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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
[X] CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) September 27, 2000
LINC CAPITAL, INC.
(Exact name of registrant as specified in its charter)
Commission File Number: 000-23309
Delaware 06-0850149
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
303 East Wacker Drive
Chicago, Illinois 60601
(Address of principal executive offices)(Zip Code)
(312) 946-1000
(Registrant's telephone number, including area code)
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Item 5. Other Events.
On October 16, 2000, the company issued a press release announcing that it has
signed a forbearance agreement with its revolving credit facility lenders.
The Company also announced that it recently completed sales of approximately $24
million of its owned and securitized lease portfolio. The proceeds of these
sales were used to reduce indebtedness under the company's revolving credit
facility and reduce the balance of the company's commercial paper securitization
facility. The indebtedness under the revolving credit facility has been reduced
to $76 million from $101 million on March 31, 2000. The outstanding balance of
the commercial paper securitization facility has been reduced to approximately
$122 million from $178 million at March 31, 2000.
In addition, the company announced that is has entered into a non-binding letter
of intent to sell its analytical instrument rental and distribution business.
The sale is subject to the completion of due diligence and financing
arrangements as well as execution of definitive binding agreements. The company
also reported that it has ceased operations at its North Carolina-based LINC
Internet Finance + Equipment division, but will continue to collect the
receivables associated with this business unit.
The full text of the press release and the forbearance ("standstill") agreement
are Exhibits to this filing.
Item 7 Financial Statements and Exhibits.
(c) Exhibits. The following exhibits are being filed with this report:
10.15 Standstill Agreement
99.3 Press Release dated October 16, 2000
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.
LINC CAPITAL, INC.
Dated: October 16, 2000
By: /s/ Allen P. Palles
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Allen P. Palles
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
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Exhibit Index
The following exhibits are filed as part of this report:
Exhibit No. Item
10.15 Standstill Agreement
99.3 Press Release dated October 16, 2000
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Exhibit 10.15
STANDSTILL AGREEMENT
This Standstill Agreement ("Standstill Agreement") is entered into this
27th day of September, 2000 among LINC Capital, Inc. (formerly known as
Scientific Leasing, Inc.), a Delaware corporation (the "Borrower"), the
institutions from time to time party to the Credit Agreement referred to below
as banks (the "Warehouse Lenders") and Fleet National Bank, successor by merger
to Fleet Bank, N.A., in its capacity as contractual representative for itself
and the other Warehouse Lenders (the "Warehouse Agent"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings given to them in
the Credit Agreement (as defined below).
W I T N E S S E T H
WHEREAS, the Borrower, LINC Quantum Analytics, Inc., a Delaware corporation
("Quantum"), the banks from time to time signatory thereto and the Warehouse
Agent are parties to that certain Third Amended and Restated Loan Agreement
dated as of July 22, 1997, as amended by that certain Amendment No. 1 to Third
Amended and Restated Loan Agreement by and among the Borrower, Quantum, the
Warehouse Agent and the banks signatory thereto dated as of October 31, 1997,
that certain Amendment No. 2 and Consent Under Third Amended and Restated Loan
Agreement by and among the Borrower, Quantum, the Warehouse Agent and the banks
signatory thereto dated as of March 31, 1998, that certain Amendment No. 3 to
Third Amended and Restated Loan Agreement by and among the Borrower, LINC Monex
Leasing, Inc., a Delaware corporation ("LINC Monex"), the Warehouse Agent and
the banks signatory thereto dated as of August 14, 1998, that certain Amendment
No. 4 and Consent by and among the Borrower, LINC Monex, the Warehouse Agent and
the banks signatory thereto dated as of September 29, 1998, that certain
Amendment No. 5 to Third Amended and Restated Loan Agreement by and among the
Borrower, the Warehouse Agent and the banks signatory thereto dated as of
October 31, 1998, that certain Amendment No. 6 and Consent by and among the
Borrower, the Warehouse Agent and the banks signatory thereto dated as of
December 4, 1998, that certain Amendment No. 7 and Consent Under Third Amended
and Restated Loan Agreement by and among the Borrower, Connor Capital
Corporation ("Connor"), the Warehouse Agent and the banks signatory thereto
dated as of December 31, 1998, that certain Amendment No. 8 to Third Amended and
Restated Loan Agreement by and among the Borrower, the Warehouse Agent and the
banks signatory thereto dated as of June, 1999, that certain Amendment No. 9 to
Third Amended and Restated Loan Agreement by and among the Borrower, Connor, the
Warehouse Agent and the banks signatory thereto dated as of November 1, 1999,
and that certain Amendment No. 10 to Third Amended and Restated Loan Agreement
by and among the Borrower, the Warehouse Agent and the banks signatory thereto
dated as of January 31, 2000 (the Third Amended and Restated Credit Agreement,
as so amended, is hereinafter referred to as the "Credit Agreement") pursuant to
which (i) the Warehouse Lenders have made Loans and certain other extensions of
credit to the Borrower and (ii) the Warehouse Agent on behalf of itself and the
Warehouse Lenders has been granted security interests in and liens against the
Collateral to secure the payment and performance of the Obligations of the
Borrower to the Warehouse Agent and the Warehouse Lenders;
WHEREAS, the outstanding aggregate principal balance of the Obligations to
the Warehouse Agent and the Warehouse Lenders as of September 27, 2000 was
$78,400,000 (the "Standstill Balance"), and the Borrower is further indebted to
the Warehouse Agent and the Warehouse Lenders for accrued interest on such
principal amount together with certain expenses and fees, including attorneys'
fees, incurred by the Warehouse Agent and the Warehouse Lenders in connection
with the Obligations, all as more particularly described in the Credit
Agreement;
WHEREAS, based on the Borrowing Base Report prepared and certified by the
Borrower for the period ended July 31, 2000, the sum of the outstanding
principal amount of the Loans and the L/C Obligations has exceeded the Borrowing
Base (the amount of such excess at any time, the "Overadvance") in an amount
equal to $10,990,488;
WHEREAS, the Borrower executed that certain Amended and Restated SLI
Security Agreement, dated September 28, 1994, as amended by that certain
Amendment No. 1 to Amended and Restated SLI Security Agreement dated as of May
22, 2000 ("the Borrower Security Agreement"), that certain Amended and Restated
SLI Pledge Agreement, dated September 28, 1994 (the "Borrower Pledge
Agreement"), that certain Amended and Restated SLI Assignment of Leases, dated
September 28, 1994 (the "Borrower Lease Assignment Agreement") and that certain
Assignment of Contracts dated as of July 22, 1997 (the "Borrower Contract
Assignment Agreement"), pursuant to which the Borrower secured the Obligations
under the Credit Agreement;
WHEREAS, pursuant to that certain Confirmation, dated July 22, 1997, the
Borrower, among other parties, acknowledged and confirmed the Borrower Pledge
Agreement and the Borrower Lease Assignment Agreement;
WHEREAS, the Borrower represents to the Warehouse Agent and the Warehouse
Lenders that, as of the date hereof, each of Quantum, LINC Monex, Connor, LINC
Equipment Services, Inc. and the LINC Group, Inc. is or has been either
dissolved, defunct, and/or no longer in business and has no assets or
operations;
WHEREAS, on or about June 5, 2000, the Borrower and the Warehouse Agent
entered into that certain Interim Custody Agreement pursuant to which the
Borrower delivered Warrants (as defined in the Interim Custody Agreement) to a
designee of the Warehouse Agent for purposes of further evidencing the prior
perfected security interest of the Warehouse Agent, for the ratable benefit of
the Warehouse Lenders, in such Warrants pursuant to the terms of the Borrower
Security Agreement;
WHEREAS, on or about July 14, 2000, the Borrower, the Warehouse Agent and
LaSalle Bank National Association, as custodian ("LaSalle"), executed that
certain Custody Agreement (the "Custody Agreement") pursuant to which the
Warehouse Agent caused the Warrants to be delivered to LaSalle as custodian on
behalf of the Warehouse Agent, for the ratable benefit of the Warehouse Lenders,
pursuant to and in accordance with the terms of the Custody Agreement for
purposes of collateral perfection under the terms of the Borrower Security
Agreement;
WHEREAS, Events of Default have occurred by virtue of Borrower's
noncompliance with certain provisions of the Credit Agreement, including,
without limitation, (a) the obligation to prepay Loans in an amount sufficient
to reduce the sum of the aggregate principal amount of the Loans to an amount
not greater than the difference between the Borrowing Base and the outstanding
L/C Obligations as required in accordance with Section 2.8(a) of the Credit
Agreement, (b) the obligation to maintain the minimum Adjusted Tangible Net
Worth required in Section 6.9(a) of the Credit Agreement, (c) the obligation to
maintain the ratio of Total Recourse Liabilities to Adjusted Tangible Net Worth
required in Section 6.9(b) of the Credit Agreement, (d) the obligation to
maintain the Debt Service Coverage required in Section 6.9(c) of the Credit
Agreement, (e) the requirement that the Borrower not accumulate aggregate
payables in excess of $250,000 that are more than 90 days overdue as provided in
Section 7.1(b) of the Credit Agreement, (f) the obligation to maintain an
average Delinquency Ratio as of the last day of each month for the three month
period then ending of not more than seven percent (7%) as required in Section
6.9(e) of the Credit Agreement, and (g) the requirement that Martin E. Zimmerman
remain an executive officer of the Borrower or actively participate in the
management of the Borrower as provided in Section 8.11(b) of the Credit
Agreement (the events described in the preceding clauses (a), (b), (c), (d),
(e), (f), and (g), the "Specified Defaults");
WHEREAS, as a result of the Specified Defaults, the Warehouse Agent
delivered that certain default letter dated April 27, 2000 to the Borrower (the
"Default Letter") pursuant to which the Warehouse Lenders (a) terminated the
Commitments under the Credit Agreement, (b) informed the Borrower that the
Warehouse Lenders were entitled to exercise all of their rights and remedies
provided in the Credit Agreement and the other Loan Documents as set forth
therein, including, without limitation, accelerating all of the Obligations,
demanding payment of the Obligations, instituting the default rate of interest,
exercising all enforcement rights with respect to the Collateral and/or refusing
to make any other financial accommodations to the Borrower, and (c) reserved all
of their rights and remedies, including the right to initiate enforcement
actions in consequence of the Events of Default outlined in the Default Letter
at any time without further notice, under the Credit Agreement, the other Loan
Documents and applicable law;
WHEREAS, pursuant to, among other agreements, the Borrower Security
Agreement, the Borrower Pledge Agreement, the Borrower Lease Assignment
Contract, and the Borrower Contract Assignment Agreement and, as a result of
such Specified Defaults, the Warehouse Agent and the Warehouse Lenders are
entitled immediately to, among other things, enforce their rights and remedies
against the Borrower and the Collateral, and enforce their rights and remedies
under and with respect to, among other things, the Borrower Pledge Agreement;
WHEREAS, on or about September 27, 2000, the Borrower presented the
Warehouse Agent and the Warehouse Lenders with a revised business plan prepared
by the management of the Borrower (as modified in accordance with this
Standstill Agreement, the "Restructuring Plan") pursuant to which the Borrower
set forth its plan for restructuring its operations;
WHEREAS, as part of the Restructuring Plan, the Borrower has informed the
Warehouse Agent and the Warehouse Lenders that it intends to execute a contract
(the "Replacement Servicer Contract") establishing Stellar Financial Services, a
Division of Lyon Financial, Inc., as servicer (the "Replacement Servicer" or
"Stellar") for the Contracts and related assets under the Loan Documents;
WHEREAS, the Borrower requested that the Warehouse Agent and the Warehouse
Lenders agree and, subject to the terms and conditions of this Standstill
Agreement, each of the Warehouse Agent and the Warehouse Lenders has agreed to
(a) forbear temporarily from demanding immediate payment of the Obligations and
enforcing its security interests in and liens against the Collateral during the
period (the "Standstill Period") commencing on the date hereof and ending on the
earlier of (i) the occurrence of a Standstill Default and (ii) December 31,
2000, and (b) forbear temporarily from enforcing its security interests in and
liens on the collateral pledged (the "Pledged Collateral") pursuant to the
Borrower Pledge Agreement during the Standstill Period;
NOW, THEREFORE, the Warehouse Agent, the Warehouse Lenders, and the
Borrower hereby agree as follows:
1. Incorporation of Recitals; Existence of Defaults; No Waiver. The
recitals set forth above are incorporated into this Standstill Agreement by this
reference thereto and the Borrower hereby agrees and acknowledges that each of
such recitals is true and correct in all respects. Without limiting the
generality of the foregoing sentence, the Borrower hereby acknowledges and
agrees that (a) each of the Specified Defaults has occurred, is continuing and
has not been waived by the Warehouse Agent or the Warehouse Lenders or otherwise
cured by the Borrower, and that reasonable notice of each such Specified Default
has been received by the Borrower; (b) the Warehouse Agent and the Warehouse
Lenders have the right to enforce immediately their rights and remedies under
the Credit Agreement, the other Loan Documents and applicable law, including,
without limitation, accelerating all of the Obligations, demanding payment of
the Obligations, instituting the default rate of interest, exercising all
enforcement rights with respect to the Collateral, the Pledged Collateral and
the Warrants, refusing to make any further Loans or issue any further L/Cs,
and/or refusing to make any other financial accommodations to the Borrower; and
(c) the Warehouse Agent's and the Warehouse Lenders' execution of this
Standstill Agreement shall not constitute, or be deemed to constitute, a
novation, refinancing, discharge, extinguishment or refunding, nor is it to be
construed as a release, waiver or modification, of any of the terms, conditions,
representations, warranties, covenants, rights or remedies set forth in the
Credit Agreement, any of the other Loan Documents or applicable law.
2. Reaffirmation of Validity and Enforceability of Loan Documents. The
Borrower reaffirms that each Loan Document is in full force and effect as of the
date hereof and that the Loan Documents secure the payment in full of the
Obligations as such Obligations may be affected by the effectiveness of this
Standstill Agreement.
3. Obligations Due. Notwithstanding anything herein or in the Credit
Agreement or other Loan Documents to the contrary, all of the Obligations shall
become due and payable immediately upon the earliest of (a) the occurrence of a
Standstill Default, and (b) the expiration of the Standstill Period.
4. No Future Advances. Notwithstanding anything herein or in the Credit
Agreement or other Loan Documents to the contrary, with the sole exception of
any draw on the Standby L/C as contemplated in Section 17(d) below, the Borrower
shall not be entitled to, and the Warehouse Lenders shall not be obligated or
deemed to be obligated to make, any future advances under or in connection with
the Credit Agreement or other Loan Documents.
5. Mandatory Prepayments. The Borrower shall make such prepayments to the
Warehouse Agent, for the ratable benefit of the Warehouse Lenders, so that the
outstanding principal amount of the Obligations shall not exceed (a) $76,000,000
on October 3, 2000, (b) $70,000,000 on October 31, 2000, (c) $63,000,000 on
November 30, 2000, and (d) $0 on or before December 31, 2000.
6. Amendment of Credit Agreement. The Credit Agreement is amended by this
Standstill Agreement in the following manner:
(a) The definition of "Applicable Margin" set forth in Section 1.1 of the
Credit Agreement is hereby amended in its entirety as follows:
"Applicable Margin" means on any date of determination from and after the
Standstill Agreement Effective Date, (a) with respect to Eurodollar Loans,
3.00% per annum and (b) with respect to Prime Rate Loans, 1.50% per annum.
(b) The definition of "Post-Default Rate" set forth in Section 1.1 of the
Credit Agreement is hereby amended in its entirety as follows:
"Post-Default Rate" means on any date of determination from and after the
occurrence and continuation of a Standstill Default, with respect to any
Loan outstanding on such date, a per annum rate equal to 3.00%. Such
"Post-Default Rate" shall be added to the Applicable Margin of such Loan.
(c) The definition of "Fleet" set forth in Section 1.1 of the Credit
Agreement is hereby amended in its entirety as follows:
"Fleet" means Fleet National Bank, as successor by merger to Fleet Bank,
N.A.
(d) Section 1.1 of the Credit Agreement is hereby amended to insert
alphabetically therein the following new defined terms:
"Ambac" means LINC Equipment Receivables, Inc.
"Blue Keel" means LINC Receivables 1999 Corporation.
"CD Rate Margin" means a per annum rate equal to 3.05%.
"Extraordinary Receipts" has the meaning set forth in Section 2.8(a)(iii).
"Fed Funds Margin" means a per annum rate equal to 3.05%.
"Leasing Budget" has the meaning set forth in the Standstill Agreement.
"Leasing Collateral Account" has the meaning set forth in Section 2.26(c).
"Leasing Operating Account" has the meaning set forth in Section 2.26(b).
"R&D Budget" has the meaning set forth in the Standstill Agreement.
"R&D Business" has the meaning set forth in the Standstill Agreement.
"R&D Collateral Account" has the meaning set forth in Section 2.26(a).
"R&D Operating Account" has the meaning set forth in Section 2.26(a).
"Replacement Servicer" has the meaning set forth in the Standstill
Agreement.
"Replacement Servicer Contract" has the meaning set forth in the Standstill
Agreement.
"Servicing Account" has the meaning set forth in the Standstill Agreement.
"Standstill Agreement" means that certain Standstill Agreement, dated as of
September 27, 2000, by and among the Borrower, the Warehouse Agent and the
Warehouse Lenders, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"Standstill Agreement Effective Date" means the date when all of the
conditions precedent set forth in Section 20 of the Standstill Agreement
are satisfied.
"Standstill Borrowing Base Report" has the meaning set forth in the
Standstill Agreement.
"Standstill Default" has the meaning set forth in the Standstill Agreement.
"Warehouse Agent" has the meaning set forth in the Standstill Agreement.
"Warehouse Lender" has the meaning set forth in the Standstill Agreement.
(e) Section 2.1 of the Credit Agreement is hereby amended to insert at the
end thereof the following:
(c) Notwithstanding anything to the contrary contained herein, from and
after the Standstill Agreement Effective Date, the Borrower shall not
request and no Warehouse Lender shall be obligated to extend any Loan or
issue any L/C. Provided that no Standstill Default has occurred, the
Borrower, from and after the Standstill Agreement Effective Date, may
request that the Warehouse Lenders convert Loans in existence on the
Standstill Agreement Effective Date as provided in Section 2.7 of the
Credit Agreement. No Loan and no Interest Period related thereto shall
extend beyond the Commitment Termination Date. No Loan shall be converted
or continued if such conversion or continuation would cause such Loan or
its related Interest Period to extend beyond the Commitment Termination
Date. The Borrower, the Warehouse Lenders and the Warehouse Agent agree
that all amounts due and payable hereunder or in connection herewith shall
be satisfied in full on or prior to the Commitment Termination Date and
that no Loan or other amount outstanding on the Commitment Termination Date
shall be converted into a Term Loan pursuant to Section 2.1(b).
(f) Section 2.8(a) of the Credit Agreement is hereby amended (x) to delete
therefrom the phrase "Notwithstanding any other provision" and to substitute
therefor the phrase (i) "Notwithstanding any other provision" and (y) to insert
at the end thereof the following paragraphs:
(ii) In each instance where the Borrower or an affiliate thereof receives
or is entitled to receive (x) cash proceeds (net of costs and related
expenses) from the sale, transfer or disposition, outside the ordinary
course of business, of assets constituting Collateral, including, without
limitation, proceeds resulting from bulk sales of lease receivables,
Transaction Warrants, warrants, equity participations, and/or equities, (y)
federal, state, or local income tax refunds, or (z) cash insurance proceeds
resulting from the loss or theft of Collateral or damage to Collateral
(such amounts, the "Extraordinary Receipts"), then the Borrower immediately
shall remit or cause the remittance of such Extraordinary Receipts to the
Warehouse Agent for application toward the partial repayment of outstanding
Obligations.
(g) Section 2.10(a) of the Credit Agreement is hereby amended in its
entirety as follows:
(a) From and after the Standstill Agreement Effective Date, the Borrower
shall from time to time repay the aggregate principal amount of the Loans,
together with accrued and unpaid interest thereon, such that the
outstanding aggregate principal balance of the Loans shall be less than or
equal to (i) $76,000,000 on or before October 3, 2000, (ii) $70,000,000 on
or before October 31, 2000, (iii) $63,000,000 on or before November 30,
2000 and (iv) $0 on or before December 31, 2000. Failure to reduce such
aggregate principal amount to the foregoing levels on or before the
foregoing dates shall constitute an Event of Default and a Standstill
Default.
(h) Section 2.11(a)(iii) of the Credit Agreement is hereby amended to
delete therefrom the phrase "the Applicable Margin" and to substitute therefor
the phrase "the CD Rate Margin".
(i) Section 2.11(a)(iv) of the Credit Agreement is hereby amended to delete
therefrom the phrase "the Applicable Margin" and to substitute therefor the
phrase "the Fed Funds Margin".
(j) Section 2.26 of the Credit Agreement is hereby amended in its entirety
as follows:
(a) On or before the Standstill Agreement Effective Date, the Borrower
shall establish and maintain with Fleet at least one lock-box account and
related cash concentration account into which the Borrower shall deposit or
cause obligors or other entities to deposit all amounts, other than
Extraordinary Receipts (which immediately shall be delivered to the
Warehouse Agent as provided for in Section 2.8(a)(ii) hereof), owed to the
Borrower or its affiliates in connection with the operation of the R&D
Business, including, without limitation, payments under agreements,
documents or instruments entered into in connection with the R&D Business
that are included under the Contract Receivables Clause, the Accounts
Receivable Clause, the Residual Value Clause, the Rental Equipment Clause,
the Finished Goods Inventory Note and Receivables Note Clause (such
lock-box account(s), together with the related cash concentration account
(as identified as Account C in Exhibit G-2 to the Standstill Agreement, the
"R&D Collateral Account"). The R&D Collateral Account shall be under the
exclusive dominion and control of the Warehouse Agent pursuant to the terms
of a collection account agreement among the Borrower, Fleet, and the
Warehouse Agent that is in the form attached to the Standstill Agreement as
Exhibit K. Prior to the occurrence of a Standstill Default, amounts on
deposit in the R&D Collateral Account shall be transferred on a weekly
basis into a collection account (as identified as Account 1 in Exhibit G-1
to the Standstill Agreement, the "R&D Operating Account") that is subject
to a collection account agreement among the Borrower, Fleet, and the
Warehouse Agent in a form attached to the Standstill Agreement as Exhibit
L. The Borrower, prior to the occurrence of a Standstill Default, shall be
entitled to withdraw amounts on deposit in the R&D Operating Account;
provided, however, that the Borrower's use of such amounts shall comply
with the terms of the R&D Budget. Subsequent to the occurrence of a
Standstill Default, no transfers shall be made between the R&D Collateral
Account and the R&D Operating Account and the Borrower shall not be
entitled to withdraw amounts from the R&D Operating Account.
Notwithstanding anything to the contrary contained herein, amounts on
deposit in the R&D Collateral Account may at any time be applied by the
Warehouse Agent, in its sole discretion, in reduction of any outstanding
Obligations, including interest and fees, then due and owing. Amounts on
deposit in the R&D Operating Account, subsequent to the occurrence of a
Standstill Default, may be applied by the Agent, in its sole discretion, in
reduction of any outstanding Obligations, including interest and fees, then
due and owing.
(b) On or before the Standstill Agreement Effective Date, the Borrower
shall establish and maintain with Fleet an operating account to be used for
the making of disbursements in a manner consistent with the Leasing Budget
relating to all of its business activities other than the R&D Business (as
identified as Account 2 in Exhibit G-1 to the Standstill Agreement, the
"Leasing Operating Account"). The Leasing Operating Account shall be under
the exclusive dominion and control of the Warehouse Agent pursuant to the
terms of a deposit account agreement among the Borrower, Fleet, and the
Warehouse Agent that is in the form attached to the Standstill Agreement as
Exhibit N. At the time of its establishment, the Leasing Operating Account
shall be funded with a balance equal to $250,000 plus the cash
disbursements projected to be made by the Borrower as reflected in the
Leasing Budget for the period from its establishment until October 31,
2000. Provided no Standstill Default has occurred, on or before the third
business day preceding the last business day of each month commencing in
October 2000 (with the sole exception of the month of December, 2000), the
Warehouse Agent, upon the written request of the Borrower, shall transfer
from the Leasing Collateral Account (as defined in Section 2.26(c) below)
to the Leasing Operating Account an amount equal to the operating expenses
and disbursements of the Borrower as reflected in the Leasing Budget for
the next calendar month (the "Current Expenses"). The Borrower, prior to
the occurrence of a Standstill Default, shall be entitled to withdraw
amounts on deposit in the Leasing Operating Account, provided, however,
that the Borrower's use of such amounts shall comply with the terms of the
Leasing Budget. Subsequent to the occurrence of a Standstill Default,
amounts on deposit in the Leasing Operating Account may be applied by the
Warehouse Agent, in its sole discretion, in reduction of any outstanding
Obligations, including interest and fees, then due and owing.
(c) On or before the Standstill Agreement Effective Date, the Borrower
shall establish and maintain with Fleet a cash concentration account into
which the Borrower shall deposit or cause the deposit of all proceeds of
Collateral relating to the Borrower's businesses other than the R&D
Business (as identified as Account 3 in Exhibit G-1 to the Standstill
Agreement, the "Leasing Collateral Account"), including, but not limited
to, the receipt of funds from the Servicing Account. The Leasing Collateral
Account shall be (i) separate from similar accounts relating to the
activities of Ambac, Blue Keel, and accounts relating to the collection of
collateral of any other secured lender to the Borrower or its subsidiaries
identified by the Borrower in writing in Exhibit O to the Standstill
Agreement (i.e., other so-called one-off purchasers or purchasers of pools
of leases). The Leasing Collateral Account shall be under the exclusive
dominion and control of the Warehouse Agent pursuant to the terms of a
collection account agreement among the Borrower, Fleet, and the Warehouse
Agent that is in the form attached to the Standstill Agreement as Exhibit
M. On the first business day of each month, the Borrower authorizes the
Warehouse Agent to apply, for the ratable benefit of the Banks, the balance
in the Leasing Collateral Account in excess of $25,000 plus any Current
Expenses for the current month which have not been transferred to the
Leasing Operating Account, against any principal, interest and fees then
due under the Loan Documents. Subsequent to the occurrence of a Standstill
Default, amounts on deposit in the Leasing Collateral Account may be
applied by the Warehouse Agent, in its sole discretion, in reduction of any
outstanding Obligations, including interest and fees, then due and owing.
(d) Commencing immediately upon establishment of the Leasing Collateral
Account, any and all cash and cash proceeds in the possession, custody or
control of the Borrower and/or the Replacement Servicer that constitute
Collateral under the Loan Documents shall be transferred to the Leasing
Collateral Account within three (3) business days of receipt of such
proceeds by the Borrower and/or the Replacement Servicer, excluding any
cash proceeds in any Ambac or Blue Keel account or the R&D Collateral
Account.
(e) The account debtors related to all receivables constituting non-R&D
Business Collateral shall be notified pursuant to redirection notices in
the form attached to the Standstill Agreement as Exhibit H sent not later
than the next invoicing cycle for the receivables underlying the Collateral
following the execution of the Replacement Servicer Contract, to make
payments to the applicable lock-box accounts referenced above and in the
Standstill Agreement.
(f) Notwithstanding anything to the contrary contained in this Section 2.26
or elsewhere in this Credit Agreement or the related Loan Documents, with
respect to any lock-box account, collection account or other bank account
maintained by the Borrower with Fleet, or an affiliate thereof, including,
without limitation, the R&D Operating Account and the Leasing Operating
Account, if applicable, Fleet and its affiliates shall permit all
withdrawals from such account requested by the Borrower that are received
in writing by Fleet or its applicable affiliate prior to 11:00 a.m. (New
York time) on the date the Borrower wishes to make any such withdrawal;
provided, however, that Fleet and its affiliates shall not disburse any
funds or permit any such withdrawal if such disbursement or withdrawal
would violate the terms of the Loan Documents; provided, further, however,
that if Fleet or its affiliates does receive any written request by the
Borrower to withdraw funds from any of the foregoing accounts prior to
11:00 a.m. (New York time) on the date the Borrower wishes to make any such
withdrawal, then the Borrower shall not be entitled to withdraw any such
requested funds, subject to the other terms and conditions of the Loan
Documents, until the next Business Day. The Borrower shall not, at any
time, have the ability to withdraw funds from the R&D Collateral Account or
the Leasing Collateral Account.
(g) Each of the R&D Collateral Account collection account agreement
appended to the Standstill Agreement as Exhibit K, the R&D Operating
Account collection account agreement appended to the Standstill Agreement
as Exhibit L, the Leasing Operating Account deposit account agreement
appended to the Standstill Agreement as Exhibit N, and the Leasing
Collateral Account collection account agreement appended to the Standstill
Agreement as Exhibit M constitutes, and shall be deemed to constitute, a
"Loan Document" for purposes of this Credit Agreement.
(k) Section 2.33 of the Credit Agreement is hereby amended to insert at the
end thereof the following paragraph:
(l) Issuance of L/Cs subsequent to the Standstill Agreement Effective Date.
No L/C shall be issued or extended under this Credit Agreement by any
Warehouse Lender from and after the Standstill Agreement Effective Date.
(l) Section 5.9 of the Credit Agreement is hereby amended to insert at the
end of such section the following sentence:
Notwithstanding the terms and conditions of this Section 5.9 or any other
provision of this Credit Agreement, from and after the Standstill Effective
Date, the Borrower shall deliver to the Warehouse Agent, pursuant to the
terms of the Standstill Agreement, Standstill Borrowing Base Reports in
lieu of the Monthly Borrowing Base Reports contemplated herein.
(m) Section 6.9 of the Credit Agreement is hereby amended to delete
subsection (e) therefrom.
(n) Section 8.4 of the Credit Agreement is hereby amended to insert at the
end of paragraph (c) the word "or" and inserting the following paragraph:
(d) A Standstill Default shall occur.
7. Budgets. On or before the Standstill Agreement Effective Date, the
Borrower shall have prepared and delivered to the Warehouse Agent and each
Warehouse Lender operating expense budgets for each week commencing September 1,
2000 through December 31, 2000, in form and substance satisfactory to the
Warehouse Agent and the Warehouse Lenders, reflecting, on a consolidating basis,
the Borrower's projected operating expenses for (a) all of its operations other
than its LINC Quantum Division (as defined below) (as appended to the
Restructuring Plan as the Summary of Monthly Cash Flows-Leasing and Corporate
Schedule 2, the "Leasing Budget") and (b) the operations of the Borrower's LINC
Quantum Division, including the IF&E rental and distribution business (the "LINC
Quantum Division") (as appended to the Restructuring Plan as the Summary of
Monthly Cash Flows-Rental and Distribution Schedule 4, the "R&D Budget",
together with the Leasing Budget, the "Budgets"). The LINC Quantum Division
rental and distribution business is hereinafter referred to as the "R&D
Business." The Budgets shall not include operating expenses associated with
Warehouse Agent's Costs (as defined in Section 12 below).
8. Variance Reports. Not later than the seventh business day following the
end of each month, the Borrower will submit to the Warehouse Agent a variance
report (each a "Variance Report") reflecting on a line-item basis the actual
operating expenses for the immediately preceding calendar month and the
percentage variance of such actual results from those reflected on each of the
Leasing Budget and the R&D Budget for such month (the "Monthly Variance
Report"). Commencing with the Variance Report provided not later than October
10, 2000, the Borrower shall also submit to the Warehouse Agent weekly projected
operating expenses for not less than twelve (12) subsequent weeks, but in no
event shall the Borrower be required to submit weekly projected operating
expenses for weeks commencing after December 31, 2000.
9. Reporting Requirements. In addition to the reporting requirements under
the Loan Documents, the Borrower shall provide the Warehouse Agent and the
Warehouse Lenders with the following reports and information, all in a form
satisfactory to the Warehouse Agent and the Warehouse Lenders:
(a) On or before each of the first and fifteenth days of each month, a
status report on portfolio sales and other events which have or are
expected to generate any Extraordinary Receipts, the transition of the
servicing to the Replacement Servicer, the recapitalization or refinancing
of the R&D Business, the value, marketability and status of the Warrants
and any other similar Collateral and other matters relating to the
Borrower's implementation of the Restructuring Plan as may be reasonably
requested by the Warehouse Agent or the Warehouse Lenders.
(b) In addition to the Monthly Variance Report provided for in Section 8
above, on or before the twenty-first business day of each month, a Variance
Report covering the period from the beginning of such month through the
fifteenth day of such month.
(c) On or before the earlier to occur of (i) the fifth business day after
the Replacement Servicer provides the Borrower (with notice to the
Warehouse Agent) with the necessary information, and (ii) the twenty-fifth
day of each month, (1) a borrowing base report for the immediately
preceding month, in the form attached hereto as Exhibit C (the "Standstill
Borrowing Base Report"), which shall include, among other things, a
separate borrowing base calculation for the R&D Business and the amount of
the Overadvance as of the last day of such month with a detailed
reconciliation of the change in the amount of the Overadvance for such
month, (2) an aging report for the immediately preceding month, (3) a
report on portfolio composition for the immediately preceding month,
including collateral type and delinquency status, (4) a summary of all cash
inflows and outflows for the immediately preceding month on a consolidated
basis, (5) an aged trial balance of accounts receivable arising from or
relating to the R&D Business and all other accounts receivable that
constitute Collateral under the Loan Documents (with the exception of lease
receivables), together with an aged list of trade payables, in each case
for the immediately preceding month with detailed back-up information, and
(6) a compliance certificate, in the form attached hereto as Exhibit D,
certifying that, among other things, the Borrower is in compliance with the
terms and conditions of this Standstill Agreement and that no Standstill
Default has occurred and is continuing.
10. Servicer and Related Accounts. In connection with the implementation of
the Replacement Servicer Contract, the Borrower shall establish the following
lock-box and cash accounts: (a) The Servicing Account. Pursuant to the
Replacement Servicer Contract, a servicing account and related lock-box accounts
(as identified as Account 4 in Exhibit G-1 hereto, the "Servicing Account")
shall be established into which the proceeds of all Contracts and Collateral
serviced by the Replacement Servicer under the Replacement Servicer Contract
shall be deposited on a daily basis. Such proceeds shall be deposited into the
Servicing Account in part from amounts on deposit in those accounts specified in
Exhibit G-2 attached hereto (such accounts, together with their related
lock-boxes, the "Concentration Accounts"). The Concentration Accounts located at
and maintained by Fleet National Bank, LaSalle Bank National Association, and
their respective affiliates (as identified as Account A and Account B,
respectively, in Exhibit G-2 attached hereto, the "Fleet/LaSalle Accounts"),
shall be under the exclusive dominion and control of the Replacement Servicer
from and after the date hereof pursuant to agreements (collectively, the
"Concentration Account Agreements") in form and substance satisfactory to the
Warehouse Agent and its counsel and attached hereto as Exhibit E. Those
Concentration Accounts other than the Fleet/LaSalle Accounts appearing as
Account D, Account E, Account F and Account G in Exhibit G-2 hereto shall be
under the exclusive dominion and control of the Replacement Servicer pursuant to
the terms of the final paragraph of this Section 10. Amounts or other items on
deposit in the Concentration Accounts result from payments made under accounts,
general intangibles, and instruments related to the Borrower that are owned or
pledged to the Warehouse Agent, for the ratable benefit of the Warehouse
Lenders, Blue Keel, or Ambac. The Servicing Account, from and after the date
hereof, shall be under the dominion and control of the Replacement Servicer for
the benefit of the Borrower and subject to a pledge and a blocked account
agreement, in form and substance satisfactory to the Warehouse Agent and its
counsel, in favor of the Warehouse Agent for the ratable benefit of the
Warehouse Lenders. The Servicing Account shall be maintained at Norwest Bank
("Norwest"). Deposits in the Servicing Account, following segregation of late
fees, taxes and amounts not consisting of Collateral (subject to an agreed upon
minimum balance not to exceed $25,000) shall be transferred by the Replacement
Servicer on a daily basis to the Leasing Collateral Account.
(b) The Tax and Fee Account. The Replacement Servicer shall establish a tax
and fee account (as identified as Account 5 in Exhibit G-1 hereto, the "Tax
and Fee Account") at Norwest into which it shall deposit from time to time
in accordance with the Replacement Servicer Contract all property taxes,
sales taxes and late charges received into the Servicing Account from
account debtors with respect to the Contracts and other Collateral serviced
by the Replacement Servicer. The monies in the Tax and Fee Account shall be
used by the Replacement Servicer to make sales and property tax payments to
appropriate jurisdictions and to remit late charges in accordance with the
terms of the Replacement Servicer Contract. Any residual amounts remaining
in the Tax and Fee Account after the payment of such taxes (less
appropriate reserves for audits and adjustments) and the remittance of such
late charges shall be transferred by the Replacement Servicer to the
Leasing Collateral Account to the extent such surplus as reasonably
determined by the Replacement Servicer exceeds $25,000. The Tax and Fee
Account shall be under the exclusive dominion and control of the
Replacement Servicer from and after the date hereof.
The Servicing Account shall be subject to a blocked account agreement and a
first-priority, perfected pledge and security interest in favor of the
Warehouse Agent, for the ratable benefit of the Warehouse Lenders, all in
form and substance satisfactory to the Warehouse Agent, the Warehouse
Lenders, and their counsel in the form attached hereto as Exhibit F not
later than October 31, 2000. Redirection notices, in a form attached hereto
as Exhibit H, shall be sent by the Borrower and/or the Replacement Servicer
to all account debtors owing amounts to the Borrower which constitute
non-R&D Business Collateral not later than the next invoicing cycle for the
receivables underlying the Collateral following the execution of the
Replacement Servicer Contract (generally 25 days prior to the due date of
the invoice), directing the account debtors to remit payment directly to
the Servicing Account. Except to the extent permitted by the Replacement
Servicer Contract with respect to remittances that are not identifiable by
the Replacement Servicer, the Borrower shall not direct the Replacement
Servicer to redirect any deposits to any account other than the foregoing
accounts without the consent of the Warehouse Agent and the Majority
Warehouse Lenders. Each Concentration Account, other than the Fleet/LaSalle
Accounts, shall be subject to the exclusive dominion and control of the
Replacement Servicer no later than October 31, 2000 pursuant to the terms
of blocked account agreements substantially similar to Exhibit E attached
hereto. The lock-boxes and accounts listed on Exhibit G-3 under the heading
"Existing Accounts to be Closed" shall be closed by the Borrower or the
Replacement Servicer on its behalf no later than October 10, 2000, and the
Borrower and/or the Replacement Servicer shall use its best efforts to
close the lock-boxes and the accounts listed on Exhibit G-2 under the
heading "Existing Accounts to be Retained" no later than December 31, 2000.
A Standstill Default shall be deemed to have occurred and be continuing if
the Concentration Accounts are not, but subject to the terms hereof, under
the exclusive dominion and control of the Replacement Servicer.
11. R&D Business. As part of the Restructuring Plan, the Borrower has
represented to the Warehouse Lenders that it has made a business determination
to promptly recapitalize, refinance or sell its R&D Business (the "R&D
Transaction") as a means to reduce the outstanding Obligations. In connection
with the R&D Business, the Borrower covenants and agrees to the following: (a)
On or before October 15, 2000, the Borrower shall deliver to the Warehouse Agent
and the Warehouse Lenders an executed letter of intent, proposal letter,
memorandum of understanding or similar document with a bona fide third party (or
parties) reflecting a proposal to recapitalize, refinance or purchase the R&D
Business, subject to the prior consent of the Warehouse Agent and the Warehouse
Lenders and any other conditions typically found in an executed letter of
intent, proposal letter, memorandum of understanding or similar document.
(b) On or before December 15, 2000, the R&D Transaction shall have been
completed, subject to the prior consent of the Warehouse Agent and the
Warehouse Lenders.
(c) Pending completion of the R&D Transaction, (i) the R&D Business shall
be funded exclusively from proceeds or collections received or generated by
the R&D Business, (ii) the Borrower shall not use any proceeds or
collections received or generated by the Borrower's non-R&D Business to
fund its R&D Business operations, and (iii) the Warehouse Agent, for the
ratable benefit of the Warehouse Lenders, shall continue to have a
first-priority, perfected lien and security interest on and in all of the
Borrower's existing and after-acquired assets and property interests used
in or comprising the R&D Business.
12. Use of Proceeds. The cash proceeds of the Warehouse Lender' Collateral
(the "Cash Proceeds") shall be used by the Borrower solely (a) to fund general
corporate purposes relating to the Borrower's operations in accordance with the
Budgets and the Restructuring Plan, (b) to pay (i) all fees as provided herein,
and (ii) all fees and expenses incurred by the Warehouse Agent, including
professional fees and expenses (including legal, financial advisor and field
examination fees and expenses) and those fees and expenses incurred in
connection with the Credit Agreement or the preparation, negotiation,
documentation and implementation of this Standstill Agreement (the "Warehouse
Agent's Costs").
13. Certain Litigation Settlements. The Borrower has advised the Warehouse
Agent and the Warehouse Lenders that, as part of its Restructuring Plan, the
Borrower is in the process of attempting to settle certain disputed third-party
claims, and that in the event it reaches such settlements during the Standstill
Period, it may seek to make certain settlement payments that would otherwise be
restricted or prohibited by the Loan Documents. The Borrower shall seek the
consent of the Warehouse Agent and the Warehouse Lenders in connection with any
proposed settlement of any such litigation that would result in a payment or
payment obligation on behalf of the Borrower in excess of $100,000 in accordance
with the terms and conditions of the Loan Documents.
14. Forbearance Fee. A $1,000,000 fee (the "Forbearance Fee"), fully earned
as of the Standstill Agreement Effective Date, shall be payable in cash to the
Warehouse Agent, for the ratable benefit of the Warehouse Lenders, as follows:
(a) $500,000 on the Standstill Agreement Effective Date, and (b) $500,000 upon
the termination of the Standstill Period; provided, however, that if the
Obligations shall have been paid in cash in full prior to October 31, 2000, the
amount of the Forbearance Fee shall be $500,000, with no additional amount
payable on the date the Obligations are paid in full; provided further, however,
that, if the Obligations shall have been paid in cash in full prior to December
15, 2000, the amount of the Forbearance Fee shall be $750,000, with $250,000
payable on the date the Obligations are paid in full.
15. Fees and Expenses of the Warehouse Agent. The Borrower shall pay all
out of pocket costs and expenses that may be incurred by or on behalf of the
Warehouse Agent (including fees and expenses of the Warehouse Agent's legal and
financial advisors and in-house counsel) relating to the negotiation,
documentation and administration of this Standstill Agreement and the
enforcement of the Warehouse Agent's and the Warehouse Lenders' rights under
this Standstill Agreement. All such fees and expenses shall be debited by the
Warehouse Agent from either the R&D Collateral Account or the Leasing Collateral
Account upon two (2) business days' notice by the Warehouse Agent to the
Borrower. During such two (2) day notice period, the Borrower may direct the
Warehouse Agent to debit either the R&D Collateral Account or the Leasing
Collateral Account provided that any such direction from the Borrower is
received by the Warehouse Agent prior to 11:00 a.m. New York time on the day of
the expiration of such two (2) day period; provided, however, that if the
Warehouse Agent does not receive any such direction from the Borrower during
such two-day notice period, then the Warehouse Agent, in its discretion, may
debit either the R&D Collateral Account or the Leasing Collateral Account for
such fees and expenses.
16. Representations and Warranties. The Borrower hereby represents and
warrants to the Warehouse Agent and the Warehouse Lenders that:
(a) Each of the Loan Documents is valid and enforceable by the Warehouse
Agent and the Warehouse Lenders against the Borrower and its affiliated
parties thereto, except as such validity and enforceability is limited by
bankruptcy and laws relating to creditors rights generally;
(b) The Borrower shall not challenge or dispute the validity of any of the
Obligations under the Credit Agreement, and that, as of the date of the
Standstill Agreement, (i) the Borrower was liable to the Warehouse Agent
and the Warehouse Lenders in the aggregate principal amount of not less
than $78,400,000, plus accrued and unpaid interest thereon, plus fees,
costs and expenses incurred in connection with the Obligations as provided
in the Loan Documents; and (ii) pursuant to the Borrowing Base Report dated
July 31, 2000, the amount of the Overadvance was not less than $10,990,488.
(c) By reason of the Loan Documents, the Obligations are secured by
first-priority, perfected, valid and enforceable liens on and security
interests in the Collateral.
17. Affirmative and Negative Covenants. In addition to each of the
covenants contained in the Credit Agreement, during the Standstill Period:
(a) The Borrower shall engage the Replacement Servicer in accordance with
the terms of the Replacement Servicer Contract, and the transition of all
material servicing activities to such Replacement Servicer shall have been
consummated, by no later than September 30, 2000.
(b) Cash proceeds and collections generated or received by or on account of
the Borrower's non-R&D Business operations shall not be used to fund the
R&D Business.
(c) Delinquencies on accounts receivable that constitute Collateral under
the Loan Documents over 60 days past-due shall not exceed $8,000,000 (the
"Delinquency Covenant").
(d) With respect to that certain standby letter of credit in the amount of
$104,474 issued on behalf of the Borrower for the benefit of UBS (the
"Standby LC"), attached hereto as Exhibit I, the Warehouse Agent has
indicated that it has delivered or intends to deliver an appropriate notice
of non-renewal prior to the time required for the next renewal period under
the terms of the Standby LC. The Borrower shall undertake to (i) notify the
beneficiary of the Standby LC of such non-renewal as soon as practicable
and (ii) replace or fully cash collateralize the Standby LC prior to its
expiration, in form and substance satisfactory to the Warehouse Agent, the
Warehouse Lenders and their counsel. Upon the payment by the Borrower of
the Obligations in accordance with this Standstill Agreement, the
obligations of the Borrower to the Warehouse Agent and the Warehouse
Lenders in connection with the Standby LC shall also be paid in full in
cash.
(e) The Borrower shall cause Stellar, as Replacement Servicer, to provide
the Borrower and the Warehouse Agent with customary servicing reports
including, without limitation, a cash receipts report, a cash
reconciliation report, an aging report and a delinquency report.
(f) Commencing immediately upon the establishment of the Leasing Collateral
Account, the Borrower shall transfer or shall cause to be transferred any
and all cash and cash proceeds in the possession, custody or control of the
Borrower and/or the Replacement Servicer that constitute Collateral under
the Loan Documents to the Leasing Collateral Account within three (3)
business days of receipt of such proceeds by the Borrower and/or the
Replacement Servicer, excluding any cash proceeds in any Ambac or Blue Keel
account or the R&D Collateral Account.
(g) As soon as practicable, the Borrower shall deliver to the Warehouse
Agent a list of the names and addresses of each payor, account debtor or
obligor in connection with any and all accounts receivable that constitute
Collateral under the Loan Documents.
(h) On or before October 23, 2000, the Borrower shall have filed with the
Securities and Exchange Commission any information statement that the
Borrower deems appropriate or necessary in connection with its
implementation of the Restructuring Plan; provided that the Borrower shall
provide the Warehouse Agent and its counsel with a draft copy of any such
information statement at least five (5) days prior to any such filing.
(i) To the extent the Borrower makes any payment to any creditor during the
Standstill Period, the Borrower shall first pay any purchase money amounts
owed to such creditor that are secured by a first-priority purchase money
security interest to the extent that it has received proceeds of the
collateral subject to such first-priority purchase money security interest
prior to paying any other amounts owed to such creditor.
(j) The Overadvance shall at no time during the Standstill Period exceed
$12,000,000 (the "Overadvance Covenant").
(k) The Borrower shall deliver on or before October 31, 2000, in form and
substance satisfactory to the Warehouse Agent and its counsel (i) the
blocked account agreement among the Warehouse Agent, Replacement Servicer,
Norwest and the Borrower with respect to the Servicing Account
substantially in the form attached hereto as Exhibit F; and (ii) the
blocked account agreement among the Replacement Servicer, Norwest and the
Borrower with respect to the Tax and Fee Account.
18. Standstill Defaults. The occurrence of any of the following events,
with the sole exception of any Specified Defaults, shall constitute a
"Standstill Default":
(a) The commencement of a case under title 11 of the United States Code, or
any other similar insolvency or receivership proceeding, by or against the
Borrower (provided, however, that in the event of the filing of an
involuntary bankruptcy case, such case is not dismissed with prejudice
within 30 days of such filing);
(b) The failure of the Borrower to pay any interest, fees or principal, or
to make any required prepayments (including, without limitation, those set
forth in Section 5 hereof), when due;
(c) The failure of the Borrower to comply with the Overadvance Covenant;
(d) The failure of the Borrower to comply with any financial covenants or
negative covenants in this Standstill Agreement;
(e) The failure of the Borrower to perform or comply with any other term or
covenant and such default shall continue unremedied subject to any
applicable grace period in this Standstill Agreement;
(f) Any representation or warranty by the Borrower in this Standstill
Agreement shall be incorrect or misleading in any material respect when
made;
(g) The Borrower shall no longer retain KPMG or such other management
consultant firm acceptable to the Warehouse Agent and the Warehouse
Lenders;
(h) Either Allen Palles or Bert Laing shall no longer serve in his current
capacity as an officer of the Borrower;
(i) A change of control shall have occurred after the Standstill Agreement
Effective Date whereby (x) the officers and directors of the Borrower shall
fail to own, collectively in the aggregate, at least ninety per cent (90%)
of the voting stock of the Borrower that such officers and directors own as
of the date of this Standstill Agreement, (y) any Person or group of
Persons (within the meaning of Section 13 or 14 Exchange Act of 1934) other
than the officers and directors of the Borrower, shall acquire at any time
beneficial ownership (within the meaning of Section 13 of the Exchange Act)
of 10% or more of the voting stock of the Borrower, or (z) individuals who
as of the Standstill Agreement Effective Date constitute the Borrower's
Board of Directors (together with any new director whose election or
appointment was approved by a vote of or recommended by at least a majority
of the directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election was
previously so approved), for any reason, cease to constitute a majority of
the directors at any time then in office. For the purposes of this section,
"Exchange Act" means the Securities and Exchange Act of 1934, and the
regulations promulgated thereunder, all as amended from time to time;
(j) There shall have occurred any condition or event which has or
reasonably could be expected to have a material adverse effect upon (i) the
condition (financial or otherwise), operations, assets, business,
properties or performance of the Borrower, (ii) the ability of the Borrower
to perform its obligations under this Standstill Agreement, or (iii) the
ability of the Warehouse Agent or any Warehouse Lender to enforce this
Standstill Agreement;
(k) The Borrower incurs or pays operating expenses during the cumulative
Standstill Period that would cause, in either case, the aggregate amount of
all operating expenses contemplated by the applicable Budget to exceed 120
percent (120%) of the aggregate amount of all such operating expenses
budgeted by the Borrower during such period;
(l) The failure of the Borrower to comply with the Delinquency Covenant;
(m) Any creditor of the Borrower, other than the Warehouse Lenders or the
Warehouse Agent on behalf of the Warehouse Lenders, shall accelerate the
indebtedness owing to such creditor, repossess any Collateral, obtain a
judgment against the Borrower in each of which events are for amounts owing
that are in excess of $500,000, or attach, levy against, execute upon or
enforce against any assets that constitute Collateral under the Loan
Documents as a result of or in connection with legal action, litigation or
similar judicial or administrative proceedings;
(o) Any creditor of the Borrower, other than the Warehouse Lenders or the
Warehouse Agent on behalf of the Warehouse Lenders, or any other entity
commences any action in any judicial, administrative or other proceeding
seeking to enjoin, restrain, bar, invalidate or challenge the Borrower's
Restructuring Plan, this Standstill Agreement or the implementation of any
significant portion thereof;
(p) The cash in the Leasing Collateral Account or the R&D Collateral
Account, as the case may be, is insufficient at any time to pay interest
when due pursuant to the Loan Documents plus Current Expenses, subject to,
however, a five (5) business day grace period solely with respect to the
amount of Current Expenses;
(q) Any entity brings any action in any judicial, administrative or other
proceeding against the Warehouse Agent or any of the Warehouse Lenders,
based upon or arising out of facts or circumstances that have occurred or
exist (known or unknown) at or before the Standstill Agreement Effective
Date, disputing, challenging or seeking to avoid the nature, scope, amount,
extent, validity, priority, enforceability or nonavoidability of any of the
Obligations, the Credit Agreement, the other Loan Documents, the liens or
security interests of the Warehouse Agent (for the ratable benefit of the
Warehouse Lenders) thereunder, or this Standstill Agreement;
(r) The transition of all material servicing to the Replacement Servicer
under the terms of the Replacement Servicer Contract shall not have been
consummated on or before September 30, 2000;
(s) The Replacement Servicer Contract shall have been terminated or
materially modified or amended, or the Replacement Servicer shall have
resigned, without the prior consent of the Warehouse Agent and the Majority
Warehouse Lenders;
(t) The Replacement Servicer shall no longer have exclusive dominion and
control over the Existing Accounts as provided in Section 10 of this
Standstill Agreement; and
(u) An Event of Default, other than the Specified Defaults, shall have
occurred under the Credit Agreement.
19. Remedies. Upon the occurrence of a Standstill Default, if the
Obligations have not been paid in full in cash, the Warehouse Agent and the
Warehouse Lenders shall have the right to immediately commence enforcement of
all of their rights and remedies under the Credit Agreement, the other Loan
Documents, this Standstill Agreement and applicable law. In addition to the
remedies set forth in the Credit Agreement, the other Loan Documents, this
Standstill Agreement and under applicable law, upon the occurrence of a
Standstill Default, the Warehouse Agent and the Warehouse Lenders shall be
hereby empowered to request from any court of competent jurisdiction, and the
Borrower hereby consents to, the appointment of a receiver for the Borrower's
assets. Such receiver shall be instructed to seek from any governmental
regulatory agencies having jurisdiction over such operations an involuntary
transfer of control of any such assets of the Borrower for the purpose of
seeking a purchaser to whom control will ultimately be transferred and shall be
allowed to operate such assets pending such transfer. The Borrower hereby agrees
to authorize such an involuntary transfer of control upon the request of the
receiver so appointed and, if the Borrower shall refuse to authorize the
transfer, its approval may be required by the court.
20. Conditions Precedent. This Standstill Agreement shall become effective
and be deemed effective as of the date all of the following conditions precedent
have been satisfied (the "Standstill Agreement Effective Date"):
(a) Execution and delivery of this Standstill Agreement, and all documents
and instruments ancillary thereto, all in form and substance satisfactory
to the Warehouse Agent, the Warehouse Lenders, and their counsel.
(b) Receipt by the Warehouse Agent and the Warehouse Lenders of the
Budgets, together with all other material related cash flow and financial
information that the Warehouse Agent has requested prior to the Standstill
Agreement Effective Date, all in form and substance satisfactory to the
Warehouse Agent, the Warehouse Lenders, and their counsel.
(c) Payment of all costs, fees and expenses owing to the Warehouse Agent as
referenced in this Standstill Agreement or in the Loan Documents,
including, without limitation, (i) the Warehouse Agent's unreimbursed legal
fees and expenses (including allocable costs of the Warehouse Agent's
in-house counsel) incurred through the Standstill Agreement Effective Date,
(ii) the Warehouse Agent's unreimbursed financial advisor (E&Y
Restructuring LLC ("EYR")) fees and expenses incurred and invoiced through
the Standstill Agreement Effective Date, (iii) the Warehouse Agent's
unreimbursed field examination (Freed Maxick) fees and expenses in the
amount of $22,455, and (iv) the unreimbursed fees and expenses of
PriceWaterhouseCoopers in the amount of $26,702.91.
(d) Satisfactory compliance by the Borrower with all material and
reasonable outstanding due diligence, document or data requests from the
Warehouse Agent, the Warehouse Lenders or the Warehouse Agent's
professional advisors, including, without limitation, EYR.
(e) Delivery by the Borrower to the Warehouse Agent and the Warehouse
Lenders of the Replacement Servicer Contract establishing Stellar as
Replacement Servicer for the Contracts and related assets under the Credit
Agreement, all in form and substance satisfactory to the Warehouse Agent,
the Warehouse Lenders and their counsel. The Replacement Servicer Contract
shall be assignable by its terms by the Borrower to the Warehouse Agent as
Collateral under the terms and conditions of the Borrower Security
Agreement and shall not be terminated by either the Borrower or Replacement
Servicer until a successor replacement servicer satisfactory to the
Warehouse Agent and the Majority Warehouse Lenders has been appointed.
(f) The preparation and delivery by the Borrower to the Warehouse Agent and
the Warehouse Lenders of a Borrower-sponsored key employee incentive or
retention program during the term of the Standstill Period, setting forth
the employees covered, the compensation payable and the conditions upon
which such compensation is payable, all in form and substance satisfactory
to the Warehouse Agent, the Warehouse Lenders and their counsel.
(g) The Borrower shall have made such prepayments to the Warehouse Agent,
for the ratable benefit of the Warehouse Lenders, to reduce the principal
amount of the Obligations to an amount not greater than $80,000,000.
(h) The Borrower shall have delivered to the Warehouse Agent and the
Warehouse Lenders a Standstill Borrowing Base Report dated as of July 31,
2000 and attached hereto as Exhibit J.
(i) The Borrower shall have established each of the following accounts (the
"Accounts"): the R&D Collateral Account, the R&D Operating Account, the
Leasing Collateral Account, the Leasing Operating Account, the Servicing
Account and the Tax and Fee Account. In addition, the Borrower shall have
granted to the Warehouse Agent, for the ratable benefit of the Warehouse
Lenders, a first priority, perfected pledge of and security interest in
each of such Accounts (with the sole exception of the Tax and Fee Account)
and shall have executed and delivered each of the blocked account
agreements in favor of the Warehouse Agent for the ratable benefit of the
Warehouse Lenders, in the form attached hereto as Exhibit K, Exhibit L,
Exhibit M, and Exhibit N, respectively, all in form and substance
satisfactory to the Warehouse Agent, the Warehouse Lenders and their
counsel.
(j) The Borrower shall have delivered to the Warehouse Agent a list
attached hereto as Exhibit O of all so-called one off purchasers or
purchasers of pools of leases.
(k) The Borrower shall have executed and delivered to the Warehouse Agent
the Concentration Account Agreements in the form attached hereto as Exhibit
E, in form and substance satisfactory to the Warehouse Agent and its
counsel.
(l) All of the representations and warranties of the Borrower in this
Standstill Agreement shall be true and correct in all material respects.
(m) Each of the Warehouse Lenders shall have obtained any necessary
internal approvals or authorizations to enter into this Standstill
Agreement.
(n) Other than the Specified Defaults, no Default or Event of Default shall
have occurred and be continuing or shall result from the execution of this
Credit Agreement.
(o) The Borrower shall have demonstrated to the Warehouse Agent and its
financial advisors to their satisfaction that the R&D Collateral Account
and the R&D Operating Account have been segregated from all other accounts
of the Borrower and cash management system.
(p) The Borrower shall have executed and delivered to the Warehouse Agent
the closing certificate attached hereto as Exhibit P.
21. Release. In further consideration of the execution by the Warehouse
Agent and the Warehouse Lenders of this Standstill Agreement, the Borrower, on
behalf of itself and each of its present and former principals, subsidiaries,
parents, holding companies, affiliates, divisions, predecessors, stockholders,
directors, officers, employees, agents, accountants, attorneys, and other
representatives, each of the Loan Parties and all of the successors and assigns
of each of the foregoing (collectively, the "Releasors"), hereby completely,
voluntarily, knowingly, and unconditionally releases, acquits, and forever
discharges (a) the Warehouse Agent, (b) each of the Warehouse Lenders, (iii)
each of the present and former principals, subsidiaries, parents, holding
companies, affiliates, divisions, predecessors, stockholders, directors,
officers, employees, agents, accountants, attorneys, and other representatives
of each of the foregoing, and (d) all of the successors and assigns of each of
the foregoing (collectively, the "Releasees"), from any and all claims, actions,
causes of action, demands, suits, debts, covenants, controversies, remedies,
liabilities, damages, sums of money, accounts, reckonings, bonds, bills,
specialties, variances, trespasses, judgments, extents, executions, rights,
obligations, losses, undertakings, costs, expenses, attorneys' fees, setoffs,
counterclaims, cross-claims, third-party claims, claims-over, reimbursement
claims, indemnity claims, contribution claims, and demands of any and every type
whatsoever, including, without limitation, any so-called "lender liability"
claims or defenses (collectively, "Claims"), whether arising out of federal,
state, provincial or local laws or regulations, statutes, rules or common law,
whether in law or in equity, whether known or unknown, matured or unmatured,
fixed or contingent, asserted or unasserted, disclosed or undisclosed,
liquidated or unliquidated, disputed or undisputed, suspected or unsuspected,
foreseen or unforeseen, direct or indirect, choate or inchoate, whether
individual, class, derivative, representative, or in any other capacity, which
any of the Releasors ever had, now has or hereinafter can, shall or may have
against any of the Releasees for, upon or by reason of any matter, cause or
thing whatsoever from the beginning of the world until the Standstill Agreement
Effective Date, in any way concerning, relating to, or arising from (i) any of
the Releasors, (ii) the Obligations, (iii) the Collateral, (iv) the Credit
Agreement or any of the other Loan Documents, (v) the financial condition,
business operations, business plans, prospects or creditworthiness of the
Borrower, and (vi) the negotiation, documentation and execution of this
Standstill Agreement and any documents relating thereto. Each of the Releasors
knowingly grants such release notwithstanding that such Releasor may hereafter
discover facts in addition to, or different from, those which that party now
knows or believes to be true, and without regard to the subsequent discovery or
existence of such different or additional facts, and expressly waives any and
all rights that any such Releasor may have under any statute, procedural rule,
common law principle or equity which would limit the effect of the foregoing
release to those Claims actually known or suspected to exist at the time of the
Standstill Agreement Effective Date. The Releasors hereby acknowledge that they
have been advised by legal counsel of the meaning and consequences of this
release.
22. No Course of Dealing. The execution and delivery of this Standstill
Agreement shall not establish a course of dealing among the Warehouse Agent or
any Warehouse Lender and the Borrower or in any other way obligate the Warehouse
Agent or any Warehouse Lender to hereafter provide any further forbearance of
any kind, to provide any further time for payment prior to the enforcement of
their security or to provide any other financial accommodations to or on behalf
of the Borrower.
23. Corporate Authority and Binding Agreement. The execution, delivery and
performance of this Standstill Agreement by the Borrower have been duly and
validly authorized by all requisite corporate action, and no other corporate
proceedings or consents on its part are necessary to authorize the execution,
delivery or performance of this Standstill Agreement. This Standstill Agreement
has been duly executed and delivered by the Borrower and constitutes the valid
and binding obligation of the Borrower, enforceable in accordance with its
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights.
24. Arm's Length Agreement. Each of the parties to this Standstill
Agreement agrees and acknowledges that this Standstill Agreement has been
negotiated in good faith, at arm's length, and not by any means forbidden by
law.
25. Injunctive Relief. The Borrower acknowledges and agrees that its
covenants and obligations under this Standstill Agreement and the other
documents, instruments and agreements executed herewith are integral to the
Warehouse Agent's and Warehouse Lenders' realization of their rights against,
and the value of their interest in, the Collateral, that a breach of any of the
covenants and obligations of the Borrower hereunder or under the other
documents, instruments and agreements executed in connection herewith shall
entitle the Warehouse Agent and the Warehouse Lenders to injunctive relief and
specific performance without the necessity of proving irreparable injury to the
Warehouse Agent and the Warehouse Lenders or that the Warehouse Agent and the
Warehouse Lenders do not have an adequate remedy at law in respect of such
breach (each of which elements the Borrower admits exist) and, as a consequence,
the Borrower agrees that each and every covenant and obligation applicable to it
and contained in this Standstill Agreement or the other documents, instruments
and agreements executed in connection herewith shall be specifically enforceable
against it. The Borrower hereby waives and agrees not to assert any defenses
against an action for specific performance of its respective covenants under the
other documents, instruments and agreements executed in connection herewith.
26. Notices. Except as otherwise provided for herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other party, or whenever any of the parties desires to give or
serve upon any of the other communication with respect to this Standstill
Agreement, such notice, demand, request, consent, approval, declaration or other
communication shall be in writing (including, but not limited to, facsimile
communication), and shall either be delivered in person, telecopied,
telegraphed, sent by reputable overnight courier or mailed by first class mail,
or registered or certified mail, return receipt requested, postage prepaid or
provided for, addressed as follows:
(a) If to the Warehouse Agent or any Warehouse Lender:
Fleet National Bank
Managed Asset Division
Mail Stop CTEH40221A
777 Main Street
Hartford, CT 06115
Attention: Andrew J. Maidman
Facsimile: (860) 986-2435
with copies to:
Fleet National Bank
Managed Asset Division-Legal Department
777 Main Street
Hartford, CT 06115
Attention: Scott A. Lessne
Facsimile: (860) 986-5076
-and-
Sidley & Austin
Bank One Plaza
Chicago, Illinois 60603
Attention: Jeffrey C. Steen
Facsimile: 312/853-7036
Phone: 312/853-7000
(b) If to the Borrower, at:
LINC Capital, Inc.
303 E. Wacker Drive
Chicago, IL 60601
Attention: Allen Palles
Facsimile: (312) 946-7304
with copies to:
LINC Capital, Inc.
303 E. Wacker Drive
Chicago, IL 60601
Attention: James G. Froberg
Facsimile: (312) 946-7304
or at such other address as may be substituted by notice given as herein
provided.
27. Counterparts. This Standstill Agreement may be executed in one or more
counterparts, each of which shall be considered an original counterpart, and
shall become a binding agreement when the Warehouse Agent, each of the Warehouse
Lenders, and the Borrower has executed one counterpart. Each of the parties
hereto agrees that a signature transmitted to the Warehouse Agent or its counsel
by facsimile transmission shall be effective to bind the party so transmitting
its signature.
28. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE
LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, THIS STANDSTILL AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS
THEREOF) APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
29. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.
(a) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION (b), EACH OF
THE PARTIES HERETO AGREES THAT ALL DISPUTES AMONG THEM ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
AMONG THEM IN CONNECTION WITH THIS STANDSTILL AGREEMENT OR ANY OF THE OTHER
DOCUMENTS, INSTRUMENTS OR AGREEMENTS EXECUTED IN CONNECTION HEREWITH,
WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED
EXCLUSIVELY BY STATE OR FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK, BUT
THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE
TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK, NEW YORK. EACH OF THE
PARTIES HERETO WAIVES IN ALL DISPUTES BROUGHT PURSUANT TO THIS SUBSECTION
(a) ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING
THE DISPUTE.
(b) OTHER JURISDICTIONS. THE BORROWER AGREES THAT THE WAREHOUSE AGENT OR
ANY WAREHOUSE LENDER SHALL HAVE THE RIGHT TO PROCEED AGAINST IT OR ITS
PROPERTY IN A COURT IN ANY LOCATION TO ENABLE SUCH PERSON OR ENTITY TO (i)
OBTAIN PERSONAL JURISDICTION OVER THE BORROWER OR (ii) REALIZE ON THE
COLLATERAL, THE PLEDGED COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR
OF SUCH PERSON OR ENTITY. THE BORROWER AGREES THAT IT WILL NOT ASSERT ANY
PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY SUCH PERSON OR ENTITY
TO REALIZE ON THE COLLATERAL, THE PLEDGED COLLATERAL OR ANY OTHER SECURITY
FOR THE OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR
OF SUCH PERSON. THE BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT IN WHICH SUCH PERSON OR ENTITY HAS COMMENCED A
PROCEEDING DESCRIBED IN THIS SUBSECTION (b). THE BORROWER IRREVOCABLY
WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING
WITH RESPECT TO THIS STANDSTILL AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT
OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH IN ANY
JURISDICTION SET FORTH ABOVE.
(c) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO
OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH
THIS STANDSTILL AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS STANDSTILL AGREEMENT
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO
THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(d) WAIVER OF BOND. THE BORROWER WAIVES THE POSTING OF ANY BOND OTHERWISE
REQUIRED OF ANY PARTY HERETO IN CONNECTION WITH ANY JUDICIAL PROCESS OR
PROCEEDING TO REALIZE ON THE COLLATERAL OR PLEDGED COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS OR TO ENFORCE ANY JUDGMENT OR OTHER COURT
ORDER ENTERED IN FAVOR OF SUCH PARTY, OR TO ENFORCE BY SPECIFIC
PERFORMANCE, TEMPORARY RESTRAINING ORDER, PRELIMINARY OR PERMANENT
INJUNCTION, THIS STANDSTILL AGREEMENT OR ANY OTHER LOAN DOCUMENT.
(e) ADVICE OF COUNSEL. EACH OF THE PARTIES REPRESENTS TO EACH OTHER PARTY
HERETO THAT IT HAS DISCUSSED THIS STANDSTILL AGREEMENT AND, SPECIFICALLY,
THE PROVISIONS OF SECTIONS 19, 21, 24, 25, 28 AND 29, WITH COUNSEL OF ITS
CHOICE AND IS FULLY AWARE OF THE LEGAL CONSEQUENCES AND EFFECTS OF AND HAS
KNOWINGLY AGREED TO THE PROVISIONS HEREOF.
30. Entire Agreement. This Standstill Agreement, including schedules and
exhibits hereto, contains the entire understanding of the parties hereto with
regard to the subject matter contained herein. This Standstill Agreement
supersedes all prior or contemporaneous negotiations, promises, statements,
covenants, agreements and representations of every nature whatsoever with
respect to the matters referred to in this Standstill Agreement, all of which
have become merged and finally integrated into this Standstill Agreement. Each
of the parties understands that in the event of any subsequent litigation,
controversy or dispute concerning any of the terms, conditions or provisions of
this Standstill Agreement, no party shall be entitled to offer or introduce into
evidence any oral promises or oral agreements between the parties relating to
the subject matter of this Standstill Agreement not included or referred to
herein and not reflected by a writing included or referred to herein. Any single
or partial exercise of any right under this Standstill Agreement shall not
preclude other or further exercise thereof or the exercise of any other right,
and no waiver, amendment or other variation of the terms, conditions or
provisions of this Standstill Agreement whatsoever shall be valid unless in
writing signed by the Warehouse Agent and the Warehouse Lenders, and then only
to the extent in such writing specifically set forth. All remedies contained in
this Standstill Agreement or by law afforded shall be cumulative and all shall
be available to the Warehouse Agent and the Warehouse Lenders until the
Obligations have been paid in full. The failure of any party to enforce at any
time any provision of this Standstill Agreement shall not be construed to be a
waiver of such provisions, nor in any way to affect the validity of this
Standstill Agreement or any part hereof or the right of such party thereafter to
enforce each and every such provision. No waiver of any breach of this
Standstill Agreement shall be held to constitute a waiver of any other or
subsequent breach. The provisions of this Standstill Agreement and the Loan
Documents shall, to the extent reasonably possible, be construed consistently.
In the event, however, of any irreconcilable inconsistency between the
provisions of this Standstill Agreement and any Loan Document, the provisions of
this Standstill Agreement shall control. In the event of any inconsistencies
between the terms of this Standstill Agreement and any Exhibits or schedules
delivered in connection herewith and attached hereto, the form and substance of
this Standstill Agreement shall control.
31. No Third-Party Beneficiaries. This Standstill Agreement shall be
binding upon and shall inure solely to the benefit of the parties hereto and
their respective successors and assigns, and is not intended to confer upon any
other third party any rights or benefits.
32. Joint Drafting of Standstill Agreement. The parties (directly and
through their counsel) hereto have participated jointly in the negotiation and
drafting of this Standstill Agreement. In the event an ambiguity or question of
intent or interpretation arises, this Standstill Agreement shall be construed as
if drafted jointly by the parties hereto and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Standstill Agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, this Standstill Agreement has been duly executed as of the
day and year first above written.
LINC CAPITAL, INC.
By: _________________________
Name:
Title:
FLEET NATIONAL BANK, successor by merger
to FLEET BANK, N.A., individually and
as Warehouse Agent
By: _________________________
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.
By: _________________________
Name:
Title:
LASALLE BANK NATIONAL ASSOCIATION
By: _________________________
Name:
Title:
BANK ONE, NA
By: _________________________
Name:
Title:
EUROPEAN AMERICAN BANK
By: _________________________
Name:
Title:
KEYBANK NATIONAL ASSOCIATION
By: _________________________
Name:
Title:
NATIONAL CITY BANK
By: _________________________
Name:
Title:
EXHIBIT A
Intentionally Omitted
EXHIBIT B
Intentionally Omitted
EXHIBIT C
Form of Standstill Borrowing Base Report
EXHIBIT D
Compliance Certificate
EXHIBIT E
Concentration Account Agreements
EXHIBIT F
Form of Blocked Account Agreement-Servicing Account
EXHIBIT G
Description of Accounts
EXHIBIT H
Form of Redirection Notice
EXHIBIT I
Standby LC
EXHIBIT J
July 31 Standstill Borrowing Base Report
EXHIBIT K
Form of Blocked Account Agreement-R&D Collateral Account
EXHIBIT L
Form of Blocked Account Agreement-R&D Operating Account
EXHIBIT M
Form of Blocked Account Agreement-Leasing Collateral Account
EXHIBIT N
Form of Blocked Account Agreement-Leasing Operating Account
EXHIBIT O
List of One-Off Purchasers or Purchasers of Pools of Leases
EXHIBIT P
Closing Certificate
<PAGE>
Exhibit 99.3
AT THE COMPANY:
Allen P. Palles Eileen O'Brien
Executive VP & CFO SVP, Investor Relations
312-946-1000 x7308 312-946-1000 x7478
FOR IMMEDIATE RELEASE
MONDAY, OCTOBER 16, 2000
LINC CAPITAL SIGNS FORBEARANCE AGREEMENT WITH LENDERS; SIGNS LETTER
OF INTENT TO SELL ANALYTICAL INSTRUMENT RENTAL AND DISTRIBUTION BUSINESS
CHICAGO, October 16, 2000-LINC Capital, Inc. (LNCC), a specialty finance
company, announced today that it has signed a forbearance agreement with its
revolving credit facility lenders.
The company also announced that it recently completed sales of approximately $24
million of its owned and securitized lease portfolio. The proceeds of these
sales were used to reduce indebtedness under the company's revolving credit
facility and reduce the balance of the company's commercial paper securitization
facility. The indebtedness under the revolving credit facility has been reduced
to $76 million from $101 million on March 31, 2000. The outstanding balance of
the commercial paper securitization facility has been reduced to approximately
$122 million from $178 million at March 31, 2000.
In addition, the company announced that is has entered into a non-binding letter
of intent to sell its analytical instrument rental and distribution business.
The sale is subject to the completion of due diligence and financing
arrangements as well as execution of definitive binding agreements. The company
also reported that it has ceased operations at its North Carolina-based LINC
Internet Finance + Equipment division, but will continue to collect the
receivables associated with this business unit.
Please refer to the company's Form 8K filed October 16, 2000 for additional
information and the text of the forbearance agreement.
The common stock of LINC Capital, Inc. can be traded on the Pink Sheets. For
additional information go to www.pinksheets.com
