Exhibit 10.5

 

THIRD AMENDED AND RESTATED
 CREDIT AGREEMENT

 

AMONG

 

SANTANDER BANK, N.A., as Agent

 

THE LENDERS PARTY HERETO,

 

TIMEPAYMENT CORP.,

 

AND

 

MF2 HOLDINGS LLC

 

Dated:

 

December 13, 2014

 











 

Table of Contents

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    
	
SECTION I   DEFINITIONS
    	
2
    
	
1.1
    	
Definitions
    	
2
    
	
1.2
    	
Rules of   Interpretation
    	
25
    
	
SECTION II   DESCRIPTION OF CREDIT
    	
25
    
	
2.1
    	
Revolving Credit Loans
    	
25
    
	
2.2
    	
The Notes
    	
29
    
	
2.3
    	
Notice and Manner of   Borrowing or Conversion of Loans
    	
29
    
	
2.4
    	
Funding of Loans
    	
30
    
	
2.5
    	
Interest Rates and   Payments of Interest
    	
32
    
	
2.6
    	
Fees
    	
33
    
	
2.7
    	
Payments and   Prepayments of the Loans
    	
33
    
	
2.8
    	
Method and Allocation   of Payments
    	
34
    
	
2.9
    	
LIBOR Indemnity
    	
36
    
	
2.10
    	
Computation of Interest   and Fees; Due Date
    	
36
    
	
2.11
    	
Changed Circumstances;   Illegality
    	
37
    
	
2.12
    	
Increased Costs
    	
37
    
	
2.13
    	
Capital Requirements
    	
38
    
	
2.14
    	
Delay in Requests
    	
39
    
	
2.15
    	
Defaulting Lender
    	
39
    
	
2.16
    	
TimePayment as Agent   for Borrowers; Contribution
    	
40
    
	
SECTION III   CONDITIONS OF LOANS
    	
41
    
	
3.1
    	
Conditions Precedent to   Initial Loans
    	
41
    
	
3.2
    	
Conditions Precedent to   all Loans
    	
44
    
	
SECTION IV   REPRESENTATIONS AND WARRANTIES
    	
45
    
	
4.1
    	
Organization;   Qualification; Business
    	
45
    
	
4.2
    	
Corporate Authority; No   Conflicts
    	
45
    
	
4.3
    	
Valid Obligations
    	
46
    
	
4.4
    	
Consents or Approvals
    	
46
    
	
4.5
    	
Title to Properties;   Absence of Encumbrances
    	
46
    
	
4.6
    	
Financial Statements;   Indebtedness
    	
46
    
	
4.7
    	
Changes
    	
47
    
	
4.8
    	
Solvency
    	
47
    
	
4.9
    	
Defaults
    	
47
    
	
4.10
    	
Taxes
    	
47
    
	
4.11
    	
Litigation
    	
48
    
	
4.12
    	
Subsidiaries
    	
48
    
	
4.13
    	
Investment Company Act
    	
48
    
	
4.14
    	
Compliance
    	
48
    
	
4.15
    	
ERISA
    	
48
    
	
4.16
    	
Environmental Matters
    	
49
    
	
4.17
    	
Restrictions on the   Borrowers
    	
49
    
	
4.18
    	
Labor Relations
    	
50
    
	
4.19
    	
Trade Relations
    	
50
    


 

i











 

Table of Contents

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    
	
4.20
    	
Margin Rules
    	
50
    
	
4.21
    	
Patriot Act; FCPA; OFAC
    	
50
    
	
4.22
    	
Bank Accounts
    	
51
    
	
4.23
    	
Disclosure
    	
51
    
	
SECTION V   AFFIRMATIVE COVENANTS
    	
51
    
	
5.1
    	
Financial Statements
    	
52
    
	
5.2
    	
Conduct of Business;   Compliance
    	
53
    
	
5.3
    	
Maintenance and   Insurance
    	
54
    
	
5.4
    	
Taxes
    	
54
    
	
5.5
    	
Inspection
    	
54
    
	
5.6
    	
Maintenance of Books   and Records
    	
55
    
	
5.7
    	
Use of Proceeds
    	
55
    
	
5.8
    	
Further Assurances
    	
55
    
	
5.9
    	
Notification   Requirements
    	
55
    
	
5.10
    	
Borrower’s Cash   Accounts
    	
56
    
	
5.11
    	
ERISA Compliance and   Reports
    	
56
    
	
5.12
    	
Environmental   Compliance
    	
56
    
	
SECTION VI   FINANCIAL COVENANTS
    	
57
    
	
6.1
    	
Interest Coverage
    	
57
    
	
6.2
    	
Leverage Ratio
    	
57
    
	
6.3
    	
Asset Quality
    	
57
    
	
SECTION VII   NEGATIVE COVENANTS
    	
58
    
	
7.1
    	
Indebtedness
    	
58
    
	
7.2
    	
Contingent Liabilities
    	
59
    
	
7.3
    	
Encumbrances
    	
59
    
	
7.4
    	
Merger; Sale or Lease   of Assets; Liquidation
    	
60
    
	
7.5
    	
Subsidiaries
    	
61
    
	
7.6
    	
Restricted Payments
    	
62
    
	
7.7
    	
Payments on   Subordinated Debt
    	
63
    
	
7.8
    	
Investments; Purchases   of Assets
    	
63
    
	
7.9
    	
ERISA Compliance
    	
65
    
	
7.10
    	
Transactions with   Affiliates
    	
66
    
	
7.11
    	
Fiscal Year
    	
66
    
	
7.12
    	
Underwriting Procedures
    	
66
    
	
7.13
    	
Compliance with Patriot   Act, FCPA, and OFAC
    	
66
    
	
SECTION VIII   DEFAULTS
    	
66
    
	
8.1
    	
Events of Default
    	
66
    
	
8.2
    	
Remedies
    	
68
    
	
SECTION IX   ASSIGNMENT AND PARTICIPATION
    	
69
    
	
9.1
    	
Assignment
    	
69
    
	
9.2
    	
Participations
    	
71
    
	
SECTION X THE   AGENT
    	
71
    
	
10.1
    	
Appointment of Agent;   Powers and Immunities
    	
71
    


 

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Table of Contents

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    
	
10.2
    	
Actions by Agent
    	
72
    
	
10.3
    	
Indemnification by   Lenders
    	
73
    
	
10.4
    	
Reimbursement
    	
73
    
	
10.5
    	
Agency Provisions   Relating to Collateral
    	
74
    
	
10.6
    	
Non-Reliance on Agent   and Other Lenders
    	
74
    
	
10.7
    	
Resignation of Agent
    	
75
    
	
SECTION XI GENERAL
    	
75
    
	
11.1
    	
Notices
    	
75
    
	
11.2
    	
Expenses
    	
76
    
	
11.3
    	
Indemnification by   Borrowers
    	
77
    
	
11.4
    	
Survival of Covenants,   Etc.
    	
78
    
	
11.5
    	
Set-Off
    	
78
    
	
11.6
    	
No Waivers
    	
78
    
	
11.7
    	
Amendments, Waivers,   etc.
    	
79
    
	
11.8
    	
Binding Effect of   Agreement
    	
80
    
	
11.9
    	
Lost Note, Etc.
    	
80
    
	
11.10
    	
Captions; Counterparts
    	
80
    
	
11.11
    	
Entire Agreement, Etc.
    	
80
    
	
11.12
    	
Waiver of Jury Trial
    	
80
    
	
11.13
    	
Governing Law;   Jurisdiction; Venue
    	
81
    
	
11.14
    	
Severability
    	
81
    
	
11.15
    	
Confidentiality
    	
81
    
	
11.16
    	
Termination
    	
82
    
	
11.17
    	
Effect of Amendment and   Restatement
    	
82
    


 

SCHEDULES

 

SCHEDULE 1 – Commitments of the Lenders

 

EXHIBITS

 

	
EXHIBIT A
    	
–
    	
Form of   Revolving Note
    
	
EXHIBIT B
    	
–
    	
Form of   Notice of Borrowing or Conversion
    
	
EXHIBIT C
    	
–
    	
Disclosure
    
	
EXHIBIT D
    	
–
    	
Form of   Report of Chief Financial Officer
    
	
EXHIBIT E
    	
–
    	
Assignment   and Joinder Agreement
    
	
EXHIBIT F
    	
–
    	
Form of   Lease
    
	
EXHIBIT G
    	
–
    	
Form of   Commitment Increase Supplement
    
	
EXHIBIT H
    	
–
    	
Form of   Additional Lender Supplement
    
	
EXHIBIT I
    	
–
    	
Form of   Acquirer Subordinated Note
    
	
EXHIBIT J-1
    	
–
    	
Form of   NY Legal Opinion
    
	
EXHIBIT J-2
    	
–
    	
Form of   MA Legal Opinion
    


 

iii











 

Table of Contents

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    


 

	
EXHIBIT K
    	
–
    	
Form of   Amended and Restated Guaranty
    
	
EXHIBIT L
    	
–
    	
Form of   Amended and Restated Pledge Agreement
    
	
EXHIBIT M
    	
–
    	
Form of   Amended and Restated Security Agreement
    
	
EXHIBIT N
    	
–
    	
Form of   Responsible Officer’s Certificate
    
	
EXHIBIT O
    	
–
    	
Form of   Amended and Restated Limited Access Services Agreement
    
	
EXHIBIT P
    	
–
    	
Form of   Merger Sub Pledge Agreement
    


 

iv









 

THIRD AMENDED AND RESTATED
 CREDIT AGREEMENT

 

THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT is made as of December 13, 2014, by and among TIMEPAYMENT CORP., a Delaware corporation (“TimePayment”), MF2 HOLDINGS LLC, a Delaware limited liability company (“NewCo” and, together with TimePayment, each a “Borrower” and collectively the “Borrowers”), with each Borrower having its chief executive office at 16 New England Executive Park, Suite 200, Burlington, Massachusetts 01803; SANTANDER BANK, N.A., formerly known as Sovereign Bank, N.A., having an office at 75 State Street, Boston, Massachusetts 02109 (“Santander”); the other financial institutions from time to time parties hereto as Lenders (as defined below); and SANTANDER BANK, N.A., as agent for the Lenders (in such capacity, the “Agent”).

 

WHEREAS, TimePayment, the Agent, Santander and the other parties thereto are parties to a certain Second Amended and Restated Credit Agreement, dated as of December 21, 2012 (as heretofore amended, the “Existing Credit Agreement”) which amended and restated that certain Amended and Restated Credit Agreement (the “First A&R Credit Agreement”), dated as of July 9, 2008; and the First A&R Credit Agreement amended and restated that certain Credit Agreement (the “Original Credit Agreement”), dated as of August 2, 2007 (the “Initial Closing Date”);

 

WHEREAS, MicroFinancial Incorporated, a Massachusetts corporation and the sole stockholder of TimePayment (“MicroFinancial”) has entered into an Agreement and Plan of Merger dated as of December 13, 2014 (including all annexes, exhibits and schedules thereto, in each case, as amended, supplemented or otherwise modified from time to time not in violation of this Agreement, the “Merger Agreement”) with MF Parent LP, a Delaware partnership Controlled (as defined below) by the Sponsor Group (as defined below) (the “Acquirer”) and MF Merger Sub Corp., a Massachusetts corporation wholly-owned by the Acquirer (“Merger Sub”), pursuant to which the Acquirer (through Merger Sub) will acquire MicroFinancial (the “Acquisition”) by way of (i) the Tender Offer (as defined below) and (ii) the Merger (as defined below);

 

WHEREAS, in connection with the consummation of the Acquisition, the Loan Parties (as defined below) will effect a reorganization of the business of MicroFinancial and TimePayment, pursuant to which certain assets of TimePayment will be transferred to NewCo, a wholly-owned Subsidiary of MF2 Investor LLC (“NewCo Parent”), a Delaware limited liability company Controlled by the Sponsor Group (the “Reorganization”);

 

WHEREAS, as a result of the Acquisition and Reorganization, the Borrowers will be mutually dependent on each other in the conduct of their business and thus each Borrower shall benefit from the extension of credit to the other Borrower under this Agreement;

 

WHEREAS, the relationship between the Borrowers will involve common management, the conduct of the same or similar businesses and the coordination of business efforts, which will provide numerous benefits to them;

 











 

WHEREAS, each Borrower shall be jointly and severally liable for the Obligations arising hereunder and under the other Loan Documents;

 

WHEREAS, by virtue of the foregoing and after giving effect to the probable liability of each Borrower hereunder and under the other Loan Documents, each Borrower is receiving at least fair consideration and reasonably equivalent value from the Lenders for the Obligations; and

 

WHEREAS, in connection with the consummation of the Acquisition and the Reorganization, the parties hereto wish to amend and restate the Existing Credit Agreement as set forth herein, and the other financial institutions signatories hereto wish to become parties hereto as Lenders.

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree that the Existing Credit Agreement is hereby amended and restated in its entirety as follows:

 

SECTION I

 

DEFINITIONS

 

1.1          Definitions.

 

All capitalized terms used in this Agreement, in the Notes, in the other Loan Documents or in any certificate, report or other document made or delivered pursuant to this Agreement (unless otherwise defined therein) shall have the meanings assigned to them below:

 

Acquirer. See Recitals.

 

Acquirer Investment.  Collectively, investments by the Acquirer in Merger Sub consisting of (a) common equity investments in an aggregate amount of not less than $38,600,000 and (b) subordinated loans pursuant to the Acquirer Subordinated Note in an aggregate amount of not less than an amount equal to (x) $109,000,000 less (y) the aggregate amount of common equity investments made under clause (a).

 

Acquirer Subordinated Note. A Class A Subordinated Note in substantially the form attached hereto at Exhibit I.

 

Acquisition. See Recitals.

 

Acquisition Documents. Collectively the Merger Agreement, the Offer Documents (as defined in the Merger Agreement) and all other material documents entered into by MicroFinancial and its Subsidiaries or Merger Sub in connection with the Tender Offer or the Merger.

 

Additional Lender.  See Section 2.1(f)(ii).

 

2











 

Additional Lender Supplement.  See Section 2.1(f)(ii).

 

Adjusted Cost.  The Original Cost less any dealer reserve, hold backs and discounts to the Borrowers applicable to any Equipment.

 

Affected Loans.  See Section 2.11(a).

 

Affiliate.  With reference to any Person, (i) any director, officer or employee of that Person, (ii) any other Person controlling, controlled by or under direct or indirect common control of that Person, (iii) any other Person directly or indirectly holding five percent (5%) or more of any class of the Capital Stock of that Person and (iv) any other Person five percent (5%) or more of any class of whose Capital Stock is held directly or indirectly by that Person.

 

Agent.  See Preamble.

 

Agent Parties.  See Section 11.1(b).

 

Agreement.  In respect of the period prior to the Closing Date, the Existing Credit Agreement.  In respect of any period on or after the Closing Date, this Third Amended and Restated Credit Agreement, including the Exhibits and Schedules hereto.

 

Applicable Margin. As of any date of determination and with respect to the Revolving Credit Loans, the applicable margin set forth in the following table that corresponds to the Leverage Ratio for the most recently completed period for which a report in substantially the form of Exhibit D signed on behalf of the each Borrower by a Responsible Officer of such Borrower was required to be delivered hereunder:

 

	
Level
    	
 
    	
Leverage
   Ratio
    	
 
    	
Base Rate
   Revolving
   Loans
    	
 
    	
Base Rate
   Conversion
   Loan
    	
 
    	
LIBOR
   Revolving
   Loans
    	
 
    	
LIBOR
   Conversion
   Loan
    	
 
    
	
I
    	
 
    	
<   2.50:1.00
    	
 
    	
0.75
    	
%
    	
1.25
    	
%
    	
2.50
    	
%
    	
3.00
    	
%
    
	
II
    	
 
    	
> 2.50:1.00
    	
 
    	
1.00
    	
%
    	
1.50
    	
%
    	
2.75
    	
%
    	
3.25
    	
%
    


 

The Applicable Margin shall, in each case, be determined and adjusted quarterly on the date five (5) Business Days after the date on which the quarterly financial information and reports are delivered to the Agent and the Lenders in accordance with the provisions of Sections 5.1(b) and (d) (each an “Interest Determination Date”), provided that until the first Interest Determination Date following the Closing Date, the Applicable Margin shall be as set forth in Tier II above.  Such Applicable Margin shall be effective from such Interest Determination Date until the next such Interest Determination Date.  Notwithstanding anything to the contrary set forth above, (a) if the Borrowers shall fail to provide the financial information and reports in accordance with the provisions of Sections 5.1(b) and (d), such Applicable Margin shall, on the date five (5) Business Days after the date by which the Borrowers were so required to provide such financial information and certifications to the Agent and the Lenders, be the percentage set

 

3











 

forth in Tier II above until such time as such information and reports are provided, whereupon the Applicable Margin shall be determined as set forth above, and (b) if an Event of Default shall occur, such Applicable Margin shall, on the date the Event of Default occurs, be the percentage set forth in Tier II above until such time as such Event of Default is cured or waived, whereupon the Applicable Margin shall be determined as set forth above.

 

In the event that any financial statement delivered pursuant to Section 5.1 is shown to be inaccurate (regardless of whether this Agreement or the Commitments are in effect when such inaccuracy is discovered), and such inaccuracy, if corrected, would, have led to the application of a higher Applicable Margin for any period (an “Applicable Period”) than the Applicable Margin applied for such Applicable Period, and only in such case, then the Borrowers shall, promptly upon receipt of written notice of such inaccuracy (i) deliver to the Agent a corrected financial statement for such Applicable Period, (ii) determine the Applicable Margin for such Applicable Period based upon the corrected financial statement, and (iii) promptly pay to the Agent the accrued additional interest owing as a result of such increased Applicable Margin for such Applicable Period, which payment shall be promptly applied by the Agent in accordance with Section 2.8(c); provided that non-payment as a result of such inaccuracy shall not in any event be deemed retroactively to be an Event of Default pursuant to Section 8.1(a), and such amount payable shall be calculated without giving effect to any additional interest payable on overdue amounts under Section 2.5(d) if paid promptly on demand.  This is in addition to rights of the Agent and Lenders with respect to Sections 2.5(d) and 8.2 and other of their respective rights under this Agreement.

 

Assignee.  See Section 9.1(a).

 

Available Commitment.  At any time, the excess of the Total Commitments over the Bridge Loan Commitment.

 

Base Rate.  For any day, a rate per annum equal to the highest of (a) the Prime Rate in effect on such day, (b) except during any period of time during which a notice delivered to the Borrowers under Section 2.11 shall be in effect, a reference rate equal to the LIBOR Rate for Base Rate Loans that would be calculated as of such day (or if such day is not a Business Day, as of the next preceding Business Day) in respect of a proposed LIBOR Rate Loan with a one (1) month Interest Period plus one percent (1%) and (c) the Federal Funds Effective Rate in effect on such day plus one half percent (0.50%).  If for any reason the 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 the inability or failure of the Agent to be able to determine such rate accurately, the Base Rate shall be determined without regard to clause (c) of the first sentence of this definition until the circumstances giving rise to such inability no longer exist.  Any change in the Base Rate due to a change in the Prime Rate, LIBOR Rate or the Federal Funds Effective Rate shall be effective on the opening of business on the date of such change.

 

Base Rate Conversion Loan. The Conversion Term Loan, to the extent it is a Base Rate Loan.

 

Base Rate Loan.  Any Loan bearing interest determined with reference to the Base Rate.

 

4











 

Board of Directors. The board of directors of a corporation, board of managers of a limited liability company, or equivalent managing body of a Person.

 

Borrowers.  See Preamble.

 

Borrowers’ Accountants.  McGladrey LLP or such other independent certified public accountants as are selected by the Borrowers and reasonably acceptable to the Agent.

 

Borrowing Base.  As of the date of any determination thereof, an amount equal to the lesser of (i) seventy five percent (75%) of the aggregate Net Present Value of Lease Receivables (determined on a Lease by Lease basis) that are Eligible Lease Receivables and (ii) one hundred percent (100%) of the Adjusted Cost of the Eligible Equipment; provided, however, that notwithstanding the foregoing, there shall be excluded from the Borrowing Base the Receivables due under (x) any Limited Quality Lease to the extent that, as of the date of determination of the Borrowing Base, the Receivables due pursuant to such Limited Quality Lease, when added to the total of Receivables due pursuant to all other Limited Quality Leases, would exceed twenty percent (20%) of Gross Lease Installments and (y) any Consumer Lease to the extent that, as of the date of determination of the Borrowing Base, the Receivables due pursuant to such Consumer Lease, when added to the total of Receivables due pursuant to all Consumer Leases, would exceed twenty five percent (25%) of Gross Lease Installments; and provided, further that, in the event that the fraction, expressed as a percentage, of (A) the amount of Eligible Lease Receivables that are more than thirty (30) days past due, divided by (B) the amount of Receivables due under all Leases that are less than ninety (90) days past due, is more than fifteen percent (15%), the Agent may, in its reasonable discretion, upon seven (7) days’ prior notice to the Borrowers, establish percentages that are up to 1,500 basis points lower for the advance rates set forth in either, or both of, clauses (i) and (ii) above (e.g., no lower than 60% in clause (i) and 85% in clause (ii)).

 

Borrowing Base Availability.  At any time, the excess of (i) the Borrowing Base over (ii) the Total Outstandings.

 

Borrowing Base Report.  A report with respect to the Borrowing Base signed by a Responsible Officer of each Borrower and in a form reasonably satisfactory to the Agent.

 

Bridge Loan Agreement.  That certain Bridge Loan Agreement between Santander and Merger Sub dated as of the date hereof providing for a loan of up to $43,000,000.

 

Bridge Loan Commitment.  So long as any Loan (as defined in the Bridge Loan Agreement) is outstanding under the Bridge Loan Agreement or Santander has any obligation to make or maintain any credit extension under the Bridge Loan Agreement, the amount of $43,000,000; otherwise, $0 (zero).

 

Business Day. (i) For all purposes other than as covered by clause (ii) below, any day other than a Saturday, Sunday or day on which banks in Boston, Massachusetts or New York, New York are authorized or required by law to close; and (ii) with respect to all notices and determinations in connection with, and payments of principal and interest on, LIBOR Loans, any day that is a Business Day described in clause (i) and that is also a day on which dealings in U.S.

 

5











 

dollar deposits are also carried on in the London interbank market and banks are open for business in London.

 

Capital Expenditures.  Without duplication, any expenditure by the Borrowers or any of their Subsidiaries for fixed or capital assets, leasehold improvements, Capitalized Leases, installment purchases of machinery and equipment, acquisitions of real estate and other similar expenditures including (i) in the case of a purchase, the entire purchase price, whether or not paid during the fiscal period in question, (ii) in the case of a Capitalized Lease, the capitalized amount (as determined under GAAP) of the obligations under such lease to pay rent and other amounts, and (iii) expenditures in any construction in progress account of the Borrowers.

 

Capitalized Leases.  All leases that have been or should be, in accordance with GAAP, recorded as capitalized leases.

 

Capital Stock. As to any Person that is a corporation, the authorized shares of such Person’s capital stock, including all classes of common, preferred, voting and nonvoting capital stock, and, as to any Person that is not a corporation or an individual, the membership or other ownership interests in such Person, including, without limitation, the right to share in profits and losses, the right to receive distributions of cash and other property, and the right to receive allocations of items of income, gain, loss, deduction and credit and similar items from such Person, whether or not such interests include voting or similar rights entitling the holder thereof to exercise Control over such Person, collectively with, in any such case, all warrants, options and other rights to purchase or otherwise acquire, and all other instruments convertible into or exchangeable for, any of the foregoing.

 

Change of Control.  At any time, (a) prior to a Qualifying IPO, the Sponsor Group (i) shall fail to have the right, directly or indirectly, by voting power, contract or otherwise, to elect or designate for election at least a majority of the Board of Directors of either Parent or (ii) shall fail to beneficially own Capital Stock of either Parent representing a majority of the voting power represented by the issued and outstanding Capital Stock of such Parent, (b) after a Qualifying IPO, any “person” or “group” (within the meaning of Rule 13d-5 of the Securities Exchange Act of 1934, as amended but excluding any employee benefit plan of such person and its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), other than any one or more of the Sponsor Group, shall beneficially own Capital Stock of either Parent representing more than 35.0% of the aggregate ordinary voting power represented by the issued and outstanding Capital Stock of such Parent and the percentage of the aggregate ordinary voting power represented by such Capital Stock beneficially owned by such person or group exceeds the percentage of the aggregate ordinary voting power represented by Capital Stock of such Parent then beneficially owned by any one or more of the Sponsor Group, unless (i) any one or more of the Sponsor Group have, at such time, the right or the ability, directly or indirectly, by voting power, contract or otherwise to elect or designate for election at least a majority of the Board of Directors of such Parent or (ii) during any period of twelve (12) consecutive months immediately prior to such time, a majority of the seats (other than vacant seats) on the Board of Directors of such Parent shall be occupied by persons who were (x) members of the Board of Directors of Parent on the Closing Date or nominated by any one or more of the Sponsor Group or Persons nominated by one or more of the Sponsor Group or (y) appointed by directors so nominated, (c) a Parent shall cease to

 

6











 

beneficially own, directly or indirectly, 100% of the issued and outstanding Capital Stock of its respective Borrower or (d) a “change of control” or similar event shall occur under the documentation governing other Material Indebtedness.

 

Closing Date.  The first date on which the conditions set forth in Sections 3.1 and 3.2 have been satisfied and any Loans are to be made hereunder.

 

Code.  The Internal Revenue Code of 1986 and the rules and regulations thereunder, collectively, as the same may from time to time be supplemented or amended and remain in effect.

 

Collateral.  All of the property, rights and interests of each Borrower and its Subsidiaries that are or are purported to be subject to the security interests and liens created by the Security Documents.

 

Collateral Accounts.  See Section 3.9 of the Security Agreement.

 

Combined EBIT.  At any date of determination, an amount equal to Combined Net Income for the most recently completed fiscal period plus (a) the following to the extent excluded or deducted in calculating such Combined Net Income:  (i) Combined Interest Expense, (ii) the provision for Federal, state, local and foreign income taxes payable, (iii) other non-recurring expenses reducing such Combined Net Income that do not represent a cash item in such period or any future period (in each case for such period), (iv) one-time costs (including restructuring costs) and expenses incurred in connection with Permitted Acquisitions, provided that all amounts added back pursuant to this clause (iv) shall not exceed twenty percent (20%) of Combined EBIT prior to giving effect to any such add-back and (v) costs and expenses, not to exceed $12,000,000 in the aggregate, incurred in connection with the Acquisition and the other transactions contemplated hereby and certified pursuant to Section 3.1(a)(xvii), provided that amounts to be added back pursuant to this clause (v) may only be included in Combined EBIT for the four consecutive fiscal quarters ending after the Closing Date, minus (b) the following to the extent included in calculating such Combined Net Income:  (i) Federal, state, local and foreign income tax credits and (ii) all non-recurring items increasing such Combined Net Income (in each case for such period).

 

Combined Interest Expense.  For any fiscal period, the sum of (a) all interest (including, with respect to Subordinated Debt, all interest paid or payable in cash and interest accrued but not yet paid in cash, but excluding PIK Interest in all cases), premium payments, debt discount, fees, charges and related expenses in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, (b) all interest paid or payable with respect to discontinued operations and (c) the portion of rent expense under Capitalized Leases that is treated as interest in accordance with GAAP, in each case, of or by either Borrower and its Subsidiaries.

 

Combined Net Income.  For any fiscal period, the combined net income of both Borrowers and their Subsidiaries, collectively, for such period, as determined in accordance with GAAP, plus cash interest paid in such period on the Indebtedness under the Acquirer

 

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Subordinated Note to the extent not eliminated in the combined financial statements delivered by the Borrowers pursuant to Section 5.1(a), except that in no event shall such combined net income include:  (a) any extraordinary or nonrecurring gains; (b) an amount of extraordinary or nonrecurring losses up to twenty-five percent (25%) of Combined EBIT for such fiscal period; (c) the net income of any Subsidiary during such period to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary of such income is not permitted by operation of the terms of its organizational documents or any agreement, instrument or law applicable to such Subsidiary during such period, except that a Borrower’s equity in any net loss of any such Subsidiary for such period shall be included in determining Combined Net Income; (d) any income (or loss) for such period of any Person if such Person is not a Subsidiary of either Borrower or its Subsidiaries, except that a Borrower’s or its Subsidiaries equity in the net income of any such Person for such period shall be included in Combined Net Income up to the aggregate amount of cash actually distributed by such Person during such Period to its Parent or its Subsidiaries as a dividend or other distribution (and in the case of a dividend or other distribution to a Subsidiary, such Subsidiary is not precluded from further distributing such amount to such Parent as described in clause (b) of this proviso); (e) any gain or loss arising from any write-up of assets or “gain-on-sale” accounting (including without limitation with respect to sales to a Special Purpose Subsidiary), except to the extent inclusion thereof shall be approved in writing by the Agent; (f) earnings of any Subsidiary accrued prior to the date it became a Subsidiary; (g) any non-cash stock based compensation income or expense related to restricted stock or stock options; (h) any deferred or other credit representing any excess of the equity of any Subsidiary at the date of acquisition thereof over the amount invested in such Subsidiary; (i) the proceeds of any life insurance policy; and (j) any reversal of any contingency reserve, except to the extent that provision for such contingency reserve shall be made from income arising during such period.

 

Combined Senior Interest Expense.  For any fiscal period, the combined interest expense of the Borrowers and their Subsidiaries for such period attributable to the Obligations.

 

Combined Tangible Net Worth.  At any date as of which the amount thereof shall be determined, the combined total assets of both Borrowers and their Subsidiaries, collectively, with inventory and cost of goods determined on a “first in, first out” basis, minus (a) Combined Total Liabilities, and minus (b) the sum of any amounts attributable to (i) the book value, net of applicable reserves, of all intangible assets of both Borrowers and their Subsidiaries, including, without limitation, goodwill, trademarks, copyrights, patents and any similar rights, and unamortized debt discount and expense, (ii) all reserves not already deducted from assets or included in Combined Total Liabilities, (iii) any write-up in the book value of assets resulting from any revaluation thereof subsequent to the date of the Initial Financial Statements, (iv) gain-on-sale accounting, (v) the value of any minority interests in Subsidiaries, (vi) intercompany accounts with Subsidiaries and Affiliates (including receivables due from Subsidiaries and Affiliates), (vii) the value, if any, attributable to any Capital Stock of either Borrower or any Subsidiary held in treasury, and (viii) the value, if any, attributable to any notes or subscriptions receivable due from equity holders in respect of Capital Stock.

 

Combined Total Liabilities.  At any date as of which the amount thereof shall be determined, all obligations that should, in accordance with GAAP, be classified as liabilities on

 

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the combined balance sheet of the Borrowers and their Subsidiaries, including in any event all Indebtedness.

 

Commitment.  In relation to any particular Lender, the maximum dollar amount which such Lender has agreed to loan to the Borrowers upon the terms and subject to the conditions of this Agreement, initially as set forth on Schedule 1 attached hereto, as such Lender’s Commitment may be modified pursuant hereto and in effect from time to time.  Schedule 1 shall be amended from time to time to reflect any changes in the Commitments of the Lenders.

 

Commitment Increase Supplement.  See Section 2.1(f)(ii).

 

Commitment Percentage.  In relation to any particular Lender, the percentage which such Lender’s Commitment represents of the aggregate Commitments of all the Lenders, initially as set forth on Schedule 1 attached hereto, as such Lender’s Commitment Percentage may be modified pursuant hereto and in effect from time to time.  Schedule 1 shall be amended from time to time to reflect any changes in the Commitment Percentages of the Lenders.

 

Communications.  Collectively, any notice, demand, communication, information, document or other material provided by or on behalf of any Loan Party pursuant to any Loan Document or the transactions contemplated therein which is distributed to the Agent or any Lender by means of electronic communications pursuant to Section 11.1(b), including through the Platform.

 

Consumer Lease. Any (i) Lease with an initial term of thirty-six (36) months or more between a Borrower and a lessee intending to lease the Equipment under such Lease for such lessee’s personal use or (ii) Security Monitoring Contract with an initial term of thirty-six (36) months or more between a Borrower and an individual with respect to security monitoring services for such individual’s home or personal use.

 

Control. The possession, directly or indirectly, of the power (a) to vote 35.0% or more of the securities having ordinary voting power for the election of directors (or any similar governing body) of a Person, or (b) to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. The terms Controlling” and “Controlled” have meanings correlative thereto.

 

Conversion Term Loan.  See Section 2.7(e).

 

Conversion Term Loan Maturity Date.  Twenty-three (23) months following the Maturity Date.

 

Credit Scoring System.  The Borrowers’ credit scoring system used in making its credit decisions as in effect as of the date hereof with such changes as are permitted hereunder.

 

Dealer.  A Person who (i) is domiciled in the United States of America, (ii) is not the subject of and is not taking any action described in subsections (g) and (h) of Section 8.1 (substituting such Person for “Borrower” in such subsections) and (iii) is engaged in the business of selling, servicing and installing Equipment or who is a broker engaged in the business of brokering the financing of Equipment.

 

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Debtor Relief Law.  The United States Bankruptcy Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States of America or other applicable jurisdictions from time to time in effect.

 

Default.  An Event of Default or any event or condition that, but for the requirement that time elapse or notice be given, or both, would constitute an Event of Default.

 

Defaulting Lender.  Subject to Section 2.15(b), any Lender that (a) has failed to (i) fund all or any portion of its Loans within two (2) Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Agent and the Borrowers in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable Default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Agent or any other Lender any other amount required to be paid by it hereunder within two (2) Business Days of the date when due, (b) has notified the Borrowers or the Agent in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable Default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three (3) Business Days after written request by the Agent or the Borrowers, to confirm in writing to the Agent and the Borrowers that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Agent and the Borrowers), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Capital Stock in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States of America or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.  Any determination by the Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.15(b)) upon delivery of written notice of such determination to the Borrowers and each Lender.

 

Discount Rate.  The Prime Rate, which rate shall change contemporaneously with any change in the Prime Rate.

 

Drawdown Date.  The Business Day on which any Loan is made or is to be made.

 

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Eligible Equipment.  Equipment:

 

(a)           Either (i) to which a Borrower has good and marketable title or (ii) in which a Borrower has a security interest and, if the Original Cost of such Equipment is $10,000 or greater, such Borrower has a perfected first priority security interest;

 

(b)           Which, except to the extent set forth in clause (a), is not subject to any Encumbrance other than that in favor of the Agent for the benefit of the Lenders and, if the Original Cost of such Equipment is $10,000 or greater, in which the Agent has a duly perfected first priority security interest under the UCC or other similar law;

 

(c)           Which is to be used primarily in the ordinary course of business by a Borrower’s lessees;

 

(d)           Which is subject to an Eligible Lease;

 

(e)           Which is insured by either a Borrower in accordance with current practice or the lessee thereof in accordance with industry standards; and

 

(f)            Which, if acquired as part of a Permitted Acquisition or a Permitted Portfolio Acquisition, shall have been approved by the Majority Lenders to the extent required under the proviso in Section 7.8(g) or the proviso in Section 7.8(h), as applicable;

 

provided that in no event shall Equipment include stand-alone software.

 

Eligible Interest Rate Contract.  Any Interest Rate Contract purchased by a Borrower or Subsidiary Guarantor from a Hedge Provider with a stated termination date no later than the Maturity Date and as to which the Agent shall have received five (5) Business Days’ prior written notice designating such Interest Rate Contract as an “Eligible Interest Rate Contract” hereunder.

 

Eligible Lease.  A Lease:

 

(a)           Which is in full force and effect, has not continued beyond the original term of the Lease and is not on a month-to-month basis;

 

(b)           The lessor under which is a Borrower;

 

(c)           Which is assignable by the lessor thereunder;

 

(d)           Which is non-cancelable and provides that the lessee’s obligations thereunder are absolute and unconditional, and not subject to defense, deduction, set-off or claim and as to which no defenses, set-offs, claims or counterclaims exist or have been asserted;

 

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(e)           Which is not subject to any Encumbrance other than that in favor of the Agent for the benefit of the Lenders, and in which the Agent has a duly perfected first priority security interest under the UCC;

 

(f)            The lessee under which (i) is domiciled in the United States of America, (ii) is not the subject of and has not taken any action described in subsections (g) and (h) of Section 8.1 (substituting such Person for “Borrower” in such subsections), (iii) is not an Affiliate of such Borrower, (iv) is not the obligor for more than $500,000 of Eligible Lease Receivables, and (v) has not otherwise been determined by the Agent to be unacceptable in its reasonable discretion;

 

(g)           Which is in a form substantially in accordance with Exhibit F or otherwise approved by the Agent;

 

(h)           Under which no payment is more than ninety (90) days past due;

 

(i)            More than eighty percent (80%) of the Receivables owing from the lessee of such Lease are Eligible Lease Receivables;

 

(j)            Under which no default has occurred other than to the extent permissible under clause (i) immediately above;

 

(k)           Which covers Eligible Equipment;

 

(l)            Which arose and was entered into in the ordinary course of business of such Borrower or its predecessor in interest, provided that if such Borrower was not the original lessor under such Lease but acquired such Lease by purchase or otherwise, such Lease has been approved by the Agent (such approval not to be unreasonably withheld or delayed);

 

(m)          Which was not originated by an Ineligible Dealer;

 

(n)           Which has not been modified, amended, restated or otherwise rewritten with respect to terms of payment, term or in any other material respect; and

 

(o)           Which, if acquired as part of a Permitted Acquisition or a Permitted Portfolio Acquisition, shall have been approved by the Majority Lenders to the extent required under the proviso in Section 7.8(g) or the proviso in Section 7.8(h), as applicable.

 

Eligible Lease Receivables.  As at the date of determination thereof, Receivables arising under and due and unpaid pursuant to an Eligible Lease.

 

Encumbrances.  Any interest granted by a Person in any real or personal property, asset or other right owned or being purchased or acquired by such Person that secures payment or performance of any obligation, including, without limitation, any mortgage, pledge, security interest, lien, retained security title of a conditional vendor or other charge or encumbrance of any kind, whether arising by contract, as a matter of law, by judicial process or otherwise.

 

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Environmental Laws.  Any and all applicable federal, state and local environmental, health or safety statutes, laws, regulations, rules and ordinances (whether now existing or hereafter enacted or promulgated), and all applicable judicial, administrative and regulatory decrees, judgments and orders, including common law rulings and determinations, relating to injury to, or the protection of, real or personal property or human health or the environment, including, without limitation, all requirements pertaining to reporting, licensing, permitting, investigation, remediation and removal of emissions, discharges, releases or threatened releases of Hazardous Materials into the environment or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of such Hazardous Materials.

 

Equipment.  Equipment owned and leased or sold by a Borrower to third party users.

 

ERISA.  The Employee Retirement Income Security Act of 1974 and the rules and regulations thereunder, collectively, as the same may from time to time be supplemented or amended and remain in effect.

 

ERISA Affiliate.  Any trade or business, whether or not incorporated, that is treated as a single employer with a Borrower or a Parent under Section 414(b), (c), (m) or (o) of the Code and Section 4001(a)(14) of ERISA.

 

ERISA Event.  (a) Any “reportable event,” as defined in Section 4043 of ERISA or the regulations issued thereunder, with respect to a Plan unless the thirty (30) day notice requirement with respect to such event has been waived by the PBGC; (b) the adoption of any amendment to a Plan that would require the provision of security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (d) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (e) the incurrence of any liability under Title IV of ERISA with respect to the termination of any Plan or the withdrawal or partial withdrawal of a Borrower or any of its ERISA Affiliates from any Plan or Multiemployer Plan; (f) the receipt by a Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to the intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (g) the receipt by a Borrower or any ERISA Affiliate of any notice concerning the imposition of Withdrawal Liability (as defined in Part I of Subtitle E of Title IV of ERISA) with respect to any Multiemployer Plan or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA; (h) the occurrence of a “prohibited transaction” with respect to which a Borrower or any of its Subsidiaries is a “disqualified person” (within the meaning of Section 4975 of the Code) or with respect to which a Borrower or any such Subsidiary could otherwise be liable; and (i) any other event or condition with respect to a Plan or Multiemployer Plan that could reasonably be expected to result in liability of a Borrower.

 

Event of Default.  Any event described in Section 8.1.

 

Excluded Swap Obligation. With respect to any Guarantor, (a) any Swap Obligation if, and to the extent that, all or a portion of the guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any guarantee thereof) is or

 

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becomes illegal under the Commodity Exchange Act or any rule, regulation, or order of the Commodity Futures Trading Commission (or the applicable or official interpretation of any thereof) (i) by virtue of such Guarantor’s failure to constitute an “eligible contract participant,” as defined in the Commodity Exchange Act and the regulations thereunder (determined after giving effect to any applicable keepwell, support, or other agreement for the benefit of such Guarantor and any and all applicable guarantees of such Guarantor’s Swap Obligations by other Loan Parties), at the time the guarantee of (or grant of such security interest by, as applicable) such Guarantor becomes or would become effective with respect to such Swap Obligation or (ii) in the case of a Swap Obligation that is subject to a clearing requirement pursuant to section 2(h) of the Commodity Exchange Act, because such Guarantor is a “financial entity,” as defined in section 2(h)(7)(C) of the Commodity Exchange Act, at the time the guarantee of (or grant of such security interest by, as applicable) such Guarantor becomes or would become effective with respect to such Swap Obligation or (b) any other Swap Obligation designated as an “Excluded Swap Obligation” of such Guarantor as specified in any agreement between the relevant Loan Parties and Hedge Provider applicable to such Swap Obligation.

 

Executive Order.  See Section 4.21(c).

 

Existing Credit Agreement.  See Recitals.

 

FCPA. See Section 4.21(b).

 

Federal Funds Effective Rate.  For any day, a fluctuating interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three (3) Federal funds brokers of recognized standing selected by the Agent.

 

First A&R Credit Agreement.  See Recitals.

 

GAAP.  Generally accepted accounting principles, consistently applied.

 

Governmental Authority.  The government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

 

Gross Lease Installments.  The total amount of Receivables due to the Borrowers from all Leases of Equipment.

 

Guarantees.  As applied to any Person (as used in this definition, the “guarantor”), all guarantees, endorsements and other contingent or surety obligations with respect to Indebtedness or other obligations of any other Person (as used in this definition, the “primary obligor”), whether or not reflected on the consolidated balance sheet of the guarantor, including any

 

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obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or other obligation.

 

Guarantors.  The Parents, Acquirer, Leasecomm, Merger Sub and any other Person that shall have executed the Guaranty as a “Guarantor” thereunder.

 

Guaranty.  That certain Amended and Restated Unlimited Guaranty, dated as of the Closing Date and substantially in the form of Exhibit K, by the Parents, Leasecomm, Merger Sub and the other Persons party thereto as Guarantors from time to time, in favor of the Agent for the Lenders; it being understood that no Special Purpose Subsidiary shall be required to be party to the Guaranty.

 

Hazardous Material.  Any substance (i) the presence of which requires or may hereafter require notification, investigation, removal or remediation under any Environmental Law; (ii) which is or becomes defined as a “hazardous waste”, “hazardous material” or “hazardous substance” or “pollutant” or “contaminant” under any present or future Environmental Law or amendments thereto including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) and any applicable local statutes and the regulations promulgated thereunder; (iii) which is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and which is or becomes regulated pursuant to any Environmental Law by any Governmental Authority, agency, department, commission, board, agency or instrumentality of the United States of America, any state of the United States of America, or any political subdivision thereof; or (iv) without limitation, which contains gasoline, diesel fuel or other petroleum products, asbestos or polychlorinated biphenyls.

 

Hedge Provider. A Lender or an Affiliate of a Lender and that enters into an Interest Rate Contract, in each case, in its capacity as a party to such Interest Rate Contract.

 

Increasing Lender.  See Section 2.1(f)(ii).

 

Indebtedness.  As applied to any Person, without duplication, (i) all obligations for borrowed money and other extensions of credit, whether secured or unsecured, absolute or contingent, and whether or not evidenced by bonds, notes, debentures or other similar instruments, including, without limitation, any recourse against the seller of Leases and related Equipment and Receivables in the type of transaction contemplated by Section 7.4(c), (ii) all obligations representing the deferred purchase price of property, other than accounts payable arising in the ordinary course of business, (iii) all obligations secured by any Encumbrance on property owned or acquired by such Person, whether or not the obligations secured thereby shall have been assumed (provided that if the obligations secured thereby have not been assumed or

 

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have recourse solely to limited assets of such Person, the amount of such obligations included for the purposes of this definition shall be an amount equal to the lesser of fair market value of such assets and the amount of the obligations secured), (iv) that portion of all obligations arising under Capitalized Leases that is required to be capitalized on the consolidated balance sheet of the such Person, (v) all Guarantees, (vi) all obligations, contingent or otherwise, with respect to the face amount of all letters of credit (whether or not drawn) and banker’s acceptances issued for the account of or on behalf of any of such Person, (vii) all obligations that are immediately due and payable out of the proceeds of or production from property now or hereafter owned or acquired by such Person, (viii) obligations in respect of Interest Rate Contracts, and (ix) all other obligations which, in accordance with GAAP, would be included as a liability on the consolidated balance sheet of such Person, but excluding anything in the nature of capital stock, capital surplus and retained earnings.

 

Ineligible Dealer.  A Dealer who has originated five (5) or more Leases, fifty percent (50%) or more of which are not Eligible Leases.

 

Initial Financial Statements.  See Section 4.6(a).

 

Interest Coverage Ratio.  The ratio of (i) Combined EBIT to (ii) Combined Senior Interest Expense.

 

Interest Period.  With respect to each LIBOR Loan, the period commencing on the date of the making or continuation of or conversion to such LIBOR Loan and ending one (1), two (2), three (3) or six (6) months thereafter, as the Borrowers may elect in the applicable Notice of Borrowing or Conversion; provided that:

 

(i)  any Interest Period (other than an Interest Period determined pursuant to clause (iii) below) that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in the next calendar month, in which case such Interest Period shall end on the immediately preceding Business Day;

 

(ii)  any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (iii) below, end on the last Business Day of a calendar month;

 

(iii)  no Interest Period shall end after the Maturity Date; and

 

(iv)  notwithstanding clause (iii) above, no Interest Period shall have a duration of less than one (1) month, and if any Interest Period applicable to a Loan would be for a shorter period, such Interest Period shall not be available hereunder.

 

Interest Rate Contracts. Any and all (a) rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor

 

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transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

 

Investment.  As applied to the Borrowers and their Subsidiaries, the purchase, acquisition or ownership of any Capital Stock or evidence of indebtedness of any other Person (including any Subsidiary); any loan, advance or extension of credit (excluding Receivables arising in the ordinary course of business) to, or contribution to the capital of, any other Person (including any Subsidiary); any real estate held for sale or investment; any securities or commodities futures contracts held; any other investment in any other Person (including any other Borrower or any Subsidiary); and the making of any commitment or the acquisition of any option to make an Investment, to the extent paid for in cash.

 

Lease.  Any (i) lease agreement, installment sales contract or other agreement (including any and all schedules, supplements and amendments thereon and modifications thereof) entered into by a Borrower as lessor or seller with respect to Equipment or (ii) Security Monitoring Contract.

 

Leasecomm.  Leasecomm Corporation, a Massachusetts corporation wholly-owned by MicroFinancial.

 

Lenders.  Santander, the other financial institutions parties hereto and listed on Schedule 1 attached hereto and each other Person that may after the date hereof become an Assignee and, thereby, a party to this Agreement as a “Lender” hereunder, but from and after the effective date that any Person shall have assigned its entire Commitment pursuant to Section 9.1, “Lenders” shall no longer include such Person.

 

Leverage Ratio.  The ratio of (i) Combined Total Liabilities, minus Subordinated Debt to (ii) Combined Tangible Net Worth, plus Subordinated Debt.

 

LIBOR Loan.  Any Loan bearing interest at a rate determined with reference to the LIBOR Rate.

 

LIBOR Conversion Loan. The Conversion Term Loan, to the extent it is a LIBOR Loan.

 

LIBOR Rate.  With respect to any LIBOR Loan for any Interest Period, the rate per annum, expressed as a percentage, as determined by the Agent on the basis of the offered rates for deposits in U.S. dollars, for a period of time comparable to such Interest Period, which appears on the Reuters page LIBOR01 as of 11:00 a.m. London time on the day that is two (2) Business Days preceding the first day of such Interest Period; provided, however, that if the rate described above does not appear on the Reuters System on any applicable interest determination

 

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date, the LIBOR Rate shall be the rate (rounded upward, if necessary, to the nearest one hundred-thousandth of a percentage point) determined on the basis of the offered rates for deposits in U.S. dollars for a period of time comparable to such Interest Period which are offered by four (4) major banks in the London interbank market at approximately 11:00 a.m. London time, on the day that is two (2) Business Days preceding the first day of such Interest Period as selected by the Agent.  The principal London office of each of the four (4) major London banks will be requested to provide a quotation of its U.S. dollar deposit offered rate.  If at least two (2) such quotations are provided, the LIBOR Rate for that date will be the arithmetic mean of the quotations.  If fewer than two (2) such quotations are provided as requested, the rate for that date will be determined on the basis of the rates quoted for loans in U.S. dollars to leading European banks for a period of time comparable to such Interest Period offered by major banks in New York City at approximately 11:00 a.m. New York City time, on the day that is two (2) Business Days preceding the first day of such Interest Period.

 

LIBOR Reserve Percentage.  For any Interest Period, the aggregate of the maximum reserve percentages (including all basic, marginal, special, emergency and supplemental reserves), expressed as a decimal, established by the Board of Governors of the Federal Reserve System and any other banking authority, domestic or foreign, to which any Lender or the Bank is subject with respect to “Eurocurrency Liabilities” (as defined in regulations issued from time to time by such Board of Governors).  The LIBOR Reserve Percentage shall be adjusted automatically on and as of the effective date of any change in any such reserve percentage.

 

Limited Quality Lease.  A Lease with a credit grade of one of the lowest three (3) tiers (currently, “Q”, “U” or “W”) as determined under the Credit Scoring System.

 

Loan Documents.  This Agreement, the Notes, the Guaranty, the Security Documents, the subordination provisions of the Acquirer Subordinated Note and all written agreements entered into pursuant to Section 5.10, together with any written agreements, instruments or documents in favor of the Agent or the Lenders now or hereafter executed and delivered by a Loan Party pursuant to or in connection with any of the foregoing.

 

Loan Party.  Each Borrower, each Guarantor, each “Obligor” under the Security Agreement and each “Pledgor” under the Pledge Agreement.

 

Loans.  The loans made or to be made by the Lenders to the Borrowers pursuant to Section II of this Agreement.

 

Majority Lenders.  As of any date, Lenders holding more than fifty percent (50%) of the aggregate outstanding principal amount of Loans on such date; and if no such principal is outstanding, Lenders holding more than fifty percent (50%) of the Total Commitments.  The Loans and Commitments of any Defaulting Lender shall be disregarded in determining Majority Lenders at any time.

 

Material Adverse Effect.  Any of (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual or contingent) or condition (financial or otherwise) of (x) the Borrowers, together taken as a whole, or (y) the Parents together with their Subsidiaries taken as a whole; (b) a material impairment of the rights and

 

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remedies of the Agent or any Lender under any Loan Document, or of the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party.

 

Material Indebtedness.  Indebtedness (other than the Loans) of any one or more of the Borrowers and their Subsidiaries in an aggregate outstanding principal amount exceeding $1,000,000.

 

Maturity Date.  The fourth anniversary of the Closing Date.

 

Merger. The merger of Merger Sub with and into MicroFinancial, with MicroFinancial surviving as a wholly-owned subsidiary of the Acquirer, all pursuant to the terms and conditions of the Merger Agreement.

 

Merger Agreement. See Preamble.

 

Merger Sub. See Preamble.

 

Merger Sub Pledge Agreement.  That certain Pledge Agreement, dated as of the Closing Date and substantially in the form of Exhibit P, between Merger Sub and the Agent.

 

MicroFinancial.  See Recitals.

 

Minimum Liquidity. As of any date, the sum of (a) the amount of cash and cash equivalents (other than any restricted cash in excess of $1,000,000) that would be included on the balance sheet of the Borrowers as of such date and (b) the Borrowing Base Availability as of such date.

 

MNPI.  Material non-public information with respect to a Borrower or any of its Subsidiaries, or the respective Capital Stock of any of the foregoing.

 

Multiemployer Plan.  Any plan which is a Multiemployer Plan as defined in Section 4001(a)(3) of ERISA.

 

Net Present Value of Lease Receivables.  An amount (determined on a Lease by Lease basis) equal to Gross Lease Installments, discounted to present value by a percentage equal to the Discount Rate (which calculation shall not take into account rental payments due or payable under any Eligible Lease beyond sixty (60) months after the commencement date of such Eligible Lease).

 

New Lender.  See Section 2.1(f)(i).

 

NewCo. See Preamble.

 

NewCo Parent. See Preamble.

 

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Non-Defaulting Lender.  At any time, each Lender that is not a Defaulting Lender at such time.

 

Note Record.  Any internal record, including a computer record, maintained by any Lender with respect to any Loan.

 

Notes.  See Section 2.2.

 

Notice of Borrowing or Conversion.  The notice, substantially in the form of Exhibit B, to be given by the applicable Borrower to the Agent to request a Loan or to convert an outstanding Loan of one Type into a Loan of another Type, in accordance with Section 2.3.

 

Obligations.  The aggregate outstanding principal balance of and interest (and premium, if any) on the Loans (including, without limitation, interest accruing at the then applicable rate provided herein after the maturity of the Loans and interest accruing at the then applicable rate provided herein after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrowers, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) and all other obligations of the Borrowers to the Agent and the Lenders of every kind and description pursuant to or in connection with the Loan Documents and any Eligible Interest Rate Contracts, direct or indirect, absolute or contingent, primary or secondary, due or to become due, now existing or hereafter arising, regardless of how they arise or by what agreement or instrument, if any, in each case whether on account of principal, interest, premium, fees, indemnities, costs, expenses or otherwise (including without limitation, with respect to ACH payments and all fees and disbursements of counsel that are required to be paid by the Borrowers pursuant to any of the Loan Documents), and including obligations to perform acts and refrain from taking action as well as obligations to pay money.

 

OFAC.  See Section 4.21(c).

 

Organizational Documents. With respect to a corporation, the certificate of incorporation or articles of incorporation and bylaws of such corporation; with respect to a limited liability company, the certificate of formation and operating agreement (or comparable documents) of such limited liability company; and with respect to any other entity, the constitutional documents of such entity, in each case including any and all modifications thereof as of the date of the Loan Document referring to such Organizational Document.

 

Original Cost.  A Borrower’s purchase price for any Equipment as invoiced by the supplier thereof.

 

Original Credit Agreement.  See Recitals.

 

Overadvance.  See Section 2.1(e).

 

Overpaying Borrower. See Section 2.16(b).

 

Parents.  Collectively, MicroFinancial and NewCo Parent.

 

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Participant.  See Section 9.2.

 

Pass Through Entity.  A Person that (i) is taxable as a partnership pursuant to Treasury Reg. §301.7701-2(c)(1) or is disregarded as separate from its owner pursuant to Treasury Reg. §301.7701-2(c)(1), in each case that has not elected to be taxable as a corporation under Treasury Reg. §301.7701-3, (ii) is an “S corporation” within the meaning of Section 1361(a)(1) of the Code or (iii) is a “qualified subchapter S subsidiary” within the meaning of Section 1361(b)(3)(B) of the Code.

 

Patriot Act.  The federal Uniting and Strengthening of America by Providing the Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as amended from time to time.

 

PBGC.  The Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

 

Pension Plan.  Any Plan which is an “employee pension benefit plan” (as defined in ERISA).

 

Permitted Acquisition.  See Section 7.8(g).

 

Permitted Encumbrances.  See Section 7.3.

 

Permitted Portfolio Acquisition.  See Section 7.8(h).

 

Person.  Any individual, corporation, partnership, limited liability company, trust, unincorporated association, business or other legal entity, and any government or governmental agency or political subdivision thereof.

 

PIK Interest.  Interest added to the unpaid principal amount of Subordinated Debt rather than paid in cash.

 

Plan.  Any “employee pension benefit plan” or “employee welfare benefit plan” (each as defined in Section 3 of ERISA) maintained by the Borrowers or any Subsidiary of the Borrowers.

 

Platform.  See Section 11.1(b).

 

Pledge Agreement.  That certain Amended and Restated Pledge Agreement, dated as of the Closing Date and substantially in the form of Exhibit L, among the Borrowers, Acquirer, the Parents, the other Guarantors from time to time party thereto and the Agent.

 

Prime Rate.  The rate per annum, expressed as a percentage, from time to time established by the Agent and made available by the Agent at its main office or, in the discretion of the Agent, the base, reference or other rate then designated by the Agent for general commercial loan reference purposes, it being understood that such rate is a reference rate, not necessarily the lowest, established from time to time, which serves as the basis upon which

 

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effective interest rates are calculated for loans making reference thereto.  Any change in such rate shall be effective from and including the effective date of such change.

 

Prohibited Transaction.  Any “prohibited transaction” within the meaning of Section 406 of ERISA or Section 4975 of the Code.

 

Qualified Investments.  As applied to each Borrower and its Subsidiaries, Investments in (i) notes, bonds or other obligations of the United States of America or any agency thereof that as to principal and interest constitute direct obligations of or are guaranteed by the United States of America and that have maturity dates not more than one (1) year from the date of acquisition, (ii) certificates of deposit, demand deposit accounts or other deposit instruments or accounts maintained in the ordinary course of business with banks or trust companies organized under the laws of the United States of America or any state thereof that have capital and surplus of at least $100,000,000 which certificates of deposit and other deposit instruments, if not payable on demand, have maturities of not more than one hundred eighty (180) days from the date of acquisition, (iii) commercial paper that, as of the date of acquisition, has the highest credit rating obtainable from Moody’s Investors Service, Inc. or Standard & Poor’s Financial Services LLC or their successors, and in each case maturing not more than two hundred seventy (270) days from the date of acquisition, (iv) any repurchase agreement secured by any one or more of the foregoing and (v) investments in “money market funds” within the meaning of Rule 2a-7 of the Investment Company Act, substantially all of whose assets are invested in investments of the type described in clauses (i) through (iv) above.

 

Qualifying IPO. An equity issuance by either Parent consisting of an underwritten primary public offering (other than a public offering pursuant to a registration statement on Form S-8) of its common stock (i) pursuant to an effective registration statement filed with the Securities and Exchange Commission in accordance with the Securities Act of 1933, as amended (whether alone or in connection with a secondary public offering) and (ii) resulting in gross proceeds to such Parent of at least $50,000,000.

 

Receivables.  All rights of a Borrower to payment of a monetary obligation (i) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (ii) for services rendered or to be rendered, (iii) for a secondary obligation incurred or to be incurred, or (iv) arising out of the use of a credit or charge card or information contained on or for use with the card; and all sums of money and other proceeds due or becoming due thereon, all notes, bills, drafts, acceptances, instruments, documents and other debts, obligations and liabilities, in whatever form, owing to such Borrower with respect thereto, all guarantees and security therefor, and such Borrower’s rights pertaining to and interest in such property, including the right of stoppage in transit, replevin or reclamation; all chattel paper; all amounts due from Affiliates of such Borrower; all insurance proceeds; all other rights and claims to the payment of money, under contracts or otherwise; and all other property constituting “accounts” as such term is defined in the UCC.

 

Reorganization. See Recitals.

 

Responsible Officer.  The chief financial officer of the applicable Parent or Borrower, as the case may be, and, in the case of a Borrower, any other officer of such Borrower designated

 

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by the chief financial officer of such Borrower to sign Borrowing Base Reports and Notices of Borrowing or Conversion.

 

Restricted Payment.  Any dividend, distribution, payment of Indebtedness, loan, advance, guaranty, extension of credit or other payment (whether in cash, securities or other property) to or for the benefit of any Person or an Affiliate of a Person who, directly or indirectly, holds any Capital Stock in a Parent or any of its Subsidiaries, whether or not such interest is evidenced by a security, and any other payment, whether in cash, securities or other property, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Capital Stock of such Parent or any of its Subsidiaries, whether now or hereafter outstanding.

 

Revolving Credit Loan.  See Section 2.1(a).

 

Santander.  See Preamble.

 

Secured Parties.  See Section 1 of the Security Agreement.

 

Securities Account Control Agreement.  A securities account control agreement among Merger Sub, the Agent, Santander, as lender under the Bridge Loan Agreement, and American Stock Transfer and Trust Company LLC (or any successor intermediary) in form and substance reasonably satisfactory to the Lender.

 

Security Agreement.  That certain Amended and Restated Security Agreement, dated as of the Closing Date and substantially in the form of Exhibit M, among the Borrowers, the Parents, the other Guarantors from time to time party thereto and the Agent for the Secured Parties.

 

Security Documents.  Collectively, the Security Agreement, the Pledge Agreement, one or more blocked account agreements, collateral assignments of trademarks, a memorandum of copyright interest, each in favor of the Agent to secure Obligations, and any additional documents evidencing or perfecting the Agent’s lien on the Collateral.

 

Security Monitoring Contract.  A security monitoring contract entered into, or assigned to, a Borrower to the extent that it is the recipient of payments for security monitoring services thereunder.

 

Settlement Date.  See Section 2.4(b).

 

Special Purpose Subsidiary.  A Subsidiary of a Parent or any of its Subsidiaries, including a Borrower, that is a special purpose corporation organized in connection with a securitization and/or sale and financing of Leases and related Equipment and Receivables of the Borrowers or a Guarantor, none of the assets of which constitutes any part of the Collateral after giving effect to the release of the Secured Parties’ Encumbrances on Collateral contemplated by Section 9 of the Security Agreement.

 

Sponsor Group. Fortress Investment Group LLC and any investment funds managed or controlled by Fortress Investment Group LLC or any of its Controlled Affiliates.

 

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Subordinated Debt.  Indebtedness of either Parent or any of their Subsidiaries, including the Borrowers, which is expressly subordinated and made junior to the payment and performance in full of the Obligations on terms and conditions reasonably satisfactory to the Lenders including, but not limited to, pursuant to the subordination terms of the Acquirer Subordinated Note.

 

Subsidiary.  With respect to any Person, any corporation, association, joint stock company, business trust, partnership, limited liability company or other similar organization of which fifty percent (50%) or more of the ordinary voting power for the election of a majority of the members of the Board of Directors of such entity is held or controlled by such Person or a Subsidiary of such Person; or any other such organization the management of which is directly or indirectly controlled by such Person or a Subsidiary of such Person through the exercise of voting power or otherwise; or any joint venture, whether incorporated or not, in which such Person has a fifty percent (50%) or greater ownership interest.

 

Swap Obligations. Any and all obligations of a Loan Party whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) any and all Interest Rate Contracts, (b) any and all cancellations, buy backs, reversals, terminations or assignments of any Interest Rate Contract transaction and (c) any “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.

 

Tender Offer. The tender offer by Merger Sub to purchase all of MicroFinancial’s common stock, par value $0.01 per share, at a price per share of $10.20 (or any greater amount per share paid pursuant to such tender offer) in cash, net to the holders of such common stock, without interest, subject to any tax withholding, pursuant to the Merger Agreement and subject to the terms and conditions set forth therein.

 

Tender Offer Closing.  The occurrence of (i) the satisfaction or waiver by Merger Sub or the Acquirer of the Offer Conditions (as defined in the Merger Agreement) and (ii) the contemporaneous acceptance for payment by Merger Sub of all shares of MicroFinancial’s common stock validly tendered and not validly withdrawn pursuant to the Tender Offer.

 

Total Commitment.  The sum of the Commitments of the Lenders as in effect from time to time, which as of the Closing Date shall be $200,000,000 and which may be any lesser amount, including zero (0), resulting from a termination or reduction of such amount in accordance with Sections 2.1, 3.1(a)(xi) and 8.2, and which amount may be increased in accordance with Section 2.1(f).

 

Total Outstandings.  At any time, the aggregate outstanding principal balance of the Loans, at the time.

 

Type.  A LIBOR Loan or a Base Rate Loan.

 

UCC.  The Uniform Commercial Code as enacted in the State of New York.

 

Unused Fee.  See Section 2.6.

 

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1.2          Rules of Interpretation.

 

(a)           All terms of an accounting or financial character used herein but not defined herein shall have the meanings assigned thereto by GAAP, as in effect from time to time, and all calculations for the purposes of Section VI hereof shall be made in accordance with GAAP; provided that if any time after the date hereof there shall occur any change in respect of GAAP from that used in the preparation of the audited financial statements referred to in Section 4.6(a) in a manner that would have a material effect on any matter which is material to Section VI, the Borrowers and the Lenders will, within ten (10) Business Days after notice from the Agent or the Borrowers, as the case may be to that effect, commence and continue in good faith negotiations with a view towards making appropriate amendments to the provisions hereof acceptable to the Lenders to reflect as narrowly as possible the effect of such change on Section VI as in effect on the date hereof; provided, further, that until such notice shall have been withdrawn or the relevant provisions amended in accordance herewith, Section VI shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective.

 

(b)           All terms employing the capitalized word “Combined” refer to the Borrowers and the Subsidiaries of such Borrower consolidated with it.

 

(c)           Except as otherwise specifically provided herein, reference to any document or agreement shall include such document or agreement as amended, supplemented or otherwise modified and in effect from time to time in accordance with its terms and the terms of this Agreement.

 

(d)           The singular includes the plural and the plural includes the singular.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.

 

(e)           A reference to any Person includes its permitted successors and permitted assigns.

 

(f)            The words “include”, “includes” and “including” are not limiting.

 

(g)           The words “herein”, “hereof”, “hereunder” and words of like import shall refer to this Agreement as a whole and not to any particular section or subdivision of this Agreement.

 

(h)           All terms not specifically defined herein or by GAAP that are defined in the UCC, shall have the meanings assigned to them in the UCC.

 

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SECTION II

 

DESCRIPTION OF CREDIT

 

2.1          Revolving Credit Loans.

 

(a)           Upon the terms and subject to the conditions of this Agreement, and in reliance upon the representations, warranties and covenants of the Borrowers herein, each of the Lenders agrees, severally and not jointly, to make revolving credit loans (the “Revolving Credit Loans”) to the Borrowers at the Borrowers’ request from time to time from and after the Closing Date and prior to the Maturity Date, provided that the Total Outstandings (after giving effect to all requested Revolving Credit Loans and, with respect to the Revolving Credit Loans made on the Closing Date, treating loans outstanding under the Existing Credit Agreement as not being outstanding for this purpose) shall not at any time exceed the lesser of (i) the Borrowing Base and (ii) the Available Commitment, provided, further that the sum of the aggregate principal amount of outstanding Revolving Credit Loans made by each Lender shall not at any time (after giving effect to all requested Revolving Credit Loans and, with respect to the Revolving Credit Loans made on the Closing Date, treating loans outstanding under the Existing Credit Agreement as not being outstanding for this purpose) exceed such Lender’s Commitment.  Subject to the terms and conditions of this Agreement, the Borrowers may borrow, repay, prepay and reborrow amounts, up to the limits imposed by this Section 2.1, from time to time between the Closing Date and the Maturity Date upon request given to the Agent pursuant to Section 2.3.  Each request for a Revolving Credit Loan hereunder shall constitute a representation and warranty by the Borrowers that the conditions set forth in Sections 3.1 and 3.2 have been satisfied as of the date of such request.

 

(b)           Each LIBOR Loan shall be in a minimum principal amount of $500,000 or in integral multiples of $100,000 in excess of such minimum amount.  No more than five (5) LIBOR Loans may be outstanding at any time.

 

(c)           Upon the terms and subject to the conditions and limitations of this Agreement, the Borrowers may convert all or a part of any outstanding Loan into a Loan of another Type on any Business Day (which, in the case of a conversion of an outstanding LIBOR Loan shall be the last day of the Interest Period applicable to such LIBOR Loan).  The Borrowers shall give the Agent prior notice of each such conversion (which notice shall be effective upon receipt) in accordance with Section 2.3.

 

(d)           (i) All Commitments shall automatically terminate at 5:00 p.m. Boston time on the Maturity Date.

 

(ii)           Subject to the provisions of Section 2.7, the Borrowers shall have the right at any time and from time to time upon five (5) Business Days’ (or such shorter period as the Agent may agree in its sole discretion) prior written notice to the Agent to reduce by $5,000,000, and in integral multiples of $1,000,000 if in excess thereof, the Total Commitment or to terminate entirely the Lenders’ Commitments to make Loans hereunder, whereupon the Commitments of the Lenders shall be reduced pro rata in accordance with their respective Commitment Percentages by the aggregate amount specified in such notice or shall, as the case may be, be terminated entirely; provided that, for the avoidance of doubt, any such written notice may be revoked by the Borrowers prior to the effectiveness of the requested reduction or termination on the date specified therein.

 

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(iii)          No such reduction or termination of any Commitment may be reinstated following the effectiveness thereof.

 

(e)           Notwithstanding the provisions of Section 2.1(a), the Agent may, in its sole discretion, advance Revolving Credit Loans on behalf of the Lenders to the Borrowers at a time when the Total Outstandings (after giving effect to all requested Loans) exceeds the lesser of (x) the Borrowing Base and (y) the Available Commitment (any such Revolving Credit Loan or Loans being herein referred to individually as an “Overadvance” and collectively, as “Overadvances”), provided that (i) the sum of (A) Total Outstandings (after giving effect to all requested Loans (including Overadvances)) and (B) the Bridge Loan Commitment shall not at any time exceed the Total Commitment, (ii) the outstanding Overadvances shall not at any time exceed ten percent (10%) of the Borrowing Base, (iii) all Overadvances shall be Base Rate Loans, (iv) no Overadvance may be made after the occurrence and during the continuation of a Default or an Event of Default without the consent of all Lenders and (v) each Overadvance shall be payable on the next Business Day after the Drawdown Date thereof.

 

(f)            The Total Commitment may be increased as provided in this Section 2.1(f) if such proposed increase is approved in advance by the Agent in its sole discretion and if the other conditions set forth below are satisfied:

 

(i)            The Borrowers may (A) request any of one (1) or more of the Lenders to increase the amount of its Commitment (which request shall be in writing and sent to the Agent to forward to such Lender) and/or (B) request the Agent to use its commercially reasonable efforts to arrange for any of one (1) or more banks or financial institutions not a party hereto (a “New Lender”) to become a party to and a Lender under this Agreement, provided that (i) in no event shall the amount of the Total Commitment as increased pursuant to this Section 2.1(f) exceed $250,000,000 and (ii) any such increase shall be not less than $10,000,000 and integral multiples of $5,000,000 in excess of such amount (or such lesser amounts as the Agent may agree to in writing), and provided, further, that the identification and arrangement of any New Lender to become a party hereto and a Lender under this Agreement shall be made by the Agent after consultation with the Borrowers.  In no event may any Lender’s Commitment be increased without the prior written consent of such Lender, and the failure of any Lender to respond to the Borrowers’ request for an increase within fifteen Business Days after written notice thereof shall be deemed a rejection by such Lender of the Borrowers’ request.  The Total Commitment may not be increased if, at the time of any proposed increase hereunder, a Default has occurred and is continuing or if a Default would occur as a result of any such increase.  Any request by the Borrowers to increase the Total Commitment shall be deemed to be a representation and warranty on and as of the date of such request and giving effect to such increase that no Default has occurred and is continuing and that no Default would occur as a result of any such increase.  Notwithstanding anything contained in this Agreement to the contrary, no Lender shall have any obligation whatsoever to increase the amount of its Commitment, and each Lender may at its option, unconditionally and without cause, decline to increase its Commitment.

 

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(ii)           If any Lender is willing, in its sole and absolute discretion, to increase the amount of its Commitment hereunder (such a Lender hereinafter referred to as an “Increasing Lender”), it shall enter into a written agreement to that effect with the Borrowers and the Agent, substantially in the form of Exhibit G (a “Commitment Increase Supplement”), which agreement shall specify, among other things, the amount of the increased Commitment of such Increasing Lender.  Upon the effectiveness of such Increasing Lender’s increase in its Commitment, Schedule 1 shall, without further action, be deemed to have been amended appropriately to reflect the increased Commitment of such Increasing Lender.  Any New Lender that is willing to become a party hereto and a Lender hereunder shall enter into a written agreement with the Borrowers and the Agent, substantially in the form of Exhibit H (an “Additional Lender Supplement”), which agreement shall specify, among other things, its Commitment hereunder.  When such New Lender becomes a Lender hereunder as set forth in the Additional Lender Supplement, Schedule 1 shall, without further action, be deemed to have been amended as appropriate to reflect the Commitment of such New Lender.  Upon the execution by the Agent, the Borrowers and such New Lender of such Additional Lender Supplement, such New Lender shall become and be deemed to be a party hereto and a “Lender” hereunder for all purposes hereof and shall enjoy all rights and assume all obligations on the part of the Lenders set forth in this Agreement, and its Commitment shall be the amount specified in its Additional Lender Supplement.  Each New Lender that executes and delivers an Additional Lender Supplement and becomes a party hereto and a “Lender” hereunder pursuant to such Additional Lender Supplement is hereinafter referred to as a “Lender” or an “Additional Lender.”

 

(iii)          In no event shall an increase in a Lender’s Commitment or the Commitment of a New Lender which results in the Total Commitment exceeding the amount which is authorized at such time in resolutions of the Borrowers previously delivered to the Agent become effective until the Agent shall have received a copy of the resolutions, in form and substance reasonably satisfactory to the Agent, of the Board of Directors of each Borrower authorizing the borrowings contemplated pursuant to such increase, certified by the secretary or an assistant secretary of each Borrower.  Upon the effectiveness of the increase in a Lender’s Commitment or the Commitment of a New Lender and execution by an Increasing Lender of a Commitment Increase Supplement or by an Additional Lender of an Additional Lender Supplement, the Borrowers shall make such borrowing from such Increasing Lender or Additional Lender, and/or shall make such prepayment of outstanding Revolving Credit Loans, as applicable, as shall be required to cause the aggregate outstanding principal amount of such Loans owing to each Lender (including each such Increasing Lender and Additional Lender) to be proportional to such Lender’s share of the relevant Total Commitment after giving effect to any increase thereof.

 

(iv)          Notwithstanding anything herein to the contrary, in no event may the Total Commitment be increased hereunder unless (A) after giving effect to such increase (and assuming the Total Commitment, as so increased, is fully utilized by the Borrowers), no Default will have occurred and be continuing and the Borrowers will be in compliance on a pro forma basis with all covenants under Section VI and (B) the Agent shall have received a certificate of a Responsible Officer of each Borrower certifying that the

 

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condition in clause (A) has been satisfied (with calculations demonstrating compliance with such covenants on a pro forma basis, in reasonable detail).

 

(v)           No New Lender may become an Additional Lender unless an Additional Lender Supplement (or counterparts thereof) has been signed by such bank or financial institution and which Additional Lender Supplement has been agreed to and acknowledged by the Borrowers and acknowledged by the Agent.  No consent of any Lender or acknowledgment of any of the other Lenders hereunder shall be required therefor.  In no event shall the Commitment of any Lender be increased by reason of any bank or financial institution becoming an Additional Lender, but the Total Commitment shall be increased by the amount of each Additional Lender’s Commitment.  Upon any Lender entering into a Commitment Increase Supplement or any Additional Lender becoming a party hereto, the Agent shall notify each other Lender thereof and shall deliver to each Lender a copy of the Additional Lender Supplement executed by such Additional Lender, agreed to and acknowledged by the Borrowers and acknowledged by the Agent, and the Commitment Increase Supplement executed by such Increasing Lender, agreed to and acknowledged by the Borrowers and acknowledged by the Agent.

 

2.2          The Notes.  The Revolving Credit Loans owing to any Lender shall, if so requested by such Lender, be evidenced by a separate promissory note for such Lender, each such note to be in substantially the form of Exhibit A, dated as of the Closing Date and completed with appropriate insertions (each such promissory note being referred to herein as a “Note” and collectively as the “Notes”).  One Note shall be payable to the order of each Lender that requested the same in a principal amount equal to such Lender’s Commitment.  The Borrowers irrevocably authorize each of the Lenders to make or cause to be made, at or about the time of the Drawdown Date of any Revolving Credit Loan or at the time of receipt of any payment of principal on the Notes, an appropriate notation on its Note Record reflecting (as the case may be) the making of such Revolving Credit Loan or the receipt of such payment.  The outstanding amount of the Revolving Credit Loans set forth on the Note Records shall be prima facie evidence of the principal amount thereof owing and unpaid to such Lenders, but the failure to record, or any error in so recording, any such amount on any Lender’s Note Record shall not limit or otherwise affect the obligations of the Borrowers hereunder or under any Note to make payments of principal of or interest on any Note when due.

 

2.3          Notice and Manner of Borrowing or Conversion of Loans.

 

(a)           The Borrowers may obtain or continue a Loan hereunder or convert an outstanding Loan into a Loan of another Type by giving the Agent a telephonic notice promptly confirmed by a written Notice of Borrowing or Conversion, which telephonic notice shall be irrevocable and which must be received no later than 2:00 p.m. Boston time (i) on the day on which the requested Loan is to be made as or converted to a Base Rate Loan, and (ii) three (3) Business Days before the day on which the requested Loan is to be made or continued as or converted to a LIBOR Loan.  Such Notice of Borrowing or Conversion shall specify (i) the effective date and amount of each Loan or portion thereof requested to be made, continued or converted, subject to the limitations set forth in Section 2.1, (ii) the interest rate option requested to be applicable thereto and (iii) the duration of the applicable Interest Period, if any (subject to the provisions of the definition of the term “Interest Period”).  If such Notice fails to specify the

 

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interest rate option to be applicable to the requested Loan, then the Borrowers shall be deemed to have requested a Base Rate Loan.  If the written confirmation of any telephonic notification differs in any material respect from the action taken by the Agent, the records of the Agent shall control absent manifest error.

 

(b)           The presentment for payment of a check, draft or other item on, or a request made by the Borrowers for a wire transfer for funds from, any deposit account maintained by a Borrower with the Agent shall be deemed to be a request pursuant to a Notice of Borrowing or Conversion by the Borrowers for a Base Rate Loan hereunder to the extent that such account has insufficient funds to pay all such checks, drafts or items presented, or wire transfers requested, on any day in full.

 

(c)           Subject to the provisions of the definition of the term “Interest Period” herein, the duration of each Interest Period for a LIBOR Loan shall be as specified in the applicable Notice of Borrowing or Conversion.  If no Interest Period is specified in a Notice of Borrowing or Conversion with respect to a requested LIBOR Loan, then the Borrowers shall be deemed to have selected an Interest Period of one (1) month’s duration.  If the Agent receives a Notice of Borrowing or Conversion after the time specified in subsection (a) above, such Notice shall not be effective.  If the Agent does not receive an effective Notice of Borrowing or Conversion with respect to an outstanding LIBOR Loan, or if, when such Notice must be given prior to the end of the Interest Period applicable to such outstanding Loan, the Borrowers shall have failed to satisfy any of the conditions hereof, the Borrowers shall be deemed to have elected to convert such outstanding Loan in whole into a Base Rate Loan on the last day of the then current Interest Period with respect thereto.

 

(d)           Notwithstanding anything to the contrary contained in this Section II, if a Default shall have occurred and be continuing, the Lenders shall have no obligation to make or continue any LIBOR Loans to the Borrowers.

 

2.4          Funding of Loans.

 

(a)           Revolving Credit Loans (including Overadvances) shall be made by the Lenders pro rata in accordance with their respective Commitment Percentages, provided, however that the failure of any Lender to make any Loan shall not relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to make any Loan required to be made by such other Lender).

 

(b)           Each of the Lenders authorizes the Agent to advance all Revolving Credit Loans (including Overadvances to the extent authorized under Section 2.1(e)) which are requested by the Borrowers during any calendar week, subject to the terms and conditions of this Agreement.  In addition, the Agent may, but shall not be obligated to, apply amounts from the Collateral Accounts to fund the payment of checks, drafts and other items, or requests for wire transfers, deemed to be a request for a Base Rate Loan pursuant to Section 2.3(b) hereof instead of, or in addition to, advancing a Revolving Credit Loan hereunder.  On such day or days as the Agent shall designate (each such day being referred to herein as a “Settlement Date”), but at least once per week, whether or not the Commitments have been terminated, a Default has occurred, the Obligations have been accelerated or the Agent is proceeding to liquidate the Collateral, the

 

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Agent shall, as promptly as practicable during normal business hours, effect a wire transfer of immediately available funds to each Lender of the amount, if any, payable to such Lender, or each Lender shall transfer to the Agent sufficient immediately available federal funds to reimburse the Agent for each such Lender’s pro rata share of all Revolving Credit Loans made by the Agent since the previous Settlement Date, in each case after taking into account payments and collections received by the Agent and applied to the Revolving Credit Loans, so that after giving effect to such transfers by the Agent to the Lenders or by the Lenders to the Agent, as the case may be, the Agent’s Note Record shall correctly reflect each Lender’s pro rata share of outstanding Revolving Credit Loans.  All Revolving Credit Loans made by the Agent on behalf of the Lenders shall be, for purposes of interest income and charges, considered to be Revolving Credit Loans from such Lenders to the Borrowers and reflected in the Note Records of the Agent and the Lenders (as among the Agent and the Lenders) at such time as the Agent receives from such Lenders funds as provided in this Section 2.4, and prior to such time such Revolving Credit Loans shall be considered, for purposes of interest income and other charges, to be Revolving Credit Loans from the Agent and so reflected in the Note Record of the Agent.

 

(c)           The Agent may notify the Lenders of any proposed Revolving Credit Loan (including any proposed Overadvance) and of the Drawdown Date thereof and the amount of each Lender’s pro rata share of such Revolving Credit Loan.  If such notice is given by the close of the Agent’s business on the Business Day on which the Agent receives an effective Notice of Borrowing or Conversion, as provided in Section 2.3, or in the case of Overadvances to the extent authorized under Section 2.1(e), if such notice is given by the close of Agent’s business on the Business Day immediately preceding the proposed Drawdown Date, each Lender shall, not later than 1:00 p.m. Boston time on the proposed Drawdown Date, make available to the Agent at its head office or at such other location as the Agent may from time to time designate, in immediately available funds, the amount of such Lender’s pro rata share of the amount of such proposed Revolving Credit Loan.  Upon receipt by the Agent of such amount, and upon the satisfaction of the conditions set forth in Section III (to the extent applicable), the Agent will make available to the Borrowers the aggregate amount of such proposed Revolving Credit Loan.

 

(d)           The Agent may, unless notified to the contrary by any Lender prior to a Drawdown Date, assume that each Lender has made available to the Agent on such Drawdown Date and the amount of such Lender’s Commitment Percentage of the Loans to be made on such Drawdown Date, and the Agent may (but it shall not be required to), in reliance upon such assumption, make available to the Borrowers a corresponding amount.  If any Lender makes available to the Agent such amount on a date after such Drawdown Date, such Lender shall pay to the Agent on demand an amount equal to the product of (i) the average, computed for the period referred to in clause (iii) below, of the weighted average interest rate paid by the Agent for federal funds acquired by the Agent during each day included in such period, times (ii) the amount of such Lender’s Commitment Percentage of any such Loans times (iii) a fraction, the numerator of which is the number of days that elapse from and including such Drawdown Date to the date on which the amount of such Lender’s Commitment Percentage of such Loans shall become immediately available to the Agent, and the denominator of which is 365.  A statement of the Agent submitted to such Lender with respect to any amounts owing under this paragraph shall be prima facie evidence of the amount due and owing to the Agent by such Lender.  If the amount of such Lender’s Commitment Percentage of such Loans is not made available to the Agent by such Lender within three (3) Business Days following such Drawdown Date, the Agent

 

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shall be entitled to recover such amount from the Borrowers on demand, with interest thereon at the rate per annum applicable to the Loans made on such Drawdown Date.

 

2.5          Interest Rates and Payments of Interest.

 

(a)           Each Revolving Credit Loan which is a Base Rate Loan shall bear interest on the outstanding principal amount thereof at a rate per annum equal to the Base Rate plus the Applicable Margin, which rates shall change contemporaneously with any change in the Base Rate.  Such interest shall be payable monthly in arrears on the first Business Day of each month.

 

(b)           Each Revolving Credit Loan which is a LIBOR Loan shall bear interest on the outstanding principal amount thereof, for each Interest Period applicable thereto, at a rate per annum equal to the LIBOR Rate plus the Applicable Margin.  Such interest shall be payable monthly in arrears on the first Business Day of each month.

 

(c)           To the extent the Conversion Term Loan is a Base Rate Conversion Loan, it shall bear interest on the outstanding principal amount thereof at a rate per annum equal to the Base Rate plus the Applicable Margin, which rate shall change contemporaneously with any change in the Base Rate.  To the extent the Conversion Term Loan is a LIBOR Conversion Loan, it shall bear interest on the outstanding principal amount thereof, for each interest period applicable thereto, at a rate per annum equal to the LIBOR Rate plus the Applicable Margin. Such interest shall be payable monthly in arrears on the first Business Day of each month.

 

(d)           If a Default shall occur, then at the option of the Agent or the direction of the Majority Lenders the unpaid balance of Loans shall bear interest, to the extent permitted by law, compounded daily at an interest rate equal to a margin of three percent (3.00%) per annum above the interest rate applicable to each such Loan in effect on the day such Default occurs, until such Default is cured or waived.

 

(e)           For the purpose of computing interest on the Loans, any items requiring clearance of payment shall not be considered to have been credited against any Loans hereunder until two (2) Business Days after receipt by the Agent of such items.

 

(f)            So long as any Lender shall be required under regulations of the Board of Governors of the Federal Reserve System (or any other banking authority, domestic or foreign, to which such Lender is subject) to maintain reserves with respect to liabilities or assets consisting of or including “Eurocurrency Liabilities” (as defined in regulations issued from time to time by such Board of Governors), the Borrowers shall pay to the Agent for the account of each such Lender additional interest on the unpaid principal amount of each LIBOR Loan made by such Lender from the date of such Loan until such principal amount is paid in full, at an interest rate per annum equal at all times to the remainder (rounded upwards, if necessary, to the next higher one one-hundredth of one percent (1/100 of 1%)) obtained by subtracting (i) the LIBOR Rate for the Interest Period for such LIBOR Loan from (ii) the rate obtained by dividing such LIBOR Rate by a percentage equal to one hundred percent (100%) minus the LIBOR Reserve Percentage of such Lender for such Interest Period.  Such additional interest shall be determined by such Lender and notified to the Borrowers through the Agent, and shall be payable on each date on which interest is payable on such LIBOR Loan.

 

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(g)           All agreements between the Borrowers and the Lenders are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of maturity of the Obligations or otherwise, shall the amount paid or agreed to be paid to the Lenders for the use or the forbearance of the Obligations exceed the maximum permissible under applicable law.  As used herein, the term “applicable law” shall mean the law of the State of New York in effect as of the date hereof; provided, however, that in the event there is a change in the law which results in a higher permissible rate of interest, then the Loan Documents shall be governed by such new law as of its effective date.  In this regard, it is expressly agreed that it is the intent of the Borrowers and the Lenders in the execution, delivery and acceptance of the Loan Documents to contract in strict compliance with the laws of the State of New York from time to time in effect.  If, under or from any circumstances whatsoever, fulfillment of any provision of any of the Loan Documents at the time of performance of such provision shall be due, shall involve transcending the limit of such validity prescribed by applicable law, then the obligation to be fulfilled shall automatically be reduced to the limits of such validity, and if under or from circumstances whatsoever the Lenders should ever receive as interest an amount which would exceed the highest lawful rate, such amount which would be excessive interest shall be applied to the reduction of the principal balance of the Obligations and not to the payment of interest.  This provision shall control every other provision of all Loan Documents.

 

2.6          Fees.

 

(a)           The Borrowers shall pay to the Agent for the benefit of the Lenders an unused line fee (the “Unused Fee”), computed on a daily basis and payable quarterly in arrears on the first Business Day of each quarter, equal to the applicable rate per annum shown below of the excess of (i) the Total Commitment at the time over (ii) the sum of the average daily amount of (x) Total Outstandings and (y) amounts extended under the Bridge Loan Agreement from time to time:

 

	
Average Daily Outstanding
    	
 
    	
Unused Fee
    	
 
    
	
>   $100,000,000
    	
 
    	
0.25
    	
%
    
	
<   $100,000,000
    	
 
    	
0.35
    	
%
    


 

(b)           The Borrowers shall pay to the Agent, solely for the account of the Agent, such other fees as the Borrowers and the Agent shall agree in writing.

 

(c)           The Borrowers authorize Agent and the Lenders to charge to their Note Records or to any deposit account which a Borrower may maintain with any of them the interest, fees, charges, taxes and expenses provided for in this Agreement, the other Loan Documents, any other document executed or delivered in connection herewith or therewith or associated with any accounts maintained with the Lenders, including with respect to account overdrafts.

 

2.7          Payments and Prepayments of the Loans.

 

(a)           On the Maturity Date or the earlier termination of all Commitments pursuant to Section 2.1(d)(ii), the Borrowers shall pay in full the unpaid principal of all outstanding Revolving Credit Loans, together with all unpaid interest thereon and all fees and

 

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other amounts due with respect thereto.  Overadvances shall be due and payable as provided in Section 2.1(e).

 

(b)           Revolving Credit Loans that are LIBOR Loans may be prepaid at any time, subject to the provisions of Section 2.9, upon three (3) Business Days’ notice.  Revolving Credit Loans that are Base Rate Loans may be prepaid at any time, without premium or penalty.  Any such notice of prepayment shall be irrevocable.  Prepayments of Revolving Credit Loans may be reborrowed to the extent provided in Section 2.1.

 

(c)           The Agent may, in its discretion, apply any amount held by the Agent in the Collateral Accounts to reduce outstanding Loans.  To the extent that the Agent so applies any such amount, then for purposes of calculating Total Outstandings under Section 2.1(a) hereof, credit for such amount shall be deemed to have been entered one (1) Business Day after being received by the Agent.  Such credit shall be conditional upon final payment in cash or solvent credits of the items giving rise thereto.

 

(d)           Except as provided in Section 2.1(e), if at any time the Total Outstandings exceed the lesser of (i) the Borrowing Base and (ii) the Available Commitment, the Borrowers shall immediately pay the amount of any such excess to the Agent for application to the Revolving Credit Loans.

 

(e)           If, prior to thirty (30) days before the Maturity Date, the Lenders shall not have offered to extend such date and if no Default shall have occurred and be continuing, then at the option of the Borrowers the unpaid principal balance of the Revolving Credit Loans shall be converted into a term loan (the “Conversion Term Loan”) which shall be payable in twenty-three (23) consecutive monthly installments each equal to one-thirty sixth (1/36th) of the original principal amount of the Conversion Term Loan, payable on the first Business Day of each calendar month, commencing with the first day of the month following the Maturity Date, with the unpaid principal balance of the Conversion Term Loan, together with all unpaid interest thereon and all fees and other amounts due with respect thereto, due and payable in full on the Conversion Term Loan Maturity Date.  If, prior to thirty (30) days before the Maturity Date, the Lenders shall have offered to extend the Maturity Date but the Borrowers shall not have agreed to such extension or if any Default shall have occurred and be continuing on such date, then notwithstanding the existence of any LIBOR Loan and notwithstanding any other provision of the Loan Documents, the Borrowers shall pay in full on the Maturity Date the unpaid principal balance of the Revolving Credit Loans, together with all unpaid interest thereon and all fees and other amounts due with respect thereto.

 

2.8          Method and Allocation of Payments.

 

(a)           All payments by the Borrowers hereunder and under any of the other Loan Documents shall be made in lawful money of the United States of America in immediately available funds, and shall be deemed to have been made only when made in compliance with this Section 2.8(a).  All such payments shall be made without set-off or counterclaim and free and clear of and without deduction for any taxes, levies, imposts, duties, charges, fees, deductions, withholdings, compulsory loans, restrictions or conditions of any nature now or hereafter imposed or levied by any jurisdiction or any political subdivision thereof or taxing or other

 

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authority therein unless the Borrowers are compelled by law to make such deduction or withholding.  If any such obligation is imposed upon the Borrowers with respect to any amount payable by it hereunder or under any of the other Loan Documents, the Borrowers will pay to each Lender such additional amount in U.S. dollars as shall be necessary to enable such Lender to receive the same net amount which such Lender would have received on such due date had no such obligation been imposed upon the Borrowers.  The Borrowers will deliver promptly to each Lender certificates or other valid vouchers or other evidence of payment reasonably satisfactory to the Agent for all taxes or other charges deducted from or paid with respect to payments made by the Borrowers hereunder or under such other Loan Document.  The Lenders may, and the Borrowers hereby authorize the Lenders to, debit the amount of any payment not made by such time to the demand deposit accounts of the Borrowers with the Lenders or to their Note Records.

 

(b)           All payments of principal of and interest in respect of Loans and of Unused Fees shall be made to the Agent, for the pro rata benefit of the Lenders, in accordance with their Commitment Percentages, and payments of any other amounts due hereunder shall be made to the Agent to be allocated among the Agent and the Lenders as their respective interests appear.  All such payments shall be made at the Agent’s head office or at such other location as the Agent may from time to time designate, in each case in immediately available funds.

 

(c)           If the Commitments shall have been terminated or the Obligations shall have been declared immediately due and payable pursuant to Section 8.2, all funds received from or on behalf of the Borrowers (including as proceeds of Collateral) by any Lender in respect of Obligations (except funds received by any Lender as a result of a deemed purchase of a participant interest pursuant to Section 2.8(d) below) shall be remitted to the Agent, and all such funds, together with all other funds received by the Agent from or on behalf of the Borrowers (including proceeds of Collateral) in respect of Obligations, shall be applied by the Agent in the following manner and order:  (i) first, to reimburse the Agent and the Lenders, in that order, for any amounts payable pursuant to Sections 11.2 and 11.3 hereof; (ii) second, to the payment of interest due on the Loans; (iii) third, to the payment of Unused Fees and any other fees payable hereunder or any other Loan Documents and; (iv) fourth, to the payment of the outstanding principal balance of the Loans, pro rata to the outstanding principal balance of each; (v) fifth, to the payment of any other Obligations payable by the Borrowers, pro rata to the outstanding principal balance of each; and (vi) any remaining funds shall be paid to whoever shall be entitled thereto or as a court of competent jurisdiction shall direct. Excluded Swap Obligations with respect to any Guarantor shall not be paid with amounts received from such Guarantor, but appropriate adjustments shall be made with respect to payments from other Loan Parties to preserve the allocation to the Obligations otherwise set forth above in this Section.

 

(d)           Each of the Lenders and the Agent hereby agrees that if it should receive any amount (whether by voluntary payment, by realization upon security, by the exercise of the right of set-off or banker’s lien, by counterclaim or cross action, by the enforcement of any right under the Loan Documents, or otherwise) in respect of principal of, or interest on, the Loans or any fees which are to be shared pro rata among the Lenders, which, as compared to the amounts theretofore received by the other Lenders with respect to such principal, interest or fees, is in excess of such Lender’s Commitment Percentage of such principal, interest or fees, such Lender shall share such excess, less the costs and expenses (including, reasonable attorneys’ fees and disbursements) incurred by such Lender in connection with such realization, exercise, claim or

 

35











 

action, pro rata with all other Lenders in proportion to their respective Commitment Percentages, and such sharing shall be deemed a purchase (without recourse) by such sharing party of participant interests in the Loans or such fees, as the case may be, owed to the recipients of such shared payments to the extent of such shared payments; provided, however, that if all or any portion of such excess amount is thereafter recovered from such Lender, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.

 

2.9          LIBOR Indemnity.  If the Borrowers for any reason (including, without limitation, pursuant to Sections 2.7, 2.11, 2.12 and 8.2 hereof) make any payment of principal with respect to any LIBOR Loan on any day other than the last day of an Interest Period applicable to such LIBOR Loan, or fails to borrow or continue or convert to a LIBOR Loan after giving a Notice of Borrowing or Conversion thereof pursuant to Section 2.3, or fails to prepay a LIBOR Loan after having given notice thereof, the Borrowers shall pay to the Agent for the benefit of the Lenders a “yield maintenance fee” in an amount computed as follows:  the current rate for United States Treasury securities (bills on a discounted basis shall be converted to a bond equivalent) with a maturity date closest to the expiration of the Interest Period of the Loan as to which the prepayment is made, shall be subtracted from the interest rate applicable (pursuant to Section 2.5(b)) to each LIBOR Loan in effect at the time of prepayment.  If the result is zero (0) or a negative number, there shall be no yield maintenance fee.  If the result is a positive number, then the resulting percentage shall be multiplied by the amount of the principal balance being prepaid.  The resulting amount shall be divided by 360 and multiplied by the number of days remaining in the Interest Period of the Loan as to which the prepayment is made.  Said amount shall be reduced to present value calculated by using the above referenced United States Treasury securities rate and the number of days remaining in the Interest Period of the Loan as to which prepayment is made.  The resulting amount shall be the yield maintenance fee due to the Lenders upon the payment of a LIBOR Loan under the circumstances described in the first sentence of this Section 2.9.  The Borrowers shall pay such amount upon presentation by the Agent of a statement setting forth the amount and the Agent’s (or the affected Lenders’) calculation thereof pursuant hereto, which statement shall be deemed true and correct absent manifest error.  If the Obligations are declared immediately due and payable pursuant to Section 8.2, then any amount provided for in this Section 2.9 shall be due and payable in the same manner as though the Borrowers had made a prepayment of the LIBOR Loans.  The Borrowers recognize that the Lenders will incur substantial additional costs and expenses including loss of yield and anticipated profitability in the event of prepayment of all or part of a LIBOR Loan and that the yield maintenance fee compensates the Lenders for such costs and expenses. The Borrowers acknowledge that the yield maintenance fee is bargained-for consideration and not a penalty.

 

2.10        Computation of Interest and Fees; Due Date.

 

(a)           Interest and all fees payable hereunder shall be computed daily on the basis of a year of three hundred sixty (360) days and paid for the actual number of days for which due.

 

(b)           If the due date for any payment of principal is extended by operation of law, interest shall be payable for such extended time.  If any payment required by this Agreement becomes due on a day that is not a Business Day such payment may be made on the next

 

36











 

succeeding Business Day (subject to the definition of the term “Interest Period”), and such extension shall be included in computing interest and fees in connection with such payment.

 

2.11        Changed Circumstances; Illegality.

 

(a)           Notwithstanding any other provision of this Agreement, in the event that:

 

(i)            on any date on which the LIBOR Rate would otherwise be set the Agent shall have determined in good faith (which determination shall be final and conclusive) that adequate and fair means do not exist for ascertaining the LIBOR Rate, or

 

(ii)           at any time the Agent or any Lender shall have determined in good faith (which determination shall be final and conclusive and, if made by any Lender, shall have been communicated to the Agent in writing) that:

 

(A)          the making or continuation of or conversion of any Loan to a LIBOR Loan has been made impracticable or unlawful by (1) the occurrence of a contingency that materially and adversely affects the interbank LIBOR market or (2) compliance by the Agent or such Lender in good faith with any applicable law or governmental regulation, guideline or order or interpretation or change thereof by any Governmental Authority charged with the interpretation or administration thereof or with any request or directive of any such Governmental Authority (whether or not having the force of law); or

 

(B)          the LIBOR Rate shall no longer represent the effective cost to the Agent or such Lender for U.S. dollar deposits in the interbank market for deposits in which it regularly participates;

 

then, and in any such event, the Agent shall forthwith so notify the Borrowers thereof.  Until the Agent notifies the Borrowers that the circumstances giving rise to such notice no longer apply, the obligation of the Lenders to allow selection by the Borrowers of the Type of Loan affected by the contingencies described in this Section 2.11(a) (herein called “Affected Loans”) shall be suspended.  If, at the time the Agent so notifies the Borrowers, the Borrowers have previously given the Agent a Notice of Borrowing or Conversion with respect to one (1) or more Affected Loans but such Loans have not yet gone into effect, such notification shall be deemed to be a request for Base Rate Loans.

 

(b)           In the event of a determination of illegality pursuant to subsection (a)(ii)(A) above, the Borrowers shall, with respect to the outstanding Affected Loans, prepay the same, together with interest thereon and any amounts required to be paid pursuant to Section 2.9, on such date as shall be specified in such notice (which shall not be earlier than the date such notice is given) and may, subject to the conditions of this Agreement, borrow a Loan of another Type in accordance with Section 2.1 hereof by giving a Notice of Borrowing or Conversion pursuant to Section 2.3 hereof.

 

2.12        Increased Costs.  In case any change made after the Closing Date in any law, regulation, treaty or official directive or the interpretation or application thereof by any court or

 

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by any Governmental Authority charged with the administration thereof or the compliance with any guideline or request of any central bank or other Governmental Authority (whether or not having the force of law):

 

(i)            subjects any Lender to any tax with respect to payments of principal or interest or any other amounts payable hereunder by the Borrowers or otherwise with respect to the transactions contemplated hereby (except for taxes on the overall net income of such Lender imposed by the United States of America or any political subdivision thereof), or

 

(ii)           imposes, modifies or deems applicable any deposit insurance, reserve, special deposit or similar requirement against assets held by, or deposits in or for the account of, or loans by, any Lender (other than such requirements as are already included in the determination of the LIBOR Rate), or

 

(iii)          imposes upon any Lender any other condition with respect to its obligations or performance under this Agreement,

 

and the result of any of the foregoing is to increase the cost to the Lender, reduce the income receivable by such Lender or impose any expense upon such Lender with respect to any Loans or its obligations under this Agreement, such Lender shall notify the Borrowers and the Agent thereof.  The Borrowers agree to pay to such Lender the amount of such increase in cost, reduction in income or additional expense as and when such cost, reduction or expense is incurred or determined, upon presentation by such Lender of a statement in the amount and setting forth in reasonable detail such Lender’s calculation thereof and the assumptions upon which such calculation was based, which statement shall be deemed true and correct absent manifest error.

 

Notwithstanding anything to the contrary contained above, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States of America regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be an applicable change in law, regardless of the date enacted, adopted or issued.

 

2.13        Capital Requirements.  If after the date hereof any Lender determines that (i) the adoption of or change in any law, rule, regulation or guideline regarding capital requirements for banks or bank holding companies, or any change in the interpretation or application thereof by any Governmental Authority charged with the administration thereof, or (ii) compliance by such Lender or its parent bank holding company with any guideline, request or directive of any such entity regarding capital adequacy (whether or not having the force of law), has the effect of reducing the return on such Lender’s or such holding company’s capital as a consequence of such Lender’s Commitment to make Loans hereunder to a level below that which such Lender or such holding company could have achieved but for such adoption, change or compliance (taking into consideration such Lender’s or such holding company’s then existing policies with respect to capital adequacy and assuming the full utilization of such entity’s capital) by any amount

 

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deemed by such Lender to be material, then such Lender shall notify the Borrowers and the Agent thereof.  The Borrowers agree to pay to such Lender the amount of such reduction of return on capital as and when such reduction is determined, payable within ninety (90) days after presentation by such Lender of a statement in the amount and setting forth in reasonable detail such Lender’s calculation thereof and the assumptions upon which such calculation was based (which statement shall be deemed true and correct absent manifest error) unless within such ninety (90) day period the Borrowers shall have prepaid in full all Obligations (other than contingent indemnification or reimbursement Obligations, to the extent no claim giving rise thereto has been asserted in writing) to such Lender, in which event no amount shall be payable to such Lender under this Section 2.13.  In determining such amount, such Lender may use any reasonable averaging and attribution methods.

 

2.14        Delay in Requests.  Failure or delay on the part of any Lender to demand compensation pursuant to the provisions of Sections 2.12 and 2.13 shall not constitute a waiver of such Lender’s right to demand such compensation, provided that no Borrower shall be required to compensate a Lender pursuant to such Sections for any increased costs incurred or reductions suffered more than six months prior to the date that such Lender notifies the Borrowers of the event giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor (except that, if the event giving rise to such increased costs or reductions is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof).

 

2.15        Defaulting Lender.

 

(a)           Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:

 

(i)            such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of Majority Lenders;

 

(ii)           any payment of principal, interest, fees or other amounts received by the Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise), or received by the Agent from a Defaulting Lender pursuant to Section 11.5, shall be applied at such time or times as may be determined by the Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Agent hereunder; second, as the Borrowers may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Agent; third, if so determined by the Agent and the Borrowers, to be held in a deposit account and released pro rata in order to satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement; fourth, to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; fifth, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrowers as a result of any judgment of a court of competent jurisdiction

 

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obtained by the Borrowers against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and sixth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if such payment is a payment of the principal amount of any Loans in respect of which such Defaulting Lender has not fully funded its appropriate share, such payment shall be applied solely to pay the Loans of all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of such Defaulting Lender until such time as all Loans are held by the Lenders pro rata in accordance with the Commitments.  Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender pursuant to this Section 2.15(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto; and

 

(iii)          no Defaulting Lender shall be entitled to receive any Unused Fee for any period during which that Lender is a Defaulting Lender (and the Borrowers shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).

 

(b)           If the Borrowers and the Agent agree in writing that a Lender is no longer a Defaulting Lender, the Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, such Lender will, if Loans are outstanding, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Agent may determine to be necessary to cause the Loans to be held pro rata by the Lenders in accordance with the Commitments under the applicable facility, whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments shall be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrowers while such Lender was a Defaulting Lender; and provided, further, that no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender, except to the extent otherwise expressly agreed by the affected parties.

 

2.16        TimePayment as Agent for Borrowers; Contribution.

 

(a)        TimePayment as Agent.  NewCo hereby appoints TimePayment as its agent with respect to the receiving and giving of any notices (including Notices of Borrowing or Conversion), requests, instructions, reports, schedules, revisions, financial statements or any other written or oral communications hereunder.  TimePayment shall keep complete, correct and accurate records of all Loans and the application of proceeds thereof, and all payments in respect of Loans and other amounts due hereunder.  The Agent and the Lenders are hereby entitled to rely on any communications given or transmitted by TimePayment as if such communication were given or transmitted by each Borrower; provided, however, that any communication given or transmitted by NewCo shall be binding with respect to NewCo.  Any communication given or transmitted by the Agent or any Lender to TimePayment shall be deemed given and transmitted to each Borrower.

 

(b)        Contribution.  The Borrowers hereby agree that, as among themselves, the ultimate responsibility for repayment of the Obligations in the event of a Default or any Event of Default by either or both of the Borrowers on their respective Obligations shall be equitably

 

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apportioned among the Borrowers in the proportion that each has benefited from the making by the Lenders of the Loans, or if such equitable apportionment cannot reasonably be determined, then in proportion to their respective net worths, determined in a manner such that none of the Obligations of either Borrower would be subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any comparable provisions of applicable law.  If a Borrower shall pay an amount with respect to the Obligations in excess of its proportionate share, determined as set forth in this Section 2.16(b) (an “Overpaying Borrower”), the other Borrower shall make a payment to such Overpaying Borrower in an amount such that the aggregate amount of each Borrower’s payments hereunder and in respect of the Obligations reflects its proportionate share of the Obligations, as so determined.  The foregoing agreement is intended to set forth only the rights and obligations of the Borrowers among themselves and shall in no way affect the obligations of any Borrower to the Lenders in respect of the Obligations.  Until the Obligations have been paid in full (except for any contingent indemnification and expense reimbursement obligations for which a claim has not yet been made) and the Commitments shall have terminated, each Borrower shall withhold exercise of any right of contribution hereunder against the other Borrower.

 

SECTION III

 

CONDITIONS OF LOANS

 

3.1          Conditions Precedent to Initial Loans.  The obligation of the Lenders to make the initial Loans is subject to the satisfaction of the following conditions precedent on or prior to the Closing Date:

 

(a)           The Agent shall have received the following agreements, documents, certificates and opinions:

 

(i)            This Agreement, duly executed and delivered by the parties thereto;

 

(ii)           If requested by the Agent on behalf of any Lender at least five (5) Business Days prior to the Closing Date, a Note for such Lender in accordance with Section 2.2, duly executed by the Borrowers;

 

(iii)          The Guaranty, duly executed and delivered by the Guarantors party thereto as of the Closing Date;

 

(iv)          The Security Agreement, together with the perfection certificate attached thereto, duly executed and delivered by the Loan Parties party thereto as of the Closing Date;

 

(v)           The Pledge Agreement and the Merger Sub Pledge Agreement, duly executed and delivered by the respective Loan Parties party thereto as of the Closing Date;

 

(vi)          Customary evidence (which may take the form of ACORD forms or policy binders) that all insurance required to be maintained pursuant to this Agreement has been obtained and is in effect and that the Borrowers are in compliance with Section

 

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5.3; provided that to the extent any such evidence, certificate or binder is not or cannot be provided on the Closing Date after the Borrowers’ use of commercially reasonable efforts to do so or without undue burden or expense, the provision of such evidence, certificates or binders shall not constitute a condition precedent to the initial availability of the Loans on the Closing Date, but shall be required to be provided within thirty (30) days after the Closing Date;

 

(vii)         A Borrowing Base Report of each Borrower as of the end of the calendar month immediately prior to the Closing Date; it being acknowledged and agreed that the Agent has, as of the date hereof, received a Borrower Base Report for each Borrower as of November 30, 2014;

 

(viii)        A Notice of Borrowing or Conversion in respect of the initial Loan to be made on the Closing Date;

 

(ix)          A copy of the Acquirer Subordinated Note executed by Merger Sub;

 

(x)           Evidence, or a certification of a Responsible Officer of Acquirer or Merger Sub, that Acquirer or another entity Controlled by one or more of the Sponsor Group shall have made the Acquirer Investment;

 

(xi)          The final Merger Agreement, including any amendments thereto; provided, that the Merger Agreement shall not have been amended, waived, or modified after the date hereof in a manner materially adverse to the Lenders without the written consent of the Agent, such consent not to be unreasonably withheld or delayed, except that (x) any decrease in the purchase price thereunder shall be deemed not to be material or adverse to the Lenders so long as any such decrease is applied to reduce the amounts of the Total Commitments and the Acquirer Investment pro rata, and (y) and any increase in the purchase price thereunder shall be deemed not to be material or adverse to the Lenders to the extent any such increase is funded with an increase in the amount of the Acquirer Investment to the extent loans are not then available hereunder to fund such increase;

 

(xii)         A customary certificate of the Secretary or an Assistant Secretary of each Borrower and each other Loan Party with respect to resolutions of the Board of Directors authorizing the execution and delivery of the Loan Documents to which such Person is a party and identifying the officer(s) authorized to execute, deliver and take all other actions required the Loan Documents to which such Person is a party, and providing specimen signatures of such officers;

 

(xiii)        The certificate of incorporation or the equivalent thereof of each Borrower and each other Loan Party and all amendments and supplements thereto, as filed in the office of the Secretary of State of such Person’s jurisdiction of incorporation, certified by said Secretary of State as being a true and correct copy thereof;

 

(xiv)        The Bylaws of each Loan Party that is a corporation and the Operating Agreement of each Loan Party that is a limited liability company, and all amendments

 

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and supplements thereto, certified by the Secretary or an Assistant Secretary of such Person as being a true and correct copy thereof;

 

(xv)         A certificate of the Secretary of State of each Loan Party’s jurisdiction of incorporation as to legal existence and good standing of such Person in such state;

 

(xvi)        An opinion addressed to the Lenders from (x) Milbank, Tweed, Hadley & McCloy LLP, counsel to the Loan Parties, substantially in the form of Exhibit J-1, and (y) Foley Hoag LLP, local counsel to the Loan Parties, substantially in the form of Exhibit J-2;

 

(xvii)       A certificate of a Responsible Officer of each Borrower, substantially in the form of Exhibit N, as to the solvency of such Borrower and its subsidiaries, on a consolidated basis, the satisfaction of the applicable conditions contained in this Section III (including as to the accuracy of representations and warranties as provided in Section 3.1(f)), and the amount of costs and expenses incurred in connection with the Acquisition and the other transactions contemplated hereby for purposes of clause (v) of the definition of Combined EBIT, together with reasonably detailed summary supporting information;

 

(xviii)      Projections of each Parent and Borrower through the fiscal year ending December 31, 2018, prepared on a quarterly basis for year 2015, and on an annual basis for years 2016 through 2018, and including combined balance sheets, statements of income, retained earnings and cash flows, credit line availability and Borrowing Base and assumptions made in connection with each of the foregoing; it being acknowledged and agreed that the Agent has, as of the date hereof, received all such Projections and such Projections are satisfactory;

 

(xix)        An Amended and Restated Limited Access Services Agreement in the form attached hereto as Exhibit O, duly executed by the Borrowers; and

 

(xx)         As to each Loan Party, an IRS Form W-9 or other applicable IRS Form signed (if applicable) by such Loan Party.

 

(b)           The Agent shall have a received a certificate of a Responsible Officer of a MicroFinancial and Merger Sub confirming that the Tender Offer Closing shall have occurred (or substantially contemporaneously with the funding of the Initial Loan will occur).

 

(c)           All necessary documents and instruments required to perfect the Agent’s liens on the Collateral shall have been delivered and be in form for filing (if applicable), in each case as contemplated by the Security Documents, it being acknowledged and agreed that the Borrowers have authorized the Agent to file prior to the Closing Date UCC-1 financing statements and UCC-3 financing statement amendments with respect to liens on the Collateral as contemplated by the Security Documents, and the Lender shall be entitled to file such financing statements on or before the Closing Date; provided that to the extent a lien on any Collateral (other than assets with respect to which a lien may be perfected solely by the filing of a financing statement under the UCC or the delivery of stock certificates of a Loan Party (other than, for the avoidance of doubt, certificates representing shares of common stock of MicroFinancial tendered

 

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pursuant to the Tender Offer)) is not or cannot be provided or perfected on the Closing Date after the Agent’s use of commercially reasonable efforts to do so or without undue burden or expense, the provision or perfection of such lien shall not constitute a condition precedent to the initial availability of the Loans on the Closing Date, but shall be required to be provided or perfected within ninety (90) days after the Closing Date.

 

(d)           All fees and expenses required to be paid hereunder (including pursuant to Section 2.6(b) hereof) on or prior to the Closing Date, with respect to expenses to the extent documented and invoiced in reasonable detail at least two (2) Business Days prior to the Closing Date, shall have been, or substantially concurrently with the funding of the initial Loans hereunder will be, paid in full.

 

(e)           The Loan Parties shall have furnished to the Agent such documents and other information reasonably requested by the Lenders at least five (5) Business Days prior to the Closing Date to comply with “know your customer” and anti-money-laundering regulations, including the Patriot Act.

 

(f)            Each of the representations and warranties made by or with respect to the Loan Parties (A) in the Acquisition Documents as are material to the interests of the Lenders (but only to the extent that the Acquirer or Merger Sub has the right to terminate the Merger Agreement or decline to close the Tender Offer as a result of the breach of such representations and warranties) and (B) in this Agreement under Sections 4.1(a)(i), 4.2(a), 4.3 (provided that the second sentence shall only apply to Collateral required to be perfected on the Closing Date pursuant to Section 3.1(c) above), 4.8, 4.13, 4.20 and 4.21, shall be true and correct in all material respects.

 

(g)           At any time on or after the date of this Agreement and prior to the time of acceptance for payment of any shares of common stock of MicroFinancial tendered pursuant to the Tender Offer, no Seller Material Adverse Effect (as defined in the Merger Agreement) shall have occurred.

 

(h)           The Borrowing Base Availability shall be no less than $7,500,000 after giving effect to the consummation of the Tender Offer and the other transactions contemplated hereby to occur on or about the Closing Date.

 

3.2          Conditions Precedent to all Loans.  The obligation of the Lenders to make any Loan, including the initial Loans except as provided below, to continue LIBOR Loans or to convert Base Rate Loans to LIBOR Loans is further subject to the following conditions:

 

(a)           timely receipt by the Agent of the most recent Borrowing Base Report required by Section 5.1(d) and the Notice of Borrowing or Conversion with respect to any Loan;

 

(b)           the outstanding Loans do not and, after giving effect to any requested Loan will not, exceed the limitations set forth in Section 2.1;

 

(c)           the representations and warranties contained in Section IV shall be true and accurate in all material respects on and as of the date of such Notice of Borrowing or Conversion and on the effective date of the making, continuation or conversion of each Loan as

 

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though made at and as of each such date (except to the extent that such representations and warranties expressly relate to an earlier date); provided that this condition shall not apply to the initial Loans on the Closing Date or any such continuation or conversion of a Loan;

 

(d)           no Default or Event of Default shall have occurred and be continuing at the time of, and immediately after the making of (or as a result of) such requested Loan; provided that this condition shall not apply to the initial Loans on the Closing Date and shall not apply to any continuation or conversion of a Loan other than as provided in Sections 2.3(d) and 2.11; and

 

(e)           with respect to the initial Loans on the Closing Date, no Event of Default under Sections 8.1(g) or (h) shall have occurred and be continuing at the time of, or immediately after the making of (or as a result of) such requested Loans.

 

The making of each Loan shall be deemed to be a representation and warranty by the Borrowers on the date of the making of such Loan as to the satisfaction of the applicable conditions set forth in this Section 3.2.

 

SECTION IV

 

REPRESENTATIONS AND WARRANTIES

 

In order to induce the Agent and the Lenders to enter into this Agreement and to make Loans hereunder, the Borrowers jointly and severally represent and warrant to the Agent and the Lenders that except as set forth on Exhibit C attached hereto:

 

4.1          Organization; Qualification; Business.

 

(a)           Each Borrower and its Subsidiaries (i) is a corporation or limited liability company duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, (ii) has all requisite corporate or limited liability company power to own its property and conduct its business as now conducted and as presently contemplated and (iii) is duly qualified and in good standing as a foreign corporation or foreign limited liability company and is duly authorized to do business in each jurisdiction (all of which are listed on Exhibit C attached hereto) where the nature of its properties or business requires such qualification, except where the failure to be so qualified would not have a Material Adverse Effect.

 

(b)           Since the date of the Initial Financial Statements, MicroFinancial has continued to engage in substantially the same business as that in which it was then engaged and is engaged in no unrelated business.

 

4.2          Corporate Authority; No Conflicts.  The execution, delivery and performance of the Loan Documents and the transactions contemplated hereby are within the corporate or limited liability company power and authority of each Borrower and have been authorized by all necessary corporate or limited liability company proceedings, and do not and will not (a) contravene any provision of the Organizational Documents of either Borrower or any law, rule or regulation applicable to either Borrower, (b) contravene any provision of, or constitute an event of default or event that, but for the requirement that time elapse or notice be given, or both,

 

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would constitute an event of default under, any other agreement, instrument, order or undertaking binding on either Borrower, or (c) result in or require the imposition of any Encumbrance on any of the properties, assets or rights of either Borrower, except in favor of the Agent and the Lenders.

 

4.3          Valid Obligations.  The Loan Documents and all of their respective terms and provisions are the legal, valid and binding obligations of each Borrower, enforceable in accordance with their respective terms except as limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors’ rights generally, and except as the remedy of specific performance or of injunctive relief is subject to the discretion of the court before which any proceeding therefor may be brought.  The Security Documents have effectively created in favor of the Agent and the Lenders legal, valid and enforceable security interests in the Collateral and such security interests are (or, in the case of the Collateral covered thereby, upon execution by the other parties to any applicable deposit account control agreement will be) fully perfected first priority (except to the extent otherwise provided or permitted in the applicable Security Documents) security interests.

 

4.4          Consents or Approvals.  The execution, delivery and performance of the Loan Documents and the transactions contemplated herein do not require any approval or consent of, or filing or registration with, any governmental or other agency or authority, or any other Person, except under or as contemplated by the Security Documents or filings required of either Parent pursuant to any securities laws.

 

4.5          Title to Properties; Absence of Encumbrances.  Each Borrower and its Subsidiaries has good and marketable title to all of the properties, assets and rights of every name and nature now purported to be owned by it, and good and valid leasehold title to all of the properties, assets and rights of every name and nature now purported to be leased by it, including, without limitation, such properties, assets and rights as are reflected in the Initial Financial Statements (except such properties, assets or rights as have been disposed of in the ordinary course of business since the date thereof), free from all Encumbrances except Permitted Encumbrances, and, except as so disclosed, free from all defects of title that might cause a Material Adverse Effect.  All leases under which either Borrower or its Subsidiaries is the lessor or lessee are in full force and effect and there are no existing defaults or events that with the giving of notice or passage of time or both could ripen into defaults by either party thereunder which would have a Material Adverse Effect.  No third parties possess any rights with respect to any of either Borrower’s or its Subsidiaries owned or leased properties, the exercise of which would have a Material Adverse Effect.  All real property owned or leased by the Borrowers is described in Exhibit C hereto.

 

4.6          Financial Statements; Indebtedness.

 

(a)           The Borrowers have furnished to the Lenders: (i) MicroFinancial’s consolidated balance sheet as of December 31, 2013 and its consolidated statements of income, changes in stockholders’ equity and cash flow for the fiscal year then ended, and related footnotes, audited and certified without qualification by the Borrower’s Accountants; and (ii) MicroFinancial’s unaudited consolidated balance sheet as of September 30, 2014 and its unaudited consolidated statements of income, changes in stockholders’ equity and cash flow for

 

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the three (3) months then ended (the “Initial Financial Statements”), certified by the principal financial officer of MicroFinancial, subject to normal, recurring year-end adjustments that shall not in the aggregate be material in amount.  All such financial statements were prepared in accordance with GAAP applied on a consistent basis throughout the periods specified and present fairly the financial position of each Parent and each of its Subsidiaries as of such dates and the results of the operations of each Parent and each of its Subsidiaries for such periods.  The Borrowers have also furnished to the Lenders the Parents’ pro forma combined balance sheet as of the Closing Date and projections of their future combined results of operations referred to at Section 3.1(a)(xviii), all of which were reasonable when made and continue to be reasonable at the date hereof.

 

(b)           At the date hereof, the Borrowers have no Indebtedness or other material liabilities, debts or obligations, whether accrued, absolute, contingent or otherwise, and whether due or to become due, including, but not limited to, liabilities or obligations on account of taxes or other governmental charges, that are not set forth on the Initial Financial Statements or on Exhibit C hereto.

 

4.7          Changes.  Since the date of the most recent financial statements delivered to the Agent pursuant to Sections 4.6(a) or 5.1 hereof or of the Existing Agreement, there have been no changes in the operations, business, properties, liabilities (actual or contingent) or condition (financial or otherwise) of MicroFinancial or any of its Subsidiaries, other than changes in the ordinary course of business, the effect of which has, in the aggregate, caused a Material Adverse Effect.

 

4.8          Solvency.  Each Borrower and its Subsidiaries, on a consolidated basis, has and, after giving effect to the Loans, will have, assets (both tangible and intangible) having a fair saleable value in excess of the amount required to pay the probable liability on its then-existing debts (whether matured or unmatured, liquidated or unliquidated, fixed or contingent); each Borrower and its Subsidiaries, on a consolidated basis, has and will have access to adequate capital for the conduct of its business and the discharge of its debts incurred in connection therewith as such debts mature; each Borrower and its Subsidiaries, on a consolidated basis, was not insolvent immediately prior to the making of the Loans and immediately after giving effect thereto, such Borrower and its Subsidiaries, on a consolidated basis, will not be insolvent.

 

4.9          Defaults.  As of the date of this Agreement, no Default exists.

 

4.10        Taxes.  Each Parent and each of its Subsidiaries has filed all federal, state and other tax returns required to be filed, and all taxes, assessments and other governmental charges due from each Parent and each of its Subsidiaries have been fully paid, except for such taxes, assessments or charges that are being contested in good faith by appropriate proceedings and with respect to which (a) adequate reserves have been established and are being maintained in accordance with GAAP and (b) no lien has been filed to secure such taxes, assessments or charges.  All such contests at the date hereof are described on Exhibit C hereto.  Neither Parent nor any of their Subsidiaries have executed any waiver that would have the effect of extending the applicable statute of limitations in respect of tax liabilities.  The federal and state income tax returns of each Parent and each of its Subsidiaries have not been audited or otherwise examined by any federal or state taxing authority.  Each Parent and each of its Subsidiaries have

 

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established on their books reserves adequate for the payment of all federal, state and other tax liabilities.

 

4.11        Litigation.  All material litigation pending or threatened in writing against the Loan Parties as of the date of this Agreement is set forth on Exhibit C hereto.  There is no litigation, arbitration, proceeding or investigation pending, or, to the knowledge of the Borrowers’ or any Subsidiary’s officers, threatened, against either Parent, the Borrowers or any of their Subsidiaries that, if adversely determined, may reasonably be expected to result in a material judgment not fully covered by insurance, may reasonably be expected to result in a forfeiture of all or any substantial part of the property of either Parent, the Borrowers or any of their Subsidiaries, or may reasonably be expected to have a Material Adverse Effect.

 

4.12        Subsidiaries.  All the Subsidiaries of the Borrowers are listed on Exhibit C hereto, with any Special Purpose Subsidiaries being separately designated as such.  Each Borrower or a Subsidiary of a Borrower is the owner, free and clear of all Encumbrances, of all of the issued and outstanding Capital Stock of each such Subsidiary.  All shares of such Capital Stock have been validly issued and are fully paid and nonassessable, and no rights to subscribe to any additional shares have been granted, and no options, warrants or similar rights are outstanding.

 

4.13        Investment Company Act.  Neither Borrower nor any of their Subsidiaries is subject to regulation under the Investment Company Act of 1940, as amended.

 

4.14        Compliance.  Each Borrower has all necessary permits, approvals, authorizations, consents, variances, licenses, franchises, registrations and other rights and privileges (including patents, trademarks, trade names and copyrights) to allow it to own and operate its business and properties without any violation of laws, regulations, authorizations and orders of public authorities (including without limitation Environmental Laws) or the rights of others, except to the extent that any such violation would not have a Material Adverse Effect.  Each Borrower and its Subsidiaries are duly authorized, qualified and licensed under, and each Borrower, and its Subsidiaries and all real properties owned or leased by them are in compliance with, all applicable laws, regulations, authorizations and orders of public authorities, including, without limitation, Environmental Laws, except to the extent that any such failure to be so authorized, qualified, licensed or in compliance would not have a Material Adverse Effect.  Each Borrower and its Subsidiaries have performed all obligations required to be performed by them under, and are not in default under or in violation of, its Organizational Documents, or any agreement, lease, mortgage, note, bond, indenture, license or other instrument or undertaking to which it is a party or by which any of it or any of its properties are bound, except for violations none of which, either individually or in the aggregate, would have any Material Adverse Effect.

 

4.15        ERISA.  Each Parent and each of its ERISA Affiliates are in compliance in all material respects with ERISA and the provisions of the Code applicable to the Plans; neither Parent nor any of their ERISA Affiliates have engaged in a Prohibited Transaction which would subject such Parent, any of its ERISA Affiliates or any Plan to a material tax or penalty imposed on a Prohibited Transaction; no Plan has incurred any “accumulated funding deficiency” (as defined in ERISA); except as set forth in the Initial Financial Statements, the aggregate fair market value of all assets of the Plans which are single-employer plans is at least equal to the aggregate present value of all accrued benefits under such Plans, both as determined in the most

 

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recent actuarial reports for such Plans using the actuarial assumptions used for funding purposes therein; neither Parent nor any of their ERISA Affiliates has incurred any liability to the PBGC over and above premiums required by law; and neither Parent nor any of their ERISA Affiliates has terminated any Plan in a manner which could result in the imposition of a lien on the property of a Parent, a Borrower or any of their ERISA Affiliates.

 

4.16        Environmental Matters.

 

(a)           Each Borrower and each of its Subsidiaries have obtained all permits, licenses and other authorizations and have made all filings, registrations and other submittals which are required under all Environmental Laws, except to the extent failure to have any such permit, license or authorization would not have a Material Adverse Effect.  Each Borrower and each of its Subsidiaries are in compliance with the terms and conditions of all such permits, licenses and authorizations, and are also in compliance with all applicable orders, decrees, judgments and injunctions, issued, entered, promulgated or approved under any Environmental Law, except to the extent failure to comply would not have a Material Adverse Effect.

 

(b)           No written notice, notification, demand, request for information, citation, summons or order has been issued and is outstanding, no complaint has been filed, no penalty has been assessed and no investigation or review is pending or, to the best of the Borrowers’ knowledge, threatened by any governmental or other entity (i) with respect to any alleged failure by either Borrower or any of its Subsidiaries to have any permit, license or authorization required in connection with the conduct of its business or to comply with any Environmental Laws, or (ii) regarding the presence of any Hazardous Material at, on or under any property now or previously owned, leased or used by either Borrower or any of its Subsidiaries or any other location to which Hazardous Materials from such property had been transported or which they have been disposed of.

 

(c)           No material oral or written notification of a release of a Hazardous Material has been filed by or on behalf of either Borrower or any of its Subsidiaries and no property now or previously owned, leased or used by either Borrower or any of its Subsidiaries is listed or, to the best of the Borrowers’ knowledge, proposed for listing on the National Priorities List under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, or on any similar state list of sites requiring investigation or clean-up.

 

(d)           There are no Encumbrances arising under or pursuant to any Environmental Law on any of the real property or properties owned, leased or used by either Borrower or any of its Subsidiaries and no governmental actions have been taken or, to the best of the Borrowers’ knowledge, are in process which could subject any of such properties to such liens or Encumbrances or, as a result of which either Borrower or any of its Subsidiaries would be required to place any notice or restriction relating to the presence of Hazardous Materials at any property owned by it in any deed to such property.

 

4.17        Restrictions on the Borrowers.  Neither Borrower is party to or bound by any contract, agreement or instrument, nor subject to any charter or other corporate or limited liability company restriction which will, under current or foreseeable conditions, cause a Material Adverse Effect.

 

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4.18        Labor Relations.  There is (i) no unfair labor practice complaint pending against the Borrowers or any of their Subsidiaries or, to the best knowledge of the Borrowers, threatened, before the National Labor Relations Board, and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending against the Borrowers or any of their Subsidiaries or, to the best knowledge of the Borrowers, threatened, except for such complaints, grievances and arbitration proceedings which, if adversely decided, would not have a material and adverse effect on the condition (financial or otherwise), properties, business or results of operations of the Borrowers or any of their Subsidiaries, (ii) no strike, labor dispute, slowdown or stoppage pending against the Borrowers or any of their Subsidiaries or, to the best knowledge of the Borrowers, threatened against the Borrowers or any of their Subsidiaries, except for any such labor action as would not have a material and adverse effect on the condition (financial or otherwise), properties, business or results of operations of the Borrowers or any of their Subsidiaries and (iii) to the best knowledge of the Borrowers, no union representation question exists with respect to the employees of the Borrowers or any of their Subsidiaries and, to the best knowledge of the Borrowers, no union organizing activities are taking place, except for any such question or activities as would not have a material and adverse effect on the condition (financial or otherwise), properties, business or results of operations of the Borrowers or any of their Subsidiaries.

 

4.19        Trade Relations.  There exists no actual or, to the best knowledge of the Borrowers, threatened termination, cancellation or limitation of, or any material modification or change in, the business relationship between the Borrowers or any of their Subsidiaries and any customer or any group of customers whose purchases, individually or in the aggregate, are material to the business of the Borrowers and their Subsidiaries, taken as a whole, or with any material supplier, except in each case, where the same could not reasonably be expected to have a Material Adverse Effect.

 

4.20        Margin Rules.  Neither Borrower owns or has any present intention of purchasing or carrying, and no portion of any Loan shall be used for purchasing or carrying, any “margin security” or “margin stock” as such terms are used in Regulations T, U or X of the Board of Governors of the Federal Reserve System.

 

4.21        Patriot Act; FCPA; OFAC.

 

(a)           Each Loan Party is in compliance, in all material respects, with (i) the Patriot Act and (ii) each of the foreign assets control regulations administered by the United States Treasury Department (31 CFR Subtitle B, Chapter V, as amended).

 

(b)           Each Loan Party is in compliance, in all material respects, with the U.S. Foreign Corrupt Practices Act of 1977, as amended from time to time (the “FCPA”) and any other applicable anti-bribery or anti-corruption law. No part of the proceeds of the Loans will knowingly be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the FCPA.

 

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(c)           No Loan Party, nor to the best knowledge of the Borrowers, any director, officer, agent, employee or Affiliate thereof, is any of the following:

 

(i)            a Person that is listed in the annex to, or it otherwise subject to the provisions of, Executive Order No. 13224 on Terrorist Financing effective September 24, 2001 (the “Executive Order”);

 

(ii)           a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order;

 

(iii)          a Person with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any laws with respect to terrorism or money laundering;

 

(iv)          a Person that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order;

 

(v)           a Person that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) at its official website or any replacement website or other replacement official publication of such list or is currently subject to any U.S. economic sanctions administered by OFAC;  or

 

(vi)          a Person who is on the “Financial Sanctions Consolidated List of Targets” administered and enforced by the governmental institutions and agencies of the United Kingdom and any other list or public designation made by any the United Nations Security Council, the European Union or other applicable Governmental Authority.

 

4.22        Bank Accounts.  Exhibit C hereto contains a complete and correct list of the names and locations of all banks in which each Parent and each of its Subsidiaries have accounts or safe deposit boxes, the designation of each such account and safe deposit box, and the names of all persons authorized to draw on or have access to each such account and safe deposit box.

 

4.23        Disclosure.  No representation or warranty made by the Borrowers in any Loan Document and no written factual information furnished to the Lenders by or on behalf of or at the request of the Borrowers in connection with any of the transactions contemplated by the Loan Documents contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements contained therein taken as a whole not misleading in light of the circumstances in which they are made (after giving effect to all supplements and updates provided thereto).

 

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SECTION V

 

AFFIRMATIVE COVENANTS

 

The Borrowers covenant that so long as any Loan or other Obligation remains outstanding or the Lenders have any obligation to make any Loan hereunder:

 

5.1          Financial Statements.  The Borrowers shall furnish to the Lenders:

 

(a)           as soon as available to the Borrowers, but in any event within ninety (90) days after the end of each fiscal year, each Borrower’s consolidated balance sheet as of the end of and related consolidated statements of income, retained earnings and cash flow for such year, prepared in accordance with GAAP and audited and certified without qualification or exception (except to the extent such qualification or exception is a result of a current maturity of any Indebtedness or any prospective financial covenant default) by the Borrowers’ Accountants; and, concurrently with such financial statements (i) a copy of the Borrowers’ Accountants’ management report and a written statement by the Borrowers’ Accountants that, in the making of the audit necessary for their report and opinion upon such financial statements they have obtained no knowledge of any Default or, if in the opinion of such accountants any such Default exists, they shall disclose in such written statement the nature and status thereof and (ii) the combined balance sheet of both Borrowers and all of their Subsidiaries as of the end of such year and related combined statements of income, retained earnings and cash flow of the Borrowers and all of their Subsidiaries for such year, prepared in accordance with GAAP and certified by a Responsible Officer of each Borrower;

 

(b)           as soon as available to the Borrowers, but in any event within forty five (45) days after the end of each quarter (i) each Borrower’s consolidated balance sheet as of the end of, and related consolidated statements of income, retained earnings and cash flow for, the quarter then ended and portion of the year then ended and (ii) a combined balance sheet of the Borrowers and all of their Subsidiaries as of the end of, and related combined statements of income, retained earnings and cash flow of the Borrowers and all of their Subsidiaries for the quarter then ended and portion of the year then ended, in each case, prepared in accordance with GAAP and certified by a Responsible Officer of the applicable Borrower(s), as the case may be, except for lack of footnotes and subject to normal, recurring year-end adjustments that shall not in the aggregate be material in amount;

 

(c)           as soon as available to the Borrowers, but in any event within thirty (30) days after the end of each month (i) each Borrower’s consolidated balance sheet as of the end of, and related consolidated statements of income, retained earnings and cash flow for, the month then ended and the portion of the year then ended and (ii) a combined balance sheet of the Borrowers and all of their Subsidiaries as of the end of, and related combined statements of income, retained earnings and cash flow of the Borrowers and all of their Subsidiaries for the month then ended and portion of the year then ended, in each case, prepared in accordance with GAAP and certified by a Responsible Officer of such Borrower(s), except for lack of footnotes and subject to normal, recurring year-end adjustments that shall not in the aggregate be material in amount;

 

(d)           concurrently with the delivery of the financial statements pursuant to subsections (a) and (b) of this Section 5.1, a report in substantially the form of Exhibit D hereto signed on behalf of each Borrower by a Responsible Officer;

 

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(e)           as soon as available, but in any event within ten (10) Business Days after the end of each month or more frequently as the Agent may elect, a Borrowing Base Report, together with such other information regarding Eligible Leases as the Agent may require;

 

(f)            within ten (10) Business Days after request by the Agent, but not more often than monthly absent a Default, Receivables and accounts payable aging reports in form satisfactory to the Agent;

 

(g)           within thirty (30) days after the first day of each fiscal year, each Borrower’s projections for such fiscal year, prepared on a quarterly basis for year 2015 and on an annual basis thereafter, and including consolidated and combined balance sheets, statements of income, retained earnings and cash flows and credit line availability and assumptions made in connection with each of the foregoing;

 

(h)           promptly after the receipt thereof by the Borrowers, copies of any reports (including any so-called management letters) submitted to either Parent or either Borrower by independent public accountants in connection with any annual or interim review of the accounts of either Parent or either Borrower made by such accountants;

 

(i)            if either a Borrower or a Parent becomes a reporting company under the Securities Exchange Act of 1934, as amended, copies of all 10-K’s, 10-Q’s, 8-K’s, proxy statements and any other financial statements and reports as such Parent or Borrower may file with the Securities and Exchange Commission or any other Governmental Authority or send to the stockholders of such Parent or Borrower, when filed with the Securities and Exchange Commission or such other Governmental Authority or sent to such stockholders (or on the next Business Day if filed after the close of business of the Agent);

 

(j)            at least thirty (30) days prior to the date any amendments or modifications are made to the agreements and other instruments evidencing Indebtedness for borrowed money of the Borrowers (other than Obligations) which is not Subordinated Debt, notification setting forth in detail the proposed amendments or modifications; and

 

(k)           from time to time, such other financial data and information about either Parent, either Borrower and their Subsidiaries as the Agent or the Lenders may reasonably request.

 

5.2          Conduct of Business; Compliance.  Each Borrower and each of its Subsidiaries shall:

 

(a)           duly observe and comply in all material respects with all material contracts and with all laws, regulations, decrees, orders, judgments and valid requirements of any governmental authorities applicable to its corporate or limited liability company existence, rights and franchises, to the conduct of its business and to its property and assets (including without limitation all Environmental Laws and ERISA), and shall maintain and keep in full force and effect and comply in all material respects with all licenses and permits necessary to the proper conduct of its business;

 

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(b)           maintain its existence and remain or engage substantially in the same business as that in which it is now engaged and in no unrelated business; and

 

(c)           provide, to the extent commercially reasonable, such information and take such actions as are reasonably requested by the Agent or any Lenders in order to assist the Agent and the Lenders in maintaining compliance with the Patriot Act and similar laws or regulations.

 

5.3          Maintenance and Insurance.

 

(a)           Each Borrower and each of its Subsidiaries shall maintain their properties in good repair, working order and condition as required for the normal conduct of their business.

 

(b)           Each Borrower shall maintain, or cause its lessees to maintain, with responsible insurance companies such insurance on such of its properties, in such amounts and against such risks as are customarily maintained by similar businesses in the micro leasing industry; provided, that each Borrower may continue to self-insure Equipment in the manner in which it is currently conducting its business; and provided, further, that each Borrower shall (x) not materially change the manner in which it self-insures Equipment without the prior written consent of the Agent; or (y) file with the Agent upon the request of the Agent a detailed list of the insurance then in effect, stating, as applicable, the names of the insurance companies, the amounts and rates of the insurance, dates of expiration thereof and the properties and risks covered thereby each naming the Agent as “Mortgagee” and “Loss Payee” together with a Lender’s Loss Payable Endorsement; and (z) within forty five (45) days after notice in writing from the Agent, obtain such additional insurance as the Agent may reasonably request including, without limitation, business interruption coverages and general and product liability coverages naming the Agent as an “additional insured”.

 

5.4          Taxes.  Each Borrower shall pay or cause to be paid all taxes, assessments or governmental charges on or against it or any of its Subsidiaries or its or their properties on or prior to the time when they become due; except for any tax, assessment or charge that is being contested in good faith by appropriate proceedings and with respect to which adequate reserves have been established and are being maintained in accordance with GAAP if no Encumbrance shall have been filed to secure such tax, assessment or charge.

 

5.5          Inspection.  Each Borrower shall permit the Agent, any Lender and their designees, at any reasonable time and at reasonable intervals of time, and upon reasonable notice (or if a Default shall have occurred and is continuing, at any time and without prior notice), to (i) visit and inspect the properties of such Borrower and its Subsidiaries, (ii) examine and make copies of and take abstracts from the books and records of such Borrower and its Subsidiaries, and (iii) discuss the affairs, finances and accounts of such Borrower and its Subsidiaries with their appropriate officers, employees and independent accountants, all at the reasonable expense of such Borrower; provided that unless an Event of Default has occurred and is continuing (x) such inspections and visits will not exceed three (3) times per year (however, the parties hereto hereby acknowledge that such inspections and visits are expected to occur only two (2) times per year) and (y) the reimbursable expenses payable by the Borrowers under this Section 5.5 shall be limited to those incurred by the Agent.  Without limiting the generality of the foregoing, each Borrower will permit periodic reviews (as determined by the Agent) of the books and records of

 

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such Borrower and its Subsidiaries to be carried out at the Borrowers’ expense by commercial finance examiners (whether employed by the Agent or by third parties) designated by the Agent.  Each Borrower shall also permit the Agent to arrange for verification of Eligible Lease Receivables, under reasonable procedures, directly with any account debtors or by other methods.  The Agent will make commercially reasonable efforts to minimize its examination expenses under this Section 5.5.

 

5.6          Maintenance of Books and Records.  Each Borrower and each of its Subsidiaries shall keep adequate books and records of account, in which true and complete entries will be made reflecting all of its business and financial transactions in accordance with GAAP and applicable law.

 

5.7          Use of Proceeds.

 

(a)           The Borrowers will use the proceeds of Loans solely to refinance existing Loans, to fund a one-time distribution by TimePayment to MicroFinancial upon the consummation of the Merger to be used in connection with the Acquisition and to repay all amounts outstanding under the Bridge Loan Agreement, to finance Receivables arising from Eligible Leases, for the working capital needs of the Borrowers, to finance Permitted Acquisitions and Permitted Portfolio Acquisitions and for ongoing general corporate purposes and related fees and expenses; provided that in no event shall NewCo use any proceeds of the Loans prior to the consummation of the Merger.

 

(b)           No portion of any Loan shall be used for the “purpose of purchasing or carrying” any “margin stock” or “margin security” as such terms are used in Regulations T, U and X of the Board of Governors of the Federal Reserve System, or otherwise in violation of such regulations.

 

(c)           The Borrowers will not use the proceeds of any Loan, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the FCPA.

 

5.8          Further Assurances.

 

(a)           At any time and from time to time each Borrower shall, and shall cause each of its Subsidiaries to, execute and deliver such further documents and take such further action as may reasonably be requested by the Agent to effect the purposes of the Loan Documents.

 

(b)           Upon the written request of the Agent after the Closing Date, the Borrower shall use commercially reasonable efforts to cause each party thereto (other than the Agent) to execute and deliver the Securities Account Control Agreement within 21 days following any such request.

 

5.9          Notification Requirements.  The Borrowers shall furnish to the Agent:

 

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(a)           immediately upon becoming aware of the existence of any condition or event that constitutes a Default, written notice thereof specifying the nature and duration thereof and the action being or proposed to be taken with respect thereto;

 

(b)           promptly upon becoming aware of any litigation, or of any investigative proceedings by a governmental agency or authority, commenced or threatened against either Borrower or any of their Subsidiaries of which they have notice, the outcome of which, individually or in the aggregate, would or might have a Material Adverse Effect, written notice thereof and the action being or proposed to be taken with respect thereto; and

 

(c)           promptly after any occurrence or after becoming aware of any condition affecting either Borrower or any Subsidiary which might constitute a Material Adverse Effect.

 

5.10        Borrower’s Cash Accounts.  Except as approved by the Agent (such approval not to be unreasonably withheld, conditioned or delayed), each Borrower and its Subsidiaries (other than any Special Purpose Subsidiary) (but not, for the avoidance of doubt, the Parents or any of their Affiliates (other than the Borrowers and their Subsidiaries)) will maintain their depository, blocked and disbursement accounts and treasury management relationships with the Agent pursuant to agreements reasonably satisfactory to the Agent and the Borrowers.  Upon the reasonable written request of the Agent, each Borrower and such Subsidiaries that are required to be Guarantors will use their commercially reasonable efforts to obtain account control agreements for the benefit of the Agent and the Secured Parties from such other banks holding their accounts as the Agent shall specify in such request, and the Agent shall be entitled to require the effectiveness of such an account control agreement as a condition precedent to any approval to be granted in connection with the immediately preceding sentence.

 

5.11        ERISA Compliance and Reports.

 

(a)           Each Plan shall comply in all material respects with ERISA and the Code, except to the extent failure to comply in any instance would not have a Material Adverse Effect.

 

(b)           With respect to any Plan, each Borrower shall, or shall cause its ERISA Affiliates to, furnish to the Lender promptly (i) as soon as possible and in any event within ten (10) days after such Borrower or any of its ERISA Affiliates knows that any ERISA Event has occurred or is expected to occur, a statement of a Responsible Officer of such Borrower describing such ERISA Event, including copies of any notice concerning such ERISA Event received from the PBGC, a plan administrator, or from a Multiemployer Plan sponsor, and the action, if any, such Borrower or such ERISA Affiliate proposes to take with respect thereto; and (ii) promptly after filing thereof, a copy of the annual report of each Pension Plan (Form 5500 or comparable form) required to be filed with the IRS and/or the United States Department of Labor.  Promptly after the adoption of any Pension Plan, such Borrower shall notify the Lender of such adoption.

 

5.12        Environmental Compliance.

 

(a)           Each Borrower and its Subsidiaries will comply in all material respects with all applicable Environmental Laws in all jurisdictions in which any of them operates now or in the future, and each Borrower and its Subsidiaries will comply in all material respects with all

 

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such Environmental Laws that may in the future be applicable to such Borrower’s or any Subsidiary’s business, properties and assets.

 

(b)           If either Borrower or any Subsidiary shall (i) receive notice that any material violation of any Environmental Law may have been committed or is about to be committed by such Borrower or any Subsidiary, (ii) receive notice that any administrative or judicial complaint or order has been filed or is about to be filed against such Borrower or any Subsidiary alleging a material violation of any Environmental Law requiring such Borrower or any Subsidiary to take any action in connection with the release of Hazardous Materials into the environment or (iii) receive any notice from a Governmental Authority or private party alleging that such Borrower or any Subsidiary may be liable or responsible for any material amount of costs associated with a response to or cleanup of a release of Hazardous Materials into the environment or any damages caused thereby, such Borrower or such Subsidiary shall provide the Agent with a copy of such notice within five (5) days after such Borrower or such Subsidiary’s receipt thereof.  Within fifteen (15) days after either Borrower or any Subsidiary has learned of the enactment or promulgation of any Environmental Law which may result in any Material Adverse Effect, such Borrower or such Subsidiary shall provide the Agent with notice thereof.

 

SECTION VI

 

FINANCIAL COVENANTS

 

The Borrowers covenant that so long as any Loan or other Obligation (other than any contingent indemnification or reimbursement Obligation, to the extent no claim giving rise thereto has been asserted in writing) remains outstanding or the Lenders have any obligation to make any Loan hereunder:

 

6.1          Interest Coverage.  The Borrowers shall not permit the Interest Coverage Ratio during any four consecutive fiscal quarters (as determined at the end of each fiscal quarter for the four quarters then ended taken as a single fiscal period) to be less than (a) 3.00:1.00 during 2014, (b) 2.75:1.00 during 2015, (c) 2.25:1.00 during 2016, and (d) 2.00:1:00 thereafter.

 

6.2          Leverage Ratio.  The Borrowers shall not permit the Leverage Ratio as of the end of any fiscal quarter to exceed 4.00 to 1.00.

 

6.3          Asset Quality.  The Borrowers shall not permit as of the end of any fiscal quarter the amount of Receivables over ninety (90) days past due to exceed eighteen and three quarters percent (18.75%) of Gross Lease Installments.

 

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SECTION VII

 

NEGATIVE COVENANTS

 

The Borrowers covenant that so long as any Loan or other Obligation (other than any contingent indemnification or reimbursement Obligation, to the extent no claim giving rise thereto has been asserted in writing) remains outstanding or the Lenders have any obligation to make any Loan hereunder:

 

7.1          Indebtedness.  Neither Borrower nor any of their Subsidiaries shall create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness other than the following:

 

(a)           Obligations;

 

(b)           Indebtedness existing as of the date of this Agreement and disclosed on Exhibit C hereto and renewals and refinancings thereof, but not any increase in the principal amounts thereof;

 

(c)           Indebtedness for taxes, assessments or governmental charges to the extent that payment therefor shall at the time not be required to be made in accordance with Section 5.4;

 

(d)           current trade liabilities on open account for the purchase price of services, materials and supplies incurred by either Borrower in the ordinary course of business (not as a result of borrowing), so long as all of such open account Indebtedness shall be promptly paid and discharged when due or in conformity with customary trade terms and practices, except for any such open account Indebtedness which is being contested in good faith by either Borrower, as to which adequate reserves required by GAAP have been established and are being maintained and as to which no Encumbrance has been placed on any property of either Borrower or any of its Subsidiaries;

 

(e)           Guarantees permitted under Section 7.2 hereof;

 

(f)            Subordinated Debt;

 

(g)           Indebtedness assumed in connection with Permitted Acquisitions to the extent permitted by Section 7.8(g)(ii);

 

(h)           Indebtedness under the Acquirer Subordinated Note;

 

(i)            so-called “second lien term” Indebtedness in an amount not to exceed $20,000,000, in the aggregate, at any time outstanding incurred after the date hereof, provided that, (i) the amount of annual principal payments on such Indebtedness shall not exceed one percent (1%) of the original principal amount of such Indebtedness and (ii) such Indebtedness shall not mature sooner than twelve (12) months after Maturity Date;

 

(j)            Indebtedness owed to a Borrower; and

 

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(k)           other Indebtedness in a principal amount not to exceed $1,500,000, in the aggregate, at any time outstanding.

 

7.2          Contingent Liabilities.  Neither Borrower nor any of their Subsidiaries shall create, incur, assume, guarantee or be or remain liable with respect to any Guarantees other than (i) Guarantees existing on the date of this Agreement and disclosed on Exhibit C hereto, (ii) Guarantees resulting from the endorsement of negotiable instruments for deposit or collection in the ordinary course of business and (iii) Guarantees that constitute Subordinated Debt.

 

7.3          Encumbrances.  Neither Borrower nor any of their Subsidiaries shall create, incur, assume or suffer to exist any Encumbrance of any kind upon or with respect to any of their property or assets, or assign or otherwise convey any right to receive income, including the sale or discount of Receivables with or without recourse, except the following (“Permitted Encumbrances”):

 

(a)           Encumbrances in favor of the Agent or any of the Secured Parties to secure Obligations;

 

(b)           Encumbrances existing as of the date of this Agreement and disclosed in Exhibit C hereto;

 

(c)           liens for taxes, fees, assessments and other governmental charges to the extent that payment of the same may be postponed or is not required in accordance with the provisions of Section 5.4;

 

(d)           landlords’ and lessors’ liens in respect of rent not in default or liens in respect of pledges or deposits under workmen’s compensation, unemployment insurance, social security laws, or similar legislation (other than ERISA) or in connection with appeal and similar bonds incidental to litigation; mechanics’, warehouseman’s, laborers’ and materialmen’s and similar liens, if the obligations secured by such liens are not then delinquent or are being contested in good faith; liens securing the performance of bids, tenders, contracts (other than for the payment of money); and liens securing statutory obligations or surety, indemnity, performance, or other similar bonds incidental to the conduct of either Borrower’s or a Subsidiary’s business in the ordinary course and that do not in the aggregate materially detract from the value of its property or materially impair the use thereof in the operation of its business;

 

(e)           judgment liens securing judgments that are fully covered by insurance, and shall not have been in existence for a period longer than ten (10) days after the creation thereof or, if a stay of execution shall have been obtained, for a period longer than ten (10) days after the expiration of such stay;

 

(f)            easements, rights of way, restrictions and other similar charges or Encumbrances relating to real property and not interfering in a material way with the ordinary conduct of the Borrowers’ business;

 

(g)           restrictions under federal and state securities laws regarding the transfer or issuance of securities;

 

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(h)           liens constituting a renewal, extension or replacement of any Permitted Encumbrance;

 

(i)            sales permitted under Section 7.4(c) hereof, provided that no purchaser or other Person involved in such transactions shall receive or retain any Encumbrance on Collateral;

 

(j)            Encumbrances securing Indebtedness permitted pursuant to Section 7.1(i); provided that such Encumbrances shall be subordinated to the Encumbrances described in Section 7.3(a) on terms and conditions reasonably satisfactory to the Agent; or

 

(k)           Encumbrances not otherwise permitted by this Section 7.3 that do not encumber any Collateral contained in the Borrowing Base, so long as the aggregate outstanding principal amount of the obligations secured thereby shall not exceed $5,000,000 at any time.

 

7.4          Merger; Sale or Lease of Assets; Liquidation.  Neither Borrower nor any of their Subsidiaries shall liquidate, merge or consolidate into or with any other person or entity, or sell, lease or otherwise dispose of any assets or properties, other than

 

(a)           the disposition of scrap, waste and obsolete or unusable items and Qualified Investments, in each case in the ordinary course of business;

 

(b)           Permitted Acquisitions;

 

(c)           sales of Leases and related Equipment and Receivables to a Special Purpose Subsidiary if all of the following conditions are satisfied:

 

(i)            the Borrowers shall have given written notice to the Agent at least thirty (30) days prior to such sale;

 

(ii)           immediately prior to such sale and after giving effect thereto no Default shall have occurred and be continuing;

 

(iii)          the credit quality of the Eligible Receivables after giving effect to such sale shall be at least as good as before giving effect to such sale as determined by the Agent, including, without limitation, by reference to the Credit Scoring System;

 

(iv)          copies of all documents relating to such sale and any other documents or information (financial or otherwise) reasonably requested by the Agent shall have been delivered to the Agent as and when requested;

 

(v)           one hundred percent (100%) of the proceeds of any such sale shall be applied to the repayment of the Obligations; and

 

(vi)          all such sales shall be without recourse to the Borrowers and their Subsidiaries;

 

(d)           sales of Leases and related Equipment and Receivables if all of the following conditions are satisfied:

 

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(i)            the Borrowers shall have given written notice to the Agent at least thirty (30) days prior to such sale;

 

(ii)           immediately prior to such sale and after giving effect thereto no Default shall have occurred and be continuing;

 

(iii)          the credit quality of the Eligible Receivables after giving effect to such sale shall be at least as good as before giving effect to such sale as determined by the Agent, including, without limitation, by reference to the Credit Scoring System;

 

(iv)          prior to such sale, the Borrowers shall provide to the Agent a revised Borrowing Base Certificate excluding the assets to be sold with the credit grade, principal amount, amount of Loans funded as of such date, and the agreed-upon sale price of each asset to be sold;

 

(v)           copies of all documents relating to such sale and any other documents or information (financial or otherwise) reasonably requested by the Agent shall have been delivered to the Agent as and when requested;

 

(vi)          one hundred percent (100%) of the proceeds of any such sale shall be applied to the repayment of the Obligations then outstanding;

 

(vii)         the Net Present Value of Lease Receivables to be sold pursuant to this Section 7.4(d) in any thirty (30) day period shall not exceed the lesser of (A) $10,000,000 and (B) five percent (5%) of the average Borrowing Base Availability during such thirty (30) day period; and

 

(viii)        all such sales shall be without recourse to the Borrowers and their Subsidiaries;

 

(e)           sales, leases or other dispositions of assets or properties from a Borrower or a Subsidiary of a Borrower to a Borrower;

 

(f)            as part of the Reorganization; and

 

(g)           the sale, lease or other disposition of assets or properties, so long as no Event of Default then exists or would arise as a result of such transaction; and provided that the aggregate fair market value of all such assets or properties shall not exceed $5,000,000 between the Closing Date and the Maturity Date.

 

7.5          Subsidiaries.  Neither Borrower shall create or acquire any Subsidiary, other than a Special Purpose Subsidiary, unless such Subsidiary becomes a Guarantor pursuant to the Guaranty within 30 days after such creation or acquisition.  Neither Borrower shall create or acquire any Subsidiary, including a Special Purpose Subsidiary, unless simultaneously with such creation or acquisition, such Borrower pledges to the Agent for the benefit of the Lenders all outstanding capital of such Subsidiary and delivers to the Agent all stock certificates therefore in accordance with the applicable Security Documents.  Neither Borrower shall permit any of its Subsidiaries to issue any additional shares of Capital Stock, any options therefor or any securities

 

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convertible thereto, other than to any Borrower, which shall be pledged to the Agent for the benefit of the Lenders pursuant to the Security Documents.  Neither Borrower nor any of their Subsidiaries shall sell, transfer or otherwise dispose of any Capital Stock of a Subsidiary, except to any Borrower or any of its wholly-owned Subsidiaries.  Neither Borrower shall, and shall not permit any of their Subsidiaries to, create or suffer to exist any consensual Encumbrances or restrictions on the ability of any Subsidiary to pay dividends or make any other distributions on its Capital Stock held by such Borrower or pay any Indebtedness owed to such Borrower or any Subsidiary or to make loans or advances or transfer any of its assets to such Borrower or any other Subsidiary, in each case other than pursuant to the Loan Documents.

 

7.6          Restricted Payments.

 

(a)           Neither Borrower nor any of their Subsidiaries shall pay, make, declare or authorize any Restricted Payment other than:

 

(i)            compensation paid to, and the reimbursement of reasonable expenses of, employees, officers and directors in the ordinary course of business and consistent with past practices, including without limitation severance pay and bonuses approved by either Parent’s Board of Directors;

 

(ii)           dividends payable solely in Capital Stock;

 

(iii)          dividends paid by any Subsidiary to the Borrowers;

 

(iv)          cash distributions paid by a Borrower to its Parent for distribution within fifteen (15) Business Days to such Parent’s equityholders or members, payments on the Acquirer Subordinated Note and management, consulting, overhead, indemnity, guarantee or other similar fees or charges paid by the Borrowers to any Affiliate, provided that (x) all of the foregoing payments shall not exceed, in the aggregate in any fiscal year, an amount equal to one hundred percent (100%) of Combined Net Income for the immediately preceding fiscal year and (y) both at the time any such payment is declared or made, and after giving effect to the payment thereof (i) no Default shall have occurred and be continuing and (ii) Minimum Liquidity shall be no less than $5,000,000 for each day of the thirty (30) days preceding the date of payment;

 

(v)           amounts distributed to MicroFinancial to be used by it in connection with the consummation of the Merger and pursuant to the Merger Agreement, including the appraised value of any Dissenting Shares (as defined in the Merger Agreement), and to repay Indebtedness under the Bridge Loan Agreement; and

 

(vi)          Restricted Payments paid to either of the Borrowers.

 

(b)           Notwithstanding anything to the contrary contained in Section 7.6(a):

 

(i)            no Restricted Payments may be made prior to the consummation of the Merger; and

 

(ii)           from time to time during or following the end of any fiscal year during which either Borrower was a Pass Through Entity, such Borrower may distribute to the holders

 

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of its equity interests in cash an aggregate amount not in excess of the maximum amount of Federal and state income taxes (and any interest and penalties thereon) for such fiscal year, calculated at the then highest marginal Federal and state tax rates, attributable to the ownership of equity interests in such Borrower.  The amount of all distributions under this Section 7.6(b)(ii) shall be verified by a Responsible Officer of such Borrower in the certificate required under Section 5.1(d) and in the written statement required of the Borrowers’ Accountants under Section 5.1(a).

 

7.7          Payments on Subordinated Debt.  The Borrowers shall not make any payment or prepayment of principal of, or interest on or any other payment in respect of, Subordinated Debt, except to the extent permitted by (a) the Acquirer Subordinated Note with respect to the Indebtedness thereunder or (b) with respect to any other Subordinated Debt, the applicable agreement between the Agent and the holders of such Subordinated Debt establishing the terms of subordination in accordance with Section 7.1(f).

 

7.8          Investments; Purchases of Assets.  Neither Borrower nor any of their Subsidiaries shall make or maintain any Investments or purchase or otherwise acquire any material amount of assets other than:

 

(a)           Investments existing on the date hereof in Subsidiaries;

 

(b)           Qualified Investments;

 

(c)           Capital Expenditures;

 

(d)           purchases of Equipment, Leases and inventory in the ordinary course of business;

 

(e)           purchases of assets or property from a Borrower or a Subsidiary of a Borrower;

 

(f)            normal trade credit extended in the ordinary course of business and consistent with prudent business practice;

 

(g)           the purchase of all or substantially all of the assets or outstanding Capital Stock of any other Person or the merger or consolidation of any other Person with or into such Borrower or a Subsidiary of such Borrower, in each case if all of the following conditions are satisfied (a “Permitted Acquisition”):

 

(i)            if the proposed transaction involves a merger or consolidation, upon the completion of such merger or consolidation the surviving party shall be such Borrower or a wholly-owned Subsidiary of such Borrower;

 

(ii)           the total consideration (including assumed Indebtedness) paid by the Borrowers in connection with all Permitted Acquisitions shall not exceed $10,000,000 in any fiscal year and, during the term hereof, shall not exceed $30,000,000 in the aggregate;

 

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(iii)          the assets, business or Person acquired in any Permitted Acquisition must be in the same or a substantially similar line of business as that of the Borrowers;

 

(iv)          both immediately before and immediately after the consummation of any Permitted Acquisition no Default shall have occurred and be continuing;

 

(v)           if total consideration for the proposed acquisition is greater than or equal to $5,000,000, such Borrower shall have delivered to the Agent and the Lenders historical financials of the proposed target and projections of consolidated cash flows prepared on a monthly basis for the Parents and their Subsidiaries for the twelve (12) month period after the proposed acquisition, both with and without giving effect to the proposed acquisition, and such projections shall demonstrate to the reasonable satisfaction of the Agent that combined cash flows of the Parents and their Subsidiaries for the twelve (12) month period after the proposed acquisition will be greater than the combined cash flows of the Parents and their Subsidiaries for the twelve (12) month period prior to when the proposed acquisition is consummated;

 

(vi)          if total consideration for the proposed acquisition is greater than or equal to $5,000,000, such Borrower shall have delivered to the Agent and the Lenders pro forma calculations giving effect to the proposed acquisition demonstrating to the reasonable satisfaction of the Agent the Borrowers’ compliance with the covenants set forth in Section VI for the four (4) fiscal quarters following the proposed acquisition;

 

(vii)         immediately after consummation of each Permitted Acquisition, the Borrowing Base shall exceed Total Outstandings by at least $7,500,000;

 

(viii)        the proposed transaction is accomplished by mutual agreement between such Borrower and the Person to be acquired or whose assets or business is to be acquired and not as a result of a tender offer or other type of so-called “hostile takeover” transaction; and

 

(ix)          the proposed transaction is not a purchase of a portfolio of Leases, related Equipment and Receivables (and no other assets) from any other Person;

 

provided, however, no Leases or Equipment acquired as part of a Permitted Acquisition for which total consideration is greater than or equal to $5,000,000 shall constitute Eligible Leases or Eligible Equipment unless such Leases and Equipment have been approved by the Majority Lenders (such approval not to be unreasonably withheld), which approval, or denial thereof, shall be notified to the Borrowers by the Agent in writing within fifteen (15) Business Days after all of the conditions set forth in this Section 7.8(g) have been satisfied;

 

(h)           the purchase of a portfolio of Leases, related Equipment and Receivables (and no other assets) from any other Person if all of the following conditions are satisfied (a “Permitted Portfolio Acquisition”):

 

(i)            the total consideration (which shall not include any assumed Indebtedness or any other pre-closing liabilities) paid by the Borrowers in connection with all Permitted Portfolio Acquisitions shall not exceed $15,000,000 in any fiscal year;

 

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(ii)           the assets acquired in any Permitted Portfolio Acquisition must be in the same or a substantially similar line of business as that of the Borrowers;

 

(iii)          both immediately before and immediately after the consummation of any Permitted Portfolio Acquisition no Default shall have occurred and be continuing;

 

(iv)          the proposed purchase is not a Permitted Acquisition;

 

(v)           if total consideration for the proposed purchase is greater than or equal to $7,500,000, the Borrowers shall have delivered to the Agent and the Lenders historical financials of the proposed seller (or such seller’s assets, being acquired, to the extent available) and projections of combined cash flows prepared on a monthly basis for the Parents and their Subsidiaries for the twelve (12) month period after the proposed purchase, both with and without giving effect to the proposed purchase, and such projections shall demonstrate to the reasonable satisfaction of the Agent that combined cash flows of the Parents and their Subsidiaries for the twelve (12) month period after the proposed purchase will be greater than the combined cash flows of the Parents and their Subsidiaries for the twelve (12) month period prior to when the proposed acquisition is consummated;

 

(vi)          if total consideration for the proposed purchase is greater than or equal to $7,500,000, the Borrowers shall have delivered to the Agent and the Lenders pro forma calculations giving effect to the proposed purchase demonstrating to the reasonable satisfaction of the Agent the Borrowers’ compliance with (x) the covenants set forth in Section VI for the four (4) fiscal quarters following the proposed purchase and (y) the condition set forth in clause (vii) below;

 

(vii)         immediately after giving effect to each Permitted Portfolio Acquisition, the Borrowing Base shall exceed Total Outstandings by at least $7,500,000; and

 

(viii)        the proposed transaction is accomplished by mutual agreement between such Borrower and the Person whose assets are to be purchased and not as a result of a tender offer or other type of so-called “hostile takeover” transaction;

 

provided, however, no Leases or Equipment purchased as part of a Permitted Portfolio Acquisition for which total consideration is greater than or equal to $7,500,000 shall constitute Eligible Leases or Eligible Equipment unless such Leases and Equipment have been approved by the Majority Lenders (such approval not to be unreasonably withheld), which approval, or denial thereof, shall be notified to the Borrowers by the Agent in writing within fifteen (15) Business Days after all of the conditions set forth in this Section 7.8(h) have been satisfied;

 

(i)            as part of the Reorganization; and

 

(j)            other Investments not to exceed $1,500,000, in the aggregate.

 

7.9          ERISA Compliance.  Neither Borrower nor any of their ERISA Affiliates nor any Plan shall (i) engage in any Prohibited Transaction which would have a Material Adverse Effect, (ii) incur any “accumulated funding deficiency” (within the meaning of Section 412(a) of the Code and Section 302 of ERISA), whether or not waived, (iii) permit to exist any material

 

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amount of “unfunded benefit liabilities” (within the meaning of Section 4001(a)(18) of ERISA), (iv) terminate any Pension Plan in a manner which could result in the imposition of a lien on any property of a Borrower or any of its Subsidiaries, (v) fail to make any required contribution to any Multiemployer Plan or (vi) completely or partially withdraw from a Multiemployer Plan if such complete or partial withdrawal will result in any material withdrawal liability under Title IV of ERISA.

 

7.10        Transactions with Affiliates.  The Borrowers will not, and will not permit any of their Subsidiaries to, directly or indirectly, enter into any purchase, sale, lease or other transaction with any Affiliate except (i) transactions in the ordinary course of business on terms that are no less favorable to the Borrowers than those which might be obtained at the time in a comparable arm’s-length transaction with any Person who is not an Affiliate, (ii) employment contracts with senior management of the Borrowers entered into in the ordinary course of business and consistent with prudent business practices, (iii) sales permitted under Section 7.4(c) and (iv) the Reorganization.  Notwithstanding the foregoing, the Borrowers will not, and will not permit any Subsidiary to, directly or indirectly, pay any management, consulting, overhead, indemnity, guarantee or other similar fee or charge to any Affiliate, except to the extent permitted under Section 7.6.

 

7.11        Fiscal Year.  The Borrowers and their Subsidiaries shall not change their fiscal years without the prior written consent of the Agent.

 

7.12        Underwriting Procedures.  The Borrowers shall not make any material change in their underwriting and credit approval standards or procedures or the Credit Scoring System without the prior written consent of the Majority Lenders.

 

7.13        Compliance with Patriot Act, FCPA, and OFAC.  Neither Borrower nor any Subsidiary of the Borrowers shall knowingly, directly or indirectly, use the proceeds of the Loans or otherwise knowingly make available such proceeds or conduct any business or engage in making or receiving any contribution of funds, goods or services to or for the benefit of any Person, for the purpose of financing the activities of any Person currently subject to any U.S. economic sanctions administered by OFAC or in any other manner that would result in any Loan Party or any Lender being in breach of any applicable economic, financial or other sanctions laws, regulations or embargoes, including but not limited to the Executive Order, OFAC, the FCPA, and the Patriot Act.

 

SECTION VIII

 

DEFAULTS

 

8.1          Events of Default.  There shall be an Event of Default hereunder if any of the following events occurs:

 

(a)           either Borrower shall fail to pay (i) any principal of any Loan when due and payable or (ii) any interest, fees or other amounts owing under any Loan Document or in respect of any Obligation within three (3) Business Days after the same shall become due and

 

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payable, whether at maturity or at any accelerated date of maturity or at any other date fixed for payment; or

 

(b)           either Borrower or any Subsidiary shall fail to perform or comply with any term, covenant or agreement applicable to it contained in Sections 5.1, 5.2(b), 5.2(c), 5.5, 5.6, 5.7, 5.9, VI and VII of this Agreement; or

 

(c)           either Borrower or any Subsidiary shall fail to perform or comply with any term, covenant or agreement applicable to them (other than as specified in subsections 8.1(a) or (b) hereof) contained in this Agreement or any other Loan Document and such default shall continue for thirty (30) days; or

 

(d)           any representation or warranty of the Borrowers made in this Agreement or any other Loan Document or in any certificate, notice or other writing delivered hereunder or thereunder shall prove to have been false or incomplete in any material respect upon the date when made or deemed to have been made; or

 

(e)           either Borrower or any of their Subsidiaries shall be enjoined, restrained or in any other way prevented by a court, governmental or administrative order or other action from conducting all or any material part of its business; or

 

(f)            either Borrower or any of their Subsidiaries shall (i) fail to pay when due (after any applicable period of grace and any applicable waiver) any amount payable under any Material Indebtedness or under any agreement for the use of real or personal property requiring aggregate payments in excess of $100,000 in any twelve (12) month period, or (ii) fail to observe or perform any term, covenant or agreement evidencing or securing such Indebtedness or relating to such agreement for the use of real or personal property beyond the applicable cure periods contained therein, the result of which failure under this clause (ii) is to permit the holder of such Indebtedness to cause such Indebtedness to become due prior to its stated maturity or to permit the other party to such agreement for the use of real or personal property to terminate such agreement; or

 

(g)           either Borrower or any of their Subsidiaries shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or similar official of itself or of all or a substantial part of its property, (ii) be generally not paying its debts as such debts become due, (iii) make a general assignment for the benefit of its creditors, (iv) commence a voluntary case under the United States Bankruptcy Code (as now or hereafter in effect), (v) take any action or commence any case or proceeding under any law relating to bankruptcy, insolvency, reorganization, winding-up or composition or adjustment of debts, or any other law providing for the relief of debtors, (vi) fail to contest in a timely or appropriate manner, or acquiesce in writing to, any petition filed against it in an involuntary case under the United States Bankruptcy Code or other law, (vii) take any action under the laws of its jurisdiction of incorporation or organization similar to any of the foregoing, or (viii) take any corporate action for the purpose of effecting any of the foregoing; or

 

(h)           a proceeding or case shall be commenced against either Borrower or any of their Subsidiaries, without the application or consent of such Borrower or such Subsidiary in

 

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any court of competent jurisdiction, seeking (i) the liquidation, reorganization, dissolution, winding up, or composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of it or of all or any substantial part of its assets, or (iii) similar relief in respect of it, under any law relating to bankruptcy, insolvency, reorganization, winding-up or composition or adjustment of debts or any other law providing for the relief of debtors, and such proceeding or case shall continue undismissed, or unstayed and in effect, for a period of sixty (60) days; or an order for relief shall be entered in an involuntary case under the United States Bankruptcy Code, against such Borrower or Subsidiary; or action under the laws of the jurisdiction of incorporation or organization of either Borrower or any Subsidiary similar to any of the foregoing shall be taken with respect to either Borrower or such Subsidiary and shall continue unstayed and in effect for a period of sixty (60) days; or

 

(i)            a judgment or order for the payment of money shall be entered against either Borrower or any of their Subsidiaries by any court, or a warrant of attachment or execution or similar process shall be issued or levied against property of either Borrower or any Subsidiary, that in the aggregate exceeds $1,000,000 in value, the payment of which is not fully covered by insurance in excess of any deductibles not exceeding $100,000 in the aggregate, and such judgment, order, warrant or process shall continue undischarged or unstayed for thirty (30) days; or

 

(j)            either Borrower or any ERISA Affiliate shall fail to pay when due any material amount that they shall have become liable to pay to the PBGC or to a Plan under Title IV of ERISA, unless such liability is being contested in good faith by appropriate proceedings, such Borrower or the ERISA Affiliate, as the case may be, has established and is maintaining adequate reserves in accordance with GAAP and no lien shall have been filed to secure such liability; or the PBGC shall institute proceedings under Title IV of ERISA to terminate or to cause a trustee to be appointed to administer any such Plan or Plans; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any such Plan or Plans must be terminated; or

 

(k)           any of the Loan Documents shall be canceled, terminated, revoked or rescinded otherwise than in accordance with the express terms thereof or with the express prior written agreement, consent or approval of the Lenders, or any action at law or in equity or other legal proceeding to cancel, revoke or rescind any Loan Document shall be commenced by or on behalf of either Borrower, or any court or other governmental or regulatory authority or agency of competent jurisdiction shall make a determination that, or shall issue a judgment, order, decree or ruling to the effect that, any one (1) or more of the Loan Documents is illegal, invalid or unenforceable in accordance with the terms thereof, or any Encumbrance in favor of the Lender created under any of the Loan Documents shall at any time (other than by reason of the Lender relinquishing such Encumbrance) cease in any material respect to constitute a valid and, to the extent applicable, perfected Encumbrance on any material portion of the Collateral; or

 

(l)            any Change of Control.

 

8.2          Remedies.  Upon the occurrence of an Event of Default described in subsections 8.1(g) and (h), immediately and automatically, and upon the occurrence of any other

 

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Event of Default, at any time thereafter while such Event of Default is continuing, at the option of the Agent or the Majority Lenders and upon the Agent’s declaration:

 

(a)           the obligation of the Lenders to make any further Loans hereunder shall terminate;

 

(b)           the unpaid principal amount of the Loans together with accrued interest and all other Obligations shall become immediately due and payable without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived; and

 

(c)           the Agent and the Lenders may exercise any and all rights they have under this Agreement, the other Loan Documents or at law or in equity, and proceed to protect and enforce their respective rights by any action at law or in equity or by any other appropriate proceeding.

 

No remedy conferred upon the Agent and the Lenders in the Loan Documents is intended to be exclusive of any other remedy, and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or by any other provision of law.  Without limiting the generality of the foregoing or of any of the terms and provisions of any of the Security Documents, if and when the Agent exercises remedies under the Security Documents with respect to Collateral, the Agent may, in its sole discretion, determine which items and types of Collateral to dispose of and in what order and may dispose of Collateral in any order the Agent shall select in its sole discretion, and the Borrowers consent to the foregoing and waives all rights of marshalling with respect to all Collateral.

 

SECTION IX

 

ASSIGNMENT AND PARTICIPATION

 

9.1          Assignment.

 

(a)           Each Lender shall have the right to assign at any time any portion of its Commitment hereunder and its interests in the risk relating to any Loans in an amount equal to or greater than $5,000,000 to other Lenders or to banks or financial institutions reasonably acceptable to the Agent (each an “Assignee”); provided that any Lender which proposes to assign less than its total Commitment must retain a Commitment of at least $10,000,000, and provided, further, that if no Default or Event of Default shall have occurred and be continuing pursuant to Sections 8.1(g) or 8.1(h), each Assignee which is not a Lender, an Affiliate of a Lender or a Federal Reserve Bank shall be subject to prior approval by the Borrowers (such approval not to be unreasonably withheld or delayed).  Each Assignee shall execute and deliver to the Agent and the Borrowers a counterpart joinder in the form of Exhibit E hereto and shall pay to the Agent, solely for the account of the Agent, an assignment fee of $3,500, provided that no such payment shall be required whenever the Agent is the assigning Lender, and provided, further, that the Borrowers shall not be responsible for any costs or fees incurred by an assignor Lender or an Assignee in connection with any such assignment or participation.  Upon the execution and delivery of such counterpart joinder, (a) such Assignee shall, on the date and to the

 

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extent provided in such counterpart joinder, become a “Lender” party to this Agreement and the other Loan Documents for all purposes of this Agreement and the other Loan Documents and shall have all rights and obligations of a “Lender” with a Commitment as set forth in such counterpart joinder, and the transferor Lender shall, on the date and to the extent provided in such counterpart joinder, be released prospectively from its obligations hereunder and under the other Loan Documents to a corresponding extent (and, in the case of an assignment covering all of the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such transferor shall cease to be a party hereto but shall continue to be entitled to the benefits of Section 11.3 and to any fees accrued for its account hereunder and not yet paid); (b) the assigning Lender, if it holds any Notes, shall promptly surrender such Notes to the Agent for cancellation and delivery to the Borrowers, provided that if the assigning Lender has retained any Commitment, the Borrowers shall execute and deliver to the Agent for delivery to such assigning Lender a new Note in the amount of the assigning Lender’s retained Commitment; (c) the Borrowers shall issue to such Assignee a Note in the amount of such Assignee’s Commitment dated the Closing Date or such other date as may be specified by such Assignee and otherwise completed in substantially the form of Exhibit A; (d) this Agreement shall be deemed appropriately amended to reflect (i) the status of such Assignee as a party hereto and (ii) the status and rights of the Lender hereunder; and (e) the Borrowers shall take such action as the Agent may reasonably request to perfect any security interests or mortgages in favor of the Lenders, including any Assignee which becomes a party to this Agreement.

 

(b)           If the Assignee, or any Participant pursuant to Section 9.2 hereof, is organized under the laws of a jurisdiction other than the United States of America or any state thereof, such Assignee shall execute and deliver to the Borrowers, simultaneously with or prior to such Assignee’s execution and delivery of the counterpart joinder described above in Section 9.1(a), and such Participant shall execute and deliver to the Lender granting the participation, a United States Internal Revenue Service Form W-8ECI or W-8BEN (or any successor form), appropriately completed, wherein such Assignee or Participant claims entitlement to complete exemption from United States Federal Withholding Tax on all interest payments hereunder and all fees payable pursuant to any of the Loan Documents.  The Borrowers shall not be required to pay any increased amount to any Assignee or other Lender on account of taxes to the extent such taxes would not have been payable if the Assignee or Participant had furnished one of the Forms referenced in this Section 9.1(b) unless the failure to furnish such a Form results from (i) a condition or event affecting the Borrowers or an act or failure to act of the Borrowers or (ii) the adoption of or change in any law, rule, regulation or guideline affecting such Assignee or Participant occurring (x) after the date on which any such Assignee executes and delivers the counterpart joinder, or (y) after the date such Assignee shall otherwise comply with the provisions of Section 9.1(a), or (z) after the date a Participant is granted its participation.

 

(c)           Any Lender may at any time pledge all or any portion of its rights under the Loan Documents, including any portion of any Note, to any of the twelve (12) Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341.  No such pledge or any enforcement thereof shall release such Lender from its obligations under any of the Loan Documents.

 

(d)           Notwithstanding the above, no assignments shall be made pursuant to this Section 9.1 to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon

 

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becoming a Lender hereunder, would constitute any of the foregoing Persons described in this Section 9.1(d).

 

(e)           In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Agent (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrowers and the Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent) in an aggregate amount sufficient, upon distribution thereof, to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Agent and each other Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as appropriate) such Lender’s full pro rata share of all Loans.  Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs).

 

9.2          Participations.  Each Lender shall have the right at any time and from time to time, without the consent of or notice to the Borrowers, to grant participations to one (1) or more banks or other financial institutions (other than a Defaulting Lender) (each a “Participant”) in all or any part of any Loans owing to such Lender and the Note held by such Lender.  Each Lender shall retain the sole right to approve, without the consent of any Participant, any amendment, modification or waiver of any provision of the Loan Documents, provided that the documents evidencing any such participation may provide that, except with the consent of such Participant, such Lender will not consent to (a) the reduction in or forgiveness of the stated principal of or rate of interest on or Unused Fee with respect to the portion of any Loan subject to such participation, (b) the extension or postponement of any stated date fixed for payment of principal or interest or Unused Fee with respect to the portion of any Loan subject to such participation, (c) the waiver or reduction of any right to indemnification of such Lender hereunder, or (d) except as otherwise permitted or required hereunder, the release of any Collateral.  Notwithstanding the foregoing, no participation shall operate to increase the Total Commitment hereunder or otherwise alter the substantive terms of this Agreement.  In the event of any such sale by a Lender of participating interests to a Participant, such Lender’s obligations under this Agreement shall remain unchanged, such Lender shall remain solely responsible for the performance thereof, such Lender shall remain the holder of such Note for all purposes under this Agreement and the Borrowers and Agent shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.

 

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SECTION X

 

THE AGENT

 

10.1        Appointment of Agent; Powers and Immunities.

 

(a)           Each Lender hereby irrevocably appoints and authorizes the Agent to act as its agent hereunder and under the other Loan Documents and to execute the Loan Documents (other than this Agreement) and all other instruments relating thereto.  Each Lender irrevocably authorizes the Agent to take such action on behalf of each of the Lenders and to exercise all such powers as are expressly delegated to the Agent hereunder and in the other Loan Documents and all related documents, together with such other powers as are reasonably incidental thereto.  The obligations of the Agent hereunder are only those expressly set forth herein.  The Agent shall not have any duties or responsibilities or any fiduciary relationship with any Lender except those expressly set forth in this Agreement.

 

(b)           Neither the Agent nor any of its directors, officers, employees or agents shall be responsible for any action taken or omitted to be taken by any of them hereunder or in connection herewith, except for their own gross negligence or willful misconduct.  Without limiting the generality of the foregoing, neither the Agent nor any of its Affiliates shall be responsible to the Lenders for or have any duty to ascertain, inquire into or verify:  (i) any recitals, statements, representations or warranties made by the Borrowers or any of their Subsidiaries or any other Person whether contained herein or otherwise; (ii) the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement, the other Loan Documents or any other document referred to or provided for herein or therein; (iii) any failure by the Borrowers or any of their Subsidiaries or any other Person to perform its obligations under any of the Loan Documents; (iv) the satisfaction of any conditions specified in Section III hereof, other than receipt of the documents, certificates and opinions specified in Section 3.1(a) hereof; (v) the existence, value, collectability or adequacy of the Collateral or any part thereof or the validity, effectiveness, perfection or relative priority of the liens and security interests of the Lenders therein; or (vi) the filing, recording, refiling, continuing or re-recording of any financing statement or other document or instrument evidencing or relating to the security interests or liens of the Agent in the Collateral.

 

(c)           The Agent may employ agents, attorneys and other experts, shall not be responsible to any Lender for the negligence or misconduct of any such agents, attorneys or experts selected by it with reasonable care and shall not be liable to any Lender for any action taken, omitted to be taken or suffered in good faith by it in accordance with the advice of such agents, attorneys and other experts. Santander, in its separate capacity as a Lender, shall have the same rights and powers under the Loan Documents as any other Lender and may exercise or refrain from exercising the same as though it were not the Agent, and Santander and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrowers as if it were not the Agent.

 

10.2        Actions by Agent.

 

(a)           The Agent shall be fully justified in failing or refusing to take any action under this Agreement as it reasonably deems appropriate unless it shall first have received such advice or concurrence of the Lenders and shall be indemnified to its reasonable satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action.  The Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any of the Loan Documents in

 

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accordance with a request of the Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon the Lenders and all future holders of the Notes.

 

(b)           Whether or not an Event of Default shall have occurred, the Agent may from time to time exercise such rights of the Agent and the Lenders under the Loan Documents as it determines may be necessary or desirable to protect the Collateral and the interests of the Agent and the Lenders therein and under the Loan Documents.  In addition, the Agent may, without the consent of the Lenders, if no Event of Default has occurred and is continuing, release Collateral valued by the Agent, in its sole discretion, of not more than $500,000 in any fiscal year.

 

(c)           Neither the Agent nor any of its directors, officers, employees or agents shall incur any liability by acting in reliance on any notice, consent, certificate, statement or other writing (which may be a bank wire, telex, facsimile or similar writing) believed by any of them to be genuine or to be signed by the proper party or parties.

 

(d)           The Agent may, and the Borrowers hereby authorize the Agent to, include references to the Borrowers and their Subsidiaries, and utilize any logo or other distinctive symbol associated with the Borrowers or any of their Subsidiaries (subject to the Borrowers’ prior review and written consent, which shall not be unreasonably withheld or delayed) in connection with any advertising, promotion or marketing undertaken by the Agent.

 

10.3        Indemnification by Lenders.  Without limiting the obligations of the Borrowers hereunder or under any other Loan Document, the Lenders agree to indemnify the Agent, ratably in accordance with their respective Commitment Percentages, for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may at any time be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of this Agreement or any other Loan Document or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or the enforcement of any of the terms hereof or thereof or of any such other documents; provided that no Lender shall be liable for any of the foregoing to the extent they result from the gross negligence or willful misconduct of the Agent.

 

10.4        Reimbursement.  Without limiting the provisions of Section 10.3, the Lenders and the Agent hereby agree that the Agent shall not be obliged to make available to any Person any sum which the Agent is expecting to receive for the account of that Person until the Agent has determined that it has received that sum.  The Agent may, however, disburse funds prior to determining that the sums which the Agent expects to receive have been finally and unconditionally paid to the Agent if the Agent wishes to do so.  If and to the extent that the Agent does disburse funds and it later becomes apparent that the Agent did not then receive a payment in an amount equal to the sum paid out, then any Person to whom the Agent made the funds available shall, on demand from the Agent refund to the Agent the sum paid to that Person.  If the Agent in good faith reasonably concludes that the distribution of any amount received by it in such capacity hereunder or under the other Loan Documents might involve it in liability, it may refrain from making distribution until its right to make distribution shall have been adjudicated by a court of competent jurisdiction.  If a court of competent jurisdiction shall adjudge that any amount received and distributed by the Agent is to be repaid, each Person to

 

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whom any such distribution shall have been made shall either repay to the Agent its proportionate share of the amount so adjudged to be repaid or shall pay over the same in such manner and to such Persons as shall be determined by such court.

 

10.5        Agency Provisions Relating to Collateral.  Each Lender authorizes and ratifies the Agent’s entry into the Security Documents for the benefit of the Lenders.  Each Lender agrees that any action taken by the Agent with respect to the Collateral in accordance with the provisions of this Agreement or the Security Documents, and the exercise by the Agent of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all Lenders.  The Agent is hereby authorized on behalf of all Lenders, without the necessity of any notice to or further consent from any Lender, to take any action with respect to any Collateral or the Loan Documents which may be necessary to perfect and maintain perfected the Agent’s Encumbrances upon the Collateral, for its benefit and the ratable benefit of the Lenders.  The Lenders hereby irrevocably authorize the Agent, at its option and in its discretion, to release any Encumbrance granted to or held by the Agent upon any Collateral (i) upon termination of all Commitments and payment and satisfaction of all Obligations (other than contingent indemnification or reimbursement Obligations, to the extent no claim giving rise thereto has been asserted in writing), (ii) in connection with any foreclosure sale or other disposition of Collateral after the occurrence and during the continuation of an Event of Default, (iii) if approved, authorized or ratified in writing by the Agent at the direction of the Lenders or (iv) as otherwise provided in the other Loan Documents.  Upon request by the Agent at any time, the Lenders will confirm in writing Agent’s authority to release particular types or items of Collateral pursuant hereto.  The Agent shall have no obligation whatsoever to any Lender or to any other Person to assure that the Collateral exists or is owned by the Borrowers or is cared for, protected or insured or has been encumbered or that the Encumbrances granted to the Agent pursuant to the Security Documents have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of its rights, authorities and powers granted or available to the Agent in this Section 10.5 or in any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, the Agent may act in any manner it may deem appropriate, in its sole discretion, but consistent with the provisions of this Agreement, including given the Agent’s own interest in the Collateral as a Lender and that the Agent shall have no duty or liability whatsoever to any Lender.

 

10.6        Non-Reliance on Agent and Other Lenders.  Each Lender represents that it has, independently and without reliance on the Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of the financial condition and affairs of the Borrowers and decision to enter into this Agreement and the other Loan Documents and agrees that it will, independently and without reliance upon the Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own appraisals and decision in taking or not taking action under this Agreement or any other Loan Document.  The Agent shall not be required to keep informed as to the performance or observance by the Borrowers of this Agreement, the other Loan Documents or any other document referred to or provided for herein or therein or by any other Person of any other agreement or to make inquiry of, or to inspect the properties or books of, any Person.  Except for notices, reports and other documents and information expressly required to

 

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be furnished to the Lenders by the Agent hereunder, the Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning any Person which may come into the possession of the Agent or any of its affiliates.  Each Lender shall have access to all documents relating to the Agent’s performance of its duties hereunder at such Lender’s request.  Unless any Lender shall promptly object to any action taken by the Agent hereunder (other than actions to which the provisions of Section 11.7(b) are applicable and other than actions which constitute gross negligence or willful misconduct by the Agent), such Lender shall conclusively be presumed to have approved the same.

 

10.7        Resignation of Agent.  The Agent may resign at any time by giving thirty (30) days’ prior written notice thereof to the Lenders and the Borrowers.  Upon any such resignation, the Lenders shall have the right to appoint a successor Agent which shall be reasonably acceptable to the Borrowers and shall be a financial institution having a combined capital and surplus in excess of $1,000,000,000.  If no successor Agent shall have been so appointed by the Lenders and shall have accepted such appointment within thirty (30) days after the retiring Agent’s giving of notice of resignation, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent which shall be reasonably acceptable to the Borrowers and shall be a financial institution having a combined capital and surplus in excess of $1,000,000,000.  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 the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder.  After any retiring Agent’s resignation, the provisions of this Agreement shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Agent.

 

SECTION XI

 

GENERAL

 

11.1        Notices.

 

(a)           Unless otherwise specified herein, all notices hereunder to any party hereto shall be in writing and shall be deemed to have been given when delivered by hand, or when sent by electronic facsimile transmission, or on the first Business Day after delivery to any overnight delivery service, freight pre-paid, or five (5) days after being sent by certified or registered mail, return receipt requested, postage pre-paid, and addressed to such party at its address indicated below:

 

If to the Borrowers, at

 

TimePayment Corp.

c/o MicroFinancial Incorporated

16 New England Executive Park, Suite 200
 Burlington, Massachusetts 01803

Attention:  Richard F. Latour and James R. Jackson, Jr.

Facsimile:  (781) 994-4710

 

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with a copy (which shall not constitute notice) to:

 

Milbank, Tweed, Hadley & McCloy LLP
 1 Chase Manhattan Plaza
 New York, NY 10005
 Attention:  David Zeltner, Esq. and Michael J. Bellucci, Esq.
 Fax No.: (212) 822-5410 and (212) 822-5003

 

If to the Agent or Santander, at

 

Santander Bank, N.A.

75 State Street

MA1-SST-05-08

Boston, Massachusetts 02109

Attention: Carmen Posteraro, Vice President

Facsimile: (617) 757-3564

 

with a copy (which shall not constitute notice) to:

 

Sullivan & Worcester LLP

One Post Office Square

Boston, Massachusetts 02109

Attention:  William A. Levine, Esq. and Lewis N. Segall, Esq.

Facsimile:  (617) 338-2880

 

If to any other Lender, to its address set forth on Schedule 1 attached hereto;

 

or at any other address specified by such party in writing.

 

(b)           Each Loan Party agrees that the Agent may, but shall not be obligated to, make the Communications available to the Lenders by posting the Communications on DebtX or a substantially similar electronic transmission system (the “Platform”).  The Platform is provided “as is” and “as available.”  The Agent Parties (as defined below) do not warrant the adequacy of the Platform and expressly disclaim liability for errors or omissions in the Communications.  No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects, is made by any Agent Party in connection with the Communications or the Platform.  In no event shall the Agent or any of its related parties (collectively, the “Agent Parties”) have any liability to the Borrowers or the other Loan Parties, any Lender or any other Person or entity for damages of any kind, including, without limitation, direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of the Borrowers’, any Loan Party’s or the Agent’s transmission of communications through the Platform.

 

11.2        Expenses.  Whether or not the transactions contemplated herein shall be consummated, the Borrowers promise to reimburse the Agent reasonably promptly following

 

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receipt of a reasonably detailed written invoice therefor for all reasonable and documented out-of-pocket costs and expenses incurred or expended in connection with the preparation, filing or recording, interpretation or administration of this Agreement and the other Loan Documents, or any amendment, modification, approval, consent or waiver hereof or thereof.  The Borrowers further promise to reimburse the Agent (and after the occurrence and during the continuation of a Default, the Lenders) for: all reasonable and documented out-of-pocket costs and expenses incurred or expended in connection with the enforcement of any Obligations, the exercise, preservation or enforcement of any rights, remedies or options of the Agent or the Lenders or the satisfaction of any Obligations, or in connection with any litigation, proceeding or dispute in any way related to the credit hereunder, including, without limitation, reasonable fees and disbursements of outside legal counsel, accounting, consulting, brokerage or other similar professional fees or expenses; any reasonable and customary fees, charges (including the Agent’s per diem charges) or out-of-pocket expenses relating to any inspections, appraisals or examinations conducted in connection with the Loans or any Collateral and all reasonable and documented out-of-pocket costs and expenses relating to any attempt to inspect, verify, protect, preserve, restore, collect, sell, liquidate or otherwise dispose of or realize upon any Collateral pursuant to the Loan Documents.  The amount of all such costs and expenses shall, until paid, be an Obligation secured by the Collateral.

 

11.3        Indemnification by Borrowers.  The Borrowers agree to indemnify and hold harmless the Agent and the Lenders, as well as their respective equityholders, members, directors, officers, agents, attorneys, subsidiaries and affiliates, from and against all damages, losses, settlement payments, obligations, liabilities, claims, suits, penalties, assessments, citations, directives, demands, judgments, actions or causes of action, whether statutorily created or under the common law, all reasonable out-of-pocket costs and expenses (including, without limitation, reasonable fees and disbursements of attorneys, engineers and consultants) and all other liabilities whatsoever (including, without limitation, liabilities under Environmental Laws) which shall at any time or times be incurred, suffered, sustained or required to be paid by any such indemnified Person (except any of the foregoing which result from (x) the gross negligence, bad faith or willful misconduct of the indemnified Person or any of its Affiliates, (y) a material breach of such indemnified Person’s or any of its Affiliates’ obligations under the Loan Documents or (z) arose from any dispute solely among indemnified Persons, other than claims against an indemnified Person in its capacity or in fulfilling its role as an agent or arranger or any similar role under the Loan Documents and other than any claims arising out of any act or omission on the part of any Loan Party or any of its Affiliates) on account of or in relation to or any way in connection with any of the arrangements or transactions contemplated by, associated with or ancillary to this Agreement, the other Loan Documents or any other documents executed or delivered in connection herewith or therewith, all as the same may be amended from time to time, whether or not all or part of the transactions contemplated by, associated with or ancillary to this Agreement, any of the other Loan Documents or any such other documents are ultimately consummated.  In any investigation, proceeding or litigation, or the preparation therefor, the Lenders shall select their own counsel and, in addition to the foregoing indemnity, the Borrowers agree to pay promptly the reasonable fees and expenses of such counsel.  In the event of the commencement of any such proceeding or litigation, the Borrowers shall be entitled to participate in such proceeding or litigation with counsel of its choice at their own expense.  The Borrowers authorize the Agent and the Lenders to charge any deposit account or Note Record which they may maintain with any of them for any of the foregoing.  The covenants of this

 

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Section 11.3 shall survive payment or satisfaction of payment of all amounts owing with respect to the Notes, any other Loan Document or any other Obligation.

 

11.4        Survival of Covenants, Etc.  All covenants, agreements, representations and warranties made herein, in the other Loan Documents or in any documents or other papers delivered by or on behalf of the Borrowers pursuant hereto or thereto shall be deemed to have been relied upon by the Agent and the Lenders, notwithstanding any investigation heretofore or hereafter made by any of them, and shall survive the making by the Lenders of the Loans as herein contemplated and the termination of all Commitments, and shall continue in full force and effect so long as any Obligation (other than any contingent indemnification or reimbursement Obligation, to the extent no claim giving rise thereto has been asserted in writing) remains outstanding and unpaid or any Lender has any obligation to make any Loans hereunder.  Notwithstanding the foregoing, the provisions of Sections 11.2 and 11.3 shall continue in full force and effect after the payment in full of all Obligations (other than contingent indemnification or reimbursement Obligations, to the extent no claim giving rise thereto has been asserted in writing).  All statements contained in any certificate or other writing delivered by or on behalf of the Borrowers pursuant hereto or the other Loan Documents or in connection with the transactions contemplated hereby shall constitute representations and warranties by the Borrowers hereunder.

 

11.5        Set-Off.  Regardless of the adequacy of any Collateral or other means of obtaining repayment of the Obligations, any deposits, balances or other sums credited by or due from the head office of any Lender or any of its branch offices to the Borrowers and any property of any of the Borrowers now or hereafter in the possession, custody, safekeeping or control of any Lender or in transit to any Lender may, at any time and from time to time, without notice to the Borrowers or compliance with any other condition precedent now or hereafter imposed by statute, rule of law, or otherwise (all of which are hereby expressly waived) be set-off, appropriated and applied by such Lender against any and all Obligations of the Borrowers in such manner as the head office of such Lender or any of its branch offices in its sole discretion may determine, and the Borrowers hereby grant each such Lender a continuing security interest in such deposits, balances, other sums and property for the payment and performance of all such Obligations; provided that in the event that any Defaulting Lender shall exercise any such right of set-off, (x) all amounts so set-off shall be paid over immediately to the Agent for further application in accordance with the provisions of Section 2.14 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of set-off.  ANY AND ALL RIGHTS TO REQUIRE ANY LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHTS OF SET-OFF WITH RESPECT TO SUCH DEPOSITS, BALANCES, OTHER SUMS AND PROPERTY OF THE BORROWERS ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.  Each Lender will provide prompt notice to the Borrowers of any set-off hereunder.

 

11.6        No Waivers.  No failure or delay by the Agent or any Lender in exercising any right, power or privilege hereunder, under the Notes or under any other Loan Document shall

 

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operate as a waiver thereof; nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  No waiver shall extend to or affect any Obligation not expressly waived or impair any right consequent thereon.  No course of dealing or omission on the part of the Agent or the Lenders in exercising any right shall operate as a waiver thereof or otherwise be prejudicial thereto.  No notice to or demand upon the Borrowers shall entitle the Borrowers to other or further notice or demand in similar or other circumstances.  The rights and remedies herein and in the Notes and the other Loan Documents are cumulative and not exclusive of any rights or remedies otherwise provided by agreement or law.

 

11.7        Amendments, Waivers, etc.

 

(a)           Neither this Agreement nor the Notes nor any other Loan Document nor any provision hereof or thereof may be amended, waived, discharged or terminated except by a written instrument signed by the Agent on behalf of the Lenders or, as the case may be, by the Lenders, and also, in the case of amendments, by the Borrowers.

 

(b)           Except where this Agreement or any of the other Loan Documents authorizes or permits the Agent to act alone or requires the automatic release of the Lenders’ Encumbrances on Collateral and except as otherwise expressly provided in this Section 11.7(b), any action to be taken (including the giving of notice) by the Lenders may be taken, and any consent or approval required or permitted by this Agreement or any other Loan Document to be given by the Lenders may be given, and any term of this Agreement, any other Loan Document or any other instrument, document or agreement related to this Agreement or the other Loan Documents or mentioned therein may be amended, and the performance or observance by the Borrowers or any other Person of any of the terms thereof and any Default or Event of Default (as defined in any of the above-referenced documents or instruments) may be waived (either generally or in a particular instance and either retroactively or prospectively), in each case only with the written consent of the Majority Lenders; provided, however, that no such amendment, consent or waiver shall (i) increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan, or waive or excuse any payment thereof, or reduce the rate of interest thereon, or reduce any premium or fees payable hereunder, without the written consent of each Lender directly affected thereby, (iii) postpone the scheduled date of payment of the principal amount of any Loan, or any interest (or premium, if any) thereon or any fees payable hereunder, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender directly affected thereby, (iv) amend this Section 11.7(b) or change the definition of “Majority Lenders” or the number of Lenders which shall be required for the Lenders or any of them to take any action under the Loan Documents, without the written consent of each Lender, (v) change the definition of “Borrowing Base” set forth in Section 1.1, amend Section 2.1(a) or waive the limitations set forth in Section 2.1(a), without the consent of each Lender, (vi) release any Collateral, except as provided in Section 10.2(b) or as expressly set forth in any other Loan Document, or amend Sections 2.5 or 2.6 hereof, without the consent of each Lender, or (vii) amend, modify or otherwise affect the rights or duties of the Agent hereunder or under any other Loan Document without the written consent of the Agent.  Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each

 

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affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender disproportionately adversely relative to other affected Lenders shall require the consent of such Defaulting Lender.

 

11.8        Binding Effect of Agreement.  This Agreement shall be binding upon and inure to the benefit of the Borrowers, the Agent, the Lenders and their respective successors and assigns; provided that the Borrowers may not assign or transfer their rights or obligations hereunder.

 

11.9        Lost Note, Etc.  Upon receipt of an affidavit (including a customary indemnity) of an officer of any Lender as to the loss, theft, destruction or mutilation of any Note or any Security Document which is an original instrument and not a public record and, in the case of any such loss, theft, destruction or mutilation, upon cancellation of such Note or Security Document, if available, the Borrowers will issue, in lieu thereof, a replacement Note or other Security Document in the same principal amount thereof and otherwise of like tenor.

 

11.10      Captions; Counterparts.  The captions in this Agreement are for convenience of reference only and shall not define or limit the provisions hereof.  This Agreement and any amendment hereof may be executed in several counterparts and by each party on a separate counterpart, each of which when so executed and delivered shall be an original, but all of which together shall constitute one instrument.  In proving this Agreement it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom enforcement is sought.

 

11.11      Entire Agreement, Etc.  The Loan Documents and any other documents executed in connection herewith or therewith express the entire understanding of the parties with respect to the transactions contemplated hereby and supersede all prior agreements with respect to the subject matter hereof, except for the letter agreements dated as of the date hereof, between the Borrowers and the Agent with respect to fees payable to the Agent and other matters in connection with the syndication of the Loans and Commitments, which letter agreements shall continue in full force and effect and shall not be superseded by any of the Loan Documents.

 

11.12      Waiver of Jury Trial.  THE BORROWERS AND EACH OF THE LENDERS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF THE AGENT OR ANY LENDER RELATING TO THE ADMINISTRATION OR ENFORCEMENT OF THE LOANS AND THE LOAN DOCUMENTS, AND AGREES THAT IT WILL NOT SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.

 

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EXCEPT AS PROHIBITED BY LAW, THE BORROWERS AND EACH OF THE LENDERS HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.  THE BORROWERS (a) CERTIFY THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE LENDERS HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE LENDERS WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (b) ACKNOWLEDGE THAT THE LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH EACH IS A PARTY BECAUSE OF, AMONG OTHER THINGS, THE BORROWERS’ WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.

 

11.13      Governing Law; Jurisdiction; Venue.  THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID STATE (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW, OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, WHICH SHALL APPLY TO THIS AGREEMENT).  THE BORROWERS CONSENT TO THE JURISDICTION OF ANY OF THE FEDERAL OR STATE COURTS LOCATED IN THE BOROUGH OF MANHATTAN IN CONNECTION WITH ANY SUIT TO ENFORCE THE RIGHTS OF THE LENDERS UNDER THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS AND CONSENT TO SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWERS BY MAIL AT THE BORROWERS’ ADDRESS SET FORTH HEREIN.  THE BORROWERS IRREVOCABLY WAIVE ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH ACTION BROUGHT IN THE COURTS REFERRED TO IN THIS SECTION 11.13 AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH ACTION THAT SUCH ACTION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

11.14      Severability.  The provisions of this Agreement are severable and if any one clause or provision hereof shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction, and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision of this Agreement in any jurisdiction.  Without limiting the foregoing provisions of this Section 11.14, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Agent, then such provisions shall be deemed to be in effect only to the extent not so limited

 

11.15      Confidentiality.  Each of the Agent and the Lenders agrees that it will use the same degree of care that it uses to maintain its own confidential information not to disclose without the prior consent of the Borrowers (other than to their Affiliates and to their and their Affiliates’ respective employees, auditors, directors, officers, agents, trustees, advisors, representatives or counsel to another Lender (it being understood that the Persons to whom such

 

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disclosure is made will be informed of the confidential nature of such information and instructed to keep such information confidential)) any information furnished by the Borrowers, any Subsidiary, or any other Loan Parties with respect to the Borrowers, any Subsidiary, or any other Loan Parties, or which is furnished pursuant to this Agreement, any other Loan Document or any documents contemplated by or referred to herein or therein and which is designated by the Borrowers to the Lenders in writing as confidential or as to which it is otherwise reasonably clear such information is not public, except that any Lender may disclose any such information (a) as has become generally available to the public other than by a breach of this Section 11.15, (b) as may be required or appropriate and without prior notice in any report, statement or testimony submitted to, or regulatory activities by, any municipal, state, federal or foreign regulatory body having or claiming to have jurisdiction over such Lender or to the Federal Reserve Board or the Federal Deposit Insurance Corporation or the OCC or similar organizations (whether in the United States or elsewhere) or their successors, (c) as may be required or appropriate in response to any summons or subpoena or any law, order, regulation or ruling applicable to such Lender, (d) to any prospective Participant or Assignee in connection with any contemplated transfer pursuant to Section IX (provided that such prospective transferee shall have been made aware of this Section 11.15 and shall have agreed to be bound by its provisions as if it were a party to this Agreement or to provisions no less restrictive than the provisions of this Section 11.15) or rating agencies and/or auditors, (e) subject to each such Person being informed of the confidential nature of the information and to their agreement to keep such information confidential on terms no less restrictive than the provisions of this Section 11.15, to any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to a Loan Party or its obligations (provided that such actual or constructive counterparty and/or advisors, as the case may be, shall have been made aware of this Section 11.15 and shall have agreed to be bound by its provisions as if it were a party to this Credit Agreement or to provisions no less restrictive than the provisions of this Section 11.15) and (f) certain terms of the transactions contemplated hereby (but not fees, pricing, its status as secured or collateral terms) following consultation with the Borrower or the Sponsor Group to bank trade publications (provided that such information shall be limited to “headline” terms deal terms and other information regarding the credit facilities evidenced by this Agreement customarily found in such publications).  In each case where the Agent or any Lender, as applicable, is compelled to disclose the confidential information pursuant to clause (b) or (c) above, the Agent or such Lender, as applicable, shall use commercially reasonable efforts to provide notice prior to such disclosure.

 

Each of the Agent and the Lenders acknowledges that (a) the information referred to above may include MNPI, (b) it has developed compliance procedures regarding the use of MNPI and (c) it will handle such MNPI in accordance with applicable law, including United States Federal and state securities laws.

 

11.16      Termination.  The Lenders’ Commitments shall automatically terminate if the initial Loans are not made within one hundred twenty (120) days after the date of this Agreement (unless the applicable conditions to the making of the initial Loan in Sections 3.1 and 3.2 shall have been satisfied on or prior to such date).

 

11.17      Effect of Amendment and Restatement.  As of the Closing Date, this Agreement shall amend, and restate as amended, the Existing Credit Agreement, but shall not constitute a novation thereof or in any way impair or otherwise affect the rights or obligations of the parties

 

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thereunder (including with respect to the Loans and the representations and warranties made thereunder) except as such rights or obligations are amended or modified hereby.  The Existing Credit Agreement as amended and restated hereby shall be deemed to be a continuing agreement among the parties, and all documents, instruments and agreements delivered pursuant to or in connection with the Existing Credit Agreement not amended and restated in connection with the entry of the parties into this Agreement shall remain in full force and effect, each in accordance with its terms, as of the date of delivery or such other date as contemplated by such document, instrument or agreement to the same extent as if the modifications to the Existing Credit Agreement contained herein were set forth in an amendment to the Existing Credit Agreement in a customary form, unless such document, instrument or agreement has otherwise been terminated or has expired in accordance with or pursuant to the terms of this Agreement, Existing Credit Agreement or such document, instrument or agreement or as otherwise agreed by the required parties hereto or thereto.

 

[Remainder of page intentionally left blank.

The next page is the signature page.]

 

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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as of the date first above written.

 

	
 
    	
TIMEPAYMENT   CORP.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/James   R. Jackson Jr.
    
	
 
    	
 
    	
Name:
    	
James   R. Jackson, Jr.
    
	
 
    	
 
    	
Title:
    	
Senior   Vice President and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
MF2   HOLDINGS LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   David E. King
    
	
 
    	
 
    	
Name:
    	
David   E. King
    
	
 
    	
 
    	
Title:
    	
Secretary   and Treasurer
    


 

[SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT]

 











 

	
 
    	
SANTANDER   BANK, N.A., as Lender and as Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Carmen Posteraro
    
	
 
    	
 
    	
Name:
    	
Carmen   Posteraro
    
	
 
    	
 
    	
Title:
    	
Vice   President
    


 

[SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT]

 











 

SCHEDULE 1

 

COMMITMENTS OF THE LENDERS*

 

	
Lender
    	
 
    	
Commitment
    	
 
    	
Commitment Percentage
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Santander Bank,   N.A.
    	
 
    	
$
    	
200,000,000
    	
*
    	
100
    	
%*
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Total:
    	
 
    	
$
    	
200,000,000
    	
 
    	
100
    	
%
    


 




* Subject to syndication prior to the Closing Date.

 

* Subject to revision upon syndication prior to Closing Date.