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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT
TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 001-13973
UNICAPITAL CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
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DELAWARE 65-0788314
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
10800 BISCAYNE BOULEVARD, SUITE 800, MIAMI, FLORIDA 33161
(Address of Principal Executive Offices) (Zip Code)
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Registrant's telephone number, including area code: (305) 899-5000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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Title of Each Class Name of Each Exchange on Which Registered
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NONE NOT APPLICABLE
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Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.001 PER SHARE
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of March 24, 2000, the aggregate market value of voting common stock
held by non-affiliates of the registrant, based upon the last reported sale
price for the registrant's Common Stock on the New York Stock Exchange on such
date, as reported in The Wall Street Journal, was $138,717,861 (calculated by
excluding shares owned beneficially by directors and executive officers as a
group from total outstanding shares solely for the purpose of this response).
The number of shares of the registrant's Common Stock outstanding as of the
close of business on March 24, 2000 was 56,371,045.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the definitive Proxy Statement of UniCapital
Corporation to be used in connection with the 2000 Annual Meeting of
Stockholders (the "Proxy Statement") are incorporated by reference into Part III
of this Annual Report on Form 10-K to the extent provided herein. Except as
specifically incorporated by reference herein, the Proxy Statement is not to be
deemed filed as part of this Annual Report on Form 10-K.
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PART I
ITEM 1. BUSINESS
Certain statements contained in this Annual Report on Form 10-K ("Form
10-K") constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements generally can be
identified by the use of forward-looking terminology such as "may," "will,"
"intend," "estimate," "anticipate," "expect," "believe," or "continue" or the
negative thereof or variations thereon or similar terminology. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company, or industry results, to be materially different from possible
future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following:
general economic and business conditions; changes in interest rates; changes in
asset values; inflation or deflation; changes in markets for financial products,
including securitized assets; changes in political, social and economic
conditions and local regulations; changes in, or failure to comply with,
government regulations; demographic changes; changes in the mix of sources of
revenues; competition; changes in business strategy or development plans;
availability of capital sufficient to meet the Company's need for capital or on
terms or at times acceptable to the Company; availability of qualified
personnel; and various other factors referenced in this Form 10-K. The Company
assumes no obligation to update any forward-looking statements contained in this
Form 10-K to reflect actual results or changes in the factors affecting such
forward-looking statements.
Forward-looking statements contained in this Form 10-K address, among other
things: (a) expectations regarding the availability and cost of capital; (b) the
ability of the Company to effect securitizations at any time or from time to
time; (c) the availability of trained management personnel at the operating
subsidiary level; (d) expectations regarding the Company's integration of
acquired businesses; (e) the availability of resources to carry out the
Company's business strategy; (f) expectations regarding the market for aircraft
engines; (g) expectations regarding the Company's intention to retain a greater
portion of the leases that it originates or acquires for its own portfolio; (h)
expectations regarding the Company's ability to turn over aircraft and aircraft
engine assets and thereby improve its liquidity and long-term profitability; (i)
expectations regarding the implementation of the Company's expense reduction
program and the realization of savings therefrom in 2000 and thereafter; and (j)
expectations regarding the Company's acquisition strategy. See "Factors that May
Affect Future Operating Results" beginning on page 9 for a more detailed
discussion of these and other factors which could cause actual results to differ
materially from those expressed or implied by any forward-looking statements.
OVERVIEW
UniCapital was founded in October 1997 as a Delaware corporation. We
commenced operations in May 1998 in conjunction with the consummation of our
initial public offering and the acquisition of twelve equipment leasing,
specialty finance and related businesses. In June, July and August 1998, we
completed the acquisition of five additional equipment leasing, specialty
finance and related businesses. We engage in asset-based financing in
strategically diverse sectors of the equipment leasing industry. We originate,
acquire, sell and service equipment leases and arrange structured financings in
the big ticket, computer and
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telecommunications equipment, middle market and small ticket areas of the
equipment leasing and specialty finance industry. We also provide lease
administration and processing services for many of the leases that we originate.
Our leases and structured financing arrangements cover a broad range of
equipment, including aircraft and aircraft engines, computer and
telecommunications equipment, construction and manufacturing equipment, office
equipment, tractor trailers, printing equipment, car washes and petroleum retail
equipment and vending machines. We generally fund the acquisition or origination
of leases through warehouse credit facilities or through recourse or
non-recourse financing, and we either retain the leases for our own account or
sell them to third parties. We use the term "leases" to refer to leases and
finance contracts.
For the year ending December 31, 1999, we had three reportable operating
segments, which are based primarily on the nature of the products and services
provided by each segment. These operating segments are:
- Big Ticket Division;
- Technology and Finance Group; and
- Business Credit Group.
We also have a Corporate Division, which consists of our corporate
operations and our lease administration and servicing operations. For
information about each segment's revenues, expenses and income, see Note 17 to
our consolidated financial statements for the year ended December 31, 1999,
included elsewhere in this Form 10-K.
BIG TICKET DIVISION. Big ticket leases, which are customized financing
transactions, are typically for equipment with a purchase price in excess of
$5.0 million, such as aircraft, aircraft engines and other transportation
equipment. Our Big Ticket Division includes the UniCapital Air Group and the
UniCapital Aircraft Engine Group. The UniCapital Rail Group, which made an
insignificant contribution to the Company's results of operations in 1999, was
discontinued in December of 1999.
UniCapital Air Group provides customized lease financing for commercial
passenger and cargo jet aircraft and offers brokerage, advisory and remarketing
services to domestic and foreign commercial airlines, aircraft lessors and
institutional investors. As a fully integrated commercial jet aircraft operating
lessor, UAG is an active participant in the global market for commercial
aircraft trading -- purchasing and trading commercial aircraft as a principal or
broker for aircraft that are on-lease or off-lease. Specializing in 6- to
12-year-old commercial jet aircraft, UniCapital Air Group's financing
professionals have more than 50 years of combined experience and have completed
nearly $5.0 billion in financing transactions.
UniCapital Aircraft Engine Group purchases, sells and leases commercial
aircraft engines, manages the engine refurbishment process and provides a broad
range of other engine management services to airlines, financial institutions
and other lessors. Engine sales and leasing represent the largest part of the
business activity and have historically accounted for the majority of the Engine
Group's revenues. Engine sales are typically made to those aircraft operators
and lessors with engines in need of repair when those aircraft operators and
lessors do not have the necessary technical expertise to manage the repair
process properly, cannot make such repairs economically, or cannot afford to
wait until the repairs are made. UniCapital
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Aircraft Engine Group's management team has more than 45 years of combined
experience in the aircraft engine business.
TECHNOLOGY AND FINANCE GROUP. Our Technology and Finance Group includes
middle market leasing and computer and telecommunications equipment leasing.
Middle market leases generally include those leases for equipment with a
purchase price ranging from $250,000 to $5.0 million. We provide lease and
secured financing for a variety of equipment, including computer, communication
and electronic equipment, printing presses and other manufacturing equipment, to
businesses throughout the United States and Canada. Our computer and
telecommunications leasing operations provide lease financing, and other value-
added services, such as installation and configuration, for computer and
telecommunications equipment, including leasing for mainframe, mid-range and
personal computers, workstations, servers, telephone systems, switches,
networks, peripherals and related high-technology equipment to Fortune 1000
companies and other large and middle market companies, throughout the United
States and Canada.
Our Technology and Finance Group also arranges structured financing
primarily for community-based mental health/mental retardation facilities and
correctional facilities. Our subsidiary, UniCapital Securities Corp., formerly
known as Municipal Capital Markets Group, Inc., is a registered broker-dealer
and places the bonds and leases that it arranges primarily with institutional
investors.
BUSINESS CREDIT GROUP. Our Business Credit Group provides small ticket
lease financing, which generally includes those leases for equipment with a
purchase price of less than $250,000. We provide lease financing for a variety
of equipment, including heavy machinery, computer systems and related office
technology equipment, petroleum retail equipment, including car washes, fuel
dispensers and convenience store operating equipment, and vending equipment, to
lessees in a variety of businesses throughout the United States.
Our Business Credit Group also provides online equipment financing and
financial planning services for small and mid-sized businesses through our
business-to-business Website known as LeaseAdvisor.com.
INDUSTRY OVERVIEW
The equipment leasing and specialty finance industry in the United States
has grown consistently during the last decade and includes a wide range of
entities that provide funding for the purchase or use of equipment. The
equipment leasing industry in the United States is a significant factor in
financing capital expenditures of businesses. According to estimates of the
Equipment Leasing Association (the "ELA"), from 1998 to 1999, equipment placed
on lease grew by approximately $36 billion from $184 billion to an estimated
$220 billion. The 1999 investment in equipment placed on lease represents an
increase of approximately 20% from comparable 1998 data. The ELA estimates that
31% of all U.S. businesses currently use leasing or financing to acquire capital
assets.
We believe that the equipment leasing industry is growing in part due to
(i) the consolidation of the banking industry, which has eliminated many of the
smaller community banks that traditionally provided equipment financing for
small to mid-size businesses, (ii) stricter lending requirements imposed by
commercial banks, (iii) a trend toward rapid credit approvals at the point of
sale made possible by improved technology, and (iv) the adoption of
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accounting pronouncements concerning the accounting treatment of transactions
with captive finance company subsidiaries, which has caused a number of
manufacturers to eliminate their finance companies, resulting in an increased
demand for independent financing. According to the ELA, two primary factors
contributing to the favorable funding environment experienced by the commercial
leasing industry are a better understanding of the leasing business by bank
regulators and a growing understanding of the leasing industry by the investment
community and the rating agencies.
1999 ACQUISITIONS
In 1999, we acquired the following significant lease portfolios:
On May 5, 1999, the Company acquired, through its wholly-owned subsidiary
UniCapital Air Group, Inc., the equity interest in a portfolio of 36 commercial
aircraft, with an appraised fair value of approximately $1.32 billion, from GE
Capital Aviation Services, Inc., a division of General Electric Capital
Corporation. The acquisition closed simultaneously with a securitization,
entitled Aircraft Finance Trust, which provided non-recourse financing at a
weighted average interest rate of 6.69%. On September 30, 1999, the Company sold
30% of its equity interest in Aircraft Finance Trust. As of September 30, 1999,
we entered into an agreement to sell up to an additional 21% of our equity
interest in Aircraft Finance Trust. On October 29, 1999, December 14, 1999,
December 15, 1999 and December 30, 1999, the Company sold 5%, 2.5%, 2.5% and
9.9% respectively, of its interest in Aircraft Finance Trust pursuant to this
agreement.
On December 21, 1999, the Company acquired, through its wholly-owned
subsidiary UniCapital Air Group, Inc., eleven Boeing 757-200ER commercial
aircraft from Lufttransport Unternehman (LTU International Airways) and leased
back eight of the aircraft to LTU for varying lease terms. UniCapital
simultaneously sold the three remaining aircraft to an unrelated commercial
aircraft lessor.
We did not acquire any equipment leasing companies in 1999, and we do not
expect that acquisitions of equipment leasing companies will contribute to our
growth in 2000.
OTHER 1999 DEVELOPMENTS
On April 26, 1999, the Company announced that it will generally retain
on-balance sheet leases transferred to our commercial paper credit facility, as
well as leases to be transferred in connection with possible future
securitizations. We expect to recognize income over the term of these leases as
finance income, as these transfers will not be structured to meet the criteria
to be accounted for as sales. In general, the leases transferred into our
commercial paper facility, and those expected to be transferred in connection
with future securitizations, are generated by our Technology and Finance Group
and our Business Credit Group.
On September 9, 1999, the Company completed its first securitization
transaction involving the issuance of $365.8 million of Equipment Contract
Backed Notes originated primarily by the Business Credit Group and the
Technology and Finance Group. In connection with this transaction, four tranches
of Class A Notes were sold to accredited investors under Rule 144A. The Class
A-1 Notes had short term ratings of A-1+ by Standard & Poor's, P-1 by Moody's
Investor Services, Inc., F1+/AAA by Fitch IBCA and D-1+ by Duff & Phelps Credit
Rating Co. The Class A-2 through A-4 Notes were rated AAA by Standard & Poor's,
Aaa by
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Moody's Investor Services, Inc., AAA by Duff & Phelps Credit Rating Co. and AAA
by Fitch IBCA. The Class A Notes benefit from a surety bond issued by Ambac
Assurance Corp. The Class B Notes, rated BBB, and Class C Notes, rated BB, by
Duff & Phelps Credit Rating Co. and Fitch IBCA, were retained by the Company. We
financed the Class B Notes pursuant to short-term facilities.
During 1999, the Company renewed its Purchase Facility, Financing Facility
and Aircraft Facility and obtained additional sources of funding. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Credit Facilities."
PRODUCTS AND SERVICES
We provide lease financing and related services to a broad range of
commercial customers. We originate direct financing leases, sales-type leases
and operating leases. In addition to financing equipment through leases, we sell
new equipment and provide lease-and equipment-related services, such as
servicing, brokering and remarketing, which is the sale or re-lease of equipment
that has come off lease.
DIRECT FINANCING LEASES. Direct financing leases transfer substantially all
of the benefits and risks of equipment ownership to the lessees. A lease is
classified as a direct financing lease if the collection of the minimum lease
payments is reasonably predictable, no significant uncertainties exist relating
to unreimbursable costs yet to be incurred by the lessor under the lease and the
lease meets one of the following criteria: (i) ownership of the property is
transferred to the lessee by the end of the lease term; (ii) the lease contains
a bargain purchase option; (iii) the term of the lease equals 75% or more of the
estimated economic life of the leased equipment; or (iv) the present value (at
the inception of the lease) of the minimum lease payments equals or exceeds 90%
of the fair value of the leased equipment.
SALES-TYPE LEASES. Sales-type leases, like direct financing leases,
transfer substantially all of the benefits and risks of equipment ownership to
the lessees. However, sales-type leases include profit at lease inception to the
extent the fair value of the equipment exceeds the carrying value. A lease is
classified as a sales-type lease if it includes such a profit at lease inception
and if the collection of the minimum lease payments is reasonably predictable,
no significant uncertainties exist relating to unreimbursable costs yet to be
incurred by the lessor under the lease and the lease meets one of the following
criteria: (i) ownership of the property is transferred to the lessee by the end
of the lease term; (ii) the lease contains a bargain purchase option; (iii) the
term of the lease equals 75% or more of the estimated economic life of the
leased equipment; or (iv) the present value (at the inception of the lease) of
the minimum lease payments equals or exceeds 90% of the fair value of the leased
equipment.
OPERATING LEASES. All lease contracts which do not meet the criteria of
direct financing leases or sales-type leases are accounted for as operating
leases.
In general, our lease transactions are net leases with a specified
noncancelable lease term. A net lease requires the lessee to maintain the
equipment, pay all property, sales and use taxes and insure the equipment
against casualty loss. The leases generally include a "hell-or-high-water"
provision which requires the lessee to make all lease payments under all
circumstances.
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RESIDUAL INTEREST IN EQUIPMENT
We retain a residual interest in the equipment covered by many of our
leases. We generally seek to determine the best remarketing plan for such
equipment prior to the expiration of the lease. In many cases, the remarketing
plan provides for the continuation of the lease or the negotiated sale of the
underlying equipment. In connection with our remarketing activities, we may
negotiate sales of the equipment prior to lease termination.
CREDIT POLICIES AND PROCEDURES
We employ underwriting policies and procedures that are intended to manage
delinquency risk and credit losses. We have a chief credit policy officer and a
corporate credit committee that have established overall corporate credit
policies and individual guidelines tailored to each type of credit transaction
or financing program that we provide. These guidelines include varying credit
risk acceptance requirements based upon factors such as the type of asset, the
creditworthiness of the lessee and the anticipated return on the transaction.
The chief credit policy officer periodically conducts field credit reviews at
each field originating unit, which include reviews of samples of the credit
decisions made by credit officers in the field to ensure compliance with
corporate credit guidelines. During the field credit reviews, as well as
periodically during the year, we assess the collectibility of our lease
portfolio. The chief credit policy officer and senior credit and risk managers
at our Miami headquarters office also make credit decisions for transactions
which fall outside of the credit guidelines or are in excess of delegated field
credit approval authorities.
The credit approval process generally includes a review of financial
statements, an assessment of the proposed transaction's compliance with general
credit risk acceptance guidelines, and a credit agency report. Depending upon
the size and nature of the proposed transaction and the lessee's business, trade
and credit references will be checked and the personal credit records of the
principals of the prospective business customer will be reviewed. We use a
credit scoring model for approving, screening or declining credits on small
ticket leases. Proposed transactions which are not within the delegated credit
authority or established credit parameters must be reviewed by the chief credit
policy officer, his delegates or the corporate credit committee. For small
ticket leases under $75,000, our goal is to make rapid credit decisions, based
upon an automated credit scoring, screening and approval system. For middle
market leases, our goal is to maintain credit policies and procedures that
enable us to make credit decisions within 48 hours from receipt of the financing
application and associated information.
During 1999, we announced our intention to retain on balance sheet a
greater portion of the leases that we originate, rather than transfer such
leases in transactions that meet the criteria to be accounted for as a sale. As
a result of this change in our business strategy, we are also retaining the
credit risk associated with the retained leases resulting from potential lessee
defaults. We expect that the majority of the financing that we obtain to fund
these leases will be non-recourse or limited recourse. In a non-recourse
financing, our lenders assume a significant portion of the underlying credit
risk associated with lessee defaults in connection with the contractual lease
payments. However, we retain credit risk to the extent that we remain the owner
of the underlying equipment subject to the lease, and retain a residual position
in that equipment. Such equipment is generally pledged as collateral to our
lenders and in the event of a default in a non-recourse financing, our lenders
may proceed to
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foreclose upon the collateral, and if liquidation thereof is insufficient to
cover such lender's indebtedness, we would lose our residual investment.
We rely on the credit policies and procedures discussed above to assist us
in our credit risk management activities. Our allowance for credit losses is
established and maintained at a balance that reflects our estimate of credit
losses related to specifically identified exposures as well as probable
exposures inherent in the remainder of our portfolio. We record periodic
provisions to the allowance to maintain the allowance at the level that best
reflects our estimate of such losses. We utilize historical loss trends, current
trends in lease delinquencies and charge-offs, lease administration efforts and
resolutions as well as management reports including watch lists and past due
reports to assess the overall quality of our portfolio and to determine the
periodic adequacy of our allowance for credit losses. We believe that our
policies and procedures discussed above are adequate to allow us to manage and
maintain our asset quality in accordance with our criteria and to estimate
losses inherent in our portfolio. We believe that these policies and procedures
also provide us with timely information of any changes in our actual experience
as compared to our estimates. Our actual loss experience has not differed
significantly from our estimates. Any future provisions for credit losses will
be dependent upon our estimates of losses that may arise in future periods.
SERVICING, COLLECTION AND ADMINISTRATION
We provide servicing, collection and administration services for certain of
the leases we originate. We have the capability to provide transaction
processing and management services for each lease contract, from the time it is
originated through its termination, including set-up, billing, cash posting,
customer service, accounting, collection, tax compliance and asset management.
Our service offerings include lien searches, UCC filings, asset tracking,
insurance tracking, preparation of sales, use and property tax returns,
invoicing and collections.
SALES AND MARKETING
We employ approximately 273 sales representatives to originate leases.
Sales and marketing efforts are primarily conducted in the field on a one-on-one
basis with established accounts, through equipment manufacturers, brokers and
vendors and also through advertising, participation in trade associations and
telesales. Most of the salespersons are compensated on a commission basis or
through other incentive-based compensation programs.
PORTFOLIO ACQUISITIONS
From time to time, we acquire portfolios of equipment leases from other
finance companies. Prior to the acquisition of a portfolio of leases, we perform
due diligence procedures, including reviewing a sample of the lease files
included in the portfolio, loss and delinquency experience and other factors.
COMPETITION
The financing of equipment is highly competitive. We compete for customers
with a number of national, regional and local lease and finance companies. In
addition, our competitors include those equipment manufacturers that finance the
sale or lease of their products themselves and other traditional types of
financial services companies, such as
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commercial banks and savings and loan associations, all of which provide
financing for the purchase of equipment. Many of our existing and potential
competitors possess substantially greater financial, marketing and operational
resources and include many larger, more established companies that may have a
lower cost of funds and greater access to capital markets and other funding
sources than we have.
Competition in the equipment lease and specialty finance market is based
primarily on lease rates, terms, reliability in meeting commitments, customer
service and market presence. We will continue to encounter significant
competition, and we may not be able to compete effectively in our chosen market
segments or any new market segments that we enter.
EMPLOYEES
As of December 31, 1999, we had 753 full-time employees, including
approximately 273 who were engaged in sales and marketing and 58 who were
engaged in credit and collection. We believe that our relationships with all of
our employees are good.
EXECUTIVE OFFICERS
The following table sets forth certain information regarding our executive
officers.
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NAME AGE POSITION WITH THE COMPANY
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Robert J. New 35 Chairman and Chief Executive Officer
Stuart L. Cauff 53 President and a Director
Edward A. Jaeckel 60 Chief Operating Officer and Chief Credit Policy Officer
Bruce E. Kropschot 59 Vice Chairman -- Mergers & Acquisitions
Martin Kalb 56 Executive Vice President and General Counsel
Steven E. Hirsch 45 Executive Vice President -- Big Ticket Division
John L. Guadagno, Jr. 52 Executive Vice President
Jonathan New 39 Chief Financial Officer
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ROBERT J. NEW co-founded UniCapital in October 1997 and has since served as
Chairman and Chief Executive Officer. From July 1996 until December 1997, Mr.
New served as an operating company president of and as acquisition consultant to
U.S. Office Products Company, a publicly-held supplier of a broad range of
office products and business services, where Mr. New participated in over 40
acquisitions. From March 1990 until August 1997, Mr. New served as Chief
Executive Officer of Prudential of Florida Leasing, Inc., a small ticket leasing
company. From December 1989 through July 1996, Mr. New served as President and
Chief Executive Officer of Prudential of Florida, Inc., an office services
company. Robert J. New is the brother of Jonathan New.
STUART L. CAUFF has served as President of the Company since March 1999, as
Chairman of UniCapital Air Group since December 1998, as Chief Executive Officer
of the Big Ticket Division since May 1998 and as a Director of the Company since
July 1998. Mr. Cauff served as President of Cauff Lippman Aviation, Inc. from
1981 until May 1998.
EDWARD A. JAECKEL has served as Chief Operating Officer since March 2000
and as Chief Credit Policy Officer since May 1998. Mr. Jaeckel served as Interim
Chief Operating Officer from July 1999 to March 2000 and as Executive Vice
President from February 1999 until
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March 2000. From March 1998 to May 1998, Mr. Jaeckel served as a consultant to
UniCapital providing services consistent with the duties and responsibilities of
Chief Credit Policy Officer of UniCapital. From 1991 until March 1998, Mr.
Jaeckel served as Vice President and Chief Credit Officer for Bank of New York
Leasing Corporation, the fourth largest bank-owned leasing company in the United
States, where he was responsible for developing, implementing and supervising
credit policies and procedures.
BRUCE E. KROPSCHOT has served as Vice Chairman -- Mergers & Acquisitions
since May 1998 and as President of the Business Credit Group since May 1999.
From November 1997 to May 1998, Mr. Kropschot served as a consultant to
UniCapital providing services consistent with the duties and responsibilities of
Vice Chairman -- Mergers & Acquisitions. From 1987 through December 1997, he was
founder and President of Kropschot Financial Services, a merger and acquisition
advisor to equipment leasing companies, which has arranged for the sale of over
100 equipment leasing and specialty finance businesses. From 1980 to 1986, Mr.
Kropschot served as President and Vice Chairman of Master Lease Corporation,
which is now known as DeLage Landen Finance, Inc.
MARTIN KALB has served as Executive Vice President and General Counsel
since May 1998. From October 1997 to May 1998, Mr. Kalb served as a consultant
to UniCapital providing services consistent with the duties and responsibilities
of Executive Vice President and General Counsel of UniCapital. From 1987 until
November 1997, he was a senior partner in the Miami, Florida office of Greenberg
Traurig Hoffman Lipoff Rosen & Quentel, P.A., where his practice focused upon
mergers and acquisitions, income taxation and estate planning.
STEVEN E. HIRSCH served as Executive Vice President -- Structured Finance
from May 1998 to December 1999. Mr. Hirsch currently serves as Executive Vice
President of the Big Ticket Division. From January 1998 to May 1998, Mr. Hirsch
served as a consultant to UniCapital providing services consistent with the
duties and responsibilities of Executive Vice President -- Structured Finance of
UniCapital. From 1987 until January 1998, Mr. Hirsch was associated with Morgan
Stanley & Co. Incorporated, most recently as the Head of the Leasing Products
Group. From 1984 until 1987 Mr. Hirsch served as Senior Vice President of Matrix
Leasing International, Inc., an equipment leasing brokerage and packaging
concern and a wholly-owned subsidiary of First Bank Systems.
JOHN L. GUADAGNO, JR. has served as Executive Vice President since August
1999. From January 1995 until July 1999, he served as President and Chief
Executive Officer of Phoenixcor, Inc., a subsidiary of Sumitomo Corporation of
America. From January 1992 to October 1994, he served as Executive Vice
President and Chief Operating Officer of MetLife Investment Management
Corporation. Mr. Guadagno is a certified public accountant.
JONATHAN NEW has served as the Chief Financial Officer of UniCapital since
October 1997. Mr. New served as Vice President and Controller of Delta Financial
Corporation, a securitizing mortgage bank, from August 1995 until December 1997.
From March 1993 until August 1995, Mr. New was the Controller of RAI Credit
Corporation, a securitizing private label credit card and data processing
business. Jonathan New is the brother of Robert J. New.
FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS
Our future operating results may be affected by a number of factors,
including the matters discussed below.
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ABSENCE OF COMBINED OPERATING HISTORY. UniCapital was founded in October
1997. We have conducted operations since the consummation of our initial public
offering and the acquisition of twelve equipment leasing, specialty finance and
related businesses in May 1998. Prior to our acquisition of these businesses and
the other businesses we have acquired, each of the businesses had been operating
independently. We may not be able to integrate these businesses successfully on
an economic basis. Until we finalize the establishment of centralized
accounting, finance and other administrative systems, we will rely upon the
separate systems of these businesses. Our success will depend, in part, upon our
ability to centralize these functions effectively and to integrate all of the
businesses that we acquire.
THERE ARE RISKS TO OUR INTERNAL GROWTH AND OPERATING STRATEGIES. A key
element of our business strategy is to improve the profitability of our
operating subsidiaries and any other businesses that we acquire. Our ability to
improve profitability depends upon various factors, including:
- our cost of and ability to obtain capital;
- our ability to achieve operating efficiencies;
- the level of continued demand by businesses for lease financing;
- our ability to expand the range of products and services that we offer;
and
- our ability to enter new markets successfully.
Many of these factors are beyond our control, and our operating strategies
may not be successful. Moreover, we may be unable to, in whole or in part,
generate adequate cash flow or obtain sufficient financing or capital to fund
our operations and to support our internal growth.
In addition, our operating strategy permits much of the decision making for
each operating subsidiary to be made by management at the operating subsidiary.
If we do not implement proper overall business controls, this decentralized
operating strategy could result in inconsistent operating and financial
practices at the operating subsidiaries, which could materially and adversely
affect our overall profitability, and ultimately our business, financial
condition and results of operations.
WE MIGHT NOT COMPLETE ADDITIONAL SECURITIZATION TRANSACTIONS. We intend to
finance a significant portion of the equipment leases that we acquire and
originate through the issuance of securities backed by such leases in
securitization transactions or through other structured finance products. In a
securitization transaction, we would pledge a pool of leases to one or more
wholly-owned, special purpose subsidiaries. The special purpose subsidiary,
either directly or through a trust, issues beneficial interests in the leases in
the form of senior and subordinated securities and sells such securities through
public offerings and private placement transactions.
We intend to utilize securitizations for refinancing of amounts outstanding
under our warehouse loan facilities. To date, we have completed two
securitization transactions. To the extent that any future securitization
transaction in which we engage is treated as a financing transaction for
accounting purposes, the consummation of the securitization would not
10
<PAGE> 12
generate revenues. Factors that will affect our ability to complete
securitization transactions include:
- conditions in the securities markets generally;
- conditions in the asset-backed securities markets;
- the credit quality and performance of our lease portfolio;
- whether our leases comply with the eligibility requirements established
in connection with the securitization transaction;
- whether we can obtain third-party credit enhancement; and
- the absence of any material downgrading or withdrawal of ratings given to
securities previously issued in the Company's securitization
transactions.
Any substantial reduction in the availability of the securitization market
for our leases or any adverse change in the terms of such securitizations could
have a material adverse effect on our business, financial condition and results
of operations.
WE MIGHT NOT BE ABLE TO CONTINUE TO INCREASE OUR VOLUME OF RECEIVABLES. A
component of our internal growth strategy is to retain for our own portfolio a
greater portion of the leases that we acquire or originate. Our ability to
sustain continued growth is dependent upon our capacity to attract, evaluate,
finance and service increasing volumes of leases of suitable yield and credit
quality. If we do not market our products effectively, maintain our portfolio
quality, service our leases effectively or obtain institutional financing in
satisfactory amounts and at acceptable rates, we will not be able to increase
our volume of leases, which would have a material adverse effect on our
business, financial condition and results of operations.
WE WILL NEED ADDITIONAL CAPITAL. We expect to fund the majority of the
leases that we originate or acquire through credit facilities. The credit
facilities that we use to finance leases and leased equipment included in our
Senior Credit Facilities, as well as certain of our other loan facilities, have
364-day to 3-year terms, some of which expire in August of 2000. We will need to
renew or replace these loan facilities. In addition, to the extent that we
retain for our own portfolio a greater portion of the leases that we acquire or
originate, we may require additional sources of financing. We may require
additional capital to fund our operations, which may not be available, or may
not be available on terms or in amounts that are acceptable to us. If we cannot
renew or replace any of our loan facilities or obtain additional capital when we
need it, our business, financial condition and results of operations will be
materially and adversely affected.
OUR CREDIT FACILITIES LIMIT OUR ABILITY TO TAKE CERTAIN ACTIONS. Our Senior
Credit Facilities:
- require us to pledge substantially all of our assets, including the stock
and assets of the operating subsidiaries, as security for borrowings
under the facilities;
- contain restrictions upon our ability to (among other things) incur
additional indebtedness, issue preferred stock, incur liens, pay
dividends or make certain other restricted payments, consummate certain
asset sales, enter into certain transactions with affiliates, merge or
consolidate with any other person without the consent of the lenders or
sell,
11
<PAGE> 13
assign, transfer, lease, convey or otherwise dispose of all or
substantially all of our assets; and
- require us to maintain specified financial ratios and to satisfy certain
financial condition tests. Our ability to meet those financial ratios and
financial condition tests can be affected by events beyond our control,
and we may not be able to meet those tests.
If an event of default occurs under any of the Senior Credit Facilities,
our lenders could declare all amounts outstanding, together with accrued
interest, to be immediately due and payable. If we could not repay these
amounts, our lenders could proceed against the collateral.
WE ARE SUBJECT TO INTEREST RATE RISKS. Our profitability is determined in
part by the difference between our cost of funds and the yield we obtain on the
leases that we originate or acquire. These leases generally are non-cancelable
and require payments to be made by the lessee for specified terms at fixed rates
based on interest rates prevailing in the market at the time the lease is
approved. Until we either sell or securitize the leases, we fund these leases
under warehouse or other loan facilities or from working capital. If interest
rates increase on our variable rate debt, and we cannot sell or securitize the
leases that we are holding, our operating margins could be adversely affected.
In addition, if interest rates increase and we increase the interest rate we
charge to our customers, demand for our leases could decline. To mitigate these
risks, we hedge certain risks of interest rate increases. We do not hedge all
interest rate risks. Hedging activities limit our ability to participate in the
benefits of lower interest rates with respect to the hedged portion of the debt.
In addition, hedging does not protect us from all interest rate-related risks.
WE ARE DEPENDENT ON THE CREDITWORTHINESS OF LESSEES. We acquire and
originate equipment leases with a wide range of purchase prices, many of which
involve small and mid-size commercial businesses located throughout the United
States and Canada, or large cyclical businesses such as airlines with operations
in different regions around the world. Small business leases and leases with
highly cyclical businesses generally entail a greater risk of non-performance
and higher delinquencies and losses than leases entered into with larger, more
creditworthy lessees or lessees in less cyclical businesses. If our lessees do
not comply with the terms of the leases, those leases cannot serve as collateral
under our warehouse facilities and in any securitizations that we undertake,
which may have a material adverse effect on our liquidity. Additionally, if we
experience delinquencies and defaults in excess of the levels we estimate when
determining allowances for credit losses, in addition to the adverse effects on
our profitability, we might not be able to obtain financing or complete any
additional securitization transactions, which could have a material adverse
effect on our business, financial condition and results of operations.
RISKS ASSOCIATED WITH ACQUISITION STRATEGY. We intend to continue to make
selective acquisitions of possibly lease portfolios, equipment leasing,
specialty finance and related businesses. This strategy requires that we review
and potentially reorganize acquired business operations, corporate
infrastructure and systems and financial controls. This strategy may not be
successful because, among other things:
- unforeseen expenses, difficulties, complications and delays frequently
encountered in connection with the rapid expansion of operations could
inhibit our growth;
12
<PAGE> 14
- we may be unable to maintain or accelerate our growth or to anticipate
all of the changing demands that expanding operations will impose on
management personnel, operational and management information systems, and
financial systems;
- we may not be able to identify, acquire or manage profitably additional
businesses or integrate them without substantial costs, delays or other
operational or financial difficulties; or
- although we intend to finance future acquisitions by using shares of our
common stock and cash, if we decide not to use our common stock because
we believe its market price to be too low, or if potential acquisition
candidates are unwilling to accept our common stock, we may not have, or
be able to obtain, sufficient cash resources to complete any
acquisitions.
If our acquisition strategy is not successful, our business, financial
condition and results of operations could be materially and adversely affected.
RISK OF ECONOMIC DOWNTURN. An economic downturn could result in a decline
in the demand for some of the types of equipment which we finance, which could
lead to a decline in originations of leases. Such a downturn could also
adversely affect the Company's ability to obtain capital to fund lease
originations or to complete any additional securitizations. In addition, such a
downturn could result in an increase in delinquencies and defaults by lessees,
which could have an adverse effect on our profitability and our ability to sell
or securitize leases. Moreover, an economic downturn, either generally or within
a specific industry, could have a material adverse effect on the value of the
equipment underlying the leases, which could in turn affect our ability to
realize our residual interest in such equipment. These results could have a
material adverse effect on our business, financial condition and results of
operations.
FLUCTUATIONS IN QUARTERLY RESULTS. We could experience fluctuations in
quarterly operating results due to a number of factors including, among others,
the consummation of a transaction in a particular calendar quarter (or the
failure to complete such a transaction), variations in the volume of leases
originated and variations in interest rates. In addition, certain of our
operating subsidiaries may from time to time experience relatively large
transactions for one or a few customers or relatively large sales of equipment,
which may not recur or may not be followed by correspondingly large transactions
in subsequent periods. Moreover, to the extent that we retain for our own
portfolio a greater portion of the leases that we acquire or originate and the
equipment that we acquire, we will not generate revenue from gain on sale for
the retained leases or revenue from sales of the retained equipment. As a result
of these fluctuations, results for any one quarter, including historical
results, should not be relied upon as being indicative of performance in future
quarters.
COMPETITION. The financing of equipment is highly competitive. We compete
for customers with:
- national, regional and local finance companies;
- equipment manufacturers that finance the sale or lease of their products
themselves; and
13
<PAGE> 15
- other traditional types of financial services companies, such as
commercial banks and savings and loan associations, all of which provide
financing for the purchase of equipment.
Many of our existing and potential competitors possess substantially
greater financial, marketing and operational resources and include many larger,
more established companies that may have a lower cost of funds and greater
access to capital markets and other funding sources than we have.
RESIDUAL VALUE RISK. We retain a residual interest in the equipment covered
by certain leases. We estimate what the fair value of the equipment will be at
the end of the contract term of the lease and reflect that residual value, if
any, as an asset on our balance sheet. Our results of operations depend, to some
degree, upon our ability to realize the residual value of the equipment. Our
ability to realize the residual values depends upon many factors, several of
which are not within our control, including:
- general market conditions at the time of expiration of the lease;
- specific market conditions for that type of equipment at the time of
expiration of the lease;
- the condition of the equipment;
- whether the equipment is obsolete;
- the cost of comparable new equipment; and
- the effects of any additional or amended government regulations.
If, upon the expiration of a lease, we sell the underlying equipment and the
amount realized is less than the recorded value of our residual interest in that
equipment, we will recognize a loss.
OUR BUSINESS-TO-BUSINESS E-COMMERCE INITIATIVES MAY NOT BE SUCCESSFUL. We
intend to expand our lease origination capabilities by providing equipment
financing and financial planning services online as part of our
business-to-business e-commerce initiatives. These initiatives, as well as the
equipment financing and financial planning services we offer online, are still
in their formative stages. We may be unable to increase our lease originations
through our business-to-business e-commerce initiatives or to anticipate all of
the changing demands that these initiatives may impose on our management
personnel, operational and management information systems, financial systems,
credit facilities and working capital. In addition, we may not be able to
implement our business-to-business e-commerce initiatives without substantial
costs, delays or other operational or financial difficulties. If we are unable
to implement these initiatives as planned and without encountering unforeseen
expenses, difficulties, complications and delays, our business-to-business
e-commerce initiatives may not be successful and our business, financial
condition and results of operations may be materially and adversely affected.
FAILURES OF HARDWARE SYSTEMS OR SOFTWARE COULD UNDERMINE OUR CUSTOMERS'
CONFIDENCE IN OUR RELIABILITY. Any interruptions in our online equipment
financing and financial planning services may undermine existing and potential
customers' confidence in the reliability of our business. Providing online
equipment financing services and financial planning models requires the
successful technical operation of an entire chain of software, hardware and
telecommuni-
14
<PAGE> 16
cations equipment. This chain includes the LeasePak, System One and Oracle
software which we license from third parties, our network servers, operating
systems, databases and networking equipment and the personal computers and
network connections of existing and potential customers. A failure of any
element in this chain can partially or completely disrupt an online application
for equipment financing. Some of the elements set forth above are not within our
control, such as Internet connectivity and software, hardware and
telecommunications equipment we purchase or license from others. In addition,
hardware and software are potentially vulnerable to interruption from power
failures, telecommunications outages, network service outages and disruptions,
natural disasters, and vandalism and other misconduct.
IF WE DO NOT ADEQUATELY MAINTAIN OUR CUSTOMERS' CONFIDENTIAL INFORMATION,
OUR REPUTATION COULD BE HARMED AND WE COULD INCUR LEGAL LIABILITY. Any breach of
security relating to our customers' confidential information could result in
legal liability for us and a reduction in use of our online equipment financing
and financial planning services, which could harm our business. We currently
have practices and procedures in place to ensure the confidentiality of our
customers' information. However, our security procedures to protect against the
risk of inadvertent disclosure or intentional breaches of security might fail to
protect information that we are obligated to keep confidential. We may not be
successful in adopting more effective systems for maintaining confidential
information, so our exposure to the risk of disclosure of the confidential
information of others may grow with any increase in the number of visitors to
our Web sites. If we fail to maintain our customers' confidential information
adequately, some of our customers could end their business relationships with us
and we could be subject to legal liability.
OUR BUSINESS-TO-BUSINESS E-COMMERCE INITIATIVES WILL SUFFER IF OUR EXISTING
AND POTENTIAL CUSTOMERS DO NOT ACCEPT THE INTERNET AS A MEANS OF APPLYING FOR
AND SECURING EQUIPMENT FINANCING. Our online equipment financing and financial
planning services depend on the increased acceptance and use of the Internet as
a medium of commerce. Our business-to-business e-commerce initiatives will
suffer if potential clients do not accept the Internet as a means of applying
for and securing equipment financing. Business-to-business e-commerce is a new
and emerging business practice that remains largely untested in the marketplace.
Rapid growth in the use of the Internet and e-commerce is a recent phenomenon.
As a result, acceptance and use may not continue to develop at recent rates and
a sufficiently broad base of business customers may not adopt or continue to use
the Internet as a medium of commerce. E-commerce may not prove to be a viable
medium for applying for and securing equipment financing for the following
reasons, any of which could seriously harm our business-to-business e-commerce
initiatives: the necessary infrastructure for Internet communications may not
develop adequately; customers may have security and confidentiality concerns;
complementary products, such as high-speed modems and high-speed communication
lines, may not be developed; alternative equipment financing solutions may be
implemented; existing and potential customers may dislike a reduction in the
human contact that traditional equipment financing methods provide; use of the
Internet and other online services may not continue to increase or may increase
more slowly than expected; the development or adoption of new standards and
protocols may be delayed; and new and burdensome governmental regulations may be
imposed.
15
<PAGE> 17
SECURITY RISKS AND CONCERNS MAY DETER THE USE OF THE INTERNET FOR
CONDUCTING COMMERCE. Concern about the security of the transmission of
confidential information over public networks is a significant barrier to
e-commerce and communication. Advances in computer capabilities, new discoveries
in the field of cryptography or other events or developments could result in
compromises or breaches of Internet security systems that protect proprietary
information. If any well-publicized compromises of security were to occur, they
could substantially reduce the use of the Internet for commerce and
communications. Anyone who circumvents our security measures could
misappropriate proprietary information or cause interruptions in our services or
operations. The Internet is a public network, and data is sent over this network
from many sources. In the past, computer viruses have been distributed and have
rapidly spread over the Internet. Computer viruses could be introduced into our
systems or those of our customers, which could disrupt our online equipment
financing technology or make it inaccessible to our customers. We may be
required to expend significant capital and other resources to protect against
the threat of, or to alleviate problems caused by, security breaches and the
introduction of computer viruses. Our security measures may be inadequate to
prevent security breaches or combat the introduction of computer viruses, either
of which may result in loss of data, increased operating costs, litigation and
possible liability.
AMORTIZATION OF INTANGIBLE ASSETS. Approximately $625.2 million, or 15.6%,
of the Company's total assets as of December 31, 1999, consists of goodwill
arising from the acquisitions of the operating subsidiaries. Goodwill is an
intangible asset that represents the difference between the aggregate purchase
price for the net assets acquired and the amount of the purchase price that is
allocated to those net assets on our balance sheet. We are required to amortize
the goodwill arising from acquisitions (including goodwill associated with the
payment of any earn-out consideration) over a period of time, with the amount
amortized in a particular period constituting an expense that reduces the
Company's net income for that period. The amount amortized, however, will not
give rise to a deduction for tax purposes. In addition, management continually
evaluates goodwill for potential impairment that may result from events or
changes in circumstances from time to time. A reduction in net income resulting
from the amortization or impairment of goodwill may have an adverse impact upon
the market price of our common stock.
DEPENDENCE ON KEY PERSONNEL. We believe that our success will depend to a
significant extent upon the efforts and abilities of Robert J. New, our
co-founder, Chairman and Chief Executive Officer, our other executive officers
and senior management and sales personnel of our operating subsidiaries. Our
operating subsidiaries will continue to depend upon the retention of key sales
personnel to maintain certain customer relationships. In addition, we will
depend upon the senior management and sales personnel of any significant
business we acquire in the future. If we lose the services of one or more of
these key employees before we retain qualified replacement personnel, our
business could be adversely affected.
POTENTIAL INFLUENCE OF EXECUTIVE OFFICERS AND DIRECTORS. As of March 24,
2000, the Company's executive officers and directors beneficially owned an
aggregate of approximately 12.5% of the outstanding shares of the Company's
common stock. The Company's executive officers and directors, if acting
together, may be able to influence the election of directors and matters
requiring the approval of the stockholders of the Company. This concentration of
16
<PAGE> 18
ownership may also have the effect of delaying or preventing a change in control
of the Company.
SHARES ELIGIBLE FOR FUTURE SALE. As of March 24, 2000, we had 56,371,045
shares of common stock outstanding. The 28,000,000 shares sold in our initial
public offering are freely tradeable without restriction or further registration
under the Securities Act, unless acquired by an "affiliate" of the Company, as
that term is defined in Rule 144 promulgated under the Securities Act ("Rule
144"); shares held by affiliates will be subject to the resale limitations of
Rule 144. Of the remaining outstanding shares of common stock, 22,834,204 shares
are available for resale at various dates, subject to compliance with Rule 144
as the holding provisions of Rule 144 are satisfied. In addition, 3,746,165
shares may be sold in accordance with the provisions of Rule 145 promulgated
under the Securities Act, subject to contractual lock-up periods contained in
the acquisition agreements pursuant to which such shares were issued. Further,
as of March 24, 2000, 6,651,332 shares of common stock were issuable upon the
exercise of stock options granted prior to or on such date and options to
purchase an additional 991,754 shares had been reserved for future grant under
the terms of several employment agreements and the acquisition agreements. We
filed a registration statement on Form S-8 with respect to the shares of common
stock issuable upon exercise of such options. Sales of substantial amounts of
common stock, or the perception that such sales could occur, could adversely
affect prevailing market prices of our common stock.
CERTAIN ANTITAKEOVER PROVISIONS. Certain provisions of our Amended and
Restated Certificate of Incorporation and Bylaws may make a change in the
control of the Company more difficult to effect, even if a change in control
were in the stockholders' interest. Pursuant to our Certificate of
Incorporation, our Board of Directors is divided into three classes of directors
elected for staggered three-year terms. Pursuant to our Certificate of
Incorporation and Bylaws, our Board of Directors may issue shares of preferred
stock of the Company, without stockholder approval, on such terms as the Board
of Directors may determine. The rights of the holders of common stock will be
subject to, and may be adversely affected by, the rights of the holders of any
preferred stock that may be issued in the future. Moreover, although the ability
to issue preferred stock may provide flexibility in connection with possible
acquisitions and other corporate purposes, such issuances may make it more
difficult for a third party to acquire, or may discourage a third party from
acquiring, stock of the Company. In addition, we are subject to the antitakeover
provisions of Section 203 of the Delaware General Corporation Law, which
prohibit the Company from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an "interested stockholder," unless the
business combination is approved in a prescribed manner.
ITEM 2. PROPERTIES
Our corporate offices are located in leased space in Miami, Florida at
10800 Biscayne Boulevard, Suite 800, Miami, Florida 33161. Our telephone number
is (305) 899-5000.
Our servicing and administration center is located in leased space in
Portland, Oregon. We also lease office space for sales and operations in
Arizona, California, Colorado, Connecticut, Florida, Georgia, Maryland,
Massachusetts, Michigan, Missouri, New Hampshire, New Jersey, New York, North
Carolina, Texas, Utah and Virginia, and we lease warehouse
17
<PAGE> 19
space in Arizona, Connecticut, Tennessee and Utah. We believe that our
facilities are adequate for our current operations.
ITEM 3. LEGAL PROCEEDINGS
UniCapital and its subsidiaries are from time to time parties to lawsuits
arising out of our respective operations. We believe that any pending litigation
to which we or our subsidiaries are parties will not have a material adverse
affect upon our business or financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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<PAGE> 20
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET FOR THE COMPANY'S COMMON STOCK
The Company's common stock has been listed on the New York Stock Exchange
since May 15, 1998. On March 24, 2000, the last sale price for the common stock
was $2.8125 per share. As of March 24, 2000 there were approximately 302 holders
of record of the Company's common stock. The following table sets forth the
range of high and low sales prices for the common stock for the periods
indicated.
<TABLE>
<CAPTION>
1998 HIGH LOW
- ---- ------- --------
<S> <C> <C>
Second Quarter (May 15, 1998 to June 30, 1998)............ $19.625 $14.1875
Third Quarter............................................. $19.375 $ 4.0625
Fourth Quarter............................................ $9.4375 $ 3.875
1999
- ----------------------------------------------------------
First Quarter............................................. $ 8.250 $ 5.5000
Second Quarter............................................ $ 7.000 $ 4.9375
Third Quarter............................................. $ 6.000 $ 3.1875
Fourth Quarter............................................ $4.1875 $ 1.625
2000
- ----------------------------------------------------------
First Quarter (January 1, 2000 to March 24, 2000)......... $5.5625 $ 2.125
</TABLE>
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<PAGE> 21
RECENT SALES OF UNREGISTERED SECURITIES
Since January 1, 1999, the Company has issued the following shares of its
Common Stock pursuant to the earnout provisions of various acquisition
agreements entered into by the Company in 1998:
<TABLE>
<CAPTION>
NO. OF SHARES OF
PURCHASER DATE COMMON STOCK
- --------- -------------- ----------------
<S> <C> <C>
Stuart Cauff.................................. March 1, 1999 242,319
The 1998 Cauff Family Trust................... March 1, 1999 144,154
Wayne D. Lippman.............................. March 1, 1999 242,319
The 1998 Lippman Family Trust................. March 1, 1999 144,155
JSE Partners Ltd.............................. April 9, 1999 13,836
LBK Limited Partnership....................... April 9, 1999 13,836
Richard Emery................................. April 9, 1999 13,836
J. Robert Bonnemort........................... April 9, 1999 13,836
David A. DiCesaris............................ April 9, 1999 13,836
Craig C. Mortensen............................ April 9, 1999 609
Christian F. Emery............................ April 9, 1999 609
Shanni Staker................................. April 9, 1999 305
Richard Giles................................. March 5, 1999 107,482
The Giles Family Trust........................ March 5, 1999 8,506
W. Jeptha Thornton............................ March 10, 1999 107,482
The 1998 Thornton Family Trust................ March 10, 1999 8,505
Samuel J. Thornton............................ March 5, 1999 25,775
David Burmon.................................. April 22, 1999 27,073
David Burmon.................................. May 7, 1999 12,048
Robert Kopp................................... April 22, 1999 27,073
Robert Kopp................................... May 7, 1999 12,048
Richard Albertelli............................ April 22, 1999 27,073
Richard Albertelli............................ May 7, 1999 12,048
</TABLE>
Each transaction was intended to be exempt from registration in reliance
upon Section 4(2) of the Securities Act.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our common stock. We
currently intend to retain earnings to finance the growth and development of our
business and we do not anticipate paying cash dividends on our common stock in
the foreseeable future. In addition, the terms of our Senior Credit Facilities
restrict the payment of dividends on our common stock. Any future change in our
dividend policy will be made at the discretion of our Board of Directors in
light of our financial condition, capital requirements, earnings prospects, any
restrictions under our credit facilities as well as other factors the Board of
Directors deem relevant.
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<PAGE> 22
ITEM 6. SELECTED FINANCIAL DATA
The following tables set forth selected financial data of the Company as of
the dates and for the periods indicated. The selected financial data set forth
below should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the Consolidated Financial
Statements of the Company and related notes thereto, included elsewhere herein.
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
YEAR ENDED DECEMBER 31, (OCTOBER 9, 1997)
------------------------ TO
1999 1998 DECEMBER 31, 1997
---------- ---------- -----------------
(IN THOUSANDS, EXCEPT SHARE AND
PER SHARE DATA)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Income from finance contracts..................... $ 70,133 $ 30,027 $ --
Rental income from operating leases............... 244,868 68,003 --
Sales of equipment................................ 478,381 360,256 --
Gain on sale of finance contracts................. 11,537 23,862 --
Fees, commissions and remarketing income.......... 30,820 17,300 --
Interest and other income......................... 27,015 8,093 --
---------- ---------- ---------
Total revenues................................ 862,754 507,541 --
---------- ---------- ---------
Cost of operating leases.......................... 112,928 27,841 --
Cost of equipment sold............................ 428,094 314,994 --
Interest expense.................................. 162,921 35,453 --
Selling, general and administrative expenses...... 112,128 63,347 2,137
Goodwill amortization............................. 18,633 10,119 --
---------- ---------- ---------
Total expenses................................ 834,704 451,754 2,137
---------- ---------- ---------
Income (loss) from operations..................... 28,050 55,787 (2,137)
Equity in income from minority-owned affiliates... -- 1,013 --
Minority Interest................................. 529 -- --
---------- ---------- ---------
Income (loss) before taxes........................ 27,521 56,800 (2,137)
Provision for income taxes........................ 17,539 32,007 --
---------- ---------- ---------
Net income (loss)................................. $ 9,982 $ 24,793 $ (2,137)
========== ========== =========
Earnings (loss) per common share, basic........... $ .19 $ .73 $ (1.62)
Earnings (loss) per common share, diluted......... $ .19 $ .72 $ (1.62)
Shares used in computing net income (loss) per
share--
Weighted average shares outstanding, basic.... 52,664,830 33,841,448 1,319,063
Weighted average shares outstanding,
diluted.................................... 53,817,103 34,353,714 1,319,063
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
--------------------------------
1999 1998 1997
---------- ---------- ----
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 25,849 $ 9,772 $ 30
Net investment in finance contracts......................... 856,527 373,383 --
Equipment under operating leases, net....................... 1,908,686 430,229 --
Total assets................................................ 4,004,581 1,669,523 631
Debt........................................................ 2,868,133 667,322 --
Stockholders' equity........................................ 838,568 817,288 276
</TABLE>
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<PAGE> 23
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
UniCapital was founded in October 1997 as a Delaware corporation. We
commenced operations in May 1998 in conjunction with the consummation of our
initial public offering and the acquisition of twelve equipment leasing,
specialty finance and related businesses. In June, July and August 1998, we
completed the acquisition of five additional equipment leasing, specialty
finance and related businesses. We intend to integrate the businesses,
operations and administrative functions of the businesses that we acquired over
a period of time. Integration may present opportunities to reduce costs through
the elimination of duplicate functions and through economies of scale, and may
necessitate additional costs and expenditures for corporate management and
administration, corporate expenses related to being a public company, systems
integration, employee relocation and severance and facilities expansion. These
various costs and possible cost-savings make comparison of future operating
results with historical operating results difficult.
We use the term "leases" to refer to both leases and finance contracts. We
derive the majority of our revenue from lease payments on leases originated and
held by the Company and sales of equipment, including sales of equipment
off-lease and the sale of new and used equipment. In addition, we derive revenue
from servicing fees, late charges and administrative fees. We also receive
remarketing fees for the sale of off-lease equipment on behalf of equity
investors in leases and we may obtain a premium for sales prices in excess of an
agreed-upon amount.
We intend to retain on-balance-sheet leases that we transfer to our
commercial paper credit facility, as well as leases to be transferred in
connection with future securitizations, as those transfers will no longer be
structured to meet the criteria to be accounted for as sales. We intend to
continue our core business practice of selling certain leases to third parties
on a whole-loan basis. These sales are typically non-recourse, and we generally
maintain no retained interest in those leases. In addition, to the extent we
repurchase or otherwise transfer out of our commercial paper facility leases
that we originally accounted for under gain on sale accounting, we intend to
account for any leases substituted therefor on a gain on sale basis.
We expect to fund the majority of the leases that we originate through
credit facilities. We may sell leases to third parties or refinance them through
a securitization program or other structured finance products. On September 9,
1999, we completed a $365.8 million term securitization transaction, and on
March 28, 2000 we completed a $301.5 million term securitization transaction.
Should we be unable to sell or securitize leases going forward with satisfactory
fixed rates within a reasonable period of time after funding, our operating
margins could be adversely affected by any increase in interest rates to the
extent that we have not effectively hedged our interest rate exposure on
variable rate debt. Moreover, increases in interest rates, which cause us to
raise the implicit interest rate charged to our customers, could decrease demand
for our lease and other financial products.
The leases we acquire or originate generally are noncancelable for a
specified term during which we generally receive scheduled payments sufficient,
in the aggregate, to cover our borrowing costs and, when aggregated with the
residual, the costs of the underlying equipment. The noncancelable term of each
lease is generally equal to or less than the
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equipment's estimated economic life. Initial terms of the leases in our
portfolio generally range from 12 to 84 months. Certain of the leases we acquire
or originate carry a $1.00 buy-out provision upon maturity of the lease.
Our leases are collateralized by the equipment leased as well as, in some
cases, a personal guarantee provided by a principal of the lessee. We manage
credit risk through diversifying our business customer base, geographic location
of lessees and the type of business equipment leased. We believe that prepayment
risks are mitigated by the noncancelable nature of the majority of our leases.
On October 29, 1999, we announced our intention to develop a program that
would expedite our ability to turn over aircraft and aircraft engine assets and
thereby seek to improve our liquidity and long-term profitability. Unforeseen
delays and expenses and possible unfavorable market conditions for aircraft and
aircraft engine assets, may affect our ability to develop or implement such a
program or to improve our liquidity and long-term profitability therefrom.
On September 30, 1999, we sold 30% of our equity interest in Aircraft
Finance Trust. As of September 30, 1999, we also entered into an agreement to
sell up to an additional 21% of our equity interest. On October 29, 1999,
December 14, 1999, December 15, 1999 and December 30, 1999, we sold 5%, 2.5%,
2.5% and 9.9%, respectively, of our equity interest in Aircraft Finance Trust
pursuant to this agreement. As a result of these sales, our consolidated results
of operations reflect a reduction in Aircraft Finance Trust's net income
represented by the outside minority interests. As of December 31, 1999 we held a
50.1% equity interest in Aircraft Finance Trust. On March 28, 2000, we sold 1.1%
of the beneficial interest in Aircraft Finance Trust. As a result of this sale,
the Company owns 49% of the beneficial interest in Aircraft Finance Trust.
Beginning with the first quarter of 2000, equipment under operating leases and
other assets totaling $1,267.0 million, and non-recourse debt and other
liabilities totaling $1,243.2 million will be eliminated from the Company's
Consolidated Balance Sheet and the Company's results of operations will reflect
only its proportionate share of the net results from Aircraft Finance Trust as
equity in income from minority-owned affiliates.
During the quarters ended September 30, 1999 and December 31, 1999, we
experienced a decline in our aircraft engine sales. The economic conditions in
Asia and South America contribute significantly to current unfavorable market
conditions for the sale of certain engine types. The unfavorable conditions for
aircraft engines in the Asian markets are likely to persist, or worsen, due to
the large number of aircraft currently on order by Asian airlines. The poor
economic conditions are expected to continue for a significant period of time,
and could have a negative impact on worldwide aircraft engine demand, as well as
upon our business, results of operations and financial condition.
On December 21, 1999, we announced the acquisition of eleven Boeing
757-200ER aircraft from Lufttransport Unternehman (LTU International Airways).
Upon acquisition, the aircraft were leased back to LTU for varying lease terms.
We simultaneously sold three of the eleven aircraft to an unrelated commercial
aircraft lessor.
On October 25, 1999, we announced our intention to implement an expense
reduction program. This program was initiated in an effort to eliminate non-core
businesses and improve operational efficiencies. We have implemented Phase I of
the expense reduction program. We are currently planning Phase II of our
expense-reduction program, which we expect to
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implement during 2000. Our expense reduction program involves the elimination of
duplicative expenses and non-core activities as well as other possible expense
reductions. There can be no assurance that these expense reductions will result
in a reduction in the Company's selling, general and administrative expenses in
2000, or an increase in the Company's pre-tax income in 2000 or any subsequent
year. In addition, unforeseen delays and expenses may affect our ability to
implement our expense reduction program in a timely manner or to realize savings
therefrom in 2000 and thereafter. We anticipate that we will record a
restructuring charge in 2000 related to the implementation of Phase I and Phase
II of our expense reduction program. During 1999, the Company entered into new
employment agreements with certain of its officers and subsidiary executives
which provided for increases in base salary, and in certain instances,
performance based-compensation. We expect that Phase I of the expense reduction
program will generate more than $5.0 million in annualized expense savings, net
of increases in compensation pursuant to those new employment agreements and
before any one-time charges associated with Phase I of the expense reduction
program, before the end of 2000.
On January 19, 2000, we unveiled our Internet e-commerce initiatives and
launched two business to business Web sites -- UniCapitalCorp.com and
LeaseAdvisor.com. The sites are expected to provide the Company's Business
Credit Group with a new channel for lease originations and to establish the
Company as a leader in online equipment financing and financial planning
services.
On February 29, 2000 Tower Air filed a petition in bankruptcy under the
United States Bankruptcy Code. UniCapital Aircraft Engine Group had 16 engines
subject to sale and lease transactions with Tower Air. Of the 16 engines,
UniCapital Aircraft Engine Group has subsequently recovered six. The aggregate
value of the transactions between Tower Air and UniCapital Aircraft Engine Group
was approximately $22 million. If the value of the collateral which UniCapital
is able to recoup, together with any other amounts received by UniCapital in the
bankruptcy proceeding is less than $22 million, then UniCapital will have a loss
to the extent of the deficiency.
CERTAIN ACCOUNTING CONSIDERATIONS
DIRECT FINANCING LEASES. Direct financing leases transfer substantially all
of the benefits and risks of equipment ownership to the lessees. A lease is
classified as a direct financing lease if the collection of the minimum lease
payments is reasonably predictable, no significant uncertainties exist relating
to unreimbursable costs yet to be incurred by the lessor under the lease and the
lease meets one of the following criteria: (i) ownership of the property is
transferred to the lessee by the end of the lease term; (ii) the lease contains
a bargain purchase option; (iii) the term of the lease equals 75% or more of the
estimated economic life of the leased equipment; or (iv) the present value (at
the inception of the lease) of the minimum lease payments equals or exceeds 90%
of the fair value of the leased equipment. With respect to our direct financing
leases, we record total lease rentals receivable, estimated unguaranteed
residual value and initial direct costs (which are those costs, including sales
commissions, incurred in connection with consummating the lease) as the gross
investment in the lease. The difference between the gross investment in the
lease and the cost of the leased equipment is defined as "unearned income."
Finance income is recognized over the term of the lease by amortizing the
unearned income using the interest method.
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<PAGE> 26
SALES-TYPE LEASES. Sales-type leases, like direct financing leases,
transfer substantially all of the benefits and risks of equipment ownership to
the lessee. However, sales-type leases include profit at lease inception to the
extent the fair value of the equipment exceeds the Company's carrying value.
Sales-type leases can arise in connection with new leases, or upon
classification of lease renewals at or near the end of the initial lease term. A
lease is classified as a sales-type lease if it includes such a profit at lease
inception and if the collection of the minimum lease payments is reasonably
predictable, no significant uncertainties exist relating to unreimbursable costs
yet to be incurred by the lessor under the lease and the lease meets one of the
following criteria: (i) ownership of the property is transferred to the lessee
by the end of the lease term; (ii) the lease contains a bargain purchase option;
(iii) the term of the lease equals 75% or more of the estimated economic life of
the leased equipment; or (iv) the present value (at the inception of the lease)
of the minimum lease payments equals or exceeds 90% of the fair value of the
leased equipment. With respect to sales-type leases, we record total lease
rentals receivable, estimated unguaranteed residual value as the gross
investment in the lease. The difference between gross investment in the lease
and the present value of the gross investment in the lease is defined as
"unearned income." The present value of the minimum lease payments computed at
the interest rate implicit in the lease is recorded as sales revenue. The cost
of the equipment less the present value of the unguaranteed residual value,
computed at the interest rate implicit in the lease, is reflected as the cost of
sale. Finance income is recognized over the term of the lease by amortizing the
unearned income using the interest method.
NET INVESTMENT IN FINANCE CONTRACTS. At December 31, 1999 the Company's net
investment in finance contracts totaled $856.5 million, or 31.0% of the
Company's net investment in leases (including net book value of equipment under
operating leases).
OPERATING LEASES. At December 31, 1999, the net book value of equipment
under operating leases totaled $1,908.7 million, or 69.0% of the Company's net
investment in leases (including net book value of finance contracts). All lease
contracts which do not meet the criteria of direct financing leases or
sales-type leases are accounted for as operating leases. Monthly lease payments
are recorded as income from operating leases on a straight-line basis. Leased
equipment is recorded, at the Company's cost, as "equipment under operating
leases" and depreciated on a straight-line basis over the estimated life of the
equipment to its estimated salvage value. When equipment is sold, the net
proceeds realized in excess of the carrying value are recorded as "gain on sale
of equipment;" if the net proceeds are less than the carrying value, the amount
by which the carrying value exceeds the net proceeds is recorded as a loss.
GAIN ON SALE OF FINANCE CONTRACTS. We have also generated gain on sale
income from the sale of leases to third party financing sources for cash. In
June 1996, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 125 ("SFAS 125"), "Accounting for Transfers
and Servicing of Financial Assets and Extinguishment of Liabilities." Among
other things, SFAS 125 requires that servicing assets and other retained
interests in transferred assets be measured by allocating the previous carrying
amount between the assets sold, if any, and retained interests, if any, based on
relative fair values at the date of transfer.
In April of 1999, we announced our intention to retain a greater portion of
the leases that we originate or acquire for our own portfolio. Although we are
retaining a greater portion of
25
<PAGE> 27
the leases that we originate or acquire, we continue to sell aircraft and
aircraft engines and remarket or sell equipment at lease end, and we continue to
sell leases and equipment subject to leases to third parties.
RESIDUAL VALUES. At the inception of a direct financing lease or a
sales-type lease, we estimate a residual value based upon the expected net
realizable value of the equipment at the end of the lease term. The salvage
value of equipment subject to operating lease is determined by, among other
factors, the estimated useful life of the equipment, the expected condition of
the equipment at the end of the lease term, and prevailing market demand for the
equipment. At the end of the initial term of a lease, the lease may be extended,
the equipment may be sold to the lessee or the equipment may be sold or leased
to another party. The original estimate of the residual value is adjusted
downward during the lease term if a decline in value is projected; however,
upward adjustments in residual estimates are not permitted.
NEW ACCOUNTING PRONOUNCEMENTS. In June 1998, the Financial Accounting
Standards Board (the "FASB") issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities," ("SFAS
No. 133") which establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. SFAS No. 133 requires that all derivative
instruments be recorded on the balance sheet at fair value, and that changes in
the fair value of derivatives be recorded each period in either current earnings
or other comprehensive income, depending upon whether the derivative is
designated as part of certain types of hedging transactions. As issued, SFAS No.
133 was effective for fiscal years beginning after June 15, 1999. In June 1999,
the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities -- Deferral of the Effective Date of FASB Statement No. 133". SFAS
No. 137 deferred the effective date of SFAS No. 133 for one year to fiscal years
beginning after June 15, 2000. The Company plans to adopt SFAS No. 133 for the
year beginning January 1, 2001. The Company is in the process of evaluating the
impact that the adoption of SFAS No. 133 will have on its results of operations
and financial condition.
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
consolidated financial statements of the Company and the related notes thereto
appearing elsewhere in this Form 10-K. Although UniCapital was founded in
October 1997, we commenced operations in May 1998 in conjunction with the
consummation of our initial public offering and the acquisition of twelve
equipment leasing, specialty finance and related businesses. In June, July and
August 1998, we completed the acquisition of five additional equipment leasing,
specialty finance and related businesses. A significant portion of the variances
discussed below are due
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to the fact that our results of operations for 1998 represent less than 8 months
of operations while our results of operations for 1999 include 12 full months.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1999 1998
---------------- ----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Income from finance contracts..................... $ 70,133 8.1% $ 30,027 5.9%
Rental income from operating leases............... 244,868 28.4 68,003 13.4
Sales of equipment................................ 478,381 55.5 360,256 71.0
Gain on sale of finance contracts................. 11,537 1.3 23,862 4.7
Fees, commissions and remarketing income.......... 30,820 3.6 17,300 3.4
Interest and other income......................... 27,015 3.1 8,093 1.6
-------- ----- -------- -----
Total revenues............................... 862,754 100.0 507,541 100.0
-------- ----- -------- -----
Cost of operating leases.......................... 112,928 13.1 27,841 5.5
Cost of equipment sold............................ 428,094 49.6 314,994 62.1
Interest expense.................................. 162,921 18.8 35,453 7.0
Selling, general and administrative expenses...... 112,128 13.0 63,347 12.5
Goodwill amortization............................. 18,633 2.2 10,119 2.0
-------- ----- -------- -----
Total expenses............................... 834,704 96.7 451,754 89.1
-------- ----- -------- -----
Income from operations............................ 28,050 3.3 55,787 10.9
Equity in income from minority-owned affiliates... -- 0.0 1,013 0.2
Minority interest................................. 529 0.1 -- 0.0
-------- ----- -------- -----
Income before taxes............................... 27,521 3.2 56,800 11.1
Provision for income taxes........................ 17,539 2.0 32,007 6.3
-------- ----- -------- -----
Net income........................................ $ 9,982 1.2% $ 24,793 4.8%
======== ===== ======== =====
</TABLE>
INCOME FROM FINANCE CONTRACTS. Income from finance contracts for the year
ended December 31, 1999 increased by $40.1 million, or 133.7%, to $70.1 million
from $30.0 million for the year ended December 31, 1998. This increase is
primarily due to an increase in the direct financing and sales-type lease
portfolios of the Technology and Finance Group and Business Credit Group
attributable to increased originations during the year ending December 31, 1999
and the Company's decision to retain, for its own portfolio, a greater portion
of the leases that it originates rather than to sell such leases in transactions
qualifying for gain-on-sale accounting treatment, as well as increased income
due to higher implicit interest rates in lease contracts, which is attributable
to increases in interest rates generally.
RENTAL INCOME FROM OPERATING LEASES. Rental income from operating leases
for the year ended December 31, 1999 increased by $176.9 million, or 260.1%, to
$244.9 million from $68.0 million for the year ended December 31 1998. This
increase is primarily due to a $1.4 billion increase in the Big Ticket
Division's portfolio of equipment under operating lease, principally related to
the acquisition of Aircraft Finance Trust, which accounted for $100.3 million of
the increase, and a $32.1 million increase in the Technology and Finance Group's
portfolio of equipment under operating lease.
SALES OF EQUIPMENT. Sales of equipment for the year ended December 31, 1999
increased by $118.1 million, or 32.8%, to $478.4 million from $360.3 million for
the year ended December 31, 1998. This increase is primarily due to an increase
in sales in the Technology and Finance Group, partially offset by lower margins
on sales of equipment for
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<PAGE> 29
one of the companies, and to an increase in sales in the Big Ticket Division as
a result of portfolio management sales of Stage 2 and older aircraft, and the
sale of three aircraft related to the LTU International Airways transaction,
partially offset by the decrease in sales of aircraft engines. The Company
expects the current unfavorable market conditions for the sale of aircraft
engines to continue in 2000.
GAIN ON SALE OF FINANCE CONTRACTS. Gain on sale of finance contracts for
the year ended December 31, 1999 decreased by $12.4 million, or 51.9%, to $11.5
million from $23.9 million for the year ended December 31, 1998. This decrease
is due to the Company's decision to retain, for its own portfolio, a greater
portion of the leases it originates, rather than sell such leases in
transactions qualifying for gain-on-sale accounting treatment. This decrease was
partially offset by two third party sales transactions that occurred in 1999,
which transactions accounted for an aggregate of $8.3 million of gain on sale of
finance contracts.
FEES, COMMISSIONS AND REMARKETING INCOME. Fees, commissions and remarketing
income for the year ended December 31, 1999 increased by $13.5 million, or
78.0%, to $30.8 million from $17.3 million for the year ended December 31, 1998.
This increase is primarily due to an increase in the remarketing income in the
Technology and Finance Group.
INTEREST AND OTHER INCOME. Interest and other income for the year ended
December 31 1999 increased by $18.9 million, or 233.3%, to $27.0 million from
$8.1 million for the year ended December 31, 1998. This increase is primarily
due to the $9.0 million gain recognized on the sale of 49.9% of the Company's
equity interest in Aircraft Finance Trust, interest income from restricted cash
balances principally from Aircraft Finance Trust, which was $2.7 million during
the period from the inception of Aircraft Finance Trust (April 13, 1999) through
December 31, 1999, and from interest income on retained interests.
COST OF OPERATING LEASES. Cost of operating leases for the year ended
December 31, 1999 increased by $85.1 million, or 306.1%, to $112.9 million from
$27.8 million for the year ended December 31, 1998. This increase is primarily
due to the increase in depreciation resulting from the net increase of $1.4
billion of equipment to the Big Ticket Division's portfolio of equipment under
operating lease, principally related to the acquisition of Aircraft Finance
Trust, which accounted for $28.5 million of the increase, and from the net
increase of $32.1 million of equipment to the Technology and Finance Group's
portfolio of equipment under operating lease.
COST OF EQUIPMENT SOLD. Cost of equipment sold for the year ended December
31, 1999 increased by $113.1 million, or 35.9%, to $428.1 million from $315.0
million for the year ended December 31, 1998. This increase is primarily due to
an increase in sales in the Technology and Finance Group and to an increase in
sales in the Big Ticket Division as a result of portfolio management sales of
Stage 2 and older aircraft and the sale of three aircraft related to the LTU
International Airways transaction, partially offset by the decrease in sales of
aircraft engines.
INTEREST EXPENSE. Interest expense for the year ended December 31, 1999
increased by $127.4 million, or 358.9%, to $162.9 million from $35.5 million for
the year ended December 31, 1998. This increase is primarily due to increased
borrowings outstanding to finance the $3.4 billion growth of the Company's lease
and equipment portfolio, which includes the $1.4 billion increase in equipment
under operating lease in the Big Ticket Division, principally related to
Aircraft Finance Trust, which accounted for $51.5 million of the
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<PAGE> 30
increase, as well as the effect of rising interest rates and the amortization of
increased facility commitment fees.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the year ended December 31, 1999 increased by $48.8
million, or 77.1%, to $112.1 million from $63.3 million for the year ended
December 31, 1998. Selling, general and administrative expenses for the year
ended December 31, 1998 include a $17.3 million non-cash compensation charge for
certain equity issuances prior to our initial public offering. The 1999 increase
is primarily due to the growth in the volume of our lease originations and
assets under management, the $7.5 million increase in the Company's provision
for credit losses due to our decision to retain a greater portion of the leases
that we originate, as well as costs associated with systems implementation and
integration of the Company's subsidiaries.
GOODWILL AMORTIZATION. Goodwill amortization for the year ended December
31, 1999 increased by $8.5 million, or 84.2%, to $18.6 million from $10.1
million for the year ended December 31, 1998. This increase is primarily
attributable to the effect of a full year of goodwill amortization for the year
ended December 31, 1999 as well as additional goodwill amortization for the year
ended December 31, 1999 as a result of additional purchase consideration paid
pursuant to the earnout provisions of various acquisition agreements entered
into by the Company in 1998.
EQUITY IN INCOME FROM MINORITY-OWNED AFFILIATES. During 1999, the Company
liquidated its investments in minority-owned affiliates, and therefore recorded
no equity in income from minority-owned affiliates for the year ended December
31, 1999. Equity in income from minority-owned affiliates for the year ended
December 31, 1998 was $1.0 million. As a result of the sale of an additional
1.1% beneficial interest in Aircraft Finance Trust, beginning with the first
quarter of 2000 the Company's proportionate share of the net results from
Aircraft Finance Trust will be recorded as equity in income from minority-owned
affiliates.
MINORITY INTEREST. Minority interest for the year ended December 31, 1999
increased by $0.5 million from zero for the year ended December 31, 1998. This
amount primarily represents a reduction to net income attributable to the sale
of a minority interest in Aircraft Finance Trust during the year ended December
31, 1999. As a result of the sale of an additional 1.1% of the beneficial
interest in Aircraft Finance Trust, beginning with the first quarter of 2000 the
Company will not record minority interest.
PERIOD FROM INCEPTION (OCTOBER 9, 1997) TO DECEMBER 31, 1997
We were incorporated in October 1997 and commenced operations in May 1998
in conjunction with the consummation of our initial public offering and the
acquisition of twelve equipment leasing, specialty finance and related
businesses. During the period from October 9, 1997 to December 31, 1997 we had a
net loss of $2.1 million, which consisted primarily of a non-cash stock
compensation charge.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1999, we had cash and cash equivalents of approximately
$25.8 million. Our business is capital intensive and requires access to
substantial short-term and long-term credit to fund new equipment leases and the
purchase of equipment. We will continue to require access to significant
additional capital to maintain and expand the volume
29
<PAGE> 31
of leases that we fund, as well as to fund any future acquisitions of lease
portfolios or leasing and specialty finance companies.
Our uses of cash include the origination of equipment leases and the
purchase of equipment, payment of interest expenses, repayment of borrowings
under our credit facilities, operating and administrative expenses, income taxes
and capital expenditures, and may include payment of the cash portion of the
earnout arrangements with the former stockholders of certain of the acquired
companies, as well as any possible future acquisitions of lease portfolios or
leasing and specialty finance companies.
We believe that borrowings from amounts available under our credit
facilities, funds generated from future operations and possible future sources
of financing, for which we are currently negotiating, will be sufficient to
finance our current operations and planned capital expenditure requirements for
the next twelve months, assuming the consummation of one or more such possible
future sources of financing and the satisfactory renewal, or replacement of our
credit facilities prior to their expiration. If we are unable to consummate one
or more such possible future sources of financing, or to renew, or replace our
credit facilities prior to their expiration with facilities of like amount, or
if we are unable to implement other alternative strategies, then we may have
insufficient cash to continue the current rate of growth of our business or
otherwise to continue to operate our business as it is now conducted, and may be
unable, in whole or in part, to fund new equipment leases or the purchase of
equipment, fund the acquisition of lease portfolios, fund additional purchase
price consideration pursuant to the earnout provisions of various acquisition
agreements, fund the purchase price of additional leasing or specialty finance
companies or fund other working capital requirements. Accordingly, in such
circumstances, we would have to make choices among the various demands upon our
liquidity, and our business, financial condition and results of operations could
be materially and adversely affected.
From time to time we engage in discussions and conduct analyses with
respect to possible acquisitions of equipment, lease portfolios and leasing and
specialty finance companies, some of which may lead to and include the
negotiation and execution of letters of intent. In order to consummate these
transactions, we would need to issue additional equity securities, incur
additional indebtedness or obtain additional sources of financing, and if we
were unable to do so, our business, financial condition and results of
operations could be materially and adversely affected.
CREDIT FACILITIES
We have in place a series of credit facilities (the "Senior Credit
Facilities") which consist of the following: (i) a $300.0 million Corporate
Revolving Credit Facility primarily to finance working capital needs (the
"Revolving Facility"); (ii) two asset-backed commercial paper facilities
totaling $400.0 million to finance small ticket and middle market leases,
consisting of an Equipment Lease Receivable Purchase Facility (the "Purchase
Facility") and an Equipment Lease Receivable Financing Facility (the "Financing
Facility"); (iii) a $200.0 million Warehouse Facility to finance small ticket
and middle market leases ("Warehouse Facility"); and (iv) a $400.0 million
Special Purpose Entity Large Ticket Warehouse Facility to finance the purchase
of aircraft and aircraft engines (the "Aircraft Facility").
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<PAGE> 32
REVOLVING FACILITY. Under the Revolving Facility, we may borrow up to
$300.0 million with a $50.0 million sublimit for letters of credit and a $15.0
million swingline sublimit. The proceeds of the Revolving Facility may be used
to refinance loans previously incurred to fund the cash portions of acquisitions
and for general corporate purposes, subject to certain limitations. Amounts
outstanding under the Revolving Facility bear interest, at our option, at Bank
of America's base rate plus an applicable margin or a Eurodollar rate plus an
applicable margin and must be supported by a borrowing base. The borrowing base
equals the net book value of qualifying assets, at varying advance rates
depending on asset types, plus an amortizing amount contractually agreed, which
amount does not bear relationship to any asset value. Our obligations under the
Revolving Facility are guaranteed by all of our subsidiaries other than certain
special purpose entities. The Revolving Facility is secured by a pledge of all
of the capital stock of our domestic guaranteeing subsidiaries (and a pledge of
65% of the capital stock of each non-United States guaranteeing subsidiary) and
a security interest in all other assets and properties of the Company and those
subsidiaries guaranteeing the Revolving Facility, other than assets financed on
a non-recourse basis by the Company and any assets subject to liens granted in
connection with certain permitted indebtedness (including securitizations).
Borrowings under the Revolving Facility are subject to certain conditions,
including but not limited to absence of material adverse effect and absence of
material litigation. In addition, the Revolving Facility contains covenants,
including but not limited to limitations on liens other than permitted liens,
investments, dividends and other restricted payments, incurrence of recourse
indebtedness, transactions with affiliates, acquisitions other than permitted
acquisitions (as defined in the Revolving Facility) as well as various financial
covenants, including ratios of recourse and limited recourse debt to tangible
net worth, cash flow to interest and rents, and maintenance at all times of a
minimum tangible net worth. The Revolving Facility, which was entered into in
June 1998, has a three-year term. We pay a quarterly fee equal to a percentage
of the unused portion of the Revolving Facility. As of December 31, 1999, the
Company had borrowings of $252.5 million outstanding under the Revolving
Facility with a weighted average interest rate of 9.1%.
PURCHASE FACILITY. We have established the Purchase Facility with Bank of
America, as agent, pursuant to which a commercial paper conduit (the "CP
Conduit") or, if the CP Conduit does not buy them, one or more bank investors,
which will include Bank of America (the "Bank Investors"), will purchase
beneficial interests (the "Net Investment") in an amount of up to $200.0 million
(the "Facility Limit"), from a qualifying special purpose entity, collateralized
by small ticket and middle market leases meeting certain eligibility
requirements. Two indirect, bankruptcy-remote subsidiaries of the Company (the
"Transferors") will purchase the Company's interest in certain financing leases
and related leased equipment originated or purchased by the Company or eligible
subsidiaries of the Company. The CP Conduit (or, upon the occurrence of certain
events, the Bank Investors) will purchases leases from the Transferors at an
amount equal to a percentage of the present value of the remaining lease
receivables. Collections on the leases will generally be applied first to pay
any amounts due under the Purchase Facility and certain other specified
facilities, and then to the Transferors. We plan to reduce the Net Investment
under the Purchase Facility periodically through securitizations. The Purchase
Facility contains certain restrictions, including but not limited to limitations
on liens on the leases, indebtedness, certain lease modifications and changes in
credit and collection practices. The Purchase Facility requires payment by the
Transferor of program fees, facility fees, administration fees and commercial
paper dealer fees. The term of the Purchase Facility
31
<PAGE> 33
was extended in August 1999 for a 364-day term, and it now expires in August
2000. The facility limit automatically decreased from $350.0 million on
September 30, 1999 to the current Facility Limit. As of December 31, 1999, the
amount outstanding under the Purchase Facility was $197.6 million (net of
restricted cash of $9.3 million) with a weighted average interest rate of 6.9%.
FINANCING FACILITY. We have established the Financing Facility with Bank of
America, as administrative agent, pursuant to which the CP Conduit or the Bank
Investors will advance an amount up to $200.0 million. A subsidiary of the
Company (the "Financing SPE") will finance the Company's interest in certain
operating and financing leases and certain leased equipment originated or
purchased by the Company or any subsidiaries of the Company. The CP Conduit (or,
under certain limited circumstances, the Bank Investors) will lend funds to the
Financing SPE in an amount equal to a percentage of the present value of the
remaining lease receivables. Such borrowings are secured by an interest in the
Financing SPE's leases and certain leased equipment. We plan to reduce the
borrowing outstanding under the Financing Facility periodically through
securitizations. The Financing Facility contains certain restrictions and
requires the payment of various fees, generally on terms substantially
equivalent to those in the Purchase Facility. We have guaranteed the amounts
borrowed under the Financing Facility. The term of the Financing Facility was
extended in August 1999 for a 364-day term, and it now expires in August 2000.
The facility limit automatically decreased from $250.0 million on September 30,
1999 to the current facility limit of $200.0 million. As of December 31, 1999,
the amount outstanding under the Financing Facility was $183.8 million (net of
restricted cash of $10.3 million) with a weighted average interest rate of 6.9%.
MORGAN STANLEY ASSET FUNDING WAREHOUSE FACILITY. We have established a
Warehouse Facility with Morgan Stanley Asset Funding, Inc., (the "Lender")
pursuant to which Lender will make loans to an indirect, bankruptcy-remote
subsidiary of the Company (the "SPE Borrower"). As security for these loans, the
SPE Borrower will assign all of the Borrower's right, title and interest in, to
and under certain small ticket and middle market leases and loans and related
equipment originated or purchased by the Company or eligible subsidiaries of the
Company (the "Originators"). Lender will lend against leases at an amount equal
to a percentage of the present value of the remaining lease receivables, up to a
maximum amount of $200.0 million. Amounts outstanding under the Warehouse
Facility bear interest at a rate equal to a Eurodollar rate plus an applicable
margin. Collections on the leases will generally be applied first to pay any
amounts due under the Warehouse Facility, including without limitation the
repayment of principal of and interest on all loans and all other amounts owing
to the Lender and then to the Originators. We plan to reduce the borrowing
outstanding under the Warehouse Facility periodically through securitizations.
Borrowings under the Warehouse Facility are subject to certain conditions. In
addition, the Warehouse Facility contains certain covenants, including but not
limited to limitations on liens, investments, dividends and other restricted
payments, capital expenditures, transactions with affiliates, acquisitions,
incurrence of debt, and interest rate protection acceptable to Lender, and
various financial covenants customary for transactions of this type. The term of
the Warehouse Facility, which was entered into in December 1999, is 364 days. As
of December 31, 1999, the Company had borrowings of $27.4 million outstanding
under the Warehouse Facility with a weighted average interest rate of 7.0%.
32
<PAGE> 34
AIRCRAFT FACILITY. In October 1998, we entered into the Aircraft Facility,
primarily to finance the purchase and leasing of aircraft. Under the Aircraft
Facility, we may borrow up to $400.0 million. The Aircraft Facility is
nonrecourse to the Company and is secured by a first priority perfected pledge
of all of the common stock of each special purpose entity wholly owned by the
Company which uses the Aircraft Facility ("SPE Aircraft Borrower') and each
domestic subsidiary of each SPE Aircraft Borrower, and a first priority
perfected security interest in all present and future assets and properties of
each SPE Aircraft Borrower and each of its subsidiaries. Borrowings under the
Aircraft Facility are subject to certain conditions, including but not limited
to absence of material adverse effect and absence of material litigation. In
addition, the Aircraft Facility contains certain covenants, including but not
limited to limitations on liens, dividends and other restricted payments,
capital expenditures, acquisitions, incurrence of debt, as well as requirements
related to annual appraisals of eligible aircraft, approved aircraft and
aircraft engine types and interest rate protection acceptable to the lender, and
various financial covenants customary for transactions of this type, including a
ratio of cash flow to interest. The term of the Aircraft Facility was extended
in November 1999, and it now expires in December 2000. Upon extension, the
maximum availability under the facility decreased from $600.0 to $400.0 million.
As of December 31, 1999, the Company had borrowings of $270.4 million
outstanding under the Aircraft Facility with a weighted average interest rate of
9.7%.
The Company paid financing fees in connection with entering into or
extending each of the Senior Credit Facilities, which will be amortized as a
yield adjustment over the terms of the Senior Credit Facilities using the
interest method, and will pay an annual administration fee equal to a percentage
of certain of the facilities. We expect that the aggregate fees and expenses to
be paid in connection with entering into the Senior Credit Facilities will be
paid from cash flows from operating activities as well as borrowings under the
Revolving Facility.
The Company is currently negotiating a transaction to sell and refinance
certain of its aircraft and other assets. A condition to the refinancing
transaction is modification of certain provisions of the Aircraft Facility. In
particular, the Company anticipates that, upon consummation of the refinancing
transaction, the Aircraft Facility will be converted to a term loan, and the
Company will have limited ability, and subject to the express approval of the
lender, to use amounts that otherwise would have been available under the
Aircraft Facility to acquire additional aircraft assets.
OTHER CREDIT FACILITIES
REVOLVING PURCHASE FACILITY. In November 1999, we announced a $50.0 million
increase in our $75.0 million discretionary, revolving facility with Key Global
Finance. This facility is for the funding of eligible leases and is available to
most of the originating units in our Technology and Finance Group as well as one
of the originating units in our Business Credit Group.
TERM LOANS
On April 30, 1999, we entered into a loan arrangement in the amount of
$40.5 million, to fund the purchase of the equity interest in the portfolio of
36 commercial aircraft that we acquired from GE Capital Aviation Services on May
5, 1999 and for general corporate purposes. The loan has an interest rate of
LIBOR plus 400 basis points, and expires in December 2000 or such earlier date
as defined in the agreement. The loan is secured by a
33
<PAGE> 35
security interest in the aircraft and engine assets held by the special purpose
entities which are borrowers under the loan arrangement. As of December 31,
1999, the outstanding principal balance was $30.9 million at an interest rate of
10.5%. As of December 31, 1999, we were in violation of certain covenants under
this loan. Our lender waived the violation until March 31, 2000. We expect to
repay the loan on March 31, 2000.
On December 20, 1999, we entered into a loan arrangement in the amount of
$167.3 million to fund the acquisition of 8 Boeing 757-200 aircraft that we
acquired and leased back to LTU. The loan has an interest rate of LIBOR plus
1.75%, and it expires in December 2000. The loan is secured by a security
interest in the aircraft and leases held by the special purpose entities that
are borrowers under the loan arrangement. The loan is recourse only to the
assets pledged to the lenders. As of December 31, 1999, $167.3 million was
outstanding under the loan.
SECURITIZATION TRANSACTIONS
On September 9, 1999, we completed our first securitization transaction
involving the issuance of $365.7 million of Equipment Contract Backed Notes
originated primarily by the Business Credit Group and the Technology and Finance
Group. In connection with this transaction, four tranches of Class A Notes were
sold to accredited investors under Rule 144A. The Class A-1 Notes had short term
ratings of A-1+ by Standard & Poor's, P-1 by Moody's Investor Services, Inc.,
F1+/AAA by Fitch IBCA and D-1+ by Duff & Phelps Credit Rating Co. The Class A-2
through A-4 Notes were rated AAA by Standard & Poor's, Aaa by Moody's Investor
Services, Inc., AAA by Duff & Phelps Credit Rating Co. and AAA by Fitch IBCA.
The Class A Notes benefit from a surety bond issued by Ambac Assurance Corp. In
addition, Class B and Class C Notes, rated BBB and BB, respectively by Duff &
Phelps Credit Rating Co. and Fitch IBCA, were retained by the Company. We
financed the Class B Notes pursuant to short term facilities. The weighted
average interest rate for the Class A Notes as of December 31, 1999 was 6.87%.
The weighted average interest rate will vary as Class A Notes are paid. As of
December 31, 1999, the outstanding principal balance was $350.9 million.
On March 28, 2000, the Company completed its second securitization
transaction involving the issuance of $301.5 million of Equipment Contract
Backed Notes originated primarily by the Business Credit Group and the
Technology and Finance Group. In connection with this transaction, four tranches
of Class A Notes were sold to accredited investors under Rule 144A. The Class
A-1 Notes had short term ratings of A-1+ by Standard & Poor's, P-1 by Moody's
Investor Services, Inc., F1+/AAA by Fitch IBCA and D-1+ by Duff & Phelps Credit
Rating Co. The Class A-2 through A-4 Notes were rated AAA by Standard & Poor's,
Aaa by Moody's Investor Services, Inc., AAA by Duff & Phelps Credit Rating Co.
and AAA by Fitch IBCA. The Class A Notes benefit from a surety bond issued by
the Ambac Assurance Corp. In addition, Class B Notes rated BBB- and Class C
Notes rated BB by Duff & Phelps Credit Rating Co and Fitch IBCA were offered as
well.
FLUCTUATIONS IN QUARTERLY RESULTS
We could experience fluctuations in quarterly operating results due to a
number of factors including, among others, the consummation of a transaction in
a particular calendar quarter (or the failure to complete such a transaction),
variations in the volume of leases originated and variations in interest rates.
In addition, certain of our operating subsidiaries may from time
34
<PAGE> 36
to time experience relatively large transactions for one or a few customers or
relatively large sales of equipment and/or lease portfolios, which may not recur
or may not be followed by correspondingly large transactions in subsequent
periods. Moreover, to the extent that we retain for our own portfolio a greater
portion of the leases that we acquire or originate and the equipment that we
acquire, we will not generate revenue from gain on sale for the retained leases
or revenue from sales of the retained equipment. As a result of these
fluctuations, results for any one quarter should not be relied upon as being
indicative of performance in future quarters.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE RISK
We incur debt to fund the origination and acquisition of leases, equipment,
lease portfolios and equipment leasing businesses and for general corporate
purposes. The interest rates charged on the debt are generally determined based
on variable measures of interest rates such as the U.S. Federal Reserve Prime
rate ("Prime") or the London Interbank Offered Rate ("LIBOR"). For information
regarding contractual interest rates on the debt and amounts outstanding and
weighted average interest rate at December 31, 1999, see Note 10 to our
consolidated financial statements for the year ended December 31, 1999, included
elsewhere in this Form 10-K.
We continually monitor interest rates in order to mitigate exposure to
certain unfavorable variations. Our objectives in managing this risk include:
- achieving certain ratios of fixed-rate debt to variable-rate debt; and
- achieving certain levels of our aggregate cost of funds.
As a result, from time to time we utilize interest rate swaps to hedge some
of the Company's exposure to changing interest rates. As used by the Company,
interest rate swaps synthetically alter the repricing characteristics of
recorded assets and liabilities, effectively allowing us to reduce our exposure
to variations in Prime or LIBOR. There are risks associated with the use of
these instruments, including:
- the possible inability of the counterparties to meet the terms of their
contracts; and
- market movements in values and interest rates.
We do not enter into interest rate swap agreements for trading purposes.
The following table presents, as of December 31, 1999, the following
information regarding interest rate swap agreements to which we are a party: (i)
the notional amount of the agreement, (ii) the fixed interest rate to be paid by
the Company or its subsidiaries, (iii) the variable rate to be paid by the
counterparty under the agreement, (iv) the fair value of the instrument, (v) the
commencement date for agreements for which the effective period does not begin
until a subsequent date, if applicable, and (vi) the maturity of the agreement.
35
<PAGE> 37
EFFECTIVE PERIOD OF INTEREST RATE SWAP
<TABLE>
<CAPTION>
EFFECTIVE PERIOD OF INTEREST RATE SWAP
AVERAGE NOTIONAL AMOUNT FOR THE TWELVE MONTHS ENDING DECEMBER 31,(B)
DECEMBER 31, -------------------------------------------------------------------------------------
1999 2000 2001 2002 2003 2004 THEREAFTER
-------------- ------------ ------------ ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
INTEREST RATE SWAPS
Amortizing notional
amount................. $37,432,916 $ 31,454,058 $ 18,895,480 $ 11,561,856 $ 6,855,677 $ 3,687,381 $1,270,710
Rate to be paid by the
Company................ 5.495%
Rate to be received by
the Company............ 30-day CP(a)
Fair value at December
31, 1999............... $705,123
Maturity................. January 2006
Amortizing notional
amount................. $7,477,456 $ 6,688,066 $ 4,904,478 $ 3,168,379 $ 2,189,597 $ 1,363,025 $ 561,378
Rate to be paid by the
Company................ 5.555%
Rate to be received by
the Company............ 30-day CP(a)
Fair value at December
31, 1999............... $180,170
Maturity................. April 2006
Amortizing notional
amount................. $11,295,422 $ 9,542,959 $ 3,148,298
Rate to be paid by the
Company................ 5.693%
Rate to be received by
the Company............ 30-day CP(a)
Fair value at December
31, 1999............... $64,698
Maturity................. September 2001
Amortizing notional
amount................. $28,894,988 $ 25,703,352 $ 19,739,170 $ 7,543,080 $ 1,877,718
Rate to be paid by the
Company................ 6.015%
Rate to be received by
the Company............ 30-day CP(a)
Fair value at December
31, 1999............... $252,799
Maturity................. November 2003
Amortizing notional
amount................. $70,937,107 $ 61,108,564 $ 41,872,877 $ 27,465,678 $ 20,100,167 $ 13,438,695 $7,877,441
Rate to be paid by the
Company................ 6.195%
Rate to be received by
the Company............ 30-day CP(a)
Fair value at December
31, 1999............... $662,013
Maturity................. August 2006
Amortizing notional
amount................. $21,587,308 $ 18,654,553 $ 11,355,657 $ 5,364,979 $ 1,662,358
Rate to be paid by the
Company................ 6.115%
Rate to be received by
the Company............ 30-day CP(a)
Fair value at December
31, 1999............... $124,329
Maturity................. October 2003
</TABLE>
36
<PAGE> 38
<TABLE>
<CAPTION>
EFFECTIVE PERIOD OF INTEREST RATE SWAP
AVERAGE NOTIONAL AMOUNT FOR THE TWELVE MONTHS ENDING DECEMBER 31,(B)
DECEMBER 31, -------------------------------------------------------------------------------------
1999 2000 2001 2002 2003 2004 THEREAFTER
-------------- ------------ ------------ ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Amortizing notional
amount............... $25,120,385 $ 20,982,557 $ 17,061,719 $ 14,470,791 $ 7,201,297 $ 1,924,644 $ --
Rate to be paid by the
Company.............. 6.245%
Rate to be received by
the Company.......... 30-day CP(a)
Fair value at December
31, 1999............. $196,586
Maturity............... June 2004
Fixed notional
amount............... $75,000,000 $ 75,000,000 $ 75,000,000 $ 75,000,000
Rate to be paid by the
Company.............. 5.125%
Rate to be received by
the Company.......... 3-month LIBOR
Fair value at December
31, 1999............. $3,314,703
Maturity............... November 2002
Amortizing notional
amount............... $-- $ 1,093,724 $ 1,044,556 $ 960,246 $ 868,152 $ 767,543 $ 387,259
Rate to be paid by the
Company.............. 6.540%
Rate to be received by
the Company.......... 30-day CP(a)
Fair value at December
31, 1999............. $19,243
Commencement........... October 2000
Maturity............... February 2010
Amortizing notional
amount............... $2,419,000 $ 2,306,250 $ 2,060,250 $ 1,814,250 $ 1,568,250 $ 1,322,250 $ 604,750
Rate to be paid by the
Company.............. 6.510%
Rate to be received by
the Company.......... 30-day CP(a)
Fair value at December
31, 1999............. $27,058
Maturity............... October 2009
Amortizing notional
amount............... $15,525,108 $ 17,964,808 $ 20,556,509 $ 18,413,917 $ 15,363,530 $ 12,769,141 $4,171,695
Rate to be paid by the
Company.............. 6.575%
Rate to be received by
the Company.......... 30-day CP(a)
Fair value at December
31, 1999............. $194,189
Maturity............... August 2009
Amortizing notional
amount............... $35,562,650 $ 28,157,121 $ 15,094,556 $ 4,774,552 $ 666,106
Rate to be paid by the
Company.............. 6.326%
Rate to be received by
the Company.......... 30-day CP(a)
Fair value at December
31, 1999............. $38,525
Maturity............... June 2003
Fixed notional
amount............... $80,000,000 $ 80,000,000
Rate to be paid by the
Company.............. 5.230%
Rate to be received by
the Company.......... 1-month LIBOR
Fair value at December
31, 1999............. $247,349
Maturity............... April 2000
Fixed notional
amount............... $60,000,000 $ 60,000,000 $ 60,000,000 $ 60,000,000
Rate to be paid by the
Company.............. 5.500%
Rate to be received by
The Company.......... 1-month LIBOR
</TABLE>
37
<PAGE> 39
<TABLE>
<CAPTION>
EFFECTIVE PERIOD OF INTEREST RATE SWAP
AVERAGE NOTIONAL AMOUNT FOR THE TWELVE MONTHS ENDING DECEMBER 31,(B)
DECEMBER 31, -------------------------------------------------------------------------------------
1999 2000 2001 2002 2003 2004 THEREAFTER
-------------- ------------ ------------ ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Fair value at December
31, 1999............. $1,395,868
Maturity............... January 2002
Fixed notional
amount............... $175,000,000 $175,000,000 $175,000,000 $175,000,000
Rate to be paid by the
Company.............. 5.560%
Rate to be received by
the Company.......... 1-month LIBOR
Fair value at December
31, 1999............. $5,542,080
Maturity............... October 2002
Fixed notional
amount............... $345,000,000 $345,000,000 $345,000,000 $345,000,000 $345,000,000 $345,000,000
Rate to be paid by the
Company.............. 5.650%
Rate to be received by
the Company.......... 1-month LIBOR
Fair value at December
31, 1999............. $15,157,012
Maturity............... January 2004
Fixed notional
amount............... $230,000,000 $230,000,000 $230,000,000 $230,000,000 $230,000,000 $230,000,000
Rate to be paid by the
Company.............. 5.710%
Rate to be received by
the Company.......... 1-month LIBOR
Fair value at December
31, 1999............. $11,741,234
Maturity............... November 2004
</TABLE>
- ---------------
(a) The rate to be received by the Company is based on a 30-day commercial paper
rate published by the U.S. Federal Reserve (H15 report).
(b) The amortizing notional amount is based on contractual agreements with the
counter-party.
38
<PAGE> 40
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
UNAUDITED SELECTED QUARTERLY FINANCIAL DATA
<TABLE>
<CAPTION>
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER 1ST QUARTER 2ND QUARTER 3RD QUARTER
1998 1998 1998 1998 1999 1999 1999
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Total revenues.................. $ -- $54,008 $130,314 $323,219 $102,691 $204,776 $186,882
Income (loss) before taxes...... (17,315) 15,932 26,007 32,176 1,383 10,285 5,898
Net income (loss)............... (17,315) 9,254 14,568 18,286 (887) 4,609 1,889
Earnings (loss) per common
share, basic.................. (2.72) 0.36 0.29 0.36 (0.02) 0.09 0.04
Earnings (loss) per common
share, diluted................ (2.72) 0.36 0.29 0.35 (0.02) 0.09 0.04
<CAPTION>
4TH QUARTER
1999
-----------
<S> <C>
Total revenues.................. $368,405
Income (loss) before taxes...... 9,955
Net income (loss)............... 4,371
Earnings (loss) per common
share, basic.................. 0.08
Earnings (loss) per common
share, diluted................ 0.08
</TABLE>
FINANCIAL STATEMENTS
The information set forth under the caption "Financial Statements" in Item
14 of Part IV of this Form 10-K is incorporated herein by reference in response
to this Item 8.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth under the captions "Election of Directors" and
"Other Matters" in the Proxy Statement, and the information set forth in Item 1,
"Business -- Executive Officers" is incorporated herein by reference in response
to this Item 10.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the caption "Executive Compensation,"
"Compensation Committee Report on Executive Compensation" and "Performance
Graph" in the Proxy Statement is incorporated herein by reference in response to
this Item 11.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the caption "Security Ownership of Certain
Beneficial Owners and Management" in the Proxy Statement is incorporated herein
by reference in response to this Item 12.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the subcaption "Executive
Compensation -- Compensation Committee Interlocks and Insider Participation" and
"Certain Relationships and Related Party Transactions" in the Proxy Statement is
incorporated herein by reference in response to this Item 13.
39
<PAGE> 41
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A)(1) FINANCIAL STATEMENTS. The following consolidated financial statements of
the Company are filed with this Form 10-K:
The consolidated financial statements of UniCapital Corporation and
Subsidiaries as of December 31, 1999 and 1998 and for the years ended
December 31, 1999 and 1998 and for the period from inception (October 9,
1997) to December 31, 1997.
(A)(2) FINANCIAL STATEMENT SCHEDULES. All financial statement schedules are
omitted because they are not applicable or the required information is shown in
the financial statements or notes thereto listed above in Item 14(a)(1).
(A)(3) EXHIBITS. The Exhibits listed below are filed or incorporated by
reference as part of this Form 10-K. Where so indicated by footnote, exhibits
which were previously filed are incorporated by reference.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
2.01 Amended and Restated Agreement and Plan of Contribution by
and among UniCapital Corporation, ACR Acquisition Corp.,
American Capital Resources, Inc. and Michael B. Pandolfelli
and Gerald P. Ennella, dated as of February 14, 1998. (1)
2.02 Amended and Restated Agreement and Plan of Contribution by
and among UniCapital Corporation, BCG Acquisition Corp.,
Boulder Capital Group, Inc., Roy L. Burger and Carl M.
Williams, dated as of February 14, 1998. (1)
2.03 Amended and Restated Agreement and Plan of Contribution by
and among UniCapital Corporation, CLA Acquisition Corp.,
Stuart L. Cauff, The 1998 Cauff Family Trust, Wayne D.
Lippman and The 1998 Lippman Family Trust, dated as of
February 14, 1998. (1)
2.04 Amended and Restated Agreement and Plan of Contribution by
and among UniCapital Corporation, JCS Acquisition Corp.,
Jacom Computer Services, Inc. and John L. Alfano, dated as
of February 14, 1998. (1)
2.05 Amended and Restated Agreement and Plan of Contribution by
and among UniCapital Corporation, KSTN Acquisition Corp.,
K.L.C., Inc. and Alan H. Kaufman and Edgar W. Lee, dated as
of February 14, 1998. (1)
2.06 Amended and Restated Agreement and Plan of Contribution by
and among UniCapital Corporation, XFC Acquisition Corp.,
Matrix Funding Corporation, and Richard C. Emery, J. Robert
Bonnemort, David A. DiCesaris, Jack S. and Judith F. Emery,
Trustees for Jack S. Emery Trust, Alvin W. and Lila E.
Emery, Trustees for Alvin W. and Lila E. Emery Trust, JSE
Partners, Ltd., a Utah Limited Partnership, LBK Limited
Partnership, a Utah Limited Partnership, John I. Kasteler,
Jr., Craig C. Mortensen, Shanni Staker and Christian F.
Emery, dated as of February 14, 1998. (1)
2.07 Amended and Restated Purchase Agreement by and among
UniCapital Corporation, MFA Acquisition Corp., Merrimac
Financial Associates and Allan Z. Gilbert, Jordan L. Shatz
and Mark F. Cignoli, dated as of February 14, 1998. (1)
</TABLE>
40
<PAGE> 42
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
2.08 Amended and Restated Agreement and Plan of Contribution by
and among UniCapital Corporation, MCMG Acquisition Corp.,
Municipal Capital Markets Group, Inc., and the Stockholders
Named Therein, dated as of February 14, 1998. (1)
2.09 Amended and Restated Agreement and Plan of Contribution by
and among UniCapital Corporation, NSJ Acquisition Corp., W.
Jeptha Thornton, Richard C. Giles, Samuel J. Thornton, The
1998 Giles Family Trust and The 1998 Thornton Family Trust,
dated as of February 14, 1998. (1)
2.10 Amended and Restated Purchase Agreement by and among PFSC
Acquisition Corp., PFSC Limited Acquisition Corp., Portfolio
Financial Servicing Company, L.P. and The Partners Listed on
the Signature Page, dated as of February 14, 1998. (1)
2.11 Amended and Restated Agreement and Plan of Contribution by
and among UniCapital Corporation, VC Acquisition Corp.,
Varilease Corporation, and the Stockholders of such company
listed on the Signature Page, dated as of February 14, 1998.
(1)
2.12 Amended and Restated Agreement and Plan of Contribution by
and among UniCapital Corporation, WAG Acquisition Corp., The
Walden Asset Group, Inc. and the Stockholders of such
company listed on the Signature Page, dated as of February
14, 1998. (1)
2.13 Agreement and Plan of Merger by and among UniCapital
Corporation, USTEC Acquisition Corp., United States Turbine
Engine Corp., James K. Neff, Carmit P. Neff and Randall P.
Fiorenza, dated as of July 27, 1998. (2)
2.14 Agreement and Plan of Reorganization by and among UniCapital
Corporation, SFC Acquisition Corp., Saddleback Financial
Corporation, Warren E. Emard and Stuart Kennedy, dated as of
July 28, 1998. (3)
2.15 Agreement and Plan of Reorganization by and among UniCapital
Corporation, JRI Acquisition Corp., HLC Financial, Inc.,
Lawrence P. Ciuffitelli and Soron Litman, dated as of July
28, 1998. (4)
2.16 Agreement and Plan of Reorganization by and among UniCapital
Corporation, MYC Acquisition Corp., The Myerson Companies,
Inc., Donald A. Myerson and Virginia Milke, dated as of
August 7, 1998. (5)
3.01 Certificate of Incorporation of UniCapital Corporation, as
amended. (1)
3.02 Bylaws of UniCapital Corporation. (1)
4.01 Credit Agreement by and among UniCapital Corporation,
NationsBank, National Association and the Lenders party
thereto, dated as of June 10, 1998. (6)
4.02 Amended and Restated Transfer and Administration Agreement
Among Kitty Hawk Funding Corporation, UCP Qualifying SPE
1998-1 Limited Partnership, UCP Operating SPE 1998-1 Limited
Partnership, UniCapital Operations Group, Inc., and Bank of
America, N.A. dated as of August 16, 1999.*
4.03 Loan and Security Agreement among Kitty Hawk Funding
Corporation, UCP Borrowing SPE 1998-1 Limited Partnership,
Portfolio Financial Servicing Company, L.P. and NationsBank,
N.A. dated as of July 10, 1998. (6)
4.04 Credit Agreement by and among UniCapital Corporation, First
Security Bank, National Association, as Trustee,
NationsBank, National Association, as Agent and as Lender,
and the Lenders party thereto, dated as of June 10, 1998.
(8)
</TABLE>
41
<PAGE> 43
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
4.05 Credit Agreement by and among UniCapital Corporation, First
Security Bank, National Association, as Trustee, Lehman
Commercial Paper Inc., as Agent and as Lender, and the
Lenders party thereto, dated as of October 6, 1998. (8)
4.05(a) Amendment No. 1 dated March 26, 1999.*
4.05(b) Amendment No. 2 dated April 28, 1999.*
4.05(c) Amendment No. 3 dated August 19, 1999.*
4.05(d) Amendment No. 4 dated October 4, 1999.*
4.05(e) Amendment No. 5 dated October 21, 1999.*
4.05(f) Amendment No. 6 dated October 28, 1999.*
4.05(g) Amendment No. 7 dated November 4, 1999.*
4.05(h) Amendment No. 8 dated November 8, 1999.*
4.05(i) Amendment No. 9 dated March 16, 2000.*
4.06 Indenture by and among UCP 99-1 LLC I and UCP 99-1 LLC II,
as Issuers, UniCapital Operations Group, Inc., as Servicer,
UniCapital Corporation, as Originator, and Norwest Bank
Minnesota, National Association, as Indenture Trustee, dated
as of August 1, 1999.*
10.01 Employment Agreement between UniCapital Corporation and John
L. Guadagno, effective as of August 2, 1999. +*
10.02 Employment Agreement between UniCapital Corporation and
Bruce E. Kropschot, effective as of May 20, 1998. +(7)
10.03 Amended and Restated Employment Agreement between UniCapital
Corporation and Martin Kalb, effective as of March 1,
2000. +*
10.04 Employment Agreement between UniCapital Corporation and
Steven E. Hirsch, effective as of May 20, 1998. +(7)
10.05 UniCapital Corporation 1997 Executive Non-Qualified Stock
Option Plan. (1)
10.06 Amended and Restated Employment Agreement between UniCapital
Corporation and Edward A. Jaeckel, effective as of October
1, 1999. +*
10.07 UniCapital Corporation 1998 Long-Term Incentive Plan. +(1)
10.08 UniCapital Corporation 1998 Non-Employee Directors' Stock
Plan. +(1)
10.09 UniCapital Corporation 1998 Employee Stock Purchase Plan.
(1)
10.10 Amended and Restated Employment Agreement between UniCapital
Corporation and Robert J. New, effective as of March 1,
2000. +*
10.11 Amended and Restated Employment Agreement between UniCapital
Corporation and Jonathan New, effective as of March 1,
2000. +*
</TABLE>
42
<PAGE> 44
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
10.12 Employment Agreement between UniCapital Corporation and
Stuart L. Cauff, effective as of May 20, 1998. +(7)
21.01 Subsidiaries.*
23.01 Consent of PricewaterhouseCoopers LLP.*
27.01 Financial Data Schedule.*
</TABLE>
- ---------------
+ Management contract or compensatory plan or arrangement.
* Filed herewith.
(1) Incorporated by reference to exhibit with corresponding number filed with
Amendment No. 1 to the registrant's Registration Statement on Form S-1 (File
No. 333-46603), as filed with the Commission on April 3, 1998.
(2) Incorporated by reference to Exhibit 2.01 to the Company's Current Report on
Form 8-K dated July 27, 1998 (File No. 001-13973).
(3) Incorporated by reference to Exhibit 2.02 to the Company's Current Report on
Form 8-K dated July 27, 1998 (File No. 001-13973).
(4) Incorporated by reference to Exhibit 2.03 to the Company's Current Report on
Form 8-K dated July 27, 1998 (File No. 001-13973).
(5) Incorporated by reference to Exhibit 2.04 to the Company's Current Report on
Form 8-K dated July 27, 1998 (File No. 001-13973).
(6) Incorporated by reference to exhibit with corresponding number filed with
the Company's Quarterly Report on Form 10-Q as filed with the Commission on
August 14, 1998.
(7) Incorporated by reference to the exhibit with corresponding number filed
with Amendment No. 1 to the Company's Registration Statement on Form S-1
(File. No. 333-53779), as filed with the Commission on June 9, 1998.
(8) Incorporated by reference to exhibit with corresponding number filed with
the Company's Annual Report on Form 10-K as filed with the Commission on
March 31, 1999.
LOAN AND CREDIT AGREEMENTS
The Company and certain of its subsidiaries have entered into the loan and
credit agreements listed below, the principal amount of each of which is less
than 10% of its assets on a consolidated basis. The Company has not filed copies
of such documents but undertakes to provide copies thereof to the Securities and
Exchange Commission supplementally upon request.
(1) Master Loan and Security Agreement by and among UCP Warehouse SPE
1999-2 LLC, UniCapital Corporation, UniCapital Operations Group, Inc.
and Morgan Stanley Asset Funding, Inc. dated as of December 23, 1999
(2) Credit agreement by and among UCP Engines, Inc., UCP Engines Trust,
State Street Bank and Trust Company of Connecticut, National
Association, Aircraft 22067 Trust and Aircraft 20527 Trust, as
Borrowers, Lehman Commercial Paper, Inc., as Lender, Syndication Agent
and Administrative Agent, Lehman Brothers Inc., as Arranger, and the
Lenders party thereto, dated as of April 28, 1999, as amended by
Amendment No. 1 dated October 29, 1999, as further amended by Amendment
No. 2 dated
43
<PAGE> 45
November 5, 1999, as further amended by Amendment No. 3 dated November
19, 1999.
(3) Lease Receivables Purchase Agreement by and among Triple-A One Funding
Corporation, as Purchaser, Key Corporate Capital, Inc., as Agent, Jacom
Computer Services, Inc., Walden Asset Group, Inc., Varilease
Corporation, Matrix Funding Corporation, American Capital Resources,
Inc., Boulder Capital Group, Inc. and UniCapital Funding Corporation,
as Sellers, and UniCapital Operations Group, Inc., as Collection Agent,
dated as of October 28, 1999.
(4) Participation Agreement by and among Aircraft 24497 Trust, Aircraft
24451 Trust, Aircraft 24176 Trust, Aircraft 23983 Trust, Aircraft 23929
Trust, Aircraft 23928 Trust, Aircraft 22689 Trust and Aircraft 22688
Trust, as Borrowers, Aircraft 24497, Inc., Aircraft 24451, Inc.
Aircraft 24176, Inc., Aircraft 23983, Inc., Aircraft 23929, Inc.,
Aircraft 23928, Inc., Aircraft 22689, Inc. and Aircraft 22688, Inc., as
Owner Participants, UniCapital Air Group, Inc., the Loan Participants a
party thereto, the Head Lessees a party thereto, Wilmington Trust
Company, as Trustee and The Chase Manhattan Bank, as Security Agent,
dated as of December 20, 1999.
(B) CURRENT REPORTS ON FORM 8-K
The Company did not file any Current Reports on Form 8-K during the quarter
ended December 31, 1999.
44
<PAGE> 46
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized in the City of Miami,
State of Florida on March 30, 2000.
UNICAPITAL CORPORATION
By: /s/ JONATHAN NEW
------------------------------------
Jonathan New
Chief Financial Officer
Each person whose signature appears below hereby appoints Robert J. New and
Jonathan New and both of them, either of whom may act without the joinder of the
other, as such person's true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for such person and in such person's
name, place and stead, in any and all capacities, to sign any and all amendments
to this Annual Report on Form 10-K, and to file the same, with all exhibits
thereto and all other documents in connection therewith, with the Commission,
granting unto said attorneys-in-fact and agents full power and authority to
perform each and every act and thing appropriate or necessary to be done, as
fully and for all intents and purposes as such person might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their substitute or substitutes may lawfully do or cause to de done by
virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<C> <S> <C>
/s/ ROBERT J. NEW Chairman and Chief Executive March 30, 2000
- ---------------------------------- Officer and a Director
Robert J. New (Principal Executive Officer)
/s/ JONATHAN NEW Chief Financial Officer March 30, 2000
- ---------------------------------- (Principal Financial Officer)
Jonathan New
/s/ STUART L. CAUFF Director March 30, 2000
- ----------------------------------
Stuart L. Cauff
/s/ SCOTT BROWN Director March 30, 2000
- ----------------------------------
Scott Brown
/s/ JONATHAN J. LEDECKY Director March 30, 2000
- ----------------------------------
Jonathan J. Ledecky
/s/ ANTHONY K. SHRIVER Director March 30, 2000
- ----------------------------------
Anthony K. Shriver
</TABLE>
45
<PAGE> 47
UNICAPITAL CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Certified Public...................... F-2
Consolidated Balance Sheets................................. F-3
Consolidated Statements of Operations....................... F-4
Consolidated Statements of Stockholders' Equity............. F-5
Consolidated Statements of Cash Flows....................... F-6
Notes to Consolidated Financial Statements.................. F-8
</TABLE>
F-1
<PAGE> 48
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and
Stockholders of UniCapital Corporation
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of stockholders' equity and of cash flows
present fairly, in all material respects, the financial position of UniCapital
Corporation and its subsidiaries at December 31, 1999 and 1998, and the results
of their operations and their cash flows for the years ended December 31, 1999
and 1998 and the period from inception (October 9, 1997) to December 31, 1997,
in conformity with accounting principles generally accepted in the United
States. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Ft. Lauderdale, Florida
February 3, 2000, except for Note 24,
as to which the date is March 28, 2000
F-2
<PAGE> 49
UNICAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1999 1998
---------- ----------
(DOLLARS IN THOUSANDS,
EXCEPT SHARE DATA)
<S> <C> <C>
ASSETS
Cash and cash equivalents................................... $ 25,849 $ 9,772
Restricted cash............................................. 126,637 --
Accounts receivable, net.................................... 60,870 41,717
Notes receivable............................................ 45,097 9,647
Net investment in finance contracts......................... 856,527 373,383
Equipment under operating leases, net....................... 1,908,686 430,229
Equipment held for sale or lease............................ 264,714 79,897
Investments................................................. 20,981 29,548
Property and equipment, net................................. 18,601 8,433
Goodwill, net of accumulated amortization of $28,752 and
$10,119 respectively...................................... 625,180 613,646
Income taxes receivable..................................... 5,872 --
Deposits and other assets................................... 45,567 73,251
---------- ----------
Total assets........................................... $4,004,581 $1,669,523
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Recourse debt............................................... $ 455,900 $ 196,279
Non-recourse and limited recourse debt...................... 2,412,233 471,043
Accounts payable and accrued expenses....................... 115,210 84,967
Security and other deposits................................. 61,185 24,473
Income taxes payable........................................ -- 6,353
Deferred income taxes....................................... 82,772 66,522
Other liabilities........................................... 14,988 2,598
---------- ----------
Total liabilities...................................... 3,142,288 852,235
---------- ----------
Commitments and contingencies (Notes 19 and 24)............. -- --
Minority interest........................................... 23,725 --
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value, 20,000,000 shares
authorized, no shares issued and outstanding.............. -- --
Common stock, $.001 par value, 200,000,000 shares
authorized, 53,512,308 and 51,433,539 shares issued and
outstanding, respectively................................. 53 51
Additional paid-in capital.................................. 808,657 796,960
Stock subscription notes receivable......................... (3,210) (3,443)
Accumulated other comprehensive income...................... 430 1,064
Retained earnings........................................... 32,638 22,656
---------- ----------
Total stockholders' equity............................. 838,568 817,288
---------- ----------
Total liabilities and stockholders' equity............. $4,004,581 $1,669,523
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 50
UNICAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED DECEMBER 31, INCEPTION
----------------------- (OCTOBER 9, 1997)
1999 1998 TO DECEMBER 31, 1997
---------- ---------- --------------------
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
Income from finance contracts............. $ 70,133 $ 30,027 $ --
Rental income from operating leases....... 244,868 68,003 --
Sales of equipment........................ 478,381 360,256 --
Gain on sale of finance contracts......... 11,537 23,862 --
Fees, commissions and remarketing income.. 30,820 17,300 --
Interest and other income................. 27,015 8,093 --
---------- ---------- ---------
Total revenues....................... 862,754 507,541 --
---------- ---------- ---------
Cost of operating leases.................. 112,928 27,841 --
Cost of equipment sold.................... 428,094 314,994 --
Interest expense.......................... 162,921 35,453 --
Selling, general and administrative
expenses................................ 112,128 63,347 2,137
Goodwill amortization..................... 18,633 10,119 --
---------- ---------- ---------
Total expenses....................... 834,704 451,754 2,137
---------- ---------- ---------
Income (loss) from operations............. 28,050 55,787 (2,137)
Equity in income from minority-owned
affiliates.............................. -- 1,013 --
Minority interest......................... 529 -- --
---------- ---------- ---------
Income (loss) before taxes................ 27,521 56,800 (2,137)
Provision for income taxes................ 17,539 32,007 --
---------- ---------- ---------
Net income (loss).................. $ 9,982 $ 24,793 $ (2,137)
========== ========== =========
Earnings (loss) per common share, basic... $ 0.19 $ 0.73 $ (1.62)
Earnings (loss) per common share,
diluted................................. $ 0.19 $ 0.72 $ (1.62)
Weighted average shares outstanding,
basic................................... 52,664,830 33,841,448 1,319,063
Weighted average shares outstanding,
diluted................................. 53,817,103 34,353,714 1,319,063
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 51
UNICAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
STOCK ACCUMULATED
ADDITIONAL SUBSCRIPTION OTHER RETAINED
COMMON PAID-IN NOTES COMPREHENSIVE EARNINGS COMPREHENSIVE TREASURY
STOCK CAPITAL RECEIVABLE INCOME (DEFICIT) INCOME STOCK TOTAL
------ ---------- ------------ ------------- --------- ------------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT INCEPTION
(OCTOBER 9, 1997)........ $-- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Issuance of 5,276,250
shares of common stock
($2,133 of compensation
expense recorded)........ 5 2,537 (129) -- -- -- -- 2,413
Comprehensive income:
Net loss................. -- -- -- -- (2,137) $(2,137) -- (2,137)
-------
Total comprehensive
income............... $(2,137)
--- -------- ------- ------ ------- ======= ----- --------
BALANCE AT DECEMBER 31,
1997..................... 5 2,537 (129) -- (2,137) -- -- 276
Issuance of 1,522,500
shares of common stock
($15,248 of compensation
expense recorded......... 2 20,367 (3,830) -- -- -- -- 16,539
Issuance of options
($2,060 of compensation
expense recorded......... -- 2,060 -- -- -- -- -- 2,060
Issuance of 28,000,000
shares of common stock,
net of underwriters
discounts and offering
costs.................... 28 488,613 -- -- -- -- -- 488,641
Issuance of 13,340,901
shares of common stock to
founding companies in
connection with
mergers.................. 13 228,119 -- -- -- -- -- 228,132
Issuance of 3,293,888
shares of common stock
for additional
acquisitions............. 3 55,264 -- -- -- -- -- 55,267
Payments received on stock
subscription notes
receivable............... -- -- 516 -- -- -- -- 516
Comprehensive income:
Net income............... -- -- -- -- 24,793 $24,793 -- 24,793
Other comprehensive
income:
Net unrealized gain on
securities, net of
deferred taxes of
$653................... -- -- -- 1,064 -- 1,064 -- 1,064
-------
Total comprehensive
income............... $25,857
--- -------- ------- ------ ------- ======= ----- --------
BALANCE AT DECEMBER 31,
1998..................... 51 796,960 (3,443) 1,064 22,656 -- -- 817,288
Issuance of 2,140,372
shares of common stock in
connection with earnouts
for companies acquired in
1998..................... 2 11,464 -- -- -- -- 651 12,117
Cancellation of 36,633
shares of common stock in
connection with
indemnification claims
for companies acquired in
1998..................... -- (311) -- -- -- -- -- (311)
Issuance of 125,030 shares
of common stock in
connection with employee
stock purchase plan...... -- 544 -- -- -- -- -- 544
Repurchase of 150,000
shares of common stock... -- -- -- -- -- -- (651) (651)
Payments received on stock
subscription notes
receivable............... -- -- 233 -- -- -- -- 233
Comprehensive income:
Net income................ -- -- -- -- 9,982 $ 9,982 -- 9,982
Other comprehensive
income:
Change in net unrealized
gain on securities (net
of deferred taxes of
$566).................... -- -- -- (924) -- (924) -- (924)
Foreign currency
translation adjustment... -- -- -- 290 -- 290 -- 290
-------
Total comprehensive
income............... $ 9,348
--- -------- ------- ------ ------- ======= ----- --------
BALANCE AT DECEMBER 31,
1999..................... $53 $808,657 $(3,210) $ 430 $32,638 $ -- $838,568
=== ======== ======= ====== ======= ===== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 52
UNICAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED PERIOD FROM
DECEMBER 31, INCEPTION
------------------------- (OCTOBER 9, 1997) TO
1999 1998 DECEMBER 31, 1997
----------- ----------- ---------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)........................................... $ 9,982 $ 24,793 $(2,137)
Adjustments to reconcile net income (loss) to net cash
provided
By (used in) operating activities:
Depreciation and amortization............................. 141,561 43,864 --
Deferred income tax expense............................... 16,250 22,123 --
Provision for credit losses............................... 8,333 814 --
Compensation expenses related to equity issuances......... -- 17,308 2,133
Gain on sale of finance contracts......................... (11,537) (23,862) --
Gain on sales of equipment................................ (50,287) (45,262) --
Gain on sale of equity interest in subsidiary............. (8,969)
Equity in income from minority-owned affiliates........... -- (1,013) --
Minority interest......................................... 529 -- --
Changes in other assets and liabilities:..................
Restricted cash......................................... (92,150) -- --
Accounts and notes receivable........................... (54,603) (36,686) --
Income taxes receivable................................. (5,872) -- --
Deposits and other assets............................... 13,908 (21,165) (601)
Accounts payable and accrued expenses................... 47,016 12,732 355
Security and other deposits............................. 36,712 4,724 --
Income taxes payable.................................... (6,353) 2,187 --
Other liabilities....................................... 12,390 (27,186) --
----------- ----------- -------
Net cash provided by (used in) operating activities... 56,910 (26,629) (250)
----------- ----------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures........................................ (12,912) (6,796) --
Proceeds from sale of finance contracts..................... 319,188 350,205 --
Proceeds from sales of equipment............................ 320,802 308,004 --
Proceeds from sale of equity interest in subsidiary......... 33,328 -- --
Collection of direct financing and sales-type leases, net of
finance income earned..................................... 238,873 138,103 --
Investment in direct financing and sales-type leases and
purchases of equipment for sale or lease.................. (2,831,442) (1,107,834) --
Cash paid for acquisitions, net of cash acquired............ -- (393,731) --
Cash paid under earnout agreements for companies acquired in
1998...................................................... (16,773) -- --
Increase (decrease) in investments, net..................... 3,021 (9,325) --
----------- ----------- -------
Net cash used in investing activities................. (1,945,915) (721,374) --
----------- ----------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from recourse debt................................. 957,519 543,884 --
Repayment of recourse debt.................................. (697,898) (496,311) --
Proceeds from non-recourse and limited recourse debt........ 2,336,299 483,866 --
Repayment of non-recourse and limited recourse debt......... (655,933) (262,139) --
Change in restricted cash................................... (34,487) -- --
Purchase of treasury stock.................................. (651) -- --
Proceeds from issuance of common stock, net of offering
costs
of $11,439................................................ -- 489,931 280
Repayment of subordinated debt assumed in acquisitions...... -- (2,002) --
Proceeds received on subscription notes receivable.......... 233 516 --
----------- ----------- -------
Net cash provided by financing activities............. 1,905,082 757,745 280
----------- ----------- -------
Increase in cash and cash equivalents....................... 16,077 9,742 30
Cash and cash equivalents at beginning of period............ 9,772 30 --
----------- ----------- -------
Cash and cash equivalents at end of period.................. $ 25,849 $ 9,772 $ 30
=========== =========== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 53
UNICAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED PERIOD FROM
DECEMBER 31, INCEPTION
------------------ (OCTOBER 9, 1997) TO
1999 1998 DECEMBER 31, 1997
-------- ------- ---------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid for interest........................ $139,068 $28,709 $ --
======== ======= ====
Cash paid for income taxes.................... $ 13,513 $ 5,422 $ --
======== ======= ====
Supplemental disclosure of cash flow information
for non-cash items:
Stock subscription notes receivable received
as consideration for issuance of common
stock...................................... $ -- $ 3,830 $129
======== ======= ====
Debt assumed by buyers as consideration on
sales of equipment......................... $ 53,254 $ -- $ --
======== ======= ====
Notes received as partial consideration on
sales of aircraft and aircraft engines..... $ 23,461 $11,492 $ --
======== ======= ====
Debt assumed in connection with the
acquisition of aircraft and aircraft
engines.................................... $314,078 $39,558 $ --
======== ======= ====
Equipment received in exchange for investment
in minority-owned affiliate in nonmonetary
transaction................................ $ 5,546 $ -- $ --
======== ======= ====
Common stock issued in connection with
earnouts for companies acquired in 1998.... $ 12,117 $ -- $ --
======== ======= ====
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-7
<PAGE> 54
UNICAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--ORGANIZATION AND NATURE OF BUSINESS
UniCapital Corporation, incorporated in Delaware, was founded in October
1997 to create a national operator and integrator of equipment leasing,
specialty finance and related businesses serving the commercial market.
UniCapital Corporation acquired twelve equipment leasing, specialty finance and
related businesses (the "Founding Companies") upon consummation of an initial
public offering (the "Offering") of its common stock ("Common Stock") in May
1998. Subsequent to the Offering, UniCapital Corporation acquired, through
merger or purchase, five additional companies, continuing the expansion of its
national operations. UniCapital Corporation, the Founding Companies and the
subsequently acquired companies are referred to collectively as the "Company".
The Company originates, acquires, sells and services equipment leases and
arranges structured financing in the computer and telecommunications equipment,
large ticket and structured finance, middle market and small ticket areas of the
equipment leasing industry. In addition, the Company provides lease
administration and processing services, which include the servicing of certain
leases sold to third parties. The Company's leases and structured financing
arrangements cover a broad range of equipment, including aircraft, aircraft
engines and aircraft equipment, computer and telecommunications equipment,
construction and manufacturing equipment, office equipment, tractor trailers,
printing equipment, car washes, petroleum retail equipment and vending machines.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of UniCapital
Corporation and its wholly owned subsidiaries, its majority-owned subsidiaries,
as well as the results of operations of the Company's investments accounted for
under the equity method. The minority interest related to consolidated
majority-owned subsidiaries has been reported as minority interest in the
Company's Consolidated Balance Sheets and the earnings related to the outside
interests have been reported as minority interest in the Company's Consolidated
Statements of Operations. All significant intercompany accounts and transactions
have been eliminated in consolidation. The consolidated financial statements
have been prepared in accordance with generally accepted accounting principles.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. While management believes that the estimates and related
assumptions used in the preparation of these financial statements are
appropriate, actual results could differ from those estimates. Estimates are
made in the assessment of collectibility of receivables and finance contracts,
recovery of estimated unguaranteed residual values of
F-8
<PAGE> 55
leased equipment, depreciable lives, impairment of goodwill and other intangible
assets, and the related estimated lives of such assets, and estimates of
expected maintenance and overhaul costs in connection with certain leases of
aircraft.
COMPREHENSIVE INCOME
In 1998, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income". Other
comprehensive income refers to revenue, expenses, gains and losses that are not
included in net income, but rather are recorded directly in stockholders'
equity. The Company has elected to present other comprehensive income in the
Consolidated Statements of Stockholders' Equity, with the accumulated balance of
other comprehensive income reported as a separate component of stockholders'
equity in the Consolidated Balance Sheets.
CASH AND CASH EQUIVALENTS
The Company classifies highly liquid investments with original maturities
of three months or less from the date of purchase as cash equivalents.
FINANCE CONTRACTS
Net investment in finance contracts principally includes direct finance
leases and sales-type leases. Direct finance leases include gross rentals
receivable, estimates of unguaranteed equipment residual values and unamortized
initial direct costs less the unamortized portion of unearned finance income,
and is reflected net of the allowance for credit losses. Unearned finance income
represents the excess of the gross rentals receivable plus the estimated
unguaranteed equipment residual value over the cost of the equipment acquired.
Initial direct costs are capitalized and amortized over the lease term under the
interest method.
Revenue from direct finance leases is recognized over the lease term under
the interest method which results in a level rate of return on the net
investment in the lease.
Sales-type leases include gross rentals receivable and estimates of
unguaranteed equipment residual values less unearned finance income, and is
reflected net of the allowance for credit losses. Unearned finance income
represents the excess of the gross rentals receivable plus the estimated
unguaranteed equipment residual value over the present value of these two
components.
Revenue under sales-type leases consists of the present value of the total
contractual lease payments which is recognized at lease inception. Cost
recognized at lease inception consists of the equipment's net book value at
lease inception, less the present value of the equipment's estimated
unguaranteed equipment residual value, and related initial direct costs.
Unearned finance income is recognized as revenue over the term of the lease
under the interest method.
OPERATING LEASES
Equipment under operating leases is recorded at cost and depreciated on a
straight-line basis over the equipment's estimated useful life to its estimated
salvage value. Generally, aircraft, aircraft engines and aircraft equipment are
depreciated over estimated useful lives of 30 years from the date of manufacture
to a 15% estimated salvage value. Technology
F-9
<PAGE> 56
equipment is generally depreciated over an estimated useful life of 3 to 7
years. In estimating the equipment's salvage value for all types of equipment,
the Company relies on historical experience by equipment type and manufacturer
and, where available, valuations by independent appraisers, adjusted for known
trends. The Company's estimates are reviewed continuously to ensure continued
appropriateness; however, the amounts the Company will ultimately realize could
differ from those estimates.
Revenue under operating leases is recognized as rental income on a
straight-line basis over the lease term. In addition, certain contingent rental
payments based on measures of usage of certain types of equipment are recognized
as rental income as received. Costs of operating leases include principally
depreciation of the leased equipment.
EQUIPMENT HELD FOR SALE OR LEASE
Equipment held for sale or lease includes equipment purchased for lease and
equipment off-lease and is stated at the lower of cost or market.
ALLOWANCE FOR CREDIT LOSSES
The allowance for credit losses represents management's estimate of
potential losses inherent in the existing lease portfolio. The allowance for
credit losses is increased by the provision for credit losses charged to expense
and reduced by credit exposures charged off, net of recoveries. The provision
for credit losses is determined based on management's assessment of several
factors including, but not limited to, current and anticipated economic
conditions and the related impact on specific lessees and industry groups,
collateral values and credit quality indicators, historical credit loss
experience, reviews and evaluations of specific credit exposures and changes in
the nature and volume of the lease portfolio. In evaluating the adequacy of the
allowance, management makes certain estimates and assumptions which are
susceptible to change in the near term. While management uses available
information to recognize credit losses, future additions to the allowance may be
necessary based on changes in economic conditions.
IMPAIRMENT OF LONG-LIVED ASSETS
In accordance with Statement of Financial Accounting Standards No. 121,
("SFAS 121") "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of", the recognition of an impairment loss for
an asset held for use is required when the estimate of undiscounted future cash
flows expected to be generated by the asset is less than its carrying amount.
Measurement of an impairment loss is to be recognized based on the fair value of
the asset. Fair value reflects the underlying economic value of the asset, in
normal market conditions (where supply and demand are in reasonable equilibrium)
and assumes adequate time for a sale and a willing buyer and seller. Short-term
fluctuations in the market place are disregarded and it is assumed that there is
no necessity either to dispose of a significant number of assets simultaneously
or to dispose of assets quickly. The fair value of the assets is based on
independent valuations of the assets and/or estimates of discounted future cash
flows. SFAS 121 also requires that long-lived assets to be disposed of be
reported at the lower of the carrying amount or fair value less estimated
disposal costs.
F-10
<PAGE> 57
INVESTMENTS
All investments in securities are classified as available-for-sale in
accordance with Statement of Financial Accounting Standards No. 115 ("SFAS
115"), "Accounting for Certain Investments in Debt and Equity Securities".
Available-for-sale securities are recorded at fair value with unrealized holding
gains or losses, net of the related tax effects, reported as a component of
accumulated other comprehensive income in a separate component of stockholders'
equity. Realized gains and losses from the sale of available-for-sale securities
are determined on a specific identification basis and included in the
Consolidated Statements of Operations.
DERIVATIVES
Derivative financial instruments, as defined in Statement of Financial
Accounting Standards No. 119, "Disclosure about Derivative Financial Instruments
and Fair Value of Financial Instruments", used by the Company primarily include
interest rate swaps. These derivative financial instruments are used as hedges
on specific transactions to synthetically alter the repricing characteristics of
the related assets and liabilities. Risks arise from the use of such instruments
from the possible inability of the counterparties to meet the terms of their
contracts and from market movements in values and interest rates. Management
believes, however, that the potential losses from such risks related to
derivative instruments held at December 31, 1999 are not significant.
In accounting for interest rate swaps, the net differential to be paid or
received on the interest rate swap is recognized as a yield adjustment to the
related asset or liability over the life of the swap agreement. If the related
asset or liability is disposed of, the swap agreement is marked to market.
Thereafter, the interest rate swap is accounted for in the consolidated
financial statements at its fair value with any unrealized gains and losses
recognized in the period incurred. If the interest rate swap agreement is
terminated, the gain or loss is deferred and amortized over the remaining life
of the related asset or liability.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation.
Depreciation on property and equipment is recognized on a straight-line basis
over the estimated useful lives of the assets which generally range from 3 to 7
years.
GOODWILL
Goodwill represents the excess of purchase price over fair value of
identifiable tangible and intangible assets and liabilities acquired.
Amortization of goodwill is recognized on a straight-line basis over the
expected periods to be benefited, generally 15 to 40 years. The Company
periodically reviews goodwill for impairment whenever events or changes in
circumstances indicate that it may not be recoverable. In such an event,
goodwill in excess of expected operating cash flows would be considered to be
impaired and would be written down to fair value, determined based on discounted
future cash flows. There was no impairment at December 31, 1999 or 1998.
F-11
<PAGE> 58
INCOME TAXES
Income taxes are accounted for using the asset and liability method under
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes". Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. Valuation allowances are provided, where necessary, to reduce
deferred taxes to the amount expected to be realized.
TRANSFERS OF FINANCE CONTRACTS
The Company accounts for transfers of finance contracts in accordance with
Statement of Financial Accounting Standards No. 125 ("SFAS 125"), "Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities." Under SFAS 125, upon a transfer of financial assets, the Company
recognizes the financial and servicing assets it controls and the liabilities it
has incurred, derecognizes financial assets when control has been surrendered
and derecognizes liabilities when extinguished. In addition, the Company
initially measures retained interests in the transferred assets by allocating
the finance contracts carrying amount to interests retained and sold based on
relative fair values at the date of transfer.
Retained interests in certain cash flows acquired in connection with a
transfer of lease receivables, if any, are initially recorded based upon the
relative fair value approach noted above and are subsequently accounted for as
available-for-sale securities in accordance with SFAS 115.
EARNINGS PER COMMON SHARE
Earnings per share is calculated in accordance with Statement of Financial
Accounting Standards No. 128 ("SFAS 128"), "Earnings per Share". SFAS 128
requires a dual presentation of basic and diluted earnings per share.
Basic earnings per share is computed by dividing net income available to
common stockholders by the weighted average number of common shares outstanding
for the period. This calculation excludes any potential dilution from securities
or other contracts to issue common stock.
Diluted earnings per share reflects the potential dilution that could occur
if securities or other contracts to issue common stock were exercised or
converted into common stock. Diluted earnings per share is calculated as net
income available to common stockholders divided by the weighted average of
common shares outstanding for the period plus the effect of dilutive shares as
determined using the treasury stock method.
STOCK OPTIONS
Statement of Financial Accounting Standards No. 123 ("SFAS 123"),
"Accounting for Stock Based Compensation", allows entities to choose between a
fair value based method of accounting for employee stock options or similar
equity instruments and the intrinsic value
F-12
<PAGE> 59
based method of accounting prescribed by Accounting Principles Board Opinion No.
25 ("APB No. 25"), "Accounting for Stock Issued to Employees". Entities electing
to account for employee stock options or similar equity instruments under APB
No. 25 must make pro forma disclosures of net income and earnings per share as
if the fair value method of accounting under SFAS 123 had been applied. The
Company has elected to apply the provisions of APB No. 25 in the preparation of
its consolidated financial statements and provide pro forma disclosure of net
income and earnings per share as required under SFAS 123 in the notes to the
consolidated financial statements.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures About
Fair Values of Financial Instruments", requires disclosure of the fair value of
financial instruments, both assets and liabilities recognized and not recognized
on the balance sheet, for which it is practicable to estimate fair value. The
differences between the carrying values and the fair values of the Company's
financial instruments at December 31, 1999 and 1998 were not significant due to
their short-term maturity and variable-interest rate characteristics.
CONCENTRATION OF CREDIT RISK
A substantial portion of the Company's leases are concentrated in certain
industries, including the commercial aircraft, technology and telecommunications
industries. To the extent that the economic or regulatory conditions prevalent
in such industries change, the lessees' ability to honor their lease obligations
may be adversely impacted. Such risk is mitigated, in part, through the
Company's deposit and collateral requirements under lease arrangements and its
continuous monitoring of exposure to credit losses.
Our leases are collateralized by the equipment as well as, in some cases, a
personal guarantee provided by the principal of the lessee. We manage credit
risk through diversifying our customer base, geographic location of lessees and
the type of business equipment leased. We believe that prepayment risks are
mitigated by the non-cancelable nature of the majority of our leases.
RECLASSIFICATIONS
Certain reclassifications have been made to prior year amounts to conform
to the current presentation.
NOTE 3--ACQUISITIONS
During 1999, the Company acquired, through its wholly-owned subsidiary
UniCapital Air Group, Inc., the equity interest in a portfolio of 36 commercial
aircraft, with an appraised fair value of approximately $1.32 billion, from GE
Capital Aviation Services, Inc., a division of General Electric Capital
Corporation. The acquisition closed simultaneously with a securitization,
entitled Aircraft Finance Trust, which provided non-recourse financing.
During 1998, UniCapital Corporation acquired twelve equipment leasing,
specialty finance and related businesses in connection with the Offering, and
subsequent to the Offering, acquired five additional companies continuing the
expansion of its national operations. Each of these acquisitions has been
accounted for using the purchase method of accounting. Under
F-13
<PAGE> 60
the purchase method of accounting, the results of operations of acquired
businesses are included in the Company's results from their respective
acquisition dates, with unaudited pro forma financial information presented in
the notes to the consolidated financial statements to reflect the pro forma
results of operations as if the acquisitions had occurred at the beginning of
the period (see Note 4). The purchase price of each acquisition has been
allocated to the fair values of identifiable tangible and intangible assets and
liabilities acquired, with the excess unallocated purchase price recorded as
goodwill.
The following table presents the aggregate consideration paid in connection
with the Company's acquisitions during 1998:
<TABLE>
<CAPTION>
SHARES OF VALUE OF GOODWILL
COMMON COMMON TOTAL DATE OF AMORTIZATION
CASH STOCK STOCK CONSIDERATION ACQUISITION PERIOD
------ ---------- -------- ------------- ----------- ------------
(IN MILLIONS, EXCEPT SHARE DATA) (IN YEARS)
<S> <C> <C> <C> <C> <C> <C>
BIG TICKET GROUP:
Cauff Lippman Aviation, Inc....... $ 51.5 1,684,210 $ 28.8 $ 80.3 5/20/98 40
Jumbo Jet (and related
entities)....................... 15.4 -- -- 15.4 6/30/98 40
The NSJ Group, Inc................ 16.0 561,978 9.6 25.6 5/20/98 40
United States Turbine Engine
Corp............................ 50.0 2,739,726 46.0 96.0 7/27/98 20
TECHNOLOGY AND FINANCE GROUP:
American Capital Resources, Inc... 20.4 1,071,051 18.3 38.7 5/20/98 40
Jacom Computer Services, Inc...... 128.0 3,368,368 57.6 185.6 5/20/98 40
Matrix Funding Corporation........ 19.4 1,035,811 17.7 37.1 5/20/98 40
Municipal Capital Markets Group,
Inc............................. 7.0 370,656 6.3 13.3 5/20/98 20
Varilease Corporation............. 36.8 1,934,371 33.1 69.9 5/20/98 40
The Walden Asset Group, Inc....... 21.0 1,105,182 18.9 39.9 5/20/98 40
BUSINESS CREDIT GROUP:
Boulder Capital Group, Inc........ 7.1 371,053 6.3 13.4 5/20/98 40
HLC Financial, Inc................ 4.3 224,096 3.8 8.1 7/28/98 40
K.L.C., Inc. (d/b/a Keystone)..... 27.9 1,468,420 25.1 53.0 5/20/98 40
Merrimac Financial Associates..... -- 178,750 3.1 3.1 5/20/98 40
The Myerson Companies, Inc. (d/b/a
BSB Leasing).................... 3.1 167,740 2.9 6.0 8/7/98 40
Saddleback Financial
Corporation..................... 3.0 162,326 2.7 5.7 7/28/98 40
CORPORATE DIVISION:
Portfolio Financial Servicing
Company, L.P.................... -- 191,051 3.2 3.2 5/19/98 15
------ ---------- ------ ------
$410.9 16,634,789 $283.4 $694.3
====== ========== ====== ======
</TABLE>
In addition to the consideration presented in the table above, the selling
shareholders of each acquired company, excluding Portfolio Financial Servicing
Company, L.P. and Jumbo Jet (and related entities), may, pursuant to certain
earnout arrangements, receive additional consideration based on targeted levels
of earnings. The earnout arrangements are generally effective for a two year
period, except for Cauff Lippman Aviation, Inc., The NSJ Group, Inc., Boulder
Capital Group, Inc., Saddleback Financial Corporation and HLC Financial, Inc.,
which will be effective over a three year period. Contingent consideration, if
earned, will be paid in a combination of cash and the Company's Common Stock and
recorded as additional purchase price. In 1999, the Company paid $19.6 million
in contingent consideration for 1998, $12.0 million in cash and $7.6 million in
Common Stock pursuant to the earnout provisions of various acquisition
agreements entered into in 1998. The Company also paid, in 1999,
F-14
<PAGE> 61
$9.3 million in contingent consideration for 1999, $4.8 million in cash and $4.5
million in Common Stock pursuant to the earnout provisions of various
acquisition agreements entered into in 1998. As of December 31, 1999, the
Company estimated that certain of the acquired companies had earned, in the
aggregate, approximately $22.8 million in contingent consideration for the year
ended December 31, 1999 to be paid in a combination of $13.2 million in cash and
$9.6 million in Common Stock pursuant to the earnout provisions of various
acquisition agreements entered into in 1998. The determination of diluted
earnings per share for the year ended December 31, 1999 includes the dilutive
effect of the contingent shares expected to be issued pursuant to the earnout
arrangements.
The following table presents the fair value of assets acquired, fair value
of liabilities assumed, Common Stock issued and the net cash paid, in the
aggregate, for acquisitions in 1998 (in thousands):
<TABLE>
<S> <C>
Fair value of assets acquired.............................. $1,312,949
Fair value of liabilities assumed.......................... (618,616)
Common stock issued........................................ (283,399)
----------
Cash paid for acquisitions................................. 410,934
Cash and cash equivalents acquired......................... (17,203)
----------
Total cash paid for acquisitions, net of cash
acquired............................................ $ 393,731
==========
</TABLE>
Following is management's brief description of each company acquired during
1998:
Big Ticket Division:
Cauff Lippman Aviation, Inc. provides operating lease financing for used
commercial jet aircraft and jet aircraft engines, as well as brokering, advisory
and remarketing services to domestic and foreign commercial airlines, aircraft
lessors and institutional investors and engages in the purchase and sale of
aircraft for its own account.
Jumbo Jet (which includes Jumbo Jet Leasing LP, Jumbo Jet, Inc., CL
Aircraft Marketing LP and CL Aircraft Marketing, Inc.) provides lease financing
for the acquisition of used commercial aircraft.
The NSJ Group, Inc. provides lease financing for used commercial jet
aircraft and jet aircraft engines to domestic and foreign commercial airlines
and engages in the purchase and sale of aircraft for its own account.
UniCapital Aircraft Engine Group, Inc., formerly known as United States
Turbine Engine Corp., purchases, manages the refurbishment process, sells and
leases commercial aircraft engines and provides a broad range of engine
management services to airlines, financial institutions and other lessors.
Technology and Finance Group:
American Capital Resources, Inc. provides lease and secured financing for
equipment, primarily printing presses, to companies in the printing, packaging
and paper converting industries.
Jacom Computer Services, Inc. provides lease financing for computer and
telecommunications equipment to large and middle market companies, including
financial institutions, throughout the United States.
F-15
<PAGE> 62
Matrix Funding Corporation provides lease financing for a variety of
equipment, primarily computer, communication and electronic equipment, to
companies throughout the United States.
UniCapital Securities Corp., formerly known as Municipal Capital Markets
Group, Inc., arranges structured financing, primarily for community-based mental
health/mental retardation facilities and correctional facilities.
Varilease Corporation provides lease financing for computer and
telecommunications equipment to Fortune 1000 companies and other businesses
throughout the United States and Canada.
The Walden Asset Group, Inc. provides lease financing for a variety of
equipment, including communications, computer and manufacturing equipment, to
Fortune 500 and other businesses throughout the United States.
Business Credit Group:
Boulder Capital Group, Inc. provides lease financing for petroleum retail
equipment, including car washes, fuel dispensers and convenience store operating
equipment, to petroleum retail businesses.
HLC Financial, Inc. provides lease financing primarily for computer systems
and related office technology equipment to customers in the automobile
dealership and hospitality industries.
K.L.C., Inc., d/b/a Keystone, provides lease financing for a variety of
equipment, primarily tractor trailers, embroidery machines and construction
equipment, to companies throughout the United States.
Merrimac Financial Associates, Inc. provides equipment financing to
operating companies engaged in the coin-operated, vending, amusement and coffee
service businesses.
Myerson Companies, Inc., d/b/a/ BSB Leasing, provides equipment lease
financing to small to medium size companies throughout the United States.
Saddleback Financial Corporation provides lease and equipment acquisition
financing for a variety of equipment utilized in various industries, including
computers, machine tools, printing, video, automotive diagnostic and electronic
equipment.
Corporate Division:
UniCapital Operations Group, Inc., formerly known as Portfolio Financial
Servicing Company, L.P., provides lease administration and processing services,
including lease accounting for both financial reporting and federal income tax
purposes, lien searches, UCC filings, asset tracking, insurance tracking,
preparation of sales, use and property tax returns, invoicing and collections.
NOTE 4--UNAUDITED PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma financial information for the year ended December
31, 1998 includes the results of UniCapital Corporation combined with the
Founding Companies and subsequent acquisitions as if all acquisitions had
occurred at January 1, 1998. This unaudited
F-16
<PAGE> 63
pro forma financial information includes the effects of (a) the acquisition of
the Founding Companies; (b) the Offering; (c) the subsequent acquisitions; (d)
certain reductions in salaries, bonuses and benefits to the stockholders and
managers of the Founding Companies and the subsequent acquisitions to which they
have contractually agreed prospectively; (e) amortization of goodwill; (f) the
incremental provision for federal and state income taxes assuming all entities
were subject to corporate federal and state income taxes; and (g) the
incremental costs of being a public company.
The unaudited pro forma financial information may not be comparable to and
may not be indicative of the Company's results of operations subsequent to the
acquisitions because the Founding Companies and the subsequent acquisitions were
not under common control or management and had different tax and capital
structures during the periods presented.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
---------------------------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C>
Total revenues............................. $672,081
Income before taxes........................ $100,413
Net income................................. $ 55,372
Earnings per common share, basic........... $ 1.10
Earnings per common share, diluted......... $ 1.08
</TABLE>
NOTE 5--FINANCE CONTRACTS
The Company's balance of net investment in finance contracts was comprised
of the following components at December 31, 1999 and 1998 (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1999 1998
---------- --------
<S> <C> <C>
Future minimum lease rentals receivable........ $1,029,195 $369,249
Estimated unguaranteed residual values......... 128,824 64,804
Initial direct costs........................... 15,804 3,438
Unearned finance income........................ (310,184) (59,540)
Allowance for credit losses.................... (7,112) (4,568)
---------- --------
Net investment in finance contracts............ $ 856,527 $373,383
========== ========
</TABLE>
At December 31, 1999 future scheduled minimum lease rentals receivable on
direct financing and sales-type leases were as follows (in thousands):
<TABLE>
<S> <C>
2000....................................................... $ 284,797
2001....................................................... 253,061
2002....................................................... 162,824
2003....................................................... 96,230
2004....................................................... 56,554
Thereafter................................................. 175,729
----------
Total................................................. $1,029,195
==========
</TABLE>
F-17
<PAGE> 64
The following table sets forth the Company's allowance for credit losses on
finance contracts receivables for the years ended December 31, 1999 and 1998 (in
thousands):
<TABLE>
<S> <C>
Balance at December 31, 1997................................ $ --
Allowances related to leases acquired through business
combinations.............................................. 5,371
Provision for credit losses................................. 814
Charge-offs, net of recoveries.............................. (1,617)
-------
Balance at December 31, 1998................................ $ 4,568
Provision for credit losses................................. 8,333
Charge-offs, net of recoveries.............................. (5,789)
-------
Balance at December 31, 1999................................ $ 7,112
=======
</TABLE>
NOTE 6--EQUIPMENT UNDER OPERATING LEASES
The cost and accumulated depreciation of equipment under operating leases
at December 31, 1999 and 1998 are as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1999 1998
---------- --------
<S> <C> <C>
Aircraft....................................... $1,826,342 $364,851
Aircraft engines............................... 34,636 6,500
Technology..................................... 152,005 81,748
Other.......................................... 4,167 1,071
---------- --------
2,017,150 454,170
Accumulated depreciation....................... (108,464) (23,941)
---------- --------
$1,908,686 $430,229
========== ========
</TABLE>
At December 31, 1999, future scheduled minimum lease contract payments to
be received under operating leases were as follows (in thousands):
<TABLE>
<S> <C>
2000........................................................ $245,826
2001........................................................ 206,572
2002........................................................ 161,194
2003........................................................ 117,099
2004........................................................ 70,640
Thereafter.................................................. 82,031
--------
Total.................................................. $883,362
========
</TABLE>
Included in income for the years ended December 31, 1999 and 1998 was $17.6
and $13.3 million of contingent rentals, respectively. Depreciation expense
related to equipment under operating leases recorded during the years ended
December 31, 1999 and 1998 was $100.4 million and $23.9 million, respectively.
F-18
<PAGE> 65
NOTE 7--EQUIPMENT HELD FOR SALE OR LEASE
The following is a summary of equipment held for sale or lease at December
31, 1999 and 1998 (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1999 1998
-------- -------
<S> <C> <C>
Aircraft.......................................... $101,034 $14,438
Aircraft engines.................................. 80,780 26,310
Technology........................................ 76,839 32,637
Other............................................. 6,235 6,614
-------- -------
264,888 79,999
Accumulated depreciation.......................... (174) (102)
-------- -------
$264,714 $79,897
======== =======
</TABLE>
Depreciation expense related to equipment held for sale or lease recorded
during the years ended December 31, 1999 and 1998 was $.07 million and $.1
million respectively.
NOTE 8--INVESTMENTS
The following is a summary of investments at December 31, 1999 and 1998 (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1999 1998
------- -------
<S> <C> <C>
Available-for-sale securities...................... $16,801 $16,058
Investment in joint ventures and minority-owned
affiliates....................................... 4,180 13,490
------- -------
Total......................................... $20,981 $29,548
======= =======
</TABLE>
F-19
<PAGE> 66
Available-for-sale Securities
The following is a summary of available-for-sale securities held at
December 31, 1999 and 1998 (in thousands):
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE EXPECTED MATURITY
1999 ------- ---------- ---------- ------- -----------------
<S> <C> <C> <C> <C> <C>
Retained Interests (Note 11)... $16,138 $ 226 $ -- $16,364 November 1, 2001
to July 1, 2009
Municipal debt securities...... 142 -- -- 142 July 1, 2000 to
July 1, 2001
Equity securities, with no
Maturity..................... 295 -- -- 295
------- ------ ---- -------
$16,575 $ 226 $ -- $16,801
======= ====== ==== =======
1998
Retained Interests (Note 11)... $11,189 $1,452 $ -- $12,641 January 1, 1999 to
December 31, 2008
Municipal debt securities...... 1,898 163 -- 2,061 December 31, 2023
Equity securities, with no
Maturity..................... 1,254 129 (27) 1,356
------- ------ ---- -------
$14,341 $1,744 $(27) $16,058
======= ====== ==== =======
</TABLE>
Sales of available-for-sale securities were not significant for the year
ended December 31, 1999. There were no sales of available-for-sale securities
for the year ended December 31, 1998.
Investment in Joint Ventures and Minority-owned Affiliates
Joint ventures and minority-owned affiliates represent companies in the
same line of business as the Company and are accounted for under the equity
method.
NOTE 9--PROPERTY AND EQUIPMENT
The following is a summary of property and equipment at December 31, 1999
and 1998 (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------- ESTIMATED
1999 1998 LIFE
------- ------ ---------
<S> <C> <C> <C>
Furniture and fixtures.......................... $ 4,071 $2,718 7 years
Computer and office equipment................... 13,422 4,389 3-5 years
Leasehold improvements and other................ 5,010 2,234 3-5 years
------- ------
22,503 9,341
Accumulated depreciation........................ (3,902) (908)
------- ------
$18,601 $8,433
======= ======
</TABLE>
Depreciation expense related to property and equipment recorded during the
years ended December 31, 1999 and 1998 was $3.2 million and $0.9 million
respectively.
F-20
<PAGE> 67
NOTE 10--DEBT
Credit Facilities
We have in place a series of credit facilities (the "Senior Credit
Facilities") which consist of the following: (i) a $300.0 million recourse
Corporate Revolving Credit Facility primarily to finance working capital needs
(the "Revolving Facility"); (ii) two asset-backed commercial paper facilities
totaling $400.0 million to finance small ticket and middle market leases,
consisting of a limited recourse Equipment Lease Receivable Purchase Facility
(the "Purchase Facility") and a recourse Equipment Lease Receivable Financing
Facility (the "Financing Facility"), (iii) a $200.0 million limited recourse
Warehouse Facility to finance small ticket and middle market leases ("Warehouse
Facility"); and (iv) a $400.0 million non-recourse Special Purpose Entity Large
Ticket Warehouse Facility primarily to finance the purchase and leasing of
aircraft and aircraft engines (the "Aircraft Facility"). As discussed in Note
11, the transfer of finance contracts into the Purchase Facility may be treated
as a sale under the provisions of SFAS 125 provided certain criteria are met
and, accordingly, may not be recorded as debt. Management expects to renew or
extend these facilities upon expiration.
Substantially all of the Company's assets, including receivables under
finance contracts and equipment under operating leases, are pledged against the
Company's obligations under the credit facilities discussed above. In addition,
the credit facilities contain covenants, including, but not limited to,
limitations on liens, investments, dividends and other restricted payments,
incurrence of recourse indebtedness, transactions with affiliates and
acquisitions, as well as various financial covenants customary for transactions
of this type, including ratios of recourse and limited recourse debt to tangible
net worth, cash flow to interest and rents, and maintenance at all times of a
defined minimum tangible net worth. The amount of dividends that the Company may
declare must be approved by the financial institution providing certain of the
Senior Credit Facilities. The Company was in compliance with the covenants under
these facilities at December 31, 1999.
Other Debt
The Company, from time to time, obtains non-recourse and limited recourse
debt financing for the acquisition of equipment from various third parties in
which the underlying equipment serves as collateral for the debt. At December
31, 1999 and 1998, the Company's balance of non-recourse and limited recourse
debt under such arrangements included debt related to the acquisition of
aircraft and aircraft engines.
Included in these amounts are five classes of asset backed notes issued in
a private placement offering by Aircraft Finance Trust, a majority-owned
consolidated subsidiary. The Class A-1 notes have an interest rate of LIBOR +
0.48%, the Class A-2 notes have an interest rate of LIBOR + 0.50%, the Class B
notes have an interest rate of LIBOR + 1.15%, the Class C notes have an interest
rate of 8.0% and the Class D notes have an interest rate of 11.0%. Collections
of lease rental payments related to designated aircraft leased under operating
leases included in Aircraft Finance Trust are applied to the repayment of the
notes in the order of priority specified in the related trust indenture.
Although the notes have a stated maturity date of May 15, 2024, the expected
maturities of the notes range from May 15, 2004 to August 15, 2016 as a result
of the application of expected cash flows from the underlying leases. On January
20, 2000, Aircraft Finance Trust completed an exchange offer whereby
F-21
<PAGE> 68
Aircraft Finance Trust issued four classes of new notes, also designated Class
A-1, Class A-2, Class B and Class C (the Exchange Notes), in exchange for the
four corresponding classes of the initial notes. The terms of the "Exchange
Notes" are identical in all material respects to the initial notes except that
the Exchange Notes are registered under the Securities Act of 1933, as amended.
The amount outstanding at December 31, 1999 was $1,176.0 million, with a
weighted average interest rate of 6.47%.
Also included in the aircraft and aircraft engine debt is a loan
arrangement in the amount of $40.5 million, to fund the purchase of the equity
interest in the portfolio of 36 commercial aircraft that we acquired from GE
Capital Aviation Services on May 5, 1999 and for general corporate purposes. The
loan has an interest rate of LIBOR plus 400 basis points, and expires in
December 2000 or such earlier date as defined in the agreement. The loan is
secured by a security interest in the aircraft and engine assets held by the
special purpose entities which are borrowers under the loan arrangement. As of
December 31, 1999, the outstanding principal balance was $30.9 million at an
interest rate of 10.5%.
The Company, from time to time, transfers finance contracts to third
parties in the normal course of business. These transactions are accounted for
under the provisions of SFAS 125. Those transfers that are accounted for as sale
transactions are discussed in Note 11. Those transfers which do not meet the
derecognition criteria of SFAS 125 are accounted for as financing transactions
and are included in the table below as discounted lease receivables. Under such
an arrangement, the principal and interest obligations of the related debt are
funded by the cash flows from collections on the underlying leases which are
generally collected directly by the creditor. In the event of default by the
lessee, the Company is not contractually obligated to repay the outstanding
balance of the related debt. Creditors may, however, have recourse to the
Company's retained interest, if any, in the equipment's residual value. In
addition, certain transfers contain limited-recourse provisions (see Note 19).
During the year ended December 31, 1999, in connection with a private
placement securitization transaction, the Company issued Equipment Contract
Backed Notes ("Notes") consisting of four tranches of Class A Notes, as well as
B and C Class Notes. The Class A Notes benefit from a surety bond issued by
Ambac Assurance Corp. The debt associated with these Equipment Contract Backed
Notes is non-recourse and collections on the related finance contracts are
applied to the repayment of the Notes in accordance with certain priorities.
Although the Notes have stated maturities ranging from September 23, 2000 to
January 23, 2007 the actual maturities will vary due to the extent and timing of
the collections of the underlying finance contracts. The Notes bear fixed
interest rates with a weighted average interest rate of 6.87%.
F-22
<PAGE> 69
The following table summarizes the credit facilities and other debt
discussed above as of December 31, 1999 (in thousands, except interest rate
data):
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
BALANCE AT INTEREST RATE AT CONTRACTUAL
DECEMBER 31, 1999 DECEMBER 31, 1999 INTEREST RATE MATURITY
----------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C>
CREDIT FACILITIES:
Senior Credit Facilities:
Revolving Facility........... $ 252,480 9.10% Prime plus 150
basis points
or LIBOR plus
250 basis
points June 10, 2001
Warehouse Facility............. 27,447 7.00% LIBOR plus 80
basis points December 22, 2000
Purchase Facility............ 168,655 6.90% Commercial
paper plus 82
basis points August 15, 2000
Financing Facility........... 194,110 6.90% Commercial
paper plus 82
basis points August 15, 2000
Aircraft Facility............ 270,448 9.70% Prime plus 175
basis points
or LIBOR plus
325 basis
points December 31, 2000
OTHER DEBT:
Non-recourse debt Related to 1,541,033 7.36% 6.36% to Various
acquisition of aircraft and 12.77% maturities
aircraft engines............. extending through
2024
Discounted lease receivables... 223,322 8.24% 6.0% to 13.0% Various
maturities
extending through
2005
Equipment Contract Backed 181,329 6.87% Various
Notes........................ maturities
through January
2007
Other recourse debt.......... 9,309 9.00% Thirty days,
automatic renewal
----------
Total...................... $2,868,133
==========
</TABLE>
F-23
<PAGE> 70
The following table summarizes the credit facilities and other debt
discussed above as of December 31, 1998 (in thousands, except interest rate
data):
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
BALANCE AT INTEREST RATE AT
DECEMBER 31, 1998 DECEMBER 31, 1998 CONTRACTUAL INTEREST RATE
----------------- ----------------- -----------------------------------
<S> <C> <C> <C>
CREDIT FACILITIES:
Senior Credit Facilities:
Revolving Facility........ $163,120 7.08% Prime plus 50 basis points or LIBOR
plus 150 basis points
Aircraft Warehouse 52,040 7.29%
Facility (terminated Prime plus 75 basis points or LIBOR
June 1999).............. plus 175 basis points
Financing Facility........ 32,844 6.16% Commercial paper plus 82 Basis
points
Aircraft Facility......... 134,030 7.32% Prime plus 75 basis points or LIBOR
plus 175 basis points
OTHER DEBT:
Non-recourse debt Related to
Acquisition of Aircraft
and Aircraft engines...... 60,564 9.39% 7.53% to 11.18%
Discounted lease
Receivables............... 222,399 8.02% 7.41% to 8.52%
Other notes Payable......... 2,010 6.00% 6.00%
Other recourse Debt......... 315 8.04% 8.00% to 8.25%
--------
Total................... $667,322
========
</TABLE>
The following table presents scheduled principal maturities of non-recourse
debt related to the acquisition of aircraft and aircraft engines, discounted
lease receivables and other recourse debt outstanding at December 31, 1999 for
each of the next five years and thereafter:
<TABLE>
<CAPTION>
NON-RECOURSE
DEBT RELATED DISCOUNTED OTHER
TO AIRCRAFT AND LEASE RECOURSE
AIRCRAFT ENGINES RECEIVABLES DEBT TOTAL
---------------- ----------- -------- ----------
<S> <C> <C> <C> <C>
2000............................... $ 273,028 $108,003 $9,309 $ 390,340
2001............................... 23,984 66,268 -- 90,252
2002............................... -- 32,713 -- 32,713
2003............................... 23,822 12,873 -- 36,695
2004............................... 18,671 3,425 -- 22,096
Thereafter......................... 1,201,528 40 -- 1,201,568
---------- -------- ------ ----------
Total......................... $1,541,033 $223,322 $9,309 $1,773,664
========== ======== ====== ==========
</TABLE>
At December 31, 1999 and 1998, included in deposits and other assets in the
accompanying consolidated balance sheets are $19.3 million and $17.5 million,
respectively, of deferred loan costs incurred to secure the Senior Credit
Facilities discussed above. These costs are amortized over the contractual terms
of those facilities. Total amortization expense of deferred loan costs for the
years ended December 31, 1999 and 1998 were $12.6 million and $4.5 million,
respectively.
F-24
<PAGE> 71
NOTE 11--SALES OF FINANCE CONTRACTS
The Company transfers finance contracts to third parties in the normal
course of business, which are accounted for as sales of finance contracts under
the provisions of SFAS 125. In these transactions, the Company records a gain on
the sale of finance contracts, and may additionally retain servicing rights and
retain certain interests in the residual cash flows of the underlying
receivables.
Under the terms of the Purchase Facility discussed in Note 10, the Company
may transfer finance contracts (the "Net Investment") of up to $200.0 million of
small ticket and middle market lease receivables meeting certain eligibility
requirements. In a transfer of finance contracts to the Purchase Facility, the
Company transfers a pool of finance contracts to a wholly-owned, bankruptcy
remote, qualifying special purpose entity. This entity then issues, for cash,
beneficial interests in the form of senior and subordinated securities, which
are collateralized by the finance contracts. The Company generally (i) retains
the right to receive any excess cash flows of the entity ("Retained Interest"),
(ii) retains the right to service the leases transferred in exchange for a
servicing fee, and (iii) records a gain on sale. The Purchase Facility contains
restrictions customary for facilities of this type, including limitations on
liens on the leases, indebtedness, certain lease modifications and changes in
credit and collection practices. At December 31, 1999 and 1998, the Purchase
Facility had an outstanding balance of $197.6 million (net of restricted cash of
$9.3 million) and $251.3 million, respectively, of which $168.6 million and $0
million, respectively, is presented as on-balance sheet debt.
Gain on Sale
Under the provisions of SFAS 125, gain on sale of finance contracts is
calculated as the difference between the proceeds received, net of related
selling expenses, and the allocable carrying amount of the related finance
contracts, determined using the fair value approach.
During the year ended December 31, 1999, in connection with a
securitization transaction, the Company transferred finance contracts with a net
book value of $162.7 million and recognized a gain of $.5 million. Under this
transaction, the Company received cash of $149.7 million and recorded Retained
Interests of $12.5 million.
In addition, during the year ended December 31, 1999, the Company
transferred finance contracts with a net book value of $157.2 million to third
parties in sales transactions, receiving proceeds of $169.5 million and
recognizing a gain of $11.0 million.
During the year ended December 31, 1998 the Company transferred finance
contracts with a net book value of $267.4 million, to the Purchase Facility,
recognizing a gain of $18.8 million. Under these transactions, the Company
received $275 million in cash and recorded Retained Interests of $12.6 million
(see Note 8).
In addition, during the year ended December 31, 1998, the Company
transferred finance contracts with a net book value of $70.1 million to third
parties in sales transactions, receiving cash of $75.2 million and recognizing a
gain of $5.1 million.
Retained Interests
For purposes of calculating the estimated fair value of the Retained
Interests, management has used discount rates ranging from 9% -- 16%. Management
has also used a range of
F-25
<PAGE> 72
expected losses arising from defaults, net of recoveries, of 0.40% to 3.25% per
annum. Other factors, such as prepayments, generally do not have a significant
impact on the gain on sale calculation due to the non-cancelable and full-payout
nature of most of the underlying leases.
The cash flows ultimately available to the Retained Interests are largely
dependent upon the actual default rates and recoveries experienced on the leases
held by the special purpose entity. Increases in default rates above, or
reduction in recoveries below the Company's estimates could reduce the cash
flows available to the Retained Interests. To the extent events occur which
cause actual Retained Interests cash flows to be materially below those
originally estimated, the Company would record an impairment in the carrying
amount of its Retained Interests through a charge to earnings in the period in
which the impairment occurred or became known to management. There was no
impairment at December 31, 1999 or 1998.
NOTE 12--DERIVATIVE INSTRUMENTS
Interest Rate Swaps
The Company from time to time utilizes interest rate swaps which
synthetically alter the repricing characteristics of variable-rate debt interest
obligations, effectively allowing the Company to pay a fixed interest rate on a
portion of its debt, reducing its exposure to variations in the Prime or LIBOR
rates charged on its debt.
At December 31, 1999, the Company was a party to 17 interest rate swap
agreements which it entered into throughout 1999 and 1998. Under these
agreements, the Company will pay fixed rates of interest on the notional amount
to the counterparty and, in turn, the counterparty will pay the Company a rate
of interest on the notional amount based on LIBOR rates or H15 30 day CP, as
individually agreed in each swap agreement. Net settlement with the counterparty
occurs monthly or quarterly and the swap arrangements expire through 2010.
The following table presents, as of December 31, 1999, the following
information regarding interest rate swap agreements to which we are a party: (i)
the notional amount of the agreement, (ii) the fixed interest rate to be paid by
the Company or its subsidiaries, (iii) the variable rate to be paid by the
counterparty under the agreement, (iv) the fair value of the instrument, (v) the
commencement date for agreements for which the effective period does not begin
until a subsequent date, if applicable, and (vi) the maturity of the agreement.
<TABLE>
<CAPTION>
EFFECTIVE PERIOD OF INTEREST RATE SWAP
AVERAGE NOTIONAL AMOUNT FOR THE TWELVE MONTHS ENDING DECEMBER 31,(B)
DECEMBER 31, -------------------------------------------------------------------------------------
1999 2000 2001 2002 2003 2004 THEREAFTER
-------------- ------------ ------------ ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
INTEREST RATE SWAPS
Amortizing notional
amount................. $37,432,916 $ 31,454,058 $ 18,895,480 $ 11,561,856 $ 6,855,677 $ 3,687,381 $1,270,710
Rate to be paid by the
Company................ 5.495%
Rate to be received by
the Company............ 30-day CP(a)
Fair value at December
31, 1999............... $705,123
Maturity................. January 2006
</TABLE>
F-26
<PAGE> 73
<TABLE>
<CAPTION>
EFFECTIVE PERIOD OF INTEREST RATE SWAP
AVERAGE NOTIONAL AMOUNT FOR THE TWELVE MONTHS ENDING DECEMBER 31,(B)
DECEMBER 31, -------------------------------------------------------------------------------------
1999 2000 2001 2002 2003 2004 THEREAFTER
-------------- ------------ ------------ ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Amortizing notional
amount................. $7,477,456 $ 6,688,066 $ 4,904,478 $ 3,168,379 $ 2,189,597 $ 1,363,025 $ 561,378
Rate to be paid by the
Company................ 5.555%
Rate to be received by
the Company............ 30-day CP(a)
Fair value at December
31, 1999............... $180,170
Maturity................. April 2006
Amortizing notional
amount................. $11,295,422 $ 9,542,959 $ 3,148,298
Rate to be paid by the
Company................ 5.693%
Rate to be received by
the Company............ 30-day CP(a)
Fair value at December
31, 1999............... $64,698
Maturity................. September 2001
Amortizing notional
amount................. $28,894,988 $ 25,703,352 $ 19,739,170 $ 7,543,080 $ 1,877,718
Rate to be paid by the
Company................ 6.015%
Rate to be received by
the Company............ 30-day CP(a)
Fair value at December
31, 1999............... $252,799
Maturity................. November 2003
Amortizing notional
amount................. $70,937,107 $ 61,108,564 $ 41,872,877 $ 27,465,678 $ 20,100,167 $ 13,438,695 $7,877,441
Rate to be paid by the
Company................ 6.195%
Rate to be received by
the Company............ 30-day CP(a)
Fair value at December
31, 1999............... $662,013
Maturity................. August 2006
Amortizing notional
amount................. $21,587,308 $ 18,654,553 $ 11,355,657 $ 5,364,979 $ 1,662,358
Rate to be paid by the
Company................ 6.115%
Rate to be received by
the Company............ 30-day CP(a)
Fair value at December
31, 1999............... $124,329
Maturity................. October 2003
Amortizing notional
amount................. $25,120,385 $ 20,982,557 $ 17,061,719 $ 14,470,791 $ 7,201,297 $ 1,924,644
Rate to be paid by the
Company................ 6.245%
Rate to be received by
the Company............ 30-day CP(a)
Fair value at December
31, 1999............... $196,586
Maturity................. June 2004
Fixed notional amount.... $75,000,000 $ 75,000,000 $ 75,000,000 $ 75,000,000
Rate to be paid by the
Company................ 5.125%
Rate to be received by
the Company............ 3-month LIBOR
Fair value at December
31, 1999............... $3,314,703
Maturity................. November 2002
</TABLE>
F-27
<PAGE> 74
<TABLE>
<CAPTION>
EFFECTIVE PERIOD OF INTEREST RATE SWAP
AVERAGE NOTIONAL AMOUNT FOR THE TWELVE MONTHS ENDING DECEMBER 31,(B)
DECEMBER 31, -------------------------------------------------------------------------------------
1999 2000 2001 2002 2003 2004 THEREAFTER
-------------- ------------ ------------ ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Amortizing notional
amount................. $-- $ 1,093,724 $ 1,044,556 $ 960,246 $ 868,152 $ 767,543 $ 387,259
Rate to be paid by the
Company................ 6.540%
Rate to be received by
the Company............ 30-day CP(a)
Fair value at December
31, 1999............... $19,243
Commencement............. October 2000
Maturity................. February 2010
Amortizing notional
amount................. $2,419,000 $ 2,306,250 $ 2,060,250 $ 1,814,250 $ 1,568,250 $ 1,322,250 $ 604,750
Rate to be paid by the
Company................ 6.510%
Rate to be received by
the Company............ 30-day CP(a)
Fair value at December
31, 1999............... $27,058
Maturity................. October 2009
Amortizing notional
amount................. $15,525,108 $ 17,964,808 $ 20,556,509 $ 18,413,917 $ 15,363,530 $ 12,769,141 $4,171,695
Rate to be paid by the
Company................ 6.575%
Rate to be received by
the Company............ 30-day CP(a)
Fair value at December
31, 1999............... $194,189
Maturity................. August 2009
Amortizing notional
amount................. $35,562,650 $ 28,157,121 $ 15,094,556 $ 4,774,552 $ 666,106
Rate to be paid by the
Company................ 6.326%
Rate to be received by
the Company............ 30-day CP(a)
Fair value at December
31, 1999............... $38,525
Maturity................. June 2003
Fixed notional amount.... $80,000,000 $ 80,000,000
Rate to be paid by the
Company................ 5.230%
Rate to be received by
the Company............ 1-month LIBOR
Fair value at December
31, 1999............... $247,349
Maturity................. April 2000
Fixed notional amount.... $60,000,000 $ 60,000,000 $ 60,000,000 $ 60,000,000
Rate to be paid by the
Company................ 5.500%
Rate to be received by
the Company............ 1-month LIBOR
Fair value at December
31, 1999............... $1,395,868
Maturity................. January 2002
Fixed notional amount.... $175,000,000 $175,000,000 $175,000,000 $175,000,000
Rate to be paid by the
Company................ 5.560%
Rate to be received by
the Company............ 1-month LIBOR
Fair value at December
31, 1999............... $5,542,080
Maturity................. October 2002
</TABLE>
F-28
<PAGE> 75
<TABLE>
<CAPTION>
EFFECTIVE PERIOD OF INTEREST RATE SWAP
AVERAGE NOTIONAL AMOUNT FOR THE TWELVE MONTHS ENDING DECEMBER 31,(B)
DECEMBER 31, -------------------------------------------------------------------------------------
1999 2000 2001 2002 2003 2004 THEREAFTER
-------------- ------------ ------------ ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed notional amount.... $345,000,000 $345,000,000 $345,000,000 $345,000,000 $345,000,000 $345,000,000
Rate to be paid by the
Company................ 5.650%
Rate to be received by
the Company............ 1-month LIBOR
Fair value at December
31, 1999............... $15,157,012
Maturity................. January 2004
Fixed notional amount.... $230,000,000 $230,000,000 $230,000,000 $230,000,000 $230,000,000 $230,000,000
Rate to be paid by the
Company................ 5.710%
Rate to be received by
the Company............ 1-month LIBOR
Fair value at December
31, 1999............... $11,741,234
Maturity................. November 2004
</TABLE>
- ---------------
(a) The rate to be received by the Company is based on a 30-day commercial paper
rate published by the U.S. Federal Reserve (H15 report).
(b) The amortizing notional amount is based on contractual agreements with the
counter-party.
NOTE 13--INCOME TAXES
The Company's pretax income for the years ended December 31, 1999 and 1998
was taxed under the following jurisdictions (in thousands):
<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
Domestic................................................... $25,485 $56,249
Foreign.................................................... 2,036 551
------- -------
Total................................................. $27,521 $56,800
======= =======
</TABLE>
The Company's provision for income taxes for the years ended December 31,
1999 and 1998 consisted of the following (in thousands):
<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
Current:
Federal.................................................. $(5,995) $ 7,798
State.................................................... 2,788 2,086
Foreign.................................................. 1,303 --
------- -------
Total current......................................... (1,904) 9,884
------- -------
Deferred:
Federal.................................................. 20,514 19,998
State.................................................... (564) 1,909
Foreign.................................................. (507) 216
------- -------
Total deferred........................................ 19,443 22,123
------- -------
Total provision for income taxes........................... $17,539 $32,007
======= =======
</TABLE>
Due to operating losses, the Company did not record a provision for income
taxes for the period from inception (October 9, 1997) to December 31, 1997. The
Company's 1999 federal income tax benefit of $6.0 million is the result of a net
operating loss generated in 1999.
F-29
<PAGE> 76
The effective tax rate for the years ended December 31, 1999 and 1998
differed from the federal statutory rate as follows (dollars in thousands):
<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
Tax provision computed at statutory rate................... $ 9,632 $19,880
Foreign taxes.............................................. 796 216
State taxes, net of federal benefit........................ 1,446 2,737
Compensation expenses related to equity issuances.......... -- 6,060
Goodwill amortization...................................... 6,290 3,525
Other...................................................... (625) (411)
------- -------
Total tax expense..................................... $17,539 $32,007
======= =======
</TABLE>
The principal components of deferred taxes at December 31, 1999 and 1998
were as follows (in thousands):
<TABLE>
<CAPTION>
1999 1998
--------- --------
<S> <C> <C>
Deferred tax assets:
Allowance for credit losses........................... $ 2,157 $ 731
Alternative minimum tax credit carryforward........... 5,013 2,605
Foreign tax credit.................................... 1,303 --
Loss carryforwards.................................... 18,686 3,494
Reserves for aircraft maintenance not deducted for
tax................................................ 5,412 --
Other................................................. 2,179 439
--------- --------
Gross deferred tax assets............................. 34,750 7,269
Less: deferred tax asset valuation allowance.......... (847) --
--------- --------
Net deferred tax assets............................... 33,903 7,269
--------- --------
Deferred tax liabilities:
Equipment held for sale or lease...................... (38,029) (5,609)
Lease revenue and related depreciation................ (68,674) (60,130)
Transfers of certain finance contracts not recognized
for tax purposes................................... (7,338) (7,394)
Other................................................. (2,634) (658)
--------- --------
Total deferred tax liabilities..................... (116,675) (73,791)
--------- --------
Net deferred tax liability.............................. $ (82,772) $(66,522)
========= ========
</TABLE>
In 1999, a valuation allowance of $.8 million has been established to
reduce the deferred tax asset related to the foreign tax credit to its expected
utilization.
The Company's ability to utilize net operating loss carryforwards and
alternative minimum tax credit carryforwards is subject to limitations under
Federal tax law. The Company's net operating loss carryforward of $47.9 million
and the alternative minimum tax net operating loss carryforward of $9.4 million
are due to expire at various dates through the year 2019. The Company's
alternative minimum tax credit carryforward of $5.0 million has no expiration
date.
NOTE 14--STOCKHOLDERS' EQUITY
Common Stock
In connection with the organization and initial capitalization of
UniCapital Corporation, on October 9, 1997, the Company issued 4,000,000 shares
of Common Stock at $.05 per share
F-30
<PAGE> 77
to certain individuals who assisted the Company in their capacity as consultants
for aggregate consideration of $200,000. In addition, the Company sold 1,276,250
additional shares of Common Stock for prices ranging from $.05 to $3 per share
between October 9, 1997 and December 31, 1997 to consultants and investors for
aggregate consideration of $208,750, of which $128,750 was in the form of stock
subscription notes receivable. In connection with the sale of these shares, the
Company recorded a non-cash compensation charge of $2.1 million during 1997,
representing the excess of the estimated fair value of the shares issued over
the consideration received.
During 1998, prior to the Offering, the Company issued an additional
1,522,500 shares of Common Stock at prices ranging from $3 to $10 per share to
individuals serving as consultants to the Company, each of whom became an
employee of the Company upon consummation of the Offering, and certain other
stockholders, for aggregate consideration of $5.1 million, of which $3.8 million
was in the form of stock subscription notes receivable, and recorded a non-cash
compensation charge of $15.2 million representing the excess of the estimated
fair value of the shares issued over the consideration received. In addition,
the Company issued an option to a consultant to the Company, who became an
employee of the Company upon consummation of the Offering, to purchase 200,000
shares of Common Stock at $3 per share, which expires on January 31, 2008. As a
result, the Company recorded a non-cash compensation charge in the amount of
$2.1 million reflecting the compensatory value of the option.
In May 1998, in connection with the Offering, the Company sold 28,000,000
shares of Common Stock to the public at $19 per share. The net proceeds to the
Company from the Offering, after deducting underwriting commissions and other
offering costs, were $488.6 million. The Company also issued 13,340,901 shares
of Common Stock, valued at $228.1 million, to the former stockholders of the
Founding Companies. Subsequent to the Offering, in connection with the
acquisition of five additional companies, the Company issued 3,293,888 shares of
Common Stock valued at $55.3 million.
In 1999, the Company issued 2,140,372 shares of Common Stock, valued at
$12.1 million, in connection with earnout agreements for companies acquired in
1998. The Company also canceled 36,633 shares of Common Stock, valued at $.3
million, in connection with indemnification claims for companies acquired in
1998.
Preferred Stock
The Company's Board of Directors is authorized to issue up to 20,000,000
shares of Preferred Stock without stockholder approval. At the time of issuance,
the Board of Directors would establish, subject to any limitations prescribed by
law, the rights, privileges and restrictions associated with the Preferred
Stock, including voting rights, dividend rights, conversion rights, redemption
privileges and liquidation preferences. At December 31, 1999 and 1998, no shares
of Preferred Stock had been issued.
Stock Repurchase Program
During 1998, the Company's Board of Directors authorized a stock repurchase
program, under which the Company may purchase up to 5 million shares of its
outstanding Common Stock. Such purchases may be made at the Company's option
from time to time in open
F-31
<PAGE> 78
market transactions at prevailing prices or through privately negotiated
transactions. As of December 31, 1999, the Company had purchased 150,000 of its
shares under the stock repurchase program. All shares were reissued in
connection with earnout payments.
Dividend Restrictions
Under the Senior Credit Facilities agreements discussed in Note 10, the
amount of dividends that the Company may declare must be approved by the
financial institutions providing those credit facilities.
Employee Stock Purchase Plan
In 1999, the Company adopted an employee stock purchase plan (the "Plan").
Under the terms of the Plan, eligible employees can purchase shares of the
Company's common stock, through voluntary payroll deductions. The shares are
issued to the eligible employee following the close of each quarter. Since the
purchase price generally includes discounts from current market value that are
customary for plans of this type, no compensation expense is recognized for the
difference in the price paid by employees and the fair market value of the
Company's common stock at the date of purchase. As of December 31, 1999, the
Company issued 125,030 shares of common stock in conjunction with this plan.
NOTE 15--STOCK OPTIONS AND INCENTIVE COMPENSATION
The Company may, from time to time, grant stock options under three stock
option plans. Vesting periods and exercise prices for stock option grants are
determined at the discretion of management. Generally, stock options vest
ratably over 4 years from the date of grant, expire 10 years from the date of
grant and carry an exercise price equal to the market value of the Company's
Common Stock at the date of grant. During 1999 and 1998, management issued
certain stock options which were immediately exercisable and in 1998 issued
stock options with exercise prices less than the market value of the Common
Stock at the date of grant.
1998 Long-Term Incentive Plan
Under the 1998 Long-Term Incentive Plan, options to acquire shares of
Common Stock may be granted to employees, directors (other than non-employee
directors), consultants and advisors of the Company. The maximum number of
shares of Common Stock which may be awarded under this plan is 15% of the total
number of shares of Common Stock outstanding from time to time. Stock options
granted under this plan during the years ended December 31, 1999 and 1998 were
2,042,696 and 4,674,396, respectively, with 621,085 and 6,250 forfeited during
1999 and 1998, respectively.
1997 Executive Non-Qualified Stock Option Plan
Under the 1997 Executive Non-Qualified Stock Option Plan, options to
acquire shares of Common Stock may be granted to employees, directors,
consultants and advisors of the Company. The maximum number of shares of Common
Stock which may be awarded under this plan is 500,000. Stock options granted
under this plan during the years ended December 31, 1999 and 1998 were 0 and
500,000, respectively, with 120,000 options forfeited during 1999.
F-32
<PAGE> 79
1998 Non-Employee Directors' Stock Plan
Under the 1998 Non-Employee Directors' Stock Plan, the Company may grant
options to acquire shares of Common Stock to non-employee directors of the
Company. The maximum number of shares of Common Stock which may be awarded under
the plan is 500,000. Stock options granted under this plan during the years
ended December 31, 1999 and 1998 were 60,000 and 63,000 respectively, with
21,000 options forfeited during 1999.
Stock Option Data
The table below presents the number of options and the weighted-average
exercise price of options outstanding at the beginning and end of the year and
options granted, exercised and forfeited during the years ended December 31,
1999 and 1998.
<TABLE>
<CAPTION>
1999 1998
WEIGHTED- WEIGHTED-
AVERAGE AVERAGE
1999 EXERCISE 1998 EXERCISE
SHARES PRICE SHARES PRICE
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Outstanding at the beginning of the
period................................... 5,231,146 $15.06 -- $ --
Granted during the period with an exercise
price equal to market price at the date
of grant................................. 2,102,696 5.56 5,037,396 15.54
Granted during the period with an exercise
price less than market price at the date
of grant................................. -- -- 200,000 3.00
Exercised during the period................ -- -- -- --
Forfeited during the period................ (762,085) 14.51 (6,250) 19.00
--------- ------ --------- ------
Outstanding at the end of the period....... 6,571,757 $12.11 5,231,146 $15.06
========= ====== ========= ======
</TABLE>
During 1999 and 1998, the Company granted 585,000 and 1,445,500 options,
respectively, that were immediately exercisable.
The table below presents the weighted-average fair value at grant date of
options granted during the years ended December 31, 1999 and 1998. Fair values
are presented separately for options with exercise prices equal to the stock's
market price at the date of grant and options with exercise prices less than the
stock's market price at the date of grant. The following weighted-average
assumptions were used in calculating fair values at grant date using the
Black-Scholes option pricing model with the following weighted average
assumptions: dividend yield of 0%, expected volatility of 40%, risk free
interest rate of 5.70% and an expected life of 4 years.
<TABLE>
<CAPTION>
1999 1999 1998 1998
OPTIONS WITH OPTIONS WITH OPTIONS WITH OPTIONS WITH
EXERCISE PRICE EXERCISE PRICE EXERCISE PRICE EXERCISE PRICE
EQUAL TO LESS THAN EQUAL TO LESS THAN
MARKET AT MARKET AT MARKET AT MARKET AT
DATE DATE DATE DATE
OF GRANT OF GRANT OF GRANT OF GRANT
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Weighted-average fair value at
grant date of an option granted
during the year................ $2.16 $-- $6.04 $10.92
===== == ===== ======
</TABLE>
F-33
<PAGE> 80
The following table presents the number of options, weighted-average
remaining contractual life and weighted-average exercise price of all options
outstanding at December 31, 1999 and 1998. In addition, the table presents the
number of options and the weighted-average exercise price of options that were
exercisable at December 31, 1999 and 1998. In order to facilitate an assessment
of the number and timing of additional shares of Common Stock that may be
issued, options in the table have been segregated based on ranges of exercise
prices.
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------- -----------------------
1999 WEIGHTED- WEIGHTED- WEIGHTED-
RANGE OF AVERAGE AVERAGE AVERAGE
EXERCISE NUMBER REMAINING EXERCISE NUMBER EXERCISE
PRICES OUTSTANDING CONTRACTUAL LIFE PRICE OUTSTANDING PRICE
-------- ----------- ----------------- --------- ----------- ---------
<C> <C> <S> <C> <C> <C>
$1.81 to $5.81 1,556,050 9.23 years $ 4.52 580,755 $ 4.17
$5.88 to $6.81 1,372,084 8.92 years 6.33 465,114 6.33
$6.88 to $18.63 924,000 8.64 years 13.22 199,750 15.88
$18.81 5,000 8.53 years 18.81 1,250 18.81
$19.00 2,714,623 8.29 years 19.00 1,554,099 19.00
--------- ---------
$1.81 to $19.00 6,571,757 8.70 years 12.11 2,800,968 13.60
========= =========
</TABLE>
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------- -----------------------
1998 WEIGHTED- WEIGHTED- WEIGHTED-
RANGE OF AVERAGE AVERAGE AVERAGE
EXERCISE NUMBER REMAINING EXERCISE NUMBER EXERCISE
PRICES OUTSTANDING CONTRACTUAL LIFE PRICE OUTSTANDING PRICE
-------- ----------- ----------------- --------- ----------- ---------
<C> <C> <S> <C> <C> <C>
$3.00 to $5.31 379,430 9.40 years $ 4.00 207,500 $ 3.08
$6.13 to $6.94 1,018,193 9.69 years 6.28 -- --
$7.31 to $10.38 47,500 9.90 years 8.26 -- --
$15.88 to $18.81 619,500 9.38 years 16.64 50,000 16.00
$19.00 3,166,523 9.30 years 19.00 1,188,000 19.00
--------- ---------
$3.00 to $19.00 5,231,146 9.40 years 15.06 1,445,500 16.61
========= =========
</TABLE>
SFAS 123 Pro Forma Disclosure
The Company has elected the intrinsic value method under APB No. 25 to
account for its employee stock options and similar equity instruments. Had
compensation expense for the Company's stock-based compensation plans been
determined based on the fair value at the grant dates for awards under those
plans consistent with the method prescribed in SFAS 123,
F-34
<PAGE> 81
the Company's net income and earnings per share for the years ended December 31,
1999 and 1998 would have been reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
1999 1998
------ -------
<S> <C> <C>
Net income
As reported............................................... $9,982 $24,793
Pro forma................................................. $7,273 $17,186
Basic earnings per share
As reported............................................... $ 0.19 $ 0.73
Pro forma................................................. $ 0.14 $ 0.51
Diluted earnings per share
As reported............................................... $ 0.19 $ 0.72
Pro forma................................................. $ 0.14 $ 0.50
</TABLE>
For purposes of calculating compensation expense in accordance with SFAS
123 for option grants during the years ended December 31, 1999 and 1998, the
fair value of each option grant was estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions: dividend yield of 0%, expected volatility of 40%, risk free
interest rate of 5.70% and an expected life of 4 years.
NOTE 16--EARNINGS PER SHARE
The following table presents a reconciliation of the numerators and the
denominators of the basic and diluted earnings (loss) per share computations for
the years ended December 31, 1999, 1998 and 1997 (in thousands, except share
data):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999
---------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
Basic EPS:
Income available to common
stockholders.......................... $ 9,982 52,664,830 $ 0.19
======
Effect of dilutive securities:
Stock options............................ 97,554
Contingently issuable shares............. 1,054,719
------- ----------
Diluted EPS:
Income available to common
stockholders.......................... $ 9,982 53,817,103 $ 0.19
======= ========== ======
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
---------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
Basic EPS:
Income available to common
stockholders.......................... $24,793 33,841,448 $ 0.73
======
Effect of dilutive securities:
Stock options............................ 175,767
Contingently issuable shares............. 336,499
------- ----------
Diluted EPS:
Income available to common
stockholders.......................... $24,793 34,353,714 $ 0.72
======= ========== ======
</TABLE>
F-35
<PAGE> 82
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
-----------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
Basic EPS:
Loss available to common
stockholders........................ $(2,137) 1,319,063 $(1.62)
======
Effect of dilutive securities:
Stock options.......................... --
Contingently issuable shares........... --
------- ----------
Diluted EPS:
Loss available to common
stockholders........................ $(2,137) 1,319,063 $(1.62)
======= ========== ======
</TABLE>
The following table presents the number and the weighted average exercise
price of anti-dilutive options that were excluded from the calculation of
diluted earnings per share for the years ended December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Number of options.............................. 5,841,761 3,810,507
Weighted average exercise price................ $ 13.74 $ 18.57
</TABLE>
NOTE 17--SEGMENT INFORMATION
Operating Segments
In accordance with Statement of Financial Accounting Standards No. 131
("SFAS 131"), "Disclosures about Segments of an Enterprise and Related
Information", the Company has three reportable operating segments, which have
been defined by management based primarily on the nature of the products and
services of each segment. During the three months ended June 30, 1999, the
Company reassessed the economic characteristics and nature of the products,
services and customers of the "Air Group" and "Aircraft Engine Group". Based
upon the similarity of the nature of the products, services and customers and
the economic characteristics of those subsidiaries, the Company aggregated those
former reportable segments as the "Big Ticket Division", which also includes the
Rail Group which was discontinued in December 1999. Accordingly, the 1998
segment information has been restated for comparative purposes.
The first segment includes those operating companies that provide leasing,
structured financing and financing services for the acquisition of commercial
aircraft and commercial aircraft engines or the "Big Ticket Division". The
second segment includes the operating companies that provide leasing and
financing for equipment generally with fair values over $250 thousand, or the
"Technology and Finance Group". The third segment includes the operating
companies that provide leasing and financing for equipment generally valued at
$250 thousand or less, or the "Business Credit Group". Equipment leased or
financed by subsidiaries in the Technology and Finance Group and the Business
Credit Group includes computer and telecommunications equipment, construction
and manufacturing equipment, office equipment, tractor trailers, printing
equipment, car washes, petroleum retail equipment and vending machines.
F-36
<PAGE> 83
Corporate Division
The Company maintains a corporate headquarters and a lease administration
subsidiary which are combined within the "Corporate Division". The Corporate
Division does not generate any significant revenues or maintain any significant
assets. Expenses recorded by the Corporate Division relate primarily to
administrative and management costs incurred in supporting and managing
subsidiary activities and costs incurred in providing lease administration for
leases acquired, originated or sold by the Company's subsidiaries. Additional
Corporate Division expenses reflect the costs of public reporting and investor
relations.
Certain expenses initially recorded by the Corporate Division, such as
interest expense, bank fees and payroll service fees, are allocated to its
operating segments based on management's estimates of certain utilization
factors such as credit facility utilization, compensation burdens, etc. The
revenue and expense balances for the Corporate Division in the tables presented
below reflect public company costs and revenue and expense items recorded by the
lease administration subsidiary that relate to transactions with third parties.
In addition, selling, general and administrative expense presented in the table
below for the Corporate Division for the year ended December 31, 1998 includes
non-cash compensation charges recorded by the Company totaling $17.3 million as
discussed in Note 14.
Segment Financial Information
The accounting policies of the Big Ticket Group, Technology and Finance
Group, Business Credit Group and the Corporate Division are the same as those
described in the summary of significant accounting policies in Note 2.
Additionally, the segment information below reflects the elimination of
significant intercompany accounts and transactions.
F-37
<PAGE> 84
The following table presents selected financial information for the
Company's reporting segments for the year ended December 31, 1999 (in
thousands):
<TABLE>
<CAPTION>
TECHNOLOGY
BIG AND BUSINESS
TICKET FINANCE CREDIT CORPORATE
DIVISION GROUP GROUP DIVISION CONSOLIDATED
---------- ---------- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
Income from finance contracts.... $ 3,082 $ 48,100 $ 18,951 $ -- $ 70,133
Rental income from operating
leases......................... 174,990 69,223 655 -- 244,868
Sales of equipment............... 357,227 121,154 -- -- 478,381
Gain on sale of finance
contracts...................... -- 11,220 317 -- 11,537
Fees, commissions and remarketing
income......................... 1,381 21,425 6,728 1,286 30,820
Interest and other income........ 15,938 5,409 3,317 2,351 27,015
---------- ---------- -------- -------- ----------
Total revenues.............. 552,618 276,531 29,968 3,637 862,754
Cost of operating leases......... 67,135 45,635 158 -- 112,928
Cost of equipment sold........... 316,984 111,110 -- -- 428,094
Interest expense................. 106,725 31,123 9,132 15,941 162,921
Selling, general and
administrative expenses........ 22,436 50,102 30,904 8,686 112,128
Goodwill amortization............ 7,794 8,715 1,821 303 18,633
---------- ---------- -------- -------- ----------
Total expenses.............. 521,074 246,685 42,015 24,930 834,704
Income (loss) from operations.... 31,544 29,846 (12,047) (21,293) 28,050
Minority interest................ 555 -- (26) -- 529
---------- ---------- -------- -------- ----------
Income (loss) before taxes....... $ 30,989 $ 29,846 $(12,021) $(21,293) $ 27,521
========== ========== ======== ======== ==========
Net investment in finance
contracts...................... $ 75,967 $ 542,059 $243,557 $ (5,056) $ 856,527
========== ========== ======== ======== ==========
Equipment under operating leases,
net............................ $1,811,690 $ 96,946 $ 50 $ -- $1,908,686
========== ========== ======== ======== ==========
Total assets..................... $2,461,779 $1,109,403 $340,085 $ 93,314 $4,004,581
========== ========== ======== ======== ==========
Total debt....................... $1,812,292 $ 560,538 $232,386 $262,917 $2,868,133
========== ========== ======== ======== ==========
</TABLE>
F-38
<PAGE> 85
The following table presents selected financial information for the
Company's reporting segments for the year ended December 31, 1998 (in
thousands):
<TABLE>
<CAPTION>
TECHNOLOGY
BIG AND BUSINESS
TICKET FINANCE CREDIT CORPORATE
DIVISION GROUP GROUP DIVISION CONSOLIDATED
-------- ---------- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
Income from Finance contracts....... $ -- $ 23,312 $ 6,715 $ -- $ 30,027
Rental income from operating
leases............................ 39,509 28,106 388 -- 68,003
Sales of equipment.................. 303,440 56,816 -- -- 360,256
Gain on sale of lease finance
contracts......................... -- 10,032 13,830 -- 23,862
Fees, commissions and remarketing
income............................ 1,751 11,924 1,757 1,868 17,300
Interest and other income........... 4,212 1,904 969 1,008 8,093
-------- -------- -------- -------- ----------
Total revenues................. 348,912 132,094 23,659 2,876 507,541
Cost of operating leases............ 11,885 15,818 138 -- 27,841
Cost of equipment sold.............. 269,967 45,027 -- -- 314,994
Interest expense.................... 15,510 14,180 2,903 2,860 35,453
Selling, general and administrative
expenses.......................... 7,496 26,017 8,626 21,208 63,347
Goodwill amortization............... 3,562 5,344 1,038 175 10,119
-------- -------- -------- -------- ----------
Total expenses................. 308,420 106,386 12,705 24,243 451,754
Income (loss) from operations....... 40,492 25,708 10,954 (21,367) 55,787
Equity in income from minority-owned
affiliates........................ 1,013 -- -- -- 1,013
-------- -------- -------- -------- ----------
Income (loss) before taxes.......... $ 41,505 $ 25,708 $ 10,954 $(21,367) $ 56,800
======== ======== ======== ======== ==========
Net investment in finance
contracts......................... $ -- $311,071 $ 60,118 $ 2,194 $ 373,383
======== ======== ======== ======== ==========
Equipment under operating leases,
net............................... $365,100 $ 64,841 $ 288 $ -- $ 430,229
======== ======== ======== ======== ==========
Total assets........................ $684,675 $782,977 $150,699 $ 51,172 $1,669,523
======== ======== ======== ======== ==========
Total debt.......................... $248,642 $201,828 $ 20,888 $195,964 $ 667,322
======== ======== ======== ======== ==========
</TABLE>
Financial information for the period from inception (October 9, 1997) to
December 31, 1997 includes certain organizational costs incurred by the
Corporate Division. The net loss reported by the Company for the period from
inception to December 31, 1997 was $2.1 million, which was comprised of non-cash
compensation charges for certain equity issuances as discussed in Note 14.
Long-lived assets, other than investments, goodwill and deferred tax
assets, include equipment under operating leases, equipment held for sale or
lease and property and equipment. The following table presents a summary of
expenditures for long-lived assets by segment for the years ended December 31,
1999 and 1998 (in thousands):
<TABLE>
<CAPTION>
TECHNOLOGY
AND BUSINESS
BIG TICKET FINANCE CREDIT CORPORATE
DIVISION GROUP GROUP DIVISION CONSOLIDATED
1999 ---------- ---------- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
Expenditures for long-lived assets... $1,944,822 $519,082 $28,886 $9,337 $2,502,127
========== ======== ======= ====== ==========
</TABLE>
F-39
<PAGE> 86
<TABLE>
<CAPTION>
TECHNOLOGY
AND BUSINESS
BIG TICKET FINANCE CREDIT CORPORATE
DIVISION GROUP GROUP DIVISION CONSOLIDATED
1998 ---------- ---------- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
Expenditures for long-lived assets... $ 603,420 $165,455 $10,545 $5,378 $ 784,798
========== ======== ======= ====== ==========
</TABLE>
Enterprise-Wide Disclosures
In addition to the segment information provided above, SFAS 131 requires
disclosure of the following: (a) revenues for each product and service or each
group of similar products and services, (b) revenues and long-lived assets
segregated by country of domicile and all foreign countries, and (c) certain
information regarding external customers which represent a source of 10% or more
of total revenues. With regard to item (a), the Company's management believes
that the operating segment information provided above reflects the presentation
of revenue for the Company's groups of similar products and services. With
regard to item (b), total long-lived assets, which includes equipment under
operating leases, utilized outside of the United States totaled $631.9 million
and $279.6 million at December 31, 1999 and 1998 respectively, and total revenue
recorded during 1999 and 1998 from sources outside of the United States totaled
$93.3 million and $126.3 million, respectively. Equipment under operating leases
utilized, and revenue derived from sources, outside of the United States relate
primarily to leasing and sales of aircraft and technology equipment. No
significant portion of these assets or revenues are attributable to any
individual foreign country. With regard to item (c), the Air Group recorded
revenues of approximately $124.3 million and $137 million in connection with
sales of equipment during 1999 and 1998 respectively, to a single customer
domiciled in the United States.
NOTE 18--NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities," ("SFAS No. 133") which
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. As issued, SFAS No. 133 was effective for fiscal years
beginning after June 15, 1999. In June 1999, the FASB issued SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities -- Deferral of the
Effective Date of FASB Statement No. 133". SFAS No. 137 deferred the effective
date of SFAS No. 133 for one year to fiscal years beginning after June 15, 2000.
SFAS 133 requires that all derivative instruments be recorded on the balance
sheet at their fair value. Changes in the fair value of derivatives are recorded
each period in current earnings or other comprehensive income, depending on
whether a derivative is designated as part of a hedge transaction and, if it is,
the type of hedge transaction. The Company is in the process of evaluating the
impact of adopting SFAS 133 and the effect that the adoption of SFAS 133 will
have on its results of operations and financial position.
NOTE 19--COMMITMENTS AND CONTINGENCIES
Recourse Provisions
The Company finances certain lease originations through limited recourse
and non-recourse debt. As part of the limited recourse arrangements, the Company
has provided
F-40
<PAGE> 87
limited guarantee provisions to certain lenders providing recourse up to
predetermined limits. The Company estimates that its maximum recourse exposure
to credit risk under these contracts was approximately $22.5 million at December
31, 1999 and was not significant at December 31, 1998.
The Company from time to time transfers finance contracts to unrelated
third parties in transactions accounted for as sales under SFAS 125. In
connection with certain transfers, the Company provides recourse to the
transferee for certain lessee defaults up to an amount not exceeding 10% of the
transfer price, which declines over the term of the leases transferred.
Management considers this recourse exposure in the measurement of the sale
transaction and in the periodic determination of the adequacy of the allowance
for credit losses. At December 31, 1999 and 1998, the Company estimates the
maximum aggregate recourse under these arrangements to be approximately $9.7
million and $28.4 million respectively.
Commitments to Extend Credit
The Company, from time to time, may commit to extend credit to its
customers in the normal course of business. Commitments to extend credit are
agreements to lend to a customer, as long as there is no violation of any
condition established in the contract or lease, and generally have fixed
expiration dates or other termination clauses. Such commitments may also provide
for the payment of a fee to the Company. The amount of collateral obtained by
the Company upon extension of credit is based on management's credit evaluations
of the counterparty. The Company evaluates each customer's creditworthiness on a
case by case basis. At such time as a commitment is made, the collateral value
supporting such commitment is generally at least equal to or greater than the
value of the commitment.
Commitments are generally expected to be drawn upon and, accordingly,
represent future cash requirements. The Company generally expects to fund any
such commitments from its unused credit lines, the sale of receivables or
working capital. Collateral obtained includes the equipment financed and may
include other property, plant and equipment, as well as personal guarantees.
Litigation
The Company is involved in various legal actions from time to time arising
out of activities conducted in the normal course of business. In the opinion of
the Company's management in consultation with legal counsel, the resolution of
these matters will not have a significant effect on the Company's financial
condition, results of operations or cash flows.
Operating Leases
The Company has entered into various operating lease agreements, primarily
for office space. Rent expense under all operating leases for the years ended
December 31, 1999 and 1998 was $5.4 million and $2.0 million, respectively. As
of December 31, 1999, future
F-41
<PAGE> 88
minimum annual lease payments under non-cancelable operating leases were as
follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- -----------------------
<S> <C>
2000.................................................. $ 5,072
2001.................................................. 4,664
2002.................................................. 4,042
2003.................................................. 3,543
2004.................................................. 2,534
Thereafter............................................ 4,733
-------
Total............................................... $24,588
=======
</TABLE>
NOTE 20--RELATED PARTY TRANSACTIONS
During 1998, in connection with certain acquisitions, the Company acquired
options to purchase additional entities owned by former stockholders of the
Company's subsidiaries. In June 1998, the Company acquired Jumbo Jet (and
related entities) (see Note 3) under such an option from a former stockholder of
one of the Founding Companies that became a member of the Company's executive
management prior to the acquisition. At December 31, 1998, the Company held
similar options to purchase other entities from former stockholders of its
subsidiaries. These options have expired as of December 31, 1999.
Three of the Company's subsidiaries rent office space from the former
stockholders of those subsidiaries. One of the former stockholders served as a
director of the Company during 1998 and all former stockholders currently hold
shares of the Company's Common Stock. Management believes that the terms of the
leases are no less favorable than those the Company could have obtained from an
unaffiliated third party. Rent expense recorded under these leases during the
years ended December 31, 1999 and 1998 was not significant.
At December 31, 1998, certain former stockholders of the Company's
subsidiaries were under employment agreements with the Company. These employment
agreements ranged from 2 years to 3 years. During 1999, some of the employment
agreements were renewed.
On October 25, 1999, the Company loaned $189,612 to an executive officer
and a related affiliate, jointly and severally. In connection with this loan,
such parties pledged to the Company 265,000 shares of the Company's Common Stock
as collateral for this indebtedness. This note bears interest at the rate of 6%
per annum. As of December 31, 1999, the outstanding principal balance of the
note totaled $189,612.
NOTE 21--GAIN ON SALE OF EQUITY INTEREST IN SUBSIDIARY
Aircraft Finance Trust, which was formed on April 13, 1999, was wholly
owned by UniCapital AFT-I, Inc. (51% equity interest) and UniCapital AFT-II,
Inc. (49% equity interest) each of which is a wholly-owned subsidiary of the
UniCapital Air Group, Inc. During 1999, UniCapital AFT-I, Inc. sold a 49.9%
interest in Aircraft Finance Trust to six financial services companies for
proceeds of $33.3 million and recognized a gain of $8.97 million.
As of December 31, 1999, the Company accounted for Aircraft Finance Trust
as a consolidated subsidiary.
F-42
<PAGE> 89
NOTE 22--RESTRICTED CASH
As of December 31, 1999, the Company had $126.6 million of restricted cash
of which $34.5 million relates to reserve accounts established in September 1999
under securitization and other credit facilities and the remainder relates to
restricted cash held at Aircraft Finance Trust.
NOTE 23--401(K) RETIREMENT SAVINGS PLAN
In 1999, the Company established a voluntary 401(k) Retirement Savings Plan
(the Plan). Employees are eligible to participate in the Plan following ninety
(90) days of employment. Enrollment for the plan takes place on a quarterly
basis. Under the Plan, eligible employees may voluntarily contribute up to 15%
of their compensation. UniCapital will contribute, as a matching contribution,
50% of the first 6% of salary reduction contributions made by the employee. The
Company's matching contributions vest over a period of six (6) years. Under the
Plan, the Company expensed $1.0 million for the year ended December 31, 1999.
NOTE 24--SUBSEQUENT EVENTS
On March 28, 2000, the Company completed its second securitization
transaction involving the issuance of $301.5 million of Equipment Contract
Backed Notes originated primarily by the Business Credit Group and the
Technology and Finance Group. In connection with this transaction, four tranches
of Class A Notes were sold to accredited investors under Rule 144A. The Class
A-1 Notes had short term ratings of A-1+ by Standard & Poor's, P-1 by Moody's
Investor Services, Inc., F1+/AAA by Fitch IBCA and D-1+ by Duff & Phelps Credit
Rating Co. The Class A-2 through A-4 Notes were rated AAA by Standard & Poor's,
Aaa by Moody's Investor Services, Inc., AAA by Duff & Phelps Credit Rating Co.
and AAA by Fitch IBCA. The Class A Notes benefit from a surety bond issued by
the Ambac Assurance Corp. In addition, Class B Notes rated BBB- and Class C
Notes rated BB by Duff & Phelps Credit Rating Co and Fitch IBCA were offered as
well.
On March 28, 2000, the Company sold all of the common stock of UniCapital
AFT-I, Inc. which owns 1.1% of the beneficial interest in Aircraft Finance
Trust. As a result, the Company now owns 49% of the beneficial interest in
Aircraft Finance Trust and will prospectively account for its remaining
investment in Aircraft Finance Trust under the equity method of accounting.
Equipment under operating leases and other assets totaling $1,267.0 million, and
non-recourse debt and other liabilities totaling $1,243.2 million will be
eliminated prospectively from the Company's Consolidated Balance Sheet and the
Company's results of operations will reflect only its proportionate share of the
net results from Aircraft Finance Trust as equity in income from minority-owned
affiliates.
F-43
<PAGE> 1
Exhibit 4.02
EXECUTION COPY
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
TRANSFER AND ADMINISTRATION AGREEMENT
among
KITTY HAWK FUNDING CORPORATION,
as Company
and
UCP QUALIFYING SPE 1998-1 LIMITED PARTNERSHIP
UCP OPERATING SPE 1998-1 LIMITED PARTNERSHIP
as Pledgors
and
UNICAPITAL OPERATIONS GROUP, INC.
individually and
as Master Servicer
and
BANK OF AMERICA, N.A.
as Agent and Bank Investor
Dated as of August 16, 1999
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C> <C>
ARTICLE I
DEFINITIONS
SECTION I.1 Certain Defined Terms................................................................ 1
SECTION I.2 Other Terms.......................................................................... 33
SECTION I.3 Computation of Time Periods.......................................................... 33
ARTICLE II
PLEDGES AND SETTLEMENTS
SECTION II.1 Facility............................................................................. 34
SECTION II.2 Pledges; Pledge Certificates; Eligible Receivables................................... 34
SECTION II.3 Selection of Tranche Periods and Tranche Rates....................................... 39
SECTION II.4 Discount, Fees and Other Costs and Expenses.......................................... 43
SECTION II.5 Settlement and Reinvestment Procedures............................................... 43
SECTION II.6 Liquidation Settlement Procedures.................................................... 46
SECTION II.7 Fees................................................................................. 47
SECTION II.8 Protection of the Interest of the Company and the Bank Investors; Releases........... 47
SECTION II.9 Deemed Collections; Reassignments; Prepayment Shortfalls; Application of Payments.... 49
SECTION II.10 Payments and Computations, Etc....................................................... 50
SECTION II.11 Reports.............................................................................. 50
SECTION II.12 Accounts............................................................................. 50
SECTION II.13 Sharing of Payments, Etc............................................................. 53
SECTION II.14 Right of Setoff...................................................................... 54
SECTION II.15 Hedging of Receivables............................................................... 54
SECTION II.16 Substitution of Receivables.......................................................... 55
SECTION II.17 Auction Procedure.................................................................... 57
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION III.1 Representations and Warranties of the Pledgors....................................... 58
SECTION III.2 Reaffirmation of Representations and Warranties by the Pledgor....................... 63
SECTION III.3 [Reserved.].......................................................................... 63
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION III.4 Representations and Warranties of the Master Servicer................................ 63
ARTICLE IV
CONDITIONS PRECEDENT
SECTION IV.1 Conditions to Closing................................................................ 66
ARTICLE V
COVENANTS
SECTION V.1 Affirmative Covenants of Pledgors.................................................... 70
SECTION V.2 Negative Covenants of the Pledgors................................................... 76
SECTION V.3 [Reserved.].......................................................................... 79
SECTION V.4 [Reserved.].......................................................................... 79
SECTION V.5 Affirmative Covenants of the Master Servicer......................................... 79
SECTION V.6 [Reserved.].......................................................................... 80
SECTION V.7 Negative Covenants of the Master Servicer............................................ 81
ARTICLE VI
ADMINISTRATION AND COLLECTIONS
SECTION VI.1 Appointment of the Master Servicer................................................... 81
SECTION VI.2 Duties of the Master Servicer........................................................ 82
SECTION VI.3 Rights After Designation of New Master Servicer...................................... 88
SECTION VI.4 Master Servicer Default.............................................................. 89
SECTION VI.5 Responsibilities of the Pledgors and the Seller...................................... 90
SECTION VI.6 Limitation on Liability of the Master Servicer and Others............................ 91
SECTION VI.7 The Master Servicer Not to Resign.................................................... 91
SECTION VI.8 Acknowledgement of Guaranty.......................................................... 91
ARTICLE VII
TERMINATION EVENTS
SECTION VII.1 Termination Events................................................................... 92
SECTION VII.2 Termination.......................................................................... 95
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE VIII
INDEMNIFICATION; EXPENSES; RELATED MATTERS
SECTION VIII.1 Indemnities by the Pledgors.......................................................... 96
SECTION VIII.2 Indemnity for Taxes, Reserves and Expenses........................................... 99
SECTION VIII.3 Taxes................................................................................102
SECTION VIII.4 Other Costs, Expenses and Related Matters............................................103
SECTION VIII.5 [Reserved.]..........................................................................104
SECTION VIII.6 Pledgor Liability....................................................................104
ARTICLE IX
THE AGENT; BANK COMMITMENT
SECTION IX.1 Authorization and Action.............................................................104
SECTION IX.2 Agent's Reliance, Etc................................................................105
SECTION IX.3 Termination Events...................................................................105
SECTION IX.4 Rights as Bank Investor..............................................................106
SECTION IX.5 Indemnification of the Agent.........................................................106
SECTION IX.6 Non-Reliance.........................................................................107
SECTION IX.7 Resignation of Agent.................................................................107
SECTION IX.8 Payments by the Agent................................................................108
SECTION IX.9 Bank Commitment; Assignment to Bank Investors........................................108
ARTICLE X
MISCELLANEOUS
SECTION X.1 Term of Agreement....................................................................113
SECTION X.2 Waivers; Amendments..................................................................114
SECTION X.3 Notices..............................................................................115
SECTION X.4 Governing Law; Submission to Jurisdiction; Integration...............................118
SECTION X.5 Severability; Counterparts...........................................................119
SECTION X.6 Successors and Assigns...............................................................119
SECTION X.7 Waiver of Confidentiality............................................................121
SECTION X.8 Confidentiality Agreement............................................................121
SECTION X.9 No Bankruptcy Petition Against the Company...........................................122
SECTION X.10 No Recourse Against Stockholders, Officers or Directors..............................122
SECTION X.11 Characterization of the Transactions Contemplated by the Agreement...................122
EXHIBIT A FORM OF NOTICE OF CHANGE IN FACILITY LIMIT...........................................A-1
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C> <C>
EXHIBIT B CREDIT POLICY MANUAL AND CREDIT POLICY PROCEDURE MEMORANDA...........................B-1
EXHIBIT C [Reserved.]..........................................................................C-1
EXHIBIT D [Reserved.]..........................................................................D-1
EXHIBIT E FORM OF INVESTOR REPORT..............................................................E-1
EXHIBIT F FORM OF PLEDGE ......................................................................F-1
EXHIBIT G FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT..........................................G-1
EXHIBIT H LIST OF ACTIONS AND SUITS............................................................H-1
EXHIBIT I LOCATION OF RECORDS..................................................................I-1
EXHIBIT J LIST OF SUBSIDIARIES AND TRADENAMES..................................................J-1
EXHIBIT K [Reserved.]..........................................................................K-1
EXHIBIT L-1 FORM OF OFFICER'S CERTIFICATE OF QUALIFYING PLEDGOR................................L-1-1
EXHIBIT L-2 FORM OF OFFICER'S CERTIFICATE OF OPERATING PLEDGOR.................................L-2-1
EXHIBIT L-3 FORM OF OFFICER'S CERTIFICATE OF SELLER............................................L-3-1
EXHIBIT L-4 FORM OF OFFICER'S CERTIFICATE OF THE GENERAL PARTNER...............................L-4-1
EXHIBIT L-5 FORM OF OFFICER'S CERTIFICATE OF THE PARENT........................................L-5-1
EXHIBIT L-6 FORM OF OFFICER'S CERTIFICATE OF THE MASTER SERVICER...............................L-6-1
EXHIBIT M FORM OF SECURED NOTE.................................................................M-1
EXHIBIT N ELIGIBLE ORIGINATORS.................................................................N-1
EXHIBIT O EXCEPTIONS TO BALLOON PAYMENT ELIGIBILITY REQUIREMENTS...............................O-1
</TABLE>
iv
<PAGE> 6
AMENDED AND RESTATED
TRANSFER AND ADMINISTRATION AGREEMENT
AMENDED AND RESTATED TRANSFER AND ADMINISTRATION AGREEMENT (this
"Agreement"), dated as of August 16, 1999, by and among UCP QUALIFYING SPE
1998-1 LIMITED PARTNERSHIP, a Nevada limited partnership, as a pledgor (in such
capacity, the "Qualifying Pledgor"), UCP OPERATING SPE 1998-1 LIMITED
PARTNERSHIP, a Nevada limited partnership, as a pledgor (in such capacity, the
"Operating Pledgor" and, collectively with the Qualifying Pledgor, the
"Pledgors"), UNICAPITAL OPERATIONS GROUP, INC., a Delaware corporation,
individually and as master servicer (in such capacity, the "Master Servicer"),
KITTY HAWK FUNDING CORPORATION, a Delaware corporation (the "Company") and BANK
OF AMERICA, N.A., a national banking association ("Bank of America"), as agent
for the Company and the Bank Investors (in such capacity, the "Agent") and as a
Bank Investor, and each other bank that is a party hereto in the capacity of a
Bank Investor.
PRELIMINARY STATEMENTS
WHEREAS, the parties hereto have entered into a Transfer and
Administration Agreement dated as of June 22, 1998 (as amended prior to the date
hereof, the "Original TAA") and desire to amend and restate the Original TAA in
its entirety; and
WHEREAS, the Pledgors may desire to pledge and assign, from time to
time, certain lease and secured loan receivables to secure a borrowing from the
Company and/or the Bank Investors, as applicable, and the Company may desire to,
and the Bank Investors, if requested, shall lend certain amounts to the
Pledgors, which amounts are secured by the Pledgors' pledge and assignment of
such receivables, subject to the terms and conditions of this Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION I.1 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
<PAGE> 7
"Accounts" means, collectively, the Collection Account, the Reserve
Account, the Fee Reserve Account, the Principal Collection Account and the
Interest Accrual Account.
"Administrative Agent" means Bank of America, N.A., as administrative
agent.
"Administrative Fee" means the fee payable to the Agent pursuant to
Section 2.7 hereof, the terms of which are set forth in the Fee Letter.
"Advance Amount" means with respect to any Pledge, the amount paid to
the Pledgors by the Company or the Bank Investors being the product of the
applicable Advance Percentage and the Outstanding Balance of the related
Receivables at the time of such Pledge.
"Advance Percentage" means (a) 93% with respect to any Pledge of a
Receivable other than a Receivable in Interim Funding and (b) 90% with respect
to any Pledge of a Receivable in Interim Funding.
"Adverse Claim" means a lien, security interest, charge or encumbrance,
or other right or claim in, of or on any Person's assets or properties in favor
of any Person other than the Company and the Bank Investors (including any UCC
financing statement or any similar instrument filed against such Person's assets
or properties) and which is not a Permitted Lien.
"Affected Assets" means, collectively, the Receivables and the Related
Security, Collections and Proceeds relating thereto.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the power to
direct or cause the direction of the management or policies of the controlled
Person, whether through ownership of voting stock, by contract or otherwise.
"Agent" means Bank of America, N.A., in its capacity as agent for the
Company and the Bank Investors, and any successor thereto appointed pursuant to
Article IX.
"Aggregate Unpaids" means, at any time, an amount equal to the sum of
(i) the aggregate accrued and unpaid Discount with
<PAGE> 8
respect to all Tranche Periods at such time, (ii) the Net Investment at such
time, and (iii) all other amounts owed (whether due or accrued) hereunder by the
Pledgors to the Company at such time.
"Assignment Amount" with respect to a Bank Investor shall mean at any
time an amount equal to the lesser of (i) such Bank Investor's Pro Rata Share of
the Net Investment at such time and (ii) such Bank Investor's unused Commitment.
"Assignment and Assumption Agreement" means an Assignment and
Assumption Agreement substantially in the form of Exhibit G attached hereto.
"Available Funds" means, for each Payment Date, all Collections
Available for the related Collection Period, plus all Servicing Advances for
such Payment Date, plus all amounts received under the Hedge Agreements with
respect to such Payment Date, plus all Finance Facility Release Amounts for such
Payment Date, plus all amounts on deposit in the Interest Accrual Account
immediately prior to such Payment Date.
"Bank Investors" shall mean Bank of America, N.A. and each other bank
that is party hereto in the capacity of a Bank Investor and their respective
successors and assigns.
"Bankruptcy Code" means the Federal Bankruptcy Code, as amended from
time to time (Title 11 of the United States Code).
"Base Rate" or "BR" means, a rate per annum equal to the greater of (i)
the prime rate of interest announced by the Liquidity Provider (or, if there is
more than one Liquidity Provider, then by Bank of America) from time to time,
changing when and as said prime rate changes (such rate not necessarily being
the lowest or best rate charged by the Liquidity Provider (or Bank of America,
as applicable)) and (ii) the sum of (a) 1.50% and (b) the rate 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 for such transactions received by the Liquidity Provider
(or, if more than one Liquidity Provider, then by Bank of America)
3
<PAGE> 9
from three Federal funds brokers of recognized standing selected by it.
"Benefit Plan" means any employee benefit plan as defined in Section
3(3) of ERISA in respect of which the Pledgors, the Seller or any ERISA
Affiliate of the Pledgors, or the Seller is, or at any time during the
immediately preceding six years was, an "employer" as defined in Section 3(5) of
ERISA.
"Business Day" means any day excluding Saturday, Sunday and any day on
which banks in New York, New York; Portland, Oregon; Miami, Florida; or
Charlotte, North Carolina are authorized or required by law to close, and, when
used with respect to the determination of any Eurodollar Rate or any notice with
respect thereto, any such day which is also a day for trading by and between
banks in United States dollar deposits in the London interbank market.
"BR Tranche" means a Tranche as to which Discount is calculated at the
Base Rate.
"BR Tranche Period" means, with respect to a BR Tranche, either (i)
prior to the Termination Date, a period of up to 30 days requested by the
Pledgors and agreed to by the Company, Bank of America on behalf of the
Liquidity Provider, or the Agent, as the case may be, commencing on a Business
Day requested by the Pledgors and agreed to by the Company, Bank of America or
the Agent, as the case may be, or (ii) after the Termination Date, a period of
one day. If such BR Tranche Period would end on a day which is not a Business
Day, such BR Tranche Period shall end on the next succeeding Business Day.
"Capitalized Lease" means any lease of property by a Person as lessee
which would be capitalized on a balance sheet of such Person prepared in
accordance with GAAP.
"Carrying Costs" has the meaning provided in Section 2.5.
"Closing Date" means June 26, 1998.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Agent" means Bank of America, N.A., as collateral agent for
any Liquidity Provider, any Credit Support Provider, the holders of Commercial
Paper and certain other parties.
4
<PAGE> 10
"Collection Account" means the account, established by the Agent, for
the benefit of the Company and the Bank Investors, pursuant to Section 2.12(a).
"Collection Period" means with respect to each Payment Date, the
immediately preceding calendar month (or, with respect to the first Payment
Date, the period beginning on the initial Cutoff Date and ending on the last day
of the month preceding such Payment Date).
"Collections" means, with respect to any Receivable, all cash
collections on and other cash proceeds of or recoveries on the related Contract,
including, without limitation, all interest charges, rental payments, and cash
proceeds of all Related Security and including all amounts received with respect
to any Deemed Collections or other reassignments of Receivables pursuant to
Section 2.9, but, in each case, other than any Excluded Amounts.
"Collections Available" means, for any Payment Date, all Collections
with respect to the related Collection Period, less any amounts allocated since
the preceding Payment Date, or since the initial Pledge Date in the case of the
first Payment Date, pursuant to Section 2.5(b).
"Commercial Paper" means the promissory notes issued by the Company in
the commercial paper market.
"Commitment" means (i) with respect to each Bank Investor party hereto,
the commitment of such Bank Investor to make loans to the Pledgors or to acquire
such loans from the Company in accordance herewith in an amount not to exceed
the dollar amount set forth opposite such Bank Investor's signature on the
signature page hereto under the heading "Commitment", minus the dollar amount of
any Commitment or portion thereof assigned pursuant to an Assignment and
Assumption Agreement plus the dollar amount of any increase to such Bank
Investor's Commitment consented to by such Bank Investor prior to the time of
determination, (ii) with respect to any assignee of a Bank Investor party hereto
taking pursuant to an Assignment and Assumption Agreement, the commitment of
such assignee to make loans to the Pledgors or to acquire such loans from the
Company not to exceed the amount set forth in such Assignment and Assumption
Agreement minus the dollar amount of any Commitment or portion thereof assigned
pursuant to an Assignment and Assumption Agreement prior to such time of
determination and (iii) with
5
<PAGE> 11
respect to any assignee of an assignee referred to in clause (ii) above, the
commitment of such assignee to make loans to the Pledgors or to acquire such
loans from the Company not to exceed the amount set forth in an Assignment and
Assumption Agreement between such assignee and its assign.
"Commitment Termination Date" means August 14, 2000, or such later date
to which the Commitment Termination Date may be extended by the Pledgors, the
Agent and the Bank Investors not later than 90 days prior to the then current
Commitment Termination Date, any such extension to become effective on the then
current Commitment Termination Date and to be for a period not to exceed 364
days from the date of the then current Commitment Termination Date.
"Company" means Kitty Hawk Funding Corporation, and its successors and
assigns.
"Concentration Factor" means for any Obligor on any date of
determination, Receivables of such Obligor having an aggregate Outstanding
Balance not in excess of (a) if the Net Investment is $100,000,000 or more on
such date of determination, the greater of 2% of the Net Investment on such date
and $5,000,000 or, with respect to any Obligor whose long term unsecured debt
obligations are rated at least "Baa3" by Moody's and at least "BBB-" by Standard
& Poor's or, if only rated by one such rating agency, are rated by such rating
agency at least at the applicable rating set forth above, the greater of 5% of
the Net Investment on such date and $7,000,000, (b) if the Net Investment is
less than $100,000,000 on such date of determination, (x) for Obligors whose
Obligor Risk Rating is "5" or worse, $3,000,000 and (y) for Obligors whose
Obligor Risk Rating is "4" or better, $4,000,000; provided that Obligors whose
Obligor Risk Rating is "5" or worse may have pledged Receivables hereunder
having an Outstanding Balance in excess of $3,000,000 but not in excess of
$4,000,000 to the extent that the Transaction Risk Rating for those Receivables
is "4" or better or (c) in any event, such other greater amount that is
determined by the Agent in the reasonable exercise of its good faith judgment
and disclosed in a written notice delivered to the Pledgors or such other lesser
amount that is determined by the Agent with the mutual consent of the Pledgors.
"Conduit Assignee" means any commercial paper conduit designated by
Bank of America from time to time to accept an
6
<PAGE> 12
assignment from the Company of all or a portion of the Net Investment.
"Contract" means any lease, conditional sale contract, loan contract or
security agreement with respect to any Equipment under which the Seller acts as
lessor or secured party to an Obligor.
"Contract Payment" means each periodic installment of rent or scheduled
payment or principal and interest payable by an Obligor under a Contract.
"Contract Schedule" means the schedule in the form attached hereto as
Schedule I to Exhibit F delivered by the Pledgors to the Agent with respect to
each Pledge or such other form as may be agreed to by the Agent from time to
time.
"CP Rate" means, with respect to any CP Tranche Period, the rate
equivalent to the rate (or if more than one rate, the weighted average of the
rates) at which Commercial Paper having a term equal to such CP Tranche Period
may be sold by any placement agent or commercial paper dealer selected by the
Company, provided, however, that if the rate (or rates) as agreed between any
such agent or dealer and the Company is a discount rate, then the rate (or if
more than one rate, the weighted average of the rates) resulting from the
Company's converting such discount rate (or rates) to an interest-bearing
equivalent rate per annum.
"CP Tranche" means a Tranche as to which Discount is calculated at a CP
Rate.
"CP Tranche Period" means, with respect to a CP Tranche, a period of
days not to exceed 90 days commencing on a Business Day requested by the
Pledgors and agreed to by the Company pursuant to Section 2.3. If a CP Tranche
Period would end on a day which is not a Business Day, such CP Tranche Period
shall end on the next succeeding Business Day.
"Credit and Collection Policy" shall mean the Parent's Credit Policy
Manual and Credit Policy and Procedure Memoranda, relating to Contracts and
Receivables existing on the date hereof and referred to in Exhibit B attached
hereto, as modified from time to time in compliance with Section 5.2(c).
"Credit Support Agreement" means the agreement between the Company and
the Credit Support Provider evidencing the obligation
7
<PAGE> 13
of the Credit Support Provider to provide credit support to the Company in
connection with the issuance by the Company of Commercial Paper.
"Credit Support Provider" means the Person or Persons who provides
credit support to the Company in connection with the issuance by the Company of
Commercial Paper.
"Cut-off Date" means, for each Receivable that is subject to a Pledge
hereunder, either (a) the first day of the month of such Pledge or, if later
than the first day of such month, the date of origination thereof or (b) such
other date as may be specified in the related Pledge Certificate.
"Dealer Fee" means the fee payable by the Pledgors to the Collateral
Agent, pursuant to Section 2.4 hereof, the terms of which are set forth in the
Fee Letter.
"Deemed Collections" means any Collections on any Receivable deemed to
have been received pursuant to Section 2.9 hereof.
"Defaulted Receivable" means a Receivable: (i) as to which any payment
is delinquent for 180 consecutive days or more from the original due date for
such payment; (ii) as to which (x) an Event of Bankruptcy has occurred and is
continuing with respect to the Obligor thereof, (y) any payment is delinquent
for 60 consecutive days or more and (z) such Receivables has not been otherwise
re-affirmed in the applicable bankruptcy proceeding; (iii) which has been
identified by the Pledgors, the Seller or the Master Servicer as uncollectible;
or (iv) which, consistent with the Credit and Collection Policy, should be
written off as uncollectible.
"Delinquency Ratio" means, the ratio (expressed as a percentage)
computed as of the last day of each calendar month by dividing (i) the aggregate
Outstanding Balance of all Delinquent Receivables as of such date by (ii) the
aggregate Outstanding Balance of all Receivables as of such date.
"delinquent" means with respect to any Receivable and specified period
of days, that more than 5% of any scheduled payment thereon has not been
received on or prior to the close of business on the last day of such period.
"Delinquent Receivable" means a Receivable: (i) as to which any payment
is delinquent for more than 30 days from the original
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<PAGE> 14
due date for such payment and (ii) which is not a Defaulted Receivable.
"Designated Obligor" means, at any time, each Obligor; provided,
however, that any Obligor shall cease to be a Designated Obligor upon prior
notice to the Pledgors from the Agent, which notice shall be based in the
Agent's sole discretion on its assessment of the risk of loss posed by such
Obligor's Receivables and which notice shall be given 30 days prior to the date
such Obligor shall cease to be a Designated Obligor unless to do so would
materially adversely affect the interests of the Agent, the Company or the Bank
Investors hereunder.
"Determination Date" means the 10th day of each month or, if such 10th
day is not a Business Day, the immediately preceding Business Day.
"Discount" means, with respect to any Tranche Period:
(TR x TNI x AD)
---------------
360
Where:
TR = the Tranche Rate applicable to such Tranche Period.
TNI = the portion of the Net Investment allocated to such Tranche
Period.
AD = the actual number of days during such Tranche Period.
provided, however, that no provision of this Agreement shall require the payment
or permit the collection of Discount at a rate which is in excess of the maximum
amount permitted by applicable law; and provided, further, that Discount shall
not be considered paid by any distribution if at any time such distribution is
rescinded or must be returned for any reason.
"Discount Rate" means for each Receivable, an amount equal to the sum
of (i) the Hedge Rate for such Receivable then in effect plus (ii) 2.00%.
"Early Collection Fee" means, for any Tranche Period (such Tranche
Period to be determined without regard to the last sentence in Section 2.3(a)
hereof) during which the portion of
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the Net Investment that was allocated to such Tranche Period is reduced for any
reason whatsoever prior to the end of such Tranche Period, the excess, if any,
of (i) the additional Discount that would have accrued during such Tranche
Period if such reductions had not occurred, minus (ii) the income, if any,
received by the recipient of such reductions from investing the proceeds of such
reductions.
"Eligible Investments" means any of the following (a) negotiable
instruments or securities represented by instruments in bearer or registered or
in book-entry form which evidence (i) obligations fully guaranteed by the United
States of America; (ii) time deposits in, or bankers acceptances issued by, any
depositary institution or trust company incorporated under the laws of the
United States of America or any state thereof and subject to supervision and
examination by Federal or state banking or depositary institution authorities;
provided, however, that at the time of investment or contractual commitment to
invest therein, the certificates of deposit or short-term deposits, if any, or
long-term unsecured debt obligations (other than such obligation whose rating is
based on collateral or on the credit of a Person other than such institution or
trust company) of such depositary institution or trust company shall have a
credit rating from Moody's and S&P of at least "P-1" and "A-1", respectively, in
the case of the certificates of deposit or short-term deposits, or a rating not
lower than one of the two highest investment categories granted by Moody's and
by S&P; (iii) certificates of deposit having, at the time of investment or
contractual commitment to invest therein, a rating from Moody's and S&P of at
least "P-1" and "A-1", respectively; or (iv) investments in money market funds
rated in the highest investment category or otherwise approved in writing by the
applicable rating agencies; (b) demand deposits in any depositary institution or
trust company referred to in (a)(ii) above; (c) commercial paper (having
original or remaining maturities of no more than 30 days) having, at the time of
investment or contractual commitment to invest therein, a credit rating from
Moody's and S&P of at least "P-1" and "A-1", respectively; (d) Eurodollar time
deposits having a credit rating from Moody's and S&P of at least "P-1" and
"A-1", respectively; and (e) repurchase agreements involving any of the Eligible
Investments described in clauses (a)(i), (a)(iii) and (d) hereof so long as the
other party to the repurchase agreement has at the time of investment therein, a
rating from Moody's and S&P of at least "P-1" and "A-1", respectively.
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<PAGE> 16
"Eligible Originators" means, at any time, any Subsidiary of the Parent
listed on Exhibit N hereto, as such list may be amended from time to time at the
reasonable discretion of the Agent upon prior notice to the Parent (which
notice, in the case of the removal of any such Subsidiary from those listed on
Exhibit N, shall be given 30 days' notice prior to the date of such amendment
unless to delay would materially adversely affect the interests of the Agent,
the Company or the Bank Investors hereunder).
"Eligible Receivable" means, at any time, any Receivable:
(i) which has been originated by the Seller at the instruction
of, or was sold to the Seller by, and in either case was underwritten
by, the Parent or a Subsidiary of the Parent that, at the time of the
Pledge of such Receivable hereunder, was an Eligible Originator, and
has been sold to one or both Pledgors (and, in the case of all Related
Security relating to Equipment, to the Operating Lease Pledgor)
pursuant to and in accordance with the Receivables Purchase Agreement
and to which the applicable Pledgor or Pledgors have good title
thereto, free and clear of all Adverse Claims;
(ii) which (together with the Collections and Related Security
related thereto) has been, unless otherwise permitted herein, the
subject of the grant by the applicable Pledgor or Pledgors of a first
priority perfected security interest therein (and in the Collections
and Related Security related thereto), effective until the earlier of
the termination of this Agreement or the time at which the related
Contract is either paid in full or reacquired by the applicable Pledgor
or Pledgors pursuant to this Agreement;
(iii) the Obligor of which (A) is a United States resident,
(B) is a Designated Obligor on the related Pledge Date, (C) is not an
Affiliate of any of the parties hereto and (D) is not a government or a
governmental subdivision or agency; provided that Receivables which in
the aggregate do not have an Outstanding Balance that represents more
than 5.0% of the Net Investment or $8 million, whichever is greater,
may be backed by the full faith and credit of the United States or of a
governmental entity whose long term general obligations are rated
investment grade;
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<PAGE> 17
(iv) which is not a Defaulted Receivable on the related Pledge
Date;
(v) which is not a Delinquent Receivable on the related Pledge
Date;
(vi) which arises pursuant to a Contract with respect to which
each of the Seller, the related Eligible Originator and the Pledgor or
Pledgors, as applicable, has performed all obligations required to be
performed by it thereunder at the time of the related Pledge Date;
(vii) which is an "eligible asset" as defined in Rule 3a-7
under the Investment Company Act of 1940, as amended;
(viii) which arises under a Contract that is "chattel paper"
within the meaning of Article 9 of the UCC of all applicable
jurisdictions and is (A) secured by a first priority perfected security
interest in the related Equipment (provided that Receivables as to
which in each case the related Equipment had at the origination of the
related Contract an original equipment cost of less than $35,000 and
which in the aggregate do not have an Outstanding Balance that
represents more than 20% of the Net Investment or $20 million,
whichever is greater, may be represented by Contracts as to which steps
to perfect such security interest have not been taken), (B) a Leveraged
Lease Loan secured by a first priority perfected security interest in
both the related lease and Equipment (subject to such lease), and which
related lease would be an Eligible Receivable had it been directly sold
to the Borrower pursuant to the Receivables Purchase Agreement and
pledged hereunder, or (C) a "true lease" as to which the related
Equipment is owned by the Operating Lease Pledgor free and clear of all
Adverse Claims;
(ix) which is denominated and payable only in United States
dollars in the United States by an Obligor with a billing address in
the United States and for which the related Equipment is located in the
United States;
(x) which, arises under a Contract that, is in full force and
effect and is and at all times will be the legal, valid and binding
obligation of the related Obligor enforceable against such Obligor in
accordance with its terms and is not subject to, nor has there been
asserted,
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<PAGE> 18
any litigation, right of recession, setoff, counterclaim or other
defense;
(xi) which, together with the Contract 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 no part of the
Contract related thereto is in violation of any such law, rule or
regulation in any material respect;
(xii) which (A) has been originated and serviced in accordance
with and otherwise satisfies all applicable requirements of the Credit
and Collection Policy and (B) is assignable without the consent of, or
notice to, the Obligor thereunder;
(xiii) which was generated in the ordinary course of the
Seller's and the related Eligible Originator's business;
(xiv) the Obligor of which has been directed to make all
payments to the Lock-Box Account;
(xv) as to which the Agent has not given at least 30 days'
notice to the Pledgor that such Receivable or class of Receivables is
not acceptable for pledge hereunder, based upon the reasonable
determination of the Agent, that a Material Adverse Effect with respect
to such class of Receivables may arise because of the nature of the
business of the Obligor;
(xvi) the assignment of which under the Receivables Purchase
Agreement by the Seller and the pledge of which hereunder by the
Pledgors do not violate, conflict or contravene any applicable laws,
rules, regulations, orders or writs or any contractual or other
restriction, limitation or encumbrance;
(xvii) to which the Obligor is responsible for the payment of
all expenses in connection with maintenance, repair, insurance, taxes
and otherwise with respect to the related Equipment and which requires
the Obligor to make periodic lease payments without condition
notwithstanding
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<PAGE> 19
damage to or destruction of the Equipment, or any other event,
including Equipment obsolescence;
(xviii) as to which the related Contract is not a lease on a
vehicle or other type of equipment which requires titling in the name
of the Operating Lease Pledgor in order to perfect the Operating Lease
Pledgor's interest, provided that certain Receivables may be leases on
vehicles or other types of equipment which require titling in the name
of the Operating Lease Pledgor, so long as the aggregate Outstanding
Balance of such Receivables does not represent more than 5.0% of the
Net Investment or $7 million, whichever is greater, and provided that
such vehicles are re-titled as required to perfect such interest within
90 days of the related Pledge Date;
(xix) which has a remaining term that does not exceed the
lesser of (A) 120 months and (B) if the remaining term thereof is
greater than 84 months the product of 0.80 and the number of months
which constitutes the "useful life" of the related Equipment as
determined by UniCapital Corporation's Credit and Risk Management Group
(or the appropriate credit officer) in accordance with the Credit and
Collection Policy, and rounded up to the nearest month;
(xx) which has a remaining Outstanding Balance on the related
Pledge Date equal to or less than $5,000,000;
(xxi) which contains customary and enforceable provisions
adequate for realization of the benefits of the related Equipment;
(xxii) which is not a "consumer lease" as defined in Section
2A-103(l)(e) of the UCC;
(xxiii) which is not subject to any guaranty of the payment
obligation thereunder by the Seller, the related Eligible Originator,
the Parent or the Master Servicer and in respect of which neither the
Seller, the Parent nor the related Eligible Originator at the time of
Pledge hereunder has established any specific credit reserve with
respect to the related Obligor;
(xxiv) as to which the Seller or its assignee may accelerate
all remaining Contract Payments if the Obligor is
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<PAGE> 20
in default under any of its obligations under such Receivable;
(xxv) which has not been terminated as a result of the loss,
theft, damage beyond repair or governmental seizure of such item of
Equipment or for any other reason;
(xxvi) the Outstanding Balance of which does not include the
amount of any security deposit held by the Master Servicer, the Seller
or the Parent;
(xxvii) which provides that in the event of the loss, theft,
damage beyond repair or governmental seizure of the related Equipment,
the Obligor is required to repair or replace the related Equipment or
pay an amount not less than the Required Payoff Amount;
(xxviii) under which the Obligor has represented to the Seller
and/or the related Eligible Originator that such Obligor has accepted
the related Equipment or is contractually bound to accept such
Equipment upon shipment or delivery thereof;
(xxix) which does not permit prepayment except upon the
payment of an amount not less than the Required Payoff Amount or, if
the Contract is a conditional sale contract or a loan, upon the payment
of the outstanding principal amount thereof together with any accrued
but unpaid interest, penalties and fees thereon;
(xxx) the Pledge of such Receivable hereunder will not cause
the Concentration Factor with respect to the related Obligor to be
exceeded;
(xxxi) for which the related Contract and Records are in the
custody of the Master Servicer at one of the locations set forth in
Exhibit I, except that (1) for Receivables having an Outstanding
Balance not in excess of 3% of the Facility Limit, such Contract and
Records shall be delivered to the Master Servicer's custody not later
than the fifth Business Day after the date of the Pledge thereof
hereunder and (2) Contracts and Records during Interim Funding may be
at the location of the applicable Originator;
(xxxii) which is in Interim Funding; provided, that the
aggregate Outstanding Balance of Receivables in Interim
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<PAGE> 21
Funding will not exceed $50 million and Interim Funding will not
continue for any such Receivable for a period in excess of 12 months;
(xxxiii) which, if previously excluded from the calculation of
the Net Receivables Balance as a result of a Take-Out, such Receivable
is being re-Pledged on the first Pledge Date to occur following such
Take-Out;
(xxxiv) which, if such Receivable has a remaining term greater
than 84 months, such Receivable does not have a final scheduled payment
in an amount in excess of 20% of the original equipment cost of the
related Equipment, provided, that, any Receivable which has a remaining
term of 120 months and is not otherwise listed on Exhibit O hereto will
not constitute an Eligible Receivable if the final scheduled payment
thereunder exceeds the amount of the other scheduled payments
thereunder; and
(xxxv) which, if such Receivable constitutes a Participation
Receivable, is a Qualified Participation Receivable.
"Equipment" means each item of personal property, together with any
replacement parts, additions, and repairs thereto, any replacements thereof, and
any accessories incorporated therein and/or affixed thereto, subject to a
Contract.
"ERISA" means 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" means, with respect to any Person, (i) any
corporation which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Code (as in effect from time to
time, the "Code")) as such Person; (ii) a trade or business (whether or not
incorporated) under common control (within the meaning of Section 414(c) of the
Code) with such Person; or (iii) a member of the same affiliated service group
(within the meaning of Section 414(n) of the Code) as such Person, any
corporation described in clause (i) above or any trade or business described in
clause (ii) above.
"Eurodollar Rate" means, with respect to any Eurodollar Tranche Period,
a rate which is 0.75% in excess of a rate per annum equal to the sum (rounded
upwards, if necessary, to the
16
<PAGE> 22
next higher 1/100 of 1%) of (A) the rate obtained by dividing (i) the applicable
LIBOR Rate by (ii) a percentage equal to 100% minus the reserve percentage used
for determining the maximum reserve requirement as specified in Regulation D
(including, without limitation, any marginal, emergency, supplemental, special
or other reserves) that is applicable to the Agent during such Eurodollar
Tranche Period in respect of eurocurrency or eurodollar funding, lending or
liabilities (or, if more than one percentage shall be so applicable, the daily
average of such percentage for those days in such Eurodollar Tranche Period
during which any such percentage shall be applicable) plus (B) the then daily
net annual assessment rate (rounded upwards, if necessary, to the nearest 1/100
of 1%) as estimated by the Agent for determining the current annual assessment
payable by the Agent to the Federal Deposit Insurance Corporation in respect of
eurocurrency or eurodollar funding, lending or liabilities.
"Eurodollar Tranche" means a Tranche as to which Discount is calculated
at the Eurodollar Rate.
"Eurodollar Tranche Period" means, with respect to a Eurodollar
Tranche, prior to the Termination Date, a period of up to one month requested by
the Pledgors and agreed to by the Company, Bank of America, on behalf of the
Liquidity Provider, or the Agent, as the case may be, commencing on a Business
Day requested by the Pledgors and agreed to by the Company, Bank of America or
the Agent, as applicable; provided, however, that if such Eurodollar Tranche
Period would expire on a day which is not a Business Day, such Eurodollar
Tranche Period shall expire on the next succeeding Business Day; provided,
further, that if such Eurodollar Tranche Period would expire on (a) a day which
is not a Business Day but is a day of the month after which no further Business
Day occurs in such month, such Eurodollar Tranche Period shall expire on the
next preceding Business Day or (b) a Business Day for which there is no
numerically corresponding day in the applicable subsequent calendar month, such
Eurodollar Tranche Period shall expire on the last Business Day of such month.
"Event of Bankruptcy" means, with respect to any Person, (i) that such
Person (a) shall be unable to pay its debts generally as they become due, (b)
shall file a petition to take advantage of any insolvency statute, (c) shall
make an assignment for the benefit of its creditors, (d) shall 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 (e) shall
file a petition or answer seeking liquidation,
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<PAGE> 23
reorganization or arrangement or similar relief under the federal bankruptcy
laws or any other applicable law or statute; or (ii)(a) a court of competent
jurisdiction shall enter an order, judgment or decree appointing a custodian,
receiver, trustee, liquidator or conservator of such Person or of the whole or
any substantial part of its properties and such order, judgment or decree
continues unstayed and in effect for a period of sixty days, or approve a
petition filed against such Person seeking liquidation, reorganization or
arrangement or similar relief under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or any state, which
petition is not dismissed within sixty days, (b) under the provisions of any
other law for the relief or aid of debtors, a court of competent jurisdiction
shall assume custody or control of such Person or of the whole or any
substantial part of its properties, which control is not relinquished within
sixty days, (c) there is commenced against such Person any proceeding or
petition seeking reorganization, arrangement or similar relief under the federal
bankruptcy laws or any other applicable law or statute of the United States of
America or any state which proceeding or petition remains undismissed for a
period of sixty days or (d) such Person takes any action to indicate its consent
to or approval of any such proceeding or petition.
"Excluded Amounts" means any collections on a Receivable or the related
Contract or Related Security (a) attributable to any Taxes, fees or other
charges imposed by any Official Body, (b) representing reimbursements of
insurance premiums or payments for services that were not financed by the Seller
or the Eligible Originator, (c) with respect to a Receivable re-assigned or
substituted for as provided for in this Agreement, (d) with respect to Equipment
related to any Contract that has been paid in full and (e) attributable to any
costs expressly incurred to third parties, such as any UCC fees, maintenance
fees and the like.
"Excluded Taxes" shall have the meaning specified in Section 8.3
hereof.
"Facility Fee" means the fee payable by the Pledgors to the Company
pursuant to Section 2.7 hereof, the terms of which are set forth in the Facility
Fee Letter.
"Facility Fee Letter" means the letter agreement dated the date hereof
among the Pledgors and the Agent with respect to the Facility Fee.
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<PAGE> 24
"Facility Limit" means $450,000,000 prior to October 1, 1999 and
$300,000,000 from and after October 1, 1999; provided that such amount may not
at any time exceed the aggregate Commitments at any time in effect; and
provided, further, that the Agent will, from time to time, at the request of the
Pledgors, within three Business Days after the receipt by the Agent of a
certificate executed by the Pledgors in the form attached hereto as Exhibit A,
agree to changes in the Facility Limit without the approval of the Company or
the Bank Investors so long as (i) the Agent receives notice of such change at
least 5 Business Days prior to the date of such change, and (ii) any resulting
increase occurs simultaneously with an equivalent decrease, and any resulting
decrease occurs simultaneously with an equivalent increase, in the facility
limit under the Finance Facility Agreement, and (iii) after giving effect to any
such change, the aggregate of the Facility Limit under this Agreement and the
facility limit under the Finance Facility Agreement does not exceed $600,000,000
prior to October 1, 1999 and $400,000,000 from and after October 1, 1999.
"Facility Pledge Agreement" means that certain agreement, dated as of
June 22, 1998, among the Pledgors and the Finance Facility Pledgor pursuant to
which the Pledgors, on the one hand, and the Finance Facility Pledgor, on the
other, have made reciprocal pledges of certain amounts to be released to such
pledgors pursuant to this Agreement and the Finance Facility Agreement,
respectively.
"Facility Term" means the period commencing on the Closing Date and
ending on the Facility Termination Date.
"Facility Termination Date" means the earlier to occur of (a) the
Termination Date and (b) the Commitment Termination Date.
"Fee Letter" means the letter agreement dated the date hereof among the
Pledgors and the Company with respect to the Administrative Fee and the Program
Fee to be paid by the Pledgors or the Parent hereunder, as amended, modified or
supplemented from time to time.
"Fee Reserve Account" means the account, established by the Agent, for
the benefit of the Company and the Bank Investors, pursuant to Section 2.12(d).
19
<PAGE> 25
"Finance Facility Agreement" means that certain Amended and Restated
Loan and Security Agreement, dated as of August 16, 1999, among the Finance
Facility Pledgor, the Agent, the Company, the Bank Investors, the Master
Servicer and the Parent.
"Finance Facility Pledgor" means UCP Borrowing SPE 1998-1 Limited
Partnership and its successors and assigns.
"Finance Facility Release Amounts" means, for any Payment Date, all
cash amounts released since the preceding Payment Date to and including such
Payment Date to the Finance Facility Pledgor pursuant to the Finance Facility
Agreement and pledged to the Pledgors pursuant to the Facility Pledge Agreement.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
accounting profession, which are in effect as of the date of this Agreement.
"General Partner" means UCP GP SPE 1998-1 LLC, a Nevada limited
liability company and its successors and assigns.
"Guaranty" means, with respect to any Person any agreement by which
such Person assumes, guarantees, endorses, contingently agrees to purchase or
provide funds for the payment of, or otherwise becomes liable upon, the
obligation of any other Person, or agrees to maintain the net worth or working
capital or other financial condition of any other Person or otherwise assures
any other creditor of such other Person against loss, including, without
limitation, any comfort letter, operating agreement or take-or-pay contract and
shall include, without limitation, the contingent liability of such Person in
connection with any application for a letter of credit.
"H.15" means Statistical Release No. H.15 (519) of the Federal Reserve
Board or any successor publication.
"Hedge Counterparty" means with respect to this Agreement, each party
which has entered into a Hedging Agreement with the Pledgors, the Parent or the
Seller (which Hedging Agreement has been assigned to the Agent), as to which
such party's (a) long-term unsecured debt obligations are rated not lower than
one of the two highest investment categories granted by S&P and Moody's
20
<PAGE> 26
and (b) short-term unsecured debt obligations are rated at least "A-1" by S&P
and "P-1" by Moody's, or such party that has been approved in advance by the
Agent.
"Hedge Payments" means for each Payment Date, any and all amounts due
and payable to the Hedge Counterparty under each Hedging Agreement from but not
including the preceding Payment Date to and including such Payment Date.
"Hedge Rate" means, for any Receivable at any time for which a Hedging
Agreement is in effect, the per annum rate at which the Hedge Payments under the
related Hedging Agreement are calculated net of a percentage amount reflecting
the average daily spread between the yield on the related Treasury security and
the rate that reflects hedge payments with respect to such security as
determined for similar hedging agreements during the preceding calendar quarter;
provided that with respect to any Receivable for any period during which such
Receivable is not required to be hedged pursuant to Section 2.15 or is otherwise
unhedged with the consent of the Agent, the Hedge Rate with respect to such
Receivable shall be the Hedge Rate as determined above from the Hedging
Agreement most recently entered into pursuant to this Agreement.
"Hedged Amount" has the meaning specified in Section 2.15.
"Hedging Agreement" means, each hedging agreement entered into by the
Pledgors, the Parent or the Seller and a Hedge Counterparty the form of which
has been approved in writing in advance by the Agent.
"Indebtedness" means, with respect to any Person such Person's (i)
obligations for borrowed money, (ii) obligations representing the deferred
purchase price of property other than accounts payable arising in the ordinary
course of such Person's business on terms customary in the trade, (iii)
obligations, whether or not assumed, secured by liens or payable out of the
proceeds or production from property now or hereafter owned or acquired by such
Person, (iv) obligations which are evidenced by notes, acceptances, or other
instruments, (v) Capitalized Lease obligations and (vi) obligations for which
such Person is obligated pursuant to a Guaranty.
"Indemnified Amounts" has the meaning specified in Section 8.1 hereof.
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<PAGE> 27
"Indemnified Parties" has the meaning specified in Section 8.1 hereof.
"Interest Accrual Account" means the account, established by the Agent
for the benefit of the Company and the Bank Investors, pursuant to Section
2.12(e).
"Interest Component" shall mean, (i) with respect to any Commercial
Paper issued on an interest-bearing basis, the interest payable on such
Commercial Paper at its maturity and (ii) with respect to any Commercial Paper
issued on a discount basis, the portion of the face amount of such Commercial
Paper representing the discount incurred in respect thereof.
"Interim Funding" means for any Receivable, with respect to which the
related Equipment is delivered in stages, a period during which Contract
Payments are based on the Equipment actually shipped or delivered, with the full
funding term of such Contract to commence pursuant to the terms thereof after
delivery of all such items of Equipment.
"Investor Report" means a report, in substantially the form attached
hereto as Exhibit E or in such other form as is mutually agreed to by the
Pledgors and the Agent, furnished by the Master Servicer pursuant to Section
2.11 hereof.
"Law" means any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, order, injunction, writ, decree or award of
any Official Body.
"Leveraged Lease Loan" means a loan by the Seller or an Eligible
Originator to a third party lessor secured by all of such lessor's right, title
and interest in a lease (originated by the Seller or such Eligible Originator
and sold, together with the related Equipment, to such third party) and in the
related Equipment.
"LIBOR Rate" means, with respect to any Eurodollar Tranche Period, the
rate which appears on Telerate Page 3750 (as defined in the 1987 Interest Rate
and Currency Exchange Definitions published by the International Swap Dealers
Association, Inc.) (or such page as may replace Telerate Page 3750), at
approximately 11:00 a.m. (London time), two Business Days before the first day
of such Eurodollar Tranche Period in an amount approximately equal to the
Eurodollar Tranche to which the Eurodollar Rate is to apply and for a period of
time approximately equal to the applicable Eurodollar Tranche Period.
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"Liquidity Provider" means the Person or Persons who will provide
liquidity support to the Company in connection with the issuance by the Company
of Commercial Paper.
"Liquidity Provider Agreement" means the agreement between the Company
and the Liquidity Provider evidencing the obligation of the Liquidity Provider
to provide liquidity support to the Company in connection with the issuance by
the Company of Commercial Paper.
"Lock-Box Account" means, collectively, each account maintained by the
Master Servicer at the Lock-Box Bank for the purpose of receiving Collections.
"Lock-Box Bank" means Bank of America, N.A. or its designee.
"Majority Investors" shall mean, at any time, the Agent and those Bank
Investors which hold Commitments aggregating in excess of 50% of the Facility
Limit as of such date.
"Master Servicer" means at any time the Person then authorized pursuant
to Section 6.1 to service, administer and collect Receivables.
"Master Servicer Default" has the meaning specified in Section 6.4
hereof.
"Material Adverse Effect" means any event or condition which would have
a material adverse effect on (i) the general collectibility of the Receivables,
(ii) the ability of the Pledgors and the Parent to perform their collective
obligations under the Transaction Documents to which they are parties and (iii)
the interests of the Agent, the Company or the Bank Investors under the
Transaction Documents.
"Maximum Net Investment" means $450,000,000 prior to October 1, 1999
and $300,000,000 from and after October 1, 1999; provided that such amount shall
increase or decrease in an amount equal to any increase or decrease in the
Facility Limit.
"Maximum Percentage Factor" means 100%
"Moody's" means Moody's Investors Service, Inc.
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"Monthly Costs" means for any Payment Date the amounts due on such
Payment Date pursuant to clauses (i) through (v) of Section 2.5(a) and for each
Tranche Period all amounts due pursuant to Section 2.5(b) or, after the
Termination Date, Section 2.6.
"Multiemployer Plan" means 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 a Pledgor, the Parent or any
ERISA Affiliate of a Pledgor or the Parent on behalf of its employees.
"Net Asset Test" shall mean a test that is met if, as of the time of
determination, the sum of the Net Receivables Balance and the amount on deposit
in the Accounts, exceeds the aggregate Net Investment plus the amount of any
outstanding Carrying Costs.
"Net Credit Loss" means, for any calendar quarter, the aggregate "Net
Credit Loss" for such calendar quarter with respect to the Parent's business
units referred to as the Technology and Finance Group and the Business Credit
Group as reported by the Parent to the investment community.
"Net Investment" means as of any time of determination the sum of the
cash amounts paid to the Pledgors (other than from amounts on deposit in the
Principal Collection Account) for each Pledge occurring prior to such date less
the aggregate amount of Collections received and applied by the Agent prior to
such date to reduce such Net Investment pursuant to Section 2.5 or 2.6 hereof;
provided that the Net Investment shall be restored and reinstated in the amount
of any Collections so received and applied if at any time the distribution of
such Collections is rescinded or must otherwise be returned for any reason; and
provided, further, that the Net Investment may be increased by the amount
described in Section 9.9(g) as described therein.
"Net Receivables Balance" means at any time the Outstanding Balance of
the Eligible Receivables at such time reduced by (i) the aggregate Outstanding
Balance of all Eligible Receivables which are Defaulted Receivables and (ii) the
aggregate Outstanding Balance of all Eligible Receivables having a Pledge Date
(and, if more than one Pledge Date, the first such Pledge Date) which occurred
more than 18 months prior to the date the Net Receivables Balance is being
determined, provided, that if such Receivable was subject to a Pledge hereunder
on the date of the first Take-Out to occur hereunder, the Net Receivables
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Balance shall not be reduced by the Outstanding Balance of such Receivable until
12 months after the date of such first Take-Out.
"Obligor" means a Person obligated to make payments for the provision
of goods and services pursuant to a Contract.
"Obligor Risk Rating" means, with respect to an Obligor, the numerical
"Obligor Rating" assigned pursuant to the Credit and Collection Policy.
"Official Body" means any government or political subdivision or any
agency, authority, bureau, central bank, commission, department or
instrumentality of any such government or political subdivision, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
"Operating Lease Pledgor" means UCP Operating SPE 1998-1 Limited
Partnership and its successors and assigns.
"Other Conduit Participant" means any Person other than the Pledgors
that has entered into a receivables purchase or pledge agreement or transfer or
pledge and administration agreement with the Company.
"Outstanding Balance" means, with respect to any Receivable at any date
of determination, an amount equal to the present value of all Contract Payments
(not including delinquent payments in respect of Delinquent Receivables) to
become due thereunder following such date (determined by discounting on a
monthly basis (assuming a calendar year consisting of twelve 30-day months), at
a rate equal to the then applicable Discount Rate for such Receivable, each such
Contract Payment from the last day of the Collection Period during which such
Contract Payment is due, to such date). The Outstanding Balance of any
Receivable in Interim Funding shall be equal to the related original Equipment
cost as set forth in the Contract Schedule, and such balance shall not decline
during Interim Funding based on Contract Payments made thereunder. In
determining the Outstanding Balance with respect to any date of determination,
the future remaining Contract Payments will be calculated after giving effect to
any payments received prior to such date of calculation to the extent such
payments relate to Contract Payments due and payable by the Obligors with
respect to the related Collection Period and any prior Collection Period.
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"Parent" means UniCapital Corporation, a Delaware corporation, and its
successors and assigns.
"Participation Receivable" means a Receivable in which any Person other
than the Pledgors, the Agent, the Company, the Bank Investors or the Master
Servicer has any participation interest in such Receivable, the related
Equipment, or the proceeds of such Receivable or Equipment.
"Payment Date" means the 20th day of each month, or if such day is not
a Business Day the next succeeding Business Day, or such earlier date of the
related month as may be agreed upon by the Agent and the Pledgors, commencing in
the month following the initial Pledge under this Agreement.
"Percentage Factor" shall mean the fraction (expressed as a percentage)
computed at any time of determination by dividing (i) the Net Investment minus
the amount on deposit in the Principal Collection Account and the Reserve
Account by (ii) the product of the Net Receivables Balance and the Weighted
Average Advance Percentage, each at the time of such computation.
"Permitted Lien" means:
(i) any lien in favor of a third-party lessor for the
Equipment relating to a Leveraged Lease Loan;
(ii) any lien of the applicable Pledgor"s right, title and
interest in the Equipment or proceeds thereof that is expressly
subordinated to the interests of the lessor or lender (and their
assignees) under the related Lease; and
(iii) any lien on the applicable Pledgor"s right, title and
interest in any Equipment or proceeds thereof that is pari passu with
the interests of the lessor or lender (and their assignees) under the
related Lease, provided, that the Receivable relating to such Equipment
is a Qualified Participation Receivable.
"Person" means any corporation, limited liability company, natural
person, firm, joint venture, partnership, trust, unincorporated organization,
enterprise, government or any department or agency of any government.
"Pledge" means a pledge and assignment by the Pledgors to the Company
or the Bank Investors of all of each Pledgor's
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respective right, title and interest in, to and under the Receivables hereunder
and all Related Security (including, without limitation, as a result of any
reinvestment of Collections in Pledged Interests pursuant to Section 2.2(b) and
2.5).
"Pledge Certificate" has the meaning specified in Section 2.2(a)
hereof.
"Pledge Date" means, with respect to each Pledge, the Business Day on
which such Pledge is made.
"Pledgors" means the Qualifying Pledgor and the Operating Lease
Pledgor.
"Pledged Interest" means, at any time of determination, all right,
title and interest created hereunder in each and every then outstanding
Receivable, (ii) all Related Security with respect to each such Receivable.
"Pool Market Value" means, as of any date, the fair market value of all
Eligible Receivables (other than Defaulted Receivables and assuming that such
Eligible Receivables are current) as of such date as determined by the Agent and
notified in writing to the Master Servicer, provided, that, if within three
Business Days of receipt of the Agent's determination of the fair market value
of such Eligible Receivables, the Master Servicer provides the Agent in writing
with its determination of the fair market value of such Eligible Receivables
which is greater that the fair market value determined by the Agent, the Agent
and the Master Servicer shall promptly select a mutually acceptable investment
banking firm to determine the fair market value of such Eligible Receivables as
of the date requested and the "Pool Market Value" shall be the middle of the
fair market value determinations made by the Agent, the Master Servicer and such
investment banking firm.
"Prepayment Shortfall" has the meaning specified in Section 2.9.
"Principal Collection Account" means the account established by the
Agent, for the benefit of the Company and the Bank Investors pursuant to Section
2.12(c).
"Principal Deemed Amount" means, for any Payment Date, the excess of
the Outstanding Balance of the Receivables at the end
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of the second preceding Collection Period (or for any Receivable for which the
Cut-off Date therefor occurred since the end of such Collection Period, the
Outstanding Balance of each such Receivable as of its Cut-off Date) over the
Outstanding Balance of the Receivables at the end of the preceding Collection
Period; provided, that, the Principal Deemed Amount will not be calculated for
any Receivables as to which a Take-Out occurred during such preceding Collection
Period.
"Pro Rata Share" means, for a Bank Investor, the Commitment of such
Bank Investor divided by the sum of the Commitments of all Bank Investors.
"Proceeds" means "proceeds" as defined in Section 9-306(1) of the UCC.
"Program Fee" means the fee payable to the Company pursuant to Section
2.7 hereof, the terms of which are set forth in the Fee Letter.
"Purchased Interest" means the interest in the Receivables acquired by
the Liquidity Provider through purchase pursuant to the terms of the Liquidity
Provider Agreement.
"Purchase Facility Differential" means for any Payment Date (i) the sum
of, for such Payment Date, all Collections Available for the related Collection
Period, plus all Servicing Advances for such Payment Date, plus all amounts
received under the Hedge Agreements with respect to such Payment Date plus all
amounts on deposit in the Interest Accrual Account immediately prior to such
Payment Date minus (ii) the amount required to be remitted on such Payment Date
pursuant to clauses (i) through (viii) of Section 2.5(a).
"Purchase Facility Free Cash Flow" means for any Payment Date any
positive Purchase Facility Differential for such Payment Date.
"Purchase Facility Shortfall" means for any Payment Date the absolute
value of any negative Purchase Facility Differential for such Payment Date.
"Purchase Termination Date" means the date upon which either Pledgor
shall cease, for any reason whatsoever, to make purchases of Receivables from
the Seller under the Receivables Purchase
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Agreement or the Receivables Purchase Agreement shall terminate for any reason
whatsoever.
"Qualified Participation Receivable" means a Participation Receivable
as to which (a) the participation interest of any Person other than the
Pledgors, the Agent, the Company, the Bank Investors or the Master Servicer is
subordinated to the applicable Pledgor's participation interest in such
Receivable or (b) the participation interest of such other Person is pari passu
with the applicable Pledgor's participation interest in such Receivable, and
such other Person has acknowledged in writing that (i) the Master Servicer will
retain the servicing rights with respect to such Receivable, (ii) the Pledgor
shall have the right to take all enforcement action with respect to any default
which occurs under the related Lease, including, without limitation, the right
to accelerate the remaining payments under such Receivable or to agree to any
modification thereof in connection with any "work-out" with respect to such
default and (iii) any Collections of such Receivable are to be remitted to such
party on a pari passu basis as received.
"Qualifying Pledgor" means UCP Qualifying SPE 1998-1 Limited
Partnership and its successors and assigns.
"Receivable" means Contracts sold to the Pledgors under the Receivables
Purchase Agreement, whether constituting an account, chattel paper, instrument,
investment property or general intangible or arising in connection with the sale
or lease of Equipment, including all Contract Payments and other payment
obligations (but other than Excluded Amounts) owed thereunder on or after the
related Cut-off Date by the related Obligor, including the right to payment of
any finance charges and other obligations of such Obligor with respect thereto.
Notwithstanding the foregoing, once a Receivable has been deemed collected
pursuant to Section 2.9 hereof, it shall no longer constitute a Receivable
hereunder.
"Receivable Systems" has the meaning specified in Section 3.1(w)
hereof.
"Receivables Purchase Agreement" means the Receivables Purchase
Agreement, dated as of June 22, 1998, among the Seller, as seller, the Pledgors,
as purchasers, and the Parent.
"Records" means all Contracts and other documents, books, records and
other information (including, without limitation,
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computer programs, tapes, discs, punch cards, data processing software and
related property and rights) maintained with respect to Receivables and the
related Obligors.
"Reinvestment Termination Date" means the second Business Day after the
delivery by the Company to the Pledgors of written notice that the Company
elects to commence the amortization of its interest in the Net Investment or
otherwise liquidate its interest in the Pledged Interest.
"Related Commercial Paper" shall mean Commercial Paper issued by the
Company the proceeds of which were used to acquire, or refinance the acquisition
of, an interest in Receivables.
"Related Security" means with respect to any Receivable: all of the
Pledgors' right, title and interest in and to:
(a) any collateral securing the Obligor's obligations under
such Contract (excluding security deposits) or any Guaranty thereof;
(b) all cash realizations on the related Equipment (including
returned and repossessed Equipment) and all loss and casualty insurance
maintained with respect to such Equipment, in each case to the extent
constituting recoveries on a Defaulted Receivable or otherwise
representing the amount necessary to pay in full all unpaid Contract
Payments and other amounts due on the related Receivable in the event
that it is a Defaulted Receivable;
(c) all Guaranties, insurance and other agreements or
arrangements of whatever character from time to time supporting,
securing or insuring any Equipment, to the extent of the cash
realizations set forth in clause (b) above;
(d) all Records related to such Contract; and
(e) all Proceeds of the foregoing;
excluding, however, in each case any Excluded Amounts.
"Required Payoff Amount" means with respect to any Collection Period
for any Receivable (a) if such Receivable is in the form of a lease, an amount,
without duplication, equal to the sum of (i) the Outstanding Balance as of the
close of business on the last day of the preceding Collection Period and (ii)
any Contract Payments due prior to the close of business on
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the last day of such preceding Collection Period and not paid by an Obligor, (b)
if such Receivable is in the form of a conditional sales contract or a loan or a
Receivable originated by American Capital Resources, Inc., an amount equal to
the outstanding principal balance thereof together with any accrued but unpaid
interest, penalties and fees thereon, and (c) in either case, any breakage cost
associated with the applicable Hedging Agreement.
"Reserve Account" means the account, established by the Agent, for the
benefit of the Company and the Bank Investors, pursuant to Section 2.12(b).
"Revolving Credit Facility Agreement" means that certain credit
agreement, dated June 10, 1998, among the Parent, Bank of America and certain
lenders a party thereto from time to time.
"Revolving Credit Facility Default" means the occurrence of an Event of
Default, as defined in the Revolving Credit Facility Agreement.
"Section 8.2 Costs" has the meaning specified in Section 8.2(d) hereof.
"Secured Note" means the secured note issued to the Agent for the
benefit of the Company and the Bank Investors pursuant to Section 2.2(d) hereof.
"Seller" means UniCapital Funding Corporation and its successors and
assigns.
"Servicer Advance" has the meaning specified in Section 6.2(l) hereof.
"Servicing Fee" means the fees payable to the Master Servicer on each
Payment Date in an amount equal to 0.50% per annum on the amount of the
Outstanding Balance of all Receivables as of the beginning of the related
Collection Period.
"Specified Reserve Account Requirement" means the sum (without
duplication) of (a) 30% of the product of (i) the aggregate Outstanding Balance
of all Receivables which are 61 to 120 days delinquent and (ii) the Advance
Percentage applicable to each such Receivable and (b) 50% of the product of (i)
the aggregate Outstanding Balance of all Receivables which are 121 to
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180 days delinquent and (ii) the Advance Percentage applicable to each such
Receivable.
"Standard & Poor's" or "S&P" means Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.
"Subsidiary" of a Person means any Person more than 50% of the
outstanding voting interests of which shall at any time be owned or controlled,
directly or indirectly, by such Person or by one or more Subsidiaries of such
Person or any similar business organization which is so owned or controlled.
"Substitute Receivable" has the meaning specified in Section 2.16.
"Take-Out" means any reduction of the Net Investment resulting from an
auction of Receivables or a reassignment to one or both Pledgors of Receivables
in accordance with Section 2.17.
"Taxes" shall have the meaning specified in Section 8.3 hereof.
"Termination Date" means the earliest of (i) the Business Day
designated by the Pledgors to the Agent as the Termination Date at any time
following 60 days' written notice to the Agent, (ii) the day upon which the
Termination Date is declared or automatically occurs pursuant to Section 7.2(a)
hereof, (iii) two Business Days prior to the Commitment Termination Date (unless
such date has been extended), or (iv) the Purchase Termination Date.
"Termination Event" means an event described in Section 7.1 hereof.
"Tranche" means a portion of the Net Investment allocated to a Tranche
Period pursuant to Section 2.3 hereof.
"Tranche Period" means a CP Tranche Period, a BR Tranche Period or a
Eurodollar Tranche Period.
"Tranche Rate" means the CP Rate, the Base Rate or the Eurodollar Rate.
"Transaction Costs" has the meaning specified in Section 8.4(a) hereof.
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"Transaction Risk Rating" means, with respect to a Receivable, the
numerical "Transaction Rating" assigned pursuant to the Credit and Collection
Policy.
"Transaction Documents" means, collectively, this Agreement, the
Receivables Purchase Agreement, the Facility Fee Letter, the Fee Letter, the
Secured Note, the Pledge Certificates and all of the other instruments,
documents and other agreements executed and delivered by the Seller or the
Pledgors in connection with any of the foregoing, in each case, as the same may
be amended, restated, supplemented or otherwise modified from time to time.
"UCC" means, with respect to any state, the Uniform Commercial Code as
from time to time in effect in such state.
"U.S." or "United States" means the United States of America.
"Weighted Average Advance Percentage" means, as of any date of
determination, the average of the Advance Percentages for the Receivables
weighted for each Receivable by the Outstanding Balance of such Receivable.
"Year 2000 Compliant" has the meaning specified in Section 3.1(w)
hereof.
"Year 2000 Problem" has the meaning specified in Section 3.1(w) hereof.
SECTION I.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 I.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", the words
"to" and "until" each means "to but excluding", and the word "within" means
"from and excluding a specified date and to and including a later specified
date".
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ARTICLE II
PLEDGES AND SETTLEMENTS
SECTION II.1 Facility. Upon the terms and subject to the conditions
herein set forth, (x) the Pledgors, jointly and severally, may, at their option,
obtain the proceeds of loans from the Company or the Bank Investors, as
applicable, in exchange for the pledge and assignment to the Agent, on behalf of
the Company or the Bank Investors, as applicable, without recourse except as
provided herein, of all of each Pledgor's respective right, title and interest
in, to and under the Receivables, together with all Related Security with
respect thereto, from time to time and (y) the Agent, on behalf of the Company,
provided that the Termination Date shall not have occurred and at the Company's
option, may, or the Agent, on behalf of the Bank Investors, provided that the
Termination Date shall not have occurred and that the Bank Investors shall have
previously accepted the assignment by the Company of all of its interest in the
Affected Assets, shall, if so requested, loan such proceeds, secured by such
pledge and assignment from the Pledgors. By accepting any pledge and assignment
hereunder, neither the Company, any Bank Investor nor the Agent assumes or shall
have any obligations or liability under any of the Contracts, all of which shall
remain the obligations and liabilities of the applicable Pledgor and of the
Seller, or with respect to any of the Equipment or the other Related Security.
SECTION II.2 Pledges; Pledge Certificates; Eligible Receivables.
(a) Pledges. Upon the terms and subject to the conditions
herein set forth from time to time (i) the Pledgors, jointly and
severally, may, at their option, borrow from the Company or the Bank
Investors, as applicable, amounts which are secured by the pledge and
assignment to the Agent, on behalf of the Company or the Agent, on
behalf of the Bank Investors, as applicable, without recourse except as
provided herein, of all of each Pledgor's respective right, title and
interest in, to and under the Receivables, together with Related
Security, Collections and Proceeds with respect thereto and (ii) the
Agent, provided that the Termination Date shall not have occurred and
at the Company's option, may, or the Agent, on behalf of the Bank
Investors, provided that the Termination Date shall not have occurred
and that the Bank Investors
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shall have previously accepted the assignment by the Company of all of
its interest in such loans and the Affected Assets, shall, in each case
if so requested by the Pledgors, accept such pledge and assignment from
the Pledgors, without recourse except as provided herein, of all of
each Pledgor's respective right, title and interest in, to and under
the Receivables, together with Related Security Collections and
Proceeds with respect thereto; provided that the payment to the
Pledgors of the Advance Amount related thereto shall have been made
and, after giving effect to the payment to the Pledgors of such Advance
Amount, (x) the sum of the Net Investment plus, in the case where the
Pledged Interest is held by the Agent on behalf of the Company, the
Interest Component of all outstanding Related Commercial Paper, would
not exceed the Facility Limit and (y) the Net Investment would not
exceed the Maximum Net Investment; provided, further, that the
representations and warranties set forth in Section 3.1 shall be true
and correct both immediately before and immediately after giving effect
to any such Pledge.
The Pledgors may, by delivering to the Agent the Pledge Certificate via
telecopy in the form of Exhibit F attached hereto (the "Pledge
Certificate"), request to borrow from the Company or the Bank
Investors, as applicable, amounts which are secured by the pledge and
assignment to the Agent, on behalf of the Company or the Bank
Investors, as applicable, of all of each Pledgor's respective right,
title and interest in, to and under the Receivables and the other
Affected Assets relating thereto no later than (i) if the proposed Net
Investment associated with any Pledge is greater than $150,000,000, no
later than 12:00 p.m. (New York City time) on the third Business Day
prior to the proposed date of such Pledge, (ii) if the proposed Net
Investment associated with any Pledge is greater than $10,000,000 but
less than or equal to $150,000,000, no later than 12:00 p.m. (New York
City time) on the second Business Day prior to the proposed date of
such Pledge and (iii) if the proposed Net Investment associated with
any Pledge is less than or equal to $10,000,000 no later than 4:00 p.m.
(New York City time) on the Business Day prior to the proposed date of
such Pledge.
Each such notice shall specify (w) whether such request is made to the
Agent, on behalf of the Company or on behalf of the Bank Investors (it
being understood and agreed that once
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any Pledged Interest hereunder is acquired on behalf of the Bank
Investors, the Agent, on behalf of Bank Investors, shall be required to
purchase all Pledged Interests held by the Agent on behalf of the
Company in accordance with Section 9.7 and thereafter that no
additional Pledges shall be funded on behalf of the Company hereunder),
(x) the desired Advance Amount (which shall be at least $1,000,000 or,
to the extent that the then available unused portion of the Facility
Limit is less than such amount, such lesser amount equal to such
available portion of the Facility Limit), (y) the desired date of such
Advance Amount and (z) the desired Tranche Period(s) and allocations of
the Net Investment of such Advance Amount thereto as required by
Section 2.3. The Agent will promptly notify the Company or each of the
Bank Investors, as the case may be, of the Agent's receipt of any
request for an Advance Amount to be made to the Agent on behalf of such
Person. To the extent that any such Advance Amount is requested of the
Agent, on behalf of the Company, the Company shall instruct the Agent
to accept or reject such offer by notice given to the Pledgors and the
Agent by telephone or telecopy by no later than the close of its
business on the Business Day of its receipt of any such request. Each
notice of proposed Pledge shall be irrevocable and binding on the
Pledgors and the Pledgors shall indemnify the Company and each Bank
Investor against any loss or expense incurred by the Company or any
Bank Investor, either directly or indirectly (including, in the case of
the Company, through the Liquidity Provider Agreement) as a result of
any failure by the Pledgors to complete such Pledge including, without
limitation, any loss or expense incurred by the Company or any Bank
Investor, either directly or indirectly (including, in the case of the
Company, pursuant to the Liquidity Provider Agreement) by reason of the
liquidation or reemployment of funds acquired by the Company, any Bank
Investor or the Liquidity Provider (including, without limitation,
funds obtained by issuing commercial paper or promissory notes or
obtaining deposits as loans from third parties) for the Company, any
Bank Investor or the Liquidity Provider to fund such Pledge. With
respect to any failure of either of the Pledgors for which the Company
or the Bank Investors are indemnified pursuant to the preceding
sentence, the applicable Bank Investor or the Company, as the case may
be, incurring any indemnified costs as a result of such failure, shall
take such steps as may be reasonable for avoiding or mitigating
(consistent with the internal policies and
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governance and legal and regulatory restrictions of the Bank Investors
or the Company, as applicable, and without requiring the incurring of
any additional costs by, or otherwise being disadvantageous to, such
party) additional costs as a result of such failure.
On the date of each Pledge, the Agent, on behalf of the Company or the
Bank Investors, as applicable, shall deliver written confirmation to
the Pledgors and the Parent of the Advance Amount, the Tranche
Period(s) and the Tranche Rate(s) relating to such Pledge and the
Pledgors shall deliver to the Agent an original executed Pledge
Certificate. The Agent shall indicate the amount of such Pledge
together with the date thereof as well as any change in the Net
Investment on the grid attached to the Pledge Certificate. The Pledge
Certificate shall evidence the Pledges. Following each Pledge, the
Company or the Bank Investors, as the case may be, shall deposit to the
Pledgors' account at the location indicated in Section 10.3 hereof, in
immediately available funds, an amount equal to the Advance Amount for
such Pledge made to the Company or the Bank Investors, as the case may
be.
By no later than 11:00 a.m. (New York City time) on any Pledge Date,
the Company or each Bank Investor, as the case may be, shall remit its
share (which, in the case of a Pledge to the Bank Investors, shall be
equal to such Bank Investor's Pro Rata Share) of the aggregate Advance
Amount for such Pledge to the account of the Agent specified therefor
from time to time by the Agent by notice to such Persons. The
obligation of each Bank Investor to remit its Pro Rata Share of any
such Advance Amount shall be several from that of each other Bank
Investor, and the failure of any Bank Investor to so make such amount
available to the Agent shall not relieve any other Bank Investor of its
obligation hereunder. Following each Pledge and the Agent's receipt of
funds from the Company or the Bank Investors as aforesaid, the Agent
shall remit the Advance Amount to the Pledgors' account at the location
indicated in Section 10.3 hereof, in immediately available funds, in an
amount equal to the Advance Amount for such Pledge. The allocation of
the Advance Amount among each Pledgor shall be by agreement among the
Pledgors and neither the Agent, the Company nor the Bank Investors
shall have any obligations or responsibility related to the allocation
of the Advance Amount upon its remittance to the Pledgors' account as
set
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forth in the preceding sentence. Unless the Agent shall have received
notice from the Company or any Bank Investor, as applicable, that such
Person will not make its share of any Advance Amount relating to any
Pledge available on the applicable Pledge Date therefor, the Agent may
(but shall have no obligation to) make the Company's or any such Bank
Investor's share of any such Advance Amount available to the Pledgors
in anticipation of the receipt by the Agent of such amount from the
Company or such Bank Investor. To the extent the Company or any such
Bank Investor fails to remit any such amount to the Agent after any
such advance by the Agent on such Pledge Date, the Company and the Bank
Investors shall be required to pay such amount, together with interest
thereon at a per annum rate equal to the Federal funds rate (as
determined in accordance with clause (ii) of the definition of "Base
Rate") to the Agent upon its demand therefor (provided that the Company
shall have no obligation to pay such interest amounts except to the
extent that it shall have sufficient funds to pay the face amount of
its Commercial Paper in full). Until such amount shall be repaid by the
defaulting Company or Bank Investor, as applicable, such amount shall
be deemed to be Net Investment paid by the Agent and the Agent shall be
deemed to be the owner of a Pledged Interest hereunder. Upon the
payment of such amount to the Agent by the Company or the Bank
Investors, such payment shall constitute such Person's payment of its
share of the applicable Advance Amount for such Pledge.
(b) [Reserved.]
(c) All Pledges. Each Pledge shall constitute a pledge to the
Agent, on behalf of the Company or the Bank Investors, as applicable,
of all of each Pledgor's respective right, title and interest in, to
and under each and every Receivable, together with all Related Security
with respect thereto. The Agent shall hold the Pledged Interests on
behalf of the Company and each Bank Investor in accordance with each of
the Company's and each Bank Investor's percentage interest in the
Pledged Interest (determined on the basis of the relationship that the
portion of the Net Investment funded by such Person bears to the
aggregate Net Investment of the Company and all of the Bank Investors
at such time).
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(d) Secured Note. The Pledgors shall issue to the Agent the
Secured Note, in the form of Exhibit M, on or prior to the date hereof.
(e) Percentage Factor. The Percentage Factor shall be
initially computed as of the opening of business on the date of the
initial Pledge hereunder. Thereafter until the Termination Date, the
Percentage Factor shall be recomputed on each Determination Date as of
the last day of the related Collection Period and at such other times
as may be reasonably requested by the Agent.
(f) Finance Facility Release Amounts; Sale Agreements. As
additional security for the payment of all Monthly Costs due under this
Agreement, each Pledgor pledges and assigns all of its right, title and
interest in the Facility Pledge Agreement, including all Finance
Facility Collateral (as defined therein) to the Agent, which pledge and
assignment the Agent hereby accepts on behalf of the Company and the
Bank Investors, as applicable. Accordingly, Finance Facility Release
Amounts shall be available on each Payment Date as part of Available
Funds for such Payment Date. As additional security for the payment of
all Aggregate Unpaids, each Pledgor pledges and assigns all of its
right, title and interest in the Receivables Purchase Agreement and the
parties hereto acknowledge that the Agent, on behalf of the Company and
the Bank Investors, as applicable, may enforce such right, title and
interest directly as if it were party thereto.
(g) Limitations on Equipment. With respect to the interests in
Equipment that are subject to Pledges hereunder, such interests are
limited to those that constitute Related Security for the related
Receivable. Therefore, upon the payment in full of any Receivable, the
Agent, the Company and the Bank Investors shall have no further
interest hereunder in the related Equipment, and all such Equipment
shall be held by the Operating Lease Pledgor or its assignee free and
clear of any lien or other claim created or imposed pursuant to this
Agreement.
SECTION II.3 Selection of Tranche Periods and Tranche Rates.
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(a) Prior to the Termination Date; Pledged Interest held on
behalf of the Company. At all times hereafter, but prior to the
Termination Date and not with respect to any portion of the Pledged
Interest held on behalf of the Bank Investors (or any of them), the
Pledgors may, subject to the Company's approval and the limitations
described below, request Tranche Periods and allocate a portion of the
Net Investment to each selected Tranche Period, so that the aggregate
amounts allocated to outstanding Tranche Periods at all times shall
equal the Net Investment held on behalf of the Company. The Pledgors
shall jointly give the Company irrevocable notice by telephone of the
new requested Tranche Period(s) at least three Business Days prior to
the expiration of any then existing Tranche Period; provided, however,
that in the event of a Tranche Period with respect to a Pledge Date,
such notice period shall not exceed the notice period pursuant to
Section 2.2 that applies to the related Pledge; provided, further, that
the Company may select, in its sole discretion, any such new Tranche
Period if (i) the Pledgors fail to provide such notice on a timely
basis or (ii) the Company determines, in its sole discretion, that the
Tranche Period requested by the Pledgors is unavailable or for any
reason commercially undesirable. The Company confirms that it is its
intention to allocate all or substantially all of the Net Investment
held on behalf of it to one or more CP Tranche Periods; provided that
the Company may determine, from time to time, in its sole discretion,
that funding such Net Investment by means of one or more CP Tranche
Periods is not possible or is not desirable for any reason. If the
Liquidity Provider acquires from the Company a Purchased Interest with
respect to the Receivables pursuant to the terms of the Liquidity
Provider Agreement, Bank of America, on behalf of the Liquidity
Provider, may exercise the right of selection granted to the Company
hereby. The initial Tranche Period applicable to any such Purchased
Interest shall be a period of not greater than 7 days and such Tranche
shall be a BR Tranche. Thereafter, provided that the Termination Date
shall not have occurred, the Tranche Period applicable thereto shall be
the BR Rate or the Eurodollar Rate, as determined by the Pledgors. In
the case of any Tranche Period outstanding upon the Termination Date,
such Tranche Period shall end on such date.
(b) After the Termination Date; Pledged Interest Held on
behalf of the Company. At all times on and after the
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Termination Date, with respect to any portion of the Pledged Interest
which shall be held by the Agent on behalf of the Company, the Company
or Bank of America, as applicable, shall select all Tranche Periods and
Tranche Rates applicable thereto.
(c) Prior to the Termination Date; Pledged Interest Held on
Behalf of Bank Investors. At all times with respect to any portion of
the Pledged Interest held by the Agent on behalf of the Bank Investors,
but prior to the Termination Date, the initial Tranche Period
applicable to such portion of the Net Investment allocable thereto
shall be a period of not greater than 3 days and such Tranche shall be
a BR Tranche. Thereafter, with respect to such portion, and with
respect to any other portion of the Pledged Interest held on behalf of
the Bank Investors (or any of them), provided that the Termination Date
shall not have occurred, the Tranche Period applicable thereto shall
be, at the Pledgor's option, either a BR Tranche or a Eurodollar
Tranche. The Pledgor shall give the Agent irrevocable notice by
telephone of the new requested Tranche Period at least three (3)
Business Days prior to the expiration of any then existing Tranche
Period. In the case of any Tranche Period outstanding upon the
occurrence of the Termination Date, such Tranche Period shall end on
the date of such occurrence.
(d) After the Termination Date; Pledged Interest Held on
behalf of Bank Investors. At all times on and after the Termination
Date, with respect to any portion of the Pledged Interest held by the
Agent on behalf of the Bank Investors, the Agent shall select all
Tranche Periods and Tranche Rates applicable thereto.
(e) Eurodollar Rate Protection; Illegality. (i) If the Agent
is unable to obtain on a timely basis the information necessary to
determine the LIBOR Rate for any proposed Eurodollar Tranche, then
(A) the Agent shall forthwith notify the Company or Bank
Investors, as applicable, and the Pledgors that the Eurodollar
Rate cannot be determined for such Eurodollar Tranche, and
(B) while such circumstances exist, neither the Company, the
Bank Investors nor the Agent shall allocate the Net Investment
of any additional Pledged
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Interests pledged and assigned during such period or
reallocate the Net Investment allocated to any then existing
Tranche ending during such period, to a Eurodollar Tranche.
(ii) If, with respect to any outstanding Eurodollar Tranche,
the Company or any of the Bank Investors on behalf of which the Agent
holds any Pledged Interest herein notifies the Agent that it is unable
to obtain matching deposits in the London interbank market to fund its
purchase or maintenance of such Pledged Interest or that the Eurodollar
Rate applicable to such Pledged Interest will not adequately reflect
the cost to the Person of funding or maintaining its respective Pledged
Interest for such Tranche Period then the Agent shall forthwith so
notify the Pledgors, whereupon neither the Agent nor the Company or the
Bank Investors, as applicable, shall, while such circumstances exist,
allocate any Net Investment of any additional Pledged Interest pledged
and assigned during such period or reallocate the Net Interest
allocated to any Tranche Period ending during such period, to a
Eurodollar Tranche.
(iii) Notwithstanding any other provision of this Agreement,
if the Company or any of the Bank Investors, as applicable, shall
notify the Agent that such Person has determined (or has been notified
by any Liquidity Provider) that the introduction of or any change in or
in the interpretation of any law or regulation makes it unlawful
(either for the Company, such Bank Investor, or such Liquidity
Provider, as applicable), or any central bank or other governmental
authority asserts that it is unlawful, for the Company, such Bank
Investor or such Liquidity Provider, as applicable, to fund Advances or
the maintenance of Pledged Interests at the Eurodollar Rate, then (x)
as of the effective date of such notice from such Person to the Agent,
the obligation or ability of the Company or such Bank Investor, as
applicable, to fund Advances or the maintenance of Pledged Interests at
the Eurodollar Rate shall be suspended until such Person notifies the
Agent that the circumstances causing such suspension no longer exist
and (y) the Net Investment of each Eurodollar Tranche in which such
Person owns an interest shall either (1) if such Person may lawfully
continue to maintain such Pledged Interest at the Eurodollar Rate until
the last day of the applicable Tranche Period, be
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reallocated on the last day of such Tranche Period to another Tranche
Period in respect of which the Net Investment allocated thereto accrues
Discount at a Tranche Rate other than the Eurodollar Rate or (2) if
such Person shall determine that it may not lawfully continue to
maintain such Pledged Interest at the Eurodollar Rate until the end of
the applicable Tranche Period, such Person's share of the Net
Investment allocated to such Eurodollar Tranche shall be deemed to
accrue Discount at the Base Rate from the effective date of such notice
until the end of such Tranche Period.
SECTION II.4 Discount, Fees and Other Costs and Expenses.
Notwithstanding the limitation on recourse under Section 2.1 hereof, the
Pledgors shall pay, as and when due in accordance with this Agreement, all
Carrying Costs, and the Servicing Fees. On the last day of each Tranche Period,
the Pledgors shall pay to the Agent, on behalf of the Company or the Bank
Investors, as applicable, an amount equal to the accrued and unpaid Discount for
such Tranche Period together with, in the event the Pledged Interest is held on
behalf of the Company, an amount equal to the discount accrued on the Company's
Commercial Paper to the extent such Commercial Paper was issued in order to fund
the Pledged Interest in an amount in excess of the Advance Amount of a Pledge.
The Pledgors shall pay to the Agent, on behalf of the Company, on each day on
which Related Commercial Paper is issued by the Company, the Dealer Fee.
Discount shall accrue with respect to each Tranche on each day occurring during
the Tranche Period related thereto. Nothing in this Agreement shall limit in any
way the obligations of the Pledgors, which shall be joint and several, to pay
the amounts set forth in this Section 2.4.
SECTION II.5 Settlement and Reinvestment Procedures.
(a) On each Payment Date, so long as no Termination Event has
occurred, all the Available Funds for such Payment Date will be
allocated by the Master Servicer in the following order of priority:
(i) first, to each Hedge Counterparty, on a pro rata
basis, any Hedge Payments then due;
(ii) second, to the Master Servicer, any unreimbursed
Servicer Advances;
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(iii) third, to the Master Servicer, the accrued and
unpaid Servicing Fees, if the Master Servicer is not an
Affiliate of the Parent;
(iv) fourth, to the Agent, for the benefit of the
Company and the Bank Investors, as applicable, the sum of the
following, in each case, to the extent not previously paid and
without duplication: accrued and unpaid Dealer Fees on
Commercial Paper; the Program Fee, Facility Fee and
Administrative Fee; any accrued Discount (whether or not
payable on such Payment Date) and any Discount payable on or
prior to such Payment Date to the extent not previously paid;
any amounts due to the Credit Support Provider under the
Credit Support Agreement or the Liquidity Provider under the
Liquidity Provider Agreement, in each case to the extent
payable pursuant to the terms of this Agreement by the
Pledgors and not otherwise payable from any of the
above-referenced fees; and Section 8.2 Costs (all of these,
the "Carrying Costs"); provided that any amount allocated
pursuant to this clause (iv) on account of accrued and unpaid
Discount that is not yet payable shall be deposited into the
Interest Accrual Account;
(v) fifth, to the Agent, for the benefit of the
Company and the Bank Investors, an amount equal to the
Principal Deemed Amount for such Payment Date plus any unpaid
shortfall in the amount applied pursuant to this clause (v) to
pay the Principal Deemed Amount from prior Payment Dates, for
deposit to the Principal Collection Account, such amount to be
so deposited until the Percentage Factor is equal to the
Maximum Percentage Factor;
(vi) sixth, to the extent that after giving effect to
clause (v) above, and any Pledge of Receivables on such
Payment Date, the Percentage Factor exceeds the Maximum
Percentage Factor, to the Agent, for the benefit of the
Company and the Bank Investors, the amount necessary to cause
the Percentage Factor to equal the Maximum Percentage Factor,
such amount to be deposited into the Principal Collection
Account;
(vii) seventh, to the Master Servicer, the accrued
and unpaid Servicing Fee, if the Master Servicer is an
Affiliate of the Parent;
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(viii) eighth, to the Reserve Account the amount, if
any, necessary to cause the balance on deposit therein to
equal the Specified Reserve Account Requirement;
(ix) ninth, to the Master Servicer, any amounts
collected during the related Collection Period in respect of
late fees, insufficient funds charges, extension fees and
other like amounts;
(x) tenth, to the Finance Facility Pledgor all
amounts required to be remitted thereto pursuant to the
Facility Pledge Agreement; and
(xi) eleventh, the balance, if any, to the Pledgors.
(b) On the last day of each Tranche Period, first, from
amounts on deposit in the Interest Accrual Account and, second, from
the Collections on deposit in the Collection Account, the Master
Servicer shall deposit to the Agent's account, for the benefit of the
Company or the Bank Investors, as applicable, an amount equal to the
accrued and unpaid Discount for such Tranche Period. The Agent, upon
its receipt of such amounts in the Agent's account, shall distribute
such amounts to the Company and/or the Bank Investors entitled thereto
as set forth above; provided that if the Agent shall have insufficient
funds to pay all of the above amounts in full on any such date, the
Agent shall pay such amounts ratably (based on the amounts owing to
each such Person) to all such Persons entitled to payment thereof. In
addition, on any Business Day, the Master Servicer shall remit to the
applicable Hedge Counterparty, any Hedge Payments then due.
(c) Amounts on deposit in the Principal Collection Account
will be applied by the Agent to repay the principal component (and not
the Discount related thereto) of the Commercial Paper or other
investments being used to fund the Net Investment as and when the same
mature; provided that so long as the Termination Date has not occurred,
the Agent may use amounts on deposit in the Principal Collection
Account to fund Pledges pursuant to Section 2.2 including Pledges to
the extent necessary to cause the Percentage Factor to not exceed the
Maximum Percentage Factor (so long as either the
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Pledgors consent to the use thereof to fund Pledges or such use shall
not cause the Percentage Factor to increase).
SECTION II.6 Liquidation Settlement Procedures. On the last day of each
Tranche Period to occur on or after the Termination Date, the Master Servicer
shall deposit to the Agent's account to the extent not already so deposited, for
the benefit of the Company or the Bank Investors, as applicable, from amounts on
deposit in the Collection Account, the sum of (i) the accrued Discount for such
Tranche Period, (ii) the portion of the Net Investment allocated to such Tranche
Period, and (iii) all other Aggregate Unpaids. On such day, the Master Servicer
shall deposit to its account, from amounts on deposit in the Collection Account
which remain after payment in full of the aforementioned amounts, the accrued
Servicing Fee for such Tranche Period. If there shall be insufficient funds on
deposit for the Master Servicer to distribute funds in payment in full of the
aforementioned amounts, the Master Servicer shall distribute funds first, in
payment of the accrued Discount, second, if the Parent or any Affiliate of the
Parent is not then the Master Servicer, to the Master Servicer's account, in
payment of the Servicing Fee payable to the Master Servicer, third, in reduction
of the Net Investment allocated to any Tranche Period ending on such date,
fourth, in payment of all fees payable by the Pledgors hereunder, fifth, in
payment of all other Aggregate Unpaids and sixth, if the Parent or any Affiliate
of the Parent is the Master Servicer, to its account as Master Servicer, in
payment of the Servicing Fee payable to such Person as Master Servicer. The
Agent, upon its receipt of such amounts in the Agent's account, shall distribute
such amounts to the Company and/or the Bank Investors entitled thereto as set
forth above; provided that if the Agent shall have insufficient funds to pay all
of the above amounts in full on any such date, the Agent shall pay such amounts
in the order of priority set forth above and, with respect to any such category
above for which the Agent shall have insufficient funds to pay all amounts owing
on such date, ratably (based on the amounts in such categories owing to such
Persons) among all such Persons entitled to payment thereof.
Following the date on which the Net Investment has been reduced to
zero, all accrued Discount and Servicing Fees have been paid in full and all
other Aggregate Unpaids have been paid in full, (i) the Agent, on behalf of the
Company and the Bank Investors, shall be deemed to have automatically
re-assigned to the Pledgors all of the Agent's right, title and interest in and
to the Affected Assets (including the Pledged Interest), (ii) the
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Master Servicer shall pay to the Pledgors any remaining amounts on deposit in
the Collection Account and (iii) the Agent, on behalf of the Company and the
Bank Investors, shall execute and deliver to the Pledgors, at the Pledgors'
expense, such documents or instruments as are necessary to terminate the Agent's
interests in the Affected Assets. Any such documents shall be prepared by or on
behalf of the Pledgors.
SECTION II.7 Fees. Notwithstanding any limitation on recourse contained
in this Agreement pursuant to the Fee Letter or the Facility Fee Letter, the
Pledgors jointly and severally shall pay on each Payment Date the following
non-refundable fees: to the Company, the Program Fee, and to the Agent, the
Administrative Fee and the Facility Fee. If on any Payment Date, Available Funds
are not sufficient to pay the fees described in the immediately preceding
sentence, payment of such fees shall be made from the amounts on deposit in the
Fee Reserve Account.
SECTION II.8 Protection of the Interest of the Company and the Bank
Investors; Releases. (a) Each Pledgor agrees that it will, and will cause the
Seller to, from time to time, at its expense, promptly execute and deliver all
instruments and documents and take all actions as may be necessary or as the
Agent may reasonably request in order to perfect or protect the Pledged Interest
or to enable the Agent, the Company or the Bank Investors to exercise or enforce
any of their respective rights hereunder. Without limiting the foregoing, each
Pledgor will, and will cause the Seller to, upon the request of the Agent, the
Company or any of the Bank Investors, in order to accurately reflect this
transaction, (x) execute and file such financing or continuation statements or
amendments thereto or assignments thereof (as permitted pursuant to Section 10.6
hereof) as may be requested by the Agent, the Company or any of the Bank
Investors and (y) mark its respective master data processing records and other
documents with a legend describing the conveyance to the Pledgors of the
Receivables (in the case of the Seller) and to the Agent, for the benefit of the
Company and the Bank Investors, of the Pledged Interest. Each Pledgor shall, and
will cause the Seller to, upon the reasonable request of the Agent, the Company
or any of the Bank Investors obtain such additional search reports as the Agent,
the Company or any of the Bank Investors shall request. To the fullest extent
permitted by applicable law, the Agent shall be permitted to sign and file
continuation statements. Carbon, photographic or other reproduction of this
Agreement or any financing statement shall be sufficient as a financing
statement. The Pledgors shall not, and shall not
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permit the Seller to, change its respective name, identity or corporate
structure (within the meaning of Section 9-402(7) of the UCC) nor relocate its
respective chief executive office or any office where Records are kept unless it
shall have: (i) given the Agent at least thirty (30) days prior notice thereof
and (ii) prepared at the Pledgors' expense and delivered to the Agent all
financing statements, instruments and other documents necessary to preserve and
protect the Pledged Interest or reasonably requested by the Agent in connection
with such change or relocation. Any filings under the UCC or otherwise that are
occasioned by such change in name or location shall be made at the expense of
Pledgors.
(b) The Master Servicer shall instruct all Obligors to cause all
Collections to be deposited directly with the Lock-Box Bank. If the Pledgors,
the Seller or the Master Servicer receives any Collections, the Pledgors, the
Seller or the Master Servicer, as applicable, shall immediately, but in any
event within two Business Days of receipt, remit (and shall cause the Seller to
remit) such Collections to the Collection Account.
(c) With respect to Receivables and Related Security reassigned due to
Deemed Collections or otherwise reassigned pursuant to Section 2.9, substituted
for pursuant to Section 2.16 or subject to a Take-out, or with respect to
Equipment with respect to Receivables that have been paid in full, the Agent
shall execute such appropriate releases (without recourse) or termination
statements as may be reasonably requested by the Pledgors.
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SECTION II.9 Deemed Collections; Reassignments; Prepayment Shortfalls;
Application of Payments. If on any day during any Collection Period any of the
representations or warranties in Article III is or has become untrue with
respect to a Receivable (whether on or after the date of any pledge of an
interest therein to the Agent, the Company or the Bank Investors as contemplated
hereunder), then any party hereto discovering the same shall so inform the other
parties hereto (provided that notice thereof shall be given to the Agent on
behalf of the Company and the Bank Investors), and unless the breach of such
representation or warranty shall have been cured on or prior to the related
Payment Date, the applicable Pledgor shall be deemed to have received during
such Collection Period a Collection of such Receivable in full and such Pledgor
shall on the related Payment Date pay to the Master Servicer an amount equal to
the Required Payoff Amount with respect to such Receivable and such amount shall
be allocated and applied by the Master Servicer as a Collection allocable to the
Pledged Interest in accordance with Section 2.5 or 2.6 hereof, as applicable;
provided that in lieu of such payment, to the extent permitted pursuant to
Section 2.16, the Pledgors may substitute a Substitute Receivable for any such
Receivable.
The Pledgors shall have the option, but shall not be required, to
accept the reassignment of Receivables that are not subject to a Deemed
Collection but that are 60 or more days past due at a price equal to the
Required Payoff Amount therefor. Also, the Pledgors will accept the reassignment
of Defaulted Receivables upon 5 Business Days' notice following the demand of
the Agent at a price equal to the Required Payoff Amount; provided that in lieu
of such payment, to the extent permitted pursuant to Section 2.16, the Pledgors
may substitute a Substitute Receivable for any such Defaulted Receivable. In
addition, to the extent any Contract that is a conditional sales contract or
other loan is prepaid by the related Obligor pursuant to its terms, the amount,
if any, by which the amount of such prepayment is less than the Required Payoff
Amount for such Receivable (any such amount, a "Prepayment Shortfall"), shall be
paid by the Pledgors to the Agent from their own account on the demand of the
Agent. Any amounts received in respect of such reassignments or in respect of
any Prepayment Shortfall shall be applied as a Collection in the manner set
forth in the preceding paragraph.
Notwithstanding the foregoing, the aggregate of (i) the Outstanding
Balance of Receivables reassigned to the Pledgors
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pursuant to this Section 2.9 or substituted for Substitute Receivables pursuant
to Section 2.16 (and if any such Receivables are Defaulted Receivables, assuming
for purposes of determining the Outstanding Balance thereof that such
Receivables are not in fact Defaulted Receivables) plus (ii) the amount of
payments made in respect of Prepayment Shortfalls by or on behalf of the
Pledgors pursuant to this Section 2.9, in each case since the most recent
Take-Out hereunder (or since the initial Pledge, if no Take-Out has yet
occurred) shall in no event exceed 10% of the then Outstanding Net Investment;
provided that any Receivable reassigned to the Pledgors pursuant to this Section
2.9 or substituted for pursuant to Section 2.16, that at the time of such
reassignment or substitution was subject to a Deemed Collection shall not be
included in calculating such 10% limitation.
SECTION II.10 Payments and Computations, Etc. All amounts to be paid or
deposited by the Pledgors or the Master Servicer hereunder shall be paid or
deposited in accordance with the terms hereof no later than 11:00 a.m. (New York
City time) on the day when due in immediately available funds; if such amounts
are payable to the Agent (whether on behalf of the Company or any Bank Investor
or otherwise) they shall be paid or deposited in the account indicated in
Section 10.3 hereof, until otherwise notified by the Agent. The Pledgors shall,
to the extent permitted by law, pay to the Agent, for the benefit of the Company
and the Bank Investors upon demand, interest on all amounts not paid or
deposited when due hereunder at a rate equal to 2% per annum plus the Base Rate.
All computations of Discount, interest and all per annum 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. Any computations by the Agent of
amounts payable by the Pledgors hereunder shall be binding upon the Pledgors
absent manifest error.
SECTION II.11 Reports. (a) Prior to the fifteenth day of each month
(or, if such fifteenth day is not a Business Day, the immediately preceding
Business Day), the Master Servicer shall prepare and forward to the Agent and
the Administrative Agent (i) an Investor Report as of the end of the last day of
the immediately preceding month and (ii) such other information as the Agent or
the Administrative Agent may reasonably request.
SECTION II.12 Accounts. (a) Collection Account. There shall be
established on the day of the initial Pledge hereunder
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and maintained with the Agent, a segregated account (the "Collection Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Agent, on behalf of the Company and the Bank
Investors. Funds on deposit in the Collection Account shall be invested by the
Agent in Eligible Investments that will mature so that such funds in the
necessary amount will be available prior to the last day of each successive
Tranche Period or Payment Date following such investment. On the last day of
each Tranche Period, all interest and earnings (net of losses and investment
expenses) on funds on deposit in the Collection Account shall be retained in the
Collection Account and be available to make any payments required to be made
hereunder (including Discount) by the Pledgors. On the date on which the Net
Investment is zero, all accrued Discount and Servicing Fees have been paid in
full and all other Aggregate Unpaids have been paid in full, any funds remaining
on deposit in the Collection Account shall be paid to the Pledgors.
(b) Reserve Account. There shall be established on the day of the
initial Pledge hereunder and maintained with the Agent, a segregated account
(the "Reserve Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Agent, on behalf of the
Company and the Bank Investors. Funds on deposit in the Reserve Account shall be
invested by the Agent in Eligible Investments that will mature so that such
funds will be available prior to the last day of each successive Tranche Period
or Payment Date following such investment. All interest and earnings (net of
losses and investment expenses) on funds on deposit in the Reserve Account shall
be retained in the Reserve Account and be available to make payments required to
be made therefrom. Funds on deposit in the Reserve Account shall be retained in
the Reserve Account and be available (i) to pay any Discount payable pursuant to
Section 2.5(b) to the extent amounts on deposit in the Interest Accrual Account
and the Collection Account are insufficient therefor, (ii) on any Payment Date
to make any payments required to be made under clauses (i) through (v) of
Section 2.5(a) to the extent that Available Funds are insufficient therefor and
(iii) on and after the Termination Date to the Agent to reduce the Net
Investment. On each Payment Date, after giving effect to the allocations set
forth in Section 2.5(a), any amounts on deposit therein that are in excess of
the Specified Reserve Account Balance will be released to the Pledgors. The
parties hereto agree that, upon the request of any Pledgor, this Agreement will
be amended to allow changes to the applicable Advance Percentages
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and corresponding reductions to the Net Investment in replacement of the
requirement to deposit funds into the Reserve Account.
(c) Principal Collection Account. There shall be established on the day
of the initial Pledge hereunder and maintained with the Agent, a segregated
account (the "Principal Collection Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Agent, on behalf of the Company and the Bank Investors. All interest and
earnings (net of losses and investment expenses) on funds on deposit in the
Principal Collection Account shall be retained in the Principal Collection
Account and be available to make payments required to be made therefrom. Funds
on deposit in the Principal Collection Account shall be invested by the Agent in
Eligible Investments that will mature so that such funds will be available prior
to the last day of each successive Tranche Period or Payment Date following such
investment. Funds on deposit in the Principal Collection Account will be applied
as set forth in Section 2.5(c).
(d) Fee Reserve Account. There shall be established on the day of the
initial Pledge hereunder and maintained with the Agent, a segregated account
(the "Fee Reserve Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Agent, on behalf of the
Company and the Bank Investors. On or prior to the date of the initial Pledge
hereunder, an amount equal to the product of (a) 0.10% and (b) the Facility
Limit as of such Pledge Date will be deposited into the Fee Reserve Account.
Funds on deposit in the Fee Reserve Account shall be invested by the Agent in
Eligible Investments that will mature so that such funds will be available prior
to each Payment Date. All interest and earnings (net of losses and investment
expenses) on funds on deposit in the Fee Reserve Account shall be retained in
the Fee Reserve Account and be available to make payments required to be made
therefrom. Funds on deposit in the Fee Reserve Account shall be available on any
Pledge Date or the date of any Take-out to make any payments of the Program Fee,
the Facility Fee or the Administrative Fee that have become due and payable to
the extent that Available Funds are insufficient therefor. If on any Payment
Date (including after a Take-Out as described below) the Net Investment is equal
to or exceeds $100,000,000, and each of the above-referenced fees has been
paid-in-full as of such Payment Date, all funds on deposit in the Fee Reserve
Account will be released at such time to the Pledgors. If after giving effect to
the initial Pledge to occur after any Take-out, the Net
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Investment is equal to less than $100,000,000, the Pledgors shall deposit into
the Fee Reserve Account an amount from the proceeds of such Pledge so that the
amount on deposit therein equals the product of (a) 0.10% and (b) the Facility
Limit as of such Pledge Date.
(e) Interest Accrual Account. There shall be established on the day of
the initial Pledge hereunder and maintained with the Agent, a segregated account
(the "Interest Accrual Account"), bearing a designation clearly indicating that
the funds deposited therein are held for the benefit of the Agent, on behalf of
the Company and the Bank Investors. Funds on deposit in the Interest Accrual
Account shall be invested by the Agent in Eligible Investments that will mature
so that such funds will be available as needed prior to the last day of each
successive Tranche Period following such investment. All interest and earnings
(net of losses and investment expenses) on funds on deposit in the Interest
Accrual Account shall be retained in the Interest Accrual Account and be
available to make payments required to be made therefrom. Funds on deposit in
the Interest Accrual Account shall be available to make payments of accrued and
unpaid Discount pursuant to Section 2.5(b).
SECTION II.13 Sharing of Payments, Etc. If the Company or any Bank
Investor (for purposes of this Section only, being a "Recipient") shall obtain
any payment (whether voluntary, involuntary, through the exercise of any right
of setoff, or otherwise) on account of Pledged Interest pledged to it (other
than pursuant to Section 2.7 or Article VIII and other than as a result of the
differences in the timing of the applications of Collections pursuant to Section
2.5 or 2.6) in excess of its ratable share of payments on account of Purchased
Interest funded by the Company and/or the Bank Investors entitled thereto, such
Recipient shall forthwith purchase from the Company and/or the Bank Investors
entitled to a share of such participations in the Pledged Interests pledged to
such Persons as shall be necessary to cause such Recipient to share the excess
payment ratably with each such other Person entitled thereto; provided, however,
that if all or any portion of such excess payment is thereafter recovered from
such Recipient, such purchase from each such other Person shall be rescinded and
each such other Person shall repay to the Recipient the purchase price paid by
such Recipient for such participation to the extent of such recovery, together
with an amount equal to such other Person's ratable share (according to the
proportion of (a) the amount of such other Person's required payment to (b) the
total amount so recovered from the
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Recipient) of any interest or other amount paid or payable by the Recipient in
respect of the total amount so recovered.
SECTION II.14 Right of Setoff. Without in any way limiting the
provisions of Section 2.13, each of the Company and the Bank Investors is hereby
authorized (in addition to any other rights it may have) at any time after the
occurrence of the Termination Date, to set-off, appropriate and apply (without
presentment, demand, protest or other notice which are hereby expressly waived)
any deposits and any other indebtedness held or owing by the Company or such
Bank Investor to, or for the account of, the Pledgors against the amount of the
Aggregate Unpaids owing by the Pledgors to such Person or to the Agent on behalf
of such Person (even if contingent or unmatured).
SECTION II.15 Hedging of Receivables The Pledgors shall from time to
time enter into such Hedging Agreements as shall be necessary so that after
giving effect to any Pledge, the excess of the Outstanding Balance of the
Receivables over the aggregate Hedged Amount under all Hedging Agreements shall
not be equal to or in excess of $10,000,000; provided that if at any time the
aggregate Hedged Amount under all Hedging Agreements exceeds the Outstanding
Balance of the Receivables, the Pledgors shall reduce such excess to zero by
terminating or reducing by an appropriate amount the Hedge Agreements. Upon
entering into any Hedging Agreement the Pledgors shall assign to the Agent, on
behalf of the Company and the Bank Investors, as applicable, all of the
Pledgors' rights under such Hedging Agreement. Each Hedging Agreement shall (i)
have a scheduled termination date that coincides with the last Contract Payment
due to occur for the Receivables to which such Hedging Agreement relates; (ii)
provide for a notional amount equal to 100% of the Outstanding Balance of such
Receivables rounded to the nearest multiple of $100,000 (the "Hedged Amount");
(iii) provide that Hedge Payments be calculated based on the "constant maturity"
yield on U.S. Treasury securities with a maturity date equal or nearest to the
then expected remaining weighted average life (as determined by the Agent in its
sole discretion) of the related Receivables; (iv) 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 H.15, as defined
in the 1991 ISDA Definitions published by the International Swaps and
Derivatives Association, Inc. and as determined in accordance with the
procedures in effect on the date of this Agreement (the "H.15"); (v) provide
that any payments to be paid with respect to each Payment Date and any early
termination date thereunder by the
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Hedge Counterparty are to be deposited into the Collection Account, for
distribution in accordance with this Agreement; and (vi) be on such other terms
and subject to such other conditions as shall be reasonably acceptable to the
Agent. The "constant maturity" yield as described in clause (iii) above shall be
determined based on the average yield, in effect for the week ending on the last
Friday immediately preceding the related date of determination for U.S. Treasury
securities adjusted to a constant maturity, as published in H.15. In the event
the H.15 is no longer available, then the rates described in clauses (iii) and
(iv) above shall be reasonably agreed to between the Pledgors and the Hedge
Counterparty and reasonably acceptable to the Agent in order to effect an
economically equivalent business deal between such parties. The Master Servicer
will provide the 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.
Each Pledgor hereby assigns all of its rights under each Hedging
Agreement to the Agent, on behalf of the Company and the Bank Investors. In
addition, the parties hereto agree that all pledges, grants and assignments made
hereunder for the benefit of the Agent, the Company and the Bank Investors
(including, without limitation, Sections 2.2(a), 2.2(f) and 2.8), shall also be
for the ratable benefit of each Hedge Counterparty as if it were named in each
such pledge, as security and assurance to it of the payment in full of all
amounts due or to become due to it hereunder.
SECTION II.16 Substitution of Receivables. On any day prior to the
occurrence of the Termination Date, the Pledgors may, subject to the conditions
set forth in this Section 2.16, replace any Receivable with one or more other
Receivables (each, a "Substitute Receivable"); provided, however, that no such
replacement shall occur unless each of the following conditions is satisfied as
of the date of such replacement and substitution by the Substitute Receivables
to be substituted on such date (it being understood that for all purposes
hereunder the Outstanding Balance of a Substituted Receivable shall be
calculated using the same Discount Rate applicable to the Receivable being
replaced):
(a) each Substitute Receivable is an Eligible Receivable;
(b) after giving effect to any such substitution, (x) the sum
of the Net Investment plus, in the case where the
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Pledged Interest is held by the Agent on behalf of the Company, the
Interest Component of all outstanding related Commercial Paper, would
not exceed the Facility Limit and (y) the Net Investment would not
exceed the Maximum Net Investment;
(c) the aggregate Outstanding Balance of such Substitute
Receivables shall be equal to or greater than the aggregate Required
Pay-off Amount as of the date of the substitution of the Receivables
being replaced;
(d) the sum of the Outstanding Balances as of the respective
dates of substitution of all of the Receivables substituted for under
this Agreement, other than any Receivable that at the time of
substitution was subject to a Deemed Collection pursuant to Section 2.9
shall not cause the 10% limitation set forth in the last paragraph of
Section 2.9 to be exceeded;
(e) all representations and warranties contained in Section
3.1 shall be true and correct with respect to each such Substitute
Receivable;
(f) such substitution does not cause a Termination Event to
occur;
(g) the Pledgors shall deliver to the Agent on the date of
such substitution a Pledge Certificate certifying that each of the
foregoing is true and correct as of such date;
(h) each Receivable substituted for (except for Receivables
subject to a Deemed Collection or that are not Eligible Receivables)
must be at least 60 days past due; and
(i) after giving effect to such substitution the Pledgors will
be in compliance with the requirements of Section 2.15.
In connection with any such substitution or any reassignment pursuant
to Section 2.9, the Agent shall, automatically and without further action, be
deemed to transfer to the appropriate Pledgors, free and clear of any Adverse
Claim created pursuant to this Agreement, all of the right, title and interest
of the Agent to and under such replaced Receivable and all Related Security, and
the Agent shall be deemed to represent and warrant that it
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has the corporate authority and has taken all necessary corporate action to
accomplish such transfer, but without any other representation and warranty,
express or implied.
SECTION II.17 Auction Procedure.
On any Business Day, the Seller may request the Agent, on behalf of the
Company and the Bank Investors, to conduct an auction with respect to the
Pledged Interest and the interest in the Secured Note represented by all or a
specified portion (such portion to have been specified by the Pledgors) of the
Receivables and the Related Security on the terms and conditions set forth
herein. With respect to any such auction, the Agent shall accept the highest bid
submitted so long as (i) at least two bids are received, and at least one bid is
made by a Person that is not a Pledgor or an Affiliate of the Pledgors, (ii) the
highest such bid shall be at least equal to the amount necessary so that after
giving effect to the application of such proceeds to pay Net Investment and
other Aggregate Unpaids, the remaining Net Investment and Net Receivables
Balance will be such that the Percentage Factor will not exceed the Maximum
Percentage Factor and (iii) the highest such bid shall in addition not be less
than the principal component of the Company's maturing Commercial Paper which
was issued to fund the portion of the Net Investment relating to the Receivables
being auctioned or the principal component subject to the Tranche Period
otherwise utilized by the Company or the Bank Investors to fund such portion of
the Net Investment, as applicable plus all unreimbursed Servicer Advances and
all Discount associated with the Tranche Periods utilized to fund such portion
of the Net Investment, as well as all other Carrying Costs related to the
auctioned Contracts accrued through the date of such reassignment. The Pledgors
shall be entitled to notification of the amount of the highest qualifying bid
for any such auction and either or both Pledgors, or any Affiliate thereof,
shall be entitled to purchase the auctioned portion of the Pledged Interest for
an amount equal to such highest bid. The method, manner, time, place and terms
of any such auction shall be commercially reasonable.
The Pledgors shall also be obligated to pay to the Agent the Agent's
reasonable legal fees and expenses incurred in connection with any such auction
and any Early Collection Fees in connection with such auction.
Upon the deposit to the Collection Account and the payment to the
Company of the amounts described in this Section, the
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Agent shall execute and deliver to the Person so acquiring the Receivables at
such Person's expense, such documents or instruments as are necessary to
terminate the Agent's interest in the Receivables and the Related Security.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION III.1 Representations and Warranties of the Pledgors. Each
Pledgor represents and warrants to the Agent, the Company and the Bank Investors
that:
(a) Existence and Power. Such Pledgor is a limited partnership
duly organized, validly existing and in good standing under the laws of
the State of Nevada and has all limited partnership power and all
material governmental licenses, authorizations, consents and approvals
required to carry on its business in each jurisdiction in which its
business is now conducted. Each Pledgor is duly qualified to do
business in, and is in good standing in, every other jurisdiction in
which the nature of its business requires it to be so qualified, except
where the failure to be so qualified or in good standing would not have
a Material Adverse Effect.
(b) Company and Governmental Authorization; Contravention. The
execution, delivery and performance by such Pledgor of this Agreement,
the Receivables Purchase Agreement, the Fee Letter, the Facility Fee
Letter, the Secured Note, the Pledge Certificates and the other
Transaction Documents to which such Pledgor is a party are within such
Pledgor's partnership powers, have been duly authorized by all
necessary action on behalf of such Pledgor, require no action by or in
respect of, or filing with, any Official Body or official thereof
(except as contemplated by Section 2.8 hereof), and do not contravene,
or constitute a default under, any provision of applicable law, rule or
regulation or of the Certificate of Limited Partnership of such Pledgor
or of any agreement, judgment, injunction, order, writ, decree or other
instrument binding upon such Pledgor or result in the creation or
imposition of any Adverse Claim on the assets of such Pledgor (except
as contemplated by Section 2.8 hereof).
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(c) Binding Effect. Each of this Agreement, the Receivables
Purchase Agreement, the Fee Letter, the Facility Fee Letter, the
Secured Note and the other Transaction Documents to which such Pledgor
is a party constitutes and each Pledge Certificate upon payment of the
Advance Amount set forth therein will constitute the legal, valid and
binding obligation of such Pledgor, enforceable against it in
accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws affecting the rights of
creditors generally.
(d) Perfection. Immediately preceding each Pledge hereunder,
each Receivable and any related Equipment shall be owned by a Pledgor
free and clear of all Adverse Claims, other than those which may be
simultaneously released and liens with respect to Leveraged Lease
Loans. On or prior to each Pledge, all financing statements and other
documents required to be recorded or filed in order to perfect and
protect the Agent's Pledged Interest against all creditors of and
purchasers from the Pledgors and the Seller will have been duly filed
in each filing office necessary for such purpose and all filing fees
and taxes, if any, payable in connection with such filings shall have
been paid in full. Notwithstanding the foregoing, it is understood
that, except with respect to Receivables that are Leveraged Lease
Loans, (i) no UCC-1 filing may have been made with respect to the
Equipment (other than vehicles as described in (ii) below) underlying
those Receivables that had at the origination of the related Contract
an original equipment cost of less than $35,000 (provided such
Receivables do not represent more than 20% of the Net Investment or $20
million of the Net Investment, whichever is greater) and (ii) certain
Receivables may be leases on vehicles or other types of equipment which
require titling in the name of the Pledgors, so long as the aggregate
Outstanding Balance of such Receivables does not represent more than
5.0% of the Net Investment or $7 million of the Net Investment,
whichever is greater, and provided that such vehicles are re-titled as
required to perfect such interest within 90 days of the related Pledge.
(e) Accuracy of Information. All information heretofore
furnished by such Pledgor (including without limitation, the Investor
Reports, any other reports delivered pursuant to Section 2.11 hereof
and the Pledgors' financial statements) to the Company, any Bank
Investors,
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the Agent or the Administrative Agent for purposes of or in connection
with this Agreement or any transaction contemplated hereby is, and all
such information hereafter furnished by such Pledgor to the Company,
any Bank Investors, the Agent or the Administrative Agent will be, true
and accurate in every material respect, on the date such information is
stated or certified.
(f) Tax Status. Such Pledgor has filed all tax returns
(federal, state and local) required to be filed and has paid or made
adequate provision for the payment of all taxes, assessments and other
governmental charges.
(g) Action, Suits. Except as set forth in Exhibit H hereof,
there are no actions, suits or proceedings pending, or to the knowledge
of such Pledgor threatened, against or affecting such Pledgor or any
Affiliate of such Pledgor or their respective properties, in or before
any court, arbitrator or other body, which may, individually or in the
aggregate, have a Material Adverse Effect.
(h) 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
such Pledgor of this Agreement, the performance by such Pledgor of the
transactions contemplated by this Agreement, and the fulfillment of the
terms hereof and thereof by such Pledgor, have been obtained.
(i) Use of Proceeds. No proceeds of any Pledge will be used by
such Pledgor to acquire any security in any transaction which is
subject to Section 13 or 14 of the Securities Exchange Act of 1934, as
amended.
(j) Place of Business. The principal place of business and
chief executive office of such Pledgor is located at the address of
such Pledgor indicated in Section 10.3 hereof and the offices where
such Pledgor keeps all its Records, are located at the address(es)
described on Exhibit I or such other locations notified to the Company
in accordance with Section 2.8 hereof in jurisdictions where all action
required by Section 2.8 hereof has been taken and completed.
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(k) Good Title. At the time of each Pledge, the Agent shall
acquire an assignment of a valid and perfected first priority security
interest to the extent of the Pledged Interest and in the Related
Security and Collections with respect thereto free and clear of any
Adverse Claim.
(l) Trade Names, Etc. Such Pledgor has no subsidiaries and
within the last five years, has operated under no trade names and has
not changed its name, merged with or into or consolidated with any
other corporation or been the subject of any proceeding under Title 11,
United States Code (Bankruptcy).
(m) Credit and Collection Policy. Since June 25, 1998, there
have been no material changes in the Credit and Collection Policy other
than as permitted hereunder.
(n) Collections and Servicing. Since June 25, 1998, there has
been no material adverse change in the ability of the Master Servicer
(to the extent it is the Parent or any Subsidiary or Affiliate of the
Parent) to service and collect the Receivables.
(o) No Termination Event. No event has occurred and is
continuing and no condition exists which constitutes a Termination
Event.
(p) Not an Investment Company. Such Pledgor is not, and is not
controlled by, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or is exempt from all
provisions of such Act.
(q) ERISA. Such Pledgor and its ERISA Affiliates is in
compliance in all material respects with ERISA and no lien exists in
favor of the Pension Benefit Guaranty Corporation on any of the
Receivables.
(r) Lock-Box Account. All Obligors have been instructed to
make payment to a Lock-Box Account.
(s) Bulk Sales. No transaction contemplated hereby or by the
Receivables Purchase Agreement requires compliance with any bulk sales
act or similar law.
(t) Pledges Under Receivables Purchase Agreement. Each
Receivable has been purchased by a Pledgor (or the interests
represented thereby have been collectively
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purchased by the Pledgors) from the Seller pursuant to, and in
accordance with, the terms of the Receivables Purchase Agreement.
(u) Preference; Voidability. The Pledgors shall have given
reasonably equivalent value to the Seller in consideration for the
transfer to the Pledgors of the Receivables and Related Security from
the Seller, and each such transfer shall not have been made for or on
account of an antecedent debt owed by the Seller to the Pledgors and no
such transfer is or may be voidable under any Section of the Bankruptcy
Reform Act of 1978 (11 U.S.C. sections 101 et seq.), as amended.
(v) Eligible Receivables. Each Receivable listed on the
Contract Schedule is an Eligible Receivable as of the related Pledge
Date (or, if such Receivable is being re-Pledged immediately following
a Take-Out, as of the original Pledge Date).
(w) Year 2000 Compliance. Such Pledgor (i) initiated a review
and assessment of all areas within its business and operations
(including those affected by suppliers and vendors) that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by such Pledgor (or suppliers, vendors and
customers) may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date
after December 31, 1999), (ii) developed a plan and timeline for
addressing the Year 2000 Problem on a timely basis, and (iii) to date,
implemented that plan in accordance with that timetable, as such
timetable may be revised from time to time. Based on the foregoing,
such Pledgor believes that all computer applications (including those
of its suppliers and vendors) that are material to its business and
operations are reasonably expected on a timely basis to be able to
perform properly date-sensitive functions for all dates before and
after January 1, 2000 (that is, be "Year 2000 Compliant"), except to
the extent that a failure to do so could not reasonably be expected (a)
to have a Material Adverse Effect, or (b) to result in a Termination
Event. Such Pledgor (i) has completed a review and assessment of all
computer applications, which are related to or involved in the
origination, collection, management or servicing of the Receivables
(the "Receivable Systems") and (ii) has determined that such Receivable
Systems are Year 2000 Compliant or will be Year 2000 Compliant on or
before August 31, 1999 and thereafter. The costs of all assessment,
remediation,
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testing and integration related to such Pledgor's plan for becoming
Year 2000 Compliant will not have a material adverse effect on the
financial condition or operations of such Pledgor.
Any document, instrument, certificate or notice delivered to the
Company hereunder shall be deemed a representation and warranty by the Pledgors.
SECTION III.2 Reaffirmation of Representations and Warranties by the
Pledgor. On each day that a Pledge is made hereunder, the Pledgors, by accepting
the proceeds of the related Advance Amount, whether delivered to the Pledgors
pursuant to Section 2.2(a) or Section 2.5(c) hereof, shall be deemed to have
certified that all representations and warranties described in Section 3.1
hereof are correct on and as of such day as though made on and as of such day.
SECTION III.3 [Reserved.]
SECTION III.4 Representations and Warranties of the Master Servicer.
The Master Servicer represents and warrants to the Company and the Bank
Investors that:
(a) Corporate Existence and Power. The Master Servicer is a
corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation and has all corporate
power and all material governmental licenses, authorizations, consents
and approvals required to carry on its business in each jurisdiction in
which its business is now conducted. The Master Servicer is duly
qualified to do business in, and is in good standing in, every other
jurisdiction in which the nature of its business requires it to be so
qualified, except where the failure to be so qualified or in good
standing would not have a Material Adverse Effect.
(b) Corporate and Governmental Authorization; Contravention.
The execution, delivery and performance by the Master Servicer of this
Agreement are within the Master Servicer's corporate powers, have been
duly authorized by all necessary corporate action, require no action by
or in respect of, or filing with, any Official Body or official
thereof, and do not contravene, or constitute a default under, any
provision of applicable law, rule or regulation or of the Certificate
of Incorporation or Bylaws of the Master Servicer or of any agreement,
judgment, injunction,
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order, writ, decree or other instrument binding upon the Master
Servicer or result in the creation or imposition of any Adverse Claim
on the assets of the Master Servicer or any of its Subsidiaries.
(c) Binding Effect. This Agreement constitutes the legal,
valid and binding obligation of the Master Servicer, enforceable in
accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws affecting the rights of
creditors.
(d) Accuracy of Information. All information heretofore
furnished by the Master Servicer to the Agent, the Company, any Bank
Investor or the Administrative Agent for purposes of or in connection
with this Agreement or any transaction contemplated hereby is, and all
such information hereafter furnished by the Master Servicer to the
Agent, the Company, any Bank Investor or the Administrative Agent will
be, true and accurate in every material respect, on the date such
information is stated or certified.
(e) Tax Status. The Master Servicer has filed all tax returns
(federal, state and local) required to be filed and has paid or made
adequate provision for the payment of all taxes, assessments and other
governmental charges.
(f) Action, Suits. Except as set forth in Exhibit H, there are
no actions, suits or proceedings pending, or to the knowledge of the
Master Servicer threatened, against or affecting the Master Servicer or
any Affiliate of the Master Servicer or their respective properties, in
or before any court, arbitrator or other body, which may, individually
or in the aggregate, have a Material Adverse Effect.
(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
Master Servicer of this Agreement, the performance by the Master
Servicer of the transactions contemplated by this Agreement, and the
fulfillment of the terms hereof and thereof by the Master Servicer,
have been obtained.
(h) Nature of Receivables. Each Receivable included in the
calculation of the Net Receivables Balance in fact
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satisfies at such time the definition of "Eligible Receivable".
(i) Credit and Collection Policy. Since June 25, 1998, there
have been no material changes in the Credit and Collection Policy other
than as permitted hereunder.
(j) Collections and Servicing. Since June 25, 1998, there has
been no material adverse change in the ability of the Master Servicer
to service and collect the Receivables.
(k) No Termination Event. No event has occurred and is
continuing and no condition exists which constitutes a Termination
Event.
(l) Not an Investment Company. The Master Servicer is not, and
is not controlled by, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or is exempt from all
provisions of such Act.
(m) ERISA. Each of the Master Servicer and its ERISA
Affiliates is in compliance in all material respects with ERISA and no
lien exists in favor of the Pension Benefit Guaranty Corporation on any
of the Receivables.
(n) Lock-Box Account. All Obligors have been instructed to
make payment to the Lock-Box Account.
(w) Year 2000 Compliance. The Master Servicer (i) initiated a
review and assessment of all areas within its business and operations
(including those affected by suppliers and vendors) that could be
adversely affected by the Year 2000 Problem, (ii) developed a plan and
timeline for addressing the Year 2000 Problem on a timely basis, and
(iii) to date, implemented that plan in accordance with that timetable,
as such timetable may be revised from time to time. Based on the
foregoing, the Master Servicer believes that all computer applications
(including those of its suppliers and vendors) that are material to its
business and operations are reasonably expected on a timely basis to be
Year 2000 Compliant, except to the extent that a failure to do so could
not reasonably be expected (a) to have a Material Adverse Effect, or
(b) to result in a Termination Event. The Master Servicer (i) has
completed a review and assessment of all computer applications, which
are related to or involved in the Receivable Systems and (ii) has
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determined that such Receivable Systems are Year 2000 Compliant or will
be Year 2000 Compliant on or before August 31, 1999 and thereafter. The
costs of all assessment, remediation, testing and integration related
to the Master Servicer's plan for becoming Year 2000 Compliant will not
have a material adverse effect on the financial condition or operations
of the Master Servicer.
ARTICLE IV
CONDITIONS PRECEDENT
SECTION IV.1 Conditions to Closing. (a) On or prior to the date of
execution hereof, the Pledgors shall deliver to the Agent the following
documents, instruments and fees all of which shall be in a form and substance
acceptable to the Agent:
(i) A copy of the resolutions of the member of the General
Partner of each Pledgor approving the execution, delivery and
performance by such Pledgor of this Agreement, the Receivables Purchase
Agreement and the other Transaction Documents to be delivered by such
Pledgor hereunder or thereunder.
(ii) The Certificate of Limited Partnership or other
organizational document of each Pledgor certified by the Secretary of
State or other similar official of the State of Nevada dated a date
reasonably prior to the Closing Date.
(iii) The Articles of Incorporation or applicable
organizational document of the Seller certified by the Secretary of
State or other similar official of the State of Delaware dated a date
reasonably prior to the Closing Date.
(iv) The Articles of Organization or other organizational
document of the General Partner certified by the Secretary of State or
other similar official of the State of Nevada dated a date reasonably
prior to the Closing Date.
(v) The Articles of Organization or other organizational
document of the Parent certified by the Secretary of State or other
similar official of the State of Delaware dated a date reasonably prior
to the Closing Date.
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(vi) The Certificate of Limited Partnership or other
organizational document of the Master Servicer certified by the
Secretary of State or other similar official of the State of Delaware
dated a date reasonably prior to the Closing Date.
(vii) A Good Standing Certificate for each Pledgor from the
Secretary of State or other similar official of the State of Nevada
dated a date reasonably prior to the Closing Date.
(viii) A Good Standing Certificate for the Seller issued by
the Secretary of State or a similar official of the State of Delaware
dated a date reasonably prior to the Closing Date.
(ix) A Good Standing Certificate for the Parent from the
Secretary of State or other similar official of the State of Delaware
dated a date reasonably prior to the Closing Date.
(x) A Good Standing Certificate for the Master Servicer from
the Secretary of State or other similar official of the State of
Delaware dated a date reasonably prior to the Closing Date.
(xi) A Certificate of the Secretary of the General Partner of
each Pledgor substantially in the form of Exhibits L-1 and L-2 attached
hereto.
(xii) A Certificate of the Secretary of the Seller
substantially in the form of Exhibit L-3 attached hereto.
(xiii) A Certificate of the Secretary of the General Partner
substantially in the form of Exhibit L-4 attached hereto.
(xiv) A Certificate of the Secretary of the Parent
substantially in the form of Exhibit L-5 attached hereto.
(xv) A Certificate of the Secretary of the Master Servicer
substantially in the form of Exhibit L-6 attached hereto.
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(xvi) An opinion of Morgan, Lewis & Bockius LLP, special
counsel to the Parent, the Master Servicer and the Seller, covering
certain corporate and security interest matters in form and substance
satisfactory to the Agent and the Agent's counsel.
(xvii) An opinion of Dewey Ballantine LLP, special counsel to
the Pledgors and the Seller, covering certain bankruptcy and insolvency
matters (i.e. "true sale" and nonconsolidation) in form and substance
satisfactory to the Agent and the Agent's counsel.
(xviii) An opinion of Dewey Ballantine LLP, special counsel to
the Pledgors and the Seller covering certain tax matters in form and
substance satisfactory to the Agent and the Agent's counsel.
(xix) An opinion of Dewey Ballantine LLP, special counsel to
the Pledgors and the Seller covering certain corporate matters in form
and substance satisfactory to the Agent and the Agent's counsel.
(xx) An opinion of Woodburn and Wedge, special Nevada counsel
to the Pledgors and the Seller covering certain corporate matters in
form and substance satisfactory to the Agent and the Agent's counsel.
(xxi) An executed copy of this Agreement, the Receivables
Purchase Agreement, the Fee Letter, the Facility Fee Letter and each of
the other Transaction Documents to be executed by the Seller or the
Pledgors.
(xxii) The Secured Note, duly executed by the Pledgors and
appropriately completed.
(xxiii) Such other documents, instruments, certificates and
opinions as the Agent or the Administrative Agent, shall reasonably
request.
(xxiv) For each Pledgor, copies of proper financing statements
(Form UCC-1), dated a date reasonably near to the Closing Date naming
such Pledgor as the debtor in favor of the Agent, for the benefit of
the Company and the Bank Investors, as the secured party or other
similar instruments or documents as may be necessary or in the
reasonable opinion of the Agent desirable under the UCC of all
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appropriate jurisdictions or any comparable law to perfect the Agent's
interest in all of each Pledgor's respective right, title and interest
in, to and under all Receivables and the Related Security and
Collections relating thereto; provided that no such filings need be
made with respect to the related Equipment.
(xxv) For each Pledgor, copies of proper financing statements
(Form UCC-1), dated a date reasonably near to the Closing Date naming
the Seller as the debtor in favor of such Pledgor as secured party and
the Agent, for the benefit of the Company and the Bank Investors, as
assignee of the secured party or other similar instruments or documents
as may be necessary or in the reasonable opinion of the Agent desirable
under the UCC of all appropriate jurisdictions or any comparable law to
perfect the Pledgor's interest in all applicable Receivables and the
Related Security and Collections relating thereto; provided that no
such filings need be made with respect to the related Equipment.
(xxvi) Certified copies of request for information or copies
(Form UCC-11) (or a similar search report certified by parties
acceptable to the Agent) dated a date reasonably near the date of the
initial Pledge listing all effective financing statements which name
either of the Pledgors or the Seller (under their respective present
names and any previous names) as debtor and which are filed in
jurisdictions in which the filings were made pursuant to items (xxiv)
or (xxv) above together with copies of such financing statements (none
of which shall cover any Receivables or Contracts).
(a) On or prior to the date of execution hereof and, on or prior to the
related Pledge Date, the Pledgors shall deliver to the Agent the following
documents and instruments all of which shall be in a form or substance
acceptable to the Agent:
(xxvii) Copies of proper financing statements (Form UCC-3), if
any, necessary to terminate all security interests and other rights of
any person in Receivables previously granted by Pledgors.
(xxviii) Copies of proper financing statements (Form UCC-3),
if any, necessary to terminate all security interests and other rights
of any person in Receivables previously granted by the Seller.
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(xxix) A computer tape setting forth all Receivables and the
Outstanding Balances thereon and such other information as the Agent
may reasonably request.
(xxx) The Pledge Certificate, duly executed by the Pledgors.
(xxxi) Such other documents, instruments, certificates and
opinions as the Agent or the Administrative Agent, shall reasonably
request.
ARTICLE V
COVENANTS
SECTION V.1 Affirmative Covenants of Pledgors. At all times from the
date hereof to the later to occur of (i) the Termination Date or (ii) the date
on which the Net Investment has been reduced to zero, all accrued Discount and
Servicing Fees shall have been paid in full and all other Aggregate Unpaids
shall have been paid in full, in cash, unless the Agent shall otherwise consent
in writing:
(a) Financial Reporting. The Pledgors will, and will cause the
Parent and each of its Subsidiaries to, maintain, for itself and each
of its respective Subsidiaries, a system of accounting established and
administered in accordance with GAAP, and furnish to the Agent:
(i) Annual Reporting. As soon as practical and in any
event within 90 days after the end of each fiscal year of the
Parent, (x) consolidated and unaudited consolidating balance
sheets of the Parent and its Subsidiaries as at the end of
such fiscal year, and the notes thereto, and the related
consolidated and unaudited consolidating statements of income,
stockholders' equity and cash flows, and the respective notes
thereto, for such fiscal year, setting forth (other than for
consolidating statements) comparative financial statements for
the preceding fiscal year, all prepared in accordance with
GAAP applied on a consistent basis and containing, with
respect to the consolidated financial statements, opinions of
Price Waterhouse L.L.P., or other such independent certified
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public accountants selected by the Parent and approved by the
Agent, which are unqualified as to the scope of the audit
performed and as to the "going concern" status of the Parent
and without any exception not acceptable to the Agent and (y)
annual consolidated financial statements, prepared in
accordance with GAAP and compiled by such accountants, for
each of the Pledgors;
(ii) Quarterly Reporting. As soon as practical and in
any event within 45 days after the end of each fiscal quarter
(except the last fiscal quarter of the fiscal year of the
Parent), consolidated and consolidating balance sheets of the
Parent and its Subsidiaries as at the end of such fiscal
quarter, and the related consolidated and consolidating
statements of income, stockholders' equity and cash flows for
such fiscal quarter and for the period from the beginning of
the then-current fiscal year through the end of such reporting
period, and accompanied by a certificate of the chief
financial officer of the Parent or any other Person expressly
designated by the Board of Directors of the Parent as an
authorized representative to the effect that such financial
statements present fairly the financial position of the Parent
and its Subsidiaries as of the end of such fiscal period and
the results of their operations and the changes in their
financial position for such fiscal period, in conformity with
the standards typically used in preparation of the interim
financial statements.
(iii) Compliance Certificate. Together with the
financial statements required hereunder, a compliance
certificate signed by each Pledgor's or the Parent's, as
applicable, chief financial officer stating that to the best
of such Person's knowledge, no Termination Event exists and no
event which but for the lapse of time or the giving of notice,
or both, would constitute Termination Event exists, or if any
such event exists, stating the nature and status thereof.
(iv) Shareholders and Partners Statements and
Reports. Promptly upon the furnishing thereof to the partners
of the Pledgors or the shareholders of the Parent, copies of
all financial statements, reports and proxy statements so
furnished.
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(v) S.E.C. Filings. Promptly upon the filing thereof,
copies of all registration statements and annual, quarterly,
monthly or other regular reports which Parent or any
subsidiary files with the Securities and Exchange Commission.
(vi) Notice of Termination Events. As soon as
possible and in any event within two (2) days after the
knowledge of the occurrence of each Termination Event or event
which but for the lapse of time or the giving of notice, or
both, would constitute a Termination Event, a statement of the
chief financial officer or chief accounting officer of both
Pledgors setting forth details of such event and the action
which the Pledgors propose to take with respect thereto.
(vii) Change in Credit and Collection Policy and Debt
Ratings. Within ten (10) days after the date any material
change in or amendment to the Credit and Collection Policy is
made, a copy of such amendment and, if requested by the Agent,
a copy of the Credit and Collection Policy then in effect.
Within five days after the date of any change in the Pledgors'
or Parent's public debt ratings (other than any asset-backed
ratings), if any, a written certification of the Pledgor's or
the Seller's public debt ratings (other than any asset-backed
ratings) after giving effect to any such change.
(viii) Credit and Collection Policy. Within ninety
(90) days after the close of each of the Parent's and each
Pledgor's fiscal years, a complete copy of the Credit and
Collection Policy then in effect.
(ix) ERISA. Promptly after the filing or receiving
thereof, copies of all reports and notices with respect to any
Reportable Event (as defined in Article IV of ERISA) which
either Pledgor, the Seller or any ERISA Affiliate of either
Pledgor or the Seller files under ERISA with the Internal
Revenue Service, the Pension Benefit Guaranty Corporation or
the U.S. Department of Labor or which either Pledgor, the
Seller or any ERISA Affiliates of either Pledgor or the Seller
receives from the Internal Revenue Service, the Pension
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Benefit Guaranty Corporation or the U.S. Department of Labor.
(x) Other Information. Such other information
(including non-financial information) as the Agent or the
Administrative Agent may from time to time reasonably request
with respect to the Seller, the Pledgors or any Subsidiary of
any of the foregoing.
(b) Conduct of Business. Each Pledgor will carry on and
conduct its business in substantially the same fields of enterprise as
it is presently conducted and do all things necessary to remain duly
incorporated, validly existing and in good standing as a domestic
corporation in its jurisdiction of incorporation and maintain all
requisite authority to conduct its business in each jurisdiction in
which its business is conducted.
(c) Compliance with Laws. The Pledgors will comply with all
laws, rules, regulations, orders, writs, judgments, injunctions,
decrees or awards to which it or its respective properties may be
subject.
(d) Furnishing of Information and Inspection of Records. The
Pledgors will furnish to the Agent from time to time such information
with respect to the Receivables as the Agent may reasonably request,
including, without limitation, listings identifying the Obligor and the
Outstanding Balance for each Receivable. The Pledgors will at any time
and from time to time upon reasonable notice during regular business
hours permit the Agent, or its agents or representatives, (i) to
examine and make copies of and take abstracts from all Records and (ii)
to visit the offices and properties of the Pledgors for the purpose of
examining such Records, and to discuss matters relating to Receivables
or the Pledgors' performance hereunder and under the other Transaction
Documents to which such Person is a party with any of the officers,
directors, employees or independent public accountants of the Pledgors
having knowledge of such matters.
(e) Keeping of Records and Books of Account. The Pledgors will
maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records
evidencing Receivables in the event of the destruction of the originals
thereof), and keep
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and maintain, all documents, books, records and other information
reasonably necessary or advisable for the collection of all Receivables
(including, without limitation, records adequate to permit the daily
identification of each new Receivable and all Collections of and
adjustments to each existing Receivable). The Pledgors will give the
Agent notice of any material change in the administrative and operating
procedures of the Pledgors or the Seller, as applicable, referred to in
the previous sentence.
(f) Performance and Compliance with Receivables and Contracts.
Each Pledgor, at its expense, will timely and fully perform and comply
with all material provisions, covenants and other promises required to
be observed by such Pledgor or the Seller under the Contracts related
to the Receivables.
(g) Credit and Collection Policies. The Pledgors will comply
in all material respects with the Credit and Collection Policy in
regard to each Receivable and the related Contract.
(h) Collections Received. The Pledgors shall hold in trust,
and deposit, immediately, but in any event not later than within two
Business Days of its receipt thereof, to the Lock-Box Account all
Collections received from time to time by the Pledgors or the Seller,
as the case may be.
(i) Accounting and Tax Treatment. The Pledgors will not (i)
account for (including for tax purposes), or otherwise treat, the
transactions contemplated by the Receivables Purchase Agreement in any
manner other than as a sale of Receivables by the Seller to the
Pledgors; provided, however, that the Operating Lease Pledgor will
treat the transfer of the Receivables transferred by the Seller to the
Operating Lease Pledgor pursuant to the Receivables Purchase Agreement
as a financing for accounting purposes or (ii) account for or otherwise
treat the transactions contemplated hereby in any manner other than as
a pledge of Receivables by the Pledgors to the Agent on behalf of the
Company or the Bank Investors, as applicable. In addition, the Pledgors
shall disclose (in a footnote or otherwise) in all of its respective
financial statements (including any such financial statements
consolidated with any other Persons' financial statements) the
existence and nature of
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the transaction contemplated hereby and by the Receivables Purchase
Agreement and the interest of the Pledgors and the Agent, on behalf of
the Company and the Bank Investors, in the Affected Assets.
(j) Separate Business. Each Pledgor shall at all times (a) to
the extent such Pledgor's office is located in the offices of the
Seller or any Affiliate of the Seller, pay fair market rent for its
executive office space located in the offices of the Seller or any
Affiliate of the Seller, (b) have at all times at least two managers
which are not employees, officers or directors of the Seller or any
Affiliate of the Seller or of any major creditor of the Seller or any
Affiliate of the Seller and are persons who are familiar and have
experience with asset securitization, (c) maintain such Pledgor's
books, financial statements, accounting records and other corporate
documents and records separate from those of the Seller or any other
entity, (d) not commingle such Pledgor's assets with those of the
Seller or any other entity, (e) act solely in its corporate name and
through its own authorized officers and agents, (f) make investments
directly or by brokers engaged and paid by such Pledgor or its agents
(provided that if any such agent is an Affiliate of such Pledgor it
shall be compensated at a fair market rate for its services), (g)
separately manage such Pledgor's liabilities from those of the Seller
or any Affiliates of the Seller and pay its own liabilities, including
all administrative expenses, from its own separate assets, except that
Parent may pay the organizational expenses of such Pledgor, and (h) pay
from such Pledgor's assets all obligations and indebtedness of any kind
incurred by such Pledgor. Each Pledgor shall abide by all limited
partnership formalities, including the maintenance of current minute
books, and such Pledgor shall cause its financial statements to be
prepared in accordance with generally accepted accounting principles in
a manner that indicates the separate existence of such Pledgor and its
assets and liabilities. Each Pledgor shall (i) pay all its liabilities,
(ii) not assume the liabilities of the Seller or any Affiliate of the
Seller, (iii) not lend funds or extend credit to the Seller or any
affiliate of the Seller except pursuant to the Receivables Purchase
Agreement in connection with the purchase of Receivables thereunder and
(iv) not guaranty the liabilities of the Seller or any Affiliates of
the Seller other than, in the case of a guaranty by the Qualifying
Pledgor, the Operating Lease
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Pledgor and, in the case of a guaranty by the Operating Lease Pledgor,
the Qualifying Pledgor, or with respect to either Pledgor, as otherwise
provided in the Facility Pledge Agreement. The officers and nonmembers
and members of each Pledgor (as appropriate) shall make decisions with
respect to the business and daily operations of such Pledgor
independent of and not dictated by any controlling entity. Each Pledgor
shall not engage in any business not permitted by its Agreement of
Limited Partnership as in effect on the Closing Date.
(k) Partnership Documents. Each Pledgor shall only amend,
alter, change or repeal Article 2, Section 16.1, Section 20.1, or
Section 21.6 of its Agreement of Limited Partnership with the prior
written consent of the Agent.
SECTION V.2 Negative Covenants of the Pledgors. At all times from the
date hereof to the later to occur of (i) the Termination Date or (ii) the date
on which the Net Investment has been reduced to zero, all accrued Discount and
Servicing Fees shall have been paid in full and all other Aggregate Unpaids
shall have been paid in full, in cash, unless the Agent shall otherwise consent
in writing:
(a) No Sales, Liens, Etc. Except as otherwise provided herein
and in the Receivables Purchase Agreement, each Pledgor will not sell,
assign (by operation of law or otherwise) or otherwise dispose of, or
create or suffer to exist any Adverse Claim upon (or the filing of any
financing statement) or with respect to any of the Affected Assets or
any account which concentrates in a Lock-Box Bank to which any
Collections of any Receivable are sent, or assign any right to receive
income in respect thereof.
(b) No Extension or Amendment of Receivables. Except as
otherwise permitted in Section 6.2 hereof, each Pledgor will not
extend, amend or otherwise modify the terms of any Receivable, or
amend, modify or waive any term or condition of any Contract related
thereto.
(c) No Change in Business or Credit and Collection Policy.
Each Pledgor will not make any material change in the Credit and
Collection Policy without providing the Agent with prior written notice
of the change; provided that each Pledgor will reverse any such change
if the Agent disapproves of such change within 30 days of receiving
prior
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written notice of such change. Each Pledgor will not make any change in
the character of its business which would have a Material Adverse
Effect.
(d) No Mergers, Etc. Each Pledgor will not (i) consolidate or
merge with or into any other Person, or (ii) sell, lease or transfer
all or substantially all of its assets to any other Person unless, in
the case of the Seller, the Seller is the surviving entity. The
foregoing covenant shall not restrict Pledgors from (i) establishing,
in connection with their 1999-1 term securitization, UCP 99-1 LLC I and
UCP 99-1 LLC II as special purpose Nevada limited liability companies;
all of the membership interests in UCP 99-1 LLC I will be held by
UniCapital Funding Corporation, and all of the membership interests in
UCP 99-1 LLC II will be held by the Pledgors until the end of the
pre-funding period in such securitization, at which time they will be
distributed to UniCapital Funding Corporation; and (ii) transferring to
UCP 99-1 LLC I and UCP 99-1 LLC II the Receivables and related property
to be securitized.
(e) Change in Payment Instructions to Obligors. Each Pledgor
will not make any change in its instructions to Obligors regarding
payments to be made to any Lock-Box Account, unless such instructions
are to deposit such payments to another existing Lock-Box Account and
the Agent shall have received written notice of such change at least 30
days prior thereto.
(f) Change of Name, Etc. Each Pledgor will not change its
name, identity or structure or the location of its chief executive
office, unless at least 10 days prior to the effective date of any such
change such Pledgor delivers to the Agent such documents, instruments
or agreements, executed by such Pledgor, as are necessary to reflect
such change and to continue the perfection of the Agent's security or
other interests in the Affected Assets.
(g) Amendment to Receivables Purchase Agreement. Each Pledgor
will not amend, modify, or supplement the Receivables Purchase
Agreement or waive any provision thereof, in each case except with the
prior written consent of the Agent and the Administrative Agent; nor
shall the Pledgor take any other action under the Receivables Purchase
Agreement that shall have a Material Adverse Effect or which is
inconsistent with the terms of this Agreement.
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(h) Other Debt. Except as provided for herein, each Pledgor
will not create, incur, assume or suffer to exist any indebtedness
whether current or funded, or any other liability other than (i)
indebtedness of the Pledgor representing fees, expenses and indemnities
arising hereunder or under the Receivables Purchase Agreement for the
purchase price of the Receivables under the Receivables Purchase
Agreement, and (ii) other indebtedness incurred in the ordinary course
of its business in an amount not to exceed $50,000 in any fiscal year;
provided, however, that each Pledgor may incur indebtedness in order to
finance the residual value of any Equipment related to a Receivable
hereunder, so long as such indebtedness is non-recourse, not subject to
petition and fully subordinated to the payment of the related
Receivable hereunder.
(i) ERISA Matters. Each Pledgor will not (i) engage or permit
any of its respective ERISA Affiliates to engage in any prohibited
transaction (as defined in Section 4975 of the Code and Section 406 of
ERISA) for which an exemption is not available or has not previously
been obtained from the U.S. Department of Labor; (ii) 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 Plan; (iii) fail
to make any payments to any Multiemployer Plan that such Pledgor or any
ERISA Affiliate of such Pledgor is 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 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 liability to
such Pledgor or any ERISA Affiliate of such Pledgor under ERISA or the
Code, if such prohibited transactions, accumulated funding
deficiencies, payments, terminations and reportable events occurring
within any fiscal year of such Pledgor, in the aggregate, involve a
payment of money or an incurring of liability by such Pledgor or any
ERISA Affiliate of such Pledgor, in an amount in excess of $1,000,000.
(j) Payment to the Seller. With respect to any Receivable sold
or contributed by the Seller to either Pledgor, the respective Pledgor
shall, and shall cause the Seller to, effect such sale or contribution
under, and
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pursuant to the terms of, the Receivables Purchase Agreement,
including, without limitation, the payment by such Pledgor to the
Seller of an amount equal to the purchase price for each such
Receivable sold, as required by the terms of the Receivables Purchase
Agreement.
SECTION V.3 [Reserved.]
SECTION V.4 [Reserved.]
SECTION V.5 Affirmative Covenants of the Master Servicer. At all times
from the date hereof to the later to occur of (i) the Termination Date or (ii)
the date on which the Net Investment has been reduced to zero, all accrued
Discount and Servicing Fees shall have been paid in full and all other Aggregate
Unpaids shall have been paid in full, in cash, unless the Agent shall otherwise
consent in writing:
(a) Conduct of Business. The Master Servicer will carry on and
conduct its business in substantially the same manner and in
substantially the same fields of enterprise as it is presently
conducted and do all things necessary to remain duly incorporated,
validly existing and in good standing as a domestic corporation in its
jurisdiction of incorporation and maintain all requisite authority to
conduct its business in each jurisdiction in which its business is
conducted.
(b) Compliance with Laws. The Master Servicer will comply in
all material respects with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it or its respective
properties may be subject.
(c) Furnishing of Information and Inspection of Records. The
Master Servicer will furnish to the Agent from time to time such
information with respect to the Receivables as the Agent may reasonably
request, including, without limitation, listings identifying the
Obligor and the Outstanding Balance for each Receivable. The Master
Servicer will, at any time and from time to time upon reasonable notice
during regular business hours permit the Agent, or its agents or
representatives, (i) to examine and make copies of and take abstracts
from all Records and (ii) to visit the offices and properties of the
Master Servicer for the purpose of examining such Records, and to
discuss
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matters relating to Receivables or the Pledgors', the Seller's or the
Master Servicer's performance hereunder and under the other Transaction
Documents to which such Person is a party with any of the officers,
directors, employees or independent public accountants of the Master
Servicer having knowledge of such matters.
(d) Keeping of Records and Books of Account. The Master
Servicer will maintain and implement administrative and operating
procedures (including, without limitation, an ability to recreate
records evidencing Receivables 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 Receivables (including, without limitation, records
adequate to permit the daily identification of each new Receivable and
all Collections of and adjustments to each existing Receivable). The
Master Servicer will give the Agent notice of any material change in
the administrative and operating procedures of the Master Servicer
referred to in the previous sentence.
(e) Notice of Agent's Interest. In the event that either
Pledgor or the Seller shall sell or otherwise transfer any interest in
accounts receivable, any computer tapes or files or other documents or
instruments provided by the Master Servicer in connection with any such
sale or transfer shall disclose the Pledgors' ownership of the
Receivables and the Agent's interest therein.
(f) Credit and Collection Policies. The Master Servicer will
comply in all material respects with the Credit and Collection Policy
in regard to each Receivable and the related Contract.
(g) Collections. The Master Servicer shall instruct all
Obligors to cause all Collections other than Collections remitted
directly to be deposited directly to a Lock-Box Account.
(h) Collections Received. The Master Servicer shall hold in
trust, and deposit, immediately, but in any event not later than within
two Business Days of its receipt thereof, to the Lock-Box Account all
Collections received from time to time by the Master Servicer.
SECTION V.6 [Reserved.]
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SECTION V.7 Negative Covenants of the Master Servicer. At all times
from the date hereof to the later to occur of (i) the Termination Date or (ii)
the date on which the Net Investment has been reduced to zero, all accrued
Discount and Servicing Fees shall have been paid in full and all other Aggregate
Unpaids shall have been paid in full, in cash, unless the Agent shall otherwise
consent in writing:
(a) No Extension or Amendment of Receivables. Except as
otherwise permitted in Section 6.2 hereof, the Master Servicer will not
extend, amend or otherwise modify the terms of any Receivable, or
amend, modify or waive any term or condition of any Contract related
thereto.
(b) No Change in Business or Credit and Collection Policy. The
Master Servicer will not make any material change in the Credit and
Collection Policy without providing the Agent with prior written notice
of such change; provided that the Master Servicer will reverse any such
change if the Agent disapproves of such change within 30 days of
receiving prior written notice of such change. The Master Servicer will
not make any change in the character of its business which would have a
Material Adverse Effect.
(c) No Mergers, Etc. The Master Servicer will not (i)
consolidate or merge with or into any other Person, or (ii) sell, lease
or transfer all or substantially all of its assets to any other Person
unless the Master Servicer is the surviving entity.
(d) Change in Payment Instructions to Obligors. The Master
Servicer will not make any change in its instructions to Obligors
regarding payments to be made to the Lock-Box Account, unless such
instructions are to deposit such payments to another existing Lock-Box
Account and the Agent shall have received written notice of such change
at least 30 days prior thereto.
ARTICLE VI
ADMINISTRATION AND COLLECTIONS
SECTION VI.1 Appointment of the Master Servicer. The servicing,
administering and collection of the Receivables shall
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be conducted by the Person (the "Master Servicer") so designated from time to
time in accordance with this Section 6.1. Until the Company gives notice to the
Pledgors of the designation of a new Master Servicer, UniCapital Operations
Group, Inc. is hereby designated as, and hereby agrees to perform the duties and
obligations of, the Master Servicer pursuant to the terms hereof. The Master
Servicer may not delegate any of its rights, duties or obligations hereunder, or
designate a substitute Master Servicer, without the prior written consent of the
Agent, provided that, it is understood that the Master Servicer's duties
hereunder with respect to particular Receivables may and shall be delegated to
the respective Eligible Originators thereof and provided, further, that the
Master Servicer shall continue to remain solely liable for the performance of
the duties as Master Servicer hereunder notwithstanding any such delegation
hereunder. The Agent may, and upon the direction of the Majority Investors the
Agent shall, after the occurrence of a Master Servicer Default or any other
Termination Event (other than those specified in clauses (k), (l), (q) and (r)
of Section 7.1) designate as Master Servicer any Person (including itself) to
succeed UniCapital Operations Group, Inc. or any successor Master Servicer, on
the condition in each case that any such Person so designated shall agree to
perform the duties and obligations of the Master Servicer pursuant to the terms
hereof. Following the occurrence and continuance of a Master Servicer Default or
any Termination Event (other than those specified above), the Agent may notify
any Obligor of the Pledged Interest.
SECTION VI.2 Duties of the Master Servicer.
(a) The Master Servicer shall take or cause to be taken all
such action as may be necessary or advisable to collect all payments
due under each Receivable and the related Contract 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. The Master Servicer's duties will include, without
limitation, collection and posting of all payments, responding to
inquiries of Obligors regarding the Receivables and related Contracts,
investigating delinquencies and remitting payments to the Agent in a
timely manner. Each of the Pledgors, the Company, the Agent and the
Bank Investors hereby appoints as its agent the Master Servicer, from
time to time designated pursuant to Section 6.1 hereof, to enforce its
respective rights and interests in and under the Affected Assets. To
the extent
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permitted by applicable law, each of the Pledgors and the Seller hereby
grants to any Master Servicer appointed hereunder an irrevocable power
of attorney to take any and all steps in the Pledgors' and/or the
Seller's name and on behalf of the Pledgors or the Seller necessary or
desirable, in the reasonable determination of the Master Servicer, to
collect all amounts due under any and all Receivables, including,
without limitation, endorsing the Pledgors' and/or the Seller's name on
checks and other instruments representing Collections and enforcing
such Receivables and the related Contracts. The Master Servicer shall
set aside for the account of the Pledgors and the Agent their
respective allocable shares of the Collections of Receivables in
accordance with Sections 2.5 and 2.6 hereof. The Master Servicer shall
segregate and deposit to the Agent's account the Agent's allocable
share of Collections of Receivables when required pursuant to Article
II hereof. So long as no Termination Event shall have occurred and be
continuing, the Master Servicer may, in accordance with the Credit and
Collection Policy, extend the maturity of Receivables; provided,
however, that such extension or adjustment shall not alter the status
of such Receivable as a Delinquent Receivable or a Defaulted
Receivable, as applicable. The Master Servicer may not otherwise waive,
modify or otherwise vary any provision of a Contract except as
consistent with the Credit and Collection Policy. The Master Servicer
may not permit a Receivable to be terminated prior to the scheduled
termination date thereof unless such termination results in a payment
at least equal to the Required Payoff Amount being deposited into the
Collection Account with respect to the related Payment Date. The
Pledgors shall deliver to the Master Servicer and the Master Servicer
shall hold in trust for the Pledgors and the Agent, on behalf of the
Company and the Bank Investors, in accordance with their respective
interests, all Records which evidence or relate to Receivables or
Related Security. The Master Servicer shall not make the Agent, the
Company or any of the Bank Investors a party to any litigation without
the prior written consent of such Person.
(b) If the Master Servicer commences a legal proceeding to
enforce a Defaulted Receivable or commences or participates in a legal
proceeding (including a bankruptcy proceeding) relating to or involving
a Contract, the Agent will be deemed to have automatically assigned its
security interest in the related Contract to the Master Servicer for
purposes of commencing or participating in any such
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proceeding as a party or claimant, and the Master Servicer is
authorized and empowered by the Agent, the Company and the Bank
Investors, to execute and deliver, on behalf of itself and the Agent
for the benefit of the Company and Bank Investors, 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 Master Servicer may not enforce a
Contract on the ground that it is not a real party in interest entitled
to enforce the Contract, then the Agent will, at the Master Servicer's
expense and direction, take steps on behalf of the Agent as agent for
the Company and the Bank Investors to enforce the Contract, including
bringing suit in the name of the Agent for the benefit of the Company
and the Bank Investors.
Upon termination of a Contract as a result of a default by the
Obligor thereunder, the Master Servicer will use best efforts to
repossess or otherwise comparably covert the ownership of and to
re-lease or otherwise dispose of any related Equipment. Without
limiting the generality of the foregoing, the Master Servicer may
dispose of any such Equipment by purchasing such Equipment or by
selling such Equipment at a public or private sale to any of its
Affiliates for a purchase price equal to the fair market value thereof.
(c) The Master Servicer shall take and retain custody of the
Contracts and other Records in accordance with the terms and conditions
of this Agreement, all for the benefit of the Company and the Bank
Investors and subject to the lien thereon in favor of the Agent, as
agent for the Company and the Bank Investors. Within five Business Days
of its receipt of any Records, the Master Servicer shall review the
related Contract to verify that such Contract has been executed and has
no mutilated pages and to confirm (in reliance on the related contract
number and Obligor name) that such Contract is referenced on the
related list of Receivables. In order to facilitate the foregoing
review by the Master Servicer, in connection with each delivery of
Records hereunder to the Master Servicer, the Master Servicer shall
maintain an electronic file, in EXCEL or a comparable format, that
contains the related list of Receivables or which otherwise contains
the Contract number
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and the name of the Obligor with respect to each related Contract. If,
at the conclusion of such review, the Master Servicer shall determine
that such Contract is not executed or has mutilated pages, or that it
is not referenced on such list of Receivables, the Master Servicer
shall promptly notify the Seller, the Pledgors and the Agent of such
determination by providing a written report to such Persons setting
forth, with particularity, the lack of execution of such Contract, that
such Contract has mutilated pages, or the fact that such Contract was
not referenced on the related list of Receivables. In addition, unless
instructed otherwise by the Seller or the Agent within 10 days of the
Master Servicer's delivery of such report, the Master Servicer shall
return any Contract not referenced on such list of Receivables to the
Seller.
In taking and retaining custody of the Contracts and other
Records, the Master Servicer shall be deemed to be acting as the agent
of the Agent, as agent for the Company and as agent of the Bank
Investors. The Master Servicer shall clearly indicate that such Records
are the sole property of the applicable Pledgor and that such Pledgor
has granted a security interest therein to the Agent on behalf of the
Company. All Contracts shall be clearly segregated from any other
documents or instruments maintained by the Master Servicer and shall be
kept in fireproof vaults or cabinets at such locations as shall be
reasonably acceptable to the Agent. The Master Servicer shall notify
the Agent of any change in location by a written notice delivered at
least 45 days prior to such change.
(d) To the extent provided for in any Contract, the Master
Servicer will use its commercially reasonable efforts to collect all
payments with respect to amounts due for taxes and assessments relating
to the related Receivables or the Equipment and remit such amounts to
the appropriate governmental authority or insurer on or prior to the
date such payments are due.
(e) The Master Servicer will use its commercially reasonable
efforts to ensure that each Obligor maintains casualty insurance
coverage with respect to the related Equipment in an amount that is
consistent with prudent leasing industry standards. Additionally, the
Master Servicer will require that each Obligor maintain third-party
liability insurance for property damage during the term of
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each Contract in amounts and against risks customarily insured against
by the Obligor on equipment owned by it. Notwithstanding the preceding
two sentences, the Master Servicer, in accordance with the Credit and
Collection Policy, may not require insurance or may allow Obligors to
self-insure. If an Obligor fails to maintain casualty or property
damage liability insurance, the Master Servicer may purchase and
maintain such insurance on behalf of, and at the expense of, the
Obligor. In connection with its activities as Master Servicer the
Master Servicer agrees to present, on behalf of the Agent as agent for
the Company and the Bank Investors, claims to the insurer under each
casualty insurance policy and any such property damage liability
policy, and to settle, adjust and compromise such claims, in each case,
consistent with the terms of each such Contract. Such Master Servicer's
insurance policies with respect to the related Equipment will insure
against liability for personal injury relating to such Equipment
thereunder, will name the Seller as an insured thereunder and will
contain a breach of warranty clause.
(f) The Master Servicer will be required to pay all expenses
incurred by it in connection with its activities under this Agreement,
including fees and disbursements of the Master Servicer, independent
accountants, Taxes imposed on the Master Servicer, and expenses
incurred in connection with payments and reports pursuant to this
Agreement. The Master 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 Lock-Box Account. The Master 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.
(g) The Master Servicer shall, as soon as practicable
following receipt thereof, turn over to the Pledgors any collections
received hereunder or under any of the other Transaction Documents of
any indebtedness of any Person which is not on account of a Receivable.
(h) If the Master Servicer is not a Pledgor or the Seller or
an Affiliate of a Pledgor or the Seller, the Master Servicer, by giving
three Business Days' prior written notice to the Agent, may revise the
percentage used to calculate the Servicing Fee so long as the revised
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percentage will not result in a Servicing Fee that exceeds 110% of the
current Servicing Fee.
(i) The Master Servicer, if other than a Pledgor or the Seller
or an Affiliate of a Pledgor or the Seller, shall as soon as
practicable upon demand, deliver to the Seller all Records in its
possession which evidence or relate to indebtedness of an Obligor which
is not a Receivable.
(j) The Master Servicer will provide to the Agent, on or prior
to March 31 of each year, commencing March 31, 1999, an annual report
signed by a officer of the Master Servicer certifying that (a) a review
of the activities of the Master Servicer, and the Master 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 Master 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 Master
Servicer Default has occurred and is continuing (or if a Master
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 Master Servicer Default occurred during
such year and no notice thereof has been given to the Agent, specifying
such Master Servicer Default and the steps taken to remedy such event).
The Master Servicer will provide to the Agent, on or prior to
June 30 of each year, commencing June 30, 2000, a report of an
independent accounting firm acceptable to the Agent, which report will
be addressed to the Master Servicer and/or UniCapital Corporation and
prepared in accordance with a form of an agreed upon procedures letter
reasonably acceptable to the Agent to be delivered by the Master
Servicer and such accounting firm no later than December 31, 1999.
(k) Notwithstanding anything to the contrary contained in this
Article VI, the Master Servicer, if not the Pledgor, the Seller or any
Affiliate of a Pledgor or the Seller, shall have no obligation to
collect, enforce or take any other action described in this Article VI
with respect to any indebtedness that is not included in the Pledged
Interest other than to deliver to the Pledgors
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the collections and documents with respect to any such indebtedness as
described in Section 6.2 hereof.
(l) For each Payment Date the Master Servicer shall make an
advance (a "Servicer Advance") to the Collection Account in an amount
equal to any Contract Payment on any Receivable due during the
preceding Collection Period and not received on or prior to the
Determination Date immediately preceding such Payment Date.
Notwithstanding the preceding sentence, (i) the Master Servicer shall
be required to make a Servicer Advance if, and only if, the Master
Servicer determines (such determination to be conclusive and binding)
in good faith that such Servicer Advance will be recoverable from the
payment of future collections on, or the liquidation of, the Receivable
as to which such advance is to be made, and (ii) the Master Servicer's
obligation to make a Servicer Advance for any Receivable shall cease on
the day such Receivable becomes a Defaulted Receivable. The Master
Servicer will deposit any Servicer Advances into the Collection Account
on or prior to 11:00 a.m. (New York City time) on the related Payment
Date, in immediately available funds.
SECTION VI.3 Rights After Designation of New Master Servicer. At any
time following the designation of a Master Servicer (other than a Pledgor, the
Seller or any Affiliate of a Pledgor or the Seller) pursuant to Section 6.1
hereof:
(i) The Agent may direct that payment of all amounts payable
under any Receivable be made directly to the Agent or its designee.
(ii) The Pledgors shall, at the Agent's request and at the
Pledgors' expense, give notice of the Agent's, the Pledgors' and/or the
Bank Investors' interest in the Receivables to each Obligor and direct
that payments be made directly to the Agent or its designee.
(iii) The Pledgors shall, at the Agent's request, (A) deliver
all of the Records, to the Agent or its designee at a place selected by
the Agent or its designee, and (B) segregate all cash, checks and other
instruments received by it from time to time constituting Collections
of Receivables in a manner acceptable to the Agent and shall, promptly
upon
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receipt, remit all such cash, checks and instruments, duly endorsed or
with duly executed instruments of transfer, to the Agent or its
designee.
(iv) The Pledgors and the Master Servicer hereby authorize the
Agent to take any and all steps in the Pledgors' or the Master
Servicer's name and on behalf of the Pledgors and the Master Servicer
necessary or desirable, in the sole determination of the Agent, to
collect all amounts due under any and all Receivables, including,
without limitation, endorsing the Pledgors' or the Master Servicer's
name on checks and other instruments representing Collections and
enforcing such Receivables and the related Contracts.
SECTION VI.4 Master Servicer Default. The occurrence of any one or more
of the following events shall constitute a Master Servicer Default:
(a) (i) the Master Servicer shall fail in any material respect
to observe or perform any term, covenant or agreement hereunder (other
than as referred to in clause (ii) of this Section 6.4(a)) or under any
of the other Transaction Documents to which the Master Servicer is a
party or by which the Master Servicer is bound, and such failure shall
remain unremedied for a period of thirty (30) days after the earlier of
(x) the date it first became known to any officer of the Master
Servicer or (y) the date on which written notice thereof shall have
been given to the Master Servicer by any other party hereto, or (ii)
the Master Servicer shall fail to make any payment or deposit required
to be made by it hereunder when due, and such failure shall continue
for 48 hours; or
(b) any representation or warranty made by the Master Servicer
in this Agreement, any of the other Transaction Documents or in any
other document delivered pursuant hereto or thereto shall prove to have
been incorrect in any material respect when made or deemed made and
shall not have been cured and corrected for a period of 30 days after
the earlier of (x) the date it first became known to any officer of the
Master Servicer or (y) the date on which written notice thereof shall
have been given to the Master Servicer by any other party hereto; or
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(c) any certification or statement made by the Master Servicer
in this Agreement, in any of the other Transaction Documents or in any
certificate or report delivered by it pursuant to any of the foregoing
shall prove to have been incorrect in any material respect when made or
deemed made, and a Material Adverse Effect shall result which shall not
have been cured and corrected for a period of 30 days after the earlier
of (x) the date it first became known to any officer of the Master
Servicer or (y) the date on which written notice thereof shall have
been given to the Master Servicer by any other party hereto; or
(d) failure of the Master Servicer or any of its Subsidiaries
to pay when due any amounts due under any agreement under which any
Indebtedness greater than $5 million is governed; or the default by the
Master Servicer or any of its Subsidiaries in the performance of any
term, provision or condition contained in any agreement under which any
Indebtedness greater than $5 million was created or is governed,
regardless of whether such event is an "event of default" or "default"
under any such agreement; or any Indebtedness of the Master Servicer or
any of its Subsidiaries greater than $5 million shall be declared to be
due and payable or required to be prepaid (other than by a regularly
scheduled payment) prior to the scheduled date of maturity thereof; or
(e) any Event of Bankruptcy shall occur with respect to the
Master Servicer or any of its Subsidiaries; or
(f) there shall have occurred any material adverse change in
the operations of the Master Servicer since the end of the last fiscal
year ending prior to the date of its appointment as Master Servicer
hereunder which, in the commercially reasonably judgment of the Agent,
materially and adversely affects the Master Servicer's ability to
perform under this Agreement.
SECTION VI.5 Responsibilities of the Pledgors and the Seller. Anything
herein to the contrary notwithstanding, the Pledgors shall, and/or shall cause
the Seller to, (i) perform all of their obligations under the Contracts related
to the Receivables to the same extent as if interests in such Receivables had
not been pledged hereunder and under the Receivables Purchase Agreement and the
exercise by the Agent, the Company and the Bank Investors of their rights
hereunder
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and under the Receivables Purchase Agreements shall not relieve the Pledgors or
the Seller from such obligations and (ii) pay, or cause the Obligor or the
Master Servicer to pay, when due any taxes, including without limitation, any
sales taxes payable in connection with the Receivables and their creation and
satisfaction. Neither the Agent, the Company nor any of the Bank Investors shall
have any obligation or liability with respect to any Receivable or related
Contracts, nor shall it be obligated to perform any of the obligations of the
Seller thereunder.
SECTION VI.6 Limitation on Liability of the Master Servicer and Others.
Except as provided herein, neither the Master Servicer nor any of the directors
of officers or employees or agents of the Master Servicer shall be under any
liability to the Agent, the Company, the Bank Investors 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 Master
Servicer or any such Person against any liability which would otherwise be
imposed by reason of its willful misconduct, bad faith or negligence in the
performance of duties or by reason of its willful misconduct hereunder.
SECTION VI.7 The Master Servicer Not to Resign. The Master 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 Master Servicer could take to make the performance of its
duties hereunder permissible under applicable law. Any such determination
permitting the resignation of the Master Servicer shall be evidenced as to
clause (i) above by an opinion of legal counsel to such effect delivered to the
Agent. No such resignation shall become effective until a successor Master
Servicer shall have assumed the responsibilities and obligations of the Master
Servicer in accordance with Section 6.1.
SECTION VI.8 Acknowledgment of Guaranty. The parties hereto hereby
acknowledge that the Parent has guaranteed the performance of the Master
Servicer under this Agreement.
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ARTICLE VII
TERMINATION EVENTS
SECTION VII.1 Termination Events. The occurrence of any one or more of
the following events shall constitute a Termination Event:
(a) a Pledgor shall fail to make any payment or deposit to be
made by it hereunder or under the Receivables Purchase Agreement when
due hereunder or thereunder; or
(b) any representation or warranty made by a Pledgor, the
Seller or an Eligible Originator in, as applicable, this Agreement, the
Receivables Purchase Agreement, any other Transaction Document to which
it is a party or in any other document delivered pursuant hereto or
thereto shall prove to have been incorrect in any material respect when
made or deemed made and shall not have been cured and corrected for a
period of 30 days after the earlier of (x) the date it first became
known to any officer of a Pledgor or (y) the date on which written
notice thereof shall have been given to a Pledgor by any other party
hereto; or
(c) any certification or statement made by a Pledgor, the
Seller or an Eligible Originator in, as applicable, this Agreement, the
Receivables Purchase Agreement, any other Transaction Document to which
it is a party or in any or any certificate or report delivered by it
pursuant to any of the foregoing shall prove to have been incorrect in
any material respect when made or deemed made and a Material Adverse
Effect shall result which shall not have been cured and corrected for a
period of 30 days after the earlier of (x) the date it first became
known to any officer of a Pledgor or (y) the date on which written
notice thereof shall have been given to a Pledgor by any other party
hereto; or
(d) a Pledgor shall default in any material respect in the
performance of any payment or undertaking (other than those covered by
clause (a) above) (i) to be performed or observed under Section
5.1(a)(vi), 5.1(h), 5.1(l), 5.2(a), (c), (d), (e) or (f) or (ii) to be
performed or observed under any other provision hereof and such failure
shall remain unremedied for a period of thirty (30) days after the
earlier of (x) the date it first became known to any officer of a
Pledgor or (y) the date on which written notice thereof shall have been
given to the a Pledgor by any other party hereto; or
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(e) failure of a Pledgor to pay when due any amounts due under
any agreement to which such Person is a party and under which any
Indebtedness is governed; failure of the Parent or the Seller to pay
when due any amounts due under any agreement to which any such Person
is a party and under which any Indebtedness greater than $5,000,000 is
governed; or the default by a Pledgor, the Parent or the Seller in the
performance of any term, provision or condition contained in any
agreement to which any such Person is a party and under which any
Indebtedness owing by a Pledgor, the Parent or the Seller was created
or is governed and for which in the case of the Parent or the Seller
the amount of such Indebtedness is greater than $5,000,000; or any
Indebtedness owing by a Pledgor, the Parent or the Seller greater than
$5,000,000 shall be declared to be due and payable or required to be
prepaid (other than by a regularly scheduled payment) prior to the date
of maturity thereof; or
(f) any Event of Bankruptcy shall occur with respect to a
Pledgor, Parent or the Seller; or
(g) the Agent, on behalf of the Company and the Bank
Investors, shall, for any reason, fail or cease to have a valid and
perfected first priority security interest in the Affected Assets free
and clear of any Adverse Claims (except as otherwise contemplated
herein); or
(h) a Master Servicer Default shall have occurred; or
(i) the Receivables Purchase Agreement shall have terminated;
or
(j) a Revolving Credit Facility Default shall have occurred;
or
(k) a Pledgor or the Parent shall enter into any transaction
or merger whereby it is not the surviving entity and where, in the case
of the Parent, the surviving entity is not acceptable to the Agent; or
(l) there shall have occurred any Material Adverse Effect; or
(m) at any time, the Percentage Factor is greater than the
Maximum Percentage Factor and such imbalance is not cured on or prior
to the next succeeding Payment Date; or
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(n) after giving effect to any Payment Date, the Percentage
Factor is greater than the Maximum Percentage Factor;
(o) the Net Investment is greater than the Maximum Net
Investment; or
(p) at any time, the Net Asset Test is not met; or
(q) at any time following the first Take-Out, the sum of (i)
the Pool Market Value as of its date of calculation, (ii) the amount,
if any, which would be due to the Pledgors in the event that each
outstanding Hedging Agreement was terminated on such date and (iii) the
aggregate amount on deposit in the Accounts (other than the Reserve
Account) on such date is less than 102% of the sum of (1) the Net
Investment, (2) the aggregate unpaid Servicer Advances, (3) all accrued
and unpaid Carrying Costs as of such date, (4) all Hedge Payments
(including any termination payments in the event that each outstanding
Hedging Agreement was terminated on such date) due on such date and (5)
an amount equal to the positive difference, if any, between the
Specified Reserve Account Requirement as of such date and the balance
of the Reserve Account as of such date, and such deficiency shall
continue unremedied for ten (10) Business Days; or
(r) A Take-Out which reduces the Net Investment to an amount
that is 30% or less of the Net Investment immediately prior to such
Take-Out has not occurred for a period of twelve consecutive months
(the first such twelve-month period commencing as of the closing of the
1999-1 term securitization); or
(s) at any time the Receivables are not subject to Hedging
Agreements in accordance with Section 2.15, and such failure is not
cured within five Business Days of the earlier of (x) the date it first
became known to any officer of a Pledgor or (y) the date on which
written notice thereof shall have been given to the a Pledgor by any
other party hereto; or
(t) the Net Credit Loss for any calendar quarter shall exceed
3.0% on an annualized basis; or the three-month rolling average
Delinquency Ratio shall exceed 11.0%;
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provided, that such Delinquency Ratio test (i) shall not be effective
through and including the expiration of the first full three Collection
Periods following each Take-Out, (ii) for the fourth full Collection
Period following each Take-Out shall be the Delinquency Ratio for such
Collection Period and (ii) for the fifth full Collection Period
following each Take-Out shall be the average of the Delinquency Ratio
for such Collection Period and the immediately preceding Collection
Period; or
(u) on the date on which the first Take-Out is consummated the
amount on deposit in the Reserve Account is less than the Specified
Reserve Account Requirement (based upon the most recent available
data), provided, that a Termination Event shall not occur under this
Section 7.1(u) if on such date the Net Investment is reduced by an
amount equal to any such deficiency in the Reserve Account.
SECTION VII.2 Termination. (a) Upon the occurrence of any Termination
Event, the Agent may, or at the direction of the Majority Investors shall, by
notice to the Pledgors and the Master Servicer declare the Termination Date to
have occurred; provided that in the case of any event described in Section
7.1(f) or 7.1(g) above, the Termination Date shall be deemed to have occurred
automatically upon the occurrence of such event. Upon any such declaration or
automatic occurrence, the Agent 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,
all of which rights shall be cumulative.
(b) At all times after the declaration or automatic occurrence of the
Termination Date pursuant to Section 7.2(a), the Base Rate plus 2.00% shall be
the Tranche Rate applicable to the Net Investment for all existing and future
Tranches.
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ARTICLE VIII
INDEMNIFICATION; EXPENSES; RELATED MATTERS
SECTION VIII.1 Indemnities by the Pledgors. Without limiting any other
rights which the Agent, the Company or each Bank Investors may have hereunder or
under applicable law, each Pledgor hereby agrees to indemnify the Company, the
Bank Investors, the Agent, the Administrative Agent, the Collateral Agent, the
Liquidity Provider and the Credit Support Provider and any successors and
permitted assigns and their respective officers, directors and employees
(collectively, "Indemnified Parties") from and against any and all damages,
losses, claims, liabilities, costs and expenses, including, without limitation,
reasonable external attorneys' fees (which such attorneys may be employees of
the Liquidity Provider, the Credit Support Provider, the Agent, the
Administrative Agent or the Collateral Agent, as applicable) and disbursements
(all of the foregoing being collectively referred to as "Indemnified Amounts")
awarded against or incurred by any of them in any action or proceeding between a
Pledgor, the Parent or the Master Servicer (if an Affiliate of the Pledgors) and
any of the Indemnified Parties or between any of the Indemnified Parties and any
third party or otherwise arising out of or as a result of this Agreement, the
other Transaction Documents, the ownership or maintenance, either directly or
indirectly, by the Agent, the Company or any Bank Investor of the Pledged
Interest or any of the other transactions contemplated hereby or thereby;
excluding, however, (i) Indemnified Amounts to the extent resulting from gross
negligence or willful misconduct on the part of an Indemnified Party, (ii)
recourse (except as otherwise specifically provided in this Agreement) for
uncollectible or uncollected Receivables or (iii) any Indemnified Amounts
relating to actions or omissions on the part of the Seller which would otherwise
constitute Indemnified Amounts. Without limiting the generality of the
foregoing, each Pledgor shall indemnify each Indemnified Party for Indemnified
Amounts relating to or resulting from:
(i) any representation or warranty made by the Pledgors or the
Master Servicer (if an Affiliate of the Pledgors) or any officers of
the Pledgors or the Master Servicer under or in connection with this
Agreement, the Receivables Purchase Agreement, any of the other
Transaction Documents, any Investor Report or any other information or
report delivered by the Pledgors or the Master Servicer pursuant
hereto, which shall have been false or incorrect in any material
respect when made or deemed made;
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(ii) the failure by either Pledgor or the Master Servicer (if
an Affiliate of the Pledgors) to comply with any applicable law, rule
or regulation with respect to any Receivable or the related Contract,
or the nonconformity of any Receivable or the related Contract with any
such applicable law, rule or regulation;
(iii) the failure to create or maintain a valid and perfected
first priority security interest in favor of the Agent, for the benefit
of the Company and the Bank Investors, in the Affected Assets as
contemplated pursuant to Section 10.11, free and clear of any Adverse
Claim;
(iv) the failure to file, or any delay in filing, financing
statements, continuation statements, or other similar instruments or
documents under the UCC of any applicable jurisdiction or other
applicable laws with respect to any of the Affected Assets;
(v) any dispute, claim, offset or defense (other than
discharge in bankruptcy) of the Obligor to the payment of any
Receivable (including, without limitation, a defense based on such
Receivable or the related Contract not being the 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
merchandise or services related to such Receivable or the furnishing or
failure to furnish such merchandise or services; provided that the
indemnification provided hereby shall not extend to credit losses on
the Affected Assets or any payment failure resulting solely from such
credit losses;
(vi) any failure of the Master Servicer (if an Affiliate of
the Pledgors) to perform its duties or obligations in accordance with
the provisions hereof; or
(vii) 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 which is
the subject of any Receivable;
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(viii) the transfer of an interest in any Receivable other
than an Eligible Receivable;
(ix) the failure by a Pledgor or the Master Servicer (if an
Affiliate of the Pledgors) to comply with any term, provision or
covenant contained in this Agreement or any of the other Transaction
Documents to which it is a party or to perform any of its respective
duties under the Contracts; provided that the indemnification provided
hereby shall not extend to credit losses on the Affected Assets or any
payment failure resulting solely from such credit losses;
(x) the failure of either Pledgor to pay when due any taxes,
including without limitation, sales, excise or personal property taxes
payable in connection with any of the Receivables;
(xi) any repayment by any Indemnified Party of any amount
previously distributed in reduction of Net Investment which such
Indemnified Party believes in good faith is required to be made;
(xii) the commingling by the Pledgors or the Master Servicer
(if an Affiliate of the Pledgors) of Collections of Receivables at any
time with other funds;
(xiii) any investigation, litigation or proceeding related to
this Agreement, any of the other Transaction Documents, the use of
proceeds of Advance Amounts by the Pledgors, the ownership of Pledged
Interests, or any Receivable, Related Security or Contract;
(xiv) any inability to obtain any judgment in or utilize the
court or other adjudication system of, any state in which an Obligor
may be located as a result of the failure of a Pledgor to qualify to do
business or file any notice of business activity report or any similar
report;
(xv) any failure of a Pledgor to give reasonably equivalent
value to the Seller in consideration of the purchase by the Pledgor
from the Seller of any Receivable, or any attempt by any Person to
void,
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rescind or set-aside any such transfer under statutory provisions or
common law or equitable action, including, without limitation, any
provision of the Bankruptcy Code; or
(xvi) any action taken by a Pledgor or the Master Servicer (if
an Affiliate of the Pledgors) in the enforcement or collection of any
Receivable;
provided, however, that if the Company enters into agreements for the purchase
of interests in receivables from one or more Other Conduit Participants, the
Company shall allocate such Indemnified Amounts which are in connection with the
Liquidity Provider Agreement, the Credit Support Agreement or the credit support
furnished by the Credit Support Provider to the Pledgors and each Other Conduit
Participant; and provided, further, that if such Indemnified Amounts are
attributable to the Pledgors, the Seller or the Master Servicer and not
attributable to any Other Conduit Participant, the Pledgors shall be solely
liable for such Indemnified Amounts or if such Indemnified Amounts are
attributable to Other Conduit Participants and not attributable to the Pledgors,
the Seller or the Master Servicer, such Other Conduit Participants shall be
solely liable for such Indemnified Amounts.
SECTION VIII.2 Indemnity for Taxes, Reserves and Expenses. (a) If after
the date hereof, the adoption of any Law or bank regulatory guideline or any
amendment or change in the interpretation of any existing or future Law or bank
regulatory guideline by any Official Body charged with the administration,
interpretation or application thereof, or the compliance with any directive of
any Official Body (in the case of any bank regulatory guideline, whether or not
having the force of Law):
(i) shall subject any Indemnified Party to any tax, duty or
other charge (other than Excluded Taxes) with respect to this
Agreement, the other Transaction Documents, the maintenance or
financing of the Pledged Interest, the Receivables or payments of
amounts due hereunder, or shall change the basis of taxation of
payments to any Indemnified Party of amounts payable in respect of this
Agreement, the other Transaction Documents, maintenance or financing of
the Pledged Interest, the Receivables or payments of amounts due
hereunder or its obligation to advance funds hereunder, under the
Liquidity Provider Agreement or the credit
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support furnished by the Credit Support Provider or otherwise in
respect of this Agreement, the other Transaction Documents, maintenance
or financing of the Pledged Interest or the Receivables (except for
changes in the rate of general corporate, franchise, net income or
other income tax imposed on such Indemnified Party by any jurisdiction;
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without limitation,
any such requirement imposed by the Board of Governors of the Federal
Reserve System) against assets of, deposits with or for the account of,
or credit extended by, any Indemnified Party or shall impose on any
Indemnified Party or on the United States market for certificates of
deposit or the London interbank market any other condition affecting
this Agreement, the other Transaction Documents, the maintenance or
financing of the Pledged Interest, the Receivables or payments of
amounts due hereunder or its obligation to advance funds hereunder,
under the Liquidity Provider Agreement or the credit support provided
by the Credit Support Provider or otherwise in respect of this
Agreement, the other Transaction Documents, the maintenance or
financing of the Pledged Interest or the Receivables; or
(iii) imposes upon any Indemnified Party any other expense
(including, without limitation, reasonable external attorneys' fees and
expenses, and expenses of litigation or preparation therefor in
contesting any of the foregoing) with respect to this Agreement, the
other Transaction Documents, the maintenance or financing of the
Pledged Interest, the Receivables or payments of amounts due hereunder
or its obligation to advance funds hereunder under the Liquidity
Provider Agreement or the credit support furnished by the Credit
Support Provider or otherwise in respect of this Agreement, the other
Transaction Documents, the maintenance or financing of the Pledged
Interests or the Receivables,
and the result of any of the foregoing is to increase the cost to such
Indemnified Party with respect to this Agreement, the other Transaction
Documents, the ownership, maintenance or financing of the Pledged Interest, the
Receivables, the obligations hereunder,
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the funding of any purchases hereunder, the Liquidity Provider Agreement or the
Credit Support Agreement, by an amount deemed by such Indemnified Party to be
material, then, within ten (10) days after written demand (including an
explanation of the basis for such demand) by such Indemnified Party through the
Agent, the Pledgors shall pay to the Agent, for the benefit of such Indemnified
Party, such additional amount or amounts as will compensate such Indemnified
Party for such increased cost or reduction.
(b) If any Indemnified Party shall have determined that after
the date hereof, the adoption of any applicable Law or bank regulatory
guideline regarding capital adequacy, or any change therein, or any
change in the interpretation thereof by any Official Body, or any
directive regarding capital adequacy (in the case of any bank
regulatory guideline, whether or not having the force of law) of any
such Official Body, has or would have the effect of reducing the rate
of return on capital of such Indemnified Party (or its parent) as a
consequence of such Indemnified Party's obligations hereunder or with
respect hereto to a level below that which such Indemnified Party (or
its parent) could have achieved but for such adoption, change, request
or directive (taking into consideration its policies with respect to
capital adequacy) by an amount deemed by such Indemnified Party to be
material, then from time to time, within ten (10) days after demand by
such Indemnified Party through the Agent, the Pledgors shall pay to the
Agent, for the benefit of such Indemnified Party, such additional
amount or amounts as will compensate such Indemnified Party (or its
parent) for such reduction.
(c) The Agent will promptly notify the Pledgors of any event
of which it has knowledge, occurring after the date hereof, which will
entitle an Indemnified Party to compensation pursuant to this Section
8.2. A notice (including an explanation of the basis for such demand)
by the Agent or the applicable Indemnified Party claiming compensation
under this Section and setting forth the additional amount or amounts
to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, the Agent or any applicable
Indemnified Party may use any reasonable averaging and attributing
methods consistent with those used for similar transactions.
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(d) With respect to any liability to any Indemnified Party for
any amounts under this Section 8.2 ("Section 8.2 Costs"), the Agent
agrees that it shall, upon the incurring of any Section 8.2 Costs, take
such steps as may be reasonable, and consult with the Pledgors in good
faith with a view toward agreeing to alternative arrangements, for
avoiding or mitigating (consistent with the internal policies and
governance and legal and regulatory restrictions of the applicable
Indemnified Party and without requiring the incurring of any additional
costs by, or otherwise being disadvantageous to, such party) additional
Section 8.2 Costs.
(e) Anything in this Section 8.2 to the contrary
notwithstanding, if the Company enters into agreements for the
acquisition of interests in receivables from one or more Other Conduit
Participants, the Company shall allocate any Section 8.2 costs which
are in connection with the Liquidity Provider Agreement, the Credit
Support Agreement or the credit support provided by the Credit Support
Provider to the Pledgors and each Other Conduit Participant; provided,
however, that if such Section 8.2 Costs are attributable to the
Pledgors, the Seller or the Master Servicer and not attributable to any
Other Conduit Participant, the Pledgors shall be solely liable for such
Section 8.2 Costs or if such Section 8.2 Costs are attributable to
Other Conduit Participants and not attributable to the Pledgors, the
Seller or the Master Servicer, such Other Conduit Participants shall be
solely liable for such Section 8.2 Costs.
SECTION VIII.3 Taxes. All payments made hereunder by the Pledgors or
the Master Servicer (each, a "payor") to the Company, any Bank Investor or the
Agent (each, a "recipient") shall be made free and clear of and without
deduction for any present or future income, excise, stamp or franchise taxes and
any other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority on any recipient (or any assignee of
such parties) (such non-excluded items being called "Taxes"), but excluding
franchise taxes and taxes imposed on or measured by the recipient's net income
or gross receipts ("Excluded Taxes"). In the event that any withholding or
deduction from any payment made by the payor hereunder is required in respect of
any Taxes, then such payor shall:
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(a) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(b) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authority; and
(c) pay to the recipient such additional amount or amounts as
is necessary to ensure that the net amount actually received by the
recipient will equal the full amount such recipient would have received
had no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against any recipient with respect
to any payment received by such recipient hereunder, the recipient may pay such
Taxes and the payor will promptly pay such additional amounts (including any
penalties, interest or expenses) as shall be necessary in order that the net
amount received by the recipient after the payment of such Taxes (including any
Taxes on such additional amount) shall equal the amount such recipient would
have received had such Taxes not been asserted.
If the payor fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the recipient the required receipts or other
required documentary evidence, the payor shall indemnify the recipient for any
incremental Taxes, interest, or penalties that may become payable by any
recipient as a result of any such failure.
SECTION VIII.4 Other Costs, Expenses and Related Matters. (a) The
Pledgors agree, upon receipt of a written invoice, to pay and to save the
Company, the Bank Investors (subject to Section 9.9(b)) and the Agent harmless
against liability for the payment of, all reasonable out-of-pocket documented
expenses (including, without limitation, reasonable attorneys', accountants' and
other third parties' fees and reasonable expenses, any filing fees and expenses
incurred by officers or employees of the Company, the Bank Investors and/or the
Agent) or intangible, documentary or recording taxes incurred by or on behalf of
the Company, any Bank Investor and the Agent (i) in connection with the
negotiation, execution, delivery and preparation of this Agreement, the other
Transaction Documents and any documents or instruments delivered pursuant hereto
and thereto and the transactions contemplated hereby or thereby (including,
without limitation, the perfection or protection of the Pledged Interest) and
(ii) from time to time
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(a) relating to any amendments, waivers or consents under this Agreement and the
other Transaction Documents, (b) arising in connection with the Company's, any
Bank Investor's, the Agent's or the Collateral Agent's enforcement or
preservation of rights (including, without limitation, the perfection and
protection of the Pledged Interest under this Agreement), or (c) arising in
connection with any audit, dispute, disagreement, litigation or preparation for
litigation involving this Agreement or any of the other Transaction Documents
(all of such amounts, collectively, "Transaction Costs").
(b) The Pledgors shall pay the Agent, for the account of the Company
and the Bank Investors, as applicable, on demand any Early Collection Fee due on
account of the reduction of a Tranche on a day prior to the last day of its
Tranche Period.
SECTION VIII.5 [Reserved.]
SECTION VIII.6 Pledgor Liability. All amounts due or required to be
paid by, and all other obligations of the Pledgors under this Article VIII shall
be joint and several obligations of the Pledgors.
ARTICLE IX
THE AGENT; BANK COMMITMENT
SECTION IX.1 Authorization and Action. The Company and each Bank
Investor hereby irrevocably appoints and authorizes the Agent to act as its
agent under this Agreement and the other Transaction Documents with such powers
and discretion as are specifically delegated to the Agent by the terms of this
Agreement and the other Transaction Documents, together with such other powers
as are reasonably incidental thereto. The Agent (which term as used in this
sentence and in Section 9.5 and the first sentence of Section 9.6 hereof shall
include its affiliates and its own and its affiliates' officers, directors,
employees, and agents): (a) shall not have any duties or responsibilities except
those expressly set forth in this Agreement and shall not be a trustee or
fiduciary for the Company or any Bank Investor; (b) shall not be responsible to
the Company or any Bank Investor for any recital, statement, representation, or
warranty (whether written or oral) made in or in connection with any Transaction
Document or any certificate or other document referred to or provided for in, or
received by any of them under, any Transaction Document, or for the value,
validity, effectiveness,
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genuineness, enforceability, or sufficiency of any Transaction Document, or any
other document referred to or provided for therein or for any failure by any of
the Pledgor, the Seller or the Master Servicer or any other Person to perform
any of its obligations thereunder; (c) shall not be responsible for or have any
duty to ascertain, inquire into, or verify the performance or observance of any
covenants or agreements by any of the Pledgors, the Seller or the Master
Servicer or the satisfaction of any condition or to inspect the property
(including the books and records) of any of the Pledgor, the Seller or the
Master Servicer or any of their Subsidiaries or affiliates; (d) shall not be
required to initiate or conduct any litigation or collection proceedings under
any Transaction Document; and (e) shall not be responsible for any action taken
or omitted to be taken by it under or in connection with any Transaction
Document, except for its own gross negligence or willful misconduct. The Agent
may employ agents and attorneys-in-fact and shall not be responsible for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care.
SECTION IX.2 Agent's Reliance, Etc. The Agent shall be entitled to rely
upon any certification, notice, instrument, writing, or other communication
(including, without limitation, any thereof by telephone or telecopy) believed
by it to be genuine and correct and to have been signed, sent or made by or on
behalf of the proper Person or Persons, and upon advice and statements of legal
counsel (including counsel for any of the Pledgors, the Seller or the Master
Servicer), independent accountants, and other experts selected by the Agent. As
to any matters not expressly provided for by this Agreement, the Agent shall not
be required to exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Investors, and
such instructions shall be binding on the Company and all of the Bank Investors;
provided, however, that the Agent shall not be required to take any action that
exposes the Agent to personal liability or that is contrary to any Transaction
Document or applicable law or unless it shall first be indemnified to its
satisfaction by the Bank Investors against any and all liability and expense
which may be incurred by it by reason of taking any such action.
SECTION IX.3 Termination Events. The Agent shall not be deemed to have
knowledge or notice of the occurrence of a Termination Event or an event which
but for the lapse of time or
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the giving of notice, or both, would constitute a Termination Event, unless the
Agent has received written notice specifying such event and stating that such
notice is a "Notice of Termination Event." In the event that the Agent receives
such a notice of the occurrence of a Termination Event or potential Termination
Event, the Agent shall give prompt notice thereof to the Company. The Agent
shall (subject to Section 9.2 hereof) take such action with respect to such
Termination Event or potential Termination Event as shall reasonably be directed
by the Majority Investors, provided that, unless and until the Agent shall have
received such directions, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such
Termination Event or potential Termination Event as it shall deem advisable in
the best interest of the Company and the Bank Investors.
SECTION IX.4 Rights as Bank Investor. With respect to its Commitment,
Bank of America (and any successor acting as Agent) in its capacity as a Bank
Investor hereunder shall have the same rights and powers hereunder as any other
Bank Investor and may exercise the same as though it were not acting as the
Agent, and the term "Bank Investor" or "Bank Investors" shall, unless the
context otherwise indicates, include the Agent in its individual capacity. Bank
of America (and any successor acting as Agent) and its affiliates may (without
having to account therefor to the Company or any Bank Investor) accept deposits
from, lend money to, make investments in, provide services to, and generally
engage in any kind of lending, trust, or other business with any of the
Pledgors, the Seller and the Master Servicer or any of their Subsidiaries or
affiliates as if it were not acting as Agent, and Bank of America (and any
successor acting as Agent) and its affiliates may accept fees and other
consideration from any of the Pledgors, the Seller and the Master Servicer or
any of their Subsidiaries or affiliates for services in connection with this
Agreement or otherwise without having to account for the same to the Company or
any Bank Investor.
SECTION IX.5 Indemnification of the Agent. The Bank Investors agree to
indemnify the Agent (to the extent not reimbursed by the Pledgors), ratably in
accordance with their Pro Rata Shares, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorneys' fees), or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against the Agent
(including by the Company or any Bank Investor) in any way relating to or
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arising out of this Agreement or any other Transaction Document or the
transactions contemplated thereby or any action taken or omitted by the Agent
under this Agreement or any other Transaction Document, provided that no Bank
Investors shall be liable for any of the foregoing to the extent they arise from
the gross negligence or willful misconduct of the Person indemnified. Without
limitation of the foregoing, the Bank Investors agree to reimburse the Agent,
ratably in accordance with their Pro Rata Shares, promptly upon demand for any
out-of-pocket expenses (including attorneys' fees) incurred by the Agent in
connection with the administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement and the
other Transaction Documents, to the extent that such expenses are incurred in
the interests of or otherwise in respect of the Bank Investors hereunder and/or
thereunder and to the extent that the Agent is not reimbursed for such expenses
by the Pledgors. The agreements contained in this Section shall survive payment
in full of the Net Investment and all other amounts payable under this
Agreement.
SECTION IX.6 Non-Reliance. The Company and each Bank Investor agrees
that it has, independently and without reliance on the Agent or the Company or
any Bank Investor, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Pledgors, the Seller, the
Eligible Originators and the Master Servicer and their Subsidiaries and decision
to enter into this Agreement and that it will, independently and without
reliance upon the Agent, the Company or any Bank Investor, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own analysis and decisions in taking or not taking action under the
Transaction Documents. Except for notices, reports, and other documents and
information expressly required to be furnished to the Company and the Bank
Investors by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Company with any credit or other information
concerning the affairs, financial condition, or business of any of the Pledgors,
the Seller or the Master Servicer or any of their Subsidiaries or affiliates
that may come into the possession of the Agent or any of its affiliates.
SECTION IX.7 Resignation of Agent. The Agent may resign at any time by
giving notice thereof to the Company, the Bank Investors and the Pledgors. Upon
any such resignation, the Majority Investors shall have the right to appoint a
successor
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Agent. If no successor Agent shall have been so appointed by the Majority
Investors and shall have accepted such appointment within thirty (30) days after
the retiring Agent's giving of notice of resignation, then the retiring Agent
may, on behalf of the Company and the Bank Investors, appoint a successor Agent
which shall be a commercial bank organized under the laws of the United States
of America having combined capital and surplus of at least $100,000,000. Upon
the acceptance of any appointment as Agent hereunder by a successor, such
successor shall thereupon succeed to and become vested with all the rights,
powers, discretion, privileges, and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations hereunder.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Article IX 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 Agent.
SECTION IX.8 Payments by the Agent. Unless specifically allocated to a
Bank Investor pursuant to the terms of this Agreement, all amounts received by
the Agent on behalf of the Bank Investors shall be paid by the Agent to the Bank
Investors (at their respective accounts specified in their respective Assignment
and Assumption Agreements) in accordance with their respective related pro rata
interests in the Net Investment on the Business Day received by the Agent,
unless such amounts are received after 12:00 noon on such Business Day, in which
case the Agent shall use its reasonable efforts to pay such amounts to the Bank
Investors on such Business Day, but, in any event, shall pay such amounts to the
Bank Investors in accordance with their respective related pro rata interests in
the Net Investment not later than the following Business Day.
SECTION IX.9 Bank Commitment; Assignment to Bank Investors.
(a) Bank Commitment. At any time on or prior to the Commitment
Termination Date, in the event that the Company does not effect a
Pledge as requested under Section 2.2(a), then at any time, the
Pledgors shall have the right to require the Company to assign its
interest in the Net Investment in whole to the Bank Investors pursuant
to this Section 9.9. In addition, if at any time on or prior to the
Commitment Termination Date (i) a Termination Event occurs that results
in the Termination Date or (ii) the Company elects to give notice to
the Pledgors of a Reinvestment Termination Date, the Pledgors hereby
request and direct
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that the Company assign its interest in the Net Investment in whole to
the Bank Investors pursuant to this Section 9.9 and the Pledgors hereby
agree jointly and severally to pay the amounts described in Section
9.9(d) below. Provided that the Net Asset Test is satisfied, upon any
such election by the Company or any such request by the Pledgors, the
Company shall make such assignment and the Bank Investors shall accept
such assignment and shall assume all of the Company's obligations
hereunder. In connection with any assignment from the Company to the
Bank Investors pursuant to this Section 9.9, each Bank Investor shall,
on the date of such assignment, pay to the Company an amount equal to
its Assignment Amount. In addition, at any time on or prior to the
Commitment Termination Date, the Pledgors shall have the right to
request funding under this Agreement directly from the Bank Investors;
provided, however, that at such time all conditions precedent set forth
herein for an Advance shall be satisfied. In connection with such
funding by the Bank Investors, the Bank Investors shall accept the
assignment of all of the Company's interest in the Net Investment and
assume all of the Company's obligations hereunder concurrently with or
prior to any such Advance. Upon any assignment by the Company to the
Bank Investors contemplated hereunder, the Company shall cease to make
any additional Pledges hereunder.
(b) Assignment. No Bank Investor may assign all or a portion
of its interests in the Net Investment, the Receivables, and Related
Security with respect thereto and its rights and obligations hereunder
to any Person unless approved in writing by the Parent (which consent
will not be unreasonably withheld), the Administrative Agent, on behalf
of the Company, and the Agent (which consent will not be unreasonably
withheld). In the case of an assignment by the Company to the Bank
Investors or by a Bank Investor to another Person, the assignor shall
deliver to the assignee(s) an Assignment and Assumption Agreement in
substantially the form of Exhibit G attached hereto, duly executed,
assigning to the assignee a pro rata interest in the Net Investment,
the Receivables and Related Security with respect thereto and the
assignor's rights and obligations hereunder and the assignor shall
promptly execute and deliver all further instruments and documents, and
take all further action, that the assignee may reasonably request, in
order to protect, or more fully evidence the assignee's right, title
and interest in and to
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such interest and to enable the Agent, on behalf of such assignee, to
exercise or enforce any rights hereunder and under the other
Transaction Documents to which such assignor is or, immediately prior
to such assignment, was a party. Upon any such assignment, (i) the
assignee shall have all of the rights and obligations of the assignor
hereunder and under the other Transaction Documents to which such
assignor is or, immediately prior to such assignment, was a party with
respect to such interest for all purposes of this Agreement and under
the other Transaction Documents to which such assignor is or,
immediately prior to such assignment, was a party (it being understood
that the Bank Investors, as assignees, shall (x) be obligated to fund
Pledges under Section 2.2(a) in accordance with the terms thereof,
notwithstanding that the Company was not so obligated and (y) not have
the right to elect the commencement of the amortization of the Net
Investment pursuant to the definition of "Reinvestment Termination
Date", notwithstanding that the Company had such right) and (ii) the
assignor shall relinquish its rights with respect to such interest for
all purposes of this Agreement and under the other Transaction
Documents to which such assignor is or, immediately prior to such
assignment, was a party. No such assignment shall be effective unless a
fully executed copy of the related Assignment and Assumption Agreement
shall be delivered to the Agent and the Pledgor. All Transaction Costs
incurred in connection with the initial assignment hereunder of Bank of
America's Pro Rata Share of its interests as Bank Investor shall be
borne by the Pledgors, but the costs associated with any other such
assignment by Bank Investors shall not be borne by the Pledgors. No
Bank Investor shall assign any portion of its Commitment hereunder
without also simultaneously assigning an equal portion of its interest
in the Liquidity Provider Agreement.
(c) Effects of Assignment. By executing and delivering an
Assignment and Assumption Agreement, the assignor and 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
Assumption Agreement, the assignor 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, the other Transaction Documents or any other instrument or
document furnished
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pursuant hereto or thereto or the execution, legality, validity,
enforceability, genuineness, sufficiency or value or this Agreement,
the other Transaction Documents or any such other instrument or
document; (ii) the assignor makes no representation or warranty and
assumes no responsibility with respect to the financial condition of
the Pledgor, the Seller or the Master Servicer or the performance or
observance by the Pledgor, the Seller or the Master Servicer of any of
their respective obligations under this Agreement, the Receivables
Purchase Agreement, the other Transaction Documents or any other
instrument or document furnished pursuant hereto; (iii) such assignee
confirms that it has received a copy of this Agreement, the Receivables
Purchase Agreement and such other instruments, documents and
information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Assumption
Agreement and to purchase such interest; (iv) such assignee will,
independently and without reliance upon the Agent, or any of its
Affiliates, or the assignor and based on such agreements, 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 and the other Transaction Documents; (v) such assignee
appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement, the other
Transaction Documents and any other instrument or document furnished
pursuant hereto or thereto as are delegated to the Agent by the terms
hereof or thereof, together with such powers as are reasonably
incidental thereto and to enforce its respective rights and interests
in and under this Agreement, the other Transaction Documents, the
Receivables, the Contracts and the Related Security; (vi) such assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement and the other
Transaction Documents are required to be performed by it as the
assignee of the assignor; and (vii) such assignee agrees that it will
not institute against the Company any proceeding of the type referred
to in Section 10.9 prior to the date which is one year and one day
after the payment in full of all Commercial Paper issued by the
Company.
(d) Pledgors' Obligation to Pay Certain Amounts; Additional
Assignment Amount. The Pledgors shall pay to the Agent, for the account
of the Company, from the sources set forth in Section 2.5, in
connection with any assignment by
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the Company to the Bank Investors pursuant to this Section 9.9, an
aggregate amount equal to all Discount to accrue through the end of
each outstanding Tranche Period plus all other Aggregate Unpaids (other
than the Net Investment). To the extent that such Discount relates to
interest or discount on Related Commercial Paper, if the Pledgors fail
to make payment of such amounts at or prior to the time of assignment
by the Company to the Bank Investors, such amount shall be paid by the
Bank Investors (in accordance with their respective Pro Rata Shares) to
the Company as additional consideration for the interests assigned to
the Bank Investors and the amount of the "Net Investment" hereunder
held by the Bank Investors shall be increased by an amount equal to the
additional amount so paid by the Bank Investors.
(e) Administration of Agreement After Assignment. After any
assignment by the Company to the Bank Investors pursuant to this
Section 9.9 (and the payment of all amounts owing to the Company in
connection therewith), all rights of the Administrative Agent and the
Collateral Agent set forth herein shall be deemed to be afforded to the
Agent on behalf of the Bank Investors instead of either such party.
(f) Payments. After any assignment by the Company to the Bank
Investors pursuant to this Section 9.9, all payments to be made
hereunder by the Pledgors or the Master Servicer to the Company shall
be made to the Agent's account as such account shall have been notified
to the Pledgors and the Master Servicer.
(g) Downgrade of Bank Investor. If at any time prior to any
assignment by the Company to the Bank Investors as contemplated
pursuant to this Section 9.9, the short term debt rating of any Bank
Investor shall be "A-2" or "P-2" from Standard & Poor's or Moody's,
respectively, with negative credit implications, such Bank Investor,
upon request of the Agent, shall, within 30 days of such request,
assign its rights and obligations hereunder to another financial
institution (which institution's short term debt shall be rated at
least "A-2" and "P-2" from Standard & Poor's and Moody's, respectively,
and which shall not be so rated with negative credit implications). If
the short term debt rating of a Bank Investor shall be "A-3" or "P-3",
or lower, from Standard & Poor's or Moody's, respectively (or such
rating shall have been withdrawn by Standard & Poor's
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or Moody's), such Bank Investor, upon request of the Agent, shall,
within five Business Days of such request, assign its rights and
obligations hereunder to another financial institution (which
institution's short term debt shall be rated at least "A-2" and "P-2"
from Standard & Poor's and Moody's, respectively, and which shall not
be so rated with negative credit implications). In either such case, if
any such Bank Investor shall not have assigned its rights and
obligations under this Agreement within the applicable time period
described above, the Company shall have the right to require such Bank
Investor to accept the assignment of such Bank Investor's Pro Rata
Share of the Net Investment; such assignment shall occur in accordance
with the applicable provisions of this Section 9.9. Such Bank Investor
shall be obligated to pay to the Company, in connection with such
assignment, in addition to the Pro Rata Share of the Net Investment, an
amount equal to the interest component of the outstanding Commercial
Paper issued to fund the portion of the Net Investment being assigned
to such Bank Investor, as reasonably determined by the Agent, such
amount when paid to constitute an addition to the Net Investment held
by such Bank Investor. Notwithstanding anything contained herein to the
contrary, upon any such assignment to a downgraded Bank Investor as
contemplated pursuant to the immediately preceding sentence, the
aggregate available amount of the Facility Limit, solely as it relates
to new Pledges by the Company, shall be reduced by the amount of unused
Commitment of such downgraded Bank Investor; it being understood and
agreed, that nothing in this sentence or the two preceding sentences
shall affect or diminish in any way any such downgraded Bank Investor's
Commitment to the Pledgors or such downgraded Bank Investor's other
obligations and liabilities hereunder and under the other Transaction
Documents.
ARTICLE X
MISCELLANEOUS
SECTION X.1 Term of Agreement. This Agreement shall terminate on the
date following the Termination Date upon which the Net Investment has been
reduced to zero, all accrued Discount and Servicing Fees have been paid in full
and all other Aggregate Unpaids have been paid in full, in each case, in cash;
provided that (i) the rights and remedies of the Agent, the Company, the
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Bank Investors and the Administrative Agent with respect to any representation
and warranty made or deemed to be made by the Pledgors pursuant to this
Agreement, (ii) the indemnification and payment provisions of Article VIII, and
(iii) the agreement set forth in Section 10.9 hereof, shall be continuing and
shall survive any termination of this Agreement.
SECTION X.2 Waivers; Amendments. (a) No failure or delay on the part of
the Agent, the Company, the Administrative Agent or any Bank Investor in
exercising any power, right or remedy under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or remedy preclude any other further exercise thereof or the exercise of
any other power, right or remedy. The rights and remedies herein provided shall
be cumulative and nonexclusive of any rights or remedies provided by law.
(b) Any provision of this Agreement or any other Transaction Document
may be amended or waived if, but only if, such amendment or waiver is in writing
and is signed by the Pledgors, the Master Servicer, the Company and the Majority
Investors (and, if Article IX or the rights or duties of the Agent are affected
thereby, by the Agent); provided that no such amendment or waiver shall, unless
signed by each Bank Investor directly affected thereby, (i) increase the
Commitment of a Bank Investor, (ii) reduce the Net Investment or rate of
interest to accrue thereon or any fees or other amounts payable hereunder, (iii)
postpone any date fixed for the payment of any scheduled distribution in respect
of the Net Investment or interest with respect thereto or any fees or other
amounts payable hereunder or for termination of any Commitment, (iv) change the
percentage of the Commitments or the number of Bank Investors, which shall be
required for the Bank Investors or any of them to take any action under this
Section or any other provision of this Agreement, (v) release all or
substantially all of the property with respect to which a security or other
interest therein has been granted hereunder to the Agent or the Bank Investors
or (vi) extend or permit the extension of the Commitment Termination Date. In
the event the Agent requests the Company's or a Bank Investor's consent pursuant
to the foregoing provisions and the Agent does not receive a consent (either
positive or negative) from the Company or such Bank Investor within 10 Business
Days of the Company's or Bank Investor's receipt of such request, then the
Company or such Bank Investor (and its percentage ownership interest hereunder)
shall be disregarded in determining whether the Agent shall have obtained
sufficient consent hereunder.
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SECTION X.3 Notices. Except as provided below, all communications and
notices provided for hereunder shall be in writing (including telecopy or
electronic facsimile transmission or similar writing) and shall be given to the
other party at its address or telecopy number set forth below or at such other
address or telecopy number as such party may hereafter specify for the purposes
of notice to such party. Each such notice or other communication shall be
effective (i) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified in this Section 10.3 and confirmation is received,
(ii) if given by mail 3 Business Days following such posting, postage prepaid,
U.S. certified or registered, (iii) if given by overnight courier, one (1)
Business Day after deposit thereof with a national overnight courier service, or
(iv) if given by any other means, when received at the address specified in this
Section 10.3. However, anything in this Section to the contrary notwithstanding,
each Pledgor hereby authorizes the Company to effect Pledges, Tranche Period and
Tranche Rate selections based on telephonic notices made by any Person which the
Company in good faith believes to be acting on behalf of the Pledgor. The
Pledgors agree to deliver promptly to the Company a written confirmation of each
telephonic notice signed by an authorized officer of Pledgor. However, the
absence of such confirmation shall not affect the validity of such notice. If
the written confirmation differs in any material respect from the action taken
by the Company, the records of the Company shall govern absent manifest error.
If to the Company:
Kitty Hawk Funding Corporation
c/o Lord Securities
Two Wall Street - 19th Floor
New York, New York 10005
Telephone: (212) 346-9006
Telecopy: (212) 346-9012
(with a copy to the Administrative Agent)
If to the Qualifying Pledgor:
UCP Qualifying SPE 1998-1 Limited Partnership
One East First Street
Suite 1600
Reno, Nevada 89501
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with a copy to:
UCP Qualifying SPE 1998-1 Limited Partnership
c/o Daniel Chait
10800 Biscayne Boulevard
Suite 300
Miami, Florida 33161
Telephone: (305) 899-5000
Telecopy: (305) 899-5050
Payment Information:
Bank: Bank of America, N.A.
ABA No.: [111 000 012]
Account Name: UCP Qualifying SPE 1998-1
Limited Partnership
Account No.: 37510 59378
If to the Operating Pledgor:
UCP Operating SPE 1998-1 Limited Partnership
One East First Street
Suite 1600
Reno, Nevada 89501
with a copy to:
UCP Operating SPE 1998-1 Limited Partnership
c/o Daniel Chait
10800 Biscayne Boulevard
Suite 300
Miami, Florida 33161
Telephone: (305) 899-5000
Telecopy: (305) 899-5050
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Payment Information:
Bank: Bank of America, N.A.
ABA No.: [111 000 012]
Account Name: UCP Operating SPE 1998-1
Limited Partnership
Account No.: 37510 59378
If to the Master Servicer
UniCapital Operations Group, Inc.
2121 SW Broadway
Portland, Oregon
Telephone: (503) 228-1245
Telecopy: (503) 721-1712
If to the Seller
UniCapital Funding Corporation
10800 Biscayne Boulevard
Suite 300
Miami, Florida 33161
Telephone: (305) 899-5000
Telecopy: (305) 899-5050
Payment Information:
Bank of America, N.A.
ABA [111 000 012]
Account 37510 33 747
Reference UniCapital Lease Funding
If to the Collateral Agent:
Bank of America, N.A.
Bank of America Corporate Center--10th Floor
Charlotte, North Carolina 28255
Attention: Michelle M. Heath--
Structured Finance
Telephone: (704) 386-7922
Telecopy: (704) 388-9169
If to the Agent:
Bank of America, N.A.
Bank of America Corporate Center--10th Floor
Charlotte, North Carolina 28255
Attention: Michelle M. Heath--
Structured Finance
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Telephone: (704) 386-7922
Telecopy: (704) 388-9169
Payment Information:
Bank of America, N.A.
ABA [053-000-196]
Account No. 10822016511
Attn.: Camille Zerbinos
If to the Administrative Agent:
Bank of America, N.A.
Bank of America Corporate Center--10th Floor
Charlotte, North Carolina 28255
Attention: Michelle M. Heath--
Structured Finance
Telephone: (704) 386-7922
Telecopy: (704) 388-9169
If to the Bank Investors, at their respective addresses set
forth on the signature pages hereto or of the Assignment and
Assumption Agreement pursuant to which it became a party
hereto.
SECTION X.4 Governing Law; Submission to Jurisdiction; Integration. (a)
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK. EACH PLEDGOR HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN THE CITY OF NEW YORK FOR
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY. Each Pledgor hereby irrevocably waives,
to the fullest extent it may effectively do so, any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum. Nothing in this Section 10.4 shall affect
the right of the Company to bring any action or proceeding against either
Pledgor or its respective properties in the courts of other jurisdictions.
(b) EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE AMONG ANY OF THEM ARISING OUT OF, CONNECTED WITH, RELATING TO OR
INCIDENTAL TO THE
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RELATIONSHIP BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR THE OTHER
TRANSACTION DOCUMENTS.
(c) 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.
SECTION X.5 Severability; Counterparts. 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. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION X.6 Successors and Assigns. (a) This Agreement shall be binding
on the parties hereto and their respective successors and assigns; provided,
however, that neither the Pledgors nor Master Servicer may assign any of its
rights or delegate any of its duties hereunder or under the Receivables Purchase
Agreement or under any of the other Transaction Documents to which it is a party
without the prior written consent of the Agent. No provision of this Agreement
shall in any manner restrict the ability of the Company or any Bank Investor to
assign, participate, grant security interests in, or otherwise transfer any
portion of the Pledged Interest.
(b) Without limiting the foregoing, the Company may, from time to time,
with prior or concurrent notice to the Pledgors, the Parent and the Master
Servicer, in one transaction or a series of transactions, assign all or a
portion of the Net Investment and its rights and obligations under this
Agreement and any other Transaction Documents to which it is a party to a
Conduit Assignee; provided that if such Conduit Assignee is not administered by
Bank of America, the Company shall only make such assignment if the Pledgors
consent to such assignment. Upon and to the extent of such assignment by the
Company to a Conduit Assignee, (i) such Conduit Assignee shall be the owner of
the
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assigned portion of the Net Investment, (ii) the related administrative or
managing agent for such Conduit Assignee will act as the Administrative Agent
for such Conduit Assignee, with all corresponding rights and powers, express or
implied, granted to the Administrative Agent hereunder or under the other
Transaction Documents, (iii) such Conduit Assignee and its liquidity support
provider(s) and credit support provider(s) and other related parties shall have
the benefit of all the rights and protections provided to the Company and its
Liquidity Support Provider(s) and Credit Support Provider(s), respectively,
herein and in the other Transaction Documents (including, without limitation,
any limitation on recourse against such Conduit Assignee or related parties, any
agreement not to file or join in the filing of a petition to commence an
insolvency proceeding against such Conduit Assignee, and the right to assign to
another Conduit Assignee as provided in this paragraph), (iv) such Conduit
Assignee shall assume all (or the assigned or assumed portion) of the Company's
obligations, if any, hereunder or any other Transaction Document, and the
Company shall be released from such obligations, in each case to the extent of
such assignment, and the obligations of the Company and such Conduit Assignee
shall be several and not joint, (v) all distributions in respect of the Net
Investment shall be made to the applicable agent or administrative agent, as
applicable, on behalf of the Company and such Conduit Assignee on a pro rata
basis according to their respective interests, (vi) the definition of the term
"CP Rate" with respect to the portion of the Net Investment funded with
commercial paper issued by the Company from time to time shall be determined in
the manner set forth in the definition of "CP Rate" applicable to the Company on
the basis of the interest rate or discount applicable to commercial paper issued
by such Conduit Assignee (rather than the Company), (vii) the defined terms and
other terms and provisions of this Agreement and the other Transaction Documents
shall be interpreted in accordance with the foregoing, and (viii) if requested
by the Agent or the agent or administrative agent with respect to the Conduit
Assignee, the parties will execute and deliver such further agreements and
documents and take such other actions as the Agent or such agent or
administrative agent may reasonably request to evidence and give effect to the
foregoing. No Assignment by the Company to a Conduit Assignee of all or any
portion of the Net Investment shall in any way diminish the related Bank
Investors' obligation under Section 9.9 to fund any Pledge not funded by the
Company or such Conduit Assignee or to acquire from the Company or such Conduit
Assignee all or any portion of the Net Investment.
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(c) Each of the Pledgors, the Seller and the Master Servicer hereby
agrees and consents to the assignment by the Company from time to time of all or
any part of its rights under, interest in and title to this Agreement and the
Pledged Interest to any Liquidity Provider or to any Conduit Assignee as set
forth in section 10.6(b). In addition, each of the Pledgors and the Seller
hereby consents to and acknowledges the assignment by the Company of all of its
rights under, interest in and title to this Agreement and the Pledged Interest
to the Master Servicer.
SECTION X.7 Waiver of Confidentiality. Each of the Pledgors, the Seller
and the Master Servicer hereby consents to the disclosure of any non-public
information (other than the identity of the Obligors and other information
relating to the identity of the Obligors with respect to it received by the
Company, the Agent, any Bank Investor or the Administrative Agent to any of the
Company, the Agent, any nationally recognized rating agency rating the Company's
Commercial Paper (informing such agency of the highly confidential nature of
such information), the Administrative Agent, the Collateral Agent, any Bank
Investor, the Liquidity Provider or the Credit Support Provider in relation to
this Agreement. Each of the Agent, the Company and each Bank Investor agrees
that, other than as set forth in the preceding sentence, it shall not disclose
such information to any other Person except (i) its auditors and attorneys and
employees, (ii) as otherwise required by applicable law or order of a court of
competent jurisdiction or (iii) to a potential Bank Investor upon its agreement
to abide by the provisions of this Section with respect to such information.
SECTION X.8 Confidentiality Agreement. Each of the Pledgors and the
Master Servicer hereby agrees that it will not disclose the contents of this
Agreement or any other proprietary or confidential information of the Company,
the Agent, the Administrative Agent, the Collateral Agent, any Liquidity
Provider or any Bank Investor to any other Person except (i) its auditors and
attorneys, employees or financial advisors (other than any commercial bank) and
any nationally recognized rating agency, provided such auditors, attorneys,
employees, financial advisors or rating agencies are informed of the highly
confidential nature of such information or (ii) as otherwise required by
applicable law or order of a court of competent jurisdiction.
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SECTION X.9 No Bankruptcy Petition Against the Company. Each of the
Pledgors, the Master Servicer and the Seller hereby covenants and agrees that,
prior to the date which is one year and one day after the payment in full of all
outstanding Commercial Paper or other indebtedness of the Company, it will not
institute against, or join any other Person in instituting against, the Company
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceeding under the laws of the United States or
any state of the United States.
SECTION X.10 No Recourse Against Stockholders, Officers or Directors.
No recourse under any obligation, covenant or agreement of the Company contained
in this Agreement shall be had against Merrill Lynch Money Markets Inc. (or any
affiliate thereof), or any stockholder, officer or director of the Company, 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 this Agreement is solely a corporate obligation of the Company,
and that no personal liability whatsoever shall attach to or be incurred by
Merrill Lynch Money Markets Inc. (or any affiliate thereof), or the
stockholders, officers or directors of the buyer, as such, or any of them, under
or by reason of any of the obligations, covenants or agreements of the Company
contained in this Agreement, or implied therefrom, and that any and all personal
liability for breaches by the Company of any of such obligations, covenants or
agreements, either at common law or at equity, or by statute or constitution, of
Merrill Lynch Money Markets Inc. (or any affiliate thereof) and every such
stockholder, officer or director of the Company is hereby expressly waived as a
condition of and consideration for the execution of this Agreement.
SECTION X.11 Characterization of the Transactions Contemplated by the
Agreement. It is the intention of the parties that this Agreement grants a
security interest in the Receivables, together with the Related Security with
respect thereto to secure payment of the amounts financed hereunder.
Accordingly, each Pledgor hereby grants to the Agent, on behalf of the Company
and the Bank Investors, a first priority perfected and continuing security
interest in all of such Pledgor's right, title and interest in, to and under the
Receivables, together with all Related Security with respect thereto, and
together with all of the Pledgor's rights under the Receivables Purchase
Agreement with respect to the Receivables and with respect to any obligations
thereunder of the Seller or any Eligible Originator
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with respect to the Receivables, and that this Agreement shall constitute a
security agreement under applicable law. The Pledgors hereby assign to the
Agent, on behalf of the Company and the Bank Investors, all of their rights and
remedies under the Receivables Purchase Agreement with respect to the
Receivables and with respect to any obligations thereunder of the Seller or any
Eligible Originator with respect to the Receivables. The Pledgors, the Company,
the Agent and the Bank Investors acknowledge that the arrangement created
pursuant to this Agreement is a financing, and not a sale of Pledged Interest,
for Federal, state and local tax purposes, and agree to act for all purposes
hereof in accordance with the foregoing.
SECTION X.12 Term Securitization Amendments. Upon the request of the
Agent (which may be made in the Agent's discretion) or upon the request of the
Operating Pledgor and the consent of the Agent and the Majority Investors (which
consent shall not be unreasonably withheld), within 60 days following the
closing by Parent or any of its Subsidiaries of a term securitization involving
the Receivables and/or lease receivables similar to the Receivables, each of the
parties hereto agrees to execute an amendment to this Agreement which modifies
the definitions of "Eligible Receivable," "Advance Percentage" and/or "Specified
Reserve Account Requirement," in each case, to reflect the related eligibility
and enhancement criteria for such term securitization.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amended and Restated Transfer and Administration Agreement as of the date first
written above.
KITTY HAWK FUNDING CORPORATION,
as Company
By: /s/ Richard L. Taiano
-------------------------------------------
Name: Richard L. Taiano
Title: Vice President
UCP QUALIFYING SPE 1998-1 Limited
Partnership, as Pledgor
By: UCP GP SPE 1998-1 LLC,
as General Partner
By: /s/ Andrew L. Stidd
-------------------------------------------
Name: Andrew L. Stidd
Title: Manager
UCP OPERATING SPE 1998-1 Limited
Partnership, as Pledgor
By: UCP GP SPE 1998-1 LLC,
as General Partner
By: /s/ Andrew L. Stidd
-------------------------------------------
Name: Andrew L. Stidd
Title: Manager
UNICAPITAL OPERATIONS GROUP, INC.,
as Master Servicer
By: /s/ Jerry Hudspeth
-------------------------------------------
Name: Jerry Hudspeth
Title: President
<PAGE> 130
Commitment: BANK OF AMERICA, N.A., as Agent
and a Bank Investor
$333,333,333 until
10/1/99 and $225,000,000
from and after 10/1/99
By: /s/ Elliot Lemon
-------------------------------------------
Name: Elliot Lemon
Title: Vice President
LEHMAN COMMERCIAL PAPER INC.
as a Bank Investor
$66,666,667 until
10/1/99 and $75,000,000
from and after 10/1/99
By: /s/ Vincent Primiano
-------------------------------------------
Name: Vincent Primiano
Title: Vice President
<PAGE> 131
EXHIBIT A
FORM OF NOTICE OF
CHANGE IN FACILITY LIMIT
[Date]
Bank of America, N.A.
Bank of America Corporate Center--10th Floor
Charlotte, North Carolina 28255
Attention: Michelle M. Heath--
Structured Finance
Dear Ms. Heath:
Reference is made to the Amended and Restated Transfer and
Administration Agreement dated as of August 16, 1999 (such agreement as amended,
modified or supplemented from time to time, the "Agreement") among UCP
Qualifying SPE 1998-1 Limited Partnership, as Pledgor (in such capacity, the
"Qualifying Pledgor"), UCP Operating SPE 1998-1 Limited Partnership, as Pledgor
(in such capacity, the "Operating Lease Pledgor" and, collectively with the
Qualifying Pledgor, the "Pledgors"), UniCapital Operations Group, Inc.,
individually and as master servicer (the "Master Servicer"), Kitty Hawk Funding
Corporation (the "Company"), Bank of America, N.A., as agent for the Company and
the Bank Investors (in such capacity, the "Agent") and as a Bank Investor, and
each other bank that is a party to the Agreement in the capacity of a Bank
Investor. Terms defined in the Agreement are used herein with the same meaning.
Pursuant to the Agreement, the undersigned hereby request that the
Facility Limit be [increased][decreased] from $__________ to $_______________,
concurrently with an equivalent [decrease][increase] in the facility limit under
the Finance Facility Agreement. A separate request under that facility is being
made concurrently herewith. The undersigned request that such change be
effective as of [date], which is at least three Business Days from the date of
delivery hereof.
A-1
<PAGE> 132
UCP QUALIFYING SPE 1998-1 Limited
Partnership, as Pledgor
By: UCP GP SPE 1998-1 LLC,
as General Partner
By:
-------------------------------------------
Name:
Title:
UCP OPERATING SPE 1998-1 Limited
Partnership, as Pledgor
By: UCP GP SPE 1998-1 LLC,
as General Partner
By:
-------------------------------------------
Name:
Title:
Confirmed and Accepted as of this
___ day of _______, ____
BANK OF AMERICA, N.A., as Agent
By:
-------------------------------
Name:
Title:
A-2
<PAGE> 133
EXHIBIT B
CREDIT POLICY MANUAL AND CREDIT POLICY PROCEDURE MEMORANDA
Each of the Parent's Credit Policy Manual and Credit Policy and
Procedure Memoranda were delivered by the Pledgors in July 1999 to the
Agent and the receipt of which has been separately acknowledged by the
Agent.
B-1
<PAGE> 134
EXHIBIT C
[Reserved.]
C-1
<PAGE> 135
EXHIBIT D
[Reserved.]
D-1
<PAGE> 136
EXHIBIT E
FORM OF INVESTOR REPORT
E-1
<PAGE> 137
EXHIBIT F
FORM OF PLEDGE CERTIFICATE
Bank of America, N.A.
Bank of America Corporate Center - 10th Floor
Charlotte, North Carolina 28255
Attention: Michelle M. Heath - Structured Finance
Reference is made to the Amended and Restated Transfer and
Administration Agreement dated as of August 16, 1999 (such agreement as amended,
modified or supplemented from time to time, the "Agreement") among UCP
Qualifying SPE 1998-1 Limited Partnership, as Pledgor (in such capacity, the
"Qualifying Pledgor"), UCP Operating SPE 1998-1 Limited Partnership, as Pledgor
(in such capacity, the "Operating Lease Pledgor" and, collectively with the
Qualifying Pledgor, the "Pledgors"), UniCapital Operations Group, Inc.,
individually and as master servicer (the "Master Servicer"), Kitty Hawk Funding
Corporation (the "Company"), Bank of America, N.A., as agent for the Company and
the Bank Investors (in such capacity, the "Agent") and as a Bank Investor, and
each other bank that is a party to the Agreement in the capacity of a Bank
Investor. Terms defined in the Agreement are used herein with the same meaning.
The Pledgors, pursuant to Section 2.3(a) of the Agreement, hereby
request that the Company make an advance to it pursuant to the following
instructions:
Borrowing Date:
-----------------------------------------------------------------
Borrowing request is made to: [Company] [Bank Investors]
Advance Amount:
-----------------------------------------------------------------
Tranche Period(s):
--------------------------------------------------------------
Account to be credited: [bank name]
--------------------------------
ABA No.
-------------------------------------------------------
Account No.
-------------------------------------------------------
Reference No.
-------------------------------------------------------
F-1
<PAGE> 138
Please credit the above-mentioned account by 11:00 a.m. (New York City
time) on the Borrowing Date.
The Pledgors hereby certify as of the date hereof that $__________ is
available for additional Pledges based on the following calculation:
$__________ (Maximum Net Investment)
minus $__________ (Net Investment)
===========
$__________ (amount available for borrowing)
As of the date of the related borrowing, the Pledgors jointly and
severally pledge and assign to the Agent, on behalf of the Company and the Bank
Investors, as applicable, all of each Pledgor's respective right, title and
interest in, to and under the Receivables set forth on the Contract Schedule
hereto and made a part hereof (each, a "Pledge"), which such Pledges are further
described in Section 2.2(a) of the Agreement. Each Pledge by the Pledgors to the
Agent and each reduction or increase in the Net Investment in respect of each
Pledge evidenced hereby shall be indicated by the Agent on the grid attached
hereto as Annex 1, and which grid will be part of this Pledge Certificate.
The Pledgors hereby certify that as of the date hereof (a) the
conditions precedent pursuant to Section 4.1(b) of the Agreement have been
satisfied, (b) the representations and warranties made in Section 3.1 of the
Agreement are true and correct both immediately before and immediately after
giving effect to a borrowing pursuant to Section 2.2 and (c) no Event of Default
exists.
This Pledge Certificate is made without recourse except as otherwise
provided in the Agreement.
This Pledge Certificate shall be governed by, and construed in
accordance with, the laws of the State of New York.
F-2
<PAGE> 139
This Pledge Certificate may be executed by different 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. Delivery of an executed counterpart of the signature page to this
Pledge Certificate by telecopier shall be effective as delivery of a manually
executed counterpart of this Pledge Certificate.
F-3
<PAGE> 140
IN WITNESS WHEREOF, the undersigned has caused this Pledge Certificate
to be duly executed and delivered by its duly authorized officer as of the date
first above written.
UCP QUALIFYING SPE 1998-1
Limited Partnership
By: UCP GP SPE 1998-1 LLC,
as General Partner
By:
-------------------------------------------
Name:
Title:
UCP OPERATING SPE 1998-1
Limited Partnership
By: UCP GP SPE 1998-1 LLC,
as General Partner
By:
-------------------------------------------
Name:
Title:
Dated:
----------------------------
F-4
<PAGE> 141
SCHEDULE I TO EXHIBIT F
CONTRACT SCHEDULE
[Spread Sheet to be attached]
F-5
<PAGE> 142
ANNEX 1 TO EXHIBIT F
GRID
Date of Pledge:
Amount of Pledge:
Increase in Net Investment (Giving effect to Pledge):
Decrease in Net Investment (Giving effect to Pledge):
F-6
<PAGE> 143
EXHIBIT G
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
Reference is made to the Amended and Restated Transfer and
Administration Agreement dated as of August 16, 1999 (such agreement as amended,
modified or supplemented from time to time, the "Agreement") among UCP
Qualifying SPE 1998-1 Limited Partnership, as Pledgor (in such capacity, the
"Qualifying Pledgor"), UCP Operating SPE 1998-1 Limited Partnership, as Pledgor
(in such capacity, the "Operating Lease Pledgor" and, collectively with the
Qualifying Pledgor, the "Pledgors"), UniCapital Operations Group, Inc.,
individually and as master servicer (the "Master Servicer"), Kitty Hawk Funding
Corporation (the "Company"), Bank of America, N.A., as agent for the Company and
the Bank Investors (in such capacity, the "Agent") and as a Bank Investor, and
each other bank that is a party to the Agreement in the capacity of a Bank
Investor. Terms defined in the Agreement are used herein with the same meaning.
___________________ (the "Assignor") and _____________________ (the "Assignee")
agree as follows:
(a) The Assignor hereby sells and assigns to the Assignee,
without recourse and without representation and warranty, and the
Assignee hereby purchases and assumes from the Assignor, that interest
in and to all of the Assignor's rights and obligations under the
Agreement and the other Transaction Documents, as of the date hereof.
Such interest is expressed as a percentage of all rights and
obligations of the Bank Investors being equal to the percentage
equivalent of a fraction the numerator of which is $________, and the
denominator of which is $________ the current Facility Limit. After
giving effect to such sale and assignment, the Assignee's Commitment
will be as set forth on the signature page hereto.
(b) [In consideration of the payment of $___________, being
___% of the existing Net Investment, and of $___________, being ___% of
the aggregate unpaid accrued Discount, receipt of which payment is
hereby acknowledged, the Assignor hereby assigns to the Agent for the
account of the Assignee, and the Assignee hereby purchases from the
G-1
<PAGE> 144
Assignor, a ___% interest in and to all of the Assignor's right, title
and interest in and to the Net Investment purchased by the undersigned
on _______________, 1998 under the Agreement.][INCLUDE IF AN EXISTING
NET INVESTMENT IS BEING ASSIGNED.]
(c) The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse
claim; (ii) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with the Agreement, any other
Transaction Document or any other instrument or document furnished
pursuant thereto or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Agreement or the Receivables,
any other Transaction Document or any other instrument or document
furnished pursuant thereto; and (iii) makes no representation or
warranty and assumes no responsibility with respect to the financial
condition of any of the Pledgors, [the Master Servicer], the Agent or
the Seller or the performance or observance by any of the Pledgors,
[the Master Servicer], the Agent or the Seller of any of their
respective obligations under the Agreement, any other Transaction
Document, or any instrument or document furnished pursuant thereto.
(d) The Assignee (i) confirms that it has received a copy of
the Agreement, the related Receivables Purchase Agreement, the Secured
Note, the Facility Fee Letter and the Fee Letter, together with copies
of the financial statements referred to in Section 5.1 of the
Agreement, to the extent delivered through the date of this Agreement,
and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this
Assignment and Assumption Agreement; (ii) agrees that it will,
independently and without reliance upon the Agent, any of its
Affiliates, the Assignor or any other [Bank 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 the Agreement and/or any other Transaction Document; (iii)
appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers and discretion under the Agreement
and/or the other Transaction Documents as are delegated to the Agent by
the terms
G-2
<PAGE> 145
thereof, together with such powers and discretion as are reasonably
incidental thereto; (iv) agrees that it will perform in accordance with
their terms all of the obligations which by the terms of the Agreement
are required to be performed by it as a [Bank Investor]; and (vi)
specifies as its address for notices and its account for payments the
office and account set forth beneath its name on the signature pages
hereof[; and (vii) attaches the forms prescribed by the Internal
Revenue Service of the United States of America certifying as to the
Assignee's status for purposes of determining exemption from United
States withholding taxes with respect to all payments to be made to the
Assignee under the Agreement or such other documents as are necessary
to indicate that all such payments are subject to such rates at a rate
reduced by an applicable tax treaty]. [The Assignee also covenants with
each of the Agent and the Master Servicer that the Assignee will not
make a public offering of the interest being assigned to and accepted
by it hereby, and will not reoffer or resell such interest, in a manner
that would render the issuance and sale of such interest, whether
considered together with the resale or otherwise, a violation of the
Securities Act of 1933 or any state securities or "Blue Sky" laws or
require registration pursuant thereto.]
(e) The effective date for this Assignment and Assumption
Agreement shall be the later of (i) the date on which the Agent
receives this Assignment executed by the parties hereto and receives
the consent of [the Pledgors and] the Administrative Agent, on behalf
of the Company, and (ii) the date of this Assignment and Assumption
Agreement (the "Effective Date"). Following the execution of this
Assignment and Assumption Agreement and the consent of [the Pledgors
and] the Administrative Agent, on behalf of the Company, this
Assignment and Assumption Agreement will be delivered to the Agent for
acceptance and recording.
(f) Upon such acceptance and recording by the Agent, as of the
Effective Date, (i) the Assignee shall be a party to the Agreement and,
to the extent provided in this Assignment and Assumption Agreement,
shall have the rights and obligations of a Bank Investor thereunder;
and (ii) the Assignor shall, to the extent provided in this Assignment
and Assumption Agreement, relinquish its rights and be released from
its obligations under the Agreement.
G-3
<PAGE> 146
(g) Upon such acceptance and recording, from and after the
Effective Date, the Agent shall make, or cause to be made, all payments
under the Agreement in respect of the interest assigned hereby
(including, without limitation, all payments in respect of such
interest in Net Investment, Discount and fees) to the Assignee. The
Assignor and Assignee shall make all appropriate adjustments in
payments under the Agreement for periods prior to the Effective Date
directly between themselves.
(h) This Assignment and Assumption Agreement shall be governed
by, and construed in accordance with, the laws of the State of New
York.
(i) This Assignment and Assumption 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 taken together shall constitute one
and the same agreement. Delivery of an executed counterpart of the
signature page to this Assignment by telecopier shall be effective as
delivery of a manually executed counterpart of this Assignment.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
G-4
<PAGE> 147
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Assumption Agreement to be executed by their respective officers thereunto duly
authorized as of the ____ day of June , 1998.
Remaining [NAME OF ASSIGNOR]
Commitment
$ By:
------------- -------------------------------------------
Title:
Commitment [NAME OF ASSIGNEE]
$ By:
------------- -------------------------------------------
Title:
[Address]
Address for notices
[Account]
Account for payments:
Consented to this __ day
of _________, 1998
BANK OF AMERICA, N.A., as
Administrative Agent
By:
-------------------------------
Name:
Title:
BANK OF AMERICA, N.A.,
as Agent
By:
-------------------------------
Name:
Title:
G-5
<PAGE> 148
EXHIBIT H
LIST OF ACTIONS AND SUITS
None.
H-1
<PAGE> 149
EXHIBIT I
LOCATION OF RECORDS
UniCapital Operations Group, Inc.
2121 SW Broadway
Portland, Oregon 97201
Attention: Gerald Hudspeth
(Or in a third-party offsite storage facility in Portland, Oregon (e.g. Iron
Mountain)
K.L.C., Inc. (Keystone) - with respect to Receivables for which it is Eligible
Originator
433 New Park
West Hartford, Connecticut 06110
Attention: Edgar Lee
I-1
<PAGE> 150
EXHIBIT J
LIST OF SUBSIDIARIES AND TRADENAMES
None.
J-1
<PAGE> 151
EXHIBIT K
[Reserved.]
K-1
<PAGE> 152
EXHIBIT L-1
FORM OF OFFICER'S CERTIFICATE OF QUALIFYING PLEDGOR
I, __________________, the undersigned ________________ of
UniCapital Funding Corporation, the member (in such capacity, the "Member") of
UCP GP SPE 1998-1 LLC, which is the general partner of UCP QUALIFYING SPE 1998-1
LIMITED PARTNERSHIP (the "Partnership"), a Nevada limited partnership, DO HEREBY
CERTIFY that:
1. Attached hereto as Annex A is a true and complete copy of the
Certificate of Limited Partnership of the Partnership as in effect on the date
hereof.
2. Attached hereto as Annex B is a true and complete copy of the
Agreement of Limited Partnership of the Partnership as in effect on the date
hereof.
3. Attached hereto as Annex C is a true and complete copy of the
resolutions duly adopted by the Member on behalf of the general partner of the
Partnership adopted by consent as of June 19, 1998, authorizing the execution,
delivery and performance of each of the documents mentioned therein, which
resolutions have not been revoked, modified, amended or rescinded and are still
in full force and effect.
L-1-1
<PAGE> 153
WITNESS my hand as of this ____ day of ________, 1998.
-----------------------------------------
Name:
Title:
I, the undersigned, __________________ of UniCapital Funding
Corporation, DO HEREBY CERTIFY that _____________________ is the duly elected
and qualified ___________________ of UniCapital Funding Corporation and the
signature above is his/her genuine signature.
WITNESS my hand as of this ____ day of _______, 1998.
-----------------------------------------
Name:
Title:
L-1-2
<PAGE> 154
EXHIBIT L-2
FORM OF OFFICER'S CERTIFICATE OF OPERATING PLEDGOR
I, __________________, the undersigned ______________ of
UniCapital Funding Corporation, the member (in such capacity, the "Member") of
UCP GP SPE 1998-1 LLC, which is the general partner of UCP OPERATING SPE 1998-1
LIMITED PARTNERSHIP (the "Partnership"), a Nevada limited liability partnership,
DO HEREBY CERTIFY that:
1. Attached hereto as Annex A is a true and complete copy of the
Certificate of Limited Partnership of the Partnership as in effect on the date
hereof.
2. Attached hereto as Annex B is a true and complete copy of the
Agreement of Limited Partnership of the Partnership as in effect on the date
hereof.
3. Attached hereto as Annex C is a true and complete copy of the
resolutions duly adopted by the Member on behalf of the general partner of the
Partnership adopted by consent as of June 19, 1998, authorizing the execution,
delivery and performance of each of the documents mentioned therein, which
resolutions have not been revoked, modified, amended or rescinded and are still
in full force and effect.
L-2-1
<PAGE> 155
WITNESS my hand as of this ____ day of ________, 1998.
-----------------------------------------
Name:
Title:
I, the undersigned, of UniCapital Funding Corporation, DO HEREBY
CERTIFY that _____________________ is the duly elected and qualified
_____________ of UniCapital Funding Corporation and the signature above is
his/her genuine signature.
WITNESS my hand as of this ____ day of _______, 1998.
-----------------------------------------
Name:
Title:
L-2-2
<PAGE> 156
EXHIBIT L-3
FORM OF OFFICER'S CERTIFICATE OF SELLER
I, __________________, the undersigned ________________ of
UniCapital Funding Corporation (the "Company"), a Delaware corporation, DO
HEREBY CERTIFY that:
1. Attached hereto as Annex A is a true and complete copy of the
Certificate of Incorporation of the Company as in effect on the date hereof.
2. Attached hereto as Annex B is a true and complete copy of the
By-laws of the Company as in effect on the date hereof.
3. Attached hereto as Annex C is a true and complete copy of the
resolutions duly adopted by the Board of Directors of the Company adopted by
consent as of June 9, 1998 and June 19, 1998, authorizing the execution,
delivery and performance of each of the documents mentioned therein, which
resolutions have not been revoked, modified, amended or rescinded and are still
in full force and effect.
4. The below-named persons, as of the date hereof, have been elected
and duly qualified as officers or representatives of the Company holding the
respective offices or positions below set opposite their names and the
signatures below set opposite their names are their genuine signatures:
Name Office Signature
--------------------------
--------------------------
--------------------------
--------------------------
L-3-1
<PAGE> 157
WITNESS my hand as of this ____ day of ________, 1998.
-----------------------------------------
Name:
Title:
I, the undersigned, ___________________ of UniCapital Funding
Corporation, DO HEREBY CERTIFY that _____________________ is the duly elected
and qualified ______________ of UniCapital Funding Corporation and the signature
above is his/her genuine signature.
WITNESS my hand as of this ____ day of _______, 1998.
-----------------------------------------
Name:
Title:
L-3-2
<PAGE> 158
EXHIBIT L-4
FORM OF OFFICER'S CERTIFICATE OF THE GENERAL PARTNER
I, __________________, the undersigned ________________ of
UniCapital Funding Corporation, the member (in such capacity, the "Member") of
UCP GP SPE 1998-1 LLC, a Delaware limited liability company (the "Company"), DO
HEREBY CERTIFY that:
1. Attached hereto as Annex A is a true and complete copy of the
Articles of Organization of the Company as in effect on the date hereof.
2. Attached hereto as Annex B is a true and complete copy of the
Operating Agreement of the Company as in effect on the date hereof.
3. Attached hereto as Annex C is a true and complete copy of the
resolutions duly adopted by the Member adopted as of June 19, 1998, authorizing
the execution, delivery and performance of each of the documents mentioned
therein, which resolutions have not been revoked, modified, amended or rescinded
and are still in full force and effect.
4. The below-named persons, as of the date hereof, have been elected
and duly qualified as the Managers of the Company and the signatures below set
opposite their names are their genuine signatures:
Name Signature
Kevin P. Burns --------------------------
Andrew L. Stidd --------------------------
Richard I. Hansen --------------------------
Gerald T. Hudspeth --------------------------
Christopher A. Kane --------------------------
L-4-1
<PAGE> 159
WITNESS my hand as of this ____ day of ________, 1998.
By:
-----------------------------------------
Name:
Title:
I, the undersigned, ___________________ of the Company, DO HEREBY
CERTIFY that _____________________ is the duly elected and qualified
______________ of the Company and the signature above is his/her genuine
signature.
WITNESS my hand as of this ____ day of _______, 1998.
By:
-----------------------------------------
Name:
Title:
L-4-2
<PAGE> 160
EXHIBIT L-5
FORM OF OFFICER'S CERTIFICATE OF THE PARENT
I, __________________, the undersigned __________________ of
UniCapital Corporation (the "Company"), a Delaware corporation, DO HEREBY
CERTIFY that:
1. Attached hereto as Annex A is a true and complete copy of the
Certificate of Incorporation of the Company as in effect on the date hereof.
2. Attached hereto as Annex B is a true and complete copy of the
By-laws of the Company as in effect on the date hereof.
3. Attached hereto as Annex C is a true and complete copy of the
resolutions duly adopted by the Board of Directors of the Company adopted by
consent as of May 24, 1998, which resolutions have not been revoked, modified,
amended or rescinded and are still in full force and effect.
4. The below-named persons, as of the date hereof, have been elected
and duly qualified as officers or representatives of the Company holding the
respective offices or positions below set opposite their names and the
signatures below set opposite their names are their genuine signatures:
Name Office Signature
--------------------------
--------------------------
--------------------------
--------------------------
L-5-1
<PAGE> 161
WITNESS my hand as of this ____ day of ________, 1998.
-----------------------------------------
Name:
Title:
I, the undersigned, ___________________ of UniCapital Corporation, DO
HEREBY CERTIFY that _____________________ is the duly elected and qualified
______________ of UniCapital Corporation and the signature above is his/her
genuine signature.
WITNESS my hand as of this ____ day of _______, 1998.
-----------------------------------------
Name:
Title:
L-5-2
<PAGE> 162
EXHIBIT L-6
FORM OF OFFICER'S CERTIFICATE OF THE MASTER SERVICER
I, __________________, the undersigned ______________ of PFSC
Acquisition Corp., the general partner of UNICAPITAL OPERATIONS GROUP, INC. (the
"Company"), a Delaware Corporation, DO HEREBY CERTIFY that:
1. Attached hereto as Annex A is a true and complete copy of the
Certificate of Incorporation of the Company as in effect on the date hereof.
2. Attached hereto as Annex B is a true and complete copy of the
Agreement of the By-Laws of the Company as in effect on the date hereof.
3. Attached hereto as Annex C is a true and complete copy of the
resolutions duly adopted by the Company adopted by consent as of [_________],
199[_], which resolutions have not been revoked, modified, amended or rescinded
and are still in full force and effect.
L-6-1
<PAGE> 163
WITNESS my hand as of this ____ day of ________, 1998.
-----------------------------------------
Name:
Title:
I, the undersigned, __________________ of PFSC Acquisition Corp., DO
HEREBY CERTIFY that _____________________ is the duly elected and qualified
___________ of PFSC Acquisition Corp. and the signature above is his/her genuine
signature.
WITNESS my hand as of this ____ day of _______, 1998.
-----------------------------------------
Name:
Title:
L-6-2
<PAGE> 164
EXHIBIT M
FORM OF SECURED NOTE
THIS NOTE OR ANY INTEREST HEREIN MAY NOT BE TRANSFERRED, ASSIGNED,
EXCHANGED OR CONVEYED EXCEPT IN ACCORDANCE WITH THE AMENDED AND RESTATED
TRANSFER AND ADMINISTRATION AGREEMENT REFERRED TO HEREIN. THIS NOTE HAS NOT BEEN
AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
UNDER ANY STATE SECURITIES LAWS AND NO TRANSFER HEREOF MAY BE MADE EXCEPT IN
ACCORDANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED AND ANY OTHER APPLICABLE
LAWS.
$[ ]
-------------
[Date]
This Note is secured solely by a pool of equipment lease and contract
receivables generated from time to time in the ordinary course of business by
UniCapital Funding Corporation (the "Seller") and acquired by UCP Qualifying SPE
1998-1 Limited Partnership and UCP Operating SPE 1998-1 Limited Partnership
(together, the "Pledgors") as further set forth in the Agreement (as defined
below).
(By way of clarification, this Note does not represent any interest (equity or
otherwise) in either of the Pledgors)
FOR VALUE RECEIVED, the Pledgors promise to pay to Bank of America,
N.A., on behalf of and as agent for Kitty Hawk Funding Corporation (the "Buyer")
and the Bank Investors (as defined in the Agreement) the principal sum of
$225,000,000 (Two hundred and twenty-five million dollars) or such other amount
as shall represent the outstanding Net Investment together with all other
Aggregate Unpaids, at the times and on the dates and all as more fully provided
in the Amended and Restated Transfer and Administration Agreement dated as of
August 16, 1999 among the Seller, the Buyer, each of the Pledgors, UniCapital
Operations Group, Inc., individually and as master servicer, Bank of America,
N.A. as agent for the Company and the Bank Investors, and certain financial
institutions that are a party thereto in the capacity of a Bank Investor (such
agreement as amended, supplemented or modified from time to time, the
"Agreement").
M-1
<PAGE> 165
The Receivables consist of all receivables generated under the Contracts from
time to time hereafter, all monies due or to become due in payment of the
Receivables and the other assets and interests as provided in the Agreement.
To the extent not defined herein, capitalized terms used herein have
the meanings assigned to such terms in the Agreement. This Note is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement, as amended from time to time, the holder hereof by virtue of
the acceptance hereof assents and by which the holder hereof is bound. In the
event of any inconsistency or conflict between the terms of this Note and the
terms of the Agreement, the terms of the Agreement shall prevail.
This Note is secured by the Receivables and Related Security, including
the right to receive Collections and other amounts at the times and in the
amounts specified in the Agreement. This Note shall be governed by and construed
in accordance with the laws of the State of New York. This Note is issued
pursuant to, and is entitled to the benefits of, the Agreement.
M-2
<PAGE> 166
IN WITNESS WHEREOF, the Pledgors have caused this Note to be duly
executed.
UCP QUALIFYING SPE 1998-1
LIMITED PARTNERSHIP
By: UCP GP SPE 1998-1 LLC,
as General Partner
By:
-------------------------------------------
Name:
Title:
UCP OPERATING SPE 1998-1
LIMITED PARTNERSHIP
By: UCP GP SPE 1998-1 LLC,
as General Partner
By:
-------------------------------------------
Name:
Title:
M-3
<PAGE> 167
EXHIBIT N
ELIGIBLE ORIGINATORS
1. American Capital Resources, Inc.
2. Boulder Capital Group, Inc.
3. Jacom Computer Services, Inc.
4. K.L.C., Inc. (Keystone)
5. Merrimac Financial Associates
6. Varilease Corp.
7. Walden Asset Group, Inc.
8. Matrix Funding Corporation
9. HLC Financial, Inc.
10. Saddleback Financial Corporation
11. SFC Capital Group Corporation
12. The Myerson Companies, Inc.(d/b/a BSB Leasing)
N-1
<PAGE> 168
EXHIBIT O
EXCEPTIONS TO BALLOON PAYMENT ELIGIBILITY REQUIREMENTS
Attached.
<PAGE> 1
Exhibit 4.05(a)
AMENDMENT
AMENDMENT, dated as of March 26, 1999 (the "Amendment"), to the
Credit Agreement, dated as of October 6, 1998 (the "Credit Agreement"), made by
and among FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association not in its individual capacity but solely as trustee on behalf of
that certain trust created under the Trust Agreement (22222), dated as of
September 28, 1998, between First Security Bank, National Association and
Aircraft 22222, Inc., a Delaware corporation (together with any successor
Qualified Trustee, the "Initial Borrower"), FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity but solely as trustee on behalf of
that certain trust created under the Trust Agreement (49104) dated as of January
10, 1999 by and between First Security Bank, National association and Aircraft
49104, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual
capacity but solely as trustee on behalf of that certain trust created under the
Trust Agreement (53015) dated as of August 28, 1998 by and between First
Security Bank, National Association and Aircraft 53015, Inc., FIRST SECURITY
BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely as trustee
on behalf of that certain trust created under the Trust Agreement (24837) dated
as of October 30, 1998 by and between First Security Bank, National Association
and Aircraft 24837, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its
individual capacity but solely as trustee under the Amended and Restated Trust
Agreement (347) dated as of October 30, 1998 by and between First Security Bank,
National Association and Aircraft 347, Inc., FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity but solely as trustee on behalf of
that certain trust created under the Amended and Restated Trust Agreement
(25221) dated as of August 25, 1998 by and between First Security Bank, National
Association and Aircraft 25221, Inc., and AIRCRAFT 373, INC. (collectively, with
the Initial Borrower, the "Existing Borrowers"), certain other UniCapital
Subsidiary Trusts and UniCapital Special Purpose Corporations designated as
Borrowing Affiliates thereunder (the Existing Borrowers and such UniCapital
Subsidiary Trusts and UniCapital Special Purpose Corporations being referred to
individually as a "Borrower" or collectively as the "Borrowers"), LEHMAN
COMMERCIAL PAPER INC., a New York corporation in its capacity as a Lender
("Lehman"), and other financial institutions from time to time parties thereto
(such financial institutions hereinafter being referred to individually as a
"Lender" or collectively as the "Lenders"), and LEHMAN COMMERCIAL PAPER INC. in
its capacity as agent for the Lenders (in such capacity, and together with any
successor agent, the "Agent").
W I T N E S S E T H :
WHEREAS, the Borrowers, UniCapital, Lehman, and the Agent, desire
to amend the Credit Agreement as set forth in this Amendment, but only on the
terms and subject to the conditions set forth below;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto agree as
follows:
<PAGE> 2
2
1. Defined Terms. Terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.
2. Amendments to Article I.
(a) The following defined terms are hereby added to subsection
1.1 in the appropriate alphabetical order:
"Alternate Applicable Aircraft Advance Rate" with respect
to any Eligible Aircraft means:
(a) if the age of such Aircraft (measured from the date of
original manufacture to the date of the original Loan made or to
be made in respect of such Eligible Aircraft) is less than or
equal to 15 years, 80%;
(b) if the age of such Aircraft (measured from the date of
original manufacture to the date of the original Loan made or to
be made in respect of such Eligible Aircraft) is less than or
equal to 20 years and greater than 15 years, 70%; or
(c) if the age of such Aircraft (measured from the date of
original manufacture to the date of the original Loan made or to
be made in respect of such Eligible Aircraft) is greater than 20
years, 60%.
"Alternate Applicable Aircraft Borrowing Base" with
respect to any Eligible Aircraft means the lesser of the following
amounts (subject to such lesser amount being reduced pursuant to the
Concentration Restriction): (a) the sum of (x) the available amount for
drawing under any Eligible Credit Enhancement in effect with respect to
the Eligible Aircraft, and (y) the product of (A) the Alternate
Applicable Aircraft Advance Rate for such Eligible Aircraft, and (B) the
Fair Market Value of such Eligible Aircraft, (b) 80% of the Fair Market
Value of such Eligible Aircraft and (c) the sum of (x) the amount
available for drawing under any Eligible Credit Enhancement in effect
with respect to such Eligible Aircraft and (y) 85% of the Purchase Price
of such Eligible Aircraft; provided, that the lesser of (a), (b) or (c)
shall be reduced by the amount of any mandatory prepayment under
subsection 2.3(b), and, provided, further, that in the case of Eligible
Aircraft with respect to which Loans have been advanced prior to March
25, 1999, the lesser of (a), (b) and (c) shall be reduced by subtracting
the Cumulative Depreciation Amount determined as of the date of an
additional Loan Advance with respect to such aircraft.
"Cumulative Depreciation Amount" means, with respect to
any Eligible Aircraft, the product of (a) an amount equal to one-twelfth
of 4% of the Fair Market Value of such Eligible Aircraft, as determined
at the time of the making of the Loans in respect of such aircraft,
multiplied by (b) the number of full calendar months that have elapsed
from the date of the initial advance of a Loan with respect to such
aircraft until the date of determination of Cumulative Depreciation
Amount.
<PAGE> 3
3
"Incremental Applicable Aircraft Borrowing Base" means,
with respect to any Eligible Aircraft, the difference between the (a)
Alternate Applicable Aircraft Borrowing Base and (b) the Applicable
Aircraft Borrowing Base as reduced by the Cumulative Depreciation Amount
for such Eligible Aircraft.
(b) The definition of "Applicable Carrier Borrowing Base" is
hereby amended by deleting the words "Applicable Aircraft Borrowing Bases" and
substituting in lieu thereof the words "Alternate Applicable Aircraft Borrowing
Bases".
(c) The definition of "Applicable Margin" is hereby amended: (1)
by deleting therefrom the amount "1.75%" and substituting in lieu thereof the
amount "2.75%"; (2) by deleting therefrom the amount "1.50%" and substituting in
lieu thereof the amount "2.50%"; (3) by deleting therefrom the phrase
"three-fourths of one percent (.75%)" and substituting in lieu thereof the
phrase "one and three-fourths percent (1.75%)"; and, (4) by deleting therefrom
the phrase "one-half of one percent (.50%)" and substituting in lieu thereof the
phrase "one and one-half percent (1.50%); provided, however, that if the
aggregate outstanding principal balance of the Revolving Loans does not exceed
the aggregate of the Applicable Aircraft Borrowing Bases of all Financed
Aircraft, the original definition of "Applicable Margin" (without regard to the
amendment herein) shall apply and, provided further, that if prepayments of the
Loans have not reduced the outstanding principal amount of the Loans to an
amount that does not exceed the aggregate Applicable Aircraft Borrowing Bases of
all Financed Aircraft as reduced by the Cumulative Depreciation Amounts of such
Financed Aircraft on or before July 31, 1999, the Applicable Margin shall
increase by adding one-quarter of one percent thereto effective August 1, 1999
and shall increase by adding an additional one-quarter of one percent thereto
effective the first day of each calendar month thereafter until prepayments of
the Loans have reduced the outstanding principal amount of the Loans to an
amount that does not exceed the aggregate Applicable Aircraft Borrowing Bases of
all Financed Aircraft as reduced by the Cumulative Depreciation Amounts of such
Financed Aircraft.
(d) The definition of "Borrowing Base" is hereby amended by
deleting therefrom the words "Applicable Aircraft Borrowing Base" wherever such
words appear and substituting in lieu thereof the term "Alternate Applicable
Aircraft Borrowing Base".
(e) The definition of "Concentration Restriction" is hereby
amended by deleting therefrom the words "Applicable Aircraft Borrowing Base"
wherever such words appear and substituting in lieu thereof the term "Alternate
Applicable Aircraft Borrowing Base".
3. Amendments to Article II.
(a) Subsection 2.1(a) of the Credit Agreement is hereby
amended:
(1) by deleting therefrom the words "Applicable Aircraft
Borrowing Base" wherever such words appear and substituting in lieu
thereof the term "Alternate Applicable Aircraft Borrowing Base"; and
<PAGE> 4
4
(2) by inserting the following after the word "violated" in
third proviso of the first sentence:
" and (Z) the aggregate Incremental Applicable Aircraft Borrowing
Bases for all Financed Aircraft shall not exceed the amount of
$50,000,000."
(b) Subsection 2.3(b)(i) of the Credit Agreement is hereby
amended by deleting such subsection and substituting in lieu thereof the
following:
"(b) Mandatory Prepayments. (i) Upon the sale of any Aircraft or
other asset by any Borrower, or upon the refinancing of any
Indebtedness of any Borrower arising from any Loan hereunder, the
Borrowers, jointly and severally, shall immediately pay to the
Agent an amount equal to the net proceeds of such sale or
refinancing, which amount shall be applied by the Agent to reduce
outstanding principal and accrued interest on any Loans made to,
or for the benefit of, such Borrower. If any net proceeds of such
sale or refinancing remain after the repayment in full of all
outstanding principal and accrued interest on such Loans, such
excess proceeds (except to the extent derived from the pending
sale of the Financed Aircraft having manufacturer's serial
numbers 373 (leased to Midway Airlines, Inc.) and 25221 (leased
to Britannia Airways)) shall first be applied pro rata to the
partial prepayment of all unpaid Revolving Loans in respect of
the remaining Financed Aircraft until the aggregate outstanding
principal balance of the Revolving Loans does not exceed the
aggregate of the Applicable Aircraft Borrowing Bases of all
Financed Aircraft as reduced by the Cumulative Depreciation
Amounts of such Financed Aircraft, and then, if no Default or
Event of Default exists at the time, the balance, if any, shall
be paid to the Applicable Borrower and may be used by such
Borrower in its discretion subject to compliance with the terms
of this Credit Agreement and other Loan Documents. If UniCapital
or any of its affiliates or one or more of the Borrowers, acting
directly or through one or more affiliates, enters into a
securitization, offering of lease receivables, equipment trust
certificate transaction or other capital markets transaction
(except the pending sale for securitization of the Financed
Aircraft having manufacturer's serial numbers 373 (leased to
Midway Airlines, Inc.) and 25221 (leased to Britannia Airways))
with respect to some or all of the Financed Aircraft, in either
case UniCapital shall cause any net proceeds of such debt
offering or other transaction to be applied pro rata to the
partial prepayment of all unpaid Revolving Loans in respect of
the Financed Aircraft until the aggregate outstanding principal
balance of the Revolving Loans does not exceed the aggregate of
the Applicable Aircraft Borrowing Bases of all Financed Aircraft
as reduced by the Cumulative depreciation Amounts of such
Financed Aircraft, and then the balance, if any (if not otherwise
required to be applied herein), shall be paid to the Applicable
Borrower and may be used by such Borrower in its discretion
subject to compliance with the terms of this Credit Agreement and
other Loan Documents."
(c) Subsection 2.10 of the Credit Agreement is hereby amended by
inserting the following after the word "therein":
<PAGE> 5
5
"and, in addition thereto, shall pay a fee equal to 1% of the
Incremental Applicable Aircraft Borrowing Base for each Financed
Aircraft on the date of the Loan advance with respect thereto."
4. Amendments to Article VII.
The following additional subsection is hereby added to Article
VII in the appropriate numerical order:
"7.26. Refinancing of Other Aircraft. UniCapital agrees to cause
the four existing aircraft financed under the NationsBank
Warehouse Credit Agreement to be promptly refinanced under this
Agreement."
5. Transitory Provision. Notwithstanding the limitation contained in the
second sentence of the definition of Financed Aircraft, with respect to Eligible
Aircraft with respect to which a Loan was advanced on or before March 25, 1999,
Lenders shall make a single additional advance with respect to all such Eligible
Aircraft, and if required, each Borrower hereby agrees to partially prepay the
unpaid Revolving Loans in order to conform to the terms and conditions contained
in subsection 2.1 of the Credit Agreement, as amended by this Amendment. The
Borrowers hereby agree that the proceeds of such additional advances shall be
used by each Borrower only to prepay existing loans permitted under subsection
8.5(d) of the Credit Agreement.
6. Effective Date. This Amendment shall become effective as of the date
hereof (the "Effective Date") upon receipt by the Agent of counterparts of this
Amendment, duly executed and delivered by the Borrowers, UniCapital, Lehman, and
the Agent and the amendment of even date herewith to the existing engagement
letter between Lehman Brothers Inc. and UniCapital, duly executed by UniCapital.
7. Representations and Warranties. After the effectiveness of this
Amendment, the Borrower confirms and reaffirms as of the date hereof the
representations and warranties contained in Article VI of the Credit Agreement.
8. Continuing Effect. Except as expressly waived or amended hereby, the
Credit Agreement shall continue to be and shall remain in full force and effect
in accordance with its terms. This Amendment shall constitute a Loan Document.
9. Governing Law; Counterparts. (a) This Amendment shall be governed by,
and construed and interpreted in accordance with, the laws of the State of
New York.
(b) This Amendment may be executed by the parties hereto on one
or more counterparts, and all such counterparts shall be deemed to constitute
one and the same instrument.
<PAGE> 6
6
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered as of the day and year first written above.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its
individual capacity, except as
expressly specified herein, but
solely as trustee, as the
Initial Borrower
By: /s/ Brett R. King
----------------------------
Name: Brett R. King
Title: Assistant
Vice President
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (49104) DATED
AS OF JANUARY 10, 1999 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 49104, INC.
By: /s/ Brett R. King
----------------------------
Name: Brett R. King
Title: Assistant
Vice President
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (22222) DATED
AS OF SEPTEMBER 28, 199 BY AND
BETWEEN
<PAGE> 7
7
FIRST SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 22222,
INC.
By: /s/ Brett R. King
----------------------------
Name: Brett R. King
Title: Assistant
Vice President
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (53015) DATED
AS OF AUGUST 28, 1998 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 53105, INC.
By: /s/ Brett R. King
----------------------------
Name: Brett R. King
Title: Assistant
Vice President
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (24837) DATED
AS OF OCTOBER 30, 1998 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 24837, INC.
By: /s/ Brett R. King
----------------------------
Name: Brett R. King
Title: Assistant
Vice President
<PAGE> 8
8
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE UNDER THE AMENDED
AND RESTATED TRUST AGREEMENT
(347) DATED AS OF OCTOBER 30,
1998 BY AND BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 347,
INC.
By: /s/ Brett R. King
----------------------------
Name: Brett R. King
Title: Assistant
Vice President
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
AMENDED AND RESTATED TRUST
AGREEMENT (25221) DATED AS OF
AUGUST 25, 1998 BY AND BETWEEN
FIRST SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 25221,
INC.
By: /s/ Brett R. King
----------------------------
Name: Brett R. King
Title: Assistant
Vice President
AIRCRAFT 373, INC.
By: /s/ Daniel M. Chait
----------------------------
Name: Daniel M. Chait
Title: Vice President
<PAGE> 9
9
UNICAPITAL CORPORATION
By: /s/ Daniel M. Chait
----------------------------
Name: Daniel M. Chait
Title: Vice President
<PAGE> 10
10
LEHMAN COMMERCIAL PAPER INC.,
as Agent and as a Lender
By: /s/ Vincent Primiano
----------------------------
Name: Vincent Primiano
Title: Vice President
<PAGE> 1
Exhibit 4.05(b)
SECOND AMENDMENT
SECOND AMENDMENT, dated as of April 28, 1999 (the "Amendment"),
to the Credit Agreement, dated as of October 6, 1998, as amended by the
Amendment dated as of March 26, 1999 (as so amended, the "Credit Agreement"),
made by and among FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association not in its individual capacity but solely as trustee on behalf of
that certain trust created under the Trust Agreement (22222), dated as of
September 28, 1998, between First Security Bank, National Association and
Aircraft 22222, Inc., a Delaware corporation (together with any successor
Qualified Trustee, the "Initial Borrower"), FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity but solely as trustee on behalf of
that certain trust created under the Trust Agreement (49104) dated as of January
10, 1999 by and between First Security Bank, National association and Aircraft
49104, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual
capacity but solely as trustee on behalf of that certain trust created under the
Trust Agreement (53015) dated as of August 28, 1998 by and between First
Security Bank, National Association and Aircraft 53015, Inc., FIRST SECURITY
BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely as trustee
on behalf of that certain trust created under the Trust Agreement (24837) dated
as of October 30, 1998 by and between First Security Bank, National Association
and Aircraft 24837, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its
individual capacity but solely as trustee under the Amended and Restated Trust
Agreement (347) dated as of October 30, 1998 by and between First Security Bank,
National Association and Aircraft 347, Inc., FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity but solely as trustee on behalf of
that certain trust created under the Amended and Restated Trust Agreement
(25221) dated as of August 25, 1998 by and between First Security Bank, National
Association and Aircraft 25221, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity but solely as trustee on behalf of that trust
created by Trust Agreement (23377) dated as of June 24, 1998 by and between
First Security Bank, National Association and Aircraft 23377, Inc., FIRST
SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely
as trustee on behalf of that trust created by Trust Agreement (23830) dated as
of July 10, 1998 by and between First Security Bank, National Association and
Aircraft 23830, Inc., WILMINGTON TRUST COMPANY, not in its individual capacity
but solely as trustee on behalf of that certain trust created under the Trust
Agreement, dated as of November 14, 1984 between Aircraft 49262, Inc. (as
assignee of CCD Air Ten, Inc.) and Wilmington Trust Company, WILMINGTON TRUST
COMPANY, not in its individual capacity but solely as trustee on behalf of that
certain trust created under the Trust Agreement, dated as of November 15, 1984
between Aircraft 49263, Inc. (as assignee of CCD Air Ten, Inc.) and Wilmington
Trust Company, FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual
capacity but solely as owner trustee on behalf of that certain trust created by
Trust Agreement (24474), dated as of April 1, 1999 between First Security Bank,
National Association and Aircraft 24474, Inc. and AIRCRAFT 373, INC.
(collectively, with the Initial Borrower, the "Existing Borrowers"), certain
other UniCapital Subsidiary Trusts and UniCapital Special Purpose Corporations
designated as Borrowing Affiliates thereunder (the Existing Borrowers and such
UniCapital Subsidiary
<PAGE> 2
2
Trusts and UniCapital Special Purpose Corporations being referred to
individually as a "Borrower" or collectively as the "Borrowers"), LEHMAN
COMMERCIAL PAPER INC., a New York corporation in its capacity as a Lender
("Lehman"), and other financial institutions from time to time parties thereto
(such financial institutions hereinafter being referred to individually as a
"Lender" or collectively as the "Lenders"), and LEHMAN COMMERCIAL PAPER INC. in
its capacity as agent for the Lenders (in such capacity, and together with any
successor agent, the "Agent").
W I T N E S S E T H :
WHEREAS, the Borrowers, UniCapital, Lehman, and the Agent, desire
to amend the Credit Agreement as set forth in this Amendment, but only on the
terms and subject to the conditions set forth below;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto agree as
follows:
1. Defined Terms. Terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.
2. Amendments to Article I.
(a) The following defined term is hereby added to subsection 1.1
in the appropriate alphabetical order:
"Affiliate Bridge Credit Agreement": the Credit Agreement dated
as of April 28, 1999, among UCP Engines, Inc., UCP Engines Trust,
a Delaware business trust, State Street Bank and Trust Company,
as Trustee, Aircraft 22067 Trust, a Delaware business trust, and
Aircraft 20527 Trust, a Delaware business trust, any other
borrowers thereunder from time to time, Lehman Commercial Paper
Inc. ("LCPI"), in its capacity as a lender thereunder and each
other financial institution executing and delivering a signature
page thereto and each other financial institution which may from
time to time become a Lender thereunder as provided therein, LCPI
in its capacity as Administrative Agent for the Lenders
thereunder, LCPI in its capacity as Syndication Agent thereunder
and Lehman Brothers Inc., as Arranger thereunder.
3. Amendments to Article VII
The following additional subsection is hereby added to Article
VII of the Credit Agreement in the appropriate numerical order:
"7.27. Cross-collateralization of Affiliate Bridge Credit
Agreement. Each Borrower and each Beneficial Owner shall execute
and deliver the guarantees, pledge
<PAGE> 3
3
agreements, mortgages and other documents from time to time
required to be executed and delivered by such parties pursuant to
the Affiliate Bridge Credit Agreement."
4. Amendments to Article VIII.
(a) Subsection 8.4 of the Credit Agreement is hereby amended by
adding at the end of clause (vii) thereof the words "or directly or indirectly
securing Indebtedness under the Affiliate Bridge Credit Agreement."
(b) Subsection 8.5 of the Credit Agreement is hereby amended by
inserting the following new subparagraph thereto in the appropriate alphabetical
order (with the corresponding relocation of the word "and" at the end of
subparagraph (c) thereof to the end of subparagraph (d) thereof):
"(e) Indebtedness in connection with the Affiliate Bridge Credit
Agreement."
5. Waivers with Respect to Certain Pending Sales and Acquisitions.
(a) Notwithstanding anything to the contrary in Section 2.3(b)(i)
of the Credit Agreement, the net proceeds of the proposed sale of the Financed
Aircraft bearing FAA Registration No. N966AS (currently leased to Spirit
Airlines) (the "Pending Sale Aircraft") shall be applied in the following order
of priority:
(1) to repay the principal and interest on the Loans
outstanding with respect to the Pending Sale Aircraft;
(2) to reduce the principal balance outstanding with
respect to the Boeing 747 Financed Aircraft bearing airframe
manufacturer's serial number 24837 (currently leased to Sabena)(the
"Sabena 747") by $2,000,000; and
(3) the remainder shall be released to the Applicable
Borrower to be used for such purposes, including payment of trust
distributions or dividends, as it may determine.
(b) Nothing contained in the definition of "Concentration
Restriction" shall (i) prevent the four Boeing 737-300 Aircraft and the two
Boeing 737-500 Aircraft, bearing airframe manufacturer's serial numbers 26537,
26538, 24355, 24356, 23771 and 23772, together with the associated engines,
proposed to be purchased from and leased back to Sabena (collectively, the
"Additional Sabena Aircraft") from being financed under the Credit Agreement or
(ii) require the principal balance of the Loans advanced with respect to the
Additional Sabena Aircraft to be prepaid to comply with such definition.
(c) A portion of the proceeds of the Loans to be advanced with
respect to the Additional Sabena Aircraft, in the amount of $670,000 for each
Additional Sabena Aircraft, shall be
<PAGE> 4
4
applied, at the Agent's option, (i) to reduce the Loan balance with respect to
the Sabena 747 or (ii) to reduce the Loan balances with respect to some or all
of the Financed Aircraft (other than the Additional Sabena Aircraft), in such
amounts and allocations as the Agent may determine.
(d) Notwithstanding anything to the contrary in Section 2.3(b)(i)
of the Credit Agreement, the net proceeds of any Additional Sabena Aircraft
shall be applied in the following order of priority:
(1) to repay the principal and interest on the Loans
outstanding with respect to the Additional Sabena Aircraft; and
(2) the remainder shall be released to the Applicable
Borrowers to be used for such purposes, including payment of trust
distributions or dividends, as they may determine.
6. Effective Date. This Amendment shall become effective as of the date
hereof (the "Effective Date") upon receipt by the Agent of counterparts of this
Amendment, duly executed and delivered by the Borrowers, UniCapital, Lehman, and
the Agent.
7. Representations and Warranties. After the effectiveness of this
Amendment, the Borrower confirms and reaffirms as of the date hereof the
representations and warranties contained in Article VI of the Credit Agreement.
8. Continuing Effect. Except as expressly waived or amended hereby, the
Credit Agreement shall continue to be and shall remain in full force and effect
in accordance with its terms. This Amendment shall constitute a Loan Document.
9. Governing Law; Counterparts. (a) This Amendment shall be governed
by, and construed and interpreted in accordance with, the laws of the State of
New York.
(b) This Amendment may be executed by the parties hereto on one
or more counterparts, and all such counterparts shall be deemed to constitute
one and the same instrument.
<PAGE> 5
5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered as of the day and year first written above.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its
individual capacity, except as
expressly specified herein, but
solely as trustee, as the
Initial Borrower
By: /s/ Brett R. King
----------------------------
Name: Brett R. King
Title: Assistant
Vice President
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (49104) DATED AS
OF JANUARY 10, 1999 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 49104, INC.
By: /s/ Brett R. King
----------------------------
Name: Brett R. King
Title: Assistant
Vice President
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (22222) DATED AS
OF SEPTEMBER 28, 199 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 22222, INC.
By: /s/ Brett R. King
----------------------------
Name: Brett R. King
Title: Assistant
Vice President
<PAGE> 6
6
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (53015) DATED AS
OF AUGUST 28, 1998 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 53105, INC.
By: /s/ Brett R. King
----------------------------
Name: Brett R. King
Title: Assistant
Vice President
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (24837) DATED AS
OF OCTOBER 30, 1998 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 24837, INC.
By: /s/ Brett R. King
----------------------------
Name: Brett R. King
Title: Assistant
Vice President
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE UNDER THE AMENDED AND
RESTATED TRUST AGREEMENT (347)
DATED AS OF OCTOBER 30, 1998 BY
AND BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 347, INC.
By: /s/ Brett R. King
----------------------------
Name: Brett R. King
Title: Assistant
Vice President
<PAGE> 7
7
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
AMENDED AND RESTATED TRUST
AGREEMENT (25221) DATED AS OF
AUGUST 25, 1998 BY AND BETWEEN
FIRST SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 25221,
INC.
By: /s/ Brett R. King
----------------------------
Name: Brett R. King
Title: Assistant
Vice President
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
TRUST CREATED BY TRUST AGREEMENT
(23377) DATED AS OF JUNE 24,
1998 BY AND BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23377,
INC.
By: /s/ Brett R. King
----------------------------
Name: Brett R. King
Title: Assistant
Vice President
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
TRUST CREATED BY TRUST AGREEMENT
(23830) DATED AS OF JULY 10,
1998 BY AND BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23830,
INC.
By: /s/ Brett R. King
----------------------------
Name: Brett R. King
Title: Assistant
Vice President
<PAGE> 8
8
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS OWNER TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED BY
TRUST AGREEMENT (24474), DATED
AS OF APRIL 1, 1999 BETWEEN
FIRST SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 24474,
INC.
By: /s/ Brett R. King
----------------------------
Name: Brett R. King
Title: Assistant
Vice President
<PAGE> 9
9
WILMINGTON TRUST COMPANY, NOT IN
ITS INDIVIDUAL CAPACITY BUT
SOLELY AS TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED UNDER
THE TRUST AGREEMENT, DATED AS OF
NOVEMBER 14, 1984 BETWEEN
AIRCRAFT 49262, INC. (AS
ASSIGNEE OF CCD AIR TEN, INC.)
AND WILMINGTON TRUST COMPANY
By: /s/ Monica M. Henry
----------------------------
Name: Monica M. Henry
Title: Account Manager
WILMINGTON TRUST COMPANY, NOT IN
ITS INDIVIDUAL CAPACITY BUT
SOLELY AS TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED UNDER
THE TRUST AGREEMENT, DATED AS OF
NOVEMBER 15, 1984 BETWEEN
AIRCRAFT 49263, INC. (AS
ASSIGNEE OF CCD AIR TEN, INC.)
AND WILMINGTON TRUST COMPANY
By: /s/ Monica M. Henry
----------------------------
Name: Monica M. Henry
Title: Account Manager
<PAGE> 10
10
AIRCRAFT 373, INC.
By: /s/ Daniel M. Chait
----------------------------
Name: Daniel M. Chait
Title: Vice President
<PAGE> 11
11
UNICAPITAL CORPORATION
By: /s/ Daniel M. Chait
----------------------------
Name: Daniel M. Chait
Title: Vice President
<PAGE> 12
12
LEHMAN COMMERCIAL PAPER INC.,
as Agent and as a Lender
By: /s/ Vincent Primiano
----------------------------
Name: Vincent Primiano
Title: Authorized Signatory
<PAGE> 1
Exhibit 4.05(c)
THIRD AMENDMENT
THIRD AMENDMENT, dated as of August 19, 1999 (the "Amendment"),
to the Credit Agreement, dated as of October 6, 1998, as amended by the
Amendment dated as of March 26, 1999 and the Second Amendment dated as of April
28, 1999 (as so amended, the "Credit Agreement"), made by and among FIRST
SECURITY BANK, NATIONAL ASSOCIATION, a national banking association not in its
individual capacity but solely as trustee on behalf of that certain trust
created under the Trust Agreement (22222), dated as of September 28, 1998,
between First Security Bank, National Association and Aircraft 22222, Inc., a
Delaware corporation (together with any successor Qualified Trustee, the
"Initial Borrower"), FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its
individual capacity but solely as trustee on behalf of that certain trust
created under the Trust Agreement (53015) dated as of August 28, 1998 by and
between First Security Bank, National Association and Aircraft 53015, Inc.,
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but
solely as trustee on behalf of that certain trust created under the Trust
Agreement (24837) dated as of October 30, 1998 by and between First Security
Bank, National Association and Aircraft 24837, Inc., FIRST SECURITY BANK,
NATIONAL ASSOCIATION, not in its individual capacity but solely as trustee under
the Amended and Restated Trust Agreement (347) dated as of October 30, 1998 by
and between First Security Bank, National Association and Aircraft 347, Inc.,
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but
solely as trustee on behalf of that trust created by Trust Agreement (23377)
dated as of June 24, 1998 by and between First Security Bank, National
Association and Aircraft 23377, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity but solely as trustee on behalf of that trust
created by Trust Agreement (23830) dated as of July 10, 1998 by and between
First Security Bank, National Association and Aircraft 23830, Inc., WILMINGTON
TRUST COMPANY, not in its individual capacity but solely as trustee on behalf of
that certain trust created under the Trust Agreement, dated as of November 14,
1984 between Aircraft 49262, Inc. (as assignee of CCD Air Ten, Inc.) and
Wilmington Trust Company, WILMINGTON TRUST COMPANY, not in its individual
capacity but solely as trustee on behalf of that certain trust created under the
Trust Agreement, dated as of November 15, 1984 between Aircraft 49263, Inc. (as
assignee of CCD Air Ten, Inc.) and Wilmington Trust Company, FIRST SECURITY
BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely as owner
trustee on behalf of that certain trust created by Trust Agreement (24474),
dated as of April 1, 1999 between First Security Bank, National Association and
Aircraft 24474, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its
individual capacity but solely as owner trustee on behalf of that certain trust
created by Trust Agreement (25262), dated as of April 25, 1999 between First
Security Bank, National Association and Aircraft 25262, Inc. and FIRST SECURITY
BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely as trustee
on behalf of that certain trust created by Trust Agreement (49368), dated as of
April 25, 1999 between First Security Bank, National Association and Aircraft
49368, Inc. (collectively, with the Initial Borrower, the "Existing Borrowers"),
certain other UniCapital Subsidiary Trusts and UniCapital Special Purpose
Corporations designated as Borrowing Affiliates thereunder (the Existing
Borrowers and such UniCapital Subsidiary Trusts and UniCapital Special Purpose
Corporations being referred to individually as a "Borrower" or collectively as
the "Borrowers"), LEHMAN COMMERCIAL PAPER
<PAGE> 2
2
INC., a New York corporation in its capacity as a Lender ("Lehman"), and other
financial institutions from time to time parties thereto (such financial
institutions hereinafter being referred to individually as a "Lender" or
collectively as the "Lenders"), and LEHMAN COMMERCIAL PAPER INC. in its capacity
as agent for the Lenders (in such capacity, and together with any successor
agent, the "Agent").
W I T N E S S E T H :
WHEREAS, the Borrowers, UniCapital, Lehman, and the Agent, desire
to amend the Credit Agreement as set forth in this Amendment, but only on the
terms and subject to the conditions set forth below;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto agree as
follows:
1. Defined Terms. Terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.
2. Amendment of Recitals. The first paragraph of the recitals is hereby
amended by deleting the amount "$500,000,000" and substituting in lieu thereof
the amount "$600,000,000."
3. Amendment of Article I. The definition of "Total Revolving Credit
Commitment" is hereby amended by deleting the amount "$500,000,000" and
substituting in lieu thereof the amount "$600,000,000."
4. Amendment of Exhibit A. Exhibit A to the Credit Agreement is hereby
amended by deleting the amount "$500,000,000" appearing opposite the name of
Lehman Commercial Paper Inc. under the heading Revolving Credit Commitment and
substituting in lieu thereof the amount "$600,000,000."
5. Effective Date. This Amendment shall become effective on the date
(the "Effective Date") on which all of the following conditions precedent have
been satisfied:
a) The Agent shall have received counterparts of this Amendment,
duly executed and delivered by the Borrowers, Unicapital, Lehman, and the Agent;
and,
b) The Agent shall have received such fees as agreed to by
Unicapital Corporation and Lehman Commercial Paper Inc., as set forth in their
letter agreement dated August 13, 1999.
6. Representations and Warranties. After the effectiveness of this
Amendment, the Borrower confirms and reaffirms as of the date hereof the
representations and warranties contained in Article VI of the Credit Agreement.
<PAGE> 3
3
7. Continuing Effect. Except as expressly waived or amended hereby, the
Credit Agreement shall continue to be and shall remain in full force and effect
in accordance with its terms. This Amendment shall constitute a Loan Document.
8. Governing Law; Counterparts. (a) This Amendment shall be governed
by, and construed and interpreted in accordance with, the laws of the State of
New York.
(b) This Amendment may be executed by the parties hereto on one
or more counterparts, and all such counterparts shall be deemed to constitute
one and the same instrument.
[SIGNATURE PAGES FOLLOW]
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered as of the day and year first written above.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION,
not in its individual capacity,
except as expressly specified
herein, but solely as trustee,
as the Initial Borrower
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (22222) DATED AS
OF SEPTEMBER 28, 199 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 22222, INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (53015) DATED AS
OF AUGUST 28, 1998 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 53105, INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (24837) DATED AS
OF OCTOBER 30, 1998 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 24837, INC.
<PAGE> 5
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE UNDER THE AMENDED AND
RESTATED TRUST AGREEMENT (347)
DATED AS OF OCTOBER 30, 1998 BY
AND BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 347, INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
TRUST CREATED BY TRUST AGREEMENT
(23377) DATED AS OF JUNE 24,
1998 BY AND BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23377,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
TRUST CREATED BY TRUST AGREEMENT
(23830) DATED AS OF JULY 10,
1998 BY AND BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23830,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS OWNER TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED BY
TRUST AGREEMENT (24474), DATED
AS OF APRIL 1, 1999 BETWEEN
FIRST SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 24474,
INC.
<PAGE> 6
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS OWNER TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED BY
TRUST AGREEMENT (25262), DATED
AS OF APRIL 25, 1999 BETWEEN
FIRST SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 25262,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (49368), DATED AS OF
APRIL 25, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 49368,
INC.
By: /s/ Brett R. King
----------------------------
Name: Brett R. King
Title: Assistant
Vice President
<PAGE> 7
WILMINGTON TRUST COMPANY, NOT IN
ITS INDIVIDUAL CAPACITY BUT
SOLELY AS TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED UNDER
THE TRUST AGREEMENT, DATED AS OF
NOVEMBER 14, 1984 BETWEEN
AIRCRAFT 49262, INC. (AS
ASSIGNEE OF CCD AIR TEN, INC.)
AND WILMINGTON TRUST COMPANY
By: /s/ Monica M. Henry
----------------------------
Name: Monica M. Henry
Title: Account Manager
WILMINGTON TRUST COMPANY, NOT IN
ITS INDIVIDUAL CAPACITY BUT
SOLELY AS TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED UNDER
THE TRUST AGREEMENT, DATED AS OF
NOVEMBER 15, 1984 BETWEEN
AIRCRAFT 49263, INC. (AS
ASSIGNEE OF CCD AIR TEN, INC.)
AND WILMINGTON TRUST COMPANY
By: /s/ Monica M. Henry
----------------------------
Name: Monica M. Henry
Title: Account Manager
<PAGE> 8
UNICAPITAL CORPORATION
By: /s/ Daniel M. Chait
----------------------------
Name: Daniel M. Chait
Title: Vice President
<PAGE> 9
LEHMAN COMMERCIAL PAPER INC.,
as Agent and as a Lender
By: /s/ Vincent Primiano
----------------------------
Name: Vincent Primiano
Title: Vice President
<PAGE> 1
Exhibit 4.05(d)
FOURTH AMENDMENT
FOURTH AMENDMENT, dated as of October 4, 1999 (the "Amendment"),
to the Credit Agreement, dated as of October 6, 1998, as amended by the
Amendment dated as of March 26, 1999, the Second Amendment dated as of April 28,
1999 and the Third Amendment dated as of August 19, 1999 (as so amended, the
"Credit Agreement"), made by and among FIRST SECURITY BANK, NATIONAL
ASSOCIATION, a national banking association not in its individual capacity but
solely as trustee on behalf of that certain trust created under the Trust
Agreement (22222), dated as of September 28, 1998, between First Security Bank,
National Association and Aircraft 22222, Inc., a Delaware corporation (together
with any successor Qualified Trustee, the "Initial Borrower"), FIRST SECURITY
BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely as trustee
on behalf of that certain trust created under the Trust Agreement (53015) dated
as of August 28, 1998 by and between First Security Bank, National Association
and Aircraft 53015, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its
individual capacity but solely as trustee on behalf of that certain trust
created under the Trust Agreement (24837) dated as of October 30, 1998 by and
between First Security Bank, National Association and Aircraft 24837, Inc.,
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but
solely as trustee under the Amended and Restated Trust Agreement (347) dated as
of October 30, 1998 by and between First Security Bank, National Association and
Aircraft 347, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its
individual capacity but solely as trustee on behalf of that trust created by
Trust Agreement (23377) dated as of June 24, 1998 by and between First Security
Bank, National Association and Aircraft 23377, Inc., FIRST SECURITY BANK,
NATIONAL ASSOCIATION, not in its individual capacity but solely as trustee on
behalf of that trust created by Trust Agreement (23830) dated as of July 10,
1998 by and between First Security Bank, National Association and Aircraft
23830, Inc., WILMINGTON TRUST COMPANY, not in its individual capacity but solely
as trustee on behalf of that certain trust created under the Trust Agreement,
dated as of November 14, 1984 between Aircraft 49262, Inc. (as assignee of CCD
Air Ten, Inc.) and Wilmington Trust Company, WILMINGTON TRUST COMPANY, not in
its individual capacity but solely as trustee on behalf of that certain trust
created under the Trust Agreement, dated as of November 15, 1984 between
Aircraft 49263, Inc. (as assignee of CCD Air Ten, Inc.) and Wilmington Trust
Company, FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual
capacity but solely as owner trustee on behalf of that certain trust created by
Trust Agreement (24474), dated as of April 1, 1999 between First Security Bank,
National Association and Aircraft 24474, Inc., FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity but solely as owner trustee on
behalf of that certain trust created by Trust Agreement (25262), dated as of
April 25, 1999 between First Security Bank, National Association and Aircraft
25262, Inc. and FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual
capacity but solely as trustee on behalf of that certain trust created by Trust
Agreement (49368), dated as of April 25, 1999 between First Security Bank,
National Association and Aircraft 49368, Inc., FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity but solely as trustee on behalf of
that certain trust created by Trust Agreement (53623), dated as of August 18,
1999 between First Security Bank, National Association and Aircraft 53623, Inc.,
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but
solely as trustee on behalf of that certain trust
<PAGE> 2
2
created by Trust Agreement (53624), dated as of August 18, 1999 between First
Security Bank, National Association and Aircraft 53624, Inc., FIRST SECURITY
BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely as trustee
on behalf of that certain trust created by Trust Agreement (23771), dated as of
April 7, 1999 between First Security Bank, National Association and Aircraft
23771, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual
capacity but solely as trustee on behalf of that certain trust created by Trust
Agreement (23772), dated as of April 1, 1999 between First Security Bank,
National Association and Aircraft 23772, Inc., FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity but solely as trustee on behalf of
that certain trust created by Trust Agreement (26537), dated as of April 1, 1999
between First Security Bank, National Association and Aircraft 26537, Inc.,
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but
solely as trustee on behalf of that certain trust created by Trust Agreement
(26538), dated as of April 7, 1999 between First Security Bank, National
Association and Aircraft 26538, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity but solely as trustee on behalf of that certain
trust created by Trust Agreement (24355), dated as of April 7, 1999 between
First Security Bank, National Association and Aircraft 24355, Inc., FIRST
SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely
as trustee on behalf of that certain trust created by Trust Agreement (24356),
dated as of April 7, 1999 between First Security Bank, National Association and
Aircraft 24356, Inc. (collectively, with the Initial Borrower, the "Existing
Borrowers"), certain other UniCapital Subsidiary Trusts and UniCapital Special
Purpose Corporations designated as Borrowing Affiliates thereunder (the Existing
Borrowers and such UniCapital Subsidiary Trusts and UniCapital Special Purpose
Corporations being referred to individually as a "Borrower" or collectively as
the "Borrowers"), LEHMAN COMMERCIAL PAPER INC., a New York corporation in its
capacity as a Lender ("Lehman"), and other financial institutions from time to
time parties thereto (such financial institutions hereinafter being referred to
individually as a "Lender" or collectively as the "Lenders"), and LEHMAN
COMMERCIAL PAPER INC. in its capacity as agent for the Lenders (in such
capacity, and together with any successor agent, the "Agent").
W I T N E S S E T H :
WHEREAS, the Borrowers, UniCapital, Lehman, and the Agent, desire
to extend the maturity of the Credit Agreement as set forth in this Amendment,
but only on the terms and subject to the conditions set forth below;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto agree as
follows:
1. Defined Terms. Terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.
<PAGE> 3
3
2. Amendment of Article I. The definition of "Stated Termination Date"
is hereby amended by deleting the existing definition and substituting in lieu
thereof the following:
"Stated Termination Date" means October 22, 1999.
3. Effective Date. This Amendment shall not be binding until the Agent
shall have received counterparts of this Amendment, duly executed and delivered
by the Borrowers, UniCapital, Lehman, and the Agent; provided, however, that
once such counterparts are received, the effective date of this Amendment shall
be deemed to be October 4, 1999.
4. Representations and Warranties. After the effectiveness of this
Amendment, the Borrower confirms and reaffirms as of the date hereof the
representations and warranties contained in Article VI of the Credit Agreement.
5. Continuing Effect. Except as expressly waived or amended hereby, the
Credit Agreement shall continue to be and shall remain in full force and effect
in accordance with its terms. This Amendment shall constitute a Loan Document.
6. Governing Law; Counterparts. (a) This Amendment shall be governed
by, and construed and interpreted in accordance with, the laws of the State of
New York.
(b) This Amendment may be executed by the parties hereto on one
or more counterparts, and all such counterparts shall be deemed to constitute
one and the same instrument.
[SIGNATURE PAGES FOLLOW]
<PAGE> 4
4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered as of the day and year first written above.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION,
not in its individual capacity,
except as expressly specified
herein, but solely as trustee,
as the Initial Borrower
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (22222) DATED AS
OF SEPTEMBER 28, 199 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 22222, INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (53015) DATED AS
OF AUGUST 28, 1998 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 53105, INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (24837) DATED AS
OF OCTOBER 30, 1998 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL
<PAGE> 5
5
ASSOCIATION AND AIRCRAFT 24837,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE UNDER THE AMENDED AND
RESTATED TRUST AGREEMENT (347)
DATED AS OF OCTOBER 30, 1998 BY
AND BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 347, INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
TRUST CREATED BY TRUST AGREEMENT
(23377) DATED AS OF JUNE 24,
1998 BY AND BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23377,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
TRUST CREATED BY TRUST AGREEMENT
(23830) DATED AS OF JULY 10,
1998 BY AND BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23830,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS OWNER TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED BY
TRUST AGREEMENT (24474), DATED
AS OF APRIL 1, 1999 BETWEEN
FIRST SECURITY BANK, NATIONAL
<PAGE> 6
6
ASSOCIATION AND AIRCRAFT 24474,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS OWNER TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED BY
TRUST AGREEMENT (25262), DATED
AS OF APRIL 25, 1999 BETWEEN
FIRST SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 25262,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (49368), DATED AS OF
APRIL 25, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 49368,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (53623), DATED AS OF
AUGUST 18, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 53623,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (53624), DATED AS OF
AUGUST 18, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 53624,
INC.
<PAGE> 7
7
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (23771), DATED AS OF
APRIL 7, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23771,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (23772), DATED AS OF
APRIL 1, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23772,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (26537), DATED AS OF
APRIL 1, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 26537,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (26538), DATED AS OF
APRIL 7, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 26538,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST
<PAGE> 8
8
CREATED BY TRUST AGREEMENT
(24355), DATED AS OF APRIL 7,
1999 BETWEEN FIRST SECURITY
BANK, NATIONAL ASSOCIATION AND
AIRCRAFT 24355, INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (24356), DATED AS OF
APRIL 7, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 24356,
INC.
By: /s/ Brett R. King
---------------------------
Name: Brett R. King
Title: Vice President
<PAGE> 9
9
WILMINGTON TRUST COMPANY, NOT IN
ITS INDIVIDUAL CAPACITY BUT
SOLELY AS TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED UNDER
THE TRUST AGREEMENT, DATED AS OF
NOVEMBER 14, 1984 BETWEEN
AIRCRAFT 49262, INC. (AS
ASSIGNEE OF CCD AIR TEN, INC.)
AND WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, NOT IN
ITS INDIVIDUAL CAPACITY BUT
SOLELY AS TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED UNDER
THE TRUST AGREEMENT, DATED AS OF
NOVEMBER 15, 1984 BETWEEN
AIRCRAFT 49263, INC. (AS
ASSIGNEE OF CCD AIR TEN, INC.)
AND WILMINGTON TRUST COMPANY
By: /s/ Charise L. Rodgers
----------------------------
Name: Charise L. Rodgers
Title: Senior Financial
Services Officer
<PAGE> 10
10
UNICAPITAL CORPORATION
By: /s/ Daniel M. Chait
---------------------------
Name: Daniel M. Chait
Title: Vice President
<PAGE> 11
11
LEHMAN COMMERCIAL PAPER INC., as
Agent and as a Lender
By: /s/ Vincent Primiano
---------------------------
Name: Vincent Primiano
Title: Vice President
<PAGE> 1
Exhibit 4.05(e)
FIFTH AMENDMENT
FIFTH AMENDMENT, dated as of October 21, 1999 (the "Amendment"),
to the Credit Agreement, dated as of October 6, 1998, as amended by the
Amendment dated as of March 26, 1999, the Second Amendment dated as of April 28,
1999, the Third Amendment dated as of August 19, 1999 and the Fourth Amendment
dated as of October 4, 1999 (as so amended, the "Credit Agreement"), made by and
among FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association
not in its individual capacity but solely as trustee on behalf of that certain
trust created under the Trust Agreement (22222), dated as of September 28, 1998,
between First Security Bank, National Association and Aircraft 22222, Inc., a
Delaware corporation (together with any successor Qualified Trustee, the
"Initial Borrower"), FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its
individual capacity but solely as trustee on behalf of that certain trust
created under the Trust Agreement (53015) dated as of August 28, 1998 by and
between First Security Bank, National Association and Aircraft 53015, Inc.,
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but
solely as trustee on behalf of that certain trust created under the Trust
Agreement (24837) dated as of October 30, 1998 by and between First Security
Bank, National Association and Aircraft 24837, Inc., FIRST SECURITY BANK,
NATIONAL ASSOCIATION, not in its individual capacity but solely as trustee under
the Amended and Restated Trust Agreement (347) dated as of October 30, 1998 by
and between First Security Bank, National Association and Aircraft 347, Inc.,
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but
solely as trustee on behalf of that trust created by Trust Agreement (23377)
dated as of June 24, 1998 by and between First Security Bank, National
Association and Aircraft 23377, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity but solely as trustee on behalf of that trust
created by Trust Agreement (23830) dated as of July 10, 1998 by and between
First Security Bank, National Association and Aircraft 23830, Inc., WILMINGTON
TRUST COMPANY, not in its individual capacity but solely as trustee on behalf of
that certain trust created under the Trust Agreement, dated as of November 14,
1984 between Aircraft 49262, Inc. (as assignee of CCD Air Ten, Inc.) and
Wilmington Trust Company, WILMINGTON TRUST COMPANY, not in its individual
capacity but solely as trustee on behalf of that certain trust created under the
Trust Agreement, dated as of November 15, 1984 between Aircraft 49263, Inc. (as
assignee of CCD Air Ten, Inc.) and Wilmington Trust Company, FIRST SECURITY
BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely as owner
trustee on behalf of that certain trust created by Trust Agreement (24474),
dated as of April 1, 1999 between First Security Bank, National Association and
Aircraft 24474, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its
individual capacity but solely as owner trustee on behalf of that certain trust
created by Trust Agreement (25262), dated as of April 25, 1999 between First
Security Bank, National Association and Aircraft 25262, Inc. and FIRST SECURITY
BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely as trustee
on behalf of that certain trust created by Trust Agreement (49368), dated as of
April 25, 1999 between First Security Bank, National Association and Aircraft
49368, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual
capacity but solely as trustee on behalf of that certain trust created by Trust
Agreement (53623), dated as of August 18, 1999 between First Security Bank,
National Association and Aircraft 53623, Inc., FIRST SECURITY BANK, NATIONAL
<PAGE> 2
2
ASSOCIATION, not in its individual capacity but solely as trustee on behalf of
that certain trust created by Trust Agreement (53624), dated as of August 18,
1999 between First Security Bank, National Association and Aircraft 53624, Inc.,
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but
solely as trustee on behalf of that certain trust created by Trust Agreement
(23771), dated as of April 7, 1999 between First Security Bank, National
Association and Aircraft 23771, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity but solely as trustee on behalf of that certain
trust created by Trust Agreement (23772), dated as of April 1, 1999 between
First Security Bank, National Association and Aircraft 23772, Inc., FIRST
SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely
as trustee on behalf of that certain trust created by Trust Agreement (26537),
dated as of April 1, 1999 between First Security Bank, National Association and
Aircraft 26537, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its
individual capacity but solely as trustee on behalf of that certain trust
created by Trust Agreement (26538), dated as of April 7, 1999 between First
Security Bank, National Association and Aircraft 26538, Inc., FIRST SECURITY
BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely as trustee
on behalf of that certain trust created by Trust Agreement (24355), dated as of
April 7, 1999 between First Security Bank, National Association and Aircraft
24355, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual
capacity but solely as trustee on behalf of that certain trust created by Trust
Agreement (24356), dated as of April 7, 1999 between First Security Bank,
National Association and Aircraft 24356, Inc. (collectively, with the Initial
Borrower, the "Existing Borrowers"), certain other UniCapital Subsidiary Trusts
and UniCapital Special Purpose Corporations designated as Borrowing Affiliates
thereunder (the Existing Borrowers and such UniCapital Subsidiary Trusts and
UniCapital Special Purpose Corporations being referred to individually as a
"Borrower" or collectively as the "Borrowers"), LEHMAN COMMERCIAL PAPER INC., a
New York corporation in its capacity as a Lender ("Lehman"), and other financial
institutions from time to time parties thereto (such financial institutions
hereinafter being referred to individually as a "Lender" or collectively as the
"Lenders"), and LEHMAN COMMERCIAL PAPER INC. in its capacity as agent for the
Lenders (in such capacity, and together with any successor agent, the "Agent").
W I T N E S S E T H :
WHEREAS, the Borrowers, UniCapital, Lehman, and the Agent, desire
to extend the maturity of the Credit Agreement as set forth in this Amendment,
but only on the terms and subject to the conditions set forth below;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto agree as
follows:
1. Defined Terms. Terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.
<PAGE> 3
3
2. Amendment of Article I. The definition of "Stated Termination Date"
is hereby amended by deleting the existing definition and substituting in lieu
thereof the following:
"Stated Termination Date" means October 29, 1999.
3. Effective Date. This Amendment shall not be binding until the Agent
shall have received counterparts of this Amendment, duly executed and delivered
by the Borrowers, UniCapital, Lehman, and the Agent; provided, however, that
once such counterparts are received, the effective date of this Amendment shall
be deemed to be October 4, 1999.
4. Representations and Warranties. After the effectiveness of this
Amendment, the Borrower confirms and reaffirms as of the date hereof the
representations and warranties contained in Article VI of the Credit Agreement.
5. Continuing Effect. Except as expressly waived or amended hereby, the
Credit Agreement shall continue to be and shall remain in full force and effect
in accordance with its terms. This Amendment shall constitute a Loan Document.
6. Governing Law; Counterparts. (a) This Amendment shall be governed
by, and construed and interpreted in accordance with, the laws of the State of
New York.
(b) This Amendment may be executed by the parties hereto on one
or more counterparts, and all such counterparts shall be deemed to constitute
one and the same instrument.
[SIGNATURE PAGES FOLLOW]
<PAGE> 4
4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered as of the day and year first written above.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION,
not in its individual capacity,
except as expressly specified
herein, but solely as trustee,
as the Initial Borrower
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (22222) DATED AS
OF SEPTEMBER 28, 199 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 22222, INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (53015) DATED AS
OF AUGUST 28, 1998 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 53105, INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (24837) DATED AS
OF OCTOBER 30, 1998 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL
<PAGE> 5
5
ASSOCIATION AND AIRCRAFT 24837,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE UNDER THE AMENDED AND
RESTATED TRUST AGREEMENT (347)
DATED AS OF OCTOBER 30, 1998 BY
AND BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 347, INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
TRUST CREATED BY TRUST AGREEMENT
(23377) DATED AS OF JUNE 24,
1998 BY AND BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23377,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
TRUST CREATED BY TRUST AGREEMENT
(23830) DATED AS OF JULY 10,
1998 BY AND BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23830,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS OWNER TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED BY
TRUST AGREEMENT (24474), DATED
AS OF APRIL 1, 1999 BETWEEN
FIRST SECURITY BANK, NATIONAL
<PAGE> 6
6
ASSOCIATION AND AIRCRAFT 24474,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS OWNER TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED BY
TRUST AGREEMENT (25262), DATED
AS OF APRIL 25, 1999 BETWEEN
FIRST SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 25262,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (49368), DATED AS OF
APRIL 25, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 49368,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (53623), DATED AS OF
AUGUST 18, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 53623,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (53624), DATED AS OF
AUGUST 18, 1999 BETWEEN FIRST
SECURITY BANK,
<PAGE> 7
7
NATIONAL ASSOCIATION AND
AIRCRAFT 53624, INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (23771), DATED AS OF
APRIL 7, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23771,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (23772), DATED AS OF
APRIL 1, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23772,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (26537), DATED AS OF
APRIL 1, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 26537,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (26538), DATED AS OF
APRIL 7, 1999 BETWEEN FIRST
SECURITY BANK,
<PAGE> 8
8
NATIONAL ASSOCIATION AND
AIRCRAFT 26538, INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (24355), DATED AS OF
APRIL 7, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 24355,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (24356), DATED AS OF
APRIL 7, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 24356,
INC.
By: /s/ Brett R. King
---------------------------
Name: Brett R. King
Title: Vice President
<PAGE> 9
9
WILMINGTON TRUST COMPANY, NOT IN
ITS INDIVIDUAL CAPACITY BUT
SOLELY AS TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED UNDER
THE TRUST AGREEMENT, DATED AS OF
NOVEMBER 14, 1984 BETWEEN
AIRCRAFT 49262, INC. (AS
ASSIGNEE OF CCD AIR TEN, INC.)
AND WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, NOT IN
ITS INDIVIDUAL CAPACITY BUT
SOLELY AS TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED UNDER
THE TRUST AGREEMENT, DATED AS OF
NOVEMBER 15, 1984 BETWEEN
AIRCRAFT 49263, INC. (AS
ASSIGNEE OF CCD AIR TEN, INC.)
AND WILMINGTON TRUST COMPANY
By: /s/ Charise L. Rodgers
----------------------------
Name: Charise L. Rodgers
Title: Senior Financial
Services Officer
<PAGE> 10
10
UNICAPITAL CORPORATION
By: /s/ Daniel M. Chait
---------------------------
Name: Daniel M. Chait
Title: Vice President
<PAGE> 11
11
LEHMAN COMMERCIAL PAPER INC., as
Agent and as a Lender
By: /s/ Vincent Primiano
---------------------------
Name: Vincent Primiano
Title: Vice President
<PAGE> 1
Exhibit 4.05(f)
[Warehouse Facility]
SIXTH AMENDMENT
SIXTH AMENDMENT, dated as of October 4, 1999 (the "Amendment"),
to the Credit Agreement, dated as of October 6, 1998, as amended by the
Amendment dated as of March 26, 1999, the Second Amendment dated as of April 28,
1999, the Third Amendment dated as of August 19, 1999, the Fourth Amendment
dated as of October 4, 1999 AND THE Fifth Amendment dated as of October 21, 1999
(as so amended, the "Credit Agreement"), made by and among FIRST SECURITY BANK,
NATIONAL ASSOCIATION, a national banking association not in its individual
capacity but solely as trustee on behalf of that certain trust created under the
Trust Agreement (22222), dated as of September 28, 1998, between First Security
Bank, National Association and Aircraft 22222, Inc., a Delaware corporation
(together with any successor Qualified Trustee, the "Initial Borrower"), FIRST
SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely
as trustee on behalf of that certain trust created under the Trust Agreement
(53015) dated as of August 28, 1998 by and between First Security Bank, National
Association and Aircraft 53015, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity but solely as trustee on behalf of that certain
trust created under the Trust Agreement (24837) dated as of October 30, 1998 by
and between First Security Bank, National Association and Aircraft 24837, Inc.,
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but
solely as trustee under the Amended and Restated Trust Agreement (347) dated as
of October 30, 1998 by and between First Security Bank, National Association and
Aircraft 347, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its
individual capacity but solely as trustee on behalf of that trust created by
Trust Agreement (23377) dated as of June 24, 1998 by and between First Security
Bank, National Association and Aircraft 23377, Inc., FIRST SECURITY BANK,
NATIONAL ASSOCIATION, not in its individual capacity but solely as trustee on
behalf of that trust created by Trust Agreement (23830) dated as of July 10,
1998 by and between First Security Bank, National Association and Aircraft
23830, Inc., WILMINGTON TRUST COMPANY, not in its individual capacity but solely
as trustee on behalf of that certain trust created under the Trust Agreement,
dated as of November 14, 1984 between Aircraft 49262, Inc. (as assignee of CCD
Air Ten, Inc.) and Wilmington Trust Company, WILMINGTON TRUST COMPANY, not in
its individual capacity but solely as trustee on behalf of that certain trust
created under the Trust Agreement, dated as of November 15, 1984 between
Aircraft 49263, Inc. (as assignee of CCD Air Ten, Inc.) and Wilmington Trust
Company, FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual
capacity but solely as owner trustee on behalf of that certain trust created by
Trust Agreement (24474), dated as of April 1, 1999 between First Security Bank,
National Association and Aircraft 24474, Inc., FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity but solely as owner trustee on
behalf of that certain trust created by Trust Agreement (25262), dated as of
April 25, 1999 between First Security Bank, National Association and Aircraft
25262, Inc. and FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual
capacity but solely as trustee on behalf of that certain trust created by Trust
Agreement (49368), dated as of April 25, 1999 between First Security Bank,
National Association and Aircraft 49368, Inc., FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity but solely as trustee on behalf of
that certain trust created by Trust Agreement (53623), dated as of August 18,
1999
<PAGE> 2
2
between First Security Bank, National Association and Aircraft 53623, Inc.,
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but
solely as trustee on behalf of that certain trust created by Trust Agreement
(53624), dated as of August 18, 1999 between First Security Bank, National
Association and Aircraft 53624, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity but solely as trustee on behalf of that certain
trust created by Trust Agreement (23771), dated as of April 7, 1999 between
First Security Bank, National Association and Aircraft 23771, Inc., FIRST
SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely
as trustee on behalf of that certain trust created by Trust Agreement (23772),
dated as of April 1, 1999 between First Security Bank, National Association and
Aircraft 23772, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its
individual capacity but solely as trustee on behalf of that certain trust
created by Trust Agreement (26537), dated as of April 1, 1999 between First
Security Bank, National Association and Aircraft 26537, Inc., FIRST SECURITY
BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely as trustee
on behalf of that certain trust created by Trust Agreement (26538), dated as of
April 7, 1999 between First Security Bank, National Association and Aircraft
26538, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual
capacity but solely as trustee on behalf of that certain trust created by Trust
Agreement (24355), dated as of April 7, 1999 between First Security Bank,
National Association and Aircraft 24355, Inc., FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity but solely as trustee on behalf of
that certain trust created by Trust Agreement (24356), dated as of April 7, 1999
between First Security Bank, National Association and Aircraft 24356, Inc.
(collectively, with the Initial Borrower, the "Existing Borrowers"), certain
other UniCapital Subsidiary Trusts and UniCapital Special Purpose Corporations
designated as Borrowing Affiliates thereunder (the Existing Borrowers and such
UniCapital Subsidiary Trusts and UniCapital Special Purpose Corporations being
referred to individually as a "Borrower" or collectively as the "Borrowers"),
LEHMAN COMMERCIAL PAPER INC., a New York corporation in its capacity as a Lender
("Lehman"), and other financial institutions from time to time parties thereto
(such financial institutions hereinafter being referred to individually as a
"Lender" or collectively as the "Lenders"), and LEHMAN COMMERCIAL PAPER INC. in
its capacity as agent for the Lenders (in such capacity, and together with any
successor agent, the "Agent").
W I T N E S S E T H :
WHEREAS, the Borrowers, UniCapital, Lehman, and the Agent, desire
to extend the maturity of the Credit Agreement as set forth in this Amendment,
but only on the terms and subject to the conditions set forth below;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto agree as
follows:
1. Defined Terms. Terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.
<PAGE> 3
3
2. Amendment of Article I. The definition of "Stated Termination Date"
is hereby amended by deleting the existing definition and substituting in lieu
thereof the following:
"Stated Termination Date" means November 5, 1999.
3. Effective Date. This Amendment shall not be binding until the Agent
shall have received counterparts of this Amendment, duly executed and delivered
by the Borrowers, UniCapital, Lehman, and the Agent; provided, however, that
once such counterparts are received, the effective date of this Amendment shall
be deemed to be October 28, 1999.
4. Representations and Warranties. After the effectiveness of this
Amendment, the Borrower confirms and reaffirms as of the date hereof the
representations and warranties contained in Article VI of the Credit Agreement.
5. Consent to Extensions of Affiliate Warehouse Credit Agreement. Each
Borrower hereby consents to all extensions of the maturity of the Affiliate
Warehouse Credit Agreement and hereby confirm and represent to the Lender and
the Agent that all guarantees thereof by any Borrower and any liens on property
of any Borrower to secure indebtedness or other obligations under the Affiliate
Warehouse Credit Agreement remain in full force and effect.
6. Continuing Effect. Except as expressly waived or amended hereby, the
Credit Agreement shall continue to be and shall remain in full force and effect
in accordance with its terms. This Amendment shall constitute a Loan Document.
7. Governing Law; Counterparts. (a) This Amendment shall be governed
by, and construed and interpreted in accordance with, the laws of the State of
New York.
(b) This Amendment may be executed by the parties hereto on one
or more counterparts, and all such counterparts shall be deemed to constitute
one and the same instrument.
[SIGNATURE PAGES FOLLOW]
<PAGE> 4
4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered as of the day and year first written above.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION,
not in its individual capacity,
except as expressly specified
herein, but solely as trustee,
as the Initial Borrower
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (22222) DATED AS
OF SEPTEMBER 28, 199 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 22222, INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (53015) DATED AS
OF AUGUST 28, 1998 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 53105, INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (24837) DATED AS
OF OCTOBER 30, 1998 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL
<PAGE> 5
5
ASSOCIATION AND AIRCRAFT 24837,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE UNDER THE AMENDED AND
RESTATED TRUST AGREEMENT (347)
DATED AS OF OCTOBER 30, 1998 BY
AND BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 347, INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
TRUST CREATED BY TRUST AGREEMENT
(23377) DATED AS OF JUNE 24,
1998 BY AND BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23377,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
TRUST CREATED BY TRUST AGREEMENT
(23830) DATED AS OF JULY 10,
1998 BY AND BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23830,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS OWNER TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED BY
TRUST AGREEMENT (24474), DATED
AS OF APRIL 1, 1999 BETWEEN
FIRST SECURITY BANK, NATIONAL
<PAGE> 6
6
ASSOCIATION AND AIRCRAFT 24474,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS OWNER TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED BY
TRUST AGREEMENT (25262), DATED
AS OF APRIL 25, 1999 BETWEEN
FIRST SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 25262,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (49368), DATED AS OF
APRIL 25, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 49368,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (53623), DATED AS OF
AUGUST 18, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 53623,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT
<PAGE> 7
7
(53624), DATED AS OF AUGUST 18,
1999 BETWEEN FIRST SECURITY
BANK, NATIONAL ASSOCIATION AND
AIRCRAFT 53624, INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (23771), DATED AS OF
APRIL 7, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23771,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (23772), DATED AS OF
APRIL 1, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23772,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (26537), DATED AS OF
APRIL 1, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 26537,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT
<PAGE> 8
8
(26538), DATED AS OF APRIL 7,
1999 BETWEEN FIRST SECURITY
BANK, NATIONAL ASSOCIATION AND
AIRCRAFT 26538, INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (24355), DATED AS OF
APRIL 7, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 24355,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (24356), DATED AS OF
APRIL 7, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 24356,
INC.
By: /s/ Brett R. King
---------------------------
Name: Brett R. King
Title: Vice President
<PAGE> 9
9
WILMINGTON TRUST COMPANY, NOT IN
ITS INDIVIDUAL CAPACITY BUT
SOLELY AS TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED UNDER
THE TRUST AGREEMENT, DATED AS OF
NOVEMBER 14, 1984 BETWEEN
AIRCRAFT 49262, INC. (AS
ASSIGNEE OF CCD AIR TEN, INC.)
AND WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, NOT IN
ITS INDIVIDUAL CAPACITY BUT
SOLELY AS TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED UNDER
THE TRUST AGREEMENT, DATED AS OF
NOVEMBER 15, 1984 BETWEEN
AIRCRAFT 49263, INC. (AS
ASSIGNEE OF CCD AIR TEN, INC.)
AND WILMINGTON TRUST COMPANY
By: /s/ Monica M. Henry
---------------------------
Name: Monica M. Henry
Title: Account Manager
<PAGE> 10
10
UNICAPITAL CORPORATION
By: /s/ Daniel M. Chait
---------------------------
Name: Daniel M. Chait
Title: Vice President &
Treasurer
<PAGE> 11
11
LEHMAN COMMERCIAL PAPER INC.,
as Agent and as a Lender
By: /s/ Vincent Primiano
---------------------------
Name: Vincent Primiano
Title: Vice President
<PAGE> 1
Exhibit 4.05(g)
[Warehouse Facility]
SEVENTH AMENDMENT
SEVENTH AMENDMENT, dated as of October 4, 1999 (the "Amendment"),
to the Credit Agreement, dated as of October 6, 1998, as amended by the
Amendment dated as of March 26, 1999, the Second Amendment dated as of April 28,
1999, the Third Amendment dated as of August 19, 1999, the Fourth Amendment
dated as of October 4, 1999, Fifth Amendment dated as of October 21, 1999 the
Sixth Amendment dated as of October 4, 1999 (as so amended, the "Credit
Agreement"), made by and among FIRST SECURITY BANK, NATIONAL ASSOCIATION, a
national banking association not in its individual capacity but solely as
trustee on behalf of that certain trust created under the Trust Agreement
(22222), dated as of September 28, 1998, between First Security Bank, National
Association and Aircraft 22222, Inc., a Delaware corporation (together with any
successor Qualified Trustee, the "Initial Borrower"), FIRST SECURITY BANK,
NATIONAL ASSOCIATION, not in its individual capacity but solely as trustee on
behalf of that certain trust created under the Trust Agreement (53015) dated as
of August 28, 1998 by and between First Security Bank, National Association and
Aircraft 53015, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its
individual capacity but solely as trustee on behalf of that certain trust
created under the Trust Agreement (24837) dated as of October 30, 1998 by and
between First Security Bank, National Association and Aircraft 24837, Inc.,
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but
solely as trustee under the Amended and Restated Trust Agreement (347) dated as
of October 30, 1998 by and between First Security Bank, National Association and
Aircraft 347, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its
individual capacity but solely as trustee on behalf of that trust created by
Trust Agreement (23377) dated as of June 24, 1998 by and between First Security
Bank, National Association and Aircraft 23377, Inc., FIRST SECURITY BANK,
NATIONAL ASSOCIATION, not in its individual capacity but solely as trustee on
behalf of that trust created by Trust Agreement (23830) dated as of July 10,
1998 by and between First Security Bank, National Association and Aircraft
23830, Inc., WILMINGTON TRUST COMPANY, not in its individual capacity but solely
as trustee on behalf of that certain trust created under the Trust Agreement,
dated as of November 14, 1984 between Aircraft 49262, Inc. (as assignee of CCD
Air Ten, Inc.) and Wilmington Trust Company, WILMINGTON TRUST COMPANY, not in
its individual capacity but solely as trustee on behalf of that certain trust
created under the Trust Agreement, dated as of November 15, 1984 between
Aircraft 49263, Inc. (as assignee of CCD Air Ten, Inc.) and Wilmington Trust
Company, FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual
capacity but solely as owner trustee on behalf of that certain trust created by
Trust Agreement (24474), dated as of April 1, 1999 between First Security Bank,
National Association and Aircraft 24474, Inc., FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity but solely as owner trustee on
behalf of that certain trust created by Trust Agreement (25262), dated as of
April 25, 1999 between First Security Bank, National Association and Aircraft
25262, Inc. and FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual
capacity but solely as trustee on behalf of that certain trust created by Trust
Agreement (49368), dated as of April 25, 1999 between First Security Bank,
National Association and Aircraft 49368, Inc., FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity but solely as trustee on behalf of
that
<PAGE> 2
2
certain trust created by Trust Agreement (53623), dated as of August 18, 1999
between First Security Bank, National Association and Aircraft 53623, Inc.,
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but
solely as trustee on behalf of that certain trust created by Trust Agreement
(53624), dated as of August 18, 1999 between First Security Bank, National
Association and Aircraft 53624, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity but solely as trustee on behalf of that certain
trust created by Trust Agreement (23771), dated as of April 7, 1999 between
First Security Bank, National Association and Aircraft 23771, Inc., FIRST
SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely
as trustee on behalf of that certain trust created by Trust Agreement (23772),
dated as of April 1, 1999 between First Security Bank, National Association and
Aircraft 23772, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its
individual capacity but solely as trustee on behalf of that certain trust
created by Trust Agreement (26537), dated as of April 1, 1999 between First
Security Bank, National Association and Aircraft 26537, Inc., FIRST SECURITY
BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely as trustee
on behalf of that certain trust created by Trust Agreement (26538), dated as of
April 7, 1999 between First Security Bank, National Association and Aircraft
26538, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual
capacity but solely as trustee on behalf of that certain trust created by Trust
Agreement (24355), dated as of April 7, 1999 between First Security Bank,
National Association and Aircraft 24355, Inc., FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity but solely as trustee on behalf of
that certain trust created by Trust Agreement (24356), dated as of April 7, 1999
between First Security Bank, National Association and Aircraft 24356, Inc.
(collectively, with the Initial Borrower, the "Existing Borrowers"), certain
other UniCapital Subsidiary Trusts and UniCapital Special Purpose Corporations
designated as Borrowing Affiliates thereunder (the Existing Borrowers and such
UniCapital Subsidiary Trusts and UniCapital Special Purpose Corporations being
referred to individually as a "Borrower" or collectively as the "Borrowers"),
LEHMAN COMMERCIAL PAPER INC., a New York corporation in its capacity as a Lender
("Lehman"), and other financial institutions from time to time parties thereto
(such financial institutions hereinafter being referred to individually as a
"Lender" or collectively as the "Lenders"), and LEHMAN COMMERCIAL PAPER INC. in
its capacity as agent for the Lenders (in such capacity, and together with any
successor agent, the "Agent").
W I T N E S S E T H :
WHEREAS, the Borrowers, UniCapital, Lehman, and the Agent, desire
to extend the maturity of the Credit Agreement as set forth in this Amendment,
but only on the terms and subject to the conditions set forth below;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto agree as
follows:
<PAGE> 3
3
1. Defined Terms. Terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.
2. Amendment of Article I. The definition of "Stated Termination Date"
is hereby amended by deleting the existing definition and substituting in lieu
thereof the following:
"Stated Termination Date" means November 19, 1999.
3. Effective Date. This Amendment shall not be binding until the Agent
shall have received counterparts of this Amendment, duly executed and delivered
by the Borrowers, UniCapital, Lehman, and the Agent; provided, however, that
once such counterparts are received, the effective date of this Amendment shall
be deemed to be November 4, 1999.
4. Representations and Warranties. After the effectiveness of this
Amendment, the Borrower confirms and reaffirms as of the date hereof the
representations and warranties contained in Article VI of the Credit Agreement.
5. Consent to Extensions of Affiliate Warehouse Credit Agreement. Each
Borrower hereby consents to all extensions of the maturity of the Affiliate
Warehouse Credit Agreement and hereby confirm and represent to the Lender and
the Agent that all guarantees thereof by any Borrower and any liens on property
of any Borrower to secure indebtedness or other obligations under the Affiliate
Warehouse Credit Agreement remain in full force and effect.
6. Continuing Effect. Except as expressly waived or amended hereby, the
Credit Agreement shall continue to be and shall remain in full force and effect
in accordance with its terms. This Amendment shall constitute a Loan Document.
7. Governing Law; Counterparts. (a) This Amendment shall be governed
by, and construed and interpreted in accordance with, the laws of the State of
New York.
(b) This Amendment may be executed by the parties hereto on one
or more counterparts, and all such counterparts shall be deemed to constitute
one and the same instrument.
[SIGNATURE PAGES FOLLOW]
<PAGE> 4
4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered as of the day and year first written above.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION,
not in its individual capacity,
except as expressly specified
herein, but solely as trustee,
as the Initial Borrower
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (22222) DATED AS
OF SEPTEMBER 28, 199 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 22222, INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (53015) DATED AS
OF AUGUST 28, 1998 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 53105, INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (24837) DATED AS
OF OCTOBER 30, 1998 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL
<PAGE> 5
5
ASSOCIATION AND AIRCRAFT 24837,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE UNDER THE AMENDED AND
RESTATED TRUST AGREEMENT (347)
DATED AS OF OCTOBER 30, 1998 BY
AND BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 347, INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
TRUST CREATED BY TRUST AGREEMENT
(23377) DATED AS OF JUNE 24,
1998 BY AND BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23377,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
TRUST CREATED BY TRUST AGREEMENT
(23830) DATED AS OF JULY 10,
1998 BY AND BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23830,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS OWNER TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED BY
TRUST AGREEMENT (24474), DATED
AS OF APRIL 1, 1999 BETWEEN
FIRST SECURITY BANK, NATIONAL
<PAGE> 6
6
ASSOCIATION AND AIRCRAFT 24474,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS OWNER TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED BY
TRUST AGREEMENT (25262), DATED
AS OF APRIL 25, 1999 BETWEEN
FIRST SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 25262,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (49368), DATED AS OF
APRIL 25, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 49368,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (53623), DATED AS OF
AUGUST 18, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 53623,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST
<PAGE> 7
7
CREATED BY TRUST AGREEMENT
(53624), DATED AS OF AUGUST 18,
1999 BETWEEN FIRST SECURITY
BANK, NATIONAL ASSOCIATION AND
AIRCRAFT 53624, INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (23771), DATED AS OF
APRIL 7, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23771,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (23772), DATED AS OF
APRIL 1, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23772,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (26537), DATED AS OF
APRIL 1, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 26537,
INC.
<PAGE> 8
8
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (26538), DATED AS OF
APRIL 7, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 26538,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (24355), DATED AS OF
APRIL 7, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 24355,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (24356), DATED AS OF
APRIL 7, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 24356,
INC.
By: /s/ Brett R. King
----------------------------
Name: Brett R. King
Title: Vice President
<PAGE> 9
9
WILMINGTON TRUST COMPANY, NOT IN
ITS INDIVIDUAL CAPACITY BUT
SOLELY AS TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED UNDER
THE TRUST AGREEMENT, DATED AS OF
NOVEMBER 14, 1984 BETWEEN
AIRCRAFT 49262, INC. (AS
ASSIGNEE OF CCD AIR TEN, INC.)
AND WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, NOT IN
ITS INDIVIDUAL CAPACITY BUT
SOLELY AS TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED UNDER
THE TRUST AGREEMENT, DATED AS OF
NOVEMBER 15, 1984 BETWEEN
AIRCRAFT 49263, INC. (AS
ASSIGNEE OF CCD AIR TEN, INC.)
AND WILMINGTON TRUST COMPANY
By: /s/ Monica M. Henry
----------------------------
Name: Monica M. Henry
Title: Account Manager
<PAGE> 10
10
UNICAPITAL CORPORATION
By: /s/ Daniel M. Chait
----------------------------
Name: Daniel M. Chait
Title: Vice President
<PAGE> 11
11
LEHMAN COMMERCIAL PAPER INC.,
as Agent and as a Lender
By: /s/ Vincent Primiano
----------------------------
Name: Vincent Primiano
Title: Vice President
<PAGE> 1
Exhibit 4.05(h)
[Warehouse Facility]
EIGHTH AMENDMENT
EIGHTH AMENDMENT, dated as of November 18, 1999 (the
"Amendment"), to the Credit Agreement, dated as of October 6, 1998, as amended
by the Amendment dated as of March 26, 1999, the Second Amendment dated as of
April 28, 1999, the Third Amendment dated as of August 19, 1999, the Fourth
Amendment dated as of October 4, 1999, Fifth Amendment dated as of October 21,
1999, the Sixth Amendment dated as of October 4, 1999 and the Seventh Amendment
dated as of November 4, 1999 (as so amended, the "Credit Agreement"), made by
and among FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association not in its individual capacity but solely as trustee on behalf of
that certain trust created under the Trust Agreement (22222), dated as of
September 28, 1998, between First Security Bank, National Association and
Aircraft 22222, Inc., a Delaware corporation (together with any successor
Qualified Trustee, the "Initial Borrower"), FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity but solely as trustee on behalf of
that certain trust created under the Trust Agreement (53015) dated as of August
28, 1998 by and between First Security Bank, National Association and Aircraft
53015, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual
capacity but solely as trustee on behalf of that certain trust created under the
Trust Agreement (24837) dated as of October 30, 1998 by and between First
Security Bank, National Association and Aircraft 24837, Inc., FIRST SECURITY
BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely as trustee
under the Amended and Restated Trust Agreement (347) dated as of October 30,
1998 by and between First Security Bank, National Association and Aircraft 347,
Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity
but solely as trustee on behalf of that trust created by Trust Agreement (23377)
dated as of June 24, 1998 by and between First Security Bank, National
Association and Aircraft 23377, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity but solely as trustee on behalf of that trust
created by Trust Agreement (23830) dated as of July 10, 1998 by and between
First Security Bank, National Association and Aircraft 23830, Inc., WILMINGTON
TRUST COMPANY, not in its individual capacity but solely as trustee on behalf of
that certain trust created under the Trust Agreement, dated as of November 14,
1984 between Aircraft 49262, Inc. (as assignee of CCD Air Ten, Inc.) and
Wilmington Trust Company, WILMINGTON TRUST COMPANY, not in its individual
capacity but solely as trustee on behalf of that certain trust created under the
Trust Agreement, dated as of November 15, 1984 between Aircraft 49263, Inc. (as
assignee of CCD Air Ten, Inc.) and Wilmington Trust Company, FIRST SECURITY
BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely as owner
trustee on behalf of that certain trust created by Trust Agreement (24474),
dated as of April 1, 1999 between First Security Bank, National Association and
Aircraft 24474, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its
individual capacity but solely as owner trustee on behalf of that certain trust
created by Trust Agreement (25262), dated as of April 25, 1999 between First
Security Bank, National Association and Aircraft 25262, Inc. and FIRST SECURITY
BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely as trustee
on behalf of that certain trust created by Trust Agreement (49368), dated as of
April 25, 1999 between First Security Bank, National Association and Aircraft
49368, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual
capacity but solely as trustee
<PAGE> 2
2
on behalf of that certain trust created by Trust Agreement (53623), dated as of
August 18, 1999 between First Security Bank, National Association and Aircraft
53623, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual
capacity but solely as trustee on behalf of that certain trust created by Trust
Agreement (53624), dated as of August 18, 1999 between First Security Bank,
National Association and Aircraft 53624, Inc., FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity but solely as trustee on behalf of
that certain trust created by Trust Agreement (23771), dated as of April 7, 1999
between First Security Bank, National Association and Aircraft 23771, Inc.,
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but
solely as trustee on behalf of that certain trust created by Trust Agreement
(23772), dated as of April 1, 1999 between First Security Bank, National
Association and Aircraft 23772, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity but solely as trustee on behalf of that certain
trust created by Trust Agreement (26537), dated as of April 1, 1999 between
First Security Bank, National Association and Aircraft 26537, Inc., FIRST
SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely
as trustee on behalf of that certain trust created by Trust Agreement (26538),
dated as of April 7, 1999 between First Security Bank, National Association and
Aircraft 26538, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its
individual capacity but solely as trustee on behalf of that certain trust
created by Trust Agreement (24355), dated as of April 7, 1999 between First
Security Bank, National Association and Aircraft 24355, Inc., FIRST SECURITY
BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely as trustee
on behalf of that certain trust created by Trust Agreement (24356), dated as of
April 7, 1999 between First Security Bank, National Association and Aircraft
24356, Inc. (collectively, with the Initial Borrower, the "Existing Borrowers"),
certain other UniCapital Subsidiary Trusts and UniCapital Special Purpose
Corporations designated as Borrowing Affiliates thereunder (the Existing
Borrowers and such UniCapital Subsidiary Trusts and UniCapital Special Purpose
Corporations being referred to individually as a "Borrower" or collectively as
the "Borrowers"), LEHMAN COMMERCIAL PAPER INC., a New York corporation in its
capacity as a Lender ("Lehman"), and other financial institutions from time to
time parties thereto (such financial institutions hereinafter being referred to
individually as a "Lender" or collectively as the "Lenders"), and LEHMAN
COMMERCIAL PAPER INC. in its capacity as agent for the Lenders (in such
capacity, and together with any successor agent, the "Agent").
W I T N E S S E T H :
WHEREAS, the Borrowers, UniCapital, Lehman, and the Agent, desire
to extend the maturity of the Credit Agreement as set forth in this Amendment,
but only on the terms and subject to the conditions set forth below;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto agree as
follows:
<PAGE> 3
3
1. Defined Terms. Terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.
2. Amendment of Article I. (a) The definition of "Stated Termination
Date" is hereby amended by deleting the existing definition and substituting in
lieu thereof the following:
"Stated Termination Date" means December 31, 2000.
(b) The definition of "Total Revolving Credit Commitment" is
amended by reducing the amount thereof to $400,000,000 and the Revolving Credit
Commitment of Lehman Commercial Paper Inc. is hereby reduced to $400,000,000.
(c) The following additional definitions are added in the
appropriate alphabetical order to Section 1.1:
"Engine ABS Transaction" means the securitization transaction
consisting of (i) the non-recourse "true sale" transfer by UniCapital Aircraft
Engines Group, Inc ("UAEG") to UniCapital Jet Thrust Trust of certain commercial
aircrafts engines, certain engine parts and certain related property (the
"Transferred Property"), (ii) the private placement of non-recourse asset-backed
notes issued by UniCapital Jet Thrust Trust secured by the Transferred Property,
and (iii) the issuance of the equity interest in UniCapital Jet Thrust Trust to
UAEG; or any similar transaction with respect to some or all of the Transferred
Property.
"Specified Overadvance Prepayment" means 50% of the amount
required to be prepaid on the Loans pursuant to the second sentence of Section
2.3(b)(i) with respect to the following Financed Aircraft: an Airbus A320-200
aircraft, having manufacturer's serial number 369 and two Boeing 737-529
aircraft having manufacturer's serial numbers 26537 and 26538.
3. Amendment and Partial Waiver of Article II. (a) Section 2.3(b) is
hereby amended by adding a new subparagraph (vi) at the end thereof, reading as
follows:
"(vi) Subject to the next succeeding sentence, at the closing of
the Engine ABS Transaction, the Borrowers, jointly and severally,
shall be required to prepay an aggregate amount (to be applied
pro rata to the principal balance of the Loans) equal to the
lesser of (x) $15,000,000, (y) the greater of (A) $10,000,000 and
(B) the total net proceeds (after the payment of all costs, fees
and expenses related to the Engine ABS Transaction and all
amounts necessary to remove any Lien on or with respect to any
Transferred Property) that UniCapital or any of its Affiliates is
or becomes entitled to receive from the Engine ABS Transaction
(without regard to any other agreements with respect to the
disposition of such proceeds), to the extent of funds remaining
after mandatory prepayments of amounts outstanding under the
Affiliate Bridge Credit Agreement, and (z) the excess, if any, of
the aggregate outstanding principal balance of the Revolving
Loans over the aggregate of the Applicable Aircraft Borrowing
Bases of all Financed Aircraft as reduced by the Cumulative
Depreciation Amounts of such
<PAGE> 4
4
Financed Aircraft. Provided no Default or Event of Default exists
on the date of closing of the Engine ABS Transaction, the amount
required to be prepaid pursuant to the immediately preceding
sentence may, at the Borrowers' unanimous joint election, be
reduced by an amount equal to 50% of the Specified Overadvance
Prepayment."
(b) Notwithstanding anything to the contrary in Section
2.3(b)(i), no mandatory prepayment in excess of the Specified Overadvance
Prepayment shall be required in connection with the sale of the aircraft
specified in the definition thereof.
(c) The Borrowers shall, jointly and severally, pay an extension
fee equal to $6,300,844.68 in connection with this Amendment. Such fee shall be
paid in twelve (12) equal monthly installments of $525,070.39 per month
commencing on January 15, 2000; provided, that the unpaid balance of such fee
shall be paid on the earliest of (such earliest date, the "Final Fee Payment
Date") (i) the date of closing of the Engine ABS Transaction, (ii) the date on
which the Loans shall become due and payable and (iii) the date, if any, on
which the Lenders consent to the occurrence of any Change in Control. In
addition, the Borrowers, jointly and severally, shall pay early termination fees
to the Agent equal to 0.90% of the outstanding principal balance of the Loans
allocable to a Financed Aircraft (other than the 369 Aircraft) if such Financed
Aircraft is sold or refinanced earlier than nine (9) months after a Loan is
advanced under the Credit Agreement with respect to such Aircraft (except, if
such sale or refinancing occurs in a securitization transaction of which Lehman
Brothers Inc. is lead manager). In addition, the Borrowers, jointly and
severally, shall pay an early termination fee to the Agent on the date of the
sale of the Airbus A320-200 aircraft with manufacturer's serial number 369 (the
"369 Aircraft") (except if such sale occurs in a securitization transaction of
which Lehman Brothers Inc. is lead manager), in an amount equal to 1.00% of the
outstanding principal balance of the Loans then allocable to the 369 Aircraft,
such fee to be payable in equal monthly installments commencing on the Payment
Date immediately succeeding such sale and ending on the Payment Date on or about
December 15, 2000, provided, that the unpaid balance of such fee shall be paid
on the Final Fee Payment Date.
(d) Each of the Lenders and the Agent hereby agrees that,
notwithstanding anything to the contrary in the Credit Agreement, no
Concentration Restriction shall be exceeded or otherwise violated by reason of
the reduction of the "Total Revolving Credit Commitment" contemplated by Section
2(b) of this Amendment; provided, however, that the Concentration Restrictions
after giving effect to such reduction shall be applicable to any Loans made
after the date hereof.
4. Special Provisions for Off-Lease 747. Notwithstanding anything to
the contrary contained in the Credit Agreement as amended hereby, the principal
balance outstanding with respect to the Boeing 747, manufacturer's serial number
24837 (the "Off-Lease 747") shall not increase above $20 million, regardless of
whether the Off-Lease 747 is re-leased. The Agent and the lenders reserve all
rights with respect to the Off-Lease 747, including without limitation the right
to demand additional mandatory prepayments pursuant to Section 2.3(b)(ii). The
Borrowers acknowledge and agree that the Off-Lease 747 is not an Eligible
Aircraft. Also, the parties hereto agree that, solely for the purposes of
determining the "Monthly Amortization Amount" under and as defined in the
Lockbox Agreement
<PAGE> 5
5
with respect to the Off-Lease 747, the "Fair Market Value" of the Off-Lease 747
shall be $35,000,000.
5. Condition Precedent. (a) This Amendment shall not be binding until
the following conditions precedent have been fulfilled; provided, however, that
once such conditions are fulfilled, the effective date of this Amendment shall
be deemed to be November 19, 1999:
(i) The Agent shall have received counterparts of this Amendment,
duly executed and delivered by the Borrowers, UniCapital, Lehman,
and the Agent;
(ii) The Agent shall have received such opinions of counsel to
the Borrowers as it may request in connection with this
Amendment;
(iii) The Agent shall have received an underwriting letter with
respect to the Lehman Brothers Inc.'s right to act as lead
manager for any securitization of the Financed Aircraft; and
(iv) the Affiliate Bridge Credit Agreement is extended to expire
coterminously with the Credit Agreement.
6. Representations and Warranties. After the effectiveness of this
Amendment, the Borrower confirms and reaffirms as of the date hereof the
representations and warranties contained in Article VI of the Credit Agreement.
7. Consent to Extensions of Affiliate Warehouse Credit Agreement. Each
Borrower hereby consents to all extensions of the maturity of the Affiliate
Bridge Credit Agreement and hereby confirm and represent to the Lender and the
Agent that all guarantees thereof by any Borrower and any liens on property of
any Borrower to secure indebtedness or other obligations under the Affiliate
Warehouse Credit Agreement remain in full force and effect.
8. Continuing Effect. Except as expressly waived or amended hereby, the
Credit Agreement shall continue to be and shall remain in full force and effect
in accordance with its terms. This Amendment shall constitute a Loan Document.
9. Governing Law; Counterparts. (a) This Amendment shall be governed
by, and construed and interpreted in accordance with, the laws of the State of
New York.
(b) This Amendment may be executed by the parties hereto on one
or more counterparts, and all such counterparts shall be deemed to constitute
one and the same instrument.
[SIGNATURE PAGES FOLLOW]
<PAGE> 6
6
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered as of the day and year first written above.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION,
not in its individual capacity,
except as expressly specified
herein, but solely as trustee,
as the Initial Borrower
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (22222) DATED AS
OF SEPTEMBER 28, 199 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 22222, INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (53015) DATED AS
OF AUGUST 28, 1998 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 53105, INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (24837) DATED AS
OF OCTOBER 30, 1998 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL
<PAGE> 7
7
ASSOCIATION AND AIRCRAFT 24837,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE UNDER THE AMENDED AND
RESTATED TRUST AGREEMENT (347)
DATED AS OF OCTOBER 30, 1998 BY
AND BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 347, INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
TRUST CREATED BY TRUST AGREEMENT
(23377) DATED AS OF JUNE 24,
1998 BY AND BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23377,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
TRUST CREATED BY TRUST AGREEMENT
(23830) DATED AS OF JULY 10,
1998 BY AND BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23830,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS OWNER TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED BY
TRUST AGREEMENT (24474), DATED
AS OF APRIL 1, 1999 BETWEEN
FIRST SECURITY BANK, NATIONAL
<PAGE> 8
8
ASSOCIATION AND AIRCRAFT 24474,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS OWNER TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED BY
TRUST AGREEMENT (25262), DATED
AS OF APRIL 25, 1999 BETWEEN
FIRST SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 25262,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (49368), DATED AS OF
APRIL 25, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 49368,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (53623), DATED AS OF
AUGUST 18, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 53623,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST
<PAGE> 9
9
CREATED BY TRUST AGREEMENT
(53624), DATED AS OF AUGUST 18,
1999 BETWEEN FIRST SECURITY
BANK, NATIONAL ASSOCIATION AND
AIRCRAFT 53624, INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (23771), DATED AS OF
APRIL 7, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23771,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (23772), DATED AS OF
APRIL 1, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23772,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (26537), DATED AS OF
APRIL 1, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 26537,
INC.
<PAGE> 10
10
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (26538), DATED AS OF
APRIL 7, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 26538,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (24355), DATED AS OF
APRIL 7, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 24355,
INC.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (24356), DATED AS OF
APRIL 7, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 24356,
INC.
By: /s/ Brett R. King
----------------------------
Name: Brett R. King
Title: Vice President
<PAGE> 11
11
WILMINGTON TRUST COMPANY, NOT IN
ITS INDIVIDUAL CAPACITY BUT
SOLELY AS TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED UNDER
THE TRUST AGREEMENT, DATED AS OF
NOVEMBER 14, 1984 BETWEEN
AIRCRAFT 49262, INC. (AS
ASSIGNEE OF CCD AIR TEN, INC.)
AND WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, NOT IN
ITS INDIVIDUAL CAPACITY BUT
SOLELY AS TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED UNDER
THE TRUST AGREEMENT, DATED AS OF
NOVEMBER 15, 1984 BETWEEN
AIRCRAFT 49263, INC. (AS
ASSIGNEE OF CCD AIR TEN, INC.)
AND WILMINGTON TRUST COMPANY
By: /s/ Anita E. Dallago
----------------------------
Name: Anita E. Dallago
Title: Administrative
Account Manager
<PAGE> 12
12
UNICAPITAL CORPORATION
By: /s/ Martin Kalb
----------------------------
Name: Martin Kalb
Title: Executive Vice
President
<PAGE> 13
13
LEHMAN COMMERCIAL PAPER INC.,
as Agent and as a Lender
By: /s/ Vincent Primiano
----------------------------
Name: Vincent Primiano
Title: Vice President
<PAGE> 1
Exhibit 4.05(i)
NINTH AMENDMENT
NINTH AMENDMENT, dated as of March 16, 2000 (the "Amendment"),
to the Credit Agreement, dated as of October 6, 1998, as amended by the
Amendment dated as of March 26, 1999, the Second Amendment dated as of April 28,
1999, the Third Amendment dated as of August 19, 1999, the Fourth Amendment
dated as of October 4, 1999, the Fifth Amendment dated as of October 21, 1999,
the Sixth Amendment dated as of October 4, 1999, the Seventh Amendment dated as
of November 4, 1999 and the Eighth Amendment dated as of November 18, 1999 (as
so amended, the "Credit Agreement"), made by and among FIRST SECURITY BANK,
NATIONAL ASSOCIATION, a national banking association not in its individual
capacity but solely as trustee on behalf that certain trust created under the
Trust Agreement (22222), dated as of September 28, 1998, between First Security
Bank, National Association and Aircraft 22222, Inc., a Delaware corporation
(together with any successor Qualified Trustee, the "Initial Borrower"), FIRST
SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely
as trustee on behalf of that certain trust created under the Trust Agreement
(53015) dated as of August 28, 1998 by and between First Security Bank, National
Association and Aircraft 53015, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity but solely as trustee on behalf of that certain
trust created under the Trust Agreement (24837) dated as of October 30, 1998 by
and between First Security Bank, National Association and Aircraft 24837, Inc.,
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but
solely as trustee under the Amended and Restated Trust Agreement (347) dated as
of October 30, 1998 by and between First Security Bank, National Association and
Aircraft 347, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its
individual capacity but solely as trustee on behalf of that trust created by
Trust Agreement (23377) dated as of June 24, 1998 by and between First Security
Bank, National Association and Aircraft 23377, Inc., FIRST SECURITY BANK,
NATIONAL ASSOCIATION, not in its individual capacity but solely as trustee on
behalf of that trust created by Trust Agreement (23830) dated as of July 10,
1998 by and between First Security Bank, National Association and Aircraft
23830, Inc., WILMINGTON TRUST COMPANY, not in its individual capacity but solely
as trustee on behalf of that certain trust created under the Trust Agreement,
dated as of November 14, 1984 between Aircraft 49262, Inc. (as assignee of CCD
Air Ten, Inc.) and Wilmington Trust Company, WILMINGTON TRUST COMPANY, not in
its individual capacity but solely as trustee on behalf of that certain trust
created under the Trust Agreement, dated as of November 15, 1984 between
Aircraft 49263, Inc. (as assignee of CCD Air Ten, Inc.) and Wilmington Trust
Company, FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual
capacity but solely as owner trustee on behalf of that certain trust created by
Trust Agreement (24474), dated as of April 1, 1999 between First Security Bank,
National Association and Aircraft 24474, Inc., FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity but solely as owner trustee on
behalf of that certain trust created by Trust Agreement (25262), dated as of
April 25, 1999 between First Security Bank, National Association and Aircraft
25262, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual
capacity but solely as trustee on behalf of that certain trust created by Trust
Agreement (49368), dated as of April 25, 1999 between First Security Bank,
National Association and Aircraft 49368, Inc., FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity but solely as trustee on behalf of
that certain trust created by Trust Agreement (53623), dated as of August 18,
1999 between First
<PAGE> 2
2
Security Bank, National Association and Aircraft 53623, Inc., FIRST SECURITY
BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely as trustee
on behalf of that certain trust created by Trust Agreement (53624), dated as of
August 18, 1999 between First Security Bank, National Association and Aircraft
53624, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual
capacity but solely as trustee on behalf of that certain trust created by Trust
Agreement (23771), dated as of April 7, 1999 between First Security Bank,
National Association and Aircraft 23771, Inc., FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity but solely as trustee on behalf of
that certain trust created by Trust Agreement (23772), dated as of April 1, 1999
between First Security Bank, National Association and Aircraft 23772, Inc.,
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but
solely as trustee on behalf of that certain trust created by Trust Agreement
(24355), dated as of April 7, 1999 between First Security Bank, National
Association and Aircraft 24355, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity but solely as trustee on behalf of that certain
trust created by Trust Agreement (24356), dated as of April 7, 1999 between
First Security Bank, National Association and Aircraft 24356, Inc. and Aircraft
24813, Inc. (collectively, with the Initial Borrower, the "Existing Borrowers"),
certain other UniCapital Subsidiary Trusts and UniCapital Special Purpose
Corporations designated as Borrowing Affiliates thereunder (the Existing
Borrowers and such UniCapital Subsidiary Trusts and UniCapital Special Purpose
Corporations being referred to individually as a "Borrower" or collectively as
the "Borrowers"), LEHMAN COMMERCIAL PAPER INC., a new York corporation in its
capacity as a Lender ("Lehman"), and other financial institutions from time to
time parties thereto (such financial institutions hereinafter being referred to
individually as a "Lender" or collectively as the "Lenders"), and LEHMAN
COMMERCIAL PAPER INC. in its capacity as agent for the Lenders (in such
capacity, and together with any successor agent, the "Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Borrowers, UniCapital, Lehman, and the Agent
desire to amend the Credit Agreement as set forth in this Amendment, but only on
the terms and subject to the conditions set forth below;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto agree as
follows:
1. Defined Terms. Terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.
2. Amendment. Section 9.1(k) of the Credit Agreement is hereby amended
by adding the following immediately prior to the semicolon therein:
", provided that in no event shall an "Event of Default" under the
Credit Agreement dated April 28, 1999 among UCP Engines, Inc., UCP
Engines Trust, State Street Bank and Trust Company of Connecticut,
N.A., as trustee, Aircraft 22067 Trust and Aircraft 20527 Trust, as
Borrowers, the Lenders party thereto, Lehman Brothers Inc., as
Arranger, and
<PAGE> 3
3
Lehman Commercial Paper Inc., as Syndication Agent and Administrative
Agent, be an Event of Default hereunder"
3. Conditions Precedent. This Amendment shall not be binding until the
Agent shall have received counterparts of this Amendment, duly executed and
delivered by the Borrowers, UniCapital, Lehman, and the Agent; provided,
however, that once such condition is fulfilled, the effective date of this
Amendment shall be deemed to be March 16, 2000.
4. Representations and Warranties. After the effectiveness of this
Amendment, the Borrower confirms and reaffirms as of the date hereof the
representations and warranties contained in Article VI of the Credit Agreement.
5. Continuing Effect. Except as expressly waived or amended hereby, the
Credit Agreement shall continue to be and shall remain in full force and effect
in accordance with its terms. This Amendment shall constitute a Loan Document.
6. Governing Law Counterparts. (a) This Amendment shall be governed by,
and construed and interpreted in accordance with, the laws of the State of New
York.
(b) This Amendment may be executed by the parties herein one
more or more counterparts, and all such counterparts shall be deemed to
constitute one and the same instrument.
[SIGNATURE PAGES FOLLOW]
<PAGE> 4
4
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered as of the day and year first written
above.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION, not
in its individual capacity,
except as expressly
specified herein, but
solely as trustee, as the
Initial Borrower
FIRST SECURITY BANK,
NATIONAL ASSOCIATION, NOT
IN ITS INDIVIDUAL CAPACITY
BUT SOLELY AS TRUSTEE ON
BEHALF OF THAT CERTAIN
TRUST CREATED BY TRUST
AGREEMENT (22222), DATED AS
OF SEPTEMBER 28, 1999 BY
AND BETWEEN FIRST SECURITY
BANK, NATIONAL ASSOCIATION
AND AIRCRAFT 22222, INC.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION, NOT
IN ITS INDIVIDUAL CAPACITY
BUT SOLELY AS TRUSTEE ON
BEHALF OF THAT CERTAIN
TRUST CREATED BY TRUST
AGREEMENT (53015), DATED AS
OF AUGUST 28, 1998 BETWEEN
FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 53015, INC.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION, NOT
IN ITS INDIVIDUAL CAPACITY
BUT SOLELY AS TRUSTEE ON
BEHALF OF THAT CERTAIN
TRUST CREATED BY TRUST
AGREEMENT (24837), DATED AS
OF OCTOBER 30, 1998 BETWEEN
FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 24837, INC.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION, NOT
IN ITS INDIVIDUAL CAPACITY
BUT SOLELY AS TRUSTEE ON
BEHALF OF THAT CERTAIN
TRUST CREATED BY TRUST
AGREEMENT (347), DATED AS
OF OCTOBER 30, 1998 BETWEEN
<PAGE> 5
5
FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 347, INC.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION, NOT
IN ITS INDIVIDUAL CAPACITY
BUT SOLELY AS TRUSTEE ON
BEHALF OF THAT CERTAIN
TRUST CREATED BY TRUST
AGREEMENT (23377), DATED AS
OF JUNE 24, 1998 BETWEEN
FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 23377, INC.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION, NOT
IN ITS INDIVIDUAL CAPACITY
BUT SOLELY AS TRUSTEE ON
BEHALF OF THAT CERTAIN
TRUST CREATED BY TRUST
AGREEMENT (23830), DATED AS
OF JULY 10, 1998 BETWEEN
FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 23830, INC.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION, NOT
IN ITS INDIVIDUAL CAPACITY
BUT SOLELY AS TRUSTEE ON
BEHALF OF THAT CERTAIN
TRUST CREATED BY TRUST
AGREEMENT (24474), DATED AS
OF APRIL 1, 1999 BETWEEN
FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 24474, INC.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION, NOT
IN ITS INDIVIDUAL CAPACITY
BUT SOLELY AS TRUSTEE ON
BEHALF OF THAT CERTAIN
TRUST CREATED BY TRUST
AGREEMENT (25262), DATED AS
OF APRIL 25, 1999 BETWEEN
FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 25262, INC.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION, NOT
IN ITS INDIVIDUAL
<PAGE> 6
6
CAPACITY BUT SOLELY AS
TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY
TRUST AGREEMENT (49368),
DATED AS OF APRIL 25, 1999
BETWEEN FIRST SECURITY
BANK, NATIONAL ASSOCIATION
AND AIRCRAFT 49368, INC.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION, NOT
IN ITS INDIVIDUAL CAPACITY
BUT SOLELY AS TRUSTEE ON
BEHALF OF THAT CERTAIN
TRUST CREATED BY TRUST
AGREEMENT (53623), DATED AS
OF AUGUST 18, 1999 BETWEEN
FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 53623, INC.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION, NOT
IN ITS INDIVIDUAL CAPACITY
BUT SOLELY AS TRUSTEE ON
BEHALF OF THAT CERTAIN
TRUST CREATED BY TRUST
AGREEMENT (53624), DATED AS
OF AUGUST 18, 1999 BETWEEN
FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 53624, INC.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION, NOT
IN ITS INDIVIDUAL CAPACITY
BUT SOLELY AS TRUSTEE ON
BEHALF OF THAT CERTAIN
TRUST CREATED BY TRUST
AGREEMENT (23771), DATED AS
OF APRIL 7, 1999 BETWEEN
FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 23771, INC.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION, NOT
IN ITS INDIVIDUAL CAPACITY
BUT SOLELY AS TRUSTEE ON
BEHALF OF THAT CERTAIN
TRUST CREATED BY TRUST
AGREEMENT (23772), DATED AS
OF APRIL 1, 1999 BETWEEN
FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 23772, INC.
<PAGE> 7
7
FIRST SECURITY BANK,
NATIONAL ASSOCIATION, NOT
IN ITS INDIVIDUAL CAPACITY
BUT SOLELY AS TRUSTEE ON
BEHALF OF THAT CERTAIN
TRUST CREATED BY TRUST
AGREEMENT (24355), DATED AS
OF APRIL 7, 1999 BETWEEN
FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 24355, INC.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION, NOT
IN ITS INDIVIDUAL CAPACITY
BUT SOLELY AS TRUSTEE ON
BEHALF OF THAT CERTAIN
TRUST CREATED BY TRUST
AGREEMENT (24356), DATED AS
OF APRIL 7, 1999 BETWEEN
FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 24356, INC.
By: /s/ Brett R. King
-----------------------
Name: Brett R. King
Title: Vice President
<PAGE> 8
8
WILMINGTON TRUST COMPANY,
NOT IN ITS INDIVIDUAL
CAPACITY BUT SOLELY AS
TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER
THE TRUST AGREEMENT, DATED
AS OF NOVEMBER 14, 1984
BETWEEN AIRCRAFT 49262,
INC. (AS ASSIGNEE OF CCD
AIR TEN, INC.) AND
WILMINGTON TRUST COMPANY.
WILMINGTON TRUST COMPANY,
NOT IN ITS INDIVIDUAL
CAPACITY BUT SOLELY AS
TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER
THE TRUST AGREEMENT, DATED
AS OF NOVEMBER 15, 1984
BETWEEN AIRCRAFT 49263,
INC. (AS ASSIGNEE OF CCD
AIR TEN, INC.) AND
WILMINGTON TRUST COMPANY
By: /s/ Charise L. Rodgers
-----------------------
Name: Charise L. Rodgers
Tile: Senior Financial
Services Officer
AIRCRAFT 24813, INC.
By: /s/ Daniel M. Chait
-----------------------
Name: Daniel M. Chait
Tile: Vice President
UNICAPITAL CORPORATION
By: /s/ Daniel M. Chait
-----------------------
Name: Daniel M. Chait
Tile: Vice President
<PAGE> 9
9
LEHMAN COMMERCIAL PAPER
INC., as Agent and as a
Lender
By: /s/ Vincent Primiano
----------------------------
Name: Vincent Primiano
Title: Vice President
<PAGE> 1
Exhibit 4.06
[Execution Version]
================================================================================
INDENTURE
by and among
UCP 99-1 LLC I
and
UCP 99-1 LLC II
as Issuers,
UNICAPITAL OPERATIONS GROUP, INC.
as Servicer,
UNICAPITAL CORPORATION
as Originator,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
as Indenture Trustee
----------
Dated as of August 1, 1999
----------
UCP 99-1 LLC I and UCP 99-1 LLC II
Equipment Contract Backed Notes
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. DEFINITIONS............................................................................................1
Section 1.01 Definitions.................................................................................1
Section 1.02 General Interpretive Principles.............................................................1
ARTICLE II. PLEDGE OF PLEDGED PROPERTY; ORIGINAL ISSUANCE OF NOTES AND CERTIFICATES...............................2
Section 2.01 Pledge of Pledged Property..................................................................2
Section 2.02 Indenture Trustee Holds Contracts and Contract Files........................................2
Section 2.03 Conditions to Closing.......................................................................3
Section 2.04 Acceptance by Indenture Trustee.............................................................4
Section 2.05 Liabilities of the Issuers and Parties to this Indenture; Limitations Thereon...............4
Section 2.06 Intended Tax Characterization...............................................................5
Section 2.07 Treasury Securities.........................................................................5
ARTICLE III. ACCOUNTS; ALLOCATION AND APPLICATION OF THE PLEDGED PROPERTY........................................6
Section 3.01 Collection Account..........................................................................6
Section 3.02 Pre-Funding Account and Capitalized Interest Account........................................7
Section 3.03 Investment of Monies Held in the Accounts; Subaccounts......................................8
Section 3.04 The Note Insurance Policy..................................................................10
Section 3.05 Disbursements From Collection Account......................................................12
Section 3.06 Reserve Account............................................................................16
Section 3.07 Class B Reserve Account....................................................................18
Section 3.08 Class C Reserve Account....................................................................18
Section 3.09 Statements to Noteholders..................................................................19
Section 3.10 Application of Write-Down Amounts..........................................................22
Section 3.11 Compliance With Withholding Requirements...................................................22
ARTICLE IV. REMOVAL OF NON-CONFORMING PLEDGED PROPERTY; SUBSTITUTION OF CONTRACTS................................22
Section 4.01 Removal of Non-Conforming Pledged Property.................................................22
Section 4.02 Substitution of Contracts..................................................................23
Section 4.03 Release of Property from the Pledged Property..............................................24
ARTICLE V. THE NOTES AND THE CERTIFICATES........................................................................24
Section 5.01 The Notes and the Certificates.............................................................24
Section 5.02 Initial Issuance of Notes and Certificates.................................................27
Section 5.03 Registration of Transfer and Exchange of Notes and Certificates............................28
Section 5.04 Mutilated, Destroyed, Lost or Stolen Notes and Certificates................................29
Section 5.05 Persons Deemed Owners......................................................................29
Section 5.06 Access to List of Noteholders' Names and Addresses.........................................30
Section 5.07 Acts of Noteholders........................................................................30
Section 5.08 No Proceedings; Limited Recourse...........................................................30
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VI. THE ISSUERS..........................................................................................31
Section 6.01 Liability of the Issuers...................................................................31
Section 6.02 Limitation on Recourse to the Issuers......................................................31
Section 6.03 Indemnity for Liability Claims.............................................................31
Section 6.04 Liabilities................................................................................31
Section 6.05 Annual Statement as to Compliance..........................................................31
Section 6.06 Payment of Principal and Interest..........................................................32
Section 6.07 Maintenance of Office or Agency............................................................32
Section 6.08 Money for Payments to be Held in Trust.....................................................32
Section 6.09 Existence..................................................................................33
Section 6.10 Protection of Pledged Property.............................................................34
Section 6.11 Performance of Obligations; Servicing of Receivables.......................................34
Section 6.12 Negative Covenants.........................................................................35
Section 6.13 Issuers May Consolidate, Etc. Only on Certain Terms........................................36
Section 6.14 Successor or Transferee....................................................................37
Section 6.15 No Other Business..........................................................................38
Section 6.16 No Borrowing...............................................................................38
Section 6.17 Guarantees, Loans, Advances and Other Liabilities..........................................38
Section 6.18 Capital Expenditures.......................................................................38
Section 6.19 Compliance with Laws.......................................................................38
Section 6.20 Further Instruments and Acts...............................................................38
ARTICLE VII. THE INDENTURE TRUSTEE...............................................................................39
Section 7.01 Duties of Indenture Trustee................................................................39
Section 7.02 Eligible Investments.......................................................................40
Section 7.03 Indenture Trustee's Assignment of Contracts................................................41
Section 7.04 Certain Matters Affecting the Indenture Trustee............................................41
Section 7.05 Indenture Trustee Not Liable for Notes, Certificates or Contracts..........................42
Section 7.06 Indenture Trustee May Own Notes............................................................43
Section 7.07 Indenture Trustee's Fees and Expenses......................................................43
Section 7.08 Eligibility Requirements for Indenture Trustee.............................................44
Section 7.09 Resignation or Removal of Indenture Trustee................................................44
Section 7.10 Successor Indenture Trustee................................................................45
Section 7.11 Merger or Consolidation of Indenture Trustee...............................................46
Section 7.12 Appointment of Co-Indenture Trustee or Separate Indenture Trustee..........................46
Section 7.13 Indenture Trustee May Enforce Claims Without Possession of Note............................48
Section 7.14 Suits for Enforcement......................................................................48
Section 7.15 Undertaking for Costs......................................................................48
Section 7.16 Representations and Warranties of Indenture Trustee........................................48
Section 7.17 Tax Returns................................................................................49
ARTICLE VIII. EVENTS OF DEFAULT; REMEDIES........................................................................49
Section 8.01 Events of Default..........................................................................49
Section 8.02 Acceleration of Maturity, Rescission and Annulment.........................................51
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
Section 8.03 Remedies...................................................................................51
Section 8.04 Notice of Event of Default.................................................................52
Section 8.05 Exercise of Power by Indenture Trustee.....................................................52
Section 8.06 Indenture Trustee May File Proofs of Claim.................................................52
Section 8.07 Allocation of Money Collected..............................................................53
Section 8.08 Waiver of Events of Default................................................................54
Section 8.09 Limitation On Suits........................................................................54
Section 8.10 Unconditional Right of Noteholders to Receive Principal and Interest.......................55
Section 8.11 Restoration of Rights and Remedies.........................................................55
Section 8.12 Rights and Remedies Cumulative.............................................................55
Section 8.13 Delay or Omission Not Waiver...............................................................56
Section 8.14 Control by Controlling Parties.............................................................56
Section 8.15 Sale of Pledged Property...................................................................56
Section 8.16 Action on Notes............................................................................57
Section 8.17 Certain Rights of the Holders of the Subordinate Notes.....................................57
ARTICLE IX. TERMINATION..........................................................................................57
Section 9.01 Optional Redemption of Notes; Final Disposition of Funds...................................57
ARTICLE X. Noteholders' Lists and Reports........................................................................58
Section 10.01 Note Registrar To Furnish To Indenture Trustee Names and Addresses of Noteholders.........58
Section 10.02 Preservation of Information...............................................................58
Section 10.03 Compliance Certificates and Opinions, etc.................................................59
ARTICLE XI. MISCELLANEOUS PROVISIONS.............................................................................59
Section 11.01 Amendment.................................................................................59
Section 11.02 Limitation on Rights of Noteholders.......................................................60
Section 11.03 Counterparts..............................................................................60
Section 11.04 Governing Law.............................................................................60
Section 11.05 Notices...................................................................................61
Section 11.06 Severability of Provisions................................................................62
Section 11.07 Third Party Beneficiary...................................................................62
Section 11.08 Assignment................................................................................62
Section 11.09 Binding Effect............................................................................62
Section 11.10 Survival of Agreement.....................................................................62
Section 11.11 Captions..................................................................................62
Section 11.12 Annexes and Exhibits......................................................................62
Section 11.13 Calculations..............................................................................62
Section 11.14 No Proceedings............................................................................62
</TABLE>
Exhibits
Exhibit A - Form of Custody Receipt
Exhibit B - Form of Wiring Instructions
Exhibit C - Forms of Class A Notes
Exhibit D - Forms of Subordinate Notes
iii
<PAGE> 5
Exhibit E - Form of Certificate
Exhibit F - Form of Transferee Certification (Non-144A)
Exhibit G - Form of Transferee Certification (144A QIB)
Exhibit H - Form of Transferee Certification (Investment Company)
Exhibit I - Form of Instrument of Transfer
Annex A - Defined Terms
iv
<PAGE> 6
This INDENTURE, dated as of August 1, 1999, is made by and among UCP
99-1 LLC I and UCP 99-1 LLC II, each a Nevada limited liability company, as
issuers (each an "Issuer", and collectively, the "Issuers"), UniCapital
Operations Group, Inc., a Delaware corporation, as servicer (the "Servicer"),
UniCapital Corporation, a Delaware corporation, as originator (the
"Originator"), and Norwest Bank Minnesota, National Association, a national
banking association, not in its individual capacity but solely as indenture
trustee (the "Indenture Trustee").
WITNESSETH:
In consideration of the mutual agreements herein contained, and of
other good and valuable consideration the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01 Definitions. Capitalized terms used and not defined herein
shall have the meanings specified in Annex A hereto.
Section 1.02 General Interpretive Principles. For purposes of this
Indenture except as otherwise expressly provided or unless the context otherwise
requires:
(a) the terms defined in this Indenture have the meanings assigned to
them in this Indenture and include the plural as well as the singular, and the
use of any gender herein shall be deemed to include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP as in effect on the date hereof;
(c) references herein to "Articles", "Sections", "Subsections",
"Paragraphs" and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Indenture;
(d) a reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
1
<PAGE> 7
ARTICLE II.
PLEDGE OF PLEDGED PROPERTY;
ORIGINAL ISSUANCE OF NOTES AND CERTIFICATES
Section 2.01 Pledge of Pledged Property. Each of the Issuers,
simultaneously with the execution and delivery of this Indenture and upon each
execution and delivery of each Subsequent Transfer Agreement, hereby pledges,
deposits, transfers, assigns, and otherwise grants to the Indenture Trustee,
without recourse (except as otherwise expressly set forth herein), to be held in
trust for the benefit of the Noteholders, the Certificateholders and the Note
Insurer (collectively, the "Beneficiaries"), as provided in this Indenture, all
of its respective right, title, and interest in, to and under (a) the Equipment,
(except for any licensed products that may accompany the Equipment) and any new
unit or units of Equipment substituted for any existing unit or units of
Equipment, including all income and proceeds upon any sale or other disposition
of the Equipment, (b) the Contracts and all amendments, additions and
supplements including schedules, summary schedules and subschedules made or
hereafter made with respect thereto, (c) all monies received by the Servicer or
due in payment of the Contracts on or after the related Cut-Off Date, including,
without limitation, all Scheduled Payments thereunder (whether or not due),
Advance Payments received by the Servicer prior to the related Cut-Off Date but
not due until a Collection Period after such Cut-Off Date, any Prepayments, any
payments in respect of a casualty or early termination and any Liquidation
Proceeds received with respect thereto, but excluding any Excluded Amounts, (d)
any guarantees of an Obligor's obligations under each such Contract, (e) the
related Contract Files, (f) any Insurance Policies and Insurance Proceeds with
respect to the Contracts, (g) the Receivables Transfer Agreement, each
Subsequent Transfer Agreement and the Servicing Agreement, each as executed and
delivered in accordance therewith, (h) all amounts on deposit in the Collection
Account, the Pre-Funding Account, the Capitalized Interest Account, the Reserve
Account, the Class B Reserve Account and the Class C Reserve Account held by the
Indenture Trustee and all amounts collected in the Lockbox Account related to
the Contracts and (i) any and all income and proceeds of any of the foregoing
(all of the foregoing, collectively, constituting the "Pledged Property").
This Indenture is a security agreement within the meaning of Article 8
and Article 9 of the Uniform Commercial Code as in effect in the States of New
York, Nevada and Minnesota. The pledge provided for in this Section 2.01 is
intended by each of the Issuers to be a grant by the Issuers to the Indenture
Trustee, for the benefit of the Beneficiaries, of a valid first priority
security interest in all of its respective right, title and interest in, to and
under the Pledged Property.
Section 2.02 Indenture Trustee Holds Contracts and Contract Files. The
executed original counterpart of each Contract, together with the other
documents or instruments, which constitute a part of a Contract File, shall be
held by the Indenture Trustee for the benefit of Beneficiaries. The Contract
File for each Contract pledged hereunder shall be delivered by or on behalf of
the Issuers to the Indenture Trustee at least two Business Days prior to (i) the
Closing Date, with respect to the Initial Contracts, and (ii) the applicable
Subsequent Transfer Date, with respect to the Subsequent Contracts. The
Indenture Trustee shall be required to issue a Custody Receipt evidencing its
receipt of the items required to be included in each Contract File no later
2
<PAGE> 8
than the Closing Date or the Subsequent Transfer Date, as applicable. The
Indenture Trustee shall at all times maintain possession of each Contract File
on behalf of the Beneficiaries in accordance with its customary custodial
policies and procedures and shall only release Contract Files to, or at the
direction of, the Servicer in accordance with Section 3.01 of the Servicing
Agreement.
Section 2.03 Conditions to Closing. As conditions to the execution and
delivery of the Notes by the Issuers, the authentication of the Notes by the
Indenture Trustee and the sale of the Notes by the Issuers, in each case, on the
Closing Date, (i) the Issuers shall have received by wire transfer the net
proceeds of sale of the Class A Notes, the Class B Notes and the Class C Notes
in authorized denominations equal in the aggregate to the Initial Class A Note
Principal Balance, the Initial Class B Note Principal Balance and the Initial
Class C Note Principal Balance, and (ii) the Indenture Trustee shall have
received the following on or before the Closing Date:
(a) The List of Initial Contracts, certified by the President, any
Senior Vice President, any Vice President or any Assistant Vice President of the
Servicer, which list shall include Contracts with an Aggregate Discounted
Contract Principal Balance as of the Initial Cut-Off Date which, when added to
the Original Pre-Funded Amount, equals or exceeds the Aggregate Initial Note
Principal Balance;
(b) Secretary's Certificates for each of the Transferors, each of the
Issuers, the Servicer and the Originator certifying to, and attaching, the
following (i) the organizational and governing documents of the respective
entity, (ii) resolutions authorizing each such entity to execute, deliver and
perform the Transaction Documents to which it is a party and the transactions
contemplated thereby and (iii) officially certified good standing certificates
for each such entity from their respective states of organization;
(c) Copies of the duly executed Financing Statements with respect to
the Initial Contracts, in accordance with the Filing Requirements, duly prepared
for filing;
(d) A certificate listing the Servicing Officers as of the Closing
Date;
(e) Executed originals of each of the Transaction Documents;
(f) A Custody Receipt, duly executed by the Indenture Trustee, with
respect to the Contract File for each Initial Contract on the List of Initial
Contracts;
(g) All Necessary Consents;
(h) An executed Note Insurance Policy;
(i) A letter from Moody's that it has assigned a rating of (i) "P-1" to
the Class A-1 Notes and (ii) "Aaa" to the Class A-2 Notes, the Class A-3 Notes
and the Class A-4 Notes;
(j) A letter from S&P that it has assigned a rating of (i) "A-1+" to
the Class A-1 Notes and (ii) "AAA" to the Class A-2 Notes, the Class A-3 Notes
and the Class A-4 Notes;
3
<PAGE> 9
(k) A letter from DCR that it has assigned a rating of at least (i)
"D-1+" to the Class A-1 Notes, (ii) "AAA" to the Class A-2 Notes, the Class A-3
Notes and the Class A-4 Notes, (iii) "BBB" to the Class B Notes and (iv) "BB" to
the Class C Notes;
(l) A letter from Fitch that it has assigned a rating of at least (i)
"F1+/AAA" to the Class A-1 Notes, (ii) "AAA" to the Class A-2 Notes, the Class
A-3 Notes and the Class A-4 Notes, (iii) "BBB" to the Class B Notes and (iv)
"BB" to the Class C Notes; and
(m) Opinions of Counsel to the Originator, the Servicer, the
Transferors and the Issuers, in form and substance reasonably acceptable to the
Indenture Trustee, the Noteholders and the Note Insurer, covering such matters
as the Indenture Trustee and the Note Insurer may reasonably request, including,
without limitation, customary opinions concerning non-consolidation, true sale,
security interest, federal tax and general corporate matters.
Section 2.04 Acceptance by Indenture Trustee. The Indenture Trustee
acknowledges its acceptance, simultaneously with the execution and delivery of
this Indenture, of all right, title and interest in and to the Pledged Property
on behalf of the Beneficiaries and declares that the Indenture Trustee holds and
will hold such right, title and interest for the benefit of all present and
future Beneficiaries for the use and purpose and subject to the terms and
provisions of this Indenture. The Issuers hereby (a) appoint the Indenture
Trustee as each of the Issuer's agent and attorney-in-fact with all power
independently to enforce all of its rights against the Originator, the Servicer
and the Transferors hereunder, under the Receivables Transfer Agreement and
under the Servicing Agreement, as applicable, and (b) directs the Indenture
Trustee to enforce such rights upon the failure of the Issuers or the Servicer,
respectively, to do so in accordance with the Receivables Transfer Agreement and
the Servicing Agreement, as applicable. The Indenture Trustee hereby accepts
such appointment and agrees to enforce such rights in accordance with the
foregoing.
Section 2.05 Liabilities of the Issuers and Parties to this Indenture;
Limitations Thereon. (a) Except as otherwise expressly provided herein, the
obligations evidenced by the Notes provide recourse only to the Pledged Property
and provide no recourse against the Originator, the Originating Units, the
Transferors, the Servicer, the Indenture Trustee, the Issuers or any other
Person other than, with respect to the Class A Notes, the Note Insurer under the
Note Insurance Policy.
(b) Neither the Originator, the Issuers, the Transferors, the Servicer,
the Originating Units nor any other Person shall be liable to the Indenture
Trustee, the Note Insurer or the Noteholders, except as provided in Article VI
hereof, Sections 5.01 and 5.03 of the Servicing Agreement and Section 4.01(g) of
the Receivables Transfer Agreement, and, with respect to the Note Insurer except
as otherwise provided in the Insurance Agreement. Without limiting the
generality of the foregoing, if any Obligor fails to pay any Scheduled Payment,
Final Scheduled Payment or other amounts due under a Contract, then neither the
Indenture Trustee, the Note Insurer nor the Noteholders will have any recourse
against the Originator, the Servicer, the Originating Units, the Issuers or the
Transferors for such Scheduled Payment, Final Scheduled Payment, other amounts
due under the Contract or any losses, damages, claims, liabilities or expenses
incurred by the Indenture Trustee or any Noteholder as a direct or indirect
result thereof, except as may expressly be provided for in Article VI hereof,
Sections 5.01 and
4
<PAGE> 10
5.03 of the Servicing Agreement and Section 4.01(g) of the Receivables Transfer
Agreement, and, with respect to the Note Insurer, except as otherwise provided
in the Insurance Agreement.
(c) The Indenture Trustee agrees that in the event of a default by an
Obligor under the terms of a Contract, which default is not cured within any
applicable cure period set forth in such Contract, the Indenture Trustee and the
Noteholders shall be expressly limited to the sources of payment specified
herein. In addition, the Indenture Trustee shall have the right to exercise the
rights of the Originator or the related Originating Unit, as applicable, under
the Contracts, the Insurance Policies and any document in any Contract File in
the name of the Indenture Trustee and the Noteholders, either directly or
through the Servicer as agent, and the Indenture Trustee is hereby directed by
the Issuers to exercise such rights; provided, however, that the Indenture
Trustee shall not be required to take any action pursuant to this Section
2.05(c) except upon written instructions from the Servicer or the Note Insurer,
in each case, if the Servicer is otherwise unable to enforce such rights on
behalf of the Indenture Trustee. The parties hereby agree that a carbon,
photographic or other reproduction of this Indenture or any financing statement
shall be sufficient as a financing statement in any State.
(d) The pledge of the Pledged Property by the Issuers pursuant to this
Indenture does not constitute and is not intended to result in an assumption by
the Indenture Trustee, the Issuers, the Note Insurer or any Noteholder of any
obligation (except for the obligation not to disturb an Obligor's right of quiet
enjoyment) of the Originator, the applicable Originating Unit or the Servicer to
any Obligor or other Person in connection with the Equipment, the Contracts, the
Insurance Policies or any document in the Contract Files.
Section 2.06 Intended Tax Characterization. The parties hereto agree
that it is their mutual intent that, for all applicable tax purposes, the Notes
will constitute indebtedness and that for all applicable tax purposes,
accordingly, the Issuers will be treated as joint and several owners of the
Pledged Property. Further, each party hereto and each Noteholder (by receiving
and holding a Note), hereby covenants to every other party hereto and to every
other Noteholder to treat the Notes as indebtedness for all applicable tax
purposes in all tax filings, reports and returns and otherwise, and further
covenants that neither it nor any of its Affiliates will take, or participate in
the taking of or permit to be taken, any action that is inconsistent with the
treatment of the Notes as indebtedness for tax purposes unless otherwise
directed by law, rule or regulation or order of any Governmental Authority. All
successors and assigns of the parties hereto shall be bound by the provisions
hereof.
Section 2.07 Treasury Securities. In determining whether the
Noteholders of the required outstanding principal balance of the Notes have
concurred in any direction, waiver or consent, Notes owned by the Originator,
the Servicer, any of the Transferors, either of the Issuers, any other obligor
upon the Notes or an Affiliate of the Originator shall be considered as though
not outstanding, except that for the purposes of determining whether the
Indenture Trustee shall be protected in relying on any such direction, waiver or
consent, only Notes which a Responsible Officer actually knows are so owned
shall be so disregarded.
5
<PAGE> 11
ARTICLE III.
ACCOUNTS; ALLOCATION AND APPLICATION OF
THE PLEDGED PROPERTY
Section 3.01 Collection Account. (a) The Servicer shall establish and
maintain with the Indenture Trustee the Collection Account for the benefit of
the Beneficiaries as an Eligible Bank Account, in the name of "UCP 99-1 LLC I
and UCP 99-1 LLC II Equipment Contract Backed Notes, Series 1999-1 Collection
Account, in trust for the registered holders of Equipment Contract Backed Notes,
Series 1999-1." The Indenture Trustee shall make withdrawals from the Collection
Account only as provided in this Indenture in amounts specified in a written
direction of the Servicer. The Indenture Trustee shall possess all right, title
and interest in all funds on deposit from time to time in the Collection Account
and all proceeds thereof. The Collection Account shall be under the sole
dominion and control of the Indenture Trustee for the benefit of the
Beneficiaries.
(b) At the times indicated in this Section 3.01(b) or in Section
3.01(c) below, the following amounts (net of Excluded Amounts) shall be
deposited in the Collection Account in immediately available funds:
(i) The Servicer shall deposit or cause to be deposited the
aggregate amount of Collections;
(ii) The Servicer shall deposit the aggregate Servicer
Advances payable pursuant to Section 4.03 of the Servicing Agreement;
(iii) The Servicer shall deposit any Purchase Amounts payable
by it or by the Originator pursuant to Section 4.01 hereof;
(iv) Investment Earnings (excluding Pre-Funding Earnings and
Capitalized Interest Earnings), as described in Section 3.03(a) hereof;
(v) The Indenture Trustee shall transfer from the Capitalized
Interest Account the Capitalized Interest Requirement, if any, with
respect to each Payment Date occurring during the Pre-Funding Period;
and
(vi) The amount, if any, received by the Indenture Trustee as
a result of a drawing on the Note Insurance Policy pursuant to Section
3.03(a) hereof.
(c) The Servicer shall so transfer the aggregate amount of Collections
no later than two Business Days after the Servicer's receipt of such amount. The
Servicer shall so deposit the aggregate amount of Servicer Advances no later
than the Determination Date immediately preceding each Payment Date. Except as
otherwise expressly set forth in this Indenture, any other deposits and
transfers of funds to be made pursuant to this Section 3.01 shall be made no
later than the third Business Day immediately preceding the related Payment
Date.
Notwithstanding the foregoing, the Servicer may deduct from amounts
otherwise payable to the Collection Account amounts previously deposited by the
Servicer into the
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Collection Account but (i) subsequently uncollectable as a result of dishonor of
the instrument of payment for or on behalf of the Obligor or (ii) later
determined to have resulted from mistaken deposits.
Section 3.02 Pre-Funding Account and Capitalized Interest Account.
(a) The Indenture Trustee shall establish and maintain the Pre-Funding
Account as one or more segregated trust accounts in the name of "UCP 99-1 LLC II
Equipment Contract Backed Notes, Series 1999-1 Pre-Funding Account, in trust for
the registered holders of Equipment Contract Backed Notes, Series 1999-1." The
Indenture Trustee will make or permit withdrawals from the Pre-Funding Account
only as provided in this Indenture in amounts specified in a written direction
of the Servicer. On the Closing Date, the Indenture Trustee will deposit from
the proceeds of the sale of the Notes, the Original Pre-Funded Amount in the
Pre-Funding Account. At least one Business Day prior to each Subsequent Transfer
Date, the Servicer, on behalf of LLC II, shall instruct the Indenture Trustee in
writing to withdraw from the Pre-Funding Account and release to LLC II an amount
equal to the aggregate Discounted Contract Principal Balance of the Subsequent
Contracts to be transferred to LLC II as of the Subsequent Cut-Off Date upon
satisfaction of each of the conditions set forth in Section 2.02 of the
Receivables Transfer Agreement with respect to the transfer of Subsequent
Contracts to LLC II. In addition, on or prior to each Payment Date, all
Pre-Funding Earnings with respect to such Payment Date shall be transferred to
the Capitalized Interest Account prior to the withdrawal of the Capitalized
Interest Requirement from the Capitalized Interest Account. Any amount remaining
on deposit in the Pre-Funding Account at the end of the Pre-Funding Period, less
any undistributed Pre-Funding Earnings, shall be distributed by the Indenture
Trustee on the Payment Date immediately following the end of the Pre-Funding
Period to the Noteholders as a prepayment of principal in accordance with
Section 3.05(b).
(b) The Indenture Trustee shall establish and maintain the Capitalized
Interest Account as one or more segregated trust accounts in the name of "UCP
99-1 LLC I and UCP 99-1 LLC II Equipment Contract Backed Notes, Series 1999-1
Capitalized Interest Account, in trust for the registered holders of Equipment
Contract Backed Notes, Series 1999-1." The Indenture Trustee shall make or
permit withdrawals from the Capitalized Interest Account only as provided in
this Indenture in amounts specified in a written direction of the Servicer. On
the Closing Date, the Indenture Trustee will deposit from the proceeds of the
sale of the Notes, the Capitalized Interest Account Deposit in the Capitalized
Interest Account. On each Payment Date occurring during the Pre-Funding Period
only, the Indenture Trustee shall transfer from the Capitalized Interest Account
into the Collection Account the Capitalized Interest Requirement, if any, for
such Payment Date. If on any Payment Date the amount on deposit in the
Capitalized Interest Account exceeds the Capitalized Interest Required Reserve
Amount, the Indenture Trustee will distribute such excess to the Issuers in
accordance with their respective percentage interests of Certificates. Any
amount remaining on deposit in the Capitalized Interest Account on the Payment
Date immediately following the end of the Pre-Funding Period (after taking into
account any transfer to be made from the Capitalized Interest Account into the
Collection Account on such Payment Date) shall be released by the Indenture
Trustee to the Issuers in accordance with their respective percentage interests
of Certificates, and the Capitalized Interest Account shall thereafter be
closed.
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Section 3.03 Investment of Monies Held in the Accounts; Subaccounts.
(a) The Servicer shall direct the Indenture Trustee in writing to
invest the amounts in each Account in Eligible Investments that mature not later
than the Business Day immediately preceding the next Payment Date following the
investment of such amounts. Eligible Investments shall not be sold or disposed
of prior to their maturities. Investment Earnings on amounts held in the
Collection Account shall be deposited in the Collection Account as earned. The
amount of any Insured Payment shall be held uninvested.
(b) The Indenture Trustee and the Servicer may, from time to time and
in connection with the administration of any Account, establish and maintain
with the Indenture Trustee one or more sub-accounts of any of the Accounts.
(c) Any investment of funds in the Accounts shall be made in Eligible
Investments held by a financial institution in accordance with the following
requirements:
(i) all Eligible Investments shall be held in an account with
such financial institution in the name of the Indenture Trustee;
(ii) all Eligible Investments held in such accounts shall be
delivered to the Indenture Trustee in the following manner:
(A) with respect to bankers' acceptances, commercial
paper, negotiable certificates of deposit and other
obligations that constitute "instruments" within the meaning
of Section 9-105 (1)(i) of the UCC (other than certificated
securities) and are susceptible of physical delivery,
transferred to the Indenture Trustee by physical delivery to
the Indenture Trustee, indorsed to, or registered in the name
of, the Indenture Trustee or its nominee or indorsed in blank;
or such additional or alternative procedures as may hereafter
become appropriate to effect the complete transfer of
ownership of any such Eligible Investments to the Indenture
Trustee free of any adverse claims, consistent with changes in
applicable law or regulations or the interpretation thereof;
(B) with respect to a "certificated security" (as
defined in Section 8-102(a)(4) of the UCC), transferred:
(1) by physical delivery of such
certificated security to the Indenture Trustee,
provided that if the certificated security is in
registered form, it shall be indorsed to, or
registered in the mane of, the Indenture Trustee or
indorsed in blank;
(2) by physical delivery of such
certificated security in registered form to a
"securities intermediary" (as defined in Section
8-102(a)(14) of the UCC) acting on behalf of the
Indenture Trustee if the certificated security has
been specially indorsed to the Indenture Trustee by
an effective indorsement.
(C) with respect to any security issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or by the
Federal National Mortgage
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Association that is a book-entry security held through the
Federal Reserve System pursuant to Federal book entry
regulations, the following procedures, all in accordance with
applicable law, including applicable federal regulations and
Articles 8 and 9 of the UCC: book-entry registration of such
property to an appropriate book-entry account maintained with
a Federal Reserve Bank by a securities intermediary which is
also a "depositary" pursuant to applicable federal regulations
and issuance by such securities intermediary of a deposit
advice or other written confirmation of such book-entry
registration to the Indenture Trustee of the purchase by the
securities intermediary on behalf of the Indenture Trustee of
such book-entry security; the making by such securities
intermediary of entries in its books and records identifying
such book-entry security held through the Federal Reserve
System pursuant to Federal book-entry regulations as belonging
to the Indenture Trustee and indicating that such securities
intermediary holds such book-entry security solely as agent
for the Indenture Trustee; or such additional or alternative
procedures as may hereafter become appropriate to effect
complete transfer of ownership of any such Eligible
Investments to the Indenture Trustee free of any adverse
claims, consistent with changes in applicable law or
regulations or the interpretation thereof;
(D) with respect to any "uncertificated security" (as
defined in Section 8-102(a)(18) of the UCC) that is not
governed by clause (C) above, transferred:
(1)(A) by registration to the Indenture
Trustee as the registered owner thereof, on the books
and records of the issuer thereof, or
(B) by registration to another Person (not a
securities intermediary) that either becomes the
registered owner of the uncertificated security on
behalf of the Indenture Trustee or, having become the
registered owner, acknowledges that it holds for the
Indenture Trustee; or
(2) by the issuer thereof having agreed that
it will comply with instructions originated by the
Indenture Trustee without further consent of the
registered owner thereof;
(E) with respect to any "security entitlement" (as
defined in Section 8-102(a)(17) of the UCC):
(1) if a securities intermediary
(A) indicates by book-entry that a
"financial asset" (as defined in Section
8-102(a)(9) of the UCC) has been credited to
the Indenture Trustee's "securities account"
(as defined in Section 8-501(a) of the UCC),
(B) receives a financial asset (as
so defined) from the Indenture
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Trustee or acquires a financial asset for
the Indenture Trustee, and in either case,
accepts it for credit to the Indenture
Trustee's securities account (as so
defined),
(C) becomes obligated under other
law, regulation or rule to credit a
financial asset to the Indenture Trustee's
securities account, or
(D) has agreed that it will comply
with "entitlements orders" (as defined in
Section 8-102(a)(8) of the UCC) originated
by the Indenture Trustee, without further
consent by the "entitlement holder" (as
defined in Section 8.102(a)(7) of the UCC),
and
(2) such financial asset either is such
Eligible Investment or a security entitlement
evidencing a claim thereto; and
(F) in each case of delivery contemplated pursuant to
clauses (A) through (E) of subsection (ii) hereof, the
Indenture Trustee shall make appropriate notations on its
records, and shall cause the same to be made on the records of
its nominees, indicating that such Eligible Investment is held
in trust pursuant to and as provided in this Indenture.
Any cash held by the Indenture Trustee shall not be considered a "financial
asset" for purposes of this Section 3.03(c). Subject to the other provisions
hereof, the Indenture Trustee shall have sole control over each such investment
and the income thereon, and any certificate or other instrument evidencing any
such investment, if any, shall be delivered directly to the Indenture Trustee or
its agent, together with each document of transfer, if any, necessary to
transfer title to such investment to the Indenture Trustee in a manner with
complies with this Section 3.03
Section 3.04 The Note Insurance Policy.
(a) On each Determination Date, the Servicer shall determine the
Available Distribution Amount with respect to the immediately following Payment
Date and shall inform the Indenture Trustee in writing no later than 10:00 a.m.,
New York City time, on such Determination Date of such Available Distribution
Amount.
(b) If the Servicer's Monthly Statement indicates that there will be an
Available Funds Shortfall with respect to any Payment Date, the Indenture
Trustee shall complete a Notice in the form of Exhibit A to the Note Insurance
Policy and submit such notice to the Note Insurer via facsimile transmission no
later than 12:00 noon New York City time on the second Business Day preceding
such Payment Date as a claim for an Insured Payment in an amount equal to such
Available Funds Shortfall.
(c) Upon receipt of Insured Payments from the Note Insurer, the
Indenture Trustee shall immediately deposit such Insured Payments in the
Collection Account and shall distribute such Insured Payments, or the proceeds
thereof, in accordance with Section 3.05 hereof to the applicable Class A
Noteholders exclusively. The parties hereto recognize that the
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making of an Insured Payment does not relieve any of the parties hereto of any
obligation hereunder or under any of the Transaction Documents.
(d) The Indenture Trustee shall (x) receive Insured Payments as
attorney-in-fact of each of the Class A Noteholders and (y) disburse such
Insured Payment to the Class A Noteholders as set forth in Section 3.05 hereof.
The Note Insurer shall be entitled to receive the related Reimbursement Amount
pursuant to Section 3.05(b)(xiii) and Section 3.05(b)(xvii) hereof with respect
to each Insured Payment made by the Note Insurer. The Indenture Trustee hereby
agrees on behalf of each Class A Noteholder and the Issuers for the benefit of
the Note Insurer that it recognizes that to the extent the Note Insurer makes
Insured Payments, either directly or indirectly (as by paying through the
Indenture Trustee), to the Class A Noteholders, the Note Insurer will be
entitled to receive the related Reimbursement Amount pursuant to Section
3.05(b)(xiii) and Section 3.05(b)(xvii) hereof.
(e) The Class A Notes will be insured by the Note Insurer pursuant to
the terms set forth in the Note Insurance Policy, notwithstanding any provisions
to the contrary contained in this Indenture. All amounts received under the Note
Insurance Policy shall be used solely for the payment to Class A Noteholders of
principal on the applicable Class A Maturity Date and interest on the Class A
Notes on each Payment Date and to repay amounts disgorged by Class A Noteholders
as set forth in paragraph (f) below.
(f) If a Responsible Officer of the Indenture Trustee at any time has
actual knowledge that there will not be sufficient moneys in the Collection
Account to make all required payments of principal and interest to the Class A
Noteholders on the applicable Payment Date as set forth on the related Monthly
Statement, the Indenture Trustee shall immediately notify the Note Insurer or
its designee by telephone, promptly confirmed in writing by overnight mail or
facsimile transmission, of the amount of such deficiency. In addition, if a
Responsible Officer of the Indenture Trustee has actual notice that any of the
Class A Noteholders have been required to disgorge payments of principal or
interest on the Class A Note pursuant to a final judgment by a court of
competent jurisdiction that such payment constitutes a voidable preference to
such Holders within the meaning of any applicable bankruptcy laws, then the
Indenture Trustee shall notify the Note Insurer or its designees of such fact in
writing by overnight mail or facsimile transmission. Such notice shall be in
addition to the procedures set forth in the Note Insurance Policy for making a
claim under the Note Insurance Policy.
(g) To the extent that the Note Insurer makes payments, directly or
indirectly, on account of principal of or interest on the Class A Notes, the
Note Insurer shall be subrogated to the rights of the Holders of the Class A
Notes to receive distributions of principal and interest in accordance with the
terms hereof.
(h) The parties hereto grant to the Note Insurer, for so long as (i)
the Note Insurance Policy is then in effect in accordance with its terms and
(ii) a Note Insurer Default has not then occurred and is continuing, the right
of prior approval of amendments or supplements to the Transaction Documents and
of the exclusive exercise of any option, vote, right, power or the like
available to the Class A Noteholders hereunder.
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(i) The Indenture Trustee shall surrender the Note Insurance Policy to
the Note Insurer for cancellation upon the expiration of the Note Insurance
Policy in accordance with the terms thereof.
Section 3.05 Disbursements From Collection Account. (a) On each Payment
Date prior to the declaration of an Event of Default hereunder, the Indenture
Trustee shall pay the Available Funds then on deposit in the Collection Account
with respect to the related Collection Period, as indicated on the Monthly
Statement, as applicable, to the Persons to which such money is then due,
calculated on the basis of and in accordance with the Monthly Statement for the
related Collection Period; provided, however, that in the event the Servicer
fails to deliver a Monthly Statement by a Payment Date the Indenture Trustee
shall, nevertheless, in accordance with the priorities set forth in Section
3.05(b), pay interest on each Class of Notes from the sources of funding set
forth herein, in each case in an amount with respect to each Class equal to the
product of (i) one-twelfth (or, with respect to the Class A-1 Notes, a fraction,
the numerator of which is the number of actual days in the related Interest
Accrual Period, and the denominator of which is 360), (ii) the related Note Rate
and (iii) the related Note Principal Balance, as reflected on the Monthly
Statement most recently delivered by the Servicer (net of any principal payments
in respect thereof on the immediately preceding Payment Date). After the
declaration of an Event of Default hereunder, the Indenture Trustee shall
distribute Available Funds in accordance with Section 8.07 hereof.
(b) On each Payment Date, the Indenture Trustee shall pay the Available
Funds then on deposit in the Collection Account with respect to the related
Collection Period (plus, where indicated, amounts transferred from the Reserve
Account, the Class B Reserve Account or the Class C Reserve Account, as
applicable, or received from the Note Insurer) to the following Persons, in the
following order of priority, without duplication:
(i) To the Servicer by wire transfer of immediately available
funds, the aggregate amount of any Excluded Amounts inadvertently
deposited in the Collection Account;
(ii) To any party entitled thereto, by check, any indemnity
payments paid pursuant to any Contract, to the extent that such amounts
are inadvertently deposited in the Collection Account;
(iii) To the Servicer by wire transfer of immediately
available funds to the account designated in writing by the Servicer,
the aggregate amount of the following:
(A) An amount equal to the unreimbursed Servicer
Advances (other than Servicer Advances for the current
Collection Period);
(B) So long as UOG or any of its Affiliates is not
then acting as Servicer, an amount equal to the Servicer Fee
owing on such Payment Date, plus any unpaid Servicer Fee owing
from prior Collection Periods; and
(C) Any Servicing Charges inadvertently deposited in
the Collection Account;
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(iv) To the Note Insurer by wire transfer of immediately
available funds to the account designated in writing by the Note
Insurer, an amount equal to the Premium Amount owing on such Payment
Date, plus any unpaid Premium Amounts from prior Collection Periods;
(v) To the Indenture Trustee by wire transfer of immediately
available funds to the account designated in writing by the Indenture
Trustee, an amount equal to the Indenture Trustee Fees owing on such
Payment Date, plus any unpaid Indenture Trustee Fees from prior
Collection Periods, subject to the limitation set forth in Section
7.07(a)(ii) hereof;
(vi) To the Indenture Trustee by wire transfer of immediately
available funds to the account designated in writing by the Indenture
Trustee, an amount equal to the reimbursable expenses due and unpaid to
the Indenture Trustee in accordance with and subject to Section
7.07(a)(ii) hereof;
(vii) To the Class A-1 Noteholders (including the Note Insurer
as subrogee), the Class A-1 Note Interest for the related Collection
Period, to the Class A-2 Noteholders (including the Note Insurer as
subrogee), the Class A-2 Note Interest for the related Collection
Period, to the Class A-3 Noteholders (including the Note Insurer as
subrogee), the Class A-3 Note Interest for the related Collection
Period, and to the Class A-4 Noteholders (including the Note Insurer as
subrogee), the Class A-4 Note Interest for the related Collection
Period, pari passu based on the interest due on each such Class of
Notes, and, if the Available Funds are insufficient to pay such
amounts, the deficiency will be funded from the following sources in
the following order of priority: (A) from the amounts on deposit in the
Reserve Account on such Payment Date, if any, and (B) from the Insured
Payment made by the Note Insurer with respect to such Payment Date, if
any;
(viii) To the Class B Noteholders, the Class B Note Interest,
and, if the Available Funds are insufficient to pay such amount, the
Class B Noteholders will receive such deficiency from the amounts on
deposit in the Class B Reserve Account on such Payment Date, if any,
available therefor, with any remaining deficiency from the amounts on
deposit in the Reserve Account, if any, available therefor;
(ix) To the Class C Noteholders, the Class C Note Interest,
and, if the Available Funds are insufficient to pay such amount, the
Class C Noteholders will receive such deficiency from amounts on
deposit in the Class C Reserve Account on such Payment Date, if any,
available therefor, with any remaining deficiency from the amounts on
deposit in the Reserve Account, if any, available therefor;
(x) Until the Class A-1 Note Principal Balance has been
reduced to zero, to the Class A-1 Noteholders (including the Note
Insurer as subrogee), the lesser of (a) the outstanding Class A-1 Note
Principal Balance and (b) the Base Principal Amount, and, if such
Payment Date is the Class A-1 Maturity Date, and the remaining
Available Funds are insufficient to reduce the Class A-1 Note Balance
to zero, the deficiency will be funded from the following sources in
the following order of priority: (A) from the
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amounts on deposit in the Reserve Account on such Payment Date, if any,
after making the payments of interest, if any, to the Class A, Class B
and Class C Noteholders pursuant to clauses (vii), (viii) and (ix) on
such Payment Date, and (B) from the Insured Payment made by the Note
Insurer with respect to such Payment Date;
(xi) Until the Class A Note Principal Balance has been reduced
to zero, to the other Class A Noteholders (including the Note Insurer
as subrogee), the sum of (a) the Class A Base Principal Distribution
Amount for such Payment Date and (b) any Class A Overdue Principal,
such amount to be applied sequentially, with 100% of such amount being
applied to reduce the applicable Note Principal Balance of the Class A
Notes then outstanding and having the lowest numerical designation
(e.g., first to the Class A-2 Notes) to zero before any principal
payment is made to the next Class, and, if the Available Funds are
insufficient to pay such amounts, the deficiency will be funded from
the following sources in the following order of priority: (A) from the
amounts on deposit in the Reserve Account on such Payment Date, if any,
after making the payments of interest, if any, to the Class A, Class B
and Class C Noteholders pursuant to clauses (vii), (viii) and (ix) on
such Payment Date and the payment of principal, if any, to the Class
A-1 Noteholders pursuant to clause (x) on such Payment Date, and (B) if
such Payment Date is the Class A-2 Maturity Date, the Class A-3
Maturity Date or the Class A-4 Maturity Date, from the Insured Payment
made by the Note Insurer with respect to such Payment Date;
(xii) To the Class D Noteholders, the Class D Note Interest;
(xiii) To the Note Insurer, the unpaid Reimbursement Amount,
if any, subject to a maximum aggregate amount of $500,000, solely with
respect to clause (ii) of the definition of Reimbursement Amount;
provided, that such $500,000 limitation shall not apply to (a) any
annual audit fees payable to the Independent Public Accountants in
accordance with the Insurance Agreement and (b) any costs and expenses
incurred by the Note Insurer after the occurrence of, and during the
continuance of, a Restricting Event to the extent that such costs and
expenses were incurred in the reasonable judgment of the Note Insurer
to preserve the Pledged Property or improve the cashflow thereon;
(xiv) To the Servicer, so long as UOG or any of its Affiliates
is then acting as Servicer, by wire transfer of immediately available
funds to the account designated in writing by the Servicer, an amount
equal to the Servicer Fee owing on such Payment Date, plus any unpaid
Servicer Fee owing from prior Collection Periods;
(xv) On and after the Payment Date on which the Class A-1 Note
Principal Balance has been reduced to zero, until the Class B Note
Principal Balance has been reduced to zero, to the Class B Noteholders,
from the Available Funds then remaining in the Collection Account, the
sum of (a) the Class B Base Principal Distribution Amount for such
Payment Date and (b) any Class B Overdue Principal; provided, however,
that if a Restricting Event exists on such Payment Date, the amount
otherwise required to be paid to the Class B Noteholders under this
clause (xv), shall instead be paid to the Class A Noteholders
(including the Note Insurer as subrogee) during such
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time as a Restricting Event is continuing as an additional reduction of
the Class A Note Principal Balance up to the amount necessary to reduce
the Class A Note Principal Balance to zero (and shall be paid in the
sequential-pay fashion described in clause (xi) above); and provided,
further, that if the Available Funds are insufficient to pay such
amount to the Class B Noteholders, the deficiency will be funded from
the following sources in the following order of priority: (A) if such
Payment Date is the Class B Maturity Date, from the amounts on deposit
in the Class B Reserve Account on such Payment Date, if any, available
therefor, after making the payment of interest, if any, pursuant to
clause (viii) on such Payment Date, and (B) from the amounts on deposit
in the Reserve Account on such Payment Date, if any, available
therefor, after making the payments, if any, pursuant to clauses (vii),
(viii), (ix), (x) and (xi) on such Payment Date;
(xvi) On and after the Payment Date on which the Class A-1
Note Principal Balance has been reduced to zero, until the Class C Note
Principal Balance has been reduced to zero, to the Class C Noteholders,
from the Available Funds then remaining in the Collection Account, the
sum of (a) the Class C Base Principal Distribution Amount for such
Payment Date and (b) any Class C Overdue Principal; provided, however,
that if a Restricting Event exists on such Payment Date, the amount
otherwise required to be paid to the Class C Noteholders under this
clause (xvi), shall instead be paid (a) to the Class A Noteholders
(including the Note Insurer as subrogee) during such time as a
Restricting Event is continuing as an additional reduction of the Class
A Note Principal Balance up to the amount necessary to reduce the Class
A Note Principal Balance to zero (and shall be paid in the
sequential-pay fashion described in clause (xi) above) and (b) then to
the Class B Noteholders as an additional reduction of the Class B Note
Principal Balance up to the amount necessary to reduce the Class B Note
Principal Balance to zero; and provided, further, that if the Available
Funds are insufficient to pay such amount to the Class C Noteholders,
the deficiency will be funded from the following sources in the
following order of priority: (A) if such Payment Date is the Class C
Maturity Date, from the amounts on deposit in the Class C Reserve
Account on such Payment Date, if any, after making the payment of
interest, if any, available therefor, pursuant to clause (ix) on such
Payment Date, and (B) from the amounts on deposit in the Reserve
Account on such Payment Date, if any, available therefor, after making
the payments, if any, pursuant to clauses (vii), (viii), (ix), (x),
(xi) and (xv) on such Payment Date;
(xvii) To the Note Insurer, the unpaid Reimbursement Amount,
if any, to the extent not paid under clause (xiii) above;
(xviii) On and after the Payment Date on which the Note
Principal Balances of all other classes of Notes have been paid to
zero, until the Class D Note Principal Balance has been reduced to
zero, to the Class D Noteholders, from the Available Funds then
remaining in the Collection Account, the sum of (a) the Class D Base
Principal Distribution Amount, and (b) any Class D Overdue Principal;
and provided, further, that if the Available Funds are insufficient to
pay such amount to the Class D Noteholders, the deficiency will be
funded from the amounts on deposit in the Reserve Account
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on such Payment Date, if any, available therefor, after making the
payments, if any, pursuant to clauses (vii), (viii), (ix), (x), (xi),
(xv) and (xvi) on such Payment Date;
(xix) To the Reserve Account, the amount necessary to maintain
the amount on deposit therein (after giving effect to all withdrawals
from the Reserve Account on such date) at the Requisite Amount for such
Payment Date;
(xx) To the Indenture Trustee, the Indenture Trustee Expenses
then due together with any Indenture Trustee Expenses from prior
Collection Periods, to the extent not paid under clause (vi) above;
(xxi) To the Class B Noteholders, the amount of any Write-Down
Amount previously allocated to the Class B Notes and not previously
paid pursuant to this clause (xxi) or from excess amounts previously
released from the Reserve Account or the Class B Reserve Account in
accordance with Sections 3.06(c) and 3.07(c), respectively;
(xxii) To the Class C Noteholders, the amount of any
Write-Down Amount previously allocated to the Class C Notes and not
previously paid pursuant to this clause (xxii) or from excess amounts
previously released from the Reserve Account or the Class C Reserve
Account in accordance with Sections 3.06(c) and 3.08(c), respectively;
(xxiii) To the Class D Noteholders, the amount of any
Write-Down Amount previously allocated to the Class D Notes and not
previously paid pursuant to this clause (xxiii) or from excess amounts
previously released from the Reserve Account in accordance with Section
3.06(c); and
(xxiv) To the Certificateholders, any remaining amounts, pro
rata in accordance with their respective percentage interests;
provided, however, that during the continuance of a Restricting Event,
no distribution will be made to the Certificateholders. Instead, such
amount will be paid to the most senior class of Notes then outstanding
and then to each Class of Notes subordinate to such senior class of
Notes in a "sequential-pay fashion" until the Note Principal Balance of
each Class of Notes has been paid in full.
(c) All payments to Noteholders shall be made on each Payment Date to
each Noteholder of record on the related Record Date by check, or, if requested
by such Noteholder, by wire transfer of immediately available funds to the
account designated in writing in the form of Exhibit B hereto (or such other
account as the Noteholder may designate in writing) delivered to the Indenture
Trustee on or prior to the related Determination Date in amounts equal to such
Noteholder's pro rata share (based on the Percentage Interest of such Noteholder
in the related Class of Notes) of the payment in respect of such Class of Notes.
Section 3.06 Reserve Account. (a) The Indenture Trustee shall
establish and maintain the Reserve Account as one or more segregated trust
accounts in the name of "UCP 99-1 LLC I and UCP 99-1 LLC II Equipment Contract
Backed Notes, Series 1999-1 Reserve Account, in trust for the registered holders
of Equipment Contract Backed Notes, Series 1999-1." The Indenture Trustee shall
make or permit withdrawals from the Reserve Account only as provided in this
Indenture in amounts specified in a written direction of the Servicer. On the
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Closing Date, the Indenture Trustee shall deposit from the proceeds of the sale
of the Notes, the Initial Reserve Account Deposit into the Reserve Account. In
addition, on or prior to each Payment Date, all Reserve Account Earnings shall
be deposited in the Reserve Account prior to making any withdrawals from the
Reserve Account on each Payment Date.
(b) On each Payment Date, the amount on deposit in the Reserve Account
will be withdrawn by the Indenture Trustee, at the direction of the Servicer, to
the extent necessary, to fund any deficiencies in the following amounts, in the
following order of priority:
(i) the Class A Note Interest then due on each Class of Class
A Notes;
(ii) the Class B Note Interest then due, but only after first
exhausting the amounts on deposit in the Class B Reserve Account on
such Payment Date;
(iii) the Class C Note Interest then due, but only after first
exhausting the amounts on deposit in the Class C Reserve Account on
such Payment Date;
(iv) the amount necessary to reduce the Note Principal Balance
of any Class of Notes having its Maturity Date on such Payment Date to
zero (in the order of priority among each such class of Notes, as each
such class of Notes receives principal payments pursuant to Section
3.05(b)); but only, in the case of the Class B and Class C Notes, after
exhausting the amounts on deposit in Class B Reserve Account or the
Class C Reserve Account, as applicable, on such Payment Date;
(v) the Class A Base Principal Distribution Amount, plus any
Class A Overdue Principal owing on such Payment Date;
(vi) the Class B Base Principal Distribution Amount, plus any
Class B Overdue Principal owing on such Payment Date;
(vii) the Class C Base Principal Distribution Amount, plus any
Class C Overdue Principal owing on such Payment Date; and
(viii) the Class D Base Principal Distribution Amount, plus
any Class D Overdue Principal owing on such Payment Date.
(c) On each Payment Date, following the payment in full of all Required
Distributions, the remaining Available Funds, if any, shall be deposited in the
Reserve Account in the amount necessary to maintain the amount on deposit in the
Reserve Account at the Requisite Amount with respect to such Payment Date. On
any Payment Date, if the amount on deposit in the Reserve Account (after giving
effect to any withdrawals therefrom on such Payment Date in accordance with the
foregoing) is in excess of the Requisite Amount with respect to such Payment
Date, such excess shall be released to the holders of the Certificates in
accordance with their respective percentage interests, unless a Restricting
Event or an Event of Default has occurred and is continuing, in which case such
excess will be retained in the Reserve Account. On the Payment Date on which the
Note Principal Balance of each class of Notes has been paid in full, the amount
remaining on deposit in the Reserve Account shall be released to the
Certificateholders in accordance with their respective percentage interest of
Certificates.
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Notwithstanding the foregoing, prior to releasing any amounts from the Reserve
Account to the Certificateholders on any Payment Date, such amount shall first
be applied to repay any outstanding Write-Down Amounts allocated to the
Subordinate Notes in the same order of priority as such Write-Down Amounts are
to be repaid on each Payment Date in accordance with Section 3.05(b).
Section 3.07 Class B Reserve Account. (a) The Indenture Trustee
shall establish and maintain the Class B Reserve Account as one or more
segregated trust accounts in the name of "UCP 99-1 LLC I and UCP 99-1 LLC II
Equipment Contract Backed Notes, Series 1999-1 Class B Reserve Account, in trust
for the registered holders of Equipment Contract Backed Notes, Series 1999-1,
Class B." The Indenture Trustee shall make or permit withdrawals from the Class
B Reserve Account only as provided in this Indenture in amounts specified in a
written direction of the Servicer. On the Closing Date, the Indenture Trustee
shall deposit from the proceeds of the sale of the Notes, the Class B Initial
Reserve Account Requirement into the Class B Reserve Account. In addition, on or
prior to each Payment Date, all Class B Reserve Account Earnings shall be
deposited in the Class B Reserve Account prior to making any withdrawals from
the Class B Reserve Account on each Payment Date.
(b) On each Payment Date, the amount on deposit in the Class B Reserve
Account will be withdrawn by the Indenture Trustee, at the direction of the
Servicer, to the extent necessary, to fund any deficiencies in the following
amounts, in the following order of priority:
(i) the Class B Note Interest then due; and
(ii) on the Class B Maturity Date, the amount necessary to
reduce the Class B Note Principal Balance to zero.
(c) On any Payment Date, if the amount on deposit in the Class B
Reserve Account (after giving effect to any withdrawals therefrom on such
Payment Date in accordance with the foregoing) is in excess of the Class B
Requisite Amount with respect to such Payment Date, such excess shall be
released to the holders of the Certificates in accordance with their respective
percentage interests, unless a Restricting Event or an Event of Default has
occurred and is continuing, in which case the excess will be retained in the
Class B Reserve Account. Following the initial deposit of the Class B Initial
Reserve Account Requirement into the Class B Reserve Account, no additional
amounts will be deposited into the Class B Reserve Account. On the Payment Date
on which the Class B Note Principal Balance has been paid in full, the amount
remaining on deposit in the Class B Reserve Account shall be released to the
Certificateholders in accordance with their respective percentage interest of
Certificates. Notwithstanding the foregoing, prior to releasing any amounts from
the Class B Reserve Account to the Certificateholders on any Payment Date, such
amount shall first be applied to repay any outstanding Write-Down Amounts
allocated to the Class B Notes.
Section 3.08 Class C Reserve Account. (a) The Indenture Trustee
shall establish and maintain the Class C Reserve Account as one or more
segregated trust accounts in the name of "UCP 99-1 LLC I and UCP 99-1 LLC II
Equipment Contract
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Backed Notes, Series 1999-1 Class C Reserve Account, in trust for the registered
holders of Equipment Contract Backed Notes, Series 1999-1, Class C." The
Indenture Trustee shall make or permit withdrawals from the Class C Reserve
Account only as provided in this Indenture in amounts specified in a written
direction of the Servicer. On the Closing Date, the Indenture Trustee shall
deposit from the proceeds of the sale of the Notes, the Class C Initial Reserve
Account Requirement into the Class C Reserve Account. In addition, on or prior
to each Payment Date, all Class C Reserve Account Earnings shall be deposited in
the Class C Reserve Account prior to making any withdrawals from the Class C
Reserve Account on each Payment Date. On each Payment Date, the amount on
deposit in the Class C Reserve Account will be withdrawn, to the extent
necessary, to fund any deficiencies in the following amounts, in the following
order of priority:
(i) the Class C Note Interest then due; and
(ii) on the Class C Maturity Date, the amount necessary to
reduce the Class C Note Principal Balance to zero.
(b) On any Payment Date, if the amount on deposit in the Class C
Reserve Account (after giving effect to any withdrawals therefrom on such
Payment Date in accordance with the foregoing) is in excess of the Class C
Requisite Amount with respect to such Payment Date, such excess shall be
released to the holders of the Certificates in accordance with their respective
percentage interests, unless a Restricting Event or an Event of Default has
occurred and is continuing, in which case the excess will be retained in the
Class C Reserve Account. Following the initial deposit of the of the Class C
Initial Reserve Account Requirement into the Class C Reserve Account, no
additional amounts will be deposited into the Class C Reserve Account. On the
Payment Date on which the Class C Note Principal Balance has been paid in full,
the amount remaining on deposit in the Class C Reserve Account shall be released
to the Certificateholders in accordance with their respective percentage
interest of Certificates. Notwithstanding the foregoing, prior to releasing any
amounts from the Class C Reserve Account to the Certificateholders on any
Payment Date, such amount shall first be applied to repay any outstanding
Write-Down Amounts allocated to the Class C Notes.
Section 3.09 Statements to Noteholders. (a) If the Servicer has
delivered the Monthly Statement to the Indenture Trustee and the Note Insurer on
the preceding Determination Date in accordance with Section 4.08 of the
Servicing Agreement, then on each Payment Date, the Indenture Trustee will
deliver to the Noteholders, the Initial Purchasers, the Note Insurer and the
Rating Agencies a statement (which statement will be prepared by the Servicer
not later than such preceding Determination Date and may be included in the
Monthly Statement) setting forth the following information (per $1,000 of the
Initial Class A Note Principal Amount, the Initial Class B Note Principal
Amount, the Initial Class C Note Principal Amount or the Initial Class D Note
Principal Amount (as the case may be) as to (i) and (ii) below):
(i) With respect to a statement to any Noteholder, the amount
of each payment allocable to such Noteholder's Percentage Interest of
the Class A, Class B, Class C or Class D Base Principal Distribution
Amount and Class A, Class B, Class C or Class D Overdue Principal, as
applicable;
(ii) With respect to a statement to any Noteholder, the amount
of each payment allocable to such Noteholder's Percentage Interest of
Class A-1, Class A-2,
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Class A-3, Class A-4, Class B, Class C or Class D Note Current Interest
and Class A-1, Class A-2, Class A-3, Class A-4, Class B, Class C or
Class D Overdue Interest, as applicable;
(iii) The aggregate amount of fees and compensation received
by the Servicer pursuant to Section 3.05(b) hereof for the related
Collection Period;
(iv) The aggregate Class A Note Principal Balance (and,
individually, the Class A-1 Note Principal Balance, the Class A-2 Note
Principal Balance, the Class A-3 Note Principal Balance, the Class A-4
Note Principal Balance), the aggregate Class B Note Principal Balance,
the aggregate Class C Note Principal Balance, the aggregate Class D
Note Principal Balance, the Class A Note Factor, the Class B Note
Factor, the Class C Note Factor, the Class D Note Factor, the Pool
Factor and the Aggregate Discounted Contract Principal Balance, after
taking into account all distributions made on such Payment Date;
(v) The total unreimbursed Servicer Advances with respect to
the related Collection Period;
(vi) The amount of Liquidation Proceeds for the related
Collection Period and the amount of Liquidation Proceeds cumulatively
since the Initial Cut-Off Date, the Aggregate Discounted Contract
Principal Balances for all Contracts that became 60-Day Delinquent
Contracts, Defaulted Contracts or Charged-Off Contracts (calculated
immediately prior to the time such Contracts became Charged-Off
Contracts) during the related Collection Period, and the Aggregate
Discounted Contract Principal Balances for all Contracts that became
and remain Charged-Off Contracts since the Initial Cut-Off Date
(calculated immediately prior to the time such Contracts became
Charged-Off Contracts);
(vii) The total number of Contracts and the Aggregate
Discounted Contract Principal Balances thereof, together with the
number and Aggregate Discounted Contract Principal Balances of all
Contracts as to which the Obligors, as of the related Calculation Date,
have missed one, two, three or four Scheduled Payments (including Final
Scheduled Payments), and 60-Day Delinquent Contracts, Defaulted
Contracts and Charged-Off Contracts reconveyed;
(viii) The amount on deposit in the Pre-Funding Account, the
Capitalized Interest Account, the Reserve Account, the Class B Reserve
Account and the Class C Reserve Account, in each case, after giving
effect to all payments made on such Payment Date;
(ix) The amount of any Write-Down Amount allocated on such
Payment Date with respect to each class of Subordinate Notes;
(x) The Class A Enhancement Percentage, the Delinquency
Trigger Ratio, the Defaulted Contract Trigger Ratio and the Cumulative
Net Charge-Off Ratio; and
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(xi) The excess of the Aggregate Discounted Contract Principal
Balance of all Contracts as of the end of the preceding Collection
Period plus the amount on deposit in the Pre-Funding Account, if any,
as of the end of the preceding Collection Period over the aggregate
Note Principal Balances of all Classes of Notes at the end of such
Payment Date, after reflecting all payments of principal and
application of Write-Down Amounts.
(b) By January 31 of each calendar year, commencing January 31, 2000,
or as otherwise required by applicable law, the Indenture Trustee shall furnish
to each Person who at any time during the immediately preceding calendar year
was a Noteholder a statement prepared by the Servicer, and delivered to the
Indenture Trustee, containing the applicable aggregate amounts paid to such
Noteholder for such calendar year or, in the event such Person was a Noteholder
during a portion of such calendar year, for the applicable portion of such year,
for the purposes of such Noteholder's preparation of federal income tax returns.
In addition to the foregoing the Servicer and the Indenture Trustee (to the
extent the Servicer has provided the necessary information to the Indenture
Trustee) shall make available to Noteholders or the Note Insurer any other
information provided to the Servicer or the Indenture Trustee or otherwise in
the Indenture Trustee's possession reasonably requested by Noteholders or the
Note Insurer in connection with tax matters.
(c) The Indenture Trustee shall promptly send to each Noteholder, each
Initial Purchaser, the Note Insurer and to the Rating Agencies in writing:
(i) Notice of any breach by the Transferors, the Issuers, the
Originator or the Servicer of any of their respective representations,
warranties and covenants made in any of the Transaction Documents, of
which a Responsible Officer of the Indenture Trustee has actual
knowledge or received written notice;
(ii) A copy of each Servicer annual compliance statement
delivered to the Indenture Trustee pursuant to Section 4.09 of the
Servicing Agreement;
(iii) Notice of any breach by the Indenture Trustee of its
representations and warranties set forth in Section 7.16 hereof of
which a Responsible Officer has actual knowledge or received written
notice;
(iv) Notice of the occurrence of any Event of Default of which
a Responsible Officer of the Indenture Trustee has actual knowledge or
received written notice;
(v) Notice of any Event of Servicing Termination, default
under the Insurance Agreement or any other default under any of the
Transaction Documents of which a Responsible Officer of the Indenture
Trustee has actual knowledge or received written notice; and
(vi) Notice of the resignation or removal of the Indenture
Trustee.
Except as may be specifically provided herein, the Indenture Trustee shall have
no obligation to seek to obtain any such information.
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Section 3.10 Application of Write-Down Amounts. On each Payment Date,
after taking into account all distributions of principal on such Payment Date,
the Servicer shall allocate the Write-Down Amount with respect to such Payment
Date as follows:
(i) first, as a reduction in the Class D Note Principal
Balance, until the Class D Note Principal Balance equals zero;
(ii) second, any remaining Write-Down Amount after application
against the Class D Note Principal Balance shall be allocated as a
reduction in the Class C Note Principal Balance, until the Class C Note
Principal Balance equals zero; and
(iii) third, any remaining Write-Down Amount after application
against the Class C Note Principal Balance shall be allocated as a
reduction in the Class B Note Principal Balance of the Class B Notes,
until the Class B Note Principal Balance equals zero.
Section 3.11 Compliance With Withholding Requirements. Notwithstanding
any other provisions of this Indenture, the Indenture Trustee, as paying agent
for and on behalf of, and at the direction of the Servicer, shall comply with
all federal withholding requirements respecting payments (or advances thereof)
to Noteholders as may be applicable to instruments constituting indebtedness for
federal income tax purposes. Any amounts so withheld shall be treated as having
been paid to the related Noteholder for all purposes of this Indenture. In no
event shall the consent of Noteholders be required for any withholding.
ARTICLE IV.
REMOVAL OF NON-CONFORMING PLEDGED
PROPERTY; SUBSTITUTION OF CONTRACTS
Section 4.01 Removal of Non-Conforming Pledged Property. (a) Upon
discovery by the Issuers, the Note Insurer, the Originator, the Servicer (or any
of its successors or assigns) or in the case of the Indenture Trustee, upon
actual knowledge of a Responsible Officer of the Indenture Trustee, of a breach
of any of the representations or warranties set forth in Section 2.03 of the
Servicing Agreement that materially and adversely affects any Contract, the
related Equipment or the related Contract File, as the case may be, or if the
Servicer fails to cause delivery of evidence of filing or copies of any UCC
financing statement or delivery of any Certificate of Title in accordance with
the Servicing Agreement or otherwise fails to satisfy the Filing Requirements
(any such event, a "Warranty Event"), the party (including any such successor or
assign) discovering such breach shall give prompt written notice to the other
parties. On or before the second Payment Date following the month of its
discovery or its receipt of notice of such breach or failure (or, at the
Servicer's or the Originator's election, as applicable, any earlier date), in
the event that any such breach or failure has not been cured as of such date in
all material respects by the Originator or the Servicer, as the case may be, or
waived as of such date by the Note Insurer, or if a Note Insurer Default has
occurred and is continuing as of such date, by the Noteholders that together own
Notes with an aggregate Percentage Interest in excess of 66 and 2/3%, the
Servicer or the Originator, as the case may be, shall deposit (or cause to be
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deposited) in the Collection Account the Purchase Amount with respect to such
Contract or replace such Contract with a Substitute Contract pursuant to Section
4.02 hereof. Any such nonconforming Contract so removed shall not be deemed to
be a Charged-Off Contract for purposes of this Article IV.
(b) The obligation of the Servicer or the Originator, as the case may
be, to remove any property from the Pledged Property and to remit the Purchase
Amount, as appropriate, with respect to the related Contract as to which a
breach has occurred and is continuing shall constitute the sole remedy against
the Servicer or the Originator, as the case may be, for such breach available to
the Indenture Trustee, the Noteholders and the Note Insurer, except to the
extent that such breach is the result of any fraud or willful misconduct on the
part of the Servicer or the Originator, as the case may be.
Section 4.02 Substitution of Contracts. (a) Subject to the
provisions of Sections 4.02(b) through (d) hereof, (i) the Servicer may
substitute one or more Contracts (each a "Substitute Contract"), transfer all of
its right, title and interest in the related Substitute Conveyed Assets and
terminate the security interest in the related Equipment with respect to any
Contract that becomes a 60-Day Delinquent Contract, a Defaulted Contract, a
Charged-Off Contract or is the subject of a Full Prepayment or a Casualty Loss,
and (ii) the Servicer or the Originator, as the case may be, may substitute one
or more Substitute Contracts, transfer all of its right, title and interest in
the related Substitute Conveyed Assets and terminate the security interest in
the related Equipment with respect to any Contract that is the subject of a
Warranty Event.
(b) Each Substitute Contract shall be a Contract (i) with respect to
which all of the representations and warranties set forth in Section 2.03 of the
Servicing Agreement were true as of the related Substitute Cut-Off Date, (ii)
which has substantially similar characteristics as the Contract being replaced
and (iii) which relates to the same Origination Pool. No Substitute Contract
shall be selected by the Originator or the Servicer, as applicable, in a manner
that it reasonably believes is adverse to the interests of the Noteholders or
the Note Insurer (without giving effect to the Note Insurance Policy).
(c) Prior to any substitution pursuant to this Section 4.02, (i) the
related Contract File shall have been delivered to the Indenture Trustee at
least two Business Days prior to such conveyance and the Indenture Trustee shall
have issued a Custody Receipt with respect to such Contract File and (ii) the
Indenture Trustee shall have received (A) an executed transfer agreement between
the Issuers and the Originator or the Servicer, as applicable, providing for the
unconditional sale and transfer of the Substitute Conveyed Assets by the
Originator or the Servicer, as applicable, to the Issuers (such agreement, a
"Substitute Transfer Agreement") and (B) the List of Substitute Contracts
reflecting such substitution.
(d) No such substitution under this Section 4.02 shall be permitted on
any Substitute Transfer Date if:
(i) on a cumulative basis from the Closing Date, the sum of
the Discounted Contract Principal Balances (as of the related
Substitute Cut-Off Date) of such Substitute Contracts (excluding
Substitute Contracts substituted pursuant to the
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Servicer's or the Originator's obligation, as applicable, under Section
4.01(a) hereof) would exceed ten percent (10%) of the sum of (x) the
Initial Aggregate Discounted Contract Principal Balance and (y) the
Original Pre-Funded Amount; or
(ii) as of the related Substitute Cut-Off Date, the Substitute
Contracts then being transferred have a Discounted Contract Principal
Balance that is less than the Discounted Contract Principal Balance of
the Contracts being replaced.
(e) Upon the replacement of a Contract with a Substitute Contract as
described above, the security interest of the Indenture Trustee in such replaced
Contract, the related Conveyed Assets and all proceeds thereon shall be
terminated and the replaced Contract and the related Conveyed Assets shall be
released from the lien of this Indenture.
(f) The Servicer shall promptly deliver notice of any substitution
pursuant to this Section 4.02 to the Note Insurer and the Rating Agencies.
Section 4.03 Release of Property from the Pledged Property. (a) The
Indenture Trustee when required by the Issuers and the provisions of this
Indenture shall execute instruments provided to it in order to release property
from the lien of this Indenture, in a manner and under circumstances that are
not inconsistent with the provisions of this Indenture and the Servicing
Agreement. No party relying upon an instrument executed by the Indenture Trustee
as provided in this Article IV shall be bound to ascertain the Indenture
Trustee's authority, inquire into the satisfaction of any conditions precedent
or see to the application of any monies.
(b) The Indenture Trustee shall, at such time as there are no Notes
outstanding and all sums due the Indenture Trustee hereunder and the Note
Insurer pursuant to the Insurance Agreement have each been paid, and the Note
Insurance Policy has been returned by the Indenture Trustee to the Note Insurer
for cancellation, release any remaining portion of the Pledged Property that
secured the Notes from the lien of this Indenture and release to the
Certificateholders (pro rata in accordance with their respective percentage
interests) or any other Person entitled thereto any funds then on deposit in any
of the Accounts and any subaccounts thereof. The Indenture Trustee shall release
property from the lien of this Indenture pursuant to this Section 4.03(b) only
upon receipt of an Issuers' Request accompanied by an Officers' Certificate and
an Opinion of Counsel each stating that all conditions precedent to such release
as set forth herein have been satisfied.
ARTICLE V.
THE NOTES AND THE CERTIFICATES
Section 5.01 The Notes and the Certificates. (a) The Notes will be
issued in denominations of $100,000 and multiples of $1,000 in excess thereof
(with the exception of one Note of each Class which may be issued in an odd
amount) of the Initial Class A-1 Note Principal Balance, the Initial Class A-2
Note Principal Balance, the Initial Class A-3 Note Principal Balance, the
Initial Class A-4 Note Principal Balance, the Initial Class B Note Principal
Balance, the Initial Class C Note Principal Balance and the Initial Class D Note
Principal Balance, respectively. The Certificates shall not have denominations.
Each Note shall represent
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a validly issued and binding obligation of the Issuers, but only if such Note
has been executed on behalf of the Issuers by a Responsible Officer of each of
the Issuers by manual or facsimile signature and authenticated on behalf of the
Indenture Trustee by a Responsible Officer the Indenture Trustee by manual or
facsimile signature. Certificate I and Certificate II shall represent undivided
beneficial interests in the portion of the Pledged Property that is pledged by
LLC I and LLC II, respectively, and each such Certificate shall be entitled to
the benefits of this Indenture if such Certificate has been executed and
authenticated on behalf of the Indenture Trustee by a Responsible Officer of the
Indenture Trustee by manual or facsimile signature. Each Note and Certificate
bearing the manual or facsimile signatures of individuals who were, at the time
when such signatures were affixed, authorized to sign on behalf of the Issuers
shall be valid and binding obligations, notwithstanding that such individuals or
any of them have ceased to be so authorized prior to the authentication and
delivery of such Note or Certificate, as applicable, or did not hold such
offices as of the date of such Note or Certificate, as applicable. No Note or
Certificate, as applicable, shall be entitled to any benefit under this
Indenture, or be valid for any purpose, unless there appears on such Note or
Certificate, as applicable, a certificate of authentication substantially in the
form set forth in the form of the Note of the related Class or Certificate, as
applicable, each attached as Exhibits hereto, signed by the Indenture Trustee by
manual or facsimile signature, and such signature upon any Note or Certificate,
as applicable, shall be conclusive evidence, and the only evidence, that such
Note or Certificate, as applicable, has been duly authenticated and delivered
hereunder. All Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class A-4
Notes shall be substantially in the forms set forth in Exhibits C-1, C-2, C-3
and C-4 hereto, respectively, all Class B Notes shall be substantially in the
form set forth in Exhibit D-1 hereto, all Class C Notes shall be substantially
in the form set forth in Exhibit D-2 hereto, all Class D Notes shall be
substantially in the form set forth in Exhibit D-3 hereto, and each Certificate
shall be in the form of Exhibit E hereto. Each Note and Certificate shall be
dated the date of their authentication. Neither the Notes, the Certificates nor
the Contracts are insured by the Federal Deposit Insurance Corporation or any
other governmental agency.
(b) It is intended that the Class A Notes and the Class B Notes be
registered so as to participate in a global book-entry system with the Issuers,
as set forth herein. The Class A Notes and the Class B Notes shall, except as
otherwise provided in the next paragraph, be initially issued in the form of a
single fully registered Class A-1 Note, Class A-2 Note, Class A-3 Note, Class
A-4 Note and Class B Note each with a denomination equal to the Initial Class
A-1 Note Principal Balance, the Initial Class A-2 Note Principal Balance, the
Initial Class A-3 Note Principal Balance, the Initial Class A-4 Note Principal
Balance and the Initial Class B Note Principal Balance, respectively. Upon
initial issuance, the ownership of each such Note shall be registered in the
Register in the name of Cede & Co., or any successor thereto, as nominee for the
Indenture Trustee.
The Issuers and the Indenture Trustee are hereby authorized to execute
and deliver the Representation Letter with the Depository.
With respect to the Class A Notes and the Class B Notes registered in
the Register in the name of Cede & Co., as nominee of the Depository, the
Issuers and the Indenture Trustee shall have no responsibility or obligation to
Direct or Indirect Participants or beneficial owners for which the Depository
holds the Class A Notes and the Class B Notes from time to time as a
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trustee. Without limiting the immediately preceding sentence, the Issuers, the
Servicer and the Indenture Trustee shall have no responsibility or obligation
with respect to (i) the accuracy of the records of the Depository, Cede & Co.,
or any Direct or Indirect Participant with respect to any ownership interest in
any the Class A Notes and the Class B Notes, (ii) the delivery to any Direct or
Indirect Participant or any other Person, other than a Noteholder, of any notice
with respect to the Class A Notes and the Class B Notes or (iii) the payment to
any Direct or Indirect Participant or any other Person, other than a Noteholder,
of any amount with respect to any distribution of principal or interest on the
Class A Notes and the Class B Notes. No Person other than a Noteholder shall
receive a certificate evidencing such Class A Notes and the Class B Notes.
Upon delivery by the Depository to the Indenture Trustee of written
notice to the effect that the Depository has determined to substitute a new
nominee in place of Cede & Co., and subject to the provisions hereof with
respect to the payment of interest by the mailing of checks or drafts to the
Noteholders appearing as Noteholders at the close of business on a Record Date,
the name "Cede & Co." in this Indenture shall refer to such new nominee of the
Depository.
(c) In the event that (i) the Depository or the Servicer advises the
Indenture Trustee in writing that the Depository is no longer willing or able to
discharge properly its responsibilities as nominee and depository with respect
to the Class A Notes and the Class B Notes and the Servicer or the Depository is
unable to locate a qualified successor or (ii) the Indenture Trustee at its sole
option elects to terminate the book-entry system through the Depository, the
Class A Notes and the Class B Notes shall no longer be restricted to being
registered in the Register in the name of Cede & Co. (or a successor nominee) as
nominee of the Depository. At that time, the Servicer may determine that the
Class A Notes and the Class B Notes shall be registered in the name of and
deposited with a successor Depository operating a global book-entry system, as
may be acceptable to the Servicer, or such Depository's agent or designee but,
if the Servicer does not select such alternative global book-entry system, then
the Class A Notes and the Class B Notes may be registered in whatever name or
names Noteholders transferring the Class A Notes and the Class B Notes shall
designate, in accordance with the provisions hereof; provided, however, that any
such registration shall be at the expense of the Servicer.
(d) Notwithstanding any other provision of this Indenture to the
contrary, so long as any Class A Note or Class B Note is registered in the name
of Cede & Co., as nominee of the Depository, all distributions of principal or
interest on such Notes, as the case may be, and all notices with respect to such
Notes, as the case may be, shall be made and given, respectively, in the manner
provided in the Representation Letter.
In the event any such Notes are issued in book-entry form with the
Depository: (i) the Indenture Trustee may deal with the Depository as the
authorized representative of the related Noteholders; (ii) the rights of such
Noteholders shall be exercised only through the Depository and shall be limited
to those established by law and agreement between such Noteholders and the
Depository; (iii) the Depository will make book-entry transfers among the Direct
Participants of the Depository and will receive and transmit distributions of
principal and interest on the related Notes to such Direct Participants; and
(iv) the Direct Participants of the Depository shall have no rights under this
Indenture under or with respect to any of such Notes
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held on their behalf by the Depository, and the Depository may be treated by the
Indenture Trustee and its agents, employees, officers and directors as the
absolute owner of such Notes for all purposes whatsoever.
(e) No transfer of any Note shall be made unless such transfer is made
in a transaction which does not require registration or qualification under the
Securities Act or qualification under any state securities laws. By acceptance
of its Note, the transferee of any Class A Note or Class B Note will be deemed
to have represented that such transfer was made in reliance on Rule 144A under
the Securities Act. If a transfer of any Class C Note or Class D Note is to be
made in reliance upon an exemption from the Securities Act other than Rule 144A
thereunder, (A) the Indenture Trustee shall receive an Opinion of Counsel that
such transfer may be made pursuant to an exemption from the Securities Act,
describing the applicable exemption and the basis therefor, which Opinion of
Counsel shall not be an expense of the Originator, the Depositor, the Servicer,
the Issuers or the Indenture Trustee or (B) the Indenture Trustee shall require
the transferee to execute a certification, substantially in the form of Exhibit
F hereto, setting forth the facts surrounding such transfer. In the event that a
transfer of any Class C Note or Class D Note is to be made in reliance on Rule
144A under the Securities Act, the related Noteholder shall cause its
prospective transferee to execute and deliver a certificate substantially in the
form of Exhibit G hereto; provided, however, that with respect to any sale of
any Class C Note or Class D Note by an investment company registered under the
Investment Company Act of 1940, as amended, made in reliance on Rule 144A, the
related Noteholder may (in lieu of delivering a certificate in the form of
Exhibit G) deliver to the Indenture Trustee a certificate in the form of Exhibit
H hereto with a copy of a Qualified Institutional Buyer Certificate in the form
of Addendum 1 thereto. The Servicer promptly shall furnish to any Holder, or any
prospective purchaser designated by a Holder, the information required to be
delivered to Holders and prospective purchasers of Notes in connection with the
resale of the Notes to permit compliance with Rule 144A in connection with such
resale. No Note may be subdivided for resale or other transfer into a unit
smaller than a unit the initial offering price of which would have been in the
aggregate $100,000. No resale or other transfer of Class C Notes or Class D
Notes may be made to a nonresident alien individual, foreign corporation or
other non-United States person.
(f) Notwithstanding anything else contained in this Indenture, neither
the Indenture Trustee nor the Note Registrar shall effect the registration of
any transfer of any Class C Note or Class D Note (i) unless, prior to such
transfer, the Indenture Trustee shall have received from the related Noteholder
(with a copy to each Rating Agency) an Opinion of Counsel to the effect that
such transfer will not result in either of the Issuers becoming subject to
taxation as an association taxable as a corporation or (ii) if following such
transfer the sum of (a) the number of Holders of Class C Notes and Class D
Notes, and (b) the number of Certificateholders, would be more than 99.
Section 5.02 Initial Issuance of Notes and Certificates. The Indenture
Trustee shall, upon the written instruction of the Issuers, in exchange for the
Pledged Property, authenticate and deliver (i) the Notes executed by the Issuers
in authorized denominations equaling in the aggregate the Initial Class A Note
Principal Balance, the Initial Class B Note Principal Balance, the Initial Class
C Note Principal Balance and the Initial Class D Note Principal Balance,
respectively, and (ii) Certificate I and Certificate II.
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Section 5.03 Registration of Transfer and Exchange of Notes and
Certificates. (a) The Indenture Trustee, as initial Note Registrar, shall
maintain, or cause to be maintained, at the Corporate Trust Office, a register
(the "Register") in which the Indenture Trustee shall provide for the
registration of Notes and of transfers and exchanges of Notes as herein
provided. All Notes shall be so registered.
(b) Upon surrender for registration of transfer of any Note at the
Corporate Trust Office, the Issuers shall execute, and the Indenture Trustee
shall authenticate and deliver, subject to the requirements of Sections 5.01(e)
and (f) hereof in the case of the Class C and Class D Notes, in the name of the
designated transferee or transferees, one or more new Notes in authorized
denominations of the same Class, of a like aggregate Percentage Interest in the
related Class of Notes, dated the date of such authentication.
(c) At the option of a Noteholder or the holder of a Certificate, Notes
or a Certificate, as the case may be, may be exchanged for other Notes of the
same class (of authorized denomination) of a like Percentage Interest in the
related Class of Notes, or such Certificate, as the case may be, upon surrender
of the Notes or the Certificates, as applicable, to be exchanged at any such
office or agency. Whenever any Notes or Certificates are so surrendered for
exchange, the Issuers shall execute, and the Indenture Trustee shall
authenticate and deliver the Note or Certificate, as applicable, that the
Noteholder or the holder of such Certificate, as the case may be, making the
exchange is entitled to receive. Every Note presented or surrendered for
registration of transfer shall be accompanied by a written instrument of
transfer substantially in the form of Exhibit I hereto, duly executed by the
Noteholder thereof or its attorney duly authorized in writing.
(d) No service charge shall be made for any registration of transfer of
any Note or for the exchange of any Note or Certificate, but the Indenture
Trustee may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer of any Note or
exchange of any Note or Certificate.
(e) All Notes surrendered for registration of transfer and all Notes
and any Certificate surrendered for exchange shall be delivered to the Indenture
Trustee and cancelled and subsequently destroyed by the Indenture Trustee in
accordance with its customary practices in effect from time to time.
(f) Notwithstanding anything to the contrary herein, a Certificate
shall not be transferable under any condition except to either Issuer, special
purpose, bankruptcy remote Affiliates of either Issuer or the members, at any
time, of either of the Issuers, and each of the Issuers, by accepting the
Certificate, agrees absolutely and unconditionally that it shall not sell any or
all of its interest in the Certificate to any other Person. Any transfer of any
or all of the interest in the Certificate in violation of the foregoing shall be
null and void and of no effect. Prior to any transfer of a Certificate to either
Issuer (other than upon initial issuance thereof on the Closing Date), a special
purpose, bankruptcy remote affiliate of either Issuer or the Members, at any
time, of either of the Issuers, the transferring Issuer shall deliver to the
Indenture Trustee and the Note Insurer an Opinion of Counsel to the effect that
such transfer will not result in either of the Issuers (i) becoming subject to
taxation as an association taxable as a corporation and (ii) becoming
substantively consolidated with UniCapital Funding, the Originator or any of
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the Originating Units in the event of a bankruptcy of UniCapital Funding, the
Originator or any of the Originating Units. Prior to the execution of any
financing agreement for a Certificate, the Rating Agencies shall have confirmed
that there shall be no downgrade in the rating of the Notes as a direct result
of the execution of such financing agreement. Each of the Issuers agrees to
provide to the Rating Agencies any information necessary for the Rating Agency
to make such a confirmation. The Issuers will deliver a copy of any such
confirmation to the Indenture Trustee.
(g) The Note Registrar shall not register the transfer of any Note
(other than the transfer of a Class A Note or a Class B Note to the nominee of
the Depository or a successor depository) unless the transferee has executed and
delivered to the Indenture Trustee a certification to the effect that either (i)
the transferee is not (A) an employee benefit plan (as defined in Section 3(3)
of ERISA) that is subject to the provisions of Title I of ERISA or (B) a plan
(as defined in Section 4975(e)(1) of the Code) that is subject to Section 4975
of the Code (each of the foregoing, a "Benefit Plan"), and is not acting on
behalf of or investing the assets of a Benefit Plan, or (ii) the transferor is
acquiring a Class A Note or a Class B Note and the transferee's acquisition and
continued holding of the Note will be covered by a U.S. Department of Labor
Prohibited Transaction Class Exemption. Each transferee of a beneficial interest
in a Class A Note or a Class B Note that is registered in the name of, and
deposited with, a depository operating a global book-entry system shall be
deemed to make one of the foregoing representations.
Section 5.04 Mutilated, Destroyed, Lost or Stolen Notes and
Certificates. If any mutilated Note or Certificate is surrendered to the
Indenture Trustee, or the Indenture Trustee receives evidence to its
satisfaction of the destruction, loss or theft of any Note or Certificate, and
(a) there is delivered to the Issuers and the Indenture Trustee such security or
indemnity satisfactory to each of them as may be required by them to save each
of them harmless (provided, that with respect to a Noteholder which is an
insurance company whose long-term debt or claims paying ability is rated
investment grade or better by Moody's and S&P at such time, a letter of
indemnity furnished by it shall be sufficient for this purpose), then, in the
absence of notice to the Indenture Trustee that any such Note or Certificate has
been acquired by a bona fide purchaser, the Issuers shall execute and the
Indenture Trustee shall authenticate and deliver in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Note or Certificate, as
applicable, a new Note of like Class and Percentage Interest or a replacement
Certificate, as applicable. In connection with the issuance of any new Note or
Certificate under this Section 5.04, the Indenture Trustee may require the
payment by the Noteholder or the Certificateholder, as the case may be, of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto. Any duplicate Note or Certificate issued pursuant to this
Section 5.04 shall constitute a Note or Certificate, as applicable, duly issued
by the Issuers, as if originally issued, whether or not the lost, stolen or
destroyed Note shall be found at any time.
Section 5.05 Persons Deemed Owners. The Indenture Trustee and the Note
Insurer may treat the Person in whose name any Note is registered as the owner
of such Note for the purpose of receiving distributions pursuant to Section 3.05
hereof and for all other purposes whatsoever, and the Note Insurer and the
Indenture Trustee shall not be affected by any notice to the contrary.
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Section 5.06 Access to List of Noteholders' Names and Addresses. (a)
The Indenture Trustee will furnish or cause to be furnished to the Servicer
within five days after each Record Date and within 15 days after receipt by the
Indenture Trustee of a request therefor from the Servicer in writing, a list of
the names and addresses of the Noteholders as of the most recent Record Date. If
one or more Noteholders representing an aggregate Percentage Interest of any
Class of Notes of not less than 25% (an "Applicant") shall apply in writing to
the Indenture Trustee, and such application shall state that the Applicant
desires to communicate with other Noteholders with respect to its rights under
this Indenture or under the Notes, then the Indenture Trustee shall, within five
Business Days after the receipt of such application, send such notice to the
current list of Noteholders. Every Noteholder, by receiving and holding a Note,
agrees with the Issuers, the Servicer and the Indenture Trustee that none of the
Issuers, the Servicer, the Indenture Trustee nor any of their respective
Affiliates shall be held accountable by reason of the disclosure of any such
information, regardless of the source from which such information was derived.
Section 5.07 Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by an agent duly appointed in writing, and, except
as herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Indenture Trustee and, where
required, to the Issuers, the Note Insurer or the Servicer. Proof of execution
of any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Section 7.01
hereof) conclusive in favor of the Indenture Trustee, the Issuers, the
Originator and the Servicer, if made in the manner provided in this Section
5.07.
(b) The fact and date of the execution by any Noteholder of any such
instrument or writing may be proven in any reasonable manner which the Indenture
Trustee deems sufficient.
(c) The ownership of Notes shall be proven by the Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Noteholder shall bind every holder of every Note issued
upon the registration of transfer thereof or in exchange therefor or in lieu
thereof, in respect of anything done or omitted to be done by the Indenture
Trustee, the Issuers or the Servicer in reliance thereon, whether or not
notation of such action is made upon such Note.
Section 5.08 No Proceedings; Limited Recourse. By its acceptance of a
Note or a Certificate, as applicable, each Noteholder and Certificateholder
shall be deemed to have agreed (a) that it will not directly or indirectly
institute, or cause to be instituted, or cooperate with others in instituting,
against either of the Issuers any bankruptcy or insolvency proceeding so long as
there shall not have elapsed one year plus one day since the maturity date of
the latest maturing securities of either of the Issuers, (b) that the Notes and
the Certificates are limited recourse obligations of the Issuers that may be
satisfied only out of the Pledged Property and do not constitute a claim against
the Issuers if cash flow from the Pledged Property is insufficient to repay the
Notes or satisfy the Certificates in full, and (c) that it has no rights in or
with respect to
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any assets of the Issuers other than the Pledged Property, including, but not
limited to, any assets collateralizing other debt obligations of the Issuers.
Notwithstanding the foregoing, to the extent that any Noteholder or
Certificateholder is deemed to have any interest in any assets of the Issuers
pledged to secure other debt obligations of the Issuers, by its acceptance of a
Note or a Certificate, as applicable, each Noteholder and each Certificateholder
shall be deemed to agree that its interest in those assets is subordinate to
claims or rights of the holders of such other debt obligations, and that its
agreement shall constitute a subordination agreement for purposes of Section
510(a) of the Bankruptcy Code.
ARTICLE VI.
THE ISSUERS
Section 6.01 Liability of the Issuers. (a) The Issuers shall be joint
and severally liable for payments in respect of the Notes in accordance herewith
only to the extent of the obligations specifically undertaken by the Issuers
herein.
Section 6.02 Limitation on Recourse to the Issuers. The claims of the
Indenture Trustee, the Note Insurer, the Servicer, the Noteholders or any other
Person hereunder against the Issuers for amounts due and owing to such Persons
hereunder, under the Notes or under any other Transaction Document to which such
Person is a party are limited recourse against the Issuers and are payable by
the Issuers solely out of Available Funds on each Payment Date in accordance
with the priorities set forth in Section 3.05(b) hereof.
Section 6.03 Indemnity for Liability Claims. The Issuers shall
indemnify, defend and hold harmless the Indenture Trustee (which shall include
any of its directors, employees, officers and agents), the Noteholders and the
Note Insurer against and from any and all costs, expenses, losses, damages,
claims and liabilities arising out of or resulting from the use, repossession or
operation of the Equipment to the extent not paid by the Servicer pursuant to
Section 5.01 of the Servicing Agreement; provided, however, that such amounts
shall be payable solely from amounts payable to the Issuers pursuant to Section
3.05(b)(xxiv) hereof and is otherwise non-recourse to the Issuers.
Section 6.04 Liabilities. Notwithstanding any provision of this
Indenture, by entering into this Indenture, the Issuers agree to be jointly and
severally liable, directly to the injured party, for the entire amount of any
losses, claims, damages or liabilities (other than those losses incurred by a
Noteholder in the capacity of an investor in the Notes) imposed on or asserted
against the Issuers or otherwise arising out of or based on the arrangements
created by this Indenture (to the extent of the Pledged Property remaining after
the Noteholders and the Note Insurer have been paid in full are insufficient to
pay such losses, claims, damages or liabilities).
Section 6.05 Annual Statement as to Compliance. The Issuers will
deliver to the Indenture Trustee, the Note Insurer, each of the Initial
Purchasers and the Rating Agencies, within 120 days after the end of each fiscal
year of the Issuers (commencing with the fiscal year
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ended December 31, 1999), an Officers' Certificate stating, as to the Authorized
Officers signing such Officers' Certificate, that:
(i) a review of the activities of the Issuers during such year
and of the performance of the Issuers under this Indenture has been
made under such Authorized Officers' supervision; and
(ii) to the best of such Authorized Officers' knowledge, based
on such review, each of the Issuers has complied with all conditions
and covenants under this Indenture throughout such year, or, if there
has been a default in the compliance of any such condition or covenant,
specifying each such default known to such Authorized Officers and the
nature and status thereof.
Section 6.06 Payment of Principal and Interest. The Issuers will pay or
cause to be duly and punctually paid the principal of and interest on the Notes
in accordance with the terms of the Notes and this Indenture. Amounts properly
withheld under the Code by any Person from a payment to any Noteholder of
interest and/or principal shall be considered as having been paid by the Issuers
to such Noteholder for all purposes of this Indenture.
Section 6.07 Maintenance of Office or Agency. The Note Registrar shall,
and the Indenture Trustee, as initial Note Registrar agrees to, maintain in the
city in which the Corporate Trust Office is located, an office or agency where
Notes may be surrendered for registration of transfer or exchange, and where
notices and demands to or upon the Issuers in respect of the Notes and this
Indenture may be served. The Indenture Trustee will give prompt written notice
to the Issuers of the location, and of any change in the location, of any such
office or agency.
Section 6.08 Money for Payments to be Held in Trust. On or before each
Payment Date, the Servicer on behalf of the Issuers shall deposit or cause to be
deposited in the Collection Account, but only from the sources described herein,
an aggregate sum sufficient to pay the amounts then becoming due under the
Notes, such sum to be held in trust for the benefit of the Persons entitled
thereto and (unless the paying agent is the Indenture Trustee) shall promptly
notify the Indenture Trustee of its action or failure so to act.
The Servicer on behalf of the Issuers will cause each paying agent
other than the Indenture Trustee to execute and deliver to the Indenture Trustee
and the Note Insurer an instrument in which such paying agent shall agree with
the Indenture Trustee (and if the Indenture Trustee acts as paying agent, it
hereby so agrees), subject to the provisions of this Section, that such paying
agent will:
(i) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(ii) give the Indenture Trustee notice of any default by the
Issuers (or any other obligor upon the Notes) of which it has actual
knowledge in the making of any payment required to be made with respect
to the Notes;
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(iii) at any time during the continuance of any such default,
upon the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such paying agent;
(iv) immediately resign as a paying agent and forthwith pay to
the Indenture Trustee all sums held by it in trust for the payment of
Notes if at any time it ceases to meet the standards required to be met
by a paying agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuers may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, direct
any paying agent to pay to the Indenture Trustee all sums held in trust by such
paying agent, such sums to be held by the Indenture Trustee upon the same terms
as those upon which the sums were held by such paying agent; and upon such a
payment by any paying agent to the Indenture Trustee, such paying agent shall be
released from all further liability with respect to such money.
Subject to applicable laws with respect to the escheat of funds, any
money held by the Indenture Trustee or any paying agent in trust for the payment
of any amount due with respect to any Note and remaining unclaimed for two years
after such amount has become due and payable shall be discharged from such trust
and be paid to the Issuers; and the Holder of such Note shall thereafter, as an
unsecured general creditor, look only to the Issuers for payment thereof (but
only to the extent of the amounts so paid to the Issuers), and all liability of
the Indenture Trustee or such paying agent with respect to such trust money
shall thereupon cease; provided, however, that, if such money or any portion
thereof had been previously deposited by the Note Insurer with the Indenture
Trustee for the payment of principal or interest on the Notes, to the extent any
amounts are owing to the Note Insurer, such amounts shall be paid promptly to
the Note Insurer upon receipt of a written request by the Note Insurer to such
effect; and provided, further, that the Indenture Trustee or such paying agent,
before being required to make any such repayment, shall at the expense of the
Issuers cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in The City of New York, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Issuers. The Indenture Trustee shall also adopt and
employ, at the expense of the Issuers, any other reasonable means of
notification of such repayment (including, but not limited to, mailing notice of
such repayment to Holders whose Notes have been called but have not been
surrendered for redemption or whose right to or interest in moneys due and
payable but not claimed is determinable from the records of the Indenture
Trustee or of any paying agent, at the last address of record for each such
Holder).
Section 6.09 Existence. Except as otherwise permitted by the provisions
of Section 6.13, each of the Issuers will keep in full effect its existence,
rights and franchises as a
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limited liability company under the laws of the State of Nevada, and each of the
Issuers will obtain and preserve its qualification to do business in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Indenture, the Notes and each other
instrument or agreement included in the Pledged Property.
Section 6.10 Protection of Pledged Property. Each of the Issuers
intends the security interest granted pursuant to this Indenture in favor of the
Indenture Trustee, the Note Insurer, the Certificateholders and the Noteholders,
as their interests appear herein, to be prior to all other liens in respect of
the Pledged Property, and the Issuers shall take all actions necessary to obtain
and maintain, in favor of the Indenture Trustee, for the benefit of the
Noteholders, the Certificateholders and the Note Insurer, a first lien on and a
first priority, perfected security interest in the Pledged Property; provided,
that with the respect to the Equipment included in the Pledged Property, the
Issuers shall only be required to comply with the Filing Requirements. The
Issuers will from time to time prepare (or shall cause to be prepared), execute
and deliver all such supplements and amendments hereto and all such financing
statements (subject to the Filing Requirements), continuation statements,
instruments of further assurance and other instruments, and will take such other
action necessary or advisable to:
(i) grant more effectively all or any portion of the Pledged
Property;
(ii) maintain or preserve the lien and security interest (and
the priority thereof) in favor of the Indenture Trustee, for the
benefit of the Noteholders, the Certificateholders and the Note
Insurer, created by this Indenture or carry out more effectively the
purposes hereof;
(iii) perfect, publish notice of or protect the validity of
any grant made or to be made by this Indenture;
(iv) enforce any of the Pledged Property;
(v) preserve and defend title to the Pledged Property and the
rights of the Indenture Trustee in such Pledged Property against the
claims of all persons and parties; and
(vi) pay all taxes or assessments levied or assessed upon the
Pledged Property when due.
Each of the Issuers hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required by the Indenture Trustee or the Note Insurer pursuant
to this Section 6.10.
Section 6.11 Performance of Obligations; Servicing of Receivables. (a)
Neither of the Issuers will take any action and each of the Issuers will use
commercially reasonable efforts not to permit any action to be taken by others
that would release any Person from any of such Person's material covenants or
obligations under any instrument or agreement included in the Pledged Property
or that would result in the amendment, hypothecation, subordination, termination
or discharge of, or impair the validity or effectiveness of, any such instrument
or agreement, except as ordered by any bankruptcy or other court or as expressly
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provided in this Indenture, the other Transaction Documents or any other
instrument or agreement.
(b) Each of the Issuers may contract with other Persons acceptable to
the Note Insurer to assist it in performing its duties under this Indenture, and
any performance of such duties by a Person identified to the Indenture Trustee
and the Note Insurer in an Officer's Certificate of each of the Issuers shall be
deemed to be action taken by the Issuers.
(c) Each of the Issuers will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the other Transaction
Documents and in the instruments and agreements included in the Pledged
Property, including, but not limited to, preparing (or causing to be prepared)
and filing (or causing to be filed) all UCC financing statements and
continuation statements required to be filed by the terms of this Indenture and
the Servicing Agreement in accordance with and within the time periods provided
for herein and therein.
(d) If a Responsible Officer of either of the Issuers shall have actual
knowledge of the occurrence of an Event of Servicing Termination under the
Servicing Agreement, the Issuers shall promptly notify the Indenture Trustee,
the Note Insurer and the Rating Agencies in writing thereof, and shall specify
in such notice the action, if any, the Issuers are taking in respect of such
default. If a Servicer Termination Event shall arise from the failure of the
Servicer to perform any of its duties or obligations under the Servicing
Agreement with respect to the Contracts, the Issuers shall take all reasonable
steps available to it to remedy such failure.
Section 6.12 Negative Covenants. So long as any Notes are Outstanding,
neither of the Issuers shall:
(i) except as expressly permitted by this Indenture or the
Transaction Documents, sell, transfer, exchange or otherwise dispose of
any of the properties or assets of such Issuer (other than the
Certificates in accordance with Section 5.03(f)), including those
included in the Pledged Property, unless directed to do so by the Note
Insurer;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Noteholder by reason of the
payment of the taxes levied or assessed upon any part of the Pledged
Property; or
(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien in favor of the Indenture
Trustee created by this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be
released from any covenants or obligations with respect to the Notes
under this Indenture except as may be expressly permitted hereby, (B)
permit any lien, charge, excise, claim, security interest, mortgage or
other encumbrance (other than the lien of this Indenture) to be created
on or extend to or otherwise arise upon or burden the
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Pledged Property or any part thereof or any interest therein or the
proceeds thereof (other than tax liens, mechanics' liens and other
liens that arise by operation of law, in each case on Equipment and
arising solely as a result of an action or omission of the related
Obligor), (C) permit the lien of this Indenture not to constitute a
valid first priority (other than with respect to any such tax,
mechanics' or other lien) security interest in the Pledged Property
(other than the Equipment, which is subject only to the Filing
Requirements) or (D) amend, modify or fail to comply with the
provisions of the Transaction Documents without the prior written
consent of the Note Insurer;
Section 6.13 Issuers May Consolidate, Etc. Only on Certain Terms. (a)
Neither of the Issuers shall consolidate or merge with or into any other Person,
unless:
(i) the Person (if other than the Issuers) formed by or
surviving such consolidation or merger shall be a Person organized and
existing under the laws of the United States of America or any state
and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Indenture Trustee, in form satisfactory
to the Indenture Trustee and the Note Insurer, the due and punctual
payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this
Indenture on the part of the Issuers to be performed or observed, all
as provided herein;
(ii) immediately after giving effect to such transaction, no
Event of Default or Restricting Event shall have occurred and be
continuing;
(iii) the Issuers shall have received an Opinion of Counsel
(and shall have delivered copies thereof to the Indenture Trustee and
the Note Insurer) to the effect that (a) such transaction will not have
any material adverse tax consequence to the Issuers, the Note Insurer
or any Noteholder, and (b) the Person (if other than the Issuers)
formed by or surviving such consolidation or merger would not be
substantively consolidated with UniCapital Funding, the Originator or
any of the Originating Units in the event of a bankruptcy of UniCapital
Funding, the Originator or any of the Originating Units;
(iv) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken;
(v) the Issuers shall have delivered to the Indenture Trustee
and the Note Insurer an Officers' Certificate and an Opinion of Counsel
each stating that such consolidation or merger and such supplemental
indenture comply with this Article VI and that all conditions precedent
herein provided for relating to such transaction have been complied
with (including any filing required by the Exchange Act);
(vi) the Rating Agencies have confirmed that such transaction
will not result in the reduction or withdrawal of any rating on any
Class of Notes; and
(vii) the Note Insurer has given its prior written consent.
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(b) Neither of the Issuers shall convey or transfer all or
substantially all of its properties or assets (other than the Certificates in
accordance with Section 5.03(f)), including those included in the Pledged
Property, to any Person, unless:
(i) the Person that acquires by conveyance or transfer the
properties and assets of such Issuer the conveyance or transfer of
which is hereby restricted shall (A) be a United States citizen or a
Person organized and existing under the laws of the United States of
America or any state, (B) expressly assume, by an indenture
supplemental hereto, executed and delivered to the Indenture Trustee,
in form satisfactory to the Indenture Trustee and the Note Insurer, the
due and punctual payment of the principal of and interest on all Notes
and the performance or observance of every agreement and covenant of
this Indenture and each of the Transaction Documents on the part of the
Issuers to be performed or observed, all as provided herein, (C)
expressly agree by means of such supplemental indenture that all right,
title and interest so conveyed or transferred shall be subject and
subordinate to the rights of Holders of the Notes, and (D) unless
otherwise provided in such supplemental indenture, expressly agree to
indemnify, defend and hold harmless the Issuers against and from any
loss, liability or expense arising under or related to this Indenture
and the Notes;
(ii) immediately after giving effect to such transaction, no
Event of Default or Restricting Event shall have occurred and be
continuing;
(iii) the Issuers shall have received an Opinion of Counsel
(and shall have delivered copies thereof to the Indenture Trustee and
the Note Insurer) to the effect that such transaction will not have any
material adverse tax consequence to the Issuers, the Note Insurer or
any Noteholder;
(iv) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken;
(v) the Issuers shall have delivered to the Indenture Trustee
and the Note Insurer an Officers' Certificate and an Opinion of Counsel
each stating that such conveyance or transfer and such supplemental
indenture comply with this Article VI and that all conditions precedent
herein provided for relating to such transaction have been complied
with (including any filing required by the Exchange Act);
(vi) the Rating Agencies have confirmed that such transaction
will not result in the reduction or withdrawal of any rating on any
Class of Notes; and
(vii) the Note Insurer has given its prior written consent.
Section 6.14 Successor or Transferee. (a) Upon any consolidation or
merger of either of the Issuers in accordance with Section 6.13, the Person
formed by or surviving such consolidation or merger (if other than such Issuer)
shall succeed to, and be substituted for, and may exercise every right and power
of, such Issuer under this Indenture with the same effect as if such Person had
been named as the Issuer herein.
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(b) Upon a conveyance or transfer of all the assets and properties of
either of the Issuers pursuant to Section 6.13(b), such Issuer will be released
from every covenant and agreement of this Indenture to be observed or performed
on the part of such Issuer with respect to the Notes immediately upon the
delivery of written notice to the Indenture Trustee and the Note Insurer stating
that such Issuer is to be so released.
Section 6.15 No Other Business. Neither of the Issuers shall engage in
any business other than financing, purchasing, owning, selling and managing the
Receivables and the Certificates in the manner contemplated by this Indenture
and the other Transaction Documents and activities incidental thereto.
Section 6.16 No Borrowing. Neither of the Issuers shall issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes, (ii) obligations owing from time to time
to the Note Insurer and (iii) any other Indebtedness permitted by or arising
under the Transaction Documents. The proceeds of the Notes shall be used
exclusively to fund each Issuer's purchase of Contracts and the other assets
constituting the Pledged Property and to pay each Issuer's organizational,
transactional and start-up expenses.
Section 6.17 Guarantees, Loans, Advances and Other Liabilities. Except
as contemplated by this Indenture or the other Transaction Documents, the
Issuers shall not make any loan or advance or credit to, or guarantee (directly
or indirectly or by an instrument having the effect of assuring another's
payment or performance on any obligation or capability of so doing or
otherwise), endorse or otherwise become continently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or own,
purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
Section 6.18 Capital Expenditures. Neither of the Issuers shall make
any expenditure (by long-term or operating lease or otherwise) for capital
assets (either realty or personal).
Section 6.19 Compliance with Laws. The Issuers shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
either of the Issuers to perform its obligations under the Notes, this Indenture
or any other Transaction Document.
Section 6.20 Further Instruments and Acts. Upon request of the
Indenture Trustee or the Note Insurer, each of the Issuers will execute and
deliver such further instruments and do such further acts as may be reasonably
necessary or proper to carry out more effectively the purpose of this Indenture
and the other Transaction Documents.
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ARTICLE VII.
THE INDENTURE TRUSTEE
Section 7.01 Duties of Indenture Trustee. (a) The Indenture Trustee
undertakes to perform such duties and only such duties as are specifically set
forth in this Indenture. If an Event of Default of which a Responsible Officer
of the Indenture Trustee shall have actual knowledge has occurred and has not
been cured or waived, the Indenture Trustee shall exercise such of the rights
and powers vested in it by this Indenture, and use the same degree of care and
skill in their exercise as a prudent Person would exercise or use under the
circumstances in the conduct of such Person's own affairs.
(b) The Indenture Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Indenture Trustee that are specifically required to
be furnished pursuant to any provision of this Indenture, shall examine them to
determine whether they conform as to form to the requirements of this Indenture.
No acceptance of, or reliance on, any such item by the Indenture Trustee shall
constitute a representation by the Indenture Trustee of the enforceability or
sufficiency of such item.
(c) No provision of this Indenture shall be construed to relieve the
Indenture Trustee from liability for its own gross negligence, bad faith or
willful misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after
the curing of all such Events of Default that may have occurred, the
duties and obligations of the Indenture Trustee shall be determined
solely by the express provisions of this Indenture; the Indenture
Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Indenture; no
implied covenants or obligations shall be read into this Indenture
against the Indenture Trustee; and in the absence of bad faith on the
part of the Indenture Trustee, the Indenture Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions furnished
to the Indenture Trustee and, if specifically required to be furnished
pursuant to any provision of this Indenture, conforming to the
requirements of this Indenture;
(ii) The Indenture Trustee shall not be liable for an error of
judgment made in good faith by a Responsible Officer of the Indenture
Trustee unless it shall be proved that the Indenture Trustee was
grossly negligent or engaged in willful misconduct in ascertaining the
pertinent facts;
(iii) The Indenture Trustee shall not be personally liable
with respect to any action taken, suffered or omitted to be taken by it
in good faith in accordance with this Indenture, pursuant to the
direction of the Controlling Parties, relating to the time, method and
place of conducting any proceeding for any remedy available to the
Indenture Trustee, or exercising, suffering or omitting to take any
trust or power conferred upon the Indenture Trustee, under this
Indenture;
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(iv) The Indenture Trustee shall not be charged with knowledge
of any Event of Servicing Termination, any Event of Default or
Restricting Event unless a Responsible Officer of the Indenture Trustee
obtains actual knowledge of such failure or event or the Indenture
Trustee receives written notice of such failure or event from the
Servicer, the Issuers, the Note Insurer or any Noteholder; and
(v) The Indenture Trustee shall have no duty to monitor the
performance of the Servicer, nor shall it have any liability in
connection with the malfeasance or nonfeasance by the Servicer. The
Indenture Trustee shall have no liability in connection with compliance
of the Servicer or the Issuers with statutory or regulatory
requirements related to the Contracts or the related Equipment. The
Indenture Trustee shall not make or be deemed to have made any
representations or warranties with respect to the Contracts or related
Equipment or the validity or sufficiency of any assignment of the
Contracts to the Issuers or the Indenture Trustee. The Indenture
Trustee shall have no obligation or liability in respect of the
maintenance of casualty or liability insurance in connection with the
Contracts or the related Equipment.
(d) The Indenture Trustee shall not be required to expend or risk its
own funds or otherwise incur financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers, if
there is reasonable ground for believing that the repayment of such funds or
indemnity satisfactory to it against such risk or liability is not assured to
it, and none of the provisions contained in this Indenture shall in any event
require the Indenture Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of the Servicer under this Indenture or
the Servicing Agreement except during such time, if any, as the Indenture
Trustee shall be the successor to, and be vested with the rights, duties, powers
and privileges of, the Servicer in accordance with the terms of this Indenture.
(e) On each Determination Date, the Indenture Trustee shall give
notice, by facsimile, to a Servicing Officer of the Servicer and the Note
Insurer if the Available Funds on deposit in the Collection Account as of such
Determination Date is less than the amount indicated in the Monthly Statement.
(f) The Indenture Trustee shall promptly notify the Note Insurer upon
obtaining actual knowledge or receipt of written notice by a Responsible Officer
of the Indenture Trustee of: (a) any proposed change herein or supplement
hereto; (b) the occurrence of any Event of Default, Event of Servicing
Termination or Restricting Event actually known to a Responsible Officer of the
Indenture Trustee; (c) any proposed change of the Indenture Trustee hereunder;
(d) any matter to be put to the Noteholders for a vote hereunder; (e) any
proposed exercise by the Noteholders of any option, vote, right, power or the
like hereunder; and (f) any other matter, notice of which is required hereunder
to be given to any of the Noteholders or to the Indenture Trustee.
Section 7.02 Eligible Investments. The Servicer shall direct the
Indenture Trustee to invest in Eligible Investments, as further specified from
time to time by written notice to the Indenture Trustee executed by a Servicing
Officer, any cash amounts deposited in the Collection Account, the Pre-Funding
Account, the Capitalized Interest Account, the Reserve Account, the Class B
Reserve Account and the Class C Reserve Account pursuant to the terms of
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this Indenture or the Servicing Agreement, immediately upon deposit of any such
cash amounts; provided, however, that each such Eligible Investment (i) shall
mature no later than the Business Day immediately preceding the Payment Date in
respect of the Collection Period during which such deposit was made and (ii)
shall not be sold or disposed of prior to its maturity. The Indenture Trustee
shall not be liable or responsible for the selection of or losses on any
investments made by it pursuant to and in compliance with such instructions of
the Servicer pursuant to this Section 7.02. In the absence of such written
direction, the Indenture Trustee shall invest such amounts in money market funds
which comply with the requirements of clause (a)(iv) of the definition of
Eligible Investments.
Section 7.03 Indenture Trustee's Assignment of Contracts. If in any
enforcement suit or legal proceeding it is held, or in connection with the
collection of a Charged-Off Contract the Servicer or its assigns reasonably
anticipates, that the Servicer or its assigns may not or will not be able to
enforce a Contract on the ground that neither the Servicer nor its assigns is a
real party in interest or a holder entitled to enforce the Contract, then the
Indenture Trustee shall, at the Servicer's or its assigns' expense and
direction, take such steps as the Indenture Trustee is reasonably directed to
take to enforce the Contract, including (i) bringing suit in the Indenture
Trustee's name or the names of the Noteholders and the Note Insurer and (ii)
executing and delivering all such instruments or documents prepared by the
Servicer as shall be required to transfer title to a Contract to the Servicer or
its assigns or otherwise enforce such Contract.
Section 7.04 Certain Matters Affecting the Indenture Trustee. Except as
otherwise provided in Section 7.01:
(i) The Indenture Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any
resolution, Officers' Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document believed by
it to be genuine and to have been signed or presented by the proper
party or parties;
(ii) The Indenture Trustee may consult with counsel, and any
Opinion of Counsel or advice shall constitute full and complete
authorization and protection in respect of any action taken or suffered
or omitted by it hereunder in good faith and in accordance with such
Opinion of Counsel or advice;
(iii) The Indenture Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Indenture, or
to institute, conduct or defend any litigation hereunder or in relation
hereto, at the request, order or direction of any of the Noteholders,
pursuant to the provisions of this Indenture unless such Noteholders
shall have offered to the Indenture Trustee such security or indemnity
satisfactory to it against the costs, expenses, and liabilities that
may be incurred therein or thereby that are reasonable in the opinion
of the Indenture Trustee; provided, however, that nothing contained
herein shall relieve the Indenture Trustee of the obligations, upon the
occurrence of an Event of Default (that has not been cured), to
exercise such of the rights and powers vested in it by this Indenture
and to use the same degree of skill and
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care in their exercise as a prudent Person would exercise under the
circumstances in the conduct of such Person's own affairs;
(iv) The Indenture Trustee shall not be personally liable for
any action taken, suffered or omitted by it in good faith and
reasonably believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Indenture;
(v) Prior to the occurrence of an Event of Default of which a
Responsible Officer of the Indenture Trustee shall have actual
knowledge and after the curing of all Events of Default that may have
occurred, the Indenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document, unless
requested in writing to do so by the Note Insurer or the Holders of
Notes evidencing Percentage Interests of not less than 25% of the
Notes; provided, however, that if the payment within a reasonable time
to the Indenture Trustee of the costs, expenses or liabilities likely
to be incurred by it in the making of such investigation is, in the
opinion of the Indenture Trustee, not reasonably assured to the
Indenture Trustee by the security afforded to it by the terms of this
Indenture, the Indenture Trustee may require indemnity satisfactory to
it against such cost, expense or liability as a condition to so
proceeding. The reasonable expense of every such examination shall be
paid by the requesting party; and
(vi) The Indenture Trustee may execute any of the trusts or
powers or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian. The Indenture Trustee shall not be
responsible for the misconduct, negligence or for the supervision of
any of the Indenture Trustee's agents or attorneys appointed with due
care by the Indenture Trustee hereunder or that of the Originator, the
Servicer or the Issuers.
Section 7.05 Indenture Trustee Not Liable for Notes, Certificates or
Contracts. Neither the Notes nor the Certificates represent an obligation issued
by the Indenture Trustee or any Affiliate thereof. The Notes and the
Certificates, in accordance with their respective terms and the terms of this
Indenture, provide recourse only to the Pledged Property and, with respect to
the Class A Notes, the Note Insurance Policy. The Indenture Trustee does not
assume any responsibility for the accuracy of the statements herein or in the
Notes or the Certificates (other than as set forth in Section 7.16 and the
certificate of authentication on the Notes and the Certificates). The Indenture
Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Notes or the Certificates (other than the certificate of
authentication on the Notes and the Certificates) or of any Contract or related
document. The Indenture Trustee shall at no time have any responsibility or
liability for or with respect to the legality, validity or enforceability of any
security interest in any Equipment or any Contract, to the perfection or
priority thereof, or to the efficacy of the Issuers or any portion thereof to
pay any Note or the Certificates, the existence or validity of any Contract, the
validity of the assignment of any Contract or the related Pledged Property to
the Issuers or of any intervening assignment, the review of any Contract, any
Contract File or the Computer Tape (it being understood that neither the
Indenture Trustee nor any of its agents have reviewed or intend to
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review such matters, the sole responsibility for such review being vested in the
Issuers), the completeness of any Contract File, the receipt by it or its
custodian of any Contract, the performance or enforcement of any Contract, the
compliance by the Issuers with any covenant or the breach by the Originator, the
Servicer or the Issuers of any representation or warranty made under the
Servicing Agreement, the Receivables Transfer Agreement or in any related
document or the accuracy of any such representation or warranty any investment
of monies in the Collection Account (except to the extent that the Indenture
Trustee, in its individual capacity, is an obligor with respect to any such
investment) or any loss resulting therefrom, the acts or omissions of the
Servicer or any Obligor, any action of the Servicer taken in the name of the
Indenture Trustee, any action by the Indenture Trustee taken at the instruction
of the Servicer or the preparation and filing of tax returns for the Issuers. No
recourse shall be had for any claim based on any provision of this Indenture,
the Notes, the Certificates or any Contract or assignment thereof against
Norwest Bank Minnesota, National Association in its individual capacity, and
Norwest Bank Minnesota, National Association shall not have any personal
obligation, liability or duty whatsoever to any Noteholder or any other Person
with respect to any such claim, and any such claim shall be asserted solely
against the Issuers or any indemnitor who shall furnish indemnity as provided
herein, except for such liability as is determined to have resulted from its own
gross negligence or willful misconduct. The Indenture Trustee shall not be
accountable for the use or application by the Issuers of any of the Notes, the
Certificates or the proceeds of the Notes or for the use or application of any
funds paid to the Servicer in respect of the Contracts.
Section 7.06 Indenture Trustee May Own Notes. The Indenture Trustee in
its individual or any other capacity may become the owner or pledgee of Notes
with the same rights as it would have if it were not Indenture Trustee, subject
to the definition of the term "Noteholder" in Annex A hereto.
Section 7.07 Indenture Trustee's Fees and Expenses. (a) Each of the
Issuers jointly and severally agrees:
(i) to pay to the Indenture Trustee, pursuant to Section
3.05(b)(v), as applicable, on each Payment Date reasonable compensation
for all services rendered by it hereunder (which compensation shall not
be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(ii) except to the extent otherwise expressly provided herein,
to reimburse the Indenture Trustee, pursuant to Section 3.05(b)(vi), as
applicable, upon its request, for all reasonable expenses,
disbursements and advances incurred or made by the Indenture Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and expenses and disbursements of any of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its gross negligence, bad faith or willful
misconduct; provided, however, that for purposes of this clause (ii),
such expenses, disbursements and advances shall be limited to an
aggregate amount of $100,000; and
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(iii) to reimburse the Indenture Trustee, pursuant to Section
3.05(b)(xx), for all reasonable expenses, disbursements and advances
that would have been paid pursuant to Section 7.07(a)(ii) but for the
$100,000 limitation.
(b) The Issuers' obligations under this Section 7.07 shall survive the
termination of this Indenture or the earlier resignation or removal of the
Indenture Trustee. The Indenture Trustee shall not be entitled to any other or
additional compensation or reimbursement, except as expressly provided herein or
as otherwise agreed from time to time.
(c) Subject to Section 7.09 hereof, the failure by the Issuers to pay
to the Indenture Trustee any compensation or other expenses shall not relieve
the Indenture Trustee of its obligations hereunder.
(d) In the event the Indenture Trustee performs services or incurs
expenses in the context of a proceeding described in Sections 6.01(a)(iv),
6.01(a)(v) or 6.01(a)(vi) of the Servicing Agreement, the fees for such services
and such expenses shall be considered expenses of administration for the
purposes of any bankruptcy laws or laws relating to creditors rights generally.
Section 7.08 Eligibility Requirements for Indenture Trustee The
Indenture Trustee hereunder shall at all times be organized and doing business
under the laws of any State or the United States of America, authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least $50,000,000 and subject to supervision or examination by
federal or State authority and shall be acceptable to the Note Insurer;
provided, however, that no entity shall qualify as Indenture Trustee hereunder
to the extent that such qualification would, in itself, affect any then current
rating of the Notes by the Rating Agencies. If such entity publishes reports of
condition at least annually, pursuant to law or the requirements of the
aforesaid supervising or examining authority, then for the purpose of this
Section 7.08, the combined capital and surplus of such entity shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. Any successor Indenture Trustee's deposit ratings shall
be at least "investment grade" by the Rating Agencies. In case at any time the
Indenture Trustee shall cease to be eligible in accordance with the provisions
of this Section 7.08, the Indenture Trustee shall resign immediately in the
manner and with the effect specified in Section 7.09 hereof.
Section 7.09 Resignation or Removal of Indenture Trustee. (a) The
Indenture Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Servicer, the Issuers,
the Note Insurer, each Noteholder and the Certificateholders, which resignation
will not become effective until such time as a successor Indenture Trustee has
been appointed in accordance with the provisions of this Section 7.09. Upon
receiving such notice of resignation, the Servicer shall promptly appoint a
successor Indenture Trustee acceptable to the Note Insurer by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Indenture Trustee and one copy to the successor Indenture Trustee. If
no successor Indenture Trustee shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Indenture Trustee may petition any court of competent jurisdiction for
the appointment of a successor Indenture Trustee.
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(b) If at any time the Indenture Trustee shall cease to be eligible in
accordance with the provisions of Section 7.08 hereof and shall fail to resign
after written request therefor by the Servicer, the Note Insurer or the Holders
of Notes of any Class evidencing Percentage Interests of more than 25% of such
Class, or, if at any time the Indenture Trustee shall be legally unable to act,
or shall be adjudged a bankrupt or insolvent, or a receiver of the Indenture
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Indenture Trustee or of its property or affairs for the
purpose of rehabilitation, conservation, or liquidation, then the Servicer may,
with the consent of the Note Insurer, and shall, at the direction of (i) the
Note Insurer or (ii) the Holders of Notes of any Class evidencing Percentage
Interests of more than 25% of the related Class, with the consent of the Note
Insurer, remove the Indenture Trustee. Notwithstanding anything in this
Indenture to the contrary, the Note Insurer shall have the right to remove the
Indenture Trustee for "cause." For purposes of this section, "cause" shall mean
(i) the gross negligence, bad faith or willful misconduct of the Indenture
Trustee in the performance of its duties under this Indenture or the Insurance
Agreement or (ii) the failure or unwillingness of the Indenture Trustee to
perform its duties under this Indenture or the Insurance Agreement; provided,
however, that to the extent that any such failure or unwillingness is
susceptible to cure, in the reasonable discretion of the Note Insurer, the Note
Insurer shall not remove the Indenture Trustee for "cause" pursuant to clause
(ii) of the immediately preceding sentence unless it has (A) consulted with the
Indenture Trustee in good faith and provided notice to the Indenture Trustee
regarding any actions or omissions of the Indenture Trustee under this Indenture
or the Insurance Agreement which the Note Insurer believes constitutes a failure
or unwillingness of the Indenture Trustee to perform its duties under this
Indenture or the Insurance Agreement and (B) provided the Indenture Trustee with
the opportunity to remedy such failure or unwillingness within 10 Business Days
(or such longer period to which the Note Insurer may reasonably consent)
following the receipt by the Indenture Trustee of written notice thereof. In the
event that the Indenture Trustee is removed by the Note Insurer pursuant to this
Section, the removal and substitution procedures set forth in this Section 7.09
and Section 7.10 hereof shall be followed.
(c) Any resignation or removal of the Indenture Trustee and appointment
of a successor Indenture Trustee pursuant to this Section 7.09 shall not become
effective until acceptance of appointment by the successor Indenture Trustee as
provided in Section 7.10 hereof. Notice of the resignation or removal of the
Indenture Trustee shall be given in writing to the Rating Agencies by the
Servicer. In the event no successor Indenture Trustee has been appointed within
30 days of the resignation or removal of the Indenture Trustee, the Indenture
Trustee, the Note Insurer or the Majority Holders of the Notes may petition a
court of competent jurisdiction to appoint a successor Indenture Trustee.
Section 7.10 Successor Indenture Trustee. (a) Any successor Indenture
Trustee appointed as provided in Section 7.09 hereof shall execute, acknowledge
and deliver to the Servicer, the Issuers and predecessor Indenture Trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor Indenture Trustee shall become effective, and such
successor Indenture Trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with like effect as if originally named as Indenture
Trustee. The predecessor Indenture Trustee shall deliver to the successor
Indenture Trustee all documents and statements held by it hereunder. The
Servicer, the Issuers and the predecessor Indenture Trustee
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shall execute and deliver such instruments and do such other things as may
reasonably be required for fully and certainly vesting and confirming in the
successor Indenture Trustee all such rights, powers, duties and obligations. The
predecessor Indenture Trustee shall not be liable for the acts or omissions of
any successor Indenture Trustee hereunder.
(b) No successor Indenture Trustee shall accept appointment as provided
in this Section 7.10 unless at the time of such acceptance such successor
Indenture Trustee shall be acceptable to the Note Insurer and eligible as the
Indenture Trustee under the provisions of Section 7.08 hereof, and as a
successor Servicer under the provisions of Section 6.02 of the Servicing
Agreement.
(c) Upon acceptance of appointment by a successor Indenture Trustee as
provided in this Section 7.10, the Servicer shall mail notice of the succession
of such Indenture Trustee hereunder to the Note Insurer, the Certificateholders
and all Noteholders at their addresses as shown in the Note Register. If the
Servicer fails to mail such notice within 10 days after acceptance of
appointment by such successor Indenture Trustee, then the successor Indenture
Trustee shall cause such notice to be mailed at the expense of the Servicer.
Section 7.11 Merger or Consolidation of Indenture Trustee. Any entity
into which the Indenture Trustee may be merged or converted or with which it may
be consolidated, or any entity resulting from any merger, conversion, or
consolidation to which the Indenture Trustee shall be a party, or any entity
succeeding to the corporate trust business of the Indenture Trustee, shall be
the successor of the Indenture Trustee hereunder, provided such entity shall be
eligible under the provisions of Section 7.08 hereof, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
Section 7.12 Appointment of Co-Indenture Trustee or Separate Indenture
Trustee. (a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirements of any jurisdiction in
which any part of Pledged Property or any Equipment may at the time be located,
the Indenture Trustee shall, with the consent of, or at the written direction
of, the Note Insurer, execute and deliver all instruments to appoint one or more
Persons approved by the Indenture Trustee to act as co-Indenture Trustee or
co-Indenture Trustees, jointly with the Indenture Trustee, or separate Indenture
Trustee or separate Indenture Trustees, to vest in such Person or Persons, in
such capacity and for the benefit of the Noteholders, and the Note Insurer such
title to the Pledged Property, or any part thereof, and, subject to the other
provisions of this Section 7.12, such powers, duties, obligations, rights and
trusts as the Servicer, the Issuers and the Indenture Trustee may consider
necessary or desirable; provided, however, that if there is a conflict between
the Issuers, the Indenture Trustee and the Note Insurer regarding the
appointment of a co-Indenture Trustee or separate Indenture Trustee, the
decision of the Note Insurer shall prevail. If the Servicer shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in the case an Event of Servicing Termination shall have occurred
and be continuing, the Indenture Trustee alone shall have the power to make such
appointment; provided, however, that if the Issuers shall not have joined in
such appointment within 15 days after the receipt by them of a request so to do,
the Indenture Trustee alone shall have the power to make such appointment. No
co-Indenture Trustee or separate Indenture Trustee hereunder shall be required
to meet the terms of eligibility
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as a successor Indenture Trustee under Section 7.08 hereof, and no notice to
Noteholders of the appointment of any co-Indenture Trustee or separate Indenture
Trustee shall be required under Section 7.10 hereof.
(b) Every separate Indenture Trustee and co-Indenture Trustee shall, to
the extent permitted by law, be appointed and act subject to the following
provisions and conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon
and exercised or performed by the Indenture Trustee and such separate
Indenture Trustee or co-Indenture Trustee jointly (it being understood
that such separate Indenture Trustee or co-Indenture Trustee is not
authorized to act separately without the Indenture Trustee joining in
such act), except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed (whether as
Indenture Trustee hereunder or as successor to the Servicer hereunder),
the Indenture Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Pledged Property or
any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate Indenture Trustee or co-Indenture
Trustee but solely at the direction of the Indenture Trustee;
(ii) No separate Indenture Trustee or co-Indenture Trustee
hereunder shall be personally liable by reason of any act or omission
of any other separate Indenture Trustee or co-Indenture Trustee
hereunder; and
(iii) The Indenture Trustee may at any time accept the
resignation of or remove any separate Indenture Trustee or co-Indenture
Trustee.
(c) Any notice, request or other writing given to the Indenture Trustee
shall be deemed to have been given to each of the then separate Indenture
Trustees and co-Indenture Trustees, as effectively as if given to each of them.
Every instrument appointing any separate Indenture Trustee or co-Indenture
Trustee shall refer to this Indenture and the conditions of this Article VII.
Each separate Indenture Trustee and co-Indenture Trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Indenture Trustee or
separately, as may be provided therein, subject to all the provisions of this
Indenture, specifically including every provision of this Indenture relating to
the conduct of, affecting the liability of, or affording protection to, the
Indenture Trustee. Every such instrument shall be filed with the Indenture
Trustee and a copy thereof given to the Servicer and the Issuers.
(d) Any separate Indenture Trustee or co-Indenture Trustee may at any
time constitute the Indenture Trustee, its agent or attorney-in-fact, with full
power and authority, to the extent not prohibited by law, to do any lawful act
under or in respect of this Indenture on its behalf and in its name. If any
separate Indenture Trustee or co-Indenture Trustee shall die, become incapable
of acting, resign or be removed, then all of its estates, properties, rights,
remedies and trusts shall vest in and be exercised by the Indenture Trustee, to
the extent permitted by law, without the appointment of a new or successor
separate Indenture Trustee or successor co-Indenture Trustee.
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(e) The Indenture Trustee shall be responsible for the payment of any
fees or expenses of any separate Indenture Trustee or co-Indenture Trustee,
which fees and expenses shall be reimbursable to the Indenture Trustee pursuant
to Section 7.07(a).
Section 7.13 Indenture Trustee May Enforce Claims Without Possession of
Note. All rights of action and claims under this Indenture or the Notes may be
prosecuted and enforced by the Indenture Trustee without the possession of any
of the Notes or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Indenture Trustee shall be brought in its
own name or in its capacity as Indenture Trustee. Any recovery of judgment
shall, after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee, its agents and counsel, be
for the ratable benefit of the Noteholders in respect of which such judgment has
been recovered.
Section 7.14 Suits for Enforcement. In case an Event of Servicing
Termination or other default by the Servicer under the Servicing Agreement or
under this Indenture shall occur and be continuing, the Indenture Trustee, in
its discretion, may, subject to the provisions of 6.04 of the Servicing
Agreement, proceed to protect and enforce its rights and the rights of the
Noteholders and the Note Insurer under this Indenture by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Indenture or in aid
of the execution of any power granted in this Indenture or for the enforcement
of any other legal, equitable or other remedy, as the Indenture Trustee, being
advised by counsel, shall deem most effectual to protect and enforce any of the
rights of the Indenture Trustee, the Noteholders and the Note Insurer.
Section 7.15 Undertaking for Costs. All parties to this Indenture agree
(and each holder of any Note by its acceptance thereof shall be deemed to have
agreed) that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Indenture Trustee or the Note Insurer, to any suit instituted by any Noteholder,
or group of Noteholders, holding in the aggregate more than 10% of the then
outstanding principal balance of the Notes, or to any suit instituted by any
Noteholder for the enforcement of the payment of the principal of or interest on
any Note on or after the maturities for such payments, including the stated
maturity as applicable.
Section 7.16 Representations and Warranties of Indenture Trustee. The
Indenture Trustee represents and warrants for the benefit of the Noteholders,
the Certificateholders and the Note Insurer that:
(a) Organization and Good Standing. The Indenture Trustee is a national
banking association duly organized, validly existing and in good standing under
the laws of the United States of America.
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(b) Authorization. The Indenture Trustee has the power, authority and
legal right to execute, deliver and perform this Indenture, and the execution,
delivery and performance of this Indenture have been duly authorized by the
Indenture Trustee by all necessary corporate action.
(c) Binding Obligations. This Indenture, assuming due authorization,
execution and delivery by all other parties thereto, constitutes the legal,
valid and binding obligation of the Indenture Trustee, enforceable against the
Indenture Trustee in accordance with its terms, except that (i) such enforcement
may be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws (whether statutory, regulatory or decisional) now or hereafter in
effect relating to creditors' rights generally and the rights of trust companies
in particular and (ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to certain equitable defenses and
to the discretion of the court before which any proceeding therefor may be
brought, whether in a proceeding at law or in equity.
(d) Eligibility. The Indenture Trustee meets the eligibility
requirements set forth in Section 7.08.
Section 7.17 Tax Returns. In the event the Issuers shall be required to
file tax returns, the Servicer shall prepare or shall cause to be prepared any
tax returns required to be filed by the Issuers and shall remit such returns to
the Issuers for signature at least five days before such returns are due to be
filed. The Indenture Trustee, upon request, will furnish the Servicer with all
such information known to the Indenture Trustee as may be reasonably required in
connection with the preparation of all tax returns of the Issuers. In no event
shall the Indenture Trustee in its individual capacity be liable for any
liabilities, costs or expenses of the Issuers, the Noteholders or the Servicer
arising under any tax law or regulation, including, without limitation, federal,
state or local income or excise taxes or any other tax imposed on or measured by
income (or any interest or penalty with respect thereto or arising from any
failure to comply therewith).
ARTICLE VIII.
EVENTS OF DEFAULT; REMEDIES
Section 8.01 Events of Default. "Event of Default" wherever used herein
means any one of the following events (whatever the reason for such Event of
Default and without regard to whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(a) failure of the Issuers to distribute or cause to be distributed to
the Indenture Trustee, for the benefit of the Noteholders, all or part of any
payment of interest required to be made under the terms of such Notes or this
Indenture on each monthly Payment Date when such amount is due and payable;
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(b) failure of the Issuers to distribute or cause to be distributed to
the Indenture Trustee, for the benefit of the Noteholders (x) on any Payment
Date, an amount equal to the principal due on the Outstanding Notes as of such
Payment Date to the extent that sufficient Available Funds are on deposit in the
Collection Account or (y) on the Class A-1 Maturity Date, the Class A-2 Maturity
Date, the Class A-3 Maturity Date, the Class A-4 Maturity Date, the Class B
Maturity Date, the Class C Maturity Date or the Class D Maturity Date, as the
case may be, any remaining principal owed on the Outstanding Class A-1 Notes,
Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes, Class C Notes
or Class D Notes, as the case may be, and in either case, such failure has not
been cured within three Business Days of such Payment Date or Maturity Date, as
applicable;
(c) failure on the part of the Issuers to duly observe or perform any
other covenants or agreements of the Issuers set forth in this Indenture or the
other Transactions Documents to which the Issuers are a party, which failure
continues unremedied for a period of 30 days after the earlier to occur of (x)
the date on which written notice of such failure, requiring the situation giving
rise to such failure to be remedied, shall have been given to the Issuers by the
Indenture Trustee, the Note Insurer or any Noteholder or (y) the date on which
the Issuers have actual knowledge of such failure or are required pursuant to
the terms of this Indenture to provide notice to the Indenture Trustee, the Note
Insurer and the Noteholders of any such failure;
(d) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of either of the Issuers in an involuntary
case or proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging either of
the Issuers a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of either of the Issuers under any applicable federal or state law, or
appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of either of the Issuers or of any substantial part of
their respective property, or ordering the winding up or liquidation of their
respective affairs, and the continuance of any such decree or order for relief
or any such other decree or order unstayed and in effect for a period of 60
consecutive days;
(e) the commencement by either of the Issuers of a voluntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated as bankrupt or insolvent, or the consent by either of the Issuers to
the entry of a decree or order for relief in respect of such Issuer in an
involuntary case or proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against such Issuer, or the filing
by either of the Issuers of a petition or answer or consent seeking
reorganization or relief under any applicable federal or state law, or the
consent by either of the Issuers to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official of such Issuer or of any
substantial part of such Issuer's property, or the making by either of the
Issuers of an assignment for the benefit of creditors;
(f) either of the Issuers becomes subject to regulation by the
Securities and Exchange Commission as an investment company within the meaning
of the Investment Company Act of 1940, as amended; or
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(g) failure of the Indenture Trustee to have a first priority,
perfected security interest in any portion of the Pledged Property (subject to
the Filing Requirements with respect to the Equipment) which continues
unremedied for a period of 30 days after the earlier to occur of (x) the date on
which written notice of such failure, requiring the situation giving rise to
such failure to be remedied, shall have been given to the Issuers by the
Indenture Trustee, the Note Insurer or any Noteholder or (y) the date on which
the Issuers have actual knowledge of such failure or are required pursuant to
the terms of the Indenture to provide notice to the Indenture Trustee, the Note
Insurer and the Noteholders of any such failure.
Section 8.02 Acceleration of Maturity, Rescission and Annulment. (a) If
an Event of Default occurs and is continuing, then and in every such case the
Indenture Trustee, at the written direction of the Controlling Parties, shall
declare the principal of all of the Notes to be immediately due and payable, by
a notice in writing to the Servicer, and upon any such declaration such
principal (together with all accrued and previously unpaid interest) shall
become immediately due and payable. The Indenture Trustee shall give notice to
each Noteholder, the Note Insurer and the Rating Agencies of such declaration.
(b) At any time, after such a declaration of acceleration has been
made, but before any sale of the Pledged Property has been made or a judgment or
decree for payment of the money due has been obtained by the Indenture Trustee
as hereinafter in this Article VIII provided, the Controlling Parties, by
written notice to the Servicer and the Indenture Trustee, may rescind and annul
such declaration and its consequence if monies have been paid or deposited with
the Indenture Trustee in a sum sufficient to pay:
(i) all overdue installments of interest on all Notes;
(ii) the principal of any of the Notes which has become due
otherwise than by such declaration of acceleration and interest thereon
at the applicable Note Rate;
(iii) to the extent that payment of such interest is lawful,
interest upon overdue installments of interest on the Notes at the rate
specified therefor in the applicable Notes; and
(iv) all sums paid or advanced, together with interest
thereon, by the Indenture Trustee or the Note Insurer hereunder or
under the Insurance Agreement or the Note Insurance Policy and the
reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee, the Note Insurer and their respective agents and
counsel.
No such rescission shall affect any subsequent default or impair any right
consequent thereon. Subsequent to any such declaration of acceleration and so
long as such declaration and its consequences have not been rescinded and
annulled, prior to the exercise by the Indenture Trustee of the remedies set
forth in Section 8.03(b) or (c) hereof, the Indenture Trustee shall give the
Noteholders and the Note Insurer ten days notice of its intention to take such
actions.
Section 8.03 Remedies. (a) If an Event of Default shall have occurred
and be continuing, the Indenture Trustee, at the written direction of the
Controlling Parties, may do one or more of the following:
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(b) institute, in its own name and as Indenture Trustee, Proceedings
for the collection of the Reimbursement Amount and the entire amount of
principal and interest remaining unpaid on the Notes, or under this Indenture in
respect of the Notes, whether by declaration or otherwise, enforce any judgment
obtained, and collect from the Pledged Property securing the Notes the monies
adjudged due;
(c) sell the Pledged Property or any portion thereof or rights or
interest therein, at one or more sales called and conducted in any manner
permitted by law;
(d) institute Proceedings from time to time for the complete or partial
foreclosure of this Indenture with respect to the Pledged Property securing the
Notes; or
(e) exercise any remedies of a secured party under the UCC or other
applicable law and take any other appropriate action to protect and enforce the
rights and remedies of the Indenture Trustee, the Note Insurer or the
Noteholders hereunder, including delivery of notices to the Obligors of the
assignment of the related Contract(s) to the Issuers and delivery of notices to
any guarantors of Contracts of the assignment of the related guarantee to the
Issuers, and in each case, the pledge of such assigned property to the Indenture
Trustee on behalf of the Beneficiaries.
Section 8.04 Notice of Event of Default. Subject to Article VII, within
two Business Days after a Responsible Officer obtaining actual knowledge of the
occurrence of any Event of Default, the Indenture Trustee shall transmit, by
certified mail return receipt requested, hand delivery, overnight courier or
facsimile, to the Note Insurer and to all Noteholders, as their names and
addresses appear in the Register, notice of such Event of Default, unless such
Event of Default shall have been cured or waived.
Section 8.05 Exercise of Power by Indenture Trustee In case an Event of
Default has occurred and is continuing to the actual knowledge of a Responsible
Officer of the Indenture Trustee, the Indenture Trustee shall exercise such of
the rights and powers vested in it by this Indenture, and use the same degree of
care and skill in its exercise, as a prudent person would exercise or use under
the circumstances in the conduct of his own affairs.
Section 8.06 Indenture Trustee May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, reorganization,
arrangement, adjustment, composition or other judicial Proceeding relating to
either of the Issuers or any other obligor upon the Notes or the property of
either of the Issuers or of such other obligor or their creditors, the Indenture
Trustee (irrespective of whether the principal of any class of Notes shall then
be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Indenture Trustee shall have made any demand for the
payment of overdue principal or interest) shall be entitled and empowered, to
intervene in such proceeding or otherwise:
(a) to file and prove a claim for all amounts owing and unpaid in
respect of the Notes or otherwise owed hereunder and to file such other papers
or documents and take such other action including participating as a member,
voting or otherwise, in any committee of creditors appointed in the matter, as
may be necessary or advisable in order to have the claims of the Indenture
Trustee, the Note Insurer (including, in each case, any claim for the reasonable
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compensation, expenses, disbursements and advances of the Indenture Trustee, the
Note Insurer, and their respective agents and counsel) and the Noteholders
allowed in such judicial Proceeding;
(b) to petition for lifting of the automatic stay and thereupon to
foreclose upon the Pledged Property as elsewhere provided herein; and
(c) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, liquidator, or sequestrator (or other
similar official) in any such judicial Proceeding is hereby authorized by each
Noteholder to make such payments to the Indenture Trustee, and in the event that
the Indenture Trustee shall consent to the making of such payments directly to
the Note Insurer or the Noteholders, to pay to the Indenture Trustee any amount
due to it for the reasonable compensation, expenses, disbursements and advances
of the Indenture Trustee, its agents and counsel.
Nothing herein contained shall be deemed to authorize the Indenture Trustee to
authorize or to consent or accept or adopt on behalf of the Note Insurer or any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting, the Note Insurer, the Notes or the rights of any Holder thereof, or
to authorize the Indenture Trustee to vote in respect of the claim of the Note
Insurer or any Noteholder in any such Proceeding.
Section 8.07 Allocation of Money Collected . Any money collected by the
Indenture Trustee with respect to the Notes pursuant to the remedies set forth
in Section 8.03 (and any funds then held or thereafter received by the Indenture
Trustee) shall be applied in the following order, at the date or dates fixed by
the Indenture Trustee; provided, however, that the provisions of this Section
8.07 shall not preclude the Indenture Trustee from receiving indemnities
satisfactory to it from or on behalf of the Noteholders against the costs,
expenses and liabilities it may incur in acting in compliance with the written
directions of the Controlling Parties; provided, further, that any such
indemnities shall not be withheld or offset from the amounts payable to any
Noteholders pursuant to clauses FOURTH, FIFTH, EIGHTH, NINTH and TENTH below:
FIRST: To the payment of all amounts due the Indenture Trustee
under Section 7.07 hereof;
SECOND: To the payment of all amounts then due to the Servicer
under the Servicing Agreement (so long as UOG or any of its Affiliates is not
then acting as Servicer);
THIRD: To the payment of all Premium Amounts due and payable
to the Note Insurer;
FOURTH: To the payment of Class A-1 Note Interest to the Class
A-1 Noteholders, Class A-2 Note Interest to the Class A-2 Noteholders, Class A-3
Note Interest to the Class A-3 Noteholders and Class A-4 Note Interest to the
Class A-4 Noteholders, pari passu based on the interest due on each such Class
of Class A Notes;
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FIFTH: To the payment of the outstanding Class A Note
Principal Balance to the Class A Noteholders, pari passu based on the
outstanding Note Principal Balance of each such Class of Class A Notes;
SIXTH: To the payment of all Reimbursement Amounts, if any,
due to the Note Insurer;
SEVENTH: To the payment of all amounts due to the Servicer
under the Servicing Agreement (so long as UOG or any of its Affiliates is then
acting as Servicer);
EIGHTH: To the payment of the Class B Note Interest and the
outstanding Class B Note Principal Balance to the Class B Noteholders;
NINTH: To the payment of the Class C Note Interest and the
outstanding Class C Note Principal Balance to the Class C Noteholders;
TENTH: To the payment of the Class D Note Interest and the
outstanding Class D Note Principal Balance to the Class D Noteholders;
ELEVENTH: To the payment of all reasonable costs and expenses
incurred by any Noteholder in connection with the enforcement of its rights
hereunder or under the Notes, ratably, without preference or priority of any
kind; and
TWELFTH: To the payment of any surplus to the
Certificateholders, pro rata, in accordance with their respective percentage
interests.
Section 8.08 Waiver of Events of Default. (a) The Note Insurer or the
holders of 66-2/3% of the then outstanding principal balance of the Notes (with
the prior written consent of the Note Insurer) may, by one or more instruments
in writing to the Indenture Trustee, waive any Event of Default hereunder and
its consequences, except a continuing Event of Default:
(i) in respect of the payment of the principal of or interest
on any Note (which may only be waived by the Holder of such Note), or
(ii) in respect of a covenant or provision hereof which under
Article XI cannot be modified or amended without the consent of the
Holder of each Note outstanding affected (which only may be waived by
the Holders of all Notes outstanding affected).
(b) Upon any such waiver, such Event of Default shall cease to exist
and shall be deemed to have been cured, for every purpose of this Indenture; but
no such waiver shall extend to any subsequent or other Event of Default or
impair any right consequent thereon.
Section 8.09 Limitation On Suits. No Holder shall have any right to
institute any Proceeding, judicial or otherwise, with respect to this Indenture,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless:
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(a) such Holder has previously given written notice to the Indenture
Trustee of a continuing Event of Default;
(b) the Controlling Parties shall have made written request to the
Indenture Trustee to institute Proceedings in respect of such Event of Default
in its own name as Indenture Trustee hereunder;
(c) such Holder or Holders have offered to the Indenture Trustee
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities to be incurred in compliance with such request;
(d) the Indenture Trustee for 30 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such Proceeding; and
(e) no direction inconsistent with such written request has been given
to the Indenture Trustee during such 30 day period by the Controlling Parties;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders
or the Note Insurer or to enforce any right under this Indenture, except in the
manner herein provided.
Section 8.10 Unconditional Right of Noteholders to Receive Principal
and Interest. Notwithstanding any other provision in this Indenture, the
Noteholders shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest on such Note as such principal
and interest becomes due and payable in accordance with the terms of this
Indenture (including, without limitation, the limitation on such payments to the
extent of Available Funds on each Payment Date) and, with the consent of the
Controlling Parties, to institute suit for the enforcement of any such payment,
and such right shall not be impaired without the consent of such Noteholder.
Section 8.11 Restoration of Rights and Remedies. If the Indenture
Trustee, the Note Insurer or any Noteholder has instituted any Proceeding to
enforce any right or remedy in accordance with the terms of this Indenture and
such Proceeding has been discontinued or abandoned for any reason, or has been
determined adverse to the Indenture Trustee, the Note Insurer or to such
Noteholder, then and in every such case, the Indenture Trustee, the Note Insurer
and the Noteholders shall, subject to any determination in such Proceeding, be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies hereunder shall continue as though no such
Proceeding has been instituted.
Section 8.12 Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee, the Note Insurer or the
Noteholders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
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Section 8.13 Delay or Omission Not Waiver. No delay or omission of the
Indenture Trustee, the Note Insurer or any Noteholder to exercise any right or
remedy accruing upon any Event of Default shall impair any such right or remedy
or constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Indenture Trustee,
the Note Insurer or the Noteholders, or any of them, may be exercised from time
to time, as often as may be deemed expedient, by the Indenture Trustee, the Note
Insurer or the Noteholders, subject however to the right of the Note Insurer to
control any such right and remedy.
Section 8.14 Control by Controlling Parties. The Controlling Parties
shall have the right to direct in writing the decision whether to conduct, and
the time, method and place of conducting, any Proceeding for any remedy
available to the Indenture Trustee with respect to the Notes or exercising any
trust or power conferred on the Indenture Trustee with respect to the Notes;
provided, that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture; and
(b) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee which is not inconsistent with such direction; provided,
however, that the Indenture Trustee need not take any action which it determines
might involve it in liability or be unjustly prejudicial to the Holders not
consenting.
Section 8.15 Sale of Pledged Property. (a) The power to effect any sale
pursuant to Section 8.03 hereof shall not be exhausted by any one or more sales
as to any portion of the Pledged Property remaining unsold, but shall continue
unimpaired until the entire Pledged Property securing the Notes shall have been
sold or all amounts payable under this Indenture with respect thereto shall have
been paid. The Indenture Trustee may from time to time postpone any sale by
public announcement made at the time and place of such sale. To the extent
permitted by law, the Indenture Trustee shall not sell the Pledged Property
without the prior written consent of the Note Insurer, so long as a Note Insurer
Default has not then occurred and is continuing.
(b) The Note Insurer and any Noteholder may bid for and acquire any
portion of the Pledged Property securing the Notes in connection with any sale
thereof.
(c) Each of the parties hereby covenants and agrees that a sale of the
entirety of the Contracts and the Equipment by a public sale held not less than
ten days after notice thereof is commercially reasonable.
(d) The Indenture Trustee shall execute and deliver an appropriate
instrument of conveyance, provided to it by the Servicer, transferring its
interest in any portion of the Pledged Property in connection with a sale
thereof. In addition, the Indenture Trustee is hereby irrevocably appointed the
agent and attorney-in-fact of the Issuers to transfer and convey its interest in
any portion of the Pledged Property in connection with a sale thereof, and to
take all action necessary to effect such sale. No purchaser or transferee at
such a sale shall be bound to
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ascertain the Indenture Trustee's authority, inquire into the satisfaction of
any conditions precedent or see to the application of any monies.
Section 8.16 Action on Notes. The Indenture Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Indenture Trustee or the Noteholders shall be impaired by the recovery of
any judgment by the Indenture Trustee against the Issuers or the Transferors or
by the levy of any execution under such judgment upon any portion of the Pledged
Property or upon any of the assets of the Issuers or the Transferors.
Section 8.17 Certain Rights of the Holders of the Subordinate Notes.
Notwithstanding anything to the contrary set forth herein or in the Servicing
Agreement, the holders of the Subordinate Notes which hold in the aggregate a
Percentage Interest of the Subordinate Notes in excess of 66 and 2/3% may, after
30 days prior written notice to the Note Insurer, petition the Indenture Trustee
to enforce against the Issuers or the Servicer any covenants or agreements made
by the Servicer or the Issuers, in the event that the Servicer or the Issuers
are then in default thereunder and no other party (i.e., the Note Insurer or the
Class A Noteholders) is demanding enforcement thereof. The Indenture Trustee may
require such petitioning, Subordinate Noteholders to post a reasonable indemnity
before the Indenture Trustee is required to act on such petition. In no event
shall the cost of any such enforcement be borne by the Note Insurer, any Class A
Noteholder or the Issuers. Failure of the Note Insurer to take any enforcement
action after receiving such notice by the Subordinate Noteholders shall not be
deemed to be a waiver of, or in any way prejudice, any rights of the Note
Insurer under the Indenture or otherwise. The Subordinate Noteholders will not
have the right, independently (unless they then constitute the Majority Holders
and the Majority Holders are otherwise then permitted to do so) to declare an
Event of Servicing Termination or an Event of Default or otherwise accelerate
the Notes.
ARTICLE IX.
TERMINATION
Section 9.01 Optional Redemption of Notes; Final Disposition of
Funds. (a) On any Payment Date on which the Aggregate Discounted Contract
Principal Balance is less than ten percent (10%) of the sum of (x) the Initial
Aggregate Discounted Contract Principal Balance and (y) the Original Pre-Funded
Amount (which as of the Closing Date, the Servicer hereby represents is the
level at which the Servicer reasonably believes that servicing the Contracts on
behalf of the Beneficiaries would be economically inefficient), LLC II, on
behalf of each of the Issuers, shall have the option to redeem the Notes in
whole by depositing or causing to be deposited into the Collection Account the
sum of (i) the Class A Note Principal Balance, the Class B Note Principal
Balance, the Class C Note Principal Balance and the Class D Note Principal
Balance, (ii) the Class A Note Interest, the Class B Note Interest, the Class C
Note Interest and the Class D Note Interest due as of such Payment Date, (iii)
all Operating Expenses due as of such Payment Date (without regard to the
limitation set forth in Section 7.07(a)(ii) hereof) and (iv) all Reimbursement
Amounts, if any, due as of such Payment Date. In the event
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that LLC II elects to redeem the Notes in accordance with this Section 9.01(a),
LLC II shall be required to notify the Indenture Trustee in writing by no later
than five (5) Business Days prior to a notice required to be sent by the
Indenture Trustee pursuant to Section 9.01(b).
(b) Notice of any redemption pursuant to Section 9.01(a) shall be given
promptly by the Indenture Trustee, by letter to the Note Insurer and
Noteholders, mailed not later than the 10th day of the month immediately
preceding the month of such final Payment Date, specifying (i) the Payment Date
upon which final payment of the Notes will be made, (ii) the scheduled amount of
any such final payment, (iii) that interest shall cease to accrue on the Notes
on such final Payment Date and (iv) the address for presentation of the Notes
for final payment. On such final Payment Date, the Indenture Trustee shall cause
to be distributed the amounts otherwise distributable on such Payment Date
pursuant to Section 3.05 hereof, taking into account the redemption pursuant to
Section 9.01(a). After such Payment Date, interest on the Notes shall cease to
accrue.
(c) In the event that any amount due to any Noteholder remains
unclaimed, the Servicer shall, at its expense, cause to be published once, in
the eastern edition of The Wall Street Journal, notice that such money remains
unclaimed. If, within two years after such publication, such amount remains
unclaimed, the Issuers shall be entitled to all unclaimed funds and other assets
which remain subject hereto, and the Indenture Trustee upon written direction
from the Servicer shall transfer such funds to the Issuers and shall be
discharged of any responsibility for such funds and, the Noteholders shall look
only to the Issuers for payment.
ARTICLE X.
Noteholders' Lists and Reports
Section 10.01 Note Registrar To Furnish To Indenture Trustee Names and
Addresses of Noteholders. The Note Registrar will furnish or cause to be
furnished to the Indenture Trustee (a) not more than five days after the earlier
of (i) each Record Date and (ii) three months after the last Record Date, a
list, in such form as the Indenture Trustee may reasonably require, of the names
and addresses of the Holders as of such Record Date and (b) at such other times
as the Indenture Trustee may request in writing, within 30 days after receipt by
the Issuer of any such request, a list of similar form and content as of a date
not more than 10 days prior to the time such list is furnished; provided,
however, that so long as the Indenture Trustee is the Note Registrar, no such
list shall be required to be furnished. The Indenture Trustee or, if the
Indenture Trustee is not the Note Registrar, the Note Registrar shall furnish to
the Note Insurer or the Issuers in writing upon their written request and at
such other times as the Note Insurer or the Issuers may request a copy of the
list of Noteholders.
Section 10.02 Preservation of Information. The Indenture Trustee shall
preserve, in as current a form as is reasonably practicable, the names and
addresses of the Noteholders contained in the most recent list furnished to the
Indenture Trustee and the names and addresses of Noteholders received by the
Indenture Trustee in its capacity as Note Registrar.
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Section 10.03 Compliance Certificates and Opinions, etc. Upon any
application or request by the Issuers to the Indenture Trustee to take any
action under any provision of this Indenture, the Issuers shall furnish to the
Indenture Trustee and the Note Insurer (i) an Officers' Certificate stating that
all conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, and (ii) an Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent, if any, have
been complied with, except that, in the case of any such application or request
as to which the furnishing of such documents is specifically required by any
provision of this Indenture, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
ARTICLE XI.
MISCELLANEOUS PROVISIONS
Section 11.01 Amendment. (a) This Indenture may be amended from
time to time by the Issuers, the Servicer, the Originator and the Indenture
Trustee, without the consent of any of the Noteholders but with the consent of
the Note Insurer, to cure any ambiguity herein; provided, however, that such
action shall not, as evidenced by an Opinion of Counsel acceptable to the
Indenture Trustee, adversely affect in any respect the interests of any
Noteholder.
(b) This Indenture may also be amended from time to time by the
Issuers, the Servicer, the Originator and the Indenture Trustee with the consent
of the Note Insurer (or, if a Note Insurer Default has occurred or is continuing
or the Class A Notes have been paid in full, the Majority Holders) for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Indenture or of modifying in any manner the rights of
the Noteholders; provided, however, that no such amendment shall (i) increase or
reduce in any manner the amount of, or accelerate or delay the timing of,
payments that are required to be made on any Note without the consent of the
Holder of such Note or (ii) reduce the aforesaid
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percentage required to consent to any such amendment, without the consent of the
Holders of all Notes then outstanding.
(c) Prior to the effectiveness of any amendment under Section 11.01(a)
or (b), the Rating Agencies shall have confirmed in writing their respective
ratings of the Notes.
(d) Promptly after the execution of any such amendment, the Indenture
Trustee shall furnish a written copy of the text of such amendment (and any
consent required with respect thereto) to each Noteholder, the
Certificateholders, the Note Insurer and the Rating Agencies.
(e) Approval of the particular form of any proposed amendment or
consent shall not be necessary for the consent of the Noteholders under Section
11.01(b), but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by the Noteholders shall be subject to
such reasonable requirements as the Indenture Trustee may prescribe.
(f) The Indenture Trustee and the Note Insurer shall be entitled to
receive an Officers' Certificate and an Opinion of Counsel to the effect that
all conditions precedent to the amendment of this Indenture have been satisfied.
The Indenture Trustee may, but shall not be obligated to, execute and deliver
any such amendment which affects that Indenture Trustee's rights, powers,
immunities or indemnifications hereunder.
Section 11.02 Limitation on Rights of Noteholders. (a) The death,
dissolution or incapacity of any Noteholder shall not operate to terminate this
Indenture nor entitle such Noteholder's legal representatives or heirs to claim
an accounting or to take any action or commence any proceeding in any court for
a partition or winding up of the Issuers, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
(b) It is understood and intended, and expressly covenanted by each
Noteholder with every other Noteholder and the Indenture Trustee, that no one or
more Holders of Notes shall have any right in any manner whatever by virtue or
by availing itself or themselves of any provisions of this Indenture to affect,
disturb or prejudice the rights of the Holders of any other of the Notes, to
obtain or seek to obtain priority over or preference to any other Holder of the
same class of Notes or to enforce any right under this Indenture, except in the
manner herein provided and for the equal, ratable and common benefit of all
Noteholders of the same class. For the protection and enforcement of the
provisions of this Section 11.02, each and every Noteholder and the Indenture
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 11.03 Counterparts. For the purpose of facilitating the
execution of this Indenture and for other purposes, this Indenture may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
Section 11.04 Governing Law. THIS INDENTURE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF
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THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, WITHOUT
REGARD TO THE CONFLICT OF LAWS PROVISIONS OF ANY STATE.
Section 11.05 Notices. All demands, notices, instructions, directions
and communications hereunder (other than periodic communications of a routine
nature made in connection with the dissemination of information regarding the
Pledged Property, the Servicer and the Issuers required to be delivered
hereunder, which shall be delivered or mailed by first class mail or facsimile
transmission) shall be in writing, personally delivered or mailed by overnight
courier, and shall be deemed to have been duly given upon receipt (a) in the
case of the Servicer, at 2121 S.W. Broadway, Suite 200, Portland, Oregon 97201,
Attention: Gerald Hudspeth, telephone (503) 228-1245, telecopy (503) 721-1712,
(b) in the case of the Originator, at 10800 Biscayne Boulevard, Suite 800,
Miami, Florida 33161, Attention: Glen Stein, telephone (305) 899-5000, telecopy
(305) 899-5050, (c) in the case of the Issuers, at One East First Street, Suite
1600, Reno, Nevada 89501, Attention: Gregg Barnard, telephone (775) 688-3000,
telecopy (775) 688-3088, with a copy to the Originator as set forth in clause
(b) above, (d) in the case of the Indenture Trustee, at Norwest Center, Sixth
Street and Marquette Avenue, MAC N9311-161 Minneapolis, Minnesota 55479,
Attention: Corporate Trust Services-Asset-Backed Administration, telephone (612)
667-8058, telecopy (612) 667-3464, (e) in the case of S&P, at 55 Water Street,
40th Floor, New York, NY 10041, Attention: Asset Backed Surveillance, telephone
(212) 438-2000, telecopy (212) 438-2661, (f) in the case of Fitch, at One State
Street Plaza, New York, New York 10004, Attention: Asset Backed Surveillance,
telephone (212) 908-0500, telephone (212) 514-9879, (g) in the case of Moody's,
at 99 Church Street, New York, New York 10007, Attention: ABS Monitoring Group,
telephone (212) 553-0300, telecopy (212) 553-3856, (h) in the case of DCR, at 55
East Monroe Street, Suite 3800, Chicago, Illinois 60603, Attention: Asset Backed
Monitoring - Equipment Leases, telephone (312) 368-3160, telecopy (312)
368-2069, (i) in the case of the Note Insurer, at One State Street Plaza, New
York, New York 10004, Attention: Structured Asset Backed Securities Department
Head, telephone (212) 688-0340, telecopy (212) 208-3547, and (j) in the case of
the Initial Purchasers, (i) to Credit Suisse First Boston Corporation at 11
Madison Avenue, New York, New York 10010, Attention: Asset Finance, telephone
number (212) 325-2000, telecopy (212) 325-8261, (ii) to Banc of America
Securities LLC at Bank of America Corporate Center, 100 North Tryon, 6th Floor,
Charlotte, North Carolina 28255, Attention: Global High-Grade Syndications,
telephone (704) 386-9690, telecopy, (704) 387-0180, and (iii) to UniCapital
Securities Corp. at 5429 LBJ Freeway, Suite 650, Dallas, Texas 75240, Attention:
Fred Cornwall, telephone (972) 386-0200, telecopy (972) 386-6636. Any notice
required or permitted to be mailed to a Noteholder shall be given by first class
mail or overnight mail, postage prepaid, at the address of such Holder as shown
in the Note Register. Any notice so mailed within the time prescribed in this
Indenture shall be conclusively presumed to have been duly given on the fifth
Business Day following mailing, whether or not the Noteholder receives such
notice. A copy of each notice sent by any party to a Noteholder hereunder shall
be promptly sent by such party to each Rating Agency.
Section 11.06 Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of this Indenture shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Indenture and shall in no way affect
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the validity or enforceability of the other provisions of this Indenture or of
the Notes or the rights of the Holders thereof.
Section 11.07 Third Party Beneficiary. The parties hereto acknowledge
and agree that the Note Insurer is an intended third party beneficiary of this
Indenture.
Section 11.08 Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Section 5.02 of the Servicing Agreement,
this Indenture may not be assigned by the Servicer except with the prior written
consent of the Note Insurer. Notice of any such assignment received by a
Responsible Officer of the Indenture Trustee shall be given to the Rating
Agencies by the Indenture Trustee.
Section 11.09 Binding Effect. This Indenture shall inure to the benefit
of, and shall be binding upon the Servicer, the Originator, the Issuers, the
Indenture Trustee, the Note Insurer, the Noteholders, the Certificateholders and
their respective successors and permitted assigns, subject, however, to the
limitations contained in this Indenture. This Indenture shall not inure to the
benefit of any Person other than the Issuers, the Servicer, the Originator, the
Indenture Trustee, the Note Insurer, the Noteholders and the Certificateholders.
Section 11.10 Survival of Agreement. All covenants, agreements,
representations and warranties made herein and in the other documents delivered
pursuant hereto shall survive the pledge of the Pledged Property and the
issuance of the Notes and the Certificates and shall continue in full force and
effect until payment in full of the Notes and all amounts owing to the Indenture
Trustee and the Note Insurer hereunder and under the other Transaction
Documents, as applicable.
Section 11.11 Captions. The captions or headings in this Indenture are
for convenience only and in no way define, limit or describe the scope or intent
of any provisions or sections of this Indenture.
Section 11.12 Annexes and Exhibits. The Annexes and the Exhibits to
this Indenture are hereby incorporated herein and made a part hereof and are an
integral part of this Indenture.
Section 11.13 Calculations. Except as otherwise provided in this
Indenture, including, without limitation, with respect to the calculation of
interest on the Class A-1 Notes, all interest rate calculations under this
Indenture, including those with respect to the Contracts, will be made on the
basis of a 360-day year and twelve 30-day months (i.e., each Interest Accrual
Period shall be deemed to be equal a 30 day period; provided, that the initial
Interest Accrual Period shall be deemed to equal only a 14 day period) and will
be carried out to at least seven decimal places. Interest on the Class A-1 Notes
will be calculated on the basis of a 360-day year and the actual number of days
elapsed during each Interest Accrual Period and will be carried out to at least
seven decimal places.
Section 11.14 No Proceedings. The Servicer, the Originator, the Issuers
and the Indenture Trustee each hereby agrees that it will not directly or
indirectly institute, or cause to be instituted, against either of the Issuers
any bankruptcy or insolvency proceeding so long as
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there shall not have elapsed one year plus one day since the maturity date of
the latest maturing securities of either of the Issuers.
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IN WITNESS WHEREOF, the Issuers, the Servicer, the Originator and the
Indenture Trustee have caused this Indenture to be duly executed by their
respective officers, all as of the day and year first above written.
UCP 99-1 LLC I, as Issuer
By: /s/ Andrew L. Stidd
----------------------------------------------
Name: Andrew L. Stidd
Title: Manager
UCP 99-1 LLC II, as Issuer
By: /s/ Andrew L. Stidd
----------------------------------------------
Name: Andrew L. Stidd
Title: Manager
UNICAPITAL OPERATIONS GROUP, INC.,
as Servicer
By: /s/ Jerry T. Hudspeth
----------------------------------------------
Name: Jerry T. Hudspeth
Title: President
UNICAPITAL CORPORATION,
as Originator
By: /s/ Glen Stein
----------------------------------------------
Name: Glen Stein
Title: Senior Vice President
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its individual capacity but
solely as Indenture Trustee
By: /s/ Marianna C. Stershic
----------------------------------------------
Name: Marianna C. Stershic
Title: Assistant Vice President
[Signature Page to Indenture]
<PAGE> 1
Exhibit 10.01
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of this 2nd day of August, 1999, is
by and between (i) UniCapital Corporation, a Delaware corporation (the
"Company"), and (ii) John L. Guadagno ("Employee").
RECITALS
The Company desires to employ Employee and to have the benefit of his
skills and services, and Employee desires to accept employment with the Company,
on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises, terms,
covenants and conditions set forth herein, and the performance of each, the
parties hereto, intending legally to be bound, hereby agree as follows:
AGREEMENTS
1. EMPLOYMENT; TERM. The Company hereby employs Employee to perform the
duties described herein, and Employee hereby accepts employment with the
Company, for a term beginning on the date hereof and continuing for a period of
three years, unless sooner terminated (the "Term").
2. POSITION AND DUTIES. The Company hereby employs Employee as the
President of the Company's "Technology and Finance Group". As such, Employee
shall have responsibilities, duties and authority reasonably accorded to and
expected of the President of the Company's Technology and Finance Group and will
report directly to the Chief Executive Officer of the Company. For purposes of
this Agreement, the term "Technology and Finance Group" means the subsidiaries
and other business units of the Company which are engaged in computer and
telecommunications leasing and middle market leasing, as determined by the
Company from time to time. Employee hereby accepts this employment upon the
terms and conditions herein contained and agrees to devote all of his
professional time, attention, and efforts to promote and further the business of
the Company and the Technology and Finance Group. Employee shall faithfully
adhere to, execute, and fulfill all policies established by the Company.
3. COMPENSATION. For all services rendered by Employee, the Company
shall compensate Employee, during the Term, as follows:
(a) Base Salary. The annual base salary payable to Employee
shall be $350,000, payable on a regular basis in accordance with the Company's
standard payroll procedures, but not less than monthly.
<PAGE> 2
(b) Commission.
(i) In addition to the foregoing base salary, Employee shall
receive an annual commission (the "Commission") equal to the
sum of (a) one-half of one percent (.5%) of the first
$50,000,000 of the net income earned by UniCapital's
Technology and Finance Group, as reported in UniCapital's
Annual Report on Form 10-K , and (b) one percent (1.0%) of the
net income earned by UniCapital's Technology and Finance Group
in excess of $50,000,000, as reported in UniCapital's Annual
Report on Form 10-K.
(ii) The Commission shall be payable annually within 91 days after
the end of the calendar year during which such Commission was
earned.
(c) Perquisites, Benefits, and Other Compensation. During the
Term, Employee shall be entitled to receive all perquisites and benefits as are
customarily provided by the Company to its employees, subject to such changes,
additions, or deletions as the Company may make generally from time to time, as
well as such other perquisites or benefits as may be specified from time to time
by the Company or the Compensation Committee.
4. EXPENSE REIMBURSEMENT. The Company shall reimburse Employee for (or,
at the Company's option, pay) all business travel and other out-of-pocket
expenses reasonably incurred by Employee in the performance of his services
hereunder during the Term. All reimbursable expenses shall be appropriately
documented in reasonable detail by Employee upon submission of any request for
reimbursement, and in a format and manner consistent with the Company's expense
reporting policy, as well as applicable federal and state tax record keeping
requirements.
5. PLACE OF PERFORMANCE. Employee understands that he may be requested
by the Company to relocate from his present residence to another geographic
location in order to more efficiently carry out his duties and responsibilities
under this Agreement or as part of a promotion or a change in duties and
responsibilities. In such event, if Employee agrees to relocate, the Company
will provide Employee with a relocation allowance, in an amount determined by
the Company, to assist Employee in covering the costs of moving himself, his
immediate family, and their personal property and effects. The total amount and
type of costs to be covered shall be determined by the Company, in light of
prevailing Company policy at the time.
6. TERMINATION; RIGHTS ON TERMINATION. Employee's employment may be
terminated in any one of the following ways, prior to the expiration of the
Term:
(a) Death. The death of Employee shall immediately terminate
the Term.
(b) Disability. If, as a result of incapacity due to physical
or mental illness or injury, Employee shall have been unable to perform the
essential functions of his position, with or without reasonable accommodation,
on a full-time basis for a period of four consecutive months, or for a total of
four months in any six-month period, then 30 days after written notice to
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<PAGE> 3
Employee (which notice may be given before or after the end of the
aforementioned periods, but which shall not be effective earlier than the last
day of the applicable period), the Company may terminate Employee's employment
hereunder if Employee is unable to resume his full-time duties at the conclusion
of such notice period. If Employee's employment is terminated as a result of
Employee's disability, the Company shall continue to pay Employee his base
salary at the then-current rate for the lesser of (i) three months from the
effective date of termination, or (ii) whatever time period is remaining under
the then-current period of the Term (without regard to renewals thereof). Such
payments shall be made in accordance with the Company's regular payroll cycle.
(c) Termination by the Company for "Cause." The Company may
terminate the Term 10 days after written notice to Employee for "cause," which
shall be: (i) Employee's material breach of this Agreement, which breach is not
cured within 10 days of receipt by Employee of written notice from the Company
specifying the breach; (ii) Employee's gross negligence in the performance of
his duties hereunder, intentional nonperformance or misperformance of such
duties, or refusal to abide by or comply with the directives of the Company, his
superior officers, or the policies and procedures of the Company, which actions
continue for a period of at least 10 days after receipt by Employee of written
notice of the need to cure or cease; (iii) Employee's willful dishonesty, fraud,
or misconduct with respect to the business or affairs of the Company or any of
its subsidiaries, and that in the judgment of the Company materially and
adversely affects the operations or reputation of the Company or any of its
subsidiaries; (iv) Employee's conviction of a felony or other crime involving
moral turpitude; or (v) Employee's abuse of alcohol or drugs (legal or illegal)
that, in the judgment of the Company, materially impairs Employee's ability to
perform his duties hereunder.
(d) Without Cause. At any time after the commencement of
employment, the Company may, without cause, terminate the Term and Employee's
employment, effective 30 days after written notice is provided to Employee.
Should Employee be terminated by the Company without cause, Employee shall
receive from the Company compensation ("Severance Compensation") equal to the
base salary at the rate then in effect for the lesser of (i) twelve months from
the effective date of termination, or (ii) whatever time period is remaining
under the then-current period of the Term (without regard to renewals thereof).
Such payments shall be made in accordance with the Company's regular payroll
cycle. If Employee resigns or otherwise terminates his employment for any reason
or for no reason, other than for disability pursuant to Section 6(b), Employee
shall receive no Severance Compensation or other compensation.
(e) Payment Through Termination. Upon termination of
Employee's employment Employee shall be entitled to receive his base salary and
all benefits and reimbursements (including payments for accrued vacation and
sick leave, in each case in accordance with applicable policies of the Company)
due through the effective date of termination. Additional compensation
subsequent to termination, if any, will be due and payable to Employee only to
the extent and in the manner expressly provided above in this Section 6. All
other rights and obligations of the Company and Employee under this Agreement
shall cease as of the effective date of termination, except that Employee's
obligations under Sections 7, 8, 9, 10 and 11 below shall survive such
termination.
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<PAGE> 4
7. RESTRICTION ON COMPETITION.
(a) During the Term, Employee shall not, directly or
indirectly, for himself or on behalf of or in conjunction with any other person,
company, partnership, corporation, business, group, or other entity (each, a
"Person") engage or prepare to engage, as an officer, director, shareholder,
owner, partner, joint venturer, or in a managerial capacity, whether as an
employee, independent contractor, consultant, advisor, lender or sales
representative, in any business engaged in providing or servicing equipment
leasing or specialty finance products or services in direct competition with the
Company, or any business engaging in the consolidation of the equipment leasing
or specialty finance industry, within the United States of America (the
"Territory").
(b) During the Term, and thereafter, if Employee continues to
be employed by the Company or any other entity owned by or affiliated with the
Company on an "at-will" basis, for the duration of such period, and thereafter
for a period of two years, Employee shall not, directly or indirectly, for
himself or on behalf of or in conjunction with any Person:
(i) call upon, correspond with or otherwise engage in
discussions with any Person who is, at that time, an employee of the Company for
the purpose or with the intent of enticing such employee away from or out of the
employ of the Company;
(ii) call upon, correspond with or otherwise engage in
discussions with any Person who or that is, at that time, or has been, within
one year prior to that time, a customer of the Company within the Territory for
the purpose of soliciting or selling products or services in direct competition
with the Company within the Territory; or
(iii) on Employee's own behalf or on behalf of any
competitor, call upon any Person that, during Employee's employment by the
Company, was either called upon by the Company as a prospective acquisition
candidate or was the subject of an acquisition analysis conducted by the
Company.
(c) The foregoing covenants shall not be deemed to prohibit
Employee from acquiring as a passive investment not more than one percent of the
capital stock of a competing business, whose stock is traded on a national
securities exchange or through the automated quotation system of a registered
securities association.
(d) For purposes of this Section 7 and Sections 8, 9, 10 and
11, references to the Company shall mean UniCapital Corporation, together with
its subsidiaries and affiliates.
(e) The covenants in this Section 7 are severable and
separate, and the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. If any provision of this Section 7 relating to
the time period or geographic area of the restrictive covenants shall be
declared by a court of competent jurisdiction to exceed the maximum time period
or geographic area, as applicable, that such court deems reasonable and
enforceable, said time period or geographic area shall be deemed to be, and
thereafter shall become, the maximum time period or largest geographic area that
such court deems reasonable and enforceable and this Agreement shall
automatically be considered to have been amended and revised to reflect such
determination.
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<PAGE> 5
(f) All of the covenants in this Section 7 shall be construed
as an agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Employee against the Company,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of such covenants. It is specifically
agreed that the period of two years stated at the beginning of this Section 7,
during which the agreements and covenants of Employee made in this Section 7
shall be effective, shall be computed by excluding from such computation any
time during which Employee is in violation of any provision of this Section 7.
(g) If the time period specified by this Section 7 shall be
reduced by law or court decision, then, notwithstanding the provisions of
Section 6 above, Employee shall be entitled to receive from the Company his base
salary at the rate then in effect solely for the longer of (i) the time period
during which the provisions of this Section 7 shall be enforceable under the
provisions of such applicable law, or (ii) the time period during which Employee
is not engaging in any competitive activity, but in no event longer than the
applicable period provided in Section 6 above.
(h) Employee has carefully read and considered the provisions
of this Section 7 and, having done so, agrees that the restrictive covenants in
this Section 7 impose a fair and reasonable restraint on Employee and are
reasonably required to protect the interests of the Company and its officers,
directors, employees, and stockholders. It is further agreed that the Company
and Employee intend that such covenants be construed and enforced in accordance
with the changing activities, business, and locations of the Company throughout
the term of these covenants.
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<PAGE> 6
8. CONFIDENTIAL INFORMATION. Employee hereby agrees to hold in strict
confidence and not to disclose to any third party any of the valuable,
confidential, and proprietary business, financial, technical, economic, sales,
and/or other types of proprietary business information relating to the Company
(including all trade secrets), in whatever form, whether oral, written, or
electronic (collectively, the "Confidential Information"), to which Employee
has, or is given (or has had or been given), access as a result of his
employment by the Company. It is agreed that the Confidential Information is
confidential and proprietary to the Company because such Confidential
Information encompasses technical know-how, trade secrets, or technical,
financial, organizational, sales, or other valuable aspects of the Company's
business and trade, including, without limitation, technologies, products,
processes, plans, clients, personnel, operations, and business activities. This
restriction shall not apply to any Confidential Information that (a) becomes
known generally to the public through no fault of Employee; (b) is required by
applicable law, legal process, or any order or mandate of a court or other
governmental authority to be disclosed; (c) is reasonably believed by Employee,
based upon the advice of legal counsel, to be required to be disclosed in
defense of a lawsuit or other legal or administrative action brought against
Employee; or (d) is known to Employee prior to the date of this Agreement or is
developed by Employee after the Term; provided, that in the case of clauses (b)
or (c), Employee shall give the Company reasonable advance written notice of the
Confidential Information intended to be disclosed and the reasons and
circumstances surrounding such disclosure, in order to permit the Company to
seek a protective order or other appropriate request for confidential treatment
of the applicable Confidential Information.
9. INVENTIONS. Employee shall disclose promptly to the Company any and
all significant conceptions and ideas for inventions, improvements, and valuable
discoveries, whether patentable or not, that are conceived or made by Employee,
solely or jointly with another, during the period of employment or within one
year thereafter, and that are directly related to the business or activities of
the Company and that Employee conceives as a result of his employment by the
Company, regardless of whether or not such ideas, inventions, or improvements
qualify as "works for hire". Employee hereby assigns and agrees to assign all
his interests therein to the Company or its nominee. Whenever requested to do so
by the Company, Employee shall execute any and all applications, assignments, or
other instruments that the Company shall deem necessary to apply for and obtain
Letters Patent of the United States or any foreign country or to otherwise
protect the Company's interest therein.
10. RETURN OF COMPANY PROPERTY; ACCESS TO RECORDS. Promptly upon
termination of Employee's employment by the Company for any reason or no reason,
Employee or Employee's personal representative shall return to the Company (a)
all Confidential Information; (b) all other records, designs, patents, business
plans, financial statements, manuals, memoranda, lists, correspondence, reports,
records, charts, advertising materials, and other data or property delivered to
or compiled by Employee by or on behalf of the Company or its representatives,
vendors, or customers that pertain to the business of the Company, whether in
paper, electronic, or other form; and (c) all keys, credit cards, vehicles, and
other property of the Company. Employee shall not retain or cause to be retained
any copies of the foregoing. Employee hereby agrees that all of the foregoing
shall be and remain the property of the Company, as the case may be, and be
subject at all times to their discretion and control.
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11. NO PRIOR AGREEMENTS. Employee hereby represents and warrants to the
Company that the execution of this Agreement by Employee, his employment by the
Company, and the performance of his duties hereunder will not violate or be a
breach of any agreement with a former employer, client, or any other Person.
Further, Employee agrees to indemnify and hold harmless the Company and their
respective officers, directors, and representatives for any claim, including,
but not limited to, reasonable attorneys' fees and expenses of investigation, of
any such third party that such third party may now have or may hereafter come to
have against the Company or such other persons, based upon or arising out of any
non-competition agreement, non-solicitation agreement, invention, secrecy, or
other agreement between Employee and such third party that was in existence as
of the date of this Agreement.
12. ASSIGNMENT; BINDING EFFECT. Employee understands that he has been
selected for employment by the Company on the basis of his personal
qualifications, experience, and skills. Employee agrees, therefore, that he
cannot assign all or any portion of his performance under this Agreement. This
Agreement may not be assigned or transferred by the Company without the prior
written consent of Employee. Subject to the preceding two sentences, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by
the parties hereto and their respective heirs, legal representatives, and
assigns. Notwithstanding the foregoing, if Employee accepts employment with a
subsidiary or affiliate of the Company, unless Employee and his new employer
agree otherwise in writing, this Agreement shall automatically be deemed to have
been assigned to such new employer (which shall thereafter be an additional or
substitute beneficiary of the covenants contained herein, as appropriate), with
the consent of Employee, such assignment shall be considered a condition of
employment by such new employer, and references to the "Company" in this
Agreement shall be deemed to refer to such new employer. If the Company is
merged with or into one of its subsidiaries or affiliates, such action shall not
be considered to cause an assignment of this Agreement, and the surviving or
successor entity shall become the beneficiary of this Agreement and all
references to the "Company" shall be deemed to refer to such surviving or
successor entity.
13. COMPLETE AGREEMENT WAIVER; AMENDMENT. This Agreement is not a
promise of future employment. Employee has no oral representations,
understandings, or agreements with the Company or any of its officers,
directors, or representatives covering the same subject matter as this
Agreement. This Agreement is the final, complete, and exclusive statement and
expression of the agreement between the Company and Employee with respect to the
subject matter hereof, and cannot be varied, contradicted, or supplemented by
evidence of any prior or contemporaneous oral or written agreements. This
written Agreement may not be later modified except by a further writing signed
by a duly authorized officer of the Company and Employee, and no term of this
Agreement may be waived except by a writing signed by the party waiving the
benefit of such term.
14. NOTICE. Whenever any notice is required hereunder, it shall be
given in writing addressed as follows:
To the Company: UniCapital Corporation
10800 Biscayne Boulevard
Suite 800
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<PAGE> 8
Miami, Florida 33161
Attention: Martin Kalb
Mr. John L. Guadagno
15 Fillow Street
Westport, Connecticut 06880
with a copy to:
-------------------------------
-------------------------------
-------------------------------
Attention:
---------------------
Notice shall be deemed given and effective three days after the deposit in the
U.S. mail of a writing addressed as above and sent first class mail, certified,
return receipt requested, or, if sent by Federal Express or other overnight
express delivery, hand delivery, or facsimile, when actually received. Either
party may change the address for notice by notifying the other party of such
change in accordance with this Section 14.
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<PAGE> 9
15. SEVERABILITY; HEADINGS. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative. This
severability provision shall be in addition to, and not in place of, the
provisions of Section 7(e) above. The paragraph headings herein are for
reference purposes only and are not intended in any way to describe, interpret,
define or limit the extent or intent of the Agreement or of any part hereof.
16. EQUITABLE REMEDY. Because of the difficulty of measuring economic
losses to the Company as a result of a breach of the restrictive covenants set
forth in Sections 7, 8, 9, 10 and/or 11, and because of the immediate and
irreparable damage that would be caused to the Company for which monetary
damages would not be a sufficient remedy, it is hereby agreed that in addition
to all other remedies that may be available to the Company at law or in equity,
the Company shall be entitled to specific performance and any injunctive or
other equitable relief as a remedy for any breach or threatened breach of the
aforementioned restrictive covenants.
17. ARBITRATION. Any unresolved dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration
conducted in accordance with the rules of the American Arbitration Association
then in effect. The arbitrators shall not have the authority to add to, detract
from, or modify any provision hereof nor to award punitive damages to any
injured party. A decision by a majority of the arbitration panel shall be final
and binding. Judgment may be entered on the arbitrators' award in any court
having jurisdiction. The direct expense of any arbitration proceeding shall be
borne by the Company. Each party shall bear its own counsel fees. The
arbitration proceeding shall be held in the city where the principal office of
the Company is located. Notwithstanding the foregoing, the Company shall be
entitled to seek injunctive or other equitable relief, as contemplated by
Section 16 above, from any court of competent jurisdiction, without the need to
resort to arbitration.
18. GOVERNING LAW. This Agreement shall in all respects be construed
according to the laws of the State of __________, without giving effect to any
conflicts of laws principles thereof that would compel the application of the
substantive laws of any other jurisdiction. The Company and Employee each hereby
irrevocably submits to the jurisdiction of the state or federal courts located
in the State of __________ in connection with any suit, action or other
proceeding arising out of or relating to this Agreement and hereby agrees not to
assert, by way of motion, as a defense, or otherwise in such suit, action or
proceeding that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper or that this
Agreement or the subject matter hereof may not be enforced by such courts.
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IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
duly executed as of the date first written above.
UniCapital Corporation
By: /s/ Robert J. New
--------------------------------------
Name: Robert J. New
--------------------------------
Title: Chairman & Chief
Executive Officer
-------------------------------
EMPLOYEE:
/s/ John L. Guadagno
- ----------------------------------
John L. Guadagno
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<PAGE> 1
Exhibit 10.03
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
made and entered into as of the 1st day of March, 2000 by and between UNICAPITAL
CORPORATION, a Delaware corporation (the "Company"), and MARTIN KALB (the
"Employee").
RECITALS
The Company and the Employee are parties to an Employment Agreement
dated as of May 20, 1998 (the "Original Agreement"). The Company desires to
retain the services of the Employee in the employment of the Company on the
terms and subject to the conditions set forth in this Agreement, and the
Employee desires to continue to make his services available to the Company on
the terms and subject to the conditions set forth in this Agreement. The Company
and the Employee are therefore amending and restating the Original Agreement in
its entirety by entering into this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises, agreements and mutual
covenants set forth herein, the parties hereto, intending to be bound legally,
hereby agree as follows:
1. DEFINITIONS. The following terms when used herein, unless the
context otherwise requires, shall be defined as follows:
1.1 "Cause" shall have the meaning set forth in Section 5.1
hereof.
1.2 "Company" shall mean UniCapital Corporation, a Delaware
corporation.
1.3 "Competing Business" shall have the meaning set forth in
Section 6.1 hereof.
1.4 "Confidential Information" shall have the meaning set
forth in Section 9.1 hereof.
1.5 "Term" shall have the meaning set forth in Section 3
hereof.
2. EMPLOYMENT
2.1 General. The Company hereby agrees to employ the Employee
as Executive Vice President and General Counsel during the Term of this
Agreement on the terms and subject to the conditions contained in this
Agreement, and the Employee hereby agrees to accept such employment on the terms
and subject to the conditions contained in this Agreement.
<PAGE> 2
2.2 Duties of Employee. During the Term of this Agreement, the
Employee shall diligently perform all duties and responsibilities as may be
assigned to him by the Company's Board of Directors and shall exercise such
power and authority as may from time to time be delegated to him thereby. The
Employee shall devote his full business time and attention to the business and
affairs of the Company as necessary to perform his duties and responsibilities
hereunder, render such services to the best of his ability, and use his best
efforts to promote the interests of the Company.
3. TERM. Subject to the provisions of Section 5 of this Agreement, the
Company shall employ the Employee for a term commencing on the date first
written above (the "Effective Date"), and expiring on February 28, 2002.
4. COMPENSATION.
4.1 Salary. The Employee shall receive an annual salary of
Four-Hundred-Fifty Thousand Dollars ($450,000.00) during the Term of this
Agreement, and such salary shall be payable in installments consistent with the
Company's normal payroll schedule but not less than monthly.
4.2 Incentive Bonus. During the Term, the Employee shall be
eligible to receive an incentive bonus up to the amount, based upon the
criteria, and payable at such times as are, specified in Exhibit A attached
hereto. The amount, manner of payment, and form of consideration, if any, shall
be determined by the Board of Directors or the Compensation Committee thereof,
in its sole and absolute discretion, and such determination shall be binding and
final. To the extent that such bonus is to be determined in light of financial
performance during a specified fiscal period and this Agreement commences on a
date after the start of such fiscal period, any bonus payable in respect of such
fiscal period's results may be prorated. In addition, if the period of the
Employee's employment hereunder expires before the end of a fiscal period, and
if the Employee is eligible to receive a bonus at such time (such eligibility
being subject to the restrictions set forth in Section 5 below), any bonus
payable in respect of such fiscal period's results may be prorated.
4.3 Benefits. During the Term of this Agreement, the Employee
shall be entitled to participate in all plans adopted for the general benefit of
the Company's employees, such as stock option plans, 401(k) plans, pension
plans, profit sharing plans, medical plans, group or other insurance plans and
benefits, to the extent that the Employee is and remains eligible to participate
therein and subject to the eligibility provisions of such plans in effect from
time to time. For each calendar year during the Term of this Agreement, the
Employee shall be entitled to not less than four weeks of paid vacation,
prorated for any period of employment of less than an entire year.
4.4 Withholding. Notwithstanding any provision in this
Agreement to the contrary, all payments required to be made by the Company
hereunder to the Employee IN connection with the Employee's employment hereunder
shall be subject to withholding of such amounts relating to taxes as the Company
may reasonably determine it should withhold pursuant to any applicable law or
regulation. In lieu of withholding such amounts, in whole or in part, the
Company may, in its sole discretion, accept other provisions for the payment of
taxes, provided
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<PAGE> 3
that the Company is satisfied that all requirements of law affecting its
responsibilities to withhold have been satisfied.
4.5 Reimbursement of Expenses. The Company agrees to reimburse
the Employee for all reasonable business expenses (including, without
limitation, reasonable travel and entertainment expenses) incurred by the
Employee in the discharge of his duties hereunder, subject to the Company's
reimbursement policies in effect from time to time. The Employee agrees to
maintain reasonable records of his business expenses in such form and detail as
the Company may request and to make such records available to the Company as and
when requested.
5. TERMINATION
5.1 Termination for Cause. Notwithstanding any provision in
this Agreement to the contrary, this Agreement may be terminated by the Company
for "Cause" at any time during the Term hereof, and such termination shall be
effective immediately upon ten (10) days' written notice to the Employee. For
purposes of this Agreement, "Cause" for the termination of the Employee's
employment hereunder shall be deemed to exist if, in the reasonable judgment of
the Company's Board of Directors: (a) the Employee commits fraud, theft or
embezzlement against the Company; (b) the Employee commits a felony or a crime
involving moral turpitude; (c) the Employee compromises trade secrets or other
proprietary information of the Company; (d) the Employee breaches any
non-competition or non-solicitation agreement with the Company or any subsidiary
or affiliate thereof; (e) the Employee breaches any of the terms of this
Agreement (other than those referenced in clauses (c) and (d) of this Section
5.1) and fails to cure such breach within 10 days after the receipt of written
notice of such breach from the Company; or (f) the Employee engages in gross
negligence or willful misconduct that causes harm to the business and operations
of the Company or a subsidiary or affiliate thereof. Upon any termination
pursuant to this Section 5.1, the Employee shall be entitled to be paid solely
the Employee's salary then in effect through the effective date of termination,
and the Company shall have no further liability or other obligation of any kind
whatsoever to the Employee.
5.2 Termination by the Company Without Cause. The Company may,
in its sole and absolute discretion, terminate the employment of the Employee
hereunder, at any time prior to the expiration of the term of this Agreement,
without "Cause" (as such term is defined in Section 5.1 above), or otherwise
without any cause, reason or justification, provided that the Company provides
to the Employee at least sixty (60) days' prior written notice (the "Termination
Notice") of such termination. In the event of any such termination by the
Company, (a) the Employee's employment with the Company shall cease and
terminate on the date specified in the Termination Notice (or, if not date is so
specified, on the date which is 60 days following the date of such notice), and
(b) the Employee shall be entitled to receive and be paid solely the Employee's
salary then in effect for the shorter of (x) the fifteen-month period following
the Employee's termination or (y) the remaining Term of this Agreement, payable
over such period at the Company's regular and customary intervals for the
payment of salaries as then in effect, and the Company shall have no further
liability or other obligation of any kind whatsoever to the Employee.
5.3 Death of the Employee. In the event that the Employee
shall die during the Term of this Agreement, the Employee's employment with the
Company shall immediately cease and terminate and the Employee's estate, heirs
(at law), devisees, legatees or other proper and
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<PAGE> 4
legally entitled descendants, or the personal representative, executor,
administrator or other proper legal representative on behalf of such
descendants, shall be entitled to receive and be paid solely the Employee's
salary through the date of death, and the Company shall have no further
liability or other obligation of any kind whatsoever to the Employee.
5.4 Disability of the Employee. In the event that the Employee
becomes incapacitated during the Term by reason of sickness, accident or other
mental or physical disability such that he is substantially unable to
performance his duties and responsibilities hereunder for a period of 60
consecutive days, or for shorter or intermittent periods aggregating 90 days
during any 12-month period (a "Disability"), the Company thereafter shall have
the right, in its sole and absolute discretion, to terminate the Employee's
employment under this Agreement by sending written notice of such termination to
the Employee or its legal guardian or other proper legal representative and
thereupon his employment hereunder shall immediately cease and terminate. In the
event of any such termination, the Employee shall be entitled to receive and be
paid solely the Employee's salary then in effect through the effective date of
termination and the Company shall have no further liability or other obligation
of any kind whatsoever to the Employee.
5.5 Termination by the Employee. Provided that the Company
does not have "Cause" to terminate the Employee pursuant to Section 5.1 above,
the Employee may terminate the Employee's employment with the Company hereunder
at any time and for any reason. Employee must provide to the Company written
notice of such termination not less than 30 days prior to the date such
termination is to be effective. Upon any termination pursuant to this Section
5.5, the Employee shall be entitled to be paid solely the Employee's salary then
in effect through the effective date of termination, and the Company shall have
no further liability or other obligation of any kind whatsoever to the Employee.
6. AGREEMENT NOT TO COMPETE
6.1 As used in this Agreement, "Competing Business" shall mean
any business or enterprise which is engaged in (a) the equipment leasing
business; or (b) any business, business segment or product line engaged in by
the Company on the date of termination of the Employee's employment with the
Company (clauses (a) and (b) collectively referred to herein as the "Company's
Business").
6.2 The Employee agrees that, during the Term of this
Agreement and for two years following the termination or expiration of his
employment for any reason whatsoever, he will not, without the prior written
consent of the Company, either directly or indirectly, on his own behalf or in
the service of or on behalf of others as a shareholder, director, officer,
trustee, consultant, independent contractor or employee, engage in, or be
employed by, or provide services to, any Competing Business within the State of
Florida or in any other state in which the Company or any subsidiary or
affiliate thereof is engaged in business or in which of any of their respective
products or services are marketed or sold at the time of such termination.
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<PAGE> 5
7. AGREEMENT NOT TO SOLICIT OR SELL TO CUSTOMERS. The Employee agrees
that, during the Term of this Agreement and for two years following the
termination or expiration of his employment for any reason whatsoever, he will
not without the prior written consent of the Company, either directly or
indirectly, call on, solicit, take away, accept as a client, customer or
prospective client or customer or attempt to call on, solicit, take away or
accept as a client, customer or prospective client or customer, any person that
was a client, customer or prospective client or customer of the Company or any
of its subsidiaries or affiliates.
8. AGREEMENT NOT TO SOLICIT OR HIRE EMPLOYEES. The Employee agrees that
during the Term of this Agreement and for two years following the termination or
expiration of his employment for any reason whatsoever, he will not, either
directly or indirectly, on his own behalf or in the service or on behalf of
others, solicit, divert or hire, attempt to solicit, divert or hire or induce or
attempt to induce to discontinue employment with the Company or any subsidiary
or affiliate thereof, any person employed by the Company or any subsidiary or
affiliate thereof, whether or not such employee is a full time employee or a
temporary employee of the Company or any subsidiary or affiliate thereof and
whether or not such employment is for a determined period or is at will.
9. OWNERSHIP AND NON-DISCLOSURE AND NON-USE OF CONFIDENTIAL
INFORMATION.
9.1 As used in this Agreement, "Confidential Information"
shall mean all customer sales and marketing information, customer account
records, proprietary receipts and/or processing techniques, information
regarding vendors and products, training and operations memoranda and similar
information, personnel records, pricing information, financial information and
trade secrets concerning or relating to the business, accounts, customers,
employees and affairs of the Company, or any subsidiary or affiliate thereof,
obtained by or furnished, disclosed or disseminated to the Employee, or
obtained, assembled or compiled by the Employee or under his supervision during
the course of his employment by the Company, and all physical embodiments of the
foregoing, all of which are hereby agreed to be the property of and confidential
to the Company, but Confidential Information shall not include any of the
foregoing to the extent the same is or becomes publicly known through no fault
or breach of this Agreement by the Employee.
9.2 The Employee acknowledges and agrees that all Confidential
Information, and all physical embodiments thereof, are confidential to and shall
be and remain the sole and exclusive property of the Company. Upon request by
the Company, and in any event upon termination of the Employee's employment with
the Company for any reason whatsoever, as a prior condition to the Employee's
receipt of any final salary or benefit payments hereunder, the Employee shall
deliver to the Company all property belonging to the Company or any of its
subsidiaries or affiliates, including, without limitation, all Confidential
Information (and all embodiments thereof), then in his custody, control or
possession, but any forfeiture of such salary or benefit shall not be considered
a satisfaction or a release of or liquidated damages for any claim(s) for
damages against the Employee which may accrue to the Company, as a result of any
breach of this Section 9 by the Employee.
9.3 The Employee agrees that he will not, either during the
Term of this Agreement or at any time thereafter, without the prior written
consent of the Company, use, disclose or make available any Confidential
Information to any person or entity, nor shall he use,
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<PAGE> 6
disclose, make available or cause to be used, disclosed or made available, or
pen-nit or allow, either on his own behalf or on behalf of others, any use or
disclosure of such Confidential Information other than in the proper performance
of the Employee's duties hereunder.
10. INVENTIONS. The Employee shall disclose promptly to the Company any
and all conceptions and ideas for inventions, improvements, and valuable
discoveries, whether patentable or not, that are conceived or made by the
Employee, solely or jointly with another, during the Term of this Agreement and
that are directly related to the business or activities of the Company and that
the Employee conceives as a result of his employment by the Company, regardless
of whether or not such ideas, inventions, or improvements qualify as "works for
hire." The Employee hereby assigns and agrees to assign all his interests
therein to the Company or its nominee. Whenever requested to do so by the
Company, the Employee shall execute any and all applications, assignments or
other instruments that the Company shall deem necessary to apply for and obtain
Letters Patent of the United States or any foreign country or to otherwise
protect the Company's interest therein.
11. REASONABLENESS OF RESTRICTIONS. In the event that any provision
relating to time period or geographic area of any restriction set forth in
Sections 6, 7, 8, 9 or 10 shall be declared by a court of competent jurisdiction
to exceed the maximum time period or area of restriction that the court deems
reasonable and enforceable, the time period or area of restriction which the
court finds to be reasonable and enforceable shall be deemed to become, and
thereafter shall be, the maximum time period or geographic area of such
restriction.
12. ENFORCEABILITY. Any provision of Sections 6, 7, 8, 9 or 10 which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, but shall be enforced to the
maximum extent permitted by law, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
13. INJUNCTION. It is recognized and hereby acknowledged by the parties
hereto that a breach by the Employee of any of the covenants contained in
Sections 6, 7, 8, 9 or 10 of this Agreement will cause irreparable harm and
damage to the Company, the monetary amount of which may be virtually impossible
to ascertain. As a result, the Employee recognizes and hereby acknowledges that
the Company shall be entitled to an injunction from any court of competent
jurisdiction enjoining and restraining any violation of any or all of the
covenants contained in Sections 6, 7, 8, 9 or 10 of this Agreement by the
Employee or any of his affiliates, associates, partners or agents, either
directly or indirectly, and that such right to injunction shall be cumulative
and in addition to whatever other remedies the Company may possess.
14. ASSIGNMENT. The Employee shall not delegate his employment
obligations pursuant to this Agreement to any other person.
15. EMPLOYER'S AUTHORITY. The relationship between the parties hereto
is that of employer and employee. The Employee agrees to observe and comply with
the rules and regulations of the Company, as adopted by the Company from time to
time with respect to the performance of the duties of the Employee. The Employee
acknowledges that he has no authority to enter into any contracts or other
obligations that are binding upon the Company unless such contracts or
obligations are authorized by the Board of Directors of the Company. The Company
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shall have the power to direct, control and supervise the duties to be performed
by the Employee, the manner of performing said duties, and the time of
performing said duties.
16. GOVERNING LAW. This Agreement, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto, shall be governed
by and construed in accordance with the laws of the State of Florida, excluding
the choice of law rules thereof. The Company and the Employee each hereby
irrevocably submit to the jurisdiction of the state or federal courts located in
Dade County, Florida in connection with any suit, action or other proceeding
arising out of or relating to this Agreement and hereby agree not to assert, by
way of motion, as a defense, or otherwise in any such suit, action or proceeding
that the suit, action or proceeding is brought in an inconvenient forum, that
the venue of the suit, action or proceeding is improper or that this Agreement
or the subject matter hereof may not be enforced by such courts.
17. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements, understandings and arrangements, both oral and
written, between the parties hereto with respect to such subject matter. This
Agreement may not be modified in any way, unless by a written instrument signed
by both the Company and the Employee.
18. NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been given when
delivered by hand or three (3) days after sent by registered or certified United
States mail, return receipt requested, postage prepaid, or the next business day
following dispatch by a reputable overnight courier service, addressed as
follows:
(i) If to the Employee:
Martin Kalb
16406 S.W. 39th Street
Miramar, FL 33027
(ii) If to the Company:
UniCapital Corporation
10800 Biscayne Boulevard, Suite 800
Miami, FL 33161
Attention: Robert J. New
with a copy given in the manner prescribed above to:
Morgan, Lewis & Bockius LLP
One Oxford Centre, Thirty-Second Floor
Pittsburgh, PA 15219
Attention: David A. Gerson
or to such other addresses as either party hereto may from time TO time give
notice of to the other party hereto in the aforesaid manner.
19. BENEFITS; BINDING EFFECT. This Agreement shall be for the benefit
of and binding upon the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and assigns.
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20. SEVERABILITY. Except as otherwise provided in Sections 11 and 12,
the invalidity of any one or more of the words, phrases, sentences, clauses,
sections or subsections contained in this Agreement shall not affect the
enforceability of the remaining portions of this Agreement or any part thereof,
all of which are inserted conditionally on their being valid in law, and, in the
event that any one or more of the words, phrases, sentences, clauses, sections
or subsections contained in this Agreement or any part thereof shall be declared
invalid, this Agreement shall be construed as if such invalid word or words,
phrase or phrases, sentence or sentences, clause or clauses, section or sections
or subsection or subsections had not been inserted. If such invalidity is caused
by length of time or size of area, or both, the otherwise invalid provision will
be considered to be reduced to a period or area which would cure such
invalidity.
21. DAMAGES. Nothing contained herein shall be construed to prevent the
Company or the Employee from seeking and recovering from the other damages
sustained by either or both of them as a result of its or his breach of any term
or provision of this Agreement. In the event that either party hereto brings
suit for the collection of any damages resulting from, or the injunction of any
action constituting, a breach of any of the terms or provisions of this
Agreement, then the non- prevailing party shall pay all reasonable court costs
and attorneys' fees of the other party.
22. SECTION HEADINGS. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
23. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the parties hereto and their respective heirs, personal
representative, legal representative, successors and assigns, any rights or
remedies under or by reason of this Agreement.
24. AMENDMENT; MODIFICATION; WAIVER. No amendment, modification or
waiver of the terms of this Agreement shall be valid unless made in writing and
duly executed by the Company and the Employee. No delay or failure at any time
on the part of the Company in exercising any right, power or privilege under
this Agreement, or in enforcing any provision of this Agreement, shall impair
any such right, power or privilege, or be construed as a waiver of any default
or as any acquiescence therein, or shall affect the right of the Company
thereafter to enforce each and every provision of this Agreement in accordance
with its terms. The waiver by either party hereto of a breach or violation of
any term or provision of this Agreement shall neither operate nor be construed
as a waiver of any subsequent breach or violation.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
UNICAPITAL CORPORATION
By: /s/ Robert J. New
-------------------------------------------
Name: Robert J. New
Title: Chairman and Chief Executive Officer
EMPLOYEE:
/s/ Martin Kalb
----------------------------------------------
Martin Kalb
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<PAGE> 10
EXHIBIT A
In determining the incentive bonus, if any, payable to the Employee
under this Agreement, the Company's Board of Directors or its Compensation
Committee will take into account the achievement of criteria specified by the
Board or the Compensation Committee relating to growth in the Company's earnings
per share from period to period. Any incentive bonus payable to the Employee
under this Agreement will not exceed 100% of the Employee's base salary, and
will be paid out of a bonus pool determined by the Board of Directors or its
Compensation Committee. Any incentive bonus will be payable in the form of cash,
stock options, or other non-cash awards, in such proportions, and in such forms,
as are determined by the Board of Directors or its Compensation Committee.
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Exhibit 10.06
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of the 1st day of February, 1999,
is by and between (i) UniCapital Corporation, a Delaware corporation (the
"Company"), and (ii) Edward A. Jaeckel ("Employee").
RECITALS
The Company desires to employ Employee and to have the benefit of his
skills and services, and Employee desires to accept employment with the Company,
on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises, terms,
covenants and conditions set forth herein, and the performance of each, the
parties hereto, intending legally to be bound, hereby agree as follows:
AGREEMENTS
1. EMPLOYMENT; TERM. The Company hereby employs Employee to perform the
duties described herein, and Employee hereby accepts employment with the
Company, for a term beginning on the date hereof and expiring on April 1, 2000,
unless sooner terminated (the "Term").
2. POSITION AND DUTIES. The Company hereby employs Employee as
Executive Vice President and Chief Credit Policy Officer. Employee will report
directly to, and will be subject to the authority of, the Chief Operating
Officer of the Company. Employee hereby accepts this employment upon the terms
and conditions herein contained and agrees to devote all of his professional
time, attention, and efforts to promote and further the business of the Company.
Employee shall faithfully adhere to, execute, and fulfill all policies
established by the Company.
3. COMPENSATION. For all services rendered by Employee, the Company
shall compensate Employee as follows:
(a) Base Salary. Effective on the date hereof, the base salary
payable to Employee shall be $250,000 per year, payable on a regular basis in
accordance with the Company's standard payroll procedures, but not less than
monthly.
(b) Incentive Bonus. During the Term, Employee shall be
eligible to receive an incentive bonus up to the amount, based upon the
criteria, and payable at such times, as may be determined by the Chief Executive
Officer, upon the advice and with the consent of the Company's Board of
Directors (the "Board") or the Compensation Committee thereof. To the extent
that such bonus is to be determined in light of Employee's performance during a
specified fiscal period and this Agreement commences on a date after the start
of such fiscal period, any bonus payable in respect of such fiscal period's
results may be prorated. In addition, if the period of Employee's employment
hereunder expires before the end of a fiscal period, and if Employee is eligible
to receive a bonus at such time (such eligibility being subject to the
restrictions set
<PAGE> 2
forth in Section 6 below), any bonus payable in respect of such fiscal period's
results may be prorated.
(c) Perquisites, Benefits, and Other Compensation. During the
Term, Employee shall be entitled to receive all perquisites and benefits as are
customarily provided by the Company to similarly situated employees, subject to
such changes, additions, or deletions as the Company may make generally from
time to time, as well as such other perquisites or benefits as may be specified
from time to time by the Board.
4. EXPENSE REIMBURSEMENT. The Company shall reimburse Employee for (or,
at the Company's option, pay) all business travel and other out-of-pocket
expenses reasonably incurred by Employee in the performance of his services
hereunder during the Term. All reimbursable expenses shall be appropriately
documented in reasonable detail by Employee upon submission of any request for
reimbursement, and in a format and manner consistent with the Company's expense
reporting policy, as well as applicable federal and state tax record keeping
requirements.
5. PLACE OF PERFORMANCE. Employee understands that he may be requested
by the Company to relocate from his present residence to another geographic
location in order to more efficiently carry out his duties and responsibilities
under this Agreement or as part of a promotion or a change in duties and
responsibilities. In such event, if Employee agrees to relocate, the Company
will provide Employee with a relocation allowance, in an amount determined by
the Company, to assist Employee in covering the costs of moving himself, his
immediate family, and their personal property and effects. The total amount and
type of costs to be covered shall be determined by the Company, in light of
prevailing Company policy at the time.
6. TERMINATION; RIGHTS ON TERMINATION. Employee's employment may be
terminated in any one of the following ways, prior to the expiration of the
Term:
(a) Death. The death of Employee shall immediately terminate
the Term, and no Severance Compensation (as defined below) or other compensation
shall be owed to Employee's estate.
(b) Disability. If, as a result of incapacity due to physical
or mental illness or injury, Employee shall have been unable to perform the
essential functions of his position, with or without reasonable accommodation,
on a full-time basis for a period of four consecutive months, or for a total of
four months in any six-month period, then 30 days after written notice to
Employee (which notice may be given before or after the end of the
aforementioned periods, but which shall not be effective earlier than the last
day of the applicable period), the Company may terminate Employee's employment
hereunder if Employee is unable to resume his full-time duties at the conclusion
of such notice period. If Employee's employment is terminated as a result of
Employee's disability, the Company shall continue to pay Employee his base
salary at the then-current rate for the lesser of (i) three months from the
effective date of termination, or (ii) whatever time period is remaining under
the then-current period of the Term (without regard to renewals thereof). Such
payments shall be made in accordance with the Company's regular payroll cycle.
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<PAGE> 3
(c) Termination by the Company for "Cause." The Company may
terminate the Term 10 days after written notice to Employee for "cause," which
shall be: (i) Employee's material breach of this Agreement, which breach is not
cured within 10 days of receipt by Employee of written notice from the Company
specifying the breach; (ii) Employee's gross negligence in the performance of
his duties hereunder, intentional nonperformance or misperformance of such
duties, or refusal to abide by or comply with the directives of the Board, his
superior officers, or the Company's policies and procedures, which actions
continue for a period of at least 10 days after receipt by Employee of written
notice of the need to cure or cease; (iii) Employee's willful dishonesty, fraud,
or misconduct with respect to the business or affairs of the Company, and that
in the judgment of the Company materially and adversely affects the operations
or reputation of the Company; (iv) Employee's conviction of a felony or other
crime involving moral turpitude; or (v) Employee's abuse of alcohol or drugs
(legal or illegal) that, in the Company's judgment, materially impairs
Employee's ability to perform his duties hereunder. In the event of a
termination for "cause," as enumerated above, Employee shall have no right to
any Severance Compensation or other compensation.
(d) Without Cause. At any time after the commencement of
employment, the Company may, without "cause", terminate the Term and Employee's
employment, effective 30 days after written notice is provided to Employee.
Should Employee be terminated by the Company without "cause", Employee shall
receive from the Company compensation ("Severance Compensation") equal to the
base salary at the rate then in effect for the greater of (i) twelve months from
the effective date of termination, or (ii) whatever time period is remaining
under the then-current period of the Term (without regard to renewals thereof).
Such payments shall be made in accordance with the Company's regular payroll
cycle. If Employee resigns or otherwise terminates his employment for any reason
or for no reason, other than for disability pursuant to Section 6(b), Employee
shall receive no Severance Compensation or other compensation.
(e) Payment Through Termination. Upon termination of
Employee's employment, Employee shall be entitled to receive all compensation
earned and all benefits and reimbursements (including payments for accrued
vacation and sick leave, in each case in accordance with applicable policies of
the Company) due through the effective date of termination. Additional
compensation subsequent to termination, if any, will be due and payable to
Employee only to the extent and in the manner expressly provided above in this
Section 6. With respect to incentive bonus compensation, Employee shall be
entitled to receive any bonus declared but not paid prior to termination. In
addition, in the event of a termination by the Company under Sections 6(b) or
6(d), Employee shall be entitled to receive incentive bonus compensation through
the end of the Company's fiscal year in which termination occurs, and paid in
such amounts, at such times, and in such forms as are determined pursuant to
Section 3(b) above. Except as specified in the preceding two sentences, Employee
shall not be entitled to receive any incentive bonus compensation after the
effective date of termination of his employment. All other rights and
obligations of the Company and Employee under this Agreement shall cease as of
the effective date of termination, except that Employee's obligations under
Sections 7, 8, 9 and 10 below shall survive such termination in accordance with
their terms.
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7. RESTRICTION ON COMPETITION.
(a) During the Term, and thereafter, if Employee continues to
be employed by the Company and/or any other entity owned by or affiliated with
the Company on an "at will" basis, for the duration of such period, and
thereafter for a period of two years, Employee shall not, directly or
indirectly, for himself or on behalf of or in conjunction with any other person,
company, partnership, corporation, business, group, or other entity (each, a
"Person"):
(i) engage, as an officer, director, shareholder, owner,
partner, joint venturer, or in a managerial capacity, whether as an employee,
independent contractor, consultant, advisor, lender or sales representative, in
any business engaged in providing or servicing equipment leasing or speciality
finance products or services in direct competition with the Company, or any
business engaging in the consolidation of the equipment leasing or speciality
finance industry, within the United States of America (the "Territory");
(ii) call upon any Person who is, at that time, within
the Territory, an employee of the Company for the purpose or with the intent of
enticing such employee away from or out of the employ of the Company;
(iii) call upon any Person who or that is, at that time,
or has been, within one year prior to that time, a customer of the Company
within the Territory for the purpose of soliciting or selling products or
services in direct competition with the Company within the Territory; or
(iv) on Employee's own behalf or on behalf of any
competitor, call upon any Person that, during Employee's employment by the
Company was either called upon by the Company as a prospective acquisition
candidate or was the subject of an acquisition analysis conducted by the
Company.
(b) The foregoing covenants shall not be deemed to prohibit
Employee from acquiring as an investment not more than one percent (1%) of the
capital stock of a competing business, whose stock is traded on a national
securities exchange or through the automated quotation system of a registered
securities association.
(c) It is further agreed that, in the event that Employee
shall cease to be employed by the Company and enters into a business or pursues
other activities that, at such time, are not in competition with the Company,
Employee shall not be chargeable with a violation of this Section 7 if the
Company subsequently enters the same (or a similar) competitive business or
activity.
(d) For purposes of this Section 7 and Sections 8, 9 and 10,
references to the "Company" shall mean UniCapital Corporation, together with its
subsidiaries and affiliates.
(e) The covenants in this Section 7 are severable and
separate, and the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. If any provision of this Section 7 relating to
the time period or geographic area of the restrictive covenants shall be
declared by a court of competent jurisdiction to exceed the maximum time period
or geographic area, as applicable, that such court deems reasonable and
enforceable, said
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time period or geographic area shall be deemed to be, and thereafter shall
become, the maximum time period or largest geographic area that such court deems
reasonable and enforceable and this Agreement shall automatically be considered
to have been amended and revised to reflect such determination.
(f) All of the covenants in this Section 7 shall be construed
as an agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Employee against the Company,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of such covenants; provided, that upon
the failure of the Company to make any payments required under this Agreement,
Employee may, upon 30 days' prior written notice to the Company, waive his right
to receive any additional compensation pursuant to this Agreement and engage in
any activity prohibited by the covenants of this Section 7. It is specifically
agreed that the period of two years stated at the beginning of this Section 7,
during which the agreements and covenants of Employee made in this Section 7
shall be effective, shall be computed by excluding from such computation any
time during which Employee is in violation of any provision of this Section 7.
(g) If the time period specified by this Section 7 shall be
reduced by law or court decision, then, notwithstanding the provisions of
Section 6 above, Employee shall be entitled to receive from the Company his base
salary at the rate then in effect solely for the longer of (i) the time period
during which the provisions of this Section 7 shall be enforceable under the
provisions of such applicable law, or (ii) the time period during which Employee
is not engaging in any competitive activity, but in no event longer than the
applicable period provided in Section 6 above.
(h) Employee has carefully read and considered the provisions
of this Section 7 and, having done so, agrees that the restrictive covenants in
this Section 7 impose a fair and reasonable restraint on Employee and are
reasonably required to protect the interests of the Company, and their
respective officers, directors, employees, and stockholders. It is further
agreed that the Company and Employee intend that such covenants be construed and
enforced in accordance with the changing activities, business, and locations of
the Company throughout the term of these covenants.
8. CONFIDENTIAL INFORMATION. Employee hereby agrees to hold in strict
confidence and not to disclose to any third party any of the valuable,
confidential, and proprietary business, financial, technical, economic, sales,
and/or other types of proprietary business information relating to the Company
(including all trade secrets), in whatever form, whether oral, written, or
electronic (collectively, the "Confidential Information"), to which Employee
has, or is given (or has had or been given), access as a result of his
employment by the Company. It is agreed that the Confidential Information is
confidential and proprietary to the Company because such Confidential
Information encompasses technical know-how, trade secrets, or technical,
financial, organizational, sales, or other valuable aspects of the Company's
business and trade, including, without limitation, technologies, products,
processes, plans, clients, personnel, operations, and business activities. This
restriction shall not apply to any Confidential Information that (a) becomes
known generally to the public through no fault of Employee; (b) is required by
applicable law, legal process, or any order or mandate of a court or other
governmental authority to be disclosed; or (c) is reasonably believed by
Employee, based upon the advice of legal
5
<PAGE> 6
counsel, to be required to be disclosed in defense of a lawsuit or other legal
or administrative action brought against Employee; provided, that in the case of
clauses (b) or (c), Employee shall give the Company reasonable advance written
notice of the Confidential Information intended to be disclosed and the reasons
and circumstances surrounding such disclosure, in order to permit the Company to
seek a protective order or other appropriate request for confidential treatment
of the applicable Confidential Information.
9. INVENTIONS. Employee shall disclose promptly to the Company any and
all significant conceptions and ideas for inventions, improvements, and valuable
discoveries, whether patentable or not, that are conceived or made by Employee,
solely or jointly with another, during the period of employment or within one
year thereafter, and that are directly related to the business or activities of
the Company and that Employee conceives as a result of his employment by the
Company, regardless of whether or not such ideas, inventions, or improvements
qualify as "works for hire". Employee hereby assigns and agrees to assign all
his interests therein to the Company or its nominee. Whenever requested to do so
by the Company, Employee shall execute any and all applications, assignments, or
other instruments that the Company shall deem necessary to apply for and obtain
Letters Patent of the United States or any foreign country or to otherwise
protect the Company's interest therein.
10. RETURN OF COMPANY PROPERTY; ACCESS TO RECORDS. Promptly upon
termination of Employee's employment by the Company for any reason or no reason,
Employee or Employee's personal representative shall return to the Company (a)
all Confidential Information; (b) all other records, designs, patents, business
plans, financial statements, manuals, memoranda, lists, correspondence, reports,
records, charts, advertising materials, and other data or property delivered to
or compiled by Employee by or on behalf of the Company or its representatives,
vendors, or customers that pertain to the business of the Company, whether in
paper, electronic, or other form; and (c) all keys, credit cards, vehicles, and
other property of the Company. Employee shall not retain or cause to be retained
any copies of the foregoing. Employee hereby agrees that all of the foregoing
shall be and remain the property of the Company, as the case may be, and be
subject at all times to their discretion and control.
11. NO PRIOR AGREEMENTS. Employee hereby represents and warrants to the
Company that the execution of this Agreement by Employee, his employment by the
Company, and the performance of his duties hereunder will not violate or be a
breach of any agreement with a former employer, client, or any other Person.
Further, Employee agrees to indemnify and hold harmless the Company and its
officers, directors, and representatives for any claim, including, but not
limited to, reasonable attorneys' fees and expenses of investigation, of any
such third party that such third party may now have or may hereafter come to
have against the Company or such other persons, based upon or arising out of any
non-competition agreement, invention, secrecy, or other agreement between
Employee and such third party that was in existence as of the date of this
Agreement. To the extent that Employee had any oral or written employment
agreement or understanding with the Company, this Agreement shall automatically
supersede such agreement or understanding, and upon execution of this Agreement
by Employee and the Company, such prior agreement or understanding automatically
shall be deemed to have been terminated and shall be null and void.
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<PAGE> 7
12. ASSIGNMENT; BINDING EFFECT. Employee understands that he has been
selected for employment by the Company on the basis of his personal
qualifications, experience, and skills. Employee agrees, therefore, that he
cannot assign all or any portion of his performance under this Agreement. This
Agreement may not be assigned or transferred by the Company without the prior
written consent of Employee. Subject to the preceding two sentences, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by
the parties hereto and their respective heirs, legal representatives, and
assigns. Notwithstanding the foregoing, if Employee accepts employment with a
subsidiary or affiliate of the Company, unless Employee and his new employer
agree otherwise in writing, this Agreement shall automatically be deemed to have
been assigned to such new employer (which shall thereafter be an additional or
substitute beneficiary of the covenants contained herein, as appropriate), with
the consent of Employee, such assignment shall be considered a condition of
employment by such new employer, and references to the "Company" in this
Agreement shall be deemed to refer to such new employer. If the Company is
merged with or into one of its subsidiaries or affiliates, such action shall not
be considered to cause an assignment of this Agreement, and the surviving or
successor entity shall become the beneficiary of this Agreement and all
references to the "Company" shall be deemed to refer to such surviving or
successor entity.
13. COMPLETE AGREEMENT WAIVER; AMENDMENT. This Agreement is not a
promise of future employment. Employee has no oral representations,
understandings, or agreements with the Company or any of its officers,
directors, or representatives covering the same subject matter as this
Agreement. This Agreement is the final, complete, and exclusive statement and
expression of the agreement between the Company and Employee with respect to the
subject matter hereof, and cannot be varied, contradicted, or supplemented by
evidence of any prior or contemporaneous oral or written agreements. This
written Agreement may not be later modified except by a further writing signed
by a duly authorized officer of the Company and Employee, and no term of this
Agreement may be waived except by a writing signed by the party waiving the
benefit of such term.
14. NOTICE. Whenever any notice is required hereunder, it shall be
given in writing addressed as follows:
To the Company: UniCapital Corporation
10800 Biscayne Boulevard
Miami, Florida 33161
Attention: Martin Kalb
To Employee: Edward A. Jaeckel
9630 N. W. 2nd Street
Unit 305
Pembroke Pines, Florida 33024
Notice shall be deemed given and effective three days after the deposit in the
U.S. mail of a writing addressed as above and sent first class mail, certified,
return receipt requested, or, if sent
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by express delivery, hand delivery, or facsimile, when actually received. Either
party may change the address for notice by notifying the other party of such
change in accordance with this Section 14.
15. SEVERABILITY; HEADINGS. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative. This
severability provision shall be in addition to, and not in place of, the
provisions of Section 7(e) above. The paragraph headings herein are for
reference purposes only and are not intended in any way to describe, interpret,
define or limit the extent or intent of the Agreement or of any part hereof.
16. EQUITABLE REMEDY. Because of the difficulty of measuring economic
losses to the Company as a result of a breach of the restrictive covenants set
forth in Sections 7, 8, 9 and 10, and because of the immediate and irreparable
damage that would be caused to the Company for which monetary damages would not
be a sufficient remedy, it is hereby agreed that in addition to all other
remedies that may be available to the at law or in equity, the Company shall be
entitled to specific performance and any injunctive or other equitable relief as
a remedy for any breach or threatened breach of the aforementioned restrictive
covenants.
17. ARBITRATION. Any unresolved dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration
conducted in accordance with the rules of the American Arbitration Association
then in effect. The arbitrators shall not have the authority to add to, detract
from, or modify any provision hereof nor to award punitive damages to any
injured party. A decision by a majority of the arbitration panel shall be final
and binding. Judgment may be entered on the arbitrators' award in any court
having jurisdiction. The direct expense of any arbitration proceeding shall be
borne by the party or parties designated by the arbitration panel. Each party
shall bear its own counsel fees. The arbitration proceeding shall be held in
Miami, Florida. Notwithstanding the foregoing, the Company shall be entitled to
seek injunctive or other equitable relief, as contemplated by Section 16 above,
from any court of competent jurisdiction, without the need to resort to
arbitration.
18. GOVERNING LAW. This Agreement shall in all respects be construed
according to the laws of the State of Florida, without giving effect to any
conflicts of laws principles thereof that would compel the application of the
substantive laws of any other jurisdiction.
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IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
duly executed as of the date first written above.
UNICAPITAL CORPORATION
By: /s/ Martin Kalb
--------------------------------------
Name: Martin Kalb
--------------------------------
Title: Executive Vice President
-------------------------------
EMPLOYEE:
/s/ Edward A. Jaeckel
- ----------------------------------
EDWARD A. JAECKEL
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Exhibit 10.10
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
made and entered into as of the 1st day of March, 2000 by and between UNICAPITAL
CORPORATION, a Delaware corporation (the "Company"), and ROBERT J. NEW (the
"Employee").
RECITALS
The Company and the Employee are parties to an Employment Agreement
dated as of May 20, 1998 (the "Original Agreement"). The Company desires to
retain the services of the Employee in the employment of the Company on the
terms and subject to the conditions set forth in this Agreement, and the
Employee desires to continue to make his services available to the Company on
the terms and subject to the conditions set forth in this Agreement. The Company
and the Employee are therefore amending and restating the Original Agreement in
its entirety by entering into this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises, agreements and mutual
covenants set forth herein, the parties hereto, intending to be bound legally,
hereby agree as follows:
1. DEFINITIONS. The following terms when used herein, unless the
context otherwise requires, shall be defined as follows:
1.1 "Cause" shall have the meaning set forth in Section 5.1
hereof.
1.2 "Company" shall mean UniCapital Corporation, a Delaware
corporation.
1.3 "Competing Business" shall have the meaning set forth in
Section 6.1 hereof.
1.4 "Confidential Information" shall have the meaning set
forth in Section 9.1 hereof.
1.5 "Term" shall have the meaning set forth in Section 3
hereof.
2. EMPLOYMENT
2.1 General. The Company hereby agrees to employ the Employee
as Chairman and Chief Executive Officer during the Term of this Agreement on the
terms and subject to the conditions contained in this Agreement, and the
Employee hereby agrees to accept such employment on the terms and subject to the
conditions contained in this Agreement.
<PAGE> 2
2.2 Duties of Employee. During the Term of this Agreement, the
Employee shall diligently perform all duties and responsibilities as may be
assigned to him by the Company's Board of Directors and shall exercise such
power and authority as may from time to time be delegated to him thereby. The
Employee shall devote his full business time and attention to the business and
affairs of the Company as necessary to perform his duties and responsibilities
hereunder, render such services to the best of his ability, and use his best
efforts to promote the interests of the Company.
3. TERM. Subject to the provisions of Section 5 of this Agreement, the
Company shall employ the Employee for a term commencing on the date first
written above (the "Effective Date"), and expiring on February 28, 2002.
4. COMPENSATION.
4.1 Salary. The Employee shall receive an annual salary of Six
Hundred and Fifty Thousand Dollars ($650,000) during the Term of this Agreement,
and such salary shall be payable in installments consistent with the Company's
normal payroll schedule but not less than monthly.
4.2 Incentive Bonus. During the Term, the Employee shall be
eligible to receive an incentive bonus up to the amount, based upon the
criteria, and payable at such times as are, specified in Exhibit A attached
hereto. The amount, manner of payment, and form of consideration, if any, shall
be determined by the Board of Directors or the Compensation Committee thereof,
in its sole and absolute discretion, and such determination shall be binding and
final. To the extent that such bonus is to be determined in light of financial
performance during a specified fiscal period and this Agreement commences on a
date after the start of such fiscal period, any bonus payable in respect of such
fiscal period's results may be prorated. In addition, if the period of the
Employee's employment hereunder expires before the end of a fiscal period, and
if the Employee is eligible to receive a bonus at such time (such eligibility
being subject to the restrictions set forth in Section 5 below), any bonus
payable in respect of such fiscal period's results may be prorated.
4.3 Benefits. During the Term of this Agreement, the Employee
shall be entitled to participate in all plans adopted for the general benefit of
the Company's employees, such as stock option plans, 401(k) plans, pension
plans, profit sharing plans, medical plans, group or other insurance plans and
benefits, to the extent that the Employee is and remains eligible to participate
therein and subject to the eligibility provisions of such plans in effect from
time to time. For each calendar year during the Term of this Agreement, the
Employee shall be entitled to not less than four weeks of paid vacation,
prorated for any period of employment of less than an entire year.
4.4 Withholding. Notwithstanding any provision in this
Agreement to the contrary, all payments required to be made by the Company
hereunder to the Employee in connection with the Employee's employment hereunder
shall be subject to withholding of such amounts relating to taxes as the Company
may reasonably determine it should withhold pursuant to any applicable law or
regulation. In lieu of withholding such amounts, in whole or in part, the
Company may, in its sole discretion, accept other provisions for the payment of
taxes, provided
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that the Company is satisfied that all requirements of law affecting its
responsibilities to withhold have been satisfied.
4.5 Reimbursement of Expenses. The Company agrees to reimburse
the Employee for all reasonable business expenses (including, without
limitation, reasonable travel and entertainment expenses) incurred by the
Employee in the discharge of his duties hereunder, subject to the Company's
reimbursement policies in effect from time to time. The Employee agrees to
maintain reasonable records of his business expenses in such form and detail as
the Company may request and to make such records available to the Company as and
when requested.
5. TERMINATION
5.1 Termination for Cause. Notwithstanding any provision in
this Agreement to the contrary, this Agreement may be terminated by the Company
for "Cause" at any time during the Term hereof, and such termination shall be
effective immediately upon ten (10) days' written notice to the Employee. For
purposes of this Agreement, "Cause" for the termination of the Employee's
employment hereunder shall be deemed to exist if, in the reasonable judgment of
the Company's Board of Directors: (a) the Employee commits fraud, theft or
embezzlement against the Company; (b) the Employee commits a felony or a crime
involving moral turpitude; (c) the Employee compromises trade secrets or other
proprietary information of the Company; (d) the Employee breaches any
non-competition or non-solicitation agreement with the Company or any subsidiary
or affiliate thereof; (e) the Employee breaches any of the terms of this
Agreement (other than those referenced in clauses (c) and (d) of this Section
5.1) and fails to cure such breach within 10 days after the receipt of written
notice of such breach from the Company; or (f) the Employee engages in gross
negligence or willful misconduct that causes harm to the business and operations
of the Company or a subsidiary or affiliate thereof. Upon any termination
pursuant to this Section 5.1, the Employee shall be entitled to be paid solely
the Employee's salary then in effect through the effective date of termination,
and the Company shall have no further liability or other obligation of any kind
whatsoever to the Employee.
5.2 Termination by the Company Without Cause. The Company may,
in its sole and absolute discretion, terminate the employment of the Employee
hereunder, at any time prior to the expiration of the term of this Agreement,
without "Cause" (as such term is defined in Section 5.1 above), or otherwise
without any cause, reason or justification, provided that the Company provides
to the Employee at least sixty (60) days' prior written notice (the "Termination
Notice") of such termination. In the event of any such termination by the
Company, (a) the Employee's employment with the Company shall cease and
terminate on the date specified in the Termination Notice (or, if not date is so
specified, on the date which is 60 days following the date of such notice), and
(b) the Employee shall be entitled to receive and be paid solely the Employee's
salary then in effect for the shorter of (x) the fifteen-month period following
the Employee's termination or (y) the remaining Term of this Agreement, payable
over such period at the Company's regular and customary intervals for the
payment of salaries as then in effect, and the Company shall have no further
liability or other obligation of any kind whatsoever to the Employee.
5.3 Death of the Employee. In the event that the Employee
shall die during the Term of this Agreement, the Employee's employment with the
Company shall immediately cease and terminate and the Employee's estate, heirs
(at law), devisees, legatees or other proper and
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<PAGE> 4
legally entitled descendants, or the personal representative, executor,
administrator or other proper legal representative on behalf of such
descendants, shall be entitled to receive and be paid solely the Employee's
salary through the date of death, and the Company shall have no further
liability or other obligation of any kind whatsoever to the Employee.
5.4 Disability of the Employee. In the event that the Employee
becomes incapacitated during the Term by reason of sickness, accident or other
mental or physical disability such that he is substantially unable to
performance his duties and responsibilities hereunder for a period of 60
consecutive days, or for shorter or intermittent periods aggregating 90 days
during any 12-month period (a "Disability"), the Company thereafter shall have
the right, in its sole and absolute discretion, to terminate the Employee's
employment under this Agreement by sending written notice of such termination to
the Employee or its legal guardian or other proper legal representative and
thereupon his employment hereunder shall immediately cease and terminate. In the
event of any such termination, the Employee shall be entitled to receive and be
paid solely the Employee's salary then in effect through the effective date of
termination and the Company shall have no further liability or other obligation
of any kind whatsoever to the Employee.
5.5 Termination by the Employee. Provided that the Company
does not have "Cause" to terminate the Employee pursuant to Section 5.1 above,
the Employee may terminate the Employee's employment with the Company hereunder
at any time and for any reason. Employee must provide to the Company written
notice of such termination not less than 30 days prior to the date such
termination is to be effective. Upon any termination pursuant to this Section
5.5, the Employee shall be entitled to be paid solely the Employee's salary then
in effect through the effective date of termination, and the Company shall have
no further liability or other obligation of any kind whatsoever to the Employee.
6. AGREEMENT NOT TO COMPETE
6.1 As used in this Agreement, "Competing Business" shall mean
any business or enterprise which is engaged in (a) the equipment leasing
business; or (b) any business, business segment or product line engaged in by
the Company on the date of termination of the Employee's employment with the
Company (clauses (a) and (b) collectively referred to herein as the "Company's
Business").
6.2 The Employee agrees that, during the Term of this
Agreement and for two years following the termination or expiration of his
employment for any reason whatsoever, he will not, without the prior written
consent of the Company, either directly or indirectly, on his own behalf or in
the service of or on behalf of others as a shareholder, director, officer,
trustee, consultant, independent contractor or employee, engage in, or be
employed by, or provide services to, any Competing Business within the State of
Florida or in any other state in which the Company or any subsidiary or
affiliate thereof is engaged in business or in which of any of their respective
products or services are marketed or sold at the time of such termination.
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<PAGE> 5
7. AGREEMENT NOT TO SOLICIT OR SELL TO CUSTOMERS. The Employee agrees
that, during the Term of this Agreement and for two years following the
termination or expiration of his employment for any reason whatsoever, he will
not without the prior written consent of the Company, either directly or
indirectly, call on, solicit, take away, accept as a client, customer or
prospective client or customer or attempt to call on, solicit, take away or
accept as a client, customer or prospective client or customer, any person that
was a client, customer or prospective client or customer of the Company or any
of its subsidiaries or affiliates.
8. AGREEMENT NOT TO SOLICIT OR HIRE EMPLOYEES. The Employee agrees that
during the Term of this Agreement and for two years following the termination or
expiration of his employment for any reason whatsoever, he will not, either
directly or indirectly, on his own behalf or in the service or on behalf of
others, solicit, divert or hire, attempt to solicit, divert or hire or induce or
attempt to induce to discontinue employment with the Company or any subsidiary
or affiliate thereof, any person employed by the Company or any subsidiary or
affiliate thereof, whether or not such employee is a full time employee or a
temporary employee of the Company or any subsidiary or affiliate thereof and
whether or not such employment is for a determined period or is at will.
9. OWNERSHIP AND NON-DISCLOSURE AND NON-USE OF CONFIDENTIAL
INFORMATION.
9.1 As used in this Agreement, "Confidential Information"
shall mean all customer sales and marketing information, customer account
records, proprietary receipts and/or processing techniques, information
regarding vendors and products, training and operations memoranda and similar
information, personnel records, pricing information, financial information and
trade secrets concerning or relating to the business, accounts, customers,
employees and affairs of the Company, or any subsidiary or affiliate thereof,
obtained by or furnished, disclosed or disseminated to the Employee, or
obtained, assembled or compiled by the Employee or under his supervision during
the course of his employment by the Company, and all physical embodiments of the
foregoing, all of which are hereby agreed to be the property of and confidential
to the Company, but Confidential Information shall not include any of the
foregoing to the extent the same is or becomes publicly known through no fault
or breach of this Agreement by the Employee.
9.2 The Employee acknowledges and agrees that all Confidential
Information, and all physical embodiments thereof, are confidential to and shall
be and remain the sole and exclusive property of the Company. Upon request by
the Company, and in any event upon termination of the Employee's employment with
the Company for any reason whatsoever, as a prior condition to the Employee's
receipt of any final salary or benefit payments hereunder, the Employee shall
deliver to the Company all property belonging to the Company or any of its
subsidiaries or affiliates, including, without limitation, all Confidential
Information (and all embodiments thereof), then in his custody, control or
possession, but any forfeiture of such salary or benefit shall not be considered
a satisfaction or a release of or liquidated damages for any claim(s) for
damages against the Employee which may accrue to the Company, as a result of any
breach of this Section 9 by the Employee.
9.3 The Employee agrees that he will not, either during the
Term of this Agreement or at any time thereafter, without the prior written
consent of the Company, use, disclose or make available any Confidential
Information to any person or entity, nor shall he use,
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<PAGE> 6
disclose, make available or cause to be used, disclosed or made available, or
pen-nit or allow, either on his own behalf or on behalf of others, any use or
disclosure of such Confidential Information other than in the proper performance
of the Employee's duties hereunder.
10. INVENTIONS. The Employee shall disclose promptly to the Company any
and all conceptions and ideas for inventions, improvements, and valuable
discoveries, whether patentable or not, that are conceived or made by the
Employee, solely or jointly with another, during the Term of this Agreement and
that are directly related to the business or activities of the Company and that
the Employee conceives as a result of his employment by the Company, regardless
of whether or not such ideas, inventions, or improvements qualify as "works for
hire." The Employee hereby assigns and agrees to assign all his interests
therein to the Company or its nominee. Whenever requested to do so by the
Company, the Employee shall execute any and all applications, assignments or
other instruments that the Company shall deem necessary to apply for and obtain
Letters Patent of the United States or any foreign country or to otherwise
protect the Company's interest therein.
11. REASONABLENESS OF RESTRICTIONS. In the event that any provision
relating to time period or geographic area of any restriction set forth in
Sections 6, 7, 8, 9 or 10 shall be declared by a court of competent jurisdiction
to exceed the maximum time period or area of restriction that the court deems
reasonable and enforceable, the time period or area of restriction which the
court finds to be reasonable and enforceable shall be deemed to become, and
thereafter shall be, the maximum time period or geographic area of such
restriction.
12. ENFORCEABILITY. Any provision of Sections 6, 7, 8, 9 or 10 which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, but shall be enforced to the
maximum extent permitted by law, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
13. INJUNCTION. It is recognized and hereby acknowledged by the parties
hereto that a breach by the Employee of any of the covenants contained in
Sections 6, 7, 8, 9 or 10 of this Agreement will cause irreparable harm and
damage to the Company, the monetary amount of which may be virtually impossible
to ascertain. As a result, the Employee recognizes and hereby acknowledges that
the Company shall be entitled to an injunction from any court of competent
jurisdiction enjoining and restraining any violation of any or all of the
covenants contained in Sections 6, 7, 8, 9 or 10 of this Agreement by the
Employee or any of his affiliates, associates, partners or agents, either
directly or indirectly, and that such right to injunction shall be cumulative
and in addition to whatever other remedies the Company may possess.
14. ASSIGNMENT. The Employee shall not delegate his employment
obligations pursuant to this Agreement to any other person.
15. EMPLOYER'S AUTHORITY. The relationship between the parties hereto
is that of employer and employee. The Employee agrees to observe and comply with
the rules and regulations of the Company, as adopted by the Company from time to
time with respect to the performance of the duties of the Employee. The Employee
acknowledges that he has no authority to enter into any contracts or other
obligations that are binding upon the Company unless such contracts or
obligations are authorized by the Board of Directors of the Company. The Company
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<PAGE> 7
shall have the power to direct, control and supervise the duties to be performed
by the Employee, the manner of performing said duties, and the time of
performing said duties.
16. GOVERNING LAW. This Agreement, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto, shall be governed
by and construed in accordance with the laws of the State of Florida, excluding
the choice of law rules thereof. The Company and the Employee each hereby
irrevocably submit to the jurisdiction of the state or federal courts located in
Dade County, Florida in connection with any suit, action or other proceeding
arising out of or relating to this Agreement and hereby agree not to assert, by
way of motion, as a defense, or otherwise in any such suit, action or proceeding
that the suit, action or proceeding is brought in an inconvenient forum, that
the venue of the suit, action or proceeding is improper or that this Agreement
or the subject matter hereof may not be enforced by such courts.
17. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements, understandings and arrangements, both oral and
written, between the parties hereto with respect to such subject matter. This
Agreement may not be modified in any way, unless by a written instrument signed
by both the Company and the Employee.
18. NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been given when
delivered by hand or three (3) days after sent by registered or certified United
States mail, return receipt requested, postage prepaid, or the next business day
following dispatch by a reputable overnight courier service, addressed as
follows:
(i) If to the Employee:
Robert J. New
11414 North Bayshore Drive
North Miami, Florida 33181
(ii) If to the Company:
UniCapital Corporation
10800 Biscayne Boulevard, Suite 800
Miami, FL 33161
Attention: Martin Kalb
with a copy given in the manner prescribed above to:
Morgan, Lewis & Bockius LLP
One Oxford Centre, Thirty-Second Floor
Pittsburgh, PA 15219
Attention: David A. Gerson
or to such other addresses as either party hereto may from time to time give
notice of to the other party hereto in the aforesaid manner.
19. BENEFITS; BINDING EFFECT. This Agreement shall be for the benefit
of and binding upon the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and assigns.
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<PAGE> 8
20. SEVERABILITY. Except as otherwise provided in Sections 11 and 12,
the invalidity of any one or more of the words, phrases, sentences, clauses,
sections or subsections contained in this Agreement shall not affect the
enforceability of the remaining portions of this Agreement or any part thereof,
all of which are inserted conditionally on their being valid in law, and, in the
event that any one or more of the words, phrases, sentences, clauses, sections
or subsections contained in this Agreement or any part thereof shall be declared
invalid, this Agreement shall be construed as if such invalid word or words,
phrase or phrases, sentence or sentences, clause or clauses, section or sections
or subsection or subsections had not been inserted. If such invalidity is caused
by length of time or size of area, or both, the otherwise invalid provision will
be considered to be reduced to a period or area which would cure such
invalidity.
21. DAMAGES. Nothing contained herein shall be construed to prevent the
Company or the Employee from seeking and recovering from the other damages
sustained by either or both of them as a result of its or his breach of any term
or provision of this Agreement. In the event that either party hereto brings
suit for the collection of any damages resulting from, or the injunction of any
action constituting, a breach of any of the terms or provisions of this
Agreement, then the non- prevailing party shall pay all reasonable court costs
and attorneys' fees of the other party.
22. SECTION HEADINGS. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
23. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the parties hereto and their respective heirs, personal
representative, legal representative, successors and assigns, any rights or
remedies under or by reason of this Agreement.
24. AMENDMENT; MODIFICATION; WAIVER. No amendment, modification or
waiver of the terms of this Agreement shall be valid unless made in writing and
duly executed by the Company and the Employee. No delay or failure at any time
on the part of the Company in exercising any right, power or privilege under
this Agreement, or in enforcing any provision of this Agreement, shall impair
any such right, power or privilege, or be construed as a waiver of any default
or as any acquiescence therein, or shall affect the right of the Company
thereafter to enforce each and every provision of this Agreement in accordance
with its terms. The waiver by either party hereto of a breach or violation of
any term or provision of this Agreement shall neither operate nor be construed
as a waiver of any subsequent breach or violation.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
UNICAPITAL CORPORATION
By: /s/ MARTIN KALB
-------------------------------------------
Name: MARTIN KALB
Title: Executive Vice President
EMPLOYEE:
/s/ ROBERT J. NEW
----------------------------------------------
Robert J. New
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EXHIBIT A
In determining the incentive bonus, if any, payable to the Employee
under this Agreement, the Company's Board of Directors or its Compensation
Committee will take into account the achievement of criteria specified by the
Board or the Compensation Committee relating to growth in the Company's earnings
per share from period to period. Any incentive bonus payable to the Employee
under this Agreement will not exceed 100% of the Employee's base salary, and
will be paid out of a bonus pool determined by the Board of Directors or its
Compensation Committee. Any incentive bonus will be payable in the form of cash,
stock options, or other non-cash awards, in such proportions, and in such forms,
as are determined by the Board of Directors or its Compensation Committee.
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Exhibit 10.11
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
made and entered into as of the 1st day of March, 2000 by and between UNICAPITAL
CORPORATION, a Delaware corporation (the "Company"), and JONATHAN NEW (the
"Employee").
RECITALS
The Company and the Employee are parties to an Employment Agreement
dated as of May 20, 1998 (the "Original Agreement"). The Company desires to
retain the services of the Employee in the employment of the Company on the
terms and subject to the conditions set forth in this Agreement, and the
Employee desires to continue to make his services available to the Company on
the terms and subject to the conditions set forth in this Agreement. The Company
and the Employee are therefore amending and restating the Original Agreement in
its entirety by entering into this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises, agreements and mutual
covenants set forth herein, the parties hereto, intending to be bound legally,
hereby agree as follows:
1. DEFINITIONS. The following terms when used herein, unless the
context otherwise requires, shall be defined as follows:
1.1 "Cause" shall have the meaning set forth in Section 5.1
hereof.
1.2 "Company" shall mean UniCapital Corporation, a Delaware
corporation.
1.3 "Competing Business" shall have the meaning set forth in
Section 6.1 hereof.
1.4 "Confidential Information" shall have the meaning set
forth in Section 9.1 hereof.
1.5 "Term" shall have the meaning set forth in Section 3
hereof.
2. EMPLOYMENT
2.1 General. The Company hereby agrees to employ the Employee
as Chief Financial Officer during the Term of this Agreement on the terms and
subject to the conditions contained in this Agreement, and the Employee hereby
agrees to accept such employment on the terms and subject to the conditions
contained in this Agreement.
<PAGE> 2
2.2 Duties of Employee. During the Term of this Agreement, the
Employee shall diligently perform all duties and responsibilities as may be
assigned to him by the Company's Board of Directors and shall exercise such
power and authority as may from time to time be delegated to him thereby. The
Employee shall devote his full business time and attention to the business and
affairs of the Company as necessary to perform his duties and responsibilities
hereunder, render such services to the best of his ability, and use his best
efforts to promote the interests of the Company.
3. TERM. Subject to the provisions of Section 5 of this Agreement, the
Company shall employ the Employee for a term commencing on the date first
written above (the "Effective Date"), and expiring on February 28, 2002.
4. COMPENSATION.
4.1 Salary. The Employee shall receive an annual salary of
Three Hundred Thousand Dollars ($300,000) during the Term of this Agreement, and
such salary shall be payable in installments consistent with the Company's
normal payroll schedule but not less than monthly.
4.2 Incentive Bonus. During the Term, the Employee shall be
eligible to receive an incentive bonus up to the amount, based upon the
criteria, and payable at such times as are, specified in Exhibit A attached
hereto. The amount, manner of payment, and form of consideration, if any, shall
be determined by the Board of Directors or the Compensation Committee thereof,
in its sole and absolute discretion, and such determination shall be binding and
final. To the extent that such bonus is to be determined in light of financial
performance during a specified fiscal period and this Agreement commences on a
date after the start of such fiscal period, any bonus payable in respect of such
fiscal period's results may be prorated. In addition, if the period of the
Employee's employment hereunder expires before the end of a fiscal period, and
if the Employee is eligible to receive a bonus at such time (such eligibility
being subject to the restrictions set forth in Section 5 below), any bonus
payable in respect of such fiscal period's results may be prorated.
4.3 Benefits. During the Term of this Agreement, the Employee
shall be entitled to participate in all plans adopted for the general benefit of
the Company's employees, such as stock option plans, 401(k) plans, pension
plans, profit sharing plans, medical plans, group or other insurance plans and
benefits, to the extent that the Employee is and remains eligible to participate
therein and subject to the eligibility provisions of such plans in effect from
time to time. For each calendar year during the Term of this Agreement, the
Employee shall be entitled to not less than four weeks of paid vacation,
prorated for any period of employment of less than an entire year.
4.4 Withholding. Notwithstanding any provision in this
Agreement to the contrary, all payments required to be made by the Company
hereunder to the Employee in connection with the Employee's employment hereunder
shall be subject to withholding of such amounts relating to taxes as the Company
may reasonably determine it should withhold pursuant to any applicable law or
regulation. In lieu of withholding such amounts, in whole or in part, the
Company may, in its sole discretion, accept other provisions for the payment of
taxes, provided
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that the Company is satisfied that all requirements of law affecting its
responsibilities to withhold have been satisfied.
4.5 Reimbursement of Expenses. The Company agrees to reimburse
the Employee for all reasonable business expenses (including, without
limitation, reasonable travel and entertainment expenses) incurred by the
Employee in the discharge of his duties hereunder, subject to the Company's
reimbursement policies in effect from time to time. The Employee agrees to
maintain reasonable records of his business expenses in such form and detail as
the Company may request and to make such records available to the Company as and
when requested.
5. TERMINATION
5.1 Termination for Cause. Notwithstanding any provision in
this Agreement to the contrary, this Agreement may be terminated by the Company
for "Cause" at any time during the Term hereof, and such termination shall be
effective immediately upon ten (10) days' written notice to the Employee. For
purposes of this Agreement, "Cause" for the termination of the Employee's
employment hereunder shall be deemed to exist if, in the reasonable judgment of
the Company's Board of Directors: (a) the Employee commits fraud, theft or
embezzlement against the Company; (b) the Employee commits a felony or a crime
involving moral turpitude; (c) the Employee compromises trade secrets or other
proprietary information of the Company; (d) the Employee breaches any
non-competition or non-solicitation agreement with the Company or any subsidiary
or affiliate thereof; (e) the Employee breaches any of the terms of this
Agreement (other than those referenced in clauses (c) and (d) of this Section
5.1) and fails to cure such breach within 10 days after the receipt of written
notice of such breach from the Company; or (f) the Employee engages in gross
negligence or willful misconduct that causes harm to the business and operations
of the Company or a subsidiary or affiliate thereof. Upon any termination
pursuant to this Section 5.1, the Employee shall be entitled to be paid solely
the Employee's salary then in effect through the effective date of termination,
and the Company shall have no further liability or other obligation of any kind
whatsoever to the Employee.
5.2 Termination by the Company Without Cause. The Company may,
in its sole and absolute discretion, terminate the employment of the Employee
hereunder, at any time prior to the expiration of the term of this Agreement,
without "Cause" (as such term is defined in Section 5.1 above), or otherwise
without any cause, reason or justification, provided that the Company provides
to the Employee at least sixty (60) days' prior written notice (the "Termination
Notice") of such termination. In the event of any such termination by the
Company, (a) the Employee's employment with the Company shall cease and
terminate on the date specified in the Termination Notice (or, if not date is so
specified, on the date which is 60 days following the date of such notice), and
(b) the Employee shall be entitled to receive and be paid solely the Employee's
salary then in effect for the shorter of (x) the fifteen-month period following
the Employee's termination or (y) the remaining Term of this Agreement
("Severance Compensation"), payable over such period at the Company's regular
and customary intervals for the payment of salaries as then in effect, and the
Company shall have no further liability or other obligation of any kind
whatsoever to the Employee.
5.3 Death of the Employee. In the event that the Employee
shall die during the Term of this Agreement, the Employee's employment with the
Company shall immediately cease and terminate and the Employee's estate, heirs
(at law), devisees, legatees or other proper and
3
<PAGE> 4
legally entitled descendants, or the personal representative, executor,
administrator or other proper legal representative on behalf of such
descendants, shall be entitled to receive and be paid solely the Employee's
salary through the date of death, and the Company shall have no further
liability or other obligation of any kind whatsoever to the Employee.
5.4 Disability of the Employee. In the event that the Employee
becomes incapacitated during the Term by reason of sickness, accident or other
mental or physical disability such that he is substantially unable to
performance his duties and responsibilities hereunder for a period of 60
consecutive days, or for shorter or intermittent periods aggregating 90 days
during any 12-month period (a "Disability"), the Company thereafter shall have
the right, in its sole and absolute discretion, to terminate the Employee's
employment under this Agreement by sending written notice of such termination to
the Employee or its legal guardian or other proper legal representative and
thereupon his employment hereunder shall immediately cease and terminate. In the
event of any such termination, the Employee shall be entitled to receive and be
paid solely the Employee's salary then in effect through the effective date of
termination and the Company shall have no further liability or other obligation
of any kind whatsoever to the Employee.
5.5 Termination by the Employee. Provided that the Company
does not have "Cause" to terminate the Employee pursuant to Section 5.1 above,
the Employee may terminate the Employee's employment with the Company hereunder
at any time and for any reason. Employee must provide to the Company written
notice of such termination not less than 30 days prior to the date such
termination is to be effective. Upon any termination pursuant to this Section
5.5, the Employee shall be entitled to be paid solely the Employee's salary then
in effect through the effective date of termination, and the Company shall have
no further liability or other obligation of any kind whatsoever to the Employee.
6. AGREEMENT NOT TO COMPETE
6.1 As used in this Agreement, "Competing Business" shall mean
any business or enterprise which is engaged in (a) the equipment leasing
business; or (b) any business, business segment or product line engaged in by
the Company on the date of termination of the Employee's employment with the
Company (clauses (a) and (b) collectively referred to herein as the "Company's
Business").
6.2 The Employee agrees that, during the Term of this
Agreement and at any time Employee is receiving Severance Compensation, he will
not, without the prior written consent of the Company, either directly or
indirectly, on his own behalf or in the service of or on behalf of others as a
shareholder, director, officer, trustee, consultant, independent contractor or
employee, engage in, or be employed by, or provide services to, any Competing
Business within the State of Florida or in any other state in which the Company
or any subsidiary or affiliate thereof is engaged in business or in which of any
of their respective products or services are marketed or sold at the time of
such termination.
4
<PAGE> 5
7. AGREEMENT NOT TO SOLICIT OR SELL TO CUSTOMERS. The Employee agrees
that, during the Term of this Agreement and for two years following the
termination or expiration of his employment for any reason whatsoever, he will
not without the prior written consent of the Company, either directly or
indirectly, call on, solicit, take away, accept as a client, customer or
prospective client or customer or attempt to call on, solicit, take away or
accept as a client, customer prospective client or customer, any person that was
a client, customer or prospective client or customer of the Company or any of
its subsidiaries or affiliates.
8. AGREEMENT NOT TO SOLICIT OR HIRE EMPLOYEES. The Employee agrees that
during the Term of this Agreement and for two years following the termination or
expiration of his employment for any reason whatsoever, he will not, either
directly or indirectly, on his own behalf or in the service or on behalf of
others, solicit, divert or hire, attempt to solicit, divert or hire or induce or
attempt to induce to discontinue employment with the Company or any subsidiary
or affiliate thereof, any person employed by the Company or any subsidiary or
affiliate thereof, whether or not such employee is a full time employee or a
temporary employee of the Company or any subsidiary or affiliate thereof and
whether or not such employment is for a determined period or is at will.
9. OWNERSHIP AND NON-DISCLOSURE AND NON-USE OF CONFIDENTIAL
INFORMATION.
9.1 As used in this Agreement, "Confidential Information"
shall mean all customer sales and marketing information, customer account
records, proprietary receipts and/or processing techniques, information
regarding vendors and products, training and operations memoranda and similar
information, personnel records, pricing information, financial information and
trade secrets concerning or relating to the business, accounts, customers,
employees and affairs of the Company, or any subsidiary or affiliate thereof,
obtained by or furnished, disclosed or disseminated to the Employee, or
obtained, assembled or compiled by the Employee or under his supervision during
the course of his employment by the Company, and all physical embodiments of the
foregoing, all of which are hereby agreed to be the property of and confidential
to the Company, but Confidential Information shall not include any of the
foregoing to the extent the same is or becomes publicly known through no fault
or breach of this Agreement by the Employee.
9.2 The Employee acknowledges and agrees that all Confidential
Information, and all physical embodiments thereof, are confidential to and shall
be and remain the sole and exclusive property of the Company. Upon request by
the Company, and in any event upon termination of the Employee's employment with
the Company for any reason whatsoever, as a prior condition to the Employee's
receipt of any final salary or benefit payments hereunder, the Employee shall
deliver to the Company all property belonging to the Company or any of its
subsidiaries or affiliates, including, without limitation, all Confidential
Information (and all embodiments thereof), then in his custody, control or
possession, but any forfeiture of such salary or benefit shall not be considered
a satisfaction or a release of or liquidated damages for any claim(s) for
damages against the Employee which may accrue to the Company, as a result of any
breach of this Section 9 by the Employee.
9.3 The Employee agrees that he will not, either during the
Term of this Agreement or at any time thereafter, without the prior written
consent of the Company, use, disclose or make available any Confidential
Information to any person or entity, nor shall he use,
5
<PAGE> 6
disclose, make available or cause to be used, disclosed or made available, or
pen-nit or allow, either on his own behalf or on behalf of others, any use or
disclosure of such Confidential Information other than in the proper performance
of the Employee's duties hereunder.
10. INVENTIONS. The Employee shall disclose promptly to the Company any
and all conceptions and ideas for inventions, improvements, and valuable
discoveries, whether patentable or not, that are conceived or made by the
Employee, solely or jointly with another, during the Term of this Agreement and
that are directly related to the business or activities of the Company and that
the Employee conceives as a result of his employment by the Company, regardless
of whether or not such ideas, inventions, or improvements qualify as "works for
hire." The Employee hereby assigns and agrees to assign all his interests
therein to the Company or its nominee. Whenever requested to do so by the
Company, the Employee shall execute any and all applications, assignments or
other instruments that the Company shall deem necessary to apply for and obtain
Letters Patent of the United States or any foreign country or to otherwise
protect the Company's interest therein.
11. REASONABLENESS OF RESTRICTIONS. In the event that any provision
relating to time period or geographic area of any restriction set forth in
Sections 6, 7, 8, 9 or 10 shall be declared by a court of competent jurisdiction
to exceed the maximum time period or area of restriction that the court deems
reasonable and enforceable, the time period or area of restriction which the
court finds to be reasonable and enforceable shall be deemed to become, and
thereafter shall be, the maximum time period or geographic area of such
restriction.
12. ENFORCEABILITY. Any provision of Sections 6, 7, 8, 9 or 10 which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, but shall be enforced to the
maximum extent permitted by law, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
13. INJUNCTION. It is recognized and hereby acknowledged by the parties
hereto that a breach by the Employee of any of the covenants contained in
Sections 6, 7, 8, 9 or 10 of this Agreement will cause irreparable harm and
damage to the Company, the monetary amount of which may be virtually impossible
to ascertain. As a result, the Employee recognizes and hereby acknowledges that
the Company shall be entitled to an injunction from any court of competent
jurisdiction enjoining and restraining any violation of any or all of the
covenants contained in Sections 6, 7, 8, 9 or 10 of this Agreement by the
Employee or any of his affiliates, associates, partners or agents, either
directly or indirectly, and that such right to injunction shall be cumulative
and in addition to whatever other remedies the Company may possess.
14. ASSIGNMENT. The Employee shall not delegate his employment
obligations pursuant to this Agreement to any other person.
15. EMPLOYER'S AUTHORITY. The relationship between the parties hereto
is that of employer and employee. The Employee agrees to observe and comply with
the rules and regulations of the Company, as adopted by the Company from time to
time with respect to the performance of the duties of the Employee. The Employee
acknowledges that he has no authority to enter into any contracts or other
obligations that are binding upon the Company unless such contracts or
obligations are authorized by the Board of Directors of the Company. The Company
6
<PAGE> 7
shall have the power to direct, control and supervise the duties to be performed
by the Employee, the manner of performing said duties, and the time of
performing said duties.
16. GOVERNING LAW. This Agreement, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto, shall be governed
by and construed in accordance with the laws of the State of Florida, excluding
the choice of law rules thereof. The Company and the Employee each hereby
irrevocably submit to the jurisdiction of the state or federal courts located in
Dade County, Florida in connection with any suit, action or other proceeding
arising out of or relating to this Agreement and hereby agree not to assert, by
way of motion, as a defense, or otherwise in any such suit, action or proceeding
that the suit, action or proceeding is brought in an inconvenient forum, that
the venue of the suit, action or proceeding is improper or that this Agreement
or the subject matter hereof may not be enforced by such courts.
17. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements, understandings and arrangements, both oral and
written, between the parties hereto with respect to such subject matter. This
Agreement may not be modified in any way, unless by a written instrument signed
by both the Company and the Employee.
18. NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been given when
delivered by hand or three (3) days after sent by registered or certified United
States mail, return receipt requested, postage prepaid, or the next business day
following dispatch by a reputable overnight courier service, addressed as
follows:
(i) If to the Employee:
Jonathan New
2335 Magnolia Drive
North Miami, Florida 33181
(ii) If to the Company:
UniCapital Corporation
10800 Biscayne Boulevard, Suite 800
Miami, FL 33161
Attention: Robert J. New
with a copy given in the manner prescribed above to:
Morgan, Lewis & Bockius LLP
One Oxford Centre, Thirty-Second Floor
Pittsburgh, PA 15219
Attention: David A. Gerson
or to such other addresses as either party hereto may from time TO time give
notice of to the other party hereto in the aforesaid manner.
19. BENEFITS; BINDING EFFECT. This Agreement shall be for the benefit
of and binding upon the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and assigns.
7
<PAGE> 8
20. SEVERABILITY. Except as otherwise provided in Sections 11 and 12,
the invalidity of any one or more of the words, phrases, sentences, clauses,
sections or subsections contained in this Agreement shall not affect the
enforceability of the remaining portions of this Agreement or any part thereof,
all of which are inserted conditionally on their being valid in law, and, in the
event that any one or more of the words, phrases, sentences, clauses, sections
or subsections contained in this Agreement or any part thereof shall be declared
invalid, this Agreement shall be construed as if such invalid word or words,
phrase or phrases, sentence or sentences, clause or clauses, section or sections
or subsection or subsections had not been inserted. If such invalidity is caused
by length of time or size of area, or both, the otherwise invalid provision will
be considered to be reduced to a period or area which would cure such
invalidity.
21. DAMAGES. Nothing contained herein shall be construed to prevent the
Company or the Employee from seeking and recovering from the other damages
sustained by either or both of them as a result of its or his breach of any term
or provision of this Agreement. In the event that either party hereto brings
suit for the collection of any damages resulting from, or the injunction of any
action constituting, a breach of any of the terms or provisions of this
Agreement, then the non- prevailing party shall pay all reasonable court costs
and attorneys' fees of the other party.
22. SECTION HEADINGS. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
23. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the parties hereto and their respective heirs, personal
representative, legal representative, successors and assigns, any rights or
remedies under or by reason of this Agreement.
24. AMENDMENT; MODIFICATION; WAIVER. No amendment, modification or
waiver of the terms of this Agreement shall be valid unless made in writing and
duly executed by the Company and the Employee. No delay or failure at any time
on the part of the Company in exercising any right, power or privilege under
this Agreement, or in enforcing any provision of this Agreement, shall impair
any such right, power or privilege, or be construed as a waiver of any default
or as any acquiescence therein, or shall affect the right of the Company
thereafter to enforce each and every provision of this Agreement in accordance
with its terms. The waiver by either party hereto of a breach or violation of
any term or provision of this Agreement shall neither operate nor be construed
as a waiver of any subsequent breach or violation.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
8
<PAGE> 9
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
UNICAPITAL CORPORATION
By: /s/ Martin Kalb
-------------------------------------------
Name: Martin Kalb
Title: Executive Vice President
EMPLOYEE:
/s/ Jonathan New
----------------------------------------------
Jonathan New
9
<PAGE> 10
EXHIBIT A
In determining the incentive bonus, if any, payable to the Employee
under this Agreement, the Company's Board of Directors or its Compensation
Committee will take into account the achievement of criteria specified by the
Board or the Compensation Committee relating to growth in the Company's earnings
per share from period to period. Any incentive bonus payable to the Employee
under this Agreement will not exceed 100% of the Employee's base salary, and
will be paid out of a bonus pool determined by the Board of Directors or its
Compensation Committee. Any incentive bonus will be payable in the form of cash,
stock options, or other non-cash awards, in such proportions, and in such forms,
as are determined by the Board of Directors or its Compensation Committee.
10
<PAGE> 1
Exhibit 21.01
<TABLE>
<CAPTION>
Subsidiaries
- ---------------------------------------- ------------------------------------- -------------------------------------
SUBSIDIARY JURISDICTION OF ORGANIZATION d/b/a NAMES
- ---------------------------------------- ------------------------------------- -------------------------------------
<S> <C> <C>
Aircorp II, Inc. Texas
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 347, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 369, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 373, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 11111, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 20527, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 20527 Trust Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 20622, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 20624 and 20626, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 20627, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 21955, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 22055, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 22067 Trust Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 22120, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 22121, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 22122, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 22222, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 22620, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 22688, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 22688 Trust Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 22689, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 22689 Trust Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 23230, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 23345, Inc. Florida
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 23377, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 23506, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 23771, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C>
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 23772, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 23623, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 23830, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 23895, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 23922, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 29328, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 23928 Trust Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 23929, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 23929 Trust Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 23983, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 23983 Trust Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 24176, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 24176 Trust Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 24209, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 24355, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 24356, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 24451, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 24451 Trust Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 24474, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 24497, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 24497 Trust Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 24813, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 24837, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 25221, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 25262, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 45775, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 46095, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 46941, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 48008, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 48009, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 48024, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 48025, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 49104, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 49262, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 49263, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 49368, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 49632, Inc. Florida
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 53015, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 53623, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft 53624, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Aircraft Finance Trust Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Alphamstone Limited Ireland
- ---------------------------------------- ------------------------------------- -------------------------------------
Amaistre Ltd. Ireland
- ---------------------------------------- ------------------------------------- -------------------------------------
American Capital Resources New York NY American Capital Resources
- ---------------------------------------- ------------------------------------- -------------------------------------
American Video Games and Missouri
Computers, Inc.
- ---------------------------------------- ------------------------------------- -------------------------------------
Avalon Leasing Corporation Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
B&A Leasing Corporation Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Bionic Leasing Corporation Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Boulder Capital Group, Inc. Colorado
- ---------------------------------------- ------------------------------------- -------------------------------------
Boulder Capital Mortgage Colorado
Corporation
- ---------------------------------------- ------------------------------------- -------------------------------------
Boulder Capital of New York, Inc. Colorado
- ---------------------------------------- ------------------------------------- -------------------------------------
Bulbeck Limited Ireland
- ---------------------------------------- ------------------------------------- -------------------------------------
Cauff, Lippman Aviation, Inc. Florida UniCapital Air Group
- ---------------------------------------- ------------------------------------- -------------------------------------
Chickney Limited Ireland
- ---------------------------------------- ------------------------------------- -------------------------------------
CLA Canada, Inc. Florida
- ---------------------------------------- ------------------------------------- -------------------------------------
CLA-DOA, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
CLA Enterprises, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
CLA Holdings, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
CL Aircraft Marketing, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
CLC 747, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
CLC Engine Leasing, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
- ---------------------------------------- ------------------------------------- -------------------------------------
CL Aircraft VIII, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
CL Aircraft XXXIV, Inc. Florida
- ---------------------------------------- ------------------------------------- -------------------------------------
Diamond Head Associates, LLC Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Galaxy Aircraft Corp. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Haysthorpe Limited Ireland
- ---------------------------------------- ------------------------------------- -------------------------------------
HLC Financial, Inc. Delaware HLC Financial Service
- ---------------------------------------- ------------------------------------- -------------------------------------
Horthlew Limited Ireland
- ---------------------------------------- ------------------------------------- -------------------------------------
Information Control Systems, Inc. Missouri
- ---------------------------------------- ------------------------------------- -------------------------------------
JJ Leasing, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Jacom Computer Services, Inc. New York
- ---------------------------------------- ------------------------------------- -------------------------------------
Jetz, Inc. Delaware Jetz of Delaware, Inc.
- ---------------------------------------- ------------------------------------- -------------------------------------
Jumbo Jet, Inc. Delaware Heavy Jumbo, Inc.
- ---------------------------------------- ------------------------------------- -------------------------------------
Jumbo Jet Leasing, LP Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
K.L.C. Inc. Connecticut Keystone Leasing
K.L.C., Inc. Connecticut
K.L.C. Leasing
K.L.C. of Connecticut
Keystone K.L.C., Inc.
- ---------------------------------------- ------------------------------------- -------------------------------------
LeaseAdvisor.com, LLC Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Matcan International, Inc. Barbados
- ---------------------------------------- ------------------------------------- -------------------------------------
Matcan Leasing, Inc. Utah
- ---------------------------------------- ------------------------------------- -------------------------------------
Matrix Credit Corporation Utah
- ---------------------------------------- ------------------------------------- -------------------------------------
Matrix Funding Corporation Utah Matrix Credit
- ---------------------------------------- ------------------------------------- -------------------------------------
Merrimac Financial Associates, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
The Myerson Companies, Inc. Delaware BSB Leasing
- ---------------------------------------- ------------------------------------- -------------------------------------
Nounsley Limited Ireland
- ---------------------------------------- ------------------------------------- -------------------------------------
NSJ-DOA, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
The NSJ Group, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
NSJ Support, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Praxis Paradigm Synergies, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Saddleback Financial Corporation Delaware Saddleback Financial Center
- ---------------------------------------- ------------------------------------- -------------------------------------
SFC Capital Group Corporation Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Shimpling Limited Ireland
- ---------------------------------------- ------------------------------------- -------------------------------------
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C>
- ---------------------------------------- ------------------------------------- -------------------------------------
Skywatch Registered Agents, Inc. Florida
- ---------------------------------------- ------------------------------------- -------------------------------------
SLC International Trading Missouri
Corporation
- ---------------------------------------- ------------------------------------- -------------------------------------
Sonic Leasing Corporation Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Stuie II Corp. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
Stuie III Corp. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
SWR Aircraft Group, Inc. Florida
- ---------------------------------------- ------------------------------------- -------------------------------------
SWR 767, Inc. Florida
- ---------------------------------------- ------------------------------------- -------------------------------------
SWR Brazil 767, Inc. Florida
- ---------------------------------------- ------------------------------------- -------------------------------------
Tailwind International AB Sweden
- ---------------------------------------- ------------------------------------- -------------------------------------
UCP Engines, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
UCP Engines Trust Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
UCP German Holdings, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
UCP GP SPE 1998-1 LLC Nevada
- ---------------------------------------- ------------------------------------- -------------------------------------
UCP Operating SPE 1998-1 Nevada
Limited Partnership
- ---------------------------------------- ------------------------------------- -------------------------------------
UCP Borrowing SPE 1998-1 Nevada
Limited Partnership
- ---------------------------------------- ------------------------------------- -------------------------------------
UCP Qualifying SPE 1998-1 Nevada
Limited Partnership
- ---------------------------------------- ------------------------------------- -------------------------------------
UCP Warehouse Holdings, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
UCP Warehouse SPE 1999-2 LLC Nevada
- ---------------------------------------- ------------------------------------- -------------------------------------
UCP Warehouse SPE 1999-3 LLC Nevada
- ---------------------------------------- ------------------------------------- -------------------------------------
UCP 1999-1 LLC I Nevada
- ---------------------------------------- ------------------------------------- -------------------------------------
UCP 1999-1 LLC II Nevada
- ---------------------------------------- ------------------------------------- -------------------------------------
UniCapital AFT-I, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
UniCapital AFT-II, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
UniCapital Aircraft Engine Group, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
UniCapital Air Group, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
UniCapital Funding Corporation Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
UniCapital Mexico Group, Inc. Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
UniCapital Mexico Holdings, LLC Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
UniCapital of Mexico, S.A. de c.v. Mexico
- ---------------------------------------- ------------------------------------- -------------------------------------
</TABLE>
<PAGE> 6
<TABLE>
<S> <C> <C>
- ---------------------------------------- ------------------------------------- -------------------------------------
UniCapital Operations Group, Inc. Delaware PFSC
Portfolio Financial Servicing Co.
Parrish Financial Servicing Co.
- ---------------------------------------- ------------------------------------- -------------------------------------
UniCapital Rail Group Delaware
- ---------------------------------------- ------------------------------------- -------------------------------------
UniCapital Securities Corp. Texas
- ---------------------------------------- ------------------------------------- -------------------------------------
UniCapital Technology Corporation Delaware UniCapital IT Solutions
- ---------------------------------------- ------------------------------------- -------------------------------------
Varilease Canada Incorporated Nova Scotia
- ---------------------------------------- ------------------------------------- -------------------------------------
Varilease Capital Corporation Michigan Varitech
- ---------------------------------------- ------------------------------------- -------------------------------------
Varilease Corporation Michigan UniCapital IT Solutions
- ---------------------------------------- ------------------------------------- -------------------------------------
Varilease/GATX Leasing Michigan
Corporation No. 1
- ---------------------------------------- ------------------------------------- -------------------------------------
Varilease/GATX Limited Michigan
Partnership No. 1
- ---------------------------------------- ------------------------------------- -------------------------------------
VLC, LLC Michigan
- ---------------------------------------- ------------------------------------- -------------------------------------
The Walden Asset Group, Inc. Massachusetts
- ---------------------------------------- ------------------------------------- -------------------------------------
Wimbish Limited Ireland
- ---------------------------------------- ------------------------------------- -------------------------------------
- ---------------------------------------- ------------------------------------- -------------------------------------
- ---------------------------------------- ------------------------------------- -------------------------------------
</TABLE>
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-61353) of UniCapital Corporation of our report
dated February 3, 2000, except for Note 24, as to which the date is March 28,
2000 relating to the financial statements, which appears in this Form 10-K.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Fort Lauderdale, Florida
March 30, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 25,849
<SECURITIES> 16,801
<RECEIVABLES> 962,494
<ALLOWANCES> 7,112
<INVENTORY> 264,714
<CURRENT-ASSETS> 0
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0
0
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</TABLE>
