prescribe under Section 13(a)
or 15(d) of the Exchange
-9-
<PAGE>
Act at any time after the Company has become subject to such reporting
requirements of the Exchange Act.
(c) The Company shall furnish to such holder of Registrable
Securities forthwith upon request (i) a written statement by the Company as to
its compliance with the reporting requirements of Rule 144 (at any time from and
after 90 days following the effective date of the first registration statement
of the Company for an offering of its securities to the general public), and of
the Securities Act and the Exchange Act (at any time after it has become subject
to such reporting requirements), (ii) a copy of the most recent annual or
quarterly report of the Company, and (iii) such other reports and documents so
filed as a holder may reasonably request to avail itself of any rule or
regulation of the Commission allowing a holder of Restricted Stock to sell any
such securities without registration.
9. DEFINITIONS.
-----------
(a) "PRIMUS/PNC REGISTRABLE SECURITIES" means (i) any Class A Common
issued upon the conversion of any Class A Preferred or the exercise of the Class
A Warrant issued pursuant to the Primus/PNC Purchase Agreement, (ii) any Class A
Common issued upon the conversion of any Class B Common issued upon conversion
of any Class B Preferred or the exercise of the Class B Warrant issued pursuant
to the Primus/PNC Purchase Agreement or the exercise of the Contingent Warrants
(if any) issued pursuant to the Primus/PNC Purchase Agreement, (iii) any Class A
Common issued upon the conversion of any Class A Preferred issued upon the
conversion of any Class B Preferred issued pursuant to the Primus/PNC Purchase
Agreement, (iv) any securities of the Company issued or issuable with respect to
the securities referred to in clauses (i), (ii) and (iii) above by way of a
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization, and (v) any
other shares of Class A Common or other Common Stock held by Persons holding
securities described in clauses (i) to (iv), inclusive, above. Unless otherwise
stated, other capitalized terms contained in this definition have the meanings
set forth in the Primus/PNC Purchase Agreement.
(b) "PRO RATA" as applied to the allocation of Primus/PNC Registrable
Securities and WSDF Registrable Securities included in a registration statement
means:
(i) with respect to the allocation of Registrable Securities to be
included as between the holders of Primus/PNC Registrable Securities on the
one hand and WSDF Registrable Securities on the other hand, (A) up to one
half of the number of Registrable Securities to be included in such
registration statement shall be allocated 50 percent to the holders of
Primus/PNC Registrable Securities and 50 percent to the holders of WSDF
Registrable Securities, in each case to the full amount thereof requested
to be included in such registration statement, and (B) the balance of the
number of registrable Securities shall be allocated among the holders of
Primus/PNC Registrable Securities and WSDF Registrable Securities pro rata
on the basis of the number of Primus/PNC Registrable Securities and WSDF
Registrable Securities then outstanding; and
-10-
<PAGE>
(ii) with respect to the further allocation of Primus/PNC Registrable
Securities among the holders thereof or WSDF Registrable Securities among
the holders thereof, pro rata on the basis of the amount of Registrable
Securities owned by each holder.
(c) "REGISTRABLE SECURITIES" means the Primus/PNC Registrable
Securities or the WSDF Registrable Securities, or any of them, as the case may
be. As to any particular Registrable Securities, such securities shall cease to
be Registrable Securities when they have been distributed to the public pursuant
to an offering registered under the Securities Act or sold to the public through
a broker, dealer or market maker in compliance with Rule 144 under the
Securities Act (or any similar rule then in force) or repurchased by the Company
or any Subsidiary. For purposes of this Agreement, a Person shall be deemed to
be a holder of Registrable Securities, and the Registrable Securities shall be
deemed to be in existence, whenever such Person has the right to acquire
directly or indirectly such Registrable Securities (upon conversion or exercise
in connection with a transfer of securities or otherwise, but disregarding any
restrictions or limitations upon the exercise of such right), whether or not
such acquisition has actually been effected, and such Person shall be entitled
to exercise the rights of a holder of Registrable Securities hereunder.
(d) "WSDF REGISTRABLE SECURITIES" means the shares of common stock
of the Company issued or issuable upon exercise of the warrant to purchase
118,038 shares of Class A common stock of the Company and the warrant to
purchase up to an additional 53,654 shares of Class A common Stock being issued
to WSDF pursuant to the WSDF Purchase Agreement, and any securities of the
Company issued or issuable with respect to such common stock by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization.
10. MISCELLANEOUS.
-------------
(a) Selection of Investment Bankers. The selection of investment
-------------------------------
banker(s) and manager(s) for any public offering or private sale by the Company
of its securities must be approved by the holders of a majority of the
PNC/Primus Registrable Securities and a majority of the WSDF Registrable
Securities, which approval shall not be unreasonably withheld so long as such
investment banker(s) and manager(s) are of recognized national standing and, in
the case of a public offering, can reasonably be expected to provide the
requisite degree of analytical and other support to the Company and the
investing public following such offering.
(b) No Inconsistent Agreements. The Company shall not hereafter
--------------------------
enter into any agreement with respect to its securities which is inconsistent
with or violates the rights granted to the holders of Registrable Securities in
this Agreement.
(c) Adjustments Affecting Registrable Securities. The Company shall
--------------------------------------------
not take any action, or permit any change to occur, with respect to its
securities which would materially and adversely affect the ability of the
holders of Registrable Securities to include such Registrable Securities in a
registration undertaken pursuant to this Agreement or which would materially and
adversely affect the marketability of such Registrable Securities in any such
registration (including, without limitation, effecting a stock split or a
combination of shares).
-11-
<PAGE>
(d) Remedies. Any Person having rights under any provision of this
--------
Agreement shall be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
(e) Amendments and Waivers. Except as otherwise provided herein, the
----------------------
provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company, the holders of a majority of the Primus/PNC
Registrable Securities and the holders of a majority of the WSDF Registrable
Securities.
(f) Successors and Assigns. All covenants and agreements in this
----------------------
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable Securities.
(g) Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
(h) Counterparts. This Agreement may be executed simultaneously in
------------
two or more counterparts (including by means of telecopied signature pages), any
one of which need not contain the signatures of more than one party, but all
such counterparts taken together shall constitute one and the same Agreement.
(i) Descriptive Headings. The descriptive headings of this Agreement
--------------------
are inserted for convenience only and do not constitute a part of this
Agreement.
(j) GOVERNING LAW. ALL ISSUES AND QUESTIONS CONCERNING THE
-------------
CONSTRUCTION, VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR
PROVISIONS (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT
WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE
OF NEW YORK.
(k) Notices. All notices, demands or other communications to be
-------
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by
-12-
<PAGE>
reputable overnight courier service (charges prepaid) or mailed to the recipient
by certified or registered mail, return receipt requested and postage prepaid.
Such notices, demands and other communications shall be sent to each party at
the address indicated below:
(i) If to the Company:
BankVest Capital Corp.
114 Turnpike Road
Westborough Executive Park
Westborough, Massachusetts 01581
Attention: President
with a copy to:
--------------
Goldstein & Manello, P.C.
265 Franklin Street
Boston, Massachusetts 02110
Attention: Richard J. Snyder
(ii) If to Primus:
Primus Capital Fund III
Limited Partnership
One Cleveland Center
Suite 2700
Cleveland, Ohio 44114
Attention: Kevin J. McGinty
with a copy to:
--------------
Kirkland & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attention: Ted H. Zook
(iii) If to PNC Venture Corp.:
PNC Venture Corp
c/o PNC Equity Management Corp.
One PNC Plaza, 19th Floor
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222
Attention: Gary J. Zentner
-13-
<PAGE>
with a copy to:
--------------
Kirkland & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attention: Ted H. Zook
(iv) If to WSDF:
Whitney Subordinated Debt Fund, LP
177 Broad Street - 1st Floor
Stamford, Connecticut 06901
Attention: James H. Fordyce
David J. O'Brien
with a copy to:
--------------
Morrison Cohen Singer & Weinstein, LLP
750 Lexington Avenue
New York, New York 10022
Attention: David Scherl
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
* * * * *
-14-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
BANKVEST CAPITAL CORP.
By _______________________________________
Its _______________________________________
PRIMUS CAPITAL FUND III LIMITED
PARTNERSHIP
By: Primus Venture Partners III
Limited Partnership, its general partner
By: Primus Venture Partners, Inc.,
its general partner
By _______________________________________
Its _______________________________________
PNC VENTURE CORP
By _______________________________________
Its _______________________________________
WHITNEY SUBORDINATED DEBT FUND,
LP
By _______________________________________
Its _______________________________________
<PAGE>
[EXECUTION COPY]
BANKVEST CAPITAL CORP.
FIRST AMENDMENT TO
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
--------------------------------------------------
THIS FIRST AMENDMENT TO AMENDED AND RESTATED REGISTRATION RIGHTS
AGREEMENT (the "Agreement") is made as of May 28, 1998, by and among BankVest
---------
Capital Corp., a Massachusetts corporation (the "Company"), Primus Capital Fund
-------
III Limited Partnership, an Ohio limited partnership ("Primus"), PNC Venture
------
Corp, a Delaware corporation ("PNC"), and Whitney Subordinated Debt Fund, L.P.,
---
a Delaware limited partnership ("WSDF").
----
WHEREAS, the parties to this Agreement are parties to an Amended and
Restated Registration Rights Agreement, dated as of February 28, 1997 (the
"Amended and Restated Registration Rights Agreement").
- ---------------------------------------------------
WHEREAS, Primus and PNC are parties to a Purchase Agreement of even
date herewith (the "1998 Purchase Agreement"). In order to induce Primus and
-----------------------
PNC to enter into the 1998 Purchase Agreement, the Company has agreed to provide
the registration rights set forth in this Agreement. The execution and delivery
of this Agreement is a condition to the Closing under the 1998 Purchase
Agreement. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Amended and Restated Registration Rights
Agreement.
WHEREAS, the parties hereto desire to amend the Amended and Restated
Registration Rights Agreement as set forth herein.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereby agree as follows:
1. Piggyback Registrations. The parties hereto hereby agree that
-----------------------
paragraph 2(a) of the Amended and Restated Registration Rights Agreement shall
be amended and restated as follows:
"(a) Right to Piggyback. Whenever the Company proposes to register
------------------
any of its securities under the Securities Act (other than pursuant to
a Demand Registration or an Employee Shelf Registration) and the
registration form to be used may be used for the registration of
Registrable Securities (a "PIGGYBACK REGISTRATION"), the Company shall
give prompt written notice to all holders of Registrable Securities of
its intention to effect such a registration and shall, subject to
paragraphs 2(c) and 2(d) below, include in such registration all
Registrable Securities with respect to which the Company has received
written requests for inclusion therein within 20 days after the
receipt of the Company's notice."
<PAGE>
2. Definitions. The parties hereto hereby agree that the following
-----------
definitions shall be added or amended and included in the definitions contained
in paragraph 9 of the Amended and Restated Registration Rights Agreement.
(a) Employee Registrable Securities. The term "Employee Registrable
-------------------------------
Securities" is hereby added to paragraph 9 of the Amended and Restated
Registration Rights Agreement as follows:
"'Employee Registrable Securities' means (i) any shares
-------------------------------
of Class A Common issued pursuant to that certain
Confidential Private Placement Memorandum prepared by and on
behalf of the Company and dated as of December 1, 1995
constituting an aggregate of 36,000 shares of Class A
Common, (ii) any shares of Class A Common issued pursuant to
that certain October 6, 1997 Private Placement Memorandum
constituting an aggregate of 38,750 shares of Class A
Common, (iii) any shares of Class A Common issued to Cathy
F. Sutton, Daniel C. Chagnon, Dennis J. Conlon, Kellie D.
Jacques and Michael P. Karman in 1995 constituting an
aggregate of 28,000 shares of Class A Common and (iv) any
securities of the Company issued or issuable with respect to
the securities referred to in clauses (i), (ii) and (iii)
above by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization. Employee
Registrable Securities shall exclude any shares of Common
Stock of the type described in clauses (i), (ii) or (iii)
above that were purchased by Paul S. Gass or John P. Colton.
Unless otherwise stated, other capitalized terms contained
in this definition have the meanings set forth in the 1998
Purchase Agreement."
(b) Primus/PNC Registrable Securities. The term "Primus/PNC Registrable
---------------------------------
Securities" as it appears in paragraph 9 of the Amended and Restated
Registration Rights Agreement is hereby deleted and replaced in its
entirety with the following:
"'Primus/PNC Registrable Securities' means (i) any Class
---------------------------------
A Common issued upon the conversion of any Class A Preferred
or the exercise of the Class A Warrant issued pursuant to
the Primus/PNC Purchase Agreement, (ii) any Class A Common
issued upon the conversion of any Class B Common issued upon
conversion of any Class B Preferred or the exercise of the
Class B Warrant issued pursuant to the Primus/PNC Purchase
Agreement or the exercise of the Contingent Warrants (if
any) issued pursuant to the Primus/PNC Purchase Agreement,
(iii) any Class A Common issued upon the conversion of any
Class A Preferred issued upon the conversion of any Class B
Preferred issued pursuant to the Primus/PNC Purchase
Agreement, (iv) any Class A Common issued upon the
conversion
-2-
<PAGE>
of any Class C Preferred issued pursuant to the 1998
Purchase Agreement, (v) any Class A Common issued upon the
conversion of any Class B Common issued upon conversion of
any Class D Preferred issued pursuant to the 1998 Purchase
Agreement or the exercise of the Contingent Warrants (if
any) issued pursuant to the 1998 Purchase Agreement, (vi)
any Class A Common issued upon the conversion of any Class C
Preferred issued upon the conversion of any Class D
Preferred issued pursuant to the 1998 Purchase Agreement,
(vii) any securities of the Company issued or issuable with
respect to the securities referred to in clauses (i), (ii),
(iii), (iv), (v) and (vi) above by way of a stock dividend
or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other
reorganization, and (viii) any other shares of Class A
Common or other Common Stock held by Persons holding
securities described in clauses (i) to (vii), inclusive,
above. Unless otherwise stated, other capitalized terms
contained in this definition have the meanings set forth in
the Primus/PNC Purchase Agreement and the 1998 Purchase
Agreement (as the case may be).
(c) 1998 Purchase Agreement. The term "1998 Purchase Agreement" shall be
-----------------------
added to the definitions contained in paragraph 9 of the Amended and
Restated Registration Rights Agreement and such term shall read as
follows:
"'1998 Purchase Agreement' means the Purchase Agreement,
-----------------------
dated as of May 28, 1998, by and among the Company, Primus
and PNC."
3. Certain Shelf Registration. The parties hereto hereby agree that
--------------------------
the following paragraph shall be added and included as a new paragraph 11 of the
Amended and Restated Registration Rights Agreement:
"Certain Shelf Registration. The holders of Primus/PNC
--------------------------
Registrable Securities and the holders of WSDF Registrable
Securities agree that, notwithstanding anything to the
contrary in this Agreement, the Company may grant the
registration rights described in this paragraph 11 to the
holders of Employee Registrable Securities. At any time
following the sixth month anniversary of the consummation of
an initial Public Offering (as defined in the 1998 Purchase
Agreement) or such earlier time as the underwriters managing
such initial Public Offering may deem acceptable, the
holders of Employee Registrable Securities may request that
the Company use its best efforts to prepare and file with
the Securities and Exchange Commission a shelf registration
statement (as amended and supplemented from time to time,
the "Shelf Registration Statement") relating to the sale by
----------------------------
the holders of Employee Registrable Securities of Employee
Registrable Securities in accordance with Rule 415 under the
Securities Act (or
-3-
<PAGE>
any similar rule that may be adopted by the Securities and
Exchange Commission) and to use its best efforts to keep
such Shelf Registration Statement effective for the period
commencing on the date on which the Securities and Exchange
Commission declares such Shelf Registration Statement
effective and ending 180 days following the date of such
declaration (the "Shelf Registration Period"). It being
-------------------------
understood that the total number of Employee Registrable
Securities that may be issued pursuant to such Shelf
Registration Statement shall not exceed 102,750 shares of
Class A Common as indicated on Exhibit A attached hereto,
---------
except as such number is adjusted pursuant to a stock
dividend or stock split or in connection with a combination
of shares, recapitalization, merger, consolidation or other
reorganization. The Company shall have the right to delay
filing the Shelf Registration Statement and delay causing
the Shelf Registration Statement to become effective, if the
Company determines, with respect to the advisability (as
determined in good faith) of deferring public disclosure of
material corporate developments or other information, that
use of the Shelf Registration Statement and the disclosure
required to be made therein would not be in the best
interests of the Company at such time. In addition, the
Company shall have the right to prohibit the transfer of any
Employee Registrable Securities pursuant to the Shelf
Registration Statement (a "Delay Period") for a reasonable
------------
length of time, if the Company determines, with respect to
the advisability (as determined in good faith) of deferring
public disclosure of material corporate developments or
other information, that use of the Shelf Registration
Statement and the disclosure required to be made therein
would not be in the best interests of the Company at such
time. In the event of a Delay Period, the Shelf Registration
Period shall be extended by the number of days constituting
such Delay Period. The Company shall use its reasonable
efforts to minimize the length of a Delay Period, if any.
Any registration described in this paragraph 11 is referred
to herein as the "Employee Shelf Registration." The Company
---------------------------
shall provide written notice to the holders of Employee
Registrable Securities of a Delay Period, if any. Any
changes to the registration rights described in this
paragraph 11 shall require the prior written consent of the
holders of a majority of the Primus/PNC Registrable
Securities and the holders of a majority of the WSDF
Registrable Securities.
* * * * *
-4-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this First Amendment to
Amended and Restated Registration Rights Agreement as of the date first written
above.
BANKVEST CAPITAL CORP.
By ________________________________________
Its ________________________________________
PRIMUS CAPITAL FUND III LIMITED PARTNERSHIP
By: Primus Venture Partners III Limited Partnership,
its general partner
By: Primus Venture Partners, Inc., its general partner
By ________________________________________
Its ________________________________________
PNC VENTURE CORP
By ________________________________________
Its ________________________________________
WHITNEY SUBORDINATED DEBT FUND, L.P.
By ________________________________________
Its ________________________________________
-5-
<PAGE>
EXHIBIT A
---------
[SEE ATTACHED]
-6-
<PAGE>
EXHIBIT 4.5
[EXECUTION COPY]
PURCHASE AGREEMENT
BY AND AMONG
BANKVEST CAPITAL CORP.,
PRIMUS CAPITAL FUND III LIMITED PARTNERSHIP
AND
PNC VENTURE CORP
__________________________________
DATED AS OF MAY 30, 1996
__________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. Authorization and Closing.......................................................... 1
1A. Authorization of the Preferred Stock and the Warrants..................... 1
1B. Purchase and Sale of the Preferred Stock and the Warrants................. 1
1C. The Closing............................................................... 1
2. Conditions of Each Purchaser's Obligation at the Closing................................ 2
2A. Representations and Warranties; Covenants................................. 2
2B. Certificate of Designation................................................ 2
2C. Amendment of Articles of Organization..................................... 2
2D. Amendment of the Company's Bylaws......................................... 2
2E. Registration Agreement.................................................... 2
2F. Stockholders Agreement.................................................... 2
2G. Sale of Preferred Stock and Warrants to Each Purchaser.................... 3
2H. Key-Man Life Insurance.................................................... 3
2I. Securities Law Compliance................................................. 3
2J. Opinion of the Company's Counsel.......................................... 3
2K. Closing Documents......................................................... 3
2L. Proceedings............................................................... 4
2M. Expenses.................................................................. 4
2N. Waiver.................................................................... 4
3. Covenants............................................................................... 4
3A. Financial Statements and Other Information................................ 4
3B. Inspection of Property.................................................... 7
3C. Quarterly Investors Meetings.............................................. 7
3D. Class A Restrictions...................................................... 8
3E. Affirmative Covenants..................................................... 12
3F. Class B Restrictions...................................................... 13
3G. Compliance with Agreements................................................ 13
3H. Current Public Information................................................ 14
3I. Amendment of Other Agreements............................................. 14
3J. Financing Agreements...................................................... 14
3K. Right of First Refusal.................................................... 15
3L. Regulatory Compliance Cooperation......................................... 16
3M. Public Disclosures........................................................ 17
3N. Contingent Warrants....................................................... 17
4. Transfer of Restricted Securities.................................................. 18
4A. General Provisions........................................................ 18
4B. Opinion Delivery.......................................................... 18
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
4C. Rule 144A.................................................................. 18
4D. Legend Removal............................................................. 18
5. Representations and Warranties of the Company....................................... 18
5A. Organization, Corporate Power and Licenses................................. 19
5B. Capital Stock and Related Matters.......................................... 19
5C. Subsidiaries; Investments.................................................. 20
5D. Authorization; No Breach................................................... 20
5E. Financial Statements....................................................... 21
5F. Absence of Undisclosed Liabilities......................................... 22
5G. No Material Adverse Change................................................. 22
5H. Absence of Certain Developments............................................ 22
5I. Assets..................................................................... 24
5J. Tax Matters................................................................ 24
5K. Contracts and Commitments.................................................. 25
5L. Intellectual Property Rights............................................... 26
5M. Litigation, etc............................................................ 27
5N. Brokerage.................................................................. 28
5O. Governmental Consent, etc.................................................. 28
5P. Insurance.................................................................. 28
5Q. Employees.................................................................. 28
5R. ERISA...................................................................... 29
5S. Compliance with Laws....................................................... 30
5T. Affiliated Transactions.................................................... 30
5U. Real Property Holding Corporation Status................................... 30
5V. Disclosure................................................................. 30
6. DEFINITIONS............................................................................. 31
6A. Definitions................................................................ 31
7. Miscellaneous............................................................................ 36
7A. Expenses................................................................... 36
7B. Remedies................................................................... 36
7C. Purchaser's Investment Representations..................................... 36
7D. Treatment of the Preferred Stock........................................... 38
7E. Consent to Amendments; Waivers............................................. 38
7F. Survival of Representations and Warranties................................. 38
7G. Successors and Assigns..................................................... 39
7H. Capital and Surplus; Special Reserves...................................... 39
7J. Severability............................................................... 39
7K. Counterparts............................................................... 39
7L. Descriptive Headings; Interpretation....................................... 39
7M. Governing Law.............................................................. 40
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
7N. Notices.................................................................... 40
7O. Consideration for Warrants................................................. 40
7P. Understanding Among the Purchasers......................................... 40
7Q. No Strict Construction..................................................... 41
</TABLE>
Schedules and Exhibits
- ----------------------
Schedule of Purchasers
List of Exhibits
List of Disclosure Schedules
-iii-
<PAGE>
[EXECUTION COPY]
BANKVEST CAPITAL CORP.
PURCHASE AGREEMENT
------------------
THIS AGREEMENT is made as of May 30, 1996, by and among BankVest
Capital Corp., a Massachusetts corporation (the "Company"), Primus Capital Fund
-------
III Limited Partnership, an Ohio limited partnership ("Primus"), and PNC Venture
------
Corp, a Delaware corporation ("PNC"). Primus and PNC are collectively referred
---
to herein as the "Purchasers" and individually as a "Purchaser". Except as
---------- ---------
otherwise provided herein, capitalized terms used herein are defined in Section
6 hereof.
Pursuant to this Agreement, the Company desires to issue and sell and
Primus desires to purchase (i) 30,000 shares of the Company's Class A
Convertible Preferred Stock, par value $1.00 per share (the "Class A Preferred")
-----------------
and (ii) a warrant (the "Class A Warrant") to purchase an aggregate of 24,000
---------------
shares of the Company's Class A Common Stock, par value $1.00 per share (the
"Class A Common"), and the Company desires to issue and sell and PNC desires to
--------------
purchase (i) 30,000 shares of the Company's Class B Convertible Preferred Stock,
par value $1.00 per share (the "Class B Preferred" and, together with the Class
-----------------
A Preferred, the "Preferred Stock") and (ii) a warrant (the "Class B Warrant"
--------------- ---------------
and, together with the Class A Warrant, the "Warrants") to purchase an aggregate
--------
of 24,000 shares of the Company's Class B Common Stock, par value $1.00 per
share (the "Class B Common" and, together with the Class A Common, the "Common
-------------- ------
Stock").
- -----
The parties hereto hereby agree as follows:
Section 1. Authorization and Closing.
-------------------------
1A. Authorization of the Preferred Stock and the Warrants. The
-----------------------------------------------------
Company shall authorize the issuance and sale to Primus of 30,000 shares of
Class A Preferred and the Class A Warrant, and the Company shall authorize the
issuance and sale to PNC of 30,000 shares of Class B Preferred and the Class B
Warrant.
1B. Purchase and Sale of the Preferred Stock and the Warrants. At
---------------------------------------------------------
the Closing, the Company shall sell to Primus and, subject to the terms and
conditions set forth herein, Primus shall purchase from the Company, 30,000
shares of Class A Preferred for $2,990,000 and the Class A Warrant for $10,000,
and the Company shall sell to PNC and, subject to the terms and conditions set
forth herein, PNC shall purchase from the Company, 30,000 shares of Class B
Preferred for $2,990,000 and the Class B Warrant for $10,000. The sale of the
Preferred Stock and the Warrants to each Purchaser shall constitute a separate
sale hereunder.
1C. The Closing. The closing of the separate purchases and sales of
-----------
the Preferred Stock and the Warrants (the "Closing") shall take place at the
-------
offices of Goldstein & Manello, P.C., 265 Franklin Street, Boston, Massachusetts
at 10:00 a.m. on May 30, 1996, or at such other place or on such other date as
may be mutually agreeable to the Company and each Purchaser. At the Closing,
the Company shall deliver to each Purchaser stock certificates evidencing the
Preferred Stock to be purchased by such Purchaser and the Warrants to be
purchased by such Purchaser, registered in such Purchaser's or its nominee's
name, upon payment of the purchase price therefor
<PAGE>
by a cashier's or certified check, or by wire transfer of immediately available
funds to the Company's account in accordance with wire instructions delivered to
each Purchaser prior to the Closing.
Section 2. Conditions of Each Purchaser's Obligation at the Closing.
--------------------------------------------------------
The obligation of each Purchaser to purchase and pay for the Preferred Stock and
the Warrants at the Closing is subject to the satisfaction as of the Closing of
the following conditions:
2A. Representations and Warranties; Covenants. The representations
-----------------------------------------
and warranties contained in Section 5 hereof shall be true and correct at and as
of the Closing as though then made and the Company shall have performed in all
material respects all of the covenants required to be performed by it hereunder
prior to the Closing.
2B. Certificate of Designation. The Company shall have duly adopted,
--------------------------
executed and filed with the Secretary of State of Massachusetts a Certificate of
Designation of Rights and Preferences establishing the terms and the relative
rights and preferences of the Preferred Stock in the form set forth in Exhibit A
---------
attached hereto (the "Certificate of Designation"), and the Company shall not
--------------------------
have adopted or filed any other document designating terms, relative rights or
preferences of its preferred stock. The Certificate of Designation shall be in
full force and effect as of the Closing under Massachusetts General Laws and
shall not have been amended or modified.
2C. Amendment of Articles of Organization. The Company's Articles of
-------------------------------------
Organization (the "Articles of Organization") shall have been amended and
------------------------
restated to include the provisions set forth in Exhibit B attached hereto, shall
---------
be in full force and effect under Massachusetts General Laws as of the Closing
as so amended and shall not have been further amended or modified.
2D. Amendment of the Company's Bylaws. The Company's bylaws (the
---------------------------------
"Bylaws") shall have been duly amended and restated to (i) permit the holders of
- -------
at least 331/3% of the outstanding Preferred Stock to call for a meeting of the
Company's stockholders in the shortest period of time permitted by applicable
law, (ii) permit any member of the Company's board of directors to call a
meeting of the board of directors in the shortest period of time permitted by
applicable law, (iii) permit the stockholders to establish the size of the board
from seven to eleven directors and permit the stockholders to fill any vacancies
on the board of directors and (iv) require meetings of the board of directors to
be held at least once during each of the Company's fiscal quarters. The Bylaws
shall be in full force and effect as of the Closing as so amended and shall not
have been further amended or modified.
2E. Registration Agreement. The Company and the Purchasers shall
----------------------
have entered into a registration agreement in the form of Exhibit C attached
---------
hereto (the "Registration Agreement"), and the Registration Agreement shall be
----------------------
in full force and effect as of the Closing.
2F. Stockholders Agreement. The Company, the Purchasers and certain
----------------------
of the Company's other stockholders shall have entered into a stockholders
agreement in the form of Exhibit D attached hereto (the "Stockholders
--------- ------------
Agreement"), and the Stockholders Agreement shall be in full force and effect as
- ---------
of the Closing.
-2-
<PAGE>
2G. Sale of Preferred Stock and Warrants to Each Purchaser. The
------------------------------------------------------
Company shall have simultaneously sold to each Purchaser the Preferred Stock and
the Warrants to be purchased by such Purchaser hereunder at the Closing and
shall have received payment therefor in full.
2H. Key-Man Life Insurance. The Company shall have obtained a key-
----------------------
man life insurance policy on the life of Paul S. Gass in the face amount of
$3,000,000, which policy shall be in full force and effect as of the Closing.
Such insurance policy shall name the Company as beneficiary and shall provide
that such insurance policy may not be canceled unless the insurance carrier
gives at least 30 days prior written notice of such cancellation to the
Purchasers.
2I. Securities Law Compliance. The Company shall have made all
-------------------------
filings (other than those which are not required to be filed before the Closing)
under all applicable federal and state securities laws necessary to consummate
the issuance of the Preferred Stock and the Warrants pursuant to this Agreement
in compliance with such laws.
2J. Opinion of the Company's Counsel. Each Purchaser shall have
--------------------------------
received from Goldstein & Manello, P.C., counsel for the Company, an opinion
with respect to the matters set forth in Exhibit E attached hereto, which shall
---------
be addressed to each Purchaser, dated the date of the Closing and in form and
substance reasonably satisfactory to each Purchaser.
2K. Closing Documents. The Company shall have delivered to Primus
-----------------
the Class A Warrant in the form of Exhibit F attached hereto and to PNC the
---------
Class B Warrant in the form of Exhibit G attached hereto, and the Company shall
---------
have delivered to each Purchaser all of the following documents:
(i) an Officer's Certificate, dated the date of the Closing,
stating that the conditions specified in Section 1 and paragraphs 2A
through 2D and paragraphs 2G through 2I, inclusive, have been fully
satisfied;
(ii) a Clerk's Certificate, dated the date of the Closing,
certifying that attached thereto are copies of (a) the resolutions duly
adopted by the Company's board of directors authorizing the execution,
delivery and performance of this Agreement, the Registration Agreement, the
Stockholders Agreement and each of the other agreements contemplated
hereby, the filing of the Certificate of Designation referred to in
paragraph 2B, the filing of the amendment to the Articles of Organization
referred to in paragraph 2C, the amendment to the Bylaws referred to in
paragraph 2D, the issuance and sale of the Preferred Stock and the
Warrants, the reservation for issuance upon conversion of the Class A
Preferred and exercise of the Class A Warrant of an aggregate of 264,000
shares of Class A Common, the reservation for issuance upon conversion of
the Class B Preferred and exercise of the Class B Warrant of an aggregate
of 264,000 shares of Class B Common, the reservation for issuance upon
conversion of the Class B Common issuable upon conversion of the Class B
Preferred and exercise of the Class B Warrant of an aggregate of 264,000
shares of Class A Common and the reservation for issuance upon conversion
of the Class B Preferred of an aggregate of 240,000 shares of Class A
Preferred and the consummation of
-3-
<PAGE>
all other transactions contemplated by this Agreement, and (b) the
resolutions duly adopted by the Company's stockholders adopting the
amendment to the Articles of Organization referred to in paragraph 2C;
(iii) certified copies of the Articles of Organization and the
Certificate of Designation, each as filed with the Secretary of State of The
Commonwealth of Massachusetts and in effect at the Closing, and a copy of the
Bylaws as certified by the Clerk of the Company and in effect at the Closing;
(iv) copies of all third party and governmental consents,
approvals and filings required in connection with the consummation of the
transactions hereunder (including, without limitation, all blue sky law
filings and waivers of all preemptive rights and rights of first refusal); and
(v) such other documents relating to the transactions
contemplated by this Agreement as any Purchaser or its special counsel may
reasonably request.
2L. Proceedings. All corporate and other proceedings taken or
-----------
required to be taken by the Company in connection with the transactions
contemplated hereby to be consummated at or prior to the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to each Purchaser and its special counsel.
2M. Expenses. At the Closing, the Company shall have reimbursed the
--------
Purchasers for their fees and expenses as provided in paragraph 7A hereof.
2N. Waiver. Any condition specified in this Section 2 may be waived
------
if consented to by each Purchaser at or prior to the Closing; provided that no
-------- ----
such waiver shall be effective against any Purchaser unless it is set forth in a
writing executed by such Purchaser.
Section 3. Covenants.
---------
3A. Financial Statements and Other Information. The Company shall
------------------------------------------
deliver to each Purchaser (so long as such Purchaser holds any Preferred Stock
or any Underlying Common Stock) and to each holder of at least 10% of the
outstanding Preferred Stock and each holder of at least 10% of the Underlying
Common Stock:
(i) as soon as available but in any event within 30 days after the
end of each monthly accounting period in each fiscal year, unaudited
consolidating and consolidated statements of income and cash flows of the
Company and its Subsidiaries for such monthly period and for the period
from the beginning of the fiscal year to the end of such month, and
unaudited consolidating and consolidated balance sheets of the Company and
its Subsidiaries as of the end of such monthly period, setting forth in
each case comparisons to the Company's annual budget and to the
corresponding period in the preceding fiscal year, and all such statements
shall be prepared in accordance with generally accepted accounting
-4-
<PAGE>
principles, consistently applied, subject to the absence of footnote
disclosures and to normal year-end adjustments for recurring accruals, and
shall be certified by the Company's chief financial officer;
(ii) accompanying the financial statements referred to in
subparagraph (i), an Officer's Certificate (a) stating that there is no
Event of Noncompliance in existence and that neither the Company nor any of
its Subsidiaries is in default under any of its other material agreements
or, if any Event of Noncompliance or any such default exists, specifying
the nature and period of existence thereof and what actions the Company and
its Subsidiaries have taken and propose to take with respect thereto and
(b) setting forth the amount of the Company's and its Subsidiaries'
outstanding funded Indebtedness as of the end of such monthly accounting
period and the amount of available funds under the Company's and its
Subsidiaries' revolving credit lines and other facilities as of the end of
such period;
(iii) within 90 days after the end of each fiscal year, consolidating
and consolidated statements of income and cash flows of the Company and its
Subsidiaries for such fiscal year, and consolidating and consolidated
balance sheets of the Company and its Subsidiaries as of the end of such
fiscal year, setting forth in each case comparisons to the Company's annual
budget and to the preceding fiscal year, all prepared in accordance with
generally accepted accounting principles, consistently applied, and
accompanied by (a) with respect to the consolidated portions of such
statements, an opinion containing no exceptions or qualifications (except
for qualifications regarding specified contingent liabilities) of an
independent accounting firm of recognized national standing acceptable to
the holders of a majority of the outstanding Preferred Stock and the
holders of a majority of the Underlying Common Stock, (b) a certificate
from such accounting firm, addressed to the Company's board of directors,
stating that in the course of its examination nothing came to its attention
that caused it to believe that there was an Event of Noncompliance in
existence or that there was any other default by the Company or any
Subsidiary in the fulfillment of or compliance with any of the terms,
covenants, provisions or conditions of any other material agreement to
which the Company or any Subsidiary is a party or, if such accountants have
reason to believe any Event of Noncompliance or other default by the
Company or any Subsidiary exists, a certificate specifying the nature and
period of existence thereof, and (c) a copy of such firm's annual
management letter to the board of directors;
(iv) promptly upon receipt thereof, any additional reports,
management letters or other detailed information concerning significant
aspects of the Company's operations or financial affairs given to the
Company by its independent accountants (and not otherwise contained in
other materials provided hereunder);
(v) at least 15 days but not more than 90 days prior to the
beginning of each fiscal year, an annual budget prepared on a monthly basis
for the Company and its Subsidiaries for such fiscal year (displaying
anticipated statements of income and cash flows and balance sheets), and
promptly upon preparation thereof any other significant budgets prepared by
the Company and any revisions of such annual or other budgets, and within
30
-5-
<PAGE>
days after any monthly period in which there is a material adverse
deviation from the annual budget, an Officer's Certificate explaining the
deviation and what actions the Company has taken and proposes to take with
respect thereto; provided that any monthly deviation which is contemplated
-------- ----
in the annual budget and which does not result in an adverse impact on the
business or operations of the Company shall not be deemed a material
adverse deviation for purposes hereof;
(vi) promptly (but in any event within ten days) after the discovery
or receipt of notice of any Event of Noncompliance, any default under any
material agreement to which it or any of its Subsidiaries is a party, any
condition or event which is reasonably likely to result in any material
liability under any federal, state or local statute or regulation relating
to public health and safety, worker health and safety or pollution or
protection of the environment or any other material adverse change, event
or circumstance affecting the Company or any Subsidiary (including, without
limitation, the filing of any material litigation against the Company or
any Subsidiary or the existence of any dispute with any Person which
involves a reasonable likelihood of such litigation being commenced), an
Officer's Certificate specifying the nature and period of existence thereof
and what actions the Company and its Subsidiaries have taken and propose to
take with respect thereto;
(vii) within ten days after transmission thereof, copies of all
financial statements, proxy statements, reports and any other general
written communications which the Company sends to its stockholders and
copies of all registration statements and all regular, special or periodic
reports which it files, or (to its knowledge) any of its officers or
directors file with respect to the Company, with the Securities and
Exchange Commission or with any securities exchange on which any of its
securities are then listed, and copies of all press releases and other
statements made available generally by the Company to the public concerning
material developments in the Company's and its Subsidiaries' businesses;
and
(viii) with reasonable promptness, such other information and
financial data concerning the Company and its Subsidiaries as any Person
entitled to receive information under this paragraph 3A may reasonably
request.
Each of the financial statements referred to in subparagraph (i) and (iii) shall
be consistent with the books and records of the Company (which, in turn, shall
be accurate and complete in all material respects) and shall present fairly in
all material respects the consolidated financial condition, results of
operations and cash flows of the Company and its Subsidiaries in accordance with
generally accepted accounting principles applied on a consistent basis as of the
dates and for the periods set forth therein, subject in the case of the
unaudited financial statements to changes resulting from normal year-end
adjustments for recurring accruals (none of which would, alone or in the
aggregate, be materially adverse to the financial condition, operating results,
assets, operations or business prospects of the Company and its Subsidiaries
taken as a whole). Notwithstanding the foregoing, the provisions of this
paragraph 3A and paragraphs 3B and 3C below shall cease to be effective so long
as the Company (a) is subject to the periodic reporting requirements of the
Securities Exchange
-6-
<PAGE>
Act and continues to comply with such requirements and (b) promptly provides to
each Person otherwise entitled to receive information pursuant to this paragraph
3A all reports and other materials filed by the Company with the Securities and
Exchange Commission pursuant to the periodic reporting requirements of the
Securities Exchange Act. Except as otherwise required by law or judicial order
or decree or by any governmental agency or authority, each Person entitled to
receive information regarding the Company and its Subsidiaries under this
paragraph 3A or paragraph 3B below or under any other provision of this
Agreement or any other agreement contemplated hereby to be executed by such
Person with the Company shall use the same standards and controls which such
Person uses to maintain the confidentiality of its own confidential information
(but in no event less than reasonable care) to maintain the confidentiality of
all nonpublic information of the Company or any of its Subsidiaries obtained by
it pursuant to this paragraph 3A or paragraph 3B below or under any other
provision of this Agreement or any other agreement contemplated hereby to be
executed by such Person with the Company; provided that each such Person may
-------- ----
disclose such information in connection with the sale or transfer of any
Preferred Stock or Underlying Common Stock if such Person's transferee agrees in
writing to be bound by the provisions hereof. For purposes of this Agreement and
the Registration Agreement, all holdings of Preferred Stock and Underlying
Common Stock by Persons who are Affiliates of each other (which, for this
purpose, shall also include Persons which have received distributions of
securities from a partnership holding such securities) shall be aggregated for
purposes of meeting any threshold tests under this Agreement and the
Registration Agreement.
3B. Inspection of Property. The Company shall permit any
----------------------
representatives designated by any Purchaser (so long as such Purchaser holds any
Preferred Stock or Underlying Common Stock) or any holder of at least 10% of the
outstanding Preferred Stock or at least 10% of the Underlying Common Stock, upon
reasonable notice and during normal business hours, to (i) visit and inspect any
of the properties of the Company and its Subsidiaries, (ii) examine the
corporate and financial records of the Company and its Subsidiaries and make
copies thereof or extracts therefrom and (iii) discuss the affairs, finances and
accounts of any such corporations with the directors, officers and independent
accountants of the Company and its Subsidiaries. The presentation of an
executed copy of this Agreement by any Purchaser or any such holder of Preferred
Stock or Underlying Common Stock to the Company's independent accountants shall
constitute the Company's permission to its independent accountants to
participate in discussions with such Persons. Any Person entitled to exercise
rights under this paragraph 3B shall be entitled to exercise such rights not
more than one time per calendar quarter, unless at any time there shall exist an
Event of Noncompliance, in which case each such Person shall be entitled to
exercise such rights at any time and from time to time during the period that
such Event of Noncompliance shall be in existence.
3C. Quarterly Investors Meetings. Immediately prior to or
----------------------------
immediately following each meeting of the Company's board of directors, the
Company shall hold an informational meeting for the holders of the Preferred
Stock and the Underlying Common Stock either by telephonic conference or at the
Company's principal executive office (or other location reasonably acceptable to
the holders of the Preferred Stock and the Underlying Common Stock and the
Company). At each such meeting, the executive officers of the Company and its
Subsidiaries and such other individuals as the executive officers deem necessary
and appropriate shall be available to discuss the affairs,
-7-
<PAGE>
finances and operations of such corporations. Each holder electing to
participate therein shall be provided with an agenda of the matters to be
discussed at each such investors meeting. The Company shall reimburse each
Purchaser for the reasonable out-of-pocket expenses of not more than one
representative designated by such Purchaser incurred in connection with
attending each such meeting.
3D. Class A Restrictions. So long as at least 331/3% of the Class A
--------------------
Preferred remains outstanding, the Company shall not, without the prior written
consent of the holders of a majority of the outstanding Class A Preferred:
(i) directly or indirectly declare or pay any dividends or make
any distributions upon any of its capital stock or other equity securities
other than the Preferred Stock pursuant to the terms of the Certificate of
Designation, except for dividends payable in shares of Common Stock issued
upon the outstanding shares of Common Stock;
(ii) directly or indirectly redeem, purchase or otherwise
acquire, or permit any Subsidiary to redeem, purchase or otherwise acquire,
any of the Company's or any Subsidiary's capital stock or other equity
securities (including, without limitation, warrants, options and other
rights to acquire such capital stock or other equity securities) other than
(a) the Preferred Stock pursuant to the terms of the Certificate of
Designation, (b) pursuant to the Put (as defined in the Stockholders
Agreement) and (c) repurchases of Common Stock from former employees of the
Company and its Subsidiaries upon termination of employment pursuant to
arrangements approved by the Company's board of directors for an aggregate
purchase price of no more than $250,000 in any twelve-month period so long
as no Event of Noncompliance is in existence immediately prior to or is
otherwise caused by any such repurchase; or directly or indirectly redeem,
purchase or make any payments with respect to any stock appreciation
rights, phantom stock plans or similar rights or plans;
(iii) authorize, issue or enter into any agreement providing for
the authorization, creation, or issuance (contingent or otherwise) of, (a)
any notes or debt securities containing equity features (including, without
limitation, any notes or debt securities convertible into or exchangeable
for capital stock or other equity securities, issued in connection with the
issuance of capital stock or other equity securities or containing profit
participation features), (b) any capital stock or other equity securities
(or any securities convertible into or exchangeable for any capital stock
or other equity securities) which are senior to or on a parity with the
Class A Preferred or the Class B Preferred with respect to the payment of
dividends, redemptions or distributions upon liquidation or otherwise or
(c) any additional Preferred Stock (other than Class A Preferred issued or
issuable upon conversion of Class B Preferred pursuant to the Certificate
of Designation); provided that nothing herein shall be interpreted as
-------- ----
prohibiting the Company from authorizing, issuing or entering into any
agreement to issue capital stock or any other equity security which is
junior to the Preferred Stock in all respects (including, without
limitation, with respect to the payment of dividends, redemptions or
distributions upon liquidation or otherwise), subject to the rights of the
holders of Preferred Stock under this Agreement, the Articles of
-8-
<PAGE>
Organization, the Certificate of Designation, the Warrants and the other
agreements contemplated hereby;
(iv) make, or permit any Subsidiary to make, any loans or advances
to, guarantees for the benefit of, or Investments in, any Person (other
than a Wholly-Owned Subsidiary established under the laws of a jurisdiction
of the United States or any of its territorial possessions), except for (a)
reasonable advances to employees in the ordinary course of business, (b)
acquisitions permitted pursuant to subparagraph (viii) below and (c)
Investments having a stated maturity no greater than one year from the date
the Company makes such Investment in (1) obligations of the United States
government or any agency thereof or obligations guaranteed by the United
States government, (2) fully-insured certificates of deposit of commercial
banks having combined capital and surplus of at least $1 billion or (3)
commercial paper with a rating of at least "Prime-1" by Moody's Investors
Service, Inc.;
(v) merge or consolidate with any Person or, except as permitted by
subparagraph (viii) below, permit any Subsidiary to merge or consolidate
with any Person (other than a Wholly-Owned Subsidiary);
(vi) sell, lease or otherwise dispose of, or permit any Subsidiary
to sell, lease or otherwise dispose of, any assets of the Company or its
Subsidiaries involving an aggregate consideration in excess of $1,000,000
in any twelve-month period (other than any sale or lease of assets made in
the ordinary course of business in connection with any capitalized leases
entered into by the Company or any of its Subsidiaries as lessor in the
ordinary course of business and other than any Liens to lending
institutions incurred or granted by the Company or any of its Subsidiaries
in the ordinary course of business in connection therewith);
(vii) liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction (including, without limitation,
any reorganization into a limited liability company, a partnership or any
other non-corporate entity which is treated as a partnership for federal
income tax purposes);
(viii) acquire, or permit any Subsidiary to acquire, any interest in
any company or business (whether by a purchase of assets, purchase of
stock, merger or otherwise), or enter into any joint venture, involving an
aggregate consideration (including, without limitation, the assumption of
liabilities whether direct or indirect) exceeding $5,000,000 in any one
transaction or series of related transactions or exceeding $5,000,000 in
any twelve-month period;
(ix) enter into, or permit any Subsidiary to enter into, the
ownership, active management or operation of any business other than the
businesses in which it is presently engaged (except that the Company shall
be permitted to operate a Wholly-Owned Subsidiary
-9-
<PAGE>
captive insurer and/or bankruptcy proof Wholly-Owned Subsidiary for the
purpose of securitizing lease receivables in the ordinary course of
business);
(x) except for any financing agreements or instruments (which are
subject to the provisions of paragraph 3J below and not this subparagraph
(x)), become subject to, or permit any of its Subsidiaries to become
subject to, (including, without limitation, by way of amendment to or
modification of) any agreement or instrument which by its terms would
(under any circumstances) restrict (a) the right of any Subsidiary to make
loans or advances or pay dividends to, transfer property to, or repay any
Indebtedness owed to, the Company or another Subsidiary (except that
nothing in this clause (a) shall prohibit the Company from operating a
bankruptcy proof Wholly-Owned Subsidiary for the purpose of securitizing
lease receivables in the ordinary course of business) or (b) the Company's
right to perform the provisions of this Agreement, the Registration
Agreement, the Stockholders Agreement, the Certificate of Designation, the
Articles of Organization or the Bylaws (including, without limitation,
provisions relating to the declaration and payment of dividends on and the
making of redemptions and conversions of the Preferred Stock);
(xi) except as expressly contemplated by this Agreement, make any
amendment to the Articles of Organization, the Certificate of Designation
or the Bylaws, or file any resolution of the board of directors with the
Massachusetts Secretary of State containing any provisions, which would
increase the number of authorized shares of the Preferred Stock or
adversely affect or otherwise impair the rights or the relative preferences
and priorities of the holders of the Preferred Stock or the Underlying
Common Stock under this Agreement, the Articles of Organization, the
Certification of Designation, the Bylaws, the Registration Agreement or the
Stockholders Agreement;
(xii) enter into, amend, modify or supplement, or permit any
Subsidiary to enter into, amend, modify or supplement, any agreement,
transaction, commitment or arrangement with any of its or any Subsidiary's
officers, directors, employees, stockholders or Affiliates or with any
individual related by blood, marriage or adoption to any such indi vidual
or with any entity in which any such Person or individual owns a beneficial
interest, except for customary employment arrangements and benefit programs
on reasonable terms and except as otherwise expressly contemplated by this
Agreement;
(xiii) increase any compensation (including salary, bonuses and other
forms of current or deferred compensation) payable to Paul S. Gass or any
other officers or directors of the Company or any of its Subsidiaries,
except for any such increases approved by the Compensation Committee
established by the Company's board of directors in accordance with the
Stockholders Agreement;
(xiv) establish or acquire (a) any Subsidiaries other than Wholly-
Owned Subsidiaries or (b) any Subsidiaries organized outside of the United
States and its territorial possessions (except that nothing in this clause
(xiv) shall prohibit the Company from establishing an offshore Wholly-Owned
Subsidiary captive insurer);
-10-
<PAGE>
(xv) except as approved by the Company's board of directors (and,
in the case of lines of credit, loans or financing arrangements with
lending institutions, within the limits of such lines of credit, loans or
financing arrangements approved by the Company's board of directors),
create, incur, assume or suffer to exist, or permit any Subsidiary to
create, incur, assume or suffer to exist, any Indebtedness;
(xvi) except as approved by the Company's board of directors,
create, incur, assume or suffer to exist, or permit any Subsidiary to
create, incur, assume or suffer to exist, any Liens (other than Permitted
Liens);
(xvii) make any capital expenditures for capital equipment for use
in the Company's operations such as computers, phones, office machines,
office furnishings and related fixtures (including, without limitation,
payments with respect to capitalized leases, as determined in accordance
with generally accepted accounting principles consistently applied)
exceeding $500,000 in the aggregate on a consolidated basis during any
fiscal year;
(xviii) enter into any leases or other rental agreements (excluding
capitalized leases, as determined in accordance with generally accepted
accounting principles consis tently applied) under which the amount of the
aggregate lease payments to be made by the Company and its Subsidiaries for
all such agreements exceeds $200,000 on a consolidated basis during any
fiscal year;
(xix) except as approved by the Company's board of directors, change
its fiscal year;
(xx) increase the authorized size of its board of directors above
seven members (except for any increase upon the occurrence of certain
Events of Noncompliance as provided in the Certificate of Designation);
(xxi) amend or modify any stock option plan or employee stock
ownership plan as in existence as of the Closing (except for any such
amendment or modification which increases to not more than 170,485 the
total number of shares of Common Stock subject to authorized stock options
(as such number of shares is proportionately adjusted for subsequent stock
splits, combinations and dividends affecting the Common Stock and as such
number includes all stock options outstanding as of the Closing)), adopt
any new stock option plan or employee stock ownership plan or issue any
shares of Common Stock to its or its Subsidiaries' employees or directors
other than pursuant to the Company's existing stock option plans (it being
understood that all such options shall be subject to vesting in equal
annual installments over not less than five years);
(xxii) issue or sell any shares of the capital stock, or rights to
acquire shares of the capital stock, of any Subsidiary to any Person other
than the Company or a Wholly-Owned Subsidiary;
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<PAGE>
(xxiii) borrow against, pledge, assign, modify, cancel or surrender
the key-man life insurance policy required to be maintained under paragraph
3E(vii) hereof; or
(xxiv) use the proceeds from the sale of the Preferred Stock and
the Warrants other than to finance its marketing efforts to banks and
equipment vendors, to support investment in equipment leases and for
working capital purposes.
3E. Affirmative Covenants. So long as at least 331/3% of the
---------------------
Preferred Stock remains outstanding, the Company shall, and shall cause each
Subsidiary to, unless it has received the prior written consent of the holders
of a majority of the outstanding Preferred Stock:
(i) at all times cause to be done all things necessary to
maintain, preserve and renew its corporate existence and all material
licenses, authorizations and permits necessary to the conduct of its
businesses and where the failure to do so would have a material adverse
effect upon the financial condition, operating results, assets, operations
or business prospects of the Company and its Subsidiaries taken as a whole;
(ii) maintain and keep its material properties in good repair,
working order and condition, and from time to time make all necessary or
desirable repairs, renewals and replacements, so that its businesses may be
properly and advantageously conducted in all material respects at all
times;
(iii) pay and discharge when payable all material taxes,
assessments and governmental charges imposed upon its properties or upon
the income or profits therefrom (in each case before the same becomes
delinquent and before penalties accrue thereon) and all material claims for
labor, materials or supplies which if unpaid would by law become a Lien
upon any of its property unless and to the extent that the same are being
contested in good faith and by appropriate proceedings and adequate
reserves (as determined in accordance with generally accepted accounting
principles, consistently applied) have been established on its books with
respect thereto;
(iv) comply with all other material obligations which it incurs
pursuant to any material contract or material agreement, whether oral or
written, express or implied, as such obligations become due, unless and to
the extent that the same are being contested in good faith and by
appropriate proceedings and adequate reserves (as determined in accordance
with generally accepted accounting principles, consistently applied) have
been established on its books with respect thereto;
(v) comply with all applicable laws, rules and regulations of
all governmental authorities, the violation of which would reasonably be
expected to have a material adverse effect upon the financial condition,
operating results, assets, operations or business prospects of the Company
and its Subsidiaries taken as a whole;
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<PAGE>
(vi) apply for and continue in force with good and responsible
insurance companies adequate insurance covering risks of such types and in
such amounts as are customary for corporations of similar size engaged in
similar lines of business;
(vii) maintain the key-man life insurance policy referred to in
paragraph 2H above;
(viii) maintain proper books of record and account which present
fairly in all material respects its financial condition and results of
operations and make provisions on its financial statements for all such
proper reserves as in each case are required in accordance with generally
accepted accounting principles, consistently applied; and
(ix) enter into and maintain nondisclosure agreements with its
key employees.
3F. Class B Restrictions. So long as at least 331/3% of the Class B
--------------------
Preferred remains outstanding, the Company shall not, without the prior written
consent of the holders of a majority of the outstanding Class B Preferred, take
any of the actions specified in paragraphs 3D(i), 3D(ii), 3D(iii), 3D(v), 3D(vi)
(but only if such transaction involves the sale, lease or other disposition of
more than 50% of the consolidated assets of the Company and its Subsidiaries
(computed on the basis of book value, determined in accordance with generally
accepted accounting principles consistently applied, or fair market value,
determined by the Company's board of directors in its good faith judgment)),
3D(vii), 3D(ix), 3D(x), 3D(xi), 3D(xii), 3D(xv), 3D(xvi) or 3D(xxiv) above;
provided that, notwithstanding the foregoing, in lieu of obtaining the prior
- -------- ----
written consent of the holders of the Class B Preferred as provided above with
respect to the actions specified in paragraphs 3D(i), 3D(ii), 3D(v), 3D(vi),
3D(ix) and 3D(x) (but only with respect to clause (a) thereof) above, the
Company may offer in writing to redeem all of the outstanding Class B Preferred
in accordance with Section 4 of the Certificate of Designation. If the holders
of a majority of the outstanding Class B Preferred reject such offer of
redemption or fail to accept such offer within ten business days after such
offer is delivered to each holder of Class B Preferred, such holders shall be
deemed to have consented to any such action which gave rise to the offer of
redemption, the offer shall be deemed to have been withdrawn and the Company
shall have no right to redeem any shares of Class B Preferred pursuant to
Section 4 of the Certificate of Designation. If the holders of a majority of
the outstanding Class B Preferred accept such offer of redemption, such holders
shall have no right to object to the taking of any such action which gave rise
to the offer of redemption, and the Company shall be obligated to redeem all of
the outstanding shares of Class B Preferred pursuant to the provisions of
Section 4 of the Certificate of Designation on or prior to the date on which any
such action which gave rise to the offer of redemption is to be taken by the
Company or any of its Subsidiaries.
3G. Compliance with Agreements. The Company shall perform and
--------------------------
observe (i) all of its obligations to each holder of the Preferred Stock and all
of its obligations to each holder of the Underlying Common Stock set forth in
the Articles of Organization, the Certificate of Designation and the Bylaws,
(ii) all of its obligations to each holder of the Warrants set forth therein,
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<PAGE>
(iii) all of its obligations to each holder of Registrable Securities set forth
in the Registration Agreement and (iv) all of its obligations to each holder of
Stockholder Shares set forth in the Stockholders Agreement.
3H. Current Public Information. At all times after the Company has
--------------------------
filed a registration statement with the Securities and Exchange Commission
pursuant to the requirements of either the Securities Act or the Securities
Exchange Act, the Company shall file all reports required to be filed by it
under the Securities Act and the Securities Exchange Act and the rules and
regulations adopted by the Securities and Exchange Commission thereunder and
shall take such further action as any holder or holders of Restricted Securities
may reasonably request, all to the extent required to enable such holders to
sell Restricted Securities pursuant to (i) Rule 144 adopted by the Securities
and Exchange Commission under the Securities Act (as such rule may be amended
from time to time) or any similar rule or regulation hereafter adopted by the
Securities and Exchange Commission or (ii) a registration statement on Form S-2
or S-3 or any similar registration form hereafter adopted by the Securities and
Exchange Commission. Upon request, the Company shall deliver to any holder of
Restricted Securities a written statement as to whether it has complied with
such requirements.
3I. Amendment of Other Agreements. The Company shall not amend,
-----------------------------
modify or waive any provision of its employment agreement with Paul S. Gass
without the prior written consent of the holders of a majority of the Underlying
Common Stock, and the Company shall enforce the provisions of such employment
agreement and shall exercise all of its rights and remedies thereunder unless it
is otherwise directed by the holders of a majority of the Underlying Common
Stock. The provisions of this paragraph 3I shall terminate upon the
consummation of a Qualified Public Offering.
3J. Financing Agreements. The Company shall not amend, modify or
--------------------
waive, or permit any Subsidiary to amend, modify or waive, any provision of the
Company's or any Subsidiary's existing financing agreements if as a result of
such amendment, modification or waiver the Company, any of its Subsidiaries or
the holders of the Preferred Stock would be subject to any provision of such
financing agreements more onerous or restrictive in any material respect than as
in effect immediately prior to any such amendment, modification or waiver,
without the prior written consent of the holders of a majority of the
outstanding Preferred Stock. The Company shall not become subject to, or permit
any Subsidiary to become subject to, any new financing agreement that contains
any provisions that are more onerous or restrictive in any material respect to
the Company, any of its Subsidiaries or the holders of the Preferred Stock than
the Company's existing financing agreements as of the date hereof, without the
prior written consent of the holders of a majority of the outstanding Preferred
Stock. Notwithstanding the foregoing, the holders of Preferred Stock shall not
unreasonably withhold such prior written consent, and such holders shall have no
right to object thereto if any such amendment, modification or waiver to an
existing financing agreement or if any such new financing agreement would not
have a material adverse effect on the business operations or financial condition
of the Company and its Subsidiaries taken as a whole. The provisions of this
paragraph 3J shall not apply if any such amendment, modification or waiver is
approved by a majority of the Company's board of directors (with at least one of
the Investor Directors (as defined
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<PAGE>
in the Stockholders Agreement) voting in favor thereof or otherwise consenting
thereto). The provisions of this paragraph 3J shall terminate upon the
consummation of a Qualified Public Offering.
3K. Right of First Refusal.
----------------------
(i) Except for issuances of Common Stock (a) to the Company's
employees as contemplated by paragraph 3D(xxi) above, (b) to the Company's
employees on the terms described on the attached Employee Stock Purchase
-----------------------
Schedule (in an aggregate amount not to exceed 44,000 shares of Common Stock (as
- --------
such number of shares is adjusted for subsequent stock splits, stock
combinations, stock dividends and recapitalizations affecting the Common Stock
and as such number shall include (1) all shares of Common Stock issued to such
employees as of the date of this Agreement and (2) all shares of Common Stock
issuable upon exercise of the common stock warrants described on the attached
Employee Stock Purchase Schedule)), (c) to customers, suppliers, financial
- --------------------------------
institutions and other Persons having legitimate business relationships with the
Company or its Subsidiaries (in an aggregate amount not to exceed 25,000 shares
of Common Stock (as such number of shares is adjusted for subsequent stock
splits, stock combinations, stock dividends and recapitalizations affecting the
Common Stock)), (d) upon the conversion of the Preferred Stock or the Class B
Common or upon the exercise of the Warrants (including the Contingent Warrants),
(e) in connection with the acquisition of another company or business as
contemplated by paragraph 3D(viii), (f) pursuant to a public offering registered
under the Securities Act, (g) upon the exercise of certain common stock warrants
issued prior to the Closing pursuant to the Private Placement Memorandum in an
aggregate amount not to exceed 8,000 shares of Common Stock (at an exercise
price of not less than $13.75 per share), (h) subsequent to the Closing and
prior to July 1, 1996, in an aggregate amount not to exceed 32,000 shares of
Common Stock pursuant to the Private Placement Memorandum (at a price not less
than $12.50 per share) or (i) upon the exercise of common stock warrants issued
subsequent to the Closing and prior to July 1, 1996 pursuant to the Private
Placement Memorandum in an aggregate amount not to exceed 3,200 shares of Common
Stock (at an exercise price of not less than $13.75 per share), if the Company
authorizes the issuance or sale of any shares of Common Stock or any securities
containing options or rights to acquire any shares of Common Stock (other than
as a dividend on the outstanding Common Stock), the Company shall first offer to
sell to each holder of Underlying Common Stock a portion of such stock or
securities equal to the quotient determined by dividing (1) the number of shares
of Underlying Common Stock held by such holder by (2) the sum of the total
number of shares of Underlying Common Stock and the number of shares of Common
Stock outstanding which are not shares of Underlying Common Stock. Each holder
of Underlying Common Stock shall be entitled to purchase such stock or
securities at the most favorable price and on the most favorable terms as such
stock or securities are to be offered to any other Persons; provided that, at
-------- ----
the request of any holder of Underlying Common Stock, the Company shall offer to
such holder stock or securities which have no voting rights (other than required
by applicable law) and which are convertible into voting securities on the same
terms as the Class B Common is convertible into Class A Common but which are
otherwise identical to the stock or securities being offered. The purchase
price for all stock and securities offered to the holders of the Underlying
Common Stock shall be payable in cash or, to the extent otherwise required
hereunder, notes issued by such holders.
-15-
<PAGE>
(ii) In order to exercise its purchase rights hereunder, a
holder of Underlying Common Stock must within 15 days after receipt of written
notice from the Company describing in reasonable detail the stock or securities
being offered, the purchase price thereof, the payment terms and such holder's
percentage allotment deliver a written notice to the Company describing its
election hereunder. If all of the stock and securities offered to the holders of
Underlying Common Stock is not fully subscribed by such holders, the remaining
stock and securities shall be reoffered by the Company to the holders purchasing
their full allotment upon the terms set forth in this paragraph, except that
such holders must exercise their purchase rights within five days after receipt
of such reoffer.
(iii) Upon the expiration of the offering periods described
above, the Company shall be entitled to sell such stock or securities which the
holders of Underlying Common Stock have not elected to purchase during the 90
days following such expiration on terms and conditions no more favorable to the
purchasers thereof than those offered to such holders. Any stock or securities
offered or sold by the Company after such 90-day period must be reoffered to the
holders of Underlying Common Stock pursuant to the terms of this paragraph.
(iv) The rights of the holders of Underlying Common Stock under
this paragraph shall terminate upon the consummation of a Qualified Public
Offering.
3L. Regulatory Compliance Cooperation.
---------------------------------
(i) Before the Company redeems, purchases or otherwise acquires,
directly or indirectly, or converts or takes any action with respect to the
voting rights of, any shares of any class of its capital stock or any securities
convertible into or exchangeable for any shares of any class of its capital
stock, the Company shall give written notice of such pending action to the
Purchasers. Upon the written request of any Purchaser made within 10 days after
its receipt of any such notice stating that after giving effect to such action
such Purchaser would have a Regulatory Problem, the Company shall defer taking
such action for such period (not to extend beyond 45 days after such Purchaser's
receipt of the Company's original notice) as such Purchaser requests to permit
it and its Affiliates to reduce the quantity of the Company's securities they
own in order to avoid the Regulatory Problem. In addition, the Company shall
not be a party to any merger, consolidation, recapitalization or other
transaction pursuant to which any Purchaser would be required to take any voting
securities, or any securities convertible into voting securities, which might
reasonably be expected to cause such Purchaser to have a Regulatory Problem.
For purposes of this paragraph, a Person shall be deemed to have a "Regulatory
----------
Problem" when such Person and such Person's Affiliates would own, control or
- -------
have power over a greater quantity of securities of any kind issued by the
Company or any other entity than are permitted under any requirement of any
governmental authority.
(ii) At any Purchaser's request at any time (whether in
connection with any action by the Company referred to in subparagraph (i) above
or otherwise), the Company shall exchange with such Purchaser for such number of
shares of Class A Common or Class A Preferred, as the case may be, then held by
such Purchaser as it designates a like number of shares of Class B
-16-
<PAGE>
Common or Class B Preferred, respectively, and the Company shall at all times
reserve and keep available out of its authorized but unissued shares of Class B
Common and Class B Preferred, solely for issue upon such exchanges, the number
of such shares deemed sufficient by the Company for such purposes. In the event
of any such exchange of Class B Common for Class A Common or Class B Preferred
for Class A Preferred, (a) the holders of such Class B Common or Class B
Preferred shall be entitled to all the rights which such holders had pursuant to
this Agreement and the Registration Agreement as holders of Class A Common or
Class A Preferred, as the case may be (including, without limitation, the right
to have such shares treated as "Underlying Common Stock" and "Registrable
Securities" pursuant to this Agreement and the Registration Agreement), and (b)
if such shares of Class A Common or Class A Preferred were "Restricted
Securities" hereunder, such Class B Common or Class B Preferred shall also be
deemed to be "Restricted Securities" hereunder.
(iii) The Company shall grant to any subsequent holder of
Restricted Securities, upon such holder's request, the same rights granted to
Purchasers pursuant to this paragraph.
3M. Public Disclosures. The Company shall not, nor shall it permit
------------------
any Subsidiary to, disclose any Person's name or identity as an investor in any
of the Purchasers in any press release or other public announcement or in any
document or material filed with any governmental entity, without the prior
written consent of such Purchaser, unless such disclosure is required by
applicable law or governmental regulations or by order of a court of competent
jurisdiction, in which case prior to making such disclosure the Company shall
have given written notice to such Purchaser describing in reasonable detail the
proposed content of such disclosure and shall permit the Purchaser to review and
comment upon the form and substance of such disclosure. Nothing herein,
however, shall prohibit the Company from disclosing or marketing the Purchasers'
investment under this Agreement.
3N. Contingent Warrants.
-------------------
(i) Upon any redemption of shares of Class B Preferred pursuant to
the terms of paragraph 4A of the Certificate of Designation, the Company shall
issue a warrant (collectively, the "Contingent Warrants") to each holder of
-------------------
Class B Preferred. The Contingent Warrants shall be in the form of Exhibit G
---------
attached hereto, shall include the additional terms and conditions described on
Exhibit H attached hereto and shall otherwise be satisfactory in form and
- ---------
substance to the recipients thereof. The holders of the Contingent Warrants
shall have the right to acquire initially the same number of shares of Class B
Common into which each such holder's shares of Class B Preferred being redeemed
(the "Redeemed Shares") were convertible as of the Redemption Date thereof. The
---------------
initial exercise price for each share of Class B Common under the Contingent
Warrants shall be equal to the Conversion Price of the Redeemed Shares as of the
Redemption Date thereof, and the Contingent Warrants shall be exercisable at any
time after the Redemption Date of the Redeemed Shares and shall expire (unless
previously exercised) on the earlier of the tenth anniversary of the Closing or
immediately following the date on which the outstanding Preferred Stock is
converted into Conversion Stock pursuant to paragraph 6F of the Certificate of
Designation.
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<PAGE>
(ii) The terms "Conversion Price," "Redemption Date" and "Conversion
Stock" have the meanings set forth in the Certificate of Designation.
Section 4. Transfer of Restricted Securities.
---------------------------------
4A. General Provisions. Restricted Securities are transferable only
------------------
pursuant to (i) public offerings registered under the Securities Act, (ii) Rule
144 or Rule 144A of the Securities and Exchange Commission (or any similar rule
or rules then in force) if such rule is available and (iii) subject to the
conditions specified in paragraph 4B below, any other legally available means of
transfer.
4B. Opinion Delivery. In connection with the transfer of any
----------------
Restricted Securities (other than a transfer described in paragraph 4A(i) or
(ii) above), the holder thereof shall deliver written notice to the Company
describing in reasonable detail the transfer or proposed transfer, together with
an opinion of Kirkland & Ellis or other counsel which (to the Company's
reasonable satisfaction) is knowledgeable in securities law matters to the
effect that such transfer of Restricted Securities may be effected without
registration of such Restricted Securities under the Securities Act. In
addition, if the holder of the Restricted Securities delivers to the Company an
opinion of Kirkland & Ellis or such other counsel that no subsequent transfer of
such Restricted Securities shall require registration under the Securities Act,
the Company shall promptly upon such contemplated transfer deliver new
certificates for such Restricted Securities which do not bear the Securities Act
legend set forth in paragraph 7C. If the Company is not required to deliver new
certificates for such Restricted Securities not bearing such legend, the holder
thereof shall not transfer the same until the prospective transferee has
confirmed to the Company in writing its agreement to be bound by the conditions
contained in this paragraph and paragraph 7C.
4C. Rule 144A. Upon the request of any Purchaser, the Company shall
---------
promptly supply to such Purchaser or its prospective transferees all information
regarding the Company required to be delivered in connection with a transfer
pursuant to Rule 144A of the Securities and Exchange Commission. The Company's
obligations under this paragraph 4C shall at all times be contingent upon the
relevant Purchaser's obtaining from the prospective transferees a written
agreement to take all reasonable precautions to safeguard the Rule 144A
information from disclosure to anyone other than a Person who will assist such
transferee in evaluating the transfer.
4D. Legend Removal. If any Restricted Securities become eligible for
--------------
sale pursuant to Rule 144(k), the Company shall, upon the request of the holder
of such Restricted Securities, remove the legend set forth in paragraph 7C from
the certificates for such Restricted Securities.
Section 5. Representations and Warranties of the Company. As a
---------------------------------------------
material inducement to the Purchasers to enter into this Agreement and purchase
the Preferred Stock and the Warrants hereunder, the Company hereby represents
and warrants that:
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<PAGE>
5A. Organization, Corporate Power and Licenses. The Company is a
------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of Massachusetts and is qualified to do business in every jurisdiction in which
the failure to so qualify has had or would have a material adverse effect on the
financial condition, operating results, assets, operations or business prospects
of the Company and its Subsidiaries taken as a whole. The Company possesses all
requisite corporate power and authority and all material licenses, permits and
authorizations necessary to own and operate its properties, to carry on its
businesses as now conducted and as presently proposed to be conducted and to
carry out the transactions contemplated by this Agreement. The copies of the
Company's and each Subsidiary's charter documents and bylaws which have been
furnished to the Purchasers' special counsel reflect all amendments made thereto
at any time prior to the date of this Agreement and are correct and complete.
5B. Capital Stock and Related Matters.
---------------------------------
(i) As of the Closing and immediately thereafter, the authorized
capital stock of the Company shall consist of (a) 500,000 shares of preferred
stock, of which 60,000 shares shall be designated as Class A Preferred (of which
30,000 shares shall be issued and outstanding and 30,000 shares shall be
reserved for issuance upon conversion of the Class B Preferred) and 30,000
shares shall be designated as Class B Preferred (all of which shall be issued
and outstanding) and (b) 5,264,000 shares of Common Stock, of which 5,000,000
shares shall be designated as Class A Common (of which 800,714 shares shall be
issued and outstanding and held beneficially and of record by the Persons (and
in the amounts) set forth on the attached Capitalization Schedule, 480,000
-----------------------
shares shall be reserved for issuance upon conversion of the Class A Preferred,
24,000 shares shall be reserved for issuance upon exercise of the Class A
Warrant, and 264,000 shares shall be reserved for issuance upon conversion of
the Class B Common issued upon conversion of the Class B Preferred and exercise
of the Class B Warrant) and of which 264,000 shares shall be designated as Class
B Common (none of which shares shall be issued and outstanding, 240,000 shares
of which shall be reserved for issuance upon conversion of the Class B Preferred
and 24,000 shares of which shall be reserved for issuance upon the exercise of
the Class B Warrant) and 9,200 shares shall be reserved for issuance upon the
exercise of certain common stock warrants issued pursuant to the Private
Placement Memorandum. As of the Closing, neither the Company nor any Subsidiary
shall have outstanding any stock or securities convertible or exchangeable for
any shares of its capital stock or containing any profit participation features,
nor shall it have outstanding any rights or options to subscribe for or to
purchase its capital stock or any stock or securities convertible into or
exchangeable for its capital stock or any stock appreciation rights or phantom
stock plans, except for the Preferred Stock, the Class B Common and the Warrants
and except as set forth on the attached Capitalization Schedule. The attached
-----------------------
Capitalization Schedule accurately sets forth the following information with
- -----------------------
respect to all outstanding options and rights to acquire the Company's capital
stock: the holder, the number of shares covered, the exercise price and the
expiration date. As of the Closing, neither the Company nor any Subsidiary shall
be subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any shares of its capital stock or any warrants,
options or other rights to acquire its capital stock, except as set forth on the
attached Capitalization Schedule and except pursuant to the Certificate of
-----------------------
Designation and the Stockholders
-19-
<PAGE>
Agreement. As of the Closing, all of the outstanding shares of the Company's
capital stock shall be validly issued, fully paid and nonassessable.
(ii) There are no statutory or, to the best of the Company's
knowledge, contractual stockholders preemptive rights or rights of refusal with
respect to the issuance of the Preferred Stock or the Warrants hereunder or the
issuance of the Common Stock upon conversion of the Preferred Stock or upon
exercise of the Warrants. Except as specifically disclosed on the attached
Capitalization Schedule, the Company has not violated any applicable federal or
- -----------------------
state securities laws in connection with the offer, sale or issuance of any of
its capital stock, and the offer, sale and issuance of the Preferred Stock and
the Warrants hereunder do not require registration under the Securities Act or
any applicable state securities laws. As of the Closing, none of the Company's
stockholders shall have the right to rescind such stockholder's purchase of the
Company's capital stock for any reason other than pursuant to a rescission offer
granted by the Company. As of the Closing, the Company has not repurchased,
committed to repurchase or agreed to repurchase capital stock from its
stockholders pursuant to rescission offers granted by the Company for an
aggregate consideration in excess of $250,000 (assuming, for purposes of this
representation and warranty, that all rescission offers granted by the Company
that remain outstanding as of the Closing are accepted by such stockholders and
the Company is committed to and has agreed to repurchase such capital stock as
of the Closing). Except as disclosed on the attached Capitalization Schedule,
-----------------------
to the best of the Company's knowledge, there are no agreements between the
Company's stockholders with respect to the voting or transfer of the Company's
capital stock or with respect to any other aspect of the Company's affairs,
except for the Stockholders Agreement.
5C. Subsidiaries; Investments. The attached Subsidiary Schedule
------------------------- -------------------
correctly sets forth the name of each Subsidiary, the jurisdiction of its
incorporation and the Persons owning the outstanding capital stock of such
Subsidiary. Each Subsidiary is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, possesses all
requisite corporate power and authority and all material licenses, permits and
authorizations necessary to own its properties and to carry on its businesses as
now being conducted and as presently proposed to be conducted and is qualified
to do business in every jurisdiction in which the failure to so qualify has had
or would have a material adverse effect on the financial condition, operating
results, assets, operations or business prospects of the Company and its
Subsidiaries taken as a whole. All of the outstanding shares of capital stock
of each Subsidiary are validly issued, fully paid and nonassess able, and all
such shares are owned by the Company or another Subsidiary free and clear of any
Lien and not subject to any option or right to purchase any such shares. Except
as set forth on the Subsidiary Schedule, neither the Company nor any Subsidiary
-------------------
owns or holds the right to acquire any shares of stock or any other security or
interest in any other Person.
5D. Authorization; No Breach. The execution, delivery and
------------------------
performance of this Agreement, the Warrants, the Registration Agreement, the
Stockholders Agreement and all other agreements contemplated hereby to which the
Company is a party, the filing of the Certificate of Designation and the
amendment and restatement of the Articles of Organization and the amendment and
restatement of the Bylaws have been duly authorized by the Company. This
Agreement, the Warrants, the Registration Agreement, the Stockholders Agreement,
the Articles of Organization,
-20-
<PAGE>
the Certificate of Designation and all other agreements contemplated hereby to
which the Company is a party each constitutes a valid and binding obligation of
the Company, enforceable in accordance with its terms. Except as set forth on
the attached Restrictions Schedule, the execution and delivery by the Company of
---------------------
this Agreement, the Registration Agreement, the Stockholders Agreement and all
other agreements contemplated hereby to which the Company is a party, the
offering, sale and issuance of the Preferred Stock and the Warrants hereunder,
the issuance of Common Stock upon conversion of the Preferred Stock, the
issuance of Class A Preferred upon the conversion of Class B Preferred, the
issuance of Warrants hereunder, the issuance of Common Stock upon exercise of
Warrants, the filing of the Certificate of Designation, the amendment and
restatement of the Articles of Organization and the Bylaws and the fulfillment
of and compliance with the respective terms hereof and thereof by the Company,
do not and shall not (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a default under, (iii) result in
the creation of any lien, security interest, charge or encumbrance upon the
Company's or any Subsidiary's capital stock or assets pursuant to, (iv) give any
third party the right to modify, terminate or accelerate any obligation under,
(v) result in a violation of, or (vi) require any authorization, consent,
approval, exemption or other action by or notice or declaration to, or filing
with, any court or administrative or governmental body or agency pursuant to,
the Certificate of Designation or the charter or bylaws of the Company or any
Subsidiary, or any law, statute, rule or regulation to which the Company or any
Subsidiary is subject, or any agreement, instrument, order, judgment or decree
to which the Company or any Subsidiary is subject. Except as set forth on the
attached Restrictions Schedule, none of the Subsidiaries are subject to any
---------------------
restrictions upon making loans or advances or paying dividends to, transferring
property to, or repaying any Indebtedness owed to, the Company or another
Subsidiary.
5E. Financial Statements. Attached hereto as the Financial
-------------------- ---------
Statements Schedule are the following financial statements:
- -------------------
(i) the audited consolidated balance sheets of the Company and
its Subsidiaries as of December 31, 1993, December 31, 1994 and June 30, 1995,
and the related statements of income and cash flows (or the equivalent) for
the respective periods then ended; and
(iii) the unaudited consolidated balance sheet of the Company and
its Subsidiaries as of April 30, 1996 (the "Latest Balance Sheet"), and the
--------------------
related statements of income and cash flows (or the equivalent) for the ten-
month period then ended.
Each of the foregoing financial statements (including in all cases the notes
thereto, if any) is consistent with the books and records of the Company (which,
in turn, are accurate and complete in all material respects) and presents fairly
in all material respects the consolidated financial condition, results of
operations and cash flows of the Company and its Subsidiaries in accordance with
generally accepted accounting principles applied on a consistent basis as of the
dates and for the periods set forth therein, subject in the case of the
unaudited financial statements to changes resulting from normal year-end
adjustments for recurring accruals (none of which would, alone or in the
aggregate, be materially adverse to the financial condition, operating results,
assets, operations or
-21-
<PAGE>
business prospects of the Company and its Subsidiaries taken as a whole). The
attached Financial Statements Schedule sets forth the amount of the Company's
-----------------------------
and its Subsidiaries' outstanding funded Indebtedness as of the end of the most
recent monthly accounting period prior to the Closing and the amount of
available funds under the Company's and its Subsidiaries' revolving credit lines
and other facilities as of the end of such monthly accounting period.
5F. Absence of Undisclosed Liabilities. Except as set forth on the
----------------------------------
attached Liabilities Schedule, the Company and its Subsidiaries do not have any
--------------------
material obligation or liability (whether accrued, absolute, contingent,
unliquidated or otherwise, whether or not known to the Company or any
Subsidiary, whether due or to become due and regardless of when asserted)
arising out of transactions entered into at or prior to the Closing, or any
action or inaction at or prior to the Closing, or any state of facts existing at
or prior to the Closing other than: (i) liabilities set forth on the Latest
Balance Sheet (including any notes thereto), (ii) liabilities and obligations
which have arisen after the date of the Latest Balance Sheet in the ordinary
course of business (none of which is a liability resulting from breach of
contract, breach of warranty, tort, infringement, claim or lawsuit) and (iii)
other liabilities and obligations expressly disclosed in the other Schedules to
this Agreement.
5G. No Material Adverse Change. Since the date of the Latest Balance
--------------------------
Sheet, there has been no material adverse change in the financial condition,
operating results, assets, operations, business prospects, employee relations or
customer or supplier relations of the Company and its Subsidiaries taken as a
whole.
5H. Absence of Certain Developments.
-------------------------------
(i) Except as expressly contemplated by this Agreement or as set
forth on the attached Developments Schedule, since the date of the Latest
---------------------
Balance Sheet, neither the Company nor any Subsidiary have:
(a) issued any notes, bonds or other debt securities or any
capital stock or other equity securities or any securities convertible,
exchangeable or exercisable into any capital stock or other equity securities;
(b) borrowed any amount or incurred or become subject to any
material liabilities, except current liabilities incurred in the ordinary
course of business and liabilities under contracts and financing agreements
with lending institutions entered into in the ordinary course of business;
(c) discharged or satisfied any material Lien or paid any
material obligation or liability, other than current liabilities paid in the
ordinary course of business;
(d) declared or made any payment or distribution of cash or other
property to its stockholders with respect to its capital stock or other equity
securities or purchased or redeemed any shares of its capital stock or other
equity securities (including, without
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<PAGE>
limitation, any warrants, options or other rights to acquire its capital stock
or other equity securities), except for such repurchases or redemptions made
pursuant to rescission offers made by the Company to certain investors
pursuant to the 1995 offering contemplated by the Private Placement
Memorandum;
(e) mortgaged or pledged any of its properties or assets or subjected
them to any material Lien, other than such mortgages and pledges made in the
ordinary course and which constitute Permitted Liens, and except Liens for
current property taxes not yet due and payable;
(f) sold, assigned or transferred any of its tangible assets, except
in the ordinary course of business, or canceled any material debts or claims;
(g) sold, assigned or transferred any patents or patent applications,
trademarks, service marks, trade names, corporate names, copyrights or
copyright registrations, trade secrets or other intangible assets, or
disclosed any material proprietary confidential information to any Person
(other than to the Purchasers and other than in the ordinary course of
business in circumstances in which the Company has imposed confidentiality
restrictions);
(h) suffered any extraordinary losses or waived any rights of material
value, whether or not in the ordinary course of business or consistent with
past practice;
(i) made capital expenditures for capital equipment for use in the
Company's operations (such as computers, phones, office machines, office
furnishings and related fixtures) or commitments therefor that aggregate in
excess of $100,000;
(j) made any loans or advances to, guarantees for the benefit of, or
any Investments in, any Persons in excess of $25,000 in the aggregate, except
for certain loans to existing employees in connection with the issuance and
sale of stock to such employees as described on the attached Employee Stock
--------------
Purchase Schedule;
-----------------
(k) made any charitable contributions or pledges;
(l) suffered any damage, destruction or casualty loss exceeding in the
aggregate $25,000, whether or not covered by insurance;
(m) made any Investment in or taken steps to incorporate any
Subsidiary, except for such steps taken in connection with the formation of an
offshore Wholly-Owned Subsidiary captive insurer and a bankruptcy proof
Wholly-Owned Subsidiary; or
(n) or entered into any other material transaction, whether or not in
the ordinary course of business.
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<PAGE>
(ii) Neither the Company nor any Subsidiary has at any time made any
payments for political contributions or made any bribes, kickback payments or
other illegal payments.
5I. Assets. Except as set forth on the attached Assets Schedule, the
------ ---------------
Company and each Subsidiary have good and marketable title to, or a valid
leasehold interest in, the material properties and assets used by them, located
on their premises or shown on the Latest Balance Sheet or acquired thereafter,
free and clear of all Liens, except for properties and assets disposed of in the
ordinary course of business since the date of the Latest Balance Sheet and
except for Liens disclosed on the Latest Balance Sheet (including any notes
thereto) and Liens for current property taxes not yet due and payable. Except as
described on the attached Assets Schedule, the Company's and each Subsidiary's
---------------
buildings, equipment and other tangible assets are in good operating condition
in all material respects and are fit for use in the ordinary course of business.
The Company and each Subsidiary own, or have a valid leasehold interest in, all
material tangible assets necessary for the conduct of their respective
businesses as presently conducted and as presently proposed to be conducted.
5J. Tax Matters.
-----------
(i) Except as set forth on the attached Taxes Schedule: the Company
--------------
and each Subsidiary have filed all Tax Returns which they are required to file
under applicable laws and regulations; all such Tax Returns are complete and
correct in all material respects and have been prepared in compliance with all
applicable laws and regulations in all material respects; the Company and each
Subsidiary have paid all Taxes due and owing by them (whether or not such Taxes
are required to be shown on a Tax Return) and have withheld and paid over to the
appropriate taxing authority all Taxes which they are required to withhold from
amounts paid or owing to any employee, stockholder, creditor or other third
party; the Company believes that as of the date of this Agreement the accrual
for Taxes on the Latest Balance Sheet would be adequate to pay all Tax
Liabilities of the Company and its Subsidiaries if their current tax year were
treated as ending on the date of the Latest Balance Sheet Date (excluding any
amount recorded which is attributable solely to timing differences between book
and Tax income); since the date of the Latest Balance Sheet, the Company and its
Subsidiaries have not incurred any liability for Taxes other than in the
ordinary course of business; and no foreign, federal, state or local tax audits
or administrative or judicial proceedings are pending or being conducted with
respect to the Company or any Subsidiary, no information related to Tax matters
has been requested by any foreign, federal, state or local taxing authority and
no written notice indicating an intent to open an audit or other review has been
received by the Company or any Subsidiary from any foreign, federal, state or
local taxing authority.
(ii) Neither the Company nor any Subsidiary is liable for the Taxes of
another Person that is not a Subsidiary (a) under Treas. Reg. (S)1.1502-6 (or
comparable provisions of state, local or foreign law), (b) as transferee or
successor, (c) by contract or indemnity or (d) otherwise. Neither the Company
nor any Subsidiary is a party to any tax sharing agreement with a Person other
than the Company or a Subsidiary.
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<PAGE>
(iii) Neither the Company nor any Subsidiary has been a member of an
Affiliated Group other than one in which the Company was the common parent, or
filed or been included in a combined, consolidated or unitary income Tax Return,
other than one filed by the Company.
5K. Contracts and Commitments.
-------------------------
(i) Except as expressly contemplated by this Agreement or as set forth
on the attached Contracts Schedule or the attached Employee Benefits Schedule,
------------------ --------------------------
neither the Company nor any Subsidiary is a party to or bound by any written or
oral:
(a) pension, profit sharing, stock option, employee stock purchase or
other plan or arrangement providing for deferred or other compensation to
employees or any other employee benefit plan or arrangement, or any collective
bargaining agreement or any other contract with any labor union, or severance
agreements, programs, policies or arrange ments;
(b) contract for the employment of any officer, individual employee or
other Person on a full-time, part-time, consulting or other basis providing
annual compensation in excess of $50,000 or contract relating to loans to
officers, directors or Affiliates;
(c) contract under which the Company or Subsidiary has advanced or
loaned any other Person amounts in the aggregate exceeding $50,000;
(d) agreement or indenture relating to borrowed money or other
Indebtedness or the mortgaging, pledging or otherwise placing a Lien on any
material asset or material group of assets of the Company or its Subsidiaries;
(e) guarantee of any obligation in excess of $50,000 (other than by
the Company of a Wholly-Owned Subsidiary's debts or a guarantee by a
Subsidiary of the Company's debts or another Subsidiary's debts);
(f) lease or agreement under which the Company or any Subsidiary is
lessee of or holds or operates any property, real or personal, owned by any
other party, except for any lease of real or personal property under which the
aggregate annual rental payments do not exceed $50,000;
(g) contract or group of related contracts with the same party or
group of affiliated parties the performance of which involves consideration in
excess of $50,000 (other than lease arrangements entered into as lessor in the
ordinary course of business);
(h) assignment, license, indemnification or other agreement with
respect to any intangible property (including, without limitation, any
Intellectual Property);
-25-
<PAGE>
(i) warranty agreement with respect to its services rendered or
its products sold or leased;
(j) agreement under which it has granted any Person any
registration rights (including, without limitation, demand and piggyback
registration rights);
(k) sales, distribution or franchise agreement;
(l) agreement with a term of more than six months which is not
terminable by the Company or any Subsidiary upon less than 30 days notice
without penalty;
(m) contract or agreement prohibiting it from freely engaging in
any business or competing anywhere in the world; or
(n) any other agreement which is material to its operations and
business prospects or involves annual consideration in excess of $50,000.
(ii) All of the contracts, agreements and instruments set forth on the
attached Contracts Schedule are valid, binding and enforceable in accordance
------------------
with their respective terms. The Company and each Subsidiary have performed all
material obligations required to be performed by them under the contracts,
agreements and instruments listed or required to be listed on the attached
Contracts Schedule and are not in default under or in breach of nor in receipt
- ------------------
of any claim of default or breach under any material contract, agreement or
instrument listed or required to be listed on the attached Contracts Schedule;
------------------
no event has occurred which with the passage of time or the giving of notice or
both would result in a default, breach or event of noncompliance by the Company
or any Subsidiary under any material contract, agreement or instrument listed or
required to be listed on the attached Contracts Schedule; neither the Company
------------------
nor any Subsidiary has any present expectation or intention of not fully
performing all such obligations; neither the Company nor any Subsidiary has
knowledge of any breach or anticipated breach by the other parties to any
material contract, agreement, instrument or commitment listed or required to be
listed on the attached Contracts Schedule; and neither the Company nor any
------------------
Subsidiary is a party to any contract requiring it to purchase or sell goods or
services or lease property above or below (as the case may be) prevailing market
prices and rates.
(iii) A true and correct copy of each of the written instruments,
plans, contracts and agreements and an accurate description of each of the oral
arrangements, contracts and agreements which are referred to on the Contracts
---------
Schedule have been made available to the Purchaser's special counsel.
- --------
5L. Intellectual Property Rights.
----------------------------
(i) The attached Intellectual Property Schedule contains a complete
------------------------------
and accurate list of all (a) patented or registered Intellectual Property Rights
owned or used by the Company or any Subsidiary, (b) pending patent applications
and applications for registrations of other Intellectual
-26-
<PAGE>
Property Rights filed by the Company or any Subsidiary, (c) material
unregistered trade names and corporate names owned or used by the Company or any
Subsidiary and (d) material unregistered trademarks, service marks, copyrights,
mask works and computer software owned or used by the Company or any Subsidiary.
The attached Intellectual Property Schedule also contains a complete and
------------------------------
accurate list of all licenses and other rights granted by the Company or any
Subsidiary to any third party with respect to any Intellectual Property Rights
and all licenses and other rights granted by any third party to the Company or
any Subsidiary with respect to any material Intellectual Property Rights, in
each case identifying the subject Intellectual Property Rights. Except as set
forth on the attached Intellectual Property Schedule, the Company or one of its
------------------------------
Subsidiaries owns all right, title and interest to, or has the right to use
pursuant to a valid license, all Intellectual Property Rights necessary for the
operation of the businesses of the Company and its Subsidiaries as presently
conducted and as presently proposed to be conducted, free and clear of all
Liens. Except as set forth on the attached Intellectual Property Schedule, the
------------------------------
loss or expiration of any Intellectual Property Right or related group of
Intellectual Property Rights owned or used by the Company or any Subsidiary has
not had and would not reasonably be expected to have a material adverse effect
on the conduct of the Company's and its Subsidiaries' respective businesses, and
no such loss or expiration is, to the best of the Company's knowledge,
threatened, pending or reasonably foreseeable. The Company and its Subsidiaries
have taken all reasonably necessary and desirable actions to maintain and
protect the Intellectual Property Rights which they own. To the best of the
Company's knowledge, the owners of any material Intellectual Property Rights
licensed to the Company or any Subsidiary have taken all reasonably necessary
and desirable actions to maintain and protect the Intellectual Property Rights
which are subject to such licenses.
(ii) Except as set forth on the attached Intellectual Property
---------------------
Schedule, (a) the Company and its Subsidiaries own all right, title and interest
- --------
in and to all of the Intellectual Property Rights listed on such schedule, free
and clear of all Liens, (b) there have been no claims made against the Company
or any Subsidiary asserting the invalidity, misuse or unenforceability of any of
such Intellectual Property Rights, and, to the best of the Company's knowledge,
there are no grounds for the same, (c) neither the Company nor any Subsidiary
has received any notices of, and is not aware of any facts which indicate a
likelihood of, any infringement or misappropriation by, or conflict with, any
third party with respect to such Intellectual Property Rights (including,
without limitation, any demand or request that the Company or any Subsidiary
license any rights from a third party) and (d) the conduct of the Company's and
each Subsidiary's business has not infringed, misappropriated or conflicted with
and does not infringe, misappropriate or conflict with any Intellectual Property
Rights of other Persons, nor would any future conduct as presently contemplated
infringe, misappropriate or conflict with any Intellectual Property Rights of
other Persons. The transactions contemplated by this Agreement shall have no
material adverse effect on the Company's or any Subsidiary's right, title and
interest in and to the Intellectual Property Rights listed on the attached
Intellectual Property Schedule.
- ------------------------------
5M. Litigation, etc. Except as set forth on the attached Litigation
--------------- ----------
Schedule, there are no actions, suits, proceedings, orders, investigations or
- --------
claims pending or, to the best of the Company's knowledge, threatened against or
affecting the Company or any Subsidiary (or to the best of the Company's
knowledge, pending or threatened against or affecting any of the officers,
directors
-27-
<PAGE>
or key employees of the Company and its Subsidiaries with respect to their
businesses or proposed business activities), or pending or threatened by the
Company or any Subsidiary against any third party, at law or in equity, or
before or by any governmental department, commission, board, bureau, agency or
instrumentality (including, without limitation, any actions, suit, proceedings
or investigations with respect to the transactions contemplated by this
Agreement); nor has there been any such actions, suits, proceedings, orders,
investigations or claims pending against or affecting the Company or any
Subsidiary during the past three years; neither the Company nor any Subsidiary
is subject to any arbitration proceedings under collective bargaining agreements
or otherwise or, to the best of the Company's knowledge, any governmental
investigations or inquiries (including, without limitation, inquiries as to the
qualification to hold or receive any material license or permit); and, to the
best of the Company's knowledge, there is no basis for any of the foregoing.
Neither the Company nor any Subsidiary is subject to any judgment, order or
decree of any court or other governmental agency, and neither the Company nor
any Subsidiary has received any opinion or memorandum or legal advice from legal
counsel to the effect that it is exposed, from a legal standpoint, to any
liability or disadvantage which may be material to its business.
5N. Brokerage. Except as set forth on the attached Brokerage
--------- ---------
Schedule, there are no claims for brokerage commissions, finders' fees or
- --------
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement binding upon the Company or any
Subsidiary. The Company shall pay, and hold each Purchaser harmless against,
any liability, loss or expense (including, without limitation, reasonable
attorneys' fees and out-of-pocket expenses) arising in connection with any such
claim.
5O. Governmental Consent, etc. No permit, consent, approval or
-------------------------
authorization of, or declaration to or filing with, any governmental authority
is required in connection with the execution, delivery and performance by the
Company of this Agreement or the other agreements contemplated hereby, or the
consummation by the Company of any other transactions contemplated hereby or
thereby, except as set forth on the attached Consents Schedule.
-----------------
5P. Insurance. Neither the Company nor any Subsidiary is in default
---------
with respect to its obligations under any insurance policy maintained by it, and
neither the Company nor any Subsidiary has been denied insurance coverage. The
insurance coverage of the Company and its Subsidiaries is customary for
corporations of similar size engaged in similar lines of business. The Company
and its Subsidiaries do not have any self-insurance or co-insurance programs.
5Q. Employees. The Company is not aware that any executive or key
---------
employee of the Company or any Subsidiary or any group of employees of the
Company or any Subsidiary has any plans to terminate employment with the Company
or any Subsidiary. The Company and each Subsidiary have complied in all
material respects with all laws relating to the employment of labor (including,
without limitation, provisions thereof relating to wages, hours, equal
opportunity, collective bargaining and the payment of social security and other
taxes), and the Company is not aware that it or any Subsidiary has any material
labor relations problems (including, without limitation, any union organization
activities, threatened or actual strikes or work stoppages or material
grievances). Neither the Company, its Subsidiaries nor, to the best of the
Company's
-28-
<PAGE>
knowledge after due inquiry, any of their key employees is subject to any
noncompete, nondisclosure, confidentiality, employment, consulting or similar
agreements relating to, affecting or in conflict with the present or proposed
business activities of the Company and its Subsidiaries, except for agreements
between the Company and its present and former employees.
5R. ERISA.
-----
(i) Except as disclosed on the attached Employee Benefits Schedule,
--------------------------------------------------------------
the Company does not maintain, contribute to or have any actual or potential
liability with respect to any (x) "defined contribution plan" (as defined in
Section 3(34) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) (the "Savings Plan"), (y) "employee welfare benefit plan" (as defined
----- ------------
in Section 3(1) of ERISA) (the "Welfare Plans") or (z) nonqualified deferred
-------------
compensation, incentive, bonus, material fringe benefit, stock bonus or other
material benefit arrangements (collectively (x), (y) and (z) above referred to
as the "Plans").
-----
(ii) The Company does not maintain, contribute to or have any actual
or potential liability with respect to any active or terminated, funded or
unfunded (x) multiemployer plan (as defined in Section 3(37) or ERISA, (y)
defined benefit plan (as defined in Section 3(35) of ERISA) or (z) plan or
arrangement to provide medical, health, life insurance or other welfare-type
benefits for current or future retired or terminated employees (except for
limited continued health benefit coverage required to be provided under Section
4980B of the IRC or similar state law).
(iii) Each of the Welfare Plans, if any, and the Savings Plan and all
related funding arrangements comply in form and operation with its terms and the
applicable requirements of ERISA, the IRC and any other laws. Except as
disclosed on the attached Employee Benefits Schedule, the Savings Plan has
--------------------------
received a favorable determination letter that it qualifies under the IRC (and
that its trust is exempt from tax under the IRC) and such favorable letter
includes changes required by the 1986 Tax Reform Act. Except as disclosed on
the attached Employee Benefits Schedule, nothing has occurred since the date of
--------------------------
such favorable determination letter that could adversely affect the qualified
status of the Savings Plan or the tax-exempt status of the trust.
(iv) None of the Company, any trustee or administrator of any Plan or
other person has engaged in any transaction with respect to any Plan which could
subject the Company or any of its employees to any tax or penalty or other
liability imposed by ERISA or the IRC. No actions, suits, investigations or
claims with respect to any of the Plans (other than routine claims for benefits)
are pending or, to the knowledge of the Company, threatened, and the Company is
not aware of any facts or circumstances which could give rise to or be expected
to give rise to any such actions, suits, investigations or claims. The Company
has complied with the requirements of Section 4980B of the IRC and Section 601
et seq. of ERISA ("COBRA"). All contributions which are due under each of the
-----
Plans has been made and all other contributions have been properly accrued. The
Company has complied with all reporting and disclosure obligations with respect
to the Welfare Plans and the Savings Plan.
-29-
<PAGE>
5S. Compliance with Laws. Except as set forth on the attached
--------------------
Compliance Schedule, neither the Company nor any Subsidiary has violated any law
- -------------------
(including, without limitation, usury laws) or any governmental regulation or
requirement which violation has had or would reasonably be expected to have a
material adverse effect upon the financial condition, operating results, assets,
operations or business prospects of the Company and its Subsidiaries taken as a
whole, and neither the Company nor any Subsidiary has received notice of any
such violation. Except as set forth on the Compliance Schedule, the Company and
-------------------
its Subsidiaries have complied with and are currently in compliance with all
Environmental and Safety Requirements, and neither the Company nor its
Subsidiaries have received any oral or written notice, report or information
regarding any liabilities (whether accrued, absolute, contingent, unliquidated
or otherwise) or any corrective, investigatory or remedial obligations arising
under Environmental and Safety Requirements which relate to the Company or its
Subsidiaries or any of their properties or their facilities and no facts or
circumstances exist with respect to the past or present operations or facilities
of the Company or any Subsidiary which would give rise to a material liability
or material corrective action or remedial obligation under any Environmental and
Safety Requirements. Neither this Agreement nor the consummation of the
transactions contemplated by this Agreement shall impose any obligations on the
Company or its Subsidiaries or otherwise for site investigation or cleanup, or
notification to or consent of any government agencies or third parties under any
Environmental and Safety Requirements (including, without limitation, any so
called "transaction-triggered" or "responsible property transfer" laws and
regulations).
5T. Affiliated Transactions. Except as set forth on the attached
-----------------------
Affiliated Transactions Schedule, to the best of the Company's knowledge no
- --------------------------------
officer, director, employee, stockholder or Affiliate of the Company or any
Subsidiary or any individual related by blood, marriage or adoption to any such
individual or any entity in which any such Person or individual owns any
beneficial interest, is a party to any agreement, contract, commitment or
transaction with the Company or any Subsidiary or has any material interest in
any material property used by the Company or any Subsidiary.
5U. Real Property Holding Corporation Status. Since its date of
----------------------------------------
incorporation, the Company has not been, and as of the date of the Closing shall
not be, a "United States real property holding corporation", as defined in
Section 897(c)(2) of the IRC, and in Section 1.897-2(b) of the Treasury
Regulations issued thereunder. The Company has no current plans or intentions
which would cause the Company to become (and shall use reasonable efforts
consistent with sound business practice to avoid becoming) a "United States real
property holding company," and the Company has filed with the IRS all
statements, if any, with its United States income tax returns which are required
under Section 1.897-2(h) of the Treasury Regulations.
5V. Disclosure. Neither this Agreement, the Private Placement
----------
Memorandum nor any of the exhibits, schedules, attachments, written statements,
documents, certificates or other items prepared and supplied to any Purchaser by
or on behalf of the Company with respect to the transactions contemplated hereby
contain any untrue statement of a material fact or omit a material fact
necessary to make each statement contained herein or therein not misleading;
provided that with respect to the financial projections furnished to the
- -------- ----
Purchasers by the Company, the Company
-30-
<PAGE>
represents and warrants only that such projections were based upon assumptions
reasonably believed by the Company to be reasonable and fair as of the date the
projections were prepared in the context of the Company's history and current
and reasonably foreseeable business conditions. There is no fact which the
Company has not disclosed to the Purchasers in writing and of which any of its
officers, directors or executive employees is aware (other than general economic
conditions) and which has had or would reasonably be expected to have a material
adverse effect upon the existing or expected financial condition, operating
results, assets, customer or supplier relations, employee relations or business
prospects of the Company and its Subsidiaries taken as a whole.
Section 6. Definitions.
-----------
6A. Definitions. For the purposes of this Agreement, the following
-----------
terms have the meanings set forth below:
"Affiliate" of any particular Person means any other Person
---------
controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
-------
direct the management and policies of a Person whether through the ownership of
voting securities, contract or otherwise.
"Affiliated Group" means any affiliated group as defined in IRC
----------------
(S)1504 that has filed a consolidated return for federal income tax purposes (or
any similar group under state, local or foreign law) for a period during which
any of the Company or any of its Subsidiaries was a member.
"Environmental and Safety Requirements" means all federal, state,
-------------------------------------
local and foreign statutes, regulations, ordinances and other provisions having
the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law, in each case
concerning public health and safety, worker health and safety and pollution or
protection of the environment (including, without limitation, all those relating
to the presence, use, production, generation, handling, transport, treatment,
storage, disposal, distribution, labeling, testing, process ing, discharge,
Release, threatened Release, control or cleanup of any hazardous or otherwise
regulated materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation).
"Event of Noncompliance" has the meaning set forth in the Certificate
----------------------
of Designation.
"Indebtedness" means at a particular time, without duplication, (i)
-------------
any indebtedness for borrowed money or issued in substitution for or exchange of
indebtedness for borrowed money, (ii) any indebtedness evidenced by any note,
bond, debenture or other debt security, (iii) any indebtedness for the deferred
purchase price of property or services with respect to which a Person is liable,
contingently or otherwise, as obligor or otherwise (other than trade payables
and other current liabilities incurred in the ordinary course of business which
are not more than six months past due), (iv) any commitment by which a Person
assures a creditor against loss (including, without limitation, contingent
reimbursement obligations with respect to letters of credit), (v) any
-31-
<PAGE>
indebtedness guaranteed in any manner by a Person (including, without
limitation, guarantees in the form of an agreement to repurchase or reimburse),
(vi) any obligations under capitalized leases with respect to which a Person is
liable, contingently or otherwise, as obligor, guarantor or otherwise, or with
respect to which obligations a Person assures a creditor against loss, (vii) any
indebtedness secured by a Lien on a Person's assets and (viii) any unsatisfied
obligation for "withdrawal liability" to a "multiemployer plan" as such terms
are defined under ERISA.
"Intellectual Property Rights" means all (i) patents, patent
----------------------------
applications, patent disclosures and inventions, (ii) trademarks, service marks,
trade dress, trade names, logos and corporate names and registrations and
applications for registration thereof together with all of the goodwill
associated therewith, (iii) copyrights (registered or unregistered) and
copyrightable works and registrations and applications for registration thereof,
(iv) mask works and registrations and applications for registration thereof, (v)
computer software, data, data bases and documentation thereof, (vi) trade
secrets and other confidential information (including, without limitation,
ideas, formulas, compositions, inventions (whether patentable or unpatentable
and whether or not reduced to practice), know-how, manufacturing and production
processes and techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data, copyrightable works,
financial and marketing plans and customer and supplier lists and information),
(vii) other intellectual property rights and (viii) copies and tangible
embodiments thereof (in whatever form or medium).
"Investment" as applied to any Person means (i) any direct or indirect
----------
purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or ownership interest (including partnership
interests and joint venture interests) of any other Person and (ii) any capital
contribution by such Person to any other Person.
"IRC" means the Internal Revenue Code of 1986, as amended, and any
---
reference to any particular IRC section shall be interpreted to include any
revision of or successor to that section regardless of how numbered or
classified.
"IRS" means the United States Internal Revenue Service.
---
"Liens" means any mortgage, pledge, security interest, encumbrance,
-----
lien or charge of any kind (including, without limitation, any conditional sale
or other title retention agreement or lease in the nature thereof), any sale of
receivables with recourse against the Company, any Subsidiary or any Affiliate,
any filing or agreement to file a financing statement as debtor under the
Uniform Commercial Code or any similar statute other than to reflect ownership
by a third party of property leased to the Company or any Subsidiaries under a
lease which is not in the nature of a conditional sale or title retention
agreement, or any subordination arrangement in favor of another Person (other
than any subordination arising in the ordinary course of business).
"Officer's Certificate" means a certificate signed by the Company's
---------------------
president or its chief financial officer, stating that (i) the officer signing
such certificate has made or has caused to be made such investigations as are
necessary in order to permit him to verify the accuracy of the
-32-
<PAGE>
information set forth in such certificate and (ii) to the best of such officer's
knowledge, such certificate does not misstate any material fact and does not
omit to state any fact necessary to make the certificate not misleading.
"Permitted Liens" means:
---------------
(i) tax liens with respect to taxes not yet due and payable or
which are being contested in good faith by appropriate proceedings and for
which appropriate reserves have been established in accordance with
generally accepted accounting principles, consistently applied;
(ii) deposits or pledges made in connection with, or to secure
payment of, utilities or similar services, workers' compensation,
unemployment insurance, old age pensions or other social security
obligations;
(iii) purchase money security interests in any property acquired
by the Company or any Subsidiary to the extent permitted by this Agreement;
(iv) interests or title of a lessor under any lease permitted by
this Agreement;
(v) mechanics', materialmen's or contractors' liens or
encumbrances or any similar lien or restriction for amounts not yet due and
payable or which are being contested in good faith by appropriate
proceedings and for which appropriate reserves have been established in
accordance with generally accepted accounting principles, consistently
applied;
(vi) easements, rights-of-way, restrictions and other similar
charges and encumbrances not interfering with the ordinary conduct of the
business of the Company and its Subsidiaries or detracting from the value
of the assets of the Company and its Subsidiaries; and
(vii) liens outstanding on the date hereof which secure
Indebtedness and which are described in the schedules to this Agreement,
including, without limitation, those liens contemplated by existing capital
leases or proposed capital leases with customers of the Company.
"Person" means an individual, a partnership, a corporation, a limited
------
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Private Placement Memorandum" means that certain Confidential Private
----------------------------
Placement Memorandum prepared by and on behalf of the Company and dated December
1, 1995.
-33-
<PAGE>
"Qualified Public Offering" has the meaning given to such term in the
-------------------------
Certificate of Designation.
"Restricted Securities" means (i) the Preferred Stock and Common Stock
---------------------
issued hereunder, (ii) the Warrants issued hereunder, (iii) the Class A Common
issued upon conversion of the Class A Preferred or upon exercise of the Class A
Warrants or upon conversion of the Class B Common, (iv) the Class B Common
issued upon conversion of the Class B Preferred or upon exercise of the Class B
Warrants, (v) the Class A Preferred issued upon conversion of the Class B
Preferred and (vi) any securities issued with respect to the securities referred
to in clauses (i) through (v) above by way of a stock dividend or stock split or
in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. As to any particular Restricted
Securities, such securities shall cease to be Restricted Securities when they
have (a) been effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering them, (b) been distributed
to the public through a broker, dealer or market maker pursuant to Rule 144 (or
any similar provision then in force) under the Securities Act or become eligible
for sale pursuant to Rule 144(k) (or any similar provision then in force) under
the Securities Act or (c) been otherwise transferred and new certificates for
them not bearing the Securities Act legend set forth in paragraph 7C have been
delivered by the Company in accordance with paragraph 4B. Whenever any
particular securities cease to be Restricted Securities, the holder thereof
shall be entitled to receive from the Company, without expense, new securities
of like tenor not bearing a Securities Act legend of the character set forth in
paragraph 7C.
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
similar federal law then in force.
"Securities and Exchange Commission" includes any governmental body or
----------------------------------
agency succeeding to the functions thereof.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
-----------------------
as amended, or any similar federal law then in force.
"Subsidiary" means, with respect to any Person, any corporation,
----------
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity if
such Person or Persons shall be allocated a majority of limited liability
company, partnership, association or other business entity gains or losses or
shall be or control any managing
-34-
<PAGE>
director or general partner of such limited liability company, partnership,
association or other business entity.
"Tax" or "Taxes" means federal, state, county, local, foreign or other
--- -----
income, gross receipts, ad valorem, franchise, profits, sales or use, transfer,
registration, excise, utility, environmental, communications, real or personal
property, capital stock, license, payroll, wage or other withholding,
employment, social security, severance, stamp, occupation, alternative or add-on
minimum, estimated and other taxes of any kind whatsoever (including, without
limitation, deficiencies, penalties, additions to tax, and interest attributable
thereto) whether disputed or not.
"Tax Liabilities" means liabilities for the payment of Taxes.
---------------
"Tax Return" means any return, information report or filing with
----------
respect to Taxes, including any schedules attached thereto and including any
amendment thereof.
"Treasury Regulations" means the United States Treasury Regulations
--------------------
promulgated under the IRC, and any reference to any particular Treasury
Regulation section shall be interpreted to include any final or temporary
revision of or successor to that section regardless of how numbered or
classified.
"Underlying Common Stock" means (i) the Class A Common issued or
-----------------------
issuable upon conversion of the Class A Preferred or upon exercise of the Class
A Warrant, (ii) the Class B Common issued or issuable upon conversion of the
Class B Preferred or exercise of the Class B Warrant or exercise of the
Contingent Warrants and (iii) any Common Stock issued or issuable with respect
to the securities referred to in clauses (i) and (ii) above by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. For purposes
of this Agreement, any Person who holds Preferred Stock or Warrants shall be
deemed to be the holder of the Underlying Common Stock obtainable upon
conversion of the Preferred Stock or exercise of the Warrants in connection with
the transfer thereof or otherwise regardless of any restriction or limitation on
the conversion of the Preferred Stock or exercise of the Warrants, such
Underlying Common Stock shall be deemed to be in existence, and such Person
shall be entitled to exercise the rights of a holder of Underlying Common Stock
hereunder. As to any particular shares of Underlying Common Stock, such shares
shall cease to be Underlying Common Stock when they have been (a) effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering them, (b) distributed to the public through a
broker, dealer or market maker pursuant to Rule 144 under the Securities Act (or
any similar provision then in force) or (c) repurchased by the Company or any
Subsidiary.
"Wholly-Owned Subsidiary" means, with respect to any Person, a
-----------------------
Subsidiary of which all of the outstanding capital stock or other ownership
interests are owned by such Person or another Wholly-Owned Subsidiary of such
Person.
-35-
<PAGE>
Section 7. Miscellaneous.
-------------
7A. Expenses. The Company shall pay, and hold each Purchaser and all
--------
holders of Preferred Stock, Warrants and Underlying Common Stock harmless
against liability for the payment of, (i) the fees and expenses incurred in
connection with their due diligence investigation and review of the Company and
its affairs and operations (including accounting and other consulting fees and
expenses) which shall be payable at the Closing or, if the Closing does not
occur, payable upon demand (such fees currently estimated at $20,000), (ii) the
fees and expenses of their special counsel arising in connection with the
negotiation and execution of this Agreement and the consummation of the
transactions contemplated by this Agreement which shall be payable at the
Closing or, if the Closing does not occur, payable upon demand (such fees
currently estimated at $45,000 - $50,000 assuming that no unforeseen issues or
conditions arise), (iii) the reasonable fees and expenses incurred with respect
to any amendments or waivers (whether or not the same become effective)
requested by the Company under or in respect of this Agreement, the agreements
contemplated hereby, the Articles of Organization or the Certificate of
Designation (including, without limitation, in connection with any proposed
merger, sale or recapitalization of the Company), (iv) stamp and other taxes
which may be payable in respect of the execution and delivery of this Agreement
or the issuance, delivery or acquisition of any shares of Preferred Stock or any
shares of Common Stock issuable upon conversion of Preferred Stock or exercise
of the Warrants, (v) the reasonable fees and expenses incurred with respect to
the enforcement of the rights granted under this Agreement, the agreements
contemplated hereby, the Articles of Organization, the Warrants and the
Certificate of Designation, and (vi) the reasonable fees and expenses incurred
by each such Person in any filing with any governmental agency with respect to
its investment in the Company or in any other filing with any governmental
agency with respect to the Company which mentions such Person.
7B. Remedies. Each holder of Preferred Stock and Underlying Common
--------
Stock shall have all rights and remedies set forth in this Agreement, the
Articles of Organization and the Certificate of Designation and all rights and
remedies which such holders have been granted at any time under any other
agreement or contract and all of the rights which such holders have under any
law. Any Person having any rights under any provision of this Agreement shall
be entitled to enforce such rights specifically (without posting a bond or other
security), to recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law.
7C. Purchaser's Investment Representations.
--------------------------------------
(i) Investment Representations. Each of the Purchasers represents
--------------------------
severally and as to itself only, and not jointly, that it is its present
intention to acquire the Preferred Stock and Warrant to be acquired by it for
its own account and that the Preferred Stock and the Warrant are being and will
be acquired by it not with a view to distribution or resale thereof in violation
of the Securities Act. The acquisition by each Purchaser of the Preferred Stock
and the Warrant acquired by it shall constitute a confirmation of this
representation by each such Purchaser.
-36-
<PAGE>
(ii) Access to Information. Each Purchaser or its representative
---------------------
during the course of this transaction, and prior to the purchase of the
Preferred Stock and the Warrant, has had the opportunity to ask questions of and
receive answers from representatives of the Company concerning the terms and
conditions of the offering of the Preferred Stock and the Warrant, and to obtain
any additional information, documents, records and books related to the Company,
its business and an investment in the Company necessary to verify the accuracy
of the information contained in the Private Placement Memorandum or otherwise
related to the financial data and business of the Company.
(iii) General Access. Each Purchaser or its representative have
--------------
received and read or reviewed, and are familiar with, this Agreement and confirm
that all documents, records and books pertaining to the Purchaser's investment
in the Company and requested by the Purchaser or its representative from the
Company have been made available or delivered to such Purchaser.
(iv) Transfer Restrictions Imposed by Securities Laws. Each
------------------------------------------------
Purchaser understands that the Preferred Stock has not been registered under the
Securities Act and applicable state securities laws, and, therefore, cannot be
resold unless it is subsequently registered under the Securities Act and
applicable state securities laws or unless an exemption from such registration
is available; the Company does not have any present intention and is under no
obligation to register the Preferred Stock under the Securities Act and
applicable state securities laws, except as provided in the Registration
Agreement; and Rule 144 under the Securities Act may not be available as a basis
for exemption from registration of the Preferred Stock thereunder.
(v) Lack of Liquidity. Each Purchaser acknowledges that it has no
-----------------
present need for liquidity in connection with its purchase of the Preferred
Stock.
(vi) Risk. Each Purchaser understands that the purchase of the
----
Preferred Stock and the Warrant involves a high degree of risk and there is no
public market for the Company's capital stock as of the Closing and there can be
no assurances that any public market for such stock will develop.
(vii) Accredited Investor Status. Each Purchaser is an
--------------------------
"Accredited Investor" as that term is defined in Rule 501 of Regulation D
promulgated under the Securities Act of 1933, as amended.
(viii) Each certificate or instrument representing Restricted
Securities shall be imprinted with a legend in substantially the following form:
"The securities represented by this certificate were originally issued on
May 30, 1996, and have not been registered under the Securities Act of
1933, as amended. The transfer of the securities represented by this
certificate is subject to the conditions specified in the Purchase
Agreement, dated as of May 30, 1996 and as amended and modified from time
to time, between the issuer (the "Company") and certain investors, and the
Company reserves the right to refuse the transfer of such
-37-
<PAGE>
securities until such conditions have been fulfilled with respect to such
transfer. A copy of such conditions shall be furnished by the Company to
the holder hereof upon written request and without charge."
7D. Treatment of the Preferred Stock. The Company covenants and
--------------------------------
agrees that (i) so long as federal income tax laws prohibit a deduction for
distributions made by the Company with respect to preferred stock, it shall
treat all distributions paid by it on the Preferred Stock as non-deductible
dividends on all of its tax returns and (ii) it shall treat the Preferred Stock
as preferred stock in all of its financial statements and other reports and
shall treat all distributions paid by it on the Preferred Stock as dividends on
preferred stock in such statements and reports. The Company acknowledges and
agrees that the increased dividend rate on the Preferred Stock provided for in
the Certificate of Designation upon the occurrence of certain Events of
Noncompliance has been negotiated by (and is intended by) the Company and the
Purchasers as a reasonable increase in yield necessitated by the increased risk
to the holders of the Preferred Stock which would arise upon any such
occurrence. The Company agrees that the Preferred Stock is stock which
participates in corporate growth to a significant extent within the meaning of
Treasury Regulation (S)1.305-5(a), and hence will not be treated as preferred
stock for purposes of IRC (S)305 and the regulations thereunder. Accordingly,
the Company has determined that there will not be constructive distributions
under Treasury Regulation (S)1.305-5(b) with respect to the Preferred Stock.
7E. Consent to Amendments; Waivers. Except as otherwise expressly
------------------------------
provided herein, any provision of this Agreement may be amended or waived and
the Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company has obtained the
written consent or waiver of the holders of a majority of the outstanding
Preferred Stock; provided that if there is no Preferred Stock outstanding, any
-------- ----
provision of this Agreement may be amended or waived and the Company may take
any action herein prohibited, only if the Company has obtained the written
consent or waiver of the holders of a majority of the Underlying Common Stock.
No other course of dealing between the Company and the holder of any Preferred
Stock, Warrant or Underlying Common Stock or any delay in exercising any rights
hereunder or under the Articles of Organization or Certificate of Designation
shall operate as a waiver of any rights of any such holders. For purposes of
this Agreement, shares of Preferred Stock or Underlying Common Stock held by the
Company or any Subsidiaries shall not be deemed to be outstanding. If the
Company pays any consideration to any holder of Preferred Stock or Underlying
Common Stock for such holder's consent to any amendment, modification or waiver
hereunder, the Company shall also pay each other holder granting its consent
hereunder equivalent consideration computed on a pro rata basis.
7F. Survival of Representations and Warranties. All representations
------------------------------------------
and warranties contained herein or made in writing by any party in connection
herewith shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby (regardless of any
investigation made by any Purchaser or on its behalf) for a period of five (5)
years.
-38-
<PAGE>
7G. Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not. In addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for any Purchaser's benefit as a
purchaser or holder of Preferred Stock, the Warrants or Underlying Common Stock
are also for the benefit of, and enforceable by, any subsequent holder of such
Preferred Stock, such Warrants or such Underlying Common Stock.
7H. Capital and Surplus; Special Reserves. The Company agrees
-------------------------------------
that the capital of the Company (as such term is used in the Business
Corporation Law of Massachusetts) in respect of the Preferred Stock issued
pursuant to this Agreement shall be equal to the aggregate par value of such
shares and that it shall not increase the capital of the Company with respect to
any shares of the Company's capital stock at any time on or after the date of
this Agreement. The Company also agrees that it shall not create any special
reserves under the Business Corporation Law of Massachusetts without the prior
written consent of the holders of a majority of the outstanding Preferred Stock.
7I. Generally Accepted Accounting Principles. Where any accounting
----------------------------------------
determination or calculation is required to be made under this Agreement or the
exhibits hereto, such determination or calculation (unless otherwise provided)
shall be made in accordance with generally accepted accounting principles,
consistently applied, except that if because of a change in generally accepted
accounting principles the Company would have to alter a previously utilized
accounting method or policy in order to remain in compliance with generally
accepted accounting principles, such determination or calculation shall continue
to be made in accordance with the Company's previous accounting methods and
policies, unless otherwise directed by the holders of a majority of the
outstanding Preferred Stock.
7J. Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
7K. Counterparts. This Agreement may be executed simultaneously in
------------
two or more counterparts (including by means of telecopied signature pages), any
one of which need not contain the signatures of more than one party, but all
such counterparts taken together shall constitute one and the same Agreement.
7L. Descriptive Headings; Interpretation. The descriptive headings
------------------------------------
of this Agreement are inserted for convenience only and do not constitute a
substantive part of this Agreement. The use of the word "including" in this
Agreement shall be by way of example rather than by limitation.
-39-
<PAGE>
7M. Governing Law. The Business Corporation Law of Massachusetts,
-------------
without regard to its principles of conflicts of laws, shall govern all issues
and questions concerning the relative rights and obligations of the Company and
its stockholders. All other issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the exhibits and
schedules hereto shall be governed by, and construed in accordance with, the
laws of The Commonwealth of Massachusetts, without giving effect to any choice
of law or conflict of law rules or provisions (whether of The Commonwealth of
Massachusetts or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than The Commonwealth of Massachusetts.
7N. Notices. All notices, demands or other communications to be
-------
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable overnight courier service
(charges prepaid) or mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to each Purchaser at the address indicated on the
attached Schedule of Purchasers attached hereto and to the Company at the
----------------------
address indicated below:
BankVest Capital Corp.
114 Turnpike Road
Westborough Executive Park
Westborough, Massachusetts 01581
Attention: President
with a copy to:
--------------
Goldstein & Manello, P.C.
265 Franklin Street
Boston, Massachusetts 02110
Attention: Richard J. Snyder
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
7O. Consideration for Warrants. The Purchasers and the Company
--------------------------
acknowledge and agree that the fair market value of the Preferred Stock issued
hereunder is $5,980,000 and the fair market value of the Warrants issued
hereunder is $20,000 and that, for all purposes (including tax and accounting),
the consideration for the issuance of the Preferred Stock and the Warrants shall
be allocated as set forth in paragraph 1B hereof. Each Purchaser and the
Company shall file their respective federal, state and local tax returns in a
manner which is consistent with such valuation and allocation and shall not take
any contrary position with any taxing authority.
7P. Understanding Among the Purchasers. The determination of each
----------------------------------
Purchaser to purchase the Preferred Stock and the Warrants pursuant to this
Agreement has been made by such
-40-
<PAGE>
Purchaser independent of any other Purchaser and independent of any statements
or opinions as to the advisability of such purchase or as to the properties,
business, prospects or condition (financial or otherwise) of the Company and its
Subsidiaries which may have been made or given by any other Purchaser or by any
agent or employee of any other Purchaser.
7Q. No Strict Construction. The parties hereto have participated
----------------------
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.
* * * * *
-41-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
BANKVEST CAPITAL CORP.
By_______________________________
Its______________________________
PRIMUS CAPITAL FUND III LIMITED
PARTNERSHIP
By: Primus Venture Partners III
Limited Partnership, its general partner
By: Primus Venture Partners, Inc.,
its general partner
By_______________________________
Its______________________________
PNC VENTURE CORP
By_______________________________
Its______________________________
<PAGE>
SCHEDULE OF PURCHASERS
----------------------
Primus Capital Fund III
Limited Partnership
One Cleveland Center
Suite 2700
Cleveland, Ohio 44114
Attention: Kevin J. McGinty
with a copy to:
- --------------
Kirkland & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attention: Ted H. Zook
PNC Venture Corp
c/o PNC Equity Management Corp.
One PNC Plaza, 19th Floor
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222
Attention: Gary J. Zentner
with a copy to:
- --------------
Kirkland & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attention: Ted H. Zook
<PAGE>
LIST OF EXHIBITS
----------------
Exhibit A - Certificate of Designation
Exhibit B - Certificate of Amendment
Exhibit C - Registration Agreement
Exhibit D - Stockholders Agreement
Exhibit E - Opinion of Counsel
Exhibit F - Form of Class A Warrant
Exhibit G - Form of Class B Warrant
Exhibit H - Additional Provisions re: Contingent Warrants
<PAGE>
LIST OF DISCLOSURE SCHEDULES
----------------------------
Employee Stock Purchase Schedule
Capitalization Schedule
Subsidiary Schedule
Restrictions Schedule
Financial Statements Schedule
Liabilities Schedule
Developments Schedule
Assets Schedule
Taxes Schedule
Contracts Schedule
Employee Benefits Schedule
Intellectual Property Schedule
Brokerage Schedule
Litigation Schedule
Consents Schedule
Compliance Schedule
Transactions Schedule
Affiliated Transactions Schedule
<PAGE>
[EXECUTION COPY]
SECOND AMENDMENT TO AND
WAIVER OF CERTAIN PROVISIONS TO
1996 PURCHASE AGREEMENT
THIS SECOND AMENDMENT AND WAIVER OF CERTAIN PROVISIONS TO 1996 PURCHASE
AGREEMENT (the "Agreement") is made as of May 28, 1998, by and among BankVest
---------
Capital Corp., a Massachusetts corporation (the "Company"), Primus Capital Fund
-------
III Limited Partnership, an Ohio limited partnership ("Primus"), and PNC Venture
------
Corp, a Delaware corporation ("PNC").
---
WHEREAS, the parties to this Agreement are parties to that certain
Purchase Agreement dated as of May 30, 1996 and as amended pursuant to that
certain First Amendment to and Waiver of Certain Provisions to Purchase
Agreement dated as of February 28, 1997 by and among the parties to this
Agreement (the "1996 Purchase Agreement").
-----------------------
WHEREAS, the parties to this Agreement are parties to a Purchase
Agreement of even date herewith (the "1998 Purchase Agreement").
-----------------------
WHEREAS, the 1996 Purchase Agreement contains certain provisions which
conflict with and which would restrict or limit the Company's ability to perform
the Company's obligations under the 1998 Purchase Agreement and consummate the
transactions contemplated thereby. The execution and delivery of this Agreement
is a condition to the Closing under the 1998 Purchase Agreement.
WHEREAS, Primus, PNC and the Company desire to waive certain
provisions contained in the 1996 Purchase Agreement in order to enable the
Company to perform its obligations under the 1998 Purchase Agreement.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to them the 1998 Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained the parties hereby agree as follows:
1. Waivers
-------
1A. Issuance of Securities. Primus and PNC hereby waive the restrictions
----------------------
contained in Section 3D(iii) (including as the same is referenced in Section 3F)
of the 1996 Purchase Agreement, relating to the limitation on the Company's
ability to issue securities and with respect to the issuance and sale to Primus
and PNC of the Class C Preferred and the Class D Preferred.
1B. Amendment to Stock Option Plan. Primus and PNC hereby waive the
------------------------------
restriction contained in Section 3D (xxi) (including as such Sections are
referenced in Section 3F) of the 1996 Purchase Agreement, relating to any
amendment or modification of the Company's stock option
<PAGE>
plan, as such restriction limits the Company's ability to increase the number of
shares of Class A Common which are subject to such stock option plan to not more
than 200,000. Primus and PNC acknowledge and agree to the increase in the number
of shares of Class A Common which are subject to such stock option plan from
200,000 to 300,000 as such numbers of shares is proportionately adjusted for
subsequent stock splits, combinations and dividends affecting the Common Stock
and as such number includes all stock options and purchase rights outstanding at
the time of issuance of the Preferred Stock or exercised for shares of Common
Stock prior to the time of issuance of the Preferred Stock.
* * * * *
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Wavier as of
the date first above written.
BANKVEST CAPITAL CORP.
By _____________________________________
Its _____________________________________
PRIMUS CAPITAL FUND III LIMITED PARTNERSHIP
By: Primus Venture Partners III Limited Partnership,
its general partner
By: Primus Venture Partners, Inc., its general partner
By _____________________________________
Its _____________________________________
PNC VENTURE CORP
By _____________________________________
Its _____________________________________
<PAGE>
EXHIBIT C
[EXECUTION COPY]
BANKVEST CAPITAL CORP.
REGISTRATION AGREEMENT
----------------------
THIS AGREEMENT is made as of May 30, 1996, by and among BankVest
Capital Corp., a Massachusetts corporation (the "Company"), Primus Capital Fund
-------
III Limited Partnership, an Ohio limited partnership ("Primus"), and PNC Venture
------
Corp, a Delaware corporation ("PNC").
---
The parties to this Agreement are parties to a Purchase Agreement of
even date herewith (the "Purchase Agreement"). In order to induce Primus and
------------------
PNC (the "Investors") to enter into the Purchase Agreement, the Company has
---------
agreed to provide the registration rights set forth in this Agreement. The
execution and delivery of this Agreement is a condition to the Closing under the
Purchase Agreement. Unless otherwise provided in this Agreement, capitalized
terms used herein shall have the meanings set forth in paragraph 8 hereof.
The parties hereto hereby agree as follows:
1. Demand Registrations.
--------------------
(a) Requests for Registration. At any time after the third
-------------------------
anniversary of the Closing under the Purchase Agreement or such earlier time as
the Company has completed a public offering of its Common Stock under the
Securities Act, the holders of a majority of the Registrable Securities may
request registration under the Securities Act of all or any portion of their
Registrable Securities on Form S-1 or any similar long-form registration ("Long-
----
Form Registrations"), and the holders of at least 25% of the Registrable
- ------------------
Securities may request registration under the Securities Act of all or any
portion of their Registrable Securities on Form S-2 or S-3 or any similar short-
form registration ("Short-Form Registrations") if available. All registrations
------------------------
requested pursuant to this paragraph 1(a) are referred to herein as "Demand
------
Registrations". Each request for a Demand Registration shall specify the
- -------------
approximate number of Registrable Securities requested to be registered and the
anticipated per share price range for such offering. Within ten days after
receipt of any such request, the Company shall give written notice of such
requested registration to all other holders of Registrable Securities and shall,
subject to paragraph 1(d) below, include in such registration all Registrable
Securities with respect to which the Company has received written re quests for
inclusion therein within 15 days after the receipt of the Company's notice.
(b) Long-Form Registrations. The holders of Registrable Securities
-----------------------
shall be entitled to request two Long-Form Registrations in which the Company
shall pay all Registration Expenses ("Company-paid Long-Form Registrations"). A
------------------------------------
registration shall not count as one of the permitted Company-paid Long-Form
Registrations until it has become effective, and neither the last or any
subsequent Company-paid Long-Form Registration shall count as one of the
permitted Company-paid Long-Form Registrations unless the holders of Registrable
Securities are able to
<PAGE>
register and sell at least 90% of the Registrable Securities requested to be
included in such registration; provided that in any event the Company shall pay
-------- ----
all Registration Expenses in connection with any registration initiated as a
Company-paid Long-Form Registration whether or not it has become effective and
whether or not such registration has counted as one of the permitted Company-
paid Long-Form Registrations.
(c) Short-Form Registrations. In addition to the Long-Form
------------------------
Registrations provided pursuant to paragraph 1(b), the holders of Registrable
Securities shall be entitled to request an unlimited number of Short-Form
Registrations in which the Company shall pay all Registration Expenses. Demand
Registrations shall be Short-Form Registrations whenever the Company is
permitted to use any applicable short form. After the Company has become
subject to the reporting requirements of the Securities Exchange Act, the
Company shall use its best efforts to make Short-Form Registrations on Form S-3
available for the sale of Registrable Securities.
(d) Priority on Demand Registrations. The Company shall not include
--------------------------------
in any Demand Registration any securities which are not Registrable Securities
without the prior written consent of the holders of a majority of the
Registrable Securities included in such registration. If a Demand Registration
is an underwritten offering and the managing underwriters advise the Company in
writing that in their opinion the number of Registrable Securities and, if
permitted hereunder, other securities requested to be included in such offering
exceeds the number of Registrable Securities and other securities, if any, which
can be sold in an orderly manner in such offering within a price range
acceptable to the holders of a majority of the Registrable Securities initially
requesting registration, the Company shall include in such registration prior to
the inclusion of any securities which are not Registrable Securities the number
of Registrable Securities requested to be included which in the opinion of such
underwriters can be sold in an orderly manner within the price range of such
offering, pro rata among the respective holders thereof on the basis of the
amount of Registrable Securities owned by each such holder. Any Persons other
than holders of Registrable Securities who participate in Demand Registrations
which are not at the Company's expense must pay their share of the Registration
Expenses as provided in paragraph 5 hereof.
(e) Restrictions on Registrations. The Company shall not be
------------------------------
obligated to effect any Long-Form Registration within 270 days after the
effective date of a previous Long-Form Registration. The Company may postpone
for up to 90 days the filing or the effectiveness of a registration statement
for a Demand Registration if the Company's board of directors determines in its
reasonable good faith judgment that such Demand Registration would reasonably be
expected to have a material adverse effect on any proposal or plan by the
Company to engage in any acquisition of assets (other than in the ordinary
course of business) or any merger, consolidation, tender offer, reorganization
or similar transaction; provided that in such event, the holders of Registrable
-------- ----
Securities initially requesting such Demand Registration shall be entitled to
withdraw such request and, if such request is withdrawn, such Demand
Registration shall not count as one of the permitted Demand Registrations
hereunder and the Company shall pay all Registration Expenses in connection with
such registration. The Company may delay a Demand Registration hereunder only
once in any twelve-month period.
-2-
<PAGE>
(f) Other Registration Rights. Except as provided in this Agreement,
-------------------------
the Company shall not grant to any Persons the right to request the Company to
register any equity securities of the Company, or any securities convertible or
exchangeable into or exercisable for such securities, without the prior written
consent of the holders of a majority of the Registrable Securities; provided
--------
that the Company may grant rights to other Persons to participate in Piggyback
- ----
Registrations so long as such rights are subordinate to the rights of the
holders of Registrable Securities with respect to such Piggyback
Registrations.
2. Piggyback Registrations.
-----------------------
(a) Right to Piggyback. Whenever the Company proposes to register
------------------
any of its securities under the Securities Act (other than pursuant to a Demand
Registration) and the registration form to be used may be used for the
registration of Registrable Securities (a "Piggyback Registration"), the Company
----------------------
shall give prompt written notice to all holders of Registrable Securities of its
intention to effect such a registration and shall, subject to paragraphs 2(c)
and 2(d) below, include in such registration all Registrable Securities with
respect to which the Company has received written requests for inclusion therein
within 20 days after the receipt of the Company's notice.
(b) Piggyback Expenses. The Registration Expenses of the holders of
------------------
Registrable Securities shall be paid by the Company in all Piggyback
Registrations.
(c) Priority on Primary Registrations. If a Piggyback Registration
---------------------------------
is an underwritten primary registration on behalf of the Company, and the
managing underwriters advise the Company in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number which can be sold in such offering without adversely affecting the
marketability of the offering, the Company shall include in such registration
(i) first, the securities the Company proposes to sell, (ii) second, the
Registrable Securities requested to be included in such registration, pro rata
among the holders of such Registrable Securities on the basis of the number of
shares owned by each such holder, and (iii) third, other securities requested to
be included in such registration.
(d) Priority on Secondary Registrations. If a Piggyback Registration
-----------------------------------
is an underwritten secondary registration on behalf of holders of the Company's
securities, and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering without
adversely affecting the marketability of the offering, the Company shall include
in such registration (i) first, the securities requested to be included therein
by the holders requesting such registration and the Registrable Securities
requested to be included in such registration, pro rata among the holders of
such securities on the basis of the number of securities owned by each such
holder, and (ii) second, other securities requested to be included in such
registration.
(e) Other Registrations. If the Company has previously filed a
-------------------
registration statement with respect to Registrable Securities pursuant to
paragraph 1 or pursuant to this paragraph 2, and if such previous registration
has not been withdrawn or abandoned, the Company shall not
-3-
<PAGE>
file or cause to be effected any other registration of any of its equity
securities or securities convertible or exchangeable into or exercisable for
its equity securities under the Securities Act (except on Form S-8 or any
successor form), whether on its own behalf or at the request of any holder or
holders of such securities, until a period of at least 180 days has elapsed from
the effective date of such previous registration.
3. Holdback Agreements.
-------------------
(a) Each holder of Registrable Securities shall not effect any public
sale or distribution (including sales pursuant to Rule 144) of equity securities
of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven days prior to and the 90-day
period beginning on the effective date of any underwritten Demand Registration
(except as part of such underwritten registration), unless the underwriters
managing the registered public offering otherwise agree.
(b) The Company (i) shall not effect any public sale or distribution
of its equity securities, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven days prior to and during the
90-day period beginning on the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration (except as part of such
underwritten registration or pursuant to registrations on Form S-8 or any
successor form), unless the underwriters managing the registered public offering
otherwise agree, and (ii) shall cause each holder of at least 2% of its Common
Stock, or any securities convertible into or exchangeable or exercisable for
Common Stock, purchased from the Company at any time after the date of this
Agreement (other than in a registered public offering) to agree not to effect
any public sale or distribution (including sales pursuant to Rule 144) of any
such securities during such period (except as part of such underwritten
registration, if otherwise permitted), unless the underwriters managing the
registered public offering otherwise agree.
4. Registration Procedures. Whenever the holders of Registrable
-----------------------
Securities have requested that any Registrable Securities be registered pursuant
to this Agreement, the Company shall use its best efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof (including the registration of Preferred
Stock, Nonvoting Common Stock and Warrants held by a holder of Registrable
Securities requesting registration as to which the Company has received
reasonable assurances that only Registrable Securities shall be distributed to
the public), and pursuant thereto the Company shall as expeditiously as
possible:
(a) prepare and file with the Securities and Exchange Commission a
registration statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become effective; provided
--------
that before filing a registration statement or prospectus or any amendments or
- ----
supplements thereto, the Company shall furnish to the counsel selected by the
holders of a majority of the Registrable Securities covered by such registration
statement copies of all such documents proposed to be filed (which documents
shall be subject to the review and comment of such counsel);
-4-
<PAGE>
(b) notify each holder of Registrable Securities of the effectiveness
of each registration statement filed hereunder and prepare and file with the
Securities and Exchange Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period of not less
than 180 days and comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such registration statement
during such period in accordance with the intended methods of disposition by the
sellers thereof set forth in such registration statement;
(c) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any seller reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller; provided that the Company shall not be required to (i) qualify generally
-------- ----
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction; and provided further that anything in this Agreement to the
-------- -------
contrary notwithstanding with respect to the bearing of expenses, if any
jurisdiction in which the Registrable Securities shall be qualified shall
require that expenses incurred in connection with the qualification of such
Registrable Securities in that jurisdiction be borne by the sellers of
Registrable Securities, then such expenses shall be payable by such sellers of
Registrable Securities pro rata to the extent required by such jurisdiction;
(e) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company shall
prepare a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not contain an untrue statement of a material fact or omit to state any
fact necessary to make the statements therein not misleading;
(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed, to be listed on the NASD automated quotation
system and, if listed on the NASD automated quotation system, use its best
efforts to secure designation of all such Registrable Securities covered by such
registration statement as a NASDAQ "national market system security" within
the meaning of Rule 11Aa2-1 of the Securities and Exchange Commission or,
failing that, to secure NASDAQ authorization for such Registrable Securities
and, without limiting the generality of the foregoing, to arrange for at
-5-
<PAGE>
least two market makers to register as such with respect to such Registrable
Securities with the NASD;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
a majority of the Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities (including effecting a stock split or a combination of
shares);
(i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(j) otherwise use its best efforts to comply with all applicable
rules and regulations of the Securities and Exchange Commission, and make
available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months beginning with
the first day of the Company's first full calendar quarter after the effective
date of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) permit any holder of Registrable Securities which holder, in its
sole and exclusive judgment, might be deemed to be an underwriter or a
controlling person of the Company, to participate in the preparation of such
registration or comparable statement and to require the insertion therein of
material, furnished to the Company in writing, which in the reasonable judgment
of such holder and its counsel should be included;
(l) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, the Company shall use its best efforts promptly to obtain the
withdrawal of such order;
(m) use its best efforts to cause such Registrable Securities covered
by such registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the sellers
thereof to consummate the disposition of such Registrable Securities; and
-6-
<PAGE>
(n) obtain a cold comfort letter from the Company's independent
public accountants in customary form and covering such matters of the type
customarily covered by cold comfort letters as the holders of a majority of the
Registrable Securities being sold reasonably request; provided that such
-------- ----
Registrable Securities constitute at least 10% of the securities covered by such
registration statement).
5. Registration Expenses.
---------------------
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws, printing expenses, messenger and delivery expenses, fees and disbursements
of custodians, and fees and disbursements of counsel for the Company and all
independent certified public accountants, underwriters (excluding discounts and
commissions) and other Persons retained by the Company (all such expenses being
herein called "Registration Expenses"), shall be borne as provided in this
---------------------
Agreement, except that the Company shall, in any event, pay its internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit or quarterly review, the expense of any liability insurance and
the expenses and fees for listing the securities to be registered on each
securities exchange on which similar securities issued by the Company are then
listed or on the NASD automated quotation system.
(b) In connection with each Demand Registration and each Piggyback
Registration, the Company shall reimburse the holders of Registrable Securities
included in such registration for the reasonable fees (not to exceed $25,000
with respect to each such Demand and Piggyback Registration) and disbursements
of one counsel chosen by the holders of a majority of the Registrable Securities
initially requesting such registration and for the reasonable fees and
disbursements of each additional counsel retained by any holder of Registrable
Securities for the purpose of rendering a legal opinion on behalf of such holder
in connection with any underwritten Demand Registration or Piggyback
Registration.
(c) To the extent Registration Expenses are not required to be paid
by the Company, each holder of securities included in any registration hereunder
shall pay those Registration Expenses allocable to the registration of such
holder's securities so included, and any Registration Expenses not so allocable
shall be borne by all sellers of securities included in such registration in
proportion to the aggregate selling price of the securities to be so registered.
6. Indemnification.
---------------
(a) The Company agrees to indemnify, to the extent permitted by law,
each holder of Registrable Securities, its officers and directors and each
Person who controls such holder (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses caused by any
untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as the same are caused by or contained in any
-7-
<PAGE>
information furnished in writing to the Company by such holder expressly for use
therein or by such holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such holder with a sufficient number of copies of the
same. In connection with an underwritten offering, the Company shall indemnify
such underwriters, their officers and directors and each Person who controls
such underwriters (within the meaning of the Securities Act) to the same extent
as provided above with respect to the indemnification of the holders of
Registrable Securities.
(b) In connection with any registration statement in which a holder
of Registrable Securities is participating, each such holder shall furnish to
the Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, shall indemnify the Company and
the underwriter, and their directors and officers and each Person who controls
the Company or the underwriter, as the case may be (within the meaning of the
Securities Act), against any losses, claims, damages, liabilities and expenses
resulting from any untrue or alleged untrue statement of material fact contained
in the registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such untrue statement or
omission is contained in any information or affidavit so furnished in writing by
such holder; provided that the obligation to indemnify shall be individual, not
-------- ----
joint and several, for each holder and shall be limited to the net amount of
proceeds received by such holder from the sale of Registrable Securities
pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder shall (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification (provided that the failure to give prompt notice
shall not impair any Person's right to indemnification hereunder to the extent
such failure has not prejudiced the indemnifying party) and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent shall not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) The indemnification provided for under this Agreement shall
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling Person
of such indemnified party and shall survive the transfer of securities. The
Company also agrees to make such provisions, as are reasonably requested by any
indemnified party, for contribution to such party in the event the Company's
indemnification is unavailable for any reason.
-8-
<PAGE>
7. Participation in Underwritten Registrations. No Person may
-------------------------------------------
participate in any registration hereunder which is underwritten unless such
Person (i) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements; provided that no
-------- ----
holder of Registrable Securities included in any underwritten registration shall
be required to make any representations or warranties to the Company or the
underwriters (other than representations and warranties regarding such holder
and such holder's intended method of distribution) or to undertake any
indemnification obligations to the Company and the underwriters with respect
thereto, except as otherwise provided in paragraph 6 hereof.
8. Definitions.
-----------
(a) "Registrable Securities" means (i) any Class A Common issued upon
----------------------
the conversion of any Class A Preferred or the exercise of the Class A Warrant
issued pursuant to the Purchase Agreement, (ii) any Class A Common issued upon
the conversion of any Class B Common issued upon conversion of any Class B
Preferred or the exercise of the Class B Warrant issued pursuant to the Purchase
Agreement or the exercise of the Contingent Warrants (if any) issued pursuant to
the Purchase Agreement, (iii) any Class A Common issued upon the conversion of
any Class A Preferred issued upon the conversion of any Class B Preferred issued
pursuant to the Purchase Agreement, (iv) any Class A Common or Class B Common
issued or issuable with respect to the securities referred to in clauses (i),
(ii) and (iii) above by way of a stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or other
reorganization, and (v) any other shares of Class A Common or other Common Stock
held by Persons holding securities described in clauses (i) to (iv), inclusive,
above. As to any particular Registrable Securities, such securities shall cease
to be Registrable Securities when they have been distributed to the public
pursuant to a offering registered under the Securities Act or sold to the public
through a broker, dealer or market maker in compliance with Rule 144 under the
Securities Act (or any similar rule then in force) or repurchased by the Company
or any Subsidiary. For purposes of this Agreement, a Person shall be deemed to
be a holder of Registrable Securities, and the Registrable Securities shall be
deemed to be in existence, whenever such Person has the right to acquire
directly or indirectly such Registrable Securities (upon conversion or exercise
in connection with a transfer of securities or otherwise, but disregarding any
restrictions or limitations upon the exercise of such right), whether or not
such acquisition has actually been effected, and such Person shall be entitled
to exercise the rights of a holder of Registrable Securities hereunder.
(b) Unless otherwise stated, other capitalized terms contained herein
have the meanings set forth in the Purchase Agreement.
9. Miscellaneous.
-------------
(a) Selection of Investment Bankers. The selection of investment
-------------------------------
banker(s) and manager(s) for any public offering or private sale by the Company
of its securities must be approved by the holders of a majority of the
Registrable Securities, which approval shall not be unreasonably
-9-
<PAGE>
withheld so long as such investment banker(s) and manager(s) are of recognized
national standing and, in the case of a public offering, can reasonably be
expected to provide the requisite degree of analytical and other support to the
Company and the investing public following such offering.
(b) No Inconsistent Agreements. The Company shall not hereafter
--------------------------
enter into any agreement with respect to its securities which is inconsistent
with or violates the rights granted to the holders of Registrable Securities in
this Agreement.
(c) Adjustments Affecting Registrable Securities. The Company shall
--------------------------------------------
not take any action, or permit any change to occur, with respect to its
securities which would materially and adversely affect the ability of the
holders of Registrable Securities to include such Registrable Securities in a
registration undertaken pursuant to this Agreement or which would materially and
adversely affect the marketability of such Registrable Securities in any such
registration (including, without limitation, effecting a stock split or a
combination of shares).
(d) Remedies. Any Person having rights under any provision of this
--------
Agreement shall be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
(e) Amendments and Waivers. Except as otherwise provided herein, the
----------------------
provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company and holders of a majority of the Registrable
Securities.
(f) Successors and Assigns. All covenants and agreements in this
----------------------
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable Securities.
(g) Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
(h) Counterparts. This Agreement may be executed simultaneously in
------------
two or more counterparts (including by means of telecopied signature pages), any
one of which need not contain the signatures of more than one party, but all
such counterparts taken together shall constitute one and the same Agreement.
-10-
<PAGE>
(i) Descriptive Headings. The descriptive headings of this Agreement
--------------------
are inserted for convenience only and do not constitute a part of this
Agreement.
(j) GOVERNING LAW. ALL ISSUES AND QUESTIONS CONCERNING THE
-------------
CONSTRUCTION, VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH
OF MASSACHUSETTS, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW
RULES OR PROVISIONS (WHETHER OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY OTHER
JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION
OTHER THAN THE COMMONWEALTH OF MASSACHUSETTS.
(k) Notices. All notices, demands or other communications to be
-------
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable overnight courier service
(charges prepaid) or mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to each Investor at the address indicated on the
Schedule of Investors attached hereto and to the Company at the address
- ---------------------
indicated below:
BankVest Capital Corp.
114 Turnpike Road
Westborough Executive Park
Westborough, Massachusetts 01581
Attention: President
with a copy to:
--------------
Goldstein & Manello, P.C.
265 Franklin Street
Boston, Massachusetts 02110
Attention: Richard J. Snyder
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
* * * * *
-11-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
BANKVEST CAPITAL CORP.
By ______________________________________
Its ______________________________________
PRIMUS CAPITAL FUND III LIMITED PARTNERSHIP
By: Primus Venture Partners III
Limited Partnership, its general partner
By: Primus Venture Partners, Inc.,
its general partner
By ______________________________________
Its ______________________________________
PNC VENTURE CORP
By ______________________________________
Its ______________________________________
<PAGE>
Schedule of Investors
---------------------
Primus Capital Fund III
Limited Partnership
One Cleveland Center
Suite 2700
Cleveland, Ohio 44114
Attention: Kevin J. McGinty
with a copy to:
- --------------
Kirkland & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attention: Ted H. Zook
PNC Venture Corp
c/o PNC Equity Management Corp.
One PNC Plaza, 19th Floor
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222
Attention: Gary J. Zentner
with a copy to:
- --------------
Kirkland & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attention: Ted H. Zook
<PAGE>
================================================================================
EXHIBIT 4.6
[EXECUTION COPY]
PURCHASE AGREEMENT
BY AND AMONG
BANKVEST CAPITAL CORP.,
PRIMUS CAPITAL FUND III LIMITED PARTNERSHIP
AND
PNC VENTURE CORP
__________________________________
DATED AS OF MAY 28, 1998
__________________________________
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. Authorization and Closing............................................................................ 1
1A. Authorization of the Preferred Stock........................................................ 1
1B. Purchase and Sale of the Preferred Stock.................................................... 1
1C. The Closing................................................................................. 1
2. Conditions of Each Purchaser's Obligation at the Closing.................................................. 1
2A. Representations and Warranties; Covenants................................................... 2
2B. Amendment and Restatement of Articles of Organization....................................... 2
2C. Amended Registration Rights Agreement....................................................... 2
2D. Amended and Restated Stockholders Agreement................................................. 2
2E. Amendment of Purchase Agreement............................................................. 2
2F. Sale of Preferred Stock to Each Purchaser................................................... 2
2G. Securities Law Compliance................................................................... 2
2H. Opinion of the Company's Counsel............................................................ 3
2I. Closing Documents........................................................................... 3
2J. Proceedings................................................................................. 3
2K. Expenses.................................................................................... 3
2L. Waiver...................................................................................... 4
3. Covenants................................................................................................. 4
3A. Financial Statements and Other Information.................................................. 4
3B. Inspection of Property...................................................................... 6
3C. Quarterly Investors Meetings................................................................ 7
3D. Class C Restrictions........................................................................ 7
3E. Affirmative Covenants...................................................................... 11
3F. Class D Restrictions....................................................................... 12
3G. Compliance with Agreements................................................................. 12
3H. Current Public Information................................................................. 13
3I. Amendment of Other Agreements.............................................................. 13
3J. Financing Agreements....................................................................... 13
3K. Right of First Refusal..................................................................... 14
3L. Regulatory Compliance Cooperation.......................................................... 15
3M. Public Disclosures......................................................................... 16
3N. Contingent Warrants........................................................................ 16
4. Transfer of Restricted Securities................................................................... 16
4A. General Provisions......................................................................... 16
4B. Opinion Delivery........................................................................... 16
4C. Rule 144A.................................................................................. 17
4D. Legend Removal............................................................................. 17
</TABLE>
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<TABLE>
<S> <C>
5. Representations and Warranties of the Company....................................................... 17
5A. Organization, Corporate Power and Licenses................................................. 17
5B. Capital Stock and Related Matters.......................................................... 17
5C. Subsidiaries; Investments.................................................................. 18
5D. Authorization; No Breach................................................................... 19
5E. Financial Statements....................................................................... 19
5F. Absence of Undisclosed Liabilities......................................................... 20
5G. No Material Adverse Change................................................................. 20
5H. Absence of Certain Developments............................................................ 20
5I. Assets..................................................................................... 22
5J. Tax Matters................................................................................ 22
5K. Contracts and Commitments.................................................................. 23
5L. Intellectual Property Rights............................................................... 24
5M. Litigation, etc............................................................................ 25
5N. Brokerage.................................................................................. 26
5O. Governmental Consent, etc.................................................................. 26
5P. Insurance.................................................................................. 26
5Q. Employees.................................................................................. 26
5R. ERISA...................................................................................... 27
5S. Compliance with Laws....................................................................... 27
5T. Affiliated Transactions.................................................................... 28
5U. Real Property Holding Corporation Status................................................... 28
5V. Disclosure................................................................................. 28
6. Definitions.............................................................................................. 29
6A. Definitions................................................................................ 29
6B. Other Definitions.......................................................................... 34
7. Miscellaneous............................................................................................ 34
7A. Expenses................................................................................... 34
7B. Remedies................................................................................... 35
7C. Purchaser's Investment Representations..................................................... 35
7D. Treatment of the Preferred Stock........................................................... 36
7E. Consent to Amendments; Waivers............................................................. 37
7F. Survival of Representations and Warranties................................................. 37
7G. Successors and Assigns..................................................................... 37
7H. Capital and Surplus; Special Reserves...................................................... 37
7I. Generally Accepted Accounting Principles................................................... 38
7J. Severability............................................................................... 38
7K. Counterparts............................................................................... 38
7L. Descriptive Headings; Interpretation....................................................... 38
7M. Governing Law.............................................................................. 38
7N. Notices.................................................................................... 38
7O. Understanding Among the Purchasers......................................................... 39
7P. Delivery by Facsimile...................................................................... 39
</TABLE>
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<TABLE>
<S> <C>
7Q. No Strict Construction..................................................................... 39
</TABLE>
Schedules and Exhibits
- ----------------------
Schedule of Purchasers
List of Exhibits
List of Disclosure Schedules
- iii -
<PAGE>
BANKVEST CAPITAL CORP.
PURCHASE AGREEMENT
------------------
THIS AGREEMENT is made as of May 28, 1998, by and among BankVest
Capital Corp., a Massachusetts corporation (the "Company"), Primus Capital Fund
-------
III Limited Partnership, an Ohio limited partnership ("Primus"), and PNC Venture
------
Corp, a Delaware corporation ("PNC"). Primus and PNC are collectively referred
---
to herein as the "Purchasers" and individually as a "Purchaser." Except as
---------- ---------
otherwise provided herein, capitalized terms used herein are defined in Section
6 hereof.
Pursuant to this Agreement, (i) the Company desires to issue and sell
and Primus desires to purchase 37,500 shares of the Company's Class C
Convertible Preferred Stock, par value $1.00 per share (the "Class C
-------
Preferred"), and (ii) the Company desires to issue and sell and PNC desires to
purchase 37,500 shares of the Company's Class D Convertible Preferred Stock, par
value $1.00 per share (the "Class D Preferred" and, together with the Class C
-----------------
Preferred, the "Preferred Stock").
---------------
The parties hereto hereby agree as follows:
Section 1. Authorization and Closing.
-------------------------
1A. Authorization of the Preferred Stock. The Company shall (i)
------------------------------------
authorize the issuance and sale to Primus of 37,500 shares of Class C Preferred
and (ii) authorize the issuance and sale to PNC of 37,500 shares of Class D
Preferred.
1B. Purchase and Sale of the Preferred Stock. At the Closing, the
----------------------------------------
Company shall (i) sell to Primus and, subject to the terms and conditions set
forth herein, Primus shall purchase from the Company, 37,500 shares of Class C
Preferred for $3,750,000 and (ii) sell to PNC and, subject to the terms and
conditions set forth herein, PNC shall purchase from the Company, 37,500 shares
of Class D Preferred for $3,750,000. The sale of the Preferred Stock to each
Purchaser shall constitute a separate sale hereunder.
1C. The Closing. The closing of the separate purchases and sales of
-----------
the Preferred Stock (the "Closing") shall take place at the offices of Goldstein
-------
& Manello, P.C., 265 Franklin Street, Boston, Massachusetts at 10:00 a.m. on May
28, 1998, or at such other place or on such other date as may be mutually
agreeable to the Company and each Purchaser. At the Closing, the Company shall
deliver to each Purchaser stock certificates evidencing the Preferred Stock to
be purchased by such Purchaser, registered in such Purchaser's or its nominee's
name, upon payment of the purchase price therefor by a cashier's or certified
check, or by wire transfer of immediately available funds to the Company's
account in accordance with wire instructions delivered to each Purchaser prior
to the Closing.
Section 2. Conditions of Each Purchaser's Obligation at the Closing.
--------------------------------------------------------
The obligation of each Purchaser to purchase and pay for the Preferred Stock at
the Closing is subject to the satisfaction as of the Closing of the following
conditions:
<PAGE>
2A. Representations and Warranties; Covenants. The representations
-----------------------------------------
and warranties contained in Section 5 hereof shall be true and correct at and as
of the Closing as though then made and the Company shall have performed in all
material respects all of the covenants required to be performed by it hereunder
prior to the Closing.
2B. Amendment and Restatement of Articles of Organization. The
-----------------------------------------------------
Company's Articles of Organization (the "Articles of Organization") shall have
------------------------
been amended and restated in the form of Exhibit A attached hereto, establishing
---------
the terms and the relative rights and preferences of the Preferred Stock and
amending and restating the terms and the relative rights and preferences of the
Company's Class A Convertible Preferred Stock, par value $1.00 per share (the
"Class A Preferred"), and the Company's Class B Convertible Preferred Stock, par
-----------------
value $1.00 per share (the "Class B Preferred"). The Company shall not have
-----------------
adopted or filed any other document designating terms, relative rights or
preferences of its preferred stock. The Articles of Organization shall be in
full force and effect under the Massachusetts General Laws as of the Closing as
so amended and restated and shall not have been further amended or modified.
2C. Amended Registration Rights Agreement. The Company and the
-------------------------------------
Purchasers shall have entered into an amendment to that certain Amended and
Restated Registration Rights Agreement, dated as of February 28, 1997, by and
among the Company, Primus, PNC and WSDF, in the form of Exhibit B attached
---------
hereto (the "First Amendment to Amended and Restated Registration Rights
-----------------------------------------------------------
Agreement"), and the First Amendment to Amended and Restated Registration Rights
- ---------
Agreement shall be in full force and effect as of the Closing.
2D. Amended and Restated Stockholders Agreement. The Company, the
-------------------------------------------
Purchasers and certain of the Company's other stockholders shall have entered
into an amended and restated stockholders agreement in the form of Exhibit C
---------
attached hereto (the "Amended and Restated Stockholders Agreement"), and the
-------------------------------------------
Amended and Restated Stockholders Agreement shall be in full force and effect as
of the Closing.
2E. Amendment of Purchase Agreement. The Company, Primus and PNC
-------------------------------
shall have entered into an amendment to that certain Purchase Agreement, dated
as of May 30, 1996, and as amended by the First Amendment to and Waiver of
Certain Provisions to Purchase Agreement, dated as of February 28, 1997, each by
and among the Company, Primus and PNC (the "1996 Purchase Agreement") in the
-----------------------
form of Exhibit D attached hereto (the "Second Amendment to Purchase
--------- ----------------------------
Agreement"), and the Second Amendment to Purchase Agreement shall be in full
force and effect as of the Closing.
2F. Sale of Preferred Stock to Each Purchaser. The Company shall
-----------------------------------------
have simultaneously sold to each Purchaser the Preferred Stock to be purchased
by such Purchaser hereunder at the Closing and shall have received payment
therefor in full.
2G. Securities Law Compliance. The Company shall have made all
-------------------------
filings (other than those which are not required to be filed before the Closing)
under all applicable federal and state securities laws necessary to consummate
the issuance of the Preferred Stock pursuant to this Agreement in compliance
with such laws.
-2-
<PAGE>
2H. Opinion of the Company's Counsel. Each Purchaser shall have
--------------------------------
received from Goldstein & Manello, P.C., counsel for the Company, an opinion
with respect to the matters set forth in Exhibit E attached hereto, which shall
---------
be addressed to each Purchaser, dated the date of the Closing and in form and
substance reasonably satisfactory to each Purchaser.
2I. Closing Documents. The Company shall have delivered to each
-----------------
Purchaser all of the following documents:
(i) an Officer's Certificate, dated the date of the Closing, stating
that the conditions specified in Section 1 and paragraphs 2A, 2B, 2F and 2G,
have been fully satisfied;
(ii) a Clerk's Certificate, dated the date of the Closing, certifying
that attached thereto are copies of (a) the resolutions duly adopted by the
Company's board of directors authorizing the execution, delivery and performance
of this Agreement, the First Amendment to Amended and Restated Registration
Rights Agreement, the Amended and Restated Stockholders Agreement, the Second
Amendment to Purchase Agreement and each of the other agreements contemplated
hereby, the filing of the restated Articles of Organization referred to in
paragraph 2B, the issuance and sale of the Preferred Stock, the reservation for
issuance upon conversion of the Class C Preferred and/or conversion of the Class
B Common issuable upon conversion of the Class D Preferred of an aggregate of
349,000 shares of Class A Common, the reservation for issuance upon conversion
of the Class D Preferred of an aggregate of 174,500 shares of Class B Common and
the reservation for issuance upon conversion of the Class D Preferred of an
aggregate of 37,500 shares of Class C Preferred and the consummation of all
other transactions contemplated by this Agreement, and (b) the resolutions duly
adopted by the Company's stockholders adopting the Articles of Organization
referred to in paragraph 2B;
(iii) certified copies of the Articles of Organization, as filed with
the Secretary of State of The Commonwealth of Massachusetts and in effect at the
Closing, and a copy of the Bylaws as certified by the Clerk of the Company and
in effect at the Closing;
(iv) copies of all third party and governmental consents, approvals
and filings required in connection with the consummation of the transactions
hereunder (including, without limitation, all blue sky law filings and waivers
of all preemptive rights and rights of first refusal); and
(v) such other documents relating to the transactions contemplated
by this Agreement as any Purchaser or its special counsel may reasonably
request.
2J. Proceedings. All corporate and other proceedings taken or
-----------
required to be taken by the Company in connection with the transactions
contemplated hereby to be consummated at or prior to the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to each Purchaser and its special counsel.
2K. Expenses. At the Closing, the Company shall have reimbursed the
--------
Purchasers for their fees and expenses as provided in paragraph 7A hereof.
-3-
<PAGE>
2L. Waiver. Any condition specified in this Section 2 may be waived
------
if consented to by each Purchaser at or prior to the Closing; provided that no
-------- ----
such waiver shall be effective against any Purchaser unless it is set forth in a
writing executed by such Purchaser.
Section 3. Covenants.
---------
3A. Financial Statements and Other Information. The Company shall
------------------------------------------
deliver to each Purchaser (so long as such Purchaser holds any Preferred Stock
or any Underlying Common Stock) and to each holder of at least 10% of the
outstanding Preferred Stock and each holder of at least 10% of the Underlying
Common Stock:
(i) as soon as available but in any event within 45 days after the
end of each monthly accounting period in each fiscal year, unaudited
consolidating and consolidated statements of income and cash flows of the
Company and its Subsidiaries for such monthly period and for the period from the
beginning of the fiscal year to the end of such month, and unaudited
consolidating and consolidated balance sheets of the Company and its
Subsidiaries as of the end of such monthly period, setting forth in each case
comparisons to the Company's annual budget and to the corresponding period in
the preceding fiscal year, and all such statements shall be prepared in
accordance with generally accepted accounting principles, consistently applied,
subject to the absence of footnote disclosures and to normal year-end
adjustments for recurring accruals, and shall be certified by the Company's
chief financial officer;
(ii) accompanying the financial statements referred to in
subparagraph (i), an Officer's Certificate (a) stating that there is no Event of
Noncompliance in existence and that neither the Company nor any of its
Subsidiaries is in default under any of its other material agreements or, if any
Event of Noncompliance or any such default exists, specifying the nature and
period of existence thereof and what actions the Company and its Subsidiaries
have taken and propose to take with respect thereto and (b) setting forth the
amount of the Company's and its Subsidiaries' outstanding funded Indebtedness as
of the end of such monthly accounting period and the amount of available funds
under the Company's and its Subsidiaries' revolving credit lines and other
facilities as of the end of such period;
(iii) within 90 days after the end of each fiscal year, consolidating
and consolidated statements of income and cash flows of the Company and its
Subsidiaries for such fiscal year, and consolidating and consolidated balance
sheets of the Company and its Subsidiaries as of the end of such fiscal year,
setting forth in each case comparisons to the Company's annual budget and to the
preceding fiscal year, all prepared in accordance with generally accepted
accounting principles, consistently applied, and accompanied by (a) with respect
to the consolidated portions of such statements, an opinion containing no
exceptions or qualifications (except for qualifications regarding specified
contingent liabilities) of an independent accounting firm of recognized national
standing acceptable to the holders of a majority of the outstanding Preferred
Stock and the holders of a majority of the Underlying Common Stock, (b) a
certificate from such accounting firm, addressed to the Company's board of
directors, stating that in the course of its examination nothing came to its
attention that caused it to believe that there was an Event of Noncompliance in
existence or that there was any other default by the Company or any Subsidiary
in the fulfillment of or compliance with
-4-
<PAGE>
any of the terms, covenants, provisions or conditions of any other material
agreement to which the Company or any Subsidiary is a party or, if such
accountants have reason to believe any Event of Noncompliance or other default
by the Company or any Subsidiary exists, a certificate specifying the nature and
period of existence thereof, and (c) a copy of such firm's annual management
letter to the board of directors;
(iv) promptly upon receipt thereof, any additional reports,
management letters or other detailed information concerning significant aspects
of the Company's operations or financial affairs given to the Company by its
independent accountants (and not otherwise contained in other materials provided
hereunder);
(v) at least 15 days but not more than 90 days prior to the
beginning of each fiscal year, an annual budget prepared on a monthly basis for
the Company and its Subsidiaries for such fiscal year (displaying anticipated
statements of income and cash flows and balance sheets), and promptly upon
preparation thereof any other significant budgets prepared by the Company and
any revisions of such annual or other budgets, and within 30 days after any
monthly period in which there is a material adverse deviation from the annual
budget, an Officer's Certificate explaining the deviation and what actions the
Company has taken and proposes to take with respect thereto; provided that any
-------- ----
monthly deviation which is contemplated in the annual budget and which does not
result in an adverse impact on the business or operations of the Company shall
not be deemed a material adverse deviation for purposes hereof;
(vi) promptly (but in any event within ten days) after the discovery
or receipt of notice of any Event of Noncompliance, any default under any
material agreement to which it or any of its Subsidiaries is a party, any
condition or event which is reasonably likely to result in any material
liability under any federal, state or local statute or regulation relating to
public health and safety, worker health and safety or pollution or protection of
the environment or any other material adverse change, event or circumstance
affecting the Company or any Subsidiary (including, without limitation, the
filing of any material litigation against the Company or any Subsidiary or the
existence of any dispute with any Person which involves a reasonable likelihood
of such litigation being commenced), an Officer's Certificate specifying the
nature and period of existence thereof and what actions the Company and its
Subsidiaries have taken and propose to take with respect thereto;
(vii) within ten days after transmission thereof, copies of all
financial statements, proxy statements, reports and any other general written
communications which the Company sends to its stockholders and copies of all
registration statements and all regular, special or periodic reports which it
files, or (to its knowledge) any of its officers or directors file with respect
to the Company, with the Securities and Exchange Commission or with any
securities exchange on which any of its securities are then listed, and copies
of all press releases and other statements made available generally by the
Company to the public concerning material developments in the Company's and its
Subsidiaries' businesses; and
(viii) with reasonable promptness, such other information and
financial data concerning the Company and its Subsidiaries as any Person
entitled to receive information under this paragraph 3A may reasonably request.
-5-
<PAGE>
Each of the financial statements referred to in subparagraph (i) and (iii) shall
be consistent with the books and records of the Company (which, in turn, shall
be accurate and complete in all material respects) and shall present fairly in
all material respects the consolidated financial condition, results of
operations and cash flows of the Company and its Subsidiaries in accordance with
generally accepted accounting principles applied on a consistent basis as of the
dates and for the periods set forth therein, subject in the case of the
unaudited financial statements to changes resulting from normal year-end
adjustments for recurring accruals (none of which would, alone or in the
aggregate, be materially adverse to the financial condition, operating results,
assets, operations or business prospects of the Company and its Subsidiaries
taken as a whole). Notwithstanding the foregoing, the provisions of this
paragraph 3A and paragraphs 3B and 3C below shall cease to be effective so long
as the Company (a) is subject to the periodic reporting requirements of the
Securities Exchange Act and continues to comply with such requirements and (b)
promptly provides to each Person otherwise entitled to receive information
pursuant to this paragraph 3A all reports and other materials filed by the
Company with the Securities and Exchange Commission pursuant to the periodic
reporting requirements of the Securities Exchange Act. Except as otherwise
required by law or judicial order or decree or by any governmental agency or
authority, each Person entitled to receive information regarding the Company and
its Subsidiaries under this paragraph 3A or paragraph 3B below or under any
other provision of this Agreement or any other agreement contemplated hereby to
be executed by such Person with the Company shall use the same standards and
controls which such Person uses to maintain the confidentiality of its own
confidential information (but in no event less than reasonable care) to maintain
the confidentiality of all nonpublic information of the Company or any of its
Subsidiaries obtained by it pursuant to this paragraph 3A or paragraph 3B below
or under any other provision of this Agreement or any other agreement
contemplated hereby to be executed by such Person with the Company; provided
--------
that each such Person may disclose such information in connection with the sale
- ----
or transfer of any Preferred Stock or Underlying Common Stock if such Person's
transferee agrees in writing to be bound by the provisions hereof. For purposes
of this Agreement and the Amended and Restated Registration Rights Agreement,
all holdings of Preferred Stock and Underlying Common Stock by Persons who are
Affiliates of each other (which, for this purpose, shall also include Persons
which have received distributions of securities from a partnership holding such
securities) shall be aggregated for purposes of meeting any threshold tests
under this Agreement and the Amended and Restated Registration Rights Agreement.
3B. Inspection of Property. The Company shall permit any
----------------------
representatives designated by any Purchaser (so long as such Purchaser holds any
Preferred Stock or Underlying Common Stock) or any holder of at least 10% of the
outstanding Preferred Stock or at least 10% of the Underlying Common Stock, upon
reasonable notice and during normal business hours, to (i) visit and inspect any
of the properties of the Company and its Subsidiaries, (ii) examine the
corporate and financial records of the Company and its Subsidiaries and make
copies thereof or extracts therefrom and (iii) discuss the affairs, finances and
accounts of any such corporations with the directors, officers and independent
accountants of the Company and its Subsidiaries. The presentation of an
executed copy of this Agreement by any Purchaser or any such holder of Preferred
Stock or Underlying Common Stock to the Company's independent accountants shall
constitute the Company's permission to its independent accountants to
participate in discussions with such Persons. Any Person entitled to exercise
rights under this paragraph 3B shall be entitled to exercise such
-6-
<PAGE>
rights not more than one time per calendar quarter, unless at any time there
shall exist an Event of Noncompliance, in which case each such Person shall be
entitled to exercise such rights at any time and from time to time during the
period that such Event of Noncompliance shall be in existence.
3C. Quarterly Investors Meetings. Immediately prior to or
----------------------------
immediately following each meeting of the Company's board of directors, the
Company shall hold an informational meeting for the holders of the Preferred
Stock and the Underlying Common Stock either by telephonic conference or at the
Company's principal executive office (or other location reasonably acceptable to
the holders of the Preferred Stock and the Underlying Common Stock and the
Company). At each such meeting, the executive officers of the Company and its
Subsidiaries and such other individuals as the executive officers deem necessary
and appropriate shall be available to discuss the affairs, finances and
operations of such corporations. Each holder electing to participate therein
shall be provided with an agenda of the matters to be discussed at each such
investors meeting. The Company shall reimburse each Purchaser for the
reasonable out-of-pocket expenses of not more than one representative designated
by such Purchaser incurred in connection with attending each such meeting.
3D. Class C Restrictions. So long as at least 331/5% of the Class C
--------------------
Preferred remains outstanding, the Company shall not, without the prior written
consent of the holders of a majority of the outstanding Class C Preferred (which
consent shall not be unreasonably withheld in the case of paragraph 3D(xxv)
below):
(i) directly or indirectly declare or pay any dividends or make any
distributions upon any of its capital stock or other equity securities other
than the Preferred Stock pursuant to the terms of the Articles of Organization,
except for dividends payable in shares of Common Stock issued upon the
outstanding shares of Common Stock;
(ii) directly or indirectly redeem, purchase or otherwise acquire, or
permit any Subsidiary to redeem, purchase or otherwise acquire, any of the
Company's or any Subsidiary's capital stock or other equity securities
(including, without limitation, warrants, options and other rights to acquire
such capital stock or other equity securities) other than (a) the Preferred
Stock or the Class B Preferred pursuant to the Articles of Organization, (b)
pursuant to the Put as defined in the Amended and Restated Stockholders
Agreement (as the same relates to the Preferred Stock and the Class A Preferred
and Class B Preferred and the Common Stock issued upon conversion thereof), (c)
WSDF's "Put" pursuant to that certain Put and Call Agreement dated as of
February 28, 1997, but only for an aggregate repurchase price of no more than $2
million, (d) repurchases of Common Stock from former employees of the Company
and its Subsidiaries upon termination of employment pursuant to arrangements
approved by the Company's board of directors for an aggregate purchase price of
no more than $250,000 in any twelve-month period so long as no Event of
Noncompliance is in existence immediately prior to or is otherwise caused by any
such repurchase, and (e) subject to approval by the Company's board of
directors, repurchases, at a price not to exceed $20.00 per share, of not more
than an aggregate of 12,500 shares of Common Stock from employees of the Company
and its Subsidiaries issued to such employees pursuant to the October 6, 1997
Private Placement Memorandum; or directly or indirectly redeem, purchase or make
any payments with respect to any stock appreciation rights, phantom stock plans
or similar rights or plans;
-7-
<PAGE>
(iii) authorize, issue or enter into any agreement providing for the
authorization, creation, or issuance (contingent or otherwise) of, (a) any notes
or debt securities containing equity features (including, without limitation,
any notes or debt securities convertible into or exchangeable for capital stock
or other equity securities, issued in connection with the issuance of capital
stock or other equity securities or containing profit participation features),
(b) any capital stock or other equity securities (or any securities convertible
into or exchangeable for any capital stock or other equity securities) which are
senior to or on a parity with the Class C Preferred or the Class D Preferred
with respect to the payment of dividends, redemptions or distributions upon
liquidation or otherwise or (c) any additional Preferred Stock (other than Class
C Preferred issued or issuable upon conversion of Class D Preferred pursuant to
Part E of the Articles of Organization); provided that nothing herein shall be
-------- ----
interpreted as prohibiting the Company from authorizing, issuing or entering
into any agreement to issue capital stock or any other equity security which is
junior to the Preferred Stock in all respects (including, without limitation,
with respect to the payment of dividends, redemptions or distributions upon
liquidation or otherwise), subject to the rights of the holders of Preferred
Stock under this Agreement, the Articles of Organization and the other
agreements contemplated hereby;
(iv) make, or permit any Subsidiary to make, any loans or advances
to, guarantees for the benefit of, or Investments in, any Person (other than a
Wholly-Owned Subsidiary established under the laws of a jurisdiction of the
United States or any of its territorial possessions), except for (a) reasonable
advances to employees in the ordinary course of business, (b) acquisitions
permitted pursuant to subparagraph (viii) below, (c) Investments having a stated
maturity no greater than one year from the date the Company makes such
Investment in (1) obligations of the United States government or any agency
thereof or obligations guaranteed by the United States government, (2) fully-
insured certificates of deposit of commercial banks having combined capital and
surplus of at least $1 billion or (3) commercial paper with a rating of at least
"Prime-1" by Moody's Investors Service, Inc. and (d) loans made in the ordinary
course of business in connection with prefunding agreements with, and other
extensions of credit to, the Company's vendors;
(v) merge or consolidate with any Person or, except as permitted by
subparagraph (viii) below, permit any Subsidiary to merge or consolidate with
any Person (other than a Wholly-Owned Subsidiary);
(vi) sell, lease or otherwise dispose of, or permit any Subsidiary to
sell, lease or otherwise dispose of, any assets of the Company or its
Subsidiaries involving an aggregate consideration in excess of $1,000,000 in any
twelve-month period (other than any sale or lease of assets made in the ordinary
course of business in connection with any leases entered into by the Company or
any of its Subsidiaries as lessor in the ordinary course of business and other
than any Liens to lending institutions incurred or granted by the Company or any
of its Subsidiaries in the ordinary course of business in connection therewith);
(vii) liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction (including, without limitation, any
reorganization into a limited liability company, a partnership or any other non-
corporate entity which is treated as a partnership for federal income tax
purposes);
-8-
<PAGE>
(viii) acquire, or permit any Subsidiary to acquire, any interest in
any company or business (whether by a purchase of assets, purchase of stock,
merger or otherwise), or enter into any joint venture, involving an aggregate
consideration (including, without limitation, the assumption of liabilities
whether direct or indirect) exceeding $5,000,000 in any one transaction or
series of related transactions or exceeding $5,000,000 in any twelve-month
period;
(ix) enter into, or permit any Subsidiary to enter into, the
ownership, active management or operation of any business other than the
businesses in which it is presently engaged (except that the Company shall be
permitted to operate a Wholly-Owned Subsidiary captive insurer and/or bankruptcy
proof Wholly-Owned Subsidiary for the purpose of securitizing lease receivables
in the ordinary course of business);
(x) except for any financing agreements or instruments (which are
subject to the provisions of paragraph 3J below and not this subparagraph (x)),
become subject to, or permit any of its Subsidiaries to become subject to,
(including, without limitation, by way of amendment to or modification of) any
agreement or instrument which by its terms would (under any circumstances)
restrict (a) the right of any Subsidiary to make loans or advances or pay
dividends to, transfer property to, or repay any Indebtedness owed to, the
Company or another Subsidiary (except that nothing in this clause (a) shall
prohibit the Company from operating a bankruptcy proof Wholly-Owned Subsidiary
for the purpose of securitizing lease receivables in the ordinary course of
business) or (b) the Company's right to perform the provisions of this
Agreement, the Amended and Restated Registration Rights Agreement, the Amended
and Restated Stockholders Agreement, the Articles of Organization or the Bylaws
(including, without limitation, provisions relating to the declaration and
payment of dividends on and the making of redemptions and conversions of the
Preferred Stock);
(xi) except as expressly contemplated by this Agreement, make any
amendment to the Articles of Organization or the Bylaws, or file any resolution
of the board of directors with the Massachusetts Secretary of State containing
any provisions, which would increase the number of authorized shares of the
Preferred Stock or adversely affect or otherwise impair the rights or the
relative preferences and priorities of the holders of the Preferred Stock or the
Underlying Common Stock under this Agreement, the Articles of Organization, the
Bylaws, the Amended and Restated Registration Rights Agreement or the Amended
and Restated Stockholders Agreement;
(xii) enter into, amend, modify or supplement, or permit any
Subsidiary to enter into, amend, modify or supplement, any agreement,
transaction, commitment or arrangement with any of its or any Subsidiary's
officers, directors, employees, stockholders or Affiliates or with any
individual related by blood, marriage or adoption to any such individual or with
any entity in which any such Person or individual owns a beneficial interest,
except for customary employment arrangements and benefit programs on reasonable
terms and except as otherwise expressly contemplated by this Agreement;
(xiii) increase any compensation (including salary, bonuses and other
forms of current or deferred compensation) payable to Paul S. Gass or any other
officers or directors of the Company or any of its Subsidiaries, except for any
such increases approved by the Compensation
-9-
<PAGE>
Committee established by the Company's board of directors in accordance with the
Amended and Restated Stockholders Agreement;
(xiv) establish or acquire (a) any Subsidiaries other than Wholly-
Owned Subsidiaries or (b) any Subsidiaries organized outside of the United
States and its territorial possessions (except that nothing in this clause (xiv)
shall prohibit the Company from establishing an offshore Wholly-Owned Subsidiary
captive insurer);
(xv) except as approved by the Company's board of directors (and,
in the case of lines of credit, loans or financing arrangements with lending
institutions, within the limits of such lines of credit, loans or financing
arrangements approved by the Company's board of directors), create, incur,
assume or suffer to exist, or permit any Subsidiary to create, incur, assume or
suffer to exist, any Indebtedness;
(xvi) except as approved by the Company's board of directors,
create, incur, assume or suffer to exist, or permit any Subsidiary to create,
incur, assume or suffer to exist, any Liens (other than Permitted Liens);
(xvii) make any capital expenditures for capital equipment for use in
the Company's operations such as computers, phones, office machines, office
furnishings and related fixtures (including, without limitation, payments with
respect to capitalized leases, as determined in accordance with generally
accepted accounting principles consistently applied) exceeding five percent (5%)
of the Company's Capital Base (as hereinafter defined) in the aggregate on a
consolidated basis during any fiscal year. The term "Capital Base" as used
------------
herein shall mean the net worth of the Company, plus all issued and outstanding
subordinated debt calculated in accordance with GAAP;
(xviii) enter into any leases or other rental agreements (excluding
capitalized leases, as determined in accordance with generally accepted
accounting principles consistently applied) under which the amount of the
aggregate lease payments to be made by the Company and its Subsidiaries for all
such agreements exceeds five percent (5%) of the Company's Capital Base (as
hereinbefore defined) on a consolidated basis during any fiscal year;
(xix) except as approved by the Company's board of directors, change
its fiscal year;
(xx) increase the authorized size of its board of directors above
seven members (except for any increase upon the occurrence of certain Events of
Noncompliance as provided in the Articles of Organization);
(xxi) amend or modify any stock option plan or employee stock
ownership plan as in existence as of the Closing (except for any such amendment
or modification which increases to not more than 300,000 the total number of
shares of Common Stock subject to authorized stock options (as such number of
shares is proportionately adjusted for subsequent stock splits, combinations and
dividends affecting the Common Stock and as such number includes all stock
-10-
<PAGE>
options and purchase rights outstanding as of the Closing or exercised for
shares of Common Stock prior to the Closing)), adopt any new stock option plan
or employee stock ownership plan or issue any shares of Common Stock to its or
its Subsidiaries' employees or directors other than pursuant to the Company's
existing stock option plans (it being understood that all such options shall be
subject to vesting in equal annual installments over not less than five years);
(xxii) issue or sell any shares of the capital stock, or rights to
acquire shares of the capital stock, of any Subsidiary to any Person other than
the Company or a Wholly-Owned Subsidiary;
(xxiii) borrow against, pledge, assign, modify, cancel or surrender
the key-man life insurance policy required to be maintained under paragraph
3E(vii) hereof;
(xxiv) use the proceeds from the sale of the Preferred Stock other
than to finance its marketing efforts to banks and equipment vendors, to support
investment in equipment leases and for working capital purposes; or
(xxv) effect or consummate an initial Public Offering unless such
initial Public Offering constitutes a Qualified Public Offering.
3E. Affirmative Covenants. So long as at least 331/3% of the
---------------------
Preferred Stock remains outstanding, the Company shall, and shall cause each
Subsidiary to, unless it has received the prior written consent of the holders
of a majority of the outstanding Preferred Stock:
(i) at all times cause to be done all things necessary to
maintain, preserve and renew its corporate existence and all material licenses,
authorizations and permits necessary to the conduct of its businesses and where
the failure to do so would have a material adverse effect upon the financial
condition, operating results, assets, operations or business prospects of the
Company and its Subsidiaries taken as a whole;
(ii) maintain and keep its material properties in good repair,
working order and condition, and from time to time make all necessary or
desirable repairs, renewals and replacements, so that its businesses may be
properly and advantageously conducted in all material respects at all times;
(iii) pay and discharge when payable all material taxes, assessments
and governmental charges imposed upon its properties or upon the income or
profits therefrom (in each case before the same becomes delinquent and before
penalties accrue thereon) and all material claims for labor, materials or
supplies which if unpaid would by law become a Lien upon any of its property
unless and to the extent that the same are being contested in good faith and by
appropriate proceedings and adequate reserves (as determined in accordance with
generally accepted accounting principles, consistently applied) have been
established on its books with respect thereto;
(iv) comply with all other material obligations which it incurs
pursuant to any material contract or material agreement, whether oral or
written, express or implied, as such
-11-
<PAGE>
obligations become due, unless and to the extent that the same are being
contested in good faith and by appropriate proceedings and adequate reserves (as
determined in accordance with generally accepted accounting principles,
consistently applied) have been established on its books with respect thereto;
(v) comply with all applicable laws, rules and regulations of all
governmental authorities, the violation of which would reasonably be expected to
have a material adverse effect upon the financial condition, operating results,
assets, operations or business prospects of the Company and its Subsidiaries
taken as a whole;
(vi) apply for and continue in force with good and responsible
insurance companies adequate insurance covering risks of such types and in such
amounts as are customary for corporations of similar size engaged in similar
lines of business;
(vii) maintain the key-man life insurance policy referred to in
paragraph 2H of the 1996 Purchase Agreement;
(viii) maintain proper books of record and account which present
fairly in all material respects its financial condition and results of
operations and make provisions on its financial statements for all such proper
reserves as in each case are required in accordance with generally accepted
accounting principles, consistently applied; and
(ix) enter into and maintain nondisclosure agreements with its key
employees.
3F. Class D Restrictions. So long as at least 331/3% of the
--------------------
Class D Preferred remains outstanding, the Company shall not, without the prior
written consent of the holders of a majority of the outstanding Class D
Preferred, take any of the actions specified in paragraphs 3D(i), 3D(ii),
3D(iii), 3D(v), 3D(vi) (but only if such transaction involves the sale, lease or
other disposition of more than 50% of the consolidated assets of the Company and
its Subsidiaries (computed on the basis of book value, determined in accordance
with generally accepted accounting principles consistently applied, or fair
market value, determined by the Company's board of directors in its good faith
judgment)), 3D(vii), 3D(ix), 3D(x), 3D(xi), 3D(xii), 3D(xv), 3D(xvi) or 3D(xxiv)
above; provided that, notwithstanding the foregoing, in lieu of obtaining the
-------- ----
prior written consent of the holders of the Class D Preferred as provided above
with respect to the actions specified in paragraphs 3D(i), 3D(ii), 3D(v),
3D(vi), 3D(ix) and 3D(x) (but only with respect to clause (a) thereof) above,
the Company may offer in writing to redeem all of the outstanding Class D
Preferred in accordance with Section 4 of Part E of the Articles of
Organization. If the holders of a majority of the outstanding Class D Preferred
reject such offer of redemption or fail to accept such offer within ten business
days after such offer is delivered to each holder of Class D Preferred, such
holders shall be deemed to have consented to any such action which gave rise to
the offer of redemption, the offer shall be deemed to have been withdrawn and
the Company shall have no right to redeem any shares of Class D Preferred
pursuant to Section 4 of Part E of the Articles of Organization. If the holders
of a majority of the outstanding Class D Preferred accept such offer of
redemption, such holders shall have no right to object to the taking of any such
action which gave rise to the offer of redemption, and the Company shall be
obligated to redeem all of the outstanding
-12-
<PAGE>
shares of Class D Preferred pursuant to the provisions of Section 4 of Part E of
the Articles of Organization on or prior to the date on which any such action
which gave rise to the offer of redemption is to be taken by the Company or any
of its Subsidiaries.
3G. Compliance with Agreements. The Company shall perform and
--------------------------
observe (i) all of its obligations to each holder of the Preferred Stock and all
of its obligations to each holder of the Underlying Common Stock set forth in
Part E of the Articles of Organization and the Bylaws, (ii) all of its
obligations to each holder of Registrable Securities set forth in the Amended
and Restated Registration Rights Agreement and (iii) all of its obligations to
each holder of Stockholder Shares set forth in the Amended and Restated
Stockholders Agreement.
3H. Current Public Information. At all times after the Company has
--------------------------
filed a registration statement with the Securities and Exchange Commission
pursuant to the requirements of either the Securities Act or the Securities
Exchange Act, the Company shall file all reports required to be filed by it
under the Securities Act and the Securities Exchange Act and the rules and
regulations adopted by the Securities and Exchange Commission thereunder and
shall take such further action as any holder or holders of Restricted Securities
may reasonably request, all to the extent required to enable such holders to
sell Restricted Securities pursuant to (i) Rule 144 adopted by the Securities
and Exchange Commission under the Securities Act (as such rule may be amended
from time to time) or any similar rule or regulation hereafter adopted by the
Securities and Exchange Commission or (ii) a registration statement on Form S-2
or S-3 or any similar registration form hereafter adopted by the Securities and
Exchange Commission. Upon request, the Company shall deliver to any holder of
Restricted Securities a written statement as to whether it has complied with
such requirements.
3I. Amendment of Other Agreements. The Company shall not amend,
-----------------------------
modify or waive any provision of its employment agreement with Paul S. Gass
without the prior written consent of the holders of a majority of the Underlying
Common Stock, and the Company shall enforce the provisions of such employment
agreement and shall exercise all of its rights and remedies thereunder unless it
is otherwise directed by the holders of a majority of the Underlying Common
Stock. The provisions of this paragraph 3I shall terminate upon the
consummation of a Qualified Public Offering.
3J. Financing Agreements. The Company shall not amend, modify or
--------------------
waive, or permit any Subsidiary to amend, modify or waive, any provision of the
Company's or any Subsidiary's existing financing agreements if as a result of
such amendment, modification or waiver the Company, any of its Subsidiaries or
the holders of the Preferred Stock would be subject to any provision of such
financing agreements more onerous or restrictive in any material respect than as
in effect immediately prior to any such amendment, modification or waiver,
without the prior written consent of the holders of a majority of the
outstanding Preferred Stock. The Company shall not become subject to, or permit
any Subsidiary to become subject to, any new financing agreement that contains
any provisions that are more onerous or restrictive in any material respect to
the Company, any of its Subsidiaries or the holders of the Preferred Stock than
the Company's existing financing agreements as of the date hereof, without the
prior written consent of the holders of a majority of the outstanding Preferred
Stock. Notwithstanding the foregoing, the holders of Preferred Stock shall
-13-
<PAGE>
not unreasonably withhold such prior written consent, and such holders shall
have no right to object thereto if any such amendment, modification or waiver to
an existing financing agreement or if any such new financing agreement would not
have a material adverse effect on the business operations or financial condition
of the Company and its Subsidiaries taken as a whole. The provisions of this
paragraph 3J shall not apply if any such amendment, modification or waiver is
approved by a majority of the Company's board of directors (with at least one of
the Investor Directors (as defined in the Amended and Restated Stockholders
Agreement) voting in favor thereof or otherwise consenting thereto). The
provisions of this paragraph 3J shall terminate upon the consummation of a
Qualified Public Offering.
3K. Right of First Refusal.
----------------------
(i) Except for issuances of Common Stock (a) to the Company's
employees as contemplated by paragraph 3D(xxi) above, (b) to customers,
suppliers, financial institutions and other Persons having legitimate business
relationships with the Company or its Subsidiaries (in an aggregate amount not
to exceed 25,000 shares of Common Stock (as such number of shares is adjusted
for subsequent stock splits, stock combinations, stock dividends and
recapitalizations affecting the Common Stock)), (c) upon the conversion of the
Preferred Stock or the Class A Preferred or the Class B Preferred or the Class B
Common or upon exercise of the Warrants, the WSDF Warrants or the Contingent
Warrants (as defined in Section 3N(i) of this Agreement and Section 3N(i) of the
1996 Purchase Agreement), (d) in connection with the acquisition of another
company or business as contemplated by paragraph 3D(viii), (e) pursuant to a
public offering registered under the Securities Act, (f) upon the exercise of
certain common stock warrants issued prior to the Closing (as defined in the
1996 Purchase Agreement) pursuant to the Private Placement Memorandum in an
aggregate amount not to exceed 8,000 shares of Common Stock (at an exercise
price of not less than $13.75 per share) or (g) upon the exercise of common
stock warrants issued subsequent to the Closing (as defined in the 1996 Purchase
Agreement) and prior to July 1, 1996 pursuant to the Private Placement
Memorandum in an aggregate amount not to exceed 3,200 shares of Common Stock (at
an exercise price of not less than $13.75 per share), if the Company authorizes
the issuance or sale of any shares of Common Stock or any securities containing
options or rights to acquire any shares of Common Stock (other than as a
dividend on the outstanding Common Stock), the Company shall first offer to sell
to each holder of Underlying Common Stock a portion of such stock or securities
equal to the quotient determined by dividing (1) the number of shares of
Underlying Common Stock held by such holder by (2) the sum of the total number
of shares of Underlying Common Stock and the number of shares of Common Stock
outstanding which are not shares of Underlying Common Stock. Each holder of
Underlying Common Stock shall be entitled to purchase such stock or securities
at the most favorable price and on the most favorable terms as such stock or
securities are to be offered to any other Persons; provided that, at the request
-------- ----
of any holder of Underlying Common Stock, the Company shall offer to such holder
stock or securities which have no voting rights (other than required by
applicable law) and which are convertible into voting securities on the same
terms as the Class B Common is convertible into Class A Common but which are
otherwise identical to the stock or securities being offered. The purchase
price for all stock and securities offered to the holders of the Underlying
Common Stock shall be payable in cash or, to the extent otherwise required
hereunder, notes issued by such holders.
-14-
<PAGE>
(ii) In order to exercise its purchase rights hereunder, a holder of
Underlying Common Stock must within 15 days after receipt of written notice from
the Company describing in reasonable detail the stock or securities being
offered, the purchase price thereof, the payment terms and such holder's
percentage allotment deliver a written notice to the Company describing its
election hereunder. If all of the stock and securities offered to the holders
of Underlying Common Stock is not fully subscribed by such holders, the
remaining stock and securities shall be reoffered by the Company to the holders
purchasing their full allotment upon the terms set forth in this paragraph,
except that such holders must exercise their purchase rights within five days
after receipt of such reoffer.
(iii) Upon the expiration of the offering periods described above, the
Company shall be entitled to sell such stock or securities which the holders of
Underlying Common Stock have not elected to purchase during the 90 days
following such expiration on terms and conditions no more favorable to the
purchasers thereof than those offered to such holders. Any stock or securities
offered or sold by the Company after such 90-day period must be reoffered to the
holders of Underlying Common Stock pursuant to the terms of this paragraph.
(iv) The rights of the holders of Underlying Common Stock under this
paragraph shall terminate upon the consummation of a Qualified Public Offering.
3L. Regulatory Compliance Cooperation.
---------------------------------
(i) Before the Company redeems, purchases or otherwise acquires,
directly or indirectly, or converts or takes any action with respect to the
voting rights of, any shares of any class of its capital stock or any securities
convertible into or exchangeable for any shares of any class of its capital
stock, the Company shall give written notice of such pending action to the
Purchasers. Upon the written request of any Purchaser made within 10 days after
its receipt of any such notice stating that after giving effect to such action
such Purchaser would have a Regulatory Problem, the Company shall defer taking
such action for such period (not to extend beyond 45 days after such Purchaser's
receipt of the Company's original notice) as such Purchaser requests to permit
it and its Affiliates to reduce the quantity of the Company's securities they
own in order to avoid the Regulatory Problem. In addition, the Company shall
not be a party to any merger, consolidation, recapitalization or other
transaction pursuant to which any Purchaser would be required to take any voting
securities, or any securities convertible into voting securities, which might
reasonably be expected to cause such Purchaser to have a Regulatory Problem.
For purposes of this paragraph, a Person shall be deemed to have a "Regulatory
----------
Problem" when such Person and such Person's Affiliates would own, control or
- -------
have power over a greater quantity of securities of any kind issued by the
Company or any other entity than are permitted under any requirement of any
governmental authority.
(ii) At any Purchaser's request at any time (whether in connection
with any action by the Company referred to in subparagraph (i) above or
otherwise), the Company shall exchange with such Purchaser for such number of
shares of Class A Common or Class C Preferred, as the case may be, then held by
such Purchaser as it designates a like number of shares of Class B Common or
Class D Preferred, respectively, and the Company shall at all times reserve and
keep available out
-15-
<PAGE>
of its authorized but unissued shares of Class B Common and Class D Preferred,
solely for issue upon such exchanges, the number of such shares deemed
sufficient by the Company for such purposes. In the event of any such exchange
of Class B Common for Class A Common or Class D Preferred for Class C Preferred,
(a) the holders of such Class B Common or Class D Preferred shall be entitled to
all the rights which such holders had pursuant to this Agreement and the Amended
and Restated Registration Rights Agreement as holders of Class A Common or Class
C Preferred, as the case may be (including, without limitation, the right to
have such shares treated as "Underlying Common Stock" and "Registrable
Securities" pursuant to this Agreement and the Amended and Restated Registration
Rights Agreement), and (b) if such shares of Class A Common or Class C Preferred
were "Restricted Securities" hereunder, such Class B Common or Class D Preferred
shall also be deemed to be "Restricted Securities" hereunder.
(iii) The Company shall grant to any subsequent holder of Restricted
Securities, upon such holder's request, the same rights granted to Purchasers
pursuant to this paragraph.
3M. Public Disclosures. The Company shall not, nor shall it permit
------------------
any Subsidiary to, disclose any Person's name or identity as an investor in any
of the Purchasers in any press release or other public announcement or in any
document or material filed with any governmental entity, without the prior
written consent of such Purchaser, unless such disclosure is required by
applicable law or governmental regulations or by order of a court of competent
jurisdiction, in which case prior to making such disclosure the Company shall
have given written notice to such Purchaser describing in reasonable detail the
proposed content of such disclosure and shall permit the Purchaser to review and
comment upon the form and substance of such disclosure. Nothing herein,
however, shall prohibit the Company from disclosing or marketing the Purchasers'
investment under this Agreement.
3N. Contingent Warrants.
-------------------
(i) Upon any redemption of shares of Class D Preferred pursuant to
the terms of paragraph 4A of Part E of the Articles of Organization, the Company
shall issue a warrant (collectively, the "Contingent Warrants") to each holder
-------------------
of Class D Preferred. The Contingent Warrants shall be in the form of Exhibit G
---------
attached to the 1996 Purchase Agreement, shall include the additional terms and
conditions described on Exhibit H attached to the 1996 Purchase Agreement
---------
(except that references therein to "$12.50" shall be deemed to be references to
"$21.49" for purposes of this paragraph 3N) and shall otherwise be satisfactory
in form and substance to the recipients thereof. The holders of the Contingent
Warrants shall have the right to acquire initially the same number of shares of
Class B Common into which each such holder's shares of Class D Preferred being
redeemed (the "Redeemed Shares") were convertible as of the Redemption Date
---------------
thereof. The initial exercise price for each share of Class B Common under the
Contingent Warrants shall be equal to the Conversion Price of the Redeemed
Shares as of the Redemption Date thereof, and the Contingent Warrants shall be
exercisable at any time after the Redemption Date of the Redeemed Shares and
shall expire (unless previously exercised) on the earlier of the tenth
anniversary of the Closing or immediately following the date on which the
outstanding Preferred Stock is converted into Conversion Stock pursuant to
paragraph 6F of Part E of the Articles of Organization.
-16-
<PAGE>
(ii) The terms "Conversion Price," "Redemption Date" and "Conversion
Stock" have the meanings set forth in Part E of the Articles of Organization.
Section 4. Transfer of Restricted Securities.
---------------------------------
4A. General Provisions. Restricted Securities are transferable only
------------------
pursuant to (i) public offerings registered under the Securities Act, (ii) Rule
144 or Rule 144A of the Securities and Exchange Commission (or any similar rule
or rules then in force) if such rule is available and (iii) subject to the
conditions specified in paragraph 4B below, any other legally available means of
transfer.
4B. Opinion Delivery. In connection with the transfer of any
----------------
Restricted Securities (other than a transfer described in paragraph 4A(i) or
(ii) above), the holder thereof shall deliver written notice to the Company
describing in reasonable detail the transfer or proposed transfer, together with
an opinion of Kirkland & Ellis or other counsel which (to the Company's
reasonable satisfaction) is knowledgeable in securities law matters to the
effect that such transfer of Restricted Securities may be effected without
registration of such Restricted Securities under the Securities Act. In
addition, if the holder of the Restricted Securities delivers to the Company an
opinion of Kirkland & Ellis or such other counsel that no subsequent transfer of
such Restricted Securities shall require registration under the Securities Act,
the Company shall promptly upon such contemplated transfer deliver new
certificates for such Restricted Securities which do not bear the Securities Act
legend set forth in paragraph 7C. If the Company is not required to deliver new
certificates for such Restricted Securities not bearing such legend, the holder
thereof shall not transfer the same until the prospective transferee has
confirmed to the Company in writing its agreement to be bound by the conditions
contained in this paragraph and paragraph 7C.
4C. Rule 144A. Upon the request of any Purchaser, the Company shall
---------
promptly supply to such Purchaser or its prospective transferees all information
regarding the Company required to be delivered in connection with a transfer
pursuant to Rule 144A of the Securities and Exchange Commission. The Company's
obligations under this paragraph 4C shall at all times be contingent upon the
relevant Purchaser's obtaining from the prospective transferees a written
agreement to take all reasonable precautions to safeguard the Rule 144A
information from disclosure to anyone other than a Person who will assist such
transferee in evaluating the transfer.
4D. Legend Removal. If any Restricted Securities become eligible for
--------------
sale pursuant to Rule 144(k), the Company shall, upon the request of the holder
of such Restricted Securities, remove the legend set forth in paragraph 7C from
the certificates for such Restricted Securities.
Section 5. Representations and Warranties of the Company. As a
---------------------------------------------
material inducement to the Purchasers to enter into this Agreement and purchase
the Preferred Stock hereunder, the Company hereby represents and warrants that:
5A. Organization, Corporate Power and Licenses. The Company is a
------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of Massachusetts and is
-17-
<PAGE>
qualified to do business in every jurisdiction in which the failure to so
qualify has had or would have a material adverse effect on the financial
condition, operating results, assets, operations or business prospects of the
Company and its Subsidiaries taken as a whole. The Company possesses all
requisite corporate power and authority and all material licenses, permits and
authorizations necessary to own and operate its properties, to carry on its
businesses as now conducted and as presently proposed to be conducted and to
carry out the transactions contemplated by this Agreement. The copies of the
Company's and each Subsidiary's charter documents and bylaws which have been
furnished to the Purchasers' special counsel reflect all amendments made thereto
at any time prior to the date of this Agreement and are correct and complete.
5B. Capital Stock and Related Matters.
---------------------------------
(i) As of the Closing and immediately thereafter, the authorized
capital stock of the Company shall consist of (a) 500,000 shares of preferred
stock, of which (1) 60,000 shares shall be designated as Class A Preferred (of
which 30,000 shares shall be issued and outstanding and 30,000 shares shall be
reserved for issuance upon conversion of the Class B Preferred), (2) 30,000
shares shall be designated as Class B Preferred (all of which shall be issued
and outstanding), (3) 75,000 shares shall be designated as Class C Preferred (of
which 37,500 shares shall be issued and outstanding and 37,500 shares shall be
reserved for issuance upon conversion of the Class D Preferred) and (4) 37,500
shares shall be designated as Class D Preferred (all of which shall be issued
and outstanding) and (b) 6,000,000 shares of Common Stock, (x) of which
5,000,000 shares shall be designated as Class A Common (of which (1) 928,073
shares shall be issued and outstanding and held beneficially and of record by
the Persons (and in the amounts) set forth on the attached Capitalization
--------------
Schedule, (2) 480,000 shares shall be reserved for issuance upon conversion of
- --------
the Class A Preferred, (3) 24,000 shares shall be reserved for issuance upon
exercise of the Class A Warrant, (4) 349,000 shares shall be reserved for
issuance upon conversion of the Class C Preferred, (5) 264,000 shares shall be
reserved for issuance upon conversion of the Class B Common issued upon
conversion of the Class B Preferred and exercise of the Class B Warrant, (6)
174,500 shares shall be reserved for issuance upon conversion of the Class B
Common issued upon conversion of the Class D Preferred), (y) 1,000,000 shares
shall be designated as Class B Common ((1) 10,670 shares of which shall be
issued and outstanding, (2) 240,000 shares of which shall be reserved for
issuance upon conversion of the Class B Preferred, (3) 24,000 shares of which
shall be reserved for issuance upon the exercise of the Class B Warrant, and (4)
174,500 shares of which shall be reserved for issuance upon conversion of the
Class D Preferred), and (z) 187,492 shares shall be reserved for issuance upon
the exercise of (1) certain common stock warrants issued pursuant to the Private
Placement Memorandum and (2) the WSDF Warrants. As of the Closing, neither the
Company nor any Subsidiary shall have outstanding any stock or securities
convertible or exchangeable for any shares of its capital stock or containing
any profit participation features, nor shall it have outstanding any rights or
options to subscribe for or to purchase its capital stock or any stock or
securities convertible into or exchangeable for its capital stock or any stock
appreciation rights or phantom stock plans, except for the Preferred Stock, the
Class A Preferred Stock, the Class B Preferred Stock, the Class B Common, the
Warrants, the WSDF Warrants, the Contingent Warrants and except as set forth on
the attached Capitalization Schedule. The attached Capitalization Schedule
----------------------- -----------------------
accurately sets forth the following information with respect to all outstanding
options and rights to acquire the Company's capital stock: the holder, the
number of shares covered, the exercise price and the
-18-
<PAGE>
expiration date. As of the Closing, neither the Company nor any Subsidiary shall
be subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any shares of its capital stock or any warrants,
options or other rights to acquire its capital stock, except as set forth on the
attached Capitalization Schedule and except pursuant to Articles of Organization
-----------------------
and the Amended and Restated Stockholders Agreement. As of the Closing, all of
the outstanding shares of the Company's capital stock shall be validly issued,
fully paid and nonassessable.
(ii) There are no statutory or, to the best of the Company's
knowledge, contractual stockholders preemptive rights or rights of refusal with
respect to the issuance of the Preferred Stock hereunder or the issuance of the
Common Stock upon conversion of the Preferred Stock. The Company has not
violated any applicable federal or state securities laws in connection with the
offer, sale or issuance of any of its capital stock, and the offer, sale and
issuance of the Preferred Stock hereunder do not require registration under the
Securities Act or any applicable state securities laws. Except as disclosed on
the attached Capitalization Schedule, to the best of the Company's knowledge,
-----------------------
there are no agreements between the Company's stockholders with respect to the
voting or transfer of the Company's capital stock or with respect to any other
aspect of the Company's affairs, except for the Amended and Restated
Stockholders Agreement.
5C. Subsidiaries; Investments. The attached Subsidiary Schedule
------------------------- -------------------
correctly sets forth the name of each Subsidiary, the jurisdiction of its
incorporation and the Persons owning the outstanding capital stock of such
Subsidiary. Each Subsidiary is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, possesses all
requisite corporate power and authority and all material licenses, permits and
authorizations necessary to own its properties and to carry on its businesses as
now being conducted and as presently proposed to be conducted and is qualified
to do business in every jurisdiction in which the failure to so qualify has had
or would have a material adverse effect on the financial condition, operating
results, assets, operations or business prospects of the Company and its
Subsidiaries taken as a whole. All of the outstanding shares of capital stock
of each Subsidiary are validly issued, fully paid and nonassessable, and all
such shares are owned by the Company or another Subsidiary free and clear of any
Lien and not subject to any option or right to purchase any such shares. Except
as set forth on the Subsidiary Schedule, neither the Company nor any Subsidiary
-------------------
owns or holds the right to acquire any shares of stock or any other security or
interest in any other Person.
5D. Authorization; No Breach. The execution, delivery and
------------------------
performance of this Agreement, the First Amendment to Amended and Restated
Registration Rights Agreement, the Amended and Restated Stockholders Agreement,
the Second Amendment to Purchase Agreement and all other agreements contemplated
hereby to which the Company is a party, the filing of the restatement of the
Articles of Organization have been duly authorized by the Company. This
Agreement, the First Amendment to Amended and Restated Registration Rights
Agreement, the Amended and Restated Stockholders Agreement, the Second Amendment
to Purchase Agreement, the Articles of Organization and all other agreements
contemplated hereby to which the Company is a party each constitutes a valid and
binding obligation of the Company, enforceable in accordance with its terms.
Except as set forth on the attached Restrictions Schedule, the execution and
---------------------
delivery by the Company of this Agreement, the First Amendment to Amended and
Restated Registration Rights Agreement, the Amended and Restated Stockholders
Agreement, the Second Amendment
-19-
<PAGE>
to Purchase Agreement and all other agreements contemplated hereby to which the
Company is a party, the offering, sale and issuance of the Preferred Stock
hereunder, the issuance of Common Stock upon conversion of the Preferred Stock,
the issuance of Class C Preferred upon the conversion of Class D Preferred, the
filing of the Articles of Organization and the fulfillment of and compliance
with the respective terms hereof and thereof by the Company, do not and shall
not (i) conflict with or result in a breach of the terms, conditions or
provisions of, (ii) constitute a default under, (iii) result in the creation of
any lien, security interest, charge or encumbrance upon the Company's or any
Subsidiary's capital stock or assets pursuant to, (iv) give any third party the
right to modify, terminate or accelerate any obligation under, (v) result in a
violation of, or (vi) require any authorization, consent, approval, exemption or
other action by or notice or declaration to, or filing with, any court or
administrative or governmental body or agency pursuant to, the charter or bylaws
of the Company or any Subsidiary, or any law, statute, rule or regulation to
which the Company or any Subsidiary is subject, or any agreement, instrument,
order, judgment or decree to which the Company or any Subsidiary is subject.
Except as set forth on the attached Restrictions Schedule, none of the
---------------------
Subsidiaries are subject to any restrictions upon making loans or advances or
paying dividends to, transferring property to, or repaying any Indebtedness owed
to, the Company or another Subsidiary.
5E. Financial Statements. Attached hereto as the Financial
-------------------- ---------
Statements Schedule are the following financial statements:
- -------------------
(i) the audited consolidated balance sheets of the Company and its
Subsidiaries as of December 31, 1996 and December 31, 1997 and the related
statements of income and cash flows (or the equivalent) for the respective
periods then ended; and
(ii) the unaudited consolidated balance sheet of the Company and its
Subsidiaries as of March 31, 1998 (the "Latest Balance Sheet"), and the related
--------------------
statements of income and cash flows (or the equivalent) for the four-month
period then ended.
Each of the foregoing financial statements (including in all cases the notes
thereto, if any) is consistent with the books and records of the Company (which,
in turn, are accurate and complete in all material respects) and presents fairly
in all material respects the consolidated financial condition, results of
operations and cash flows of the Company and its Subsidiaries in accordance with
generally accepted accounting principles applied on a consistent basis as of the
dates and for the periods set forth therein, subject in the case of the
unaudited financial statements to changes resulting from normal year-end
adjustments for recurring accruals (none of which would, alone or in the
aggregate, be materially adverse to the financial condition, operating results,
assets, operations or business prospects of the Company and its Subsidiaries
taken as a whole). The attached Financial Statements Schedule sets forth the
-----------------------------
amount of the Company's and its Subsidiaries' outstanding funded Indebtedness as
of the end of the most recent monthly accounting period prior to the Closing and
the amount of available funds under the Company's and its Subsidiaries'
revolving credit lines and other facilities as of the end of such monthly
accounting period.
5F. Absence of Undisclosed Liabilities. Except as set forth on the
----------------------------------
attached Liabilities Schedule, the Company and its Subsidiaries do not have any
--------------------
material obligation or
-20-
<PAGE>
liability (whether accrued, absolute, contingent, unliquidated or otherwise,
whether or not known to the Company or any Subsidiary, whether due or to become
due and regardless of when asserted) arising out of transactions entered into at
or prior to the Closing, or any action or inaction at or prior to the Closing,
or any state of facts existing at or prior to the Closing other than: (i)
liabilities set forth on the Latest Balance Sheet (including any notes thereto),
(ii) liabilities and obligations which have arisen after the date of the Latest
Balance Sheet in the ordinary course of business (none of which is a liability
resulting from breach of contract, breach of warranty, tort, infringement, claim
or lawsuit) and (iii) other liabilities and obligations expressly disclosed in
the other Schedules to this Agreement.
5G. No Material Adverse Change. Since the date of the Latest Balance
--------------------------
Sheet, there has been no material adverse change in the financial condition,
operating results, assets, operations, business prospects, employee relations or
customer or supplier relations of the Company and its Subsidiaries taken as a
whole.
5H. Absence of Certain Developments.
-------------------------------
(i) Except as expressly contemplated by this Agreement or as set forth
on the attached Developments Schedule, since the date of the Latest Balance
---------------------
Sheet, neither the Company nor any Subsidiary have:
(a) issued any notes, bonds or other debt securities or any
capital stock or other equity securities or any securities convertible,
exchangeable or exercisable into any capital stock or other equity
securities;
(b) borrowed any amount or incurred or become subject to any
material liabilities, except current liabilities incurred in the ordinary
course of business and liabilities under contracts and financing agreements
with lending institutions entered into in the ordinary course of business;
(c) discharged or satisfied any material Lien or paid any
material obligation or liability, other than current liabilities paid in
the ordinary course of business;
(d) declared or made any payment or distribution of cash or
other property to its stockholders with respect to its capital stock or
other equity securities or purchased or redeemed any shares of its capital
stock or other equity securities (including, without limitation, any
warrants, options or other rights to acquire its capital stock or other
equity securities);
(e) mortgaged or pledged any of its properties or assets or
subjected them to any material Lien, other than such mortgages and pledges
made in the ordinary course and which constitute Permitted Liens, and
except Liens for current property taxes not yet due and payable;
-21-
<PAGE>
(f) sold, assigned or transferred any of its tangible assets,
except in the ordinary course of business, or canceled any material debts
or claims;
(g) sold, assigned or transferred any patents or patent
applications, trademarks, service marks, trade names, corporate names,
copyrights or copyright registrations, trade secrets or other intangible
assets, or disclosed any material proprietary confidential information to
any Person (other than to the Purchasers and other than in the ordinary
course of business in circumstances in which the Company has imposed
confidentiality restrictions);
(h) suffered any extraordinary losses or waived any rights of
material value, whether or not in the ordinary course of business or
consistent with past practice;
(i) made capital expenditures for capital equipment for use in
the Company's operations (such as computers, phones, office machines,
office furnishings and related fixtures) or commitments therefor that
aggregate in excess of $100,000 ;
(j) made any loans or advances to, guarantees for the benefit
of, or any Investments in, any Persons in excess of $25,000 in the
aggregate, except for certain loans to existing employees in connection
with the issuance and sale of stock to such employees as described on the
attached Employee Stock Purchase Schedule;
--------------------------------
(k) made any charitable contributions or pledges;
(l) suffered any damage, destruction or casualty loss exceeding
in the aggregate $25,000, whether or not covered by insurance;
(m) made any Investment in or taken steps to incorporate any
Subsidiary, except for such steps taken in connection with the formation of
an offshore Wholly-Owned Subsidiary captive insurer and bankruptcy proof
Wholly-Owned Subsidiaries; or
(n) or entered into any other material transaction, whether or
not in the ordinary course of business.
(ii) Neither the Company nor any Subsidiary has at any time made any
payments for political contributions or made any bribes, kickback payments or
other illegal payments.
5I. Assets. Except as set forth on the attached Assets Schedule, the
------ ---------------
Company and each Subsidiary have good and marketable title to, or a valid
leasehold interest in, the material properties and assets used by them, located
on their premises or shown on the Latest Balance Sheet or acquired thereafter,
free and clear of all Liens, except for properties and assets disposed of in the
ordinary course of business since the date of the Latest Balance Sheet and
except for Liens disclosed on the Latest Balance Sheet (including any notes
thereto) and Liens for current property taxes not yet due and payable. Except
as described on the attached Assets Schedule, the Company's and each
---------------
Subsidiary's buildings, equipment and other tangible assets are in good
operating condition in all
-22-
<PAGE>
material respects and are fit for use in the ordinary course of business. The
Company and each Subsidiary own, or have a valid leasehold interest in, all
material tangible assets necessary for the conduct of their respective
businesses as presently conducted and as presently proposed to be conducted.
5J. Tax Matters.
-----------
(i) Except as set forth on the attached Taxes Schedule: the Company
--------------
and each Subsidiary have filed all Tax Returns which they are required to file
under applicable laws and regulations; all such Tax Returns are complete and
correct in all material respects and have been prepared in compliance with all
applicable laws and regulations in all material respects; the Company and each
Subsidiary have paid all Taxes due and owing by them (whether or not such Taxes
are required to be shown on a Tax Return) and have withheld and paid over to the
appropriate taxing authority all Taxes which they are required to withhold from
amounts paid or owing to any employee, stockholder, creditor or other third
party; the Company believes that as of the date of this Agreement the accrual
for Taxes on the Latest Balance Sheet would be adequate to pay all Tax
Liabilities of the Company and its Subsidiaries if their current tax year were
treated as ending on the date of the Latest Balance Sheet (excluding any amount
recorded which is attributable solely to timing differences between book and Tax
income); since the date of the Latest Balance Sheet, the Company and its
Subsidiaries have not incurred any liability for Taxes other than in the
ordinary course of business; and no foreign, federal, state or local tax audits
or administrative or judicial proceedings are pending or being conducted with
respect to the Company or any Subsidiary, no information related to Tax matters
has been requested by any foreign, federal, state or local taxing authority and
no written notice indicating an intent to open an audit or other review has been
received by the Company or any Subsidiary from any foreign, federal, state or
local taxing authority.
(ii) Neither the Company nor any Subsidiary is liable for the Taxes
of another Person that is not a Subsidiary (a) under Treas. Reg. (S)1.1502-6 (or
comparable provisions of state, local or foreign law), (b) as transferee or
successor, (c) by contract or indemnity or (d) otherwise. Neither the Company
nor any Subsidiary is a party to any tax sharing agreement with a Person other
than the Company or a Subsidiary.
(iii) Neither the Company nor any Subsidiary has been a member of an
Affiliated Group other than one in which the Company was the common parent, or
filed or been included in a combined, consolidated or unitary income Tax Return,
other than one filed by the Company.
5K. Contracts and Commitments.
-------------------------
(i) Except as expressly contemplated by this Agreement or as set
forth on the attached Contracts Schedule or the attached Employee Benefits
------------------ -----------------
Schedule, neither the Company nor any Subsidiary is a party to or bound by any
- --------
written or oral:
(a) pension, profit sharing, stock option, employee stock
purchase or other plan or arrangement providing for deferred or other
compensation to employees or any other
-23-
<PAGE>
employee benefit plan or arrangement, or any collective bargaining
agreement or any other contract with any labor union, or severance
agreements, programs, policies or arrange ments;
(b) contract for the employment of any officer, individual
employee or other Person on a full-time, part-time, consulting or other
basis providing annual compensation in excess of $50,000 or contract
relating to loans to officers, directors or Affiliates;
(c) contract under which the Company or Subsidiary has advanced
or loaned any other Person amounts in the aggregate exceeding $50,000;
(d) agreement or indenture relating to borrowed money or other
Indebtedness or the mortgaging, pledging or otherwise placing a Lien on any
material asset or material group of assets of the Company or its
Subsidiaries;
(e) guarantee of any obligation in excess of $50,000 (other than
by the Company of a Wholly-Owned Subsidiary's debts or a guarantee by a
Subsidiary of the Company's debts or another Subsidiary's debts);
(f) lease or agreement under which the Company or any Subsidiary
is lessee of or holds or operates any property, real or personal, owned by
any other party, except for any lease of real or personal property under
which the aggregate annual rental payments do not exceed $50,000;
(g) contract or group of related contracts with the same party
or group of affiliated parties the performance of which involves
consideration in excess of $50,000 (other than lease arrangements entered
into as lessor in the ordinary course of business);
(h) assignment, license, indemnification or other agreement with
respect to any intangible property (including, without limitation, any
Intellectual Property Rights);
(i) warranty agreement with respect to its services rendered or
its products sold or leased;
(j) agreement under which it has granted any Person any
registration rights (including, without limitation, demand and piggyback
registration rights);
(k) sales, distribution or franchise agreement;
(l) agreement with a term of more than six months which is not
terminable by the Company or any Subsidiary upon less than 30 days notice
without penalty;
(m) contract or agreement prohibiting it from freely engaging in
any business or competing anywhere in the world; or
-24-
<PAGE>
(n) any other agreement which is material to its operations and
business prospects or involves annual consideration in excess of $50,000.
(ii) All of the contracts, agreements and instruments set forth on
the attached Contracts Schedule are valid, binding and enforceable in accordance
with their respective terms. The Company and each Subsidiary have performed all
material obligations required to be performed by them under the contracts,
agreements and instruments listed or required to be listed on the attached
Contracts Schedule and are not in default under or in breach of nor in receipt
- ------------------
of any claim of default or breach under any material contract, agreement or
instrument listed or required to be listed on the attached Contracts Schedule;
------------------
no event has occurred which with the passage of time or the giving of notice or
both would result in a default, breach or event of noncompliance by the Company
or any Subsidiary under any material contract, agreement or instrument listed or
required to be listed on the attached Contracts Schedule; neither the Company
------------------
nor any Subsidiary has any present expectation or intention of not fully
performing all such obligations; neither the Company nor any Subsidiary has
knowledge of any breach or anticipated breach by the other parties to any
material contract, agreement, instrument or commitment listed or required to be
listed on the attached Contracts Schedule; and neither the Company nor any
------------------
Subsidiary is a party to any contract requiring it to purchase or sell goods or
services or lease property above or below (as the case may be) prevailing market
prices and rates.
(iii) A true and correct copy of each of the written instruments,
plans, contracts and agreements and an accurate description of each of the oral
arrangements, contracts and agreements which are referred to on the Contracts
---------
Schedule have been made available to the Purchaser's special counsel.
- --------
5L. Intellectual Property Rights.
----------------------------
(i) The attached Intellectual Property Schedule contains a complete
------------------------------
and accurate list of all (a) patented or registered Intellectual Property Rights
owned or used by the Company or any Subsidiary, (b) pending patent applications
and applications for registrations of other Intellectual Property Rights filed
by the Company or any Subsidiary, (c) material unregistered trade names and
corporate names owned or used by the Company or any Subsidiary and (d) material
unregistered trademarks, service marks, copyrights, mask works and computer
software owned or used by the Company or any Subsidiary. The attached
Intellectual Property Schedule also contains a complete and accurate list of all
- ------------------------------
licenses and other rights granted by the Company or any Subsidiary to any third
party with respect to any Intellectual Property Rights and all licenses and
other rights granted by any third party to the Company or any Subsidiary with
respect to any material Intellectual Property Rights, in each case identifying
the subject Intellectual Property Rights. Except as set forth on the attached
Intellectual Property Schedule, the Company or one of its Subsidiaries owns all
- ------------------------------
right, title and interest to, or has the right to use pursuant to a valid
license, all Intellectual Property Rights necessary for the operation of the
businesses of the Company and its Subsidiaries as presently conducted and as
presently proposed to be conducted, free and clear of all Liens. Except as set
forth on the attached Intellectual Property Schedule, the loss or expiration of
------------------------------
any Intellectual Property Right or related group of Intellectual Property Rights
owned or used by the Company or any Subsidiary has not had and would not
reasonably be expected to have a material adverse effect on
-25-
<PAGE>
the conduct of the Company's and its Subsidiaries' respective businesses, and no
such loss or expiration is, to the best of the Company's knowledge, threatened,
pending or reasonably foreseeable. The Company and its Subsidiaries have taken
all reasonably necessary and desirable actions to maintain and protect the
Intellectual Property Rights which they own. To the best of the Company's
knowledge, the owners of any material Intellectual Property Rights licensed to
the Company or any Subsidiary have taken all reasonably necessary and desirable
actions to maintain and protect the Intellectual Property Rights which are
subject to such licenses.
(ii) Except as set forth on the attached Intellectual Property
---------------------
Schedule, (a) the Company and its Subsidiaries own all right, title and interest
- --------
in and to all of the Intellectual Property Rights listed on such schedule, free
and clear of all Liens, (b) there have been no claims made against the Company
or any Subsidiary asserting the invalidity, misuse or unenforceability of any of
such Intellectual Property Rights, and, to the best of the Company's knowledge,
there are no grounds for the same, (c) neither the Company nor any Subsidiary
has received any notices of, and is not aware of any facts which indicate a
likelihood of, any infringement or misappropriation by, or conflict with, any
third party with respect to such Intellectual Property Rights (including,
without limitation, any demand or request that the Company or any Subsidiary
license any rights from a third party) and (d) the conduct of the Company's and
each Subsidiary's business has not infringed, misappropriated or conflicted with
and does not infringe, misappropriate or conflict with any Intellectual Property
Rights of other Persons, nor would any future conduct as presently contemplated
infringe, misappropriate or conflict with any Intellectual Property Rights of
other Persons. The transactions contemplated by this Agreement shall have no
material adverse effect on the Company's or any Subsidiary's right, title and
interest in and to the Intellectual Property Rights listed on the attached
Intellectual Property Schedule.
- ------------------------------
5M. Litigation, etc. Except as set forth on the attached Litigation
--------------- ----------
Schedule, there are no actions, suits, proceedings, orders, investigations or
- --------
claims pending or, to the best of the Company's knowledge, threatened against or
affecting the Company or any Subsidiary (or to the best of the Company's
knowledge, pending or threatened against or affecting any of the officers,
directors or key employees of the Company and its Subsidiaries with respect to
their businesses or proposed business activities), or pending or threatened by
the Company or any Subsidiary against any third party, at law or in equity, or
before or by any governmental department, commission, board, bureau, agency or
instrumentality (including, without limitation, any actions, suit, proceedings
or investigations with respect to the transactions contemplated by this
Agreement); nor has there been any such actions, suits, proceedings, orders,
investigations or claims pending against or affecting the Company or any
Subsidiary during the past three years; neither the Company nor any Subsidiary
is subject to any arbitration proceedings under collective bargaining agreements
or otherwise or, to the best of the Company's knowledge, any governmental
investigations or inquiries (including, without limitation, inquiries as to the
qualification to hold or receive any material license or permit); and, to the
best of the Company's knowledge, there is no basis for any of the foregoing.
Neither the Company nor any Subsidiary is subject to any judgment, order or
decree of any court or other governmental agency, and neither the Company nor
any Subsidiary has received any opinion or memorandum or legal advice from legal
counsel to the effect that it is exposed, from a legal standpoint, to any
liability or disadvantage which may be material to its business.
-26-
<PAGE>
5N. Brokerage. Except as set forth on the attached Brokerage
--------- ---------
Schedule, there are no claims for brokerage commissions, finders' fees or
- --------
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement binding upon the Company or any
Subsidiary. The Company shall pay, and hold each Purchaser harmless against,
any liability, loss or expense (including, without limitation, reasonable
attorneys' fees and out-of-pocket expenses) arising in connection with any such
claim.
5O. Governmental Consent, etc. No permit, consent, approval or
-------------------------
authorization of, or declaration to or filing with, any governmental authority
is required in connection with the execution, delivery and performance by the
Company of this Agreement or the other agreements contemplated hereby, or the
consummation by the Company of any other transactions contemplated hereby or
thereby, except as set forth on the attached Consents Schedule.
-----------------
5P. Insurance. Neither the Company nor any Subsidiary is in default
---------
with respect to its obligations under any insurance policy maintained by it, and
neither the Company nor any Subsidiary has been denied insurance coverage. The
insurance coverage of the Company and its Subsidiaries is customary for
corporations of similar size engaged in similar lines of business. The Company
and its Subsidiaries do not have any self-insurance or co-insurance programs.
5Q. Employees. The Company is not aware that any executive or key
---------
employee of the Company or any Subsidiary or any group of employees of the
Company or any Subsidiary has any plans to terminate employment with the Company
or any Subsidiary. The Company and each Subsidiary have complied in all
material respects with all laws relating to the employment of labor (including,
without limitation, provisions thereof relating to wages, hours, equal
opportunity, collective bargaining and the payment of social security and other
taxes), and the Company is not aware that it or any Subsidiary has any material
labor relations problems (including, without limitation, any union organization
activities, threatened or actual strikes or work stoppages or material
grievances). Neither the Company, its Subsidiaries nor, to the best of the
Company's knowledge after due inquiry, any of their key employees is subject to
any noncompete, nondisclosure, confidentiality, employment, consulting or
similar agreements relating to, affecting or in conflict with the present or
proposed business activities of the Company and its Subsidiaries, except for
agreements between the Company and its present and former employees.
5R. ERISA.
-----
(i) Except as disclosed on the attached Employee Benefits Schedule,
---------------------------
the Company does not maintain, contribute to or have any actual or potential
liability with respect to any (x) "defined contribution plan" (as defined in
Section 3(34) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) (the "Savings Plan"), (y) "employee welfare benefit plan" (as defined
----- ------------
in Section 3(1) of ERISA) (the "Welfare Plans") or (z) nonqualified deferred
-------------
compensation, incentive, bonus, material fringe benefit, stock bonus or other
material benefit arrangements (collectively (x), (y) and (z) above referred to
as the "Plans").
-----
(ii) The Company does not maintain, contribute to or have any actual
or potential liability with respect to any active or terminated, funded or
unfunded (x) multiemployer plan (as
-27-
<PAGE>
defined in Section 3(37) or ERISA, (y) defined benefit plan (as defined in
Section 3(35) of ERISA) or (z) plan or arrangement to provide medical, health,
life insurance or other welfare-type benefits for current or future retired or
terminated employees (except for limited continued health benefit coverage
required to be provided under Section 4980B of the IRC or similar state law).
(iii) Each of the Welfare Plans, if any, and the Savings Plan and all
related funding arrangements comply in form and operation with its terms and the
applicable requirements of ERISA, the IRC and any other laws. Except as
disclosed on the attached Employee Benefits Schedule, the Savings Plan has
--------------------------
received a favorable determination letter that it qualifies under the IRC (and
that its trust is exempt from tax under the IRC) and such favorable letter
includes changes required by the 1986 Tax Reform Act. Except as disclosed on
the attached Employee Benefits Schedule, nothing has occurred since the date of
--------------------------
such favorable determination letter that could adversely affect the qualified
status of the Savings Plan or the tax-exempt status of the trust.
(iv) None of the Company, any trustee or administrator of any Plan or
other person has engaged in any transaction with respect to any Plan which could
subject the Company or any of its employees to any tax or penalty or other
liability imposed by ERISA or the IRC. No actions, suits, investigations or
claims with respect to any of the Plans (other than routine claims for benefits)
are pending or, to the knowledge of the Company, threatened, and the Company is
not aware of any facts or circumstances which could give rise to or be expected
to give rise to any such actions, suits, investigations or claims. The Company
has complied with the requirements of Section 4980B of the IRC and Section 601
et seq. of ERISA ("COBRA"). All contributions which are due under each of the
-----
Plans has been made and all other contributions have been properly accrued. The
Company has complied with all reporting and disclosure obligations with respect
to the Welfare Plans and the Savings Plan.
5S. Compliance with Laws. Except as set forth on the attached
--------------------
Compliance Schedule, neither the Company nor any Subsidiary has violated any law
- -------------------
(including, without limitation, usury laws) or any governmental regulation or
requirement which violation has had or would reasonably be expected to have a
material adverse effect upon the financial condition, operating results, assets,
operations or business prospects of the Company and its Subsidiaries taken as a
whole, and neither the Company nor any Subsidiary has received notice of any
such violation. Except as set forth on the Compliance Schedule, the Company and
-------------------
its Subsidiaries have complied with and are currently in compliance with all
Environmental and Safety Requirements, and neither the Company nor its
Subsidiaries have received any oral or written notice, report or information
regarding any liabilities (whether accrued, absolute, contingent, unliquidated
or otherwise) or any corrective, investigatory or remedial obligations arising
under Environmental and Safety Requirements which relate to the Company or its
Subsidiaries or any of their properties or their facilities and no facts or
circumstances exist with respect to the past or present operations or facilities
of the Company or any Subsidiary which would give rise to a material liability
or material corrective action or remedial obligation under any Environmental and
Safety Requirements. Neither this Agreement nor the consummation of the
transactions contemplated by this Agreement shall impose any obligations on the
Company or its Subsidiaries or otherwise for site investigation or cleanup, or
notification to or consent of any government agencies or third parties under any
Environmental
-28-
<PAGE>
and Safety Requirements (including, without limitation, any so called
"transaction-triggered" or "responsible property transfer" laws and
regulations).
5T. Affiliated Transactions. Except as set forth on the attached
-----------------------
Affiliated Transactions Schedule, to the best of the Company's knowledge no
- --------------------------------
officer, director, employee, stockholder or Affiliate of the Company or any
Subsidiary or any individual related by blood, marriage or adoption to any such
individual or any entity in which any such Person or individual owns any
beneficial interest, is a party to any agreement, contract, commitment or
transaction with the Company or any Subsidiary or has any material interest in
any material property used by the Company or any Subsidiary.
5U. Real Property Holding Corporation Status. Since its date of
----------------------------------------
incorporation, the Company has not been, and as of the date of the Closing shall
not be, a "United States real property holding corporation," as defined in
Section 897(c)(2) of the IRC, and in Section 1.897-2(b) of the Treasury
Regulations issued thereunder. The Company has no current plans or intentions
which would cause the Company to become (and shall use reasonable efforts
consistent with sound business practice to avoid becoming) a "United States real
property holding company," and the Company has filed with the IRS all
statements, if any, with its United States income tax returns which are required
under Section 1.897-2(h) of the Treasury Regulations.
5V. Disclosure. Neither this Agreement nor any of the exhibits,
----------
schedules, attachments, written statements, documents, certificates or other
items prepared and supplied to any Purchaser by or on behalf of the Company with
respect to the transactions contemplated hereby contain any untrue statement of
a material fact or omit a material fact necessary to make each statement
contained herein or therein not misleading; provided that with respect to the
-------- ----
financial projections furnished to the Purchasers by the Company, the Company
represents and warrants only that such projections were based upon assumptions
reasonably believed by the Company to be reasonable and fair as of the date the
projections were prepared in the context of the Company's history and current
and reasonably foreseeable business conditions. There is no fact which the
Company has not disclosed to the Purchasers in writing and of which any of its
officers, directors or executive employees is aware (other than general economic
conditions) and which has had or would reasonably be expected to have a material
adverse effect upon the existing or expected financial condition, operating
results, assets, customer or supplier relations, employee relations or business
prospects of the Company and its Subsidiaries taken as a whole.
Section 6. Definitions.
-----------
6A. Definitions. For the purposes of this Agreement, the following
-----------
terms have the meanings set forth below:
"Affiliate" of any particular Person means any other Person
---------
controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
-------
direct the management and policies of a Person whether through the ownership of
voting securities, contract or otherwise.
-29-
<PAGE>
"Affiliated Group" means any affiliated group as defined in IRC
----------------
(S)1504 that has filed a consolidated return for federal income tax purposes (or
any similar group under state, local or foreign law) for a period during which
any of the Company or any of its Subsidiaries was a member.
"Amended and Restated Registration Rights Agreement" means that
--------------------------------------------------
certain Amended and Restated Registration Rights Agreement dated as of February
28, 1997, by and among the Company, Primus, PNC and WSDF, and as amended
pursuant to the First Amendment to Amended and Restated Registration Rights
Agreement.
"Class A Common" means the Company's Class A Common Stock, par value
--------------
$1.00 per share.
"Class A Warrant" means that certain warrant to purchase 24,000 shares
---------------
of Class A Common issued pursuant to the 1996 Purchase Agreement.
"Class B Common" means the Company's Class B Common Stock, par value
--------------
$1.00 per share.
"Class B Warrant" means that certain warrant to purchase 24,000 shares
---------------
of Class B Common issued pursuant to the 1996 Purchase Agreement.
"Common Stock" means collectively the Class A Common and Class B
------------
Common.
"Environmental and Safety Requirements" means all federal, state,
-------------------------------------
local and foreign statutes, regulations, ordinances and other provisions having
the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law, in each case
concerning public health and safety, worker health and safety and pollution or
protection of the environment (including, without limitation, all those relating
to the presence, use, production, generation, handling, transport, treatment,
storage, disposal, distribution, labeling, testing, processing, discharge,
Release, threatened Release, control or cleanup of any hazardous or otherwise
regulated materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation).
"Event of Noncompliance" has the meaning set forth in Part E of the
----------------------
Articles of Organization.
"Indebtedness" means at a particular time, without duplication, (i)
-------------
any indebtedness for borrowed money or issued in substitution for or exchange of
indebtedness for borrowed money, (ii) any indebtedness evidenced by any note,
bond, debenture or other debt security, (iii) any indebtedness for the deferred
purchase price of property or services with respect to which a Person is liable,
contingently or otherwise, as obligor or otherwise (other than trade payables
and other current liabilities incurred in the ordinary course of business which
are not more than six months past due), (iv) any commitment by which a Person
assures a creditor against loss (including, without limitation, contingent
reimbursement obligations with respect to letters of credit), (v) any
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<PAGE>
indebtedness guaranteed in any manner by a Person (including, without
limitation, guarantees in the form of an agreement to repurchase or reimburse),
(vi) any obligations under capitalized leases with respect to which a Person is
liable, contingently or otherwise, as obligor, guarantor or otherwise, or with
respect to which obligations a Person assures a creditor against loss, (vii) any
indebtedness secured by a Lien on a Person's assets and (viii) any unsatisfied
obligation for "withdrawal liability" to a "multiemployer plan" as such terms
are defined under ERISA.
"Intellectual Property Rights" means all (i) patents, patent
----------------------------
applications, patent disclosures and inventions, (ii) trademarks, service marks,
trade dress, trade names, logos and corporate names and registrations and
applications for registration thereof together with all of the goodwill
associated therewith, (iii) copyrights (registered or unregistered) and
copyrightable works and registrations and applications for registration thereof,
(iv) mask works and registrations and applications for registration thereof, (v)
computer software, data, data bases and documentation thereof, (vi) trade
secrets and other confidential information (including, without limitation,
ideas, formulas, compositions, inventions (whether patentable or unpatentable
and whether or not reduced to practice), know-how, manufacturing and production
processes and techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data, copyrightable works,
financial and marketing plans and customer and supplier lists and information),
(vii) other intellectual property rights and (viii) copies and tangible
embodiments thereof (in whatever form or medium).
"Investment" as applied to any Person means (i) any direct or indirect
----------
purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or ownership interest (including partnership
interests and joint venture interests) of any other Person and (ii) any capital
contribution by such Person to any other Person.
"IRC" means the Internal Revenue Code of 1986, as amended, and any
---
reference to any particular IRC section shall be interpreted to include any
revision of or successor to that section regardless of how numbered or
classified.
"IRS" means the United States Internal Revenue Service.
---
"Liens" means any mortgage, pledge, security interest, encumbrance,
-----
lien or charge of any kind (including, without limitation, any conditional sale
or other title retention agreement or lease in the nature thereof), any sale of
receivables with recourse against the Company, any Subsidiary or any Affiliate,
any filing or agreement to file a financing statement as debtor under the
Uniform Commercial Code or any similar statute other than to reflect ownership
by a third party of property leased to the Company or any Subsidiaries under a
lease which is not in the nature of a conditional sale or title retention
agreement, or any subordination arrangement in favor of another Person (other
than any subordination arising in the ordinary course of business).
"Officer's Certificate" means a certificate signed by the Company's
---------------------
president or its chief financial officer, stating that (i) the officer signing
such certificate has made or has caused to be made such investigations as are
necessary in order to permit him to verify the accuracy of the information set
forth in such certificate and (ii) to the best of such officer's knowledge, such
-31-
<PAGE>
certificate does not misstate any material fact and does not omit to state any
fact necessary to make the certificate not misleading.
"Permitted Liens" means:
---------------
(i) tax liens with respect to taxes not yet due and payable or
which are being contested in good faith by appropriate proceedings and for
which appropriate reserves have been established in accordance with
generally accepted accounting principles, consistently applied;
(ii) deposits or pledges made in connection with, or to secure
payment of, utilities or similar services, workers' compensation,
unemployment insurance, old age pensions or other social security
obligations;
(iii) purchase money security interests in any property acquired
by the Company or any Subsidiary to the extent permitted by this Agreement;
(iv) interests or title of a lessor under any lease permitted by
this Agreement;
(v) mechanics', materialmen's or contractors' liens or
encumbrances or any similar lien or restriction for amounts not yet due and
payable or which are being contested in good faith by appropriate
proceedings and for which appropriate reserves have been established in
accordance with generally accepted accounting principles, consistently
applied;
(vi) easements, rights-of-way, restrictions and other similar
charges and encumbrances not interfering with the ordinary conduct of the
business of the Company and its Subsidiaries or detracting from the value
of the assets of the Company and its Subsidiaries; and
(vii) liens outstanding on the date hereof which secure
Indebtedness and which are described in the schedules to this Agreement,
including, without limitation, those liens contemplated by existing capital
leases or proposed capital leases with customers of the Company.
"Person" means an individual, a partnership, a corporation, a limited
------
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Private Placement Memorandum" means that certain Confidential Private
----------------------------
Placement Memorandum prepared by and on behalf of the Company and dated December
1, 1995.
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<PAGE>
"Public Offering" means any offering by the Company of its capital
---------------
stock or equity securities to the public pursuant to an effective registration
statement under the Securities Act of 1933, as then in effect, or any comparable
statement under any similar federal statute then in force.
"Qualified Public Offering" has the meaning given to such term in Part
-------------------------
E of the Articles of Organization.
"Restricted Securities" means (i) the Preferred Stock and Common Stock
---------------------
issued hereunder, (ii) the Class A Common issued upon conversion of the Class C
Preferred or upon conversion of the Class B Common, (iii) the Class B Common
issued upon conversion of the Class D Preferred, (iv) the Class C Preferred
issued upon conversion of the Class D Preferred and (v) any securities issued
with respect to the securities referred to in clauses (i) through (iv) above by
way of a stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization. As to
any particular Restricted Securities, such securities shall cease to be
Restricted Securities when they have (a) been effectively registered under the
Securities Act and disposed of in accordance with the registration statement
covering them, (b) been distributed to the public through a broker, dealer or
market maker pursuant to Rule 144 (or any similar provision then in force) under
the Securities Act or become eligible for sale pursuant to Rule 144(k) (or any
similar provision then in force) under the Securities Act or (c) been otherwise
transferred and new certificates for them not bearing the Securities Act legend
set forth in paragraph 7C have been delivered by the Company in accordance with
paragraph 4B. Whenever any particular securities cease to be Restricted
Securities, the holder thereof shall be entitled to receive from the Company,
without expense, new securities of like tenor not bearing a Securities Act
legend of the character set forth in paragraph 7C.
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
similar federal law then in force.
"Securities and Exchange Commission" includes any governmental body or
----------------------------------
agency succeeding to the functions thereof.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
-----------------------
as amended, or any similar federal law then in force.
"Stockholder Shares" shall have the meaning set forth in the Amended
------------------
and Restated Stockholders Agreement.
"Subsidiary" means, with respect to any Person, any corporation,
----------
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of
-33-
<PAGE>
that Person or a combination thereof. For purposes hereof, a Person or Persons
shall be deemed to have a majority ownership interest in a limited liability
company, partnership, association or other business entity if such Person or
Persons shall be allocated a majority of limited liability company, partnership,
association or other business entity gains or losses or shall be or control any
managing director or general partner of such limited liability company,
partnership, association or other business entity.
"Tax" or "Taxes" means federal, state, county, local, foreign or other
--- -----
income, gross receipts, ad valorem, franchise, profits, sales or use, transfer,
registration, excise, utility, environmental, communications, real or personal
property, capital stock, license, payroll, wage or other withholding,
employment, social security, severance, stamp, occupation, alternative or add-on
minimum, estimated and other taxes of any kind whatsoever (including, without
limitation, deficiencies, penalties, additions to tax, and interest attributable
thereto) whether disputed or not.
"Tax Liabilities" means liabilities for the payment of Taxes.
---------------
"Tax Return" means any return, information report or filing with
----------
respect to Taxes, including any schedules attached thereto and including any
amendment thereof.
"Treasury Regulations" means the United States Treasury Regulations
--------------------
promulgated under the IRC, and any reference to any particular Treasury
Regulation section shall be interpreted to include any final or temporary
revision of or successor to that section regardless of how numbered or
classified.
"Underlying Common Stock" means (i) the Class A Common issued or
-----------------------
issuable upon conversion of the Class C Preferred, (ii) the Class B Common
issued or issuable upon conversion of the Class D Preferred or exercise of the
Contingent Warrants and (iii) any Common Stock issued or issuable with respect
to the securities referred to in clauses (i) and (ii) above by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. For purposes
of this Agreement, any Person who holds Preferred Stock shall be deemed to be
the holder of the Underlying Common Stock obtainable upon conversion of the
Preferred Stock in connection with the transfer thereof or otherwise regardless
of any restriction or limitation on the conversion of the Preferred Stock, such
Underlying Common Stock shall be deemed to be in existence, and such Person
shall be entitled to exercise the rights of a holder of Underlying Common Stock
hereunder. As to any particular shares of Underlying Common Stock, such shares
shall cease to be Underlying Common Stock when they have been (a) effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering them, (b) distributed to the public through a
broker, dealer or market maker pursuant to Rule 144 under the Securities Act (or
any similar provision then in force) or (c) repurchased by the Company or any
Subsidiary.
"Warrants" means collectively the Class A Warrant and the Class B
--------
Warrant.
-34-
<PAGE>
"Wholly-Owned Subsidiary" means, with respect to any Person, a
-----------------------
Subsidiary of which all of the outstanding capital stock or other ownership
interests are owned by such Person or another Wholly-Owned Subsidiary of such
Person.
"WSDF" means the Whitney Subordinated Debt Fund, L.P., a Delaware
----
limited partnership.
"WSDF Purchase Agreement" means that certain Securities Purchase
-----------------------
Agreement by and between the Company and WSDF dated as of February 28, 1998.
"WSDF Warrants" means, collectively, (i) that certain warrant to
-------------
purchase 118,038 shares of Class A Common Stock issued to WSDF pursuant to the
WSDF Purchase Agreement and (ii) that certain warrant to purchase up to an
additional 53,654 share of Class A Common Stock issued to WSDF pursuant to the
WSDF Purchase Agreement.
6B. Other Definitions. For purposes of this Agreement, the following
-----------------
terms are defined in the following paragraphs of this Agreement:
<TABLE>
<S> <C>
Article of Organization.................................2B
Capital Base............................................3D
Class A Preferred.......................................2B
Class B Preferred.......................................2B
Class C Preferred.................................Recitals
Class D Preferred.................................Recitals
Closing.................................................1C
COBRA...................................................5R
Company...........................................Recitals
Contingent Warrants.....................................3N
ERISA...................................................5R
First Amendment to Amended and Restated
Registration Rights Agreement......................2C
Latest Balance Sheets...................................5E
Plans...................................................5R
Preferred Stock...................................Recitals
PNC...............................................Recitals
Primus............................................Recitals
Purchaser.........................................Recitals
Purchasers........................................Recitals
Put and Call Agreement..................................3D
Redeemed Shares.........................................3N
Regulatory Problem......................................3L
Savings Plan............................................5R
Second Amendment to Purchase Agreement..................2E
Amended and Restated Stockholders Agreement.............2D
Welfare Plans...........................................5R
</TABLE>
-35-
<PAGE>
Section 7. Miscellaneous.
-------------
7A. Expenses. The Company shall pay, and hold each Purchaser and all
--------
holders of Preferred Stock and Underlying Common Stock harmless against
liability for the payment of, (i) the fees and expenses incurred in connection
with their due diligence investigation and review of the Company and its affairs
and operations (including accounting and other consulting fees and expenses)
which shall be payable at the Closing or, if the Closing does not occur, payable
upon demand, (ii) the fees and expenses of their special counsel arising in
connection with the negotiation and execution of this Agreement and the
consummation of the transactions contemplated by this Agreement which shall be
payable at the Closing or, if the Closing does not occur, payable upon demand,
(iii) the reasonable fees and expenses incurred with respect to any amendments
or waivers (whether or not the same become effective) requested by the Company
under or in respect of this Agreement, the agreements contemplated hereby or the
Articles of Organization (including, without limitation, in connection with any
proposed merger, sale or recapitalization of the Company), (iv) stamp and other
taxes which may be payable in respect of the execution and delivery of this
Agreement or the issuance, delivery or acquisition of any shares of Preferred
Stock or any shares of Common Stock issuable upon conversion of Preferred Stock,
(v) the reasonable fees and expenses incurred with respect to the enforcement of
the rights granted under this Agreement, the agreements contemplated hereby and
the Articles of Organization and (vi) the reasonable fees and expenses incurred
by each such Person in any filing with any governmental agency with respect to
its investment in the Company or in any other filing with any governmental
agency with respect to the Company which mentions such Person.
7B. Remedies. Each holder of Preferred Stock and Underlying Common
--------
Stock shall have all rights and remedies set forth in this Agreement and the
Articles of Organization and all rights and remedies which such holders have
been granted at any time under any other agreement or contract and all of the
rights which such holders have under any law. Any Person having any rights under
any provision of this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law.
7C. Purchaser's Investment Representations.
--------------------------------------
(i) Investment Representations. Each of the Purchasers represents
--------------------------
severally and as to itself only, and not jointly, that it is its present
intention to acquire the Preferred Stock to be acquired by it for its own
account and that the Preferred Stock are being and will be acquired by it not
with a view to distribution or resale thereof in violation of the Securities
Act. The acquisition by each Purchaser of the Preferred Stock acquired by it
shall constitute a confirmation of this representation by each such Purchaser.
(ii) Access to Information. Each Purchaser or its representative
---------------------
during the course of this transaction, and prior to the purchase of the
Preferred Stock, has had the opportunity to ask questions of and receive answers
from representatives of the Company concerning the terms and conditions of the
offering of the Preferred Stock, and to obtain any additional information,
-36-
<PAGE>
documents, records and books related to the Company, its business and an
investment in the Company.
(iii) General Access. Each Purchaser or its representative have
--------------
received and read or reviewed, and are familiar with, this Agreement and confirm
that all documents, records and books pertaining to the Purchaser's investment
in the Company and requested by the Purchaser or its representative from the
Company have been made available or delivered to such Purchaser.
(iv) Transfer Restrictions Imposed by Securities Laws. Each
------------------------------------------------
Purchaser understands that the Preferred Stock has not been registered under the
Securities Act and applicable state securities laws, and, therefore, cannot be
resold unless it is subsequently registered under the Securities Act and
applicable state securities laws or unless an exemption from such registration
is available; the Company does not have any present intention and is under no
obligation to register the Preferred Stock under the Securities Act and
applicable state securities laws, except as provided in the Amended and Restated
Registration Rights Agreement; and Rule 144 under the Securities Act may not be
available as a basis for exemption from registration of the Preferred Stock
thereunder.
(v) Lack of Liquidity. Each Purchaser acknowledges that it has no
-----------------
present need for liquidity in connection with its purchase of the Preferred
Stock.
(vi) Risk. Each Purchaser understands that the purchase of the
----
Preferred Stock involves a high degree of risk and there is no public market for
the Company's capital stock as of the Closing and there can be no assurances
that any public market for such stock will develop.
(vii) Accredited Investor Status. Each Purchaser is an "Accredited
--------------------------
Investor" as that term is defined in Rule 501 of Regulation D promulgated under
the Securities Act of 1933, as amended.
(viii) Legend. Each certificate or instrument representing Restricted
------
Securities shall be imprinted with a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIG- INALLY
ISSUED ON MAY 28, 1998, AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THE TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS
SPECIFIED IN THE PURCHASE AGREEMENT, DATED AS OF MAY 28, 1998 AND AS
AMENDED AND MODIFIED FROM TIME TO TIME, BETWEEN THE ISSUER (THE
"COMPANY") AND CERTAIN INVESTORS, AND THE COMPANY RESERVES THE RIGHT
-------
RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITIES UNTIL SUCH CONDITIONS
HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. A COPY OF SUCH
CONDITIONS SHALL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF
UPON WRITTEN REQUEST AND WITHOUT CHARGE."
-37-
<PAGE>
7D. Treatment of the Preferred Stock. The Company covenants and
--------------------------------
agrees that (i) so long as federal income tax laws prohibit a deduction for
distributions made by the Company with respect to preferred stock, it shall
treat all distributions paid by it on the Preferred Stock as non-deductible
dividends on all of its tax returns and (ii) it shall treat the Preferred Stock
as preferred stock in all of its financial statements and other reports and
shall treat all distributions paid by it on the Preferred Stock as dividends on
preferred stock in such statements and reports. The Company acknowledges and
agrees that the increased dividend rate on the Preferred Stock provided for in
Part E of the Articles of Organization upon the occurrence of certain Events of
Noncompliance has been negotiated by (and is intended by) the Company and the
Purchasers as a reasonable increase in yield necessitated by the increased risk
to the holders of the Preferred Stock which would arise upon any such
occurrence. The Company agrees that the Preferred Stock is stock which
participates in corporate growth to a significant extent within the meaning of
Treasury Regulation (S)1.305-5(a), and hence will not be treated as preferred
stock for purposes of IRC (S)305 and the regulations thereunder. Accordingly,
the Company has determined that there will not be constructive distributions
under Treasury Regulation (S)1.305-5(b) with respect to the Preferred Stock.
7E. Consent to Amendments; Waivers. Except as otherwise expressly
------------------------------
provided herein, any provision of this Agreement may be amended or waived and
the Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company has obtained the
written consent or waiver of the holders of a majority of the outstanding
Preferred Stock; provided that if there is no Preferred Stock outstanding, any
-------- ----
provision of this Agreement may be amended or waived and the Company may take
any action herein prohibited, only if the Company has obtained the written
consent or waiver of the holders of a majority of the Underlying Common Stock.
No other course of dealing between the Company and the holder of any Preferred
Stock or Underlying Common Stock or any delay in exercising any rights hereunder
or under the Articles of Organization shall operate as a waiver of any rights of
any such holders. For purposes of this Agreement, shares of Preferred Stock or
Underlying Common Stock held by the Company or any Subsidiaries shall not be
deemed to be outstanding. If the Company pays any consideration to any holder of
Preferred Stock or Underlying Common Stock for such holder's consent to any
amendment, modification or waiver hereunder, the Company shall also pay each
other holder granting its consent hereunder equivalent consideration computed on
a pro rata basis.
7F. Survival of Representations and Warranties. All representations
------------------------------------------
and warranties contained herein or made in writing by any party in connection
herewith shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby (regardless of any
investigation made by any Purchaser or on its behalf) for a period of five (5)
years.
7G. Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not. In addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for any Purchaser's benefit as a
purchaser or holder of Preferred Stock or Underlying Common Stock are also for
the benefit of, and enforceable by, any subsequent holder of such Preferred
Stock or such Underlying Common Stock.
-38-
<PAGE>
7H. Capital and Surplus; Special Reserves. The Company agrees that
-------------------------------------
the capital of the Company (as such term is used in the Business Corporation Law
of Massachusetts) in respect of the Preferred Stock issued pursuant to this
Agreement shall be equal to the aggregate par value of such shares and that it
shall not increase the capital of the Company with respect to any shares of the
Company's capital stock at any time on or after the date of this Agreement. The
Company also agrees that it shall not create any special reserves under the
Business Corporation Law of Massachusetts without the prior written consent of
the holders of a majority of the outstanding Preferred Stock.
7I. Generally Accepted Accounting Principles. Where any accounting
----------------------------------------
determination or calculation is required to be made under this Agreement or the
exhibits hereto, such determination or calculation (unless otherwise provided)
shall be made in accordance with generally accepted accounting principles,
consistently applied, except that if because of a change in generally accepted
accounting principles the Company would have to alter a previously utilized
accounting method or policy in order to remain in compliance with generally
accepted accounting principles, such determination or calculation shall continue
to be made in accordance with the Company's previous accounting methods and
policies, unless otherwise directed by the holders of a majority of the
outstanding Preferred Stock.
7J. Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
7K. Counterparts. This Agreement may be executed simultaneously in
------------
two or more counterparts (including by means of telecopied signature pages), any
one of which need not contain the signatures of more than one party, but all
such counterparts taken together shall constitute one and the same Agreement.
7L. Descriptive Headings; Interpretation. The descriptive headings
------------------------------------
of this Agreement are inserted for convenience only and do not constitute a
substantive part of this Agreement. The use of the word "including" in this
Agreement shall be by way of example rather than by limitation.
7M. Governing Law. The Business Corporation Law of Massachusetts,
-------------
without regard to its principles of conflicts of laws, shall govern all issues
and questions concerning the relative rights and obligations of the Company and
its stockholders. All other issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the exhibits and
schedules hereto shall be governed by, and construed in accordance with, the
laws of The Commonwealth of Massachusetts, without giving effect to any choice
of law or conflict of law rules or provisions (whether of The Commonwealth of
Massachusetts or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than The Commonwealth of Massachusetts.
-39-
<PAGE>
7N. Notices. All notices, demands or other communications to be
-------
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable overnight courier service
(charges prepaid) or mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to each Purchaser at the address indicated on the
attached Schedule of Purchasers attached hereto and to the Company at the
----------------------
address indicated below:
BankVest Capital Corp.
200 Nickerson Road
Marlboro, Massachusetts 01752
Attention: President
with a copy to:
--------------
Goldstein & Manello, P.C.
265 Franklin Street
Boston, Massachusetts 02110
Attention: Richard J. Snyder
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
7O. Understanding Among the Purchasers. The determination of each
----------------------------------
Purchaser to purchase the Preferred Stock pursuant to this Agreement has been
made by such Purchaser independent of any other Purchaser and independent of any
statements or opinions as to the advisability of such purchase or as to the
properties, business, prospects or condition (financial or otherwise) of the
Company and its Subsidiaries which may have been made or given by any other
Purchaser or by any agent or employee of any other Purchaser.
7P. Delivery by Facsimile. This Agreement and any signed agreement
---------------------
or instrument entered into in connection with this Agreement, and any amendments
hereto or thereto, to the extent signed and delivered by means of a facsimile
machine, shall be treated in all manner and respects as an original agreement or
instrument and shall be considered to have the same binding legal effect as if
it were the original signed version thereof delivered in person. At the request
of any party hereto or to any such agreement or instrument, each other party
hereto or thereto shall re-execute original forms thereof and deliver them to
all other parties. No party hereto or to any such agreement or instrument shall
raise the use of a facsimile machine to deliver a signature or the fact that any
signature or agreement or instrument was transmitted or communicated through the
use of a facsimile machine as a defense to the formation of a contract and each
such party forever waives any such defense.
7Q. No Strict Construction. The parties hereto have participated
----------------------
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto, and
-40-
<PAGE>
no presumption or burden of proof shall arise favoring or disfavoring any party
by virtue of the authorship of any of the provisions of this Agreement.
* * * * *
-41-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Purchase Agreement
as of the date first written above.
BANKVEST CAPITAL CORP.
By __________________________________________________
Its __________________________________________________
PRIMUS CAPITAL FUND III LIMITED
PARTNERSHIP
By: Primus Venture Partners III Limited Partnership,
its general partner
By: Primus Venture Partners, Inc., its general partner
By __________________________________________________
Its __________________________________________________
PNC VENTURE CORP
By __________________________________________________
Its __________________________________________________
<PAGE>
SCHEDULE OF PURCHASERS
----------------------
Primus Capital Fund III Limited Partnership
5900 Landerbrook Drive
Suite 200
Cleveland, Ohio 44124
Attention: Kevin J. McGinty
with a copy to:
- --------------
Kirkland & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attention: Ted H. Zook
PNC Venture Corp
c/o PNC Equity Management Corp.
3150 CNG Tower
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222
Attention: Gary J. Zentner
with a copy to:
- --------------
Kirkland & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attention: Ted H. Zook
<PAGE>
LIST OF EXHIBITS
----------------
Exhibit A - Restated Articles of Organization
Exhibit B - First Amendment to Amended and Restated Registration Rights
Agreement
Exhibit C - Amended and Restated Stockholders Agreement
Exhibit D - Second Amendment to 1996 Purchase Agreement
Exhibit E - Opinion of Counsel of the Company
<PAGE>
LIST OF DISCLOSURE SCHEDULES
----------------------------
Capitalization Schedule
Subsidiary Schedule
Restrictions Schedule
Financial Statements Schedule
Liabilities Schedule
Developments Schedule
Employee Stock Purchase Schedule
Assets Schedule
Taxes Schedule
Contracts Schedule
Employee Benefits Schedule
Intellectual Property Schedule
Litigation Schedule
Brokerage Schedule
Consents Schedule
Compliance Schedule
Affiliated Transactions Schedule
<PAGE>
EXHIBIT 4.8
EXECUTION COPY
--------------
- --------------------------------------------------------------------------------
SECURITIES PURCHASE AGREEMENT
BY AND BETWEEN
BANKVEST CAPITAL CORP.,
AND
WHITNEY SUBORDINATED DEBT FUND, L.P.,
________________________________
DATED AS OF FEBRUARY 28, 1997
________________________________
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 DEFINITIONS.................................................................................... 1
1.1 Definitions.................................................................................... 1
1.2 Accounting Terms: Financial Statements......................................................... 9
1.3 Knowledge of the Company....................................................................... 9
ARTICLE 2 PURCHASE AND SALE OF THE SECURITIES............................................................ 10
2.1 Purchase and Sale of the Note.................................................................. 10
2.2 Purchase and Sale of Warrants.................................................................. 10
2.3 Fees at Closing; Annual Fees................................................................... 10
2.4 Closing........................................................................................ 10
2.5 Financial Accounting Positions; Tax Reporting.................................................. 10
ARTICLE 3 CONDITIONS TO THE OBLIGATIONS OF PURCHASER
TO PURCHASE THE SECURITIES..................................................................... 11
3.1 Representations and Warranties................................................................. 11
3.2 Compliance with this Agreement................................................................. 11
3.3 Clerk's Certificates........................................................................... 11
3.4 Documents...................................................................................... 11
3.5 Purchase of Securities Permitted by Applicable Laws............................................ 11
3.6 Opinion of Counsel............................................................................. 12
3.7 Approval of Counsel to Purchaser............................................................... 12
3.8 Consents and Approvals......................................................................... 12
3.9 Registration Rights Agreement.................................................................. 12
3.10 Stockholders Agreement......................................................................... 12
3.11 No Material Judgment or Order.................................................................. 12
3.12 Pro Forma Balance Sheet........................................................................ 12
3.13 Goodstanding Certificates...................................................................... 13
ARTICLE 4 CONDITIONS TO THE OBLIGATIONS
OF THE COMPANY TO ISSUE AND SELL THE SECURITIES................................................ 13
4.1 Representations and Warranties................................................................. 13
4.2 Compliance with this Agreement................................................................. 13
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................................. 13
5.1 Corporate Existence and Power.................................................................. 13
5.2 Corporate Authorization; No Contravention...................................................... 14
5.3 Governmental Authorization; Third Party Consents............................................... 14
5.4 Binding Effect................................................................................. 14
5.5 No Legal Bar................................................................................... 14
5.6 Litigation..................................................................................... 14
5.7 Compliance with Laws........................................................................... 15
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
5.8 No Default or Breach........................................................................... 15
5.9 Title to Properties............................................................................ 15
5.10 Use of Real Property........................................................................... 15
5.11 Taxes.......................................................................................... 15
5.12 Financial Condition............................................................................ 16
5.13 ERISA.......................................................................................... 16
5.14 Disclosure..................................................................................... 16
5.15 Absence of Certain Changes or Events........................................................... 17
5.16 Environmental Matters.......................................................................... 17
5.17 Investment Company/Government Regulations...................................................... 18
5.18 Subsidiaries................................................................................... 18
5.19 Capitalization................................................................................. 18
5.20 Private Offering............................................................................... 20
5.21 Broker's, Finder's or Similar Fees............................................................. 20
5.22 Labor Relations................................................................................ 21
5.23 Employee Benefit Plans......................................................................... 21
5.24 Patents, Trademarks, Etc....................................................................... 21
5.25 Potential Conflicts of Interest................................................................ 22
5.26 Trade Relations................................................................................ 22
5.27 Outstanding Borrowings......................................................................... 22
5.28 Material Contracts............................................................................. 23
5.29 Insurance...................................................................................... 23
5.30 Solvency....................................................................................... 23
5.31 Other Documents................................................................................ 23
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PURCHASER.................................................... 24
6.1 Authorization; No Contravention................................................................ 24
6.2 Binding Effect................................................................................. 24
6.3 No Legal Bar................................................................................... 24
6.4 Purchase for Own Account....................................................................... 24
6.5 ERISA.......................................................................................... 25
6.6 Broker's, Finder's or Similar Fees............................................................. 25
6.7 Governmental Authorization; Third Party Consent................................................ 25
ARTICLE 7 INDEMNIFICATION................................................................................ 25
7.1 Indemnification................................................................................ 25
7.2 Notification................................................................................... 26
7.3 Registration Rights Agreement.................................................................. 27
ARTICLE 8 AFFIRMATIVE COVENANTS.......................................................................... 27
8.1 Financial Statements and Other Information..................................................... 27
8.2 Preservation of Corporate Existence............................................................ 30
8.3 Payment of Obligations......................................................................... 31
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
8.4 Compliance with Laws........................................................................... 31
8.5 Reservation of Shares.......................................................................... 31
8.6 Inspection..................................................................................... 32
8.7 Payment of Note................................................................................ 32
8.8 Insurance...................................................................................... 32
8.9 Books and Records.............................................................................. 32
8.10 Use of Proceeds................................................................................ 32
8.11 Board Nominees................................................................................. 32
8.12 Granting of Options. ......................................................................... 33
8.13 Key-Man Life Insurance......................................................................... 33
ARTICLE 9 NEGATIVE COVENANTS............................................................................. 33
9.1 Fundamental Changes; Consolidations, Mergers and Acquisitions.................................. 33
9.2 Transactions with Affiliates................................................................... 33
9.3 No Inconsistent Agreements..................................................................... 34
9.4 Limitation on Indebtedness..................................................................... 34
9.5 Limitation on Liens............................................................................ 35
9.6 Dispositions of Assets......................................................................... 36
9.7 Limitations on Restricted Payments............................................................. 36
9.8 Financial Covenants............................................................................ 36
9.9 Employee Benefit Plans......................................................................... 37
9.10 Limitation on Business of the Company.......................................................... 37
9.11 Investments; Joint Ventures.................................................................... 38
9.12 Contingent Obligations......................................................................... 38
9.13 Management Fees and Compensation............................................................... 38
9.14 Fiscal Year.................................................................................... 38
9.15 Press Release; Public Offering Materials....................................................... 38
9.16 Subsidiaries................................................................................... 39
ARTICLE 10 PREPAYMENT..................................................................................... 39
10.1 Optional Prepayment............................................................................ 39
10.2 Mandatory Prepayment........................................................................... 39
ARTICLE 11 MISCELLANEOUS.................................................................................. 39
11.1 Survival of Representations and Warranties..................................................... 39
11.2 Notices........................................................................................ 39
11.3 Successors and Assigns......................................................................... 40
11.4 Amendment and Waiver........................................................................... 41
11.5 Counterparts................................................................................... 41
11.6 Headings....................................................................................... 41
11.7 GOVERNING LAW.................................................................................. 41
11.8 JURISDICTION................................................................................... 41
11.9 Severability................................................................................... 42
</TABLE>
iii
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<TABLE>
<S> <C>
11.10 Rules of Construction................................................................. 42
11.11 Entire Agreement...................................................................... 42
11.12 Certain Expenses...................................................................... 42
11.13 Publicity............................................................................. 42
11.14 Further Assurances.................................................................... 42
11.15 Obligations of Purchaser.............................................................. 42
</TABLE>
iv
<PAGE>
PAGE
----
Exhibits
- --------
A Note
B-1 Vested Warrant
B-2 Vesting Warrant
C First Amendment to Stockholders Agreement
D Amended and Restated Registration Rights Agreement
E Put and Call Agreement
<PAGE>
SECURITIES PURCHASE AGREEMENT
AGREEMENT, dated as of February 28, 1997, by and between BANKVEST
CAPITAL CORP. (the "COMPANY"), a Massachusetts corporation and WHITNEY
SUBORDINATED DEBT FUND, L.P. ("WSDF"), a Delaware limited partnership,
("PURCHASER").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company wishes to sell to Purchaser, and Purchaser wishes
to purchase from the Company (i) a subordinated promissory note (the "NOTE"),
due February 27, 2005, in the principal amount of $15,000,000, (ii) a warrant
(the "VESTED WARRANT") to purchase 118,038 shares of Class A common stock, $1.00
par value per share, of the Company (the "COMMON STOCK"), for an exercise price
and subject to the provisions for exercise as more fully set forth in the Vested
Warrant, and (iii) a warrant (the "VESTING WARRANT" and together with the
Vested Warrant, the "WARRANTS") to purchase up to an additional 53,654 shares of
Class A Common Stock subject to adjustment and the provisions for exercise as
more fully set forth in the Vesting Warrant, in each case upon the terms and
subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto agree
as follows:
ARTICLE 1
DEFINITIONS
-----------
1.1 Definitions. As used in this Agreement, and unless the context
-----------
requires a different meaning, the following terms have the meanings indicated:
"AFFILIATE" means any Person (a) directly or indirectly controlling,
controlled by, or under common control with, the Company, (b) directly or
indirectly owning or holding five percent (5%) or more of any equity interest in
the Company, or (c) five percent (5%) or more of whose voting stock or other
equity interest is directly or indirectly owned or held by the Company. For
purposes of this definition, "control" (including with correlative meanings, the
terms "controlling", "controlled by" and under "common control with") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"AGREEMENT" shall mean this Agreement, including the exhibits and
schedules attached hereto, as the same may be amended, supplemented or modified
in accordance with the terms hereof.
<PAGE>
"ARTICLES OF ORGANIZATION" shall mean the Articles of Organization of
the Company as in effect on the Closing Date.
"ASSET DISPOSITION" means the disposition, whether by sale, lease,
transfer, loss, damage, destruction, condemnation or otherwise of any of the
following: (a) any of the stock of the Company or any of its Subsidiaries or (b)
any or all of the assets of the Company or its Subsidiaries other than sales of
inventory in the ordinary course of business. "NET PROCEEDS" of any Asset
Disposition means cash proceeds received by the Company or any of its
Subsidiaries from any Asset Disposition (including insurance proceeds, awards of
condemnation, and payments under notes or other debt securities received in
connection with any Asset Disposition), net of (x) the costs of such sale,
lease, transfer or other disposition (including taxes attributable to such sale,
lease or transfer), and (y) amounts applied to repayment of Indebtedness secured
by a Lien on the asset or property disposed. Sales of leases from time to time
to a Subsidiary in connection with the Company's securitization business shall
be deemed to be included in the term "sales of inventory in the ordinary course
of business".
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in the City of New York are authorized or
required by law or executive order to close.
"BY-LAWS" shall mean the By-laws and all amendments thereto of the
Company as in effect on the Closing Date.
"CAPITAL EXPENDITURES" shall mean the aggregate expenditures (whether
or not financed) made by the Company and its Subsidiaries for fixed or capital
assets or improvements, or for replacements, substitutions or additions thereto,
that have a useful service life of one year or more at the time the asset is
acquired by the Company or one of its Subsidiaries, and are used in the
production, distribution and/or the sale of the goods or services or offered for
sale by the Company or one of its Subsidiaries, all as determined in accordance
with GAAP. Capital Expenditures shall be calculated as set forth in Exhibit F.
"CAPITAL LEASE OBLIGATIONS" of any Person shall mean 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
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP consistently applied.
"CASH" shall mean the currency of the United States of America.
"CASH EQUIVALENTS" means: (i) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one (1) year
<PAGE>
from the date of acquisition thereof; (ii) commercial paper maturing no more
than one (1) year from the date issued and, at the time of acquisition, having a
rating of at least A-1 from Standard & Poor's Corporation or a least P-1 from
Moody's Investors Service, Inc., (iii) certificates of deposit or bankers'
acceptances maturing within one (1) year from the date of issuance thereof
issued by, or overnight reverse repurchase agreements from, any commercial bank
organized under the laws of the United States of America or any state thereof or
the District of Columbia having combined capital and surplus of not less than
$500,000,000; (iv) time deposits maturing no more than thirty (30) days from the
date of creation thereof with commercial banks having membership in the Federal
Deposit Insurance Corporation in amounts not exceeding the lesser of $100,000 or
the maximum amount of insurance applicable to the aggregate amount of the
Company's and its Subsidiaries, deposits at such institution; and (v) deposits
or investments in mutual or similar funds offered or sponsored by brokerage or
other companies having membership in the Securities Investor Protection
Corporation in amounts not exceeding the lesser of $100,000 or the maximum
amount of insurance applicable to the aggregate amount of the Company's and its
Subsidiaries, deposits at such institution.
"CLOSING" shall have the meaning assigned to that term in Section
2.14.
"CLOSING DATE" shall have the meaning assigned to that term in Section
2.14.
"CLASS A COMMON STOCK" shall have the meaning assigned to that term in
Section 5.19.
"CLASS B COMMON STOCK" shall have the meaning assigned to that term in
Section 5.19.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, or
any successor statute thereto.
"COMMISSION" shall mean the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act.
"COMMON STOCK" shall have the meaning assigned to that term in the
first Whereas clause hereof, or any other capital stock of the Company into
which such stock is reclassified or reconstituted.
"CONDITION OF THE COMPANY" shall mean the assets, business,
properties, operations or financial condition of the Company and its
Subsidiaries, taken as a whole.
"CONTINGENT OBLIGATION" as applied to any Person, means any direct or
indirect liability, obligation, contingent or otherwise, of that Person: (i)
with respect to the sale or other disposition of any lease receivables, the full
amount of any recourse obligation of the seller or transferor relating thereto,
whether or not such recourse obligation is considered a contingent
3
<PAGE>
liability under GAAP (ii) with respect to any indebtedness, lease, dividend or
other obligation of another Person if the primary purpose or intent of the
Person incurring such liability, or the primary effect thereof, is to provide
assurance to the obligee of such liability that such liability will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such liability will be protected (in whole or in part)
against loss with respect thereto; (iii) with respect to any letter of credit
issued for the account of that Person or as to which that Person is otherwise
liable for reimbursement of drawings; or (iv) under any foreign exchange
contract, currency swap agreement, interest rate swap agreement or other similar
agreement or arrangement designed to alter the risks of that Person arising from
fluctuations in currency values or interest rates. Contingent Obligations shall
include (a) the direct or indirect guaranty, endorsement (other than for
collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of the obligation
of another, (b) the obligation to make take-or-pay or similar payments if
required regardless of nonperformance by any other party or parties to an
agreement, and (c) any liability of such Person for the obligations of another
through any agreement to purchase, repurchase or otherwise acquire such
obligation or any property constituting security therefor, to provide funds for
the payment or discharge of such obligation or to maintain the solvency,
financial condition or any balance sheet item or level of income of another. The
amount of any Contingent Obligation shall be equal to the amount of the
obligation so guaranteed or otherwise supported or, if not a fixed and
determined amount, the maximum amount so guaranteed.
"CONTRACTUAL OBLIGATIONS" shall mean as to any Person, any provision
of any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument to which such
Person is a party or by which it or any of its property is bound.
"DEFINED BENEFIT PLAN" shall mean a defined benefit plan within the
meaning of Section 3(35) of ERISA or Section 414(j) of the Code, whether funded
or unfunded, qualified or non-qualified (whether or not subject to ERISA or the
Code).
"ENVIRONMENTAL LAWS" shall mean any Federal, state, territorial,
provincial or local law, common law doctrine, rule, order, decree, judgment,
injunction, license, permit or regulation relating to environmental matters,
including those pertaining to land use, air, soil, surface water, ground water
(including the protection, cleanup, removal, remediation or damage thereof),
public or employee health or safety or any other environmental matter, together
with any other laws (Federal, state, territorial, provincial or local) relating
to emissions, discharges, releases or threatened releases of any pollutant or
contaminant including, without limitation, medical, chemical, biological,
biohazardous or radioactive waste and materials, into ambient air, land, surface
water, groundwater, personal property or structures, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transportation, discharge or handling of any contaminant, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. 9601 et seq.), the Hazardous Material Transportation
-- ---
Act (49 U.S.C. 1801 et seq.), the Resource Conservation and Recovery Act (42
-- ---
U.S.C. 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. 1251 et
-- --- --
seq.), the Clean Air Act (42 U.S.C. 1251 et seq.), the Toxic Substances Control
- --- -- ---
Act (15 U.S.C. 2601 et seq.), and the Occupational Safety and Health Act (29
-- ---
4
<PAGE>
U.S.C. 651 et seq.), as such laws have been, or are, amended, modified or
-- ---
supplemented heretofore or from time to time hereafter and any analogous future
Federal, or present or future state or local laws, statutes and regulations
promulgated thereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" shall mean any Person that is treated as a single
employer with the Company or any of its Subsidiaries under Section 414(b), (c),
(m) or (o) of the Code.
"EVENT OF DEFAULT" shall have the meaning assigned to such term in the
Note.
"EXERCISABLE SHARES" shall have the meaning assigned to that term in
Section 8.5 hereof.
"GAAP" shall mean generally accepted accounting principles in effect
from time to time within the United States.
"GOVERNMENTAL AUTHORITY" shall mean the government of any nation,
state, city, locality or other political subdivision of any thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"HAZARDOUS MATERIALS" shall mean those substances which are regulated
by or form the basis of liability under any Environmental Laws.
"INDEBTEDNESS" shall mean as to any Person (a) all obligations of such
Person for borrowed money (including, without limitation, reimbursement and all
other obligations with respect to surety bonds, unfunded credit commitments,
letters of credit and bankers' acceptances, whether or not matured), (b) all
obligations of such Person evidenced by notes, bonds, debentures or similar
instruments, (c) all obligations of such Person to pay the deferred purchase
price of property or services, except trade accounts payable and accrued
commercial or trade liabilities arising in the ordinary course of business, (d)
all interest rate and currency swaps, caps, collars and similar agreements or
hedging devices to the extent that payments are obligated to be made by such
Person, whether periodically or upon the happening of a contingency, (e) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (f)
all obligations of such Person under leases which have been or should be, in
accordance with GAAP, recorded as capital leases, (g) all indebtedness secured
by any Lien (other than Liens in favor of lessors under leases other than leases
included in clause (f)) on any property or asset owned or held by that Person
5
<PAGE>
regardless of whether the indebtedness secured thereby shall have been assumed
by that Person or is non-recourse to the credit of that Person, and (h) any
Contingent Obligation of such Person.
"INITIAL PUBLIC OFFERING" shall mean the sale by either the Company or
any of its Subsidiaries of its capital stock pursuant to a registration
statement on Form S-1 or other Form under the Securities Act.
"INTEREST EXPENSE" shall mean, with respect to the Company and its
Subsidiaries on a consolidated basis for any period, the sum of (a) gross
interest expense of the Company and its Subsidiaries for such period determined
on a consolidated basis in accordance with GAAP consistently applied, including
(i) the amortization of debt discounts, (ii) the amortization of all fees
payable in connection with the incurrence of Indebtedness to the extent included
in interest expense, (iii) the portion of any payments or accruals with respect
to Capital Lease Obligations allocable to interest expense and (iv) all
commissions paid to factors during such period, and (b) any other capitalized
interest of the Company and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP consistently applied.
"INVESTMENT" means (i) any direct or indirect purchase or other
acquisition by the Company or any of its Subsidiaries of any beneficial interest
in, including stock, partnership interest or other equity securities of, any
other Person (other than a Person that prior to the relevant purchase or
acquisition was a Subsidiary of the Company) or (ii) any direct or indirect
loan, advance or capital contribution by the Company or any of its Subsidiaries
to any other Person (other than a Subsidiary of the Company), including all
indebtedness and accounts receivable from that other Person that are not current
assets or did not arise from sales to that other Person in the ordinary course
of business. The amount of any Investment shall be the original cost of such
Investment plus the cost of all additions thereto, without any adjustments for
----
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment.
"LIEN" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or preference, priority,
right or other security interest or preferential arrangement of any kind or
nature whatsoever (excluding preferred stock and equity related preferences)
including, without limitation, those created by, arising under or evidenced by
any conditional sale or other title retention agreement, the interest of a
lessor under a Capital Lease Obligation, or any financing lease having
substantially the same economic effect as any of the foregoing.
"NET INCOME" shall mean, for any period, the net income (or loss) of
the Company and its Subsidiaries on a consolidated basis for such period, as
determined in accordance with GAAP consistently applied, but excluding any
extraordinary gains or losses and any insurance proceeds received by the Company
or any of its Subsidiaries.
6
<PAGE>
"NOTE" shall mean the subordinated promissory note in the principal
amount of $15,000,000 referred to in the first Whereas clause hereof, which note
is substantially in the form attached hereto as Exhibit A.
"OUTSTANDING BORROWINGS" shall mean all Indebtedness of the Company
and its Subsidiaries for money borrowed that is outstanding at the relevant time
of determination.
"PERSON" shall mean any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, Governmental Authority or other entity of any kind, and shall include
any successor (by merger or otherwise) of such entity.
"PLANS" shall have the meaning assigned to that term in Section 5.23
of this Agreement.
"PREFERRED STOCK"shall have the meaning assigned to it in Section
5.19.
"PUT AND CALL AGREEMENT" shall mean the Put and Call Agreement
substantially in the form attached hereto as Exhibit E.
"PRO FORMA BALANCE SHEET" shall mean the pro forma consolidated
balance sheet of the Company and its Subsidiaries delivered pursuant to Section
3.13.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Amended and Restated
Registration Rights Agreement substantially in the form attached hereto as
Exhibit D.
"RESTRICTED PAYMENT" means: (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock, limited
liability company interest, or partnership interest of the Company or any of its
Subsidiaries now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock, limited liability company interest, or
partnership interest to the holders of that class; (ii) any redemption,
conversion, exchange, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any class of
stock, limited liability company interest or partnership interest of the Company
or any of its Subsidiaries now or hereafter outstanding, other than the
Conversion of Class A Convertible Preferred Stock into Class A Common Stock and
the conversion of Class B Convertible Preferred Stock into Class B Common Stock;
(iii) any payment or prepayment of interest on, principal of, premium, if any,
redemption, conversion, exchange, purchase, retirement, defeasance, sinking fund
or similar payment with respect to, any Indebtedness subordinated to the
Indebtedness existing pursuant to the Note and this Agreement; (iv) any payment
made to retire, or to obtain the surrender of, any outstanding warrants, options
or other rights to acquire shares of any class of stock, limited liability
company interest, or partnership interest of the Company or any of its
Subsidiaries now or hereafter outstanding; and (v) any payment under any
noncompete agreement.
7
<PAGE>
"REQUIREMENTS OF LAW" shall mean as to any Person, the Articles of
Organization and By-laws or other organizational or governing documents of such
Person, and any law, treaty, rule, regulation, right, privilege, qualification,
license or franchise or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable or binding upon such Person or
any of its property or to which such Person or any of its property is subject or
pertaining to any or all of the transactions contemplated or referred to herein.
"SECURITIES" shall mean, collectively, the Note and the Warrants.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
"SENIOR INDEBTEDNESS" shall mean all Indebtedness of the Company (i)
currently outstanding or incurred in the future pursuant to any borrowing by the
Company from any bank or institutional lender or (ii) constituting a Contingent
Obligation under clause (i) of the definition of Contingent Obligation
hereinabove.
"SOLVENT" shall mean, with respect to the Company and its Subsidiaries
considered as a whole, based on the Pro Forma Balance Sheet, (i) the assets and
the property of the Company and its Subsidiaries, considered as a whole, exceed
the aggregate liabilities (including contingent and unliquidated liabilities) of
the Company and its Subsidiaries, considered as a whole, (ii) after giving
effect to the transactions contemplated by this Agreement, the Company and its
Subsidiaries, considered as a whole, will not be left with unreasonably small
capital, and (iii) after giving effect to the transactions contemplated by this
Agreement, the Company and its Subsidiaries, considered as a whole, are able to
both service and pay their liabilities as they mature. In computing the amount
of contingent or unliquidated liabilities at any time, such liabilities will be
computed as the amount that, in light of all the facts and circumstances
existing at such time, represents the amount that is likely to become an actual
or matured liability.
"SUBSIDIARY" shall mean, with respect to any Person, a corporation or
other entity of which 50% or more of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Company.
"STOCKHOLDERS AGREEMENT" shall mean the First Amendment to
Stockholders Agreement substantially in the form attached hereto as Exhibit C.
"TANGIBLE NET WORTH" shall mean, as of the date of determination
thereof, the excess of (a) all assets of the Company and its Subsidiaries on a
consolidated basis determined in accordance with GAAP, over (b) all liabilities
of the Company and its Subsidiaries on a consolidated basis determined in
accordance with GAAP, minus (c) the sum of (i) the book value of all intangibles
determined in accordance with GAAP, including good will and intellectual
property, and (ii) any
8
<PAGE>
write-up in the book value of assets since the most recent audited financial
statements in existence on the date hereof.
"TRANSACTION DOCUMENTS" shall mean collectively, this Agreement, the
Note, the Warrants, the Registration Rights Agreement, the Stockholders
Agreement, the Put and Call Agreement, the Articles of Organization and the By-
laws.
"VESTED WARRANT" shall mean the Vested Warrant referred to in the
first Whereas clause hereof, which warrant is in substantially the form attached
hereto as Exhibit B-1.
"VESTING WARRANT" shall mean the Vested Warrant referred to in the
first Whereas clause hereof, which warrant is in substantially the form attached
hereto as Exhibit B-2.
"WARRANTS" shall mean the Vested Warrant and the Vesting Warrant.
"WHITNEY" shall mean J.H. Whitney & Co.
1.2 Accounting Terms: Financial Statements. All accounting terms
--------------------------------------
used herein not expressly defined in this Agreement shall have the respective
meanings given to them in accordance with sound accounting practice. The term
"SOUND ACCOUNTING PRACTICE" shall mean such accounting practice as, in the
opinion of the independent certified public accountants regularly retained by
the Company, conforms at the time to GAAP applied on a consistent basis except
for changes with which such accountants concur. If any changes in accounting
principles are hereafter occasioned by promulgation of rules, regulations,
pronouncements or opinions of or are otherwise required by, the Financial
Accounting Standards Board or the American Institute of Certified Public
Accountants (or successors thereto or agencies with similar functions), and any
of such changes results in a change in the method of calculation of, or affects
the results of such calculation of, any of the financial covenants, standards or
terms found herein, then the parties hereto agree to enter into and diligently
pursue negotiations in order to amend such financial covenants, standards or
terms so as to reflect fairly and equitably such changes, with the desired
result that the criteria for evaluating the Company's financial condition and
results of operations shall be the same after such changes as if such changes
had not been made.
1.3 Knowledge of the Company. All references to the knowledge of the
------------------------
Company or to facts known by the Company shall mean actual knowledge or notice
of the Chairman of the Board, Chief Executive Officer, President, or Chief
Financial Officer of the Company or any Chief Executive Officer or Chief
Financial Officer of any Subsidiary or division of the Company.
9
<PAGE>
ARTICLE 2
PURCHASE AND SALE OF THE SECURITIES
-----------------------------------
2.1 Purchase and Sale of the Note. Subject to the terms and
-----------------------------
conditions herein set forth, the Company agrees that it will issue and sell to
Purchaser, and Purchaser agrees that it will acquire from the Company on the
Closing Date, the Note substantially in the form attached hereto as Exhibit A,
appropriately completed in conformity herewith. The purchase price of the Note
shall be $15,000,000.
2.2 Purchase and Sale of Warrants. Subject to the terms and
-----------------------------
conditions herein set forth, the Company agrees that it will issue and sell to
Purchaser, and Purchaser agrees that it will acquire from the Company on the
Closing Date, the Vested Warrant and the Vesting Warrant substantially in the
forms attached hereto as Exhibits B-1 and B-2, appropriately completed in
conformity herewith. The purchase price for the Vested Warrant shall be $1,180
and the purchase price for the Vesting Warrant shall be $536.
2.3 FEES AT CLOSING; ANNUAL FEES. At the Closing, the Company shall
----------------------------
(a) pay to Whitney a debt placement fee of $450,000, and (b) reimburse all of
Purchaser's reasonable out-of-pocket expenses (including, without limitation,
lawyer's fees, charges and disbursements and consultants' fees and expenses and
any other due diligence expenses which expenses shall not exceed $160,000)
incurred in connection with the transactions contemplated by this Agreement,
which payments shall be made by wire transfer of immediately available funds to
an account or accounts designated by Purchaser.
2.4 Closing. The purchase and issuance of the Securities shall take
-------
place at the closing (the "CLOSING") to be held at the offices of Morrison Cohen
Singer & Weinstein, LLP, 750 Lexington Avenue, New York, New York 10022 at 10:00
a.m., Eastern Standard Time, on February 28, 1997, or at such other time and
place as the Company and Purchaser may agree in writing (the "CLOSING DATE").
At the Closing, the Company shall deliver: (a) the Note to Purchaser against
delivery by Purchaser to the Company of the purchase price therefor and (b) the
Warrants to Purchaser against delivery by Purchaser to the Company of the
purchase price therefor. In each case such purchase price paid shall be by wire
transfer of immediately available funds.
2.5 FINANCIAL ACCOUNTING POSITIONS; TAX REPORTING. Each of the
---------------------------------------------
parties hereto agrees to take reporting and other positions with respect to the
Securities which are consistent with the purchase price of the Securities set
forth herein for all financial accounting purposes, unless otherwise required by
applicable GAAP or Commission rules (in which case the parties agree only to
take positions inconsistent with the purchase price of the Securities set forth
herein provided that Purchaser has consented thereto, which consent shall not be
unreasonably withheld). Each of the parties to this Agreement agrees to take
reporting and other positions with respect to the Securities
10
<PAGE>
which are consistent with the purchase price of the Securities set forth herein
for all other purposes, including without limitation, for all Federal, state and
local tax purposes.
ARTICLE 3
CONDITIONS TO THE OBLIGATIONS OF PURCHASER
-------------------------------------------
TO PURCHASE THE SECURITIES
--------------------------
The obligation of Purchaser to purchase the Note and the Warrants, to
pay the purchase prices therefor at the Closing and to perform any obligations
hereunder shall be subject to the satisfaction as determined by, or waived by,
Purchaser of the following conditions on or before the Closing Date. Purchaser
shall not be obligated to purchase the Note unless the purchase and sale of the
Warrants occurs simultaneously therewith and shall not be obligated to purchase
the Warrants unless the purchase and sale of the Note occurs simultaneously
therewith.
3.1 Representations and Warranties. The representations and
------------------------------
warranties of the Company contained in Article 5 hereof shall be true and
correct at and as of the Closing Date as if made at and as of such date.
3.2 Compliance with this Agreement. The Company shall have performed
------------------------------
and complied with all of its agreements and conditions set forth or contemplated
herein that are required to be performed or complied with by the Company on or
before the Closing Date.
3.3 Clerk's Certificates. Purchaser shall have received certificates
--------------------
from the Company, dated the Closing Date and signed by the Clerk or an Assistant
Clerk of the Company, certifying (a) that the attached copies of the Articles of
Organization and By-laws of the Company, and resolutions of the Board of
Directors of the Company, approving the Transaction Documents to which it is a
party and the transactions contemplated hereby and thereby, are all true,
complete and correct and remain unamended and in full force and effect, and (b)
as to the incumbency and specimen signature of each officer of the Company
executing any Transaction Document to which it is a party or any other document
delivered in connection herewith on behalf of the Company.
3.4 Documents. Purchaser shall have received true, complete and
---------
correct copies of such agreements, schedules, exhibits, certificates, documents,
financial information and filings as they may reasonably request in connection
with or relating to the transactions contemplated hereby, all in form and
substance satisfactory to Purchaser.
3.5 Purchase of Securities Permitted by Applicable Laws. The
---------------------------------------------------
acquisition of and payment for the Securities to be acquired by Purchaser
hereunder and the consummation of the transactions contemplated hereby and by
the Transaction Documents (a) shall not be prohibited by any Requirement of Law,
(b) shall not subject Purchaser to any penalty or other onerous condition under
or pursuant to any Requirement of Law, and (c) shall be permitted by all
Requirements of Law to which Purchaser or the transactions contemplated by or
referred to herein or in the Transaction
11
<PAGE>
Documents are subject; and Purchaser shall have received such certificates or
other evidence as they may reasonably request to establish compliance with this
condition.
3.6 Opinion of Counsel. Purchaser shall have received an opinion of
------------------
outside counsel to the Company, dated the Closing Date, relating to the
transactions contemplated by or referred to herein, in form and substance
acceptable to Purchaser.
3.7 Approval of Counsel to Purchaser. All actions and proceedings
--------------------------------
hereunder and all agreements, schedules, exhibits, certificates, financial
information, filings and other documents required to be delivered by the Company
and each of its Subsidiaries hereunder or in connection with the consummation of
the transactions contemplated hereby, and all other related matters, shall have
been in form and substance acceptable to Morrison Cohen Singer & Weinstein, LLP,
counsel to Purchaser, in its reasonable judgment (including, without limitation,
the opinion of counsel referred to in Section 3.6 hereof).
3.8 Consents and Approvals. All consents, exemptions,
----------------------
authorizations, or other actions by, or notices to, or filings with,
Governmental Authorities and other Persons in respect of all Requirements of Law
and with respect to those Contractual Obligations of the Company and each of its
Subsidiaries necessary, desirable, or required in connection with the execution,
delivery or performance (including, without limitation, the payment of interest
on the Note and the issuance of Common Stock upon the exercise of the Warrants)
by the Company, or enforcement against the Company, of the Transaction Documents
to which it is a party shall have been obtained and be in full force and effect,
and Purchaser shall have been furnished with appropriate evidence thereof, and
all waiting periods shall have lapsed without extension or the imposition of any
conditions or restrictions.
3.9 Registration Rights Agreement. The Company shall have duly
-----------------------------
executed and delivered the Registration Rights Agreement.
3.10 Stockholders Agreement. The Stockholders Agreement shall have
----------------------
been duly executed and delivered by all of the parties thereto.
3.11 No Material Judgment or Order. There shall not be on the Closing
-----------------------------
Date any judgment or order of a court of competent jurisdiction or any ruling of
any Governmental Authority or any condition imposed under any Requirement of Law
which, in the judgment of Purchaser, would prohibit the purchase of the
Securities hereunder or subject Purchaser to any penalty or other onerous
condition under or pursuant to any Requirement of Law if the Securities were to
be purchased hereunder.
3.12 Pro Forma Balance Sheet. The Company shall have delivered to
-----------------------
Purchaser as of the Closing Date a pro forma consolidated balance sheet of the
Company and its Subsidiaries, certified by the chief financial officer of the
Company that it fairly presents the pro forma
12
<PAGE>
adjustments reflecting the consummation of the transactions contemplated in this
Agreement, including all material fees and expenses in connection therewith.
3.13 Goodstanding Certificates. The Company shall have delivered to
-------------------------
Purchaser as of the Closing Date, goodstanding certificates for the Company and
each of its Subsidiaries for each of their respective jurisdictions of
incorporation and all other jurisdictions where they do business.
ARTICLE 4
CONDITIONS TO THE OBLIGATIONS
-----------------------------
OF THE COMPANY TO ISSUE AND SELL THE SECURITIES
-----------------------------------------------
The obligations of the Company to issue and sell the Securities and to
perform its other obligations hereunder relating thereto shall be subject to the
satisfaction as determined by, or waived by, the Company of the following
conditions on or before the Closing Date:
4.1 Representations and Warranties. The representations and
------------------------------
warranties of Purchaser contained in Article 6 hereof shall be true and correct
at and as of the Closing Date as if made at and as of such date.
4.2 Compliance with this Agreement. Purchaser shall have performed
------------------------------
and complied with all of their respective agreements and conditions set forth or
contemplated herein that are required to be performed or complied with by
Purchaser on or before the Closing Date.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company hereby represents and warrants to Purchaser, after giving
effect to the transactions contemplated by this Agreement, as follows:
5.1 Corporate Existence and Power. The Company and each of its
-----------------------------
Subsidiaries: (a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation; (b) has all
requisite corporate power and authority to own and operate its property, to
lease the property it operates as lessee and to conduct the business in which it
is currently, or is currently proposed to be, engaged; (c) is, duly qualified as
a foreign corporation, licensed and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification, except to the extent that the
failure to do so would not have a material adverse effect on the Condition of
the Company and its Subsidiaries; and (d) has the corporate power and authority
to execute, deliver and perform
13
<PAGE>
its obligations under each Transaction Document to which it is or will be a
party and to borrow hereunder.
5.2 CORPORATE AUTHORIZATION; NO CONTRAVENTION. The execution,
-----------------------------------------
delivery and performance by the Company of each Transaction Document to which it
is a party and the consummation of the transactions contemplated hereby and
thereby, including without limitation the issuance of the Securities: (a) has
been duly authorized by all necessary corporate, and if required, stockholder
action; (b) does not contravene the terms of the Company's Articles of
Organization or by-laws, or any amendment thereof; and (c) will not violate,
conflict with or result in any breach or contravention of or the creation of any
Lien under, any Contractual Obligation of the Company or any of its Subsidiaries
or any Requirement of Law applicable to the Company or any of its Subsidiaries.
5.3 GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENTS. No approval,
------------------------------------------------
consent, compliance, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person in respect of any
Requirement of Law, and no lapse of a waiting period under a Requirement of Law,
is necessary or required in connection with the execution, delivery or
performance by (including, without limitation, the payment of interest on the
Note and the issuance of Common Stock upon the exercise of the Warrants), or
enforcement against, the Company of the Transaction Documents to which it is a
party or the consummation of the transactions contemplated hereby or thereby.
5.4 BINDING EFFECT. Each of the Transaction Documents to which it is
--------------
a party has been duly executed and delivered by the Company, and constitutes the
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
relating to enforceability.
5.5 NO LEGAL BAR. Neither the execution, delivery and performance of
------------
the Transaction Documents nor the issuance of or performance of the terms of the
Securities will violate any Requirement of Law or any Contractual Obligation of
the Company or any of its Subsidiaries except as qualified by those waivers and
consents delivered at the Closing. Except as disclosed in Schedule 5.5, neither
the Company nor any of its Subsidiaries has previously entered into any
agreement which is currently in effect or to which the Company or any of its
Subsidiaries is currently bound, granting any rights to any Person which are
inconsistent with the rights to be granted by the Company in the Transaction
Documents.
5.6 LITIGATION. Except as set forth on Schedule 5.6, there are no
---------- ------------
legal actions, suits, proceedings, claims or disputes pending or to the best of
the Company's knowledge threatened, at law, in equity, in arbitration or before
any Governmental Authority against or affecting the Company or any of its
Subsidiaries (or, as applicable, or to the Company's knowledge, any of their
respective shareholders, directors, officers, employees or agents). No
injunction, writ, temporary
14
<PAGE>
restraining order, decree or any order of any nature has been issued by any
court or other Govern mental Authority purporting to enjoin or restrain the
execution, delivery or performance of the Transaction Documents.
5.7 COMPLIANCE WITH LAWS. Except as set forth on Schedule 5.7, the
-------------------- ------------
Company and each of its Subsidiaries are in compliance with all material
Requirements of Law.
5.8 NO DEFAULT OR BREACH. No event has occurred and is continuing or
--------------------
would result from the incurring of obligations by the Company and its
Subsidiaries under the Transaction Documents which constitutes or, with the
giving of notice or lapse of time or both, would constitute an Event of Default.
Neither the Company nor any of its Subsidiaries is in default under or with
respect to any Contractual Obligation in any material respect.
5.9 TITLE TO PROPERTIES. Except as set forth on Schedule 5.9, the
------------------- ------------
Company and/or each of its Subsidiaries have good record and marketable title in
fee simple to, or hold interests as lessees under leases in full force and
effect in all real property, used in connection with their business.
5.10 USE OF REAL PROPERTY. The Company does not own any real
--------------------
property. Except as set forth on Schedule 5.10, the leased real properties
-------------
reflected on the Pro Forma Balance Sheet or used in connection with the business
of the Company and its Subsidiaries, are used and operated in compliance and
conformity with all applicable leases, contracts, commitments, licenses and
permits, to the extent that the failure so to conform would, in the aggregate,
materially adversely affect the Condition of the Company; neither the Company
nor any of its Subsidiaries has received notice of violation of any applicable
zoning or building regulation, ordinance or other law, order, regulation or
requirement relating to the operations of either the Company or any of its
Subsidiaries; and there is no such violation. Except as set forth on Schedule
--------
5.10, all plants and other buildings that are covered by leases reflected on the
- ----
Pro Forma Balance Sheet or used in connection with the business of the Company
and its Subsidiaries, substantially conform with all applicable ordinances,
codes, regulations and requirements, and no law or regulation presently in
effect or condition precludes or materially restricts continuation of the
present use of such properties. Each of the leased real properties used in
connection with the business of the Company and its Subsidiaries are in full
force and effect and the Company enjoys peaceful and undisturbed possession
thereunder. There is no material default on the part of the Company or any of
its Subsidiaries or event or condition which with notice or lapse of terms, or
both, would constitute a material default on the part of the Company or any of
its Subsidiaries under any of such leases.
5.11 TAXES. The Company and each of its Subsidiaries have filed or
-----
caused to be filed, or have properly filed extensions for, all tax returns which
are required to be filed and have paid or caused to be paid all taxes required
to be paid by them and all assessments received by them to the extent that such
taxes have become due, except taxes the validity or amount of which is being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves have been set aside. The Company and each of its Subsidiaries
have paid or caused to be paid, or have established reserves that the Company
reasonably believes to be adequate in all material respects,
15
<PAGE>
for all tax liabilities applicable to the Company and its Subsidiaries for all
fiscal years which have not been examined and reported on by the taxing
authorities (or closed by applicable statutes).
5.12 FINANCIAL CONDITION.
-------------------
(a) The Company has furnished Purchaser with true and complete
copies of (i) the audited consolidated balance sheets of the Company and its
Subsidiaries as of June 30, 1996 and June 30, 1995 and the related consolidated
statements of operations and cash flows, together with the notes thereto, of the
Company and its Subsidiaries for the year ended June 30, 1996 and six months
ended June 30, 1995 (the "AUDITED FINANCIAL STATEMENTS"), and (ii) the unaudited
consolidated balance sheets of the Company and its Subsidiaries as of January
31, 1997 and the related consolidated statements of operations and cash flows,
together with the notes thereto, of the Company and its Subsidiaries for the
seven month period ended January 31, 1997 (the "1996 FINANCIAL STATEMENTS"). The
Audited Financial Statements and the 1996 Financial Statements fairly present,
in all material respects, the financial position of the Company and each of its
Subsidiaries as of the respective dates thereof, and the results of operations
and cash flows of the Company and each of its Subsidiaries as of the respective
dates or for the respective periods set forth therein, all in conformity with
GAAP consistently applied during the periods involved, except as otherwise set
forth in the Note thereto and subject, in the case of the 1996 Financial
Statements, to normal year-end audit adjustments.
(b) The Pro Forma Balance Sheet delivered to Purchaser sets
forth the assets and liabilities of the Company and its Subsidiaries on a pro
forma consolidated basis after taking into account the consummation of the
transactions contemplated in this Agreement. The Pro Forma Balance Sheet has
been prepared by the Company in accordance with GAAP and fairly presents in all
material respects the assets and liabilities of the Company and its Subsidiaries
on a consolidated basis, reflecting the consummation of the transactions
contemplated in this Agreement and based on the assumptions set forth therein.
(c) The projections of the Company and its Subsidiaries on a
consolidated basis heretofore delivered to the Purchaser and included in the
Company's October 1996 $15,000,000 Confidential Private Placement Memorandum
prepared by Bank of Boston are based on assumptions which were reasonable when
made and such assumptions and projections are reasonable on the date hereof and
the Company has not delivered to any Person any later dated projections.
5.13 ERISA. The execution and delivery of the Transaction Documents,
-----
the purchase and sale of the Securities hereunder and the consummation of the
transactions contemplated hereby and thereby will not result in any prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975 of the
Code.
5.14 DISCLOSURE.
----------
16
<PAGE>
(a) Agreement And Other Documents. This Agreement, together with
-----------------------------
all exhibits and schedules hereto, and the agreements, certificates and other
documents furnished to Purchaser by the Company and its Subsidiaries at the
Closing, do not contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which they were made, not
misleading.
(b) Material Adverse Effects. There is no fact known to the
------------------------
Company, which the Company has not disclosed to Purchaser in writing which
materially adversely affects or, could reasonably be expected to materially
adversely affect, the Condition of the Company or the ability of the Company or
any of its Subsidiaries to perform their obligations under the Transaction
Documents, or any agreement or other document contemplated thereby to which it
is a party.
5.15 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1996,
------------------------------------
except as set forth on Schedule 5.15, neither the Company nor any of its
-------------
Subsidiaries has (i) issued any stock, bonds or other corporate securities, (ii)
borrowed any amount or incurred any liabilities (absolute or contingent), other
than in the ordinary course of business, in excess of $100,000, (iii) discharged
or satisfied any lien or incurred or paid any obligation or liability (absolute
or contingent), other than in the ordinary course of business, in excess of
$100,000, (iv) declared or made any payment or distribution to stockholders or
purchased or redeemed any shares of its capital stock or other securities, (v)
mortgaged, pledged or subjected to lien any of its assets, tangible or
intangible, (vi) sold, assigned or transferred any of its tangible assets, or
canceled any debts or claims, (vii) sold, assigned or transferred any patents,
trademarks, trade names, copyrights, trade secrets or other intangible assets,
(viii) suffered any losses of property, or waived any rights of substantial
value, (ix) suffered any adverse change in the Condition of the Company or its
Subsidiaries, (x) expended any material amount, granted any bonuses or
extraordinary salary increases, (xi) entered into any transaction involving
consideration in excess of $100,000 except as otherwise contemplated hereby or
(xii) entered into any agreement or transaction, or amended or terminated any
agreement, with an Affiliate. To the knowledge of the Company, no adverse
change in the Condition of the Company or its Subsidiaries is threatened or
reasonably likely to occur.
5.16 ENVIRONMENTAL MATTERS. Except as described on Schedule 5.16:
--------------------- -------------
(a) The property, assets and operations of the Company and its
Sub sidiaries are and have been in compliance with all applicable Environmental
Laws; there are no Hazardous Materials stored or otherwise located in, on or
under any of the property or assets of the Company or its Subsidiaries including
the groundwater except in compliance with applicable Environmental Laws; and
there have been no releases or threatened releases of Hazardous Materials in, on
or under any property adjoining any of the property or assets of the Company or
its Subsidiaries which have not been remediated to the satisfaction of the
appropriate Governmental Authorities.
(b) None of the property, assets or operations of the Company or
its Subsidiaries is the subject of any Federal, state or local investigation
evaluating whether (i) any
17
<PAGE>
remedial action is needed to respond to a release or threatened release of any
Hazardous Materials into the environment or (ii) any release or threatened
release of any Hazardous Materials into the environment is in contravention of
any Environmental Law.
(c) Neither the Company nor any of its Subsidiaries has received
any notice or claim, nor are there pending or to the knowledge of the Company,
threatened or reasonably anticipated, lawsuits or proceedings against any of
them, with respect to violations of an Environmental Law or in connection with
the presence of or exposure to any Hazardous Materials in the environment or any
release or threatened release of any Hazardous Materials into the environment,
and neither the Company nor any of its Subsidiaries is or was the owner or
operator of any property which (i) pursuant to any Environmental Law has been
placed on any list of Hazardous Materials disposal sites, including, without
limitation, the "National Priorities List" or "CERCLIS List," (ii) has, or had,
any subsurface storage tanks located thereon, or (iii) has ever been used as or
for a waste disposal facility, a mine, a gasoline service station or, other than
for petroleum substances stored in the ordinary course of business, a petroleum
products storage facility.
(d) Neither the Company nor any of its Subsidiaries has any
present or contingent liability in connection with the presence either on or off
the property or assets of the Company or its Subsidiaries of any Hazardous
Materials in the environment or any release or threatened release of any
Hazardous Materials into the environment.
5.17 INVESTMENT COMPANY/GOVERNMENT REGULATIONS. The Company is not an
-----------------------------------------
"investment company" within the meaning of the Investment Company Act of 1940,
as amended. Neither the Company nor its Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, as amended, the Federal
Power Act, the Interstate Commerce Act, or any federal or state statute or
regulation limiting its ability to incur Indebtedness.
5.18 SUBSIDIARIES.
------------
(a) Schedule 5.18 sets forth a complete and accurate list of all
-------------
of the Subsidiaries of the Company together with their respective jurisdictions
of incorporation or organization. Each such Subsidiary is wholly owned by the
Company. All of the outstanding shares of capital stock of the Subsidiaries that
are corporations are validly issued, fully paid and nonassessable. Except as set
forth on Schedule 5.18, as of the Closing Date, all of the outstanding shares of
-------------
capital stock of, or other ownership interests in, each of the Subsidiaries are
owned by the Company or by a wholly owned Subsidiary in all cases free and clear
of any Liens, claims, charges or encumbrances. No Subsidiary has outstanding
options, warrants, subscriptions, calls, rights, convertible securities or other
agreements or commitments obligating the Subsidiary to issue, transfer or sell
any securities of the Subsidiary.
(b) Except for the Subsidiaries of the Company, the Company does
not own of record or beneficially, directly or indirectly, (i) any shares of
outstanding capital stock or securities convertible into capital stock of any
other corporation, and (ii) any participating interest in any partnership, joint
venture or other non-corporate business enterprises.
18
<PAGE>
5.19 CAPITALIZATION.
--------------
(a) As of the Closing Date, the authorized capital stock of
the Company consists of 500,000 shares of Preferred Stock, $1.00 par value, (the
"PREFERRED STOCK") of which 60,000 shares have been designated as Class A
Convertible Preferred Stock and 30,000 shares have been designated as Class B
Convertible Preferred Stock, and 5,000,000 shares of Class A Common Stock, $1.00
par value (the "CLASS A COMMON STOCK"), and 264,000 shares of Class B Common
Stock, $1.00 par value, (the "CLASS B COMMON STOCK"). As of the date hereof
there are, and as of the Closing Date, there will be:
(i) 30,000 shares of Class A Convertible Preferred Stock issued and
outstanding and 240,000 shares of Class A Common Stock reserved for
issuance upon conversion thereof;
(ii) 30,000 shares of Class B Convertible Preferred Stock issued and
outstanding and 240,000 shares of Class B Common Stock reserved for
issuance upon conversion thereof;
(iii) 868,714 shares of Class A Common Stock issued and outstanding;
(iv) no shares of the Class B Common Stock issued and outstanding;
(v) (A) 24,000 shares of Class A Common Stock reserved for
issuance; and
(B) 24,000 shares of Class B Common Stock reserved for
issuance;
upon exercise of certain outstanding warrants (the "PRIMUS/PNC WARRANTS")
at an exercise price of $13.75 per share, which Primus/PNC Warrants are
currently exercisable and expire on various dates through May, 2006;
(vi) 264,000 shares of Class A Common Stock reserved for issuance
upon conversion of the Class B Common Stock referred to in clauses
5.19(a)(ii) and 5.19(a)(v)(B);
(vii) 118,038 shares of Class A Common Stock reserved for issuance
upon exercise of the Vested Warrants;
(viii) 53,654 shares of Class A Common Stock reserved for issuance
upon exercise of the Vesting Warrants;
(ix) 200,000 shares of Class A Common Stock reserved for issuance
pursuant to stock options ("MANAGEMENT OPTIONS") granted to certain
employees and other members of management of the Company and its
Subsidiaries identified on Schedule 5.19; and
-------------
19
<PAGE>
(x) 16,000 shares of Class A Common Stock reserved for issuance upon
exercise of other warrants and options outstanding on the date hereof
("OTHER WARRANTS").
The Vested Warrants, Vesting Warrants, Primus/PNC Warrants, Options and all
outstanding shares of capital stock of the Company have been duly authorized by
all necessary corporate action. All outstanding shares of capital stock of the
Company are, and the shares of Common Stock issuable upon exercise of the
Warrants, Primus/PNC Warrants, the Options and the Other Warrants when issued
will be, validly issued, fully paid and nonassessable. The designations,
powers, preferences, rights, qualifications, limitations and restrictions in
respect of each class or series of authorized capital stock of the Company are
as set forth in the Articles of Organization, and all such designations, powers,
preferences, rights, qualifications, limitations and restrictions are valid,
binding and enforceable and in accordance with all applicable laws. Schedule
--------
5.19 provides an accurate list of (A) all stockholders owning the issued and
- ----
outstanding Preferred Stock and Common Stock, together with the number held by
each, and (B) all of the holders of warrants, options, rights and securities
convertible into Common Stock of the Company, together with the number of shares
of Common Stock to be issued upon the exercise or conversion of such warrants,
options, rights and convertible securities.
(b) On the Closing Date, except for the Warrants, the Primus/PNC
Warrants, the Management Options, and the Other Warrants there will be no
outstanding securities convertible into or exchangeable for capital stock of the
Company or options, warrants or other rights to purchase or subscribe to capital
stock of the Company or any of its Subsidiaries or contracts, commitments,
agreements, understandings or arrangements of any kind to which the Company or
any of its Subsidiaries is a party relating to the issuance of any capital stock
of the Company or any of its Subsidiaries, any such convertible or exchangeable
securities or any such options, warrants or rights.
5.20 PRIVATE OFFERING. No form of general solicitation or general
----------------
advertising was used by the Company, its Subsidiaries, or its or their
representatives in connection with the offer or sale of the Securities. No
registration of the Securities or Common Stock issuable upon the exercise of the
Warrants pursuant to the provisions of the Securities Act or the state
securities or "blue sky" laws will be required by the offer, sale or issuance of
the Securities pursuant to this Agreement or of the Common Stock issuable upon
the exercise of the Warrants. The Company agrees that neither it, nor anyone
acting on its behalf, will offer or sell the Securities or any other security so
as to require the registration of the Securities or Common Stock issuable upon
the exercise of the Warrants pursuant to the provisions of the Securities Act or
any state securities or "blue sky" laws, unless such Securities or Common Stock
issuable upon the exercise of the Warrants are so registered.
5.21 BROKER'S, FINDER'S OR SIMILAR FEES. Except as provided in
----------------------------------
Section 2.3 or as set forth on Schedule 5.21 there are no brokerage commissions,
-------------
finder's fees or similar fees or commissions payable in connection with the
transactions contemplated hereby based on any agreement, arrangement or
understanding with the Company or any of its Subsidiaries, or any action
20
<PAGE>
taken by any such entity, other than a fee payable to Bank of Boston or its
Affiliates, which fee shall be payable by the Company.
5.22 LABOR RELATIONS. Neither the Company nor any of its Subsidiaries
---------------
has committed or is engaged in any unfair labor practice. Except as set forth
in Schedule 5.22, there is (a) no unfair labor practice complaint pending or
-------------
threatened against the Company or any of its Subsidiaries before the National
Labor Relations Board and no grievance or arbitration proceeding arising out of
or under collective bargaining agreements is so pending or threatened, (b) no
strike, labor dispute, slowdown or stoppage pending or threatened against the
Company or any of its Subsidiaries, and (c) no union representation question
existing with respect to the employees of the Company or any of its Subsidiaries
and no union organizing activities are taking place. Neither the Company, nor
any of its Subsidiaries, is a party to any collective bargaining agreement.
5.23 EMPLOYEE BENEFIT PLANS. Neither the Company nor any of its
----------------------
Subsidiaries nor any ERISA Affiliate has any actual or contingent, direct or
indirect, liability in respect of any employee benefit plan (as defined in
Section 3(3) of ERISA) or other employee benefit arrangement, other than as
listed on Schedule 5.23(a) (collectively, the "PLANS"). The Company has
----------------
delivered to Purchaser accurate and complete copies of all of the Plans. All of
the Plans are in substantial compliance with all applicable Requirements of Law.
Except as set forth on Schedule 5.23(b), no "prohibited transaction," as defined
----------------
in Section 406 of ERISA and Section 4975 of the Code, has occurred in respect of
any of the Plans, and no civil or criminal action brought pursuant to Part 5 of
Title I of ERISA is pending or, to the best of the Company's knowledge, is
threatened against any fiduciary of any such Plan. No Plan: (i) is subject to
Title IV of ERISA, or is otherwise a Defined Benefit Plan, or is a multiple
employer plan (within the meaning of Section 413(c) of the Code); or (ii)
provides for post-retirement welfare benefits or a "parachute payment" (within
the meaning of Section 280G(b) of the Code).
5.24 PATENTS, TRADEMARKS, ETC. The Company and its Subsidiaries own
-------------------------
or are licensed or otherwise have the right to use all patents, trademarks,
service marks, trade names, copyrights, licenses, franchises and other rights
(collectively, the "RIGHTS") being used to conduct their businesses as now
operated (a complete list of licenses or other contracts relating to the
Company's and its Subsidiaries' Rights and of registrations of patents,
trademarks, service marks and copyrights including any applications therefor
constituting such Rights, is attached hereto as Schedule 5.24). To the best
-------------
knowledge of the Company, no right or product, process, method, substance or
other material presently sold by or employed by the Company or any of its
Subsidiaries, or which the Company or any of its Subsidiaries contemplates
selling or employing, infringes upon the Rights that are owned by others. No
litigation is pending and no claim has been made against the Company or any of
its Subsidiaries or is threatened, contesting the right of the Company or any of
its Subsidiaries to sell or use any Right or product, process, method, substance
or other material presently sold by or employed by the Company or any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries has asserted any
claim of infringement, misappropriation or misuse by any Person of any Rights
owned by the Company or any of its Subsidiaries or to which they have exclusive
use. Except as set forth on Schedule 5.24, no employee, officer or consultant
-------------
of the
21
<PAGE>
Company or any of its Subsidiaries has any proprietary, financial or other
interest in any Rights owned or used by the Company or its Subsidiaries in their
businesses. Except as set forth on Schedule 5.24, neither the Company nor any of
-------------
its Subsidiaries has any obligation to compensate any Person for the use of any
Rights and neither the Company nor any of its Subsidiaries has granted any
license or other right to use any of the Rights of the Company or it
Subsidiaries, whether requiring the payment of royalties or not. The Company and
its Subsidiaries have taken all reasonable measures to protect and preserve the
security, confidentiality and value of their Rights, including trade secrets and
other confidential information. All trade secrets and other confidential
information of the Company and its Subsidiaries are presently valued and
predictable and are not part of the public domain or knowledge, nor have they
been used, divulged or appropriated for the benefit of any Person other than the
Company or its Subsidiaries or otherwise to the detriment of the Company or its
Subsidiaries. No employee or consultant of the Company or its Subsidiaries has
used any trade secrets or other confidential information of any other Person in
the course of his work for the Company or its Subsidiaries. To the best
knowledge of the Company, no patent, invention, device, principle or any
statute, law, rule, regulation, standard or code is pending or proposed which
would restrict the Company's ability to use any of the Rights.
5.25 POTENTIAL CONFLICTS OF INTEREST. Except as set forth on Schedule
------------------------------- --------
5.25, no officer, director, stockholder or other security holder of the Company
- ----
or any of its Subsidiaries: (a) owns, directly or indirectly, any interest in
(excepting less than 5% stock holdings for investment purposes in securities of
publicly held and traded companies), or is an officer, director, employee or
consultant of, any Person that is, or is engaged in business as, a competitor,
lessor, lessee, supplier, distributor, sales agent or customer of, or lender to
or borrower from, the Company or any of its Subsidiaries; (b) owns, directly or
indirectly, in whole or in part, any tangible or intangible property that the
Company or any of its Subsidiaries used in the conduct of business; or (c) has
any cause of action or other claim whatsoever against, or owes or has advanced
any amount to, the Company or any of its Subsidiaries, except for claims in the
ordinary course of business such as for accrued vacation pay, accrued benefits
under employee benefit plans, and similar matters and agreements existing on the
date hereof.
5.26 TRADE RELATIONS. There exists no actual or threatened
---------------
termination, cancellation or limitation of, or any adverse modification or
change in, the business relationship of the Company, its Subsidiaries or their
business with any customer or any group of customers whose purchases are
individually or in the aggregate material to the business of the Company or any
such Subsidiary, or with any material supplier, and there exists no present
condition or state of facts or circumstances that would materially adversely
affect the Condition of the Company or prevent the Company or its Subsidiaries
from conducting their business after the consummation of the transactions
contemplated by this Agreement, in substantially the same manner in which such
business has heretofore been conducted.
5.27 OUTSTANDING BORROWINGS. Schedule 5.27 lists (i) the amount of
---------------------- -------------
all Outstanding Borrowings of the Company and its Subsidiaries (other than
Indebtedness under this Agreement) as of the closing of the transactions
contemplated hereby, (ii) the Liens that relate to
22
<PAGE>
such Outstanding Borrowings and that encumber the assets of the Company and its
Subsidiaries, (iii) the name of each lender thereof, (iv) the amount of any
unfunded commitments available to the Company in connection with any Outstanding
Borrowings, and (v) the amount of all Indebtedness constituting a Contingent
Obligation under clause (i) of the definition of Contingent Obligation
hereinabove. There exists no default, event of default or event of
noncompliance, whether or not denominated as such, and there exists no condition
and no event or transaction has occurred which with notice or the passage of
time or both would mature into such a default, event of default or event of
noncompliance, under any agreement, instrument or other document evidencing or
giving rise to or creating any rights with respect to the Indebtedness listed on
Schedule 5.27.
5.28 MATERIAL CONTRACTS. Neither the Company nor any Subsidiary is a
------------------
party to any Contractual Obligation, or is subject to any charge, corporate
restriction, judgment, injunction, decree, or Requirement of Law, materially
adversely affecting the Condition of the Company. Schedule 5.28 lists all
-------------
contracts, agreements and commitments of the Company and its Subsidiaries as of
the Closing Date, whether written or oral, other than (a) the Transaction
Documents, (b) purchase orders in the ordinary course of business, and (c) any
other contracts, agreements and commitments of the Company that do not extend
beyond one year and involve the receipt or payment of not more than $25,000.
Each of the contracts, agreements and commitments of the Company set forth on
Schedule 5.28 is in full force and effect.
- -------------
5.29 INSURANCE. Schedule 5.29 accurately summarizes all of the
--------- -------------
insurance policies or programs of the Company and its Subsidiaries in effect as
of the date hereof, and indicates the insurer's name, policy number, expiration
date, amount of coverage, type of coverage, annual premiums, exclusions and
deductibles, and also indicates any self-insurance program that is in effect.
All such policies are in full force and effect, are underwritten by reputable
insurers and are sufficient for all applicable requirements of law. All such
policies will remain in full force and effect and will not in any way be
affected by, or terminate or lapse by reason of any of the transactions
contemplated hereby.
5.30 SOLVENCY. The Company and its Subsidiaries, taken as a whole,
--------
are Solvent.
5.31 OTHER DOCUMENTS. The Company has delivered to Purchaser true,
---------------
complete and correct copies of all agreements, schedules, exhibits,
certificates, financial information, filings and other documents relating to the
Company and its Subsidiaries, and all amendments and modifications thereto.
Such documents comprise a full and complete copy of all agreements and
understandings between the parties thereto with respect to the subject matter
thereof and all transactions related thereto, and there are no agreements or
understandings, oral or written, or side agreements not contained therein that
relate to or modify the substance thereof. Each of such documents to which it
is a party has been duly authorized by all necessary corporate action on the
part of the Company and its Subsidiaries, was validly executed and delivered by
the Company and its Subsidiaries and is the legal, valid and binding obligation
of the Company and its Subsidiaries and their successors, enforceable in
accordance with its terms, except as limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
affecting
23
<PAGE>
creditors' rights generally and by general principles of equity relating to
enforceability. Each of such documents is in full force and effect, and none of
their provisions have been waived by any party thereto.
ARTICLE 6
REPRESENTATIONS AND
-------------------
WARRANTIES OF PURCHASER
-----------------------
Purchaser hereby represents and warrants as follows:
6.1 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
-------------------------------
performance by it of this Agreement: (a) is within its power and authority and
has been duly authorized by all necessary action; (b) does not contravene the
terms of its organizational documents or any amendment thereof; and (c) will not
violate, conflict with or result in any breach or contravention of any of its
Contractual Obligations, or any order or decree directly relating to it.
6.2 BINDING EFFECT. This Agreement has been duly executed and
--------------
delivered by it and this Agreement constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws affecting the enforcement of creditors' rights generally or by equitable
principles relating to enforceability.
6.3 NO LEGAL BAR. The execution, delivery and performance of the
------------
Transaction Documents by it will not violate any Requirement of Law applicable
to it.
6.4 PURCHASE FOR OWN ACCOUNT. The Securities to be acquired by it
------------------------
pursuant to this Agreement are being or will be acquired for its own account and
with no intention of distributing or reselling such securities or any part
thereof in any transaction that would be in violation of the securities laws of
the United States of America, or any state, without prejudice, however, to its
right at all times to sell or otherwise dispose of all or any part of the Note
or the Warrants, under an effective registration statement under the Securities
Act, or under an exemption from such registration available under the Securities
Act, and subject, nevertheless, to the disposition of its property being at all
times within its control. If Purchaser should in the future decide to dispose
of any of the Securities, Purchaser understands and agrees that it may do so
only in compliance with the Securities Act and applicable state securities laws,
as then in effect. It agrees to the imprinting of a legend on certificates
representing all of the Securities to the following effect: "THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD
OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
24
<PAGE>
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS."
6.5 ERISA. No part of the funds used by it to purchase the
-----
Securities hereunder constitutes assets of any "employee benefit plan" (as
defined in Section 3(3) of ERISA) or "plan" (as defined in Section 4975 of the
Code) listed on Schedule 5.23(a).
----------------
6.6 BROKER'S, FINDER'S OR SIMILAR FEES. There are no brokerage
----------------------------------
commissions, finder's fees or similar fees or commissions payable in connection
with the transactions contemplated hereby based on any agreement, arrangement or
understanding with it or any action taken by it, other than a fee payable to
Bank of Boston or its Affiliates, which fee shall be payable by the Company.
6.7 GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENT. No approval,
-----------------------------------------------
consent, compliance, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person in respect of any
Requirement of Law, and no lapse of a waiting period under a Requirement of Law,
is necessary or required in connection with the execution, delivery or
performance by it or enforcement against it of this Agreement or the
transactions contemplated hereby.
ARTICLE 7
INDEMNIFICATION
---------------
25
<PAGE>
7.1 INDEMNIFICATION. In addition to all other sums due hereunder or
---------------
provided for in this Agreement, the Company agrees to indemnify and hold
harmless Purchaser and its respective Affiliates and each of its respective
officers, directors, agents, employees, subsidiaries, partners, attorneys,
accountants and controlling persons (each, an "INDEMNIFIED PARTY") to the
fullest extent permitted by law from and against any and all losses, claims,
damages, expenses (including, without limitation, reasonable fees, disbursements
and other charges of counsel incurred by an Indemnified Party in any action or
proceeding between the Company and such Indemnified Party (or Indemnified
Parties) or between an Indemnified Party (or Indemnified Parties) and any third
party or otherwise) or other liabilities, losses, or diminution in value
(collectively, "LIABILITIES") resulting from or arising out of any breach of any
representation or warranty, covenant or agreement of the Company in this
Agreement, the Articles of Organization, the Registration Rights Agreement, the
Stockholders Agreement, the Note, the Warrants, or the other Transaction
Documents, including without limitation, the failure to make payment when due of
amounts owing pursuant to this Agreement, the Note or the other Transaction
Documents, on the due date thereof (whether at the scheduled maturity, by
acceleration or otherwise) or any legal, administrative or other actions
(including actions brought by Purchaser, the Company, its Subsidiaries or any
equity holders of the Company or derivative actions brought by any Person
claiming through or in the Company's name), proceedings or investigations
(whether formal or informal), or written threats thereof, based upon, relating
to or arising out of the Transaction Documents, the transactions contemplated
thereby, or any Indemnified Party's role therein or in the transactions
contemplated thereby; provided, however, that the Company shall not be liable
-------- -------
under this Section 7.1 to an Indemnified Party: (a) for any amount paid by the
Indemnified Party in settlement of claims by the Indemnified Party without the
Company's consent (which consent shall not be unreasonably withheld), (b) to the
extent that it is finally judicially determined that such Liabilities resulted
primarily from the willful misconduct or gross negligence of such Indemnified
Party or (c) to the extent that it is finally judicially determined that such
Liabilities resulted primarily from the breach by such Indemnified Party of any
representation, warranty, covenant or other agreement of such Indemnified Party
contained in this Agreement; provided, further, that if and to the extent that
-------- -------
such indemnification is unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of such Liabilities which
shall be permissible under applicable laws. In connection with the obligation
of the Company to indemnify for expenses as set forth above, the Company further
agrees, upon presentation of appropriate invoices containing reasonable
detail, to reimburse each Indemnified Party for all such expenses (including
fees, disbursements and other charges of counsel incurred by an Indemnified
Party in any action or proceeding between the Company and such Indemnified Party
(or Indemnified Parties) or between an Indemnified Party (or Indemnified
Parties) and any third party or otherwise) as they are incurred by such
Indemnified Party; provided, however, that if an Indemnified Party is reimbursed
-------- -------
hereunder for any expenses, such reimbursement of expenses shall be refunded to
the extent it is finally judicially determined that the Liabilities in question
resulted primarily from (i) the willful misconduct or gross negligence of such
Indemnified Party or (ii) the breach by such Indemnified Party of any
representation, warranty, covenant or other agreement of such Indemnified Party
contained in this Agreement or any other Transaction Document.
26
<PAGE>
7.2 NOTIFICATION. Each Indemnified Party under this Article 7 will,
------------
promptly after the receipt of notice of the commencement of any action,
investigation, claim or other proceeding against such Indemnified Party in
respect of which indemnity may be sought from the Company under this Article 7,
notify the Company in writing of the commencement thereof. The omission of any
Indemnified Party so to notify the Company of any such action shall not relieve
the Company from any liability which it may have to such Indemnified Party (a)
other than pursuant to this Article 7 or (b) under this Article 7, unless, and
only to the extent that, such omission results in the Company's forfeiture of
substantive rights or defenses or other damage. In case any such action, claim
or other proceeding shall be brought against any Indemnified Party and it shall
notify the Company of the commencement thereof, the Company shall be entitled to
assume the defense thereof at its own expense, with counsel satisfactory to such
Indemnified Party in its reasonable judgment; provided, however, that any
-------- -------
Indemnified Party may, at its own expense, retain separate counsel to
participate in such defense. Notwithstanding the foregoing, in any action,
claim or proceeding in which the Company, on the one hand, and an Indemnified
Party, on the other hand, is, or is reasonably likely to become, a party, such
Indemnified Party shall have the right to employ separate counsel at the
Company's expense and to control its own defense of such action, claim or
proceeding if, in the reasonable opinion of counsel to such Indemnified Party, a
conflict or potential conflict exists between the Company, on the one hand, and
such Indemnified Party, on the other hand, that would make such separate
representation advisable; provided, however, that in no event shall the Company
-------- -------
be required to pay fees and expenses under this Article 7 for more than one firm
of attorneys in any jurisdiction in any one legal action or group of related
legal actions. The Company agrees that it will not, without the prior written
consent of Purchaser, settle, compromise or consent to the entry of any judgment
in any pending or threatened claim, action or proceeding relating to the matters
contemplated hereby (if any Indemnified Party is a party thereto or has been
actually threatened to be made a party thereto) unless such settlement,
compromise or consent includes an unconditional release of Purchaser and each
other Indemnified Party from all liability arising or that may arise out of such
claim, action or proceeding, which consent of Purchaser shall not be
unreasonably withheld with respect to any settlement, compromise or consent
relating to the payment of money damages only. The Company shall not be liable
for any settlement of any claim, action or proceeding effected against an
Indemnified Party without its written consent, which consent shall not be
unreasonably withheld. The rights accorded to Indemnified Parties hereunder
shall be in addition to any rights that any Indemnified Party may have at common
law, by separate agreement or otherwise.
7.3 REGISTRATION RIGHTS AGREEMENT. Notwithstanding anything to the
-----------------------------
contrary in this Article 7, the indemnification and contribution provisions of
the Registration Rights Agreement shall govern any claim made with respect to
registration statements filed pursuant thereto or sales made thereunder.
27
<PAGE>
ARTICLE 8
AFFIRMATIVE COVENANTS
---------------------
Until the payment by the Company of all principal of and interest on
the Note and all other amounts due at the time of payment of such principal and
interest to Purchaser under this Agreement and the other Transaction Documents,
including, without limitation, all fees, expenses and amounts due at such time
in respect of indemnity obligations under Article 7, the Company hereby
covenants and agrees with Purchaser as follows:
8.1 FINANCIAL STATEMENTS AND OTHER INFORMATION. The Company shall
------------------------------------------
maintain, and cause each of its Subsidiaries to maintain, a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in conformity with GAAP (it being
understood that monthly financial statements are not required to have footnote
disclosures). The Company shall deliver to Purchaser each of the financial
statements and other reports described below:
(a) Monthly and Quarterly Financial. As soon as available and in
-------------------------------
any event within thirty (30) days after the end of each month, the Company shall
deliver (i) the consolidated and consolidating balance sheets of the Company and
its Subsidiaries, as at the end of such month and the related consolidated and
consolidating statements of income, stockholders' equity and cash flow for such
month and for the period from the beginning of the then current fiscal year of
the Company to the end of such month (and, with respect to financial statements
delivered for months that are also the last month of any fiscal quarter,
accompanied by the related consolidated and consolidating statements of income,
stockholders' equity and cash flow for such fiscal quarter) and (ii) a schedule
of the outstanding Indebtedness for borrowed money of the Company and its
Subsidiaries describing in reasonable detail each such debt issue or loan
outstanding and the principal amount and amount of accrued and unpaid interest
with respect to each such debt issue or loan.
(b) Year-End Financial. As soon as available and in any event
------------------
within ninety (90) days after the end of the fiscal year of the Company, the
Company shall deliver (i) the consolidated and consolidating balance sheets of
the Company and its Subsidiaries as at the end of such year and the related
consolidated and consolidating statements of income, stockholders' equity and
cash flow for such fiscal year, (ii) a schedule of the outstanding Indebtedness
for borrowed money of the Company and its Subsidiaries describing in reasonable
detail each such debt issue or loan outstanding and the principal amount and
amount of accrued and unpaid interest with respect to each such debt issue or
loan, and (iii) a report with respect to the financial statements from Coopers &
Lybrand, LLP or another "Big Six" firm of certified public accountants selected
by the Company and reasonably acceptable to Purchaser, which report shall be
prepared in accordance with Statement of Auditing Standards No. 58 (the
"STATEMENT") entitled "Reports on Audited Financial Statements" and such report
shall be "Unqualified" (as such term is defined in such Statement).
28
<PAGE>
(c) Company's Compliance Certificate. Together with each
--------------------------------
delivery of financial statements of the Company and its Subsidiaries pursuant to
subsections 8.1(a) and 8.1(b) above, the Company shall deliver a fully and
properly completed compliance certificate (in form and substance satisfactory to
Purchaser) signed by the Company's chief executive officer or chief financial
officer. The Company and Purchaser acknowledge and agree that calculations of
covenant compliance, with respect to the financial covenants contained in
subsection 9.8 hereof and contained in any such compliance certificate delivered
for a month that is not the last month of a calendar quarter, will be for
informational purposes only and shall not measure compliance (or lack of
compliance) with such financial covenants.
(d) Accountants' Reports. Promptly upon receipt thereof, the
--------------------
Company shall deliver copies of all significant reports submitted by the
Company's firm of certified public accountants in connection with each annual,
interim or special audit or review of any type of the financial statements or
related internal control systems of the Company and its Subsidiaries made by
such accountants, including any comment letter submitted by such accountants to
managements in connection with their services.
(e) Management Reports. Together with each delivery of financial
------------------
statements of the Company and its Subsidiaries pursuant to subsections 8.1(a)
and 8.1(b), the Company will deliver a management report (i) describing the
operations and financial condition of the Company and its Subsidiaries for the
month then ended and the portion of the current fiscal year then elapsed (or for
the fiscal year then ended in the case of year-end financial), (ii) setting
forth in comparative form the corresponding figures for the corresponding
periods of the previous fiscal year and the corresponding figures from the most
recent projections for the current fiscal year delivered pursuant to subsection
8.1(f) and (iii) discussing the reasons for any significant variations. The
information above shall be presented in reasonable detail and shall be certified
by the chief financial officer of the Company to the effect that such
information fairly presents the results of operations and financial condition of
the Company and its Subsidiaries as at the dates and for the periods indicated.
(f) Projections. No earlier than sixty (60) days nor later than
-----------
fifteen (15) days prior to the end of each fiscal year occurring after the
Closing Date, the Company shall prepare and deliver to Purchaser projections of
the Company and its Subsidiaries for the next succeeding three fiscal years,
which projections shall be prepared on an annual basis, and for the next
succeeding fiscal year, on a month to month basis.
(g) SEC Filings and Press Releases. Promptly upon their becoming
------------------------------
available, the Company shall deliver copies of (i) all financial statements,
reports, notices and proxy statements sent or made available by the Company or
any of its Subsidiaries to their security holders, (ii) all regular and periodic
reports and all registration statements and prospectuses, if any, filed by the
Company or any of its Subsidiaries with any securities exchange or with the
Securities and Exchange Commission or any governmental or private regulatory
authority, and (iii) all press
29
<PAGE>
releases and other statements made available by the Company or any of its
Subsidiaries to the public concerning material developments in the business the
Company or any of its Subsidiaries.
(h) Events of Default, Etc. Promptly upon the Company obtaining
-----------------------
knowledge of any of the following events or conditions, the Company shall
deliver copies of all notices given or received by the Company or any of its
Subsidiaries with respect to any such event of condition and a certificate of
the Company's chief executive officer specifying the nature and period of
existence of such event or condition and what action the Company has taken, is
taking and proposes to take with respect thereto: (i) any condition or event
that constitutes an Event of Default; (ii) any notice that any Person has given
to the Company or any of its Subsidiaries or any other action taken with respect
to a claimed default or event or condition in any agreement evidencing
Indebtedness or any other material agreement to which the Company or any of its
Subsidiaries is a party; or (iii) any event or condition which, in the Company's
reasonable judgment, could be expected to result in any material adverse effect
on the Condition of the Company.
(i) Litigation. Promptly upon any officer of the Company
----------
obtaining knowledge of (i) the institution of any action, suit, proceeding,
governmental investigation or arbitration against or affecting the Company or
any of its Subsidiaries or any property of the Company or any of its
Subsidiaries not previously disclosed by the Company to Purchaser or (ii) any
material development in any action, suit, proceeding, governmental investigation
or arbitration at any time pending against or affecting the Company or any of
its Subsidiaries or any property of the Company or any of its Subsidiaries
which, in each case, is reasonably possible to have a material adverse effect on
the Condition of the Company, the Company will promptly give notice thereof to
Purchaser and provide such other information as may be reasonably available to
them to enable Purchaser and their respective counsel to evaluate such matter.
(j) Subsidiaries. Not less than fifteen (15) days prior to
------------
creating a Subsidiary or acquiring the stock of a Person, such that such Person
will become a Subsidiary, the Company shall notify Purchaser of the Company's or
any of its Subsidiary's intention to create such Subsidiary or acquire such
stock.
(k) Supplemented Schedules; Notice of Corporate Changes.
---------------------------------------------------
Annually, concurrently with the delivery of the projections required by
subsection 8.1(f), the Company shall supplement in writing and deliver to
Purchaser revisions of the Schedules annexed to this Agreement to the extent
necessary to disclose new or changed facts or circumstances after the Closing
Date; provided that subsequent disclosures shall not constitute a cure or waiver
--------
of any Event of Default resulting from the matters disclosed. The Company shall
(i) if requested by Purchaser, provide prompt written notice to Purchaser of all
jurisdictions in which the Company or any of its Subsidiaries becomes qualified
after the Closing Date to transact business, and (ii) provide prompt written
notice to Purchaser of any material change after the Closing Date in the
authorized and issued capital stock or other equity interests of the Company or
any of its Subsidiaries or any other material amendment to their charter, by-
laws or other organization documents, such notice, in each case, to identify the
applicable jurisdictions or capital structures, as applicable.
30
<PAGE>
(l) No Defaults. The Company shall deliver to Purchaser
-----------
concurrently with the delivery of the financial statements referred to in
Section 8.1(b), a certificate of the Company's Chief Financial Officer stating
that to his or her knowledge no Event of Default shall have occurred during the
period covered thereby, except as specified in such certificate.
(m) Other Information. With reasonable promptness, the Company
-----------------
shall deliver such other information and data with respect to the Company or any
of its Subsidiaries as from time to time may be reasonably required by
Purchaser.
(n) Except as otherwise required by law or judicial order or by
a decree or by any governmental agency or authority, with respect to information
regarding the Company and its Subsidiaries received by Purchaser under this
Section 8.1 or under any other provision of this Agreement or the Transaction
Documents, Purchaser shall use the same standards and controls which Purchaser
uses to maintain the confidentiality of its own confidential information (but in
no event less than reasonable care) to maintain the confidentiality of all
nonpublic information of the Company or any of its Subsidiaries obtained by it
pursuant to this Agreement or the Transaction Documents.
8.2 PRESERVATION OF CORPORATE EXISTENCE. The Company shall, and
-----------------------------------
shall cause each of its Subsidiaries to:
(a) preserve and maintain in full force and effect its corporate
existence, except as otherwise permitted by Section 9.1;
(b) conduct its business in accordance with sound business
practices, keep its properties in good working order and condition (normal wear
and tear excepted), and from time to time make all needed repairs to, renewals
of or replacements of its properties (except to the extent that any of such
properties are obsolete or are being replaced) so that the efficiency of its
business operations shall be fully maintained and preserved; and
(c) file or cause to be filed in a timely manner all reports,
applications, estimates and licenses that shall be required by a Governmental
Authority.
8.3 PAYMENT OF OBLIGATIONS. The Company shall, and shall cause each
----------------------
of its Subsidiaries to, pay and discharge as the same shall become due and
payable, all their respective obligations and liabilities, including without
limitation:
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being contested
in good faith by appropriate proceedings and adequate reserves in accordance
with GAAP are being maintained by the Company or such Subsidiary, or the failure
to pay would not have a material adverse effect on the condition, financial or
otherwise, of the Company or such Subsidiary;
31
<PAGE>
(b) all lawful claims which the Company, and each of its
Subsidiaries is obligated to pay, which are due and which, if unpaid, might by
law become a Lien upon its property, unless the same are being contested in good
faith by appropriate proceedings and adequate reserves in accordance with GAAP
are being maintained by the Company or such Subsidiary; and
(c) all payments of principal, interest and other amounts when
due on Indebtedness.
8.4 COMPLIANCE WITH LAWS. The Company shall comply, and shall cause
--------------------
each of its Subsidiaries to comply, in all material respects with all
Requirements of Law and with the directions of any Governmental Authority having
jurisdiction over them or their business or property (including all applicable
Environmental Laws).
8.5 RESERVATION OF SHARES. The Company shall at all times reserve
---------------------
and keep available out of its authorized Common Stock, solely for the purpose of
issuance or delivery upon exercise of the Warrants, the Primus/PNC Warrants the
Management Options and the Other Warrants, the maximum number of shares of
capital stock that may be issuable or deliverable upon such exercise or
conversion, as the case may be (the "EXERCISABLE SHARES"). The Exercisable
Shares shall, when issued or delivered in accordance with the Warrants, the
Primus/PNC Warrants, Management Options or Other Warrants, as the case may be,
be duly and validly issued and fully paid and non-assessable. The Company shall
issue such capital stock in accordance with the provisions of the Warrants, the
Primus/PNC Warrants, Options or Other Warrants, as the case may be, and shall
otherwise comply, in each case, with the terms thereof.
8.6 INSPECTION. The Company will permit, and will cause each of its
----------
Subsidiaries to permit, authorized representatives of Purchaser to visit and
inspect any of their properties, to examine their corporate, financial and
operating records and make copies thereof or abstracts therefrom, and to discuss
their affairs, finances and accounts with their respective directors, officers
and independent public accountants, all at such reasonable times during normal
business hours and as often as may be reasonably requested, upon reasonable
advance notice.
8.7 PAYMENT OF NOTE. The Company shall pay the principal of,
---------------
interest on and other amounts due in respect of, the Note on the dates and in
the manner provided in the Note.
8.8 INSURANCE. The Company and each of its Subsidiaries shall
---------
maintain insurance with insurance companies or associations with a rating of "A"
or better as established by Best's Rating Guide (or an equivalent rating with
such other publication of a similar nature as shall be in current use) in such
amounts and covering such risks as are usually and customarily carried with
respect to similar businesses according to their respective locations. Without
in any way limiting the scope of the foregoing, the Company and each of its
Subsidiaries agrees to establish and maintain from the Closing Date forward,
directors' and officers' liability insurance coverage for each of the members of
the Board of Directors of the Company.
32
<PAGE>
8.9 BOOKS AND RECORDS. The Company shall, and shall cause each of
-----------------
its Subsidiaries to, keep proper books of record and account, in which full and
correct entries shall be made of all financial transactions and the assets and
business of the Company and each of its Subsidiaries in accordance with GAAP
consistently applied to the Company and its Subsidiaries taken as a whole.
8.10 USE OF PROCEEDS. The Company shall use the proceeds of the sale
---------------
of Securities hereunder only as follows: (i) for the payment of fees and
expenses in connection with the transactions contemplated hereunder and in the
Transaction Documents, and (ii) for general corporate purposes.
8.11 BOARD NOMINEES. The Company shall (a) maintain not less than a
--------------
seven-member Board of Directors and (b) use its best efforts to have one nominee
designated by Purchaser elected to the Company's Board of Directors. The
Company shall provide to such director the same information concerning the
Company and its Subsidiaries, and access thereto, provided to other members of
the Company's Board of Directors. The reasonable travel expenses incurred by
any such director in attending any such meetings shall be reimbursed by the
Company to the extent consistent with the Company's then existing policy of
reimbursing directors generally for such expenses. If at any time the
Stockholders Agreement has terminated and there remains outstanding any amount
under the Note, then the Company will use its best efforts to have a person
designated by Purchaser as a director of the Company, and in connection
therewith shall nominate such person as a "management nominee" in connection
with any annual or special meeting at which directors of the Company are to be
elected.
8.12 GRANTING OF OPTIONS. The Company may grant no more than 200,000
-------------------
Management Options. If the Management Options are granted, the Company shall
grant the Options at an exercise price equal to at least the per share fair
market value of the Common Stock (as determined by the Company's Board of
Directors) at the time of such grant or grants, as the case may be.
8.13 KEY-MAN LIFE INSURANCE. The Company shall maintain a key-main
----------------------
life insurance policy on the life of Paul S. Gass in the face amount of not less
than $3,000,000, which policy shall be in full force and effect as of the
Closing Date. Such insurance policy shall name the Company as beneficiary and
shall provide that such insurance policy may not be canceled unless the
insurance carrier gives at least 30 days prior written notice of such
cancellation to Purchaser.
33
<PAGE>
ARTICLE 9
NEGATIVE COVENANTS
------------------
Until the payment by the Company of all principal of and interest on
the Note and all other amounts due at the time of payment of such principal and
interest to Purchaser under this Agreement and the other Transaction Documents,
including, without limitation, all fees, expenses and amounts due at such time
in respect of indemnity obligations under Article 7, the Company hereby
covenants and agrees with Purchaser as follows:
9.1 FUNDAMENTAL CHANGES; CONSOLIDATIONS, MERGERS AND ACQUISITIONS.
-------------------------------------------------------------
The Company shall not, and shall not permit any of its Subsidiaries directly or
indirectly to: (a) amend, modify or waive any term or provision of its Articles
of Organization, By-laws or other organization or governing agreements and
documents, unless required by law; (b) enter into any transaction of merger or
consolidation except any Subsidiary of the Company may be merged with or into
the Company (provided that the Company is the surviving entity) or any other
--------
Subsidiary of the Company; (c) liquidate, wind-up or dissolve itself (or suffer
any liquidation or dissolution); or (d) acquire by purchase or otherwise all or
any substantial part of the business or assets or stock of any other Person
except in the ordinary course of business.
9.2 TRANSACTIONS WITH AFFILIATES.
----------------------------
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, (i) enter into any transaction or agreement with, or make any
payment (other than pursuant to agreements existing on the date hereof or
subsequently approved by Purchaser) to, any Affiliate of the Company other than
a Subsidiary, (ii) amend or terminate any existing agreement with any Affiliate
of the Company, (iii) purchase from or provide to an Affiliate of the Company
any selling, general, management or administrative services, (iv) directly or
indirectly make any sales to or purchases from an Affiliate of the Company or
(v) increase the compensation being paid to an Affiliate except for any such
payments or increases in compensation approved by the Compensation Committee
established by the Company's Board of Directors in accordance with the
Stockholders Agreement. Notwithstanding the foregoing, the Company and its
Subsidiaries shall be permitted to (i) make all payments to Purchaser
contemplated by this Agreement, the Note and the other Transaction Documents and
(ii) enter into customary loan agreements with PNC Bank containing commercially
reasonable terms and conditions, and make all payments required thereunder.
34
<PAGE>
9.3 NO INCONSISTENT AGREEMENTS.
--------------------------
(a) Neither the Company nor any of its Subsidiaries shall enter
into any Contractual Obligation or enter into any amendment or other
modification to any currently existing Contractual Obligation of the Company, or
any of its Subsidiaries, which by its terms restricts or prohibits the ability
of the Company to pay the principal of or interest on the Note or to fully
satisfy all of the Company's obligations under the Transaction Documents.
(b) Neither the Company nor any of its Subsidiaries shall enter
into any agreement which contains any clause which directly or indirectly
prohibits the payment by the Company or any of its Subsidiaries required under
the Put and Call Agreement, provided that the foregoing shall not include
customary financial covenants, even if such covenants might be violated as a
result of such payment being made.
9.4 LIMITATION ON INDEBTEDNESS. The Company shall not, and shall not
--------------------------
cause, suffer or permit any of its Subsidiaries to, directly or indirectly,
collectively and in the aggregate, issue, assume or otherwise incur any
Indebtedness, other than:
(a) Indebtedness under the Transaction Documents;
(b) Senior Indebtedness, provided that the ratio of Senior
Indebtedness plus obligations under all letters of credit outstanding to
Tangible Net Worth plus Indebtedness under this Agreement shall not exceed 6:1;
(c) Indebtedness listed on Schedule 5.27;
-------------
(d) non-current liabilities for post-employment healthcare and
other insurance benefits;
(e) trade payables, operating expenses and accrued expenses, in
each case arising in the ordinary course of business;
(f) Indebtedness secured by a Lien permitted under Section 9.5;
(g) intercompany Indebtedness among the Company and its
Subsidiaries; provided that the obligations of such Indebtedness shall: (i) be
--------
subordinated in right of payment to all Indebtedness under the Note and this
Agreement from and after such time as any portion of the Indebtedness under the
Note and this Agreement shall become due and payable (whether at stated
maturity, by acceleration or otherwise); and (ii) have such other terms and
provisions as Purchaser may reasonably require; and
(h) refinancings, refundings or extensions of the foregoing,
including, without limitation, refinancings of the Indebtedness under this
Agreement to the extent that the
35
<PAGE>
Company is required to prepay the same pursuant to paragraph 3(a) of the Note;
provided, that any such refinancings, refundings or extensions (other than
- --------
refinancings, refundings or extensions of the Senior Indebtedness) shall not (i)
exceed the principal amount refinanced, refunded or extended, (ii) shorten the
maturity (or weighted average life to maturity) of such Indebtedness, (iii)
increase the interest rate applicable to such Indebtedness, (iv) upon the
occurrence and during the continuance of an Event of Default, cause any
covenants or undertakings (whether affirmative or negative) of the Company, or
its Subsidiaries in respect of such Indebtedness to be more restrictive than
such covenants or undertakings had been prior to such refinancing, refunding or
extension, (v) facilitate the exercise or enforcement of any remedies of any
obligee of such Indebtedness in respect of any default or event of default
thereunder, or (vi) result in any amendments or modifications of any of the
subordination provisions applicable to such Indebtedness.
9.5 LIMITATION ON LIENS. The Company will not, nor will the Company
-------------------
permit any of its Subsidiaries directly or indirectly to create, incur, assume
or permit to exist any Lien on or with respect to any property or asset
(including any document or instrument with respect to goods or accounts
receivable) of the Company or its Subsidiaries, whether now owned or hereafter
acquired, or any income or profits therefrom, except Permitted Encumbrances.
"PERMITTED ENCUMBRANCES" means the following: (a) Liens for taxes, assessments
or other governmental charges which are not yet due and payable or which are
being contested in good faith with a reserve or other appropriate provision
having been made thereof; (b) statutory Liens of landlords, carriers,
warehousemen, mechanics, materialmen and other similar liens imposed by law,
which are incurred in the ordinary course of business for sums not more than
thirty (30) days delinquent or which are being contested in good faith; provided
--------
that a reserve or other appropriate provision shall have been made therefor and
the aggregate amount of such Liens is less than $500,000; (c) Liens (other than
any Lien imposed by the Employee Retirement Income Security Act of 1974 or any
rule or regulation promulgated thereunder) incurred or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety, stay, customs and appeal
bonds, bids, leases, government contracts, trade contracts, performance and
return of money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money); (d) deposits in an aggregate amount not to
exceed $500,000, made in the ordinary course of business to secure liability to
insurance carriers; (e) Liens for purchase money obligations; provided that:
--------
(i) the purchase of the asset subject to any such Lien is permitted under
subsection 9.8(a); (ii) the Indebtedness secured by any such Lien is permitted
under subsection 9.4; and (iii) any such Lien encumbers only the asset so
purchased; (f) any attachment or judgment Lien not constituting an Event of
Default; (g) leases or subleases granted to others not interfering in any
material respect with the business of the Company or its Subsidiaries; (h)
easements, rights of way, restrictions and other similar charges or encumbrances
not interfering in any material respect with the ordinary conduct of the
business of the Company or any of its Subsidiaries; (i) Liens existing on the
date hereof and renewals and extensions thereof, which Liens are set forth on
Schedule 5.27 hereto; and (j) liens securing Senior Indebtedness.
- -------------
36
<PAGE>
9.6 DISPOSITIONS OF ASSETS. The Company will not, nor will the
----------------------
Company permit any of its Subsidiaries directly or indirectly to: convey, sell
(pursuant to a sale/leaseback or otherwise), lease, sublease, transfer or
otherwise dispose of, or grant any Person an option to acquire, in one
transaction or a series of transactions, any of its property, business or
assets, or the capital stock of or other equity interests in any of its
Subsidiaries, whether now owned or hereafter acquired, except for (a) bona fide
sales of inventory, including lease receivables, to customers for fair value in
the ordinary course of business and dispositions of obsolete equipment not used
or useful in the business, and (b) Asset Dispositions if all of the following
conditions are met: (i) the market value of assets sold or otherwise disposed
of (by the Company and its Subsidiaries taken as a whole) in any fiscal year of
the Company do not exceed $500,000; (ii) the consideration received is at least
equal to the fair market value of such assets; (iii) the sole consideration
received is cash; (iv) after giving effect to the sale of other disposition of
the assets included within the Asset Disposition and the repayment of
Indebtedness with the proceeds thereof, the Company would be in compliance on a
pro forma basis with the covenants set forth in Section 9.8 hereof recomputed
for the most recently ended month for which information is available and is in
compliance with all other terms and conditions contained in this Agreement; and
(vi) no Event of Default then exists or shall result from such sale or other
disposition.
9.7 LIMITATIONS ON RESTRICTED PAYMENTS. The Company shall not, and
----------------------------------
shall not permit any of its Subsidiaries to declare, or make any Restricted
Payment.
9.8 FINANCIAL COVENANTS. The Company covenants and agrees that until
-------------------
payment in full of all Indebtedness hereunder and under the Note, the Company
shall comply with and shall cause each of its Subsidiaries to comply with all
covenants in this Section 9.8 applicable to such Person.
(a) Capital Expenditures. The Company shall not permit Capital
--------------------
Expenditures (as defined in Exhibit F) calculated in any fiscal year to exceed
5% of the Capital Base of the Company for any fiscal year. For purposes of this
Section 9.8(a), Capital Base shall mean the Tangible Net Worth of the Company
plus all Indebtedness under this Agreement.
"CAPITAL EXPENDITURES" will be calculated as illustrated on Exhibit F.
(b) Maintenance of Minimum Tangible Net Worth. The Company has a
-----------------------------------------
Tangible Net Worth on the date hereof of at least $6.0 million. As of the end of
each fiscal year, the Company will have a Tangible Net Worth equal to at least
the amount set forth below:
<TABLE>
<CAPTION>
Year Fiscal Year Ending Minimum Tangible Net Worth
- ---- ------------------ --------------------------
<S> <C> <C>
Year 1 June 30, 1997 $6 million
Year 2 June 30, 1998 $6 million plus 50% of Net Income for Year 1.
</TABLE>
37
<PAGE>
<TABLE>
<S> <C> <C>
Year 3 June 30, 1999 Minimum Tangible Net Worth required for Year 2 plus 50%
of Net Income for Year 2.
Year 4 June 30, 2000 Minimum Tangible Net Worth required for Year 3 plus 50%
of Net Income for Year 3.
Year 5 June 30, 2001 Minimum Tangible Net Worth required for Year 4 plus 50%
of Net Income for Year 4.
Year 6 June 30, 2002 Minimum Tangible Net Worth required for Year 5 plus 50%
of Net Income for Year 5.
Year 7 June 30, 2003 Minimum Tangible Net Worth required for Year 6 plus 50%
of Net Income for Year 6.
Year 8 June 30, 2004 Minimum Tangible Net Worth required for Year 7 plus 50%
of Net Income for Year 7.
</TABLE>
Satisfaction of such minimum Tangible Net Worth requirement will be tested as
provided in Exhibit F and, for such purpose, losses shall be disregarded so that
the required minimum Tangible Net Worth at the end of any fiscal year shall not
be less than the required minimum Tangible Net Worth for the preceding fiscal
year.
(c) Maintenance of Allowance for Bad Debt. The Company will
-------------------------------------
maintain an allowance for bad debt reserve for not less than 1.8% of the
aggregate amount of net lease receivables at the end of each fiscal period.
9.9 EMPLOYEE BENEFIT PLANS. The Company shall not, and shall not
----------------------
permit any of its Subsidiaries or any ERISA Affiliate, without the prior
approval of Purchaser, (a) to establish or contribute to any employee benefit
plan (within the meaning of Section 3(3) of ERISA) or other employee benefit
arrangement which (i) is subject to Title IV of ERISA or is otherwise a Defined
Benefit Plan, or is a multiple employer plan (within the meaning of Section
413(c) of the Code); or (ii) provides post-retirement welfare benefits or
"parachute payments" (within the meaning of Section 280G(b) of the Code); or (b)
to amend any Plan if the effect of such amendment would cause such Plan to be a
plan or arrangement described in clause (a)(i) hereof or to provide any of the
benefits described in clause (a)(ii) hereof.
9.10 LIMITATION ON BUSINESS OF THE COMPANY. The Company shall not
-------------------------------------
engage in any business or transaction other than the business in which it is
currently engaged and the transactions contemplated by the Transaction Documents
and this Agreement.
38
<PAGE>
9.11 INVESTMENTS; JOINT VENTURES. The Company shall not, and shall
---------------------------
not permit any of its Subsidiaries directly or indirectly to make or own any
Investment in any Person except: (a) the Company and its Subsidiaries may make
and own Investments in Cash Equivalents; provided that such Cash Equivalents are
not subject to setoff rights in favor of the issuing bank arising from any
banking relationship of the Company or any of its Subsidiaries; (b) the Company
and its Subsidiaries may make intercompany loans and investments to the extent
permitted under subsection 9.4; (c) the Company and its Subsidiaries may make
loans and advances to employees for moving, entertainment, travel and other
similar expenses in the ordinary course of business not to exceed $500,000 in
the aggregate at any time outstanding; (d) the Company and its Subsidiaries may
purchase portfolios of assets of leasing companies which portfolios relate to
the Company's business in the ordinary course; and (e) the Company and its
Subsidiaries may acquire any interest in any leasing company or leasing business
(whether by a purchase of assets, purchase of stock, merger or otherwise), or
enter into any leasing joint venture, in any such case in respect of portfolios
which are related to the Company's business, involving an aggregate
consideration (including, without limitation, the assumption of liabilities
whether direct or indirect) up to $5,000,000 in any one transaction or series of
related transactions in any twelve-month period..
9.12 CONTINGENT OBLIGATIONS. The Company shall not, nor shall the
----------------------
Company permit any of its Subsidiaries directly or indirectly to create or
become or be liable with respect to any Contingent Obligation except those; (a)
resulting from endorsements of negotiable instruments for collection in the
ordinary course of business; (b) arising under the Transactions Documents; (c)
existing on the Closing Date and as described in Schedule 9.12 annexed hereto;
-------------
(d) arising with respect to customary indemnification and purchase price
adjustment obligations incurred in connection with any Asset Dispositions; (e)
incurred in the ordinary course of business with respect to surety and appeal
bonds, performance and return-of-money bonds and similar obligations not
exceeding any time outstanding $500,000 in aggregate liability; (f) incurred
with respect to any Indebtedness permitted pursuant to Section 9.4 hereof; (g)
which are incurred in the normal course of the Company's business and are in
respect of (i) letters of credit in an aggregate amount outstanding at any time
not greater than $5,000,000, (ii) Senior Indebtedness, (iii) obligations of any
Subsidiary of the Company in its capacity as a casualty insurer and (iv) the
sale or other disposition to third parties of lease receivables; and (h) not
permitted by clauses (a) through (g) above so long as any such Contingent
Obligations, in the aggregate at any time outstanding do not exceed $500,000.
9.13 MANAGEMENT FEES AND COMPENSATION. The Company shall not, nor
--------------------------------
shall the Company permit any of its Subsidiaries directly or indirectly to pay
any management, consulting or similar fees to any Affiliate or to any director,
officer or employee of the Company of any of its Subsidiaries except reasonable
Director's fees and expenses and except as set forth on Schedule 9.13.
-------------
Notwithstanding the foregoing, no payments may be made with respect to any items
set forth on Schedule 9.13 upon the incurrence and during the continuation of an
-------------
Event of Default.
9.14 FISCAL YEAR. The Company and its Subsidiaries shall not change
-----------
their fiscal year without the prior consent of Purchaser.
39
<PAGE>
9.15 PRESS RELEASE; PUBLIC OFFERING MATERIALS. The Company shall not,
----------------------------------------
nor shall the Company permit any of its Subsidiaries to disclose a name of
either Purchaser or any of their respective Affiliates in any press release or
in any prospectus, proxy statement or other materials filed with the
governmental entity relating to a public offering of the capital stock or other
equity interest of the Company or any of its Subsidiaries without Purchaser's or
such Affiliate's prior written consent which shall not be unreasonably withheld.
9.16 SUBSIDIARIES. The Company shall not, nor shall the Company
------------
permit any of its Subsidiaries directly or indirectly to establish, create or
acquire any new Subsidiary.
ARTICLE 10
PREPAYMENT
----------
10.1 OPTIONAL PREPAYMENT. The Company may prepay outstanding
-------------------
principal (together with accrued interest) on the Note only if the Note is
prepaid in accordance with the "OPTIONAL PREPAYMENT" provisions set forth in
Section 4 of the Note.
10.2 MANDATORY PREPAYMENT. Subject to Section 7 of the Note, the
--------------------
Company shall prepay outstanding principal (together with accrued interest) on
the Note in accordance with the "MANDATORY PREPAYMENT" provisions set forth in
Section 3 of the Note.
ARTICLE 11
MISCELLANEOUS
-------------
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
------------------------------------------
representations and warranties made herein shall survive the execution and
delivery of this Agreement, any investigation by or on behalf of Purchaser,
acceptance of the Securities and payment therefor, or termination of this
Agreement.
11.2 NOTICES. All notices, demands and other communications provided
-------
for or permitted hereunder shall be made in writing and shall be by registered
or certified first-class mail, return receipt requested, telecopier, courier
service or personal delivery:
40
<PAGE>
(a) if to Purchaser:
Whitney Subordinated Debt Fund, L.P.
177 Broad Street
Stamford, Connecticut 06901
Telecopier No.: (203) 973-1422
Attention: Mr. James H. Fordyce
Mr. Daniel J. O'Brien
with a copy to:
Morrison Cohen Singer & Weinstein, LLP
750 Lexington Avenue
New York, New York 10022
Telecopier No.: (212) 735-8708
Attention: David A. Scherl, Esq.
(b) if to the Company:
BankVest Capital Corp.
114 Turnpike Road
Westboro, MA 01581
Attention: Paul S. Gass
Telecopier: (502) 635-6002
with a copy to:
Goldstein & Manello, P.C.
265 Franklin Street
Boston, MA 02110
Attention: Richard J. Snyder, Esq.
Telecopier: (617) 439-8988
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial overnight courier service; five Business
Days after being deposited in the mail, postage prepaid, if mailed; and when
receipt is acknowledged, if telecopied.
11.3 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors and permitted assigns of the
parties hereto. Subject to applicable securities laws, Purchaser may assign any
of its respective rights under any of the Transaction Documents, and any holder
of the Note, the Warrants or the Common Stock issuable upon exercise of the
Warrants may assign the Note or Warrants or the Common Stock issuable upon
exercise of
41
<PAGE>
the Warrants, in each case to any affiliate of Whitney or to any other Person
provided that any transfer to any other Person shall be subject to the approval
of the Company, such approval not to be unreasonably withheld. The Company may
not assign any of its rights under this Agreement without the prior written
consent of Purchaser. Except as provided in Article 7, no Person other than the
parties hereto and their successors and permitted assigns is intended to be a
beneficiary of any of the Transaction Documents.
11.4 AMENDMENT AND WAIVER.
--------------------
(a) No failure or delay on the part of any of the parties hereto
in exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the parties
hereto at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by any party from the terms of any provision of
this Agreement, shall be effective (i) only if it is made or given in writing
and signed by all of the parties hereto, and (ii) only in the specific instance
and for the specific purpose for which made or given. Except where notice is
specifically required by this Agreement, no notice to or demand on the Company
in any case shall entitle the Company to any other or further notice or demand
in similar or other circumstances.
11.5 COUNTERPARTS. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
11.6 HEADINGS. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
11.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW OF SUCH STATE.
11.8 JURISDICTION. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY
------------
AGREES THAT THE ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, THE NOTE, THE WARRANTS OR ANY AGREEMENTS OR TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW
YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK
AND HEREBY EXPRESSLY SUBMITS TO THE PERSONAL JURISDICTION AND VENUE OF SUCH
COURTS FOR THE
42
<PAGE>
PURPOSES THEREOF AND EXPRESSLY WAIVES ANY CLAIM OF IMPROPER VENUE AND ANY CLAIM
THAT THE SUCH COURTS ARE AN INCONVENIENT FORUM. EACH PARTY HEREBY IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY
SUCH SUIT, ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED
OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS ADDRESS SET FORTH IN SECTION 11.2,
SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER SUCH MAILING.
11.9 SEVERABILITY. If any one or more of the provisions contained
------------
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
11.10 RULES OF CONSTRUCTION. Unless the context otherwise requires,
---------------------
"or" is not exclusive, and references to sections or subsections refer to
sections or subsections of this Agreement.
11.11 ENTIRE AGREEMENT. This Agreement, together with the exhibits and
----------------
schedules hereto and the other Transaction Documents, is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein or therein. This Agreement, together with the exhibits
and schedules hereto, and the other Transaction Documents supersede all prior
agreements and understandings between the parties with respect to such subject
matter.
11.12 CERTAIN EXPENSES. The Company will pay all reasonable expenses
----------------
of Purchaser (including fees, charges and disbursements of counsel) in
connection with any amendment, supplement, modification or waiver of or to any
provision of this Agreement (including, without limitation, a response to a
request by the Company for Purchaser's consent to any action otherwise
prohibited hereunder), the Note or the Warrants, or consent to any departure by
the Company from, the terms of any provision of this Agreement, the Note or the
Warrants.
11.13 PUBLICITY. Except as may be required by applicable law, none of
---------
the parties hereto shall issue a publicity release or announcement or otherwise
make any public disclosure concerning this Agreement or the transactions
contemplated hereby, without prior approval by the other party hereto. If any
announcement is required by law to be made by any party hereto, prior to making
such announcement such party will deliver a draft of such announcement to the
other parties and shall give the other parties an opportunity to comment
thereon.
11.14 FURTHER ASSURANCES. Each of the parties shall execute such
------------------
documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations, or other actions by, or
giving any notices to, or making any filings with, any Governmental Authority or
any other Person) as may be reasonably required or desirable to carry out or to
perform the provisions of this Agreement.
11.15 OBLIGATIONS OF PURCHASER. Purchaser's obligation and the
------------------------
obligations of the Company hereunder are subject to the execution and delivery
of this Agreement by Purchaser.
43
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their respective officers hereunto duly authorized
as of the date first above written.
BANKVEST CAPITAL CORP.
By: _____________________________________
Name:
Title:
WHITNEY SUBORDINATED DEBT FUND, L.P.
By: _____________________________________
Name:
A General Partner
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]
44
<PAGE>
EXHIBIT F
INDEBTEDNESS AND FINANCIAL COVENANT CALCULATIONS
------------------------------------------------
1. Calculation of Ratio of Senior Indebtedness to Tangible Net Worth as set
forth in Section 9.4(b).
---------------------------------------------------------------------------
SENIOR INDEBTEDNESS:
(i) Borrowings $__________
Plus: (ii) Recourse Obligations __________
Plus: (iii) Those Contingent Obligations described in clause
(i) of the definition of Contingent Obligations __________
Total Senior Indebtedness __________
Tangible Net Worth __________
Total Senior Indebtedness Divided by Tangible Net Worth plus __________
Indebtedness under this Agreement
Required Ratio of Senior Indebtedness to Tangible Net Worth plus __________
Indebtedness under this Agreement
In Compliance __________
Yes/No
2. Calculation of Capital Expenditures
-----------------------------------
CAPITAL EXPENDITURES are defined as follows:
Amount capitalized as capital expenditures for the period in
question, under GAAP, as property, plant, and equipment or
similar fixed asset accounts, including net present value of
multi-year operating leases. $__________
Plus: deposits made during such period in connection with
property, plant, and equipment; less deposits of a
prior period included above. __________
[Less: Net Proceeds of Asset Disposition (as defined in
Article 1) included in capital expenditures above.] __________
CAPITAL EXPENDITURES __________
F-1
<PAGE>
Less: Portion of Capital Expenditures financed under capital
leases or other Indebtedness __________
UNFINANCED CAPITAL EXPENDITURES/ACTUAL CAPITAL EXPENDITURES
(used in calculation of Fixed Charge Coverage) $__________
3. Calculation of Minimum Tangible Net Worth
-----------------------------------------
ACTUAL TANGIBLE NET WORTH __________
MINIMUM REQUIRED TANGIBLE NET WORTH __________
IN COMPLIANCE __________
Yes/No
F-2
<PAGE>
EXHIBIT 4.9
EXECUTION COPY
--------------
NOTE
----
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO
AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF SUCH ACT AND SUCH LAWS
BANKVEST CAPITAL CORP.
10.101% SUBORDINATED PROMISSORY NOTE
DUE FEBRUARY 27, 2005
$15,000,000 New York, New York
February 28, 1997
FOR VALUE RECEIVED, the undersigned, BANKVEST CAPITAL CORP., a
Massachusetts corporation (the "BORROWER"), hereby promises to pay to the order
of WHITNEY SUBORDINATED DEBT FUND, L.P. or its registered assigns (the
"HOLDER"), the principal sum of FIFTEEN MILLION ($15,000,000) on February 27,
2005 (the "MATURITY DATE"), with interest thereon from time to time as provided
herein.
1. PURCHASE AGREEMENT. This Subordinated Promissory Note (the
------------------
"NOTE") is issued by the Borrower pursuant to the Securities Purchase Agreement
(the "PURCHASE AGREEMENT"), dated as of February 28, 1997, by and between the
Borrower and Whitney Subordinated Debt Fund, L.P. ("WSDF"), and the Holder is
entitled to the benefits of this Note and the Purchase Agreement, as it relates
to the Note, and may enforce the agreements of the Borrower contained herein and
therein and exercise the remedies provided for hereby and thereby or otherwise
available to it in
<PAGE>
respect hereto and thereto. Capitalized terms used herein without definition are
used herein with the meanings ascribed to such terms in the Purchase Agreement.
2. INTEREST. The Borrower promises to pay interest on the principal
--------
amount of this Note from time to time outstanding at the rate of 10.101% per
annum. The Borrower shall pay accrued interest quarterly on each March 31, June
30, September 30 and December 31 of each year or, if any such date shall not be
a Business Day, on the next succeeding Business Day to occur after such date
(each date upon which interest shall be so payable, an "INTEREST PAYMENT DATE"),
beginning on March 31, 1997. Interest on this Note shall be paid by wire
transfer of immediately available funds to an account at a bank designated by
the Holder. Interest on this Note shall accrue from the date of issuance until
repayment of the principal and payment of all accrued interest in full. Interest
shall accrue and be computed on the basis of a 360-day year of twelve 30-day
months. Notwithstanding the foregoing provisions of this Section 2, but subject
to applicable law, upon and during the occurrence of an Event of Default (as
hereinafter defined), this Note shall bear interest, from the date of the
occurrence of such Event of Default until such Event of Default is cured or
waived, payable on demand in immediately available funds, at a rate equal to the
rate of interest otherwise in effect pursuant to the first sentence of this
Section 2 plus 2% per annum. Subject to applicable law, any interest that shall
----
accrue on overdue interest on this Note as provided in the preceding sentence
which shall not have been paid in full on or before the next Interest Payment
Date to occur after the Interest Payment Date on which the overdue interest
became due and payable shall itself be deemed to be overdue interest on this
Note to which the preceding sentence shall apply.
3. MANDATORY PREPAYMENT.
--------------------
(a) Public Offerings. Upon the consummation of all Public
----------------
Offerings (as hereinafter defined) while this Note remains outstanding, the
Borrower shall apply the aggregate proceeds therefrom in excess of the sum of
(i) reasonable brokerage commissions or underwriting fees and other reasonable
fees and expenses (including, without limitation, reasonable fees, charges and
disbursements of counsel and accountants and reasonable fees and expenses of
investment bankers) relating to such Public Offering and (ii) $15,000,000 (such
excess being the "Net Proceeds"), such that the first $5,000,000 of Net Proceeds
and 50% of all other Net Proceeds shall prepay the outstanding principal amount
of this Note (together with interest accrued thereon), such payment to be made
within 5 Business Days after receipt by either the Borrower or any of its
Subsidiaries of the proceeds of each such Public Offering, except that
prepayment of the greater of the first $5,000,000 or the amount required to be
prepaid hereunder from the initial Public Offering shall be paid within 90 days
after receipt of the proceeds of such initial Public Offering. For the purposes
hereof, "PUBLIC OFFERING" means the sale by either the Borrower or any of its
Subsidiaries of its capital stock pursuant to a registration statement on Form
S-1 or other Form under the Securities Act.
(b) Change of Control. Upon a Change of Control (as hereinafter
-----------------
defined), the Borrower shall prepay the outstanding principal amount of this
Note (together with interest accrued thereon), within 5 Business Days after the
occurrence of such Change of Control.
2
<PAGE>
For the purposes hereof, "CHANGE OF CONTROL" means (i) any transaction or series
of transactions in which one or more Persons, other than the current
shareholders of the Company, become the beneficial owners of an aggregate of 30%
or more of the then outstanding capital stock of the Company, provided that
shares of capital stock acquired upon exercise of Management Options or Other
Warrants shall be excluded for purposes of this clause and shares sold by the
Company in a Public offering shall be disregarded for purposes of this clause,
(ii) Paul S. Gass shall sell all or substantially all of his equity ownership in
the Borrower to any Person other than his spouse and his descendants (whether
natural or adopted) and any trust solely for the benefit of Gass and/or his
spouse and/or such descendants, (iii) the sale of all or substantially all of
the Borrower's assets, (iv) the liquidation of the Borrower, (v) the election of
any person to the Board of Directors who was not placed in nomination for that
office as contemplated in the Stockholders' Agreement, (vi) Paul S. Gass shall
cease to serve as the President and Chief Executive Officer of the Borrower, and
(vii) except if permitted or not prohibited by the Purchase Agreement, the
combination of the Borrower with another company, as a result of which the
shareholders of Borrower hold less than 70% of the total of all voting shares
outstanding or Borrower's directors constitute less than a majority of the Board
of Directors of the combined entity.
(c) Notice. The Borrower shall give written notice to the Holder
------
of any mandatory prepayment pursuant to this Section 3 at least 5 Business Days
prior to the date of such prepayment. Such notice shall be given in the manner
specified in Section 11.2 of the Purchase Agreement.
4. OPTIONAL PREPAYMENT.
-------------------
(a) Upon notice given to the Holder as provided in Section 4(b),
the Borrower, at its option, may prepay all or any portion of this Note at any
time, by paying an amount equal to the outstanding principal amount of this
Note, or the portion of this Note so noticed for prepayment, together with
interest accrued and unpaid thereon to the date fixed for prepayment, together
with costs and expenses (including, without limitation, reasonable fees, charges
and disbursements of counsel), if any, associated with such prepayment, without
penalty or premium; provided, however, each prepayment of less than the full
-------- -------
outstanding principal balance of the Note shall be in an aggregate principal
amount of $1,000,000 or a whole multiple thereof, and provided, further, that
-------- -------
unless this Note shall be paid in full, the aggregate principal balance of this
Note outstanding at any time shall be at least $5,000,000.
(b) The Borrower may give written notice of prepayment of this
Note or any portion thereof not less than 10 nor more than 60 days prior to the
date fixed for such prepayment. Such notice of prepayment shall be given in the
manner specified in Section 11.2 of the Purchase Agreement. Upon notice of
prepayment being given by the Borrower, the Borrower covenants and agrees that
it will prepay, on the date therein fixed for prepayment, the outstanding
principal amount of this Note or the portion hereof so noticed for prepayment,
together with interest accrued and unpaid thereon to the date fixed for such
prepayment, together with the costs and expenses referred to in Section 4(a).
3
<PAGE>
(c) All optional prepayments under this Section 4 shall include
payment of accrued interest on the principal amount so prepaid and shall be
applied first to all costs, expenses and indemnities payable under the Purchase
Agreement, then to payment of default interest, if any, then to payment of
accrued interest, and thereafter to principal.
5. AMENDMENT. Amendments and modifications of this Note may be made
---------
only in the manner provided in Section 11.4 of the Purchase Agreement.
6. DEFAULTS AND REMEDIES.
---------------------
(a) Events of Default. An "Event of Default" shall occur if:
-----------------
(i) the Borrower shall default in the payment of the
principal of this Note, or any installment thereof, when and as the same shall
become due and payable, whether at maturity or at a date required or fixed for
prepayment or by acceleration or otherwise; or
(ii) the Borrower shall default in the payment of any
installment of interest on this Note according to its terms, when and as the
same shall become due and payable and such default shall continue for a period
of 5 days following notice thereof; or
(iii) the Borrower shall default in the due observance or
performance of any covenant to be observed or performed pursuant to Sections
8.1, 8.2(a), 8.3(a), 8.11 or Article 9 of the Purchase Agreement and such
default shall continue for a period of 15 days;
(iv) the Borrower or any of its Subsidiaries shall default
in the due observance or performance of any other covenant, condition or
agreement on the part of the Borrower or any of its Subsidiaries to be observed
or performed pursuant to the terms hereof or pursuant to the terms of the
Purchase Agreement or any of the Transaction Documents (other than those
referred to in clauses (i), (ii) or (iii) of this Section 6(a)), and such
default shall continue for 30 days after the earlier of (A) the date the
Borrower is required to give notice thereof to the Holder (whether or not such
notice is actually given) or (B) the date of written notice thereof, specifying
such default and, if such default is capable of being remedied, requesting that
the same be remedied, shall have been given to the Borrower by the Holder; or
(v) any representation, warranty or certification made by
or on behalf of the Borrower or its Subsidiaries in the Purchase Agreement, this
Note, the Transaction Documents or in any certificate or other document
delivered pursuant hereto or thereto shall have been incorrect in any material
respect when made; or
(vi) any event or condition shall occur that results in
(A) the acceleration of the maturity of any Indebtedness of the Borrower or any
of its Subsidiaries, or (B)
4
<PAGE>
a default at the maturity of any Indebtedness of the Borrower, in either case in
a principal amount aggregating $250,000 or more; or
(vii) any uninsured damage to or loss, theft or destruction
of any assets of the Borrower or any of its Subsidiaries shall occur that is in
excess of $500,000; or
(viii) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction seeking
(a) relief in respect of the Borrower or any of its Subsidiaries, or of a
substantial part of their property or assets, under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other Federal or
state bankruptcy, insolvency, receivership or similar law, (b) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for the Borrower or any of its Subsidiaries, or for a substantial part of their
property or assets, or (c) the winding up or liquidation of either the Borrower
or any of its Subsidiaries; and 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; or
(ix) the Borrower or any of its Subsidiaries shall (a)
voluntarily commence any proceeding or file any petition seeking relief under
Title 11 of the United States Code, as now constituted or hereafter amended, or
any other Federal or state bankruptcy, insolvency, receivership or similar law,
(b) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition described in
paragraph (viii) of this Section 6(a), (c) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any of its Subsidiaries, or for a
substantial part of their property or assets, (d) file an answer admitting the
material allegations of a petition filed against it in any such proceeding, (e)
make a general assignment for the benefit of creditors, (f) become unable, admit
in writing its inability or fail generally to pay its debts as they become due
or (g) take any action for the purpose of effecting any of the foregoing; or
(x) one or more judgments for the payment of money in an
aggregate amount in excess of $250,000 (to the extent not covered by insurance)
shall be rendered against the Borrower or any of its Subsidiaries and the same
shall remain undischarged for a period of 30 days during which execution shall
not be effectively stayed, or any action shall be legally taken by a judgment
creditor to levy upon assets or properties of the Borrower or any of its
Subsidiaries to enforce any such judgment; or
(xi) the holder or holders of Class A Preferred Stock
shall exercise their right to elect a director or directors to the Company's
Board of Directors upon the occurrence of an Event of Non-Compliance of the type
described in Sections 9(A)(ii), 9(A)(iii), 9(a)(vi) or 9(A)(viii) of the
Company's Certificate of Designation setting forth the preferences, voting
powers, qualifications and special or relative rights or privileges of the
Company's Class A and Class B Preferred Stock.
(b) Acceleration.
------------
5
<PAGE>
(i) If an Event of Default occurs under Section
6(a)(viii) or (ix), then the outstanding principal of and all accrued interest
on this Note shall automatically become immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived.
(ii) If any other Event of Default occurs and is
continuing, the Holder, by written notice to the Borrower, may declare the
principal of and accrued interest on this Note to be immediately due and
payable. Upon such declaration, such principal and interest shall become
immediately due and payable.
(iii) The Holder may rescind an acceleration and its
consequences if all existing Events of Default have been cured or waived, except
nonpayment of principal or interest that has become due solely because of the
acceleration, and if the rescission would not conflict with any judgment or
decree. Any notice of rescission shall be given in the manner specified in
Section 11.2 of the Purchase Agreement.
7. SUBORDINATION. The "Subordinated Indebtedness", as defined below
-------------
in this Section 7, shall at all times be wholly subordinate and junior in right
of payment to all Senior Indebtedness to the extent and in the manner provided
in this Section 7.
(a) Definitions. As used in this Section 7, the following terms
-----------
shall have the following meanings:
"INDEBTEDNESS" shall have the meaning assigned to that term in the
Purchase Agreement.
"SENIOR INDEBTEDNESS" shall have the meaning assigned to that term in
the Purchase Agreement.
"SUBORDINATED INDEBTEDNESS" shall mean (i) the principal of and
interest on this Note; and (ii) any other obligations of the Borrower arising
out of or in connection with the Purchase Agreement or this Note.
(b) Subordination Upon Certain Events. Upon the occurrence of
---------------------------------
any Event of Default with respect to the Borrower (but not its Subsidiaries)
under Sections 6(a)(viii) or (ix) of this Note:
(i) Upon any payment or distribution of assets of the
Borrower to creditors of such Borrower, holders of Senior Indebtedness shall be
entitled to receive indefeasible payment in full of all obligations with respect
to the Senior Indebtedness before the Holder shall be entitled to receive any
distribution in respect of the Subordinated Indebtedness.
6
<PAGE>
(ii) Until all obligations with respect to Senior
Indebtedness are paid in full, any distribution to which the Holder would be
entitled but for this Section 7 shall be made to the holders of Senior
Indebtedness, as their interests may appear, except that the Holder may,
pursuant to a plan of reorganization under Chapter 11 of the Bankruptcy Code of
1978, as amended, or any similar provision of any successor legislation thereto,
receive securities that are subordinate to the Senior Indebtedness to at least
the same extent as this Note if pursuant to such plan the distributions to the
holders of the Senior Indebtedness in the form of cash, securities or other
property, by set-off or otherwise, provide for payment of the full amount of the
allowed claim of the holders of the Senior Indebtedness.
(iii) For purposes of this Section 7, a distribution may
consist of cash, securities or other property, by set-off or otherwise.
(iv) Notwithstanding the foregoing provisions of Section
7(b), if payment or delivery by the Borrower of cash, securities or other
property to the Holder is authorized by an order or decree giving effect, and
stating in such order or decree that effect is given, to the subordination of
this Note to the Senior Indebtedness, and made by a court of competent
jurisdiction in a proceeding under any applicable bankruptcy or reorganization
law, payment or delivery by such Borrower of such cash, securities or other
property shall be made to the Holder in accordance with such order or decree.
(c) Payments and Distributions Received. If the Holder shall
-----------------------------------
have received any payment from or distribution of assets of the Borrower in
respect of the Subordinated Indebtedness in contravention of the terms of this
Section 7 before all Senior Indebtedness is paid in full, then and in such event
such payment or distribution shall be received and held in trust for and shall
be promptly paid over or delivered to the holders of Senior Indebtedness to the
extent necessary to pay all such Senior Indebtedness in full.
(d) Proofs of Claim. If, while any Senior Indebtedness is
---------------
outstanding, any Event of Default under Section 6(a)(viii) or (ix) of this Note
occurs with respect to the Borrower (but not its Subsidiaries), the Holder shall
duly and promptly take such action as any holder of Senior Indebtedness may
reasonably request to collect any payment with respect to this Note for the
account of the holders of the Senior Indebtedness and to file appropriate claims
or proofs of claim in respect of this Note. Upon the failure of the Holder to
take any such action, each holder of Senior Indebtedness is hereby irrevocably
authorized and empowered (in its own name or otherwise), but shall have no
obligation, to demand, sue for, collect and receive every payment or
distribution referred to in respect of this Note and to file claims and proofs
of claim and take such other action as it may deem necessary or advisable for
the exercise or enforcement of any of the rights or interests of the holder with
respect to this Note.
(e) Subrogation. After all amounts payable under or in respect
-----------
of Senior Indebtedness are paid in full, the Holder shall be subrogated to the
rights of holders of Senior Indebtedness to receive payments or distributions
applicable to Senior Indebtedness to the extent that
7
<PAGE>
distributions otherwise payable to the Holder have been applied to the payment
of Senior Indebtedness. A distribution made under this Section 7 to a holder of
Senior Indebtedness which otherwise would have been made to the Holder is not,
as between the Borrower and the Holder, a payment by the Borrower on Senior
Indebtedness.
(f) Relative Rights. This Section defines the relative rights of the
---------------
Holder and the holders of Senior Indebtedness. Nothing in this Section shall:
(1) impair, as between the Borrower and the Holder, the obligation of the
Borrower, which is absolute and unconditional, to pay principal of and interest
(including default interest) on this Note in accordance with its terms; (2)
affect the relative rights of the Holder and creditors of the Borrower other
than holders of Senior Indebtedness or (3) prevent the Holder from exercising
its available remedies upon a default or Event of Default, subject to the
rights, if any, under this Section 7 of holders of Senior Indebtedness.
(g) Subordination May Not Be Impaired by the Borrower. No right of
-------------------------------------------------
any holder of any Senior Indebtedness to enforce the subordination of the
Indebtedness evidenced by this Note shall be impaired by any failure to act by
the Borrower or such holder of Senior Indebtedness or by the failure of the
Borrower or such holder to comply with this Note. The provisions of this
Section 7 shall continue to be effective or be reinstated, as the case may be,
if at any time any payment of any of the Senior Indebtedness is rescinded or
must otherwise be returned by any holder of Senior Indebtedness as a result of
the insolvency, bankruptcy or reorganization of the Borrower or any of its
Subsidiaries or otherwise, all as though such payment had not been made.
(h) Payments. A payment with respect to principal of or interest on
--------
the Subordinated Indebtedness shall include, without limitation, payment of
principal of, and interest on this Note, any depositing of funds for the
defeasance of the Subordinated Indebtedness, any sinking fund and any payment on
account of mandatory prepayment or optional prepayment provisions.
(i) Section Not to Prevent Events of Default. The failure to make a
----------------------------------------
payment on account of principal of or interest on or other amounts constituting
Subordinated Indebtedness by reason of any provision of this Section 7 shall not
be construed as preventing the occurrence of an Event of Default under Section
6.
(j) Subordination Not Impaired: Benefit of Subordination. The Holder
-------------------------------------- -------------
agrees and consents that without notice to or assent by such Holder, and without
affecting the liabilities and obligations of the Borrower and the rights and
benefits of the holders of the Senior Indebtedness set forth in this Section 7:
(i) The obligations and liabilities of the Borrower and any
other party or parties for or upon the Senior Indebtedness may, from time to
time, be increased, renewed, refinanced, extended, modified, amended, restated,
compromised, supplemented, terminated, waived or released, except as prohibited
by Sections 9.3 and 9.4 of the Purchase Agreement;
8
<PAGE>
(ii) The holders of Senior Indebtedness, and any
representative or representatives acting on behalf thereof, may exercise or
refrain from exercising any right, remedy or power granted by or in connection
with any agreements relating to the Senior Indebtedness; and
(iii) Any balance or balances of funds with any holder of
Senior Indebtedness at any time outstanding to the credit of the Borrower may,
from time to time, in whole or in part, be applied, surrendered or released;
all as the holders of the Senior Indebtedness, and any representative or
representatives acting on behalf thereof, may deem advisable, and all without
impairing, abridging, diminishing, releasing or affecting the subordination of
the Subordinated Indebtedness to the Senior Indebtedness provided for herein.
(k) Modification of Section 7. The provisions of this Section 7
-------------------------
are for the benefit of the holders from time to time of Senior Indebtedness and,
so long as any Senior Indebtedness remains unpaid, may not be modified,
rescinded or canceled in whole or in part without the prior written consent
thereto of all holders of Senior Indebtedness.
(l) Miscellaneous.
-------------
(i) To the extent permitted by applicable law, the Holder
and the Borrower hereby waive (1) notice of acceptance hereof by the holders of
the Senior Indebtedness, and (2) all diligence in the collection or protection
of or realization upon the Senior Indebtedness.
(ii) The Borrower and the Holder hereby expressly agree
that the holders of Senior Indebtedness may enforce any and all rights derived
herein by suit, either in equity or law, for specific performance of any
agreement contained in this Section 7 or for judgment at law and any other
relief whatsoever appropriate to such action or procedure.
(iii) The Holder acknowledges and agrees that the foregoing
subordination provisions are, and are intended to be, an inducement and a
consideration to each holder of Senior Indebtedness, whether such Senior
Indebtedness was created or acquired before or after the issuance of this
Agreement, and each holder of Senior Indebtedness shall be deemed conclusively
to have relied upon such subordination provisions in acquiring and continuing to
hold such Senior Indebtedness.
8. USE OF PROCEEDS. The Borrower shall use the proceeds from
---------------
the Indebtedness evidenced by this Note for the payment of fees and expenses in
connection with the transactions contemplated in the Transaction Documents and
for general corporate purposes.
9. SUITS FOR ENFORCEMENT.
---------------------
9
<PAGE>
(a) Subject to Section 7, upon the occurrence of any one or more
Events of Default, the Holder of this Note may proceed to protect and enforce
its rights hereunder by suit in equity, action at law or by other appropriate
proceeding, whether for the specific performance of any covenant or agreement
contained in the Purchase Agreement or this Note or in aid of the exercise of
any power granted in the Purchase Agreement or this Note, or may proceed to
enforce the payment of this Note, or to enforce any other legal or equitable
right of the Holder of this Note.
(b) In case of any default under this Note, the Borrower will
pay to the Holder such amounts as shall be sufficient to cover the costs and
expenses of such Holder due to such default, as provided in Article 7 of the
Purchase Agreement.
10. REMEDIES CUMULATIVE. No remedy herein conferred upon the Holder
-------------------
is intended to be exclusive of any other remedy and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise.
11. REMEDIES NOT WAIVED. No course of dealing between the Borrower
-------------------
and the Holder or any delay on the part of the Holder in exercising any rights
hereunder shall operate as a waiver of any right.
12. TRANSFER.
--------
(a) The term "HOLDER" as used herein shall also include any
transferee of this Note whose name has been recorded by the Borrower in the Note
Register. Each transferee of this Note acknowledges that this Note has not been
registered under the Securities Act, and may be transferred only pursuant to an
effective registration under the Securities Act or pursuant to an applicable
exemption from the registration requirements of the Securities Act.
(b) The Borrower shall maintain a register (the "NOTE REGISTER")
in its principal offices for the purpose of registering the Note and any
transfer thereof, which register shall reflect and identify, at all times, the
ownership of any interest in the Note. Upon the issuance of this Note, the
Borrower shall record the name of the initial purchaser of this Note in the Note
Register as the first Holder. Upon surrender for registration of transfer or
exchange of this Note at the principal offices of the Borrower, the Borrower
shall, at its expense, execute and deliver one or more new Notes of like tenor,
each in a principal amount not less than one-third of the then principal amount
outstanding hereunder, registered in the name of the Holder or a transferee or
transferees. If this Note is divided as provided in this paragraph 12, then all
references herein to this "Note" shall include the Notes issued as a result of
such division. Every Note surrendered for registration of transfer or exchange
shall be duly endorsed, or be accompanied by written instrument of transfer duly
executed by the Holder of such Note or such holder's attorney duly authorized in
writing.
13. REPLACEMENT OF NOTE. On receipt by the Borrower of an affidavit
-------------------
of an authorized representative of the Holder stating the circumstances of the
loss, theft, destruction or
10
<PAGE>
mutilation of this Note (and in the case of any such mutilation, on surrender
and cancellation of such Note), the Borrower, at its expense, will promptly
execute and deliver, in lieu thereof, a new Note of like tenor. If required by
the Borrower, such Holder must provide an indemnity bond or other indemnity
sufficient in the judgment of the Borrower to protect the Borrower from any loss
which it may suffer if a lost, stolen or destroyed Note is replaced.
14. COVENANTS BIND SUCCESSORS AND ASSIGNS. All the covenants,
-------------------------------------
stipulations, promises and agreements in this Note contained by or on behalf of
the Borrower shall bind its successors and assigns, whether so expressed or not.
15. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW OF SUCH STATE.
16. HEADINGS. The headings in this Note are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
BANKVEST CAPITAL CORP.
By: ____________________________________
Name:
Title:
11
<PAGE>
EXHIBIT 4.10
EXECUTION COPY
--------------
VESTED WARRANT
--------------
February 28, 1997
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAW OF
ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH
ACT AND SUCH LAWS.
No. VDW-1 Warrant to Purchase 118,038
Shares of Common Stock
BANKVEST CAPITAL CORP.
COMMON STOCK PURCHASE WARRANT
Void after February 27, 2007
BANKVEST CAPITAL CORP. (the "COMPANY" ), a Massachusetts corporation,
hereby certifies that for value received, WHITNEY SUBORDINATED DEBT FUND, L.P.
("WSDF"), a Delaware limited partnership, or assigns (the "HOLDER"), is entitled
to purchase, subject to the terms and conditions hereinafter set forth, an
aggregate of 118,038 fully paid and nonassessable shares of Common Stock, $1.00
par value (as defined herein) of the Company, at an exercise price of $15.00 per
Warrant Share (as defined herein) (the "PURCHASE PRICE"), subject to adjustment
as provided herein, at any time or from time to time after the date hereof and
---
ending at 5:00 P.M., New York City time, on February 27, 2007 (the "EXPIRATION
DATE").
This Warrant is issued pursuant to the Securities Purchase Agreement (the
"PURCHASE AGREEMENT"), dated as of February 28, 1997, by and between the Company
and Whitney Subordinated Debt Fund, L.P., and is subject to the terms thereof.
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned such terms in the Purchase Agreement. The Holder is entitled to the
rights and subject to the obligations contained in the Purchase Agreement, the
Registration Rights Agreement and the Stockholders Agreement relating to this
Warrant and the shares of Common Stock issuable upon exercise of this Warrant.
<PAGE>
1. DEFINITIONS. For the purposes of this Warrant, the following terms
-----------
shall have the meanings indicated:
"APPLICABLE PRICE" shall mean the higher of (a) the Current Market
Price per share of Common Stock on the applicable record or other relevant date
and (b) the Dilution Price.
"ARTICLES OF INCORPORATION" shall mean the Articles of Incorporation
of the Company as in effect on February 28, 1997.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in the City of New York are authorized or
required by law or executive order to close.
"CANCELLATION PORTION" has the meaning ascribed to such term in
Subsection 2(b).
"CLOSING PRICE" shall mean, with respect to each share of Common Stock
for any day, (a) the last reported sale price regular way or, in case no such
sale takes place on such day, the average of the closing bid and asked prices
regular way, in either case as reported on the principal national securities
exchange on which the Common Stock is listed or admitted for trading or (b) if
the Common Stock is not listed or admitted for trading on any national
securities exchange, the last reported sale price or, in case no such sale takes
place on such day, the average of the highest reported bid and the lowest
reported asked quotation for the Common Stock, in either case as reported on the
NASDAQ or a similar service if NASDAQ is no longer reporting such information.
"COMMON STOCK" means the Class A common stock, $1.00 par value per
share, of the Company, and any class of stock resulting from successive changes
or reclassification of such Common Stock.
"COMPANY" has the meaning ascribed to such term in the first paragraph
of this Warrant.
"CURRENT MARKET PRICE" shall be determined in accordance with
Subsection 3(e).
"DILUTION PRICE" shall mean, with respect to each share of Common
Stock, $15.00, subject to appropriate adjustment for events described in
Subsection 3(a).
"EXERCISE DATE" has the meaning ascribed to such term in Subsection
2(d).
"EXPIRATION DATE" has the meaning ascribed to such term in the first
paragraph of this Warrant.
2
<PAGE>
"HOLDER" has the meaning ascribed to such term in the first paragraph
and Section 9 of this Warrant.
"INITIAL PUBLIC OFFERING" means the sale by either the Company or any
of its Subsidiaries of its capital stock pursuant to a registration statement on
Form S-1 or otherwise under the Securities Act.
"NASDAQ" shall mean the Automatic Quotation System of the National
Association of Securities Dealers, Inc.
"NOTE" shall mean the Subordinated Promissory Note, dated the date
hereof, in the principal amount of $15,000,000, with the Company as the maker
thereof, and the Holder as the payee thereof.
"PERSON" shall mean any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency or political subdivision thereof) or other
entity of any kind, and shall include any successor (by merger or otherwise) of
such entity.
"PRE DILUTED COMMON STOCK" shall mean the number of shares of Common
Stock issued and outstanding, plus the number of shares of Common Stock issuable
upon exercise of this Warrant, the Vesting Warrant, in each case prior to giving
effect to the transaction which causes an adjustment to the Purchase Price
pursuant to Section 3 hereof, plus the number of shares of Common Stock issuable
as a result of the transaction in question or upon the exercise, exchange and/or
conversion of the securities issued in the transaction in question.
"PURCHASE AGREEMENT" has the meaning ascribed to such term in the
second paragraph of this Warrant.
"PURCHASE PRICE" has the meaning ascribed to such term in the first
paragraph of this Warrant.
"STOCKHOLDERS AGREEMENT" means the First Amendment to Stockholders
Agreement substantially in the form attached to the Purchase Agreement as
Exhibit C.
- ---------
"SUBSIDIARY" shall mean, with respect to any Person, a corporation or
other entity of which 50% or more of the voting power of the voting equity
securities or equity interests is owned, directly or indirectly, by such Person.
"VESTING WARRANT" shall mean the warrant to acquire up to an
additional 53,654 shares of Common Stock subject to the formula set forth in
such warrant and exercisable commencing August 31, 2000.
3
<PAGE>
"WARRANT" shall mean this Warrant and any subsequent Warrant issued
pursuant to Subsection 2(c) or to a transferee as contemplated in Section 9.
"WARRANT REGISTER" has the meaning ascribed to such term in Subsection
9(b).
"WARRANT SHARES" shall mean the shares of Common Stock issuable upon
exercise, and to the extent the Warrant has been exercised, such shares issued
upon exercise.
2. EXERCISE OF WARRANT.
-------------------
(a) Exercise. Subject to the restrictions set forth in the
--------
introductory paragraph of this Warrant, this Warrant may be exercised, in whole
or in part, at any time or from time to time on or prior to the Expiration Date,
by surrendering to the Company at its principal office this Warrant, with the
form of Election to Purchase Shares (the "ELECTION TO PURCHASE SHARES") attached
hereto as Exhibit A duly executed by the Holder and accompanied by payment of
---------
the Purchase Price for the number of shares of Common Stock specified in such
form.
(b) Delivery of Shares; Payment of Purchase Price. As soon as
---------------------------------------------
practicable after surrender of this Warrant and receipt of payment, the Company
shall promptly issue and deliver to the Holder a certificate or certificates for
the number of shares of Common Stock set forth in the Election to Purchase
Shares, in such name or names as may be designated by such Holder, along with a
check for the amount of cash to be paid in lieu of issuance of fractional
shares, if any. Payment of the Purchase Price may be made as follows (or by any
combination of the following): (i) in United States currency by cash or delivery
of a certified check, bank draft or postal or express money order payable to the
order of the Company, (ii) by assigning to the Company all or any part of the
unpaid principal amount of the Note held by the Holder in a principal amount
equal to the Purchase Price, (iii) by surrender of a number of shares of Common
Stock held by the Holder equal to the quotient obtained by dividing (A) the
Purchase Price payable with respect to the portion of this Warrant then being
exercised by (B) the Current Market Price per share of Common Stock on the
Exercise Date, or (iv) by cancellation of any portion of this Warrant (the
"CANCELLATION PORTION") with respect to the number of shares of Common Stock
equal to the quotient obtained by dividing (A) the sum of the Purchase Price
payable with respect to the portion of this Warrant then being exercised by
cancellation of the Cancellation Portion and the Purchase Price that would be
payable with respect to the Cancellation Portion if such portion was being
exercised rather than canceled by (B) the Current Market Price per share of
Common Stock on the Exercise Date.
(c) Partial Exercise. If this Warrant is exercised for less than all
----------------
of the shares of Common Stock purchasable under this Warrant, the Company shall
cancel this Warrant upon surrender hereof and shall execute and deliver to the
Holder a new Warrant of like tenor for the balance of the shares of Common Stock
purchasable hereunder.
(d) When Exercise Effective. The exercise of this Warrant shall be
-----------------------
deemed to have been effective immediately prior to the close of business on the
Business Day on which this
4
<PAGE>
Warrant is surrendered to and the Purchase Price is received by the Company as
provided in this Section 2 (the "EXERCISE DATE") and the Person in whose name
any certificate for shares of Common Stock shall be issuable upon such exercise,
as provided in Subsection 2(b), shall be deemed to be the record holder of such
shares of Common Stock for all purposes on the Exercise Date.
(e) Continued Validity. A Holder of shares of Common Stock issued
------------------
upon the exercise of this Warrant, in whole or in part, shall continue to be
entitled to all of the rights and subject to all of the obligations set forth in
Section 9.
3. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES. The Purchase Price
-------------------------------------------------
and the number of Warrant Shares shall be adjusted from time to time upon the
occurrence of the following events:
(a) Dividend, Subdivision, Combination or Reclassification of Common
----------------------------------------------------------------
Stock. If the Company shall, at any time or from time to time, (i) declare a
- -----
dividend on the Common Stock payable in shares of its capital stock (including
Common Stock), (ii) subdivide the outstanding Common Stock into a larger number
of shares of Common Stock, (iii) combine the outstanding Common Stock into a
smaller number of shares of its Common Stock, or (iv) issue any shares of its
capital stock in a reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), then in each such case, the Purchase
====
Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such date shall be
proportionately adjusted so that the Holder of any Warrant exercised after such
date shall be entitled to receive, upon payment of the same aggregate amount as
would have been payable before such date, the aggregate number and kind of
shares of capital stock which, if such Warrant had been exercised immediately
prior to such date, such Holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification. Any such adjustment shall become effective immediately after
the record date of such dividend or the effective date of such subdivision,
combination or reclassification. Such adjustment shall be made successively
whenever any event listed above shall occur. If a dividend is declared and such
dividend is not paid, the Purchase Price shall again be adjusted to be the
Purchase Price in effect immediately prior to such record date.
(b) Issuance of Rights to Purchase Common Stock Below Current Market
----------------------------------------------------------------
Price or Dilution Price. If the Company shall, at any time or from time to time,
- -----------------------
fix a record date for the issuance of rights, options or warrants to all holders
of Common Stock entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Common Stock, or securities
convertible into Common Stock at a price per share of Common Stock or having a
conversion price per share of Common Stock if a security is convertible into
Common Stock (determined in either such case by dividing (x) the total
consideration payable to the Company upon exercise, conversion or exchange of
such rights, options, warrants or other securities convertible into Common Stock
by (y) the total number of shares of Common Stock covered by such rights,
options, warrants or other securities convertible into Common Stock) lower than
either the Current Market
5
<PAGE>
Price per share of Common Stock on such record date (or, if an ex-dividend date
has been established for such record date, on the day next preceding such ex-
dividend date) or the Dilution Price, then, the Purchase Price shall be reduced
====
to the price determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the sum
of the number of shares of Common Stock outstanding on such record date plus the
number of additional shares of Common Stock which the aggregate offering price
of the total number of shares of Common Stock so to be offered (or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at the Applicable Price and the denominator of which shall be the
number of shares of Common Stock outstanding on such record date plus the number
of additional shares of Common Stock to be offered for subscription or purchase
(or into which the convertible securities so to be offered are initially
convertible). In case such price for subscription or purchase may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be determined in good faith by the Board of
Directors of the Company. Any such adjustment shall become effective immediately
after the record date for such rights or warrants. Such adjustment shall be made
successively whenever such a record date is fixed. If such rights, options or
warrants are not so issued, the Purchase Price shall be adjusted to the Purchase
Price in effect immediately prior to such record date.
(c) Certain Distributions. If the Company shall, at any time or from
---------------------
time to time, fix a record date for the distribution to all holders of Common
Stock (including any such distribution made in connection with a consolidation
or merger in which the Company is the continuing corporation) of evidences of
indebtedness, assets or other property (other than regularly scheduled cash
dividends or cash distributions payable out of consolidated earnings or earned
surplus or dividends payable in capital stock for which adjustment is made under
Subsection 3(a)) or subscription rights, options or warrants (excluding those
referred to in Subsection 3(b)), then the Purchase Price shall be reduced to the
====
price determined by multiplying the Purchase Price in effect immediately prior
to such record date by a fraction (which shall in no event be less than zero),
the numerator of which shall be the Current Market Price per share of Common
Stock on such record date (or, if an ex-dividend date has been established for
such record date, on the next day preceding such ex-dividend date), less the
fair market value (as determined in good faith by the Board of Directors of the
Company) of the portion of the assets, evidences of indebtedness, other
property, subscription rights or warrants so to be distributed applicable to one
share of Common Stock and the denominator of which shall be such Current Market
Price per share of Common Stock. Any such adjustment shall become effective
immediately after the record date for such distribution. Such adjustments shall
be made successively whenever such a record date is fixed. In the event that
such distribution is not so made, the Purchase Price shall be adjusted to the
Purchase Price in effect immediately prior to such record date.
(d) Issuance of Common Stock Below Current Market Price or Dilution
---------------------------------------------------------------
Price. If the Company shall, at any time and from time to time, after the date
- -----
hereof, directly or indirectly, sell or issue shares of Common Stock (regardless
of whether originally issued or from the Company's treasury), or rights,
options, warrants or convertible or exchangeable securities containing the right
to subscribe for or purchase shares of Common Stock (excluding shares issued
6
<PAGE>
(i) in any of the transactions described in Subsections 3(a), (b) and (c)
hereof,(ii) upon exercise of this Warrant and the Vesting Warrant, and (iii)
upon the exercise or conversion of options, warrants or any other securities
convertible into or exchangeable for shares of Common Stock outstanding as of
February 28, 1997 as set forth in Schedule 5.19 to the Purchase Agreement, if
such shares would otherwise be included in this Section 3(d)) at a price per
share of Common Stock (determined, in the case of rights, options, warrants or
convertible or exchangeable securities, by dividing (x) the total consideration
received or receivable by the Company in consideration of the sale or issuance
of such rights, options, warrants or convertible or exchangeable securities,
plus the total consideration payable to the Company upon exercise or conversion
or exchange thereof, by (y) the total number of shares of Common Stock covered
by such rights, options, warrants or convertible or exchangeable securities)
lower than either the Current Market Price per share of Common Stock or the
Dilution Price immediately prior to such sale or issuance, then the Purchase
====
Price shall be reduced to a price determined by multiplying the Purchase Price
in effect immediately prior thereto by a fraction, the numerator of which shall
be the sum of the number of shares of Common Stock outstanding immediately prior
to such sale or issuance plus the number of shares of Common Stock which the
aggregate consideration received (determined as provided below) for such sale or
issuance would purchase at the Applicable Price and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
after such sale or issuance. Such adjustment shall be made successively whenever
such sale or issuance is made. For the purposes of such adjustments, the shares
of Common Stock which the holder of any such rights, options, warrants, or
convertible or exchangeable securities shall be entitled to subscribe for or
purchase shall be deemed to be issued and outstanding as of the date of such
sale or issuance and the consideration "received" by the Company therefor shall
be deemed to be the consideration actually received or receivable by the Company
(plus any underwriting discounts or commissions in connection therewith) for
such rights, options, warrants or convertible or exchangeable securities, plus
the consideration stated in such rights, options, warrants or convertible or
exchangeable securities to be payable to the Company for the shares of Common
Stock covered thereby. If the Company shall sell or issue shares of Common Stock
for a consideration consisting, in whole or in part, of property other than cash
or its equivalent, then in determining the "price per share of Common Stock" and
the "consideration" received or receivable by or payable to the Company for
purposes of the first sentence and the immediately preceding sentence of this
Subsection 3(d), the fair value of such property shall be determined in good
faith by the Board of Directors of the Company. The determination of whether any
adjustment is required under this Subsection 3(d) by reason of the sale and
issuance of rights, options, warrants or convertible or exchangeable securities
and the amount of such adjustment, if any, shall be made only at the time of
such issuance or sale and not at the subsequent time of issuance of shares of
Common Stock upon the exercise of such rights to subscribe or purchase.
(e) Determination of Current Market Price. For the purpose of any
-------------------------------------
computation under Subsections (b), (c) or (d) of this Section 3 or any other
provision of this Warrant, the Current Market Price per share of Common Stock on
any date shall be deemed to be the average of the daily Closing Prices per share
of Common Stock for the 10 consecutive trading days commencing 15 trading days
before such date. If on any such date the shares of Common Stock are not listed
or admitted for trading on any national securities exchange or quoted by NASDAQ
or a similar service,
7
<PAGE>
the Current Market Price for such shares shall be the fair market value of such
shares on such date as determined in good faith by a committee of disinterested
members of the Board of Directors of the Company based on a written opinion of
an independent investment banking firm of nationally recognized stature.
(f) De Minimis Adjustments. No adjustment in the Purchase Price shall
----------------------
be made if the amount of such adjustment would result in a change in the
Purchase Price per share of less than $0.05, but in such case any adjustment
that would otherwise be required to be made shall be carried forward and shall
be made at the time of and together with the next subsequent adjustment, which
together with any adjustment so carried forward, would result in a change in the
Purchase Price of $0.05 per share. If the Company shall, at any time or from
time to time, issue Common Stock by way of dividends on any stock of the Company
or subdivide or combine the outstanding shares of the Common Stock, such amount
of $0.01 (as theretofore increased or decreased, if such amounts shall have been
adjusted in accordance with the provisions of this clause) shall forthwith be
proportionately increased in the case of a combination or decreased in the case
of a subdivision or stock dividend so as appropriately to reflect the same.
Notwithstanding the provisions of the first sentence of this Subsection 3(f),
any adjustment postponed pursuant to this Subsection 3(f) shall be made no later
than the earlier of (i) three years from the date of the transaction that would,
but for the provisions of the first sentence of this Section 3(f), have required
such adjustment, (ii) an Exercise Date or (iii) the Expiration Date.
(g) Adjustments to Other Shares. In the event that at any time, as a
---------------------------
result of an adjustment made pursuant to Subsection 3(a), the Holder shall
become entitled to receive, upon exercise of this Warrant, any shares of capital
stock of the Company other than shares of Common Stock, the number of such
other shares so receivable upon exercise of this Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares of Common Stock
contained in Subsections 3(a), (b), (c) and (d), inclusive, and the provisions
of Sections 2, 5, 6 and 7 with respect to the shares of Common Stock shall apply
on like terms to any such other shares.
(h) Adjustment of Number of Shares Issuable Upon Exercise. Upon each
-----------------------------------------------------
adjustment of the Purchase Price as a result of the calculations made in
Subsections 3(a), (b), (c) or (d), this Warrant shall thereafter evidence the
right to receive, at the adjusted Purchase Price, that number of shares of
Common Stock (calculated to the nearest one-hundredth) obtained by dividing
(x) the product of the aggregate number of shares of Common Stock covered by
this Warrant immediately prior to such adjustment and the Purchase Price in
effect immediately prior to such adjustment of the Purchase Price by (y) the
Purchase Price in effect immediately after such adjustment of the Purchase
Price.
4. CERTIFICATE AS TO ADJUSTMENTS. Whenever the Purchase Price and the
-----------------------------
number of Warrant Shares, or the securities or other property deliverable upon
the exercise of this Warrant, shall be adjusted pursuant to the provisions
hereof, the Company shall promptly give written notice thereof to the Holder, in
accordance with Section 13, in the form of a certificate signed by the
8
<PAGE>
Chairman of the Board, President or one of the Vice Presidents of the Company,
and by the Chief Financial Officer, Treasurer or one of the Assistant Treasurers
of the Company, stating the adjusted Purchase Price, the number of Warrant
Shares, or the securities or other property deliverable upon exercise of the
Warrant, calculated to the nearest cent or the nearest one-hundredth of a share
and setting forth in reasonable detail the method of calculation and the facts
requiring such adjustment and upon which such calculation is based. Each
adjustment shall remain in effect until a subsequent adjustment is required.
5. FRACTIONAL SHARES. Notwithstanding an adjustment pursuant to Section
-----------------
3(h) in the number Warrant Shares or pursuant to any other provision of this
Warrant, the Company shall not be required to issue fractions of shares upon
exercise of this Warrant or to distribute certificates which evidence fractional
shares. In lieu of fractional shares, the Company may make payment to the
Holder, at the time of exercise of this Warrant as herein provided, of an amount
in cash equal to such fraction multiplied by the greater of the Current Market
Price of a share of Common Stock on the Exercise Date and the Dilution Price.
6. NOTICE OF PROPOSED ACTIONS. In case the Company shall propose at any
--------------------------
time or from time to time (a) to declare or pay any dividend payable in stock of
any class to the holders of Common Stock or to make any other distribution to
the holders of Common Stock (other than a regularly scheduled cash dividend),
(b) to offer to the holders of Common Stock rights or warrants to subscribe for
or to purchase any additional shares of Common Stock or shares of stock of any
class or any other securities, rights or options, (c) to effect any
reclassification of its Common Stock, (d) to effect any consolidation, merger or
sale, transfer or other disposition of all or substantially all of the property,
assets or business of the Company which would, if consummated, adjust the
Purchase Price or the securities issuable upon exercise of the Warrant, (e) to
effect the liquidation, dissolution or winding up of the Company, or (f) to take
any other action that would require a vote of the Company's stockholders, then,
in each such case, the Company shall give to the Holder, in accordance with
Section 13, a written notice of such proposed action, which shall specify (i)
the record date for the purposes of such stock dividend, distribution of rights
or warrants or vote of the stockholders of the Company, or if a record is not to
be taken, the date as of which the holders of shares of Common Stock of record
to be entitled to such dividend, distribution of rights or warrants, or vote is
to be determined, or (ii) the date on which such reclassification,
consolidation, merger, sale, transfer, disposition, liquidation, dissolution or
winding up is expected to become effective, and such notice shall be so given as
promptly as possible but in any event at least ten (10) Business Days prior to
the applicable record, determination or effective date specified in such notice.
7. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of its
-------------------------
Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder of this Warrant against
dilution or other impairment. Without limiting the generality of the foregoing,
the Company (a) will not increase the par value of any shares of stock
9
<PAGE>
receivable on the exercise of this Warrant above the amount payable therefor on
such exercise, (b) will at all times reserve and keep available the maximum
number of its authorized shares of Common Stock, free from all preemptive rights
therein, which will be sufficient to permit the full exercise of this Warrant,
and (c) will take all such action as may be necessary or appropriate in order
that all Warrant Shares will, upon issuance, be duly and validly issued, fully
paid and nonassessable, and free from all taxes, liens and charges with respect
to the issue thereof.
8. REPLACEMENT OF WARRANT. On receipt by the Company of an affidavit of
----------------------
an authorized representative of the Holder stating the circumstances of the
loss, theft, destruction or mutilation of this Warrant (and in the case of any
such mutilation, on surrender and cancellation of such Warrant), the Company at
its expense will promptly execute and deliver, in lieu thereof, a new Warrant of
like tenor.
9. RESTRICTIONS ON TRANSFER.
------------------------
(a) The term "HOLDER" as used herein shall also include any transferee
of this Warrant whose name has been recorded by the Company in the Warrant
Register (as hereinafter defined). Each transferee of this Warrant acknowledges
that this Warrant has not been registered under the Securities Act and may be
transferred only pursuant to an effective registration under the Securities Act
or pursuant to an applicable exemption from the registration requirements of the
Securities Act.
(b) The Company shall maintain a register (the "WARRANT REGISTER") in
its principal office for the purpose of registering the Warrant and any transfer
thereof, which register shall reflect and identify, at all times, the ownership
of any interest in the Warrant. Upon the issuance of this Warrant, the Company
shall record the name of the initial purchaser of this Warrant in the Warrant
Register as the first Holder. Upon surrender for registration of transfer or
exchange of this Warrant together with a properly executed Form of Assignment
attached hereto as Exhibit B at the principal office of the Company, the Company
---------
shall, at its expense, execute and deliver one or more new Warrants of like
tenor which shall be exercisable for a like aggregate number of shares of Common
Stock, registered in the name of the Holder or a transferee or transferees.
(c) This Warrant may be transferred or assigned by the Holder at
anytime to any Person other than an entity that conducts business in the same
industry and in direct competition with the Company. Notwithstanding the
foregoing, the Holder may transfer or assign this Warrant at any time to its
Permitted Transferees (as such term is defined in the Stockholders Agreement).
10. NO RIGHTS OR LIABILITY AS A STOCKHOLDER. This Warrant does not
---------------------------------------
entitle the Holder hereof to any voting rights or other rights as a stockholder
of the Company. No provisions hereof, in the absence of affirmative action by
the Holder hereof to purchase Common Stock, and no enumeration herein of the
rights or privileges of the Holder shall give rise to any liability of such
Holder as a stockholder of the Company.
10
<PAGE>
11. CHARGES, TAXES AND EXPENSES. Issuance of certificates for shares of
---------------------------
Common Stock upon the exercise of this Warrant shall be made without charge to
the Holder hereof for any issue or transfer tax, or other incidental expense, in
respect of the issuance or delivery of such certificates or the securities
represented thereby, all of which taxes and expenses shall be paid by the
Company.
12. AMENDMENT OR WAIVER. This Warrant and any term hereof may be amended,
-------------------
waived, discharged or terminated only by and with the written consent of the
Company and the Holder.
13. NOTICES. Any notice or other communication (or delivery) required or
-------
permitted hereunder shall be made in writing and shall be by registered mail,
return receipt requested, telecopier, courier service or personal delivery to
the Company at its principal office as specified in Section 11.2 of the Purchase
Agreement and to the Holder at its address as it appears in the Warrant
Register. All such notices and communications (and deliveries) shall be deemed
to have been duly given: when delivered by hand, if personally delivered; when
delivered by courier, if delivered by commercial overnight courier service; five
Business Days after being deposited in the mail, postage prepaid, if mailed; and
when receipt is acknowledged, if telecopied.
14. CERTAIN REMEDIES. The Holder shall be entitled to an injunction or
----------------
injunctions to prevent breaches of the provisions of this Warrant and to enforce
specifically the terms and provisions of this Warrant in any court of the United
States or any state thereof having jurisdiction, this being in addition to any
other remedy to which such Holder may be entitled at law or in equity.
15. GOVERNING LAW. This Warrant shall be governed by and construed in
-------------
accordance with the laws of the State of New York, without regard to the
principles of conflicts of law of such State.
16. HEADINGS. The headings in this Warrant are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
BANKVEST CAPITAL CORP.
By: ________________________________
Name:
Title:
11
<PAGE>
Exhibit A to Common
Stock Purchase Warrant
-----------------------------
[FORM OF]
ELECTION TO PURCHASE SHARES
The undersigned hereby irrevocably elects to exercise the Warrant to
purchase _____ shares of Class A Common Stock, $1.00 par value per share
("COMMON STOCK"), of BANKVEST CAPITAL CORP. (the "COMPANY") and hereby [makes
payment of $_______ therefor] [or] [makes payment therefor by assignment to the
Company pursuant to Section 2(b)(ii) of the Warrant of $_____________ aggregate
principal amount of Note (as defined in the Warrant)] [or] [makes payment
therefore by surrendering pursuant to Section 2(b)(iii) _____ shares of Common
Stock of the Company] [or] [makes payment therefor by cancellation pursuant to
Section 2(b)(iv) of a portion of the Warrant with respect to _________ shares of
Common Stock]. The undersigned hereby requests that certificates for such shares
be issued and delivered as follows:
ISSUE TO:_______________________________________________________________________
(NAME)
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
________________________________________________________________________________
(SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)
DELIVER TO:_____________________________________________________________________
(NAME)
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
If the number of shares of Common Stock purchased hereby is less than
the number of shares of Common Stock covered by the Warrant, the undersigned
requests that a new Warrant representing the number of shares of Common Stock
not purchased be issued and delivered as follows:
ISSUE TO:_______________________________________________________________________
(NAME OF HOLDER)
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
DELIVER TO:_____________________________________________________________________
(NAME OF HOLDER)
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
Dated: _______________________ [NAME OF HOLDER]
By: ___________________________________
Name:
Title:
_____________________________
/1/ Name of Holder must conform in all respects to name of Holder as specified
on the face of the Warrant.
12
<PAGE>
Exhibit B to Common
Stock Purchase Warrant
------------------------------
[FORM OF] ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers unto the Assignee named below all of the rights of the undersigned to
purchase Class A Common Stock, $1.00 par value per share ("COMMON STOCK"), of
BANKVEST CAPITAL CORP. represented by the Warrant, with respect to the number of
shares of Common Stock set forth below:
Name of Assignee Address No. of Shares
- ---------------- ------- -------------
and does hereby irrevocably constitute and appoint ____________________________
Attorney to make such transfer on the books of BANKVEST CAPITAL CORP. maintained
for that purpose, with full power of substitution in the premises.
Dated:_____________________ [NAME OF HOLDER]
By: ______________________________
Name:
Title:
_____________________________
/1/ Name of Holder must conform in all respects to name of Holder as specified
on the face of the Warrant.
13
<PAGE>
EXHIBIT 4.11
EXECUTION COPY
--------------
VESTING WARRANT
---------------
February 28, 1997
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAW OF
ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH
ACT AND SUCH LAWS.
No. VGW-1 Warrant to Purchase up to 53,654
Shares of Common Stock
BANKVEST CAPITAL CORP.
COMMON STOCK PURCHASE WARRANT
Void after February 27, 2007
BANKVEST CAPITAL CORP. (the "COMPANY" ), a Massachusetts corporation,
hereby certifies that for value received, WHITNEY SUBORDINATED DEBT FUND, L.P.
("WSDF"), a Delaware limited partnership, or assigns (the "HOLDER"), is entitled
to purchase, subject to the terms and conditions hereinafter set forth, an
aggregate of 53,654 fully paid and nonassessable shares of Common Stock, $1.00
par value (as defined herein) of the Company less the number of shares computed
as the product of the Repayment Amount multiplied by the Adjustment Factor, at
an exercise price of $15.00 per Warrant Share (as defined herein) (the "PURCHASE
PRICE"), subject to all adjustments as provided for herein, at any time or from
time to time beginning on the Vesting Date (as defined herein), and ending at
---
5:00 P.M., New York City time, on February 27, 2007 (the "EXPIRATION DATE").
This Warrant is issued pursuant to the Securities Purchase Agreement (the
"PURCHASE AGREEMENT"), dated as of February 28, 1997, by and between the Company
and Whitney Subordinated Debt Fund, L.P., and is subject to the terms thereof.
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned such terms in the Purchase Agreement. The Holder is entitled to the
rights and subject to the obligations contained in the Purchase Agreement,
<PAGE>
the Registration Rights Agreement and the Stockholders Agreement relating to
this Warrant and the shares of Common Stock issuable upon exercise of this
Warrant.
1. DEFINITIONS. For the purposes of this Warrant, the following terms
-----------
shall have the meanings indicated:
"ADJUSTMENT FACTOR" shall mean .00357693.
"APPLICABLE PRICE" shall mean the higher of (a) the Current Market
Price per share of Common Stock on the applicable record or other relevant date
and (b) the Dilution Price.
"ARTICLES OF INCORPORATION" shall mean the Articles of Incorporation
of the Company as in effect on February 28, 1997.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in the City of New York are authorized or
required by law or executive order to close.
"CANCELLATION PORTION" has the meaning ascribed to such term in
Subsection 2(b).
"CLOSING PRICE" shall mean, with respect to each share of Common Stock
for any day, (a) the last reported sale price regular way or, in case no such
sale takes place on such day, the average of the closing bid and asked prices
regular way, in either case as reported on the principal national securities
exchange on which the Common Stock is listed or admitted for trading or (b) if
the Common Stock is not listed or admitted for trading on any national
securities exchange, the last reported sale price or, in case no such sale takes
place on such day, the average of the highest reported bid and the lowest
reported asked quotation for the Common Stock, in either case as reported on the
NASDAQ or a similar service if NASDAQ is no longer reporting such information.
"COMMON STOCK" means the Class A common stock, $1.00 par value per
share, of the Company, and any class of stock resulting from successive changes
or reclassification of such Common Stock.
"COMPANY" has the meaning ascribed to such term in the first paragraph
of this Warrant.
"CURRENT MARKET PRICE" shall be determined in accordance with
Subsection 3(e).
"DILUTION PRICE" shall mean, with respect to each share of Common
Stock, $15.00, subject to appropriate adjustment for events described in
Subsection 3(a).
"EXERCISE DATE" has the meaning ascribed to such term in Subsection
2(d).
2
<PAGE>
"EXPIRATION DATE" has the meaning ascribed to such term in the first
paragraph of this Warrant.
"HOLDER" has the meaning ascribed to such term in the first paragraph
and Section 9 of this Warrant.
"INITIAL PUBLIC OFFERING" means the sale by either the Company or any
of its Subsidiaries of its capital stock pursuant to a registration statement on
Form S-1 or otherwise under the Securities Act.
"NASDAQ" shall mean the Automatic Quotation System of the National
Association of Securities Dealers, Inc.
"NOTE" shall mean the Subordinated Promissory Note, dated the date
hereof, in the principal amount of $15,000,000, with the Company as the maker
thereof, and the Holder as the payee thereof.
"PERSON" shall mean any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency or political subdivision thereof) or other
entity of any kind, and shall include any successor (by merger or otherwise) of
such entity.
"PRE DILUTED COMMON STOCK" shall mean the number of shares of Common
Stock issued and outstanding, plus the number of shares of Common Stock issuable
upon exercise of this Warrant, the Vested Warrant, in each case prior to giving
effect to the transaction which causes an adjustment to the Purchase Price
pursuant to Section 3 hereof, plus the number of shares of Common Stock issuable
as a result of the transaction in question or upon the exercise, exchange and/or
conversion of the securities issued in the transaction in question.
"PURCHASE AGREEMENT" has the meaning ascribed to such term in the
second paragraph of this Warrant.
"PURCHASE PRICE" has the meaning ascribed to such term in the first
paragraph of this Warrant.
"REPAYMENT AMOUNT" shall mean the total amount of principal that has
been repaid on the Note as of the Vesting Date.
"STOCKHOLDERS AGREEMENT" means the First Amendment to Stockholders
Agreement substantially in the form attached to the Purchase Agreement as
Exhibit C.
- ---------
"SUBSIDIARY" shall mean, with respect to any Person, a corporation or
other entity of which 50% or more of the voting power of the voting equity
securities or equity interests is
3
<PAGE>
owned, directly or indirectly, by such Person.
"VESTED WARRANT" shall mean the warrant to acquire up to an additional
118,038 shares of Common Stock and exercisable as set forth in such warrant.
"VESTING DATE" shall mean August 31, 2000.
"WARRANT" shall mean this Warrant and any subsequent Warrant issued
pursuant to Subsection 2(c) or to a transferee as contemplated in Section 9.
"WARRANT REGISTER" has the meaning ascribed to such term in Subsection
9(b).
"WARRANT SHARES" shall mean the shares of Common Stock issuable upon
exercise, and to the extent the Warrant has been exercised, such shares issued
upon exercise.
2. EXERCISE OF WARRANT.
-------------------
(a) Exercise. Subject to the restrictions set forth in the
--------
introductory paragraph of this Warrant, this Warrant may be exercised, in whole
or in part, at any time or from time to time on or prior to the Expiration Date,
by surrendering to the Company at its principal office this Warrant, with the
form of Election to Purchase Shares (the "ELECTION TO PURCHASE SHARES") attached
hereto as Exhibit A duly executed by the Holder and accompanied by payment of
---------
the Purchase Price for the number of shares of Common Stock specified in such
form.
(b) Delivery of Shares; Payment of Purchase Price. As soon as
---------------------------------------------
practicable after surrender of this Warrant and receipt of payment, the Company
shall promptly issue and deliver to the Holder a certificate or certificates for
the number of shares of Common Stock set forth in the Election to Purchase
Shares, in such name or names as may be designated by such Holder, along with a
check for the amount of cash to be paid in lieu of issuance of fractional
shares, if any. Payment of the Purchase Price may be made as follows (or by any
combination of the following): (i) in United States currency by cash or delivery
of a certified check, bank draft or postal or express money order payable to the
order of the Company, (ii) by assigning to the Company all or any part of the
unpaid principal amount of the Note held by the Holder in a principal amount
equal to the Purchase Price, (iii) by surrender of a number of shares of Common
Stock held by the Holder equal to the quotient obtained by dividing (A) the
Purchase Price payable with respect to the portion of this Warrant then being
exercised by (B) the Current Market Price per share of Common Stock on the
Exercise Date, or (iv) by cancellation of any portion of this Warrant (the
"CANCELLATION PORTION") with respect to the number of shares of Common Stock
equal to the quotient obtained by dividing (A) the sum of the Purchase Price
payable with respect to the portion of this Warrant then being exercised by
cancellation of the Cancellation Portion and the Purchase Price that would be
payable with respect to the Cancellation Portion if such portion was being
exercised rather than canceled by (B) the Current Market Price per share of
Common Stock on the Exercise Date.
4
<PAGE>
(c) Partial Exercise. If this Warrant is exercised for less than all
----------------
of the shares of Common Stock purchasable under this Warrant, the Company shall
cancel this Warrant upon surrender hereof and shall execute and deliver to the
Holder a new Warrant of like tenor for the balance of the shares of Common Stock
purchasable hereunder.
(d) When Exercise Effective. The exercise of this Warrant shall be
-----------------------
deemed to have been effective immediately prior to the close of business on the
Business Day on which this Warrant is surrendered to and the Purchase Price is
received by the Company as provided in this Section 2 (the "EXERCISE DATE") and
the Person in whose name any certificate for shares of Common Stock shall be
issuable upon such exercise, as provided in Subsection 2(b), shall be deemed to
be the record holder of such shares of Common Stock for all purposes on the
Exercise Date.
(e) Continued Validity. A Holder of shares of Common Stock issued
------------------
upon the exercise of this Warrant, in whole or in part, shall continue to be
entitled to all of the rights and subject to all of the obligations set forth in
Section 9.
3. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES. The Purchase Price
-------------------------------------------------
and the number of Warrant Shares shall be adjusted from time to time upon the
occurrence of the following events occurring after the initial issuance of this
Warrant which shall be applied retroactively to the number of shares which are
issuable upon exercise of this Warrant as computed on the Vesting Date.
(a) Dividend, Subdivision, Combination or Reclassification of Common
----------------------------------------------------------------
Stock. If the Company shall, at any time or from time to time, (i) declare a
- -----
dividend on the Common Stock payable in shares of its capital stock (including
Common Stock), (ii) subdivide the outstanding Common Stock into a larger number
of shares of Common Stock, (iii) combine the outstanding Common Stock into a
smaller number of shares of its Common Stock, or (iv) issue any shares of its
capital stock in a reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), then in each such case, the Purchase
====
Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such date shall be
proportionately adjusted so that the Holder of any Warrant exercised after such
date shall be entitled to receive, upon payment of the same aggregate amount as
would have been payable before such date, the aggregate number and kind of
shares of capital stock which, if such Warrant had been exercised immediately
prior to such date, such Holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification. Any such adjustment shall become effective immediately after
the record date of such dividend or the effective date of such subdivision,
combination or reclassification. Such adjustment shall be made successively
whenever any event listed above shall occur. If a dividend is declared and such
dividend is not paid, the Purchase Price shall again be adjusted to be the
Purchase Price in effect immediately prior to such record date.
(b) Issuance of Rights to Purchase Common Stock Below Current Market
----------------------------------------------------------------
Price or Dilution Price. If the Company shall, at any time or from time to time,
- -----------------------
fix a record date for the
5
<PAGE>
issuance of rights, options or warrants to all holders of Common Stock entitling
them (for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Common Stock, or securities convertible into Common
Stock at a price per share of Common Stock or having a conversion price per
share of Common Stock if a security is convertible into Common Stock (determined
in either such case by dividing (x) the total consideration payable to the
Company upon exercise, conversion or exchange of such rights, options, warrants
or other securities convertible into Common Stock by (y) the total number of
shares of Common Stock covered by such rights, options, warrants or other
securities convertible into Common Stock) lower than either the Current Market
Price per share of Common Stock on such record date (or, if an ex-dividend date
has been established for such record date, on the day next preceding such ex-
dividend date) or the Dilution Price, then, the Purchase Price shall be reduced
====
to the price determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the sum
of the number of shares of Common Stock outstanding on such record date plus the
number of additional shares of Common Stock which the aggregate offering price
of the total number of shares of Common Stock so to be offered (or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at the Applicable Price and the denominator of which shall be the
number of shares of Common Stock outstanding on such record date plus the number
of additional shares of Common Stock to be offered for subscription or purchase
(or into which the convertible securities so to be offered are initially
convertible). In case such price for subscription or purchase may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be determined in good faith by the Board of
Directors of the Company. Any such adjustment shall become effective immediately
after the record date for such rights or warrants. Such adjustment shall be made
successively whenever such a record date is fixed. If such rights, options or
warrants are not so issued, the Purchase Price shall be adjusted to the Purchase
Price in effect immediately prior to such record date.
(c) Certain Distributions. If the Company shall, at any time or from
---------------------
time to time, fix a record date for the distribution to all holders of Common
Stock (including any such distribution made in connection with a consolidation
or merger in which the Company is the continuing corporation) of evidences of
indebtedness, assets or other property (other than regularly scheduled cash
dividends or cash distributions payable out of consolidated earnings or earned
surplus or dividends payable in capital stock for which adjustment is made under
Subsection 3(a)) or subscription rights, options or warrants (excluding those
referred to in Subsection 3(b)), then the Purchase Price shall be reduced to the
====
price determined by multiplying the Purchase Price in effect immediately prior
to such record date by a fraction (which shall in no event be less than zero),
the numerator of which shall be the Current Market Price per share of Common
Stock on such record date (or, if an ex-dividend date has been established for
such record date, on the next day preceding such ex-dividend date), less the
fair market value (as determined in good faith by the Board of Directors of the
Company) of the portion of the assets, evidences of indebtedness, other
property, subscription rights or warrants so to be distributed applicable to one
share of Common Stock and the denominator of which shall be such Current Market
Price per share of Common Stock. Any such adjustment shall become effective
immediately after the record date for such distribution. Such adjustments shall
be made successively whenever such a record date is fixed. In the event that
such
6
<PAGE>
distribution is not so made, the Purchase Price shall be adjusted to the
Purchase Price in effect immediately prior to such record date.
(d) Issuance of Common Stock Below Current Market Price or Dilution
---------------------------------------------------------------
Price. If the Company shall, at any time and from time to time, after the date
- -----
hereof, directly or indirectly, sell or issue shares of Common Stock (regardless
of whether originally issued or from the Company's treasury), or rights,
options, warrants or convertible or exchangeable securities containing the right
to subscribe for or purchase shares of Common Stock (excluding shares issued (i)
in any of the transactions described in Subsections 3(a), (b) and (c) hereof,
(ii) upon exercise of this Warrant and the Vested Warrant, (iii) upon the
exercise or conversion of options, warrants or any other securities convertible
into or exchangeable for shares of Common Stock outstanding as of February 28,
1997 as set forth in Schedule 5.19 to the Purchase Agreement, if such shares
would otherwise be included in this Section 3(d)) at a price per share of Common
Stock (determined, in the case of rights, options, warrants or convertible or
exchangeable securities, by dividing (x) the total consideration received or
receivable by the Company in consideration of the sale or issuance of such
rights, options, warrants or convertible or exchangeable securities, plus the
total consideration payable to the Company upon exercise or conversion or
exchange thereof, by (y) the total number of shares of Common Stock covered by
such rights, options, warrants or convertible or exchangeable securities) lower
than either the Current Market Price per share of Common Stock or the Dilution
Price immediately prior to such sale or issuance, then the Purchase Price shall
====
be reduced to a price determined by multiplying the Purchase Price in effect
immediately prior thereto by a fraction, the numerator of which shall be the sum
of the number of shares of Common Stock outstanding immediately prior to such
sale or issuance plus the number of shares of Common Stock which the aggregate
consideration received (determined as provided below) for such sale or issuance
would purchase at the Applicable Price and the denominator of which shall be the
total number of shares of Common Stock outstanding immediately after such sale
or issuance. Such adjustment shall be made successively whenever such sale or
issuance is made. For the purposes of such adjustments, the shares of Common
Stock which the holder of any such rights, options, warrants, or convertible or
exchangeable securities shall be entitled to subscribe for or purchase shall be
deemed to be issued and outstanding as of the date of such sale or issuance and
the consideration "received" by the Company therefor shall be deemed to be the
consideration actually received or receivable by the Company (plus any
underwriting discounts or commissions in connection therewith) for such rights,
options, warrants or convertible or exchangeable securities, plus the
consideration stated in such rights, options, warrants or convertible or
exchangeable securities to be payable to the Company for the shares of Common
Stock covered thereby. If the Company shall sell or issue shares of Common Stock
for a consideration consisting, in whole or in part, of property other than cash
or its equivalent, then in determining the "price per share of Common Stock" and
the "consideration" received or receivable by or payable to the Company for
purposes of the first sentence and the immediately preceding sentence of this
Subsection 3(d), the fair value of such property shall be determined in good
faith by the Board of Directors of the Company. The determination of whether any
adjustment is required under this Subsection 3(d) by reason of the sale and
issuance of rights, options, warrants or convertible or exchangeable securities
and the amount of such adjustment, if any, shall be made
7
<PAGE>
only at the time of such issuance or sale and not at the subsequent time of
issuance of shares of Common Stock upon the exercise of such rights to subscribe
or purchase.
(e) Determination of Current Market Price. For the purpose of any
-------------------------------------
computation under Subsections (b), (c) or (d) of this Section 3 or any other
provision of this Warrant, the Current Market Price per share of Common Stock on
any date shall be deemed to be the average of the daily Closing Prices per share
of Common Stock for the 10 consecutive trading days commencing 15 trading days
before such date. If on any such date the shares of Common Stock are not listed
or admitted for trading on any national securities exchange or quoted by NASDAQ
or a similar service, the Current Market Price for such shares shall be the fair
market value of such shares on such date as determined in good faith by a
committee of disinterested members of the Board of Directors of the Company
based on a written opinion of an independent investment banking firm of
nationally recognized stature.
(f) De Minimis Adjustments. No adjustment in the Purchase Price shall
----------------------
be made if the amount of such adjustment would result in a change in the
Purchase Price per share of less than $0.05, but in such case any adjustment
that would otherwise be required to be made shall be carried forward and shall
be made at the time of and together with the next subsequent adjustment, which
together with any adjustment so carried forward, would result in a change in the
Purchase Price of $0.05 per share. If the Company shall, at any time or from
time to time, issue Common Stock by way of dividends on any stock of the Company
or subdivide or combine the outstanding shares of the Common Stock, such amount
of $0.01 (as theretofore increased or decreased, if such amounts shall have been
adjusted in accordance with the provisions of this clause) shall forthwith be
proportionately increased in the case of a combination or decreased in the case
of a subdivision or stock dividend so as appropriately to reflect the same.
Notwithstanding the provisions of the first sentence of this Subsection 3(f),
any adjustment postponed pursuant to this Subsection 3(f) shall be made no later
than the earlier of (i) three years from the date of the transaction that would,
but for the provisions of the first sentence of this Section 3(f), have required
such adjustment, (ii) an Exercise Date or (iii) the Expiration Date.
(g) Adjustments to Other Shares. In the event that at any time, as a
---------------------------
result of an adjustment made pursuant to Subsection 3(a), the Holder shall
become entitled to receive, upon exercise of this Warrant, any shares of capital
stock of the Company other than shares of Common Stock, the number of such
other shares so receivable upon exercise of this Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares of Common Stock
contained in Subsections 3(a), (b), (c) and (d), inclusive, and the provisions
of Sections 2, 5, 6 and 7 with respect to the shares of Common Stock shall apply
on like terms to any such other shares.
(h) Adjustment of Number of Shares Issuable Upon Exercise. Upon each
-----------------------------------------------------
adjustment of the Purchase Price as a result of the calculations made in
Subsections 3(a), (b), (c) or (d), this Warrant shall thereafter evidence the
right to receive, at the adjusted Purchase Price, that number of shares of
Common Stock (calculated to the nearest one-hundredth) obtained by dividing
8
<PAGE>
(x) the product of the aggregate number of shares of Common Stock covered by
this Warrant immediately prior to such adjustment and the Purchase Price in
effect immediately prior to such adjustment of the Purchase Price by (y) the
Purchase Price in effect immediately after such adjustment of the Purchase
Price.
4. CERTIFICATE AS TO ADJUSTMENTS. Whenever the Purchase Price and
-----------------------------
the number of Warrant Shares, or the securities or other property deliverable
upon the exercise of this Warrant, shall be adjusted pursuant to the provisions
hereof, the Company shall promptly give written notice thereof to the Holder, in
accordance with Section 13, in the form of a certificate signed by the Chairman
of the Board, President or one of the Vice Presidents of the Company, and by the
Chief Financial Officer, Treasurer or one of the Assistant Treasurers of the
Company, stating the adjusted Purchase Price, the number of Warrant Shares, or
the securities or other property deliverable upon exercise of the Warrant,
calculated to the nearest cent or the nearest one-hundredth of a share and
setting forth in reasonable detail the method of calculation and the facts
requiring such adjustment and upon which such calculation is based. Each
adjustment shall remain in effect until a subsequent adjustment is required.
5. FRACTIONAL SHARES. Notwithstanding an adjustment pursuant to Section
-----------------
3(h) in the number Warrant Shares or pursuant to any other provision of this
Warrant, the Company shall not be required to issue fractions of shares upon
exercise of this Warrant or to distribute certificates which evidence fractional
shares. In lieu of fractional shares, the Company may make payment to the
Holder, at the time of exercise of this Warrant as herein provided, of an amount
in cash equal to such fraction multiplied by the greater of the Current Market
Price of a share of Common Stock on the Exercise Date and the Dilution Price.
6. NOTICE OF PROPOSED ACTIONS. In case the Company shall propose at any
--------------------------
time or from time to time (a) to declare or pay any dividend payable in stock of
any class to the holders of Common Stock or to make any other distribution to
the holders of Common Stock (other than a regularly scheduled cash dividend),
(b) to offer to the holders of Common Stock rights or warrants to subscribe for
or to purchase any additional shares of Common Stock or shares of stock of any
class or any other securities, rights or options, (c) to effect any
reclassification of its Common Stock, (d) to effect any consolidation, merger or
sale, transfer or other disposition of all or substantially all of the property,
assets or business of the Company which would, if consummated, adjust the
Purchase Price or the Warrant Shares, (e) to effect the liquidation, dissolution
or winding up of the Company, or (f) to take any other action that would require
a vote of the Company's stockholders, then, in each such case, the Company shall
give to the Holder, in accordance with Section 13, a written notice of such
proposed action, which shall specify (i) the record date for the purposes of
such stock dividend, distribution of rights or warrants or vote of the
stockholders of the Company, or if a record is not to be taken, the date as of
which the holders of shares of Common Stock of record to be entitled to such
dividend, distribution of rights or warrants, or vote is to be determined, or
(ii) the date on which such reclassification, consolidation, merger, sale,
transfer, disposition, liquidation, dissolution or winding up is expected to
become effective, and such notice shall be so
9
<PAGE>
given as promptly as possible but in any event at least ten (10) Business Days
prior to the applicable record, determination or effective date specified in
such notice.
7. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of its
-------------------------
Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder of this Warrant against
dilution or other impairment. Without limiting the generality of the foregoing,
the Company (a) will not increase the par value of any shares of stock
receivable on the exercise of this Warrant above the amount payable therefor on
such exercise, (b) will at all times reserve and keep available the maximum
number of its authorized shares of Common Stock, free from all preemptive rights
therein, which will be sufficient to permit the full exercise of this Warrant,
and (c) will take all such action as may be necessary or appropriate in order
that all Warrant Shares will, upon issuance, be duly and validly issued, fully
paid and nonassessable, and free from all taxes, liens and charges with respect
to the issue thereof.
8. REPLACEMENT OF WARRANT. On receipt by the Company of an affidavit of
----------------------
an authorized representative of the Holder stating the circumstances of the
loss, theft, destruction or mutilation of this Warrant (and in the case of any
such mutilation, on surrender and cancellation of such Warrant), the Company at
its expense will promptly execute and deliver, in lieu thereof, a new Warrant of
like tenor.
9. RESTRICTIONS ON TRANSFER.
------------------------
(a) The term "HOLDER" as used herein shall also include any transferee
of this Warrant whose name has been recorded by the Company in the Warrant
Register (as hereinafter defined). Each transferee of this Warrant acknowledges
that this Warrant has not been registered under the Securities Act and may be
transferred only pursuant to an effective registration under the Securities Act
or pursuant to an applicable exemption from the registration requirements of the
Securities Act.
(b) The Company shall maintain a register (the "WARRANT REGISTER") in
its principal office for the purpose of registering the Warrant and any transfer
thereof, which register shall reflect and identify, at all times, the ownership
of any interest in the Warrant. Upon the issuance of this Warrant, the Company
shall record the name of the initial purchaser of this Warrant in the Warrant
Register as the first Holder. Upon surrender for registration of transfer or
exchange of this Warrant together with a properly executed Form of Assignment
attached hereto as Exhibit B at the principal office of the Company, the Company
---------
shall, at its expense, execute and deliver one or more new Warrants of like
tenor which shall be exercisable for a like aggregate number of shares of Common
Stock, registered in the name of the Holder or a transferee or transferees.
10
<PAGE>
(c) This Warrant may be transferred or assigned by the Holder at
anytime to any Person other than an entity that conducts business in the same
industry and in direct competition with the Company. Notwithstanding the
foregoing, the Holder may transfer or assign this Warrant at any time to its
Permitted Transferees (as such term is defined in the Stockholders Agreement).
10. NO RIGHTS OR LIABILITY AS A STOCKHOLDER. This Warrant does not entitle
---------------------------------------
the Holder hereof to any voting rights or other rights as a stockholder of the
Company. No provisions hereof, in the absence of affirmative action by the
Holder hereof to purchase Common Stock, and no enumeration herein of the rights
or privileges of the Holder shall give rise to any liability of such Holder as a
stockholder of the Company.
11. CHARGES, TAXES AND EXPENSES. Issuance of certificates for shares of
---------------------------
Common Stock upon the exercise of this Warrant shall be made without charge to
the Holder hereof for any issue or transfer tax, or other incidental expense, in
respect of the issuance or delivery of such certificates or the securities
represented thereby, all of which taxes and expenses shall be paid by the
Company.
12. AMENDMENT OR WAIVER. This Warrant and any term hereof may be amended,
-------------------
waived, discharged or terminated only by and with the written consent of the
Company and the Holder.
13. NOTICES. Any notice or other communication (or delivery) required or
-------
permitted hereunder shall be made in writing and shall be by registered mail,
return receipt requested, telecopier, courier service or personal delivery to
the Company at its principal office as specified in Section 11.2 of the Purchase
Agreement and to the Holder at its address as it appears in the Warrant
Register. All such notices and communications (and deliveries) shall be deemed
to have been duly given: when delivered by hand, if personally delivered; when
delivered by courier, if delivered by commercial overnight courier service; five
Business Days after being deposited in the mail, postage prepaid, if mailed; and
when receipt is acknowledged, if telecopied.
14. CERTAIN REMEDIES. The Holder shall be entitled to an injunction or
----------------
injunctions to prevent breaches of the provisions of this Warrant and to enforce
specifically the terms and provisions of this Warrant in any court of the United
States or any state thereof having jurisdiction, this being in addition to any
other remedy to which such Holder may be entitled at law or in equity.
15. GOVERNING LAW. This Warrant shall be governed by and construed in
-------------
accordance with the laws of the State of New York, without regard to the
principles of conflicts of law of such State.
11
<PAGE>
16. HEADINGS. The headings in this Warrant are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
BANKVEST CAPITAL CORP.
By: ________________________________
Name:
Title:
12
<PAGE>
Exhibit A to Common
Stock Purchase Warrant
------------------------------
[FORM OF]
ELECTION TO PURCHASE SHARES
The undersigned hereby irrevocably elects to exercise the Warrant to
purchase _____ shares of Class A Common Stock, $1.00 par value per share
("COMMON STOCK"), of BANKVEST CAPITAL CORP. (the "COMPANY") and hereby [makes
payment of $_______ therefor] [or] [makes payment therefor by assignment to the
Company pursuant to Section 2(b)(ii) of the Warrant of $_____________ aggregate
principal amount of Note (as defined in the Warrant)] [or] [makes payment
therefore by surrendering pursuant to Section 2(b)(iii) _____ shares of Common
Stock of the Company] [or] [makes payment therefor by cancellation pursuant to
Section 2(b)(iv) of a portion of the Warrant with respect to _________ shares of
Common Stock]. The undersigned hereby requests that certificates for such shares
be issued and delivered as follows:
ISSUE TO:_______________________________________________________________________
(NAME)
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
________________________________________________________________________________
(SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)
DELIVER TO:_____________________________________________________________________
(NAME)
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
If the number of shares of Common Stock purchased hereby is less than
the number of shares of Common Stock covered by the Warrant, the undersigned
requests that a new Warrant representing the number of shares of Common Stock
not purchased be issued and delivered as follows:
ISSUE TO:_______________________________________________________________________
(NAME OF HOLDER)
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
DELIVER TO:_____________________________________________________________________
(NAME OF HOLDER)
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
Dated: _________________________ [NAME OF HOLDER]
By: ___________________________________
Name:
Title:
_____________________________
/1/ Name of Holder must conform in all respects to name of Holder as specified
on the face of the Warrant.
13
<PAGE>
Exhibit B to Common
Stock Purchase Warrant
------------------------------
[FORM OF] ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers unto the Assignee named below all of the rights of the undersigned to
purchase Class A Common Stock, $1.00 par value per share ("COMMON STOCK"), of
BANKVEST CAPITAL CORP. represented by the Warrant, with respect to the number of
shares of Common Stock set forth below:
Name of Assignee Address No. of Shares
- ---------------- ------- -------------
and does hereby irrevocably constitute and appoint ____________________________
Attorney to make such transfer on the books of BANKVEST CAPITAL CORP. maintained
for that purpose, with full power of substitution in the premises.
Dated: _________________ [NAME OF HOLDER]
By: ____________________________________________
Name:
Title:
_____________________________
/1/ Name of Holder must conform in all respects to name of Holder as specified
on the face of the Warrant.
14
<PAGE>
EXHIBIT 4.12
EXHIBIT E
---------
PUT AND CALL AGREEMENT
AGREEMENT (this "AGREEMENT"), dated as of February 28, 1997, by and
between BANKVEST CAPITAL CORP.(the "COMPANY"), a Massachusetts corporation, and
WHITNEY SUBORDINATED DEBT FUND, L.P. (the "WSDF"), a Delaware limited
partnership.
W I T N E S S E T H :
WHEREAS, pursuant to the Securities Purchase Agreement (the "PURCHASE
AGREEMENT"), WSDF has purchased from the Company (i) a subordinated promissory
note (the "NOTE"), due February 27, 2005, in the principal amount of
$15,000,000, (ii) a warrant (the "VESTED WARRANT") to purchase 118,038 shares of
Class A common stock, $1.00 par value per share, of the Company (the "COMMON
STOCK"), for an exercise price and subject to the provisions for exercise as
more fully set forth in the Vested Warrant, and (iii) a warrant (the "VESTING
WARRANT" and together with the Vested Warrant, the "WARRANTS") to purchase up to
an additional 53,654 shares of Class A Common Stock subject to adjustment and
for an exercise price and subject further to the provisions for exercise as more
fully set forth in the Vesting Warrant, in each case upon the terms and subject
to the conditions set forth in the Purchase Agreement;
WHEREAS, WSDF and the Company have agreed that the Holder (as defined
herein) of the Warrants and/or the Warrant Shares (as defined herein) shall have
the right, but not the obligation, to require the Company to purchase all or a
portion of such Warrants and/or Warrant Shares, as the case may be, as provided
herein; and
WHEREAS, WSDF and the Company have further agreed that, the Company
shall have the right, but not the obligation, to purchase from the Holder all of
the Warrants and/or Warrant Shares, as the case may be, as further provided
herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenant and obligations hereinafter set forth, the parties hereto hereby agree
as follows:
SECTION 1. DEFINITIONS. As used herein, the following terms shall
-----------
have the following respective meanings:
"CALL PRICE" has the meaning set forth in Section 3.3.
"CALL OPTIONS" means either of the options described in Section 3.1 or
3.2
"CLOSING DATE" means February 28, 1997.
<PAGE>
"COMMON STOCK" means the Class A common stock, $1.00 par value per
share, of the Company, and any class of stock resulting from successive changes
or reclassification of such Common Stock.
"FAIR VALUE" means the fair value of the appropriate security,
property, assets, business or entity as determined by agreement of the Company
and the Holders of two-thirds or more of the Warrant Shares provided that if the
Company and such holders are unable to reach agreement on any determination of
"Fair Value" within thirty (30) days following the occurrence of the event
giving rise to the requirement to make such determination, then such "Fair
Value" shall be as determined by an opinion of an independent investment banking
firm or firms in accordance with the following procedure: In the case of any
event which gives rise to a requirement to determine "Fair Value" pursuant to
the provisions hereof, the Company shall be responsible for initiating the
process by which Fair Value shall be determined as promptly as practicable
following such event, and if the procedures contemplated in connection with
obtaining such opinion have not been complied with fully, then any such
determination of Fair Value for any purpose of under this Agreement (and any
such resulting determination of the Repurchase Price) shall be deemed to be
preliminary and subject to adjustment pending full compliance with such
procedures. The Company and the Holder of the Warrants or Warrant Shares (who,
if more than one, shall agree among themselves by a two-thirds majority based on
the number of Warrant Shares held) shall each retain a separate independent
investment banking firm (which firm, in either case, may be the independent
investment banking firm regularly retained by the Company or such holder);
provided, however, that the Holder may, at its option, elect to rely on the firm
- -------- -------
retained by the Company in lieu of retaining its own firm. The fees and
expenses of the independent investment banking firm selected by the Company
shall be borne by the Company and the fees and expenses of the independent
investment banking firm selected by the Holders of the Warrants and the Warrant
Shares shall be borne by the Holders of such Warrants and the Warrant Shares.
Such firms shall determine the fair value of the security, property, assets,
business or entity, as the case may be, in question and deliver their opinion in
writing to the Company and to such Holder. If such firms cannot jointly make
such determination (or in the event that the Holder has elected to rely upon the
firm retained by the Company and disagrees with the determination made by such
firm), then, unless otherwise directed by agreement of the Company and the
Holder or Holders of two-thirds or more of the Warrant Shares, such firms (or
firm), in their (or its) sole discretion, shall choose another independent
investment banking firm for the Company and such Holders, which firm shall make
such determination and render such an opinion. In either case the determination
so made shall be conclusive and binding on the Company and such Holders. The
fees and expenses of any such determination made by the independent investment
banking firm selected by such independent banking firms (or firm) shall be borne
equally by the Company, on the one hand, and the Holders of the Warrants and
Warrant Shares, on the other hand. In determining Fair Value, no discount
shall be imposed by reason of a minority ownership interest or the illiquidity
of the stock interest being valued. The Fair Value of the Warrant Shares shall
be determined without regard to the fact that the Warrant Shares may constitute
a minority ownership interest in a closely held corporation.
2
<PAGE>
"HOLDER" means WSDF, its successors and assigns and has the meaning
ascribed to such term as set forth in Section 9 of the Warrants.
"ISSUABLE WARRANT SHARES" means the shares of Common Stock issuable at
any time upon exercise of the Warrants.
"ISSUED WARRANT SHARES" means any shares of Common Stock issued upon
exercise of the Warrants.
"NOTE" has the meaning assigned to that term in the first Whereas
clause.
"PUT OPTIONS" means either of the options described in Sections 2.1 or
2.2.
"REPURCHASE PERIOD" means the period commencing on the earliest of (a)
the seventh anniversary of the Closing Date, (b) acceleration of the Note upon
an Event of Default, or (c) the occurrence of any event requiring a mandatory
prepayment of the Note, and terminating on the earliest of (x) the effective
time of a Qualified Public Offering as such term is defined on the date hereof
in the Stockholders Agreement by and among the Company, WSDF, Primus Capital
Fund III Limited Partnership LP, PNC Venture Corp. and certain stockholders of
the Company and (y) at 5:00 p.m. New York City time on February 27, 2007.
"REPURCHASE PRICE" has the meaning set forth in Section 2.3.
"VESTED WARRANT" has the meaning assigned to that term in the first
Whereas clause.
"VESTING WARRANT" has the meaning assigned to that term in the first
Whereas clause.
"WARRANTS" means the Vested Warrant and the Vesting Warrant dated as
of the Closing Date issued to the Holder and all warrants issued upon the
transfer or division of or in substitution for any Warrant (each a "WARRANT").
"WARRANT SHARES" means, prior to the exercise of all or any part of
the Warrants, the Issuable Warrant Shares remaining issuable upon exercise
thereof, and, following the exercise of all or a part of the Warrants, the
Issued Warrant Shares.
SECTION 2. PUT OPTIONS.
-----------
2.1 COMPANY'S OBLIGATION TO REPURCHASE WARRANTS. Upon receipt of
-------------------------------------------
written notice from the Holder of the Warrants at any time during the Repurchase
Period (the "PUT NOTICE"), the Company shall, within sixty (60) days of the date
designated in such Put Notice, repurchase from such Holder all or any portion of
the Warrants for an amount determined by multiplying (a) the Repurchase Price
per share of Common Stock as of the date specified in such notice less the
Exercise
3
<PAGE>
Price per share of Common Stock in effect on the date of such Put Notice, by (b)
the number of Issuable Warrant Shares as of such date. Upon such date designated
for the repurchase of the Warrants pursuant to this Section 2.1, the Holder
shall surrender the Warrants as designated in the Put Notice, to the Company,
without being required to make any representation or warranty (other than that
the Holder has good and valid title to the Warrants free and clear of liens,
claims, encumbrances and restrictions of any kind), against payment therefor by
(at the option of the Holder) (i) wire transfer to an account in a bank located
in the United States designated by the Holder for such purposes or (ii) delivery
of a certified or official bank check drawn on a member of the New York Federal
Reserve Clearing House.
2.2 COMPANY'S OBLIGATION TO REPURCHASE ISSUED WARRANT SHARES. Upon
--------------------------------------------------------
receipt of a Put Notice from any Holder of Issued Warrant Shares, at any time
during the Repurchase Period, the Company shall, within sixty (60) days of the
date designated in such Put Notice, repurchase from such Holder all or any
portion of the Issued Warrant Shares held by such Holder for an amount equal to
the number of such shares multiplied by the Repurchase Price per share as of the
date of such notice. Upon the date designated for such repurchase, the Holder
of such Issued Warrant Shares shall deliver to the Company, one or more
certificates representing the shares being repurchased duly endorsed for
transfer to the Company, without being required to make any representation or
warranty (other than that such Holder has good and valid title to the Issued
Warrant Shares free and clear of liens, claims, encumbrances and restrictions of
any kind), against payment therefor by (at the option of the Holder) (i) wire
transfer to an account in a bank located in the United States designated by the
Holder for such purposes or ii) delivery of a certified or official bank check
drawn on a member of the New York Federal Reserve Clearing House.
2.3 DETERMINATION OF THE REPURCHASE PRICE. For the purposes of this
-------------------------------------
Section 2 the Repurchase Price per share of Common Stock as of a date specified
in the Put Notice given under Section 2.1 or 2.2 (the "REPURCHASE PRICE") shall
be equal to the Fair Value of the Company, as of the date of such
determination; divided by number of shares of Common Stock outstanding on a
-------
fully diluted basis (including the Warrant Shares, after giving effect to the
payment of the Exercise Price therefor), as of such date.
2.4 Anything in Sections 2.1 or 2.2 to the contrary
notwithstanding,
(a) each Put Notice must be accompanied by similar Put Notices from
Holders of all other Warrants and all other Issued Warrant Shares, except that
if the limitation in subsection (b) hereinbelow restricts the aggregate
Repurchase Price to be paid to Holder of Warrants and Issued Warrant Shares,
then the Holders of Warrants and Issued Warrant Shares shall have the right to
exercise the Put Options on one additional occasion with respect to the Warrants
and Issued Warrant Shares not repurchased;
(b) if the Put Options are exercised prior to the maturity of the
Note, by acceleration or otherwise, at a time when there remains outstanding any
shares of the Company's Series A Convertible Preferred Stock or Series B
Convertible Preferred Stock, then the Put Options
4
<PAGE>
may be exercised only with respect to portions of Warrants and/or Issued Warrant
Shares such that the aggregate Repurchase Price for all such securities to be
paid by the Company to the Holders of Warrants and/or Issued Warrant Shares
shall not exceed $2 million; and
(c) the Company shall not be obligated to repurchase Warrants or
Issued Warrant Shares if after completion of such repurchase and by reason
thereof, the Company would be in violation of any financial covenant contained
in any agreement relating to Senior Indebtedness as such term is defined in the
Purchase Agreement, or if the repurchase is prohibited by provisions of the
Business Corporation Law of Massachusetts.
SECTION 3. CALL OPTIONS.
------------
3.1 COMPANY'S OPTION TO REPURCHASE WARRANTS. By giving written
---------------------------------------
notice of its intention to repurchase all of the Warrants (a "CALL NOTICE") to
the Holder thereof (which Call Notice must be accompanied by similar Call
Notices to the Holders of all other Warrants and Issued Warrant Shares), the
Company shall have the right during the Repurchase Period to repurchase all of
the Warrants from the Holder thereof for an amount determined by multiplying (a)
the Call Price per share of Common Stock less the Exercise Price per share of
Common Stock in effect on the date of such Call Notice by (b) the number of
Issuable Shares at the time issuable upon the exercise of the Warrants. The Call
Notice (which shall be irrevocable) shall (i) designate the date of repurchase,
which date shall be not more than thirty (30) days from the date of such notice,
(ii) state the Call Price per share of Common Stock as of the date of such
notice and the Exercise Price per share in effect on such date (iii) state the
number of Issuable Shares issuable upon exercise of the Warrants subject to
repurchase and (iv) indicate the method by which the Call Price per share of
Common Stock was calculated. On the date so designated in the Call Notice
pursuant to this Section 3.1, the Holder shall surrender the Warrants to the
Company, without being required to make any representation or warranty (other
than that the Holder has good and valid title to the Warrants free and clear of
liens, claims, encumbrances and restrictions of any kind), against payment
therefor by (at the option of the Holder) (i) wire transfer to an account in a
bank located in the United States designated by the Holder for such purposes or
(ii) a certified or official bank check drawn on a member of the New York
Federal Reserve Clearing House payable to the order of the Holder.
3.2 COMPANY'S OPTION TO REPURCHASE ISSUED WARRANT SHARES. By giving
----------------------------------------------------
a Call Notice to the Holders of any Issued Warrant Shares (which Call Notice
must be accompanied by similar Call Notices to the Holders of all Warrants and
all other Issued Warrant Shares), the Company shall have the right during the
Repurchase Period to repurchase all Issued Warrant Shares at a price per share
equal to the Call Price per share of Common Stock as of the date of such Call
Notice. The Call Notice (which shall be irrevocable) shall (i) designate the
date of repurchase, which date shall be not more than thirty (30) days from the
date of such notice, (ii) state the Call Price per share of Common Stock as of
the date of such notice, (iii) state the number of Issued Warrant Shares subject
to repurchase, and (iv) indicate the method by which the Call Price per share
was calculated. On the date so designated, the Holders of the Issued Warrant
Shares shall deliver to the Company,
5
<PAGE>
one or more certificates representing such shares duly endorsed for transfer to
the Company, without being required to make any representation or warranty
(other than that such Holder has good and valid title to the Issued Warrant
Shares free and clear of liens, claims, encumbrances and restrictions of any
kind), against payment therefor by (at the option of the Holder) (i) wire
transfer to an account in a bank located in the United States designated by the
Holder for such purposes or (ii) delivery of a certified or official bank check
drawn on a member of the New York Federal Reserve Clearing House.
3.3 DETERMINATION OF CALL PRICE. For the purposes of this Section 3,
---------------------------
the Call Price per share of Common Stock as of the date specified in the Call
Notice given pursuant to Section 3.1 or 3.2 (the "CALL PRICE") shall be equal to
the Repurchase Price as of such date.
3.4 ADJUSTMENT FOR SUBSEQUENT EVENTS. If a Change of Control or an
--------------------------------
Initial Public Offering shall occur within one hundred eighty (180) days after
the date of the exercise of the Company's Call Option pursuant to this Section 3
herein evidencing a Fair Value per share of Common Stock greater than the Call
Price per share of Common Stock in effect on the date of the Call Notice, then
the Company shall pay to the Holders of the Warrants or Issued Warrant Shares
repurchased pursuant to this Section 3 an amount equal to (x) (i) the Fair Value
per share of Common Stock evidenced after taking into effect the Change of
Control or the Initial Public Offering multiplied by (ii) the sum of the number
of Issuable Warrant Shares issuable upon exercise of Warrants repurchased
pursuant to this Section 3 plus the number of Issued Warrant Shares repurchased
pursuant to this Section 3, minus (y) the aggregate Call Price in effect at the
time of said repurchase.
SECTION 4. DURATION OF AGREEMENT. The rights and obligations of the
---------------------
parties under this Agreement shall terminate upon the earliest to occur of (i)
the transfer to the Company of all Warrants and the Warrant Shares owned by such
Holder and delivery to the Holder of the Repurchase Price or Call Price, as the
case may be, and (ii) Repurchase Period.
SECTION 5. COVENANTS AND WARRANTIES. The Company covenants and
------------------------
warrants as follows:
5.1 The execution, delivery and performance of this Agreement by the
Company will not violate any provision of law, any order of any court or other
agency of government, or any provision of any indenture, agreement or other
instrument to which the Company or any of its properties or assets is bound, or
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any such indenture, agreement or other instrument,
or result in the creation or imposition of any lien, charge or encumbrance of
any nature whatsoever upon any of the properties or assets of the Company.
6
<PAGE>
5.2 This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms.
5.3 Neither the Company nor any of its Subsidiaries shall enter into
any agreement which contains any clause which directly or indirectly prohibits
the payment by the Company or any of its Subsidiaries required under this
Agreement, provided that the foregoing shall not include customary financial
covenants, even if such covenants might be violated as a result of such payment
being made.
SECTION 6. DEFAULT AND REMEDIES.
--------------------
6.1 DEFAULT. The failure by the Company to purchase the Warrants or
--------
the Warrant Shares pursuant to Sections 2 or 3 herein, shall constitute an Event
of Default under Section 6(a)(iv) of the Note and the Holders shall be afforded
all of the remedies set forth therein.
6.2 REMEDIES. The Company stipulates that the remedies at law of the
--------
Holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
SECTION 7. SUCCESSORS AND ASSIGNS. This Agreement and the rights
----------------------
evidenced hereby shall inure to the benefit of and be binding upon the
successors and assigns of the Company, and the Holder of the Warrants and the
Holder of the Warrant Shares, and shall be enforceable by any such Holder or
Holders.
SECTION 8. NOTICES. All notices, requests and other communications
-------
to be given or otherwise made to the Holder or other parties hereto shall be
deemed to be sufficient if contained in a written instrument duly transmitted by
telecopy or telex or duly sent by overnight courier service or first class
registered or certified mail, postage prepaid, addressed to such party at the
address set forth below or at such other address as may hereafter be designated
in writing by the addressee to the addressor listing all parties:
(a) if to the Holder:
Whitney Subordinated Debt Fund, L.P.
177 Broad Street
7
<PAGE>
Stamford, Connecticut 06901
Telecopier No.: (203) 973-1422
Attention: Mr. James H. Fordyce
Mr. Daniel J. O'Brien
with a copy to:
Morrison Cohen Singer & Weinstein, LLP
750 Lexington Avenue
New York, New York 10022
Telecopier No.: (212) 735-8708
Attention: David A. Scherl, Esq.
(b) if to the Company:
BankVest Capital Corp.
114 Turnpike Road
Westboro, MA 01581
Attention: Paul S. Gass
Telecopier: (502) 635-6002
with a copy to:
Goldstein & Manello, P.C.
265 Franklin Street
Boston, MA 02110
Attention: Richard J. Snyder, Esq.
Telecopier: (617) 439-8988
or to such other address or addresses as shall have been furnished in writing to
the other parties hereto. Each Holder agrees, at all times, to provide the
Company with an address for notices hereunder.
All notices hereunder shall be effective on the date of transmission
if transmitted by telex or telecopy, on the first day after delivery to an
overnight national courier service if sent by such service and on the date of
receipt if sent by mail.
SECTION 9. MODIFICATION. Except as otherwise provided herein,
------------
neither this Agreement nor any provision hereof shall be modified, changed,
discharged or terminated except by an instrument in writing signed by the party
against whom the enforcement of any modification, change, discharge or
termination is sought or by the agreement of the WSDF, and a majority of all
other Holders of the Warrants or Warrant Shares, if any, subject to this
Agreement (calculated on
8
<PAGE>
a fully-diluted basis); provided, however, that no modification or amendment
-------- -------
shall be effective to reduce the percentage of the Warrant Shares the consent of
the Holders of which is required under this Section 9.
SECTION 10. ENTIRE AGREEMENT. This Agreement constitutes the entire
----------------
agreement among the undersigned with respect to matters or understandings
involving the ownership, control or disposition of their Warrants and Warrants
Shares and supersedes any and all prior agreements or understandings, oral or
written, among any or all of the undersigned relating to such ownership, control
or disposition.
SECTION 11. GOVERNING LAW. This agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of New York.
SECTION 12. COUNTERPARTS. This Agreement may be executed in one or
------------
more counterparts, each of which shall be deemed to be an original, but all of
which taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
BANKVEST CAPITAL CORP.
By: _______________________________________
Name:
Title:
WHITNEY SUBORDINATED DEBT FUND, L.P.
By: _______________________________________
Name:
A General Partner
9
<PAGE>
================================================================================
EXHIBIT 10.14
U.S. $75,000,000
RECEIVABLES PURCHASE AGREEMENT
Dated as of August 15, 1997
Among
BVFU FUNDING CORP.
as the Seller
-------------
BANKVEST CAPITAL CORP.
as the Servicer
---------------
the INVESTORS
named herein
------------
VARIABLE FUNDING CAPITAL CORPORATION
as a Purchaser
--------------
FIRST UNION CAPITAL MARKETS CORP.
as the Deal Agent
-----------------
and
FIRST UNION NATIONAL BANK
as the Liquidity Agent
----------------------
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
as the Collateral Custodian and Backup Servicer
-----------------------------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
DEFINITIONS
<S> <C>
Section 1.1 Certain Defined Terms................................................................... 1
Section 1.2 Other Terms............................................................................. 23
Section 1.3 Computation of Time Periods............................................................. 23
ARTICLE II
THE PURCHASE FACILITY
Section 2.1 Purchases of Asset Interest............................................................. 24
Section 2.2 The Initial Purchase, Subsequent Purchases and
Incremental Purchases................................................................... 24
Section 2.3 Reduction of the Purchase Limit; Repurchase............................................. 25
Section 2.4 Selection of Fixed Periods.............................................................. 26
Section 2.5 Percentage Evidenced by Asset Interest.................................................. 26
Section 2.6 Dividing or Combining Asset Interests................................................... 26
Section 2.7 Non-Liquidation Settlement Procedures................................................... 27
Section 2.8 Settlement Procedures Following a Payout Event.......................................... 28
Section 2.9 Collections and Allocations............................................................. 29
Section 2.10 Payments, Computations, Etc............................................................. 30
Section 2.11 [Reserved].............................................................................. 31
Section 2.12 Fees. ................................................................................ 31
Section 2.13 Increased Costs; Capital Adequacy; Illegality........................................... 31
Section 2.14 Taxes. ................................................................................ 32
Section 2.15 Assignment of the Purchase Agreement.................................................... 34
Section 2.16 Substitution of Contracts............................................................... 35
ARTICLE III
CONDITIONS OF PURCHASES
Section 3.1 Conditions Precedent to Initial Purchase................................................. 36
Section 3.2 Conditions Precedent to All Purchases and Remittances of Collections..................... 36
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Section 4.1 Representations and Warranties of the Seller............................................ 37
Section 4.2 Representations and Warranties of Seller Relating to the Agreement and the Contracts.... 41
ARTICLE V
GENERAL COVENANTS OF THE SELLER
Section 5.1 General Covenants....................................................................... 42
Section 5.2 Covenants of Seller..................................................................... 43
Section 5.3 Release of Lien on Equipment............................................................ 47
Section 5.4 Hedging of Contracts.................................................................... 47
Section 5.5 Retransfer of Ineligible Contracts...................................................... 48
Section 5.6 Retransfer of Assets.................................................................... 48
ARTICLE VI
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 6.1 Appointment and Acceptance; Duties...................................................... 49
Section 6.2 Collection of Payments.................................................................. 52
Section 6.3 Servicer Advances....................................................................... 53
Section 6.4 Realization Upon Defaulted Contract..................................................... 54
Section 6.5 Maintenance of Insurance Policies....................................................... 54
Section 6.6 Representations and Warranties of Servicer.............................................. 54
Section 6.7 Representations and Warranties of Backup Servicer and Collateral Custodian.............. 56
Section 6.8 Covenants of Servicer................................................................... 57
Section 6.9 Covenants of Backup Servicer and Collateral Custodian................................... 58
Section 6.10 Servicing Compensation.................................................................. 58
Section 6.11 Custodial Compensation.................................................................. 59
Section 6.12 Payment of Certain Expenses by Servicer................................................. 59
Section 6.13 Reports................................................................................. 59
Section 6.14 Annual Statement as to Compliance....................................................... 60
Section 6.15 Annual Independent Public Accountant's Servicing Reports................................ 60
Section 6.16 Adjustments............................................................................. 60
Section 6.17 Merger or Consolidation of the Servicer................................................. 61
Section 6.18 Limitation on Liability of the Servicer and Others...................................... 61
Section 6.19 Indemnification of the Seller, the Backup Servicer,
the Collateral Custodian, the Deal Agent and the Purchasers......................... 61
Section 6.20 The Servicer Not to Resign.............................................................. 62
Section 6.21 Access to Certain Documentation and Information Regarding the Contracts................. 62
Section 6.22 Backup Servicer......................................................................... 62
Section 6.23 Identification of Records............................................................... 63
Section 6.24 Servicer Defaults....................................................................... 64
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
Section 6.25 Appointment of Successor Servicer...................................................... 65
Section 6.26 Notification........................................................................... 66
Section 6.27 Protection of Right, Title and Interest to Assets...................................... 66
Section 6.28 Subservicers........................................................................... 67
ARTICLE VII
PAYOUT EVENTS
Section 7.1 Payout Events.......................................................................... 67
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Indemnities by the Seller.............................................................. 69
ARTICLE IX
THE DEAL AGENT AND THE LIQUIDITY AGENT
Section 9.1 Authorization and Action............................................................... 71
Section 9.2 Delegation of Duties................................................................... 72
Section 9.3 Exculpatory Provisions................................................................. 72
Section 9.4 Reliance............................................................................... 73
Section 9.5 Non-Reliance on Deal Agent, Liquidity Agent and Other Purchasers....................... 74
Section 9.6 Reimbursement and Indemnification...................................................... 74
Section 9.7 Deal Agent and Liquidity Agent in their Individual Capacities.......................... 74
Section 9.8 Successor Deal Agent or Liquidity Agent................................................ 74
ARTICLE X
ASSIGNMENTS; PARTICIPATIONS
Section 10.1 Assignments and Participations......................................................... 75
ARTICLE XI
MISCELLANEOUS
Section 11.1 Amendments and Waivers................................................................. 78
Section 11.2 Notices, Etc........................................................................... 79
Section 11.3 Ratable Payments....................................................................... 79
Section 11.4 No Waiver, Remedies.................................................................... 80
Section 11.5 Binding Effect......................................................................... 80
Section 11.6 Term of this Agreement................................................................. 80
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C>
Section 11.7 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF OBJECTION TO VENUE................... 80
Section 11.8 WAIVER OF JURY TRIAL................................................................... 81
Section 11.9 Costs, Expenses and Taxes.............................................................. 81
Section 11.10 No Proceedings......................................................................... 82
Section 11.11 Recourse Against Certain Parties....................................................... 82
Section 11.12 Protection of Ownership Interests of the Purchasers; Intent of
Parties; Security Interest ........................................................ 83
Section 11.13 Confidentiality........................................................................ 83
Section 11.14 Execution in Counterparts; Severability; Integration................................... 84
</TABLE>
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<PAGE>
EXHIBITS
- --------
EXHIBIT A Form of Notice of Sale
EXHIBIT B Form of Lock-Box Notices
EXHIBIT C "Limited Purpose" Provisions of Seller's Certificate of
Incorporation
EXHIBIT D Form of Assignment and Acceptance
EXHIBIT E Form of Monthly Report
EXHIBIT F Form of Servicer's Certificate
EXHIBIT G Form of Purchase Certificate
SCHEDULES
- ---------
SCHEDULE I Condition Precedent Documents
SCHEDULE II Lock-Box Banks and Lock-Box Accounts
SCHEDULE III Tradenames, Fictitious Names and "Doing Business As" Names
SCHEDULE IV Substitute Contracts Criteria
SCHEDULE V Location of Contract Files
SCHEDULE VI List of Contracts
-v-
<PAGE>
THIS RECEIVABLES PURCHASE AGREEMENT (the "Agreement") is made as of
August 15, 1997, among:
(1) BVFU FUNDING CORP., a Delaware corporation, as seller (the "Seller");
(2) BANKVEST CAPITAL CORP., a Massachusetts corporation ("BVCC"), as
servicer (the "Servicer");
(3) the financial institutions listed on the signature pages of this
Agreement under the heading "Investors" and their respective
successors and assigns (the "Investors");
(4) VARIABLE FUNDING CAPITAL CORPORATION, a Delaware corporation ("VFCC");
(5) FIRST UNION CAPITAL MARKETS CORP. ("FCMC"), as deal agent (the "Deal
Agent") and as documentation agent (the "Documentation Agent");
(6) FIRST UNION NATIONAL BANK ("First Union"), as liquidity agent (the
"Liquidity Agent"); and
(7) NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION ("Norwest"), as
collateral custodian (the "Collateral Custodian") and backup servicer
(the "Backup Servicer").
IT IS AGREED as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 CERTAIN DEFINED TERMS.
(a) Certain capitalized terms used throughout this Agreement are
defined above or in this Section 1.1.
(b) As used in this Agreement and its exhibits, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined).
ADCB: On any date of determination, the sum of the Discounted
----
Contract Balance of each Eligible Contract (excluding all Defaulted Contracts,
Casualty Loss Contracts, Early Termination Contracts and Contracts subject to a
Warranty Event) included in the Asset Pool as of the date of such determination.
<PAGE>
Addition Date: With respect to any Additional Contracts, the date on
-------------
which such Additional Contracts become Pool Assets.
Additional Contracts: All Contracts that become Pool Assets after the
--------------------
Closing Date.
Additional Cut Off Date: Each date on and after which Collections on
-----------------------
an Additional Contract are to be transferred to the Asset Pool.
Add-On Purchase: Any Incremental Purchase hereunder to be funded
---------------
through the issuance of additional Commercial Paper Notes as part of an existing
tranche of Commercial Paper Notes (i.e., a tranche issued in respect of a
Purchase meeting the $5,000,000 or $10,000,000 minimum requirement set forth in
Section 2.2(b), as applicable) in connection with the rollover of such tranche
in full.
Adjusted Eurodollar Rate: On any day, an interest rate per annum
------------------------
equal to the quotient, expressed as a percentage and rounded upwards (if
necessary), to the nearest 1/100 of 1%, obtained by dividing (i) the LIBOR Rate
on such day by (ii) 100% minus the Eurodollar Reserve Percentage on such day.
Administration Agreement: That certain Administration Agreement
------------------------
executed between VFCC and First Union Capital Markets Corp., as the same may be
amended, supplemented, or otherwise modified from time to time.
Adverse Claim: A lien, security interest, charge, encumbrance or
-------------
other right or claim of any Person.
Affected Party: As defined in Section 2.13(a).
--------------
Affiliate: With respect to a Person means any other Person
---------
controlling, controlled by or under common control with such Person. For
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
Agent's Account: A special account (account number 01 41 96 47) in
---------------
the name of the Deal Agent or, so long as VFCC is the sole Purchaser hereunder,
in the name of VFCC, maintained at Bankers Trust Company.
Aggregate Unpaids: At any time, an amount equal to the sum of all
-----------------
Yield (accrued and to accrue), Capital and all other amounts owed hereunder or
under any fee letter delivered by the Originator to the Deal Agent and the
Purchasers at such time (whether due or accrued).
-2-
<PAGE>
Agreement: This Receivables Purchase Agreement, dated as of August
---------
15, 1997, as amended, modified, supplemented or restated from time to time.
Alternative Rate: An interest rate per annum equal to the Adjusted
----------------
Eurodollar Rate or the Base Rate, as the Seller shall select in accordance with
the terms of this Agreement; provided, however, that the "Alternative Rate" for
-------- -------
any Capital allocated to a Fixed Period shall be the Base Rate if (a) on or
before the first day of such Fixed Period, the relevant Purchaser shall have
notified the Deal Agent that a Eurodollar Disruption Event has occurred, (b)
such Fixed Period is a period of less than one month or (c) such Capital is less
than $5,000,000.
Asset: All right, title and interest of the transferring party in, to
-----
and under any and all of the following:
(i) the Existing Contracts and Additional Contracts, and all moneys
due or to become due in payment of such Contracts on and after the related Cut
Off Date, any Prepayment Amounts, any payments in respect of a casualty or early
termination, and any Recoveries received with respect thereto, but excluding any
Scheduled Payments due prior to the related Cut Off Date and any Excluded
Amounts;
(ii) the Equipment related to such Contracts including all proceeds
from any sale or other disposition of such Equipment;
(iii) the Contract Files;
(iv) all payments made or to be made in the future with respect to
such Contracts or the obligor thereunder and under any guarantee or similar
credit enhancement with respect to such Contracts;
(v) all Insurance Proceeds with respect to each such Contract; and
(vi) all income and proceeds of the foregoing.
Asset Interest: At any time, an undivided variable percentage
--------------
ownership interest in all Assets. Each Asset Interest shall be calculated in
accordance with Section 2.5 for each Fixed Period with an amount of Capital with
respect to such Asset Interest as is allocated to such Fixed Period pursuant to
Section 2.4. The undivided percentage interest of an Asset Interest shall equal
c
c + --- R
C
-----------
ADCB
-3-
<PAGE>
where:
c = equals the Capital in respect of such Asset Interest.
C = aggregate Capital.
R = aggregate Overcollateralization
Asset Pool: At any time, all then outstanding Assets.
----------
Assignment and Acceptance: An assignment and acceptance entered into
-------------------------
by an Investor and an Eligible Assignee, and accepted by the Deal Agent, in
substantially the form of Exhibit D hereto.
Backup Servicer: Norwest Bank Minnesota, National Association, and
---------------
its successors and assigns.
Backup Servicer Fee Rate: The rate per annum set forth in the fee
------------------------
letter, dated August 19, 1997, delivered by the Originator to the Deal Agent and
the Purchasers.
Backup Servicing Fee: As defined in Section 6.22.
--------------------
Bankruptcy Code: The Federal Bankruptcy Code, as amended from time to
---------------
time (Title 11 of the United States Code).
Base Rate: On any date, a fluctuating rate of interest per annum
---------
equal to the higher of (a) the Prime Rate or (b) the Federal Funds Rate plus
1.0%.
Benefit Plan: Any employee benefit plan as defined in Section 3(3) of
------------
ERISA in respect of which the Seller or any ERISA Affiliate of the Seller is, or
at any time during the immediately preceding six years was, an "employer" as
defined in Section 3(5) of ERISA.
Blended Discount Rate: For any Determination Date, a rate per annum
---------------------
equal to the weighted average (calculated based on the applicable Outstanding
Balances) of (i) the Blended Discount Rate as of the immediately preceding
Determination Date and (ii) the Sale Discount Rate, if any, for any Contract
transferred to the Asset Pool on the most recent Purchase Date, if any,
occurring on or after the immediately preceding Determination Date; provided,
--------
however, that the Blended Discount Rate for the first Determination Date
- -------
following the Closing Date shall be the Sale Discount Rate applicable to the
Original Contracts.
Business Day: Any day of the year other than a Saturday or a Sunday
------------
on which (a) banks are not required or authorized to be closed in New York City,
Minneapolis, Minnesota, and Charlotte, North Carolina and (b) if the term
"Business Day" is used in connection with the Adjusted Eurodollar Rate, dealings
in United States dollar deposits are carried on in the London interbank market.
-4-
<PAGE>
Capital: For each Asset Interest, the amount paid to the Seller for
-------
such Asset Interest at the time of its purchase by the Purchaser pursuant to
this Agreement, or such amount divided or combined in accordance with Section
2.6, in each case reduced from time to time by Collections distributed on
account of such Capital pursuant to Sections 2.7 or 2.8; provided, however, that
-------- -------
such Capital shall not be reduced by any distribution of any portion of
Collections if at any time such distribution is rescinded or must be returned
for any reason.
Capital Limit: At any time, an amount equal to the product of the
-------------
ADCB at such time and .88.
Casualty Loss: With respect to any item of Equipment, the loss,
-------------
theft, damage beyond repair or governmental condemnation or seizure of such item
of Equipment.
Casualty Loss Contract: Any Contract that is subject to a Casualty
----------------------
Loss.
Closing Date: August 15, 1997.
------------
Code: The Internal Revenue Code of 1986, as amended.
----
Collateral Custodian: Norwest.
--------------------
Collection Account: As defined in Section 6.2(f).
------------------
Collection Date: The date following the Termination Date on which the
---------------
aggregate outstanding Capital has been reduced to zero, the Purchasers have
received all Yield and other amounts due to the Purchasers in connection with
this Agreement and the Deal Agent has received all amounts due to it in
connection with this Agreement.
Collections: (a) All cash collections and other cash proceeds of any
-----------
Asset, including, without limitation, Scheduled Payments, Prepayments, Insurance
Proceeds and Recoveries, all as related to amounts attributable to the Contracts
in the Asset Pool or the related Equipment, but excluding any Excluded Amounts
and (b) any other funds received by the Seller or the Servicer with respect to
any Contract or related Equipment.
Commercial Paper Notes: On any day, any short-term promissory notes
----------------------
issued by VFCC with respect to financing its purchase of an Asset Interest
hereunder.
Commitment: For each Investor, the commitment of such Investor to
----------
purchase Asset Interests from the Seller in an amount not to exceed the amount
set forth opposite such Investor's name on the signature pages of this
Agreement, as such amount may be modified in accordance with the terms hereof.
Commitment Fee: As defined in Section 2.12(a) hereof.
--------------
Commitment Fee Rate: The rate per annum set forth in any fee letter
-------------------
delivered by the Originator to the Deal Agent and the Purchasers.
-5-
<PAGE>
Commitment Termination Date: August 14, 1998 or such later date to
---------------------------
which the Commitment Termination Date may be extended (if extended) in the sole
discretion of VFCC and each Investor in accordance with the terms of Section
2.1(b).
Contract: Any lease of Equipment by the Originator or by a third
--------
party, in each case as lessor, to an Obligor.
Contract Files: With respect to each Contract, the fully executed
--------------
original counterpart (for UCC purposes) of the Contract, the original
certificate of title or other title document with respect to the related
Equipment (if applicable), and otherwise such documents, if any, that the
Collateral Custodian holds, evidencing ownership of such Equipment (if
applicable) and all other documents originally delivered to the Seller or held
by the Collateral Custodian with respect to any Contract.
Contract List: The contract list provided by the Seller to the Deal
-------------
Agent and the Collateral Custodian, in the form of Schedule VI hereto.
CP Disruption Event: The inability of a Purchaser, at any time,
-------------------
whether as a result of a prohibition, a contractual restriction or any other
event or circumstance whatsoever, to raise funds through the issuance of its
commercial paper notes (whether or not constituting commercial paper notes
issued to fund Purchases hereunder) in the United States commercial paper
market.
CP Rate: As to a Fixed Period, a rate equivalent to the rate (or if
-------
more than one rate, the weighted average of the rates) at which commercial paper
notes of VFCC having a term equal to such Fixed Period may be sold by any
placement agent or commercial paper dealer selected by VFCC, as agreed between
each such agent or dealer and VFCC and notified by VFCC to the Deal Agent and
the Servicer (inclusive of the Placement Agent Fee Rate); provided, however, if
-------- -------
the rate (or rates) as agreed between any such agent or dealer and VFCC with
regard to any Fixed Period for the applicable Purchase is a discounted rate (or
rates), the "CP Rate" for such Fixed Period shall be the rate (or if more than
one rate, the weighted average of the rates) resulting from converting such
discount rate (or rates) to an interest-bearing equivalent rate per annum.
Credit and Collection Policy: The written credit and collection
----------------------------
policies of the Originator and Servicer in effect on the date hereof, as amended
or supplemented from time to time with the prior written consent of the Deal
Agent.
Custodial Fee: As defined in Section 6.11.
-------------
Cut Off Date: With respect to each Existing Contract, the date on and
------------
after which Collections on such Existing Contract are to be transferred to the
Asset Pool, and with respect to each Additional Contract, the related Additional
Cut Off Date.
Debt: With respect to any Person, (a) indebtedness of such Person for
----
borrowed money, (b) obligations of such Person evidenced by bonds, debentures,
notes or
-6-
<PAGE>
other similar instruments, (c) obligations of such Person to pay the deferred
purchase price of property or services, (d) obligations of such Person as
obligor under leases which shall have been or should be, in accordance with
GAAP, recorded as capital leases, (e) obligations secured by an Adverse Claim
upon property or assets owned by such Person, even though such Person has not
assumed or become liable for the payment of such obligations and (f) obligations
of such Person under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (a) through (e) above.
Default Ratio: As of any Determination Date, the percentage
-------------
equivalent of a fraction, the numerator of which is equal to twice the sum of
the Discounted Contract Balance of Contracts that became Defaulted Contracts net
of Recoveries during the immediately preceding six calendar months and the
denominator of which is the average of the ADCB as of each of the current
Determination Date and each of the immediately preceding five Determination
Dates.
Defaulted Contract: (i) A Contract in the Asset Pool as to which (i)
------------------
the Servicer has determined or should have determined in accordance with its
Credit and Collection Policy that such Contract is not collectible or is subject
to repossession, or (ii) a Contract in the Asset Pool as to which all or a
portion of any one or more Scheduled Payments is more than 120 days past due in
an aggregate amount equal to the higher of (A) ten dollars or more or (B) ten
percent or more of any Scheduled Payment.
Delinquency Ratio: As of any Determination Date, the percentage
-----------------
equivalent of a fraction, the numerator of which is the average of the
Discounted Contract Balance of Delinquent Contracts as of such Determination
Date and each of the immediately preceding two Determination Dates and the
denominator of which is the average of the ADCB as of such Determination Date
and each of the immediately preceding two Determination Dates.
Delinquent Contract: A Contract in the Asset Pool as to which all or
-------------------
a portion of any one or more Scheduled Payments in an aggregate amount of ten
dollars or more, or ten percent or more, of any Scheduled Payment thereunder are
delinquent for 60 days or more.
Determination Date: The last Business Day of each calendar month.
------------------
Discounted Contract Balance: With respect to any Contract, (i) as of
---------------------------
the related Cut Off Date, the present value of all remaining Scheduled Payments
becoming due under such Contract after the applicable Cut Off Date discounted
monthly at the Sale Discount Rate and (ii) as of any other date of
determination, the present value of all remaining Scheduled Payments becoming
due under such Contract after such Determination Date discounted monthly at the
Blended Discount Rate.
The "Discounted Contract Balance" for each Contract shall be
calculated assuming:
-7-
<PAGE>
(i) all payments due in any Monthly Period as due on the last day
of the Monthly Period;
(ii) payments are discounted on a monthly basis using a 30 day month
and a 360 day year; and
(iii) all security deposits and drawings under letters of credit, if
any, issued in support of a Contract are applied to reduce Scheduled
Payments in inverse order of the due date thereof.
Early Termination Contracts: Any Contract that the Servicer has
---------------------------
allowed the related Obligor to terminate prior to the date on which the final
Scheduled Payment is due thereunder.
Eligible Assignee: (a) A Person whose short-term rating is at least
-----------------
A-1 from S&P and P-1 from Moody's, or whose obligations under this Agreement are
guaranteed by a Person whose short-term rating is at least A-1 from S&P and P-1
from Moody's, or (b) such other Person satisfactory to VFCC, the Deal Agent and
each of the rating agencies rating the Commercial Paper and approved, in
writing, by the Seller; provided, however, that no such approval shall be
-------- -------
required in the event any Investor is required by any rating agency rating
VFCC's commercial paper notes or by any regulatory agency to make an assignment.
Eligible Contract: On any Determination Date, each Contract with
-----------------
respect to which each of the following is true:
(a) the information with respect to the Contract and the Equipment
subject to the Contract is true and correct in all material respects;
(b) immediately prior to the transfer hereunder of the Contract and
any related Equipment (or security interest therein), the Contract was owned by
the Seller free and clear of any Adverse Claim;
(c) no Scheduled Payment related to the Contract is (i) more than 60
days delinquent, (ii) a payment as to which the Servicer has failed to make a
Servicer Advance, (iii) a payment as to which the related Equipment has been
repossessed or (iv) a payment as to which the related Equipment has been
charged-off in accordance with the credit and collection policies of the
Servicer;
(d) no provision of the Contract has been waived, altered or modified
in any respect except as allowed under the Credit and Collection Policy of the
Servicer;
(e) the Contract is a valid and binding payment obligation of the
Obligor and is enforceable in accordance with its terms (except as may be
limited by applicable Insolvency Laws and the availability of equitable
remedies);
-8-
<PAGE>
(f) the Contract is not and will not be subject to rights of
rescission, setoff, counterclaim or defense and no such rights have been
asserted or threatened with respect to the Contract;
(g) the Contract, at the time it is sold to VFCC does not violate the
laws of the United States or any state in any manner which would create
liability for any Purchaser or which would materially and adversely affect the
enforceability or collectibility of such Contract;
(h) (i) the Contract and any related Equipment have not been sold,
transferred, assigned or pledged by the Seller to any other Person and, with
respect to a Contract that is a "true lease," any Equipment related to such true
lease is owned by the Seller free and clear of any Liens of any third parties
(except for any Permitted Liens) and (ii) such Contract is secured by a fully
perfected Lien of the first priority on the related Equipment;
(i) the Contract constitutes chattel paper, an account, an instrument
or a general intangible as defined under the UCC and if the Contract constitutes
"chattel paper" for purposes of the UCC, there is not more than one "secured
party's original" counterpart of the Contract;
(j) all filings necessary to evidence the conveyance or transfer to
the Deal Agent of the Contract and all right, title and interest in the related
Equipment have been made in all appropriate jurisdictions;
(k) the Obligor is not the subject of bankruptcy or other insolvency
proceedings;
(l) the Obligor's billing address is in the United States and the
Contract is a U.S. dollar-denominated obligation;
(m) the Contract does not require the prior written consent of an
Obligor or contain any other restriction on the transfer or assignment of the
Contract (other than a consent or waiver of such restriction that has been
obtained prior to the Closing Date, with respect to an Existing Contract, or the
Addition Date, with respect to an Additional Contract);
(n) the obligations of the related Obligor under the Contract are
irrevocable, unconditional and non-cancelable (without the right to set off for
any reason and net of any maintenance or cost per copy charges);
(o) the Contract has a remaining term to maturity of not greater than
60 months, provided, however, that up to 10% (by ADCB) may have a remaining term
-------- -------
to maturity of not greater than 72 months;
(p) no adverse selection procedure was used in selecting the Contract
for the Asset Pool;
-9-
<PAGE>
(q) the Obligor under the Contract is required to maintain casualty
insurance or to self-insure with respect to the related Equipment in accordance
with the Servicer's normal requirements;
(r) the Contract is not a "consumer lease" as defined in Section 2A-
103(l)(e) of the UCC;
(s) the Contract is not subject to any guarantee by the Servicer nor
has the Seller or the Originator established any specific credit reserve with
respect to the related Obligor;
(t) the Contract provides that (i) the Originator, the Seller or the
Servicer may accelerate all remaining Scheduled Payments if the Obligor is in
default under any of its obligations under such Contract and (ii) the Obligor
thereof may not elect to utilize its security deposit to offset any remaining
Scheduled Payment;
(u) the Obligor under the Contract is required to maintain the
Equipment in good working order and bear all costs of operating the Equipment
(including the payment of Taxes);
(v) no provision of such Contract provides for a Prepayment Amount
less than the amount calculated in accordance with the definition of Prepayment
Amount;
(w) the Contract has not been terminated as a result of a Casualty
Loss to the related Equipment or for any other reason;
(x) the Discounted Contract Balance of such Contract, when aggregated
with the Discounted Contract Balance of each other Contract having the same
Obligor, does not exceed the Portfolio Concentration Criteria;
(y) the Discounted Contract Balance of such Contract does not include
the amount of any security deposit held by the Servicer or the Seller; such
Contract provides that in the event of a Casualty Loss, the Obligor is required
to pay an amount not less than the present value of all remaining Scheduled
Payments discounted at the Blended Discount Rate plus any past due amounts as of
the date of determination;
(aa) the Obligor thereunder has represented to the Originator that
such Obligor has accepted the related Equipment and has had a reasonable
opportunity to inspect and test such Equipment and the Originator has not been
notified of any defects therein; and
(bb) all payments in respect of a Contract will be made free and clear
of, and without deduction or withholding for or on account of, any Taxes.
Equipment: The tangible assets financed or leased by an Obligor
---------
pursuant to a Contract and/or, unless the context otherwise requires, a security
interest in such assets, such
-10-
<PAGE>
tangible assets to consist of small ticket equipment, including without
limitation small manufacturing, automotive repair, printing, information and
document processing and storage, telecommunications and office equipment.
ERISA: The U.S. Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
ERISA Affiliate: (a) Any corporation which is a member of the same
---------------
controlled group of corporations (within the meaning of Section 414(b) of the
Code) as the Seller; (b) A trade or business (whether or not incorporated) under
common control (within the meaning of Section 414(c) of the Code) with the
Seller or (c) A member of the same affiliated service group (within the meaning
of Section 414(m) of the Code) as the Seller, any corporation described in
clause (a) above or any trade or business described in clause (b) above.
Eurocurrency Liabilities: As defined in Regulation D of the Board of
------------------------
Governors of the Federal Reserve System, as in effect from time to time.
Eurodollar Disruption Event: With respect to all Capital allocated to
---------------------------
any Fixed Period, any of the following: (a) a determination by a Purchaser that
it would be contrary to law or to the directive of any central bank or other
governmental authority (whether or not having the force of law) to obtain United
States dollars in the London interbank market to make, fund or maintain any
Purchase for such Fixed Period, (b) the failure of one or more of the Reference
Banks to furnish timely information for purposes of determining the Adjusted
Eurodollar Rate, (c) a determination by a Purchaser that the rate at which
deposits of United States dollars are being offered to such Purchaser in the
London interbank market does not accurately reflect the cost to such Purchaser
of making, funding or maintaining any Purchase for such Fixed Period or (d) the
inability of a Purchaser to obtain United States dollars in the London interbank
market to make, fund or maintain any Purchase for such Fixed Period.
Eurodollar Reserve Percentage: Of any Reference Bank for any Fixed
-----------------------------
Period, for any Capital means the overcollateralization percentage applicable
during such Fixed Period (or, if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in such Fixed
Period during which any such percentage shall be so applicable) under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for such Reference Bank with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities having
a term equal to such Fixed Period.
Excluded Amounts: (a) Any collections on deposit in the Collection
----------------
Account or otherwise received by the Servicer on or with respect to the Asset
Pool or related Equipment, which collections are attributable to any Taxes, fees
or other charges imposed by any Governmental Authority, (b) any collections
representing reimbursements of insurance premiums or payments for services that
were not financed by the Originator, (c) any collections with respect to
Contracts repurchased or substituted for with respect to a Warranty Event, or
otherwise replaced by a Substitute Contract and (d) any late fees, insufficient
funds
-11-
<PAGE>
charges, inspection charges, collection fees, delinquency fees, repossession
fees or UCC fees, extension fees, documentation fees, maintenance fees and
insurance fees.
Existing Contracts: The Contracts purchased by the Seller under the
------------------
Purchase Agreement and owned by the Seller on the Closing Date.
Facility Financing Statement: As defined in Schedule I.
----------------------------
Federal Funds Rate: For any period, a fluctuating interest rate per
------------------
annum equal for each day during such period to the weighted average of the
federal funds rates as quoted by First Union and confirmed in Federal Reserve
Board Statistical Release H.15(519) or any successor or substitute publication
selected by First Union (or, if such day is not a Business Day, for the next
preceding Business Day), or, if, for any reason, such rate is not available on
any day, the rate determined, in the sole opinion of First Union, to be the rate
at which federal funds are being offered for sale in the national federal funds
market at 9:00 A.M. Charlotte, North Carolina time.
Filing Locations: [Massachusetts].
----------------
First Union: First Union National Bank, in its individual capacity,
-----------
and its successors or assigns.
Fixed Period: For any outstanding Capital, (a) if Yield in respect of
------------
all or any part thereof is computed by reference to the CP Rate, a period of 1
to and including 60 days, (b) if Yield in respect thereof is computed by
reference to the Adjusted Eurodollar Rate, a period of one, two or three months
and (c) if Yield in respect thereof is computed at the Base Rate, a period of 1
to and including 31 days, in each case, as determined pursuant to Section 2.4.
GAAP: Generally accepted accounting principles as in effect from time
----
to time in the United States.
Governmental Authority: With respect to any Person, any nation or
----------------------
government, any state or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any court or arbitrator having
jurisdiction over such Person.
H.15: As defined in Section 5.4.
----
Hedge Counterparty: With respect to this Agreement, each related
------------------
party, approved in writing by the related Investor, which has entered into a
Hedging Agreement with the Seller (and assigned to the Deal Agent on behalf of
VFCC) and as to which such party's (a) long-term unsecured debt obligations are
rated at least "A-" by S&P and "A3" by Moody's, and (b) short-term unsecured
debt obligations are rated at least "A-1" by S&P and "P-1" by Moody's.
-12-
<PAGE>
Hedged Amount: As defined in Section 5.4.
-------------
Hedged Costs: With respect to any Payment Date, the amount of hedging
------------
costs, including, without limitation, payments to the Hedge Counterparty, as
payable out of funds in the Collection Account on such Payment Date as provided
by Section 2.7.
Hedged Level: As defined in Section 5.4.
------------
Hedging Agreement: With respect to this Agreement, each hedging
-----------------
agreement entered into by the Seller and a Hedge Counterparty.
Increased Costs: Any amounts required to be paid by the Seller to an
---------------
Affected Party pursuant to Section 2.12.
Incremental Purchase: Any Purchase that increases the aggregate
--------------------
outstanding Capital hereunder.
Indebtedness: With respect to any Person at any date, (a) all
------------
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current liabilities incurred in the
ordinary course of business and payable in accordance with customary trade
practices) or which is evidenced by a note, bond, debenture or similar
instrument, (b) all obligations of such Person under capital leases, (c) all
obligations of such Person in respect of acceptances issued or created for the
account of such Person and (d) all liabilities secured by any Lien on any
property owned by such Person even though such Person has not assumed or
otherwise become liable for the payment thereof.
Indemnified Amounts: As defined in Section 8.1
-------------------
Indemnified Persons: As defined in Section 6.19.
-------------------
Ineligible Contract: As defined in Section 5.5.
-------------------
Insolvency Event: With respect to a specified Person, (a) the filing
----------------
of a decree or order for relief by a court having jurisdiction in the premises
in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Insolvency Law now or hereafter in effect,
or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for such Person or for any substantial part of its property,
or ordering the winding-up or liquidation of such Person's affairs, and such
decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or (b) the commencement by such Person of a voluntary case
under any applicable Insolvency Law now or hereafter in effect, or the consent
by such Person to the entry of an order for relief in an involuntary case under
any such law, or the consent by such Person to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for such Person or for any substantial part of its property,
or the making by such Person of any general assignment for the benefit of
creditors, or the failure by such Person generally to pay its debts
-13-
<PAGE>
as such debts become due, or the taking of action by such Person in furtherance
of any of the foregoing.
Insolvency Laws: The Bankruptcy Code of the United States of America
---------------
and all other applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization, suspension of payments,
or similar debtor relief laws from time to time in effect affecting the rights
of creditors generally.
Instrument: Any "instrument" (as defined in Article 9 of the UCC),
----------
other than an instrument which constitutes part of chattel paper.
Insurance Policy: With respect to any Contract, an insurance policy
----------------
covering physical damage to or loss of the related Equipment.
Insurance Proceeds: Depending on the context, any amounts payable or
------------------
any payments made, to the Servicer under any Insurance Policy.
Investment: With respect to any Person, any direct or indirect loan,
----------
advance or investment by such Person in any other Person, whether by means of
share purchase, capital contribution, loan or otherwise, excluding the
acquisition of Assets pursuant to the Purchase Agreement and excluding
commission, travel and similar advances to officers, employees and directors
made in the ordinary course of business.
Investor: First Union and each liquidity bank that is a party to the
--------
Liquidity Purchase Agreement dated as of August 15, 1997 between the Purchaser,
the Liquidity Agent and each other liquidity bank a party thereto.
Issuer: VFCC and any other Purchaser whose principal business
------
consists of issuing commercial paper or other securities to fund its acquisition
and maintenance of receivables, accounts, instruments, chattel paper, general
intangibles and other similar assets.
LIBOR Rate: For a Fixed Period, an interest rate per annum equal to
----------
the sum of the rate appearing on the Telerate Page 3750 as of 11:00 a.m. (London
time) on the Business Day which is the second Business Day immediately preceding
the first day of such Fixed Period for a term comparable to such Fixed Period
or, if no such rate appears on such day, the average (rounded upward to the
nearest one-sixteenth (1/16) of one percent) per annum rate of interest
determined by First Union at its principal office in Charlotte, North Carolina
(each such determination, absent manifest error, to be conclusive and binding)
as of two Business Days prior to the first day of the applicable Fixed Period,
to be the rate at which deposits in immediately available funds in U.S. dollars
are being, have been, or would be offered or quoted by the First Union to major
banks in the interbank market for Eurodollar deposits at or about 11:00 A.M.
(Charlotte, North Carolina time) on such day, for a term comparable to such
Fixed Period and in an amount approximately equal to the requested Capital.
-14-
<PAGE>
Lien: With respect to any Asset, (a) any mortgage, lien, pledge,
----
charge, security interest or encumbrance of any kind in respect of such Asset or
(b) the interest of a vendor or lessor under any conditional sale agreement,
financing lease or other title retention agreement relating to such Asset.
Liquidation Expenses: With respect to any Contract, the aggregate
--------------------
amount of all out-of-pocket expenses reasonably incurred by the Servicer
(including amounts paid to any subservicer) and any reasonably allocated costs
of internal counsel, in each case in accordance with the Servicer's customary
procedures in connection with the repossession, refurbishing and disposition of
any related Equipment upon or after the expiration or earlier termination of
such Contract and other out-of-pocket costs related to the liquidation of any
such Equipment, including the attempted collection of any amount owing pursuant
to such Contract if it is a Defaulted Contract.
Lock-Box: A post office box to which Collections are remitted for
--------
retrieval by a Lock-Box Bank and deposited by such Lock-Box Bank into a Lock-Box
Account.
Lock-Box Account: An account maintained for the purpose of receiving
----------------
Collections at a bank or other financial institution which has executed a Lock-
Box Notice for the purpose of receiving Collections.
Lock-Box Bank: Any of the banks or other financial institutions
-------------
holding one or more Lock-Box Accounts.
Lock-Box Notice: A notice, in substantially the form of Exhibit B,
---------------
among the Seller, the Originator (if applicable) and a Lock-Box Bank.
Monthly Period: As to any Determination Date, the calendar month
--------------
ended on such Determination Date.
Monthly Report: As defined in Section 6.13(a).
--------------
Moody's: Moody's Investors Service, Inc., and any successor thereto.
-------
Multiemployer Plan: A "multiemployer plan" as defined in Section
------------------
4001(a)(3) of ERISA which is or was at any time during the current year or the
immediately preceding five years contributed to by the Seller or any ERISA
Affiliate on behalf of its employees.
Norwest: Norwest Bank Minnesota, National Association.
-------
Notice of Sale: A notice, substantially in the form of Exhibit A
--------------
hereto, delivered pursuant to Section 2.2.
Obligor: A Person obligated to make payments pursuant to a Contract
-------
including any guarantor thereof.
-15-
<PAGE>
Officer's Certificate: A certificate signed by any officer of the
---------------------
Seller or the Servicer and delivered to the Collateral Custodian, as the case
may be.
Opinion of Counsel: A written opinion of counsel, who may be counsel
------------------
for Seller or the Servicer and who shall be reasonably acceptable to the Deal
Agent.
Original Contract: Each Contract identified by account number and
-----------------
Outstanding Balance as of the related Cut Off Date in the Contract List.
Originator: BankVest Capital Corp. or any wholly owned subsidiary
----------
thereof.
Originator Assets: Any Asset that was transferred to the Seller by
-----------------
the Originator.
Outstanding Balance: Of any Asset at any time, the then outstanding
-------------------
principal balance thereof.
Overcollateralization: At any time with respect to any Asset
---------------------
Interest, an amount equal to the product of (a) the ADCB at such time and (b)
.12.
Payment Date: The 20th day of each calendar month or, if such day is
------------
not a Business Day, the next succeeding Business Day.
Payout Event: As defined in Section 7.1.
------------
Permitted Investments: Any one or more of the following types of
---------------------
investments:
(a) marketable obligations of the United States of America, the
full and timely payment of which are backed by the full faith and credit of
the United States of America and which have a maturity of not more than 270
days from the date of acquisition;
(b) marketable obligations, the full and timely payment of which
are directly and fully guaranteed by the full faith and credit of the
United States of America and which have a maturity of not more than 270
days from the date of acquisition;
(c) bankers' acceptances and certificates of deposit and other
interest-bearing obligations (in each case having a maturity of not more
than 270 days from the date of acquisition) denominated in dollars and
issued by any bank with capital, surplus and undivided profits aggregating
at least $100,000,000, the short-term obligations of which are rated A-1 by
S&P and P-1 by Moody's;
(d) repurchase obligations with a term of not more than ten days
for underlying securities of the types described in clauses (a), (b) and
(c) above entered into with any bank of the type described in clause (c)
above;
-16-
<PAGE>
(e) commercial paper rated at least A-1 by S&P and P-1 by
Moody's; and,
(f) demand deposits, time deposits or certificates of deposit
(having original maturities of no more than 365 days) of depository
institutions or trust companies incorporated under the laws of the United
States of America or any state thereof (or domestic branches of any foreign
bank) and subject to supervision and examination by federal or state
banking or depository institution authorities; provided, however that at
-------- -------
the time such investment, or the commitment to make such investment, is
entered into, the short-term debt rating of such depository institution or
trust company shall be at least A-1 by S&P and P-1 by Moody's.
Permitted Liens: (a) shall mean, with respect to Contracts in the
---------------
Asset Pool:
(i) Liens for state, municipal or other local taxes if such
taxes shall not at the time be due and payable, (ii) Liens in favor of
the Seller created pursuant to a Purchase Agreement and transferred to
the Asset Pool hereunder and (iii) Liens in favor of the Deal Agent as
agent for the Purchasers created pursuant to this Agreement; and
(b) with respect to the related Equipment:
(i) materialmen's, warehousemen's and mechanics' liens and
other Liens arising by operation of law in the ordinary course of
business for sums not due, (ii) Liens for state, municipal or other
local taxes if such taxes shall not at the time be due and payable,
(iii) Liens in favor of the Seller created pursuant to a Purchase
Agreement and transferred to the Asset Pool hereunder and (iv) Liens
in favor of the Deal Agent as agent for the Purchasers created
pursuant to this Agreement.
Person: An individual, partnership, corporation (including a business
------
trust), limited liability company, joint stock company, trust, unincorporated
association, sole proprietorship, joint venture, government (or any agency or
political subdivision thereof) or other entity.
Placement Agent Fee Rate: On any day the fee (or if more than one,
------------------------
the average of the fees) charged by dealers in or placement agents for
Commercial Paper Notes in connection with the sale or placement of such
Commercial Paper Notes.
Pool Assets: On any day any Asset in the Asset Pool.
-----------
Portfolio Concentration Criteria: The following concentration
--------------------------------
limitations at all times measured on the basis of percentage of ADCB:
-17-
<PAGE>
(a) the sum of the Discounted Contract Balances of Contracts relating
to any one individual Obligor is limited to the greater of (i) U.S. $500,000 and
(ii) 1.0% of the ADCB;
(b) the sum of the Discounted Contract Balance of the 25 obligors
with the largest aggregate Discounted Contract Balances is limited to 15% of the
ADCB;
(c) the sum of the Discounted Contract Balances of Contracts relating
to any one type of Equipment is limited to 30% of the ADCB;
(d) the sum of the Discounted Contract Balances of Contracts
originated by any one vendor is limited to 15% of the ADCB;
(e) the sum of the Discounted Contract Balances of Obligors located
in any one state is limited to 10% of the ADCB, with the exception of Obligors
located in Massachusetts (in which the sum of the Discount Contract Balance of
Obligors is limited to 25% of the ADCB), California (in which the sum of the
Discount Contract Balance of Obligors is limited to 20% of the ADCB) and New
York (in which the sum of the Discount Contract Balance of Obligors is limited
to 15% of the ADCB);
(f) the sum of the Discounted Contract Balances of Contracts whose
Obligors are municipalities or other government related organizations is limited
to 2% of the ADCB;
(g) the sum of the Discounted Contract Balances of which the payment
terms are non-monthly is limited to 5% of the ADCB;
(h) the sum of the Discounted Contract Balances of Contracts
originated by the Originator (including Contracts originated in the name of a
third party so long as the Originator actually financed and services such
Contracts) must at all times equal 90% or more of the ADCB, and all Contracts
must have been financed by the Originator; and
(i) the sum of the Discounted Contract Balances of Contracts under
which the obligations of the related Obligor are not irrevocable and
unconditional and non-cancelable ("Conditional Contracts") is limited to 10% of
the ADCB, and the Obligors under all Conditional Contracts must be governmental
entities or municipalities.
Prepaid Contract: Any Contract that has terminated or been prepaid in
----------------
full prior to its scheduled expiration date (including because of a Casualty
Loss), other than a Defaulted Contract.
Prepayment Amount: As specified in Section 6.2(b).
-----------------
Prepayments: Any and all (i) partial and full prepayments on a
-----------
Contract (including, with respect to any Contract and any Monthly Period, any
Scheduled Payment or portion thereof which is due in a subsequent Monthly Period
which the Servicer has received,
-18-
<PAGE>
and expressly permitted the related Obligor to make, in advance of its scheduled
due date, and which will be applied to such Scheduled Payment on such due date),
(ii) cash proceeds or rents realized from the sale, lease, re-lease or re-
financing of Equipment under a Prepaid Contract, net of Liquidation Expenses,
and (iii) Recoveries.
Prime Rate: The rate announced by First Union from time to time as
----------
its prime rate in the United States, such rate to change as and when such
designated rate changes. The Prime Rate is not intended to be the lowest rate
of interest charged by First Union in connection with extensions of credit to
debtors.
Program Fee: As defined in Section 2.12(b).
-----------
Program Fee Agreement: The letter agreement, dated August 19, 1997,
---------------------
among the Seller, the Servicer and the Deal Agent, setting forth, among other
things, the Commitment Fee, the Program Fee and the Servicing Fee.
Program Fee Rate: The rate per annum set forth in the Program Fee
----------------
Agreement.
Purchase: A purchase by a Purchaser of an Asset Interest from the
--------
Seller pursuant to Article II, including without limitation, the remittance by
the Servicer to the Seller of Collections of Pool Assets pursuant to Section
2.7(b).
Purchase Agreement: The Purchase Agreement dated as of the date
------------------
hereof, between the Originator and the Seller, as amended, modified,
supplemented or restated from time to time.
Purchase Certificate: Each certificate, in the Form of Exhibit G,
-------------------- ---------
delivered on the date of the Initial Purchase and on the date of each
Incremental Purchase.
Purchase Date: The Closing Date, and as to any Incremental Purchase,
-------------
any Business Day that is (i) at least one (1) calendar month following the
immediately preceding Purchase Date and (ii) two (2) Business Days immediately
following the receipt by the Deal Agent of a written request by the Seller to
sell an Asset Interest, such notice to be in the form of Exhibit A hereto and to
---------
conform to requirements of Section 3.2 hereof.
Purchase Limit: At any time, $75,000,000, on or after the Termination
--------------
Date, the "Purchase Limit" shall mean the aggregate outstanding Capital.
Purchasers: Collectively, VFCC and the Investors and any other Person
----------
that agrees, pursuant to the pertinent Assignment and Acceptance, to purchase an
Asset Interest pursuant to this Agreement.
Qualified Institution: As defined in Section 6.2.
---------------------
-19-
<PAGE>
Rating Agency: Each of Standard & Poor's, Moody's and any other
-------------
rating agency that has been requested to issue a rating with respect to the
commercial paper notes issued by the Issuer.
Records: All Contracts and other documents, books, records and other
-------
information (including without limitation, computer programs, tapes, disks,
punch cards, data processing software and related property and rights)
maintained with respect to Assets and the related Obligors which the Seller has
itself generated, in which the Seller has acquired an interest pursuant to the
Purchase Agreement or in which the Seller has otherwise obtained an interest.
Recoveries: With respect to a Defaulted Contract, proceeds from the
----------
sale, lease, re-lease or refinancing of the Equipment, proceeds of any related
Insurance Policy and any other recoveries with respect to such Defaulted
Contract and the related Equipment and related property, and other amounts
representing late fees and penalties net of Liquidation Expenses and amounts, if
any, so received that are required to be refunded to the Obligor on such
Contract.
Reference Bank: Any bank which furnishes information for purposes of
--------------
determining the Adjusted Eurodollar Rate.
Register: As defined in Section 10.1(c).
--------
Reinvestment Termination Date: The Business Day that the Seller
-----------------------------
designates as the Reinvestment Termination Date by notice to the Deal Agent at
least ten Business Days prior to such Business Day or, if any of the conditions
precedent in Section 3.2 are not satisfied, the Business Day that the Deal Agent
designates as the Reinvestment Termination Date by notice to the Seller at least
one Business Day prior to such Business Day.
Replaced Contract: As defined in Section 2.16(a).
-----------------
Reporting Date: The 10th day of the month or the first Business Day
--------------
thereafter.
Required Investors: At a particular time, Investors with Commitments
------------------
in excess of 66 2/3% of the Purchase Limit.
Required Reports: Collectively, the Monthly Report, the Servicer's
----------------
Certificate and the quarterly financial statement of the Servicer required to be
delivered to the Deal Agent pursuant to Section 6.13(c) hereof.
Requirements of Law: For any Person shall mean the certificate of
-------------------
incorporation or articles of association and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation, or
order or determination of an arbitrator or Governmental Authority, in each case
applicable to or binding upon such Person or to which such Person is subject,
whether Federal, state or local (including, without
-20-
<PAGE>
limitation, usury laws, the Federal Truth in Lending Act, and Regulation Z and
Regulation B of the Board of Governors of the Federal Reserve System).
Responsible Officer: As to any Person, any officer of such Person
-------------------
with direct responsibility for the administration of this Agreement and also,
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
Retransfer Date: As defined in Section 5.6.
---------------
S&P: Standard & Poor's Ratings Services, a division of The McGraw-
---
Hill Companies, Inc. and any successor thereto.
Sale Discount Rate: For any Contract to be transferred to the Asset
------------------
Pool by the Seller, a rate per annum, calculated on the Business Day immediately
preceding such transfer, equal to the sum of (i) the fixed interest rate
associated with the Hedge Agreement related to such purchase, (ii) the Program
Fee Rate, (iii) the Placement Agent Fee Rate and (iv) the Servicing Fee Rate.
Scheduled Payments: On any Determination Date with respect to any
------------------
Contract, (a) each monthly, quarterly, annual or seasonal rent or financing
(whether principal or principal and interest) payment scheduled to be made by
the Obligor thereof after such Determination Date under the terms of such
Contract, reduced by a number of such scheduled payments equal to a number
(rounding upwards to the next highest integer if such number is not an integer)
obtained by dividing (i) the dollar amount of any security deposit related to
such Contract by (ii) the amount of a single scheduled payment under such
Contract, (b) any payment due from the Obligor of such Contract at the
expiration or other termination of such Contract and (c) any payments in
connection with a Warranty Event.
Seller: BVFU Funding Corp., or any permitted successor thereto.
------
Servicer: BankVest Capital Corp. and its permitted successors and
--------
assigns.
Servicer Advance: An advance of Scheduled Payments made by the
----------------
Servicer pursuant to Section 6.3.
Servicer Default: As specified in Section 6.24.
----------------
Servicer's Certificate: As defined in Section 6.13(b).
----------------------
Servicing Fee: As specified in Section 2.12(c).
-------------
Servicing Fee Rate: The rate per annum set forth in any fee letter
------------------
delivered by the Originator to the Deal Agent and the Purchasers.
Solvent: As to any Person at any time, having a state of affairs such
-------
that all of the following conditions are met: (a) the fair value of the property
of such Person is greater
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than the amount of such Person's liabilities (including disputed, contingent and
unliquidated liabilities) as such value is established and liabilities evaluated
for purposes of Section 101(31) of the Bankruptcy Code; (b) the present fair
salable value of the property of such Person in an orderly liquidation of such
Person is not less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and matured; (c)
such Person is able to realize upon its property and pay its debts and other
liabilities (including disputed, contingent and unliquidated liabilities) as
they mature in the normal course of business; (d) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature; and (e) such
Person is not engaged in business or a transaction, and is not about to engage
in a business or a transaction, for which such Person's property would
constitute unreasonably small capital.
Structuring Fee: The structuring fee agreed to between the Seller and
---------------
the Deal Agent in the Program Fee Agreement.
Subservicer: Portfolio Financial Servicing (formerly Parrish
-----------
Financial Servicing Company, L.P.) and its permitted successors and assigns.
Substitute Contract: On any day, an Eligible Contract which meets
-------------------
each of the conditions for substitution set forth in Schedule IV hereto.
Successor Servicer: As defined in Section 6.25(a).
------------------
Swap Rate: As defined in Section 5.4.
---------
Taxes: Any present or future taxes, levies, imposts, duties, charges,
-----
assessments or fees of any nature (including interest, penalties, and additions
thereto) that are imposed by any government or other taxing authority.
Termination Date: The earliest of (a) the date of termination of the
----------------
Purchase Limit pursuant to Section 2.3, (b) the date of the occurrence of a
Payout Event pursuant to Section 7.1, (c) the Reinvestment Termination Date and
(d) ___________, 19__.
Termination Notice: As defined in Section 6.24.
------------------
Transaction: As defined in Section 3.2.
-----------
UCC: The Uniform Commercial Code as from time to time in effect in
---
the specified jurisdiction.
United States: The United States of America.
-------------
Unreimbursed Servicer Advances: At any time, the amount of all
------------------------------
previous Servicer Advances (or portions thereof) as to which the Servicer has
not been reimbursed as of such time pursuant to Section 2.7 and which the
Servicer has determined in its sole discretion will not be recoverable from
Collections with respect to the related Contract.
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<PAGE>
Warranty Event: As to any Pool Asset, the occurrence and continuance
--------------
of a material breach of any representation or warranty relating to such
Contract.
Yield: For each Asset Interest for any Fixed Period, the product of
-----
YRT x C x ED
------------
360
where:
C = the Capital allocated to such Fixed Period;
ED = the actual number of days elapsed during such Fixed
Period; and
YRT = the Yield Rate for such Fixed Period;
provided, however that (a) no provision of this Agreement shall require the
- -------- -------
payment or permit the collection of Yield in excess of the maximum permitted by
applicable law and (b) Yield shall not be considered paid by any distribution if
at any time such distribution is rescinded or must otherwise be returned for any
reason.
Yield Rate: means the sum of (i) the Program Fee Rate and (ii):
----------
(A) to the extent the relevant Purchaser will be funding the
applicable Purchase on the first day of such Fixed Period through the issuance
of commercial paper, a rate equal to the CP Rate for such Fixed Period, and
(B) to the extent the relevant Purchaser will not be funding the
applicable Purchase on the first day of such Fixed Period through the issuance
of commercial paper, a rate equal to the Alternative Rate for such Fixed Period
or such other rate as the Deal Agent and the Seller shall agree to in writing.
Section 1.2 Other Terms.
-----------
All accounting terms not specifically defined herein shall be
construed in accordance with GAAP. All terms used in Article 9 of the UCC in
the State of New York, and not specifically defined herein, are used herein as
defined in such Article 9.
Section 1.3 Computation of Time Periods.
---------------------------
Unless otherwise stated in this Agreement, in the computation of a
period of time from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding."
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ARTICLE II
THE PURCHASE FACILITY
Section 2.1 Purchases of Asset Interest.
---------------------------
(a) On the terms and conditions hereinafter set forth, the Seller may
on any Purchase Date, at its option, sell and assign Asset Interests to the
Purchasers. The Deal Agent may act on behalf of and for the benefit of the
Purchasers in this regard. VFCC may, in its sole discretion, purchase, or if
VFCC shall decline to purchase, the Liquidity Agent shall purchase on behalf of
the Investors, Asset Interests from time to time during the period from the date
hereof to but not including the Termination Date. Under no circumstances shall
any Purchaser make the initial Purchase or any Incremental Purchase if, after
giving effect to such Purchase or Incremental Purchase, the aggregate Capital
outstanding hereunder would exceed the lesser of (i) the Purchase Limit or (ii)
the Capital Limit.
(b) The Seller may, within 60 days, but no later than 45 days, prior
to the then Commitment Termination Date, by written notice to the Deal Agent,
make written request for VFCC and the Investors to extend the Commitment
Termination Date for an additional period of 364 days. The Deal Agent will give
prompt notice to VFCC and each of the Investors of its receipt of such request
for extension of the Commitment Termination Date. VFCC and each Investor shall
make a determination, in their sole discretion and after a full credit review,
not less than 15 days prior to the then applicable Commitment Termination Date
as to whether or not it will agree to extend the Commitment Termination Date;
provided, however, that the failure of VFCC or any Investor to make a timely
- -------- -------
response to the Seller's request for extension of the Commitment Termination
Date shall be deemed to constitute a refusal by VFCC or the Investor, as the
case may be, to extend the Commitment Termination Date. The Commitment
Termination Date shall only be extended upon the consent of both (i) VFCC and
(ii) 100% of the Investors.
SECTION 2.2 THE INITIAL PURCHASE, SUBSEQUENT PURCHASES AND
-----------------------------------------------
INCREMENTAL PURCHASES.
---------------------
(a) Subject to the conditions described in Section 2.1, the initial
Purchase and each Incremental Purchase shall be made in accordance with the
procedures described in Section 2.2(b). After the Collection Date has occurred,
each of the Purchasers and the Deal Agent, in accordance with their respective
interests, shall assign and transfer to the Seller their respective remaining
interest in Asset Interests to the Seller free and clear of any Adverse Claim
resulting solely from an act or omission by a Purchaser or the Deal Agent, but
without any other representation or warranty, express or implied.
(b) The initial Purchase and each Incremental Purchase shall be made
pursuant to the terms of a Purchase Certificate in the form of Exhibit G hereto,
---------
after receipt by the Purchaser of a Notice of Sale delivered by the Seller to
the Deal Agent at least two Business Days prior to such proposed Purchase Date
or, if the Yield to accrue with respect to such Purchase or Incremental Purchase
is computed by reference to the Adjusted Eurodollar
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<PAGE>
Rate, on at least three Business Days' notice from the Seller to the Deal Agent,
and each such notice shall specify (i) the aggregate amount of such initial
Purchase or Incremental Purchase which amount must satisfy the applicable
minimum requirement set forth in the following sentence, (ii) the date of such
Purchase or Incremental Purchase, (iii) the duration of the initial Fixed
Periods for the Capital arising as a result of such Purchase or Incremental
Purchase and (iv) the rate at which Yield is to accrue on such Capital for such
Fixed Periods. The Seller shall deliver no more than two such notices in any
calendar month, and each amount specified in any such notice must satisfy the
following minimum requirements, as applicable, as a condition to the related
Purchase: (i) the initial Purchase shall be in an amount equal to $10,000,000 or
an integral multiple of $10,000 in excess thereof; (ii) each Add-On Purchase
shall be in an amount equal to $10,000 or an integral multiple of $10,000 in
excess thereof; and (iii) each Incremental Purchase hereunder other than an Add-
On Purchase shall be in an amount equal to $5,000,000 or an integral multiple of
$10,000 in excess thereof; provided, however, that if such Incremental Purchase
-------- -------
is to be made hereunder at a time when there are no outstanding Commercial Paper
Notes issued in respect of a Purchase of $5,000,000 or an integral multiple of
$10,000 in excess thereof, then such Incremental Purchase shall be in an amount
equal to $10,000,000 or an integral multiple of $10,000 in excess thereof.
Following receipt of such notice, the Deal Agent will consult with VFCC in order
to assist VFCC in determining whether or not to make the purchase. If VFCC
declines to make a proposed purchase, the initial Purchase or Incremental
Purchase will be made by the Investors. The Deal Agent shall notify the Seller
whether the duration of the initial Fixed Periods described in such notice is
acceptable or, if not acceptable, the Deal Agent shall advise the Seller of such
Fixed Periods as may be acceptable. On the date of such Purchase or Incremental
Purchase, as the case may be, VFCC or each Investor shall, upon satisfaction of
the applicable conditions set forth in Article III, make available to the Seller
in same day funds, at ____________________________, an amount equal to (i)
Capital of the Asset Interest related to such initial Purchase or Incremental
Purchase, as the case may be, in the case of a purchase by VFCC or (ii) such
Investor's pro rata share of the Capital related to such Asset Interest, in the
case of a purchase by the Investors.
SECTION 2.3 REDUCTION OF THE PURCHASE LIMIT; REPURCHASE.
-------------------------------------------
(a) The Seller may, upon at least five Business Days' notice to the
Deal Agent, terminate in whole or reduce in part the portion of the Purchase
Limit that exceeds the sum of the aggregate Capital and Yield accrued and to
accrue thereon, and the Commitments of the Investors shall be reduced
proportionately; provided, however, that each partial reduction of the Purchase
-------- -------
Limit shall be in an aggregate amount equal to $1,000,000 or an integral
multiple thereof. Each notice of reduction or termination pursuant to this
Section 2.3(a) shall be irrevocable.
(b) Pursuant to the provisions of Section 2.7(b) and Section 2.8(b),
the Seller may, at any time prior to the occurrence of the Termination Date,
reduce the Purchaser's Asset Interest by remitting to the Purchaser (i) cash and
(ii) instructions to apply such cash to the reduction of Capital.
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<PAGE>
SECTION 2.4 SELECTION OF FIXED PERIODS.
--------------------------
Each Asset Interest shall at all times have an associated amount of
Capital, a Yield Rate and a Fixed Period applicable to it. At all times
hereafter until the Termination Date, the Deal Agent shall, after consultation
with the Purchasers, select (a) Fixed Periods and allocate a portion of the
outstanding Capital to each selected Fixed Period, so that the outstanding
Capital is at all times allocated to a Fixed Period and (b) Yield Rates to apply
to such Capital for such Fixed Periods. Each subsequent Fixed Period shall
commence on the last day of the immediately preceding Fixed Period, and the
duration of and Yield Rate applicable to such subsequent Fixed Period shall be
such as the Deal Agent shall, after consultation with the Purchasers, select.
Any Fixed Period which would otherwise end on a day which is not a Business Day
shall be extended to the next succeeding Business Day; provided, however, that
-------- -------
if Yield in respect of such Fixed Period is computed by reference to the
Adjusted Eurodollar Rate, and such next succeeding Business Day is in the next
calendar month, then such Fixed Period shall end on the next preceding Business
Day. In addition, whenever any Fixed Period as to which Yield accrues at the
Adjusted Eurodollar Rate commences on the last Business Day in a month or on a
day for which there is no numerically corresponding day in the month in which
such Fixed Period ends, the last day of such Fixed Period shall occur on the
last Business Day of the month in which such Fixed Period ends. Furthermore, if
a CP Disruption Event shall have occurred and be continuing, the relevant
Purchaser, or the Deal Agent on its behalf, may, upon notice to the Seller,
terminate any Fixed Period then in effect if such Purchaser has funded the
Capital allocated to such Fixed Period by issuing its commercial paper notes.
Any Fixed Period which commences before the Termination Date and would otherwise
end on a date occurring after the Termination Date shall end on the Termination
Date. On or after the Termination Date, the Deal Agent shall have the right to
allocate outstanding Capital to Fixed Periods of such duration as shall be
selected by the Deal Agent. The relevant Purchaser shall, on the first day of
each Fixed Period, notify the Deal Agent of the Yield Rate for the Capital
allocated to such Fixed Period. The initial Yield Rate for any Asset Interest
transferred to the Investors pursuant to Section 2.1 or 2.2 shall be the Base
Rate.
SECTION 2.5 PERCENTAGE EVIDENCED BY ASSET INTEREST.
--------------------------------------
Each Asset Interest shall be initially computed on its date of
purchase. Thereafter, until the Termination Date, each Asset Interest shall be
automatically recomputed (or deemed to be recomputed) on each day prior to the
Termination Date. The variable percentage represented by an Asset Interest as
computed (or deemed recomputed) as of the close of business on the day
immediately preceding the Termination Date shall remain constant at all times
after the Termination Date. The variable percentage represented by the Asset
Interest shall become zero when its Capital and Yield has been collected in
full.
SECTION 2.6 DIVIDING OR COMBINING ASSET INTERESTS.
-------------------------------------
The Seller or a Purchaser may, upon notice to and consent by the Deal
Agent received at least three Business Days prior to the end of a Fixed Period
for any Asset Interest,
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<PAGE>
take any of the following actions at the end of such Fixed Period with respect
to such Asset Interest: (i) divide the Asset Interest owned by a Purchaser into
two or more portions of Asset Interests having aggregate Capital equal to the
Capital of such divided Asset Interest, (ii) combine one portion of an Asset
Interest of a Purchaser with another portion of an Asset Interest of such
Purchaser with a Fixed Period ending on the same day, creating a new portion of
an Asset Interest having Capital equal to the Capital of the two portions of
Asset Interest combined or (iii) combine the Asset Interest of a Purchaser with
the Asset Interest to be purchased on such day by such Purchaser, creating a new
Asset Interest having Capital equal to the Capital of the two Asset Interests
combined; provided, that an Asset Interest of VFCC may not be combined with an
Asset Interest of the Investors.
SECTION 2.7 NON-LIQUIDATION SETTLEMENT PROCEDURES.
-------------------------------------
The provisions of this Section 2.7 shall apply during the term of this
Agreement prior to the occurrence of the Termination Date.
(a) On each Payment Date, the Servicer shall pay to the following
Persons, from (i) the Collection Account, to the extent of available funds, (ii)
a Servicer Advance and (iii) to the extent amounts pursuant to the preceding
clauses (i) and (ii) are insufficient, Seller's own funds, the following amounts
in the following order of priority:
(i) FIRST, to any Hedging Counterparty, an amount equal to any
-----
accrued and unpaid amounts under any Hedging Agreement, for the payment
thereof;
(ii) SECOND, to the Servicer, in an amount equal to any
------
Unreimbursed Servicer Advances, for the payment thereof;
(iii) THIRD, to the Servicer, in an amount equal any accrued and
-----
unpaid Servicing Fee arrearage, for the payment thereof;
(iv) FOURTH, to the Servicer, in an amount equal to any accrued
------
and unpaid Servicing Fee, for the payment thereof;
(v) FIFTH, to the Backup Servicer, in an amount equal to the
-----
accrued and unpaid Backup Servicing Fee, for the payment thereof;
(vi) SIXTH, to the Collateral Custodian, in an amount equal to
-----
any accrued and unpaid Custodial Fee, for the payment thereof;
(vii) SEVENTH, to the Deal Agent, in an amount equal to all
-------
accrued and unpaid ;
(viii) EIGHTH, to the Deal Agent, in the amount of any unpaid
------
Increased Costs and/or Taxes, for payment to the Purchasers in respect
thereof;
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<PAGE>
(ix) NINTH, to the extent that funds are available, any
-----
remaining amounts may be reinvested in additional Eligible Contracts
provided that the level of Capital would not exceed the Capital Limit; and
(x) TENTH, any remaining amount shall be distributed to the
-----
Seller.
(b) Notwithstanding anything to the contrary contained in this
Section 2.7 or any other provision in this Agreement, if, on any Business Day
prior to the Termination Date the outstanding amount of Capital shall exceed the
lesser of (i) the Purchase Limit or (ii) the Capital Limit, then the Seller
shall remit to the Deal Agent, prior to any reinvestment of funds as set forth
in Section 2.7(a) and in any event no later than the close of business of the
Deal Agent on the next succeeding Business Day, a payment (to be applied by the
Deal Agent to outstanding Capital allocated to Fixed Periods selected by the
Deal Agent, in its sole discretion) in such amount as may be necessary to reduce
outstanding Capital to an amount less than or equal to the lesser of (i) the
Purchase Limit and (ii) the Capital Limit.
SECTION 2.8 SETTLEMENT PROCEDURES FOLLOWING A PAYOUT EVENT.
----------------------------------------------
The provisions of this Section 2.8 shall apply during the term of this
Agreement after the occurrence of the Termination Date.
(a) On each Business Day on which a Fixed Period ends, the Servicer
shall pay to the Agent's account, from (i) the Collection Account, to the extent
of available funds, (ii) a Servicer Advance and (iii) to the extent amounts
pursuant to the preceding clauses (i) and (ii) are insufficient, Seller's own
funds, an amount equal to the accrued and unpaid Yield on the Capital related to
such Fixed Period.
(b) On each Payment Date, after applying funds as set forth in
paragraph (a) above, the Servicer shall pay to the following Persons, from (i)
the Collection Account, to the extent of available funds, (ii) a Servicer
Advance and (iii) to the extent amounts pursuant to the preceding clauses (i)
and (ii) are insufficient, Seller's own funds, the following amounts in the
following order of priority:
(i) FIRST, to any Hedging Counterparty, an amount equal to any
-----
accrued and unpaid amounts under any Hedging Agreement, for the payment
thereof;
(ii) SECOND, to the Servicer, in an amount equal to any
------
Unreimbursed Servicer Advances, for the payment thereof;
(iii) THIRD, to the Servicer, in an amount equal to the accrued
-----
and unpaid Servicing Fee arrearage, for the payment thereof;
(iv) FOURTH, to the Servicer, in an amount equal to any accrued
------
and unpaid Servicing Fee, for the payment thereof;
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<PAGE>
(v) FIFTH, to the Backup Servicer, in an amount equal to the
-----
accrued and unpaid Backup Servicing Fee, for the payment thereof;
(vi) SIXTH, to the Collateral Custodian, in an amount equal to
-----
the accrued and unpaid Custodial Fee, for the payment thereof;
(vii) SEVENTH, to the Deal Agent, in an amount equal to all
-------
accrued and unpaid Yield;
(viii) EIGHTH, to the Deal Agent, in the amount of any unpaid
------
Increased Costs and/or Taxes, for payment to the Purchasers in respect
thereof;
(ix) NINTH, to the extent that funds are available, to the
-----
Deal Agent for payment to the Purchasers in reduction of the aggregate
Capital; and
(x) TENTH, upon the reduction of the Capital to zero and the
-----
payment in full of all other amounts due and owing to any party, any
remaining amount shall be distributed to the Seller.
(b) If at any time on or after the Termination Date, the Deal Agent
or the Seller determines that as of the close of business on the day immediately
preceding the Termination Date the outstanding amount of Capital exceeded the
lesser of (i) the Purchase Limit, or (ii) the Capital Limit, then the Seller
shall immediately remit to the Deal Agent, for the benefit of the Purchasers,
the amount (to be applied against Capital) which would have been required to
make the outstanding amount of Capital equal to the lesser of (i) the Purchase
Limit, or (ii) the Capital Limit as of the close of business on the date
immediately preceding the Termination Date.
SECTION 2.9 COLLECTIONS AND ALLOCATIONS.
---------------------------
(a) Collections. The Servicer shall transfer, or cause to be
-----------
transferred, all Collections on deposit in the form of available funds in the
Lock-Box Account to the Collection Account by the close of business on the
Business Day such Collections are received in the Lock-Box Account. The
Servicer shall promptly (but in no event later than three Business Days after
the receipt thereof) deposit all Collections received directly by it in the
Collection Account.
The Servicer shall make such deposits or payments on the date
indicated therein by electronic funds transfer through the Automated Clearing
House system, or by wire transfer, in immediately available funds.
(b) Initial Deposits. On the Closing Date and on each Addition Date
----------------
thereafter, the Servicer will deposit (in immediately available funds) into the
Collection Account all Collections received after the applicable Cut Off Date
and through and including the Closing Date or Addition Date, as the case may be,
in respect of Contracts being transferred to the Asset Pool on such date.
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<PAGE>
(c) Excluded Amounts. The Servicer may withdraw from the Collection
----------------
Account any Collections constituting Excluded Amounts if the Servicer has, prior
to such withdrawal, delivered to the Deal Agent a report setting forth the
calculation of such Excluded Amounts in a format reasonably satisfactory to the
Deal Agent.
SECTION 2.10 PAYMENTS, COMPUTATIONS, ETC.
---------------------------
(a) All amounts to be paid or deposited by the Seller or the Servicer
hereunder shall be paid or deposited in accordance with the terms hereof no
later than 11:00 A.M. (Charlotte, North Carolina time) on the day when due in
lawful money of the United States in immediately available funds to the Agent's
Account. The Seller shall, to the extent permitted by law, pay to the Purchaser
interest on all amounts not paid or deposited when due hereunder at 1% per annum
above the Base Rate, payable on demand; provided, however, that such interest
-------- -------
rate shall not at any time exceed the maximum rate permitted by applicable law.
Such interest shall be retained by the Deal Agent except to the extent that such
failure to make a timely payment or deposit has continued beyond the date for
distribution by the Deal Agent of such overdue amount to the Purchasers, in
which case such interest accruing after such date shall be for the account of,
and distributed by the Deal Agent to the Purchasers. All computations of
interest and all computations of Yield and other fees hereunder shall be made on
the basis of a year of 360 days for the actual number of days (including the
first but excluding the last day) elapsed.
(b) Whenever any payment hereunder shall be stated to be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of payment of Yield, interest or any fee payable hereunder, as the
case may be; provided, however, that, if such extension would cause payment of
-------- -------
Yield on or Capital of any Asset Interest on which Yield accrues at the Adjusted
Eurodollar Rate to be made in the next following month, such payment shall be
made on the next preceding Business Day.
(c) If any Purchase or Incremental Purchase requested by the Seller
and approved by a Purchaser and the Deal Agent pursuant to Section 2.2 or any
selection of a subsequent Fixed Period and applicable Yield Rate for any Capital
allocated to such Fixed Period requested by the Seller and approved by the Deal
Agent pursuant to Section 2.4 is not for any reason whatsoever related to the
default or nonperformance by the Seller made or effectuated, as the case may be,
on the date specified therefor, the Seller shall indemnify the Purchaser against
any loss, cost or expense incurred by the Purchaser, including, without
limitation, any loss (including loss of anticipated profits, net of anticipated
profits in the reemployment of such funds in the manner determined by the
Purchaser), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by the Purchaser to fund or
maintain such Purchase or Incremental Purchase, as the case may be, during such
Fixed Period.
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<PAGE>
SECTION 2.11 [RESERVED].
--------
SECTION 2.12 FEES.
----
(a) The Servicer shall pay to the Deal Agent from the Collection
Account on each Payment Date, monthly in arrears a fee agreed to between the
Servicer and the Deal Agent (the "Commitment Fee").
(b) The Servicer shall pay to the Deal Agent from the Collection
Account on each Payment Date, monthly in arrears, a fee (the "Program Fee")
agreed to between the Servicer and the Deal Agent in the fee letter agreement
between such parties dated the date hereof (the "Program Fee Agreement").
(c) The Servicer shall be entitled to receive a fee (the "Servicing
Fee"), monthly in arrears in accordance with Section 2.7(a) or 2.8(b), as
applicable, which fee shall be equal to the product of (i) the Servicing Fee
Rate agreed to between the Servicer and the Deal Agent in the Program Fee
Agreement and (ii) ADCB for the preceding Determination Date.
(d) The Back-up Servicer shall be entitled to receive the Back-up
Servicing Fee in accordance with Section 2.7(a) or 2.8(b) as applicable.
(e) The Collateral Custodian shall be entitled to receive the
Custodial Fee in accordance with Section 2.7(a) or 2.8(b), as applicable.
(f) The Seller shall pay to the Deal Agent, on the Closing Date, the
Structuring Fee in immediately available funds.
SECTION 2.13 INCREASED COSTS; CAPITAL ADEQUACY; ILLEGALITY.
---------------------------------------------
(a) If either (i) the introduction of or any change (including,
without limitation, any change by way of imposition or increase of reserve
requirements) in or in the interpretation of any law or regulation or (ii) the
compliance by a Purchaser or any Affiliate thereof (each of which, an "Affected
Party") with any guideline or request from any central bank or other
governmental agency or authority (whether or not having the force of law), (A)
shall subject an Affected Party to any Tax (except for Taxes on the overall net
income of such Affected Party), duty or other charge with respect to an Asset
Interest, or any right to make Purchases hereunder, or on any payment made
hereunder or (B) shall impose, modify or deem applicable any reserve requirement
(including, without limitation, any reserve requirement imposed by the Board of
Governors of the Federal Reserve System, but excluding any reserve requirement,
if any, included in the determination of Yield), special deposit or similar
requirement against assets of, deposits with or for the amount of, or credit
extended by, any Affected Party or (C) shall impose any other condition
affecting an Asset Interest or a Purchaser's rights hereunder, the result of
which is to increase the cost to any Affected Party or to reduce the amount of
any sum received or receivable by an Affected Party under this Agreement, then
within ten days after demand by such Affected Party (which demand shall be
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<PAGE>
accompanied by a statement setting forth the basis for such demand), the Seller
shall pay directly to such Affected Party such additional amount or amounts as
will compensate such Affected Party for such additional or increased cost
incurred or such reduction suffered.
(b) If either (i) the introduction of or any change in or in the
interpretation of any law, guideline, rule, regulation, directive or request or
(ii) compliance by any Affected Party with any law, guideline, rule, regulation,
directive or request from any central bank or other governmental authority or
agency (whether or not having the force of law), including, without limitation,
compliance by an Affected Party with any request or directive regarding capital
adequacy, has or would have the effect of reducing the rate of return on the
capital of any Affected Party as a consequence of its obligations hereunder or
arising in connection herewith to a level below that which any such Affected
Party could have achieved but for such introduction, change or compliance
(taking into consideration the policies of such Affected Party with respect to
capital adequacy) by an amount deemed by such Affected Party to be material,
then from time to time, within ten days after demand by such Affected Party
(which demand shall be accompanied by a statement setting forth the basis for
such demand), the Seller shall pay directly to such Affected Party such
additional amount or amounts as will compensate such Affected Party for such
reduction.
(c) If as a result of any event or circumstance similar to those
described in clauses (a) or (b) of this section, any Affected Party is required
to compensate a bank or other financial institution providing liquidity support,
credit enhancement or other similar support to such Affected Party in connection
with this Agreement or the funding or maintenance of Purchases hereunder, then
within ten days after demand by such Affected Party, the Seller shall pay to
such Affected Party such additional amount or amounts as may be necessary to
reimburse such Affected Party for any amounts paid by it.
(d) In determining any amount provided for in this section, the
Affected Party may use any reasonable averaging and attribution methods. Any
Affected Party making a claim under this section shall submit to the Seller a
certificate as to such additional or increased cost or reduction, which
certificate shall be conclusive absent demonstrable error.
(e) If a Purchaser shall notify the Deal Agent that a Eurodollar
Disruption Event as described in clause (a) of the definition of "Eurodollar
Disruption Event" has occurred, the Deal Agent shall in turn so notify the
Seller, whereupon all Capital in respect of which Yield accrues at the Adjusted
Eurodollar Rate for the then current Fixed Period shall immediately be converted
into Capital in respect of which Yield accrues at the Base Rate for the
remainder of such Fixed Period.
SECTION 2.14 TAXES.
-----
(a) All payments made by an Obligor in respect of a Contract and all
payments made by the Seller or the Servicer under this Agreement will be made
free and clear of and without deduction or withholding for or on account of any
Taxes, unless such withholding or deduction is required by law. In such event,
the Obligor, Seller, or Servicer (as the case may be) shall pay to the
appropriate taxing authority any such Taxes required to be
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deducted or withheld and the amount payable to each Purchaser or the Deal Agent
(as the case may be) will be increased (such increase, the "Additional Amount")
such that every net payment made under this Agreement after deduction or
withholding for or on account of any Taxes (including, without limitation, any
Taxes on such increase) is not less than the amount that would have been paid
had no such deduction or withholding been deducted or withheld. The foregoing
obligation to pay Additional Amounts, however, will not apply with respect to
net income or franchise taxes imposed on a Purchaser or the Deal Agent,
respectively, with respect to payments required to be made by the Seller or
Servicer under this Agreement, by a taxing jurisdiction in which such Purchaser
or Deal Agent is organized or conducts business (as the case may be). If a
Purchaser or the Deal Agent pays any Taxes in respect of which the Seller is
obligated to pay Additional Amounts under this Section 2.14(a), the Seller shall
promptly reimburse such Purchaser or Deal Agent in full.
(b) The Seller will indemnify each Purchaser and the Deal Agent for
the full amount of Taxes in respect of which the Seller is required to pay
Additional Amounts (including, without limitation, any Taxes imposed by any
jurisdiction on such Additional Amounts) paid by such Purchaser or the Deal
Agent (as the case may be) and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto; provided, however, that
-------- -------
such Purchaser or the Deal Agent, as appropriate, making a demand for indemnity
payment shall provide the Seller, at its address set forth under its name on the
signature pages hereof, with a certificate from the relevant taxing authority or
from a responsible officer of such Purchaser or the Deal Agent stating or
otherwise evidencing that such Purchaser or the Deal Agent has made payment of
such Taxes and will provide a copy of or extract from documentation, if
available, furnished by such taxing authority evidencing assertion or payment of
such Taxes. This indemnification shall be made within ten days from the date
the Purchaser or the Deal Agent (as the case may be) makes written demand
therefor.
(c) Within 30 days after the date of any payment by the Seller of any
Taxes, the Seller will furnish to the Deal Agent, at its address set forth under
its name on the signature pages hereof, appropriate evidence of payment thereof.
(d) If a Purchaser is not created or organized under the laws of the
United States or a political subdivision thereof, such Purchaser shall, to the
extent that it may then do so under applicable laws and regulations, deliver to
the Seller with a copy to the Deal Agent (i) within 15 days after the date
hereof, or, if later, the date on which such Purchaser becomes a Purchaser
hereof two (or such other number as may from time to time be prescribed by
applicable laws or regulations) duly completed copies of IRS Form 4224 or Form
1001 (or any successor forms or other certificates or statements which may be
required from time to time by the relevant United States taxing authorities or
applicable laws or regulations), as appropriate, to permit the Seller to make
payments hereunder for the account of such Purchaser, as the case may be,
without deduction or withholding of United States federal income or similar
Taxes and (ii) upon the obsolescence of or after the occurrence of any event
requiring a change in, any form or certificate previously delivered pursuant to
this Section 2.14(d), copies (in such numbers as may from time to time be
prescribed by applicable laws or regulations) of such additional, amended or
successor forms, certificates or statements as may be required under
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applicable laws or regulations to permit the Seller to make payments hereunder
for the account of such Purchaser, without deduction or withholding of United
States federal income or similar Taxes.
(e) For any period with respect to which a Purchaser or the Deal
Agent has failed to provide the Seller with the appropriate form, certificate or
statement described in clause (d) of this section (other than if such failure is
due to a change in law occurring after the date of this Agreement), the Deal
Agent or such Purchaser, as the case may be, shall not be entitled to
indemnification under clauses (a) or (b) of this section with respect to any
Taxes.
(f) Within 30 days of the written request of the Seller therefor, the
Deal Agent and the Purchaser, as appropriate, shall execute and deliver to the
Seller such certificates, forms or other documents which can be furnished
consistent with the facts and which are reasonably necessary to assist the
Seller in applying for refunds of Taxes remitted hereunder provided, however,
-------- -------
that the Deal Agent and the Purchaser shall not be required to deliver such
certificate if in their respective sole discretion it is determined that the
deliverance of such certificate would have a material adverse affect on the Deal
Agent or Purchaser and provided further, however, that the Seller shall
-------- ------- -------
reimburse the Deal Agent or Purchaser for any expenses incurred in the delivery
of such certificate.
(g) If, in connection with an agreement or other document providing
liquidity support, credit enhancement or other similar support to the Purchasers
in connection with this Agreement or the funding or maintenance of Purchases
hereunder, the Purchasers are required to compensate a bank or other financial
institution in respect of Taxes under circumstances similar to those described
in this section then within ten days after demand by the Purchasers, the Seller
shall pay to the Purchasers such additional amount or amounts as may be
necessary to reimburse the Purchasers for any amounts paid by them.
(h) Without prejudice to the survival of any other agreement of the
Seller hereunder, the agreements and obligations of the Seller contained in this
section shall survive the termination of this Agreement.
SECTION 2.15 ASSIGNMENT OF THE PURCHASE AGREEMENT.
------------------------------------
The Seller hereby represents, warrants and confirms to the Deal Agent
that the Seller has assigned to the Deal Agent, for the ratable benefit of the
Purchasers hereunder, all of the Seller's right and title to and interest in the
Purchase Agreement. The Seller confirms that following a Payout Event the Deal
Agent shall have the sole right to enforce the Seller's rights and remedies
under the Purchase Agreement for the benefit of the Purchasers, but without any
obligation on the part of the Deal Agent, the Purchasers or any of their
respective Affiliates, to perform any of the obligations of the Seller under the
Purchase Agreement. The Seller further confirms and agrees that such assignment
to the Deal Agent shall terminate upon the Collection Date; provided, however,
-------- -------
that the rights of the Deal Agent and the Purchasers pursuant to such assignment
with respect to rights and remedies in connection with any indemnities and any
breach of any representation, warranty or covenants made by the Originator
pursuant to the Purchase Agreement, which rights and remedies survive the
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Termination of the Purchase Agreement, shall be continuing and shall survive any
termination of such assignment.
SECTION 2.16 SUBSTITUTION OF CONTRACTS.
-------------------------
On any day prior to the occurrence of the Termination Date, the Deal
Agent as agent for the Purchasers may, in its sole discretion, by written notice
to the Seller, request that any Contract subject to a Warranty Event or in
respect of which the Obligor thereunder has requested the rewriting and/or
restructuring of such Contract be replaced by one or more other Contracts (each,
a "Substitute Contract"), provided that no such replacement shall occur unless
each of the following conditions is satisfied as of the date of such replacement
and substitution:
(a) the Seller has previously recommended to the Deal Agent in
writing that the Contract to be replaced should be replaced (each a "Replaced
Contract");
(b) each Substitute Contract is an Eligible Contract on the date of
substitution;
(c) after giving effect to any such substitution, the aggregate of
all outstanding Capital does not exceed the lesser of the (i) Purchase Limit and
(ii) the Capital Limit;
(d) the aggregate Discounted Contract Balance (at the Blended
Discount Rate as of the date of substitution) of such Substitute Contracts shall
be equal to or greater than the aggregate Discounted Contract Balances (at the
Blended Discount Rate as of the date of substitution) of Contracts being
replaced;
(e) such Substitute Contracts, at the time of substitution by the
Seller, shall have approximately the same weighted average life as the replaced
Contracts;
(f) all representations and warranties of the Seller contained in
Sections 4.1 and 4.2 shall be true and correct as of the date of substitution of
any such Substitute Contract;
(g) the substitution of any Substitute Contract does not cause a
Payout Event to occur; and
(h) the Seller shall deliver to the Deal Agent on the date of such
substitution a certificate of a Responsible Officer certifying that each of the
foregoing is true and correct as of such date.
In connection with any such substitution, the Deal Agent as agent for
the Purchasers shall, automatically and without further action, be deemed to
transfer to the Seller, free and clear of any Lien created pursuant to this
Agreement, all of the right, title and interest of the Deal Agent as Agent for
the Purchasers in, to and under such Replaced Contract, and the Deal Agent as
agent for the Purchasers shall be deemed to represent and warrant that it has
the corporate authority and has taken all necessary corporate action to
accomplish such
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transfer, but without any other representation and warranty, express or implied.
Any right of the Deal Agent as agent for the Purchasers to substitute any
Contract in the Asset Pool pursuant to this Section 2.16 shall be in addition
to, and without limitation of, any other rights and remedies that the Deal Agent
as agent for the Purchasers or any Purchaser may have to require the Seller or
the Servicer, as applicable, to substitute for, or accept retransfer of, any
Contract pursuant to the terms of this Agreement.
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.1 CONDITIONS PRECEDENT TO INITIAL PURCHASE.
----------------------------------------
The initial Purchase hereunder is subject to the condition precedent
that the Deal Agent shall have received on or before the date of such purchase
the items listed in Schedule I, each (unless otherwise indicated) dated such
----------
date, in form and substance satisfactory to the Deal Agent and the Purchasers.
SECTION 3.2 CONDITIONS PRECEDENT TO ALL PURCHASES AND REMITTANCES OF
--------------------------------------------------------
COLLECTIONS.
-----------
Each Purchase (including the initial Purchase) from the Seller by a
Purchaser, the right of the Servicer to remit Collections to the Seller pursuant
to Section 2.7(b) and each Incremental Purchase (each, a "Transaction") shall be
subject to the further conditions precedent that (a) with respect to any
Purchase (other than the initial Purchase) or Incremental Purchase, on or prior
to the date of such Purchase or Incremental Purchase, the Servicer shall have
delivered to the Deal Agent, in form and substance satisfactory to the Deal
Agent, a completed Monthly Report dated within 10 days prior to the date of such
Purchase or Incremental Purchase and containing such additional information as
may be reasonably requested by the Deal Agent; (b) on the date of such
Transaction the following statements shall be true and the Seller shall be
deemed to have certified that:
(i) The representations and warranties contained in Sections
4.1 and 4.2 are true and correct on and as of such day as though made on
and as of such date,
(ii) No event has occurred and is continuing, or would result
from such Transaction which constitutes a Payout Event,
(iii) On and as of such day, after giving effect to such
Transaction, the outstanding Capital does not exceed the lesser of (x) the
Purchase Limit, or (y) the Capital Limit,
(iv) On and as of such day, the Seller and the Servicer each
has performed all of the agreements contained in this Agreement to be
performed by such person at or prior to such day, and
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<PAGE>
(v) No law or regulation shall prohibit, and no order,
judgment or decree of any federal, state or local court or governmental
body, agency or instrumentality shall prohibit or enjoin, the making of
such Purchase, remittance of Collections or Incremental Purchase by the
Purchaser in accordance with the provisions hereof; and
(c) on the date of such Transaction, the Deal Agent shall have received such
other approvals, opinions or documents as the Deal Agent may reasonably require.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER.
--------------------------------------------
The Seller represents and warrants as follows:
(a) Organization and Good Standing. The Seller is a corporation duly
------------------------------
organized and validly existing in good standing under the laws of the State of
Delaware, and has full corporate power, authority and legal right to own or
lease its properties and conduct its business as such properties are presently
owned or leased and such business is presently conducted, and to execute,
deliver and perform its obligations under this Agreement and the Purchase
Agreement.
(b) Due Qualification. The Seller is duly qualified to do business
-----------------
and is in good standing as a corporation, and has obtained or will obtain all
necessary licenses and approvals, in each jurisdiction in which failure to so
qualify or to obtain such licenses and approvals would have a material adverse
effect on its ability to perform its obligations hereunder.
(c) Due Authorization. The execution and delivery of this Agreement
-----------------
and the Purchase Agreement and the consummation of the transactions provided for
herein and therein have been duly authorized by the Seller by all necessary
corporate action on the part of the Seller and do not contravene the Seller's
certificate of incorporation or by-laws.
(d) No Conflict. The execution and delivery of this Agreement and the
-----------
Purchase Agreement, the performance of the transactions contemplated hereby and
thereby and the fulfillment of the terms hereof and thereof will not conflict
with, result in any breach of any of the material terms and provisions of, or
constitute (with or without notice or lapse of time or both) a default under,
any indenture, contract, agreement, mortgage, deed of trust, or other instrument
to which the Seller is a party or by which it or any of its property is bound.
(e) No Violation. The execution and delivery of this Agreement and
------------
the Purchase Agreement, the performance of the transactions contemplated hereby
and thereby and the fulfillment of the terms hereof and thereof will not
conflict with or violate, in any material respect, any Requirements of Law
applicable to the Seller.
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<PAGE>
(f) No Proceedings. There are no proceedings or investigations
--------------
pending or, to the best knowledge of the Seller, threatened against the Seller,
before any court, regulatory body, administrative agency, or other tribunal or
governmental instrumentality (i) asserting the invalidity of this Agreement or
the Purchase Agreement, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or the Purchase Agreement or (iii)
seeking any determination or ruling that could reasonably be expected to be
adversely determined, and if adversely determined, would materially and
adversely affect the performance by the Seller of its obligations under this
Agreement or the Purchase Agreement.
(g) All Consents Required. All approvals, authorizations, consents,
---------------------
orders or other actions of any Person or of any Governmental Authority required
in connection with the execution and delivery by the Seller of this Agreement
and the Purchase Agreement, the performance by the Seller of the transactions
contemplated by this Agreement and the Purchase Agreement, and the fulfillment
of the terms hereof and thereof by the Seller, have been obtained.
(h) Bulk Sales. The execution, delivery and performance of this
----------
Agreement do not require compliance with any "bulk sales" law by Seller.
(i) Solvency. The transactions under this Agreement and/or the
--------
Purchase Agreement do not and will not render the Seller not Solvent.
(j) Selection Procedures. No procedures believed by the Seller to be
--------------------
materially adverse to the interests of VFCC or the Purchasers were utilized by
the Seller in identifying and/or selecting the Contracts in the Asset Pool. In
addition, each Contract shall have been underwritten in accordance with and
satisfy the standards of any Credit and Collection Policy which has been
established by the Seller or the Originator and is then in effect. Such Credit
and Collection Policy or procedure may be amended from time to time in the
Seller's or the Originator's normal course of business provided that the Seller
shall provide notification to the Purchaser of any material change in such
credit and collection policy or procedure.
(k) Taxes. The Seller has filed or caused to be filed all Tax returns
-----
which, to its knowledge, are required to be filed. The Seller has paid all Taxes
and all assessments made against it or any of its property (other than any
amount of Tax the validity of which is currently being contested in good faith
by appropriate proceedings and with respect to which reserves in accordance with
generally accepted accounting principles have been provided on the books of the
Seller), and no Tax lien has been filed and, to the Seller's knowledge, no claim
is being asserted, with respect to any such Tax, fee or other charge.
(l) Agreements Enforceable. This Agreement and the Purchase Agreement
----------------------
constitute the legal, valid and binding obligation of the Seller enforceable
against the Seller in accordance with their respective terms, except as such
enforceability may be limited by Insolvency Laws and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).
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<PAGE>
(m) Exchange Act Compliance. No proceeds of any Purchase or
-----------------------
Incremental Purchase will be used by the Seller to acquire any security in any
transaction which is subject to Section 13 or 14 of the Securities Exchange Act
of 1934, as amended.
(n) No Liens. Each Asset, together with the Contract related thereto,
--------
shall, at all times, be owned by the Seller free and clear of any Adverse Claim
except as provided herein, and upon each Purchase, remittance of Collections or
Incremental Purchase, the relevant Purchaser shall acquire a valid and perfected
first priority undivided ownership interest in each Asset then existing or
thereafter arising and Collections with respect thereto, free and clear of any
Adverse Claim except as provided hereunder. No effective financing statement or
other instrument similar in effect covering any Asset or Collections with
respect thereto shall at any time be on file in any recording office except such
as may be filed in favor of the Deal Agent relating to this Agreement.
(o) Purchase Limit and Capital Limit. As of the close of business on
--------------------------------
each Business Day prior to the Termination Date, the amount of Capital
outstanding shall not exceed the lesser of (x) the Purchase Limit on such
Business Day or (y) the Capital Limit on such Business Day.
(p) Reports Accurate. No Monthly Report (if prepared by the Seller,
----------------
or to the extent that information contained therein is supplied by the Seller),
information, exhibit, financial statement, document, book, record or report
furnished or to be furnished by the Seller to the Deal Agent or a Purchaser in
connection with this Agreement is or will be inaccurate in any material respect
as of the date it is or shall be dated or (except as otherwise disclosed to the
Deal Agent or such Purchaser, as the case may be, at such time) as of the date
so furnished, and no such document contains or will contain any material
misstatement of fact or omits or shall omit to state a material fact or any fact
necessary to make the statements contained therein not misleading.
(q) Location of Offices. The principal place of business and chief
-------------------
executive are located at the address of the Seller referred to in Section 11.2
hereof (or at such other locations as to which the notice and other requirements
specified in Section 5.2(m) shall have been satisfied).
(r) Lock-Boxes. The names and addresses of all the Lock-Box Banks,
----------
together, with the account numbers of the Lock-Box Accounts of the Seller at
such Lock-Box Banks and the names, addresses and account numbers of all accounts
to which Collections of the Assets outstanding before the initial Purchase
hereunder have been sent, are specified in Schedule II (which shall be deemed to
be amended in respect of terminating or adding any Lock-Box Account or Lock-Box
Bank upon satisfaction of the notice and other requirements specified in respect
thereof).
(s) Tradenames. Except as described in Schedule III, the Seller has
----------
no trade names, fictitious names, assumed names or "doing business as" names or
other names under which it has done or is doing business.
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<PAGE>
(t) Purchase Agreement. The Purchase Agreement is the only agreement
------------------
pursuant to which the Seller purchases Assets.
(u) Value Given. The Seller shall have given reasonably equivalent
-----------
value to the Originator in consideration for the transfer to the Seller of the
Assets under the Purchase Agreement, no such transfer shall have been made for
or on account of an antecedent debt owed by the Originator to the Seller, and no
such transfer is or may be voidable or subject to avoidance under any section of
the Bankruptcy Code; no event or circumstance has occurred that would constitute
a Payout Event pursuant to Section 7.1.
(v) Special Purpose Entity. The Certificate of Incorporation of the
Seller includes substantially the provisions set forth on Exhibit C hereto, and
---------
the Originator has confirmed in writing to the Seller that, so long as the
Seller is not "insolvent" within the meaning of the Bankruptcy Code, the
Originator will not cause the Seller to file a voluntary petition under the
Bankruptcy Code or any other bankruptcy or insolvency laws. Each of the Seller
and the Originator is aware that in light of the circumstances described in the
preceding sentence and other relevant facts, the filing of a voluntary petition
under the Bankruptcy Code for the purpose of making the assets of the Seller
available to satisfy claims of the creditors of the Originator would not result
in making such assets available to satisfy such creditors under the Bankruptcy
Code.
(w) Accounting. The Seller accounts for the transfers to it from the
----------
Originator of interests in Assets and Collections under the Purchase Agreement
as sales of such Assets and transfers of Asset Interests as sales of such Asset
Interests in its books, records and financial statements, in each case
consistent with GAAP and with the requirements set forth herein.
(x) Separate Entity. The Seller is operated as an entity with assets
---------------
and liabilities distinct from those of the Originator and any Affiliates thereof
(other than the Seller), and the Seller hereby acknowledges that the Deal Agent
and the Purchasers are entering into the transactions contemplated by this
Agreement in reliance upon the Seller's identity as a separate legal entity from
the Originator and from each such other Affiliate of the Originator.
(y) Security Interest. The Seller has granted a security interest (as
-----------------
defined in the UCC) to the Deal Agent, as agent for the Purchasers, in the
Assets and Collections, which is enforceable in accordance with applicable law
upon execution and delivery of this Agreement. Upon the filing of UCC-1
financing statements naming the Deal Agent as secured party and the Seller as
debtor, the Deal Agent, as agent for the Purchasers, shall have a first priority
perfected security interest in the Assets and Collections. All filings
(including, without limitation, such UCC filings) as are necessary in any
jurisdiction to perfect the interest of the Deal Agent as agent for the
Purchasers, in the Assets and Collections have been (or prior to the applicable
Purchase will be) made.
(z) Investments. The Seller does not own or hold directly or
-----------
indirectly, any capital stock or equity security of, or any equity interest in,
any Person.
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(aa) Business. Since its incorporation, the Seller has conducted no
--------
business other than the purchase and receipt of Contracts and related assets
from the Originator under the Purchase Agreement, the sale of Contracts under
this Agreement and such other activities as are incidental to the foregoing.
(bb) Investment Company Act. The Seller is not an "investment company"
----------------------
within the meaning of the Investment Company Act of 1940, as amended.
(cc) Accuracy of Representations and Warranties. Each representation
------------------------------------------
or warranty by the Seller contained herein or in any certificate or other
document furnished by the Seller pursuant hereto or in connection herewith is
true and correct in all material respects.
The representations and warranties set forth in this section shall survive the
transfer of the Assets to the Deal Agent as agent for the Purchasers. Upon
discovery by the Seller, the Servicer, any Purchaser, the Liquidity Agent or the
Deal Agent of a breach of any of the foregoing representations and warranties,
the party discovering such breach shall give prompt written notice to the
others.
SECTION 4.2 REPRESENTATIONS AND WARRANTIES OF SELLER RELATING TO THE
--------------------------------------------------------
AGREEMENT AND THE CONTRACTS.
---------------------------
The Seller hereby represents and warrants to the Deal Agent, each
Purchaser, the Liquidity Agent and each Investor that, as of the Closing Date
and as of each Addition Date:
(a) Binding, Obligation, Valid Transfer and Security Interest.
---------------------------------------------------------
(i) This Agreement and the Purchase Agreement each constitutes a
legal, valid and binding obligation of the Seller, enforceable against the
Seller in accordance with its terms, except as such enforceability may be
limited by Insolvency Laws and except as such enforceability may be limited
by general principles of equity (whether considered in a suit at law or in
equity).
(ii) This Agreement constitutes either (A) a valid transfer to
the Deal Agent as agent for the Purchasers of all right, title and interest
of the Seller in, to and under the transferred Assets to the extent of the
aggregate Asset Interests, and such transfer will be free and clear of any
Lien of any Person claiming through or under the Seller or its Affiliates,
except for Permitted Liens, or (B) a grant of a security interest in such
property to the Deal Agent as agent for the Purchasers. Upon the filing of
the financing statements described in Section 6.9(c) and, in the case of
Additional Contracts on the applicable Addition Date, the Deal Agent as
agent for the Purchasers shall have a first priority perfected security
interest in such property, subject only to Permitted Liens. Neither the
Seller nor any Person claiming through or under Seller shall have any claim
to or interest in the Collection Account and, if this Agreement constitutes
the grant of a security interest in such property, except for the interest
of Seller in such property as a debtor for purposes of the UCC.
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(b) Eligibility of Contracts. As of the Closing Date, (i) Schedule I
------------------------
to this Agreement and the information contained in the Purchase Certificate
delivered pursuant to Section 2.2(b) is an accurate and complete listing in all
material respects of all the Existing Contracts in the Asset Pool as of the
Closing Date and the information contained therein with respect to the identity
of such Contracts and the amounts owing thereunder is true and correct in all
material respects as of the related Cut Off Date, (ii) each such Contract is an
Eligible Contract, (iii) each such Contract and the related Equipment is free
and clear of any Lien of any Person (other than Permitted Liens) and in
compliance with all Requirements of Law applicable to the Seller and (iv) with
respect to each such Contract, all consents, licenses, approvals or
authorizations of or registrations or declarations with any Governmental
Authority required to be obtained, effected or given by the Seller in connection
with the transfer of an interest in such Contract and the related Equipment to
the Deal Agent as agent for the Purchasers have been duly obtained, effected or
given and are in full force and effect. On each Addition Date on which
Additional Contracts are added by the Seller to the Asset Pool, the Seller shall
be deemed to represent and warrant that (i) such Additional Contract referenced
on the related Purchase Certificate delivered pursuant to Section 2.2(b) hereof
is an Eligible Contract, (ii) each such Additional Contract and the related
Equipment is free and clear of any Lien of any Person (other than Permitted
Liens) and in compliance with all Requirements of Law applicable to Seller
and/or the Originator, (iii) with respect to each such Additional Contract, all
consents, licenses, approvals, authorizations, registrations or declarations
with any Governmental Authority required to be obtained, effected or given by
the Seller in connection with the addition of such Contract and the related
Equipment to the Asset Pool have been duly obtained, effected or given and are
in full force and effect and (iv) the representations and warranties set forth
in Section 4.2(a) are true and correct with respect to each Contract transferred
on such day as if made on such day.
(c) Notice of Breach. The representations and warranties set forth in
----------------
this Section 4.2 shall survive the transfer of an interest in the respective
Contracts and related Equipment, or interests therein, to the Deal Agent as
agent for the Purchasers. Upon discovery by the Seller, the Servicer, any
Purchaser, the Deal Agent, the Liquidity Agent or any Investor of a breach of
any of the foregoing representations and warranties, the party discovering such
breach shall give prompt written notice to the others.
ARTICLE V
GENERAL COVENANTS OF THE SELLER
Section 5.1 General Covenants.
-----------------
Until the date on which all Aggregate Unpaids have been indefeasibly
paid in full, the Seller hereby covenants that:
(a) Compliance with Laws, Preservation of Corporate Existence. The
---------------------------------------------------------
Seller will comply in all material respects with all applicable laws, rules,
regulations and orders and preserve and maintain its corporate existence,
rights, franchises, qualifications and privileges.
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SECTION 5.2 COVENANTS OF SELLER.
-------------------
The Seller hereby covenants that:
(a) Contracts Not to be Evidenced by Instruments. The Seller will
--------------------------------------------
take no action to cause any Contract which is not, as of the Closing Date or the
related Addition Date, as the case may be, evidenced by an Instrument, to be so
evidenced except in connection with the enforcement or collection of such
Contract.
(b) Security Interests. The Seller will not sell, pledge, assign or
------------------
transfer to any other Person, or grant, create, incur, assume or suffer to exist
any Lien on any Contract in the Asset Pool or related Equipment, whether now
existing or hereafter transferred hereunder, or any interest therein, and the
Seller will not sell, pledge, assign or suffer to exist any Lien on its
interest, if any, hereunder. The Seller will immediately notify the Deal Agent
of the existence of any Lien on any Contract in the Asset Pool or related
Equipment; and the Seller shall defend the right, title and interest of the Deal
Agent as agent for the Purchasers in, to and under the Contracts in the Asset
Pool and the related Equipment, against all claims of third parties; provided,
--------
however, that nothing in this section 5.2(b) shall prevent or be deemed to
- -------
prohibit the Seller from suffering to exist Permitted Liens upon any of the
Contracts in the Asset Pool or any related Equipment.
(c) Delivery of Collections. The Seller agrees to pay to the Servicer
-----------------------
promptly (but in no event later than three Business Days after receipt) all
Collections received by Seller in respect of the Contracts in the Asset Pool.
(d) Compliance with the Law. Seller hereby agrees to comply in all
-----------------------
material respects with all Requirements of Law applicable to Seller, the
Contracts and the Equipment.
(e) Activities of Seller. The Seller shall not engage in any business
--------------------
or activity of any kind, or enter into any transaction or indenture, mortgage,
instrument, agreement, contract, lease or other undertaking, which is not
directly related to the transactions contemplated and authorized by this
Agreement or the Purchase Agreements.
(f) Indebtedness. The Seller shall not create, incur, assume or
------------
suffer to exist any Indebtedness or other liability whatsoever, except (i)
obligations incurred under this Agreement, or (ii) liabilities incident to the
maintenance of its corporate existence in good standing.
(g) Guarantees. The Seller shall not become or remain liable,
----------
directly or indirectly, in connection with any Indebtedness or other liability
of any other Person, whether by guarantee, endorsement (other than endorsements
of negotiable instruments for deposit or collection in the ordinary course of
business), agreement to purchase or repurchase, agreement to supply or advance
funds, or otherwise.
(h) Investments. The Seller shall not make or suffer to exist any
-----------
loans or advances to, or extend any credit to, or make any investments (by way
of transfer of property,
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contributions to capital, purchase of stock or securities or evidences of
indebtedness, acquisition of the business or assets, or otherwise) in, any
Person except for purchases of Contracts pursuant to the Purchase Agreements, or
(ii) for investments in Permitted Investments in accordance with the terms of
this Agreement.
(i) Merger; Sales. The Seller shall not enter into any transaction of
-------------
merger or consolidation, or liquidate or dissolve itself (or suffer any
liquidation or dissolution), or acquire or be acquired by any Person, or convey,
sell, lease or otherwise dispose of all or substantially all of its property or
business, except as provided for in this Agreement.
(j) Distributions. The Seller shall not declare or pay, directly or
-------------
indirectly, any dividend or make any other distribution (whether in cash or
other property) with respect to the profits, assets or capital of the Seller or
any Person's interest therein, or purchase, redeem or otherwise acquire for
value any of its capital stock now or hereafter outstanding, except that so long
as no Payout Event has occurred and is continuing and no Payout Event would
occur as a result thereof or after giving effect thereto and the Seller would
continue to be Solvent as a result thereof and after giving effect thereto, the
Seller may declare and pay cash or stock dividends on its capital stock.
(k) Agreements. The Seller shall not become a party to, or permit any
----------
of its properties to be bound by, any indenture, mortgage, instrument, contract,
agreement, lease or other undertaking, except this Agreement and the Purchase
Agreements, or amend or modify the provisions of its Certificate of
Incorporation or issue any power of attorney except to the Deal Agent or the
Servicer.
(l) Separate Corporate Existence. The Seller shall:
----------------------------
(i) Maintain its own deposit account or accounts, separate from
those of any Affiliate, with commercial banking institutions. The funds of
the Seller will not be diverted to any other Person or for other than
corporate uses of the Seller.
(ii) Ensure that, to the extent that it shares the same officers
or other employees as any of its stockholders or Affiliates, the salaries
of and the expenses related to providing benefits to such officers and
other employees shall be fairly allocated among such entities, and each
such entity shall bear its fair share of the salary and benefit costs
associated with all such common officers and employees.
(iii) Ensure that, to the extent that it jointly contracts with
any of its stockholders or Affiliates to do business with vendors or
service providers or to share overhead expenses, the costs incurred in so
doing shall be allocated fairly among such entities, and each such entity
shall bear its fair share of such costs. To the extent that the Seller
contracts or does business with vendors or service providers when the goods
and services provided are partially for the benefit of any other Person,
the costs incurred in so doing shall be fairly allocated to or among such
entities for whose benefit the goods and services are provided, and each
such entity shall bear its fair share of
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such costs. All material transactions between Seller and any of its
Affiliates shall be only on an arm's length basis.
(iv) Maintain a principal executive and administrative office
through which its business is conducted separate from those of its
Affiliates. To the extent that Seller and any of its stockholders or
Affiliates have offices in the same location, there shall be a fair and
appropriate allocation of overhead costs among them, and each such entity
shall bear its fair share of such expenses.
(v) Conduct its affairs strictly in accordance with its
Certificate of Incorporation and observe all necessary, appropriate and
customary corporate formalities, including, but not limited to, holding all
regular and special stockholders, and directors' meetings appropriate to
authorize all corporate action, keeping separate and accurate minutes of
its meetings, passing all resolutions or consents necessary to authorize
actions taken or to be taken, and maintaining accurate and separate books,
records and accounts, including, but not limited to, payroll and
intercompany transaction accounts.
(vi) Take or refrain from taking, as applicable, each of the
activities specified in the "non-substantive consolidation" opinion of
Goldstein and Manello, P.C. delivered on the Closing Date, upon which the
conclusions expressed therein are based.
(m) Location of Seller, Records; Instruments. The Seller (x) shall
----------------------------------------
not move outside the State of Massachusetts, the location of its chief executive
office, without 45 days' prior written notice to the Deal Agent and (y) shall
not move, or consent to the Collateral Custodian or Servicer moving, the
Contract Files from the possession of the Collateral Custodian thereof on the
Closing Date, without 45 days' prior written notice to the Deal Agent and (z)
will promptly take all actions required of each relevant jurisdiction in order
to continue the first priority perfected security interest of the Deal Agent as
agent for the Purchasers in all Assets in the Asset Pool. The Seller will give
the Deal Agent prompt notice of a change within the State of Massachusetts of
the location of its chief executive office.
(n) Accounting of Purchases. Other than for federal income tax
-----------------------
purposes, the Seller will not account for or treat (whether in financial
statements or otherwise) the transactions contemplated hereby in any manner
other than as the sale, or absolute assignment, of Assets by the Seller to a
Purchaser. The Seller will not account for or treat (whether in financial
statements or otherwise) the transaction contemplated by the Purchase Agreement
in any manner other than as the sale, or absolute assignment, of the Originator
Assets by the Originator to the Seller, as the case may be.
(o) ERISA Matters. The Seller will not (a) engage or permit any ERISA
-------------
Affiliate to engage in any prohibited transaction for which an exemption is not
available or has not previously been obtained from the United States Department
of Labor; (b) permit to exist any accumulated funding deficiency, as defined in
Section 302(a) of ERISA and Section 412(a) of the Code, or funding deficiency
with respect to any Benefit Plan other than a Multiemployer
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Plan; (c) fail to make any payments to a Multiemployer Plan that the Seller or
any ERISA Affiliate may be required to make under the agreement relating to such
Multiemployer Plan or any law pertaining thereto; (d) terminate any Benefit Plan
so as to result in any liability; or (e) permit to exist any occurrence of any
reportable event described in Title IV of ERISA.
(p) Nature of Business. The Seller will engage in no business other
------------------
than the purchase of Assets from the Originator, the sale of Asset Interests to
a Purchaser and the other transactions permitted or contemplated by this
Agreement.
(q) Originator Assets. With respect to each Asset acquired by the
-----------------
Seller, the Seller will (i) acquire such Asset pursuant to and in accordance
with the terms of the Purchase Agreement, (ii) take all action necessary to
perfect, protect and more fully evidence the Seller's ownership of such Asset,
including, without limitation, (A) filing and maintaining effective financing
statements (Form UCC-1) against the Originator in all necessary or appropriate
filing offices, and filing continuation statements, amendments or assignments
with respect thereto in such filing offices and (B) executing or causing to be
executed such other instruments or notices as may be necessary or appropriate
and (iii) take all additional action that the Deal Agent may reasonably request
to perfect, protect and more fully evidence the respective interests of the
parties to this Agreement in the Assets and other Asset Interest related
thereto.
(r) Transactions with Affiliates. The Seller will not enter into, or
----------------------------
be a party to, any transaction with any of its Affiliates, except (i) the
transactions permitted or contemplated by this Agreement and the Purchase
Agreement, and (ii) other transactions (including, without limitation, the lease
of office space or computer equipment or software by the Seller to or from an
Affiliate) (A) in the ordinary course of business, (B) pursuant to the
reasonable requirements of the Seller's business, (C) upon fair and reasonable
terms that are no less favorable to the Seller than could be obtained in a
comparable arm's-length transaction with a Person not an Affiliate of the
Seller, and (D) not inconsistent with the factual assumptions set forth in the
opinion letters issued by Goldstein and Manello, P.C. and delivered to the Deal
Agent as a condition to the initial Purchase as such assumptions may be modified
in any subsequent opinion letters delivered to the Deal Agent hereunder pursuant
to Section 3.2(c) or otherwise. It is understood that any compensation
arrangement for officers shall be permitted under clause (ii)(A) through (C)
above if such arrangement has been expressly approved by the board of directors
of the Seller.
(s) Debt; Investments. The Seller will not incur any Debt other than
-----------------
Debt arising hereunder. The Seller will not make any Investments other than
Permitted Investments.
(t) Change in the Purchase Agreement. The Seller will not amend,
--------------------------------
modify, waive or terminate any terms or conditions of the Purchase Agreement.
(u) Amendment to Certificate of Incorporation. The Seller will not
-----------------------------------------
amend, modify or otherwise make any change to its Certificate of Incorporation
which would delete or otherwise nullify or circumvent the provisions set forth
on Exhibit C hereto.
---------
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(v) Credit and Collection Policy. The Seller shall not cause or
----------------------------
permit any changes to be made to the Credit and Collection Policy in any manner
that would materially and adversely affect the collectibility of the Contracts
sold hereunder without the prior written consent of the Deal Agent.
SECTION 5.3 RELEASE OF LIEN ON EQUIPMENT.
----------------------------
At the same time as (i) any Contract in the Asset Pool expires by its
terms and all amounts in respect thereof have been paid by the related Obligor
and deposited in the Collection Account or (ii) any Contract becomes a Prepaid
Contract and all amounts in respect thereof have been paid by the related
Obligor and deposited in the Collection Account, the Deal Agent as agent for the
Purchasers will, to the extent requested by the Servicer, release its interest
in such Contract; provided, however, that such release will not constitute a
-------- -------
release of their respective interests in the Equipment or the proceeds of such
Contract or Equipment. In connection with any sale of such Equipment on or
after the occurrence of (i) or (ii) above, the Deal Agent as agent for the
Purchasers will after the deposit by the Servicer of the proceeds of such sale
into the Collection Account, at the sole expense of the Servicer, execute and
deliver to the Servicer any assignments, bills of sale, termination statements
and any other releases and instruments as the Servicer may reasonably request in
order to effect the release and transfer of such Equipment; provided that the
Deal Agent as agent for the Purchasers will make no representation or warranty,
express or implied, with respect to any such Equipment in connection with such
sale or transfer and assignment. Nothing in this section shall diminish the
Servicer's obligations pursuant to Section 6.1(c) with respect to the proceeds
of any such sale.
SECTION 5.4 HEDGING OF CONTRACTS.
--------------------
On or prior to the Purchase Date, the Seller shall have entered into
the Hedging Agreement with the Hedge Counterparty. On each Purchase Date the
Seller shall assign to the Deal Agent on behalf of VFCC all of the Seller's
rights under the Hedging Agreements relating to the Contracts conveyed on such
Purchase Date. Each Hedging Agreement shall (i) have a scheduled Termination
Date that coincides with the last Scheduled Payment due to occur for the
Contracts conveyed on such Purchase Date; (ii) provide for a notional amount
from time to time equal to one hundred percent (100%) of the Capital (the
"Hedged Level"), of the aggregate amount (discounted to the present value at the
"Swap Rate" defined below) of all remaining Scheduled Payments on the Contracts
on such Purchase Date (the "Hedged Amount"); (iii) provide that the Hedge
Counterparty's payment obligations shall be calculated by reference to the
Hedged Amount and a per annum rate determined by reference to USD-CP-H.15, as
defined in the 1991 ISDA Definitions published by the International Swap Dealers
Association, Inc. and as determined in accordance with the procedures in effect
on the date of this Agreement (the "H.15"), for a period of 30 days, as
determined on the immediately preceding Payment Date; (iv) provide that the
Seller's payment obligations shall be calculated by reference to the Hedged
Amount and a per annum fixed rate agreed to between the Seller and the Hedge
Counterparty (the "Swap Rate"); (v) provide for net payments to be paid on each
Payment Date and any early termination date thereunder (A) on behalf of the
Seller,
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solely out of funds in the Collection Account and (B) by the Hedge Counterparty
for deposit into the Collection Account, for distribution in accordance with the
Agreement and (vi) provide for early termination at the option of the Required
Investors upon the disposition of the related Contracts. In the event the H.15
is no longer available, then the rate described in clause (iii) above shall be
determined by reference to such other publication or method of calculation as
shall be reasonably agreed between the Seller and the Purchaser in order to
effect an economically equivalent business deal between such parties. The
Servicer will provide the Deal Agent with written notice confirming the amounts,
if any, to be paid by or to the Hedge Counterparty on each Payment Date and any
early termination date.
SECTION 5.5 RETRANSFER OF INELIGIBLE CONTRACTS.
----------------------------------
In the event of a breach of any representation or warranty set forth
in Section 4.2 with respect to a Contract in the Asset Pool (each such Contract,
an "Ineligible Contract"), no later than the earlier of (i) knowledge by the
Seller of such Contract becoming an Ineligible Contract and (ii) receipt by the
Seller from the Deal Agent or Servicer of written notice thereof, the Seller
shall repurchase each such Ineligible Contract and any related Equipment
selected by the Servicer as to which such breach related, and the Deal Agent as
agent for the Purchasers shall convey, without recourse, representation or
warranty, all of its right, title and interest in such Ineligible Contract. In
any of the foregoing instances, the Seller shall accept the retransfer of each
such Ineligible Contract, and there shall be deducted from the ADCB the
Discounted Contract Balance (calculated using the Blended Discount Rate as of
the most recent Determination Date) of each such Ineligible Contract. On and
after the date of retransfer the Ineligible Contract so retransferred shall not
be included in the Asset Pool. In consideration of such retransfer the Seller
shall, on the date of retransfer of such Ineligible Contract make a deposit to
the Collection Account (for allocation pursuant to Section 2.7 or 2.8, as
applicable in immediately available funds in an amount equal to the Discounted
Contract Balance of such Ineligible Contract (calculated using the Blended
Discount Rate as of the most recent Determination Date)). Upon each retransfer
to the Seller of such Ineligible Contract, the Deal Agent, as agent for the
Purchasers, shall automatically and without further action be deemed to
transfer, assign and set-over to the Seller, without recourse, representation or
warranty, all the right, title and interest of the Deal Agent, as agent for the
Purchasers, in, to and under such Contract and all monies due or to become due
with respect thereto, the related Equipment and all proceeds of such Contract
and Recoveries and Insurance Proceeds relating thereto and all rights to
security for any such Contract, and all proceeds and products of the foregoing.
The Deal Agent, as agent for the Purchasers, shall, at the sole expense of the
Servicer execute such documents and instruments of transfer as may be prepared
by the Servicer on behalf of the Seller and take other such actions as shall
reasonably be requested by the Seller to effect the transfer of such Ineligible
Contract pursuant to this subsection.
SECTION 5.6 RETRANSFER OF ASSETS.
--------------------
In the event of a breach of any representation or warranty set forth
in Section 4.2 hereof which breach could reasonably be expected to have a
material adverse affect on the rights of the Purchasers, the Deal Agent, as
agent of the Purchasers, (or on the ability of the
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Seller to perform its obligations hereunder), by notice then given in writing to
the Seller, the Servicer may direct the Seller to accept retransfer of all of
the Contracts in the Asset Pool and the Seller shall be obligated to accept
retransfer of such Contracts on a Payment Date specified by the Seller (such
date, the "Retransfer Date"). The Seller shall deposit on the Retransfer Date an
amount equal to the deposit amount provided below for such Contracts in the
Collection Account for distribution to the Purchasers. The deposit amount for
such retransfer will be equal to the sum of (i) the outstanding Capital at the
end of the Business Day preceding the Payment Date on which the retransfer is
scheduled to be made, plus (ii) an amount equal to all accrued and to accrue
with respect to unpaid Program Fees, Commitment Fees and Yield in respect of
such Capital at the applicable Blended Discount Rate through the latest maturing
Fixed period less (iii) the amount, if any, available in the Collection Account
on such Payment Date. On the Retransfer Date, provided that such amounts have
been deposited in full into the Collection Account, the Contracts in the Asset
Pool (or security interests therein) and all monies due or to become due with
respect thereto, the related Equipment (or security interests therein) and all
proceeds thereof, and all proceeds and products of the foregoing, shall be
transferred to the Seller and the Deal Agent as agent for the Purchasers shall,
at the sole expense of the Servicer, execute and deliver such instruments of
transfer, in each case without recourse, representation or warranty, as shall be
prepared and reasonably requested by the Servicer on behalf of the Seller to
vest in the Seller, or its designee or assignee, all right, title and interest
of the Deal Agent as agent for the Purchasers in, to and under the Contacts in
the Asset Pool, all monies due or to become due with respect thereto, the
related Equipment and all proceeds thereof and Insurance Proceeds relating
thereto. If the Deal Agent gives a notice directing the Seller to accept a
retransfer as provided above, the obligation of Seller to accept a retransfer of
the Contracts in the Asset Pool pursuant to this Section 5.6 shall constitute
the sole remedy respecting a breach of the representations and warranties
contained in Section 4.2 available to the Purchasers and the Deal Agent on
behalf of the Purchasers.
ARTICLE VI
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 6.1 Appointment and Acceptance; Duties.
----------------------------------
(a) Appointment of Initial Servicer and Collateral Custodian.
--------------------------------------------------------
BankVest Capital Corp. is hereby appointed as Servicer pursuant to this
Agreement. BankVest Capital Corp. accepts the appointment and agrees to act as
the Servicer pursuant to this Agreement. Norwest is hereby appointed as
Collateral Custodian pursuant to this Agreement. Norwest accepts the
appointment and agrees to act as the Collateral Custodian pursuant to this
Agreement.
(b) General Duties. The Servicer will manage, service, administer,
--------------
collect and enforce the Assets in the Asset Pool on behalf of the Purchasers
(the "Servicing Duties") and will have full power and authority to do any and
all things in connection with the performance of the Servicing Duties which it
deems necessary or desirable and as shall not contravene the provisions of this
Agreement. The Servicer will perform the Servicing Duties
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with reasonable care, using that degree of skill and attention that a prudent
person engaging in such activities would exercise, but in any event shall not
act with less care than the Servicer exercises with respect to all comparable
contracts that it services for itself or others. The Servicing Duties will
include, without limitation, collection and posting of all payments, responding
to inquiries of Obligors regarding the Assets in the Asset Pool, investigating
delinquencies and making Servicer Advances, remitting payments to the Deal Agent
in a timely manner, furnishing monthly, quarterly and annual statements with
respect to collections and payments in accordance with the provisions of this
Agreement, and using its best efforts to maintain the perfected first priority
security interest of the Deal Agent as agent for the Purchasers in the Assets.
The Servicer will follow customary standards, policies, and procedures and will
have full power and authority, acting alone, to do any and all things in
connection with the performance of the Servicing Duties that it deems necessary
or desirable. If the Servicer commences a legal proceeding to enforce a
Defaulted Contract or commences or participates in a legal proceeding (including
a bankruptcy proceeding) relating to or involving an Asset in the Asset Pool,
the Deal Agent as agent for the Purchasers will be deemed to have automatically
assigned the related Contract to the Servicer for purposes of commencing or
participating in any such proceeding as a party or claimant, and the Servicer is
authorized and empowered by the Purchasers, pursuant to this Section 6.1(b), to
execute and deliver, on behalf of itself and the Deal Agent as agent for the
Purchasers, any and all instruments of satisfaction or cancellation, or partial
or full release or discharge, and all other notices, demands, claims,
complaints, responses, affidavits or other documents or instruments in
connection with any such proceedings. If in any enforcement suit or legal
proceeding it is held that the Servicer may not enforce a Contract on the ground
that it is not a real party in interest or a holder entitled to enforce the
Contract, then the Deal Agent will, at the Servicer's expense and direction,
take steps on behalf of the Deal Agent as agent for the Purchasers to enforce
the Contract, including bringing suit in the name of the Deal Agent as agent for
the Purchasers.
(c) Disposition Upon Termination of Contract. Upon the termination of
---------------------------------------
a Contract included in the Asset Pool as a result of a default by the Obligor
thereunder the Servicer will use commercially reasonable efforts to dispose of
any related Equipment. Without limiting the generality of the foregoing, the
Servicer may dispose of any such Equipment by purchasing such Equipment or by
selling such Equipment to any of its Affiliates for a purchase price equal to
the fair market value thereof, any such sale to be evidenced by a certificate of
a Responsible Officer of the Servicer delivered to the Deal Agent setting forth
the Contract, the Equipment, the sale price of the Equipment and certifying that
such sale price is the fair market value of such Equipment.
(d) Further Assurances. The Deal Agent will, at the sole expense of
------------------
the Servicer, furnish the Servicer with any powers of attorney and other
documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties under this Agreement.
(e) Custodial Duties. The Collateral Custodian shall take and retain
----------------
custody of the Contract Files in accordance with the terms and conditions of
this Agreement, all for the benefit of the Purchasers and subject to the Lien
thereon in favor of the Deal Agent as agent
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for the Purchasers. In so taking and retaining custody of the Contract Files,
the Collateral Custodian shall be deemed to be acting as the agent of the Deal
Agent as agent for the Purchasers, provided, however, that the Collateral
-------- -------
Custodian makes no representations as to the existence, perfection or priority
of any Lien on the Contract Files or the instruments therein, and provided,
--------
further, that the Collateral Custodian's duties as agent shall be limited to
- -------
those expressly contemplated herein. All Contract Files shall be kept in
fireproof vaults or cabinets at the locations specified on Schedule V attached
hereto, or at such other office as shall be specified to the Deal Agent by the
Collateral Custodian in a written notice delivered at least 45 days prior to
such change. All Contract Files shall be placed together in a separate file
cabinet with an appropriate identifying label and maintained in such a manner so
as to permit retrieval and access. All Contract Files shall be clearly
segregated from any other documents or instruments maintained by the Collateral
Custodian. The Collateral Custodian shall clearly indicate that such Contract
Files are the sole property of the Seller and that the Seller has granted an
interest therein to the Deal Agent on behalf of the Purchasers. In performing
its duties, the Collateral Custodian shall use the same degree of care and
attention as it employs with respect to similar Contracts which it holds as
Custodian.
(f) Concerning the Collateral Custodian. (i) The Collateral
-----------------------------------
Custodian may conclusively rely on and shall be fully protected in acting upon
any certificate, instrument, opinion, notice, letter, telegram or other document
delivered to it and which in good faith it reasonably believes to be genuine and
which has been signed by the proper party or parties. The Collateral Custodian
may rely conclusively on and shall be fully protected by in acting upon (i) the
written instructions of any designated officer of the Deal Agent or (ii) the
verbal instructions of the Deal Agent.
(ii) The Collateral Custodian may consult counsel satisfactory to it
and the advice or opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in accordance with the advice or
opinion of such counsel.
(iii) The Collateral Custodian shall not be liable for any error of
judgment, or for any act done or step taken or omitted by it, in good
faith, or for any mistakes of fact or law, or for anything which it may do
or refrain from doing in connection herewith except in the case of its
willful misconduct or negligent performance or omission.
(iv) The Collateral Custodian makes no warranty or representation and
shall have no responsibility (except as expressly set forth in this
Agreement) as to the content, completeness, validity, sufficiency, value,
genuineness, ownership or transferability of the Contracts, as will not be
required to and will not make any representations as to the validity or
value (except as expressly set forth in this Agreement) of any of the
Contracts. The Collateral Custodian shall not be obligated to take any
legal action hereunder which might in its judgment involve any expense or
liability unless it has been furnished with an indemnity reasonably
satisfactory to it.
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(v) The Collateral Custodian shall have no duties or
responsibilities except such duties and responsibilities as are
specifically set forth in this Agreement and no covenants or obligations
shall be implied in this Agreement against the Collateral Custodian.
(vi) The Collateral Custodian shall not be required to expend or risk
its own funds in the performance of its duties hereunder.
(vii) It is expressly agreed and acknowledged that the Collateral
Custodian is not guaranteeing performance of or assuming any liability for
the obligations of the other parties hereto or any parties to the
Contracts.
SECTION 6.2 COLLECTION OF PAYMENTS.
----------------------
(a) Collection Efforts; Modification of Contracts. The Servicer will
---------------------------------------------
make reasonable efforts to collect all payments called for under the terms and
provisions of the Contracts in the Asset Pool as and when the same become due,
and will follow those collection procedures which it follows with respect to all
comparable Contracts that it services for itself or others. The Servicer may
not waive, modify or otherwise vary any provision of a Contract. The Servicer
may in its discretion waive any late payment charge or any other fees that may
be collected in the ordinary course of servicing any Contract in the Asset Pool.
(b) Prepaid Contract. The Servicer may not permit a Contract in the
----------------
Asset Pool to become a Prepaid Contract (which shall not include a Contract that
becomes a Prepaid Contract due to a Casualty Loss), unless (x) the Servicer
------
provides an Additional Contract or (y) such prepayment will not result in the
Collection Account receiving an amount (the "Prepayment Amount") less than the
sum of (A) the Discounted Contract Balance on the date of such prepayment
calculated using the Blended Discount Rate in effect on the date of such payment
and (B) any outstanding Servicer Advances thereon. After a Payout Event has
occurred, the Servicer may not permit a Contract in the Asset Pool to become a
Prepaid Contract (which shall not include a Contract that becomes an Prepaid
Contract due to a Casualty Loss), unless the Servicer collects an amount equal
------
to the sum of the Discounted Contract Balance plus accrued and unpaid interest
and any outstanding Servicer Advances thereon plus any swap breakage costs
associated with the prepayment.
(c) Acceleration. The Servicer shall accelerate the maturity of all
------------
or any Scheduled Payments under any Contract in the Asset Pool under which a
default under the terms thereof has occurred and is continuing (after the lapse
of any applicable grace period) promptly after such Contract becomes a Defaulted
Contract.
(d) Taxes and other Amounts. To the extent provided for in any
-----------------------
Contract in the Asset Pool, the Servicer will use its best efforts to collect
all payments with respect to amounts due for taxes, assessments and insurance
premiums relating to such Contracts or the Equipment and remit such amounts to
the appropriate Governmental Authority or insurer on or prior to the date such
payments are due.
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(e) Payments to Lock-Box Account. On or before the Closing Date with
----------------------------
respect to the Existing Contracts and on or before the relevant Addition Date,
with respect to Additional Contracts, the Servicer shall have instructed all
Obligors to make all payments in respect of the Contracts in the Asset Pool to a
Lock-Box or directly to a Lock-Box Account.
(f) Establishment of the Collection Account. The Servicer shall cause
---------------------------------------
to be established, on or before the Closing Date, and maintained in the name of
the Deal Agent as agent for the Purchasers, with an office or branch of a
depository institution or trust company organized under the laws of the United
States of America or any one of the States thereof or the District of Columbia
(or any domestic branch of a foreign bank) a segregated corporate trust account
(the "Collection Account"); provided, however, that at all times such depository
-------- -------
institution or trust company shall be a depository institution organized under
the laws of the United States of America or any one of the States thereof or the
District of Columbia (or any domestic branch of a foreign bank), (i)(A) which
has either (1) a long-term unsecured debt rating of A- or better by S&P and A-3
or better by Moody's or (2) a short-term unsecured debt rating or certificate of
deposit rating of A-1 or better by S&P or P-1 or better by Moody's, (B) the
parent corporation of which has either (1) a long-term unsecured debt rating of
A- or better by S&P and A-3 or better by Moody's or (2) a short-term unsecured
debt rating or certificate of deposit rating of A-1 or better by S&P and P-1 or
better by Moody's or (C) is otherwise acceptable to the Deal Agent and (ii)
whose deposits are insured by the Federal Deposit Insurance Corporation (any
such depository institution or trust company, a "Qualified Institution").
SECTION 6.3 SERVICER ADVANCES.
-----------------
For each Monthly Period, if the Servicer determines that any Scheduled
Payment (or portion thereof) which was due and payable pursuant to a Contract in
the Asset Pool during such Monthly Period was not received prior to the end of
such Monthly Period, the Servicer shall make an advance in an amount up to the
amount of such delinquent Scheduled Payment (or portion thereof); in addition,
if on any day there are not sufficient funds on deposit in the Collection
Account to pay accrued Yield of any Asset Interest the Fixed Period of which
ends on such day, the Servicer shall make an advance in the amount necessary to
pay such Yield (in either case, any such advance, a "Servicer Advance").
Notwithstanding the preceding sentence, (i) the Servicer shall be required to
make a Servicer Advance with respect to any Contract if, and only if, the
Servicer determines (such determination to be conclusive and binding) in good
faith that such Servicer Advance will ultimately be recoverable from future
collections on, or the liquidation of, the Asset Pool and payments under any
Hedging Agreement, (ii) the Servicer's obligation to make a Servicer Advance for
any Contract shall cease on the day such Contract becomes a Defaulted Contract
or is charged-off pursuant to the Servicer's Credit and Collection Policies [and
(iii) any successor Servicer, including the Backup Servicer, will not be
obligated to make any Servicer Advances]. The Servicer will deposit any
Servicer Advances into the Collection Account on or prior to 11:00 a.m.
(Charlotte, North Carolina time) on the related Payment Date, in immediately
available funds.
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SECTION 6.4 REALIZATION UPON DEFAULTED CONTRACT.
-----------------------------------
The Servicer will use its best efforts to repossess or otherwise
comparably convert the ownership of any Equipment relating to a Defaulted
Contract and will act as sales and processing agent for Equipment which it
repossesses. The Servicer will follow such other practices and procedures as it
deems necessary or advisable and as are customary and usual in its servicing of
contracts and other actions by the Servicer in order to realize upon such
Equipment, which practices and procedures may include reasonable efforts to
enforce all obligations of Obligors and repossessing and selling such Equipment
at public or private sale in circumstances other than those described in the
preceding sentence. Without limiting the generality of the foregoing, the
Servicer may sell any such Equipment to the Servicer or its Affiliates for a
purchase price equal to the then fair market value thereof, any such sale to be
evidenced by a certificate of a Responsible Officer of the Servicer delivered to
the Deal Agent setting forth the Contract, the Equipment, the sale price of the
Equipment and certifying that such sale price is the fair market value of such
Equipment. In any case in which any such Equipment has suffered damage, the
Servicer will not expend funds in connection with any repair or toward the
repossession of such Equipment unless it reasonably determines that such repair
and/or repossession will increase the Recoveries by an amount greater than the
amount of such expenses. The Servicer will remit to the Collection Account the
Recoveries received in connection with the sale or disposition of Equipment
relating to a Defaulted Contract.
SECTION 6.5 MAINTENANCE OF INSURANCE POLICIES.
---------------------------------
The Servicer will use its best efforts to ensure that each Obligor
maintains an Insurance Policy with respect to the related Equipment in an amount
at least equal to the sum of the Discounted Contract Balance of the related
Contract and shall ensure that each such Insurance Policy names the Deal Agent,
as agent for the Purchasers, as loss payee and as an insured thereunder;
provided that the Servicer, in accordance with its Credit and Collection Policy,
may allow Obligors to self-insure. Additionally, the Servicer will require that
each Obligor maintain property damage liability insurance during the term of
each Contract in amounts and against risks customarily insured against by the
Obligor on equipment owned by it. If an Obligor fails to maintain property
damage insurance, the Servicer may purchase and maintain such insurance on
behalf of, and at the expense of, the Obligor. In connection with its
activities as Servicer, the Servicer agrees to present, on behalf of the Deal
Agent as agent for the Purchasers, claims to the insurer under each Insurance
Policy and any such liability policy, and to settle, adjust and compromise such
claims, in each case, consistent with the terms of each Contract. The
Servicer's Insurance Policies with respect to the related Equipment will insure
against liability for personal injury and property damage relating to such
Equipment, will name the Deal Agent as agent for the Purchasers as loss payee
and as an insured thereunder and will contain a breach of warranty clause.
SECTION 6.6 REPRESENTATIONS AND WARRANTIES OF SERVICER.
------------------------------------------
The Servicer represents and warrants to the Deal Agent as agent for
the Purchasers and the Purchasers that, as of the Closing Date and on each
Addition Date, insofar
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as any of the following affects the Servicer's ability to perform its
obligations pursuant to this Agreement in any material respect:
(a) Organization and Good Standing. The Servicer is a corporation
------------------------------
duly organized, validly existing and in good standing under the laws of
Massachusetts with all requisite corporate power and authority to own its
properties and to conduct its business as presently conducted and to enter into
and perform its obligations pursuant to this Agreement.
(b) Due Qualification. The Servicer is qualified to do business as a
-----------------
corporation, is in good standing, and has obtained all licenses and approvals as
required under the laws of all jurisdictions in which the ownership or lease of
its property and or the conduct of its business (other than the performance of
its obligations hereunder) requires such qualification, standing, license or
approval, except to the extent that the failure to so qualify, maintain such
standing or be so licensed or approved would not have an adverse effect on the
interests of the Seller or of the Purchasers. The Servicer is qualified to do
business as a corporation, is in good standing, and has obtained all licenses
and approvals as required under the laws of all states in which the performance
of its obligations pursuant to this Agreement requires such qualification,
standing, license or approval.
(c) Power and Authority. The Servicer has the corporate power and
-------------------
authority to execute and deliver this Agreement and to carry out its terms. The
Servicer has duly authorized the execution, delivery and performance of this
Agreement by all requisite corporate action. The execution, delivery and
performance of this Agreement does not contravene the Servicer's Certificate of
Incorporation or by-laws.
(d) No Violation. The consummation of the transactions contemplated
------------
by, and the fulfillment of the terms of, this Agreement by the Servicer (with or
without notice or lapse of time) will not (i) conflict with, result in any
breach of any of the terms or provisions of, or constitute a default under, the
articles of incorporation or by-laws of the Servicer, or any term of any
agreement, indenture, mortgage, deed of trust or other instrument to which the
Servicer is a party or by which it or any of its property is bound, (ii) result
in the creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement, mortgage, deed of trust or other
instrument, or (iii) violate any law, regulation, order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority
applicable to the Servicer or any of its properties.
(e) No Consent. No consent, approval, authorization, order,
----------
registration, filing, qualification, license or permit of or with any
Governmental Authority having jurisdiction over the Servicer or any of its
properties is required to be obtained by or with respect to the Servicer in
order for the Servicer to enter into this Agreement or perform its obligations
hereunder.
(f) Binding Obligation. This Agreement constitutes a legal, valid and
------------------
binding obligation of the Servicer, enforceable against the Servicer in
accordance with its terms, except as such enforceability may be limited by (i)
applicable Insolvency Laws and (ii) general principles of equity (whether
considered in a suit at law or in equity).
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(g) No Proceeding. There are no proceedings or investigations pending
-------------
or threatened against the Servicer, before any Governmental Authority (i)
asserting the invalidity of this Agreement, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement or (iii)
seeking any determination or ruling that might (in the reasonable judgment of
the Servicer) materially and adversely affect the performance by the Servicer of
its obligations under, or the validity or enforceability of, this Agreement.
(h) Reports Accurate. No Servicer Certificate, information, exhibit,
----------------
financial statement, document, book, record or report furnished or to be
furnished by the Servicer to the Deal Agent or a Purchaser in connection with
this Agreement is or will be inaccurate in any material respect as of the date
it is or shall be dated or (except as otherwise disclosed to the Deal Agent or
such Purchaser, as the case may be, at such time) as of the date so furnished,
and no such document contains or will contain any material misstatement of fact
or omits or shall omit to state a material fact or any fact necessary to make
the statements contained therein not misleading.
SECTION 6.7 REPRESENTATIONS AND WARRANTIES OF BACKUP SERVICER AND
-----------------------------------------------------
COLLATERAL CUSTODIAN.
--------------------
Each of the Backup Servicer and the Collateral Custodian represents
and warrants to the Deal Agent as agent for the Purchasers and the Purchasers
that, as of the Closing Date and on each Addition Date, insofar as any of the
following affects the Backup Servicer's or the Custodian's, as the case may be,
ability to perform its obligations pursuant to this Agreement in any material
respect:
(a) Organization and Good Standing. Norwest is a national banking
------------------------------
association duly organized, validly existing and in good standing under the laws
of the United States of America with all requisite corporate power and authority
to own its properties and to conduct its business as presently conducted and to
enter into and perform its obligations pursuant to this Agreement.
(b) Due Qualification. Each of the Backup Servicer and the Collateral
-----------------
Custodian is qualified to do business as a corporation, is in good standing, and
has obtained all licenses and approvals as required under the laws of all states
in which the performance of its obligations pursuant to this Agreement requires
such qualification, standing, license or approval, except to the extent that the
failure to so qualify, maintain such standing, or be so licensed or approved
would not have a material adverse effect on the interests of the Seller or the
Purchasers.
(c) Power and Authority. Each of the Backup Servicer and the
-------------------
Custodian has the corporate power and authority to execute and deliver this
Agreement and to carry out its terms. Each of the Backup Servicer and the
Custodian has duly authorized the execution, delivery and performance of this
Agreement by all requisite corporate action.
(d) No Violation. The consummation of the transactions contemplated
------------
by, and the fulfillment of the terms of, this Agreement by the Backup Servicer
or the Custodian
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(with or without notice or lapse of time) will not (i) conflict with, result in
any breach of any of the terms or provisions of, or constitute a default under,
the articles of incorporation or by-laws of the Backup Servicer or the
Custodian, or any term of any material agreement, indenture, mortgage, deed of
trust or other instrument to which the Backup Servicer or the Custodian is a
party or by which it or any of its property is bound, (ii) result in the
creation or imposition of any Lien upon any of its properties pursuant to the
terms of any such indenture, agreement, mortgage, deed of trust or other
instrument, or (iii) violate any law, regulation, order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority
applicable to Norwest or any of its properties.
(e) No Consent. No consent, approval, authorization, order,
----------
registration, filing, qualification, license or permit of or with any
Governmental Authority having jurisdiction over the Backup Servicer or the
Custodian or any of its respective properties is required to be obtained by or
with respect to Norwest in order for the Backup Servicer or the Custodian to
enter into this Agreement or perform its obligations hereunder.
(f) Binding Obligation. This Agreement constitutes a legal, valid and
------------------
binding obligation of Norwest, enforceable against the Backup Servicer and the
Custodian in accordance with its terms, except as such enforceability may be
limited by (i) applicable Insolvency Laws and (ii) general principles of equity
(whether considered in a suit at law or in equity).
(g) No Proceeding. There are no proceedings or investigations pending
-------------
or, to the best of its knowledge, threatened, against the Backup Servicer or the
Custodian, before any Governmental Authority (i) asserting the invalidity of
this Agreement, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or (iii) seeking any determination
or ruling that might (in the reasonable judgment of the Backup Servicer or the
Custodian, as the case may be) materially and adversely affect the performance
by the Backup Servicer or the Custodian of its obligations under, or the
validity or enforceability of, this Agreement.
SECTION 6.8 COVENANTS OF SERVICER.
---------------------
The Servicer hereby covenants that:
(a) Compliance with Law. The Servicer will comply with all laws and
-------------------
regulations of any Governmental Authority applicable to the Servicer or the
Contracts in the Asset Pool and related Equipment and Contract Files or any part
thereof.
(b) Obligations with Respect to Contracts; Modifications. The
----------------------------------------------------
Servicer will duly fulfill and comply with all obligations on the part of the
Seller to be fulfilled or complied with under or in connection with each
Contract in the Asset Pool and will do nothing to impair the rights of the Deal
Agent as agent for the Purchasers or of the Purchasers in, to and under the
Assets. The Servicer will perform such obligations under the Contracts in the
Asset Pool and will not change or modify the Contracts.
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(c) No Bankruptcy Petition. Prior to the date that is one year and
----------------------
one day after the payment in full of all amounts owing in respect of all
outstanding commercial paper issued by VFCC, the Servicer will not institute
against the Seller or VFCC, or join any other Person in instituting against the
Seller or VFCC, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceedings under the laws of the
United States or any state of the United States. This Section 6.8(c) will
survive the termination of this Agreement.
SECTION 6.9 COVENANTS OF BACKUP SERVICER AND COLLATERAL CUSTODIAN.
-----------------------------------------------------
Each of the Backup Servicer and the Custodian hereby covenants that:
(a) Contract Files. The Collateral Custodian will, at its own cost
--------------
and expense, maintain all Contract Files in accordance with the terms of this
Agreement. Without limiting the generality of the preceding sentence, the
Collateral Custodian will not dispose of any documents constituting the Contract
Files in any manner which is inconsistent with the performance of its
obligations as the Collateral Custodian pursuant to this Agreement and will not
dispose of any Contract except as contemplated by this Agreement.
(b) Compliance with Law. Each of the Backup Servicer and the
-------------------
Custodian will comply with all laws and regulations of any Governmental
Authority applicable to the Backup Servicer and the Collateral Custodian or the
Contracts in the Asset Pool and related Equipment and Contract Files or any part
thereof.
(c) Preservation of Security Interest. Each of the Backup Servicer
---------------------------------
and the Custodian will execute and file such financing and continuation
statements and any other documents reasonably requested by the Deal Agent to be
filed or which may be required by any law or regulation of any Governmental
Authority to preserve and protect fully the interest of the Deal Agent as agent
for the Purchasers in, to and under the Assets.
(d) No Bankruptcy Petition. Prior to the date that is one year and
----------------------
one day after the payment in full of all amounts owing in respect of all
outstanding commercial paper issued by VFCC, neither the Backup Servicer nor the
Custodian will institute against the Seller or VFCC, or join any other Person in
instituting against the Seller or VFCC, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar proceedings
under the laws of the United States or any state of the United States. This
Section 6.9 (d) will survive the termination of this Agreement.
(e) Location of Contract Files. The Contract Files shall remain at
--------------------------
all times in the possession of the Collateral Custodian at the address set forth
herein unless notice of a different address is given in accordance with the
terms hereof.
SECTION 6.10 SERVICING COMPENSATION.
----------------------
As compensation for its servicing activities hereunder and
reimbursement for its expenses, the Servicer shall be entitled to receive a
servicing fee (the "Servicing Fee") in
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respect of each Monthly Period (or portion thereof) equal to one-twelfth of the
product of (A) the Servicing Fee Rate and (B) the ADCB as on the most recent
Determination Date, such Servicing Fee to be payable monthly in arrears on each
Payment Date to the extent of funds available therefor pursuant to the
provisions of Section 2.7 or 2.8, as applicable.
SECTION 6.11 CUSTODIAL COMPENSATION.
----------------------
As compensation for its custodial activities hereunder and
reimbursement for its expenses, the Collateral Custodian shall be entitled to
receive a custodial fee (the "Custodial Fee") in respect of each Monthly Period
(or portion thereof) equal to [$4 per [new] Contract File] [delivered during
such Monthly Period].
SECTION 6.12 PAYMENT OF CERTAIN EXPENSES BY SERVICER.
---------------------------------------
The Servicer will be required to pay all expenses incurred by it in
connection with its activities under this Agreement, including fees and
disbursements of independent accountants, Taxes imposed on the Servicer,
expenses incurred in connection with payments and reports pursuant to this
Agreement, and all other fees and expenses not expressly stated under this
Agreement for the account of the Seller, but excluding Liquidation Expenses
incurred as a result of activities contemplated by Section 6.4. The Servicer
will be required to pay all reasonable fees and expenses owing to any bank or
trust company in connection with the maintenance of the Collection Account and
the Lock-Box Account. The Servicer shall be required to pay such expenses for
its own account and shall not be entitled to any payment therefor other than the
Servicing Fee.
SECTION 6.13 REPORTS.
-------
(a) Monthly Report. With respect to each Determination Date and the
--------------
related Monthly Period, the Servicer will provide to the Deal Agent, on the
related Reporting Date, a monthly statement (a "Monthly Report"), signed by a
Responsible Officer of the Servicer and substantially in the form of Exhibit E.
---------
(b) Servicer's Certificate. Together with each Monthly Report, the
----------------------
Servicer shall submit to the Purchaser a certificate (a "Servicer's
Certificate"), signed by a Responsible Officer of the Servicer and substantially
in the form of Exhibit F.
---------
(c) Financial Statements. The Servicer will submit to the Purchaser
--------------------
and the Backup Servicer, within 45 days of the end of each of its fiscal
quarters, commencing November 15, 1997 unaudited financial statements (including
an analysis of delinquencies and losses for each fiscal quarter) as of the end
of each such fiscal quarter. The Servicer will submit to the Purchaser, within
90 days of the end of each of its fiscal years, commencing September 30, 1997
audited financial statements (including an analysis of delinquencies and losses
for each fiscal year describing the causes thereof and sufficient to determine
whether a Payout Event has occurred or is reasonably likely to occur and
otherwise reasonably satisfactory to the Deal Agent) as of the end of each such
fiscal year.
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SECTION 6.14 ANNUAL STATEMENT AS TO COMPLIANCE.
---------------------------------
The Servicer will provide to the Deal Agent and the Backup Servicer,
on or prior to September 30 of each year, commencing September 30, 1998, an
annual report signed by a Responsible Officer of the Servicer certifying that
(a) a review of the activities of the Servicer, and the Servicer's performance
pursuant to this Agreement, for the period ending on the last day of the
immediately preceding fiscal year has been made under such Person's supervision
and (b) the Servicer has performed or has caused to be performed in all material
respects all of its obligations under this Agreement throughout such year and no
Servicer Default has occurred and is continuing (or if a Servicer Default has so
occurred and is continuing, specifying each such event, the nature and status
thereof and the steps necessary to remedy such event, and, if a Servicer Default
occurred during such year and no notice thereof has been given to the Deal
Agent, specifying such Servicer Default and the steps taken to remedy such
event).
SECTION 6.15 ANNUAL INDEPENDENT PUBLIC ACCOUNTANT'S SERVICING REPORTS.
--------------------------------------------------------
The Servicer will cause a firm of nationally recognized independent
public accountants (who may also render other services to the Servicer) to
furnish to the Deal Agent and the Backup Servicer, on or prior to September 30
of each year, commencing September 30, 1998, (i) a report relating to the
previous fiscal year to the effect that (a) such firm has reviewed certain
documents and records relating to the servicing of the Contracts in the Asset
Pool, and (b) based on such examination, such firm is of the opinion that the
Monthly Reports for such year were prepared in compliance with this Agreement,
except for such exceptions as it believes to be immaterial and such other
exceptions as will be set forth in such firm's report and (ii) a report covering
the preceding fiscal year to the effect that such accountants have applied
certain agreed-upon procedures to certain documents and records relating to the
servicing of Contracts under this Agreement, compared the information contained
in the Servicer's Certificates delivered during the period covered by such
report with such documents and records and that no matters came to the attention
of such accountants that caused them to believe that such servicing was not
conducted in compliance with this Article VI of this Agreement, except for such
exceptions as such accountants shall believe to be immaterial and such other
exceptions as shall be set forth in such statement.
SECTION 6.16 ADJUSTMENTS.
-----------
If (i) the Servicer makes a deposit into the Collection Account in
respect of a Collection of a Contract in the Asset Pool and such Collection was
received by the Servicer in the form of a check which is not honored for any
reason or (ii) the Servicer makes a mistake with respect to the amount of any
Collection and deposits an amount that is less than or more than the actual
amount of such Collection, the Servicer shall appropriately adjust the amount
subsequently deposited into the Collection Account to reflect such dishonored
check or mistake. Any Scheduled Payment in respect of which a dishonored check
is received shall be deemed not to have been paid.
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SECTION 6.17 MERGER OR CONSOLIDATION OF THE SERVICER.
---------------------------------------
The Servicer shall not consolidate with or merge into any other Person
or convey or transfer its properties and assets substantially as an entirety to
any Person, unless the Servicer is the surviving entity and unless:
(i) the Servicer has delivered to the Deal Agent and the Backup
Servicer an Officer's Certificate and an Opinion of Counsel each stating that
any consolidation, merger, conveyance or transfer and such supplemental
agreement comply with this Section 6.17 and that all conditions precedent herein
provided for relating to such transaction have been complied with and, in the
case of the Opinion of Counsel, that such supplemental agreement is legal, valid
and binding with respect to the Servicer and such other matters as the Deal
Agent may request;
(ii) the Servicer shall have delivered notice of such consolidation,
merger, conveyance or transfer to the Deal Agent; and
(iii) after giving effect thereto, no Payout Event or event which
with notice or lapse of time would constitute a Payout Event shall have
occurred.
SECTION 6.18 LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS.
--------------------------------------------------
Except as provided herein, neither the Servicer nor any of the
directors or officers or employees or agents of the Servicer shall be under any
liability to the Deal Agent, the Purchasers or any other Person for any action
taken or for refraining from the taking of any action pursuant to this Agreement
whether arising from express or implied duties under this Agreement; provided,
--------
however, that this provision shall not protect the Servicer or any such Person
- -------
against any liability which would otherwise be imposed by reason of its willful
misfeasance, bad faith or gross negligence in the performance of duties or by
reason of its willful misconduct hereunder.
SECTION 6.19 INDEMNIFICATION OF THE SELLER, THE BACKUP SERVICER, THE
-------------------------------------------------------
COLLATERAL CUSTODIAN, THE DEAL AGENT AND THE PURCHASERS.
-------------------------------------------------------
The Servicer shall indemnify and hold harmless the Seller, the Backup
Servicer, the Collateral Custodian, the Deal Agent, the Liquidity Agent and each
Purchaser (collectively, the "Indemnified Persons") from and against any loss,
liability, expense, damage or injury suffered or sustained by any Indemnified
Person by reason of any acts, omissions or alleged acts or omissions of the
Servicer, including, but not limited to any judgment, award, settlement,
reasonable attorneys' fees and other costs or expenses incurred in connection
with the defense of any actual or threatened action, proceeding or claim.
Notwithstanding the foregoing, the Servicer shall not indemnify an Indemnified
Person if such loss, liability, expense, damage or injury results or arises (i)
as a result of fraud, gross negligence or breach of fiduciary duty by such
Indemnified Person; and (ii) under any Tax law, including without limitation any
federal, state or local income or franchise taxes or any other Tax imposed on or
measured by income (or any interest or penalties with respect thereto or arising
from a failure
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to comply therewith) required to be paid by the Seller, the Backup Servicer, the
Collateral Custodian, the Deal Agent, the Liquidity Agent or the Purchasers in
connection herewith to any taxing authority. The provisions of this indemnity
shall run directly to and be enforceable by an injured party subject to the
limitations hereof.
Any indemnification pursuant to this Section shall not be payable from
the Assets.
The obligations of the Servicer under this Section 6.19 shall survive
the resignation or removal of the Deal Agent, the Liquidity Agent, the Backup
Servicer or the Collateral Custodian and the termination of this Agreement.
SECTION 6.20 THE SERVICER NOT TO RESIGN.
--------------------------
The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon determination that (i) the performance of its duties
hereunder is or becomes impermissible under applicable law and (ii) there is no
reasonable action which the Servicer could take to make the performance of its
duties hereunder permissible under applicable law. Any such determination
permitting the resignation of the Servicer shall be evidenced as to clause (i)
above by an Opinion of Counsel to such effect delivered to the Deal Agent and
the Backup Servicer. No such resignation shall become effective until a
Successor Servicer shall have assumed the responsibilities and obligations of
the Servicer in accordance with Section 6.25.
SECTION 6.21 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
-----------------------------------------------
REGARDING THE CONTRACTS.
-----------------------
The Collateral Custodian shall provide to the Deal Agent access to the
Contract Files and all other documentation regarding the Contracts in the Asset
Pool and the related Equipment in such cases where the Deal Agent is required in
connection with the enforcement of the rights or interests of the Purchasers, or
by applicable statutes or regulations to review such documentation, such access
being afforded without charge but only (i) upon reasonable prior request, (ii)
during normal business hours and (iii) subject to the Servicer's and Collateral
Custodian's normal security and confidentiality procedures. Prior to the
Closing Date and periodically thereafter at the discretion of the Deal Agent,
the Deal Agent may review the Servicer's collection and administration of the
Contracts in order to assess compliance by the Servicer with the Servicer's
written policies and procedures, as well as with this Agreement and may conduct
an audit of the Contracts and Contract Files in conjunction with such a review.
Such review shall be reasonable in scope and shall be completed in a reasonable
period of time.
SECTION 6.22 BACKUP SERVICER.
---------------
The Backup Servicer shall perform the obligations from time to time
applicable to it under this Agreement, which shall include, following the
resignation or removal of the
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Servicer hereunder, all of the obligations of the Servicer hereunder, except as
otherwise specifically set forth herein.
[The Backup Servicer hereby agrees to defend and indemnify the
Purchasers, the Deal Agent and the Liquidity Agent against any and all claims,
damages, losses, liabilities, costs and expenses whatsoever (including
reasonable attorney's fees and disbursements) which any of the Purchasers, the
Deal Agent or the Liquidity Agent may incur by reason of or in connection with
any action taken by the Backup Servicer relative to any Asset (other than any
such action taken solely and strictly in accordance with written instructions
received by the Backup Servicer from the Deal Agent and not involving any
negligence or willful misconduct on the part of the Backup Servicer), or any
failure of the Backup Servicer to take an action relative to any Asset
constituting negligence or willful misconduct on the part of the Servicer,
including any action or failure to act which causes any Asset or the realization
of Collections to fail to comply with the terms and conditions of such Asset or
the provisions of any Requirement of Law applicable to the Seller, the Backup
Servicer, the Deal Agent, the Liquidity Agent or any Purchaser. None of the
Deal Agent, the Liquidity Agent or any Purchaser shall have any obligation to
take any action or commence any proceedings to realize upon any Defaulted
Contract or to enforce any of its rights or remedies with respect thereto or
with respect to the Seller as a condition to the right of any of the Deal Agent,
the Liquidity Agent or any Purchaser to obtain indemnification from the Backup
Servicer under this subsection.]
As compensation for its back-up servicing obligations hereunder, the
Backup Servicer shall be entitled to receive a back-up servicing fee in respect
of each Monthly Period (or portion thereof) until the first to occur of the date
on which the Backup Servicer becomes a Successor Servicer, resigns or is removed
as Backup Servicer or termination of this Agreement (the "Backup Servicing
Fee"), payable monthly in arrears on the related Payment Date, in an amount
equal to one-twelfth of the product of (i) the Backup Servicer Fee Rate and (ii)
the ADCB on the first day of the preceding Monthly Period.
Subject to the terms of the Backup Servicing Agreement, the Backup
Servicer may resign at any time by not less than 180 days notice to the Deal
Agent, the Liquidity Agent, the Servicer, the Seller and the Originator. In
addition, the Backup Servicer may be removed without cause by the Deal Agent by
notice then given in writing to the Servicer, the Seller and the Backup
Servicer. In the event of any such resignation or removal, the Backup Servicer
may be replaced by (i) the Servicer, acting with the consent of the Deal Agent
or (ii) if no such replacement is appointed within 30 days following such
removal or resignation, by the Deal Agent. [However, the Backup Servicer shall
not be relieved of its back-up servicing obligations until such replacement is
consummated.]
SECTION 6.23 IDENTIFICATION OF RECORDS.
-------------------------
The Servicer shall clearly and unambiguously identify each Contract in
the Asset Pool and the related Equipment in its computer or other records to
reflect that such
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Contracts and Equipment have been transferred to and are owned by the Seller and
that an interest therein has been transferred by the Seller pursuant to this
Agreement.
SECTION 6.24 SERVICER DEFAULTS.
-----------------
If any one of the following events (a "Servicer Default") shall occur
and be continuing:
(a) any failure by the Servicer to make any payment, transfer or
deposit or to give instructions or notice to the Deal Agent as required by this
Agreement, or to deliver any required Monthly Report or other Required Reports
hereunder on or before the date occurring three Business Days after the date
such payment, transfer, deposit, instruction or notice or report is required to
be made or given, as the case may be, under the terms of this Agreement;
(b) any failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of the
Servicer set forth in this Agreement which has a material adverse effect on the
Purchasers, which continues unremedied for a period of 30 days after the first
to occur of (i) the date on which written notice of such failure requiring the
same to be remedied shall have been given to the Servicer by the Deal Agent and
(ii) the date on which the Servicer becomes aware thereof;
(c) any representation, warranty or certification made by the
Servicer in this Agreement or in any certificate delivered pursuant to this
Agreement shall prove to have been incorrect when made, which has a material
adverse effect on the Purchasers and which continues to be unremedied for a
period of 30 days after the first to occur of (i) the date on which written
notice of such incorrectness requiring the same to be remedied shall have been
given to the Servicer by the Deal Agent and (ii) the date on which the Servicer
becomes aware thereof;
(d) an Insolvency Event shall occur with respect to the Servicer;
(e) an Insolvency Event shall occur with respect to the Subservicer
and the Seller fails to replace the Subservicer with the Backup Servicer or
other acceptable party within 30 days;
(f) any material delegation of the Servicer's or Subservicer's duties
which is not permitted by Section 7.1;
(g) any financial or Asset information reasonably requested by the
Deal Agent or the Purchaser as provided herein is not reasonably provided as
requested;
(h) the rendering against the Servicer of a final judgment, decree or
order for the payment of money in excess of U.S. $1,000,000 and the continuance
of such judgment, decree or order unsatisfied and in effect for any period of 61
consecutive days without a stay of execution;
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(i) the failure of the Servicer to make any payment due with respect
to aggregate recourse debt or other obligations with an aggregate principal
amount exceeding U.S. $1,000,000 or the occurrence of any event or condition
which would permit acceleration of such recourse debt or other obligations if
such event or condition has not been waived;
(j) any change in the management of the Servicer relating to the
positions of President, CEO, Chairman of the Board and Executive Vice President;
or
(k) any change in the control of the Servicer which takes the form of
either a merger or consolidation in which the Servicer is not the surviving
entity, then, so long as such Servicer Default shall not have been remedied, the
Deal Agent, by written notice to the Servicer (a "Termination Notice"), may
terminate all of the rights and obligations of the Servicer as Servicer under
this Agreement.
SECTION 6.25 APPOINTMENT OF SUCCESSOR SERVICER.
---------------------------------
(a) On and after the receipt by the Servicer of a Termination Notice
pursuant to Section 6.24, the Servicer shall continue to perform all servicing
functions under this Agreement until the date specified in the Termination
Notice or otherwise specified by the Deal Agent in writing or, if no such date
is specified in such Termination Notice or otherwise specified by the Deal
Agent, until a date mutually agreed upon by the Servicer and the Deal Agent.
The Deal Agent may at the time described in the immediately preceding sentence
in its sole discretion, appoint the Backup Servicer as the Servicer hereunder,
and the Backup Servicer shall on such date assume all obligations of the
Servicer hereunder, and all authority and power of the Servicer under this
Agreement shall pass to and be vested in the Backup Servicer; provided, however,
-------- -------
that the Successor Servicer shall not (i) be responsible or liable for any past
actions or omissions of the outgoing Servicer or (ii) be obligated to make
Servicer Advances. In the event that the Deal Agent does not so appoint the
Backup Servicer, there is no Backup Servicer or the Backup Servicer is unwilling
or unable to assume such obligations on such date, the Deal Agent shall as
promptly as possible appoint a successor servicer (the Backup Servicer or any
such other successor, the "Successor Servicer"), and such Successor Servicer
shall accept its appointment by a written assumption in a form acceptable to the
Deal Agent. If the Deal Agent within 60 days of receipt of a Termination Notice
is unable to obtain any bids from eligible servicers and the Servicer delivers
an Officer's Certificate to the effect that it cannot in good faith cure the
Servicer Default which gave rise to a transfer of servicing, then the Deal Agent
shall offer the Seller the right to accept retransfer of all the Assets and the
Seller may accept re-transfer of all the Assets, provided, however, that if the
-------- -------
long-term unsecured debt obligations of the Seller are not rated at the time of
such purchase at least investment grade by each rating agency providing a rating
in respect of such long-term unsecured debt obligations, no such re-transfer
shall occur unless the Seller shall deliver an Opinion of Counsel reasonably
acceptable to the Deal Agent that such re-transfer would not constitute a
fraudulent conveyance of the Seller. The amount to be paid and deposited in
respect of such re-transfer shall be equal to the sum of the Capital outstanding
plus all Yield that has accrued thereon and that will accrue thereon. In the
event that a Successor Servicer has not been appointed and has not accepted its
appointment at the time when the Servicer
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ceases to act as Servicer, the Deal Agent shall petition a court of competent
jurisdiction to appoint any established financial institution having a net worth
of not less than U.S. $50,000,000 and whose regular business includes the
servicing of Contracts as the Successor Servicer hereunder.
(b) Upon its appointment, the Backup Servicer or the Successor
Servicer, as applicable, shall be the successor in all respects to the Servicer
with respect to servicing functions under this Agreement and shall be subject to
all the responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions hereof, and all references in this
Agreement to the Servicer shall be deemed to refer to the Backup Servicer or the
Successor Servicer, as applicable.
(c) All authority and power granted to the Servicer under this
Agreement shall automatically cease and terminate upon termination of this
Agreement and shall pass to and be vested in the Seller and, without limitation,
the Seller is hereby authorized and empowered to execute and deliver, on behalf
of the Servicer, as attorney-in-fact or otherwise, all documents and other
instruments, and to do and accomplish all other acts or things necessary or
appropriate to effect the purposes of such transfer of servicing rights. The
Servicer agrees to cooperate with the Seller in effecting the termination of the
responsibilities and rights of the Servicer to conduct servicing on the
Contracts in the Asset Pool.
SECTION 6.26 NOTIFICATION.
------------
Upon the Servicer becoming aware of the occurrence of any Servicer
Default, the Servicer shall immediately give written notice thereof to the Deal
Agent and the Backup Servicer.
SECTION 6.27 PROTECTION OF RIGHT, TITLE AND INTEREST TO ASSETS.
-------------------------------------------------
(a) The Servicer shall cause this Agreement, all amendments hereto
and/or all financing statements and continuation statements and any other
necessary documents covering the right, title and interest of the Deal Agent as
agent for the Purchaser and of the Purchasers to the Assets to be promptly
recorded, registered and filed, and at all times to be kept recorded, registered
and filed, all in such manner and in such places as may be required by law fully
to preserve and protect the right, title and interest of the Deal Agent as agent
for the Purchasers hereunder to all property comprising the Assets. The
Servicer shall deliver to the Deal Agent file-stamped copies of, or filing
receipts for, any document recorded, registered or filed as provided above, as
soon as available following such recording, registration or filing. The Seller
shall cooperate fully with the Servicer in connection with the obligations set
forth above and will execute any and all documents reasonably required to
fulfill the intent of this subsection 6.27(a).
(b) The Servicer will give the Deal Agent at least 45 days prior
written notice of any relocation of any office from which it services Contracts
in the Asset Pool or keeps the Contract Files or of its principal executive
office and whether, as a result of such relocation, the applicable provisions of
the UCC or any other applicable law governing the
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perfection of interests in property would require the filing of any amendment of
any previously filed financing or continuation statement or of any new financing
statement and shall file such financing statements or amendments as may be
necessary to continue the perfection of the security interest of the Deal Agent
as agent for the Purchasers in the Contracts in the Asset Pool and the proceeds
thereof. The Servicer will at all times maintain each office from which it
services Contracts in the Asset Pool within the United States of America.
SECTION 6.28 SUBSERVICERS.
------------
The Servicer shall have the right to subcontract pursuant to a written
agreement with the Subservicer and such other Persons as the Deal Agent and the
Purchasers may approve in writing for the performance of the duties and
obligations of the Servicer hereunder. The Deal Agent shall be notified of all
subcontracts with subservicers and provided a copy thereof. Notwithstanding the
performance of any of its obligations hereunder by any subservicer, the Servicer
shall remain obligated and liable to the Deal Agent and the Purchasers for the
servicing of the Contracts in accordance with the provisions of this Agreement,
without any diminution of such obligation or liability by virtue of such
performance by any subservicer. The fees and expenses of any such subservicer
shall be as agreed between the Servicer and such subservicer from time to time
and neither the Issuer, the Deal Agent nor any Purchaser shall have any
responsibility therefor. Servicer covenants and agrees that in the event the
Deal Agent and the Purchasers shall notify the Servicer that they have reason to
believe that a subservicer would be unable to perform its obligations under the
applicable subservicing agreement, it shall terminate all of the rights and
obligations of such subservicer under such subservicing agreement and appoint
another subservicer satisfactory to the Deal Agent and the Purchasers.
ARTICLE VII
PAYOUT EVENTS
SECTION 7.1 PAYOUT EVENTS.
-------------
If any of the following events ("Payout Events") shall occur:
(a) as of any Reporting Date, the Delinquency Ratio for the preceding
Determination Date exceeds 4.5%;
(b) as of any Reporting Date, the Default Ratio for the preceding
Determination Date exceeds 3.0%;
(c) the Reinvestment Termination Date shall have occurred;
(d) the level of Capital exceeds the Capital Limit and the Seller does
not, within one Business Day, contribute Eligible Contracts and/or cash
collateral sufficient to cause the Capital to comply with the Capital Limit;
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(e) the Seller is not in compliance with the Portfolio Concentration
Criteria;
(f) a Servicer Default occurs and is continuing;
(g) (i) failure on the part of the Seller to make any payment or
deposit required by the terms of this Agreement on the day such payment or
deposit is required to be made or
(ii) failure on the part of the Seller to observe or perform any
of its covenants or agreements set forth in this Agreement, which failure
has a material adverse effect on the interests of the Deal Agent, any
Purchaser, the Liquidity Agent or any Investor and which continues
unremedied for a period of 30 days or more after written notice to Seller;
provided, that only a five day cure period shall apply in the case of a
--------
failure by the Seller to observe its covenants not to grant a security
interest or otherwise intentionally create a Lien on the Contracts;
(h) any representation or warranty made by the Seller in this
Agreement or any information required to be given by the Seller to the Deal
Agent to identify Contracts pursuant to this Agreement, shall prove to have been
incorrect in any material respect when made or delivered and which continues to
be incorrect in any material respect for a period of 30 days after written
notice or actual knowledge thereof;
(i) the occurrence of an Insolvency Event relating to the Originator,
the Seller or the Servicer;
(j) the occurrence of an Insolvency Event relating to the Subservicer
and the Subservicer is not replaced within 30 days;
(k) the passage of 60 days following receipt by the Purchaser of a
written notification of the Seller's intent to terminate the revolving period;
(l) the Seller shall become an "investment company" within the
meaning of the Investment Company Act of 1940, as amended (the "40 Act") or the
arrangements contemplated by this Agreement shall require registration as an
"investment company" within the meaning of the 40 Act;
(m) a regulatory, tax or accounting body has ordered that the
activities of the Seller or any Affiliate of the Seller, contemplated hereby be
terminated or, as a result of any other event or circumstance, the activities of
the Seller contemplated hereby may reasonably be expected to cause the Seller or
any of its respective Affiliates to suffer materially adverse regulatory,
accounting or tax consequences; or
(n) on any day, less than 100% of the Capital is subject to Hedging
Agreements.
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then, and in any such event, the Termination Date shall be deemed to have
occurred automatically upon the occurrence of such event. Upon any such
occurrence, the Deal Agent and the Purchasers shall have, in addition to all
other rights and remedies under this Agreement or otherwise, all other rights
and remedies provided under the UCC of the applicable jurisdiction and other
applicable laws, which rights shall be cumulative.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 INDEMNITIES BY THE SELLER.
-------------------------
Without limiting any other rights which the Deal Agent, the Backup
Servicer, the Collateral Custodian, the Purchasers or any of their respective
Affiliates may have hereunder or under applicable law, the Seller hereby agrees
to indemnify the Deal Agent, the Liquidity Agent, the Purchasers, and each of
their respective Affiliates from and against any and all damages, losses,
claims, liabilities and related costs and expenses, including reasonable
attorneys' fees and disbursements (all of the foregoing being collectively
referred to as "Indemnified Amounts") awarded against or incurred by any of them
arising out of or as a result of this Agreement or the ownership of the Asset
Interest or in respect of any Asset or any Contract, excluding, however, (i)
Indemnified Amounts to the extent resulting from gross negligence or willful
misconduct on the part of the Deal Agent, the Backup Servicer, the Collateral
Custodian, the Liquidity Agent, such Purchaser or such Affiliate and (ii)
recourse (except with respect to payment and performance of obligations provided
for in this Agreement) for Defaulted Contracts. Without limiting the foregoing,
the Seller shall indemnify the Deal Agent, the Backup Servicer, the Collateral
Custodian, the Liquidity Agent, the Purchasers and each of their respective
Affiliates for Indemnified Amounts relating to or resulting from:
(i) any Purchased Asset treated as or represented by the Seller to
be an Eligible Contract which is not at the applicable time an Eligible
Contract;
(ii) reliance on any representation or warranty made or deemed made
by the Seller, the Servicer (if the Originator or one of its Affiliates) or
any of their respective officers under or in connection with this
Agreement, which shall have been false or incorrect in any material respect
when made or deemed made or delivered;
(iii) the failure by the Seller or the Servicer (if the Originator or
one of its Affiliates) to comply with any term, provision or covenant contained
in this Agreement or any agreement executed in connection with this Agreement,
or with any applicable law, rule or regulation with respect to any Asset, the
related Contract, or the nonconformity of any Asset, the related Contract with
any such applicable law, rule or regulation;
(iv) the failure to vest and maintain vested in the relevant
Purchaser or to transfer to such Purchaser, an undivided ownership interest in
the Assets, together with all
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Collections, free and clear of any Adverse Claim whether existing at the time of
any Purchase or at any time thereafter;
(v) the failure to maintain, as of the close of business on each
Business Day prior to the Termination Date, an amount of Capital outstanding
which is less than or equal to the lesser of (x) the Purchase Limit on such
Business Day, or (y) the Capital Limit on such Business Day;
(vi) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any Assets
which are, or are purported to be, Pool Assets, whether at the time of any
Purchase or at any subsequent time;
(vii) any dispute, claim, offset or defense (other than the discharge
in bankruptcy of the Obligor) of the Obligor to the payment of any Asset which
is, or is purported to be, a Purchased Asset (including, without limitation, a
defense based on such Asset or the related Contract not being a legal, valid and
binding obligation of such Obligor enforceable against it in accordance with its
terms), or any other claim resulting from the sale of the merchandise or
services related to such Asset or the furnishing or failure to furnish such
merchandise or services;
(viii) any failure of the Seller or the Servicer (if the Originator or
one of its Affiliates) to perform its duties or obligations in accordance with
the provisions of this Agreement or any failure by the Originator, the Seller or
any Affiliate thereof to perform its respective duties under the Contracts;
(ix) any products liability claim or personal injury or property
damage suit or other similar or related claim or action of whatever sort arising
out of or in connection with merchandise or services which are the subject of
any Asset or Contract;
(x) the failure by Seller to pay when due any Taxes, including
without limitation, sales, excise or personal property taxes payable in
connection with the Pool Assets;
(xi) any repayment by the Deal Agent, the Liquidity Agent or a
Purchaser of any amount previously distributed in reduction of Capital or
payment of Yield or any other amount due hereunder, in each case which amount
the Deal Agent, the Liquidity Agent or a Purchaser believes in good faith is
required to be repaid;
(xii) the commingling of Collections of Pool Assets at any time with
other funds;
(xiii) any investigation, litigation or proceeding related to this
Agreement or the use of proceeds of Purchases or reinvestments or the ownership
of the Asset Interest or in respect of any Asset or Contract;
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(xiv) any failure by the Seller to give reasonably equivalent value
to the Originator in consideration for the transfer by the Originator to the
Seller of any Assets or any attempt by any Person to void or otherwise avoid any
such transfer under any statutory provision or common law or equitable action,
including, without limitation, any provision of the Bankruptcy Code; or
(xv) the failure of the Seller, the Originator or any of their
respective agents or representatives to remit to the Servicer or the Deal Agent,
Collections of Pool Assets remitted to the Seller or any such agent or
representative.
Any amounts subject to the indemnification provisions of this Section 8.1 shall
be paid by the Seller to the Deal Agent within two Business Days following the
Deal Agent's demand therefor.
ARTICLE IX
THE DEAL AGENT AND THE LIQUIDITY AGENT
SECTION 9.1 AUTHORIZATION AND ACTION.
------------------------
(a) Each Purchaser hereby designates and appoints the Deal Agent as
Deal Agent hereunder, and authorizes the Deal Agent to take such actions as
agent on its behalf and to exercise such powers as are delegated to the Deal
Agent by the terms of this Agreement together with such powers as are reasonably
incidental thereto. The Deal Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Purchaser, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on the part of the Deal
Agent shall be read into this Agreement or otherwise exist for the Deal Agent.
In performing its functions and duties hereunder, the Deal Agent shall act
solely as agent for the Purchasers and does not assume nor shall be deemed to
have assumed any obligation or relationship of trust or agency with or for the
Seller or any of its successors or assigns. The Deal Agent shall not be
required to take any action which exposes the Deal Agent to personal liability
or which is contrary to this Agreement or applicable law. The appointment and
authority of the Deal Agent hereunder shall terminate at the indefeasible
payment in full of the Aggregate Unpaids or under any fee letter delivered by
the Originator to the Deal Agent and the Purchasers.
(b) Each Investor hereby designates and appoints FUNB as Liquidity
Agent hereunder, and authorizes the Liquidity Agent to take such actions as
agent on its behalf and to exercise such powers as are delegated to the
Liquidity Agent by the terms of this Agreement together with such powers as are
reasonably incidental thereto. The Liquidity Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Investor, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on the part of the
Liquidity Agent shall be read into this Agreement or otherwise exist for the
Liquidity Agent. In performing its functions and duties hereunder, the
Liquidity Agent shall act solely as agent for the Investors and does not assume
nor shall be
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deemed to have assumed any obligation or relationship of trust or agency with or
for the Seller or any of its successors or assigns. The Liquidity Agent shall
not be required to take any action which exposes the Liquidity Agent to personal
liability or which is contrary to this Agreement or applicable law. The
appointment and authority of the Liquidity Agent hereunder shall terminate at
the indefeasible payment in full of all Capital, Yield and any amount at any
time due hereunder or under any fee letter delivered by the Originator to the
Deal Agent and the Purchasers.
SECTION 9.2 DELEGATION OF DUTIES.
--------------------
(a) The Deal Agent may execute any of its duties under this Agreement
by or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Deal Agent shall
not be responsible for the negligence or misconduct of any agents or attorneys-
in-fact selected by it with reasonable care.
(b) The Liquidity Agent may execute any of its duties under this
Agreement by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. The
Liquidity Agent shall not be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by it with reasonable care.
SECTION 9.3 EXCULPATORY PROVISIONS.
----------------------
(a) Neither the Deal Agent nor any of its directors, officers, agents
or employees shall be (i) liable for any action lawfully taken or omitted to be
taken by it or them under or in connection with this Agreement (except for its,
their or such Person's own gross negligence or willful misconduct or, in the
case of the Deal Agent, the breach of its obligations expressly set forth in
this Agreement), or (ii) responsible in any manner to any of the Purchasers for
any recitals, statements, representations or warranties made by the Seller
contained in this Agreement or in any certificate, report, statement or other
document referred to or provided for in, or received under or in connection
with, this Agreement or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other document furnished
in connection herewith, or for any failure of the Seller to perform its
obligations hereunder, or for the satisfaction of any condition specified in
Article III. The Deal Agent shall not be under any obligation to any Purchaser
to ascertain or to inquire as to the observance or performance of any of the
agreements or covenants contained in, or conditions of, this Agreement, or to
inspect the properties, books or records of the Seller. The Deal Agent shall
not be deemed to have knowledge of any Payout Event unless the Deal Agent has
received notice from the Seller or a Purchaser.
(b) Neither the Liquidity Agent nor any of its directors, officers,
agents or employees shall be (i) liable for any action lawfully taken or omitted
to be taken by it or them under or in connection with this Agreement (except for
its, their or such Person's own gross negligence or willful misconduct or, in
the case of the Liquidity Agent, the breach of its obligations expressly set
forth in this Agreement), or (ii) responsible in any manner to the Deal Agent or
any of the Purchasers for any recitals, statements, representations or
warranties made by the Seller contained in this Agreement or in any certificate,
report, statement or other
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document referred to or provided for in, or received under or in connection
with, this Agreement or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other document furnished
in connection herewith, or for any failure of the Seller to perform its
obligations hereunder, or for the satisfaction of any condition specified in
Article III. The Liquidity Agent shall not be under any obligation to the Deal
Agent or any Purchaser to ascertain or to inquire as to the observance or
performance of any of the agreements or covenants contained in, or conditions
of, this Agreement, or to inspect the properties, books or records of the
Seller. The Liquidity Agent shall not be deemed to have knowledge of any Payout
Event unless the Liquidity Agent has received notice from the Seller, the Deal
Agent or a Purchaser.
SECTION 9.4 RELIANCE.
--------
(a) The Deal Agent shall in all cases be entitled to rely, and shall
be fully protected in relying, upon any document or conversation believed by it
to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Seller), independent accountants and other
experts selected by the Deal Agent. The Deal Agent shall in all cases be fully
justified in failing or refusing to take any action under this Agreement or any
other document furnished in connection herewith unless it shall first receive
such advice or concurrence of VFCC or the Required Investors or all of the
Purchasers, as applicable, as it deems appropriate or it shall first be
indemnified to its satisfaction by the Purchasers, provided that unless and
until the Deal Agent shall have received such advice, the Deal Agent may take or
refrain from taking any action, as the Deal Agent shall deem advisable and in
the best interests of the Purchasers. The Deal Agent shall in all cases be
fully protected in acting, or in refraining from acting, in accordance with a
request of VFCC or the Required Investors or all of the Purchasers, as
applicable, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Purchasers.
(b) The Liquidity Agent shall in all cases be entitled to rely, and
shall be fully protected in relying, upon any document or conversation believed
by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Seller), independent accountants
and other experts selected by the Liquidity Agent. The Liquidity Agent shall in
all cases be fully justified in failing or refusing to take any action under
this Agreement or any other document furnished in connection herewith unless it
shall first receive such advice or concurrence of Required Investors as it deems
appropriate or it shall first be indemnified to its satisfaction by the
Investors, provided that unless and until the Liquidity Agent shall have
--------
received such advice, the Liquidity Agent may take or refrain from taking any
action, as the Liquidity Agent shall deem advisable and in the best interests of
the Investors. The Liquidity Agent shall in all cases be fully protected in
acting, or in refraining from acting, in accordance with a request of the
Required Investors and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Investors.
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SECTION 9.5 NON-RELIANCE ON DEAL AGENT, LIQUIDITY AGENT AND OTHER
-----------------------------------------------------
PURCHASERS.
----------
Each Purchaser expressly acknowledges that neither the Deal Agent, the
Liquidity Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates has made any representations or warranties to it
and that no act by the Deal Agent hereafter taken, including, without
limitation, any review of the affairs of the Seller, shall be deemed to
constitute any representation or warranty by the Deal Agent or the Liquidity
Agent. Each Purchaser represents and warrants to the Deal Agent and to the
Liquidity Agent that it has and will, independently and without reliance upon
the Deal Agent, the Liquidity Agent or any other Purchaser and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, operations, property, prospects,
financial and other conditions and creditworthiness of the Seller and made its
own decision to enter into this Agreement.
SECTION 9.6 REIMBURSEMENT AND INDEMNIFICATION.
---------------------------------
The Investors agree to reimburse and indemnify VFCC, the Deal Agent,
the Liquidity Agent and each of their respective officers, directors, employees,
representatives and agents ratably according to their pro rata shares, to the
extent not paid or reimbursed by the Seller (i) for any amounts for which VFCC,
the Liquidity Agent, acting in its capacity as Liquidity Agent, or the Deal
Agent, acting in its capacity as Deal Agent, is entitled to reimbursement by the
Seller hereunder and (ii) for any other expenses incurred by VFCC, the Liquidity
Agent, acting in its capacity as Liquidity Agent, or the Deal Agent, in its
capacity as Deal Agent and acting on behalf of the Purchasers, in connection
with the administration and enforcement of this Agreement.
SECTION 9.7 DEAL AGENT AND LIQUIDITY AGENT IN THEIR INDIVIDUAL
--------------------------------------------------
CAPACITIES.
----------
The Deal Agent, the Liquidity Agent and each of their respective
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Seller or any Affiliate of the Seller as though the
Deal Agent or the Liquidity Agent, as the case may be, were not the Deal Agent
or the Liquidity Agent, as the case may be, hereunder. With respect to the
acquisition of Asset Interests pursuant to this Agreement, the Deal Agent, the
Liquidity Agent and each of their respective Affiliates shall have the same
rights and powers under this Agreement as any Purchaser and may exercise the
same as though it were not the Deal Agent or the Liquidity Agent, as the case
may be, and the terms "Investor," "Purchaser," "Investors" and "Purchasers"
shall include the Deal Agent or the Liquidity Agent, as the case may be, in its
individual capacity.
SECTION 9.8 SUCCESSOR DEAL AGENT OR LIQUIDITY AGENT.
---------------------------------------
(a) The Deal Agent may, upon 5 days' notice to the Seller and the
Purchasers, and the Deal Agent will, upon the direction of all of the Purchasers
(other than the Deal Agent, in its individual capacity) resign as Deal Agent.
If the Deal Agent shall resign,
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then the Required Investors during such 5-day period shall appoint from among
the Purchasers a successor agent. If for any reason no successor Deal Agent is
appointed by the Required Investors during such 5-day period, then effective
upon the expiration of such five-day period, the Purchasers shall perform all of
the duties of the Deal Agent hereunder and the Seller shall make all payments in
respect of the Aggregate Unpaids or under any fee letter delivered by the
Originator to the Deal Agent and the Purchasers directly to the applicable
Purchaser and for all purposes shall deal directly with the Purchasers. After
any retiring Deal Agent's resignation hereunder as Deal Agent, the provisions of
this Article IX and Article VIII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Deal Agent under this Agreement.
(b) The Liquidity Agent may, upon 5 days' notice to the Seller, the
Deal Agent and the Investors, and the Liquidity Agent will, upon the direction
of all of the Investors (other than the Liquidity Agent, in its individual
capacity) resign as Liquidity Agent. If the Liquidity Agent shall resign, then
the Required Investors during such 5-day period shall appoint from among the
Investors a successor Liquidity Agent. If for any reason no successor Liquidity
Agent is appointed by the Required Investors during such 5-day period, then
effective upon the expiration of such five-day period, the Investors shall
perform all of the duties of the Liquidity Agent hereunder and all payments in
respect of the Capital, Yield and any amount due at any time hereunder or under
any fee letter delivered by the Originator to the Deal Agent and the Purchasers
directly to the applicable Investor and for all purposes shall deal directly
with the Investors. After any retiring Liquidity Agent's resignation hereunder
as Liquidity Agent, the provisions of this Article IX and Article VIII shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Liquidity Agent under this Agreement.
ARTICLE X
ASSIGNMENTS; PARTICIPATIONS
SECTION 10.1 ASSIGNMENTS AND PARTICIPATIONS.
------------------------------
(a) Each Investor may upon at least 30 days notice to VFCC, the Deal
Agent, the Liquidity Agent and S&P and Moody's, assign to one or more banks or
other entities all or a portion of its rights and obligations under this
Agreement; provided, however, that (i) each such assignment shall be of a
-------- -------
constant, and not a varying percentage of all of the assigning Investor's rights
and obligations under this Agreement, (ii) the amount of the Commitment of the
assigning Investor being assigned pursuant to each such assignment (determined
as of the date of the Assignment and Acceptance with respect to such assignment)
shall in no event be less than the lesser of (A) $15,000,000 or an integral
multiple of $1,000,000 in excess of that amount and (B) the full amount of the
assigning Investor's Commitment, (iii) each such assignment shall be to an
Eligible Assignee, (iv) the parties to each such assignment shall execute and
deliver to the Deal Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with a processing and recordation fee of
$3,500 or such lesser amount as shall be approved by the Deal Agent and
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(v) the parties to each such assignment shall have agreed to reimburse the Deal
Agent, the Liquidity Agent and VFCC for all fees, costs and expenses (including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel
for each of the Deal Agent, the Liquidity Agent and VFCC) incurred by the Deal
Agent, the Liquidity Agent and VFCC, respectively, in connection with such
assignment, and provided further that upon the effective date of such assignment
-------- -------
the provisions of Section 3.03(f) of the Administration Agreement shall be
satisfied. Upon such execution, delivery and acceptance by the Deal Agent and
the Liquidity Agent and the recording by the Deal Agent, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be the date of acceptance thereof by the Deal Agent and the Liquidity
Agent, unless a later date is specified therein, (i) the assignee thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment and Acceptance, have the
rights and obligations of an Investor hereunder and (ii) the Investor assignor
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under this Agreement (and, in the case of
an Assignment and Acceptance covering all or the remaining portion of an
assigning Investor's rights and obligations under this Agreement, such Investor
shall cease to be a party hereto).
(b) By executing and delivering an Assignment and Acceptance, the
Investor assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Investor makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such assigning Investor makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of VFCC or the performance or observance by VFCC of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of such financial statements and other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon the Deal Agent or the
Liquidity Agent, such assigning Investor or any other Investor and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement; (v) such assigning Investor and such assignee confirm that such
assignee is an Eligible Assignee; (vi) such assignee appoints and authorizes
each of the Deal Agent and the Liquidity Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement as are delegated to
such agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as an Investor.
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(c) The Deal Agent shall maintain at its address referred to herein a
copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Investors and the
Commitment of, and the Capital of, each Asset interest owned by each investor
from time to time (the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and VFCC, the
Seller and the Investors may treat each Person whose name is recorded in the
Register as an Investor hereunder for all purposes of this Agreement. The
Register shall be available for inspection by VFCC, the Liquidity Agent or any
Investor at any reasonable time and from time to time upon reasonable prior
notice.
(d) Subject to the provisions of Section 10.1(a), upon its receipt of
an Assignment and Acceptance executed by an assigning Investor and an assignee,
the Deal Agent and the Liquidity Agent shall each, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit D
---------
hereto, accept such Assignment and Acceptance, and the Deal Agent shall then (i)
record the information contained therein in the Register and (ii) give prompt
notice thereof to VFCC.
(e) Each Investor may sell participations to one or more banks or
other entities in or to all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment and each Asset Interest owned by it); provided, however, that (i)
-------- -------
such Investor's obligations under this Agreement (including, without limitation,
its Commitment hereunder) shall remain unchanged, (ii) such Investor shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Deal Agent and the other Investors shall continue
to deal solely and directly with such Investor in connection with such
Investor's rights and obligations under this Agreement, and provided further
-------- -------
that the Deal Agent shall have confirmed that upon the effective date of such
participation the provisions of Section 3.03(f) of the Administration Agreement
shall be satisfied. Notwithstanding anything herein to the contrary, each
participant shall have the rights of an Investor (including any right to receive
payment) under Sections 2.12 and 2.13; provided, however, that no participant
-------- -------
shall be entitled to receive payment under either such Section in excess of the
amount that would have been payable under such Section by the Seller to the
Investor granting its participation had such participation not been granted, and
no Investor granting a participation shall be entitled to receive payment under
either such Section in an amount which exceeds the sum of (i) the amount to
which such Investor is entitled under such Section with respect to the any
portion of any Asset Interest owned by such Investor which is not subject to any
participation plus (ii) the aggregate amount to which its participants are
----
entitled under such Sections with respect to the amounts of their respective
participations. With respect to any participation described in this Section
10.1, the participant's rights as set forth in the agreement between such
participant and the applicable Investor to agree to or to restrict such
Investor's ability to agree to any modification, waiver or release of any of the
terms of this Agreement or to exercise or refrain from exercising any powers or
rights which such Investor may have under or in respect of this Agreement shall
be limited to the right to consent to any of the matters set forth in Section
11.1 of this Agreement.
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(f) Each Investor may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
10.1, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Seller or VFCC furnished to such
Investor by or on behalf of the Seller or VFCC.
(g) In the event (i) an Investor ceases to qualify as an Eligible
Assignee, or (ii) an Investor makes demand for compensation pursuant to Section
2.12 or Section 2.13, VFCC may, and, upon the direction of the Seller and prior
to the occurrence of an Event of Termination, shall, in any such case,
notwithstanding any provision to the contrary herein, replace such Investor with
an Eligible Assignee by giving three Business Days' prior written notice to such
Investor. In the event of the replacement of an Investor, such Investor agrees
(i) to assign all of its rights and obligations hereunder to an Eligible
Assignee selected by VFCC upon payment to such Investor of the amount of such
Investors Asset Interests together with any accrued and unpaid Yield thereon,
all accrued and unpaid commitment fees owing to such Investor and all other
amounts owing to such Investor hereunder and (ii) to execute and deliver an
Assignment and Acceptance and such other documents evidencing such assignment as
shall be necessary or reasonably requested by VFCC or the Deal Agent. In the
event that any Investor ceases to qualify as an Eligible Assignee, such affected
Investor agrees (1) to give the Deal Agent, the Seller and VFCC prompt written
notice thereof and (2) subject to the following proviso, to reimburse the Deal
Agent, the Liquidity Agent, the Seller, VFCC and the relevant assignee for all
fees, costs and expenses (including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for each of the Deal Agent, the Liquidity
Agent, the Seller and VFCC and such assignee) incurred by the Deal Agent, the
Liquidity Agent, the Seller, VFCC and such assignee, respectively, in connection
with any assignment made pursuant to this Section 10.1(g) by such affected
Investor; provided, however, that such affected Investor's liability for such
-------- -------
costs, fees and expenses shall be limited to the amount of any up-front fees
paid to such affected Investor at the time that it became a party to this
Agreement.
(h) Nothing herein shall prohibit any Investor from pledging or
assigning as collateral any of its rights under this Agreement to any Federal
Reserve Bank in accordance with applicable law and any such pledge or collateral
assignment may be made without compliance with Section 10.1(a) or Section
10.1(b).
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 AMENDMENTS AND WAIVERS.
----------------------
(a) Except as provided in this Section 11.1, no amendment, waiver or
other modification of any provision of this Agreement shall be effective without
the written agreement of the Seller, the Deal Agent, the Backup Servicer, the
Collateral Custodian and the Required Investors. Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
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(b) No amendment, waiver or other modification of this Agreement
shall:
(i) without the consent of each affected Purchaser, (A) extend
the Commitment Termination Date or the date of any payment or deposit of
Collections by the Seller or the Servicer, (B) reduce the rate or extend
the time of payment of Yield (or any component thereof), (C) reduce any fee
payable to the Deal Agent for the benefit of the Purchasers, (D) except
pursuant to Article X hereof, change the amount of the Capital of any
Purchaser, an Investor's pro rata share or an Investor's Commitment, (E)
amend, modify or waive any provision of the definition of Required
Investors or this Section 11.1(b), (F) consent to or permit the assignment
or transfer by the Seller of any of its rights and obligations under this
Agreement or (G) amend or modify any defined term (or any defined term used
directly or indirectly in such defined term) used in clauses (A) through
(E) above in a manner which would circumvent the intention of the
restrictions set forth in such clauses; or
(ii) without the written consent of the Deal Agent, amend, modify
or waive any provision of this Agreement if the effect thereof is to affect
the rights or duties of such Agent.
(c) Notwithstanding the foregoing provisions of this Section 11.1,
without the consent of the Investors, the Deal Agent may, with the consent of
the Seller amend this Agreement solely to add additional Persons as Investors
hereunder. Any modification or waiver shall apply to each of the Purchasers
equally and shall be binding upon the Seller, the Purchasers and the Deal Agent.
SECTION 11.2 NOTICES, ETC.
------------
All notices and other communications provided for hereunder shall,
unless otherwise stated herein, be in writing (including telex communication and
communication by facsimile copy) and mailed, telexed, transmitted or delivered,
as to each party hereto, at its address set forth under its name on the
signature pages hereof or specified in such party's Assignment and Acceptance or
at such other address as shall be designated by such party in a written notice
to the other parties hereto. All such notices and communications shall be
effective, upon receipt, or in the case of (a) notice by mail, five days after
being deposited in the United States mail, first class postage prepaid, (b)
notice by telex, when telexed against receipt of answer back, or (c) notice by
facsimile copy, when verbal communication of receipt is obtained, except that
notices and communications pursuant to Article II shall not be effective until
received with respect to any notice sent by mail or telex.
SECTION 11.3 RATABLE PAYMENTS.
----------------
If any Purchaser, whether by setoff or otherwise, has payment made to
it with respect to any portion of the Aggregate Unpaids owing to such Purchaser
(other than payments received pursuant to Section 7.1 in a greater proportion
than that received by any other Purchaser, such Purchaser agrees, promptly upon
demand, to purchase for cash without recourse or warranty a portion of the
Aggregate Unpaids held by the other Purchasers so that
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after such purchase each Purchaser will hold its ratable proportion of the
Aggregate Unpaids; provided that if all or any portion of such excess amount is
thereafter recovered from such Purchaser, such purchase shall be rescinded and
the purchase price restored to the extent of such recovery, but without
interest.
SECTION 11.4 NO WAIVER, REMEDIES.
-------------------
No failure on the part of the Deal Agent or a Purchaser to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
SECTION 11.5 BINDING EFFECT.
--------------
This Agreement shall be binding upon and inure to the benefit of the
Seller, the Deal Agent, the Backup Servicer, the Collateral Custodian, the
Purchasers and their respective successors and permitted assigns.
SECTION 11.6 TERM OF THIS AGREEMENT.
----------------------
This Agreement, including, without limitation, the Seller's obligation
to observe its covenants set forth in Article V, and the Servicer's obligation
to observe its covenants set forth in Article VI, shall remain in full force and
effect until the Collection Date; provided, however, that the rights and
-------- -------
remedies with respect to any breach of any representation and warranty made or
deemed made by the Seller pursuant to Articles III and IV and the
indemnification and payment provisions of Article VIII and Article IX and the
provisions of Section 11.9 and Section 11.10 shall be continuing and shall
survive any termination of this Agreement.
SECTION 11.7 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF
-------------------------------------------------
OBJECTION TO VENUE.
------------------
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK. EACH OF THE PURCHASERS, THE SELLER, THE
LIQUIDITY AGENT AND THE DEAL AGENT HEREBY AGREES TO THE NON-EXCLUSIVE
JURISDICTION OF ANY FEDERAL COURT LOCATED WITHIN THE STATE OF NEW YORK. EACH OF
THE PARTIES HERETO HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS,
AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY OF THE
AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.
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SECTION 11.8 WAIVER OF JURY TRIAL.
--------------------
TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PURCHASERS, THE
SELLER AND THE DEAL AGENT WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE BETWEEN
THE PARTIES HERETO ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO
THE RELATIONSHIP BETWEEN ANY OF THEM IN CONNECTION WITH THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. INSTEAD, ANY SUCH DISPUTE RESOLVED IN COURT
WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
SECTION 11.9 COSTS, EXPENSES AND TAXES.
-------------------------
(a) In addition to the rights of indemnification granted to the Deal
Agent, the Liquidity Agent, the Purchasers and its Affiliates under Article VIII
hereof, the Seller agrees to pay on demand all costs and expenses of the
Purchasers, the Liquidity Agent, the Backup Servicer, the Collateral Custodian
and the Deal Agent incurred in connection with the preparation, execution,
delivery, administration (including periodic auditing), amendment or
modification of, or any waiver or consent issued in connection with, this
Agreement and the other documents to be delivered hereunder or in connection
herewith, including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for the Deal Agent, the Liquidity Agent, the Backup
Servicer, the Collateral Custodian and the Purchasers with respect thereto and
with respect to advising the Deal Agent, the Liquidity Agent, the Backup
Servicer, the Collateral Custodian and the Purchasers as to their respective
rights and remedies under this Agreement and the other documents to be delivered
hereunder or in connection herewith, and all costs and expenses, if any
(including reasonable counsel fees and expenses), incurred by the Deal Agent,
the Liquidity Agent, the Backup Servicer, the Collateral Custodian or the
Purchasers in connection with the enforcement of this Agreement and the other
documents to be delivered hereunder or in connection herewith.
(b) The Seller shall pay on demand any and all commissions of
placement agents and dealers in respect of commercial paper notes issued to fund
the Purchase of any Asset Interest and any and all stamp, sales, excise and
other taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing and recording of this Agreement, the other documents
to be delivered hereunder or any agreement or other document providing liquidity
support, credit enhancement or other similar support to the Purchaser in
connection with this Agreement or the funding or maintenance of Purchases
hereunder.
(c) The Seller shall pay on demand all other costs, expenses and
Taxes (excluding income taxes) incurred by any Issuer or any shareholder of such
Issuer ("Other Costs"), including, without limitation, the cost of auditing such
Issuer's books by certified public accountants, the cost of rating such Issuer's
commercial paper by independent financial rating agencies, the Taxes (excluding
income taxes) resulting from such Issuer's operations,
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and the reasonable fees and out-of-pocket expenses of counsel for the Issuer or
any counsel for any general or limited partner or shareholder of the Issuer with
respect to (i) advising such Person as to its rights and remedies under this
Agreement and the other documents to be delivered hereunder or in connection
herewith, (ii) the enforcement of this Agreement and the other documents to be
delivered hereunder or in connection herewith or matters relating to the
Issuer's operations and (iii) advising such Person as to the issuance of the
Issuer's commercial paper notes and action in connection with such issuance.
SECTION 11.10 NO PROCEEDINGS.
--------------
Each of the Seller, the Deal Agent, the Liquidity Agent, the Servicer,
the Subservicer, the Backup Servicer, the Collateral Custodian and the
Purchasers hereby agrees that it will not institute against, or join any other
Person in instituting against VFCC any proceedings of the type referred to in
Section 6.8(c) and 6.9(c) so long as any commercial paper issued by VFCC shall
be outstanding or there shall not have elapsed one year and one day since the
last day on which any such commercial paper shall have been outstanding.
SECTION 11.11 RECOURSE AGAINST CERTAIN PARTIES.
--------------------------------
No recourse under or with respect to any obligation, covenant or
agreement (including, without limitation, the payment of any fees or any other
obligations) of any Purchaser as contained in this Agreement or any other
agreement, instrument or document entered into by it pursuant hereto or in
connection herewith shall be had against any administrator of such Purchaser or
any incorporator, affiliate, stockholder, officer, employee or director of such
Purchaser or of any such administrator, as such, by the enforcement of any
assessment or by any legal or equitable proceeding, by virtue of any statute or
otherwise; it being expressly agreed and understood that the agreements of such
-------- --------- ------ --- ----------
Purchaser contained in this Agreement and all of the other agreements,
instruments and documents entered into by it pursuant hereto or in connection
herewith are, in each case, solely the corporate obligations of such Purchaser,
and that no personal liability whatsoever shall attach to or be incurred by any
administrator of such Purchaser or any incorporator, stockholder, affiliate,
officer, employee or director of such Purchaser or of any such administrator, as
such, or any other of them, under or by reason of any of the obligations,
covenants or agreements of such Purchaser contained in this Agreement or in any
other such instruments, documents or agreements, or which are implied therefrom,
and that any and all personal liability of every such administrator of such
Purchaser and each incorporator, stockholder, affiliate, officer, employee or
director of such Purchaser or of any such administrator, or any of them, for
breaches by such Purchaser of any such obligations, covenants or agreements,
which liability may arise either at common law or at equity, by statute or
constitution, or otherwise, is hereby expressly waived as a condition of and in
consideration for the execution of this Agreement. The provisions of this
Section 11.11 shall survive the termination of this Agreement.
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SECTION 11.12 PROTECTION OF OWNERSHIP INTERESTS OF THE PURCHASERS;
----------------------------------------------------
INTENT OF PARTIES; SECURITY INTEREST.
------------------------------------
(a) The Seller agrees that from time to time, at its expense, it will
promptly execute and deliver all instruments and documents, and take all
actions, that may reasonably be necessary or desirable, or that the Deal Agent
may reasonably request, to perfect, protect or more fully evidence the Asset
Interests and the undivided ownership interest in the Assets in the Asset Pool
represented by such Asset Interests, or to enable the Deal Agent or the
Purchasers to exercise and enforce their rights and remedies hereunder.
(b) If the Seller or the Servicer fails to perform any of its
obligations hereunder after five Business Days notice from the Deal Agent, the
Deal Agent or any Purchaser may (but shall not be required to) perform, or cause
performance of, such obligation; and the Deal Agent's or such Purchaser's costs
and expenses incurred in connection therewith shall be payable by the Seller (if
the Servicer that fails to so perform is the Seller or an Affiliate thereof) as
provided in Article VIII, as applicable. The Seller irrevocably authorizes the
Deal Agent and appoints the Deal Agent as its attorney-in-fact to act on behalf
of the Seller (i) to execute on behalf of the Seller as debtor and to file
financing statements necessary or desirable in the Deal Agents sole discretion
to perfect and to maintain the perfection and priority of the interest of the
Purchasers in the Assets and (ii) to file a carbon, photographic or other
reproduction of this Agreement or any financing statement with respect to the
Assets as a financing statement in such offices as the Deal Agent in its sole
discretion deems necessary or desirable to perfect and to maintain the
perfection and priority of the interests of the Purchasers in the Assets. This
appointment is coupled with an interest and is irrevocable.
(c) The parties hereto intend that the conveyance of Asset Interests
by the Seller to the Purchasers shall be treated as sales for all purposes. If,
despite such intention, a determination is made that such transactions shall not
be treated as sales, then the parties hereto intend that this Agreement
constitutes a security agreement and the transactions effected hereby constitute
secured loans by the Purchasers to the Seller under applicable law. For such
purpose, the Seller hereby transfers, conveys, assigns and grants to the Deal
Agent, for the benefit of the Purchasers, a continuing security interest in all
Assets, all Collections and the proceeds of the foregoing to secure the
repayment of all Capital, all payments at any time due or accrued in respect of
the Yield on any Asset Interest and all other payments at any time due (whether
accrued or due) by the Seller hereunder (including without limit any amount
owing under Article VIII hereof) or under any fee letter to the Deal Agent and
each Purchaser.
SECTION 11.13 CONFIDENTIALITY.
---------------
(a) Each of the Deal Agent, the Purchasers, the Liquidity Agent and
the Seller shall maintain and shall cause each of its employees and officers to
maintain the confidentiality of the Agreement and the other confidential
proprietary information with respect to the other parties hereto and their
respective businesses obtained by it or them in connection with the structuring,
negotiating and execution of the transactions contemplated herein, except
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that each such party and its officers and employees may (i) disclose such
information to its external accountants, attorneys, investors, potential
investors, lenders and potential lenders and the agents of such Persons
("Excepted Persons"), and as required by an applicable law or order of any
judicial or administrative proceeding; provided, however, that each Excepted
--------
Person shall, as a condition to any such disclosure, execute a confidentiality
agreement reasonably satisfactory in form and substance to the Deal Agent to the
effect that such information shall be used solely in connection with such
Excepted Person's evaluation of, or relationship with, the Seller and its
affiliates, and (ii) disclose the existence of the Agreement, but not the
financial terms thereof.
(b) Anything herein to the contrary notwithstanding, the Seller
hereby consents to the disclosure of any nonpublic information with respect to
it (i) to the Deal Agent, the Liquidity Agent or the Purchasers by each other,
(ii) by the Deal Agent or the Purchasers to any prospective or actual assignee
or participant of any of them or (iii) by the Deal Agent, the Liquidity Agent or
a Purchaser to any Rating Agency, Commercial Paper dealer or provider of a
surety, guaranty or credit or liquidity enhancement to a Purchaser and to any
officers, directors, employees, outside accountants and attorneys of any of the
foregoing, provided each such Person is informed of the confidential nature of
such information. In addition, the Purchasers, the Liquidity Agent and the Deal
Agent may disclose any such nonpublic information pursuant to any law, rule,
regulation, direction, request or order of any judicial, administrative or
regulatory authority or proceedings (whether or not having the force or effect
of law).
SECTION 11.14 EXECUTION IN COUNTERPARTS; SEVERABILITY; INTEGRATION.
----------------------------------------------------
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby. This
Agreement contains the final and complete integration of all prior expressions
by the parties hereto with respect to the subject matter hereof and shall
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof, superseding all prior oral or written understandings
other than any fee letter delivered by the Originator to the Deal Agent and the
Purchasers.
[Signature to Follow]
-84-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
THE SELLER: BVFU FUNDING CORP.
By _____________________________
Title:
BVFU Funding Corp.
C/o Bankvest Capital Corp.
114 Turnpike Road
Westboro, MA 01581
Attention: John P. Colton
Facsimile Number: (508) 870-0260
Confirmation Number: (508) 366-7800
THE SERVICER: BANKVEST CAPITAL CORP.
By _____________________________
Title:
Bankvest Capital Corp.
114 Turnpike Road
Westboro, MA 01581
Attention: Mr. John P. Colton
Facsimile Number: (508) 870-0260
Confirmation Number: (508) 366-7800
THE INVESTORS: FIRST UNION NATIONAL BANK
By _____________________________
Title:
Commitment: $75,000,000
First Union National Bank
One First Union Center, TW-6
Charlotte, North Carolina 28288
Attention: Mr. Bill A. Shirley
Facsimile Number: (704) 374-4001
Confimation No: (____)
-85-
<PAGE>
VFCC: VARIABLE FUNDING CAPITAL CORPORATION
By First Union Capital Markets Corp., as
attorney-in-fact
By _____________________________
Title:
Variable Funding Capital Corporation
c/o First Union Capital Markets Corp.
One First Union Center, TW-6
Attention: Mr. Darrell Baber
Facsimile No.: (704) 383-6036
Confirmation No.: (704) 383-9343
With a copy to:
Lord Securities Corp.
Attention:
Facsimile No.: (_____) __________
Confirmation No.: (_____) __________
THE DEAL AGENT: FIRST UNION CAPITAL MARKETS CORP.
By _____________________________
Title:
First Union Capital Markets Corp.
One First Union Center, TW-6
Charlotte, North Carolina 28288
Attention: Mr. Darrell Baber
Facsimile No.: (704) 383-6036
Telephone No.: (704) 383-9343
-86-
<PAGE>
THE LIQUIDITY AGENT: FIRST UNION NATIONAL BANK
By _____________________________
Title:
First Union National Bank
One First Union Center, TW-6
Charlotte, North Carolina 28288
Attention: Mr. Bill A. Shirley
Facsimile No.: (704) 374-4001
Telephone No.: (_____) __________
THE COLLATERAL CUSTODIAN: NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By _____________________________
Title:
Address: Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55779-0070
Attention: Corporate Trust Servicer --
Asset-Backed Administration
Facsimile Number: (612) 667-3539
Confirmation Number: (612) 667-1117
THE BACKUP SERVICER: NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By _____________________________
Title:
Address: Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55779-0070
Attention: Corporate Trust Servicer --
Asset-Backed Administration
Facsimile Number: (612) 667-3539
Confirmation Number: (612) 667-1117
-87-
<PAGE>
SCHEDULE I
CONDITION PRECEDENT DOCUMENTS
As required by Section 3.1 of the Agreement, each of the following items
must be delivered to the Deal Agent prior to the date of the initial Purchase:
1. A copy of this Agreement duly executed by the Seller and the Servicer;
2. Certificates of the Secretary or Assistant Secretary of each of the
Seller and of the Servicer, each dated the date of this Agreement, certifying
(i) the names and true signatures of the incumbent officers of such Person
authorized to sign this Agreement and the other documents to be delivered by it
hereunder (on which certificate the Deal Agent, the Liquidity Agent and the
Purchasers may conclusively rely until such time as the Deal Agent shall receive
from the Seller or the Servicer, as the case may be, a revised certificate
meeting the requirements of this paragraph (b), (ii) that the copy of the
certificate of incorporation of such Person attached thereto is a complete and
correct copy and that such certificate of incorporation has not been amended,
modified or supplemented and is in full force and effect, (iii) that the copy of
the bylaws of such Person attached thereto is a complete and correct copy and
that such by-laws have not been amended, modified or supplemented and are in
full force and effect, and (iv) the resolutions of such Person's board of
directors approving and authorizing the execution, delivery and performance by
such Person of this Agreement and the documents related thereto;
3. Good standing certificate for the Seller issued by the Secretary of
State of Delaware.
4. Good standing certificate for the Servicer issued by the Secretary of
State of Massachusetts.
5. Qualification to do Business Certificate of Seller issued by the
Secretary of State of Massachusetts.
6. Acknowledgment copies of proper financing statements, dated a date
reasonably near to the date of the initial Purchase, describing the Assets and
naming the Originator [Leasevest] as debtor and the Seller [Originator] as
secured party, or other, similar instruments or documents, as may be necessary
or, in the opinion of the Deal Agent, desirable under the UCC of all appropriate
jurisdictions or any comparable law to perfect the Seller's interests in all
Assets;
7. Acknowledgment copies of proper financing statements (the "Facility
Financing Statement"), dated a date reasonably near to the date of the initial
Purchase, describing the Assets and naming the Seller as debtor and the Deal
Agent, on behalf of the Purchasers, as secured party, or other, similar
instruments or documents, as may be necessary
<PAGE>
or, in the opinion of the Deal Agent or the Purchaser, desirable under the UCC
of all appropriate jurisdictions or any comparable law to perfect the
Purchaser's interests in all Assets;
8. Acknowledgment copies of proper financing statements, if any, necessary
to release all security interests and other rights of any Person in the Assets
previously granted by the Seller;
9. Certified copies of requests for information or copies (or a similar
search report certified by a party acceptable to the Deal Agent), dated a date
reasonably near to the date of the initial Purchase, listing all effective
financing statements which name the Seller (under its present name and any
previous name) as debtor and which are filed in the applicable jurisdictions
together with copies of such financing statements (none of which, other than the
financing statements filed in connection with this transaction, shall cover any
Assets or Contracts);
10. An accurate and complete listing in all material respects of all the
Existing Contracts in the Asset Pool as of the Closing Date and any Addition
Date;
11. Payment of the Structuring Fee and the estimated legal fees and
expenses of counsel to the Deal Agent;
12. Undated executed copies of Lock-Box Notices to the Lock-Box Banks; and
13. Opinions of Goldstein and Manello, P.C., counsel to the Seller as to
such matters as the Deal Agent may reasonably request.
<PAGE>
SCHEDULE II
LOCK-BOX BANK AND ACCOUNT NUMBER
Lock-Box Bank: PNC Bank, N.A.
Lock-Box Account Number: 641652
<PAGE>
SCHEDULE III
TRADENAMES, FICTITIOUS NAMES AND "DOING BUSINESS AS" NAMES
None
<PAGE>
SCHEDULE IV
SUBSTITUTE CONTRACTS CRITERIA
Each Substitute Contract must satisfy each of the following conditions.
(i) At the time of substitution, such Substitute Contracts have in
the aggregate a Discounted Contract Balance (at the Blended Discount Rate as of
the date of substitution) of not less than the Discounted Contract Balances of
the Contracts being replaced (at the Blended Discount Rate as of the date of
substitution); and
(ii) Such Substitute Contracts, at the time of substitution by the
Seller shall have approximately the same weighted average life as the remaining
Scheduled Payments of Assets in the Asset Pool and shall not materially extend
the final maturity of the originally Scheduled Payments of Assets in the Asset
Pool.
In addition, on a cumulative basis, the sum of the Discounted Contract
Balance of Contracts substituted for Defaulted Contracts is not to exceed 5% of
the average number of Contracts outstanding under the facility and, on a
cumulative basis, the sum of the Discounted Contract Balance of Contracts
substituted for all Contracts, other than Prepaid Contracts, is not to exceed
more than 10% of the average under the facility.
<PAGE>
EXHIBIT 10.16
[Conformed Version]
- --------------------------------------------------------------------------------
LEASE RECEIVABLES
SALE AND CONTRIBUTION AGREEMENT
Dated as of September 30, 1996
Among
BV FUNDING CORP.
as the Buyer
------------
and
BANKVEST CAPITAL CORP.
as the Originator and the Servicer
----------------------------------
and
LEASEVEST CAPITAL CORP.
as LeaseVest
------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
ARTICLE I - DEFINITIONS ................................................... 5
SECTION 1.01. Certain Defined Terms ............................. 5
SECTION 1.02. Other Terms ....................................... 8
SECTION 1.03. Computation of Time Periods ....................... 8
ARTICLE II - AMOUNTS AND TERMS OF THE PURCHASES ........................... 8
SECTION 2.01. Agreement to Purchase ............................. 8
SECTION 2.02. Making Purchases from the Originator............... 9
SECTION 2.03. Purchases of Interests in Leases .................. 10
SECTION 2.04. Collections ....................................... 10
SECTION 2.05. Transfer of Records to the Buyer .................. 10
SECTION 2.06. Perfection of Liens; Further Assurances ........... 11
SECTION 2.07. Transfers by LeaseVest to the Buyer ............... 11
ARTICLE III - CONDITIONS OF PURCHASES ..................................... 12
SECTION 3.01. Conditions Precedent to Initial Purchase .......... 12
SECTION 3.02. Conditions Precedent to All Purchases ............. 12
SECTION 3.03. Effect of Payment of Purchase Price ............... 13
ARTICLE IV - REPRESENTATIONS AND WARRANTIES 13
SECTION 4.01. Representations and Warranties .................... 13
ARTICLE V - GENERAL COVENANTS ............................................. 17
SECTION 5.01. Affirmative Covenants ............................. 17
SECTION 5.02. Reporting Requirements ............................ 18
SECTION 5.03. Negative Covenants ................................ 19
ARTICLE VI - ADMINISTRATION AND COLLECTION ................................ 21
SECTION 6.01. Designation of Servicer ........................... 21
SECTION 6.02. Further Action Evidencing Transfers ............... 21
ARTICLE VII - INDEMNIFICATION; REPURCHASES ................................ 21
SECTION 7.01. Indemnities by the Originating Parties ............ 21
SECTION 7.02. Substitution and Repurchase of Assets ............. 23
ARTICLE VIII - MISCELLANEOUS .............................................. 24
SECTION 8.01. Amendments, Etc ................................... 24
SECTION 8.02. Notices, Etc ...................................... 25
SECTION 8.03. No Waiver; Remedies ............................... 25
SECTION 8.04. Binding Effect; Assignability ..................... 25
</TABLE>
<PAGE>
<TABLE>
<S> <C>
SECTION 8.05. GOVERNING LAW; WAIVER OF JURY TRIAL ............... 26
SECTION 8.06. Costs, Expenses and Taxes ......................... 26
SECTION 8.07. Execution in Counterparts; Severability ........... 27
SECTION 8.08. No Proceedings .................................... 27
</TABLE>
<PAGE>
LIST OF EXHIBITS
----------------
EXHIBIT A List of Offices of Originator where Records Are Kept
EXHIBIT B Trade Names and Assumed Names
EXHIBIT C LeaseVest Assignment and Similar Blanket Assignment(s)
<PAGE>
LEASE RECEIVABLES SALE AND CONTRIBUTION AGREEMENT
Dated as of September 30, 1996
BV FUNDING CORP., a Delaware corporation (the "Buyer"), BANKVEST
CAPITAL CORP., a Massachusetts corporation (in its capacities as the
"Originator" and the "Servicer") and LEASEVEST CAPITAL CORP., a Massachusetts
corporation ("LeaseVest"), agree as follows:
PRELIMINARY STATEMENTS.
(1) The Originator is in the business of leasing, financing and
providing associated services with respect to equipment;
(2) The Buyer is a special-purpose Subsidiary of the Originator
established to purchase and otherwise acquire Assets and related
Purchased/Contributed Interests;
(3) The Originator wishes from time to time to offer to sell or
contribute as capital to the Buyer Assets and related Purchased/Contributed
Interests;
(4) The Buyer desires to procure such Assets and related
Purchased/Contributed Interests from the Originator; and
(5) A portion of the Assets and related Purchased/Contributed
Interests which the Originator wishes to sell or contribute as capital to the
Buyer hereunder have been originated by LeaseVest and transferred to the
Originator in an unrelated transaction or group of transactions; consequently,
notwithstanding such earlier transfers, for the avoidance of doubt and in
furtherance of the transactions contemplated pursuant hereto, LeaseVest desires
to transfer any and all interests which it may retain (if any) in, to and under
any such Assets and related Purchased/Contributed Interests directly to the
Buyer.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. Unless otherwise defined
---------------------
herein, all capitalized terms shall have the meanings set forth in the EFCC
Agreement. As used in this Agreement, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):
<PAGE>
"Collections" means, with respect to any Purchased Asset, all cash
-----------
collections and other cash proceeds of such Purchased Asset (including, without
limitation, any related Lease Termination Payments and any Residual
Realizations), all cash proceeds of Related Security and other related
Purchased/Contributed Interests with respect to such Purchased Asset, and any
amounts received or deemed to have been received pursuant to Section 7.02 in
------------
respect of such Purchased Asset.
"EFCC Agreement" means that certain Lease Receivables Purchase
--------------
Agreement dated as of the date hereof between EFCC, FNBB, as Deal Agent, the
Buyer, as Seller, and the Originator, as Servicer and Collateral Custodian, as
such agreement may be amended, supplemented or modified from time to time.
"Equipment" means any equipment leased or financed by the Originator
---------
as lessor (whether or not pursuant to an Asset assigned to the Originator by
LeaseVest or another Person).
"Facility Documents" shall mean collectively, this Agreement, the EFCC
------------------
Agreement, the Lock-Box Agreement, the Interest Rate Hedges, the Fee Letter,
each Liquidity Fee Letter, each Supplemental Enhancement Fee Letter and all
other agreements, documents and instruments executed and delivered in connection
therewith.
"FNBB" means The First National Bank of Boston, a national banking
----
association, and any successor.
"Lease" means a contract in the form of a lease, installment sales
-----
contract, promissory note/security agreement or other similar type of chattel
paper pursuant to which the Originator leases Equipment to or finances the
acquisition of Equipment by an Obligor.
"LeaseVest Assignment" has the meaning assigned to that term in
--------------------
Section 2.07(a).
- ---------------
"Originating Parties" means, collectively, each of the Originator and
-------------------
LeaseVest, and the term "Originating Party" refers to either of them.
-----------------
"Purchase" has the meaning assigned to that term in Section 2.01.
-------- ------------
"Purchase Date" has the meaning assigned to that term in Section 2.01.
------------- ------------
"Purchase Price" has the meaning assigned to that term in Section
-------------- -------
2.02.
"Purchased/Contributed Interests" means, at any time, all then
-------------------------------
outstanding Purchased Assets, Related Security with respect to such Purchased
Assets, Equipment with respect to such Purchased Assets, Leases with respect to
such Purchased Assets and Collections with respect to, and other proceeds of,
such Purchased Assets, including,
<PAGE>
without limitation, all Collections of Purchased Assets relating to payments due
thereunder at any time during the month in which such Asset became a Purchased
Asset.
"Purchased Asset" means any Asset which appears on any list of Assets
---------------
at any time hereafter submitted to and accepted by the Buyer pursuant to Section
-------
2.02, whether purchased by the Buyer or contributed to the capital of the Buyer.
- ----
Once an Asset appears on any such list it shall remain a Purchased Asset;
provided, however, that with respect to any Asset that is repurchased by the
- -------- -------
Originator pursuant to Section 7.02, following the Buyer's receipt of the
------------
repurchase price for such Asset, "Purchased Asset" shall not include the Asset
---------------
so repurchased.
"Records" means all Leases and other documents, books, and records
-------
(including without limitation, computer programs, tapes, discs and punch cards)
maintained by the Originator with respect to Leases and the related Obligors.
"Related Security" means with respect to any Lease:
----------------
(i) all security interests or liens and property subject thereto
from time to time purporting to secure payment of the Asset arising under
such Lease, whether pursuant to such Lease or otherwise;
(ii) the blanket assignment to the Buyer, of all UCC financing
statements covering any Equipment or covering any collateral securing
payment of the Asset arising under such Lease;
(iii) all guarantees, indemnities, warranties, letters of credit,
insurance policies and proceeds and premium refunds thereof and other
agreements or arrangements of whatever character from time to time
supporting or securing payment of the Asset arising under such Lease,
whether pursuant to the Lease related to such Asset or otherwise;
(iv) all of the Originator's right, title and interest in, to and
under the Equipment related to such Lease, whether as an ownership
interest, as collateral security, or which was repossessed from an Obligor
of a Lease to the extent that the outstanding balance of such Lease remains
unpaid;
(v) all Records; and
(v) all Collections and other proceeds of the foregoing, including
without limitation, all insurance and condemnation proceeds and all
security deposits related to the equipment.
"Sale Notice" has the meaning assigned to that term in Section 2.02.
----------- ------------
<PAGE>
"Termination Date" has the meaning assigned to that term in the EFCC
----------------
Agreement.
"UCC" means the Uniform Commercial Code as from time to time in effect
---
in the specified jurisdiction.
SECTION 1.02. Other Terms. All accounting terms not specifically
-----------
defined herein shall be construed in accordance with generally accepted
accounting principles. All terms used in Article 9 of the UCC in the State of
Massachusetts, and not specifically defined herein, are used herein as defined
in such Article 9.
SECTION 1.03. Computation of Time Periods. Unless otherwise stated
---------------------------
in this Agreement, in the computation of a period of time from a specified date
to a later specified date, the word "from" means "from and including" and the
words "to" and "until" each means "to but excluding."
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 2.01. Agreement to Purchase. (a) Prior to the Termination
---------------------
Date, the Buyer shall, on each Purchase Date on which a transfer hereunder will
occur (a "Purchase Date"), upon the written request of the Originator, purchase,
or agree to have contributed to it, all of the Originator's right, title and
interest in and to the Leases described in each Sale Notice together with all
other Purchased Assets related thereto (each, a "Purchase"), from the Originator
on the terms and subject to the conditions of this Agreement and of the EFCC
Agreement. Purchases shall be made not more frequently than once per week upon
delivery to the Deal Agent of a Purchase Request at least three Business Days
before the effective date of the requested Purchase (other than in the case of
the initial Purchase Request hereunder, which may be delivered prior to 10:00
A.M. (Boston, Massachusetts time) on the Initial Purchase Date).
(b) It is the intention of the parties hereto that each Purchase of
Assets and related Lease, Related Security and Collections made hereunder shall
constitute a "sale of chattel paper," as such term is used in Article 9 of the
UCC, which sales are absolute and irrevocable and provide the Buyer with the
full benefits of ownership of the Purchased Assets and all related
Purchased/Contributed Interests. None of the parties hereto intends the
transactions contemplated hereunder to be, or for any purpose to be
characterized as, loans from the Buyer to the Originator secured by such assets.
If at any time a court characterizes the Purchases hereunder as loans by the
Buyer to the Originator, then the Originator hereby pledges, grants a security
interest in and assigns to the Buyer, all of the
<PAGE>
Originator's right and title to and interest in the Purchased Assets, the
Related Security, Collections and the other Purchased/Contributed Interests
related thereto as security for such loans and for the payment and performance
of all obligations of the Originating Parties hereunder. In view of the
intention of the parties hereto that the Purchases of Assets and related Leases
made hereunder shall constitute sales of such Assets and related Leases rather
than a loan secured by such Assets and related Leases, each of the Originating
Parties agrees to note on its respective financial statements that assets sold
to the Buyer hereunder are not available to the creditors of the Originator.
SECTION 2.02. Making Purchases from the Originator.
------------------------------------
(a) Purchases shall be made not more frequently than once per week,
upon delivery of a Sale Notice (as described below). At least three Business
Days before the effective date of any requested Purchase (other than in the case
of the initial Sale Notice hereunder, which may be delivered prior to 10:00 A.M.
(Boston, Massachusetts time) on the Initial Purchase Date), the Originator shall
give the Buyer, the Servicer and the Deal Agent written notice of each Purchase
(in each case, a "Sale Notice") specifying, as of the Purchase Date specified in
the Sale Notice, (i) all Leases subject to such Purchase (including the
identification of any Asset which is not an Eligible Asset), (ii) a list of
Related Security with respect to such Assets, (iii) the amortization schedule
(in the aggregate) of such Leases, and (iv) that portion of the Purchase Price
which is payable in cash for the Purchased/Contributed Interests to be
transferred.
(b) The purchase price (the "Purchase Price") for the new Assets noted
--------------
on a Sale Notice (together with the related Purchased/Contributed Interests)
payable on any Purchase Date shall be an amount equal to the aggregate present
values of the aggregate amount of the remaining Periodic Installments of Rent
under each related Lease, with such aggregate amount discounted to present value
using the Purchase Price Discount Rate for such Asset and a payment schedule of
the first day of each month commencing with the first day of the month in which
the Purchase Price is calculated. "Purchase Price Discount Rate" means, for
----------------------------
purposes of the foregoing calculation, the rate set forth as such in each Sale
Notice, which is a reflection of actual historical losses and carrying costs of
the Buyer.
(c) Except as otherwise provided below in this Section 2.02, the
------------
Purchase Price for the Purchased/Contributed Interests sold by the Originator
under this Agreement shall be payable in full in cash by the Buyer, in each case
on the date of each such Purchase, except that the Buyer may, with respect to
any Purchase, offset against such Purchase Price any amounts owed by the
Originator to the Buyer hereunder with respect to repurchase obligations which
remain unpaid. On the date of each Purchase, the Buyer shall, upon satisfaction
of the applicable conditions set forth in Article III, make available to the
-----------
Originator the portion of the Purchase Price payable in cash referred to above
in same day funds.
<PAGE>
(d) If, on any Purchase Date, the Buyer has insufficient funds to pay
in full the Purchase Price owed on such day, then the Originator shall be deemed
to have contributed to the capital of the Buyer Purchased/Contributed Interests
having a Purchase Price equal to the portion of the total Purchase Price owed on
such day which is not paid in cash.
SECTION 2.03. Purchases of Interests in Leases. Although the Buyer
--------------------------------
has Purchased the Leases that constitute Purchased/Contributed Interests, the
Originator shall, in its capacity as Servicer (i) perform all of the obligations
of the lessor under the Leases related to the Purchased Assets and the exercise
by Buyer of any of its rights thereunder or hereunder shall not relieve
Originator from such obligations and (ii) pay on behalf of or cause the Obligor
to pay when due (A) any taxes, including without limitation, sales, excise and
personal property taxes payable in connection with the Purchased Assets, unless
the Originator is contesting the payment of such taxes in good faith and by
appropriate proceedings, and (B) all premiums for insurance with respect to the
Equipment related to such Purchased Assets; provided, that, the Buyer shall have
-------- ----
the right to exercise any of the rights of the lessor under any such Lease and
the Buyer shall perform (and hereby authorizes the Servicer to perform on its
behalf) the obligation of the lessor under any such Lease to sell the Equipment
covered by such Lease to the Obligor under such Lease in the event such Obligor
exercises its purchase option under such Lease.
SECTION 2.04. Collections. Any Collections of Purchased Assets
-----------
received (or deemed to have been received) by either Originating Party shall be
remitted directly to the Buyer by depositing such Collections in the Lock-Box
Account within one Business Day of such Originating Party's receipt.
SECTION 2.05. Transfer of Records to the Buyer.
--------------------------------
(a) In connection with the Purchases of Assets hereunder, each of the
Originating Parties hereby sells, transfers, assigns and otherwise conveys to
the Buyer all of the Originator's right and title to and interest in the Records
relating to all Assets included in the Purchased/Contributed Interests, without
the need for any further documentation in connection with any Purchase. In
connection with such transfer, the Originating Parties hereby grants to the
Buyer and the Servicer an irrevocable, non-exclusive license (or sublicense, as
the case may be) to use, without royalty or payment of any kind, all software
used by the Originating Parties to account for the Purchased Assets, to the
extent necessary to administer the Purchased Assets, whether such software is
owned by such Originating Party or is owned by others and used by such
Originating Party under license agreements with respect thereto. The license
granted hereby shall be royalty free and irrevocable, except that such license
shall terminate upon the later of the Collection Date and the termination of
this Agreement.
<PAGE>
(b) Each Originating Party shall take such action as is reasonably
requested by the Buyer and/or the Servicer, from time to time hereafter, that
may be necessary or appropriate, including the transfer of certain Records to
the Collateral Custodian as provided in Section 5.01(d), to ensure that Buyer
---------------
has (i) an enforceable ownership interest in the Records relating to the
Purchased Assets and (ii) an enforceable right (whether by license or sublicense
or otherwise) to use all of the computer software used to account for the
Purchased Assets and/or to recreate such Records, in each case, without
incurring any royalty, cost or expense on the part of the Buyer whatsoever.
SECTION 2.06. Perfection of Liens; Further Assurances. Upon the
---------------------------------------
request of the Buyer, each Originating Party shall, at its expense, promptly
execute and deliver all further instruments and documents, and take all further
action (including, without limitation, the execution and filing of such
financing or continuation statements, or amendments thereto or assignments
thereof), that may be necessary or desirable, or that the Buyer may request, in
order to (i) assure compliance with the Obligor UCC Filing Requirement, and (ii)
perfect and protect any ownership or security interest granted or purported to
be granted to the Buyer hereunder or to enable the Buyer to exercise and enforce
its rights and remedies hereunder with respect to any Purchased/Contributed
Interests. Each Originating Party hereby authorizes the Buyer to file one or
more continuation statements, amendments and/or assignments of financing
statements, relative to all or any part of the Purchased/Contributed Interests
now existing or hereafter arising without the signature of such Originating
Party where permitted by law. A carbon, photographic or other reproduction of
this Agreement or any financing statement covering the Purchased/Contributed
Interests or any part thereof shall be sufficient as a financing statement.
Each Originating Party will furnish to the Buyer from time to time statements
and schedules further identifying and describing the Purchased/Contributed
Interests and such other reports in connection with the Purchased/Contributed
Interests as the Buyer may reasonably request, all in reasonable detail.
SECTION 2.07. Transfers by LeaseVest to the Buyer. (a) The parties
-----------------------------------
hereto acknowledge that LeaseVest has previously sold, transferred and assigned
all of its right, title and interest in, to and under the Purchased Assets
originated by it, together with the other Purchased/Contributed Interests
relating thereto, to the Originator; each such sale and transfer being evidenced
and memorialized by the one of the following master agreements and/or blanket
assignments executed by LeaseVest in favor of the Originator (a copy of each of
which assignment is attached hereto as Exhibit C): (i) Assignment of Equipment
---------
Lease Agreements between BankVest and LeaseVest, dated May 15, 1995, (ii) that
certain Agreement dated as of September 30, 1996, between the Originating
Parties, and (iii) that certain Assignment of Equipment Lease Agreements dated
as of September 30, 1996, made by LV in favor of the Originator (the agreements
and assignments referenced in each of clauses (i) ,(ii) and (iii) above, in each
case as amended, restated, supplemented or otherwise modified from time to time
hereafter, are
<PAGE>
sometimes collectively referred to as the "LeaseVest Assignment"). For the
avoidance of doubt and to further evidence the intent of the parties hereto that
all right, title and interest in, to and under the Purchased Assets and the
other Purchased/Contributed Interests relating thereto has been sold,
transferred and assigned to the Buyer pursuant to this Agreement, LeaseVest
hereby irrevocably sells, transfers, assigns and quitclaims any residual right,
title and interest that it may have (or be deemed to have) in, to and under any
of the Purchased Assets and the other Purchased/Contributed Interests relating
thereto directly to the Buyer.
(b) To the extent that any sale, transfer, assignment or quitclaim of
Purchased Assets and other Purchased/Contributed Interests relating thereto from
LeaseVest to the Buyer contemplated by Section 2.07(a) is treated by a court as
---------------
the making of one or more loans instead of a sale under applicable law,
LeaseVest hereby pledges, grants a security interest in and assigns to the
Buyer, all of LeaseVest's right, title and interest in, to and under the
Purchased Assets, the Related Security, Collections and the other
Purchased/Contributed Interests related thereto as security for such loans and
for the payment and performance of all obligations of the Originating Parties
hereunder.
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01. Conditions Precedent to Initial Purchase. The initial
----------------------------------------
Purchase shall be subject to the condition precedent that the EFCC Agreement
shall have become effective and all conditions precedent to the initial purchase
thereunder shall have been satisfied or waived in accordance with the terms
thereof.
SECTION 3.02. Conditions Precedent to All Purchases. Each Purchase
-------------------------------------
(including the initial Purchase) by the Buyer from the Originator shall be
subject to the further conditions precedent that (a) with respect to any such
Purchase, on or prior to the date of such Purchase, the Originator shall have
delivered (i) to the Buyer, in form and substance satisfactory to the Buyer, a
completed Sale Notice dated within twenty days (but no less than three Business
Days) prior to the date of such Purchase and containing such additional
information as may be reasonably requested by the Buyer and (ii) to the
Collateral Custodian the original copy of each Lease under which the Assets to
be included in such Purchase arose and (b) on the date of such Purchase the
representations and warranties contained in Section 4.01 are correct in all
------------
material respects on and as of such day as though made on and as of such date,
and the Originator by accepting the cash portion of the Purchase Price shall be
deemed to have certified thereto.
SECTION 3.03. Effect of Payment of Purchase Price. Upon the payment
-----------------------------------
of the Purchase Price for any Purchase, (whether in cash or through a capital
<PAGE>
contribution), title to the Purchased Assets and the related
Purchased/Contributed Interests shall vest in the Buyer, whether or not the
conditions precedent to such Purchase were in fact satisfied.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties. Each of the Originator
------------------------------
(individually and as Servicer) and LeaseVest hereby represents and warrants as
follows:
(a) Due Incorporation and Good Standing. Such Originating Party is a
-----------------------------------
corporation duly incorporated, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts and is duly qualified to do business,
and is in good standing, in the Commonwealth of Massachusetts and in every other
jurisdiction in which the nature of its business requires it to be so qualified.
(b) Due Authorization and No Conflict. The execution, delivery and
---------------------------------
performance by such Originating Party of this Agreement and all other Facility
Documents to which it is a party, and the transactions contemplated hereby and
thereby, are within such Originating Party's corporate powers, have been duly
authorized by all necessary corporate action on the part of such Originating
Party, do not contravene (i) the such Originating Party's charter or by-laws,
(ii) any law, rule or regulation applicable to such Originating Party, (iii) any
contractual restriction contained in any indenture, loan or credit agreement,
lease, mortgage, security agreement, bond, note, or other agreement or
instrument binding on such Originating Party or its property or (iv) any order,
writ, judgment, award, injunction or decree binding on such Originating Party or
its property, and do not result in or require the creation of any Adverse Claim
upon or with respect to any of its properties pursuant to any material
indenture, loan or credit agreement, lease, mortgage, security agreement, bond,
note or other material agreement binding on such Originating Party or its
property (other than in favor of the Buyer as contemplated hereunder); and no
transaction contemplated hereby requires compliance with any bulk sales act or
similar law. This Agreement has been duly executed and delivered on behalf of
the Originator.
(c) Governmental Consent. No authorization or approval or other
--------------------
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance by
such Originating Party of this Agreement or any other agreement, document or
instrument to be delivered hereunder, except for filings under the UCC.
<PAGE>
(d) Enforceability of Facility Documents. This Agreement and each
------------------------------------
other Facility Document to be delivered by such Originating Party in connection
herewith constitute the legal, valid and binding obligation of such Originating
Party enforceable against such Originating Party in accordance with their
respective terms.
(e) No Litigation. There are no actions, suits or proceedings
-------------
pending, or to the knowledge of such Originating Party threatened in writing,
against such Originating Party or any of its Subsidiaries, or the property of
such Originating Party or any of its Subsidiaries, in any court, or before any
arbitrator of any kind, or before or by any governmental body, which (i) assert
the invalidity of any Facility Document or any action to be taken by such
Originating Party in connection therewith, or (ii) seek to prevent the
consummation of the transactions contemplated by this Agreement and the other
Facility Documents. Such Originating Party is not in default with respect to
any order of any court, arbitrator or governmental body.
(f) Use of Proceeds. No proceeds of any Purchase will be used by
---------------
such Originating Party to acquire any security in any transaction which is
subject to Section 13 or 14 of the Securities Exchange Act of 1934, as amended.
(g) Perfection of Interest in Purchased Assets. Prior to the Buyer's
------------------------------------------
Purchase and/or acquisition of each Purchased/Contributed Interest hereunder,
each Purchased Asset shall, together with the Lease related thereto, be owned by
the Originator free and clear of any Adverse Claim except as provided herein or
arising as a result of any action taken by the Buyer or any assignee thereof,
and upon each Purchase, the Buyer shall acquire a valid and perfected first
priority ownership interest in each Purchased Asset then existing or thereafter
arising and in the Related Security, Collections and Equipment with respect
thereto, in each case free and clear of any Adverse Claim except as provided
herein or arising as a result of any action taken by the Buyer or any assignee
thereof; and no effective financing statement or other instrument similar in
effect filed by or permitted to be filed by such Originating Party covering any
Purchased Asset, the Related Security, Collections or the other
Purchased/Contributed Interests with respect thereto shall at any time be on
file in any recording office except as such may be filed in favor of the Buyer
or its assignees in accordance with this Agreement, and, with respect to the
Equipment, against the related Obligor in favor of the Originator.
(h) Accuracy of Information. No Sale Notice, furnished or to be
-----------------------
furnished by the Originator to the Buyer in connection with this Agreement is or
shall be inaccurate in any material respect as of the date it is or shall be
dated or as of the date so furnished.
(i) Location of Chief Executive Office and Records. The chief place
----------------------------------------------
of business and chief executive office of such Originating Party are located at
the address of
<PAGE>
such Originating Party referred to in Section 8.02 hereof and the locations of
------------
the offices where such Originating Party keeps all the Records are listed on
Exhibit A (or at such other locations, notified to the Buyer in accordance with
- ---------
Section 5.01(e), in jurisdictions where all actions required by Sections 2.10
- --------------
and 6.05 of the EFCC Agreement has been taken and completed).
(j) Lock-Box Accounts. Except as otherwise agreed by the Deal Agent
-----------------
and the Buyer, and in the case of occasional inadvertent errors on the part of
one or more Obligors (which errors are immaterial in the aggregate with respect
to the Purchased Assets taken as a whole): (A) PNC Bank, N.A., in its capacity
as the Lock-Box Bank, is the only bank to which Collections of Purchased Assets
are remitted by Obligors, (B) account number 10-1093-3415 at such Lock-Box Bank
is the only Lock-Box Account to which Collections of Purchased Assets are so
remitted, (C) the Post Office Box is the only post-office box to which
Collections of Purchased Assets are remitted by Obligors, and (D) neither of the
Originating Parties shall have given any contrary instructions to any Obligor.
(k) No Tradenames. Except as described in Exhibit B, such
------------- ---------
Originating Party has no tradenames, fictitious names, assumed names or "doing
business as" names.
(l) Facility Documents. The Facility Documents are the only
------------------
agreements pursuant to which the Buyer purchases and receives contributions of
Leases, Assets and any other accounts receivable from such Originating Party,
and the Facility Documents delivered to the Deal Agent represent all material
agreements between such Originating Party and the Seller. All such assets are
transferred without recourse to such Originating Party.
(m) Taxes. Such Originating Party has filed or caused to be filed all
-----
Federal, state and local tax returns which are required to be filed by it, and
has paid or caused to be paid all taxes before such taxes became delinquent,
other than any taxes or assessments the validity of which are being contested in
good faith by appropriate proceedings.
(n) Solvency. Such Originating Party is not "insolvent" (as such term
--------
is defined in (S)101(32)(A) of the Bankruptcy Code).
(o) Ownership of the Seller. One hundred percent (100%) of the
-----------------------
outstanding capital stock of the Buyer is directly owned (both beneficially and
of record) by the Originator. Such stock is validly issued, fully paid and
nonassessable and there are no options, warrants or other rights to acquire
capital stock from the Buyer.
(p) No Fraudulent Conveyance. The transactions contemplated by the
------------------------
LeaseVest Assignment, this Agreement and by each of the Facility Documents are
being
<PAGE>
consummated by such Originating Party in furtherance of such Originating Party's
ordinary business, with no contemplation of insolvency and with no intent to
hinder, delay or defraud any of its present or future creditors. By its receipt
of the Purchase Prices hereunder and its ownership of the capital stock of the
Buyer, the Originator shall have received reasonably equivalent value for the
Purchased/Contributed Interests sold or otherwise conveyed to the Buyer under
this Agreement. By the Originator's receipt of the Purchase Prices hereunder,
and the receipt by LeaseVest of the other consideration transferred in
connection with the transactions contemplated by the LeaseVest Assignment (and
other similar predecessor agreements), LeaseVest shall have received reasonably
equivalent for the Purchased/Contributed Interests sold or otherwise conveyed by
it to the Originator under the LeaseVest Assignment (or any such similar
predecessor agreement).
(q) Software. Each of the Buyer and the Servicer has (or will have,
--------
concurrently with the effectiveness hereof) an enforceable right (whether by
license, sublicense or assignment) to use all of the computer software used to
account for the Purchased Assets to the extent necessary to administer the
Purchased Assets, except where the failure to have or obtain such right would
not materially adversely affect (i) the interests hereunder of the Buyer in the
Purchased/Contributed Interests, or (ii) the ability of each such Originating
Party to perform its obligations hereunder.
(r) LeaseVest Assignment. (i) The LeaseVest Assignment (A) is in
--------------------
full force and effect in the form set forth at Exhibit C hereto (except as may
---------
otherwise be permitted pursuant to Section 5.03(i)), (B) constitutes the legal,
---------------
valid and binding obligations of the parties thereto in accordance with its
terms, and (C) is the only agreement pursuant to which LeaseVest assigns any of
its rights, title and/or interests in, to or under any Purchased/Contributed
Interests to any other Person; and (ii) the agreements attached at Exhibit C
---------
hereto constitute the only agreements pursuant to which, prior to the date
hereof, LeaseVest has assigned any of its rights, title and/or interests in, to
or under any Purchased/Contributed Interests to any other Person.
<PAGE>
ARTICLE V
GENERAL COVENANTS
SECTION 5.01. Affirmative Covenants. Each of the Originator and
---------------------
LeaseVest shall, unless the Buyer shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply in all material respects with
--------------------------
all applicable laws, rules, regulations and orders with respect to it, its
business and properties and all Assets and related Leases.
(b) Preservation of Corporate Existence. Preserve and maintain its
-----------------------------------
corporate existence, rights, franchises and privileges in the jurisdiction of
its incorporation, and qualify and remain qualified in good standing as a
foreign corporation in each jurisdiction where the nature of its business
requires it to be so qualified.
(c) Audits. At any time and from time to time upon reasonable prior
------
written notice to the Originator and during regular business hours, permit the
Buyer, or its agents or representatives, (i) to examine and make copies of and
abstracts from all Records, and (ii) to visit the offices and properties of the
such Originating Party for the purpose of examining such Records, and to discuss
matters relating to the Assets or such Originating Party's performance hereunder
with any of the officers or employees of the Originating Party having knowledge
of such matters.
(d) Keeping of Records and Books of Account. Maintain and implement
---------------------------------------
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing the Assets in the event of the
destruction of the originals thereof) and keep and maintain, all documents,
books, records and other information reasonably necessary or advisable for the
collection of all Assets (including, without limitation, records adequate to
permit the daily identification of all Collections of and adjustments to each
Purchased Asset). The original counterpart of each Lease subject to a Purchase
hereunder shall be delivered to the Collateral Custodian and all other Records
relating thereto shall be held by the Originator, as Servicer; such original
counterpart and all such Records shall in any event be marked with a legend
indicating the interests of the Buyer and its successors and assigns.
(e) Location of Records. Keep its chief place of business and chief
-------------------
executive office, and the offices where it keeps the Records, at the address(es)
of such Originating Party referred to in Section 4.01(i), or, in any such case,
---------------
upon 30 days' prior written notice to the Buyer, at such other locations within
the United States where all action required by Sections 2.10 and 6.05 of the
EFCC Agreement shall have been taken and completed.
<PAGE>
(f) Credit and Collection Policies. Comply in all material respects
------------------------------
with its Credit and Collection Policy in regard to each Purchased Asset and the
related Lease.
(g) Collections. Instruct all Obligors of Purchased Assets to cause
-----------
all Collections to be deposited directly to the Lock-Box Account (and in the
case of any payments made by mail, to the related Post Office Box), and if such
Originating Party shall receive any Collections, such Originating Party shall
remit such Collections to the Lock-Box Account within one Business Day following
such Originating Party's receipt thereof.
(h) Compliance with ERISA. Establish, maintain and operate all Plans
---------------------
to comply in all material respects with the provisions of ERISA, the IRC, and
all other applicable laws, and the regulations and interpretations thereunder.
(i) Obligor UCC Filing Requirement. With respect to each Asset that
------------------------------
constitutes a Purchased Asset, comply with the Obligor UCC Filing Requirement.
(j) Maintenance of Insurance. Maintain, or cause each Obligor to
------------------------
maintain, with respect to the Leases related to the Purchased Assets and the
Equipment related thereto, casualty and general liability insurance in an amount
and of a nature consistent with industry practice and the Credit and Collection
Policy. Such Originating Party shall remit, or shall cause to be remitted, the
proceeds of any such insurance policy to the Lock-Box Account.
(k) Separate Identity. Such Originating Party acknowledges that the
-----------------
Buyer, the Deal Agent and EFCC are entering into the transactions contemplated
by this Agreement and the EFCC Agreement in reliance upon the Buyer's identity
as a separate legal entity from the Originating Parties.
(l) Facility Documents. Comply in all material respects with the
------------------
terms of and employ the procedures outlined in the EFCC Agreement and all of the
other Facility Documents to which it is a party.
(m) Fair Selection. In connection with each Purchase hereunder,
--------------
select Assets for inclusion in such Purchase on a basis which is not adverse to
the Buyer.
SECTION 5.02. Reporting Requirements. The Originator shall, unless
----------------------
the Buyer shall otherwise consent in writing, furnish to the Buyer, as soon as
reasonably practicable, from time to time, such information, documents, records
or reports respecting the Assets or the conditions or operations, financial or
otherwise, of the Originating Parties or any of their Affiliates as the Buyer
may from time to time reasonably request in order to protect the interests of
the Buyer under or as contemplated by this Agreement,
<PAGE>
and shall provide to the Buyer promptly upon its demand therefor, all such
information, documents, records or reports which are originally prepared by or
on behalf of the Originating Parties or any of their Affiliates as the Buyer may
be required to deliver to the Deal Agent pursuant to the terms of the Lease
Receivables Purchase Agreement.
SECTION 5.03. Negative Covenants. From the date hereof, neither of
------------------
the Originator or LeaseVest shall, without the written consent of the Buyer:
(a) Extension or Amendment of Assets. Except to the extent permitted
--------------------------------
in Section 6.02 of the EFCC Agreement in the Originator's capacity as Servicer
------------
thereunder, extend, amend or otherwise modify, the terms of any Purchased Asset,
or amend, modify or waive, any term or condition of any Lease related thereto.
(b) Change in Business or Credit and Collection Policy. Make any
--------------------------------------------------
material change in the Credit and Collection Policy, which change would
materially impair the collectibility of any Purchased Asset.
(c) Change in Payment Instructions to Obligors. Make any amendment,
------------------------------------------
change or other modification to the terms of the Lock-Box Agreement.
(d) Change in Corporate Name. Make any change to its corporate name
------------------------
or use any tradenames, fictitious names, assumed names or "doing business as"
names other than those described in Exhibit B, unless prior to the effective
---------
date of any such name change or use, such Originating Party delivers to the
Buyer such Financing Statements (Form UCC-1 and UCC-3) executed by such
Originating Party which the Buyer may reasonably request to reflect such name
change or use, together with such other documents and instruments that the Buyer
may request in connection therewith in order to maintain a first priority
interest of the Buyer in the Purchased/Contributed Interests.
(e) ERISA Matters. (i) Engage or permit any ERISA Affiliate to
-------------
engage in any prohibited transaction for which an exemption is not available or
has not previously been obtained from the DOL; (ii) permit to exist any
accumulated funding deficiency, as defined in Section 302(a) of ERISA and
Section 412(a) of the IRC, or funding deficiency with respect to any Benefit
Plan other than a Multiemployer Plan; (iii) fail to make any payments to any
Multiemployer Plan that the Originating Party or any ERISA Affiliate may be
required to make under the agreement relating to such Multiemployer Plan or any
law pertaining thereto; (iv) terminate any Benefit Plan so as to result in any
material liability; or (v) permit to exist any occurrence of any reportable
event described in Title IV of ERISA which represents a material risk of a
material liability of the Originating Party or any ERISA Affiliate under ERISA
or the IRC.
(f) Terminate or Reject Leases. Without limiting Section 5.03(b),
-------------------------- ---------------
terminate or reject any Lease under which a Purchased Asset has arisen prior to
the term
<PAGE>
of such Lease, whether such rejection or early termination is made pursuant to
an equitable cause, statute, regulation, judicial proceeding or other applicable
law (including, without limitation, Section 365 of the Bankruptcy Code) unless,
prior to such termination or rejection, the Originator repurchases the Purchased
Asset pursuant to Section 7.02 hereof.
------------
(g) Facility Documents. Except as otherwise permitted under Section
------------------ -------
8.01, (a) terminate, amend or otherwise modify any Facility Document to which it
- ----
is a party or grant any waiver or consent thereunder, (b) , terminate, amend or
otherwise modify either of the Servicing Agreement or the Backup Servicing
Agreement, or grant any waiver or consent thereunder, or (c) without the prior
written consent of the Buyer, which consent shall not unreasonably be withheld,
consent to any amendment or modification of the Credit and Collection Policy,
which would, in either case, impair the collectibility of any Purchased Asset.
(h) Accounting Treatment. Prepare any financial statements or other
--------------------
statements which shall account for the transactions contemplated by this
Agreement in any manner other than as the sale of, or a capital contribution of,
the Purchased/Contributed Interests by the Originator to the Buyer.
(i) LeaseVest Assignment. Terminate, amend, restate, waive or
--------------------
otherwise modify any of the terms of the LeaseVest Assignment, or otherwise
permit the LeaseVest Assignment to fail to be in full force and effect.
(j) Negative Pledge.
---------------
(i) Without the prior written consent of the Buyer, which consent
shall not unreasonably be withheld, sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist, any
Adverse Claim upon or with respect to, any Purchased/Contributed Interest,
Related Security or Collections, or any related Lease, or any Servicing
Agreement Assets.
(ii) At all times prior to the termination of the Line of Credit
Agreement dated as of October 31, 1995 between MetroWest Bank (formerly
known as Framingham Savings Bank) and the Originator, as the same may be
amended, restated, supplemented, replaced or otherwise modified from time
to time (the "Metro Credit Agreement"), maintain leases, the costs bases of
which are equal to or exceed the loan balance outstanding to the Originator
from time to time, free and clear of any and all liens at all time.
<PAGE>
ARTICLE VI
ADMINISTRATION AND COLLECTION
SECTION 6.01. Designation of Servicer. Consistent with the Buyer's
-----------------------
ownership of the Purchased Assets and the other Purchased/Contributed Interests,
the Buyer shall have the sole right to service, administer and collect the
Assets, to assign such right and to delegate such right to the Servicer.
Pursuant to the EFCC Agreement, the Originator has been appointed by the Buyer,
the Deal Agent and EFCC as the Servicer thereunder (the "Servicer") and the
Originator has accepted such appointment thereunder. As part of the
consideration for the Purchases hereunder, the Originator hereby consents to
appointment as Servicer and agrees to perform each of the duties and obligations
of the Servicer pursuant to the terms of the EFCC Agreement. In addition, the
Originator acknowledges that if the Originator is replaced as Servicer pursuant
to Article VI of the EFCC Agreement, the Deal Agent and the successor Servicer
shall have all of the rights described in Article VI of the EFCC Agreement.
SECTION 6.02. Further Action Evidencing Transfers. The Originator
-----------------------------------
shall mark its master data processing records evidencing the Purchased Assets
and related Leases with a legend, acceptable to the Buyer, evidencing that the
Buyer has acquired an ownership interest therein as provided in this Agreement.
If the Originator fails to perform any of its agreements or obligations under
this Agreement, the Buyer may (but shall not be required to) itself perform, or
cause performance of, such agreement or obligation, and the expenses of the
Buyer incurred in connection therewith shall be payable by the Originator upon
the Buyer's demand therefor; provided, however, prior to taking any such action,
-------- -------
the Buyer shall give notice of such intention to the Originator and provide the
Originator with a reasonable opportunity to take such action itself.
ARTICLE VII
INDEMNIFICATION; REPURCHASES
<PAGE>
SECTION 7.01. Indemnities by the Originating Parties. (a) Without
--------------------------------------
limiting any other rights which the Buyer may have hereunder or under applicable
law, each Originating Party, jointly and severally, hereby agrees to indemnify
the Buyer, from and against any and all damages, losses, claims, liabilities and
related costs and expenses, including reasonable attorneys' fees and
disbursements (all of the foregoing being collectively referred to as
"Indemnified Amounts") awarded against or incurred by the Buyer arising out of
-------------------
or as a result of this Agreement or the ownership of the Purchased/Contributed
Interests or in respect of any Asset or any Lease, excluding, however, (i)
Indemnified Amounts to the extent resulting from gross negligence or willful
misconduct on the part of the Buyer or (ii) recourse (except with respect to
payment and performance obligations provided for in this Agreement) for
uncollectible Purchased Assets. Without limiting the foregoing, each of the
Originating Parties, jointly and severally, shall indemnify the Buyer for
Indemnified Amounts relating to or resulting from:
(i) reliance on any representation or warranty made or deemed made
by either Originating Party (or any of its officers) under or in connection
with this Agreement, any Sale Notice or any other information or report
delivered by an Originating Party pursuant hereto, which shall have been
false or incorrect in any material respect when made or deemed made or
delivered;
(ii) the failure by the Originator (individually or as Servicer) or
LeaseVest to comply with any term, provision or covenant contained in this
Agreement, or any Facility Document to which it is a party or with any
applicable law, rule or regulation with respect to any Asset, the related
Lease, the Related Security or the other Purchased/Contributed Interests,
or the nonconformity of any Asset, the related Lease, the Related Security
or the other Purchased/Contributed Interests with any such applicable law,
rule or regulation;
(iii) the reduction of Purchased Assets due to any Permitted
Encumbrance (except in favor of the Buyer or its assignees) whether
existing at the time of the Purchase of such Asset or at any time
thereafter;
(iv) any products liability claim or personal injury or property
damage suit or other similar or related claim or action of whatever sort
arising out of or in connection with goods, merchandise and/or services
which are the subject of any Asset or Lease;
(v) the failure of the Originator (individually or as Servicer) or
LeaseVest to maintain, or cause the relevant Obligor to maintain in effect,
policies of casualty and general liability insurance with respect to the
Leases related to the
<PAGE>
Purchased Assets and the Equipment related thereto, to the extent required
pursuant to Section 5.01(j);
---------------
(vi) the failure to pay when due any taxes, including, without
limitation, sales, excise or personal property taxes payable in connection
with the Purchased Assets;
(vii) the payment by the Buyer of, or indemnification made by the
Buyer in respect of, Taxes, including, without limitation, any Taxes
imposed by any jurisdiction on amounts payable and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto
to the extent caused by the Originator's actions or failure to act;
provided that the Buyer shall provide the Seller, at its address referred
--------
to in Section 10.02, with a certificate from the relevant taxing authority
-------------
or from a responsible officer of the Buyer (or a party so indemnified by
the Buyer, as the case may be) stating or otherwise evidencing that the
Buyer has made payment of such Taxes (or has indemnified a third party
therefor) and, within 30 days thereafter, will provide a copy of or extract
from documentation, if available, furnished by such taxing authority
evidencing assertion or payment of such Taxes; and
(viii) any payment made or required to be made by the Buyer to, or to
a Person seeking indemnification from the Buyer in respect of a payment
which such Person made to, (1) the Lock-Box Bank with respect to the Lock-
Box Account or (2) the Collection Account Bank with respect to the
Collection Account, whether in connection with reimbursement for a returned
item, or for any other reason whatsoever.
Any amounts subject to the indemnification provisions of this Section 7.01 shall
------------
be paid by the Originating Part(ies) on which a demand hereunder has been made
to the Buyer, within two Business Days following the Buyer's demand therefor.
SECTION 7.02. Substitution and Repurchase of Assets. The following
-------------------------------------
rights are in addition to and not in limitation of any other rights or remedies
that the Buyer may have hereunder.
(a) If, with respect to any Purchased Asset, (i) such Asset did not
constitute an Eligible Asset on the date such Asset became a Purchased Asset or
(ii) an Originating Party shall have breached any representation or warranty
made hereunder with respect to such Asset including without limitation, any of
the representations and warranties contained in Section 4.01(g) (a Purchased
---------------
Asset described in either of clauses (i) or (ii) above being referred to as an
----------- ----
"Ineligible Purchased Asset"), then the Originator shall on the next succeeding
--------------------------
Settlement Date, upon the Buyer's written demand, either substitute for such
Ineligible Purchased Asset a new Asset in the manner specified in
<PAGE>
subsection (d) of this Section 7.02, or repurchase such Ineligible Purchased
- -------------- ------------
Asset for the repurchase price specified in subsection (e) of this Section 7.02.
-------------- ------------
(b) The Originator may at any time and from time to time notify the
Buyer of its intent to substitute one or more new Assets for any Purchased
Assets (other than any Purchased Asset (i) which is a Defaulted Asset or (ii) in
respect of which the Obligor thereunder has requested the rewriting and/or
restructuring of the related Lease as an accommodation to such Obligor);
provided, that in such notice the Originator shall certify that the Purchased
- --------
Assets to be repurchased by the Seller represent a fair selection of the
aggregate Purchased Assets. On the Settlement Date next succeeding any such
notice, the Originator shall substitute for any such Purchased Asset a new Asset
in the manner specified in subsection (d) of this Section 7.02.
-------------- ------------
(c) Notwithstanding anything herein to the contrary, in no event may
the Originator substitute for a Purchased Asset under subsection (b) of this
--------------
Section 7.02 if, after giving effect to such substitution, the aggregate amount
- ------------
of Periodic Installments of Rent on all Purchased Assets substituted for by the
Seller pursuant to subsection (b) of this Section 7.02 would exceed ten percent
-------------- ------------
(10%) of the Aggregate Outstanding Balance at such time.
(d) If the Originator substitutes a new Asset for a Purchased Asset
pursuant to this Section 7.02, such new Asset shall (i) on the date of
------------
substitution, be an Eligible Asset (ii) have an Outstanding Balance at least
equal to the Outstanding Balance of the Purchased Asset for which it is being
substituted, (iii) have a remaining term that is no longer than the remaining
term of the Purchased Asset for which it is being substituted, and (iv) be of
equivalent credit quality to the Purchased Asset for which it is being
substituted. In no event shall any such substitution take place after the
occurrence of the Termination Date. On the date of such substitution, such new
Eligible Asset shall become a Purchased Asset and the Asset so replaced shall
cease to be a Purchased Asset, and the Originator shall list the Leases relating
to any such new Purchased Asset on a new Sales Notice, together with a list of
all Related Security with respect thereto, the amortization schedule of such
Purchased Asset, and a certification by the Originator as to the satisfaction of
the requirements relating to such Purchased Asset set forth in clauses (i)
through (iv) above.
(e) In the case of a repurchase by the Originator from the Buyer of a
Purchased Asset pursuant to this Section 7.02, the Originator shall, on the
------------
Settlement Date coinciding with such repurchase pay to the Buyer an amount equal
to the Outstanding Balance (as defined in the EFCC Agreement) of such Purchased
Asset as of such Settlement Date. Any such repurchase shall be made without
recourse or warranty, express or implied (other than a representation and
warranty that such Asset is free and clear of any Adverse Claim created by or
through the Buyer). The Originator and the
<PAGE>
Buyer shall execute and deliver such instruments of transfer or assignments as
are necessary to vest ownership of such Asset in the Originator.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment to or waiver of any
----------------
provision of this Agreement nor consent to any departure by an Originating
Party, shall in any event be effective unless the same shall be in writing and
signed by (i) each Originating Party and the Buyer (with respect to an
amendment) or (ii) the Buyer (with respect to a waiver or consent by it) or the
Originating Parties (with respect to a waiver or consent by them), as the case
may be, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that,
-------- -------
at any time that the commercial paper notes of EFCC (if any) are being rated by
one or more of the Rating Agencies, at the request of the Purchaser, no material
amendment or modification of any material provisions hereof shall be effective
absent written confirmation by each of Moody's, S&P and DCR (as applicable) that
such amendment or modification will not result in a withdrawal or downgrading of
the then-current rating of the commercial paper notes issued by EFCC by such
rating agency. The Originator shall send, or shall cause to be sent, copies of
all amendments, modifications or supplements to this Agreement to each of the
Rating Agencies then rating the commercial paper notes issued by EFCC, if any,
at the request of the Buyer, prior to the execution thereof by all parties
thereto. This Agreement contains a final and complete integration of all prior
expressions by the parties hereto with respect to the subject matter hereof and
shall constitute the entire agreement (together with the exhibits hereto)
among the parties hereto with respect to the subject matter hereof, superseding
all prior oral or written understandings.
SECTION 8.02. Notices, Etc. All notices and other communications
-------------
provided for hereunder shall, unless otherwise stated herein, be in writing
(including telex communication and communication by facsimile copy) and mailed,
telexed, transmitted or delivered, as to each party hereto, at its address set
forth under its name on the signature pages hereof or at such other address as
shall be designated by such party in a written notice to the other parties
hereto. All such notices and communications shall be effective, upon receipt,
or in the case of delivery by mail, three days after being deposited in the
mails, or, in the case of notice by facsimile, when electronics communications
of a receipt is obtained, in each case addressed as aforesaid.
SECTION 8.03. No Waiver; Remedies. No failure on the part of the
-------------------
Buyer to exercise, and no delay in exercising, any right hereunder shall operate
as a
<PAGE>
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
SECTION 8.04. Binding Effect; Assignability. This Agreement shall be
-----------------------------
binding upon and inure to the benefit of each of the Originating Parties, the
Buyer and their respective successors and permitted assigns (which successors of
the Originating Parties shall include a trustee in bankruptcy). Neither of the
Originating Parties shall assign any of their respective rights and obligations
hereunder or any interest herein without the prior written consent of the Buyer
and the Deal Agent. Each Originating Party acknowledges that the Buyer shall
assign to the Deal Agent, for the benefit of EFCC, all of its rights, remedies,
powers and privileges hereunder and that EFCC may further assign such rights,
remedies, powers and privileges to the extent permitted in the EFCC Agreement.
Each Originating Party agrees that the Deal Agent, as the assignee of the Buyer,
shall, subject to the terms of the EFCC Agreement, have the right to enforce
this Agreement and to exercise directly all of the Buyer's rights and remedies
under this Agreement (including, without limitation, the rights and remedies
under Sections 6.01, 6.02, 7.01 and 7.02, and each Originating Party agrees to
------------- ---- ---- ----
cooperate fully with the Deal Agent and the Servicer in the exercise of such
rights and remedies. Without limitation by the foregoing, each Originating
Party hereby acknowledges that the Buyer and the Servicer have agreed pursuant
to the EFCC Agreement and certain related agreements that, subject to the
restrictions set forth therein, the Deal Agent, and certain parties providing
liquidity and credit enhancement in connection with the EFCC Agreement, shall be
entitled to exercise the Buyer's rights under this Agreement. Each Originating
Party hereby consents to the foregoing and agrees to cooperate with any such
Person electing to exercise the Buyer's rights under this Agreement. The Buyer
may assign at any time its rights and obligations hereunder and interests herein
to any other Person without the consent of either of the Originating Parties.
This Agreement shall create and constitute the continuing obligations of the
parties hereto in accordance with its terms which shall remain in full force and
effect until such time as this Agreement shall terminate; provided, however,
-------- -------
that the rights and remedies with respect to any breach of any representation
and warranty made by an Originating Party pursuant to Article IV and the
indemnification and payment provisions of Article VII and Article VIII shall be
continuing and shall survive any termination of this Agreement.
SECTION 8.05. GOVERNING LAW; WAIVER OF JURY TRIAL.
-----------------------------------
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE COMMONWEALTH OF MASSACHUSETTS, EXCEPT TO THE
EXTENT THAT THE VALIDITY OR PERFECTION OF THE INTERESTS OF THE BUYER IN THE
PURCHASED/CONTRIBUTED INTERESTS OR REMEDIES HEREUNDER OR THEREUNDER, IN RESPECT
THEREOF, ARE GOVERNED BY THE LAWS OF A
<PAGE>
JURISDICTION OTHER THAN THE COMMONWEALTH OF MASSACHUSETTS.
(b) EACH THE PARTIES HERETO HEREBY AGREES TO THE JURISDICTION OF ANY
FEDERAL COURT LOCATED WITHIN THE STATE OF NEW YORK.
SECTION 8.06. Costs, Expenses and Taxes. (a) In addition to the
-------------------------
rights of indemnification under Article VII hereof, each Originating Party
-----------
agrees to pay, jointly and severally, on demand, all reasonable costs and
expenses in connection with the preparation, execution and delivery (including
periodic auditing, filing searches and any requested amendments, waivers or
consents) of this Agreement and the other documents to be delivered hereunder or
in connection herewith, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Buyer and its assignees with respect
hereto and thereto and with respect to advising the Buyer and its assignees as
to its rights and remedies hereunder and thereunder, and the other agreements
executed pursuant hereto and all costs and expenses, if any (including
reasonable counsel fees and expenses), in connection with the enforcement of
this Agreement and the other agreements and documents to be delivered hereunder
or in connection herewith.
(b) In addition, each Originating Party shall pay on demand, jointly
and severally, any and all stamp, sales, excise and other taxes and fees payable
or determined to be payable in connection with the execution, delivery, filing
and recording of this Agreement or the other agreements and documents to be
delivered hereunder or in connection herewith, or of any other agreement or
document providing liquidity support, credit enhancement or other similar
support to EFCC in respect of the transactions contemplated hereby or by the
EFCC Agreement, and agrees to indemnify the Buyer and its assignees against any
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes and fees.
SECTION 8.07. Execution in Counterparts; Severability. This
---------------------------------------
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and
the same agreement. In case any provision in or obligation under this Agreement
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 8.08. No Proceedings. Each Originating Party hereby agrees
--------------
that it will not institute against the Buyer any Involuntary Proceeding (as
defined in clause (i) of Section 7.01(f) of the EFCC Agreement) so long as any
---------------
obligations of the
<PAGE>
Buyer shall be outstanding or there shall not have elapsed one year plus one day
since the last day on which any such obligations shall have been outstanding.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as a sealed
instrument, as of the date first above written.
BUYER: BV FUNDING CORP.
By: /s/ John Colton
--------------------------------
Title: Executive Vice President
Address:
114 Turnpike Road
Westboro, MA 01581
Attn: J. Colton
Telecopy No.: 508-870-0260
ORIGINATOR: BANKVEST CAPITAL CORP.
By: /s/ John Colton
--------------------------------
Title: Executive Vice President
Address:
114 Turnpike Road
Westboro, MA 01581
Attn: J. Colton
Telecopy No.: 508-870-0260
<PAGE>
LEASEVEST: LEASEVEST CAPITAL CORP.
By: /s/ John Colton
-----------------------------------
Title: Executive Vice President
Address:
114 Turnpike Road
Westboro, MA 01581
Attn: J. Colton
Telecopy No.: 508-870-0260
<PAGE>
EXHIBIT A
LIST OF OFFICES WHERE RECORDS ARE KEPT
(Attached)
<PAGE>
EXHIBIT B
TRADENAMES AND ASSUMED NAMES
(Attached)
<PAGE>
EXHIBIT C
LEASEVEST ASSIGNMENT AND OTHER SIMILAR BLANKET ASSIGNMENTS
(Attached)
<PAGE>
EXHIBIT 10.17
[Conformed Version]
LEASE RECEIVABLES
PURCHASE AGREEMENT
Dated as of September 30, 1996
Among
BV FUNDING CORP.
as Seller,
BANKVEST CAPITAL CORP.,
as Servicer and Collateral Custodian,
EAGLEFUNDING CAPITAL CORPORATION,
as Purchaser
and
THE FIRST NATIONAL BANK OF BOSTON
as Deal Agent
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
ARTICLE I DEFINITIONS........................................................................................ - 1 -
SECTION 1.01. Certain Defined Terms................................................................ - 1 -
SECTION 1.02. Other Terms.......................................................................... - 27 -
SECTION 1.03. Computation of Time Periods.......................................................... - 27 -
ARTICLE II AMOUNTS AND TERMS OF THE PURCHASES................................................................ - 27 -
SECTION 2.01. Facility............................................................................. - 27 -
SECTION 2.02. Making Purchases..................................................................... - 28 -
SECTION 2.03. Transfers of Interests in Leases..................................................... - 29 -
SECTION 2.04. Termination or Reduction of the Purchase Limit....................................... - 29 -
SECTION 2.05. Selection of Purchase Periods........................................................ - 29 -
SECTION 2.06. Settlement Procedures................................................................ - 30 -
SECTION 2.07. Payments and Computations, Etc....................................................... - 33 -
SECTION 2.08. Yield Protection..................................................................... - 34 -
SECTION 2.09. Increased Capital.................................................................... - 35 -
SECTION 2.10. Grant of Security Interest in Equipment Collateral................................... - 35 -
SECTION 2.11. Taxes................................................................................ - 36 -
ARTICLE III CONDITIONS OF PURCHASES.......................................................................... - 36 -
SECTION 3.01. Conditions Precedent to Initial Purchase............................................. - 37 -
SECTION 3.02. Conditions Precedent to All Purchases................................................ - 39 -
ARTICLE IV REPRESENTATIONS AND WARRANTIES.................................................................... - 40 -
SECTION 4.01. Representations and Warranties of the Seller......................................... - 40 -
SECTION 4.02. Representations and Warranties of the Servicer....................................... - 43 -
ARTICLE V GENERAL COVENANTS.................................................................................. - 45 -
SECTION 5.01. Affirmative Covenants of the Seller.................................................. - 45 -
SECTION 5.02. Reporting Requirements of the Seller................................................. - 49 -
SECTION 5.03. Negative Covenants of the Seller..................................................... - 50 -
SECTION 5.04. Covenants of the Servicer............................................................ - 52 -
ARTICLE VI ADMINISTRATION AND COLLECTION..................................................................... - 55 -
SECTION 6.01. Designation of Servicer.............................................................. - 55 -
SECTION 6.02. Duties of the Servicer............................................................... - 55 -
SECTION 6.03. Rights of the Deal Agent............................................................. - 56 -
SECTION 6.04. Responsibilities of the Seller....................................................... - 57 -
SECTION 6.05. Further Action Evidencing Purchases.................................................. - 57 -
SECTION 6.06. Application of Payments.............................................................. - 58 -
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
SECTION 6.07. Collateral Custodian................................................................. - 58 -
ARTICLE VII EVENTS OF TERMINATION............................................................................ - 59 -
SECTION 7.01. Events of Termination................................................................ - 59 -
ARTICLE VIII THE DEAL AGENT.................................................................................. - 62 -
SECTION 8.01. Authorization and Action............................................................. - 62 -
SECTION 8.02. Deal Agent's Reliance, Etc........................................................... - 62 -
SECTION 8.03. Deal Agent and Affiliates............................................................ - 62 -
SECTION 8.04. Purchase Decisions................................................................... - 63 -
SECTION 8.05. Resignation of the Deal Agent........................................................ - 63 -
ARTICLE IX INDEMNIFICATION; REPURCHASES...................................................................... - 63 -
SECTION 9.01. Indemnities by the Seller............................................................ - 63 -
SECTION 9.02. Substitution and Repurchase of Assets................................................ - 65 -
ARTICLE X MISCELLANEOUS...................................................................................... - 66 -
SECTION 10.01. Amendments, Etc..................................................................... - 66 -
SECTION 10.02. Notices, Etc........................................................................ - 67 -
SECTION 10.03. No Waiver; Remedies................................................................. - 67 -
SECTION 10.04. Binding Effect; Assignability....................................................... - 67 -
SECTION 10.05. GOVERNING LAW; WAIVER OF JURY TRIAL................................................. - 68 -
SECTION 10.06. Costs, Expenses and Taxes........................................................... - 69 -
SECTION 10.07. No Proceedings...................................................................... - 70 -
SECTION 10.08. Set-Off............................................................................. - 70 -
SECTION 10.09. Execution in Counterparts; Severability............................................. - 70 -
</TABLE>
-ii-
<PAGE>
LIST OF EXHIBITS
----------------
EXHIBIT A Description of Credit and Collection Policy
EXHIBIT B Form of Interest Rate Hedge Assignment (with Interest Rate Hedge
Acknowledgment attached)
EXHIBIT C Form of Collection Account Agreement
EXHIBIT D Form of Purchase Request
EXHIBIT E Form of Asset Report
EXHIBIT F List of Offices of Seller where Records Are Kept
EXHIBIT G Form of Interest Rate Hedge Report
EXHIBIT H Lock-Box Agreement
EXHIBIT I Form of Lease
-iii-
<PAGE>
LEASE RECEIVABLES PURCHASE AGREEMENT
This LEASE RECEIVABLES PURCHASE AGREEMENT dated as of September 30,
1996 among BV FUNDING CORP., a Delaware corporation, as Seller, BANKVEST CAPITAL
CORP., a Massachusetts corporation, as Servicer and Collateral Custodian,
EAGLEFUNDING CAPITAL CORPORATION, as Purchaser, and THE FIRST NATIONAL BANK OF
BOSTON, as Deal Agent.
PRELIMINARY STATEMENTS. (1) The Originator is in the business of
leasing, financing, and providing associated services with respect to equipment;
(2) The Seller is a special-purpose Subsidiary of the Originator
established to purchase and otherwise acquire Assets and related property;
(3) The Seller wishes from time to time to offer to sell, transfer
and assign to the Purchaser, Assets and related property; and
(4) Subject to the terms and conditions set forth herein, the
Purchaser shall accept such offers to purchase such Assets and related property
from the Seller.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement (both
---------------------
above and elsewhere), the following terms shall have the following meanings
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"Adjusted Base Rate" means, on any date, a per annum rate of interest
------------------
equal to the sum of the Base Rate on such date and 0.55%.
"Adjusted Eurodollar Rate" means, with respect to any Purchase Period
------------------------
for all Capital allocated to such Purchase Period, an interest rate per annum
equal to the sum of
(a) a per annum rate equal to
(i) at all times prior to the occurrence of the Rating Agency
Review Completion, 0.55%; and
-1-
<PAGE>
(ii) at all times on and after the occurrence of the Rating
Agency Review Completion, 1.55%; plus
----
(b) the Eurodollar Rate with respect to such Purchase Period.
"Adverse Claim" means a lien, security interest, charge, encumbrance
-------------
or other right or claim of any Person other than Permitted Encumbrances.
"Affected Party" means the Purchaser, FNBB, individually and in its
--------------
capacity as Deal Agent, any Liquidity Provider, any Supplemental Enhancement
Provider and any parent company controlling any of the foregoing.
"Affiliate" means, with respect to any Person, any other Person
---------
directly or indirectly controlling, controlled by, or under common control with,
such specified Person; provided, however, that none of the Deal Agent, the
-------- -------
Purchaser, any Liquidity Provider or any Supplemental Enhancement Provider shall
be deemed to be an Affiliate of the Seller. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract, or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Affiliated Obligor" means any Obligor which is an Affiliate of
------------------
another Obligor.
"Aggregate Fee Rate" means the sum of the per annum rates or
------------------
percentages applicable from time to time to calculate each of the Servicer Fee,
the Program Fee, the Liquidity Fee, the Supplemental Enhancement Fee and the
fees, if any, payable by the Seller with respect to Interest Rate Hedges.
"Aggregate Outstanding Balance" means, at any time, the aggregate
-----------------------------
Outstanding Balance of all Purchased Assets that are Eligible Assets.
"Aggregate Purchase Price" means, at any time, the sum of the
------------------------
outstanding Capital at such time and the Deferred Purchase Price at such time.
"Agreement" means this Lease Receivables Purchase Agreement, as the
---------
same may from time to time be amended, restated, supplemented or otherwise
modified.
"Alternative Rate" means, with respect to any Purchase Period for all
----------------
Capital allocated to such Purchase Period, an interest rate per annum equal to
the Adjusted Eurodollar Rate or the Adjusted Base Rate as the Seller shall
select in accordance with the terms of this Agreement; provided, however, that
-------- -------
the "Alternative Rate" for such Capital allocated to such Purchase Period shall
----------------
be the Adjusted Base Rate if (a) on or before the first day of such Purchase
-2-
<PAGE>
Period, a Purchaser shall have notified the Deal Agent that a Eurodollar
Disruption Event has occurred, (b) such Fixed Period is a period of 1 to 29 days
or (c) such Capital is less than $1,000,000.
"Asset" means, with respect to any Lease at any time, all rights to
-----
payment arising thereunder, including, without limitation, (i) any Periodic
Installment of Rent then or thereafter payable by the Obligor under such Lease,
(ii) any Lease Termination Payments, and (iii) any Residual Realizations,
together with any supplemental or additional payment required by the terms of
such Lease with respect to insurance, maintenance, ancillary products and
services and other specific charges, but excluding any such payments or charges
which constitute sales or other taxes or the price for a purchase option.
"Asset Report" means a report, in substantially the form of Exhibit E,
------------ ---------
furnished by the Servicer to the Deal Agent for the Purchaser pursuant to
Section 2.06(a)(i).
- ------------------
"Backup Servicing Agreement" means the Backup Servicing Agreement,
--------------------------
dated as of July 1, 1996 among BankVest Capital Corp., Parrish Financial
Servicing Company, L.P., and Norwest Bank Minnesota, National Association, as
the same may be amended, restated, supplemented or otherwise modified from time
to time.
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C.
---------------
Section 101 et seq.), as amended from time to time, or any successor statute.
-- ---
"Base Rate" means, on any date, a fluctuating rate of interest per
---------
annum equal to the higher of (a) the per annum rate of interest announced from
time to time by FNBB at its head office in Boston, Massachusetts as its "base
rate", and (ii) ? of one percent per annum above the Federal Funds Rate.
"Benefit Plan" means, with respect to any Person, a defined benefit
------------
plan as defined in Section 3(35) of ERISA (other than a Multiemployer Plan) in
respect of which such Person or any ERISA Affiliate of such Person is, or at any
time within the immediately preceding six (6) years was, an "employer" as
defined in Section 3(5) of ERISA.
"Breakage Indemnity" means, for any Purchase Period (computed without
------------------
regard to the maturity of a Purchase Period occurring as a result of the
occurrence of the Termination Date) during which Capital is reduced (determined
without regard to any Purchases), the amount, if any, by which (i) the
additional Yield (calculated without taking into account any Breakage Indemnity)
------------------
which would have accrued on the reductions of such Capital during such Purchase
Period (as so computed) if such reductions had remained as Capital exceeds (ii)
the income, if any, received by the Purchaser or the applicable Liquidity
Provider or Supplemental Enhancement Provider from the investment by such Person
of the proceeds of such reductions of Capital (which investment the Purchaser
and the Liquidity Providers will use reasonable efforts to make under the then
applicable conditions and circumstances).
-3-
<PAGE>
"Business Day" means a day of the year other than a Saturday or a
------------
Sunday on which (a) banks are authorized or required to be open in New York City
and Boston, Massachusetts and (b) if the term "Business Day" is used in
connection with the Adjusted Eurodollar Rate, dealings in dollar deposits are
carried on in the London interbank market.
"Capital" means the sum of the amounts paid to the Seller for each
-------
Capital Purchase pursuant to Section 2.02, reduced from time to time by
------------
Collections received and distributed on account of such Capital pursuant to
Section 2.06 below. If the Purchaser, any Liquidity Provider, any Supplemental
- ------------
Enhancement Provider or the Deal Agent is required (or believes in good faith
that it is required) by law to repay (as a preference or otherwise) to the
Seller, the Originator, LeaseVest, an Obligor, a trustee for the Seller, the
Originator, LeaseVest or any Obligor, a court or any other Person any amount
which previously caused a reduction in Capital, and does so repay such amount,
then Capital shall be reinstated by the amount of such repayment and the Seller
will indemnify and hold the Purchaser, such Liquidity Provider or the Deal Agent
harmless for the amount of such repayment, interest thereon required (or
believed in good faith by the Purchaser, such Liquidity Provider or the Deal
Agent to be required) to be paid in connection therewith and all losses,
liabilities, costs and expenses related thereto (including but not limited to
reasonable attorneys' fees and expenses).
"Capital Purchase" means any increase in the aggregate outstanding
----------------
Capital hereunder.
"Collateral Custodian" means the Person appointed from time to time as
--------------------
Collateral Custodian by the Deal Agent pursuant to Section 6.07.
------------
"Collateral Custodian Fee" means that portion of the Servicer Fee
------------------------
which is allocated for the account of the Collateral Custodian as compensation
for its duties hereunder in the event that the Collateral Custodian is not the
Servicer, as the Seller, the Servicer, the Deal Agent and the Collateral
Custodian may from time to time agree.
"Collection Account" means the account maintained at the Collection
------------------
Account Bank into which Collections of Purchased Assets are deposited following
withdrawal of such Collections from the Lock-Box Account.
"Collection Account Agreement" means an agreement substantially in the
----------------------------
form of Exhibit C among the Seller, the Servicer, the Deal Agent and the
---------
Collection Account Bank which agreement sets forth the rights of the Deal Agent,
the Seller and the Servicer with respect to the disposition and allocation of
the Collections deposited into the Collection Account.
"Collection Account Bank" means The First National Bank of Boston, and
-----------------------
any successor.
-4-
<PAGE>
"Collection Date" means the date following the Termination Date on
---------------
which the aggregate outstanding Capital has been reduced to zero and the
Purchaser and the Deal Agent have received all Yield and other amounts payable
under this Agreement or any other document, instrument or agreement executed
pursuant hereto.
"Collections" means, with respect to any Purchased Asset, all cash
-----------
collections and other cash proceeds of such Purchased Asset (including, without
limitation, any related Lease Termination Payments and any Residual
Realizations), all cash proceeds of Related Security with respect to such
Purchased Asset, and any amounts in respect of such Purchased Asset received or
deemed to have been received pursuant to Section 9.02, and shall also include
------------
any amounts earned as a result of the investment of the Collections held by the
Deal Agent pursuant to Section 2.06.
------------
"Concentration" for any Obligor and its Affiliated Obligors at any
-------------
time means a ratio calculated by dividing (i) the aggregate Outstanding Balance
--------
of all Purchased Assets which are Eligible Assets owing by such Obligor and its
Affiliated Obligors by (ii) the Aggregate Outstanding Balance at such time.
--
"Coverage Shortfall" means the occurrence of the Event of Termination
------------------
described in Section 7.01(j).
---------------
"CP Disruption Event" means the inability of the Purchaser, at any
-------------------
time, whether as a result of a prohibition, a contractual restriction or any
other event or circumstance whatsoever, to raise funds through the issuance of
its commercial paper notes (whether or not constituting commercial paper notes
issued to fund Purchases hereunder) in the United States commercial paper
market.
"CP Rate" means, with respect to any Purchase Period for all Capital
-------
allocated to such Period, the rate equivalent to the rate for (or if more than
one rate, the weighted average or the rates) at which commercial paper notes of
the Purchaser having a term equal to such Purchase Period and to be issued to
fund the applicable Purchase by the Purchaser may be sold by any placement agent
or commercial paper dealer selected by such Purchaser, as agreed between each
such agent or dealer and such Purchaser and notified by the Purchaser to the
Deal Agent and the Servicer; provided, however, if the rate (or rates) as agreed
-------- -------
between any such agent or dealer and the Purchaser with regard to any Purchase
Period for the applicable Purchase is a discount rate (or rates), the "CP Rate"
-------
for such Purchase Period shall be the rate (or if more than one rate, the
weighted average of the rates) resulting from converting such discount rate (or
rates) to an interest-bearing equivalent rate per annum.
"Credit and Collection Policy" means those credit and collection
----------------------------
policies and practices relating to Leases and Assets described in Exhibit A, as
---------
modified in compliance with Section 5.03(c).
---------------
-5-
<PAGE>
"DCR" means Duff & Phelps Credit Rating Co., and any successor
---
thereto.
"Deal Agent" means FNBB, in its capacity as agent hereunder for the
----------
Purchaser.
"Default Ratio" means, for any month, a fraction (expressed as a
-------------
percentage) determined as of the last day of such month equal to (a) the
aggregate Outstanding Balance of all Purchased Assets which became Defaulted
Assets during such month divided by (b) the aggregate Outstanding Balance of all
----------
Purchased Assets which were Eligible Assets outstanding on the last day of the
later of (i) the third month next preceding such month, and (ii) September of
1996.
"Defaulted Asset" means an Asset at any time: (i) which arises under
---------------
a Lease with respect to which more than the greater of (A) ten percent (10%) of
any individual payment thereunder, or (B) $10.00 remains unpaid for more than
ninety (90) days from the original due date for such payment (regardless of
whether such Asset becomes current at some future date), (ii) as to which the
Obligor thereof has taken any action, or suffered any event to occur, of the
type described in Section 7.01(f), (iii) as to which foreclosure proceedings
---------------
have been initiated and are continuing, or (iv) which, consistent with the
Credit and Collection Policy, has been or should be written off as
uncollectible; provided, that neither the Servicer nor the Seller shall be
--------
required to include an Asset which becomes a Defaulted Asset during a given
calendar month as a "Defaulted Asset" for the purposes of this Agreement until
the earlier of (x) the date on which the Asset Report in respect of such month
is required to be delivered pursuant to Section 2.06(a) and (y) the date on
which such Asset Report is actually delivered to the Deal Agent.
"Deferred Purchase Price" means
-----------------------
(a) at any time prior to the Collection Date, the sum of
(i) an amount equal to the greater of:
(A) the Loss Holdback at such time, and
(B) the product of 12.0% and an amount equal to the
Aggregate Outstanding Balance at such time; and
(ii) the Overconcentration Reserve at such time; and
(b) on and after the Collection Date, an amount equal to the
Aggregate Outstanding Balance.
"Delinquency Ratio" means, for any month, a fraction (expressed as a
-----------------
percentage) determined as of the last day of such month equal to (a) the
aggregate Outstanding Balance of all Purchased Assets which became Delinquent
Assets during such month divided by (b) the aggregate Outstanding Balance of all
----------
Purchased Assets which were Eligible Assets outstanding
-6-
<PAGE>
on the last day of the later of (i) the second month next preceding such month,
and (ii) September of 1996.
"Delinquent Asset" means an Asset that is not a Defaulted Asset and
----------------
(i) which arises under a Lease with respect to which more than the greater of
(A) ten percent (10%) of any individual payment thereunder, or (B) $10.00
remains unpaid for more than sixty (60) days from the original due date for such
payment (regardless of whether such Asset becomes current at some future date)
or (ii) which, consistent with the Credit and Collection Policy, has been or
should be classified as delinquent; provided, that neither the Servicer nor the
--------
Seller shall be required to include an Asset which becomes a Delinquent Asset
during a given calendar month as a "Delinquent Asset" for the purposes of this
Agreement until the earlier of (x) the date on which the Asset Report in respect
of such month is required to be delivered pursuant to Section 2.06(a) and (y)
the date on which such Asset Report is actually delivered to the Deal Agent.
"DOL" means the United States Department of Labor and any successor
---
department or agency.
"EFCC" means EagleFunding Capital Corporation, a Delaware corporation.
----
"Eligible Asset" means, at any time, an Asset:
--------------
(i) the Obligor of which is a United States resident;
(ii) which:
(A) is not a Defaulted Asset and has not been a Defaulted
Asset during the prior twelve (12) months;
(B) on the Purchase Date thereof, is not a Delinquent Asset
and has not been a Delinquent Asset on more than one occasion prior to
any date of determination hereunder; and
(C) at all times during which the quotient (stated as a
percentage) of the aggregate Outstanding Balance of all Delinquent
Assets divided by the Aggregate Outstanding Balance exceeds 3.0%, is
------- --
not a Delinquent Asset;
(iii) which arises out of a Lease having an original term of no more
than 72 months;
(iv) which, upon becoming a Purchased Asset, will not cause the
Weighted Average Remaining Term to exceed 33 months;
-7-
<PAGE>
(v) which is denominated and payable only in United States dollars
within the United States;
(vi) which, together with the Lease related thereto, does not
contravene in any material respect any laws, rules or regulations
applicable thereto (including, without limitation, laws, rules and
regulations relating to truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection practices and
privacy) and with respect to which none of the Originator, LeaseVest or the
Seller is in violation of any such law, rule or regulation applicable to
such Asset;
(vii) which is freely assignable and does not require the consent,
authorization, approval or notice to the Obligor thereof (except for such
consents, authorizations, approvals or notices which have already been
obtained) in connection with the conveyance of the related Leases, the
Related Security and the Collections from LeaseVest to the Originator (as
applicable), from the Originator (and/or LeaseVest) to the Seller and from
the Seller to the Purchaser;
(viii) which satisfies all applicable requirements of the Credit and
Collection Policy;
(ix) the Obligor of which is not an Affiliate of any of the parties
hereto;
(x) the Obligor of which is in possession of the Equipment subject
to the related Lease, is the end-user of such equipment, and is not sub-
leasing such equipment to any other user or sub-lessee;
(xi) in respect of which the Deal Agent has not notified the Seller
that such Asset is unacceptable for purchase hereunder; and
(xii) which arises under a Lease:
(A) which has been duly authorized is in full force and effect
and constitutes the legal, valid and binding obligation of the Obligor
of such Lease enforceable against such Obligor in accordance with its
terms;
(B) which is "chattel paper" within the meaning of the UCC of
all applicable jurisdictions, the original counterpart of which is
contained in files stamped to indicate that the Leases in such files
have been Purchased by the Purchaser;
(C) in respect of which the Obligor UCC Filing Requirement has
been satisfied;
-8-
<PAGE>
(D) which, in the case of a True Lease, good and marketable
title to all Equipment related thereto has been transferred to the
Seller, free and clear of any Adverse Claim which would reasonably be
expected to prevent the Seller from granting a first priority
perfected security interest in such Equipment to the Deal Agent for
the benefit of the Purchaser hereunder;
(E) as of the Purchase Date thereof, (1) there was no default,
breach, violation or event permitting acceleration under the terms of
the Lease, and (2) no event had occurred and was continuing that, with
notice, the lapse of time, or both, would constitute a default,
breach, violation or event permitting acceleration under the terms of
the Lease;
(F) which was originated or selected for purchase by LeaseVest
and/or the Originator in the ordinary course of its business in a
manner which satisfies the underwriting practices set forth in the
Credit and Collection Policy;
(G) which constitutes a non-cancelable obligation of the
Obligor and requires the Obligor to make all payments of Periodic
Installments of Rent thereunder included in the calculation of the
Outstanding Balance thereof regardless of the condition of the
Equipment to which such Lease relates;
(H) which has not been amended, altered, rewritten, extended,
compromised, adjusted or otherwise modified, and no material provision
of which has been waived;
(I) which has not been satisfied, released, canceled,
subordinated or rescinded, nor has any instrument been executed by
LeaseVest or the Originator which would effect any such satisfaction,
release, cancellation, subordination or rescission;
(J) which is not subject to (i) any right of rescission,
setoff, recoupment, counterclaim or defense (other than the Obligor's
right of quiet enjoyment), whether arising out of transactions
concerning such Lease or otherwise, and no such right has been
asserted in writing by any person with respect thereto, or (ii) any
dispute, offset, claim or other Adverse Claim, right of recision,
counterclaim or other defense (including defenses arising out of
violations of usury laws) that would reduce (or which has reduced) the
cash amount payable therefor;
(K) with respect to which all consents, licenses, approvals
and authorizations of any governmental agencies or authorities
required to be obtained in connection with the conveyance of the
Leases, the Purchased Asset, the Related Security and the Collections
from LeaseVest to the Originator (as applicable),
-9-
<PAGE>
from the Originator (and/or LeaseVest) to the Seller and from the
Seller to the Purchaser have been obtained;
(L) which requires the Obligor thereunder to pay all insurance
and maintenance costs and taxes with respect to the related Equipment;
(M) which does not contractually provide for a final payment
in excess of one-third (1/3) of the original purchase price of the
related Equipment;
(N) which does not relate to an equipment upgrade under an
existing Lease unless additional schedules related thereto have been
attached to such Lease;
(O) good and marketable title to which (including a 100% first
priority ownership interest in the Purchased Asset relating thereto,
all Related Security and Collections with respect thereto) has been
conveyed by LeaseVest to the Originator (as applicable), by the
Originator to the Seller and by the Seller to the Purchaser, free and
clear of any Adverse Claim;
(P) which contains enforceable provisions sufficient to enable
LeaseVest (as applicable), the Originator (or its assigns, including
the Seller and the Purchaser) to realize against the Equipment related
thereto;
(Q) which does not constitute a "consumer lease" within the
meaning of Article 2A of the UCC in any jurisdiction where such
Article 2A has been adopted and governs the construction thereof;
(R) with respect to which the related Equipment has not, and
will not, be primarily (as opposed to incidentally) used for the
transportation, treatment, storage, disposal, remediation, removal or
refining of any pollutant, hazardous substance, radioactive substance,
toxic substance, hazardous waste, toxic waste, petroleum or petroleum-
derived substance or waste, asbestos, PCBs, or any hazardous or toxic
constituent thereof, as defined by, regulated under, or subject to any
federal, state or local laws, statutes, codes, ordinances, rules,
regulations, judgments, agreements or orders related to or addressing
the environment;
(S) which has a minimum internal rate of return equal to or
greater than the Lease Discount Rate applicable to the related
Purchased Asset at that time;
(T) which provides for Periodic Installments of Rent to be
made by the Obligor thereunder on a regular periodic basis no less
frequently than quarterly;
-10-
<PAGE>
(U) with respect to which at least one Periodic Installment of
Rent has been paid prior to the Purchase Date of such Lease (in
addition to any required deposits or prepayments of final
installments);
(V) with respect to which only one original counterpart copy
is in existence;
(W) has been originated by either of the Originating
Parties or any other Person, and in the case of any Asset originated
by any Person other than the Originator, (1) good and marketable title
to which (and in the case of any True Lease, good and marketable title
to all related Equipment) shall have been acquired by the Originator
(aa) (I) in the case of an originator other than LeaseVest, the
aggregate Outstanding Balance of all Leases in respect of Purchased
Assets originated by such originator exceeds 2.0% of the Aggregate
Outstanding Balance in effect at any time of determination hereunder
(each, a "Material Originating Person"), pursuant to the terms of a
---------------------------
master agreement between the Originator and such Material Originating
Person governing the sale of similar assets originated by such Person
from time to time, the terms of which master agreement shall be in
form and substance reasonably satisfactory to the Deal Agent, and (II)
in the case of LeaseVest as originator, pursuant to the terms of the
LeaseVest Assignment, and (bb) prior to the date of the relevant Lease
Purchase hereunder, and (2) in the case of a Material Originating
Person, no less than five Business Days prior to the initial proposed
inclusion of Assets originated by such Material Originating Person in
a Lease Purchase hereunder, the Deal Agent shall have received written
notice of such proposed inclusion, and a copy of the master agreement
described in subclause (1)(aa)(I) above; and
(X) which, in the case of any Asset originated by either of
the Originating Parties, is in substantially the form of Lease set
forth in Exhibit I hereto; and
---------
(xiii) the Obligor of which is not an Obligor in respect of which the
aggregate Outstanding Balance of all Eligible Assets owed by such Obligor
constitute less than 50% of the aggregate Outstanding Balances of all
Assets owed by such Obligor;
(xiv) the Obligor of which is located in a jurisdiction:
(A) in each case where LeaseVest is the originator of such
Asset, in which LeaseVest has received a certificate of authority to
do business and is in good standing, in such jurisdiction;
(B) in each case where BankVest Capital Corp. is the
originator of such Asset, in which BankVest Capital Corp. has received
a certificate of authority to do business and is in good standing, in
such jurisdiction; and
-11-
<PAGE>
(C) in each case where neither of the Originating Parties is
the originator of such Asset, in which the Originator has received a
certificate of authority to do business and is in good standing, in
such jurisdiction; and
(xv) the Obligor of which is not the federal government of the
United States of America or any agency or body politic thereof.
"Eligible Assets Balance" means, at any time, the aggregate remaining
-----------------------
Periodic Installments of Rent on all Purchased Assets which are Eligible Assets.
"Equipment" means any equipment leased or financed by the Seller.
---------
"Equipment Collateral" has the meaning assigned to that term in
--------------------
Section 2.10.
- ------------
"ERISA" means the U.S. Employee Retirement Income Security Act of
-----
1974, as amended from time to time, and any successor statute.
"ERISA Affiliate" means, with respect to any Person, any (i)
---------------
corporation which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the IRC) as such Person; (ii)
partnership or other trade or business (whether or not incorporated) under
common control (within the meaning of Section 414(c) of the IRC) with such
Person or (iii) member of the same affiliated service group (within the meaning
of Section 414(m) of the IRC) as such Person, any corporation described in
clause (i) above or any partnership or other trade or business described in
clause (ii) above.
"Eurocurrency Liabilities" has the meaning assigned to that term in
------------------------
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Disruption Event" means, with respect to all Capital
---------------------------
allocated to any Purchase Period, any of the following: (a) a determination by
a Purchaser that it would be contrary to law or to the directive of any central
bank or other governmental authority (whether or not having the force of law) to
obtain United States dollars in the London interbank market to make, fund or
maintain any Purchase for such Purchase Period, (b) the failure of FNBB to
furnish timely information for purposes of determining the Adjusted Eurodollar
Rate, (c) a determination by a Purchaser that the rate at which deposits of
United States dollars are being offered in the London interbank market does not
accurately reflect the cost to such Purchaser of making, funding or maintaining
any Purchase for such Purchase Period or (d) the inability of a Purchaser to
obtain United States dollars in the London interbank market to make, fund or
maintain any Purchase for such Purchase Period.
"Eurodollar Rate" means, with respect to any Purchase Period for all
---------------
Capital allocated to such Purchase Period, an interest rate per annum equal to
the quotient, stated as a
-12-
<PAGE>
percentage, of (i) the per annum rate determined by the Deal Agent at which
Dollar deposits for such Purchase Period are offered by FNBB based on
information presented on Telerate Page 3750 as of 11:00 a.m. London time on the
second Business Day prior to the first day of such Purchase Period, divided by
(ii) a number equal to 1.00 minus the Eurodollar Reserve Percentage, if
-----
applicable.
"Eurodollar Reserve Percentage" means, for any day with respect to a
-----------------------------
Purchase Period to which Capital has been allocated hereunder, means the maximum
rate (expressed as a decimal) at which any lender subject thereto would be
required to maintain reserves under Regulation D of the Board of Governors of
the Federal Reserve System (or any successor or similar regulations relating to
such reserve requirements) against Eurocurrency Liabilities, if such liabilities
were Outstanding. The Eurodollar Reserve Percentage shall be adjusted
automatically on and as of the effective date of any change in the maximum rate
described above.
"Event of Termination" has the meaning assigned to that term in
--------------------
Section 7.01.
- ------------
"Facility Documents" shall mean collectively, this Agreement, the
------------------
Lease Sale Agreement, the Lock-Box Agreement, the Interest Rate Hedges, the Fee
Letter, each Liquidity Fee Letter, each Supplemental Enhancement Fee Letter and
all other agreements, documents and instruments executed and delivered in
connection herewith or therewith, in each case, as the same may be amended,
supplemented or otherwise modified from time to time.
"Federal Funds Rate" means, for any day, a fluctuating interest rate
------------------
per annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day for such transactions received by FNBB
from three Federal funds brokers of recognized standing selected by it.
"Fee Letter" means the fee letter of even date herewith, among the
----------
Deal Agent, the Purchaser and the Seller, as the same may from time to time be
amended, restated, supplemented or otherwise modified.
"FNBB" means The First National Bank of Boston, a national banking
----
association, and any successor.
"FNBB Interest Rate Hedges" means all Interest Rate Hedges entered
-------------------------
into by the Seller with FNBB, as counterparty.
"Indebtedness" of any Person means (i) indebtedness of such Person for
------------
borrowed money, (ii) obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (iii) obligations of such Person to pay the
deferred purchase price of property or
-13-
<PAGE>
services, (iv) obligations of such Person as lessee under leases which shall
have been or should be, in accordance with generally accepted accounting
principles, recorded as capital leases, (v) obligations secured by any lien or
other charge upon property or Assets owned by such Person, even though such
Person has not assumed or become liable for the payment of such obligations,
(vi) obligations of such Person in connection with any letter of credit issued
for the account of such Person and (vii) obligations of such Person under direct
or indirect guaranties in respect of, and obligations (contingent or otherwise)
to purchase or otherwise acquire, or otherwise to assure a creditor against loss
in respect of, indebtedness or obligations of others of the kinds referred to in
clauses (i) through (vi) above.
"Initial Purchase Date" means the date the first Lease Purchase is
---------------------
made pursuant to this Agreement.
"Initial Security Agreement" means the Security Agreement of even date
--------------------------
herewith, made by the Purchaser in favor of Bankers Trust Company, as the
Supplemental Enhancement Collateral Agent for the benefit of itself and the
Supplemental Enhancement Providers.
"Initial Supplemental Enhancement Agreement" means the Supplemental
------------------------------------------
Enhancement Loan Agreement of even date herewith, among the Purchaser, the
financial institutions parties thereto as "Supplemental Enhancement Providers"
and FNBB, in its capacity as agent for the Supplemental Enhancement Providers
thereunder, as the same may from time to time be amended, restated, supplemented
or otherwise modified.
"Initial Supplemental Enhancement Fee Letter" means the fee letter of
-------------------------------------------
even date herewith, making reference to the Initial Supplemental Enhancement
Agreement, among the Deal Agent, the Purchaser, the Seller and FNBB, in its
capacity as agent for the Supplemental Enhancement Providers thereunder, as the
same may from time to time be amended, restated, supplemented or otherwise
modified.
"Interest Rate Hedges" means all interest rate exchange, collar, cap,
--------------------
swap or similar agreements entered into by the Seller in connection herewith to
provide protection to, or minimize the impact upon, the Seller of increasing
Yield Rates.
"Interest Rate Hedge Assignment" means an assignment of an Interest
------------------------------
Rate Hedge in substantially the form of Exhibit B, made by the Seller in favor
---------
of the Deal Agent.
"Interest Rate Hedge Assignment Acknowledgment" means an
---------------------------------------------
acknowledgment in substantially the form of Exhibit B executed by a counterparty
---------
to an Interest Rate Hedge in favor of the Deal Agent.
"IRC" means the Internal Revenue Code of 1986, as amended from time to
---
time, and any successor statute.
-14-
<PAGE>
"IRS" means the Internal Revenue Service of the United States of
---
America.
"Late Charges" means amounts due under a Lease as fees or charges for
------------
late payments under such Lease.
"Lease" means a contract in the form of a lease, installment sales
-----
contract, promissory note/security agreement or other similar type of chattel
paper pursuant to which the Seller (as assignee of the Originator or otherwise)
leases Equipment to or finances the acquisition of Equipment by an Obligor.
"Lease Discount Rate" means, with respect to any Purchased Asset at
-------------------
any time, a discount rate used to calculate the present value of the Periodic
Installments of Rent payable under the related Lease. The Lease Discount Rate
for the Eligible Assets purchased by the Purchaser on any date pursuant to a
Lease Purchase shall be a rate equal to the sum of (i) the interest rate per
annum quoted to the Seller by the Interest Rate Hedge counterparty selected by
the Seller as the rate at which such counterparty is willing to enter into an
Interest Rate Hedge pursuant to which the Seller will pay an interest rate
calculated in connection with an Interest Rate Hedge amortization prepared by
the Seller and agreed to by the Deal Agent and which complies with Section
-------
5.01(m) hereof, and in return shall receive a floating interest rate (calculated
- -------
against the same principal amount) approximately equal to a rate equal during
any month to the daily average during such month of the money market yields of
the rate set forth in H.15 (519) for 30 day maturities under the caption
"Commercial Paper" plus (ii) the Aggregate Fee Rate in effect at the time of the
----
Purchase Date thereof.
"Lease Purchase" means a purchase by the Purchaser of Purchased
--------------
Interests from the Seller pursuant to Sections 2.01 and 2.02.
------------- ----
"Lease Sale Agreement" means that certain Lease Sale and Contribution
--------------------
Agreement of even date herewith among the Originator, LeaseVest and the Seller,
as such agreement may be amended, supplemented or modified from time to time.
"Lease Sale Assets" means all right, title and interest of the Seller
-----------------
in, to and under the Lease Sale Agreement, including, without limitation, all
obligations due and to become due to the Seller from either of the Originating
Parties under or in connection therewith, whether as Assets or fees, expenses,
costs, indemnities, insurance recoveries, damages for breach or otherwise, and
all rights, remedies, powers, privileges and claims of the Seller against either
of the Originating Parties under or with respect to the Lease Sale Agreement.
"Lease Termination Payment" means a payment made by an Obligor under a
-------------------------
Lease upon the early termination of such Lease.
"LeaseVest" means LeaseVest Capital Corp., a Massachusetts
---------
corporation.
-15-
<PAGE>
"LeaseVest Assignment" has the meaning assigned to that term in
--------------------
Section 2.07(a) of the Lease Sale Agreement.
"Liquidity Agreements" means any one or more loan agreements styled as
--------------------
"liquidity loan agreements" or other similar agreements, entered into by the
Purchaser and one or more financial institutions at any time from and after the
Initial Purchase Date, pursuant to which the Purchaser may from time to time
make borrowings from such financial institutions secured by all or part of the
Purchaser's right, title and interest in, to and under the Purchased Interests
arising hereunder, as such agreements may from time to time be amended,
restated, supplemented or otherwise modified.
"Liquidity Fee" means a fee payable monthly in arrears to the Deal
-------------
Agent for the account of each Liquidity Provider, equal to the product of (i)
the average daily aggregate amount of the liquidity commitment of such Liquidity
Provider under the applicable Liquidity Agreement during the month then most
recently concluded, and (ii) the relevant per annum rate set forth in the
applicable Liquidity Fee Letter.
"Liquidity Fee Letter" means, with respect to a Liquidity Agreement, a
--------------------
fee letter making reference to such Liquidity Agreement and entered into on or
about the date of such Liquidity Agreement among the Deal Agent, the Purchaser,
the Seller and the relevant Liquidity Provider (or an agent for a group of such
Liquidity Providers, as the case may be), as the same may from time to time be
amended, restated, supplemented or otherwise modified.
"Liquidity Provider" means any of the financial institutions from time
------------------
to time party to any Liquidity Agreement in a capacity as a liquidity lender to
the Purchaser thereunder.
"Lock-Box Account" means account #10-1093-3415 (or a replacement
----------------
account therefor) maintained at the Lock-Box Bank pursuant to the terms of the
Lock-Box Agreement, for the purpose of receiving Collections and providing for
(among other things) the remittance of such Collections to the Collection
Account.
"Lock-Box Agreement" means the lock box service agreement among the
------------------
Lock-Box Bank, BankVest Capital Corp. (in its capacity as trustee for each of
the "Participants" named thereunder as parties thereto), the Seller, Parrish
Financial Servicing Company, L.P., the Deal Agent and such other Persons which
from time to time may become parties thereto as "Participants" in accordance
with the terms thereof, being in form and substance equivalent to the form of
lock box service agreement attached as Exhibit H hereto, as the same may be
---------
amended, restated, supplemented or otherwise modified from time to time with the
consent of the Deal Agent.
-16-
<PAGE>
"Lock-Box Bank" means PNC Bank, N.A., or any replacement depositary
-------------
institution acceptable to each of the Purchaser and the Deal Agent in the
exercise of their respective sole discretion, at which the Lock-Box Account is
maintained.
"Loss Holdback" means, at any time, an amount equal to (a) the
-------------
Aggregate Outstanding Balance at such time, multiplied by (b) a fraction
---------- --
(expressed as a percentage) equal to:
(A x B x C)
where:
A = The product of (A) a factor of twelve, and (B) the greater
of (i) the average of the Default Ratios for the three then
most recently concluded months (or such lesser number of
months as shall have concluded after August of 1996 and
prior to the applicable date of determination hereunder),
and (ii) the average of the Default Ratios for the twelve
then most recently concluded months (or such lesser number
of months as shall have concluded after August of 1996 and
prior to the applicable date of determination hereunder).
B = The Weighted Average Remaining Term at such time (expressed
in years).
C = A factor of 2.50.
"Moody's" means Moody's Investors Service, Inc. and its successors.
-------
"Multiemployer Plan" means, with respect to any Person, a
------------------
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA which is, or
within the immediately preceding six (6) years was, contributed to by either
such Person or any ERISA Affiliate of such Person.
"Obligor" means a Person obligated to make payments on a Purchased
-------
Asset pursuant to a Lease.
"Obligor Concentration Limit" means a percentage equal to 4.0%
---------------------------
"Obligor UCC Filing Requirement" means, with respect to any Lease in
------------------------------
respect of one or more items of Equipment having an aggregate initial purchase
price of greater than or equal to $25,000 (or, in the case of any Lease the
Obligor in respect of which has senior unsecured indebtedness rated investment
grade by one or more Rating Agencies, an aggregate initial purchase price of
greater than $75,000), that the Originator has obtained appropriate UCC
-17-
<PAGE>
financing statements (Form UCC-1) executed by the Obligor of such Lease, which
UCC financing statements have been filed in all applicable jurisdictions, so
that, if such Lease is a Security Document, the Originator would reasonably be
expected to have a first priority perfected security interest in the Equipment
subject to such Lease.
"Originating Parties" means, collectively, each of the Originator and
-------------------
LeaseVest, and the term "Originating Party" refers to either of them.
-----------------
"Originator" means BankVest Capital Corp., a Massachusetts
----------
corporation, in its capacity as "Originator" under the Lease Sale Agreement.
"Outstanding Balance" means, with respect to any Asset, an amount
-------------------
equal to the present value of the Periodic Installments of Rent relating to such
Asset, determined by discounting on a monthly basis (assuming a calendar year
consisting of twelve thirty-day months) each such Periodic Installment of Rent
from the end of the calendar month in which such Periodic Installment of Rent is
due, at a rate equal to the Lease Discount Rate with respect to such Asset
(determined as of the date of the related Lease Purchase). Notwithstanding
anything to the contrary contained in this Agreement, if any Periodic
Installment of Rent was not paid when due and if such payment remains unpaid at
the time the Outstanding Balance of the related Asset is calculated for any
purpose, then the portion of the "Outstanding Balance" of such Asset relating to
-------------------
such Periodic Installment of Rent shall be equal to the amount of such unpaid
payment.
"Overconcentration Amount" means, at any time, for each Obligor, the
------------------------
amount by which the aggregate Outstanding Balances of Purchased Assets which are
Eligible Assets owing by such Obligor at such time exceeds the product of the
Obligor Concentration Limit and the Aggregate Outstanding Balance at such time.
"Overconcentration Reserve" means, at any time, an amount equal to the
-------------------------
sum of:
(a) the aggregate Overconcentration Amounts for all Obligors at such
time; and
(b) the amount by which the aggregate Outstanding Balances of all
Eligible Assets which were Delinquent Assets on not more than one occasion
prior to any date of determination hereunder exceeds five percent (5.0%) of
the Aggregate Outstanding Balance at such time; and
(c) the amount by which the aggregate Outstanding Balances of all
Eligible Assets in respect of which the Obligor is a state or local
government of any state of the United States or any agency or political
subdivision thereof exceeds ten percent (10%) of the Aggregate Outstanding
Balance at such time; and
(d) the amount by which the aggregate Outstanding Balances of all
Eligible Assets which were originated by Persons other than either of the
Originating Parties
-18-
<PAGE>
exceeds twenty-five percent (25%) of the Aggregate Outstanding Balance at
such time; and
(e) the amount by which the aggregate Outstanding Balances of all
Eligible Assets having an original term of more than 60 months exceeds ten
percent (10%) of the Aggregate Outstanding Balance at such time; and
(f) the amount by which the aggregate Outstanding Balances of all
Eligible Assets the terms of which provide for a final payment in excess of
one-quarter (1/4) of the original purchase price of the related Equipment
exceeds ten percent (10%) of the Aggregate Outstanding Balance at such
time.
"Periodic Installments of Rent" means, with respect to any Lease, the
-----------------------------
amount of individual rent installments payable by the Obligor under such Lease,
excluding however, all supplemental or additional payments required by the terms
of such Lease with respect to sales and other taxes, insurance, maintenance,
purchase option payments, ancillary products and services and other specific
charges.
"Permitted Encumbrance" means any of the following:
---------------------
(a) liens, charges or other encumbrances for taxes and assessments
which are not yet due and payable;
(b) liens of or resulting from any judgment or award, the time for the
appeal or petition for rehearing of which shall not have expired, or in respect
of which the Seller and/or the Originator shall at any time in good faith be
prosecuting an appeal or proceeding for a review, which liens do not, (1) in the
aggregate, secure claims or indebtedness of more than $250,000, or (2) in
respect of certain Equipment, secure claims or indebtedness of more than 10% of
the initial purchase price of such Equipment;
(c) liens, charges or other encumbrances or priority claims
incidental to the conduct of business or the ownership of properties and Assets
(including mechanics', carriers', repairers', warehousemen's and attorneys'
liens and statutory landlords' liens) and deposits, pledges or liens to secure
statutory obligations, surety or appeal bonds or other liens of like general
nature incurred in the ordinary course of business and not in connection with
the borrowing of money, provided in each case, the obligation secured is not
--------
overdue or, if overdue, is being contested in good faith by appropriate actions
or proceedings;
(d) liens, charges or encumbrances in favor of the Purchaser, any
Liquidity Provider, any Supplemental Enhancement Provider or the Deal Agent; and
(e) with respect to Equipment, the interest of an Obligor in such
Equipment under the related Lease.
-19-
<PAGE>
"Permitted Investments" means:
---------------------
(a) securities issued or directly and fully guaranteed or insured by
the United States government or any agency or instrumentality thereof having
maturities of no more than 90 days from the date of acquisition;
(b) time deposits and certificates of deposit having maturities of no
more than 90 days from the date of acquisition, maintained with or issued by any
commercial bank having capital and surplus in excess of $500,000,000 and having
a short-term rating of not less than P-1 or the equivalent thereof from Moody's
and D-1 or the equivalent thereof from DCR (if rated by DCR) and a short-term
rating from S&P which is at least as high as the rating of the commercial paper
notes issued by EFCC;
(c) repurchase obligations for underlying securities of the types
described in clauses (a) or (b) above with a term of not more than ten days and
----------- ---
maturing no later than 90 days after the date of acquisition; and
(d) commercial paper maturing within 90 days after the date of
acquisition and having a rating of not less than P-1 or the equivalent thereof
from Moody's and D-1 or the equivalent thereof from DCR (if rated by DCR) and a
rating from S&P which is at least as high as the rating of the commercial paper
notes issued by EFCC.
"Person" means an individual, partnership, corporation (including a
------
business trust), joint stock company, limited liability company, trust,
unincorporated association, joint venture, government (or any agency or
political subdivision thereof) or other entity.
"Plan" means, with respect to any Person, an employee benefit plan
----
defined in Section 3(3) of ERISA in respect of which such Person or any ERISA
Affiliate of such Person is, or within the immediately preceding six years was,
an "employer" as defined in Section 3(5) of ERISA.
"Post Office Box" means, with respect to the Lock-Box Account, P.O.
---------------
Box 641652, Pittsburgh, PA 15264-1652, or a replacement post office box agreed
to by the Deal Agent, to which Obligors remitting payments relating to Assets by
mail are instructed to direct such payments for deposit into the Lock-Box
Account.
"Program Fee" means a fee, payable monthly in arrears to the Deal
-----------
Agent for the account of the Purchaser, equal to the product of (i) the average
daily amount of outstanding Capital during the month then most recently
concluded, and (ii) the relevant per annum rate set forth in the Fee Letter.
"Purchase" means a Lease Purchase or a Capital Purchase, as
--------
applicable.
-20-
<PAGE>
"Purchase Date" means, with respect to any Lease and the Assets
-------------
arising thereunder, the date of the initial Purchase thereof hereunder.
"Purchase Limit" means at any time $50,000,000, as such amount may be
--------------
reduced pursuant to Section 2.04; provided, however, that at any time prior to
------------ -------- -------
the occurrence of Rating Agency Review Completion, "Purchase Limit" shall mean
--------------
$19,600,000, as such amount may be reduced pursuant to Section 2.04.
------------
Notwithstanding anything in the foregoing sentence to the contrary, at all times
on and after the Termination Date, the "Purchase Limit" shall mean the aggregate
--------------
outstanding Capital at such time.
"Purchase Period" for any outstanding Capital means (a) if Yield in
---------------
respect of all or any part thereof is computed by reference to the CP Rate, a
period of 1 to and including 35 days, (b) if Yield in respect thereof is
computed by reference to the Adjusted Eurodollar Rate, a period of one month and
(c) if Yield in respect thereof is computed at the Adjusted Base Rate, a period
of 1 to and including 31 days, in each case, as determined pursuant to Section
-------
2.05.
- ----
"Purchase Request" means a written request, in substantially the form
----------------
of Exhibit D, delivered by the Seller to the Deal Agent for the Purchaser, and
---------
(x) requesting a Lease Purchase or a Capital Purchase pursuant to Sections 2.01
-------------
and 2.02, or (y) identifying Leases for substitution in accordance with Section
---- -------
9.02.
- ----
"Purchased Asset" means any Asset purchased pursuant to Section 2.01
--------------- ------------
and Section 2.02; provided, however, that with respect to any Asset that is
------------ -------- -------
repurchased or substituted for by the Seller pursuant to Section 9.02, following
------------
the Deal Agent's receipt of the repurchase price or substituted Asset for such
Asset, the term "Purchased Asset" shall not include the Asset so repurchased or
---------------
substituted for.
"Purchased Interests" means, at any time, all then outstanding
-------------------
Purchased Assets, Related Security with respect to such Purchased Assets, Lease
Sale Assets, payments owing to the Seller or the Deal Agent (as applicable)
under Interest Rate Hedges covering Purchased Assets and Collections with
respect to, and other proceeds of, such Purchased Assets, including, without
limitation, all Collections of a Purchased Asset relating to payments due
thereunder at any time during the month in which such Asset became a Purchased
Asset.
"Purchaser" means EFCC, and any of its successors or permitted
---------
assignees.
"Purchaser UCC Filing Requirement" means, with respect to any Lease,
--------------------------------
that the Deal Agent shall have (i) filed all appropriate UCC financing
statements executed by the Seller (Form UCC-1) in all applicable jurisdictions
where the Equipment subject to such Lease is located, so that, if such Lease is
a True Lease, the Purchaser would reasonably be expected to have a first
priority perfected security interest in the Equipment subject to such Lease.
-21-
<PAGE>
"Rating Agency" means each of S&P, Moody's and DCR.
-------------
"Rating Agency Review Completion" means, the occurrence of the latest
-------------------------------
to occur of the following three events: (a) the completion, to the sole
satisfaction of the Deal Agent, of the diligence review of the transactions
contemplated by the Facility Documents by each Rating Agency, the scope of which
review would be consistent with the scope of review necessary for each Rating
Agency to issue a letter confirming the rating of the commercial paper notes of
EagleFunding, and may result in suggestions by the Rating Agencies for changes
to the structure of such transactions (including, by way of example, and not
limitation, possible modifications to (i) the definition of the term "Eligible
Asset", (ii) the definition of the term "Deferred Purchase Price", (iii) funding
and settlement procedures set forth in Article II, and (iv) requirements for
Interest Rate Hedges); (b) the Purchase Limit hereunder shall exceed 100% of
the aggregate amount of the "Supplemental Enhancement Commitments" of the
Supplemental Enhancement Providers under the Initial Supplemental Enhancement
Agreement; and (c) receipt by the Servicer of notice from the Deal Agent of the
occurrence of the events described in clauses (a) and (b) above (which notice
shall be required to be given by the Deal Agent promptly upon its obtaining
actual knowledge of the occurrence thereof).
"Records" means all Leases and other documents, books and records
-------
(including without limitation, computer programs, tapes, discs and punch cards)
maintained by Seller with respect to Leases and the related Obligors.
"Related Security" means with respect to any Lease:
----------------
(i) all security interests or liens and property subject thereto
from time to time purporting to secure payment of the Asset arising under such
Lease, whether pursuant to such Lease or otherwise;
(ii) the blanket assignment to the Deal Agent, for the benefit of the
Purchaser, of all UCC financing statements covering any Equipment or covering
any collateral securing payment of the Asset arising under such Lease;
(iii) all guarantees, indemnities, warranties, letters of credit,
insurance policies and proceeds and premium refunds thereof and other agreements
or arrangements of whatever character from time to time supporting or securing
payment of the Asset arising under such Lease, whether pursuant to the Lease
related to such Asset or otherwise;
(iv) all of LeaseVest's and the Originator's right, title and
interest in, to and under the Equipment related to such Lease, whether as
an ownership interest, as collateral security, or which was repossessed
from an Obligor of an Asset to the extent that the outstanding balance of
such Lease remains unpaid;
-22-
<PAGE>
(v) all Records; and
(vi) all Collections and other proceeds of the foregoing, including,
without limitation, all insurance and condemnation proceeds and all
security deposits related to the Equipment.
"Residual Realization" means, with respect to any Equipment, the
--------------------
amount received or receivable by the Seller or the Servicer upon the sale or
other disposition of the Equipment, whether from the Obligor upon the exercise
of any purchase option or from a sale or from insurance proceeds or otherwise.
"Revolving Credit Agreement" means the Revolving Credit Agreement
--------------------------
dated as of September 12, 1996, among the Originator, LeaseVest and FNBB, as the
same may be amended, restated, supplemented or otherwise modified from time to
time hereafter.
"S&P" means Standard & Poor's Ratings Group and its successors.
---
"Scheduled Termination Date" means October 31, 1999.
--------------------------
"Security Agreements" means any one or more agreements styled as a
-------------------
"security agreement" or other similar agreements, made by the Purchaser in favor
of a collateral agent for the benefit of one or more Liquidity Providers,
Supplemental Enhancement Providers and/or the holders of the commercial paper
notes of EFCC, evidencing the grant by EFCC of a security interest in and to its
interests in the Purchased Assets, Equipment Collateral and under this Agreement
in order to secure any obligations of EFCC to any such Persons.
"Security Document" means a Lease whereby the Originator or LeaseVest
-----------------
has, for purposes of applicable state commercial law, made a loan to the
Obligor, which loan is secured by the Obligor's ownership interest in the
related Equipment, and the lease or installment payments thereon represent
repayment on such loan.
"Seller" means BV Funding Corp., a Delaware corporation, in its
------
capacity as seller hereunder, together with its successors and permitted
assigns.
"Servicer" means at any time the Person(s) then authorized pursuant
--------
to Article VI to service, administer and collect the Purchased Assets.
----------
"Servicer Advance" means an advance of any amounts by the Servicer for
----------------
the account of the Seller to the Purchaser as payment of any amounts owing by
the Seller, as set forth in Section 2.06(b)(iii).
--------------------
"Servicer Default" means any of the following events shall have
----------------
occurred:
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<PAGE>
(a) The Servicer shall fail to make any payment or deposit to be made
by it hereunder when due; or
(b) The Servicer shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be performed or
observed and any such failure shall remain unremedied for five Business Days
after written notice from the Deal Agent; or
(c) Any representation or warranty made or deemed to be made by the
Servicer (or any of its officers) under or in connection with this Agreement,
any Asset Report, or any Purchase Request shall prove to have been false or
incorrect in any material respect when made; provided, however, that if any such
-------- -------
representation or warranty relates to an Asset which is repurchased by the
Seller pursuant to Section 9.02 hereof, then the breach of such representation
------------
or warranty shall not give rise to a Servicer Default under this subsection (c);
--------------
or
(d) (i) The Servicer shall admit in writing its inability to pay its
debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the Servicer
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, or other similar official for
it or for any substantial part of its property and, in the case of a proceeding
instituted by a party other than the Servicer, such proceeding shall continue
undismissed, unstayed and in effect for a period of sixty (60) consecutive days;
or (ii) the Servicer's Board of Directors shall vote affirmatively to authorize
any of the actions set forth in clause (i) above in this subsection (d); or
---------- --------------
(e) If the Servicer is the Originator or any Affiliate thereof,
either of the Originator or LeaseVest shall fail to satisfy, at any time, any of
the provisions of Section 8.3 of the Revolving Credit Agreement.
"Servicer Fee" means a fee payable monthly in arrears to the Deal
------------
Agent for the account of the Servicer, equal to the product of (i) the average
daily Eligible Assets Balance during such Purchase Period and (ii) the per annum
rate of 1.0%.
"Servicing Agreement" means the Servicing Agreement dated April 5,
-------------------
1996 between Parish Financial Servicing Company, L.P. and BankVest Capital
Corp., as the same may be amended, restated, supplemented or otherwise modified
from time to time.
"Servicing Agreement Assets" means all right, title and interest of
--------------------------
the Seller (by way of assignment from the Originator or otherwise) in, to and
under the Servicing Agreement and the Backup Servicing Agreement, including,
without limitation, all obligations due and to become due to the Originator or
the Seller thereunder.
-24-
<PAGE>
"Settlement Date" means each of the Initial Purchase Date, the
---------------
twelfth day in December of 1996, and the twelfth day of each month thereafter
(or, if such day is not a Business Day, the first following day that is a
Business Day, unless that day falls in the next calendar month, in which case,
the first preceding day which is a Business Day); provided, that (i) the Seller
--------
may, in its discretion, by notice to the Deal Agent, request that Settlement
Dates occur more frequently than monthly and (ii) the Deal Agent may, in its
discretion following the occurrence of an Event of Termination, by notice to the
Seller, require that Settlement Dates occur more frequently than monthly.
"Settlement Period" means the period commencing on the opening of
-----------------
business of the Servicer on the Business Day next succeeding a Settlement Date,
and ending on the close of business of the Servicer on the next Settlement Date
to occur hereunder.
"Stop Event" means the occurrence of an Event of Termination of the
----------
type described in Section 7.01(j) (without giving effect to any waiver thereof).
---------------
For purposes of the Administration Agreement, this Stop Event shall be the sole
Stop Event under this Agreement.
"Subordinated Interest" means the subordinated undivided interest of
---------------------
the Seller in the Purchased Interests which undivided interest shall equal the
Deferred Purchase Price.
"Subsidiary" means, as to any Person, any corporation or other entity
----------
of which securities or other ownership interests having ordinary voting power to
elect a majority of the Board of Directors or other Persons performing similar
functions are at the time directly or indirectly owned by such Person.
"Supplemental Enhancement Agreements" means any one or more loan
-----------------------------------
agreements styled as a "supplemental enhancement loan agreement" or other
similar agreements, entered into by the Purchaser and one or more financial
institutions at any time from and after the Initial Purchase Date, pursuant to
which the Purchaser may from time to time make borrowings from such financial
institutions secured by all or part of the Purchaser's right, title and interest
in, to and under the Purchased Interests arising hereunder, as such agreements
may from time to time be amended, restated, supplemented or otherwise modified
(including, without limitation, the "Initial Supplemental Enhancement
Agreement").
"Supplemental Enhancement Fee" means a fee payable monthly in arrears
----------------------------
to the Deal Agent for the account of each Supplemental Enhancement Provider,
equal to the product of (i) the average daily aggregate amount of the lending
commitment (whether or not used) of such Supplemental Enhancement Provider under
the applicable Supplemental Enhancement Agreement during the month then most
recently concluded, and (ii) the relevant per annum rate set forth in the
applicable Supplemental Enhancement Fee Letter.
-25-
<PAGE>
"Supplemental Enhancement Fee Letter" means, with respect to a
-----------------------------------
Supplemental Enhancement Agreement, a fee letter making reference to such
Supplemental Enhancement Agreement and entered into on or about the date of such
Supplemental Enhancement Agreement among the Deal Agent, the Purchaser, the
Seller and the relevant Supplemental Enhancement Provider (or an agent for a
group of such Supplemental Enhancement Providers, as the case may be), as the
same may from time to time be amended, restated, supplemented or otherwise
modified (including, without limitation, the "Initial Supplemental Enhancement
Fee Letter").
"Supplemental Enhancement Provider" means any of the financial
---------------------------------
institutions from time to time party to any Supplemental Enhancement Agreement
in a capacity as a supplemental enhancement lender to the Purchaser thereunder.
"Taxes" has the meaning assigned to that term in Section 2.11(a).
----- ---------------
"Termination Date" means the earliest of
----------------
(i) that Business Day which the Seller designates as the Termination
Date by written notice to the Deal Agent at least sixty (60) Business Days
prior to such Business Day,
(ii) that Business Day which the Deal Agent designates as the
Termination Date by written notice to the Seller following the occurrence
of an Event of Termination,
(iii) the date of the reduction of the Purchase Limit to zero pursuant
to Section 2.04,
------------
(iv) any expiration, termination or other cancellation of the
commitments of any of the Liquidity Providers or Supplemental Enhancement
Providers under any Liquidity Agreement or Supplemental Enhancement
Agreement (as applicable) if the effect of such expiration, termination or
other cancellation is to cause the aggregate outstanding principal amount
of such commitments at such time (whether or not drawn) to be less than
102% of the Purchase Limit in effect at any time,
(v) the automatic occurrence of the Termination Date pursuant to
Section 7.01,
------------
(vi) the Scheduled Termination Date,
(vii) the date occurring 120 days after the date hereof (the "Agency
Cut-Off Date"), but only in the event that
(A) Rating Agency Review Completion shall not have occurred
prior to the Agency Cut-Off Date, or
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<PAGE>
(B) Rating Agency Review Completion shall have occurred prior
to the Agency Cut-Off Date, and as a result of such review, one or
more such Rating Agencies shall have proposed modifications to the
transactions contemplated by the Facility Documents, which proposed
modifications shall not have given rise to corresponding amendments to
the Facility Documents in form and substance satisfactory to the
Rating Agenc(ies) prior to the occurrence of the Agency Cut-Off Date,
and
(viii) the first date occurring after the date on which all of the
Rating Agencies have issued ratings of the commercial paper notes of EFCC,
on which such commercial paper notes (A) are not rated at least D-1 by DCR,
(B) are not rated at least P-1 by Moody's, or (C) have been downgraded by
S&P.
"True Lease" means a Lease which is not a Security Document.
----------
"UCC" means the Uniform Commercial Code as from time to time in effect
---
in the specified jurisdiction.
"Up-Front Fee" means a fee payable by or on behalf of the Seller,
------------
pursuant to the Fee Letter, on the date of the initial Lease Purchase hereunder.
"Voting Stock" has the meaning assigned to such term in the Revolving
------------
Credit Agreement.
"Weighted Average Remaining Term" means, at any time, a term
-------------------------------
(calculated in years) equal to:
E (P\\n\\ x T\\n\\)
//n//
---------
ELRB
where:
E = The mathematical symbol for summation. The summation is
computed from 1 to n, where n is the number of remaining
Periodic Installments of Rent which comprise all Eligible
Assets at such time.
P\\n\\ = The amount of the nth Periodic Installment of Rent which
comprises such Eligible Assets.
-27-
<PAGE>
T\\n\\ = The remaining period, in years, from such time until the
scheduled due date of such nth Periodic Installment of Rent.
ELRB = The Eligible Assets Balance at such time.
"Yield" means, during any Purchase Period, the product of:
-----
YRT x C x ED
---
360
where:
C = the applicable Capital outstanding during such Purchase Period.
YRT = the Yield Rate for such Purchase Period.
ED = the actual number of days elapsed during such Purchase Period.
provided, however that (i) no provision of this Agreement shall require the
- -------- -------
payment or permit the collection of Yield in excess of the maximum permitted by
applicable law and (ii) Yield shall not be considered paid by any distribution
if at any time such distribution is rescinded or must otherwise be returned for
any reason.
"Yield Payment Date" means, with respect to each Purchase Period, the
------------------
last day of such Purchase Period.
"Yield Rate" means, for any Purchase Period for all Capital allocated
----------
to such Purchase Period:
(a) to the extent a Purchaser will be funding the applicable Purchase
on the first day of such Purchase Period through the issuance of commercial
paper, a rate equal to the CP Rate for such Purchase Period;
(b) to the extent a Purchaser will not be funding the applicable
Purchase on the first day of such Purchase Period through the issuance of
commercial paper, a rate equal to the Alternative Rate for such Fixed Period or
such other rate as the Deal Agent and the Seller shall agree to in writing;
provided, however, that (x) at all times following the occurrence and during the
- -------- -------
continuation of a Stop Event or an Event of Termination, the "Yield Rate" shall
----------
be a rate equal to the sum of the Base Rate at such time plus a per annum rate
of 2.0%, and (y) for all Fixed Periods commencing
-28-
<PAGE>
prior to the occurrence of the Rating Agency Review Completion, the "Yield Rate"
----------
shall be a rate equal to the applicable Alternative Rate.
SECTION 1.02. Other Terms. All accounting terms not specifically
-----------
defined herein shall be construed in accordance with generally accepted
accounting principles. All terms used in Article 9 of the UCC in the State of
New York, and not specifically defined herein, are used herein as defined in
such Article 9.
SECTION 1.03. Computation of Time Periods. Unless otherwise stated
---------------------------
in this Agreement, in the computation of a period of time from a specified date
to a later specified date, the word "from" means "from and including" and the
words "to" and "until" each means "to but excluding."
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 2.01. Facility. On the terms and conditions hereinafter set
--------
forth, the Purchaser shall make Purchases from the Seller from time to time
during the period from the date the conditions precedent in Section 3.01 are
------------
satisfied to the Termination Date. Each Lease Purchase shall constitute an
assignment and sale by the Seller, and a purchase and acquisition by the
Purchaser, of Purchased Interests, including, without limitation, designated
Eligible Assets, Related Security and Collections with respect thereto. Under
no circumstances shall the Purchaser make a Capital Purchase, if, after giving
effect to such Capital Purchase, the aggregate outstanding Capital hereunder
would exceed the Purchase Limit. Each Lease Purchase shall consist of the
purchase of Eligible Assets with an aggregate Outstanding Balance of not less
than $1,000,000, and each Capital Purchase shall be in a minimum amount of at
least $1,000,000; provided, however, that the Purchase made on the Initial
-------- -------
Purchase Date shall be in a minimum amount of $6,500,000. If at any time a
court characterizes the transactions hereunder as loans by the Purchaser to the
Seller, then the Seller hereby pledges, grants a security interest in and
assigns to the Deal Agent, for the benefit of the Purchaser, all of the right
and title to and interest in the Purchased Interests, including the Purchased
Assets and the Related Security, Collections and Equipment Collateral related
thereto, as security for such loans and for the payment and performance of all
obligations of the Seller hereunder.
SECTION 2.02. Making Purchases.
----------------
(a) Purchases. Purchases shall be made not more frequently than once
---------
every two weeks upon delivery to the Deal Agent of a Purchase Request at least
three Business Days before the effective date of the requested Purchase (other
than in the case of the initial Purchase Request hereunder, which may be
delivered prior to 10:00 A.M. (Boston, Massachusetts time) on the Initial
Purchase Date). Each Purchase Request for a Capital Purchase shall specify the
increase
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<PAGE>
to outstanding Capital as a result of such requested Capital Purchase. Each
Purchase Request for a Lease Purchase shall specify (i) a list of all Leases
under which new Assets which will constitute Purchased Assets arise, (ii) a list
of Related Security with respect to such Assets, (iii) the amortization schedule
of all such new Purchased Assets (together with a remaining amortization
schedule for all other Purchased Assets), and (iv) the items listed
in the form of Purchase Request attached at Exhibit E (i.e., the amount of
---------
outstanding Capital, the Loss Holdback, the Overconcentration Reserve, the
Deferred Purchase Price, the Eligible Assets Balance, the Aggregate Outstanding
Balance and the Weighted Average Remaining Term) in each case calculated after
giving effect to such Lease Purchase. Each Purchase Request for a Capital
Purchase shall specify the items listed in the form of Purchase Request attached
at Exhibit E (i.e., the amount of outstanding Capital, the Loss Holdback, the
---------
Overconcentration Reserve, the Deferred Purchase Price, the Eligible Assets
Balance, the Aggregate Outstanding Balance and the Weighted Average Remaining
Term) in each case calculated after giving effect to such Capital Purchase. On
the date of each Capital Purchase, the Purchaser shall, upon satisfaction of the
applicable conditions set forth in Article III, make available to the Deal Agent
-----------
at its address referred to in Section 2.07 the amount of such Capital Purchase
------------
in same day funds, and after receipt by the Deal Agent of such funds, the Deal
Agent will make such funds immediately available to the Seller in an account
entitled "BV Funding Corp.", ABA #011-000-390, Account #523-02224, maintained at
the office of FNBB located at 100 Federal Street, Boston, Massachusetts, 02110.
(b) Purchase Price; Deferred Purchase Price. The purchase price for
---------------------------------------
the Purchased Interests subject to any Lease Purchase hereunder shall be
composed of an immediate payment to the Seller consisting of a Capital Purchase
and/or the reinvestment of Collections pursuant to Section 2.06(d) plus the
--------------- ----
Deferred Purchase Price allocable to such Lease Purchase. The amount of each
Capital Purchase (whether in connection with a Lease Purchase or otherwise)
shall be the amount requested by the Seller in the related Purchase Request but
shall not exceed an amount equal to (i) the Aggregate Outstanding Balance (after
giving effect to the Capital Purchase) minus (ii) the sum of (A) the outstanding
-----
Capital (before giving effect to such Capital Purchase) and (B) the Deferred
Purchase Price (after giving effect to any changes in the Deferred Purchase
Price on such Purchase Date). After the Collection Date has occurred, the
Purchaser shall, in full satisfaction of the Deferred Purchase Price, at its
option either pay the Deferred Purchase Price to the holder of the Subordinated
Interest or assign and sell to the holder of the Subordinated Interest, its
respective remaining interest in the Purchased Interests and any remaining
Collections without any representation or warranty, express or implied (other
than a representation and warranty that such Purchased Interests are free and
clear of any Adverse Claim created by or through the Purchaser, any Liquidity
Provider or any Supplemental Enhancement Provider).
SECTION 2.03. Transfers of Interests in Leases. Notwithstanding
--------------------------------
anything to the contrary contained in this Agreement, none of the Deal Agent,
the Purchaser, any Liquidity Provider or any Supplemental Enhancement Provider
shall have any affirmative obligation or liability with respect to any Purchased
Asset or related Leases or any other Purchased Interests
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<PAGE>
(including, without limitation, any Interest Rate Hedges), nor shall any of them
be obligated to perform any of the affirmative obligations of any of the Seller,
LeaseVest or the Originator thereunder.
SECTION 2.04. Termination or Reduction of the Purchase Limit. The
----------------------------------------------
Seller may, upon at least five Business Days' notice to the Deal Agent,
terminate in whole or reduce in part the unused portion of the Purchase Limit;
provided, however, that each partial reduction shall be in an amount equal to
- -------- -------
$1,000,000 or an integral multiple thereof.
SECTION 2.05. Selection of Purchase Periods. At all times hereafter
-----------------------------
until the Termination Date, the Seller shall, subject to the Deal Agent's and
the Purchasers' approval and the limitations described below, select (a)
Purchase Periods and allocate a portion of the outstanding Capital to each
selected Purchase Period, so that the outstanding Capital is at all times
allocated to a Purchase Period and (b) Yield Rates to apply to such Capital for
such Purchase Periods. The initial Purchase Period(s) and Yield Rate(s)
applicable to the Capital arising as a result of the initial Purchase hereunder
or any later Capital Purchase shall be specified in the Purchase Request
relating to such Purchase described in Section 2.02(a). Each subsequent
---------------
Purchase Period shall commence on the last day of the immediately preceding
Purchase Period, and the duration of and Yield Rate applicable to such
subsequent Purchase Period shall be such as the Seller shall select and the Deal
Agent shall approve on notice from the Seller received by the Deal Agent
(including notice by telephone, confirmed in writing) not later than 10:00 A.M.
(Boston, Massachusetts time) on such last day, except that (a) if the Deal Agent
------
and the Seller shall not have so mutually agreed before 10:00 A.M. (Boston,
Massachusetts time) on such last day, such Purchase Period shall be one day and
the applicable Yield Rate shall be the Adjusted Base Rate and (b) if the Seller
is requesting that Yield accrue at the Adjusted Eurodollar Rate for such
Purchase Period, and the Deal Agent and the Seller shall not have so mutually
agreed before 10:00 A.M. (Boston, Massachusetts time) on the second Business Day
prior to such last day, such Purchase Period shall be one day and the applicable
Yield Rate shall be the Adjusted Base Rate. Any Purchase Period which would
otherwise end on a day which is not a Business Day shall be extended to the next
succeeding Business Day; provided, however, that if Yield in respect of such
-------- -------
Purchase Period is computed by reference to the Adjusted Eurodollar Rate, and
such next succeeding Business Day is in the next calendar month, then such
Purchase Period shall end on the next preceding Business Day. In addition,
whenever any Purchase Period as to which Yield accrues at the Adjusted
Eurodollar Rate commences on the last Business Day in a month or on a day for
which there is no numerically corresponding day in the month in which such
Purchase Period ends, the last day of such Purchase Period shall occur on the
last Business Day of the month in which such Purchase Period ends. Furthermore,
if a CP Disruption Event shall have occurred and be continuing, the Purchaser,
or the Deal Agent on its behalf, may, upon notice to the Seller, terminate any
Purchase Period then in effect if the Purchaser has funded the Capital allocated
to such Purchase Period by issuing its commercial paper notes. Any Purchase
Period which commences before the Termination Date and would otherwise end on a
date occurring after the Termination Date shall end on the Termination Date. On
or after the Termination Date, the Deal Agent shall have the right to allocate
outstanding
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<PAGE>
Capital to Purchase Periods of such duration as shall be selected by the Deal
Agent. The Purchaser shall, on the first day of each Purchase Period, notify the
Deal Agent of the Yield Rate for the Capital allocated to such Purchase Period.
SECTION 2.06. Settlement Procedures.
---------------------
(a) Asset Reports. On or prior to the tenth day of each month (or,
-------------
if such day is not a Business Day, the first following day that is a Business
Day, unless that day falls in the next calendar month, in which case, the first
preceding day which is a Business Day) commencing with December of 1996 (or at
such other times and from time to time as may be reasonably requested by the
Deal Agent), the Servicer shall prepare and forward to the Deal Agent for the
Purchaser, an Asset Report, indicating the status of the Purchased Assets as of
the close of business of the Servicer on the last day of the immediately
preceding month (or as of such other date as the Deal Agent may request which is
no fewer than ten Business Days prior to the date of the requested delivery of
such Asset Report), together with such attachments as may be required by the
Deal Agent thereunder, and setting forth, among other things, the payments made
on the immediately preceding Yield Payment Date.
(b) Allocation of Collections and Other Amounts.
-------------------------------------------
(i) Collections. On each day, both before and after the Termination
-----------
Date, the Servicer or, if the Deal Agent has exercised its right under
Section 6.03(a) to require the Collection Account Bank to remit all
---------------
Collections of Purchased Assets deposited in the Collection Account
directly to the Deal Agent, the Deal Agent, shall allocate Collections of
Purchased Assets received in the Collection Account, or by the Deal Agent
(as the case may be) on such day as follows:
(1) Set aside and hold in trust for the Seller all amounts in
respect of such Collections pertaining to (A) sales and use taxes and
personal property taxes, and (B) premiums for insurance with respect
to related Equipment purchased by the Obligor through the Originator
or an Affiliate of the Originator, in each case to the extent the
portion of the Collections described in clauses (A) and (B) of this
paragraph (1) are separately invoiced to and identified by the Obligor
to such uses; and
(2) Set aside and hold in trust for the Purchaser and the
Seller, all remaining Collections.
(ii) Payments Under Interest Rate Hedges. Each payment from the
-----------------------------------
applicable counterparty under an Interest Rate Hedge shall be set aside by
the Servicer (or the Deal Agent, as the case may be) and held in trust for
the Purchaser and the Seller.
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<PAGE>
(iii) Servicer Advances. To the extent that the amounts set aside
-----------------
for the Purchaser and the Seller pursuant to this Section 2.06(b) are at
---------------
any time insufficient to pay in full the amounts set forth in Sections
--------
2.06(c) or (d) below, the Servicer may make a Servicer Advance to satisfy
------- ---
such deficiency if, and only if, the Servicer determines in good faith that
such Servicer Advance will be recoverable from future Collections and
payments under Interest Rate Hedges (such determination to be conclusive
and binding).
(c) Yield Payment Dates. On each Yield Payment Date, the Servicer
or the Deal Agent shall pay to the Purchaser from the amounts set aside in
respect of accrued Yield pursuant to Section 2.06(d) or (e) (as the case may
--------------- ---
be), an amount equal to the Yield due and payable on such Yield Payment Date.
(d) Pre-Termination Date. On each Business Day occurring prior to
--------------------
the Termination Date, out of amounts set aside for the Purchaser and the Seller
pursuant to Section 2.06(b) (in all cases including any amounts received
---------------
pursuant to a Servicer Advance), the Servicer or the Deal Agent (as the case may
be) shall pay or retain (as the case may be), for application to the following
items in the following order of priority:
(i) first, to the extent that the Servicer has previously made
-----
Servicer Advances which have not been repaid in full, to the Servicer, the
amount of such outstanding Servicer Advances;
(ii) second, (A) if such day is a Settlement Date, to each
------
counterparty under an Interest Rate Hedge, the net amount, if any, due to
such counterparty thereunder as of such Settlement Date, and (B) if such
day is not a Settlement Date, to be retained for the benefit of the
Purchaser to the extent of any such accrued and unpaid amounts which are
not then due and payable, based on estimated and actual information (as the
case may be) provided by the Deal Agent to the Seller and the Servicer
concerning the applicable weighted average Lease Discount Rate for all
Purchased Assets, the Aggregate Fee Rate and the relevant commercial paper
rate specified in Section 5.01(m), and not to be applied to any of the
---------------
following items;
(iii) third, (A) if such day is a Yield Payment Date, for application
-----
to accrued Yield which is due and payable on such Yield Payment Date (if
any), and (B) if such day is not a Yield Payment Date, to the extent of any
accrued Yield which is not then due and payable, to be retained for the
benefit of the Purchaser, until the next succeeding Yield Payment Date, and
not to be applied to any of the following items;
(iv) fourth, (A) if such day is a Settlement Date, for application to
------
the Servicer in payment of the Servicer Fee (less, if applicable, any
portion of the Servicer Fee allocated to the Collateral Custodian Fee in
the event the Servicer is not the Collateral Custodian), and (B) if such
day is not a Settlement Date, to the extent of any accrued Servicer Fee
(less, if applicable, any portion of the Servicer Fee allocated to the
Collateral Custodian Fee in the event the Servicer is not the Collateral
Custodian) which is not then due and
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<PAGE>
payable, to be retained for the benefit of the Purchaser, until the next
succeeding Settlement Date, and not to be applied to any of the following
items;
(v) fifth, (A) if such day is a Settlement Date, for application to
-----
the Collateral Custodian (if different than the Servicer) in payment of the
Collateral Custodian Fee, and (B) if such day is not a Settlement Date, to
the extent of any accrued Collateral Custodian Fee (if the Collateral
Custodian is different than the Servicer) which is not then due and
payable, to be retained for the benefit of the Purchaser, until the next
succeeding Settlement Date, and not to be applied to any of the following
items;
(vi) sixth, (A) if such day is a Settlement Date, for application to
-----
the Purchaser, in payment of the Program Fee, the Liquidity Fee and the
Supplemental Enhancement Fee (as the case may be), on a pro rata basis in
accordance with the then outstanding balance of each such fee, and (B) if
such day is not a Settlement Date, to the extent of any accrued Program
Fee, the Liquidity Fee and the Supplemental Enhancement Fee which is not
due and payable (as the case may be), on a pro rata basis in accordance
with the then outstanding balance of each such fee, to be retained for the
benefit of the Purchaser until the next succeeding Settlement Date, and not
to be applied to any of the following items;
(vii) seventh, to the Purchaser, an amount equal to the sum of (A)
-------
the excess, if any, of (x) outstanding Capital over (y) the Aggregate
Outstanding Balance minus the Deferred Purchase Price (as of the end of the
next preceding month, as set forth in the then applicable Asset Report)
plus (B) any applicable Breakage Indemnity;
----
(viii) eighth, if a Capital Purchase is occurring on such day, to the
------
Seller, an amount up to the immediately payable portion of the purchase
price for the related Purchased Interests as described in Section 2.02(b);
---------------
and
(ix) ninth, to the Seller, all remaining amounts (if any) following
-----
the payment or retention (as the case may be) of the amounts set forth in
clauses (i) through (viii) above.
----------- ------
The Purchaser shall apply all amounts received or retained pursuant to clause
------
(vii) above (including any amounts received pursuant to a Servicer Advance) and,
- -----
at the Seller's option, such other funds of the Seller, (x) first, to the
-----
payment of any Breakage Indemnity under clause (vii)(B) above, and (y) second,
--------------- ------
in reduction of outstanding Capital.
(e) Post-Termination Date. On each Business Day on and after the
---------------------
Termination Date, out of amounts set aside for the Purchaser and the Seller
pursuant to Section 2.06(b) (in all cases including any amounts received
---------------
pursuant to a Servicer Advance), the Servicer or the Deal Agent (as the case may
be) shall pay or retain (as the case may be), for application to the following
items in the following order of priority:
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<PAGE>
(i) first, (A) if such day is a Settlement Date, to each
-----
counterparty under an Interest Rate Hedge, the net amount, if any, due to
such counterparty thereunder as of such Settlement Date, and (B) if such
day is not a Settlement Date, to be retained for the benefit of the
Purchaser to the extent of any such accrued and unpaid amounts which are
not then due and payable, based on estimated and actual information (as the
case may be) provided by the Deal Agent to the Seller and the Servicer
concerning the applicable weighted average Lease Discount Rate for all
Purchased Assets, the Aggregate Fee Rate and the relevant commercial paper
rate specified in Section 5.01(m), and not to be applied to any of the
---------------
following items;
(ii) second, (A) if such day is a Yield Payment Date, for application
------
to accrued Yield which is due and payable on such Yield Payment Date (if
any), and (B) if such day is not a Yield Payment Date, to the extent of any
accrued Yield which is not then due and payable, to be retained for the
benefit of the Purchaser, until the next succeeding Yield Payment Date, and
not to be applied to any of the following items;
(iii) third, (A) if such day is a Settlement Date, for application to
-----
the Servicer (if the Servicer is other than the Originator or an Affiliate
of the Originator) in payment of the Servicer Fee (less, if applicable, any
portion of the Servicer Fee allocated to the Collateral Custodian Fee in
the event the Servicer is not the Collateral Custodian), and (B) if such
day is not a Settlement Date (and if the Servicer is other than the
Originator or an Affiliate of the Originator) to the extent of any accrued
Servicer Fee (less, if applicable, any portion of the Servicer Fee
allocated to the Collateral Custodian Fee in the event the Servicer is not
the Collateral Custodian) which is not then due and payable, to be retained
for the benefit of the Purchaser, until the next succeeding Settlement
Date, and not to be applied to any of the following items;
(iv) fourth, (A) if such day is a Settlement Date, for application to
------
the Collateral Custodian (if different than the Servicer) in payment of the
Collateral Custodian Fee, and (B) if such day is not a Settlement Date, to
the extent of any accrued Collateral Custodian Fee (if the Collateral
Custodian is different than the Servicer) which is not then due and
payable, to be retained for the benefit of the Purchaser, until the next
succeeding Settlement Date, and not to be applied to any of the following
items;
(v) fifth, (A) if such day is a Settlement Date, for application to
-----
the Purchaser, in payment of the Program Fee, and (B) if such day is not a
Settlement Date, to the extent of any accrued Program Fee, to be retained
for the benefit of the Purchaser until the next succeeding Settlement Date,
and not to be applied to any of the following items;
(vi) sixth, (A) if such day is a Settlement Date, for application to
-----
the Purchaser, in payment of the Liquidity Fee, and (B) if such day is not
a Settlement Date, to the extent of any accrued Liquidity Fee, to be
retained for the benefit of the Purchaser until the next succeeding
Settlement Date, and not to be applied to any of the following items;
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<PAGE>
(vii) seventh, (A) if such day is a Settlement Date, for application
-------
to the Purchaser, in payment of the Supplemental Enhancement Fee, and (B)
if such day is not a Settlement Date, to the extent of any accrued
Supplemental Enhancement Fee, to be retained for the benefit of the
Purchaser until the next succeeding Settlement Date, and not to be applied
to any of the following items;
(viii) eighth, to the Purchaser, an amount equal to the sum of (A)
------
the amount of outstanding Capital plus (B) any applicable Breakage
----
Indemnity;
(ix) ninth, to the Servicer (if the Servicer is the Originator or an
-----
Affiliate of the Originator) in payment of any amount of Servicer Fee then
due and payable;
(x) tenth, to the Servicer, to the extent that the Servicer has
-----
previously made Servicer Advances which have not been repaid in full, the
amount of such outstanding Services Advances; and
(xi) eleventh, to the Seller, all remaining amounts (if any)
--------
following the payment of the amounts set forth in clauses (i) through (x)
----------- ---
above.
The Purchaser shall apply all amounts received or retained pursuant to clause
------
(viii) above to the Purchaser (A) first, to the payment of any applicable
- ------ -----
Breakage Indemnity, and (B) second, in reduction of outstanding Capital.
------
Following the Collection Date, all Collections shall be payable to the holder of
the Subordinated Interest in satisfaction of the Deferred Purchase Price.
SECTION 2.07. Payments and Computations, Etc. All amounts to be paid
-------------------------------
or deposited by the Seller or the Servicer hereunder to or for the benefit of
the Purchaser shall be paid or deposited in accordance with the terms hereof no
later than 2:00 P.M. (New York City time) on the day when due in lawful money of
the United States of America in immediately available funds to a special account
at Bankers Trust Company (ABA #021-001-033, Acct. #01419647, Attn. Commercial
Paper Group, Eagle Funding Capital Corporation, BankVest Collateral Account
#21654), in the name of the Purchaser and maintained at Bankers Trust Company's
office located at Four Albany Street, New York, New York 10006. All amounts to
be paid or deposited by the Seller or the Servicer to or for the benefit of the
Deal Agent hereunder shall be paid or deposited in accordance with the terms
hereof no later than 2:00 P.M. (Boston, Massachusetts time) on the day when due
in lawful money of the United States of America in immediately available funds
to an account identified in writing to the Seller and the Servicer by the Deal
Agent in the name of the Deal Agent and maintained at FNBB's office located at
100 Federal Street, Boston, Massachusetts 02110. The Seller shall, to the
extent permitted by law, pay to the Purchaser interest on all amounts not paid
or deposited when due hereunder (whether owing by the Seller individually or as
Servicer) at 2.0% per annum above the Base Rate, payable on demand; provided,
--------
however, that such interest rate shall not at any time exceed the maximum rate
- -------
permitted by applicable law. Such interest shall be retained by the Purchaser
except to the extent that such failure to make a timely payment or deposit has
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<PAGE>
continued beyond the date for distribution of such overdue amount to any
applicable Liquidity Provider or Supplemental Enhancement Provider, in which
case such interest accruing after such date shall be for the account of, and
distributed by the Purchaser to such Liquidity Provider or such Supplemental
Enhancement Provider. All computations of interest and all computations of
Yield, Breakage Indemnity, Liquidity Fees, Program Fees, Liquidity Fees,
Supplemental Enhancement Fees, Servicer Fees, Collateral Custodian Fees and
other fees hereunder shall be made on the basis of a year of 360 days for the
actual number of days (including the first but excluding the last day) elapsed.
SECTION 2.08. Yield Protection. (a) If due to either: (i) the
----------------
introduction of or any change (including, without limitation, any change by way
of imposition or increase of reserve requirements) in or in the interpretation
by any governmental or regulatory authority or agency of any law or regulation
(other than laws or regulations relating to taxes) or (ii) the compliance by any
Affected Party with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) or from any
rating agency, (1) there shall be an increase in the cost to any Affected Party
of accepting, funding or maintaining any Purchase hereunder, or agreeing to
accept, fund or maintain any Purchase hereunder, (2) there shall be a reduction
in the amount receivable with regard to any Purchased Asset or (3) any Affected
Party shall be required to make a payment calculated by reference to the
Purchased Asset purchased by it or Yield received by it, then the Seller shall,
from time to time, immediately upon demand by the Deal Agent, pay the Deal Agent
for the account of such Affected Party, that portion of such increased costs
incurred, amounts not received or required payment made or to be made, which the
Deal Agent determines is attributable to accepting, funding and maintaining any
Purchase hereunder, or agreeing to accept, fund or maintain any Purchase
hereunder. In determining such amount, the Deal Agent may use any reasonable
averaging and attribution methods. The Deal Agent shall submit to the Seller a
certificate as to such increased costs incurred, amounts not received or
receivable or required payment made or to be made, which certificate shall, in
the absence of manifest error, be conclusive and binding for all purposes.
(b) If due to either: (i) the introduction of or any change
(including, without limitation, any change by way of imposition or increase of
reserve requirements) in or in the interpretation by any governmental or
regulatory authority or agency of any law or regulation (other than laws or
regulations relating to taxes) or (ii) compliance with any guideline or request
from any central bank or other governmental authority (whether or not having the
force of law) or from any rating agency, similar in nature to those described in
subsection (a) above, any Affected Party is required to compensate any other
Affected Party in connection with this Agreement, any Liquidity Agreement or any
Supplemental Enhancement Agreement, or the funding or maintenance of a Purchase
hereunder, then immediately upon demand by any such Affected Party, the Seller
shall pay to such Affected Party, such additional amount or amounts as may be
necessary to pay such other Affected Party the amounts due or to otherwise
reimburse such other Affected Party for any amounts paid by it.
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<PAGE>
SECTION 2.09. Increased Capital. (a) If either (i) the introduction
-----------------
of or any change in or in the interpretation by any governmental or regulatory
authority or agency of any law or regulation or (ii) compliance by any Affected
Party with any guideline or request from any central bank or other governmental
authority (whether or not having the force of law), or any rating agency,
affects or would affect the amount of capital required or expected to be
maintained by such Affected Party or such Affected Party determines that the
amount of such capital is increased by or based upon the existence of the
Purchaser's agreement to accept, fund or maintain Purchases hereunder and other
similar agreements or facilities, then, upon demand by such Affected Party or
the Deal Agent, the Seller shall immediately pay to such Affected Party or the
Deal Agent for the account of such Affected Party from time to time, as
specified by such Affected Party or the Deal Agent, additional amounts
sufficient to compensate such Affected Party in light of such circumstances, to
the extent that such Affected Party or the Deal Agent on behalf of such Affected
Party reasonably determines such increase in capital to be allocable to the
existence of the Purchaser's agreements hereunder. A certificate as to such
amounts submitted to the Seller by such Affected Party or the Deal Agent, shall,
in the absence of manifest error, be conclusive and binding for all purposes.
(b) If either (i) the introduction of or any change in or in the
interpretation by any governmental or regulatory authority or agency of any law
or regulation or (ii) compliance with any guideline or request from any central
bank or other governmental authority (whether or not having the force of law),
or any rating agency, under events or circumstances similar to those described
in subsection (a) above, any Affected Party is required to compensate any other
Affected Party in connection with this Agreement, any Liquidity Agreement or any
Supplemental Enhancement Agreement, or the funding or maintenance of a Purchase
hereunder, then immediately upon demand by any such Affected Party, the Seller
shall pay to such Affected Party, such additional amount or amounts as may be
necessary to pay such other Affected Party the amounts due or to otherwise
reimburse such other Affected Party for any amounts paid by it.
SECTION 2.10. Grant of Security Interest in Equipment Collateral.
--------------------------------------------------
(a) As security for the payment and performance of all of the obligations of
the Seller hereunder and as additional enhancement to enable the Purchaser to
fully recover Capital and accrued and unpaid Yield and fees, the Seller hereby
grants to the Deal Agent, for the benefit of the Purchaser, a security interest
in all of the Seller's right, title and interest in and to the following,
whether now owned or hereafter acquired and whether now existing or hereafter
arising (the "Equipment Collateral"): All Equipment which is the subject of any
Purchased Asset and substitutions therefor and products and proceeds thereof,
including, without limitation, all payments under insurance (whether or not the
Deal Agent is the loss payee thereof) or any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect to any of the
foregoing.
(b) At any time, upon the request of the Deal Agent, the Seller
shall, at its expense, promptly execute and deliver all further instruments and
documents, and take all further action (including, without limitation, the
execution and filing of such financing or continuation
-38-
<PAGE>
statements, or amendments thereto or assignments thereof), that may be necessary
or desirable, or that the Deal Agent may request, in order to perfect and
protect any security interest granted or purported to be granted to the Deal
Agent hereunder or to enable the Deal Agent to exercise and enforce its rights
and remedies hereunder with respect to any Equipment Collateral. The Seller
hereby authorizes the Deal Agent to file one or more financing or continuation
statements, and amendments thereto and assignments thereof, relative to all or
any part of the Equipment Collateral now existing or hereafter arising without
the signature of the Seller where permitted by law. A carbon, photographic or
other reproduction of this Agreement or any financing statement covering the
Equipment Collateral or any part thereof shall be sufficient as a financing
statement. The Seller will furnish to the Deal Agent from time to time
statements and schedules further identifying and describing the Equipment
Collateral and such other reports in connection with the Equipment Collateral as
the Deal Agent may request, all in reasonable detail.
SECTION 2.11. Taxes. (a) Any and all payments to an Affected Party
-----
hereunder shall be made, in accordance with Section 2.06, free and clear of and
------------
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of an Affected Party, net income taxes that are imposed
- ---------
by the United States and franchise taxes and net income taxes that are imposed
on such Affected Party by the state or foreign jurisdiction under the laws of
which such Affected Party is organized or in which it is otherwise doing
business or any political subdivision thereof (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Seller or the Servicer shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Affected Party, (i) the Seller shall make an additional payment
to such Affected Party, in an amount sufficient so that, after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.11), such Affected Party receives an amount equal to the
------------
sum it would have received had no such deductions been made, (ii) the Seller or
the Servicer, as the case may be, shall make such deductions and (iii) the
Seller or the Servicer, as the case may be, shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance with
applicable law.
(b) If, in connection with an agreement or other document providing
liquidity support, credit enhancement or other similar support in connection
with this Agreement or the funding or maintenance of any Purchases hereunder,
any Affected Party is required to compensate any other Affected Party in respect
of taxes under circumstances similar to those described in this Section 2.11,
------------
then immediately upon demand by such Affected Party, the Seller shall pay to
such Affected Party such additional amount or amounts as may be necessary to pay
such other Affected Party the amounts due or to otherwise reimburse such other
Affected Party for any amounts paid by it.
ARTICLE III
CONDITIONS OF PURCHASES
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<PAGE>
SECTION 3.01. Conditions Precedent to Initial Purchase. The initial
----------------------------------------
Capital Purchase and Lease Purchase shall be subject to the condition precedent
that the Deal Agent shall have received the following, each in form and
substance satisfactory to the Deal Agent:
(a) This Agreement executed by each party hereto;
(b) A copy of the resolutions of the Board of Directors of the Seller
approving this Agreement, the Lease Sale Agreement and the other Facility
Documents to be delivered by it hereunder and the transactions contemplated
hereby, certified by its Secretary or Assistant Secretary;
(c) The Certificate of Incorporation of the Seller certified by the
Secretary of State of Delaware;
(d) Good Standing Certificates for the Seller issued by the
Secretaries of State of the States of Arkansas, Arizona, California,
Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Kansas,
Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada,
New Hampshire, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon,
Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Washington,
Wisconsin and Wyoming and by the Secretaries of the Commonwealths of
Massachusetts, Pennsylvania and Virginia;
(e) A certificate of the Secretary or Assistant Secretary of the
Seller certifying (i) the names and true signatures of the officers authorized
on its behalf to sign this Agreement, the Lease Sale Agreement and the other
Facility Documents to be delivered by it hereunder (on which certificate the
Deal Agent and the Purchaser may conclusively rely until such time as the Deal
Agent shall receive from the Seller a revised certificate meeting the
requirements of this subsection (e)) and (ii) a copy of the Seller's by-laws;
(f) Acknowledgment copies as duly filed of proper UCC-1 Financing
Statements (executed by LeaseVest, the Originator and/or the Seller, as
applicable), as may be necessary or, in the opinion of the Deal Agent, desirable
under the UCC of all appropriate jurisdictions or any comparable law to perfect
the Originator's, the Seller's, the Deal Agent's and the Purchaser's respective
interests in all Assets, Equipment Collateral and (subject to Section 6.05
------------
hereof) Related Security in which an interest may be assigned hereunder or under
the Lease Sale Agreement;
(g) Certified copies of Requests for Information or Copies (Form UCC-
11) (or a similar search report certified by a party acceptable to the Deal
Agent), dated a date reasonably near to the date of the initial Purchase,
listing all effective financing statements which name the Seller, the Originator
or LeaseVest (under their respective present names, and any previous names or
tradenames) as debtor and which are filed in the jurisdictions in which filings
were
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<PAGE>
made pursuant to subsection (f) of this Section 3.01, together with copies of
------------
such financing statements;
(h) The Collection Account Agreement executed by the Seller, the
Servicer and the Originator and acknowledged and agreed to by the Collection
Account Bank together with an acknowledgment and authorization executed by the
Deal Agent;
(i) A copy of the Lock-Box Agreement executed by each of the parties
thereto;
(j) The Lease Sale Agreement, executed by the Seller, LeaseVest and
the Originator;
(k) A copy of the resolutions of the Board of Directors of the
Originator approving the Lease Sale Agreement and the other Facility Documents
to be delivered by it hereunder and the transactions contemplated hereby,
certified by its Secretary or Assistant Secretary;
(l) The Certificate of Incorporation of the Originator certified by
the Secretary of the Commonwealth of Massachusetts;
(m) Good Standing Certificates for the issued by the Secretaries of
State of the States of Arkansas, Connecticut, Rhode Island, California, Vermont,
Georgia, Maine, North Carolina, Florida, Maryland, Michigan, Minnesota,
Mississippi, Missouri, Tennessee, Washington, Oregon and Kansas, and by the
Secretaries of the Commonwealths of Massachusetts, Pennsylvania and Virginia;
(n) A certificate of the Secretary or Assistant Secretary of the
Originator certifying (i) the names and true signatures of the officers
authorized on its behalf to sign the Lease Sale Agreement and the other Facility
Documents to be delivered by it hereunder (on which certificate the Deal Agent
and the Purchaser may conclusively rely until such time as the Deal Agent shall
receive from the Originator a revised certificate meeting the requirements of
this subsection (n)) and (ii) a copy of the Originator's by-laws;
(o) An opinion of Goldstein & Manello, P.C., counsel for the
Originator and the Seller, as to enforceability, no conflict with laws and
agreements, perfection, priority, and such corporate and other matters as the
Deal Agent may reasonably request;
(p) An opinion of Goldstein & Manello, P.C., counsel for the
Originator and the Seller, as to true sale, non-consolidation, non-rejection and
such other matters as the Deal Agent may reasonably request;
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<PAGE>
(q) A copy of the resolutions of the Board of Directors of LeaseVest
approving the Lease Sale Agreement and the other Facility Documents to be
delivered by it hereunder and the transactions contemplated hereby, certified by
its Secretary or Assistant Secretary;
(r) The Certificate of Incorporation of LeaseVest certified by the
Secretary of the Commonwealth of Massachusetts;
(s) Good Standing Certificates for LeaseVest issued by the
Secretaries of State of the States of Delaware, Indiana, Nebraska, New
Hampshire, New Jersey, New York, South Carolina and West Virginia;
(t) A certificate of the Secretary or Assistant Secretary of
LeaseVest certifying (i) the names and true signatures of the officers
authorized on its behalf to sign the Lease Sale Agreement and the other Facility
Documents to be delivered by it hereunder (on which certificate the Deal Agent
and the Purchaser may conclusively rely until such time as the Deal Agent shall
receive from LeaseVest a revised certificate meeting the requirements of this
subsection (t)) and (ii) a copy of LeaseVest's by-laws;
(u) A copy of the Interest Rate Hedge Agreement entered into by the
Seller and a counterparty satisfying the requirements of Section 5.01(m), in
---------------
form and substance satisfactory to the Deal Agent and otherwise meeting the
requirements of Section 5.01(m), together with an executed Interest Rate Hedge
---------------
Assignment relating thereto executed by the Seller and an Interest Rate Hedge
Assignment Agreement, executed by such counterparty;
(v) A copy of each of the Initial Supplemental Enhancement Agreement
and the Initial Security Agreement, in each case executed by each of the parties
thereto;
(w) A copy of the Administrative Services and Lease and Operating
Agreement, dated as of September 30, 1996, between the Originator and the
Seller, executed by each of the parties thereto; and
(x) A copy of the Tax Allocation and Sharing Agreement, dated as of
September 30, 1996, among each of the Originator, the Seller and LeaseVest,
executed by each of the parties thereto.
SECTION 3.02. Conditions Precedent to All Purchases. Each Purchase
-------------------------------------
(including the initial Capital Purchase and Lease Purchase) from the Seller by
the Purchaser shall be subject to the further conditions precedent that:
(a) on or prior to the date thereof, the Servicer shall have
delivered (i) to the Deal Agent, (1) a completed Purchase Request in accordance
with Section 2.02, (2) a duly completed Asset Report for the most recently ended
month, and (3) with respect to each Lease Purchase, evidence, in form and
substance reasonably satisfactory to the Deal Agent, that the Seller has
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entered into Interest Rate Hedges satisfying the terms of this Agreement and in
a notional amount equal to the aggregate Outstanding Balance of the Eligible
Assets subject to such Lease Purchase (together, for any Interest Rate Hedges
the counterparty of which is not FNBB, with an Interest Rate Hedge Assignment
Acknowledgment duly executed by such counterparty and concurrently delivered to
the Deal Agent), and (ii) with respect to each Lease Purchase, to the Collateral
Custodian, the single original copy of each Lease under which the Assets to be
included in such Purchase arose;
(b) all amounts then due and payable under the Facility Documents
have been paid (including, in connection with the initial Lease Purchase to made
hereunder, the Up-Front Fee);
(c) all Adverse Claims with respect to the Purchased Assets,
Equipment Collateral and Related Security shall have been released; and
(d) on the date of each Purchase the following statements shall be
true and the Seller by accepting the amount for a Capital Purchase or by
receiving the proceeds of reinvested Collections in consideration for a Purchase
pursuant to Section 2.06(d) shall be deemed to have certified that:
(i) The representations and warranties contained in Section 4.01 are
------------
correct on and as of such day as though made on and as of such date, and
(ii) No event has occurred and is continuing, or would result from
such Purchase which constitutes an Event of Termination or would constitute
an Event of Termination but for the requirement that notice be given or
time elapse or both.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Seller. The
--------------------------------------------
Seller represents and warrants as follows:
(a) Due Incorporation and Good Standing. The Seller is a corporation
-----------------------------------
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, and is duly qualified to do business, and in good standing,
in the Commonwealth of Massachusetts and in every other jurisdiction in which
the nature of its business requires it to be so qualified.
(b) Due Authorization and No Conflict. The execution, delivery and
---------------------------------
performance by the Seller of this Agreement, the Lease Sale Agreement and all
other Facility Documents to which it is a party, and the transactions
contemplated hereby and thereby, are within the Seller's
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<PAGE>
corporate powers, have been duly authorized by all necessary corporate action on
the part of the Seller, do not contravene (i) the Seller's charter or by-laws,
(ii) any law, rule or regulation applicable to the Seller, (iii) any contractual
restriction contained in any indenture, loan or credit agreement, lease,
mortgage, security agreement, bond, note, or other agreement or instrument
binding on the Seller or its property or (iv) any order, writ, judgment, award,
injunction or decree binding on the Seller or its property, and do not result in
or require the creation of any Adverse Claim upon or with respect to any of its
properties pursuant to any material indenture, loan or credit agreement, lease,
mortgage, security agreement, bond, note or other material agreement binding on
the Seller or its properties; and no transaction contemplated hereby requires
compliance with any bulk sales act or similar law. This Agreement and the Lease
Sale Agreement have been duly executed and delivered on behalf of the Seller.
(c) Governmental Consent. No authorization or approval or other
--------------------
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance by
the Seller of this Agreement, the Lease Sale Agreement or any other agreement,
document or instrument to be delivered by it hereunder, except for filings under
the UCC.
(d) Enforceability of Facility Documents. This Agreement and each
------------------------------------
other Facility Document to be delivered by the Seller in connection herewith
constitute the legal, valid and binding obligation of the Seller enforceable
against the Seller in accordance with their respective terms.
(e) No Litigation. There are no actions, suits or proceedings
-------------
pending, or to the knowledge of the Seller threatened in writing, against the
Seller, or the property of the Seller, in any court, or before any arbitrator of
any kind, or before or by any governmental body, which (i) assert the invalidity
of any Facility Document or any action to be taken by the Seller in connection
therewith; or (ii) seek to prevent the consummation of the transactions
contemplated by this Agreement and the other Facility Documents. The Seller is
not in default with respect to any order of any court, arbitrator or
governmental body.
(f) Perfection of Interest in Purchased Asset. Each Purchased Asset
-----------------------------------------
shall, together with the Lease related thereto, at all times, be owned by the
Seller free and clear of any Adverse Claim except as provided herein or arising
as a result of any action taken by the Purchaser or any assignee thereof, and
upon each Purchase, the Purchaser shall acquire a valid and perfected first
priority interest in each Purchased Asset then existing or thereafter arising
and in the Related Security, Collections and Equipment Collateral with respect
thereto (subject, in the case of Related Security, to Section 6.05 and, in the
------------
case of Equipment Collateral, to Section 2.10), in each case free and clear of
------------
any Adverse Claim except as provided herein or arising as a result of any action
taken by the Purchaser or any assignee thereof; and no effective financing
statement or other instrument similar in effect, filed or permitted to be filed
by the Seller, covering any Purchased Asset, the Related Security, Collections
or the Equipment Collateral with respect thereto shall at any time be on file in
any recording office except such as may be
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<PAGE>
filed in favor of the Deal Agent in accordance with this Agreement, and, with
respect to the Equipment Collateral, such financing statements as may be filed
against the related Obligor in favor of the Originator.
(g) Accuracy of Information. No Asset Report or Purchase Request (if
-----------------------
prepared by the Seller) furnished or to be furnished by the Seller to the Deal
Agent, the Purchaser, any Liquidity Provider or any Supplemental Enhancement
Provider in connection with this Agreement is or shall be inaccurate in any
material respect as of the date it is or shall be dated, or as of the date so
furnished.
(h) Location of Chief Executive Office and Records. The chief place
----------------------------------------------
of business and chief executive office of the Seller are located at the address
of the Seller referred to in Section 10.02 hereof and the locations of the
-------------
offices where the Seller keeps all the Records are listed on Exhibit F (or at
---------
such other locations, notified to the Deal Agent in accordance with Section
-------
5.01(f), in jurisdictions where all action required by Section 6.05 has been
- ------- ------------
taken and completed).
(i) Lock-Box Bank Information. Except as otherwise agreed by the
-------------------------
Deal Agent, and in the case of occasional inadvertent errors on the part of one
or more Obligors (which errors are immaterial in the aggregate with respect to
the Purchased Assets taken as a whole): (A) PNC Bank, N.A., in its capacity as
the Lock-Box Bank, is the only bank to which Collections of Purchased Assets are
remitted by Obligors, (B) account number 10-1093-3415 at such Lock-Box Bank is
the only Lock-Box Account to which Collections of Purchased Assets are so
remitted, (C) the Post Office Box is the only post-office box to which
Collections of Purchased Assets are remitted by Obligors, and (D) none of the
Originator, LeaseVest, the Servicer, the Seller, the Lock-Box Bank or Parrish
Financial Servicing Company, L.P. shall have given any contrary instructions to
any Obligor.
(j) No Tradenames. The Seller has no tradenames, fictitious names,
-------------
assumed names or "doing business as" names.
(k) Separate Corporate Existence. The Seller is operated as an
----------------------------
entity with assets and liabilities distinct from those of the Originator and any
other Affiliates of the Seller, and the Seller hereby acknowledges that the Deal
Agent and the Purchaser are entering into the transactions contemplated by this
Agreement in reliance upon the Seller's identity as a separate legal entity from
the Originator and each such Affiliate. Since its incorporation, the Seller has
been operated in such a manner as to comply with the covenants set forth in
Section 5.01(l).
- ---------------
(l) Investments. The Seller does not own or hold, directly or
-----------
indirectly, any capital stock or equity security of, or any equity interest in,
any Person.
(m) Facility Documents. The Facility Documents are the only
-------------------
agreements pursuant to which the Seller purchases and receives contributions of
Leases, Assets or any other
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accounts receivable from either of the Originating Parties, and the Facility
Documents represent all material agreements between either or both of the
Originating Parties on the one hand, and the Seller on the other. Upon the
purchase and/or contribution of each Asset pursuant to the Lease Sale Agreement,
the Seller shall be the lawful owner of, and have good and marketable title to,
such Asset and all assets relating thereto (including, without limitation, all
related Equipment in the case of a True Lease), free and clear of any Adverse
Claims. All such assets are transferred without recourse to the Originator or
LeaseVest except as described in the Lease Sale Agreement.
(n) Business. Since its incorporation, the Seller has conducted no
--------
business other than the purchase and receipt of Assets and related assets from
the Originator under the Lease Sale Agreement, the sale of Purchased Interests
under this Agreement to finance any such Purchases, and such other activities as
are incidental to the foregoing.
(o) Taxes. The Seller has filed or caused to be filed all Federal,
-----
state and local tax returns which are required to be filed by it, and has paid
or caused to be paid all taxes prior to such taxes becoming delinquent, other
than any taxes or assessments the validity of which are being contested in good
faith by appropriate proceedings.
(p) Solvency. The Seller is not "insolvent" (as such term is defined
--------
in ?101(32)(A) of the Bankruptcy Code.
(q) Software. Except as set forth in the Lease Sale Agreement, each
--------
of (i) the Seller and (ii) the Servicer has the right (whether by license,
sublicense or assignment) to use all of the computer software used by the
Servicer and/or the Originator to account for the Purchased Assets to the extent
necessary to administer the Purchased Assets, and to assign (by way of sale or
collateral) or sublicense such rights to use all of such software to the Deal
Agent and the Purchaser.
(r) Investment Company Act. The Seller is not, and is not controlled
----------------------
by, an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
(s) Use of Proceeds. All proceeds of the Purchases will be used by
---------------
the Seller to fund its purchase obligations under the Lease Sale Agreement and
to pay ordinary operating expenses incurred in connection therewith, and no
proceeds of any Purchase will be used by the Seller (i) for a purpose which
violates, or would be inconsistent with, Regulation G, T, U or X promulgated by
the Board of Governors of the Federal Reserve System from time to time or (ii)
to acquire any security in any transaction which is subject to Section 13 or 14
of the Securities Exchange Act of 1934, as amended.
(t) Purchaser UCC Filing Requirement. At the time of any
--------------------------------
determination hereunder, the Purchaser UCC Filing Requirement shall have been
satisfied in respect of Eligible
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<PAGE>
Assets having an aggregate Outstanding Balance constituting greater than 70% of
the Aggregate Outstanding Balance then in effect.
SECTION 4.02. Representations and Warranties of the Servicer. The
----------------------------------------------
Servicer represents and warrants as follows:
(a) Due Incorporation and Good Standing. The Servicer is a
-----------------------------------
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation and is duly qualified to do business,
and is in good standing, in every jurisdiction in which the nature of its
business requires it to be so qualified.
(b) Due Authorization and No Conflict. The execution, delivery and
---------------------------------
performance by the Servicer of this Agreement, the Lease Sale Agreement and all
other agreements, instruments and documents to be delivered by it hereunder, and
the transactions contemplated hereby and thereby, are within the Servicer's
corporate powers, have been duly authorized by all necessary corporate action on
the part of the Servicer, do not contravene (i) the Servicer's charter or by-
laws, (ii) any law, rule or regulation applicable to the Servicer, (iii) any
material contractual restriction contained in any material indenture, loan or
credit agreement, lease, mortgage, security agreement, bond, note, or other
material agreement or instrument binding on the Servicer or its property or (iv)
any material order, writ, judgment, award, injunction or decree binding on the
Servicer or its property, and do not result in or require the creation of any
Adverse Claim upon or with respect to any of its properties pursuant to any
material indenture, loan or credit agreement, lease mortgage, security
agreement, bond, note or other material agreement binding on the Servicer or its
properties. This Agreement and the Lease Sale Agreement have been duly executed
and delivered on behalf of the Servicer.
(c) Governmental Consent. No authorization or approval or other
--------------------
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance by
the Servicer of this Agreement, the Lease Sale Agreement or any other agreement,
document or instrument to be delivered by it hereunder.
(d) Enforceability of Facility Documents. This Agreement and each
------------------------------------
other Facility Document to be delivered by the Servicer in connection herewith
constitute the legal, valid and binding obligation of the Servicer enforceable
against the Servicer in accordance with their respective terms.
(e) No Litigation. There are no actions, suits or proceedings
-------------
pending, or to the knowledge of the Servicer threatened in writing, against or
affecting the Servicer, or the property of the Servicer, in any court, or before
any arbitrator of any kind, or before or by any governmental body, which (i)
assert the invalidity of any Facility Document or any action to be taken by the
Servicer in connection therewith, or (ii) seek to prevent the consummation of
the transactions contemplated by this Agreement and the other Facility
Documents. The Servicer is not in default with respect to any order of any
court, arbitrator or governmental body.
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<PAGE>
(f) Accuracy of Information. No Asset Report or Purchase Request (if
-----------------------
prepared by the Servicer), furnished or to be furnished by the Servicer to the
Deal Agent, the Purchaser or any Liquidity Provider in connection with this
Agreement is or shall be inaccurate in any material respect as of the date it is
or shall be dated, or as of the date so furnished.
(g) Financial Statements. The audited balance sheet of the
--------------------
Originator as at June 30, 1996, and the related statements of income and cash
flow of the Originator for the year period then ended, certified by its chief
financial officer, copies of which have been furnished to the Deal Agent,
present fairly in all material respects the financial position of the Originator
at such date and the results of the operations of the Originator for the period
ended on such date, all in accordance with generally accepted accounting
principles consistently applied, and since June 30, 1996, there has been no
material adverse change in any such condition or operations.
ARTICLE V
GENERAL COVENANTS
SECTION 5.01. Affirmative Covenants of the Seller. From the Initial
-----------------------------------
Purchase Date until the later of the Termination Date or the Collection Date,
the Seller shall, unless the Deal Agent shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply in all material respects with
--------------------------
all applicable laws, rules, regulations and orders with respect to all Assets
and related Leases.
(b) Preservation of Corporate Existence. Preserve and maintain its
-----------------------------------
corporate existence, rights, franchises and privileges in the jurisdiction of
its incorporation, and qualify and remain qualified in good standing as a
foreign corporation in each jurisdiction where the nature of its business
requires it to be so qualified.
(c) Audits. From time to time during each calendar quarter, upon
------
reasonable prior written notice to the Seller and during regular business hours,
permit the Deal Agent, or its agents or representatives, (i) to examine and make
copies of and abstracts from all Records, and (ii) to visit the offices and
properties of the Seller for the purpose of examining such Records, and to
discuss matters relating to the Assets or the Seller's performance hereunder
with any of the officers or employees of the Seller having knowledge of such
matters and with the Seller's independent public accountants.
(d) Keeping of Records and Books of Account. Maintain and implement
---------------------------------------
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing the Assets in the event of the
destruction of the originals thereof) and keep and maintain, all documents,
books, records and other information reasonably necessary or advisable for the
collection of all Assets (including, without limitation, records adequate to
permit the daily identification of all Collections of and adjustments to each
Purchased Asset).
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<PAGE>
The original counterpart of each Lease subject to a Lease Purchase hereunder
shall be delivered to the Collateral Custodian and all other Records relating
thereto shall be held by the Servicer; such original counterpart and all such
Records shall in any event be marked with a legend indicating the interests of
the Deal Agent and the Purchaser therein.
(e) Performance and Compliance with Assets and Leases. At its
-------------------------------------------------
expense timely and fully perform and comply, in all material respects, with all
material provisions, covenants and other promises required to be observed by it
under the Leases related to the Purchased Asset.
(f) Location of Records. Keep its chief place of business and chief
-------------------
executive office, and the offices where it keeps the Records, at the address(es)
of the Seller referred to in Section 4.01(h), or, in any such case, upon 30
---------------
days' prior written notice to the Deal Agent, at such other locations within the
United States where all action required by Section 6.05 shall have been taken
------------
and completed.
(g) Credit and Collection Policies. Comply in all material respects
------------------------------
with its Credit and Collection Policy in regard to each Purchased Asset and the
related Lease.
(h) Collections. Instruct all Obligors of Purchased Leases to cause
-----------
all Collections to be deposited directly to the Lock-Box Account (and in the
case of any payments made by mail, to the related Post Office Box) and if the
Seller shall receive any Collections (including, without limitation, any
Collections deemed to have been received pursuant to Section 9.02), the Seller
------------
shall remit such Collections to the Collection Account within one Business Day
following the Seller's receipt thereof.
(i) Posting of Collections and Assets. Apply all Collections to the
---------------------------------
applicable Assets pursuant to the terms of Section 6.06 and modify its general
------------
trial balance to reflect such Collections, in each case, within one Business Day
following the Seller's or the Servicer's receipt of information in respect of
such Collections but in no event more than five Business Days after the earliest
date on which such Collections are deposited in the Lock-Box Account or
otherwise received by the Servicer or the Seller.
(j) Obligor UCC Filing Requirement. Comply with the Obligor UCC
------------------------------
Filing Requirement.
(k) Facility Documents. Comply in all material respects with the
------------------
terms of and employ the procedures outlined in and enforce its rights with
respect to the obligations of the Originator and/or LeaseVest under the Lease
Sale Agreement, and all of the other Facility Documents to which it is a party.
(l) Separate Corporate Existence. Take all reasonable steps it deems
----------------------------
necessary or advisable to maintain the Seller's identity as a separate legal
entity from the Originator and any of its other Affiliates, and to not mislead
others as to the separate identity of Seller and the
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Originator. Without limiting the generality of the foregoing and in addition to
and consistent with the covenants set forth in Sections 5.01(b) and 5.01(k), the
---------------- -------
Seller shall:
(i) constitute a limited purpose corporation whose activities are
restricted in its certificate of incorporation;
(ii) not permit the direct involvement by the Originator or any other
Affiliate of the Originator in the day-to-day management of the Seller
(other than permitting employees, officers and directors of the Originator
to serve as employees, officers and directors of the Seller and to take
such acts and do such things in connection therewith as such persons deem
reasonable or necessary under the circumstances to faithfully fulfill their
duties as officers, directors and employees of Seller, or as they are
required to take or do by any applicable law, rule or regulation, or by the
order, decree or judgment of any court, arbitrator or governmental body);
(iii) other than activities undertaken pursuant to the Lease Sale
Agreement and this Agreement and the other Facility Documents, not engage
in intercorporate transactions with the Originator or any other Affiliate
of the Originator, other than transactions in the ordinary course of
business between a parent corporation and its subsidiary;
(iv) maintain separate corporate records and books of account from
the Originator and the other Affiliates of the Originator, hold corporate
meetings and otherwise observe corporate formalities;
(v) prepare its financial statements separately from those of its
other Affiliates and insure that any consolidated financial statements and
books and records of the Originator that include the Seller have notes to
the effect that the Seller is a separate corporate entity and that the
Seller's creditors have a claim on its Assets prior to those Assets
becoming available to any creditors of the Originator;
(vi) not commingle its funds (other than those deposited into the
Lock-Box Account) or other Assets of the Seller with those of any other
Affiliate, and not hold its Assets in any manner that would create an
appearance that such Assets belong to any other Affiliate, and will not
maintain bank accounts or other depository accounts (other than the Lock-
Box Account) to which any Affiliate is an account party, into which any
Affiliate makes deposits or from which any Affiliate has the power to make
withdrawals;
(vii) pay its own expenses and obligations out of its own funds and
Assets, other than expenses incurred in connection with the closing of the
transactions contemplated by this Agreement and the other Facility
Documents and as provided in the Interest Rate Settlement Agreement;
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<PAGE>
(viii) not permit the Originator or any Affiliate of the Originator
(other than in connection with any Lock-Box Account) to (A) guaranty any of
the Seller's obligations or (B) advance funds to the Seller for the payment
of expenses or otherwise (other than in connection with Servicer Advances);
(ix) not pay any expenses, guaranty any obligations or advance
funds for the payment of expenses or obligations of the Originator or any
other Affiliate of the Originator;
(x) conduct all business correspondence of the Seller and other
communications in the Seller's own name on its own stationery;
(xi) not permit the Originator or any other Affiliate of the
Originator to act as an agent of the Seller in any capacity (except as
Servicer hereunder) and not itself act as an agent for the Originator, but
instead present itself to the public as a corporation separate from the
Originator, independently engaged in the business of purchasing and selling
Leases;
(xii) maintain one independent director at all times who shall at no
time be a shareholder, director, officer, employee, Affiliate or associate
of any shareholder of the Originator as provided in its articles of
incorporation; and
(xiii) take such other actions as are necessary on its part to ensure
that the facts and assumptions set forth in the opinion of Seller's counsel
described in Section 3.01(p) remain true and correct at all times.
---------------
(m) Interest Rate Hedges. (A) Concurrently with each Lease Purchase
--------------------
hereunder, enter into an Interest Rate Hedge with such counterparties and on
such terms as shall satisfy the requirements of clause (B) below, and transfer,
assign and otherwise convey to the Deal Agent all of the Seller's rights in, to
and under such Interest Rate Hedge pursuant to an Interest Rate Hedge Assignment
together with an Interest Rate Hedge Assignment Acknowledgment executed by the
relevant Interest Rate Hedge counterparty; and
(B) Maintain, at all times, with respect to each Lease Purchase
and the Eligible Assets subject thereto, Interest Rate Hedges (i) between the
Seller and either FNBB, and/or such other counterparties as may be acceptable to
the Deal Agent and have a long-term rating of at least AA- from S&P, Aa3 from
Moody's, AA- from DCR (if rated by DCR) and a short-term rating of at least A-1
from S&P, P-1 from Moody's and D-1 from DCR (if rated by DCR), (ii) with an
aggregate notional amount not less than the product of (A) a factor of 0.93, (B)
the aggregate Outstanding Balance of such Eligible Assets, and (C) a factor of
0.88, and (iii) with respect to which the Seller makes periodic payments to the
applicable counterparty (solely on a net basis from funds available under
Section 2.06(d)(ii) or Section 2.06(e)(i), as the case may be) by reference to A
- ------------------- ------------------
fixed rate equal to (1) the applicable Lease Discount Rate minus (2) the
-----
applicable Aggregate Fee Rate, and the counterparty makes periodic payments to
the Seller or (to
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<PAGE>
the extent the Deal Agent has required such counterparty to remit such payments
directly to the Deal Agent) to the Deal Agent (in either case, solely on a net
basis) by reference to a rate equal during any month to the daily average during
such month of the money market yields of the rate set forth in H.15 (519) for 30
day maturities under the caption "Commercial Paper"; and
(C) Deliver prior written notice to each of the Rating
Agencies then rating the commercial paper notes of the Purchaser (if any), of
the Seller's entry into one or more Interest Rate Hedges with a Person other
than FNBB.
(n) Search Updates. Without limiting any other rights of the Deal
--------------
Agent hereunder, obtain (or cause the Servicer to obtain), at the expense of the
Seller, and deliver to the Deal Agent, within ten Business Days of the close of
each fiscal quarter of each fiscal year of the Seller (or promptly upon the
reasonable request of the Deal Agent if required on a more frequent basis by the
Deal Agent) certified copies of Requests for Information or Copies (Form UCC-11)
(or a similar search report certified by a party acceptable to the Deal Agent),
listing all effective financing statements which name LeaseVest, the Originator
or the Seller (under their respective present names, and any previous names or
tradenames) as debtor and which are filed in any jurisdiction in which filings
would be required to be made under the UCC of any applicable jurisdiction in
order to perfect (by filing a financing statement) a security interest in
chattel paper owned by such Person, together with copies of such financing
statements (which search reports may be "bringdowns" of any earlier search
report executed against any such Person in the same jurisdiction).
(o) Fair Selection. In connection with each Lease Purchase
--------------
hereunder, select Eligible Assets for inclusion in such Lease Purchase on a
basis which is not adverse to any of the Purchaser or the Deal Agent.
SECTION 5.02. Reporting Requirements of the Seller. From the Initial
------------------------------------
Purchase Date until the later of the Termination Date or the Collection Date,
the Seller will, unless the Deal Agent shall otherwise consent in writing,
furnish to the Deal Agent:
(a) as soon as possible and in any event within five Business Days
after the occurrence of each Event of Termination or each event which, with the
giving of notice or lapse of time or both, would constitute an Event of
Termination, the statement of the chief financial officer, chief accounting
officer or treasurer of the Seller setting forth details of such Event of
Termination or event and the action which the Seller proposes to take with
respect thereto;
(b) on or before the first Settlement Date in each month, a report
summarizing the portfolio of Interest Rate Hedges as of such day, setting forth
the information contained in, and substantially in the form of, the report
attached hereto as Exhibit G;
---------
(c) as soon as available and in any event within 45 days after the
end of each of the first three quarters of each fiscal year of the Seller and
the Originator, balance sheets of the
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<PAGE>
Seller, consolidated balance sheets of the Originator and its consolidated
Subsidiaries as of the end of such quarter, and the related consolidated
statements of income and retained earnings and consolidated statements of cash
flow of the Seller and the Originator and its consolidated Subsidiaries, each
for the period commencing at the end of the previous fiscal year (as
appropriate) and ending with the end of such quarter, together with separate
consolidating balance sheets, statements of income and retained earnings and
statements of cash flow for the Seller and for the Originator and its
consolidated Subsidiaries for the equivalent periods, all of the foregoing to be
certified as correct by the chief financial officer or chief accounting officer
of the Seller or the Originator (as appropriate), in each such case prepared in
accordance with generally accepted accounting principles, consistently applied;
(d) as soon as available and in any event within 90 days after the
end of each fiscal year of the Seller and the Originator, an unqualified audit
report, including the balance sheets of the Seller and the consolidated balance
sheets of the Originator and its consolidated Subsidiaries as of the end of such
year and the related consolidated statements of income and retained earnings and
consolidated statements of cash flow of the Seller and the Originator and its
consolidated Subsidiaries for such year, together with a separate consolidating
balance sheet, statement of income and retained earnings and statement of cash
flow for the Originator and the Seller for the equivalent periods, all of the
foregoing to be certified by nationally recognized independent public
accountants acceptable to the Deal Agent, in each such case prepared in
accordance with generally accepted accounting principles, consistently applied;
and
(e) as soon as reasonably practicable, from time to time, such other
information, documents, records or reports (including SEC filings) respecting
the Assets or the conditions or operations, financial or otherwise, of the
Seller and its Affiliates as the Deal Agent may from time to time reasonably
request in order to protect the interests of the Deal Agent or the Purchaser
under or as contemplated by this Agreement.
SECTION 5.03. Negative Covenants of the Seller. From the Initial
--------------------------------
Purchase Date until the later of the Termination Date or the Collection Date,
the Seller will not, without the written consent of the Deal Agent:
(a) Sales, Liens, Etc. Against Assets and Related Assets. Except as
----------------------------------------------------
otherwise provided herein, (i) sell, assign (by operation of law or otherwise)
or otherwise dispose of, or create or suffer to exist, any Adverse Claim upon or
with respect to, any Purchased Asset, Related Security or Collections, or any
related Lease, or any Lease Sale Asset or Servicing Agreement Asset (if any), or
assign any right to receive income in respect thereof, or (ii) create or suffer
to exist, any Adverse Claim upon or with respect to any Equipment Collateral.
(b) Extension or Amendment of Assets. Except as otherwise permitted
--------------------------------
in Section 6.02, extend, amend or otherwise modify, the terms of any Purchased
------------
Asset, or amend, modify or waive, any term or condition of any Lease related
thereto.
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<PAGE>
(c) Change in Business or Credit and Collection Policy. Make any
--------------------------------------------------
change in the character of its business or in the Credit and Collection Policy,
which change would, in either case, materially impair the collectibility of any
Purchased Asset.
(d) Change in Payment Instructions to Obligors. Make any amendment,
------------------------------------------
change or other modification to the terms of the Lock-Box Agreement, or in any
instructions to Obligors given in accordance with Section 5.01(h).
---------------
(e) Stock, Merger, Consolidation, Etc. Sell any shares of any class
----------------------------------
of its capital stock to any Person (other than the Originator) or consolidate
with or merge into or with any other corporation, or purchase or otherwise
acquire all or substantially all of the Assets or capital stock, or other
ownership interest of, any Person or sell, transfer, lease or otherwise dispose
of all or substantially all of its Assets to any Person, except as expressly
permitted under the terms of this Agreement.
(f) Change in Corporate Name. Make any change to its corporate name
------------------------
or use any tradenames, fictitious names, assumed names or "doing business as"
names unless the Seller shall give the Deal Agent thirty (30) days prior written
notice thereof and shall take such other steps reasonably requested by the Deal
Agent (including, without limitation, the filing of amendments to and/or new UCC
financing statements) in order to maintain a first priority perfected interest
of the Purchaser in the Purchased Interests and the Equipment Collateral.
(g) ERISA Matters. Establish or be party to any Plan, Multiemployer
-------------
Plan or Benefit Plan.
(h) Terminate or Reject Leases. Without limiting Section 5.03(b),
-------------------------- ---------------
terminate or reject any Lease under which a Purchased Asset has arisen prior to
the end of the term of such Lease, whether such rejection or early termination
is made pursuant to an equitable cause, statute, regulation, judicial proceeding
or other applicable law (including, without limitation, Section 365 of the
Bankruptcy Code), unless (i) with respect to Defaulted Assets, the Seller has
determined in good faith that such termination or rejection will maximize the
recovery thereon, or (ii) prior to such termination or rejection, the Seller
pays the Deal Agent, for the benefit of the Purchaser and the Liquidity
Providers, an amount equal to the aggregate Outstanding Balance with respect
thereto (such Outstanding Balance to be calculated assuming that the Lease is in
effect for its full term).
(i) Indebtedness. Create, incur, assume or suffer to exist any
------------
Indebtedness except for (i) Indebtedness to the Deal Agent, the Purchaser or any
Affected Party expressly contemplated hereunder, and (ii) Indebtedness to the
Originator pursuant to the Lease Sale Agreement or any other Facility Document.
(j) Guarantees. Guarantee, endorse or otherwise be or become
----------
contingently liable (including by agreement to maintain balance sheet tests) in
connection with the obligations of
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<PAGE>
any other Person, except endorsements of negotiable instruments for collection
in the ordinary course of business and reimbursement or indemnification
obligations in favor of the Deal Agent, the Purchaser or any Affected Party as
provided for under this Agreement.
(k) Limitation on Transactions with Affiliates. Enter into, or be a
------------------------------------------
party to any transaction with any Affiliate of the Seller, except for:
(i) the transactions contemplated by the Lease Sale Agreement and
the other Facility Documents;
(ii) other transactions in the nature of employment contracts and
directors' fees, upon fair and reasonable terms materially no less
favorable to the Seller than would be obtained in a comparable arm's-length
transaction with a Person not an Affiliate; and
(iii) with respect only to transactions between the Seller and
LeaseVest or the Originator, transactions in the ordinary course of
business between a parent corporation and its subsidiary.
(l) Facility Documents. Except as otherwise permitted under Section
------------------ -------
10.01, (a) terminate, amend or otherwise modify any Facility Document to which
- -----
it is a party or grant any waiver or consent thereunder, (b) terminate, amend or
otherwise modify, or permit the Originator to terminate, amend or otherwise
modify, either of the Servicing Agreement or the Backup Servicing Agreement, or
grant any waiver or consent thereunder, or (c) without the prior written consent
of the Deal Agent, which consent will not unreasonably be withheld, consent to
any amendment or modification of the Credit and Collection Policy, which would,
in either case, impair the collectibility of any Purchased Asset.
(m) Charter and By-Laws. Amend or otherwise modify its Certificate
-------------------
of Incorporation or By-laws in any manner which requires the consent of the
"Independent Director" (as defined in the Seller's Certificate of Incorporation)
without the prior written consent of the Deal Agent or delivery of an opinion of
counsel that such amendment shall not alter the conclusions set forth in the
legal opinion described in Section 3.01(p).
---------------
(n) Lines of Business. Conduct any business other than that
-----------------
described in Section 4.01(n), or enter into any transaction with any Person
---------------
which is not contemplated by or incidental to the performance of its obligations
under the Facility Documents.
(o) Accounting Treatment. Prepare any financial statements or other
--------------------
statements (including any tax filings which are not consolidated with those of
the Originator) which shall account for the transactions contemplated by the
Lease Sale Agreement in any manner other than as the sale of, or a capital
contribution of, the Leases, the Assets and the related Assets by the Originator
to the Seller.
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<PAGE>
(p) Limitation on Investments. Make or suffer to exist any loans or
-------------------------
advances to, or extend any credit to, or make any investments (by way of
transfer of property, contributions to capital, purchase of stock or securities
or evidences of indebtedness, acquisition of the business or Assets, or
otherwise) in, any Affiliate or any other Person except for Permitted
Investments and the purchase of Assets and related Assets pursuant to the terms
of the Lease Sale Agreement.
(q) Prepayments of Purchased Asset. Permit or accept the proceeds of
------------------------------
any prepayment of a Purchased Asset, unless the Seller is entitled under Section
-------
2.06(d) to receive or apply such proceeds in an amount sufficient to repay in
- -------
full the Capital outstanding with respect to such Purchased Asset, any Breakage
Indemnity resulting therefrom and any fees, costs or expenses (including early
termination payments) resulting from the reduction of the aggregate notional
amount of the Interest Rate Hedges.
SECTION 5.04. Covenants of the Servicer.
-------------------------
(a) Affirmative Covenants of the Servicer. From the Initial Purchase
-------------------------------------
Date until the later of the Termination Date or the Collection Date, the
Servicer will, unless the Deal Agent shall otherwise consent in writing:
(i) Compliance with Laws, Etc. Comply in all material respects with
--------------------------
all applicable laws, rules, regulations and orders with respect to, and the
servicing of, all Assets and related Leases.
(ii) Preservation of Corporate Existence. Preserve and maintain its
-----------------------------------
corporate existence, rights, franchises and privileges in the jurisdiction
of its incorporation, and qualify and remain qualified in good standing as
a foreign corporation in each jurisdiction where the nature of its business
requires it to be so qualified.
(iii) Audits. From time to time upon reasonable prior written notice
------
to the Servicer and during regular business hours, permit the Deal Agent,
or its agents or representatives, (1) to examine and make copies of and
abstracts from all Records, and (2) to visit the offices and properties of
the Servicer for the purpose of examining such Records, and to discuss
matters relating to the Assets or the Servicer's performance hereunder with
any of the officers or employees of the Servicer having knowledge of such
matters, and with the Seller's independent public accountants.
(iv) Keeping of Records and Books of Account. Maintain and implement
---------------------------------------
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing the Assets in the event of the
destruction of the originals thereof) and keep and maintain, all documents,
books, records and other information reasonably necessary for the
collection of all Assets (including, without limitation, records adequate
to permit the daily identification of all Collections of and adjustments to
each Purchased Asset). The original counterpart of each Lease subject to a
Lease
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<PAGE>
Purchase hereunder shall be delivered to the Collateral Custodian and all
other Records relating thereto shall be held by the Servicer segregated
from any similar documents; such original counterpart and all such Records
shall in any event be marked with a legend indicating the interests of the
Purchaser and the Liquidity Providers therein.
(v) Performance and Compliance with Assets and Leases. At its
-------------------------------------------------
expense timely perform and comply, in all material respects, with all
material provisions, covenants and other promises required to be observed
by it under the Leases related to the Purchased Asset.
(vi) Credit and Collection Policies. Comply in all material
------------------------------
respects with its Credit and Collection Policy in regard to each Purchased
Asset and the related Lease.
(vii) Collections. Instruct all Obligors of Purchased Leases to
-----------
cause all Collections to be deposited directly to the Lock-Box Account (and
in the case of any payments made by mail, to the related Post Office Box).
Pursuant to the terms of the Lock-Box Agreement, the Servicer shall cause
all Collections so deposited into the Lock-Box Account to be remitted to
the Collection Account within five Business Days after the date of such
deposit.
(viii) Posting of Collections and Assets. Apply all Collections to
---------------------------------
the applicable Assets pursuant to the terms of Section 6.06 within one
------------
Business Day following the Seller's or the Servicer's receipt of
information in respect of such Collections but in no event more than five
Business Days after the earliest date on which such Collections are
deposited in the Lock-Box Bank or otherwise received by the Servicer or the
Seller.
(ix) Maintenance of Insurance. Maintain, or cause each Obligor to
------------------------
maintain, with respect to the Leases related to the Purchased Assets and
the Equipment related thereto, casualty and general liability insurance in
an amount and of a nature consistent with industry practice and the Credit
and Collection Policy. The Servicer shall remit, or shall cause to be
remitted, the proceeds of any such insurance policy to the Lock-Box
Account.
(x) Facility Documents. Comply in all material respects with the
------------------
terms of and employ the procedures outlined in the Lease Sale Agreement,
and all of the other Facility Documents to which it is a party.
(b) Reporting Requirements of the Servicer. From the Initial
--------------------------------------
Purchase Date until the later of the Termination Date or the Collection Date,
the Servicer will, unless the Deal Agent shall otherwise consent in writing,
furnish to the Deal Agent:
(i) As soon as reasonably practicable and in any event within five
Business Days after the occurrence of each Event of Termination or each
event which, with the giving of
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<PAGE>
notice or lapse of time or both, would constitute an Event of Termination,
a notice setting forth details of such Event of Termination or event.
(ii) As soon as reasonably practicable and in any event within five
Business Days after the occurrence of each Servicer Default or each event
which, with the giving of notice or lapse of time or both, would constitute
a Servicer Default, the statement of the chief financial officer, chief
accounting officer or treasurer of the Servicer setting forth details of
such Servicer Default or event and the action which the Servicer proposes
to take with respect thereto.
(iii) As soon as reasonably practicable, from time to time, such
other information, documents, records or reports within its possession
respecting the Assets or the conditions or operations, financial or otherwise,
of the Servicer as the Deal Agent may from time to time reasonably request in
order to protect the interests of the Deal Agent or the Purchaser under or as
contemplated by this Agreement.
(c) Negative Covenants of the Servicer. From the Initial Purchase
----------------------------------
Date until the later of the Termination Date or the Collection Date, the
Servicer will not, without the written consent of the Deal Agent and the Seller:
(i) Extension or Amendment of Assets. Except as otherwise permitted
--------------------------------
in Section 6.02, extend, amend or otherwise modify, the terms of any
------------
Purchased Asset, or amend, modify or waive, any material term or condition
of any Lease related thereto.
(ii) Change in Business or Credit and Collection Policy. Make any
--------------------------------------------------
material change in the character of its business or in the Credit and
Collection Policy, which change would, in either case, materially impair
the collectibility of any Purchased Asset.
(iii) Change in Payment Instructions to Obligors. Make any
------------------------------------------
amendment, change or other modification to the Lock-Box Agreement or in any
instructions to Obligors given in accordance with Section 5.04(a)(vii).
--------------------
(iv) ERISA. (1) Engage or permit any ERISA Affiliate to engage in
-----
any prohibited transaction for which an exemption is not available or has
not previously been obtained from the DOL; (2) permit to exist any
accumulated funding deficiency, as defined in Section 302(a) of ERISA and
Section 412(a) of the IRC, or funding deficiency with respect to any
Benefit Plan other than a Multiemployer Plan; (3) fail to make any payments
to any Multiemployer Plan that the Servicer or any ERISA Affiliate may be
required to make under the agreement relating to such Multiemployer Plan or
any law pertaining thereto; (4) terminate any Benefit Plan so as to result
in any material liability; or (5) permit to exist any occurrence of any
reportable event described in Title IV of ERISA which represents a material
risk of a material liability of the Servicer or any ERISA Affiliate under
ERISA or the IRC.
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<PAGE>
ARTICLE VI
ADMINISTRATION AND COLLECTION
SECTION 6.01. Designation of Servicer. The servicing, administering
-----------------------
and collection of the Assets shall be conducted by the Person (the "Servicer")
--------
so designated from time to time in accordance with this Section 6.01. Until the
------------
Deal Agent gives notice to the Seller of the designation of a new Servicer, the
Originator is hereby designated as, and hereby agrees to perform the duties and
obligations of, the Servicer pursuant to the terms hereof. The Deal Agent may
only designate as Servicer any Person to succeed the Originator or any successor
Servicer upon two Business Days' prior written notice following the occurrence
of a Servicer Default or an Event of Termination, and on the condition in each
case that any such Person so designated shall agree to perform the duties and
obligations of the Servicer pursuant to the terms hereof. The Servicer may,
with the prior consent of the Deal Agent, which consent shall not be
unreasonably withheld, subcontract with any other Person for servicing,
administering or collecting the Purchased Asset, provided that the Servicer
shall remain liable for the performance of the duties and obligations of the
Servicer pursuant to the terms hereof. The Servicer shall not resign from the
obligations and duties hereby imposed on it except upon determination that (i)
the performance of its duties hereunder is no longer permissible under
applicable law and (ii) there is no reasonable action which the Servicer could
take to make the performance of its duties hereunder permissible under
applicable law.
SECTION 6.02. Duties of the Servicer. (a) The Servicer shall take
----------------------
or cause to be taken all such actions as it deems necessary or advisable to
collect each Purchased Asset from time to time, all in accordance with
applicable laws, rules and regulations, with reasonable care and diligence, and
in accordance with the Credit and Collection Policy. Each of the Seller, the
Purchaser, and the Deal Agent hereby appoints as its agent the Servicer, from
time to time designated pursuant to Section 6.01, to enforce its respective
------------
rights and interests in and under the Purchased Assets, the Related Security,
the related Leases and the Equipment Collateral. The Servicer (so long as it is
the Originator) will at all times apply the same standards and follow the same
procedures with respect to the decision to commence, and in prosecuting and
litigating with respect to a Purchased Asset as it applies and follows with
respect to Assets which are not Purchased Assets. In no event shall the
Servicer be entitled to make the Deal Agent or the Purchaser a party to any
litigation without the Deal Agent's express prior written consent. The Servicer
shall set aside for the account of the Purchaser the Collections of Purchased
Asset in accordance with Section 2.06 but shall not be required (unless
------------
otherwise requested by the Deal Agent following the occurrence of an Event of
Termination) to segregate the funds constituting such portion of such
Collections prior to the remittance thereof in accordance with said Section. If
instructed by the Deal Agent following the occurrence of an Event of
Termination, the Servicer shall segregate and deposit with a bank (which may be
FNBB) selected by the Servicer and approved by the Deal Agent the Collections of
Purchased Assets, set aside for the Purchaser,
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<PAGE>
on the first Business Day following receipt by the Servicer of such Collections
and will, if so requested by the Deal Agent, provide payment instructions to
such bank as directed by the Deal Agent. Provided that the Termination Date
shall not have occurred, the Originator, while it is Servicer, may, in
accordance with the Credit and Collection Policy, amend, modify or waive any
term or condition of any Lease unless such amendment, modification or waiver (i)
is inconsistent with the servicing standards set forth above, (ii) would reduce
or adversely affect the Obligor's obligation to maintain, service and insure the
underlying equipment Collateral, (iii) would cause Assets arising thereunder to
fail to be Eligible Assets (as if tested on the date of such amendment,
modification or waiver) or (iv) would materially adversely affect the amount or
collectibility of any Asset arising thereunder. The Seller shall deliver to the
Servicer, and the Servicer shall hold in trust for the Seller and the Purchaser
in accordance with their respective interests, all Records.
(b) The Servicer shall as soon as practicable following receipt turn
over to the Seller the Collections of any Asset which is not a Purchased Asset
less, in the event the Originator is not the Servicer, all reasonable and
appropriate out-of-pocket costs and expenses of such Servicer of servicing,
collecting and administering the Assets to the extent not covered by the
Servicer Fee received by it. The Servicer, if other than the Originator, shall
as soon as practicable upon demand deliver to the Seller all Records in its
possession relating to Assets of the Seller other than Purchased Assets, and
copies of Records in its possession relating to Purchased Asset. The Servicer's
authorization under this Agreement shall terminate after the Termination Date on
the Collection Date.
(c) Notwithstanding anything to the contrary contained in this
Article VI, the Servicer, if the Deal Agent or its designee, shall have no
- ----------
obligation to collect, enforce or take any other action described in this
Article VI with respect to any Asset that is not a Purchased Asset other than to
- ----------
deliver to the Seller the Collections and documents with respect to any such
Asset that is not a Purchased Asset as described in the first two sentences of
Section 6.02(b) and to exercise the same degree of care with respect to
- ---------------
Collections and documents in its possession as it would with respect to its own
property.
SECTION 6.03. Rights of the Deal Agent. (a) The Deal Agent is
------------------------
hereby authorized at any time (i) to notify the Collection Account Bank or the
Lock-Box Bank to accept directions with respect thereto only from the Deal Agent
or its designee and (ii) notify the counterparties to each Interest Rate Hedge
to make any payments owed by such counterparties thereunder directly to the Deal
Agent or its designee.
(b) At any time following the occurrence of a Servicer Default or an
Event of Termination:
(i) The Deal Agent may notify (or may direct the Servicer
to notify) at any time the Obligors of Purchased Assets, or any
of them, of the Purchaser's interest in the Purchased Interests
and Equipment Collateral and direct such
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<PAGE>
Obligors, or any of them, that payment of all amounts payable
under any Purchased Asset or Equipment be made directly to the
Deal Agent or its designee.
(ii) The Seller shall, at the Deal Agent's request and at
the Seller's expense, give notice of the Purchaser's and the
Liquidity Providers' interest in Purchased Asset to each Obligor
and direct that payments be made directly to the Deal Agent or
its designee.
(iii) Each of the Seller and the Purchaser hereby authorizes
the Deal Agent to take any and all steps in the Seller's name and
on behalf of the Seller and the Purchaser which are reasonably
necessary or desirable, in the sole determination of the Deal
Agent, to collect all amounts due under any and all Purchased
Assets, including, without limitation, endorsing the Seller's
name on checks and other instruments representing Collections and
enforcing such Assets and the related Leases.
(c) The Deal Agent shall have the sole and exclusive right to
withdraw or order a transfer of funds in respect of Collections from the Lock-
Box Account, and the Lock-Box Bank shall be instructed to remit any amounts in
respect of Collections deposited in the Lock-Box Account solely according to the
direction of the Deal Agent or its assigns (or as otherwise instructed in
writing by the Deal Agent from time to time).
SECTION 6.04. Responsibilities of the Seller. Anything herein to the
------------------------------
contrary notwithstanding, the Seller shall (i) perform all of its obligations
under the Leases related to the Purchased Asset to the same extent as if
Purchased Interests had not been sold hereunder and the exercise by Deal Agent
of its rights hereunder shall not relieve Seller from such obligations and (ii)
pay when due any taxes, including without limitation, sales, excise and personal
property taxes payable in connection with the Purchased Asset, unless the Seller
is contesting the payment of such taxes in good faith and by appropriate
proceedings.
SECTION 6.05. Further Action Evidencing Purchases. The Seller agrees
-----------------------------------
that from time to time, at its expense, it will promptly execute and deliver all
further instruments and documents, and take all further action that the Deal
Agent may reasonably request in order to perfect, protect or more fully evidence
the Purchased Interests and the Equipment Collateral. Without limiting the
generality of the foregoing, the Seller will (i) mark its master data processing
records evidencing such Purchased Asset and related Leases with a legend,
acceptable to the Deal Agent, evidencing that the Deal Agent and the Purchaser
have acquired an interest therein as provided in this Agreement, (ii) comply
with the Obligor UCC Filing Requirement and (iii) upon the request of the Deal
Agent or the Purchaser (subject to the provisions of Section 2.10), execute and
------------
file such financing or continuation statements, or amendments thereto or
assignments thereof, and such other instruments or notices, as may be necessary
or appropriate or as such Persons may reasonably request. The Seller hereby
authorizes the Deal Agent to file one or more financing or continuation
statements, and amendments thereto and assignments thereof,
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relative to all or any of the Purchased Assets, the Related Security and/or the
Equipment Collateral now existing or hereafter arising without the signature of
the Seller where permitted by law. A carbon, photographic or other reproduction
of this Agreement or any financing statement covering all or any part of the
Purchased Assets, the Related Security and/or the Equipment Collateral, shall be
sufficient as a financing statement. If the Seller fails to perform any of its
agreements or obligations under this Agreement, the Deal Agent may (but shall
not be required to) itself perform, or cause performance of, such agreement or
obligation, and the expenses of the Deal Agent incurred in connection therewith
shall be payable by the Seller upon the Deal Agent's demand therefor.
SECTION 6.06. Application of Payments. To the extent the Servicer
-----------------------
receives a payment from an Obligor of a Purchased Asset with respect to which
the Obligor has not identified the Asset to which such payment should be applied
(a payment in the exact amount of an outstanding invoice being sufficient
identification), the Servicer shall use its best efforts to contact such Obligor
to confirm the Asset to which such Obligor intended that such payment be
applied.
SECTION 6.07. Collateral Custodian. All original counterpart copies
--------------------
of the Leases in respect of the Purchased Assets shall at all times prior to the
Collection Date be held by the Person (the "Collateral Custodian") so designated
--------------------
from time to time in accordance with this Section 6.07 (provided, however, that
------------ -------- -------
in the case of Leases styled as "master leases" or similar documents, the
Collateral Custodian shall at all times prior to the Collection Date only be
required to hold the original counterpart copies of all appropriate schedules to
such master leases). Until the Deal Agent gives notice to the Seller of the
designation of a new Collateral Custodian, the Originator (in its capacity as
Servicer) is hereby designated as, and hereby agrees to perform the duties and
obligations of, the Collateral Custodian pursuant to the terms hereof. In the
event, as a result of an audit or otherwise, the Deal Agent reasonably believes
that the performance and practices of the Collateral Custodian threaten in any
manner the perfection or priority of the Purchaser's interest in the Purchased
Interests or the Equipment Collateral, the Deal Agent may, upon two Business
Days prior written notice, designate as Collateral Custodian either the Servicer
(if not already the Collateral Custodian) or the Deal Agent or any Affiliate of
FNBB and, following the occurrence of a Servicer Default or an Event of
Termination, any other Person to succeed the Originator or any successor
Collateral Custodian, on the condition in each case that any such Person so
designated shall agree to perform the duties and obligations of the Collateral
Custodian pursuant to the terms hereof. Upon taking possession of the original
copy of a Lease, the Collateral Custodian hereby agrees (i) to maintain
possession of such original copies in trust for the Purchaser and the Deal
Agent, (ii) to exercise the same degree of care with respect to the possession
of such Leases as it would if such Leases were its own property, and (iii) to
return the original copy of such Lease to the Seller within two Business Days of
the Seller's request therefor to the extent the Seller requires such original
copy to conduct further business with, or take enforcement action against, the
Obligor of such Lease. Upon the appointment of a successor Collateral
Custodian, the Collateral Custodian being replaced shall
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make all Leases and related documents available to the successor Collateral
Custodian at a place selected by such successor Collateral Custodian.
ARTICLE VII
EVENTS OF TERMINATION
SECTION 7.01. Events of Termination. If any of the following events
---------------------
("Events of Termination") shall occur:
(a) The Seller shall fail to make any payment or deposit required to
be made by it hereunder when due; or
(b) The Seller shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be performed or
observed and any such failure shall remain unremedied for five days after
written notice from the Deal Agent; or
(c) Any representation or warranty made or deemed to be made by the
Seller (or any of its officers or agents) under or in connection with this
Agreement, any Asset Report, any Purchase Request or other information or report
delivered pursuant hereto or pursuant to any other Facility Document shall prove
to have been false or incorrect in any material respect when made; provided,
--------
however, that if any such representation or warranty relates to an Asset which
- -------
is repurchased by the Seller pursuant to Section 9.02 hereof, then the breach of
------------
such representation or warranty shall not give rise to an Event of Termination
under this subsection (c); or
--------------
(d) The Originator or LeaseVest shall fail to pay any principal or
premium or interest on any Indebtedness having a principal amount of $1,000,000
or greater, when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) and such
failure shall continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such Indebtedness; or any other default
under any agreement or instrument relating to any such Indebtedness of the
Originator or LeaseVest or any other event, shall occur and shall continue after
the applicable grace period, if any, specified in such agreement or instrument
if the effect of such default or event is to accelerate, or to permit the
acceleration of, the maturity of such Indebtedness; or any such Indebtedness
shall be declared to be due and payable or required to be prepaid (other than by
a regularly scheduled required prepayment) prior to the stated maturity thereof;
or
(e) Any Lease Purchase shall for any reason, except to the extent
permitted by the terms hereof, cease to create a valid and perfected first
priority interest in each Purchased Asset and the Related Security (subject to
Section 6.05 hereof) and Collections with respect thereto; provided, however, if
- ------------ -------- -------
any such failure relates to an Asset which is repurchased by the Seller
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pursuant to Section 9.02 hereof, then such failure shall not give rise to an
------------
Event of Termination under this subsection (e); or
--------------
(f) (i) The Seller shall admit in writing its inability to pay its
debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted against the Seller (an
"Involuntary Proceeding") or by the Seller seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, or other similar official for it or for any substantial part of its
property and, in the case of an Involuntary Proceeding, such proceeding shall
continue undismissed, unstayed and in effect for a period of sixty (60)
consecutive days; or (ii) the Seller's Board of Directors shall vote
affirmatively to authorize any of the actions set forth in clause (i) above in
----------
this subsection (f); or
--------------
(g) A Servicer Default shall have occurred and be continuing; or
(h) As of any date of determination, (1) The average Default Ratio
for the three most recently concluded months (or such lesser number of months as
shall have concluded after August of 1996 and prior to the applicable date of
determination hereunder) exceeds 0.25% or (2) the average Default Ratio for the
twelve most recently concluded months exceeds 0.25% (or such lesser number of
months as shall have concluded after August of 1996 and prior to the applicable
date of determination hereunder); or
(i) As of any date of determination, (1) the average Delinquency Ratio
for the three most recently concluded months (or such lesser number of months as
shall have concluded after August of 1996 and prior to the applicable date of
determination hereunder) exceeds 0.4166% or (2) the average Delinquency Ratio
for the twelve most recently concluded months (or such lesser number of months
as shall have concluded after August of 1996 and prior to the applicable date of
determination hereunder) exceeds 0.4166%; or
(j) As of the close of business on any Settlement Date, the Aggregate
Outstanding Balance then in effect minus the Deferred Purchase Price then in
-----
effect shall be less than the then outstanding Capital (after giving effect to
any increases or reductions to Capital to be made on such day), and such
deficiency shall exist for a period of five Business Days after such day,
without cure or waiver; or
(k) There shall have been any material adverse change in the
financial condition or operations of the Seller or the Originator since June 30,
1996, or there shall have occurred any event which materially adversely affects
the collectibility of the Assets generally or there shall have occurred any
other event which materially adversely affects the ability of the Seller to
collect Assets generally or the ability of the Seller to perform hereunder, in
each case, as determined in the reasonable judgment of the Deal Agent; or
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(l) The Originator shall cease to (1) own directly 100% of the
outstanding capital stock of the Seller, or (2) own legally or beneficially 100%
of the Voting Stock of LeaseVest, or (3) own legally or beneficially at least
51% of the Voting Stock of The Equipment Leasing Insurance Co. Ltd.; or
(m) There shall remain undischarged for more than thirty (30) days
any final judgment or execution action against either the Originator or any of
its Subsidiaries that, together with other outstanding claims and execution
actions against the Originator and its Subsidiaries exceeds $100,000 in the
aggregate; or
(n) (i) either Paul S. Gass or John P. Colton shall in the aggregate,
at any time, cease to maintain ownership and control of at least fifty percent
(50%) of the Voting Stock of the Originator owned by Paul S. Gass and John P.
Colton, collectively, on a fully diluted basis, as of the date hereof, or (ii)
either Paul S. Gass or John P. Colton shall cease to be employed in a senior
management position with the Originator or there shall occur any substantial
diminution in the senior management positions, duties and responsibilities of
either of Paul S. Gass or John P. Colton; or
(o) The Pension Benefit Guaranty Corporation or the IRS shall have
filed notice of one or more liens against either the Originator or the Seller
(unless such lien does not purport to cover the Purchased Assets), and such
notice shall have remained in effect for more than thirty (30) days unless,
prior to the expiration of such period, such liens shall have been adequately
bonded by the Originator or the Seller, as applicable; or
(p) The Purchaser or the Deal Agent shall determine that its
participation in the transactions contemplated hereunder will impose a material
adverse regulatory, accounting, tax or other impact on the Purchaser or the Deal
Agent; or
(q) For any reason whatsoever, (1) the "Supplemental Enhancement
Commitment Termination Date" shall have occurred under the Initial Supplemental
Enhancement Agreement, or (2) the "Supplemental Enhancement Commitments" of the
Supplemental Enhancement Providers under the Initial Supplemental Enhancement
Agreement shall otherwise cease to be in full force and effect in an aggregate
amount equal to or exceeding 102% of the Purchase Limit then in effect
hereunder, and there shall not then exist a replacement liquidity facility in
favor of the Purchaser in form and substance satisfactory to each of the
Purchaser and the Deal Agent (and, in the event that the Purchaser has issued
commercial paper notes at any such time of determination hereunder, satisfactory
in form and substance to each of the rating agencies then rating such commercial
paper at the request of the Purchaser) providing liquidity coverage to the
Purchaser in an amount equal to or exceeding 102% of the Purchase Limit then in
effect hereunder;
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then, and in any such event, the Deal Agent shall, at the request, or may with
the consent, of the Purchaser, by notice to the Seller declare the Termination
Date to have occurred, except that, in the case of any event described in clause
------ ------
(i) of subsection (f) above or in subsection (h), (i), (j) or (p) above, the
- --- -------------- -------------- --- --- ---
Termination Date shall be deemed to have occurred automatically upon the
occurrence of such event; provided, however, that if any Involuntary Proceeding
-------- -------
(as defined in subsection (f) above) is dismissed within sixty (60) days after
--------------
its commencement, and if no other Event of Termination has occurred, then
following such dismissal, the program shall be reinstated as if the Termination
Date had not occurred. Upon any such declaration or automatic occurrence, the
Deal Agent and the Purchaser shall have, in addition to all other rights and
remedies under this Agreement or otherwise, all other rights and remedies
provided under the UCC of the applicable jurisdiction and other applicable laws,
which rights shall be cumulative.
ARTICLE VIII
THE DEAL AGENT
SECTION 8.01. Authorization and Action. The Purchaser hereby
------------------------
appoints and authorizes the Deal Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to the
Deal Agent by the terms hereof, together with such powers as are reasonably
incidental thereto, including, without limitation, the power and authority to
hold and to perfect any ownership interest or security interest created pursuant
hereto or in connection herewith on behalf of the Purchaser.
SECTION 8.02. Deal Agent's Reliance, Etc. Neither the Deal Agent nor
---------------------------
any of its directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them as Deal Agent under or in
connection with this Agreement (including, without limitation, any action taken
or omitted to be taken by it or them if the Deal Agent is designated as Servicer
pursuant to Section 6.01) or any other agreement executed pursuant hereto,
------------
except for its or their own gross negligence or willful malfeasance or
misfeasance. Without limiting the foregoing, the Deal Agent: (i) may consult
with legal counsel (including counsel for the Seller), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (ii) makes no warranty or
representation to any Affected Party and shall not be responsible to any
Affected Party for any statements, warranties or representations made in or in
connection with this Agreement or in connection with any of the other agreements
executed pursuant hereto; (iii) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement on the part of the Seller or to inspect the
property (including the books and records) of the Seller; (iv) shall not be
responsible to any Affected Person for the due execution, legality, validity,
enforceability, genuineness or sufficiency of value of this Agreement or any
other agreement, instrument or document furnished pursuant hereto; and (v) shall
incur no liability under or in respect of this Agreement or any other agreement
executed pursuant hereto, by acting
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upon any notice (including notice by telephone with respect to notices under
Section 2.02), consent, certificate or other instrument or writing (which may be
- ------------
by telex or facsimile) believed by it to be genuine and signed or sent by the
proper party or parties.
SECTION 8.03. Deal Agent and Affiliates. With respect to any
-------------------------
interests which may be assigned by the Purchaser to FNBB pursuant to Section
-------
10.04, FNBB shall have the same rights and powers under this Agreement as would
- -----
the Purchaser if it were holding such interests and may exercise the same as
though it were not the Deal Agent. FNBB and its Affiliates may generally engage
in any kind of business with the Seller, LeaseVest, the Originator or any
Obligor, any of their respective Affiliates and any Person who may do business
with or own securities of the Seller or any Obligor or any of their respective
Affiliates, all as if FNBB were not the Deal Agent and without any duty to
account therefor to the Purchaser or any Liquidity Provider.
SECTION 8.04. Purchase Decisions. The Purchaser acknowledges that it
------------------
has, independently and without reliance upon the Deal Agent, FNBB or any
Affiliate of FNBB, and based on such documents and information as it has deemed
appropriate, made its own evaluation and decision to enter into this Agreement
and, if it so determines, to purchase the Purchased Interests hereunder. The
Purchaser also acknowledges that it will, independently and without reliance
upon the Deal Agent, FNBB or any Affiliate of FNBB, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own decisions in taking or not taking action under this Agreement.
SECTION 8.05. Resignation of the Deal Agent. The Deal Agent may
-----------------------------
resign as Deal Agent hereunder at any time by giving not less than five (5)
Business Days' prior written notice to the Purchaser, the Seller and the
Servicer, such resignation to be effective on the earlier of (i) the appointment
and acceptance of a successor Deal Agent as provided below and (ii) the 30th day
following delivery of such notice. Upon any such resignation, the Purchaser
shall appoint a financial institution of its choosing as Deal Agent. Following
the appointment of a successor Deal Agent and such successor Deal Agent's
acceptance thereof, such successor Deal Agent shall succeed to and become vested
with all the rights, powers, privileges and duties of the resigning Deal Agent
as Deal Agent hereunder, and the resigning Deal Agent shall be discharged from
its duties and obligations as Deal Agent hereunder. After the Deal Agent's
resignation, the provisions of this Article VIII shall continue in effect for
------------
its benefit in respect of any actions taken or omitted to be taken by it while
it was acting as the Deal Agent.
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ARTICLE IX
INDEMNIFICATION; REPURCHASES
SECTION 9.01. Indemnities by the Seller. (a) Without limiting any
-------------------------
other rights which any Affected Party may have hereunder or under applicable
law, the Seller hereby agrees to indemnify the Purchaser and FNBB, individually
and in its capacity as Deal Agent (the "Indemnified Parties"), from and against
-------------------
any and all damages, losses, claims, liabilities and related costs and expenses,
including reasonable attorneys' fees and disbursements (all of the foregoing
being collectively referred to as "Indemnified Amounts") awarded against or
-------------------
incurred by such Indemnified Party arising out of or as a result of this
Agreement, any of the other Facility Documents, or any interest of any such
Indemnified Party in, to or under the Purchased Interests, the Equipment
Collateral or in respect of any Asset or any Lease, excluding, however, (i)
Indemnified Amounts to the extent resulting from gross negligence or willful
misconduct on the part of any Indemnified Party or (ii) recourse (except with
respect to payment and performance obligations provided for in this Agreement)
for uncollectible Purchased Assets. Without limiting the foregoing, Seller
shall indemnify each Indemnified Party for Indemnified Amounts relating to or
resulting from:
(i) reliance on any representation or warranty made or
deemed made by the Seller (or any of its officers) under or in
connection with this Agreement, any Purchase Notice or any other
information or report delivered by or on behalf of the Seller
pursuant hereto, which shall have been false or incorrect in any
material respect when made or deemed made or delivered;
(ii) the failure by the Seller or the Servicer to comply
with any term, provision or covenant contained in this Agreement,
the Lease Sale Agreement or any other Facility Document to which
it is party or with any applicable law, rule or regulation with
respect to any Asset, the related Lease or the Related Security,
or the nonconformity of any Asset, the related Lease or the
Related Security with any such applicable law, rule or
regulation;
(iii) any reduction of a Purchased Asset due to a Permitted
Encumbrance (excluding any Permitted Encumbrance in favor of an
Indemnified Party), whether existing at the time of the Lease
Purchase of such Purchased Asset or at any time thereafter;
(iv) any products liability claim or personal injury or
property damage suit or other similar or related claim or action
of whatever sort arising out of or in connection with Equipment,
goods, merchandise and/or services which are the subject of any
Asset or Lease;
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(v) the failure to pay when due any taxes, including, without
limitation, sales, excise or personal property taxes payable by the Seller,
LeaseVest or the Originator in connection with the Purchased Assets;
(vi) the failure of the Servicer to maintain, or cause the relevant
Obligor to maintain in effect, policies of casualty and general liability
insurance with respect to the Leases related to the Purchased Assets and
the Equipment related thereto, to the extent required pursuant to Section
-------
5.04(a)(ix);
-----------
(vii) the payment by such Indemnified Party of Taxes, including,
without limitation, any Taxes imposed by any jurisdiction on amounts
payable and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto to the extent caused by the
Seller's actions or failure to act; provided that an Indemnified Party,
--------
making a demand for indemnity payment shall provide the Seller, at its
address referred to in Section 10.02, with a certificate from the relevant
-------------
taxing authority or from a responsible officer of such Indemnified Party
stating or otherwise evidencing that such Indemnified Party has made
payment of such Taxes and, within 30 days thereafter, will provide a copy
of or extract from documentation, if available, furnished by such taxing
authority evidencing assertion or payment of such Taxes; and
(viii) any payment made by or on behalf of an Indemnified Party (1)
to the Lock-Box Bank with respect to the Lock-Box Account or (2) to the
Collection Account Bank with respect to the Collection Account, whether in
connection with reimbursement for a returned item, or for any other reason
whatsoever.
Any amounts subject to the indemnification provisions of this Section 9.01 shall
------------
be paid by the Seller to the Deal Agent within two Business Days following Deal
Agent's demand therefor.
SECTION 9.02. Substitution and Repurchase of Assets. The following
-------------------------------------
rights are in addition to and not in limitation of any other rights or remedies
that the Purchaser or the Deal Agent may have hereunder.
(a) If, with respect to any Purchased Asset, such Asset did not
constitute an Eligible Asset on the date such Asset became a Purchased Asset or
the Seller shall have breached any representation or warranty made hereunder
with respect to such Asset, including, without limitation, any of the
representations and warranties contained in Section 4.01(f) (a Purchased Asset
---------------
described above being referred to as an "Ineligible Purchased Asset"), then the
--------------------------
Seller shall, unless such ineligibility or breach is waived or cured in all
material respects, on the next succeeding Settlement Date, upon the Deal Agent's
written demand, either substitute for such Ineligible Purchased Asset a new
Asset in the manner specified in subsection (f) of this Section 9.02 or
-------------- ------------
repurchase such Ineligible Purchased Asset for the repurchase price specified in
subsection (g) of this Section 9.02; provided, however, that following the
- -------------- ------------ -------- -------
Termination Date, the Seller shall not have the option to substitute for
Ineligible Purchased Assets, but must repurchase
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such Ineligible Purchased Assets for the repurchase price specified in
subsection (g) of this Section 9.02.
- -----------------------------------
(b) [Reserved].
(c) The Seller may at any time and from time to time notify the Deal
Agent of its intent to substitute one or more new Assets for any Purchased
Assets (other than any Purchased Asset (i) which is a Defaulted Asset or (ii) in
respect of which the Obligor thereunder has requested the rewriting and/or
restructuring of the related Lease as an accommodation to such Obligor);
provided, that in such notice the Seller shall certify that the Purchased Assets
- --------
to be repurchased by the Seller represent a fair selection of the aggregate
Purchased Assets. On the Settlement Date next succeeding any such notice, the
Seller shall substitute for any such Purchased Asset a new Asset in the manner
specified in subsection (f) of this Section 9.02.
-------------- ------------
(d) Notwithstanding anything herein to the contrary, in no event may
the Seller substitute for a Purchased Asset under subsection (c) of this Section
-------------- -------
9.02 if, after giving effect to such substitution, the aggregate amount of
- ----
Periodic Installments of Rent on all Purchased Assets substituted for by the
Seller pursuant to subsection (c) of this Section 9.02 would exceed ten percent
-------------- ------------
(10%) of the Aggregate Outstanding Balance at such time.
(e) At any time following the Termination Date when the Aggregate
Outstanding Balance is less than ten percent (10%) of the Aggregate Outstanding
Balance as of the Termination Date, the Seller may notify the Deal Agent of its
intent to repurchase all remaining Purchased Assets. On the Settlement Date
next succeeding any such notice, the Seller shall repurchase all outstanding
Purchased Assets for the repurchase price specified in subsection (g) of this
--------------
Section 9.02.
- ------------
(f) If the Seller substitutes a new Asset for a Purchased Asset
pursuant to this Section 9.02, such new Asset shall (i) on the date of
------------
substitution, be an Eligible Asset (ii) have an Outstanding Balance at least
equal to the Outstanding Balance of the Purchased Asset for which it is being
substituted, (iii) have a remaining term that is no longer than the remaining
term of the Purchased Asset for which it is being substituted, (iv) be of
equivalent credit quality to the Purchased Asset for which it is being
substituted, and (v) not give rise to the occurrence of an Event of Termination
after giving effect to the substitution therefor. In no event shall any such
substitution take place after the occurrence or during the continuation of an
Event of Termination, or otherwise after the occurrence of the Termination Date.
On the date of such substitution, such new Eligible Asset shall become a
Purchased Asset and the Asset so replaced shall cease to be a Purchased Asset,
and the Seller shall list the Leases relating to any such new Purchased Asset on
a new Purchase Request, together with a list of all Related Security with
respect thereto, the amortization schedule of such Purchased Asset, and a
certification by the Seller as to the satisfaction of the requirements relating
to such Purchased Asset set forth in clauses (i) through (v) above.
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(g) In the case of a repurchase from the Purchaser by the Seller of a
Purchased Asset pursuant to this Section 9.02, the Seller shall, on the
------------
Settlement Date coinciding with such repurchase pay to the Deal Agent as a
reduction of Capital an amount equal to the Outstanding Balance of such
Purchased Asset. The proceeds of any such repurchase shall be deemed to be
Collections of such Asset received by the Seller, and the amount of each such
Collection shall be applied as provided in Section 2.06. The repurchase of any
------------
Asset shall not relieve the Seller of the obligation to pay Yield on the Capital
outstanding with respect to such Asset through the date of such repurchase. Any
such repurchase shall be made without recourse or warranty, express or implied
(other than a representation and warranty that such Asset is free and clear of
any Adverse Claim created by or through the Purchaser).
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Amendments, Etc. No amendment to or waiver of any
----------------
provision of this Agreement nor consent to any departure by the Seller, shall in
any event be effective unless the same shall be in writing and signed by (i) the
Seller, the Deal Agent and the Purchaser (with respect to an amendment) or (ii)
the Deal Agent and the Purchaser (with respect to a waiver or consent by them)
or the Seller (with respect to a waiver or consent by it), as the case may be,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, however, that no such
-------- -------
amendment or modification shall affect the rights or duties of the Servicer
hereunder without the prior written consent of the Servicer; and provided,
--------
further, however, that, at any time that the commercial paper notes of the
- ------- -------
Purchaser (if any) are being rated by one or more of the Rating Agencies, at the
request of the Purchaser, no material amendment or modification of Article II or
----------
Article VII hereof, or of any other material provisions hereof, shall be
- -----------
effective absent written confirmation by each of Moody's, S&P and DCR (as
applicable) that such amendment or modification will not result in a withdrawal
or downgrading of the then-current rating of the commercial paper notes issued
by the Purchaser by such rating agency. The Purchaser shall send, or shall
cause to be sent, copies of all amendments, modifications or supplements to this
Agreement to each of the Rating Agencies then rating the commercial paper notes
issued by the Purchaser, if any, at the request of the Purchaser, prior to the
execution thereof by all parties thereto. This Agreement contains a final and
complete integration of all prior expressions by the parties hereto with respect
to the subject matter hereof and shall constitute the entire agreement (together
with the exhibits hereto) among the parties hereto with respect to the subject
matter hereof, superseding all prior oral or written understandings.
SECTION 10.02. Notices, Etc. All notices and other communications
-------------
provided for hereunder shall, unless otherwise stated herein, be in writing
(including telex communication and communication by facsimile copy) and shall be
personally delivered or sent by first class mail, postage prepaid, or by courier
or by facsimile, to each party hereto, at its address set forth
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under its name on the signature pages hereof or at such other address as shall
be designated by such party in a written notice to the other parties hereto. All
such notices and communications shall be effective, upon receipt, or in the case
of delivery by mail, three days after being deposited in the mails, or, in the
case of notice by facsimile, when electronic communication of receipt is
obtained, in each case addressed as aforesaid.
SECTION 10.03. No Waiver; Remedies. No failure on the part of the
-------------------
Deal Agent, the Purchaser or any Liquidity Provider to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Without limiting the foregoing, the Deal Agent is hereby authorized by the
Seller at any time and from time to time, to the fullest extent permitted by
law, to instruct FNBB or any Affiliate of FNBB to set off and apply any and all
deposits (whether general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by FNBB or such Affiliate
to or for the credit or the account of the Seller against any and all of the
obligations of Seller, now or hereafter existing under this Agreement or under
any agreement executed pursuant hereto, to the Deal Agent, the Purchaser or
their respective successors and assigns irrespective of whether or not demand
therefor shall have been made under this Agreement or under any agreement
executed pursuant hereto. The Seller acknowledges that the rights of the Deal
Agent, the Purchaser and the Liquidity Providers or any of their respective
successors and assigns described in this paragraph are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
such parties may have.
SECTION 10.04. Binding Effect; Assignability. (a) This Agreement
-----------------------------
shall be binding upon and inure to the benefit of the Seller, the Servicer, the
Deal Agent, the Purchaser and their respective successors and permitted assigns
(which successors of the Seller shall include a trustee in bankruptcy). This
Agreement shall create and constitute the continuing obligations of the parties
hereto in accordance with its terms, and shall remain in full force and effect
until such time, after the Termination Date, as the Collection Date shall occur;
provided, however, that the rights and remedies with respect to any breach of
- -------- -------
any representation and warranty made by the Seller pursuant to Article IV and
----------
the indemnification and payment provisions of Sections 2.08, 2.09 and 2.11,
------------- ---- ----
Article IX and Article X shall be continuing and shall survive any termination
- ---------- ---------
of this Agreement for one year.
(b) The Seller may not assign any of its rights and obligations
hereunder or any interest herein without the prior written consent of the
Purchaser and the Deal Agent.
(c) The Purchaser may, without the consent of the Seller, assign at
any time all of its rights and obligations hereunder and interest herein to any
Person, except that if such Person is not FNBB, or any other Affiliate of FNBB,
the Purchaser shall be required to acquire the prior written consent of the Deal
Agent and the Seller to any such assignment. Any permitted assignee of the
Purchaser as described in the preceding sentence may further assign at any time
its rights
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<PAGE>
and obligations hereunder or interests herein with the consent of the Deal Agent
and the Seller to the extent required in the preceding sentence. Upon any such
assignment, the assignee shall succeed to and become vested with all the rights,
powers, privileges and duties of the Purchaser, and the resigning Purchaser
shall be discharged from its duties and obligations as Purchaser hereunder. The
Seller and the Servicer agree to execute or obtain such other documentation as
may be reasonably requested by the assigning Purchaser in order to effectuate
such assignment.
(d) At any time and from time to time, the Purchaser may, without the
consent of the Seller, assign all or a portion of its interests in Purchased
Interests and Equipment Collateral hereunder, and all or a portion of its
interests under the Facility Documents, to any or all of the Liquidity Providers
or the Supplemental Enhancement Providers, and each of the Seller and the
Servicer hereby acknowledge and agree that the obligations of the Purchaser to
any such Liquidity Providers or Supplemental Enhancement Providers may from time
to time be secured by an assignment by the Purchaser of its interests in
Purchased Interests and Equipment Collateral hereunder, and under the Facility
Documents. The Liquidity Providers and the Supplemental Enhancement Providers,
or any agents therefor, shall also be entitled to sell their interests (or
portions thereof) to other Liquidity Providers and Supplemental Enhancement
Providers, or to any other Persons in connection with the enforcement of any of
the above-described security interests granted to the Liquidity Providers and/or
the Supplemental Enhancement Providers by the Purchaser. The Purchaser, the
Liquidity Provider or the Supplemental Enhancement Provider making any such
assignment shall provide notice to the Seller of any assignment hereunder or
thereunder.
SECTION 10.05. GOVERNING LAW; WAIVER OF JURY TRIAL. THIS AGREEMENT
-----------------------------------
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE INTERESTS
OF THE PURCHASER IN THE PURCHASED INTERESTS OR REMEDIES HEREUNDER OR THEREUNDER,
IN RESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. THE SELLER AND THE SERVICER HEREBY AGREE TO THE JURISDICTION
OF ANY FEDERAL COURT LOCATED WITHIN THE STATE OF NEW YORK. THE SELLER AND THE
SERVICER EACH HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING
ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE AMONG ANY OF THE
SELLER, THE SERVICER, THE PURCHASER OR THE DEAL AGENT ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP BETWEEN THEM IN CONNECTION
WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN
A BENCH TRIAL WITHOUT A JURY. WITH RESPECT TO THE FOREGOING CONSENT TO
JURISDICTION, EACH OF THE SELLER AND THE SERVICER HEREBY WAIVES ANY OBJECTION
BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION
----- --- ----------
INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN
-73-
<PAGE>
THIS SECTION 10.05 SHALL AFFECT THE RIGHT OF THE PURCHASER OR THE
-------------
DEAL AGENT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT
THE RIGHT OF THE PURCHASER OR THE DEAL AGENT TO BRING ANY ACTION OR PROCEEDING
AGAINST THE SELLER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 10.06. Costs, Expenses and Taxes. (a) In addition to the
-------------------------
rights of indemnification under Article IX hereof, the Seller agrees to pay on
----------
demand all reasonable costs and expenses in connection with the preparation,
execution, delivery and administration (including periodic auditing, filing
searches and any requested amendments, waivers or consents) of this Agreement
and the other documents to be delivered hereunder or in connection herewith,
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Deal Agent and the Purchaser with respect thereto and with
respect to advising the Deal Agent and the Purchaser as to their respective
rights and remedies under this Agreement, and the other agreements executed
pursuant hereto or in connection herewith and all costs and expenses, if any
(including reasonable counsel fees and expenses), in connection with the
enforcement of this Agreement and the other agreements and documents to be
delivered hereunder or in connection herewith, (provided, however, that the
-------- -------
Seller shall not be obligated to pay or reimburse the Deal Agent for personnel
costs in connection with any audit of the Servicer's or the Seller's books
and/or records hereunder taking place after the date hereof, to the extent that
the amount charged in connection with such personnel costs exceeds, on an
average basis, $1,000 per man/day).
(b) In addition, the Seller shall pay on demand any and all stamp,
sales, excise and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of this Agreement
or the other agreements and documents to be delivered hereunder or in connection
herewith, or of any other agreement or document providing liquidity support,
credit enhancement or other similar support to the Purchaser in connection with
this Agreement or the funding or maintenance of Purchases hereunder, and agrees
to indemnify the Deal Agent, the Purchaser and the Liquidity Providers against
any liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes and fees.
(c) In addition, the Seller shall pay on demand all other costs and
expenses incurred by the Purchaser or any general or limited partner or
shareholder of the Purchaser ("Other Costs"), including, without limitation, the
cost of auditing the Purchaser's books by certified public accountants, the cost
of rating the Purchaser's promissory notes by independent financial rating
agencies and the reasonable fees and out-of-pocket expenses of counsel for the
Purchaser or any counsel for any general or limited partner or shareholder of
the Purchaser with respect to (i) advising the Purchaser or such general or
limited partner or shareholder as to its rights and remedies under this
Agreement and the other documents to be delivered hereunder or in connection
herewith, (ii) the enforcement of this Agreement and the other documents to be
delivered hereunder or in connection herewith or (iii) advising the Purchaser or
such general or limited partner or shareholder as to matters relating to the
Purchaser's operations; provided, however, that if the Purchaser enters into
-------- -------
agreements for the purchase of receivables from one or
-74-
<PAGE>
more other Persons ("Other Sellers"), the Seller and such Other Sellers shall
each be liable for such Other Costs ratably in accordance with the usage under
the respective facilities of the Purchaser to purchase receivables from the
Seller and each Other Seller; and provided, further, that if such Other Costs
-------- -------
are attributable to the Seller and not attributable to any Other Seller, the
Seller shall be solely liable for such Other Costs.
SECTION 10.07. No Proceedings. (a) The Seller, the Servicer and the
--------------
Collateral Custodian, each hereby agrees that it will not institute against the
Purchaser any proceeding of the type referred to in clause (i) of Section
-------
7.01(f) so long as any promissory notes issued by the Purchaser shall be
- -------
outstanding or there shall not have elapsed one year plus one day since the last
day on which any such promissory notes shall have been outstanding.
(b) The Purchaser, the Deal Agent, the Servicer and the Collateral
Custodian each hereby agree that it will not institute against the Seller any
proceeding of the type referred to in clause (i) of Section 7.01(f) so long as
---------------
any obligations of the Seller shall be outstanding or there shall not have
elapsed one year plus one day since the last day on which any such obligations
shall have been outstanding.
SECTION 10.08. Set-Off. The Seller hereby waives any rights it may
-------
have by way of set-off or deduction with respect to the Purchaser or any of the
Purchaser's rights, claims or properties.
SECTION 10.09. Execution in Counterparts; Severability. This
---------------------------------------
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and
the same agreement. In case any provision in or obligation under this Agreement
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
-75-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
SELLER: BV FUNDING CORP.
By: /s/ John Colton
------------------------------------------
Title: Director
Address:
114 Turnpike Road
Westboro, MA 01581
Attn: J. Colton
Telecopy No.: 508-870-0260
PURCHASER: EAGLEFUNDING CAPITAL CORPORATION
By The First National Bank of
Boston, as its Attorney-in-Fact
By: /s/ George Kent
-----------------------------------------
Title: Director
Address:
100 Federal Street
Boston, MA 02110
Attn: John T. Hackett, III
Telecopy No.: 617-434-9591
DEAL AGENT: THE FIRST NATIONAL BANK OF BOSTON
as Deal Agent
By: /s/ George Kent
-----------------------------------------
Title: Director
Address:
100 Federal Street
Boston, MA 02110
SIGNATURE PAGE TO
LEASE RECEIVABLES PURCHASES AGREEMENT
DATED AS OF SEPTEMBER 30, 1996
<PAGE>
Attn: John T. Hackett, III
Telecopy No.: 617-434-9591
SIGNATURE PAGE TO
LEASE RECEIVABLES PURCHASES AGREEMENT
DATED AS OF SEPTEMBER 30, 1996
<PAGE>
SERVICER AND COLLATERAL
CUSTODIAN: BANKVEST CAPITAL CORP.
By: /s/ John Colton
------------------------------------------
Title: Director
Address:
114 Turnpike Road
Westboro, MA 01581
Attn: J. Colton
Telecopy No.: 508-870-0260
SIGNATURE PAGE TO
LEASE RECEIVABLES PURCHASES AGREEMENT
DATED AS OF SEPTEMBER 30, 1996
<PAGE>
EXHIBIT A
DESCRIPTION OF CREDIT AND COLLECTION POLICY
(Attached)
-79-
<PAGE>
EXHIBIT B
FORM OF INTEREST RATE HEDGE ASSIGNMENT
(INCLUDING FORM OF INTEREST RATE HEDGE ASSIGNMENT ACKNOWLEDGMENT)
Attached
<PAGE>
EXHIBIT C
FORM OF COLLECTION ACCOUNT AGREEMENT
Attached
<PAGE>
EXHIBIT D
FORM OF PURCHASE REQUEST
Attached
<PAGE>
EXHIBIT E
FORM OF ASSET REPORT
Attached
<PAGE>
EXHIBIT F
LIST OF OFFICES OF SELLER
WHERE RECORDS ARE KEPT
<PAGE>
EXHIBIT G
FORM OF INTEREST RATE HEDGE REPORT
Attached
<PAGE>
EXHIBIT H
LOCK-BOX AGREEMENT
Attached
-2-
<PAGE>
EXHIBIT I
FORM OF LEASE
Attached
-3-
<PAGE>
AMENDMENT NO. 1
to
LEASE RECEIVABLES PURCHASE AGREEMENT
Dated as of September 30, 1996
THIS AMENDMENT NO. 1 ("Amendment") dated as of February 28, 1997, is
entered into among BV FUNDING CORP., a Delaware corporation (as Seller),
BANKVEST CAPITAL CORP., a Massachusetts corporation (as Servicer and Collateral
Custodian), EAGLEFUNDING CAPITAL CORPORATION (as Purchaser) and THE FIRST
NATIONAL BANK OF BOSTON (as Deal Agent). Capitalized terms used herein without
definition shall have the meanings ascribed thereto in the "Receivables Purchase
Agreement" referred to below.
PRELIMINARY STATEMENTS. Each of the Seller, the Servicer, the
Collateral Custodian, the Purchaser and the Deal Agent are parties to that
certain Lease Receivables Purchase Agreement dated as of September 30, 1996 (the
"Receivables Purchase Agreement").
The Seller and the Servicer have agreed with the Deal Agent and the
Purchaser to amend certain provisions of the Receivables Purchase Agreement.
Each of the parties hereto has consented to each of such proposed amendments, as
hereinafter set forth.
SECTION 1. Amendments to the Receivables Purchase Agreement. The
Receivables Purchase Agreement is, effective as of the date first written above
and subject to the satisfaction of the conditions precedent set forth in Section
2 hereof, hereby amended as follows:
(a) Section 1.01 of the Receivables Purchase Agreement is amended to
insert the following parenthetical phrase at the end of clause (a) of the
definition of each of the terms "Default Ratio" and Delinquency Ratio":
"(including, without limitation, any such Purchased Assets which were
repurchased or substituted for by the Seller during or after such month
pursuant to Section 9.02 hereof, or otherwise assigned, transferred or
disposed of during or after such month)".
(b) Section 1.01 of the Receivables Purchase Agreement is further amended
to delete the definition of the term "Liquidity Fee" and replace the same with
the following:
"'Liquidity Fee' means a fee payable monthly in arrears to the
---------------
Purchaser in respect of each Liquidity Provider's liquidity commitment,
equal to the product of (i) the average daily aggregate amount of the
liquidity commitment of such Liquidity Provider under the applicable
Liquidity Agreement during the month
<PAGE>
then most recently concluded, and (ii) the relevant per annum rate set
forth in the applicable Liquidity Fee Letter.".
(c) Section 1.01 the Receivables Purchase Agreement is further amended to
delete the description of the variable "A" set forth in the definition of the
term "Loss Holdback", and replace the same in its entirety with the following:
"A = The product of (A) a factor of twelve, and (B) the greater of (i)
the average of the Loss Asset Ratios for the three then most
recently concluded months (or such lesser number of months as
shall have concluded after October of 1996 and prior to the
applicable date of determination hereunder), and (ii) the average
of the Loss Asset Ratios for the twelve then most recently
concluded months (or such lesser number of months as shall have
concluded after October of 1996 and prior to the applicable date
of determination hereunder).".
(d) Section 1.01 of the Receivables Purchase Agreement is further amended
to add the following definitions immediately after the definition of "Loss
Holdback" and immediately prior to the definition of "Moody's":
"'Loss Asset' means an Asset at any time: (i) which arises under a
------------
Lease with respect to which more than the greater of (A) ten percent (10%)
of any individual payment thereunder, or (B) $10.00 remains unpaid for more
than one hundred and eighty (180) days from the original due date for such
payment (regardless of whether such Asset becomes current at some future
date), (ii) as to which the Obligor thereof has taken any action, or
suffered any event to occur, of the type described in Section 7.01(f),
(iii) as to which foreclosure proceedings have been initiated and are
continuing, or (iv) which, consistent with the Credit and Collection
Policy, has been or should be written off as uncollectible; provided, that
neither the Servicer nor the Seller shall be required to include an Asset
which becomes a Loss Asset during a given calendar month as a "Loss Asset"
for the purposes of this Agreement until the earlier of (x) the date on
which the Asset Report in respect of such month is required to be delivered
pursuant to Section 2.06(a) and (y) the date on which such Asset Report is
actually delivered to the Deal Agent.
'Loss Asset Ratio' means, for any month, a fraction (expressed as a
------------------
percentage) determined as of the last day of such month equal to (a) the
aggregate Outstanding Balance of all Purchased Assets which became Loss
Assets during such month (including, without limitation, any such Purchased
Assets which were repurchased or substituted for by the Seller during or
after such month pursuant to
2
<PAGE>
Section 9.02 hereof, or otherwise assigned, transferred or disposed of
during or after such month) divided by (b) the aggregate Outstanding
Balance of all Purchased Assets which were Eligible Assets outstanding on
the last day of the later of (i) the sixth month next preceding such month,
and (ii) September of 1996.".
(e) Section 1.01 of the Receivables Purchase Agreement is further amended
to remove the reference to the percentage "4.0%" in the definition of the term
"Obligor Concentration Limit", and replace the same with a reference to "3.0%".
(f) Section 1.01 of the Receivables Purchase Agreement is further amended
to add the following language prior to the period at the end of the definition
of the term "Overconcentration Reserve":
"; and
(g) the amount by which the aggregate Outstanding Balances of all
Eligible Assets which were (i) originated by a Person other than either of
the Originating Parties and (ii) (A) not acquired by an Originating Party
pursuant to a purchase of Assets in bulk from such originator, or (B) not
subject to a complete and independent underwriting review in accordance
with Credit and Collection Policy on the part of an Originating Party prior
to the purchase thereof by such Originating Party, or (C) not serviced
directly by the Servicer hereunder, exceeds five percent (5.0%) of the
Aggregate Outstanding Balance at such time".
(g) Section 1.01 of the Receivables Purchase Agreement is further amended
to delete clause (b) of the definition of the term "Rating Agency Review
Completion" in its entirety, and to replace the same with the following:
"(b) the Initial Supplemental Enhancement Agreement shall be amended
and restated, or otherwise replaced, by a Liquidity Agreement in form and
substance satisfactory to the Purchaser and the Deal Agent, pursuant to
which the aggregate amount of the commitments of the Liquidity Providers
thereunder in favor of the Purchaser shall equal or exceed $51,000,000;".
(h) Section 1.01 of the Receivables Purchase Agreement is further amended
to delete paragraph (e) of the definition of the term "Servicer Default" in its
entirety, and to replace the same with the following:
"(e) If the Servicer is the Originator or any Affiliate thereof,
either of the Originator or LeaseVest shall fail to satisfy, (i) at any
time during which the Revolving Credit Agreement is in effect, any of the
provisions of Section 8.3 of the Revolving Credit Agreement, or any
successor provisions thereto, as the
3
<PAGE>
Revolving Credit Agreement may be in effect from time to time, or (ii) in
the event that the Revolving Credit Agreement is not in effect at any time,
any of the provisions of such Section 8.3 of the Revolving Credit
Agreement, or any successor provisions thereto, as the Revolving Credit
Agreement is in effect on the day next preceding its termination or
cancellation.".
(i) Section 1.01 of the Receivables Purchase Agreement is further amended
to delete the definition of the term "Settlement Date" and replace the same with
the following:
"'Settlement Date' means each of the Initial Purchase Date, the
-----------------
twelfth day in each of December of 1996 and January of 1997, and the
seventeenth day of each month thereafter (or, if such day is not a Business
Day, the first following day that is a Business Day, unless that day falls
in the next calendar month, in which case, the first preceding day which is
a Business Day); provided, that (i) the Seller may, in its discretion, by
notice to the Deal Agent, request that Settlement Dates occur more
frequently than monthly and (ii) the Deal Agent may, in its discretion
following the occurrence of an Event of Termination, by notice to the
Seller, require that Settlement Dates occur more frequently than monthly.".
(j) Section 1.01 of the Receivables Purchase Agreement is further amended
to delete the definition of the term "Stop Event" and replace the same with the
following:
"'Stop Event' means the occurrence of (i) an Event of Termination of
----------
the type described in Section 7.01(j) (without giving effect to any waiver
---------------
thereof) or (ii) the occurrence of an acceleration of all of the
Purchaser's indebtedness to the Liquidity Providers under a Liquidity
Agreement, or to the Supplemental Enhancement Providers under a
Supplemental Enhancement Agreement, in each case as a result of the
occurrence of an "Event of Default" or similar occurrence. For purposes of
the Administration Agreement, the two Stop Events described in the
foregoing sentence shall be the sole Stop Events under this Agreement.".
(k) Section 1.01 of the Receivables Purchase Agreement is further amended
to delete the portion of clause (vii) of the definition of the term "Termination
Date" set forth prior to subclause (A), and to replace the same with the
following:
"(vii) February 28, 1997 (the "Agency Cut-Off Date"), but only in the
event that".
(l) Section 2.06(d) of the Receivables Purchase Agreement is amended to
delete clauses (ii) and (iii) thereof in their entirety, and to replace the same
with the following:
4
<PAGE>
"(ii) second, (A) if such day is a Yield Payment Date, for
------
application to accrued Yield which is due and payable on such Yield Payment
Date (if any), and (B) if such day is not a Yield Payment Date, to the
extent of any accrued Yield which is not then due and payable, to be
retained for the benefit of the Purchaser, until the next succeeding Yield
Payment Date, and not to be applied to any of the following items;
(iii) third, (A) if such day is a Settlement Date, to each
-----
counterparty under an Interest Rate Hedge, the net amount, if any, due to
such counterparty thereunder as of such Settlement Date, and (B) if such
day is not a Settlement Date, to be retained for the benefit of the
Purchaser to the extent of any such accrued and unpaid amounts which are
not then due and payable, based on estimated and actual information (as the
case may be) provided by the Deal Agent to the Seller and the Servicer
concerning the applicable weighted average Lease Discount Rate for all
Purchased Assets, the Aggregate Fee Rate and the relevant commercial paper
rate specified in Section 5.01(m), and not to be applied to any of the
---------------
following items;".
(m) Section 2.06(e) of the Receivables Purchase Agreement is amended to
delete clauses (i) and (ii) thereof in their entirety, and to replace the same
with the following:
"(i) first, (A) if such day is a Yield Payment Date, for application
-----
to accrued Yield which is due and payable on such Yield Payment Date (if
any), and (B) if such day is not a Yield Payment Date, to the extent of any
accrued Yield which is not then due and payable, to be retained for the
benefit of the Purchaser, until the next succeeding Yield Payment Date, and
not to be applied to any of the following items;
(ii) second, (A) if such day is a Settlement Date, to each
------
counterparty under an Interest Rate Hedge, the net amount, if any, due to
such counterparty thereunder as of such Settlement Date, and (B) if such
day is not a Settlement Date, to be retained for the benefit of the
Purchaser to the extent of any such accrued and unpaid amounts which are
not then due and payable, based on estimated and actual information (as the
case may be) provided by the Deal Agent to the Seller and the Servicer
concerning the applicable weighted average Lease Discount Rate for all
Purchased Assets, the Aggregate Fee Rate and the relevant commercial paper
rate specified in Section 5.01(m), and not to be applied to any of the
---------------
following items;".
(n) Section 3.02 of the Receivables Purchase Agreement is amended to
insert the following language prior to the period at the end of the definition
of clause (ii) of paragraph (d) thereof:
"; and
5
<PAGE>
(e) in the case of any Capital Purchase which is also a Lease
Purchase, the increase in the amount of outstanding Capital resulting
therefrom shall be less than the aggregate original cost to the relevant
Originating Party of the Equipment relating to the Assets subject to such
Purchase;".
(o) Section 7.01 of the Receivables Purchase Agreement is amended to
delete paragraphs (h) and (i) thereof in their entirety and to replace the same
with the following:
"(h) As of any date of determination, (1) The average Default Ratio
for the three most recently concluded months (or such lesser number of
months as shall have concluded after October of 1996 and prior to the
applicable date of determination hereunder) exceeds 1.00% or (2) the
average Default Ratio for the twelve most recently concluded months (or
such lesser number of months as shall have concluded after October of 1996
and prior to the applicable date of determination hereunder) exceeds 1.00%;
or
(i) As of any date of determination, (1) the average Delinquency Ratio
for the three most recently concluded months (or such lesser number of
months as shall have concluded after October of 1996 and prior to the
applicable date of determination hereunder) exceeds 1.50% or (2) the
average Delinquency Ratio for the twelve most recently concluded months (or
such lesser number of months as shall have concluded after October of 1996
and prior to the applicable date of determination hereunder) exceeds 1.50%;
or".
(p) Section 8.02 of the Receivables Purchase Agreement is amended to
delete the word "gross" appearing in the first sentence thereof.
(q) Section 8.04 of the Receivables Purchase Agreement is amended to
delete the text of such section in its entirety, and replace the same with the
following: "[Reserved]".
(r) Section 9.02 of the Receivables Purchase Agreement is amended to
delete paragraph (c) thereof in its entirety and to replace the same with the
following:
"(c) The Seller may at any time and from time to time notify the Deal
Agent of its intent to substitute one or more new Assets for any Purchased
Assets which are Loss Assets at the time of such substitution; provided,
that in such notice the Seller shall certify that the Purchased Assets to
be repurchased by the Seller represent a fair selection of the aggregate
Purchased Assets which are Loss Assets. On the Settlement Date next
succeeding any such notice, the Seller shall substitute for any such
Purchased Asset a new Asset in the manner specified in subsection (f) of
this Section 9.02.".
(s) Section 9.02 of the Receivables Purchase Agreement is further amended
to insert the following parenthetical phrase at the end of clause (iv) of
paragraph (f) thereof:
6
<PAGE>
"(which credit quality shall be determined, in the case of an existing
Purchased Asset to be substituted for, as of the time of the initial Lease
Purchase relating thereto)".
SECTION 2. Conditions Precedent. This Amendment shall become
effective as of February 28, 1997 upon:
(a) receipt by the Deal Agent or its counsel of counterpart signature
pages of this Amendment, executed by each of the parties hereto; and
(b) receipt by the Purchaser of written confirmation from each of
Moody's, DCR and S&P that this Amendment will not result in a withdrawal or
downgrading of the then current rating of the commercial paper notes issued by
the Purchaser.
SECTION 3. Covenants, Representations and Warranties of the Seller
and the Servicer.
(a) Upon the effectiveness of this Amendment, each of the Seller, the
Servicer and the Collateral Custodian hereby (i) reaffirms all covenants,
representations and warranties made by it in the Receivables Purchase Agreement
to the extent the same are not amended hereby, (ii) agrees that all such
covenants, representations and warranties shall be deemed to have been re-made
as of the effective date of this Amendment, and (iii) represents and warrants
that no Servicer Default, Event of Termination, Termination Date, or event which
with the giving of notice or the passage of time or both would constitute a
Servicer Default or Event of Termination, is in effect or is continuing.
(b) Each of the Seller, the Servicer and the Collateral Custodian
hereby represents and warrants that this Amendment constitutes its legal, valid
and binding obligation, enforceable against such Person in accordance with its
terms.
SECTION 4. Reference to and Effect on the Facility Documents.
(a) Upon the effectiveness of this Amendment, (i) each reference in
the Receivables Purchase Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import shall mean and be a reference to the
Receivables Purchase Agreement, as amended hereby, and (ii) each reference to
the Receivables Purchase Agreement in any other Facility Document or any other
document, instrument or agreement executed and/or delivered in connection
therewith, shall mean and be a reference to the Receivables Purchase Agreement
as amended hereby.
7
<PAGE>
(b) Except as specifically amended above, the terms and conditions of
the Receivables Purchase Agreement, of all other Facility Documents and any
other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of the Deal Agent or the
Purchaser under the Receivables Purchase Agreement or any other Facility
Document or any other document, instrument or agreement executed in connection
therewith, nor constitute a waiver of any provision contained therein, in each
case except as specifically set forth herein.
SECTION 5. Execution in Counterparts. This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument.
SECTION 6. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 7. Headings. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized as of the
date first above written.
SELLER: BV FUNDING CORP.
By__________________________
Title:
114 Turnpike Road
Westboro, MA 01581
Attn: J. Colton
Telecopy No. 508-870-0260
PURCHASER: EAGLEFUNDING CAPITAL CORPORATION
By The First National Bank of
Boston, as its Attorney-in-Fact
By__________________________
Title:
100 Federal Street
Boston, MA 02110
Attn: John T. Hackett, III
Telecopy No. 617-434-9591
DEAL AGENT: THE FIRST NATIONAL BANK OF BOSTON
as Deal Agent
By__________________________
Title:
100 Federal Street
Boston, MA 02110
Attn: John T. Hackett, III
Telecopy No. 617-434-9591
<PAGE>
SERVICER AND COLLATERAL
CUSTODIAN: BANKVEST CAPITAL CORP.
By__________________________
Title:
114 Turnpike Road
Westboro, MA 01581
Attn: J. Colton
Telecopy No. 508-870-0260
<PAGE>
AMENDMENT NO. 2
to
LEASE RECEIVABLES PURCHASE AGREEMENT
Dated as of September 30, 1996
THIS AMENDMENT NO. 2 ("Amendment") dated as of June 30, 1997, is
entered into among BV FUNDING CORP., a Delaware corporation (as Seller),
BANKVEST CAPITAL CORP., a Massachusetts corporation (as Servicer and Collateral
Custodian), EAGLEFUNDING CAPITAL CORPORATION (as Purchaser) and BANKBOSTON,
N.A., formerly known as THE FIRST NATIONAL BANK OF BOSTON (as Deal Agent).
Capitalized terms used herein without definition shall have the meanings
ascribed thereto in the "Receivables Purchase Agreement" referred to below.
PRELIMINARY STATEMENTS. Each of the Seller, the Servicer, the
Collateral Custodian, the Purchaser and the Deal Agent are parties to that
certain Lease Receivables Purchase Agreement dated as of September 30, 1996, and
amended as of February 28, 1997 (the "Receivables Purchase Agreement").
The Seller and the Servicer have agreed with the Deal Agent and the
Purchaser to amend a provision of the Receivables Purchase Agreement. Each of
the parties hereto has consented to such proposed amendment, as hereinafter set
forth.
SECTION 1. Amendment to the Receivables Purchase Agreement. The
-----------------------------------------------
Receivables Purchase Agreement is, effective as of the date first written above
and subject to the satisfaction of the conditions precedent set forth in Section
2 hereof, hereby amended as follows:
Section 1.01 of the Receivables Purchase Agreement is amended to
delete the reference in the definition of the term "Scheduled Termination
Date" to "October 31, 1999" and replace the same with a reference to
"October 31, 2001".
SECTION 2. Condition Precedent. This Amendment shall become
-------------------
effective as of June 30, 1997 upon receipt by the Deal Agent or its counsel of
counterpart signature pages of this Amendment, executed by each of the parties
hereto.
SECTION 3. Covenants, Representations and Warranties of the Seller
-------------------------------------------------------
and the Servicer.
- ----------------
<PAGE>
(a) Upon the effectiveness of this Amendment, each of the Seller, the
Servicer and the Collateral Custodian hereby (i) reaffirms all covenants,
representations and warranties made by it in the Receivables Purchase Agreement
to the extent the same are not amended hereby, (ii) agrees that all such
covenants, representations and warranties shall be deemed to have been re-made
as of the effective date of this Amendment, and (iii) represents and warrants
that no Servicer Default, Event of Termination, Termination Date, or event which
with the giving of notice or the passage of time or both would constitute a
Servicer Default or Event of Termination, is in effect or is continuing.
(b) Each of the Seller, the Servicer and the Collateral Custodian
hereby represents and warrants that this Amendment constitutes its legal, valid
and binding obligation, enforceable against such Person in accordance with its
terms.
SECTION 4. Reference to and Effect on the Facility Documents.
-------------------------------------------------
(a) Upon the effectiveness of this Amendment, (i) each reference in
the Receivables Purchase Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import shall mean and be a reference to the
Receivables Purchase Agreement, as amended hereby, and (ii) each reference to
the Receivables Purchase Agreement in any other Facility Document or any other
document, instrument or agreement executed and/or delivered in connection
therewith, shall mean and be a reference to the Receivables Purchase Agreement
as amended hereby.
(b) Except as specifically amended above, the terms and conditions
of the Receivables Purchase Agreement, of all other Facility Documents and any
other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of the Deal Agent
or the Purchaser under the Receivables Purchase Agreement or any other Facility
Document or any other document, instrument or agreement executed in connection
therewith, nor constitute a waiver of any provision contained therein, in each
case except as specifically set forth herein.
SECTION 5. Execution in Counterparts. This Amendment may be
-------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same instrument.
SECTION 6. Governing Law. This Amendment shall be governed by and
-------------
construed in accordance with the laws of the State of New York.
SECTION 7. Headings. Section headings in this Amendment are
--------
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized as of the
date first above written.
SELLER: BV FUNDING CORP.
By___________________________
Title:
114 Turnpike Road
Westboro, MA 01581
Attn: J. Colton
Telecopy No. 508-870-0260
PURCHASER: EAGLEFUNDING CAPITAL CORPORATION
By: BankBoston, N.A., as its Attorney-in-Fact
By_________________________
Title:
c/o BancBoston Securities Inc.
100 Federal Street
Boston, MA 02110
Attn: John T. Hackett III
Telecopy No. 617-434-9591
DEAL AGENT: BANKBOSTON, N.A.,
as Deal Agent
By______________________________
Title:
100 Federal Street
Boston, MA 02110
Attn: Adam Cohen
Telecopy No. 617-434-9591
SERVICER AND COLLATERAL
CUSTODIAN: BANKVEST CAPITAL CORP.
By______________________________
Title:
114 Turnpike Road
Westboro, MA 01581
Attn: J. Colton
Telecopy No. 508-870-0260
<PAGE>
[EXECUTION COPY]
AMENDMENT NO. 3
to
LEASE RECEIVABLES PURCHASE AGREEMENT
Dated as of September 30, 1996
THIS AMENDMENT NO. 3 ("Amendment") dated as of December 7, 1997, is
entered into among BV FUNDING CORP., a Delaware corporation (as Seller),
BANKVEST CAPITAL CORP., a Massachusetts corporation (as Servicer and Collateral
Custodian), EAGLEFUNDING CAPITAL CORPORATION (as Purchaser) and BANKBOSTON,
N.A., formerly known as THE FIRST NATIONAL BANK OF BOSTON (as Deal Agent).
Capitalized terms used herein without definition shall have the meanings
ascribed thereto in the "Receivables Purchase Agreement" referred to below.
PRELIMINARY STATEMENTS. Each of the Seller, the Servicer, the
Collateral Custodian, the Purchaser and the Deal Agent are parties to that
certain Lease Receivables Purchase Agreement dated as of September 30, 1996, and
amended as of February 28, 1997 and June 30, 1997 (the "Receivables Purchase
Agreement").
The Seller and the Servicer have agreed with the Deal Agent and the
Purchaser to amend certain provisions of the Receivables Purchase Agreement.
Each of the parties hereto has consented to such proposed amendment, as
hereinafter set forth.
SECTION 1. Amendment to the Receivables Purchase Agreement. The
-----------------------------------------------
Receivables Purchase Agreement is, effective as of the date first written above
and subject to the satisfaction of the conditions precedent set forth in Section
2 hereof, hereby amended as follows:
(a) Section 1.01 of the Receivables Purchase Agreement is amended to
delete the definition of the term "Default Ratio" in its entirety, and to
replace the same with the following:
"'Default Ratio' means, for any month, a fraction (expressed as a
-------------
percentage) determined as of the last day of such month equal to (a)
the excess (if any) of (x) the product of two times the aggregate
Outstanding Balance of all Purchased Assets which became Defaulted
Assets during the six month period ending on the last day of such
month (including, without limitation, any such Purchased Assets which
were repurchased or substituted for by the Seller during or after such
six month period pursuant to Section 9.02 hereof, or otherwise
------------
assigned, transferred or disposed of during or after such month) over
----
(y) the aggregate amount of all Collections constituting recoveries of
Defaulted Assets received in the Collection Account during such six
month period; divided by
----------
<PAGE>
(b) the average of the aggregate Outstanding Balance of all Purchased
Assets which were Eligible Assets as of the last day of each of the
months in the six month period ending on the last day of such month.".
(b) Section 1.01 of the Receivables Purchase Agreement is amended to
delete the definition of the term "Deferred Purchase Price" in its entirety, and
to replace the same with the following:
"'Deferred Purchase Price' means
-----------------------
(a) at any time prior to the Collection Date, the sum of
(i) an amount equal to the product of 12.0% and an amount equal
to the Aggregate Outstanding Balance at such time; and
(ii) the Overconcentration Reserve at such time; and
(b) on and after the Collection Date, an amount equal to the
Aggregate Outstanding Balance.".
(c) Section 1.01 of the Receivables Purchase Agreement is amended to
delete the definition of the term "Delinquency Ratio" in its entirety, and to
replace the same with the following:
"'Delinquency Ratio' means, for any month, a fraction (expressed
-----------------
as a percentage) determined as of the last day of such month equal to
(a) the sum of (1) the aggregate Outstanding Balance of all Purchased
Assets that were Delinquent Assets as of the last day of the next
preceding month, and (2) the aggregate Outstanding Balance of all
Purchased Assets that were Delinquent Assets as of the last day of the
second preceding month; divided by (b) the sum of (1) the aggregate
----------
Outstanding Balance of all Purchased Assets that were Eligible Assets
as of the last day of the third preceding month, and (2) the aggregate
Outstanding Balance of all Purchased Assets that were Eligible Assets
as of the last day of the fourth preceding month.".
(d) Section 1.01 of the Receivables Purchase Agreement is amended to
delete the following language from the first line of the definition of the term
"Delinquent Asset" therein:
"that is not a Defaulted Asset and".
2
<PAGE>
(e) Section 1.01 of the Receivables Purchase Agreement is amended to
delete the definitions of each of the following terms in their entirety: "Loss
Holdback" and "Loss Asset Ratio".
(f) Section 2.02(a) of the Receivables Purchase Agreement is amended
to delete each reference therein to the phrase "the Loss Holdback," in its
entirety.
(g) Section 7.01 of the Receivables Purchase Agreement is amended to
delete paragraphs (h) and (i) thereof in their entirety and to replace the same
with the following:
"(h) The Default Ratio for any month shall exceed 4.0%; or
(i) The Delinquency Ratio for any month shall exceed 4.50%; or".
SECTION 2. Condition Precedent. This Amendment shall become
-------------------
effective as of December 7, 1997 upon receipt by the Deal Agent or its counsel
of counterpart signature pages of this Amendment, executed by each of the
parties hereto.
SECTION 3. Covenants, Representations and Warranties of the Seller
-------------------------------------------------------
and the Servicer.
- ----------------
(a) Upon the effectiveness of this Amendment, each of the Seller, the
Servicer and the Collateral Custodian hereby (i) reaffirms all covenants,
representations and warranties made by it in the Receivables Purchase Agreement
to the extent the same are not amended hereby, (ii) agrees that all such
covenants, representations and warranties shall be deemed to have been re-made
as of the effective date of this Amendment, and (iii) represents and warrants
that no Servicer Default, Event of Termination, Termination Date, or event which
with the giving of notice or the passage of time or both would constitute a
Servicer Default or Event of Termination, is in effect or is continuing.
(b) Each of the Seller, the Servicer and the Collateral Custodian
hereby represents and warrants that this Amendment constitutes its legal, valid
and binding obligation, enforceable against such Person in accordance with its
terms.
SECTION 4. Reference to and Effect on the Facility Documents.
-------------------------------------------------
(a) Upon the effectiveness of this Amendment, (i) each reference in
the Receivables Purchase Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import shall mean and be a reference to the
Receivables Purchase Agreement, as amended hereby, and (ii) each reference to
the Receivables Purchase Agreement in any other Facility Document or any other
document, instrument or agreement executed and/or delivered in connection
therewith, shall mean and be a reference to the Receivables Purchase Agreement
as amended hereby.
3
<PAGE>
(b) Except as specifically amended above, the terms and conditions of
the Receivables Purchase Agreement, of all other Facility Documents and any
other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of the Deal Agent or the
Purchaser under the Receivables Purchase Agreement or any other Facility
Document or any other document, instrument or agreement executed in connection
therewith, nor constitute a waiver of any provision contained therein, in each
case except as specifically set forth herein.
SECTION 5. Execution in Counterparts. This Amendment may be executed
-------------------------
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument.
SECTION 6. Governing Law. This Amendment shall be governed by and
-------------
construed in accordance with the laws of the State of New York.
SECTION 7. Headings. Section headings in this Amendment are included
--------
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized as of the
date first above written.
SELLER: BV FUNDING CORP.
By___________________________
Title:
114 Turnpike Road
Westboro, MA 01581
Attn: J. Colton
Telecopy No. 508-870-0260
PURCHASER: EAGLEFUNDING CAPITAL CORPORATION
By: BankBoston, N.A., as its Attorney-in-Fact
By______________________
Title:
c/o BancBoston Securities Inc.
100 Federal Street
Boston, MA 02110
Attn: John T. Hackett III
Telecopy No. 617-434-9591
DEAL AGENT: BANKBOSTON, N.A.,
as Deal Agent
By___________________________
Title:
100 Federal Street
Boston, MA 02110
Attn: Adam Cohen
<PAGE>
Telecopy No. 617-434-9591
<PAGE>
SERVICER AND COLLATERAL
CUSTODIAN: BANKVEST CAPITAL CORP.
By___________________________
Title:
114 Turnpike Road
Westboro, MA 01581
Attn: J. Colton
Telecopy No. 508-870-0260
<PAGE>
SECTION 7. Headings. Section headings in this Amendment are
--------
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose.
3
<PAGE>
[Execution Copy]
AMENDMENT NO. 4
to
LEASE RECEIVABLES PURCHASE AGREEMENT
Dated as of September 30, 1996
THIS AMENDMENT NO. 4 ("Amendment") dated as of January 7, 1998, is
entered into among BV FUNDING CORP., a Delaware corporation (as Seller),
BANKVEST CAPITAL CORP., a Massachusetts corporation (as Servicer and Collateral
Custodian), EAGLEFUNDING CAPITAL CORPORATION (as Purchaser) and BANKBOSTON,
N.A., formerly known as THE FIRST NATIONAL BANK OF BOSTON (as Deal Agent).
Capitalized terms used herein without definition shall have the meanings
ascribed thereto in the "Receivables Purchase Agreement" referred to below.
PRELIMINARY STATEMENTS. Each of the Seller, the Servicer, the
Collateral Custodian, the Purchaser and the Deal Agent are parties to that
certain Lease Receivables Purchase Agreement dated as of September 30, 1996, and
amended as of February 28, 1997, June 30, 1997 and December 7, 1997 (the
"Receivables Purchase Agreement").
The Seller and the Servicer have agreed with the Deal Agent and the
Purchaser to amend certain provisions of the Receivables Purchase Agreement.
Each of the parties hereto has consented to such proposed amendment, as
hereinafter set forth.
SECTION 1. Amendment to the Receivables Purchase Agreement. The
-----------------------------------------------
Receivables Purchase Agreement is, effective as of January 7, 1998 and subject
to the satisfaction of the conditions precedent set forth in Section 2 hereof,
hereby amended to delete clause (i) of paragraph (n) of Section 7.01 of the
Receivables Purchase Agreement in its entirety.
SECTION 2. Condition Precedent. This Amendment shall become
-------------------
effective as of January 7, 1998 upon the later to occur of:
(a) receipt by the Deal Agent or its counsel of counterpart signature
pages of this Amendment, executed by each of the parties hereto; and
(b) receipt by the Originator of $25,000,000 or more in net proceeds
of an initial public offering of its voting capital stock on or prior to
June 7, 1998.
SECTION 3. Covenants, Representations and Warranties of the Seller
-------------------------------------------------------
and the Servicer.
- ----------------
<PAGE>
(a) Upon the effectiveness of this Amendment, each of the Seller, the
Servicer and the Collateral Custodian hereby (i) reaffirms all covenants,
representations and warranties made by it in the Receivables Purchase Agreement
to the extent the same are not amended hereby, (ii) agrees that all such
covenants, representations and warranties shall be deemed to have been re-made
as of the effective date of this Amendment, and (iii) represents and warrants
that no Servicer Default, Event of Termination, Termination Date, or event which
with the giving of notice or the passage of time or both would constitute a
Servicer Default or Event of Termination, is in effect or is continuing.
(b) Each of the Seller, the Servicer and the Collateral Custodian
hereby represents and warrants that this Amendment constitutes its legal, valid
and binding obligation, enforceable against such Person in accordance with its
terms.
SECTION 4. Reference to and Effect on the Facility Documents.
-------------------------------------------------
(a) Upon the effectiveness of this Amendment, (i) each reference in
the Receivables Purchase Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import shall mean and be a reference to the
Receivables Purchase Agreement, as amended hereby, and (ii) each reference to
the Receivables Purchase Agreement in any other Facility Document or any other
document, instrument or agreement executed and/or delivered in connection
therewith, shall mean and be a reference to the Receivables Purchase Agreement
as amended hereby.
(b) Except as specifically amended above, the terms and conditions
of the Receivables Purchase Agreement, of all other Facility Documents and any
other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of the Deal Agent
or the Purchaser under the Receivables Purchase Agreement or any other Facility
Document or any other document, instrument or agreement executed in connection
therewith, nor constitute a waiver of any provision contained therein, in each
case except as specifically set forth herein.
SECTION 5. Execution in Counterparts. This Amendment may be
-------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same instrument.
SECTION 6. Governing Law. This Amendment shall be governed by and
-------------
construed in accordance with the laws of the State of New York.
2
<PAGE>
SECTION 7. Headings. Section headings in this Amendment are
--------
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized as of the
date first above written.
SELLER: BV FUNDING CORP.
By___________________________
Title:
114 Turnpike Road
Westboro, MA 01581
Attn: J. Colton
Telecopy No. 508-870-0260
PURCHASER: EAGLEFUNDING CAPITAL CORPORATION
By: BankBoston, N.A., as its Attorney-in-Fact
By______________________
Title:
c/o BancBoston Securities Inc.
100 Federal Street
Boston, MA 02110
Attn: John T. Hackett III
Telecopy No. 617-434-1533
DEAL AGENT: BANKBOSTON, N.A.,
as Deal Agent
By___________________________
Title:
100 Federal Street
Boston, MA 02110
Attn: Adam Cohen
<PAGE>
Telecopy No. 617-434-1533
<PAGE>
SERVICER AND COLLATERAL
CUSTODIAN: BANKVEST CAPITAL CORP.
By___________________________
Title:
114 Turnpike Road
Westboro, MA 01581
Attn: J. Colton
Telecopy No. 508-870-0260
<PAGE>
AMENDMENT NO. 5
to
LEASE RECEIVABLES PURCHASE AGREEMENT
Dated as of September 30, 1996
THIS AMENDMENT NO. 5 ("Amendment") dated as of May 1, 1998, is entered
into among BV FUNDING CORP., a Delaware corporation (as Seller), BANKVEST
CAPITAL CORP., a Massachusetts corporation (as Servicer and Collateral
Custodian), EAGLEFUNDING CAPITAL CORPORATION (as Purchaser) and BANKBOSTON,
N.A., formerly known as THE FIRST NATIONAL BANK OF BOSTON (as Deal Agent).
Capitalized terms used herein without definition shall have the meanings
ascribed thereto in the "Receivables Purchase Agreement" referred to below.
PRELIMINARY STATEMENTS. Each of the Seller, the Servicer, the
Collateral Custodian, the Purchaser and the Deal Agent are parties to that
certain Lease Receivables Purchase Agreement dated as of September 30, 1996, and
amended as of February 28, 1997, June 30, 1997, December 7, 1997 and January 7,
1998 (the "Receivables Purchase Agreement").
The Seller, the Servicer and the Collateral Custodian have agreed with
the Deal Agent and the Purchaser to amend certain provisions of the Receivables
Purchase Agreement. Each of the parties hereto has consented to such proposed
amendment, as hereinafter set forth.
SECTION 1. Amendment to the Receivables Purchase Agreement. The
-----------------------------------------------
Receivables Purchase Agreement is, effective as of May 1, 1998 and subject to
the satisfaction of the conditions precedent set forth in Section 2 hereof,
hereby amended as follows:
(a) Section 1.01 of the Receivables Purchase Agreement is amended to
delete the word "and" appearing at the end of clause (f) of the definition of
the term "Overconcentration Reserve" therein, and insert the following provision
prior to the period at the end of subsection (g) thereof:
"; and
(h) the amount by which the aggregate Outstanding Balances
of all Eligible Assets in respect of which the underlying
equipment was sold to either of the Originating Parties (or, in
the case of an Eligible Asset originated by a Person other than
an Originating Party, was sold to such Person) by any single
vendor exceeds twenty percent (20%) of the Aggregate Outstanding
Balance at such time".
(b) Section 1.01 of the Receivables Purchase Agreement is amended to
insert the following two definitions after the definition of the term
"Overconcentration Reserve" therein:
<PAGE>
'"Partial Liquidation Event' means the occurrence of the
-------------------------
180th consecutive day after the first day on which outstanding
Capital is increased from an amount less than $115,000,000 to an
amount greater than or equal to $115,000,000, during which 180-
day period the amount of Capital outstanding is not reduced to an
amount less than or equal to $50,000,000.
'"Partial Liquidation Period' means the period from the
--------------------------
occurrence of a Partial Liquidation Event to the earlier to occur
of (i) the first date thereafter on which the amount of Capital
outstanding is less than or equal to $50,000,000, and (ii) the
Termination Date".
(c) Section 1.01 of the Receivables Purchase Agreement is further amended
to delete the definition of the term "Purchase Limit" and replace the same with
the following:
'"Purchase Limit' means, at any time, $75,000,000, as such
amount may be reduced pursuant to Section 2.04; provided,
------------ --------
however, that if at any time after May 1, 1998, the equity
-------
capital of the Originator is increased by the Originator's
issuance of additional capital stock in an amount equal to
$6,750,000 or more (calculated on a net basis, after subtracting
(i) any expenses directly attributable to such equity offering
and (ii) any reductions in equity capital occurring after May 1,
1998 as a result of stock repurchases or redemptions, or
otherwise), "Purchase Limit" shall mean $125,000,000, as such
--------------
amount may be reduced pursuant to Section 2.04, which change in
------------
the "Purchase Limit" pursuant to this proviso shall take place
--------------
automatically, without the need on the part of the Seller to take
any action or give any notice. Notwithstanding anything in the
foregoing sentence to the contrary,
(i) at all times (A) during the continuation of the
Partial Liquidation Period, and (B) on and after the
Termination Date, "Purchase Limit" shall mean the aggregate
--------------
outstanding Capital at such time; and
(ii) at all times from the termination of the Partial
Liquidation Period (other than as a result of the occurrence
of the Termination Date) to the occurrence of the
Termination Date, "Purchase Limit" shall mean the aggregate
--------------
outstanding Capital in effect as of the time of the
termination of the Partial Liquidation Period".
(d) Section 2.06(d) of the Receivables Purchase Agreement is amended to
delete the language appearing therein prior to clause (i) thereof, in its
entirety, and to replace the same with the following:
"Pre-Termination Date and No Partial Liquidation Period. On
------------------------------------------------------
each Business Day occurring (x) other than during the Partial
Liquidation Period, and
2
<PAGE>
(y) prior to the Termination Date, out of amounts set aside for
the Purchaser and the Seller pursuant to Section 2.06(b) (in all
---------------
cases, including any amounts received pursuant to a Servicer
Advance), the Servicer or the Deal Agent (as the case may be)
shall pay or retain (as the case may be), for application to the
following items in the following order of priority:".
(e) Section 2.06(e) of the Receivables Purchase Agreement is amended to
delete the language appearing therein prior to clause (i) thereof, in its
entirety, and to replace the same with the following:
"Post-Termination Date or Partial Liquidation Period. On
---------------------------------------------------
each Business Day occurring (x) during the Partial Liquidation
Period, or (y) on and after the Termination Date, out of amounts
set aside for the Purchaser and the Seller pursuant to Section
-------
2.06(b) (in all cases including any amounts received pursuant to
-------
a Servicer Advance), the Servicer or the Deal Agent (as the case
may be) shall pay or retain (as the case may be), for application
to the following items in the following order of priority:".
(f) Section 3.02 of the Receivables Purchase Agreement is amended to
delete the word "and" appearing at the end of subsection (d) thereof, and insert
the following provisions prior to the period at the end of subsection (e)
thereof:
";
(f) in the case of any Capital Purchase, after giving
effect to such Purchase, Capital outstanding shall be $10,000,000
or more; and
(g) the Partial Liquidation Period shall not be in effect
at the time of such Purchase".
SECTION 2. Conditions Precedent. This Amendment shall become
--------------------
effective as of May 1, 1998 upon receipt by the Deal Agent or its counsel of (i)
counterpart signature pages of this Amendment, executed by each of the parties
hereto, (ii) counterpart signature pages of Amendment No. 2 dated as of May 1,
1998 to the Amended and Restated Liquidity Agreement, dated as of February 28,
1997, as amended prior to the date hereof (the "Liquidity Agreement"), among
the Purchaser, in its capacity as the "Borrower" thereunder, the "Liquidity
Providers" parties thereto from time to time, BankBoston, N.A. (formerly known
as The First National Bank of Boston), in its capacity as "Liquidity Agent"
thereunder, and Bankers Trust Company, as "Collateral Agent" thereunder,
executed by each of the parties thereto, and (iii) written confirmation from
each of Moody's, DCR and S&P of the rating of the commercial paper notes of
EagleFunding, after giving effect to the amendments contemplated by this
Amendment and Amendment No. 2 to the Liquidity Agreement.
3
<PAGE>
SECTION 3. Covenants, Representations and Warranties of the Seller
-------------------------------------------------------
and the Servicer.
- ----------------
(a) Upon the effectiveness of this Amendment, each of the Seller, the
Servicer and the Collateral Custodian hereby (i) reaffirms all covenants,
representations and warranties made by it in the Receivables Purchase Agreement
to the extent the same are not amended hereby, (ii) agrees that all such
covenants, representations and warranties shall be deemed to have been re-made
as of the effective date of this Amendment, and (iii) represents and warrants
that no Servicer Default, Event of Termination, Termination Date, or event which
with the giving of notice or the passage of time or both would constitute a
Servicer Default or Event of Termination, is in effect or is continuing.
(b) Each of the Seller, the Servicer and the Collateral Custodian
hereby represents and warrants that this Amendment constitutes its legal, valid
and binding obligation, enforceable against such Person in accordance with its
terms.
SECTION 4. Reference to and Effect on the Facility Documents.
-------------------------------------------------
(a) Upon the effectiveness of this Amendment, (i) each reference in
the Receivables Purchase Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import shall mean and be a reference to the
Receivables Purchase Agreement, as amended hereby, and (ii) each reference to
the Receivables Purchase Agreement in any other Facility Document or any other
document, instrument or agreement executed and/or delivered in connection
therewith, shall mean and be a reference to the Receivables Purchase Agreement
as amended hereby.
(b) Except as specifically amended above, the terms and conditions
of the Receivables Purchase Agreement, of all other Facility Documents and any
other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of the Deal Agent
or the Purchaser under the Receivables Purchase Agreement or any other Facility
Document or any other document, instrument or agreement executed in connection
therewith, nor constitute a waiver of any provision contained therein, in each
case except as specifically set forth herein.
SECTION 5. Execution in Counterparts. This Amendment may be
-------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same instrument.
4
<PAGE>
SECTION 6. Governing Law. This Amendment shall be governed by and
-------------
construed in accordance with the laws of the State of New York.
SECTION 7. Headings. Section headings in this Amendment are included
--------
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized as of the
date first above written.
SELLER: BV FUNDING CORP.
By___________________________
Title:
200 Nickerson Road
Marlboro, Mass. 01752
Attn: J. Colton
Telecopy No. 800-532-7318
PURCHASER: EAGLEFUNDING CAPITAL CORPORATION
By: BankBoston, N.A., as its Attorney-in-Fact
By___________________________
Title:
c/o BancBoston Securities Inc.
100 Federal Street
Boston, MA 02110
Attn: John T. Hackett III
Telecopy No. 617-434-1533
DEAL AGENT: BANKBOSTON, N.A.,
as Deal Agent
By__________________________
Title:
100 Federal Street
Boston, MA 02110
Attn: Adam Cohen
<PAGE>
Telecopy No. 617-434-1533
<PAGE>
SERVICER AND COLLATERAL
CUSTODIAN: BANKVEST CAPITAL CORP.
By______________________________
Title:
200 Nickerson Road
Marlboro, Mass. 01752
Attn: J. Colton
Telecopy No. 800-532-7318
<PAGE>
EXHIBIT 10.32
LOAN AND SECURITY AGREEMENT
BANKVEST CAPITAL CORP.
AND
LEASEVEST CAPITAL CORP.
WITH
PNC BANK, NATIONAL ASSOCIATION
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
SECTION 1. DEFINITIONS AND INTERPRETATION 1
1.1 Terms Defined 1
1.2 Accounting Principles 7
SECTION 2. THE LOANS 7
2.1 Credit Facility - Description 7
2.2 Advances and Payments 8
2.3 Preconditions to Advances and Assignment of Leases and Leased Property 8
2.4 Credit Facility Interest 10
2.5 Additional Interest Provisions. 10
2.6 Fees 11
2.7 Prepayments 11
2.8 Use of Proceeds 12
2.9 Capital Adequacy 12
SECTION 3. COLLATERAL 13
3.1 Description 13
3.2 Lien Documents 13
3.3 Other Actions 13
3.4 Searches 14
3.5 Filing Security Agreement 14
3.6 Power of Attorney 14
SECTION 4. CLOSING AND CONDITIONS PRECEDENT TO ADVANCES 14
4.1 Resolutions, Opinions, and Other Documents 15
4.2 Absence of Certain Events 15
4.3 Warranties and Representations at Closing 15
4.4 Compliance with this Agreement 16
4.5 Officers' Certificate 16
4.6 Closing 16
4.7 Non-Waiver of Rights 16
SECTION 5. REPRESENTATIONS AND WARRANTIES 16
5.1 Corporate Organization and Validity 16
5.2 Places of Business 17
5.3 Pending Litigation 17
5.4 Title to Collateral 17
5.5 Governmental Consent 18
5.6 Taxes 18
5.7 Financial Statements 18
5.8 Full Disclosure 18
5.9 Subsidiaries 18
5.10 Guarantees, Contracts, etc. 18
5.11 Government Regulations, etc. 19
i
<PAGE>
<CAPTION>
<S> <C>
5.12 Names 19
5.13 Other Associations 19
5.14 Environmental Matters 20
5.15 Capital Stock 20
5.16 Solvency 20
5.17 Leases and Leased Property 20
5.18 Interrelatedness of Borrowers 24
SECTION 6. BORROWER'S AFFIRMATIVE COVENANTS 24
6.1 Payment of Taxes and Claims 24
6.2 Maintenance of Insurance, Financial Records
and Corporate Existence 24
6.3 Business Conducted 25
6.4 Litigation 25
6.5 Taxes 26
6.6 Bank Accounts 26
6.7 Employee Benefit Plans 26
6.8 Warranties for Future Advances 26
6.9 Financial Covenants 27
6.10 Financial and Business Information 28
6.11 Officers' Certificates 29
6.12 Inspection 30
6.13 Tax Returns and Reports 30
6.14 Material Adverse Developments 30
6.15 Places of Business 30
6.16 Sale of Collateral 30
SECTION 7. BORROWER'S NEGATIVE COVENANTS: 31
7.1 Merger, Consolidation, Dissolution or Liquidation 31
7.2 Liens and Encumbrances 31
7.3 Negative Pledge 31
7.4 Transactions With Affiliates or Subsidiaries 31
7.5 Guarantees 32
7.6 Distributions, Redemptions and Other Indebtedness 32
7.7 Use of Lender's Name 32
7.8 Change of Ownership Interests/Change in Management 32
7.9 Loans and Investments 32
SECTION 8. DEFAULT 33
8.1 Events of Default 33
8.2 Cure 35
8.3 Rights and Remedies on Default 35
8.4 Nature of Remedies 36
8.5 Set-Off 36
SECTION 9. MISCELLANEOUS 37
9.1 GOVERNING LAW 37
9.2 Integrated Agreement 37
9.3 Waiver 37
9.4 Time 38
ii
<PAGE>
<CAPTION>
<S> <C>
9.5 Expenses of Lender 38
9.6 Brokerage 38
9.7 Notices 38
9.8 Headings 39
9.9 Survival 39
9.10 Successors and Assigns 40
9.11 Duplicate Originals 40
9.12 Modification 40
9.13 Signatories 40
9.14 Third Parties 40
9.15 Discharge of Taxes, Borrower's Obligations, Etc. 40
9.16 Consent to Jurisdiction 40
9.17 Waiver of Jury Trial 41
9.18 Information to Participant 41
9.19 Obligations Joint and Several 41
</TABLE>
iii
<PAGE>
EXHIBIT LIST
------------
Exhibit 2.1(a) -- Form of Term Note
Exhibit 2.1(c) -- Form of Advance Rate Certificate
Exhibit 2.3(c) -- Form of Collateral Report
Exhibit 2.3(d) -- Form of Assignment Agreement
Exhibit 5.1 -- Borrowers' States of Qualifications
Exhibit 5.2 -- Places of Business
Exhibit 5.3 -- Judgments, Proceedings, Litigation and
Orders
Exhibit 5.7 -- Borrowers' Federal Tax Identification
Numbers
Exhibit 5.9 -- Subsidiaries and Affiliates
Exhibit 5.10 -- Existing Guaranties, Investments and
Borrowings, Leases and Employment Agreements
Exhibit 5.12 -- Schedule of Names
Exhibit 5.13 -- Other Associations
Exhibit 5.14 -- Environmental Matters
Exhibit 5.15 -- Capital Stock
Exhibit 5.17 -- Leases and Leased Property
Exhibit 6.11 -- Officers' Certificates
Exhibit 7.4 -- Transactions with Affiliates
<PAGE>
LOAN AND SECURITY AGREEMENT
---------------------------
This Loan and Security Agreement ("Agreement") is dated as of this 9th day
of May, 1997, by and among BANKVEST CAPITAL CORP. ("BankVest"), LEASEVEST
CAPITAL CORP. (LeaseVest") (collectively, the "Borrowers" and individually, each
a "Borrower") and PNC BANK, NATIONAL ASSOCIATION, a national banking association
("Lender").
BACKGROUND
----------
A. Borrowers are in the business of leasing personal property to Lessees
or otherwise financing the purchase of personal property for third party
purchasers pursuant to leases or installment sale agreements. Borrowers wish,
from time to time, to obtain advances up to the Maximum Credit Limit. Lender is
willing to make loans and grant extensions of credit to Borrowers under the
terms and provisions hereinafter set forth.
B. The parties desire to define the terms and conditions of their
relationship to writing.
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
SECTION 1. DEFINITIONS AND INTERPRETATION
1.1 Terms Defined : As used in this Agreement, the following terms have
-------------
the following respective meanings:
Account - Any right to payment for goods sold or leased or for
-------
services rendered which is not evidenced by an instrument or chattel paper,
whether or not it has been earned by performance.
Adjusted Debt to Tangible Net Worth Ratio - At any time means the
-----------------------------------------
ratio of (i) total Senior Liabilities less Nonrecourse Debt to (ii) Borrowers'
Tangible Net Worth.
Advance(s) - Any monies advanced or credit, including Term Loans,
----------
extended to Borrowers by Lender under the Credit Facility.
Advance Rate - As of any date of determination, an amount equal to the
------------
lesser of the aggregate amount, with respect to the Specific Lease Collateral
corresponding to a related Term Loan, of the lesser of the following for each
such Lease, as determined on a lease-by-lease basis, (i) one hundred percent
(100%) of the original cost of the Leased Property corresponding to such Lease,
less advance payments and security deposits, or (ii) ninety percent (90%) of the
net present value of the remaining scheduled Lease
<PAGE>
payments due under such Lease, discounted at the Applicable Rate corresponding
to such Term Loan.
Advance Rate Certificate - Section 2.1(c).
------------------------
Affiliate - As to any person, each other person that directly, or
---------
indirectly, through one or more intermediaries, controls or is controlled by, or
is under common control with, the person in question.
Agreement - This Loan and Security Agreement, as it may hereafter be
---------
amended, supplemented or replaced from time to time.
Applicable Rate - Section 2.4.
---------------
Assignment Agreement - Section 2.3(d).
--------------------
Authorized Officer - Any officer or partner of a Borrower authorized
------------------
by specific resolution of each Borrower to request Advances as set forth in the
incumbency certificate referred to in Section 4.1(d) of this Agreement.
Books and Records - All of Borrowers' original ledger cards, payment
-----------------
schedules, credit applications, Contract Rights, liens, security instruments,
guarantees and other General Intangibles relating in any way to the Leases or
Leased Property.
Business Day - Any day that is not a Saturday or Sunday or day on
------------
which Lender is required or permitted to close.
Chattel Paper - The meaning ascribed thereto in the Pennsylvania
-------------
Uniform Code.
Closing - Section 4.6.
-------
Closing Date - Section 4.6.
------------
Collateral - All now or hereafter existing Leases and Leased Property,
----------
Books and Records and all cash and noncash proceeds, thereof, including, without
limitation, insurance proceeds.
Contract Rights - All rights under contracts not yet earned by
---------------
performance.
Credit Facility - Section 2.1.
---------------
Current Term - The Initial Term during the period of the Initial Term,
------------
and any renewal or extended term during the term thereof, if Lender elects, in
its sole discretion to renew or extend the Credit Facility.
Defaulted Lease - Any Lease where the Lease fails, at any time, to be
---------------
an Eligible Lease, provided however, that any new criteria established pursuant
to clause (12) of the definition of Eligible Lease shall only be applicable on a
prospective basis and
<PAGE>
shall not, in and of itself, convert an existing Eligible Lease into a Defaulted
Lease.
De Minimis Delinquency - The greater of (i) Ten Dollars ($10) or (ii)
----------------------
ten percent (10%) of one month=s Lease payment.
Distribution -
------------
(1) Dividends or other distributions on capital stock of either
Borrower; and
(2) The redemption, repurchase or acquisition of such stock or of
warrants, rights or other options to purchase such stock.
Documents - The meaning ascribed thereto in the Pennsylvania Uniform
---------
Code.
Eligible Lease(s) - All items of Specific Lease Collateral which meet
-----------------
all of the following specifications: (1) are not subject to any Lien, security
interest or prior assignment other than Lender's security interest and the
rights of the Lessees thereunder; (2) are valid and enforceable Leases,
representing the undisputed obligation of each Lessee, with rentals due
thereunder not more than 59 days contractually past due, without giving effect
to any De Minimis Delinquency; (3) are not subject to any defense, set off,
counterclaim, deduction, or allowance or adjustment; (4) provide for the lease
of Leased Property which has not been returned, rejected, lost or damaged; (5)
arose in the ordinary course of Borrowers' business; (6) neither Borrower has
received notice of bankruptcy, receivership, reorganization, insolvency or
material adverse change in the financial condition of the Lessee; (7) the Lessee
is not a Subsidiary or Affiliate of Borrowers, does not control Borrowers, and
is not under the control of or under common control with either Borrower; (8)
are Leases which comply with all general representations and warranties set
forth in Section 5.17 hereof; (9) are Leases with stated terms of not greater
than 60 months; (10) are Leases payable in equal consecutive installments no
less frequently than quarterly; (11) the Leased Property corresponding thereto
does not have an original cost in excess of $250,000; and (12) such other
criteria as may be reasonably established by Lender, from time to time.
Equipment - The meaning ascribed thereto in the Pennsylvania Uniform
---------
Commercial Code.
ERISA - The Employee Retirement Income Security Act of 1974, as the
-----
same may be amended, from time to time.
Event of Default - Section 8.1.
----------------
Expenses - Section 9.5.
--------
Facility Fee - Section 2.6(a)
------------
<PAGE>
Financial Statements - The consolidated financial statements of
--------------------
Borrowers prepared in accordance with GAAP.
GAAP - Generally accepted accounting principles as in effect on the
----
Closing Date, as may be amended from time to time.
General Intangibles - The meaning ascribed thereto in the Pennsylvania
-------------------
Uniform Commercial Code and shall include, but not be limited to, all Contract
Rights (including without limitation, all rights under any remarketing
agreements), chattel paper, documents, instruments, books, records, ledgers,
journals, check books, printouts, blue prints, designs, computer programs,
computer tapes, punch cards, formulae, drawings, customer lists, choses in
action, claims, goodwill, designs and plans, licenses, license agreements, tax
and all other types of refunds, returned and unearned insurance premiums, rights
and claims under insurance policies, patents, patent application, trademarks,
trade names, trade styles, trademark applications and copyrights.
Hazardous Substance - Section 5.14.
-------------------
Initial Term - Section 2.1(b).
------------
Instruments - The meaning ascribed thereto in the Pennsylvania Uniform
-----------
Code.
Inventory - The meaning ascribed thereto in the Pennsylvania Uniform
---------
Commercial Code and shall include all additions, improvements, accessions,
attachments, upgrades, replacements and substitutions thereto or therefor.
IRS - Section 6.7.
---
Lease(s) - All of each Borrower's Accounts, Documents, General
--------
Intangibles, Instruments and Chattel Paper arising in connection with each and
every equipment lease and/or schedule to a master lease agreement, assigned to
Lender, or now or hereafter designated on any schedule or Assignment Agreement
as being assigned to Lender. The term "Lease" includes (i) all payments to be
made thereunder, (ii) all rights of such Borrower therein, and (iii) any and all
amendments, renewals, extensions or guarantees thereof.
Leased Property - Any property leased or to be leased or financed by a
---------------
Borrower pursuant to a Lease; the term "Leased Property" includes all of such
Borrower's Inventory or Equipment so leased and any and all additions,
improvements, accessions, attachments, upgrades, replacements and substitutions
thereto and therefor.
Lessee - The lessee(s) or obligor(s) responsible for payment and/or
------
performance under a Lease.
<PAGE>
Liabilities - All liabilities of every kind of Borrowers as would be
-----------
shown on Borrowers' consolidated Financial Statements prepared in accordance
with GAAP.
Lien - Any interest of any kind or nature in property securing an
----
obligation owed to, or a claim of any kind or nature in property by, a Person
other than the owner of the Property, whether such interest is based on the
common law, statute, regulation or contract, and including, but not limited to,
a security interest or lien arising from a mortgage, encumbrance, pledge,
conditional sale or trust receipt, a lease, consignment or bailment for security
purposes, a trust, or an assignment.
Loans - Collectively, the Term Loans.
-----
Loan Documents - This Agreement, any and all Term Note(s) and all
--------------
agreements, instruments and documents executed and/or delivered from time to
time in connection therewith, all as may be amended or replaced from time to
time.
Maturity Date - The last day of the Current Term.
-------------
Maximum Credit Limit - Five Million ($5,000,000) Dollars.
--------------------
Net Income - The consolidated net income after taxes of Borrowers as
----------
such would appear on Borrowers' consolidated statement of income, prepared in
accordance with GA"P.
Net Loss - Borrowers' Net Income expressed as a loss.
--------
Net Lease Receivables - Section 6.9(b).
---------------------
Nonrecourse Debt - All Liabilities of Borrowers which are non-recourse
----------------
in nature and treated as non-recourse obligations on Borrowers' Financial
Statements.
Obligations - All existing and future liabilities and obligations of
-----------
every kind or nature at any time owing by Borrowers to Lender, whether joint or
several, related or unrelated, primary or secondary, matured or contingent, due
or to become due, and whether principal, interest, fees or Expenses, including,
without limitation, obligations in respect of the Credit Facility and this
Agreement and any extensions, modifications, substitutions, increases and
renewals thereof, and the payment of all reasonable amounts advanced by Lender
to preserve, protect and enforce rights hereunder and in the Collateral and all
Expenses incurred by Lender in connection therewith.
PBGC - Section 6.7.
----
Pennsylvania Uniform Commercial Code or UCC - The Uniform Commercial
-------------------------------------------
Code as enacted in Pennsylvania, as the same shall be amended from time to time.
<PAGE>
Person - An individual, partnership, corporation, trust,
------
unincorporated association or organization, joint venture or any other entity.
Property - Any interest of Borrowers in any kind of property or asset,
--------
whether real, personal or mixed, or tangible or intangible.
Senior Liabilities - All liabilities of Borrowers, as shown on the
------------------
Financial Statements, other than that portion of the Subordinated Debt which is
not due and payable within 12 months of the date of determination.
Specific Lease Collateral - All Leases and corresponding Leased
-------------------------
Property specifically relating to, pledged as collateral for, and used to
determine the Advance Rate corresponding to, a Term Loan.
Subordinated Debt - All indebtedness of Borrower as described in that
-----------------
certain Securities Purchase Agreement and Note between BankVest Capital Corp.
and Whitney Subordinated Debt Fund, L.P. dated February 28, 1997, and other
indebtedness specifically subordinated to the Obligations in a manner which
provides that the holders of such indebtedness shall have no greater rights than
those afforded the holders of the indebtedness under the Subordination
Agreement, including, without limitation, the right to receive payments.
Subordination Agreement - The Securities Purchase Agreement and Note
-----------------------
between BankVest Capital Corp. and Whitney Subordinated Debt Fund, L.P. dated
February 28, 1997.
Subsidiary - Any corporation more than fifty percent (50%) of whose
----------
voting stock is legally and beneficially owned by Borrower or owned by a
corporation more than fifty percent (50%) of whose voting stock is legally and
beneficially owned by Borrower.
Tangible Net Worth - At any time means the amount of stockholders
------------------
equity on a consolidated basis (excluding trademarks, goodwill, covenants not to
compete, deferred closing costs and all other intangible assets as that term is
defined under GA"P) plus that portion of the Subordinated Debt not due and
payable within one year of the date of determination.
Term Loan(s) - Section 2.1(a).
------------
Term Notes - Section 2.1(a)(i).
----------
Unmatured Event of Default - An event or condition which with the
--------------------------
passage of time, the giving of notice, or both would become an Event of Default.
Unused Line Fee - Section 2.6(b).
---------------
<PAGE>
1.2 Accounting Principles : Where the character or amount of any asset
---------------------
or liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, this shall be done in accordance with GAAP, to the
extent applicable, except as otherwise expressly provided in this Agreement.
SECTION 2. THE LOANS
2.1 Credit Facility - Description:
-----------------------------
(a) Subject to the terms and conditions of this Agreement, Lender
hereby establishes for the joint and several benefit of Borrowers credit
facility ("Credit Facility") which shall include Advances to be extended by
Lender from time to time to or for the benefit of Borrowers hereunder in the
form of term loans ("Term Loans"). The aggregate outstanding principal amount
of all Term Loans, at any time, shall not exceed the Maximum Credit Limit.
Subject to such limitation, the outstanding balance under the Credit Facility
may fluctuate from time to time, to be reduced by repayments made by Borrower,
to be increased by future Term Loans which may be made by Lender. In no event
shall the initial principal amount of any Term Loan be less than $200,000. The
Obligations of each Borrower under the Credit Facility and this Agreement shall
at all times be joint and several, absolute and unconditional.
(i) In conjunction with each Term Loan, Borrowers shall
execute and deliver a promissory note to Lender for the total principal amount
of such Term Loan (collectively, as may be amended, modified or replaced from
time to time, the "Term Notes"). Each Term Note shall evidence Borrowers'
absolute and unconditional obligation to repay Lender for the Term Loan with
interest as herein and therein provided. Each and every Term Loan under the
Credit Facility shall be evidenced by separate Term Notes, which are deemed
incorporated herein by reference and made a part hereof. All Term Notes shall be
substantially in the form set forth in Exhibit "2.1(a)" attached hereto and made
a part hereof.
(ii) Term Loans shall only be made available as permanent
financing for Specific Lease Collateral.
(iii) Each Term Loan, together with accrued interest, shall be
repaid in monthly installments (not to exceed 60 months) as set by Lender at the
time Borrowers request such a Term Loan. The principal amount of each Term Loan
shall not exceed the aggregate of the Advance Rate with respect to each item of
Specific Lease Collateral corresponding to such Term Loan.
(b) The term ("Initial Term") of the Credit Facility shall expire on
May 9, 1998. After the Maturity Date no further Advances shall be available
from Lender.
<PAGE>
(c) Borrowers shall deliver with each borrowing request; a
certificate in the form of Exhibit "2.1(c)" attached hereto and made a part
hereof ("Advance Rate Certificate"), executed by an Authorized Officer,
calculating the Advance Rate with respect to the requested Term Loan.
2.2 Advances and Payments:
---------------------
(a) Except to the extent otherwise set forth in this Agreement, all
payments of principal and of interest on the Credit Facility, the Facility Fee,
Unused Line Fee, the Expenses, and all other charges and any other Obligations
of Borrowers hereunder, shall be made to Lender at its main Philadelphia banking
office, PNC Bank Center, 1600 Market Street, 31st Floor, Philadelphia, PA 19103,
Attention Sandra L. McCollum, in United States dollars, in immediately available
funds. Lender shall have the unconditional right and discretion from time to
time to charge Borrower's deposit account for all of Borrower's Obligations
under this Agreement including without limitation, interest, principal, fees and
reimbursement of Expenses if any or all of such Obligations are not paid within
five (5) days of the due date thereof.
(b) (i) Advances which may be made by Lender from time to time
under the Credit Facility shall be made available by crediting such proceeds to
Borrowers' operating account with Lender.
(ii) All Advances requested by Borrowers must be requested by
11:00 A.M. Philadelphia time, three (3) Business Days prior to the date of such
requested Advance. All requests or confirmation of requests for an Advance are
to be in writing and may be sent by telecopy or facsimile transmission provided
that Lender shall have the right to require that receipt of such request not be
effective unless confirmed via telephone with Lender. Subject to satisfaction of
the terms and conditions hereof, the requested Advance shall be made available
to Borrowers by crediting such amount to Borrowers' operating account with
Lender on the day the requested Advance is to be made.
2.3 Preconditions to Advances and Assignment of Leases and Leased Property
----------------------------------------------------------------------
Before Lender will make any Advance to Borrowers:
(i) Each Borrower will deliver to Lender the following (dated and
signed) in form and substance satisfactory to Lender:
(a) A written borrowing request setting forth the requested
date of the Advance (but no sooner than three (3) Business Days after Lender
receives the request), the requested advance amount, an Advance Rate Certificate
in the form attached hereto as Exhibit "2.1(c)", any information required by
this
<PAGE>
Agreement and such other information as Lender shall reasonably request.
(b) A Term Note in the principal amount equal to the requested
Term Loan,
(c) A description of the collateral package, which shall
include, a description of the Lessee, the Leased Property, the net cost of the
Leased Property, the net remaining principal balance under the Lease(s), and the
terms of and rentals owed under each Lease, in the form attached hereto as
Exhibit "2.3(c)" ("Collateral Report") and such other information which Lender
shall reasonably request,
(d) An Assignment Agreement signed by such Borrower assigning
Borrower's right, title and interest in and to the Leased Property and Leases to
Lender, in the form attached hereto as Exhibit "2.3(d)" ("Assignment
Agreement"),
(e) Invoices showing Lessor's itemized cost of the Leased
Property along with confirmation that full payment for the Leased Property has
been made to the vendor,
(f) If requested by Lender, additional Uniform Commercial Code
("UCC") financing statements covering the Collateral listing Lender as secured
party and each Borrower as debtor, to be filed in locations reasonably required
by Lender,
(g) Copies of all UCC-1 financing statements filed by a Borrower
against Lessee(s) and any acknowledgment copies or recording information such
Borrower has received back from the recording offices along with UCC-3
assignments with respect to the Specific Lease Collateral corresponding to the
Term Loan, assigning such Borrower's interest to Lender, all as may be required
by Section 5.17 below,
(h) The sole original of each Lease (as described in Sections
5.17(b) and 5.17(c) below) along with all schedules duly assigned to Lender
along with, if applicable, a certified copy of the corresponding Master Lease
Agreement,
(i) Evidence that each item of Leased Property, with an initial
cost in excess of $100,000, is insured against such risks, in such amounts, with
such insurance, and on such terms and conditions as shall be satisfactory to
Lender, including but not limited to, provisions naming Lender as lender loss
payee and preventing cancellation or modification of the insurance coverage
without at least thirty (30) days prior notice to Lender ("Insurance Coverage"),
(j) A certificate of acceptance or other document evidencing
that the Lessee has received and accepted the Leased Property, and
<PAGE>
(k) An undated notice signed by Borrowers directing each Lessee
to pay all sums due or to become due under each Lease directly to Lender
("Lessee Notice") to be used only following the occurrence of an Event of
Default. Lender will hold the Lessee Notices in escrow and will not release
them, unless and until an Event of Default shall have occurred.
(l) Such financial information concerning any of the Leases,
Borrowers or any Lessee as Lender may reasonably request, and
(m) Such other instruments, agreements and documents as Lender
reasonably requests to carry out the intent of the parties to this Agreement.
(ii) No Event of Default or Unmatured Event of Default shall have
occurred hereunder.
2.4 Credit Facility Interest: The unpaid principal balance of each Term
------------------------
Loan shall bear interest at a fixed rate of interest equal to 215 basis points
in excess of the then existing yield to maturity of the United States Treasury
Obligation with a maturity nearest the scheduled maturity of the corresponding
Term Loan (based on the weighted average life of the corresponding Specific
Lease Collateral), at the time such Term Loan is requested ("Applicable Rate").
Interest on Term Loans shall be due and payable in arrears on the first day of
each calendar month commencing the first full month following the Closing Date.
<PAGE>
2.5 Additional Interest Provisions.
------------------------------
(a) Calculation of Interest: Interest on the Loans shall be based on
-----------------------
a three hundred sixty (360) day year comprised of twelve 30-day months and
charged for the actual number of days elapsed.
(b) Default Rate: After the occurrence and during the continuance of
------------
an Event of Default hereunder, the per annum effective rate of interest on all
Term Loans outstanding under the Credit Facility, shall be increased to a rate
equal to two (2%) percentage points in excess of the Applicable Rate.
(c) Continuation of Interest Charges: All contractual rates of
--------------------------------
interest chargeable on outstanding Loans, shall continue to accrue and be paid
even after default, maturity, acceleration, judgment, bankruptcy, insolvency
proceedings of any kind or the happening of any event or occurrence similar or
dissimilar.
(f) Applicable Interest Limitations: In no contingency or event
-------------------------------
whatsoever shall the aggregate of all amounts deemed interest hereunder and
charged or collected pursuant to the terms of this Agreement exceed the highest
rate permissible under any law which a court of competent jurisdiction shall, in
a final determination, deem applicable hereto. In the event that such court
determines Lender has charged or received interest hereunder in excess of the
highest applicable rate, Lender shall in its sole discretion, apply and set off
such excess interest received by Lender against other Obligations due or to
become due and such rate shall automatically be reduced to the maximum rate
permitted by such law.
2.6 Fees:
----
(a) Facility Fee: As of Closing, Borrower shall have paid to Lender a
------------
$5,000 non-refundable facility fee ("Facility Fee").
(b) Unused Line Fee: Commencing on the six (6) month anniversary of
---------------
the date of this Agreement and continuing so long as this Agreement has not been
terminated pursuant to the terms hereof, Borrower shall unconditionally pay to
Lender a non-refundable fee ("Unused Line Fee") equal to three eighths of one
percent (.375%) per annum of the average daily unused portion of the Credit
Facility calculated by subtracting the average daily outstanding balance of all
Loans from the then current amount of the Maximum Credit Limit. The Unused Line
Fee shall be computed and paid on a quarterly basis, in arrears, on the first
day of each January, April, July and October, with the first payment being due
on January 1, 1998.
<PAGE>
2.7 Prepayments:
-----------
Upon any prepayment by or on behalf of the Borrowers (whether
voluntary, on default or otherwise), the Lender may require, if it so elects,
the Borrowers to pay the Lender as compensation for the cost of having advanced
or being prepared to advance fixed rate funds hereunder an amount equal to the
Cost of Prepayment. "Cost of Prepayment" means an amount equal to the present
value, if positive, of the product of (a) the difference between (i) the yield,
on the beginning date of the applicable interest period, of a U.S. Treasury
obligation with a maturity similar to the applicable interest period minus (ii)
-----
the yield on the prepayment date, of a U.S. Treasury obligation with a maturity
similar to the remaining maturity of the applicable interest period, and (b) the
principal amounts to be prepaid, and (c) the number of years, including
fractional years, from the prepayment date to the end of the applicable interest
period. The yield on any U.S. Treasury obligation shall be determined by
reference to Federal Reserve Statistical Release H.15(519) "Selected Interest
Rates". For purposes of making present value calculations, the yield to
maturity of a similar maturity U.S. Treasury obligation on the prepayment date
shall be deemed the discount rate. The Cost of Prepayment shall also apply to
any payments made after acceleration of the maturity date of this Note while a
Fixed Rate is in effect. Borrowers agree that this fee payable to Lender is a
reasonable estimate of its damages and not a penalty.
(b) Proceeds of Collateral: Borrowers shall, promptly upon receipt of
----------------------
the proceeds from the sale or other disposition of any Specific Lease Collateral
relating to a Term Loan, pay to Lender an amount equal to that portion of the
Term Loan corresponding to such Specific Lease Collateral, for application
against the outstanding amount of such Term Loan. Prior to the occurrence of an
Event of Default, proceeds of Specific Lease Collateral relating to a Term Loan
shall first be applied to accrued and unpaid interest, fees, costs, Expenses
related to the Credit Facility, and then to the outstanding balance of such Term
Loan in the inverse order of Maturity. Following the occurrence of an Event of
Default, all proceeds from the Collateral and all payments received pursuant to
the terms of the Leases shall be immediately delivered to Lender and Lender may
apply such proceeds to any of Borrowers' Obligations in such order as Lender may
decide in its sole discretion.
(c) Replacement of Defaulted Leases: Upon a Lease constituting
-------------------------------
Specific Lease Collateral relating to a Term Loan, becoming a Defaulted Lease,
Borrowers shall, at Borrower's option, within twenty (20) days of becoming aware
that such Lease is a
<PAGE>
Defaulted Lease, either immediately prepay such Term Loan in accordance with
subsection (b) above or replace such Lease with a new lease with an Advance Rate
equal to at least the Advance Rate (calculated as of the date such Lease became
a Defaulted Lease) of the Lease being replaced, in form and substance and with a
Lessee with creditworthiness satisfactory to Lender. In addition, Borrowers
shall execute such agreements and documents and take such action as Lender
requests in order to effectuate the exchange and protect and perfect Lender's
security interest in the new Lease. So long as no Event of Default has occurred
and is continuing, upon any Defaulted Lease being prepaid or replaced, Lender
shall execute such documentation as is reasonably necessary to release its
security interest in such Defaulted Lease and the related Leased Property and
return the original of such Defaulted Lease to such Borrower.
2.8 Use of Proceeds: The extensions of credit under and proceeds of the
---------------
Credit Facility shall be used to enable Borrower to purchase Leased Property and
finance Leases associated with such Leased Property.
2.9 Capital Adequacy: If any present or future law, governmental rule,
----------------
regulation, policy, guideline, directive or similar requirement (whether or not
having the force of law) imposes, modifies, or deems applicable any capital
adequacy, capital maintenance or similar requirement which affects the manner in
which Lender allocates capital resources to its obligations (including any
obligations hereunder), and as a result thereof, in the opinion of Lender, the
rate of return on Lender's capital with regard to the Loans is reduced to a
level below that which Lender could have achieved but for such circumstances,
then in such case and upon notice from Lender to Borrowers, from time to time,
Borrowers shall pay Lender such additional amount or amounts as shall compensate
Lender for such reduction in its rate of return. Such notice shall contain the
statement of Lender with regard to any such amount or amounts which shall, in
the absence of manifest error, be binding upon Borrowers. In determining such
amount, Lender may use any reasonable method of averaging and attribution that
it deems applicable.
SECTION 3. COLLATERAL
3.1 Description: As security for the payment of the Obligations, and
-----------
satisfaction by Borrowers of all covenants and undertakings contained in this
Agreement and the other Loan Documents each Borrower hereby assigns and grants
to Lender a continuing first lien on and security interest in, upon and to the
Collateral.
<PAGE>
3.2 Lien Documents: At Closing and thereafter as Lender deems necessary,
--------------
each Borrower shall execute and deliver to Lender, or shall have executed and
delivered (all in form and substance reasonably satisfactory to Lender):
(a) Financing Statements - Financing statements pursuant to the UCC,
--------------------
which Lender may file in any jurisdiction where any Collateral is or may be
located and in any other jurisdiction that Lender deems appropriate; and
(b) Other Agreements - Any other agreements, documents, instruments
----------------
and writings, including, without limitation, security agreements and Assignment
Agreements, reasonably required by Lender to evidence, perfect or protect
Lender's liens and security interest in the Collateral or as Lender may
reasonably request from time to time.
3.3 Other Actions: In addition to the foregoing, Borrowers shall do
-------------
anything further that may be lawfully and reasonably required by Lender to
perfect its security interests and to effectuate the intentions and objectives
of this Agreement, including, but not limited to, the execution and delivery of
lockbox agreements, continuation statements, amendments to financing statements,
security agreements, contracts and any other documents required hereunder. At
Lender's request, Borrowers shall also immediately deliver (with execution by
each Borrower of all necessary documents or forms to reflect Lender's Lien
thereon) to Lender, all items for which Lender must or may receive possession to
obtain a perfected security interest, including without limitation, all Leases,
notes, certificates and documents of title, chattel paper, warehouse receipts,
instruments, and any other similar instruments constituting Collateral.
3.4 Searches: Lender shall, prior to or at Closing, and thereafter as
--------
Lender may determine from time to time, at Borrowers' expense, obtain the
following searches (the results of which are to be consistent with the
warranties made by Borrower's in this Agreement):
(a) UCC Searches: UCC searches with the Secretary of State and local
------------
filing office of each state where Borrowers maintain their chief executive
office, a place of business, or assets;
(b) Judgments, Etc.: Judgment, federal tax lien and corporate tax
---------------
lien searches, in all applicable filing offices of each state searched under
subparagraph (a) above.
Borrowers shall, prior to or at Closing and at their expense, obtain
and deliver to Lender good standing certificates
<PAGE>
showing Borrowers to be in good standing in their state(s) of incorporation and
in each other state or foreign country in which they are doing and presently
intend to do business for which the failure to be so qualified might have
material adverse effect on Borrowers' business, financial condition, Property or
Lender's rights hereunder.
3.5 Filing Security Agreement: A carbon, photographic or other
-------------------------
reproduction or other copy of this Agreement or of a financing statement is
sufficient as and may be filed in lieu of a financing statement.
3.6 Power of Attorney: Each of the officers of Lender is hereby
-----------------
irrevocably made, constituted and appointed the true and lawful attorney for
Borrowers (without requiring any of them to act as such) with full power of
substitution to do the following: (1) endorse the name of a Borrower(s) upon any
and all checks, drafts, money orders and other instruments for the payment of
monies that are payable to Borrower(s) and constitute collections on the
Collateral; (2) execute in the name of Borrowers, or either of them, any
financing statements, schedules, assignments, instruments, documents and
statements that Borrowers are obligated to give Lender hereunder or are
necessary to perfect Lender's security interest or Lien in the Collateral; (3)
verify validity, amount or any other matter relating to the Collateral by mail,
telephone, telecopy or otherwise; provided however, that prior to an Event of
Default, any such activity shall be performed only after prior notice to
Borrowers and in a manner reasonably satisfactory to the parties; and (4)
following the occurrence of an Event of Default, do such other and further acts
and deeds in the name of Borrowers that Lender may reasonably deem necessary or
desirable to enforce any Lease or other Collateral.
SECTION 4. CLOSING AND CONDITIONS PRECEDENT TO ADVANCES
Closing under this Agreement and the making of each Advance are subject to
the following conditions precedent (all documents to be in form and substance
satisfactory to Lender and Lender's counsel):
4.1 Resolutions, Opinions, and Other Documents: Prior to the Closing,
------------------------------------------
Borrowers shall have delivered to Lender the following:
(a) this Agreement properly executed;
(b) each document and agreement required to be executed under any
provision of this Agreement or any related agreement;
(c) certified copies of (i) resolutions of each Borrower's board of
directors authorizing the execution of this Agreement and each instrument,
agreement and document required to be
<PAGE>
delivered by any Section hereof and (ii) each Borrower's Articles of
Incorporation and By-laws;
(d) an incumbency certificate identifying all Authorized Officers of
each Borrower, with specimen signatures;
(e) a written opinion of Borrowers' independent counsel addressed to
Lender;
(f) certification by Borrowers' chief financial officer that there
has not occurred any material adverse change in the operations and condition
(financial or otherwise) of Borrowers since December 31, 1996;
(g) payment by Borrowers of all Expenses associated with the Credit
Facility incurred to the Closing Date and the Facility Fee;
(h) Uniform Commercial Code, judgment, federal and state tax lien
searches against each Borrower, at each Borrower's expense, showing that the
Collateral is not subject to any Liens, together with Good Standing and
Corporate Tax Lien Search Certificates showing no tax Liens on either Borrower's
Property and showing each Borrower to be in good standing in each jurisdiction
where the failure to so qualify might have a material adverse affect on
Borrowers' business, financial condition, Property or Lender's rights hereunder;
and
(i) Copies of the Subordination Agreement(s) with respect to the
Subordinated Debt.
4.2 Absence of Certain Events: At the Closing Date and prior to each
-------------------------
Advance, no Event of Default or Unmatured Event of Default hereunder shall have
occurred and be continuing.
4.3 Warranties and Representations at Closing: The warranties and
-----------------------------------------
representations contained in Section 5 as well as any other Section of this
Agreement shall be true and correct in all material respects on the Closing Date
and at the time of each Advance with the same effect as though made on and as of
that date. Neither Borrower shall have taken any action or permitted any
condition to exist which would have been prohibited by any Section hereof.
4.4 Compliance with this Agreement: Each Borrower shall have performed
------------------------------
and complied with all agreements, covenants and conditions contained herein
including, without limitation, the provisions of Sections 6 and 7 hereof, which
are required to be performed or complied with by such Borrower before or at the
Closing Date and as of the date of each Advance.
<PAGE>
4.5 Officers' Certificate: Lender shall have received a certificate
---------------------
dated the Closing Date and signed by the chief financial officer of Borrowers
certifying that all of the conditions specified in this Section have been
fulfilled.
4.6 Closing: Subject to the conditions of this Section 4, the Credit
-------
Facility shall be made available on the date ("Closing Date") this Agreement is
executed and the conditions contained in Section 4.1 hereof are satisfied (the
"Closing").
4.7 Non-Waiver of Rights: By completing the Closing hereunder, or by
--------------------
making Advances hereunder, Lender does not thereby waive a breach of any
warranty, representation or covenant made by Borrowers, or either of them,
hereunder or any agreement, document, or instrument delivered to Lender or
otherwise referred to herein, and any claims and rights of Lender resulting from
any breach or misrepresentation by either Borrower are specifically reserved by
Lender.
SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce Lender to complete the Closing and make the initial Advances
under the Credit Facility to Borrowers, Borrowers warrant and represent to
Lender that:
5.1 Corporate Organization and Validity:
-----------------------------------
(a) Each Borrower is a corporation duly organized and validly existing
under the laws of its state of incorporation, is duly qualified, is validly
existing and in good standing and has lawful power and authority to engage in
the business it conducts in each state and other jurisdiction where the nature
and extent of its business requires qualification, except where the failure to
so qualify would not have a material adverse effect on such Borrower's business,
financial condition, Property or prospects. A list of all states and other
jurisdictions where each Borrower is qualified to do business is attached hereto
as Exhibit "5.1" and made a part hereof.
(b) The making and performance of this Agreement and related
agreements, and each document required by any Section hereof will not violate
any law, government rule or regulation, or the charter, minutes or bylaw
provisions of either Borrower or violate or result in a default (immediately or
with the passage of time) under any contract, agreement or instrument to which
such Borrower is a party, or by which it is bound. Borrowers are not in
violation of nor have knowingly caused any Person to violate any term of any
agreement or instrument to which they or such Person is a party or by which they
may be bound or of their charters, minutes
<PAGE>
or bylaws which violation could have a material adverse effect on either
Borrower's business, financial condition, Property or prospects.
(c) Each Borrower has all requisite corporate power and authority to
enter into and perform this Agreement and to incur the obligations herein
provided for, and has taken all proper and necessary corporate action to
authorize the execution, delivery and performance of this Agreement, and the
documents and related agreements required hereby.
(d) This Agreement, any and all Term Notes and all related agreements
and documents required to be executed and delivered by Borrowers hereunder, when
delivered, will be valid and binding upon each Borrower and enforceable in
accordance with their respective terms, subject to the effect of bankruptcy,
reorganization, insolvency and other laws affecting the rights of creditors
generally.
5.2 Places of Business: The only places of business of Borrowers, and
------------------
the places where they keep and intend to keep their Books and Records concerning
the Collateral, are at the addresses listed in Exhibit "5.2" attached hereto and
made a part hereof.
5.3 Pending Litigation: There are no judgments or judicial or
------------------
administrative orders, proceedings or investigations (civil or criminal)
pending, or to the knowledge of either Borrower, threatened, against Borrower(s)
in any court or before any governmental authority or arbitration board or
tribunal except as shown in Exhibit "5.3" attached hereto and made a part
hereof, none of which may materially and adversely affect the business,
financial condition, Property or prospects of Borrowers, or the ability of
Borrowers to perform under this Agreement. Neither Borrower is in default with
respect to any order of any court, governmental authority, regulatory agency or
arbitration board or tribunal. No executive officer of either Borrower has been
indicted or convicted in connection with or is engaging in any criminal conduct,
or is currently subject to any lawsuit or proceeding or under investigation in
connection with any anti-racketeering or other conduct or activity.
5.4 Title to Collateral: Each Borrower has good and marketable title in
-------------------
fee simple (or its equivalent under applicable law) to all the Collateral it
respectively purports to own (or holds a first priority perfected security
interest in the portion of the Collateral constituting Leased Property) free
from Liens, except those of Lender, and free from the claims of any other Person
other than the corresponding Lessees or the original lessor, if applicable.
<PAGE>
5.5 Governmental Consent: Neither the nature of Borrowers or of their
--------------------
business or Property, nor any relationship between Borrowers and any other
Person, nor any circumstance affecting Borrowers in connection with the issuance
or delivery of any and all Term Notes, is such as to require a consent, approval
or authorization of, or filing, registration or qualification with, any
governmental authority on the part of either Borrower in connection with the
execution and delivery of this Agreement or the issuance or delivery of any and
all Term Notes or other documents contemplated hereby.
5.6 Taxes: All tax returns required to be filed by Borrowers, or either
-----
of them, in any jurisdiction have in fact been filed, and all taxes,
assessments, fees and other governmental charges upon Borrowers, or upon any of
their Property income or franchises, which are shown to be due and payable on
such returns have been paid, except for those taxes being contested in good
faith with due diligence by appropriate proceedings for which appropriate
reserves have been maintained under GAAP. Borrowers are not aware of any
proposed additional tax assessment or tax to be assessed against or applicable
to either Borrower that might have a material adverse effect on Borrowers'
business, financial condition, Property or prospects.
5.7 Financial Statements: Borrowers' annual consolidated audited
--------------------
balance sheet as of June 30, 1996, the quarterly unaudited consolidated balance
sheet as of December 31, 1996 and the related income statements and statements
of cash flows as of such dates, all accompanied by reports thereon from
Borrowers' independent certified public accountants, (complete copies of which
have been delivered to Lender), have been prepared in accordance with GAAP and
present fairly, accurately and completely the financial position of Borrowers as
of such dates and the results of its operations for such periods. The fiscal
year for Borrowers currently ends on June 30. Borrowers federal tax
identification numbers are set forth on Exhibit A5.7" attached hereto and made a
part hereof.
5.8 Full Disclosure: Neither the financial statements referred to in
---------------
Section 5.7, nor this Agreement or related agreements and documents or any
written statement furnished by a Borrower to Lender in connection with the
negotiation of the Credit Facility and contained in any financial statements or
documents relating to a Borrower contain any untrue statement of a material fact
or omit a material fact necessary to make the statements contained therein or
herein not misleading.
5.9 Subsidiaries: Borrowers have no Subsidiaries or Affiliates, except
------------
as listed on Exhibit "5.9" attached hereto and made a part hereof.
<PAGE>
5.10 Guarantees, Contracts, etc.:
---------------------------
(a) Neither Borrower owns nor holds equity or long term debt
investments in, has any outstanding advances to, or serves as guarantor, surety
or accommodation maker for the obligations of, or has any outstanding borrowings
from, any Person except as described in Exhibit "5.10", attached hereto and a
made part hereof.
(b) Neither Borrower is a party to any contract or agreement, or
subject to any charter or other corporate restriction, which materially and
adversely affects its business, financial condition, Property or prospects.
(c) Except as otherwise specifically provided in this Agreement,
neither Borrower has agreed or consented to cause or permit any of the
Collateral whether now owned or hereafter acquired to be subject in the future
(upon the happening of a contingency or otherwise) to a Lien not permitted by
this Agreement.
5.11 Government Regulations, etc.:
----------------------------
(a) Borrowers have obtained all licenses, permits, franchises and
other governmental authorizations necessary for the ownership of their Property
and for the conduct of their business, where the failure to obtain would have a
material adverse effect on the business, financial condition, Property or
prospects of either Borrower.
(b) Neither Borrower is in violation of, has not received written
notice that it is in violation of, or has knowingly caused any Person to
violate, any applicable statute, regulation or ordinance of the United States of
America, or of any state, city, town, municipality, county or of any other
jurisdiction, or of any agency, or department thereof, (including without
limitation, environmental laws and regulations), which may materially and
adversely affect Borrowers' business, financial condition, Property or
prospects.
(c) Borrowers are current with all reports and documents required to
be filed with any state or federal securities commission or similar agency and
is in full compliance in all material respects with all applicable rules and
regulations of such commissions.
5.12 Names: Within five (5) years prior to the Closing Date, neither
-----
Borrower has conducted business under or used any other name (whether corporate
or assumed) except for the names shown on Exhibit "5.12", attached hereto and
made a part hereof. Each trade name of Borrower represents a division or
trading style of
<PAGE>
such Borrower and not a separate corporate subsidiary, affiliate or independent
entity.
5.13 Other Associations: Neither Borrower is engaged nor has an
------------------
interest in any joint venture or partnership with any other Person except as
described on Exhibit "5.13" hereto and made a part hereof.
5.14 Environmental Matters: Except as disclosed on Exhibit "5.14"
---------------------
attached hereto and made a part hereof, Borrowers have no knowledge of the
presence of any Hazardous Substances on any of the real property where either
Borrower conducts operations or has its personal property, or of any spills,
releases, discharges or disposal of Hazardous Substances that have occurred, are
presently occurring on any other real property as a result of the conduct,
action or activities of either Borrower.
As used herein, the term "Hazardous Substances" means any substances
defined or designated as hazardous or toxic waste, hazardous or toxic material,
hazardous or toxic substance or similar term, by any environmental statute, rule
or regulation of any governmental entity presently in effect and applicable to
such real property.
5.15 Capital Stock: The authorized and outstanding shares of capital
-------------
stock of Borrowers are as set forth on Exhibit "5.15" attached hereto and made a
part hereof. All of the capital stock of Borrowers has been duly and validly
authorized and issued and is fully paid and non-assessable and has been sold and
delivered to the holders thereof in compliance with, or under valid exemption
from, all Federal and state laws and the rules and regulations of all regulatory
bodies thereof governing the sale and delivery of securities. Except for the
rights and obligations set forth in Exhibit "5.15", there are no subscriptions,
warrants, options, calls, commitments, rights or agreements by which a Borrower
or any of their shareholders is bound relating to the issuance, transfer, voting
or redemption of shares of its capital stock or any pre-emptive rights held by
any Person with respect to the shares of capital stock of such Borrower. Except
as set forth in Exhibit "5.15", Borrower has not issued any securities
convertible into or exchangeable for shares of its capital stock or any options,
warrants or other rights to acquire such shares or securities convertible into
or exchangeable for such shares.
5.16 Solvency: Borrowers on a consolidated basis are solvent, able to
--------
pay their debts as they become due, and have capital sufficient to carry on
their business and all business in which Borrowers are about to engage, and now
own Property having a value both at fair valuation and at present fair salable
value greater than the amount required to pay their debts. Borrowers will not
be
<PAGE>
rendered insolvent by the execution and delivery of this Agreement or any of the
other documents executed in connection with this Agreement or by the
transactions contemplated hereunder or thereunder.
5.17 Leases and Leased Property: Each Lease constituting Specific Lease
--------------------------
Collateral securing a Term Loan and the Leased Property associated therewith
shall, at all times when such Leases constitute Specific Lease Collateral, be in
compliance with all of the following representations:
(a) Each Lease is in substantially the same form as one of the forms
attached hereto as Exhibit "5.17", unless otherwise agreed to by Lender in
writing, and is genuine, based on contracts that are enforceable in accordance
with its terms against the Lessee and the Leased Property named and referenced
therein, constitutes the entire agreement for the leasing of the Leased Property
thereby covered, has not been altered or amended, except as set forth in the
related schedules, and Borrowers' Books and Records relating thereto are
accurate, complete and genuine;
(b) The sole original of each Lease has been delivered to Lender, and
any other originally signed counterparts of each Lease shall contain a legend
stating that the Lease has been assigned to PNC Bank, National Association,
pursuant to that certain Loan and Security Agreement dated May 9, 1997 or
contain similar language specifying that such counterpart is not an original for
"chattel paper" purposes under the UCC;
(c) Where the Lease consists of a Master Lease Agreement and specific
schedules which describe the terms of any specific items to be leased pursuant
to such schedule, the sole original schedule shall constitute the sole original
Lease, provided that the terms of the Master Lease Agreement and the schedule
make it clear that the sole original schedule is a separate lease for "Chattel
Paper" purposes under the UCC and that possession of such schedule constitutes
possession of "Chattel Paper" under the UCC;
(d) Except as otherwise consented to by Lender in writing, no more
than $250,000 of the Credit Facility is secured by Leases with the same Lessee
or affiliated entities;
(e) The original amount and unpaid balance of each Lease shown on
Borrowers' Books and Records and on any statement or schedule delivered to
Lender in connection therewith is the true and correct amount actually owed to
the designated Borrower, no portion of which, except as specifically provided
for in the Lease, has been prepaid;
<PAGE>
(f) The amount due under each Lease is not subject to, and the terms
of each Lease provide that the Lessee may not assert, any claim or reduction,
counterclaim, setoff, recoupment, or any other claim, allowance or adjustment
and no Lease has been re-negotiated, restructured or compromised;
(g) All security agreements, title retention instruments and other
documents and instruments which are security for any Lease, and/or each Lease
contain a correct and sufficient description of the Leased Property covered
thereby and all security interests granted therein to the designated Borrower
(either directly or as assignee), if applicable, subject to Section 5.17(o)
below, have been properly perfected and assigned to Lender;
(h) Neither Borrower has nor will it enter into any agreement with a
Lessee of any Leased Property which provides, directly or indirectly, for the
crediting of any obligation or liability of such Borrower to such Lessee against
future rentals accruing under the Lease;
(i) Each item of Leased Property has been delivered to and, in all
instances, accepted by the Lessee and has not been removed from service and is
in good condition, ordinary wear and tear accepted, has not been returned,
rejected, lost, stolen, destroyed or damaged;
(j) Each Lease has been duly executed by the designated Borrower (or,
as applicable, duly assigned to Borrower by a third party lessor) and each
Lessee, is a valid, legal and binding obligation of such Borrower, and such
Lessee, and is enforceable against such Borrower and such Lessee in accordance
with its terms. Such Borrower is the sole owner of each of the Leases and has
the authority to assign all of its right, title and interest therein upon the
terms herein set forth;
(k) Borrowers have made an adequate credit investigation of each
Lessee and approved each Lessee in accordance with their Credit Guidelines in
effect as of December 23, 1996, or any subsequent versions of such guidelines
which may be approved by Lender, and have determined that the credit is
satisfactory and Lender has approved the credit, following its own credit
review. Each Lease must be representative of Borrowers' overall lease portfolio
with regard to credit quality, equipment type, structure and yield, geographical
considerations, transaction size and vendor relationships;
(l) All costs, fees, and expenses incurred in making and closing each
of the Leases has been paid and each Lease is not more than 59 days
contractually past due and will be not more than thirty (30) days contractually
past due at the time of the
<PAGE>
assignment thereof to Lender, without giving effect to any De Minimis
Delinquency. No default exists or event exists which with the giving of notice
or the passage of time or both, will result in the occurrence of a default of
any obligation, as expressed in any Lease;
(m) All rentals, fees, costs, expenses and charges paid or payable by
the Lessee under any Lease, including without limitation, any brokerage and
other fees paid to a Borrower do not violate any laws relating to the maximum
fees, costs, expenses or charges that can be charged in any state under the laws
governing, or applicable to, such Lease, Leased Property or Lessee with respect
to those matters of law.
(n) Lender has a first perfected lien and security interest in all of
Borrowers' right, title and interest in and to the Collateral, including,
without limitation, each Lease, subject to no other Lien, it being understood
however, that in the event a Lease is not a "true lease," Borrowers' perfection
of their underlying security interest in the Leased Property is subject to the
filing exceptions set forth in Section 5.17(o) below. Each Borrower has taken
and in the future, shall take all steps necessary to maintain Lender's first
perfected lien and security interest in the Collateral, including, if required,
but subject to Section 5.17(o) below, perfecting such Borrower's security
interest (in the event the Lease is not a "true lease") through filing financing
statements, amendments thereto, or assignments and/or continuations thereof and
recording of the documentation necessary to perfect such Borrower's lien;
(o) For each Lease where the corresponding Leased Property has a cost
in excess of $25,000, Borrowers have filed such UCC financing statements
(listing the designated Borrower as secured party, Lessee as debtor, and such
Leased Property as collateral), in such locations as would be required by
applicable law (if such Borrower were a secured party and Lessee were a debtor)
in order to perfect a security interest in such Leased Property under the UCC or
otherwise, in favor of Lender, as such Borrower=s assignee; provided however,
that Borrowers shall not be required to file such financing statements if the
corresponding Lessee is an investment grade company with a rating of BBB or
higher as defined by Standard & Poor's Rating Service, and provided further that
the aggregate amount due under such Leases shall not exceed 10% of the Maximum
Credit Limit;
(p) For each item of Leased Property constituting Specific Lease
Collateral with an initial cost in excess of $100,000, Lender is named as
assignee on all UCC-1 Financing Statements so filed or Borrowers have delivered
a separate UCC-3
<PAGE>
Financing Statement assigning their interest to Lender to be filed by Lender;
(r) Each Lease is a Atriple net lease@ and is valid and enforceable
and presents the undisputed obligation of the Lessee named therein and is not
more than fifty-nine (59) days contractually past due, without giving effect to
any De Minimis Delinquency;
(s) Each item of Leased Property, with an initial cost in excess of
$50,000, has been insured in the ordinary course of Borrowers' or the
corresponding Lessee's business;
(t) Neither Borrower has received notice of a bankruptcy,
receivership, reorganization or insolvency of any Lessee;
(u) No Lessee is a governmental entity (unless Lender consents
otherwise in writing) or is a subsidiary or affiliate of either Borrower, or
under common control with either Borrower or is an officer or employee of
Borrowers;
(v) The Lessee is not otherwise in default under the corresponding
Lease; and
(w) No Lease provides for the lease of Leased Property, ownership of
which is evidenced by certificate of title.
5.18 Interrelatedness of Borrowers: The business operations of each
-----------------------------
Borrower are interrelated and complement one another, and such companies have a
common business purpose, with inter-company bookkeeping and accounting
adjustments used to separate their respective Properties, Liabilities, and
transactions. The proceeds of Loans under the Agreement will directly or
indirectly benefit each Borrower hereunder severally and jointly, regardless of
which Borrower requests or receives part or all of the proceeds of such Loans.
SECTION 6. BORROWER'S AFFIRMATIVE COVENANTS
Each Borrower covenants that until all of Borrowers' Obligations to Lender
are paid and satisfied in full and the Credit Facility has been terminated:
6.1 Payment of Taxes and Claims: Each Borrower shall pay, before they
---------------------------
become delinquent, all taxes, assessments and governmental charges or levies
imposed upon it or upon each Borrower's Property.
6.2 Maintenance of Insurance, Financial Records
--------------------------------------------
<PAGE>
and Corporate Existence:
-----------------------
(a) Property Insurance - Each Borrower shall maintain or caused to be
------------------
maintained fire, flood, casualty and such other hazard insurance in such
amounts, with such deductibles and with such insurers as are customarily used by
companies operating in the same industry as Borrowers or the corresponding
Lessee. At or prior to Closing, each Borrower shall furnish Lender with copies
of original policies of insurance certified as true and correct and being in
full force and effect as of the Closing Date or such other evidence of insurance
as Lender may require. In the event that either Borrower fails to procure or
cause to be procured any such insurance or to timely pay or cause to be paid the
premium(s) on any such insurance, Lender may with prior notice to Borrowers, do
so for such Borrower, but Borrowers shall continue to be liable for the same.
Such policies shall expressly provide that the requisite insurance cannot be
altered or canceled without thirty (30) days prior written notice to Lender.
Each Borrower further covenants that all insurance premiums owing under its
current casualty policy have been paid. Borrowers also agrees to notify Lender,
promptly, upon either Borrower's receipt of a notice of termination,
cancellation, or non-renewal from its insurance company of any such policy.
(b) Public Liability Insurance - Each Borrower shall maintain and
--------------------------
shall deliver to Lender upon Lender's request, evidence of public liability
insurance in such amounts as is customary for companies in the same or similar
businesses located in the same or similar area.
(c) Financial Records - Borrowers shall keep current and accurate
-----------------
books of records and accounts in which full and correct entries will be made of
all of its business transactions, and will reflect in its financial statements
adequate accruals and appropriations to reserves, all in accordance with GAAP.
Borrowers shall not change their respective fiscal year end date without the
prior written consent of Lender.
(d) Corporate Existence and Rights - Borrowers shall do (or cause to
------------------------------
be done) all things necessary to preserve and keep in full force and effect
their existence, good standing, rights and franchises.
(e) Compliance with Laws - Borrowers shall be in compliance with any
--------------------
and all laws, ordinances, governmental rules and regulations, and court or
administrative orders or decrees to which it is subject, whether federal, state
or local, (including without limitation environmental or environmental-related
laws, statutes, ordinances, rules, regulations and notices), and shall obtain
and maintain any and all licenses, permits, franchises or
<PAGE>
other governmental authorizations necessary to the ownership of their Property
or to the conduct of their businesses, which violation or failure to obtain may
materially adversely affect the business, Property, financial conditions or
prospects of either Borrower.
6.3 Business Conducted: Borrowers shall continue in the business
------------------
presently operated by them using their best efforts to maintain their customers
and goodwill. Neither Borrower shall engage, directly or indirectly, in any
material respect in any line of business substantially different from the
businesses conducted by them immediately prior to the Closing Date.
6.4 Litigation: Borrowers shall give prompt notice to Lender of any and
----------
all litigation claiming, in the aggregate, in excess of $250,000 from
Borrowers', or either of them, or which may otherwise have a material adverse
effect on the business, financial condition, Property or prospects of either
Borrower.
6.5 Taxes: Borrowers shall pay all taxes (other than taxes based upon
-----
or measured by Lender's income or revenues), if any, in connection with the
Loans and/or the recording of any financing statements or other Loan Documents.
The Obligations of Borrowers under this section shall survive the payment of
Borrowers' Obligations under this Agreement and the termination of this
Agreement. Borrowers shall cause to be paid all taxes incurred in connection
with any of the Leases or the acquisition, sale or lease of any of the Leased
Property.
6.6 Bank Accounts: Borrowers shall maintain a depository and a lockbox
-------------
account with Lender.
6.7 Employee Benefit Plans: Borrowers have funded all Pension Plan(s)
----------------------
in a manner that satisfies the minimum funding requirements of Section 302 of
ERISA and will (a) fund all such Pension Plan(s) in a manner that will satisfy
the minimum funding standards of Section 302 of ERISA, or will promptly satisfy
any accumulated funding deficiency that arises under Section 302 of ERISA, (b)
furnish Lender, promptly upon Lender's request of the same, with copies of all
reports or other statements filed with the United States Department of Labor,
the Pension Benefit Guaranty Corporation ("PBGC") or the Internal Revenue
Service ("IRS") with respect to all Pension Plan(s), or which either Borrower,
or any member of a Controlled Group, may receive from the United States
Department of Labor, the IRS or the PBGC, with respect to all such Pension
Plan(s), and (c) promptly advise Lender of the occurrence of any reportable
event (as defined in Section 4043 of ERISA, other than a reportable event for
which the thirty (30) day notice requirement has been waived by the PBGC) or
prohibited transaction (under Section 406 of ERISA or Section 4975 of the
Internal Revenue
<PAGE>
Code) with respect to any such Pension Plan(s) and the action which Borrowers
propose to take with respect thereto. Borrowers will make all contributions when
due with respect to any multi-employer pension plan in which they participate
and will promptly advise Lender (i) upon its receipt of notice of the assertion
against either Borrower of a claim for withdrawal liability, (ii) upon the
occurrence of any event which, to the best of Borrowers' knowledge, would
trigger the assertion of a claim for withdrawal liability against either
Borrower, and (iii) upon the occurrence of any event which, to the best of
Borrowers' knowledge, would place either Borrower in a Controlled Group as a
result of which any member (including either Borrower) thereof may be subject to
a claim for withdrawal liability, whether liquidated or contingent.
<PAGE>
6.8 Warranties for Future Advances: Each request by Borrowers for an
------------------------------
Advance under the Credit Facility in any form following the Closing Date shall
constitute an automatic representation and warranty by Borrowers to the effect
that:
(a) There has been no material adverse change in either Borrower's
operations or condition (financial or otherwise) since the date of delivery of
Borrowers' then most recent Financial Statements.
(b) No Event of Default which has not been cured or waived, or
Unmatured Event of Default, then exists;
(c) Each Advance is within and complies with the terms and conditions
of this Agreement including without limitation the notice provisions contained
in Section 2.3 hereof;
(d) No Lien, other than Permitted Liens, including, without
limitation, any federal tax Lien, has been imposed on either Borrower which may,
in any way, take priority over Lender's security interests in Liens or on any
Collateral; and
(e) Each representation and warranty set forth in Section 5 of this
Agreement is then true and correct in all material respects; provided that
Borrowers may update Exhibits "5.1", "5.3", "5.9", "5.10", "5.13", "5.14" and
"5.15" so that such Exhibits accurately reflect the state of Borrowers' affairs
as of the date of a request for an Advance by giving written notice thereof to
Lender, and further provided that such updated Exhibits do not reflect events or
conditions which constitute violations of Section 6 or 7 hereof or otherwise
reflect material adverse developments.
6.9 Financial Covenants: Borrowers shall maintain and comply with the
-------------------
following financial covenants as reflected on and computed from their Financial
Statements:
(a) Adjusted Debt to Tangible Net Worth Ratio: Borrowers shall have
-----------------------------------------
and maintain at all times an Adjusted Debt to Tangible Net Worth Ratio on a
consolidated basis, measured quarterly as of the last day of each fiscal
quarter, of not more than 6 to 1.
(b) Delinquency Rate: Borrowers shall have and maintain at all times
----------------
a Delinquency Rate (as defined below), measured monthly as of the last day of
each calendar month, of no greater than seven percent (7.0%) of the Net Lease
Receivables comprising of Borrowers' entire combined lease portfolio. "Net Lease
Receivables" shall mean the aggregate of the scheduled future lease payments
comprising of Borrowers' entire combined lease portfolio
<PAGE>
plus the estimated residual value of the personal property leased pursuant
thereto, plus indirect initial costs, less unearned lease income and allowance
for doubtful accounts. "Delinquency Rate" shall mean the percentage of
Borrowers' entire combined lease portfolio, expressed in dollars, relating to
leases which are more than thirty (30) days contractually delinquent, without
giving effect to any De Minimis Delinquency, expressed as a percentage of the
aggregate Net Lease Receivables.
(c) Net Income: Borrowers shall have and maintain Net Income on a
----------
consolidated basis, calculated on a rolling four quarter basis and measured
quarterly at the end of each fiscal quarter of not less than $1.00 provided that
Borrowers shall not permit a Net Loss to occur during any one fiscal quarter in
excess of $100,000.
(d) Bad Debt Reserve: Borrowers shall maintain a bad debt reserve of
----------------
at least 1.8% of the aggregate Net Lease Receivables.
6.10 Financial and Business Information: Borrowers shall deliver to Lender
----------------------------------
the following:
(a) Financial Statements and Collateral Reports: such data, reports,
-------------------------------------------
statements and information, financial or otherwise, as Lender may reasonably
request, including, without limitation:
(i) within ninety (90) days after the end of each fiscal year of
Borrowers, deliver to Lender, Financial Statements of Borrowers for such year
including the balance sheet of Borrowers as at the end of such fiscal year and a
statement of cash flows and income statement for such fiscal year, all on a
consolidated and consolidating basis, setting forth in the consolidated
statements in comparative form, the corresponding figures as at the end of and
for the previous fiscal year, all in reasonable detail, including all supporting
schedules, and audited and certified by independent public accountants of
recognized standing, selected by Borrowers and reasonably satisfactory to the
Lender, to have been prepared in accordance with GAAP, and such independent
public accountants shall also provide an unqualified opinion that the Financial
Statements present fairly the Borrowers' financial condition. Such independent
accountants shall also provide a statement certifying that nothing has come to
their attention to cause them to believe that calculations contained in the
compliance certificate are inaccurate.
(ii) within fifteen (15) days of the end of each calendar month,
deliver to Lender, Borrowers' receivables aging report which shall include an
aging summary of each Borrower's entire lease portfolio, including the Leases
and a complete aging
<PAGE>
report for all Leases pledged to Lender, along with a covenant compliance
certificate, and a report certifying that each Lease constituting Specific Lease
Collateral continues to be an Eligible Lease, or if this is not the case,
identifying those Leases which have become Defaulted Leases and what
arrangements have been made to prepay the corresponding Term Loan or substitute
the Defaulted Lease(s), as required by Section 2.7(c) above, and such other
reports as Lender reasonably deems necessary, certified by Borrowers' chief
financial officer as true and correct, all in form and substance reasonably
satisfactory to Lender; and
(iii) within forty-five (45) days after the end of each fiscal
quarter, deliver to Lender Borrowers' internally prepared quarterly consolidated
and consolidating Financial Statements, including balance sheet, income
statement and statements of cash flows.
(b) Notice of Event of Default - promptly upon becoming aware of the
--------------------------
existence of any condition or event which constitutes a default or an Event of
Default or Unmatured Event of Default under this Agreement, a written notice
specifying the nature and period of existence thereof and what action Borrowers
are taking (and propose to take) with respect thereto;
(c) Notice of Claimed Default - promptly upon receipt by either
-------------------------
Borrower, notice of default, oral or written, given to such Borrower by any
creditor for borrowed money; and
(d) Securities and Other Reports - if either Borrower shall be
----------------------------
required to file reports with the Securities and Exchange Commission, promptly
upon its becoming available, one copy of each financial statement, report,
notice or proxy statement sent by such Borrower to stockholders generally, and,
a copy of each regular or periodic report, and any registration statement, or
prospectus in respect thereof, filed by such Borrower with any securities
exchange or with federal or state securities and exchange commissions or any
successor agency.
6.11 Officers' Certificates: Along with the set of Financial Statements
----------------------
delivered to Lender at the end of each fiscal quarter and fiscal year pursuant
to Section 6.10(a) hereof, Borrowers shall deliver to Lender a certificate (in
the form of Exhibit "6.11" attached hereto and made a part hereof) from the
chief financial officer of Borrowers (and as to certificates accompanying the
annual statements of Borrowers, also certified by Borrowers' independent
certified public accountant) setting forth:
(a) Covenant Compliance - the information (including detailed
-------------------
calculations) required in order to establish whether Borrowers are in compliance
with the requirements of Sections 6.9
<PAGE>
as of the end of the period covered by the financial statements then being
furnished (and any exhibits appended thereto) under Section 6.10; and
(b) Event of Default - that the signer in his capacity as an officer
----------------
of Borrowers has reviewed the relevant terms of this Agreement, and has made (or
caused to be made under his supervision) a review of the transactions and
conditions of Borrowers from the beginning of the accounting period covered by
the Financial Statements being delivered therewith to the date of the
certificate, and that such review has not disclosed the existence during such
period of any condition or event which constitutes an Event of Default or
Unmatured Event of Default or if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action Borrowers
have taken or propose to take with respect thereto.
6.12 Inspection: Borrowers will permit any of Lender's officers or other
----------
representatives to visit and inspect any of Borrowers' locations or where any
Collateral is kept during regular business hours, to examine all of Borrowers'
books of account, records, reports and other papers, to make copies and extracts
therefrom and to discuss its affairs, finances and accounts with its officers,
employees and independent certified public accountants. All such inspections
(anticipated to be performed at least twice each year) shall be at Borrowers'
expense at the standard rates charged by Lender for such activities (plus
Lender's out-of-pocket expenses); provided, however, that prior to the
occurrence of an Event of Default or Unmatured Event of Default, Borrowers shall
not be responsible for fees and costs associated with the field examinations in
an amount in excess of $8,000 plus the actual out of pocket costs incurred, in
any one calendar year.
6.13 Tax Returns and Reports: At Lender's request from time to time,
-----------------------
Borrowers shall promptly furnish Lender with copies of the annual federal and
state income tax returns of Borrowers.
6.14 Material Adverse Developments: Borrowers agree that immediately
-----------------------------
upon becoming aware of any development or other information which would
reasonably be expected to materially and adversely affect their businesses,
financial condition, Property, prospects or its ability to perform under this
Agreement, they shall give to Lender telephonic or facsimile notice specifying
the nature of such development or information and such anticipated effect. In
addition, such verbal communication shall be confirmed by written notice thereof
to Lender on the next business day after such verbal notice is given.
6.15 Places of Business: Borrowers shall give thirty (30) days prior
------------------
written notice to Lender of any changes in the location of any of their
respective places of business, of the places where
<PAGE>
Books and Records are kept, or the establishment of any new, or the
discontinuance of any existing place of business.
6.16 Sale of Collateral: Borrowers shall mark their Books and Records
------------------
to indicate Lender's security interest in the Collateral, including the Leases
and Leased Property and, unless Lender consents otherwise in writing, a Borrower
shall retain title at all times to the Leased Property; provided however, that
so long as no Event of Default or Unmatured Event of Default has occurred,
Borrowers may, subject to the prepayment provisions set forth herein, sell
Leases and Leased Property. So long as no Event of Default or Unmatured Event
of Default has occurred, upon receipt of the proceeds (if required) from the
sale of such Leases and/or Leased Property, or upon a Lease having been paid-out
in full, Lender shall execute such documentation as is reasonably necessary to
release its security interest in such Leases and/or Lease Property and return
such original Lease(s) to Borrowers within twenty (20) days of their request
therefor.
SECTION 7. BORROWER'S NEGATIVE COVENANTS:
Each Borrower covenants that until all of Borrowers' Obligations to Lender
are paid and satisfied in full and the Credit Facility has been terminated,
that:
7.1 Merger, Consolidation, Dissolution or Liquidation:
-------------------------------------------------
(a) Borrowers shall not sell, lease, license, transfer or otherwise
dispose of its Property other than Property sold in the ordinary course or
ordinary operation of Borrower's business (which shall include sales in
conjunction with securitization transactions and other sales, transfers or
assignments arising in conjunction with financing transactions), without
Lender's prior written consent.
(b) Borrowers shall not merge or consolidate with, or acquire, any
other Person or commence a dissolution or liquidation unless (i) BankVest is the
surviving entity; and (ii) after giving effect to the transaction, the covenants
of the Loans Documents shall not be violated, including, without limitation,
those relating to leverage and management; and (iii) such merger or acquisition
shall be with a Person in the same or similar business as Borrowers.
Notwithstanding the above, nothing shall prohibit the merger of any subsidiary
of BankVest into BankVest or into another subsidiary.
7.2 Liens and Encumbrances: Borrowers shall not: (i) execute a negative
----------------------
pledge agreement with any Person covering any of the Collateral, or (ii) cause
or permit or agree or consent to cause or permit in the future (upon the
happening of a contingency or
<PAGE>
otherwise) the Collateral, whether now owned or hereafter acquired, to be
subject to a Lien other than the Lien of Lender hereunder.
7.3 Negative Pledge: Borrowers shall not pledge, grant or permit any
---------------
Lien to exist on the common stock of any Subsidiaries or any of their Affiliates
other than a Lien on the Stock of LeaseVest previously granted to First Bank of
Boston.
7.4 Transactions With Affiliates or Subsidiaries:
--------------------------------------------
(a) Borrowers shall not enter into any transaction with any
Subsidiary or other Affiliate including, without limitation, the purchase, sale,
lease or exchange of Property, or the loaning or giving of funds to any
Affiliate or any Subsidiary, unless (i) except for those transactions described
in Exhibit 7.4 hereto, such Subsidiary or Affiliate is engaged in a business
substantially related to the business conducted by Borrowers and the transaction
is in the ordinary course of and pursuant to the reasonable requirements of
Borrowers' business and upon terms substantially the same and no less favorable
to Borrowers as it would obtain in a comparable arm's-length transactions with
any Person not an Affiliate or a Subsidiary, and (ii) so long as such
transaction is not prohibited hereunder.
(b) Subject in any event to the limitations of Section 7.4(a) above,
Borrowers shall not create or acquire any Subsidiary unless such Subsidiary
engages in a business substantially related to the business of Borrowers as
conducted immediately prior to the Closing Date.
7.5 Guarantees: Excepting the endorsement in the ordinary course of
----------
business of negotiable instruments for deposit or collection and the guaranty of
the liabilities described in Exhibit A5.10" hereto, neither Borrower shall
become or be liable, directly or indirectly, primary or secondary, matured or
contingent, in any manner, whether as guarantor, surety, accommodation maker, or
otherwise, for the existing or future indebtedness of any kind of any other
Person other than a Borrower hereunder.
7.6 Distributions, Redemptions and Other Indebtedness: Borrowers shall
-------------------------------------------------
not declare or pay or make any forms of Distribution other than Distributions in
the form of stock of BankVest, provided, however, that prior to the occurrence
of an Unmatured Event of Default or an Event of Default, BankVest may make cash
Distributions to its shareholders in an amount not to exceed 30% of Borrowers'
Net Income; provided further that notwithstanding the foregoing, nothing herein
shall prohibit Distributions from any subsidiary of BankVest to BankVest, or
Distributions required pursuant to that certain Agreement dated May
<PAGE>
30, 1996 by and among BankVest, Primus Capital Fund III Limited Partnership and
PNC Venture Capital Corporation.
7.7 Use of Lender's Name: Borrowers shall not use Lender's name (or the
--------------------
name of any of Lender's Affiliates) in connection with any of its business
operations except to identify the existence of the Credit Facility. Nothing
herein contained is intended to permit or authorize Borrowers to make any
contract on behalf of Lender.
7.8 Change of Ownership Interests/Change in Management: BankVest shall
--------------------------------------------------
continue to own 100% of the voting stock of LeaseVest and Paul Gass and John
Colton will, at all times, remain as President and Executive Vice President
respectively of Borrowers and shall continue to own at least 23% of the
aggregate voting interest of all classes of capital stock of BankVest.
7.9 Loans and Investments: Borrowers shall not have outstanding any
---------------------
loans, advances, extensions of credit or capital contributions to or investments
in any Person(s) in an aggregate amount in excess of $300,000, except as made in
the ordinary course of Borrowers' business.
SECTION 8. DEFAULT
8.1 Events of Default: Each of the following events shall constitute an
-----------------
event of default ("Event of Default") and Lender shall thereupon have the option
to declare the Obligations immediately due and payable, all without demand,
notice, presentment or protest or further action of any kind (it also being
understood that the occurrence of any of the events or conditions set forth in
subparagraphs (j), (k) or (l) shall automatically cause an acceleration of the
Obligations):
(a) Payments - if Borrowers fail to make any payment of principal or
--------
interest on the date when such payment is due and payable, whether upon
maturity, acceleration, demand or otherwise; or
(b) Other Charges - if Borrowers fail to pay any other charges,
-------------
fees, Expenses or other monetary obligations owing to Lender arising out of or
incurred in connection with this Agreement on the date when such payment is due
and payable, whether upon maturity, acceleration, demand or otherwise; or
(c) Particular Covenant Defaults - if Borrowers, or either of them,
----------------------------
fail to perform, comply with or observe any covenant or undertaking contained in
this Agreement; provided however, that solely with respect to those covenants
contained in
<PAGE>
Sections 6.1, 6.2, 6.5, 6.7, 6.9(d), 6.10 and 6.11, Borrowers shall have 10 days
from the date of such failure, to comply with or observe such covenant; or
(d) Financial Information - if any statement, report, financial
---------------------
statement, or certificate made or delivered by Borrowers or either of them, or
any of their officers, employees or agents, to Lender is not true and correct,
in all material respects, when made; or
(e) Uninsured Loss - if there shall occur any uninsured damage to or
--------------
loss, theft, or destruction in excess of $250,000 with respect to any portion of
any Collateral; or
(f) Warranties or Representations - if any warranty, representation
-----------------------------
or other statement by or on behalf of Borrowers, or either of them, contained in
or pursuant to this Agreement, or in any document, agreement or instrument
furnished in compliance with, relating to, or in reference to this Agreement, is
false, erroneous, or misleading in any material respect when made; or
(g) Agreements with Others - if Borrowers, or either of them, shall
----------------------
default beyond any grace period under any agreement with any creditor for
borrowed money in excess of $250,000, and (i) such default consists of the
failure to pay any principal, premium or interest with respect to such
indebtedness or (ii) such default consists of the failure to perform any
covenant or agreement with respect to such indebtedness, if the effect of such
default is to cause such Borrower's obligations which are the subject thereof to
become due prior to its maturity date or prior to its regularly scheduled date
of payment; or
(h) Other Agreements with Lender - if Borrowers, or either of them,
----------------------------
breach or violate the terms of, or if a default or an event of default, occurs
under, any other existing or future agreement (related or unrelated) between or
among Borrowers, or either of them, and Lender; or
(i) Judgments - if any final judgment for the payment of money in
---------
excess of $250,000 which is not fully and unconditionally covered by insurance
or for which Borrowers have not established a cash or cash equivalent reserve in
the amount of such judgment shall be rendered; or
(j) Assignment for Benefit of Creditors, etc. - if either Borrower
----------------------------------------
makes or proposes an assignment for the benefit of creditors generally, offers a
composition or extension to creditors, or makes or sends notice of an intended
bulk sale of any business or assets now or hereafter owned or conducted by such
<PAGE>
Borrower which might materially and adversely affect such Borrower; or
(k) Bankruptcy, Dissolution, etc. - upon the commencement of any
----------------------------
action for the dissolution or liquidation of either Borrower, or the
commencement of any proceeding to avoid any transaction entered into by either
Borrower, or the commencement of any case or proceeding for reorganization or
liquidation of either Borrower's debts under the Bankruptcy Code or any other
state or federal law, now or hereafter enacted for the relief of debtors,
whether instituted by or against such Borrower; provided, however, that such
Borrower shall have forty-five (45) days to obtain the dismissal or discharge of
involuntary proceedings filed against it, it being understood that during such
forty-five (45) day period, Lender shall not be obligated to make Advances
hereunder and Lender may seek adequate protection in any bankruptcy proceeding;
or
(l) Receiver - upon the appointment of a receiver, liquidator,
--------
custodian, trustee or similar official or fiduciary for either Borrower or for
any of either Borrower's Property; or
(m) Execution Process, Seizure, etc. - the issuance of any execution
-------------------------------
or distraint process against either Borrower, or any Property of either
Borrower is seized by any governmental entity, federal, state or local; or
(n) Termination of Business - if Borrowers cease any material
-----------------------
portion of their business operations as presently conducted; or
(o) Pension Benefits, etc. - if Borrowers fail to comply with ERISA,
----------------------
so that grounds exist to permit the appointment of a trustee under ERISA to
administer Borrowers' employee plans or to allow the Pension Benefit Guaranty
Corporation to institute proceedings to appoint a trustee to administer such
plan(s), or to permit the entry of a Lien to secure any deficiency or claim; or
(p) Investigations - any indication or evidence received by Lender
--------------
that reasonably leads it to believe either Borrower may have directly or
indirectly been engaged in any type of activity which, would be reasonably
likely to result in the forfeiture of any Property of Borrowers, or either of
them, to any governmental entity, federal, state or local.
8.2 Cure - Nothing contained in this Agreement or the Loan Documents
----
shall be deemed to compel Lender to accept a cure of any Event of Default
hereunder.
<PAGE>
8.3 Rights and Remedies on Default:
------------------------------
(a) In addition to all other rights, options and remedies granted or
available to Lender under this Agreement or the Loan Documents, or otherwise
available at law or in equity, upon or at any time the occurrence and during the
continuance of an Event of Default or Unmatured Event of Default, Lender may, in
its discretion and without effecting the otherwise discretionary nature of the
Credit Facility, withhold or cease making Advances under the Credit Facility.
(b) In addition to all other rights, options and remedies granted or
available to Lender under this Agreement or the Loan Documents (each of which is
also then exercisable by Lender), Lender may, in its discretion, upon or at any
time after the occurrence and during the continuance of an Event of Default,
terminate the Credit Facility.
(c) In addition to all other rights, options and remedies granted or
available to Lender under this Agreement or the Loan Documents (each of which is
also then exercisable by Lender), Lender may, upon or at any time after the
occurrence of an Event of Default, exercise all rights under the UCC and any
other applicable law or in equity, and under all Loan Documents permitted to be
exercised after the occurrence of an Event of Default, including the following
rights and remedies (which list is given by way of example and is not intended
to be an exhaustive list of all such rights and remedies):
(i) The right to take possession of, and notify all Lessees of
the Lender's security interest in the Collateral and require payment under the
Leases to be made directly to Lender, and Lender may, in its own name or in the
name of either Borrower, exercise all rights of lessor under the Leases and
collect, sue for and receive payment on all Leases, and settle, compromise and
adjust the same on any terms as may be satisfactory to Lender, in its sole and
absolute discretion for any reason or without reason and Lender may do all of
the foregoing with or without judicial process (including without limitation
notifying the United States postal authorities to redirect mail addressed to
Borrowers, or either of them, to an address designated by Lender); or
(ii) By its own means or with judicial assistance, subject to
the rights of the Lessees, enter Borrowers' premises or location of Collateral
and take possession of the Collateral, or render it unusable, or dispose of the
Collateral on such premises in compliance with subsection (e) below, without any
liability for rent, storage, utilities or other sums, and Borrowers shall not
resist or interfere with such action; or
<PAGE>
(iii) Require Borrowers at Borrowers' expense, subject to the
rights of the Lessees, to assemble all or any part of the Collateral and make it
available to Lender at any place designated by Lender; or
(iv) The right to reduce or modify the Maximum Credit Limit or
the Advance Rates or to modify the terms and conditions upon which Lender may be
willing to consider making Advances under the Credit Facility.
(e) Each Borrower hereby agrees that a notice received by it at
least ten (10) days before the time of any intended public sale or of the time
after which any private sale or other disposition of the Collateral is to be
made, shall be deemed to be reasonable notice of such sale or other disposition.
If permitted by applicable law, any Collateral which threatens to speedily
decline in value or which is sold on a recognized market may be sold immediately
by Lender without prior notice to such Borrower. Each Borrower covenants and
agrees not to interfere with or impose any obstacle to Lender's exercise of its
rights and remedies with respect to the Collateral, after the occurrence of an
Event of Default hereunder.
8.4 Nature of Remedies: All rights and remedies granted Lender hereunder
------------------
and under the Loan Documents, or otherwise available at law or in equity, shall
be deemed concurrent and cumulative, and not alternative remedies, and Lender
may proceed with any number of remedies at the same time until all Obligations
are satisfied in full. The exercise of any one right or remedy shall not be
deemed a waiver or release of any other right or remedy, and Lender, upon or at
any time after the occurrence of an Event of Default, may proceed against
Borrowers, or either of them, at any time, under any agreement, with any
available remedy and in any order.
8.5 Set-Off: Subject to the terms of that certain Lockbox Service
-------
Agreement dated as of September 30, 1996, if any bank account of Borrowers, or
either of them, with Lender, or any participant is attached or otherwise liened
or levied upon by any third party, Lender (and such participant) shall have and
be deemed to have, without notice to Borrowers, the immediate right of set-off
and may apply the funds or amount thus set-off against any of Borrowers'
Obligations hereunder.
SECTION 9. MISCELLANEOUS
9.1 GOVERNING LAW: THIS AGREEMENT, AND ALL RELATED AGREEMENTS AND
-------------
DOCUMENTS, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE
LAWS OF THE COMMONWEALTH OF PENNSYLVANIA. THE PROVISIONS OF THIS AGREEMENT, THE
OTHER LOAN
<PAGE>
DOCUMENTS AND ALL OTHER AGREEMENTS AND DOCUMENTS REFERRED TO HEREIN ARE TO BE
DEEMED SEVERABLE, AND THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION SHALL
NOT AFFECT OR IMPAIR THE REMAINING PROVISIONS WHICH SHALL CONTINUE IN FULL FORCE
AND EFFECT.
9.2 Integrated Agreement: All Term Notes, the other Loan Documents, all
--------------------
related agreements, and this Agreement shall be construed as integrated and
complementary of each other, and as augmenting and not restricting Lender's
rights and remedies. If, after applying the foregoing, an inconsistency still
exists, the provisions of this Agreement shall constitute an amendment thereto
and shall control.
9.3 Waiver:
------
(a) No omission or delay by Lender in exercising any right or power
under this Agreement or any related agreements and documents will impair such
right or power or be construed to be a waiver of any default, or Event of
Default or an acquiescence therein, and any single or partial exercise of any
such right or power will not preclude other or further exercise thereof or the
exercise of any other right, and as to each Borrower no waiver will be valid
unless in writing and signed by Lender and then only to the extent specified.
(b) Borrowers release and shall indemnify, defend and hold harmless
Lender, and its respective officers, employees and agents, of and from any
claims, demands, liabilities, obligations, judgments, injuries, losses, damages
and costs and expenses (including, without limitation, reasonable legal fees)
resulting from (i) acts or conduct of Borrowers, or either of them, or under,
pursuant or related to this Agreement and the other Loan Documents, (ii)
Borrowers' breach or violation of any representation, warranty, covenant or
undertaking contained in this Agreement or the other Loan Documents, and (iii)
Borrowers' failure to comply with any or all laws, statutes, ordinances,
governmental rules, regulations or standards, whether federal, state or local,
or court or administrative orders or decrees, (including without limitation
environmental laws, etc.) and all costs, expenses, fines, penalties or other
damages resulting therefrom, unless resulting from acts or conduct of Lender
constituting willful misconduct or gross negligence.
9.4 Time: Whenever Borrowers shall be required to make any payment, or
----
perform any act, on a day which is not a Business Day, such payment may be made,
or such act may be performed, on the next succeeding Business Day. Time is of
the essence in Borrowers' performance under all provisions of this Agreement and
all related agreements and documents.
<PAGE>
9.5 Expenses of Lender: At Closing and from time to time thereafter,
------------------
Borrowers will pay all expenses of Lender on demand (including, without
limitation, search costs, audit fees, appraisal fees, environmental fees and the
fees and expenses of legal counsel for Lender) relating to this Agreement, and
all related agreements and documents, including, without limitation, expenses
incurred in the analysis, negotiation, preparation, closing, administration and
enforcement of this Agreement and the other Loan Documents, the enforcement,
protection and defense of the rights of Lender in and to the Loans and
Collateral or otherwise hereunder, and any reasonable expenses relating to
extensions, amendments, waivers or consents pursuant to the provisions hereof,
or any related agreements and documents or relating to agreements with other
creditors, or termination of this Agreement (collectively, the "Expenses");
provided, however, that Borrowers shall not be responsible for Expenses incurred
with the negotiation and preparation of this Agreement through the Closing Date,
in excess of $12,000.
9.6 Brokerage: This transaction was brought about and entered into by
---------
Lender and Borrowers acting as principals and without any brokers, agents or
finders being the effective procuring cause hereof. Borrowers represent that
neither of them have committed Lender to the payment of any brokerage fee,
commission or charge in connection with this transaction. If any such claim is
made on Lender by any broker, finder or agent or other person, Borrowers hereby
indemnify, defend and hold harmless Lender against such claim and further will
defend, with counsel satisfactory to Lender, any action or actions to recover on
such claim, at Borrowers' own cost and expense, including Lender's reasonable
counsel fees. Borrowers further agree that until any such claim or demand is
adjudicated in Lender's favor, the amount demanded shall be deemed an Obligation
of Borrowers under this Agreement.
9.7 Notices:
-------
(a) Any notices or consents required or permitted by this Agreement
shall be in writing and shall be deemed given if delivered in person or if sent
by telecopy or by nationally recognized overnight courier, or via first class,
Certified or Registered mail, postage prepaid, as follows, unless such address
is changed by written notice hereunder:
<PAGE>
If to Lender to: PNC Bank, National Association
Lease Finance Group
1600 Market Street, 31st Floor
Philadelphia, PA 19103
Attn: Sandra L. McCollum
Assistant Vice President
Telecopy No.: 215/585-4769
With copies to: Blank Rome Comisky & McCauley
Four Penn Center Plaza
Philadelphia, PA 19103
Attn: Mark I. Rabinowitz, Esquire
Telecopy No.: 215/569-5555
If to Borrowers to: BankVest Capital Corp.
114 Turnpike Road
Westboro, MA 01581
Attn: Paul Gass, President
Telecopy No.: 508/870-0260
With copies to: Goldstein & Manello, P.C.
265 Franklin Street
Boston, MA 02110-3192
Attn: Richard J. Snyder
Telecopy No.: 617/946-8118
(b) Any notice sent by Lender or Borrowers by any of the above
methods shall be deemed to be given when so received.
(c) Lender shall be fully entitled to rely upon any facsimile
transmission or other writing purported to be sent by any Authorized Officer
(whether requesting an Advance or otherwise) as being genuine and authorized.
9.8 Headings: The headings of any paragraph or Section of this
--------
Agreement are for convenience only and shall not be used to interpret any
provision of this Agreement.
9.9 Survival: All warranties, representations, and covenants made by
--------
Borrowers, or either of them, herein, or in any agreement referred to herein or
on any certificate, document or other instrument delivered by it or on its
behalf under this Agreement, shall be considered to have been relied upon by
Lender, and shall survive the delivery to Lender of any and all Notes,
regardless of any investigation made by Lender or on its behalf. All statements
in any such certificate or other instrument prepared and/or delivered for the
benefit of Lender shall constitute warranties and representations by Borrowers
hereunder. Except as otherwise expressly provided herein, all covenants made by
Borrowers, or either of
<PAGE>
them, hereunder or under any other agreement or instrument shall be deemed
continuing until all Obligations are satisfied in full.
9.10 Successors and Assigns: This Agreement shall inure to the benefit of
----------------------
and be binding upon the successors and assigns of each of the parties.
Borrowers may not transfer, assign or delegate any of their duties or
obligations hereunder.
9.11 Duplicate Originals: Two or more duplicate originals of this
-------------------
Agreement may be signed by the parties, each of which shall be an original but
all of which together shall constitute one and the same instrument. This
Agreement may be executed in counterparts, all of which counterparts taken
together shall constitute one completed fully executed document.
9.12 Modification: No modification hereof or any agreement referred to
------------
herein shall be binding or enforceable unless in writing and signed by Borrowers
and Lender.
9.13 Signatories: Each individual signatory hereto represents and
-----------
warrants that he is duly authorized to execute this Agreement on behalf of his
principal and that he executes the Agreement in such capacity and not as a
party.
9.14 Third Parties: No rights are intended to be created hereunder, or
-------------
under any related agreements or documents for the benefit of any third party
donee, creditor or incidental beneficiary of Borrowers, or either of them.
Nothing contained in this Agreement shall be construed as a delegation to Lender
of Borrowers' duty of performance, including, without limitation, a Borrower's
duties under any Lease, account or contract with any other Person.
9.15 Discharge of Taxes, Borrower's Obligations, Etc.: Lender, in its
------------------------------------------------
sole discretion, shall have the right at any time, and from time to time, with
prior notice to Borrowers, if Borrowers fail to do so five (5) Business Days
after requested in writing to do so by Lender, to: (a) pay for the performance
of any of Borrowers' Obligations hereunder, and (b) discharge taxes or Liens, at
any time levied or placed on any of either Borrower's Property in violation of
this Agreement unless such Borrower is in good faith with due diligence by
appropriate proceedings contesting such taxes or Liens and maintaining proper
reserves therefor in accordance with GAAP. Expenses and advances shall be
deemed Advances hereunder and shall bear interest at the highest Applicable Rate
applied to any Term Loan until reimbursed to Lender. Such payments and advances
made by Lender shall not be construed as a waiver by Lender of an Event of
Default under this Agreement.
<PAGE>
9.16 Consent to Jurisdiction: Each Borrower and Lender hereby irrevocably
-----------------------
consent to the jurisdiction of the Courts of Common Pleas of Philadelphia,
Commonwealth of Pennsylvania or the United States District Court for the Eastern
District of Pennsylvania in any and all actions and proceedings whether arising
hereunder or under any other agreement or undertaking. Each Borrower
irrevocably agrees to service of process by certified mail, return receipt
requested to the address of the appropriate party set forth herein.
9.17 Waiver of Jury Trial: EACH BORROWER AND LENDER HEREBY WAIVE ANY AND
--------------------
ALL RIGHTS IT MAY HAVE TO A JURY TRIAL IN CONNECTION WITH ANY LITIGATION
COMMENCED BY OR AGAINST LENDER WITH RESPECT TO RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO OR UNDER THE LOAN DOCUMENTS .
9.18 Information to Participant: Lender may divulge to any participant,
--------------------------
co-lender or assignee or prospective participant,
<PAGE>
co-lender or assignee it may obtain in the Credit Facility, or any portion
thereof, all information, and furnish to such Person copies of any reports,
financial statements, certificates, and documents obtained under any provision
of this Agreement, or related agreements and documents.
9.19 Obligations Joint and Several: All Obligations of Borrowers
-----------------------------
hereunder and under the Loan Documents are joint and several.
IN WITNESS WHEREOF, the undersigned parties have executed this Agreement
the day and year first above written.
BORROWERS:
BANKVEST CAPITAL CORP.
By:________________________________
Title:
Attest:____________________________
(Corporate Seal)
LEASEVEST CAPITAL CORP.
By:________________________________
Title:
Attest:____________________________
(Corporate Seal)
LENDER:
PNC BANK, NATIONAL ASSOCIATION
By:________________________________
Title:
<PAGE>
TERM NOTE
---------
$_______________ Philadelphia, PA
____________, 199_
FOR VALUE RECEIVED and intending to be legally bound, the undersigned,
BankVest Capital Corp. and LeaseVest Capital Corp. (collectively, the
"Borrowers" and individually, each a "Borrower"), each with a place of business
at 114 Turnpike Road, Westboro, Massachusetts 01581, jointly and severally
promise to pay, in lawful money of the United States, to the order of PNC Bank,
National Association. ("Lender"), at Lender's offices at 1600 Market Street,
31st Floor, Philadelphia, Pennsylvania, 19103, the sum of __________________
($____________) Dollars in __________ (___) consecutive monthly installments of
principal of $_______________ each plus interest as set forth in the repayment
schedule in Exhibit A (attached hereto and made a part hereof), commencing on
the _______ day of the month immediately following the date of this Note and on
the ______ day of each month thereafter with a final payment of the entire
outstanding principal balance of the Loan and all accrued but unpaid interest,
fees, costs and expenses due on ______. The actual amount due and owing from
time to time hereunder shall be evidenced by Lender's records of disbursements
and receipts with respect to the Loan which shall be conclusive evidence of such
amount.
Interest shall accrue on the unpaid principal amount outstanding hereunder
from time to time at the per annum rate equal to ___________________
("Applicable Rate"). Interest shall be calculated on a basis of a year of 360
days but computed for the actual number of days elapsed. After the occurrence of
an Event of Default (as defined in the Loan Agreement) such rate shall be
increased to a per annum rate equal to two (2%) percent in excess of the
Applicable Rate. In no event shall the amount of interest paid or agreed to be
paid to Lender hereunder exceed the highest lawful rate permissible under any
law which a court of competent jurisdiction may deem applicable hereto. In such
event, the interest rate shall automatically be reduced to the maximum rate
permitted by such law and Lender shall apply any such excess first to principal,
in the inverse order of maturity and then to any remaining Obligation in such
order as Lender may determine.
This Term Note is one of the Notes referred to in the Loan and Security
Agreement dated May 9, 1997 between Borrowers and Lender (as it may hereafter be
supplemented, amended, extended, or replaced from time to time, the "Loan
Agreement"). This Term Note ("Note") shall evidence Borrowers' absolute and
<PAGE>
unconditional obligation to repay all sums advanced by Lender pursuant to this
Note. If Borrowers fail to make any payment hereunder when due or if an Event of
Default occurs under the Loan Documents, Lender may declare Borrowers in default
hereunder and declare the unpaid principal balance of this Note to be
immediately due and payable. Lender shall thereupon have the option at any time
and from time to time to exercise all rights and remedies set forth herein, and
in the other Loan Documents, as well as all rights and remedies otherwise
available to Lender at law or in equity, to collect the unpaid indebtedness
hereunder and thereunder. This Note is secured by the Collateral described in
the Loan Agreement.
This Note may be prepaid only in accordance with the terms and conditions
of the Loan Agreement.
Each Borrower hereby waives presentment for payment, protest, demand,
notice of nonpayment or dishonor and all other notices (except as specifically
set forth in the Loan Agreement) in connection with the delivery, acceptance,
performance or enforcement of this Note. Any failure or delay of Lender to
exercise any right hereunder shall not be construed as a waiver of the right to
exercise the same or any other right at any other time or times. The waiver by
Lender of a breach or default of any provision of this Note shall not operate or
be construed as a waiver of any subsequent breach or default thereof. Borrowers
agree to reimburse Lender for all Expenses, including, without limitation,
attorneys' fees, incurred by Lender to enforce the provisions of this Note, to
protect, preserve and defend Lender's rights under the Loan Agreement, and
collect Borrowers' Obligations hereunder as described in the Loan Agreement.
Notwithstanding the entry of any judgment under this Note, the unpaid
principal balance under this Note shall continue to bear interest at the
applicable rate set forth above.
This Note shall be construed and governed by the laws of the Commonwealth
of Pennsylvania, without regard to its otherwise applicable principles of
conflict of laws. The provisions of this Note are joint and severable and the
invalidity or unenforceability of any provision shall not alter or impair the
remaining provisions of this Note. All capitalized terms not otherwise defined
herein shall have the respective meanings as set forth in the Loan Agreement.
JURY TRIAL IS WAIVED BY EACH BORROWER IN CONNECTION WITH ANY CONTROVERSY OR
PROCEEDING INVOLVING THE RIGHTS OF THE PARTIES TO THIS NOTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE.
2
<PAGE>
IN WITNESS WHEREOF, and intending to be legally bound hereby, Borrowers
have executed these presents the day and year first above written.
BANKVEST CAPITAL CORP.
Attest:____________________ By:______________________________
LEASEVEST CAPITAL CORP.
Attest:____________________ By: _____________________________
3
<PAGE>
EXHIBIT 10.33
REVOLVING CREDIT AGREEMENT
--------------------------
dated as of September 12, 1996
among
BANKVEST CAPITAL CORP.
and
LEASEVEST CAPITAL CORP.,
as the Borrowers
and
THE FIRST NATIONAL BANK OF BOSTON,
as the Bank
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
1. DEFINITIONS.............................................................. 1
2. REVOLVING CREDIT FACILITY................................................ 11
2.1. Commitment to Lend............................................... 11
2.2. Requests for Revolving Credit Loans.............................. 11
2.2.1. Loan Requests........................................... 11
2.2.2. Revolving Credit Note................................... 11
2.3. Conversion Options............................................... 12
2.3.1. Conversion to Different Type of Revolving Credit Loan... 12
2.3.2. Continuation of Type of Revolving Credit Loan........... 12
2.3.3. Eurodollar Rate Loans................................... 12
2.4. Interest......................................................... 13
2.5. Repayments and Prepayments....................................... 13
2.6. Extension of Maturity Date....................................... 13
3. CHANGES IN CIRCUMSTANCES, ETC............................................ 14
3.1. Inability to Determine Eurodollar Rate........................... 14
3.2. Illegality....................................................... 14
3.3. Change in Circumstances.......................................... 14
3.4. Capital Adequacy................................................. 15
3.5. Certificate...................................................... 15
3.6. Indemnity........................................................ 16
3.7. Interest after Event of Default.................................. 16
3.8. Concerning Joint and Several Liability of the Borrowers.......... 16
4. FEES AND PAYMENTS........................................................ 20
5. SECURITY................................................................. 20
6. REPRESENTATIONS AND WARRANTIES........................................... 21
7. CONDITIONS PRECEDENT..................................................... 26
7.1. Conditions to Initial Revolving Credit Loans..................... 26
7.2. Conditions to All Borrowings..................................... 28
8. COVENANTS................................................................ 28
8.1. Affirmative Covenants............................................ 28
8.2. Negative Covenants............................................... 30
8.3. Financial Covenants.............................................. 32
9. EVENTS OF DEFAULT; ACCELERATION.......................................... 33
10. SETOFF.................................................................. 35
11. MISCELLANEOUS........................................................... 35
</TABLE>
<PAGE>
EXHIBITS AND SCHEDULES
Exhibit A Form of Revolving Credit Note
Exhibit B Form of Borrowing Base Report
Exhibit C Form of Compliance Certificate
Exhibit D Form of Lease Receivable Designation Certificate
Exhibit E Form of Designated Lease Receivables Released Report
Schedule 8.2(a) Existing Indebtedness
<PAGE>
REVOLVING CREDIT AGREEMENT
--------------------------
This REVOLVING CREDIT AGREEMENT (this "Agreement") is made as of September
12, 1996, by and among BANKVEST CAPITAL CORP. ("BankVest" or a "Borrower"), a
Massachusetts corporation having its principal place of business at 114 Turnpike
Road, Westboro, MA 01581, LEASEVEST CAPITAL CORP. ("LeaseVest" or a "Borrower"
and, together with BankVest, the "Borrowers"), a Massachusetts corporation
having its principal place of business at 114 Turnpike Road, Westboro, MA 01581
and THE FIRST NATIONAL BANK OF BOSTON (the "Bank"), a national banking
association with its head office at 100 Federal Street, Boston, Massachusetts
02110.
1. DEFINITIONS.
-----------
Certain capitalized terms are defined below:
Acquisition Cost: All costs and expenses incurred by the Borrowers in
----------------
connection with the acquisition of any Eligible Equipment, including, without
limitation, sales or use taxes, freight or installation costs, and license fees,
minus any down payments made by the Lessee and holdbacks to vendors.
Affiliate: Any Person that would be considered to be an affiliate of
---------
either of the Borrowers under Rule 144(a) of the Rules and Regulations of the
Securities and Exchange Commission, as in effect on the date hereof, if such
Borrower were issuing securities.
Agreement: See preamble, which term shall include this Agreement and the
---------
Schedules and Exhibits hereto, all as amended and in effect from time to time.
Applicable Maturity Date: See (S)2.6.
------------------------
Backup Servicer Agreement: The Backup Servicing Agreement dated as of July
-------------------------
1, 1996, among BankVest, Parrish and NorWest, in the form delivered to the Bank
on or prior to the Closing Date.
Bank: See preamble.
----
Base Rate: The higher of (i) the annual rate of interest announced from
---------
time to time by the Bank at its head office as the Bank's "base rate" and (ii)
one-half of one percent (1/2%) above the Federal Funds Effective Rate.
Base Rate Loans: Revolving Credit Loans bearing interest calculated by
---------------
reference to the Base Rate.
<PAGE>
-2-
BKB Account: The account with the Lockbox Bank under the sole dominion and
-----------
control of the Bank into which all proceeds of Collateral are transferred,
maintained in accordance with the Receivables Collection Agreement.
Borrowers: See preamble.
---------
Borrowing Base: At the relevant time of reference thereto, an amount
--------------
determined by the Bank by reference to the most recent Borrowing Base Report
delivered to the Bank pursuant to (S)8.1(a), which is equal to the lesser of (a)
90% of the net present value (calculated at a discount rate of the weighted
average interest rate of the Revolving Credit Loans, at the relevant time of
reference thereto, plus 1%) of Eligible Lease Receivables and (b) 100% of the
----
aggregate Acquisition Cost to the Borrowers of the underlying Equipment in
respect of Eligible Lease Receivables.
Borrowing Base Report: A report with respect to the Borrowers' Borrowing
---------------------
Base in substantially the form attached hereto as Exhibit B.
------- -
Business Day: Any day on which banks in Boston, Massachusetts, are open
------------
for business generally and, in the case of Eurodollar Rate Loans, also a day
which is a Eurodollar Business Day.
Capitalized Leases: Leases under which BankVest or any of its Subsidiaries
------------------
is the lessee or obligor, the discounted future rental payment obligations under
which are required to be capitalized on the balance sheet of such lessee or
obligor in accordance with GAAP.
Charter Documents: In respect of any entity, the certificate or articles
-----------------
of incorporation or organization and the by-laws of such entity, or other
constitutive documents of such entity.
Closing Date: The first date on which the conditions set forth in (S)7
------------
have been satisfied.
Collateral: All of the property, rights and assets of the Borrowers and
----------
their Subsidiaries that are or are intended to be subject to the security
interests created by the Security Documents.
Commercial Finance Examination: An examination by employees, agents or
------------------------------
consultants of the Bank of the assets of BankVest and its Subsidiaries which,
without limiting the generality of the foregoing, may include a review of
BankVest's books and records and the books and records of BankVest's
Subsidiaries.
Commitment: The obligation of the Bank to make Revolving Credit Loans to
----------
the Borrowers up to an aggregate outstanding principal amount not to exceed
$15,000,000, as such amount may be reduced from time to time or terminated
hereunder.
<PAGE>
-3-
Consent: In respect of any Person, any permit, license or exemption from,
-------
approval, consent of, registration or filing with any local, state or federal
governmental or regulatory agency or authority, required under applicable law.
Consolidated or consolidated: With reference to any term defined herein,
----------------------------
shall mean that term as applied to the accounts of BankVest and its
Subsidiaries, consolidated in accordance with GAAP.
Consolidated Net Income (or Deficit): The consolidated net income (or
------------------------------------
deficit) of BankVest and its Subsidiaries after deduction of all expenses, taxes
and other charges, determined in accordance with GAAP, after eliminating
therefrom all extraordinary nonrecurring items of income.
Consolidated Tangible Net Worth: The excess of (a) all assets of BankVest
-------------------------------
and its Subsidiaries on a consolidated basis determined in accordance with GAAP,
over (b) all liabilities of BankVest and its Subsidiaries on a consolidated
basis determined in accordance with GAAP, minus (c) the sum of (i) the book
-----
value of all intangibles determined in accordance with GAAP, including good will
and intellectual property, and (ii) any write-up in the book value of assets
since the most recent audited Financials in existence on the date hereof.
Consolidated Total Liabilities: All liabilities of BankVest and its
------------------------------
Subsidiaries on a consolidated basis that in accordance with GAAP are properly
classified as liabilities.
Conversion Request: A notice given by the Borrowers to the Bank of the
------------------
Borrowers' election to convert or continue a Revolving Credit Loan in accordance
with (S)2.3 hereof.
Credit Policy: The criteria for extension of credit for receivables and
-------------
Leases of BankVest and its Subsidiaries, in the form delivered to the Bank on
or prior to the Closing Date and as amended, supplemented or modified from time
to time in accordance with (S)8.2(h).
Default: An event or act which with the giving of notice and/or the lapse
-------
of time, would become an Event of Default.
Delinquent Account: Any Lease Receivable that is outstanding for more than
------------------
sixty (60) days past the date payment on such Lease Receivable is originally
due.
Designated Lease Receivables: Lease Receivables as to which either of the
----------------------------
Borrowers has full and unencumbered title (other than the first priority
security interest granted to the Bank as contemplated by the Security Agreement)
and (a) the Borrowers have notified the Bank and the Servicer that such Lease
Receivables are intended to be Designated Lease Receivables pursuant to a Lease
Receivable Designation Certificate, (b) the Servicer and the Borrowers have made
appropriate notations on their
<PAGE>
-4-
records of the Bank's lien on such Lease Receivables, and (c) the Bank has a
valid and perfected security interest in such Lease Receivables and the
underlying Equipment with respect to such Lease Receivables.
Designated Lease Receivables Release Report: A report substantially in the
-------------------------------------------
form of Exhibit E hereto pursuant to which the Borrowers notify the Banks of
---------
which Designated Lease Receivables are to be released.
Domestic Lending Office: Initially the office of the Bank designated as
-----------------------
such by notice to the Borrowers; thereafter, such other office of the Bank, if
any, located within the United States that will be making or maintaining Base
Rate Loans.
Drawdown Date: In respect of any Revolving Credit Loan, the date on which
-------------
such Revolving Credit Loan is made or to be made to the Borrowers, and the date
on which any Revolving Credit Loan is converted or continued in accordance with
(S)2.3.
Eligible Equipment: Equipment (a) which is new or used; (b) which is in
------------------
good condition, repair and working order; (c) which, if it has an Acquisition
Cost of $50,000 or greater, is insured in the manner provided in the applicable
Lease; (d) (i) which is owned by a Borrower free and clear of all Liens (other
than Liens granted to the Bank) or (ii) in which the Lessee thereof has granted
a Borrower a security interest free and clear of all Liens (other than Liens
granted to the Bank); (e) which is located within the United States; (f) which
is subject to a Lease which meets the eligibility requirements set forth in
Eligible Lease Receivables and (g) which is otherwise approved by the Bank.
Eligible Lease Receivables: The aggregate of the unpaid portions of
--------------------------
Designated Lease Receivables (net of any credits, rebates, offsets, holdbacks or
other adjustments or commissions payable to third parties, deposits and payments
received in advance from Lessees, and any receivables for insurance premiums and
taxes due on account of any Lease or the underlying Equipment with respect to
such Lease, in each case that are adjustments to such Lease Receivables) (a)
that the Borrowers reasonably and in good faith determine to be collectible; (b)
which pertain to Eligible Equipment; (c) that are with Lessees that (i) are not
Affiliates or employees of either of the Borrowers or have common officers or
directors with either of the Borrowers, (ii) leased the underlying Equipment in
respect of such Lease Receivable at arm's length, (iii) are not insolvent or
involved, whether voluntary or involuntary, in any case or proceeding under any
bankruptcy, reorganization, arrangement, insolvency, adjustment of debt,
dissolution, liquidation or similar law of any jurisdiction, or (iv) are, in the
Bank's reasonable judgment, creditworthy based upon such credit and collateral
considerations as the Bank may deem appropriate from time to time; (d) that are
in payment of obligations that have been fully performed and are not subject to
dispute or any other similar claims that would reduce the cash amount payable
therefor; (e) that are not subject to any pledge,
<PAGE>
-5-
restriction, security interest or other lien or encumbrance other than those
created by the Loan Documents; (f) that related to a Lease which was originated
in accordance with such Borrower's Credit Policy or is otherwise acceptable to
the Bank in its sole discretion; (g) that are in respect of a "commercial use"
lease; (h) that are not currently Delinquent Accounts; (i) that have not been
Delinquent Accounts more than once; (j) that are not Delinquent Accounts for
which the delinquency has been cured provided, however, that a portion of the
-------- -------
aggregate amount of reinstated Delinquent Accounts that have only been
Delinquent Accounts once not in excess of five percent (5%) of otherwise
Eligible Lease Receivables shall be included in Eligible Lease Receivables; (k)
that are not Rewrites; (l) that arise from Leases with an original term of not
greater than sixty (60) months; (m) that are not due from any single Lessee if
more than fifty percent (50%) of the aggregate amount of all Lease Receivables
owing from such Lessee would otherwise not be Eligible Lease Receivables; (n)
that are not due from a Lessee located in Minnesota or New Jersey unless the
applicable Borrower (i) has received a certificate of authority to do business
and is in good standing in such state or (ii) has filed a notice of business
activities report with the appropriate office or agency of such state for the
current year; (o) that are not payable from an office outside of the United
States unless such Lease Receivable is supported by a letter of credit
acceptable to, and issued for the benefit of, the Bank; (p) that are not due
from a Lessee which is the federal government of the United States or the state
or local government of any of the states of the United States, or any agency or
political subdivision of any thereof, provided, however that not more than
--------- -------
$1,000,000 in the aggregate of Accounts Receivable due from the state or local
government of any of the states of the United States or any agency or political
subdivision thereof may constitute Eligible Lease Receivables; (q) that are not
due from any single Lessee if more than five percent (5%) of the aggregate
amount of all Lease Receivables owing from such Lessee would otherwise not be
Eligible Lease Receivables, provided, however, that five percent (5%) of such
-------- -------
Lessee's otherwise Eligible Lease Receivables shall be included in Eligible
Lease Receivables; and (r) that is not the obligation of a Lessee to whom either
Borrower is or may become liable for goods sold or services rendered by such
Lessee, provided, however, that only the dollar amount of such liability shall
-------- -------
be excluded from Eligible Lease Receivables.
Environmental Laws: All laws pertaining to environmental matters,
------------------
including without limitation, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response Compensation and Liability Act of 1980, the
Superfund Amendments and Reauthorization Act of 1986, the Federal Clean Water
Act, the Federal Clean Air Act, the Toxic Substances Control Act, in each case
as amended, and all rules, regulations, judgments, decrees, orders and licenses
arising under all such laws.
Equipment: Equipment leased from either of the Borrowers pursuant to a
---------
Lease.
<PAGE>
-6-
ERISA: The Employee Retirement Income Security Act of 1974, as amended,
-----
and all rules, regulations, judgments, decrees, and orders arising thereunder.
Eurocurrency Reserve Rate: For any day with respect to a Eurodollar Rate
-------------------------
Loan, the maximum rate (expressed as a decimal) at which any lender subject
thereto would be required to maintain reserves under Regulation D of the Board
of Governors of the Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against "Eurocurrency
Liabilities" (as that term is used in Regulation D), if such liabilities were
outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on
and as of the effective date of any change in the Eurocurrency Reserve Rate.
Eurodollar Business Day: Any day on which commercial banks are open for
-----------------------
international business (including dealings in U.S. dollar deposits) in London or
such other eurodollar interbank market as may be selected by the Bank in its
sole discretion acting in good faith.
Eurodollar Lending Office: Initially, the office of the Bank designated as
-------------------------
such by notice to the Borrowers; thereafter, such other office of the Bank, if
any, that shall be making or maintaining Eurodollar Rate Loans.
Eurodollar Rate: For any Interest Period with respect to a Eurodollar Rate
---------------
Loan, the rate of interest equal to the rate at which the Bank's Eurodollar
Lending Office is offered U.S. dollar deposits two Eurodollar Business Days
prior to the beginning of such Interest Period in the interbank eurodollar
market where the eurodollar and foreign currency and exchange operations of such
Eurodollar Lending Office are customarily conducted at or about 10:00 a.m.,
Boston time, for delivery on the first day of such Interest Period for the
number of days comprised therein and in an amount comparable to the amount of
the Eurodollar Rate Loan of the Bank to which such Interest Period applies,
divided by (ii) a number equal to 1.00 minus the Eurocurrency Reserve Rate, if
applicable.
Eurodollar Rate Loans: Revolving Credit Loans bearing interest calculated
---------------------
by reference to the Eurodollar Rate.
Event of Default: Any of the events listed in (S)9 hereof.
----------------
Federal Funds Effective Rate: For any day, the rate per annum equal to the
----------------------------
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for such day on such transactions received by the Bank from three
funds brokers of recognized standing selected by the Bank.
<PAGE>
-7-
Financials: In respect of any period, the consolidated and, with respect
----------
to annual and quarterly fiscal periods, consolidating balance sheet of any
Person and its Subsidiaries as at the end of such period, and the related
statement of income and consolidated and, with respect to annual and quarterly
fiscal periods, consolidating statement of cash flow for such period, each
setting forth in comparative form the figures for the previous comparable fiscal
period, all in reasonable detail and prepared in accordance with GAAP.
GAAP: Generally accepted accounting principles consistent with those
----
adopted by the Financial Accounting Standards Board and its predecessor, (i)
generally, as in effect from time to time, and (ii) for purposes of determining
compliance by the Borrowers with their financial covenants set forth herein, as
in effect for the fiscal year therein reported in the most recent Financials
submitted to the Bank prior to execution of this Agreement.
Indebtedness: All obligations, contingent and otherwise, that in
------------
accordance with GAAP should be classified upon the obligor's balance sheet as
liabilities, or to which reference should be made by footnotes thereto,
including in any event and whether or not so classified: (i) all debt and
similar monetary obligations, whether direct or indirect; (ii) all liabilities
secured by any mortgage, pledge, security interest, lien, charge, or other
encumbrance existing on property owned or acquired subject thereto, whether or
not the liability secured thereby shall have been assumed; and (iii) all
guarantees, endorsements and other contingent obligations whether direct or
indirect in respect of indebtedness of others, including any obligation to
supply funds to or in any manner to invest in, directly or indirectly, the
debtor, to purchase indebtedness, or to assure the owner of indebtedness against
loss, through an agreement to purchase goods, supplies, or services for the
purpose of enabling the debtor to make payment of the indebtedness held by such
owner or otherwise, and the obligations to reimburse the issuer in respect of
any letters of credit.
Interest Payment Date: (i) As to any Base Rate Loan, the first day of the
---------------------
next calendar month with respect to the immediately preceding calendar month;
and (ii) as to any Eurodollar Rate Loan, the last day of the Interest Period
with respect to such Eurodollar Rate Loan.
Interest Period: With respect to each Revolving Credit Loan, (i)
---------------
initially, the period commencing on the Drawdown Date of such Revolving Credit
Loan and ending on the last day of one of the periods set forth below, as
selected by the Borrowers in a Loan Request (A) for any Base Rate Loan, the last
day of the calendar month; and (B) for any Eurodollar Rate Loan, 1, 2 or 3
months; and (ii) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Revolving Credit Loan and ending on
the last day of one of the periods set forth above, as selected by the Borrowers
in a Conversion Request; provided that all of the foregoing provisions relating
--------
to Interest Periods are subject to the following:
<PAGE>
-8-
(a) if any Interest Period with respect to a Eurodollar Rate Loan
would otherwise end on a day that is not a Eurodollar Business Day, that
Interest Period shall be extended to the next succeeding Eurodollar
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding Eurodollar Business Day;
(b) if any Interest Period with respect to a Base Rate Loan would end
on a day that is not a Business Day, that Interest Period shall end on the
next succeeding Business Day.
(c) if the Borrowers shall fail to give notice as provided in (S)2.3,
the Borrowers shall be deemed to have requested a conversion of the
affected Eurodollar Rate Loan to a Base Rate Loan and the continuance of
all Base Rate Loans as Base Rate Loans on the last day of the then current
Interest Period with respect thereto;
(d) any Interest Period that begins on the last Eurodollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Eurodollar Business Day of a calendar month; and
(e) any Interest Period relating to any Eurodollar Rate Loan that
would otherwise extend beyond the Maturity Date shall end on the Maturity
Date.
Lease. Each lease which evidences any Lease Receivable included in
-----
Designated Lease Receivables.
Lease Receivable Designation Certificate: A certificate substantially in
----------------------------------------
the form of Exhibit D hereto pursuant to which the Borrowers grant liens on
---------
Lease Receivables to the Bank.
Lease Receivables: Lease receivables of either of the Borrowers
-----------------
outstanding and owed to such Borrower which have arisen in respect of lease
obligations of the Lessees to such Borrower as determined in accordance with
GAAP, consistently applied, as entered on the books and records of such Borrower
but in any case not including purchase options or residual value of the
underlying Equipment.
Lessee: The Person or Affiliate group of Persons obligated to make
------
payments with respect to a Lease.
Liens: Any encumbrance, mortgage, pledge, hypothecation, charge,
-----
restriction or other security interest of any kind securing any obligation of
any entity or person.
<PAGE>
-9-
Loan Documents: This Agreement, the Revolving Credit Note and the Security
--------------
Documents, in each case as from time to time amended or supplemented.
Loan Request: See (S)2.1.
------------
Lockbox Agreement: The Lockbox Servicing Agreement dated as of June 26,
-----------------
1996 between BankVest and PNC, in the form delivered to the Bank on or prior to
the Closing Date.
Lockbox Bank: PNC or any other financial institution which has entered
------------
into a lockbox agreement with either of the Borrowers in form and substance
satisfactory to the Bank.
Materially Adverse Effect: Any materially adverse effect on the financial
-------------------------
condition or business operations of BankVest and its Subsidiaries taken
together, or material impairment of the ability of BankVest or any of its
Subsidiaries, to perform its obligations hereunder or under any of the other
Loan Documents.
Maturity Date: December 12, 1997, as the same may be extended in the sole
-------------
discretion of the Bank pursuant to (S)2.6 hereof, or such earlier date on which
all Revolving Credit Loans may become due and payable pursuant to the terms
hereof.
NorWest: NorWest Bank Minnesota, National Association, a national banking
-------
association and the backup servicer with respect to certain lease contracts of
BankVest and its Subsidiaries.
Obligations: All indebtedness, obligations and liabilities of BankVest and
-----------
its Subsidiaries to the Bank, individually or collectively, existing on the date
of this Agreement or arising thereafter, direct or indirect, joint or several,
absolute or contingent, matured or unmatured, liquidated or unliquidated,
secured or unsecured, arising by contract, operation of law or otherwise,
arising or incurred under this Agreement or any other Loan Document or in
respect of any of the Revolving Credit Loans or the Revolving Credit Note or
other instruments at any time evidencing any thereof.
Parrish. Parrish Financial Servicing Company, L.P., a Delaware limited
-------
partnership and the servicer with respect to certain lease contracts of BankVest
and its Subsidiaries.
Perfection Certificates: The Perfection Certificates as defined in the
-----------------------
Security Agreement.
Permitted Liens. Liens, security interests and other encumbrances
---------------
permitted by (S)8.2(b).
<PAGE>
-10-
Person: Any individual, corporation, partnership, trust, unincorporated
------
association, business, or other legal entity, and any government or any
governmental agency or political subdivision hereof.
PNC. PNC Bank, National Association, a national banking association.
---
Receivables Collection Agreement: The Lockbox Service Agreement dated on
----------- --------------------
or prior to the Closing Date among Parrish, the Lockbox Bank, the Borrowers, and
the Bank and in form and substance satisfactory to the Bank.
Requirement of Law: In respect of any Person, any law, treaty, rule,
------------------
regulation or determination of an arbitrator, court, or other governmental
authority, in each case applicable to or binding upon such Person or affecting
any of its property.
Reserves: With respect to any fiscal quarter, the ending allowance for
--------
doubtful accounts on BankVest's consolidated balance sheet at the end of such
fiscal quarter, prepared in accordance with GAAP.
Revolving Credit Loans: Revolving credit loans made or to be made by the
----------------------
Bank to the Borrowers pursuant to (S)2.
Revolving Credit Notes: See (S)2.2.3.
----------------------
Rewrites: Any Lease Receivable, the terms of which have been modified,
--------
postponed, extended or rewritten in any manner.
Security Agreement: The Security Agreement dated as of the Closing Date,
------------------
among the Borrowers and the Bank and in form and substance satisfactory to the
Bank.
Security Documents: The Security Agreement and the Receivables Collection
------------------
Agreement.
Service Agreement: The Servicing Agreement dated as of April 5, 1996,
------- ---------
between Parrish and BankVest, in the form delivered to the Bank on or prior to
the Closing Date.
Servicer: Parrish or any successor thereto acceptable to the Bank which
--------
has become a party to the Receivables Collection Agreement and has entered into
a service agreement in form and substance satisfactory to the Bank.
Subordinated Debt: Unsecured Indebtedness of BankVest or any of its
-----------------
Subsidiaries that is expressly subordinated and made junior to the payment and
performance in full of the Obligations, and evidenced as such by written
instrument containing subordination provisions in form and substance acceptable
to the Bank.
<PAGE>
-11-
Subsidiary: Any corporation, association, trust or other business entity
----------
of which the designated parent shall at any time own directly or indirectly
through a Subsidiary or Subsidiaries at least a majority (by number of votes) of
the outstanding Voting Stock.
Voting Stock: Stock or similar interests, of any class or classes (however
------------
designated), the holders of which are at the time entitled, as such holders, to
vote for the election of a majority of the directors (or persons performing
similar functions) of the corporation, association, trust or other business
entity involved, whether or not the right so to vote exists by reason of the
happening of a contingency.
2. REVOLVING CREDIT FACILITY.
-------------------------
2.1 COMMITMENT TO LEND. Upon the terms and subject to the conditions of
------------------
this Agreement, the Bank agrees to lend to the Borrowers such sums that the
Borrowers may request, from the date hereof until but not including the Maturity
Date, provided that the sum of the outstanding principal amount of all Revolving
--------
Credit Loans (after giving effect to all amounts requested) shall not exceed the
lesser of (a) the Commitment and (b) the Borrowing Base. Revolving Credit Loans
shall be in the minimum aggregate amount of $100,000 or an integral multiple
thereof.
2.2 REQUESTS FOR REVOLVING CREDIT LOANS.
-----------------------------------
2.2.1 LOAN REQUESTS. The Borrowers shall give to the Bank written
-------------
notice in form and substance satisfactory to the Bank (or telephonic notice
confirmed in writing in form and substance satisfactory to the Bank) of
each Revolving Credit Loan requested hereunder (a "Loan Request") (i) no
later than 10:00 a.m., Boston time, on the proposed Drawdown Date of any
Base Rate Loan and (ii) no less than three (3) Eurodollar Business Days
prior to the proposed Drawdown Date of any Eurodollar Rate Loan. Each such
notice shall specify (A) the principal amount of the Revolving Credit Loan
requested, (B) the proposed Drawdown Date of such Revolving Credit Loan,
(C) whether such Revolving Credit Loan shall be a Base Rate Loan or a
Eurodollar Rate Loan and (D) in the case of a Eurodollar Rate Loan, the
Interest Period for such Eurodollar Rate Loan and shall include (y) a
Borrowing Base Report setting forth the Borrowing Base as of such date and
(z) a Lease Receivable Designation Certificate if after giving effect to
such Revolving Credit Loans, the outstanding principal amount of Revolving
Credit Loans shall exceed the Borrowing Base. Each such notice shall be
irrevocable and binding on the Borrowers and shall obligate the Borrowers
to accept the Revolving Credit Loan requested from the Bank on the proposed
Drawdown Date. Each Loan Request shall be in a minimum aggregate amount of
$100,000 or an integral multiple thereof.
2.2.2 REVOLVING CREDIT NOTE. The obligation of the Borrowers to
---------------------
repay to the Bank the principal of the Revolving Credit
<PAGE>
-12-
Loans and interest accrued thereon shall be evidenced by a promissory note
in substantially the form of Exhibit A hereto (the "Revolving Credit Note")
---------
in the maximum aggregate principal amount of $15,000,000 executed and
delivered by the Borrowers and payable to the order of the Bank, in form
and substance satisfactory to the Bank.
2.3. CONVERSION OPTIONS.
------------------
2.3.1 CONVERSION TO DIFFERENT TYPE OF REVOLVING CREDIT LOAN. The
-----------------------------------------------------
Borrowers may elect from time to time to convert any outstanding Revolving
Credit Loan from a Base Rate Loan to a Eurodollar Rate Loan or from a
Eurodollar Rate Loan to a Base Rate Loan, provided that (i) with respect to
--------
any such conversion of a Eurodollar Rate Loan to a Base Rate Loan, the
Borrowers shall give the Bank at least three (3) Business Days prior
written notice of such election; (ii) with respect to any such conversion
of a Eurodollar Rate Loan into a Base Rate Loan on a date that is not the
last day of the Interest Period with respect thereto, such conversion shall
be subject to the provisions of (S)3.6; (iii) with respect to any such
conversion of a Base Rate Loan to a Eurodollar Rate Loan, the Borrowers
shall give the Bank at least three (3) Eurodollar Business Days prior
written notice of such election and (iv) no Revolving Credit Loan may be
converted into a Eurodollar Rate Loan when any Default or Event of Default
has occurred and is continuing. On the date on which such conversion is
being made, the Bank shall take such action as is necessary to transfer
such Revolving Credit Loans to its Domestic Lending Office or its
Eurodollar Lending Office, as the case may be. All or any part of
outstanding Revolving Credit Loans may be converted as provided herein,
provided that partial conversions shall be in an aggregate principal amount
--------
of $100,000 or a whole multiple thereof. Each Conversion Request relating
to the conversion of a Revolving Credit Loan to a Eurodollar Rate Loan
shall be irrevocable by the Borrowers.
2.3.2 CONTINUATION OF TYPE OF REVOLVING CREDIT LOAN. Any Base Rate
---------------------------------------------
Loan or Eurodollar Rate Loan may be continued as such upon the expiration
of an Interest Period with respect thereto by compliance by the Borrowers
with the notice provisions contained in (S)2.3.1; provided that no
--------
Eurodollar Rate Loan may be continued as such when any Default or Event of
Default has occurred and is continuing, but shall be automatically
converted to a Base Rate Loan on the last day of the first Interest Period
relating thereto ending during the continuance of any Default or Event of
Default of which the officers of the Bank active upon the Borrowers'
account have actual knowledge. In the event that the Borrowers fail to
provide any such notice with respect to the continuation of any Eurodollar
Rate Loan as such, then such Eurodollar Rate Loan shall be automatically
<PAGE>
-13-
converted to a Base Rate Loan on the last day of the first Interest Period
relating thereto.
2.3.3. EURODOLLAR RATE LOANS. Any conversion to or from Eurodollar
---------------------
Rate Loans shall be in such amounts and be made pursuant to such elections
so that, after giving effect thereto, (i) the aggregate principal amount of
all Eurodollar Rate Loans having the same Interest Period shall not be less
than $1,000,000 or a multiple of $500,000 in excess thereof, and (ii) there
shall not be more than five (5) outstanding Revolving Credit Loans which
are Eurodollar Rate Loans at any time.
2.4. INTEREST. So long as no Event of Default is continuing, (i) each
--------
Revolving Credit Loan which is a Base Rate Loan shall bear interest for the
period commencing with the Drawdown Date thereof and ending on the last day of
the Interest Period with respect thereto at the rate of three-quarters of one
percent (0.75%) per annum above the Base Rate, and (ii) each Revolving Credit
Loan which is a Eurodollar Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at the rate of two and one-quarter percent
(2.25%) per annum above the Eurodollar Rate determined for such Interest Period.
The Borrowers jointly and severally promise to pay interest on the Revolving
Credit Loans or any portion thereof outstanding during each Interest Period in
arrears on each Interest Payment Date applicable to such Interest Period.
2.5. REPAYMENTS AND PREPAYMENTS. The Borrowers hereby jointly and
--------------------------
severally agree to pay the Bank on the Maturity Date the entire unpaid
principal of and interest on all Revolving Credit Loans. The Borrowers may elect
to prepay the outstanding principal of all or any part of any Revolving Credit
Loan, without premium or penalty, provided that the full or partial prepayment
of the outstanding amount of any Eurodollar Rate Loans pursuant to this (S)2.5
may be made only on the last day of the Interest Period relating thereto. The
Borrowers shall give the Bank no later than 10:00 a.m., Boston time, at least
three (3) Eurodollar Business Days prior written or telephonic notice, of any
proposed prepayment pursuant to this (S)2.5 of any Eurodollar Rate Loan; and on
the date of such prepayment pursuant to this (S)2.5 of any Base Rate Loan, in
each case specifying the proposed date of such prepayment and the amount to be
prepaid. The Borrowers shall be entitled to reborrow before the Maturity Date
such amounts, upon the terms and subject to the conditions of this Agreement. If
at any time the total outstanding Revolving Credit Loans shall exceed the lesser
of (i) the Commitment and (ii) the Borrowing Base, the Borrowers shall
immediately pay the amount of such excess to the Bank for application to the
Revolving Credit Loans. The Borrowers may elect to reduce or terminate the
Commitment by a minimum principal amount of $1,000,000 or an integral multiple
thereof, upon written notice to the Bank given by 10:00 a.m., Boston time, at
least two (2) Business Days prior to the
<PAGE>
-14-
date of such reduction or termination. The Borrowers shall not be entitled to
reinstate the Commitment following such reduction or termination.
2.6. EXTENSION OF MATURITY DATE. The Borrowers may, provided that no
--------------------------
Default or Event of Default has occurred and is continuing, by written notice to
the Bank given not more than one hundred and twenty (120) days nor less than
ninety (90) days prior to the then Applicable Maturity Date (the "Applicable
Maturity Date") request that the Applicable Maturity Date be extended to the
date which is one-year after the then Applicable Maturity Date. A consent, if
any, to the extension of the Applicable Maturity Date shall be given by the Bank
no less than sixty (60) days prior to the Applicable Maturity Date, provided
--------
that if the Bank does not respond to the Borrowers' request on or prior to the
date which is sixty (60) days prior to the Applicable Maturity Date, the Bank
shall be deemed to have refused such request to extend the Applicable Maturity
Date. If the Bank consents to the extension of the Applicable Maturity Date, the
Maturity Date shall be extended for one-year, and the definition of Maturity
Date shall be deemed to reflect such extension for all purposes hereof. Nothing
contained herein shall in any way obligate the Bank to extend the Maturity Date.
3. CHANGES IN CIRCUMSTANCES, ETC.
-----------------------------
3.1. INABILITY TO DETERMINE EURODOLLAR RATE. In the event, prior to the
--------------------------------------
commencement of any Interest Period relating to any Eurodollar Rate Loan, the
Bank shall determine that adequate and reasonable methods do not exist for
ascertaining the Eurodollar Rate that would otherwise determine the rate of
interest to be applicable to any Eurodollar Rate Loan during any Interest
Period, the Bank shall forthwith give notice of such determination (which shall
be conclusive and binding on the Borrowers) to the Borrowers. In such event (i)
any Loan Request or Conversion Request with respect to any Eurodollar Rate Loan
shall be automatically withdrawn and shall be deemed a request for a Base Rate
Loan, (ii) each Eurodollar Rate Loan will automatically, on the last day of the
then current Interest Period thereof, become a Base Rate Loan, and (iii) the
obligation of the Bank to make Eurodollar Rate Loans shall be suspended until
the Bank determines that the circumstances giving rise to such suspension no
longer exist, whereupon the Bank shall so notify the Borrowers.
3.2. ILLEGALITY. Notwithstanding any other provisions herein, if any
----------
present or future law, regulation, treaty or directive or in the interpretation
or application thereof shall make it unlawful for the Bank to make or maintain
Eurodollar Rate Loans, the Bank shall forthwith give notice of such
circumstances to the Borrowers and thereupon (i) the commitment of the Bank to
make Eurodollar Rate Loans or convert Base Rate Loans to Eurodollar Rate Loans
shall forthwith be suspended and (ii) the Revolving Credit Loans then
outstanding as Eurodollar Rate Loans, if any, shall be converted automatically
to Base Rate Loans on the last day of each Interest Period applicable to such
Eurodollar Rate Loans or within such earlier
<PAGE>
-15-
period as may be required by law. The Borrowers hereby jointly and severally
agree promptly to pay the Bank, upon demand by the Bank, any additional amounts
necessary to compensate the Bank for any costs incurred by the Bank in making
any conversion in accordance with this (S)4.2, including any interest or fees
payable by the Bank to lenders of funds obtained by it in order to make or
maintain its Eurodollar Rate Loans hereunder.
3.3. CHANGE IN CIRCUMSTANCES. If, on or after the date hereof the Bank
-----------------------
determines that (i) the adoption of, or any change in, any applicable law, rule,
regulation or guideline or the interpretation or administration thereof (whether
or not having the force of law), or (ii) compliance by the Bank or its parent
holding company with any guideline, request or directive (whether or not having
the force of law), (A) shall subject the Bank to any tax, duty or other charge
with respect to any Eurodollar Rate Loan or the Revolving Credit Note, or shall
change the basis of taxation of payments to the Bank of the principal of or
interest on, Eurodollar Rate Loans or in respect of any other amounts due under
this Agreement in respect of Eurodollar Rate Loans (other than with respect to
taxes based upon the Bank's net income), or (B) shall impose, modify or deem
applicable any reserve, special deposit or similar requirement (including,
without limitation, any imposed by the Board of Governors of the Federal Reserve
System, but excluding with respect to any Eurodollar Rate Loan any such
requirement included in an applicable Eurocurrency Reserve Rate) against assets
of, deposits with or for the account of, or credit extended by, the Bank, or
shall impose on the Bank or the London interbank market any other condition
affecting Eurodollar Rate Loans or the Revolving Credit Note, and the result of
any of the foregoing is to increase the cost to the Bank of making or
maintaining any Eurodollar Rate Loan, or to reduce the amount of any sum
received or receivable by the Bank under this Agreement or under the Revolving
Credit Note with respect to any Revolving Credit Loan, by an amount reasonably
deemed by the Bank to be material, then, upon demand by the Bank, the Borrowers
jointly and severally agree to pay to the Bank such additional amount or amounts
as will compensate the Bank for such increased cost or reduction.
3.4. CAPITAL ADEQUACY. If, on or after the date hereof the Bank determines
----------------
that (a) the adoption of, or any change in, any applicable law, rule, regulation
or guideline or the interpretation or administration thereof (whether or not
having the force of law), or (b) compliance by the Bank or its parent holding
company with any guideline, request or directive (whether or not having the
force of law), has the effect of reducing the return on the Bank's or such
holding company's capital as a consequence of the Commitment or the Revolving
Credit Loans to a level below that which the Bank or such holding company could
have achieved but for such adoption, change or compliance by any amount deemed
by the Bank to be material, the Bank may notify the Borrowers thereof. The
Borrowers jointly and severally agree to pay the Bank the amount of the
Borrowers' allocable share of the amount of such reduction in the return on
capital as and when
<PAGE>
-16-
such reduction is determined, upon presentation by the Bank of a statement in
the amount and setting forth the Bank's calculation thereof, which statement
shall be deemed true and correct absent manifest error. The Bank agrees to
allocate shares of such reduction among the Borrowers and the Bank's other
customers similarly situated on a fair and non-discriminatory basis.
3.5. CERTIFICATE. A certificate setting forth any additional amounts
-----------
payable pursuant to (S)3.3 or (S)3.4 and a brief explanation of such amounts
which are due, submitted by the Bank to the Borrowers, shall be conclusive,
absent manifest error, that such amounts are due and owing.
3.6. INDEMNITY. The Borrowers jointly and severally agree to indemnify
---------
and hold the Bank harmless from and against any loss, cost or expense (including
loss of anticipated profits) the Bank may sustain as a consequence of (a) the
Borrowers' failure to pay the principal amount of any Eurodollar Rate Loan as
and when due or the payment of any Eurodollar Rate Loan on a date that is not
the last day of the Interest Period applicable thereto, including interest or
fees payable by the Bank to lenders of funds obtained by it in order to maintain
any such Eurodollar Rate Loans, (b) default by the Borrowers in making a
borrowing or conversion after the Borrowers have given (or are deemed to have
given) a Loan Request or a Conversion Request relating thereto in accordance
with (S)2.3 or (c) the making of any payment of a Eurodollar Rate Loan or the
making of any conversion of any such Eurodollar Rate Loan to a Base Rate Loan on
a day that is not the last day of the applicable Interest Period with respect
thereto, including interest or fees payable by the Bank to lenders of funds
obtained by it in order to maintain any such Eurodollar Rate Loans.
3.7. INTEREST AFTER EVENT OF DEFAULT. While an Event of Default is
-------------------------------
continuing, amounts payable under any of the Loan Documents shall bear interest
(compounded monthly and payable on demand in respect of overdue amounts) at a
rate per annum which is equal to two hundred (200) basis points above the rate
of interest otherwise applicable to such Revolving Credit Loans pursuant to
(S)2.4 until such amount is paid in full or (as the case may be) such Event of
Default has been cured or waived in writing by the Bank (after as well as before
judgment).
3.8. CONCERNING JOINT AND SEVERAL LIABILITY OF THE BORROWERS.
-------------------------------------------------------
(a) Each of the Borrowers is accepting joint and several liability
hereunder and under the other Loan Documents in consideration of the
financial accommodations to be provided by the Bank under this Agreement,
for the mutual benefit, directly and indirectly, of each of the Borrowers
and in consideration of the undertakings of each other Borrower to accept
joint and several liability for the Obligations.
(b) Each of the Borrowers, jointly and severally, hereby irrevocably
and unconditionally accepts, not merely as a surety but
<PAGE>
-17-
also as a co-debtor, joint and several liability with the other Borrower,
with respect to the payment and performance of all of the Obligations
(including, without limitation, any Obligations arising under this (S)3.8),
it being the intention of the parties hereto that all the Obligations shall
be the joint and several obligations of each of the Borrowers without
preferences or distinction among them.
(c) If and to the extent that either of the Borrowers shall fail to
make any payment with respect to any of the Obligations as and when due or
to perform any of the Obligations in accordance with the terms thereof,
then in each such event the other Borrower will make such payment with
respect to, or perform, such Obligation.
(d) The Obligations of each of the Borrowers under the provisions of
this (S)3.8 constitute the full recourse Obligations of each of the
Borrowers enforceable against each such corporation to the full extent of
its properties and assets, irrespective of the validity, regularity or
enforceability of this Agreement or the other Loan Documents or any other
circumstance whatsoever as to the other Borrower.
(e) Except as otherwise expressly provided herein, each Borrower
hereby waives promptness, diligence, presentment, demand, protest, notice
of acceptance of its joint and several liability, notice of any and all
advances of the Revolving Credit Loans made under this Agreement and the
Revolving Credit Note, notice of occurrence of any Default or Event of
Default (except to the extent notice is expressly required to be given
pursuant to the terms of this Agreement or any of the other Loan
Documents), or of any demand for any payment under this Agreement, notice
of any action at any time taken or omitted by the Bank under or in respect
of any of the Obligations hereunder, any requirement of diligence and,
generally, all demands, notices and other formalities of every kind in
connection with this Agreement and the other Loan Documents. Each Borrower
hereby waives all defenses which may be available by virtue of any
valuation, stay, moratorium law or other similar law now or hereafter in
effect, any right to require the marshaling of assets of the Borrowers and
any other entity or Person primarily or secondarily liable with respect to
any of the Obligations, and all suretyship defenses generally. Each
Borrower hereby assents to, and waives notice of, any extension or
postponement of the time for the payment, or place or manner for payment,
compromise, refinancing, consolidation or renewals of any of the
<PAGE>
-18-
Obligations hereunder, the acceptance of any partial payment thereon, any
waiver, consent or other action or acquiescence by the Bank at any time or
times in respect of any default by either Borrower in the performance or
satisfaction of any term, covenant, condition or provision of this
Agreement and the other Loan Documents, any and all other indulgences
whatsoever by the Bank in respect of any of the Obligations hereunder, and
the taking, addition, substitution or release, in whole or in part, at any
time or times, of any security for any of such Obligations or the addition,
substitution or release, in whole or in part, of either Borrower or any
other entity or Person primarily or secondarily liable for any Obligation.
Such Borrower further agrees that its Obligations shall not be released or
discharged, in whole or in part, or otherwise affected by the adequacy of
any rights which the Bank may have against any collateral security or other
means of obtaining repayment of any of the Obligations, the impairment of
any collateral security securing the Obligations, including, without
limitation, the failure to protect or preserve any rights which the Agent
or any Bank may have in such collateral security or the substitution,
exchange, surrender, release, loss or destruction of any such collateral
security, any other act or omission which might in any manner or to any
extent vary the risk of such Borrower, or otherwise operate as a release or
discharge of such Borrower, all of which may be done without notice to such
Borrower; provided, however, that the foregoing shall in no way be deemed
-------- -------
to create commercially unreasonable standards as to the Bank's duties as
secured party under the Loan Documents (as such rights and duties are set
forth therein). If for any reason the other Borrower has no legal
existence or is under no legal obligation to discharge any of the
Obligations, or if any of the Obligations have become irrecoverable from
the other Borrower by reason of such other Borrower's insolvency,
bankruptcy or reorganization or by other operation of law or for any
reason, this Agreement and the other Loan Documents to which it is a party
shall nevertheless be binding on such Borrower to the same extent as if
such Borrower at all times had been the sole obligor on such Obligations.
Without limiting the generality of the foregoing, each Borrower assents to
any other action or delay in acting or failure to act on the part of the
Bank, including, without limitation, any failure strictly or diligently to
assert any right or to pursue any remedy or to comply fully with applicable
laws or regulations thereunder which might, but for the provisions of this
(S)3.8, afford grounds for terminating, discharging or relieving such
Borrower, in whole or in part, from any of its obligations under this
(S)3.8, it being the intention of each Borrower that, so long as any of the
Obligations hereunder remain unsatisfied, the obligations of such Borrower
under this (S)3.8 shall not be discharged except by performance and then
only to the extent of such performance. The Obligations of each Borrower
under this (S)3.8 shall not be diminished or rendered unenforceable by any
winding up, reorganization, arrangement, liquidation, reconstruction or
similar proceeding with respect to either reconstruction or similar
proceeding with respect to any Borrower, or the Bank. The joint and
several liability of the Borrowers hereunder shall continue in full force
and effect notwithstanding any absorption, merger, amalgamation or any
other change whatsoever in the name, ownership, membership, constitution or
place of formation of either Borrower or the Bank.
<PAGE>
-19-
Each of the Borrowers acknowledges and confirms that it has itself
established its own adequate means of obtaining from the other Borrower on
a continuing basis all information desired by such Borrower concerning the
financial condition of the other Borrower and that each such Borrower will
look to the other Borrower and not to the Bank in order for such Borrower
to keep adequately informed of changes in each of the other Borrower's
financial conditions.
(f) The provisions of this (S)3.8 are made for the benefit of the
Bank and its respective successors and assigns, and may be enforced by it
or them from time to time against either or both of the Borrowers as often
as occasion therefor may arise and without requirement on the part of the
Bank or such successor or assign first to marshall any of its or their
claims or to exercise any of its or their rights against the other Borrower
or to exhaust any remedies available to it or them against the other
Borrower or to resort to any other source or means of obtaining payment of
any of the Obligations hereunder or to elect any other remedy. The
provisions of this (S)3.8 shall remain in effect until all of the
Obligations shall have been paid in full or otherwise fully satisfied. If
at any time, any payment, or any part thereof, made in respect of any of
the Obligations, is rescinded or must otherwise be restored or returned by
the Bank upon the insolvency, bankruptcy or reorganization of either of the
Borrowers, or otherwise, the provisions of this (S)3.8 will forthwith be
reinstated in effect, as though such payment had not been made.
(g) Each of the Borrowers hereby agrees that it will not enforce any
of its rights of reimbursement, contribution, subrogation or the like
against the other Borrower with respect to any liability incurred by it
hereunder or under any of the other Loan Documents, any payments made by it
to the Bank with respect to any of the Obligations or any collateral
security therefor until such time as all of the Obligations have been
irrevocably paid in full in cash. Any claim which either Borrower may have
against the other Borrower with respect to any payments to the Bank
hereunder or under any other Loan Documents are hereby expressly made
subordinate and junior in right of payment, without limitation as to any
increases in the Obligations arising hereunder or thereunder, to the prior
payment in full of the Obligations and, in the event of any insolvency,
bankruptcy, receivership, liquidation, reorganization or other similar
proceeding under the laws of any jurisdiction relating to either Borrower,
its debts or its assets, whether voluntary or involuntary, all such
Obligations shall be paid in full before any payment or distribution of any
character, whether in cash, securities or other property, shall be made to
the other Borrower therefor.
(h) Each of the Borrowers hereby agrees that the payment of any
amounts due with respect to the indebtedness owing by either Borrower to
the other Borrower is hereby subordinated to the prior
<PAGE>
-20-
payment in full in cash of the Obligations. Each Borrower hereby agrees
that after the occurrence and during the continuance of any Default or
Event of Default, such Borrower will not demand, sue for or otherwise
attempt to collect any indebtedness of the other Borrower owing to such
Borrower until the Obligations shall have been paid in full in cash. If,
notwithstanding the foregoing sentence, such Borrower shall collect,
enforce or receive any amounts in respect of such indebtedness, such
amounts shall be collected, enforced and received by such Borrower as
trustee for the Bank and be paid over to the Bank to be applied to repay
the Obligations.
4. FEES AND PAYMENTS.
-----------------
Contemporaneously with execution and delivery of this Agreement, the
Borrowers shall pay to the Bank a closing fee in the amount of $75,000. The
Borrowers shall pay to the Bank, on the first day of each calendar month
hereafter, and upon the Maturity Date or the date upon which the Commitment is
no longer in effect, a commitment fee calculated at a rate per annum which is
equal to one-half percent (0.50%) of the average daily difference by which the
Commitment amount exceeds the aggregate sum of the outstanding Revolving Credit
Loans during the preceding calendar month or portion thereof. All payments to
be made by the Borrowers hereunder or under any of the other Loan Documents
shall be made in U.S. dollars in immediately available funds at the Bank's head
office at 100 Federal Street, Boston, Massachusetts 02110, without set-off or
counterclaim and without any withholding or deduction whatsoever.
Notwithstanding the notice and minimum amount requirements set forth in (S)2.2,
the Bank may, in its sole discretion, make Base Rate Loans to the Borrowers to
cover any sum due and payable by the Borrowers to the Bank hereunder or under
any of the other Loan Documents. The Borrowers hereby request and authorize the
Bank to make from time to time such Base Rate Loans. Each of the Borrowers
acknowledges and agrees that the making of such Base Rate Loans shall, in each
case, be subject in all respects to the provisions of this Agreement as if they
were Revolving Credit Loans covered by a Loan Request including, without
limitation, the limitations set forth in (S)2.1 and requirements that the
applicable provisions of (S)7 be satisfied. The Bank shall also be entitled to
charge any account of either of the Borrowers with the Bank for any sum due and
payable by the Borrowers to the Bank hereunder or under any of the other Loan
Documents. If any payment hereunder is required to be made on a day which is
not a Business Day, it shall be paid on the immediately succeeding Business Day,
with interest and any applicable fees adjusted accordingly. All computations of
interest in respect of Revolving Credit Loans or of the commitment fee payable
hereunder shall be made by the Bank on the basis of actual days elapsed and on a
360-day year.
<PAGE>
-21-
5. SECURITY.
--------
The Obligations shall be secured by a perfected first priority security
interest in all Designated Lease Receivables of the Borrowers and the underlying
Equipment and Leases related thereto, all cash, cash equivalents, instruments,
and documents related to Designated Lease Receivables (excluding the Borrowers'
rights and interests under the Service Agreement and the Lockbox Agreement), all
patents, trademarks and other intellectual property of the Borrowers, all
general intangibles of the Borrowers and all accessions, substitutions and
proceeds thereof (including insurance proceeds), in each case whether now owned
or hereafter acquired, pursuant to the terms of the Security Documents to which
either of the Borrowers is a party. Notwithstanding the foregoing, prior to the
occurrence of a Default or Event of Default, the Bank will release its Lien on
Designated Lease Receivables so long as prior to such release the Borrowers
shall have delivered (i) a Borrowing Base Report dated the date of such release
indicating that after giving effect to such release the outstanding principal
amount of all Revolving Credit Loans does not exceed the Borrowing Base, (ii) a
Designated Lease Receivables Released Report dated the date of such release
indicating the Designated Lease Receivables to be released, and (iii) if
applicable, a Lease Receivable Designation Certificate to ensure that after
giving effect to such release, the outstanding principal amount of Revolving
Credit Loans does not exceed the Borrowing Base.
6. REPRESENTATIONS AND WARRANTIES.
------------------------------
Each of the Borrowers represents and warrants to the Bank on the date
hereof, on the date of any Loan Request and on each Drawdown Date that:
(a) each of the Borrowers is duly organized, validly existing, and in
good standing under the laws of its jurisdiction of incorporation and is
duly qualified and in good standing in every other jurisdiction where it is
doing business, and the execution, delivery and performance by each of the
Borrowers of the Loan Documents to which such Borrower is a party (i) are
within its corporate authority, (ii) have been duly authorized, and (iii)
do not conflict with or contravene its Charter Documents;
(b) upon execution and delivery thereof, each Loan Document to which
each of the Borrowers is a party shall constitute the legal, valid and
binding obligation of such Borrower enforceable in accordance with its
terms;
(c) each of the Borrowers has good and marketable title to all its
material properties, subject only to Liens permitted hereunder, and
possesses all assets, including intellectual properties, franchises and
Consents, adequate for the conduct of its business as now conducted,
without known conflict with any rights of others. Each of the Borrowers
maintains insurance with financially responsible
<PAGE>
-22-
insurers, copies of the policies for which have been previously delivered
to the Bank, covering such risks and in such amounts and with such
deductibles as are customary in the Borrowers' business and are adequate
and are in accordance with the terms of the Security Agreement;
(d) each of the Borrowers has a fiscal year which is the twelve (12)
months ending on June 30, 1996 of each year; BankVest has provided to the
Bank its audited Financials as at June 30, 1996 and for the fiscal period
then ended, and such Financials are complete and correct and fairly present
the position of BankVest and its Subsidiaries as at such date and for such
period in accordance with GAAP consistently applied; neither of the
Borrowers has any Indebtedness, or any financial obligations under any
contracts, or agreements, except for Indebtedness permitted under (S)8.2(a)
hereof; BankVest has also provided to the Bank its forecast of the
operations of BankVest and its Subsidiaries for the period from July 1,
1996 through June 30, 2001, and such forecast has been prepared in good
faith based upon reasonable assumptions;
(e) since June 30, 1996, there has been no materially adverse change
of any kind in BankVest or any of its Subsidiaries which would have a
Materially Adverse Effect;
(f) there are no legal or other proceedings or investigations pending
or threatened against before any court, tribunal or regulatory authority
which would, if adversely determined, alone or together, have a Materially
Adverse Effect;
(g) the execution, delivery, performance of its obligations, and
exercise of its rights under the Loan Documents to which it is a party by
each of the Borrowers, including borrowing under this Agreement (i) do not
require any Consents; and (ii) are not and will not be in conflict with or
prohibited or prevented by (A) any Requirement of Law, or (B) any Charter
Document, corporate minute or resolution, instrument, agreement or
provision thereof, in each case binding on it or affecting its property;
(h) neither of the Borrowers is in violation of (i) any Charter
Document, corporate minute or resolution, (ii) any instrument or agreement,
in each case binding on it or affecting its property, or (iii) any
Requirement of Law in either case, in a manner which could have a
Materially Adverse Effect, including, without limitation, all applicable
federal and state tax laws, ERISA and Environmental Laws;
(i) upon execution and delivery of the Security Documents and the
filing of documents thereby required, the Bank shall have first-priority
perfected Liens on the Collateral, subject only to Liens permitted
hereunder and entitled to priority under applicable law,
<PAGE>
-23-
with no financing statements, chattel mortgages, real estate mortgages or
similar filings on record anywhere which conflict with such first-priority
Liens of the Bank;
(j) BankVest's only Subsidiaries are LeaseVest and The Equipment
Leasing Insurance Co. Ltd.; LeaseVest has no Subsidiaries and neither of
the Borrowers is a party to any partnership or joint venture;
(k) each of the representations and warranties made by each of the
Borrowers in any of the Loan Documents was true and correct in all material
respects when made and continues to be true and correct in all material
respects on the Closing Date, except to the extent that any of such
representations and warranties relate, by the express terms thereof, solely
to a date falling prior to the Closing Date, and except to the extent that
any of such representations and warranties may have been affected by the
consummation of the transactions contemplated and permitted or required by
the Loan Documents; and
(l) each Designated Lease Receivable of the Borrowers meets the
following criteria:
(i) either of the Borrowers is the sole legal owner of the
Designated Lease Receivables, the Leases and the Equipment (or will
have a first priority security interest in the Equipment), free and
clear of all liens;
(ii) each of the Leases is a legal, valid and binding full
recourse obligation of the Lessee thereunder, enforceable by a
Borrower and its assigns against such Lessee in accordance with the
terms thereof, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization or similar laws relating to or
affecting the enforcement of creditors' rights generally and by any
and all applicable requirements of any federal, state or local law
including, without limitation, usury, truth-in-lending and equal
credit opportunity laws applicable to each Lease have been complied
with;
(iii) each of the Borrowers and, to the best of the
Borrowers' knowledge, the other parties to such Lease, had all
requisite authority and capacity to enter into such Lease; and no
Lessee has been released, in whole or in part, from any of its
obligations in respect of any Lease;
(iv) except as enforcement may be limited by bankruptcy,
insolvency, reorganization or similar laws relating to or affecting
the enforcement of creditors' rights generally and by equitable
principles, the obligation of each Lessee to pay all amounts owed
under each of the Leases to which such Lessee
<PAGE>
-24-
is a party throughout the term thereof is and will be unconditional,
without any right of set-off or counterclaim or any defense by such
Lessee, and without regard to any event affecting the Equipment, if
any, subject to such Lease, any claim of such Lessee against either of
the Borrowers or any change in circumstance of such Lessee or any
other circumstance whatsoever;
(v) there will be no facts or circumstances existing as
of the relevant time which give rise to any right of rescission,
offset, counterclaim or defense, including the defense of usury, to
the obligations of any Lessee, including the obligation of such Lessee
to pay all amounts due thereunder, with respect to any Lease to which
such Lessee is a party; and neither the operation of any of the terms
of any Lease nor the exercise of any right thereunder will render such
Lease unenforceable in whole or in part or subject to any right of
rescission, offset, counterclaim or defense, including the defense of
usury (other than limitations on enforcement as a result of
bankruptcy, insolvency, reorganization or similar laws relating to or
affecting the enforcement of creditors' rights generally and by
general equitable principles), and no such right of rescission,
offset, counterclaim or defense has been asserted with respect
thereto;
(vi) no Lease, and no provision of any Lease, has been
amended, terminated, altered, waived or modified since inception in
any respect that is adverse to the interests of either of the
Borrowers except for reissues that are consistent with the applicable
Borrower's past practices, no Lease has been satisfied, cancelled or
subordinated, in whole or in part, or rescinded, nor has any
instrument been executed that would effect any such satisfaction,
cancellation, subordination or rescission, except for Leases that have
been prepaid in full;
(vii) no Lessee has been released by either of the
Borrowers from the terms of the related Lease;
(viii) each Lease was originated or acquired in a
Borrower's ordinary course of business, in accordance with such
Borrower's Credit Policy; each Lease is of a type customarily in use
in the leasing or financing business and has not been found, in the
Bank's reasonable judgment, to be unacceptable;
(ix) each Lessee is a resident of the United States of
America and is not a Borrower or an Affiliate of a Borrower;
<PAGE>
-25-
(x) each Lease requires the Lessee to assume all risk of
loss or malfunction of the related Equipment, to pay all sales, use,
property, excise and other similar taxes imposed on or with respect to
the related Equipment and permits the rights with respect to such
Lease, and all Collateral related thereto, to be assigned by the
Borrowers without the consent of any Person; no Lease permits early
termination or prepayment, unless the amount required to be paid by or
on behalf of Lessee in respect thereof is equal to or greater than the
applicable termination amount; no Lease provides for the
substitution, exchange or addition of any Equipment subject thereto
which would result in any reduction of the amount of payments or
change the timing of payments due under such Lease;
(xi) there are no proceedings or investigations pending
against either of the Borrowers or, to the best of the Borrowers'
knowledge, threatened or otherwise pending before any court,
regulatory body, administrative agency or other tribunal or government
instrumentality (A) asserting the invalidity or unenforceability of
any Lease, (B) seeking to prevent payment and performance of any
Lease, or (C) seeking any determination or ruling that might, in the
aggregate, adversely and materially affect the validity or
enforceability of any Lease;
(xii) each of the Borrowers has duly performed all material
obligations on its part required to be performed by it under or in
connection with each Lease, and has done nothing to materially impair
its rights thereunder;
(xiii) each Lease is either an "account" (as defined in
Section 9-106 of the Uniform Commercial Code as in effect in the
Commonwealth of Massachusetts (the "UCC")) or "chattel paper" (as
defined in Section 9-105 of the UCC) or an "instrument" (as defined in
Section 9-105 of the UCC); if the Lease is chattel paper, then (A)
there is only one counterpart of the Lease that constitutes "chattel
paper" for purposes of Section 9-105(b) and 9-308 of the UCC and (B)
either BankVest or its Subsidiaries has a first priority security
interest in the Equipment that is the subject of the Lease;
(xiv) each Lease requires the related Lessee to maintain
the related Equipment, if any, in good and workable order, to obtain
and maintain physical damage insurance on the Equipment subject
thereto and to name the lessor thereunder as loss payee with respect
thereto; each Lessee of Equipment which has an Acquisition Cost equal
to or in excess of $100,000 maintains physical damage insurance on
such
<PAGE>
-26-
Equipment and has named the lessor thereunder as loss payee with
respect thereto; to the best of the Borrowers' knowledge, the
Equipment was properly delivered to the Lessee in good repair, without
defects and in satisfactory order and the related Equipment, if any,
is in good operating condition and repair; to the best of the
Borrowers' knowledge, the related Equipment was accepted by the Lessee
after reasonable opportunity to inspect and test the same and no
Lessee has informed BankVest and its Subsidiaries of any defects
therein;
(xv) no Lease constitutes a "consumer lease" under the
UCC;
(xvi) BankVest, its Subsidiaries and the Servicer have
marked their computer records to reflect the interest granted to the
Bank hereunder;
(xvii) BankVest and its Subsidiaries have segregated the
original Leases and Lease files relating to Designated Lease
Receivables from all other Leases, have kept such original Leases in
folders and have marked all folders containing such original Leases
relating to Designated Lease Receivables to reflect the interest
granted to the Bank hereunder in a manner acceptable to the Bank.
7. CONDITIONS PRECEDENT.
--------------------
7.1. CONDITIONS TO INITIAL REVOLVING CREDIT LOANS. In addition to the
--------------------------------------------
making of the foregoing representations and warranties and the delivery of such
documents and the taking of such actions as the Bank may require at or prior to
the time of executing this Agreement, the obligation of the Bank to make the
initial Revolving Credit Loan to the Borrowers hereunder is subject to the
satisfaction of the following further conditions precedent:
(a) each of the Loan Documents shall have been duly and properly
authorized, executed and delivered by the respective party or parties
thereto and shall be in full force and effect on and as of the Closing Date
and executed original counterparts of each of the Loan Documents shall have
been furnished to the Bank;
(b) the Service Agreement, the Backup Servicer Agreement, the Lockbox
Agreement and the Receivables Collection Agreement shall be in full force
and effect and shall be in form and substance satisfactory to the Bank; the
Bank shall be satisfied in all respects with the cash management and
lockbox arrangements of the Borrowers; the Bank shall have received a fully
executed copy of the Service Agreement, the Backup Servicer Agreement, the
Lockbox Agreement and the Receivables Collection Agreement;
<PAGE>
-27-
(c) receipt by the Bank of copies of all other material agreements
and contracts of BankVest and its Subsidiaries, including, without
limitation, other loan agreements, each certified to be true, correct, and
complete and in full force and effect by an officer of BankVest;
(d) receipt by the Bank from each Borrower of copies, certified by
the corporate secretary (or other comparable officer) of such Borrower to
be true and complete on the Closing Date, of the Charter Documents of such
Borrower;
(e) receipt by the Bank of copies, certified by the corporate
secretary (or other comparable officer) of each Borrower to be true and
complete on the Closing Date, of the records of all actions taken by such
Borrower's directors and shareholders as may be required to authorize (a)
its execution and delivery of each of the Loan Documents, (b) its
performance of all of its agreements and obligations under each of such
documents, and (c) the borrowings, the granting of collateral security for
the Obligations, and other transactions contemplated by this Agreement and
the other Loan Documents;
(f) receipt by the Bank from each Borrower of an incumbency
certificate, dated the Closing Date, signed by the corporate secretary (or
other comparable officer) of each Borrower and certifying the name,
incumbency, title, and specimen signature of each individual who shall be
authorized: (i) to sign on its behalf each of the Loan Documents; (ii) to
make application for the Revolving Credit Loans; and (iii) to give notices
and to take any other action on its behalf under the Loan Documents;
(g) receipt by the Bank of the most recent Credit Policy of BankVest
and its Subsidiaries, which Credit Policy shall be in form and substance
satisfactory to the Bank;
(h) receipt by the Bank from the Borrowers of completed and fully
executed Perfection Certificates and the results of UCC searches with
respect to the Collateral, indicating no Liens other than Liens permitted
under (S)8.2(b) and otherwise in form and substance satisfactory to the
Bank;
(i) receipt by the Bank of an officer's certificate of BankVest dated
as of the Closing Date as to the solvency of BankVest and its Subsidiaries
following the consummation of the transactions contemplated herein and in
form and substance satisfactory to the Bank;
(j) receipt by the Bank of (i) a certificate of insurance, in form
and substance satisfactory to the Bank, from an independent insurance
broker dated as of the date hereof, identifying issuers,
<PAGE>
-28-
types of insurance, insurance limits, and policy terms, requiring the
insurer to give the Bank at least thirty (30) days prior written notice of
cancellation of any insurance, and otherwise describing the insurance
obtained in accordance with the provisions of the Security Documents, and
(ii) certified copies of all policies evidencing such insurance (or
certificates therefor signed by the insurer or an agent authorized to bind
the insurer);
(k) receipt by the Bank of a favorable legal opinion addressed to the
Bank, dated as of the date hereof, in form and substance satisfactory to
the Bank, from Goldstein & Manello, P.C., counsel to BankVest and its
Subsidiaries;
(l) receipt by the Bank of the closing fee and payment in full of all
out-of-pocket expenses of the Bank, including but not limited to attorneys
fees, disbursements, expenses for Commercial Finance Examinations, the
Bank's due diligence review of the Servicer and collateral audits, and fees
of consultants and other professionals;
(m) receipt by the Bank of an initial Borrowing Base Report and a
Lease Receivable Designation Certificate, accurate as of the Closing Date,
and the most recent Lease Receivables aging report of BankVest and its
Subsidiaries, dated as of the Closing Date;
(n) since the date of the most recent Financials reviewed by the
Bank, there shall have been no materially adverse change of any kind in
BankVest or any of its Subsidiaries which would have a Materially Adverse
Effect; and
(o) satisfaction of the conditions precedent set forth in (S)7.2
hereof.
7.2. CONDITIONS TO ALL BORROWINGS. The obligation of the Bank to make any
----------------------------
Revolving Credit Loan to the Borrowers hereunder is subject to the satisfaction
of the following conditions precedent:
(a) each of the representations and warranties of the Borrowers to
the Bank herein, in any of the other Loan Documents or any documents,
certificate or other paper or notice in connection herewith shall be true
and correct in all material respects as of the time made or claimed to have
been made;
(b) no Default or Event of Default shall be continuing;
(c) all proceedings in connection with the transactions contemplated
hereby shall be in form and substance satisfactory to the Bank, and the
Bank shall have received all information and documents as it may have
reasonably requested;
<PAGE>
-29-
(d) no change shall have occurred in any law or regulation or in the
interpretation thereof that in the reasonable opinion of the Bank would
make it unlawful for the Bank to make such Revolving Credit Loan; and
(e) the Bank shall have received a Borrowing Base Report setting
forth the Borrowing Base as of the date of the Loan Request.
8. COVENANTS.
---------
8.1. AFFIRMATIVE COVENANTS. Each of the Borrowers agrees that so long as
---------------------
there are any Revolving Credit Loans outstanding and until the termination of
the Commitment and the payment and satisfaction in full of all the Obligations,
each of the Borrowers will comply with its obligations as set forth throughout
this Agreement and to:
(a) furnish the Bank: (i) as soon as available but in any event
within ninety (90) days after the close of each fiscal year, its audited
Financials for such fiscal year, certified by the Borrowers' accountants,
Coopers & Lybrand L.L.P.; (ii) as soon as available but in any event within
forty-five (45) days after the end of each fiscal quarter its unaudited
Financials for such quarter, certified by its chief financial officer;
(iii) as soon as available but in any event within thirty (30) days after
the end of each fiscal month its unaudited Financials for such month
certified by its chief financial officer; (iv) together with the quarterly
and annual audited Financials, a certificate of the Borrowers, in the form
attached as Exhibit C hereto, setting forth computations demonstrating
------- -
compliance with the Borrowers' financial covenants set forth herein, and
certifying that no Default or Event of Default has occurred, or if it has,
the actions taken by the Borrower with respect thereto; (v) together with
each Loan Request and, in addition, within ten (10) days after the end of
each calendar month or at such earlier time as the Bank may request, a
Borrowing Base Report setting forth the Borrowing Base as of the date of
such Loan Request or at the end of such calendar month, as applicable, and
providing materials supporting the calculation of such Borrowing Base
Report, including without limitation, lease agings, eligibility support,
and lease detail; (vi) within ten (10) days after the end of each calendar
month, a Lease Receivable aging report; and (vii) as soon as practicable,
but in any event not later than thirty (30) days prior to the beginning of
each fiscal year, management-prepared quarterly financial forecasts of
BankVest and its Subsidiaries with respect to each fiscal year;
(b) (i) keep true and accurate books of account in accordance with
GAAP, maintain its current fiscal year and permit the Bank or its
designated representatives to inspect the Borrowers' premises during normal
business hours, and to examine and be advised as to such or other business
records upon the request of the Bank, all at
<PAGE>
-30-
the Borrowers' expense and (ii) permit the Bank's commercial financial
examiners to conduct periodic Commercial Finance Examinations, at the
Borrowers' expense, provided that liability of the Borrowers for such
--------
expenses shall be limited to $750 per examiner, per day, per Commercial
Finance Examination, the number of examiners participating in any
Commercial Finance Examination shall not exceed two (2) and the number of
Commercial Finance Examinations at the Borrowers' Expense shall not exceed
four (4) Commercial Finance Examinations per calendar year, in each case so
long as no Default or Event of Default has occurred and is continuing;
(c) (i) maintain its corporate existence, business and assets, (ii)
keep its business and assets adequately insured, (iii) maintain its chief
executive office in the United States, (iv) continue to engage in the same
lines of business, and (v) comply with all Requirements of Law, including
ERISA and Environmental Laws;
(d) notify the Bank promptly in writing of (i) the occurrence of any
Default or Event of Default, (ii) any noncompliance with ERISA or any
Environmental Law or proceeding in respect thereof which could have a
Materially Adverse Effect, providing the Bank copies of all related notices
and correspondence, (iii) any change of address or additional location,
(iv) any threatened or pending litigation or similar proceeding affecting
either of the Borrowers or any material change in any such litigation or
proceeding previously reported and (v) claims against any assets or
properties of either of the Borrower encumbered in favor of the Bank;
(e) use the proceeds of the Revolving Credit Loans solely for the
short-term financing of Eligible Lease Receivables and not for the carrying
of "margin security" or "margin stock" within the meaning of Regulations U
and X of the Board of Governors of the Federal Reserve System, 12 C.F.R.
Parts 221 and 224;
(f) subject to (S)8.2(h) hereof, promptly furnish to the Bank any
amendments, modifications or supplementations to the most recent Credit
Policy of BankVest and its Subsidiaries;
(g) cooperate with the Bank, take such action, execute such
documents, and provide such information as the Bank may from time to time
reasonably request in order further to effect the transactions contemplated
by and the purposes of the Loan Documents; and
(h) ensure that all proceeds of Collateral are (i) sent to the
Lockbox Bank and (ii) transferred within five (5) Business Days of the
Lockbox Bank's receipt thereof to the BKB Account, all in accordance with
the Receivables Collection Agreement, provided that, prior to an Event of
--------
Default, any or all funds in the BKB Account will be transferred to
designated accounts of the Borrowers acceptable to the
<PAGE>
-31-
Bank, and otherwise maintain cash management and lockbox arrangements
satisfactory in form and substance to the Bank in its sole discretion.
8.2. NEGATIVE COVENANTS. Each of the Borrowers agrees that so long as
------------------
there are any Revolving Credit Loans outstanding and until the termination of
the Commitment and the payment and satisfaction in full of all the Obligations,
neither of the Borrowers will:
(a) create, incur, permit to exist or assume any Indebtedness other
than (i) Indebtedness to the Bank, (ii) Indebtedness that contains negative
or financial covenants that are not more restrictive in any material
respect to BankVest or any of its Subsidiaries than the negative or
financial covenants contained in this Agreement, provided that no Default
--------
or Event of Default exists at the time of the incurrence of such
Indebtedness or would result therefrom, (iii) current liabilities of the
Borrowers not incurred through the borrowing of money or the obtaining of
credit except credit on an open account customarily extended, (iv)
Indebtedness in respect of taxes or other governmental charges contested in
good faith and by appropriate proceedings and for which adequate reserves
have been taken; (v) Subordinated Debt; (vi) Indebtedness of a Borrower to
a Borrower; and (vii) existing Indebtedness not included above and listed
on Schedule 8.2(a) hereto;
---------------
(b) create, incur, permit to exist or assume any Liens on any of the
property or assets of any of the Borrowers except (i) Liens in favor of the
Bank securing the Obligations; (ii) Liens securing taxes or other
governmental charges not yet due; (iii) deposits or pledges made in
connection with worker's compensation, unemployment insurance, old age
pension, social security, retirement benefits or other similar legislation;
(iv) Liens of carriers, warehousemen, mechanics and materialmen, less than
120 days old as to obligations not yet due; (v) easements, rights-of-way,
zoning restrictions, restrictions on the use of real property and defects
and irregularities in the title thereto, landlord's or lessor's liens under
leases to which either of the Borrower is a party and similar minor Liens
which individually and in the aggregate do not have a Materially Adverse
Effect; and (vi) Liens on assets of the Borrowers not constituting
Collateral to secure Indebtedness of the type and amount permitted by
(S)8.2(a)(ii);
(c) create, form or permit to exist any Subsidiaries (other than
LeaseVest and The Equipment Leasing Insurance Co. Ltd., or make or permit
to exist any investments other than investments in (i) marketable
obligations of the United States maturing within one (1) year; (ii)
certificates of deposit, bankers' acceptances and time and demand deposits
of United States banks having total assets in excess of $1,000,000,000;
(iii) investments by a Borrower in another Borrower; (iv) investments by
the Borrowers in The Equipment
<PAGE>
-32-
Leasing Insurance Co. Ltd. not to exceed $500,000 in the aggregate; or (v)
such other investments as the Bank may from time to time approve in
writing; provided, however, that in each such case referred to in this
-------- -------
(S)8.2(c), arrangements have been made to the satisfaction of the Bank for
the perfection and protection and the preservation of the Bank's Lien
therein where applicable;
(d) make any dividends or distributions on or in respect of any
shares of any class of its capital stock of any nature whatsoever, other
than (i) dividends payable solely in shares of common or preferred stock in
place of cash distributions, (ii) dividends or distributions by LeaseVest
or The Equipment Leasing Insurance Co. Ltd. to BankVest, (iii) so long as
both immediately before and after giving effect to the proposed
distribution no Default or Event of Default shall have occurred and be
continuing, distributions consisting of the repurchase by BankVest of
capital stock of BankVest owned by former employees of BankVest not to
exceed in aggregate amount $300,000 in any fiscal year, and (iv) so long as
both immediately before and after giving effect to the proposed dividend no
Default or Event of Default shall have occurred and be continuing and the
Borrowers have delivered to the Bank their audited Financials and
Compliance Certificate for the fiscal year most recently ended, dividends
or distributions by BankVest during any fiscal year not to exceed in
aggregate amount 35% of Consolidated Net Income for the previous fiscal
year;
(e) become party to a merger or consolidation with any other parties
(other than the merger or consolidation of a Subsidiary of BankVest with
and into BankVest) or any sale-leaseback transaction, or effect any sale,
transfer or other disposition of any assets or any interests therein other
than in the ordinary course, consistent with past practices or purchase,
lease or otherwise acquire assets other than in the ordinary course,
consistent with past practices and other than the sale of Designated Lease
Receivables, provided that in connection with the sale of any Designated
--------
Lease Receivables, the Bank will release its Lien on such Designated Lease
Receivables so long as prior to such sale the Borrowers shall have
delivered a Borrowing Base Report dated the date of such sale indicating
that after giving effect to such sale the outstanding principal amount of
all Revolving Credit Loans does not exceed the Borrowing Base;
(f) enter into, or cause, allow or permit to exist any transaction or
agreement with any Affiliate except any transaction or agreement having
terms not less favorable to the Borrowers than would be the case if such
transaction or agreement had been entered into with a Person that is not an
Affiliate;
(g) amend, supplement or otherwise modify the terms of the Service
Agreement, the Backup Servicer Agreement, the Receivables
<PAGE>
-33-
Collection Agreement or the Lockbox Agreement without ten (10) Business
Days prior notice to the Bank and, in the event that the Bank determines
that such amendment, supplementation or modification impacts the Bank and
the Bank notifies the Borrowers of such determination, the prior consent of
the Bank; or
(h) amend, supplement or otherwise modify in any material way the
Credit Policy without the prior consent of the Bank.
8.3. FINANCIAL COVENANTS. Each of the Borrowers agrees that so long as
-------------------
there are any Revolving Credit Loans outstanding and until the termination of
the Commitment and the payment and satisfaction in full of all the Obligations,
neither of the Borrowers will:
(a) permit the ratio of (i) Consolidated Total Liabilities at the end
of any fiscal quarter to (ii) the sum of Consolidated Tangible Net Worth at
the end of such fiscal quarter plus the aggregate outstanding amount of
----
Subordinated Debt as at the end of such fiscal quarter to exceed 6.00 to
1.00;
(b) permit the sum of Lease Receivables for which payment is thirty
(30) days past the original due date therefor, calculated at the end of
each fiscal month, to exceed 7.0% of net Lease Receivables;
(c) (i) permit Consolidated Net Income for any two consecutive fiscal
quarters (measured at the end of each fiscal quarter) to be less than $1.00
and (ii) permit Consolidated Net Deficit for any fiscal quarter to exceed
$100,000; or
(d) permit Reserves as at the end of any fiscal quarter to be less
than 1.8% of the aggregate amount of net Lease Receivables outstanding at
the end of such fiscal quarter.
9. EVENTS OF DEFAULT; ACCELERATION.
-------------------------------
If any of the following events ("Events of Default") shall occur:
(a) the Borrowers shall fail to pay when due and payable any
principal of the Revolving Credit Loans when the same becomes due;
(b) the Borrowers shall fail to pay interest on the Revolving Credit
Loans or any other sum due under any of the Loan Documents on the date on
which the same shall have first become due and payable;
(c) either of the Borrowers shall fail to perform any term, covenant
or agreement contained in (S)(S)8.1(a), 8.1(d) through (h), 8.2 and 8.3;
<PAGE>
-34-
(d) either of the Borrowers shall fail to perform any other term,
covenant or agreement contained in the Loan Documents within fifteen (15)
days after the Bank has given written notice of such failure to the
Borrowers;
(e) any representation or warranty of either of the Borrowers or any
of their Subsidiaries in the Loan Documents or in any certificate or notice
given in connection therewith shall have been false or misleading in any
"material respect" at the time made or deemed to have been made. As used
herein, "material respect" shall mean if it has any impact on the
enforceability of the Loan Documents or with regard to the ability of the
Bank to receive payment in full in cash of the Obligations;
(f) either of the Borrowers or any of their Subsidiaries shall be in
default (after any applicable period of grace or cure period) under any
agreement or agreements evidencing Indebtedness owing to the Bank or any
affiliates of the Bank or in excess of $250,000 in aggregate principal
amount, or shall fail to pay such Indebtedness when due, or within any
applicable period of grace;
(g) any of the Loan Documents shall cease to be in full force and
effect;
(h) either of the Borrowers or any of their Subsidiaries (i) shall
make an assignment for the benefit of creditors, (ii) shall be adjudicated
bankrupt or insolvent, (iii) shall seek the appointment of, or be the
subject of an order appointing, a trustee, liquidator or receiver as to all
or part of its assets, (iv) shall commence, approve or consent to, any case
or proceeding under any bankruptcy, reorganization or similar law and, in
the case of an involuntary case or proceeding, such case or proceeding is
not dismissed within forty-five (45) days following the commencement
thereof, or (v) shall be the subject of an order for relief in an
involuntary case under federal bankruptcy law;
(i) either of the Borrowers or any of their Subsidiaries shall be
unable to pay its debts as they mature;
(j) there shall remain undischarged for more than thirty (30) days
any final judgment or execution action against either of the Borrowers or
any of their Subsidiaries that, together with other outstanding claims and
execution actions against the Borrowers and their Subsidiaries exceeds
$100,000 in the aggregate;
(k) BankVest shall cease to own legally or beneficially 100% or more
of the Voting Stock of LeaseVest or The Equipment Leasing Insurance Co.
Ltd. (except as permitted by (S)8.2(e));
<PAGE>
-35-
(l)(i) either Paul S. Gass or John P. Colton shall in the aggregate,
at any time, cease to maintain ownership and control of at least fifty
percent (50%) of the Voting Stock of BankVest owned by Paul S. Gass and
John P. Colton, collectively, on a fully diluted basis, as of the Closing
Date or (ii) either Paul S. Gass or John P. Colton shall cease to be
employed in a senior management position with the Borrowers or there shall
occur any substantial diminution in the senior management positions, duties
and responsibilities of either of Paul S. Gass or John P. Colton;
THEN, or at any time thereafter:
(1) In the case of any Event of Default under clause (h) or (i), the
Commitment shall automatically terminate and the Bank shall be relieved of
all further obligations to make Revolving Credit Loans, and the entire
unpaid principal amount of the Revolving Credit Loans, all interest accrued
and unpaid thereon, and all other amounts payable thereunder and under the
other Loan Documents shall automatically become forthwith due and payable,
without presentment, demand, protest or notice of any kind, all of which
are hereby expressly waived by the Borrowers; and
(2) In the case of any Event of Default other than (h) and (i), the
Bank may, by written notice to the Borrowers, terminate the Commitment
and/or declare the unpaid principal amount of the Revolving Credit Loans,
all interest accrued and unpaid thereon, and all other amounts payable
hereunder and under the other Loan Documents to be forthwith due and
payable, without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by the Borrowers.
No remedy herein conferred upon the Bank is intended to be exclusive of any
other remedy and each and every remedy shall be cumulative and in addition to
every other remedy hereunder, now or hereafter existing at law or in equity or
otherwise.
10. SETOFF.
------
Regardless of the adequacy of any collateral for the Obligations, any
deposits or other sums credited by or due from the Bank to the Borrowers may be
applied to or set off against any principal, interest and any other amounts due
from the Borrowers to the Bank at any time without notice to the Borrowers, or
compliance with any other procedure imposed by statute or otherwise, all of
which are hereby expressly waived by the Borrowers.
11. MISCELLANEOUS.
-------------
Each of the Borrowers jointly and severally agrees to indemnify and hold
harmless the Bank and its officers, employees, affiliates, agents, and
controlling persons from and against all claims, damages, liabilities and
<PAGE>
-36-
losses of every kind arising out of the Loan Documents, including without
limitation, against those in respect of the application of Environmental Laws to
the Borrowers and their Subsidiaries absent the gross negligence or willful
misconduct of the Bank. The Borrowers shall pay to the Bank promptly on demand
all costs and expenses (including any taxes and reasonable legal and other
professional fees and fees of its commercial finance examiner) incurred by the
Bank in connection with the preparation, negotiation, execution, amendment,
administration or enforcement of any of the Loan Documents; provided that the
--------
Bank's legal fees in connection with the preparation, negotiation and execution
of the Loan Documents shall not exceed $35,000 plus disbursements. Any
communication to be made hereunder shall (i) be made in writing, but unless
otherwise stated, may be made by telex, facsimile transmission or letter, and
(ii) be made or delivered to the address of the party receiving notice which is
identified with its signature below (unless such party has by five (5) days
written notice specified another address), and shall be deemed made or
delivered, when dispatched, left at that address, or five (5) days after being
mailed, postage prepaid, to such address. This Agreement shall be binding upon
and inure to the benefit of each party hereto and its successors and assigns,
but neither of the Borrowers may assign its rights or obligations hereunder.
This Agreement may not be amended or waived except by a written instrument
signed by the Borrowers, and the Bank, and any such amendment or waiver shall be
effective only for the specific purpose given. No failure or delay by the Bank
to exercise any right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege preclude any other
right, power or privilege. The provisions of this Agreement are severable and if
any one provision hereof shall be held invalid or unenforceable in whole or in
part in any jurisdiction, such invalidity or unenforceability shall affect only
such provision in such jurisdiction. This Agreement, together with all Schedules
and Exhibits hereto, expresses the entire understanding of the parties with
respect to the transactions contemplated hereby. This Agreement and any
amendment hereby may be executed in several counterparts, each of which shall be
an original, and all of which shall constitute one agreement. In proving this
Agreement, it shall not be necessary to produce more than one such counterpart
executed by the party to be charged. THIS AGREEMENT AND THE NOTES ARE CONTRACTS
UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL BE CONSTRUED IN
ACCORDANCE THEREWITH AND GOVERNED THEREBY. EACH OF THE BORROWERS AGREES THAT ANY
SUIT FOR THE ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS MAY BE BROUGHT IN THE
COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING
THEREIN. Each of the Borrowers as an inducement to the Bank to enter into this
Agreement, hereby waives its right to a jury trial with respect to any action
arising in connection with any Loan Document.
<PAGE>
-37-
IN WITNESS WHEREOF, the undersigned have duly executed this Revolving
Credit Agreement as a sealed instrument as of the date first above written.
BANKVEST CAPITAL CORP.
By:_____________________________
John P. Colton,
Executive Vice President
Address:
114 Turnpike Road
Westboro, MA 01581
Attn: John P. Colton,
Executive Vice President
Tel: (508) 366-7800
Fax: (508) 870-0260
LEASEVEST CAPITAL CORP.
By:_________________________
John P. Colton,
Executive Vice President
Address:
114 Turnpike Road
Westboro, MA 01581
Attn: John P. Colton,
Executive Vice President
Tel: (508) 366-7800
Fax: (508) 870-0260
<PAGE>
-38-
THE FIRST NATIONAL BANK OF
BOSTON
By:_____________________________
Laurent Favre, Director
Address:
100 Federal Street
Mailstop 01-09-06
Boston, MA 02110
Attn: Scott M. D'Orsi,
Asset Based Lending
Tel: (617) 434-2003
Fax: (617) 434-6241
<PAGE>
REVOLVING CREDIT NOTE
---------------------
$15,000,000.00 September 12, 1996
FOR VALUE RECEIVED, the undersigned BANKVEST CAPITAL CORP., a Massachusetts
corporation and LEASEVEST CAPITAL CORP., a Massachusetts corporation
(collectively, the "Borrowers"), hereby promise to pay to the order of THE FIRST
NATIONAL BANK OF BOSTON, a national banking association (the "Bank") at the
Bank's head office at 100 Federal Street, Boston, Massachusetts 02110:
(a) prior to or on the Maturity Date the principal amount of FIFTEEN
MILLION DOLLARS ($15,000,000.00) or, if less, the aggregate unpaid
principal amount of Revolving Credit Loans advanced by the Bank to the
Borrowers pursuant to the Revolving Credit Agreement dated as of September
12, 1996 (as amended and in effect from time to time, the "Credit
Agreement"), among the Borrowers and the Bank;
(b) the principal outstanding hereunder from time to time at the
times provided in the Credit Agreement; and
(c) interest on the principal balance hereof from time to time
outstanding from the Closing Date under the Credit Agreement through and
including the maturity date hereof at the times and at the rate provided in
the Credit Agreement.
This Revolving Credit Note (this "Note") evidences borrowings under and has
been issued by the Borrowers in accordance with the terms of the Credit
Agreement. The Bank and any holder hereof is entitled to the benefits of the
Credit Agreement, the Security Documents and the other Loan Documents, and may
enforce the agreements of the Borrowers contained therein, and any holder hereof
may exercise the respective remedies provided for thereby or otherwise available
in respect thereof, all in accordance with the respective terms thereof. All
capitalized terms used in this Note and not otherwise defined herein shall have
the same meanings herein as in the Credit Agreement.
Each of the Borrowers irrevocably authorizes the Bank to make or cause to
be made, at or about the time of the Drawdown Date of any Revolving Credit Loan
or at the time of receipt of any payment of principal of this Note, an
appropriate notation on the grid attached to this Note, or the continuation of
such grid, or any other similar record, including computer records, reflecting
the making of such Revolving Credit Loan or (as the case may be) the receipt of
such payment. The outstanding amount of the Revolving Credit Loans set forth on
the grid attached to this Note, or the continuation of such grid, or any other
similar record, including computer records, maintained by the Bank with respect
to any Revolving Credit Loans shall be prima facie evidence of the principal
----- -----
amount thereof owing and
<PAGE>
-2-
unpaid to the Bank, but the failure to record, or any error in so recording, any
such amount on any such grid, continuation or other record shall not limit or
otherwise affect the obligation of the Borrowers hereunder or under the Credit
Agreement to make payments of principal of and interest on this Note when due.
The Borrowers have the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire unpaid
principal amount of this Note and all of the unpaid interest accrued thereon may
become or be declared due and payable in the manner and with the effect provided
in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any further occasion.
Each of the Borrowers and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWERS HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). EACH OF THE BORROWERS AGREES THAT ANY SUIT FOR THE ENFORCEMENT
OF THIS NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS
OR ANY FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING
MADE UPON THE BORROWERS BY MAIL AT THE ADDRESS SPECIFIED BY REFERENCE IN (S)11
OF THE CREDIT AGREEMENT. EACH OF THE BORROWERS HEREBY WAIVES ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR
THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
This Note shall be deemed to take effect as a sealed instrument under the
laws of the Commonwealth of Massachusetts.
<PAGE>
-3-
IN WITNESS WHEREOF, each of the undersigned have caused this Revolving
Credit Note to be signed in its corporate name by its duly authorized officer as
of the day and year first above written.
BANKVEST CAPITAL CORP.
By:____________________________
John P. Colton,
Executive Vice President
LEASEVEST CAPITAL CORP.
By:____________________________
John P. Colton,
Executive Vice President
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Amount Amount of Balance of
of Revolving Principal Paid Principal Notation
Date Credit Loan or Prepaid Unpaid Made By:
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
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- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
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- -------------------------------------------------------------------------------------------------
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- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
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- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
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- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
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</TABLE>
<PAGE>
EXHIBIT 10.34
AMENDMENT TO
REVOLVING CREDIT AGREEMENT
Dated as of January 1, 1997
This AMENDMENT TO THE REVOLVING CREDIT AGREEMENT (this "Amendment") dated
---------
as of September 12, 1996 (the "Credit Agreement") by and among BANKVEST CAPITAL
----------------
CORP., ("BankVest" or a "Borrower"), a Massachusetts corporation having its
-------- --------
principal place of business at 114 Turnpike Road, Westboro, MA 01581, LEASEVEST
CAPITAL CORP., ("LeaseVest" or a "Borrower" and, together with BankVest, the
--------- --------
"Borrowers"), a Massachusetts corporation having its principal place of business
- ----------
at 114 Turnpike Road, Westboro, MA 01581, and THE FIRST NATIONAL BANK OF BOSTON
(the "Bank"), a national banking association with its head office at 100 Federal
----
Street, Boston, Massachusetts 02110, is entered into as of the date set forth
above.
WHEREAS, the Borrowers and the Bank have agreed to modify certain terms and
conditions of the Credit Agreement, as specifically set forth in this Amendment;
NOW, THEREFORE, in consideration of the foregoing premise and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Borrowers and the Bank hereby agree as follows:
(S)1. DEFINITIONS. Capitalized terms used herein and not otherwise
-----------
defined herein have the meanings given to such terms in the Credit Agreement as
amended hereby.
(S)2. AMENDMENT TO SECTION 2.4 OF THE CREDIT AGREEMENT. Clause (i) of
------------------------------------------------
Section 2.4 of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:
(i) each Revolving Credit Loan which is a Base Rate Loan shall bear
interest for the period commencing with the Drawdown Date thereof and ending on
the last day of the Interest Period with respect thereto at the rate of the Base
Rate,
(S)3. MISCELLANEOUS. Except as expressly set forth in this Amendment, all
-------------
of the terms and provisions of the Revolving Credit Agreement shall remain in
full force and effect. This Amendment may be executed in counterparts and shall
be governed by and construed in accordance with the laws of the Commonwealth of
Massachusetts.
<PAGE>
-2-
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as an
instrument under seal to be effective as of the date first above written.
BANKVEST CAPITAL CORP.
By:______________________________
John P. Colton
Executive Vice President
LEASEVEST CAPITAL CORP.
By:______________________________
John P. Colton
Executive Vice President
THE FIRST NATIONAL BANK OF BOSTON
By:______________________________
Name:_________________________
Title:________________________
<PAGE>
EXHIBIT 10.35
AMENDMENT NO. 2 TO
REVOLVING CREDIT AGREEMENT
AND SECURITY AGREEMENT
This AMENDMENT NO. 2 (this "Amendment"), dated as of December 5, 1997 by
---------
and among BANKVEST CAPITAL CORP. ("BankVest" or a "Borrower"), a Massachusetts
-------- --------
corporation having its principal place of business at 114 Turnpike Road,
Westboro, MA 01581, LEASEVEST CAPITAL CORP. ("LeaseVest" or a "Borrower" and,
--------- --------
together with BankVest, the "Borrowers"), a Massachusetts corporation having its
---------
principal place of business at 114 Turnpike Road, Westboro, MA 01581, and
BANKBOSTON, N.A. (f/k/a The First National Bank of Boston) (the "Bank"), a
----
national banking association with its head office at 100 Federal Street, Boston,
Massachusetts 02110, amends (i) the Revolving Credit Agreement dated as of
September 12, 1996, as amended as of January 1, 1997 (as so amended and as may
be further amended and in effect from time to time, the "Credit Agreement")
----------------
among the Borrowers and the Bank and (ii) the Security Agreement dated as of
September 12, 1996 (as amended and in effect from time to time, the "Security
--------
Agreement") among the Borrowers and the Bank.
- ---------
WHEREAS, the Borrowers and the Bank have agreed to modify and amend certain
terms and conditions of the Credit Agreement and the Security Agreement, as
specifically set forth in this Amendment;
NOW, THEREFORE, in consideration of the foregoing premise and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Borrowers and the Bank hereby agree as follows:
(S)1. DEFINITIONS. Capitalized terms used herein and not otherwise
-----------
defined herein have the meanings given to such terms in the Credit Agreement as
amended hereby.
(S)2. AMENDMENTS TO THE CREDIT AGREEMENT. The Credit Agreement is hereby
----------------------------------
amended as follows:
(a) The definition of "Backup Servicer Agreement" set forth in (S)1 of
the Credit Agreement is deleted in its entirety.
(b) The definition of "Commitment" set forth in (S)1 of the Credit
Agreement is amended by deleting the dollar amount "$15,000,000" and
substituting in place thereof the dollar amount "$20,000,000".
(c) The definition of "Delinquent Account" set forth in (S)1 of the
Credit Agreement is amended by inserting before the period at the end thereof
the phrase "in an amount equal to the higher of (a) ten dollars or more or (b)
ten percent or more of any scheduled lease payment".
(d) The definition of "Eligible Lease Receivables" set forth in (S)1 of
the Credit Agreement is amended by:
<PAGE>
-2-
(i) deleting the word "or" at the end of clause (c)(iii) thereof and
substituting in place thereof the word "and";
(ii) replacing clause (f) thereof in its entirety with the following
new clause (f):
"(f) that related to a Lease which was originated in
accordance with such Borrower's Credit Policy or acquired by a
Borrower in the ordinary course of its business and complies with such
Borrower's Credit Policy;"
(iii) deleting the term "sixty (60) months" in clause (l) thereof and
inserting in place thereof the phrase:
"seventy-two (72) months, provided, however, that no more than ten
-------- -------
percent (10%) of the total amount of Eligible Lease Receivables may be
the subject of Leases having an original term of greater than sixty
(60) months"
(iv) amending clause (p) thereof by deleting the dollar amount
"$1,000,000" and substituting in place thereof the dollar amount
"$2,000,000"; and
(v) deleting the word "and" before clause (r) thereof and inserting
a new clause (s) as follows:
"and (s) that is not the result of a sale-leaseback transaction,
provided, however, that not more than ten percent (10%) of the total
-------- -------
amount of Eligible Lease Receivables may be the subject of sale-
leaseback transactions"
(e) The definition of "Equipment" set forth in (S)1 of the Credit
Agreement is amended by inserting before the period at the end thereof the
phrase "or from a lessor who sold the Lease and the underlying equipment to
either of the Borrowers."
(f) The definition of "Interest Period" is amended by restating clause (i)
(B) thereof to read as follows:
"(B) for any Eurodollar Rate Loan, 1, 2 or 3 weeks or 1, 2 or 3
months; and"
(g) The definition of "Lease Receivables" set forth in (S)1 of the Credit
Agreement is hereby amended by inserting after the word "Borrower" and before
the phrase "as determined in accordance with GAAP" the phrase "or lease
obligations of the Lessees assigned or sold by a lessor to such Borrower, all".
(h) The definition of "Lockbox Agreement" set forth in (S)1 of the Credit
Agreement is amended by inserting at the end thereof the phrase "and as amended
from time to time solely to add other parties."
<PAGE>
-3-
(i) The definition of "Maturity Date" set forth in (S)1 of the Credit
Agreement is amended by deleting the reference to the year "1997" and
substituting in place thereof the reference to the year "1998".
(j) The definition of "NorWest" set forth in (S)1 of the Credit Agreement
is deleted in its entirety.
(k) The definition of "Rewrites" set forth in (S)1 of the Credit Agreement
is amended by inserting before the period at the end of such definition the
phrase:
"more than once, excluding changes relating to administrative matters made
during the first six (6) months of the Lease term;"
(l) The following definition of "Second Amendment Date" is inserted in the
appropriate alphabetically sequence in (S)1 of the Credit Agreement:
"Second Amendment Date. December 5, 1997."
---------------------
(m) The definition of "Servicer" set forth in (S)1 of the Credit Agreement
is amended and restated in its entirety to read as follows:
"Servicer. Parrish or any successor thereto acceptable to the Bank and
--------
which acceptance shall not be unreasonably withheld and who has become a
party to the Receivable Collection Agreement and has entered into a service
agreement with the Borrowers in form and substance satisfactory to the
Bank."
(n) The definition of "Subordinated Debt" set forth in (S)1 of the Credit
Agreement is amended by deleting the phrase "in form and substance acceptable to
the Bank" and substituting in place thereof the phrase:
"on substantially the same terms as contained in the Securities Purchase
Agreement dated February 28, 1997 by and between BankVest and J.H. Whitney
Subordinated Debt Fund, L.P. in the form delivered to the Bank on or prior
to the Second Amendment Date."
(o) Section 2.2.2 of the Credit Agreement is amended by deleting the
dollar amount "$15,000,000" and substituting in place thereof the dollar amount
"$20,000,000".
(p) Section 4 of the Credit Agreement is amended by deleting the
percentage "one-half percent (0.50%)" in the second sentence thereof and
substituting in place thereof the percentage "one-quarter percent (0.25%)".
(q) Section 5 of the Credit Agreement is amended by inserting after the
phrase "in each case" in the eighth line thereof the phrase "insofar as the
foregoing relate to the Designated Lease Receivables and".
(r) Section 6(d) of the Credit Agreement is amended by deleting the
reference to the year "1996" in the first clause thereof.
(s) Section 6(j) of the Credit Agreement is amended by:
<PAGE>
-4-
(i) inserting after the word "LeaseVest" in the first line thereof
the words ", BV Funding Corp., BVFU Funding Corp."; and
(ii) deleting the final clause thereof from and after the semi-colon
in the second line thereof and substituting in place thereof the phrase:
"and such other Subsidiaries or joint ventures as the Borrowers may
from time to time form, acquire or enter into in accordance with
(S)8.2(c) hereof;"
(t) Section 8.1(a) of the Credit Agreement is amended by deleting the name
"Coopers & Lybrand" in clause (i) thereof and substituting in place thereof the
name "Deloitte & Touche."
(u) Section 8.2(a) of the Credit Agreement is amended and restated in its
entirety to read as follows: "Intentionally Omitted".
---------------------
(v) Section 8.2(b)(vi) of the Credit Agreement is amended and restated in
its entirety to read as follows:
"(vi) Liens on assets of the Borrowers not constituting Collateral to
secure Indebtedness, provided that Liens on patents, trademarks, other
--------
intellectual property and general intangibles of the Borrowers shall be
permitted only to the extent such intellectual property and general
intangibles relate specifically to the Lease Receivables being pledged to
secure such Indebtedness;"
(w) Section 8.2(c) of the Credit Agreement is amended by:
(i) inserting after the word "Ltd.," in the second line thereof the
phrase:
"as well as special purpose Subsidiaries for use in securitizations
and other Subsidiaries formed or acquired by either Borrower in the
ordinary course of business or joint ventures entered into by either
Borrower in the ordinary course of business, provided that (A) such
Subsidiaries or joint ventures are engaged in the same line of
business as the Borrowers (i.e. the leased financing of equipment
having book values of less than $500,000) and (B) BankVest has a
consolidated tangible net worth plus subordinated debt of not less
than $40,000,000 at the time of such formation, acquisition or
entrance into such Subsidiary or joint venture)"; and
(ii) deleting the words "or (v)" and substituting in place thereof
the following "(v) investments by the Borrowers in Subsidiaries and joint
ventures to the extent the existence of such Subsidiaries and joint
ventures is otherwise permitted under this (S)8.2(c); or (vi)".
(x) Section 8.2(d) of the Credit Agreement is amended and restated in its
entirety as follows:
<PAGE>
-5-
"(d) make any dividends or distributions on or in respect of any
shares of any class of its capital stock of any nature whatsoever, if,
either before or immediately after giving effect to the proposed
distributions or dividends, a Default or Event of Default shall have
occurred and be continuing;"
(y) Section 8.2(e) of the Credit Agreement is hereby amended by:
(i) inserting after the word "BankVest" in the third line thereof
the phrase:
"or a merger or consolidation as a result of which the surviving
corporate entity is BankVest, provided that no Default or Event of
Default shall have occurred and be continuing or would result from
such merger or consolidation";
(ii) deleting the phrase "or any sale-leaseback transaction" in the
third line thereof; and
(iii) inserting after the phrase "in the ordinary course" in line five
thereof the phrase "(securitizations and other sales of Leases being
acknowledged as in the ordinary course of business)".
(z) Section 8.2(f) of the Credit Agreement is amended by inserting before
the semi-colon at the end thereof the phrase "and any securitizations".
(aa) Section 8.2(g) of the Credit Agreement is amended by deleting the
words "the Backup Servicer Agreement,".
(bb) Section 8.2(h) of the Credit Agreement is amended by inserting at the
end thereof the phrase "and which consent shall not be unreasonably withheld."
(cc) Section 8.3(b) of the Credit Agreement is amended by deleting the
phrase "fiscal month" in the third line thereof and substituting in place
thereof the phrase "fiscal quarter".
(dd) Section 8.3(c) of the Credit Agreement is amended by:
(i) deleting the word "two" in the first line thereof and
substituting in place thereof the word "four"; and
(ii) deleting the dollar amount "$100,000" in line four thereof and
substituting in place thereof the dollar amount "$200,000".
(ee) Section 9(f) of the Credit Agreement is amended by deleting the dollar
amount "$250,000" in the fourth line thereof and substituting in place thereof
the dollar amount "$500,000".
(ff) Section 9(j) of the Credit Agreement is amended by deleting the dollar
amount "$100,000" in the fifth line thereof and substituting in place thereof
the dollar amount "$500,000".
<PAGE>
-6-
(gg) Section 9(l) of the Credit Agreement is amended and restated in its
entirety to read as follows:
"(i) any person or group of persons (within the meaning of Section 13
or 14 of the Securities Exchange Act of 1934, as amended) (other than
shareholders of BankVest as of the Second Amendment Date) shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated
by the Securities and Exchange Commission under said Act) of 20% or more of
the outstanding shares of common stock of BankVest; or, during any period
of twelve consecutive calendar months, individuals who were directors of
BankVest on the first day of such period shall cease to constitute a
majority of the board of directors of BankVest;"
(S)3. AMENDMENT TO THE SECURITY AGREEMENT. Section 2.1(e) of the Security
-----------------------------------
Agreement is amended by inserting before the semi-colon at the end of such
paragraph the phrase ", to the extent the foregoing relate to any Designated
Lease Receivables".
(S)4. AFFIRMATION BY THE BORROWERS. Each of the Borrowers hereby ratifies
----------------------------
and confirms all of the Obligations and each of the Borrowers hereby affirms its
absolute and unconditional joint and several promise to pay to the Bank the
Revolving Credit Loans and all other amounts due under the Credit Agreement as
amended hereby. Each of the Borrowers hereby confirms that the Obligations are
and remain secured pursuant to the Security Documents to which such Borrower is
a party.
(S)5. AMENDMENT FEE. The Borrowers shall pay to the Bank an amendment fee
-------------
in an aggregate amount equal to $50,000 with a portion of such fee equal to
$25,000 due and payable on or prior to the Effective Date of this Amendment and
the remaining portion due and payable on July 1, 1998.
(S)6. CONDITIONS TO EFFECTIVENESS. The effectiveness of this Amendment
---------------------------
shall be conditioned upon the satisfaction of the following conditions
precedent.
(S)6.1. DELIVERY OF DOCUMENTS. The Borrowers shall have delivered to the
---------------------
Agent, contemporaneously with the execution hereof, or there shall have
otherwise been delivered to the Agent, the following, in form and substance
satisfactory to the Banks:
(a) this Amendment executed and delivered by each of the Borrowers and the
Bank;
(b) a restated Revolving Credit Note in favor of the Bank duly authorized,
executed and delivered by each of the Borrowers; and
(c) evidence of corporate resolutions of each Borrower authorizing the
additional borrowings contemplated under this Amendment.
(S)6.2. AMENDMENT FEE. The Borrowers shall have paid to the Bank a
-------------
portion of amendment fee in an amount equal to $25,000.
<PAGE>
-7-
(S)6.3. LEGAL FEES. Each Borrower confirms and agrees that it shall pay
----------
or reimburse the Bank for all legal fees and disbursements of counsel for the
Bank in connection with this Agreement.
(S)7. CONDITION SUBSEQUENT. The Borrowers shall pay to the Bank on July
--------------------
1, 1998 the remaining portion of the amendment fee in an amount equal to
$25,000. Failure to make such payment on such date shall be an immediate Event
of Default.
(S)8. REPRESENTATIONS AND WARRANTIES. Each of the Borrowers hereby
------------------------------
represents and warrants to the Banks as follows:
(a) The representations and warranties of such Borrower contained in
the Credit Agreement, as amended hereby were true and correct in all material
respects when made and are and continue to be true and correct in all material
respects on the date hereof, except that the financial statements referred to
therein shall be the financial statements of such Borrower most recently
delivered to the Agent, and except as such representations and warranties are
affected by the transactions contemplated hereby.
(b) The execution, delivery and performance by such Borrower of this
Amendment and the consummation of the transactions contemplated hereby: (i) are
within the corporate powers of such Borrower and have been duly authorized by
all necessary corporate action on the part of such Borrower, (ii) to the best of
such Borrower's knowledge, do not require any approval, consent of, or filing on
the part of such Borrower with, any governmental agency or authority, or any
other person, association or entity, which bears on the validity of this
Amendment and which is required by law or the regulation or rule of any agency
or authority, or other person, association or entity, (iii) do not violate any
provisions of any order, writ, judgment, injunction, decree, determination or
award presently in effect in which such Borrower is named, or any provision of
the charter documents or by-laws of such Borrower, (iv) do not result in any
breach of or constitute a default under any agreement or instrument to which
such Borrower is a party or to which it or any of its properties are bound,
including without limitation any indenture, loan or loan agreement, lease, debt
instrument or mortgage, except for such breaches and defaults which would not
have a material adverse effect on such Borrower and its Subsidiaries taken as a
whole, and (v) except as specified in this Amendment, do not result in or
require the creation or imposition of any mortgage, deed of trust, pledge or
encumbrance of any nature upon any of the assets or properties of such Borrower.
(c) This Amendment, the Credit Agreement as amended hereby, and the
other Loan Documents constitute the legal, valid and binding obligations of such
Borrower, enforceable against such Borrower in accordance with their respective
terms, provided that (i) enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws of general application
affecting the rights and remedies of creditors, and (ii) enforcement may be
subject to general principles of equity, and the availability of the remedies of
specific performance and injunctive relief may be subject to the discretion of
the court before which any proceeding for such remedies may be brought.
<PAGE>
-8-
(S)9. MISCELLANEOUS. Except as expressly set forth in this Amendment, all
-------------
of the terms and provisions of the Revolving Credit Agreement shall remain in
full force and effect. This Amendment may be executed in counterparts and shall
be governed by and construed in accordance with the laws of the Commonwealth of
Massachusetts. This Amendment shall become effective on the date on which all
the conditions set forth in (S)6 shall have been satisfied (the "Effective
Date").
<PAGE>
-9-
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as an
instrument under seal to be effective as of the date first above written.
BANKVEST CAPITAL CORP.
By:________________________________________
John P. Colton
Executive Vice President
LEASEVEST CAPITAL CORP.
By:________________________________________
John P. Colton
Executive Vice President
BANKBOSTON, N.A. (f/k/a The First
National Bank of Boston)
By:________________________________________
Garrett M. Quinn, Vice President
<PAGE>
EXHIBIT 10.36
AMENDMENT NO. 3 TO
REVOLVING CREDIT AGREEMENT
AND SECURITY AGREEMENT
This AMENDMENT NO. 3 (this "Amendment"), dated as of December 24, 1997 by
---------
and among BANKVEST CAPITAL CORP. ("BankVest" or a "Borrower"), a Massachusetts
-------- --------
corporation having its principal place of business at 114 Turnpike Road,
Westboro, MA 01581, LEASEVEST CAPITAL CORP. ("LeaseVest" or a "Borrower" and,
--------- --------
together with BankVest, the "Borrowers"), a Massachusetts corporation having its
---------
principal place of business at 114 Turnpike Road, Westboro, MA 01581, and
BANKBOSTON, N.A. (f/k/a The First National Bank of Boston) (the "Bank"), a
----
national banking association with its head office at 100 Federal Street, Boston,
Massachusetts 02110, amends (i) the Revolving Credit Agreement dated as of
September 12, 1996, as amended as of January 1, 1997 and further amended as of
December 5, 1997 (as so amended and as may be further amended and in effect from
time to time, the "Credit Agreement") among the Borrowers and the Bank and (ii)
----------------
the Security Agreement dated as of September 12, 1996, as amended as of December
5, 1997 (as so amended and as may be further amended and in effect from time to
time, the "Security Agreement") among the Borrowers and the Bank.
------------------
WHEREAS, the Borrowers and the Bank have agreed to modify and amend certain
terms and conditions of the Credit Agreement and the Security Agreement, as
specifically set forth in this Amendment;
NOW, THEREFORE, in consideration of the foregoing premise and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Borrowers and the Bank hereby agree as follows:
(S)1. DEFINITIONS. Capitalized terms used herein and not otherwise
-----------
defined herein have the meanings given to such terms in the Credit Agreement as
amended hereby.
(S)2. AMENDMENTS TO THE CREDIT AGREEMENT. The Credit Agreement is hereby
----------------------------------
amended as follows:
(a) The following new definitions are inserted alphabetically in (S)1 of
the Credit Agreement:
Letter of Credit. See (S)2A.1.1.
----------------
Letter of Credit Application. See (S)2A.1.1.
----------------------------
Letter of Credit Fee. See (S)2A.6.
--------------------
Maximum Drawing Amount. The maximum aggregate amount that the
----------------------
beneficiaries may at any time draw under outstanding Letters of Credit, as
such aggregate amount may be reduced from time to time pursuant to the
terms of the Letters of Credit.
<PAGE>
-2-
Reimbursement Obligation. The Borrowers' joint and several obligation
------------------------
to reimburse the Bank on account of any drawing under any Letter of Credit
as provided in (S)2A.2.
Uniform Customs. With respect to any Letter of Credit, the Uniform
---------------
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500 or any successor version thereto
adopted by the Bank in the ordinary course of its business as a letter of
credit issuer and in effect at the time of issuance of such Letter of
Credit.
Unpaid Reimbursement Obligation. Any Reimbursement Obligation for
-------------------------------
which the Borrowers do not reimburse the Bank on the date specified in, and
in accordance with, (S)2A.2.
(b) The definitions of "Commitment", "Loan Documents" and "Obligations"
set forth in (S)1 of the Credit Agreement are amended and restated in their
entirety as follows:
Commitment. The obligation of the Bank to make Revolving Credit Loans
----------
to, and to issue, extend and renew Letters of Credit for the account of,
the Borrowers hereunder up to an aggregate principal amount not to exceed
$20,000,000, as such amount may be reduced from time to time or terminated
hereunder.
Loan Documents. This Agreement, the Revolving Credit Note, the Letter
--------------
of Credit Applications and the Security Documents, in each case as from
time to time amended or supplemented.
Obligations. All indebtedness, obligations and liabilities of
-----------
BankVest and its Subsidiaries to the Bank, individually or collectively,
existing on the date of this Agreement or arising thereafter, direct or
indirect, joint or several, absolute or contingent, matured or unmatured,
liquidated or unliquidated, secured or unsecured, arising by contract,
operation of law or otherwise, arising or incurred under this Agreement or
any other Loan Document or in respect of any of the Revolving Credit Loans
or Letters of Credit or the Revolving Credit Note or other instruments at
any time evidencing any thereof.
(c) The definition of "Borrowing Base" set forth in (S)1 of the Credit
Agreement is amended by deleting the words "Borrowing Base Report" and
substituting in place thereof the words "Lease Receivables Designation
Certificate".
(d) The definitions of "Borrowing Base Report" and "Designated Lease
Receivables Release Reports" set forth in (S)1 of the Credit Agreement are
deleted in their entirety.
(e) The definitions of "Lease Receivable Designation Certificate" set
forth in (S)1 of the Credit Agreement is amended and restated in its entirety to
read as follows:
<PAGE>
-3-
Lease Receivable Designation Certificate. A report with respect to
----------------------------------------
the Borrowers' Borrowing Base and pursuant to which the Borrowers grant
liens on Lease Receivables to the Bank, in substantially the form attached
hereto as Exhibit D.
---------
(f) Section 2.1 of the Credit Agreement is amended by inserting after the
parenthetical "(after giving effect to all amounts requested)" in the first
sentence of such section, the words "plus the Maximum Drawing Amount and all
----
Unpaid Reimbursement Obligations".
(g) Section 2.2.1 of the Credit Agreement is amended by deleting clauses
(y) and (z) in the second sentence thereof and substituting in place thereof the
following clause "a Lease Receivable Designation Certificate setting forth,
among other things, the Borrowing Base and any newly designated Lease
Receivables as of such date".
(h) Section 2.5 of the Credit Agreement is amended by restating the fifth
sentence thereof in its entirety as follows: "If at any time the total
outstanding Revolving Credit Loans plus the Maximum Drawing Amount and all
----
Unpaid Reimbursement Obligations shall exceed the lesser of (i) the Commitment
and (ii) the Borrowing Base, the Borrowers shall immediately pay the amount of
such excess to the Bank for application: first, to any Unpaid Reimbursement
Obligations; second, to the Revolving Credit Loans; and third, to provide cash
collateral for Reimbursement Obligations as contemplated by (S)2A.2(b) and (c).
(i) The Credit Agreement is further amended by inserting at the end of
(S)2 a new (S)2A as follows:
(S)2A. LETTERS OF CREDIT.
-----------------
(S)2A.1. LETTER OF CREDIT COMMITMENT.
---------------------------
(S)2A.1.1. COMMITMENT TO ISSUE LETTERS OF CREDIT. Subject to the
-------------------------------------
terms and conditions hereof and the execution and delivery by the Borrowers
of a letter of credit application on the Bank's customary form (a "Letter
of Credit Application"), the Bank, in reliance upon the representations and
warranties of the Borrowers contained herein, agrees to issue, extend and
renew for the account of the Borrowers one or more standby or documentary
letters of credit (individually, a "Letter of Credit"), in such form as may
be requested from time to time by the Borrower and agreed to by the Bank;
provided, however, that, after giving effect to such request, (a) the sum
of the aggregate Maximum Drawing Amount and all Unpaid Reimbursement
Obligations shall not exceed $500,000 at any one time and (b) the sum of
(i) the Maximum Drawing Amount on all Letters of Credit, (ii) all Unpaid
Reimbursement Obligations, and (iii) the amount of all Revolving Credit
Loans outstanding shall not exceed the lesser of (A) the Commitment and (B)
the Borrowing Base.
(S)2A.1.2. LETTER OF CREDIT APPLICATIONS. Each Letter of Credit
-----------------------------
Application shall be completed to the satisfaction of the Bank. In the
event that any provision of any Letter of Credit Application shall be
inconsistent with
<PAGE>
-4-
any provision of this Agreement, then the provisions of this Agreement
shall, to the extent of any such inconsistency, govern.
(S)2A.1.3. TERMS OF LETTERS OF CREDIT. Each Letter of Credit
--------------------------
issued, extended or renewed hereunder shall, among other things, (i)
provide for the payment of sight drafts for honor thereunder when presented
in accordance with the terms thereof and when accompanied by the documents
described therein, and (ii) have an expiry date no later than the date
which is fourteen (14) days (or, if the Letter of Credit is confirmed by a
confirmer or otherwise provides for one or more nominated persons, forty-
five (45) days) prior to the Maturity Date. Each Letter of Credit so
issued, extended or renewed shall be subject to the Uniform Customs.
(S)2A.2. REIMBURSEMENT OBLIGATION OF THE BORROWERS. In order to induce
-----------------------------------------
the Bank to issue, extend and renew each Letter of Credit, the Borrowers hereby
jointly and severally agree to reimburse or pay to the Bank with respect to each
Letter of Credit issued, extended or renewed by the Bank hereunder,
(a) except as otherwise expressly provided in (S)2A.2(b) and (c),
on each date that any draft presented under such Letter of Credit is
honored by the Bank, or the Bank otherwise makes a payment with respect to
such draft, (i) the amount paid by the Bank under or with respect to such
Letter of Credit, and (ii) the amount of any taxes, fees, charges or other
costs and expenses whatsoever incurred by the Bank in connection with any
payment made by the Bank under, or with respect to, such Letter of Credit,
(b) upon the reduction (but not termination) of the Commitment to
an amount less than the Maximum Drawing Amount, an amount equal to such
difference, which amount shall be held by the Bank as cash collateral for
all Reimbursement Obligations, and
(c) upon the termination of the Commitment, or the acceleration of
the Reimbursement Obligations with respect to all Letters of Credit in
accordance with (S)9, an amount equal to the then Maximum Drawing Amount on
all Letters of Credit, which amount shall be held by the Bank as cash
collateral for all Reimbursement Obligations.
All payments hereunder may be made by the Borrowers with the proceeds of
Revolving Credit Loans, provided that the Borrowers are not then in default
hereunder and the limitation set forth in (S)2A1.1(b) would not thereby be
exceeded. Each such payment shall be made to the Bank at the Bank's head office
in immediately available funds. Interest on any and all amounts remaining
unpaid by the Borrowers under this (S)2A.2 at any time from the date such
amounts become due and payable (whether as stated in this (S)2A.2, by
acceleration or otherwise) until payment in full (whether before or after
judgment) shall be payable to the Bank on demand at the rate specified in (S)3.7
for overdue principal on the Revolving Credit Loans.
(S)2A.3. LETTER OF CREDIT PAYMENTS. If any draft shall be presented or
-------------------------
other demand for payment shall be made under any Letter of Credit, the Bank
shall notify the Borrowers of the date and amount of the draft presented or
demand for payment
<PAGE>
-5-
and of the date and time when it expects to pay such draft or honor such demand
for payment. The responsibility of the Bank to the Borrowers shall be only to
determine that the documents (including each draft) delivered under each Letter
of Credit in connection with such presentment shall be in conformity in all
material respects with such Letter of Credit.
(S)2A.4. OBLIGATIONS ABSOLUTE. The Borrowers' obligations under this
--------------------
(S)2A shall be absolute and unconditional under any and all circumstances and
irrespective of the occurrence of any Default or Event of Default or any
condition precedent whatsoever or any setoff, counterclaim or defense to payment
which the Borrowers may have or have had against the Bank, or any beneficiary of
a Letter of Credit. Each Borrower further agrees with the Bank that the Bank
shall not be responsible for, and the Borrowers' Reimbursement Obligations under
(S)2A.2 shall not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon as long as such
documents comply on their face with the requirements of the Letter of Credit,
even if such documents should in fact prove to be in any or all respects
invalid, fraudulent or forged, or any dispute between or among either Borrower,
the beneficiary of any Letter of Credit or any financing institution or other
party to which any Letter of Credit may be transferred or any claims or defenses
whatsoever of either Borrower against the beneficiary of any Letter of Credit or
any such transferee except to the extent that any of the foregoing arises out of
the gross negligence or willful misconduct of the Bank. The Bank shall not be
liable for any error, omission, interruption or delay in transmission, dispatch
or delivery of any message or advice, however transmitted, in connection with
any Letter of Credit except to the extent that any of the foregoing arises out
of the gross negligence or willful misconduct of the Bank. Each Borrower agrees
that any action taken or omitted by the Bank under or in connection with each
Letter of Credit and the related drafts and documents, if done in good faith,
shall be binding upon such Borrower and shall not result in any liability on the
part of the Bank to such Borrower.
(S)2A.5. RELIANCE BY ISSUER. To the extent not inconsistent with (S)2A.4,
------------------
the Bank shall be entitled to rely, and shall be fully protected in relying
upon, any Letter of Credit, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document believed by it in good faith to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Bank.
(S)2A.6. LETTER OF CREDIT FEE. The Borrowers shall pay a fee (in each
--------------------
case, a "Letter of Credit Fee") to the Bank quarterly in arrears on the first
day of each fiscal quarter of the Borrowers for the immediately preceding fiscal
quarter of the Borrowers (i) in respect of each standby Letter of Credit in an
amount equal to two percent (2.00%) per annum of the face amount of each standby
Letter of Credit plus the Bank's customary issuance, amendment and other
----
administrative processing fees, and (ii) in respect of each documentary Letter
of Credit in an amount equal to two percent (2.00%) per annum on the face amount
of such documentary Letter of Credit, plus the Bank's customary issuance,
----
amendment, time negotiation fee and other administrative processing fees.
<PAGE>
-6-
(j) Section 3.3 of the Credit Agreement is amended and restated in its
entirety to read as follows:
3.3. CHANGE IN CIRCUMSTANCES. If, on or after the date hereof the
-----------------------
Bank determines that (i) the adoption of, or any change in, any applicable
law, rule, regulation or guideline or the interpretation or administration
thereof (whether or not having the force of law), or (ii) compliance by the
Bank or its parent holding company with any guideline, request or directive
(whether or not having the force of law), (A) shall subject the Bank to any
tax, duty or other charge with respect to any Eurodollar Rate Loan, any
Letter of Credit or the Revolving Credit Note, or shall change the basis of
taxation of payments to the Bank of the principal of or interest on,
Eurodollar Rate Loans or in respect of any other amounts due under this
Agreement in respect of Eurodollar Rate Loans (other than with respect to
taxes based upon the Bank's net income), or (B) shall impose, modify or
deem applicable any reserve, special deposit or similar requirement
(including, without limitation, any imposed by the Board of Governors of
the Federal Reserve System, but excluding with respect to any Eurodollar
Rate Loan any such requirement included in an applicable Eurocurrency
Reserve Rate) against assets of, deposits with or for the account of, or
credit extended by, the Bank, or shall impose on the Bank or the London
interbank market any other condition affecting Eurodollar Rate Loans, any
Letter of Credit or the Revolving Credit Note, and the result of any of the
foregoing is to increase the cost to the Bank of making or maintaining any
Eurodollar Rate Loan or any Letter of Credit, or to reduce the amount of
any sum received or receivable by the Bank under this Agreement, under any
Letter of Credit or under the Revolving Credit Note with respect to any
Revolving Credit Loan, by an amount reasonably deemed by the Bank to be
material, then, upon demand by the Bank, the Borrowers jointly and
severally agree to pay to the Bank such additional amount or amounts as
will compensate the Bank for such increased cost or reduction. The Bank
agrees to provide a certificate to the Borrowers as to any such costs, or
reduction including calculations in reasonable detail.
(k) Section 4 of the Credit Agreement is amended by inserting after the
words "commitment fee" in the last sentence thereof the words "or Letter of
Credit Fees".
(l) Section 5 of the Credit Agreement is amended by restating the last
sentence thereof in its entirety to read as follows: "Notwithstanding the
foregoing, prior to the occurrence of a Default or Event of Default, the Bank
will release its Lien on Designated Lease Receivables so long as prior to such
release the Borrowers shall have delivered a Lease Receivable Designation
Certificate dated the date of such release indicating that after giving effect
to such release the outstanding principal amount of all Revolving Credit Loans
does not exceed the Borrowing Base and to ensure that after giving effect to
such release, the outstanding principal amount of Revolving Credit Loans does
not exceed the Borrowing Base."
(m) Section 7.2 of the Credit Agreement is amended by:
<PAGE>
-7-
(i) inserting after the word "Borrowers" in the preamble thereof the
words "and to issue, extend or renew any Letter of Credit";
(ii) inserting before the semi-colon at the end of paragraph (d)
thereof the phrase "or to issue, extend or renew such Letter of Credit";
and
(iii) amended and restating in its entirety paragraph (e) of such
section to read as follows:
(e) the Bank shall have received a Lease Receivable Designation
Certificate setting forth, among other things, the Borrowing Base as
of the date of the Loan Request or request to issue, extend or renew
such Letter of Credit.
(n) Section 8.1 of the Credit Agreement is amended by deleting the
preamble of such section in its entirety and substituting in place thereof the
following:
8.1. AFFIRMATIVE COVENANTS. Each of the Borrowers agrees that so
---------------------
long as there are any Revolving Credit Loans, Unpaid Reimbursement
Obligations or Letters of Credit outstanding and until the termination of
the Commitment and the obligation of the Bank to issue, extend or renew any
Letter of Credit and the payment and satisfaction in full of all the
Obligations, each of the Borrowers will comply with its obligations as set
forth throughout this Agreement and to:
(o) Section 8.1(a)(v) of the Credit Agreement is amended and restated in
its entirety to read as follows:
(v) together with each Loan Request or request to issue, extend or
renew a Letter of Credit, when designating new Lease Receivables as
Designated Lease Receivables, upon the release of Designated Lease
Receivables and, in addition, within ten (10) days after the end of each
calendar month or at such earlier time as the Bank may request, a Lease
Receivable Designation Certificate setting forth, among other things, the
Borrowing Base as of the date of such Loan Request or request to issue,
extend or renew a Letter of Credit, at the end of such calendar month or
other date, as applicable, and providing materials supporting the
calculation of such Lease Receivable Designation Certificate, including
without limitation, lease agings, eligibility support, and lease detail;
(p) Section 8.2 of the Credit Agreement is amended by deleting the
preamble of such section in its entirety and substituting in place thereof the
following:
8.2. NEGATIVE COVENANTS. Each of the Borrowers agrees that so long
------------------
as there are any Revolving Credit Loans, Unpaid Reimbursement Obligations
or Letters of Credit outstanding and until the termination of the
Commitment and the obligation of the Bank to issue, extend or renew any
Letter of Credit and the payment and satisfaction in full of all the
Obligations, neither of the Borrowers will:
<PAGE>
-8-
(q) Section 8.2(e) of the Credit Agreement is amended by deleting the
words "Borrowing Base Report" and substituting in place thereof the words "Lease
Receivable Designation Certificate".
(r) Section 8.3 of the Credit Agreement is amended by deleting the
preamble of such section in its entirety and substituting in place thereof the
following:
8.3. FINANCIAL COVENANTS. Each of the Borrowers agrees that so long
-------------------
as there are any Revolving Credit Loans, Unpaid Reimbursement Obligations
or Letters of Credit outstanding and until the termination of the
Commitment and the obligation of the Bank to issue, extend or renew any
Letter of Credit and the payment and satisfaction in full of all the
Obligations, neither of the Borrowers will:
(s) Section 9(a) of the Credit Agreement is amended by inserting after the
words "Revolving Credit Loans" the words "or any Reimbursement Obligation".
(t) Sections 9(1) and (2) are amended and restated in their entirety to
read as follows:
(1) In the case of any Event of Default under clause (h) or (i), the
Commitment shall automatically terminate and the Bank shall be relieved of
all further obligations to make Revolving Credit Loans or to issue, renew
or extend any Letters of Credit, and the entire unpaid principal amount of
the Revolving Credit Loans, all interest accrued and unpaid thereon, all
Unpaid Reimbursement Obligations and all other amounts payable thereunder
and under the other Loan Documents shall automatically become forthwith due
and payable, without presentment, demand, protest or notice of any kind,
all of which are hereby expressly waived by the Borrowers and the Bank may
require that cash be delivered to the Bank in the amount of the Maximum
Drawing Amount to be held by the Bank as cash collateral for all
Reimbursement Obligations; and
(2) In the case of any Event of Default other than (h) and (i), the
Bank may, by written notice to the Borrowers, terminate the Commitment
and/or declare the unpaid principal amount of the Revolving Credit Loans,
all interest accrued and unpaid thereon, all Unpaid Reimbursement
Obligations and all other amounts payable hereunder and under the other
Loan Documents to be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby
expressly waived by the Borrowers and the Bank may require that cash be
delivered to the Bank in the amount of the Maximum Drawing Amount to be
held by the Bank as cash collateral for all Reimbursement Obligations.
(u) Exhibits B and E to the Credit Agreement are deleted in their
---------- -
entirety.
(v) Exhibit D to the Credit Agreement is substituted in its entirety by
---------
the Exhibit D attached hereto and all references contained in the Credit
---------
Agreement
<PAGE>
-9-
and the other Loan Documents to Exhibit D to the Credit Agreement shall refer to
----------
the Exhibit D attached hereto.
---------
(S)3. AMENDMENT TO THE SECURITY AGREEMENT. The Security Agreement is
-----------------------------------
hereby amended as follows:
(a) Section 2.2 of the Security Agreement is amended by inserting after
the word "Designated" in the last sentence thereof the word "Lease".
(b) Section 6 of the Security Agreement is amended by deleting the words
"Borrowing Base Report" in the second sentence thereof and substituting in place
thereof the words "Lease Receivable Designation Certificate".
(S)4. AFFIRMATION BY THE BORROWERS. Each of the Borrowers hereby ratifies
----------------------------
and confirms all of the Obligations and each of the Borrowers hereby affirms its
absolute and unconditional joint and several promise to pay to the Bank the
Revolving Credit Loans and all other amounts due under the Credit Agreement as
amended hereby. Each of the Borrowers hereby confirms that the Obligations are
and remain secured pursuant to the Security Documents to which such Borrower is
a party.
(S)5. CONDITIONS TO EFFECTIVENESS. The effectiveness of this Amendment
---------------------------
shall be conditioned upon the satisfaction of the following conditions
precedent.
(S)5.1. DELIVERY OF DOCUMENTS. The Borrowers shall have delivered to the
---------------------
Bank, contemporaneously with the execution hereof, or there shall have otherwise
been delivered to the Bank, this Amendment executed and delivered by each of the
Borrowers and the Bank.
(S)5.2. LEGAL FEES. Each Borrower confirms and agrees that it shall pay
----------
or reimburse the Bank for all legal fees and disbursements of counsel for the
Bank in connection with this Agreement.
(S)6. REPRESENTATIONS AND WARRANTIES. Each of the Borrowers hereby
------------------------------
represents and warrants to the Banks as follows:
(a) The representations and warranties of such Borrower contained in the
Credit Agreement, as amended hereby were true and correct in all material
respects when made and are and continue to be true and correct in all material
respects on the date hereof, except that the financial statements referred to
therein shall be the financial statements of such Borrower most recently
delivered to the Agent, and except as such representations and warranties are
affected by the transactions contemplated hereby.
(b) The execution, delivery and performance by such Borrower of this
Amendment and the consummation of the transactions contemplated hereby: (i) are
within the corporate powers of such Borrower and have been duly authorized by
all necessary corporate action on the part of such Borrower, (ii) to the best of
such Borrower's knowledge, do not require any approval, consent of, or filing on
the part of such Borrower with, any governmental agency or authority, or any
other person,
<PAGE>
-10-
association or entity, which bears on the validity of this Amendment and which
is required by law or the regulation or rule of any agency or authority, or
other person, association or entity, (iii) do not violate any provisions of any
order, writ, judgment, injunction, decree, determination or award presently in
effect in which such Borrower is named, or any provision of the charter
documents or by-laws of such Borrower, (iv) do not result in any breach of or
constitute a default under any agreement or instrument to which such Borrower is
a party or to which it or any of its properties are bound, including without
limitation any indenture, loan or loan agreement, lease, debt instrument or
mortgage, except for such breaches and defaults which would not have a material
adverse effect on such Borrower and its Subsidiaries taken as a whole, and (v)
except as specified in this Amendment, do not result in or require the creation
or imposition of any mortgage, deed of trust, pledge or encumbrance of any
nature upon any of the assets or properties of such Borrower.
(c) This Amendment, the Credit Agreement as amended hereby, and the other
Loan Documents constitute the legal, valid and binding obligations of such
Borrower, enforceable against such Borrower in accordance with their respective
terms, provided that (i) enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws of general application
affecting the rights and remedies of creditors, and (ii) enforcement may be
subject to general principles of equity, and the availability of the remedies of
specific performance and injunctive relief may be subject to the discretion of
the court before which any proceeding for such remedies may be brought.
(S)7. MISCELLANEOUS. Except as expressly set forth in this Amendment, all
-------------
of the terms and provisions of the Revolving Credit Agreement shall remain in
full force and effect. This Amendment may be executed in counterparts and shall
be governed by and construed in accordance with the laws of the Commonwealth of
Massachusetts. This Amendment shall become effective on the date on which all
the conditions set forth in (S)5 shall have been satisfied (the "Effective
Date").
<PAGE>
-11-
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as an
instrument under seal to be effective as of the date first above written.
BANKVEST CAPITAL CORP.
By:___________________________________
John P. Colton
Executive Vice President
LEASEVEST CAPITAL CORP.
By:___________________________________
John P. Colton
Executive Vice President
BANKBOSTON, N.A. (f/k/a The First
National Bank of Boston)
By:___________________________________
Garrett M. Quinn, Vice President
<PAGE>
EXHIBIT 10.37
AMENDED AND RESTATED
--------------------
REVOLVING CREDIT NOTE
---------------------
$20,000,000.00 December 5, 1997
FOR VALUE RECEIVED, the undersigned BANKVEST CAPITAL CORP., a Massachusetts
corporation and LEASEVEST CAPITAL CORP., a Massachusetts corporation
(collectively, the "Borrowers"), hereby promise to pay to the order of
BANKBOSTON, N.A. F/K/A THE FIRST NATIONAL BANK OF BOSTON, a national banking
association (the "Bank") at the Bank's head office at 100 Federal Street,
Boston, Massachusetts 02110:
(a) prior to or on the Maturity Date the principal amount of TWENTY
MILLION DOLLARS ($20,000,000.00) or, if less, the aggregate unpaid
principal amount of Revolving Credit Loans advanced by the Bank to the
Borrowers pursuant to the Revolving Credit Agreement dated as of September
12, 1996 (as amended and in effect from time to time, the "Credit
Agreement"), among the Borrowers and the Bank;
(b) the principal outstanding hereunder from time to time at the
times provided in the Credit Agreement; and
(c) interest on the principal balance hereof from time to time
outstanding from the Closing Date under the Credit Agreement through and
including the maturity date hereof at the times and at the rate provided in
the Credit Agreement.
This Revolving Credit Note (this "Note") evidences borrowings under and has
been issued by the Borrowers in accordance with the terms of the Credit
Agreement. The Bank and any holder hereof is entitled to the benefits of the
Credit Agreement, the Security Documents and the other Loan Documents, and may
enforce the agreements of the Borrowers contained therein, and any holder hereof
may exercise the respective remedies provided for thereby or otherwise available
in respect thereof, all in accordance with the respective terms thereof. All
capitalized terms used in this Note and not otherwise defined herein shall have
the same meanings herein as in the Credit Agreement.
This Note is given to the Bank in substitution of the Revolving Credit Note
dated September 12, 1996 delivered by the Borrowers to the Bank which was given
to the Bank and evidences Revolving Credit Loans advanced by the Bank to the
Borrowers under the Credit Agreement and outstanding on the date hereof.
Nothing herein or in any other documents shall be construed to constitute
payment of such original note or to release or terminate the security interest
created by any Security Document in favor of the Bank in respect of the
Borrowers' obligations thereunder.
<PAGE>
-2-
Each of the Borrowers irrevocably authorizes the Bank to make or cause to
be made, at or about the time of the Drawdown Date of any Revolving Credit Loan
or at the time of receipt of any payment of principal of this Note, an
appropriate notation on the grid attached to this Note, or the continuation of
such grid, or any other similar record, including computer records, reflecting
the making of such Revolving Credit Loan or (as the case may be) the receipt of
such payment. The outstanding amount of the Revolving Credit Loans set forth on
the grid attached to this Note, or the continuation of such grid, or any other
similar record, including computer records, maintained by the Bank with respect
to any Revolving Credit Loans shall be prima facie evidence of the principal
----- -----
amount thereof owing and unpaid to the Bank, but the failure to record, or any
error in so recording, any such amount on any such grid, continuation or other
record shall not limit or otherwise affect the obligation of the Borrowers
hereunder or under the Credit Agreement to make payments of principal of and
interest on this Note when due.
The Borrowers have the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire unpaid
principal amount of this Note and all of the unpaid interest accrued thereon may
become or be declared due and payable in the manner and with the effect provided
in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any further occasion.
Each of the Borrowers and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWERS HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). EACH OF THE BORROWERS AGREES THAT ANY SUIT FOR THE ENFORCEMENT
OF THIS NOTE MAY BE BROUGHT IN THE COURTS OF THE
<PAGE>
-3-
COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND THE
CONSENT TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF
PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWERS BY MAIL AT THE ADDRESS
SPECIFIED BY REFERENCE IN (S)11 OF THE CREDIT AGREEMENT. EACH OF THE BORROWERS
HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF
ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT
COURT.
This Note shall be deemed to take effect as a sealed instrument under the
laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, each of the undersigned have caused this Revolving
Credit Note to be signed in its corporate name by its duly authorized officer as
of the day and year first above written.
BANKVEST CAPITAL CORP.
By:_______________________________
John P. Colton,
Executive Vice President
LEASEVEST CAPITAL CORP.
By:_______________________________
John P. Colton,
Executive Vice President
<PAGE>
-4-
<TABLE>
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of Revolving Principal Paid Principal Notation
Date Credit Loan or Prepaid Unpaid Made By:
<S> <C> <C> <C> <C>
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</TABLE>
<PAGE>
============================================================
EXHIBIT 10.40
BANKVEST CAPITAL CORP.
REVOLVING CREDIT FACILITY
________________________________________________
August 21, 1998
_______________________________________________
============================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS.
Section 1.1 Definitions..................................... 1
Section 1.2 Accounting Terms................................ 13
Section 1.3 Other Terms..................................... 14
ARTICLE 2. COMMITMENT, LOANS AND COLLATERAL
Section 2.1 Loans........................................... 14
Section 2.2 Procedure for Borrowings; Continuations
and Conversions......................................... 14
Section 2.3 Borrowing Computation........................... 16
Section 2.4 Borrowings...................................... 16
Section 2.5 Facility Fee; Commitment Fee.................... 16
Section 2.6 Borrowing Base; Prepayments..................... 17
Section 2.7 Use of Proceeds of Loans........................ 17
Section 2.8 Interest........................................ 17
Section 2.9 Note............................................ 18
Section 2.10 Payments....................................... 19
Section 2.11 Computations................................... 20
Section 2.12 Minimum Amounts of Borrowings and Prepayments.. 20
Section 2.13 Renewal of Commitment; Extension of
Commitment Termination Date............................ 20
Section 2.14 Regulatory Changes in Capital Requirements..... 20
Section 2.15 Security....................................... 21
Section 2.16 Termination or Reduction of Commitment......... 22
Section 2.17 Increased Costs................................ 22
Section 2.18 Yield Maintenance.............................. 23
Section 2.19 Alternate Rate of Interest..................... 24
Section 2.20 Change in Legality............................. 24
ARTICLE 3. REPRESENTATION AND WARRANTIES
Section 3.1 Organization.................................... 25
Section 3.2 Power, Authority, Consents...................... 25
Section 3.3 No Violation of Law or Agreements............... 26
Section 3.4 Due Execution, Validity, Enforceability......... 26
Section 3.5 Properties, Priority of Liens................... 26
Section 3.6 Judgements, Actions, Proceedings................ 27
Section 3.7 No Defaults, Compliance With Laws............... 27
Section 3.8 Burdensome Documents............................ 27
Section 3.9 Financial Statements............................ 28
Section 3.10 Tax Returns.................................... 28
Section 3.11 Intellectual Property.......................... 28
Section 3.12 Regulations G and U............................ 28
Section 3.13 Name Changes................................... 29
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Section 3.14 Full Disclosure................................ 29
Section 3.15 Condition of Assets; Permits................... 29
Section 3.16 ERISA.......................................... 29
Section 3.17 Principal Place of Business.................... 30
Section 3.18 Absence of Default............................. 30
Section 3.19 Regulated Company.............................. 30
Section 3.20 Indebtedness................................... 30
Section 3.21 Solvency....................................... 30
Section 3.22 Eligibility.................................... 31
ARTICLE 4. THE CLOSING; CONDITIONS TO THE LOANS
Section 4.1 Conditions to Effectiveness of Agreement........ 31
Section 4.2 Conditions to Loans............................. 33
ARTICLE 5. DELIVERY OF FINANCIAL REPORTS, DOCUMENTS AND
OTHER INFORMATION
Section 5.1 Annual Financial Statements..................... 34
Section 5.2 Quarterly Financial Statements.................. 34
Section 5.3 Monthly Financial Statements.................... 35
Section 5.4 No Default Certificate.......................... 35
Section 5.5 Borrowing Base Reports.......................... 35
Section 5.6 Concentration of Equipment and Leases........... 35
Section 5.7 Accounts Receivable Aging....................... 35
Section 5.8 Certificate of Accountants; Management Letter... 36
Section 5.9 Annual Budget................................... 36
Section 5.10 Cumulative Nature of Financial Statements
and Comparisons........................................ 36
Section 5.11 Notice of Litigation........................... 36
Section 5.12 Copies of Documents............................ 36
Section 5.13 Notice of Defaults............................. 36
Section 5.14 ERISA Notices.................................. 36
Section 5.15 UCC Acknowledgments............................ 37
Section 5.16 Other Information.............................. 37
ARTICLE 6. AFFIRMATIVE COVENANTS
Section 6.1 Books and Records................................ 37
Section 6.2 Inspections and Audits........................... 37
Section 6.3 Maintenance and Repairs.......................... 38
Section 6.4 Continuance of Business.......................... 38
Section 6.5 Copies of Corporate Documents.................... 38
Section 6.6 Perform Obligations.............................. 38
Section 6.7 Insurance........................................ 39
Section 6.8 Legending of Leases.............................. 39
Section 6.9 Financial Covenants.............................. 39
Section 6.10 Reportable Events............................... 40
Section 6.11 Compliance with Laws, etc....................... 40
Section 6.12 Borrowing Base.................................. 41
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE 7. NEGATIVE COVENANTS
Section 7.1 Indebtedness..................................... 41
Section 7.2 Liens............................................ 41
Section 7.3 Guaranties....................................... 42
Section 7.4 Mergers, Acquisitions............................ 42
Section 7.5 Dividends........................................ 42
Section 7.6 Stock Issuance................................... 43
Section 7.7 Changes in Business; Sale of Assets.............. 43
Section 7.8 Fiscal Year...................................... 43
Section 7.9 ERISA Obligations................................ 43
Section 7.10 Amendment of Documents.......................... 44
Section 7.11 Transactions with Affiliates.................... 44
Section 7.12 Multiple Agreements............................. 44
ARTICLE 8. EVENTS OF DEFAULT
Section 8.1 Payments......................................... 45
Section 8.2 Covenants........................................ 45
Section 8.3 Other Covenants.................................. 45
Section 8.4 Other Defaults................................... 45
Section 8.5 Representations and Warranties................... 45
Section 8.6 Bankruptcy....................................... 46
Section 8.7 Judgments........................................ 46
Section 8.8 ERISA............................................ 46
Section 8.9 Ownership of Stock and Control of Borrower....... 47
Section 8.10 Liens........................................... 47
ARTICLE 9. ADDITIONAL LENDERS; PARTICIPATIONS
Section 9.1 Assignments...................................... 47
Section 9.2 Participations................................... 47
ARTICLE 10. MISCELLANEOUS PROVISIONS
Section 10.1 Fees and Expenses; Indemnity.................... 48
Section 10.2 Taxes........................................... 49
Section 10.3 Payments........................................ 50
Section 10.4 Survival of Agreements and Representations...... 50
Section 10.5 Lien on and Set-off of Deposits................. 50
Section 10.6 Modifications, Consents and Waivers;
Entire Agreement............................... 51
Section 10.7 Remedies Cumulative............................. 51
Section 10.8 Further Assurances.............................. 51
Section 10.9 Notices......................................... 52
Section 10.10 Construction; Governing Law; Consent to
Jurisdiction; Waiver of Jury Trial, Set-off
and Counterclaim............................... 53
Section 10.11 Severability................................... 54
</TABLE>
(4)
<PAGE>
<TABLE>
<S> <C>
Section 10.12 Binding Effect; No Assignment or Delegation.... 54
Section 10.13 Counterparts................................... 54
Section 10.14 Pledge to Federal Reserve...................... 54
Section 10.15 Lost Notes..................................... 54
</TABLE>
Exhibit A-Loan Notice
Exhibit B-Form of Note
Exhibit C-Security Agreement
Exhibit D-Assignment of Leases
Exhibit E-Legal Opinion
Exhibit F-Borrowing Base Report
Exhibit G-Compliance Certificate
Exhibit H-Form of Omnibus UCC Assignment
Schedule 3.1(a)-Authorized and Outstanding Shares; Subsidiaries
Schedule 3.1(b)-States Where Conduct Business
Schedule 3.5-Existing Liens
Schedule 3.20-Existing Indebtedness
(5)
<PAGE>
CREDIT AGREEMENT
----------------
CREDIT AGREEMENT, dated as of August 21, 1998, by and between BANKVEST
CAPITAL CORPORATION, a Massachusetts corporation, having an office at 200
Nickerson Road, Marlborough, Massachusetts 01752 (the "Borrower") and FLEET
BANK, NATIONAL ASSOCIATION, a national banking association having an office at
1185 Avenue of the Americas, New York, New York 10036 (the "Lender").
W I T N E S S E T H :
WHEREAS, the Borrower has requested and the Lender has agreed to make
available a revolving credit facility to the Borrower on the terms and
conditions set forth herein.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS.
SECTION 1.1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
"ADDITIONAL COSTS" - as defined in Section 2.14.
"ADJUSTED COST" - the Original Equipment Cost, less the actual amount
----
of any dealer reserve, holdbacks, security deposits, advance payments and
discounts to the Borrower.
"AFFILIATE" - as to any Person, any other Person which directly or
indirectly Controls, or is under common Control with, or is Controlled by, such
Person; provided that (i) any Person which owns directly or indirectly 5% or
--------
more of the securities having ordinary voting power for the election of
directors or other governing body of a corporation or 5% or more of the
partnership or other ownership interests of any other Person (other than as a
limited partner of such other Person), in each case with respect to any
corporation or other Person with a class of securities registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or 10% or more
of such securities or partnership or other ownership interests, with respect to
any corporation or other Person which does not have a class of securities
registered under the Exchange Act, will be deemed to Control such corporation or
other Person and (ii) each stockholder, director
<PAGE>
and officer of the Borrower shall be deemed to be an Affiliate of the Borrower.
"AGREEMENT" - this Agreement, as the same may, from time to time, be
amended, supplemented or modified.
"ALLOWANCE FOR DOUBTFUL ACCOUNTS" - the allowance made by the Borrower
for Leases more than 180 days past due, or for which, in accordance with GAAP,
are deemed doubtful or uncollectible accounts.
"ASSIGNMENT" - as defined in Section 9.1.
"ASSIGNMENT OF LEASES" - as defined in Section 2.15(a)(ii).
"BORROWING BASE" - as at the date of any determination thereof, an
amount equal to the sum of the Eligible Contract Value of all Eligible Contracts
financed by Revolving Loans. Determination of the amount of Revolving Credit
Loan Borrowing Base shall be made on a lease by lease basis but shall be
comprised of the aggregate of all such calculations as of the date of any
determination thereof, provided, that in no event will any such advance (x)
exceed 100% of the Adjusted Cost of the pertinent Equipment or (y) be made with
respect to an otherwise Eligible Contract unless such Contract is subject to a
written financing commitment issued by a third party acceptable to the Lender.
"BORROWING BASE REPORT" - as defined in Section 5.5.
"BORROWING DATE" - the Business Day specified in a Notice delivered
pursuant to Section 2.2 as the date on which the Borrower requests the Lender to
make a Loan.
"BORROWING RATE" - LIBOR plus 1.85% in the case of LIBOR Loans, Cost of
Funds plus 1.85% in the case of Cost of Funds Loans and the Prime Rate in the
case of Fluctuating Rate Loans, as such LIBOR Loans and/or Fluctuating Rate
Loans are selected in accordance with Section 2.2 hereof.
"BUSINESS DAY" - a day other than a Saturday, Sunday or other day on
which commercial banks in New York are required or permitted by law to remain
closed, except that "Business Day" in the context of a specific city shall mean
any date on which commercial banks are open for business in that city.
"CHANGE OF CONTROL" - (i) should Paul Gass or John Colton cease
(whether due to retirement, disability, death or
<PAGE>
otherwise) to hold the office, serve in the capacity or exercise the managerial
policy-making responsibilities which on the date hereof he now holds, serves in
or exercises with or on behalf of the Borrower and within thirty days of such
cessation the Borrower has not employed a replacement officer selected by the
Borrower and reasonably satisfactory to the Lender, or (ii) Paul Gass and John
Colton shall collectively cease to own beneficially and of record, in the
aggregate, at least 10% of the issued and outstanding capital stock of the
Borrower having ordinary voting power for the election of directors of the
Borrower, whether on a fully diluted basis or otherwise.
"CODE" - the Internal Revenue Code of 1986, as it may be amended from
time to time, and any successor statute.
"COLLATERAL" - as defined in the Security Documents.
"COMMITMENT" - the Commitment of the Lender hereunder to make Revolving
Credit Loans pursuant to the loan facility provided under this Agreement upon
the terms and subject to the conditions of this Agreement up to an aggregate
principal amount of such Loans, at any time outstanding, of $15,000,000, which
Commitment shall, subject to the terms of Section 2.13 and Article 8, terminate
on the Commitment Termination Date.
"COMMITMENT FEE" - shall have the meaning given thereto in Section 2.5.
"COMMITMENT TERMINATION DATE" - the Business Day immediately preceding
the first anniversary of the date hereof, unless extended pursuant to Section
2.13.
"COMPLIANCE CERTIFICATE" - as defined in Section 4.2.
"CONTROL" OR "CONTROLLED BY" - as to any Person, the possession, direct
or indirect, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or
partnership or other ownership interests, by contract or otherwise.
"CONTROLLED GROUP" - all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower, are treated as a single employer under
Section 414(b), 414(c) or 414(m) of the Internal Revenue Code of 1986, as
amended, and Section 4001(a)(2) of ERISA.
"COST OF FUNDS" - the per annum rate of interest which the Lender is
required to pay, or is offering to pay, for
<PAGE>
wholesale liabilities, adjusted for reserve requirements and such other
requirements as may be imposed by federal, state or local government and
regulatory agencies, as determined by the Lender.
"COST OF FUNDS LOANS" - shall mean Loans hereunder that bear interest
for the Interest Period applicable thereto at a rate of interest based upon the
Costs of Funds.
"CREDIT PERIOD" - as defined in Section 2.1.
"DEBT INSTRUMENT" - as defined in Section 8.4.
"DEFAULT" - an event which with notice or lapse of time or both would
constitute an Event of Default.
"DEFAULTED LEASE RECEIVABLES" - the aggregate of the fixed rentals
remaining to be paid under Leases (i) where all or any portion of the payments
due thereunder are past due for more than 120 days, or (ii) that have been
deemed not collectable (or are subject to actual repossession activities) by the
Borrower, or (iii) that should be deemed not collectable in accordance with the
Borrower's credit and collection policy.
"DELINQUENCY" or "DELINQUENCIES" - as of any date, the ratio of (i)
Lease Receivables for Owned Leases and Managed Leases collectively which are
past due for more than 30 days, divided by (ii) Net Lease Receivables for Owned
Leases and Managed Leases collectively.
"DOLLARS" - and "$" - lawful money of the United States of America.
"ELIGIBLE CONTRACT" - a Lease:
(a) Which is in full force and effect;
(b) The lessor under which is the Borrower;
(c) Which is fully assignable by the lessor thereunder and which has
been assigned by the Borrower to the Lender pursuant to the terms
of the Loan Documents;
(d) Which is non-cancellable and provides that the lessee's
obligations thereunder are absolute and unconditional, which
obligations are not, pursuant to the terms of such contract,
subject to contingencies, defense, deduction, set-off or claim,
and as to which no defenses, set-offs,
<PAGE>
claims or counterclaims exist or have been asserted by the lessee
or anyone on its behalf;
(e) Which is not subject to any Lien other than Permitted Liens and
other than the Lien in favor of the Lender, and in which the
Lender has a duly perfected first priority security interest under
the UCC;
(f) The lessee under which has not filed a petition for bankruptcy or
any other petition for relief under the U.S. Bankruptcy Code or
any other bankruptcy or insolvency law or made an assignment for
the benefit of creditors, nor has any petition or other
application for relief under the U.S. Bankruptcy Code or any other
bankruptcy or insolvency law been filed against such lessee, nor
has such lessee so filed, suspended its business operations,
become insolvent, or suffered a receiver or a trustee to be
appointed for any of its assets or affairs;
(g) Which has not been amended, modified or supplemented other than to
include upgrades of Equipment or increase the number of units
leased (and accordingly the aggregate amount of rentals payable)
thereunder, nor have any rights of the lessor thereunder been
waived, except in each case to the extent approved by the Lender
in writing;
(h) Under which no payment is more than 60 days past due beyond the
payment date therefor set forth in the Lease or schedule thereto;
(i) Under which no default has occurred;
(j) Which covers Eligible Equipment;
(k) Which, at the date of inclusion thereof in the Borrowing Base,
shall have a remaining term of not more than eighty-four (84)
months;
(l) Which is with a Person which is not an Affiliate of the Borrower
or Controlled by an Affiliate of the Borrower;
(m) The lessee under which is not located outside the United States;
and
(n) Which is a net lease and the lessee thereunder is responsible for
all payments in connection there-
-10-
<PAGE>
with, including, but not limited to, payment of all taxes,
insurance and maintenance expenses, provided, that the Borrower
--------
may be responsible for maintenance of Equipment under such Lease
if such obligation of the Borrower shall, pursuant to the terms of
such Lease, expressly be made independent of, and not limit or in
any way affect, the provisions of the Lease (and the obligations
of the lessee) described in paragraph (d) of this definition.
"ELIGIBLE CONTRACT VALUE" - with respect to each Eligible Contract, the
lesser of (i) ninety-two (92%) percent of the Net Present Value of Fixed Rentals
remaining to be paid under such Eligible Contract or (ii) one hundred (100%)
percent of the Adjusted Cost of the Equipment subject to such Eligible Contract.
"ELIGIBLE EQUIPMENT" - Equipment:
(a) Which is not subject to any Lien other than Permitted Liens and
the Lien in favor of the Lender, and in which the Lender has a
duly perfected first priority security interest under the UCC or
other similar law (subject to the provisions of Section 4.2(c));
(b) Which is to be used in the ordinary course of business by the
Borrower's lessees;
(c) Which is insured by either the Borrower in accordance with current
practice or the lessee thereof in accordance with industry
standards and in amounts satisfactory to the Lender;
(d) Which is in good working order and condition and can readily be
sold, rented or leased;
(e) Which is located within the United States;
(f) Which the Borrower has good and marketable title or in which it
has a first priority security interest which is assignable;
(g) Which is acceptable to the Lender in all respects; and
(h) Which is subject to an Eligible Contract.
"EQUIPMENT" - as defined in the UCC, (a) to which the Borrower has good
and marketable title or has a first priority perfected security interest which
has been assigned to the Lender
-11-
<PAGE>
and (b) which is not deemed a fixture (unless a fixture filing and landlord
waiver has been obtained) or consumer good as such terms are defined in the UCC.
"ERISA" - the Employee Retirement Income Security Act of 1974, as it
may be amended from time to time, and the regulations thereunder.
"EVENT(S) OF DEFAULT" - as defined in Article 8.
"FINAL MATURITY DATE" - the Business Day immediately preceding the
first anniversary of the date hereof, unless extended pursuant to Section 2.13.
"FINANCIAL STATEMENTS" - the more recent of (a) the audited balance
sheet and statements of income and retained earnings and of cash flows of the
Borrower as at and for the fiscal year ended June 30, 1997 or (b) the most
recent financial statements delivered by the Borrower to the Lender pursuant to
Sections 5.1, 5.2 and 5.3.
"FIXED RATE LOAN" - any LIBOR Loan or Cost of Funds Loan.
"FIXED RATE LOANS" - collectively LIBOR Loans and Cost of Funds Loans.
"FLUCTUATING RATE LOANS" - Loans hereunder that bear interest at a rate
of interest based upon the Prime Rate plus the applicable margin, if indicated.
"GAAP" - generally accepted accounting principles, in effect from time
to time in the United States, consistently applied, provided that for the
purposes of Sections 5.1, 5.2 and 5.3 and the definitions used therein, "GAAP"
shall mean generally accepted accounting principles in effect on the date hereof
and consistent with those used in the preparation of the financial statements
delivered pursuant to Section 4.1(g)(i)(a).
"INDEBTEDNESS" - with respect to any Person, all (i) liabilities or
obligations, direct and contingent, which in accordance with GAAP would be
included in determining total liabilities as shown on the liability side of a
balance sheet of such Person at the date as of which Indebtedness is to be
determined, including, without limitation, lease obligations required to be
shown as a liability on the balance sheet of the lessee in accordance with GAAP;
(ii) liabilities or obligations of others for which such Person is directly or
indirectly liable, by way of guaranty (whether by direct guaranty, suretyship,
discount,
-12-
<PAGE>
endorsement, take-or-pay agreement, agreement to purchase or advance or keep in
funds or other agreement having the effect of a guaranty) or otherwise; (iii)
liabilities or obligations secured by liens on any assets of such Person,
whether or not such liabilities or obligations shall have been assumed by it;
(iv) non-cancellable liabilities under all operating leases and (v) liabilities
or obligations of such Person, direct or contingent, with respect to letters of
credit issued for the account of such Person and bankers' acceptances credited
for such Person.
"INTEREST PERIOD" - any period during which a Loan bears interest at a
fixed rate as elected by the Borrower in accordance with the terms of this
Agreement.
(a) If any Interest Period would otherwise end on a day which is not a
Business Day, that Interest Period shall be extended to the next succeeding
Business Day unless such Interest Period is with respect to a LIBOR Loan and the
result of such extension would be to extend such Interest Period into another
calendar month, in which event such Interest Period shall end on the immediately
preceding Business Day.
(b) No Interest Period shall extend beyond the Maturity Date.
"INVESTMENT" - any investment in any Person by means of purchase of
shares of stock or Indebtedness, capital contribution, loan, advance or
guarantee, or any acquisition of all or any part of the business or assets of
any Person, or any commitment or option to make any Investment.
"IRS" - Internal Revenue Service.
"LATEST BALANCE SHEET" - as defined in Section 3.10.
"LEASE" - any lease agreement or rental contract (including any and all
schedules, supplements and amendments thereon and modifications thereof) entered
into by the Borrower as lessor with respect to Equipment.
"LEASE RECEIVABLES" - Fixed rentals remaining to be paid under Leases.
"LENDER" - Fleet Bank N.A., any of its permitted successors and assigns
pursuant to Section 9.1, and any other financial institutions which may
hereafter become a "Lender" under this Agreement pursuant to Section 9.1.
-13-
<PAGE>
"LEVERAGE RATIO" - as of any date, the ratio of (i) Total Liabilities,
plus any recourse portion of limited recourse Indebtedness, minus Subordinated
- ---- -----
Debt to (ii) Tangible Capital Funds.
"LIBOR" - as applicable to any LIBOR Loan, the rate per annum (rounded
upward, if necessary, to the nearest 1/32 of one percent) as determined on the
basis of the offered rates for deposits in U.S. dollars, for a period of time
comparable to such LIBOR Loan which appears on the Telerate page 3750 as of
11:00 a.m. London time on the day that is two London Business Days preceding the
first day of such LIBOR Loan; provided, however, if the rate described above
does not appear on the Telerate System on any applicable interest determination
date, the LIBOR rate shall be the rate (rounded upwards as described above, if
necessary) for deposits in dollars for a period substantially equal to the
interest period on the Reuters Page "LIBO" (or such other page as may replace
the LIBO Page on that service for the purpose of displaying such rates), as of
11:00 a.m. (London Time), on the day that is two (2) London Business Days prior
to the beginning of such interest period.
If both the Telerate and Reuters system are unavailable, then the rate for
that date will be determined on the basis of the offered rates for deposits in
U.S. dollars for a period of time comparable to such LIBOR Loan which are
offered by four major banks in the London interbank market at approximately
11:00 a.m. London time, on the day that is two (2) London Business Days
preceding the first day of such LIBOR Loan as selected by the Lender. The
principal London office of each of the four major London banks will be requested
to provide a quotation of its U.S. dollar deposit offered rate. If at least two
such quotations are provided, the rate for that date will be the arithmetic mean
of the quotations. If fewer than two quotations are provided as requested, the
rate for that date will be determined on the basis of the rates quoted for loans
in U.S. dollars to leading European banks for a period of time comparable to
such LIBOR Loan offered by major banks in New York City at approximately 11:00
a.m. New York City time, on the day that is two London Business Days preceding
the first day of such LIBOR Loan. In the event that the Lender is unable to
obtain any such quotation as provided above, it will be deemed that LIBOR
pursuant to a LIBOR Loan cannot be determined.
In the event that the Board of Governors of the Federal Reserve System shall
impose a Reserve Percentage with respect to LIBOR deposits of the Lender then
for any period during which such Reserve Percentage shall apply, LIBOR shall be
equal to the amount determined above divided by an amount equal to 1 minus such
Reserve Percentage.
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"LIBOR LOANS" - Loans hereunder that bear interest for the Interest
Period applicable thereto at a rate of interest based upon LIBOR.
"LIEN" - any mortgage, deed of trust, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement, any
lease in the nature of a grant of a security interest or lien), and the filing
of or agreement to give any financing statement under the UCC or similar law of
any jurisdiction.
"LOAN" AND "LOANS" - individually, a Revolving Credit Loan and
collectively, the Revolving Credit Loan(s).
"LOAN DOCUMENTS" - this Agreement, the Notes, the Security Documents,
and all other documents executed and delivered in connection herewith or
therewith, including all amendments, modifications and supplements of or to all
such documents.
"MANAGED LEASES" - means Leases that have been sold or transferred by
the Borrower either on a non-recourse basis, through a securitization program or
otherwise, where the servicing of such Leases has been retained by the Borrower.
"MATURITY DATE" - the Maturity Date of all Revolving Credit Loans shall
be the Commitment Termination Date.
"MAXIMUM LEASE TERM" - with respect to Eligible Contracts with an
Eligible Contract Value not in excess of 15% of the amount of the Commitment,
eighty-four (84) months.
"NET INCOME" - the net income (but not loss or deficit) of the
Borrower, determined in accordance with GAAP; provided, however, that Net Income
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shall not include amounts added to such net income (or deficit) in respect of
the write-up of any asset.
"NET LEASE RECEIVABLES" - Lease Receivables minus advance payments,
security deposits, dealer holdbacks and similar items.
"NET PRESENT VALUE" - the amount of all fixed, periodic basic rental
payments (excluding any residual payments) under an Eligible Contract,
discounted to present value by the Prime Rate as such Prime Rate is in effect
from time to time. All present value calculations shall be made using a 30-day
month and a 360-day year.
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"NON-RECOURSE INDEBTEDNESS" - Indebtedness of the Borrower for which
the remedy for nonpayment or non-performance of any obligation or any default
(other than for breach of standard representations and warranties) in respect
thereof is strictly and absolutely limited to any collateral securing such
Indebtedness and in respect of which the Borrower is not subject to any personal
liability.
"NOTE" - the Revolving Credit Note and any note(s) issued in
substitution or replacement thereof.
"NOTICE" as defined in Section 2.2.
"OBLIGATIONS" - as defined in Section 2.15(a).
"ORIGINAL EQUIPMENT COST" - the purchase price to the Borrower for any
Equipment as invoiced by the supplier thereof, less any manufacturer discounts,
rebates or similar items.
"OWNED LEASES" - all Leases other than Managed Leases.
"PARTICIPANT" - as defined in Section 9.2.
"PARTICIPATION" - as defined in Section 9.2.
"PBGC" - the Pension Benefit Guaranty Corporation or its successor.
"PERMITTED LENDERS" - as defined in Section 7.1.
"PERMITTED LIENS" - (i) liens or charges for current taxes, assessments
or other governmental charges other than those arising from income taxes (A)
which are not yet due and payable or (B) the validity of which is being
contested in good faith by appropriate proceedings upon stay of execution of the
enforcement thereof and which are in respect of claims for current taxes,
assessments, or other governmental charges not exceeding an aggregate amount of
$250,000; (ii) Liens or charges not exceeding an aggregate amount of $250,000,
incurred in the ordinary course of business of the Borrower in connection with
workers' compensation, unemployment insurance, social security or other forms of
governmental insurance or benefits, or to secure performance of statutory
obligations, leases and contracts (other than for borrowed money) entered into
in the ordinary course of business or to secure obligations on surety or appeal
bonds; (iii) Liens of attachment and judgment respecting claims, the validity of
which is being contested in good faith by appropriate proceedings upon stay
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of execution of the enforcement thereof which shall be vacated or bonded (and
continues to be bonded) within 30 days after the date of attachment or
perfection thereof; and (iv) mechanic's, materialmen's, warehousemen's or other
similar liens arising in the ordinary course of Borrower's business which either
(A) are inchoate and relate to an obligation which is not yet due and payable,
or (B) are being contested in good faith and which are in respect of mechanics',
materialmen's, or other similar charges for which adequate reserves have been
set aside on the books of the Borrower in accordance with GAAP, consistently
applied.
"PERSON" - an individual, a corporation, a partnership, a joint
venture, a limited liability company or partnership, a trust or unincorporated
organization, a joint stock company or other similar organization, a government
or any political subdivision thereof, a court, or any other legal entity,
whether acting in an individual, fiduciary or other capacity.
"PLAN" - an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Code and is either (i) maintained by the Borrower or any member of the
Controlled Group for employees of the Borrower, or by the Borrower for any other
member of such Controlled Group or (ii) maintained pursuant to a collective
bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which the Borrower or any member of the Controlled
Group is then making or accruing obligations to make contributions or has within
the preceding five plan years made contributions.
"POST-DEFAULT RATE" - (i) in respect of the principal amount of any
Loans not paid when due (whether at stated maturity, by acceleration or
otherwise), a rate per annum during the period commencing on the due date until
such Loans are paid in full equal to the Borrowing Rate for such Loans plus two
(2%) percent (provided, that, with respect to Fixed Rate Loans, such rate shall
apply until the last day of the Interest Period thereof, at which time and until
paid in full, the Post-Default Rate shall be the Post-Default Rate that would be
applicable to Fluctuating Rate Loans) and (ii) in respect of all other amounts
payable by the Borrower hereunder not paid when due (whether at stated maturity,
by acceleration or otherwise), a rate per annum during the period commencing on
the due date until such other amounts are paid in full equal to the Prime Rate
plus two (2%) percent, as in effect from time to time in each such case, to the
extent permitted by applicable law.
"PRIME RATE" - the variable per annum rate of interest so designated
from time to time by the Lender as its prime rate. Each change in any interest
rate provided for herein based upon
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the Prime Rate resulting from a change in the Prime Rate shall take effect at
the time of such change in the Prime Rate. The Prime Rate is a reference rate
and does not necessarily represent the lowest or best rate being charged by the
Lender to any customer.
"PURCHASE MONEY SECURITY INTEREST" - as defined in Section 7.2.
"REGULATION D" - Regulation D of the Board of Governors of the Federal
Reserve System, as the same may be amended or supplemented from time to time.
"REGULATORY CHANGE" - any change after the date of this Agreement in
foreign or United States federal, state or local laws or regulations (including
Regulation D) or the adoption or making after such date of any interpretations,
directives or requests applying to a class of banks including any of the Lenders
of or under any foreign or United States federal, state, or local laws or
regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
"RESERVE COVERAGE" - as of any date, the ratio of the Allowance for
Doubtful Accounts to Net Lease Receivables.
"REVOLVING CREDIT LOANS" - revolving credit loans made by the Lender
during the Credit Period pursuant to Section 2.1(a).
"REVOLVING CREDIT NOTE" - as defined in Section 2.9(a).
"SECURITY AGREEMENT" - as defined in Section 2.15(a)(i).
"SECURITY DOCUMENTS" - as defined in Section 2.15(a)(iv).
"SOLVENT" - with respect to any Person, means that (i) the fair value
of all of such Person's properties and assets is in excess of the total amount
of its Indebtedness; (ii) it is able to pay its debts as they mature; (iii) it
does not have unreasonably small capital for the business in which it is engaged
or for any business or transaction in which it is about to engage; and (iv) it
is not "insolvent" as such term is defined in Section 101(31) of Title 11 of the
United States Code, 11 U.S.C. Section 101, et seq.
-- ---
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"SUBORDINATED DEBT" - Indebtedness owing by the Borrower to any Person
completely subordinated to all of the Borrower's Obligations to the Lender on
terms satisfactory to the Lender.
"SUBSIDIARY" - shall mean as to any Person, a corporation or other
Person of which shares of stock or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other managers of
such corporation or other Person are at the time owned, directly or indirectly
through one or more intermediaries, by such Person. Unless the context
otherwise requires, references herein to Subsidiary shall mean a Subsidiary of
the Borrower.
"TANGIBLE CAPITAL FUNDS" - Tangible Net Worth plus Subordinated Debt.
"TANGIBLE NET WORTH" - the sum of (a) preferred stock, (b) common
stock, (c) additional paid-in capital and (d) retained earnings (or less any
----
accumulated deficit, if applicable), less the sum of (x) deferred financing
----
fees, initial direct costs, prepaid expenses, goodwill and other intangible
assets, (y) treasury stock and (z) loans, advances or other extensions of credit
to Affiliates, employees and stockholders, all as determined in accordance with
GAAP.
"TOTAL LIABILITIES" - the Indebtedness (excluding Non-Recourse
Indebtedness) of the Borrower, determined in accordance with GAAP.
"UNUSED COMMITMENT" - as of any date, the difference, if any, between
(i) the amount of the Commitment in effect on such date, and (ii) the then
aggregate outstanding principal amount of all Revolving Credit Loans made by the
Lender hereunder.
"UCC" - the Uniform Commercial Code as enacted in any state of the
United States or in the District of Columbia or the United States Virgin Islands
insofar as any such statute, as in effect from time to time, may be relevant to
the creation, perfection, continuation and enforcement of Liens on Collateral.
"WELFARE PLAN" - an employee welfare benefit Plan, as defined in
Section 3(1) of ERISA.
SECTION 1.2. ACCOUNTING TERMS.
Any accounting terms used in this Agreement which are not specifically
defined herein shall have the meanings customarily given thereto in accordance
with GAAP, consistently applied. The Borrower shall deliver to the Lenders at
the same time as the
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delivery of any annual, quarterly or monthly financial statement under Section
5.1, 5.2 or 5.3 (i) a description in reasonable detail of any material variation
between the application of accounting principles employed in the preparation of
such statement and the application of accounting principles employed in the
preparation of the next preceding annual or quarterly financial statements and
(ii) reasonable estimates of the differences between such statements arising as
a consequence thereof; provided, however, that any such material variation must
have been pursuant to the prior written consent of the Lender.
SECTION 1.3. OTHER TERMS.
Any references herein to exhibits, schedules, sections or articles are
references to exhibits, schedules, sections or articles of this Agreement,
unless otherwise specified. Wherever appropriate in the context, terms used
herein in the singular also include the plural, and vice versa, and each
masculine, feminine or neuter pronoun shall also include the other genders.
ARTICLE 2. COMMITMENT, LOANS AND COLLATERAL
SECTION 2.1. LOANS.
(a) Subject to the terms and conditions of this Agreement, the Lender
hereby agrees, on the terms and subject to the conditions of this Agreement, to
make Revolving Credit Loans to the Borrower on any Business Day during the
period (the "Credit Period") from the date hereof to and including the
Commitment Termination Date in an aggregate principal amount at any one time
outstanding up to the Lender's Commitment; provided, however, that no Revolving
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Credit Loan shall be made hereunder if, after giving effect thereto, the
aggregate outstanding principal amount of all Revolving Credit Loans would
exceed the lesser of (x) the amount of the Revolving Credit Borrowing Base or
(y) the Commitment.
(b) Subject to the terms and conditions of this Agreement, the
Borrower may borrow, repay and reborrow amounts in respect of the Revolving
Credit Loans available under the Commitment during the Credit Period.
(c) All Revolving Credit Loans shall be due and payable in full on the
Commitment Termination Date, subject to prior payment thereof as required
pursuant to Section 2.6.
(d) The Borrower shall not be permitted to reduce the amount of the
Commitment prior to the Commitment Termination Date.
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SECTION 2.2. PROCEDURE FOR BORROWINGS; CONTINUATIONS AND CONVERSIONS
(a) Subject to the terms and conditions of this Agreement, the Borrower may
borrow under the Commitment until the Commitment Termination Date on any
Business Day by giving the Lender irrevocable notice in the form of Exhibit A
hereto (a "Notice") of each prepayment and of each request for a Loan hereunder
(i) in the case of prepayments at least three Business Days before the date of
such prepayment designated in such Notice setting forth the amount of the such
prepayment and the date of such prepayment (which shall be a Business Day) and
(ii) in the case of Loan requests (which shall include continuations and
conversions of Loans) (A) in the case of LIBOR Loans three Business Days before
a proposed borrowing or continuation or conversion and (B) in the case of Cost
of Funds Loans and Fluctuating Rate Loans not less than one nor more than five
Business Days before a proposed borrowing, setting forth (w) the amount of the
Loan requested, which shall not be less than $250,000, (x) the requested
borrowing date or Interest Period commencement date, as the case may be, (y)
whether the borrowing or Interest Period is to be for a LIBOR Loan, Cost of
Funds Loan, Fluctuating Rate Loan or a combination thereof, and (z) if entirely
or partially a Fixed Rate Loan, the length of the Interest Period therefor,
which shall be one, two or three months in the case of LIBOR Loans and 1 week, 2
weeks or 30, 60 or 90 days in the case of Cost of Funds Loans. As used in this
Section 2.2, "conversion" shall mean the conversion from one interest rate to
another interest rate as more fully described in this Agreement. Such Notice
shall be written (including, without limitation, via facsimile transmission) and
shall be sufficient if received by l p.m. on the date on which such notice is to
be given. Unless notification is otherwise furnished by the Borrower to the
Lender (in a manner consistent with the requirements of this Section), Loans
will be made by credits to the Borrower's demand deposit account maintained with
the Lender. If the Borrower furnishes such notice but no election is made as to
the type of Loan or the Interest Period to be applicable thereto, the Loan will
automatically then be made as a Fluctuating Rate Loan until such required
information is furnished pursuant to the terms hereof.
(b) The Borrower shall have the right at any time on prior irrevocable
written or telex Notice to the Lender as specified in this Agreement (i) to
continue any Loan into a subsequent Interest Period, (ii) to convert any Fixed
Rate Loan into a Fluctuating Rate Loan, and (iii) to convert any Fluctuating
Rate Loan into a Fixed Rate Loan (specifying the Interest Period to be
applicable thereto), subject to the following:
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(a) in the case of a conversion of less than all of the outstanding
Loans, the aggregate principal amount of Loans converted shall not be less than
$250,000 and shall be an integral multiple thereof;
(b) no Fixed Rate Loan shall be converted at any time other than at the
end of an Interest Period applicable thereto; and
(c) any portion of a Loan maturing or required to be prepaid in less
than one month may not be converted into or continued as a Fixed Rate Loan.
In the event that the Borrower shall not give notice to continue any Fixed Rate
Loan into a subsequent Interest Period or convert any such Loan into a Loan of
another type, on the last day of the Interest Period thereof, such Loan (unless
prepaid) shall automatically be converted into a Fluctuating Rate Loan. The
Interest Period applicable to any Fixed Rate Loan resulting from a conversion or
continuation shall be specified by the Borrower in the irrevocable Notice
delivered by the Borrower pursuant to Section 2.2(a); provided, however, that,
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if such Notice does not specify either the type of Loan or the Interest Period
to be applicable thereto, the Loan shall automatically be converted into, or
continued as, as the case may be, a Fluctuating Rate Loan until such required
Notice is furnished pursuant to the terms hereof. Notwithstanding anything to
the contrary contained above, if an Event of Default shall have occurred and is
continuing, no Fixed Rate Loan may be continued into a subsequent Interest
Period and no Fluctuating Rate Loan may be converted into a Fixed Rate Loan.
SECTION 2.3. BORROWING COMPUTATION.
Each Notice shall be accompanied by (i) a Borrowing Base Report,
calculated as of the date of, and giving effect to, the Revolving Credit Loan
requested in such Notice; and (ii) a Compliance Certificate.
SECTION 2.4. BORROWINGS.
(a) Subject to the limitations set forth in Section 2.1 hereof, upon
the satisfaction by the Borrower of the applicable conditions set forth in
Article 4 hereof and Sections 2.2 and 2.3 above, and provided that the Eligible
Contracts and Eligible Equipment relating to a requested Revolving Credit Loan
shall be "Eligible" within the parameters of the eligibility definition set
forth in this Agreement with respect thereto, on each Borrowing Date, the Lender
shall make the Revolving Credit Loan requested by the Borrower on the applicable
Borrowing Date.
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(b) On each Borrowing Date, the Lender shall make available the amount
of the Revolving Credit Loan to be made by it no later than 11:00 A.M. New York
City time, on such date, in immediately available funds, which the Lender shall
pay over to the Borrower, upon the Lender's receipt of the documents and
satisfaction of the conditions required under Article 4 with respect to such
Revolving Credit Loan, (i) to an account designated by the Borrower or (ii) on
instructions from the Borrower to the Lender in the Notice related to such
Revolving Credit Loan, by transmitting such amount to the Borrower or such
Person or entity as the Borrower shall have designated in such Notice.
SECTION 2.5. FACILITY FEE; COMMITMENT FEE.
(a) Facility Fee - The Borrower shall pay to the Lender a facility fee
------------
of $15,000.00 (the "Facility Fee") upon the execution of this Agreement.
(b) Commitment Fee - The Borrower shall pay to the Lender, a commitment
--------------
fee (the "Commitment Fee") on the entire amount of the Lender's Unused
Commitment for the period beginning November 21, 1998 to and including the
earlier of the date the Commitment is terminated pursuant to Article 8 hereof or
the Commitment Termination Date, at a rate per annum of one quarter of one
(1/4%) percent. The Commitment Fee shall be payable quarterly in arrears on the
first Business Day of each June, September, December and March and on the date
the Commitment is terminated pursuant to Article 8 hereof, the first such
payment to be on the first Business Day of December, 1998.
SECTION 2.6. BORROWING BASE; PREPAYMENTS.
(a) At no time shall the aggregate principal amount of the Revolving
Credit Loans outstanding exceed the amount of the Borrowing Base. In the event
that for any reason, including, without limitation, sale of Equipment, any
Equipment or Leases become ineligible within the meaning of the definitions in
this Agreement of "Eligible Equipment", or "Eligible Contracts," collection of
payments under an Eligible Contract, the aggregate outstanding principal amount
of the Revolving Credit Loans exceeds the Borrowing Base, the Borrower shall
prepay the Revolving Credit Loans within five (5) Business Days after the first
day there exists such excess, in an amount sufficient to reduce the sum of the
aggregate principal amount of the Revolving Credit Loans to an amount not
greater than the Borrowing Base. Together with each such prepayment, if
applicable, the Borrower shall also pay any amount required pursuant to Section
2.18.
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(b) Subject to the delivery of a Notice pursuant to Section 2.2,
without premium or penalty, but subject to the provisions of Section 2.18, the
Borrower shall have the right to prepay any Revolving Credit Loan at any time
and from time to time in whole or in part; provided, however, that any such
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prepayment (other than a prepayment pursuant to Section 2.6(a)) shall be in an
amount not less than such amounts as provided in Section 2.12 hereof.
SECTION 2.7. USE OF PROCEEDS OF LOANS.
The proceeds of each Revolving Credit Loan shall be used by the
Borrower solely to finance the purchase of Eligible Equipment subject to
Eligible Contracts and for no other purpose whatsoever.
SECTION 2.8. INTEREST.
(a) Subject to subsection (b) below, the Borrower shall pay to the
Lender interest on the unpaid principal amount of each Revolving Credit Loan for
the period commencing on the date of such Loan until such Loan shall be paid in
full at the Borrowing Rate applicable to such Loan.
(b) Notwithstanding the foregoing, the Borrower shall pay interest at
the applicable Post-Default Rate on any Revolving Loan and on any other amount
payable by the Borrower hereunder and under any other Loan Document (including
interest to the extent permitted by law) which shall not be paid in full when
due (whether at stated maturity, by acceleration or otherwise) for the period
commencing on the due date thereof to and including the date on which the same
is paid in full.
(c) Except as provided in the following sentence, accrued interest on
each Revolving Credit Loan shall be payable monthly in arrears on the 15th day
of each month, commencing on the first month immediately following the date of
the making of such Loan and continuing on the 15th day of each month thereafter,
until the maturity of such Loan or the payment or prepayment thereof in full.
Interest which is payable at a Post-Default Rate shall be payable from time to
time on demand of the Lender.
(d) All agreements between the Borrower and the Lender are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of acceleration of maturity of the indebtedness evidenced hereby or
otherwise, shall the amount paid or agreed to be paid to the Lender for the use
or the forbearance of the indebtedness evidenced hereby exceed the maximum
permissible under applicable law. As used herein, the term "applicable law"
shall mean the law in effect as of the date
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hereof provided, however, that in the event there is a change in the law which
results in a higher permissible rate of interest, then the Loan Documents shall
be governed by such new law as of its effective date. In this regard, it is
expressly agreed that it is the intent of Borrower and the Lender in the
execution, delivery and acceptance of this Agreement to contract in strict
compliance with the laws of the State of New York from time to time in effect.
If, under or from any circumstances whatsoever, fulfillment of any provision
hereof or of any of the Loan Documents at the time of performance of such
provision shall be due, shall involve transcending the limit of such validity
prescribed by applicable law, then the obligation to be fulfilled shall
automatically be reduced to the limits of such validity, and if under or from
circumstances whatsoever the Lender should ever receive as interest and amount
which would exceed the highest lawful rate, such amount which would be excessive
interest shall be applied to the reduction of the principal balance evidenced by
a Note (in such manner as the Lender may determine in its sole discretion) and
not to the payment of interest. This provision shall control every other
provision of all agreements between the Borrower and the Lender. Any such
payments of interest which are not made as a result of the limitation referred
to in the preceding sentence shall be made by the Borrower to the Lender, if at
all, on the earliest interest payment date or dates on which the receipt thereof
would be permissible under the laws applicable to the Lender limiting rates of
interest which may be charged or collected by such Lender.
SECTION 2.9. NOTE.
(a) The Revolving Credit Loans made by the Lender shall be evidenced by
a single promissory note made by the Borrower and payable to the order of the
Lender in a principal amount equal to the Commitment and otherwise duly
completed, in substantially the form of Exhibit B hereto (the "Revolving Credit
Note") and representing the obligation of the Borrower to pay the lesser of (a)
the amount of the Commitment or, (b) the aggregate unpaid principal amount of
all Revolving Credit Loans made by the Lender to the Borrower, with interest
thereon as hereinafter prescribed. The Revolving Credit Note shall (i) be
stated to mature on the Termination Date and (ii) bear interest with respect to
the unpaid principal balance thereof from time to time outstanding at a rate per
annum to be elected by the Borrower in accordance with the notice provisions set
forth in Section 2.2 hereof, and in the case of Fixed Rate Loans for the
Interest Period therein specified, equal to either (1) 1.85% in excess of LIBOR,
(2) 1.85% in excess of Cost of Funds, or (3) the Prime Rate (which interest rate
will change when and as the Prime Rate changes). In all cases interest shall be
computed on the basis of a 360-day year for actual days elapsed and shall be
payable as provided in this Agreement. After
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any stated or accelerated maturity, the Revolving Credit Note shall bear
interest at the rate set forth in this Agreement.
(b) The Borrower hereby authorizes the Lender to make notations of all
payments and prepayments made on account of the principal of the Revolving
Credit Loans and interest thereon on the schedule attached to the Revolving
Credit Note and such notations shall, in the absence of manifest error, be
conclusive; provided, however, that any failure by the Lender to make any such
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notation shall not limit or otherwise affect the obligations of the Borrower
hereunder or under the Note in respect of the Revolving Credit Loans.
SECTION 2.10. PAYMENTS.
All payments of principal, interest, fees and other amounts payable by
the Borrower hereunder shall be made in Dollars, in immediately available funds,
to the Lender, at the office of the Lender set forth in Section 10.9 hereof no
later than 11:00 A.M., New York City time, on the dates on which such payments
shall become due. Subject to the provisions of subparagraph (a) in the
definition of Interest Period set forth in Section 1.1 hereof, payments which
are due on a day which is not a Business Day shall be payable on the first
Business Day thereafter and interest shall continue to accrue, or shall be
payable for any principal so extended, in each case for the period of such
extension. Each such payment made after such time on such dates shall be deemed
to have been made on the next succeeding Business Day and interest shall accrue
thereon accordingly. All payments received by the Lender hereunder shall be
applied first, to pay all fees, expenses and other amounts (other than principal
and interest) then due and payable hereunder, second, to pay accrued and unpaid
interest on the Loans and third, to repay the outstanding principal balance of
the Loans. The Borrower hereby authorizes and directs the Lender to charge any
account of the Borrower maintained at any office of the Lender for any such
payments.
SECTION 2.11. COMPUTATIONS.
Interest on all Loans, the Commitment Fee and any other amounts payable
hereunder or under the Notes or in connection herewith or therewith shall be
computed on the basis of a 360-day year, 30-day month and actual days elapsed.
SECTION 2.12. MINIMUM AMOUNTS OF BORROWINGS AND PREPAYMENTS.
Except for borrowings which exhaust the full remaining amount of the
Commitment or prepayments pursuant to Section
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2.6(a), and except as otherwise expressly set forth in this Agreement, each
borrowing and prepayment of a Loan shall be in a minimum amount of $250,000
(except those payments made to keep the Borrower in compliance with the
Borrowing Base).
SECTION 2.13. RENEWAL OF COMMITMENT; EXTENSION OF COMMITMENT TERMINATION
DATE.
Upon (i) the written request of the Borrower to the Lender given at
least sixty (60) but not more than ninety (90) days prior to the Commitment
Termination Date and (ii) the written consent of the Lender (such consent to be
given at the sole discretion of the Lender), the Commitment shall be renewed and
the Commitment Termination Date shall be extended for successive one-year
periods, provided no Default or Event of Default exists hereunder either at the
date of receipt of such request or the Commitment Termination Date then in
effect (without giving effect to the requested extension), and the Borrower
shall certify to such effect to the Lender. The Lender shall within thirty (30)
days after receipt of such notice, deliver written notice to the Borrower of its
decision whether or not to renew the Commitment and extend the Commitment
Termination Date. In the event the Lender has not given such notice within such
thirty (30) day period, the Lender shall be deemed to have elected not to renew
its Commitment and not to extend the Commitment Termination Date.
2.14. REGULATORY CHANGES IN CAPITAL REQUIREMENTS. If any existing or future
law, regulation or guideline or the interpretation thereof by any court or
administrative or Governmental Authority charged with the administration
thereof, or compliance by the Lender with any request or directive (whether or
not having the force of law) of any such authority, imposes, modifies, deems
applicable or results in the application of, any capital maintenance, capital
ratio or similar requirement against loan commitments made by the Lender (or
participations therein) or the Lender in anticipation of the effectiveness of
any capital maintenance, capital ratio or similar requirement takes reasonable
action to enable itself to comply therewith, and the result thereof is to impose
upon the Lender or increase any capital requirement applicable as a result of
the making or maintenance of the Commitment or participations therein (which
imposition of or increase in capital requirements may be determined by the
Lender's reasonable allocation of the aggregate of such capital impositions or
increases) then, upon demand by the Lender, the Borrower shall immediately pay
to the Lender from time to time as specified by the Lender additional commitment
fees which shall be sufficient to compensate the Lender for such impositions of
or increases in capital requirements, together with interest on each such amount
from the date demanded until payment in full thereof at the Post Default Rate. A
certificate setting forth in reasonable detail
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the amounts necessary to compensate the Lender as a result of an imposition of
or increase in capital requirements submitted by the Lender to the Borrower
shall be conclusive, absent manifest error or bad faith, as to the amount
thereof. For purposes of this Section, (a) in calculating the amount necessary
to compensate the Lender for any imposition of or increase in capital
requirements, the Lender shall be deemed to be entitled to a rate of return on
capital (after federal, state and local taxes) of fifteen per cent per annum,
and (b) all references to the "Lender" shall be deemed to include any
participant in the Commitment and any corporation controlling the Lender.
SECTION 2.15. SECURITY.
In order to secure the due payment and performance by the Borrower of all of
the Indebtedness, liabilities and obligations of the Borrower to the Lender,
whether now existing or hereafter arising, under this Agreement, the Note or any
of the other Loan Documents, including, without limitation, the due and punctual
payment of the principal of and the interest on the Note according to their
terms and effect and all fees, costs and expenses from time to time payable to
the Lender under the Loan Documents (all such Indebtedness, liabilities and
obligations are hereinafter referred to, collectively, as the "Obligations"),
the Borrower shall:
(i) concurrently herewith, grant to the Lender, as secured party, a first
Lien on all of the Borrower's Leases financed by the Lender or
otherwise included in the Borrowing Base together with all Equipment
covered by such Leases, all whether now owned or hereafter acquired,
tangible and intangible, by the execution and delivery to the Lender
of a security agreement concurrently herewith, in the form of Exhibit
C hereto (the "Security Agreement");
(ii) concurrently herewith, grant to the Lender, as secured party, in
confirmation of the terms of the Security Agreement, a first Lien on
and assign to the Lender all of the Borrower's right, title and
interest in, to and under, all of the Borrower's Leases referred to in
subparagraph 2.15(i) above, including all security deposits and
additional collateral it receives from lessees under such Leases, by
the execution and delivery to the Lender of an assignment of leases
concurrently herewith, in the form of Exhibit D hereto (the
"Assignment of Leases");
(iii) pursuant to Article 4, file all UCC financing statements with respect
to all Collateral under the Security Agreement,
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including, without limitation, all UCC financing statements required to
assign to the Lender any Liens filed by the Borrower against lessees under
such Leases referred to in this Section 2.15 and, subject to Section 6.8,
stamp each file containing an original executed counterpart of each Lease of
the Borrower with the legend required pursuant to Section 6.8.;
(iv) execute and deliver or cause to be executed and delivered such other
agreements, instruments and documents (including but not limited to
assignments to the Lender of UCC-1 Financing Statements filed by the
Borrower against lessees or sublessees under Leases) as the Lender may
reasonably require in order to effect the purposes of the Security
Agreement, the Assignment of Leases and this Agreement (the Security
Agreement, the Assignment of Leases, UCC Financing Statements, and such
other agreements, instruments and documents are referred to
collectively as the "Security Documents").
2.16. TERMINATION OR REDUCTION OF COMMITMENT. The Borrower shall have the
right, upon not less than three Business Days' irrevocable written notice, to
terminate the Commitment or, from time to time, to reduce the amount of the
Commitment, provided that (a) any such reduction (i) shall be in the minimum
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amount of $500,000 or a multiple thereof, (ii) shall reduce permanently the
amount of the Commitment then in effect, and (iii) shall be accompanied by
prepayment of the Revolving Credit Loans outstanding to the extent, if any, that
the Loans then outstanding exceed the amount of the Commitment as then reduced,
together with accrued interest on the amount so prepaid to and including the
dates of each such prepayment and any amounts payable pursuant to Section 2.18
in connection therewith and the payment of any unpaid commitment fee then
accrued hereunder, and (b) any such termination of the Commitment shall be
accompanied by prepayment in full of the Revolving Credit Loans outstanding and
together with accrued interest thereon to and including the date of prepayment
and any amounts payable pursuant to Section 2.18 in connection therewith and the
payment of any unpaid commitment fee then accrued hereunder.
2.17. INCREASED COSTS. If the Lender determines in its sole reasonable
discretion that the effect of any applicable law or government regulation,
guideline or order or the interpretation thereof by any Governmental Authority
charged with the administration thereof (such as, for example, a change in
official reserve requirements which the Lender is required to maintain in
respect of loans or deposits or other funds procured for funding such loans) is
to increase the cost to the Lender of making or continuing Fixed Rate Loans
hereunder or to reduce the amount of
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any payment of principal or interest receivable by the Lender thereon, then the
Borrower will pay to the Lender on demand such additional amounts as the Lender
may determine to be required to compensate the Lender for such additional costs
or reduction. Any additional payment under this section will be computed from
the effective date at which such additional costs have to be borne by the
Lender. A certificate as to any additional amounts payable pursuant to this
Section setting forth the basis and method of determining such amounts shall be
conclusive, absent manifest error, as to the determination by the Lender set
forth therein if made reasonably and in good faith. The Borrower shall pay any
amounts so certified to it by the Lender within 10 days of receipt of any such
certificate. For purposes of this Section, all references to the "Lender" shall
be deemed to include any participant in the Commitment and/or loans.
2.18. YIELD MAINTENANCE. If, at any time (i) any Loan is a Fixed Rate
Loan, and (ii) the Lender in its reasonable discretion should determine that
current market conditions can accommodate a prepayment request, the Borrower
shall have the right at such time to prepay such Loan in whole (but not in
part), and the Borrower shall pay to the Lender a yield maintenance fee in an
amount computed as follows: The current rate for United States Treasury
securities (bills on a discounted basis shall be converted to a bond equivalent)
with a maturity date closest to the maturity date of the term chosen pursuant to
the Fixed Rate Election as to which the prepayment is made, shall be subtracted
from the Cost of Funds component of the fixed rate in effect at the time of
prepayment. If the result is zero or a negative number, there shall be no yield
maintenance fee. If the result is a positive number, then the resulting
percentage shall be multiplied by the amount of the principal balance being
prepaid. The resulting amount shall be divided by 360 and multiplied by the
number of days remaining in the term chosen pursuant to the Fixed Rate Election
as to which the prepayment is made. Said amount shall be reduced to present
value calculated by using the number of days remaining in the designated term
and using the above-referenced United States Treasury security rate and the
number of days remaining in the term chosen pursuant to the Fixed Rate Election
as to which the prepayment is made. The resulting amount shall be the yield
maintenance fee due to the Lender upon prepayment of the Fixed Rate Loan. Each
reference in this paragraph to "Fixed Rate Election" shall mean the election by
the Borrower pursuant to Section 2.2 of this Agreement.
If by reason of an Event of Default the Lender elects to declare any Loan to be
immediately due and payable, then any yield maintenance fee with respect to such
Loan shall become due and payable in the same manner as though the Borrower had
exercised such right of prepayment.
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A certificate as to any additional amounts payable pursuant to this Section
setting forth the basis and method of determining such amounts shall be
conclusive, absent manifest error, as to the determination by the Lender set
forth therein if made reasonably and in good faith. The Borrower shall pay any
amounts so certified to it by the Lender within 10 days of receipt of any such
certificate. For purposes of this Section, all references to the "Lender" shall
be deemed to include any participant in the Commitment and/or Loans.
2.19. ALTERNATE RATE OF INTEREST. In the event, and on each occasion, that
on the day two Business Days prior to the commencement of any Interest Period
for a LIBOR Loan, the Lender shall have determined (i) that dollar deposits in
the amount of the requested principal amount of such LIBOR Loan are not
generally available in the London Interbank Market, (ii) that the rate at which
such dollar deposits are being offered will not adequately and fairly reflect
the cost to the Lender of making or maintaining such LIBOR Loan during such
Interest Period, or (iii) that reasonable means do not exist for ascertaining
the Adjusted Libor Rate, the Lender shall, as soon as practicable thereafter,
give written or telex notice of such determination to the Borrower. In the event
of any such determination, until the circumstances giving rise to such notice no
longer exist, no LIBOR Loans will be made hereunder. Each determination by the
Lender hereunder shall be conclusive absent manifest error. For purposes of this
Section, all references to the "Lender" shall be deemed to include any
participant in the Commitment and/or the Loans.
2.20. CHANGE IN LEGALITY.
(a) Notwithstanding anything to the contrary herein contained, if any
change in any law or regulation or in the interpretation thereof by any
governmental authority charged with the administration or interpretation thereof
shall make it unlawful for the Lender to make or maintain any LIBOR Loan, then,
by written notice to the Borrower, the Lender may:
(i) declare that LIBOR Loans will not thereafter be made by the
Lender hereunder, whereupon the Borrower shall be prohibited from requesting
LIBOR Loans from the Lender hereunder unless such declaration is subsequently
withdrawn; and
(ii) require that all outstanding LIBOR Loans made by it be converted
to Fluctuating Rate Loans, in which event (x) all such LIBOR Loans shall be
automatically converted to Fluctuating Rate Loans as of the effective date of
such notice as provided in paragraph (b) below and (y) all payments and
prepayments of principal which would otherwise have been applied
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to repay the converted LIBOR Loans shall instead be applied to repay the
Fluctuating Rate Loans resulting from the conversion of such LIBOR Loans.
(b) For purposes of this Section, (i) a notice to the Borrower by the
Lender pursuant to paragraph (a) above shall be effective, if lawful, on the
last day of the then current Interest Period; in all other cases, such notice
shall be effective on the day of receipt by the Borrower and (ii) all references
to the "Lender" shall be deemed to include any participant in the Commitment
and/or the Loans.
ARTICLE 3. REPRESENTATION AND WARRANTIES
The Borrower hereby represents and warrants to the Lender (which
representations and warranties shall be deemed restated at and as of the date of
the making of any Loans hereunder) that:
SECTION 3.1. ORGANIZATION.
(a) The Borrower is duly organized and validly existing under the laws
of the State of Massachusetts and has the power to own its assets and to
transact the business in which it is presently engaged and in which it proposes
to be engaged, and to execute, deliver and perform its obligations under the
Loan Documents. Schedule 3.1(a) annexed hereto accurately and completely lists
the authorized and outstanding shares of capital stock of the Borrower and the
ownership of such stock. All of the shares of the Borrower are validly issued
and fully paid and nonassessable, and are owned free and clear of any Lien.
Except as set forth on Schedule 3.1(a), there are not outstanding any warrants,
options, contracts or commitments of any kind entitling any Person to purchase
or otherwise acquire any shares of capital stock of the Borrower nor are there
outstanding any securities which are convertible into or exchangeable for any
shares of capital stock of the Borrower. Except as set forth on Schedule 3.1(a),
the Borrower has no Subsidiaries.
(b) The Borrower is in good standing in its state of incorporation and
in each state in which it is qualified to do business. There are no
jurisdictions other than as set forth on Schedule 3.1(b) hereto in which the
character of the properties owned or proposed to be owned by the Borrower or in
which the transaction of its business as now conducted or as proposed to be
conducted requires or will require the Borrower to qualify to do business and as
to which failure to so qualify could have a material adverse effect on its
business, operations, financial condition or properties or on the interest of
the Lender in the Collateral.
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SECTION 3.2. POWER, AUTHORITY, CONSENTS.
The Borrower has power to execute, deliver and perform the Loan
Documents to be executed by it, the Borrower has taken all necessary action
(corporate or otherwise) to authorize the borrowing hereunder on the terms and
conditions of this Agreement and the Borrower has taken all necessary action
(corporate or otherwise) to authorize the execution, delivery and performance of
the Loan Documents. No consent or approval of any Person (including, without
limitation, any stockholder of the Borrower), no consent or approval of any
landlord or mortgagee, no waiver of any Lien or right of distraint or other
similar right and no consent, license, approval, authorization or declaration of
any governmental authority, bureau or agency, is or will be required in
connection with the execution, delivery or performance by either of the Loan
Parties, or the validity, enforcement or priority, of the Loan Documents (or any
Lien created and granted thereunder).
SECTION 3.3. NO VIOLATION OF LAW OR AGREEMENTS.
The execution, delivery and performance by the Loan Parties of the Loan
Documents will not (i) materially violate or conflict with any provision of law
or any rule or regulation to which the Loan Parties or their assets or
properties are subject, (ii) materially violate or conflict with any provision
of the Certificate of Incorporation or by-laws of the Borrower, (iii) materially
violate or conflict with or result in a breach of any order, writ, injunction,
ordinance, resolution, decree, or other similar document or instrument of any
court or governmental authority, bureau or agency, or create (with or without
the giving of notice or lapse of time, or both) a default under or breach of any
agreement, bond, note or indenture to which either Loan Party is a party, or by
which either of them is bound or any of their respective properties or assets is
affected, or (iv) result in the imposition of any Lien of any nature whatsoever
upon any of the properties or assets owned by or used in connection with the
business of the Borrower, except for the Liens created and granted or permitted
pursuant to the Security Documents.
SECTION 3.4. DUE EXECUTION, VALIDITY, ENFORCEABILITY.
This Agreement and each of the other Loan Documents has been duly
executed and delivered by Borrower, as applicable, and each constitutes a valid
and legally binding obligation of Borrower, enforceable against Borrower in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
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similar laws affecting the enforcement of creditors' rights generally and by the
availability of equitable remedies.
SECTION 3.5. PROPERTIES, PRIORITY OF LIENS.
The Leases and the Equipment covered by the Leases are owned by the
Borrower free and clear of any Lien of any nature whatsoever, except as provided
for in the Security Documents to be executed and delivered pursuant hereto, the
Liens listed on Schedule 3.5 hereto and Permitted Liens. The Liens which have,
simultaneously with the execution and delivery of this Agreement and the
consummation of the initial Loans, been created and granted by the Security
Documents constitute valid perfected first priority Liens on the Collateral,
subject to no prior or equal Lien except as permitted by Section 7.2.
SECTION 3.6. JUDGMENTS, ACTIONS, PROCEEDINGS.
There are no outstanding judgments, actions or proceedings pending
before any court or governmental authority, bureau or agency, with respect to
or, to the best of the Borrower's knowledge, threatened against or affecting
Borrower Parties involving, in the case of any judgment, action or proceeding,
an amount in excess of $50,000 individually, and, in the case of all judgments,
actions or proceedings, amounts in excess of $100,000 in the aggregate nor, to
the best of the Borrower's knowledge, is there any reasonable basis for the
institution of any such action or proceeding which is probable of assertion, nor
are there any such actions or proceedings in which the Borrower is a plaintiff
or complainant. Without limiting the foregoing, there are no pending or, to the
best of the Borrower's knowledge, threatened claims, actions or proceedings, and
the Borrower has not received or given within the last three (3) years, any
written communication from or to any governmental authority or any other Person
concerning the possible presence of any asbestos or hazardous waste including,
without limitation, toxic or hazardous substances, wastes or contaminants and
discharges of sewer or effluents, for which the Borrower may be liable or
responsible under any federal, state, or local law, rule, regulation, ordinance
or order.
SECTION 3.7. NO DEFAULTS, COMPLIANCE WITH LAWS.
The Borrower is not in default under any agreement which is material to
its business, or under any ordinance, resolution, decree, bond, note, indenture,
order or judgment to which it is a party or by which it is bound, or any other
agreement or other instrument by which any of the properties or assets owned by
it or used in the conduct of its business is affected which default could have a
material adverse effect on its business, operations,
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assets, financial condition or prospects and or on the collectability of the
Collateral or the Lien of the Lender thereon. The Borrower has complied and/or
is in compliance in all respects with all applicable laws, ordinances and
regulations non-compliance with which could have a material adverse effect on
the business, operations, assets, financial condition or prospects or on the
collectability of the Collateral or the Lien of the Lender thereon.
SECTION 3.8. BURDENSOME DOCUMENTS.
The Borrower is not a party to or bound by, nor are any of the
properties or assets owned by the Borrower or used in the conduct of its
business affected by, any agreement, ordinance, resolution, decree, bond, note,
indenture, order or judgment which materially and adversely affects its
business, operations, assets, financial condition or prospects or the
collectability of the Collateral or the Lien of the Lender thereon.
SECTION 3.9. FINANCIAL STATEMENTs.
Each of the Financial Statements is correct and complete and presents
fairly the financial position and results of operations of the Borrower as at
its date and for the period then ended, and has been prepared in accordance with
GAAP. The Borrower has no material obligations, liabilities or commitments,
direct or contingent, which are not reflected in the Financial Statements. There
has been no material adverse change in the financial condition, results of
operations, asset, or prospects of the Borrower since the balance sheet of the
Borrower included in the Financial Statements dated December 31, 1997. The
fiscal year of the Borrower which has recently been changed, is now the twelve-
month period ending on the last day of June of each year.
SECTION 3.10. TAX RETURNS.
The Borrower has filed all federal, state and local tax returns
required to be filed by it and has not failed to pay any taxes, or interest and
penalties relating thereto, on or before the due dates thereof. Except to the
extent that reserves therefor are reflected in the Financial Statements, (a)
there are no material federal, state or local tax liabilities of the Borrower
due or to become due for any tax year ended on or prior to the date of the
latest balance sheets included in the Financial Statements (the "Latest Balance
Sheet"), whether incurred in respect of or measured by income, which are not
properly reflected in the Latest Balance Sheet, and (b) there are no material
claims pending or, to the knowledge of the Borrower, proposed or threatened
against the Borrower for past federal, state, or local
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taxes, except those, if any, as to which proper reserves are reflected in the
Financial Statements.
SECTION 3.11. INTELLECTUAL PROPERTY.
The Borrower possesses all necessary patents, trademarks, trademark
rights, service marks, service mark rights, trade names, trade name rights and
copyrights to conduct its business as now conducted and as proposed to be
conducted, without, to the best of its knowledge, any conflict with the patents,
trademarks, trademark rights, trade names, trade name rights and copyrights of
others.
SECTION 3.12. REGULATIONS G AND U.
No part of the proceeds received by the Borrower from the Loans will be
used directly or indirectly for the purpose of purchasing or carrying, or for
payment in full or in part of Indebtedness which was incurred for the purposes
of purchasing or carrying, any margin stock as such term is defined in
Regulation G of the Board of Governors of the Federal Reserve System, as the
same may be amended or supplemented from time to time, or Regulation U of the
Board of Governors of the Federal Reserve System, as the same may be amended or
supplemented from time to time.
SECTION 3.13. NAME CHANGES.
The Borrower has not, in the past four years, changed its name (except
as indicated in the Security Agreement), been the surviving entity of a merger
or consolidation, or acquired all or substantially all of the assets of any
Person except as set forth in the Financial Statements.
SECTION 3.14. FULL DISCLOSURE.
None of the Financial Statements nor any certificate, opinion, or any
other statement made or furnished in writing to the Lender by or on behalf of
the Borrower in connection with this Agreement or the transactions contemplated
herein, contains any untrue statement of a material fact, or omits to state a
material fact necessary in order to make the statements contained therein or
herein not misleading. There is no fact known to the Borrower which has, or
would in the now foreseeable future have, a material adverse effect on the
business, operations, assets, financial condition or prospects of the Borrower
or on the collectability of the Collateral or the Lien of the Lender thereon
which fact has not been set forth herein, in the Financial Statements, or any
certificate, opinion, or other written statement so made or furnished to the
Lender.
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SECTION 3.15. CONDITION OF ASSETS; PERMITS.
All of the assets and properties of the Borrower which are reasonably
necessary for the operation of its business are in good working condition,
ordinary wear and tear excepted, and are able to serve the function for which
they are currently being used, excluding assets not material in number or value
to the whole of the Borrower's assets, which are being repaired, or will shortly
be repaired in the ordinary course of business. The Borrower possesses all
permits, licenses, consents and approvals of governmental and regulatory
authorities and other Persons necessary to conduct its business.
SECTION 3.16. ERISA.
(a) Neither the Borrower or any ERISA Affiliate of the Borrower
maintains, sponsors, contributes to or is obligated to contribute to, or during
the five (5) years ending on the date of the execution and delivery of this
Agreement, has maintained, sponsored, contributed to or was obligated to
contribute to, any Plan, except as set forth in the Financial Statements.
(b) No Welfare Plan which the Borrower maintains, sponsors,
contributes to or is obligated to contribute to provides or will provide
benefits, including, without limitation, death or medical benefits (whether or
not insured) with respect to any current or former employee of Borrower beyond
their retirement or other termination of service other than (i) coverage
mandated by applicable law, (ii) retirement or death benefits under any Plan or
(iii) disability benefits under any Welfare Plan that have been fully provided
for by insurance or otherwise.
(c) Neither the Borrower or any ERISA Affiliate of the Borrower nor
the assets of the Borrower or of any ERISA Affiliate of the Borrower are or are
deemed "plan assets" whether by operation of law or under regulations
promulgated under ERISA.
(d) All references to the Borrower in this Section 3.16 or in any
other Section of this Agreement relating to ERISA, shall be deemed to refer to
the Borrower and all other entities which are, together with the Borrower, part
of a Controlled Group.
SECTION 3.17. PRINCIPAL PLACE OF BUSINESS.
The principal place of business of the Borrower and the records
relating to the Leases, invoices, claims, accounts receivable and contract
rights of the Borrower are located at the address indicated for the Borrower in
the introduction to this Agreement.
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SECTION 3.18. ABSENCE OF DEFAULT.
No Default or Event of Default exists.
SECTION 3.19. REGULATED COMPANY.
The Borrower is not (i) an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940 as amended, (ii) a "holding company" or a "Subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or of
a "Subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended, or (iii) subject to any other
law which purports to regulate or restrict its ability to borrow money or to
consummate the transactions contemplated by this Agreement or the other Loan
Documents or to perform its obligations hereunder or thereunder.
SECTION 3.20. INDEBTEDNESS.
Schedule 3.20 annexed hereto is a true and complete list of all
existing Indebtedness for borrowed money of the Borrower.
SECTION 3.21. SOLVENCY.
The Borrower is Solvent prior to and will be Solvent after giving
effect to the transactions contemplated by this Agreement and the other Loan
Documents and the making of the Loans to be made hereunder.
SECTION 3.22. ELIGIBILITY.
Each item included in the Borrowing Base satisfies the applicable
conditions to eligibility with respect to such item set forth in the definition
of such item in Section 1.1 hereof.
ARTICLE 4. THE CLOSING; CONDITIONS TO THE LOANS
SECTION 4.1. CONDITIONS TO EFFECTIVENESS OF AGREEMENT.
The obligation of the Lender to make the initial Revolving Credit Loan
hereunder shall be subject to the fulfillment (to the satisfaction of the
Lender) of the following conditions precedent:
(a) The Borrower shall have executed and delivered to the Lender,
this Agreement, the Revolving Credit Note, the Security Agreement and the
Assignment of Leases.
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(b) Prior to or contemporaneously with the funding of the initial
Loan, all existing Indebtedness of the Borrower for borrowed money shall have
been paid in full and evidence thereof, in form and substance satisfactory to
the Lender, shall be delivered to the Lender.
(c) The Borrower shall have filed or executed and delivered to the
Lender for filing all such UCC-1 financing statements, in form and substance
satisfactory to the Lender, as the Lender shall require to perfect and preserve
its security interest created under the Security Documents (and the Borrower
shall also execute and deliver to the Lender such additional UCC-1 financing
statements for such additional locations as the Lender may from time to time
request);
(d) The Lender shall have received copies of the following, each of
which shall be satisfactory to the Lender:
(i) (a) The Financial Statements and (b) an initial Borrowing
Base Report dated as of the date of the making of such Loan, certified to be
true and correct and as having been prepared in accordance with GAAP by the
President or the Chief Financial Officer of the Borrower;
(ii) A Certificate of the Secretary or Assistant Secretary of
the Borrower certifying to the Articles of Incorporation of the Borrower
(certified by the Secretary of State of Massachusetts), the by-laws of the
Borrower; the taking of all corporate action by the Borrower necessary to
authorize the execution, delivery and performance of each of the Loan Documents
and that such action has not been rescinded, limited or modified;
(iii) Good standing certificates as of dates not more than
twenty (20) days prior to the date of the closing with respect to the Borrower
from the State of Massachusetts, from each other significant state where the
Borrower is authorized to transact business which is listed on Schedule 3.1(b)
and from each other jurisdiction specified by the Lender;
(iv) An incumbency certificate (with specimen signatures) with
respect to the officers of the Borrower;
(v) An opinion of counsel of the Borrower addressed to the
Lender substantially in the form of Exhibit E annexed hereto.
(e) All original executed copies of Leases shall be in the possession
of the Borrower; provided, that, the file
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containing such Leases shall be stamped with the legend set forth in Section
6.8;
(f) The Lender or an independent auditor acceptable to the Lender
shall have completed its independent audit of the books, records, properties and
assets of the Borrower and the results thereof shall have been satisfactory to
the Lender in its sole discretion.
(g) The Lender shall have received all fees, costs and expenses
payable by the Borrower, including, without limitation, the reasonable fees and
expenses of counsel to the Lender (not to exceed $15,000), to the extent payable
on or prior to the date hereof.
(h) No Default or Event of Default has occurred, each representation
and warranty contained in the Loan Documents shall be true and correct in all
material respects, the Borrower shall be in compliance with all of the covenants
to be complied with by the Borrower and the Lender shall have received a
certificate hereto dated the date hereof certifying to such effect and, inter
-----
alia, that the conditions set forth in Sections 4.1(e) and (i) are satisfied on
- ----
such date.
(i) All consents, approvals and authorizations required in connection
with the execution, delivery and performance of this Agreement shall have been
delivered to the Lender.
(j) The Lender shall have received an "omnibus" assignment, in the
form of Exhibit H hereto, of all Uniform Commercial Code financing statements
filed by the Borrower with respect to Equipment and Leases included in the
Borrowing Base.
(k) The Lender shall have been made a party to the Borrower's
existing lock box arrangement in a manner satisfactory to the Lender.
(l) All legal matters incident to the effectiveness of this Agreement
shall be satisfactory to counsel to the Lender.
SECTION 4.2. CONDITIONS TO LOANS.
The obligation of the Lender to make each Revolving Credit Loan shall
be subject to the fulfillment (to the satisfaction of the Lender) of the
following conditions precedent which, in the case of the initial Loan, shall be
in addition to the other conditions set forth in Section 4.1:
(a) The Lender shall have received a Notice relating to such Loan and
a duly executed Security Agreement Supplement with
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respect to the applicable Leases and Equipment included in the Collateral for
such Loan, together, to the extent required pursuant to Section 2.3, with the
Borrowing Base Report, certified by the President or Chief Financial Officer or
Controller of the Borrower, which shall establish to the satisfaction of the
Lender that the Borrowing Base is equal to or greater than the outstanding
principal amount of the Loan after giving effect to the Loan proposed to be
made.
(b) The Borrower shall have perfected its interest in the Equipment
against each lessee of Equipment which is leasing Equipment with an aggregate
Original Cost of $10,000 or more (whether or not under one or more Leases) in
each jurisdiction where such Lessee shall have $10,000 or more in aggregate
Original Cost of Equipment subject to Leases, in each case by filing of a UCC
financing statement naming the Borrower as secured party/lessor and the lessee
of such Equipment as debtor/lessee. To the extent any Security Document
contains any provision which is expressly inconsistent with this Section 4.2(b),
the provisions of this Section 4.2(b) shall control.
(c) The Borrower shall have delivered to the Lender a certificate of
an officer acknowledging that the file containing each executed original of each
Lease included in the Collateral for such Loan shall have been stamped with the
legend required by Section 6.8 and copies of such documentation relating to the
Leases and Equipment being financed by such Loan as the Lender shall request.
(d) The representations and warranties contained in the Loan Documents
shall be true and correct on the date of the making of such Loan as if restated
at and as of the date thereof, the Borrower shall be in compliance with all of
the covenants to be complied with by the Borrower and no Default or Event of
Default shall have occurred.
(e) No material adverse change shall have occurred in the operations,
assets, financial condition or prospects of the Borrower since December 31,
1997.
(f) The Lender shall have received a compliance certificate (a
"Compliance Certificate") in the form of Exhibit G dated the date of the making
of such Loan and executed by the President or Chief Financial Officer,
certifying, inter alia, that the conditions set forth in Section 4.2(c), (d) and
----- ----
(e) hereof are satisfied on such date.
(g) All legal matters incident to the Loan shall be satisfactory to
counsel for the Lender.
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(h) All proceedings in connection with the transactions contemplated
by this Agreement and all documents incident thereto shall be satisfactory in
form and substance to the Lender, and the Lender upon its request shall have
received all information and such counterpart originals or certified or other
copies of such documents as it may reasonably request prior to the making of
such Loan.
(i) The Borrower shall have delivered to the Lender all material
documents and agreements evidencing or executed in connection with Subordinated
Debt and the Lender shall be reasonably satisfied that such documents provide
that all obligations owing by the Borrower to the Lender are in all respects
senior to such Subordinated Debt on terms satisfactory to the Lender.
ARTICLE 5. DELIVERY OF FINANCIAL REPORTS, DOCUMENTS AND OTHER INFORMATION
While the Commitment is outstanding and so long as the Borrower is indebted
to the Lender and until payment in full of the Note and full and complete
performance of all of its other obligations arising hereunder (other than
indemnities under Section 11.1 which by their terms survive a termination of
this Agreement), the Borrower shall deliver to the Lender:
SECTION 5.1. ANNUAL FINANCIAL STATEMENTS.
Annually, as soon as available, but in any event within 120 days after
the last day of each of its fiscal years, a balance sheet of the Borrower as at
such last day of such fiscal year and statements of income and retained earnings
and of cash flows for such fiscal year, each prepared in accordance with GAAP
consistently applied, in reasonable detail, and audited and certified without
qualification by a recognized firm of independent certified public accountants
reasonably acceptable to the Lender as fairly presenting the financial position
and the results of operations of the Borrower as at and for the year ending on
its date and as having been prepared in accordance with GAAP.
SECTION 5.2. QUARTERLY FINANCIAL STATEMENTS.
As soon as available, but in any event within 45 days after the end of
each fiscal quarter, an unaudited balance sheet of the Borrower as of the last
day of such quarter and statement of income and retained earnings and of cash
flows for such quarter, each such statement to be certified by the President or
Chief Financial Officer of the Borrower as fairly presenting the financial
position and the results of operations of the Borrower
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as at its date and for such quarter and as having been prepared in accordance
with GAAP consistently applied (subject to year-end audit adjustments).
SECTION 5.3. INTENTIONALLY OMITTED.
---------------------
SECTION 5.4. NO DEFAULT CERTIFICATE.
At the same time as it delivers the financial statements required under
the provisions of Sections 5.1 and 5.2, a certificate of the President or Chief
Financial Officer of the Borrower to the effect that no Event of Default
hereunder and that no default under any other agreement to which the Borrower is
a party or by which it is bound, or by which, to the best of the knowledge of
the Borrower, any of its properties or assets, taken as a whole, may be
materially affected, and no Default or Event of Default exists or, if such
cannot be so certified, specifying in reasonable detail the exceptions, if any,
to such statement. Such certificate shall be accompanied by a detailed
calculation indicating compliance with the covenants contained in Section 6.9
hereof.
SECTION 5.5. BORROWING BASE REPORTS.
As soon as available, but in any event within 15 days after the end of
each month, a borrowing base report evidencing the compliance by the Borrower
with the Borrowing Base limitation set forth in Section 2.1(a) hereunder in the
form of Exhibit F annexed hereto (the "Borrowing Base Report"), dated as at the
end of the immediately preceding month, in each case certified by the President
or Chief Financial Officer of the Borrower.
SECTION 5.6. LARGEST LESSEES.
As soon as available, but in any event within 15 days after the end of
each calendar quarter, a report (in a format reasonably satisfactory to the
Lender) indicating the Borrower's 25 largest lessees together with a breakdown
of exposure by equipment type.
SECTION 5.7. ACCOUNTS RECEIVABLE AGING.
As soon as available, but in any event within 30 days after the end of
each fiscal quarter, a detailed aged accounts receivable trial balance showing
accounts receivable of the Borrower as of the last day of the immediately
preceding fiscal quarter in the following categories: 0-30 days; 31- 60 days;
61-90 days and 91 days and over, certified by the President or Chief Financial
Officer of the Borrower.
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SECTION 5.8. CERTIFICATE OF ACCOUNTANTS; MANAGEMENT LETTER.
At the same time as it delivers the financial statements required under
the provisions of Section 5.1, a copy of the Borrower's accounting firm's annual
management letter to the Borrower's Board of Directors.
SECTION 5.9. INTENTIONALLY OMITTED.
---------------------
SECTION 5.10. CUMULATIVE NATURE OF FINANCIAL STATEMENTS AND COMPARISONS.
All of the financial statements required by Sections 5.1, 5.2 and 5.3
shall include a comparison to the annual budget and to the corresponding period
in the next preceding year. The quarterly and monthly statements of income and
cash flows required by Sections 5.2 and 5.3 shall cover the portions of the year
then elapsed as well as the pertinent monthly or quarterly period.
SECTION 5.11. NOTICE OF LITIGATION.
Promptly notify the Lender in writing of any litigation, legal
proceeding or dispute, other than disputes in the ordinary course of business
or, whether or not in the ordinary course of business, involving claims or
counterclaims against the Borrower for aggregate amounts in excess of $250,000,
which involves a claim or counterclaim against the Borrower, whether or not
fully covered by insurance and regardless of the subject matter thereof.
SECTION 5.12. COPIES OF DOCUMENTS.
Promptly upon their becoming available, copies of any material (a)
correspondence or notices received by the Borrower from any federal, state or
local governmental authority which regulates the operations of the Borrower,
including as to environmental matters and hazardous waste, relating to an actual
or threatened change or development which would be materially adverse to the
Borrower; (b) written reports submitted to the Borrower by its independent
accountants in connection with any annual or interim audit of the books of the
Borrower made by such accountants; and (c) any appraisals received by the
Borrower with respect to the properties or assets of the Borrower.
SECTION 5.13. NOTICES OF DEFAULTS.
Promptly, notice of the occurrence of any Default or an Event of
Default hereunder, or event which would constitute or
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cause a materially adverse change in the condition, financial or otherwise, or
the operations of the Borrower.
SECTION 5.14. ERISA NOTICES.
(a) Concurrently with such filing, a copy of each form 5500 which is
filed with respect to each Plan with the IRS; and
(b) Promptly, upon their becoming available, copies of: (i) all
correspondence with the PBGC, the Secretary of Labor or any representative of
the IRS with respect to any Plan, relating to an actual or threatened change or
development which would be materially adverse to the Borrower, (ii) copies of
all actuarial valuations received by the Borrower with respect to any Plan; and
(iii) copies of any notices of Plan termination filed by any Plan Administrator
(as those terms are used in ERISA) with the PBGC and of any notices from PBGC to
the Borrower with respect to the intent of the PBGC to institute involuntary
termination proceedings.
SECTION 5.15. UCC ACKNOWLEDGMENTS.
Promptly upon its receipt thereof, copies of stamped acknowledgment
copies of all UCC-1 financing statements filed which name the Lender as secured
party and the Borrower as debtor evidencing the filing thereof and evidence of
the payment of all applicable recordation taxes.
SECTION 5.16. OTHER INFORMATION.
Promptly after a written request therefor, such other financial data or
information evidencing compliance with the requirements of this Agreement, the
Note and the other Loan Documents, and such other data and information of any
nature as the Lender may reasonably request from time to time.
ARTICLE 6. AFFIRMATIVE COVENANTS
While the Commitment is outstanding and so long as the Borrower is indebted
to the Lender and until payment in full of the Note and full and complete
performance of all of its other obligations arising hereunder, the Borrower
shall:
SECTION 6.1. BOOKS AND RECORDS.
Keep proper books of record and account in a manner reasonably
satisfactory to the Lender in which full, true and correct entries shall be made
of all dealings or transactions in relation to its business and activities and
maintain accounts and
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reserves in accordance with GAAP, for all taxes (including income taxes), all
depreciation, depletion, obsolescence and amortization of its properties, all
contingencies, and all other reserves, and maintain all manually executed copies
of Eligible Leases at its principal office designated in the introductory
paragraph hereof or such other principal office in the United States as the
Borrower shall establish, subject to compliance with the applicable provisions
of the Loan Documents.
SECTION 6.2. INSPECTIONS AND AUDITS.
Permit the Lender to make or cause to be made at the expense of the
Borrower inspections and audits, by representatives of the Lender and/or an
independent auditor acceptable to the Lender, in its sole discretion, of the
books and records of the Borrower and to make extracts therefrom and copies
thereof, or to make inspections and examinations of any properties and
facilities of the Borrower, on reasonable notice, at all such reasonable times,
upon reasonable notice, and as often as the Lender may reasonably require, in
order to assure that the Borrower is and will be in compliance with its
obligations under the Loan Documents or to evaluate the Lender's investment in
the Note; provided that any independent audits of the Borrower's books and
--------
records shall be conducted not more often than annually at a cost per annum to
the Borrower of not more than $7,500 in audit fees plus expenses, unless a
Default or Event of Default shall have occurred and be continuing or pursuant to
the Loan Documents additional due diligence or audits are required, in which
event such audits may be conducted more often than annually and without such
limitation as to fees.
SECTION 6.3. MAINTENANCE AND REPAIRS.
Maintain in good repair, working order and condition, subject to normal
wear and tear, all properties and assets from time to time owned by it and used
in or necessary for the operation of its business, and make all reasonable
repairs, replacements, additions and improvements thereto.
SECTION 6.4. CONTINUANCE OF BUSINESS.
Do, or cause to be done, all things reasonably necessary to preserve
and keep in full force and effect its corporate existence and all permits,
rights and privileges necessary for the proper conduct of its business and
continue to engage in the same line of business.
SECTION 6.5. COPIES OF CORPORATE DOCUMENTS.
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Subject to the prohibitions set forth in Section 7.12 hereof, promptly
deliver to the Lender copies of any material amendments or modifications to its
Certificate of Incorporation and by-laws, certified with respect to the
Certificate of Incorporation by the Secretary of State of its state of
incorporation and, with respect to the by-laws, by the secretary of the
Borrower.
SECTION 6.6. PERFORM OBLIGATIONS.
(a) Pay and discharge all of its obligations and liabilities,
including, without limitation, all taxes, assessments and governmental charges
upon its income and properties, when due, unless and to the extent only that
such obligations, liabilities, taxes, assessments and governmental charges shall
be contested in good faith and by appropriate proceedings and that, to the
extent required by GAAP then in effect, proper and adequate book reserves
relating thereto are established by the Borrower, and then only to the extent
that a bond is filed in cases where the filing of a bond is necessary to avoid
the creation of a Lien against any of its properties.
(b) Perform all its obligations under each of the Leases.
SECTION 6.7. INSURANCE.
(a) Maintain or cause to be maintained with responsible insurance
companies, such insurance on the Equipment covered by the Leases against such
risks, including public liability, property damage and worker's compensation
insurance as are usually insured against by persons engaged in the business of
leasing equipment in the same location in at least such amounts as such
insurance is usually carried by persons engaged in the business of leasing
equipment in such state or states or country or countries as the business of the
Borrower may be conducted.
(b) Carry all insurance available through the PBGC or any private
insurance companies covering its obligations to the PBGC, to the extent
applicable.
SECTION 6.8. LEGENDING OF LEASE FILES.
(a) Cause each file containing an original executed Lease, including
any lease or rental schedule to any master lease agreement to be stamped as a
counterpart original, with the following legend prominently noted on the file
thereof:
THE EQUIPMENT IDENTIFIED IN THIS LEASE SCHEDULE, AND ALL RIGHTS OF
THE LESSOR UNDER THIS LEASE SCHEDULE
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ARE SUBJECT TO A LIEN AND SECURITY INTEREST GRANTED TO FLEET BANK
N.A., AS SECURED PARTY, UNDER A CERTAIN CREDIT AGREEMENT, AND THE
DOCUMENTS RELATED THERETO.
(b) Each original Lease shall be contained in the file containing
such a legend. The Borrower may remove such legend from any file for a Lease
which is being released from the Borrowing Base provided (i) such release is
permitted under the Loan Documents, (ii) no Default or Event of Default exists
or would result therefrom and (iii) such Lease is being financed through Non-
Recourse Indebtedness permitted under Section 7.1(e) and the release thereof is
required as a condition to such financing.
SECTION 6.9. FINANCIAL COVENANTS.
While the Commitment is outstanding and so long as the Borrower is
indebted to the Lender and until payment in full of the Note and full and
complete performance of all of its other obligations arising hereunder (other
than indemnities under Section 10.1 which by their terms survive a termination
of this Agreement), the Borrower shall:
(a) Maintain at all times a Tangible Net Worth of not less than the
sum of (i) $6,000,000 and (ii) 50% of the aggregate cumulative amount of Net
Income (with no reduction for any deficit or loss) of the Borrower for each of
the fiscal years ending after June 30, 1997;
(b) Have as of the end of each fiscal quarter a Leverage Ratio not in
excess of 6.0 to 1.0.
(c) Have consolidated Net Income for any and all two consecutive
fiscal quarters of not less than $1.00.
(d) (i) Have as of the end of each fiscal quarter, for the preceding
twelve month period ending on that date, Delinquencies of not more than 7% and
(ii) provide the Lender detail, on a monthly basis, of all Leases included in
the Borrowing Base which are more than thirty days past due, together with a
calculation of Delinquencies with respect to such Leases (calculated separately
as to all Leases and those Leases included in the Borrowing Base).
(e) Have as of the last day of each fiscal quarter, for the preceding
twelve month period ending on that date, a Reserve Coverage of not less than
1.8%.
SECTION 6.10. REPORTABLE EVENTS.
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Promptly notify the Lender in writing of the occurrence of any
"Reportable Event", as defined in Section 4043 of ERISA, if a notice of such
Reportable Event is required under ERISA to be delivered to the PBGC within 30
days after the occurrence thereof, together with a description of such
Reportable Event and a statement of the action the Borrower intends to take with
respect thereto, together with a copy of the notice thereof given to the PBGC.
SECTION 6.11. COMPLIANCE WITH LAWS, ETC.
Comply with all applicable laws, rules, regulations and orders to
which it or its properties or assets are subject, and duly observe all valid
requirements of governmental authorities, and all applicable statutes, rules,
regulations, and orders relating to environmental protection and to public and
employee health and safety to which it or its properties or assets are subject,
except where the failure to do so would not have a materially adverse effect on
the operations, properties taken as a whole, business or financial condition of
the Borrower.
SECTION 6.12. BORROWING BASE.
Make such prepayments, from time to time, as required by Section 2.6
hereof so that the outstanding principal amount of all Loans hereunder shall, at
no time, exceed the Borrowing Base.
ARTICLE 7. NEGATIVE COVENANTS
While the Commitment is outstanding and so long as the Borrower is indebted
to the Lender or any Lender and until payment in full of the Notes and full and
complete performance of all of its other obligations arising hereunder, the
Borrower shall not:
SECTION 7.1. INDEBTEDNESS.
Without the prior written consent of the Lender create, incur, permit to
exist or have outstanding any Indebtedness, except:
(a) Indebtedness of the Borrower to the Lender under this Agreement and
the Note;
(b) Non-interest bearing accounts payable and accrued liabilities, in any
case not more than 90 days past due from the original due date thereof, and non-
interest bearing
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deferred liabilities other than for borrowed money (e.g. deferred compensation
----
and deferred taxes) in each case incurred and continuing in the ordinary course
of business;
(c) INTENTIONALLY OMITTED.
---------------------
(d) Non-Recourse Indebtedness for borrowed money which is secured by Liens
on specific assets (other than Eligible Equipment (including Eligible Equipment
or Eligible Contracts)) as to which the lenders are to be repaid solely out of
such assets or proceeds thereof;
(e) Indebtedness secured by Permitted Liens (but not in excess of the
amount of such Lien referred to in the definition of "Permitted Liens"); and
(f) Indebtedness for borrowed money owing to other lenders ("Permitted
Lenders"); provided, that, none of such Indebtedness shall be secured by any of
the Collateral.
SECTION 7.2. LIENS.
Create, or assume or permit to exist, any Lien on any of the
Collateral, whether now owned or hereafter acquired, except:
(a) Those created and granted by the Security Documents; and
(b) Permitted Liens.
SECTION 7.3. GUARANTIES.
Assume, endorse, be or become liable for, or guarantee, the
obligations of any person, unless (i) same is in favor of Affiliates or
Subsidiaries, and the aggregate amount guaranteed does not exceed $500,000 or
(ii) same is solely the endorsement of negotiable instruments for deposit or
collection in the ordinary course of business. For the purposes hereof, the
term guarantee shall include any agreement, whether such agreement is on a
contingency or otherwise, to purchase, repurchase or otherwise acquire
Indebtedness of any other person or to purchase, sell or lease, as lessee or
lessor, property or services, in any such case primarily for the purpose of
enabling another person to make payment of Indebtedness, or to make any payment
(whether as an advance, capital contribution, purchase of an equity interest or
otherwise) to assure a minimum equity, asset base, working capital or other
balance sheet or financial condition, in connection with the Indebtedness of
another person, or to
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supply funds to or in any manner invest in another Person in connection with
such Person's Indebtedness.
SECTION 7.4. MERGERS, ACQUISITIONS.
Merge or consolidate with any Person unless the Borrower is the
surviving entity and the Lender reasonably determines that such merger or
consolidation (i) does not adversely affect the Lender's rights hereunder or
under any of the other Loan Documents or (ii) will not have a material adverse
affect on the Borrower's business or properties or on the Collateral.
SECTION 7.5. DIVIDENDS.
With respect to any fiscal period, declare or pay any cash dividends
or make any cash distribution of any kind on the outstanding stock of the
Borrower, or set aside any sum for any such purpose; provided, that, as long as
no Event of Default has occurred and is continuing (or would occur as a result
of any dividend permitted by the following clause), the Borrower may pay cash or
stock dividends in an amount, with respect to any fiscal period, not in excess
of 50% of Net Income for such fiscal period.
SECTION 7.6. INTENTIONALLY OMITTED.
---------------------
SECTION 7.7. CHANGES IN BUSINESS; SALE OF ASSETS.
(a) Make any material change in its business from that of small
ticket leasing, as in existence on the date hereof, or in the nature of its
operation, or liquidate or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of
any of its property, assets or business except, with respect to assets other
than Eligible Equipment or Eligible Contracts, in the ordinary course of
business and for a fair consideration.
(b) Sell, transfer, assign or dispose of any Eligible Equipment or
Eligible Contracts with respect to which a Loan has been made unless the net
proceeds thereof are sufficient to prepay the related Loan in accordance with
Section 2.6.
SECTION 7.8. FISCAL YEAR.
Change its fiscal year.
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SECTION 7.9. ERISA OBLIGATIONS.
(a) Maintain, sponsor, contribute to or become obligated to contribute
to, or suffer or permit any ERISA Affiliate of the Borrower to maintain,
sponsor, contribute to or become obligated to contribute to, any Plan, except as
set forth in the Financial Statements.
(b) Permit any Welfare Plan which the Borrower maintains, sponsors,
contributes to or is obligated to contribute to, to provide benefits, including,
without limitation, death or medical benefits (whether or not insured) with
respect to any current or former employee of the Borrower beyond their
retirement or other termination of service other than (i) coverage mandated by
applicable law, (ii) retirement or death benefits under any Plan or (iii)
disability benefits under any Welfare Plan that have been fully provided for by
insurance or otherwise.
(c) Permit it or any ERISA Affiliate of the Borrower nor the assets of
the Borrower or of any ERISA Affiliate of the Borrower to become assets of any
employee benefit plan, whether by operation of law or under regulations
promulgated under ERISA.
(d) Be or become obligated to the PBGC other than in respect of annual
premium payments not in excess of $50,000.
(e) Be or become obligated to the IRS with respect to excise or other
penalty taxes provided for in those provisions of Section 4975 of the Code, as
in effect or hereafter amended or supplemented, in excess of $50,000.
SECTION 7.10. AMENDMENT OF DOCUMENTS.
Modify, amend, supplement or terminate, or agree to modify, amend,
supplement or terminate its Certificate of Incorporation or by-laws if such
amendment does not adversely affects the Lender's rights hereunder or under any
of the other Loan Documents.
SECTION 7.11. TRANSACTIONS WITH AFFILIATES.
Other then Investments in [Leasevest] (which is necessary in jurisdictions
in which the Borrower may not operate because of its legal name) and guarantees
of its Bermuda Subsidiary within the limitations provided in this Agreement,
directly or
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indirectly: (i) make any Investment in an Affiliate; (ii) transfer, sell, lease,
assign or otherwise dispose of any assets to an Affiliate; (iii) merge into or
consolidate with or purchase or acquire assets from an Affiliate; or (iv) enter
into any other transaction directly or indirectly with or for the benefit of any
Affiliate (including, without limitation, guarantees and assumptions of
obligations of an Affiliate).
SECTION 7.12. MULTIPLE AGREEMENTS.
Allow any Permitted Lender (other than PNC Bank or affiliates of PNC Bank)
to lend to, or obtain any interest in, the Borrower, other than on a senior
level basis, including without limitation, allow any such Permitted Lender to
have any equity interest in the Borrower or to lend to the Borrower on a
Subordinate basis.
ARTICLE 8. EVENTS OF DEFAULT.
Upon the occurrence of any one or more of the following events (an "Event
of Default", individually or "Events of Default", if more than one) then, in any
such event, and at any time thereafter if any Event of Default shall occur and
be continuing, the Lender in its sole discretion may terminate the Commitment,
and declare the entire unpaid balance of the principal of and interest on the
Note and all other obligations and Indebtedness of the Borrower to the Lender
arising hereunder and under the other Loan Documents to be due and payable
whereupon the same shall immediately become due and payable, without presentment
or demand for payment, notice of nonpayment, protest or notice or demand of any
kind, all of which are expressly waived by the Borrower, and the Lender may, at
its discretion, exercise such other rights and remedies that shall be available
to it, including, without limitation, the rights of a secured party under the
UCC:
SECTION 8.1. PAYMENTS.
Failure to make any payment of principal on the Note when due or
failure to make any payment of interest or any fee within three Business Days of
when same is due.
SECTION 8.2. COVENANTS.
Failure to perform or observe any of the agreements and covenants of
the Borrower contained in Section 6.9 or Section 6.12 hereof, which shall remain
unremedied for a period of ten (10) days.
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SECTION 8.3. OTHER COVENANTS.
Failure by the Borrower to perform or observe any other term,
condition or covenant of this Agreement or of any of the other Loan Documents to
which the Borrower is a party, including, without limitation, the Note or
Security Documents, which shall remain unremedied for a period of thirty (30)
days.
SECTION 8.4. OTHER DEFAULTS.
(a) Failure of the Borrower to perform or observe any term, condition
or covenant of any bond, debenture, loan agreement, indenture, guaranty, trust
agreement, mortgage or similar instrument to which it is a party or by which it
is bound, or by which any of its properties or assets may be affected (a "Debt
Instrument") beyond any applicable grace or cure period, or failure to occur or
occurrence of any event or condition referred to in any Debt Instrument beyond
any applicable grace or cure period, so that, as a result of any such failure to
perform, failure to occur or occurrence, the Indebtedness included therein or
secured or covered thereby may be declared due and payable prior to the date on
which such Indebtedness would otherwise become due and payable.
(b) Failure to pay any Indebtedness for borrowed money due at final
maturity or pursuant to demand under any Debt Instrument.
SECTION 8.5. REPRESENTATIONS AND WARRANTIES.
Any representation or warranty made in writing to the Lender by the
Borrower in any of the Loan Documents, or in connection with the making of the
Loans, or any certificate, statement or report made or delivered in compliance
with this Agreement, shall have been false or misleading in any material respect
when made or delivered or deemed made or delivered.
SECTION 8.6. BANKRUPTCY.
(a) The Borrower shall make an assignment for the benefit of
creditors, file a petition in bankruptcy, be adjudicated insolvent, petition or
apply to any tribunal for the appointment of a receiver, custodian, or any
trustee for it or a substantial part of its assets, or shall commence any
proceeding under any bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution or liquidation law or statute of any jurisdiction whether now
or hereafter in
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effect, or the Borrower shall take any corporate action to authorize any of the
foregoing actions; or there shall have been filed any such petition or
application, or any such proceeding shall have been commenced against it, which
remains undismissed for a period of 90 days or more; or any order for relief
shall be entered in any such proceeding; or the Borrower by any act or omission
shall indicate its consent to, approval of or acquiescence in any such petition,
application or proceeding or the appointment of a custodian, receiver or any
trustee for it or any substantial part of any of its properties, or shall suffer
any custodianship, receivership or trusteeship to continue undischarged for a
period of 90 days or more.
(b) The Borrower shall generally not pay its respective debts as such
debts become due.
(c) The Borrower shall have concealed, removed, or permitted to be
concealed or removed, any part of its property, with intent to hinder, delay or
defraud its creditors or any of them or made or suffered a transfer of any of
their respective property which may be fraudulent under any bankruptcy,
fraudulent conveyance or similar law; or shall have made any transfer of their
respective property to or for the benefit of a creditor at a time when other
creditors similarly situated have not been paid; or shall have suffered or
permitted, while insolvent, any creditor to obtain a Lien upon any of its or his
property through legal proceedings or distraint which is not vacated within 60
days from the date thereof.
SECTION 8.7. JUDGMENTS.
Any judgment against the Borrower or any attachment, levy or execution
against any its properties for any amount in excess of $100,000 shall remain
unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a period
of 60 days or more.
SECTION 8.8. ERISA.
(a) The termination of any Plan or the institution by the PBGC of
proceedings for the involuntary termination of any Plan, in either case, by
reason of, or which results or could result in, a "material accumulated funding
deficiency" under Section 412 of the Code.
(b) Failure by the Borrower to make required contributions, in
accordance with the applicable provisions of
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<PAGE>
ERISA, to each of the Plans hereafter established or assumed by it.
SECTION 8.9. OWNERSHIP OF STOCK AND CONTROL OF BORROWER.
There shall have occurred a Change of Control.
SECTION 8.10. LIENS.
Any of the Liens created and granted to the Lender under the Security
Documents shall fail to be valid, first, perfected Liens, subject to no prior or
equal Lien, except as permitted by Section 7.2(a) and (b), with respect to
assets included in the Borrowing Base.
ARTICLE 9. ADDITIONAL LENDERS; PARTICIPATIONS
SECTION 9.1. ASSIGNMENTS.
The Borrower may not assign any of its rights or delegate any of its
obligations under this Agreement and the other Loan Documents. Except as
provided herein, the Lender may assign to one (but not more than 3, unless an
Event of Default shall occur and be continuing in which case there shall be no
limit on the number of assignees) banks or other financial institutions having
Tangible Net Worth in excess of $50 million all or a portion of its interests,
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Commitment hereunder and the Note or Notes held by it);
provided, however, that (i) each such assignment shall be of a fixed, and not a
- -------- -------
varying, percentage of all the Lender's rights and obligations under this
Agreement and (ii) the Lender and any such assignee shall execute an Assignment
Agreement in form and substance satisfactory to the Lender (the "Assignment"),
together with any Note or Notes subject to such assignment. Upon such execution
and delivery from and after the date of each Assignment, the assignee thereunder
shall be a party hereto and, to the extent provided in such Assignment, have the
rights and obligations of, and be subject to the duties and restrictions
applicable to, the Lender hereunder.
SECTION 9.2. PARTICIPATIONS.
(a) The Lender shall have the right, subject to the further provisions
of this Sectio 9.2, to grant or sell a participation in all or any part of its
Loans, Note and Commitment (a "Participation") to any commercial lender, other
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<PAGE>
financial institution or other entity (a "Participant") without the consent of
the Borrower, although notice thereof shall be given to the Borrower by the
Lender promptly after any Participation.
(b) Notwithstanding anything in the foregoing to the contrary, (i) no
Participant shall have any direct rights hereunder, (ii) the Borrower shall deal
solely with the Lender and shall not be obligated to extend any rights or make
any payment to, or seek any consent of, the Participant, (iii) no Participation
shall relieve the selling Lender from its Commitment to make Loans hereunder or
any of its other obligations hereunder and the Lender shall remain solely
responsible for the performance thereof, (iv) the Lender may grant or sell a
Participation with respect to more than fifty percent (50%) of its Commitment
and (v) no Participant (other than an affiliate of such Lender) shall have any
right to require such Lender to take or omit to take any action under this
Agreement or any Note, except any action or omission which would (A) extend the
final maturity of any Loan or the Commitment Termination Date, (B) reduce the
interest rate, fees or commissions on, any Loans, (C) forgive any principal of
or interest, fees or commissions payable on any Loans, or (D) release all or
substantially all of the Collateral except to the extent expressly permitted
pursuant to the Security Documents.
(c) The Lender may furnish any public or non-public information
concerning the Borrower, including notices, certificates and documents delivered
hereunder, which are in the possession of such Lender from time to time to
Participants and potential Participants, provided that no such non-public
--------
information, certificates, notices or documents shall be furnished without the
written undertaking of the recipient, a copy of which shall be furnished to the
Borrower promptly upon receipt thereof, to keep all such non-public information
confidential, except as may be required by law.
ARTICLE 10. MISCELLANEOUS PROVISIONS
SECTION 10.1. FEES AND EXPENSES; INDEMNITY
(a) The Borrower agrees to pay on demand all costs and expenses
incurred by the Lender in connection with the preparation, execution, delivery,
filing and administration of this Agreement (provided, that, legal fees in
connection with the preparation, execution and delivery of this Agreement shall
not exceed $15,000 including out-of-pocket costs and expenses), and of any
amendment, modification or supplement to this Agreement, including, without
limitation, the fees and
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<PAGE>
out-of-pocket expenses of counsel for the Lender incurred in connection with
advising the Lender as to its rights and responsibilities hereunder. The
Borrower also agrees to pay all such costs and expenses, including court costs,
incurred in connection with enforcement of this Agreement, or any amendment,
modification, or supplement thereto, whether by negotiation, legal proceedings,
or otherwise. In addition, the Borrower will promptly pay all reasonable fees
and expenses (subject to the provisions of Section 6.2) incurred by the Lender
with respect to an annual audit of the books and records of the Borrower, the
Borrowing Base and the Borrower's methods and procedures with respect thereto
conducted by consultants, accountants or other professionals selected by the
Lender in its sole discretion to perform such functions, not to exceed $10,000
in the aggregate per annum.
(b) The Borrower shall indemnify the Lender, its directors, officers,
employees and agents against, and hold them harmless from, any loss,
liabilities, damages, claims, costs and expenses (including reasonable
attorneys' fees and disbursements) suffered or incurred by them to the extent
arising out of, resulting from or in any manner connected with, the execution,
delivery and performance of each of the Loan Documents, the Loans and any and
all transactions related to or consummated in connection with the Loans,
including, without limitation, losses, liabilities, damages, claims, costs and
expenses suffered by the Lender in investigating, preparing for, defending
against, or providing evidence, producing documents or taking any other action
in respect of any commenced or threatened litigation, administrative proceeding
or investigation under any federal securities law or any other statute of any
jurisdiction, or any regulation, or at common law or otherwise, which is alleged
to arise out of or is based upon (i) any untrue statement or alleged untrue
statement of any material fact of the Borrower and its Affiliates in any
document or schedule filed with any governmental body; (ii) any omissions or
alleged omission to state any material fact required to be stated in such
document or schedule, or necessary to make the statements made therein, in light
of the circumstances under which made, not misleading; or (iii) any transactions
financed with the proceeds of any Loans; provided, however, that the Borrower
-------- -------
shall not be liable for the payment of any portion of such loss, liabilities,
damages, claims, costs and expenses to the extent resulting from the Lender's
gross negligence or willful misconduct. The indemnity set forth herein shall be
in addition to any other obligations or liabilities of the Borrower to the
Lender and the Lenders hereunder or at common law or otherwise. The provisions
of this Section 10.1 shall
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<PAGE>
survive the payment of the Notes and the termination of this Agreement.
SECTION 10.2. TAXES
If, under any law in effect on the date of the closing of any Loan
hereunder, or under any retroactive provision of any law subsequently enacted,
it shall be determined that any federal, state or local tax is payable in
respect of the issuance of the Note, or the filing or recording of any
mortgages, financing statements, or other documents (whether measured by the
amount of indebtedness secured or otherwise) as contemplated by this Agreement,
then the Borrower will pay any such tax and all interest and penalties, if any,
and will indemnify the Lender against and hold it harmless from any loss or
damage resulting from or arising out of the nonpayment or delay in payment of
any such tax. If any such tax or taxes shall be assessed or levied against the
Lender or any other holder of the Note (other than income taxes with respect to
the Lender's income generally), the Lender, or such other holder, as the case
may be, may notify the Borrower and make immediate payment thereof, together
with interest or penalties in connection therewith, and shall thereupon be
entitled to and shall receive immediate reimbursement therefor from the
Borrower. Notwithstanding any other provision contained in this Agreement, the
covenants and agreements of the Borrower in this Section 11.2 shall survive
payment of the Note and the termination of this Agreement.
SECTION 10.3. PAYMENTS
All payments by the Borrower hereunder and under the Note shall be
made without set-off or counterclaim and in such amounts as may be necessary in
order that all such payments shall not be less than the amounts otherwise
specified to be paid under this Agreement and the Note (after withholding for or
on account of (i) any present or future taxes, levies, imposts, duties or other
similar charges of whatever nature imposed by any government or any political
subdivision or taxing authority thereof, other than any tax (except those
referred to in clause (ii) below) on or measured by the net income of the Lender
pursuant to applicable federal, state and local income tax laws, and (ii)
deduction of amounts equal to the taxes on or measured by the net income of the
Lender payable by the Lender with respect to the amount by which the payments
required to be made under this sentence exceed the amounts otherwise specified
to be paid in this Agreement and the Note). Upon payment in full of the Note,
the Lender shall mark such Note "Paid" and promptly return it to the Borrower.
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<PAGE>
SECTION 10.4. SURVIVAL OF AGREEMENTS AND REPRESENTATIONS
All agreements, representations and warranties made herein shall
survive the delivery of this Agreement and the Note.
SECTION 10.5. LIEN ON AND SET-OFF OF DEPOSITS
As additional collateral security for the payment of the Obligations,
the Borrower hereby grants to the Lender a lien on and security interest in and
right of setoff to any and all deposits or other sums at any time credited by or
due from the Lender or any Affiliate of the Lender to the Borrower, whether now
existing or hereafter arising, whether in regular or special depository accounts
or otherwise, and any and all monies, credit, collateral, securities and other
property of the Borrower, whether now existing or hereafter arising, and the
proceeds thereof, now or hereafter held or received by or in transit to the
Lender or any Affiliate of the Lender from or for the Borrower, whether for
safekeeping, custody, pledge, transmission, collection or otherwise. At any
time, without demand or notice, the Lender may set off the same or any part
thereof and apply the same to any of the Obligations of the Borrower even though
unmatured and regardless of the adequacy of any other collateral securing the
Loans. ANY AND ALL RIGHTS TO REQUIRE THE LENDER TO EXERCISE ITS RIGHTS OR
REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS,
PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS
OR OTHER PROPERTY OF THE BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED.
SECTION 10.6. MODIFICATIONS, CONSENTS AND WAIVERS;
ENTIRE AGREEMENT.
(a) No modification, amendment or waiver of or with respect to any
provision of this Agreement, the Note, the Security Documents or any of the
other Loan Documents nor consent to any departure by the Borrower from any of
the terms or conditions hereof or thereof, shall in any event be effective
unless it shall be in writing and signed by the party against whom enforcement
is sought. No consent to or demand on the Borrower in any case shall, of
itself, entitle it to any other or further notice or demand in similar or other
circumstances.
(b) This Agreement embodies the entire agreement and understanding
between the Lender, the Lenders and the Borrower and supersedes all prior
agreements and understandings relating to the subject matter hereof.
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<PAGE>
SECTION 10.7. REMEDIES CUMULATIVE.
Each and every right granted to the Lender hereunder or under any
other document delivered hereunder or in connection herewith, or allowed them by
law or equity, shall be cumulative and may be exercised from time to time. No
failure on the part of the Lender to exercise, and no delay in exercising, any
right shall operate as a waiver thereof, nor shall any single or partial
exercise thereof or the exercise of any other right.
SECTION 10.8. FURTHER ASSURANCES.
At any time and from time to time, upon the request of the Lender, the
Borrower shall execute, deliver and acknowledge or cause to be executed,
delivered and acknowledged, such further documents and instruments and do such
other acts and things as the Lender may reasonably request in order to fully
effect the purposes of this Agreement, the Note, the Security Documents and the
other Loan Documents.
SECTION 10.9. NOTICES.
Except as otherwise provided for herein, all notices, requests,
reports and other communications pursuant to this Agreement shall be in writing,
either by letter (delivered by hand or commercial messenger service or sent by
certified mail, return receipt requested, except for routine reports delivered
in compliance with Article 5 hereof which may be sent by ordinary first-class
mail), telecopier (followed by a hard copy) or telegram, addressed as follows:
If to the Borrower:
Bankvest Capital Corporation
200 Nickerson Road
Marlborough, Massachusetts 01752
Attention: Kellie D. Jacques, CFO
Telecopier: 508-786-7522
If to the Lender:
Fleet Bank N.A.
1185 Avenue of the Americas
New York, New York 10036
Attention: Leasing & Finance
Telecopier: (212) 819-6211
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<PAGE>
with a copy (other than in the case of Notices and reports and other
documents delivered in compliance with Article 5 hereof) to:
Emmet, Marvin & Martin, LLP
120 Broadway
New York, New York 10271
Attention: Richard M. Skoller, Esq.
Telecopier: (212) 238-3100
Any notice, request or other communication hereunder shall be deemed to have
been duly given on the day on which it is delivered by hand or commercial
messenger service to such party at its address specified above, or, if sent by
mail, on the fifth Business Day after the day deposited with a United States
Postal Depositary, postage prepaid, or, if sent by facsimile, when
electronically confirmed. Any fax transmission will be confirmed by hard copy
sent one (1) Business Day after transmission by first class or registered or
certified mail. Any party may change the person or address to whom or which
notices are to be given hereunder, by notice duly given hereunder; provided,
however, that any such notice shall be deemed to have been given hereunder only
when actually received by the party to which it is addressed.
SECTION 10.10. CONSTRUCTION; GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER
OF JURY TRIAL, SET-OFF AND COUNTERCLAIM.
(a) The headings used in this Agreement are for convenience of
reference only and shall not in any way be deemed to limit, define or describe
the scope and intent of this Agreement or any provision hereof.
(b) This Agreement, the Note, the Security Documents and the other
Loan Documents shall be governed by, and construed and interpreted in accordance
with, the laws of the State of New York without reference to its principles of
conflict of laws.
(c) THE BORROWER HEREBY IRREVOCABLY CONSENTS THAT ANY LEGAL ACTION OR
PROCEEDING AGAINST IT UNDER, ARISING OUT OF OR IN ANY MANNER RELATING TO THIS
AGREEMENT, THE NOTES, OR ANY OTHER LOAN DOCUMENT JUNE BE BROUGHT IN ANY COURT OF
THE STATE OF NEW YORK SITTING IN THE COUNTY OF NEW YORK OR IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. THE BORROWER, BY THE
EXECUTION AND DELIVERY OF THIS AGREEMENT, EXPRESSLY AND IRREVOCABLY ASSENTS AND
SUBMITS TO THE PERSONAL JURISDICTION OF ANY OF SUCH COURTS IN ANY SUCH ACTION OR
PROCEEDING. THE BORROWER FURTHER IRREVOCABLY
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CONSENTS TO THE SERVICE OF ANY COMPLAINT, SUMMONS, NOTICE OR OTHER PROCESS
RELATING TO ANY SUCH ACTION OR PROCEEDING BY DELIVERY THEREOF TO IT BY HAND OR
BY MAIL IN THE MANNER PROVIDED FOR IN SECTION 10.9 HEREOF. THE BORROWER HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES ANY CLAIM OR DEFENSE IN ANY SUCH ACTION OR
PROCEEDING BASED ON ANY ALLEGED LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS OR ANY SIMILAR BASIS. THE BORROWER SHALL NOT BE ENTITLED IN
- --------------------
ANY SUCH ACTION OR PROCEEDING TO ASSERT ANY DEFENSE GIVEN OR ALLOWED UNDER THE
LAWS OF ANY OTHER STATE OTHER THAN THE STATE OF NEW YORK UNLESS SUCH DEFENSE IS
ALSO GIVEN OR ALLOWED BY THE LAWS OF THE STATE OF NEW YORK. NOTHING IN THIS
SECTION 10.10 SHALL AFFECT, OR IMPAIR IN ANY MANNER OR TO ANY EXTENT THE RIGHT
OF THE LENDERS TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE
BORROWER IN ANY JURISDICTION OR TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.
(d) THE BORROWER AND THE LENDER MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM
BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH. THIS
WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE LENDER TO ACCEPT THIS AGREEMENT
AND MAKE THE LOANS.
SECTION 10.11. SEVERABILITY.
The provisions of this Agreement are severable, and if any clause or
provision hereof shall be held invalid or unenforceable in whole or in part in
any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction and shall not in
any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Agreement in any jurisdiction. Each of the
covenants, agreements and conditions contained in this Agreement is independent
and compliance by the Borrower with any of them shall not excuse noncompliance
by the Borrower with any other covenant, agreement or condition. The Borrower
shall not take any action the effect of which shall constitute a breach or
violation of any provision of this Agreement.
SECTION 10.12. BINDING EFFECT; NO ASSIGNMENT
OR DELEGATION.
This Agreement shall be binding upon and inure to the benefit of the
Borrower and its successors and to the benefit of the Lender and its successors
and assigns. The rights and obligations of the Borrower under this Agreement
shall not be assigned or delegated without the prior written
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consent of the Lender, and any purported assignment or delegation without such
consent shall be void.
SECTION 10.13. COUNTERPARTS.
This Agreement may be executed in as many counterparts as may be
deemed necessary or convenient, each of which, when so executed, shall be deemed
an original, but all such counterparts shall constitute one and the same
instrument.
SECTION 10.14. PLEDGE TO FEDERAL RESERVE. The Lender may at any time
pledge all or any portion of its rights under the Loan Documents including any
portion of the Note to any of the twelve (12) Federal Reserve Banks organized
under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such
pledge or enforcement thereof shall release Lender from its obligations under
any of the Loan Documents.
SECTION 10.15. LOST NOTES. Upon receipt of an affidavit of an officer of
the Lender as to the loss, theft, destruction or mutilation of any Note or any
other security document which is not of public record, which affidavit shall
include standard indemnification language, and, in the case of any such loss,
theft, destruction or mutilation, upon surrender and cancellation of such Note
or other security document, the Borrower will issue, in lieu thereof, a
replacement Note or other security document in the same principal amount thereof
and otherwise of like tenor.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
duly executed as of the date first above written.
BORROWER:
--------
BANKVEST CAPITAL CORP.
By:_________________________
Name:
Title:
LENDER:
------
FLEET BANK, NATIONAL ASSOCIATION
By:__________________________
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<PAGE>
Name:
Title: Vice President
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EXHIBIT 10.41
REVOLVING CREDIT NOTE
---------------------
$15,000,000.00 As of August 21, 1998
New York, New York
FOR VALUE RECEIVED, BANKVEST CAPITAL CORP., a Massachusetts corporation,
having an office at 200 Nickerson Road, Marlborough, MA 01752 (the "Borrower"),
hereby promises to pay to the order of FLEET BANK N.A. (the "Lender"), in lawful
money of the United States of America and in immediately available funds, the
principal sum of FIFTEEN MILLION DOLLARS ($15,000,000.00) or the aggregate
unpaid principal amount at the close of business on the Commitment Termination
Date of the Revolving Credit Loans made to the Borrower by the Lender pursuant
to the Credit Agreement (as hereinafter defined), whichever is less, on the
Commitment Termination Date, and to pay interest on the unpaid principal amount
of the Revolving Credit Loans monthly in arrears on the ___ day of each month,
in like money and funds, for the period commencing with the first month
immediately following the date a Revolving Credit Loan is made until such
Revolving Credit Loan shall be paid in full, at the rate per annum (computed on
the basis of a 365-day year and actual days elapsed) set forth in the Credit
Agreement. Any amount of principal and, to the extent permitted by law,
interest not paid when due, whether at stated maturity, by acceleration or
otherwise, shall bear interest (computed on the basis of a 365-day year and
actual days elapsed) from the date when due until said amount is paid in full at
a rate per annum equal to the Post-Default Rate, and all such interest shall be
payable on demand.
Anything herein to the contrary notwithstanding, the obligation of the
Borrower to make payments of interest shall be subject to the limitation that
payments of interest shall not be required to be made to the Lender to the
extent that the Lender's receipt thereof would not be permissible under the law
or laws applicable to the Lender limiting rates of interest which may be charged
or collected by the Lender. Any such payments of interest which are not made as
a result of the limitation referred to in the preceding sentence shall be made
by the Borrower to the Lender, if at all, on the earliest interest payment date
or dates on which the receipt thereof would be permissible under such laws
applicable to the Lender
<PAGE>
limiting rates of interest which may be charged or collected by the Lender.
Payments of both principal and interest on this Revolving Credit Note are
to be made no later than 11:00 a.m. New York City time at the office of the
Lender at 1185 Avenue of the Americas, New York, New York 10036 or such other
place as the Lender shall designate to the Borrower in writing. Pursuant to
Section 2.10 of the Credit Agreement, the Lender shall have the option of
causing any payment due under this Revolving Credit Note to be made by means of
debiting the amount of such payment from any ordinary deposit account of the
Borrower maintained with the Lender.
This Revolving Credit Note may be prepaid from time to time in accordance
with the terms of the Credit Agreement.
The Lender is hereby authorized by the Borrower to record on the schedule
annexed to this Revolving Credit Note (or on a supplemental schedule thereto)
the amount of each Revolving Credit Loan made by the Lender under the Credit
Agreement and the amount of each payment or prepayment of principal of the
Revolving Credit Loan received by the Lender, it being understood however that
failure to make any such notation shall not affect the rights of the Lender or
the obligations of the Borrower hereunder or under the Credit Agreement in
respect of the Revolving Credit Loans.
This Revolving Credit Note is the Revolving Credit Note referred to in
Section 2.9 of, and is entitled to the benefits and subject to the terms and
conditions of, the Credit Agreement dated as of August 21, 1998, among the
Borrower and the Lender (such Credit Agreement, as amended, restated,
supplemented or otherwise modified from time to time, being referred to as the
"Credit Agreement"), and evidences the Revolving Credit Loans made by the Lender
thereunder. This Revolving Credit Note is entitled to certain security as
further described in the Credit Agreement. Capitalized terms used in this
Revolving Credit Note and not otherwise defined herein have the respective
meanings assigned to them in the Credit Agreement.
Upon the occurrence of an Event of Default, the principal hereof and
accrued interest hereon shall become, or may be declared to be, forthwith due
and payable in the manner, upon
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<PAGE>
the conditions and with the effect provided in the Credit Agreement.
The Borrower agrees to pay costs of collection and reasonable attorneys'
fees and disbursements in case default occurs in the payment of this Revolving
Credit Note. The Borrower hereby waives presentment, demand for payment,
protest, notice of protest and notice of non-payment hereof.
This Revolving Credit Note shall be governed by and construed and enforced
in accordance with the laws of the State of New York, without reference to its
principles of conflict of laws.
BANKVEST CAPITAL CORP.
By:_________________________
Name:
Title:
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<PAGE>
SCHEDULE TO REVOLVING CREDIT NOTE
This Revolving Credit Note evidences the Revolving Credit Loans made under
the within described Credit Agreement made on the dates set forth below, subject
to the payments or prepayments of principal set forth below:
<TABLE>
<CAPTION>
PRINCIPAL
DATE OF AMOUNT OF PRINCIPAL
REVOLVING REVOLVING AMOUNT PAID BALANCE
CREDIT LOAN CREDIT LOAN OR PREPAID OUTSTANDING INITIALS
- ------------- ----------- ----------- ----------- --------
<S> <C> <C> <C> <C>
</TABLE>
-4-
<PAGE>
EXHIBIT 10.42
================================================================================
AMENDED AND RESTATED
MASTER SALE OF
CHATTEL PAPER AND SECURITY AGREEMENT
DATED AS OF MARCH 19, 1996
BY AND AMONG
EUROPEAN AMERICAN BANK
AS BUYER
AND
BANKVEST CAPITAL CORP.
LEASEVEST CAPITAL CORP.
AS SELLERS
================================================================================
<PAGE>
AMENDED AND RESTATED MASTER SALE OF CHATTEL PAPER AND SECURITY AGREEMENT
dated as of March 19, 1996, among EUROPEAN AMERICAN BANK ("Buyer"), with an
address at EAB Plaza, Uniondale, New York 11555, and BANKVEST CAPITAL CORP.
("BankVest"), and LEASEVEST CAPITAL CORP., jointly and severally, (each a
"Seller" and collectively, the "Seller"), each a Massachusetts corporation, with
its principal place of business at 114 Turnpike Road, Westboro, Massachusetts
01581.
RECITALS
--------
A. Pursuant to a Master Sale of Chattel Paper and Security Agreement dated
as of May 9, 1995, between Buyer and Seller (the "Original Agreement") the
Seller sold and the Buyer purchased certain equipment lease Paper.
B. The Original Agreement provided that the aggregate purchase price for
the Paper was not to exceed $5 million.
C. Seller desires to sell and Buyer desires to purchase, from time to time
on the terms and conditions set forth herein, additional equipment lease paper
for an aggregate purchase price not to exceed $10,000,000. (which amount shall
include the aggregate purchase price of the Paper purchased pursuant to the
Original Agreement) and Seller and Buyer desire to amend and restate, in its
entirety, the Original Agreement.
Accordingly, Seller and Buyer hereby agree as follows:
1. DEFINITIONS.
-----------
The following terms, and all other capitalized terms when used in this
Agreement shall have the meanings assigned to them herein unless the context
otherwise requires:
"Agreement" shall mean this Amended and Restated Master Sale of Chattel
Paper and Security Agreement, as the same may be further modified, amended or
restated from time to time in the manner provided herein.
"Assignment" shall mean the instrument entitled "Sale and Assignment of
Chattel Paper" evidencing the sale, assignment and transfer of an item of Paper
by Seller to Buyer, incorporating the terms of this Agreement, substantially in
the form of Exhibit "A" annexed hereto.
"Debtor" shall mean the obligor under an item of Paper, and its successors
and assigns.
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"Debtor Obligations" shall mean (a) the unpaid balance of monies due or to
become due under an item of Paper, including all extensions or modifications
thereof, and (b) all other obligations of a Debtor pursuant to such Paper.
"Equipment" shall mean all of the machinery, equipment, motor vehicles,
furniture and fixtures identified and described in an item of Paper, together
with all parts, attachments, accessions, accessories and additions that at the
time of the delivery of an Assignment or thereafter is affixed or related
thereto, and all substitutions and replacements thereof, wherever located.
"Guarantor" shall mean any person or entity guaranteeing any of the Debtor
Obligations.
"Paper" shall refer to any equipment lease, installment sale contract or
other chattel paper sold, assigned and transferred by Seller to Buyer pursuant
to an Assignment between Seller or another party, and a Debtor, including any
schedules, amendments or addenda thereto, and all purchase options, renewal
options, guaranties, security agreements, pledge agreements and other
agreements, documents and instruments relating thereto.
"Pledgor" shall mean any person or entity pledging any collateral as
security for any of the Debtor Obligations.
"Property" shall have the meaning assigned to such term in Section 3
hereof.
"Repurchase Price" shall have the meaning assigned to such term in Section
8(a) hereof.
"Seller's Obligations" shall mean all obligations of Seller and all
extensions and renewals thereof, of every nature owed at any time to Buyer,
whether now existing or hereafter incurred, direct or contingent, pursuant to
the terms of this Agreement or any Assignment including, but not limited to, the
Repurchase Price owed with respect to any item of Paper.
"UCC" shall mean the Uniform Commercial Code.
2. SALE OF PAPER.
-------------
(a) Subject to the terms and conditions set forth in this Agreement,
Seller hereby agrees to sell and Buyer hereby agrees to purchase from time to
time during the period commencing May 9, 1995 and ending on February 28, 1997
(the "Commitment Expiration Date"), Paper which satisfies the requirements of
Section 4(b) hereof for an aggregate purchase price not to exceed
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$10,000,000 (which amount shall include the aggregate purchase price of Paper
purchased pursuant to the Original Agreement) (the "Commitment"). Each transfer
of an item of Paper shall be evidenced by and described in an Assignment signed
by Seller specifying the amount, terms of payment, the Equipment covered by such
Paper, all security deposits and related agreements, guaranties, instruments and
agreements. Seller shall not in any Assignment or otherwise delegate any of its
obligations under such Paper, to Buyer. Rates quoted by Buyer to Seller with
respect to an item of Paper proposed to be sold hereunder shall be valid for a
period of sixty (60) days from the date of such quote, and if such Paper is not
sold to Buyer in accordance with the terms hereof within such period, the Buyer
reserves the right to withdraw such offer without notice. The rate shall be such
rate as quoted by Buyer from time to time in its sole and absolute discretion.
(b) Prior to and as a condition precedent to the execution hereof by
Buyer, Seller shall deliver to Buyer in form and substance satisfactory to
Buyer, the following:
(i) a certificate, substantially in the form of Exhibit B
annexed hereto, of the Corporate Secretary of Seller relating to the
incumbency and signatures of the officers authorized to execute this
Agreement and certifying the resolutions of Seller's Board of Directors
authorizing Seller to enter into and be bound by this Agreement and the
transactions contemplated hereby; and
(ii) a written opinion of Seller's legal counsel, in form and
substance acceptable to Buyer.
(c) Prior to and as a condition precedent to the purchase of each
item of Paper hereunder, Seller shall deliver, in form and substance
satisfactory to Buyer, the following:
(i) the duly executed, complete and sole original counterpart
number 1 of the Paper, marked "Original";
(ii) a Delivery and Acceptance Certificate for the related
Equipment, in form and substance satisfactory to Buyer, executed by the
Debtor;
(iii) an Assignment, substantially in the form of Exhibit A,
completed and duly executed by Seller;
(iv) fully executed UCC financing statements on form UCC-1 as
required by Buyer for filing by Buyer against Seller and the Debtor;
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(v) original bills of sale or other proofs of ownership of
the Equipment acceptable to Buyer, together with proof of payment in full;
(vi) original vehicle title, where applicable, naming Buyer as
primary lienholder; and
(vii) such other documents as Buyer may reasonably request,
including, but not limited to, landlord/mortgagee waivers.
(d) Notwithstanding anything contained herein to the contrary, Buyer
shall not be obligated to purchase any Paper in respect of a Debtor previously
approved if (i) the provisions contained in the submitted equipment lease,
installment sale contract or other chattel paper deviate in any respect from the
terms on which Buyer based its credit approval, (ii) there shall have been a
material adverse change in the financial condition or operations of the Seller
or the proposed Debtor, (iii) there shall be any claim, action, litigation or
proceeding pending or threatened against Seller or the proposed Debtor that, if
adversely determined, could cause a material adverse change in the financial
condition or operations of Seller or the proposed Debtor, or (iv) the date of
the original credit approval is more than sixty (60) days prior to the date of
delivery of the documents specified in Section 2(c) hereof, and the Debtor's
credit is not reapproved.
3. SECURITY INTEREST.
-----------------
As security for the prompt payment in full to Buyer of Seller's Obligations
and all Debtor Obligations with respect to each item of Paper, Seller grants
and/or assigns and conveys to Buyer continuing purchase money security interest
(which upon the filing of executed financing statements the jurisdiction in
which the property is located will constitute a first priority perfected
security interest) in the following (herein collectively referred to as the
"Property"): (a) the Equipment covered by such Paper and all proceeds and
products thereof in any form whatsoever including (without limitation) accounts,
chattel paper, instruments, general intangibles, insurance proceeds and any
claims against third parties for loss of or damage to the Equipment, and (b) all
books, records, ledger cards and other property and general intangibles at any
time evidencing or relating to the Paper and the Equipment.
4. REPRESENTATIONS AND WARRANTIES OF SELLER.
----------------------------------------
Seller hereby represents and warrants to Buyer (which representations shall
survive the execution, delivery and
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performance of this Agreement), as of this date of this Agreement and as of the
date of the delivery of each Assignment with respect to such Assignment, the
Paper transferred thereby, the Debtor under such Paper and the Equipment, that:
(a) Seller is a corporation duly organized and in good standing under
the laws of the state of its incorporation and is duly qualified or licensed to
do business as a foreign corporation, in good standing, in each other state
wherein the conduct of its business or the ownership of its property would
require such qualification or licensing or whether failure to be so qualified
would have an adverse effect on the enforceability of Seller's rights under any
item of Paper or its interests in any Equipment. Seller maintains its chief
executive office and principal place of business at the address set forth above
and shall not change such location except upon thirty (30) days prior written
notice to Buyer. Seller has the corporate power, authority and legal right to
enter into, and has taken all action necessary to authorize the execution,
delivery and performance of this Agreement, the Paper, the Assignment and all
other documents and instruments otherwise required or contemplated hereunder and
thereunder, any and all of which do not and shall not contravene the provisions
of Seller's Certificate or Articles of Incorporation, By-Laws, or any agreement
or instrument to which it is a party or by which it or its property is bound,
and shall not cause or result in any violation, breach or default of, or
accelerate any payment under, any such agreement or instrument. This Agreement
and the Assignment are the legal, valid and binding obligations of Seller, each
enforceable against Seller in accordance with the terms thereof. Seller is the
sole and absolute owner of the Paper and the Equipment (or, with regard to the
Equipment, has a first priority purchase money security interest in therein),
and has the absolute right to sell and assign the Paper and to grant or assign
and convey to Buyer a first priority purchase money security interest in the
Property, free of any claim, lien, encumbrance or security interest of any
nature, except for the interest of the Debtor, and except that Seller's interest
in any software is limited to a non-exclusive license therein. Seller has not
prepaid, released, sold, assigned nor encumbered the Paper or any of the
Equipment to or in favor of any party nor done any act to impair the validity or
enforceability of the Paper or assignability of the Equipment. There is no
consent, approval or authorization of, or filing or recording with, any
governmental body or agency or of any company or person required to be obtained
or made in connection with the execution, delivery and performance by Seller of
this Agreement, the Assignment, the Paper or any other document or instrument
required or contemplated hereunder, except as contemplated by Section 4(c)
hereof. There is no claim, action, litigation or proceeding before any court,
governmental body or agency pending
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or threatened against Seller or, to the knowledge of Seller, pending or
threatened against the Debtor, any Guarantor, any Pledgor, the Paper or the
Equipment, except as disclosed in writing to Buyer prior to the sale and
delivery of the Paper to Buyer.
(b) The Paper and all purchase options, renewal options, guaranties,
security agreements, pledge agreements and other related agreements, documents
and instruments will each have been described in the Assignment and delivered to
Buyer, and, together with all signatures appearing thereon, are: genuine, in
all respects what they purport to be, in full force and effect, and valid,
legally binding agreements of and enforceable against the Debtor and the
Guarantor and any Pledgor, as the case may be, in accordance with the provisions
thereof. Seller has no adverse credit information about the Debtor or any
Guarantor or any Pledgor which has not been disclosed to and approved by Buyer
in writing, and has furnished to Buyer all credit information received by Seller
with respect thereto. The Debtor has taken all necessary corporate or other
action and obtained all necessary permits and authorization and made all filing
and recordings with respect to its execution and delivery of the Paper and its
performance thereof. The Paper is an absolute and unconditional obligation of
the Debtor, and the Debtor does not have any right of offset, defense, claim or
counterclaim of any kind with respect to the payment of any of the Debtor
Obligations under the Paper, is current on all payments (within 60 days of the
last scheduled payment date) and taxes owed thereunder and is not contesting any
of the provisions thereof. All representations in the Paper made by Seller were
true and correct when made. No default, and no event that, but for the passage
of time or the giving of notice or both, would constitute a default, and is
continuing under the provisions of the Paper by either Seller or the Debtor. All
sums of money previously paid by the Debtor as advance rentals or deposits of
security, in whatever form, have been fully disclosed to Buyer. Seller has
delivered to Buyer the sole executed original counterpart of the Paper, and such
agreement constitutes the entire agreement of the parties thereto with respect
to the Equipment and has not been modified, cancelled or waived in any respect,
and there are no other agreements or documents relating to the Paper or the
Equipment. Seller has caused all other executed copies of the Paper (including,
without limitation, any executed counterpart(s) in the possession of the Debtor)
to bear the legend: "Duplicate Copy", "Second Copy", "Lessee Copy" or language
of similar import.
(c) Unless otherwise disclosed to and approved by Buyer in writing
prior to the delivery of the Assignment, the Equipment is new, has been
delivered to and has been unconditionally accepted by the Debtor without dispute
or claim,
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and is located at the address(es) specified in the Paper. The Equipment is, and
shall remain, personal property regardless of its attachment to real property in
any manner, and is in good working order. Seller has properly made or caused to
be made all required governmental and administrative filings and recordings, if
any, and has obtained unconditionally all permits and approvals (including
patent licenses, if any) necessary to protect the interest of Seller as owner of
the Equipment, and has or shall, if required by Buyer under Section 2(c)(ix)
hereof, promptly, at its sole cost and expense, obtain and deliver to Buyer
waivers, executed by the landlord and/or the mortgagee(s) of the real property
where the Equipment is located, of any claim or right to lien, levy or distrain
for rent against the Equipment and of any claim of an interest in the Equipment,
as fixtures or otherwise, duly executed in form and substance acceptable to
Buyer and in recordable form in accordance with the laws of the state where such
real property is located. Buyer's security interest in the Equipment is, or will
constitute, upon the filing or recording of the UCC financing statements
delivered by Seller to Buyer together with each Assignment, a valid, enforceable
and perfected first priority purchase money security interest in the Equipment
pursuant to the laws of the jurisdiction(s) where the Equipment is located;
provided, however, with respect to Equipment with an original value of $10,000
or less no UCC financing statement has been filed. If a Certificate of Title is
required by law with respect to the Equipment, Seller has obtained such
Certificate and shall cause any notation thereon to be made in a timely manner
to perfect Buyer's first priority security interest in the Equipment. Seller has
duly filed UCC financing statements which, if Seller's interest in the Equipment
were deemed to be a security interest, would perfect a first priority security
interest of Seller in the Equipment in the jurisdiction where the Equipment is
located. Acknowledgment copies of these UCC financing statements, together with
acknowledgment copies of UCC financing statements duly filed to protect Buyer's
interest in the Paper, have been delivered to Buyer with the Assignment, or will
be so delivered promptly upon receipt of such copies from the applicable filing
office; provided, however, with respect to Equipment with an original value of
$10,000 or less no UCC financing statement has been filed.
(d) Seller has delivered to Buyer all material written information in
its possession with respect to the Paper, the Debtor, any Guarantor or Pledgor
and the Equipment. All statements, documents, instruments, information,
representations and warranties made or furnished by Seller to Buyer relating to
the business and financial affairs of Seller, this Agreement, the Assignment,
the Paper, the Debtor, any Guarantor or Pledgor and the Equipment are in all
material respects true and complete, and Seller knows of no fact which, if known
to Buyer, would affect
7
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Buyer's reliance on any of the foregoing.
(e) At the time an Assignment is delivered to Buyer, the Equipment is
fully insured against loss, fire, theft, damage or destruction from any cause
whatever in an amount not less than the total rent under the Paper or the full
replacement cost of the Equipment without provision for depreciation, whichever
is greater, and the Debtor maintains additional insurance against injury, loss
or damage to persons or property arising out of the use or operation of the
Equipment as is customarily maintained by owners of like property, all with
companies satisfactory to Buyer.
5. CERTAIN COVENANTS OF SELLER.
---------------------------
Seller hereby covenants and agrees that so long as Seller's Obligations or
any Debtor Obligations with respect to any item of Paper remain unpaid, it
shall:
(a) perform and observe all of the warranties, duties and
obligations, if any required of it under each item of Paper and nothing
contained herein or in any other document nor any action taken shall be deemed
to relieve Seller from, or cause Buyer to assume, or be liable for, the
performance or observance of any of such warranties, duties or obligations;
(b) immediately upon obtaining knowledge thereof, notify buyer in
writing of each default, or any circumstances which might lead to a default
pursuant to the provisions of any time of Paper, or the damage, destruction,
loss or theft of, or any dispute or claim with respect to, the Equipment;
(c) execute and deliver to Buyer, at Seller's sole cost and expense,
such security agreements, UCC financing statements, amendments and other
documents or instruments, in form and substance satisfactory to Buyer, as Buyer
may request, from time to time, to evidence, perfect, maintain and enforce
Buyer's rights in each item of Paper and security interest in the related
Property; Buyer may, where permitted by law, file such UCC financing statement
without the signature of Seller appearing thereon;
(d) keep proper books and records with respect to each item of Paper
and the Equipment covered thereby; upon reasonable advance notice from Buyer,
Seller shall permit Buyer to inspect and make copies of all such books and
records of account financial condition as Buyer may reasonably request;
(e) not modify, accept any payment from any Debtor under, or make any
payment on behalf of or to any Debtor for the
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purpose or with the result, whether or not intended, of concealing or preventing
an event of default under, any item of Paper, and Seller agrees that if any such
payment is received by it, such payment shall be held in trust for the sole
benefit of Buyer and shall promptly be remitted by Seller to Buyer;
(f) not discontinue or change, or dispose of all or a substantial
part of, its business or assets, nor sell, assign, transfer, dispose of, or
grant or suffer to exist any security interest lien, encumbrance or other
interest of any kind with respect to any item of Paper or any Equipment, or move
or permit the removal of the Equipment leased covered thereby from the
address(es) specified in the Paper;
(g) shall furnish Buyer within 120 days after the close of each
fiscal year copies of its financial statements containing balance sheets as of
the end of such fiscal year, statements of income, retained earnings and cash
flow for such fiscal year, in each case prepared in accordance with generally
accepted accounting principles consistently applied and certified by a
recognized firm of certified public accountants acceptable to Buyer as fairly
presenting Seller's financial condition; upon request, Seller shall deliver to
Buyer, (i) within 60 days after the close of each fiscal quarter of Seller's
business, Seller's quarterly financial report prepared in accordance with
generally accepted accounting principles consistently applied and certified by
Seller's chief financial officer as fairly presenting Seller's financial
condition, and (ii) such other information concerning Seller's financial
condition and operations as Buyer may reasonably request from time to time;
(h) shall, if any forms of Paper, delivery and acceptance receipts,
resolutions, guaranties and other documents are furnished to Seller by Buyer,
use such forms only in conjunction with transactions that Seller sells to Buyer
hereunder, and Seller shall not disclose, distribute or otherwise disseminate
any such form to any third party (other than the Debtor) or claim a proprietary
interest in any such form or in any other document delivered to Buyer by Seller,
shall not constitute a defense against or waiver of Seller's breach of any
representation, warranty or covenant in this Agreement or in any Assignment.
Buyer's knowledge of any breach by Seller of any representation, warranty or
covenant contained in this Agreement or in any Assignment, or Buyer's failure to
disclose its knowledge of such breach to Seller, at the time of the purchase of
any item of Paper or at any time thereafter, shall neither impair Buyer's
ability to fully enforce, nor constitute a defense against or waiver of, any of
Seller's Obligations, unless Buyer shall have executed an express written waiver
or such breach; and
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(i) immediately notify Buyer of the assertion of any claim or the
threat or institution of any litigation that, if adversely determined, would
have a material adverse effect on any item of Paper or the Equipment covered
thereby, or on the assets, prospects, business or condition (financial or
otherwise) of Seller.
6. TAXES.
-----
Seller shall be liable for, and shall duly pay and discharge, all taxes,
assessments and penalties (including interest) imposed upon all transactions
under this Agreement, all Assignments, all paper and all Equipment, including
(without limitation all taxes, assessments and penalties that Buyer may be
required to withhold or pay for any reason with respect to any of the foregoing,
other than taxes on or measured by Buyer's net income. Seller hereby
indemnifies and holds Buyer harmless from and against all such taxes,
assessments and penalties paid (including interest) by, charged to or asserted
against Buyer. Notwithstanding the foregoing, Seller shall not be liable for
and does not indemnify Buyer from any penalties or interest resulting from
Buyer's gross negligence or willful misconduct.
7. SERVICING, POWER OF ATTORNEY.
----------------------------
So long as no Event of Default shall have occurred, Seller shall be
responsible, at its expense, for all billing, collecting and servicing with
respect to the Paper. In performing such servicing, Seller shall use the degree
of skill and attention used by servicers servicing similar portfolios of Paper,
and in any event, not less than the degree of skill and attention used by the
Seller prior to the sale of the Paper to Buyer. Seller may retain Xerox, Inc.
("Xerox") to service all or a portion of the Paper; provided, however, prior to
any servicing by Xerox, Buyer shall have received a letter from Xerox, in form
and substance satisfactory to Buyer, to the effect that upon an Event of Default
and termination by Buyer of Seller's servicing of the Paper hereunder, Xerox
shall continue to service the Paper on terms to be set forth in an agreement
between Xerox and Buyer which terms shall be substantially similar to the terms
on which Xerox is currently servicing Paper for Seller.
(a) In performing its duties under this Section 7, Seller shall be an
independent contractor of the Buyer and shall not be an agent of Buyer. This
Agreement shall not be construed to create a partnership or joint venture
between the parties.
(b) Until termination of the servicing hereunder, Seller shall give
representatives of Buyer access, at Seller's premises,
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during normal business hours and on reasonable advance notice to the records of
Seller relating the Paper and shall, upon reasonable advance notice, make a
available to representatives of Buyer at Seller's premises employees of Seller
who are familiar with the Paper and Seller's servicing procedures relating to
the Paper.
(c) Seller shall not amend or modify any term of any Paper without the
prior written consent of Buyer.
(d) Seller shall keep and maintain, or cause its agents to keep and
maintain, complete and accurate records of all funds collected and paid during
the servicing hereunder relating to the Paper, and shall, or cause its agents
to, remit funds on demand to Buyer from time to time.
(e) All funds collected by Seller in respect of the Paper and the
Equipment less an amount equal to Seller's Spread (as defined below) shall be
remitted to Buyer by wire transfer of immediately available funds to an account
designated by Buyer within five (5) business days of the end of each calendar
month commencing the calendar month ending May, 1995. "Seller's Spread" shall
mean an amount equal to the positive difference between the total payments
received by Buyer with respect to each item of Paper at the rate specified in
the Paper less the total payments at the rate in effect in accordance with
Section 2 hereof with respect to each item of Paper. A schedule of such amounts
with respect to the initial purchase of Paper hereunder is set forth on Schedule
A. Within ten days of the end of each calendar month, Seller shall deliver, or
shall cause Xerox to deliver, to Buyer an receivables aging report in form and
substance satisfactory to Buyer with respect to collections during the
immediately preceding month together with such other servicing reports
reasonably requested by Buyer. Other than with respect to payment of the
Seller's Spread hereunder, Buyer shall have no obligations to pay Seller or
reimburse Seller with respect to any cost or expenses incurred by Seller or its
agents in connection with the servicing contemplated hereunder.
(f) On the date hereof, and from time to time, upon the purchase of Paper
hereunder, Seller shall deposit into a interest bearing account at Buyer in the
name of Buyer an amount equal to one months' scheduled collections of the Paper.
The amounts in such account shall secure the Sellers' joint and several
obligations hereunder, subject to Section 11 hereof. Buyer, from time to time,
in its sole and absolute discretion may release funds in the account to Seller.
Buyer shall have the right to apply, from time to time, amounts in the account
to payment of Seller's obligations to Buyer under this Agreement.
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(g) Seller will indemnify, defend and hold Buyer harmless against and from
any and all losses, damages, costs, expenses, reasonable attorneys fees' or
other liabilities, arising out of or resulting from the failure of Seller or its
agents to service the Paper in accordance with this Section 7.
(h) Buyer upon not less than thirty days' prior notice to the Seller (or
one days' prior notice in the event any proceeding or action referred to in
Section 12(ii) or 12(iii) shall have occurred) shall have the right to
terminate Seller's servicing hereunder for cause or no cause. In the event of
termination, Seller agrees to cooperate with Buyer in order to ensure an orderly
transfer of servicing to Buyer or its designee.
(i) Effective upon the date of termination of the servicing pursuant to
the Servicing Agreement, Buyer shall have the sole and exclusive right to
collect and enforce payment of all Debtor Obligations with respect to, and
enforce all of the rights and remedies provided for in, each item of Paper.
Seller hereby constitutes and appoints Buyer, its officers, employees and any of
their designees, as its attorney-in-fact, to exercise in a lawful manner at any
time any or all of the following powers which, being coupled with an interest,
shall be irrevocable until Debtor Obligations with respect to each item of Paper
have been paid in full: (i) to demand, collect, receive, receipt, endorse,
assign, deliver, accept, give acquittances for and deposit in the name of Buyer
or Seller, any and all monies, checks, remittances and other instruments and
documents relating to each item of Paper and Equipment; (ii) to notify the
Debtor under each item of Paper of the assignment of the respective Paper and
Buyer's interest, including its security interest in the Equipment; (iii) to
notify each Debtor to make payments under its Paper directly to Buyer; (iv) to
take or bring in the name of Buyer or Seller, all steps, actions, suits or
proceedings, or to file any claim or to make any settlement, compromise or
discharge, or to extend the times of any payments, release any party or
substitute another as Debtor, deemed by Buyer necessary or desirable to enforce
its rights in any item of Paper, or to effect collection of the Debtor
Obligations or to protect, preserve, maintain or enforce Buyer's security
interest in the Property; (v) to maintain, repair, protect or preserve the
Equipment; and (vi) to execute and file in Seller's name and on its behalf any
Paper, UCC financing statements, assignments, continuations or amendments
thereto with respect to Buyer's interest in any Paper and security interest in
any of the Property. Seller hereby releases Buyer, its officers, directors,
shareholders, employees and designees from any liability arising from any act or
acts hereunder or in furtherance hereof, whether of omission or commission and
whether based upon any error of judgment or mistake of law or fact.
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8. REPURCHASE OF PAPER.
-------------------
(a) In the event that (i) Seller defaults in the performance of any
of its obligations under any item of Paper, this Agreement or any agreement or
document or instrument related thereto, or (ii) any warranty or representation
made by Seller herein or in any Assignment in respect of any item of Paper, the
Debtor thereunder, any Guarantor or Pledgor or the Equipment shall be incorrect
or (iii) as to any item of Paper, the Debtor thereunder shall have defaulted in
the payment of its obligations and such default shall have continued unremedied
by such Debtor for ninety-one days or more, then Seller agrees to pay to Buyer
on demand, at Buyer's option, the sum of: (i) the then unpaid balance of rental
payment accruing under each item of Paper to which such default or breach
pertains, each discounted using the simple interest method at the rate
applicable to the Assignment by which such Paper was sold by Seller to Buyer,
plus all reasonable costs and expenses incurred by Buyer relating to each such
paper and the Equipment covered thereby, including (without limitation) the
costs and expenses for the maintenance, repair, protection and preservation of
the Equipment and all reasonable attorneys' fees and expenses in connection with
defending or enforcing Buyer's rights and remedies under this Agreement, such
Paper and the Equipment leased thereunder or otherwise, plus (ii) all advance
rentals and other fees paid to Seller with respect to each such Paper, plus
(iii) interest at the rate of eighteen percent(18%) per annum on the amount
determined under Section 8(a)(i) and (ii) hereof from the date of demand until
the date paid in full, or the highest rate of interest permitted by applicable
law, whichever is less (such sum hereinafter being referred to collectively, as
the "REPURCHASE PRICE").
----------------
(b) If, with the consent of Buyer and Seller, a Debtor exercises an
option to prepay its obligations under an item of Paper or to purchase the
Equipment for an amount that is less than the Repurchase Price for such Paper at
the time of exercise of such option, then Seller agrees to pay Buyer on demand
the difference between such amount paid and the Repurchase Price for such Paper.
(c) Notwithstanding anything to the contrary contained herein or in
any other document, if any event of default shall occur under any item of Paper
for any reason whatsoever during a period of time commencing with the date of
Buyer's purchase of such Paper up to and including a date three (3) months
subsequent thereto, and such event of default shall continue unremedied for a
period of fifteen (15) days ("DEFAULTED PAPER"), Seller agrees, upon receipt of
---------------
written notice from Buyer, to either (i) repurchase such Defaulted Paper at the
Repurchase Price within
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fifteen (15) days of receipt by Seller of such notice, or (ii) at Buyer's
option, assign to Buyer (in accordance with the terms of this Agreement) such
substitute Paper as shall be reasonably acceptable to Buyer in exchange for such
Defaulted Paper.
(d) Upon payment to Buyer of the Repurchase Price with respect to an
item of Paper in accordance with Section 8(a) hereof and provided Seller has not
breached and is not otherwise in default under any provision of this Agreement
or any Assignment, Buyer shall terminate its interests including its security
interest in the related Property and shall assign to Seller all of Buyer's
right, title and interest in the Paper without recourse, representation or
warranty, express or implied.
(e) In the event that, upon the payment of all amounts to be paid to
Buyer under an item of Paper, Buyer is unable to locate Seller (for the purpose
of re-assigning the Paper to Seller) by sending a notice to Seller at its
address for notices set forth in this Agreement, Seller hereby irrevocably
authorizes and appoints Buyer (in Seller's name or Buyer's name, or both, as
Buyer shall in its sole discretion determine) Seller's true and lawful attorney-
in-fact to deliver to the Debtor under such Paper (a) a bill of sale for the
Equipment covered by such Paper, whether or not such Debtor has an option to
purchase the Equipment and for such consideration (or for no consideration) and
on such other terms as Buyer shall in Buyer's discretion determine (any
consideration received to be retained by Buyer), and (b) a UCC termination
statement terminating the filing of any UCC financing statement filed by Seller
with respect to the Equipment. The foregoing powers are coupled with an
interest and shall not be affected by Seller's dissolution, reorganization or
any merger.
9. INDEMNIFICATION.
---------------
(a) Seller hereby indemnifies and holds Buyer harmless against any
claim, suit, action, proceeding (formal or informal), investigation, judgment,
loss and legal and other expenses as and when incurred by Buyer arising out of
or based upon (i) the breach by Seller of any representation, warranty, covenant
or other agreement contained in this Agreement or in any Assignment, including
(without limitation) any failure to pay any sales, use or similar tax with
respect to any item of paper or the Equipment covered thereby, (ii) any loss or
damage to property, persons, services or equipment resulting from or in
connection with the use of any equipment, (iii) any default by Seller under any
item of Paper or in the performance of any of its obligations thereunder.
(b) If Seller fails to perform hereunder or under any Assignment or
item of Paper, then in addition to any other right,
14
<PAGE>
Buyer may have, Buyer may in its discretion, but need not perform thereunder on
Seller's behalf, and in that event, Seller shall pay buyer, on demand, all costs
and expenses incurred by Buyer with interest at the rate of 18% per annum or the
highest rate permissible under applicable law, whichever is less.
10. DEFAULTS AND REMEDIES.
---------------------
(a) In the event (each, with respect to any Seller, a "Default"):
(i) Seller shall fail to repurchase and pay the Repurchase
Price for any item of Paper from Buyer, when and as provided in
Section 8(a) hereof; or
(ii) Seller defaults in any other payment obligations, or in the
performance or observance of any other covenant, agreement, warranty,
representation, or provision contained in this Agreement, or any other
agreement with Buyer, and such default shall have continued for a
period of thirty (30) days after notice thereof to Seller from Buyer
or, if the default is curable but cannot, in Buyer's judgment, be
cured within such 30-day period, then, within an additional thirty
(30) days, if Seller commences promptly to cure such Default and
pursue their best efforts to diligently cure the same; or
(iii) Seller defaults in the payment of any indebtedness of
Seller in the principal amount of $250,000 or more or any interest
thereon or under any agreement or instrument under or pursuant to
which any such indebtedness may have been issued, created, assumed, or
guaranteed by Seller and such default shall continue for more than the
period of grace, if any, therein specified, or any such indebtedness
shall be declared due and payable; or
(iv) Seller shall: (a) cease to do business as a going concern;
(b) admit in writing its inability to pay its debts generally as they
become due; (c) make an assignment for the benefit of its creditors;
or (d) commence a proceeding for the appointment of a receiver,
trustee, liquidator or conservator of itself or of the whole or any
substantial part of its property; or
(v) a complaint or petition or answer seeking liquidation,
reorganization or arrangement or any
15
<PAGE>
similar relief under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or any state
is filed by Seller or against Seller and not dismissed within sixty
(60) days of the filing thereof, or a court of competent jurisdiction
shall enter an order, judgment or decree appointing a receiver,
trustee, liquidator or conservator (or shall otherwise assume custody
or control) of Seller or of the whole or any substantial part of its
assets;
then, if such Default shall be continuing, Seller shall, immediately upon
Buyer's demand, purchase any or all of the Paper sold to Buyer hereunder for the
Repurchase Price therefor. If Seller fails to purchase such Paper immediately
upon Buyer's demand, Buyer shall have the following rights and remedies (to the
extent permitted by law) in addition to all of the rights and remedies of a
secured party under the UCC of the applicable jurisdiction and other applicable
law, and the right to commence an action or proceeding against Seller for the
payment of the Repurchase Price of such Paper and all other amounts due under
this Agreement, all such rights and remedies being cumulative, not exclusive and
enforceable alternatively, successively or concurrently:
(i) to prosecute any action, suit or proceeding to protect and
enforce any or all of the rights of Buyer pursuant to the provisions of
this Agreement, whether for the specific performance of any covenant or
other provision contained herein or in any document or instrument delivered
in connection with or pursuant to the provisions of this Agreement, or to
enforce the payment of such Repurchase Price;
(ii) with or without judicial process or the aid and assistance
of others, to enter upon any premises under the control of Seller in which
the Equipment covered by any item of Paper may be located and, without
resistance or interference by Seller, take possession of the Equipment;
and/or dispose of any of the Equipment on the premises; and/or require
Seller to assemble and make available to Buyer at the expense of Seller,
any of the Equipment at any place and time designated by Buyer which is
reasonably convenient to both parties; and/or sell, re-sell, lease, assign
and deliver, grant option for or otherwise dispose of any of the Equipment
in its then condition or following any commercially reasonable
preparation or processing, at one or more public or private sales, upon at
least fifteen (15) days' notice to Seller (which notice Seller acknowledges
is reasonable), upon any
16
<PAGE>
commercially reasonable terms at the place(s) and times(s) and to the
person(s) as Buyer deems best; Buyer may buy any of the Equipment at any
public sale and, if any of the Equipment is of a type customarily sold in a
recognized market or is of the type which is the subject of widely
distributed standard price quotations, Buyer may buy the Equipment at
private sale, free of any equity of Seller, which Seller hereby waives; and
(iii) Buyer may apply the cash proceeds actually received from
any sale or other disposition of the Equipment leased under any item of
Paper to the expenses of retaking, holding, storing, preparing for sale,
selling, leasing and the like, to attorneys' fees and all legal, travel and
other expenses which may be incurred by Buyer in attempting to collect such
Repurchase Price or enforce this Agreement or in the prosecution or defense
of any action or proceedings related to this Agreement and then to such
Repurchase Price and Seller shall remain liable for and will pay Buyer on
demand any deficiency.
(b) In the event the Debtor under any Item of Paper fails to pay any
of the Debtor Obligations with respect to the Paper when due and payable
pursuant to the provisions of the Paper, or any other event of default shall
occur under the Paper, Buyer shall have (in addition to all of its rights and
remedies against the Debtor) all of the rights and remedies of a secured party
pursuant to the UCC and other applicable law in respect of the Equipment,
whether the security interest in such Equipment is created pursuant to the
provision of this Agreement or the Paper, and the provisions of Section
10(a)(ii) hereof shall also apply to the exercise of such rights and remedies,
except that the enforcement of such provisions shall be at the expense of the
Debtor.
11. ULTIMATE NET LOSS.
-----------------
(a) Except as otherwise provided in Section 11(g) below and so long
as no Default shall have occurred and be continuing hereunder, the Ultimate Net
Loss of Sellers arising out of their joint and several obligation to repurchase
any Paper under this Agreement shall not exceed (i) $500,000, with respect to
the aggregate Paper purchased by Buyer during the period commencing May 9, 1995
and ending February 29, 1996 and (ii) $750,000 with respect to the aggregate
Paper purchased by Buyer during the period commencing March 1, 1996 and ending
February 28, 1997 and $750,000 during each one year period thereafter during
17
<PAGE>
the term of this Agreement; provided, however, with respect to clause (i), in
the event the consolidated net worth of BankVest, as indicated on a balance
sheet of Bank Vest prepared on a review basis (or audited) in accordance with
generally accepted accounting principles, consistently applied, by Coopers &
Lybrand, exceeds $3,000,000 then effective as of the date of such balance sheet
the amount $750,000 shall be reduced to $500,000.
(b) "Ultimate Net Loss", as used herein, shall mean with respect to
Paper repurchased by Seller hereunder the sum of:
(i) all payments made by Seller to Buyer upon its repurchase of
such Paper; PROVIDED, HOWEVER, (x) payments made by Seller due to a
-----------------
repurchase of an item of Paper pursuant to Section 8(a), Section 8(b) or by
reason of any breach by Seller of any representation or warranty shall be
excluded and (y) a substitution of an item of such Paper shall not be
deemed a payment; plus
(ii) the reasonable out-of-pocket expenses, including, without
limitation, refurbishing costs and costs of transportation incurred by
Seller in connection with any recoveries made in the liquidation by it of
such Paper and the Equipment covered thereby; MINUS
-----
(iii) the total amount realized by Seller from all sources upon
the liquidation of such Paper and the Equipment covered thereby (including
any resale of Equipment as to which Seller or any affiliate of Seller has
acquired title in default proceedings under the Paper or in satisfaction of
the Debtor's obligations thereunder) repurchased by Seller from Buyer,
including, without limitation, recoveries from any party liable on such
Paper and from the sale, lease, or other disposition of Equipment under
such Paper.
(c) Seller agrees to take all necessary and the appropriate action to
recover the Repurchase Price from all parties liable on Paper repurchased by it
pursuant to Section 8 of this Agreement and from the Equipment covered thereby.
Without limiting the foregoing, the Seller will refurbish the Equipment, sell
the same on a priority basis vis-a-vis other Equipment, and use its best efforts
to obtain the highest price possible. In computing the Ultimate Net Loss
incurred by Seller, if the Paper was repurchased pursuant to Section 8 of this
Agreement:
(i) there shall not be included as a "loss"
---
18
<PAGE>
in such computation any portion of the amount paid to Buyer in the
repurchase of any item of Paper, unless and until Seller shall have made a
bona fide sale of the Equipment covered by such Paper and shall have used
its best efforts to recover any amounts owing thereon from all parties
liable therefor;
(ii) it shall be deemed that no "loss" has been incurred by
Seller on any such item of repurchased Paper, if Seller fails, within 180
days after the date on which its repurchase of any such item of Paper shall
have been demanded by Buyer, to both establish its net loss with respect
thereto and to notify Buyer in writing of such net loss; provided, however,
such 180 day period shall be extended to 240 days if Seller demonstrates
that it was diligently pursuing during such 180 day period and is
continuing to diligently pursue, its remedies with respect to such Paper
including sale of the Equipment and/or obtaining insurance proceeds with
respect thereto.
(iii) it shall be deemed that no "loss" has been incurred by
Seller if (i) a UCC financing statement was not filed with respect to
Equipment which is the subject of the repurchased Paper if such failure to
file is a proximate cause of the loss or (ii) insurance in an amount equal
to at least the full amount of the loss was not obtained or maintained with
respect to the Equipment which is the subject of the repurchased Paper.
(d) Seller shall continue to fulfill its obligations under Section 8
hereof with respect to all Paper purchased hereunder until Seller has incurred
the Ultimate Net Loss, determined as set forth in clause (a) above. Thereafter,
except as otherwise herein provided, Seller shall not be required to make any
payments to Buyer with respect to the Paper purchased hereunder which is subject
to such Ultimate Net Loss provisions.
(e) Seller shall keep separate records with respect to Paper
purchased by Buyer of all amounts realized by it from the liquidation of Paper
repurchased pursuant to Section 8 of this Agreement, including all amounts
realized from the Equipment covered by such Paper. Upon request, Seller will
furnish a written report to Buyer, within thirty (30) days of any such request,
showing the amount of out-of-pocket expenses incurred in connection with any
recoveries made by Seller in the liquidation of such Paper and the amounts
realized by Seller from all sources upon the liquidation of such Paper. Buyer
shall have the right, upon prior written notice, to audit and make copies of the
records
19
<PAGE>
of Seller with respect to such out-of-pocket expenses incurred, recoveries made
and amounts realized in respect of such Paper.
(f) If and when Seller shall have incurred 50% of the Ultimate Net
Loss with respect to any period described in clause (a)(i) or (a)(ii) of Section
11 it shall not thereafter, without the prior written consent of Buyer:
(i) sell any Equipment covered by Paper repurchased by Seller for
a price less than the Repurchase Price of such Paper; or
(ii) compromise of settle the amount owing on any repurchased
Paper for an amount less than the Repurchase Price of such Paper.
If Buyer fails to so consent within five (5) days after its receipt of a
written request from Seller to:
i) the sale of Equipment covered by such Paper at an offered
price less than the amount of the applicable Repurchase Price; or
ii) accept an offer from the Debtor under such Paper to pay, in
compromise or settlement, an amount less than such Repurchase Price (each
such offer being herein referred to as "CLOSE-OUT OFFER");
---------------
thereafter, either Buyer or Seller (with prior written consent of Buyer)
within ninety (90) days after such written request, are unable to sell such
Equipment for a price, or obtain a settlement or compromise from Debtor in
an amount, at least equal to such Close-Out Offer, Buyer shall pay to
Seller for such Equipment and for all of Seller's right, title and interest
in the related Paper, an amount equal to such Close-Out Offer. The payment
by Buyer to Seller of such Close-Out Offer shall be deemed to be a recovery
by Seller under clause (iii) of Section 11(b) hereof.
(g) Notwithstanding anything in the foregoing that may be to the
contrary, the provisions of this Section 11 for an Ultimate Net Loss by Seller
shall in no way impair, limit, or otherwise affect Seller's liability to Buyer
for:
(i) any Paper Seller is required to repurchase from Buyer
pursuant to Section 8(a) or 8(b) or by reason of any breach by Seller of
any representation or warranty (other than a warranty of payment) in
respect of said Paper under any assignment
20
<PAGE>
or endorsement thereof or under this Agreement or any other agreement as to
such Paper;
(ii) any Paper which Seller is required to repurchase from Buyer
pursuant to Section 8 hereof by reason of the occurrence of a Default by
Seller;
(iii) any Paper which Seller shall have purchased from Buyer
without any prior request or demand by Buyer for such repurchase;
(iv) any Paper which Seller is required to repurchase pursuant
to Section 10(a) hereof; and
(v) any Paper which Seller shall have failed to repurchase in
accordance with Section 8(c) hereof.
(h) In no event shall Buyer be required to take any action to
preserve, collect, enforce, defend or protect its rights in any Paper or to
maintain, repair, license, register, insure or take any other action with
respect to the Equipment.
12. TERMINATION OF COMMITMENT.
--------------------------
Buyer may terminate its commitment to purchase Paper on the terms and
conditions set forth hereunder prior to the Commitment Expiration Date if a
Default shall have occurred and be continuing or Paul Gass ceases to be the
President and Chief Executive Officer of Seller or otherwise ceases to be
actively involved in the management of the Seller. Any termination of the
Commitment shall not effect or modify Seller's obligations in respect of Paper
purchased by Buyer pursuant to this Agreement, or otherwise affect or modify
Seller's obligations hereunder.
13. MISCELLANEOUS.
-------------
(a) The obligation of each Seller hereunder is the independent and
several obligation of each Seller and with respect to "Paper" originated by such
Seller and may be enforced against such Seller, whether or not enforcement of
any right or remedy hereunder has been sought against the other Seller; provided
however, each Seller acknowledges and agrees that the obligations are joint and
several.
(b) Except as specifically provided herein, Seller waives presentment
for payment, demand, protest, notice of dishonor of any item of Paper and any
instrument included in or evidencing such Paper, and any and all other notices
or demands whatsoever, Buyer shall not be required to take any particular
21
<PAGE>
action to preserve, collect, enforce, defend or protect its rights in such Paper
or related Property or to maintain, repair, license, register or insure the
Equipment leased thereunder. No provision hereof and no right or remedy of Buyer
may be waived by Buyer, and no provision hereof may be amended, except in
writing, and any such waiver of a right or remedy on one occasion shall not be
construed as a waiver of such right or remedy on future occasions.
(c) All notices provided for in this Agreement and each Assignment
shall be in writing and shall be deemed given when mailed if sent by registered
or certified mail, return, receipt requested, to Seller or Buyer at their
respective addresses set forth above, or when actually received if given in any
other manner. Any changes in such addresses shall be by similar notice as
provided for herein.
(d) Seller, at its sole cost and expense, will at all times hereafter:
(i) execute such UCC financing statements and other instruments and perform such
other acts as Buyer may request to establish and maintain the security interests
herein granted and the priority and continued perfection thereof; (ii) obtain
and promptly furnish to Buyer evidence of all such government approvals as may
be required to enable Seller to comply with its obligations under this
Agreement; (iii) not change the location of its principal place of business or
chief executive offices unless at least thirty (30) days' prior written notice
of such change shall have been given to Buyer; and (iv) execute and deliver all
such other instruments and perform all such other acts as Buyer may reasonably
request to carry out the transactions contemplated by this Agreement.
(e) This Agreement and any Assignment shall be binding upon and shall
inure to the benefit of Seller and Buyer and their respective successors and
assigns, and shall not be deemed for the benefit of any third party; PROVIDED,
--------
HOWEVER, that Seller shall not assert any defense, offset, claim or counterclaim
- -------
against any assignee of Buyer that may be asserted against Buyer, and Seller
shall not assign any of its rights or obligations hereunder without the prior
written consent of Buyer.
(F) THIS AGREEMENT AND EACH ASSIGNMENT SHALL BE GOVERNED BY AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OR CHOICE OF LAW. SELLER HEREBY IRREVOCABLY CONSENTS
TO THE JURISDICTION AND VENUE OF THE COURTS OF THE STATE OF NEW YORK AND ANY
FEDERAL COURT LOCATED IN THE STATE IN CONNECTION WITH ANY ACTION OR PROCEEDING
ARISING OUT OF, OR RELATING TO, THIS AGREEMENT, ANY ASSIGNMENT, ANY ITEM OF
PAPER OR ANY AGREEMENT RELATED THERETO, OR ANY RELATED PROPERTY AND SELLER
AGREES THAT
22
<PAGE>
SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE GIVEN BY MAIL TO
SELLERS ADDRESS SHOWN ABOVE. SELLER HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY
AND RIGHTS TO INTERPOSE COUNTERCLAIMS IN THE EVENT OF ANY LITIGATION WITH
RESPECT
23
<PAGE>
TO THIS AGREEMENT, ANY ASSIGNMENT, ANY ITEM OF PAPER OR RELATED AGREEMENT, OR
ANY PROPERTY.
IN WITNESS WHEREOF, Buyer and Seller have caused this Agreement to be duly
executed and delivered as of the date first shown above.
Buyer: Seller:
EUROPEAN AMERICAN BANK BANKVEST CAPITAL CORP.
By:_____________________ By:______________________
Name: Ira Z. Romoff Name: Paul Gass
Title: Senior Vice President Title: President
LEASEVEST CAPITAL CORP.
By:___________________
Name: Paul Gass
Title: President
24
<PAGE>
EXHIBIT "A"
MASTER LEASE ASSIGNMENT
FOR VALUE RECEIVED, [_______________________] ("Seller"), hereby
sells, assigns, and transfers to EUROPEAN AMERICAN BANK ("Buyer"), all of the
Seller's right, title and interest in and to, the equipment leases, retail
installment contracts or other chattel paper identified on Schedule A attached
hereto and made a part hereof (the "Paper"), together with all of Seller's
right, title and interest all monies due or to become due to or on behalf of
Seller thereunder, and all of the purchase options, renewal options, guaranties,
security agreements, pledge agreements and other agreements, letters of credit,
recourse agreements, documents and instruments relating to the Paper.
Seller hereby constitutes and appoints the Buyer, its successors and
assigns, as Seller's true and lawful attorney and attorneys-in-fact, with full
power of substitution, in Seller's name and stead, but on behalf and for the
benefit of the Buyer, its successors and assigns to demand and receive any and
all of the Paper, and to give receipts and releases for an in respect of the
same, and any part thereof, to execute, endorse and deliver in Seller's name
place and stead, all instruments necessary to transfer legal and beneficial
title to Buyer of all the Paper and to execute, acknowledge and deliver such
other instruments in writing of whatever kind and nature, and to do all acts and
things as may be necessary or appropriate to vest in Buyer the rights and
benefits with respect to the Paper and acquired under the Amended and Restated
Master Sale of Chattel Paper and Security Agreement by and among Buyer and
Seller, including, without limitation, endorsing the name of Seller upon any
document or instrument (including, without limitation, UCC financing statements)
evidencing or relating to the Paper or any lien with respect to the Paper, and
upon any checks, notes, acceptances, money orders, drafts or any other payment
relating to or constituting proceeds of any of the foregoing. Seller hereby
declares that the foregoing powers are coupled with an interest and are and
shall be irrevocable by Seller or by its dissolution or in any manner or for any
reason whatsoever.
IN WITNESS WHEREOF, the Seller has executed this assignment this 19th
day of March, 1996.
[___________________]
By:_________________
25
<PAGE>
Title: President
Acknowledged:
EUROPEAN AMERICAN BANK
By: _______________________
Title: Senior Vice President
26
<PAGE>
EXHIBIT B
CERTIFICATE OF AUTHORITY OF SELLER
The undersigned hereby certifies to European American Bank ("EAB")
---
that the following resolutions were duly adopted by the Board of Directors of
_______________________________________, a corporation existing under the laws
of Massachusetts (the "CORPORATION"), [by unanimous written consent dated at
-----------
which meeting a quorum was present and acting throughout], that the same have
not been modified or rescinded and are not in conflict with any provision of the
Certificate of Incorporation, By-Laws or any agreement of the Corporation:
"RESOLVED, that this Corporation is authorized and empowered (a) to
sell and assign to European American Bank ("EAB") from time to time
---
such existing and future equipment leases, installment sales contracts
and/or other chattel paper (collectively, "PAPER") between this
-----
Corporation (or other parties) and various debtors, to be unsecured or
to be secured by equipment and/or other collateral, and/or (b) to sell
to EAB from time to time the equipment covered by Paper, and/or (c) to
borrow money from EAB from time to time, with such borrowing to be
unsecured or to be secured by Paper, equipment and/or other collateral
(including, without limitation, in each case, the sale of Paper and/or
other property now or hereafter owned by this Corporation, the
borrowing of funds and the granting of security interests in property
of every description belonging to this Corporation), all such
transactions to be on such terms and conditions as may be mutually
agreed from time to time between this Corporation and EAB, and each
and any officer of this Corporation is authorized,in the name and on
behalf of this Corporation, to execute and deliver to EAB a Master
Sale of Chattel Paper and Security Agreement, a Sale and Assignment,
one or more Loan Receipts, and/or such other promissory notes, chattel
mortgages, security agreements, financing statements, bills of sale
and/or other agreements, instruments and documents
27
<PAGE>
in connection with such transactions and all supplements,
amendments, modifications and restatements thereto,
containing such terms and conditions as may be approved by
the officer executing such document, such officer's
execution thereof to be deemed conclusive evidence of such
approval and of such officer's authority to do so, and it
is further
RESOLVED, that each and any officer of this Corporation is
authorized, in the name and on behalf of this Corporation,
to execute and deliver to EAB such other documents and take
such other actions as such officer may deem necessary or
advisable to effectuate and perform the transactions
contemplated by the foregoing resolution, and the Secretary
or any Assignment Secretary of this Corporation is
authorized to certify a copy of these resolutions to
Lessor."
The undersigned further certifies that (a) annexed hereto as Exhibits
"A" and "B", respectively, are true, correct and complete copies of the
Certificate of Incorporation and By-Laws of the Corporation, as amended to date,
and (b) set forth below are the names and genuine signatures of certain officers
of the Corporation each of whom is duly elected, qualified and currently holds
the respective office(s) appearing beside such name:
OFFICE NAME SIGNATURE
- ------ ---- ---------
President Paul Gass ____________________
Signed and sealed this ____ day of March, 1996.
(Corporate Seal) ___________________________________
(Secretary)
The undersigned, the President of the Corporation, hereby certifies to
EAB that the above is the signature of _____________, the duly elected,
qualified and currently serving Secretary of the Corporation.
___________________________
28
<PAGE>
Paul Gass
29
<PAGE>
EXHIBIT 10.44
FFCCB&DRAFT
6/27/97
SEC0ND AMENDMENT
TO
AMENDED AND RESTATED
MASTER SALE OF CHATTEL PAPER
AND SECURITY AGREEMENT
SECOND AMENDMENT (this "Second Amendment") dated as of June 30, 1997 to the
AMENDED AND RESTATED MASTER SALE OF CHATTEL PAPER AND SECURITY AGREEMENT (the
"Original Agreement") dated as of March 21, 1996, as amended prior to the date
hereof among EUROPEAN AMERICAN BANK ("Buyer"), BANKVEST CAPITAL CORP.
("BankVest"), and LEASEVEST CAPITAL CORP. ("LeaseVest"), jointly and severally,
("BankVest" and "LeaseVest", each a "Seller" and, collectively, the "Sellers")
each a Massachusetts corporation with its principal place of business at 114
Turnpike Road, Westboro, Massachusetts 01581.
RECITALS
The Buyer and the Seller desire to amend the Agreement on the terms set
forth herein.
Accordingly, the Seller and the Buyer hereby agree as follows:
1. Amendments. The Original Agreement is hereby amended as follows:
----------
A. The first sentence of Section 2(a) is hereby deleted in its
entirety and the following substituted in place thereof:
Subject to the terms and conditions set forth in this Agreement,
Seller hereby agrees to sell and Buyer hereby agrees to purchase
from time to time during the period commencing May 9, 1995 and
ending on November 30, 1997 or such later date as Buyer and
Seller may mutually agree in writing (such date, the "Commitment
Expiration Date") Paper, the sum of the unpaid rental payments in
respect of which when added to the sum of unpaid rental with
respect to all Paper purchased by Buyer from Seller shall not
exceed $15,000,000 (the "Commitment"). The Commitment
<PAGE>
shall include the aggregate unpaid rental payments from time to
time of Paper purchased by Buyer from Seller prior to the date
hereof.
B. Section 5 is hereby amended to add new clauses (j) through (m) which
shall read in their entirety as follows:
(j) The Sellers shall maintain at all times an Adjusted Debt to
Tangible Net Worth ratio on a consolidated basis, measured quarterly as the
last day of each fiscal quarter, of not more than 6 to 1.
(k) The Sellers shall have and maintain at all times a
Delinquency Rate measured monthly as of the last day of each calendar
month, of no greater than seven (7%) percent of the Net Lease Receivables
comprising the Sellers' entire combined lease portfolio.
(l) The Sellers shall have and maintain net income on a
consolidated basis, calculated on a rolling four quarter basis and measured
quarterly at the end of each fiscal quarter of not less than one ($1.00)
dollar provided that the Sellers shall not permit a net loss to occur
during any one fiscal quarter in excess of one hundred thousand
($100,000.00) dollars.
(m) The Sellers have a consolidated Tangible Net Worth on the
date hereof of at least $6.0 million. As of the end of each fiscal
quarter, the Sellers will have a Tangible Net Worth equal to at least the
amount set forth below:
<TABLE>
<CAPTION>
Year Fiscal Year Ending Minimum Tangible Net Worth
----------------------- --------------------------
<S> <C> <C>
Year 1 June 30, 1997 $6 million
Year 2 June 30, 1998 $6 million plus 50% of
Net Income for Year 1.
Year 3 June 30, 1999 Minimum Tangible Net
Worth required for Year 2
plus 50% of Net Income
for Year 2.
Year 4 June 30, 2000 Minimum Tangible Net
Worth required for Year 3
plus 50% of Net Income
2
<PAGE>
<CAPTION>
for year 3.
Year 5 June 30, 2001 Minimum Tangible Net
Worth required for Year 4
plus 50% of Net Income
for Year 4.
Year 6 June 30, 2002 Minimum Tangible Net
Worth required for Year 5
plus 50% of Net Income
for Year 5.
Year 7 June 30, 2003 Minimum Tangible Net
Worth required for Year 6
plus 50% of Net Income
for Year 6.
Year 8 June 30, 2004 Minimum Tangible Net
Worth required for Year 7
plus 50% of Net Income
for Year 7.
</TABLE>
Satisfaction of such minimum Tangible Net Worth requirement will be tested at
the end of each fiscal quarter and, for such purpose, losses shall be
disregarded so that the required minimum Tangible Net Worth at the end of any
fiscal year shall not be less than the required minimum Tangible Net Worth for
the preceding fiscal year.
C. Article I is hereby amended to add the following defined terms in
appropriate alphabetical order:
"Adjusted Debt to Tangible Net Worth Ratio" shall mean at any time the
ratio of (i) total senior liabilities less Non-Recourse debt to (ii) Tangible
Net Worth.
"Delinquency Rate" shall mean the percentage of the Sellers' entire
combined lease portfolio expressed in dollars relating to leases which are more
than 30 days' contractually delinquent expressed as a percentage of the
aggregate Net Lease Receivables.
"Liabilities" shall mean all liabilities of every kind of the Sellers' as
would be shown on the Sellers' consolidated financial statements prepared in
accordance with GAAP.
"Net Lease Receivables" shall mean the aggregate of the scheduled future
lease payments comprising the Sellers' entire combined lease portfolio plus the
estimated residual value of the personal property leased pursuant thereto, plus
indirect initial cost, less unearned lease income and allows for doubtful
accounts.
3
<PAGE>
"Non-Recourse Debt" shall mean all liabilities of the Sellers' which are
non-recourse in nature and treated as non-recourse obligations on the Sellers'
financial statements.
"Senior Liabilities" shall mean all Liabilities of Sellers shown on the
consolidated financial statements of BankVest other than subordinated
Liabilities.
"Tangible Net Worth" shall mean as of the date of determination thereof,
the excess of (a) all assets of the Sellers determined on a consolidated basis
in accordance with GAAP over all liabilities of the Sellers determined on a
consolidated basis in accordance with GAAP, minus (c) the sum of (i) the book
value of all intangibles determined in accordance with GAAP, including goodwill
and intellectual property and (ii) any write-up of the book value of the assets
since the most recent audited financial statements in existence on the date
hereof.
D. Section 10 is hereby amended to add a new clause (c) which shall read
in its entirety as follows:
(c) In the event the Seller breaches any of the covenants contained in
Section 5(j) through Section 5(m) (the "Financial Covenants"), then Sellers
shall, immediately upon Buyer's demand, remit to Buyer an amount equal to the
difference between (x) the Ultimate Net Loss of Sellers incurred by the Sellers
immediately prior to such breach and (y) the maximum Ultimate Net Loss which may
be incurred by Sellers in each case as determined in accordance with Section 11
of the Agreement, in each case of (x) and (y) determined solely with respect to
Paper purchased on or after the date hereof (the "Escrow Amount"). The Buyer
shall deposit the Escrow Amount in an interest-bearing account at a branch of
the Buyer designated "BankVest Capital Corp./LeaseVest Capital Corp. special
escrow account", which shall be an account under the sole dominion and control
of Buyer. Proceeds of the account shall be used to fund Borrower's liabilities
under this Agreement, including without limitation, Section 9 and Section 11 of
the Agreement. On the first day of each month, the Buyer will remit to the
Seller an amount by which the funds in the account exceed the Escrow Amount
determined as of the last day of the preceding month or the Seller will remit to
Buyer for credit to the account an amount by which the Escrow Amount as so
determined exceeds the funds in the account. Buyer shall have a continuing lien
on all amounts in the account. Upon the earlier of (i) Sellers' compliance with
all of the Financial Covenants, and (ii) the date on which Sellers' obligations
under the Agreement have been paid in full and satisfied the Buyer shall release
the remaining funds held in the account to the Seller. Such release under
clause (i) shall not impair the Buyer's right
4
<PAGE>
to enforce this clause (c) with respect to any subsequent breach of any
Financial Covenant.
3. Miscellaneous. (a) Except as expressly modified hereby, the
--------------
Original Agreement shall remain in full force and effect and the terms thereof
are ratified and confirmed.
(b) This Second Amendment shall be governed by and construed in
accordance with the laws of the State of New York.
(c) This Second Amendment may be executed in two or more
counterparts each of which shall be deemed an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF the parties have executed this Second Amendment as
of the date first above-written.
EUROPEAN AMERICAN BANK
By:________________________
Title:
BANKVEST CAPITAL CORP.
By:________________________
Title:
LEASEVEST CAPITAL CORP.
By:________________________
Title:
5
<PAGE>
EXHIBIT 10.45
THIRD AMENDMENT
TO
AMENDED AND RESTATED
MASTER SALE OF CHATTEL PAPER
AND SECURITY AGREEMENT
THIRD AMENDMENT (this "Third Amendment") dated as of January ___, 1998, to
the AMENDED AND RESTATED MASTER SALE OF CHATTEL PAPER AND SECURITY AGREEMENT
(the "Original Agreement") dated as of March 21, 1996, as amended prior to the
date hereof, among EUROPEAN AMERICAN BANK ("Buyer"), BANKVEST CAPITAL CORP.
("BankVest"), and LEASEVEST CAPITAL CORP. ("LeaseVest"), jointly and severally
("BankVest" and "LeaseVest" each a "Seller" and, collectively, the "Sellers"),
each a Massachusetts corporation with its principal place of business at 200
Nickerson Road, Marlboro, Massachusetts, 01752.
RECITALS
The Buyer and the Seller desire to amend the Original Agreement on the
terms set forth herein.
Accordingly, the Seller and the Buyer hereby agree as follows:
1. Amendments. The Original Agreement is hereby amended as follows:
----------
(a) The date "November 30, 1997" in Section 2(a) is hereby deleted,
and the date "November 30, 1998" is substituted in place thereof.
(b) For purposes of Section 13(c), Seller's principal place of
business is, effective as of January 19, 1998, located at 200 Nickerson Road,
Marlboro, Massachusetts, 01752.
2. Miscellaneous. (a) Except as expressly modified hereby, the Original
--------------
Agreement shall remain in full force and effect and the terms thereof are
ratified and confirmed.
(B) THIS THIRD AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(c) This Third Amendment may be executed in two or more counterparts,
each of which shall be deemed an original but all of which taken together shall
constitute one and the same agreement.
<PAGE>
IN WITNESS WHEREOF the parties have executed this Third Amendment as of the
date first above written.
EUROPEAN AMERICAN BANK
By:________________________
Title:
BANKVEST CAPITAL CORP.
By:________________________
Title:
LEASEVEST CAPITAL CORP.
By:________________________
Title:
2
<PAGE>
EXHIBIT 10.48
<TABLE>
<S> <C>
ARTICLE I DEFINITIONS............................................................................................ 1
-----------
ARTICLE II ADVANCES AND TERMS OF PAYMENT......................................................................... 5
-----------------------------
2.1 Discretionary Borrowing/Lending................................................................ 5
-------------------------------
2.2 The Facility................................................................................... 5
------------
2.2.1 Amount................................................................................ 5
------
2.2.2 Procedure for Borrowing............................................................... 6
-----------------------
2.2.3 Reborrowing........................................................................... 6
-----------
2.3 Extension of Facility Expiration Date.......................................................... 6
-------------------------------------
2.4 Interest Rate, Computation..................................................................... 6
--------------------------
2.5 Payments....................................................................................... 6
--------
2.6 Prepayment..................................................................................... 7
----------
2.6.1 Voluntary............................................................................. 7
---------
2.6.2 Mandatory Prepayments/No Prepayment Premium........................................... 7
-------------------------------------------
2.6.3 Additional Payments................................................................... 7
-------------------
2.6.4 Involuntary Prepayment................................................................ 7
----------------------
2.7 Late Charges; Default Rate..................................................................... 7
--------------------------
2.8 Payment after Borrower Event of Default........................................................ 8
---------------------------------------
2.9 Maximum Interest............................................................................... 8
----------------
2.10 Method of Payment; Good Funds.................................................................. 8
-----------------------------
ARTICLE III NOTE; SECURITY INTEREST.............................................................................. 8
-----------------------
3.1 Note........................................................................................... 8
----
3.2 Grant of Security Interest..................................................................... 8
--------------------------
3.3 Substitution of Contracts...................................................................... 9
-------------------------
ARTICLE IV CONDITIONS OF CLOSING; ADVANCES....................................................................... 9
-------------------------------
4.1 Conditions of Closing.......................................................................... 9
---------------------
4.1.1 Representations and Warranties........................................................ 9
------------------------------
4.1.2 Delivery of Documents................................................................. 9
---------------------
4.1.3 Security Interests.................................................................... 9
------------------
4.1.4 Opinion of Counsel.................................................................... 9
------------------
4.1.5 Performance; No Default............................................................... 9
-----------------------
4.1.6 Approval of Loan Documents and Security Interests..................................... 9
-------------------------------------------------
4.1.7 Material Adverse Change............................................................... 10
-----------------------
4.2 Conditions of Advances......................................................................... 10
----------------------
4.2.1 Representations and Warranties........................................................ 10
------------------------------
4.2.2 Delivery of Documents................................................................. 10
---------------------
4.2.3 Security Interests.................................................................... 10
------------------
4.2.4 Additional Conditions................................................................. 10
---------------------
ARTICLE V REPRESENTATIONS AND WARRANTIES......................................................................... 10
------------------------------
ARTICLE VI AFFIRMATIVE COVENANTS................................................................................. 12
---------------------
ARTICLE VII NEGATIVE COVENANTS................................................................................... 14
------------------
ARTICLE VIII BORROWER AND CONTRACT EVENTS OF DEFAULT -- DEFINITIONS AND REMEDIES................................. 14
-------------------------------------------------------------------
8.1 Borrower Events of Default -- Definition....................................................... 14
----------------------------------------
8.2 Borrower Events of Default -- Remedies......................................................... 16
--------------------------------------
8.3 Contract Events of Default..................................................................... 16
--------------------------
8.3.1 Definition............................................................................ 16
----------
8.3.2 Acceleration.......................................................................... 16
------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
8.3.3 Contract Event of Default -- Remedies................................................. 16
-------------------------------------
8.4 Power of Attorney.............................................................................. 17
-----------------
8.5 Expenses....................................................................................... 18
--------
8.6 Application of Funds........................................................................... 18
--------------------
ARTICLE IX CLOSING............................................................................................... 18
-------
ARTICLE X MISCELLANEOUS......................................................................................... 18
-------------
10.1 Rights, Remedies and Powers.................................................................... 18
---------------------------
10.2 Modifications, Waivers and Consents............................................................ 18
-----------------------------------
10.3 Communications................................................................................. 18
--------------
10.4 Severability................................................................................... 19
------------
10.5 Survival....................................................................................... 19
--------
10.6 Attorneys' Fees and Other Expenses............................................................. 19
----------------------------------
10.7 Indemnity...................................................................................... 19
---------
10.8 Binding Effect................................................................................. 20
--------------
10.9 Assignments; Participations.................................................................... 20
---------------------------
10.10 Further Assurances............................................................................. 20
------------------
10.11 GOVERNING LAW, CONSENT TO JURISDICTION AND SERVICE OF PROCESS.................................. 20
-------------------------------------------------------------
10.12 WAIVER OF JURY TRIAL........................................................................... 20
--------------------
</TABLE>
<PAGE>
LOAN AND SECURITY AGREEMENT
---------------------------
(FULL RECOURSE)
This Loan and Security Agreement is entered into as of August 7, 1995 between
BANKVEST CAPITAL CORP. ("Borrower"), a Massachusetts corporation, having its
principal place of business at 114 Turnpike Road, Westboro, Ma 01581, and HELLER
FINANCIAL, INC., a Delaware corporation ("Lender").
PRELIMINARY STATEMENT:
---------------------
Borrower desires to borrow certain sums from Lender to be used to finance
Borrower's leasing and/or lending activities of certain Eligible Equipment (this
and all other capitalized terms are defined in Section 1.1 below). Lender is
willing to provide such funds, subject to the terms and conditions set forth
below.
ARTICLE I
DEFINITIONS
-----------
1.1 Definitions. As used in this Agreement and in the other Loan Documents,
-----------
unless otherwise expressly indicated herein or therein, the following terms
shall have the following meanings (such definitions to be applicable both to the
singular and plural terms defined):
Acquisition Cost: all costs and expenses incurred by Borrower in
----------------
connection with the acquisition of any Eligible Equipment, including, without
limitation, sales or use taxes, freight or installation costs, and license
fees, but excluding any down payments made by End-User.
Advance: a loan which is part of the Facility.
-------
Agreement: this Loan and Security Agreement, as amended or supplemented
---------
at any time.
Amortization Schedule: a schedule approved by Lender for the repayment of
---------------------
each Advance.
Approved Contract Term: without the prior written approval of Lender, a
----------------------
period of time not less than Twenty-Four (24) months and not more than Sixty
(60) months.
Assignment: the assignment of Contracts, and any Lien applicable thereto
----------
in the form of Exhibit A executed by Borrower in favor of Lender.
Borrower Event of Default: any Events of Default described in Section
-------------------------
8.1.
Borrower Lien: a Lien on Collateral granted by an End-User to Borrower,
-------------
which Lien has been assigned by Borrower to Lender pursuant to an Assignment.
Borrower's Obligations: (i) all liabilities, obligations and covenants
----------------------
imposed upon Borrower pursuant to the terms of the Loan Documents, and (ii)
all costs of litigation, collection, reasonable attorneys' fees and other
costs expended or incurred in connection with the enforcement of Lender's
rights hereunder and with respect to the Contracts and the Facility
Equipment.
Business Day: any day other than (i) a Saturday, (ii) Sunday or (iii)
------------
other day on which The First National Bank of Chicago, Chicago, Illinois is
closed.
Casualty: an event in which any item of Facility Equipment or any portion
--------
thereof is lost, damaged (and such damage cannot reasonably be repaired by
Borrower or an End-User of such Facility Equipment within 60 days),
destroyed, stolen, confiscated, requisitioned or condemned regardless of
cause.
<PAGE>
Casualty Payments: all proceeds of the Collateral which arise out of any
-----------------
Casualty, including, without limitation, insurance claims, tort claims, or
reimbursement payments with respect to claims for indemnity.
Certificate of Acceptance: a certificate of delivery and acceptance
-------------------------
executed by an End-User pursuant to a Contract with respect to Facility
Equipment, substantially in the form included in Group Exhibit C.
Closing: the execution by Borrower and Lender of the Loan Documents.
-------
Closing Certificate: a certificate in the form of Exhibit D executed by a
-------------------
Responsible Officer on behalf of Borrower.
Closing Date: the date upon or as of which the Closing occurs.
------------
Collateral: the Property described in Section 3.2.
----------
Collection Agent: XEROX ADMINISTRATIVE SERVICES, or any successor entity
----------------
authorized to service, administer and collect remittances due from End-Users
under Facility Contracts.
Contract: a lease of Eligible Equipment by and between Borrower, as
--------
lessor, and an End-User, as lessee, which contains no end-of-term purchase
option, or contains an end-of-term purchase option at not less than eight
percent (8%) of the related Acquisition Cost.
Contract Event of Default: the Event of Default described in Section
-------------------------
8.3.1.
Contract Funding Request: a request for an Advance in the form of Exhibit
------------------------
H delivered by Borrower to Lender, with all attachments as specified therein.
Contract Payment Letter: a letter in the form of Exhibit I.
-----------------------
Contract Proceeds: funds received by Borrower with respect to any
-----------------
Facility Contract or any Facility Equipment which is the subject of a
Facility Contract.
Default Rate: an annual rate equal to 2% plus the Facility Rate.
------------
Default Rate Period: a period of time commencing on the date that Lender
-------------------
declares in writing to Borrower that an Event of Default has occurred and
that the Default Rate is applicable and ending on the date that such Event of
Default is cured or waived.
Disbursement Date: any date on or after the Closing Date upon which the
-----------------
proceeds of any Advance are disbursed.
Eligible Contract: a Contract (I) that is a legal, valid, binding, non-
-----------------
cancelable and enforceable obligation of the End-User, (II) that provides
either for the retention of title to the Equipment by the Borrower, (III)
under which no amount is past due more than thirty (30) days, (IV) as to
which the End-User is not otherwise in default, (V) employing substantially
standard pricing and documentation (including, without limitation, provisions
concerning payment terms, assignment, maintenance, termination, renewal,
insurance and stipulated loss provisions) which have been approved by Lender,
(VI) under which the End-User's obligations are subject to no conditions
precedent which remain unperformed, (VII) which pertains to Eligible
Equipment, (VIII) where the End-User is an Eligible End-User, (IX) which has
been originated by Borrower as lessor, (X) which is for an Approved Contract
Term, (XI) which contains no end-of-term purchase option or contains an end-
of-term purchase option at not less than eight percent (8%) of the related
Eligible Equipment Acquisition Cost, (XII) as to which the applicable
Facility Funding Amount will not exceed the sum of Seventy-Five Thousand
Dollars ($75,000.00) nor be less than Ten Thousand Dollars
<PAGE>
($10,000.00) without the prior written approval of Lender, (XIII) which
conforms to credit underwriting standards which shall have previously been
agreed to in writing between Borrower and Lender, and (XIV) which is in all
other respects acceptable to Lender.
Eligible End-User: an End-User (I) which is not in bankruptcy or
-----------------
receivership or subject to a reorganization proceeding of any kind or
insolvent, (II) which is not in default or breach under any of the terms of
the applicable Contract, and (III) which, pursuant to underwriting standards
jointly agreed upon in writing between Borrower and Lender, is a financially
responsible and creditworthy commercial or institutional entity (other than a
Governmental Body).
Eligible Equipment: Machine tool, printing, woodworking, office
------------------
automation, automotive after-market and other equipment (I) which is new or
used, (II) which is in good condition, repair and working order, (III) which
is insured in the manner provided in the applicable Contract, (IV) (A) which
is owned by Borrower free and clear of all Liens except a Lender Lien, or (B)
in which the End-User thereof has granted Borrower a security interest free
and clear of all Liens except Permitted Liens, (V) which is located within
the continental United States, (VI) which is subject to an Eligible Contract,
and (VII) which is otherwise approved by Lender.
End-User: the end-user under a Contract.
--------
Equipment: equipment which has been approved by Lender, free and clear of
---------
all liens and encumbrances, together with all substitutions and replacements
for such equipment, and all accessories, attachments, parts, upgrades,
features and peripheral equipment now or hereafter attached to or used in
connection therewith.
Event of Default: any of the Borrower Events of Default or Contract Event
----------------
of Default.
Evidence of Insurance: either (I) an original certificate of insurance,
---------------------
(II) documentation sufficient to establish coverage under a previously
approved policy of Borrower, or (III) if approved in writing by Lender,
evidence of self-insurance by an End-User under a Facility Contract.
Facility: the Advances to be made by Lender to Borrower pursuant to
--------
subsections 2.2.1.
Facility Contract: an Eligible Contract which is subject to an Advance.
-----------------
For the purposes of this Agreement, all references to a Facility Contract
which takes the form of a master Lease shall be deemed to include any
schedules thereunder.
Facility Equipment: any Equipment which is the subject of a Facility
------------------
Contract.
Facility Expiration Date: August 7, 1996, or any subsequent date to which
------------------------
the terms and conditions of this Agreement shall have been extended as of any
time in accordance with the provisions of Section 2.3 of this Agreement.
Facility Funding Amount: with respect to each Facility Contract which is
-----------------------
proposed to be made the subject of an Advance, the lesser of (I) the present
value of all payments due thereunder (with the exception of any residuals or
purchase options) for the Approved Contract Term of each such Facility
Contract, using a discount rate to determine such present value equal to the
Term Facility Rate, or (II) 100.00% of the Acquisition Cost for each item of
Facility Equipment.
Facility Funding Period: a period of time from the Closing Date until
-----------------------
August 7, 1996 or a date subsequent thereto pursuant to Section 2.3 hereof.
Facility Note: a full recourse promissory note in the form of Exhibit H
-------------
executed by Borrower in favor of Lender.
3
<PAGE>
Facility Rate: with respect to each Advance, a fixed per annum interest
-------------
rate equal to the sum of (i) 3.25%; and (ii) the weekly average U.S. Treasury
Constant Maturities for a Treasury Note having approximately an equal term as
the weighted average term of the Contracts subject to the applicable Advance,
as reported by the Federal Release for the calendar week in which funding of
an Advance takes place.
Federal Release: Federal Reserve Statistical Release No. H.15(519) under
---------------
the caption "U.S. Government Securities/Treasury Constant Maturities" or any
successor publication providing information as to the yields of Treasury
Notes.
GAAP: generally accepted accounting principles as in effect from time to
----
time, which shall include the official interpretations thereof by the
Financial Accounting Standards Board, consistently applied.
Good Funds: United States dollars available to Lender in Federal funds at
----------
or before 2:00 p.m. Chicago time on a Business Day.
Governmental Body: any foreign, federal, state, municipal or other
-----------------
government, or any department, commission, board, bureau, agency, public
authority or instrumentality thereof or any court or arbitrator.
Incipient Default: any event or condition which, with the giving of
-----------------
notice or the lapse of time, or both, would become an Event of Default.
Intangible Collateral: as defined in Section 3.2(b).
---------------------
Lease: any lease agreement or master lease agreement pertaining to
-----
Equipment between Borrower, as lessor and another Person, as lessee.
Lender Lien: the Lien on the Collateral granted by Borrower to Lender
-----------
pursuant to Article III of this Agreement.
Lien: any mortgage, deed of trust, hypothecation, pledge, security
----
interest, encumbrance, lien or charge of any kind (including any agreement to
give any of the foregoing), any conditional sale or other title retention
agreement or any lease in the nature of any of the foregoing.
Loan Documents: this Agreement, the Note, the Assignments, the Contract
--------------
Funding Requests, the Closing Certificate, UCC financing statements, and all
other documents, instruments, and certificates executed by Borrower pursuant
to this Agreement.
Loan Repayment Amount: with respect to an Advance at any time, the
---------------------
aggregate unpaid principal of, and accrued interest (including any interest
accrued at the Default Rate) on, such Advance.
Lockbox: the arrangement with the Collection Agent, who will act as the
-------
agent for collection of all remittances and proceeds due to Borrower from
End-Users subject to Facility Contracts, and which shall be identified as
follows:
Administration Center
P.O. Box 23870
Rochester, New York 14692-3870
Lockbox Agreement: the agreement among Borrower, Collection Agent and
-----------------
Lender, substantially in the form attached hereto as Exhibit F, which shall
set forth the terms, conditions and provisions of the Lockbox.
Note: the Facility Note.
----
4
<PAGE>
Ordinary Prepayment Premium: (i) Four Percent (4%) of the amount prepaid
---------------------------
if prepaid prior to the first anniversary of the related Disbursement Date,
(ii) Three Percent (3%) of the amount prepaid if prepaid after the first
anniversary to the second anniversary of the related Disbursement Date, (iii)
Two Percent (2%) of the amount prepaid if prepaid after the second
anniversary to the third anniversary of the related Disbursement Date; and
(iv) One Percent (1%) of the amount prepaid if prepaid after the third
anniversary of the related Disbursement Date.
Permitted Liens: any of the following Liens: (I) the Lender Lien; (II)
---------------
the Contracts; (III) any Borrower Lien; (IV) any Liens expressly subordinate
to (i), (ii) and/or (iii) above; and (V) Liens for taxes or assessments and
similar charges, which either are (A) not delinquent or (B) being contested
diligently and in good faith by appropriate proceedings, and as to which
Borrower has set aside adequate reserves on its books.
Permitted Substitution: the substitution by Borrower of an Eligible
----------------------
Contract for a Facility Contract, in accordance with the provisions of
Section 3.3.
Person: any individual, sole proprietorship, partnership, joint venture,
------
trust, unincorporated organization, association, corporation, institution,
entity, party or Governmental Body.
Property: all types of real, personal or mixed property and all types of
--------
tangible or intangible property.
Responsible Officer: any of the President, Senior Vice President -
-------------------
Operations, Chief Financial Officer, Clerk, Senior Vice President or Vice
President of Borrower.
Sale Proceeds: the gross proceeds received by Borrower with respect to
-------------
any sale of Facility Equipment, less any remarketing fees paid by Borrower
with respect to any such sale.
Treasury Notes shall mean unsecured promissory notes issued, from time
--------------
to time, as an obligation of the United States Government by the Secretary of
the Treasury in various denominations and with stated maturity dates from the
date of issue.
UCC: the Uniform Commercial Code.
---
U.S. Treasuries Constant Maturities: as defined in the Federal Release.
-----------------------------------
1.2 Time Periods. In this Agreement and the other Loan Documents, in the
------------
computation of periods of time from a specified date to a later specified date
(i) the word "from" means "from and including," (ii) the words "to" and "until"
each mean "to, but excluding" and (iii) the words "through," "end of" and
"expiration" each mean "through and including." All references in this Agreement
and the other Loan Documents to "month," "quarter" or "year" shall be deemed to
refer to a calendar month, quarter or year.
1.3 Accounting Terms. Unless otherwise specified in this Agreement, all
----------------
accounting terms used herein shall be construed, all accounting determinations
hereunder shall be made, and all financial statements required to be delivered
pursuant hereto shall be prepared in accordance with GAAP.
1.4 References. All references in this Agreement to an "Article," "Section,"
----------
"subsection," "subparagraph," "clause" or "Exhibit," unless otherwise indicated,
shall be deemed to refer to an Article, Section, subsection, subparagraph,
clause or Exhibit, as applicable, of or to this Agreement.
1.5 Lender's Discretion. Whenever the terms "satisfactory to," "determined
-------------------
by," "acceptable to," "shall elect," "shall request," or similar terms are used
in this Agreement or any of the other Loan Documents to apply to Lender, except
as otherwise specifically provided herein or therein, such terms shall mean
satisfactory to, at the election of, determined by, acceptable to, or requested
by, Lender, in its sole, but reasonable, discretion.
1.6 Statements as to Knowledge. Any statements, representations or warranties
--------------------------
which are based upon the best knowledge of Borrower shall be deemed to have been
made after due inquiry with respect to the matter in question.
5
<PAGE>
ARTICLE II
ADVANCES AND TERMS OF PAYMENT
-----------------------------
2.1 Discretionary Borrowing/Lending. Notwithstanding the other provisions of
-------------------------------
this Agreement, Advances hereunder shall be made only when both (i) Borrower, in
its sole discretion, desires to borrow money from Lender, and (ii) Lender, in
its sole discretion, desires to loan money to Borrower; it being agreed that
this Agreement shall not be construed as imposing any duty on Borrower to borrow
from Lender, nor any duty on Lender to loan to Borrower.
2.2 The Facility.
------------
2.2.1 Amount. The Facility is a term loan in the maximum amount
------
outstanding at any one time of up to Two Million Dollars ($2,000,000.00)
which, subject to the provisions of subsection 2.2.2 shall be made available
to Borrower by Lender during the Facility Funding Period.
2.2.2 Procedure for Borrowing. Subject to the satisfaction of the terms
-----------------------
and conditions set forth in Sections 2.1 (Discretionary Borrowing/Lending),
2.2 (The Facility), 4.1 (Closing) and 4.2 (Advances), on or after the Closing
Date Lender shall disburse the proceeds of any Advance as Borrower may
request in the related Contract Funding Request. The Contract Funding Request
shall specify: (A) the date such Advance is to be made, which shall be (I) a
Business Day not less than 2 Business Days after the delivery to Lender of
such Contract Funding Request, or (II) with respect to any Advance requiring
Lender's written approval, a Business Day not less than 5 Business Days after
the delivery to Lender of such Contract Funding Request, and (B) the amount
of Advance, which shall not exceed the applicable Facility Funding Amount,
and without the written consent of Lender, be not less than $250,000.00 and
no more than $1,000,000.00. Lender shall not be obligated to make any
Advance (I) if an Incipient Default or Event of Default exists or will occur
if the requested Advance is made, (II) any more frequently than once each
month, or (III) with respect to any Contract which Lender determines is not
an Eligible Contract or for an End-User which Lender determines is not an
Eligible End-User.
Until the first two Advances have been completed hereunder in a manner
satisfactory to Lender, Lender shall retain the discretion, as set forth in
subsection (xiv) of the definition of Eligible Contract, in the reasonable
exercise of its credit judgment, to reject any proposed Contract for an
Advance hereunder. Thereafter, with respect to any requested Advance, so long
as (1) each Contract submitted meets all of the other requirements (i)
through and including (xiii) of the definition of Eligible Contract; and (2)
---
the Facility Funding Amount with respect to each Contract is less than
$30,000.00; and (3) the amount of the requested Advance is between
---
$250,000.00 and $500,000.00, Lender's approval shall no longer be required
for any Contract subject to the requested Advance to be deemed an Eligible
Contract, but the provisions of Section 2.1 hereof shall continue to apply.
2.2.3 Reborrowing. Borrower shall be entitled to reborrow any portion
-----------
of the Advance which is repaid or prepaid.
2.3 Extension of Facility Expiration Date. Borrower may, not less than sixty
-------------------------------------
(60) days, nor more than one hundred twenty (120) days prior to the Facility
Expiration Date, request Lender to extend the Facility Expiration Date for one
additional calendar year. In the event Lender does not respond to Borrower's
request by thirty (30) days prior to the Facility Expiration date, Borrower's
request shall be deemed denied. In addition, Lender may, at any time, in its
sole discretion, consider extending the Facility Expiration Date. In the event
that Lender elects to make an Advance hereunder pursuant to an Contract Funding
Request of Borrower past the Facility Expiration Date, the Facility Expiration
Date and the Facility Funding Period shall be deemed to have been extended
through and including the date such Advance is made. Notwithstanding the
foregoing, however, all obligations under this Agreement shall survive any
expiration or termination of this Agreement and/or the termination of any
Facility Contract.
6
<PAGE>
2.4 Interest Rate, Computation. Each Advance shall bear interest at the
--------------------------
Facility Rate, which shall be computed on the basis of a year consisting of 360
days and charged for the actual number of days during the period for which
interest is being charged.
2.5 Payments. Provided the Borrower is not in default, Borrower, at its sole
--------
cost and expense, through the Collection Agent, shall be responsible for the
billing and collecting of the payments due under any Contract(s). All billing
with respect to Facility Contracts shall be accomplished by separate invoices
(i.e., not included in invoices to the same End-User for rentals or other
payments due under any other agreement between Borrower and End-User), and shall
direct the End-Users to forward all Facility Contract remittances (including,
but not limited to rents, renewal rents and Casualty Payments) to the Lockbox,
which shall be subject to the Lockbox Agreement. The fees and expenses of such
Lockbox and Collection Agent shall be payable by Borrower. On or before the due
date set forth in each Facility Contract, or the next occurring Business Day,
commencing with the first month following the Advance with respect thereto,
Borrower or Collection Agent shall pay the amounts due under such Facility
Contracts to Lender, whether or not such amounts have been remitted by such End-
Users. All payments made pursuant to this subsection 2.5 shall be applied first,
to any accrued and unpaid fees and expenses then owed by Borrower to Lender;
second, to accrued and unpaid interest then due Lender calculated at the
Facility Rate through the last date of such immediately preceding month, and
third, to principal due Lender on the applicable Advances until paid in full.
2.6 Prepayment.
----------
2.6.1 Voluntary. Borrower may prepay the Facility in whole or in part,
---------
provided that, concurrently with any such optional prepayment, subject to the
provisions of the final sentence of this subsection, Borrower shall pay to
Lender the Ordinary Prepayment Premium; PROVIDED, HOWEVER, that not more
often than once per month, Borrower may prepay that portion of the Facility
attributable to any one Facility Contract without Ordinary Prepayment
Premium, less a rebate of unearned interest, if any, calculated in accordance
with the "Rule of 78's." Not less than 5 Business Days prior to any voluntary
prepayment of the Facility, Borrower shall give notice to Lender of its
intention to prepay, which notice shall state: (I) Borrower's acknowledgment
that its intention to prepay and the notice are irrevocable and constitute
the commitment of Borrower to prepay in accordance therewith, (II) the
Advance to which such prepayment is to be applied, (III) the amount of such
prepayment, and (IV) the date of such prepayment. All prepayment proceeds
shall be applied by Lender as set forth in the last sentence of Section 2.5
hereof.
2.6.2 Mandatory Prepayments/No Prepayment Premium. The following shall
-------------------------------------------
be deemed Mandatory Prepayments and no Ordinary Prepayment Premium shall be
payable with respect thereto:
(a) Contract Proceeds, etc. Borrower shall pay to Lender 100% of
-----------------------
the Contract Proceeds applicable to Facility Contracts and/or Facility
Equipment received by Borrower which constitute (I) Casualty Payments,
(II) Sale Proceeds and (III) any amounts paid by any End-User (A) as a
result of the early termination of any Facility Contract, or (B) in
advance of their scheduled due date(s) under a Facility Contract, except
that, so long as no Incipient Default or Event of Default exists as of
the date of receipt by Borrower of any such payment, such Contract
Proceeds shall be applied as follows:
(A) Casualty Payments pertaining to a Casualty which (I) does
not cause the subject Facility Equipment to be irreparable or
irreplaceable shall be applied (1) first, to the replacement
and/or repair of such subject Facility Equipment, (2) next, to
the payment of Borrower's Obligations then outstanding pertaining
to the portion of the Advance which relates to the subject
Facility Contract (other than accrued and unpaid interest thereon
and the principal balance thereof), (3) next, to the payment of
accrued and unpaid interest on the portion of the Advance which
relates to the subject Facility Contract to the date on which
Lender is in receipt of Good Funds, (4) next, to the payment of
the principal balance of the Advance which relates to the subject
Facility Contract in accordance with the applicable Amortization
Schedule, in the inverse order of the maturity of the
installments shown on such Amortization Schedule and (5) the
remainder, if any, to Borrower or (II) causes the subject
Facility Equipment to be irreparable or irreplaceable, then as
provided in clause (I) preceding, except that the first such
payment shall be applied as described in subclause (2) of such
clause (I), and
7
<PAGE>
(B) Contract Proceeds described in clauses (ii) and (iii) of
subparagraph (a) shall be applied as described in clause (II) of
subparagraph (A) hereof.
(b) Contract Event of Default. Any prepayment by Borrower arising
-------------------------
from Lender's exercise of a remedy for a Contract Event of Default.
2.6.3 Additional Payments. Any prepayment of the Advances pursuant to
-------------------
this Section 2.6 shall be accompanied by payment of all accrued and unpaid
interest on the applicable Advance to the date on which Lender is in receipt
of Good Funds.
2.6.4 Involuntary Prepayment. Any prepayment of the Advances received by
----------------------
Lender resulting from the exercise by Lender of any remedy available to
Lender subsequent to the occurrence of an Event of Default and the
acceleration of Borrower's Obligations shall be deemed to be a prepayment
subject to the terms of subsections 2.6.1 hereof and the applicable Ordinary
Prepayment Premium shall be payable with respect thereto.
2.7 Late Charges; Default Rate. If any payment of principal or interest to
--------------------------
be made by Borrower to Lender under the Facility becomes past due for a period
of 10 days, Borrower shall pay to Lender on demand a late charge of five percent
(5%) of the amount of such overdue payment. In addition, during a Default Rate
Period, Borrower's Obligations pertaining to the Facility shall bear interest at
the Default Rate.
2.8 Payment after Borrower Event of Default. Upon the occurrence and during
---------------------------------------
the continuation of a Borrower Event of Default, all Contract Proceeds
pertaining to Facility Contracts and/or Facility Equipment shall be applied by
Lender in such manner as Lender shall determine.
2.9 Maximum Interest. Notwithstanding any provision to the contrary herein
----------------
contained, Lender shall not collect a rate of interest on any obligation or
liability due and owing by Borrower to Lender in excess of the maximum contract
rate of interest permitted by applicable law. Lender and Borrower have agreed
that the interest laws of the State of Illinois shall govern the relationship
between them, but in the event of a final adjudication to the contrary, nunc pro
tunc, Borrower shall be obligated to pay to Lender only such interest as then
shall be permitted by the applicable laws of the State found to govern the
contract relationship between Lender and Borrower. All interest found in excess
of that rate of interest allowed and collected by Lender shall be applied to the
Advances in such manner as to prevent the payment and collection of interest in
excess of the rate permitted by applicable law.
2.10 Method of Payment; Good Funds. All payments which are to be made by
-----------------------------
Borrower to Lender pursuant to the Loan Documents shall be made by wire transfer
to BANK OF AMERICA, 231 South LaSalle Street, Chicago, Illinois 60697; ABA
#071000039, Heller Financial, Inc., Acct. #74-21753, Phone Advice to MARK
FIORENTINO: 708-268-2117.
Payment shall not be deemed to be received until Lender is in receipt of Good
Funds.
ARTICLE III
NOTE; SECURITY INTEREST
-----------------------
3.1 Note. Borrower's Obligations described in clause (i) of the definition
----
of such term shall be evidenced by the Note.
3.2 Grant of Security Interest. As security for the payment and performance
--------------------------
of Borrower's Obligations, Borrower hereby grants to Lender a Lien in the
following described collateral (the "Collateral"), such Lien to be superior and
prior to all other Liens other than Permitted Liens:
(a) Facility Equipment. All of Borrower's right, title and interest in
------------------
and to the Facility Equipment.
8
<PAGE>
(b) The Contracts. All chattel paper and Contracts pertaining to any
-------------
Facility Equipment, including, without limitation, all of Borrower's right,
title and interest in, to and under each Facility Contract relating to each
item of Facility Equipment and the right to receive all payments thereunder
(collectively, the "Intangible Collateral").
(c) Lockbox and Lockbox Agreement. The Lockbox and Lockbox Agreement.
-----------------------------
(d) Books and Records. All of the books and records of Borrower
-----------------
pertaining to the Property described in subparagraphs (a) - (c) above.
(e) Proceeds. All attachments, additions, accessions, upgrades,
--------
accessories and replacements pertaining to the items described in
subparagraphs (a) through (d) above, as applicable, including all cash and
non-cash proceeds (including Casualty Payments and other insurance proceeds)
pertaining thereto.
Lender shall not be required to look to the Collateral for the payment of
Borrower's Obligations, but may proceed against Borrower in such manner as
Lender deems desirable. All of the Collateral assigned to Lender hereunder
shall secure the payment and performance of all of Borrower's Obligations, and
whether now existing or in the future; provided, however, that upon the payment
and performance in full of all of Borrower's Obligations with respect to a
Facility Contract (or the exercise of a Permitted Substitution with respect
thereto), all of Borrower's Obligations with respect to such Facility Contract
and the Facility Equipment which is subject thereto shall be deemed to be
satisfied, the Loan Documents applicable to such Facility Contract and such
Facility Equipment shall automatically terminate and Lender shall execute and
deliver to Borrower such UCC termination statements and other instruments as may
be necessary to release the applicable Lender Lien(s) in the related Collateral.
3.3 Substitution of Contracts. Within One Hundred Twenty (120) days after a
-------------------------
Contract Event of Default occurs, or in the event of a prepayment by an End-User
with respect to a Facility Contract, or with the prior, written agreement of
Lender, in addition to any other remedy available hereunder to Borrower with
respect thereto, Borrower may substitute another Eligible Contract for an
existing Facility Contract ("Existing Facility Contract"), provided (I) that the
present value (determined using a discount rate which is equal to the Facility
Rate which is applicable to the Existing Facility Contract) of the payments
remaining under such Substitute Contract, is equal to or greater than the
present value (calculated as described above) of the remaining payments of such
Existing Facility Contract, including any payments which are past due under such
Existing Facility Contract; and (II) that the number of payments remaining under
such Substitute Contract equals or exceeds the number of payments remaining
under the Existing Facility Contract.
ARTICLE IV
CONDITIONS OF CLOSING; ADVANCES
-------------------------------
4.1 Conditions of Closing. The Closing shall not take place unless all of
---------------------
the conditions set forth in this Section 4.1 have been satisfied in a manner,
form and substance satisfactory to Lender:
4.1.1 Representations and Warranties. On the Closing Date, the
------------------------------
representations and warranties of Borrower set forth in the Loan Documents
shall be true and correct in all material respects.
4.1.2 Delivery of Documents. The following shall have been delivered to
---------------------
Lender, each duly authorized and executed:
(a) the Agreement, with all Exhibits; the Note and the Closing
Certificate;
(b) a certificate of the Clerk or an Assistant Clerk of Borrower
in the form of Exhibit J, with all attachments noted therein;
(c) a certified copy of the forms of Contract used by Borrower,
to be attached to the Agreement as Group Exhibit C;
9
<PAGE>
(d) the Lockbox Agreement;
(e) an agreement by and between Borrower, Lender and Collection
Agent, substantially in the form attached hereto as Exhibit E,
providing for back-up servicing of the Facility Contracts if a
Borrower Event of Default occurs; and
(f) such additional instruments, documents, certificates,
consents, financing statements, waivers and opinions as Lender reasonably
may request.
4.1.3 Security Interests. All UCC financing statements referenced in
------------------
Section 4.2.3, including UCC-1(s) naming Borrower as debtor and Lender as
secured party to be filed where applicable, substantially in the form
attached hereto as Exhibit B, shall have been filed and confirmation thereof
received by Lender.
4.1.4 Opinion of Counsel. Lender shall have received from GOLDSTEIN &
------------------
MANELLO, P.C., counsel to Borrower, an opinion dated the Closing Date,
addressed to Lender in the form of Exhibit K.
4.1.5 Performance; No Default. Borrower shall have performed and
-----------------------
complied with all agreements and conditions contained in the Loan Documents
to be performed by or complied with prior to or at the Closing Date.
4.1.6 Approval of Loan Documents and Security Interests. The approval
-------------------------------------------------
and/or consent shall have been obtained from all Governmental Bodies and all
other Persons whose approval or consent is necessary or required to enable
Borrower to (I) enter into and perform its obligations under the Loan
Documents, (II) grant to Lender the Lender Lien and (III) consummate the
Advances.
4.1.7 Material Adverse Change. Since the issuance of Borrower's most
-----------------------
recent fiscal year-end financial statements, no event shall have occurred
which has a material adverse effect on (I) the financial condition, Property,
business, operations, ownership, structure, prospects or profits of Borrower
or any End-User, (II) the ability of Borrower to perform its obligations
under the Loan Documents, (III) the ability of any End-User to perform its
obligations under the Facility Contract(s), or (IV) the Collateral.
4.2 Conditions of Advances. The obligation of Lender to disburse any Advances
----------------------
on or after the Closing Date shall be subject to the satisfaction of all of the
conditions set forth in this Section 4.2 in a manner, form and substance
satisfactory to Lender:
4.2.1 Representations and Warranties. On the date of such Advance, the
------------------------------
representations and warranties of Borrower set forth in the Loan Documents
shall be true and correct in all material respects.
4.2.2 Delivery of Documents. In addition to the documents previously
---------------------
delivered to Lender pursuant to Section 4.1.2, the following shall have been
delivered to Lender, each duly authorized and executed:
(a) the Contract Funding Requests for the Advances to be made,
with all attachments noted therein; and
(b) such additional instruments, documents, certificates,
consents, financing statements, waivers and opinions as Lender reasonably
may request.
4.2.3 Security Interests. All UCC financing statements, including, but
------------------
not limited to:
(a) With respect to Contracts having an Acquisition Cost over Ten
Thousand Dollars ($10,000.00), financing statements naming End-User as
debtor or lessee, and Borrower as secured party or lessor, to be filed in
the state(s) where the Equipment is located,
10
<PAGE>
(b) With respect to Contracts having an Acquisition Cost over Fifty
Thousand Dollars ($50,000.00), financing statements as required, naming
Lender as assignee to be filed in the jurisdiction(s) where the UCC-1(s)
referred to in 4.2.3(a) above are filed, and
(c) all other filings and actions necessary to perfect and maintain
the Lender Lien as a valid and perfected Lien in the Collateral,
shall have been filed and confirmation thereof received by Lender.
4.2.4 Additional Conditions. Borrower shall have re-satisfied the
---------------------
conditions set forth in Sections 4.1.5 (Performance; No Default), 4.1.6
-----------------------
(Approval of Loan Documents and Security Interests), and 4.1.7 (Material
-------------------------------------------------- --------
Adverse Change) hereof with respect to the requested Advance(s).
--------------
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
Borrower hereby represents and warrants to Lender as follows:
5.1 Organization, Power, Authority, etc. Borrower (I) is duly organized,
-----------------------------------
validly existing and in good standing under the laws of the State of
Massachusetts, (II) is qualified to do business in every jurisdiction in which
the character of the Property owned or leased by it or the business conducted by
it makes such qualification necessary and the failure to so qualify would
permanently preclude Borrower from enforcing its rights with respect to any
Facility Contract or Facility Equipment or would expose Borrower to any material
loss or liability, (III) has the power and authority to carry on its business,
(IV) has the power and authority to execute and perform this Agreement and the
other Loan Documents, and (V) has duly authorized the execution, delivery and
performance of this Agreement and the other Loan Documents.
5.2 Validity, etc., of Loan Documents. This Agreement and the other Loan
---------------------------------
Documents constitute the legal, valid and binding obligations of Borrower and
are enforceable against Borrower in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by equitable principles (whether or not any
action to enforce such document is brought at law or in equity). The execution,
delivery and performance of the Loan Documents by Borrower (I) has not violated
and will not violate any provision of law, any order of any Governmental Body,
or the Certificate of Incorporation or Bylaws of Borrower, or any indenture,
agreement or other instrument to which Borrower is a party, (II) is not in
conflict with, will not result in a breach of or, with the giving of notice, or
the passage of time, or both, will not constitute a default under any such
indenture, agreement or other instrument, and (III) will not result in the
creation or imposition of any Lien of any nature whatsoever upon any of the
Property of Borrower, except for Permitted Liens.
5.3 Other Agreements. Borrower is not a party to any agreement or instrument
----------------
materially adversely affecting its present or proposed business, properties, or
assets, and Borrower is not in default in the performance, observance or
fulfillment of any material obligation, covenant or condition set forth in any
agreement or instrument to which it is a party, which default would have a
material adverse effect on the ability of Borrower to consummate any of the
transactions contemplated by the Loan Documents or to perform any of its
obligations under any of the Loan Documents.
5.4 Principal Place of Business. The principal place of business of Borrower
---------------------------
and its chief executive office are at 114 Turnpike Road, Westboro, Ma 01581.
Borrower has not done business under any name other than BANKVEST CAPITAL CORP.
and LEASEVEST CAPITAL CORP.
5.5 Priority. The Lender Lien is subject to no prior Liens other than
--------
Permitted Liens, and all Borrower Liens have been or will be assigned to Lender
pursuant to an Assignment.
11
<PAGE>
5.6 Financial Statements. Borrower has delivered to Lender the financial
--------------------
statements described on Exhibit L. Such financial statements present fairly the
financial condition and results of operations of Borrower as of the dates and
for the periods indicated therein. All of the foregoing financial statements,
except as otherwise indicated therein, have been prepared in accordance with
GAAP.
5.7 Litigation. Except as set forth in Exhibit M, there are no actions,
----------
suits, arbitrations, proceedings or claims (whether or not purportedly on behalf
of Borrower) pending or to the best knowledge of Borrower, threatened, against
Borrower or maintained by Borrower, at law or in equity or before any
Governmental Body which, if adversely determined, would have a material adverse
effect on the ability of Borrower to consummate any of the transactions
contemplated by the Loan Documents or perform any of its obligations under any
of the Loan Documents.
5.8 Necessary Property. Borrower has all necessary rights in its Property
------------------
(including all patents or trademarks) which are necessary to conduct the
business of Borrower as now conducted.
5.9 Collateral. Borrower is the owner of, or has obtained or been granted a
----------
first, prior, and perfected security interest in, all of the Collateral except
the portion thereof consisting of Property hereafter acquired and upon
acquisition thereof Borrower will be the owner of, or will obtain or be granted
a first, prior, and perfected security interest in, such after-acquired
Property, free from any Lien, except for Permitted Liens. Except for the
financing statements in favor of Lender and Borrower, no financing statement
covering any Collateral is on file in any public office.
5.10 Validity and Enforceability of Contracts. (I) Each and every Facility
----------------------------------------
Contract shall be genuine, valid, enforce able and non-cancelable for the
initial term of the Contract, and shall not be subject during such term to any
offset, deduction, counterclaim, or lien (except the Lender Lien); (II) All
parties to the Facility Contracts at the time of execution thereof had full
capacity to contract and the execution thereof by all parties thereto was duly
authorized; (III) Each Facility Contract correctly and accurately describes the
Equipment subject thereto and in the possession of the End-User named in such
Contract and the payments due thereunder; (IV) Each Facility Contract complies
with and does not violate applicable laws including, without limitation, any
applicable interest, usury, disclosure or truth-in-lending laws; (V) Each
Facility Contract has not been modified from the form approved by Lender, as
attached to this Agreement as Group Exhibit C; and (VI) The related Facility
Equipment is covered by comprehensive physical damage insurance for the full
insurable value thereof, unless otherwise mutually agreed to by Borrower and
Heller, and general public liability coverage. With respect to any Facility
Contract under which the Facility Equipment has an Acquisition Cost in excess of
$50,000.00, Borrower has been named as "Loss Payee" and "Additional Insured" as
its interests may appear. Said insurance is in full force and effect, and has
not lapsed or been cancelled by the End-User or the respective insurers.
ARTICLE VI
AFFIRMATIVE COVENANTS
---------------------
Borrower covenants and agrees with Lender as follows:
6.1 Payment of Borrower's Obligations. Borrower shall pay and perform all of
---------------------------------
Borrower's Obligations as and when the same become due, payable and/or
performable, as applicable.
6.2 Preservation of Existence. Borrower shall maintain its existence and
-------------------------
rights in full force and effect to the extent necessary to perform its
obligations under the Loan Documents.
6.3 Legal Requirements. Borrower (I) promptly and faithfully shall comply
------------------
with, conform to and obey all applicable present and future laws, ordinances,
rules, regulations and other requirements that could materially adversely affect
the conduct of its operations, and (II) shall use or cause the portion of the
Collateral consisting of Facility Equipment to be used in a manner and for the
use contemplated by the manufacturer thereof, and in material compliance with
all laws, rules and regulations of every Governmental Body having jurisdiction
over such Facility Equipment.
12
<PAGE>
6.4 Financial Statements and Other Reports. Borrower shall maintain full and
--------------------------------------
complete books of account and other records reflecting the results of Borrower's
operations, all in accordance with GAAP, and shall furnish or cause to be
furnished to Lender within
(i) 120 days after the end of each year, the audited financial
statements for such year for Borrower certified (without qualification as to
the opinion or scope of examination) by a firm of independent certified
public accountants selected by Borrower and satisfactory to Lender;
(ii) 60 days after the end of each quarter, quarterly financial
statements of Borrower, 30 days after the end of each quarter, reports
setting forth leasing, remarketing activities and insurance settlements with
respect to all Facility Equipment; and
(iii) 30 days after the end of each month: reports setting forth (I) any
change in the identity or location of all Facility Equipment and (II) all
cash applications pertaining to the Facility Contracts, and (III) setting
forth amounts received and receivable due under each Facility Contract,
including the amounts overdue and the period for which such amounts are
overdue, and
(iv) 10 days after receipt thereof by Borrower, copies of all End-User
financial statements required to be delivered to Borrower pursuant to the
applicable Contract.
All of the items described in clauses (ii) and (iii) of this Section 6.4
shall be certified by a Responsible Officer of Borrower.
6.5 Removal of Facility Equipment. Promptly after a Responsible Officer
-----------------------------
learns that any Facility Equipment has been moved by a End-User from one
location to another, Borrower will inform Lender or will cause such End-User to
inform Lender of such move and will execute such additional financing statements
as Lender reasonably may request.
6.6 Damage to Equipment. Promptly after a Responsible Officer learns that any
-------------------
Facility Equipment is damaged, and if such Facility Equipment can be repaired in
accordance with the terms of the applicable Facility Contract so as to restore
the same to good and working order, Borrower shall cause such repairs to be made
in accordance with the terms of such Facility Contract.
6.7 Books and Records; Inspections.
------------------------------
6.7.1 Books and Records. Borrower shall keep and maintain, or cause to
-----------------
be kept and maintained, complete and accurate books and records and make all
necessary entries therein to reflect the transactions contemplated hereby and
all payments, credits, adjustments and calculations relative thereto.
6.7.2 Inspections. Upon reasonable prior notice, Lender shall have full
-----------
and complete access to the books and records of Borrower pertaining to the
Collateral. In addition, from time to time, but not more often than twice
each year (and upon the occurrence and during the continuation of a Borrower
Event of Default as often as Lender in its sole discretion deems necessary in
order to monitor the business activities of Borrower), representatives of
Lender shall have the right to conduct an audit of the books and records of
Borrower. Borrower shall pay to Lender on demand the actual, reasonable, out-
of-pocket travel expenses, not to exceed twenty five hundred dollars
($2,500.00) per calendar year (so long as a Borrower Event of Default has not
occurred nor is continuing), incurred by Lender for any employee of Lender
who may conduct or assist in conducting any such audit.
6.8 Maintenance. Borrower, pursuant to the applicable Facility Contract,
-----------
shall cause all Facility Equipment to be maintained and serviced so as to keep
such Facility Equipment in good operating condition, ordinary wear and tear from
normal use excepted.
6.9 Notice of Defaults; Change in Business and Adverse Events. Borrower,
---------------------------------------------------------
immediately after any Responsible Officer becomes aware thereof, shall give
Lender written notice of the occurrence of (I) any Event of Default or any
13
<PAGE>
Incipient Default, accompanied by a statement of such Responsible Officer
setting forth what action Borrower proposes to take in respect thereof, (II) any
change in the (A) executive officers or key employees of Borrower, or (B)
location of the chief place of business of Borrower or any sale or purchase
outside the regular course of business of Borrower, (III) any event which may
have a material adverse effect on the (A) enforceability of the Lender Lien or
(B) ability of Borrower to perform any of its obligations under any of the Loan
Documents, (IV) any material default in payment or performance by Borrower or
any End-User under any Facility Contract or (V) any material damage to or
irreparable malfunction of any Facility Equipment.
6.10 Insurance. All Facility Equipment shall be covered by comprehensive
---------
physical damage insurance for the full insurable value thereof, unless otherwise
mutually agreed to by Borrower and Heller, and general public liability
coverage. With respect to any Facility Contract under which the Facility
Equipment has an Acquisition Cost in excess of $50,000.00, Borrower shall
continue to be named as "Loss Payee" and "Additional Insured" as its interests
may appear. Said insurance shall continue to be in full force and effect, and
shall not lapse or be cancelled by the End-Users. Borrower shall have and shall
maintain a contingent liability insurance policy which covers the Facility
Equipment, the proceeds of which shall be payable to Heller in the event an End-
User fails to provide liability insurance as described herein. In conjunction
with any Advance, Borrower shall only be required to produce Evidence of
Insurance with respect to any Facility Contract in which the Acquisition Cost of
Facility Equipment is greater than $50,000.00. Borrower, pursuant to the
applicable Facility Contract, will cause the End-User under each Facility
Contract to maintain all Facility Equipment in accordance with the terms of all
insurance policies which are or may be in effect with respect thereto so as not
to alter or impair any of the benefits or coverage to which Borrower or the
applicable End-User is entitled under any such insurance policies.
6.11 Taxes. Borrower shall pay or, pursuant to each Contract, shall cause
-----
the End-User thereunder to pay promptly when due all taxes, levies, assessments
and governmental charges upon or relating to Facility Equipment for which
Borrower or the applicable End-User is or may be liable.
6.12 Contracts. With respect to each of the Contracts, Borrower shall: (I)
---------
perform all acts necessary to preserve the validity and enforceability of each
such Contract; (II) take all actions reasonably necessary to assist Lender in
collecting when due all amounts owing to Borrower with respect to each such
Contract; (III) at all times keep accurate and complete records of performance
by Borrower and the End-User under each such Contract; (IV) upon request of
Lender verify with the End-User under each Facility Contract the payments due to
Borrower under such Facility Contract, except that (A) prior to the occurrence
of a Borrower Event of Default or Incipient Default, such requests shall not
occur any more frequently than once each year and (B) after the occurrence and
during the continuation of an Incipient Default or a Borrower Event of Default,
such requests may occur as often as Lender shall require; and (V) mark each
duplicate original copy thereof that it is a duplicate original, and that all of
the rights of the Secured Party/Lessor and the equipment which is subject to the
Contract are subject to a lien in favor of HELLER FINANCIAL, INC.
ARTICLE VII
NEGATIVE COVENANTS
------------------
Until Borrower's Obligations are paid and performed in full, Borrower shall
not:
7.1 Liens. Create or incur or suffer to exist any Lien on the Collateral
-----
other than Permitted Liens.
7.2 Borrowing. Create, incur, assume or suffer to exist any indebtedness
---------
which is secured by Liens on the Collateral other than the Advances or Permitted
Liens.
7.3 Modifications of Facility Contracts. Without the prior, written consent
-----------------------------------
of Lender: amend, supplement, modify, compromise or waive any of the terms of
any Facility Contract (I) if the effect of such amendment, supplement,
modification, compromise or waiver is to (A) reduce or waive the amount of any
payment thereunder, (B) extend the term thereof (except as otherwise permitted
pursuant to Section 7.4), or (C) waive any provisions thereof with respect to
taxes, insurance or maintenance or (II) unless such amendment, supplement,
modification, compromise or waiver is with respect to (A) the removal of any
Facility Equipment and, in connection with such removal, Borrower complies with
the provisions
14
<PAGE>
of Section 6.5, or (B) a Permitted Substitution and if, in connection with such
Permitted Substitution any prepayment of any portion of the Facility shall
occur, Borrower shall comply with the terms of subsection 2.6.
7.4 Extensions of Facility Contracts; Future Contracts of Facility Equipment.
------------------------------------------------------------------------
Without the prior written consent of Lender: (I) Extend the term of any Facility
Contract unless as of the end of the Approved Contract Term of such Facility
Contract, such Contract no longer will be a Facility Contract as a result of any
such extension or (II) re-lease any Facility Equipment unless such re-lease is
for the purpose of mitigating damages arising from a Contract Event of Default.
7.5 Maintenance of Perfected Lender Lien. Change the location of its chief
------------------------------------
executive office or principal place of business, except if Borrower has (I)
given Lender at least 30 days prior written notice thereof and (II) caused to be
filed all UCC financing statements which in the opinion of Lender are necessary
or advisable to maintain the perfection of the applicable Lender Lien.
7.6 Merger and Acquisition. Without the prior, written consent of Lender,
----------------------
which consent will not be unreasonably withheld or delayed, consolidate with or
merge into any Person, or acquire all or substantially all of the stock or
Property of any Person.
7.7 Sale or Transfer of Assets. Sell, lease, assign, exchange, transfer or
--------------------------
otherwise dispose of any Property except (I) dispositions of Property (other
than Equipment), which is not necessary to the continued operation of the
business of Borrower, (II) disposition of the real estate now owned or hereafter
acquired by Borrower, provided no Incipient Default or Event of Default is in
existence or will occur as a result of the consummation of any such sale, (III)
the leasing of real property, (IV) dispositions of Property in the ordinary
course of Borrower's business, or (V) disposition of any obsolete or unusable
Property, provided that if such Property is necessary to the continued operation
of the business of Borrower, such Property promptly is replaced with Property of
like function and value to such Property when the same was not obsolete or
unusable, as applicable.
ARTICLE VIII
BORROWER AND CONTRACT EVENTS OF DEFAULT -- DEFINITIONS AND REMEDIES
-------------------------------------------------------------------
8.1 Borrower Events of Default -- Definition. The occurrence of any of the
----------------------------------------
following shall constitute a Borrower Event of Default hereunder:
(a) Default in Payment. If Borrower or Collection Agent shall fail to
------------------
remit to Lender when due any payment that Borrower is required to make
hereunder when and as the same shall become due and payable, and such failure
shall continue for a period of 10 days after such payment becomes due.
(b) Breach of Representation or Warranty. Subject to the final sentence
------------------------------------
of this Section 8.1, if any representation made by Borrower to Lender in any
Loan Document or in any report, certificate, opinion, financial statement
(other than those financial statements provided by and pertaining to any End-
User) or other document or statement furnished pursuant thereto shall be
false or misleading in any material respect when made, or any warranty given
by Borrower shall be breached by Borrower, unless (I) the fact, circumstance
or condition is made true within thirty (30) days after written notice
thereof is given to Borrower by Lender, and (II) in Lender's judgment, such
cure removes any adverse effect on the Lender.
(c) Breach of Covenant. Subject to the final sentence of this Section
------------------
8.1, if Borrower shall fail to duly observe or perform any covenant,
condition or agreement set forth in Article VI of the Agreement on its part
to be performed or observed for thirty (30) days after a Responsible Officer
has knowledge thereof.
15
<PAGE>
(d) Bankruptcy, Receivership, Insolvency, etc.
-----------------------------------------
(i) If Borrower shall (A) apply for or consent to the appointment
of a receiver, trustee or liquidator for it or any of its Property, (B)
be unable to pay its debts as they mature, (C) make a general assignment
for the benefit of creditors, (D) be adjudicated a bankrupt or insolvent
or (E) file a voluntary petition in bankruptcy, or a petition or an
answer seeking reorganization or an arrangement with creditors or to take
advantage of any bankruptcy, reorganization, insolvency, readjustment of
debt, dissolution or liquidation law or statute, or file an answer
admitting the material allegations of a petition filed against it in any
proceeding under any such law, or if action shall be taken by Borrower
for the purpose of effecting any of the foregoing, or
(ii) If any Governmental Body of competent jurisdiction shall enter
an order appointing, without consent of Borrower, a custodian, receiver,
trustee or other officer with similar powers with respect to Borrower or
with respect to any substantial part of the Property belonging to
Borrower, or if an order for relief shall be entered in any case or
proceeding for liquidation or reorganization or otherwise to take
advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of Borrower, or if
any petition for any such relief shall be filed against Borrower, and
such petition shall not be dismissed within 45 days.
(e) Non-Payment of Other Indebtedness. Default by Borrower (other than in
---------------------------------
payment of Borrower's Obligations) in the (I) payment when due (subject to
any applicable grace period or cure period), whether by acceleration or
otherwise, of any indebtedness, where the amount thereof is in excess of
$500,000, or (II) performance or observance of any obligation or condition
with respect to any indebtedness of Borrower, where the amount of such
indebtedness is in excess of $500,000 (other than in payment of Borrower's
Obligations) if the effect of such default is to accelerate the maturity of
any such indebtedness or to permit the holder thereof to cause such
indebtedness to become due and payable prior to its expressed maturity.
(f) Other Material Obligations. Default in the payment when due, or in
--------------------------
the performance or observance of, any material obligation of, or condition
agreed to by, Borrower with respect to any purchase or lease of goods or
services, where (I) the amount with respect to any such purchase or lease of
goods or services is in excess of $500,000 and (II) any grace period or cure
period with respect to any such payment, performance or observance has lapsed
(except such default in payment, performance or observance shall not be
deemed to constitute a default hereunder if the existence of any such default
is being contested by Borrower in good faith and by appropriate proceedings
diligently pursued).
In any such event, in addition to Lender's other remedies under this
Agreement, Lender, by notice to Borrower, may declare that no further Advances
shall be made. Furthermore, with respect to a breach of any representation,
warranty or covenant set forth in Sections 5.10(vi) or 6.10 concerning Facility
Contract(s) under which the Acquisition Cost of the related Equipment is less
than $50,000.00, a Borrower Event of Default shall not be deemed to have
occurred until and unless Lender suffers a loss as a result of such breach.
8.2 Borrower Events of Default -- Remedies. If a Borrower Event of Default
--------------------------------------
shall have occurred, and has not been cured by Borrower (or by Lender, at its
discretion) within an applicable cure period, or a Material Adverse Change
occurs of the type set forth in Section 4.1.7 (i) or (ii), then Lender shall
have the right to do any or all of the following:
(a) complete and deliver to the End-Users the Contract Payment Letters
in photocopy form to commence direct billing and collection with respect
to the Facility Contracts, and deduct from such receipts and remittances
a fee equal to five percent (5%) of the aggregate monthly receipts
("Administration Fee") from the payment on the Facility Contracts as
compensation for the additional administrative burden;
(b) (I) exercise of any of Borrower's rights under any of the Facility
Contracts, or (II) by written notice, require Borrower to exercise on
behalf of Lender as secured party under this Agreement any and all
16
<PAGE>
of the rights available to Borrower under any Facility Contract to the
extent not already exercised by Borrower, whereupon Borrower shall
immediately take all requested action;
(c) proceed against Borrower for all rights and remedies Lender may
have in law or in equity under the Loan Documents;
(d) declare the entire amount of Borrower's Obligations and
Administration Fee due and payable immediately, and exercise in respect of
the Facility Equipment all the rights and remedies of a secured party upon
default under the UCC, including, at any reasonable time, to enter Borrower's
premises and take physical possession of any master leases to which the
related Facility Contracts pertain.
Lender shall not take any action or exercise any right that would
disturb any End-User's full and quiet enjoyment of all of such End-User's
rights under that Facility Contract. Lender will give Borrower 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 Borrower, at
least twenty (20) days before the time of such sale or disposition.
Notwithstanding the foregoing, to the extent that a breach occurs under
Section 8.1(b), and such breach relates to an individual Facility Contract,
Borrower shall have thirty (30) days from receipt of demand by Lender to
repurchase the Facility Contract pursuant to the terms of the Mandatory
Prepayment clause set forth at Section 2.6.4 herein. Borrower's failure to
repurchase such Facility Contract within said thirty (30) day period shall
then constitute a Borrower Event of Default under Section 8.1(a).
All actual costs and expenses incurred by Lender in connection with the
enforcement and/or exercise of any of its rights or remedies (including,
without limitation, reasonable attorneys fees) hereunder shall (i) be payable
by Borrower to Lender immediately upon demand, (ii) constitute a portion of
Borrower's Obligations and (iii) be secured by the Lender Lien.
8.3 Contract Events of Default.
--------------------------
8.3.1 Definition: The occurrence of a default by any End-User pursuant
----------
to the terms of a Facility Contract, which default entitles Borrower to
accelerate or terminate such Facility Contract or to repossess the related
Facility Equipment, shall constitute a Contract Event of Default.
8.3.2 Acceleration. Upon the occurrence of a Contract Event of Default,
------------
Lender, at any time (unless such Contract Event of Default shall have been
cured by Borrower), at its option, by notice to Borrower and/or End-User, may
terminate such Facility Contract and accelerate all payments due thereunder.
8.3.3 Contract Event of Default -- Remedies. Upon the occurrence of a
-------------------------------------
Contract Event of Default, Borrower shall, if known to Borrower, immediately
deliver to Lender written notice thereof, which notice shall identify the
Facility Contract which is in default and the applicable Facility Advance,
and describe the nature of such default and the actions Borrower proposes to
undertake with respect to such default. If any payment(s) under a Facility
Contract becomes One Hundred Twenty (120) days past due, whether or not such
payment(s) have been cured by Borrower, then Borrower shall prepay in full
the unpaid portion of the Advance pertaining to such Facility Contract, or
exercise its right of substitution pursuant to Section 3.3 hereof.
Lender, with respect to the Facility Equipment subject to such
Facility Contract, shall have and may exercise against Borrower all the
rights and remedies of a secured party under the Illinois UCC and/or the UCC
applicable to the location of the related Facility Equipment, and any other
applicable laws. Lender will give Borrower 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
17
<PAGE>
mailed, postage prepaid, to Borrower at least twenty (20) days before the
time of such sale or disposition. Lender shall have full recourse to Borrower
for any deficiency between the Sale Proceeds and the Loan Repayment Amount
for the related Advance. In addition to the foregoing, at Lender's election,
Lender may complete and deliver one or more Contract Payment Letters in
photocopy form in order to commence direct billing and collection with
respect to one or more Contracts subject to a Contract Event of Default and
deduct the Administration Fee with respect thereto. Furthermore:
(i) Lender only shall be entitled to exercise the rights and remedies
set forth in this Section 8.3.3 with respect to the Facility Contract,
the End-User and the Facility Equipment which are the subject of such
Contract Event of Default;
(ii) the expenses to and other payments to which any proceeds of the
Collateral shall be applied in accordance with the provisions of
subsections 8.5 & 8.6 shall be so applied to payment of Borrower's
Obligations pertaining to the Facility Contract which is the subject of
such Contract Event of Default, and
(iii) upon payment and performance in full of all of Borrower's
Obligations pertaining to the Facility Contract which is the subject of
such Contract Event of Default, both (A) the Contract Event of Default
with respect to such Facility Contract, and (B) any related Borrower
Event of Default shall be deemed to be cured.
8.4 Power of Attorney. In order to permit Lender to exercise the rights and
-----------------
remedies set forth herein, Borrower hereby irrevocably appoints Lender as its
attorney-in-fact and agent with full power of substitution, in the name of
Lender or in the name of Borrower, to perform any of the following acts upon the
occurrence of a Borrower Event of Default : (I) receive, open and examine all
mail addressed to Borrower and retain any such mail relating to the Collateral
and return to Borrower only that mail which is not so related; (II) endorse the
name of Borrower on any checks or other instruments or evidences of payment or
other documents, drafts, or instruments arising in connection with or pertaining
to the Collateral, to the extent that any such items come into the possession of
Lender; (III) compromise, prosecute or defend any action, claim, or proceeding
concerning the Collateral; (IV) perform any and all acts which Borrower is
obligated to perform under the Loan Documents; (V) exercise such rights as
Borrower might exercise with respect to the Collateral, including, without
limitation, the leasing or other utilization thereof and the collection of any
such rents or other payments applicable thereto; (VI) give notice of the
existence of the Lender's Lien, including, without limitation, notification to
End-Users and/or other account debtors of the existence of such Lender's Lien
with respect to the rents and other payments due to Borrower relative to the
Collateral; or (VII) execute in Borrower's name and file any notices, financing
statements and other documents or instruments Lender determines are necessary or
required to carry out fully the intent and purpose of the Loan Documents or to
perfect the Lender Lien.
Borrower hereby ratifies and approves all that Lender shall do or cause
to be done by virtue of the power of attorney granted herein and agrees that
neither Lender nor any of Lender's employees, agents, officers, or its attorneys
will be liable for any acts or omissions or for any error of judgment or mistake
of fact or law made while acting in good faith pursuant to the provisions of
this subparagraph, unless such act, omission, error of judgment or mistake of
fact or law is determined by a court of competent jurisdiction in a decision
which no longer is subject to appeal to be the result of the gross negligence or
the willful or wanton misconduct of Lender or any such employees, agents,
officers or attorneys of Lender. The appointment of Lender as Borrower's
attorney-in-fact is a power coupled with an interest, and therefore shall remain
irrevocable until all of Borrower's Obligations have been paid and performed in
full.
8.5 Expenses. All actual costs and expenses incurred by Lender in connection
--------
with the enforcement and/or exercise of any of its rights or remedies
(including, without limitation, reasonable attorneys fees) hereunder shall (i)
be payable by Borrower to Lender immediately upon demand, (ii) constitute a
portion of Borrower's Obligations and (iii) be secured by the Lender Lien.
8.6 Application of Funds. Any funds received by Lender pursuant to the
--------------------
exercise of any rights accorded to Lender pursuant to or by the operation of any
of the terms of any of the Loan Documents, including, without limitation, Sale
Proceeds, shall be applied by Lender in the following order of priority:
18
<PAGE>
(i) Expenses: First to the payment of all (A) actual fees and expenses,
--------
including, without limitation, court costs, fees of appraisers, title
charges, costs of maintaining and preserving the Collateral, costs of sale,
reasonable attorney's fees, and all other costs incurred by Lender in
exercising any rights accorded to Lender pursuant to the Loan Documents or by
applicable law and (B) Liens superior to the Liens of Lender, except such
superior Liens subject to which any sale of the Collateral may have been
made;
(ii) Borrower's Obligations. Next, to the payment of Borrower's
----------------------
Obligations, in such order as Lender may determine; and
(iii) Surplus. Any surplus, to the Person or Persons legally entitled
-------
thereto.
ARTICLE IX
CLOSING
-------
The Closing Date shall be such date as the parties shall determine, and the
Closing shall take place on that date, provided all conditions for the Closing
as set forth in this Agreement have been satisfied. Unless the Closing occurs on
or before August 20, 1995, this Agreement shall terminate and be of no further
force or effect and, except for any obligation of Borrower to Lender pursuant to
Sections 10.6 (Attorneys' Fees and Other Expenses) and 10.7 (Indemnity), neither
of the parties hereto shall have any further obligation to any other party.
ARTICLE X
MISCELLANEOUS
-------------
10.1 Rights, Remedies and Powers. Each and every right, remedy and power
---------------------------
granted to Lender hereunder shall be cumulative and in addition to any other
right, remedy or power not specifically granted herein or now or hereafter
existing in equity, at law, by virtue of statute or otherwise and may be
exercised by Lender from time to time concurrently or independently as often and
in such order as Lender may deem expedient. Any failure or delay on the part of
Lender in exercising any such right, remedy or power, or abandonment or
discontinuance of steps to enforce the same, shall not operate as a waiver
thereof or affect Lender's right thereafter to exercise the same, and any single
or partial exercise of any such right, remedy or power shall not preclude any
other or further exercise thereof or the exercise of any other right, remedy or
power. Acceptance of payments in arrears shall not waive or affect any right to
accelerate Borrower's Obligations.
10.2 Modifications, Waivers and Consents. Any modification or waiver of
-----------------------------------
any provision of this Agreement, or any consent to any departure by Borrower
therefrom, shall not be effective in any event unless the same is in writing and
signed by Lender, and then such modification, waiver or consent shall be
effective only in the specific instance and for the specific purpose given. Any
notice to or demand on Borrower in any event not specifically required of Lender
hereunder shall not entitle Borrower to any other or further notice or demand in
the same, similar or other circumstances unless specifically required hereunder.
10.3 Communications. All notices, consents, approvals and other
--------------
communications under the Loan Documents shall be in writing and shall be (i)
delivered in person, (ii) sent by telephonic facsimile ("FAX") or (iii) mailed,
postage prepaid, either by (A) registered or certified mail, return receipt
requested, or (B) overnight express carrier, addressed in each case as follows:
To Lender: Heller Financial, Inc.
One TransAm Plaza Drive, Suite 222
Oakbrook Terrace, Illinois 60181
Attention: Executive Vice President, Vendor Finance Division
FAX No.: (708) 916-7457
Borrower: BankVest Capital Corp.
19
<PAGE>
Attention: Paul Gass
114 Turnpike Road, Westboro, MA 01581
FAX No.: (508) 870-0260
with a copy to: Goldstein and Manello, P.C.
Attention: Richard Snyder
265 Franklin Street, Boston, MA 02110
FAX No.: (617) 439-8988
or to such other address, as to either of the parties hereto, as such party
shall designate in a written notice to the other party hereto. All notices sent
pursuant to the terms of this Section 10.3 shall be deemed received (i) if sent
by FAX, on the day sent if a Business Day, or if such day is not a Business Day,
then on the next Business Day, (ii) if sent by overnight, express carrier, on
the next Business Day immediately following the day sent, or (iii) if sent by
registered or certified mail, on the fifth Business Day following the day sent.
10.4 Severability. If any provision of this Agreement is prohibited by, or
------------
is unlawful or unenforceable under, any applicable law of any jurisdiction, such
provision, as to such jurisdiction, shall be ineffective to the extent of such
prohibition without invalidating the remaining provisions hereof; provided,
however, that where the provisions of any such applicable law may be waived,
they hereby are waived by Borrower to the full extent permitted by law so that
this Agreement shall be deemed to be an agreement which is valid and binding in
accordance with its terms.
10.5 Survival. The warranties, representations, covenants and agreements
--------
set forth herein shall survive the making of the Advances and the execution and
delivery of the Loan Documents and shall continue in full force and effect until
Borrower's Obligations have been paid and performed in full.
10.6 Attorneys' Fees and Other Expenses. Borrower agrees to pay to Lender
----------------------------------
on demand any actual out-of-pocket costs or expenses, together with reasonable
attorneys' fees, incurred by Lender in connection with the enforcement or
collection against Borrower of any provision of any of the Loan Documents,
whether or not suit is instituted, including, but not limited to, such actual
costs or expenses arising from the enforcement or collection against Borrower of
any provision of any of the Loan Documents in any state or Federal bankruptcy or
reorganization proceeding. In addition, in the event that Borrower elects to
submit a Contract Funding Request containing one or more Contracts which have
material deviations from the standard form approved by Lender and attached to
this Agreement as Group Exhibit C, Lender reserves the right to charge a
reasonable fee, based on a rate of $125.00 per hour to a maximum of $2,500.00
per occurrence, as an offset against the related Advance, for its inside counsel
to review such Contract(s).
10.7 Indemnity. Borrower agrees to indemnify and save Lender and its
---------
successors, assigns, agents and servants harmless of and from any claims,
actions, suits, losses, costs, liabilities, damages or expenses (including
actual expenses and reasonable attorneys' fees) incurred by Lender in connection
with the transactions contemplated by this Agreement, including without
limitation: (I) any loss, cost, liability, damage or expense (including actual
expenses and reasonable attorneys' fees) incurred in connection with the
Facility Contracts; (II) the delivery, ownership, alteration, operation,
maintenance, return or other disposition of the Collateral; (III) from any
documentation deficiencies or changes to the basic format of the Facility
Contract; (IV) from the existence of any party having an interest, lien or claim
in the Facility Contract(s), and/or the Facility Equipment covered thereby,
and/or the proceeds thereof, which interest, lien or claim is prior to the
interest therein assigned to Lender hereby; (V) the construction of Lender and
Borrower as having the relationship of joint venturers or partners, or (VI) the
determination that Lender or Borrower has acted as agent for the other.
Borrower's obligations with respect to the indemnity set forth in this Section
10.7 shall survive repayment of all amounts due pursuant to the Loan Documents,
the cancellation of the Note and the release and/or cancellation of any and all
of the Loan Documents. Lender agrees to promptly notify Borrower of any matters
in respect of which this indemnity may apply. If notified in writing of any
action or claim brought or threatened against Lender based on a claim for which
Borrower is to provide indemnity and given full authority, information, and
assistance for the defense of same by Lender, Borrower shall, without
limitation, defend those actions or claims at its expense and pay the costs and
damages and attorneys' fees awarded in any such action or arising from any such
claim, provided that Borrower shall have the right to control the defense and
settlement of all such actions and claims. Lender will take all such actions (at
the expense of Borrower) as may be
20
<PAGE>
reasonably requested by Borrower to assist Borrower in connection with such
defense or settlement. Nothing herein is intended to indemnify Lender for
consequences of its actions or failure to act.
10.8 Binding Effect. This Agreement shall be binding upon the successors
--------------
and assigns of Borrower and shall inure to the benefit of the successors and
assigns of Lender.
10.9 Assignments; Participations. Lender shall be entitled to sell, assign
---------------------------
or transfer any portion of its interest in the Facility; provided, however,
Lender hereby agrees to deliver to Borrower notice of such proposed sale,
assignment or transfer not less than 30 days prior to the proposed date for the
consummation thereof, which notice shall include a description of the financial
institution to which such sale, assignment or transfer is proposed to be made.
In connection with any such sale, assignment or transfer, Lender may disclose
such information with respect to Borrower, its business and financial affairs
and the Facility as Lender reasonably deems necessary, unless any such
information which has been provided by Borrower to Lender is confidential in
nature, in which case such confidential information shall not be disclosed
without the prior written consent of Borrower, which consent shall not
unreasonably be withheld or delayed.
10.10 Further Assurances. Each of Borrower and Lender agrees that upon the
------------------
request of the other party hereto at any time and from time to time after the
execution of this Agreement it shall execute and deliver such further
instructions, documents, and certificates and take such further actions as such
party reasonably may request.
10.11 GOVERNING LAW, CONSENT TO JURISDICTION AND SERVICE OF PROCESS. THIS
-------------------------------------------------------------
AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS SHALL BE A CONTRACT MADE UNDER
AND GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE
AND PERFORMED ENTIRELY WITHIN THE STATE OF ILLINOIS. BORROWER DOES HEREBY
SUBMIT, AT LENDER'S ELECTION, TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY
COURTS (FEDERAL, STATE OR LOCAL) HAVING A SITUS WITHIN THE COUNTY OF COOK AND
THE STATE OF ILLINOIS WITH RESPECT TO ANY DISPUTE, CLAIM, OR SUIT, WHETHER
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY
RELATED NOTE OR ANY OF BORROWER'S OBLIGATIONS OR INDEBTED NESS HEREUNDER.
BORROWER EXPRESSLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO SERVICE BY
CERTIFIED MAIL, POSTAGE PREPAID, DIRECTED TO THE LAST KNOWN ADDRESS OF BORROWER,
WHICH SERVICE SHALL BE DEEMED COMPLETED WITHIN TEN (10) DAYS AFTER THE DATE OF
MAILING THEREOF. BORROWER HEREBY IRREVOCABLY WAIVES ANY CLAIM THAT THE COUNTY OF
COOK, STATE OF ILLINOIS IS AN INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON
LACK OF VENUE AS WELL AS ANY RIGHT IT MAY NOW OR HEREAFTER HAVE TO REMOVE ANY
SUCH ACTION OR PROCEEDING, ONCE COMMENCED, TO ANOTHER COURT ON THE GROUNDS OF
FORUM NON CONVENIENS OR OTHERWISE. THE EXCLUSIVE CHOICE OF FORUM SET FORTH
HEREIN SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION BY LENDER TO ENFORCE THE SAME
IN ANY OTHER APPROPRIATE JURISDICTION.
10.12 WAIVER OF JURY TRIAL. BORROWER AND LENDER HEREBY WAIVE THEIR
--------------------
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS LOAN AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. THIS
WAIVER IS INTENDED TO BE EFFECTIVE WITH RESPECT TO ALL DISPUTES WHICH ARISE OUT
OF ANY OF THE LOAN DOCUMENTS OR PERTAIN TO THE TRANSACTIONS CONTEMPLATED
THEREBY. THIS WAIVER IS IRREVOCABLE, AND MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND SUCH WAIVER SET FORTH HEREIN SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS.
21
<PAGE>
This Agreement has been executed and delivered by each of the parties hereto
by a duly authorized officer of each such party on the date first set forth
above.
HELLER FINANCIAL, INC. BANKVEST CAPITAL CORP.
By: _____________________________ By:______________________________
Title: __________________________ Title:___________________________
22
<PAGE>
LIST OF EXHIBITS
----------------
Exhibit A - Form of Assignment of Contracts and Liens
-----------------------------------------
Exhibit B - Form of Borrower/Heller UCC
---------------------------
Exhibit C - Certified Copy of Form of Contract (including Certificate of
------------------------------------------------------------
Acceptance)
-----------
Exhibit D - Form of Closing Certificate
---------------------------
Exhibit E - Form of Back-up Servicing Agreement
-----------------------------------
Exhibit F - Form of Lockbox Agreement
-------------------------
Exhibit G - Form of Facility Note
---------------------
Exhibit H - Form of Contract Funding Request
--------------------------------
Exhibit I - Form of Contract Payment Letter
-------------------------------
Exhibit J - Form of Clerk's Certificate, w/att. COGS, resolutions, bylaws,
--------------------------------------------------------------
etc.
----
Exhibit K - Form of Borrower's Counsel Opinion
----------------------------------
Exhibit L - List of Financial Statements Submitted
--------------------------------------
Exhibit M - List of Material Lawsuits
-------------------------
i
<PAGE>
EXHIBIT A
---------
Form of Assignment of Contracts and Liens
-----------------------------------------
ASSIGNMENT OF CONTRACTS AND LIENS
---------------------------------
THIS ASSIGNMENT OF CONTRACTS AND LIENS is made as of the _____ day of
__________, by BANKVEST CAPITAL CORP., a Massachusetts corporation (the
"Borrower"), to HELLER FINANCIAL, INC., a Delaware corporation ("Lender").
RECITALS:
--------
A. Lender and Borrower have entered into a Loan and Security Agreement dated
as of August 7, 1995 (the "Agreement") pursuant to which Lender has agreed to
make certain Advances to Borrower, subject to the terms and conditions set forth
therein.
B. Borrower is the lessor and/or secured party under those certain Contracts
(individually, a "Contract" and collectively, the "Contracts") pertaining to
certain Facility Equipment (the "Equipment"), a description of which is set
forth on Exhibit A. A true and correct copy of each Contract (together with all
amendments and modifications thereto) is attached as Exhibit B.
C. Pursuant to each Contract, the End-User has executed UCC Financing
Statements with respect to the related Facility Equipment.
D. One of the conditions precedent to Lender's obligation to provide the
financing described above is Borrower's execution and delivery of this
Assignment.
NOW, THEREFORE, to induce Lender to make the Advances and for other good and
valuable consideration, the receipt and sufficiency of which are acknowledged,
Borrower agrees as follows:
1. DEFINITION. Any capitalized term not otherwise defined herein which is
----------
defined in the Agreement shall have the meaning ascribed thereto in such
Agreement.
2. ASSIGNMENT. To secure payment and performance of Borrower's Obligations,
----------
Borrower transfers and assigns to Lender all of Borrower's right, title and
interest in and to each of the Contracts and each of the Borrower Liens.
3. REPRESENTATIONS AND WARRANTIES. The Representations and Warranties set
------------------------------
forth in the Agreement in Article V are hereby incorporated herein by reference
and reaffirmed with respect to all Contracts to be made subject to the requested
Advance. Borrower also represents and warrants that all of the conditions to
Advances set forth in Section 4.2 of the Agreement have been satisfied.
4. COVENANTS. The Covenants set forth in the Agreement in Articles VI and
---------
VII are hereby incorporated herein by reference and reaffirmed with respect to
all Contracts to be made subject to the requested Advance.
5. SECURITY. This Assignment is for collateral security purposes only.
--------
6. REMEDIES FOR DEFAULT. Upon the occurrence of any Borrower Event of
--------------------
Default or Contract Event of Default, Lender, at its option, without in any way
waiving such default, shall have all of the remedies set forth in Article VIII
of the Agreement.
7. RELEASE OF ASSIGNMENT. Upon the payment and performance in full of all
---------------------
of Borrower's Obligations with respect to a Facility Contract (or the exercise
of a Permitted Substitution with respect thereto), all of the covenants and
obligations of Borrower to Lender with respect to such Facility Contract and the
Facility Equipment which is subject thereto
ii
<PAGE>
shall be deemed to be satisfied, the Loan Documents applicable to such Facility
Contract and such Facility Equipment shall automatically terminate and Lender
shall execute and deliver to Borrower such UCC termination statements and other
instruments as may be necessary to release the applicable Lender Lien(s) in the
related Collateral.
8. SEVERABILITY. In the event that any provision of this Assignment is
------------
deemed to be invalid by reason of the operation of any law or by reason of the
interpretation placed thereon by any court or any other Governmental Body, this
Assignment shall be construed as not containing such provision and the
invalidity of such provision shall not affect the validity of any other
provisions hereof, and any and all other provisions hereof which otherwise are
lawful and valid shall remain in full force and effect.
9. GOVERNING LAW. THIS ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, EXCEPT TO THE EXTENT THAT IT
IS MANDATORY THAT THE LAWS OF THE STATE IN WHICH THE EQUIPMENT IS LOCATED APPLY.
FOR PURPOSES OF THIS SECTION 9, THIS ASSIGNMENT SHALL BE DEEMED TO BE PERFORMED
AND MADE IN THE STATE OF ILLINOIS.
10. MISCELLANEOUS.
-------------
(a) No delay or omission on the part of Lender in exercising any rights or
remedies contained herein shall operate as a waiver of such right or remedy or
any other right or remedy, and no single or partial exercise of any right or
remedy shall preclude any other or further exercise thereof, or the exercise of
any other right or remedy. A waiver of any right or remedy on any one occasion
shall not be construed as a bar or waiver of any right or remedy on future
occasions, and no delay, omission, waiver or single or partial exercise shall be
deemed to establish a custom or course of dealing or performance between the
parties hereto.
(b) The right of the Lender to enforce any other security for Borrower's
Obligations may be exercised either prior to, simultaneously with, or subsequent
to any action taken by Lender hereunder.
(c) This Assignment, together with the covenants, representations and
warranties herein contained, shall inure to the benefit of Lender and its
successors and assigns and shall be binding upon the successors and assigns of
Borrower.
IN WITNESS WHEREOF, this Assignment has been made by Borrower as of the day
and year first written above.
BANKVEST CAPITAL CORP.
By: _______________________________
Its: ______________________________
iii
<PAGE>
EXHIBIT B
---------
Form of Borrower/Heller UCC
---------------------------
All of Debtor's right, title and interest in and to the following, whether now
or hereafter existing: All leases, installment sale contracts and other chattel
paper (collectively, "Contracts") assigned to Secured Party pursuant to that
certain Loan and Security Agreement dated as of August 7, 1995 by and between
Secured Party and Debtor ("Agreement"), including, without limitation, the
Contracts set forth in Schedule "A" attached hereto and incorporated herein; all
of Debtor's right, title and interest in and to the machinery, equipment and
fixtures subject to each Contract; the Lockbox and Lockbox Agreement as defined
in the Agreement; all of the books and records of Debtor pertaining to the
foregoing; and all attachments, additions, accessions, upgrades, accessories,
replacements and products pertaining to the foregoing, as applicable, including
all cash and non-cash proceeds (including insurance proceeds) pertaining
thereto.
iv
<PAGE>
EXHIBIT C
---------
Certified Copy of Forms of Contract
-----------------------------------
v
<PAGE>
EXHIBIT D
---------
Form of Closing Certificate
---------------------------
CLOSING CERTIFICATE
-------------------
I, PAUL GASS, President of BANKVEST CAPITAL CORP., a Massachusetts
corporation, hereby do certify pursuant to the Loan and Security Agreement dated
as of August 7, 1995 (the "Agreement") (all terms used herein that are defined
in the Agreement and not otherwise defined herein shall have the respective
meanings set forth in the Agreement) between the Borrower and Lender, as
follows:
1. The representations and warranties contained in Article V of the
Agreement are true and correct as of the Closing Date.
2. All conditions of Closing set forth in Section 4.1 of the Agreement have
been satisfied, except as follows:
___________________________________________________________________________
________________________________________________________________________________
______________________________________________________.
3. No Event of Default or Incipient Default exists as of the Closing Date.
4. No material adverse change has occurred in the business of Borrower since
the date of the last financial statements delivered by the Borrower to Lender.
IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of
_____________, 19___.
BANKVEST CAPITAL CORP. ATTEST:
By: _____________________________ _________________________
Clerk
vi
<PAGE>
EXHIBIT E
---------
Form of Back-up Servicing Agreement
-----------------------------------
(To be supplied by Collection Agent and Borrower)
vii
<PAGE>
EXHIBIT F
---------
Form of Lockbox Agreement
-------------------------
LOCKBOX SERVICE AGREEMENT BETWEEN XEROX ADMINISTRATIVE SERVICES
AND BANKVEST CAPITAL CORP.
THIS AGREEMENT, made as of August 7, 1995, is by and between and XEROX
ADMINISTRATIVE SERVICES ("XAS") and BANKVEST CAPITAL CORP. ("Customer").
WITNESSETH
WHEREAS, Customer desires to purchase from XAS, and XAS desires to sell to
Customer, XAS's Lockbox services hereinafter described, for the benefit of
HELLER FINANCIAL, INC. ("Heller"), on those terms and conditions set forth:
NOW, THEREFORE, it is agreed by and between the parties as follows:
I. Customer warrants, represents, and agrees to notify its accounts that
remittance checks shall be mailed to the Customer at the following address:
_________
_________
_________
II. The procedures to be followed in the handling of Lockbox services provided
for herein shall be as hereafter stated in this paragraph, and XAS agrees
to do each of the following:
A. Collect mail at scheduled times from the Post Office box provided for
this purpose Monday through Friday. There will be no mail collection
on Saturday, Sunday or any State or Federal Holiday.
B. To process all remittances within the exception item guidelines that
the Customer has defined below.
Exception Item Guidelines
1. Post-Dated checks will be held for deposit within a reasonable time
----------
(currently 5 days);
2. No Date checks are deposited as of the date received;
-------
3. No Signature checks are returned to the End-user;
------------
4. Legends (paid in full are deposited and notification send to End-user
-------
not accepting legend);
5. Payable to Not Indicated checks are returned to the End-user; and
------------------------
6. Other exceptions are dealt with on an as received basis.
-----
C. All remittance checks to be processed and deposited to Customer's
account shall be endorsed, "For Deposit Only -- BankVest Capital --
Account #590 17097 0." AFTER XAS'S RECEIPT OF NOTICE OF DEFAULT AS
DESCRIBED IN PARAGRAPH E. BELOW, ALL REMITTANCE CHECKS TO BE PROCESSED
AND DEPOSITED SHALL BE ENDORSED, "CREDIT TO THE ACCOUNT OF PARTIES AS
SET FORTH IN LOCKBOX SERVICE AGREEMENT BETWEEN BANKVEST CAPITAL CORP.
AND XEROX ADMINISTRATIVE SERVICES DATED AS OF AUGUST 7, 1995. ABSENCE
OF ENDORSEMENT GUARANTEED." Any change in the manner or style of said
endorsement shall be made by Customer's and Heller's written notice to
XAS of such change, and Customer shall supply XAS a stamp conforming
to Customer's and Heller's requirements. Said notice of change shall
be effective upon receipt by XAS.
viii
<PAGE>
D. XAS shall maintain all copies of each encoded check, a deposit advice
and other supporting information. XAS will receive any letters or
other communication received with the check and also any checks not
deposited due to exceptions. These shall be maintained by Operations
Manager, Xerox Administrative Services, The Atrium 0871-005, 134 East
Main Street, Rochester, New York 14604. XAS shall deliver to Customer
and Heller, on a monthly basis, reporting reflecting the disposition
of all remittance checks processed at XAS's Lockbox at the following
address:
Cathy Sutton
BankVest Capital Corp.
114 Turnpike Rd.
Westboro, MA 01581
E. XAS shall credit by deposit the total of all remittance checks
processed to the Customer's account number
_____________________________ until such time XAS receives notice from
Heller that Customer is in default under either a Loan and Security
Agreement or a Purchase and Sale Agreement, both with Heller and dated
as of August 7, 1995, and thereafter all deposits will be held by XAS
until Heller shall advise XAS otherwise by written instruction. Heller
agrees to indemnify XAS and hold it harmless from any and all claims,
losses, lawsuits, liabilities, costs and expenses (including court
costs and attorney's fees) of whatsoever kind or nature that XAS may
suffer or incur in relying on such notice. XAS shall have no duties
under the underlying loan or agreement to determine that a default by
Customer exists in fact, and XAS shall have no duty to determine that
signature and notice are genuine. XAS further agrees that, in the
event of its receipt of such notice, Heller may elect to continue to
utilize XAS's Lockbox services as set forth herein, and that XAS shall
accept Heller as a substitute party for Customer hereunder.
F. Maintain a microfilm record of each remittance check processed.
G. Handle the following item in the manner indicated:
1. Foreign items will be processed according to XAS's usual
operating procedures.
2. If there exists a variance between numerical and written amounts,
XAS shall process such items on the basis of the written amounts.
Customer agrees to promptly notify XAS of any adjustments made
with respect to such items, and any appropriate debits or credits
to Customer's account shall thereupon be made.
3. Undated checks will be dated with the current date.
4. Returned checks or disputed items previously credited to
Customer's account will be promptly debited, or if insufficient
balances remain, then Customer will, upon demand, remit to XAS
the amount of funds represented by said items. Said items shall
be made available for delivery to the Customer in the manner
hereinabove provided.
III. Throughout the term of this Agreement, for its services hereunder, Customer
shall advance to XAS monthly, a monthly maintenance fee in accordance with
XAS's current fee schedule in addition to XAS's normal account analysis
charges in effect from time to time. XAS is hereby authorized to bill
Customer directly for fees and charges incurred in connection with this
Agreement.
IV. Customer agrees to and does hereby indemnify and hold harmless XAS from and
against any and all expenses, costs, claims, causes of action, and
liabilities resulting from claims by third parties which directly or
indirectly arise from the handling of and credit given for remittance items
handled under this Agreement, it being understood and agreed that XAS acts
herein as agent for the Customer. XAS will not be liable for acting under
court order, garnishment, tax levy or similar process. It is further
expressly agreed that XAS shall not be liable to Customer or any other
party for any loss, directly or indirectly, resulting from its improper
processing of items as required in Section 2 hereof, except in cases of
gross negligence, fraud or willful misconduct.
ix
<PAGE>
V. This agreement may be terminated by either Customer or XAS upon giving to
the other Thirty (30) days written notice of its intention to do so. A copy
of such notice shall be sent to Heller. However, this Agreement shall
remain in full force and effect after the effective date of cancellation
with respect to items received and processed hereunder.
VI. This Agreement may not be amended, nor may it be terminated by Customer
without the written consent of Heller.
VII. Notices provisions:
Any written notice, request or demand required or permitted by this
Agreement shall, until any party shall notify the others in writing of a
different address, be properly given if sent by certified first class mail,
postage prepaid, return receipt requested, or by prepaid overnight delivery
service or by facsimile transmission, and shall be deemed given on the day
that such writing is received by the party to whom it is sent, and
addressed as follows:
If to XAS: If to the Customer:
__________ __________
__________ __________
__________ __________
__________ __________
Fax Number ( ) Number ( )
--------- --------
If to Heller:
Heller Financial, Inc.
Attn: Vendor Finance Division
One TransAm Plaza Drive, Suite 222
Oakbrook Terrace, Illinois 60181
Fax Number: (708) 916-7457
VIII.This Agreement represents the entire understanding between the parties with
respect to the subject matter hereof and no additional, supplemental or
amending Agreement shall be deemed to exist or be enforceable between the
parties unless in writing and signed by the parties. This Agreement shall
be governed by and construed in accordance with the laws of the State
of___________.
EXECUTED, this day and year first above written.
CUSTOMER XAS
By:________ By:__________
Its:_______ Its:______________
Contact person at Customer should questions arise relative to a Lockbox deposit:
(Please print)
Agreed and Acknowledged:
Heller Financial, Inc.
By:_____________________
Its:____________________
x
<PAGE>
EXHIBIT G
---------
Form of Facility Promissory Note
--------------------------------
FULL RECOURSE FACILITY NOTE
---------------------------
Up to $2,000,000.00
Chicago, Illinois August 7, 1995
For Value Received, BANKVEST CAPITAL CORP., a Massachusetts corporation
("Borrower"), promises to pay to the order of HELLER FINANCIAL, INC., a Delaware
corporation ("Lender"), the principal sum of Two Million Dollars
($2,000,000.00), or so much as is advanced by Lender under the Facility, plus
interest thereon and any other charges applicable thereto, all as set forth more
fully in that certain Loan and Security Agreement dated of even date herewith
and executed by and between Borrower and Lender (the "Agreement"). All
capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in such Agreement, the applicable provisions of which are incorporated
herein by this reference.
This Note is executed to evidence the Facility described in the Agreement. Each
Advance shall bear interest as provided in the Agreement. Interest which accrues
on each Advance, together with the principal amount thereof, shall be payable in
accordance with the applicable Amortization Schedule attached to each Contract
Funding Request. Each payment described on such Amortization Schedule represents
payment of interest as well as principal. The principal balance of the Facility,
or any portion thereof, shall or may be prepaid as described in the Agreement.
If any payment to be made pursuant to this Note becomes past due for a period in
excess of ten (10) days, Borrower shall pay to Lender on demand any late charges
or other payments which Lender is entitled to receive from Borrower pursuant to
the provisions of Article II of the Agreement.
At the election of the holder hereof, upon the occurrence of an Event of
Default, the Facility, and all accrued and unpaid interest thereon, together
with any other applicable charges, shall be and become immediately due and
payable in full.
If any suit or action is instituted or attorneys are employed to collect this
Note or any part thereof, Borrower promises and agrees to pay all costs of
collection, including actual court costs and reasonable attorneys' fees.
Borrower for itself and its successors and assigns hereby waives presentment for
payment, protest and demand, notice of protest, demand and of dishonor and
nonpayment of this Note, and expressly agrees that this Note, or any payment
hereunder, may be extended from time to time before, at or after maturity,
without in any way affecting the liability of Borrower hereunder.
Lender or the holder hereof shall not be required to look to any collateral for
the payment of this Note, but may proceed against the undersigned in such manner
as it deems desirable. None of the rights or remedies of Lender or the holder
hereunder or under the Agreement are to be deemed waived or affected by any
failure to exercise same. All remedies conferred upon Lender or the holder of
this Note, the Agreement or any other instrument or agreement to which the
undersigned is a party or under which any or all of them is bound, shall be
cumulative and not exclusive, and such remedies may be exercised concurrently or
consecutively at Lender's or the holder's option.
THIS PROMISSORY NOTE SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF
THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN
THE STATE OF ILLINOIS. BORROWER DOES HEREBY SUBMIT, AT LENDER'S ELECTION, TO THE
EXCLUSIVE JURISDICTION AND VENUE OF ANY COURTS (FEDERAL, STATE OR LOCAL) HAVING
A SITUS WITHIN THE COUNTY OF COOK AND THE STATE OF ILLINOIS WITH RESPECT TO ANY
DISPUTE, CLAIM, OR SUIT WHETHER DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS PROMISSORY NOTE. BORROWER EXPRESSLY WAIVES PERSONAL SERVICE OF
PROCESS AND CONSENTS TO SERVICE BY CERTIFIED MAIL, POSTAGE PREPAID, DIRECTED TO
THE LAST KNOWN ADDRESS OF BORROWER, WHICH SERVICE SHALL BE DEEMED COMPLETED
WITHIN TEN (10) DAYS AFTER THE DATE OF MAILING THEREOF. BORROWER
xi
<PAGE>
HEREBY IRREVOCABLY WAIVES ANY CLAIM THAT THE COUNTY OF COOK, STATE OF ILLINOIS
IS AN INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK OF VENUE AS WELL AS
ANY RIGHT IT MAY NOW OR HEREAFTER HAVE TO REMOVE ANY SUCH ACTION OR PROCEEDING,
ONCE COMMENCED, TO ANOTHER COURT ON THE GROUNDS OF FORUM NON CONVENIENS OR
OTHERWISE. THE EXCLUSIVE CHOICE OF FORUM SET FORTH HEREIN SHALL NOT BE DEEMED TO
PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE
TAKING OF ANY ACTION BY LENDER TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE
JURISDICTION.
BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS PROMISSORY NOTE. THIS
WAIVER IS INTENDED TO BE EFFECTIVE WITH RESPECT TO ALL DISPUTES WHICH ARISE OUT
OF THE PROMISSORY NOTE, THE LOAN DOCUMENTS OR PERTAIN TO THE TRANSACTIONS
CONTEMPLATED THEREBY. THIS WAIVER IS IRREVOCABLE, AND MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND SUCH WAIVER SET FORTH HEREIN SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS PROMISSORY
NOTE OR THE OTHER LOAN DOCUMENTS.
This Note shall be binding upon Borrower, its successors and assigns, and shall
inure to the benefit of the successors and assigns of Lender.
IN WITNESS WHEREOF, Borrower has executed this Note as of the date first written
above.
BANKVEST CAPITAL CORP.
By: ________________________
Title _____________________
xii
<PAGE>
EXHIBIT H
---------
Form of Contract Funding Request
--------------------------------
[TO BE PUT ON LETTERHEAD OF BORROWER]
REQUEST FOR CONTRACT FUNDING ADVANCE
------------------------------------
___________________, 19___
Heller Financial, Inc.
One Trans Am Plaza Drive -- Suite 222
Oakbrook Terrace, Illinois 60181
Attn: Lease Portfolio Group
Ladies and Gentlemen:
On _________________, 19___, we would like to drawn down $__________________
on our Facility in accordance with the provisions contained in the Loan and
Security Agreement dated as of August 7, 1995 (the "Agreement") between the
undersigned and Heller Financial, Inc. These funds should be wired on
_____________________, 19___ as follows:
Receiving Bank: Credit Account:
In the event we are unable to draw down such Advance on the requested date, the
amount of our requested Advance shall increase by a per-diem rate of
$____________ per day thereafter.
In accordance with the provisions of the Agreement attached hereto as:
(a) Exhibit A are the original Facility Contracts relative to this
Advance (individually, a "Contract" and collectively, the "Contracts"),
attached to which is evidence that each End-User subject to a Facility
Contract has been notified of and has acknowledged in writing the requirement
to remit all future payments due thereunder to the Lockbox;
(b) Exhibit B is an Amortization Schedule, in a format acceptable to
Lender, covering all Contracts subject to this Advance;
(c) Exhibit C is a bill of sale (if applicable) or other evidence of
ownership, Evidence of Insurance (with respect to any Facility Contracts in
which the underlying Facility Equipment has an Acquisition Cost of more than
Fifty Thousand Dollars ($50,000.00), and a Certificate of Acceptance for each
item of Equipment which is subject to a Facility Contract;
(d) Exhibit D is evidence of each End-User's authority to enter into its
respective Facility Contract;
(e) Exhibit E is an Assignment of Contracts and Liens, attached to which
are properly executed UCC financing statements, showing Lender as Secured
Party or as Lender of Secured Party, as applicable;
(f) Exhibit F is a master Contract Payment Letter executed on Borrower's
letterhead;
xiii
<PAGE>
(g) Exhibit G are copies of any current financial statements of the End-
Users which have been furnished to Borrower;
(h) Exhibit H is properly executed UCC financing statements as set forth
in Section 4.2.3 of the Agreement.
I, PAUL GASS, President of BANKVEST CAPITAL CORP., a Massachusetts corporation,
hereby do certify pursuant to Article II of the Loan and Security Agreement
dated as of August 7, 1995 (the "Agreement") (all terms used herein that are
defined in the Agreement and not otherwise defined herein shall have the
respective meanings set forth in the Agreement) between the Borrower and Lender,
that no Event of Default now exists or will be created, and, to the best of my
knowledge after due inquiry, no Incipient Default exists or will be created if
the Advance being requested of Heller Financial, Inc. of even date herewith, is
made.
IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of ______________,
19___.
BANKVEST CAPITAL CORP.
By: ___________________________
Its:___________________________
xiv
<PAGE>
EXHIBIT I
---------
Form of Contract Payment Letter
-------------------------------
[TO BE PLACED ON LETTERHEAD OF BORROWER]
NOTICE AND ACKNOWLEDGMENT OF ASSIGNMENT
---------------------------------------
________________, 19____
To: The Customer shown on the attached Exhibit "A" ("Customer")
Re: The Installment Sale Contract, Conditional Sale Contract or Lease
("Contract") referenced on Exhibit "A" attached hereto, by and between
BankVest Capital Corp. ("BankVest") and Customer, and the equipment which
is the subject of such Contract ("Equipment").
BANKVEST HEREBY GIVES NOTICE TO CUSTOMER THAT IT HAS ASSIGNED THE CONTRACT
FOR FINANCING PURPOSES TO HELLER FINANCIAL, INC. ("HELLER").
In connection with the aforesaid assignment, BankVest hereby directs
Customer, and Customer hereby agrees, to make all further payments of
obligations payable under the Contract to Heller at the following address:
____________________________________
____________________________________
____________________________________
Attn: ______________________________
(or at such other address as Heller from time to time may notify Customer at
Customer's above address or such other address of which Customer has given
Heller notice), commencing with the payment in the amount of $ ____________ due
on _________________, 19___, and monthly thereafter (for a total of
__________________ (______) payments, unless otherwise advised by Heller).
BankVest agrees that payment to Heller will relieve Customer of its obligation
to make such payments to BankVest pursuant to the Contract and all such payments
must be made to Heller until Heller advises Customer otherwise.
All notices and other correspondence to Heller (other than payments) shall
be addressed to it at One TransAm Plaza Drive, Suite 222, Attention: Vendor
Finance Division, Financial Services Group, or to such other address as Heller
may notify Customer from time to time.
Notwithstanding any term or provision of the Contract to the contrary,
Customer hereby represents, acknowledges and agrees:
A. That:
(i) the Contract is in full force and effect and Customer is not in
default thereunder,
(ii) all of the Equipment is in Customer's possession and has been
unconditionally accepted by Customer,
(iii) as of the date of this Notice and Acknowledgment, Customer has
made no prior assignment, pledge or other encumbrance of the Contract, the
Equipment, or any documents related thereto,
(iv) Customer has no knowledge of any facts which might impair the
validity of the Contract,
xv
<PAGE>
(v) Customer is not in possession of the original or counterpart
original Contract or any documents related thereto, except for one duplicate
original of such Contract, which is marked to indicate (A) that it is a
duplicate original, and (B) that all of the rights of the Secured
Party/Lessor and the equipment which is subject to the Contract are subject
to a lien in favor of Heller Financial, Inc." and
(vi) should Customer come into possession of the original or
counterpart original Contract or any documents related thereto, Customer
shall hold such documentation in trust for Heller, and promptly shall turn
over such documentation to Heller;
B. That Customer's obligation to make all payments as set forth in the
Contracts is unconditional and that Customer will make all such payments,
including any and all prepayments thereof, to Heller directly without asserting
any right to setoff, defense, counterclaims, or other rights;
C. That BankVest has assigned to Heller all monies due or to become due
to BankVest under the Contract and all rights and privileges of BankVest under
the Contract except that Heller shall not be chargeable with any obligations or
liabilities thereunder to Customer and that Customer promises to settle all
claims against BankVest directly with BankVest and hereby waives, relinquishes
and disclaims as to Heller all counterclaims, rights of set-off and defenses
Customer may have against BankVest;
D. That Customer will not, without Heller's prior written consent: (i)
prepay monies owing under the Contract, (ii) modify or amend the Contract, (iii)
assign or sublet its rights under the Contract or in the Equipment, (iv)
exercise any of its rights under the Contract which are exercisable only with
the consent of BankVest, or (v) return the Equipment to BankVest;
E. That any notice which Customer is required to give BankVest under the
Contract shall be sent with a copy addressed to Heller;
F. That the rights of the Customer under the Contract or in the Equipment
shall be subject and subordinate and junior to the rights of Heller under any
security agreements or instruments now or hereafter executed by BankVest
affecting the Equipment and the accessions, additions, replacements or
substitutions to the Equipment; and
G. That the proceeds of insurance payable as a result of loss of or
damage to the Equipment shall be applied at the option of Heller: (a) toward the
replacement, restoration of repair of the Equipment, or (b) toward payment of
the obligations of Customer under the Contract and Customer hereby irrevocably
appoints Heller as Customer's attorney-in-fact to make claim for, receive
payment of and execute and endorse all documents, checks or drafts received
under any insurance policy in payment for loss or damage to the Equipment, which
appointment is deemed to be a power coupled with an interest and therefor is
irrevocable.
THE ASSIGNMENT REFERRED TO HEREIN SHALL BE DEEMED NOT TO RELIEVE BANKVEST
FROM ANY OF ITS OBLIGATIONS UNDER THE CONTRACT.
Please acknowledge Customer's consent to and agreement with the foregoing by
having an authorized officer execute the acknowledgment below and returning an
executed copy of this letter to Heller. The parties hereto agree that this
Acknowledgment may be executed in counterparts.
YOU MAY RELY UPON A PHOTOCOPY OF THIS NOTIFICATION IN LIEU OF THE ORIGINAL.
xvi
<PAGE>
BANKVEST CAPITAL CORP.
By: _______________________
Its:_______________________
Acknowledged, consented and agreed to
this _____ day of___________, 19____.
Receipt Acknowledged:
HELLER FINANCIAL, INC.
(Customer)
By: _____________________ By: _______________________
Title: __________________ Title: _________________
xvii
<PAGE>
EXHIBIT J
---------
Form of Clerk's Certificate re: Articles, Bylaws and Resolutions
----------------------------------------------------------------
CLERK'S CERTIFICATE -- BANKVEST CAPITAL CORP.
The undersigned hereby certifies that he/she is the duly elected, qualified and
acting Clerk of BANKVEST CAPITAL CORP., a Massachusetts corporation (the
"Corporation") and, pursuant to that certain Loan and Security Agreement dated
as of August 7, 1995 (the "Agreement"), between the Corporation and Heller
Financial, Inc., a Delaware corporation, hereby further certifies as follows:
(a) Attached hereto as Exhibit A is a complete and correct copy of the Bylaws
of the Corporation, as in effect on the date hereof, which Bylaws have not
been amended, modified or rescinded since the date of adoption thereof,
except as set forth in such Exhibit A;
(b) Attached hereto as Exhibit B is a complete and correct copy of the
Corporation's Certificate of Incorporation certified by the Secretary of
State of Massachusetts as true, complete and correct as of
_____________________, 19___, and no action for any amendment to such
certificate has been taken since that date or is pending, except as set
forth in such Exhibit B;
(c) Attached hereto as Exhibit C is a complete and correct copy of resolutions
duly adopted by unanimous written consent of the directors of the
Corporation, in accordance with Section ________ of the Massachusetts
Corporation Law, which resolutions have not been amended, modified or
rescinded since the date of adoption thereof and are in full force and
effect on the date hereof;
(d) Set forth below are the names and titles of the duly elected, qualified and
acting officers of the Corporation, each such person holds the office set
forth opposite his or her name, and the signatures appearing opposite the
respective names of those officers who are executing any of the Loan
Documents (as defined in the Agreement) on behalf of the Corporation are
genuine signatures of such officers:
__________________ __________________________________
President
__________________ __________________________________
Senior Vice President -- Operations
__________________ __________________________________
Clerk
__________________ __________________________________
Chief Financial Officer
__________________ __________________________________
Senior Vice President
__________________ __________________________________
Vice President
(e) Each such officer who signs or has signed the Agreement or any other
documents delivered pursuant to the Agreement is or has been duly
authorized and empowered to do so in the name and on behalf of the
Corporation.
IN WITNESS WHEREOF, the undersigned have executed this Clerk's Certificate this
___ day of ____________, 19___.
___________________________________
xviii
<PAGE>
The undersigned hereby certifies that ___ is the duly elected, qualified and
acting President of the Corporation, and hereby further certifies that
______________________ is the duly elected, qualified and acting Clerk of the
Corporation, and that the above signature is h___ genuine signature.
___________________________________
EXHIBIT K
---------
Form of Opinion of Borrower's Counsel
-------------------------------------
Heller Financial, Inc.
One Trans Am Plaza Drive
Suite 222
Oakbrook Terrace, Illinois 60181
We have acted as counsel to BANKVEST CAPITAL CORP. (the "Corporation"), in
connection with the preparation of, and the initial borrowing made under that
certain Loan and Security Agreement (the "Agreement") dated as of August 7, 1995
by and between the Corporation and you and the following documents:
1. Facility Note in the principal amount of $2,000,000.00 dated as of
August 7, 1995 executed by the Corporation as maker/Borrower, payable
to your order;
2. Assignment of Contracts and Liens dated as of _____________, executed
by the Corporation in your favor;
(which documents together with the Agreement shall be referred to herein
collectively as the "Transaction Documents") and have participated in the
Corporation's behalf in connection with your loan to the Corporation
("Transaction"). This Opinion Letter is provided to you at the request of the
Corporation pursuant to Section 4.1.4 of the Agreement. Except as otherwise
indicated herein, capitalized terms used in this Opinion Letter are defined as
set forth in the Agreement or the Accord (as defined below) unless the context
requires otherwise. In case of an inconsistency between terms defined in both,
the definitions in the Agreement shall govern.
For purposes of this Opinion Letter, we have examined, among other things, the
following documents:
[LIST DOCUMENTS REVIEWED]
This Opinion Letter is governed by, and shall be interpreted in accordance with,
the Legal Opinion Accord (the "Accord") of the ABA Section of Business Law
(1991). As a consequence, it is subject to a number of qualifications,
exceptions, definitions, limitations on coverage and other limitations, all as
more particularly described in the Accord, and this Opinion Letter should be
read in conjunction therewith. The law covered by the opinions expressed herein
is limited to the federal Law of the United States and the Law of the State of
___________.
As to various matters of fact relevant to the opinions expressed herein, we have
relied, with your permission, upon the representations and warranties contained
in Sections 5.3, 5.4 and 5.7 of the Agreement.
In issuing this Opinion Letter, we have assumed, without independent
investigation on our part, that (i) you have duly executed and delivered all
Transaction Documents and other documents required by you in connection with the
making and Closing of the Facility in accordance with the Agreement, excepting
only such documents as did not require your execution, which documents you have
duly accepted; and (ii) the descriptions of Collateral set forth in the
Transaction Documents are accurate and complete.
Based upon and subject to the foregoing, and subject to the qualifications set
forth below, we are of the opinion that:
xix
<PAGE>
1. The Transaction Documents are enforceable against the Corporation in
accordance with their respective terms.
2. Execution and delivery by the Corporation of, and performance of its
agreements in, the Transaction Documents, do not (i) breach, or result in a
default under, any existing obligation of the Corporation under contracts
pertaining to the borrowing of money by the Corporation or guaranties by
the Corporation of third-party debt, the breach or default of which would
result in a material adverse impact on the Corporation's ability to
consummate the Transaction or to perform any of its obligations under the
Transaction Documents, (ii) breach or otherwise violate any existing
obligation of the Corporation under any Court Order, or (iii) result in the
creation or imposition of any lien on the Property of the Corporation,
except the Permitted Liens.
3. Execution and delivery by the Corporation of, and performance by the
Corporation of its agreements in, the Transaction Documents do not violate
applicable provisions of statutory law or regulation.
4. The Agreement creates a valid security interest in the Collateral.
5. We hereby confirm to you that there are no actions or proceedings against
the Corporation, pending or overtly threatened in writing, before any
court, governmental agency or arbitrator which (i) seek to affect the
enforceability of the Agreement, or (ii) except as disclosed in Exhibit M
to the Agreement, would, if determined adversely to the Corporation, have a
material adverse impact on the Corporation's ability to perform any of its
obligations under the Transaction Documents.
The General Qualifications apply to the opinions set forth in paragraphs 3 and 4
above as well as to the opinion set forth in paragraph 1 above.
This Opinion Letter may be relied on by you only in connection with the
Transaction and may not be used or relied on by you or any other person for any
other purpose whatsoever, except to the extent authorized in the Accord, without
in each instance our prior written consent.
Very truly yours,
xx
<PAGE>
EXHIBIT L
---------
List of Borrower Financial Statements Delivered to Lender
---------------------------------------------------------
xxi
<PAGE>
EXHIBIT M
---------
Description of Material Litigation
----------------------------------
TO BE PROVIDED BY BORROWER AND BORROWER'S COUNSEL
xxii
<PAGE>
ASSIGNMENT OF CONTRACTS AND LIENS
---------------------------------
THIS ASSIGNMENT OF CONTRACTS AND LIENS is made as of the _____ day of
__________, by BANKVEST CAPITAL CORP., a Massachusetts corporation (the
"Borrower"), to HELLER FINANCIAL, INC., a Delaware corporation ("Lender").
RECITALS:
--------
A. Lender and Borrower have entered into a Loan and Security Agreement
dated as of August 7, 1995 (the "Agreement") pursuant to which Lender has agreed
to make certain Advances to Borrower, subject to the terms and conditions set
forth therein.
B. Borrower is the lessor and/or secured party under those certain
Contracts (individually, a "Contract" and collectively, the "Contracts")
pertaining to certain Facility Equipment (the "Equipment"), a description of
which is set forth on Exhibit A. A true and correct copy of each Contract
(together with all amendments and modifications thereto) is attached as Exhibit
B.
C. Pursuant to each Contract, the End-User has executed UCC Financing
Statements with respect to the related Facility Equipment.
D. One of the conditions precedent to Lender's obligation to provide the
financing described above is Borrower's execution and delivery of this
Assignment.
NOW, THEREFORE, to induce Lender to make the Advances and for other good
and valuable consideration, the receipt and sufficiency of which are
acknowledged, Borrower agrees as follows:
1. DEFINITION. Any capitalized term not otherwise defined herein which is
----------
defined in the Agreement shall have the meaning ascribed thereto in such
Agreement.
2. ASSIGNMENT. To secure payment and performance of Borrower's
----------
Obligations, Borrower transfers and assigns to Lender all of Borrower's right,
title and interest in and to each of the Contracts and each of the Borrower
Liens.
3. REPRESENTATIONS AND WARRANTIES. The Representations and Warranties set
------------------------------
forth in the Agreement in Article V are hereby incorporated herein by reference
and reaffirmed with respect to all Contracts to be made subject to the requested
Advance. Borrower also represents and warrants that all of the conditions to
Advances set forth in Section 4.2 of the Agreement have been satisfied.
4. COVENANTS. The Covenants set forth in the Agreement in Articles VI and
---------
VII are hereby incorporated herein by reference and reaffirmed with respect to
all Contracts to be made subject to the requested Advance.
5. SECURITY. This Assignment is for collateral security purposes only.
--------
6. REMEDIES FOR DEFAULT. Upon the occurrence of any Borrower Event of
--------------------
Default or Contract Event of Default, Lender, at its option, without in any way
waiving such default, shall have all of the remedies set forth in Article VIII
of the Agreement.
7. RELEASE OF ASSIGNMENT. Upon the payment and performance in full of all
---------------------
of Borrower's Obligations with respect to a Facility Contract (or the exercise
of a Permitted Substitution with respect thereto), all of the covenants and
obligations of Borrower to Lender with respect to such Facility Contract and the
Facility Equipment which is subject thereto shall be deemed to be satisfied, the
Loan Documents applicable to such Facility Contract and such Facility Equipment
shall automatically terminate and Lender shall execute and deliver to Borrower
such UCC termination statements and other instruments as may be necessary to
release the applicable Lender Lien(s) in the related Collateral.
1
<PAGE>
8. SEVERABILITY. In the event that any provision of this Assignment is
------------
deemed to be invalid by reason of the operation of any law or by reason of the
interpretation placed thereon by any court or any other Governmental Body, this
Assignment shall be construed as not containing such provision and the
invalidity of such provision shall not affect the validity of any other
provisions hereof, and any and all other provisions hereof which otherwise are
lawful and valid shall remain in full force and effect.
9. GOVERNING LAW. THIS ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, EXCEPT TO THE EXTENT THAT IT
IS MANDATORY THAT THE LAWS OF THE STATE IN WHICH THE EQUIPMENT IS LOCATED APPLY.
FOR PURPOSES OF THIS SECTION 9, THIS ASSIGNMENT SHALL BE DEEMED TO BE PERFORMED
AND MADE IN THE STATE OF ILLINOIS.
10. MISCELLANEOUS.
-------------
(a) No delay or omission on the part of Lender in exercising any rights or
remedies contained herein shall operate as a waiver of such right or remedy or
any other right or remedy, and no single or partial exercise of any right or
remedy shall preclude any other or further exercise thereof, or the exercise of
any other right or remedy. A waiver of any right or remedy on any one occasion
shall not be construed as a bar or waiver of any right or remedy on future
occasions, and no delay, omission, waiver or single or partial exercise shall be
deemed to establish a custom or course of dealing or performance between the
parties hereto.
(b) The right of the Lender to enforce any other security for Borrower's
Obligations may be exercised either prior to, simultaneously with, or subsequent
to any action taken by Lender hereunder.
(c) This Assignment, together with the covenants, representations and
warranties herein contained, shall inure to the benefit of Lender and its
successors and assigns and shall be binding upon the successors and assigns of
Borrower.
IN WITNESS WHEREOF, this Assignment has been made by Borrower as of the day
and year first written above.
BANKVEST CAPITAL CORP.
By: ______________________________________
Its: _____________________________________
2
<PAGE>
CLOSING CERTIFICATE
-------------------
I, PAUL GASS, President of BANKVEST CAPITAL CORP., a Massachusetts
corporation, hereby do certify pursuant to the Loan and Security Agreement dated
as of August 7, 1995 (the "Agreement") (all terms used herein that are defined
in the Agreement and not otherwise defined herein shall have the respective
meanings set forth in the Agreement) between the Borrower and Lender, as
follows:
1. The representations and warranties contained in Article V of the
Agreement are true and correct as of the Closing Date.
2. All conditions of Closing set forth in Section 4.1 of the Agreement
have been satisfied, except as follows:
___________________________________________________________________________
________________________________________________________________________________
______________________________________________________________.
3. No Event of Default or Incipient Default exists as of the Closing
Date.
4. No material adverse change has occurred in the business of Borrower
since the date of the last financial statements delivered by the Borrower to
Lender.
IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of
____________________, 19___.
BANKVEST CAPITAL CORP. ATTEST:
By: __________________________________ _________________________
Clerk
<PAGE>
FULL RECOURSE FACILITY NOTE
---------------------------
Up to $2,000,000.00
Chicago, Illinois August 7, 1995
For Value Received, BANKVEST CAPITAL CORP., a Massachusetts corporation
("Borrower"), promises to pay to the order of HELLER FINANCIAL, INC., a Delaware
corporation ("Lender"), the principal sum of Two Million Dollars
($2,000,000.00), or so much as is advanced by Lender under the Facility, plus
interest thereon and any other charges applicable thereto, all as set forth more
fully in that certain Loan and Security Agreement dated of even date herewith
and executed by and between Borrower and Lender (the "Agreement"). All
capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in such Agreement, the applicable provisions of which are incorporated
herein by this reference.
This Note is executed to evidence the Facility described in the Agreement. Each
Advance shall bear interest as provided in the Agreement. Interest which accrues
on each Advance, together with the principal amount thereof, shall be payable in
accordance with the applicable Amortization Schedule attached to each Contract
Funding Request. Each payment described on such Amortization Schedule represents
payment of interest as well as principal. The principal balance of the Facility,
or any portion thereof, shall or may be prepaid as described in the Agreement.
If any payment to be made pursuant to this Note becomes past due for a period in
excess of ten (10) days, Borrower shall pay to Lender on demand any late charges
or other payments which Lender is entitled to receive from Borrower pursuant to
the provisions of Article II of the Agreement.
At the election of the holder hereof, upon the occurrence of an Event of
Default, the Facility, and all accrued and unpaid interest thereon, together
with any other applicable charges, shall be and become immediately due and
payable in full.
If any suit or action is instituted or attorneys are employed to collect this
Note or any part thereof, Borrower promises and agrees to pay all costs of
collection, including actual court costs and reasonable attorneys' fees.
Borrower for itself and its successors and assigns hereby waives presentment for
payment, protest and demand, notice of protest, demand and of dishonor and
nonpayment of this Note, and expressly agrees that this Note, or any payment
hereunder, may be extended from time to time before, at or after maturity,
without in any way affecting the liability of Borrower hereunder.
Lender or the holder hereof shall not be required to look to any collateral for
the payment of this Note, but may proceed against the undersigned in such manner
as it deems desirable. None of the rights or remedies of Lender or the holder
hereunder or under the Agreement are to be deemed waived or affected by any
failure to exercise same. All remedies conferred upon Lender or the holder of
this Note, the Agreement or any other instrument or agreement to which the
undersigned is a party or under which any or all of them is bound, shall be
cumulative and not exclusive, and such remedies may be exercised concurrently or
consecutively at Lender's or the holder's option.
THIS PROMISSORY NOTE SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF
THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN
THE STATE OF ILLINOIS. BORROWER DOES HEREBY SUBMIT, AT LENDER'S ELECTION, TO THE
EXCLUSIVE JURISDICTION AND VENUE OF ANY COURTS (FEDERAL, STATE OR LOCAL)
HAVING A SITUS WITHIN THE COUNTY OF COOK AND THE STATE OF ILLINOIS WITH RESPECT
TO ANY DISPUTE, CLAIM, OR SUIT WHETHER DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS PROMISSORY NOTE. BORROWER EXPRESSLY WAIVES PERSONAL SERVICE OF
PROCESS AND CONSENTS TO SERVICE BY CERTIFIED MAIL, POSTAGE PREPAID, DIRECTED TO
THE LAST KNOWN ADDRESS OF BORROWER, WHICH SERVICE SHALL BE DEEMED COMPLETED
WITHIN TEN (10) DAYS AFTER THE DATE OF MAILING THEREOF. BORROWER HEREBY
IRREVOCABLY WAIVES ANY CLAIM THAT THE COUNTY OF COOK, STATE OF ILLINOIS IS AN
INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK OF VENUE AS WELL AS ANY
RIGHT IT MAY NOW OR HEREAFTER HAVE TO REMOVE ANY SUCH ACTION OR PROCEEDING, ONCE
COMMENCED, TO ANOTHER COURT ON THE GROUNDS OF FORUM NON CONVENIENS OR OTHERWISE.
THE
<PAGE>
EXCLUSIVE CHOICE OF FORUM SET FORTH HEREIN SHALL NOT BE DEEMED TO PRECLUDE THE
ENFORCEMENT BY LENDER OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF
ANY ACTION BY LENDER TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE JURISDICTION.
BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS PROMISSORY NOTE. THIS
WAIVER IS INTENDED TO BE EFFECTIVE WITH RESPECT TO ALL DISPUTES WHICH ARISE OUT
OF THE PROMISSORY NOTE, THE LOAN DOCUMENTS OR PERTAIN TO THE TRANSACTIONS
CONTEMPLATED THEREBY. THIS WAIVER IS IRREVOCABLE, AND MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND SUCH WAIVER SET FORTH HEREIN SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS PROMISSORY
NOTE OR THE OTHER LOAN DOCUMENTS.
This Note shall be binding upon Borrower, its successors and assigns, and shall
inure to the benefit of the successors and assigns of Lender.
IN WITNESS WHEREOF, Borrower has executed this Note as of the date first written
above.
BANKVEST CAPITAL CORP.
By: ____________________________________
Title __________________________________
<PAGE>
CLERK'S CERTIFICATE -- BANKVEST CAPITAL CORP.
The undersigned hereby certifies that he/she is the duly elected, qualified and
acting Clerk of BANKVEST CAPITAL CORP., a Massachusetts corporation (the
"Corporation") and, pursuant to that certain Loan and Security Agreement dated
as of August 7, 1995 (the "Agreement"), between the Corporation and Heller
Financial, Inc., a Delaware corporation, hereby further certifies as follows:
(a) Attached hereto as Exhibit A is a complete and correct copy of the Bylaws
of the Corporation, as in effect on the date hereof, which Bylaws have not
been amended, modified or rescinded since the date of adoption thereof,
except as set forth in such Exhibit A;
(b) Attached hereto as Exhibit B is a complete and correct copy of the
Corporation's Certificate of Incorporation certified by the Secretary of
State of Massachusetts as true, complete and correct as of
_____________________, 19___, and no action for any amendment to such
certificate has been taken since that date or is pending, except as set
forth in such Exhibit B;
(c) Attached hereto as Exhibit C is a complete and correct copy of resolutions
duly adopted by unanimous written consent of the directors of the
Corporation, in accordance with Section ________ of the Massachusetts
Corporation Law, which resolutions have not been amended, modified or
rescinded since the date of adoption thereof and are in full force and
effect on the date hereof;
(d) Set forth below are the names and titles of the duly elected, qualified and
acting officers of the Corporation, each such person holds the office set
forth opposite his or her name, and the signatures appearing opposite the
respective names of those officers who are executing any of the Loan
Documents (as defined in the Agreement) on behalf of the Corporation are
genuine signatures of such officers:
_________________ ___________________________________
President
_________________ ___________________________________
Senior Vice President -- Operations
_________________ ___________________________________
Clerk
_________________ ___________________________________
Chief Financial Officer
_________________ ___________________________________
Senior Vice President
_________________ ___________________________________
Vice President
(e) Each such officer who signs or has signed the Agreement or any other
documents delivered pursuant to the Agreement is or has been duly
authorized and empowered to do so in the name and on behalf of the
Corporation.
IN WITNESS WHEREOF, the undersigned have executed this Clerk's Certificate this
___ day of ____________, 19___.
___________________________________
The undersigned hereby certifies that ___ is the duly elected, qualified and
acting President of the Corporation, and hereby further certifies that
______________________ is the duly elected, qualified and acting Clerk of the
Corporation, and that the above signature is h___ genuine signature.
___________________________________
<PAGE>
LOCKBOX SERVICE AGREEMENT BETWEEN XEROX ADMINISTRATIVE SERVICES and
BANKVEST CAPITAL CORP.
THIS AGREEMENT, made as of August 7, 1995, is by and between and XEROX
ADMINISTRATIVE SERVICES ("XAS") and BANKVEST CAPITAL CORP. ("Customer").
WITNESSETH
WHEREAS, Customer desires to purchase from XAS, and XAS desires to sell to
Customer, XAS's Lockbox services hereinafter described, for the benefit of
HELLER FINANCIAL, INC. ("Heller"), on those terms and conditions set forth:
NOW, THEREFORE, it is agreed by and between the parties as follows:
I. Customer warrants, represents, and agrees to notify its accounts that
remittance checks shall be mailed to the Customer at the following address:
____________
____________
____________
II. The procedures to be followed in the handling of Lockbox services provided
for herein shall be as hereafter stated in this paragraph, and XAS agrees
to do each of the following:
A. Collect mail at scheduled times from the Post Office box provided for
this purpose Monday through Friday. There will be no mail collection
on Saturday, Sunday or any State or Federal Holiday.
B. To process all remittances within the exception item guidelines that
the Customer has defined below.
Exception Item Guidelines
1. Post-Dated checks will be held for deposit within a reasonable time
----------
(currently 5 days);
2. No Date checks are deposited as of the date received;
-------
3. No Signature checks are returned to the End-user;
------------
4. Legends (paid in full are deposited and notification send to End-user
--------
not accepting legend);
5. Payable to Not Indicated checks are returned to the End-user; and
------------------------
6. Other exceptions are dealt with on an as received basis.
-----
C. All remittance checks to be processed and deposited to Customer's
account shall be endorsed, "For Deposit Only -- BankVest Capital --
Account #590 17097 0." AFTER XAS'S RECEIPT OF NOTICE OF DEFAULT AS
DESCRIBED IN PARAGRAPH E. BELOW, ALL REMITTANCE CHECKS TO BE PROCESSED
AND DEPOSITED SHALL BE ENDORSED, "CREDIT TO THE ACCOUNT OF PARTIES AS
SET FORTH IN LOCKBOX SERVICE AGREEMENT BETWEEN BANKVEST CAPITAL CORP.
AND XEROX ADMINISTRATIVE SERVICES DATED AS OF AUGUST 7, 1995. ABSENCE
OF ENDORSEMENT GUARANTEED." Any change in the manner or style of said
endorsement shall be made by Customer's and Heller's written notice to
XAS of such change, and Customer shall supply XAS a stamp conforming
to Customer's and Heller's requirements. Said notice of change shall
be effective upon receipt by XAS.
<PAGE>
D. XAS shall maintain all copies of each encoded check, a deposit advice
and other supporting information. XAS will receive any letters or
other communication received with the check and also any checks not
deposited due to exceptions. These shall be maintained by Operations
Manager, Xerox Administrative Services, The Atrium 0871-005, 134 East
Main Street, Rochester, New York 14604. XAS shall deliver to Customer
and Heller, on a monthly basis, reporting reflecting the disposition
of all remittance checks processed at XAS's Lockbox at the following
address:
Cathy Sutton
BankVest Capital Corp.
114 Turnpike Rd.
Westboro, MA 01581
E. XAS shall credit by deposit the total of all remittance checks
processed to the Customer's account number
_____________________________ until such time XAS receives notice from
Heller that Customer is in default under either a Loan and Security
Agreement or a Purchase and Sale Agreement, both with Heller and dated
as of August 7, 1995, and thereafter all deposits will be held by XAS
until Heller shall advise XAS otherwise by written instruction. Heller
agrees to indemnify XAS and hold it harmless from any and all claims,
losses, lawsuits, liabilities, costs and expenses (including court
costs and attorney's fees) of whatsoever kind or nature that XAS may
suffer or incur in relying on such notice. XAS shall have no duties
under the underlying loan or agreement to determine that a default by
Customer exists in fact, and XAS shall have no duty to determine that
signature and notice are genuine. XAS further agrees that, in the
event of its receipt of such notice, Heller may elect to continue to
utilize XAS's Lockbox services as set forth herein, and that XAS shall
accept Heller as a substitute party for Customer hereunder.
F. Maintain a microfilm record of each remittance check processed.
G. Handle the following item in the manner indicated:
1. Foreign items will be processed according to XAS's usual
operating procedures.
2. If there exists a variance between numerical and written amounts,
XAS shall process such items on the basis of the written amounts.
Customer agrees to promptly notify XAS of any adjustments made
with respect to such items, and any appropriate debits or credits
to Customer's account shall thereupon be made.
3. Undated checks will be dated with the current date.
4. Returned checks or disputed items previously credited to
Customer's account will be promptly debited, or if insufficient
balances remain, then Customer will, upon demand, remit to XAS
the amount of funds represented by said items. Said items shall
be made available for delivery to the Customer in the manner
hereinabove provided.
III. Throughout the term of this Agreement, for its services hereunder, Customer
shall advance to XAS monthly, a monthly maintenance fee in accordance with
XAS's current fee schedule in addition to XAS's normal account analysis
charges in effect from time to time. XAS is hereby authorized to bill
Customer directly for fees and charges incurred in connection with this
Agreement.
IV. Customer agrees to and does hereby indemnify and hold harmless XAS from and
against any and all expenses, costs, claims, causes of action, and
liabilities resulting from claims by third parties which directly or
indirectly arise from the handling of and credit given for remittance items
handled under this Agreement, it being understood and agreed that XAS acts
herein as agent for the Customer. XAS will not be liable for acting under
court order, garnishment, tax levy or similar process. It is further
expressly agreed that XAS shall not be liable to Customer or any other
party for any loss, directly or indirectly, resulting from its improper
processing of items as required in Section 2 hereof, except in cases of
gross negligence, fraud or willful misconduct.
<PAGE>
V. This agreement may be terminated by either Customer or XAS upon giving to
the other Thirty (30) days written notice of its intention to do so. A
copy of such notice shall be sent to Heller. However, this Agreement
shall remain in full force and effect after the effective date of
cancellation with respect to items received and processed hereunder.
VI. This Agreement may not be amended, nor may it be terminated by Customer
without the written consent of Heller.
VII. Notices provisions:
Any written notice, request or demand required or permitted by this
Agreement shall, until any party shall notify the others in writing of a
different address, be properly given if sent by certified first class
mail, postage prepaid, return receipt requested, or by prepaid overnight
delivery service or by facsimile transmission, and shall be deemed given
on the day that such writing is received by the party to whom it is sent,
and addressed as follows:
If to XAS: If to the Customer:
_________ ________
_________ ________
_________ ________
_________ ________
Fax Number ( ) Fax Number ( )
----------- -----------
If to Heller:
Heller Financial, Inc.
Attn: Vendor Finance Division
One TransAm Plaza Drive, Suite 222
Oakbrook Terrace, Illinois 60181
Fax Number: (708) 916-7457
VIII. This Agreement represents the entire understanding between the parties
with respect to the subject matter hereof and no additional, supplemental
or amending Agreement shall be deemed to exist or be enforceable between
the parties unless in writing and signed by the parties. This Agreement
shall be governed by and construed in accordance with the laws of the
State of___________.
EXECUTED, this day and year first above written.
CUSTOMER XAS
By:_______________ By:______________
Its:_______________ Its:______________
Contact person at Customer should questions arise relative to a Lockbox deposit:
(Please print)
Agreed and Acknowledged:
Heller Financial, Inc.
By:_______________________
Its:______________________
<PAGE>
EXHIBIT 10.49
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
----------------------------------------------
This Amendment is made as of February 12, 1996 ("Amendment") to supplement and
amend that certain Loan and Security Agreement dated as of August 7, 1995 and
all documents related thereto (collectively, the "Loan Agreement") between
HELLER FINANCIAL, INC., a Delaware corporation ("Lender") and BANKVEST CAPITAL
CORP., a Massachusetts corporation ("Borrower"). Any capitalized terms used
herein and which are defined in the Loan Agreement shall have the meaning set
forth in the Loan Agreement. Where a textual passage is amended in part only,
new language may be shown double underlined, deleted language may be shown in
=================
*strikeout*, and ... (an ellipsis) may be used for language that is unmodified.
Such double underlining, strike out and ellipses as used herein are for
convenience only to illustrate changes from the Loan Agreement, and are not part
of the Loan Agreement as amended.
PRELIMINARY STATEMENT
---------------------
A. Pursuant to the Loan Agreement, Lender has made to Borrower various
Advances;
B. Borrower desires to increase the available facility under the Loan
Agreement to $7,500,000 (the "Increased Facility"), with availability to be
shared between the Loan Agreement and that Purchase and Sale Agreement dated as
of August 7, 1995 by and between Lender and Borrower ("Sale Agreement"). Lender
is willing to comply with Borrower's request, subject to the terms and
conditions set forth below.
NOW, THEREFORE, it is hereby agreed as follows:
1. AMENDMENT OF DEFINITIONS; ADDITIONAL DEFINITIONS.
------------------------------------------------
1.1 The definitions of "Facility Expiration Date" and "Facility Funding
Period" shall be deleted in their entirety.
1.2 New definitions, Purchase and Sale Agreement, Lockbox Compliance
--------------------------- ------------------
Ratio and Lockbox Compliance Ratio Covenant, shall be added as follows:
----- ---------------------------------
"Purchase and Sale Agreement or Sale Agreement: that certain
--------------------------- --------------
Purchase and Sale Agreement dated as of August 7, 1995 between
Borrower and Lender, as amended from time to time."
"Lockbox Compliance Ratio shall have the meaning set forth in
------------------------
Exhibit O -- Lockbox Compliance Certificate."
"Lockbox Compliance Ratio Covenant: a requirement that the
---------------------------------
Lockbox Compliance Ratio, as set forth in the most recently due
Lockbox Compliance Certificate, expressed as a percentage, be equal
to or greater than eighty percent (80%)."
1.3 The definition of Acquisition Cost shall be amended to read as
----------------
follows:
"Acquisition Cost: all costs and expenses incurred by an End-User
----------------
(in the case of installment/conditional sales contracts) or by
Borrower (in the case of any Leases with Borrower as lessor) in
connection with the acquisition of any Eligible Equipment,
including, without limitation, sales or use taxes, freight or
installation costs, and license fees, but excluding any down
payments or deposits (including security deposits) made by End-
=========================================
User."
<PAGE>
1.4 The definition of Collection Agent shall be amended to read as
----------------
follows:
"Collection Agent: XEROX ADMINISTRATIVE SERVICES, PARISH
----------------
FINANCIAL SERVICING CO., L.P., or any successor entity jointly
=======
approved by Lender and Borrower which is authorized to service,
========================================
administer and collect remittances due from End-Users under Facility
Contracts."
1.5 The definition of Loan Repayment Amount shall be amended to read as
---------------------
follows:
"Loan Repayment Amount: with respect to an Advance at any time,
---------------------
the aggregate unpaid principal of, and accrued interest (including
any interest accrued at the Default Rate) computed in accordance
======================
with the Rule of 78's, on such Advance."
======================
1.6 The definition of Lockbox Agreement shall be amended to read as
-----------------
follows:
"Lockbox Agreement: the agreement among Borrower, Collection
-----------------
Agent and Lender, substantially in the form attached hereto as
Exhibit F and subject to Lender's approval, which shall set forth
================================
the terms, conditions and provisions of the Lockbox."
2. AMOUNT. Section 2.2.1 shall be amended to read as follows:
------
"2.2.1 Amount. The Facility is a term loan in the amount of up to
------
*Two* Seven Million Five Hundred Thousand Dollars *($2,000,000)*
===== =====================
($7,500,000), less any amounts outstanding under the Sale Agreement,
===================================================================
which, subject to the provisions of subsection 2.2.2 and Section 2.4
shall be made available to Borrower by Lender *during the Facility
Funding Period.*"
3. EXTENSION OF FACILITY EXPIRATION DATE. Section 2.3 shall be deleted in
-------------------------------------
its entirety and replaced with the following:
"2.3 Termination of Facility. Upon not less than sixty (60)
-----------------------
days' prior notice, either party may notify the other of its intention
not to seek/provide any further financing hereunder; provided, however,
--------
that notwithstanding the foregoing, all of Borrower's Obligations shall
survive any expiration or termination of this Agreement and/or the
termination of any Facility Contract."
4. PREPAYMENT. Section 2.6 and all subsections thereunder shall be deleted
----------
in its entirety and replaced with the following:
"2.6 Prepayment.
----------
2.6.1 Voluntary Prepayment. Borrower may prepay one or more
--------------------
Advances under the Facility upon at least thirty (30) Business Days'
prior notice received by Lender, by paying to Lender the amount of such
prepayment, plus all accrued and unpaid interest (at the applicable
Facility Funding Rate(s) or Default Rate) calculated in accordance with
the "Rule of 78's", plus the amount of the Ordinary Prepayment Premium
applicable thereto. Upon request by Borrower, Lender shall, as soon as
practicable, provide to Borrower the amount of Borrower's Obligations
which must be repaid to Borrower to satisfy the requirements of this
paragraph.
2.6.2 Mandatory Prepayment.
--------------------
(a) Termination of Contract due to End-User Buyout. If an
----------------------------------------------
End-User voluntarily terminates a Facility Contract before its
scheduled expiration by exercising an option to purchase the
Facility Equipment, Borrower shall prepay the associated Advance
within ten (10) Business Days of such termination by paying to
Lender (i) the Loan Repayment Amount with respect to such Advance,
along
2
<PAGE>
with (ii) the applicable Ordinary Prepayment Premium.
Notwithstanding the foregoing, if Borrower elects to exercise its
right of Permitted Substitution with respect to such terminated
Facility Contract, no Ordinary Prepayment Premium shall be payable
with respect thereto.
(b) Casualty. If any Equipment subject to an Advance is
---------
lost or damaged, and cannot be repaired or replaced with
substantially similar Equipment by the first due date occurring not
less than thirty (30) days after such loss or damage, Borrower shall
prepay the associated Advance within ten (10) Business Days
thereafter by paying to Lender the Loan Repayment Amount with
respect to such Advance, and, to the extent Borrower is able to
---
collect sufficient proceeds from the insurance carrier and/or the
End-User, an amount to additionally reimburse Lender for costs
incident to breaking its corresponding debt, which shall not exceed
three percent (3%) of the principal amount prepaid, and which shall
be evidenced by a certificate prepared by Lender showing, in
reasonable detail, the calculation of such costs. No Ordinary
Prepayment Premium shall be payable in respect to a mandatory
prepayment made pursuant to this subsection.
(c) Contract Event of Default. If Borrower prepays an
-------------------------
Advance pursuant to Section 8.3.3 hereof with respect to a Contract
Event of Default, no Ordinary Prepayment Premium shall be payable by
Borrower to Lender in connection with any such prepayment.
(d) Early Termination without End-User Buyout. If a
-----------------------------------------
Facility Contract is voluntarily terminated by a End-User prior to
the scheduled expiration, without the exercise of a purchase option,
Borrower shall prepay the associated Advance within thirty (30) days
of such event by paying to Lender the (i) Loan Repayment Amount and
the (ii) Ordinary Prepayment Premium with respect to such Advance.
Notwithstanding the foregoing, if Borrower elects to exercise its
right of Permitted Substitution with respect to such terminated
Facility Contract, no Ordinary Prepayment Premium shall be payable
with respect thereto.
2.6.3 No Other Prepayments Permitted. No Facility Advance may be
------------------------------
prepaid except as otherwise expressly provided in this Agreement unless
Borrower pays the Ordinary Prepayment Premium together with the Loan
Repayment Amount for such Facility Advance.
2.6.4 Involuntary Prepayment. Any prepayment of the Advances
----------------------
received by Lender resulting from the exercise by Lender of any remedy
available to Lender subsequent to the occurrence of a Borrower Event of
Default and the acceleration of Borrower's Obligations shall be deemed to
be a mandatory prepayment, and the applicable Ordinary Prepayment Premium
shall be payable with respect thereto."
5. CONDITIONS TO CLOSING. Section 4.2.4 shall be amended to read as
---------------------
follows:
"4.2.4 Additional Conditions. Borrower shall have re-satisfied the
---------------------
conditions set forth in Sections 4.1.5 (Performance; No Default), 4.1.6
(Approval of Loan Documents and Security Interests), and 4.1.7 (Material
Adverse Change) hereof with respect to the requested Advance(s), and
=====
shall then be in compliance with the Lockbox Compliance Ratio Covenant
======================================================================
and shall continue to be in compliance with such Lockbox Compliance Ratio
=========================================================================
Covenant upon the funding of the requested Advance."
==================================================
6. FINANCIAL STATEMENTS AND OTHER REPORTS. Section 6.4 shall be amended to
--------------------------------------
read as follows:
"6.4 Financial Statements and Other Reports. Borrower shall
--------------------------------------
maintain full and complete books of account and other records reflecting
the results of Borrower's operations, all in accordance with GAAP, and
shall furnish or cause to be furnished to Lender within:
(i) 120 days after the end of each year, the audited
financial statements for such year for Borrower certified (without
qualification as to the opinion or scope of examination) by a firm
of independent certified public accountants selected by Borrower and
satisfactory to Lender;
3
<PAGE>
(ii) Semi-annually, within 30 days of period end, computer
=====================================================
diskettes/tapes containing all backup data regarding Borrower's
===============================================================
portfolio, in format acceptable to Lender;
=========================================
(iii) 30 days after the end of each quarter, (I) a true and
==========
correct copy of the Lockbox statements for the preceding quarter,
=================================================================
(II) the completed Lockbox Compliance Certificate for the preceding
===================================================================
quarter, in the form attached hereto as Exhibit O, (III) computer
=================================================================
diskettes/tapes containing all backup data regarding Facility
=============================================================
Contracts and Facility Equipment, in format acceptable to Lender;
=================================================================
and (IV) reports setting forth leasing, remarketing activities and
========
insurance settlements with respect to all Facility Equipment;
(iv) 60 days after the end of each quarter, quarterly
financial statements of Borrower;
(v) 30 days after the end of each month: reports setting
===
forth (I) any change in the identity or location of all Facility
Equipment and (II) all cash applications pertaining to the Facility
Contracts, and (III) amounts received and receivable due under each
Facility Contract, including the amounts overdue and the period for
which such amounts are overdue,
(vi) 10 days after receipt thereof by Borrower, copies of
====
all End-User financial statements required to be delivered to
Borrower pursuant to the applicable Contract.
All of the items described in clauses (ii) *and (iii)* through (v)
===========
of this Section 6.4 shall be certified by a Responsible Officer of
Borrower."
7. ADDITIONAL BORROWER EVENTS OF DEFAULT. The following shall be added
-------------------------------------
additional Borrower Events of Default under Sections 8.1(g) and (h) thereunder:
--------------------------
"(g) if XEROX ADMINISTRATIVE SERVICES or PARISH FINANCIAL SERVICING
=== ==============================================================
CO., L.P. shall give notice that it intends to terminate the Lockbox
====================================================================
Agreement, and within the foregoing notice period, no substitute
================================================================
Collection Agent shall have executed a Lockbox Agreement in form and
====================================================================
substance acceptable to Lender.
==============================
(h) if Borrower shall have failed to comply with the Lockbox
=== ========================================================
Compliance Ratio Covenant and such failure is not cured within sixty (60)
=========================================================================
days' notice from Lender to Borrower."
=====================================
8. FORM OF FACILITY NOTE/EXHIBIT K. The Form of Facility Note shall be
--------------------------------
deleted, and the Exhibit K to this Amendment shall be substituted in its stead.
9. FORM OF LOCKBOX COMPLIANCE CERTIFICATE/EXHIBIT O. An Exhibit O -- Form
-------------------------------------------------
of Lockbox Compliance Certificate shall be added in the form attached to this
Amendment as Exhibit O.
10. INCREASED ADDITIONAL LOANS. Subject to the satisfaction of the terms and
--------------------------
conditions of this Amendment, the available facility under the Loan Agreement
shall be increased from $2,000,000.00 to $7,500,000.00, less any amounts
outstanding under the Sale Agreement, and Lender shall make available the
Increased Facility subject to the conditions set forth in the Loan Agreement as
amended.
11. CONDITIONS OF INCREASED FACILITY. The obligation of Lender to make
--------------------------------
available the Increased Facility shall be subject to the satisfaction of all of
the following conditions in a manner, form and substance satisfactory to the
Lender:
11.1 Representations and Warranties. The representations and warranties
------------------------------
set forth in this Amendment and the Loan Agreement, where applicable, shall
be true and correct as of February 12, 1996 and as of the date this Amendment
is executed by Borrower.
4
<PAGE>
11.2 Delivery of Documents. The following shall have been delivered to
---------------------
Lender, each duly authorized and executed:
(a) a Promissory Note in the form of Exhibit K attached hereto (the
"Revised Facility Note"), in substitution of the Facility Note;
(b) a certificate of incumbency of Borrower in the form of Exhibit
1 attached hereto, and a Unanimous Consent in the form of Exhibit 2
attached hereto;
(c) a current certificate of good standing in the states in which
Borrower is qualified or authorized to do business;
(d) certified copies of any amendments to the articles of
incorporation and by-laws of Borrower since the date such materials were
last furnished to Lender; and
(e) such other documents, certificates, consents and waivers as
Lender may request.
Upon delivery of all of the foregoing, and the satisfaction by Borrower
of all conditions contained in this Amendment, the Facility Note shall be
cancelled and delivered to Borrower, and thereafter all references in the
Loan Agreement to the Note shall be deemed to refer to the Revised
Facility Note.
11.3 Closing Certificate. Borrower shall deliver to Lender a closing
-------------------
certificate in the form of Exhibit 4 attached hereto, signed by the
President, Vice President, Secretary or Treasurer of Borrower.
11.4 Material Adverse Changes. No event shall have occurred which has a
------------------------
material adverse effect on (i) the financial condition, property, business,
operations, prospects or profits of Borrower or the ability of Borrower to
perform its obligations hereunder or under the Loan Agreement or (ii) the
projections for financial performance of Borrower as set forth in any
document or paper furnished to Lender by Borrower or its representatives.
12. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
------------------------------
Lender that all representations and warranties set forth in the Loan Agreement,
as modified by this Amendment as applicable, are true, complete and accurate in
all respects as of the date hereof.
13. SURVIVAL OF ORIGINAL AGREEMENT. Except as amended hereby, the Loan
------------------------------
Agreement shall remain in full force and effect, and Borrower shall continue to
be subject to the security interests and liens granted thereunder.
14. SUCCESSORS AND ASSIGNS. The terms hereof shall inure to the benefit of
----------------------
and be binding upon the parties hereto and their respective heirs, legal
representatives, successors and assigns.
15. COUNTERPARTS. This Amendment shall not be effective unless and until it
------------
has been executed by all parties hereto. This Amendment may be executed in
multiple counterparts, and signatures by facsimile shall be deemed acceptable.
SIGNATURE BLOCK ON FOLLOWING PAGE
5
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first written above.
BANKVEST CAPITAL CORP. HELLER FINANCIAL, INC.
By: ______________________________ By: _____________________________
Title: _____________________________ Title: ____________________________
Attest:
_________________________________
6
<PAGE>
EXHIBIT O
---------
Form of Lockbox Compliance Certificate
--------------------------------------
LOCKBOX COMPLIANCE CERTIFICATE FOR THE QUARTER ENDED _______________
(A): TOTAL DOLLAR AMOUNT OF ALL CHECKS RECEIVED IN OUR LOCKBOX ON LOANS/LEASES
ASSIGNED TO HELLER FINANCIAL, INC. ____________________./1/
(B): TOTAL DOLLAR AMOUNT OF ALL PAYMENTS RECEIVED ON LOANS/LEASES ASSIGNED TO
HELLER FINANCIAL, INC. _________________________________.
LOCKBOX COMPLIANCE RATIO (A DIVIDED BY B) ____________________.
________________________
/1/Note: This amount should only include checks forwarded directly by the
End-user to the Lockbox. It should not include checks forwarded to the Borrower
and subsequently forwarded to the Lockbox.
i
<PAGE>
EXHIBIT K
---------
Form of Facility Promissory Note
--------------------------------
REVISED FULL RECOURSE FACILITY NOTE
-----------------------------------
Up to $*200,000.00* 7,500,000.00
============
Chicago, Illinois August 7, 1995
For Value Received, BANKVEST CAPITAL CORP., a Massachusetts corporation
("Borrower"), promises to pay to the order of HELLER FINANCIAL, INC., a Delaware
corporation ("Lender"), the principal sum of *Two* Seven Million Five Hundred
===== ============
Thousand Dollars $*200,000.00* 7,500,000.00, or so much as is advanced by
======== ============
Lender under the Facility, plus interest thereon and any other charges
applicable thereto, all as set forth more fully in that certain Loan and
Security Agreement dated of even date herewith and executed by and between
Borrower and Lender (the "Agreement"). All capitalized terms not otherwise
defined herein shall have the meaning ascribed to them in such Agreement, the
applicable provisions of which are incorporated herein by this reference.
This Note is executed to evidence the Facility described in the Agreement. Each
Facility Advance shall bear interest as provided in the Agreement. Interest
which accrues on each Advance, together with the principal amount thereof, shall
be payable in accordance with the applicable Amortization Schedule attached to
each Contract Funding Request. Each payment described on such Amortization
Schedule represents payment of interest as well as principal. The principal
balance of the Facility, or any portion thereof, shall or may be prepaid as
described in the Agreement.
If any payment to be made pursuant to this Note becomes past due for a period in
excess of ten (10) days, Borrower shall pay to Lender on demand any late charges
or other payments which Lender is entitled to receive from Borrower pursuant to
the provisions of Article II of the Agreement.
At the election of the holder hereof, upon the occurrence of an Event of
Default, the Facility, and all accrued and unpaid interest thereon, together
with any other applicable charges, shall be and become immediately due and
payable in full.
If any suit or action is instituted or attorneys are employed to collect this
Note or any part thereof, Borrower promises and agrees to pay all costs of
collection, including actual court costs and reasonable attorneys' fees.
Borrower for itself and its successors and assigns hereby waives presentment for
payment, protest and demand, notice of protest, demand and of dishonor and
nonpayment of this Note, and expressly agrees that this Note, or any payment
hereunder, may be extended from time to time before, at or after maturity,
without in any way affecting the liability of Borrower hereunder or any
guarantor hereof.
Lender or the holder hereof shall not be required to look to any Collateral or
Additional Collateral for the payment of this Note, but may proceed against the
undersigned in such manner as it deems desirable. None of the rights or
remedies of Lender or the holder hereunder or under the Agreement are to be
deemed waived or affected by any failure to exercise same. All remedies
conferred upon Lender or the holder of this Note, the Agreement or any other
instrument or agreement to which the undersigned is a party or under which any
or all of them is bound, shall be cumulative and not exclusive, and such
remedies may be exercised concurrently or consecutively at Lender's or the
holder's option.
ii
<PAGE>
THIS PROMISSORY NOTE SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF
THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN
THE STATE OF ILLINOIS. BORROWER DOES HEREBY SUBMIT, AT LENDER'S ELECTION, TO THE
EXCLUSIVE JURISDICTION AND VENUE OF ANY COURTS (FEDERAL, STATE OR LOCAL) HAVING
A SITUS WITHIN THE COUNTY OF COOK AND THE STATE OF ILLINOIS WITH RESPECT TO ANY
DISPUTE, CLAIM, OR SUIT WHETHER DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS PROMISSORY NOTE. BORROWER EXPRESSLY WAIVES PERSONAL SERVICE OF
PROCESS AND CONSENTS TO SERVICE BY CERTIFIED MAIL, POSTAGE PREPAID, DIRECTED TO
THE LAST KNOWN ADDRESS OF BORROWER, WHICH SERVICE SHALL BE DEEMED COM PLETED
WITHIN TEN (10) DAYS AFTER THE DATE OF MAILING THEREOF. BORROWER HEREBY
IRREVOCABLY WAIVES ANY CLAIM THAT THE COUNTY OF COOK, STATE OF ILLINOIS IS AN
INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK OF VENUE AS WELL AS ANY
RIGHT IT MAY NOW OR HEREAFTER HAVE TO REMOVE ANY SUCH ACTION OR PROCEEDING, ONCE
COMMENCED, TO ANOTHER COURT ON THE GROUNDS OF FORUM NON CONVENIENS OR OTHERWISE.
THE EXCLUSIVE CHOICE OF FORUM SET FORTH HEREIN SHALL NOT BE DEEMED TO PRECLUDE
THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING
OF ANY ACTION BY LENDER TO ENFORCE THE SAME IN ANY OTHER AP PROPRIATE
JURISDICTION.
BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS PROMISSORY NOTE. THIS
WAIVER IS INTENDED TO BE EFFECTIVE WITH RESPECT TO ALL DISPUTES WHICH ARISE OUT
OF THE PROMISSORY NOTE, THE LOAN DOCUMENTS OR PERTAIN TO THE TRANSACTIONS
CONTEMPLATED THEREBY. THIS WAIVER IS IRREVOCABLE, AND MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND SUCH WAIVER SET FORTH HEREIN SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS PROMISSORY
NOTE OR THE OTHER LOAN DOCUMENTS.
This Note shall be binding upon Borrower, its successors and assigns, and shall
inure to the benefit of the successors and assigns of Lender.
THIS NOTE REPLACES THAT CERTAIN FACILITY NOTE OF EVEN DATE IN THE MAXIMUM
=========================================================================
PRINCIPAL AMOUNT OF $2,000,000 BETWEEN BORROWER AND LENDER.
===========================================================
IN WITNESS WHEREOF, Borrower has executed this Note as of the date first written
above.
BANKVEST CAPITAL CORP.
By: ____________________________________
Title __________________________________
iii
<PAGE>
EXHIBIT 1
---------
FORM OF INCUMBENCY CERTIFICATE
OF
BankVest Capital Corp.
----------------------
The undersigned, being the duly elected ________________________ of BANKVEST
CAPITAL CORP., a corporation formed pursuant to the laws of the State of
Massachusetts (the "Company"), does hereby certify that the following persons
currently are serving in the Company in the capacities set forth opposite each
such name and that set forth opposite each such name is a true and correct
specimen of the signature of such person:
Name Title Signature
---- ----- ---------
____________________________ _______________________ ____________________
____________________________ _______________________ ____________________
____________________________ _______________________ ____________________
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the day
of February, 1996.
BANKVEST CAPITAL CORP.
By:_______________________
Title:____________________
iv
<PAGE>
EXHIBIT 2
---------
FORM OF UNANIMOUS CONSENT OF THE BOARD OF DIRECTORS
AND SHAREHOLDERS OF BANKVEST CAPITAL CORP.
We, the undersigned, being all of the Shareholders and all of the members of
the Board of Directors of BankVest Capital Corp., a Massachusetts corporation
(the "Company"), hereby do consent to the adoption of, and hereby do adopt, the
following resolutions:
WHEREAS, the Company and Heller Financial, Inc., a Delaware corporation
("Lender") entered into a Loan and Security Agreement dated as of August 7, 1995
("Loan Agreement"), pursuant to which Lender agreed to make certain Advances to
the Company;
WHEREAS, there has been presented and reviewed by the President, Vice
President, Secretary or Treasurer of the Company (i) a proposed form of an
Amendment to Loan and Security Agreement ("Amendment") to be executed by and
between Lender and the Company and (ii) proposed forms of certain other
documents to be executed in connection with the consummation of the transactions
contemplated by the Amendment (the "Related Amendment Agreements"). The Loan and
Security Agreement, the Amendment and the Related Amendment Agreements shall
hereinafter collectively be referred to as the "Loan Agreement". All other
capitalized terms used herein which are not otherwise defined herein and which
are defined in the Loan Agreement shall have the meaning set forth in the Loan
Agreement;
WHEREAS, pursuant to the terms of the Amendment, the Lender proposed to
increase the amount of the available Facility Loans to $7,500,000 (the
"Increased Facility"), less any amounts outstanding under that certain Purchase
and Sale Agreement dated as of August 7, 1995, as amended from time to time;
WHEREAS, as a condition precedent to the Increased Facility, Lender requires,
inter alia, the execution and delivery by the Company of the Amendment and the
other Related Amendment Agreements to which the Company is to be a party; and
WHEREAS, the Board of Directors of the Company and the Shareholders of the
Company deem it to be in the best interest of the Company to obtain the
Increased Facility, and to execute and deliver the Amendment and all other
Related Amendment Agreements to which the Company is to be a party, and to
effect the transactions contemplated therein;
NOW, THEREFORE, it is hereby resolved that the Company be and it hereby is
authorized to execute and deliver to Lender the Amendment and each of the
Related Amendment Agreements to which the Company is to be a party; and
FURTHER RESOLVED, the President, Vice President, Secretary or Treasurer of
the Company, be and they hereby are authorized and directed, in the name and on
behalf of the Company to execute and deliver the Amendment, each of the Related
Amendment Agreements to which the Company is a party, and all other documents,
instruments, agreements and statements, which may be necessary to effectuate the
transactions contemplated hereby and thereby, all of which shall be in the forms
previously reviewed by the undersigned, or with such changes as the officer(s)
executing the same shall approve, and the execution and delivery thereof by such
officer(s) shall constitute the approval of the terms thereof;
FURTHER RESOLVED, that the President, Vice President, Secretary or Treasurer
of the Company, be and they hereby are authorized and directed, in the name and
on behalf of the Company, to do and perform any
v
<PAGE>
and all other acts and to execute and deliver any and all other documents,
instruments and certificates, which may be necessary, appropriate or desirable
in order to consummate the transactions contemplated hereby.
FURTHER RESOLVED, that these resolutions may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which,
when taken together, shall be deemed to be one and the same instrument.
Dated: __________________________
DIRECTORS:
_______________________________
_______________________________
_______________________________
vi
<PAGE>
EXHIBIT 4
---------
BANKVEST CAPITAL CORP.
FORM OF CLOSING CERTIFICATE
---------------------------
Heller Financial, Inc.
One TransAm Plaza Drive -- Suite 222
Oakbrook Terrace, Illinois 60181
Ladies and Gentlemen:
Pursuant to that certain Loan and Security Agreement dated as of August 7, 1995
by and between BANKVEST CAPITAL CORP., a Massachusetts corporation ("Borrower"),
and HELLER FINANCIAL, INC., a Delaware corporation ("Lender"), as amended by the
Amendment to Loan and Security Agreement ("Amendment") dated as of February 12,
1996; (collectively, "Loan Agreement"), and as an inducement to and part of the
consideration for the Increased Facility (as defined in the Loan Agreement), the
undersigned hereby warrants and represents to you that:
1. All representations and warranties made by the undersigned in the Loan
Agreement and the related documents are true and correct in all material
respects as of the date hereof.
2. No Event of Default exists (as such term is defined in the Loan
Agreement).
DATED as of February ________________, 1996.
BANKVEST CAPITAL CORP. Attest:
By:______________________________ ______________________
Its:_____________________________
vii
<PAGE>
REVISED FULL RECOURSE FACILITY NOTE
-----------------------------------
Up to $7,500,000.00
Chicago, Illinois August 7, 1995
For Value Received, BANKVEST CAPITAL CORP., a Massachusetts corporation
("Borrower"), promises to pay to the order of HELLER FINANCIAL, INC., a Delaware
corporation ("Lender"), the principal sum of Seven Million Five Hundred Thousand
Dollars ($7,500,000.00), or so much as is advanced by Lender under the Facility,
plus interest thereon and any other charges applicable thereto, all as set forth
more fully in that certain Loan and Security Agreement dated of even date
herewith and executed by and between Borrower and Lender (the "Agreement"). All
capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in such Agreement, the applicable provisions of which are incorporated
herein by this reference.
This Note is executed to evidence the Facility described in the Agreement. Each
Facility Advance shall bear interest as provided in the Agreement. Interest
which accrues on each Advance, together with the principal amount thereof, shall
be payable in accordance with the applicable Amortization Schedule attached to
each Contract Funding Request. Each payment described on such Amortization
Schedule represents payment of interest as well as principal. The principal
balance of the Facility, or any portion thereof, shall or may be prepaid as
described in the Agreement.
If any payment to be made pursuant to this Note becomes past due for a period in
excess of ten (10) days, Borrower shall pay to Lender on demand any late charges
or other payments which Lender is entitled to receive from Borrower pursuant to
the provisions of Article II of the Agreement.
At the election of the holder hereof, upon the occurrence of an Event of
Default, the Facility, and all accrued and unpaid interest thereon, together
with any other applicable charges, shall be and become immediately due and
payable in full.
If any suit or action is instituted or attorneys are employed to collect this
Note or any part thereof, Borrower promises and agrees to pay all costs of
collection, including actual court costs and reasonable attorneys' fees.
Borrower for itself and its successors and assigns hereby waives presentment for
payment, protest and demand, notice of protest, demand and of dishonor and
nonpayment of this Note, and expressly agrees that this Note, or any payment
hereunder, may be extended from time to time before, at or after maturity,
without in any way affecting the liability of Borrower hereunder or any
guarantor hereof.
Lender or the holder hereof shall not be required to look to any Collateral or
Additional Collateral for the payment of this Note, but may proceed against the
undersigned in such manner as it deems desirable. None of the rights or remedies
of Lender or the holder hereunder or under the Agreement are to be deemed waived
or affected by any failure to exercise same. All remedies conferred upon Lender
or the holder of this Note, the Agreement or any other instrument or agreement
to which the undersigned is a party or under which any or all of them is bound,
shall be cumulative and not exclusive, and such remedies may be exercised
concurrently or consecutively at Lender's or the holder's option.
THIS PROMISSORY NOTE SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF
THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN
THE STATE OF ILLINOIS. BORROWER DOES HEREBY SUBMIT, AT LENDER'S ELECTION, TO THE
EXCLUSIVE JURISDICTION AND VENUE OF ANY COURTS (FEDERAL, STATE OR LOCAL) HAVING
A SITUS WITHIN THE COUNTY OF COOK AND THE STATE OF ILLINOIS WITH RESPECT
<PAGE>
TO ANY DISPUTE, CLAIM, OR SUIT WHETHER DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS PROMISSORY NOTE. BORROWER EXPRESSLY WAIVES PERSONAL SERVICE OF
PROCESS AND CONSENTS TO SERVICE BY CERTIFIED MAIL, POSTAGE PREPAID, DIRECTED TO
THE LAST KNOWN ADDRESS OF BORROWER, WHICH SERVICE SHALL BE DEEMED COM PLETED
WITHIN TEN (10) DAYS AFTER THE DATE OF MAILING THEREOF. BORROWER HEREBY
IRREVOCABLY WAIVES ANY CLAIM THAT THE COUNTY OF COOK, STATE OF ILLINOIS IS AN
INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK OF VENUE AS WELL AS ANY
RIGHT IT MAY NOW OR HEREAFTER HAVE TO REMOVE ANY SUCH ACTION OR PROCEEDING, ONCE
COMMENCED, TO ANOTHER COURT ON THE GROUNDS OF FORUM NON CONVENIENS OR OTHERWISE.
THE EXCLUSIVE CHOICE OF FORUM SET FORTH HEREIN SHALL NOT BE DEEMED TO PRECLUDE
THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING
OF ANY ACTION BY LENDER TO ENFORCE THE SAME IN ANY OTHER AP PROPRIATE
JURISDICTION.
BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS PROMISSORY NOTE. THIS
WAIVER IS INTENDED TO BE EFFECTIVE WITH RESPECT TO ALL DISPUTES WHICH ARISE OUT
OF THE PROMISSORY NOTE, THE LOAN DOCUMENTS OR PERTAIN TO THE TRANSACTIONS
CONTEMPLATED THEREBY. THIS WAIVER IS IRREVOCABLE, AND MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND SUCH WAIVER SET FORTH HEREIN SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS PROMISSORY
NOTE OR THE OTHER LOAN DOCUMENTS.
This Note shall be binding upon Borrower, its successors and assigns, and shall
inure to the benefit of the successors and assigns of Lender.
THIS NOTE REPLACES THAT CERTAIN FACILITY NOTE OF EVEN DATE IN THE MAXIMUM
PRINCIPAL AMOUNT OF $2,000,000 BETWEEN BORROWER AND LENDER.
IN WITNESS WHEREOF, Borrower has executed this Note as of the date first written
above.
BANKVEST CAPITAL CORP.
By: ____________________________________
Title __________________________________
<PAGE>
INCUMBENCY CERTIFICATE OF BankVest Capital Corp.
------------------------------------------------
The undersigned, being the duly elected ________________________ of BANKVEST
CAPITAL CORP., a corporation formed pursuant to the laws of the State of
Massachusetts (the "Company"), does hereby certify that the following persons
currently are serving in the Company in the capacities set forth opposite each
such name and that set forth opposite each such name is a true and correct
specimen of the signature of such person:
Name Title Signature
---- ----- ---------
______________________ ____________________________ ____________________
______________________ ____________________________ ____________________
______________________ ____________________________ ____________________
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the day
of February, 1996.
BANKVEST CAPITAL CORP.
By: _________________________
Title: ______________________
<PAGE>
CLOSING CERTIFICATE
-------------------
Heller Financial, Inc.
One TransAm Plaza Drive -- Suite 222
Oakbrook Terrace, Illinois 60181
Ladies and Gentlemen:
Pursuant to that certain Loan and Security Agreement dated as of August 7, 1995
by and between BANKVEST CAPITAL CORP., a Massachusetts corporation ("Borrower"),
and HELLER FINANCIAL, INC., a Delaware corporation ("Lender"), as amended by the
Amendment to Loan and Security Agreement ("Amendment") dated as of February 12,
1996; (collectively, "Loan Agreement"), and as an inducement to and part of the
consideration for the Increased Facility (as defined in the Loan Agreement), the
undersigned hereby warrants and represents to you that:
1. All representations and warranties made by the undersigned in the Loan
Agreement and the related documents are true and correct in all material
respects as of the date hereof.
2. No Event of Default exists (as such term is defined in the Loan
Agreement).
DATED as of December __________, 1995.
BANKVEST CAPITAL CORP. Attest:
By:______________________________ ______________________
Its: ______________________________
<PAGE>
UNANIMOUS CONSENT OF THE BOARD OF DIRECTORS
AND SHAREHOLDERS OF BANKVEST CAPITAL CORP.
______________________________________________________________________
We, the undersigned, being all of the Shareholders and all of the members of
the Board of Directors of BankVest Capital Corp., a Massachusetts corporation
(the "Company"), hereby do consent to the adoption of, and hereby do adopt, the
following resolutions:
WHEREAS, the Company and Heller Financial, Inc., a Delaware corporation
("Lender") entered into a Loan and Security Agreement dated as of August 7, 1995
("Loan Agreement"), pursuant to which Lender agreed to make certain Advances to
the Company;
WHEREAS, there has been presented and reviewed by the President, Vice
President, Secretary or Treasurer of the Company (i) a proposed form of an
Amendment to Loan and Security Agreement ("Amendment") to be executed by and
between Lender and the Company and (ii) proposed forms of certain other
documents to be executed in connection with the consummation of the transactions
contemplated by the Amendment (the "Related Amendment Agreements"). The Loan and
Security Agreement, the Amendment and the Related Amendment Agreements shall
hereinafter collectively be referred to as the "Loan Agreement". All other
capitalized terms used herein which are not otherwise defined herein and which
are defined in the Loan Agreement shall have the meaning set forth in the Loan
Agreement;
WHEREAS, pursuant to the terms of the Amendment, the Lender proposed to
increase the amount of the available Facility Loans to $7,500,000 (the
"Increased Facility"), less any amounts outstanding under that certain Purchase
and Sale Agreement dated as of August 7, 1995, as amended from time to time;
WHEREAS, as a condition precedent to the Increased Facility, Lender requires,
inter alia, the execution and delivery by the Company of the Amendment and the
other Related Amendment Agreements to which the Company is to be a party; and
WHEREAS, the Board of Directors of the Company and the Shareholders of the
Company deem it to be in the best interest of the Company to obtain the
Increased Facility, and to execute and deliver the Amendment and all other
Related Amendment Agreements to which the Company is to be a party, and to
effect the transactions contemplated therein;
NOW, THEREFORE, it is hereby resolved that the Company be and it hereby is
authorized to execute and deliver to Lender the Amendment and each of the
Related Amendment Agreements to which the Company is to be a party; and
FURTHER RESOLVED, the President, Vice President, Secretary or Treasurer of
the Company, be and they hereby are authorized and directed, in the name and on
behalf of the Company to execute and deliver the Amendment, each of the Related
Amendment Agreements to which the Company is a party, and all other documents,
instruments, agreements and statements, which may be necessary to effectuate the
transactions contemplated hereby and thereby, all of which shall be in the forms
previously reviewed by the undersigned, or with such changes as the officer(s)
executing the same shall approve, and the execution and delivery thereof by such
officer(s) shall constitute the approval of the terms thereof;
FURTHER RESOLVED, that the President, Vice President, Secretary or Treasurer
of the Company, be and they hereby are authorized and directed, in the name and
on behalf of the Company, to do and perform any
<PAGE>
and all other acts and to execute and deliver any and all other documents,
instruments and certificates, which may be necessary, appropriate or desirable
in order to consummate the transactions contemplated hereby.
FURTHER RESOLVED, that these resolutions may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which,
when taken together, shall be deemed to be one and the same instrument.
Dated: __________________________
DIRECTORS:
_______________________________
_______________________________
_______________________________
ii
<PAGE>
EXHIBIT 10.50
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
-----------------------------------------------
This Second Amendment to Loan and Security Agreement is made as of June 24, 1996
("Amendment") to supplement and amend that certain Loan and Security Agreement
dated as of August 7, 1995 and all documents related thereto, as amended by that
First Amendment to Loan and Security Agreement dated as of February 12, 1996
(collectively, the "Loan Agreement") between HELLER FINANCIAL, INC., a Delaware
corporation ("Lender") and BANKVEST CAPITAL CORP., a Massachusetts corporation
("Borrower"). Any capitalized terms used herein and which are defined in the
Loan Agreement shall have the meaning set forth in the Loan Agreement. Where a
textual passage is amended in part only, new language may be shown double
======
underlined, deleted language may be shown in *strikeout*, and ... (an ellipsis)
==========
may be used for language that is unmodified. Such double underlining, strike out
and ellipses as used herein are for convenience only to illustrate changes from
the Loan Agreement, and are not part of the Loan Agreement as amended.
PRELIMINARY STATEMENT
---------------------
A. Pursuant to the Loan Agreement, Lender has made to Borrower various
Advances;
B. Borrower desires to increase the available facility under the Loan
Agreement to $21,000,000 (the "Increased Facility"), with availability to be
shared between the Loan Agreement and that Purchase and Sale Agreement dated as
of August 7, 1995 by and between Lender and Borrower, as amended by that certain
First Amendment to Purchase and Sale Agreement dated as of February 12, 1996,
and as further amended from time to time (collectively, "Sale Agreement").
Lender is willing to comply with Borrower's request, subject to the terms and
conditions set forth below.
NOW, THEREFORE, it is hereby agreed as follows:
1. AMENDED DEFINITIONS; ADDITIONAL DEFINITIONS.
-------------------------------------------
1.1 New definitions, Lockbox Coverage and Lockbox Coverage Covenant,
---------------- -------------------------
shall be added as follows:
"Lockbox Coverage shall have the meaning set forth in Exhibit O --
----------------
Lockbox Compliance Certificate."
"Lockbox Coverage Covenant: a requirement that the Lockbox Coverage,
-------------------------
as set forth in the most recently due Lockbox Compliance Certificate,
expressed as a percentage, be equal to or greater than seventy percent
(70%)."
1.2 The definition of Facility Rate shall be amended to read as follows:
-------------
"Facility Rate: with respect to each Advance made prior to June 24,
------------- ======================
1996, a fixed per annum interest rate equal to the sum of (i) 3.25%; and
====
(ii) the weekly average U.S. Treasury Constant Maturities for a Treasury
Note having approximately an equal term as the weighted average term of
the Contracts subject to the applicable Advance, as reported by the
Federal Release for the calendar week in which funding of an Advance
takes place; with respect to each Advance made on or after June 24, 1996,
==============================================================
a fixed per annum interest rate equal to the sum of (i) 2.75%; and (ii)
=======================================================================
the weekly average U.S. Treasury Constant Maturities for a Treasury Note
========================================================================
having approximately an equal term as the weighted average term of the
======================================================================
Contracts subject to the applicable Advance, as reported by the Federal
=======================================================================
Release for the calendar week in which funding of an Advance takes
==================================================================
place."
=====
<PAGE>
2. AMOUNT. Section 2.2.1 shall be amended to read as follows:
------
"2.2.1 Amount. The Facility is a term loan in the maximum amount
------ =======
outstanding at any one time of up to *Seven Million Five Hundred Thousand
===========================
Dollars ($7,500,000)* Twenty One Million Dollars ($21,000,000) less any
========================================
amounts outstanding under the Sale Agreement, which, subject to the
provisions of subsection 2.2.2 and Section 2.4 shall be made available to
Borrower by Lender."
3. CONDITIONS TO CLOSING. Section 4.2.4 shall be amended to read as
---------------------
follows:
"4.2.4 Additional Conditions. Borrower shall have re-satisfied the
---------------------
conditions set forth in Sections 4.1.5 (Performance; No Default), 4.1.6
(Approval of Loan Documents and Security Interests), and 4.1.7 (Material
Adverse Change) hereof with respect to the requested Advance(s), and shall
then be in compliance with the Lockbox Compliance Ratio Covenant and Lockbox
===========
Coverage Covenant and shall continue to be in compliance with such Lockbox
=================
Compliance Ratio Covenant and Lockbox Coverage Covenant upon the funding of
=============================
the requested Advance."
4. FINANCIAL STATEMENTS AND OTHER REPORTS. Subsection 6.4(iii) shall be
--------------------------------------
amended to read as follows:
"(iii) 30 days after the end of each quarter, (I) a true and correct
copy of the Lockbox statements for the preceding quarter, (II) the completed
Lockbox Compliance Certificate for the preceding quarter, in the form
attached hereto as Exhibit O, (III) computer diskettes/tapes containing all
backup data regarding Facility Contracts and Facility Equipment, in format
acceptable to Lender; *and* (IV) reports setting forth leasing, remarketing
activities and insurance settlements with respect to all Facility Equipment,
=
and (V) a certificate verifying Borrower's compliance with all covenants
========================================================================
contained in that certain Purchase Agreement dated as of May 30, 1996 by and
============================================================================
among Borrower, Primus Capital Fund III Limited Partnership and PNC Venture
===========================================================================
Corp., as amended from time to time;"
===================================
and Subsection 6.4(v) shall be amended to read as follows:
"(v) 30 days after the end of each month: reports setting forth (I) any
change in the identity or location of all Facility Equipment and (II)*all
cash applications pertaining to the Facility Contracts, and (III) amounts
received and receivable due under each Facility Contract, including the
amounts overdue and the period for which such amounts are overdue* a
=
delinquency report in the form attached hereto as Exhibit P"
===========================================================
5. ADDITIONAL NEGATIVE COVENANT. The following shall be added as an
----------------------------
additional negative covenant to Article VII:
"7.8 Delinquency Covenant. For two consecutive reporting periods, allow
=== ===================================================================
Facility Contract 90-day Delinquency to be greater than seven percent (7%)
==========================================================================
of the Aggregate Portfolio Outstandings, nor allow Facility Contract Total
==========================================================================
Delinquency to be greater than eighteen percent (18%) of the Aggregate
======================================================================
Portfolio Outstandings. All terms in this subsection not otherwise defined
===========================================================================
shall have the meanings set forth in Exhibit P (Form of Monthly Delinquency
===========================================================================
Report)."
=======
6. ADDITIONAL/AMENDED BORROWER EVENTS OF DEFAULT. The following changes
---------------------------------------------
shall be made to Borrower Events of Default under Sections 8.1(h) and (i)
--------------------------
thereunder:
"(h) commencing with the fourth calendar quarter of 1996, if Borrower
===================================================
shall have failed to comply with the Lockbox Compliance Ratio Covenant
and/or the Lockbox Coverage Covenant for two or more consecutive reporting
==========================================================================
periods and such failure is not cured within sixty (60) days' notice from
=======
Lender to Borrower; and
=====
2
<PAGE>
(i) if Paul Gass or John Colton sell or transfer more than fifty percent
=== ====================================================================
(50%) of their respective ownership interests in Borrower to any third
======================================================================
parties or if either cease to be meaningfully involved in the day-to-day
========================================================================
management and operations of Borrower.
=====================================
7. FORM OF FACILITY NOTE/EXHIBIT K. The Form of Facility Note shall be
-------------------------------
deleted, and the Exhibit K to this Amendment shall be substituted in its stead.
8. FORM OF LOCKBOX COMPLIANCE CERTIFICATE/EXHIBIT O. Exhibit O -- Form of
------------------------------------------------
Lockbox Compliance Certificate shall be amended to read as set forth in the form
attached to this Amendment as Exhibit O.
9. FORM OF MONTHLY DELINQUENCY REPORT/EXHIBIT P. Exhibit P -- Form of
--------------------------------------------
Monthly Delinquency Report shall be added to the Loan Agreement in the form
attached to this Amendment as Exhibit P.
10. INCREASED ADDITIONAL LOANS. Subject to the satisfaction of the terms and
--------------------------
conditions of this Amendment, the available facility under the Loan Agreement
shall be increased from $7,500,000.00 to $21,000,000.00 less any amounts
outstanding under the Sale Agreement, and Lender shall make available the
Increased Facility subject to the conditions set forth in the Loan Agreement as
amended, including, but not limited to, Section 2.1 thereof.
11. CONDITIONS OF INCREASED FACILITY. The Increased Facility shall be
--------------------------------
subject to the satisfaction of all of the following conditions in a manner, form
and substance satisfactory to the Lender:
11.1 Representations and Warranties. The representations and warranties
------------------------------
set forth in this Amendment and the Loan Agreement, where applicable, shall
be true and correct as of June 24, 1996 and as of the date this Amendment is
executed by Borrower.
11.2 Delivery of Documents. The following shall have been delivered to
---------------------
Lender, each duly authorized and executed:
(a) a Promissory Note in the form of Exhibit K attached hereto (the
"Revised Facility Note"), in substitution of the existing Facility Note;
(b) a certificate of incumbency of Borrower in the form of Exhibit
1 attached hereto, and a Unanimous Consent in the form of Exhibit 2
attached hereto;
(c) a current certificate of good standing in the states in which
Borrower is qualified or authorized to do business;
(d) certified copies of any amendments to the articles of
incorporation and by-laws of Borrower since the date such materials were
last furnished to Lender; and
(e) such other documents, certificates, consents and waivers as
Lender may request.
Upon delivery of all of the foregoing (except for the certificates
referenced in subsection (c), which may be delivered no later than July
31, 1996), and the satisfaction by Borrower of all conditions contained
in this Amendment, the existing Facility Note shall be cancelled and
delivered to Borrower, and thereafter all references in the Loan
Agreement to the Note shall be deemed to refer to the Revised Facility
Note.
3
<PAGE>
11.3 Closing Certificate. Borrower shall deliver to Lender a closing
-------------------
certificate in the form of Exhibit 4 attached hereto, signed by the
President, Vice President, Secretary or Treasurer of Borrower.
11.4 Material Adverse Changes. No event shall have occurred which has a
------------------------
material adverse effect on (i) the financial condition, property, business,
operations, prospects or profits of Borrower or the ability of Borrower to
perform its obligations hereunder or under the Loan Agreement or (ii) the
projections for financial performance of Borrower as set forth in any
document or paper furnished to Lender by Borrower or its representatives.
12. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
------------------------------
Lender that all representations and warranties set forth in the Loan Agreement,
as modified by this Amendment as applicable, are true, complete and accurate in
all respects as of the date hereof.
13. SURVIVAL OF ORIGINAL AGREEMENT. Except as amended hereby, the Loan
------------------------------
Agreement shall remain in full force and effect, and Borrower shall continue to
be subject to the security interests and liens granted thereunder.
14. SUCCESSORS AND ASSIGNS. The terms hereof shall inure to the benefit of
----------------------
and be binding upon the parties hereto and their respective heirs, legal
representatives, successors and assigns.
15. COUNTERPARTS. This Amendment shall not be effective unless and until it
------------
has been executed by all parties hereto. This Amendment may be executed in
multiple counterparts, and signatures by facsimile shall be deemed acceptable.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first written above.
BANKVEST CAPITAL CORP. HELLER FINANCIAL, INC.
By: ________________________________ By: _______________________________
Title: _____________________________ Title: ____________________________
Attest:
_________________________________
4
<PAGE>
EXHIBIT O
---------
Form of Lockbox Compliance Certificate
--------------------------------------
LOCKBOX COMPLIANCE CERTIFICATE FOR THE QUARTER ENDED _______________
(A): TOTAL DOLLAR AMOUNT OF ALL CHECKS RECEIVED IN OUR LOCKBOX ON LOANS/LEASES
ASSIGNED TO LENDER ____________________./1/
B): TOTAL DOLLAR AMOUNT OF ALL PAYMENTS RECEIVED ON LOANS/LEASES ASSIGNED TO
LENDER _________________________________.
C) TOTAL DOLLAR AMOUNT DUE LENDER
=== ==============================
LOCKBOX COMPLIANCE RATIO (A DIVIDED BY B) ____________________.
LOCKBOX COVERAGE (A DIVIDED BY C) ________________________
=================================
________________
/1/ Note: This amount should only include checks forwarded directly by the End-
user to the Lockbox. It should not include checks forwarded to the Borrower and
subsequently forwarded to the Lockbox.
i
<PAGE>
EXHIBIT K
---------
Form of Facility Promissory Note
--------------------------------
REVISED FULL RECOURSE FACILITY NOTE
-----------------------------------
Up to $*7,500,000.00* 21,000,000
==========
Chicago, Illinois August 7, 1995
For Value Received, BANKVEST CAPITAL CORP., a Massachusetts corporation
("Borrower"), promises to pay to the order of HELLER FINANCIAL, INC., a Delaware
corporation ("Lender"), the principal sum of *Seven Million Five Hundred
Thousand Dollars ($7,500,000.00)* Twenty One Million Dollars ($21,000,000), or
=======================================
so much as is advanced by Lender under the Facility, plus interest thereon and
any other charges applicable thereto, all as set forth more fully in that
certain Loan and Security Agreement dated of even date herewith as amended from
===============
time to time and executed by and between Borrower and Lender (the "Agreement").
============
All capitalized terms not otherwise defined herein shall have the meaning
ascribed to them in such Agreement, the applicable provisions of which are
incorporated herein by this reference.
This Note is executed to evidence the Facility described in the Agreement. Each
Facility Advance shall bear interest as provided in the Agreement. Interest
which accrues on each Advance, together with the principal amount thereof, shall
be payable in accordance with the applicable Amortization Schedule attached to
each Contract Funding Request. Each payment described on such Amortization
Schedule represents payment of interest as well as principal. The principal
balance of the Facility, or any portion thereof, shall or may be prepaid as
described in the Agreement.
If any payment to be made pursuant to this Note becomes past due for a period in
excess of ten (10) days, Borrower shall pay to Lender on demand any late charges
or other payments which Lender is entitled to receive from Borrower pursuant to
the provisions of Article II of the Agreement.
At the election of the holder hereof, upon the occurrence of an Event of
Default, the Facility, and all accrued and unpaid interest thereon, together
with any other applicable charges, shall be and become immediately due and
payable in full.
If any suit or action is instituted or attorneys are employed to collect this
Note or any part thereof, Borrower promises and agrees to pay all costs of
collection, including actual court costs and reasonable attorneys' fees.
Borrower for itself and its successors and assigns hereby waives presentment for
payment, protest and demand, notice of protest, demand and of dishonor and
nonpayment of this Note, and expressly agrees that this Note, or any payment
hereunder, may be extended from time to time before, at or after maturity,
without in any way affecting the liability of Borrower hereunder or any
guarantor hereof.
Lender or the holder hereof shall not be required to look to any Collateral or
Additional Collateral for the payment of this Note, but may proceed against the
undersigned in such manner as it deems desirable. None of the rights or
remedies of Lender or the holder hereunder or under the Agreement are to be
deemed waived or affected by any failure to exercise same. All remedies
conferred upon Lender or the holder of this Note, the Agreement or any other
instrument or agreement to which the undersigned is a party or under which any
or all of them is bound, shall be cumulative and not exclusive, and such
remedies may be exercised concurrently or consecutively at Lender's or the
holder's option.
ii
<PAGE>
THIS PROMISSORY NOTE SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF
THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN
THE STATE OF ILLINOIS. BORROWER DOES HEREBY SUBMIT, AT LENDER'S ELECTION, TO THE
EXCLUSIVE JURISDICTION AND VENUE OF ANY COURTS (FEDERAL, STATE OR LOCAL) HAVING
A SITUS WITHIN THE COUNTY OF COOK AND THE STATE OF ILLINOIS WITH RESPECT TO ANY
DISPUTE, CLAIM, OR SUIT WHETHER DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS PROMISSORY NOTE. BORROWER EXPRESSLY WAIVES PERSONAL SERVICE OF
PROCESS AND CONSENTS TO SERVICE BY CERTIFIED MAIL, POSTAGE PREPAID, DIRECTED TO
THE LAST KNOWN ADDRESS OF BORROWER, WHICH SERVICE SHALL BE DEEMED COMPLETED
WITHIN TEN (10) DAYS AFTER THE DATE OF MAILING THEREOF. BORROWER HEREBY
IRREVOCABLY WAIVES ANY CLAIM THAT THE COUNTY OF COOK, STATE OF ILLINOIS IS AN
INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK OF VENUE AS WELL AS ANY
RIGHT IT MAY NOW OR HEREAFTER HAVE TO REMOVE ANY SUCH ACTION OR PROCEEDING, ONCE
COMMENCED, TO ANOTHER COURT ON THE GROUNDS OF FORUM NON CONVENIENS OR OTHERWISE.
THE EXCLUSIVE CHOICE OF FORUM SET FORTH HEREIN SHALL NOT BE DEEMED TO PRECLUDE
THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING
OF ANY ACTION BY LENDER TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE
JURISDICTION.
BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS PROMISSORY NOTE. THIS
WAIVER IS INTENDED TO BE EFFECTIVE WITH RESPECT TO ALL DISPUTES WHICH ARISE OUT
OF THE PROMISSORY NOTE, THE LOAN DOCUMENTS OR PERTAIN TO THE TRANSACTIONS
CONTEMPLATED THEREBY. THIS WAIVER IS IRREVOCABLE, AND MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND SUCH WAIVER SET FORTH HEREIN SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS PROMISSORY
NOTE OR THE OTHER LOAN DOCUMENTS.
This Note shall be binding upon Borrower, its successors and assigns, and shall
inure to the benefit of the successors and assigns of Lender.
THIS NOTE REPLACES THAT CERTAIN FACILITY NOTE OF EVEN DATE IN THE MAXIMUM
PRINCIPAL AMOUNT OF $7,500,000 BETWEEN BORROWER AND LENDER.
IN WITNESS WHEREOF, Borrower has executed this Note as of the date first written
above.
BANKVEST CAPITAL CORP.
By: ____________________________________
Title __________________________________
iii
<PAGE>
EXHIBIT P
---------
Form of Monthly Delinquency Report
----------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
END-USER LEASE # GROSS END-USER DAYS LESS THAN 30-59 60-89 90-119 120+
NAME REC. GROSS PAST DUE 30
REC.
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
ABC Co. 111 100,000 2 100,000
Inc.
- -----------------------------------------------------------------------------------------------------------------------------
112 200,000 95 200,000
- -----------------------------------------------------------------------------------------------------------------------------
113 350,000 45 350,000
- -----------------------------------------------------------------------------------------------------------------------------
650,000
- -----------------------------------------------------------------------------------------------------------------------------
XYZ, Inc. 211 150,000 65 150,000
- -----------------------------------------------------------------------------------------------------------------------------
212 250,000 125 250,000
- -----------------------------------------------------------------------------------------------------------------------------
400,000
- -----------------------------------------------------------------------------------------------------------------------------
1,050,000 1,050,000 100,000 350,000 150,000 200,000 250,000
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Total Delinquency equals the aggregate of all 30+ (i.e. 950,000)
- --------------------------------
90 day delinquency equals the aggregate of all 90+ (i.e. 450,000)
- --------------------------------
Aggregate Portfolio Outstandings equals the total of all Gross Receivables
(i.e. 1,050,000)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
iv
<PAGE>
EXHIBIT 1
---------
FORM OF INCUMBENCY CERTIFICATE
OF
BankVest Capital Corp.
----------------------
The undersigned, being the duly elected ________________________ of BANKVEST
CAPITAL CORP., a corporation formed pursuant to the laws of the State of
Massachusetts (the "Company"), does hereby certify that the following persons
currently are serving in the Company in the capacities set forth opposite each
such name and that set forth opposite each such name is a true and correct
specimen of the signature of such person:
Name Title Signature
---- ----- ---------
________________ ________________ __________________
________________ ________________ __________________
________________ ________________ __________________
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the
_____ day of June, 1996.
BANKVEST CAPITAL CORP.
By: _______________________
Title: ______________________
v
<PAGE>
EXHIBIT 2
---------
FORM OF UNANIMOUS CONSENT OF THE BOARD OF DIRECTORS
OF BANKVEST CAPITAL CORP.
We, the undersigned, being the Board of Directors of BankVest Capital Corp.,
a Massachusetts corporation (the "Company"), hereby do consent to the adoption
of, and hereby do adopt, the following resolutions:
WHEREAS, the Company and Heller Financial, Inc., a Delaware corporation
("Lender") entered into a Loan and Security Agreement dated as of August 7,
1995, as amended by that certain First Amendment to Loan and Security Agreement
dated as of February 12, 1996 (collectively, "Loan Agreement"), pursuant to
which Lender agreed to make certain Advances to the Company;
WHEREAS, there has been presented and reviewed by the President, Vice
President, Secretary or Treasurer of the Company (i) a proposed form of a Second
Amendment to Loan and Security Agreement ("Amendment") to be executed by and
between Lender and the Company and (ii) proposed forms of certain other
documents to be executed in connection with the consummation of the transactions
contemplated by the Amendment (the "Related Amendment Agreements"). The Loan
and Security Agreement, the Amendment and the Related Amendment Agreements shall
hereinafter collectively be referred to as the "Loan Agreement". All other
capitalized terms used herein which are not otherwise defined herein and which
are defined in the Loan Agreement shall have the meaning set forth in the Loan
Agreement;
WHEREAS, pursuant to the terms of the Amendment, the Lender proposed to
increase the amount of the available Facility Advances to $21,000,000 (the
"Increased Facility"), less any amounts outstanding under that certain Purchase
and Sale Agreement dated as of August 7, 1995, as amended from time to time;
WHEREAS, as a condition precedent to the Increased Facility, Lender requires,
inter alia, the execution and delivery by the Company of the Amendment and the
other Related Amendment Agreements to which the Company is to be a party; and
WHEREAS, the Board of Directors of the Company deem it to be in the best
interest of the Company to obtain the Increased Facility, and to execute and
deliver the Amendment and all other Related Amendment Agreements to which the
Company is to be a party, and to effect the transactions contemplated therein;
NOW, THEREFORE, it is hereby resolved that the Company be and it hereby is
authorized to execute and deliver to Lender the Amendment and each of the
Related Amendment Agreements to which the Company is to be a party; and
FURTHER RESOLVED, the President, Vice President, Secretary or Treasurer of
the Company, be and they hereby are authorized and directed, in the name and on
behalf of the Company to execute and deliver the Amendment, each of the Related
Amendment Agreements to which the Company is a party, and all other documents,
instruments, agreements and statements, which may be necessary to effectuate the
transactions contemplated hereby and thereby, all of which shall be in the forms
previously reviewed by the undersigned, or with such changes as the officer(s)
executing the same shall approve, and the execution and delivery thereof by such
officer(s) shall constitute the approval of the terms thereof;
FURTHER RESOLVED, that the President, Vice President, Secretary or Treasurer
of the Company, be and they hereby are authorized and directed, in the name and
on behalf of the Company, to do and perform any
vi
<PAGE>
and all other acts and to execute and deliver any and all other documents,
instruments and certificates, which may be necessary, appropriate or desirable
in order to consummate the transactions contemplated hereby.
FURTHER RESOLVED, that these resolutions may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which,
when taken together, shall be deemed to be one and the same instrument.
Dated: __________________________
DIRECTORS:
_________________________________
_________________________________
_________________________________
vii
<PAGE>
EXHIBIT 4
---------
BANKVEST CAPITAL CORP.
FORM OF CLOSING CERTIFICATE
---------------------------
Heller Financial, Inc.
One TransAm Plaza Drive -- Suite 222
Oakbrook Terrace, Illinois 60181
Ladies and Gentlemen:
Pursuant to that certain Loan and Security Agreement dated as of August 7, 1995
by and between BANKVEST CAPITAL CORP., a Massachusetts corporation ("Borrower"),
and HELLER FINANCIAL, INC., a Delaware corporation ("Lender"), as amended by the
Amendment to Loan and Security Agreement ("Amendment") dated as of February 12,
1996 and the Second Amendment to Loan and Security Agreement dated as of June
24, 1996 (collectively, "Loan Agreement"), and as an inducement to and part of
the consideration for the Increased Facility (as defined in the Loan Agreement),
the undersigned hereby warrants and represents to you that:
1. All representations and warranties made by the undersigned in the Loan
Agreement and the related documents are true and correct in all material
respects as of the date hereof.
2. No Event of Default exists (as such term is defined in the Loan
Agreement).
DATED as of June ________________, 1996.
BANKVEST CAPITAL CORP. Attest:
By:______________________________ ______________________
Its: ______________________________
viii
<PAGE>
REVISED FULL RECOURSE FACILITY NOTE
-----------------------------------
Up to $21,000,000.00
Chicago, Illinois August 7, 1995
For Value Received, BANKVEST CAPITAL CORP., a Massachusetts corporation
("Borrower"), promises to pay to the order of HELLER FINANCIAL, INC., a Delaware
corporation ("Lender"), the principal sum of Twenty One Million Dollars
($21,000,000.00), or so much as is advanced by Lender under the Facility, plus
interest thereon and any other charges applicable thereto, all as set forth more
fully in that certain Loan and Security Agreement dated of even date herewith as
amended from time to time, and executed by and between Borrower and Lender (the
"Agreement"). All capitalized terms not otherwise defined herein shall have the
meaning ascribed to them in such Agreement, the applicable provisions of which
are incorporated herein by this reference.
This Note is executed to evidence the Facility described in the Agreement. Each
Facility Advance shall bear interest as provided in the Agreement. Interest
which accrues on each Advance, together with the principal amount thereof, shall
be payable in accordance with the applicable Amortization Schedule attached to
each Contract Funding Request. Each payment described on such Amortization
Schedule represents payment of interest as well as principal. The principal
balance of the Facility, or any portion thereof, shall or may be prepaid as
described in the Agreement.
If any payment to be made pursuant to this Note becomes past due for a period in
excess of ten (10) days, Borrower shall pay to Lender on demand any late charges
or other payments which Lender is entitled to receive from Borrower pursuant to
the provisions of Article II of the Agreement.
At the election of the holder hereof, upon the occurrence of an Event of
Default, the Facility, and all accrued and unpaid interest thereon, together
with any other applicable charges, shall be and become immediately due and
payable in full.
If any suit or action is instituted or attorneys are employed to collect this
Note or any part thereof, Borrower promises and agrees to pay all costs of
collection, including actual court costs and reasonable attorneys' fees.
Borrower for itself and its successors and assigns hereby waives presentment for
payment, protest and demand, notice of protest, demand and of dishonor and
nonpayment of this Note, and expressly agrees that this Note, or any payment
hereunder, may be extended from time to time before, at or after maturity,
without in any way affecting the liability of Borrower hereunder or any
guarantor hereof.
Lender or the holder hereof shall not be required to look to any Collateral or
Additional Collateral for the payment of this Note, but may proceed against the
undersigned in such manner as it deems desirable. None of the rights or
remedies of Lender or the holder hereunder or under the Agreement are to be
deemed waived or affected by any failure to exercise same. All remedies
conferred upon Lender or the holder of this Note, the Agreement or any other
instrument or agreement to which the undersigned is a party or under which any
or all of them is bound, shall be cumulative and not exclusive, and such
remedies may be exercised concurrently or consecutively at Lender's or the
holder's option.
THIS PROMISSORY NOTE SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF
THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN
THE STATE OF ILLINOIS. BORROWER DOES HEREBY SUBMIT, AT LENDER'S ELECTION, TO THE
EXCLUSIVE JURISDICTION AND VENUE OF ANY COURTS (FEDERAL, STATE OR LOCAL) HAVING
A SITUS WITHIN THE COUNTY OF COOK AND THE STATE OF ILLINOIS WITH RESPECT
<PAGE>
TO ANY DISPUTE, CLAIM, OR SUIT WHETHER DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS PROMISSORY NOTE. BORROWER EXPRESSLY WAIVES PERSONAL SERVICE OF
PROCESS AND CONSENTS TO SERVICE BY CERTIFIED MAIL, POSTAGE PREPAID, DIRECTED TO
THE LAST KNOWN ADDRESS OF BORROWER, WHICH SERVICE SHALL BE DEEMED COM PLETED
WITHIN TEN (10) DAYS AFTER THE DATE OF MAILING THEREOF. BORROWER HEREBY
IRREVOCABLY WAIVES ANY CLAIM THAT THE COUNTY OF COOK, STATE OF ILLINOIS IS AN
INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK OF VENUE AS WELL AS ANY
RIGHT IT MAY NOW OR HEREAFTER HAVE TO REMOVE ANY SUCH ACTION OR PROCEEDING, ONCE
COMMENCED, TO ANOTHER COURT ON THE GROUNDS OF FORUM NON CONVENIENS OR OTHERWISE.
THE EXCLUSIVE CHOICE OF FORUM SET FORTH HEREIN SHALL NOT BE DEEMED TO PRECLUDE
THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING
OF ANY ACTION BY LENDER TO ENFORCE THE SAME IN ANY OTHER AP PROPRIATE
JURISDICTION.
BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS PROMISSORY NOTE. THIS
WAIVER IS INTENDED TO BE EFFECTIVE WITH RESPECT TO ALL DISPUTES WHICH ARISE OUT
OF THE PROMISSORY NOTE, THE LOAN DOCUMENTS OR PERTAIN TO THE TRANSACTIONS
CONTEMPLATED THEREBY. THIS WAIVER IS IRREVOCABLE, AND MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND SUCH WAIVER SET FORTH HEREIN SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS PROMISSORY
NOTE OR THE OTHER LOAN DOCUMENTS.
This Note shall be binding upon Borrower, its successors and assigns, and shall
inure to the benefit of the successors and assigns of Lender.
THIS NOTE REPLACES THAT CERTAIN FACILITY NOTE OF EVEN DATE IN THE MAXIMUM
PRINCIPAL AMOUNT OF $7,500,000 BETWEEN BORROWER AND LENDER.
IN WITNESS WHEREOF, Borrower has executed this Note as of the date first written
above.
BANKVEST CAPITAL CORP.
By: ____________________________________
Title __________________________________
<PAGE>
INCUMBENCY CERTIFICATE OF BankVest Capital Corp.
------------------------------------------------
The undersigned, being the duly elected ________________________ of BANKVEST
CAPITAL CORP., a corporation formed pursuant to the laws of the State of
Massachusetts (the "Company"), does hereby certify that the following persons
currently are serving in the Company in the capacities set forth opposite each
such name and that set forth opposite each such name is a true and correct
specimen of the signature of such person:
Name Title Signature
---- ----- ---------
________________ ________________ ________________
________________ ________________ ________________
________________ ________________ ________________
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the day
of June, 1996.
BANKVEST CAPITAL CORP.
By: _______________________
Title: ______________________
<PAGE>
CLOSING CERTIFICATE
-------------------
Heller Financial, Inc.
One TransAm Plaza Drive -- Suite 222
Oakbrook Terrace, Illinois 60181
Ladies and Gentlemen:
Pursuant to that certain Loan and Security Agreement dated as of August 7, 1995
by and between BANKVEST CAPITAL CORP., a Massachusetts corporation ("Borrower"),
and HELLER FINANCIAL, INC., a Delaware corporation ("Lender"), as amended by the
Amendment to Loan and Security Agreement ("Amendment") dated as of February 12,
1996 and the Second Amendment to Loan and Security Agreement dated as of June
24, 1996 (collectively, "Loan Agreement"), and as an inducement to and part of
the consideration for the Increased Facility (as defined in the Loan Agreement),
the undersigned hereby warrants and represents to you that:
1. All representations and warranties made by the undersigned in the Loan
Agreement and the related documents are true and correct in all material
respects as of the date hereof.
2. No Event of Default exists (as such term is defined in the Loan
Agreement).
DATED as of June__________, 1996.
BANKVEST CAPITAL CORP. Attest:
By:______________________________ ______________________
Its: ______________________________
<PAGE>
UNANIMOUS CONSENT OF THE BOARD OF DIRECTORS
OF BANKVEST CAPITAL CORP.
___________________________________________________________________________
We, the undersigned, being the members of the Board of Directors of BankVest
Capital Corp., a Massachusetts corporation (the "Company"), hereby do consent to
the adoption of, and hereby do adopt, the following resolutions:
WHEREAS, the Company and Heller Financial, Inc., a Delaware corporation
("Lender") entered into a Loan and Security Agreement dated as of August 7,
1995, as amended by that certain First Amendment to Loan and Security Agreement
dated as of February 12, 1996 (collectively, "Loan Agreement"), pursuant to
which Lender agreed to make certain Advances to the Company;
WHEREAS, there has been presented and reviewed by the President, Vice
President, Secretary or Treasurer of the Company (i) a proposed form of a Second
Amendment to Loan and Security Agreement ("Amendment") to be executed by and
between Lender and the Company and (ii) proposed forms of certain other
documents to be executed in connection with the consummation of the transactions
contemplated by the Amendment (the "Related Amendment Agreements"). The Loan
and Security Agreement, the Amendment and the Related Amendment Agreements shall
hereinafter collectively be referred to as the "Loan Agreement". All other
capitalized terms used herein which are not otherwise defined herein and which
are defined in the Loan Agreement shall have the meaning set forth in the Loan
Agreement;
WHEREAS, pursuant to the terms of the Amendment, the Lender proposed to
increase the amount of the available Facility Advances to $21,000,000 (the
"Increased Facility"), less any amounts outstanding under that certain Purchase
and Sale Agreement dated as of August 7, 1995, as amended from time to time;
WHEREAS, as a condition precedent to the Increased Facility, Lender requires,
inter alia, the execution and delivery by the Company of the Amendment and the
other Related Amendment Agreements to which the Company is to be a party; and
WHEREAS, the Board of Directors of the Company deem it to be in the best
interest of the Company to obtain the Increased Facility, and to execute and
deliver the Amendment and all other Related Amendment Agreements to which the
Company is to be a party, and to effect the transactions contemplated therein;
NOW, THEREFORE, it is hereby resolved that the Company be and it hereby is
authorized to execute and deliver to Lender the Amendment and each of the
Related Amendment Agreements to which the Company is to be a party; and
FURTHER RESOLVED, the President, Vice President, Secretary or Treasurer of
the Company, be and they hereby are authorized and directed, in the name and on
behalf of the Company to execute and deliver the Amendment, each of the Related
Amendment Agreements to which the Company is a party, and all other documents,
instruments, agreements and statements, which may be necessary to effectuate the
transactions contemplated hereby and thereby, all of which shall be in the forms
previously reviewed by the undersigned, or with such changes as the officer(s)
executing the same shall approve, and the execution and delivery thereof by such
officer(s) shall constitute the approval of the terms thereof;
FURTHER RESOLVED, that the President, Vice President, Secretary or Treasurer
of the Company, be and they hereby are authorized and directed, in the name and
on behalf of the Company, to do and perform any
i
<PAGE>
and all other acts and to execute and deliver any and all other documents,
instruments and certificates, which may be necessary, appropriate or desirable
in order to consummate the transactions contemplated hereby.
FURTHER RESOLVED, that these resolutions may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which,
when taken together, shall be deemed to be one and the same instrument.
Dated: __________________________
DIRECTORS:
_________________________________
_________________________________
_________________________________
ii
<PAGE>
EXHIBIT 10.51
THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT
----------------------------------------------
This Third Amendment to Loan and Security Agreement is made as of July 11, 1997
("Amendment") to supplement and amend that certain Loan and Security Agreement
dated as of August 7, 1995 and all documents related thereto, as amended by that
First Amendment to Loan and Security Agreement dated as of February 12, 1996 and
that certain Second Amendment to Loan and Security Agreement dated as of June
24, 1996 (collectively, the "Loan Agreement") between HELLER FINANCIAL, INC., a
Delaware corporation ("Lender") and BANKVEST CAPITAL CORP., a Massachusetts
corporation ("Borrower"). Any capitalized terms used herein and which are
defined in the Loan Agreement shall have the meaning set forth in the Loan
Agreement. Where a textual passage is amended in part only, new language may be
shown double underlined, deleted language may be shown in *strikeout*, and ...
=================
(an ellipsis) may be used for language that is unmodified. Such double
underlining, strike out and ellipses as used herein are for convenience only to
illustrate changes from the Loan Agreement, and are not part of the Loan
Agreement as amended.
PRELIMINARY STATEMENT
---------------------
A. Pursuant to the Loan Agreement, Lender has made to Borrower various
Advances;
B. Borrower desires to increase the available facility under the Loan
Agreement to $40,000,000 (the "Increased Facility"), with availability to be
shared between the Loan Agreement and that Purchase and Sale Agreement dated as
of August 7, 1995 by and between Lender and Borrower, as amended from time to
time (collectively, "Sale Agreement"). Lender is willing to comply with
Borrower's request, subject to the terms and conditions set forth below.
NOW, THEREFORE, it is hereby agreed as follows:
1. AMENDED DEFINITIONS; ADDITIONAL DEFINITIONS. The definition of
-------------------------------------------
Facility Rate shall be amended to read as follows:
- -------------
"Facility Rate: ...; with respect to each Advance made on or after
-------------
June 24, 1996, a fixed per annum interest rate equal to the lesser of (A)
================
the sum of (i) 2.75%; and (ii) the weekly average U.S. Treasury Constant
Maturities for a Treasury Note having approximately an equal term as the
weighted average term of the Contracts subject to the applicable Advance,
as reported by the Federal Release for the calendar week in which funding
of an Advance takes place, or (B) the Facility Rate, if any, set forth in
==============================================
the applicable Amortization Schedule executed in connection with each
=====================================================================
Advance."
=======
2. AMOUNT. Section 2.2.1 shall be amended to read as follows:
------
"2.2.1 Amount. The Facility is a term loan in the maximum amount
------
outstanding at any one time of up to *Twenty One* Forty Million Dollars
=====
*($21,000,000)* ($40,000,000) less any amounts outstanding under the Sale
============
Agreement, which, subject to the provisions of subsection 2.2.2 and Section
2.4 shall be made available to Borrower by Lender."
3. BORROWER CREDIT AUTHORITY. The second full paragraph of Section 2.2.2
-------------------------
shall be amended to read as follows:
Until the first two Advances have been completed hereunder in a manner
satisfactory to Lender, Lender shall retain the discretion ... to reject
any proposed Contract for an Advance hereunder. Thereafter, with respect to
any requested Advance, so long as (1) each Contract submitted meets all of
the other requirements (i) through and including (xiii) of the definition
of Eligible Contract; and (2) the Facility Funding Amount
<PAGE>
with respect to each Contract is less than *$30,000.00* $50,000.00; *and
==========
(3) the amount of the requested Advance is between $250,000.00 and
$500,000.00,* Lender's approval shall no longer be required for any
Contract subject to the requested Advance to be deemed an Eligible
Contract, but the provisions of Section 2.1 hereof shall continue to apply.
4. FINANCIAL STATEMENTS AND OTHER REPORTS. Subsection 6.4(iii)(III)
--------------------------------------
shall be amended to read, in pertinent part, as follows:
"(iii) 30 days after the end of each quarter, ... (III) computer
diskettes/tapes containing all backup data regarding Facility Contracts and
Facility Equipment, in format *acceptable to lender* attached hereto as
==================
Exhibit 6.4(iii)(III); ..."
=====================
5. FORM OF FACILITY NOTE/EXHIBIT K. The Form of Facility Note shall be
-------------------------------
deleted, and the Exhibit K to this Amendment shall be substituted in its stead.
6. FORM OF PORTFOLIO DOWNLOAD/EXHIBIT 6.4(III)(III). Exhibit
------------------------------------------------
6.4(iii)(III)-- Form of Portfolio Download shall be added to the Loan Agreement
in the form attached to this Amendment as Exhibit 6.4(iii)(III).
7. INCREASED ADDITIONAL LOANS. Subject to the satisfaction of the terms
--------------------------
and conditions of this Amendment, the available facility under the Loan
Agreement shall be increased from $21,000,000.00 to $40,000,000.00 less any
amounts outstanding under the Sale Agreement, and Lender shall make available
the Increased Facility subject to the conditions set forth in the Loan Agreement
as amended, including, but not limited to, Section 2.1 thereof.
8. CONDITIONS OF INCREASED FACILITY. The Increased Facility shall be
--------------------------------
subject to the satisfaction of all of the following conditions in a manner, form
and substance satisfactory to the Lender:
8.1 Representations and Warranties. The representations and
------------------------------
warranties set forth in this Amendment and the Loan Agreement, where
applicable, shall be true and correct as of July 11, 1997 and as of the date
this Amendment is executed by Borrower.
8.2 Delivery of Documents. The following shall have been delivered
---------------------
to Lender, each duly authorized and executed:
(a) a Promissory Note in the form of Exhibit K attached hereto
(the "Revised Facility Note"), in substitution of the existing
Facility Note;
(b) a certificate of incumbency of Borrower in the form of
Exhibit 1 attached hereto, and a Unanimous Consent in the form of
Exhibit 2 attached hereto;
(c) a current certificate of good standing in the states in
which Borrower is qualified or authorized to do business;
(d) certified copies of any amendments to the articles of
incorporation and by-laws of Borrower since the date such materials
were last furnished to Lender; and
(e) such other documents, certificates, consents and waivers as
Lender may request.
Upon delivery of all of the foregoing, and the satisfaction by
Borrower of all conditions contained in this Amendment, the existing
Facility Note shall be cancelled and delivered to Borrower, and
<PAGE>
thereafter all references in the Loan Agreement to the Note shall be
deemed to refer to the Revised Facility Note.
8.3 Material Adverse Changes. No event shall have occurred which has
------------------------
a material adverse effect on (i) the financial condition, property,
business, operations, prospects or profits of Borrower or the ability of
Borrower to perform its obligations hereunder or under the Loan Agreement
or (ii) the projections for financial performance of Borrower as set forth
in any document or paper furnished to Lender by Borrower or its
representatives.
9. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
------------------------------
Lender that all representations and warranties set forth in the Loan Agreement,
as modified by this Amendment as applicable, are true, complete and accurate in
all respects as of the date hereof.
10. SURVIVAL OF ORIGINAL AGREEMENT. Except as amended hereby, the Loan
------------------------------
Agreement shall remain in full force and effect, and Borrower shall continue to
be subject to the security interests and liens granted thereunder.
11. SUCCESSORS AND ASSIGNS. The terms hereof shall inure to the benefit of
----------------------
and be binding upon the parties hereto and their respective heirs, legal
representatives, successors and assigns.
12. COUNTERPARTS. This Amendment shall not be effective unless and until
------------
it has been executed by all parties hereto. This Amendment may be executed in
multiple counterparts, and signatures by facsimile shall be deemed acceptable.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first written above.
BANKVEST CAPITAL CORP. HELLER FINANCIAL, INC.
By: ______________________________ By: _______________________________
Title: ___________________________ Title: ____________________________
Attest:
__________________________________
3
<PAGE>
EXHIBIT 6(A)(III)(III)
----------------------
FORM OF PORTFOLIO DOWNLOAD
--------------------------
With respect to all Facility Contracts, Borrower should deliver all of the
information below on a 3.5 inch diskette. The information should appear in
either an ASCII format with fields separated by commas (,) and records separated
by carriage returns (new line) or an Excel spreadsheet with field names running
horizontally across the top of the spreadsheet. A one line header may be
included but no footers or any type of subtotaling should appear on the
download.
1. Account Number (must be unique)
2. End-User Name
3. End-User Street Address
4. End-User City
5. End-User State
6. End-User Zip
7. Phone Number
8. Payment Amount (if level payment)
9. Balloon Amount ( if level payment)
10. Original Equipment Cost (the original acquisition cost of the equipment)
11. Remaining Gross Receivable (includes prepays and delinquencies/rent only)
12. Booked Residual Amount (the guaranteed and unguaranteed expected residual
value of equipment at the end of the lease)
13. Security Deposit
14. Advance Payment Amount (total dollar amount of advance payments to be
applied toward the end of the lease term)
15. Number of Advance Payments
16. Payment Frequency (the number of months between payments, i.e., Monthly
=1; Quarterly =3; Semi-Annual =6; Annual = 12.)
17. Tax Status (E= Exempt, N = Nonexempt for state purposes)
18. Advance or Arrears ( 1 = Adv; 2 = Arr.)
19. Original Term (the original number of months elapsed between the
origination date and the maturity date; does not include the expected
residual due date)
20. Remaining Term ( the number of months between Heller's purchase date and
the maturity date)
21. Equipment Description
22. Equipment Address
23. Equipment City
24. Equipment State
25. Equipment Zip
26. Start Date (Origination Date-Date interest started accruing)
27. SIC Code
28. APR (the effective yield to the lessor of the lease expressed in a decimal
format)
29. Maturity Date (the date on which the obligor's final payment is currently
due)
30. Account Status (indicates current status of the account, i.e., "A" =
active; "C" = closed; "N" = non-accrual; "O"= charged off)
31. Scheduled Balance (sum of remaining rents not yet due, )
32. Original Gross Balance (sum of rental stream plus residual)
33. First Payment Due Date
34. Next Due Date
35. Due Day (day of the month account is due)
36. Days Late -30 (number of times a lease has been delinquent 30 days)
37. Days Late -60 (number of times a lease has been delinquent 60 days)
38. Days Late -90 (number of times a lease has been delinquent 90 days)
39. Days Late -120 (number of times a lease has been delinquent 120 days)
40. Payment stream for each deal (need only at time of funding or
substitution/only if non level payments)
i
<PAGE>
EXHIBIT K
---------
Form of Facility Promissory Note
--------------------------------
REVISED FULL RECOURSE FACILITY NOTE
-----------------------------------
Up to *$21,000,000.00* $40,000,000.00
==============
Chicago, Illinois August 7, 1995
For Value Received, BANKVEST CAPITAL CORP., a Massachusetts corporation
("Borrower"), promises to pay to the order of HELLER FINANCIAL, INC., a Delaware
corporation ("Lender"), the principal sum of *Twenty One* Forty Million Dollars
=====
*($21,000,000)* ($40,000,000.00), or so much as is advanced by Lender under the
================
Facility, plus interest thereon and any other charges applicable thereto, all as
set forth more fully in that certain Loan and Security Agreement dated of even
date herewith as amended from time to time and executed by and between Borrower
and Lender (the "Agreement"). All capitalized terms not otherwise defined herein
shall have the meaning ascribed to them in such Agreement, the applicable
provisions of which are incorporated herein by this reference.
This Note is executed to evidence the Facility described in the Agreement. Each
Facility Advance shall bear interest as provided in the Agreement. Interest
which accrues on each Advance, together with the principal amount thereof, shall
be payable in accordance with the applicable Amortization Schedule attached to
each Contract Funding Request. Each payment described on such Amortization
Schedule represents payment of interest as well as principal. The principal
balance of the Facility, or any portion thereof, shall or may be prepaid as
described in the Agreement.
If any payment to be made pursuant to this Note becomes past due for a period in
excess of ten (10) days, Borrower shall pay to Lender on demand any late charges
or other payments which Lender is entitled to receive from Borrower pursuant to
the provisions of Article II of the Agreement.
At the election of the holder hereof, upon the occurrence of an Event of
Default, the Facility, and all accrued and unpaid interest thereon, together
with any other applicable charges, shall be and become immediately due and
payable in full.
If any suit or action is instituted or attorneys are employed to collect this
Note or any part thereof, Borrower promises and agrees to pay all costs of
collection, including actual court costs and reasonable attorneys' fees.
Borrower for itself and its successors and assigns hereby waives presentment for
payment, protest and demand, notice of protest, demand and of dishonor and
nonpayment of this Note, and expressly agrees that this Note, or any payment
hereunder, may be extended from time to time before, at or after maturity,
without in any way affecting the liability of Borrower hereunder or any
guarantor hereof.
Lender or the holder hereof shall not be required to look to any Collateral or
Additional Collateral for the payment of this Note, but may proceed against the
undersigned in such manner as it deems desirable. None of the rights or
remedies of Lender or the holder hereunder or under the Agreement are to be
deemed waived or affected by any failure to exercise same. All remedies
conferred upon Lender or the holder of this Note, the Agreement or any other
instrument or agreement to which the undersigned is a party or under which any
or all of them is bound, shall be cumulative and not exclusive, and such
remedies may be exercised concurrently or consecutively at Lender's or the
holder's option.
ii
<PAGE>
THIS PROMISSORY NOTE SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF
THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN
THE STATE OF ILLINOIS. BORROWER DOES HEREBY SUBMIT, AT LENDER'S ELECTION, TO THE
EXCLUSIVE JURISDICTION AND VENUE OF ANY COURTS (FEDERAL, STATE OR LOCAL) HAVING
A SITUS WITHIN THE COUNTY OF COOK AND THE STATE OF ILLINOIS WITH RESPECT TO ANY
DISPUTE, CLAIM, OR SUIT WHETHER DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS PROMISSORY NOTE. BORROWER EXPRESSLY WAIVES PERSONAL SERVICE OF
PROCESS AND CONSENTS TO SERVICE BY CERTIFIED MAIL, POSTAGE PREPAID, DIRECTED TO
THE LAST KNOWN ADDRESS OF BORROWER, WHICH SERVICE SHALL BE DEEMED COMPLETED
WITHIN TEN (10) DAYS AFTER THE DATE OF MAILING THEREOF. BORROWER HEREBY
IRREVOCABLY WAIVES ANY CLAIM THAT THE COUNTY OF COOK, STATE OF ILLINOIS IS AN
INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK OF VENUE AS WELL AS ANY
RIGHT IT MAY NOW OR HEREAFTER HAVE TO REMOVE ANY SUCH ACTION OR PROCEEDING, ONCE
COMMENCED, TO ANOTHER COURT ON THE GROUNDS OF FORUM NON CONVENIENS OR OTHERWISE.
THE EXCLUSIVE CHOICE OF FORUM SET FORTH HEREIN SHALL NOT BE DEEMED TO PRECLUDE
THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING
OF ANY ACTION BY LENDER TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE
JURISDICTION.
BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS PROMISSORY NOTE. THIS
WAIVER IS INTENDED TO BE EFFECTIVE WITH RESPECT TO ALL DISPUTES WHICH ARISE OUT
OF THE PROMISSORY NOTE, THE LOAN DOCUMENTS OR PERTAIN TO THE TRANSACTIONS
CONTEMPLATED THEREBY. THIS WAIVER IS IRREVOCABLE, AND MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND SUCH WAIVER SET FORTH HEREIN SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS PROMISSORY
NOTE OR THE OTHER LOAN DOCUMENTS.
This Note shall be binding upon Borrower, its successors and assigns, and shall
inure to the benefit of the successors and assigns of Lender.
THIS NOTE REPLACES THAT CERTAIN FACILITY NOTE OF EVEN DATE IN THE MAXIMUM
PRINCIPAL AMOUNT OF *$7,5000,000* $40,000,000.00 BETWEEN BORROWER AND LENDER.
==============
IN WITNESS WHEREOF, Borrower has executed this Note as of the date first written
above.
BANKVEST CAPITAL CORP.
By: ____________________________________
Title _________________________________
iii
<PAGE>
EXHIBIT 1
---------
FORM OF INCUMBENCY CERTIFICATE
OF
BankVest Capital Corp.
----------------------
The undersigned, being the duly elected ________________________ of BANKVEST
CAPITAL CORP., a corporation formed pursuant to the laws of the State of
Massachusetts (the "Company"), does hereby certify that the following persons
currently are serving in the Company in the capacities set forth opposite each
such name and that set forth opposite each such name is a true and correct
specimen of the signature of such person:
Name Title Signature
---- ----- ---------
________________________ ________________________ ________________________
________________________ ________________________ ________________________
________________________ ________________________ ________________________
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the ____
day of July, 1997.
BANKVEST CAPITAL CORP.
By: ____________________
Title: _________________
iv
<PAGE>
EXHIBIT 2
---------
FORM OF UNANIMOUS CONSENT OF THE BOARD OF DIRECTORS
OF BANKVEST CAPITAL CORP.
We, the undersigned, being the Board of Directors of BankVest Capital Corp.,
a Massachusetts corporation (the "Company"), hereby do consent to the adoption
of, and hereby do adopt, the following resolutions:
WHEREAS, the Company and Heller Financial, Inc., a Delaware corporation
("Lender") entered into a Loan and Security Agreement dated as of August 7,
1995, as amended from time to time (collectively, "Loan Agreement"), pursuant to
which Lender agreed to make certain Advances to the Company;
WHEREAS, there has been presented and reviewed by the President, Vice
President, Secretary or Treasurer of the Company (i) a proposed form of a Third
Amendment to Loan and Security Agreement ("Amendment") to be executed by and
between Lender and the Company and (ii) proposed forms of certain other
documents to be executed in connection with the consummation of the transactions
contemplated by the Amendment (the "Related Amendment Agreements"). The Loan
and Security Agreement, the Amendment and the Related Amendment Agreements shall
hereinafter collectively be referred to as the "Loan Agreement". All other
capitalized terms used herein which are not otherwise defined herein and which
are defined in the Loan Agreement shall have the meaning set forth in the Loan
Agreement;
WHEREAS, pursuant to the terms of the Amendment, the Lender proposed to
increase the amount of the available Facility Advances to $40,000,000 (the
"Increased Facility"), less any amounts outstanding under that certain Purchase
and Sale Agreement dated as of August 7, 1995, as amended from time to time;
WHEREAS, as a condition precedent to the Increased Facility, Lender
requires, inter alia, the execution and delivery by the Company of the Amendment
and the other Related Amendment Agreements to which the Company is to be a
party; and
WHEREAS, the Board of Directors of the Company deem it to be in the best
interest of the Company to obtain the Increased Facility, and to execute and
deliver the Amendment and all other Related Amendment Agreements to which the
Company is to be a party, and to effect the transactions contemplated therein;
NOW, THEREFORE, it is hereby resolved that the Company be and it hereby is
authorized to execute and deliver to Lender the Amendment and each of the
Related Amendment Agreements to which the Company is to be a party; and
FURTHER RESOLVED, the President, Vice President, Secretary or Treasurer of
the Company, be and they hereby are authorized and directed, in the name and on
behalf of the Company to execute and deliver the Amendment, each of the Related
Amendment Agreements to which the Company is a party, and all other documents,
instruments, agreements and statements, which may be necessary to effectuate the
transactions contemplated hereby and thereby, all of which shall be in the forms
previously reviewed by the undersigned, or with such changes as the officer(s)
executing the same shall approve, and the execution and delivery thereof by such
officer(s) shall constitute the approval of the terms thereof;
FURTHER RESOLVED, that the President, Vice President, Secretary or
Treasurer of the Company, be and they hereby are authorized and directed, in the
name and on behalf of the Company, to do and perform any and all other acts and
to execute and deliver any and all other documents, instruments and
certificates, which may be necessary, appropriate or desirable in order to
consummate the transactions contemplated hereby.
v
<PAGE>
FURTHER RESOLVED, that these resolutions may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which,
when taken together, shall be deemed to be one and the same instrument.
Dated: ___________________________
DIRECTORS:
__________________________________
__________________________________
__________________________________
vi
<PAGE>
REVISED FULL RECOURSE FACILITY NOTE
-----------------------------------
Up to $40,000,000.00
Chicago, Illinois August 7, 1995
For Value Received, BANKVEST CAPITAL CORP., a Massachusetts corporation
("Borrower"), promises to pay to the order of HELLER FINANCIAL, INC., a Delaware
corporation ("Lender"), the principal sum of Forty Million Dollars
($40,000,000.00), or so much as is advanced by Lender under the Facility, plus
interest thereon and any other charges applicable thereto, all as set forth more
fully in that certain Loan and Security Agreement dated of even date herewith as
amended from time to time, and executed by and between Borrower and Lender (the
"Agreement"). All capitalized terms not otherwise defined herein shall have the
meaning ascribed to them in such Agreement, the applicable provisions of which
are incorporated herein by this reference.
This Note is executed to evidence the Facility described in the Agreement. Each
Facility Advance shall bear interest as provided in the Agreement. Interest
which accrues on each Advance, together with the principal amount thereof, shall
be payable in accordance with the applicable Amortization Schedule attached to
each Contract Funding Request. Each payment described on such Amortization
Schedule represents payment of interest as well as principal. The principal
balance of the Facility, or any portion thereof, shall or may be prepaid as
described in the Agreement.
If any payment to be made pursuant to this Note becomes past due for a period in
excess of ten (10) days, Borrower shall pay to Lender on demand any late charges
or other payments which Lender is entitled to receive from Borrower pursuant to
the provisions of Article II of the Agreement.
At the election of the holder hereof, upon the occurrence of an Event of
Default, the Facility, and all accrued and unpaid interest thereon, together
with any other applicable charges, shall be and become immediately due and
payable in full.
If any suit or action is instituted or attorneys are employed to collect this
Note or any part thereof, Borrower promises and agrees to pay all costs of
collection, including actual court costs and reasonable attorneys' fees.
Borrower for itself and its successors and assigns hereby waives presentment for
payment, protest and demand, notice of protest, demand and of dishonor and
nonpayment of this Note, and expressly agrees that this Note, or any payment
hereunder, may be extended from time to time before, at or after maturity,
without in any way affecting the liability of Borrower hereunder or any
guarantor hereof.
Lender or the holder hereof shall not be required to look to any Collateral or
Additional Collateral for the payment of this Note, but may proceed against the
undersigned in such manner as it deems desirable. None of the rights or
remedies of Lender or the holder hereunder or under the Agreement are to be
deemed waived or affected by any failure to exercise same. All remedies
conferred upon Lender or the holder of this Note, the Agreement or any other
instrument or agreement to which the undersigned is a party or under which any
or all of them is bound, shall be cumulative and not exclusive, and such
remedies may be exercised concurrently or consecutively at Lender's or the
holder's option.
THIS PROMISSORY NOTE SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF
THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN
THE STATE OF ILLINOIS. BORROWER DOES HEREBY SUBMIT, AT LENDER'S ELECTION, TO THE
EXCLUSIVE JURISDICTION AND VENUE OF ANY COURTS (FEDERAL, STATE OR LOCAL) HAVING
A SITUS WITHIN THE COUNTY OF COOK AND THE STATE OF ILLINOIS WITH RESPECT
<PAGE>
TO ANY DISPUTE, CLAIM, OR SUIT WHETHER DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS PROMISSORY NOTE. BORROWER EXPRESSLY WAIVES PERSONAL SERVICE OF
PROCESS AND CONSENTS TO SERVICE BY CERTIFIED MAIL, POSTAGE PREPAID, DIRECTED TO
THE LAST KNOWN ADDRESS OF BORROWER, WHICH SERVICE SHALL BE DEEMED COMPLETED
WITHIN TEN (10) DAYS AFTER THE DATE OF MAILING THEREOF. BORROWER HEREBY
IRREVOCABLY WAIVES ANY CLAIM THAT THE COUNTY OF COOK, STATE OF ILLINOIS IS AN
INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK OF VENUE AS WELL AS ANY
RIGHT IT MAY NOW OR HEREAFTER HAVE TO REMOVE ANY SUCH ACTION OR PROCEEDING, ONCE
COMMENCED, TO ANOTHER COURT ON THE GROUNDS OF FORUM NON CONVENIENS OR OTHERWISE.
THE EXCLUSIVE CHOICE OF FORUM SET FORTH HEREIN SHALL NOT BE DEEMED TO PRECLUDE
THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING
OF ANY ACTION BY LENDER TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE
JURISDICTION.
BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS PROMISSORY NOTE. THIS
WAIVER IS INTENDED TO BE EFFECTIVE WITH RESPECT TO ALL DISPUTES WHICH ARISE OUT
OF THE PROMISSORY NOTE, THE LOAN DOCUMENTS OR PERTAIN TO THE TRANSACTIONS
CONTEMPLATED THEREBY. THIS WAIVER IS IRREVOCABLE, AND MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND SUCH WAIVER SET FORTH HEREIN SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS PROMISSORY
NOTE OR THE OTHER LOAN DOCUMENTS.
This Note shall be binding upon Borrower, its successors and assigns, and shall
inure to the benefit of the successors and assigns of Lender.
THIS NOTE REPLACES THAT CERTAIN FACILITY NOTE OF EVEN DATE IN THE MAXIMUM
PRINCIPAL AMOUNT OF $21,000,000 BETWEEN BORROWER AND LENDER.
IN WITNESS WHEREOF, Borrower has executed this Note as of the date first written
above.
BANKVEST CAPITAL CORP.
By: ____________________________________
Title _________________________________
<PAGE>
INCUMBENCY CERTIFICATE OF BankVest Capital Corp.
------------------------------------------------
The undersigned, being the duly elected ________________________ of BANKVEST
CAPITAL CORP., a corporation formed pursuant to the laws of the State of
Massachusetts (the "Company"), does hereby certify that the following persons
currently are serving in the Company in the capacities set forth opposite each
such name and that set forth opposite each such name is a true and correct
specimen of the signature of such person:
Name Title Signature
---- ----- ---------
________________________ _________________________ ________________________
________________________ _________________________ ________________________
________________________ _________________________ ________________________
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the day
of July, 1997.
BANKVEST CAPITAL CORP.
By: ____________________
Title: _________________
<PAGE>
EXHIBIT 10.53
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
----------------------------------------------
This Amendment is made as of February 12, 1996 ("Amendment") to supplement and
amend that certain Purchase and Sale Agreement dated as of August 7, 1995 and
all documents related thereto (collectively, the "Sale Agreement") between
HELLER FINANCIAL, INC., a Delaware corporation ("Heller") and BANKVEST CAPITAL
CORP., a Massachusetts corporation ("BankVest"). Any capitalized terms used
herein and which are defined in the Sale Agreement shall have the meaning set
forth in the Sale Agreement. Where a textual passage is amended in part only,
new language may be shown double underlined, deleted language may be shown in
=================
*strikeout* and ... (an ellipsis) may be used for language that is unmodified.
Such double underlining, strike out and ellipses as used herein are for
convenience only to illustrate changes from the Sale Agreement, and are not part
of the Sale Agreement as amended.
PRELIMINARY STATEMENT
---------------------
A. Pursuant to the Sale Agreement, BankVest has assigned to Heller
BankVest's right, title and interest in and to various Contracts and Payments
thereunder, and assigned to Heller all of BankVest's right, title and interest
in and to, or grated to Heller a security interest in the Equipment covered by
such Contracts;
B. BankVest desires to increase the available aggregate Repurchase Price
with respect to all Contracts to $7,500,000 (the "Increased Facility"), with
availability to be shared between the Sale Agreement and that certain Loan and
Security Agreement dated as of August 7, 1995 by and between Heller and BankVest
("Loan Agreement"). Heller is willing to comply with BankVest's request, subject
to the terms and conditions set forth below.
NOW, THEREFORE, it is hereby agreed as follows:
1. AMENDMENT OF DEFINITIONS; ADDITIONAL DEFINITIONS.
------------------------------------------------
1.1 New definitions, Loan and Security Agreement, Lockbox Compliance
--------------------------- ------------------
Ratio and Lockbox Compliance Ratio Covenant shall be added as follows:
----- ---------------------------------
"Loan and Security Agreement or Loan Agreement: that certain
--------------------------- --------------
Loan and Security Agreement dated as of August 7, 1995 between
BankVest and Heller, as amended from time to time."
"Lockbox Compliance Ratio shall have the meaning set forth in
------------------------
Exhibit H -- Lockbox Compliance Certificate."
"Lockbox Compliance Ratio Covenant: a requirement that the
---------------------------------
Lockbox Compliance Ratio, as set forth in the most recently due
Lockbox Compliance Certificate, expressed as a percentage, be equal
to or greater than eighty percent (80%)."
1.2 The definition of Acquisition Cost shall be amended to read as
----------------
follows:
"Acquisition Cost: all costs and expenses incurred by BankVest in
----------------
connection with the acquisition of any Eligible Equipment, including,
without limitation, sales or use taxes, freight or installation
costs, and license fees, but excluding any down payments or deposits
===========
(including security deposits) made by Lessee."
=============================
1.3 The definition of Collection Agent shall be amended to read as
----------------
follows:
<PAGE>
"Collection Agent: XEROX ADMINISTRATIVE SERVICES, PARISH
----------------
FINANCIAL SERVICING CO., L.P., or any successor entity jointly
=======
approved by Heller and BankVest which is authorized to service,
========================================
administer and collect remittances due from Lessees under Facility
Contracts."
1.4 The definition of Lockbox Agreement shall be amended to read as
-----------------
follows:
"Lockbox Agreement: the agreement among BankVest, Collection
-----------------
Agent and Heller, substantially in the form attached hereto as
Exhibit E and subject to Heller's approval, which shall set forth the
================================
terms, conditions and provisions of the Lockbox."
2. PURCHASE PRICE. The last sentence of Section 2 shall be amended to read
--------------
as follows:
"Notwithstanding anything contained herein to the contrary, (i)
=====
Heller shall not be obligated to purchase any Contracts if at the time of
=========================================================================
purchase, or as a result of such purchase, BankVest is or would be in
=====================================================================
violation of the Lockbox Compliance Ratio Covenant, and (ii) at no time
============================================================
shall the aggregate Repurchase Price with respect to all Contracts exceed
the sum of *Three Million Dollars ($3,000,000)* Seven Million Five
==================
Hundred Thousand Dollars ($7,500,000) less all amounts outstanding under
========================================================================
the Loan Agreement."
====================
3. FINANCIAL STATEMENTS AND OTHER REPORTS. Section 6(a) shall be amended to
--------------------------------------
read as follows:
"(a) maintain full and complete books of account and other records
reflecting the results of BankVest's operations, all in accordance with
GAAP, and shall furnish or cause to be furnished to Heller within:
(i) 120 days after the end of each year, the audited financial
statements for such year for BankVest certified (without
qualification as to the opinion or scope of examination) by a firm of
independent certified public accountants selected by BankVest and
satisfactory to Heller;
(ii) Semi-annually, within 30 days of period end, computer
=====================================================
diskettes/tapes containing all backup data regarding BankVest's
===============================================================
portfolio, in format acceptable to Heller;
=========================================
(iii) 30 days after the end of each quarter, (I) a true and
==========
correct copy of the Lockbox statements for the preceding quarter,
=================================================================
(II) the completed Lockbox Compliance Certificate for the preceding
===================================================================
quarter, in the form attached hereto as Exhibit O, (III) computer
=================================================================
diskettes/tapes containing all backup data regarding Facility
=============================================================
Contracts and Facility Equipment, in format acceptable to Lender; and
=====================================================================
(IV) reports setting forth leasing, remarketing activities and
====
insurance settlements with respect to all Facility Equipment;
(iv) 60 days after the end of each quarter, quarterly financial
statements of BankVest;
(v) 30 days after the end of each month: reports setting forth
===
(I) any change in the identity or location of all Facility Equipment
and (II) all cash applications pertaining to the Facility Contracts,
and (III) amounts received and receivable due under each Facility
Contract, including the amounts overdue and the period for which such
amounts are overdue,
(vi) 10 days after receipt thereof by BankVest, copies of all
====
End-User financial statements required to be delivered to BankVest
pursuant to the applicable Contract.
All of the items described in clauses (ii) *and (iii)* through (v)
===========
of this Section shall be certified by an authorized officer of BankVest."
<PAGE>
4. ADDITIONAL EVENTS OF DEFAULT. The following shall be added as additional
----------------------------
Events of Default at the end of the first sentence of section Section 12(a)
thereunder:
", (iv) if XEROX ADMINISTRATIVE SERVICES or PARISH FINANCIAL
===========================================================
SERVICING CORP., L.P. shall give notice that it intends to terminate the
========================================================================
Lockbox Agreement, and within the foregoing notice period, no substitute
========================================================================
Collection Agent shall have executed a Lockbox Agreement in form and
====================================================================
substance acceptable to Heller, or (v) if BankVest shall have failed to
=======================================================================
comply with the Lockbox Compliance Ratio Covenant and such failure is not
=========================================================================
cured within sixty (60) days' notice from Heller to BankVest."
============================================================
5. FORM OF LOCKBOX COMPLIANCE CERTIFICATE/EXHIBIT H. An Exhibit H -- Form
-------------------------------------------------
of Lockbox Compliance Certificate shall be added in the form attached to this
Amendment as Exhibit H.
6. INCREASED IN AGGREGATE PURCHASE PRICE. Subject to the satisfaction of
--------------------------------------
the terms and conditions of this Amendment, the maximum available Repurchase
Price under the Sale Agreement shall be increased from $3,000,000.00 to
$7,500,000.00, less any amounts outstanding under the Loan Agreement.
7. CONDITIONS OF INCREASE. The obligation of Heller to increase the
-----------------------
available Repurchase Price under the Sale Agreement shall be subject to the
satisfaction of all of the following conditions in a manner, form and substance
satisfactory to Heller:
7.1 Representations and Warranties. The representations and warranties
------------------------------
set forth in this Amendment and the Sale Agreement, where applicable, shall
be true and correct as of February 12, 1996 and as of the date this Amendment
is executed by BankVest.
7.2 Delivery of Documents. The following shall have been delivered to
---------------------
Heller, each duly authorized and executed:
(a) a certificate of incumbency of BankVest in the form of Exhibit 1
attached hereto, and a Unanimous Consent in the form of Exhibit 2
attached hereto;
(b) a current certificate of good standing in the states in which
BankVest is qualified or authorized to do business;
(c) certified copies of any amendments to the articles of
incorporation and by-laws of BankVest since the date such materials were
last furnished to Heller; and
(d) such other documents, certificates, consents and waivers as
Heller may request.
7.3 Closing Certificate. BankVest shall deliver to Heller a closing
-------------------
certificate in the form of Exhibit 4 attached hereto, signed by the
President, Vice President, Secretary or Treasurer of BankVest.
7.4 Material Adverse Changes. No event shall have occurred which has a
------------------------
material adverse effect on (i) the financial condition, property, business,
operations, prospects or profits of BankVest or the ability of BankVest to
perform its obligations hereunder or under the Sale Agreement or (ii) the
projections for financial performance of BankVest as set forth in any
document or paper furnished to Heller by BankVest or its representatives.
8. REPRESENTATIONS AND WARRANTIES. BankVest represents and warrants to
------------------------------
Heller that all representations and warranties set forth in the Sale Agreement,
as modified by this Amendment as applicable, are true, complete and accurate in
all respects as of the date hereof.
3
<PAGE>
9. SURVIVAL OF ORIGINAL AGREEMENT. Except as amended hereby, the Sale
------------------------------
Agreement shall remain in full force and effect, and BankVest shall continue to
be subject to the security interests and liens granted thereunder.
10. SUCCESSORS AND ASSIGNS. The terms hereof shall inure to the benefit of
----------------------
and be binding upon the parties hereto and their respective heirs, legal
representatives, successors and assigns.
11. COUNTERPARTS. This Amendment shall not be effective unless and until it
------------
has been executed by all parties hereto. This Amendment may be executed in
multiple counterparts, and signatures by facsimile shall be deemed acceptable.
SIGNATURE BLOCK ON THE FOLLOWING PAGE
IN WITNESS WHEREOF, the parties have executed this Amendment as of February
12, 1996.
BANKVEST CAPITAL CORP. HELLER FINANCIAL, INC.
By: ________________________________ By: _______________________________
Title: _____________________________ Title: ____________________________
Attest:
____________________________________
4
<PAGE>
EXHIBIT H
---------
Form of Lockbox Compliance Certificate
--------------------------------------
LOCKBOX COMPLIANCE CERTIFICATE FOR THE QUARTER ENDED _______________
(A): TOTAL DOLLAR AMOUNT OF ALL CHECKS RECEIVED IN OUR LOCKBOX ON LOANS/LEASES
ASSIGNED TO HELLER FINANCIAL, INC. ____________________./1/
(B): TOTAL DOLLAR AMOUNT OF ALL PAYMENTS RECEIVED ON LOANS/LEASES ASSIGNED TO
HELLER FINANCIAL, INC. _________________________________.
LOCKBOX COMPLIANCE RATIO (A DIVIDED BY B) ____________________.
______________________________________
/1/ Note: This amount should only include checks forwarded directly by
the Lessee to the Lockbox. It should not include checks forwarded to BankVest
and subsequently forwarded to the Lockbox.
i
<PAGE>
EXHIBIT 1
---------
FORM OF INCUMBENCY CERTIFICATE
OF
BankVest Capital Corp.
----------------------
The undersigned, being the duly elected ________________________ of BANKVEST
CAPITAL CORP., a corporation formed pursuant to the laws of the State of
Massachusetts (the "Company"), does hereby certify that the following persons
currently are serving in the Company in the capacities set forth opposite each
such name and that set forth opposite each such name is a true and correct
specimen of the signature of such person:
Name Title Signature
------ ----- ---------
_______________ ________________ ___________________
_______________ ________________ ___________________
_______________ ________________ ___________________
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the __
day of February, 1996.
BANKVEST CAPITAL CORP.
By: _______________________
Title: ______________________
ii
<PAGE>
EXHIBIT 2
---------
FORM OF UNANIMOUS CONSENT OF THE BOARD OF DIRECTORS
AND SHAREHOLDERS OF BANKVEST CAPITAL CORP.
We, the undersigned, being all of the Shareholders and all of the members of
the Board of Directors of BankVest Capital Corp., a Massachusetts corporation
(the "Company"), hereby do consent to the adoption of, and hereby do adopt, the
following resolutions:
WHEREAS, the Company and Heller Financial, Inc., a Delaware corporation
("Heller") entered into a Sale Agreement dated as of August 7, 1995 ("Sale
Agreement"), pursuant to which BankVest has assigned to Heller BankVest's right,
title and interest in and to various Contracts and Payments thereunder, and
assigned to Heller all of BankVest's right, title and interest in and to, or
grated to Heller a security interest in the Equipment covered by such Contracts;
WHEREAS, there has been presented and reviewed by the President, Vice
President, Secretary or Treasurer of the Company (i) a proposed form of an
Amendment to Sale Agreement ("Amendment") to be executed by and between Heller
and the Company and (ii) proposed forms of certain other documents to be
executed in connection with the consummation of the transactions contemplated by
the Amendment (the "Related Amendment Agreements"). The Sale Agreement, the
Amendment and the Related Amendment Agreements shall hereinafter collectively be
referred to as the "Sale Agreement". All other capitalized terms used herein
which are not otherwise defined herein and which are defined in the Sale
Agreement shall have the meaning set forth in the Sale Agreement;
WHEREAS, pursuant to the terms of the Amendment, Heller proposed to increase
the amount of the available Repurchase Price for Contracts to $7,500,000 (the
"Increased Facility"), less any amounts outstanding under that certain Loan and
Security Agreement dated as of August 7, 1995, as amended from time to time;
WHEREAS, as a condition precedent to the Increased Facility, Heller requires,
inter alia, the execution and delivery by the Company of the Amendment and the
other Related Amendment Agreements to which the Company is to be a party; and
WHEREAS, the Board of Directors of the Company and the Shareholders of the
Company deem it to be in the best interest of the Company to obtain the
Increased Facility, and to execute and deliver the Amendment and all other
Related Amendment Agreements to which the Company is to be a party, and to
effect the transactions contemplated therein;
NOW, THEREFORE, it is hereby resolved that the Company be and it hereby is
authorized to execute and deliver to Heller the Amendment and each of the
Related Amendment Agreements to which the Company is to be a party; and
FURTHER RESOLVED, the President, Vice President, Secretary or Treasurer of
the Company, be and they hereby are authorized and directed, in the name and on
behalf of the Company to execute and deliver the Amendment, each of the Related
Amendment Agreements to which the Company is a party, and all other documents,
instruments, agreements and statements, which may be necessary to effectuate the
transactions contemplated hereby and thereby, all of which shall be in the forms
previously reviewed by the undersigned, or with such changes as the officer(s)
executing the same shall approve, and the execution and delivery thereof by such
officer(s) shall constitute the approval of the terms thereof;
iii
<PAGE>
FURTHER RESOLVED, that the President, Vice President, Secretary or Treasurer
of the Company, be and they hereby are authorized and directed, in the name and
on behalf of the Company, to do and perform any and all other acts and to
execute and deliver any and all other documents, instruments and certificates,
which may be necessary, appropriate or desirable in order to consummate the
transactions contemplated hereby.
FURTHER RESOLVED, that these resolutions may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which,
when taken together, shall be deemed to be one and the same instrument.
Dated: __________________________
DIRECTORS:
_______________________________
_______________________________
_______________________________
iv
<PAGE>
EXHIBIT 4
---------
BANKVEST CAPITAL CORP.
FORM OF CLOSING CERTIFICATE
---------------------------
Heller Financial, Inc.
One TransAm Plaza Drive -- Suite 222
Oakbrook Terrace, Illinois 60181
Ladies and Gentlemen:
Pursuant to that certain Sale Agreement dated as of August 7, 1995 by and
between BANKVEST CAPITAL CORP., a Massachusetts corporation ("BankVest"), and
HELLER FINANCIAL, INC., a Delaware corporation ("Heller"), as amended by the
Amendment to Sale Agreement ("Amendment") dated as of February 12, 1996;
(collectively, "Sale Agreement"), and as an inducement to and part of the
consideration for the Increased Facility (as defined in the Sale Agreement), the
undersigned hereby warrants and represents to you that:
1. All representations and warranties made by the undersigned in the Sale
Agreement and the related documents are true and correct in all material
respects as of the date hereof.
2. No Event of Default exists (as such term is defined in the Sale
Agreement).
DATED as of February ________________, 1996.
BANKVEST CAPITAL CORP. Attest:
By:______________________________ ______________________
Its: ____________________________
v
<PAGE>
INCUMBENCY CERTIFICATE OF BankVest Capital Corp.
------------------------------------------------
The undersigned, being the duly elected ________________________ of BANKVEST
CAPITAL CORP., a corporation formed pursuant to the laws of the State of
Massachusetts (the "Company"), does hereby certify that the following persons
currently are serving in the Company in the capacities set forth opposite each
such name and that set forth opposite each such name is a true and correct
specimen of the signature of such person:
Name Title Signature
---- ----- ---------
_______________ _______________ _________________
_______________ _______________ _________________
_______________ _______________ _________________
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the day
of June, 1995.
BANKVEST CAPITAL CORP.
By: _______________________
Title: ____________________
<PAGE>
CLOSING CERTIFICATE
-------------------
Heller Financial, Inc.
One TransAm Plaza Drive -- Suite 222
Oakbrook Terrace, Illinois 60181
Ladies and Gentlemen:
Pursuant to that certainSale Agreement dated as of August 7, 1995 by and between
BANKVEST CAPITAL CORP., a Massachusetts corporation ("BankVest"), and HELLER
FINANCIAL, INC., a Delaware corporation ("Heller"), as amended by the Amendment
to Sale Agreement ("Amendment") dated as of February 12, 1996; (collectively,
"Sale Agreement"), and as an inducement to and part of the consideration for the
Increased Facility (as defined in the Sale Agreement), the undersigned hereby
warrants and represents to you that:
1. All representations and warranties made by the undersigned in the Sale
Agreement and the related documents are true and correct in all material
respects as of the date hereof.
2. No Event of Default exists (as such term is defined in the Sale
Agreement).
DATED as of December __________, 1995.
BANKVEST CAPITAL CORP. Attest:
By:______________________________ ______________________
Its: ____________________________
<PAGE>
UNANIMOUS CONSENT OF THE BOARD OF DIRECTORS
AND SHAREHOLDERS OF BANKVEST CAPITAL CORP.
_________________________________________________________________________
We, the undersigned, being all of the Shareholders and all of the members of
the Board of Directors of BankVest Capital Corp., a Massachusetts corporation
(the "Company"), hereby do consent to the adoption of, and hereby do adopt, the
following resolutions:
WHEREAS, the Company and Heller Financial, Inc., a Delaware corporation
("Heller") entered into a Sale Agreement dated as of August 7, 1995 ("Sale
Agreement"), pursuant to which BankVest has assigned to Heller BankVest's right,
title and interest in and to various Contracts and Payments thereunder, and
assigned to Heller all of BankVest's right, title and interest in and to, or
grated to Heller a security interest in the Equipment covered by such Contracts;
WHEREAS, there has been presented and reviewed by the President, Vice
President, Secretary or Treasurer of the Company (i) a proposed form of an
Amendment to Sale Agreement ("Amendment") to be executed by and between Heller
and the Company and (ii) proposed forms of certain other documents to be
executed in connection with the consummation of the transactions contemplated by
the Amendment (the "Related Amendment Agreements"). The Sale Agreement, the
Amendment and the Related Amendment Agreements shall hereinafter collectively be
referred to as the "Sale Agreement". All other capitalized terms used herein
which are not otherwise defined herein and which are defined in the Sale
Agreement shall have the meaning set forth in the Sale Agreement;
WHEREAS, pursuant to the terms of the Amendment, Heller proposed to increase
the amount of the available Repurchase Price for Contracts to $7,500,000 (the
"Increased Facility"), less any amounts outstanding under that certain Loan and
Security Agreement dated as of August 7, 1995, as amended from time to time;
WHEREAS, as a condition precedent to the Increased Facility, Heller requires,
inter alia, the execution and delivery by the Company of the Amendment and the
other Related Amendment Agreements to which the Company is to be a party; and
WHEREAS, the Board of Directors of the Company and the Shareholders of the
Company deem it to be in the best interest of the Company to obtain the
Increased Facility, and to execute and deliver the Amendment and all other
Related Amendment Agreements to which the Company is to be a party, and to
effect the transactions contemplated therein;
NOW, THEREFORE, it is hereby resolved that the Company be and it hereby is
authorized to execute and deliver to Heller the Amendment and each of the
Related Amendment Agreements to which the Company is to be a party; and
FURTHER RESOLVED, the President, Vice President, Secretary or Treasurer of
the Company, be and they hereby are authorized and directed, in the name and on
behalf of the Company to execute and deliver the Amendment, each of the Related
Amendment Agreements to which the Company is a party, and all other documents,
instruments, agreements and statements, which may be necessary to effectuate the
transactions contemplated hereby and thereby, all of which shall be in the forms
previously reviewed by the undersigned, or with such changes as the officer(s)
executing the same shall approve, and the execution and delivery thereof by such
officer(s) shall constitute the approval of the terms thereof;
FURTHER RESOLVED, that the President, Vice President, Secretary or Treasurer
of the Company, be and they hereby are authorized and directed, in the name and
on behalf of the Company, to do and perform any
i
<PAGE>
and all other acts and to execute and deliver any and all other documents,
instruments and certificates, which may be necessary, appropriate or desirable
in order to consummate the transactions contemplated hereby.
FURTHER RESOLVED, that these resolutions may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which,
when taken together, shall be deemed to be one and the same instrument.
Dated: ________________________
DIRECTORS:
_______________________________
_______________________________
_______________________________
ii
<PAGE>
EXHIBIT 10.54
SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT
-----------------------------------------------
This Second Amendment to Purchase and Sale Agreement is made as of June 24, 1996
("Amendment") to supplement and amend that certain Purchase and Sale Agreement
dated as of August 7, 1995 and all documents related thereto, as amended by that
First Amendment to Purchase and Sale Agreement dated as of February 12, 1996
(collectively, the "Sale Agreement") between HELLER FINANCIAL LEASING, INC., a
Delaware corporation ("Heller") and BANKVEST CAPITAL CORP., a Massachusetts
corporation ("BankVest"). Any capitalized terms used herein and which are
defined in the Sale Agreement shall have the meaning set forth in the Sale
Agreement. Where a textual passage is amended in part only, new language may be
shown double underlined, deleted language may be shown in *strikeout,* and ...
=================
(an ellipsis) may be used for language that is unmodified. Such double
underlining, strike out and ellipses as used herein are for convenience only to
illustrate changes from the Sale Agreement, and are not part of the Sale
Agreement as amended.
PRELIMINARY STATEMENT
---------------------
A. Pursuant to the Sale Agreement, BankVest has assigned to Heller
BankVest's right, title and interest in and to various Contracts and Payments
thereunder, and assigned to Heller all of BankVest's right, title and interest
in and to, or grated to Heller a security interest in the Equipment covered by
such Contracts;
B. BankVest desires to increase the available aggregate Repurchase Price
with respect to all Contracts to $21,000,000 (the "Increase"), with availability
to be shared between the Sale Agreement and that certain Loan and Security
Agreement dated as of August 7, 1995 by and between Heller Financial, Inc. and
BankVest, as amended by that certain First Amendment to Loan and Security
Agreement dated as of February 12, 1996 and that certain Second Amendment to
Loan and Security Agreement dated as of June 24, 1996 (collectively, "Loan
Agreement"). Heller is willing to comply with BankVest's request, subject to the
terms and conditions set forth below.
NOW, THEREFORE, it is hereby agreed as follows:
1. AMENDED DEFINITIONS; ADDITIONAL DEFINITIONS.
-------------------------------------------
1.1 New definitions, Lockbox Coverage and Lockbox Coverage Covenant,
---------------- -------------------------
shall be added as follows:
"Lockbox Coverage shall have the meaning set forth in Exhibit H
----------------
-- Lockbox Compliance Certificate."
"Lockbox Coverage Covenant: a requirement that the Lockbox
-------------------------
Coverage, as set forth in the most recently due Lockbox Compliance
Certificate, expressed as a percentage, be equal to or greater than
seventy percent (70%)."
1.2 The definition of Discount Rate shall be amended to read as
-------------
follows:
"Discount Rate for Contracts purchased by Heller prior to June
------------- =============
24, 1996 means the rate used to determine Heller's purchase price for
========
such Contracts, which shall be a fixed annual interest rate equal to
the sum of (i) 3.25%; and (ii) the weekly average U.S. Treasury
Constant Maturities for a Treasury Note having a maturity
approximately equivalent to the Weighted Average Remaining Term of the
applicable Contract(s), as reported by the Federal Release for the
calendar week in which the applicable funding takes place; for
===
Contracts purchased by Heller on or after June 24, 1996, a fixed
================================================================
annual interest rate equal to the sum of (i) 2.75%; and (ii) the
================================================================
weekly average U.S. Treasury Constant Maturities for a Treasury Note
====================================================================
having a maturity approximately equivalent to the Weighted Average
================================================================
Remaining Term
==============
<PAGE>
of the applicable Contract(s), as reported by the Federal Release for
=====================================================================
the calendar week in which the applicable funding takes place."
================================================================
2. PURCHASE PRICE. The last sentence of Section 2 shall be amended to
--------------
read as follows:
"Notwithstanding anything contained herein to the contrary, (i) Heller
shall not be obligated to purchase any Contracts if at the time of
purchase, or as a result of such purchase, BankVest is or would be in
violation of the Lockbox Compliance Ratio Covenant or Lockbox Coverage
===================
Covenant, and (ii) at no time shall the aggregate Repurchase Price with
========
respect to all Contracts exceed the sum of *Seven Million Five Hundred
Thousand Dollars ($7,500,000)* Twenty One Million Dollars ($21,000,000)
========================================
less all amounts outstanding under the Loan Agreement."
3. FINANCIAL STATEMENTS AND OTHER REPORTS. Section 6(a)(iii) shall be
--------------------------------------
amended to read as follows:
"(iii) 30 days after the end of each quarter, (I) a true and correct
copy of the Lockbox statements for the preceding quarter, (II) the
completed Lockbox Compliance Certificate for the preceding quarter, in the
form attached hereto as Exhibit O, (III) computer diskettes/tapes
containing all backup data regarding Contracts and *Facility* Equipment, in
format acceptable to *Lender* Heller; *and* (IV) reports setting forth
======
leasing, remarketing activities and insurance settlements with respect to
all *Facility* Equipment, and (V) a certificate verifying BankVest's
==========================================
compliance with all covenants contained in that certain Purchase Agreement
==========================================================================
dated as of May 30, 1996 by and among BankVest, Primus Capital Fund III
=======================================================================
Limited Partnership and PNC Venture Corp., as amended from time to time;"
=======================================================================
and Subsection 6.4(a)(v) shall be amended to read as follows:
"(v) 30 days after the end of each month: reports setting forth (I)
any change in the identity or location of all *Facility* Equipment and (II)
*all cash applications pertaining to the Facility Contracts, and (III)
amounts received and receivable due under each Facility Contract, including
the amounts overdue and the period for which such amounts are overdue* a
=
delinquency report in the form attached hereto as Exhibit P"
===========================================================
4. ADDITIONAL EVENTS OF DEFAULT. The following shall be added as
----------------------------
additional Events of Default at the end of the first sentence of Section 12(a)
thereunder:
"..., *or* (v) commencing with the fourth calendar quarter of 1996, if
===================================================
BankVest shall have failed to comply for two consecutive reporting periods
=====================================
with either the Lockbox Compliance Ratio Covenant or the Lockbox Coverage
====== =======================
Covenant and such failure is not cured within sixty (60) days' notice from
========
Heller to BankVest, (vi) if Paul Gass or John Colton sell or transfer more
======================================================
than fifty percent (50%) of their respective ownership interests in
===================================================================
BankVest to any third parties or if either cease to be meaningfully
===================================================================
involved in the day-to-day management and operations of BankVest, or (vii)
==========================================================================
if the Contract 90-day Delinquency is greater than seven percent (7%) of
========================================================================
the Aggregate Portfolio Outstandings for two consecutive reporting periods,
==========================================================================
or (vii) if the Contract Total Delinquency is greater than eighteen percent
===========================================================================
(18%) of the Aggregate Portfolio Outstandings for two consecutive reporting
===========================================================================
periods. All terms in subsections 12(a)(vi) and (vii) not otherwise defined
===========================================================================
shall have the meanings set forth in Exhibit P (Form of Monthly Delinquency
===========================================================================
Report)."
=======
5. FORM OF LOCKBOX COMPLIANCE CERTIFICATE/EXHIBIT H. Exhibit H -- Form of
-------------------------------------------------
Lockbox Compliance Certificate shall be amended to read as set forth in the form
attached to this Amendment as Exhibit H.
6. FORM OF MONTHLY DELINQUENCY REPORT/EXHIBIT P. Exhibit P -- Form of
--------------------------------------------
Monthly Delinquency Report shall be added to the Loan Agreement in the form
attached to this Amendment as Exhibit P.
7. TERMINATION OF AGREEMENT. The following shall be added as a new
------------------------
subsection (i) to Section 13:
<PAGE>
"(i) Upon not less than sixty (60) days' prior notice, either party
may notify the other of its intention not to seek/provide any further
financing hereunder; provided, however, that notwithstanding the foregoing,
all of BankVest's obligations shall survive any expiration or termination
of this Agreement and/or the termination of any Contract."
8. INCREASED IN AGGREGATE PURCHASE PRICE. Subject to the satisfaction of
--------------------------------------
the terms and conditions of this Amendment, the maximum available Repurchase
Price under the Sale Agreement shall be increased from $7,500,000.00 to
$21,000,000.00 less any amounts outstanding under the Loan Agreement.
9. CONDITIONS OF INCREASE. The increase in the available Repurchase Price
-----------------------
under the Sale Agreement shall be subject to the satisfaction of all of the
following conditions in a manner, form and substance satisfactory to Heller:
9.1 Representations and Warranties. The representations and
------------------------------
warranties set forth in this Amendment and the Sale Agreement, where
applicable, shall be true and correct as of June 24, 1996 and as of the
date this Amendment is executed by BankVest.
9.2 Delivery of Documents. The following shall have been delivered to
---------------------
Heller, each duly authorized and executed:
(a) a certificate of incumbency of BankVest in the form of
Exhibit 1 attached hereto, and a Unanimous Consent in the form of
Exhibit 2 attached hereto;
(b) a current certificate of good standing for the Commonwealth
of Massachusetts;
(c) certified copies of any amendments to the articles of
incorporation and by-laws of BankVest since the date such materials
were last furnished to Heller; and
(d) such other documents, certificates, consents and waivers as
Heller may request.
9.3 Closing Certificate. BankVest shall deliver to Heller a closing
-------------------
certificate in the form of Exhibit 4 attached hereto, signed by the
President, Vice President, Secretary or Treasurer of BankVest.
9.4 Material Adverse Changes. No event shall have occurred which has
------------------------
a material adverse effect on (i) the financial condition, property,
business, operations, prospects or profits of BankVest or the ability of
BankVest to perform its obligations hereunder or under the Sale Agreement
or (ii) the projections for financial performance of BankVest as set forth
in any document or paper furnished to Heller by BankVest or its
representatives.
10. REPRESENTATIONS AND WARRANTIES. BankVest represents and warrants to
------------------------------
Heller that all representations and warranties set forth in the Sale Agreement,
as modified by this Amendment as applicable, are true, complete and accurate in
all respects as of the date hereof.
11. SURVIVAL OF ORIGINAL AGREEMENT. Except as amended hereby, the Sale
------------------------------
Agreement shall remain in full force and effect, and BankVest shall continue to
be subject to the security interests and liens granted thereunder.
12. SUCCESSORS AND ASSIGNS. The terms hereof shall inure to the benefit of
----------------------
and be binding upon the parties hereto and their respective heirs, legal
representatives, successors and assigns.
3
<PAGE>
13. COUNTERPARTS. This Amendment shall not be effective unless and until
------------
it has been executed by all parties hereto. This Amendment may be executed in
multiple counterparts, and signatures by facsimile shall be deemed acceptable.
SIGNATURE BLOCK ON THE FOLLOWING PAGE
IN WITNESS WHEREOF, the parties have executed this Amendment as of June 24,
1996.
BANKVEST CAPITAL CORP. HELLER FINANCIAL LEASING, INC.
By:____________________________ By:________________________________
Title:_________________________ Title: ____________________________
Attest:
_______________________________
4
<PAGE>
EXHIBIT H
---------
Form of Lockbox Compliance Certificate
--------------------------------------
LOCKBOX COMPLIANCE CERTIFICATE FOR THE QUARTER ENDED _______________
(A): TOTAL DOLLAR AMOUNT OF ALL CHECKS RECEIVED IN OUR LOCKBOX ON LOANS/LEASES
ASSIGNED TO HELLER ____________________./1/
(B): TOTAL DOLLAR AMOUNT OF ALL PAYMENTS RECEIVED ON LOANS/LEASES ASSIGNED TO
HELLER _________________________________.
(C) TOTAL DOLLAR AMOUNT DUE HELLER
=== ==============================
LOCKBOX COMPLIANCE RATIO (A DIVIDED BY B) ____________________.
LOCKBOX COVERAGE (A DIVIDED BY C) ____________________________
=================================
___________________
/1/ Note: This amount should only include checks forwarded directly by the
Lessee to the Lockbox. It should not include checks forwarded to BankVest
and subsequently forwarded to the Lockbox.
i
<PAGE>
EXHIBIT P
---------
Form of Monthly Delinquency Report
----------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
END-USER LEASE # GROSS END-USER DAYS LESS THAN 30-59 60-89 90-119 120+
NAME REC. GROSS PAST DUE 30
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
ABC Co. 111 100,000 2 100,000
Inc.
- -------------------------------------------------------------------------------------------------------------------
112 200,000 95 200,000
- -------------------------------------------------------------------------------------------------------------------
113 350,000 45 350,000
- -------------------------------------------------------------------------------------------------------------------
650,000
- -------------------------------------------------------------------------------------------------------------------
XYZ, Inc. 211 150,000 65 150,000
- -------------------------------------------------------------------------------------------------------------------
212 250,000 125 250,000
- -------------------------------------------------------------------------------------------------------------------
400,000
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
1,050,000 1,050,000 100,000 350,000 150,000 200,000 250,000
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- ---------------------------------- Total Delinquency equals the aggregate of all 30+ (i.e. 950,000)
- ---------------------------------- 90 day delinquency equals the aggregate of all 90+ (i.e. 450,000)
Aggregate Portfolio Outstandings equals the total of all Gross
Receivables (i.e. 1,050,000)
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
ii
<PAGE>
EXHIBIT 1
---------
FORM OF INCUMBENCY CERTIFICATE
OF
BankVest Capital Corp.
----------------------
The undersigned, being the duly elected ________________________ of BANKVEST
CAPITAL CORP., a corporation formed pursuant to the laws of the State of
Massachusetts (the "Company"), does hereby certify that the following persons
currently are serving in the Company in the capacities set forth opposite each
such name and that set forth opposite each such name is a true and correct
specimen of the signature of such person:
Name Title Signature
---- ----- ---------
______________________ ______________________ ______________________
______________________ ______________________ ______________________
______________________ ______________________ ______________________
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the __
day of June, 1996.
BANKVEST CAPITAL CORP.
By: _________________________
Title: ______________________
iii
<PAGE>
EXHIBIT 2
---------
FORM OF UNANIMOUS CONSENT OF THE BOARD OF DIRECTORS
OF BANKVEST CAPITAL CORP.
We, the undersigned, being the Board of Directors of BankVest Capital
Corp., a Massachusetts corporation (the "Company"), hereby do consent to the
adoption of, and hereby do adopt, the following resolutions:
WHEREAS, the Company and Heller Financial Leasing, Inc., a Delaware
corporation ("Heller") entered into a Purchase and Sale Agreement dated as of
August 7, 1995, as amended by that First Amendment to Purchase and Sale
Agreement dated as of February 12, 1996 (collectively, "Sale Agreement"),
pursuant to which BankVest has assigned to Heller BankVest's right, title and
interest in and to various Contracts and Payments thereunder, and assigned to
Heller all of BankVest's right, title and interest in and to, or grated to
Heller a security interest in the Equipment covered by such Contracts;
WHEREAS, there has been presented and reviewed by the President, Vice
President, Secretary or Treasurer of the Company (i) a proposed form of a Second
Amendment to Purchase and Sale Agreement ("Amendment") to be executed by and
between Heller and the Company and (ii) proposed forms of certain other
documents to be executed in connection with the consummation of the transactions
contemplated by the Amendment (the "Related Amendment Agreements"). The Sale
Agreement, the Amendment and the Related Amendment Agreements shall hereinafter
collectively be referred to as the "Sale Agreement". All other capitalized
terms used herein which are not otherwise defined herein and which are defined
in the Sale Agreement shall have the meaning set forth in the Sale Agreement;
WHEREAS, pursuant to the terms of the Amendment, Heller proposed to
increase the amount of the available Repurchase Price for Contracts to
$21,000,000 (the "Increase") less any amounts outstanding under that certain
Loan and Security Agreement dated as of August 7, 1995, as amended from time to
time;
WHEREAS, as a condition precedent to the Increase, Heller requires, inter
alia, the execution and delivery by the Company of the Amendment and the other
Related Amendment Agreements to which the Company is to be a party; and
WHEREAS, the Board of Directors of the Company deem it to be in the best
interest of the Company to obtain the Increase, and to execute and deliver the
Amendment and all other Related Amendment Agreements to which the Company is to
be a party, and to effect the transactions contemplated therein;
NOW, THEREFORE, it is hereby resolved that the Company be and it hereby is
authorized to execute and deliver to Heller the Amendment and each of the
Related Amendment Agreements to which the Company is to be a party; and
FURTHER RESOLVED, the President, Vice President, Secretary or Treasurer of
the Company, be and they hereby are authorized and directed, in the name and on
behalf of the Company to execute and deliver the Amendment, each of the Related
Amendment Agreements to which the Company is a party, and all other documents,
instruments, agreements and statements, which may be necessary to effectuate the
transactions contemplated hereby and thereby, all of which shall be in the forms
previously reviewed by the undersigned, or with such changes as the officer(s)
executing the same shall approve, and the execution and delivery thereof by such
officer(s) shall constitute the approval of the terms thereof;
iv
<PAGE>
FURTHER RESOLVED, that the President, Vice President, Secretary or
Treasurer of the Company, be and they hereby are authorized and directed, in the
name and on behalf of the Company, to do and perform any and all other acts and
to execute and deliver any and all other documents, instruments and
certificates, which may be necessary, appropriate or desirable in order to
consummate the transactions contemplated hereby.
FURTHER RESOLVED, that these resolutions may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which,
when taken together, shall be deemed to be one and the same instrument.
Dated: ________________________
DIRECTORS:
_______________________________
_______________________________
_______________________________
v
<PAGE>
EXHIBIT 4
---------
BANKVEST CAPITAL CORP.
FORM OF CLOSING CERTIFICATE
---------------------------
Heller Financial, Inc.
One TransAm Plaza Drive -- Suite 222
Oakbrook Terrace, Illinois 60181
Ladies and Gentlemen:
Pursuant to that certain Sale Agreement dated as of August 7, 1995 by and
between BANKVEST CAPITAL CORP., a Massachusetts corporation ("BankVest"), and
HELLER FINANCIAL, INC., a Delaware corporation ("Heller"), as amended by the
First Amendment to Purchase and Sale Agreement dated as of February 12, 1996 and
as amended by the Second Amendment to Purchase and Sale Agreement dated as of
June 24, 1996 (collectively, "Sale Agreement"), and as an inducement to and part
of the consideration for the Increase (as defined in the Sale Agreement), the
undersigned hereby warrants and represents to you that:
1. All representations and warranties made by the undersigned in the Sale
Agreement and the related documents are true and correct in all material
respects as of the date hereof.
2. No Event of Default exists (as such term is defined in the Sale
Agreement).
DATED as of June ________________, 1996.
BANKVEST CAPITAL CORP. Attest:
By:______________________________ ______________________
Its: ____________________________
vi
<PAGE>
INCUMBENCY CERTIFICATE OF BankVest Capital Corp.
------------------------------------------------
The undersigned, being the duly elected ________________________ of BANKVEST
CAPITAL CORP., a corporation formed pursuant to the laws of the State of
Massachusetts (the "Company"), does hereby certify that the following persons
currently are serving in the Company in the capacities set forth opposite each
such name and that set forth opposite each such name is a true and correct
specimen of the signature of such person:
Name Title Signature
---- ----- ---------
______________________ ______________________ ______________________
______________________ ______________________ ______________________
______________________ ______________________ ______________________
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the __
day of June, 1996.
BANKVEST CAPITAL CORP.
By: _______________________
Title: ____________________
<PAGE>
CLOSING CERTIFICATE
-------------------
Heller Financial, Inc.
One TransAm Plaza Drive -- Suite 222
Oakbrook Terrace, Illinois 60181
Ladies and Gentlemen:
Pursuant to that certain Sale Agreement dated as of August 7, 1995 by and
between BANKVEST CAPITAL CORP., a Massachusetts corporation ("BankVest"), and
HELLER FINANCIAL, INC., a Delaware corporation ("Heller"), as amended by the
First Amendment to Purchase and Sale Agreement dated as of February 12, 1996 and
as amended by the Second Amendment to Purchase and Sale Agreement dated as of
June 24, 1996 (collectively, "Sale Agreement"), and as an inducement to and part
of the consideration for the Increase (as defined in the Sale Agreement), the
undersigned hereby warrants and represents to you that:
1. All representations and warranties made by the undersigned in the Sale
Agreement and the related documents are true and correct in all material
respects as of the date hereof.
2. No Event of Default exists (as such term is defined in the Sale
Agreement).
DATED as of June __________, 1996.
BANKVEST CAPITAL CORP. Attest:
By:______________________________ ______________________
Its: ____________________________
<PAGE>
UNANIMOUS CONSENT OF THE BOARD OF DIRECTORS
OF BANKVEST CAPITAL CORP.
___________________________________________________________________________
We, the undersigned, being the Board of Directors of BankVest Capital
Corp., a Massachusetts corporation (the "Company"), hereby do consent to the
adoption of, and hereby do adopt, the following resolutions:
WHEREAS, the Company and Heller Financial Leasing, Inc., a Delaware
corporation ("Heller") entered into a Purchase and Sale Agreement dated as of
August 7, 1995, as amended by that First Amendment to Purchase and Sale
Agreement dated as of February 12, 1996 (collectively, "Sale Agreement"),
pursuant to which BankVest has assigned to Heller BankVest's right, title and
interest in and to various Contracts and Payments thereunder, and assigned to
Heller all of BankVest's right, title and interest in and to, or grated to
Heller a security interest in the Equipment covered by such Contracts;
WHEREAS, there has been presented and reviewed by the President, Vice
President, Secretary or Treasurer of the Company (i) a proposed form of a Second
Amendment to Purchase and Sale Agreement ("Amendment") to be executed by and
between Heller and the Company and (ii) proposed forms of certain other
documents to be executed in connection with the consummation of the transactions
contemplated by the Amendment (the "Related Amendment Agreements"). The Sale
Agreement, the Amendment and the Related Amendment Agreements shall hereinafter
collectively be referred to as the "Sale Agreement". All other capitalized
terms used herein which are not otherwise defined herein and which are defined
in the Sale Agreement shall have the meaning set forth in the Sale Agreement;
WHEREAS, pursuant to the terms of the Amendment, Heller proposed to
increase the amount of the available Repurchase Price for Contracts to
$21,000,000 (the "Increase") less any amounts outstanding under that certain
Loan and Security Agreement dated as of August 7, 1995, as amended from time to
time;
WHEREAS, as a condition precedent to the Increase, Heller requires, inter
alia, the execution and delivery by the Company of the Amendment and the other
Related Amendment Agreements to which the Company is to be a party; and
WHEREAS, the Board of Directors of the Company deem it to be in the best
interest of the Company to obtain the Increase, and to execute and deliver the
Amendment and all other Related Amendment Agreements to which the Company is to
be a party, and to effect the transactions contemplated therein;
NOW, THEREFORE, it is hereby resolved that the Company be and it hereby is
authorized to execute and deliver to Heller the Amendment and each of the
Related Amendment Agreements to which the Company is to be a party; and
FURTHER RESOLVED, the President, Vice President, Secretary or Treasurer of
the Company, be and they hereby are authorized and directed, in the name and on
behalf of the Company to execute and deliver the Amendment, each of the Related
Amendment Agreements to which the Company is a party, and all other documents,
instruments, agreements and statements, which may be necessary to effectuate the
transactions contemplated hereby and thereby, all of which shall be in the forms
previously reviewed by the undersigned, or with such changes as the officer(s)
executing the same shall approve, and the execution and delivery thereof by such
officer(s) shall constitute the approval of the terms thereof;
FURTHER RESOLVED, that the President, Vice President, Secretary or
Treasurer of the Company, be and they hereby are authorized and directed, in the
name and on behalf of the Company, to do and perform any
i
<PAGE>
and all other acts and to execute and deliver any and all other documents,
instruments and certificates, which may be necessary, appropriate or desirable
in order to consummate the transactions contemplated hereby.
FURTHER RESOLVED, that these resolutions may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which,
when taken together, shall be deemed to be one and the same instrument.
Dated: ________________________
DIRECTORS:
_______________________________
_______________________________
_______________________________
ii
<PAGE>
EXHIBIT 10.55
THIRD AMENDMENT TO PURCHASE AND SALE AGREEMENT
----------------------------------------------
This Third Amendment to Purchase and Sale Agreement is made as of July 11, 1997
("Amendment") to supplement and amend that certain Purchase and Sale Agreement
dated as of August 7, 1995, and all documents related thereto, as amended by
that First Amendment to Purchase and Sale Agreement dated as of February 12,
1996, and as amended by that Second Amendment to Purchase and Sale Agreement
dated as of June 24, 1996 (collectively, the "Sale Agreement") between HELLER
FINANCIAL LEASING, INC., a Delaware corporation ("Heller") and BANKVEST CAPITAL
CORP., a Massachusetts corporation ("BankVest"). Any capitalized terms used
herein and which are defined in the Sale Agreement shall have the meaning set
forth in the Sale Agreement. Where a textual passage is amended in part only,
new language may be shown double underlined, deleted language may be shown in
=================
*strikeout*, and ... (an ellipsis) may be used for language that is unmodified.
Such double underlining, strike out and ellipses as used herein are for
convenience only to illustrate changes from the Sale Agreement, and are not part
of the Sale Agreement as amended.
PRELIMINARY STATEMENT
---------------------
A. Pursuant to the Sale Agreement, BankVest has assigned to Heller
BankVest's right, title and interest in and to various Contracts and Payments
thereunder, and assigned to Heller all of BankVest's right, title and interest
in and to, or granted to Heller a security interest in the Equipment covered by
such Contracts;
B. BankVest desires to increase the available aggregate Repurchase Price
with respect to all Contracts to $40,000,000 (the "Increase"), with availability
to be shared between the Sale Agreement and that certain Loan and Security
Agreement dated as of August 7, 1995 by and between Heller Financial, Inc. and
BankVest, as amended by that certain First Amendment to Loan and Security
Agreement dated as of February 12, 1996, that certain Second Amendment to Loan
and Security Agreement dated as of June 24, 1996, and that certain Third
Amendment to Loan and Security Agreement dated as of July 11, 1997
(collectively, "Loan Agreement"). Heller is willing to comply with BankVest's
request, subject to the terms and conditions set forth below.
NOW, THEREFORE, it is hereby agreed as follows:
1. AMENDED DEFINITIONS; ADDITIONAL DEFINITIONS. The definition of Discount
------------------------------------------- --------
Rate shall be amended to read as follows:
- ----
"Discount Rate for Contracts purchased by Heller prior to June 24, 1996
-------------
means ...; for Contracts purchased by Heller on or after June 24, 1996, a
fixed annual interest rate equal to the lesser of (A) the sum of (i) 2.75%;
=================
and (ii) the weekly average U.S. Treasury Constant Maturities for a Treasury
Note having a maturity approximately equivalent to the Weighted Average
Remaining Term of the applicable Contract(s), as reported by the Federal
Release for the calendar week in which the applicable funding takes place,
=
or (B) the Discount Rate, if any, set forth in the applicable Bill of Sale
==========================================================================
and Assignment."
==============
2. PURCHASE PRICE. Section 2 shall be amended to read as follows:
--------------
"2. HELLER'S DISCRETION/PURCHASE PRICE. Heller hall have sole
====================-------------- =====================
discretion in each case in the exercise of its credit authority to accept or
============================================================================
decline any Contract(s) for purchase hereunder. However, Bankvest shall have
============================================================================
limited authority to credit-approve any Contract (1) meeting all of the
========================================================================
eligibility criteria set forth in Section 5 hereof and pertaining to
====================================================================
Eligible Equipment, and (2) which has been originated by Bankvest or
====================================================================
Leasevest as Lessor, and (3) with respect to which the Purchase Price is
========================================================================
less than $50,000.00. Heller may, in its sole discretion at any time, (i)
=========================================================================
issue additional eligibility guidelines with respect to such Contracts and
==========================================================================
Lessees, and/or (ii) revoke such limited credit-approval authority at any
=========================================================================
time.
=====
<PAGE>
The purchase price of a Contract shall be computed as of the date of
purchase and shall be the lesser of (i) the Balance of Payments discounted
at the then applicable Discount Rate, or (ii) one hundred percent (100%) of
the Acquisition Cost of the Eligible Equipment subject to such Contract. On
the date of Heller's purchase of the Contract, Heller will first apply the
proceeds representing the purchase price to be paid by Heller against any
payments BankVest is then required to make to Heller under the terms of this
Agreement, and then Heller will pay any remainder to BankVest in cash.
Notwithstanding anything contained herein to the contrary, (i) Heller shall
not be obligated to purchase any Contracts if at the time of purchase, or as
a result of such purchase, BankVest is or would be in violation of the
Lockbox Compliance Ratio Covenant or Lockbox Coverage Covenant, and (ii) at
no time shall the aggregate Repurchase Price with respect to all Contracts
exceed the sum of *Twenty One Million Dollars ($21,000,000)* Forty Million
=============
Dollars ($40,000,000) less all amounts outstanding under the Loan
=====================
Agreement."
3. FINANCIAL STATEMENTS AND OTHER REPORTS. Section 6(a)(iii) shall be
--------------------------------------
amended to read as follows:
"(iii) 30 days after the end of each quarter, (I) a true and correct
copy of the Lockbox statements for the preceding quarter, (II) the completed
Lockbox Compliance Certificate for the preceding quarter, in the form
attached hereto as Exhibit O, (III) computer diskettes/tapes containing all
backup data regarding Contracts and Equipment, in the format set forth in
=== ============
Exhibit 6(a)(iii)(III) hereof *acceptable to Heller*; (IV) reports setting
=============================
forth leasing, remarketing activities and insurance settlements with respect
to all Equipment, and (V) a certificate verifying BankVest's compliance with
all covenants contained in that certain Purchase Agreement dated as of May
30, 1996 by and among BankVest, Primus Capital Fund III Limited Partnership
and PNC Venture Corp., as amended from time to time;"
4. FORM OF PORTFOLIO DOWNLOAD/EXHIBIT 6(A)(III)(III). Exhibit
--------------------------------------------------
6(a)(iii)(III)--Form of Portfolio Download shall be added to the Sale Agreement
in the form attached to this Amendment as Exhibit 6(a)(iii)(III).
5. CONDITIONS OF INCREASE. The increase in the available Repurchase Price
-----------------------
under the Sale Agreement shall be subject to the satisfaction of all of the
following conditions in a manner, form and substance satisfactory to Heller:
6.1 Representations and Warranties. The representations and warranties
------------------------------
set forth in this Amendment and the Sale Agreement, where applicable, shall
be true and correct as of July 11, 1997 and as of the date this Amendment is
executed by BankVest.
6.2 Delivery of Documents. The following shall have been delivered to
---------------------
Heller, each duly authorized and executed:
(a) a certificate of incumbency of BankVest in the form of Exhibit 1
attached hereto, and a Unanimous Consent in the form of Exhibit 2
attached hereto;
(b) a current certificate of good standing for the Commonwealth of
Massachusetts;
(c) certified copies of any amendments to the articles of
incorporation and by-laws of BankVest since the date such materials were
last furnished to Heller; and
(d) such other documents, certificates, consents and waivers as
Heller may request.
6.3 Material Adverse Changes. No event shall have occurred which has a
------------------------
material adverse effect on (i) the financial condition, property, business,
operations, prospects or profits of BankVest or the ability of BankVest to
perform its obligations hereunder or under the Sale Agreement or (ii) the
projections for financial performance of BankVest as set forth in any
document or paper furnished to Heller by BankVest or its representatives.
2
<PAGE>
7. REPRESENTATIONS AND WARRANTIES. BankVest represents and warrants to
------------------------------
Heller that all representations and warranties set forth in the Sale Agreement,
as modified by this Amendment as applicable, are true, complete and accurate in
all respects as of the date hereof.
8. SURVIVAL OF ORIGINAL AGREEMENT. Except as amended hereby, the Sale
------------------------------
Agreement shall remain in full force and effect, and BankVest shall continue to
be subject to the security interests and liens granted thereunder.
9. SUCCESSORS AND ASSIGNS. The terms hereof shall inure to the benefit of
----------------------
and be binding upon the parties hereto and their respective heirs, legal
representatives, successors and assigns.
10. COUNTERPARTS. This Amendment shall not be effective unless and until it
------------
has been executed by all parties hereto. This Amendment may be executed in
multiple counterparts, and signatures by facsimile shall be deemed acceptable.
IN WITNESS WHEREOF, the parties have executed this Amendment as of July 11,
1997.
BANKVEST CAPITAL CORP. HELLER FINANCIAL LEASING, INC.
By: ______________________________ By: _______________________________
Title: ___________________________ Title: ____________________________
Attest:
_________________________________
3
<PAGE>
EXHIBIT 6(A)(III)(III)
FORM OF PORTFOLIO DOWNLOAD
--------------------------
With respect to all Facility Contracts, Borrower should deliver all of the
information below on a 3.5 inch diskette. The information should appear in
either an ASCII format with fields separated by commas (,) and records separated
by carriage returns (new line) or an Excel spreadsheet with field names running
horizontally across the top of the spreadsheet. A one line header may be
included but no footers or any type of subtotaling should appear on the
download.
1. Account Number (must be unique)
2. End-User Name
3. End-User Street Address
4. End-User City
5. End-User State
6. End-User Zip
7. Phone Number
8. Payment Amount (if level payment)
9. Balloon Amount ( if level payment)
10. Original Equipment Cost (the original acquisition cost of the equipment)
11. Remaining Gross Receivable (includes prepays and delinquencies/rent only)
12. Booked Residual Amount (the guaranteed and unguaranteed expected residual
value of equipment at the end of the lease)
13. Security Deposit
14. Advance Payment Amount (total dollar amount of advance payments to be
applied toward the end of the lease term)
15. Number of Advance Payments
16. Payment Frequency (the number of months between payments, i.e., Monthly
=1; Quarterly =3; Semi-Annual =6; Annual = 12.)
17. Tax Status (E= Exempt, N = Nonexempt for state purposes)
18. Advance or Arrears ( 1 = Adv; 2 = Arr.)
19. Original Term (the original number of months elapsed between the
origination date and the maturity date; does not include the expected
residual due date)
20. Remaining Term ( the number of months between Heller's purchase date and
the maturity date)
21. Equipment Description
22. Equipment Address
23. Equipment City
24. Equipment State
25. Equipment Zip
26. Start Date (Origination Date-Date interest started accruing)
27. SIC Code
28. APR (the effective yield to the lessor of the lease expressed in a decimal
format)
29. Maturity Date (the date on which the obligor's final payment is currently
due)
30. Account Status (indicates current status of the account, i.e., "A" =
active; "C" = closed; "N" = non-accrual; "O"= charged off)
31. Scheduled Balance (sum of remaining rents not yet due, )
32. Original Gross Balance (sum of rental stream plus residual)
33. First Payment Due Date
34. Next Due Date
35. Due Day (day of the month account is due)
36. Days Late -30 (number of times a lease has been delinquent 30 days)
37. Days Late -60 (number of times a lease has been delinquent 60 days)
38. Days Late -90 (number of times a lease has been delinquent 90 days)
39. Days Late -120 (number of times a lease has been delinquent 120 days)
40. Payment stream for each deal (need only at time of funding or
substitution/only if non level payments)
i
<PAGE>
EXHIBIT 1
---------
FORM OF INCUMBENCY CERTIFICATE
OF
BankVest Capital Corp.
----------------------
The undersigned, being the duly elected ________________________ of BANKVEST
CAPITAL CORP., a corporation formed pursuant to the laws of the State of
Massachusetts (the "Company"), does hereby certify that the following persons
currently are serving in the Company in the capacities set forth opposite each
such name and that set forth opposite each such name is a true and correct
specimen of the signature of such person:
Name Title Signature
---- ----- ---------
______________________ ______________________ ______________________
______________________ ______________________ ______________________
______________________ ______________________ ______________________
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the day
of July, 1997.
BANKVEST CAPITAL CORP.
By: _______________________
Title: ____________________
ii
<PAGE>
EXHIBIT 2
---------
FORM OF UNANIMOUS CONSENT OF THE BOARD OF DIRECTORS
OF BANKVEST CAPITAL CORP.
We, the undersigned, being the Board of Directors of BankVest Capital Corp.,
a Massachusetts corporation (the "Company"), hereby do consent to the adoption
of, and hereby do adopt, the following resolutions:
WHEREAS, the Company and Heller Financial Leasing, Inc., a Delaware
corporation ("Heller") entered into a Purchase and Sale Agreement dated as of
August 7, 1995, as amended from time to time (collectively, "Sale Agreement"),
pursuant to which BankVest has assigned to Heller BankVest's right, title and
interest in and to various Contracts and Payments thereunder, and assigned to
Heller all of BankVest's right, title and interest in and to, or grated to
Heller a security interest in the Equipment covered by such Contracts;
WHEREAS, there has been presented and reviewed by the President, Vice
President, Secretary or Treasurer of the Company (i) a proposed form of a Third
Amendment to Purchase and Sale Agreement ("Amendment") to be executed by and
between Heller and the Company and (ii) proposed forms of certain other
documents to be executed in connection with the consummation of the transactions
contemplated by the Amendment (the "Related Amendment Agreements"). The Sale
Agreement, the Amendment and the Related Amendment Agreements shall hereinafter
collectively be referred to as the "Sale Agreement". All other capitalized
terms used herein which are not otherwise defined herein and which are defined
in the Sale Agreement shall have the meaning set forth in the Sale Agreement;
WHEREAS, pursuant to the terms of the Amendment, Heller proposed to increase
the amount of the available Repurchase Price for Contracts to $40,000,000 (the
"Increase") less any amounts outstanding under that certain Loan and Security
Agreement dated as of August 7, 1995, as amended from time to time;
WHEREAS, as a condition precedent to the Increase, Heller requires, inter
alia, the execution and delivery by the Company of the Amendment and the other
Related Amendment Agreements to which the Company is to be a party; and
WHEREAS, the Board of Directors of the Company deem it to be in the best
interest of the Company to obtain the Increase, and to execute and deliver the
Amendment and all other Related Amendment Agreements to which the Company is to
be a party, and to effect the transactions contemplated therein;
NOW, THEREFORE, it is hereby resolved that the Company be and it hereby is
authorized to execute and deliver to Heller the Amendment and each of the
Related Amendment Agreements to which the Company is to be a party; and
FURTHER RESOLVED, the President, Vice President, Secretary or Treasurer of
the Company, be and they hereby are authorized and directed, in the name and on
behalf of the Company to execute and deliver the Amendment, each of the Related
Amendment Agreements to which the Company is a party, and all other documents,
instruments, agreements and statements, which may be necessary to effectuate the
transactions contemplated hereby and thereby, all of which shall be in the forms
previously reviewed by the undersigned, or with such changes as the officer(s)
executing the same shall approve, and the execution and delivery thereof by such
officer(s) shall constitute the approval of the terms thereof;
FURTHER RESOLVED, that the President, Vice President, Secretary or Treasurer
of the Company, be and they hereby are authorized and directed, in the name and
on behalf of the Company, to do and perform any
iii
<PAGE>
and all other acts and to execute and deliver any and all other documents,
instruments and certificates, which may be necessary, appropriate or desirable
in order to consummate the transactions contemplated hereby.
FURTHER RESOLVED, that these resolutions may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which,
when taken together, shall be deemed to be one and the same instrument.
Dated: ________________________
DIRECTORS:
_______________________________
_______________________________
_______________________________
iv
<PAGE>
INCUMBENCY CERTIFICATE OF BankVest Capital Corp.
------------------------------------------------
The undersigned, being the duly elected ________________________ of BANKVEST
CAPITAL CORP., a corporation formed pursuant to the laws of the State of
Massachusetts (the "Company"), does hereby certify that the following persons
currently are serving in the Company in the capacities set forth opposite each
such name and that set forth opposite each such name is a true and correct
specimen of the signature of such person:
Name Title Signature
---- ----- ---------
_______________________ _______________________ ______________________
_______________________ _______________________ ______________________
_______________________ _______________________ ______________________
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the day
of July, 1997.
BANKVEST CAPITAL CORP.
By: _______________________
Title: ____________________
<PAGE>
EXHIBIT 10.56
SALE OF CHATTEL PAPER
AND SECURITY AGREEMENT
----------------------
This Sale of Chattel Paper and Security Agreement dated as of
__________________, 1996, by and among UJB Leasing Corporation, a New Jersey
Corporation ("UJB"), having its principal place of business located at 25 East
Salem Street, Hackensack, New Jersey 07602 and BankVest Capital Corp., a
Massachusetts Corporation ("Seller"), with its principal place of business at
114 Turnpike Road, Westborough, Massachusetts 01581.
R E C I T A L S:
---------------
A. Seller is engaged in the business of, among other things, providing
equipment leasing services.
B. Seller desires to sell and UJB desires to purchase, from time to time,
on the terms and conditions set forth herein, equipment lease paper for an
aggregate purchase price not to exceed TWO MILLION FIVE HUNDRED THOUSAND DOLLARS
($2,500,000).
NOW, THEREFORE, in consideration of these premises and the mutual
agreements and covenants hereinafter set forth, the parties hereto agree as
follows:
I
DEFINITIONS
-----------
The following terms, and all other capitalized terms when used in this
Agreement, shall have the meanings assigned to them herein unless the context
otherwise requires:
1.1 "Agreement" shall mean this Sale of Chattel Paper and Security
Agreement, as the same may be modified, amended or restated from time to time in
the manner provided herein.
1.2 "Assignment" shall mean the instrument entitled "Sale and Assignment
of Chattel Paper" evidencing the sale, assignment and transfer of an Item of
Paper by Seller to UJB, incorporating the terms of this Agreement, substantially
in the form of Exhibit "A" annexed hereto.
1.3 "Collateral" shall have the meaning assigned to such term in Section
3.1 hereof.
1.4 "Credit Package" shall mean the documents submitted by the Seller to
UJB for review and credit approval relating to each Item of Paper, which
documents shall include a completed loan application, credit bureau report,
financial statements, tax returns, credit references, bank references and other
information and documentation of a similar nature to enable UJB to determine the
creditworthiness of a Debtor, Guarantor or Pledgor and the Debtor's, Guarantor's
and Pledgor's financial ability to satisfy the Debtor Obligations.
1
<PAGE>
1.5 "Debtor" shall mean the obligor under an Item of Paper and its
successors and assigns.
1.6 "Debtor Obligations" shall mean: (a) the unpaid balance of monies due
or to become due under an Item of Paper, including all extensions or
modifications or substitutions thereof, and (b) all other obligations of a
Debtor pursuant to such Paper.
1.7 "Defaulted Paper" shall have the meaning assigned to such term in
Section 11.2 hereof.
1.8 Intentionally Omitted.
1.9 "Equipment" shall mean all the machinery, equipment, motor vehicles,
furniture and fixtures, or other tangible personal property identified and
described in an Item of Paper, together with all parts and attachments,
accessions, accessories and additions, that at the time of delivery of an
Assignment or thereafter is affixed or related thereto, and all substitutions
and replacements thereof, wherever located.
1.10 "Event of Default" shall mean the occurrence of any of the events
described in Section X hereof.
1.11 "Financing Statement(s)" shall mean the financing statement(s)
required to be filed or recorded pursuant to the UCC in any recording office(s)
in order to perfect the security interest granted to a Seller and UJB pursuant
to the Item of Paper and this Agreement.
1.12 "Guarantor" shall mean any person or entity guaranteeing any of the
Debtor Obligations.
1.13 "Paper" or "Item of Paper" shall refer to any equipment lease,
installment sale contract, or other chattel paper sold, assigned and transferred
by Seller to UJB pursuant to an Assignment between Seller or another party, and
a Debtor, including any schedules, amendments, addenda, substitutions,
extensions, renewals or modifications thereto, and all purchase options, renewal
options, guarantees, security agreements, pledge agreements and other
agreements, documents and instruments relating thereto.
1.14 "Pledgor" shall mean any person or entity pledging any collateral as
security for any of the Debtor Obligations.
1.15 "Purchase Expiration Date" shall mean the one year anniversary of the
date of this Agreement.
1.16 "Purchase Price" shall mean the amount paid by UJB to Seller for an
Item of Paper, which shall equal the total of the rental or installment payments
remaining due for an Item
2
<PAGE>
of Paper (exclusive of sales or use taxes) present valued based on the remaining
term of that Item of Paper at the Quoted Rate.
1.17 "Quoted Rate" shall mean the interest rate quoted by UJB to Seller
with respect to an Item of Paper offered for sale hereunder.
1.18 "Replacement Paper" shall have the meaning assigned to such term in
Section 11.2 hereof.
1.19 "Repurchase Price" shall have the meaning assigned to such term in
Section 11.1 hereof.
1.20 "Sale Documents" shall mean the Term Sheet, this Agreement, the
Financing Statements, the Incumbency Certificate, the Corporate Resolutions, the
Estoppel Certificate, the Opinion Letter and all other documents of every kind
and nature submitted and/or executed in connection with this Agreement, whether
executed contemporaneously herewith or at any other time, together with all
amendments, substitutions, supplements, replacements or modifications to any or
all of them.
1.21 "Seller's Obligations" shall mean all obligations of Seller and all
extensions and renewals thereof or as same may be modified or amended, of every
nature owed at any time to UJB, whether now existing or hereafter incurred,
direct or contingent, pursuant to the terms of this Agreement or any Assignment,
including, but not limited to the Repurchase Price owed with respect to any Item
of Paper.
1.22 "Servicing Agent" shall mean the entity selected by Seller and
approved by UJB to act as the servicing agent pursuant to the Servicing
Agreement and any approved substitute or replacement thereof.
1.23 "Servicing Agreement" shall mean the agreement entered into between
the Seller and the Servicing Agent to service the Paper as more particularly set
forth in Section IX hereof, together with any renewals, extensions,
modifications or substitutions thereof.
1.24 "Term Sheet" shall mean that certain term sheet dated November 2,
1995, issued by UJB to the Seller.
1.25 "UCC" shall mean the Uniform Commercial Code as same may be amended
from time to time.
1.26 "Ultimate Net Loss" shall have the meaning assigned to such term in
Section XIV hereof.
1.27 "Uninsured Equipment" shall the meaning assigned to such term in
Section 6.5 hereof.
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1.28 "Unperfected Equipment" shall have the meaning assigned to such term
in Section 6.3 hereof.
II
SALE AND PURCHASE OF PAPER; FUNDING
-----------------------------------
2.1 Subject to the terms and conditions set forth herein and the funding
limitations as set forth in the Term Sheet, Seller agrees to offer to sell to
UJB Items of Paper from and after the date hereof until the Purchase Expiration
Date. In connection with each Item of Paper offered to UJB by Seller hereunder,
Seller shall submit complete Credit Packages to UJB for review. UJB shall, in
its sole and absolute discretion, purchase such Items of Paper that are
acceptable to it. UJB shall be under no obligation to purchase any Paper
offered by Seller, and the purchase by UJB of any Item of Paper shall not
obligate UJB to purchase any other Item of Paper. UJB shall not be required to
purchase any Item of Paper or Items of Paper unless the Purchase Price therefor
is at least equal to $500,000. UJB shall advise Seller whether it intends to
purchase a particular Item of Paper and with respect to each Item of Paper that
UJB elects to purchase, UJB shall advise the Seller of the Quoted Rate, which
Quoted Rate shall remain valid for a period of thirty (30) days from the date
that UJB notifies the Seller of its decision with respect to such Item of Paper.
If any Item of Paper is not sold to UJB within said thirty (30) day period as
aforesaid, UJB reserves the right to withdraw its acceptance of the offer to
purchase the said Item of Paper without notice, to be exercised in its sole and
absolute discretion. The Quoted Rate shall be set from time to time by UJB in
its sole and absolute discretion and is not necessarily tied to any external or
internal index or rate, nor is it tied to or related to rates quoted to any
other customer of UJB. Any approval to purchase an Item of Paper shall be
subject to the terms and conditions contained in said approval.
2.2 Notwithstanding anything contained herein to the contrary, UJB shall
not be obligated to purchase any Paper in respect of a Debtor previously
approved if:
(a) the provisions contained in the submitted Item of Paper deviate in
any respect from the terms on which UJB based its credit approval;
(b) there shall have been a material adverse change in the financial
condition or operations of the Seller or the proposed Debtor;
(c) there shall be any claim, action, litigation or proceeding pending
or threatened against Seller or the proposed Debtor or Guarantor or Pledgor
that, if adversely determined, could cause a material adverse change in the
financial condition or operations of Seller or the proposed Debtor, Guarantor or
Pledgor; or
(d) the date of the original credit approval is more than thirty (30)
days prior to the date of the delivery of the documents specified in Section 2.3
hereof and the Debtor's credit is not reapproved.
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2.3 Prior to and as a condition precedent to the purchase of each Item of
Paper hereunder, Seller shall deliver, in form and substance satisfactory to
UJB, the following:
(a) the duly executed, complete and sole original counterpart number
one of the Paper, marked "Original";
(b) a delivery and acceptance certificate for the Equipment executed
by Debtor;
(c) an Assignment substantially in the form of Exhibit A, completed
and duly executed by Seller;
(d) the acknowledgment and secured creditor's copies of the filed
Financing Statements and/or unfiled assignments thereof in favor of UJB;
(e) original bills of sale, or other proof or evidence of ownership of
the Equipment acceptable to UJB, together with proof of payment in full thereof;
(f) original vehicle titles, where applicable, naming UJB as sole
lienholder;
(g) evidence of insurance coverage relating to the Equipment, covering
such risks and in such amounts and with such insurers as are reasonably
acceptable to UJB; and
(h) such other documents as UJB may reasonably request, including but
not limited to corporate resolutions, incumbency certificates, good standing
certificates, landlord/mortgagee waivers and acknowledgments of the assignment
executed and delivered by the Debtor.
2.4 If UJB purchases an Item of Paper, UJB shall pay the Purchase Price to
Seller. In the event UJB declines to purchase a particular Item of Paper and
Seller declines to extend credit to the Debtor and/or consummate said lease,
installment sale contract or other transaction, the Seller shall, if required by
applicable law, provide the Debtor with a declination notice or other
appropriate notification, all in conformity with federal and state laws and
regulations.
2.5 If the Seller has received any payments from a Debtor relating to any
Item of Paper purchased by UJB pursuant to the terms hereof, the Seller shall
provide a certificate verifying the current balance due under that Item of
Paper, the date and amount of each such payments received by Seller and the
application of said payments by Seller, together with such other information as
may be requested by UJB.
2.6 In the event that all or any portion of the Purchase Price is required
to be returned to a Debtor or someone making a claim by or on behalf of the
Debtor or the Debtor's creditors, as a result of order, judgment or settlement
(or similar disposition) issued by a court or tribunal
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of competent jurisdiction or resulting from a claim made in such court or
tribunal, the Seller shall, upon demand of UJB, immediately return all or any
portion of the Purchase Price required to be returned. The provisions of this
subsection shall survive the termination of this Agreement.
2.7 (a) UJB shall submit monthly invoices to the Seller, which invoices
shall reflect the aggregate sum contractually due to UJB pursuant to the Item(s)
of Paper purchased by UJB hereunder and the due date(s) of each such monthly
payment. The Seller agrees to pay and shall pay to UJB the required monthly
installments on or before the due dates noted in the invoices. Any failure or
delay in submitting said invoices shall not relieve Seller of its obligation to
pay the monthly installment payments to UJB or impair, in any manner, UJB's
right to receive said payments.
(b) Provided no Event of Default has occurred or is continuing
hereunder, payments made to the Servicing Agent by or on behalf of the Debtors
shall be turned over to Seller. Upon the occurrence or continuance of an Event
of Default hereunder, Seller's right to continue to receive payments from the
Servicing Agent shall be subject to termination, at UJB's sole and absolute
discretion. UJB shall then have the right to direct the Servicing Agent to turn
over any and all payments it receives from or on behalf of the Debtors of the
Items of Paper purchased by UJB hereunder to UJB pursuant to the provisions of
Section 9 hereof, or as otherwise directed by UJB.
III
SECURITY INTEREST
-----------------
3.1 To secure the payment and performance of the Seller's Obligations and
the Debtor Obligations, Seller hereby grants, assigns and conveys to UJB the
following security interests:
(a) a valid first perfected purchase money security interest in the
Equipment covered by each Item of Paper purchased by UJB pursuant to this
Agreement and all proceeds and products thereof in any form whatsoever;
(b) all books, records, ledger cards and other property and general
intangibles, files, correspondence, computer programs, tapes, disks, and related
data processing software owned by the Seller or the Debtor or in which the
Seller or the Debtor have an interest at any time evidencing or in any way
related to the Paper and the Equipment;
(c) any claims of the Seller or Debtor against third parties for loss
or damage to, or destruction of, any and all of the Equipment, all guaranties,
security and liens for payment of any Paper, and documents of title, policies,
certificates of insurance, insurance proceeds, securities, chattel paper and
other documents and instruments evidencing or pertaining thereto; and
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(d) any and all assets of the Seller now or hereafter held or
received by or in transit to UJB from or for UJB, or which may now or hereafter
be in the possession of UJB, or as to which UJB may now or hereafter control
possession, by documents of title or otherwise, whether for safekeeping,
custody, pledge, transmission, election or otherwise, and any and all deposits,
general or special, balances, sums, proceeds and credits of Seller and all
rights and remedies which Seller might exercise with respect to any of the
foregoing but for the execution of this Agreement.
The aforesaid items (a-d) shall collectively be hereinafter sometimes
referred to as the "Collateral". The Collateral shall also include, as
applicable, all additions, substitutions, extensions, repairs and replacements
thereto.
3.2 This Agreement shall be effective as a security agreement as that term
is used in UCC as enacted in the State of New Jersey.
3.3 Notwithstanding anything contained herein to the contrary, Seller
shall, in conjunction with UJB's purchase of each Item of Paper, execute and
deliver to UJB unfiled UCC assignment of financing statement forms ("UCC3s")
assigning to UJB Seller's security interest in and to the Equipment and the Item
of Paper. UJB shall, in its sole and absolute discretion, and at its expense,
and at any time, file all or any of said UCC3s.
IV
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
-------------------------------------------------
To induce UJB to enter into this Agreement, the Seller represents, warrants
and covenants to UJB, which representations, warranties and covenants shall
survive the execution, delivery, performance and termination of this Agreement,
as of the date of this Agreement and as of the date of the delivery of each
Assignment with respect to such Assignment, the Paper transferred thereby, the
Debtor and the Equipment:
4.1 Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Massachusetts and is duly qualified and
authorized to do business in each State wherein the conduct of its business or
the ownership of its property would require such qualification or license or
where failure to so qualify would have an adverse effect on the enforceability
of Seller's rights under any Item of Paper or its interests in any Equipment or
would materially impair its ability to perform its obligations under this
Agreement. Seller has the power to execute, deliver and carry out the terms of
this Agreement and its board of directors has duly authorized and approved the
terms of this Agreement, the other Sale Documents and the taking of any and all
action contemplated hereunder or thereunder by the Seller.
4.2 The execution of this Agreement and the other Sale Documents and every
other instrument or document required to be executed in accordance herewith or
therewith, or which UJB may deem advisable in connection herewith, does not
violate any provisions of the Seller's
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Articles of Incorporation or By-Laws, or of any agreement or undertaking to
which Seller is a party or by which the Seller is bound in any fashion.
4.3 Seller has taken all action required by law to validate and make this
Agreement and to enter into the other Sale Documents and any other documents
required in connection herewith, as evidenced by the incumbency certificate and
corporate resolution executed and delivered to UJB contemporaneously herewith.
4.4 The Seller has, and at all times will have, good and marketable title
in and to the Paper and the Collateral (or, with respect to the Equipment, has a
valid first priority purchase money security interest therein). No other person
has or will have any right, title, interest, claim or lien therein, thereon or
thereto, other than the interest of the Debtor pursuant to the related Item of
Paper. The Paper and the Collateral will remain free and clear of any lien
except the liens granted to UJB hereunder, which liens to UJB shall be at all
times first and prior on the Collateral.
4.5 Subject to the provisions of Section 3.3 above, Seller agrees, at its
own expense, to execute the Financing Statements or continuation statements
required by the UCC, together with any and all other instruments or documents
and take such other action including delivery as may be required to perfect or
maintain UJB's security interest in the Collateral and/or ownership interest in
the Paper and, unless prohibited by law, Seller hereby authorizes UJB to execute
and file any such financing statements or continuation statements on Seller's
behalf.
4.6 No consent or approval of, giving of notice to, registration with or
taking of any other action in respect of, any governmental authority or agency
is required with respect to the execution, delivery and performance by Seller of
this Agreement or any of the other Sale Documents.
4.7 There are no actions, suits, or proceedings pending (nor, to the
knowledge of Seller, any actions, suits or proceedings threatened, nor is there
any basis therefore) against or in any way relating adversely to Seller, the
Paper, the Equipment or any other Collateral, and to the best of Seller's
knowledge, any Debtor, any Guarantor or any Pledgor.
4.8 The financial statements of Seller submitted to UJB in connection with
the application for the within transactions fairly presents the financial
condition of Seller. Seller knows of no liability, direct or contingent,
involving significant amounts, not disclosed by or reserved against in said
financial statements.
4.9 There has been no material and adverse change in Seller's condition,
financial or otherwise, since the date of the financial statements delivered to
UJB.
4.10 The Seller agrees that it will execute and deliver any other documents
or instruments necessary to achieve and maintain at all times in favor of UJB an
absolute ownership interest in the Paper and a valid first perfected lien on the
Collateral as herein described.
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4.11 All federal, state and other tax returns of Seller required by law to
be filed have been duly filed and all federal, state and other taxes,
assessments and other governmental charges or levies upon the Seller or its
property, income, profits and assessments which are due and payable have been
paid. All taxes due to the Federal government, and any taxes or assessments due
to any state, county or municipality, have been fully paid and satisfied by the
Seller except for current taxes not now due and payable.
4.12 The Seller's chief executive office, principal place of business and
books and records relating to the Paper and the Collateral are located at 114
Turnpike Road, Westborough, Massachusetts (and with respect to the Equipment, is
located at the address or addresses noted in the Paper). The Seller will not
move its chief executive office, its principal place of business or its books
and records referred to herein or change its name, identity or corporate
structure without giving UJB at least thirty (30) days prior written notice
thereof. Seller further agrees that it will not remove or allow the Debtor to
remove any Collateral referred to herein from the addresses where such
Collateral is presently located.
4.13 None of the representations, warranties or statements made to UJB by
or on behalf of Seller pursuant hereto or in connection with this Agreement or
the transactions contemplated hereby contain any untrue statement of a material
fact, or omit to state a material fact necessary in order to make the statements
contained herein and therein, in light of the circumstances in which they are
made, not misleading.
4.14 All of the Items of Paper are, and will be, legal, valid, binding and
enforceable obligations of the parties thereto (without right of set-off or
subject to any counterclaims or other defenses) in accordance with the terms
thereof, and are not, and will not be subject to any liens, and none of the
Items of Paper sold to UJB hereunder are forged or have affixed thereto any
unauthorized signatures or have been entered into by any persons without the
required legal capacity.
4.15 No Event of Default (as specified in Section X), and no event which,
with a lapse of time or the giving of notice, would constitute an Event of
Default, shall have occurred and be continuing and Seller is not presently in
violation of any of the representations and warranties herein specified.
4.16 All statements contained in any certificate, financial statement,
legal opinion or other instrument delivered by or on behalf of the Seller
pursuant to or in connection with or in any amendment to this Agreement, shall
constitute representations and warranties made under this Agreement. All
representations and warranties made under this Agreement shall be made at and as
of the date as of which this Agreement is dated. All representations and
warranties made under this Agreement shall survive and not be waived by the
execution and delivery of this Agreement or any investigation by UJB.
4.17 (a) Seller has duly complied with, and its facilities, business,
assets, property, leaseholds and equipment are in compliance in all material
respects with, the provisions of the Federal Occupational Safety and Health Act,
the Americans with Disabilities Act, all applicable
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environmental statutes, and all rules and regulations thereunder and all similar
state and local laws, rules and regulations; and there have been no outstanding
citations, notices or orders of non-compliance issued to Seller or relating to
its business, assets, property, leaseholds or equipment under any such laws,
rules or regulations.
(b) Seller's facilities, business, assets, property, leaseholds and
equipment are in compliance in all material respects with, all applicable
federal, state and local laws, rules and regulations relating to, air emissions,
water discharge, noise emissions, solid or liquid waste disposal, hazardous
waste or materials, or other environmental, health or safety matters.
4.18 All insurance expenses and all expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping the Collateral, and
any and all excise, property, sale and use taxes imposed by any state, federal
or local authority on any of the Collateral or in respect of the sale thereof,
shall be borne and paid by Seller or the Debtor (if so provided in the
particular Item of Paper); if Seller fails to promptly pay any portion thereof
when due, UJB may, at its option, but shall not be required to, pay the same,
and Seller agrees promptly to reimburse UJB therefore with interest accruing
thereon daily at eighteen (18%) percent per annum. All sums so paid or incurred
by UJB for any of the foregoing and any and all other sums for which Seller may
become liable hereunder and all costs and expenses (including attorney's fees,
legal expenses and court costs) which UJB may incur in enforcing or protecting
its lien on or rights and interest in the Paper and/or the Collateral or any of
its rights or remedies under this or any other agreement between the parties
hereto or with respect to any of the transactions to be had thereunder, until
paid by Seller to UJB with interest at the rate aforesaid, shall be considered
as additional indebtedness owing by Seller to UJB hereunder and, as such, shall
be secured by all of the said Collateral and the proceeds from the sale thereof
and by any and all other collateral, security, assets, reserves or funds of
Seller in or coming into the hands or enuring to the benefit of UJB. UJB shall
not be liable or responsible in any way for the safekeeping of any of the
Collateral or for any loss or damage thereto or for any diminution in the value
thereof, or for any act or default of any warehouseman, carrier, forwarding
agency or other person whomsoever, but the same shall be at the Seller's or the
Debtor's sole risk.
4.19 As to Seller immediately prior to the date of this Agreement, the
present fair salable value of its assets is greater than the amount required to
pay its total liabilities, and it is able to pay its debts as they mature or
become due. Seller shall maintain such solvent financial condition, giving
affect to the Seller's Obligations, as long as Seller is obligated to UJB under
this Agreement.
4.20 Seller has delivered to UJB all material written information in its
possession with respect to the Paper, the Debtor, any Guarantor or Pledgor and
the Equipment. All statements, documents, instruments, and information
representations and warranties made or furnished by Seller to UJB relating to
the business and financial affairs of Seller, this Agreement, the Assignment,
the Paper, any Debtor, any Guarantor or Pledgor or the Equipment are in all
material respects true and complete, and Seller knows of no fact which, if known
to UJB, would affect UJB's reliance on any of the foregoing.
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V
WARRANTIES, REPRESENTATIONS AND COVENANTS
RELATING TO THE PAPER
---------------------
Seller hereby represents, warrants and covenants with respect to each Item
of Paper, the Debtor, any Guarantor, any Pledgor, and the Equipment as of the
date of this Agreement and as of the date of the delivery of each Assignment
with respect to any Item of Paper purchased by UJB hereunder, as follows:
5.1 Seller is the sole and absolute owner of each Item of Paper and the
Equipment (or, with regard to the Equipment, has a valid first perfected
purchase money security interest therein) and no interest in the Paper or the
Equipment has been sold, leased, assigned, pledged, or otherwise encumbered in
any manner whatsoever and no other person, company or entity claims to hold such
an interest, except for the interest of the Debtor pursuant to that particular
Item of Paper.
5.2 Each Item of Paper represents a bona fide, genuine, valid, binding and
enforceable obligation of the Debtor, any Guarantor and/or Pledgor, as the case
may be, enforceable in accordance with its terms, except to the extent that such
enforceability may be affected by any bankruptcy, insolvency, reorganization or
similar law affecting creditor's rights generally.
5.3 Each Item of Paper purchased by UJB hereunder was entered into and
remains in compliance with all applicable federal, state and local laws and
regulations.
5.4 Seller has the absolute right to: (a) sell and assign the Paper to
UJB; and (b) and grant a security interest in and to the Equipment to UJB.
5.5 Full title and the right to receive all sums due or to become due
pursuant to the Paper shall be vested solely in UJB upon Seller's execution and
delivery of the Assignment for each Item of Paper so purchased hereunder.
5.6 The amount stated in the Item of Paper to be due is not past due and
will in fact be due and payable at the time or times provided therein and all
other sums due or to become pursuant to the Paper are free of all liens and
other outstanding rights, counterclaims, encumbrances, claims, rights of
recoupment, setoff and defenses of every kind whatsoever, except to the extent
that enforceability may be affected by any bankruptcy, insolvency,
reorganization or similar law affecting creditor's rights generally.
5.7 The Paper is an absolute and unconditional obligation of the Debtor,
and the Debtor is current on all payments (within 30 days of the last scheduled
payment date) owed thereunder and the Debtor is not contesting any of the
provisions thereof.
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5.8 The Paper is genuine and what it purports to be and it has not and
will not be modified or altered without the prior written consent of UJB.
5.9 No default on the part of any Debtor, any Guarantor or Pledgor or the
Seller has occurred under the terms of the Paper, or under any other agreement
between any Debtor, any Guarantor or any Pledgor and Seller. Seller has not and
will not sell or make any other assignment of or otherwise encumber the Paper or
the Equipment or the rights, privileges or monies or benefits pursuant to the
Paper except to UJB hereunder.
5.10 All signatures, names, addresses, amounts and statements of fact
contained in the Paper are genuine, true and correct. Seller shall comply with
all of its warranties and obligations with respect to the Paper. The filing,
recordation and/or any other action or procedure which is permitted or required
by statute or regulation to perfect UJB's title (or security interest) in and to
the Paper and the Equipment has been accomplished pursuant to all applicable
laws and regulations.
5.11 Seller has no adverse credit information about any Debtor or any
Guarantor or Pledgor which has not been disclosed to and approved by UJB in
writing, and Seller has submitted to UJB all available credit information
relating to any Debtor, any Guarantor and any Pledgor, whether favorable or
unfavorable.
5.12 There is no litigation or proceeding pending or threatened (in
writing) which might, if successful, adversely affect the interest of the Seller
and/or UJB with respect to any Item of Paper or the Equipment.
5.13 Each Item of Paper represents a business transaction and the Equipment
is not used or to be used by the Debtor for consumer, family or household
purposes. The Paper is not governed by or subject to the regulations set forth
in 12 C.F.R. section 226, et .seq.
--- ----
5.14 All representations in the Paper made by Seller were true and correct
when made.
5.15 No default, and no event that, but for the passage of time or the
giving of notice or both, would constitute a default, has occurred or is
continuing under the provisions of the Paper by either Seller or Debtor.
5.16 All sums of money previously paid by any Debtor as advance rentals or
deposits of security, in whatever form, have been fully disclosed to UJB.
5.17 Seller has delivered to UJB the sole executed original counterpart of
the Paper. Such Item of Paper constitutes the entire agreement of the parties
thereto with respect to the Equipment and has not been modified, cancelled or
waived in any respect, and there are no other agreements or documents relating
to the Paper or the Equipment.
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5.18 Seller has caused all other executed copies of the Paper (including,
without limitation, any executed counterpart(s) in the possession of the Debtor)
to bear the legend: "Duplicate Copy," "Second Copy," "Lessee Copy" or language
of similar import.
5.19 The representations and warranties made under this Section V shall
survive the execution, delivery, performance and termination of this Agreement
and shall not be waived by any investigation by UJB relating thereto.
VI
REPRESENTATIONS, WARRANTIES AND COVENANTS
RELATING TO THE EQUIPMENT
-------------------------
Seller hereby represents, warrants and covenants with respect to the
Equipment as of the date of this Agreement and as of the date of the delivery of
each Assignment with respect to any Item of Paper purchased by UJB hereunder and
the Equipment related thereto, as follows:
6.1 Unless otherwise disclosed to and approved by UJB prior to the
delivery of each Assignment, the Equipment is new, has been delivered to and has
been unconditionally accepted by the Debtor without dispute or claim and is
located at the address(es) specified in the Paper.
6.2 The Equipment is, and shall remain, personal property regardless of
its attachment to real property, in any manner, and is in good working order.
Seller has properly made or has caused to be made all required governmental and
administrative filings and recordings, if any, and has obtained unconditionally,
all permits and approvals (including patent licenses, if any) as necessary to
protect the interest of Seller as owner of the Equipment and has or shall, as
required by UJB, promptly, at Seller's sole cost and expense, obtain and
deliver to UJB waivers, executed by the landlord and/or the mortgagee(s) of the
real property where the Equipment is located, of any claim or right to lien,
levy or distraint for rent against the Equipment and of any claim of any
interest in the Equipment, as fixtures or otherwise, duly executed in form and
substance acceptable to UJB in recordable form in accordance with the laws of
the state where such real property is located.
6.3 UJB's security interest in the Equipment is, or will constitute, upon
the proper filing or recording of the UCC financing statements delivered by
Seller to UJB together with each Assignment, a valid, enforceable and perfected
first priority purchase money security interest in the Equipment pursuant to the
laws of the jurisdiction where the Equipment is located subject, however, to the
provisions of Section 3.3 above, provided, however, with respect to Equipment
with an original value of $10,000 or less, no UCC financing statement has or
will be filed ("Unperfected Equipment").
6.4 If a certificate of title or similar certificate is required by law
with respect to the Equipment, Seller has obtained such certificate and shall
cause any notation thereon to be made in a timely manner to perfect UJB's first
priority security interest in the Equipment. Seller has
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duly filed the UCC Financing Statements which, if Seller's interest in the
Equipment were to be deemed a security interest, would perfect a first priority
purchase money security interest of Seller in the Equipment in the jurisdiction
where the Equipment is located. Acknowledgment copies of these Financing
Statements, together with acknowledgment copies of the Financing Statements duly
filed to protect UJB's interest in the Paper, have been delivered to UJB with
the Assignment, except with regard to the Unperfected Equipment.
6.5 At the time an Assignment is delivered to UJB, the Equipment is fully
insured against loss, fire, theft, damage or destruction from any cause
whatsoever in an amount not less than the full replacement cost of the Equipment
(without provision for depreciation) and the Debtor maintains additional
insurance against injury, loss or damage to persons or property arising out of
the use or operation of the Equipment as is customarily maintained by owners of
like property, all with insurance companies satisfactory to UJB; provided,
however, such insurance shall not be required to be obtained or maintained with
respect to Equipment with an original value of $50,000 or less ("Uninsured
Equipment").
6.6 The representations and warranties made under this Section VI shall
survive the execution, delivery, performance and termination of this Agreement
and shall not be waived by any investigation by UJB relating thereto.
VII
AFFIRMATIVE COVENANTS OF SELLER
-------------------------------
Seller hereby covenants and agrees that, so long as Seller's Obligations or
any Debtor Obligations with respect to any Item of Paper remain unpaid or
unperformed, Seller shall:
7.1 Within fifteen (15) days after obtaining knowledge thereof, notify
UJB, in writing, of each default or any circumstance which might lead to a
default pursuant to any Item of Paper or the damage, destruction, loss or theft
with regard to the Equipment, or any dispute or claim with regard to any Item of
Paper or the Equipment or of any material adverse change in circumstances with
respect to matters set forth in the representations, warranties and covenants
under Sections IV, V and VI hereof.
7.2 Promptly pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits and upon any
properties belonging to it prior to the date on which penalties attach thereto,
and all lawful claims for labor, materials and supplies which, if unpaid, might
become a lien or charge upon any properties of the Seller; except that no such
tax, assessment, charge, levy or claim need be paid which is being contested in
good faith by appropriate proceedings and for which adequate reserves shall have
been set aside.
7.3 Observe, perform and comply with the covenants, warranties, duties,
obligations, terms and conditions required of Seller under each Item of Paper
and pursuant to this Agreement,
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the other Sale Documents and any other agreement or document entered into
between Seller and UJB. Nothing contained herein or in any of the other Sale
Documents, or any action taken, shall be deemed to release Seller from, or cause
UJB to assume, or be liable for, the performance or observance of any of such
covenants, warranties, duties or obligations.
7.4 Seller shall keep proper and detailed books and records with respect
to each Item of Paper and the Equipment. At any time and from time to time,
upon request by UJB, Seller shall permit representatives of UJB to:
(a) Visit and inspect the properties of the Seller,
(b) Inspect, copy and make extracts from its books and records
relating in any way to the Items of Paper purchased hereunder, the Equipment or
any other Collateral or in any way relating to this Agreement and/or UJB's
rights and remedies hereunder, at any place designated by UJB, and
(c) Discuss with its officers its respective businesses, assets,
liabilities, financial condition, results of operations and business prospects.
7.5 Comply with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority, compliance with which is
necessary to maintain its corporate existence or the conduct of its business or
non-compliance with which would materially and adversely affect: (a) its ability
to perform in accordance with the terms and conditions of this Agreement, or (b)
any security given to secure the Seller's Obligations or the Debtor Obligations.
7.6 (a) Cause to be maintained, in full force and effect on the Equipment
(except the Uninsured Equipment) insurance in such reasonable amounts and
against such customary risks as is satisfactory to UJB, including, but without
limitation, fire, theft, burglary, pilferage, loss in transit, boiler,
machinery, workman's compensation, liability and hazard insurance. Said
insurance policy or policies shall:
(i) Be in a form and with insurers which are
satisfactory to UJB;
(ii) Be for such risks and for such insured values as
UJB or its assigns may require in order to replace the property in the event of
actual or constructive total loss;
(iii) Designate UJB and its assignees, as additional
loss payee, as their interests may from time to time appear;
(iv) Contain a "Breach of Warranty" clause whereby
the insurer agrees that a breach of the insuring conditions or any negligence by
Seller, the Debtor or any other person shall not invalidate the insurance as to
UJB and its assignees;
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(v) Provide that they may not be cancelled or
materially altered without thirty (30) days prior notice to UJB and its
assignees; and
(vi) Upon demand, be delivered to UJB.
(b) Obtain such additional insurance as UJB may reasonably
require.
(c) In the event of loss or damage, forthwith notify UJB
and file proofs of loss with the appropriate insurer. Seller hereby authorizes
UJB to endorse any checks or drafts constituting insurance proceeds.
(d) Forthwith upon receipt of insurance proceeds endorse
and deliver the same to UJB.
(e) In no event shall UJB be required to: (i) ascertain the
existence of or examine any insurance policy; or (ii) advise Seller or Debtor in
the event such insurance coverage shall not comply with the requirements of this
Agreement or any other Sale Documents; or (iii) obtain any insurance on the
aforementioned risks.
(f) Seller hereby directs any insurance company concerned
to pay directly to UJB any monies which may become payable to UJB or Seller
under such insurance policies, and Seller appoints UJB as attorney-in-fact
(which appointment is agreed to be coupled with an interest) to endorse any
draft therefore. UJB shall have the right to retain and apply the proceeds of
any such insurance, at its election, to reduction of any sums due under the
affected Item(s) of Paper or the Seller's Obligations.
7.7 Seller shall execute and deliver to UJB any assignment, pledge, lien,
encumbrance, security agreement, Financing Statement or other documents, in form
and substance satisfactory to UJB, as may reasonably be requested by UJB at any
time when there are Seller's Obligations or Debtor Obligations unpaid or
unperformed in order to effectuate more fully the purposes of this Agreement
and/or any other Sale Documents. UJB may, where permitted by law, file such UCC
Financial Statements without Seller's signature appearing thereon.
7.8 Seller shall, subject to the provisions of Section XIV hereof, pay to
UJB, upon demand, together with interest at the rate of 18% per annum from the
date when incurred or advanced by UJB until repaid by Seller, all costs,
expenses or other sums incurred or advanced by UJB to preserve, collect and
protect its interest in or realize on the Collateral, and to enforce UJB's
rights as against Seller, the Debtor, any Guarantor or Pledgor, or in the
prosecution or defense of any action or proceeding related to the subject matter
of this Agreement, including without limitation legal fees, expenses and
disbursements incurred by UJB. All such expenses, costs and other sums shall be
deemed Seller's Obligations and/or Debtor Obligations secured by the Collateral.
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7.9 All warranties and representations made herein by Seller, and in any
other agreements or documents executed and/or delivered by Seller to UJB in
connection with this Agreement, will continue to be true and accurate so long as
the Seller's Obligations and the Debtor Obligations remain unpaid or
unperformed.
7.10 The Seller agrees to pay any tax, assessment, penalty or other charge
or liens upon or with regard to all transactions under this Agreement, all
Assignments, all Paper and the Equipment, existing at any time, whether before
or after the execution and delivery of this Agreement or any Assignment, and to
furnish proof thereof satisfactory to UJB, within thirty (30) days after such
payment is due; if UJB shall so elect, it may pay such taxes, assessments,
penalties, charges, encumbrances or liens and add the amount of such payments to
the Seller's Obligations, which amount so paid shall be paid by Seller on
demand. Seller hereby indemnifies and holds UJB harmless from and against all
such taxes, assessments and penalties paid (including interest) by, charged to
or asserted against UJB. Notwithstanding the foregoing, Seller shall not be
liable for and does not indemnity UJB for any penalties or interest resulting
from UJB's gross negligence or willful misconduct
7.11 (a) Seller shall, within ninety (90) days after the end of each
fiscal year, furnish to UJB its balance sheet as at the end of such year, and
its income and surplus statement and statement of cash flows for such fiscal
year, all in reasonable detail, all prepared in accordance with generally
accepted accounting principles consistently applied on a consolidated basis with
its subsidiaries and affiliates, and all audited by independent certified public
accountants of recognized standing selected by Seller and satisfactory to UJB,
and in addition to such statements, any supplementary information to the
financial reports as UJB shall reasonably require.
(b) Seller shall also deliver to UJB, within forty-five (45) days
after the end of each quarter-annual fiscal period of the Seller, except the
fourth quarter, its balance sheet as at the end of such period, its cumulative
income and surplus statement and its statement of cash flows for the period
beginning on the first day of such fiscal year and ending on the date of such
balance sheet, all in reasonable detail, all prepared in accordance with
generally accepted accounting principles consistently applied, certified by the
chief financial officer of the Seller and in addition to such statements any
supplementary information to the financial reports as UJB shall reasonably
require.
(c) As soon as practical after the end of each month, and in any
event within ten (10) days after the end of such month, Seller shall cause to be
furnished to UJB a monthly detailed trial balance of the Paper purchased by UJB
hereunder, as of the close of the preceding month, together with a
reconciliation report showing collections, payments, adjustments and
delinquencies relating to said Paper, in form and substance acceptable to UJB.
All such statements shall be certified as correct by the chief financial officer
of Seller.
7.12 Seller agrees to promptly pay all finders' fees, brokerage fees,
commissions or similar fees payable to any person or entity in connection with
the transactions described in this Agreement, if any. Seller agrees to
indemnify and hold harmless UJB from and against any
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claim of any broker, finder or other person, together with any attorneys' fees
incurred by UJB in respect thereto, arising out of the transactions contemplated
by this Agreement. Seller and UJB acknowledge that they are not, as of the date
of this Agreement, aware of any such fees due to any person or entity. This
obligation shall survive the expiration or termination of this Agreement.
7.13 From and after the occurrence or continuation of an Event of Default,
or as otherwise provided under Section 9 hereof, and if requested by UJB, Seller
shall direct all Debtors, Guarantors or Pledgors to remit all payments under
each Item of Paper to UJB or to an account designated by UJB. UJB agrees to
apply such funds paid to the Seller's Obligations and the Debtor Obligations
upon receipt thereof by UJB. Seller shall not modify, accept any payment from
any Debtor under, or make any payment on behalf of or to any Debtor for the
purpose or with the result, whether or not intended, of cancelling or
preventing an Event of Default under any Item of Paper (except as otherwise
provided herein), and Seller agrees that if any such payment is received by it,
such payment shall be held in trust for the sole benefit of UJB and shall
promptly be remitted by Seller to UJB.
7.14 The form of the Paper which now exists or shall be used by Seller and
entered into in the future during the term of this Agreement and offered for
sale to UJB hereunder, shall be in substantially the same form as the Paper
reviewed and approved by UJB prior to the execution of this Agreement. The
Seller shall not modify, amend or otherwise alter any of the terms of the Paper
or any other document or writing thereto without UJB's prior written consent, or
waive any of Seller's rights, if such modification might result in any
diminution or adverse effect upon the Collateral or the conduct of the business
of Seller or otherwise impair the enforceability of the Paper and the rights of
UJB with respect to the Paper or the Equipment. If any forms of Paper or any
other related documents are furnished to Seller by UJB, Seller shall use such
forms only in conjunction with transactions that Seller sells to UJB hereunder.
Seller shall not disclose, distribute or otherwise disseminate any such form to
any third party (other than the Debtor) or claim a proprietary interest in any
such form or any other document delivered by UJB to Seller. Seller's use of any
such forms shall not constitute a defense against or waiver of Seller's breach
of any representation, warranty or covenant in this Agreement or in any
Assignment. UJB's knowledge of any breach by Seller in any representation,
warranty or covenant contained in this Agreement or in any Assignment, or UJB's
failure to disclose its knowledge of such breach to Seller, at the time of the
purchase of any Item of Paper, or at any time thereafter, shall neither impair
UJB's ability to fully enforce, nor constitute a defense against or waiver of,
any of Seller's Obligations, unless UJB shall have executed an express written
waiver of such breach.
VIII
NEGATIVE COVENANTS
------------------
Seller hereby covenants and agrees that so long as Seller's Obligations or
any Debtor Obligations with respect to any Item of Paper remain unpaid or
unperformed, it will not:
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8.1 Incur, create or permit to exist any assignment, pledge,
hypothecation, security interest, lien or other encumbrance on any of the Paper,
the Equipment or any of the other Collateral, except: (a) liens for taxes not
delinquent; and (b) those liens in favor of UJB;
8.2 Change Seller's present management (consisting of Paul Gass and John
P. Colton) without the prior written consent of UJB, which consent shall not be
unreasonably withheld or delayed;
8.3 Assign this Agreement or any rights hereunder or with respect to any
of the other Sale Documents to any person or entity;
8.4 Grant extensions of time for the payment or compromise for less than
the full face value or release in whole or in part any person liable for the
payment of, allow any credit whatsoever, except for the amount of cash to be
paid upon any Collateral or any instrument or document representing the
Collateral, without the prior written consent of UJB, which consent shall not be
unreasonably withheld or delayed, provided, however, if the Seller does not
obtain UJB's prior written consent thereto, the Seller shall give UJB written
notification of any such extension, compromise or release within five (5) days
thereafter and if UJB does not consent, in writing, to such extension,
compromise or release, Seller shall immediately, upon UJB's demand, replace said
affected Item of Paper with acceptable Replacement Paper;
8.5 Discontinue or change or dispose of all or a substantial part of, its
business or assets; and
8.6 Move or knowingly permit the removal of the Equipment from the
address(es) specified in the Paper, without the prior written consent of UJB,
which consent shall not be unreasonably withheld or delayed.
IX
SERVICING, POWER OF ATTORNEY
----------------------------
9.1 So long as no Event of Default shall have occurred, Seller shall, at
its cost and expense, enter into and maintain, for so long as the Seller's
Obligations and/or the Debtor Obligations remain unpaid and unperformed, a
Servicing Agreement with a servicing entity selected by Seller and approved by
UJB ("Servicing Agent") for the Paper purchased by UJB hereunder. The Servicing
Agent shall be responsible for all billing, collecting and servicing with
respect to the Paper. Seller shall be permitted to replace a Servicing Agent
with a substitute Servicing Agent who shall assume the duties and
responsibilities of the Servicing Agent being replaced, provided UJB receives
prior written notice of any such requested substitution and approves of the
replacement Servicing Agreement and the replacement Servicing Agent, in writing,
which approval shall not be unreasonably withheld or delayed. The Servicing
Agent shall acknowledge, and the Servicing Agreement shall expressly provide,
that upon an Event of Default, if so requested by UJB, the Servicing Agent shall
continue to service Paper on the same
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terms and conditions as set forth in the Servicing Agreement entered into with
Seller or pursuant to the terms of a new Servicing Agreement to be entered into
with UJB, which terms shall be substantially similar to the terms of the
Servicing Agreement then existing between the Servicing Agent and the Seller.
UJB shall be deemed to be a third-party beneficiary of the Servicing Agreement
with respect to the Paper purchased hereunder.
9.2 In performing its duties under this Section IX, the Servicing Agent
shall be an independent contractor of the Seller and shall not be an agent of
UJB. Neither the Servicing Agreement, nor this Agreement shall be construed to
create a partnership or joint venture between the parties.
9.3 Until termination of the servicing under the Servicing Agreement,
Seller shall cause the Servicing Agent to allow representatives of UJB access,
at the Servicing Agent's premises during normal business hours and on reasonable
advance notice, to the records of the Servicing Agent or the Seller relating to
the Paper and shall, upon reasonable advance notice, make available to UJB's
representatives at the Servicing Agent's premises, employees of the Servicing
Agent who are familiar with the Paper and the servicing procedures relating
thereto.
9.4 Neither the Servicing Agent or the Seller shall amend or modify any
material term of any Paper without the prior written consent of UJB.
9.5 The Servicing Agent shall keep and maintain complete and accurate
records of all funds collected and paid during the servicing hereunder relating
to the Paper, and shall remit funds on demand to UJB as herein provided.
9.6 All funds collected by the Servicing Agent in respect of the Paper and
Equipment shall be remitted to Seller, except as otherwise provided in Section
2.7 above.
9.7 Within ten days of the end of each calendar month, the Servicing Agent
or Seller shall deliver to UJB a receivable's aging report in form and substance
satisfactory to UJB with respect to collections during the immediately preceding
month together with such other servicing reports reasonably requested by UJB.
UJB shall have no obligation to pay or cause to be paid to Seller or reimburse
Seller with respect to any costs or expenses incurred by Seller or the Servicing
Agent in connection with the servicing contemplated hereunder.
9.8 Seller shall and hereby does indemnify, defend and hold UJB harmless
from and against any and all losses, damages, costs, expenses, including, but
not limited to reasonable attorney's fees, or other liabilities arising out of
or resulting from the failure of the Seller or the Servicing Agent to service
the Paper in accordance with this Section IX.
9.9 In the event UJB is dissatisfied for any reason, in its sole and
absolute discretion, with the then existing Servicing Agent (which determination
shall be made in the exercise of UJB's good faith and reasonable judgment), and
UJB shall have furnished thirty (30) days prior written notice to Seller of
UJB's dissatisfaction with the Servicing Agent (or one day's notice if any Event
of Default shall have occurred or be continuing), UJB shall have the right to
require
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Seller to terminate the existing Servicing Agreement and to enter into a
substitute Servicing Agreement with another Servicing Agent acceptable to UJB or
to assume the obligations of servicing the Paper itself. In the event of any
such termination, Seller agrees to cooperate with UJB and the substitute
Servicing Agent in order to ensure an orderly transfer of the servicing to UJB
or a substitute Servicing Agent.
9.10 Should UJB elect to assume the servicing functions regarding the Paper
as herein provided, effective upon the date of termination of the servicing
pursuant to the Servicing Agreement, UJB shall have the sole and exclusive right
to collect and enforce payment of all Debtor Obligations with respect to, and
enforce all of the rights and remedies provided for in each Item of Paper.
9.11 Seller hereby constitutes and appoints UJB, its officers, employees
and any other designees, as Seller's attorney-in-fact, with full power of
substitution, to exercise in a lawful manner at any time, whether prior to or
after an Event of Default, any or all of the following powers which, being
coupled with an interest, shall be irrevocable until the Seller's obligations
and the Debtor obligations with respect to each Item of Paper have been paid in
full: (a) to demand, collect, receive, receipt, endorse, assign, deliver,
accept and give acquaintances for and deposit in the name of UJB or Seller, any
and all monies, checks, remittances and other instruments and documents relating
to each Item of Paper and the Equipment; (b) notify the Debtor under each Item
of Paper of the assignment of the respective Paper and UJB's interest therein
including its security interest in the Equipment; (c) to notify each Debtor to
make payments under each Item of Paper directly to UJB; (d) to take or bring in
the name of UJB or Seller, all steps, actions, suits or proceedings, or to file
any claim or to make any settlement, compromise or discharge, or to extend the
times of any payments, release any party or substitute another as Debtor, deemed
by UJB necessary or desirable to enforce its rights in any Item of Paper, or to
effect collection of the Seller's Obligations and/or Debtor Obligations or to
protect, preserve, maintain or enforce UJB's security interest in the
Collateral; (e) to maintain, repair, protect or preserve the Equipment and its
interest in the Collateral, including without limitation, the payment of debts
of the Seller or the Debtor which might, in UJB's sole and absolute discretion,
impair the Collateral or UJB's security interest therein; (f) to purchase
insurance on the Collateral and pay taxes or assessments thereon, and the sums
so expended by UJB shall be secured by the Collateral, shall be added to the
amount of Seller's Obligations and/or the Debtor Obligations, as the case may
be, and shall be payable on demand with interest at the rate of 18% per annum
from the date expended by UJB until repaid by the Seller or the Debtor; (g) to
execute and file in Seller's name and on its behalf any Financing Statements,
assignments, continuations or amendments thereto with respect to UJB's interest
in any Paper and security interest in the Collateral, at the cost and expense of
the Seller; and (h) to do any and all things necessary or proper to carry out
the intent of this Agreement and to perfect the lien and rights of UJB created
under this Agreement.
9.12 From and after an Event of Default, at UJB's sole discretion, UJB
shall be authorized to ( and Seller shall upon request of UJB) notify postal
authorities to deliver all mail, correspondence, or parcels addressed to Seller
relating to the Paper and the Collateral to UJB at such address as UJB may
direct and in connection therewith, to receive, open and dispose of all
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mail addressed to Seller relating to the Paper and the Collateral and to take
therefrom any proceeds of the Paper or the Collateral assigned or pledged to UJB
and to notify post office authorities to change the address for delivery of such
mail addressed to Seller to such address as UJB shall designate.
9.13 UJB shall not be obligated to do any of the acts or exercise any of
the powers hereinabove authorized, but if UJB elects to do any such act or
exercise any such power, it shall not be accountable for more than it actually
receives as a result of such exercise of such power, and it shall not be liable
or responsible to Seller for any acts or omissions nor for any error in judgment
or mistake of law or fact, unless caused by the gross negligence or willful
misconduct of UJB.
X
EVENTS OF DEFAULT
-----------------
The occurrence of any of the following shall constitute an Event of Default
("Event of Default"):
10.1. Seller's failure to keep, observe, perform and/or carry out in every
particular any of its obligations, covenants, terms or provisions contained in
any Item of Paper, this Agreement or any of the other Sale Documents, provided,
however, with regard to non-monetary defaults which are capable of being cured
by Seller, no Event of Default shall be deemed to occur until such failure shall
have remained uncured for a period of ten (10) days after notice thereof to
Seller by UJB;
10.2 Seller's consent to the application for an appointment of a receiver
or trustee for it or for substantially all of its property, its sufferance of
any such appointment made without its consent to any proceedings against it
under any law relating to bankruptcy, insolvency, or the reorganization or
relief of Debtors, which shall have continued unstayed and in effect for a
period of sixty (60) consecutive days;
10.3 Seller's admission in writing of its inability to pay its debts as
they mature, or commission of any act of bankruptcy; Seller's making of an
assignment for the benefit of creditors, or the filing of a voluntary petition
in bankruptcy by the Seller or the application for a receiver by the Seller;
10.4 The entry of one or more judgments, which in the aggregate exceed
the sum of $25,000.00 or any execution or attachment order against or affecting
the Seller which have not been vacated or dismissed within thirty (30) days
after entry and, in the reasonable opinion of UJB, adversely and materially
affects the credit standing of the Seller;
10.5. Any statement, representation or warranty by the Seller contained in
this agreement, any Assignment in respect of any Item of Paper, the other Sale
Documents, the
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financial statements, applications submitted for credit or any other agreement
for the payment of money with UJB proving to be incorrect or misleading in any
material respect, or a breach in any of the terms or conditions of this
Agreement, the other Sale Documents or any other agreement with UJB at any time
when Seller is obligated to UJB hereunder;
10.6 Any material and adverse change in the condition or affairs,
financial or otherwise, of the Seller, which in the reasonable opinion of UJB
impairs UJB security or increases its risk so as to jeopardize the repayment or
performance of the Seller's Obligations under this Agreement or any of the other
Sale Documents;
10.7. The failure of the Seller to provide financial statements to UJB
when required or requested to do so, together with such financial information as
may reasonably be requested by UJB;
10.8. Any change in the present management of the Seller (consisting of
Paul Gass and John P. Colton) without the prior written consent of UJB, which
consent shall not be unreasonably withheld or delayed;
10.9. Any suspension of the Seller's transaction of its usual business; or
10.10 Liquidation or dissolution of the Seller.
XI
REPURCHASE OF PAPER
-------------------
11.1 Upon the occurrence or continuation of an Event of Default, and
which Event of Default shall remain uncured for a period of ten (10) days after
notice thereof by UJB to Seller, Seller agrees to, immediately upon UJB's
demand, repurchase any one or more Items of Paper or all of the Paper purchased
by UJB hereunder (whether delinquent or not) for an amount equal to the sum of:
(a) the then unpaid balance of rental payments due and to become due under each
Item of Paper to which such repurchase demand has been made, each discounted
using the Rule of 78s rebate method; (b) all reasonable costs and expenses
incurred by UJB relating to each such Item of Paper and the Equipment covered
thereby (including without limitation) the costs and expenses for the
maintenance, repair, protection and preservation of the Equipment and all
reasonable attorneys' fees and expenses in connection with defending or
enforcing UJB's rights and remedies under this Agreement, under such Paper and
the Equipment, or otherwise; (c) all advance rentals and other fees paid to
Seller with respect to each Item of Paper; and (d) interest at the rate of 18%
per annum on the amount determined under Section 11.1 (a), (b) and (c) above,
from the date of demand until the date paid in full, or at the highest rate of
interest permitted by applicable law, whichever is less (such sum hereinafter
being referred to collectively as the "Repurchase Price"). Notwithstanding
anything contained herein to the contrary if an Event of Default shall occur or
be continuing, and said Event of Default specifically relates to an Item of
Paper or Items of Paper, Seller shall not be required to repurchase all of the
Paper purchased by
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UJB hereunder, but only that Item of Paper of those Items of Paper to which such
Event of Default relates.
11.2. If any default or breach under any Item of Paper, for any reason
whatsoever, shall occur and continue unremedied for a period of sixty (60) days
("Defaulted Paper"), then with respect to such Defaulted Paper, Seller shall,
immediately upon UJB's request, and at UJB's sole discretion, promptly (and in
no event later than thirty (30) days after written demand from UJB) either: (a)
replace the Defaulted Paper with an acceptable substitute or replacement Item of
Paper ("Replacement Paper") by assigning to UJB such Replacement Paper in
accordance with the terms of this Agreement in exchange for such Defaulted
Paper; or (b) repurchase the Defaulted Paper for the Repurchase Price. The
determination of what constitutes acceptable Replacement Paper shall be
determined in UJB's sole and absolute discretion.
11.3 If, with the consent of UJB, a Debtor exercises an option to repay
his obligations under an Item of Paper or to purchase the Equipment for an
amount that is less than the Repurchase Price for such Paper at the time of
exercise of such option, Seller agrees to either: (a) pay UJB on demand the
difference between such amount paid and the Repurchase Price for such Paper; or
(b) furnish to UJB acceptable Replacement Paper, at UJB's option.
11.4 Upon payment to UJB of the Repurchase Price with respect to an Item
of Paper in accordance with Sections 11.1 and 11.2 above, and provided no Event
of Default has occurred or is continuing hereunder, UJB shall terminate its
interests in said Item of Paper and its security interest in the related
Collateral, and shall assign to Seller all of UJB's rights, title and interest
in and to that particular Item of Paper, without recourse and without any
representations or warranties, express or implied, at Seller's cost and expense.
11.5 In the event that, upon payment of all amounts to be paid to UJB
under an Item of Paper, UJB is unable to locate the Seller (for the purpose of
re-assigning the Paper to Seller) by sending a notice to Seller at its address
for notices set forth in this Agreement, Seller hereby irrevocably authorizes
and appoints UJB (in Seller's name or UJB's name or both, as UJB shall in its
sole discretion determine) Seller's true and lawful attorney-in-fact to deliver
to the Debtor under such Paper: (a) a bill of sale for the Equipment covered by
such Paper, whether or not such Debtor has an option to purchase the Equipment
and for such consideration (or for no consideration) and on such other terms as
UJB shall in UJB's discretion determine (any consideration received to be
retained by UJB), and (b) a UCC termination statement terminating the filing of
any Financing Statements filed by Seller with respect to the Equipment. The
foregoing powers are coupled with an interest and shall not be affected by
Seller's dissolution, reorganization or any merger and shall survive the
termination of this Agreement.
11.6 No delay on the part of UJB in exercising any rights hereunder or
under any Item of Paper, nor in taking any action to collect or enforce payment
of any Item of Paper or with respect to its right to realize on any related item
of Equipment, shall operate as a waiver of any such rights or in any manner
prejudice UJB's rights against Seller hereunder. UJB shall be under no duty to
notify Seller of any default by any Debtor under the terms and conditions of the
Paper, except as herein set forth.
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11.7 UJB may, without prejudice to any claim against Seller hereunder, at
any time, or from time to time, in UJB's sole discretion and without notice to
Seller: (a) extend or change the time for payment, and the manner, place or
terms of payment of any Item of Paper; (b) exchange, release or surrender all or
any collateral security which UJB may at any time hold in connection with any
Item of Paper; (c) sell any Equipment held by UJB at public or private sale
and/or purchase said Equipment at such sale; and (d) settle or compromise with
any Debtor, any Guarantor or any Pledgor or subordinate to the payment of any
such Paper of any Debtor, any Guarantor or any Pledgor, to the payment of any
other debt which may be owing to UJB. Notwithstanding anything contained herein
to the contrary, UJB shall not take any of the actions noted in this Section
11.7 with respect to any Item of Paper unless the Debtor is in default
thereunder and said Item of Paper has not been replaced pursuant to Section 11.2
above or if an Event of Default has occurred or is continuing.
11.8 Until repurchased by Seller, UJB may continue to collect all sums
due under the Paper. UJB shall at all times have the right to realize upon any
collateral security relating to any Defaulted Paper and Seller's obligation to
repurchase any such Defaulted Paper shall survive any such sale of the
Collateral, if any.
11.9 In the event that any claim, counterclaim, crossclaim or defense is
asserted by any Debtor, any Guarantor or Pledgor, or any other person or entity
claiming by or through said Debtor, Guarantor or Pledgor, whether in a judicial
proceeding, bankruptcy or by notice to UJB, the Servicing Agent or the Seller of
nonpayment of an Item of Paper as a result of such claim or defense, alleging
breach of warranty, breach of contract, violation of any federal, state or local
statute, rule or regulation, or any other claim, counterclaim, crossclaim or
defense relating to any Item of Paper or the Equipment, or otherwise, Seller
agrees to repurchase any such Item of Paper so affected for the Repurchase Price
within fifteen (15) days of written demand from UJB. Seller shall continue to
defend and indemnify UJB against any and all loss, cost, damage, liability,
injury or expense, including without limitation, reasonable attorneys' fees, by
reason of any such claim, counterclaim, crossclaim or defense.
XII
INDEMNIFICATION
---------------
12.1 Seller hereby indemnifies and holds UJB harmless from and against
any claim, suit, action, proceeding (formal or informal), investigation,
judgment, loss, damage, liability, expense, including without limitation,
attorney's fees and other legal expenses as and when incurred by UJB arising out
of or based upon: (a) breach by Seller of any representation, warranty, covenant
or other agreement contained in this Agreement, in any Assignment or any of the
other Sale Documents (including without limitation) any failure to pay any
sales, use or similar tax with respect to any Item of Paper or the equipment
covered thereby; (b) any loss or damage to property, person, services or
equipment resulting from or in connection with the use
25
<PAGE>
of any Equipment; and (c) any default by Seller under any Item of Paper or in
the performance of any of its obligations thereunder or hereunder.
12.2 If Seller fails to perform hereunder or under any Assignment or Item
of Paper or any other Loan Document, then, in addition to any other rights UJB
may have, UJB may, in its sole and absolute discretion, (but need not) perform
thereunder on Seller's behalf, and in that event, Seller shall pay UJB, on
demand, all costs and expenses incurred by UJB with interest at the rate of 18%
per annum or the highest rate permissible under applicable law, whichever is
less.
XIII
REMEDIES UPON THE OCCURRENCE OF AN EVENT OF DEFAULT
---------------------------------------------------
13.1 In addition to Seller's obligation to repurchase the Paper more
particularly set forth in Section XI above, upon the occurrence or continuation
of any Event of Default, or should Seller fail to pay the Repurchase Price
within thirty (30) days after written request therefor as required pursuant to
Section 11.2 above, UJB shall have the following additional rights and remedies
(to the extent permitted by law) which, shall be in addition to all of the
rights and remedies of a secured party under the UCC in the applicable
jurisdiction and other applicable law, all such rights and remedies being
cumulative, not exclusive and enforceable alternatively, successively or
concurrently:
(a) to declare all of Seller's Obligations to be immediately due
and payable, to prosecute any action, suit or proceeding to enforce any or all
of the rights of UJB pursuant to the provisions of this Agreement or the other
Sale Documents, or the specific performance of any covenant or other provision
contained herein or any other document or instrument delivered in connection
with or pursuant to the provisions of this Agreement, or to enforce payment of
such Repurchase Price;
(b) with or without judicial process or the aid and assistance of
others, to enter upon any premises under the control of Seller in which the
Equipment covered by an Item of Paper may be located, and, without resistance or
interference by Seller, take possession of the Equipment, and/or dispose of any
of the Equipment on the premises, and/or require Seller to assemble or make
available to UJB at the expense of Seller, any of the Equipment at any place and
time designated by UJB which is reasonably convenient to both parties, and/or
sell or resell or lease, assign or deliver, grant options for or otherwise
dispose of any of the Equipment in its then condition or following any
commercially reasonable preparation or processing, at one or more public or
private sales, upon at least ten (10) days notice to Seller (which notice Seller
acknowledges is reasonable), upon any commercially reasonable terms at the
place(s) and time(s) and to the person(s) as UJB deems best; UJB may buy any of
the Equipment at any public sale and, if any of the Equipment is of a type
customarily sold in a recognized market or is of the type which is the subject
of widely distributed standard price quotations, UJB may buy the Equipment at
private sale, free of any equity or interest of Seller, which Seller hereby
waives.
26
<PAGE>
Notwithstanding anything contained herein to the contrary, UJB shall have no
obligation to take possession of all or any of the Equipment;
(c) UJB may apply the cash proceeds actually received from any sale
or any disposition of the Equipment related to any Item of Paper to the expenses
of retaking, holding, storing, preparing for sale, selling, leasing and the
like, to attorneys' fees and all legal, travel and other expenses which may be
incurred by UJB in attempting to collect such Repurchase Price or enforce this
Agreement or to realize upon any Collateral, or in the prosecution or defense of
any action or proceeding related to this Agreement and any of the other Sale
Documents and then to such Repurchase Price and Seller shall remain liable for
and will pay UJB on demand any deficiency; and
(d) Seller acknowledges that its right to have the Equipment
returned to it pursuant to an Item of Paper and/or any claim or interest in an
Item of Paper and/or the Equipment or the residual value thereof shall be
automatically terminated and of no further force and effect in the event that
UJB exercises its rights and remedies as against said Item of Paper and/or the
Equipment as herein or therein provided, to the extent of the Repurchase Price
thereof.
13.2 In the event the Debtor under an Item of Paper fails to pay any of
the Debtor Obligations in respect to the Paper when due and payable pursuant to
the provisions of the Paper, or any other default shall occur under an Item of
Paper, UJB shall have (in addition to all of its rights and remedies against the
Debtor) all of its rights and remedies of a secured party pursuant to the UCC
and any other applicable law in respect of the Equipment, whether the security
interest in such Equipment is created pursuant to the provisions of this
Agreement or the Paper, and the provisions of Sections 13.1 (b), (c) and (d)
hereof shall also apply to the exercise of its rights and remedies, except that
the enforcement of such provisions, as against the Debtor, shall be at the
expense of Debtor.
13.3 Upon the occurrence of any Event of Default, UJB may also, with or
without proceeding with such sale or foreclosure of any Collateral or demanding
payment of the Seller's Obligations, without notice terminate further
performance under this Agreement or any of the other Sale Documents or exercise
all rights granted in any other agreement or agreements between UJB and Seller
without further liability or obligation by UJB. Neither such termination, nor
the termination of this Agreement by lapse of time, the giving of notice or
otherwise, shall absolve, release or otherwise affect the liability of Seller in
respect to transactions had prior to such termination, nor affect any of the
liens, security interests, rights, powers and remedies of UJB, but they shall,
in all events, continue until all Seller's Obligations are satisfied. Without in
anyway limiting the generality of the foregoing rights, at UJB's sole and
absolute discretion, UJB shall have no further obligation under the terms of the
Term Sheet and/or this Agreement, or otherwise, to purchase any new or
additional Paper from Seller, nor to purchase any Paper that UJB may have
previously offered to purchase, anything contained herein to the contrary
notwithstanding. Should UJB exercise the rights contained herein, UJB shall not,
in any manner, be liable to Seller for any failure to purchase or continue to
purchase an Item of Paper.
27
<PAGE>
13.4 UJB shall have the right to exercise any rights or take any of the
remedies otherwise available to it under the Sale Documents or as a matter of
law or equity.
13.5 Immediately, and without notice or other action, UJB shall have the
right to set-off any money owed by UJB in any capacity to the Seller against any
of the Seller's liability to UJB, whether due or not, and UJB shall be deemed to
have exercised such right of set-off and to have made a charge against any such
money immediately upon the occurrence of such Event of Default, even though the
actual book entries may be made at some time subsequent thereto.
13.6 No remedy referred to herein is intended to be exclusive, but each
shall be cumulative and in addition to any other remedy referred to above or
otherwise available to UJB at law or in equity. No express or implied waiver by
UJB of any Event of Default shall in any way be, or be construed to be, a waiver
of any future or subsequent Event of Default. The failure or delay of UJB in
exercising any rights granted it hereunder upon any occurrence of any of the
contingencies set forth herein shall not constitute a waiver of any such right
upon the continuation or recurrence of any such contingencies or similar
contingencies and any single or partial exercise of any particular right by UJB
shall not exhaust the same or constitute a waiver of any other right provided
herein. The Events of Default and remedies thereon are not restrictive of and
shall be in addition to any and all other rights and remedies of UJB provided
for by this Agreement, the other Sale Documents and applicable law.
13.7 SELLER HEREBY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY LITIGATION
RELATING TO THIS AGREEMENT, THE OTHER SALE DOCUMENTS OR OTHER AGREEMENTS OR
INSTRUMENTS BETWEEN SELLER AND UJB. _________
13.8 UJB shall be under no obligation whatsoever to proceed first against
any Item of Paper or the Collateral before proceeding against any other Item of
Paper or any other Collateral. It is expressly understood and agreed that all
of the Collateral stands as equal security for all of Seller's Obligations, and
that UJB shall have the right to proceed against any or all of the Collateral in
any order, or simultaneously, as in its sole and absolute discretion it shall
determine. It is further understood and agreed that UJB shall have the right,
in its sole and absolute discretion, to sell any or all of the Collateral in any
order or simultaneously.
XIV
ULTIMATE NET LOSS
-----------------
14.1 Provided no Event of Default shall have occurred or be continuing,
Seller's obligation to repurchase any Paper pursuant to Section 11.2 above shall
not exceed 10% of the aggregate Purchase Price paid by UJB to Seller hereunder
for all Paper purchased by UJB remaining on UJB's portfolio (the "Ultimate Net
Loss"). The Ultimate Net Loss shall increase as and when UJB purchases Items of
Paper or accepts Replacement Paper hereunder. The Ultimate Net Loss shall
decrease only as, when and if an Item of Paper is repurchased by Seller pursuant
28
<PAGE>
to Section 11.2 above; the amount of any such decrease in the Ultimate Net Loss
shall be equal to the Purchase Price of that particular Item of Paper so
repurchased.
14.2 The Ultimate Net Loss, as used in this Agreement, shall only apply
to Paper repurchased pursuant to Section 11.2 hereof, and shall expressly
exclude: (a) Paper repurchased pursuant to Sections 11.1 and 11.3 above; (b)
Paper for which Replacement Paper has been accepted in substitution of Defaulted
Paper pursuant to Section 11.2 above, (c) Paper which Seller shall have
purchased from UJB without prior request or demand by UJB for such repurchase;
(d) Paper which Seller shall have failed to repurchase in accordance with
Sections 11.1 and 11.2 hereof; (e) Paper relating to Unperfected Equipment if
the failure to file Financing Statements is the proximate cause of the loss; and
(f) Paper relating to Uninsured Equipment if the failure to obtain and maintain
insurance coverage with respect to that item of Equipment is the proximate cause
of the loss.
14.3 For purposes of this Agreement, the amount to be charged against the
Ultimate Net Loss for each affected Item of Paper ("Charge(s)") shall be the
Repurchase Price thereof plus the reasonable out-of-pocket expenses including,
without limitation, refurbishing costs and costs of transportation incurred by
Seller in connection with any recoveries or repossessions and/or the liquidation
by it of such Paper and Equipment covered thereby, minus the total amount
realized by Seller from all sources upon the collection and/or liquidation of
such Paper and the Equipment relating thereto, including, without limitation,
any resale or release of the Equipment as to which Seller or any affiliate of
Seller had acquired title in default proceedings under the Paper or in
satisfaction of the Debtor Obligations hereunder and/or recoveries from any
party liable on such Paper and from the sale, lease or other disposition of the
Equipment under such Paper.
14.4 In the event the Seller shall have paid the Repurchase Price to UJB
pursuant to Section 11.2 above, and at that time Seller shall not have
liquidated the Equipment and/or recovered any sums due from the Debtor, any
Guarantor or Pledgor in regard to an Item of Paper pursuant to Section 14.3
above, but thereafter recovers all or a portion of the Charge from any parties
liable on the Paper or as a result of a liquidation or disposition of the
Equipment, the amount so recovered shall reduce the amount of any previous
Charge(s), as though no loss had been incurred by Seller to that extent.
14.5 Seller agrees to diligently pursue its rights and remedies with
respect to the Paper and the Equipment and to take all necessary and appropriate
action to recover the Charge from all parties liable on the Paper repurchased by
it pursuant to Section 11.2 of this Agreement and from the Equipment covered
thereby. Without limiting the foregoing, the Seller will refurbish the
Equipment, as necessary, sell or lease the same on a priority basis vis-a-vis
other equipment in its possession or under its control, and use its best efforts
to obtain the highest price possible.
14.6 Seller shall keep separate records with respect to Paper purchased
by UJB, which shall include all amounts realized by Seller from the recovery of
sums due under the Paper so repurchased and/or from the liquidation or
disposition of the Equipment and all costs and expenses incurred in connection
therewith. Upon request, Seller shall furnish a written report to
29
<PAGE>
UJB, within thirty (30) days of any such request, showing the amount of out-of-
pocket expenses incurred in connection with any recoveries made by Seller in
connection with the collection and/or liquidation of such Paper and the amounts
realized by Seller from all sources upon the collection and/or liquidation of
such Paper and/or the Equipment. UJB shall have the right, upon prior written
notice, to audit and make copies of the records of Seller with respect to such
out-of-pocket expenses incurred, recoveries made and amounts realized in respect
of such Paper and the Equipment.
14.7 At each anniversary date of this Agreement, so long as Seller's
Obligations and/or Debtor Obligations remain outstanding, the Charges made
against the Ultimate Net Loss for the prior twelve (12) month period shall be
reduced to zero (0) and Seller shall continue to fulfill its obligations under
Section XI hereof with respect to all Paper purchased hereunder, as though no
Charges were previously made against the Ultimate Net Loss. In the event that
the Charges during a particular twelve (12) month period equal the Ultimate Net
Loss, which is subject to change as herein provided, and provided no Event of
Default has occurred or is continuing, Seller shall not be required to make any
payment to UJB with respect to the Paper purchased hereunder pursuant to Section
11.2 above for the balance of that twelve (12) month period, except as otherwise
provided herein.
14.8 If and when the Charges shall equal or exceed (50%) percent of the
Ultimate Net Loss during any twelve (12) month period, so long as there remain
Debtor Obligations unpaid or unperformed, Seller shall not thereafter, without
the prior written consent of UJB, which consent shall not be unreasonably
withheld or delayed:
(a) Sell or lease any Equipment covered by Paper repurchased by
Seller for a price less than the Repurchase Price of such Item of Paper; or
(b) Compromise or settle the amount owing on any repurchased Paper
for an amount less than the Repurchase Price of such Paper.
If UJB fails to so consent within five business (5) days after its receipt of a
written request from Seller to:
(a) the sale of Equipment covered by such Paper at an offered price
less than the amount of the applicable Repurchase Price; or
(b) accept an offer from the Debtor under such Paper to pay, in
compromise or settlement, an amount less than such Repurchase Price (each such
offer being herein referred to as a "Close Out Offer"),
and Seller ultimately recovers less than the Close Out Offer with
respect to any such Item of Paper and/or from the Equipment, the difference
between the amount of the Close Out Offer and the amount actually recovered,
shall thereafter be added to the aggregate of the Charges upon receipt of
satisfactory documentation evidencing the amount actually recovered relating to
said Item of Paper or the Equipment.
30
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XV
MISCELLANEOUS
-------------
15.1 UJB shall be entitled to its reasonable expenses incurred in the
enforcement or liquidation of any Seller's Obligations due hereunder, or for the
enforcement of payment of the Seller's Obligations, and those expenses shall,
without limitation, include reasonable attorneys' fees plus other legal costs
and expenses incurred. Seller agrees to pay all costs and expenses of UJB in
connection with the preparation, execution, delivery, and administration of this
Agreement, the other Sale Documents and other instruments and documents to be
executed contemporaneously herewith, including reasonable attorney's fees and
out-of-pocket expenses of counsel for UJB.
15.2 The Seller agrees that no delay on the part of UJB in exercising any
power or right hereunder shall operate as a waiver or relinquishment of any such
power or right, nor preclude any further exercise thereof, or the exercise of
any other power or right. UJB shall not by any act or omission be deemed to
have waived any of its rights or remedies hereunder, unless such waiver is in
writing and signed by UJB, and then only to the extent set forth therein. A
waiver as to any one event shall in no way be construed as continuing or as
preventing the exercise of such rights or remedies by subsequent event.
15.3 Seller waives presentment, dishonor and notice of dishonor, protest
and notice of protest of any commercial papers at any time held by UJB on which
the Seller is in any way liable.
15.4 The provisions of this Agreement shall be in addition to those of
the other Sale Documents or other writings held by UJB relating to the Seller's
Obligations and the Debtor Obligations, all of which shall be construed as one
instrument. To the extent there is any conflict between the provisions of this
Agreement and any other Sale Documents, the terms of the agreement which affords
the greater protection to UJB shall control.
15.5 Seller consents to any extension, postponement of time of payment,
indulgence or to any substitution, exchange or release of Collateral and to any
addition to or release of, any party or persons primarily or secondarily liable,
or acceptance of partial payments of any Paper or other Collateral in the
settlement, compromising or adjustment thereof, provided, however, UJB shall not
compromise the amount due with respect to any Item of Paper unless Debtor is in
default thereunder and said Item of Paper has not been replaced pursuant to
Section 11.2 above or there has occurred or is continuing an Event of Default
hereunder.
15.6 All representations and warranties made herein or in any certificate
or instrument contemplated hereby shall survive any independent investigation
made by UJB in the execution and delivery of this Agreement, in said
certificates or instruments and shall continue so long as
31
<PAGE>
any Seller's Obligations and Debtor's Obligations are outstanding and
unsatisfied, applicable statutes of limitation to the contrary, notwithstanding.
15.7 This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto, their respective successors and assigns.
15.8 The rights and remedies herein expressed to be vested in or
conferred upon UJB shall be cumulative and shall be in addition to and not in
substitution for or in derogation of the rights and remedies conferred by any
applicable law.
15.9 Nothing herein contained shall impose upon UJB any obligation to
enforce any terms, covenants or conditions contained herein. Failure of UJB, in
any one or more instances, to insist upon strict performance by the Seller or
any Debtor of any terms, covenants or conditions of this Agreement and/or the
other Sale Documents or any Item of Paper, shall not be deemed to be a waiver or
relinquishment of any such terms, covenants and conditions.
15.10 This Agreement and all rights hereunder may be assigned or otherwise
transferred by UJB to anyone of its choosing.
15.11 This Agreement, the other Sale Documents and the rights of the
parties shall be governed by and construed under the laws of the State of New
Jersey, without regard to principles of conflict or choices of law.
15.12 This Agreement may not be modified, amended, altered or changed
orally or by course of dealing between Seller and UJB, but only by an agreement
in writing duly executed on behalf of the party to whom enforcement of any such
waiver, change, modification or discharge is sought.
15.13 If any term or provision of this Agreement or the application
thereof shall to any extent be invalid or unenforceable, the remainder of this
Agreement, or the application of such terms or provisions other than that which
is held invalid or unenforceable, shall not be affected thereby, and each term
and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
15.14 This Agreement shall be strictly for the benefit of the Seller and
shall not inure to the benefit of, nor be intended or construed to give any
third parties any legal or equitable right, remedy or claim under or through the
Seller, the relationship between UJB and the Seller being strictly a contractual
one evidencing a creditor-debtor relationship. Seller and UJB hereby expressly
disclaim the existence of any partnership, joint venture, employment or other
agency relationship between them by virtue of this Agreement.
15.15 Any notices under this Agreement shall be deemed duly given five (5)
days after said notice is deposited with the United States Post Office if sent
by certified mail, return receipt requested, postage prepaid, addressed to the
parties hereto at the respective addresses set forth at
32
<PAGE>
the heading of this Agreement, or when actually received if given in any other
manner. Any changes in such addresses shall be made by similar notice as herein
provided.
15.16 Throughout this Agreement, the masculine shall include the feminine
and vice versa and the singular shall include the plural and vice versa, unless
the context of this Agreement indicates otherwise.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers, as of
the day and year first above written.
ATTEST: BANKVEST CAPITAL CORP.
_______________________________ By:_____________________________
DOROTHY C. VINE, Secretary/Clerk PAUL S. GASS, President
WITNESS/ATTEST: UJB LEASING CORPORATION
______________________________ By:_____________________________
PETER C. PLATT, President
33
<PAGE>
EXHIBIT A
SALE AND ASSIGNMENT OF
CHATTEL PAPER
For value received, and in accordance with the terms and conditions of that
certain Sale of Chattel Paper and Security Agreement dated as of ____________,
199_, (the "Agreement"), by and among UJB Leasing Corporation ("UJB") and
BankVest Capital Corp. ("Seller"), Seller hereby sells, assigns and transfers to
UJB, all of Seller's right, title and interest in and to the equipment leases,
retail installment contracts and other chattel paper identified on Schedule A
attached hereto and made a part hereof (the "Paper" or "Item of Paper"),
together with all of the Seller's right, title and interest in and to all monies
due or to become due to or on behalf of Seller hereunder and all of the purchase
options, renewal options, guarantees, security agreements, pledge agreements,
and other agreements, letters of credit, recourse agreements, documents and
instruments relating to the Paper.
All agreements, covenants, warranties and representations of Seller as
contained in the Agreement are herein reaffirmed and restated and shall apply to
each Item of the Paper hereby assigned and identified on Schedule A. All of the
terms and conditions contained in the Agreement remain in full force and effect
as written and have been and will be complied with by Seller.
IN WITNESS WHEREOF, Seller has hereunto caused these presents to be signed
by its proper authorized representative this _____ day of _______________, 199_.
BANKVEST CAPITAL CORP.
By____________________________
, President
Signed, sealed and delivered
in the presence or attested by:
_____________________________
, Secretary
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<PAGE>
BY FAX
Charles Fiumefreddo, Vice President
UJB Leasing Corporation
25 Salem Street
Hackensack, New Jersey 07602
Dear Mr. Fiumefreddo:
Please find enclosed herewith a blacklined draft of Section 14 of the
Sale of Chattel Paper and Security Agreement, which reflect the changes that we
discussed. After you review this material, please contact me.
I look forward to hearing from you.
Very truly yours,
Michael P. Turner
1
<PAGE>
EXHIBIT 10.57
FIRST AMENDMENT TO
SALE OF CHATTEL PAPER
AND SECURITY AGREEMENT
----------------------
This First Amendment to Sale of Chattel Paper and Security Agreement
(hereinafter referred to as the "First Amendment") is made as of the 1st day of
June, 1997, by and among Summit Leasing Corporation, a New Jersey corporation
("Summit"), formerly known as UJB Leasing Corporation ("UJB"), having an office
located at 750 Walnut Avenue, Cranford, New Jersey 07016 and BankVest Capital
Corp., a Massachusetts corporation ("Seller"), with its principal place of
business at 114 Turnpike Road, Westborough, Massachusetts 01581.
RECITALS:
--------
A. On or about March 28, 1996, UJB and Seller entered into that
certain Sale of Chattel Paper and Security Agreement relating to the sale by
Seller and the purchase by UJB of certain equipment lease paper (the
"Agreement").
B. Seller and Summit desire to modify the terms and conditions of
the Agreement for the purposes set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual agreements
and covenants hereinafter set forth, the parties hereto agree as follows:
1. Definitions: Unless otherwise defined herein, all capitalized
-----------
and defined terms used herein shall have the same meaning set forth in the
Agreement.
2. Recitals: The recitals set forth above are hereby incorporated
--------
herein as if set forth at length. Seller and Summit each acknowledge and
confirm that all of the aforesaid recitals are true, accurate and correct in all
respects.
3. Estoppel with Regard to Present Portfolio Balance and Charges:
-------------------------------------------------------------
Seller acknowledges and agrees that, as of the date of this Agreement: (i) the
unpaid lease stream relating to the Paper purchased by Summit remaining in
Summit's portfolio is: $2,021,142.21; (ii) the aggregate Purchase Price paid by
Summit to Seller pursuant to the Agreement for all Paper purchased by Summit
remaining in Summit's portfolio is $2,471,865.71; and (iii) the amount of the
Charges made against the Ultimate Net Loss is $0.
4. Continued Validity of Sale Documents: Seller hereby acknowledges,
------------------------------------
ratifies, confirms and affirms: (i) the extent and validity of the Sale
Documents; (ii) that said Sale Documents are and remain valid, enforceable in
accordance with their respective terms and are and remain in full force and
effect as of the date hereof; (iii) that the Sale Documents are not subject to
any real or personal defenses whatsoever; (iv) that pursuant to the security
interests granted to Summit in accordance with the Sale Documents, the Sale
Documents constitute a
<PAGE>
continuing valid first perfected lien upon the Collateral, which security
interest secures the payment and performance of the obligations due and owing
under the Sale Documents. Seller warrants and represents that all
representations contained in the Sale Documents are true and complete as of the
date hereof, no warranty therein contained has been breached as of the date
hereof and it is in full compliance with all of the terms and conditions thereof
and has performed all obligations on its part to be performed therein.
5. Representations, Warranties and Covenants: Seller hereby
-----------------------------------------
represents, warrants and covenants as follows:
A. Seller has disclosed its current financial condition and circumstances
to Summit. Any and all substantial and/or material adverse changes in
its financial condition and circumstances which shall occur after the
date of the disclosure of its financial condition shall be immediately
brought to the attention of Summit by Seller and Summit shall be
promptly notified in writing of same by Seller.
B. To the best of Seller' knowledge, information and reasonable belief,
its execution, delivery and performance in accordance with the terms
of this First Amendment does not violate any applicable law, rule,
regulation or order of any governmental authority or in any way
conflict with or result in a breach of any of the terms, conditions or
provisions of any other agreement or instrument to which it may be
bound.
C. The financial disclosures made by Seller accurately and fairly present
its financial condition and circumstances as of the date of this First
Amendment and there have been no further substantial and/or material
adverse changes in its financial condition and circumstances as of the
date of this First Amendment.
D. There are no actions, suits or proceedings pending (nor to Seller'
knowledge, any actions, suits or proceedings threatened, nor is there
any basis therefor), against or in any way relating adversely to it or
its properties in any court or before any arbitrator of any kind or
before any governmental or non-governmental body which, if adversely
determined, would singly or in the aggregate have a material adverse
affect on its financial condition.
6. Modification Pertaining to the Sale Documents: From and after
--------------------------------------------
the effective date of this First Amendment, the Sale Documents are hereby
modified to provide that all references to "UJB Leasing Corporation" or to
"UJB," or words of similar meaning shall be deemed to refer to Summit Leasing
Corporation.
7. Modification to the Agreement. From and after the date of this
-----------------------------
First Amendment, the Agreement is hereby modified in the following respects:
A. Recital B is deleted in its entirety and replaced with the following:
2
<PAGE>
Seller desires to sell and Summit desires to purchase, from time to
time, on the terms and conditions set forth herein, equipment lease
paper, for an aggregate, purchase price not to exceed SEVEN MILLION
FIVE HUNDRED THOUSAND DOLLARS ($7,500,000.00).
B. The following section is added to Article I:
1.11A. "Funding Cap' shall mean (a) from and after March 28, 1996
through March 27, 1997, the sum of TWO MILLION FIVE HUNDRED DOLLARS
($2,500,000); and (b) from and after June 1, 1997 through March 27,
1998, the sum of SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS
("7,500,000").
C. Section 1.15 is deleted and replaced with the following:
1.15 "Purchase Expiration Date" shall mean March 28, 1998.
D. Section 1.20 is deleted and replaced with the following:
1.20 "Sale Documents" shall mean the Term Sheet, this Agreement, as
modified by the First Amendment, the Financing Statements, the
Incumbency Certificate, the Corporate Resolutions, the Estoppel
Certificate, the Opinion Letter and all documents of every kind and
nature submitted and/or executed in connection with this Agreement
whether executed contemporaneously herewith or at any other time,
together with all amendments, substitutions, supplements, replacements
or modifications to any or all of them.
E. The first sentence of Section 2.1 is deleted and replaced with the
following:
Subject to the terms and conditions set forth herein and the Funding
Cap, Seller agrees to offer to sell to Summit, Items of Paper from and
after the date hereof until the Purchase Expiration Date.
8. Documentation to be Furnished to Summit. Summit's Agreement to
---------------------------------------
enter into this First Amendment is contingent upon Summit's receipt, review and
acceptance, prior to the execution and delivery of this First Amendment, of the
following documentation:
A. UCC-1 Financing Statements searches in the appropriate filing
offices regarding Seller;
B. Upper court judgment and lien searches regarding Seller.
C. Federal tax lien and state tax lien searches regarding Seller.
D. A good standing certificate with regard to Seller from its state
of formation and all states where it is authorized to do business.
3
<PAGE>
E. Franchise tax searches regarding the Seller from its state of
formation and all states where it is authorized to do business.
F. Such other searches as required by Summit or Summit's counsel to
insure Summit's first lien position and perfected security interest in
and to the Collateral shall be continued unaffected.
9. Further Assurances: Seller hereby agrees that it shall execute
------------------
and/or deliver to Summit any documents, information or agreements as may be
reasonably requested by Summit at any time so long as any sums due or
obligations under the Sale Documents remain unpaid or unperformed.
10. Release and Discharge of Summit: Seller hereby releases and
-------------------------------
discharges Summit of and from all claims, causes of action, demands, damages or
suits, at law and in equity, which it may, as of the date of this First
Amendment, have or claim to have against Summit relating to, arising out of or
resulting from its relationship with Summit or with respect to the obligations
due to Summit as evidenced by the Sale Documents or the Collateral.
11. Reinstatement of Obligations: The Sale Documents, including this
----------------------------
First Amendment, and Seller' liabilities thereunder shall continue to be
effective or be reinstated, as the case may be, if at any time any payment or
other value received by Summit, from any source, or any part thereof, of any of
the sums due under the Sale Documents are rescinded or might otherwise be
restored or returned by Summit by reason of: (i) any judgment, decree or order
of any court or administrative body having competent jurisdiction; (ii) any
settlement or compromise of any such claim; or (iii) otherwise, all as through
such payment had not been made and received by Summit, notwithstanding any
termination of all or any of the Sale Documents or payment in full of the
obligations due to Summit as evidenced by the Sale Documents.
12. Application of N.J.S.A. 25:1-5: Seller acknowledges the amendment
------------------------------
to N.J.S.A. 25:1-5, which precludes enforcement, inter alia, of any oral
----- ----
promises relating to extensions of credit, and agrees, without regard to whether
such amendment is prospective or retroactive in application, that its provisions
are fully applicable to this First Amendment.
13. Governing Law: This First Amendment shall be governed by and
-------------
construed in accordance with the laws of the State of New Jersey, without regard
to the principles of conflicts of laws.
14. Relief from Bankruptcy Stay: In the event that Seller shall:
---------------------------
(i) file with any bankruptcy court of competent jurisdiction or be the subject
of any petition under Title 11 of the U.S. Bankruptcy Code, as amended
("Bankruptcy Code"), (ii) be the subject of any order for relief issued under
the Bankruptcy Code, (iii) file or be the subject of any petition seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any present or future Federal or state act
or law relating to bankruptcy, insolvency, or other relief for debtors, (iv)
have sought or consented to or acquiesced in the appointment of any trus-
4
<PAGE>
tee, receiver, conservator, or liquidator, or (v) be the subject of any order,
judgment, or decree entered by any court of competent jurisdiction approving a
petition filed against such party for any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under any
present or future Federal or state act or law relating to bankruptcy,
insolvency, or relief for debtors, Summit shall thereupon be entitled and Seller
each irrevocably consents to immediate and unconditional relief from any
automatic stay imposed by Section 362 of the Bankruptcy Code, or otherwise, on
or against the exercise of the rights and remedies otherwise available to Summit
as provided for herein, in the Sale Documents and as otherwise provided by law,
and Seller hereby irrevocably waives any right to object to such relief and will
not contest any motion by Summit seeking relief from the automatic stay.
15. Binding Effect: This First Amendment is binding upon, inures to
--------------
the benefit of and is enforceable by the personal representatives, successors
and assigns of the parties. This First Amendment is not assignable by Seller.
16. Non-Waiver: No failure or delay on the part of Summit, or its
----------
successors and assigns, in the exercise of any right, power or privilege
pursuant to the Sale Documents (including this First Amendment) is to be
construed to be or operate as a waiver. Partial exercise of any right, power or
privilege by Summit is not to preclude any further right, power or privilege,
nor be deemed a waiver. Any waiver or modification of this First Amendment or
any other document, instrument or agreement executed by Seller is to be in
writing signed by Seller and Summit. Summit may, in its sole discretion,
release, impair or surrender all or any of the interest granted hereunder or
under any other agreement executed by Seller without waiving, exhausting or
impairing any of Summit's rights and remedies available pursuant to the Sale
Documents or under this First Amendment.
17. Representation by Counsel; Drafting of Agreement: Seller
------------------------------------------------
acknowledges that it has had the opportunity to consult independent counsel of
its own selection in connection with the matters covered by this First Amendment
and that it has executed and delivered this First Amendment (and any other
documents referred to herein or in connection herewith) with the benefit of
counsel and of its own free will and volition. Seller also acknowledges and
agrees that the terms of this First Amendment have been negotiated in good faith
by the parties and that said terms shall be construed in a neutral fashion and
without regard to the draftsmanship of this First Amendment.
18. Severability: In the event that any portion of this First
------------
Amendment is deemed unenforceable by a court of competent jurisdiction, such
provision declared to be unenforceable is to be deemed to have been omitted from
this First Amendment and all such remaining terms and conditions of this First
Amendment are to continue in full force and effect.
19. Continued Effectiveness of Sale Documents: Except as
-----------------------------------------
specifically modified herein, all of the other terms and conditions of the Sale
Documents shall remain in full force and effect and the parties hereto expressly
confirm and ratify all of their respective liabilities, obligations, duties and
responsibilities under and pursuant to said Sale Documents, as modified.
5
<PAGE>
It is the intention of the parties hereto that this First Amendment shall not
constitute a novation and shall in no way adversely affect or impair the lien
priority referred to herein.
IN WITNESS WHEREOF, the parties have executed and delivered this First
Amendment or caused this First Amendment to be duly executed and delivered by
their proper and duly authorized officers or representatives as of the day and
year first above written.
ATTEST: BANKVEST CAPITAL CORP.
_________________________________ By:________________________________________
DOROTHY C. VINE, Secretary/Clerk PAUL S. GLASS, President
WITNESS/ATTEST: SUMMIT LEASING CORPORATION
(formerly known as UJB Leasing Corporation)
_________________________________ By:________________________________________
PETER C. PLATT, President
Chief Executive Officer
6
<PAGE>
EXHIBIT 10.58
SECOND AMENDMENT TO
SALE OF CHATTEL PAPER
AND SECURITY AGREEMENT
This Second Amendment to Sale of Chattel Paper and Security Agreement
(hereinafter referred to as the "Second Amendment") is made as of the ____ day
of ________________, 1998, by and among Summit Leasing Corporation, a New Jersey
corporation ("Summit"), formerly known as UJB Leasing Corporation ("UJB"),
having an office located at 750 Walnut Avenue, Cranford, New Jersey 07016 and
BankVest Capital Corp., a Massachusetts corporation ("Seller"), with its
principal place of business at 114 Turnpike Road, Westborough, Massachusetts
01581.
RECITALS:
--------
A. On or about March 28, 1996, UJB and Seller entered into that
certain Sale of Chattel Paper and Security Agreement relating to the sale by
Seller and the purchase by UJB of certain equipment lease paper (the
"Agreement").
B. Summit and Seller modified the terms and conditions of the
Agreement, as evidenced by that certain First Amendment to Sale of Chattel Paper
and Security Agreement ("First Amendment") dated as of June 1, 1997. The First
Amendment and the Agreement are hereinafter collectively referred to as the
"Agreement" where the context and circumstances so require.
C. Seller and Summit desire to further modify the terms and
conditions of the Agreement for the purposes set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual agreements
and covenants hereinafter set forth, the parties hereto agree as follows:
1. Definitions: Unless otherwise defined herein, all capitalized and
-----------
defined terms used herein shall have the same meaning set forth in the
Agreement.
2. Recitals: The recitals set forth above are hereby incorporated
--------
herein as if set forth at length. Seller and Summit each acknowledge and confirm
that all of the aforesaid recitals are true, accurate and correct in all
respects.
3. Continued Validity of Sale Documents: Seller hereby acknowledges,
------------------------------------
ratifies, confirms and affirms: (i) the extent and validity of the Sale
Documents; (ii) that said Sale Documents are and remain valid, enforceable in
accordance with their respective terms and are and remain in full force and
effect as of the date hereof; (iii) that the Sale Documents are not subject to
any real or personal defenses whatsoever; (iv) that pursuant to the security
interests granted to Summit in accordance with the Sale Documents, the Sale
Documents constitute a
<PAGE>
continuing valid first perfected lien upon the Collateral, which security
interest secures the payment and performance of the obligations due and owing
under the Sale Documents. Seller warrants and represents that all
representations contained in the Sale Documents are true and complete as of the
date hereof, no warranty therein contained has been breached as of the date
hereof and it is in full compliance with all of the terms and conditions thereof
and has performed all obligations on its part to be performed therein.
4. Modification to the Agreement. From and after the date of this
-----------------------------
Second Amendment, the Agreement is hereby modified in the following respects:
A. Section 1.15 is deleted and replaced with the following:
1.15 "Purchase Expiration Date" shall mean March 28, 1999.
B. Section 1.20 is deleted and replaced with the following:
1.20 "Sale Documents" shall mean the Term Sheet, this Agreement, as
modified by the First Amendment and the Second Amendment, the
Financing Statements, the Incumbency Certificate, the Corporate
Resolutions, the Estoppel Certificate, the Opinion Letter and all
documents of every kind and nature submitted and/or executed in
connection with this Agreement whether executed contemporaneously
herewith or at any other time, together with all amendments,
substitutions, supplements, replacements or modifications to any or
all of them.
C. The first sentence of Section 2.1 is deleted and replaced with the
following:
Subject to the terms and conditions set forth herein and the Funding
Cap, Seller agrees to offer to sell to Summit, Items of Paper from and
after the date hereof until the Purchase Expiration Date.
D. The following sections are added to the Agreement:
14.9. With respect to the Items of Paper identified on Schedule 14.9
hereof (the "Schedule 14.9 Items of Paper"), provided no Event of
Default shall have occurred or be continuing, Seller's obligations to
repurchase any Schedule 14.9 Items of Paper pursuant to Section 11.2
above shall not exceed 50 percent of the aggregate Purchase Price paid
by Summit to Seller hereunder for said Schedule 14.9 Items of Paper
(the "Schedule 14.9 Ultimate Net Loss"). The Schedule 14.9 Ultimate
Net Loss shall not be included as a component or part of the Ultimate
Net Loss referred to in Section 14.1 above. The Schedule 14.9 Ultimate
Net Loss shall decrease only as, when, and if a Schedule 14.9 Item of
Paper is repurchased by Seller pursuant to Section 11.2 above; the
amount of any such decrease in the Schedule 14.9 Ultimate Net Loss
shall be equal to the Purchase Price of that particular Schedule 14.9
Item of Paper so repurchased. The provisions of Sections 14.2, 14.3,
14.4, 14.5, 14.6 and 14.8 above shall, where the context and
circumstances so require, apply to the
2
<PAGE>
Schedule 14.9 Ultimate Net Loss and, in that regard, the phrase
"Ultimate Net Loss" shall include the Schedule 14.9 Ultimate Net Loss.
At each anniversary date of this Agreement, so long as Seller's
Obligations and/or Debtor's Obligations remain outstanding, the
charges made against the Schedule 14.9 Ultimate Net Loss for the prior
twelve-month period shall be reduced to zero ($0) and Seller shall
continue to fulfill its obligations under Section XI with respect to
all Schedule 14.9 Items of Paper purchased hereunder, as though no
Charges were previously made against the Schedule 14.9 Ultimate Net
Loss. In the event that the Charges during a particular twelve-month
period equal the Schedule 14.9 Ultimate Net Loss, which is subject to
change as herein provided, and provided no Event of Default has
occurred or is continuing, Seller shall not be required to make any
payment to Summit with respect to the Schedule 14.9 Items of Paper
purchased hereunder pursuant to Section 11.2 above for the balance of
that twelve-month (12) period, except as otherwise provided herein.
Schedule 14.9 may be hereinafter supplemented or amended by the
parties hereto. If the parties decide to supplement or amend said
Schedule, a new Schedule shall be prepared, dated, initialed by the
parties and appended to the Agreement, thereby superseding the prior
Schedule.
14.10 With respect to the Items of Paper identified on Schedule 14.10
hereof (the "Schedule 14.10 Items of Paper"), Seller shall be required
to repurchase the Schedule 14.10 Items of Paper for the Repurchase
Price or replace the Schedule 14.10 Items of Paper, at Summit's sole
discretion and option pursuant to Section 11.2 hereof. It is in the
intention of the parties hereto that: (i) Seller shall be on FULL
RECOURSE for the Schedule 14.10 Items of Paper; (ii) Seller's
repurchase or replacement of any Schedule 14.10 Item of Paper shall
not be limited or restricted in any manner; (iii) Seller's repurchase
of a Schedule 14.10 Item of Paper pursuant to Section 11.2 hereof
shall not be included as a component or part of the Ultimate Net Loss
or the Schedule 14.9 Ultimate Net Loss or otherwise factored in the
computation of the Ultimate Net Loss or the Schedule 14.9 Ultimate Net
Loss; (iv) the Ultimate Net Loss and the Schedule 14.9 Ultimate Net
Loss shall not apply to any Schedule 14.10 Item of Paper repurchased
by Seller pursuant to Section 11.2 above; and (v) the Repurchase Price
due and/or paid on account of the Schedule 14.10 Item of Paper shall
not be or constitute a Charge against the Ultimate Net Loss or the
Schedule 14.9 Ultimate Net Loss. Schedule 14.10 may be hereinafter
supplemented or amended by the parties hereto. If the parties decide
to supplement or amend said Schedule, a new Schedule shall be
prepared, dated, initialed by the parties and appended to the
Agreement, thereby superseding the prior Schedule.
5. Documentation to be Furnished to Summit. Summit's agreement to
---------------------------------------
enter into this Second Amendment is contingent upon Summit's receipt, review and
acceptance, prior to the execution and delivery of this Second Amendment, of
authorizing resolutions and/or certificates on behalf of Seller authorizing
Seller to enter into this Second Amendment and to perform in accordance with the
terms and conditions of the Agreement.
3
<PAGE>
6. Further Assurances: Seller hereby agrees that it shall execute
------------------
and/or deliver to Summit any documents, information or agreements as may be
reasonably requested by Summit at any time so long as any sums due or
obligations under the Sale Documents remain unpaid or unperformed.
7. Release and Discharge of Summit: Seller hereby releases and
-------------------------------
discharges Summit of and from all claims, causes of action, demands, damages or
suits, at law and in equity, which it may, as of the date of this Second
Amendment, have or claim to have against Summit relating to, arising out of or
resulting from its relationship with Summit or with respect to the obligations
due to Summit as evidenced by the Sale Documents or the Collateral.
8. Reinstatement of Obligations: The Sale Documents, including this
----------------------------
Second Amendment, and Seller' liabilities thereunder shall continue to be
effective or be reinstated, as the case may be, if at any time any payment or
other value received by Summit, from any source, or any part thereof, of any of
the sums due under the Sale Documents are rescinded or might otherwise be
restored or returned by Summit by reason of: (i) any judgment, decree or order
of any court or administrative body having competent jurisdiction; (ii) any
settlement or compromise of any such claim; or (iii) otherwise, all as through
such payment had not been made and received by Summit, notwithstanding any
termination of all or any of the Sale Documents or payment in full of the
obligations due to Summit as evidenced by the Sale Documents.
9. Application of N.J.S.A. 25:1-5: Seller acknowledges the amendment
------------------------------
to N.J.S.A. 25:1-5, which precludes enforcement, inter alia, of any oral
promises relating to extensions of credit, and agrees, without regard to whether
such amendment is prospective or retroactive in application, that its provisions
are fully applicable to this Second Amendment.
10. Governing Law: This Second Amendment shall be governed by and
-------------
construed in accordance with the laws of the State of New Jersey, without regard
to the principles of conflicts of laws.
11. Binding Effect: This Second Amendment is binding upon, inures to
--------------
the benefit of and is enforceable by the personal representatives, successors
and assigns of the parties. This Second Amendment is not assignable by Seller.
12. Non-Waiver: No failure or delay on the part of Summit, or its
----------
successors and assigns, in the exercise of any right, power or privilege
pursuant to the Sale Documents (including this Second Amendment) is to be
construed to be or operate as a waiver. Partial exercise of any right, power or
privilege by Summit is not to preclude any further right, power or privilege,
nor be deemed a waiver. Any waiver or modification of this Second Amendment or
any other document, instrument or agreement executed by Seller is to be in
writing signed by Seller and Summit. Summit may, in its sole discretion,
release, impair or surrender all or any of the interest granted hereunder or
under any other agreement executed by Seller without waiving, exhausting or
impairing any of Summit's rights and remedies available pursuant to the Sale
Documents or under this Second Amendment.
4
<PAGE>
13. Representation by Counsel; Drafting of Agreement: Seller
------------------------------------------------
acknowledges that it has had the opportunity to consult independent counsel of
its own selection in connection with the matters covered by this Second
Amendment and that it has executed and delivered this Second Amendment (and any
other documents referred to herein or in connection herewith) with the benefit
of counsel and of its own free will and volition. Seller also acknowledges and
agrees that the terms of this Second Amendment have been negotiated in good
faith by the parties and that said terms shall be construed in a neutral fashion
and without regard to the draftsmanship of this Second Amendment.
14. Severability: In the event that any portion of this Second
------------
Amendment is deemed unenforceable by a court of competent jurisdiction, such
provision declared to be unenforceable is to be deemed to have been omitted from
this Second Amendment and all such remaining terms and conditions of this Second
Amendment are to continue in full force and effect.
15. Continued Effectiveness of Sale Documents: Except as specifically
-----------------------------------------
modified herein, all of the other terms and conditions of the Sale Documents
shall remain in full force and effect and the parties hereto expressly confirm
and ratify all of their respective liabilities, obligations, duties and
responsibilities under and pursuant to said Sale Documents, as modified. It is
the intention of the parties hereto that this Second Amendment shall not
constitute a novation and shall in no way adversely affect or impair the lien
priority referred to herein.
IN WITNESS WHEREOF, the parties have executed and delivered this
Second Amendment or caused this Second Amendment to be duly executed and
delivered by their proper and duly authorized officers or representatives as of
the day and year first above written.
ATTEST: BANKVEST CAPITAL CORP.
_________________________________ By:_____________________________
DOROTHY C. VINE, Secretary/Clerk _____________, President
WITNESS/ATTEST: SUMMIT LEASING CORPORATION
(formerly known as UJB Leasing
Corporation)
_________________________________ By:_____________________________
PETER C. PLATT, President
Chief Executive Officer
5
<PAGE>
SCHEDULE 14.9
ITEMS OF PAPER
--------------
1. Lease Number 46682-1, evidenced by the Lease Agreement entered into by
Artistic Images, Inc., as Lessee and BankVest Capital Corp., as Lessor,
accepted by BankVest Capital Corp. on March 23, 1998 and all related
documents.
2. Lease Number 10287-1, evidenced by the Lease Agreement entered into by
Cromar & Associates, Inc. d/b/a Productions Unlimited, Inc., as Lessee and
BankVest Capital Corp., as Lessor, accepted by BankVest Capital Corp. on
_______________ and all related documents.
6
<PAGE>
SCHEDULE 14.10
ITEMS OF PAPER
--------------
1. Lease Number 33551, evidenced by the Lease Agreement entered into by The
Mail House, Inc., as Lessee and BankVest Capital Corp., as Lessor, accepted
by BankVest Capital Corp. on ______________ and all related documents.
2. Lease Number 46412-1, evidenced by the Lease Agreement entered into by DAS
Devices, Inc., as Lessee and BankVest Capital Corp., as Lessor, accepted by
BankVest Capital Corp. on March 27, 1998 and all related documents.
7
<PAGE>
EXHIBIT 16.1
[LOGO OF PRICEWATERHOUSECOOPERS APPEARS HERE]
October 5, 1998
Securities and Exchange Commission
450 5th Street, N.W.
Washington, D.C. 20549
Commissioners:
We have read the attached statements which are to be substituted in the first
amendment to the registration statement on Form S-1 for the current language
appearing under the heading "CHANGE IN ACCOUNTANTS," which registration
statement was initially filed by BankVest Capital Corp. with the Securities and
Exchange Commission on September 30, 1998. We agree with the statements
concerning Coopers & Lybrand L.L.P.
Yours truly,
/s/ PricewaterhouseCoopers LLP
PriceWaterhouseCoopers LLP
<PAGE>
INSERT
Coopers & Lybrand L.L.P. served as auditor to the Company prior to May 1997, and
had audited the Company's consolidated financial statements through the year
ended June 30, 1996. Upon becoming aware of the Company's intent to issue
securities in an initial public offering, Coopers & Lybrand L.L.P. advised the
Company that it was independent of the Company under the rules of the American
Institute of Certified Public Accountants. However, because of a familial
relationship between a partner of Coopers & Lybrand L.L.P. and an executive
officer of the Company, Coopers & Lybrand L.L.P. would not be deemed to be
independent of the Company under the rules of the Commission. Accordingly, in
May 1997, Coopers & Lybrand L.L.P. resigned as the Company's auditor and the
Board of Directors of the Company appointed Deloitte & Touche LLP to reaudit the
Company's consolidated financial statements included in this Prospectus.
The reports of Coopers & Lybrand L.L.P. on the Company's June 30, 1995 and 1996
consolidated financial statements did not contain any adverse opinion or
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principles. In addition, in connection with its audits
of the two fiscal years ended June 30, 1996, and through May 1997, there were no
disagreements with Coopers & Lybrand L.L.P. on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements if not resolved to the satisfaction of Coopers &
Lybrand L.L.P. would have caused them to make reference thereto in their report
on the financial statements for such years.
