<PAGE>
- - - --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------------
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
----- EXCHANGE ACT OF 1934
For the quarter period ended December 31, 1994
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 0-15167
TRANS LEASING INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-2747735
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
3000 Dundee Road, Northbrook, Illinois 60062
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code (708) 272-1000
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
----- -----
The number of shares of Common Stock, Par Value $.01 Per Share, of the
Registrant outstanding as of February 9, 1995 was 4,222,975.
- - - --------------------------------------------------------------------------------
Total number of pages: 14
<PAGE>
TRANS LEASING INTERNATIONAL, INC.
---------------------------------
INDEX
Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Independent Accountants' Review Report 4
Condensed Consolidated Statements of Operations 5
Three-month and six-month
periods ended December 31, 1994
and 1993 (unaudited)
Condensed Consolidated Balance Sheets 6
December 31, 1994
(unaudited)
and June 30, 1994
Condensed Consolidated Statements
of Cash Flows 7
Six-month periods ended
December 31, 1994 and 1993
(unaudited)
Notes to Condensed Consolidated
Financial Statements 8
(unaudited)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
-2-
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
-3-
<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
- - - --------------------------------------
To the Stockholders and Board of Directors
Trans Leasing International, Inc.
Northbrook, Illinois
We have reviewed the accompanying condensed consolidated balance sheet of Trans
Leasing International, Inc. as of December 31, 1994, and the related condensed
consolidated statements of operations and cash flows for the three-month and
six-month periods ended December 31, 1994 and 1993. These financial statements
are the responsibility of the Corporation's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Trans Leasing International, Inc.
as of June 30, 1994, and the related consolidated statements of operations,
stockholders' equity, and cash flows for the year then ended (not presented
herein); and in our report dated August 11, 1994 (September 28, 1994 as to Note
N), we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of June 30, 1994 is fairly stated, in
all material respects, in relation to the consolidated balance sheet from which
it has been derived.
DELOITTE & TOUCHE LLP
Chicago, Illinois
February 9, 1995
<PAGE>
TRANS LEASING INTERNATIONAL, INC.
---------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three months Six months
ended ended
December 31 December 31
--------------------------- ----------------------------
1994 1993 1994 1993
---------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
REVENUES:
Lease income $7,189,000 $6,623,000 $14,118,000 $13,040,000
Other 212,000 118,000 377,000 229,000
---------- ------------ ----------- -----------
Total Revenues 7,401,000 6,741,000 14,495,000 13,269,000
COSTS AND EXPENSES:
Interest 3,400,000 2,957,000 6,543,000 5,863,000
General and administrative 2,347,000 2,198,000 4,568,000 4,243,000
Provision for uncollectible accounts 1,086,000 2,903,000 2,106,000 3,746,000
---------- ------------ ----------- -----------
Total Costs and Expenses 6,833,000 8,058,000 13,217,000 13,852,000
---------- ------------ ----------- -----------
EARNINGS (LOSS) BEFORE INCOME
TAXES AND CUMULATIVE EFFECT
OF A CHANGE IN ACCOUNTING 568,000 ( 1,317,000) 1,278,000 ( 583,000)
INCOME TAXES 218,000 ( 504,000) 489,000 ( 223,000)
---------- ------------ ----------- -----------
EARNINGS (LOSS) BEFORE
CUMULATIVE EFFECT OF A
CHANGE IN ACCOUNTING 350,000 ( 813,000) 789,000 ( 360,000)
CUMULATIVE EFFECT OF A CHANGE IN
ACCOUNTING FOR INCOME TAXES 155,000
---------- ------------ ----------- -----------
NET EARNINGS (LOSS) $ 350,000 ($ 813,000) $ 789,000 ($ 515,000)
========== ============ =========== ===========
EARNINGS (LOSS) PER COMMON SHARE:
EARNINGS (LOSS) BEFORE
CUMULATIVE EFFECT OF A
CHANGE IN ACCOUNTING $.08 ($.19) $.18 ($.09)
CUMULATIVE EFFECT OF A CHANGE IN
ACCOUNTING FOR INCOME TAXES ( .03)
---- ----- ---- ------
NET EARNINGS (LOSS) $.08 ($.19) $.18 ($.12)
==== ===== ==== =====
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 4,353,700 4,371,900 4,362,800 4,371,900
</TABLE>
See notes to condensed consolidated financial statements.
-2-
<PAGE>
TRANS LEASING INTERNATIONAL, INC.
---------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
<TABLE>
<CAPTION>
December 31, June 30,
1994 1994
------------- --------------
ASSETS (Unaudited)
------
<S> <C> <C>
CASH $ 2,784,000 $ 3,297,000
RESTRICTED CASH 12,740,000 8,984,000
NET INVESTMENT IN DIRECT FINANCE LEASES:
Future minimum lease payments 201,959,000 186,287,000
Estimated unguaranteed residual value 19,069,000 18,201,000
------------- -------------
221,028,000 204,488,000
Less: Unearned income ( 36,603,000) ( 33,624,000)
Allowance for uncollectible accounts ( 5,192,000) ( 4,047,000)
------------- -------------
179,233,000 166,817,000
------------- -------------
FINANCE CONTRACT RECEIVABLES, less allowance for
uncollectible accounts of $134,000 and $141,000,
respectively 5,090,000 6,352,000
PROPERTY AND EQUIPMENT, net of accumulated
depreciation 3,360,000 2,019,000
INCOME TAXES RECOVERABLE 844,000 1,951,000
OTHER ASSETS 5,003,000 4,315,000
------------- -------------
$209,054,000 $193,735,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 6,255,000 $ 5,288,000
NOTES PAYABLE TO FINANCIAL INSTITUTIONS 83,345,000 60,657,000
LEASE-BACKED OBLIGATIONS 69,415,000 78,184,000
SUBORDINATED OBLIGATIONS 23,000,000 23,000,000
DEFERRED INCOME TAXES 1,827,000 1,827,000
STOCKHOLDERS' EQUITY:
Preferred stock, par value $1.00;
authorized 2,500,000 shares; none issued
Common stock, par value $.01; authorized
10,000,000 shares; issued 4,798,500 shares 48,000 48,000
Additional paid-in capital 9,879,000 9,879,000
Retained earnings 16,819,000 16,030,000
Less 530,325 shares held in treasury, at cost, at
December 31, 1994 426,600 shares held in
treasury, at cost, at June 30, 1994 ( 1,534,000) ( 1,178,000)
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 25,212,000 24,779,000
------------- -------------
$209,054,000 $193,735,000
============= =============
</TABLE>
See notes to condensed consolidated financial statements.
-3-
<PAGE>
TRANS LEASING INTERNATIONAL, INC.
---------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Six months
ended
December 31
-------------------------------
1994 1993
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ 789,000 ($ 515,000)
Adjustments to reconcile net earnings
(loss) to net cash provided by
operating activities:
Leasing costs, primarily provision
for uncollectible accounts and
amortization of initial direct costs 3,149,000 4,707,000
Depreciation and amortization 306,000 202,000
Initial direct costs paid ( 1, 162,000) ( 947,000)
Deferred income taxes 155,000
Changes in:
Accounts payable and accrued expenses 967,000 1,150,000
Income taxes recoverable 1,107,000 ( 1,014,000)
Other assets ( 745,000) ( 1,485,000)
Other ( 1,000) ( 24,000)
------------- ------------
Net cash provided by operating
activities 4,410,000 2,229,000
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Principal collections on leases 34,839,000 30,534,000
Equipment purchased for leasing ( 51,383,000) ( 45,652,000)
Purchase of lease financing receivables ( 329,000) ( 1,970,000)
Purchase of property and equipment ( 1,743,000) ( 207,000)
Disposal of property and equipment 130,000 71,000
------------- ------------
Net cash used in investing activities ( 18,486,000) ( 17,224,000)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of notes payable to financial
institutions 69,545,000 35,000,000
Repayment of notes payable to financial
institutions ( 46,857,000) ( 10,612,000)
Issuance of lease-backed obligations 50,453,000
Repayment of lease-backed obligations ( 59,222,000) ( 9,329,000)
Purchase of treasury stock ( 356,000)
------------- ------------
Net cash provided by financing
activities 13,563,000 15,059,000
------------- ------------
NET (DECREASE) INCREASE IN CASH ( 513,000) 64,000
CASH, beginning of period 3,297,000 2,269,000
------------- ------------
CASH, end of period $ 2,784,000 $ 2,333,000
============= ============
</TABLE>
See notes to condensed consolidated financial statements.
-4-
<PAGE>
TRANS LEASING INTERNATIONAL, INC.
---------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(Unaudited)
Note A - Financial Statements:
- - - -----------------------------
The condensed consolidated balance sheet as of December 31, 1994, and the
condensed consolidated statements of operations and cash flows for the three-
month and six-month periods ended December 31, 1994 and 1993, have been prepared
by the Company without audit. The condensed consolidated balance sheet at June
30, 1994, has been taken from the audited financial statements of that date. In
the opinion of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position at December 31,
1994, and the results of operations and cash flows for the periods presented
have been made. The results of operations for the period ended December 31,
1994, are not necessarily indicative of the operating results for the full year.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted. It is suggested that these financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's June 30, 1994 annual report to stockholders.
Certain 1994 amounts have been reclassified to conform with the
presentation used in the 1995 financial statements.
Note B - Change in Accounting for Income Taxes:
- - - ----------------------------------------------
The Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 109, "Accounting for Income Taxes", effective July 1, 1993. This statement
supersedes the provisions of Accounting Principles Board Opinion No. 11,
"Accounting for Income Taxes", under which the Company had previously been
recognizing income tax expense. The cumulative effect of adopting SFAS No. 109
on the Company's financial statements was to decrease net earnings by $155,000
($.03 per share) for the first six months of fiscal 1994.
-5-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
GENERAL
- - - -------
The Company's operations are comprised almost exclusively of lease
financing. The Company realizes net earnings to the extent that lease income,
net of a provision for uncollectible accounts, and related fees exceed interest
expense and general and administrative expenses. Interest expense is the single
largest expense of the Company and is a function of the amounts borrowed by the
Company to finance its lease portfolio and the interest rates associated with
those borrowings. The difference between the lease income and the cost of funds
to finance the leases is generally referred to as the "spread" in the portfolio.
Substantially all of the Company's lease receivables are written at a fixed
rate for a fixed term. The Company's borrowings on the other hand are at both
fixed and variable rates of interest. The Company borrows under a revolving
credit facility at a variable interest rate (see "Liquidity and Capital
Resources") and from time to time periodically refinances that debt on a fixed-
rate basis through private placements of institutional debt, a fixed-rate loan
option in the revolving credit agreement, securitization of lease receivables or
the sale of debt in the public market. To the extent the Company refinances
with fixed-rate debt, the Company locks in the spread in its portfolio.
The Company has experienced growth in both the dollar amount and number of
new lease receivables added to its portfolio during each of the past five fiscal
years. In analyzing the Company's financial statements, it is important to
understand the impact of lease receivable growth during an accounting period on
lease income and net earnings.
For financial reporting purposes, substantially all of the Company's leases
are classified as direct finance leases and are accounted for in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 13. The Company
accounts for its investment in direct finance leases by recording on the balance
sheet the total minimum lease payments receivable plus the estimated residual
value of leased equipment less the unearned lease income. Unearned lease income
represents the excess of the total minimum lease payments plus the estimated
residual value expected to be realized at the end of the lease term over the
cost of the related equipment. Unearned lease income is recognized as revenue
over the term of the lease by a method which approximates the "interest" method,
i.e., application of a constant periodic rate of return to the declining net
investment in each lease. As a result, during a period in which the Company
realizes growth in new lease receivables, lease income should also increase, but
at a lesser rate.
Initial direct costs incurred in consummating a lease, principally
commissions, are capitalized as part of the net investment in direct finance
leases and amortized over the lease term as a reduction in the yield. Also, at
the inception of a lease an addition is made to the allowance for uncollectible
accounts and capitalized as part of the net investment in direct finance leases.
This capitalized expense is amortized as a provision for uncollectible accounts
in the same manner as lease revenue is recognized, because the Company believes
that such amortization procedure approximates the timing of lease receivable
uncollectibility. The Company supplements this process with periodic
evaluations of the reasonableness of the allowance and, if necessary, additional
expense would be recognized currently. In the quarter ended December 31, 1993,
the Company recognized additional expense of $300,000 as a result of this
process and $1,696,000 for the write-off of one significant account which
represented approximately one percent of the Company's portfolio. See "Results
of Operations" below for further discussion.
-6-
<PAGE>
RESULTS OF OPERATIONS
- - - ---------------------
Lease income increased $1,078,000 (8.3%) in the first six months of fiscal
1995 compared with the like period of fiscal 1994, and $566,000 (8.5%) in the
second quarter of fiscal 1995 as compared with the second quarter of fiscal
1994, due primarily to a 12.6% increase in the net investment in direct finance
leases. In addition, the increase in lease income is attributable to an
increase in lease-related fees of $197,000 (16.7%) in the first six months of
fiscal 1995 and $100,000 (16.8%) in the second quarter of fiscal 1995 as
compared with the comparable fiscal 1994 periods.
The growth in the Company's lease portfolio is the result of an increase in
the dollar amount of leases originated. The Company believes that the dollar
amount of leases originated has increased primarily as a result of its increased
marketing and selling activities, greater name recognition of LeaseCard in the
marketplace, the introduction of new products by equipment manufacturers and
reductions in lease rates which have enabled the Company to attract additional
new business. Lease-related fees, primarily delinquency charges and lease
continuance fees, have increased as a result of the growth in the size of the
Company's lease portfolio.
Interest expense increased $680,000 (11.6%) in the first six months of
fiscal 1995 as compared with the like period of the prior year, and $443,000
(15.0%) in the second quarter of fiscal 1995 as compared with the second quarter
of fiscal 1994. This increase resulted from an increase in the amounts borrowed
to finance the growth in the lease portfolio and the increase in interest rates.
Interest expense as a percent of lease income increased to 47.3% and 46.3% for
the three months and six months ended December 31, 1994, respectively, from
44.7% and 45.0% for the comparable fiscal 1994 periods.
General and administrative expenses increased $325,000 (7.7%) in the six-
month period ended December 31, 1994, compared with the like period of the prior
year, and $149,000 (6.8%) in the second quarter of fiscal 1995 compared with the
second quarter of fiscal 1994. General and administrative expenses as a
percent of lease income decreased slightly to 32.7% and 32.4% for the three
months and six months ended December 31, 1994, respectively, and 33.2% and 32.5%
for the comparable fiscal 1994 periods.
The provision for uncollectible accounts decreased $1,640,000 (43.8%) in
the six-month period ended December 31, 1994, compared with the like period of
the prior year, and by $1,817,000 (62.6%) in the second quarter of fiscal 1995
as compared with the second quarter of fiscal 1994. This decrease is primarily
the result of the write-off in the second quarter of fiscal 1994 of one large
lessee account in the amount of $1,696,000 which represented approximately one
percent of the Company's portfolio and an additional expense of $300,000 to
adjust the allowance for uncollectible accounts. The write-off in fiscal 1994
of this one account does not reflect a deterioration in the performance of the
remainder of the portfolio which continues to perform consistent with historical
norms.
Earnings before income taxes and the cumulative effect of a change in
accounting for the first six months of fiscal 1995 were $1,278,000 compared with
a loss of $583,000 for the like period of the prior year, and were $568,000 for
the second quarter of fiscal 1995 compared with a loss of $1,317,000 for the
like quarter of the prior year. Earnings before the cumulative effect of a
change in accounting for the first six months of fiscal 1995 were $789,000 or
$.18 per share, compared with a loss of $360,000, or $.09 per share, for
the like period of the prior year. For the second quarter of
-7-
<PAGE>
fiscal 1995, earnings before the cumulative effect of a change in accounting
were $350,000, or $.08 per share, compared with a loss of $813,000, or $.19 per
share, for the like quarter of the prior year. These increases were primarily
due to the decrease in the provision for uncollectible accounts, as discussed
above.
Net earnings for the first six months of fiscal 1995 were $789,000, or $.18
per share, compared with a net loss of $515,000, or $.12 per share, for the like
period of the prior year. For the second quarter of fiscal 1995, net earnings
were $350,000, or $.08 per share, compared with a net loss of $813,000, or $.19
per share, for the like quarter of the prior year. The increase was primarily
due to the decrease in the provision for uncollectible accounts, as discussed
above, and the adoption of SFAS No. 109 in fiscal 1994 .
LIQUIDITY AND CAPITAL RESOURCES
- - - -------------------------------
The Company has principally financed its operations, including the growth
of its lease portfolio, through borrowings under its revolving credit agreement,
issuance of debt and lease-backed obligations in both the institutional private
placement and public markets, principal collections on leases and cash provided
from operations.
Net cash used in investing activities, which was $18.5 million in the first
six months of fiscal 1995 and $17.2 million in the first six months of fiscal
1994, generally represents the excess of equipment purchased for leasing over
principal collections on leases. Net cash provided by financing activities (the
excess of borrowings under the revolving credit agreement and issuance of debt
and lease-backed obligations over repayments of these debt instruments) was
$13.6 million in the first six months of fiscal 1995 and $15.1 million in the
first six months of fiscal 1994; the remaining funds used in investing
activities were provided by operating cash flows.
The Company is in the process of updating its data processing system. The
Company expects to complete the upgrade in fiscal 1995 and anticipates
additional expenditures of $136,000 for new data processing equipment, which is
already committed. Also, as of December 31, 1994, the Company had outstanding
commitments to purchase equipment, which it intended to lease, with an aggregate
purchase price of $3.1 million.
The Company borrows under its revolving credit agreement from time to time
to fund its operations. As the Company has approached full utilization under
this agreement, it has sold long-term debt and lease-backed obligations in both
the institutional private placement and public markets and used the proceeds to
reduce its revolving credit borrowings. These long-term debt and lease-backed
obligations are issued either with fixed interest rates or with floating
interest rates combined with interest rate hedges to lock in a fixed rate. The
Company intends to continue to issue long-term debt and lease-backed obligations
in both the institutional private placement and public markets to reduce its
exposure to floating rates associated with revolving credit borrowings.
-8-
<PAGE>
On December 9, 1994, the Company cancelled its revolving credit agreement
with Bank of America and established a similar facility with First Union
National Bank of North Carolina. The Company made this change due to the more
favorable pricing and flexible terms afforded by the new facility.
The Company's current revolving credit agreement permits the Company to
borrow up to $50 million on an unsecured basis, and as of February 9, 1995, the
outstanding loans under this facility were $39.9 million and unused borrowing
capacity was $10.1 million.
The Company believes that the unused credit facility, increasing principal
payments on leases and continued placement of debt and lease-backed obligations
in either the public or private markets will provide adequate capital resources
and liquidity for the Company to fund its operations and debt maturities.
The Company completed negotiations to develop a uniform indenture for all
of its private placement financings. The new agreements were effective November
30, 1994.
On November 16, 1994, the Board of Directors authorized the repurchase by
the Company of up to 1,000,000 shares of its common stock. The Board determined
that this stock repurchase program is in the best interests of the Company and
its shareholders given the significant discount to book value at which the
Company's common stock is currently trading. As of December 31, 1994, 103,725
shares have been repurchased at a total cost of $356,000 under this program.
-9-
<PAGE>
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) List of Exhibits Filed with Form 10-Q:
-------------------------------------
10.36 Credit Agreement dated as of December 9, 1994 between
Registrant and First Union National Bank of North Carolina.
10.37 Amended and Restated Note Agreement dated as of November 30,
1994 between Registrant and certain lenders named therein.
10.38 Amended and Restated Note Agreement dated as of November 30,
1994 between Registrant and First Union National Bank of North
Carolina.
10.39 Amended and Restated Note Agreement dated as of November 30,
1994 between Registrant and Massachusetts Mutual Life Insurance
Company.
27 Financial Data Schedule.
(b) Reports on Form 8-K
-------------------
No reports were filed on Form 8-K during the fiscal quarter ended
December 31, 1994.
-13-
<PAGE>
SIGNATURES
----------
Pursuant to the requirements 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.
TRANS LEASING INTERNATIONAL, INC.
---------------------------------
(Registrant)
DATE: February 10, 1995 RICHARD GROSSMAN
----------------- -----------------------------------
Richard Grossman
President, Chief Executive Officer,
Chairman of the Board of Directors
DATE: February 10, 1995 NORMAN SMAGLEY
----------------- ------------------------------
Norman Smagley
Vice President, Finance, and
Chief Financial Officer
-14-
<PAGE>
EXHIBIT 10.36
================================================================================
CREDIT AGREEMENT
Dated As Of December 9, 1994
between
TRANS LEASING INTERNATIONAL, INC.
and
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
individually and as Agent
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
1. DEFINITIONS, INTERPRETATION OF AGREEMENT AND COMPLIANCE WITH
FINANCIAL RESTRICTIONS................................................ 1
1.1 Definitions..................................................... 1
1.2 Other Definitional Provisions................................... 23
1.3 Interpretation of Agreement..................................... 24
1.4 Compliance with Financial Restrictions.......................... 24
2. COMMITMENT OF THE BANKS............................................... 24
2.1 Revolving Loans................................................. 24
2.2 Fixed Rate Loans................................................ 24
2.3 Term Loan....................................................... 24
3. LOAN OPTIONS; BORROWING PROCEDURES; CONTINUATION/CONVERSION
OF LOANS; CERTAIN LOAN TERMS.......................................... 25
3.1 Loan Options.................................................... 25
3.2 Borrowing Procedures............................................ 25
3.3 Continuation and/or Conversion of Loans......................... 27
3.4 Funding Losses.................................................. 27
3.5 Capital Adequacy................................................ 28
4. NOTES EVIDENCING BORROWINGS........................................... 29
4.1 Notes Evidencing Revolving Loans................................ 29
4.2 Notes Evidencing Fixed Rate Loans............................... 29
4.3 Notes Evidencing Term Loans..................................... 29
5. INTEREST AND FEES..................................................... 29
5.1 Interest - Revolving Loans...................................... 29
5.2 Interest - Fixed Rate Loans..................................... 30
5.3 Interest - Term Loans........................................... 30
5.4 Interest after Maturity......................................... 30
5.5 Commitment Fee.................................................. 31
5.6 Method of Calculating Interest and Fees......................... 31
6. PAYMENTS, PREPAYMENTS, REDUCTION OR TERMINATION OF THE
CREDIT AND SETOFF..................................................... 31
6.1 Place of Payment................................................ 31
6.2 Mandatory Prepayments........................................... 32
i
<PAGE>
6.3 Optional Prepayments - Revolving Loans.......................... 32
6.4 Optional Prepayments - Term Loan................................ 33
6.5 Optional Prepayment of Fixed Rate Loans......................... 33
6.6 Reduction or Termination of the Credit.......................... 35
6.7 Setoff.......................................................... 36
6.8 Proration of Payments........................................... 37
7. ADDITIONAL PROVISIONS RELATING TO EURODOLLAR LOANS.................... 37
7.1 Increased Cost.................................................. 37
7.2 Eurodollar Deposits Unavailable or Interest Rate
Unascertainable................................................. 38
7.3 Changes in Law Rendering Eurodollar Loans Unlawful.............. 39
7.4 Funding......................................................... 40
7.5 Mitigation...................................................... 40
8. WARRANTIES............................................................ 41
8.1 Existence....................................................... 41
8.2 Authorization................................................... 41
8.3 No Conflicts.................................................... 41
8.4 Validity and Binding Effect..................................... 41
8.5 No Default...................................................... 42
8.6 Financial Statements............................................ 42
8.7 Insurance....................................................... 42
8.8 Litigation...................................................... 43
8.9 Liens........................................................... 43
8.10 Subsidiaries.................................................... 44
8.11 Partnerships.................................................... 44
8.12 Purpose......................................................... 44
8.13 Regulation U.................................................... 44
8.14 Compliance...................................................... 44
8.15 Pension and Welfare Plans....................................... 44
8.16 Taxes........................................................... 45
8.17 Investment Company Act Representation........................... 45
8.18 Public Utility Holding Company Act Representation............... 46
9. COMPANY'S COVENANTS................................................... 46
9.1 Financial Statements and Other Reports.......................... 46
9.2 Notices......................................................... 48
9.3 Existence....................................................... 49
9.4 Nature of Business.............................................. 49
9.5 Books, Records and Access....................................... 49
9.6 Insurance....................................................... 49
ii
<PAGE>
9.7 Insurance Reports............................................... 49
9.8 Repair.......................................................... 50
9.9 Taxes........................................................... 50
9.10 Compliance...................................................... 51
9.11 Pension Plans................................................... 51
9.12 Merger, Purchase and Sale....................................... 51
9.13 Liabilities to Net Worth Ratio.................................. 52
9.14 Tangible Net Worth.............................................. 52
9.15 Capital Expenditures............................................ 53
9.16 Interest Coverage............................................... 53
9.17 Restricted Payments............................................. 53
9.18 Company's and Subsidiaries' Stock............................... 54
9.19 Indebtedness.................................................... 54
9.20 Liens........................................................... 55
9.21 Guaranties...................................................... 56
9.22 Investments..................................................... 56
9.23 Leases.......................................................... 57
9.24 Lease Portfolio................................................. 57
9.25 Unconditional Purchase Obligation............................... 58
9.26 Other Agreements................................................ 58
9.27 Use of Proceeds................................................. 58
9.28 Transactions with Related Parties............................... 59
9.29 Subsidiaries; Partnerships...................................... 59
10. CONDITIONS PRECEDENT TO ALL REVOLVING LOANS, FIXED RATE
LOANS AND THE TERM LOANS.............................................. 59
10.1 Notice.......................................................... 59
10.2 Default......................................................... 59
10.3 Insurance....................................................... 59
10.4 Warranties...................................................... 60
10.5 Certification................................................... 60
10.6 Term Notes; Fixed Rate Loan Notes............................... 60
11. CONDITION PRECEDENT TO INITIAL REVOLVING LOANS........................ 60
11.1 Revolving Note.................................................. 60
11.2 Resolutions..................................................... 61
11.3 Incumbency Certificate.......................................... 61
11.4 By-Laws......................................................... 61
11.5 Certificate of Incorporation.................................... 61
11.6 Good Standing................................................... 61
11.7 Opinion......................................................... 61
iii
<PAGE>
11.8 Exhibits; Schedules............................................. 61
11.9 Borrowing Base Certificate...................................... 61
12. EVENTS OF DEFAULT AND REMEDIES........................................ 61
12.1 Events of Default............................................... 61
12.2 Remedies........................................................ 64
13. THE AGENT............................................................. 65
13.1 Authorization and Appointment................................... 65
13.2 Indemnification................................................. 65
13.3 Exculpation..................................................... 66
13.4 Non-Reliance on Agent........................................... 67
13.5 Agent and Affiliates............................................ 68
13.6 Notice to Holder of Notes....................................... 68
13.7 Resignation..................................................... 68
14. GENERAL............................................................... 68
14.1 No Waiver by the Agent or Banks................................. 68
14.2 Amendments...................................................... 69
14.3 Notices......................................................... 70
14.4 Expenses; Attorney's Fees....................................... 70
14.5 Assignments; Participations..................................... 71
14.5.1 Assignments................................................... 71
14.5.2 Effectiveness of Assignments.................................. 72
14.5.3 Participations................................................ 73
14.6 Information..................................................... 74
14.7 Severability.................................................... 75
14.8 Successors...................................................... 75
14.9 Counterparts.................................................... 75
14.10 Governing Law................................................... 75
14.11 WAIVER OF JURY TRIAL............................................ 75
iv
<PAGE>
LIST OF SCHEDULES AND EXHIBITS
Schedules
---------
Schedule 8.7 Insurance Summary
Schedule 8.8 Litigation
Schedule 8.9 Liens
Schedule 8.10 Subsidiaries
Schedule 8.11 Partnerships
Schedule 8.15 Welfare Benefit Plans
Schedule 9.19 Indebtedness
Schedule 9.22 Investments
Exhibits
--------
Exhibit A Form of Fixed Rate Loan Note
Exhibit B Form of Revolving Note
Exhibit C Form of Term Note
Exhibit D Form of Confirmation
Exhibit E Form of Fixed Rate Loan Request
Exhibit F Form of Compliance Certificate
Exhibit G Form of Borrowing Base Certificate
Exhibit H Form of Subordination Agreement
Exhibit I Form of Opinion
v
<PAGE>
CREDIT AGREEMENT
THIS AGREEMENT is entered into as of December 9, 1994, between TRANS
LEASING INTERNATIONAL, INC., a Delaware corporation (the "Company"), and First
Union National Bank of North Carolina ("First Union"), individually and as
Agent.
WHEREAS, the Company and First Union desire to enter into this Credit
Agreement pursuant to which First Union will make certain loans to the Company
as more fully described herein;
NOW, THEREFORE, in consideration of the foregoing premises and the
agreements hereinafter set forth, and for other good and valuable consideration
the receipt of which is hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS, INTERPRETATION OF AGREEMENT AND COMPLIANCE WITH
FINANCIAL RESTRICTIONS.
1.1 Definitions. In addition to the terms defined elsewhere in this
-----------
Agreement, the following terms shall have the meanings indicated for
purposes of this Agreement (such meanings to be equally applicable to both
the singular and plural forms of the terms defined):
"Account" has the meaning ascribed to such term in Section 3.2(c).
------- --------------
"Agent" means First Union as Agent for the Banks (if any) hereunder,
-----
and includes any Person subsequently appointed as the successor Agent
pursuant to Section 13.7.
------------
"Agreement" means this Credit Agreement, as it may be amended,
---------
modified or supplemented from time to time.
"Alternate Reference Rate" means, for any day, a fluctuating rate
------------------------
per annum equal to the greater of (i) the Reference Rate in effect on such
day or (ii) a rate per annum (rounded upward to the next highest 1/8 of 1%
if not already an integral multiple of 1/8 of 1%) equal to the Federal
Funds Effective Rate in effect on such day plus one-half of one percentage
point (1/2%) per annum. If for any reason the
1
<PAGE>
Agent shall have determined (which determination shall be conclusive in the
absence of manifest error) that it is unable to ascertain the Federal Funds
Effective Rate for any reason (including, without limitation, the inability
or failure of the Agent to obtain sufficient bids or publications in
accordance with the terms hereof), the Alternate Reference Rate shall be a
fluctuating rate per annum equal to the Reference Rate in effect from time
to time until the circumstances giving rise to such inability no longer
exist.
"Alternate Reference Rate Loan" means any Loan which bears interest
-----------------------------
at a rate determined with reference to the Alternate Reference Rate.
"Alternate Reference Rate Revolving Loan" means any Revolving Loan
---------------------------------------
which bears interest at a rate determined with reference to the Alternate
Reference Rate.
"Alternate Reference Rate Term Loan" means the Term Loans when they
----------------------------------
bear interest at a rate determined with reference to the Alternate
Reference Rate.
"Alternative Fixed Rate" has the meaning ascribed to such term in
----------------------
Section 6.5.
-----------
"Applicable Payments" has the meaning ascribed to such term in
-------------------
Section 6.5.
-----------
"Assignee" has the meaning ascribed to such term in Section 14.5.
-------- ------------
"Assignment" has the meaning ascribed to such term in Section 14.5.
---------- ------------
"Assignment and Assumption Agreement" has the meaning ascribed to
-----------------------------------
such term in Section 14.5.
------------
"Average Original Equipment Cost of Assets" has the meaning ascribed
-----------------------------------------
to such term in Section 9.24.
------------
"Bank" shall include First Union and any Person which becomes a
----
"Bank" hereunder pursuant to Section 14.5.
------------
2
<PAGE>
"Bank of America" means Bank of America Illinois, a national banking
---------------
association.
"Banking Day" means any day on which banks are open for business in
-----------
Charlotte, North Carolina and, with respect to Eurodollar Loans, on which
dealings in foreign currencies and exchange may be carried on by the Banks in
the interbank eurodollar market.
"Bid Side of the Eurodollar Market" has the meaning ascribed to such term
---------------------------------
in Section 6.5.
-----------
"Borrowing" means Loans of the same type and (a) in the case of Eurodollar
---------
Loans, having the same Interest Period and (b) in the case of Fixed Rate Loans,
having the same amortization and maturity dates, made by all Banks on the same
Banking Day and pursuant to the same request in accordance with Section 3.2 or
-----------
3.3.
- - - ---
"Borrowing Base" means the excess of (a) the sum of (i) 85% of the present
--------------
value of Eligible Lease Receivables (determined, for each Lease, on the basis of
the Receivable Discount Rate), plus (ii) 85% of the present value of Eligible
Vendor Note Receivables (determined, for each Vendor Note, on the basis of the
Receivable Discount Rate), plus (iii) 25% of the present value (determined on
the basis of the Receivable Discount Rate) of the lesser of (X) 11% of the
aggregate original acquisition cost of the property leased under Eligible Leases
and (Y) the aggregate Residuals with respect to Eligible Leases, plus (iv) the
total amount of Unrestricted Cash of the Company and its consolidated
Subsidiaries over (b) the Company's Consolidated Total Liabilities other than
the outstanding principal balance of the Loans; provided, that to the extent the
--------
sum of (x) the aggregate Eligible Lease Receivables, plus (y) the aggregate
Eligible Vendor Note Receivables due from any one Person (other than Hanjin
Shipping and all of its subsidiaries, including Korean Airlines) exceeds
$1,000,000 as of such time of determination and in the case of Hanjin Shipping
and all of its subsidiaries, including Korean Airlines, exceeds $3,000,000 as of
such time of determination, the portion thereof in excess
3
<PAGE>
of such amounts shall be excluded from the computation of the Borrowing Base.
"Borrowing Base Certificate" has the meaning ascribed to such term in
--------------------------
Section 9.1(a).
- - - --------------
"Capitalized Lease" means any lease which is or should be capitalized on
-----------------
the balance sheet of the lessee in accordance with GAAP.
"Code" means the Internal Revenue Code of 1986 and any successor statute of
----
similar import, together with the regulations thereunder, in each case as in
effect from time to time. References to sections of the Code shall be construed
to also refer to any successor sections.
"Commitment" means, as the context may require, a Bank's Revolving Loan
----------
Commitment, Term Loan Commitment or Fixed Rate Loan Commitment.
"Commitment Amount" means, as the context may require, the Revolving Loan
-----------------
Commitment Amount, Term Loan Commitment Amount or Fixed Rate Loan Commitment
Amount.
"Compliance Certificate" has the meaning ascribed to such term in Section
---------------------- -------
9.1(d).
- - - ------
"Confirmation" has the meaning ascribed to such term in Section 3.2(a).
------------ --------------
"Consolidated Tangible Net Worth" means, at any time, the total of (a)
-------------------------------
shareholders' equity (including capital stock, additional paid-in capital and
retained earnings after deducting treasury stock) of the Company and its
consolidated Subsidiaries calculated in accordance with GAAP, plus (b)
----
Subordinated Debt of the Company and its consolidated Subsidiaries (other than
that portion thereof which is due within twelve (12) months of such time), minus
-----
(c) the sum of (i) the total amount of any intangible assets of the Company and
its consolidated Subsidiaries, plus (ii) Restricted Cash of the Company and its
----
Subsidiaries (not including any Restricted Cash of a Securitization Subsidiary)
plus (iii) the
- - - ----
4
<PAGE>
Company's aggregate Net Assets of Securitization Subsidiaries. Intangible assets
shall include, without limitation, unamortized debt discount and expense,
unamortized deferred charges and goodwill.
"Consolidated Total Liabilities" means, at any date of determination, the
------------------------------
sum of (a) the total liabilities of the Company and its consolidated
Subsidiaries which, in accordance with GAAP, would be included in determining
liabilities as shown on the liability side of the Company's consolidated balance
sheet, plus (b) the contingent obligations or liabilities of the Company and its
----
consolidated Subsidiaries (excluding those as to which a dollar amount is not
ascertainable), minus (c) that portion of deferred taxes of the Company and its
-----
consolidated Subsidiaries which does not exceed eight percent (8%) of the
consolidated total assets (as determined in accordance with GAAP) of the Company
and its consolidated Subsidiaries, and minus (d) Subordinated Debt other than
-----
that portion thereof which is due within twelve (12) months of such date of
determination.
"Conversion Date" means September 11, 1995, or such earlier date (which
---------------
shall be a Banking Day) as may be fixed by the Company on at least five (5)
Banking Days' written or telephonic notice received by the Agent; provided,
--------
however, that, upon the Company's request and subject to the terms set forth
- - - -------
herein, the Conversion Date may be extended for successive periods of time so
long as each such extension does not extend the Conversion Date to a date that
is more than one year from the first date on which the Agent has received
notices from all of the Banks that each such Bank has agreed to so extend the
Conversion Date. The Company shall promptly confirm any telephonic notice in
writing. If the Company desires to extend a scheduled Conversion Date, the
Company shall so notify the Agent (which shall promptly notify each of the
Banks) in writing at least ninety (90) days prior to such scheduled Conversion
Date. Each Bank will, at least sixty (60) days prior to the then scheduled
Conversion Date, notify the Agent (which shall promptly notify the Company) in
writing if such Bank has decided not to extend the Conversion Date; provided,
--------
however, that failure of a Bank to so notify the Agent shall not constitute such
- - - -------
Bank's agreement to extend the
5
<PAGE>
Conversion Date or otherwise obligate such Bank to do so. Once the Agent
receives notices from all of the Banks that they have agreed to extend the
Conversion Date, the Conversion Date shall be extended to the earlier of (i) the
date requested by the Company and (ii) the date one year from the date on which
the Agent receives notices from all the Banks of their respective agreements to
the extension.
"Credit" means the aggregate Commitments of the Banks to make Revolving
------
Loans, Fixed Rate Loans and the Term Loans under the terms of this Agreement.
"Dollars" and the symbol "$" means lawful money of the United States of
-------
America.
"Eligible Lease" means a Lease (i) under which the Company is the lessor
--------------
or, by reason of the Company's purchase thereof, is the successor in interest of
the lessor, (ii) which is either a "sales type lease," a "direct financing
lease" or an "operating lease" (as such terms are defined in FASB Statement No.
13, as in effect from time to time), and (iii) which satisfies all of the
following requirements: no payment due from the lessee thereunder is more than
60 days past due, and there exists no other material default by the lessee of
any of its obligations thereunder or by any other obligor of its obligations
with respect thereto; it arises from a bona fide lease or sale of the property
covered thereby and is the valid and enforceable obligation of the lessee
thereunder; it provides that it is noncancellable during its initial firm term
and that the lessee will pay all amounts due thereunder without setoff,
counterclaim, defense or abatement; there exist no setoffs, counterclaims or
defenses of or disputes with the lessee with respect thereto; the Lease, the
payments due or to become due thereunder and the property leased thereunder are
not subject to any Lien except Liens permitted under this Agreement (other than
Liens described in Section 9.20(h), which shall not be permitted to apply to an
---------------
Eligible Lease) and the interests of the lessee; the Company holds indefeasible
title to the Lease and all payments due or to become due thereunder and all
property covered thereby; and the lessee under the Lease is not one which the
Agent, acting in its reasonable discretion or at the direction of the
6
<PAGE>
Majority Banks, has notified the Company is not acceptable to the Agent and/or
the Majority Banks. A Lease which initially was an Eligible Lease, but which
subsequently fails to satisfy any of the above requirements, shall cease to be
an Eligible Lease.
"Eligible Lease Receivable" means a Lease Receivable under an Eligible
-------------------------
Lease.
"Eligible Receivable" means an Eligible Lease Receivable or an Eligible
-------------------
Vendor Note Receivable.
"Eligible Securitization Asset" means any lease or installment purchase
-----------------------------
contract (and the rights thereunder) entered into or owned by the Company or a
Securitization Subsidiary, as the case may be, the Company's or a Securitization
Subsidiary's interest in any equipment or other assets which are the subject of
any such lease or contract, all monies due or to become due with respect to any
of the foregoing, all rights and interests in the insurance policies with
respect to any of the foregoing and cash in an amount up to the aggregate
reserve or credit enhancement requirements, if any, which the Company or any
Securitization Subsidiary, as the case may be, is obligated to fund under the
documents governing the securitization of such asset by a Securitization
Subsidiary.
"Eligible Vendor Note" means a Vendor Note which satisfies all of the
--------------------
following requirements: (i) it is the valid and enforceable obligation of the
maker thereof; (ii) it is a negotiable instrument and the maker thereof has
waived all defenses as against any assignee of the Company or subsequent holder
thereof; (iii) the collateral security therefor is subject to a first and prior
perfected Lien in favor of the Company and is not subject to any other Lien;
(iv) each Lease securing payment or performance thereof meets all of the
requirements of an Eligible Lease except that the maker of the Vendor Note is
the lessor under such Lease and the owner thereof: (v) no payment with respect
thereto is more than 60 days past due, and there exists no other material
default by the maker thereof of any of its obligations thereunder or under any
assignment, security agreement or
7
<PAGE>
other document executed by the maker thereof in connection therewith; (vi) there
exist no setoffs, counterclaims or defenses of or disputes with the maker with
respect thereto; and (vii) the maker thereof is not one which the Agent acting
in its reasonable discretion or at the direction of the Majority Banks, has
notified the Company is not acceptable to the Agent and/or the Majority Banks.
A Vendor Note which initially was an Eligible Vendor Note, but subsequently
fails to satisfy any of the above requirements, shall cease to be an Eligible
Vendor Note.
"Eligible Vendor Note Receivable" means a Vendor Note Receivable under an
-------------------------------
Eligible Vendor Note; provided, however, that the maximum dollar amount of
-------- -------
Vendor Note Receivables which shall be considered as Eligible Vendor Note
Receivables shall be limited to not more than 50% of the Company's Consolidated
Tangible Net Worth in the case of any one maker of Vendor Notes in each case as
set forth in the most recent Compliance Certificate delivered pursuant to
Section 9.1(d).
- - - --------------
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed to also refer to any successor sections.
"ERISA Affiliate" means any corporation, partnership, or other trade or
---------------
business (whether or not incorporated) that is, along with the Company, a member
of a controlled group of corporations or a controlled group of trades or
businesses, as described in Sections 414(b) and 414(c), respectively, of the
Code or Section 4001 of ERISA, or a member of the same affiliated service group
within the meaning of Section 414(m) of the Code.
"Eurocurrency Reserve Requirement" means, with respect to any Eurodollar
--------------------------------
Loan for any Interest Period, a percentage equal to the daily average during
such Interest Period of the percentages in effect on each day of such Interest
Period, as prescribed by the Federal Reserve Board, for determining the
aggregate maximum reserve requirements (including all basic,
8
<PAGE>
supplemental, marginal and other reserves) applicable to "Eurocurrency
liabilities" pursuant to Regulation D or any other then applicable regulation of
the Federal Reserve Board which prescribes reserve requirements applicable to
"Eurocurrency liabilities," as presently defined in Regulation D. Without
limiting the effect of the foregoing, the Eurocurrency Reserve Requirement shall
reflect any other reserves required to be maintained by the Bank against (i) any
category of liabilities that includes deposits by reference to which the
Interbank Rate (Reserve Adjusted) is to be determined, or (ii) any category of
extensions of credit or other assets that includes Eurodollar Loans. For
purposes of this Agreement, any Eurodollar Loans hereunder shall be deemed to be
"Eurocurrency liabilities," as defined in Regulation D, and, as such, shall be
deemed to be subject to such reserve requirements without the benefit of, or
credit for, proration, exceptions or offsets which may be available to the Bank
from time to time under Regulation D.
"Eurodollar Loan" means any Loan (other than a Fixed Rate Loan) which bears
---------------
interest at a rate determined with reference to the Interbank Rate (Reserve
Adjusted).
"Eurodollar Revolving Loan" means any Revolving Loan which bears interest
-------------------------
at a rate determined with reference to the Interbank Rate (Reserve Adjusted).
"Eurodollar Term Loans" means the Term Loans which at any time bear
---------------------
interest at a rate determined with reference to the Interbank Rate (Reserve
Adjusted).
"Event of Default" means any of the events described in Section 12.1.
---------------- ------------
"Federal Funds Effective Rate" means, for any day, an interest rate per
----------------------------
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Banking Day,
the average of the quotations for such day on such transactions received by the
Agent from three Federal
9
<PAGE>
funds brokers of recognized standing selected by it. In the case of a day which
is not a Banking Day, the Federal Funds Effective Rate for such day shall be the
Federal Funds Effective Rate for the next preceding Banking Day. For purposes
of this Agreement and the Notes, each change in the Alternate Reference Rate due
to a change in the Federal Funds Effective Rate shall take effect on the
effective date of such change in the Federal Funds Effective Rate.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
---------------------
System or any successor thereto.
"Fiscal Quarter" means any quarter of a Fiscal Year.
--------------
"Fiscal Year" means any period of 12 consecutive calendar months ending on
-----------
the 30th day of June. References to a Fiscal Year with a number corresponding
to any calendar year (e.g. "Fiscal Year 1994") refer to the Fiscal Year ending
on the 30th day of June occurring during such calendar year.
"Fixed Rate Loan Commitment" means, relative to any Bank, such Bank's
--------------------------
obligation to make Fixed Rate Loans pursuant to Section 2.2 in an amount equal
-----------
to its Percentage of each Borrowing of Fixed Rate Loans, up to a maximum of its
Percentage of the Fixed Rate Loan Commitment Amount.
"Fixed Rate Loan Commitment Amount" means, on any date, the lesser of (a)
--------------------------------- ------
$50,000,000, as such amount may be reduced from time to time pursuant to Section
-------
6.6, minus the outstanding principal balance of the Revolving Loans (after
- - - --- -----
taking into account the amount thereof concurrently repaid with the proceeds of
any Fixed Rate Loans) and (b) the Borrowing Base minus the outstanding principal
-----
balance of the Revolving Loans (after taking into account the amount thereof
concurrently repaid with the proceeds of any Fixed Rate Loans).
"Fixed Rate Loan Date" has the meaning given such term in the definition of
--------------------
"Fixed Rate Loan Rate".
"Fixed Rate Loan Note" means a promissory note of the Company, in the form
--------------------
set forth as Exhibit A, with appropriate
---------
10
<PAGE>
insertions, as such promissory note may be amended, modified or supplemented
from time to time, and the term "Fixed Rate Loan Note" shall include any
substitutions for, or renewals of, such promissory note.
"Fixed Rate Loan Rate" means, for any Fixed Rate Loan, the sum of two
--------------------
percentage points (2.00%) plus the rate of interest which is approximately equal
to the quotient of:
(a) the sum of the products of:
(i) the amount of each scheduled principal payment with respect to
such Loan (each, a "Scheduled Payment"),
(ii) for each Scheduled Payment, the number of months (rounded to the
nearest whole integer) in the period (the "Payment Period")
commencing on the date the Fixed Rate Loan is to be made (the
"Fixed Rate Loan Date") and ending on the date the Scheduled
Payment is to be paid (the "Scheduled Payment Date"), and
(iii) for each Scheduled Payment, the rate per annum at which Dollar
deposits in immediately available funds are offered to the Agent
in the interbank eurodollar market at or about 11:00 a.m.,
Charlotte time three (3) Banking Days prior to the Fixed Rate
Loan Date, for delivery on the Fixed Rate Loan Date, for the
number of months from the Fixed Rate Loan Date to the Scheduled
Payment Date and in an amount comparable to the amount of the
Scheduled Payment,
divided by:
(b) the sum of the products of:
(i) the amount of each Scheduled Payment, and
11
<PAGE>
(ii) for each Scheduled Payment, the Payment Period therefor;
provided, however, that if any Bank shall notify the Agent that the rate of
- - - -------- -------
interest calculated pursuant to the foregoing formula for any Borrowing of Fixed
Rate Loans will not adequately and fairly reflect the cost to such Bank of
making or maintaining its Fixed Rate Loan included in such Borrowing, the rate
of interest calculated above for all of the Fixed Rate Loans to be included in
such Borrowing of Fixed Rate Loans shall be increased by the amount determined
by such Bank to be necessary to adequately reflect the cost to such Bank of
making its Fixed Rate Loan included in such Borrowing. Determinations by any
Bank of the amount of increase in the interest rate applicable to a Fixed Rate
Loan which is required to compensate such Bank in respect of the foregoing shall
be conclusive, absent manifest error and, if requested by the Company, shall be
set forth in a certificate of such Bank delivered to the Company.
"Fixed Rate Loan Request" has the meaning ascribed to such term in Section
---------------------- -------
3.2(b).
- - - ------
"Fixed Rate Loans" means the Loans described in Section 2.2.
---------------- -----------
"GAAP" means generally accepted accounting principles as applied in the
----
preparation of the audited financial statement of the Company referred to in
Section 8.6.
- - - -----------
"Indebtedness" of any Person means, without duplication, (i) any obligation
------------
of such Person for borrowed money, including, without limitation, (a) any
obligation of such Person evidenced by bonds, debentures, notes or other similar
debt instruments, and (b) any obligation for borrowed money which is non-
recourse to the credit of such Person but which is secured by a Lien on any
asset of such Person, (ii) any obligation of such Person on account of deposits
or advances, (iii) any obligation of such Person for the deferred purchase price
of any property or services, except Trade Accounts Payable, (iv) any obligation
of such Person as lessee under a Capitalized Lease, and (v) any Indebtedness of
another Person
12
<PAGE>
secured by a Lien on any asset of such first Person, whether or not such
Indebtedness is assumed by such first Person. For all purposes of this
Agreement, the Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture in which such Person is a general partner or a
joint venturer.
"Interbank Rate" means, with respect to each Interest Period for a
--------------
Eurodollar Loan or each Fixed Rate Loan, as applicable, the rate per annum at
which Dollar deposits in immediately available funds are offered to the Agent
two (2) Banking Days prior to the beginning of such Interest Period or the date
of making such Fixed Rate Loan, as applicable, by major banks in the interbank
eurodollar market as at or about 11:00 a.m., Charlotte time, for delivery on the
first day of such Interest Period, for the number of days comprised therein and
in an amount equal to the amount of the Agent's portion of the Eurodollar Loan,
or Fixed Rate Loan, as applicable, to be outstanding during such Interest
Period.
"Interbank Rate (Reserve Adjusted)" means, with respect to each Interest
---------------------------------
Period for a Eurodollar Loan, and each Fixed Rate Loan, a rate per annum
(rounded upward, if necessary, to the nearest 1/100 of 1%) determined pursuant
to the following formula:
Interbank Rate = Interbank Rate
--------------
(Reserve Adjusted) 1-Eurocurrency Reserve Requirement
"Interest Period" means, with respect to any Eurodollar Loan, the period
---------------
commencing on the borrowing date of such Eurodollar Loan, or the date an
Alternate Reference Rate Loan is converted into such Eurodollar Loan, or the
last day of the prior Interest Period for such Eurodollar Loan, as the case may
be, and ending on the numerically corresponding day one, two, three or six
months thereafter, as selected by the Company pursuant to Section 3.2 or Section
----------- -------
3.3; provided, however, that:
- - - --- -------- -------
13
<PAGE>
(a) any Interest Period which would otherwise end on a day which is
not a Banking Day shall end on the next succeeding Banking Day unless such
next succeeding Banking Day falls in another calendar month, in which case
such Interest Period shall end on the next preceding Banking Day;
(b) any Interest Period which begins on the last Banking Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on
the last Banking Day of the calendar month at the end of such Interest
Period;
(c) no Interest Period for a Eurodollar Revolving Loan shall extend
beyond the Conversion Date; and
(d) if any Interest Period includes a date on which a principal
repayment is to be made on the Term Loans, (x) the principal amount of the
Term Loans to be repaid on such date shall have an Interest Period ending
on such date, and (y) the remainder of the Term Loans, if any, shall have
an Interest Period as set forth above.
"Investment" means any investment, made in cash or by delivery of any kind
----------
of property or asset, in any Person, whether by acquisition of shares of stock
or similar interest, Indebtedness or other obligation or security, or by loan,
advance or capital contribution, or otherwise, but shall not include the
purchase by the Company of property for lease or sale in the ordinary course of
its business.
"Lease" means any contract or agreement for the leasing of personal
-----
property.
"Lease Receivable" with respect to a Lease means, at any time of
----------------
determination, without duplication, amounts due or to become due to the Company
under such Lease.
"Liabilities" means all of the liabilities, obligations and indebtedness of
-----------
the Company to First Union or any Bank of
14
<PAGE>
any kind or nature under or in connection with this Agreement and the other Loan
Documents, however created, arising or evidenced, whether direct or indirect,
absolute or contingent, now or hereafter existing or due or to become due.
"Lien" means any mortgage, pledge, hypothecation, judgment lien or similar
----
legal process, title retention lien, or other lien or security interest,
including, without limitation, the interest of a vendor under any conditional
sale or other title retention agreement and the interest of a lessor under any
Capitalized Lease.
"Loan Document" means this Agreement, the Notes and each other document,
-------------
instrument or agreement executed and/or delivered pursuant hereto or in
connection herewith, as any thereof may be amended, modified, restated or
replaced from time to time.
"Loans" means the Revolving Loans made pursuant to Section 2.1, the Fixed
----- -----------
Rate Loans made pursuant to Section 2.2, and the Term Loans made pursuant to
-----------
Section 2.3. Each Loan shall be an Alternate Reference Rate Loan, a Eurodollar
- - - -----------
Loan or a Fixed Rate Loan (each of which shall be a "type" of Loan).
"Majority Banks" means those Banks whose share in the aggregate Loans
--------------
outstanding constitutes (or, if no Loans are outstanding, those whose aggregate
Percentages constitutes) at least sixty-six and two-thirds percent (66 2/3%).
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
------------------
4001(a)(3) of ERISA which is maintained for employees of the Company or any
ERISA Affiliate.
"Net Assets of Securitization Subsidiaries" means, as of any date of
-----------------------------------------
determination, the difference (but not below zero) between (i) the total cash
and net Lease Receivables of all Securitization Subsidiaries determined in
accordance with GAAP as shown on the consolidated balance sheet of the Company
(after eliminating intercompany items) at such date of determination, minus (ii)
-----
the total lease-backed
15
<PAGE>
obligations and liquidity or similar loan obligations of all Securitization
Subsidiaries determined in accordance with GAAP as shown on the consolidated
balance sheet of the Company (after eliminating intercompany items) at such date
of determination.
"Non-Recourse Debt" means Indebtedness of the Company for which the Company
-----------------
is not personally liable and which is incurred for the express purpose of
purchasing or financing a specific lease or one or more items of property,
wherein repayment of such Indebtedness may be satisfied only out of the value of
said lease or property (including residuals) and the income and proceeds thereof
or therefrom, and not against the Company personally or any of its other
property or assets (other than Restricted Cash).
"Non-Recourse Lender" has the meaning ascribed to such term in Section
------------------- -------
9.19(e).
- - - -------
"Notes" mean the Revolving Notes referred to in Section 4.1, the Fixed Rate
----- -----------
Loan Notes referred to in Section 4.2 and the Term Notes referred to in Section
----------- -------
4.3.
- - - ---
"OEC Inflation Index" shall have the meaning ascribed to such term in
-------------------
Section 9.24.
- - - ------------
"Original Equipment Cost" shall have the meaning ascribed to such term in
-----------------------
Section 9.24.
- - - ------------
"Participant" has the meaning ascribed to such term in Section 14.5.
----------- ------------
"Payment Date" means (a) as to any Eurodollar Loan, the last day of each
------------
Interest Period with respect thereto and, if such Interest Period is in excess
of three months, the day three months after the commencement of such Interest
Period, (b) as to any Alternate Reference Rate Loan, the last day of each Fiscal
Quarter, commencing on the first of such days to occur after such Alternate
Reference Rate Loan is made or a Eurodollar Loan is converted to an Alternate
Reference Rate Loan, (c) as to any Fixed Rate Loan, the last day of each Fiscal
Quarter, commencing on the first of such days to occur
16
<PAGE>
after such Fixed Rate Loan is made, and (d) as to any fees, the last day of each
January, April, July and October, commencing on the first such date to occur
after the date hereof.
"Payment Period" has the meaning given such term in the definition of
--------------
"Fixed Rate Loan Rate".
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
----
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan", as such term is defined in section
------------
3(2) of ERISA, which is subject to Title IV of ERISA (other than a Multiemployer
Plan), and to which the Company or any ERISA Affiliate, may have liability,
including any liability by reason of having been a substantial employer within
the meaning of section 4063 of ERISA at any time during the preceding five
years, or by reason of being deemed to be a contributing sponsor under section
4069 of ERISA.
"Percentage" means as to any Bank, the percentage of such Bank of the
----------
Credit, as set forth opposite such Bank's signature hereto or in an Assignment
and Acceptance Agreement executed by such Bank, as adjusted from time to time
pursuant to Section 14.5.
-------------
"Permitted Investment" means any of the following maintained by the Company
--------------------
or any Subsidiary, or any Bank on behalf of the Company or any Subsidiary, with
such Bank:
(a) any evidence of indebtedness issued or guaranteed by the
government of the United States of America, maturing not more than one year
from the date of measurement;
(b) commercial paper, maturing not more than one year after date of
issue and rated P-1 or P-2 by Moody's Investors Service, Inc. or A-1 or A-2
by Standard & Poor's Corporation, issued by a corporation organized
17
<PAGE>
under the laws of any State of the United States of America;
(c) any certificate of deposit or acceptance, maturing not more than
one year from the date of measurement, issued by any Bank or a commercial
banking institution which is a member of the Federal Reserve System and
which has a combined capital and surplus and undivided profits of not less
than $100,000,000; and
(d) money market funds sponsored by insurance companies, investment
banking firms or commercial banking institutions which are members of the
Federal Reserve System, provided such fund has assets of not less than
$100,000,000.
"Person" means an individual, partnership, corporation, trust, joint
------
venture, joint stock company, association, unincorporated organization,
government or agency or political subdivision thereof, or other entity.
"Plan" means any Pension Plan or Welfare Plan.
----
"Prepayment Date" has the meaning ascribed to such term in Section 6.5.
--------------- -----------
"Prepayment Premium" has the meaning ascribed to such term in Section 6.5.
------------------ -----------
"Prior Credit Agreement" means that certain Amended and Restated Credit
----------------------
Agreement, dated as of February 25, 1992, as amended, among the Company, Bank of
America and the other Banks (as defined therein).
"Receivable Discount Rate" for any Lease or Vendor Note at any date of
------------------------
determination means the greater of (a) the sum of (i) the rate per annum at
which Dollar deposits in immediately available funds are offered to the Agent in
the interbank eurodollar market at or about 11:00 a.m., Charlotte time on such
date of determination, for delivery two Banking Days thereafter, for a period of
thirty (30) months and in an
18
<PAGE>
amount of $1,000,000, plus (ii) one and one-half percentage points (1 1/2%) and
----
(b) the Alternate Reference Rate.
"Reference Rate" means, at any time, the rate of interest then most
--------------
recently announced by First Union at Charlotte, North Carolina as its prime
rate, which may not necessarily be its lowest lending rate. For purposes of this
Agreement and the Notes, each change in the Alternate Reference Rate due to a
change in the Reference Rate shall take effect on the effective date of the
change in the Reference Rate.
"Related Party" means, for purposes of Section 9.28 only, any Person (other
------------- ------------
than a Subsidiary) (i) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with,
the Company, (ii) which beneficially owns or holds 5% or more of the equity
interest of the Company, or (iii) 5% or more of the equity interest of which is
beneficially owned or held by the Company or a Subsidiary. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Reportable Event" has the meaning given to such term in ERISA.
----------------
"Residual" means, with respect to a Lease, the amount determined by the
--------
Company at the commencement of the Lease term (as thereafter reduced or
increased, as appropriate, as the result of appropriate changes in
circumstances) as the estimated amount to be realized by the Company with
respect to the sale or other disposition of the property subject to the Lease as
of the expiration of the primary Lease term. Any determination by the Company to
increase the amount of Residual with respect to a Lease in a material amount
after the initial determination thereof shall be supported by such evidence as
shall be reasonably acceptable to the Agent and the Majority Banks.
19
<PAGE>
"Restricted Cash" means, with respect to the Company or any Subsidiary
---------------
(including a Securitization Subsidiary), the aggregate amount required to be
maintained by the Company or such Subsidiary in reserve, spread or cash
collateral accounts established and maintained pursuant to agreements entered
into by the Company or such Subsidiary for the borrowing of money or the
financing of Leases or other chattel paper.
"Revolving Loan Commitment" means, relative to any Bank, such Bank's
-------------------------
obligation to make Revolving Loans pursuant to Section 2.1 in an amount equal to
-----------
its Percentage of each Borrowing of Revolving Loans, up to a maximum of its
Percentage of the Revolving Loan Commitment Amount.
"Revolving Loan Commitment Amount" means, on any date of determination, the
--------------------------------
lesser of (a) the Borrowing Base minus the outstanding principal balance of the
- - - ------ -----
Fixed Rate Loans and (b) $50,000,000 (as such amount may be reduced from time to
time pursuant to Section 6.6) less the outstanding principal balance of the
-----------
Fixed Rate Loans.
"Revolving Loans" means the Loans described in Section 2.1 and shall be
--------------- -----------
Alternate Reference Rate Revolving Loans or Eurodollar Revolving Loans.
"Revolving Note" means a promissory note of the Company, in the form set
--------------
forth as Exhibit B, with appropriate insertions, as such promissory note may be
---------
amended, modified or supplemented from time to time, and the term "Revolving
Note" shall include any substitutions for, or renewals of, such promissory note.
"Scheduled Payment" has the meaning given such term in the definition of
-----------------
"Fixed Rate Loan Rate".
"Scheduled Payment Date" has the meaning given such term in the definition
----------------------
of "Fixed Rate Loan Rate".
"Securitization Subsidiary" means any wholly-owned Subsidiary exclusively
-------------------------
engaged in financing Eligible
20
<PAGE>
Securitization Assets and activities related to such financing activities.
"Subordinated Debt" means Indebtedness of the Company or any Subsidiary
-----------------
having maturities and terms, and which is subordinated to payment of the Notes
in a manner, approved in writing by the Agent acting on the direction of the
Majority Banks; provided, however, Non-Recourse Debt which is subordinated
-------- -------
pursuant to an agreement substantially in the form of Exhibit H, shall not be
---------
considered Subordinated Debt.
"Subsidiary" means any Person of which or in which the Company and its
----------
other Subsidiaries own directly or indirectly 50% or more of (i) the combined
voting power of all classes of stock having general voting power under ordinary
circumstances to elect a majority of the board of directors of such Person, if
it is a corporation, (ii) the capital interest or profits interest of such
Person, if it is a partnership, joint venture or similar entity, or (iii) the
beneficial interest of such Person, if it is a trust, association or other
unincorporated organization. Notwithstanding the foregoing, a Securitization
Subsidiary shall not be considered a Subsidiary for purposes of the definition
of "Consolidated Total Liabilities".
"Taxes" with respect to any Person means taxes, assessments or other
-----
governmental charges or levies imposed upon such Person, its income or any of
its properties, franchises or assets.
"Term Loan Commitment" means, relative to any Bank, such Bank's obligation
--------------------
to make a Term Loan pursuant to Section 2.3.
-----------
"Term Loan Commitment Amount" means the outstanding principal balance of
---------------------------
the Revolving Loans on the Conversion Date, but in any event not more than the
Revolving Loan Commitment Amount.
"Term Loans" means the Loans described in Section 2.3 and shall be
---------- -----------
Alternate Reference Rate Term Loans or Eurodollar Term Loans.
21
<PAGE>
"Term Note" means a promissory note of the Company, in the form set forth
---------
as Exhibit C, with appropriate insertions, as such promissory note may be
---------
amended, modified or supplemented from time to time, and the term "Term Note"
shall include any substitutions for, or renewals of, such promissory note.
"Trade Accounts Payable" of any Person means trade accounts payable of such
----------------------
Person incurred in the ordinary course of such Person's business.
"Unmatured Event of Default" means an event or condition which with the
--------------------------
lapse of time or giving of notice to the Company, or both, would constitute an
Event of Default.
"Unrestricted Cash" means cash other than Restricted Cash.
-----------------
"Vendor Note" means
-----------
(a) any promissory note (i) which is made payable to the order of the
Company by a lessor or seller of personal property, (ii) which evidences a
loan made by the Company to, or was purchased by the Company from, such
lessor or seller, and (iii) the payment of which is secured, pursuant to
the terms thereof or of one or more separate assignments or security
agreements executed by the maker of such promissory note, by one or more
Leases, purchase money notes, installment sale contracts or other chattel
paper owned by such lessor or seller, and by the property which is the
subject of such Lease(s), purchase money notes, installment sale
contract(s) or other chattel paper;
(b) any promissory note (i) which is made payable to a seller of
personal property (which may be the Company), (ii) which, if it is made
payable to a seller of personal property other than the Company, was
purchased by the Company from such seller or its assignee, and (iii) the
payment of which is secured pursuant to the terms thereof or of one or more
separate assignments or security agreements executed by the maker
22
<PAGE>
of such promissory note, by the property which is sold (in whole or in
part) in consideration for such promissory note; and
(c) any installment sale contract or other chattel paper (i) pursuant
to which any payment is to be made to a seller of personal property (which
may be the Company), (ii) as to which the right to the payments to such
seller, if it is not the Company, was purchased by the Company from such
seller or its assignee, and (iii) payments under which are secured pursuant
to the terms thereof or of one or more separate assignments or security
agreements executed by the obligor under such installment sale contract or
other chattel paper, by the property which is sold (in whole or in part)
pursuant to such installment sale contract or other chattel paper.
"Vendor Note Receivable" with respect to a Vendor Note means, at any time
----------------------
of determination, without duplication, amounts due or to become due to the
Company under such Vendor Note.
"Weighted Average Maturity Date" has the meaning ascribed to such term in
------------------------------
Section 6.5.
-----------
"Weighted Average Life to Maturity" has the meaning ascribed to such term
---------------------------------
in the definition of "Weighted Average Maturity Date".
"Welfare Plan" means a "welfare plan", as such term is defined in section
------------
3(1) of ERISA.
1.2 Other Definitional Provisions. Unless otherwise defined or the
-----------------------------
context otherwise requires, all financial and accounting terms used herein or in
any certificate or other document made or delivered pursuant hereto shall be
defined in accordance with GAAP. Unless otherwise defined therein, all terms
defined in this Agreement shall have the defined meanings when used in any Note
or in any certificate or other document made or delivered pursuant hereto.
23
<PAGE>
1.3 Interpretation of Agreement. A Section or an Exhibit or a Schedule
--------------------------- ------- ------- --------
is, unless otherwise stated, a reference to a section hereof or an exhibit or
schedule hereto, as the case may be. Section captions used in this Agreement
are for convenience only, and shall not affect the construction of this
Agreement. The words "hereof," "herein," "hereto" and "hereunder" and words of
similar purport when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
1.4 Compliance with Financial Restrictions. Compliance with each of the
--------------------------------------
financial ratios and restrictions contained in Section 9 shall, except as
---------
otherwise provided herein, be determined in accordance with GAAP consistently
followed.
2. COMMITMENT OF THE BANKS. Subject to the terms and conditions of this
Agreement and in reliance upon the warranties of the Company herein set forth,
each Bank, severally for itself alone, and not jointly, agrees:
2.1 Revolving Loans. To make loans (collectively called the "Revolving
---------------
Loans" and individually called a "Revolving Loan") to the Company, which
Revolving Loans the Company may repay and reborrow during the period from the
date hereof to, but not including, the Conversion Date, in an amount equal to
its Percentage of each Borrowing of Revolving Loans as the Company may from time
to time request, but not exceeding in the aggregate at any one time outstanding,
such Bank's Revolving Loan Commitment.
2.2 Fixed Rate Loans. To make a loan (each, a "Fixed Rate Loan" and
----------------
collectively, the "Fixed Rate Loans"), on the last day of any Fiscal Quarter
ending coincident with or prior to the Conversion Date, in an amount equal to
its Percentage of each Borrowing of Fixed Rate Loans as the Company may request;
provided, however, that the proceeds of each Bank's Fixed Rate Loan shall be
- - - -------- -------
applied to the concurrent repayment and reduction of Revolving Loans from such
Bank outstanding on the date of such Fixed Rate Loan.
2.3 Term Loan. To make a loan (the "Term Loan") on the Conversion Date
---------
in an amount equal to its Percentage of the Borrowing of Term Loans as the
Company may request, but not
24
<PAGE>
exceeding such Bank's Term Loan Commitment; provided, however, that the proceeds
-------- -------
of each Bank's Term Loan shall be applied to the extent necessary to the
concurrent payment in full of the aggregate principal amount of the Revolving
Loans from such Bank outstanding on the Conversion Date plus accrued interest
thereon.
3. LOAN OPTIONS; BORROWING PROCEDURES; CONTINUATION/CONVERSION OF LOANS;
CERTAIN LOAN TERMS
3.1 Loan Options. Each Loan shall be an Alternate Reference Rate Loan, a
------------
Eurodollar Loan or a Fixed Rate Loan, as shall be selected by the Company,
except as otherwise provided herein. Before the Conversion Date, any
combination of types of Revolving Loans may be outstanding at the same time.
After the Conversion Date, the Term Loan shall be denominated as either an
Alternate Reference Rate Term Loan or a Eurodollar Term Loan, except as
otherwise provided herein.
3.2 Borrowing Procedures.
--------------------
(a) The Company shall give the Agent prior written or telephonic notice
of each requested Borrowing, which shall be of the same type of Loan. Each
such notice shall be irrevocable and, in addition to the information required
pursuant to Section 3.2(b), shall specify (i) the borrowing date (which shall
--------------
be a Banking Day), (ii) the amount and type of Loan, and (iii) if the
Borrowing is to be of Eurodollar Loans, the initial Interest Period for such
Loans. Each notice of a Borrowing of Alternate Reference Rate Loans shall be
received by the Agent not later than 12:00 noon, Charlotte time on the Banking
Day which is the borrowing date with respect to such requested Borrowing; each
notice of Borrowing of Eurodollar Loans shall be received by the Agent not
later than 11:00 a.m., Charlotte time two (2) Banking Days prior to the
borrowing date with respect to such requested Borrowing; each notice of
Borrowing of Fixed Rate Loans shall be received by the Agent not later than
10:30 a.m., Charlotte time two (2) Banking Days prior to the borrowing date
with respect to such requested Borrowing. Each Borrowing of Alternate
Reference Rate Revolving Loans shall be in a minimum aggregate amount of
$100,000 or an integral multiple of $50,000 in excess thereof; each Borrowing
of Eurodollar
25
<PAGE>
Revolving Loans shall be in a minimum aggregate amount of $500,000 or an
integral multiple of $100,000 in excess thereof; and each Borrowing of Fixed
Rate Loans shall be in a minimum aggregate amount of $500,000 or an integral
multiple of $100,000 in excess thereof. The Company shall promptly confirm any
telephonic notice of a request for a Borrowing of Revolving Loans or Term Loans
in writing not later than the next following Banking Day by delivering to the
Agent a confirmation (the "Confirmation") in the form of Exhibit C hereto, it
---------
being understood, however, that the Company's failure to confirm any telephonic
notice or otherwise comply with the provisions of this Section 3.2 shall not
-----------
affect the obligation of the Company to repay each Loan in accordance with the
terms of this Agreement and the applicable Note).
(b) Each request for a Borrowing of Fixed Rate Loans shall be accompanied by
delivery to the Agent of a Fixed Rate Loan Request duly executed by an
authorized officer of the Company substantially in the form of Exhibit E.
---------
Provided the Fixed Rate Loan Request is delivered to the Agent by 10:00 a.m.
Charlotte time then, based upon the information in the Fixed Rate Loan Request,
the Agent will compute the Fixed Rate Loan Rate for the requested Borrowing and
the amortization schedule of principal and interest payments with respect
thereto, and will give the Company telephonic notice of the Fixed Rate Loan Rate
to be applicable to the requested Borrowing before 12:00 p.m. (noon) Charlotte
time on the same day. If the Company desires to borrow the requested Fixed Rate
Loans on the date set forth in the Fixed Rate Loan Request the Company must
notify the Agent not later than 2:00 p.m., Charlotte time, on the day the Agent
has notified the Company of the Fixed Rate Loan Rate to be applicable to the
requested Borrowing, that it accepts the Fixed Rate Loan Rate established by the
Agent.
(c) On or before 1:30 p.m. Charlotte time on the Banking Day of a requested
Borrowing, each Bank shall deposit with the Agent same day funds in an amount
equal to such Bank's Percentage of the requested Borrowing. Such deposit will
be made to an account which the Agent shall specify from time to time by notice
to the Banks. To the extent funds are
26
<PAGE>
received from the Banks, and provided all the conditions precedent to the
making of the requested Loans have been satisfied (unless waived in
accordance with the provisions of this Agreement), subject to the terms of
Section 2.2 and Section 2.3 the Agent shall make such funds available to
----------- -----------
the Company by crediting its commercial demand deposit account number
2000000718280 (the "Account") maintained with First Union. No Bank's
obligation to make any Loan shall be affected by any other Bank's failure
to make any Loan.
3.3 Continuation and/or Conversion of Loans. The Company may irrevocably
---------------------------------------
elect to (i) continue any outstanding Eurodollar Loan from the current Interest
Period for such Loan into a subsequent Interest Period to begin on the last day
of such current Interest Period, or (ii) convert any outstanding Alternate
Reference Rate Loan into a Eurodollar Loan, or (iii) convert any outstanding
Eurodollar Loan into an Alternate Reference Rate Loan on the last day of the
current Interest Period for such Eurodollar Loan, by giving the Agent prior
written or telephonic notice of such continuation or conversion; provided,
--------
however, that each such conversion or continuation shall be pro rated among the
- - - -------
applicable outstanding Loans of all Banks. Each such notice shall be received
by the Agent not later than 11:00 a.m., Charlotte time, two (2) Banking Days
prior to the effective date of continuation or conversion. Each such notice
shall specify (a) the effective date of continuation or conversion (which shall
be a Banking Day), (b) the type of Loan the Loan is to be continued as or
converted into and the amount of such Loan, and (c) the Interest Period for such
Loan, if applicable. The Company shall promptly confirm each such telephonic
notice in writing. Absent timely notice of continuation or conversion, each
Eurodollar Loan shall automatically convert into an Alternate Reference Rate
Loan on the last day of the current Interest Period for such Loan unless paid in
full on such last day. No Loan shall be converted into a Eurodollar Loan and no
Eurodollar Loan shall be continued less than one month before the Conversion
Date or the final maturity of the Term Loan or at any time that an Event of
Default or an Unmatured Event of Default shall exist.
3.4 Funding Losses. The Company will indemnify each Bank upon demand
--------------
against any loss or expense which such Bank may sustain or incur (including,
without limitation, any loss or
27
<PAGE>
expense sustained or incurred in obtaining, liquidating or employing deposits or
other funds acquired to effect, fund or maintain any Loan) as a consequence of
(i) any failure of the Company to make any payment when due of any amount due
hereunder or under any Note, (ii) any failure of the Company to borrow, continue
or convert a Loan on a date specified therefor or in a notice thereof, or (iii)
any payment (including, without limitation, any payment pursuant to Section 7.3
-----------
or Section 12.2), prepayment or conversion of any Eurodollar Loan on a date
------------
other than the last day of the Interest Period for such Loan. Determinations by
each Bank for purposes of this Section 3.4 of the amount required to indemnify
-----------
such Bank against any such loss or expense shall be conclusive in the absence of
manifest error.
3.5 Capital Adequacy. If any Bank shall reasonably determine that the
----------------
application or adoption of any law, rule, regulation, directive, interpretation,
treaty or guideline regarding capital adequacy, or any change therein or in the
interpretation or administration thereof, whether or not having the force of law
(including, without limitation, application of changes to Regulation H and
Regulation Y of the Federal Reserve Board issued by the Federal Reserve Board on
January 19, 1989 and regulations of the Comptroller of the Currency, Department
of the Treasury, 12 CFR Part 3, Appendix A, issued by the Comptroller of the
Currency on January 27, 1989) increases the amount of capital required or
expected to be maintained by such Bank or any Person controlling such Bank, and
such increase is based upon the existence of such Bank's obligations hereunder
and other commitments of this type, then from time to time, within 10 days after
demand from such Bank, the Company shall pay to such Bank such amount or amounts
as will compensate such Bank or such controlling Person, as the case may be, for
such increased capital requirement. The determination of any amount to be paid
by the Company under this Section 3.5 shall take into consideration the policies
-----------
of such Bank or any Person controlling such Bank with respect to capital
adequacy and shall be based upon any reasonable averaging, attribution and
allocation methods. A certificate of such Bank setting forth the amount or
amounts as shall be necessary to compensate such Bank as specified in this
Section 3.5 shall be delivered to the Company and shall be conclusive in the
- - - -----------
absence of manifest error.
28
<PAGE>
4. NOTES EVIDENCING BORROWINGS.
4.1 Notes Evidencing Revolving Loans. Each Bank's Revolving Loans shall
--------------------------------
be evidenced by a Revolving Note, which shall be made payable to the order of
such Bank, dated the date of the initial Revolving Loan made by such Bank, and
shall mature on the Conversion Date. All Revolving Loans made by each Bank to
the Company pursuant to this Agreement and all payments of principal shall be
evidenced by such Bank in its records or, at its option, on the schedule (or any
continuation thereof) attached to its respective Revolving Note, which records
or schedule shall be rebuttable presumptive evidence of the subject matter
thereof.
4.2 Notes Evidencing Fixed Rate Loans. Each Bank's Fixed Rate Loans
---------------------------------
shall be evidenced by a separate Fixed Rate Loan Note, which shall be made
payable to the order of such Bank, dated the date of the Fixed Rate Loan
evidenced thereby, and shall be payable in eighteen (18) consecutive, equal
quarterly installments of principal, payable on each Payment Date with respect
to the Fixed Rate Loan evidenced thereby.
4.3 Notes Evidencing Term Loans. Each Bank's Term Loan shall be
---------------------------
evidenced by a separate Term Note, which shall be made payable to the order of
such Bank, dated the Conversion Date, and shall be payable in sixteen (16)
consecutive, equal quarterly installments payable on the last day of each
January, April, July and October, commencing with the first of such dates to
occur after the date of such Bank's Term Loan.
5. INTEREST AND FEES.
5.1 Interest - Revolving Loans.
--------------------------
(a) Alternate Reference Rate Revolving Loans. The unpaid principal of
----------------------------------------
the Alternate Reference Rate Revolving Loans shall bear interest to maturity
at a rate per annum equal to the Alternate Reference Rate in effect from time
to time. Accrued interest on the Alternate Reference Rate Revolving Loans
shall be payable on each Payment Date and at maturity.
29
<PAGE>
(b) Eurodollar Revolving Loans. The unpaid principal of the Eurodollar
--------------------------
Revolving Loans shall bear interest to maturity at a rate per annum equal to
the Interbank Rate (Reserve Adjusted) in effect for each Interest Period with
respect to such Eurodollar Revolving Loan plus seventy-five basis points
(.75%). Accrued interest on Eurodollar Revolving Loans shall be payable on
each Payment Date and at maturity.
5.2 Interest - Fixed Rate Loans. The unpaid principal of each Fixed Rate
---------------------------
Loan shall bear interest to maturity at the Fixed Rate Loan Rate applicable to
such Loan. Accrued interest on each Fixed Rate Loan shall be payable on each
Payment Date and at maturity.
5.3 Interest - Term Loans.
---------------------
(a) Alternate Reference Rate Term Loans. The unpaid principal of the
-----------------------------------
Alternate Reference Rate Term Loans shall bear interest to maturity at a rate
per annum equal to the Alternate Reference Rate in effect from time to time
plus one-quarter of one percentage point (1/4%). Accrued interest on the
Alternate Reference Rate Term Loans shall be payable on each Payment Date and
at maturity.
(b) Eurodollar Term Loans. The unpaid principal of the Eurodollar Term
---------------------
Loans shall bear interest to maturity at a rate per annum equal to the
Interbank Rate (Reserve Adjusted) in effect for each Interest Period with
respect to such Eurodollar Term Loan plus one percentage point (1%). Accrued
interest on Eurodollar Term Loans shall be payable on each Payment Date and at
maturity.
5.4 Interest after Maturity. The Company shall pay to the Banks interest
-----------------------
on any amount of principal of any Loan which is not paid when due, whether at
stated maturity, by acceleration or otherwise, accruing from and including the
date such amount shall have become due to (but not including) the date of
payment thereof in full at the rate per annum which is equal to the greater of
(i) two percentage points (2%) in excess of the rate applicable to the unpaid
amount immediately before it became due, or (ii) two and one-half percentage
points (2 1/2%) in excess of the Alternate
30
<PAGE>
Reference Rate from time to time in effect. Interest after maturity shall be
payable on demand.
5.5 Commitment Fee. The Company agrees to pay to the Banks, ratably in
--------------
accordance with their respective Percentages, a commitment fee of one-quarter of
one percentage point (1/4%) per annum on the daily average of the excess of (a)
the Revolving Loan Commitment Amount (without reduction for any outstanding
Fixed Rate Loans) over (b) the aggregate outstanding Loans, during the period
commencing on the date of this Agreement and ending on the Conversion Date, or,
if earlier, the termination of the Credit. Such commitment fee shall be payable
on each Payment Date and on the Conversion Date or the date the Credit and the
Commitments terminate for any period then ending for which such commitment fee
shall not have been theretofore paid.
5.6 Method of Calculating Interest and Fees. Interest and any fees shall
---------------------------------------
be computed on the basis of a year consisting of 360 days and paid for actual
days elapsed. For each Eurodollar Loan interest shall accrue during each
Interest Period from and including the first day thereof to but excluding the
last day thereof.
6. PAYMENTS, PREPAYMENTS, REDUCTION OR TERMINATION OF THE CREDIT AND SETOFF.
6.1 Place of Payment. All payments hereunder (including payments with
----------------
respect to the Notes) shall be made without setoff or counterclaim and shall be
made to the Agent for the account of the Banks, ratably in accordance with their
Percentages, in immediately available funds prior to 1:00 p.m., Charlotte time,
on the date due at the Agent's office at One First Union Center, TW-19,
Charlotte, North Carolina 28288-0735, or at such other place or for such other
account as may be designated by the Agent to the Company in writing. The Agent
shall promptly remit in immediately available funds to each Bank its share of
all such payments received by the Agent for the account of such Bank. Any
payments received after such time shall be deemed received on the next Banking
Day. Subject to the definition of the term "Interest Period," whenever any
payment to be made hereunder or under any Note shall be stated to be due on a
date other than a Banking Day, such payment may be made on the next succeeding
31
<PAGE>
Banking Day, and such extension of time shall be included in the calculation of
interest or any fees.
6.2 Mandatory Prepayments. If at any time the outstanding principal
---------------------
amount of the Loans exceeds the Borrowing Base, the Company shall immediately
make a prepayment to the Agent, for the account of the Banks, of the principal
amount of the Loans in the amount necessary to eliminate such excess. If a
prepayment is required prior to the Conversion Date pursuant to this Section
-------
6.2, the prepayment shall be applied first to reduction of the Alternate
- - - ---
Reference Rate Revolving Loans and then to the Eurodollar Revolving Loans, until
the Revolving Loans are repaid in full, before being applied to reduce the
outstanding principal balance of any Fixed Rate Loan. If a payment is required
under this Section 6.2 after the Conversion Date, the prepayment shall be
-----------
applied first to reduction of the Term Loan until the Term Loan is repaid in
full before being applied to reduce the outstanding balance of Fixed Rate Loans.
Amounts applied to prepayment of the Fixed Rate Loans pursuant to this Section
-------
6.2 shall be applied to such Fixed Rate Loans as the Agent, acting on
- - - ---
instruction from the Majority Banks, may elect. Amounts applied to repayment of
the Term Loan or any Fixed Rate Loan shall be applied to the unpaid installments
of the Note evidencing such Loan in the inverse order of their maturities. Any
repayment of principal of any Note pursuant to this Section 6.2 shall include
-----------
accrued interest to the date of payment on the principal amount being prepaid.
Any repayment of Loans shall be made pro rata among Loans of the same type and,
if applicable, the same Interest Period or maturity date, of all of the Banks.
6.3 Optional Prepayments - Revolving Loans.
--------------------------------------
(a) The Company may from time to time, upon prior written or telephonic
notice received by the Agent (which shall promptly advise each Bank thereof) no
later than 1:00 p.m. Charlotte Time on a Banking Day, prepay the principal of
the Alternate Reference Rate Revolving Loans in whole or in part, as
contemplated by Section 2.1; provided, however, that (a) any partial prepayment
----------- -------- -------
of principal shall be in a minimum amount of $100,000 and in an integral
multiple of $50,000 and (b) any such prepayment shall be made pro rata among
Loans of the same type.
32
<PAGE>
(b) The Company may from time to time, upon at least one (1) Banking Days'
prior written or telephonic notice received by the Agent (which shall promptly
advise each Bank thereof), prepay the principal of the Eurodollar Revolving
Loans in whole or in part, as contemplated by Section 2.1; provided, however,
----------- -------- -------
that (a) any partial prepayment of principal shall be in a minimum amount of
$500,000 and in an integral multiple of $100,000 and (b) any such prepayment
shall be made pro rata among Loans of the same type and, if applicable, having
the same Interest Period of all Banks; and provided, further, that prepayment of
-------- -------
principal of a Eurodollar Revolving Loan on a day other than the last day of the
Interest Period with respect thereto may be made only with the consent of the
Agent acting at the direction of the Majority Banks and shall be subject to the
indemnification provisions of Section 3.4, but shall otherwise be without any
-----------
premium or penalty. The Company shall promptly confirm any telephonic notice of
prepayment in writing.
6.4 Optional Prepayments - Term Loan. The Company may from time to time,
--------------------------------
upon at least one (1) Banking Days' prior written or telephonic notice received
by the Agent (which shall promptly advise each Bank thereof), prepay the
principal of the Term Loans in whole or in part; provided, however, that (a) any
-------- -------
partial prepayment of principal shall be in a minimum amount of $500,000 and in
an integral multiple of $100,000 and shall be applied to the unpaid installments
of the Term Loans in the inverse order of their maturities and (b) any such
prepayment shall be made pro rata among Loans of the same type and, if
applicable, having the same Interest Period, of all Banks; and provided,
--------
further, that prepayment of principal of a Eurodollar Term Loan on a day other
- - - -------
than the last day of the Interest Period with respect thereto may be made only
with the consent of the Agent acting at the direction of the Majority Banks and
shall be subject to the indemnification provisions of Section 3.4, but shall
-----------
otherwise be without any premium or penalty. The Company shall promptly confirm
any telephonic notice of prepayment in writing. Any prepayment of the principal
of the Term Loans shall include accrued interest to the date of prepayment on
the principal amount being prepaid.
6.5 Optional Prepayment of Fixed Rate Loans. The Company may from time
---------------------------------------
to time, upon at least five (5) Banking Days' prior written notice received by
the Agent (which shall promptly
33
<PAGE>
advise each Bank thereof), prepay all or a portion of the principal of any Fixed
Rate Loans; provided, however, that the Company shall pay to the Agent for the
-------- -------
account of the Banks on the date of any prepayment of Fixed Rate Loans (a) a
Prepayment Premium (hereinafter defined) and (b) any amounts required by Section
-------
3.4. Any partial prepayments of principal shall be in an amount of $500,000 or
- - - ---
an integral multiple thereof and shall be applied to the unpaid installments of
the Fixed Rate Loans being prepaid in the inverse order of their respective
maturities. Any such prepayment shall be made pro rata among Fixed Rate Loans
of all Banks made on the same day and having the same maturity date. Any
prepayment of the principal of a Fixed Rate Loan shall include accrued interest
to the date of prepayment on the principal amount being prepaid.
"Prepayment Date" means the date on which a prepayment is to be made.
"Prepayment Premium" means the excess, if any, of (a) the present value on the
Prepayment Date of the Applicable Payments after the Prepayment Date less (b)
the sum of the outstanding principal being prepaid and the interest accrued
thereon to the date of prepayment but not due on or before such date. The
present value of the Applicable Payments shall be calculated by discounting to
the Prepayment Date such Applicable Payments at the Alternative Fixed Rate for
the Weighted Average Maturity Date of such Applicable Payments on the basis of a
year consisting of 360 days for actual days elapsed.
"Applicable Payments" mean the scheduled principal payments (or portion
thereof) being prepaid and the scheduled interest payments related thereto.
"Weighted Average Maturity Date" of any Applicable Payments means the date
which follows the Prepayment Date applicable thereto by a number of days equal
to the Weighted Average Life to Maturity of such Applicable Payments. The
"Weighted Average Life to Maturity" of any Applicable Payments means the
quotient of:
34
<PAGE>
(a) the sum of the products of:
(i) the principal amount of each Applicable Payment, and
(ii) for each principal Applicable Payment, the number of days between
the Prepayment Date thereof and the scheduled payment date
applicable thereto.
divided by:
(b) the aggregate principal amount of the Applicable Payments.
"Alternative Fixed Rate" means the Bid Side of the Eurodollar Market.
"Bid Side of the Eurodollar Market" for the Weighted Average Maturity Date
means the per annum rate determined by the Bank as the per annum rate for
deposits in the interbank eurodollar market for the number of days from the
Prepayment Date to such Weighted Average Maturity Date in an amount equal to the
Applicable Payments, bid by the Bank two Banking Days prior to the Prepayment
Date for delivery on the Prepayment Date. Determinations by the Bank for
purposes of this Section of such per annum rate shall be conclusive absent
manifest error.
6.6 Reduction or Termination of the Credit. The Company may from time to
--------------------------------------
time, upon at least five (5) Banking Days' prior written or telephonic notice
received by the Agent (which shall promptly advise the Banks), irrevocably elect
to permanently reduce the amount of the Credit and the Commitment Amounts (such
reduction to be made among the Banks according to their respective Percentages),
but only upon payment to the Agent, for the account of the Banks, of the unpaid
principal amount of the Revolving Loans, if any, in excess of the then reduced
amount of the Revolving Credit Commitment Amount, plus (i) accrued interest to
the date of such payment on the principal amount being repaid and (ii) any
amount required to indemnify each of the Banks pursuant to Section 3.4 in
-----------
respect of such payment. Any such reduction shall be in a minimum amount of
$1,000,000 and in an integral multiple of $500,000. The Company may at any time
on like notice irrevocably
35
<PAGE>
elect to terminate the Credit and the Commitments upon payment in full of (a)
the Revolving Loans (or the Term Loans, if applicable), (b) any Fixed Rate
Loans, (c) unpaid accrued interest on Loans to the date of such payment, (d) any
amount required to indemnify any Bank pursuant to Section 3.4 in respect of such
-----------
payment, and (e) any other Liabilities of the Company. The Company shall
promptly confirm any telephonic notice of reduction or termination of the Credit
in writing.
6.7 Setoff. In addition to and not in limitation of all other rights and
------
remedies (including other rights of setoff) that any Bank or other holder of any
Note may have, any Bank or such other holder shall, upon the occurrence of any
Event of Default described in Section 12.1 or any Unmatured Event of Default
------------
described in Section 12.1(e), have the right to appropriate and apply to the
---------------
payment of any and all Loans and other liabilities of the Company hereunder
(whether or not then due), in such order of application as such Bank or such
other holder may elect, any and all balances, credits, deposits (general or
special, time or demand, provisional or final), accounts or moneys of the
Company then or thereafter with such Bank or such other holder. Any Bank shall
promptly advise the Agent and the Company of any such setoff and application but
failure to do so shall not affect the validity of such setoff and application.
To secure the payment of such Loans and other liabilities, the Company hereby
grants the Agent, for the benefit of the Banks, the Agent and each such other
holder a continuing security interest in such balances, credits, deposits,
accounts or moneys, and each Bank is hereby appointed and accepts appointment as
the agent of the Agent for purposes of maintaining and retaining possession of
such property. Notwithstanding the foregoing, each Bank hereby agrees that, if
a Person other than the Company establishes to the reasonable satisfaction of
such Bank and the Agent that any balances, credits or deposits appropriated and
applied by such Bank are properly traceable proceeds of property owned by such
other Person and not by the Company, and such other Person has a legally
enforceable prior claim to such proceeds under applicable law, such Bank shall,
upon receipt of evidence reasonably satisfactory to such Bank and the Agent
establishing such legally enforceable prior claim of such other Person, turn
over such amounts to the Company or as otherwise instructed by such other
Person.
36
<PAGE>
6.8 Proration of Payments. If any Bank or other holder of a Note shall
---------------------
obtain any payment or other recovery (whether voluntary, involuntary, by
application of offset or otherwise) on account of principal of or interest on
any Note in excess of its pro rata share of payments and other recoveries
obtained by all Banks or other holders on account of principal of and interest
on Notes then held by them, such Bank or other holder shall purchase from the
other Banks or holders such participation in the Notes held by them as shall be
necessary to cause such purchasing Bank or other holder to share the excess
payment or other recovery ratably with each of them; provided, however, that if
-------- -------
all or any portion of the excess payment or other recovery is thereafter
recovered from such purchasing holder, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
The Company agrees that the Bank so purchasing a participation from the other
Banks under this Section 6.8 may exercise all its rights of payment, including
-----------
the right of set-off, with respect to such participation as fully as if such
Bank were the direct creditor of the Company in the amount of such
participation.
7. ADDITIONAL PROVISIONS RELATING TO EURODOLLAR LOANS.
7.1 Increased Cost. If, as a result of any law, rule, regulation, treaty
--------------
or directive, or any change therein or in the interpretation or administration
thereof, or compliance by any Bank with any request or directive (whether or not
having the force of law) from any court, central bank, governmental authority,
agency or instrumentality, or comparable agency:
(a) any tax, duty or other charge with respect to any Eurodollar Loan,
any Note or such Bank's obligation to make Eurodollar Loans is imposed,
modified or deemed applicable, or the basis of taxation of payments to such
Bank of the principal of, or interest on, any Eurodollar Loan (other than
taxes imposed on the overall net income of such Bank by the jurisdiction in
which such Bank has its principal office) is changed;
(b) any reserve, special deposit, special assessment or similar
requirement against assets of, deposits with or for
37
<PAGE>
the account of, or credit extended by, such Bank is imposed, modified or
deemed applicable; or
(c) any other condition affecting this Agreement or any Eurodollar Loan
is imposed on such Bank or the relevant market;
and such Bank determines that, by reason thereof, the cost to such Bank of
making or maintaining any of the Eurodollar Loans is increased, or the amount of
any sum receivable by such Bank hereunder or under any Note in respect of any of
the Eurodollar Loans is reduced;
then, (i) the Company shall pay to any such affected Bank upon demand (which
- - - ----
demand shall be accompanied by a statement setting forth the basis for the
calculation thereof but only to the extent not theretofore provided to the
Company) such additional amount or amounts as will compensate such Bank for such
additional cost or reduction (provided such amount has not been compensated for
in the calculation of the Eurocurrency Reserve Requirement), and (ii) provided
the Agent has not yet determined the Interbank Rate with respect to new
Eurodollar Loans requested by the Company but not yet borrowed, at the Company's
option by notice to the Agent such request shall be deemed a request to make
Alternate Reference Rate Loans. Determinations by such Bank for purposes of
this section of the additional amounts required to compensate such Bank in
respect of the foregoing shall be conclusive, absent manifest error. In
determining such amounts, such Bank may use any reasonable averaging,
attribution and allocation methods.
7.2 Eurodollar Deposits Unavailable or Interest Rate Unascertainable. If
----------------------------------------------------------------
the Company has any Eurodollar Loan outstanding, or has notified the Agent of
its intention to borrow a Eurodollar Loan as provided herein, then in the event
that prior to any Interest Period any Bank shall have determined (which
determination shall be conclusive and binding on the parties hereto) that:
(a) deposits of the necessary amount for the relevant Interest Period are
not available to such Bank in the interbank eurodollar market or that, by
reason of circumstances affecting such market, adequate and reasonable
38
<PAGE>
means do not exist for ascertaining the Interbank Rate applicable to such
Interest Period; or
(b) the making or funding of Eurodollar Loans has become impracticable as
a result of any event occurring after the date of this Agreement which, in the
opinion of such Bank, materially and adversely affects such Eurodollar Loans
or the Bank's obligation to make such Eurodollar Loans, or the relevant
market;
the affected Bank shall promptly give notice of such determination to the
Company, the Agent and the other Banks, and (i) any notice of new Eurodollar
Loans previously given by the Company and not yet borrowed or converted shall be
deemed a notice to make an Alternate Reference Rate Loan to the extent of the
affected Bank's ratable share of the proposed Borrowing of Eurodollar Loans, and
(ii) the Company shall be obligated either to prepay in full any outstanding
Eurodollar Loans made by such affected Bank without any premium or penalty on
the last day of the then current Interest Period with respect thereto, or
convert any such Loans to Alternate Reference Rate Loans, as selected by the
Company, on such last day.
7.3 Changes in Law Rendering Eurodollar Loans Unlawful. If at any time
--------------------------------------------------
due to the adoption of any law, rule, regulation, treaty or directive, or any
change therein or in the interpretation or administration thereof by any court,
central bank, governmental authority, agency or instrumentality, or comparable
agency charged with the interpretation or administration thereof, or for any
other reason arising subsequent to the date hereof, it shall become unlawful or
impossible for any Bank to make or fund any Eurodollar Loan which it is
committed to make hereunder, the obligation of such Bank to provide such
Eurodollar Loans shall, upon the happening of such event, forthwith be suspended
for the duration of such illegality or impossibility. If any such event shall
make it unlawful or impossible for any Bank to continue any Eurodollar Loans
previously made by it hereunder, such Bank shall, upon the happening of such
event, notify the Company, the Agent and the other Banks thereof in writing, and
the Company shall, on the earlier of (i) the last day of the then current
Interest Period with respect thereto or (ii) if required by such law, rule,
regulation, treaty, directive or interpretation, on such date as shall be
specified in such notice, either convert each such
39
<PAGE>
unlawful Loan to an Alternate Reference Rate Loan or prepay in full each such
unlawful Loan, together with accrued interest thereon, without any premium or
penalty (except as provided in Section 3.4).
------------
7.4 Funding.
-------
(a) Discretion of each Bank as to Manner of Funding. Notwithstanding any
-----------------------------------------------
provision of this Agreement to the contrary, each Bank shall be entitled to
fund and maintain its funding of all or any part of the Loans in any manner it
sees fit; it being understood, however, that for purposes of this Agreement,
all determinations hereunder shall be made as if each Bank had actually funded
and maintained each Eurodollar Loan during the Interest Period for such Loan
through the purchase of deposits having a term corresponding to such Interest
Period and bearing an interest rate equal, in the case of a Eurodollar Loan,
to the Interbank Rate for such Interest Period (whether or not such Bank shall
have granted any participations in such Loan).
(b) Funding Through the Sale of Participations. Notwithstanding any
------------------------------------------
provision of this Agreement to the contrary, the Company acknowledges that any
Bank may fund all or any part of the Loans by it hereunder by sales of
participations to various participants, and agrees that such Bank may, in
invoking its rights under this Section 7 or under Section 3.4, demand and
--------- -----------
receive payment for costs and other amounts incurred by, or allocable to, any
such participant, or take other action arising from circumstances applicable
to any such participant, to the same extent that such participant could demand
and receive payments, or take other action, under this Section 7 or under
---------
Section 3.4 if such participant were a Bank under this Agreement.
-----------
7.5 Mitigation. With respect to any obligation of the Company to make
----------
any payment to any Bank pursuant to Section 7.1 or Section 7.4, the suspension
----------- -----------
of such Bank's obligation to provide Eurodollar Loans pursuant to Section 7.3,
-----------
or the Company's obligation to convert or prepay Eurodollar Loans pursuant to
Section 7.3, upon the occurrence of any event giving rise to any such obligation
- - - -----------
or suspension, such affected Bank will (a) use its best efforts to change its
lending office for Eurodollar Loans if
40
<PAGE>
such change will avoid the need for, or reduce the amount of, any such payment
or prepayment obligation, or will avoid the need for any such suspension, and if
such change will not, in the reasonable judgment of such Bank, be otherwise
disadvantageous to such Bank, and (b) use all reasonable efforts to minimize any
such payment obligation of the Company.
8. WARRANTIES. To induce the Banks to grant the Credit and to make the
Loans, the Company warrants that:
8.1 Existence. The Company and all of its corporate Subsidiaries are
---------
corporations duly organized, validly existing and in good standing under the
laws of the states of their respective incorporation. All of the Company's
other Subsidiaries, if any, are entities duly organized, validly existing and in
good standing under the laws of the jurisdictions of their respective
organization. The Company and all of its Subsidiaries are in good standing and
are duly qualified to do business in each state where, because of the nature of
their respective activities or properties, such qualification is required.
8.2 Authorization. The Company is duly authorized to execute and deliver
-------------
this Agreement and the Notes and is and will continue to be duly authorized to
borrow monies hereunder and to perform its obligations under this Agreement and
the Notes. The execution, delivery and performance by the Company of this
Agreement and the Notes and the borrowings hereunder do not and will not require
any consent or approval of any governmental agency or authority.
8.3 No Conflicts. The execution, delivery and performance by the Company
------------
of this Agreement and the Notes do not and will not conflict with (i) any
provision of law, (ii) the charter or by-laws of the Company, (iii) any
agreement binding upon the Company, or (iv) any court or administrative order or
decree applicable to the Company, and do not and will not require, or result in,
the creation or imposition of any Lien on any asset of the Company or any of its
Subsidiaries.
8.4 Validity and Binding Effect. This Agreement is, and the Notes when
---------------------------
duly executed and delivered will be, legal, valid and binding obligations of the
Company, enforceable against
41
<PAGE>
the Company in accordance with their respective terms, except as enforceability
may be limited by bankruptcy, insolvency or other similar laws of general
application affecting the enforcement of creditors' rights or by general
principles of equity limiting the availability of equitable remedies.
8.5 No Default. Neither the Company nor any of its Subsidiaries is in
----------
default under any agreement or instrument to which the Company or any Subsidiary
is a party or by which any of their respective properties or assets is bound or
affected, which default might materially and adversely affect the financial
condition or operations of the Company and its Subsidiaries taken as a whole.
No Event of Default or Unmatured Event of Default has occurred and is
continuing.
8.6 Financial Statements. The Company's audited consolidated and
--------------------
consolidating financial statement as of June 30, 1994 and the Company's
unaudited consolidated and consolidating financial statement as of September 30,
1994, copies of which have been furnished to the Agent and the Banks, have been
prepared in conformity with generally accepted accounting principles applied on
a basis consistent with that of the preceding Fiscal Year and period and present
fairly the financial condition of the Company and its Subsidiaries as of such
dates and the results of their operations for the periods then ended, subject
(in the case of the interim financial statement) to year-end audit adjustments.
Since such dates, there has been no material adverse change in the financial
condition of the Company and its Subsidiaries taken as a whole.
8.7 Insurance. The certificate signed by the chief financial officer of
---------
the Company that attests to and summarizes the property and casualty insurance
program carried by the Company and its Subsidiaries (Schedule 8.7 attached
------------
hereto) is complete and accurate as of the date of this Agreement. This summary
includes the insurer's(s') name(s), policy number(s), expiration date(s),
amount(s) of coverage, type(s) of coverage, the annual premium(s), exclusions,
deductibles and self-insured retention and describes in detail any retrospective
rating plan, fronting arrangement or any other self-insurance or risk assumption
agreed to by the Company or any Subsidiary or imposed upon the Company or any
Subsidiary by any
42
<PAGE>
such insurer. This summary also includes any self-insurance program that is in
effect.
8.8 Litigation. No claims, litigation, arbitration proceedings or
----------
governmental proceedings are pending or threatened against or are affecting the
Company or any of its Subsidiaries, the results of which might materially and
adversely affect the financial condition or operations of the Company and its
Subsidiaries taken as a whole, except those referred to in a schedule furnished
to the Bank contemporaneously herewith and attached hereto as Schedule 8.8.
------------
Other than any liability incident to such claims, litigation or proceedings or
provided for or disclosed in the financial statements referred to in Section 8.6
-----------
or listed on Schedule 8.15, neither the Company nor any of its Subsidiaries has
-------------
any contingent liabilities which are material to the Company and its
Subsidiaries taken as a whole.
8.9 Liens. None of the property, revenues or assets of the Company or
-----
any of its Subsidiaries is subject to any Lien, except:
(a) Liens for current Taxes not delinquent or Taxes being contested in good
faith and by appropriate proceedings and as to which such reserves or other
appropriate provisions as may be required by GAAP are being maintained;
(b) carriers', warehousemen's, mechanics', material men's and other like
statutory Liens arising in the ordinary course of business securing
obligations which are not overdue for a period of more than 30 days or which
are being contested in good faith and by appropriate proceedings and as to
which such reserves or other appropriate provisions as may be required by GAAP
are being maintained;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, and other obligations of a like nature incurred in the
ordinary course of business;
43
<PAGE>
(e) Liens disclosed in the financial statements referred to in Section
-------
8.6; and
----
(f) Liens listed on Schedule 8.9.
------------
8.10 Subsidiaries. The Company has no Subsidiaries except as
------------
listed on Schedule 8.10. The Company and its Subsidiaries own the percentage of
-------------
its Subsidiaries as set forth on Schedule 8.10.
-------------
8.11 Partnerships. Neither the Company nor any of its
------------
Subsidiaries is a partner or joint venturer in any partnership or joint venture
other than the partnerships and joint ventures listed on Schedule 8.11.
-------------
8.12 Purpose. The proceeds of the Loans will be used by the
-------
Company for the payment of all principal, accrued interest, fees, and other
amounts owed to Bank of America as agent on behalf of the banks under the Prior
Credit Agreement and any excess proceeds for financing Leases and other working
capital purposes.
8.13 Regulation U. The Company is not engaged in the business of
------------
purchasing or selling "margin stock," as such term is defined in Regulation U of
the Federal Reserve Board, or extending credit to others for the purpose of
purchasing or carrying margin stock, and no part of the proceeds of any Loan
will be used to purchase or carry any margin stock or for any other purpose
which would violate any of the margin regulations of the Federal Reserve Board.
8.14 Compliance. Neither the Company nor any of its Subsidiaries
----------
has failed to comply with any statute or governmental rule or regulation
applicable to it where the effect of such failure would materially and adversely
affect the Company's or any Subsidiary's financial condition or operations.
8.15 Pension and Welfare Plans. Each Plan complies in all
-------------------------
material respects with all applicable statutes and governmental rules and
regulations; no Reportable Event has occurred and is continuing with respect to
any Pension Plan; neither the Company nor any ERISA Affiliate has withdrawn from
any Multiemployer Plan in a "complete withdrawal" or a "partial withdrawal" as
defined in
44
<PAGE>
Section 4203 or 4205 of ERISA, respectively, or instituted steps to do so; no
steps have been instituted to terminate any Pension Plan; no contribution
failure has occurred with respect to any Pension Plan sufficient to give rise to
a Lien under Section 302(f) of ERISA; no condition exists or event or
transaction has occurred in connection with any Pension Plan or Multiemployer
Plan which could result in the incurrence by the Company or any ERISA Affiliate
of any material liability, fine or penalty; and neither the Company nor any
ERISA Affiliate is a "contributing sponsor" as defined in Section 4001(a)(13) of
ERISA of a "single-employer" plan as defined in Section 4001(a)(15) of ERISA
which has two or more contributing sponsors at least two of which are not under
common control. Neither the Company nor any ERISA Affiliate is a member of, or
contributes to, any multiple employer Plan as described in section 4064 of
ERISA. Neither the Company nor any of its Subsidiaries has any contingent
liability with respect to any post-retirement "welfare benefit plans," as such
term is defined in ERISA, except as listed on Schedule 8.15, other than
-------------
liability for continuation coverage described in Part 6 of Title I of ERISA.
8.16 Taxes. Each of the Company and its Subsidiaries has filed
-----
all tax returns which are required to have been filed and has paid, or made
adequate provisions for the payment of, all of its Taxes which are due and
payable, except such Taxes, if any, as are being contested in good faith and by
appropriate proceedings and as to which such reserves or other appropriate
provisions as may be required by GAAP have been maintained. The federal income
tax liability of the Company and its Subsidiaries has been audited by the
Internal Revenue Service and has been finally determined and satisfied (or the
time for audit has expired) for all tax years up to and including the tax year
ended June 30, 1990. The Company is not aware of any proposed assessment
against the Company or any of its Subsidiaries for additional Taxes (or any
basis for any such assessment) which might be material to the Company and its
Subsidiaries taken as a whole, other than any such assessments being contested
in good faith and by appropriate proceedings and as to which such reserves or
other appropriate provisions as may be required by GAAP are being maintained.
8.17 Investment Company Act Representation. The Company is not an
-------------------------------------
"investment company" or a company "controlled" by
45
<PAGE>
an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
8.18 Public Utility Holding Company Act Representation. The
-------------------------------------------------
Company is not a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
9. COMPANY'S COVENANTS. From the date of this Agreement and thereafter
until the expiration or termination of the Credit and until the Notes and other
liabilities of the Company hereunder are paid in full, the Company agrees that,
unless otherwise consented to by the Majority Banks (or the Agent acting at the
direction of the Majority Banks), it will:
9.1 Financial Statements and Other Reports. Furnish to the Agent
--------------------------------------
in sufficient number of original copies to provide one to each Bank:
(a) Borrowing Base Certificate. Within 30 days after the end of each
--------------------------
month: (i) a certificate substantially in the form of Exhibit G ("Borrowing
---------
Base Certificate") signed by the President or chief financial officer of the
Company containing a computation of the Borrowing Base, and showing compliance
with the requirements of Section 6.2, and (ii) an aging of the Company's
-----------
accounts receivable in form and content satisfactory to the Agent and the
Majority Banks.
(b) Annual Audit Report. Within ninety (90) days after each Fiscal Year
-------------------
of the Company, a copy of the annual audit report of the Company and its
Subsidiaries prepared on a consolidated basis and in conformity with GAAP and
certified by an independent certified public accountant who shall be
reasonably satisfactory to the Agent and the Majority Banks, together with a
certificate from such accountant to the effect that, in making the examination
necessary for the signing of such annual audit report, such accountant has not
become aware of any Event of Default or Unmatured Event of Default that has
occurred and is continuing, or, if such accountant has become aware of any
such event, describing it;
46
<PAGE>
(c) Quarterly Financial Statement. Within forty-five (45) days after each
-----------------------------
Fiscal Quarter (except the last Fiscal Quarter) of each Fiscal Year of the
Company, a copy of the unaudited financial statement of the Company and its
Subsidiaries prepared in the same manner as the audit report referred to in
preceding clause (b), signed by the Company's chief financial officer and
----------
consisting of at least a balance sheet as of the close of such Fiscal Quarter
and statements of earnings for such Fiscal Quarter and statements of earnings
and cash flows for the period from the beginning of such Fiscal Year to the
close of such Fiscal Quarter;
(d) Officer's Certificate. Together with the financial statements furnished
---------------------
by the Company under preceding clauses (b) and (c), a certificate of the
------- --- ---
Company's chief financial officer in the form of Exhibit F (a "Compliance
---------
Certificate"), dated the date of such annual audit report or such quarterly
financial statement, as the case may be, to the effect that no Event of Default
or Unmatured Event of Default has occurred and is continuing, or, if there is
any such event, describing it and the steps, if any, being taken to cure it, and
containing a computation of, and showing compliance with, each of the financial
ratios and restrictions contained in this Section 9;
---------
(e) SEC and Other Reports. Copies of each filing and report made by the
---------------------
Company or any Subsidiary with or to any securities exchange or the Securities
and Exchange Commission and of each communication from the Company or any
Subsidiary to shareholders generally, promptly upon the filing or making
thereof;
(f) Report of Change in Subsidiaries or Partnerships. Promptly from time to
------------------------------------------------
time, a written report of any change in the list of the Company's Subsidiaries
set forth on Schedule 8.10 or in the list of partnerships and joint ventures set
-------------
forth on Schedule 8.11; and
-------------
(g) Requested Information. Promptly from time to time, such other reports or
---------------------
information as the Agent or any Bank (any such request of a Bank to be made
through the Agent) may reasonably request.
47
<PAGE>
9.2 Notices. Notify the Agent and each Bank in writing of any of
-------
the following immediately upon learning of the occurrence thereof, describing
the same and, if applicable, the steps being taken by the Person(s) affected
with respect thereto:
(a) Default. The occurrence of an Event of Default or an Unmatured Event
-------
of Default;
(b) Litigation. The institution of any litigation, arbitration proceeding
----------
or governmental proceeding which is material to the Company and its
Subsidiaries taken as a whole;
(c) Judgment. The entry of any judgment or decree against the Company or
--------
any Subsidiary if the aggregate amount of all judgments and decrees then
outstanding against the Company and all Subsidiaries exceeds $100,000 after
deducting (i) the amount with respect to which the Company or any Subsidiary
is insured and with respect to which the insurer has assumed responsibility in
writing, and (ii) the amount for which the Company or any Subsidiary is
otherwise indemnified if the terms of such indemnification and the Person
providing such indemnification are satisfactory to the Agent;
(d) Pension and Welfare Plans. The occurrence of a Reportable Event with
-------------------------
respect to any Plan; the institution of any steps by the Company, any ERISA
Affiliate, the PBGC or any other Person to terminate any Plan; the institution
of any steps by the Company or any ERISA Affiliate to withdraw from any Plan
with respect to which it is a substantial employer within the meaning of
Section 4063 of ERISA; or the incurrence of any material increase in the
contingent liability of the Company or any Subsidiary with respect to any
post-retirement welfare benefits;
(e) Material Adverse Change. The occurrence of a material adverse change
-----------------------
in the business, operations or financial condition of the Company and its
Subsidiaries taken as a whole; or
48
<PAGE>
(f) Other Events. The occurrence of such other events as the Agent or
------------
any Bank may from time to time reasonably specify (any such specification by a
Bank to be made through the Agent).
9.3 Existence. Maintain and preserve, and cause each Subsidiary
---------
to maintain and preserve, its respective existence as a corporation or other
form of business organization, as the case may be, and all rights, privileges,
licenses, patents, patent rights, copyrights, trademarks, trade names,
franchises and other authority to the extent material and necessary for the
conduct of its respective business in the ordinary course as conducted from time
to time.
9.4 Nature of Business. Engage, and cause each Subsidiary to
------------------
engage, in the leasing of property under "sales type," "direct financing" or
"operating" leases, the sale of property on conditional sales contracts, the
financing of lease receivables, installment sale contract receivables and
revolving credit receivables, or in other activities reasonably related to such
leasing, sales or financing activity.
9.5 Books, Records and Access. Maintain, and cause each
-------------------------
Subsidiary to maintain, complete and accurate books and records in which full
and correct entries in conformity with GAAP shall be made of all dealings and
transactions in relation to its respective business and activities; permit, and
cause each Subsidiary to permit, access by the Agent and the Banks to the books
and records of the Company and such Subsidiary during normal business hours; and
permit, and cause each Subsidiary to permit, the Agent or any Bank to make
copies of such books and records.
9.6 Insurance. Maintain, and cause each Subsidiary to maintain,
---------
insurance to such extent and against such hazards and liabilities as is commonly
maintained by companies similarly situated or as the Agent or the Majority Banks
may reasonably request (any such request of the Majority Banks to be made
through the Agent) from time to time.
9.7 Insurance Reports. Provide to the Agent at least annually
-----------------
within 90 days of the end of the Company's Fiscal Year, and in a sufficient
number of copies to provide one to each Bank,
49
<PAGE>
a certificate signed by its chief financial officer that attests to and
summarizes the property and casualty insurance program carried by the Company
and its Subsidiaries. This summary shall include the insurer's(s') name(s),
policy number(s), expiration date(s), amount(s) of coverage, type(s) of
coverage, the annual premium(s), exclusions, deductibles and self-insured
retention and shall describe in detail any retrospective rating plan, fronting
arrangement or any other self-insurance or risk assumption agreed to by the
Company or any Subsidiary or imposed upon the Company or any Subsidiary by any
such insurer, as well as any self-insurance program that is in effect. The
Company shall also notify the Agent and each Bank in writing at least twenty
(20) days prior to any cancellation of, or material change in, any such
insurance by the Company or any Subsidiary or within five (5) business days
after receipt of any notice (whether formal or informal) of cancellation or
change by any of its insurers. Annually, the Agent or any Bank shall have the
right to request the Company to have a risk management survey completed by a
recognized independent risk management consultant acceptable to the Company and
the Agent and the Majority Banks which will identify, quantify and assess any
catastrophic uninsured, underinsured or self-insured exposures faced by the
Company and all Subsidiaries. The cost of such survey shall be borne solely by
the Banks. A sufficient number of copies of the results of each such survey to
provide one to each Bank shall be promptly delivered by the Company to the
Agent.
9.8 Repair. Maintain, preserve and keep, and cause each
------
Subsidiary to maintain, preserve and keep, its properties in good repair,
working order and condition; and from time to time make, and cause each
Subsidiary to make, all necessary and proper repairs, renewals, replacements,
additions, betterments and improvements thereto so that at all times the
efficiency thereof shall be fully preserved and maintained.
9.9 Taxes. Pay, and cause each Subsidiary to pay, when due, all
-----
of its Taxes, unless and only to the extent that the Company or such Subsidiary,
as the case may be, is contesting such Taxes in good faith and by appropriate
proceedings and the Company or such Subsidiary has set aside on its books such
reserves or other appropriate provisions therefor as may be required by GAAP.
50
<PAGE>
9.10 Compliance. Comply, and cause each Subsidiary to comply, with all
----------
statutes and governmental rules and regulations applicable to it.
9.11 Pension Plans. Not permit, and not permit any Subsidiary to
-------------
permit, any condition to exist in connection with any Plan (other than a Multi-
employer Plan) which might constitute grounds for the PBGC to institute
proceedings to have such Plan terminated or a trustee appointed to administer
such Plan; not fail, and not permit any Subsidiary to fail, to make a required
contribution to any Pension Plan if such failure is sufficient to give rise to a
Lien under Section 302(f) of ERISA; and not engage in, or permit to exist or
occur, or permit any of its Subsidiaries to engage in, or permit to exist or
occur, any other condition, event or transaction with respect to any Plan which
could result in the incurrence by the Company or any of its Subsidiaries of any
material liability, fine or penalty.
9.12 Merger, Purchase and Sale. Not, and not permit any
-------------------------
Subsidiary to:
(a) be a party to any merger or consolidation;
(b) except in the normal course of its business, sell, transfer, convey,
lease or otherwise dispose of all or any substantial part of the assets of the
Company and its Subsidiaries taken as a whole, or sell or assign, with or
without recourse, any accounts receivable or chattel paper; or
(c) purchase or otherwise acquire all or substantially all the assets of
any Person.
Notwithstanding the foregoing
(x) any wholly-owned Subsidiary may merge into the Company or into or
with any other wholly-owned Subsidiary;
(y) any wholly-owned Subsidiary may consolidate with any other wholly-
owned Subsidiary so long as immediately thereafter 100% of the voting stock or
other ownership
51
<PAGE>
interest of the resulting Person is owned by the Company or another wholly-
owned Subsidiary; and
(z) any wholly-owned Subsidiary may sell, transfer, convey, lease or
assign all or a substantial part of its assets to the Company or another
wholly-owned Subsidiary;
provided, in each of the cases described in preceding clauses (x), (y) and (z),
- - - --------- ------- - - -
that immediately thereafter and after giving effect thereto, no Event of Default
or Unmatured of Default shall have occurred and be continued.
For purposes of this Section 9.12 only, a sale, transfer, conveyance,
------------
lease or other disposition of assets shall be deemed to be a "substantial part"
of the assets of the Company and its Subsidiaries only if the value of such
assets, when added to the value of all other assets sold, transferred, conveyed,
leased or otherwise disposed of by the Company and its Subsidiaries (other than
in the normal course of business) during the same Fiscal Year, exceeds 10% of
the Company's consolidated total assets determined as of the end of the
immediately preceding Fiscal Year. As used in the preceding sentence, the term
"value" shall mean, with respect to any asset disposed of, the greater of such
asset's book or fair market value as of the date of disposition, with "book
value" being the value of such asset as would appear immediately prior to such
disposition on a balance sheet of the owner of such asset prepared in accordance
with GAAP.
9.13 Liabilities to Net Worth Ratio. Not permit the ratio of the
------------------------------
Company's Consolidated Total Liabilities to the Company's Consolidated Tangible
Net Worth to exceed 4.0 to 1.0.
9.14 Tangible Net Worth. Not at any time permit the sum of (a)
------------------
the Company's Consolidated Tangible Net Worth at such time, plus (b) the
----
Company's aggregate Net Assets of Securitization Subsidiaries at such time,
minus (c) the amount of any Subordinated Debt included in the computation of the
- - - -----
Company's Consolidated Tangible Net Worth at such time; plus (d) the aggregate
----
amount paid by the Company to redeem its stock during the period commencing on
December 31, 1992 to and including such time, to be less than the sum of (x)
$17,000,000 plus (y) 50% of the Company's consolidated cumulative net income for
the period commencing January 1, 1993 to
52
<PAGE>
and including such time (but not less than zero); provided, however, that, for
-------- -------
purposes of determining compliance with this Section 9.14, (i) the amount
------------
included in clause (d) hereof shall not exceed $5,000,000 and (ii) amounts paid
----------
by the Company to redeem its stock shall only be included in clause (d) hereof
----------
to the extent such stock is retained by the Company as treasury stock.
9.15 Capital Expenditures. Not, and not permit any Subsidiary to,
--------------------
purchase or otherwise acquire (including, without limitation, acquisition by way
of Capitalized Lease), or commit to purchase or otherwise acquire, any fixed
asset (which shall not include any property leased by the Company or any
Subsidiary as lessor under a Lease) if, after giving effect to such purchase or
other acquisition, the aggregate cost of all fixed assets purchased or otherwise
acquired by the Company and its Subsidiaries on a consolidated basis in any one
Fiscal Year would exceed $800,000.
9.16 Interest Coverage. Not permit the ratio of (a) the Company's
-----------------
consolidated net earnings before interest expense and provision for Taxes for
any Fiscal Quarter or Fiscal Year of the Company to (b) the Company's
consolidated interest expense for such Fiscal Quarter or Fiscal Year, as the
case may be, to be less than 1.15 to 1.00.
For purposes of this Section 9.16, (i) net earnings shall not include any
------------
material gains on the sale or other disposition of Investments or fixed assets
or any material extraordinary or nonrecurring items of income to the extent that
the aggregate of all such gains and extraordinary or nonrecurring items of
income exceeds the aggregate of losses on such sale or other disposition and
extraordinary or nonrecurring charges, and (ii) interest expense shall include,
without limitation, implicit interest expense on Capitalized Leases. As used in
this paragraph, a gain on the sale or disposition of Investments or fixed
assets, or an extraordinary or nonrecurring item of income, shall be "material"
if such gain or item of income, when aggregated with all other such gains or
items of income, exceeds $50,000 in the aggregate in any Fiscal Year.
9.17 Restricted Payments. Not purchase or redeem any shares of
-------------------
its stock, declare or pay any dividends thereon (other than stock dividends),
make any distribution to stockholders or set
53
<PAGE>
aside any funds for any such purpose, and not prepay, purchase or redeem, and
not permit any Subsidiary to purchase, any subordinated indebtedness of the
Company or any Subsidiary; provided, however, that as long as immediately before
-------- -------
and after giving effect thereto no Event of Default or Unmatured Event of
Default then exists which is continuing (i) the Company may expend up to
$5,000,000 to purchase or redeem shares of its stock and (ii) the Company may in
any fiscal quarter pay cash dividends in an amount not to exceed twenty-five
percent (25%) of the Company's consolidated net income for the immediately
preceding fiscal quarter.
9.18 Company's and Subsidiaries' Stock. Not permit any Subsidiary
---------------------------------
to purchase or otherwise acquire any shares of the stock of the Company; and not
take any action, or permit any Subsidiary to take any action, which will result
in a decrease in the Company's or any Subsidiary's ownership interest in any
Subsidiary.
9.19 Indebtedness. Not, and not permit any Subsidiary to, incur
------------
or permit to exist any Indebtedness, except:
(a) Indebtedness under the terms of this Agreement;
(b) other Indebtedness approved in writing by the Majority Banks (or the
Agent acting on the direction of the Majority Banks);
(c) Indebtedness hereafter incurred in connection with the Liens
permitted by Section 9.20(a);
---------------
(d) unsecured Indebtedness (which may be pari passu with the Loans) to
---- -----
lenders who are parties to an intercreditor agreement with the Banks
containing terms satisfactory to the Majority Banks;
(e) Non-Recourse Debt, provided, however, that (A) such Indebtedness is
-------- -------
incurred under an agreement acceptable to the Agent and the Majority Banks and
(B) if the Company shall incur Non-Recourse Debt after the date of this
Agreement then, to the extent the party to whom such Non-Recourse Debt is owed
(a "Non-Recourse Lender") might, under applicable law, become entitled to any
recourse against the Company pursuant to (S)1111(b) of the Bankruptcy Reform
Act of
54
<PAGE>
1978 (11 U.S.C. (S)1111(b)) or any other provisions of any bankruptcy,
insolvency or other law of any jurisdiction, such Non-Recourse Lender shall
have agreed that its recourse claim with respect to the Non-Recourse Debt
arising after the date of this Agreement shall be subordinated upon the terms
specified in Exhibit I hereto, to the claims of the Banks; and
---------
(f) other Indebtedness outstanding on the date hereof and listed on
Schedule 9.19.
-------------
9.20 Liens. Not, and not permit any Subsidiary to, create or
-----
permit to exist any Lien with respect to any property, revenues or assets now
owned or hereafter acquired, except:
(a) Liens in connection with the acquisition of property after the date
hereof by way of purchase money mortgage, conditional sale or other title
retention agreement, Capitalized Lease or other deferred payment contract, and
attaching only to the property being acquired, if the Indebtedness secured
thereby does not exceed 80% (100% in the case of a Capitalized Lease) of the
fair market value of such property at the time of acquisition thereof nor
$500,000 in the aggregate for the Company and all Subsidiaries at any one time
outstanding.
(b) Liens for current Taxes not delinquent or Taxes being contested in
good faith and by appropriate proceedings and as to which such reserves or
other appropriate provisions as may be required by GAAP are being maintained;
(c) carriers', warehousemen's, mechanics', materialmen's, repairmen's, and
other like statutory Liens arising in the ordinary course of business securing
obligations which are not overdue for a period of more than 30 days or which
are being contested in good faith and by appropriate proceedings and as to
which such reserves or other appropriate provisions as may be required by GAAP
are being maintained;
55
<PAGE>
(d) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(e) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations and other obligations of a like nature incurred in the
ordinary course of business;
(f) the Lien provided for in Section 6.7 and other Liens in favor of the
-----------
Agent for the benefit of the Banks;
(g) Liens referred to in Section 8.9;
-----------
(h) Liens on Leases and related personal property covered by thereby
securing Non-Recourse Debt, if such Indebtedness does not exceed, for the
Leases securing such Indebtedness, 100% of the present value (using the
interest rate applicable to such Indebtedness) of the Lease Receivables with
respect to such Leases; and
(i) Restricted Cash, provided, however, that the Company shall satisfy
-------- -------
all Restricted Cash requirements from the proceeds of the funds borrowed or
otherwise received from the financing of Leases and other chattel paper.
9.21 Guaranties. Not, and not permit any Subsidiary to, become or
----------
be a guarantor or surety of, or otherwise become or be responsible in any manner
(whether by agreement to purchase any obligations, stock, assets, goods or
services, or to supply or advance any funds, assets, goods or services, or
otherwise) with respect to, any undertaking of any other Person, except for: (a)
the endorsement, in the ordinary course of collection, of instruments payable to
it or its order and (b) guaranties by the Company or a Subsidiary of obligations
of the Company or another Subsidiary, provided the beneficiary of such guaranty
shall be a party to an intercreditor agreement with the Agent for the benefit of
the Banks containing terms satisfactory to the Majority Banks.
9.22 Investments. Not, and not permit any Subsidiary to, make or
-----------
permit to exist any Investment in any Person, except for:
56
<PAGE>
(a) advances not to exceed, in the aggregate for the Company and all
Subsidiaries, $25,000 at any one time outstanding to officers and employees;
(b) Permitted Investments;
(c) Investments evidenced by Vendor Notes;
(d) Investments (other than Investments in the nature of loans or
advances) outstanding on the date hereof in Subsidiaries by the Company and
other Subsidiaries; and
(e) other Investments outstanding on the date hereof and listed on
Schedule 9.22.
-------------
9.23 Leases. Not enter into or permit to exist, or permit any of
------
its Subsidiaries to enter into or permit to exist, any arrangements for the
leasing by the Company or any of its Subsidiaries, as lessee, of any real or
personal property (or any interest therein) under leases (other than Capitalized
Leases) which require the payment by the Company and its Subsidiaries on a
consolidated basis of rental amounts in the aggregate in excess of (i)$500,000
in any one Fiscal Year or (ii) $1,600,000 during the full remaining terms of
such leases.
9.24 Lease Portfolio. Not permit the Average Original Equipment
---------------
Cost of Assets to exceed $15,000 multiplied by the OEC Inflation Index.
"Average Original Equipment Cost of Assets" shall mean, as of any date of
determination, the aggregate Original Equipment Cost of all items of property
owned by the Company or a Subsidiary and leased to other Persons under Leases,
divided by the total number of such items of property leased by the Company to
other Persons under "sales type," "direct financing" or "operating" leases
reflected on the Company's books and records.
"Original Equipment Cost" shall mean, with respect to an item of personal
property owned by the Company or a Subsidiary for lease to another Person, the
acquisition cost thereof capitalizable in accordance with GAAP and used to
determine the amount recorded on the Company's balance sheet with respect
thereto.
57
<PAGE>
"OEC Inflation Index" shall mean, as of the date of any determination thereof,
a fraction, the numerator of which is the monthly Consumer Price Index for All
Urban Consumers, All Items, U.S. City Average (1982-84 = 100) (unadjusted)
published by the U.S. Bureau of Labor Statistics (the "CPI-U"), for the most
recent month for which the CPI-U shall have been published, and the denominator
of which is 135 (being the CPI-U for March, 1991); provided, that if the CPI-U
--------
is no longer published, there shall be substituted in both the numerator and the
denominator the most nearly comparable index published by Federal authorities
that reflects inflationary or deflationary changes, which substituted index
shall be determined by the Agent by notice to the Company and be conclusive in
the absence of bad faith or manifest error. In the event that the Company
determines that the OEC Inflation Index does not accurately reflect the changes
to the cost of items of equipment to be adjusted by such OEC Inflation Index,
then another index which in the judgment of the Company more accurately reflects
such changes, and which is acceptable to the Majority Banks, shall be
substituted for the OEC Inflation Index.
9.25 Unconditional Purchase Obligation. Not, and not permit any
---------------------------------
Subsidiary to, enter into or be a party to any contract for the purchase or
lease of materials, supplies or other property or services if such contract
requires that payment be made by it regardless of whether or not delivery is
ever made of such materials, supplies or other property or services.
9.26 Other Agreements. Not, and not permit any Subsidiary to,
----------------
enter into any agreement containing any provision which would be violated or
breached by the Company's performance of its obligations hereunder or under any
instrument or document delivered or to be delivered by the Company hereunder or
in connection herewith.
9.27 Use of Proceeds. Not permit any proceeds of the Loans to be
---------------
used, either directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of "purchasing or carrying any margin stock" within the
meaning of Regulation U of the Federal Reserve Board, as amended from time to
time; and furnish to the Agent, upon its request, a statement in conformity with
the requirements of Federal Reserve Form U-l referred to in Regulation U.
58
<PAGE>
9.28 Transactions with Related Parties. Not, and not permit any
---------------------------------
Subsidiary to, enter into or be a party to any transaction or arrangement,
including, without limitation, the purchase, sale, lease or exchange of property
or the rendering of any service, with any Related Party, except in the ordinary
course of and pursuant to the reasonable requirements of the Company's or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Company or such Subsidiary than would obtain in a comparable arm's-length
transaction with a Person not a Related Party.
9.29 Subsidiaries; Partnerships. Not create or permit to exist,
--------------------------
or become a partner or joint venturer in, and not permit any Subsidiary to
create or permit to exist or become a partner or joint venturer in, any
Subsidiary, partnership or joint venture, as applicable, other than
Securitization Subsidiaries, Subsidiaries used in the business of providing
revolving credit and any set forth on Schedule 8.10 or Schedule 8.11, as
------------- -------------
applicable.
10. CONDITIONS PRECEDENT TO ALL REVOLVING LOANS, FIXED RATE LOANS AND THE
TERM LOANS. The obligation of any Bank to make any Revolving Loan or Fixed Rate
Loan, or to make its Term Loan, is subject to the satisfaction of each of the
following conditions precedent:
10.1 Notice. In the case of a Revolving Loan or Fixed Rate Loan,
------
the Agent and such Bank shall have received timely notice of such Revolving Loan
in accordance with Section 3.2.
-----------
10.2 Default. Before and after giving effect to such Loan, no
-------
Event of Default or Unmatured Event of Default shall have occurred and be
continuing.
10.3 Insurance. There shall have been no material change, or
---------
notice of prospective material change (whether such notice is formal or
informal):
(a) in the nature, extent, scope or cost of the insurance policies of
the Company or any Subsidiary listed on Schedule 8.7; or
------------
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<PAGE>
(b) to the Company's knowledge, which reduces the policyholder's or
financial size ratings of the Company's or any Subsidiary's insurance carriers
as established by Best's Insurance Reports,
------------------------
which change would have a material adverse effect on the financial condition of
the Company and its Subsidiaries taken as a whole or would significantly
adversely affect the Company's ability to perform its obligations under this
Agreement or any Note.
10.4 Warranties. Before and after giving effect to such Loan, the
----------
warranties in Section 8 shall be true and correct as though made on the date of
---------
such Loan, except for such changes as are specifically permitted hereunder.
10.5 Certification. Each request for a Borrowing of Revolving
-------------
Loans and the request for the Borrowing of the Term Loans shall be deemed to be
a certification to the Agent and each Bank that the conditions precedent set out
in Sections 10.2, 10.3 and 10.4 have been satisfied.
-------- ---- ---- ----
10.6 Term Notes; Fixed Rate Loan Notes. In the case of the Term
---------------------------------
Loans or Fixed Rate Loans, the Company shall have delivered to the Agent, for
the account of the Banks, a duly executed Term Note or Fixed Rate Loan Note, as
applicable, payable to the order of each Bank in the amount of its respective
Term Loan or Fixed Rate Loan, as applicable.
11. CONDITION PRECEDENT TO INITIAL REVOLVING LOANS. The obligation of each
Bank to make its initial Revolving Loan hereunder is subject to the satisfaction
of the condition precedent, in addition to the applicable conditions precedent
set forth in Section 10 above, that the Company shall have delivered to the
----------
Agent all of the following, each duly executed and dated the date of the initial
Revolving Loan (or such other date as is satisfactory to the Agent and all of
the Banks), in form and substance satisfactory to the Agent and all of the
Banks, and in sufficient number of counterpart originals to provide one to each
Bank:
11.1 Revolving Note. Its Revolving Note.
--------------
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11.2 Resolutions. A copy, duly certified by the secretary or an
-----------
assistant secretary of the Company, of (i) the resolutions of the Company's
Board of Directors authorizing or ratifying the execution and delivery of this
Agreement and the Notes and authorizing the borrowings hereunder, (ii) all
documents evidencing other necessary corporate action, and (iii) all approvals
or consents, if any, with respect to this Agreement and the Notes.
11.3 Incumbency Certificate. A certificate of the secretary or an
----------------------
assistant secretary of the Company certifying the names of the Company's
officers authorized to sign this Agreement, the Notes and all other documents or
certificates to be delivered hereunder, together with the true signatures of
such officers.
11.4 By-Laws. A copy, certified as true and correct by the
-------
secretary or an assistant secretary of the Company, of the Company's By-Laws.
11.5 Certificate of Incorporation. A copy, certified by the
----------------------------
Secretary of State of Delaware, of the Company's Certificate of Incorporation,
together with all amendments thereto.
11.6 Good Standing. A current Good Standing Certificate issued by
-------------
the Secretary of State (or similar officer) of Delaware, Illinois, Florida, and
California.
11.7 Opinion. An opinion of Kirkland & Ellis, counsel to the
-------
Company, addressed to the Agent and the Banks in substantially the form of
Exhibit I.
- - - ---------
11.8 Exhibits; Schedules. Completed Exhibits and Schedules, and
-------------------
the information disclosed therein shall be acceptable to all of the Banks.
11.9 Borrowing Base Certificate. A duly executed Borrowing Base
--------------------------
Certificate.
12. EVENTS OF DEFAULT AND REMEDIES.
12.1 Events of Default. Each of the following shall constitute an
-----------------
Event of Default under this Agreement:
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(a) Non-Payment. Default, and the continuance thereof for five (5) days, in
-----------
the payment, when due, of any principal of, or interest on, any Loan or any fee
hereunder.
(b) Non-Payment of Other Indebtedness. Default in the payment when due,
---------------------------------
whether by acceleration or otherwise (subject to any applicable grace period),
of any Indebtedness in an aggregate principal amount of $100,000 or more of, or
guaranteed by, the Company or any Subsidiary (other than (i) any Indebtedness of
any Subsidiary to the Company or to any other Subsidiary and (ii) the
Indebtedness evidenced by the Notes).
(c) Acceleration of Other Indebtedness. Any event or condition shall occur
----------------------------------
which results in the acceleration of the maturity of any Indebtedness in an
aggregate principal amount of $100,000 or more of, or guaranteed by, the Company
or any Subsidiary (other than (i) any Indebtedness of any Subsidiary to the
Company or to any other Subsidiary and (ii) the Indebtedness evidenced by the
Notes) or enables the holder or holders of such other Indebtedness or any
trustee or agent for such holders (any required notice of default having been
given and any applicable grace period having expired) to accelerate the maturity
of such other Indebtedness.
(d) Other Material Obligations. Default in the payment when due, whether by
--------------------------
acceleration or otherwise, or in the performance or observance (subject to any
applicable grace period) of: (i) any obligation or agreement of the Company or
any Subsidiary to or with the Agent or any Bank (other than any obligation or
----- ----
agreement of the Company hereunder or under any Note), or (ii) any material
obligation or agreement of the Company or any Subsidiary to or with any other
Person with respect to any material purchase or lease of goods or services
(other than (x) any such material obligation or agreement constituting or
- - - ------ ----
related to Indebtedness, (y) Trade Accounts Payable, and (z) any material
obligation or agreement of any Subsidiary to the Company or to any other
Subsidiary), except only to the extent that the existence of any such default is
being contested by the Company or such Subsidiary, as the case may
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<PAGE>
be, in good faith and by appropriate proceedings and the Company or such
Subsidiary shall have set aside on its books such reserves or other appropriate
provisions therefor as may be required by GAAP.
(e) Insolvency. The Company or any of its Subsidiaries becomes insolvent, or
----------
generally fails to pay, or admits in writing its inability to pay, its debts as
they mature, or applies for, consents to, or acquiesces in, the appointment of a
trustee, receiver or other custodian for the Company or such Subsidiary or for a
substantial part of the property of the Company or such Subsidiary, or makes a
general assignment for the benefit of creditors; or, in the absence of such
application, consent or acquiescence, a trustee, receiver or other custodian is
appointed for the Company or any of its Subsidiaries or for a substantial part
of the property of the Company or any of its Subsidiaries and is not discharged
within 60 days; or any bankruptcy, reorganization, debt arrangement or other
proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding, is instituted by or against the Company or any of its
Subsidiaries and, if instituted against the Company or any of its Subsidiaries,
is consented to or acquiesced in by the Company or such Subsidiary or remains
for 60 days undismissed; or any warrant of attachment or similar legal process
is issued against any substantial part of the property of the Company or any of
its Subsidiaries which is not released within 60 days of service.
(f) Pension Plans. The institution by the Company or any ERISA Affiliate of
-------------
steps to terminate any Plan if, in order to effectuate such termination, (i) the
Company or any ERISA Affiliate would be required to make a contribution to such
Plan or would incur a liability or obligation to such Plan and (ii) immediately
after giving effect to the payment or satisfaction of such contribution,
liability or obligation (if made or undertaken by the Company or any Subsidiary)
an Event of Default or Unmatured Event of Default would exist and be continuing;
or the institution by the PBGC of steps to terminate any Plan.
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<PAGE>
(g) Agreements. Default in the performance of any of the Company's
----------
agreements herein set forth (and not constituting an Event of Default under
any of the other subsections of this Section 12.1) and continuance of such
------------
default for 30 days after notice thereof to the Company from the Agent.
(h) Warranty. Any warranty made by the Company herein is untrue or
--------
misleading in any material respect when made or deemed made; or any schedule,
statement, report, notice, certificate or other writing furnished by the
Company to the Agent or any Bank is untrue or misleading in any material
respect on the date as of which the facts set forth therein are stated or
certified; or any certification made or deemed made by the Company to the
Agent or any Bank is untrue or misleading in any material respect on or as of
the date made or deemed made.
(i) Litigation. There shall be entered against the Company or any
----------
Subsidiary one or more judgments or decrees in excess of $100,000 in the
aggregate at any one time outstanding for the Company and all Subsidiaries,
excluding those judgments or decrees (i) that shall have been outstanding less
than 60 calendar days from the entry thereof or (ii) for and to the extent
which the Company or any Subsidiary is fully insured (other than a deductible
portion not to exceed $100,000) and with respect to which the insurer has
assumed responsibility in writing or for and to the extent which the Company
or any Subsidiary is otherwise indemnified if the terms of such
indemnification and the Person providing such indemnification are satisfactory
to the Agent and the Majority Banks.
(j) Change of Ownership. Richard Grossman shall cease to own at least 35%
-------------------
of the issued and outstanding stock of the Company which, under ordinary
circumstances, has the power to elect a majority of the Company's Board of
Directors.
12.2 Remedies. If any Event of Default described in Section 12.1
-------- ------------
shall have occurred and be continuing, the Agent, upon the request of the
Majority Banks, may declare the Commitments and
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<PAGE>
the Credit to be terminated and all or a portion of the Loans to be due and
payable, whereupon the Commitments and Credit shall immediately terminate and
the outstanding Loans shall become immediately due and payable to the extent so
declared, all without notice of any kind (except that if an event described in
Section 12.1(e) occurs, the Commitments and the Credit shall immediately
- - - ---------------
terminate and all outstanding Loans shall become immediately due and payable
without declaration or notice of any kind). The Agent shall promptly advise the
Company of any such declaration, but failure to do so shall not impair the
effect of such declaration.
13. THE AGENT.
13.1 Authorization and Appointment. Each Bank hereby appoints and
-----------------------------
authorizes the Agent, and the Agent hereby agrees to act, on behalf of such Bank
as such Bank's agent to the extent provided in this Agreement or in any other
Loan Document. The Agent shall have and may exercise such powers under this
Agreement and the other Loan Documents as are specifically delegated to the
Agent by the terms hereof or thereof, as applicable, and to take or refrain from
taking such other action as may be reasonably incidental thereto. As to any
other matters not expressly provided for by this Agreement or another Loan
Document, the Agent shall not be required to exercise any discretion or take any
action.
13.2 Indemnification. To the extent the Company does not do so,
---------------
each Bank agrees to reimburse the Agent upon request, and indemnify the Agent
for, and hold the Agent harmless against, a share (determined, in accordance
with such Bank's Percentage) of any loss, damages, penalty, action, judgment,
obligation, out-of-pocket cost, disbursement, liability or out-of-pocket expense
(including reasonable fees, disbursements and charges of the Agent's attorneys)
which may be imposed on, incurred by or asserted against the Agent, other than
as a consequence of actual gross negligence or willful misconduct on the part of
the Agent, arising out of or in connection with the performance of its
obligations or the exercise of its powers hereunder or under any other Loan
Documents, or any request by any Bank, including without limitation the costs,
expenses and disbursements in connection with defending against any claim or
liability, or answering any subpoena, related to the exercise or performance of
any of its powers or duties as Agent under this Agreement or any other Loan
Documents, or the
65
<PAGE>
taking or refraining from taking any action under or in connection with this
Agreement or any other Loan Document.
13.3 Exculpation. The Agent shall be entitled to act, and shall
-----------
be fully protected in acting upon, any communication in whatever form believed
by the Agent in good faith to be genuine and correct and to have been signed or
sent or made by a proper person or persons or entity. The Agent may consult
counsel and shall be entitled to act, and shall be fully protected in any action
taken in good faith, in accordance with advice given by counsel. The Agent may
employ agents and attorneys-in-fact and shall not be liable for the default or
misconduct of any such agents or attorneys-in-fact selected by the Agent with
reasonable care. Neither the Agent nor any of its directors, officers, employees
or agents shall be liable as such for any action taken or omitted by it or them
(including, without limitation, any action taken or omitted hereunder pursuant
to any provision of this Agreement or any other Loan Document that permits the
Agent to exercise its discretion) except for its or their own gross negligence
or willful misconduct. Without limiting the foregoing, neither the Agent nor
any of its directors, officers, employees or agents shall (i) be responsible for
any recitals, representations or warranties contained in, or for the execution,
validity, genuineness, effectiveness or enforceability of, this Agreement, any
Note or any other Loan Document, (ii) be responsible for the validity,
genuineness, perfection, effectiveness, enforceability, collectibility,
existence, value or enforcement of any of the Liabilities or any property at any
time securing payment or performance of the Company's obligations hereunder,
under the Notes or any other Loan Document, (iii) be under any duty to inquire
into or pass upon or be informed with respect to any of the foregoing matters,
or to make any inquiry concerning the performance by the Company or any other
Person of its obligations or (iv) be responsible for any determination made by
it or them as to whether or not the transactions contemplated hereby or the
obligations of the Company hereunder or any other obligations of the Company or
its affiliates qualify as a highly leveraged transaction, as such term is
defined in Comptroller of the Currency Banking Circular 242 and interpreted in
the February 6, 1990 joint statement of the Comptroller of the Currency, the
Federal Reserve Board and the Federal Deposit Insurance Corporation, as further
amended, interpreted or otherwise modified from time to time. In any event,
66
<PAGE>
the Agent shall at all times be entitled to act or refrain from acting, and in
all cases shall be fully protected in acting or refraining from acting, if the
Agent acts or refrains from acting in accordance with written instructions from
the Majority Banks. The agency hereby created shall in no way impair or affect
any of the rights and powers of, or impose any duties or obligations upon, the
Agent in its individual capacity.
13.4 Non-Reliance on Agent. Each Bank acknowledges that it has,
---------------------
independently and without reliance on the Agent or any other Bank, and based on
such documents and information as it deemed appropriate, made its own credit
analysis of the Company and decision to enter into this Agreement, and made such
inquiries and taken such care on its own behalf as would have been the case had
such Bank's commitment been granted and such Bank's Loans and other financial
accommodations to the Company been made directly by such Bank to the Company
without the intervention of the Agent or any other Bank. Each Bank further
agrees and acknowledges that it will, independently and without reliance upon or
the intervention of the Agent or any other Bank, and based upon 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 this Agreement
and the other Loan Documents. Each Bank further agrees and acknowledges that
(i) the Agent makes no representations or warranties about the credit-worthiness
of the Company or with respect to the legality, validity, sufficiency, value or
enforceability of this Agreement, any Note or any other Loan Document or any of
the Liabilities, or of any collateral or other security which at any time may
secure any of the Liabilities and (ii) except for notices, documents, reports
and other information expressly required to be furnished by the Agent to the
Banks under this Agreement or another Loan Document to which the Agent is a
party or by which it is bound, the Agent has no duty or responsibility to
provide such Bank with any credit or other information concerning the affairs,
financial condition or business of the Company or any other Person that may come
into the Agent's possession. If and to the extent that the Agent provides any
Bank with copies of documents or information as a result of any field
examination, collateral audit or other investigation by the Agent with respect
to this Agreement or any other Loan Document, such Bank agrees that such
documents are provided without any representation or warranty by the Agent as to
the validity,
67
<PAGE>
accuracy or completeness thereof, and such Bank shall have no claim against the
Agent with respect thereto for any reason whatsoever.
13.5 Agent and Affiliates. The Agent shall have the same rights
--------------------
and powers hereunder as any other Bank and may exercise or refrain from
exercising the same as though it were not the Agent, and the Agent and its
affiliates may accept deposits from and generally engage in any kind of business
with the Company and its Subsidiaries as if the Agent were not the Agent
hereunder.
13.6 Notice to Holder of Notes. The Agent may deem and treat the
-------------------------
payees of any Notes as the owners thereof for all purposes unless a written
notice of assignment, negotiation or transfer thereof has been filed with the
Agent. Any request, authority or consent of any holder of any Note shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
Note.
13.7 Resignation. The Agent may resign as such at any time upon
-----------
at least 30 days' prior notice to Company and the Banks. In the event of any
such resignation, the Majority Banks shall as promptly as practicable appoint a
successor Agent, the identity of which shall be approved by the Company (which
approval will not be unreasonably withheld or delayed). If no successor shall
have been so appointed, and shall have accepted such appointment, within 30 days
after the giving of notice of such resignation, then the retiring Agent may (but
shall not be required to), on behalf of the Banks, appoint a successor Agent.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from all further duties and obligations under this
Agreement. After any resignation pursuant to this Section 13.7, the provisions
------------
of this Section 13 shall inure to the benefit of the retiring Agent as to any
----------
actions taken or omitted to be taken by it while it was Agent hereunder.
14. GENERAL.
14.1 No Waiver by the Agent or Banks. No failure or delay on the
-------------------------------
part of the Agent or any Bank in the exercise of any power or right, and no
course of dealing between the Company and
68
<PAGE>
the Agent or any Bank, shall operate as a waiver of such power or right, nor
shall any single or partial exercise of any power or right preclude other or
further exercise thereof or the exercise of any other power or right. The
remedies provided for in this Agreement and the other Loan Documents are
cumulative and not exclusive of any remedies which may be available to the Agent
or any Bank at law or in equity. No notice to or demand on the Company not
required hereunder shall in any event entitle the Company to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the right of the Agent or any Bank to any other or further action in
any circumstances without notice or demand.
14.2 Amendments. No amendment, modification or waiver of, or
----------
consent with respect to, any provision of this Agreement shall in any event be
effective unless the same shall be in writing and signed and delivered by the
Borrower, the Agent and Banks having an aggregate Percentage of not less than
the aggregate Percentage expressly designated herein with respect thereto or, in
the absence of such designation, by the Majority Banks, and then any such
amendment, modification, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. No amendment,
modification, waiver or consent shall, unless in writing and signed by all the
Banks, do any of the following: (i) waive any of the conditions specified in
Section 10 or Section 11, (ii) increase the amount or extend the term of the
- - - ---------- ----------
Commitment of any Bank or subject the Banks to any additional obligations, (iii)
reduce the principal of, or interest on any of the Loans under or evidenced by
this Agreement or any Note, or reduce or waive the amount of any fee payable to
or for the account of the Banks under this Agreement, (iv) postpone or extend
any date fixed for any payment of principal of, or interest on, any of the Loans
under or evidenced by this Agreement or any Note, or any reimbursement
obligation, (v) change the definition of Majority Banks or otherwise reduce the
aggregate Percentage required to effect an amendment, modification, waiver or
consent, (vi) change the definition of Borrowing Base, or change the definition
of any of the defined terms referred to in the definition of Borrowing Base or
(vii) change any provision of this Section 14.2. Further, no amendment,
------------
modification, waiver or consent shall extend the maturity or reduce the
principal amount of, or rate of interest on, any Loan without the consent of the
69
<PAGE>
holder of such Loan. No provision of Section 13 shall be amended, modified or
----------
waived, nor shall the amount of the Agent's fee referred to in Section 5.6 be
-----------
amended, without the consent of the Agent.
14.3 Notices. Except as otherwise expressly provided herein, any
-------
notice hereunder to the Company, the Agent or any Bank shall be in writing
(including telegraphic, telex, or facsimile communication) and shall be given to
the Company, the Agent or such Bank at its address, telex number or facsimile
number set forth on the signature pages hereof or at such other address, telex
number or facsimile number as such party may, by written notice, designate as
its address, telex number or facsimile number for purposes of notices hereunder.
All such notices shall be deemed to be given when transmitted by telex and the
appropriate answerback is received, transmitted by facsimile, delivered to the
telegraph office, delivered by courier, personally delivered or, in the case of
notice by mail, three (3) Banking Days following deposit in the United States
mail, properly addressed as herein provided, with proper postage prepaid;
provided, however, that notices to the Agent with respect to the Conversion
- - - -------- -------
Date, or under Sections 3.2, 3.3, 6.2, 6.3, 6.4, 6.5 or 6.6 shall not be
------------ --- --- --- --- --- ---
effective until actually received by the Agent.
14.4 Expenses; Attorney's Fees. The Company agrees, whether or
-------------------------
not any Loan is made hereunder, to pay upon demand all reasonable out-of-pocket
expenses (including the reasonable fees, disbursements and other charges of
attorneys) incurred by the Agent or any Bank, and the reasonable charges for and
expenses of attorneys who may be employees of the Agent or a Bank, in connection
with (a) in the case of the Agent, (i) the preparation, negotiation and
execution of this Agreement and any other Loan Documents, (ii) the preparation
of any and all amendments to this Agreement or any other Loan Document, and
(iii) the performance of periodic collateral field examinations and/or audits;
and (b) in the case of the Agent and each Bank, (i) the collection or
enforcement of the Company's obligations hereunder or under any other Loan
Document and (ii) the collection or enforcement of any rights of the Agent or
any Bank in or to any property at any time securing payment or performance of
the Company's Liabilities. The Company also agrees (x) to indemnify and hold
the Agent and each Bank harmless from any loss or expense which may arise or be
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<PAGE>
created by the Agent's acceptance of telephonic or other instructions for making
Loans and (y) to pay, and save the Agent and each Lender harmless from all
liability for, any stamp or other taxes which may be payable with respect to the
execution or delivery of this Agreement, any Note or any other Loan Document, or
the issuance of any Note or of any other Loan Documents. The Company's
foregoing obligations shall survive any termination of this Agreement.
14.5 Assignments; Participations. Each Bank may assign, or sell
---------------------------
participations in, its Loans and its Commitments hereunder to one or more other
Persons in accordance with this Section 14.5.
------------
14.5.1 Assignments. Any Bank may, subject to the further provisions of
--------------------
this Section 14.5, with the prior written consent of the Agent (which consent
------------
shall not be unreasonably withheld or delayed), at any time sell, assign or
negotiate and delegate to one or more commercial banks or other financial
institutions (each Person to whom such assignment and delegation is to be made
being herein referred to as an "Assignee"), all or any part of its
Commitments, Loans, Notes and other rights and obligations under this
Agreement and the other Loan Documents (such transfer is herein called an
"Assignment"). Upon such Assignment becoming effective as provided in Section
-------
14.5.2, the assigning Bank shall be relieved from the portion of the
------
Commitments, obligations to indemnify the Agent and other obligations
hereunder to the extent assumed and undertaken by the Assignee, and to such
extent the Assignee shall have the rights and obligations, and shall be and
become, a "Bank" hereunder. Notwithstanding the foregoing, unless otherwise
consented to by the Agent, (i) each Bank shall retain an interest in the Loans
such that, unless it assigns its entire interest, its Percentage is never less
than ten percent (10%), (ii) each Assignment and delegation shall be of a
constant, and not a varying, percentage of such assigning Bank's Commitments,
Loans, Notes and other rights and obligations, (iii) each Assignment shall be
in the initial principal amount of not less than 10% of the Credit in the
aggregate for all Loans and Commitments assigned (or an integral multiple of
$500,000 if above such amount), and
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(iv) each Assignment shall be documented by an agreement between the assigning
Bank and the Assignee in a form acceptable to the Agent, duly completed (an
"Assignment and Assumption Agreement").
14.5.2 Effectiveness of Assignments. An Assignment shall become effective
----------------------------
hereunder when all of the following shall have occurred; provided that the
--------
Company and the Agent shall be entitled to continue to deal solely and directly
with such assigning Bank in connection with the interests so assigned and
delegated until such Assignment has become effective:
(a) the Agent and the Company shall have given prior written consent to
the Assignment (which consents will not be unreasonably withheld); provided,
--------
that no consent of the Company or the Agent shall be required if (i) the
----
Assignee is already a Bank under the Agreement and (ii) as a result of such
Assignment First Union's Percentage will not be less than 66% prior to the
Conversion Date or any extension thereof nor less than 34% thereafter;
(b) the Agent and the Company shall have received payment instructions,
addresses and related information with respect to such Assignee;
(c) the Agent and the Company shall have received evidence satisfactory
to the Company and the Agent that, as of the date of such assignment and
delegation, the Company will not be required to pay any costs, fees, taxes or
other amounts of any kind or nature with respect to the interest assigned in
excess of those payable by the Company with respect to such interest prior to
such assignment;
(d) the Agent shall have received from the assignor or the assignee, for
the account of the Agent a processing fee of $3,000;
(e) the Assignee shall have submitted the relevant Assignment and
Assumption Agreement, or other document
72
<PAGE>
in which the transferee shall have agreed in writing to have irrevocably
assumed and undertaken the transferred portion of the assigning Bank's
obligations hereunder (including, without limitation, the obligation to
indemnify the Agent hereunder), to the Agent, with a copy to the Company, and
shall have provided to the Agent information the Agent shall have reasonably
requested to make payments to the Assignee; and
(f) the assigning Bank and the Agent shall have agreed upon a date upon
which the Assignment shall become effective.
Upon the Assignment becoming effective (i) the Company and the Agent shall make
appropriate arrangements so that, if appropriate, new Notes are issued to the
assigning Bank and the Assignee and previously issued Notes are returned to the
Company, (ii) the Agent shall thereafter forward all payments of interest,
principal, fees and other amounts that would have been made to the assigning
Bank, but for the Assignment, in proportion to the percentage of the assigning
Bank's rights transferred to the Assignee, (iii) the Assignee shall be deemed
automatically to have become a party hereto and to the extent that rights and
obligations hereunder have been assigned and delegated to such Assignee shall
have the rights and obligations of a Bank hereunder and under the other Loan
Documents and (iv) the assigning Bank, to the extent that rights and obligations
hereunder have been assigned and delegated by it, shall be released from its
obligations hereunder. Any attempted assignment and delegation not made in
accordance with this Section 14.5 shall be null and void.
------------
14.5.3 Participations. Any Bank may at any time, subject to the provisions
--------------
of this Section 14.5.3, sell to one or more commercial banks or other Persons
--------------
(each of such commercial banks and other Persons being herein called a
"Participant") participating interests in any of its Loans, Commitments and
Notes hereunder; provided, however, that
-------- -------
(a) no participation may be sold to a Person which is not an affiliate of
a Bank, or is itself a Bank,
73
<PAGE>
without the Company's consent (which consent will not be unreasonably withheld
or delayed);
(b) no participation contemplated in this Section 14.5.3 shall relieve
--------------
such Bank from its commitment hereunder or its other obligations hereunder;
(c) such Bank shall remain solely responsible for the performance of its
commitments hereunder and such other obligations;
(d) the Company and the Agent shall continue to deal solely and directly
with such Bank in connection with such Bank's rights and obligations under
this Agreement;
(e) no Participant, unless such Participant is an affiliate of such Bank,
or is itself a Bank, shall be entitled to require such Bank to take or refrain
from taking any action hereunder, except that such Bank may agree with any
Participant that such Bank will not, without such Participant's consent, take
any action which would, in the case of any principal, interest or fee in which
the Participant has a beneficial interest: (i) reduce the principal of, or
interest on, any of the Loans, or reduce or waive the amount of any fee
payable to or for the account of the Banks under this Agreement or (ii)
postpone or extend any date fixed for any payment of principal of, or interest
on, any of the Loans, or any reimbursement obligation; and
(e) no Participant may further participate any interest hereunder (and
each participation agreement shall contain a restriction to such effect).
The Company acknowledges and agrees that, to the extent permitted by applicable
law, each Participant shall be considered a Bank for purposes of Sections 6.7
------------
and Section 3.5.
------------
14.6 Information. Each Bank may furnish any information
-----------
concerning the Company in the possession of such Bank
74
<PAGE>
from time to time to assignees of the rights and/or obligations of such Bank
hereunder and to participants in any Loan (including prospective assignees and
participants) and may furnish information in response to credit inquiries
consistent with such Banks' general banking practice.
14.7 Severability. Any provision of this Agreement 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 or affecting the validity or
enforceability of such provision in any other jurisdiction.
14.8 Successors. This Agreement shall be binding upon the
----------
Company, the Agent and the Banks and their respective successors and permitted
assigns, and shall inure to the benefit of the Company, the Agent and the Banks
and the successors and permitted assigns of the Agent and the Banks. The
Company shall not assign its rights or duties hereunder without the consent of
the Agent and all the Banks.
14.9 Counterparts. This Agreement may be executed in any number
------------
of counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same Agreement. When counterparts
executed by all of the parties shall have been lodged with the Agent (or, in the
case of any Bank as to which an executed counterpart shall not have been so
lodged, the Agent shall have received telegraphic, telex or other written
confirmation from such Bank of the execution of a counterpart hereof by such
Lender), this Agreement shall become effective as of the date hereof, and at
such time the Agent shall notify the Company and each Bank.
14.10 Governing Law. This Agreement, the Notes and the other
-------------
Loan Documents shall be contracts made under and governed by the internal laws
of the State of Illinois.
14.11 WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE AGENT AND
--------------------
EACH BANK WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS (i) UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
OR UNDER ANY AMENDMENT,
75
<PAGE>
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR (ii) ARISING FROM ANY BANKING RELATIONSHIP
EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
* * * * *
76
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first written above.
TRANS LEASING INTERNATIONAL, INC.
By:
--------------------------------
Title: Vice President, Finance and
------------------------------
Chief Financial Officer
------------------------------
Address: 3000 Dundee Road
Northbrook, IL 60062
Attention: Mr. Norman Smagley
Facsimile number: 708/291-7318
Amount
of
Commitment Percentage
---------- ----------
$50,000,000 100.00% FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, individually
and as Agent
By:
------------------------------
Title: Assistant Vice President
-----------------------------
Address: One First Union Center,
TW-19
301 S. College St.
Charlotte, NC 28288-0735
Attention: Christopher R. Snyder
Telex number: 68433115
(Answerback: FUNCHA)
Facsimile number: 704/374-4092
77
<PAGE>
EXHIBIT 10.37
TRANS LEASING INTERNATIONAL, INC.
Composite Conformed Copy
of
Amended and Restated Note Agreements
Dated as of November 30, 1994
Re:
Note Agreements
Dated as of June 1, 1993
And
$38,000,000 5.83% Senior Notes, Series A,
Due March 31, 1998 and
$4,000,000 6.82% Senior Notes, Series B,
Due June 1, 1998 and
$10,000,000 6.31% Senior Notes, Series C,
Due September 30, 1998
Separate Amended and Restated Note Agreements, each dated as of November 30,
1994, in the form attached hereto, were entered into among Trans Leasing
International, Inc. and the institutions named below. Each of said instruments
was executed by Trans Leasing International, Inc. by Norman Smagley, its Vice
President, Finance & Chief Financial Officer. The separate Amended and Restated
Note Agreements were addressed to each of the institutions as shown on Schedule
I attached to said Amended and Restated Note Agreements and were accepted by the
officers of the respective institutions as shown below:
PRINCIPAL MUTUAL LIFE INSURANCE PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY COMPANY
711 High Street
DES MOINES, IOWA 50392-0800 By /s/Jane A.B. Eppink
Its Counsel
By /s/Christopher J. Henderson
Its Counsel
MASSACHUSETTS MUTUAL LIFE MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY INSURANCE COMPANY
1295 State Street
Springfield, MA 01111 By /s/John B. Joyce
Its Vice President
<PAGE>
[CONFORMED COPY]
================================================================================
Trans Leasing International, Inc.
Amended and Restated Note Agreement
Dated as of November 30, 1994
Re: Note Agreement dated as of June 1, 1993
and
$38,000,000 5.83% Senior Notes, Series A,
Due March 31, 1998
and
$4,000,000 6.82% Senior Notes, Series B,
Due June 1, 1998
and
$10,000,000 6.31% Senior Notes, Series C,
Due September 30, 1998
================================================================================
<PAGE>
Table of Contents
(Not a part of the Agreement)
Section Heading Page
Parties...................................................................... 1
Section 1. Description of Notes and Commitment.......................... 1
Section 1.1. Description of Notes....................................... 1
Section 1.2. Commitment, Closing Dates.................................. 2
Section 1.3. Other Agreements........................................... 3
Section 2. Payment of Notes............................................. 3
Section 2.1. Required Principal Payments................................ 3
Section 2.2. Optional Prepayment........................................ 4
Section 2.3. Prepayment on Change of Control............................ 4
Section 2.4. Notice of Prepayments...................................... 5
Section 2.5. Allocation of Principal Payments........................... 5
Section 2.6. Direct Payment............................................. 6
Section 2.7. Business Days.............................................. 6
Section 3. Representations.............................................. 6
Section 3.1. Representations of the Company............................. 6
Section 3.2. Representations of the Purchaser........................... 6
Section 4. Closing Conditions........................................... 7
Section 4.1. Closing Date............................................... 7
Section 4.2. Waiver of Conditions....................................... 8
Section 5. Company Covenants............................................ 8
Section 5.1. Corporate Existence, Etc................................... 8
Section 5.2. Insurance.................................................. 8
Section 5.3. Taxes, Claims for Labor and Materials, Compliance with
Laws....................................................... 8
Section 5.4. Maintenance, Etc........................................... 9
Section 5.5. Nature of Business......................................... 9
Section 5.6. Consolidated Tangible Net Worth............................ 9
Section 5.7. Permitted Debt............................................. 9
Section 5.8. Limitations on Liabilities................................ 10
Section 5.9. Fixed Charge Coverage..................................... 10
Section 5.10. Limitation on Liens....................................... 10
Section 5.11. Restricted Payments....................................... 12
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<PAGE>
Section 5.12. Limitation on Long-Term Leases............................ 13
Section 5.13. Mergers, Consolidations and Sales of Assets............... 13
Section 5.14. Guaranties................................................ 15
Section 5.15. Repurchase of Notes....................................... 15
Section 5.16. Transactions with Affiliates.............................. 15
Section 5.17. Investments............................................... 15
Section 5.18. Termination of Pension Plans.............................. 17
Section 5.19. Reports and Rights of Inspection.......................... 17
Section 5.20. Consolidated Tax Returns.................................. 20
Section 5.21. Sale of Eligible Securitization Assets.................... 20
Section 6. Events of Default and Remedies Therefor..................... 20
Section 6.1. Events of Default......................................... 20
Section 6.2. Acceleration of Maturities................................ 22
Section 6.3. Rescission of Acceleration................................ 22
Section 7. Amendments, Waivers and Consents............................ 23
Section 7.1. Consent Required.......................................... 23
Section 7.2. Effect of Amendment or Waiver............................. 23
Section 7.3. Solicitation of Noteholders............................... 23
Section 8. Interpretation of Agreement................................. 24
Section 8.1. Definitions............................................... 24
Section 8.2. Accounting Principles..................................... 33
Section 9. Miscellaneous............................................... 33
Section 9.1. Registered Notes.......................................... 33
Section 9.2. Exchange of Notes......................................... 33
Section 9.3. Loss, Theft, Etc. of Notes................................ 33
Section 9.4. Expenses, Stamp Tax Indemnity............................. 34
Section 9.5. Powers and Rights Not Waived; Remedies
Cumulative................................................ 34
Section 9.6. Notices................................................... 34
Section 9.7. Successors and Assigns.................................... 35
Section 9.8. Survival of Covenants and Representations................. 35
Section 9.9. Severability.............................................. 35
Section 9.10. Governing Law............................................. 35
Section 9.11. Captions.................................................. 35
Section 9.12. Requisite Approval; Opinion; Fees and
Expenses.................................................. 35
Section 9.13. Affirmation............................................... 35
Signature................................................................... 37
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<PAGE>
Attachments to Note Agreement:
Schedule I -- Name and Address of Purchasers
Exhibit A -- Form of 5.83% Series A Senior Note
Exhibit B -- Form of 6.82% Series B Senior Note
Exhibit C -- Form of 6.31% Series C Senior Note
Exhibit D -- Closing Certificate of the Company
Exhibit E -- Description of Special Counsel's Closing Opinion
Exhibit F -- Description of Closing Opinion of Counsel to the Company
Exhibit G -- Subordination Provisions Applicable to Subordinated Debt
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<PAGE>
Trans Leasing International, Inc.
3000 Dundee Road
Northbrook, Illinois 60062
Amended and Restated Note Agreement
Re: Note Agreement dated as of June 1, 1993
and
$38,000,000 5.83% Senior Notes, Series A,
Due March 31, 1998
and
$4,000,000 6.82% Senior Notes, Series B,
Due June 1, 1998
and
$10,000,000 6.31% Senior Notes, Series C,
Due September 30, 1998
----------------------
Dated as of
November 30, 1994
To the Purchaser named in Schedule I
hereto which is a signatory of the
Amended and Restated Note Agreement
Ladies and Gentlemen:
The undersigned, Trans Leasing International, Inc., a Delaware
corporation (the "Company"), desires to amend certain covenants contained in the
separate Note Agreements dated as of June 1, 1993 (the "Note Agreements")
entered into by the Company with each of the Purchasers named in Schedule I
hereto and in order to accomplish this objective the Company desires to amend
and restate the separate Note Agreements. Therefore, in consideration of the
premises and of the mutual agreements contained herein, the Company agrees with
you that the Note Agreement to which you are a party shall be amended and
restated in its entirety as follows:
Section 1. Description of Notes and Commitment;.
Section 1.1. Description of Notes . The Company will authorize
the issue and sale of the following series of promissory Notes:
(a) $38,000,000 aggregate principal amount of its 5.83%
Senior Notes, Series A, due March 31, 1998 (the "Series A
Notes");
<PAGE>
(b) $4,000,000 aggregate principal amount of its 6.82%
Senior Notes, Series B, due June 1, 1998 (the "Series B Notes");
and
(c) $10,000,000 aggregate principal amount of its 6.31%
Senior Notes, Series C, due September 30, 1998 (the "Series C
Notes").
The Series A Notes, the Series B Notes and the Series C Notes are herein
collectively referred to as the "Notes". The Notes shall rank pari passu with
all other Unsecured Senior Debt of the Company, whether such Unsecured Senior
Debt is outstanding on the date of this Agreement or is hereafter incurred.
The Series A Notes and Series C Notes shall be dated the date of
issue, shall bear interest prior to maturity at the rate per annum shown above
for such Series, payable semiannually on March 31 and September 30 in each year
commencing September 30, 1993, and at maturity, and shall bear interest on
overdue principal (including any overdue required or optional prepayment of
principal) and premium, if any, and (to the extent legally enforceable) on any
overdue installment of interest at the rate of one percent per annum over the
stated rate for such Series after the date due, whether by acceleration or
otherwise, until paid, to be expressed to mature on the date shown above for
each Series, and to be substantially in the respective forms attached hereto as
Exhibit A and Exhibit C.
The Series B Notes shall be dated the date of issue, shall bear
interest prior to maturity at the rate per annum shown above for such Series,
payable semiannually on June 1 and December 1 in each year commencing December
1, 1993, and at maturity, and shall bear interest on overdue principal
(including any overdue required or optional prepayment of principal) and
premium, if any, and (to the extent legally enforceable) on any overdue
installment of interest at the rate of one percent per annum over the stated
rate for such Series after the date due, whether by acceleration or otherwise,
until paid, to be expressed to mature on the date shown above for such Series,
and to be substantially in the form attached hereto as Exhibit B.
Interest on the Notes shall be computed on the basis of a 360-day year
of twelve 30-day months. The Notes are not subject to prepayment or redemption
at the option of the Company prior to their expressed maturity dates except on
the terms and conditions and in the amounts and with the premium, if any, set
forth in (S)2 of this Agreement. The term "Notes" as used herein shall include
each Note delivered pursuant to this Agreement and the separate agreements with
the other purchasers named in Schedule I. You and the other purchasers named in
Schedule I are hereinafter sometimes referred to as the "Purchasers". Unless
otherwise defined, the capitalized terms used herein are defined in (S)8.
Section 1.2. Commitment, Closing Dates. Subject to the terms and
conditions hereof and on the basis of the representations and warranties
hereinafter set forth, the Company agrees to issue and sell to you, and you
agree to purchase from the Company, Notes of the Company to be sold on such
Closing Date described below at a price of 100% of the principal amount thereof
on the applicable Closing Date for such Notes in the aggregate principal amount
set forth opposite your name in Schedule I.
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<PAGE>
Delivery of the Notes will be made at the offices of Chapman and
Cutler, 111 West Monroe Street, Chicago, Illinois 60603, against payment
therefor in Federal or other funds current and immediately available at the
principal office of Continental Bank, N.A., Account #7804563 (ABA #071000039).
Delivery of the Series A Notes and the Series B Notes will be made against
payment therefor at 10:00 A.M. Chicago time, on June 29, 1993 or such later date
(but not later than July 9, 1993) as the Company shall specify by not less than
five days' prior written notice to you (the "First Closing Date"). Delivery of
the Series C Notes will be made against payment therefor at 10:00 A.M. Chicago
time, on September 1, 1993 or such later date (but not later than September 30,
1993) as the Company shall specify by not less than five days' prior written
notice to you (the "Second Closing Date"). The First Closing Date and the
Second Closing Date are herein referred to collectively as the "Closing Dates"
and individually as a "Closing Date".
The Notes will be delivered to you in the form of a single registered
Note of the respective Series to be purchased by you for the full amount of your
purchase (unless different denominations are specified by you), registered in
your name or in the name of such nominee as you may specify and in substantially
the form attached hereto as Exhibit A, B and/or C, as the case may be, all as
you may specify at any time prior to the date fixed for delivery.
Section 1.3. Other Agreements. Simultaneously with the execution
and delivery of this Agreement, the Company is entering into similar agreements
with the other Purchasers under which such other Purchasers agree to purchase
from the Company the principal amount of Notes set opposite such Purchasers'
names in Schedule I, and your obligation is subject to the execution and
delivery of the similar agreements by the other Purchasers. This Agreement and
said similar agreements with the other Purchasers are herein collectively
referred to as the "Agreements". The obligations of each Purchaser shall be
several and not joint and no Purchaser shall be liable or responsible for the
acts of any other Purchaser.
Section 2. Payment of Notes.
Section 2.1. Required Principal Payments. (a) The Company agrees
that (i) on the last day of March and September in each year commencing March
31, 1994 and ending March 31, 1996, both inclusive, it will pay and apply and
there shall become due and payable on the principal indebtedness evidenced by
the Series A Notes an amount equal to $3,600,000, and (ii) on the last day of
March and September in each year commencing September 30, 1996 and ending
September 30, 1997, both inclusive, it will pay and apply and there shall become
due and payable on the principal indebtedness evidenced by the Series A Notes an
amount equal to $5,000,000. The entire remaining principal amount of the Series
A Notes shall become due and payable on March 31, 1998. No premium shall be
payable in connection with any required payments made pursuant to this
(S)2.1(a).
(b) Except as provided in (S)2.2, the Series B Notes are not subject to
prepayment or redemption prior to their expressed maturity date. The entire
principal amount of the Series B Notes shall be due and payable on June 1, 1998.
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<PAGE>
(c) The Company agrees that on the last day of March and September in
each year commencing September 30, 1994 and ending March 31, 1998, both
inclusive, it will pay and apply and there shall become due and payable on the
principal indebtedness evidenced by the Series C Notes an amount equal to
$1,100,000. The entire remaining principal amount of the Series C Notes shall
become due and payable on September 30, 1998. No premium shall be payable in
connection with any required payments made pursuant to this (S)2.1(c).
Section 2.2. Optional Prepayment. In addition to the principal
payments required by (S)2.1 and upon compliance with (S)2.4, the Company shall
have the privilege on any interest payment date on or after, but not before,
September 30, 1995, of prepaying all (but not less than all) outstanding Notes
in whole and not in part by payment of the principal amount of the Notes and
accrued interest thereon to the date of such prepayment, together with a premium
equal to the Make-Whole Premium Amount determined as of five Business Days prior
to the date of such prepayment.
Section 2.3. Prepayment on Change of Control. (a) In the event
that a Put Event Date shall occur, the Company will give immediate written
notice (a "Company Notice") of such fact to all holders of the Notes. The
Company Notice shall (i) describe the facts and circumstances of such Put Event
Date in reasonable detail, (ii) refer to this (S)2.3 and the rights of the
holders of the Notes to require prepayment of their Notes on the terms and
conditions provided for herein, (iii) contain an offer by the Company to prepay
all of the outstanding Notes in full together with accrued interest to the date
of prepayment and a premium equal to the Make-Whole Premium Amount, and (iv) set
forth the date, which shall be not less than 30 nor more than 60 days following
the date of giving of the Company Notice, on which the Company will make such
prepayment. Each holder of the Notes shall have the right to accept such offer
and require prepayment of the Notes held by such holder in full by written
notice to the Company given within 21 days following receipt of the Company
Notice. The Company shall on the prepayment date set forth in the Company
Notice prepay all Notes held by holders who have accepted such offer of
prepayment.
(b) In the event the Company fails to give the Company Notice as required
above, upon the occurrence of a Put Event Date, each holder of Notes shall have
the right to require the Company to prepay such holder's Notes in full together
with accrued interest thereon to the date of prepayment and a premium equal to
the Make-Whole Premium Amount. Notice of a required prepayment pursuant to this
(S)2.3(b) shall be delivered by any holder of Notes to the Company not more than
30 days after such holder has actual knowledge of such Put Event Date. The date
of such prepayment shall be the same date as the Put Event Date or, in the event
the Put Event Date shall have occurred prior to receipt of the notice from a
Noteholder, then such prepayment together with accrued interest and a premium
equal to the Make-Whole Premium Amount, if any, thereon shall be on the date
designated in, and shall be not less than five nor more than ten days following
the date of, such holder's notice. Upon receipt of such notice, the Company
shall give immediate written notice of such declaration of prepayment to each
other holder of Notes which shall set forth the date of prepayment for the
holder of Notes which shall have initially delivered such declaration of
prepayment. Each such holder shall have the right to require the Company to
prepay such holder's Notes in full, together with accrued interest thereon to
the date of
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<PAGE>
prepayment and a premium equal to the Make-Whole Premium Amount, on the date of
prepayment of the Notes held by the holder initially serving such declaration of
prepayment or on such other date as the holders thereof shall designate not
later than 30 days following such initial prepayment date.
"Grossman Group" shall mean Richard Grossman and his spouse, lineal
descendants, trustees of trusts established for the benefit of such Persons and
executors of the estates of such Persons.
"Put Event Date" shall mean any date upon which a Put Event shall have
occurred.
"Put Event" means any event by which either (i) the Grossman Group shall
fail to own legally and beneficially with full voting power at least 30% of the
Voting Stock of the Company, unless 51% or more of the Voting Stock of the
Company is owned by a corporation having debt obligations rated A or better by
at least two nationally recognized credit rating agencies, one of which shall be
either S&P or Moody's, or (ii) Richard Grossman shall fail to hold the office of
Chairman of the Board or President of the Company and perform the duties of
Chief Executive Officer of the Company.
Any prepayment of less than all of the outstanding Notes of a particular
Series made pursuant to this (S)2.3 shall be applied to the payment in full of
the Notes of such Series held by the holders declaring their Notes due and
payable pursuant to this (S)2.3, and each scheduled payment of such Series
pursuant to the provisions of (S)2.1 coming due thereafter, if any, shall be
reduced by an amount which bears the same relationship to such scheduled payment
as the aggregate amount being so applied pursuant to this (S)2.3 to such Series
bears to the unpaid principal amount of the Notes of such Series immediately
prior to such application, so that the amounts of the scheduled payments on each
Note of such Series remaining outstanding after such application shall be
unchanged by such application.
Section 2.4. Notice of Prepayments. The Company will give notice of
any prepayment of the Notes pursuant to (S)2.2 to each holder thereof not less
than 30 days nor more than 60 days before the date fixed for such optional
prepayment specifying (i) such date, (ii) the section of this Agreement under
which the prepayment is to be made, (iii) the principal amount of the holder's
Notes to be prepaid on such date, (iv) that a premium may be payable, (v) the
date when such premium will be calculated and (vi) the accrued interest
applicable to the prepayment. Such notice of prepayment shall also certify all
facts which are conditions precedent to any such prepayment. Notice of
prepayment having been so given, the aggregate principal amount of the Notes
specified in such notice, together with the premium, if any, and accrued
interest thereon shall become due and payable on the prepayment date. A
computation of the amount, if any, of any premium payable in connection with a
prepayment for each Series shall be furnished to the holders of the Notes of the
applicable Series three Business Days prior to such prepayment.
Section 2.5. Allocation of Principal Payments. All scheduled
principal payments of the Series A Notes or the Series C Notes, as the case may
be, shall be applied on all
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<PAGE>
outstanding Notes of such Series ratably in accordance with the unpaid
principal amounts of the Notes of such Series.
Section 2.6. Direct Payment. Notwithstanding anything to the
contrary in this Agreement or the Notes, in the case of any Note owned by you or
your nominee or owned by any other institutional holder who has given written
notice to the Company requesting that the provisions of this (S)2.6 shall apply,
the Company will promptly and punctually pay when due the principal thereof and
premium, if any, and interest thereon, without any presentment thereof, directly
to you, your nominee or such subsequent holder at your address or your nominee's
address set forth in Schedule I or at such other address as you, your nominee or
such subsequent holder may from time to time designate in writing to the Company
or, if a bank account is designated for you or your nominee on Schedule I hereto
or in any written notice to the Company from you, your nominee or any such
subsequent holder, the Company will make such payments in immediately available
funds to such bank account, marked for attention as indicated, or in such other
manner or to such other account of you, your nominee or such holder in any bank
in the United States as you, your nominee or any subsequent holder may from time
to time direct in writing. The holder of any Notes to which this (S)2.6 applies
agrees that in the event it shall sell or transfer any such Notes (i) it will,
prior to the delivery of such Notes (unless it has already done so), make a
notation thereon of all principal, if any, prepaid on such Notes and will also
note thereon the date to which interest has been paid on such Notes, and (ii) it
will promptly notify the Company of the name and address of the transferee of
any Notes so transferred. With respect to Notes to which this (S)2.6 applies,
the Company shall be entitled to presume conclusively that the original or such
subsequent institutional holder as shall have requested the provisions hereof to
apply to its Notes remains the holder of such Notes until (y) the Company shall
have received notice of the transfer of such Notes, and of the name and address
of the transferee, or (z) such Notes shall have been presented to the Company as
evidence of the transfer.
Section 2.7. Business Days. If any payment of principal, premium,
if any, and/or interest on the Notes shall fall due on any day which is not a
Business Day, then payment shall be made on the next succeeding Business Day.
Section 3. Representations.
Section 3.1. Representations of the Company. The Company represents
and warrants that all representations and warranties set forth in Exhibit D are
true and correct as of the date hereof and are incorporated herein by reference
with the same force and effect as though herein set forth in full.
Section 3.2. Representations of the Purchaser. You represent, and
in entering into this Agreement the Company understands, that you are acquiring
the Notes for the purpose of investment and not with a view to the distribution
thereof, and that you have no present intention of selling, negotiating or
otherwise disposing of the Notes; it being understood, however, that the
disposition of your property shall at all times be and remain within your
control. You further represent that you are acquiring the Notes for your own
account and with your general corporate assets and not with the assets of any
separate account in which
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<PAGE>
any employee benefit plan has any interest. As used in this Section, the terms
"separate account" and "employee benefit plan" shall have the respective
meanings assigned to them in ERISA.
Section 4. Closing Conditions.
Section 4.1. Closing Date. Your obligation to purchase the Notes on
each applicable Closing Date shall be subject to the performance by the Company
of its agreements hereunder which by the terms hereof are to be performed at or
prior to the time of delivery of the Notes and to the following further
conditions precedent:
(a) Closing Certificate. You shall have received a certificate
dated the applicable Closing Date, signed by the Chief Financial Officer of
the Company, the truth and accuracy of which shall be a condition to your
obligation to purchase the Notes proposed to be sold to you, to the effect
that (i) the representations and warranties of the Company set forth in
Exhibit D hereto are true and correct on and with respect to the applicable
Closing Date, (ii) the Company has performed all of its obligations
hereunder which are to be performed on or prior to such Closing Date, and
(iii) no Default or Event of Default has occurred and is continuing.
(b) Legal Opinions. Concurrently with the delivery of Notes to you
on the applicable Closing Date, you shall have received from Chapman and
Cutler, who are acting as your special counsel in this transaction, and
from Kirkland & Ellis, counsel for the Company, their respective opinions
dated the applicable Closing Date, in form and substance satisfactory to
you, and covering the matters set forth in Exhibits E and F, respectively,
hereto.
(c) Satisfactory Proceedings. All proceedings taken in connection
with the transactions contemplated by this Agreement, and all documents
necessary to the consummation thereof, shall be satisfactory in form and
substance to you and your special counsel, and you shall have received a
copy (executed or certified as may be appropriate) of all legal documents
or proceedings taken in connection with the consummation of said
transactions.
(d) Consent of Holders of Other Indebtedness. On or prior to the
applicable Closing Date, any notice, consent or approvals required to be
obtained from any holder or holders of any outstanding Indebtedness of the
Company and any amendments of agreements pursuant to which any Indebtedness
may have been issued which shall be necessary to permit the consummation of
the transactions contemplated hereby shall have been obtained and all such
notices, consents or amendments shall be satisfactory in form and substance
to you and your special counsel.
(e) Payment of Fees of Special Counsel. On the applicable Closing
Date, the Company shall have paid the reasonable fees and expenses of your
special counsel.
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(f) Related Transactions. Prior to or concurrently with the
issuance and sale of the Notes on the First Closing Date, the Company
(i) shall have consummated the issuance and sale of the entire
principal amount of such Notes to be sold on the First Closing Date
pursuant to this Agreement and the other Agreements referred to in
(S)1.3, and (ii) shall have executed and delivered the Agreements
pursuant to which $10,000,000 aggregate principal amount of the
Series C Notes will be issued on the Second Closing Date.
Section 4.2. Waiver of Conditions. If on any Closing Date the
Company fails to tender to you the Notes to be issued to you on such date or if
the conditions specified in this (S)4 have not been fulfilled, you may thereupon
elect to be relieved of all further obligations under this Agreement. Without
limiting the foregoing, if the conditions specified in this (S)4 have not been
fulfilled, you may waive compliance by the Company with any such condition to
such extent as you may in your sole discretion determine. Nothing in this
(S)4.2 shall operate to relieve the Company of any of its obligations hereunder
or to waive any of your rights against the Company.
Section 5. Company Covenants.
From and after the First Closing Date and continuing so long as any
amount remains unpaid on any Note:
Section 5.1. Corporate Existence, Etc. The Company will preserve
and keep in force and effect, and will cause each Subsidiary to preserve and
keep in force and effect, its corporate existence and all licenses and permits
material and necessary to the proper conduct of its business, provided that the
foregoing shall not prevent any transaction permitted by (S)5.13.
Section 5.2. Insurance. The Company will maintain, and will cause
each Subsidiary to maintain, insurance coverage by financially sound and
reputable insurers in such forms and amounts and against such risks as are
customary for corporations of established reputation engaged in the same or a
similar business and owning and operating similar properties. In lieu of or
supplemental to such insurance, the Company may adopt such other plan or method
of protection (an "insurance plan"), whether by the establishment of an
insurance fund or reserve to be held and applied to make good losses from
casualties, or otherwise, and conforming to the practices of similar
corporations maintaining systems of self-insurance, as determined by the Board
of Directors of the Company and as shall be consistent with GAAP. The Company
shall, concurrently with its adoption of any such insurance plan, furnish to you
a certificate of an actuary or other qualified person that such insurance plan
is adequate.
Section 5.3. Taxes, Claims for Labor and Materials, Compliance with
Laws . The Company will promptly pay and discharge, and will cause each
Subsidiary promptly to pay and discharge, all lawful taxes, assessments and
governmental charges or levies imposed upon the Company or such Subsidiary,
respectively, or upon or in respect of all or any part of the property or
business of the Company or such Subsidiary, all trade accounts payable in
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accordance with usual and customary business practice, and all claims for work,
labor or materials, which if unpaid might become a Lien upon any property of the
Company or such Subsidiary, the amount of which when added to the amount of all
other such Liens would exceed $10,000 in the aggregate; provided that the
Company or such Subsidiary shall not be required to pay any such tax,
assessment, charge, levy, account payable or claim if (i) the validity,
applicability or amount thereof is being contested in good faith by appropriate
actions or proceedings which will prevent the forfeiture or sale of any property
of the Company or such Subsidiary or any material interference with the use
thereof by the Company or such Subsidiary, and (ii) the Company or such
Subsidiary shall set aside on its books, reserves deemed by it to be adequate
with respect thereto. The Company will promptly comply and will cause each
Subsidiary to comply with all laws, ordinances or governmental rules and
regulations to which it is subject, including without limitation, the
Occupational Safety and Health Act of 1970, ERISA and all laws, ordinances,
governmental rules and regulations relating to environmental protection in all
applicable jurisdictions, except for violations thereof which would neither
materially and adversely affect the properties, business, prospects, profits or
condition of the Company or its Subsidiaries nor result in any Lien upon any
property of the Company or any Subsidiary, the amount of which when added to the
amount of all other such Liens would exceed $10,000 in the aggregate.
Section 5.4. Maintenance, Etc. The Company will maintain, preserve
and keep, and will cause each Subsidiary to maintain, preserve and keep, its
properties which are used or useful in the conduct of its business (whether
owned in fee or a leasehold interest) in good repair and working order and from
time to time will make all necessary repairs, replacements, renewals and
additions so that at all times the efficiency thereof shall be maintained.
Section 5.5. Nature of Business. Neither the Company nor any
Subsidiary will engage in any business if, as a result, either (i) the general
nature of the business, taken on a consolidated basis, which would then be
engaged in by the Company and its Subsidiaries would be substantially changed
from the leasing of property under "sales type," "direct financing" or
"operating" leases, the sale of property on conditional sale contracts, the
financing of lease receivables, installment sale contract receivables and
revolving credit receivables and related business engaged in by the Company and
its Subsidiaries on the date of this Agreement, or (ii) less than 80% of the
gross revenue of the Company and its Subsidiaries (determined on a consolidated
basis in accordance with GAAP) would be derived from the activities described in
clause (i) above related to equipment which has an original cost of less than
$75,000.
Section 5.6. Consolidated Tangible Net Worth. The Company will at
all times keep and maintain Consolidated Tangible Net Worth at an amount not
less than $17,000,000.
Section 5.7. Permitted Debt. The Company will not and will not
permit any Subsidiary to create, assume or incur or in any manner become or
remain liable in respect of any Debt, except:
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(a) the Notes;
(b) Senior Debt of the Company;
(c) Subordinated Debt of the Company;
(d) Debt of the Company secured by Liens permitted by (S)5.10;
(e) Securitized Debt secured by Liens permitted by (S)5.10;
(f) Debt outstanding on the date hereof and reflected on the
consolidated balance sheet of the Company and its Subsidiaries at March 31,
1993; and
(g) Debt of a Subsidiary to the Company or to a Wholly-owned
Subsidiary.
Section 5.8. Limitations on Liabilities. The Company will not at
any time permit:
(a) the aggregate amount of Adjusted Total Liabilities to exceed an
amount equal to 400% of Adjusted Tangible Net Worth; or
(b) Subordinated Funded Debt to exceed an amount equal to 150% of
Consolidated Tangible Net Worth; or
(c) the aggregate amount of Unencumbered Assets to be less than an
amount equal to 120% of the aggregate principal amount of outstanding
Unsecured Senior Debt.
Section 5.9. Fixed Charge Coverage. For each period of four
consecutive fiscal quarters ending on the last day of each fiscal quarter, Net
Income Available for Fixed Charges shall have been an amount which was at least
115% of Fixed Charges for such period of four fiscal quarters; provided that on
the fiscal quarter ending September 30, 1994, Net Income Available for Fixed
Charges shall have been an amount which was at least 115% of Fixed Charges for
the period of only the immediately preceding three consecutive fiscal quarters.
Section 5.10. Limitation on Liens. The Company will not, and will
not permit any Subsidiary to, create or incur, or suffer to be incurred or to
exist, any Lien on its or their property or assets, whether now owned or
hereafter acquired, or upon any income or profits therefrom, or transfer any
property for the purpose of subjecting the same to the payment of obligations in
priority to the payment of its or their general creditors, or acquire or agree
to acquire, or permit any Subsidiary to acquire, any property or assets upon
conditional sales agreements or other title retention devices, except:
(a) Liens for property taxes and assessments or governmental charges
or levies and Liens securing claims or demands of mechanics and
materialmen, provided that payment thereof is not at the time required by
(S)5.3;
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(b) Liens of or resulting from any judgment or award, the time for
the appeal or petition for rehearing of which shall not have expired, or in
respect of which the Company or a Subsidiary shall at any time in good
faith be prosecuting an appeal or proceeding for a review and in respect of
which a stay of execution pending such appeal or proceeding for review
shall have been secured;
(c) Liens and priority claims incidental to the conduct of business
or the ownership of properties and assets (including liens in connection
with workers' compensation, unemployment insurance and other like laws,
warehousemen's and attorneys' Liens and statutory landlords' Liens) and
deposits, pledges or Liens, not exceeding $500,000 in aggregate amount, to
secure the performance of bids, tenders or trade contracts, or to secure
statutory obligations, surety or appeal bonds or other Liens of like
general nature incurred in the ordinary course of business and not in
connection with the borrowing of money, provided in each case, the
obligation secured is not overdue for a period of more than 30 days or is
being contested in good faith by appropriate actions or proceedings;
(d) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and other
similar purposes, or zoning or other restrictions as to the use of real
properties, which are necessary for the conduct of the activities of the
Company and its Subsidiaries or which customarily exist on properties of
corporations engaged in similar activities and similarly situated and which
do not in any event materially impair their use in the operation of the
business of the Company and its Subsidiaries;
(e) Liens securing Indebtedness of a Subsidiary to the Company or to
a Wholly-owned Subsidiary;
(f) Liens or other arrangements for the retention of title
(including Capitalized Leases) existing as of March 31, 1993, securing Debt
of the Company or any Subsidiary outstanding on such date and identified in
Annex B to Exhibit D of this Agreement;
(g) Liens existing on the date of this Agreement and identified in
Annex B to Exhibit D of this Agreement which were given to secure the
purchase price of fixed assets (x) leased or sold by the Company or a
Subsidiary in the ordinary course of business under direct full payout
leases and (y) acquired or purchased by the Company or such Subsidiary with
proceeds of secured Debt the obligation for the payment of which is limited
to the amounts payable under such leases; provided that (i) the Lien shall
attach solely to the property acquired or purchased, and (ii) all such Debt
shall have been incurred within the applicable limitations provided in
(S)5.8;
(h) Liens incurred after the First Closing Date given to secure the
payment of the purchase price incurred in connection with the acquisition
of fixed assets useful and intended to be used in carrying on the business
of the Company or a Subsidiary, including Liens existing on such fixed
assets at the time of acquisition thereof or at the
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time of acquisition by the Company or a Subsidiary of any business entity
then owning such fixed assets, whether or not such existing Liens were
given to secure the payment of the purchase price of the fixed assets to
which they attach so long as they were not incurred, extended or renewed in
contemplation of such acquisition, provided that (i) the Lien or charge
shall attach solely to the property acquired or purchased, (ii) at the time
of acquisition of such fixed assets, the aggregate amount remaining unpaid
on all Debt secured by Liens on such fixed assets whether or not assumed by
the Company or a Subsidiary shall not exceed an amount equal to 10% of
Consolidated Tangible Net Worth, and (iii) all such Debt shall have been
incurred within the applicable limitations provided in (S)5.8;
(i) deposits of Restricted Cash in existence as of the First Closing
Date and identified in Annex B to Exhibit D of this Agreement; and
(j) Liens securing Securitized Debt, provided that the Lien or
charge shall attach only to Eligible Securitization Assets owned by a
Securitization Subsidiary.
Section 5.11. Restricted Payments. The Company will not --
(a) Declare or pay any dividends, either in cash or property, on any
shares of its capital stock of any class (except dividends or other
distributions payable solely in shares of capital stock of the Company); or
(b) Directly or indirectly, or through any Subsidiary, purchase,
redeem or retire any shares of its capital stock of any class or any
warrants, rights or options to purchase or acquire any shares of its
capital stock; or
(c) Make any other payment or distribution, either directly or
indirectly or through any Subsidiary, in respect of its capital stock; or
(d) Make any optional prepayment on account of principal of
Subordinated Funded Debt, or purchase or permit any Subsidiary to purchase
any Subordinated Funded Debt (other than to the extent of the net proceeds
to the Company from the issue after December 31, 1992 of other Subordinated
Funded Debt);
(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock, warrants, rights or options and optional
prepayments of Subordinated Funded Debt, and all such other distributions being
herein collectively called "Restricted Payments"), if after giving effect
thereto the aggregate amount of Restricted Payments made during the period from
and after December 31, 1992 to and including the date of the making of the
Restricted Payment in question, would exceed the sum of (i) $2,000,000, (ii) 50%
of Consolidated Net Income for such period, computed on a cumulative basis for
said entire period (or if such Consolidated Net Income is a deficit figure, then
minus 100% of such deficit) and (iii) the net proceeds to the Company from the
issue or sale after December 31, 1992 of shares of capital stock of the Company
or warrants, rights or options to purchase or acquire any shares of its capital
stock.
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The Company will not declare any dividend which constitutes a
Restricted Payment payable more than 60 days after the date of declaration
thereof.
The Company will not make any Restricted Payment if at the time of the
making of such payment and after giving effect thereto, any Default or Event of
Default shall exist hereunder.
For the purposes of this (S)5.11, the amount of any Restricted Payment
declared, paid or distributed in property of the Company shall be deemed to be
the greater of the book value or fair market value (as determined in good faith
by the Board of Directors of the Company) of such property at the time of the
making of the Restricted Payment in question.
Section 5.12. Limitation on Long-Term Leases. The Company will not
and will not permit any Subsidiary to become obligated, as lessee, under any
Long-Term Lease if at the time of entering into any such Long-Term Lease and
after giving effect thereto, the aggregate Rentals payable by the Company and
all of its Subsidiaries on a consolidated basis in any one fiscal year
thereafter under all Long-Term Leases would exceed 10% of Consolidated Tangible
Net Worth determined at the end of the preceding fiscal quarter.
Section 5.13. Mergers, Consolidations and Sales of Assets. (a) The
Company will not, and will not permit any Subsidiary to (i) consolidate with or
be a party to a merger with any other corporation or (ii) sell, lease or
otherwise dispose of all or any substantial part (as hereinafter defined) of the
assets of the Company and its Subsidiaries, provided, however, that:
(1) any Subsidiary may merge or consolidate with or into the
Company or any Wholly-owned Subsidiary so long as in any merger or
consolidation involving the Company, the Company shall be the
surviving or continuing corporation and in the case of any merger or
consolidation of a Subsidiary with or into a Wholly-owned
Subsidiary, such Wholly-owned Subsidiary shall be the surviving or
continuing corporation;
(2) the Company may consolidate or merge with any other
corporation if (i) either (a) the Company shall be the surviving or
continuing corporation, or (b) if the surviving or continuing entity
is other than the Company, such entity is organized under the law of
the United States or a state thereof, expressly assumes all
obligations of the Company under this Agreement and the Notes by
written agreement satisfactory to the holders of 51% or more in
aggregate principal amount of the outstanding Notes, and has debt
obligations rated A or better by two nationally recognized credit
rating agencies, one of which shall be either S&P or Moody's, and
(ii) at the time of such consolidation or merger and after giving
effect thereto, no Default or Event of Default shall have occurred
and be continuing; and
(3) any Subsidiary may sell, lease or otherwise dispose of
all or any substantial part of its assets to the Company or any
Wholly-owned Subsidiary.
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(b) The Company will not permit any Subsidiary to issue or sell any
shares of stock of any class (including as "stock" for the purposes of this
(S)5.13, any warrants, rights or options to purchase or otherwise acquire stock
or other Securities exchangeable for or convertible into stock) of such
Subsidiary to any Person other than the Company or a Wholly-owned Subsidiary,
except for the purpose of qualifying directors, or except in satisfaction of the
validly pre-existing preemptive rights of minority shareholders in connection
with the simultaneous issuance of stock to the Company and/or a Subsidiary
whereby the Company and/or such Subsidiary maintain their same proportionate
interest in such Subsidiary.
(c) The Company will not sell, transfer or otherwise dispose of any
shares of stock in any Subsidiary (except to qualify directors) or any
Indebtedness of any Subsidiary, and will not permit any Subsidiary to sell,
transfer or otherwise dispose of (except to the Company or a Wholly-owned
Subsidiary) any shares of stock or any Indebtedness of any other Subsidiary,
unless:
(1) simultaneously with such sale, transfer, or disposition, all
shares of stock and all Indebtedness of such Subsidiary at the time owned
by the Company and by every other Subsidiary shall be sold, transferred or
disposed of as an entirety;
(2) the Board of Directors of the Company shall have determined, as
evidenced by a resolution thereof, that the retention of such stock and
Indebtedness is no longer in the best interests of the Company;
(3) such stock and Indebtedness is sold, transferred or otherwise
disposed of to a Person, for a cash consideration and on terms reasonably
deemed by the Board of Directors to be adequate and satisfactory;
(4) the Subsidiary being disposed of shall not have any continuing
investment in the Company or any other Subsidiary not being simultaneously
disposed of; and
(5) such sale or other disposition does not involve a substantial
part (as hereinafter defined) of the assets of the Company and its
Subsidiaries.
As used in this (S)5.13, a sale, lease or other disposition of assets
shall be deemed to be a "substantial part" of the assets of the Company and its
Subsidiaries only if the book value of such assets when added to the book value
of all other assets sold, leased or otherwise disposed of by the Company and its
Subsidiaries (other than (i) sales in the ordinary course of business, including
sales of equipment with respect to which leases have terminated, (ii) the
disposition of Eligible Securitization Assets by the Company to a Securitization
Subsidiary and (iii) the sale, transfer or other disposition of Eligible
Securitization Assets by the Company or any Securitization Subsidiary to any
Person in connection with an Eligible Securitization Transaction) during any
period of 12 consecutive calendar months, exceeds 10% of Tangible Assets
determined as of the end of the immediately preceding fiscal year. Sales or
other realization on delinquent receivables shall not be included in any
computation of sales or other dispositions hereunder.
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Section 5.14. Guaranties. The Company will not and will not permit
any Subsidiary to become or be liable in respect of any Guaranty except
Guaranties of the Company which are limited in amount to a stated maximum dollar
exposure and included in Consolidated Funded Debt.
Section 5.15. Repurchase of Notes. Neither the Company nor any
Subsidiary or Affiliate, directly or indirectly, may repurchase or make any
offer to repurchase any Notes unless the offer has been made to repurchase
Notes, pro rata, from all holders of the Notes at the same time and upon the
same terms. In case the Company repurchases any Notes, such Notes shall
thereafter be cancelled and no Notes shall be issued in substitution therefor.
Section 5.16. Transactions with Affiliates. The Company will not,
and will not permit any Subsidiary to, enter into or be a party to, any
transaction or arrangement with any Affiliate (including without limitation, the
purchase from, sale to or exchange of property with, or the rendering of any
service by or for, any Affiliate), except in the ordinary course of and pursuant
to the reasonable requirements of the Company's or such Subsidiary's business
and upon fair and reasonable terms no less favorable to the Company or such
Subsidiary than would be obtainable in a comparable arm's-length transaction
with a Person other than an Affiliate. The existence and continuation of the
arrangements pursuant to which the Company pays certain insurance premiums for
Persons related to Richard Grossman described in the sections captioned
"Executive Compensation" and "Certain Relationships and Related Transactions" of
the Company's most recent Annual Report on Form 10-K will not be deemed to
violate this (S)5.16, so long as the aggregate amount of such premiums does not
exceed $200,000.
Section 5.17. Investments. The Company will not, and will not
permit any Subsidiary to, have or make any investments in or loans, advances or
extensions of credit to, any Person, except:
(a) investments, loans and advances by the Company and its
Subsidiaries in and to Subsidiaries, including any investment in a
corporation which, after giving effect to such investment, will
become a Subsidiary;
(b) investments in commercial paper maturing in 270 days or less
from the date of issuance which is accorded the highest rating by
S&P, Moody's or other nationally recognized credit rating agency of
similar standing;
(c) investments in direct obligations of the United States of
America, or any agency thereof, or obligations guaranteed by the
full faith and credit of the United States of America, provided that
all such obligations mature in twelve months or less from the date
of acquisition thereof;
(d) investments in certificates of deposit maturing within one
year from the date of origin, issued by a bank or trust company
organized under the laws of the United States or any state thereof,
having capital, surplus and undivided profits aggregating at least
$100,000,000;
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(e) investments in debt obligations of corporations organized
and existing under the laws of the United States, any state or the
District of Columbia maturing in 12 months or less from the date of
acquisition thereof, and rated AA or better by S&P or Aa or better by
Moody's or other nationally recognized rating agency of similar
standing;
(f) loans or advances in the usual and ordinary course of
business to officers, directors and employees for expenses (including
moving expenses related to a transfer) incidental to carrying on the
business of the Company or any Subsidiary;
(g) receivables (including notes taken pursuant to the
collection of leases) arising in the ordinary course of business of
the Company and its Subsidiaries;
(h) money market funds sponsored by insurance companies,
investment banking firms or commercial banking institutions which are
members of the Federal Reserve System, provided such fund (i) has
assets of not less than $100,000,000 and (ii) invests solely in
investments permitted under subparagraphs (b), (c) and (d) above;
(i) investments in promissory notes (i) which are issued by a
manufacturer or vendor of personal property or which are issued by a
finance company or broker owning lease receivables, (ii) which
evidence a loan made by the Company to such persons described in
clause (i), and (iii) the payment or performance of which is secured
pursuant to the terms of the promissory notes or one or more separate
assignments or security agreements executed by the maker thereof, by
one or more leases owned by such persons described in clause (i) and
by the property covered by such leases;
(j) investments, loans and advances by the Company and its
Securitization Subsidiaries in and to any Person in connection with an
Eligible Securitization Transaction; and
(k) other investments, loans and advances (in addition to those
permitted by the foregoing provisions of this (S)5.17) provided that
the aggregate amount of all such other investments, loans and advances
at any time owned by the Company and its Subsidiaries shall not exceed
an amount equal to 15% of Shareholders' Equity.
In valuing any investments, loans and advances for the purpose of
applying the limitations set forth in this (S)5.17, such investments, loans and
advances shall be taken at the original cost thereof, without allowance for any
subsequent write-offs or appreciation or depreciation therein, but less any
amount repaid or recovered in cash on account of capital or principal.
For purposes of this (S)5.17, at any time when a corporation becomes a
Subsidiary, all investments of such corporation at such time shall be deemed to
have been made by such corporation, as a Subsidiary, at such time.
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Section 5.18. Termination of Pension Plans. The Company will not
and will not permit any Subsidiary to permit any employee benefit plan
maintained by it to be terminated in a manner which would result in the
imposition of a lien on any property of the Company or any Subsidiary pursuant
to Section 4068 of ERISA.
Section 5.19. Reports and Rights of Inspection. The Company will
keep, and will cause each Subsidiary to keep, proper books of record and account
in which full and correct entries will be made of all dealings or transactions
of or in relation to the business and affairs of the Company or such Subsidiary,
in accordance with GAAP consistently applied (except for changes disclosed in
the financial statements furnished to you pursuant to this (S)5.19 and concurred
in by the independent public accountants referred to in (S)5.19(b) hereof) and
(without duplication of materials furnished pursuant to (S)5.19(d) below) will
furnish to you so long as you are the holder of any Note and to each other
institutional holder of the then outstanding Notes (in duplicate if so specified
below or otherwise requested):
(a) Quarterly Statements. Promptly upon their being available,
quarterly reports on Form 10-Q filed by the Company with the SEC, or, if
the Company for any reason is not required to file such reports, as soon as
available and in any event within 45 days after the end of each quarterly
fiscal period (except the last) of each fiscal year, copies of:
(1) a consolidated balance sheet of the Company and its
Subsidiaries as of the close of such quarter setting forth in
comparative form the amount for the corresponding period of the
preceding fiscal year,
(2) consolidated statements of income and retained earnings of
the Company and its Subsidiaries for such quarterly period and for the
year-to-date ending with such quarter, setting forth in comparative
form the amount for the corresponding period of the preceding fiscal
year, and
(3) a consolidated statement of cash flows of the Company and
its Subsidiaries for the quarterly period and for the year-to-date
ending with such quarter, setting forth in comparative form the amount
for the corresponding period of the preceding fiscal year,
all in reasonable detail, prepared in accordance with GAAP and certified as
fairly presenting, in all material respects, the financial position and the
results of operations and cash flows, subject to changes resulting from
year-end adjustments, of the Company and its Subsidiaries by an authorized
financial officer of the Company;
(b) Annual Statements. As soon as available and in any event within
120 days after the close of each fiscal year of the Company, copies of:
(1) consolidated and consolidating balance sheets of the
Company and its Subsidiaries as of the close of such fiscal year, and
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(2) consolidated and consolidating statements of income and
stockholders' equity and cash flows of the Company and its
Subsidiaries for such fiscal year,
in each case setting forth in comparative form the consolidated figures for
the preceding fiscal year, all in reasonable detail and accompanied by an
unqualified opinion thereon of a firm of independent public accountants of
recognized national standing selected by the Company to the effect that the
consolidated financial statements have been prepared in accordance with
GAAP consistently applied (except for changes in application in which such
accountants concur and which are so noted) and present fairly, in all
material respects, the financial position and the results of operations and
cash flows of the Company and its Subsidiaries and that the examination of
such accountants in connection with such financial statements has been made
in accordance with generally accepted auditing standards and included such
tests of the accounting records and such other auditing procedures as were
considered necessary in the circumstances;
(c) Audit Reports. Promptly upon receipt thereof, one copy of each
interim or special audit made by independent accountants of the books of
the Company or any Subsidiary and any management letter received from such
accountants;
(d) SEC and Other Reports. Promptly upon their becoming available,
one copy of each financial statement, report, notice or proxy statement
sent by the Company to stockholders generally and of each regular or
periodic report (including reports on Forms 8-K, 10-K and 10-Q) and any
registration statement or prospectus filed (other than with respect to any
employee benefit plan) by the Company or any Subsidiary with any securities
exchange or the SEC, and copies of any orders in any proceedings to which
the Company or any of its Subsidiaries is a party, issued by any
governmental agency, Federal or state, having jurisdiction over the Company
or any of its Subsidiaries;
(e) Notice of Default or Pending Litigation. Within three Business
Days after knowledge thereof shall have come to any officer of the Company,
the Company will give written notice to the holders of the Notes of (i) the
happening of any Default or Event of Default hereunder or (ii) any pending
or threatened litigation, arbitration proceeding or governmental proceeding
against the Company or any Subsidiary which, in the opinion of its counsel,
could reasonably have in the aggregate a material adverse effect on the
business or properties of the Company or any Subsidiary, taken as a whole;
(f) Officer's Certificates. Within the periods provided in
paragraphs (a) and (b) above, a certificate of an authorized financial
officer of the Company stating that such officer has reviewed the
provisions of this Agreement and setting forth: (i) the information and
computations (in sufficient detail) required in order to establish whether
the Company was in compliance with the requirements of (S)5.6 through
(S)5.9, inclusive, (S)5.10(h), (S)5.11, (S)5.12, (S)5.13 and (S)5.17(k) at
the end of the
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period covered by the financial statements then being furnished, and (ii)
whether there existed as of the date of such financial statements and
whether, to the best of such officer's knowledge, there exists on the date
of the certificate or existed at any time during the period covered by such
financial statements any Default or Event of Default and, if any such
condition or event exists on the date of the certificate or existed during
such periods, specifying the nature and period of existence thereof and the
action the Company took or is taking and proposes to take with respect
thereto;
(g) Accountants' Certificates. Within the period provided in
paragraph (b) above, a certificate of the accountants who render an opinion
with respect to such financial statements, stating that they have reviewed
this Agreement and stating further, whether in making their audit, such
accountants have become aware of any Put Event or Default or Event of
Default under any of the terms or provisions of this Agreement insofar as
any such terms or provisions pertain to or involve accounting matters or
determinations, and if any such condition or event then exists, specifying
the nature and period of existence thereof; and
(h) Requested Information. With reasonable promptness, such other
data and information as you or any such institutional holder may reasonably
request.
Without limiting the foregoing, the Company will permit you, so long as you are
the holder of any Note, and each institutional holder of the then outstanding
Notes (or such Persons as either you or such holder may designate) to visit and
inspect, under the Company's guidance, any of the properties of the Company or
any Subsidiary, to examine all their books of account, records, reports and
other papers, to make copies and extracts therefrom, and to discuss their
respective affairs, finances and accounts with their respective officers,
employees, and independent public accountants (and by this provision the Company
authorizes said accountants to discuss with you the finances and affairs of the
Company and its Subsidiaries) all at such reasonable times and as often as may
be reasonably requested. The Company shall not be required to pay or reimburse
you or any such holder for expenses which you or any such holder may incur in
connection with any such visitation or inspection; provided, however, that after
a Default or Event of Default shall have occurred and be continuing, the Company
shall be required to pay or reimburse (i) the expenses incurred by the original
Purchasers in connection with any visitation or inspection, and (ii) the
expenses incurred by a representative of all the subsequent holders in
connection with any visitation or inspection as shall be designated by 66-2/3%
in aggregate principal amount of Notes held by such subsequent holders.
Section 5.20. Consolidated Tax Returns. The Company will not and
will not permit any Subsidiary to be a party to a consolidated Federal income
tax return with any Person other than the Company and its Subsidiaries if as a
result thereof, as of any date, the aggregate amount of Federal income taxes
which the Company and its Subsidiaries have then or theretofore paid or become
obligated to pay (determined on a cumulative basis) exceeds the amount which
they would have been required to pay pursuant to a consolidated tax return
solely of the Company and its Subsidiaries.
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Section 5.21. Sale of Eligible Securitization Assets. The Company
will not, and will not permit any Subsidiary to, sell, contribute or otherwise
transfer any Eligible Securitization Assets to any Person, unless (i) at the
time of such sale, contribution or other transfer, the Company or its
Subsidiary, as the case may be, receives cash proceeds (net of related expenses)
equal to at least 85% of the aggregate net book value of all such Eligible
Securitization Assets sold, contributed and otherwise transferred to such Person
at such time, and (ii) the Company or its Subsidiary, as the case may be,
applies such cash proceeds within 60 days after the receipt thereof to either
repay Senior Debt or finance new lease receivables.
Section 6. Events of Default and Remedies Therefor.
Section 6.1. Events of Default. Any one or more of the following
shall constitute an "Event of Default" as the term is used herein:
(a) Default shall occur in the payment of interest on any Note when
the same shall have become due and such default shall continue for more
than five Business Days; or
(b) Default shall occur in the making of any required principal
payment on any of the Notes as provided in (S)2.1; or
(c) Default shall occur in the making of any other payment of the
principal of any Note or the premium thereon at the expressed or any
accelerated maturity date or at any date fixed for prepayment; or
(d) Default shall be made in the payment of the principal of or
interest on Debt of the Company and its Subsidiaries for borrowed money
having an aggregate unpaid principal amount in excess of $1,000,000, as and
when the same shall become due and payable by the lapse of time, by
declaration, by call for redemption or otherwise, and such default shall
continue beyond the period of grace, if any, allowed with respect thereto;
or
(e) Default or the happening of any event shall occur under any
indenture, agreement, or other instrument under which any Debt of the
Company or any Subsidiary for borrowed money may be issued and such default
or event shall continue for a period of time sufficient to permit the
acceleration of the maturity of Debt of the Company and its Subsidiaries
having an aggregate unpaid principal amount in excess of $1,000,000; or
(f) Default shall occur in the observance or performance of any
covenant or agreement contained in (S)5.6 through (S)5.17, inclusive, or
(S)5.21 hereof; or
(g) Default shall occur in the observance or performance of any
other provision of this Agreement which is not remedied within 30 days
after the earlier of
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(i) the date a responsible officer of the Company obtains actual
knowledge of such default or (ii) notice thereof to the Company by the
holder of any Note; or
(h) Default shall occur in the observance or performance by the
Company under any interest rate swap or interest rate exchange agreement
(however denominated) or any currency swap or currency exchange agreement;
or
(i) If any representation or warranty made by the Company herein, or
made by the Company in any statement or certificate furnished by the
Company in connection with the consummation of the issuance and delivery of
the Notes or furnished by the Company pursuant hereto, is untrue in any
material respect as of the date of the issuance or making thereof; or
(j) Final judgment or judgments for the payment of money aggregating
in excess of $500,000 is or are outstanding against the Company or any
Subsidiary or against any property or assets of either and any one of such
judgments has remained unpaid, unvacated, unbonded or unstayed by appeal or
otherwise for a period of 30 days from the date of its entry; or
(k) The Company or any Subsidiary becomes insolvent or bankrupt, is
generally not paying its debts as they become due or makes an assignment
for the benefit of creditors, or the Company or any Subsidiary causes or
suffers an order for relief to be entered with respect to it under
applicable Federal bankruptcy law or applies for or consents to the
appointment of a custodian, trustee or receiver for the Company or such
Subsidiary or for the major part of the property of either; or
(l) A custodian, trustee or receiver is appointed for the Company or
any Subsidiary or for the major part of the property of either and is not
discharged within 30 days after such appointment; or
(m) Bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy or
similar law or laws for the relief of debtors, are instituted by or against
the Company or any Subsidiary and, if instituted against the Company or any
Subsidiary, are consented to or are not dismissed within 60 days after such
institution.
Section 6.2. Acceleration of Maturities. When any Event of Default
described in paragraph (a), (b) or (c) of (S)6.1 has happened and is continuing,
any holder of any Note may, and when any Event of Default described in
paragraphs (d) through (j), inclusive, of said (S)6.1 has happened and is
continuing, the holder or holders of 25% or more of the principal amount of
Notes at the time outstanding may, by notice in writing sent by registered or
certified mail to the Company, declare the entire principal and all interest
accrued on all Notes to be, and all Notes shall thereupon become, forthwith due
and payable, without any presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived. When any Event of Default
described in paragraph (k), (l) or (m) of (S)6.1 has occurred, then all
outstanding Notes shall immediately become due and
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payable without presentment, demand or notice of any kind. Upon the Notes
becoming due and payable as a result of any Event of Default as aforesaid, the
Company will forthwith pay to the holders of the Notes the entire principal and
interest accrued on the Notes and, to the extent permitted by law, the Make-
Whole Premium Amount. No course of dealing on the part of any Noteholder nor any
delay or failure on the part of any Noteholder to exercise any right shall
operate as a waiver of such right or otherwise prejudice such holder's rights,
powers and remedies. The Company further agrees, to the extent permitted by law,
to pay to the holder or holders of the Notes all costs and expenses incurred by
them in the collection of any Notes upon any default hereunder or thereon,
including reasonable compensation to such holder's or holders' attorneys for all
services rendered in connection therewith.
Section 6.3. Rescission of Acceleration . The provisions of (S)6.2
are subject to the condition that if the principal of and accrued interest on
all or any outstanding Notes have been declared immediately due and payable by
reason of the occurrence of any Event of Default described in paragraphs (d)
through (j), inclusive, of (S)6.1, the holders of 66-2/3% in aggregate principal
amount of the Notes then outstanding may, by written instrument filed with the
Company, rescind and annul such declaration and the consequences thereof,
provided that at the time such declaration is annulled and rescinded:
(a) no judgment or decree has been entered for the payment of any
monies due pursuant to the Notes or this Agreement;
(b) all arrears of interest upon all the Notes and all other sums
payable under the Notes and under this Agreement (except any principal,
interest or premium on the Notes which has become due and payable solely by
reason of such declaration under (S)6.2) shall have been duly paid; and
(c) each and every other Default and Event of Default shall have
been made good, cured or waived pursuant to (S)7.1;
and provided further, that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right consequent
thereto.
Section 7. Amendments, Waivers and Consents.
Section 7.1. Consent Required. Any term, covenant, agreement or
condition of this Agreement may, with the consent of the Company, be amended or
compliance therewith may be waived (either generally or in a particular instance
and either retroactively or prospectively), if the Company shall have obtained
the consent in writing of the holders of at least 51% in aggregate principal
amount of outstanding Notes; provided that without the written consent of the
holders of all of the Notes then outstanding, no such waiver, modification,
alteration or amendment shall be effective (i) which will change the time of
payment (including any principal payment required by (S)2) of the principal of
or the interest on any Note or reduce the principal amount thereof or change the
rate of interest thereon, or (ii) which will change any of the provisions with
respect to optional prepayments, or (iii)
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which will amend the provisions of (S)5.15, or (iv) which will change the
percentage of holders of the Notes required to consent to any such amendment,
alteration or modification or any of the provisions of this (S)7 or (S)2 or
(S)6. For purposes of calculating the percentage of outstanding Notes which have
consented to any amendment of this Agreement, or waived any provision hereof or
for the purpose of calculating whether the holders of the requisite percentage
of outstanding Notes have requested any action by the Company hereunder or taken
any other action with respect to this Agreement or the Notes, Notes held by the
Company, a Subsidiary or any Affiliates shall be excluded.
Section 7.2. Effect of Amendment or Waiver. Any such amendment or
waiver shall apply equally to all of the holders of the Notes and shall be
binding upon them, upon each future holder of any Note and upon the Company,
whether or not such Note shall have been marked to indicate such amendment or
waiver. No such amendment or waiver shall extend to or affect any obligation
not expressly amended or waived or impair any right consequent thereon.
Section 7.3. Solicitation of Noteholders. The Company will not
solicit, request or negotiate for or with respect to any proposed waiver or
amendment of any of the provisions of this Agreement or the Notes unless each
holder of the Notes (irrespective of the amount of Notes then owned by it) shall
be informed thereof by the Company and shall be afforded the opportunity of
considering the same for a period of not less than five Business Days and shall
be supplied by the Company with a brief statement regarding the reasons for any
such proposed waiver or amendment, a copy of the proposed waiver or amendment
and such other information as any holder of the Notes shall reasonably request
regarding such amendment or waiver to enable it to make an informed decision
with respect thereto. Executed or true and correct copies of any waiver or
amendment effected pursuant to the provisions of this (S)7 shall be delivered by
the Company to each holder of outstanding Notes within 30 days following the
date on which the same shall have been executed and delivered by the holder or
holders of the requisite percentage of outstanding Notes. The Company will not,
directly or indirectly, pay or cause to be paid any remuneration, whether by way
of supplemental or additional interest, fee or otherwise, to any holder of the
Notes as consideration for or as an inducement to the entering into by any
holder of the Notes of any waiver or amendment of any of the terms and
provisions of this Agreement unless such remuneration is concurrently paid, on
the same terms, ratably to the holders of all of the Notes then outstanding.
Section 8. Interpretation of Agreement; Definitions.
Section 8.1. Definitions. Unless the context otherwise requires,
the terms hereinafter set forth when used herein shall have the following
meanings and the following definitions shall be equally applicable to both the
singular and plural forms of any of the terms herein defined:
"Adjusted Tangible Net Worth" shall mean, as of the date of any
determination thereof, the difference between (a) the sum of (i) Consolidated
Tangible Net Worth, (ii)
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deferred income taxes of the Company and its Subsidiaries and (iii)
Subordinated Funded Debt, and (b) the Net Tangible Assets of Securitization
Subsidiaries.
"Adjusted Total Liabilities" shall mean, as of the date of any
determination thereof, Total Liabilities less all (i) Subordinated Funded Debt
and (ii) Securitized Debt.
"Affiliate" shall mean any Person (other than a Subsidiary) (i) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Company, (ii) which
beneficially owns or holds 5% or more of any class of the Voting Stock of the
Company or (iii) 5% or more of the Voting Stock (or in the case of a Person
which is not a corporation, 5% or more of the equity interest) of which is
beneficially owned or held by the Company or a Subsidiary. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of Voting Stock, by contract or otherwise.
"Business Day" means any day other than a Saturday, Sunday or other
day on which banks in Chicago, Illinois or New York, New York are required by
law to close or are customarily closed.
"Capitalized Lease" shall mean any lease the obligation for Rentals
with respect to which is required to be capitalized on a balance sheet of the
lessee in accordance with GAAP.
"Capitalized Rentals" shall mean as of the date of any determination
thereof the amount at which the aggregate Rentals due and to become due under
all Capitalized Leases under which the Company or any Subsidiary is a lessee
would be reflected as a liability on a consolidated balance sheet of the Company
and its Subsidiaries.
"Consolidated Net Income" for any period shall mean the gross revenues
of the Company and its Subsidiaries for such period less all expenses and other
proper charges (including taxes on income), determined on a consolidated basis
in accordance with GAAP consistently applied and after eliminating earnings or
losses attributable to outstanding Minority Interests, but excluding in any
event:
(a) any gains or losses on the sale or other disposition of
investments or fixed or capital assets (other than gains or losses
resulting from the sale or disposition of leased equipment upon or after
expiration of the lease), and any taxes on such excluded gains and any tax
deductions or credits on account of any such excluded losses;
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of any Subsidiary accrued prior to the
date it became a Subsidiary;
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(d) net earnings and losses of any corporation (other than a
Subsidiary), substantially all the assets of which have been acquired in
any manner, realized by such other corporation prior to the date of such
acquisition;
(e) net earnings and losses of any corporation (other than a
Subsidiary) with which the Company or a Subsidiary shall have consolidated
or which shall have merged into or with the Company or a Subsidiary prior
to the date of such consolidation or merger;
(f) net earnings of any business entity (other than a Subsidiary) in
which the Company or any Subsidiary has an ownership interest unless such
net earnings shall have actually been received by the Company or such
Subsidiary in the form of cash distributions;
(g) earnings resulting from any reappraisal, revaluation or write-up
of assets;
(h) any deferred or other credit representing any excess of the
equity in any Subsidiary at the date of acquisition thereof over the amount
invested in such Subsidiary;
(i) any gain arising from the acquisition of any Securities of the
Company or any Subsidiary; and
(j) any reversal of any contingency reserve, except to the extent
that provision for such contingency reserve shall have been made from
income arising during such period.
"Consolidated Net Tangible Assets" shall mean as of the date of any
determination thereof the total amount of all Tangible Assets of the Company and
its Subsidiaries after deducting all Restricted Investments, Restricted Cash and
all items which in accordance with GAAP would be included on the liability side
of a consolidated balance sheet, except deferred income taxes, capital stock of
any class, surplus, and Funded Debt of the Company and its Subsidiaries.
"Consolidated Tangible Net Worth" shall mean, as of the date of any
determination thereof, Consolidated Net Tangible Assets less (i) all accounts
receivable more than 90 days overdue unless a reserve in an amount equal to the
entire unpaid amount payable under the lease which gave rise to such receivable
shall have been created on the books of the Company, and (ii) all outstanding
Funded Debt, deferred income taxes and Minority Interests, all determined in
accordance with GAAP consolidating the Company and its Subsidiaries.
"Current Debt" shall mean as of the date of any determination thereof
all Indebtedness for money borrowed other than Funded Debt, determined on a
consolidated basis eliminating intercompany items. Current Debt shall include
any Capitalized Rentals not included in Funded Debt.
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"Debt" shall mean as of the date of any determination thereof all
Current Debt and Funded Debt of the Company and its Subsidiaries, determined on
a consolidated basis eliminating intercompany items.
"Default" shall mean any event or condition the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default as defined in (S)6.1.
"Eligible Securitization Asset" shall mean (i) any lease or
installment purchase contract (and the rights thereunder) entered into or owned
by the Company or a Securitization Subsidiary, as the case may be, which shall
have been selected for disposition in accordance with the Company's or such
Securitization Subsidiary's past practices or substantially in accordance with
standard industry practice, (ii) the Company's or such Securitization
Subsidiary's interest, as the case may be, in any equipment or other assets
which are the subject of the lease or installment purchase contract described in
the foregoing clause (i), (iii) all monies due or to become due with respect to
any of the foregoing clauses (i) or (ii), (iv) all rights and interests in the
insurance policies with respect to any of the foregoing, and (v) cash in an
amount up to the aggregate reserve or credit enhancement requirements, if any,
which the Company or a Securitization Subsidiary, as the case may be, is
obligated to fund under the documents governing an asset securitization for any
Person.
"Eligible Securitization Transaction" shall mean a sale, contribution
or transfer of Eligible Securitization Assets by the Company or any
Securitization Subsidiary to any Person in accordance with (S)5.21 for the
purpose of issuing Indebtedness secured by such Eligible Securitization Assets
which is non-recourse to the Company or any Subsidiary (other than due to
certain breaches of representations and warranties made by the Company or such
Securitization Subsidiary in connection with the sale, contribution or transfer
of Eligible Securitization Assets), the cash proceeds of which shall be remitted
in part to the Company or such Securitization Subsidiary as partial
consideration for the sale, contribution or transfer of such Eligible
Securitization Assets.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed to also refer to any successor sections.
"ERISA Affiliate" shall mean any corporation, trade or business that
is, along with the Company, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in section 414(b) and
414(c), respectively, of the Code or Section 4001 or ERISA.
"Event of Default" shall have the meaning set forth in (S)6.1.
"Fixed Charges" for any period shall mean on a consolidated basis the
sum of (i) all Rentals (other than Rentals on Capitalized Leases) which were
accrued and payable in accordance with GAAP during such period by the Company
and its Subsidiaries, and (ii) all
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Interest Charges on all Indebtedness (including imputed interest on Capitalized
Rentals) of the Company and its Subsidiaries.
"Funded Debt" of any Person shall mean (i) all Indebtedness for
borrowed money or which has been incurred in connection with the acquisition of
assets in each case having a final maturity of more than one year from the date
of any determination thereof (or which is renewable or extendible at the option
of the obligor for a period or periods more than one year from the date of any
determination of Funded Debt), (ii) all Capitalized Rentals maturing more than
one year from the date of any determination thereof, and (iii) all Guaranties of
Debt of others. For purposes of this Agreement, Funded Debt shall include
Securitized Debt. "Consolidated" when used as a prefix to any Funded Debt shall
mean the aggregate amount of all such Funded Debt of the Company and its
Subsidiaries on a consolidated basis eliminating intercompany items.
"GAAP" shall mean generally accepted accounting principles at the
time.
"Guaranties" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing, or in effect guaranteeing,
any Indebtedness, dividend or other obligation of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person: (i) to purchase such Indebtedness or obligation or
any property or assets constituting security therefor, (ii) to advance or supply
funds (x) for the purchase or payment of such Indebtedness or obligation, (y) to
maintain working capital or other balance sheet condition or otherwise to
advance or make available funds for the purchase or payment of such Indebtedness
or obligation, or (z) to maintain fixed charge coverage or other income
statement condition, or (iii) to lease property or to purchase Securities or
other property or services primarily for the purpose of assuring the owner of
such Indebtedness or obligation of the ability of the primary obligor to make
payment of the Indebtedness or obligation, or (iv) otherwise to assure the owner
of the Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations made under this Agreement, (a) a
Guaranty in respect of any Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the principal amount of such Indebtedness for borrowed
money which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness equal
to the maximum aggregate amount of such obligation, liability or dividend, and
(b) the obligations of the Company or any Securitization Subsidiary to purchase
any Repurchased Asset from any Person in connection with an Eligible
Securitization Transaction shall not constitute a "Guaranty" so long as the
price to be paid therefor by the Company or such Securitization Subsidiary does
not exceed the value which was ascribed to such Repurchased Asset in connection
with the initial sale or transfer by the Company or any Securitization
Subsidiary to such Person and so long as such obligations have not become due
and payable.
"Indebtedness" of any Person shall mean and include all obligations of
such Person which in accordance with GAAP shall be classified upon a balance
sheet of such Person as liabilities of such Person, and in any event shall
include all (i) obligations of such Person for
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borrowed money or which has been incurred in connection with the acquisition of
property or assets, (ii) obligations secured by any lien or other charge upon
property or assets owned by such Person, even though such Person has not assumed
or become liable for the payment of such obligations, (iii) obligations created
or arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person, notwithstanding the fact that the
rights and remedies of the seller, lender or lessor under such agreement in the
event of default are limited to repossession or sale of property, and (iv)
Capitalized Rentals under any Capitalized Lease. For the purpose of computing
the "Indebtedness" of any Person, there shall be excluded any particular
Indebtedness to the extent that, upon or prior to the maturity thereof, there
shall have been deposited with the proper depositary in trust the necessary
funds (or evidences of such Indebtedness, if permitted by the instrument
creating such Indebtedness) for the payment, redemption or satisfaction of such
Indebtedness; and thereafter such funds and evidences of Indebtedness so
deposited shall not be included in any computation of the assets of such Person.
The obligations of the Company or any Securitization Subsidiary to purchase any
Repurchased Asset from any Person in connection with an Eligible Securitization
Transaction shall not constitute "Indebtedness" so long as the price to be paid
therefor by the Company or such Securitization Subsidiary does not exceed the
value which was ascribed to such Repurchased Asset in connection with the
initial sale or transfer by the Company or any Securitization Subsidiary to such
Person and so long as such obligations have not become due and payable.
"Interest Charges" for any period shall mean all interest and all
amortization of debt discount and expense as determined in accordance with GAAP
on any particular Indebtedness for which such calculations are being made.
"Lien" shall mean any mortgage, pledge, security interest, conditional
sale agreement or other title retention devise (including Capitalized Lease),
encumbrance, or lien or charge of any kind.
"Long-Term Lease" shall mean any lease of real or personal property
(other than a Capitalized Lease) having an original term, including any period
for which the lease may be renewed or extended at the option of the lessor or
lessee, of more than three years.
"Make-Whole Premium Amount" shall mean, at any time with respect to
any Note of any Series of Notes being prepaid pursuant to (S)2.2 or (S)2.3 or
paid as a result of the existence of an Event of Default, the excess, if any, of
(a) the net present value of the remaining principal and interest payments to
become due on such Note to be prepaid, discounted at a rate which is equal to
the applicable Treasury Rate for such Note, over (b) the aggregate principal
amount of such Note plus accrued interest then to be paid or prepaid (it being
understood that on any prepayment date, the accrued interest shall be deemed to
be zero for purposes of calculating the Make-Whole Premium Amount). If the
applicable Treasury Rate for such Note of such Series at the time of such
payment is equal to or higher than (i) 5.83% in the case of a Series A Note,
(ii) 6.82% in the case of a Series B Note, or (iii) 6.31% in the case of a
Series C Note, the applicable Make-Whole Premium Amount for such Note shall be
zero.
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"Minority Interests" shall mean any shares of stock of any class of a
Subsidiary (other than directors' qualifying shares as required by law) that are
not owned by the Company and/or one or more of its Subsidiaries. Minority
Interests shall be valued by valuing Minority Interests constituting preferred
stock at the voluntary or involuntary liquidating value of such preferred stock,
whichever is greater, and by valuing Minority Interests constituting common
stock at the book value of capital and surplus applicable thereto adjusted, if
necessary, to reflect any changes from the book value of such common stock
required by the foregoing method of valuing Minority Interests in preferred
stock.
"Moody's" shall mean Moody's Investors Service, Inc. and its
successors and assigns.
"Net Tangible Assets of Securitization Subsidiaries" shall mean as of
any date of determination the difference (but not below zero) between (i) the
total assets of all Securitization Subsidiaries after deducting therefrom all
intangible assets of such Securitization Subsidiaries determined in accordance
with GAAP as shown on the consolidating balance sheet of the Company (after
eliminating intercompany and consolidating items) at such date of determination,
minus (ii) the total liabilities other than deferred income tax liabilities of
all Securitization Subsidiaries determined in accordance with GAAP as shown on
the consolidating balance sheet of the Company (after eliminating intercompany
and consolidating items) at such date of determination.
"Net Income Available for Fixed Charges" for any period shall mean the
sum of (i) Consolidated Net Income during such period plus (to the extent
deducted in determining Consolidated Net Income), (ii) all provisions for any
Federal, state or other income taxes made by the Company and its Subsidiaries
during such period and (iii) Fixed Charges during such period.
"Person" shall mean an individual, partnership, corporation, estate,
trust or unincorporated organization, and a government or agency or political
subdivision thereof.
"Plan" means a "pension plan," as such term is defined in ERISA,
established or maintained by the Company or any ERISA Affiliate or as to which
the Company or any ERISA Affiliate contributed or is a member or otherwise may
have any liability.
"Rentals" shall mean and include all fixed rents (including as such
all payments which the lessee is obligated to make to the lessor on termination
of the lease or surrender of the property) payable by the Company or a
Subsidiary, as lessee or sublessee under a lease of real or personal property,
but shall be exclusive of any amounts required to be paid by the Company or a
Subsidiary (whether or not designated as rents or additional rents) on account
of maintenance, repairs, insurance, taxes and similar charges. Fixed rents
under any so-called "percentage leases" shall be computed solely on the basis of
the minimum rents, if any, required to be paid by the lessee regardless of sales
volume or gross revenues.
"Repurchased Asset" shall mean an Eligible Securitization Asset
repurchased by the Company or a Securitization Subsidiary from any Person as a
remedy for the inaccuracy of
-29-
<PAGE>
any representation or warranty made by the Company or a Securitization
Subsidiary in connection with the sale or transfer of such Eligible
Securitization Asset to such Person.
"Restricted Cash" shall mean any cash of the Company or any Subsidiary
(other than a Securitization Subsidiary) on deposit with financial institutions
as a reserve against possible losses from defaults on lease payments which the
Company or such Subsidiary has sold to or discounted with such financial
institutions.
"Restricted Investments" shall mean investments, loans and advances
of the type referred to in (S)5.17(k).
"S&P" shall mean Standard & Poor's Corporation and its successors
and assigns.
"SEC" shall mean the Securities and Exchange Commission or any
successor agency.
"Securitization Subsidiary" shall mean any Subsidiary of which all of
the issued and outstanding shares of stock (or beneficial interest in the case
of a business trust) shall be owned by the Company and/or one or more of its
Wholly-owned Subsidiaries or Securitization Subsidiaries and which engages
exclusively in financing Eligible Securitization Assets and activities related
to such financing activities.
"Securitized Debt" shall mean Indebtedness for borrowed money of a
Securitization Subsidiary which is secured by any Lien or other charge upon
Eligible Securitization Assets owned by such Securitization Subsidiary.
"Security" shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
"Senior Debt" shall mean all Debt other than Subordinated Debt and
Securitized Debt.
"Shareholders' Equity" shall mean, as of the date of any determination
thereof, shareholders' equity of the Company and its Subsidiaries determined on
a consolidated basis in accordance with GAAP.
"Subordinated Debt" shall mean (A) all unsecured Debt of the Company,
whether such unsecured Debt is outstanding on the date of this Agreement or is
hereafter incurred, which shall (i) contain or have applicable thereto
subordination provisions substantially in the form set forth in Exhibit G or
such other provisions as may be approved in writing by the holders of not less
than 66-2/3% in aggregate principal amount of the outstanding Notes, (ii) have a
final maturity date after September 30, 1998, and (iii) have a Weighted Average
Life to Maturity greater than the Weighted Average Life to Maturity of each
Series of Notes, and (B) the Company's $13,000,000 10-1/2% Subordinated Notes
due October 15, 2002, and the Company's $10,000,000 13.40% Subordinated Notes
due June 30, 1999; provided that no modification to the subordination provisions
contained in the documents pursuant to which such subordinated notes are
outstanding shall be made without the written consent of the holders of not less
than 66-2/3% in aggregate principal amount of the
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<PAGE>
outstanding Notes unless after such modification the subordination provisions
are substantially similar to those contain in Exhibit G.
"Subordinated Funded Debt" shall mean all Subordinated Debt of the
Company which is also Funded Debt.
The term "Subsidiary" shall mean any business entity (i) whose
financial statements are required in accordance with GAAP to be consolidated
with the financial statements of the Company, (ii) which is organized under the
laws of the United States or any State thereof, (iii) which conducts
substantially all of its business and has substantially all of its assets within
the United States, and (iv) of which more than 80% (by number of votes) of the
Voting Stock (or the beneficial interest in the case of a business trust) is
owned by the Company and/or one or more Subsidiaries.
"Tangible Assets" shall mean as of the date of any determination
thereof the total amount of all assets of the Company and its Subsidiaries (less
depreciation, depletion and other properly deductible valuation reserves) after
deducting all goodwill, patents, trade names, trade marks, copyrights,
franchises, experimental expense, organization expense, unamortized debt
discount and expense, deferred assets other than prepaid insurance and prepaid
taxes, the excess of cost of shares acquired over book value of related assets
and such other assets as are properly classified as "intangible assets" in
accordance with GAAP.
"Total Liabilities" shall mean, as of the date of any determination
thereof, Guaranties of Indebtedness of others and all items which in accordance
with GAAP would be included on the liability side of a consolidated balance
sheet of the Company and its Subsidiaries (including, without limitation, all
leases discounted with financial institutions) other than deferred income taxes,
capital stock of any class and surplus.
"Treasury Rate" at any time with respect to any Note being prepaid
pursuant to (S)2.2 or (S)2.3, or paid as a result of the existence of an Event
of Default, means (i) .5% plus (ii) the yield to maturity at such time of United
States Treasury obligations with a constant maturity (as compiled by and
published in the most recently published issue of the United States Federal
Reserve Bulletin or its successor publication) most nearly equal to the Weighted
Average Life to Maturity of the Note of the applicable Series then being paid.
If no maturity exactly corresponding to such Weighted Average Life to Maturity
shall appear therein, yields for the two most closely corresponding published
maturities shall be calculated pursuant to the foregoing sentence and the
Treasury Rate shall be interpolated from such yields on a straight-line basis
(rounding, in the case of relevant periods, to the nearest month). If such
rates shall not have been so published, the Treasury Rate in respect of such
determination date shall be calculated pursuant to the next preceding sentence
on the basis of the arithmetic mean of the arithmetic means of the secondary
market ask rates, as of approximately 3:30 P.M., New York City time, on such
Business Days for the actively traded U.S. Treasury security or securities with
a maturity or maturities most closely corresponding to such Weighted Average
Life to Maturity as reported by three primary United States Government
securities dealers in New York City of national standing selected in good faith
by the Company.
-31-
<PAGE>
"Unencumbered Assets" shall mean the aggregate amount of assets of the
Company and its Subsidiaries shown on the Company's consolidated balance sheet
which are unencumbered by Liens securing Debt; provided that no lease which is a
Repurchased Asset shall constitute an Unencumbered Asset at any time when any
scheduled payment thereunder is past due by more than 60 days.
"Unsecured Senior Debt" shall mean all Senior Debt having no
existing Liens attached thereto.
"Voting Stock" shall mean Securities of any class or classes the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
"Weighted Average Life to Maturity" with respect to the Notes means,
as at the time of determination, the number of years obtained by dividing the
then Remaining Dollar-years of the Notes of the applicable Series by the
outstanding principal amount of the Notes of such Series. The term "Remaining
Dollar-years" of the Notes of the applicable Series means the product obtained
by (1) multiplying (A) the amount of each then remaining required principal
payment (including payment at final maturity) of such Series, by (B) the number
of years (calculated to the nearest one-twelfth) which will elapse between the
time of determination and the date such required payment is due, and (2)
totaling all the products obtained in (1).
"Wholly-owned" when used in connection with any Subsidiary shall mean
a Subsidiary of which all of the issued and outstanding shares of stock (except
shares required as directors' qualifying shares) and all Indebtedness for
borrowed money shall be owned by the Company and/or one or more of its Wholly-
owned Subsidiaries.
Section 8.2. Accounting Principles. Where the character or amount
of any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, the same shall be done in accordance
with GAAP, to the extent applicable, except where such principles are
inconsistent with the requirements of this Agreement.
Section 9. Miscellaneous.
Section 9.1. Registered Notes. The Company shall cause to be kept
at its principal office a register for the registration and transfer of the
Notes (hereinafter called the "Note Register"), and the Company will register or
transfer or cause to be registered or transferred, as hereinafter provided and
under such reasonable regulations as it may prescribe, any Note issued pursuant
to this Agreement.
At any time and from time to time the registered holder of any Note
which has been duly registered as hereinabove provided may transfer such Note
upon surrender thereof at the principal office of the Company duly endorsed or
accompanied by a written instrument
-32-
<PAGE>
of transfer duly executed by the registered holder of such Note or its attorney
duly authorized in writing.
The Person in whose name any registered Note shall be registered shall
be deemed and treated as the owner and holder thereof for all purposes of this
Agreement. Payment of or on account of the principal, premium, if any, and
interest on any registered Note shall be made to or upon the written order of
such registered holder.
Section 9.2. Exchange of Notes. At any time, and from time to time,
upon not less than ten days' notice to that effect given by the holder of any
Note initially delivered or of any Note substituted therefor pursuant to (S)9.1,
this (S)9.2 or (S)9.3, and, upon surrender of such Note at its office, the
Company will deliver in exchange therefor, without expense to the holder, except
as set forth below, Notes for the same aggregate principal amount as the then
unpaid principal amount of the Note so surrendered, in the denomination of
$100,000 or any amount in excess thereof as such holder shall specify, dated as
of the date to which interest has been paid on the Note so surrendered or, if
such surrender is prior to the payment of any interest thereon, then dated as of
the date of issue, payable to such Person or Persons, or order, as may be
designated by such holder, and otherwise of the same form and tenor as the Notes
so surrendered for exchange. The Company may require the payment of a sum
sufficient to cover any stamp tax or governmental charge imposed upon such
exchange or transfer.
Section 9.3. Loss, Theft, Etc. of Notes. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of any
Note, and in the case of any such loss, theft or destruction upon delivery of a
bond of indemnity in such form and amount as shall be reasonably satisfactory to
the Company, or in the event of such mutilation upon surrender and cancellation
of the Note, the Company will make and deliver without expense to the holder
thereof, a new Note, of like tenor, in lieu of such lost, stolen, destroyed or
mutilated Note. If the Purchaser or any subsequent institutional holder is the
owner of any such lost, stolen or destroyed Note, then the affidavit of an
authorized officer of such owner, setting forth the fact of loss, theft or
destruction and of its ownership of the Note at the time of such loss, theft or
destruction shall be accepted as satisfactory evidence thereof and no further
indemnity shall be required as a condition to the execution and delivery of a
new Note other than the written agreement of such owner to indemnify the
Company.
Section 9.4. Expenses, Stamp Tax Indemnity. Whether or not the
transactions herein contemplated shall be consummated, the Company agrees to pay
directly all of your out-of-pocket expenses in connection with the preparation,
execution and delivery of this Agreement and the transactions contemplated
hereby, including but not limited to the reasonable charges and disbursements of
Chapman and Cutler, your special counsel, duplicating and printing costs and
charges for shipping the Notes, adequately insured to you at your home office or
at such other place as you may designate, and all such expenses relating to any
amendment, waivers or consents pursuant to the provisions hereof. The Company
also agrees that it will pay and save you harmless against any and all liability
with respect to stamp and other taxes, if any, which may be payable or which may
be determined to be payable in connection with the execution and delivery of
this Agreement or the Notes,
-33-
<PAGE>
whether or not any Notes are then outstanding. The Company agrees to protect and
indemnify you against any liability for any and all brokerage fees and
commissions payable or claimed to be payable to any Person in connection with
the transactions contemplated by this Agreement. The obligation of the Company
to pay expenses pursuant to this (S)9.4, (S)5.19 and (S)6.2 shall survive the
payment of the Notes. The Company agrees to pay the cost of procuring a private
placement number for the Notes.
Section 9.5. Powers and Rights Not Waived; Remedies Cumulative.
No delay or failure on the part of the holder of any Note in the exercise of any
power or right shall operate as a waiver thereof; nor shall any single or
partial exercise of the same preclude any other or further exercise thereof, or
the exercise of any other power or right, and the rights and remedies of the
holder of any Note are cumulative to and are not exclusive of any rights or
remedies any such holder would otherwise have, and no waiver or consent, given
or extended pursuant to (S)7 hereof, shall extend to or affect any obligation or
right not expressly waived or consented to.
Section 9.6. Notices. All communications provided for hereunder
shall be in writing and, if to you, delivered by overnight courier or mailed by
registered or certified mail, or by facsimile communication, addressed to you at
your address appearing on Schedule I to this Agreement or such other address as
you or any subsequent holder of any Note initially issued to you may designate
to the Company in writing, and if to the Company, delivered by overnight courier
or mailed by registered or certified mail or by facsimile communication, to the
Company at 3000 Dundee Road, Northbrook, Illinois 60062, Attention: Chairman,
or to such other address as the Company may in writing designate to you or to a
subsequent holder of the Note initially issued to you; provided, however, that a
notice to you by facsimile communication shall only be effective if made by
confirmed transmission to you at a telephone number designated for such purpose
in Schedule I or as you or a subsequent holder of any Note initially issued to
you may designate in writing and notice is also sent by overnight courier on the
same day such facsimile communication is transmitted.
Section 9.7. Successors and Assigns. This Agreement shall be
binding upon the Company and its successors and assigns and shall inure to your
benefit and to the benefit of your successors and assigns, including each
successive holder or holders of any Notes.
Section 9.8. Survival of Covenants and Representations. All
covenants, representations and warranties made by the Company herein and in any
certificates delivered pursuant hereto, whether or not in connection with any
Closing Date, shall survive the closing and the delivery of this Agreement and
the Notes.
Section 9.9. Severability. Should any part of this Agreement for
any reason be declared invalid, such decision shall not affect the validity of
any remaining portion, which remaining portion shall remain in force and effect
as if this Agreement had been executed with the invalid portion thereof
eliminated and it is hereby declared the intention of the parties hereto that
they would have executed the remaining portion of this Agreement
-34-
<PAGE>
without including therein any such part, parts, or portion which may, for any
reason, be hereafter declared invalid.
Section 9.10. Governing Law. This Agreement and the Notes issued
and sold hereunder shall be governed by and construed in accordance with
Illinois law.
Section 9.11. Captions. The descriptive headings of the various
Sections or parts of this Agreement are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof.
Section 9.12. Requisite Approval; Opinion; Fees and Expenses. This
Amended and Restated Note Agreement shall not become effective until (i) the
Company and the holders of 51% in aggregate principal amount of all Notes
outstanding on the date hereof shall have executed and delivered this Amended
and Restated Note Agreement, (ii) the holders of Notes shall have received an
opinion of counsel which shall be satisfactory in scope and form to such
holders, and (iii) the Company shall have paid all reasonable out-of-pocket
expenses incurred by the holders of Notes in connection with the consummation of
the transactions contemplated by this Amended and Restated Note Agreement,
including, without limitation, the fees, expenses and disbursements of Chapman
and Cutler which are reflected in statements of such counsel rendered on or
prior to the effective date of this Amended and Restated Note Agreement.
Section 9.13. Affirmation. Except as expressly amended hereby, the
Company agrees that the Note Agreements, the Notes and all other documents and
agreements executed by the Company in connection with the execution and delivery
of the separate Note Agreements and the issuance and sale of the Notes, shall
remain in full force and effect. From and after the effective date of this
Amended and Restated Note Agreement, all references to the separate Note
Agreements or any similar term shall be deemed to be references to the separate
Amended and Restated Note Agreements.
-35-
<PAGE>
The execution hereof by you shall constitute a contract between us for the uses
and purposes hereinabove set forth, and this Amended and Restated Note Agreement
may be executed in any number of counterparts, each executed counterpart
constituting an original but all together only one agreement.
Trans Leasing International, Inc.
By____________________________________
Its
Accepted as of November 30, 1994.
[Variation]
By____________________________________
Its
[By___________________________________
Its ]
-36-
<PAGE>
Schedule I
Principal Amount
Name and Addresses of Series A Notes to be
of Purchasers Purchased
Principal Mutual Life Insurance Company $21,000,000
711 High Street
Des Moines, Iowa 50392-0800
Attention: Investment Department -
Securities Division
Regarding Bond No. 1-B-24686
Telefacsimile: (515) 248-2490
Confirmation: (515) 248-3495
Payments
All payments on or in respect of the Notes to be
by bank wire transfer of Federal or other
immediately available funds (identifying each
payment as "Trans Leasing International, Inc.
5.83% Senior Notes, Series A, Due March 31,
l998, PPN 893245 B* 0, principal or interest")
to:
Norwest Bank Iowa, N.A.
7th and Walnut Streets
Des Moines, Iowa 50309
ABA #073 000 228
for credit to
Principal Mutual Life Insurance Company
Account No. 014752
Notices
All notices concerning payment on or in respect
of the Notes, to:
Principal Mutual Life Insurance Company
711 High Street
Des Moines, Iowa 50392-0810
Attention: Investment Department
Accounting & Treasury
SCHEDULE I
(to Note Agreement)
<PAGE>
All notices and communications other than those
in respect to payments to be addressed as first
provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer ID #42-012-7290
I-2
<PAGE>
Principal Amount
Name and Address of Series A Notes to be
of Purchaser Purchased
Massachusetts Mutual Life Insurance $10,000,000
Company
1295 State Street
Springfield, Massachusetts 01111
Attention: Securities Investment Division
Payments
All payments on or in respect of the Notes to be by
bank wire transfer of Federal or other immediately
available funds (identifying each payment as "Trans
Leasing International, Inc. 5.83% Senior Notes,
Series A, Due March 31, l998, PPN 893245 B* 0,
principal or interest") to:
Chemical Bank
Institutional Client Services
4 New York Plaza - 4th Floor
New York, New York 10004-2413
ABA #021-000128
for credit to
Massachusetts Mutual Life Insurance Company's
Insurance & Financial Management -
Non-Traditional
Account No. 325-009-317
with telephone advice to the Securities
Custody and Collection Department of
Massachusetts Mutual Life Insurance
Company at (413) 788-8411, Fax:
(413) 744-6263.
I-3
<PAGE>
Notices
All notices and communications to be addressed as
first provided above, except notices with respect
to corporate actions and payments and written
confirmation of each such payment to be addressed,
Attention: Securities Custody and Collection
Department, E 381.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. #04-1590850
I-4
<PAGE>
Principal Amount
Name and Addresses of Series A Notes to be
of Purchasers Purchased
Phoenix Home Life Mutual Insurance Company $6,000,000
One American Row
Hartford, Connecticut 06115
Attention: Private Placements Division
Payments
All payments on or in respect of the Notes to be
by bank wire transfer of Federal or other
immediately available funds (identifying each
payment as "Trans Leasing International, Inc.
5.83% Senior Notes, Series A, Due March 31, l998,
PPN 893245 B* 0, principal or interest") to:
Chase Manhattan Bank
ABA #021 0000 21
BNF-SSG Private Income Processing/
AC-9009000200
for credit to
Phoenix Home Life Mutual
Insurance Company
Account No. G-05143
Notices
All notices and communications to be addressed as
first provided above.
Name of Nominee in which Notes are to be issued: None
Tax I.D. #06-0493340
I-5
<PAGE>
Principal Amount
Name and Address of Series A Notes to be
of Purchasers Purchased
TMG Life Insurance Company $1,000,000
401 N. Executive Drive
Brookfield, WI 53008-0980
Attn: Karen Carabell
Payments
All payments on or in respect of the Notes to be
by bank wire transfer of Federal or other immediately
available funds (identifying each payment as
"Trans Leasing International, Inc. 5.83% Senior Notes,
Series A, Due March 31, l998, PPN 893245 B* 0,
principal or interest") to:
Federal Reserve Bank - Minneapolis
Norwest Bank MN/Trust
Credit Account #08-40-245
ABA #091000019
for credit to The Mutual Group's
Account No. 732446000
Notices
All other written communications should be sent to:
Ms. Lisa Harris
The Mutual Group (U.S.)
401 North Executive Drive
Brookfield, WI 53008-0980
Telephone: (414) 797-2305
Telecopy: (414) 797-3988
Name of Nominee in which Notes are to be issued: None
Tax I.D. #45-0208990
I-6
<PAGE>
Principal Amount
Name and Addresses of Series B Notes to be
of Purchasers Purchased
Phoenix Home Life Mutual Insurance Company $4,000,000
One American Row
Hartford, Connecticut 06115
Attention: Private Placements Division
Payments
All payments on or in respect of the Notes to be
by bank wire transfer of Federal or other
immediately available funds (identifying each
payment as "Trans Leasing International, Inc.
6.82% Senior Notes, Series B, Due June 1, l998,
PPN 893245 B@ 8, principal or interest") to:
Chase Manhattan Bank
ABA #021 0000 21
BNF-SSG Private Income Processing/
AC-9009000200
for credit to
Phoenix Home Life Mutual
Insurance Company
Account No. G-05143
Notices
All notices and communications to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Tax I.D. #06-0493340
I-7
<PAGE>
Principal Amount
Name and Address of Series C Notes to be
of Purchasers Purchased
Core States Bank, N.A. $10,000,000
1500 Market Street
Centre Square Building, West Tower
19th Floor FC1-3-19-20
Philadelphia, PA 19101
Attn: Private Placements Division
Payments
All payments on or in respect of the Notes to be
by bank wire transfer of Federal or other
immediately available funds (identifying each
payment as "Trans Leasing International, Inc.
6.31% Senior Notes, Series C, Due September 30,
l998, PPN 893245 C# 5, principal or interest") to:
Core States Bank, N.A.
ABA #031-0000-11
for credit to Commercial Loan Accounting's
Account No. 0132-0452
Notices
John F. McDonald
(215) 973-3961
Andrey Wines
(215) 973-3750
Name of Nominee in which Notes are to be issued: None
I-8
<PAGE>
Trans Leasing International, Inc.
5.83% Senior Note, Series A
Due March 31, 1998
PPN: 893245 B* 0
No. AR-
$_____________ ____________, 19__
Trans Leasing International, Inc., a Delaware corporation (the "Company"),
for value received, hereby promises to pay to
or registered assigns
on the 31st day of March, 1998
the principal amount of
Dollars ($____________)
and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid hereon at the
rate of 5.83% per annum from the date hereof until maturity, payable
semiannually on the last day of each March and September in each year
(commencing September 30, 1993) and at maturity. The Company agrees to pay
interest on overdue principal (including any overdue required or optional
prepayment of principal) and premium, if any, and (to the extent legally
enforceable) on any overdue installment of interest, at the rate of 6.83% per
annum after the due date, whether by acceleration or otherwise, until paid. If
any payment of principal, premium, if any, and/or interest on this Note shall
fall due on any day which is not a Business Day, then payment shall be made on
the next succeeding Business Day. Both the principal hereof and interest hereon
are payable at the principal office of the Company in Northbrook, Illinois in
coin or currency of the United States of America which at the time of payment
shall be legal tender for the payment of public and private debts.
This Note is one of the 5.83% Senior Notes, Series A, due March 31, 1998 of
the Company in the aggregate principal amount of $38,000,000 issued or to be
issued under and subject to the terms and provisions of the separate Note
Agreements, each dated as of June 1, 1993 (the "Note Agreements"), entered into
by the Company with the original Purchasers therein referred to and this Note
and the holder hereof are entitled equally and ratably with the holders of all
other Notes outstanding under the Note Agreements to all the benefits provided
for thereby or referred to therein. Reference is hereby made to the Note
Agreements for a statement of such rights and benefits.
EXHIBIT A
(to Note Agreement)
<PAGE>
This Note and the other Notes outstanding under the Note Agreements may be
declared due prior to their expressed maturity dates and certain payments are
required to be made thereon, all in the events, on the terms and in the manner
and amounts as provided in the Note Agreements.
The Notes are not subject to prepayment or redemption at the option of the
Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Note Agreements.
This Note and the Indebtedness evidenced hereby shall rank pari passu with
all other Unsecured Senior Debt of the Company, whether such Unsecured Senior
Debt is outstanding on the date hereof or is hereafter incurred.
This Note is registered on the books of the Company and is transferable only
by surrender thereof at the principal office of the Company duly endorsed or
accompanied by a written instrument of transfer duly executed by the registered
holder of this Note or its attorney duly authorized in writing. Payment of or
on account of principal, premium, if any, and interest on this Note shall be
made only to or upon the order in writing of the registered holder.
Trans Leasing International, Inc.
By_______________________________
Its
A-2
<PAGE>
Trans Leasing International, Inc.
6.82% Senior Note, Series B
Due June 1, 1998
PPN: 893245 B@ 8
No. BR-
$________________ ____________, 19__
Trans Leasing International, Inc., a Delaware corporation (the "Company"),
for value received, hereby promises to pay to
or registered assigns
on the 1st day of June, 1998
the principal amount of
Dollars ($____________)
and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid hereon at the
rate of 6.82% per annum from the date hereof until maturity, payable
semiannually on the first day of each June and December in each year (commencing
December 1, 1993) and at maturity. The Company agrees to pay interest on
overdue principal (including any overdue required or optional prepayment of
principal) and premium, if any, and (to the extent legally enforceable) on any
overdue installment of interest, at the rate of 7.82% per annum after the due
date, whether by acceleration or otherwise, until paid. If any payment of
principal, premium, if any, and/or interest on this Note shall fall due on any
day which is not a Business Day, then payment shall be made on the next
succeeding Business Day. Both the principal hereof and interest hereon are
payable at the principal office of the Company in Northbrook, Illinois in coin
or currency of the United States of America which at the time of payment shall
be legal tender for the payment of public and private debts.
This Note is one of the 6.82% Senior Notes, Series B, due June 1, 1998 of the
Company in the aggregate principal amount of $4,000,000 issued or to be issued
under and subject to the terms and provisions of the separate Note Agreements,
each dated as of June 1, 1993 (the "Note Agreements"), entered into by the
Company with the original Purchasers therein referred to and this Note and the
holder hereof are entitled equally and ratably with the holders of all other
Notes outstanding under the Note Agreements to all the benefits provided for
thereby or referred to therein. Reference is hereby made to the Note Agreements
for a statement of such rights and benefits.
EXHIBIT B
(to Note Agreement)
<PAGE>
This Note and the other Notes outstanding under the Note Agreements may be
declared due prior to their expressed maturity dates and certain payments are
required to be made thereon, all in the events, on the terms and in the manner
and amounts as provided in the Note Agreements.
The Notes are not subject to prepayment or redemption at the option of the
Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Note Agreements.
This Note and the Indebtedness evidenced hereby shall rank pari passu with
all other Unsecured Senior Debt of the Company, whether such Unsecured Senior
Debt is outstanding on the date hereof or is hereafter incurred.
This Note is registered on the books of the Company and is transferable only
by surrender thereof at the principal office of the Company duly endorsed or
accompanied by a written instrument of transfer duly executed by the registered
holder of this Note or its attorney duly authorized in writing. Payment of or
on account of principal, premium, if any, and interest on this Note shall be
made only to or upon the order in writing of the registered holder.
Trans Leasing International, Inc.
By_______________________________
Its
B-2
<PAGE>
Trans Leasing International, Inc.
6.31% Senior Note, Series C
Due September 30, 1998
PPN: 893245 C# 5
No. CR-
$________________ ____________, 19__
Trans Leasing International, Inc., a Delaware corporation (the "Company"),
for value received, hereby promises to pay to
or registered assigns
on the 30th day of September, 1998
the principal amount of
Dollars ($____________)
and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid hereon at the
rate of 6.31% per annum from the date hereof until maturity, payable
semiannually on the last day of each March and September in each year
(commencing September 30, 1993) and at maturity. The Company agrees to pay
interest on overdue principal (including any overdue required or optional
prepayment of principal) and premium, if any, and (to the extent legally
enforceable) on any overdue installment of interest, at the rate of 7.31% per
annum after the due date, whether by acceleration or otherwise, until paid. If
any payment of principal, premium, if any, and/or interest on this Note shall
fall due on any day which is not a Business Day, then payment shall be made on
the next succeeding Business Day. Both the principal hereof and interest hereon
are payable at the principal office of the Company in Northbrook, Illinois in
coin or currency of the United States of America which at the time of payment
shall be legal tender for the payment of public and private debts.
This Note is one of the 6.31% Senior Notes, Series C, due September 30, 1998
of the Company in the aggregate principal amount of $10,000,000 issued or to be
issued under and subject to the terms and provisions of the separate Note
Agreements, each dated as of June 1, 1993 (the "Note Agreements"), entered into
by the Company with the original Purchasers therein referred to and this Note
and the holder hereof are entitled equally and ratably with the holders of all
other Notes outstanding under the Note Agreements to all the benefits provided
for thereby or referred to therein. Reference is hereby made to the Note
Agreements for a statement of such rights and benefits.
EXHIBIT C
(to Note Agreement)
<PAGE>
This Note and the other Notes outstanding under the Note Agreements may be
declared due prior to their expressed maturity dates and certain payments are
required to be made thereon, all in the events, on the terms and in the manner
and amounts as provided in the Note Agreements.
The Notes are not subject to prepayment or redemption at the option of the
Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Note Agreements.
This Note and the Indebtedness evidenced hereby shall rank pari passu with
all other Unsecured Senior Debt of the Company, whether such Unsecured Senior
Debt is outstanding on the date hereof or is hereafter incurred.
This Note is registered on the books of the Company and is transferable only
by surrender thereof at the principal office of the Company duly endorsed or
accompanied by a written instrument of transfer duly executed by the registered
holder of this Note or its attorney duly authorized in writing. Payment of or
on account of principal, premium, if any, and interest on this Note shall be
made only to or upon the order in writing of the registered holder.
Trans Leasing International, Inc.
By_______________________________
Its
C-2
<PAGE>
Representations and Warranties
The Company represents and warrants to each of you as follows:
1. Subsidiaries. Annex A attached hereto states the name of each of
the Company's Subsidiaries, its jurisdiction of incorporation and the
percentage of its Voting Stock owned by the Company and/or its
Subsidiaries. Those Subsidiaries listed in Section 1 of said Annex A
constitute Restricted Subsidiaries. The Company has good and marketable
title to all of the shares it purports to own of the stock of each
Subsidiary, free and clear of any lien. All such shares have been duly
issued and are fully paid and non-assessable.
2. Corporate Organization and Authority. The Company, and each
Subsidiary,
(a) is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation;
(b) has all requisite power and authority and all licenses and
permits material and necessary to own and operate its properties and
to carry on its business as now conducted and as presently proposed to
be conducted; and
(c) is duly licensed or qualified and is in good standing as a
foreign corporation in each jurisdiction wherein the nature of the
business transacted by it or the nature of the property owned or
leased by it makes such licensing or qualification necessary, except
where the failure to be licensed or qualified would not have a
material adverse effect on the business, prospects, profits,
properties or condition (financial or otherwise) of the Company and
its Subsidiaries.
3. Business and Property. You have heretofore been furnished with a
copy of the Private Placement Memorandum dated April, 1993 prepared by
Continental Bank, N.A., a copy of the Form 10-K of the Company for the
fiscal years ended June 30 in each of the years 1988 to 1992, both
inclusive, and a copy of the Form 10-Q of the Company for the six months
ended December 31, 1992 and the nine months ended March 31, 1993 (the
"Disclosure Documents") which generally set forth the business conducted
and proposed to be conducted by the Company and its Subsidiaries and the
principal properties of the Company and its Subsidiaries.
4. Financial Statements. (a) The consolidated balance sheets of
the Company and its Subsidiaries as of June 30 in each of the years 1988 to
1992, both inclusive, and the statements of income and retained earnings
and changes in financial position or cash flows for the fiscal years ended
on said dates accompanied by a report thereon containing an opinion
unqualified as to scope limitations imposed by the Company and otherwise
without qualification except as therein noted, by Deloitte & Touche
(formerly Touche Ross & Co.), have been prepared in accordance with
EXHIBIT D
(to Note Agreement)
<PAGE>
GAAP consistently applied except as therein noted, are correct and complete
and present fairly the financial position of the Company and its
Subsidiaries as of such dates and the results of their operations and
changes in their financial position or cash flows for such periods. The
unaudited consolidated balance sheet of the Company and its Subsidiaries as
of December 31, 1992 and March 31, 1993, and the unaudited statements of
income and retained earnings and cash flows for the six-month and
nine-month periods ended on said dates, respectively, prepared by the
Company have been prepared in accordance with GAAP consistently applied and
present fairly the financial position of the Company and its Subsidiaries
as of said dates and the results of their operations and changes in their
financial position or cash flows for such periods.
(b) Since June 30, 1992, there has been no change in the condition,
financial or otherwise, of the Company and its Subsidiaries as shown on the
consolidated balance sheet as of such date except changes in the ordinary
course of business, none of which individually or in the aggregate has been
materially adverse.
5. Indebtedness. Annex B attached hereto correctly describes all
Current Debt, Funded Debt, Capitalized Leases and Long-Term Leases of the
Company, as lessee, and its Subsidiaries outstanding on March 31, 1993.
6. Full Disclosure. The financial statements referred to in
paragraph 4 do not, nor do the Disclosure Documents or any other written
statement furnished by the Company to you in connection with the
negotiation of the sale of the Notes, contain any untrue statement of a
material fact or omit a material fact necessary to make the statements
contained therein or herein not misleading. There is no fact peculiar to
the Company or its Subsidiaries which the Company has not disclosed to you
in writing which materially affects adversely nor, so far as the Company
can now reasonably foresee, will materially affect adversely the
properties, business, prospects, profits or condition (financial or
otherwise) of the Company and its Subsidiaries.
7. Pending Litigation. There are no proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company or
any Subsidiary in any court or before any governmental authority or
arbitration board or tribunal which involve the possibility of materially
and adversely affecting the properties, business, prospects, profits or
financial condition of the Company and its Subsidiaries or the ability of
the Company to perform its obligations under the Agreements and the Notes.
Neither the Company nor any Subsidiary is in default with respect to any
order of any court or governmental authority or arbitration board or
tribunal.
8. Title to Properties. The Company and each Subsidiary has good
and marketable title in fee simple (or its equivalent under applicable law)
to all the real property and has good title to all the other property it
purports to own, including that reflected in the most recent balance sheet
referred to in paragraph 4, except property subject to Capitalized Leases
or as sold or otherwise disposed of in the ordinary
D-2
<PAGE>
course of business and except for liens disclosed in notes to the financial
statements referred to in paragraph 4 hereof or otherwise permitted by the
Agreement.
9. Patents and Trademarks. The Company and each Subsidiary owns or
possesses all the patents, trademarks, trade names, service marks,
copyright, licenses and rights with respect to the foregoing necessary for
the present and planned future conduct of its business, without any known
conflict with the rights of others.
10. Sale is Legal and Authorized. The sale of the Notes and
compliance by the Company with all of the provisions of the Agreement and
the Notes --
(a) are within the corporate powers of the Company and have
been duly authorized by proper corporate action on the part of the
Company; and
(b) will not violate any provisions of any law or any order of
any court or governmental authority or agency and will not conflict
with or result in any breach of any of the terms, conditions or
provisions of, or constitute a default under the Certificate of
Incorporation or By-laws of the Company or any indenture or other
agreement or instrument to which the Company is a party or by which it
may be bound or result in the imposition of any liens or encumbrances
on any property of the Company.
11. No Defaults. No Default or Event of Default as defined in the
Agreement has occurred and is continuing. The Company is not in default in
the payment of principal or interest on any Indebtedness for borrowed money
and is not in default under any instrument or instruments or agreements
under and subject to which any Indebtedness for borrowed money has been
issued and no event has occurred and is continuing under the provisions of
any such instrument or agreement which with the lapse of time or the giving
of notice, or both, would constitute an event of default thereunder.
12. Governmental Consent. No approval, consent or withholding of
objection on the part of any regulatory body, state, Federal or local, is
necessary in connection with the execution and delivery by the Company of
the Agreement or the Notes or compliance by the Company with any of the
provisions of the Agreement or the Notes.
13. Taxes. All tax returns required to be filed by the Company or
any Subsidiary in any jurisdiction have, in fact, been filed, and all
taxes, assessments, fees and other governmental charges upon the Company or
any Subsidiary or upon any of their respective properties, income or
franchises with respect to which the applicable statute of limitations has
not expired, which are shown to be due and payable in such returns have
been paid, except where the failure to file such returns could not
reasonably be expected to have, in the aggregate, a material adverse effect
on the business, prospects, profits, properties or condition (financial or
otherwise) of the Company and its Subsidiaries. The Company does not know
of any proposed
D-3
<PAGE>
additional tax assessment against it for which adequate provision has not
been made on its accounts. The Federal income tax liability of the Company
and its Subsidiaries has been finally determined by the Internal Revenue
Service and satisfied for all taxable years up to and including the taxable
year ended June 30, 1989 and no material controversy in respect of
additional income taxes due since said date is pending or to the knowledge
of the Company threatened. The provisions for taxes on the books of the
Company and each Subsidiary are adequate for all open years, and for its
current fiscal period.
14. Use of Proceeds. The net proceeds from the sale of the Notes
will be used to refinance outstanding indebtedness and for general
corporate purposes. None of the transactions contemplated in the Agreement
(including, without limitation thereof, the use of proceeds from the
issuance of the Notes) will violate or result in a violation of Section 7
of the Securities Exchange Act of 1934, as amended, or any regulation
issued pursuant thereto, including, without limitation, Regulations G, T
and X of the Board of Governors of the Federal Reserve System, 12 C.F.R.,
Chapter II. Neither the Company, directly or indirectly, nor any
Subsidiary owns or intends to carry or purchase any "margin stock" within
the meaning of said Regulation G. None of the proceeds from the sale of
the Notes will be used to purchase, or refinance, any borrowing, the
proceeds of which were used to purchase any "security" within the meaning
of the Securities and Exchange Act of 1934, as amended.
15. Private Offering. Neither the Company, directly or indirectly,
nor any agent on its behalf has offered or will offer the Notes or any
similar Security or has solicited or will solicit an offer to acquire the
Notes or any similar Security from or has otherwise approached or
negotiated or will approach or negotiate in respect of the Notes or any
similar Security with any Person other than you and not more than 30 other
institutional investors, each of whom was offered a portion of the Notes at
private sale for investment. Neither the Company, directly or indirectly,
nor any agent on its behalf has offered or will offer the Notes or any
similar Security or has solicited or will solicit an offer to acquire the
Notes or any similar Security from any Person so as to bring the issuance
and sale of the Notes within the provisions of Section 5 of the Securities
Act of 1933, as amended.
16. ERISA. Assuming the correctness of your representations in
(S)3.2 of the Agreement, the consummation of the transactions provided for
in the Agreement and compliance by the Company with the provisions thereof
and the Notes issued thereunder will not involve any prohibited transaction
within the meaning of ERISA or Section 4975 of the Internal Revenue Code of
1986, as amended. No Plans are maintained by the Company or any Person
which is under common control with the Company within the meaning of
Section 4001(b) of ERISA.
17. Compliance with Law. Neither the Company nor any Subsidiary
(a) is in violation of any law, ordinance, franchise, governmental rule or
regulation to which it is subject; or (b) has failed to obtain any license,
permit, franchise or other governmental authorization necessary to the
ownership of its property or to the
D-4
<PAGE>
conduct of its business, which violation or failure to obtain could
reasonably be expected to, in the aggregate, materially adversely affect
the business, prospects, profits, properties or condition (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole, or impair
the ability of the Company to perform its obligations contained in the
Agreements or the Notes in any material respect. Neither the Company nor
any Subsidiary is in default with respect to any order of any court or
governmental authority or arbitration board or tribunal.
18. Compliance with Environmental Laws. The Company is not in
violation of any applicable Federal, state, or local laws, statutes, rules,
regulations or ordinances relating to public health, safety or the
environment, including, without limitation, relating to releases,
discharges, emissions or disposals to air, water, land or ground water, to
the withdrawal or use of ground water, to the use, handling or disposal of
polychlorinated biphenyls (PCBs), asbestos or urea formaldehyde, to the
treatment, storage, disposal or management of hazardous substances
(including, without limitation, petroleum, crude oil or any fraction
thereof, or other hydrocarbons), pollutants or contaminants, to exposure to
toxic, hazardous or other controlled, prohibited or regulated substances
which violation could in the aggregate have a material adverse effect on
the business, prospects, profits, properties or condition (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole. Neither
the Company nor any Subsidiary has any liability or class of liability
under the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended (42 U.S.C. Section 9601 et seq.), or the Resource
Conservation and Recovery Act of 1976, as amended (42 U.S.C. Section 6901
et seq.).
19. Investment Company Act. The Company is not, and is not
directly or indirectly controlled by or acting on behalf of any person
which is, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
20. Holding Company Act Status. The Company is not a "holding
company," or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company", as such terms are defined in the Public
Utility Holding Company Act of 1935, as amended.
D-5
<PAGE>
Subsidiaries of the Company
<TABLE>
<CAPTION>
1. Restricted Subsidiaries:
Percentage of Voting Stock
Jurisdiction of Owned by Company and
Name of Subsidiary Incorporation each other Subsidiary
<S> <C> <C>
Trans Leasing Insurance Illinois 100%
Services, Inc.
Nuvotron, Inc. Illinois 100%
T.L.I. Auto Leasing Group, Illinois 100%
Inc.
<CAPTION>
2. Subsidiaries (other than Restricted Subsidiaries):
Percentage of Voting Stock
Jurisdiction of Owned by Company and
Name of Subsidiary Incorporation each other Subsidiary
<S> <C> <C>
Trans Leasing Finance Corp. Delaware 100%
TL Lease Funding Corp. II Delaware 100%
</TABLE>
ANNEX A
(to Closing Certificate)
<PAGE>
Description of Debt and Leases
1. Current Debt of the Company and its Restricted Subsidiaries outstanding on
March 31, 1993 is as follows:
<TABLE>
<S> <C>
Accounts Payable and Accrued Expenses $ 6,534,000
NIP -- Revolving Credit Agreement 23,000,000
10.39% Senior Notes 5,000,000
9.80% Senior Notes 5,000,000
9.39% Senior Notes 3,000,000
13.00% Senior Notes 2,222,000
Leases Discounted with Financial Institutions 13,000
-----------
$44,769,000
===========
</TABLE>
2. Funded Debt of the Company and its Restricted Subsidiaries outstanding on
March 31, 1993 is as follows:
<TABLE>
<S> <C>
9.80% Senior Notes $ 5,000,000
9.39% Senior Notes 3,000,000
13.00% Senior Notes 2,222,000
13.40% Subordinates Notes 10,000,000
10.50% Subordinated Debentures 13,000,000
-----------
$33,222,000
===========
</TABLE>
3. Long-Term Leases of the Company and its Restricted Subsidiaries outstanding
on March 31, 1993 are as follows:
<TABLE>
<S> <C> <C>
Lederer Realty Office space $ 696,080
Waldenstrom Warehouse and 101,421
office space
MPI Management Office space 78,294
Koll Management Office space 100,644
Services
Wm H. Lawler et. al. Office space 37,309
----------
$1,013,748
==========
</TABLE>
ANNEX B
(to Closing Certificate)
<PAGE>
4. Capitalized Leases of the Company and its Restricted Subsidiaries outstanding
on March 31, 1993 are as follows:
None.
5. Deposits of Restricted Cash of the Company and its Restricted Subsidiaries in
existence on the First Closing Date are as follows:
None
-2-
<PAGE>
Description of Special Counsel's Closing Opinion
The closing opinion of Chapman and Cutler, special counsel to the
Purchasers, called for by (S)4.1 and (S)4.2 of the Note Agreements, shall be
dated the Closing Date and addressed to the Purchasers, shall be satisfactory in
form and substance to the Purchasers and shall be to the effect that:
1. The Company is a corporation, validly existing and in good
standing under the laws of the State of Delaware and has the corporate
power and the corporate authority to execute and deliver the Note Agreement
and to issue the Notes.
2. Each Note Agreement has been duly authorized by all necessary
corporate action on the part of the Company, has been duly executed and
delivered by the Company and constitutes the legal, valid and binding
contract of the Company enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent conveyance or similar laws affecting
creditors' rights generally, and general principles of equity (regardless
of whether the application of such principles is considered in a proceeding
in equity or at law).
3. The Notes have been duly authorized by all necessary corporate
action on the part of the Company, have been duly executed and delivered by
the Company and constitute the legal, valid and binding obligations of the
Company enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance or similar laws affecting creditors'
rights generally, and general principles of equity (regardless of whether
the application of such principles is considered in a proceeding in equity
or at law).
4. No approval, consent or withholding of objection on the part of,
or filing, registration or qualification with, any governmental body,
Federal, state or local, is necessary in connection with the execution and
delivery of the Note Agreement or the Notes.
5. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Agreements do not, under existing
law, require the registration of the Notes under the Securities Act of
1933, as amended, or the qualification of an indenture under the Trust
Indenture Act of 1939, as amended.
The opinion of Chapman and Cutler shall also state that the opinion of
Kirkland and Ellis is satisfactory in scope and form to Chapman and Cutler and
that, in their opinion, the Purchasers are justified in relying thereon.
In rendering the opinion set forth in paragraph 1 above, Chapman and
Cutler may rely solely upon an examination of the Certificate of Incorporation
certified by, and a certificate of good standing of the Company from, the
Secretary of State of the State of Delaware and the By-laws of the Company.
EXHIBIT E
(to Note Agreement)
<PAGE>
With respect to matters of fact upon which such opinion is based,
Chapman and Cutler may rely on appropriate certificates of public officials and
officers of the Company.
E-2
<PAGE>
Description of Closing Opinion of Counsel to the Company
The closing opinion of Kirkland & Ellis, counsel for the Company,
which is called for by (S)4.1 and (S)4.2 of the Note Agreements, shall be dated
the Closing Date and addressed to the Purchasers, shall be satisfactory in scope
and form to the Purchaser and shall be to the effect that:
1. The Company is a corporation, duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, has the
corporate power and the corporate authority to execute and perform the Note
Agreements and to issue the Notes and has the full corporate power and the
corporate authority to conduct the activities in which it is now engaged
and is duly licensed or qualified and is in good standing as a foreign
corporation in each jurisdiction in which the character of the properties
owned or leased by it or the nature of the business transacted by it makes
such licensing or qualification necessary.
2. Each Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation
and is duly licensed or qualified and is in good standing in each
jurisdiction in which the character of the properties owned or leased by it
or the nature of the business transacted by it makes such licensing or
qualification necessary and all of the issued and outstanding shares of
capital stock of each such Subsidiary have been duly issued, are fully paid
and non-assessable and are owned by the Company, by one or more
Subsidiaries, or by the Company and one or more Subsidiaries.
3. Each Note Agreement has been duly authorized by all necessary
corporate action on the part of the Company, has been duly executed and
delivered by the Company and constitutes the legal, valid and binding
contract of the Company enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent conveyance or similar laws affecting
creditors' rights generally, and general principles of equity (regardless
of whether the application of such principles is considered in a proceeding
in equity or at law).
4. The Notes have been duly authorized by all necessary corporate
action on the part of the Company, have been duly executed and delivered by
the Company and constitute the legal, valid and binding obligations of the
Company enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance or similar laws affecting creditors'
rights generally, and general principles of equity (regardless of whether
the application of such principles is considered in a proceeding in equity
or at law).
5. The issuance and sale of the Notes and the execution, delivery
and performance by the Company of the Note Agreements do not conflict with
or result in any breach of any of the provisions of or constitute a default
under or result in the creation of imposition of any lien or encumbrance
upon any of the property of the Company pursuant to the provisions of the
Certificate of Incorporation or By-laws of
EXHIBIT F
(to Note Agreement)
<PAGE>
the Company or any agreement or other instrument known to such counsel, to
which the Company is a party or by which the Company may be bound.
6. To such counsel's knowledge (based solely upon inquiries of
officers of the Company), there is not now pending or threatened any
action, suit or proceeding before any court or any governmental or
regulatory authority against the Company or its property or assets which
would reasonably be expected to result in any material adverse change in
the financial condition of the Company or which would materially impair the
ability of the Company to execute and perform the Note Agreements and the
Notes.
7. The use of the proceeds from the issuance of the Notes to
refinance outstanding bank Debt will not violate or result in a violation
of Section 7 of the Securities Exchange Act of 1934, as amended, or any
regulation issued pursuant to such Section or Regulations G, T, U and X of
the Board of Governors of the Federal Reserve System, 12 C.F.R., Chap. II.
8. No approval, consent or withholding of objection on the part of,
or filing, registration or qualification with, any governmental body,
Federal or state, is necessary in connection with the execution and
delivery of the Note Agreements or the Notes.
9. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Agreements do not, under existing
law, require the registration of the Notes under the Securities Act of
1933, as amended, or the qualification of an indenture under the Trust
Indenture Act of 1939, as amended.
The opinion of Kirkland & Ellis shall cover such other matters
relating to the sale of the Notes as the Purchasers may reasonably request.
With respect to matters of fact on which such opinion is based, such counsel
shall be entitled to rely on appropriate certificates of public officials and
officers of the Company.
F-2
<PAGE>
Subordination Provisions Applicable to
Subordinated Debt
The indebtedness evidenced by the subordinated notes* and any renewals
or extensions thereof, shall at all times be wholly subordinate and junior in
right of payment to any and all indebtedness of the Company [here insert
description of indebtedness to which Subordinated Debt is subordinated which in
all events must include the Notes] (herein called "Superior Indebtedness"), in
the manner and with the force and effect hereinafter set forth:
(a) In the event of any insolvency or bankruptcy proceedings, and
any receivership, liquidation, reorganization, arrangement or other similar
proceedings in connection therewith, relative to the Company or to its
creditors, as such, or to its property, and in the event of any
proceedings, for voluntary liquidation, dissolution or other winding-up of
the Company, whether or not involving insolvency or bankruptcy, then the
holder of Superior Indebtedness shall be entitled to receive payment in
full of all principal, premium and interest on all Superior Indebtedness
before the holders of the [DESCRIBE SUBORDINATED DEBT] are entitled to
receive any payment on account of principal, premium or interest upon the
[DESCRIBE SUBORDINATED DEBT], and to that end (but subject to the power of
a court of competent jurisdiction to make other equitable provisions
reflecting the rights conferred in this Agreement upon the Superior
Indebtedness and the holders thereof with respect to the subordinate
indebtedness represented by the [DESCRIBE SUBORDINATED DEBT] and the
holders thereof by a lawful plan of reorganization under applicable
bankruptcy law) the holders of Superior Indebtedness shall be entitled to
receive for application in payment thereof any payment or distribution of
any kind or character, whether in cash or property or securities, which may
be payable or deliverable in any such proceedings in respect of the
[DESCRIBE SUBORDINATED DEBT], except securities which are subordinate and
junior in right of payment to the payment of all Superior Indebtedness then
outstanding;
(b) On or prior to the Subordination Modification Date, (i) in the
event that pursuant to the provisions hereof the [DESCRIBE SUBORDINATED
DEBT] are declared or become due and payable before their expressed
maturity because of an occurrence of an event of default described herein
(under circumstances when the foregoing paragraph (a) shall not be
applicable) or otherwise, no amount shall be paid by the Company in respect
of the principal of or interest on the [DESCRIBE SUBORDINATED DEBT] unless
and until all Superior Indebtedness outstanding at the time the [DESCRIBE
SUBORDINATED DEBT] so become due and payable because of any such event,
shall have been paid in full or payment thereof shall have been provided
for in a manner satisfactory to the holders of such outstanding Superior
Indebtedness, or (ii) in the event that the holders of in excess of 25% of
any issue of the Superior Indebtedness shall have, in good faith, demanded
payment of the entire
________________
* Or debentures or other designation as may be appropriate.
EXHIBIT G
(to Note Agreement)
<PAGE>
principal amount of such Superior Indebtedness after such Superior
Indebtedness shall become due, as a result of a default in respect thereof
or at maturity, if the Company shall have failed to pay such Superior
Indebtedness in full, no amount shall be paid by the Company in respect of
principal or interest on the [DESCRIBE SUBORDINATED DEBT] unless and until
such Superior Indebtedness shall have been paid in full;
(c) On or after the Subordination Modification Date, (i) in the
event that pursuant to the provisions hereof the [DESCRIBE SUBORDINATED
DEBT] are declared or become due and payable before their expressed
maturity because of the occurrence of an event of default described herein
(under circumstances when the foregoing paragraph (a) shall not be
applicable) or otherwise, no amount shall be paid by the Company in respect
of the principal of or interest on the [DESCRIBE SUBORDINATED DEBT] in
excess of current interest payments as provided herein, unless and until
all Superior Indebtedness outstanding at the time the [DESCRIBE
SUBORDINATED DEBT] so become due and payable because of any such event,
shall have been paid in full or payment thereof shall have been provided
for in a manner satisfactory to the holders of such outstanding Superior
Indebtedness, or (ii) in the event that the holders of in excess of 25% of
any issue of the Superior Indebtedness shall have, in good faith, demanded
payment of the entire principal amount of such Superior Indebtedness after
such Superior Indebtedness shall become due, as a result of a default in
respect thereof or at maturity, if the Company shall have failed to pay
such Superior Indebtedness in full, no amount shall be paid by the Company
in respect of principal or interest on the [DESCRIBE SUBORDINATED DEBT]
unless and until such Superior Indebtedness shall have been paid in full;
and
(d) Notwithstanding any of the other provisions of this Agreement,
during the continuance of (x) any default (a "Superior Indebtedness Payment
Default") in the payment of either principal or interest with respect to
any Superior Indebtedness or (y) any default (a "Superior Indebtedness Non-
Payment Default") other than a Superior Indebtedness Payment Default with
respect to any Superior Indebtedness, no payment of principal, interest or
make-whole premium amount shall be made on or with respect to the
indebtedness evidenced by the [DESCRIBE SUBORDINATED DEBT] or any renewals
or extensions thereof for the period (each such period being referred to as
a "Non-Payment Period")
(i) commencing on the date that any one or more of the holders
of Superior Indebtedness shall have given written notice of such
default to the Company and ending on the date (A) 180 days (in the
case of a Superior Indebtedness Payment Default) and (B) 120 days (in
the case of a Superior Indebtedness Non-Payment Default), as the case
may be, after such notice shall have been given, or
(ii) commencing on the date that judicial proceedings shall
have been commenced by one or more holders of Superior Indebtedness
holding an aggregate principal amount of Superior Indebtedness of not
less than $5,000,000 with respect to such default and ending on the
date on which such judicial proceedings shall no longer be pending or
being pursued in good faith by any one or more of the holders of
Superior Indebtedness,
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<PAGE>
provided, however, that upon the expiration of any Non-Payment Period a
subsequent Non-Payment Period shall not commence with respect to a default
attributable to the same facts or circumstances that gave rise to such
expired Non-Payment Period for the period commencing on the expiration of
the most recently ended Non-Payment Period and ending 12 calendar months
thereafter.
The Company shall not make, and the holders of the [DESCRIBE
SUBORDINATED DEBT] shall not accept, any optional prepayment of the [DESCRIBE
SUBORDINATED DEBT] at any time when such optional prepayment would be in
contravention of the terms of any Superior Indebtedness. The provisions of this
section shall not be modified or amended in any respect affecting the rights of
the holders of Superior Indebtedness under this section without the prior
written consent of the holders of the outstanding Superior Indebtedness so
affected, the holders from time to time of Superior Indebtedness being third-
party beneficiaries of the subordination provisions contained in this section.
Each holder of the [DESCRIBE SUBORDINATED DEBT] agrees that prior to
the Subordination Modification Date, notwithstanding any other provisions of
this Agreement: (v) that during a Non-Payment Period (except under
circumstances where the preceding paragraph (a) is applicable) such holder shall
not commence or take any Restricted Enforcement Action (other than acceleration
upon the occurrence of a default in the payment of principal or interest on the
Superior Indebtedness); and (w) that no event of default shall be deemed to have
occurred, and such holder of the [DESCRIBE SUBORDINATED DEBT] shall not commence
or take any Restricted Enforcement Action (other than acceleration upon the
occurrence of a default in the payment of principal or interest on the Superior
Indebtedness) solely as a result of the Company's failure to make payment of
principal, interest or make-whole premium amount which it is not permitted to
make as provided in the preceding paragraph (d) so long as each such payment so
suspended or not so made as a result of the operation of the preceding paragraph
(d) is paid in full on the first day such payment is permitted to be made by the
preceding paragraph (d). Each holder of the [DESCRIBE SUBORDINATED DEBT]
further agrees that from and after the Subordination Modification Date, (x)
during a Non-Payment Period (except under circumstances in which the preceding
paragraph (a) is applicable) such holder shall not commence or take any
Restricted Enforcement Action (other than (1) acceleration during the Non-
Payment Period described in the preceding subparagraph (d)(ii) or (2) the
institution of proceedings in equity for specific performance after commencement
of judicial proceedings by holders of Superior Indebtedness as described in the
preceding subparagraph (d)(ii)); and (y) during a Non-Payment Period described
in the preceding subparagraph (d)(i) no event of default shall be deemed to have
occurred solely as a result of the Company's failure to make payment of
principal, interest or make-whole premium amount which it is not permitted to
make as provided in the preceding paragraph (d) so long as each such payment so
suspended or not so made as a result of the operation of the preceding paragraph
(d) is paid in full on the first day such payment is permitted to be made by the
preceding paragraph (d). Each holder of the [DESCRIBE SUBORDINATED DEBT]
further agrees that no event of default shall be deemed to have occurred, and
such holder of the [DESCRIBE SUBORDINATED DEBT] shall not commence or take any
Restricted Enforcement Action solely as a result of a default with respect to
any Superior
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<PAGE>
any Superior Indebtedness which gave rise to a Non-Payment Period described in
the preceding paragraph (d) if such default with respect to such Superior
Indebtedness shall have been either effectively waived by the holder or holders
of such Superior Indebtedness or cured by the Company, in either case, prior to
the expiration of the Non-Payment Period which resulted from such default with
respect to such Superior Indebtedness.
Any dividend, distribution or payment of any kind or character,
whether in cash, property or securities (other than securities that are
subordinated and junior in right of payment to the payment of all (x) Superior
Indebtedness that may at the time be outstanding or (y) obligations evidenced by
securities that may have been issued in exchange for or in lieu of Superior
Indebtedness in a reorganization plan in connection with proceedings of the type
referred to in the preceding paragraph (a)) which shall be made upon or in
respect of the indebtedness evidenced by the [DESCRIBE SUBORDINATED DEBT], or
any renewals or extensions thereof, in contravention of any of the terms of
these subordination provisions, shall be paid over to the holders of Superior
Indebtedness, pro rata, for application in payment thereof unless and until the
Superior Indebtedness shall have been paid and satisfied in full and, until so
paid over, the same shall be held in trust by such holders of the [DESCRIBE
SUBORDINATED DEBT] as the property of the holders of such Superior Indebtedness.
The Company covenants and agrees, for the benefit of each and every
present and future holder of Superior Indebtedness that in the event that the
[DESCRIBE SUBORDINATED DEBT] are declared or become due and payable because of
an occurrence of an event of default described herein or otherwise, then each
holder of any Superior Indebtedness then outstanding shall have the right to
declare immediately due and payable on demand all or any part of such Superior
Indebtedness owing and payable to such holder, regardless of any other maturity
or terms of said Superior Indebtedness; and if and when any such default has
occurred, or any notice of default under the terms hereof may be served upon the
Company, then in each such event the Company shall and hereby agrees that it
will immediately notify the holders of the Superior Indebtedness of such default
or notice thereof, as the case may be.
Upon the payment of all amounts of Superior Indebtedness as provided
in this section or provision having been made for such payment in cash, the
holders of the [DESCRIBE SUBORDINATED DEBT] will be subrogated to the rights of
the holders of Superior Indebtedness to receive payments or distributions of
assets of the Company applicable to the Superior Indebtedness until the
principal of, and prepayment charge, if any, and interest on, the [DESCRIBE
SUBORDINATED DEBT] shall be paid in full; and no payments or distributions
(direct or indirect) to the holders of the Superior Indebtedness of cash,
property or securities to which the holders of the [DESCRIBE SUBORDINATED DEBT]
would be entitled except for the provisions of this section shall, as between
the Company, its creditors (other than the holders of Superior Indebtedness) and
the holders of the [DESCRIBE SUBORDINATED DEBT], be deemed to be a payment by
the Company to or on account of the [DESCRIBE SUBORDINATED DEBT], it being
understood that the provisions of this section are, and are intended, solely for
the purpose of defining the
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<PAGE>
relative rights of the holders of the [DESCRIBE SUBORDINATED DEBT], on the one
hand, and the holders of Superior Indebtedness, on the other hand.
No right of any present or future holder of any Superior Indebtedness
of the Company to enforce subordination as herein provided shall at any time or
in any way be prejudiced or impaired by any failure to act on the part of the
Company, or by any noncompliance by the Company with the terms, provisions and
covenants of this Agreement, regardless of any knowledge thereof that any such
holder of Superior Indebtedness may have or be otherwise charged with.
The provisions hereof are solely for the purpose of defining the
relative rights of the holders of Superior Indebtedness on the one hand, and the
holders of the [DESCRIBE SUBORDINATED DEBT] on the other hand, and nothing
herein shall impair, as between the Company and the holder of the [DESCRIBE
SUBORDINATED DEBT], the obligation of the Company, which is unconditional and
absolute, to pay to the holders of the [DESCRIBE SUBORDINATED DEBT] the
principal, premium, if any, and interest hereon in accordance with its terms,
nor shall anything herein prevent the holder of any [DESCRIBE SUBORDINATED DEBT]
from exercising all remedies otherwise permitted by applicable law or hereunder
upon default hereunder, subject to the rights, if any, of holders of Superior
Indebtedness as herein provided.
Each and every holder of the [DESCRIBE SUBORDINATED DEBT] by
acceptance thereof shall undertake and agree for the benefit of each holder of
Superior Indebtedness to execute, verify, deliver and file any proofs of claim,
consents, assignments or other instruments which any holder of Superior
Indebtedness may at any time require in order to prove and realize upon any
rights or claims pertaining to the [DESCRIBE SUBORDINATED DEBT] and to
effectuate the full benefit of the subordination contained herein; and upon
failure of any such holder of any of the [DESCRIBE SUBORDINATED DEBT] so to do,
any such holder of Superior Indebtedness shall be deemed to be irrevocably
appointed the agent and attorney-in-fact of such holder to execute, verify,
deliver and file any such proofs of claim, consents, assignments or other
instruments.
"CIGNA Debt" shall mean the 9.80% Senior Notes of the Company issued
under the separate Note Agreements dated as of December 1, 1989, between the
Company and Connecticut General Life Insurance Company, on behalf of one or more
separate accounts, Insurance Company of North America, CIGNA Property and
Casualty Insurance Company, Connecticut General Life Insurance Company and
Phoenix Mutual Life Insurance Company, respectively.
"First Union Debt" shall mean the Floating Rate Senior Installment
Notes of the Company issued under the Loan Agreement dated as of April 1, 1991,
between the Company and First Union National Bank of North Carolina.
"Restricted Enforcement Action" shall mean (i) any acceleration of the
[DESCRIBE SUBORDINATED DEBT] hereunder, (ii) any act which reasonably could be
expected to cause the Company to be subject to any bankruptcy, reorganization,
arrangement,
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<PAGE>
insolvency, or other proceeding for relief under any bankruptcy or
similar law or laws for the relief of debtors, or (iii) the institution of any
proceeding at law or in equity for the payment of any principal, interest or
premium, if any, under the [DESCRIBE SUBORDINATED DEBT].
"Subordination Modification Date" shall mean the first date after
which all indebtedness in respect of the CIGNA Debt and the First Union Debt
shall have been discharged.
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<PAGE>
EXHIBIT 10.38
[CONFORMED COPY]
================================================================================
Trans Leasing International, Inc.
Amended and Restated Loan Agreement
Dated as of November 30, 1994
Re: Loan Agreement dated as of April 1, 1991
and
$10,000,000 Floating Rate Senior Installment Notes
Due March 31, 1995
================================================================================
<PAGE>
Table of Contents
(Not a part of the Agreement)
Section Heading Page
Section 1. Description of Notes and Commitment........................ 1
Section 1.1. Description of Notes.................................... 1
Section 1.2. Commitment, Closing Date................................ 2
Section 1.3. Interest Rate on Notes.................................. 2
Section 1.4. Additional Costs........................................ 2
Section 1.5. Limitation on LIBOR Interest Rate....................... 3
Section 1.6. Illegality.............................................. 4
Section 1.7. Certain Conversions Pursuant to Sections 1.4,
1.5 and 1.6; Short Final Interest Period................ 4
Section 1.8. Compensation............................................ 4
Section 1.9. Set-Off................................................. 5
Section 2. Repayment and Prepayment of Notes.......................... 5
Section 2.1. Required Principal Payments............................. 5
Section 2.2. Optional Prepayment..................................... 5
Section 2.3. Prepayment on Change of Control......................... 6
Section 2.4. Notice of Prepayments................................... 7
Section 2.5. Allocation of Principal Payments and Prepayments........ 7
Section 2.6. Direct Payment.......................................... 7
Section 2.7. Business Days........................................... 7
Section 3. Representations............................................ 8
Section 3.1. Representations of the Company.......................... 8
Section 3.2. Representations of the Lender........................... 8
Section 4. Closing Conditions......................................... 8
Section 4.1. Closing Certificate..................................... 8
Section 4.2. Legal Opinions.......................................... 8
Section 4.3. Satisfactory Proceedings................................ 8
Section 4.4. Consent of Holders of Other Indebtedness................ 8
Section 4.5. Certificates and Policies of Insurance.................. 9
Section 4.6. Payment of Fee.......................................... 9
Section 4.7. Payment of Fees of Special Counsel...................... 9
Section 4.8. Waiver of Conditions.................................... 9
Section 5. Company Covenants.......................................... 9
Section 5.1. Corporate Existence, etc................................ 9
Section 5.2. Insurance............................................... 9
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<PAGE>
Section 5.3. Taxes, Claims for Labor and Materials, Compliance with
Laws.................................................... 10
Section 5.4. Maintenance, etc........................................ 10
Section 5.5. Nature of Business...................................... 10
Section 5.6. Consolidated Tangible Net Worth......................... 11
Section 5.7. Permitted Debt.......................................... 11
Section 5.8. Limitations on Liabilities.............................. 11
Section 5.9. Fixed Charge Coverage................................... 11
Section 5.10. Limitation on Liens..................................... 12
Section 5.11. Restricted Payments..................................... 13
Section 5.12. Limitation on Long-Term Leases.......................... 14
Section 5.13. Mergers, Consolidations and Sales of Assets............. 14
Section 5.14. Guaranties.............................................. 16
Section 5.15. Purchase of Notes....................................... 16
Section 5.16. Transactions with Affiliates............................ 16
Section 5.17. Investments............................................. 17
Section 5.18. Termination of Pension Plans............................ 18
Section 5.19. Reports and Rights of Inspection........................ 18
Section 5.20. Consolidated Tax Returns................................ 21
Section 5.21. Sale of Eligible Securitization Assets.................. 21
Section 6. Events of Default and Remedies Therefor.................... 22
Section 6.1. Events of Default....................................... 22
Section 6.2. Acceleration of Maturities.............................. 23
Section 6.3. Rescission of Acceleration.............................. 24
Section 7. Amendments, Waivers and Consents........................... 24
Section 7.1. Consent Required........................................ 24
Section 7.2. Effect of Amendment or Waiver........................... 24
Section 7.3. Solicitation of Noteholders............................. 25
Section 8. Interpretation of Agreement; Definitions................... 25
Section 8.1. Definitions............................................. 25
Section 8.2. Accounting Principles................................... 34
Section 9. Miscellaneous.............................................. 35
Section 9.1. Registered Notes........................................ 35
Section 9.2. Exchange of Notes....................................... 35
Section 9.3. Loss, Theft, etc. of Notes.............................. 35
Section 9.4. Expenses, Stamp Tax Indemnity........................... 36
Section 9.5. Powers and Rights Not Waived; Remedies Cumulative....... 36
Section 9.6. Waiver of Jury Trial; Jurisdiction and Venue............ 36
Section 9.7. Notices................................................. 37
Section 9.8. Non-Business Day........................................ 37
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<PAGE>
Section 9.9. Successors and Assigns.................................. 37
Section 9.10. Survival of Covenants and Representations............... 37
Section 9.11. Severability............................................ 37
Section 9.12. Governing Law........................................... 37
Section 9.13. Captions................................................ 37
Section 9.14. Requisite Approval...................................... 38
Section 9.15. Affirmation............................................. 38
Signatures.................................................................. 39
Attachments to Loan Agreement:
Schedule I -- Name and Address of Lender
Exhibit A -- Form of Floating Rate Senior Installment Note
Exhibit B -- Closing Certificate of the Company
Exhibit C -- Description of Special Counsel's Closing Opinion
Exhibit D -- Description of Closing Opinion of Counsel to the Company
Exhibit E -- Subordination Provisions Applicable to Subordinated Debt
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<PAGE>
Trans Leasing International, Inc.
3000 Dundee Road
Northbrook, Illinois 60062
Amended and Restated Loan Agreement
Re: Loan Agreement dated as of April 1, 1991
and
$10,000,000 Floating Rate Senior Installment Notes
Due March 31, 1995
Dated as of
November 30, 1994
First Union National Bank
of North Carolina
One First Union Center
Charlotte, North Carolina 28288-0735
Attention: Reginald Imamura
Ladies and Gentlemen:
The undersigned, Trans Leasing International, Inc., a Delaware
corporation (the "Company"), desires to amend certain covenants contained in the
Loan Agreement dated as of April 1, 1991 (the "Loan Agreement") entered into by
the Company with you, and in order to accomplish this objective the Company
desires to amend and restate the Loan Agreement. Therefore, in consideration of
the premises and of the mutual agreements contained herein, the Company agrees
with you that the Loan Agreement to which you are a party shall be amended and
restated in its entirety as follows:
Section 1. Description of Notes and Commitment.
Section 1.1. Description of Notes. The Company will authorize a loan
of $10,000,000, to be evidenced by $10,000,000 principal amount of its Floating
Rate Senior Installment Notes (the "Notes"), to be dated the date of issue, to
bear interest from such date at the rate determined in the manner set forth in
(S)1.3 below, payable semiannually on the last day of March and September in
each year (commencing September 30, 1991) and at maturity, to be expressed to
mature on March 31, 1995, and to be substantially in the form attached hereto as
Exhibit A. The Notes are not subject to prepayment or redemption at the option
of the Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts set forth in (S)2 of this Agreement. The term
"Notes" as used herein shall include each Note delivered pursuant to this
Agreement. You are hereinafter sometimes referred to as the "Lender". Unless
otherwise defined, the capitalized terms used herein are defined in (S)8.
<PAGE>
Trans Leasing International, Inc. Amended and Restated Loan Agreement
Section 1.2. Commitment, Closing Date. Subject to the terms and
conditions hereof and on the basis of the representations and warranties
hereinafter set forth, the Company agrees to borrow from you, and you agree to
lend to the Company, the principal amount of $10,000,000 on the Closing Date
hereinafter mentioned, and to evidence said loan the Company will issue Notes in
the principal amount of such loan.
Delivery of the Notes will be made at the offices of Chapman and
Cutler, 111 West Monroe Street, Chicago, Illinois 60603, against payment
therefor in Federal or other funds current and immediately available at the
principal office of Continental Bank N.A. in the amount of the loan at 10:00
A.M., Chicago time, on April 26, 1991 or such later date (but not later than
April 30, 1991) as the Company shall specify by not less than five days' prior
written notice to you (the "Closing Date"). The Notes delivered to you on the
Closing Date will be delivered to you in the form of a single registered Note of
the principal amount of the loan to be made by you on such Closing Date for the
full amount of your loan (unless different denominations are specified by you),
registered in your name or in the name of such nominee as you may specify and in
substantially the form attached hereto as Exhibit A, all as you may specify at
any time prior to the date fixed for delivery.
Section 1.3. Interest Rate on Notes. Except as otherwise provided
in (S)1.7, the Notes will bear interest at the Adjusted LIBOR Rate, payable
semiannually on the last day of March and September in each year (commencing
September 30, 1991) and at maturity and will bear interest on overdue principal
and (to the extent legally enforceable) on any overdue installment of interest
at the rate of 2% over the Adjusted LIBOR Rate or the Alternate Rate then borne
by the Notes, as the case may be, after the date due (provided that after March
31, 1995, such rate shall be 2% over the Alternate Rate), whether by
acceleration or otherwise, until paid. The Adjusted LIBOR Rate for each
Interest Period shall be determined by the Lender on the applicable Interest
Reset Date. The Company shall notify the Lender by 11:00 A.M., Charlotte time,
on or prior to the applicable Interest Reset Date which notice shall specify the
duration of the applicable Interest Period. In the event the Company shall
fail to notify the Lender as to the relevant Interest Period, the duration of
the applicable Interest Period shall be one month (or, in the case of the final
Interest Period, such shorter duration as shall result in such Interest Period
ending on March 31, 1995). All requests and notifications by the Company with
respect to an Interest Period shall be irrevocable. The Lender is hereby
authorized to act in reliance upon telephonic instructions for the determination
of the relevant Interest Period given by any Person purporting to be a Person
from time to time designated to act on behalf of the Company in a written notice
from the Company to the Lender, and the Company hereby indemnifies the Lender
from and against any liabilities, losses or costs ensuing from such reliance.
Each telephonic request shall be promptly confirmed in writing, but all such
telephonic requests shall be fully binding upon the Company notwithstanding the
failure of the Lender to receive such a written confirmation. Interest on the
Notes shall be computed on the basis of a 360-day year of twelve 30-day months.
Section 1.4. Additional Costs. (a) The Company shall pay to the
Lender from time to time such amounts as the Lender may determine to be
necessary to compensate it for any increased costs which the Lender determines
are attributable to its making or maintaining
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<PAGE>
Trans Leasing International, Inc. Amended and Restated Loan Agreement
the loan evidenced by the Notes, or any reduction in any amount receivable by
the Lender hereunder in respect of the Notes (such increases in costs and
reductions in amounts receivable being herein called "Additional Costs"),
resulting from any Regulatory Change which:
(i) imposes any new tax on the Lender or changes the basis of
taxation of any amounts payable to the Lender under this Agreement or the
Notes (other than any Regulatory Change which affects taxes measured by or
imposed upon the overall gross receipts or net income of the Lender by the
jurisdiction in which the Lender has its principal office or by the United
States federal government); or
(ii) imposes, modifies or deems applicable any reserve, special
deposit, minimum capital, capital ratio or similar requirements relating to
any extensions of credit or other assets of, or any deposits with or other
liabilities of, the Lender (including any deposits referred to in the
definition of "LIBOR"); or
(iii) imposes any other condition affecting this Agreement or the
Notes.
The Lender will notify the Company of any event or condition which will entitle
the Lender to compensation pursuant to this (S)1.4 as promptly as practicable
after it obtains knowledge thereof and determines to request such compensation
(which determination the Lender will endeavor to make with reasonable
promptness). The Lender will furnish the Company with a certificate setting
forth in good faith and in reasonable detail the basis and amount of each
request by the Lender for compensation under this (S)1.4. The Company will be
obligated to provide compensation to the Lender under this (S)1.4 only to the
extent that the Lender has requested additional compensation generally from
Persons to which the Lender has extended loans similar in nature to the loan
made to the Company pursuant to this Agreement and with respect to which the
Lender has the right to request additional compensation pursuant to a provision
similar to this (S)1.4.
(b) Determinations and allocations by the Lender for purposes of this
(S)1.4 of the effect of any Regulatory Change pursuant to (S)1.4 on its costs or
rate of return of maintaining the loan evidenced by the Notes, or on amounts
receivable by it in respect of the Notes, and of the amounts required to
compensate the Lender under this (S)1.4, shall be conclusive in the absence of
manifest error, provided that such determinations and allocations are made on a
reasonable basis.
(c) If the Lender provides notice to the Company seeking compensation for
Additional Costs pursuant to (S)1.4(a), the Company shall have the privilege of
specifying, by written notice to the Lender, that the provisions of (S)1.7 shall
be applicable.
Section 1.5. Limitation on LIBOR Interest Rate. Anything herein to
the contrary notwithstanding, if, on or prior to the determination of LIBOR for
any Interest Period:
(a) the Lender determines (which determination shall be conclusive)
that quotations of interest rates for the relevant deposits referred to in
the definition of
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<PAGE>
Trans Leasing International, Inc. Amended and Restated Loan Agreement
"LIBOR" are not being provided in the relevant amounts or for the relevant
maturities for purposes of determining rates of interest for Eurodollar
loans as provided herein; or
(b) the Lender determines (which determination shall be conclusive)
that the relevant rates of interest referred to in the definition of
"LIBOR" upon which the Adjusted LIBOR Rate for such Interest Period is to
be determined will not adequately cover the funding cost to the Lender of
maintaining the loan evidenced by the Notes for such Interest Period;
then the Lender shall give the Company prompt notice thereof, and so long as
such condition remains in effect, the provisions of (S)1.7 shall be applicable.
Section 1.6. Illegality. Notwithstanding any other provision of
this Agreement, in the event that it becomes unlawful for the Lender to make or
maintain the loan evidenced by the Notes either because (i) the interest rate
borne by the Notes is determined by referring to LIBOR or (ii) of the manner in
which the Lender is funding the loan evidenced by the Notes, then the Lender
shall promptly notify the Company thereof and the provisions of (S)1.7 shall be
applicable.
Section 1.7. Certain Conversions Pursuant to Sections 1.4, 1.5 and
1.6; Short Final Interest Period. If the Company shall provide the Lender
with notice pursuant to (S)1.4(c) specifying that this (S)1.7 shall apply, then
the interest rate borne by the Notes shall be automatically converted to the
Alternate Rate on the last day of the then current Interest Period (or on such
earlier date as the Company may specify in such notice to the Lender); provided
that on or before the date of such conversion to the Alternate Rate, the Company
shall have paid to the Lender such amounts as are required by (S)1.4 to
compensate the Lender for Additional Costs incurred by it during the period
ending on the conversion date. If the Lender shall provide the Company with
notice pursuant to the requirements of (S)1.5 or (S)1.6 of circumstances that
give rise to the application of (S)1.7, then the interest rate borne by the
Notes shall be automatically converted to the Alternate Rate on the last day of
the then current Interest Period (or in the case of (S)1.6 hereof on such
earlier date as the Lender may specify to the Company). If the Lender gives
notice to the Company that the circumstances specified in (S)1.4, (S)1.5 or
(S)1.6 which gave rise to the conversion no longer exist (which the Lender
agrees to do promptly upon such circumstances ceasing to exist), then the
interest rate borne by the Notes shall be automatically converted on the first
day of the next succeeding Interest Period to the Adjusted LIBOR Rate. If the
Interest Period immediately preceding the Interest Period ending March 31, 1995
shall end on a date which is less than one month prior to March 31, 1995, then
the interest rate borne by the Notes for the Interest Period ending on March 31,
1995 shall be the Alternate Rate.
Section 1.8. Compensation. The Company shall pay to the Lender,
upon the request of the Lender, such amount or amounts as shall be sufficient
(in the reasonable opinion of the Lender) to compensate it for any loss, cost or
expense which the Lender incurs and determines are attributable to any payment
or prepayment for any reason (including, without limitation, pursuant to (S)2.2,
(S)2.4 or by reason of the acceleration of the Notes
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<PAGE>
Trans Leasing International, Inc. Amended and Restated Loan Agreement
pursuant to (S)6 hereof) on a date other than the last day of an Interest
Period. Without limiting the effect of the preceding sentence, such compensation
shall include an amount equal to the excess, if any, of (i) the amount of
interest which otherwise would have accrued on the principal amount so paid or
prepaid for the period from the date of such payment or prepayment to the last
day of the then current Interest Period at the applicable rate of interest for
the Notes over (ii) the interest component of the amount the Lender would have
bid in the London Interbank market for U.S. dollar deposits of leading banks in
amounts comparable to such principal amount and with maturities comparable to
such period (as reasonably determined by the Lender). The Lender will furnish
the Company with a certificate setting forth in good faith and reasonable detail
the basis and amount of each request by the Lender for compensation under this
(S)1.8. Such certificate shall be conclusive in the absence of manifest error,
provided that such determinations and allocations are made on a reasonable
basis.
Section 1.9. Set-Off. The Company agrees that, in addition to (and
without limitation of) any right of set-off, banker's lien or counterclaim the
Lender may otherwise have, the Lender shall be entitled, at its option, to set
off and apply balances held by it for account of the Company at any of its
offices or affiliates, in U.S. dollars or in any other currency, whether or not
matured, against any principal of or interest on the Notes, or any other amount
payable to the Lender hereunder, which is not paid when due (regardless of
whether such balances are then due to the Company), in which case it shall
promptly notify the Company thereof, provided that the Lender's failure to give
such notice shall not affect the validity thereof.
Section 2. Repayment and Prepayment of Notes.
Section 2.1. Required Principal Payments. The Company agrees that (i) on
September 30, 1991, March 31, 1992, September 30, 1992 and March 31, 1993 it
will pay and there shall become due and payable on the principal Indebtedness
evidenced by the Notes the sum of $1,000,000 and (ii) on September 30, 1993,
March 31, 1994 and September 30, 1994 it will pay and there shall become due and
payable on the principal Indebtedness evidenced by the Notes the sum of
$1,500,000. The entire remaining principal amount of the loan shall become due
and payable on March 31, 1995. No premium shall be payable in connection with
any required principal payment made pursuant to this (S)2.1. For purposes of
this (S)2.1, any prepayment of less than all of the outstanding Notes pursuant
to (S)2.2 shall be deemed to be applied first, to the amount of principal
scheduled to be repaid on March 31, 1995, and then, to the remaining scheduled
principal payments in inverse chronological order.
Section 2.2. Optional Prepayment. In addition to the payments required by
(S)2.1, upon compliance with (S)2.4 the Company shall have the privilege, on any
Optional Prepayment Date on or after, but not prior to, March 31, 1992, of
prepaying the Indebtedness evidenced by the outstanding Notes, in whole or in
part (but if in part, then in units of $500,000 or an integral multiple in
excess thereof), by payment of the principal amount of the Indebtedness
evidenced by the Notes and accrued interest thereon to the date of such
prepayment.
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
"Optional Prepayment Date" shall mean, (i) so long as the Notes bear
interest at the Adjusted LIBOR Rate, any Interest Reset Date, and (ii) so long
as the Notes bear interest at the Alternate Rate, any date upon which the
Company is required to pay interest on the Notes pursuant to (S)1.3.
Section 2.3. Prepayment on Change of Control. (a) In the event that
a Put Event Date shall occur, the Company will give immediate written notice (a
"Company Notice") of such fact to all holders of the Notes. The Company Notice
shall (i) describe the facts and circumstances of such Put Event Date in
reasonable detail, (ii) refer to this (S)2.3 and the rights of the holders of
the Notes to require prepayment of their Notes on the terms and conditions
provided for herein, (iii) contain an offer by the Company to prepay all of the
outstanding Notes in full together with accrued interest to the date of
prepayment, and (iv) set forth the date, which shall be not less than 30 nor
more than 60 days following the date of giving of the Company Notice, on which
the Company will make such prepayment. Each holder of the Notes shall have the
right to accept such offer and require prepayment of the Notes held by such
holder in full by written notice to the Company given within 21 days following
receipt of the Company Notice. The Company shall on the prepayment date set
forth in the Company Notice prepay all Notes held by holders who have accepted
such offer of prepayment.
(b) In the event the Company fails to give the Company Notice as required
above, upon the occurrence of a Put Event Date, each holder of Notes shall have
the right to require the Company to prepay such holder's Notes in full together
with accrued interest thereon to the date of prepayment. Notice of a required
prepayment pursuant to this (S)2.3(b) shall be delivered by any holder of Notes
to the Company not more than 30 days after such holder has actual knowledge of
such Put Event Date. The date of such prepayment shall be the same date as the
Put Event Date or, in the event the Put Event Date shall have occurred prior to
receipt of the notice from a Noteholder, then such prepayment together with
accrued interest thereon shall be on the date designated in, and shall be not
less than five nor more than ten days following the date of, such holder's
notice.
"Grossman Group" shall mean Richard Grossman and his spouse, lineal
descendants, trustees of trusts established for the benefit of such Persons and
executors of the estates of such Persons.
"Put Event Date" shall mean any date upon which a Put Event shall have
occurred.
"Put Event" means any event by which either (i) the Grossman Group shall
fail to own legally and beneficially with full voting power at least 30% of the
Voting Stock of the Company, unless 51% or more of the Voting Stock of the
Company is owned by a corporation having debt obligations rated A or better by
at least two nationally recognized credit rating agencies, one of which shall be
either S&P or Moody's, or (ii) Richard Grossman shall fail to hold the office of
Chairman of the Board or President of the Company and perform the duties of
Chief Executive Officer of the Company.
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<PAGE>
Trans Leasing International, Inc. Amended and Restated Loan Agreement
Section 2.4. Notice of Prepayments. The Company will give notice of
any prepayment of the Notes pursuant to (S)2.2 to each holder thereof not less
than 30 days nor more than 60 days before the date fixed for such optional
prepayment specifying (i) such date, (ii) the section of this Agreement under
which the prepayment is to be made, (iii) the principal amount of the holder's
Notes to be prepaid on such date, and (iv) the accrued interest applicable to
the prepayment. Such notice of prepayment shall also certify all facts which
are conditions precedent to any such prepayment. Notice of prepayment having
been so given, the aggregate principal amount of the Notes specified in such
notice, together with accrued interest thereon shall become due and payable on
the prepayment date.
Section 2.5. Allocation of Principal Payments and Prepayments.
Except in the case of any prepayment pursuant to (S)2.3, all principal payments
shall be applied on all outstanding Notes ratably in accordance with the unpaid
principal amounts thereof.
Section 2.6. Direct Payment. Notwithstanding anything to the
contrary in this Agreement or the Notes, in the case of any Note owned by you or
your nominee or owned by any other institutional holder who has given written
notice to the Company requesting that the provisions of this (S)2.6 shall apply,
the Company will promptly and punctually pay when due the principal thereof and
interest thereon, without any presentment thereof, directly to you, your nominee
or such subsequent holder at your address or your nominee's address set forth in
Schedule I or at such other address as you, your nominee or such subsequent
holder may from time to time designate in writing to the Company or, if a bank
account is designated for you or your nominee on Schedule I hereto or in any
written notice to the Company from you, your nominee or any such subsequent
holder, the Company will make such payments in immediately available funds to
such bank account, marked for attention as indicated, or in such other manner or
to such other account of you, your nominee or such holder in any bank in the
United States as you, your nominee or any subsequent holder may from time to
time direct in writing. The holder of any Notes to which this (S)2.6 applies
agrees that in the event it shall sell or transfer any such Notes (i) it will,
prior to the delivery of such Notes (unless it has already done so), make a
notation thereon of all principal, if any, prepaid on such Notes and will also
note thereon the date to which interest has been paid on such Notes, and (ii) it
will promptly notify the Company of the name and address of the transferee of
any Notes so transferred. With respect to Notes to which this (S)2.6 applies,
the Company shall be entitled to presume conclusively that the original or such
subsequent institutional holder as shall have requested the provisions hereof to
apply to its Notes remains the holder of such Notes until (y) the Company shall
have received notice of the transfer of such Notes, and of the name and address
of the transferee, or (z) such Notes shall have been presented to the Company as
evidence of the transfer.
Section 2.7. Business Days. If any payment of principal and/or
interest on the Notes shall fall due on any day which is not a Business Day,
then payment shall be made on the next succeeding Business Day.
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<PAGE>
Trans Leasing International, Inc. Amended and Restated Loan Agreement
Section 3. Representations.
Section 3.1. Representations of the Company. The Company represents
and warrants that all representations set forth in the form of certificate
attached hereto as Exhibit B are true and correct as of the date hereof and are
incorporated herein by reference with the same force and effect as though herein
set forth in full.
Section 3.2. Representations of the Lender. You represent, and in
entering into this Agreement the Company understands, that you are making the
loan evidenced by the Notes in the normal course of your banking or lending
operations or for the purpose of investment and in any case not with a view to
the distribution thereof, and that you have no present intention of selling,
negotiating or otherwise disposing of the Notes; provided that the disposition
of your property shall at all times be and remain within your control. You
further represent that you are not funding the loan with the assets of any
separate account in which any employee benefit plan has any interest. As used
in this Section, the terms "separate account" and "employee benefit plan" shall
have the respective meanings assigned to them in ERISA.
Section 4. Closing Conditions.
Your obligation to consummate the loan on the Closing Date shall be
subject to the performance by the Company of its agreements hereunder which by
the terms hereof are to be performed at or prior to the time of delivery of the
Notes and to the following further conditions precedent:
Section 4.1. Closing Certificate. Concurrently with the delivery of
Notes to you on the Closing Date, you shall have received a certificate dated
the Closing Date, signed by the President or a Vice President of the Company
substantially in the form attached hereto as Exhibit B, the truth and accuracy
of which shall be a condition to your obligation to purchase the Notes proposed
to be sold to you.
Section 4.2. Legal Opinions. Concurrently with the delivery of
Notes to you on the Closing Date, you shall have received from Chapman and
Cutler, who are acting as your special counsel in this transaction, and from
Kirkland & Ellis, counsel for the Company, their respective opinions dated the
Closing Date, in form and substance satisfactory to you, and covering the
matters set forth in Exhibits C and D, respectively, hereto.
Section 4.3. Satisfactory Proceedings. All proceedings taken in
connection with the transactions contemplated by this Agreement, and all
documents necessary to the consummation thereof, shall be satisfactory in form
and substance to you and your special counsel, and you shall have received a
copy (executed or certified as may be appropriate) of all legal documents or
proceedings taken in connection with the consummation of said transactions.
Section 4.4. Consent of Holders of Other Indebtedness. On or prior
to the Closing Date, any notice, consent or approvals required to be obtained
from any holder or holders
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<PAGE>
Trans Leasing International, Inc. Amended and Restated Loan Agreement
of any outstanding Indebtedness of the Company and any amendments of agreements
pursuant to which any Indebtedness may have been issued which shall be necessary
to permit the consummation of the transactions contemplated hereby shall have
been obtained and all such notices, consents or amendments shall be satisfactory
in form and substance to you and your special counsel.
Section 4.5. Certificates and Policies of Insurance. On or prior to
the Closing Date, the Company shall furnish to you copies of insurance policies
and certificates of insurance demonstrating that the insurance coverage required
by (S)5.2 is in full force and effect on the Closing Date.
Section 4.6. Payment of Fee. On the Closing Date the Company shall
have paid to you an origination fee in the amount of $25,000.
Section 4.7. Payment of Fees of Special Counsel. On the Closing
Date, the Company shall have paid the reasonable fees and expenses of your
special counsel.
Section 4.8. Waiver of Conditions. If on the Closing Date the
Company fails to tender to you the Notes to be issued to you on such date or if
the conditions specified in this (S)4 have not been fulfilled, you may thereupon
elect to be relieved of all further obligations under this Agreement. Without
limiting the foregoing, if the conditions specified in this (S)4 have not been
fulfilled, you may waive compliance by the Company with any such condition to
such extent as you may in your sole discretion determine. Nothing in this
(S)4.8 shall operate to relieve the Company of any of its obligations hereunder
or to waive any of your rights against the Company.
Section 5. Company Covenants.
From and after the Closing Date and continuing so long as any amount
remains unpaid on any Note:
Section 5.1. Corporate Existence, etc. The Company will preserve
and keep in force and effect, and will cause each Subsidiary to preserve and
keep in force and effect, its corporate existence and all licenses and permits
material and necessary to the proper conduct of its business, provided that the
foregoing shall not prevent any transaction permitted by (S)5.13.
Section 5.2. Insurance. The Company will maintain, and will cause
each Subsidiary to maintain, insurance coverage by financially sound and
reputable insurers in such forms and amounts and against such risks as are
customary for corporations of established reputation engaged in the same or a
similar business and owning and operating similar properties. In lieu of or
supplemental to such insurance, the Company may adopt such other plan or method
of protection (an "insurance plan"), whether by the establishment of an
insurance fund or reserve to be held and applied to make good losses from
casualties, or otherwise, and conforming to the practices of similar
corporations maintaining systems of self-insurance, as determined by the Board
of Directors of the Company and as shall be
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<PAGE>
Trans Leasing International, Inc. Amended and Restated Loan Agreement
consistent with GAAP. The Company shall, concurrently with its adoption of any
such insurance plan, furnish to you a certificate of an actuary or other
qualified person that such insurance plan is adequate.
Section 5.3. Taxes, Claims for Labor and Materials, Compliance with
Laws. The Company will promptly pay and discharge, and will cause each
Subsidiary promptly to pay and discharge, all lawful taxes, assessments and
governmental charges or levies imposed upon the Company or such Subsidiary,
respectively, or upon or in respect of all or any part of the property or
business of the Company or such Subsidiary, all trade accounts payable in
accordance with usual and customary business practice, and all claims for work,
labor or materials, which if unpaid might become a Lien upon any property of the
Company or such Subsidiary, the amount of which when added to the amount of all
other such Liens would exceed $10,000 in the aggregate; provided the Company or
such Subsidiary shall not be required to pay any such tax, assessment, charge,
levy, account payable or claim if (i) the validity, applicability or amount
thereof is being contested in good faith by appropriate actions or proceedings
which will prevent the forfeiture or sale of any property of the Company or such
Subsidiary or any material interference with the use thereof by the Company or
such Subsidiary, and (ii) the Company or such Subsidiary shall set aside on its
books, reserves deemed by it to be adequate with respect thereto. The Company
will promptly comply and will cause each Subsidiary to comply with all laws,
ordinances or governmental rules and regulations to which it is subject,
including without limitation, the Occupational Safety and Health Act of 1970,
ERISA and all laws, ordinances, governmental rules and regulations relating to
environmental protection in all applicable jurisdictions, except for violations
thereof which would neither materially and adversely affect the properties,
business, prospects, profits or condition of the Company or its Subsidiaries nor
result in any Lien upon any property of the Company or any Subsidiary, the
amount of which when added to the amount of all other such Liens would exceed
$10,000 in the aggregate.
Section 5.4. Maintenance, etc. The Company will maintain, preserve
and keep, and will cause each Subsidiary to maintain, preserve and keep, its
properties which are used or useful in the conduct of its business (whether
owned in fee or a leasehold interest) in good repair and working order and from
time to time will make all necessary repairs, replacements, renewals and
additions so that at all times the efficiency thereof shall be maintained.
Section 5.5. Nature of Business. Neither the Company nor any
Subsidiary will engage in any business if, as a result, either (i) the general
nature of the business, taken on a consolidated basis, which would then be
engaged in by the Company and its Subsidiaries would be substantially changed
from the leasing of property under "sales type," "direct financing" or
"operating" leases, the sale of property on conditional sale contracts, the
financing of lease receivables, installment sale contract receivables and
revolving credit receivables and related business engaged in by the Company and
its Subsidiaries on the date of this Agreement, or (ii) less than 80% of the
gross revenue of the Company and its Subsidiaries (determined on a consolidated
basis in accordance with GAAP) would be
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<PAGE>
Trans Leasing International, Inc. Amended and Restated Loan Agreement
derived from the activities described in clause (i) above related to equipment
which has an original cost of less than $75,000.
Section 5.6. Consolidated Tangible Net Worth. The Company will at
all times keep and maintain Consolidated Tangible Net Worth at an amount not
less than $17,000,000.
Section 5.7. Permitted Debt. The Company will not and will not
permit any Subsidiary to create, assume or incur or in any manner become or
remain liable in respect of any Debt, except:
(a) the Notes;
(b) Senior Debt of the Company;
(c) Subordinated Debt of the Company;
(d) Debt of the Company secured by Liens permitted by (S)5.10;
(e) Securitized Debt secured by Liens permitted by (S)5.10;
(f) Debt outstanding on the date hereof and reflected on the
consolidated balance sheets of the Company and its Subsidiary at
December 31, 1990; and
(g) Debt of a Subsidiary to the Company or to a Wholly-owned
Subsidiary.
Section 5.8. Limitations on Liabilities. The Company will not at any
time permit:
(a) the aggregate amount of Adjusted Total Liabilities to exceed an
amount equal to 400% of Adjusted Tangible Net Worth; or
(b) Subordinated Funded Debt to exceed an amount equal to 150% of
Consolidated Tangible Net Worth; or
(c) the aggregate amount of Unencumbered Assets to be less than an
amount equal to 120% of the aggregate principal amount of outstanding
Unsecured Senior Debt.
Section 5.9. Fixed Charge Coverage. For each period of four
consecutive fiscal quarters ending on the last day of each fiscal quarter, Net
Income Available for Fixed Charges shall have been an amount which was at least
115% of Fixed Charges for such period of four fiscal quarters; provided that on
the fiscal quarter ending September 30, 1994, Net Income Available for Fixed
Charges shall have been an amount which was at least 115% of Fixed Charges for
the period of only the immediately preceding three consecutive fiscal quarters.
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
Section 5.10. Limitation on Liens. The Company will not, and will
not permit any Subsidiary to, create or incur, or suffer to be incurred or to
exist, any Lien on its or their property or assets, whether now owned or
hereafter acquired, or upon any income or profits therefrom, or transfer any
property for the purpose of subjecting the same to the payment of obligations in
priority to the payment of its or their general creditors, or acquire or agree
to acquire, or permit any Subsidiary to acquire, any property or assets upon
conditional sales agreements or other title retention devices, except:
(a) Liens for property taxes and assessments or governmental charges
or levies and Liens securing claims or demands of mechanics and
materialmen, provided that payment thereof is not at the time required
by (S)5.3;
(b) Liens of or resulting from any judgment or award, the time for
the appeal or petition for rehearing of which shall not have expired,
or in respect of which the Company or a Subsidiary shall at any time
in good faith be prosecuting an appeal or proceeding for a review and
in respect of which a stay of execution pending such appeal or
proceeding for review shall have been secured;
(c) Liens and priority claims incidental to the conduct of business
or the ownership of properties and assets (including liens in
connection with workers' compensation, unemployment insurance and
other like laws, warehousemen's and attorneys' Liens and statutory
landlords' Liens) and deposits, pledges or Liens, not exceeding
$500,000 in aggregate amount, to secure the performance of bids,
tenders or trade contracts, or to secure statutory obligations, surety
or appeal bonds or other Liens of like general nature incurred in the
ordinary course of business and not in connection with the borrowing
of money, provided in each case, the obligation secured is not overdue
for a period of more than 30 days or is being contested in good faith
by appropriate actions or proceedings;
(d) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and
other similar purposes, or zoning or other restrictions as to the use
of real properties, which are necessary for the conduct of the
activities of the Company and its Subsidiaries or which customarily
exist on properties of corporations engaged in similar activities and
similarly situated and which do not in any event materially impair
their use in the operation of the business of the Company and its
Subsidiaries;
(e) Liens securing Indebtedness of a Subsidiary to the Company or to
a Wholly-owned Subsidiary;
(f) Liens or other arrangements for the retention of title
(including Capitalized Leases) existing as of December 31, 1990,
securing Debt of the Company or any Subsidiary outstanding on such
date and identified in Annex A to Exhibit B of this Agreement;
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
(g) Liens existing on the date of this Agreement and identified in
Annex A to Exhibit B of this Agreement which were given to secure the
purchase price of fixed assets (x) leased or sold by the Company or a
Subsidiary in the ordinary course of business under direct full payout
leases and (y) acquired or purchased by the Company or such Subsidiary
with proceeds of secured Debt the obligation for the payment of which
is limited to the amounts payable under such leases; provided that (i)
the Lien shall attach solely to the property acquired or purchased and
(ii) all such Debt shall have been incurred within the applicable
limitations provided in (S)5.8;
(h) Liens incurred after the Closing Date given to secure the
payment of the purchase price incurred in connection with the
acquisition of fixed assets useful and intended to be used in carrying
on the business of the Company or a Subsidiary, including Liens
existing on such fixed assets at the time of acquisition thereof or at
the time of acquisition by the Company or a Subsidiary of any business
entity then owning such fixed assets, whether or not such existing
Liens were given to secure the payment of the purchase price of the
fixed assets to which they attach so long as they were not incurred,
extended or renewed in contemplation of such acquisition, provided
that (i) the Lien or charge shall attach solely to the property
acquired or purchased, (ii) at the time of acquisition of such fixed
assets, the aggregate amount remaining unpaid on all Debt secured by
Liens on such fixed assets whether or not assumed by the Company or a
Subsidiary shall not exceed an amount equal to 10% of Consolidated
Tangible Net Worth, and (iii) all such Debt shall have been incurred
within the applicable limitations provided in (S)5.8;
(i) deposits of Restricted Cash in existence as of the Closing Date;
and
(j) Liens securing Securitized Debt, provided that the Lien or
charge shall attach only to Eligible Securitization Assets owned by a
Securitization Subsidiary.
Section 5.11. Restricted Payments. The Company will not:
(a) Declare or pay any dividends, either in cash or property, on any
shares of its capital stock of any class (except dividends or other
distributions payable solely in shares of capital stock of the
Company); or
(b) Directly or indirectly, or through any Subsidiary, purchase,
redeem or retire any shares of its capital stock of any class or any
warrants, rights or options to purchase or acquire any shares of its
capital stock; or
(c) Make any other payment or distribution, either directly or
indirectly or through any Subsidiary, in respect of its capital stock;
or
(d) Make any optional prepayment of principal on account of
principal of Subordinated Funded Debt, or purchase or permit any
Subsidiary to purchase any Subordinated Funded Debt (other than to the
extent of the net proceeds to the
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
Company from the issue after December 31, 1992 of other Subordinated
Funded Debt);
(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock, warrants, rights or options and optional
prepayments of Subordinated Funded Debt, and all such other distributions being
herein collectively called "Restricted Payments"), if after giving effect
thereto the aggregate amount of Restricted Payments made during the period from
and after December 31, 1992 to and including the date of the making of the
Restricted Payment in question, would exceed the sum of (i) $2,000,000, (ii) 50%
of Consolidated Net Income for such period, computed on a cumulative basis for
said entire period (or if such Consolidated Net Income is a deficit figure, then
minus 100% of such deficit) and (iii) the net proceeds to the Company from the
issue or sale after December 31, 1992 of shares of capital stock of the Company
or warrants, rights or options to purchase or acquire any shares of its capital
stock.
The Company will not declare any dividend which constitutes a
Restricted Payment payable more than 60 days after the date of declaration
thereof.
The Company will not make any Restricted Payment if at the time of the
making of such payment and after giving effect thereto, any Default or Event of
Default shall exist hereunder.
For the purposes of this (S)5.11, the amount of any Restricted Payment
declared, paid or distributed in property of the Company shall be deemed to be
the greater of the book value or fair market value (as determined in good faith
by the Board of Directors of the Company) of such property at the time of the
making of the Restricted Payment in question.
Section 5.12. Limitation on Long-Term Leases. The Company will not
and will not permit any Subsidiary to become obligated, as lessee, under any
Long-Term Lease if at the time of entering into any such Long-Term Lease and
after giving effect thereto, the aggregate Rentals payable by the Company and
its Subsidiaries on a consolidated basis in any one fiscal year thereafter under
all Long-Term Leases would exceed 10% of Consolidated Tangible Net Worth
determined at the end of the preceding fiscal quarter.
Section 5.13. Mergers, Consolidations and Sales of Assets. (a) The
Company will not, and will not permit any Subsidiary to (i) consolidate with or
be a party to a merger with any other corporation or (ii) sell, lease or
otherwise dispose of all or any substantial part (as hereinafter defined) of the
assets of the Company and its Subsidiaries, provided, however, that:
(1) any Subsidiary may merge or consolidate with or into the Company
or any Wholly-owned Subsidiary so long as in any merger or
consolidation involving the Company, the Company shall be the
surviving or continuing corporation and in the case of any merger or
consolidation of a Subsidiary with or into a Wholly-owned Subsidiary,
such Wholly-owned Subsidiary shall be the surviving or continuing
corporation;
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
(2) the Company may consolidate or merge with any other corporation
if (i) either (a) the Company shall be the surviving or continuing
corporation, or (b) if the surviving or continuing entity is other
than the Company, such entity is organized under the law of the United
States or a state thereof, expressly assumes all obligations of the
Company under this Agreement and the Notes by written agreement
satisfactory to the holders of 51% or more in aggregate principal
amount of the outstanding Notes, and has debt obligations rated A or
better by two nationally recognized credit rating agencies, one of
which shall be either S&P or Moody's, and (ii) at the time of such
consolidation or merger and after giving effect thereto, no Default or
Event of Default shall have occurred and be continuing; and
(3) any Subsidiary may sell, lease or otherwise dispose of all or
any substantial part of its assets to the Company or any Wholly-owned
Subsidiary.
(b) The Company will not permit any Subsidiary to issue or sell any
shares of stock of any class (including as "stock" for the purposes of this
(S)5.13, any warrants, rights or options to purchase or otherwise acquire stock
or other Securities exchangeable for or convertible into stock) of such
Subsidiary to any Person other than the Company or a Wholly-owned Subsidiary,
except for the purpose of qualifying directors, or except in satisfaction of the
validly pre-existing preemptive rights of minority shareholders in connection
with the simultaneous issuance of stock to the Company and/or a Subsidiary
whereby the Company and/or such Subsidiary maintain their same proportionate
interest in such Subsidiary.
(c) The Company will not sell, transfer or otherwise dispose of any
shares of stock in any Subsidiary (except to qualify directors) or any
Indebtedness of any Subsidiary, and will not permit any Subsidiary to sell,
transfer or otherwise dispose of (except to the Company or a Wholly-owned
Subsidiary) any shares of stock or any Indebtedness of any other Subsidiary,
unless:
(1) simultaneously with such sale, transfer, or other disposition,
all shares of stock and all Indebtedness of such Subsidiary at the
time owned by the Company and by every other Subsidiary shall be sold,
transferred or disposed of as an entirety;
(2) the Board of Directors of the Company shall have determined, as
evidenced by a resolution thereof, that the retention of such stock
and Indebtedness is no longer in the best interests of the Company;
(3) such stock and Indebtedness is sold, transferred or otherwise
disposed of to a Person, for a cash consideration and on terms
reasonably deemed by the Board of Directors to be adequate and
satisfactory;
(4) the Subsidiary being disposed of shall not have any continuing
investment in the Company or any other Subsidiary not being
simultaneously disposed of; and
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
(5) such sale or other disposition does not involve a substantial
part (as hereinafter defined) of the assets of the Company and its
Subsidiaries.
As used in this (S)5.13, a sale, lease or other disposition of assets
shall be deemed to be a "substantial part" of the assets of the Company and its
Subsidiaries only if the book value of such assets, when added to the book value
of all other assets sold, leased or otherwise disposed of by the Company and its
Subsidiaries (other than (i) sales in the ordinary course of business, including
sales of equipment with respect to which leases have terminated, (ii) the
disposition of Eligible Securitization Assets by the Company to a Securitization
Subsidiary, and (iii) the sale, transfer or other disposition of Eligible
Securitization Assets by the Company or any Securitization Subsidiary to any
Person in connection with an Eligible Securitization Transaction) during any
period of 12 consecutive calendar months, exceeds 10% of Tangible Assets
determined as of the end of the immediately preceding fiscal year. Sales or
other realization on delinquent receivables shall not be included in any
computation of sales or other dispositions hereunder.
Section 5.14. Guaranties. The Company will not and will not permit
any Subsidiary to become or be liable in respect of any Guaranty except
Guaranties of the Company which are limited in amount to a stated maximum dollar
exposure and included in Consolidated Funded Debt.
Section 5.15. Purchase of Notes. Neither the Company nor any
Subsidiary or Affiliate, directly or indirectly, may purchase or make any offer
to purchase any Notes unless the offer has been made to purchase Notes, pro
rata, from all holders of the Notes at the same time and upon the same terms.
In case the Company purchases any Notes, such Notes shall thereafter be
cancelled and no Notes shall be issued in substitution therefor.
Section 5.16. Transactions with Affiliates. The Company will not,
and will not permit any Subsidiary to, enter into or be a party to any
transaction or arrangement with any Affiliate (including without limitation, the
purchase from, sale to or exchange of property with, or the rendering of any
service by or for, any Affiliate), except in the ordinary course of and pursuant
to the reasonable requirements of the Company's or such Subsidiary's business
and upon fair and reasonable terms no less favorable to the Company or such
Subsidiary than would be obtainable in a comparable arm's-length transaction
with a Person other than an Affiliate. The existence and continuation of the
arrangements pursuant to which the Company pays certain insurance premiums for
Persons related to Richard Grossman described in the sections captioned
"Executive Compensation" and "Certain Relationships and Related Transactions" of
the Company's most recent Annual Report on Form 10-K will not be deemed to
violate this (S)5.16, so long as the aggregate amount of such premiums does not
exceed $200,000.
Section 5.17. Investments. The Company will not, and will not
permit any Subsidiary to, have or make any investments in or loans, advances or
extensions of credit to, any Person, except:
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
(a) investments, loans and advances by the Company and its
Subsidiaries in and to Subsidiaries, including any investment in a
corporation which, after giving effect to such investment, will become a
Subsidiary;
(b) investments in commercial paper maturing in 270 days or less
from the date of issuance which is accorded the highest rating by S&P,
Moody's or other nationally recognized credit rating agency of similar
standing;
(c) investments in direct obligations of the United States of
America, or any agency thereof, or obligations guaranteed by the full faith
and credit of the United States of America, provided that all such
obligations mature in twelve months or less from the date of acquisition
thereof;
(d) investments in certificates of deposit maturing within one year
from the date of origin, issued by a bank or trust company organized under
the laws of the United States or any state thereof, having capital, surplus
and undivided profits aggregating at least $100,000,000;
(e) investments in debt obligations of corporations organized and
existing under the laws of the United States, any state or the District of
Columbia maturing in 12 months or less from the date of acquisition
thereof, and rated AA or better by S&P or Aa by Moody's or other nationally
recognized rating agency of similar standing;
(f) loans or advances in the usual and ordinary course of business
to officers, directors and employees for expenses (including moving
expenses related to a transfer) incidental to carrying on the business of
the Company or any Subsidiary;
(g) receivables (including notes taken pursuant to the collection of
leases) arising in the ordinary course of business of the Company and its
Subsidiaries;
(h) money market funds sponsored by insurance companies, investment
banking firms or commercial banking institutions which are members of the
Federal Reserve System, provided such fund (i) has assets of not less than
$100,000,000 and (ii) invests solely in investments permitted under
subparagraphs (b), (c) and (d) above;
(i) investments in promissory notes (i) which are issued by a
manufacturer or vendor of personal property or which are issued by a
finance company or broker owning lease receivables, (ii) which evidence a
loan made by the Company to such persons described in clause (i), and (iii)
the payment or performance of which is secured pursuant to the terms of the
promissory notes or one or more separate assignments or security agreements
executed by the maker thereof, by one or more leases owned by such persons
described in clause (i) and by the property covered by such leases;
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
(j) investments, loans and advances by the Company and its
Securitization Subsidiaries in and to any Person in connection with an
Eligible Securitization Transaction; and
(k) other investments, loans and advances (in addition to those
permitted by the foregoing provisions of this (S)5.17), provided that
the aggregate amount of all such other investments, loans and advances
at any time owned by the Company and its Subsidiaries shall not exceed
an amount equal to 15% of Shareholders' Equity.
In valuing any investments, loans and advances for the purpose of
applying the limitations set forth in this (S)5.17, such investments, loans and
advances shall be taken at the original cost thereof, without allowance for any
subsequent write-offs or appreciation or depreciation therein, but less any
amount repaid or recovered in cash on account of capital or principal.
For purposes of this (S)5.17, at any time when a corporation becomes a
Subsidiary, all investments of such corporation at such time shall be deemed to
have been made by such corporation, as a Subsidiary, at such time.
Section 5.18. Termination of Pension Plans. The Company will not
and will not permit any Subsidiary to permit any employee benefit plan
maintained by it to be terminated in a manner which would result in the
imposition of a lien on any property of the Company or any Subsidiary pursuant
to Section 4068 of ERISA.
Section 5.19. Reports and Rights of Inspection. The Company will
keep, and will cause each Subsidiary to keep, proper books of record and account
in which full and correct entries will be made of all dealings or transactions
of or in relation to the business and affairs of the Company or such Subsidiary,
in accordance with GAAP consistently applied (except for changes disclosed in
the financial statements furnished to you pursuant to this (S)5.19 and concurred
in by the independent public accountants referred to in (S)5.19(b) hereof) and
(without duplication of materials furnished pursuant to (S)5.19(d) below) will
furnish to you so long as you are the holder of any Note and to each other
institutional holder of the then outstanding Notes (in duplicate if so specified
below or otherwise requested):
(a) Quarterly Statements. Promptly upon their being available,
quarterly reports on Form 10-Q filed by the Company with the SEC, or,
if the Company for any reason is not required to file such reports, as
soon as available and in any event within 45 days after the end of
each quarterly fiscal period (except the last) of each fiscal year,
copies of:
(1) a consolidated balance sheet of the Company and its
Subsidiaries as of the close of such quarter setting forth in
comparative form the amount for the corresponding period of the
preceding fiscal year,
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
(2) consolidated statements of income and retained earnings of
the Company and its Subsidiaries for such quarterly period and for
the year-to-date ending with such quarter, setting forth in
comparative form the amount for the corresponding period of the
preceding fiscal year, and
(3) a consolidated statement of cash flows of the Company and
its Subsidiaries for the quarterly period and for the year-to-date
ending with such quarter, setting forth in comparative form the
amount for the corresponding period of the preceding fiscal year,
all in reasonable detail, prepared in accordance with GAAP and certified as
fairly presenting, in all material respects, the financial position and the
results of operations and cash flows, subject to changes resulting from
year-end adjustments, of the Company and its Subsidiaries by an authorized
financial officer of the Company;
(b) Annual Statements. As soon as available and in any event within
120 days after the close of each fiscal year of the Company, copies of:
(1) consolidated and consolidating balance sheets of the
Company and its Subsidiaries as of the close of such fiscal year,
and
(2) consolidated and consolidating statements of income and
stockholders' equity and cash flows of the Company and its
Subsidiaries for such fiscal year,
in each case setting forth in comparative form the consolidated figures for
the preceding fiscal year, all in reasonable detail and accompanied by an
unqualified opinion thereon of a firm of independent public accountants of
recognized national standing selected by the Company to the effect that the
consolidated financial statements have been prepared in accordance with
GAAP consistently applied (except for changes in application in which such
accountants concur and which are so noted) and present fairly, in all
material respects, the financial position and the results of operations and
cash flows of the Company and its Subsidiaries and that the examination of
such accountants in connection with such financial statements has been
conducted in accordance with generally accepted auditing standards and
included such tests of the accounting records and such other auditing
procedures as were considered necessary in the circumstances;
(c) Audit Reports. Promptly upon receipt thereof, one copy of each
interim or special audit made by independent accountants of the books of
the Company or any Subsidiary and any management letter received from such
accountants;
(d) SEC and Other Reports. Promptly upon their becoming available,
one copy of each financial statement, report, notice or proxy statement
sent by the Company to stockholders generally and of each regular or
periodic report (including reports on Forms 8-K, 10-K and 10-Q), and any
registration statement or prospectus
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
filed (other than with respect to any employee benefit plan) by the Company
or any Subsidiary with any securities exchange or the SEC, and copies of
any orders in any proceedings to which the Company or any of its
Subsidiaries is a party, issued by any governmental agency, Federal or
state, having jurisdiction over the Company or any of its Subsidiaries;
(e) Notice of Default or Pending Litigation. Within three Business
Days after knowledge thereof shall have come to any officer of the Company,
the Company will give written notice to the holders of the Notes of (i) the
happening of any Default or Event of Default hereunder or (ii) any pending
or threatened litigation, arbitration proceeding or governmental proceeding
against the Company or any Subsidiary which, in the opinion of its counsel,
could reasonably have in the aggregate a material adverse affect on the
business or properties of the Company or any Subsidiary, taken as a whole;
(f) Officer's Certificates. Within the periods provided in
paragraphs (a) and (b) above, a certificate of an authorized financial
officer of the Company stating that such officer has reviewed the
provisions of this Agreement and setting forth: (i) the information and
computations (in sufficient detail) required in order to establish whether
the Company was in compliance with the requirements of (S)5.6 through
(S)5.9, inclusive, (S)5.10(h), (S)5.11, (S)5.12, (S)5.13 and (S)5.17(k) at
the end of the period covered by the financial statements then being
furnished, and (ii) whether there existed as of the date of such financial
statements and whether, to the best of such officer's knowledge, there
exists on the date of the certificate or existed at any time during the
period covered by such financial statements any Default or Event of Default
and, if any such condition or event exists on the date of the certificate
or existed during such periods, specifying the nature and period of
existence thereof and the action the Company took or is taking and proposes
to take with respect thereto;
(g) Accountants' Certificates. Within the period provided in
paragraph (b) above, a certificate of the accountants who render an opinion
with respect to such financial statements, stating that they have reviewed
this Agreement and stating further, whether in making their audit, such
accountants have become aware of any Default or Event of Default under any
of the terms or provisions of this Agreement insofar as any such terms or
provisions pertain to or involve accounting matters or determinations, and
if any such condition or event then exists, specifying the nature and
period of existence thereof; and
(h) Requested Information. With reasonable promptness, such other
data and information as you or any such institutional holder may reasonably
request.
Without limiting the foregoing, the Company will permit you, so long as you are
the holder of any Note, and each institutional holder of the then outstanding
Notes (or such Persons as either you or such holder may designate) to visit and
inspect, under the Company's guidance, any of the properties of the Company or
any Subsidiary, to examine all their books of account, records, reports and
other papers, to make copies and extracts therefrom, and to
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
discuss their respective affairs, finances and accounts with their respective
officers, employees, and independent public accountants (and by this provision
the Company authorizes said accountants to discuss with you the finances and
affairs of the Company and its Subsidiaries) all at such reasonable times and as
often as may be reasonably requested. The Company shall not be required to pay
or reimburse you or any such holder for expenses which you or any such holder
may incur in connection with any such visitation or inspection; provided,
however, that after a Default or Event of Default shall have occurred and be
continuing, the Company shall be required to pay or reimburse (i) the expenses
incurred by the original Lender in connection with any visitation or inspection,
and (ii) the expenses incurred by a representative of all the subsequent holders
in connection with any visitation or inspection as shall be designated by 66-
2/3% in aggregate principal amount of Notes held by such subsequent holders.
Section 5.20. Consolidated Tax Returns. The Company will not and
will not permit any Subsidiary to be a party to a consolidated Federal income
tax return with any Person other than the Company and its Subsidiaries if as a
result thereof, as of any date, the aggregate amount of Federal income taxes
which the Company and its Subsidiaries have then or theretofore paid or become
obligated to pay (determined on a cumulative basis) exceeds the amount which
they would have been required to pay pursuant to a consolidated tax return
solely of the Company and its Subsidiaries.
Section 5.21. Sale of Eligible Securitization Assets. The Company
will not, and will not permit any Subsidiary to, sell, transfer or otherwise
dispose of any Eligible Securitization Assets to any Person, unless the Company
or such Subsidiary (i) receives cash proceeds (net of related expenses) equal to
at least 85% of the book value of such Eligible Securitization Assets sold,
transferred or otherwise disposed of to such Person, and (ii) applies the cash
proceeds (net of related expenses) received from such sale, transfer or other
disposition within 60 days after the receipt thereof to either repay Senior Debt
or finance new lease receivables.
Section 6. Events of Default and Remedies Therefor.
Section 6.1. Events of Default. Any one or more of the following
shall constitute an "Event of Default" as the term is used herein:
(a) Default shall occur in the payment of interest on any Note when
the same shall have become due and such default shall continue for
more than five Business Days; or
(b) Default shall occur in the making of any required principal
payment on any of the Notes as provided in (S)2.1; or
(c) Default shall occur in the making of any other payment of the
principal of any Note or the premium thereon at the expressed or any
accelerated maturity date or at any date fixed for prepayment; or
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
(d) Default shall be made in the payment of the principal of or
interest on Debt of the Company and its Subsidiaries for borrowed money
having an aggregate unpaid principal amount in excess of $1,000,000, as and
when the same shall become due and payable by the lapse of time, by
declaration, by call for redemption or otherwise, and such default shall
continue beyond the period of grace, if any, allowed with respect thereto;
or
(e) Default or the happening of any event shall occur under any
indenture, agreement, or other instrument under which any Debt of the
Company or any Subsidiary for borrowed money may be issued and such default
or event shall continue for a period of time sufficient to permit the
acceleration of the maturity of Debt of the Company and its Subsidiaries
having an aggregate unpaid principal amount in excess of $1,000,000; or
(f) Default shall occur in the observance or performance of any
covenant or agreement contained in (S)5.6 through (S)5.17, inclusive, or
(S)5.21 hereof; or
(g) Default shall occur in the observance or performance of any
other provision of this Agreement which is not remedied within 30 days
after the earlier of (i) the date a responsible officer of the Company
obtains actual knowledge of such default or (ii) notice thereof to the
Company by the holder of any Note; or
(h) Default shall occur in the observance or performance by the
Company under any interest rate swap or interest rate exchange agreement
(however denominated) or any currency swap or currency exchange agreement;
or
(i) If any representation or warranty made by the Company herein, or
made by the Company in any statement or certificate furnished by the
Company in connection with the consummation of the issuance and delivery of
the Notes or furnished by the Company pursuant hereto, is untrue in any
material respect as of the date of the issuance or making thereof; or
(j) Final judgment or judgments for the payment of money aggregating
in excess of $500,000 is or are outstanding against the Company or any
Subsidiary or against any property or assets of either and any one of such
judgments has remained unpaid, unvacated, unbonded or unstayed by appeal or
otherwise for a period of 30 days from the date of its entry; or
(k) The Company or any Subsidiary becomes insolvent or bankrupt, is
generally not paying its debts as they become due or makes an assignment
for the benefit of creditors, or the Company or any Subsidiary causes or
suffers an order for relief to be entered with respect to it under
applicable Federal bankruptcy law or applies for or consents to the
appointment of a custodian, trustee or receiver for the Company or such
Subsidiary or for the major part of the property of either; or
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
(l) A custodian, trustee or receiver is appointed for the Company or
any Subsidiary or for the major part of the property of either and is not
discharged within 30 days after such appointment; or
(m) Bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy or
similar law or laws for the relief of debtors, are instituted by or against
the Company or any Subsidiary and, if instituted against the Company or any
Subsidiary, are consented to or are not dismissed within 60 days after such
institution.
Section 6.2. Acceleration of Maturities. When any Event of Default
described in paragraph (a), (b) or (c) of (S)6.1 has happened and is continuing,
any holder of any Note may, and when any Event of Default described in
paragraphs (d) through (j), inclusive, of said (S)6.1 has happened and is
continuing, the holder or holders of 25% or more of the principal amount of
Notes at the time outstanding may, by notice in writing sent by registered or
certified mail to the Company, declare the entire principal and all interest
accrued all Notes to be, and all Notes shall thereupon become, forthwith due and
payable, without any presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived. When any Event of Default described
in paragraph (k), (l) or (m) of (S)6.1 has occurred, then all outstanding Notes
shall immediately become due and payable without presentment, demand or notice
of any kind. Upon the Notes becoming due and payable as a result of any Event
of Default as aforesaid, the Company will forthwith pay to the holders of the
Notes the entire principal and interest accrued on the Notes. No course of
dealing on the part of any Noteholder nor any delay or failure on the part of
any Noteholder to exercise any right shall operate as a waiver of such right or
otherwise prejudice such holder's rights, powers and remedies. The Company
further agrees, to the extent permitted by law, to pay to the holder or holders
of the Notes all costs and expenses incurred by them in the collection of any
Notes upon any default hereunder or thereon, including reasonable compensation
to such holder's or holders' attorneys for all services rendered in connection
therewith.
Section 6.3. Rescission of Acceleration. The provisions of (S)6.2
are subject to the condition that if the principal of and accrued interest on
all or any outstanding Notes has been declared immediately due and payable by
reason of the occurrence of any Event of Default described in paragraphs (d)
through (j), inclusive, of (S)6.1, the holders of 66-2/3% in aggregate principal
amount of the Notes then outstanding may, by written instrument filed with the
Company, rescind and annul such declaration and the consequences thereof,
provided that at the time such declaration is annulled and rescinded:
(a) no judgment or decree has been entered for the payment of any
monies due pursuant to the Notes or this Agreement;
(b) all arrears of interest upon all the Notes and all other sums
payable under the Notes and under this Agreement (except any principal,
interest or premium on the Notes which has become due and payable solely by
reason of such declaration under (S)6.2) shall have been duly paid; and
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
(c) each and every other Default and Event of Default shall have
been made good, cured or waived pursuant to (S)7.1;
and provided further, that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right consequent
thereto.
Section 7. Amendments, Waivers and Consents.
Section 7.1. Consent Required. Any term, covenant, agreement or
condition of this Agreement may, with the consent of the Company, be amended or
compliance therewith may be waived (either generally or in a particular instance
and either retroactively or prospectively), if the Company shall have obtained
the consent in writing of the holders of at least 51% in aggregate principal
amount of outstanding Notes; provided that without the written consent of the
holders of all of the Notes then outstanding, no such waiver, modification,
alteration or amendment shall be effective (i) which will change the time of
payment (including any principal payment required by (S)2) of the principal of
or the interest on any Note or reduce the principal amount thereof or change the
rate of interest thereon, or (ii) which will amend the provisions of (S)5.15, or
(iii) which will change the percentage of holders of the Notes required to
consent to any such amendment, alteration or modification or any of the
provisions of this (S)7 or (S)2 or (S)6. For purposes of calculating the
percentage of outstanding Notes which have consented to any amendment of this
Agreement, or waived any provision hereof or for the purpose of calculating
whether the holders of the requisite percentage of outstanding Notes have
requested any action by the Company hereunder or taken any other action with
respect to this Agreement or the Notes, Notes held by the Company, a Subsidiary
or any Affiliates shall be excluded.
Section 7.2. Effect of Amendment or Waiver. Any such amendment or
waiver shall apply equally to all of the holders of the Notes and shall be
binding upon them, upon each future holder of any Note and upon the Company,
whether or not such Note shall have been marked to indicate such amendment or
waiver. No such amendment or waiver shall extend to or affect any obligation
not expressly amended or waived or impair any right consequent thereon.
Section 7.3. Solicitation of Noteholders. The Company will not
solicit, request or negotiate for or with respect to any proposed waiver or
amendment of any of the provisions of this Agreement or the Notes unless each
holder of the Notes (irrespective of the amount of Notes then owned by it) shall
be informed thereof by the Company and shall be afforded the opportunity of
considering the same for a period of not less than five Business Days and shall
be supplied by the Company with a brief statement regarding the reasons for any
such proposed waiver or amendment, a copy of the proposed waiver or amendment
and such other information as any holder of the Notes shall reasonably request
regarding such amendment or waiver to enable it to make an informed decision
with respect thereto. Executed or true and correct copies of any waiver or
amendment effected pursuant to the provisions of this (S)7 shall be delivered by
the Company to each holder of outstanding Notes within 30 days following the
date on which the same shall have been executed and delivered by the holder or
holders of the requisite percentage of outstanding Notes. The Company
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
will not, directly or indirectly, pay or cause to be paid any remuneration,
whether by way of supplemental or additional interest, fee or otherwise, to any
holder of the Notes as consideration for or as an inducement to the entering
into by any holder of the Notes of any waiver or amendment of any of the terms
and provisions of this Agreement unless such remuneration is concurrently paid,
on the same terms, ratably to the holders of all of the Notes then outstanding.
Section 8. Interpretation of Agreement; Definitions.
Section 8.1. Definitions. Unless the context otherwise requires,
the terms hereinafter set forth when used herein shall have the following
meanings and the following definitions shall be equally applicable to both the
singular and plural forms of any of the terms herein defined:
"Adjusted LIBOR Rate" shall mean a rate per annum equal to 1.50% plus
LIBOR as determined on the applicable Interest Reset Date.
"Adjusted Tangible Net Worth" shall mean, as of the date of any
determination thereof, the difference between (a) the sum of (i) Consolidated
Tangible Net Worth, (ii) deferred income taxes of the Company and its
Subsidiaries and (iii) Subordinated Funded Debt and (b) the Net Tangible Assets
of Securitization Subsidiaries.
"Adjusted Total Liabilities" shall mean, as of the date of any
determination thereof, Total Liabilities less all (i) Subordinated Funded Debt
and (ii) Securitized Debt.
"Affiliate" shall mean any Person (other than a Subsidiary) (i) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Company, (ii) which
beneficially owns or holds 5% or more of any class of the Voting Stock of the
Company or (iii) 5% or more of the Voting Stock (or in the case of a Person
which is not a corporation, 5% or more of the equity interest) of which is
beneficially owned or held by the Company or a Subsidiary. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of Voting Stock, by contract or otherwise.
"Alternate Rate" shall mean .10% plus that rate per annum announced
from time to time by the Lender as its prime rate. The prime rate is one of
several interest rate bases used by the Lender, and is not represented or
intended to be the lowest or most favorable rate of interest offered by the
Lender.
"Business Day" shall mean any day other than a Saturday, Sunday, or
any day which shall be in Chicago, Illinois, New York, New York, Charlotte,
North Carolina or London, England a legal holiday or a day on which banking
institutions are authorized by law to close.
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
"Capitalized Lease" shall mean any lease the obligation for Rentals
with respect to which is required to be capitalized on a balance sheet of the
lessee in accordance with GAAP.
"Capitalized Rentals" shall mean, as of the date of any determination
thereof, the amount at which the aggregate Rentals due and to become due under
all Capitalized Leases under which the Company or any Subsidiary is a lessee
would be reflected as a liability on the consolidated balance sheets of the
Company and its Subsidiaries.
"Consolidated Net Income" for any period shall mean the gross revenues
of the Company and its Subsidiaries for such period less all expenses and other
proper charges (including taxes on income), determined on a consolidated basis
in accordance with GAAP consistently applied and after eliminating earnings or
losses attributable to outstanding Minority Interests, but excluding in any
event:
(a) any gains or losses on the sale or other disposition of
investments or fixed or capital assets (other than gains or losses
resulting from the sale or disposition of lease equipment upon or
after expiration of the lease), and any taxes on such excluded gains
and any tax deductions or credits on account of any such excluded
losses;
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of any Subsidiary accrued prior to the
date it became a Subsidiary;
(d) net earnings and losses of any corporation (other than a
Subsidiary), substantially all the assets of which have been acquired
in any manner, realized by such other corporation prior to the date of
such acquisition;
(e) net earnings and losses of any corporation (other than a
Subsidiary) with which the Company or a Subsidiary shall have
consolidated or which shall have merged into or with the Company or a
Subsidiary prior to the date of such consolidation or merger;
(f) net earnings of any business entity (other than a Subsidiary) in
which the Company or any Subsidiary has an ownership interest unless
such net earnings shall have actually been received by the Company or
such Subsidiary in the form of cash distributions;
(g) earnings resulting from any reappraisal, revaluation or write-up
of assets;
(h) any deferred or other credit representing any excess of the
equity in any Subsidiary at the date of acquisition thereof over the
amount invested in such Subsidiary;
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
(i) any gain arising from the acquisition of any Securities of the
Company or any Subsidiary; and
(j) any reversal of any contingency reserve, except to the extent
that provision for such contingency reserve shall have been made from
income arising during such period.
"Consolidated Net Tangible Assets" shall mean, as of the date of any
determination thereof, the total amount of all Tangible Assets of the Company
and its Subsidiaries after deducting all Restricted Investments, Restricted Cash
and all items which in accordance with GAAP would be included on the liability
side of a consolidated balance sheet, except deferred income taxes, capital
stock of any class, surplus, and Funded Debt of the Company and its
Subsidiaries.
"Consolidated Tangible Net Worth" shall mean, as of the date of any
determination thereof, Consolidated Net Tangible Assets less (i) all accounts
receivable more than 90 days overdue unless a reserve in an amount equal to the
entire unpaid amount payable under the lease which gave rise to such receivable
shall have been created on the books of the Company and (ii) all outstanding
Funded Debt, deferred income taxes and Minority Interests, all determined in
accordance with GAAP consolidating the Company and its Subsidiaries.
"Current Debt" shall mean, as of the date of any determination
thereof, all Indebtedness for money borrowed other than Funded Debt determined
on a consolidated basis eliminating intercompany items. Current Debt shall
include any Capitalized Rentals not included in Funded Debt.
"Debt" shall mean, as of the date of any determination thereof, all
Current Debt and Funded Debt of the Company and its Subsidiaries determined on a
consolidated basis eliminating intercompany items.
"Default" shall mean any event or condition, the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default as defined in (S)6.1.
"Eligible Securitization Asset" shall mean (i) any lease or
installment purchase contract (and the rights thereunder) entered into or owned
by the Company or a Securitization Subsidiary, as the case may be, which shall
have been selected for disposition in accordance with the Company's or such
Securitization Subsidiary's past practices or substantially in accordance with
standard industry practice, (ii) the Company's or such Securitization
Subsidiary's interest, as the case may be, in any equipment or other assets
which are the subject of the lease or installment purchase contract described in
the foregoing clause (i), (iii) all monies due or to become due with respect to
any of the foregoing clauses (i) or (ii), (iv) all rights and interests in the
insurance policies with respect to any of the foregoing, and (v) cash in an
amount up to the aggregate reserve or credit enhancement
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
requirements, if any, which the Company or a Securitization Subsidiary, as the
case may be, is obligated to fund under the documents governing an asset
securitization for any Person.
"Eligible Securitization Transaction" shall mean a sale, contribution
or transfer of Eligible Securitization Assets by the Company or any
Securitization Subsidiary to any Person in accordance with (S)5.21 for the
purpose of issuing Indebtedness secured by such Eligible Securitization Assets
which is non-recourse to the Company or any Subsidiary (other than due to
certain breaches of representations and warranties made by the Company or such
Securitization Subsidiary in connection with the sale, contribution or transfer
of Eligible Securitization Assets), the cash proceeds of which shall be remitted
in part to the Company or such Securitization Subsidiary as partial
consideration for the sale, contribution or transfer of such Eligible
Securitization Assets.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed to also refer to any successor sections.
"ERISA Affiliate" shall mean any corporation, trade or business that
is, along with the Company, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in section 414(b) and
414(c), respectively, of the Code or Section 4001 or ERISA.
"Event of Default" shall have the meaning set forth in (S)6.1.
"Fixed Charges" for any period shall mean on a consolidated basis the
sum of (i) all Rentals (other than Rentals on Capitalized Leases) which were
accrued and payable in accordance with GAAP during such period by the Company
and its Subsidiaries, and (ii) all Interest Charges on all Indebtedness
(including imputed interest on Capitalized Rentals) of the Company and its
Subsidiaries.
"Funded Debt" of any Person shall mean (i) all Indebtedness for
borrowed money or which has been incurred in connection with the acquisition of
assets in each case having a final maturity of more than one year from the date
of any determination thereof (or which is renewable or extendible at the option
of the obligor for a period or periods more than one year from the date of any
determination of Funded Debt), (ii) all Capitalized Rentals maturing more than
one year from the date of any determination thereof, and (iii) all Guaranties of
Indebtedness of others. For purposes of this Agreement, Funded Debt shall
include Securitized Debt. "Consolidated" when used as a prefix to any Funded
Debt shall mean the aggregate amount of all such Funded Debt of the Company and
its Subsidiaries on a consolidated basis eliminating intercompany items.
"GAAP" shall mean generally accepted accounting principles at the
time.
"Guaranties" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
Person guaranteeing or in effect, guaranteeing any Indebtedness, dividend or
other obligation, of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, all obligations
incurred through an agreement, contingent or otherwise, by such Person: (i) to
purchase such Indebtedness or obligation or any property or assets constituting
security therefor, (ii) to advance or supply funds (x) for the purchase or
payment of such Indebtedness or obligation, (y) to maintain working capital or
other balance sheet condition or otherwise to advance or make available funds
for the purchase or payment of such Indebtedness or obligation, or (z) to
maintain fixed charge coverage or other income statement condition, or (iii) to
lease property or to purchase Securities or other property or services primarily
for the purpose of assuring the owner of such Indebtedness or obligation of the
ability of the primary obligor to make payment of the Indebtedness or
obligation, or (iv) otherwise to assure the owner of the Indebtedness or
obligation of the primary obligor against loss in respect thereof. For the
purposes of all computations made under this Agreement, (a) a Guaranty in
respect of any Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the principal amount of such Indebtedness for borrowed
money which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness equal
to the maximum aggregate amount of such obligation, liability or dividend, and
(b) the obligations of the Company or any Securitization Subsidiary to purchase
any Repurchased Asset from any Person in connection with an Eligible
Securitization Transaction shall not constitute a "Guaranty" so long as the
price to be paid therefor by the Company or such Securitization Subsidiary does
not exceed the value which was ascribed to such Repurchased Asset in connection
with the initial sale or transfer by the Company or any Securitization
Subsidiary to such Person and so long as such obligations have not become due
and payable.
"Indebtedness" of any Person shall mean and include all obligations of
such Person which in accordance with GAAP shall be classified upon a balance
sheet of such Person as liabilities of such Person, and in any event shall
include all (i) obligations of such Person for borrowed money or which has been
incurred in connection with the acquisition of property or assets, (ii)
obligations secured by any lien or other charge upon property or assets owned by
such Person, even though such Person has not assumed or become liable for the
payment of such obligations, (iii) obligations created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person, notwithstanding the fact that the rights and remedies
of the seller, lender or lessor under such agreement in the event of default are
limited to repossession or sale of property, and (iv) Capitalized Rentals under
any Capitalized Lease. For the purpose of computing the "Indebtedness" of any
Person, there shall be excluded any particular Indebtedness to the extent that,
upon or prior to the maturity thereof, there shall have been deposited with the
proper depositary in trust the necessary funds (or evidences of such
Indebtedness, if permitted by the instrument creating such Indebtedness) for the
payment, redemption or satisfaction of such Indebtedness; and thereafter such
funds and evidences of Indebtedness so deposited shall not be included in any
computation of the assets of such Person. The obligations of the Company or any
Securitization Subsidiary to purchase any Repurchased Asset from any Person in
connection with an Eligible Securitization Transaction shall not constitute
"Indebtedness" so long as the price to be paid therefor by the Company or such
Securitization Subsidiary does not exceed the value which was ascribed to such
Repurchased
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
Asset in connection with the initial sale or transfer by the Company or any
Securitization Subsidiary to such Person and so long as such obligations have
not become due and payable.
"Interest Charges" for any period shall mean all interest and all
amortization of debt discount and expense in accordance with GAAP on any
particular Indebtedness for which such calculations are being made.
"Interest Period" shall mean (a) so long as the Notes are to bear
interest at the Adjusted LIBOR Rate, the period (x) commencing on the later of
(i) the Closing Date or (ii) the last day of the immediately preceding Interest
Period and (y) ending on the date which is either one, two, three or six
month(s) thereafter determined in accordance with the procedure set forth in
(S)1.3, and (b) so long as the Notes bear interest at the Alternate Rate, the
period commencing on the date upon which the Notes shall bear interest at the
Alternate Rate determined in accordance with (S)1.7 and ending on the earlier of
(i) the date the Company receives notice from the Lender pursuant to (S)1.7 that
the circumstances which gave rise to the conversion to the Alternate Rate no
longer exist, or (ii) March 31, 1995, provided, however, that:
(A) the Company may not select an Interest Period that extends
beyond March 31, 1995;
(B) whenever the last day of any Interest Period would otherwise be
a day that is not a Business Day, the last day of such Interest Period
shall be extended to the next succeeding Business Day, provided,
however, that if such extension would cause the last day of such
Interest Period to occur in the following calendar month, the last day
of such Interest Period shall be the immediately preceding Business
Day; and
(C) for purposes of determining an Interest Period, a month means a
period starting on one day in a calendar month and ending on the
numerically corresponding day in the next calendar month; provided,
however, that if there is no numerically corresponding day in the
month in which such Interest Period is to end or if such Interest
Period begins on the last Business Day of a calendar month, then such
Interest Period shall end on the last Business Day of the calendar
month in which such Interest Period is to end.
"Interest Reset Date" shall mean the first day of the applicable
Interest Period for which LIBOR is to be determined.
"LIBOR" shall mean, with respect to each Interest Period, a rate per
annum (rounded upwards, if necessary, to the nearest 1/16 of 1%) determined by
the Lender to be equal to the rate quoted by prime banks in the London interbank
market to the Lender as of 11:00 a.m., London time (or as soon thereafter as
practicable), on the Interest Reset Date for the offering by such prime banks to
the Lender in the London interbank market of U.S. dollar deposits having a term
comparable to such Interest Period and in the aggregate outstanding principal
amount of the Notes held by the Lender for such Interest Period; provided,
however, that if such rate cannot be determined for any reason, LIBOR for such
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
Interest Period shall be the rate per annum equal to the arithmetic mean
(rounded upwards, if necessary, to the nearest 1/16 of 1%) of the offered rates
for deposits in U.S. dollars for a period having a term comparable to such
Interest Period which appear on the display designated as page "LIBO" on the
Reuter Monitor Money Rates Service (or such other page as may replace the LIBO
Page on that service for the purpose of displaying London interbank offered
rates of major banks) as of 11:00 a.m., London time, on the Interest Reset Date.
"Lien" shall mean any mortgage, pledge, security interest, conditional
sale agreement or other title retention devise (including Capitalized Lease),
encumbrance, or lien or charge of any kind.
"Long-Term Lease" shall mean any lease of real or personal property
(other than a Capitalized Lease) having an original term, including any period
for which the lease may be renewed or extended at the option of the lessor or
lessee, of more than three years.
"Minority Interests" shall mean any shares of stock of any class of a
Subsidiary (other than directors' qualifying shares as required by law) that are
not owned by the Company and/or one or more of its Subsidiaries. Minority
Interests shall be valued by valuing Minority Interests constituting preferred
stock at the voluntary or involuntary liquidating value of such preferred stock,
whichever is greater, and by valuing Minority Interests constituting common
stock at the book value of capital and surplus applicable thereto adjusted, if
necessary, to reflect any changes from the book value of such common stock
required by the foregoing method of valuing Minority Interests in preferred
stock.
"Moody's" shall mean Moody's Investors Service, Inc., and its
successors and assigns.
"Net Tangible Assets of Securitization Subsidiaries" shall mean as of
any date of determination the difference (but not below zero) between (i) the
total assets of all Securitization Subsidiaries after deducting therefrom all
intangible assets of such Securitization Subsidiaries determined in accordance
with GAAP as shown on the consolidating balance sheet of the Company (after
eliminating intercompany and consolidating items) at such date of determination,
minus (ii) the total liabilities other than deferred income tax liabilities of
all Securitization Subsidiaries determined in accordance with GAAP as shown on
the consolidating balance sheet of the Company (after eliminating intercompany
and consolidating items) at such date of determination.
"Net Income Available for Fixed Charges" for any period shall mean the
sum of (i) Consolidated Net Income during such period plus (to the extent
deducted in determining Consolidated Net Income), (ii) all provisions for any
Federal, state or other income taxes made by the Company and its Subsidiaries
during such period and (iii) Fixed Charges during such period.
"Person" shall mean an individual, partnership, corporation, estate,
trust or unincorporated organization, and a government or agency or political
subdivision thereof.
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
"Plan" means a "pension plan," as such term is defined in ERISA,
established or maintained by the Company or any ERISA Affiliate or as to which
the Company or any ERISA Affiliate contributed or is a member or otherwise may
have any liability.
"Regulatory Change" shall mean any change after the date of this
Agreement in United States Federal or state laws or regulations (including
without limitation Regulation D of the Board of Governors of the Federal Reserve
System and the laws or regulations which designate any assessment rate relating
to certificates of deposit or otherwise) or the adoption or making after such
date of any interpretations, directives or requests applying to a class of
banks, including the Lender, of or under United States Federal or state laws or
regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
"Rentals" shall mean and include all fixed rents (including as such
all payments which the lessee is obligated to make to the lessor on termination
of the lease or surrender of the property) payable by the Company or a
Subsidiary, as lessee or sublessee under a lease of real or personal property,
but shall be exclusive of any amounts required to be paid by the Company or a
Subsidiary (whether or not designated as rents or additional rents) on account
of maintenance, repairs, insurance, taxes and similar charges. Fixed rents
under any so-called "percentage leases" shall be computed solely on the basis of
the minimum rents, if any, required to be paid by the lessee regardless of sales
volume or gross revenues.
"Repurchased Asset" shall mean an Eligible Securitization Asset
repurchased by the Company or a Securitization Subsidiary from any Person as a
remedy for the inaccuracy of any representation or warranty made by the Company
or a Securitization Subsidiary in connection with the sale or transfer of such
Eligible Securitization Asset to such Person.
"Restricted Cash" shall mean any cash of the Company or any Subsidiary
(other than a Securitization Subsidiary) on deposit with financial institutions
as a reserve against possible losses from defaults on lease payments which the
Company or such Subsidiary has sold to or discounted with such financial
institutions.
"Restricted Investments" shall mean investments, loans and advances
of the type referred to in (S)5.17(k).
"S&P" shall mean Standard & Poor's Corporation and its successors
and assigns.
"SEC" shall mean the Securities and Exchange Commission or any
successor agency.
"Securitization Subsidiary" shall mean any Subsidiary of which all of
the issued and outstanding shares of stock (or beneficial interest in the case
of a business trust) shall be owned by the Company and/or one or more of its
Wholly-owned Subsidiaries or Securitization Subsidiaries and which engages
exclusively in financing Eligible Securitization Assets and activities related
to such financing activities.
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
"Securitized Debt" shall mean Indebtedness for borrowed money of a
Securitization Subsidiary which is secured by any Lien or other charge upon
Eligible Securitization Assets owned by such Securitization Subsidiary.
"Security" shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
"Senior Debt" shall mean all Debt other than Subordinated Debt and
Securitized Debt.
"Subordinated Debt" shall mean all Debt of the Company which is not
secured by any Lien and which shall (a) contain or have applicable thereto
covenants which are no more restrictive than the covenants contained in (S)5 and
subordination provisions substantially in the form set forth in Exhibit E
hereof, or such other covenants or provisions as may be approved in writing by
the holders of not less than 66-2/3% in aggregate principal amount of the
outstanding Notes, (b) have a final maturity date after March 31, 1995 (provided
that the Company's 13% Subordinated Notes due December 1, 1994 shall constitute
Subordinated Debt, and (c) have a Weighted Average Life to Maturity greater than
the Weighted Average Life to Maturity of the Notes.
"Subordinated Funded Debt" shall mean all Subordinated Debt of the
Company which is also Funded Debt.
The term "Subsidiary" shall mean any business entity (i) whose
financial statements are required in accordance with GAAP to be consolidated
with the financial statements of the Company, (ii) which is organized under the
laws of the United States or any State thereof, (iii) which conducts
substantially all of its business and has substantially all of its assets within
the United States, and (iv) of which more than 80% (by number of votes) of the
Voting Stock (or the beneficial interest in the case of a business trust) is
owned by the Company and/or one or more Subsidiaries.
"Tangible Assets" shall mean, as of the date of any determination
thereof, the total amount of all assets of the Company and its Subsidiaries
(less depreciation, depletion and other properly deductible valuation reserves)
after deducting all goodwill, patents, trade names, trade marks, copyrights,
franchises, experimental expense, organization expense, unamortized debt
discount and expense, deferred assets other than prepaid insurance and prepaid
taxes, the excess of cost of shares acquired over book value of related assets
and such other assets as are properly classified as "intangible assets" in
accordance with GAAP.
"Total Liabilities" shall mean, as of the date of any determination
thereof, Guaranties of Indebtedness of others and all items which in accordance
with GAAP would be included on the liability side of a consolidated balance
sheet of the Company and its Subsidiaries (including, without limitation, all
leases discounted with financial institutions) other than deferred income taxes,
capital stock of any class and surplus.
"Unencumbered Assets" shall mean the aggregate amount of assets of the
Company and its Subsidiaries shown on the Company's consolidated balance sheet
which are
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
unencumbered by Liens securing Debt; provided that no lease which is a
Repurchased Asset shall constitute an Unencumbered Asset at any time when any
scheduled payment thereunder is past due by more than 60 days.
"Unsecured Senior Debt" shall mean all Senior Debt having no
existing Liens attached thereto.
"Voting Stock" shall mean Securities of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
"Weighted Average Life to Maturity" with respect to the Notes shall
mean, as at the time of determination, the number of years obtained by dividing
the then Remaining Dollar-years of the Notes by the outstanding principal amount
of the Notes. The term "Remaining Dollar-years" of the Notes means the product
obtained by (1) multiplying (A) the amount of each then remaining required
principal payment (including payment at final maturity), by (B) the number of
years (calculated to the nearest one-twelfth) which will elapse between the time
of determination and the date such required payment is due, and (2) totaling all
the products obtained in (1).
"Wholly-owned" when used in connection with any Subsidiary shall mean
a Subsidiary of which all of the issued and outstanding shares of stock (except
shares required as directors' qualifying shares) and all Indebtedness for
borrowed money shall be owned by the Company and/or one or more of its Wholly-
owned Subsidiaries.
Section 8.2. Accounting Principles. Where the character or amount
of any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, the same shall be done in accordance
with GAAP, to the extent applicable, except where such principles are
inconsistent with the requirements of this Agreement.
Section 9. Miscellaneous.
Section 9.1. Registered Notes. The Company shall cause to be kept
at its principal office a register for the registration and transfer of the
Notes (hereinafter called the "Note Register"), and the Company will register or
transfer or cause to be registered or transferred, as hereinafter provided and
under such reasonable regulations as it may prescribe, any Note issued pursuant
to this Agreement.
At any time and from time to time the registered holder of any Note
which has been duly registered as hereinabove provided may transfer such Note
upon surrender thereof at the principal office of the Company duly endorsed or
accompanied by a written instrument of transfer duly executed by the registered
holder of such Note or its attorney duly authorized in writing.
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
The Person in whose name any registered Note shall be registered shall
be deemed and treated as the owner and holder thereof for all purposes of this
Agreement. Payment of or on account of the principal, premium, if any, and
interest on any registered Note shall be made to or upon the written order of
such registered holder.
Section 9.2. Exchange of Notes. At any time, and from time to time,
upon not less than ten days' notice to that effect given by the holder of any
Note initially delivered or of any Note substituted therefor pursuant to (S)9.1,
this (S)9.2 or (S)9.3, and, upon surrender of such Note at its office, the
Company will deliver in exchange therefor, without expense to the holder, except
as set forth below, Notes for the same aggregate principal amount as the then
unpaid principal amount of the Note so surrendered, in the denomination of
$100,000 or any amount in excess thereof as such holder shall specify, dated as
of the date to which interest has been paid on the Note so surrendered or, if
such surrender is prior to the payment of any interest thereon, then dated as of
the date of issue, payable to such Person or Persons, or order, as may be
designated by such holder, and otherwise of the same form and tenor as the Notes
so surrendered for exchange. The Company may require the payment of a sum
sufficient to cover any stamp tax or governmental charge imposed upon such
exchange or transfer.
Section 9.3. Loss, Theft, etc. of Notes. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of any
Note, and in the case of any such loss, theft or destruction upon delivery of a
bond of indemnity in such form and amount as shall be reasonably satisfactory to
the Company, or in the event of such mutilation upon surrender and cancellation
of the Note, the Company will make and deliver without expense to the holder
thereof, a new Note, of like tenor, in lieu of such lost, stolen, destroyed or
mutilated Note. If any Purchaser or any subsequent institutional holder is the
owner of any such lost, stolen or destroyed Note, then the affidavit of an
authorized officer of such owner, setting forth the fact of loss, theft or
destruction and of its ownership of the Note at the time of such loss, theft or
destruction shall be accepted as satisfactory evidence thereof and no further
indemnity shall be required as a condition to the execution and delivery of a
new Note other than the written agreement of such owner to indemnify the
Company.
Section 9.4. Expenses, Stamp Tax Indemnity. Whether or not the
transactions herein contemplated shall be consummated, the Company agrees to pay
directly all of your out-of-pocket expenses in connection with the preparation,
execution and delivery of this Agreement and the transactions contemplated
hereby, including but not limited to the reasonable charges and disbursements of
Chapman and Cutler, your special counsel, duplicating and printing costs and
charges for shipping the Notes, adequately insured to you at your home office or
at such other place as you may designate, and all such expenses relating to any
amendment, waivers or consents pursuant to the provisions hereof. The Company
also agrees that it will pay and save you harmless against any and all liability
with respect to stamp and other taxes, if any, which may be payable or which may
be determined to be payable in connection with the execution and delivery of
this Agreement or the Notes, whether or not any Notes are then outstanding. The
Company agrees to protect and indemnify you against any liability for any and
all brokerage fees and commissions payable or claimed to be payable to any
Person in connection with the transactions contemplated by
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
this Agreement. The obligation of the Company to pay expenses pursuant to this
(S)9.4, (S)5.19 and (S)6.2 shall survive the payment of the Notes.
Section 9.5. Powers and Rights Not Waived; Remedies Cumulative. No
delay or failure on the part of the holder of any Note in the exercise of any
power or right shall operate as a waiver thereof; nor shall any single or
partial exercise of the same preclude any other or further exercise thereof, or
the exercise of any other power or right, and the rights and remedies of the
holder of any Note are cumulative to and are not exclusive of any rights or
remedies any such holder would otherwise have, and no waiver or consent, given
or extended pursuant to (S)7 hereof, shall extend to or affect any obligation or
right not expressly waived or consented to.
Section 9.6. Waiver of Jury Trial; Jurisdiction and Venue. The
Company and you, and each subsequent holder of a Note by acceptance thereof,
each hereby irrevocably waives any right to a trial by jury of any and all
issues, matters and disputes arising out of this Agreement or the Notes, or
otherwise arising out of or in connection with the Loan made hereunder, and
agrees that such issues, matters and disputes shall be determined by the court
without a jury. The Company further agrees that (a) any action brought against
it, by you or any other holder of the Notes, hereunder or under the Notes or
otherwise arising out of or in connection with the loan made hereunder, may be
brought in the North Carolina courts having subject matter jurisdiction that are
located in the judicial district that includes Charlotte, North Carolina
(wherein your principal office is located and wherein this Agreement is accepted
by you), or in the United States District Court for the judicial district that
includes Charlotte, North Carolina, or in the Illinois courts having subject
matter jurisdiction that are located in any judicial district that includes
Chicago, Illinois, or in the United States District Court for the judicial
district that includes Chicago, Illinois, as you or such holder may determine;
(b) the Company hereby submits to personal jurisdiction in said courts and
consents to service of process on it by mail sent to its address for notices as
provided in (S)9.7; and (c) the Company hereby consents to venue in said courts
and waives any right to change venue from said courts; provided that the
foregoing shall not limit your right or the right of any other holder of the
Notes to bring any action in any other court, jurisdiction or judicial district
in which such action could be brought, or limit alternative means of service of
process on the Company as permitted by law.
Section 9.7. Notices. All communications provided for hereunder
shall be in writing and, if to you, delivered by overnight courier or mailed by
registered or certified mail, or by facsimile communication, addressed to you at
your address appearing on Schedule I to this Agreement or such other address as
you or any subsequent holder of any Note initially issued to you may designate
to the Company in writing, and if to the Company, delivered by overnight courier
or mailed by registered or certified mail or by facsimile communication, to the
Company at 3000 Dundee Road, Northbrook, Illinois 60062, Attention: Chairman,
or to such other address as the Company may in writing designate to you or to a
subsequent holder of the Note initially issued to you; provided, however, that a
notice to you by facsimile communication shall only be effective if made by
confirmed transmission to you at a telephone number designated for such purpose
in Schedule I or as
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Trans Leasing International, Inc. Amended and Restated Loan Agreement
you or a subsequent holder of any Note initially issued to you may designate in
writing and notice is also sent by overnight courier on the same day such
facsimile communication is transmitted.
Section 9.8. Non-Business Day. If any principal of the Notes shall
fall due on any day which is not a Business Day, interest at the rate such Notes
bear for the period prior to maturity shall continue to accrue on such principal
from the stated due date thereof to and including the next succeeding Business
Day on which the same is payable.
Section 9.9. Successors and Assigns. This Agreement shall be
binding upon the Company and its successors and assigns and shall inure to your
benefit and to the benefit of your successors and assigns, including each
successive holder or holders of any Notes.
Section 9.10. Survival of Covenants and Representations. All
covenants, representations and warranties made by the Company herein and in any
certificates delivered pursuant hereto, whether or not in connection with the
Closing Date, shall survive the closing and the delivery of this Agreement and
the Notes.
Section 9.11. Severability. Should any part of this Agreement for
any reason be declared invalid, such decision shall not affect the validity of
any remaining portion, which remaining portion shall remain in force and effect
as if this Agreement had been executed with the invalid portion thereof
eliminated and it is hereby declared the intention of the parties hereto that
they would have executed the remaining portion of this Agreement without
including therein any such part, parts, or portion which may, for any reason, be
hereafter declared invalid.
Section 9.12. Governing Law. This Agreement and the Notes issued
and sold hereunder shall be governed by and construed in accordance with
Illinois law.
Section 9.13. Captions. The descriptive headings of the various
Sections or parts of this Agreement are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof.
Section 9.14. Requisite Approval; Opinion; Fees and Expenses. This
Amended and Restated Loan Agreement shall not become effective until (i) the
Company and the holders of 51% in aggregate principal amount of all Notes
outstanding on the date hereof shall have executed and delivered this Amended
and Restated Loan Agreement, (ii) the holders of Notes shall have received an
opinion of counsel which shall be satisfactory in scope and form to such
holders, and (iii) the Company shall have paid all reasonable out-of-pocket
expenses incurred by the holders of Notes in connection with the consummation of
the transactions contemplated by this Amended and Restated Loan Agreement,
including, without limitation, the fees, expenses and disbursements of Chapman
and Cutler which are reflected in statements of such counsel rendered on or
prior to the effective date of this Amended and Restated Loan Agreement.
-37-
<PAGE>
Trans Leasing International, Inc. Amended and Restated Loan Agreement
Section 9.15. Affirmation. Except as expressly amended hereby, the
Company agrees that the Loan Agreement, the Notes and all other documents and
agreements executed by the Company in connection with the execution and delivery
of the Loan Agreement and the loan evidenced by the Notes, shall remain in full
force and effect. From and after the effective date of this Amended and
Restated Loan Agreement, all references to the Loan Agreement or any similar
term shall be deemed to be references to the Amended and Restated Loan
Agreement.
-38-
<PAGE>
Trans Leasing International, Inc. Amended and Restated Loan Agreement
The execution hereof by you shall constitute a contract between us for
the uses and purposes hereinabove set forth, and this Amended and Restated Loan
Agreement may be executed in any number of counterparts, each executed
counterpart constituting an original but all together only one agreement.
Trans Leasing International, Inc.
By /s/ Norman Smagley
---------------------------------
Its Vice President, Finance & Chief
--------------------------------
Financial Officer
Accepted as of November 30, 1994
First Union National Bank of North Carolina
By /s/ Christopher R. Snyder
---------------------------------
Its Assistant Vice President
--------------------------------
-39-
<PAGE>
Principal Amount
Name and Address of Notes Evidencing
of Lender Loans
First Union National Bank $10,000,000
of North Carolina
One First Union Center
Charlotte, North Carolina 28288-0735
Attention: Reginald Imamura
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Trans Leasing International, Inc., Floating Rate Senior Installment Notes
due March 31, 1995, principal or interest") to:
First Union National Bank of North Carolina
One First Union Center
Charlotte, North Carolina 28288-0735
Attention: Hannah Carmody
for credit to First Union National Bank of North Carolina's
Account No. 0530 00 219
Notices
All notices and communications, including notices with respect to payments
and written confirmation of each such payment, to be addressed as first
provided above.
Name of Nominee in which Notes are to be issued: None.
SCHEDULE 1
(to Loan Agreement)
<PAGE>
Trans Leasing International, Inc.
Floating Rate Senior Installment Note
Due March 31, 1995
No. R-
$ ___________, 19__
Trans Leasing International, Inc., a Delaware corporation (the "Company"),
for value received, hereby promises to pay to
or registered assigns
the principal amount of
Dollars ($ )
payable in semiannual principal installments of $_________ each on September 30,
1991, March 31, 1992, September 30, 1992 and March 31, 1993 and in semiannual
principal installments of $__________ each on September 30, 1993, March 31,
1994, September 30, 1994 and March 31, 1995, together with interest (computed on
the basis of a 360-day year of twelve 30-day months) from the date hereof until
maturity on the principal amount from time to time remaining unpaid hereon at
the rate determined in the manner set forth in Section 1 of the Loan Agreement
hereinafter referred to, payable semiannually on the last day of March and
September in each year (commencing September 30, 1991) and at maturity. Both
the principal hereof and interest hereon are payable in the manner and at the
place set forth in the Loan Agreement hereinafter referred to in coin or
currency of the United States of America which at the time of payment shall be
legal tender for the payment of public and private debts.
This Note is one of the Floating Rate Senior Installment Notes of the Company
in the aggregate principal amount of $10,000,000 issued or to be issued under
and pursuant to the terms and provisions of a Loan Agreement dated as of April
1, 1991 (the "Loan Agreement"), entered into by the Company with the original
Lender therein referred to and this Note and the holder hereof are entitled
equally and ratably with the holders of all other Notes outstanding under the
Loan Agreement to all the benefits and security provided for thereby or referred
to therein, to which Loan Agreement reference is hereby made for the statement
thereof.
This Note and the other Notes outstanding under the Loan Agreement may be
declared due prior to their expressed maturity dates all in the events, on the
terms and in the manner and amounts as provided in the Loan Agreement.
EXHIBIT A
(to Loan Agreement)
<PAGE>
The Notes are not subject to prepayment or redemption at the option of the
Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts set forth in the Loan Agreement.
This Note is registered on the books of the Company and is transferable only
by surrender thereof at the principal office of the Company duly endorsed or
accompanied by a written instrument of transfer duly executed by the registered
holder of this Note or its attorney duly authorized in writing. Payment of or
on account of principal, premium, if any, and interest on this Note shall be
made only to or upon the order in writing of the registered holder.
Trans Leasing International, Inc.
By
------------------------------
Its President
A-2
<PAGE>
Trans Leasing International, Inc.
Closing Certificate
First Union National Bank
of North Carolina
One First Union Center
Charlotte, North Carolina 28288-0735
Gentlemen:
This certificate is delivered to you in compliance with the
requirements of the Loan Agreement dated as of April 1, 1991 (the "Agreement"),
entered into by the undersigned, Trans Leasing International, Inc., a Delaware
corporation (the "Company"), with you, and as an inducement to and as part of
the consideration for your loan on this date in the principal amount of
$10,000,000, as evidenced by $10,000,000 principal amount of Floating Rate
Senior Installment Notes (the "Notes") of the Company pursuant to the Agreement.
The terms which are capitalized herein shall have the same meanings as in the
Agreement.
The Company represents and warrants to each of you as follows:
1. Subsidiaries. Trans Leasing Insurance Services, Inc., an
Illinois corporation, Nuvotron, Inc., an Illinois corporation, and
T.L.I. Auto Leasing Group, Inc., an Illinois corporation, are the only
Subsidiaries of the Company and all of the Voting Stock of each
Subsidiary is owned by the Company. The Company has good and
marketable title to all of the shares it purports to own of the stock
of each Subsidiary, free and clear of any lien. All such shares have
been duly issued and are fully paid and non-assessable.
2. Corporate Organization and Authority. The Company, and each
Subsidiary,
(a) is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation;
(b) has all requisite power and authority and all licenses and
permits material and necessary to own and operate its properties and
to carry on its business as now conducted and as presently proposed
to be conducted; and
(c) is duly licensed or qualified and is in good standing as a
foreign corporation in each jurisdiction wherein the nature of the
business transacted by it or the nature of the property owned or
leased by it makes such licensing or qualification necessary.
EXHIBIT B
(to Loan Agreement)
<PAGE>
3. Business and Property. You have heretofore been furnished with a
copy of the Form 10-K of the Company for the fiscal year ended June 30,
1990 and Form 10-Q of the Company for the fiscal quarter period ended
December 31, 1990 (the "Disclosure Documents") which generally set forth
the business conducted and proposed to be conducted by the Company and its
Subsidiaries and the principal properties of the Company and its
Subsidiaries.
4. Financial Statements. (a) The consolidated balance sheets of the
Company and its Subsidiaries as of June 30 in each of the years 1986 to
1990, both inclusive, and the related statements of earnings, stockholders'
equity and changes in financial position or cash flows for the fiscal years
ended on said dates accompanied by a report thereon containing an opinion
unqualified as to scope limitations imposed by the Company and otherwise
without qualification except as therein noted, by Deloitte & Touche
(formerly Touche Ross & Co.), have been prepared in accordance with GAAP
consistently applied except as therein noted, are correct and complete and
present fairly the financial position of the Company and its Subsidiaries
as of such dates and the results of their operations and changes in their
financial position or cash flows for such periods. The unaudited
consolidated balance sheets of the Company and its Subsidiaries as of
December 31, 1990, and the unaudited statements of earnings and cash flows
for the six-month period ended on said date prepared by the Company have
been prepared in accordance with GAAP consistently applied, are correct and
complete and present fairly the financial position of the Company and its
Subsidiaries as of said date and the results of their operations and cash
flows for such period.
(b) Since December 31, 1990, there has been no change in the
condition, financial or otherwise, of the Company and its Subsidiaries as
shown on the consolidated balance sheets as of such date except changes in
the ordinary course of business, none of which individually or in the
aggregate has been materially adverse.
5. Indebtedness. Annex A attached hereto correctly describes all
Current Debt, Funded Debt, Capitalized Leases and Long-Term Leases of the
Company, as lessee, and its Subsidiaries outstanding on December 31, 1990.
6. Full Disclosure. The financial statements referred to in
paragraph 4 do not, nor do the Disclosure Documents or any other written
statement furnished by the Company to you in connection with the
negotiation of the loan, contain any untrue statement of a material fact or
omit a material fact necessary to make the statements contained therein or
herein not misleading. There is no fact peculiar to the Company or its
Subsidiaries which the Company has not disclosed to you in writing which
materially affects adversely nor, so far as the Company can now reasonably
foresee, will materially affect adversely the properties, business,
prospects, profits or condition (financial or otherwise) of the Company and
its Subsidiaries.
7. Pending Litigation. There are no proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company or
any
B-2
<PAGE>
Subsidiary in any court or before any governmental authority or
arbitration board or tribunal which involve the possibility of materially
and adversely affecting the properties, business, prospects, profits or
financial condition of the Company and its Subsidiaries or the ability of
the Company to perform its obligations under the Agreement and the Notes.
Neither the Company nor any Subsidiary is in default with respect to any
order of any court or governmental authority or arbitration board or
tribunal.
8. Title to Properties. The Company and each Subsidiary has good
and marketable title in fee simple (or its equivalent under applicable law)
to all the real property and has good title to all the other property it
purports to own, including that reflected in the most recent balance sheets
referred to in paragraph 4, except property subject to Capitalized Leases
or as sold or otherwise disposed of in the ordinary course of business and
except for liens disclosed in notes to the financial statements referred to
in paragraph 4 hereof or otherwise permitted by the Agreement.
9. Patents and Trademarks. The Company and each Subsidiary owns or
possesses all the patents, trademarks, trade names, service marks,
copyright, licenses and rights with respect to the foregoing necessary for
the present and planned future conduct of its business, without any known
conflict with the rights of others.
10. Loan Is Legal and Authorized. The consummation of the loan and
compliance by the Company with all of the provisions of the Agreement and
the Notes--
(a) are within the corporate powers of the Company and have
been duly authorized by proper corporate action on the part of the
Company; and
(b) will not violate any provisions of any law or any order of
any court or governmental authority or agency and will not conflict
with or result in any breach of any of the terms, conditions or
provisions of, or constitute a default under the Certificate of
Incorporation or By-laws of the Company or any indenture or other
agreement or instrument to which the Company is a party or by which
it may be bound or result in the imposition of any liens or
encumbrances on any property of the Company.
11. No Defaults. No Default or Event of Default as defined in the
Agreement has occurred and is continuing. The Company is not in default in
the payment of principal or interest on any Indebtedness for borrowed money
and is not in default under any instrument or instruments or agreements
under and subject to which any Indebtedness for borrowed money has been
issued and no event has occurred and is continuing under the provisions of
any such instrument or agreement which with the lapse of time or the giving
of notice, or both, would constitute an event of default thereunder.
B-3
<PAGE>
12. Governmental Consent. No approval, consent or withholding of
objection on the part of any regulatory body, state, Federal or local, is
necessary in connection with the execution and delivery by the Company of
the Agreement or the Notes or compliance by the Company with any of the
provisions of the Agreement or the Notes.
13. Taxes. All tax returns required to be filed by the Company or
any Subsidiary in any jurisdiction have, in fact, been filed, and all
taxes, assessments, fees and other governmental charges upon the Company or
any Subsidiary or upon any of their respective properties, income or
franchises, which are shown to be due and payable in such returns have been
paid. The Company does not know of any proposed additional tax assessment
against it for which adequate provision has not been made on its accounts.
The Federal income tax liability of the Company and its Subsidiaries has
been finally determined by the Internal Revenue Service and satisfied for
all taxable years up to and including the taxable year ended December 31,
1984 and no material controversy in respect of additional income taxes due
since said date is pending or to the knowledge of the Company threatened.
The provisions for taxes on the books of the Company and each Subsidiary
are adequate for all open years, and for that portion of its current fiscal
period through the Closing Date.
14. Use of Proceeds. The net proceeds from the loan will be used
to refinance outstanding bank Debt. None of the transactions contemplated
in the Agreement (including, without limitation thereof, the use of
proceeds from the loan) will violate or result in a violation of Section 7
of the Securities Exchange Act of 1934, as amended, or any regulation
issued pursuant thereto, including, without limitation, Regulations G, T, U
and X of the Board of Governors of the Federal Reserve System, 12 C.F.R.,
Chapter II. Neither the Company, directly or indirectly, nor any
Subsidiary owns or intends to carry or purchase any "margin stock" within
the meaning of said Regulation U. None of the proceeds from the loan will
be used to purchase, or refinance, any borrowing, the proceeds of which
were used to purchase any "security" within the meaning of the Securities
and Exchange Act of 1934, as amended.
15. Private Offering. Neither the Company, directly or indirectly,
nor any agent on its behalf has offered or will offer the Notes or any
similar Security or has solicited or will solicit an offer to acquire the
Notes or any similar Security from or has otherwise approached or
negotiated or will approach or negotiate in respect of the Notes or any
similar Security with any Person other than you and not more than 22 other
institutional investors, each of whom was offered a portion of the Notes at
private sale for investment. Neither the Company, directly or indirectly,
nor any agent on its behalf has offered or will offer the Notes or any
similar Security or has solicited or will solicit an offer to acquire the
Notes or any similar Security from any Person so as to bring the loan
within the provisions of Section 5 of the Securities Act of 1933, as
amended.
B-4
<PAGE>
16. Employee Retirement Income Security Act of 1974. Assuming the
correctness of your representations in (S)3.2, the consummation of the
transactions provided for in the agreement and compliance by the Company
with the provisions thereof and the Notes issued thereunder will not
involve any prohibited transaction within the meaning of the Employee
Retirement Income Security Act of 1974 ("ERISA") or Section 4975 of the
Internal Revenue Code. No "employee pension benefit plans", as defined in
ERISA ("Plans"), are maintained by the Company or any Person which is under
common control with the Company within the meaning of Section 4001(b) of
ERISA.
17. Investment Company Act. The Company is not, and is not
directly or indirectly controlled by or acting on behalf of any person
which is, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
18. Holding Company Act Status. The Company is not a "holding
company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company", as such terms are defined in the Public
Utility Holding Company Act of 1935, as amended.
Dated: April __, 1991
Trans Leasing International, Inc.
By
------------------------------
Its
B-5
<PAGE>
Description of Debt and Leases
1. Current Debt of the Company and its Subsidiaries outstanding on
December 31, 1990 is as follows:
<TABLE>
<S> <C>
Accounts Payable and Accrued Expenses
$ 2,509,000
Notes Payable to Banks 44,111,000
13% Subordinated Notes 2,222,000
Leases Discounted With Financial Institutions 833,000
-----------
$49,675,000
===========
</TABLE>
2. Funded Debt of the Company and its Subsidiaries outstanding on
December 31, 1990 is as follows:
<TABLE>
<S> <C>
10.15% Senior Notes $ 2,500,000
13% Subordinated Notes 6,667,000
9.80% Senior Notes 15,000,000
Leases Discounted With Financial Institutions 134,000
10.39% Senior Notes 10,000,000
-----------
$34,301,000
===========
</TABLE>
3. Long-Term Leases of the Company and its Subsidiaries outstanding on
December 31, 1990 are as follows:
<TABLE>
<CAPTION>
Lessor Description
<S> <C> <C>
Dart & Kraft Computer equipment,
office furniture, phone $ 81,869
system
Lederer Realty Office space 973,893
Waldenstrom Warehouse space 192,699
MPI Management Office Space 46,323
-----------
$ 1,294,784
===========
</TABLE>
4. Capitalized Leases of the Company and its Subsidiaries outstanding on
December 31, 1990 are as follows:
None
ANNEX A
(to Loan Agreement)
*list secured Debt separately
<PAGE>
Description of Special Counsel's Closing Opinion
The closing opinion of Chapman and Cutler, special counsel to the Lender,
called for by (S)4.2 of the Loan Agreement, shall be dated the Closing Date and
addressed to the Lender, shall be satisfactory in form and substance to the
Lender and shall be to the effect that:
(1) The Company is a corporation, duly incorporated, legally
existing and in good standing under the laws of the State of Delaware, has
corporate power and authority and is duly authorized to enter into and
perform the Loan Agreement and to issue the Notes and incur the
Indebtedness to be evidenced thereby;
(2) The Loan Agreement has been duly authorized, executed and
delivered by the Company and constitutes the legal, valid and binding
contract and agreement of the Company enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally, and subject, as to enforceability,
to general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law);
(3) The Notes have been duly authorized by proper corporate action
on the part of the Company, have been duly executed by authorized officers
of the Company and delivered and constitute the legal, valid and binding
obligations of the Company enforceable in accordance with their terms,
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally, and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law);
(4) No approval, consent or withholding of objection on the part of,
or filing, registration or qualification with, any governmental body,
Federal, state or local, is necessary in connection with the execution and
delivery of the Loan Agreement or the Notes; and
(5) The consummation of the loan and the issuance and delivery of
the Notes under the circumstances contemplated by the Loan Agreement is an
exempt transaction under the Securities Act of 1933, as amended, and does
not under existing law require the registration of the Notes under the
Securities Act of 1933, as amended, or the qualification of an indenture in
respect thereof under the Trust Indenture Act of 1939.
The opinion of Chapman and Cutler shall also state that the opinion of
Kirkland & Ellis is satisfactory in scope and form to Chapman and Cutler and
that, in their opinion, the Lender is justified in relying thereon and shall
cover such other matters relating to the loan as the Lender may reasonably
request. In rendering the opinion set forth in paragraph (1) above, Chapman and
Cutler may rely solely upon the Certificate of Incorporation of the Company
certified by the Secretary of State of the State of Delaware and the good
standing certificate for the Company in the State of Delaware. With respect to
matters of fact upon which such opinion is based, Chapman and Cutler may rely on
appropriate certificates of public officials and officers of the Company.
EXHIBIT C
(to Loan Agreement)
<PAGE>
Description of Closing Opinion of Counsel to the Company
The closing opinion of Kirkland & Ellis, counsel for the Company,
which is called for by (S)4.2 of the Loan Agreement, shall be dated the Closing
Date and addressed to the Lender, shall be satisfactory in scope and form to the
Lender and shall cover the matters referred to in paragraphs 1 through 5 of
Exhibit C and shall also be to the effect that:
(1) The Company has corporate power and authority and is duly
authorized to conduct the activities in which it is now engaged and is
qualified and is in good standing in each jurisdiction in which the
character of the properties owned or leased by it or the nature of the
business transacted by it makes such qualification necessary, except where
the failure to be so qualified would not have a material adverse effect on
the Company's financial condition;
(2) Each Subsidiary is a corporation duly organized, legally
existing and in good standing under the laws of its jurisdiction of
incorporation and is qualified to do business as a foreign corporation and
in good standing in each jurisdiction in which the character of the
properties owned or leased by it or the nature of the business transacted
by it makes such licensing or qualification necessary, except where the
failure to be so qualified would not have a material adverse effect on the
Company's financial condition. The outstanding shares of capital stock of
each such Subsidiary are fully paid and non-assessable and have been duly
and validly issued and are owned by the Company;
(3) The consummation of the loan, the issuance of the Notes and the
execution, delivery and performance by the Company of the Loan Agreement
and the making of payments under the Notes do not conflict with or result
in any breach of any of the provisions of or constitute a default under or
result in the creation or imposition of any lien or encumbrance upon any of
the property of the Company pursuant to the provisions of the Certificate
of Incorporation or By-laws of the Company or any agreement or other
instrument known to such counsel, to which the Company is a party or by
which the Company may be bound;
(4) The Notes constitute "Superior Indebtedness" as defined in the
Subordinated Note Agreement dated as of November 1, 1987, under and
pursuant to which the Company's Subordinated Debt is outstanding;
(5) To such counsel's knowledge (based solely upon inquiries of
officers of the Company), there is not now pending or threatened any
action, suit or proceeding before any court or any governmental or
regulatory authority against the Company or its property or assets which
would reasonably be expected to result in any material adverse change in
the financial condition of the Company or which would materially impair the
ability of the Company to execute and perform the Loan Agreement and the
Notes; and
EXHIBIT D
(to Loan Agreement)
<PAGE>
(6) The use of the proceeds from the loan to refinance outstanding
bank Debt will not violate or result in a violation of Section 7 of the
Securities Exchange Act of 1934, as amended, or any regulation issued
pursuant to such Section or Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R., Chap. II.
The opinion of Kirkland & Ellis shall cover such other matters
relating to the loan as the Lender may reasonably request. With respect to
matters of fact on which such opinion is based, such counsel shall be entitled
to rely on appropriate certificates of public officials and officers of the
Company.
D-2
<PAGE>
Subordination Provisions Applicable to
Subordinated Debt
The indebtedness evidenced by the subordinated notes/*/ and any
renewals or extensions thereof, shall at all times be wholly subordinate and
junior in right of payment to any and all indebtedness of the Company [here
insert description of indebtedness to which Subordinated Debt is subordinated
which in all events must include the Notes] (herein called "Superior
Indebtedness"), in the manner and with the force and effect hereinafter set
forth:
(a) In the event of any insolvency or bankruptcy proceedings, and
any receivership, liquidation, reorganization, arrangement or other similar
proceedings in connection therewith, relative to the Company or to its
creditors, as such, or to its property, and in the event of any
proceedings, for voluntary liquidation, dissolution or other winding-up of
the Company, whether or not involving insolvency or bankruptcy, then the
holder of Superior Indebtedness shall be entitled to receive payment in
full of all principal, premium and interest on all Superior Indebtedness
before the holders of the [DESCRIBE SUBORDINATED DEBT] are entitled to
receive any payment on account of principal, premium or interest upon the
[DESCRIBE SUBORDINATED DEBT], and to that end (but subject to the power of
a court of competent jurisdiction to make other equitable provisions
reflecting the rights conferred in this Agreement upon the Superior
Indebtedness and the holders thereof with respect to the subordinate
indebtedness represented by the [DESCRIBE SUBORDINATED DEBT] and the
holders thereof by a lawful plan of reorganization under applicable
bankruptcy law) the holders of Superior Indebtedness shall be entitled to
receive for application in payment thereof any payment or distribution of
any kind or character, whether in cash or property or securities, which may
be payable or deliverable in any such proceedings in respect of the
[DESCRIBE SUBORDINATED DEBT], except securities which are subordinate and
junior in right of payment to the payment of all Superior Indebtedness then
outstanding;
(b) On or prior to the Subordination Modification Date, (i) in the
event that pursuant to the provisions hereof the [DESCRIBE SUBORDINATED
DEBT] are declared or become due and payable before their expressed
maturity because of an occurrence of an event of default described herein
(under circumstances when the foregoing paragraph (a) shall not be
applicable) or otherwise, no amount shall be paid by the Company in respect
of the principal of or interest on the [DESCRIBE SUBORDINATED DEBT] unless
and until all Superior Indebtedness outstanding at the time the [DESCRIBE
SUBORDINATED DEBT] so become due and payable because of any such event,
shall have been paid in full or payment thereof shall have been provided
for in a manner satisfactory to the holders of such outstanding Superior
Indebtedness, or (ii) in the event that the holders of in excess of 25% of
any issue of the Superior Indebtedness shall have, in good faith, demanded
payment of the entire
- - - -------------------------
/*/ Or debentures or other designation as may be appropriate.
EXHIBIT E
(to Loan Agreement)
<PAGE>
principal amount of such Superior Indebtedness after such Superior
Indebtedness shall become due, as a result of a default in respect thereof
or at maturity, if the Company shall have failed to pay such Superior
Indebtedness in full, no amount shall be paid by the Company in respect of
principal or interest on the [DESCRIBE SUBORDINATED DEBT] unless and until
such Superior Indebtedness shall have been paid in full;
(c) On or after the Subordination Modification Date, (i) in the
event that pursuant to the provisions hereof the [DESCRIBE SUBORDINATED
DEBT] are declared or become due and payable before their expressed
maturity because of the occurrence of an event of default described herein
(under circumstances when the foregoing paragraph (a) shall not be
applicable) or otherwise, no amount shall be paid by the Company in respect
of the principal of or interest on the [DESCRIBE SUBORDINATED DEBT] in
excess of current interest payments as provided herein, unless and until
all Superior Indebtedness outstanding at the time the [DESCRIBE
SUBORDINATED DEBT] so become due and payable because of any such event,
shall have been paid in full or payment thereof shall have been provided
for in a manner satisfactory to the holders of such outstanding Superior
Indebtedness, or (ii) in the event that the holders of in excess of 25% of
any issue of the Superior Indebtedness shall have, in good faith, demanded
payment of the entire principal amount of such Superior Indebtedness after
such Superior Indebtedness shall become due, as a result of a default in
respect thereof or at maturity, if the Company shall have failed to pay
such Superior Indebtedness in full, no amount shall be paid by the Company
in respect of principal or interest on the [DESCRIBE SUBORDINATED DEBT]
unless and until such Superior Indebtedness shall have been paid in full;
and
(d) Notwithstanding any of the other provisions of this Agreement,
during the continuance of (x) any default (a "Superior Indebtedness Payment
Default") in the payment of either principal or interest with respect to
any Superior Indebtedness or (y) any default (a "Superior Indebtedness Non-
Payment Default") other than a Superior Indebtedness Payment Default with
respect to any Superior Indebtedness, no payment of principal, interest or
make-whole premium amount shall be made on or with respect to the
indebtedness evidenced by the [DESCRIBE SUBORDINATED DEBT] or any renewals
or extensions thereof for the period (each such period being referred to as
a "Non-Payment Period")
(i) commencing on the date that any one or more of the holders
of Superior Indebtedness shall have given written notice of such
default to the Company and ending on the date (A) 180 days (in the
case of a Superior Indebtedness Payment Default) and (B) 120 days (in
the case of a Superior Indebtedness Non-Payment Default), as the case
may be, after such notice shall have been given, or
(ii) commencing on the date that judicial proceedings shall
have been commenced by one or more holders of Superior Indebtedness
holding an aggregate principal amount of Superior Indebtedness of not
less than $5,000,000 with respect to such default and ending on the
date on which such judicial proceedings shall no longer be pending or
being pursued in good faith by any one or more of the holders of
Superior Indebtedness,
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<PAGE>
provided, however, that upon the expiration of any Non-Payment Period a
subsequent Non-Payment Period shall not commence with respect to a default
attributable to the same facts or circumstances that gave rise to such
expired Non-Payment Period for the period commencing on the expiration of
the most recently ended Non-Payment Period and ending 12 calendar months
thereafter.
The Company shall not make, and the holders of the [DESCRIBE SUBORDINATED
DEBT] shall not accept, any optional prepayment of the [DESCRIBE SUBORDINATED
DEBT] at any time when such optional prepayment would be in contravention of the
terms of any Superior Indebtedness. The provisions of this section shall not be
modified or amended in any respect affecting the rights of the holders of
Superior Indebtedness under this section without the prior written consent of
the holders of the outstanding Superior Indebtedness so affected, the holders
from time to time of Superior Indebtedness being third-party beneficiaries of
the subordination provisions contained in this sectio n.
Each holder of the [DESCRIBE SUBORDINATED DEBT] agrees that prior to
the Subordination Modification Date, notwithstanding any other provisions of
this Agreement: (v) that during a Non-Payment Period (except under
circumstances where the preceding paragraph (a) is applicable) such holder shall
not commence or take any Restricted Enforcement Action (other than acceleration
upon the occurrence of a default in the payment of principal or interest on the
Superior Indebtedness); and (w) that no event of default shall be deemed to have
occurred, and such holder of the [DESCRIBE SUBORDINATED DEBT] shall not commence
or take any Restricted Enforcement Action (other than acceleration upon the
occurrence of a default in the payment of principal or interest on the Superior
Indebtedness) solely as a result of the Company's failure to make payment of
principal, interest or make-whole premium amount which it is not permitted to
make as provided in the preceding paragraph (d) so long as each such payment so
suspended or not so made as a result of the operation of the preceding paragraph
(d) is paid in full on the first day such payment is permitted to be made by the
preceding paragraph (d). Each holder of the [DESCRIBE SUBORDINATED DEBT]
further agrees that from and after the Subordination Modification Date, (x)
during a Non-Payment Period (except under circumstances in which the preceding
paragraph (a) is applicable) such holder shall not commence or take any
Restricted Enforcement Action (other than (1) acceleration during the Non-
Payment Period described in the preceding subparagraph (d)(ii) or (2) the
institution of proceedings in equity for specific performance after commencement
of judicial proceedings by holders of Superior Indebtedness as described in the
preceding subparagraph (d)(ii)); and (y) during a Non-Payment Period described
in the preceding subparagraph (d)(i) no event of default shall be deemed to have
occurred solely as a result of the Company's failure to make payment of
principal, interest or make-whole premium amount which it is not permitted to
make as provided in the preceding paragraph (d) so long as each such payment so
suspended or not so made as a result of the operation of the preceding paragraph
(d) is paid in full on the first day such payment is permitted to be made by the
preceding paragraph (d). Each holder of the [DESCRIBE SUBORDINATED DEBT]
further agrees that no event of default shall be deemed to have occurred, and
such holder of the [DESCRIBE SUBORDINATED DEBT] shall not commence or take any
Restricted Enforcement Action solely as a result of a default with respect to
any Superior
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<PAGE>
Indebtedness which gave rise to a Non-Payment Period described in the preceding
paragraph (d) if such default with respect to such Superior Indebtedness shall
have been either effectively waived by the holder or holders of such Superior
Indebtedness or cured by the Company, in either case, prior to the expiration of
the Non-Payment Period which resulted from such default with respect to such
Superior Indebtedness.
Any dividend, distribution or payment of any kind or character,
whether in cash, property or securities (other than securities that are
subordinated and junior in right of payment to the payment of all (x) Superior
Indebtedness that may at the time be outstanding or (y) obligations evidenced by
securities that may have been issued in exchange for or in lieu of Superior
Indebtedness in a reorganization plan in connection with proceedings of the type
referred to in the preceding paragraph (a)) which shall be made upon or in
respect of the indebtedness evidenced by the [DESCRIBE SUBORDINATED DEBT], or
any renewals or extensions thereof, in contravention of any of the terms of
these subordination provisions, shall be paid over to the holders of Superior
Indebtedness, pro rata, for application in payment thereof unless and until the
Superior Indebtedness shall have been paid and satisfied in full and, until so
paid over, the same shall be held in trust by such holders of the [DESCRIBE
SUBORDINATED DEBT] as the property of the holders of such Superior Indebtedness.
The Company covenants and agrees, for the benefit of each and every
present and future holder of Superior Indebtedness that in the event that the
[DESCRIBE SUBORDINATED DEBT] are declared or become due and payable because of
an occurrence of an event of default described herein or otherwise, then each
holder of any Superior Indebtedness then outstanding shall have the right to
declare immediately due and payable on demand all or any part of such Superior
Indebtedness owing and payable to such holder, regardless of any other maturity
or terms of said Superior Indebtedness; and if and when any such default has
occurred, or any notice of default under the terms hereof may be served upon the
Company, then in each such event the Company shall and hereby agrees that it
will immediately notify the holders of the Superior Indebtedness of such default
or notice thereof, as the case may be.
Upon the payment of all amounts of Superior Indebtedness as provided
in this section or provision having been made for such payment in cash, the
holders of the [DESCRIBE SUBORDINATED DEBT] will be subrogated to the rights of
the holders of Superior Indebtedness to receive payments or distributions of
assets of the Company applicable to the Superior Indebtedness until the
principal of, and prepayment charge, if any, and interest on, the [DESCRIBE
SUBORDINATED DEBT] shall be paid in full; and no payments or distributions
(direct or indirect) to the holders of the Superior Indebtedness of cash,
property or securities to which the holders of the [DESCRIBE SUBORDINATED DEBT]
would be entitled except for the provisions of this section shall, as between
the Company, its creditors (other than the holders of Superior Indebtedness) and
the holders of the [DESCRIBE SUBORDINATED DEBT], be deemed to be a payment by
the Company to or on account of the [DESCRIBE SUBORDINATED DEBT], it being
understood that the provisions of this section are, and are intended, solely for
the purpose of defining the
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<PAGE>
relative rights of the holders of the [DESCRIBE SUBORDINATED DEBT], on the one
hand, and the holders of Superior Indebtedness, on the other hand.
No right of any present or future holder of any Superior Indebtedness
of the Company to enforce subordination as herein provided shall at any time or
in any way be prejudiced or impaired by any failure to act on the part of the
Company, or by any noncompliance by the Company with the terms, provisions and
covenants of this Agreement, regardless of any knowledge thereof that any such
holder of Superior Indebtedness may have or be otherwise charged with.
The provisions hereof are solely for the purpose of defining the
relative rights of the holders of Superior Indebtedness on the one hand, and the
holders of the [DESCRIBE SUBORDINATED DEBT] on the other hand, and nothing
herein shall impair, as between the Company and the holder of the [DESCRIBE
SUBORDINATED DEBT], the obligation of the Company, which is unconditional and
absolute, to pay to the holders of the [DESCRIBE SUBORDINATED DEBT] the
principal, premium, if any, and interest hereon in accordance with its terms,
nor shall anything herein prevent the holder of any [DESCRIBE SUBORDINATED DEBT]
from exercising all remedies otherwise permitted by applicable law or hereunder
upon default hereunder, subject to the rights, if any, of holders of Superior
Indebtedness as herein provided.
Each and every holder of the [DESCRIBE SUBORDINATED DEBT] by
acceptance thereof shall undertake and agree for the benefit of each holder of
Superior Indebtedness to execute, verify, deliver and file any proofs of claim,
consents, assignments or other instruments which any holder of Superior
Indebtedness may at any time require in order to prove and realize upon any
rights or claims pertaining to the [DESCRIBE SUBORDINATED DEBT] and to
effectuate the full benefit of the subordination contained herein; and upon
failure of any such holder of any of the [DESCRIBE SUBORDINATED DEBT] so to do,
any such holder of Superior Indebtedness shall be deemed to be irrevocably
appointed the agent and attorney-in-fact of such holder to execute, verify,
deliver and file any such proofs of claim, consents, assignments or other
instruments.
"CIGNA Debt" shall mean the 9.80% Senior Notes of the Company issued
under the separate Note Agreements dated as of December 1, 1989, between the
Company and Connecticut General Life Insurance Company, on behalf of one or more
separate accounts, Insurance Company of North America, CIGNA Property and
Casualty Insurance Company, Connecticut General Life Insurance Company and
Phoenix Mutual Life Insurance Company, respectively.
"First Union Debt" shall mean the Floating Rate Senior Installment
Notes of the Company issued under the Loan Agreement dated as of April 1, 1991,
between the Company and First Union National Bank of North Carolina.
"Restricted Enforcement Action" shall mean (i) any acceleration of the
[DESCRIBE SUBORDINATED DEBT] hereunder, (ii) any act which reasonably could be
expected to cause the Company to be subject to any bankruptcy, reorganization,
arrangement,
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<PAGE>
insolvency, or other proceeding for relief under any bankruptcy or
similar law or laws for the relief of debtors, or (iii) the institution of any
proceeding at law or in equity for the payment of any principal, interest or
premium, if any, under the [DESCRIBE SUBORDINATED DEBT].
"Subordination Modification Date" shall mean the first date after
which all indebtedness in respect of the CIGNA Debt and the First Union Debt
shall have been discharged.
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<PAGE>
EXHIBIT 10.39
(CONFORMED COPY)
================================================================================
Trans Leasing International, Inc.
Amended and Restated Note Agreement
Dated as of November 30, 1994
Re: Note Agreement dated as of June 15, 1992
And
$10,000,000 13.40% Subordinated Notes
Due June 30, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
(Not a part of the Agreement)
Section Heading Page
Parties...................................................................... 1
Section 1. Description of Notes and Commitment............................ 1
Section 1.1. Description of Notes....................................... 1
Section 1.2. Commitment, Closing Date................................... 2
Section 2. Payment of Notes............................................... 2
Section 2.1. Required Principal Payments................................ 2
Section 2.2. Optional Prepayment........................................ 2
Section 2.3. Prepayment on Change of Control............................ 2
Section 2.4. Notice of Prepayments...................................... 3
Section 2.5. Allocation of Principal Payments........................... 4
Section 2.6. Direct Payment............................................. 4
Section 2.7. Business Days.............................................. 4
Section 3. Representations................................................ 4
Section 3.1. Representations of the Company............................. 4
Section 3.2. Representations of the Purchaser........................... 4
Section 4. Closing Conditions............................................. 5
Section 4.1. Closing Certificate........................................ 5
Section 4.2. Legal Opinions............................................. 5
Section 4.3. Satisfactory Proceedings................................... 5
Section 4.4. Consent of Holders of Other Indebtedness................... 5
Section 4.5. Payment of Fees of Special Counsel......................... 5
Section 4.6. Waiver of Conditions....................................... 5
Section 5. Company Covenants.............................................. 6
Section 5.1. Corporate Existence, Etc................................... 6
Section 5.2. Insurance.................................................. 6
Section 5.3. Taxes, Claims for Labor and Materials,Compliance with Laws. 6
Section 5.4. Maintenance, Etc........................................... 7
Section 5.5. Nature of Business......................................... 7
Section 5.6. Consolidated Tangible Net Worth............................ 7
Section 5.7. Permitted Debt............................................. 7
Section 5.8. Limitations on Liabilities................................. 8
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<PAGE>
Section 5.9. Fixed Charge Coverage...................................... 8
Section 5.10. Limitation on Liens........................................ 8
Section 5.11. Restricted Payments........................................ 10
Section 5.12. Limitation on Long-Term Leases............................. 11
Section 5.13. Mergers, Consolidations and Sales of Assets................ 11
Section 5.14. Guaranties................................................. 12
Section 5.15. Repurchase of Notes........................................ 12
Section 5.16. Transactions with Affiliates............................... 13
Section 5.17. Investments................................................ 13
Section 5.18. Termination of Pension Plans............................... 15
Section 5.19. Reports and Rights of Inspection........................... 15
Section 5.20. Consolidated Tax Returns................................... 18
Section 5.21. Sale of Eligible Securitization Assets..................... 18
Section 6. Events of Default and Remedies Therefor........................ 18
Section 6.1. Events of Default.......................................... 18
Section 6.2. Acceleration of Maturities................................. 19
Section 6.3. Rescission of Acceleration................................. 20
Section 7. Amendments, Waivers and Consents............................... 20
Section 7.1. Consent Required........................................... 20
Section 7.2. Effect of Amendment or Waiver.............................. 21
Section 7.3. Solicitation of Noteholders................................ 21
Section 8. Interpretation of Agreement.................................... 21
Section 8.1. Definitions................................................ 21
Section 8.2. Accounting Principles...................................... 30
Section 9. Subordination of the Notes..................................... 31
Section 10. Miscellaneous.................................................. 35
Section 10.1. Registered Notes........................................... 35
Section 10.2. Exchange of Notes.......................................... 35
Section 10.3. Loss, Theft, Etc. of Notes................................. 36
Section 10.4. Expenses, Stamp Tax Indemnity.............................. 36
Section 10.5. Powers and Rights Not Waived; Remedies Cumulative.......... 36
Section 10.6. Notices.................................................... 37
Section 10.7. Successors and Assigns..................................... 37
Section 10.8. Survival of Covenants and Representations.................. 37
Section 10.9. Severability............................................... 37
Section 10.10. Governing Law.............................................. 37
Section 10.11. Captions................................................... 37
Section 10.12. Requisite Approval......................................... 37
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<PAGE>
Section 10.13. Affirmation.................................................. 38
Signature.................................................................... 39
Attachments to Note Agreement:
Schedule I - Name and Address of Purchaser
Exhibit A - Form of 13.40% Subordinated Note
Exhibit B - Closing Certificate of the Company
Exhibit C - Description of Special Counsel's Closing Opinion
Exhibit D - Description of Closing Opinion of Counsel to the Company
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<PAGE>
Trans Leasing International, Inc.
3000 Dundee Road
Northbrook, Illinois 60062
Amended and Restated Note Agreement
Re: Note Agreement dated as of June 15, 1992
and
$10,000,000 13.40% Subordinated Notes
Due June 30, 1999
Dated as of
November 30, 1994
Massachusetts Mutual Life
Insurance Company
1295 State Street
Springfield, MA 01111
Gentlemen:
The undersigned, Trans Leasing International, Inc., a Delaware
corporation (the "Company"), desires to amend certain covenants contained in the
Note Agreement dated as of June 15, 1992 (the "Note Agreement") entered into by
the Company with you, and in order to accomplish this objective the Company
desires to amend and restate the Note Agreement. Therefore, in consideration of
the premises and of the mutual agreements contained herein, the Company agrees
with you that the Note Agreement to which you are a party shall be amended and
restated in its entirety as follows:
Section 1. Description of Notes and Commitment.
Section 1.1. Description of Notes. The Company will authorize the
issue and sale of $10,000,000 aggregate principal amount of its 13.40%
Subordinated Notes (the "Notes"), to be dated the date of issue, to bear
interest from such date at the rate of 13.40% per annum, payable semiannually on
the last day of June and December in each year (commencing December 31, 1992)
and at maturity and to bear interest on overdue principal (including any overdue
required payment or optional prepayment of principal) and premium, if any, and
(to the extent legally enforceable) on any overdue installment of interest at
the rate of 14.40% per annum after maturity, whether by acceleration or
otherwise, until paid, to be expressed to mature on June 30, 1999, and to be
substantially in the form attached hereto as Exhibit A. Interest on the Notes
shall be computed on the basis of a 360-day year of twelve 30-day months. The
Notes are not subject to prepayment or redemption at the option of the Company
prior to their expressed maturity dates except on the terms and conditions and
in the amounts and with the premium, if any, set forth in (S)2 of this
Agreement. You are hereinafter sometimes referred to as the "Purchaser".
Unless otherwise defined, the capitalized terms used herein are defined in (S)8.
<PAGE>
Section 1.2. Commitment, Closing Date. Subject to the terms and
conditions hereof and on the basis of the representations and warranties
hereinafter set forth, the Company agrees to issue and sell to you, and you
agree to purchase from the Company, Notes of the Company at a price of 100% of
the principal amount thereof on the Closing Date for such Notes hereinafter
mentioned in the aggregate principal amount set forth opposite your name in
Schedule I.
Delivery of the Notes will be made at the offices of Chapman and
Cutler, 111 West Monroe Street, Chicago, Illinois 60603, against payment
therefor in Federal or other funds current and immediately available at the
principal office of Continental Illinois National Bank and Trust Company of
Chicago in the amount of the purchase price at 10:00 A.M. Chicago time, on June
29, 1992 (the "Closing Date"). The Notes delivered to you on the Closing Date
will be delivered to you in the form of two registered Notes in the respective
principal amounts set forth opposite your name in Schedule I attached hereto,
registered in your name and in substantially the form attached hereto as Exhibit
A.
Section 2. Payment of Notes.
Section 2.1. Required Principal Payments. The Company agrees that
on the last day of June and December in each year commencing June 30, 1995 and
ending December 31, 1998, both inclusive, it will pay and apply and there shall
become due and payable on the principal indebtedness evidenced by the Notes an
amount equal to the lesser of (i) $1,110,000 or (ii) the principal amount of the
Notes then outstanding. The entire remaining principal amount of the Notes
shall become due and payable on June 30, 1999. No premium shall be payable in
connection with any required principal payment made pursuant to this (S)2.1.
Section 2.2. Optional Prepayment. In addition to the principal
payments required by (S)2.1 and upon compliance with (S)2.4, the Company shall
have the privilege, on any interest payment date on or after June 30, 1995, of
prepaying all outstanding Notes in whole and not in part by payment of the
principal amount of the Notes and accrued interest thereon to the date of such
prepayment, together with a premium equal to the Make-Whole Premium Amount
determined as of five Business Days prior to the date of such prepayment.
Section 2.3. Prepayment on Change of Control. (a) In the event
that a Put Event Date shall occur, the Company will give immediate written
notice (a "Company Notice") of such fact to all holders of the Notes. The
Company Notice shall (i) describe the facts and circumstances of such Put Event
Date in reasonable detail, (ii) refer to this (S)2.3 and the rights of the
holders of the Notes to require prepayment of their Notes on the terms and
conditions provided for herein, (iii) contain an offer by the Company to prepay
all of the outstanding Notes in full together with accrued interest to the date
of prepayment and a premium equal to the Make-Whole Premium Amount, and (iv) set
forth the date, which shall be not less than 30 nor more than 60 days following
the date of the Company Notice, on which the Company will make such prepayment.
Each holder of the Notes shall have the right to accept such offer and require
prepayment of the Notes held by such holder in full by written notice to the
Company given within 21 days following receipt of the Company
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<PAGE>
Notice. The Company shall on the prepayment date set forth in the Company Notice
prepay all Notes held by holders who have accepted such offer of prepayment.
(b) In the event the Company fails to give the Company Notice as
required above, upon the occurrence of a Put Event Date, each holder of Notes
shall have the right to require the Company to prepay such holder's Notes in
full together with accrued interest thereon to the date of prepayment and a
premium equal to the Make-Whole Premium Amount. Notice of a required prepayment
pursuant to this (S)2.3(b) shall be delivered by any holder of Notes to the
Company not more than 30 days after such holder has actual knowledge of such Put
Event Date. The date of such prepayment shall be the same date as the Put Event
Date or, in the event the Put Event Date shall have occurred prior to receipt of
the notice from a Noteholder, then such prepayment together with accrued
interest and a premium equal to the Make-Whole Premium Amount, if any, thereon
shall be on the date designated in, and shall be not less than five nor more
than ten days following the date of, such holder's notice.
"Grossman Group" shall mean Richard Grossman and his spouse, lineal
descendants, trustees of trusts established for the benefit of such Persons and
executors of the estates of such Persons.
"Put Event Date" shall mean any date upon which a Put Event shall
have occurred.
"Put Event" means any event by which either (i) the Grossman Group
shall fail to own legally and beneficially with full voting power at least 30%
of the Voting Stock of the Company, unless 51% or more of the Voting Stock of
the Company is owned by a corporation having debt obligations rated A or better
by at least two nationally recognized credit rating agencies, one of which shall
be either S&P or Moody's, or (ii) Richard Grossman shall fail to hold the office
of Chairman of the Board or President of the Company and perform the duties of
Chief Executive Officer of the Company.
Section 2.4. Notice of Prepayments. The Company will give notice of
any prepayment of the Notes pursuant to (S)2.2 to each holder thereof not less
than 30 days nor more than 60 days before the date fixed for such optional
prepayment specifying (i) such date, (ii) the section of this Agreement under
which the prepayment is to be made, (iii) the principal amount of the holder's
Notes to be prepaid on such date, (iv) that a premium may be payable, (v) the
date when such premium will be calculated and (vi) the accrued interest
applicable to the prepayment. Such notice of prepayment shall also certify all
facts which are conditions precedent to any such prepayment. Notice of
prepayment having been so given, the aggregate principal amount of the Notes
specified in such notice, together with the premium, if any, and accrued
interest thereon shall become due and payable on the prepayment date. A
computation of the amount, if any, of any premium payable in connection with a
prepayment shall be furnished to the holders of the Notes three Business Days
prior to such prepayment.
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<PAGE>
Section 2.5. Allocation of Principal Payments. All principal
payments pursuant to (S)2.1 shall be applied on all outstanding Notes ratably in
accordance with the unpaid principal amounts thereof.
Section 2.6. Direct Payment. Notwithstanding anything to the
contrary in this Agreement or the Notes, in the case of any Note owned by you or
your nominee or owned by any other institutional holder who has given written
notice to the Company requesting that the provisions of this (S)2.6 shall apply,
the Company will promptly and punctually pay when due the principal thereof and
premium, if any, and interest thereon, without any presentment thereof, directly
to you, your nominee or such subsequent holder at your address or your nominee's
address set forth in Schedule I or at such other address as you, your nominee or
such subsequent holder may from time to time designate in writing to the Company
or, if a bank account is designated for you or your nominee on Schedule I hereto
or in any written notice to the Company from you, your nominee or any such
subsequent holder, the Company will make such payments in immediately available
funds to such bank account, marked for attention as indicated, or in such other
manner or to such other account of you, your nominee or such holder in any bank
in the United States as you, your nominee or any subsequent holder may from time
to time direct in writing. The holder of any Notes to which this (S)2.6 applies
agrees that in the event it shall sell or transfer any such Notes (i) it will,
prior to the delivery of such Notes (unless it has already done so), make a
notation thereon of all principal, if any, prepaid on such Notes and will also
note thereon the date to which interest has been paid on such Notes, and (ii) it
will promptly notify the Company of the name and address of the transferee of
any Notes so transferred. With respect to Notes to which this (S)2.6 applies,
the Company shall be entitled to presume conclusively that the original or such
subsequent institutional holder as shall have requested the provisions hereof to
apply to its Notes remains the holder of such Notes until (y) the Company shall
have received notice of the transfer of such Notes, and of the name and address
of the transferee, or (z) such Notes shall have been presented to the Company as
evidence of the transfer.
Section 2.7. Business Days. If any payment of principal, premium,
if any, and/or interest on the Notes shall fall due on any day which is not a
Business Day, then payment shall be made on the next succeeding Business Day.
Section 3. Representations.
Section 3.1. Representations of the Company. The Company represents
and warrants that all representations set forth in the form of certificate
attached hereto as Exhibit B are true and correct as of the date hereof and are
incorporated herein by reference with the same force and effect as though herein
set forth in full.
Section 3.2. Representations of the Purchaser. You represent, and
in entering into this Agreement the Company understands, that you are acquiring
the Notes for the purpose of investment and not with a view to the distribution
thereof, and that you have no present intention of selling, negotiating or
otherwise disposing of the Notes; provided that the disposition of your property
shall at all times be and remain within your control. You further represent
that you are acquiring the Notes for your own account and with your
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<PAGE>
general corporate assets and not with the assets of any separate account in
which any employee benefit plan has any interest. As used in this Section, the
terms "separate account" and "employee benefit plan" shall have the respective
meanings assigned to them in ERISA.
Section 4. Closing Conditions.
Your obligation to purchase the Notes on the Closing Date shall be
subject to the performance by the Company of its agreements hereunder which by
the terms hereof are to be performed at or prior to the time of delivery of the
Notes and to the following further conditions precedent:
Section 4.1. Closing Certificate. Concurrently with the delivery of
Notes to you on the Closing Date, you shall have received a certificate dated
the Closing Date, signed by the President or a Vice President of the Company
substantially in the form attached hereto as Exhibit B, the truth and accuracy
of which shall be a condition to your obligation to purchase the Notes proposed
to be sold to you.
Section 4.2. Legal Opinions. Concurrently with the delivery of
Notes to you on the Closing Date, you shall have received from Chapman and
Cutler, who are acting as your special counsel in this transaction, and from
Kirkland & Ellis, counsel for the Company, their respective opinions dated the
Closing Date, in form and substance satisfactory to you, and covering the
matters set forth in Exhibits C and D, respectively, hereto.
Section 4.3. Satisfactory Proceedings. All proceedings taken in
connection with the transactions contemplated by this Agreement, and all
documents necessary to the consummation thereof, shall be satisfactory in form
and substance to you and your special counsel, and you shall have received a
copy (executed or certified as may be appropriate) of all legal documents or
proceedings taken in connection with the consummation of said transactions.
Section 4.4. Consent of Holders of Other Indebtedness. On or prior
to the Closing Date, any notice, consent or approvals required to be obtained
from any holder or holders of any outstanding Indebtedness of the Company and
any amendments of agreements pursuant to which any Indebtedness may have been
issued which shall be necessary to permit the consummation of the transactions
contemplated hereby shall have been obtained and all such notices, consents or
amendments shall be satisfactory in form and substance to you and your special
counsel.
Section 4.5. Payment of Fees of Special Counsel. On the Closing
Date, the Company shall have paid the reasonable fees and expenses of your
special counsel.
Section 4.6. Waiver of Conditions. If on the Closing Date the
Company fails to tender to you the Notes to be issued to you on such date or if
the conditions specified in this (S)4 have not been fulfilled, you may thereupon
elect to be relieved of all further obligations under this Agreement. Without
limiting the foregoing, if the conditions specified in this (S)4 have not been
fulfilled, you may waive compliance by the Company with any such condition
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<PAGE>
to such extent as you may in your sole discretion determine. Nothing in this
(S)4.6 shall operate to relieve the Company of any of its obligations hereunder
or to waive any of your rights against the Company.
Section 5. Company Covenants.
From and after the Closing Date and continuing so long as any
amount remains unpaid on any Note:
Section 5.1. Corporate Existence, Etc. The Company will preserve
and keep in force and effect, and will cause each Subsidiary to preserve and
keep in force and effect, its corporate existence and all licenses and permits
material and necessary to the proper conduct of its business, provided that the
foregoing shall not prevent any transaction permitted by (S)5.13.
Section 5.2. Insurance. The Company will maintain, and will cause
each Subsidiary to maintain, insurance coverage by financially sound and
reputable insurers in such forms and amounts and against such risks as are
customary for corporations of established reputation engaged in the same or a
similar business and owning and operating similar properties. In lieu of or
supplemental to such insurance, the Company may adopt such other plan or method
of protection (an "insurance plan"), whether by the establishment of an
insurance fund or reserve to be held and applied to make good losses from
casualties, or otherwise, and conforming to the practices of similar
corporations maintaining systems of self-insurance, as determined by the Board
of Directors of the Company and as shall be consistent with GAAP. The Company
shall, concurrently with its adoption of any such insurance plan, furnish to you
a certificate of an actuary or other qualified person that such insurance plan
is adequate.
Section 5.3. Taxes, Claims for Labor and Materials, Compliance with
Laws. The Company will promptly pay and discharge, and will cause each
Subsidiary promptly to pay and discharge, all lawful taxes, assessments and
governmental charges or levies imposed upon the Company or such Subsidiary,
respectively, or upon or in respect of all or any part of the property or
business of the Company or such Subsidiary, all trade accounts payable in
accordance with usual and customary business practice, and all claims for work,
labor or materials, which if unpaid might become a Lien upon any property of the
Company or such Subsidiary, the amount of which when added to the amount of all
other such Liens would exceed $10,000 in the aggregate; provided that the
Company or such Subsidiary shall not be required to pay any such tax,
assessment, charge, levy, account payable or claim if (i) the validity,
applicability or amount thereof is being contested in good faith by appropriate
actions or proceedings which will prevent the forfeiture or sale of any property
of the Company or such Subsidiary or any material interference with the use
thereof by the Company or such Subsidiary, and (ii) the Company or such
Subsidiary shall set aside on its books, reserves deemed by it to be adequate
with respect thereto. The Company will promptly comply and will cause each
Subsidiary to comply with all laws, ordinances or governmental rules and
regulations to which it is subject, including without limitation, the
Occupational Safety and Health Act of 1970, ERISA and all laws, ordinances,
governmental
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rules and regulations relating to environmental protection in all
applicable jurisdictions, except for violations thereof which would neither
materially and adversely affect the properties, business, prospects, profits or
condition of the Company or its Subsidiaries nor result in any Lien upon any
property of the Company or any Subsidiary, the amount of which when added to the
amount of all other such Liens would exceed $10,000 in the aggregate.
Section 5.4. Maintenance, Etc. The Company will maintain, preserve
and keep, and will cause each Subsidiary to maintain, preserve and keep, its
properties which are used or useful in the conduct of its business (whether
owned in fee or a leasehold interest) in good repair and working order and from
time to time will make all necessary repairs, replacements, renewals and
additions so that at all times the efficiency thereof shall be maintained.
Section 5.5. Nature of Business. Neither the Company nor any
Subsidiary will engage in any business if, as a result, either (i) the general
nature of the business, taken on a consolidated basis, which would then be
engaged in by the Company and its Subsidiaries would be substantially changed
from the leasing of property under "sales type," "direct financing" or
"operating" leases, the sale of property on conditional sale contracts, the
financing of lease receivables, installment sale contract receivables and
revolving credit receivables and related business engaged in by the Company and
its Subsidiaries on the date of this Agreement, or (ii) less than 80% of the
gross revenue of the Company and its Subsidiaries (determined on a consolidated
basis in accordance with GAAP) would be derived from the activities described in
clause (i) above related to equipment which has an original cost of less than
$75,000.
Section 5.6. Consolidated Tangible Net Worth. The Company will at
all times keep and maintain Consolidated Tangible Net Worth at an amount not
less than $12,000,000.
Section 5.7. Permitted Debt. The Company will not and will not
permit any Subsidiary to create, assume or incur or in any manner become or
remain liable in respect of any Debt, except:
(a) the Notes;
(b) Senior Debt of the Company;
(c) other Subordinated Debt of the Company;
(d) Debt of the Company secured by Liens permitted by (S)5.10;
(e) Securitized Debt secured by Liens permitted by (S)5.10;
(f) Debt outstanding on the date hereof and reflected on the
consolidated balance sheet of the Company and its Subsidiaries at
March 31, 1992; and
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(g) Debt of a Subsidiary to the Company or to a Wholly-owned
Subsidiary.
Section 5.8. Limitations on Liabilities. The Company will not
at any time permit:
(a) the aggregate amount of Adjusted Total Liabilities to exceed
an amount equal to 400% of Adjusted Tangible Net Worth; or
(b) Subordinated Funded Debt to exceed an amount equal to 150% of
Consolidated Tangible Net Worth; or
(c) the aggregate amount of Unencumbered Assets to be less than an
amount equal to 110% of the aggregate principal amount of outstanding
Unsecured Senior Debt.
Section 5.9. Fixed Charge Coverage. For each period of four
consecutive fiscal quarters ending on the last day of each fiscal quarter, Net
Income Available for Fixed Charges shall have been an amount which was at least
110% of Fixed Charges for such period of four fiscal quarters; provided that on
the fiscal quarter ending September 30, 1994, Net Income Available for Fixed
Charges shall have been an amount which was at least 110% of Fixed Charges for
the period of only the immediately preceding three consecutive fiscal quarters.
Section 5.10. Limitation on Liens. The Company will not, and will
not permit any Subsidiary to, create or incur, or suffer to be incurred or to
exist, any Lien on its or their property or assets, whether now owned or
hereafter acquired, or upon any income or profits therefrom, or transfer any
property for the purpose of subjecting the same to the payment of obligations in
priority to the payment of its or their general creditors, or acquire or agree
to acquire, or permit any Subsidiary to acquire, any property or assets upon
conditional sales agreements or other title retention devices, except:
(a) Liens for property taxes and assessments or governmental
charges or levies and Liens securing claims or demands of mechanics
and materialmen, provided that payment thereof is not at the time
required by (S)5.3;
(b) Liens of or resulting from any judgment or award, the time for
the appeal or petition for rehearing of which shall not have expired,
or in respect of which the Company or a Subsidiary shall at any time
in good faith be prosecuting an appeal or proceeding for a review and
in respect of which a stay of execution pending such appeal or
proceeding for review shall have been secured;
(c) Liens and priority claims incidental to the conduct of
business or the ownership of properties and assets (including liens in
connection with workers' compensation, unemployment insurance and
other like laws, warehousemen's and attorneys' Liens and statutory
landlords' Liens) and deposits, pledges or Liens, not exceeding
$500,000 in aggregate amount, to secure the performance of bids,
tenders or trade contracts, or to secure statutory obligations, surety
or appeal bonds or other
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Liens of like general nature incurred in the ordinary course of
business and not in connection with the borrowing of money, provided
in each case, the obligation secured is not overdue for a period of
more than 30 days or is being contested in good faith by appropriate
actions or proceedings;
(d) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and
other similar purposes, or zoning or other restrictions as to the use
of real properties, which are necessary for the conduct of the
activities of the Company and its Subsidiaries or which customarily
exist on properties of corporations engaged in similar activities and
similarly situated and which do not in any event materially impair
their use in the operation of the business of the Company and its
Subsidiaries;
(e) Liens securing Indebtedness of a Subsidiary to the Company or
to a Wholly-owned Subsidiary;
(f) Liens or other arrangements for the retention of title
(including Capitalized Leases) existing as of March 31, 1992, securing
Debt of the Company or any Subsidiary outstanding on such date and
identified in Annex A to Exhibit B of this Agreement;
(g) Liens existing on the date of this Agreement and identified in
Annex A to Exhibit B of this Agreement which were given to secure the
purchase price of fixed assets (x) leased or sold by the Company or a
Subsidiary in the ordinary course of business under direct full payout
leases and (y) acquired or purchased by the Company or such Subsidiary
with proceeds of secured Debt the obligation for the payment of which
is limited to the amounts payable under such leases; provided that (i)
the Lien shall attach solely to the property acquired or purchased and
(ii) all such Debt shall have been incurred within the applicable
limitations provided in (S)5.8;
(h) Liens incurred after the Closing Date given to secure the
payment of the purchase price incurred in connection with the
acquisition of fixed assets useful and intended to be used in carrying
on the business of the Company or a Subsidiary, including Liens
existing on such fixed assets at the time of acquisition thereof or at
the time of acquisition by the Company or a Subsidiary of any business
entity then owning such fixed assets, whether or not such existing
Liens were given to secure the payment of the purchase price of the
fixed assets to which they attach so long as they were not incurred,
extended or renewed in contemplation of such acquisition, provided
that (i) the Lien or charge shall attach solely to the property
acquired or purchased, (ii) at the time of acquisition of such fixed
assets, the aggregate amount remaining unpaid on all Debt secured by
Liens on such fixed assets whether or not assumed by the Company or a
Subsidiary shall not exceed an amount equal to 15% of Consolidated
Tangible Net Worth, and (iii) all such Debt shall have been incurred
within the applicable limitations provided in (S)5.8;
(i) deposits of Restricted Cash in existence as of the Closing
Date; and
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(j) Liens securing Securitized Debt, provided that the Lien or
charge shall attach only to Eligible Securitization Assets owned by a
Securitization Subsidiary.
Section 5.11. Restricted Payments. The Company will not --
(a) Declare or pay any dividends, either in cash or property, on
any shares of its capital stock of any class (except dividends or
other distributions payable solely in shares of capital stock of the
Company); or
(b) Directly or indirectly, or through any Subsidiary, purchase,
redeem or retire any shares of its capital stock of any class or any
warrants, rights or options to purchase or acquire any shares of its
capital stock; or
(c) Make any other payment or distribution, either directly or
indirectly or through any Subsidiary, in respect of its capital stock;
or
(d) Make any optional prepayment on account of principal of
Subordinated Funded Debt, or purchase or permit any Subsidiary to
purchase any Subordinated Funded Debt (other than to the extent of the
net proceeds to the Company from the issue after December 31, 1992 of
other Subordinated Funded Debt);
(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock, warrants, rights or options and optional
prepayments of Subordinated Funded Debt, and all such other distributions being
herein collectively called "Restricted Payments"), if after giving effect
thereto the aggregate amount of Restricted Payments made during the period from
and after December 31, 1992 to and including the date of the making of the
Restricted Payment in question, would exceed the sum of (i) 2,000,000, (ii) 50%
of Consolidated Net Income for such period, computed on a cumulative basis for
said entire period (or if such Consolidated Net Income is a deficit figure, then
minus 100% of such deficit) and (iii) the net proceeds to the Company from the
issue or sale after December 31, 1992 of shares of capital stock of the Company
or warrants, rights or options to purchase or acquire any shares of its capital
stock.
The Company will not declare any dividend which constitutes a
Restricted Payment payable more than 60 days after the date of declaration
thereof.
The Company will not make any Restricted Payment if at the time of the
making of such payment and after giving effect thereto, any Default or Event of
Default shall exist hereunder.
For the purposes of this (S)5.11, the amount of any Restricted Payment
declared, paid or distributed in property of the Company shall be deemed to be
the greater of the book value or fair market value (as determined in good faith
by the Board of Directors of the Company) of such property at the time of the
making of the Restricted Payment in question.
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Section 5.12. Limitation on Long-Term Leases. The Company will not
and will not permit any Subsidiary to become obligated, as lessee, under any
Long-Term Lease if at the time of entering into any such Long-Term Lease and
after giving effect thereto, the aggregate Rentals payable by the Company and
all of its Subsidiaries on a consolidated basis in any one fiscal year
thereafter under all Long-Term Leases would exceed 10% of Consolidated Tangible
Net Worth determined at the end of the preceding fiscal quarter.
Section 5.13. Mergers, Consolidations and Sales of Assets. (a) The
Company will not, and will not permit any Subsidiary to (i) consolidate with or
be a party to a merger with any other corporation or (ii) sell, lease or
otherwise dispose of all or any substantial part (as hereinafter defined) of the
assets of the Company and its Subsidiaries, provided, however, that:
(1) any Subsidiary may merge or consolidate with or into the
Company or any Wholly-owned Subsidiary so long as in any merger or
consolidation involving the Company, the Company shall be the
surviving or continuing corporation and in the case of any merger or
consolidation of a Subsidiary with or into a Wholly-owned Subsidiary,
such Wholly-owned Subsidiary shall be the surviving or continuing
corporation;
(2) the Company may consolidate or merge with any other
corporation if (i) either (a) the Company shall be the surviving or
continuing corporation, or (b) if the surviving or continuing entity
is other than the Company, such entity is organized under the law of
the United States or a state thereof, expressly assumes all
obligations of the Company under this Agreement and the Notes by
written agreement satisfactory to the holders of 51% or more in
aggregate principal amount of the outstanding Notes, and has debt
obligations rated A or better by two nationally recognized credit
rating agencies, one of which shall be either S&P or Moody's, and (ii)
at the time of such consolidation or merger and after giving effect
thereto, no Default or Event of Default shall have occurred and be
continuing; and
(3) any Subsidiary may sell, lease or otherwise dispose of all or
any substantial part of its assets to the Company or any Wholly-owned
Subsidiary.
(b) The Company will not permit any Subsidiary to issue or sell any
shares of stock of any class (including as "stock" for the purposes of this
(S)5.13, any warrants, rights or options to purchase or otherwise acquire stock
or other Securities exchangeable for or convertible into stock) of such
Subsidiary to any Person other than the Company or a Wholly-owned Subsidiary,
except for the purpose of qualifying directors, or except in satisfaction of the
validly pre-existing preemptive rights of minority shareholders in connection
with the simultaneous issuance of stock to the Company and/or a Subsidiary
whereby the Company and/or such Subsidiary maintain their same proportionate
interest in such Subsidiary.
(c) The Company will not sell, transfer or otherwise dispose of any
shares of stock in any Subsidiary (except to qualify directors) or any
Indebtedness of any Subsidiary, and
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will not permit any Subsidiary to sell, transfer or otherwise dispose of (except
to the Company or a Wholly-owned Subsidiary) any shares of stock or any
Indebtedness of any other Subsidiary, unless:
(1) simultaneously with such sale, transfer, or disposition, all
shares of stock and all Indebtedness of such Subsidiary at the time
owned by the Company and by every other Subsidiary shall be sold,
transferred or disposed of as an entirety;
(2) the Board of Directors of the Company shall have determined,
as evidenced by a resolution thereof, that the retention of such stock
and Indebtedness is no longer in the best interests of the Company;
(3) such stock and Indebtedness is sold, transferred or otherwise
disposed of to a Person, for a cash consideration and on terms
reasonably deemed by the Board of Directors to be adequate and
satisfactory;
(4) the Subsidiary being disposed of shall not have any continuing
investment in the Company or any other Subsidiary not being
simultaneously disposed of; and
(5) such sale or other disposition does not involve a substantial
part (as hereinafter defined) of the assets of the Company and its
Subsidiaries.
As used in this (S)5.13, a sale, lease or other disposition of assets
shall be deemed to be a "substantial part" of the assets of the Company and its
Subsidiaries only if the book value of such assets when added to the book value
of all other assets sold, leased or otherwise disposed of by the Company and its
Subsidiaries (other than (i) sales in the ordinary course of business, including
sales of equipment with respect to which leases have terminated (ii) the
disposition of Eligible Securitization Assets by the Company to a Securitization
Subsidiary, and (iii) the sale, transfer or other disposition of Eligible
Securitization Assets by the Company or any Securitization Subsidiary to any
Person in connection with an Eligible Securitization Transaction) during any
period of 12 consecutive calendar months, exceeds 15% of all consolidated assets
of the Company and its Restricted Subsidiaries determined as of the end of the
immediately preceding fiscal year. Sales or other realization on delinquent
receivables shall not be included in any computation of sales or other
dispositions hereunder.
Section 5.14. Guaranties. The Company will not and will not permit
any Subsidiary to become or be liable in respect of any Guaranty except
Guaranties of the Company which are limited in amount to a stated maximum dollar
exposure and included in Consolidated Funded Debt.
Section 5.15. Repurchase of Notes. Neither the Company nor any
Subsidiary or Affiliate, directly or indirectly, may repurchase or make any
offer to repurchase any Notes unless the offer has been made to repurchase
Notes, pro rata, from all holders of the Notes at the same time and upon the
same terms. In case the Company repurchases any Notes, such Notes shall
thereafter be cancelled and no Notes shall be issued in substitution therefor.
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Section 5.16. Transactions with Affiliates. The Company will not,
and will not permit any Subsidiary to, enter into or be a party to, any
transaction or arrangement with any Affiliate (including without limitation, the
purchase from, sale to or exchange of property with, or the rendering of any
service by or for, any Affiliate), except in the ordinary course of and pursuant
to the reasonable requirements of the Company's or such Subsidiary's business
and upon fair and reasonable terms no less favorable to the Company or such
Subsidiary than would be obtainable in a comparable arm's-length transaction
with a Person other than an Affiliate. The existence and continuation of the
arrangements pursuant to which the Company pays certain insurance premiums for
Persons related to Richard Grossman described in the sections captioned
"Executive Compensation" and "Certain Relationships and Related Transactions" of
the Company's most recent Annual Report on Form 10-K will not be deemed to
violate this (S)5.16, so long as the aggregate amount of such premiums does not
exceed $200,000.
Section 5.17. Investments. The Company will not, and will not
permit any Subsidiary to, have or make any investments in or loans, advances or
extensions of credit to, any Person, except:
(a) investments, loans and advances by the Company and its
Subsidiaries in and to Subsidiaries, including any investment in a
corporation which, after giving effect to such investment, will become
a Subsidiary;
(b) investments in commercial paper maturing in 270 days or less
from the date of issuance which is accorded the highest rating by S&P,
Moody's or other nationally recognized credit rating agency of similar
standing;
(c) investments in direct obligations of the United States of
America, or any agency thereof, or obligations guaranteed by the full
faith and credit of the United States of America, provided that all
such obligations mature in twelve months or less from the date of
acquisition thereof;
(d) investments in certificates of deposit maturing within one
year from the date of origin, issued by a bank or trust company
organized under the laws of the United States or any state thereof,
having capital, surplus and undivided profits aggregating at least
$100,000,000
(e) investments in debt obligations of corporations organized and
existing under the laws of the United States, any state or the
District of Columbia maturing in 12 months or less from the date of
acquisition thereof, and rated AA or better by S&P or Aa or better by
Moody's or other nationally recognized rating agency of similar
standing;
(f) loans or advances in the usual and ordinary course of business
to officers, directors and employees for expenses (including moving
expenses related to a transfer) incidental to carrying on the business
of the Company or any Subsidiary;
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(g) receivables (including notes taken pursuant to the collection
of leases) arising in the ordinary course of business of the Company
and its Subsidiaries;
(h) money market funds sponsored by insurance companies,
investment banking firms or commercial banking institutions which are
members of the Federal Reserve System, provided such fund (i) has
assets of not less than $100,000,000 and (ii) invests solely in
investments permitted under subparagraphs (b), (c) and (d) above;
(i) investments in promissory notes (i) which are issued by a
manufacturer or vendor of personal property or which are issued by a
finance company or broker owning lease receivables, (ii) which
evidence a loan made by the Company to such persons described in
clause (i), and (iii) the payment or performance of which is secured
pursuant to the terms of the promissory notes or one or more separate
assignments or security agreements executed by the maker thereof, by
one or more leases owned by such persons described in clause (i) and
by the property covered by such leases;
(j) investments, loans and advances by the Company and its
Securitization Subsidiaries in and to any Person in connection with an
Eligible Securitization Transaction; and
(k) other investments, loans and advances (in addition to those
permitted by the foregoing provisions of this (S)5.17) provided that
the aggregate amount of all such other investments, loans and advances
at any time owned by the Company and its Subsidiaries shall not exceed
an amount equal to 15% of Shareholders' Equity.
In valuing any investments, loans and advances for the purpose of
applying the limitations set forth in this (S)5.17, such investments, loans and
advances shall be taken at the original cost thereof, without allowance for any
subsequent write-offs or appreciation or depreciation therein, but less any
amount repaid or recovered in cash on account of capital or principal.
For purposes of this (S)5.17, at any time when a corporation becomes a
Subsidiary, all investments of such corporation at such time shall be deemed to
have been made by such corporation, as a Subsidiary, at such time.
Section 5.18. Termination of Pension Plans. The Company will not
and will not permit any Subsidiary to permit any employee benefit plan
maintained by it to be terminated in a manner which would result in the
imposition of a lien on any property of the Company or any Subsidiary pursuant
to Section 4068 of ERISA.
Section 5.19. Reports and Rights of Inspection. The Company will
keep, and will cause each Subsidiary to keep, proper books of record and account
in which full and correct entries will be made of all dealings or transactions
of or in relation to the business and affairs of the Company or such Subsidiary,
in accordance with GAAP consistently applied (except for changes disclosed in
the financial statements furnished to you pursuant to this
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<PAGE>
(S)5.19 and concurred in by the independent public accountants referred to in
(S)5.19(b) hereof) and (without duplication of materials furnished pursuant to
(S)5.19(d) below) will furnish to you so long as you are the holder of any Note
and to each other institutional holder of the then outstanding Notes (in
duplicate if so specified below or otherwise requested):
(a) Quarterly Statements. Promptly upon their being available,
quarterly reports on Form 10-Q filed by the Company with the SEC, or,
if the Company for any reason is not required to file such reports, as
soon as available and in any event within 45 days after the end of
each quarterly fiscal period (except the last) of each fiscal year,
copies of:
(1) a consolidated balance sheet of the Company and its
Subsidiaries as of the close of such quarter setting forth in
comparative form the amount for the corresponding period of the
preceding fiscal year,
(2) consolidated statements of income and retained earnings of
the Company and its Subsidiaries for such quarterly period and for
the year-to-date ending with such quarter, setting forth in
comparative form the amount for the corresponding period of the
preceding fiscal year, and
(3) a consolidated statement of cash flows of the Company and
its Subsidiaries for the quarterly period and for the year-to-date
ending with such quarter, setting forth in comparative form the
amount for the corresponding period of the preceding fiscal year,
all in reasonable detail, prepared in accordance with GAAP and
certified as fairly presenting, in all material respects, the
financial position and the results of operations and cash flows,
subject to changes resulting from year-end adjustments, of the Company
and its Subsidiaries by an authorized financial officer of the
Company;
(b) Annual Statements. As soon as available and in any event
within 120 days after the close of each fiscal year of the Company,
copies of:
(1) consolidated and consolidating balance sheets of the
Company and its Subsidiaries as of the close of such fiscal year,
and
(2) consolidated and consolidating statements of income and
stockholders' equity and cash flows of the Company and its
Subsidiaries for such fiscal year,
in each case setting forth in comparative form the consolidated
figures for the preceding fiscal year, all in reasonable detail and
accompanied by an unqualified opinion thereon of a firm of independent
public accountants of recognized national standing selected by the
Company to the effect that the consolidated financial statements have
been prepared in accordance with GAAP consistently applied (except
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for changes in application in which such accountants concur and which
are so noted) and present fairly, in all material respects, the
financial position and results of operations and cash flows of the
Company and its Subsidiaries and that the examination of such
accountants in connection with such financial statements has been made
in accordance with generally accepted auditing standards and included
such tests of the accounting records and such other auditing
procedures as were considered necessary in the circumstances;
(c) Audit Reports. Promptly upon receipt thereof, one copy of each
interim or special audit made by independent accountants of the books
of the Company or any Subsidiary and any management letter received
from such accountants;
(d) SEC and Other Reports. Promptly upon their becoming available,
one copy of each financial statement, report, notice or proxy
statement sent by the Company to stockholders generally and of each
regular or periodic report (including reports on Forms 8-K, 10-K and
10-Q) and any registration statement or prospectus filed (other than
with respect to any employee benefit plan) by the Company or any
Subsidiary with any securities exchange or the SEC, and copies of any
orders in any proceedings to which the Company or any of its
Subsidiaries is a party, issued by any governmental agency, Federal or
state, having jurisdiction over the Company or any of its
Subsidiaries;
(e) Notice of Default or Pending Litigation. Within three Business
Days after knowledge thereof shall have come to any officer of the
Company, the Company will give written notice to the holders of the
Notes of (i) the happening of any Default or Event of Default
hereunder or (ii) any pending or threatened litigation, arbitration
proceeding or governmental proceeding against the Company or any
Subsidiary which, in the opinion of its counsel, could reasonably have
a material adverse effect on the business or properties of the Company
or any Subsidiary, taken as a whole;
(f) Officer's Certificates. Within the periods provided in
paragraphs (a) and (b) above, a certificate of an authorized financial
officer of the Company stating that he has reviewed the provisions of
this Agreement and setting forth: (i) the information and computations
(in sufficient detail) required in order to establish whether the
Company was in compliance with the requirements of (S)5.6 through
(S)5.9, inclusive, (S)5.10(h), (S)5.11, (S)5.12, (S)5.13 and
(S)5.17(k) at the end of the period covered by the financial
statements then being furnished, and (ii) whether there existed as of
the date of such financial statements and whether, to the best of his
knowledge, there exists on the date of the certificate or existed at
any time during the period covered by such financial statements any
Default or Event of Default and, if any such condition or event exists
on the date of the certificate or existed during such periods,
specifying the nature and period of existence thereof and the action
the Company took or is taking and proposes to take with respect
thereto;
(g) Accountants' Certificates. Within the period provided in
paragraph (b) above, a certificate of the accountants who render an
opinion with respect to such
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financial statements, stating that they have reviewed this Agreement
and stating further, whether in making their audit, such accountants
have become aware of any Put Event or Default or Event of Default
under any of the terms or provisions of this Agreement insofar as any
such terms or provisions pertain to or involve accounting matters or
determinations, and if any such condition or event then exists,
specifying the nature and period of existence thereof; and
(h) Requested Information. With reasonable promptness, such other
data and information as you or any such institutional holder may
reasonably request.
Without limiting the foregoing, the Company will permit you, so long as you are
the holder of any Note, and each institutional holder of the then outstanding
Notes (or such Persons as either you or such holder may designate) to visit and
inspect, under the Company's guidance, any of the properties of the Company or
any Subsidiary, to examine all their books of account, records, reports and
other papers, to make copies and extracts therefrom, and to discuss their
respective affairs, finances and accounts with their respective officers,
employees, and independent public accountants (and by this provision the Company
authorizes said accountants to discuss with you the finances and affairs of the
Company and its Subsidiaries) all at such reasonable times and as often as may
be reasonably requested. The Company shall not be required to pay or reimburse
you or any such holder for expenses which you or any such holder may incur in
connection with any such visitation or inspection; provided, however, that after
a Default or Event of Default shall have occurred and be continuing, the Company
shall be required to pay or reimburse (i) the expenses incurred by the original
Purchaser in connection with any visitation or inspection, and (ii) the expenses
incurred by a representative of all the subsequent holders in connection with
any visitation or inspection as shall be designated by 66-2/3% in aggregate
principal amount of Notes held by such subsequent holders.
Section 5.20. Consolidated Tax Returns. The Company will not and
will not permit any Subsidiary to be a party to a consolidated Federal income
tax return with any Person other than the Company and its Subsidiaries if as a
result thereof, as of any date, the aggregate amount of Federal income taxes
which the Company and its Subsidiaries have then or theretofore paid or become
obligated to pay (determined on a cumulative basis) exceeds the amount which
they would have been required to pay pursuant to a consolidated tax return
solely of the Company and its Subsidiaries.
Section 5.21. Sale of Eligible Securitization Assets. The Company
will not, and will not permit any Subsidiary to, sell, transfer or otherwise
dispose of any Eligible Securitization Assets to any Person, unless the Company
or such Subsidiary (i) receives cash proceeds (net of related expenses) equal to
at least 85% of the book value of such Eligible Securitization Assets sold,
transferred or otherwise disposed of to such Person, and (ii) applies the cash
proceeds (net of related expenses) received from such sale, transfer or other
disposition within 60 days after the receipt thereof to either repay Senior Debt
or finance new lease receivables.
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Section 6. Events of Default and Remedies Therefor.
Section 6.1. Events of Default. Any one or more of the following
shall constitute an "Event of Default" as the term is used herein:
(a) Default shall occur in the payment of interest on any Note when
the same shall have become due and such default shall continue for
more than five Business Days; or
(b) Default shall occur in the making of any required principal
payment on any of the Notes as provided in (S)2.1; or
(c) Default shall occur in the making of any other payment of the
principal of any Note or the premium thereon at the expressed or any
accelerated maturity date or at any date fixed for prepayment; or
(d) Default shall be made in the payment of the principal of or
interest on Debt of the Company and its Subsidiaries for borrowed
money having an aggregate unpaid principal amount in excess of
$1,000,000, as and when the same shall become due and payable by the
lapse of time, by declaration, by call for redemption or otherwise,
and such default shall continue beyond the period of grace, if any,
allowed with respect thereto; or
(e) Default or the happening of any event shall occur under any
indenture, agreement, or other instrument under which any Debt of the
Company or any Subsidiary for borrowed money may be issued and such
default or event shall continue for a period of time sufficient to
permit the acceleration of the maturity of Debt of the Company and its
Subsidiaries having an aggregate unpaid principal amount in excess of
$1,000,000; or
(f) Default shall occur in the observance or performance of any
covenant or agreement contained in (S)5.6 through (S)5.17, inclusive,
or (S)5.21 hereof; or
(g) Default shall occur in the observance or performance of any
other provision of this Agreement which is not remedied within 30 days
after the earlier of (i) the date a responsible officer of the Company
obtains actual knowledge of such default or (ii) notice thereof to the
Company by the holder of any Note; or
(h) Default shall occur in the observance or performance by the
Company under any interest rate swap or interest rate exchange
agreement (however denominated) or any currency swap or currency
exchange agreement; or
(i) If any representation or warranty made by the Company herein, or
made by the Company in any statement or certificate furnished by the
Company in connection with the consummation of the issuance and
delivery of the Notes or
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furnished by the Company pursuant hereto, is untrue in any material
respect as of the date of the issuance or making thereof; or
(j) Final judgment or judgments for the payment of money aggregating
in excess of $500,000 is or are outstanding against the Company or any
Subsidiary or against any property or assets of either and any one of
such judgments has remained unpaid, unvacated, unbonded or unstayed by
appeal or otherwise for a period of 30 days from the date of its
entry; or
(k) The Company or any Subsidiary becomes insolvent or bankrupt, is
generally not paying its debts as they become due or makes an
assignment for the benefit of creditors, or the Company or any
Subsidiary causes or suffers an order for relief to be entered with
respect to it under applicable Federal bankruptcy law or applies for
or consents to the appointment of a custodian, trustee or receiver for
the Company or such Subsidiary or for the major part of the property
of either; or
(l) A custodian, trustee or receiver is appointed for the Company or
any Subsidiary or for the major part of the property of either and is
not discharged within 30 days after such appointment; or
(m) Bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy or
similar law or laws for the relief of debtors, are instituted by or
against the Company or any Subsidiary and, if instituted against the
Company or any Subsidiary, are consented to or are not dismissed
within 60 days after such institution.
Section 6.2. Acceleration of Maturities. When any Event of Default
described in paragraph (a), (b) or (c) of (S)6.1 has happened and is continuing,
any holder of any Note may, and when any Event of Default described in
paragraphs (d) through (j), inclusive, of said (S)6.1 has happened and is
continuing, the holder or holders of 51% or more of the principal amount of
Notes at the time outstanding may, by notice in writing sent by registered or
certified mail to the Company, declare the entire principal and all interest
accrued on all Notes to be, and all Notes shall thereupon become, forthwith due
and payable, without any presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived. When any Event of Default
described in paragraph (k), (l) or (m) of (S)6.1 has occurred, then all
outstanding Notes shall immediately become due and payable without presentment,
demand or notice of any kind. Upon the Notes becoming due and payable as a
result of any Event of Default as aforesaid, the Company will forthwith pay to
the holders of the Notes the entire principal and interest accrued on the Notes
and, to the extent permitted by law, the Make-Whole Premium Amount. No course
of dealing on the part of any Noteholder nor any delay or failure on the part of
any Noteholder to exercise any right shall operate as a waiver of such right or
otherwise prejudice such holder's rights, powers and remedies. The Company
further agrees, to the extent permitted by law, to pay to the holder or holders
of the Notes all costs and expenses incurred by them in the collection of any
Notes upon any default hereunder or thereon, including reasonable
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compensation to such holder's or holders' attorneys for all services rendered in
connection therewith.
Section 6.3. Rescission of Acceleration. The provisions of (S)6.2
are subject to the condition that if the principal of and accrued interest on
all or any outstanding Notes have been declared immediately due and payable by
reason of the occurrence of any Event of Default described in paragraphs (d)
through (j), inclusive, of (S)6.1, the holders of 51% in aggregate principal
amount of the Notes then outstanding may, by written instrument filed with the
Company, rescind and annul such declaration and the consequences thereof,
provided that at the time such declaration is annulled and rescinded:
(a) no judgment or decree has been entered for the payment of any
monies due pursuant to the Notes or this Agreement;
(b) all arrears of interest upon all the Notes and all other sums
payable under the Notes and under this Agreement (except any
principal, interest or premium on the Notes which has become due and
payable solely by reason of such declaration under (S)6.2) shall have
been duly paid; and
(c) each and every other Default and Event of Default shall have
been made good, cured or waived pursuant to (S)7.1;
and provided further, that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right consequent
thereto.
Section 7. Amendments, Waivers and Consents.
Section 7.1. Consent Required. Any term, covenant, agreement or
condition of this Agreement may, with the consent of the Company, be amended or
compliance therewith may be waived (either generally or in a particular instance
and either retroactively or prospectively), if the Company shall have obtained
the consent in writing of the holders of at least 51% in aggregate principal
amount of outstanding Notes; provided that without the written consent of the
holders of all of the Notes then outstanding, no such waiver, modification,
alteration or amendment shall be effective (i) which will change the time of
payment (including any principal payment required by (S)2) of the principal of
or the interest on any Note or reduce the principal amount thereof or change the
rate of interest thereon, or (ii) which will change any of the provisions with
respect to optional prepayments, or (iii) which will amend the provisions of
(S)5.15, or (iv) which will change the percentage of holders of the Notes
required to consent to any such amendment, alteration or modification or any of
the provisions of this (S)7 or (S)2 or (S)6. For purposes of calculating the
percentage of outstanding Notes which have consented to any amendment of this
Agreement, or waived any provision hereof or for the purpose of calculating
whether the holders of the requisite percentage of outstanding Notes have
requested any action by the Company hereunder or taken any other action with
respect to this Agreement or the Notes, Notes held by the Company, a Subsidiary
or any Affiliates shall be excluded.
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Section 7.2. Effect of Amendment or Waiver. Any such amendment or
waiver shall apply equally to all of the holders of the Notes and shall be
binding upon them, upon each future holder of any Note and upon the Company,
whether or not such Note shall have been marked to indicate such amendment or
waiver. No such amendment or waiver shall extend to or affect any obligation
not expressly amended or waived or impair any right consequent thereon.
Section 7.3. Solicitation of Noteholders. The Company will not
solicit, request or negotiate for or with respect to any proposed waiver or
amendment of any of the provisions of this Agreement or the Notes unless each
holder of the Notes (irrespective of the amount of Notes then owned by it) shall
be informed thereof by the Company and shall be afforded the opportunity of
considering the same for a period of not less than five Business Days and shall
be supplied by the Company with a brief statement regarding the reasons for any
such proposed waiver or amendment, a copy of the proposed waiver or amendment
and such other information as any holder of the Notes shall reasonably request
regarding such amendment or waiver to enable it to make an informed decision
with respect thereto. Executed or true and correct copies of any waiver or
amendment effected pursuant to the provisions of this (S)7 shall be delivered by
the Company to each holder of outstanding Notes within 30 days following the
date on which the same shall have been executed and delivered by the holder or
holders of the requisite percentage of outstanding Notes. The Company will not,
directly or indirectly, pay or cause to be paid any remuneration, whether by way
of supplemental or additional interest, fee or otherwise, to any holder of the
Notes as consideration for or as an inducement to the entering into by any
holder of the Notes of any waiver or amendment of any of the terms and
provisions of this Agreement unless such remuneration is concurrently paid, on
the same terms, ratably to the holders of all of the Notes then outstanding.
Section 8. Interpretation of Agreement; Definitions.
Section 8.1. Definitions. Unless the context otherwise requires,
the terms hereinafter set forth when used herein shall have the following
meanings and the following definitions shall be equally applicable to both the
singular and plural forms of any of the terms herein defined:
"Adjusted Tangible Net Worth" shall mean, as of the date of any
determination thereof, the difference between (a) the sum of (i) Consolidated
Tangible Net Worth, (ii) deferred income taxes of the Company and its
Subsidiaries and (iii) Subordinated Funded Debt, and (b) the Net Tangible Assets
of Securitization Subsidiaries.
"Adjusted Total Liabilities" shall mean, as of the date of any
determination thereof, Total Liabilities less all (i) Subordinated Funded Debt
and (ii) Securitized Debt.
"Affiliate" shall mean any Person (other than a Subsidiary) (i) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Company, (ii) which
beneficially owns or holds 5% or more of any class of the Voting Stock of the
Company or (iii) 5% or more of the Voting Stock (or in
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the case of a Person which is not a corporation, 5% or more of the equity
interest) of which is beneficially owned or held by the Company or a Subsidiary.
The term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of Voting Stock, by contract or otherwise.
"Business Day" means any day other than a Saturday, Sunday or other
day on which banks in Chicago, Illinois or New York, New York are required by
law to close or are customarily closed.
"Capitalized Lease" shall mean any lease the obligation for Rentals
with respect to which is required to be capitalized on a balance sheet of the
lessee in accordance with GAAP.
"Capitalized Rentals" shall mean as of the date of any determination
thereof the amount at which the aggregate Rentals due and to become due under
all Capitalized Leases under which the Company or any Subsidiary is a lessee
would be reflected as a liability on a consolidated balance sheet of the Company
and its Subsidiaries.
"CIGNA Debt" shall mean the 9.80% Senior Notes of the Company issued
under the separate Note Agreements dated as of December 1, 1989, between the
Company and Connecticut General Life Insurance Company, on behalf of one or more
separate accounts, Insurance Company of North America, CIGNA Property and
Casualty Insurance Company, Connecticut General Life Insurance Company and
Phoenix Mutual Life Insurance Company, respectively.
"Consolidated Net Income" for any period shall mean the gross revenues
of the Company and its Subsidiaries for such period less all expenses and other
proper charges (including taxes on income), determined on a consolidated basis
in accordance with GAAP consistently applied and after eliminating earnings or
losses attributable to outstanding Minority Interests, but excluding in any
event:
(a) any gains or losses on the sale or other disposition of
investments or fixed or capital assets (other than gains or losses
resulting from the sale or disposition of lease equipment upon or
after expiration of the lease), and any taxes on such excluded gains
and any tax deductions or credits on account of any such excluded
losses;
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of any Subsidiary accrued prior to the
date it became a Subsidiary;
(d) net earnings and losses of any corporation (other than a
Subsidiary), substantially all the assets of which have been acquired
in any manner, realized by such other corporation prior to the date of
such acquisition;
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(e) net earnings and losses of any corporation (other than a
Subsidiary) with which the Company or a Subsidiary shall have
consolidated or which shall have merged into or with the Company or a
Subsidiary prior to the date of such consolidation or merger;
(f) net earnings of any business entity (other than a Subsidiary) in
which the Company or any Subsidiary has an ownership interest unless
such net earnings shall have actually been received by the Company or
such Subsidiary in the form of cash distributions;
(g) earnings resulting from any reappraisal, revaluation or write-up
of assets;
(h) any deferred or other credit representing any excess of the
equity in any Subsidiary at the date of acquisition thereof over the
amount invested in such Subsidiary;
(i) any gain arising from the acquisition of any Securities of the
Company or any Subsidiary; and
(j) any reversal of any contingency reserve, except to the extent
that provision for such contingency reserve shall have been made from
income arising during such period.
"Consolidated Net Tangible Assets" shall mean as of the date of any
determination thereof the total amount of all Tangible Assets of the Company and
its Subsidiaries after deducting all Restricted Investments, Restricted Cash and
all items which in accordance with GAAP would be included on the liability side
of a consolidated balance sheet, except deferred income taxes, capital stock of
any class, surplus, and Funded Debt of the Company and its Subsidiaries.
"Consolidated Tangible Net Worth" shall mean, as of the date of any
determination thereof, Consolidated Net Tangible Assets less (i) all accounts
receivable more than 90 days overdue unless a reserve in an amount equal to the
entire unpaid amount payable under the lease which gave rise to such receivable
shall have been created on the books of the Company, and (ii) all outstanding
Funded Debt, deferred income taxes and Minority Interests, all determined in
accordance with GAAP consolidating the Company and its Subsidiaries.
"Current Debt" shall mean as of the date of any determination thereof
all Indebtedness for money borrowed other than Funded Debt, determined on a
consolidated basis eliminating intercompany items. Current Debt shall include
any Capitalized Rentals not included in Funded Debt.
"Debt" shall mean as of the date of any determination thereof all
Current Debt and Funded Debt of the Company and its Subsidiaries, determined on
a consolidated basis eliminating intercompany items.
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"Default" shall mean any event or condition the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default as defined in (S)6.1.
"Eligible Securitization Asset" shall mean (i) any lease or
installment purchase contract (and the rights thereunder) entered into or owned
by the Company or a Securitization Subsidiary, as the case may be, which shall
have been selected for disposition in accordance with the Company's or such
Securitization Subsidiary's past practices or substantially in accordance with
standard industry practice, (ii) the Company's or such Securitization
Subsidiary's interest, as the case may be, in any equipment or other assets
which are the subject of the lease or installment purchase contract described in
the foregoing clause (i), (iii) all monies due or to become due with respect to
any of the foregoing clauses (i) or (ii), (iv) all rights and interests in the
insurance policies with respect to any of the foregoing, and (v) cash in an
amount up to the aggregate reserve or credit enhancement requirements, if any,
which the Company or any Securitization Subsidiary, as the case may be, is
obligated to fund under the documents governing an asset securitization for any
Person.
"Eligible Securitization Transaction" shall mean a sale, contribution
or transfer of Eligible Securitization Assets by the Company or any
Securitization Subsidiary to any Person in accordance with (S)5.21 for the
purpose of issuing Indebtedness secured by such Eligible Securitization Assets
which is non-recourse to the Company or any Subsidiary (other than due to
certain breaches of representations and warranties made by the Company or such
Securitization Subsidiary in connection with the sale, contribution or transfer
of Eligible Securitization Assets), the cash proceeds of which shall be remitted
in part to the Company or such Securitization Subsidiary as partial
consideration for the sale, contribution or transfer of such Eligible
Securitization Assets.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed to also refer to any successor sections.
"ERISA Affiliate" shall mean any corporation, trade or business that
is, along with the Company, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in section 414(b) and
414(c), respectively, of the Code or Section 4001 or ERISA.
"Event of Default" shall have the meaning set forth in (S)6.1.
"First Union Debt" shall mean the Floating Rate Senior Installment
Notes of the Company issued under the Loan Agreement dated as of April 1, 1991,
between the Company and First Union National Bank of North Carolina.
"Fixed Charges" for any period shall mean on a consolidated basis the
sum of (i) all Rentals (other than Rentals on Capitalized Leases) which were
accrued and payable in
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accordance with GAAP during such period by the Company and its Subsidiaries, and
(ii) all Interest Charges on all Indebtedness (including imputed interest on
Capitalized Rentals) of the Company and its Subsidiaries.
"Funded Debt" of any Person shall mean (i) all Indebtedness for
borrowed money or which has been incurred in connection with the acquisition of
assets in each case having a final maturity of more than one year from the date
of any determination thereof (or which is renewable or extendible at the option
of the obligor for a period or periods more than one year from the date of any
determination of Funded Debt), (ii) all Capitalized Rentals maturing more than
one year from the date of any determination thereof, and (iii) all Guaranties of
Debt of others. For purposes of this Agreement, Funded Debt shall include
Securitized Debt. "Consolidated" when used as a prefix to any Funded Debt shall
mean the aggregate amount of all such Funded Debt of the Company and its
Subsidiaries on a consolidated basis eliminating intercompany items.
"GAAP" shall mean generally accepted accounting principles at the
time.
"Guaranties" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing, or in effect guaranteeing,
any Indebtedness, dividend or other obligation of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person: (i) to purchase such Indebtedness or obligation or
any property or assets constituting security therefor, (ii) to advance or supply
funds (x) for the purchase or payment of such Indebtedness or obligation, (y) to
maintain working capital or other balance sheet condition or otherwise to
advance or make available funds for the purchase or payment of such Indebtedness
or obligation, or (z) to maintain fixed charge coverage or other income
statement condition, or (iii) to lease property or to purchase Securities or
other property or services primarily for the purpose of assuring the owner of
such Indebtedness or obligation of the ability of the primary obligor to make
payment of the Indebtedness or obligation, or (iv) otherwise to assure the owner
of the Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations made under this Agreement, (a) a
Guaranty in respect of any Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the principal amount of such Indebtedness for borrowed
money which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness equal
to the maximum aggregate amount of such obligation, liability or dividend, and
(b) the obligations of the Company or any Securitization Subsidiary to purchase
any Repurchased Asset from any Person in connection with an Eligible
Securitization Transaction shall not constitute a "Guaranty" so long as the
price to be paid therefor by the Company or such Securitization Subsidiary does
not exceed the value which was ascribed to such Repurchased Asset in connection
with the initial sale or transfer by the Company or any Securitization
Subsidiary to such Person and so long as such obligations have not become due
and payable.
"Indebtedness" of any Person shall mean and include all obligations of
such Person which in accordance with GAAP shall be classified upon a balance
sheet of such Person as
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liabilities of such Person, and in any event shall include all (i) obligations
of such Person for borrowed money or which has been incurred in connection with
the acquisition of property or assets, (ii) obligations secured by any lien or
other charge upon property or assets owned by such Person, even though such
Person has not assumed or become liable for the payment of such obligations,
(iii) obligations created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person,
notwithstanding the fact that the rights and remedies of the seller, lender or
lessor under such agreement in the event of default are limited to repossession
or sale of property, and (iv) Capitalized Rentals under any Capitalized Lease.
For the purpose of computing the "Indebtedness" of any Person, there shall be
excluded any particular Indebtedness to the extent that, upon or prior to the
maturity thereof, there shall have been deposited with the proper depositary in
trust the necessary funds (or evidences of such Indebtedness, if permitted by
the instrument creating such Indebtedness) for the payment, redemption or
satisfaction of such Indebtedness; and thereafter such funds and evidences of
Indebtedness so deposited shall not be included in any computation of the assets
of such Person. The obligations of the Company or any Securitization Subsidiary
to purchase any Repurchased Asset from any Person in connection with an Eligible
Securitization Transaction shall not constitute "Indebtedness" so long as the
price to be paid therefor by the Company or such Securitization Subsidiary does
not exceed the value which was ascribed to such Repurchased Asset in connection
with the initial sale or transfer by the Company or any Securitization
Subsidiary to such Person and so long as such obligations have not become due
and payable.
"Interest Charges" for any period shall mean all interest and all
amortization of debt discount and expense as determined in accordance with GAAP
on any particular Indebtedness for which such calculations are being made.
"Lien" shall mean any mortgage, pledge, security interest, conditional
sale agreement or other title retention devise (including Capitalized Lease),
encumbrance, or lien or charge of any kind.
"Long-Term Lease" shall mean any lease of real or personal property
(other than a Capitalized Lease) having an original term, including any period
for which the lease may be renewed or extended at the option of the lessor or
lessee, of more than three years.
"Make-Whole Premium Amount" shall mean at any time with respect to
Notes being prepaid pursuant to (S)2.2 or (S)2.3 or paid as a result of the
existence of an Event of Default, to the extent that the Treasury Rate at such
time is lower than 13.40% per annum, the excess of (a) the net present value of
the remaining principal and interest payments to become due on the Notes to be
prepaid, discounted at a rate which is equal to the Treasury Rate, over (b) the
aggregate principal amount of the Notes plus accrued interest then to be paid or
prepaid (it being understood that on any prepayment date, the accrued interest
shall be deemed to be zero for purposes of calculating the Make-Whole Premium
Amount). To the extent that the Treasury Rate at the time of such payment is
equal to or higher than 13.40%, the Make-Whole Premium Amount is zero.
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"Minority Interests" shall mean any shares of stock of any class of a
Subsidiary (other than directors' qualifying shares as required by law) that are
not owned by the Company and/or one or more of its Subsidiaries. Minority
Interests shall be valued by valuing Minority Interests constituting preferred
stock at the voluntary or involuntary liquidating value of such preferred stock,
whichever is greater, and by valuing Minority Interests constituting common
stock at the book value of capital and surplus applicable thereto adjusted, if
necessary, to reflect any changes from the book value of such common stock
required by the foregoing method of valuing Minority Interests in preferred
stock.
"Moody's" shall mean Moody's Investors Service, Inc. and its
successors and assigns.
"Net Tangible Assets of Securitization Subsidiaries" shall mean as of
any date of determination the difference (but not below zero) between (i) the
total assets of all Securitization Subsidiaries after deducting therefrom all
intangible assets of such Securitization Subsidiaries determined in accordance
with GAAP as shown on the consolidating balance sheet of the Company (after
eliminating intercompany and consolidating items) at such date of determination,
minus (ii) the total liabilities other than deferred income tax liabilities of
all Securitization Subsidiaries determined in accordance with GAAP as shown on
the consolidating balance sheet of the Company (after eliminating intercompany
and consolidating items) at such date of determination.
"Net Income Available for Fixed Charges" for any period shall mean the
sum of (i) Consolidated Net Income during such period plus (to the extent
deducted in determining Consolidated Net Income), (ii) all provisions for any
Federal, state or other income taxes made by the Company and its Subsidiaries
during such period and (iii) Fixed Charges during such period.
"Person" shall mean an individual, partnership, corporation, estate,
trust or unincorporated organization, and a government or agency or political
subdivision thereof.
"Plan" means a "pension plan," as such term is defined in ERISA,
established or maintained by the Company or any ERISA Affiliate or as to which
the Company or any ERISA Affiliate contributed or is a member or otherwise may
have any liability.
"Rentals" shall mean and include all fixed rents (including as such
all payments which the lessee is obligated to make to the lessor on termination
of the lease or surrender of the property) payable by the Company or a
Subsidiary, as lessee or sublessee under a lease of real or personal property,
but shall be exclusive of any amounts required to be paid by the Company or a
Subsidiary (whether or not designated as rents or additional rents) on account
of maintenance, repairs, insurance, taxes and similar charges. Fixed rents
under any so-called "percentage leases" shall be computed solely on the basis of
the minimum rents, if any, required to be paid by the lessee regardless of sales
volume or gross revenues.
"Repurchased Asset" shall mean an Eligible Securitization Asset
repurchased by the Company or a Securitization Subsidiary from any Person as a
remedy for the inaccuracy of
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any representation or warranty made by the Company or a Securitization
Subsidiary in connection with the sale or transfer of such Eligible
Securitization Asset to such Person.
"Restricted Cash" shall mean any cash of the Company or any Subsidiary
(other than a Securitization Subsidiary) on deposit with financial institutions
as a reserve against possible losses from defaults on lease payments which the
Company or such Subsidiary has sold to or discounted with such financial
institutions.
"Restricted Investments" shall mean investments, loans and advances
of the type referred to in (S)5.17(k).
"S&P" shall mean Standard & Poor's Corporation and its successors
and assigns.
"SEC" shall mean the Securities and Exchange Commission or any
successor agency.
"Securitization Subsidiary" shall mean any Subsidiary of which all of
the issued and outstanding shares of stock (or beneficial interest in the case
of a business trust) shall be owned by the Company and/or one or more of its
Wholly-owned Subsidiaries or Securitization Subsidiaries and which engages
exclusively in financing Eligible Securitization Assets and activities related
to such financing activities.
"Securitized Debt" shall mean Indebtedness for borrowed money of a
Securitization Subsidiary which is secured by any Lien or other charge upon
Eligible Securitization Assets owned by such Securitization Subsidiary.
"Security" shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
"Senior Debt" shall mean all Debt other than Subordinated Debt and
Securitized Debt.
"Shareholders' Equity" shall mean, as of the date of any determination
thereof, shareholders' equity of the Company and its Subsidiaries determined on
a consolidated basis in accordance with GAAP.
"Subordinated Debt" shall mean the Notes and all other unsecured Debt
of the Company which shall contain or have applicable thereto subordination
provisions substantially in the form set forth in (S)9 or such other provisions
as may be approved in writing by the holders of not less than 66-2/3% in
aggregate principal amount of the outstanding Notes.
"Subordinated Funded Debt" shall mean all Subordinated Debt of the
Company which is also Funded Debt.
"Subordination Modification Date" shall mean the first date after
which all Indebtedness in respect of the CIGNA Debt and the First Union Debt
shall have been discharged.
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The term "Subsidiary" shall mean any business entity (i) whose
financial statements are required in accordance with GAAP to be consolidated
with the financial statements of the Company, (ii) which is organized under the
laws of the United States or any State thereof, (iii) which conducts
substantially all of its business and has substantially all of its assets within
the United States, and (iv) of which more than 80% (by number of votes) of the
Voting Stock (or the beneficial interest in the case of a business trust) is
owned by the Company and/or one or more Subsidiaries.
"Superior Indebtedness" shall have the meaning set forth in (S)9.
"Tangible Assets" shall mean as of the date of any determination
thereof the total amount of all assets of the Company and its Subsidiaries (less
depreciation, depletion and other properly deductible valuation reserves) after
deducting all goodwill, patents, trade names, trade marks, copyrights,
franchises, experimental expense, organization expense, unamortized debt
discount and expense, deferred assets other than prepaid insurance and prepaid
taxes, the excess of cost of shares acquired over book value of related assets
and such other assets as are properly classified as "intangible assets" in
accordance with GAAP.
"Total Liabilities" shall mean, as of the date of any determination
thereof, Guaranties of Indebtedness of others and all items which in accordance
with GAAP would be included on the liability side of a consolidated balance
sheet of the Company and its Subsidiaries (including, without limitation, all
leases discounted with financial institutions) other than deferred income taxes,
capital stock of any class and surplus.
"Treasury Rate" at any time with respect to any Notes being prepaid
pursuant to (S)2.2 or (S)2.3, or paid as a result of the existence of an Event
of Default, means (i) .5% plus (ii) the yield to maturity at such time of United
States Treasury obligations with a constant maturity (as compiled by and
published in the most recently published issue of the United States Federal
Reserve Bulletin or its successor publication) most nearly equal to the Weighted
Average Life to Maturity of the Notes then being paid. If no maturity exactly
corresponding to such Weighted Average Life to Maturity shall appear therein,
yields for the two most closely corresponding published maturities shall be
calculated pursuant to the foregoing sentence and the Treasury Rate shall be
interpolated from such yields on a straight-line basis (rounding, in the case of
relevant periods, to the nearest month). If such rates shall not have been so
published, the Treasury Rate in respect of such determination date shall be
calculated pursuant to the next preceding sentence on the basis of the
arithmetic mean of the arithmetic means of the secondary market ask rates, as of
approximately 3:30 P.M., New York City time, on such Business Days for the
actively traded U.S. Treasury security or securities with a maturity or
maturities most closely corresponding to such Weighted Average Life to Maturity
as reported by three primary United States Government securities dealers in New
York City of national standing selected in good faith by the Company.
"Unencumbered Assets" shall mean the aggregate amount of assets of the
Company and its Subsidiaries shown on the Company's consolidated balance sheet
which are unencumbered by Liens securing Debt; provided that no lease which is a
Repurchased Asset
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shall constitute an Unencumbered Asset at any time when any scheduled payment
thereunder is past due by more than 60 days.
"Unsecured Senior Debt" shall mean all Senior Debt having no
existing Liens attached thereto.
"Voting Stock" shall mean Securities of any class or classes the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
"Weighted Average Life to Maturity" with respect to the Notes means,
as at the time of determination, the number of years obtained by dividing the
then Remaining Dollar-years of the Notes by the outstanding principal amount of
the Notes. The term "Remaining Dollar-years" of the Notes means the product
obtained by (1) multiplying (A) the amount of each then remaining required
principal payment (including payment at final maturity), by (B) the number of
years (calculated to the nearest one-twelfth) which will elapse between the time
of determination and the date such required payment is due, and (2) totaling all
the products obtained in (1).
"Wholly-owned" when used in connection with any Subsidiary shall mean
a Subsidiary of which all of the issued and outstanding shares of stock (except
shares required as directors' qualifying shares) and all Indebtedness for
borrowed money shall be owned by the Company and/or one or more of its Wholly-
owned Subsidiaries.
Section 8.2. Accounting Principles. Where the character or amount
of any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, the same shall be done in accordance
with GAAP, to the extent applicable, except where such principles are
inconsistent with the requirements of this Agreement.
Section 9. Subordination of the Notes.
The Indebtedness evidenced by the Notes shall be subordinate and
junior in right of payment, to the extent and in the manner hereinafter set
forth, to the CIGNA Debt, the First Union Debt and all other Indebtedness of the
Company for money borrowed by the Company which is not expressed to be junior or
subordinate in right of payment to any other Indebtedness of the Company whether
now outstanding or hereafter incurred (all such Indebtedness being herein called
"Superior Indebtedness"):
(a) In the event of any insolvency or bankruptcy proceedings, and
any receivership, liquidation, reorganization, arrangement or other
similar proceedings in connection therewith, relative to the Company
or to its creditors, as such, or to its property, and in the event of
any proceedings, for voluntary liquidation, dissolution or other
winding-up of the Company, whether or not involving insolvency or
bankruptcy, then the holder of Superior Indebtedness shall be entitled
to receive payment in full of all principal, premium and interest on
all Superior Indebtedness
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before the holders of the Notes are entitled to receive any payment on
account of principal, premium or interest upon the Notes, and to that
end (but subject to the power of a court of competent jurisdiction to
make other equitable provisions reflecting the rights conferred in
this Agreement upon the Superior Indebtedness and the holders thereof
with respect to the subordinate indebtedness represented by the Notes
and the holders thereof by a lawful plan of reorganization under
applicable bankruptcy law) the holders of Superior Indebtedness shall
be entitled to receive for application in payment thereof any payment
or distribution of any kind or character, whether in cash or property
or securities, which may be payable or deliverable in any such
proceedings in respect of the Notes, except securities which are
subordinate and junior in right of payment to the payment of all
Superior Indebtedness then outstanding;
(b) On or prior to the Subordination Modification Date, (i) in the
event that pursuant to the provisions hereof the Notes are declared or
become due and payable before their expressed maturity because of an
occurrence of an Event of Default described herein (under
circumstances when (S)9(a) shall not be applicable) or otherwise
(including any prepayment described in (S)2.3), no amount shall be
paid by the Company in respect of the principal of or interest on the
Notes unless and until all Superior Indebtedness outstanding at the
time the Notes so become due and payable because of any such event
shall have been paid in full or payment thereof shall have been
provided for in a manner satisfactory to the holders of such
outstanding Superior Indebtedness, or (ii) in the event that the
holders of in excess of 25% of any issue of the Superior Indebtedness
shall have, in good faith, demanded payment of the entire principal
amount of such Superior Indebtedness after such Superior Indebtedness
shall become due, as a result of a default in respect thereof or at
maturity, if the Company shall have failed to pay such Superior
Indebtedness in full, no amount shall be paid by the Company in
respect of principal or interest on the Notes unless and until such
Superior Indebtedness shall have been paid in full;
(c) On or after the Subordination Modification Date, (i) in the
event that pursuant to the provisions hereof the Notes are declared or
become due and payable before their expressed maturity because of the
occurrence of an Event of Default described herein (under
circumstances when (S)9(a) shall not be applicable) or otherwise
(including any prepayment described in (S)2.3), no amount shall be
paid by the Company in respect of the principal of or interest on the
Notes in excess of current interest payments as provided herein,
unless and until all Superior Indebtedness outstanding at the time the
Notes so become due and payable because of any such event shall have
been paid in full or payment thereof shall have been provided for in a
manner satisfactory to the holders of such outstanding Superior
Indebtedness, or (ii) in the event that the holders of in excess of
25% of any issue of the Superior Indebtedness shall have, in good
faith, demanded payment of the entire principal amount of such
Superior Indebtedness after such Superior Indebtedness shall become
due, as a result of a default in respect thereof or at maturity, if
the Company shall have failed to pay such Superior Indebtedness in
full, no amount shall be paid by the Company in respect of principal
or interest on the Notes unless and until such Superior Indebtedness
shall have been paid in full; and
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<PAGE>
(d) Notwithstanding any of the other provisions of this Agreement,
during the continuance of (x) any default (a "Superior Indebtedness
Payment Default") in the payment of either principal or interest with
respect to any Superior Indebtedness or (y) any default (a "Superior
Indebtedness Non-Payment Default") other than a Superior Indebtedness
Payment Default with respect to any Superior Indebtedness, no payment
of principal, interest or Make-Whole Premium Amount shall be made on
or with respect to the Indebtedness evidenced by the Notes or any
renewals or extensions thereof for the period (each such period being
referred to as a "Non-Payment Period")
(i) commencing on the date that any one or more of the holders
of Superior Indebtedness shall have given written notice of such
default to the Company and ending on the date (A) 180 days (in the
case of a Superior Indebtedness Payment Default) and (B) 120 days
(in the case of a Superior Indebtedness Non-Payment Default), as the
case may be, after such notice shall have been given, or
(ii) commencing on the date that judicial proceedings shall
have been commenced by one or more holders of Superior Indebtedness
holding an aggregate principal amount of Superior Indebtedness of
not less than $5,000,000 with respect to such default and ending on
the date on which such judicial proceedings shall no longer be
pending or being pursued in good faith by any one or more of the
holders of Superior Indebtedness,
provided, however, that upon the expiration of any Non-Payment Period
a subsequent Non-Payment Period shall not commence with respect to a
default attributable to the same facts or circumstances that gave rise
to such expired Non-Payment Period for the period commencing on the
expiration of the most recently ended Non-Payment Period and ending 12
calendar months thereafter.
The Company shall not make, and the holders of the Notes shall not
accept, any optional prepayment of the Notes at any time when such optional
prepayment would be in contravention of the terms of any Superior Indebtedness;
provided that a prepayment of the Notes pursuant to (S)2.3 shall not be deemed
to be an optional prepayment pursuant to this (S)9 or otherwise under this
Agreement. The provisions of this (S)9 shall not be modified or amended in any
respect affecting the rights of the holders of Superior Indebtedness under this
(S)9 without the prior written consent of the holders of the outstanding
Superior Indebtedness so affected, the holders from time to time of Superior
Indebtedness being third-party beneficiaries of the subordination provisions
contained in this (S)9.
Each holder of the Notes agrees that prior to the Subordination
Modification Date, notwithstanding any other provisions of this Agreement: (v)
that during a Non-Payment Period (except under circumstances in which (S)9(a) is
applicable) such holder shall not commence or take any Restricted Enforcement
Action (other than acceleration upon the occurrence of a default in the payment
of principal or interest on the Superior Indebtedness); and (w) that no Event of
Default shall be deemed to have occurred, and such holder of the Notes shall not
commence or take any Restricted Enforcement Action (other
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than acceleration upon the occurrence of a default in the payment of principal
or interest on the Superior Indebtedness) solely as a result of the Company's
failure to make payment of principal, interest or Make-Whole Premium Amount
which it is not permitted to make as provided in (S)9(d) so long as each such
payment so suspended or not so made as a result of the operation of (S)9(d) is
paid in full on the first day such payment is permitted to be made by (S)9(d).
Each holder of the Notes further agrees that from and after the Subordination
Modification Date, (x) during a Non-Payment Period (except under circumstances
in which (S)9(a) is applicable) such holder shall not commence or take any
Restricted Enforcement Action (other than (1) acceleration during the Non-
Payment Period described in (S)9(d)(ii) or (2) the institution of proceedings in
equity for specific performance after commencement of judicial proceedings by
holders of Superior Indebtedness as described in (S)9(d)(ii)); and (y) during a
Non-Payment Period described in (S)9(d)(i) no Event of Default shall be deemed
to have occurred solely as a result of the Company's failure to make payment of
principal, interest or Make-Whole Premium Amount which it is not permitted to
make as provided in (S)9(d) so long as each such payment so suspended or not so
made as a result of the operation of (S)9(d) is paid in full on the first day
such payment is permitted to be made by (S)9(d). Each holder of the Notes
further agrees that no Event of Default shall be deemed to have occurred, and
such holder of the Notes shall not commence or take any Restricted Enforcement
Action solely as a result of a default with respect to any Superior Indebtedness
which gave rise to a Non-Payment Period described in (S)9(d) if such default
with respect to such Superior Indebtedness shall have been either effectively
waived by the holder or holders of such Superior Indebtedness or cured by the
Company, in either case, prior to the expiration of the Non-Payment Period which
resulted from such default with respect to such Superior Indebtedness.
Any dividend, distribution or payment of any kind or character,
whether in cash, property or securities (other than securities that are
subordinated and junior in right of payment to the payment of all (x) Superior
Indebtedness that may at the time be outstanding or (y) obligations evidenced by
securities that may have been issued in exchange for or in lieu of Superior
Indebtedness in a reorganization plan in connection with proceedings of the type
referred to in (S)9(a)) which shall be made upon or in respect of the
Indebtedness evidenced by the Notes, or any renewals or extensions thereof, in
contravention of any of the provisions of this (S)9, shall be paid over to the
holders of Superior Indebtedness, pro rata, for application in payment thereof
unless and until the Superior Indebtedness shall have been paid and satisfied in
full and, until so paid over, the same shall be held in trust by such holders of
the Notes as the property of the holders of such Superior Indebtedness.
The Company covenants and agrees, for the benefit of each and every
present and future holder of Superior Indebtedness that in the event that the
Notes are declared or become due and payable because of an occurrence of an
Event of Default described herein or otherwise, then each holder of any Superior
Indebtedness then outstanding shall have the right to declare immediately due
and payable on demand all or any part of such Superior Indebtedness owing and
payable to such holder, regardless of any other maturity or terms of said
Superior Indebtedness; and if and when any such default has occurred, or any
notice of Default under the terms hereof may be served upon the Company, then in
each such event
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<PAGE>
the Company shall and hereby agrees that it will immediately notify the holders
of the Superior Indebtedness of such Default or notice thereof, as the case may
be.
Upon the payment of all amounts of Superior Indebtedness as provided
in this (S)9 or provision having been made for such payment in cash, the holders
of the Notes will be subrogated to the rights of the holders of Superior
Indebtedness to receive payments or distributions of assets of the Company
applicable to the Superior Indebtedness until the principal of, and prepayment
charge, if any, and interest on, the Notes shall be paid in full; and no
payments or distributions (direct or indirect) to the holders of the Superior
Indebtedness of cash, property or Securities to which the holders of the Notes
would be entitled except for the provisions of this (S)9 shall, as between the
Company, its creditors (other than the holders of Superior Indebtedness) and the
holders of the Notes, be deemed to be a payment by the Company to or on account
of the Notes, it being understood that the provisions of this (S)9 are, and are
intended, solely for the purpose of defining the relative rights of the holders
of the Notes, on the one hand, and the holders of Superior Indebtedness, on the
other hand.
No right of any present or future holder of any Superior Indebtedness
of the Company to enforce subordination as herein provided shall at any time or
in any way be prejudiced or impaired by any failure to act on the part of the
Company, or by any noncompliance by the Company with the terms, provisions and
covenants of this Agreement, regardless of any knowledge thereof that any such
holder of Superior Indebtedness may have or be otherwise charged with.
The provisions hereof are solely for the purpose of defining the
relative rights of the holders of Superior Indebtedness on the one hand, and the
holders of the Notes on the other hand, and nothing herein shall impair, as
between the Company and the holder of the Notes, the obligation of the Company,
which is unconditional and absolute, to pay to the holders of the Notes the
principal, premium, if any, and interest hereon in accordance with its terms,
nor shall anything herein prevent the holder of any Note from exercising all
remedies otherwise permitted by applicable law or hereunder upon Default
hereunder, subject to the rights, if any, of holders of Superior Indebtedness as
herein provided.
Each and every holder of the Notes by acceptance thereof shall
undertake and agree for the benefit of each holder of Superior Indebtedness to
execute, verify, deliver and file any proofs of claim, consents, assignments or
other instruments which any holder of Superior Indebtedness may at any time
require in order to prove and realize upon any rights or claims pertaining to
the Notes and to effectuate the full benefit of the subordination contained
herein; and upon failure of any such holder of any of the Notes so to do, any
such holder of Superior Indebtedness shall be deemed to be irrevocably appointed
the agent and attorney-in-fact of such holder to execute, verify, deliver and
file any such proofs of claim, consents, assignments or other instruments.
"Restricted Enforcement Action" shall mean (i) any acceleration of the
Notes hereunder, (ii) any act which reasonably could be expected to cause the
Company to be subject to any bankruptcy, reorganization, arrangement,
insolvency, or other proceeding for
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<PAGE>
relief under any bankruptcy or similar law or laws for the relief of debtors, or
(iii) the institution of any proceeding at law or in equity for the payment of
any principal, interest or premium, if any, under the Notes.
Section 10. Miscellaneous.
Section 10.1. Registered Notes. The Company shall cause to be kept
at its principal office a register for the registration and transfer of the
Notes (hereinafter called the "Note Register"), and the Company will register or
transfer or cause to be registered or transferred, as hereinafter provided and
under such reasonable regulations as it may prescribe, any Note issued pursuant
to this Agreement.
At any time and from time to time the registered holder of any Note
which has been duly registered as hereinabove provided may transfer such Note
upon surrender thereof at the principal office of the Company duly endorsed or
accompanied by a written instrument of transfer duly executed by the registered
holder of such Note or its attorney duly authorized in writing.
The Person in whose name any registered Note shall be registered shall
be deemed and treated as the owner and holder thereof for all purposes of this
Agreement. Payment of or on account of the principal, premium, if any, and
interest on any registered Note shall be made to or upon the written order of
such registered holder.
Section 10.2. Exchange of Notes. At any time, and from time to
time, upon not less than ten days' notice to that effect given by the holder of
any Note initially delivered or of any Note substituted therefor pursuant to
(S)10.1, this (S)10.2 or (S)10.3, and, upon surrender of such Note at its
office, the Company will deliver in exchange therefor, without expense to the
holder, except as set forth below, Notes for the same aggregate principal amount
as the then unpaid principal amount of the Note so surrendered, in the
denomination of $100,000 or any amount in excess thereof as such holder shall
specify, dated as of the date to which interest has been paid on the Note so
surrendered or, if such surrender is prior to the payment of any interest
thereon, then dated as of the date of issue, payable to such Person or Persons,
or order, as may be designated by such holder, and otherwise of the same form
and tenor as the Notes so surrendered for exchange. The Company may require the
payment of a sum sufficient to cover any stamp tax or governmental charge
imposed upon such exchange or transfer.
Section 10.3. Loss, Theft, Etc. of Notes. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of any
Note, and in the case of any such loss, theft or destruction upon delivery of a
bond of indemnity in such form and amount as shall be reasonably satisfactory to
the Company, or in the event of such mutilation upon surrender and cancellation
of the Note, the Company will make and deliver without expense to the holder
thereof, a new Note, of like tenor, in lieu of such lost, stolen, destroyed or
mutilated Note. If the Purchaser or any subsequent institutional holder is the
owner of any such lost, stolen or destroyed Note, then the affidavit of an
authorized officer of such owner, setting forth the fact of loss, theft or
destruction and of its ownership of the Note at the time
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<PAGE>
of such loss, theft or destruction shall be accepted as satisfactory evidence
thereof and no further indemnity shall be required as a condition to the
execution and delivery of a new Note other than the written agreement of such
owner to indemnify the Company.
Section 10.4. Expenses, Stamp Tax Indemnity. Whether or not the
transactions herein contemplated shall be consummated, the Company agrees to pay
directly all of your out-of-pocket expenses in connection with the preparation,
execution and delivery of this Agreement and the transactions contemplated
hereby, including but not limited to the reasonable charges and disbursements of
Chapman and Cutler, your special counsel, duplicating and printing costs and
charges for shipping the Notes, adequately insured to you at your home office or
at such other place as you may designate, and all such expenses relating to any
amendment, waivers or consents pursuant to the provisions hereof. The Company
also agrees that it will pay and save you harmless against any and all liability
with respect to stamp and other taxes, if any, which may be payable or which may
be determined to be payable in connection with the execution and delivery of
this Agreement or the Notes, whether or not any Notes are then outstanding. The
Company agrees to protect and indemnify you against any liability for any and
all brokerage fees and commissions payable or claimed to be payable to any
Person in connection with the transactions contemplated by this Agreement. The
obligation of the Company to pay expenses pursuant to this (S)10.4, (S)5.19 and
(S)6.2 shall survive the payment of the Notes. The Company agrees to pay the
cost of procuring a private placement number for the Notes.
Section 10.5. Powers and Rights Not Waived; Remedies Cumulative.
No delay or failure on the part of the holder of any Note in the exercise of any
power or right shall operate as a waiver thereof; nor shall any single or
partial exercise of the same preclude any other or further exercise thereof, or
the exercise of any other power or right, and the rights and remedies of the
holder of any Note are cumulative to and are not exclusive of any rights or
remedies any such holder would otherwise have, and no waiver or consent, given
or extended pursuant to (S)7 hereof, shall extend to or affect any obligation or
right not expressly waived or consented to.
Section 10.6. Notices. All communications provided for hereunder
shall be in writing and, if to you, delivered by overnight courier or mailed by
registered or certified mail, or by facsimile communication, addressed to you at
your address appearing on Schedule I to this Agreement or such other address as
you or any subsequent holder of any Note initially issued to you may designate
to the Company in writing, and if to the Company, delivered by overnight courier
or mailed by registered or certified mail or by facsimile communication, to the
Company at 3000 Dundee Road, Northbrook, Illinois 60062, Attention: Chairman,
or to such other address as the Company may in writing designate to you or to a
subsequent holder of the Note initially issued to you; provided, however, that a
notice to you by facsimile communication shall only be effective if made by
confirmed transmission to you at a telephone number designated for such purpose
in Schedule I or as you or a subsequent holder of any Note initially issued to
you may designate in writing and notice is also sent by overnight courier on the
same day such facsimile communication is transmitted.
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<PAGE>
Section 10.7. Successors and Assigns. This Agreement shall be
binding upon the Company and its successors and assigns and shall inure to your
benefit and to the benefit of your successors and assigns, including each
successive holder or holders of any Notes.
Section 10.8. Survival of Covenants and Representations. All
covenants, representations and warranties made by the Company herein and in any
certificates delivered pursuant hereto, whether or not in connection with the
Closing Date, shall survive the closing and the delivery of this Agreement and
the Notes.
Section 10.9. Severability. Should any part of this Agreement for
any reason be declared invalid, such decision shall not affect the validity of
any remaining portion, which remaining portion shall remain in force and effect
as if this Agreement had been executed with the invalid portion thereof
eliminated and it is hereby declared the intention of the parties hereto that
they would have executed the remaining portion of this Agreement without
including therein any such part, parts, or portion which may, for any reason, be
hereafter declared invalid.
Section 10.10. Governing Law. This Agreement and the Notes issued
and sold hereunder shall be governed by and construed in accordance with
Illinois law.
Section 10.11. Captions. The descriptive headings of the various
Sections or parts of this Agreement are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof.
Section 10.12. Requisite Approval; Opinion; Fees and Expenses. This
Amended and Restated Note Agreement shall not become effective until (i) the
Company and the holders of 51% in aggregate principal amount of all Notes
outstanding on the date hereof shall have executed and delivered this Amended
and Restated Note Agreement, (ii) the holders of Notes shall have received an
opinion of counsel which shall be satisfactory in scope and form to such
holders, and (iii) the Company shall have paid all reasonable out-of-pocket
expenses incurred by the holders of Notes in connection with the consummation of
the transactions contemplated by this Amended and Restated Note Agreement,
including, without limitation, the fees, expenses and disbursements of Chapman
and Cutler which are reflected in statements of such counsel rendered on or
prior to the effective date of this Amended and Restated Note Agreement.
Section 10.13. Affirmation. Except as expressly amended hereby, the
Company agrees that the Note Agreement, the Notes and all other documents and
agreements executed by the Company in connection with the execution and delivery
of the Note Agreement and the issuance and sale of the Notes, shall remain in
full force and effect. From and after the effective date of this Amended and
Restated Note Agreement, all references to the Note Agreement or any similar
term shall be deemed to be references to the Amended and Restated Note
Agreement.
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The execution hereof by you shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this Amended and Restated Note
Agreement may be executed in any number of counterparts, each executed
counterpart constituting an original but all together only one agreement.
Trans Leasing International, Inc.
By /s/ Norman Smagley
------------------------------
Its Vice President, Finance &
Chief Financial Officer
Accepted as of November 30, 1994
Massachusetts Mutual Life Insurance
Company
By /s/ John B. Joyce
------------------------------
Its Vice President
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<PAGE>
Schedule I
Principal Amount
Name and Address of Notes to be
of Purchaser Purchased
Massachusetts Mutual Life Insurance $5,000,000
Company
1295 State Street
Springfield, Massachusetts 01111
Attention: Securities Investment Division
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "Trans
Leasing International, Inc. 13.40% Subordinated Notes Due 1999, PPN 893245 B# 6,
principal or interest") to:
Chemical Bank
Institutional Custody Department
55 Water Street
North Building, 3rd Floor
New York, New York 10041
ABA #021-000128
for credit to
Massachusetts Mutual Life Insurance Company's
Account No. 321-029-852
with telephone advice to the Securities
Custody and Collection Department of
Massachusetts Mutual Life Insurance
Company at (413) 788-8411, Fax:
(413) 744-6263.
<PAGE>
Notices
All notices and communications to be addressed as first provided above,
except notices with respect to payments and written confirmation of each such
payment to be addressed, Attention: Securities Custody and Collection
Department.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. #04-1590850
I-2
<PAGE>
Principal Amount
Name and Address of Notes to be
of Purchaser Purchased
Massachusetts Mutual Life Insurance $5,000,000
Company
1295 State Street
Springfield, Massachusetts 01111
Attention: Securities Investment Division
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "Trans
Leasing International, Inc. 13.40% Subordinated Notes Due 1999, PPN 893245 B# 6,
principal or interest") to:
Chemical Bank
Institutional Custody Department
55 Water Street
North Building, 3rd Floor
New York, New York 10041
ABA #021-000128
for credit to
Massachusetts Mutual Life Insurance Company's
Account No. 321-029-828
with telephone advice to the Securities
Custody and Collection Department of
Massachusetts Mutual Life Insurance
Company at (413) 788-8411, Fax:
(413) 744-6263.
I-3
<PAGE>
Notices
All notices and communications to be addressed as first provided above,
except notices with respect to payments and written confirmation of each such
payment to be addressed, Attention: Securities Custody and Collection
Department.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. #04-1590850
I-4
<PAGE>
Trans Leasing International, Inc.
13.40% Subordinated Note
Due June 30, 1999
No. R-
_________, 19 __
$__________
Trans Leasing International, Inc., a Delaware corporation (the
"Company"), for value received, hereby promises to pay to
or registered assigns
the principal amount of
Dollars ($_____)
payable in semiannual principal installments of $___________ on the last day of
June and December in each year commencing June 30, 1995 to December 31, 1998,
both inclusive, and a final principal installment of $__________ on June 30,
1999, together with interest (computed on the basis of a 360-day year of twelve
30-day months) on the principal amount from time to time remaining unpaid hereon
at the rate of 13.40% per annum from the date hereof until maturity, payable
semiannually on the last day of June and December in each year (commencing
December 31, 1992) and at maturity. The Company agrees to pay interest on
overdue principal (including any overdue required payment or optional prepayment
of principal) and premium, if any, and (to the extent legally enforceable) on
any overdue installment of interest, at the rate of 14.40% per annum after
maturity, whether by acceleration or otherwise, until paid. Both the principal
hereof and interest hereon are payable at the principal office of the Company in
Northbrook, Illinois in coin or currency of the United States of America which
at the time of payment shall be legal tender for the payment of public and
private debts.
This Note is one of the 13.40% Subordinated Notes of the Company in the
aggregate principal amount of $10,000,000 issued or to be issued under and
pursuant to the terms and provisions of a Note Agreement dated as of June 15,
1992 (the "Note Agreement") entered into by the Company with the original
Purchaser therein referred to and this Note and the holder hereof are entitled
equally and ratably with the holders of all other Notes outstanding under the
Note Agreement to all the benefits and security provided for thereby or referred
to therein, to which Note Agreement reference is hereby made for the statement
thereof.
This Note and the other Notes outstanding under the Note Agreement may be
declared due prior to their expressed maturity dates and certain prepayments are
required to be made thereon, all in the events, on the terms and in the manner
and amounts as provided in the Note Agreement.
EXHIBIT A
(to Note Agreement)
<PAGE>
This Note is not subject to prepayment or redemption at the option of the
Company prior to its expressed maturity date except on the terms and conditions
and in the amounts and with the premium, if any, set forth in Section 2 of the
Note Agreement.
This Note and the Indebtedness evidenced hereby, including principal and
interest, shall at all times be and remain junior and subordinate in right of
payment to any and all Superior Indebtedness as defined in the Note Agreement,
all in the manner and to the extent set forth in the Note Agreement.
This Note is registered on the books of the Company and is transferable only
by surrender thereof at the principal office of the Company duly endorsed or
accompanied by a written instrument of transfer duly executed by the registered
holder of this Note or its attorney duly authorized in writing. Payment of or
on account of principal, premium, if any, and interest on this Note shall be
made only to or upon the order in writing of the registered holder.
Trans Leasing International, Inc.
By
------------------------------
Its
A-2
<PAGE>
Trans Leasing International, Inc.
Closing Certificate
Massachusetts Mutual Life
Insurance Company
1295 State Street
Springfield, Massachusetts 01111
Gentlemen:
This certificate is delivered to you in compliance with the
requirements of the Note Agreement dated as of June 15, 1992 (the "Agreement")
entered into by the undersigned, Trans Leasing International, Inc., a Delaware
corporation (the "Company"), with you, and as an inducement to and as part of
the consideration for your purchase on this date of $10,000,000 principal amount
of 13.40% Subordinated Notes (the "Notes") of the Company pursuant to the
Agreement. The terms which are capitalized herein shall have the same meanings
as in the Agreement.
The Company represents and warrants to each of you as follows:
1. Subsidiaries. Trans Leasing Insurance Services, Inc., an
Illinois corporation, Nuvotron, Inc., an Illinois corporation, T.L.I.
Auto Leasing Group, Inc., an Illinois corporation, and Trans Leasing
Finance Corp., a Delaware corporation, are the only Subsidiaries of
the Company and all of the Voting Stock of each Subsidiary is owned by
the Company. The Company has good and marketable title to all of the
shares it purports to own of the stock of each Subsidiary, free and
clear of any lien. All such shares have been duly issued and are fully
paid and non-assessable.
2. Corporate Organization and Authority. The Company, and each
Subsidiary,
(a) is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation;
(b) has all requisite power and authority and all licenses and
permits material and necessary to own and operate its properties
and to carry on its business as now conducted and as presently
proposed to be conducted; and
(c) is duly licensed or qualified and is in good standing as a
foreign corporation in each jurisdiction wherein the nature of the
business transacted by it or the nature of the property owned or
leased by it makes such licensing or qualification necessary.
EXHIBIT B
(to Note Agreement)
<PAGE>
3. Business and Property. You have heretofore been furnished with a
copy of the Form 10-K of the Company for the fiscal year ended June
30, 1991 and Form 10-Q of the Company for the fiscal quarter period
ended March 31, 1992 (the "Disclosure Documents") which generally set
forth the business conducted and proposed to be conducted by the
Company and its Subsidiaries and the principal properties of the
Company and its Subsidiaries.
4. Financial Statements. (a) The consolidated balance sheets of
the Company and its Subsidiaries as of June 30 in each of the years
1989 to 1991, both inclusive, and the statements of income and
retained earnings and changes in financial position or cash flows for
the fiscal years ended on said dates accompanied by a report thereon
containing an opinion unqualified as to scope limitations imposed by
the Company and otherwise without qualification except as therein
noted, by Deloitte & Touche (formerly Touche Ross & Co.), have been
prepared in accordance with GAAP consistently applied except as
therein noted, are correct and complete and present fairly the
financial position of the Company and its Subsidiaries as of such
dates and the results of their operations and changes in their
financial position or cash flows for such periods. The unaudited
consolidated balance sheet of the Company and its Subsidiaries as of
March 31, 1992, and the unaudited statements of income and retained
earnings and cash flows for the nine-month period ended on said date
prepared by the Company have been prepared in accordance with GAAP
consistently applied and present fairly the financial position of the
Company and its Subsidiaries as of said date and the results of their
operations and changes in their financial position or cash flows for
such period.
(b) Since June 30, 1991, there has been no change in the condition,
financial or otherwise, of the Company and its Subsidiaries as shown
on the consolidated balance sheet as of such date except changes in
the ordinary course of business, none of which individually or in the
aggregate has been materially adverse.
5. Indebtedness. Annex A attached hereto correctly describes all
Current Debt, Funded Debt, Capitalized Leases and Long-Term Leases of
the Company, as lessee, and its Subsidiaries outstanding on March 31,
1992.
6. Full Disclosure. The financial statements referred to in
paragraph 4 do not, nor do the Disclosure Documents or any other
written statement furnished by the Company to you in connection with
the negotiation of the sale of the Notes, contain any untrue statement
of a material fact or omit a material fact necessary to make the
statements contained therein or herein not misleading. There is no
fact peculiar to the Company or its Subsidiaries which the Company has
not disclosed to you in writing which materially affects adversely
nor, so far as the Company can now reasonably foresee, will materially
affect adversely the properties, business, prospects, profits or
condition (financial or otherwise) of the Company and its
Subsidiaries.
7. Pending Litigation. There are no proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company
or any
B-2
<PAGE>
Subsidiary in any court or before any governmental authority or
arbitration board or tribunal which involve the possibility of
materially and adversely affecting the properties, business,
prospects, profits or financial condition of the Company and its
Subsidiaries or the ability of the Company to perform its obligations
under the Agreements and the Notes. Neither the Company nor any
Subsidiary is in default with respect to any order of any court or
governmental authority or arbitration board or tribunal.
8. Title to Properties. The Company and each Subsidiary has good
and marketable title in fee simple (or its equivalent under applicable
law) to all the real property and has good title to all the other
property it purports to own, including that reflected in the most
recent balance sheet referred to in paragraph 4, except property
subject to Capitalized Leases or as sold or otherwise disposed of in
the ordinary course of business and except for liens disclosed in
notes to the financial statements referred to in paragraph 4 hereof or
otherwise permitted by the Agreement.
9. Patents and Trademarks. The Company and each Subsidiary owns or
possesses all the patents, trademarks, trade names, service marks,
copyright, licenses and rights with respect to the foregoing necessary
for the present and planned future conduct of its business, without
any known conflict with the rights of others.
10. Sale is Legal and Authorized. The sale of the Notes and
compliance by the Company with all of the provisions of the Agreement
and the Notes--
(a) are within the corporate powers of the Company and have
been duly authorized by proper corporate action on the part of the
Company; and
(b) will not violate any provisions of any law or any order of
any court or governmental authority or agency and will not conflict
with or result in any breach of any of the terms, conditions or
provisions of, or constitute a default under the Certificate of
Incorporation or By-laws of the Company or any indenture or other
agreement or instrument to which the Company is a party or by which
it may be bound or result in the imposition of any liens or
encumbrances on any property of the Company.
11. No Defaults. No Default or Event of Default as defined in the
Agreement has occurred and is continuing. The Company is not in
default in the payment of principal or interest on any Indebtedness
for borrowed money and is not in default under any instrument or
instruments or agreements under and subject to which any Indebtedness
for borrowed money has been issued and no event has occurred and is
continuing under the provisions of any such instrument or agreement
which with the lapse of time or the giving of notice, or both, would
constitute an event of default thereunder.
12. Governmental Consent. No approval, consent or withholding of
objection on the part of any regulatory body, state, Federal or local,
is necessary in
B-3
<PAGE>
connection with the execution and delivery by the Company of the
Agreement or the Notes or compliance by the Company with any of the
provisions of the Agreement or the Notes.
13. Taxes. All tax returns required to be filed by the Company or
any Subsidiary in any jurisdiction have, in fact, been filed, and all
taxes, assessments, fees and other governmental charges upon the
Company or any Subsidiary or upon any of their respective properties,
income or franchises with respect to which the applicable statute of
limitations has not expired, which are shown to be due and payable in
such returns have been paid. The Company does not know of any proposed
additional tax assessment against it for which adequate provision has
not been made on its accounts. The Federal income tax liability of the
Company and its Subsidiaries has been finally determined by the
Internal Revenue Service and satisfied for all taxable years up to and
including the taxable year ended June 30, 1988 and no material
controversy in respect of additional income taxes due since said date
is pending or to the knowledge of the Company threatened. The
provisions for taxes on the books of the Company and each Subsidiary
are adequate for all open years, and for that portion of its current
fiscal period through the Closing Date.
14. Use of Proceeds. The net proceeds from the sale of the Notes
will be used to refinance outstanding bank Debt. None of the
transactions contemplated in the Agreement (including, without
limitation thereof, the use of proceeds from the issuance of the
Notes) will violate or result in a violation of Section 7 of the
Securities Exchange Act of 1934, as amended, or any regulation issued
pursuant thereto, including, without limitation, Regulations G, T and
X of the Board of Governors of the Federal Reserve System, 12 C.F.R.,
Chapter II. Neither the Company, directly or indirectly, nor any
Subsidiary owns or intends to carry or purchase any "margin stock"
within the meaning of said Regulation G. None of the proceeds from the
sale of the Notes will be used to purchase, or refinance, any
borrowing, the proceeds of which were used to purchase any "security"
within the meaning of the Securities and Exchange Act of 1934, as
amended.
15. Private Offering. Neither the Company, directly or indirectly,
nor any agent on its behalf has offered or will offer the Notes or any
similar Security or has solicited or will solicit an offer to acquire
the Notes or any similar Security from or has otherwise approached or
negotiated or will approach or negotiate in respect of the Notes or
any similar Security with any Person other than you and not more than
6 other institutional investors, each of whom was offered a portion of
the Notes at private sale for investment. Neither the Company,
directly or indirectly, nor any agent on its behalf has offered or
will offer the Notes or any similar Security or has solicited or will
solicit an offer to acquire the Notes or any similar Security from any
Person so as to bring the issuance and sale of the Notes within the
provisions of Section 5 of the Securities Act of 1933, as amended.
16. ERISA. Assuming the correctness of your representations in
(S)3.2 of the Agreement, the consummation of the transactions provided
for in the Agreement and
B-4
<PAGE>
compliance by the Company with the provisions thereof and the Notes
issued thereunder will not involve any prohibited transaction within
the meaning of ERISA or Section 4975 of the Internal Revenue Code of
1986, as amended. No Plans are maintained by the Company or any Person
which is under common control with the Company within the meaning of
Section 4001(b) of ERISA.
17. Investment Company Act. The Company is not, and is not
directly or indirectly controlled by or acting on behalf of any person
which is, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
18. Holding Company Act Status. The Company is not a "holding
company," or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company", as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended.
Dated: June 29, 1992.
Trans Leasing International, Inc.
By
------------------------------
Its
B-5
<PAGE>
Description of Special Counsel's Closing Opinion
The closing opinion of Chapman and Cutler, special counsel to the
Purchaser, called for by (S)4.2 of the Note Agreement, shall be dated the
Closing Date and addressed to the Purchaser, shall be satisfactory in form and
substance to the Purchaser and shall be to the effect that:
1. The Company is a corporation, validly existing and in good
standing under the laws of the State of Delaware and has the corporate
power and the corporate authority to execute and deliver the Note Agreement
and to issue the Notes.
2. The Note Agreement has been duly authorized by all necessary
corporate action on the part of the Company, has been duly executed and
delivered by the Company and constitutes the legal, valid and binding
contract of the Company enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent conveyance or similar laws affecting
creditors' rights generally, and general principles of equity (regardless
of whether the application of such principles is considered in a proceeding
in equity or at law).
3. The Notes have been duly authorized by all necessary corporate
action on the part of the Company, have been duly executed and delivered by
the Company and constitute the legal, valid and binding obligations of the
Company enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance or similar laws affecting creditors'
rights generally, and general principles of equity (regardless of whether
the application of such principles is considered in a proceeding in equity
or at law).
4. No approval, consent or withholding of objection on the part of,
or filing, registration or qualification with, any governmental body,
Federal, state or local, is necessary in connection with the execution and
delivery of the Note Agreement or the Notes.
5. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Agreement does not, under existing
law, require the registration of the Notes under the Securities Act of
1933, as amended, or the qualification of an indenture under the Trust
Indenture Act of 1939, as amended.
The opinion of Chapman and Cutler shall also state that the opinion of
Kirkland and Ellis is satisfactory in scope and form to Chapman and Cutler and
that, in their opinion, the Purchaser is justified in relying thereon.
In rendering the opinion set forth in paragraph 1 above, Chapman and
Cutler may rely solely upon an examination of the Certificate of Incorporation
certified by, and a
EXHIBIT C
(to Note Agreement)
<PAGE>
certificate of good standing of the Company from, the Secretary of State of the
State of Delaware and the By-laws of the Company.
With respect to matters of fact upon which such opinion is based, Chapman
and Cutler may rely on appropriate certificates of public officials and officers
of the Company.
C-2
<PAGE>
Description of Closing Opinion of Counsel to the Company
The closing opinion of Kirkland & Ellis, counsel for the Company, which is
called for by (S)4.2 of the Note Agreement, shall be dated the Closing Date and
addressed to the Purchaser, shall be satisfactory in scope and form to the
Purchaser and shall be to the effect that:
1. The Company is a corporation, duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, has the
corporate power and the corporate authority to execute and perform the Note
Agreement and to issue the Notes and has the full corporate power and the
corporate authority to conduct the activities in which it is now engaged
and is duly licensed or qualified and is in good standing as a foreign
corporation in each jurisdiction in which the character of the properties
owned or leased by it or the nature of the business transacted by it makes
such licensing or qualification necessary.
2. Each Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation
and is duly licensed or qualified and is in good standing in each
jurisdiction in which the character of the properties owned or leased by it
or the nature of the business transacted by it makes such licensing or
qualification necessary and all of the issued and outstanding shares of
capital stock of each such Subsidiary have been duly issued, are fully paid
and non-assessable and are owned by the Company, by one or more
Subsidiaries, or by the Company and one or more Subsidiaries.
3. The Note Agreement has been duly authorized by all necessary
corporate action on the part of the Company, has been duly executed and
delivered by the Company and constitutes the legal, valid and binding
contract of the Company enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent conveyance or similar laws affecting
creditors' rights generally, and general principles of equity (regardless
of whether the application of such principles is considered in a proceeding
in equity or at law).
4. The Notes have been duly authorized by all necessary corporate
action on the part of the Company, have been duly executed and delivered by
the Company and constitute the legal, valid and binding obligations of the
Company enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance or similar laws affecting creditors'
rights generally, and general principles of equity (regardless of whether
the application of such principles is considered in a proceeding in equity
or at law).
5. The issuance and sale of the Notes and the execution, delivery
and performance by the Company of the Note Agreement and the making of
payments under the Notes do not conflict with or result in any breach of
any of the provisions
EXHIBIT D
(to Note Agreement)
<PAGE>
of or constitute a default under or result in the creation of imposition of
any lien or encumbrance upon any of the property of the Company pursuant to
the provisions of the Certificate of Incorporation or By-laws of the
Company or any agreement or other instrument known to such counsel, to
which the Company is a party or by which the Company may be bound.
6. To such counsel's knowledge (based solely upon inquiries of
officers of the Company), there is not now pending or threatened any
action, suit or proceeding before any court or any governmental or
regulatory authority against the Company or its property or assets which
would reasonably be expected to result in any material adverse change in
the financial condition of the Company or which would materially impair the
ability of the Company to execute and perform the Note Agreement and the
Notes.
7. The use of the proceeds from the issuance of the Notes to
refinance outstanding bank Debt will not violate or result in a violation
of Section 7 of the Securities Exchange Act of 1934, as amended, or any
regulation issued pursuant to such Section or Regulations G, T, U and X of
the Board of Governors of the Federal Reserve System, 12 C.F.R., Chap. II.
8. No approval, consent or withholding of objection on the part of,
or filing, registration or qualification with, any governmental body,
Federal or state, is necessary in connection with the execution and
delivery of the Note Agreement or the Notes.
9. The issuance and sale of the Notes and the execution, delivery
and performance by the Company of the Note Agreement do not conflict with
or result in any breach of any of the provisions of or constitute a default
under or result in the creation or imposition of any Lien upon any of the
property of the Company pursuant to the provisions of the Certificate of
Incorporation or By-laws of the Company or any agreement or other
instrument known to such counsel to which the Company is a party or by
which the Company may be bound.
10. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Agreement does not, under existing
law, require the registration of the Notes under the Securities Act of
1933, as amended, or the qualification of an indenture under the Trust
Indenture Act of 1939, as amended.
The opinion of Kirkland & Ellis shall cover such other matters relating to
the sale of the Notes as the Purchaser may reasonably request. With respect to
matters of fact on which such opinion is based, such counsel shall be entitled
to rely on appropriate certificates of public officials and officers of the
Company.
D-2
<TABLE> <S> <C>
<PAGE>
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<RECEIVABLES> 190,359
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<CURRENT-ASSETS> 200,691
<PP&E> 4,610
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0
0
<OTHER-SE> 25,164
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