Document:

ex10-22.htm

EXHIBIT 10.22

 

SETTLEMENT AGREEMENT

           This Settlement Agreement (the “Agreement”) is made on November 19, 2013 between Comerica Bank, The Mint Leasing, Inc., Jerry Parish, and Victor M. Garcia (collectively, the “Parties”).

 

	
1.

	
Recitals and Definitions.  These recitals and definitions are an integral part of this agreement.

 

	
  

	
A.

	
The “Bank” means Comerica Bank, as well as its past or present or future parents, subsidiaries, affiliates, successors and predecessors, and other individuals or entities in which any of the foregoing entities has or had or will have a majority interest or which is or was or will be related to or affiliated with any of the foregoing entities; and the respective officers, directors, agents, fiduciaries, trustees, employees, attorneys, advisors, investment advisors, auditors, accountants, insurers, sponsors, settlors, successors, and assigns of all such entities and individuals.

 

	
  

	
B.

	
“Mint” means The Mint Leasing, Inc., as well as its past and present owners, members, officers, directors, employees, principals, agents, managers, parent entities, subsidiaries, affiliates, related entities, predecessors in interest, successors in interest, assigns, and attorneys.

 

	
  

	
C.

	
On or about February 16, 2007, Mint obtained a revolving credit facility from Bank, in the original principal amount of $30 million (the “Loan”). The Loan has been modified and amended by numerous modification, renewal, and extension agreements, and currently is evidenced by an Installment Note-Prime Referenced Rate, dated September 10, 2011, in the principal amount of $21,846,701.24 (the “Note” and, collectively, together with all prior documents, amendments, modifications, supplements, renewals, and extensions thereof, and all other documents given in connection with or to secure the Loan the “Loan Documents”).

 

	
  

	
D.

	
Victor M. Garcia and Jerry Parish (collectively, “Guarantors”) guaranteed Mint’s indebtedness to the Bank in guaranty agreements dated February 5, 2007 and February 6, 2007, respectively (the “Guaranties”).

 

	
  

	
E.

	
The Loan is further secured by a Security Agreement dated February 16, 2007 (the “Security Agreement”), in which Mint granted the Bank a security interest in all of Mint’s assets (the “Collateral”).

 

	
  

	
F.

	
The Loan Documents require Mint to maintain all of its funds in its Comerica account(s) (“Account”).

 

	
  

	
G.

	
The Loan, as amended, matured on December 31, 2012.

 

  

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H.

	
Mint failed to repay the balance due and owing on the Loan, and the Parties entered into a Settlement, Release, Indemnity and Limited Forbearance Agreement dated April 8, 2013 (“Forbearance Agreement”). Under the Forbearance Agreement, the Bank agreed to forbear from exercising its rights and remedies under the Loan until April 18, 2013, at which time Mint agreed to make a settlement payment. Mint failed to pay the full Settlement Amount as set forth in the Forbearance Agreement.

 

	
  

	
I.

	
On June 4, 2013, the Bank filed a lawsuit in the District Court of Harris County, Texas, 281st Judicial District, Cause No. 2013-33154, against Mint and Guarantors for breach of the Note and the Guaranties (the “Lawsuit”).

 

	
  

	
J.

	
On June 28, 2013, Mint and Guarantors filed their answer and a counterclaim against the Bank for breach of contract, tortious interference with a contract, and conversion.

 

	
  

	
K.

	
The Court entered a temporary injunction on July 3, 2013 (“Temporary Injunction”) and issued an order to compel on August 2, 2013 (“Order to Compel”).

 

	
  

	
L.

	
Mint and the Guarantors have advised Comerica that Mint wishes to refinance the Loan with Moriah Capital or a related entity (the “Refinance”).  Moriah and its related entities are referred to as “Moriah” hereinafter.

 

	
  

	
M.

	
Mint and the Guarantors executed a Hold Harmless letter dated October 22, 2013, requesting and authorizing Comerica to disclose and release confidential information to Moriah.

 

	
  

	
N.

	
Comerica and Moriah have conditionally agreed to the terms of a note sale and assignment, under which Comerica will sell the Loan and assign related Loan Documents, including but not limitied to the Guarantees, to Moriah for $8,500,000 (the “Note Sale”).  Mint and the Guarantors will execute a Joinder with resepct to that Note Sale.

 

	
2.

	
Third Party Beneficiaries.  The Parties do not intend that there be any third party beneficiaries to this Agreement.

 

	
3.

	
Purpose of Agreement.  The Parties wish to settle their claims against one another in the Lawsuit and to resolve all controversy existing between them.

 

	
4.

	
Contemporaneous Closing of Agreement and Note Sale.  The Parties intend that the closing of this Agreement and the Note Sale will occur contemporaneously.  This Agreement shall not be effective unless and until the Note Sale is also closed.

 

	
5.

	
Deposits and Sweeps.  Mint represents and warrants that all receipts, income, funds and revenues received by it since the entry of the Injunction have been deposited with Comerica pursuant to the terms of the Injunction.  Mint represents and warrants that such deposits will continue until the Note Sale closes.  Mint represents and warrants that it has not taken any steps to divert, withhold, or delay payment of any receipts, income, funds, or revenues owed to since the Injunction was issued. Mint agrees and acknowledges that Comerica may continue to debit Mint’s Account until the Note Sale is closed.  Mint acknowledges and agrees that all debits to its Account by Comerica have been proper and in accordance with Comerica’s rights under the Loan Documents and Injunction.

 

  

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6.

	
Dismissal of Lawsuit.  Within (3) business days of the Bank’s receipt of the proceeds of the Note Sale, the Parties shall submit a stipulation and proposed order to the Court, dismissing all claims and counterclaims in the Lawsuit.  The dismissal of the claims and counterclaims against Comerica shall be with prejudice. The Stipulation will be substantially in the form of Exhibit A, attached.  The Parties shall bear their own costs and attorney fees.

 

	
7.

	
Release.  MINT AND THE GUARANTORS (IN THEIR OWN RIGHT AND ON BEHALF OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, INDEPENDENT CONTRACTORS, ATTORNEYS AND AGENTS) (COLLECTIVELY, THE “RELEASING PARTIES”) HEREBY RELEASE, ACQUIT, REMISE, AND FOREVER DISCHARGE AND RELIEVE  BANK, ITS PREDECESSORS, SUCCESSORS AND ASSIGNS AND THEIR PAST AND PRESENT DIRECTORS, OFFICERS, EMPLOYEES, INDEPENDENT CONTRACTORS, REPRESENTATIVES, PARENT CORPORATIONS, SUBSIDIARIES AND AFFILIATES AND ATTORNEYS AND AGENTS (THE “RELEASED PARTIES”), JOINTLY AND SEVERALLY, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE STATE AND FEDERAL LAW, FROM ANY AND ALL ACTS AND OMISSIONS OF THE RELEASED PARTIES, AND FROM ANY AND ALL CLAIMS, CAUSES OF ACTION, COUNTERCLAIMS, DEMANDS, CONTROVERSIES, COSTS, DEBTS, SUMS OF MONEY, ACCOUNTS, RECKONINGS, BONDS, BILLS, DAMAGES, OBLIGATIONS, LIABILITIES, OBJECTIONS, AGREEMENTS, COVENANTS, SUITS, OFFSETS, RIGHTS, ACTIONS, CONTRACTS AND EXECUTIONS OF ANY NATURE, TYPE, OR DESCRIPTION WHATSOEVER WHICH THE RELEASING PARTIES HAVE OR MAY COME TO HAVE AGAINST THE RELEASED PARTIES, INCLUDING, BUT NOT LIMITED TO, CLAIMS OF NEGLIGENCE, GROSS NEGLIGENCE, USURY, FRAUD, DURESS, MISTAKE, DECEIT, MISREPRESENTATION, CONSPIRACY, DEFAMATION, CONTROL, INTERFERENCE WITH CONTRACTUAL AND BUSINESS RELATIONSHIPS, CONFLICTS OF INTEREST, MISUSE OF INSIDER INFORMATION, CONCEALMENT, DISCLOSURE, SECRECY, MISUSE OF COLLATERAL, WRONGFUL RELEASE OF COLLATERAL, FAILURE TO INSPECT, ENVIRONMENTAL DUE DILIGENCE, NEGLIGENT LOAN PROCESSING AND ADMINISTRATION, NEGLIGENCE OR FRAUD IN RATES AND METHODS USED TO COMPUTE INTEREST, WRONGFUL SETOFF, VIOLATIONS OF STATUTES AND REGULATIONS OF GOVERNMENTAL ENTITIES, INSTRUMENTALITIES AND AGENCIES (BOTH CIVIL AND CRIMINAL), RACKETEERING ACTIVITIES, SECURITIES AND ANTITRUST LAWS VIOLATIONS, TYING ARRANGEMENTS, DECEPTIVE TRADE PRACTICES, BREACH OR ABUSE OF ANY ALLEGED FIDUCIARY DUTY, BREACH OF ANY ALLEGED SPECIAL RELATIONSHIP, COURSE OF CONDUCT OR DEALING, ALLEGED OBLIGATION OF FAIR DEALING, ALLEGED OBLIGATION OF GOOD FAITH, ALLEGED OBLIGATION OF GOOD FAITH AND FAIR DEALING, VIOLATION OF THE TEXAS DECEPTIVE TRADE PRACTICES, AND CONTRIBUTION AND INDEMNITY, WHETHER OR NOT IN CONNECTION WITH OR RELATED TO THE LOAN DOCUMENTS, THE AGREEMENT, OR THE PARTIES LENDING RELATIONSHIP,  AT LAW OR IN EQUITY, IN CONTRACT IN TORT, AND WHETHER POSSESSED OR POSSESSED IN THE FUTURE, KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED, WHETHER LIABILITY BE DIRECT OR INDIRECT, LIQUIDATED OR UNLIQUIDATED, WHETHER PRESENTLY ACCRUED OR TO ACCRUE HEREAFTER, WHETHER ABSOLUTE OR CONTINGENT   AND RELATING TO MATTERS OCCURRING ANY TIME FROM THE BEGINNING OF TIME UP TO AND IMMEDIATELY PRECEDING THE MOMENT OF EXECUTION OF THIS RELEASE (THE “RELEASED CLAIMS”). THE RELEASING PARTIES REPRESENT AND WARRANT THAT NO FACTS EXIST WHICH COULD PRESENTLY OR IN THE FUTURE COULD SUPPORT THE ASSERTION OF ANY OF THE RELEASED CLAIMS AGAINST THE RELEASED PARTIES. THE RELEASING PARTIES FURTHER COVENANT NOT TO SUE THE RELEASED PARTIES ON ACCOUNT OF ANY OF THE RELEASED CLAIMS, AND EXPRESSLY WAIVE ANY AND ALL DEFENSES THEY MAY HAVE OR COME TO HAVE IN CONNECTION WITH THEIR DEBTS AND OBLIGATIONS TO THE RELEASED PARTIES.  THIS PARAGRAPH IS IN ADDITION TO AND SHALL NOT IN ANY WAY LIMIT ANY OTHER RELEASE, COVENANT NOT TO SUE, OR WAIVER BY THE RELEASING PARTIES IN FAVOR OF THE RELEASED PARTIES.

 

  

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8.

	
Modification.  This Agreement may not be modified, amended, altered, or supplemented except upon the execution and delivery of a written agreement executed by each of the Parties.

 

	
9.

	
Execution in Counterparts.  This Agreement may be executed in counterparts and faxed and e-mailed signatures are acceptable as binding.

 

	
10.

	
Binding on Successors.  This Agreement shall be binding on and inure to the benefit of all heirs, successors, and assigns of the Parties to the full extent allowed by law.

 

	
11.

	
Mutual Drafting.    This Agreement shall be deemed to have been negotiated and drafted by the Parties and their respective attorneys.  No provision herein shall be interpreted or construed in favor of or against any Party on the ground that such Party or its attorney drafted such provision of this Agreement.  Uncertainty and ambiguity in a provision herein shall not be interpreted against that provision’s drafter.

 

	
12.

	
Choice of Law.  This Agreement and the covenants and agreements contained herein shall be governed by and construed in accordance with the law of the State of Texas. 

 

	
13.

	
Representations and Waivers.  Each Party represents that it/he has had the opportunity to consult with an attorney before executing this Agreement and is entering into this Agreement of its/his own volition.

 

By signing below, the undersigned represents that it/he has read and understands the above Agreement, has had a reasonable amount of time to consider its terms, agree with its terms, and has the authority to enter into it.

[signature on next page]

  

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COMERICA BANK

 

 

By: /s/ Douglas Muniga

 

Its Senior Vice President

	
THE MINT LEASING, INC.

 

 

By:  /s/ Jerry Parish

 

Its President

 

 

 

	  	
/s/ Jerry Parish

By: Jerry Parish

 

 

	  	
/s/ Victor M. Garcia

By: Victor M. Garcia

 

 

 

 

Page 5 of 5ex10-23.htm

EXHIBIT 10.23

EXECUTION

 

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

by and between

MNH MANAGEMENT LLC,

as Lender

and

THE MINT LEASING, INC., a Nevada corporation,

THE MINT LEASING, INC., a Texas corporation,

and

THE MINT LEASING SOUTH, INC., a Texas corporation

jointly and severally,

as Borrower

Dated: November 19, 2013

  

  

  

EXECUTION

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT, dated as of November 19, 2013, by and between  THE MINT LEASING, INC., a Nevada corporation with a principal place of business at 323 N. Loop West, Houston, TX 77008 (“Mint Nevada”), THE MINT LEASING, INC., a Texas corporation with a principal place of business at 323 N. Loop West, Houston, TX 77008  (“Mint Texas”) and THE MINT LEASING SOUTH, INC., a Texas corporation with a principal place of business at 323 N. Loop West, Houston, TX 77008 (“Mint South” and, together with Mint Nevada and Mint Texas, jointly and severally, “Borrower”), and MNH MANAGEMENT LLC, a Delaware limited liability company with offices at 7 West 51st Street, New York, NY 10019 (together with its successors and assigns, the “Lender”).

 

R E C I T A L S:

 

A.              Comerica Bank, through its predecessor in interest, Sterling Bank, previously made a term loan to Borrower under that certain Amended and Restated Loan Agreement, dated October 27, 2009, effective October 2, 2009, as subsequently amended (as so amended, the “Comerica Loan Agreement”), between Borrower and Comerica Bank.

B.               Simultaneously herewith, Comerica Bank is assigning to Lender all of Comerica Bank’s right, title and interest in, to and under the Comerica Loan Agreement and the other documents associated therewith pursuant to the Loan Purchase Agreement between Lender and Comerica Bank.

C.               Borrower and Lender, as assignee of Comerica Bank, desire to amend and restate the Comerica Loan Agreement and the Security Agreement, dated as of February 16, 2007, as subsequently amended  (as so amended, the “Comerica Security Agreement”), between Borrower and Comerica Bank on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and agreements herein contained and other good and valuable consideration, Lender and Borrower mutually covenant, warrant and agree as follows:

 

SECTION 1. DEFINITIONS AND RULES OF INTERPRETATION AND CONSTRUCTION

 

Specific Terms Defined.  Capitalized terms used herein and not otherwise defined have the following meanings:

 

1.1             “Account Debtor” or “account debtor” has the meaning ascribed to such term in the UCC.

 

1.2             “Accounts” or “accounts” means “accounts” as defined in the UCC, and, in addition, any and all obligations of any kind at any time due and/or owing to Borrower, whether now existing or hereafter arising, and all rights of Borrower to receive payment or any other consideration including, without limitation, invoices, contract rights, accounts receivable, lease payments, general intangibles, choses-in-action, notes, drafts, acceptances, instruments and all other debts, obligations and liabilities in whatever form owing to Borrower from any Person, Governmental Authority or any other entity, all security therefor, and all of Borrower’s rights to receive payments for goods sold (whether delivered, undelivered, in transit or returned) or services rendered, which may be represented thereby, or with respect thereto, including, but not limited to, all rights as an unpaid vendor (including stoppage in transit, replevin or reclamation), and all additional amounts due from any Account Debtor, whether or not invoiced, together with all Proceeds and products of any and all of the foregoing.

 

  

  

  

1.3             “Affiliate” means, with respect to any Person, (a) any other Person that, directly or indirectly, controls, is controlled by, or is under common control with such Person, including any Subsidiary, or (b) any other Person who is a director, manager or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of any Person described in clause (a) above.  For the purposes of this definition, control of a Person shall mean the power (direct or indirect) to direct or cause the direction of the management or the policies of such Person, whether through the ownership of any voting securities of such person or by contract or otherwise.

 

1.4             “Agreement” means this Amended and Restated Loan and Security Agreement (including all Exhibits annexed hereto and the Borrower’s Disclosure Schedule) as originally executed or, if amended, modified, supplemented, renewed or extended from time to time, as so amended, modified, supplemented, renewed or extended.

 

1.5             [RESERVED]

 

1.6             “Balance Sheet Date” means March 31, 2013.

 

1.7             “Borrower” has the meaning set forth in the introductory paragraph hereof.

 

1.8             “Borrower’s Disclosure Schedule” means the disclosure schedule prepared by Borrower that is being delivered to Lender concurrently herewith.

 

1.9             “Business” means the leasing of automobiles and fleet vehicles.

 

1.10           “Business Day” means any day other than a Saturday, Sunday or any other day on which banks located in the State of New York are authorized or required to close under applicable banking laws.

 

1.11           “Capital Assets” means, in accordance with GAAP, fixed assets, both tangible (such as land, buildings, fixtures, machinery and equipment) and intangible (such as patents, copyrights, trademarks, franchises and goodwill).

 

1.12            “Change of Control” has the meaning as set forth in Section 10.1 hereof.

 

1.13            “Chattel Paper” has the meaning ascribed to such term in the UCC.

 

1.14           “Closing Date” means the date of this Agreement.

 

1.15           “Collateral” has the meaning as set forth in Section 5.1 hereof.

 

  

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1.16           “Collateral Assignment of Leases” means the Collateral Assignment of Leases to be executed and delivered by Borrower to Lender in the form of Exhibit 1.16 annexed hereto.

 

1.17           “Commercial Tort Claims” has the meaning ascribed to such term in the UCC.

 

1.18           “Custodian” means U.S. Bank National Association.

 

1.19           “Custodian Agreement” means that certain Custodian Agreement, dated as of the date hereof, between Lender and the Custodian.

 

1.20           “Default Interest Rate” has the meaning set forth in Section 3.1.

 

1.21           “Deposit Accounts” has the meaning ascribed to such term in the UCC.

 

1.22           “Document” or “document” has the meaning ascribed to such term in the UCC.

 

1.23           “Eligible Lease” means each of the lease agreements, whether an existing lease agreement or a renewal or substitution thereof, reflecting Borrower as lessor and pertaining to the lease of a motor vehicle, which lease agreements are set forth on Schedule 1.23 annexed hereto or are hereafter entered into by Borrower, which lease agreement satisfies all of the following criteria:

 

(a)      The lease agreement is in full force and effect and the lessee is not in default thereunder;

 

(b)      no amount has remained unpaid under the lease agreement for more than  thirty (30) days beyond the due date thereof; provided, however, that, solely with respect to two commercial fleet lessees, Preferred Dealer Services and On Time Car Rental, amounts may remain unpaid under their respective lease agreements for up to sixty (60) days if not more than ten (10) days have elapsed since Borrower’s receipt of their most recent regularly scheduled lease payment;

 

(c)      there are no contra relationships, setoffs, counterclaims or disputes existing with respect to any amounts due under the lease agreement;

 

(d)      the lease agreement and the underlying motor vehicle  are free and clear of Liens except for the Liens of Lender;

 

(e)      the lessee thereunder is not a Governmental Authority;

 

(f)       the lessee thereunder, if an individual, does not reside outside the United States and, if not an individual, its chief executive office or principal place of business is located in the United States;

 

(g)      there are no facts existing or threatened which might result in any material adverse change in the lessee’s financial condition;

 

(h)      lease agreements that satisfy the criteria set forth in this Section 1.21, to which a single lessee or such lessee’s affiliates are parties so long as such lease agreements, in the aggregate, constitute no more than twenty percent (20%) of all Eligible Leases;

 

  

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(i)       the vehicle underlying the lease agreement shall have been insured for collision and comprehensive insurance in at least the amount owing under the remaining term of the lease agreement, with Borrower named as loss payee and Lender named as additional insured and loss payee in accordance with Section 6.7 hereof;

 

(j)       Borrower shall have taken such actions necessary, in the determination of Lender, to ensure that all lease and other payments from the lessee pursuant to such lease agreement are directed to the Lockbox or to an account at a financial institution that is subject to an account control agreement in favor of Lender and otherwise satisfactory to Lender; and

 

(k)      such Leases are otherwise satisfactory to Lender in its sole discretion.

 

1.24           “Eligible Lease Receivables Certificate” has the meaning set forth in Section 4.2(c).

 

1.25           “Eligible Owned Vehicles has the meaning set forth in Section 4.2(c)(i).

 

1.26           “Environment” means all air, surface water, groundwater or land, including, without limitation, land surface or subsurface, including, without limitation, all fish, wildlife, biota and all other natural resources.

 

1.27           “Environmental Law” or “Environmental Laws” means all federal, state and local laws, statutes, ordinances and regulations now or hereafter in effect, and in each case as amended or supplemented from time to time, and any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment relating to the regulation and protection of human health, safety, the environment and natural resources (including ambient air, surface water, groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic species and vegetation).

 

1.28           “Environmental Liabilities and Costs” means, as to any Person, all liabilities, obligations, responsibilities, remedial actions, losses, damages, punitive damages, consequential damages, treble damages, costs and expenses (including all fees, disbursements and expenses of counsel, experts and consultants and costs of investigation and feasibility studies), fines, penalties, sanctions and interest incurred as a result of any claim or demand by any other Person, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, including any Environmental Law, permit, order or agreement with any Governmental Authority or other Person, and which arise from any environmental, health or safety conditions, or a Release or conditions that are reasonably likely to result in a Release, and result from the past, present or future operations of such Person or any of its Affiliates.

 

1.29           “Environmental Lien” means any Lien in favor of any Governmental Authority for Environmental Liabilities and Costs.

 

1.30           “ERISA” means the Employee Retirement Income Security Act of 1974, as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented, together with all rules, regulations and interpretations thereunder or related thereto.

 

  

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1.31           “Equipment” means “equipment”, as such term is defined in the UCC, now owned or hereafter acquired by Borrower, wherever located, and shall include, without limitation, the machinery and equipment set forth on Section 5.4(j) of the Borrower’s Disclosure Schedule, and all other equipment, machinery, furniture, Fixtures, computer equipment, telephone equipment, molds, tools, dies, partitions, tooling, transportation equipment, all other tangible assets used in connection with the manufacture, sale or lease of goods or rendition of services, and Borrower’s interests in any leased equipment, and all repairs, modifications, alterations, additions, controls and operating accessories thereof or thereto, and all substitutions and replacements therefor.

 

1.32           “Equity Interests” means, with respect to any Person, any and all shares, rights to purchase, options, warrants, general, limited or limited liability partnership interests, membership interests, units, participations or other equivalents of or interest in (regardless of how designated) equity of such Person, whether voting or nonvoting, including common stock, preferred stock, convertible securities or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC (or any successor thereto) under the 1934 Act).

 

1.33           “Event of Default” means the occurrence or existence of any event or condition described in Section 11 of this Agreement.

 

1.34           “Existing Insurance Policies” has the meaning set forth in Section 5.4(p) hereof.

 

1.35           “Financial Statements” has the meaning as set forth in Section 8.9 hereof.

 

1.36           “Financing Statements” means the Uniform Commercial Code UCC-1 Financing Statements and motor vehicle title certificates to be filed with applicable Governmental Authorities of each State or Commonwealth or political subdivisions thereof pursuant to which Lender shall perfect its security interest in the Collateral.

 

1.37           “Fiscal Year” means that twelve (12) month period commencing on January 1 and ending on December 31.

 

1.38           “Fixtures” has the meaning ascribed to such term in the UCC.

 

1.39           “GAAP” means generally accepted accounting principles in effect in the United States of America at the time of any determination, and which are applied on a consistent basis.  All accounting terms used in this Agreement which are not expressly defined in this Agreement shall have the meanings given to those terms by GAAP, unless the context of this Agreement otherwise requires.

 

1.40           “General Intangibles” has the meaning ascribed to such term in the UCC.

 

1.41           “Goods” has the meaning ascribed to such term in the UCC.

 

1.42           “Governmental Authority” or “Governmental Authorities” means any federal, state, county or municipal governmental agency, department, instrumentality, board, commission, officer, official or entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

 

1.43           “Guarantee” means the Personal Guarantee in the form of Exhibit 1.43 annexed hereto.

 

1.44           “Guarantor” means Jerry Parish.

 

  

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1.45           “Hazardous Substances” means (a) substances that are defined or listed in, or otherwise classified pursuant to, any applicable laws or regulations as “hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic substances,” or any other formulation intended to define, list, or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP toxicity,” (b) oil, petroleum, or petroleum derived substances, natural gas, natural gas liquids, synthetic gas, drilling fluids, produced waters, and other wastes associated with the exploration, development, or production of crude oil, natural gas, or geothermal resources, (c) any flammable substances or explosives or any radioactive materials, and (d) asbestos in any form or electrical equipment that contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess of 50 parts per million.

 

1.46           “Indebtedness” means, with respect to any Person, all of the obligations of such Person which, in accordance with GAAP, should be classified upon such Person’s balance sheet as liabilities, or to which reference should be made by footnotes thereto, including without limitation, with respect to Borrower, in any event and whether or not so classified:

 

(a)           all debt and similar monetary obligations of Borrower, whether direct or indirect;

 

(b)           all obligations of Borrower arising or incurred under or in respect of any guaranties (whether direct or indirect) by Borrower of the Indebtedness of any other Person; and

 

(c)           all obligations of Borrower arising or incurred under or in respect of any Lien upon or in any property owned by Borrower that secures Indebtedness of another  Person, even though Borrower has not assumed or become liable for the payment of such Indebtedness.

 

1.47           “Intellectual Property” means all of the following intellectual property used in the conduct of the business of Borrower: (a) inventions, processes, techniques, discoveries, developments and related improvements, whether or not patentable; (b) United States patents, patent applications, divisionals, continuations, reissues, renewals, registrations, confirmations, re-examinations, extensions and any provisional applications, of any such patents or patent applications, and any foreign or international equivalent of any of the foregoing; (c) unregistered, United States registered or pending trademark, trade dress, service mark, service name, trade name, brand name, logo, domain name, or business symbol and any foreign or international equivalent of any of the foregoing and all goodwill associated therewith; (d) work specifications, software (including object and source code listing) and artwork; (e) technical, scientific and other know-how and information, trade secrets, methods, processes, practices, formulas, designs, assembly procedures, specifications owned or used by Borrower; (f) copyrights; (g) work for hire; (h) customer and mailing lists; and (i) any and all rights of the Borrower to the names “Mint Leasing”  or any derivation thereof, and Borrower’s entire customer list and database and all assets used or useful by Borrower in the conduct of its business over the internet or in any electronic medium, including any websites, URLs or domain names owned by Borrower.

 

1.48           “Interest Rate” means the Term Interest Rate.

 

1.49           “Instruments” has the meaning ascribed to such term in the UCC

 

  

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1.50            “Inventory” means “inventory,” as such term is defined in the UCC, now owned or hereafter acquired by Borrower, wherever located, and, in any event, shall include, without limitation, all raw materials, work-in-process, finished and semi-finished Inventory including, without limitation, all materials, parts, components and supplies relating to the manufacture or assembly thereof, packaging and shipping supplies relating thereto, motor vehicles deemed to be inventory, including, without limitation, the motor vehicles listed in Schedule 5.4(j) of the Borrower’s Disclosure Schedule and all other inventory, merchandise, goods and other personal property now or hereafter owned by Borrower, which are held for sale, exchange or lease or are furnished or are to be furnished under a contract of service or an exchange arrangement or which constitute raw materials, work-in-process or materials used or consumed or to be used or consumed in Borrower’s business, or the processing, packaging, delivery or shipping of the same, and all finished goods and the products of the foregoing, whatever form and wherever located; and all names or marks affixed to or to be affixed thereto for purposes of selling same by the seller, manufacturer, lessor or licensor thereof and all right, title and interest of Borrower therein and thereto.

 

1.51           “Investment Property” has the meaning ascribed to such term in the UCC.

 

1.52           “Lender” has the meaning set forth in the introductory paragraph hereof.

 

1.53           “Letter-of-Credit Rights” means “letter-of-credit rights” as such term is defined in the UCC, including rights to payment or performance under a letter of credit, whether or not the beneficiary thereof has demanded or is entitled to demand payment or performance.

 

1.54           “Lien” or “lien” means any mortgage, deed of trust, pledge, security interest, hypothecation, assignment, lien (statutory or other, including, without limitation, liens imposed by any Governmental Authority), claim, charge or other encumbrance of any kind or nature whatsoever (including, without limitation, pursuant to any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the UCC or comparable law of any jurisdiction to evidence any of the foregoing) on personal or real property or fixtures.

 

1.55           “Loan” means the original principal amount as set forth in the Term Loan Note.

 

1.56           “Loan Documents” means this Agreement, the Term Note, the Guarantee, the Collateral Assignment of Leases, the Stock Pledge Agreement, the Securities Issuance Agreement, Landlord Waiver and Access Agreement, Warrants (as defined in the Securities Issuance Agreement), the Lockbox Agreement, the Custodian Agreement, and any and all other agreements, notes, documents, mortgages, financing statements, guaranties, intercreditor agreements, subordination agreements, certificates and instruments executed and/or delivered at any time by Borrower or any other Person to Lender pursuant to and in connection with the Loan and this Agreement, as the same may be amended, modified, supplemented, renewed or extended from time to time.

 

1.57           “Lockbox” shall have the meaning assigned to such term in the Lockbox Agreement.

 

1.58           “Lockbox Agent” means the person serving from time to time as the Lockbox Agent under the Lockbox Agreement.

 

1.59           “Lockbox Agreement” means that certain Lockbox Agreement, dated as of the date hereof, among Lender, the Borrower and the Lockbox Agent.

 

  

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1.60           “Material Adverse Effect” means a material adverse effect on (a) the Business, assets, liabilities, financial condition, results of operations or business prospects of Borrower, (b) the ability of Borrower or any Guarantor to perform its obligations under any Loan Document to which it is a party, (c) the value of the Collateral or the rights of Lender therein, (d) the validity or enforceability of any of the Loan Documents, (e) the rights and remedies of Lender under any of such Loan Documents, or (f) the timely payment of the principal of or interest on the Loan or other amounts payable in connection therewith. All determinations of materiality shall be made by the Lender in its reasonable judgment.

 

1.61           “Material Contract” means any contract or other arrangement (other than Loan Documents), whether written or oral, to which Borrower is a party as to which the breach, nonperformance, cancellation or failure to renew by any party thereto could have a Material Adverse Effect.

 

1.62           “Maturity Date” means the earlier of (i) November  19, 2015,and  (ii) the date Lender may exercise any of its remedies pursuant to the terms hereof.

 

1.63           “Landlord Waiver and Access Agreement” means the Landlord Waiver and Access Agreement in the form of Exhibit 1.63 annexed hereto.

 

1.63A         “NADA Loan Value” has the meaning set forth in Section 4.2.

 

1.64           “1934 Act” means the Securities Exchange Act of 1934, as amended.

 

1.65           “Note” means the Term Loan Note.

 

1.66           “Obligations” means all obligations, liabilities and indebtedness of every kind, nature and description owing by Borrower to Lender pursuant to the Loan Documents, including, without limitation, principal, interest, repurchase obligations, charges, fees,  costs and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, whether now existing or hereafter arising, whether arising before, during or after the Term or after the commencement of any case with respect to Borrower under the United States Bankruptcy Code or any similar statute (including, without limitation, the payment of interest and other amounts which would accrue and become due but for the commencement of such case), whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, secured or unsecured.

 

1.67           “Payment Intangibles” has the meaning ascribed to such term in the UCC.

 

1.68           “Permitted Encumbrances” means the following: (a) Liens granted to Lender or its Affiliates; and (b) purchase money security interests in favor of equipment vendors upon any Capital Assets hereafter acquired (including, without limitation, capitalized or finance leases); provided, that, (i) no such purchase money security interest or other Lien (or capitalized or finance lease, as the case may be) with respect to specific future Capital Assets shall extend to or cover any other property, other than the specific Capital Assets so acquired, and the Proceeds thereof, (ii) such mortgage, Lien or security interest secures only the cost or obligation to pay the purchase price of such specific Capital Assets only (or the obligations under the capitalized or finance lease), (iii) the principal amount secured thereby shall not exceed one hundred (100%) percent of the lesser of the cost or the fair market value (at the time of the acquisition of the Capital Assets) of the Capital Assets so acquired, and (iv) such purchase money security interest is preapproved in writing by Lender.

 

  

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1.69           “Person” or “person” means, as applicable, any individual, sole proprietorship, partnership, corporation, limited liability company, limited liability partnership, business trust, unincorporated association, joint stock corporation, trust, joint venture or other entity or any government or any agency or instrumentality or political subdivision thereof.

 

1.70           “Proceeds” has the meaning ascribed to such term in the UCC and shall also include, but not be limited to, (a) any and all Proceeds of any and all insurance policies (including, without limitation, life insurance, casualty insurance, business interruption insurance and credit insurance), indemnity, warranty or guaranty payable to Borrower from time to time with respect to any of the Collateral or otherwise, (b) any and all payments (in any form whatsoever) made or due and payable to Borrower from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any governmental body, authority, bureau or agency or any other Person (whether or not acting under color of Governmental Authority) and (c) any and all other amounts from time to time paid or payable under or in connection with any of the Collateral.

 

1.71           “Promissory Note” has the meaning ascribed to such term in the UCC.

 

1.72           “Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing of a Hazardous Substance into the Environment.

 

1.73           “Responsible Officer” means the President or Chief Executive Officer of Borrower.

 

1.74           “SEC” means the United States Securities and Exchange Commission.

 

1.75           “SEC Reports” shall mean the Borrower’s (1) Annual Report on Form 10-K for the year ended December 31, 2012, and (2) all other periodic and other reports filed by the Borrower with the SEC pursuant to the 1934 Act subsequent to December 31, 2012, and prior to the date hereof, in each case as filed with the SEC and including the information and documents (other than exhibits) incorporated therein by reference.

 

1.76           “Securities” has the meaning ascribed to such term in the UCC.

 

1.77           “Securities Issuance Agreement” means the Securities Issuance Agreement to be executed and delivered by Borrower to Lender in the form of Exhibit 1.77 annexed hereto.

 

1.78           “Software” has the meaning ascribed to such term in the UCC.

 

1.79            “Stock Pledge Agreement” means the Stock Pledge Agreement to be executed and delivered by Borrower to Lender in the form of Exhibit 1.79 annexed hereto.

 

1.80           “Subsidiary” means, as to any Person, a corporation, limited liability company or other entity with respect to which more than fifty (50%) percent of the outstanding Equity Interests of each class having voting power is at the time owned by such Person or by one or more Subsidiaries of such Person or by such Person.

 

1.81           “Tangible Chattel Paper” has the meaning ascribed to such term in the UCC.

 

  

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1.82           “Tax” has the meaning set forth in Section 8.12(c).

 

1.83           “Tax Deduction” has the meaning set forth in Section 8.12(c).

 

1.84           “Term” has the meaning set forth in Section 4.1.

 

1.85           “Term Interest” means interest accruing on the unpaid principal balance of the Term Loan at the Term Interest Rate.

 

1.86           “Term Interest Rate” has the meaning set forth in Section 3.1(b).

 

1.87           “Term Loan” has the meaning set forth in Section 2.1(a).

 

1.88           “Term Loan Collateral Base” has the meaning set forth in Section 4.2(c).

 

1.89           “Term Loan Note” has the meaning set forth in Section 2.1(b).

 

1.90           “Term Loan Prepayment Fee” has the meaning set forth in Section 4.2(b) hereof.

 

1.91           “UCC” means the Uniform Commercial Code as presently enacted in  New York (or any successor legislation thereto), and as the same may be amended from time to time, and the state counterparts thereof as may be enacted in such states or jurisdictions where any of the Collateral is located or held.

 

1.92            “United States Bankruptcy Code” means Title 11 of the United States Code, as amended, and any successor statute.

 

1.93           Rules of Interpretation and Construction.  In this Agreement unless the context otherwise requires:

 

(a)           All terms used herein which are defined in the UCC  shall have the meanings given therein unless otherwise defined in this Agreement;

 

(b)           Sections mentioned by number only are the respective Sections of this Agreement as so numbered;

 

(c)           Words importing a particular gender shall mean and include the other gender and words importing the singular number mean and include the plural number and vice versa;

 

(d)           Words importing persons shall mean and include firms, associations, partnerships (including limited partnerships), societies, trusts, corporations, limited liability companies or other legal entities, including public or governmental bodies, as well as natural persons;

 

(e)           Each reference in this Agreement to a particular person shall be deemed to include a reference to such person's successors and permitted assigns;

 

(f)           Any headings preceding the texts of any Section of this Agreement, and any table of contents or marginal notes appended to copies hereof are intended, solely for convenience of reference and shall not constitute a part of this Agreement, nor shall they affect its meaning, construction or effect;

 

  

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(g)           If any clause, provision or section of this Agreement shall be ruled invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any of the remaining provisions thereof;

 

(h)           The terms “herein”, “hereunder”, “hereby”, “hereto”, and any similar terms as used in this Agreement refer to this Agreement; the term “heretofore” means before the date of execution of this Agreement; and the term “hereafter” shall mean after the date of execution of this Agreement;

 

(i)           If any clause, provision or section of this Agreement shall be determined to be apparently contrary to or conflicting with any other clause, provision or section of this Agreement, then the clause, provision or section containing the more specific provisions shall control and govern with respect to such apparent conflict;

 

(j)           Unless otherwise specified, (i) all accounting terms used herein or in any Loan Document shall be interpreted in accordance with GAAP, (ii) all accounting determinations and computations hereunder or thereunder shall be made in accordance with GAAP and (iii) all financial statements required to be delivered hereunder or thereunder shall be prepared in accordance with GAAP;

 

(k)           An Event of Default that occurs shall exist or continue or be continuing unless such Event of Default is waived by Lender in accordance with the terms of this Agreement; and

 

(l)           The word “and” when used from time to time herein shall mean “or” or “and/or” if such meaning is expansive of the rights or interests of Lender in the given context.

 

(m)           All references herein and in the other Loan Documents to times of day shall refer to New York City time, unless otherwise specified to the contrary; and

 

(n)           No provision of this Agreement shall be construed against or interpreted to the disadvantage of any party hereto by reason of such party or his or its counsel having, or being deemed to have, structured or drafted such provision.

 

SECTION 2. LOANS

 

2.1           Term Loan.

 

(a)           Upon the terms and provisions and subject to the conditions contained in this Agreement, on the date hereof, Lender is making a term loan in the amount of Nine Million Three Hundred Thousand Dollars ($9,300,000) to Borrower (the “Term Loan”).

 

(b)           The obligation of Borrower to repay the Term Loan shall be evidenced by a note (the “Term Loan Note”) in the form of Exhibit 2.1(b) hereto and dated the date hereof.

 

  

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(c)           Borrower shall repay the principal of the Term Loan in accordance with the payment schedule set forth in the Term Loan Note. Once borrowed and repaid, amounts drawn under the Term Loan may be not be reborrowed.

 

2.2           Collections; Deposit Account Control Agreements.

 

 (a)           Remittances from Account Debtors (including remittances from lessees under the Eligible Leases) and all other proceeds of Accounts and other Collateral shall be sent to the Lockbox designated by and/or maintained in the name of Borrower pursuant to the Lockbox Agreement or pursuant to such other deposit account control agreement(s) that have been approved in writing by Lender in Lender’s sole discretion. Once instituted, the Lockbox system shall remain in effect unless Lender directs otherwise. Borrower shall bear all risk of loss of any funds deposited into such accounts except to the extent such loss is caused by the gross negligence or the willful misconduct of Lender. In connection therewith, Borrower shall execute the Lockbox Agreement and such other account control agreements as Lender shall specify from time to time. Any Collateral Proceeds received by Borrower from any source whatsoever shall be held in trust for the benefit of Lender and immediately remitted to Lender in kind.

 

(b)           All payments of principal, interest, fees, costs, expenses and other charges provided for in this Agreement or any other Loan Document that have not been paid to Lender on the due dates thereof, shall be added to the principal amount of the Obligations, and shall bear interest at the Default Interest Rate.

 

2.3           Use of Proceeds.  Borrower shall use the proceeds of the Loan solely for (a) payment in full of any other Indebtedness secured by the Collateral, (b) payment of the closing fees to Lender hereunder, (c) payment of outstanding closing expenses and (d) new vehicle fleet purchases.

 

2.4           Repayment.  Borrower shall repay the Loan and other Obligations in accordance with the Term Loan Note and this Agreement.

 

SECTION 3. INTEREST, FEES AND CHARGES

 

3.1     Interest.

 

(a)           The unpaid principal balance of the Term Loan shall bear interest at a rate per annum equal to the Term Interest Rate (defined below) and shall be paid in accordance with the Term Loan Note.

 

(b)           The “Term Interest Rate” shall be computed on the basis of the actual number of days elapsed and a year of three hundred sixty  360) days, and  shall accrue at a rate per annum equal to the greater of (i) the sum of (A) the “Prime Rate” as reported in the “Money Rates” column of The Wall Street Journal, adjusted as and when such Prime Rate changes, plus (B) Four and Three Quarters Percent (4.75%), or (ii) Eight Percent (8%). Term Interest shall be payable monthly in accordance with the provisions of the Term Loan Note.

 

(c)           Following and during the continuation of an Event of Default, the Term Interest Rate shall be increased by Six Percent (6%) per annum (the “Default Interest Rate”).

 

  

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3.2     Fees.  Borrower shall pay Lender, or Lender’s designee, the closing fee and other fees set forth below, on or before the dates set forth below:

 

 (a)           Closing and other fees are payable by Borrower to Lender as follows:

(i)           Closing fee equal to four and one-half percent (4.5%) of the principal amount of the Term Loan, due and payable at Closing.

(ii)           Collateral monitoring fee equal to one-twelfth of one percent of the average outstanding Term Loan balance for the preceding month, payable monthly in arrears on the tenth (10th) day of each month, provided that if such day is not a Business Day, Borrower shall pay such collateral monitoring fee on the first (1st) Business Day following such day.

 

 

(b)           Audit fees of $1,000 per person, per day, plus out-of-pocket expenses, for not more than two (2) quarterly audits during each 12-month period of the Term; provided, that no such limitation shall apply following the occurrence of an Event of Default.

Such fees, other than the audit fees referenced above, shall be deemed fully earned on the date hereof, shall be paid from Loan proceeds or as Lender may otherwise direct, and shall not be subject to rebate or proration for any reason.

 

3.3     Fees and Expenses.  Borrower shall pay, on Lender's demand, all costs, expenses, filing fees and taxes payable in connection with the preparation, execution, delivery, recording, administration, collection, liquidation, defense and enforcement of the Loan Documents, Lender's rights in the Collateral, and all other existing and future agreements or documents contemplated herein or related hereto, including any amendments, waivers, supplements or consents which may now or hereafter be made or entered into in respect hereof, or in any way involving claims or defenses asserted by Lender or claims or defenses against Lender asserted by Borrower or any third party directly or indirectly arising out of or related to the relationship between Borrower and Lender, including, but not limited to the following, whether incurred before, during or after the Term or after the commencement of any case with respect to Borrower under the United States Bankruptcy Code or any similar or successor statute: (a) all costs and expenses of filing or recording (including UCC Financing Statement, motor vehicle title and, if applicable, mortgage filing fees); (b) all title insurance and other insurance premiums, appraisal fees, fees incurred in connection with any environmental report and audit, survey and search fees and charges; (c) all costs and expenses of onsite visits by Lender and its representatives, including travel and lodging expenses; (d) all fees relating to the wire transfer of loan proceeds and other funds and fees for returned checks; (e) all costs and fees of the Custodian and its agents; and (f) all costs, fees and disbursements of counsel to Lender. If any fees, costs or charges payable to Lender hereunder are not paid when due, such amounts shall be added to the principal amount of the Obligations and accrue interest at the Default Interest Rate until paid.

 

3.4     Savings Clause.  It is intended that the Interest Rate and the Default Interest Rate, individually and collectively, shall never exceed the maximum rate, if any, which may be legally charged in the State of New York for loans made to corporations (the “Maximum Rate”).  If the provisions for interest contained in the Term Loan Note would result in a rate higher than the Maximum Rate, the interest shall nevertheless be limited to the Maximum Rate and any amounts which may be paid toward interest in excess of the Maximum Rate shall be applied to the reduction of principal, or, at the option of Lender, returned to the Borrower.

 

  

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SECTION 4. TERM.

 

4.1     Term.  This Agreement shall continue until all Obligations shall have been indefeasibly paid in full (the “Term”).

 

4.2     Early Termination; Prepayment

 

(a)           Lender shall have the right to terminate this Agreement at any time upon or after the occurrence of an Event of Default.

 

(b)           Borrower may prepay the Loan without premium or penalty, except as set forth herein. Notwithstanding the foregoing, if Lender accelerates the payment of the Obligations due to the occurrence of an Event of Default, Borrower shall pay to Lender, in addition to the payment in full of all Obligations, an early payment fee (“Term Loan Prepayment Fee”) in an amount equal to ten percent (10.0%) of the then-outstanding principal balance of the Term Loan. Such Term Loan Prepayment Fee shall be due and payable by Borrower to Lender upon acceleration of the payment of the Obligations due to the occurrence of an Event of Default. The Term Loan Prepayment Fee is intended to compensate Lender for committing and deploying funds for Borrower’s loan pursuant to the Agreement and for Lender’s loss of investment of such funds in connection with such early termination, and is not intended as a penalty.

 

(c)           Notwithstanding any provision herein to the contrary, Borrower shall repay the Term Loan immediately at any time and from time to time in an amount by which the outstanding balance of the Term Loan exceeds the Term Loan Collateral Base, as determined by Lender (an “Overadvance”). “Term Loan Collateral Base” means an amount equal to the lesser of the amounts determined in accordance with the following two formulas, in each case as verified by Lender and as evidenced by a certificate of a Responsible Officer setting forth such calculations in reasonable detail, in form and substance satisfactory to Lender (the “Eligible Lease Receivables Certificate”):

(i)           Formula One: the sum of (A) sixty percent (60%) of then-current receivables under Eligible Leases, which receivables shall be recalculated on the fifth day of each month, effective as of the last day of the prior month, and on the twentieth day of each month, effective on the fifteenth day of such month,  plus (B) sixty percent (60%) of the residual value at lease-end of the underlying motor vehicles then leased under the Eligible Leases, which amount, and the calculation thereof, shall be set forth in each Eligible Lease Receivables Certificate, plus (C) sixty percent (60%) of the NADA Loan Value of all motor vehicles owned by Borrower that are not under lease and are in Borrower’s possession, as to which motor vehicles Lender has a first priority Lien and which owned vehicles have not been in Borrower’s possession for more than one hundred twenty (120) days (“Eligible Owned Vehicles”), which amount, and the calculation thereof, shall be set forth in each Eligible Lease Receivables Certificate, provided that the portion of the Term Loan Collateral Base attributable to the NADA Loan Value of all Eligible Owned Vehicles shall not exceed Eight Hundred Fifty Thousand Dollars ($850,000); or

  

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(ii)           Formula Two: the sum of (A) seventy percent (70%) of the then-current NADA Loan Value for the underlying motor vehicles on the Eligible Leases, which amount, and the calculation thereof, shall be set forth in each Eligible Lease Receivables Certificate, plus (B) sixty percent (60%) of the NADA Loan Value of Eligible Owned Vehicles, which amount, and the calculation thereof, shall be set forth in each Eligible Lease Receivables Certificate, provided that the portion of the Term Loan Collateral Base attributable to the NADA Loan Value of all Eligible Owned Vehicles shall not exceed Eight Hundred Fifty Thousand Dollars ($850,000).

(d)           In addition, Borrower shall prepay the Term Loan in an amount equal to the gross sale proceeds of the sale of any motor vehicle received by Borrower upon the termination of the Eligible Lease to which such motor vehicle is subject or the sale by Borrower of any other motor vehicle Inventory in the usual course of Borrower’s business, less direct expenses of such sale, as verified by Lender, to be applied to the Obligations in such manner as Lender shall determine, in accordance with the provisions of Section 5.4(e).

“NADA Loan Value” means, with respect to a motor vehicle under an Eligible Lease or an Eligible Owned Vehicle, as the case may be, the loan value for such vehicle as determined by the National Automobile Dealers Association and as confirmed by Lender.

SECTION 5. COLLATERAL.

 

5.1     Security Interests in Borrower’s Assets.  As collateral security for the payment and performance of the Obligations, Borrower hereby grants and conveys to Lender a first priority continuing security interest in and Lien upon all now owned and hereafter acquired property and assets of Borrower and the Proceeds and products thereof (which property, assets and Proceeds, together with all other collateral security for the Obligations now or hereafter granted to or otherwise acquired by Lender, are referred to herein collectively as the “Collateral”), including, without limitation, all property of Borrower now or hereafter held or possessed by Lender, and including the following:

 

(a)           Accounts;

 

(b)           Chattel Paper;

 

(c)           Commercial Tort Claims;

 

(d)           Deposit Accounts;

 

(e)           Documents;

 

(f)           Electronic Chattel Paper;

 

(g)           Equipment;

 

(h)           Fixtures;

 

  

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(i)           General Intangibles, including, without limitation, all Eligible Leases and other motor vehicle leases to which Borrower is a party;

 

(j)           Goods;

 

(k)           motor vehicles;

 

(l)           Instruments;

 

(m)           Inventory;

 

(n)           Investment Property;

 

(o)           Letter-of-Credit Rights;

 

(p)           Payment Intangibles;

 

(q)           Promissory Notes;

 

(r)           Software;

 

(s)           Tangible Chattel Paper;

 

(t)           Securities (whether certificated or uncertificated);

 

(u)           warehouse receipts;

 

(v)           cash monies;

 

(w)           tax and duty refunds;

 

(x)           Intellectual Property;

 

(y)           All present and future books and records relating to any of the above including, without limitation, all present and future motor vehicle titles, books of account of every kind or nature, purchase and sale agreements, invoices, ledger cards, bills of lading and other shipping evidence, statements, correspondence, memoranda, credit files and other data relating to the Collateral or any Account Debtor, together with the tapes, disks, diskettes and other data and software storage media and devices, file cabinets or containers in or on which the foregoing are stored (including any rights of Borrower with respect to any of the foregoing maintained with or by any other Person); and

 

(z)           Any and all products and Proceeds of the foregoing in any form including, without limitation, all insurance claims, warranty claims and Proceeds and claims against third parties for loss or destruction of or damage to any or the foregoing.

 

  

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5.2     Financing Statements.  Borrower hereby authorizes Lender to file Financing Statements with respect to the Collateral in form acceptable to Lender and its counsel, and hereby ratifies any actions taken by Lender prior to the date hereof to file such Financing Statements.  Borrower shall, at all times, do, make, execute, deliver and record, register or file all Financing Statements and other instruments, acts, pledges, leasehold or other mortgages, amendments, modifications, assignments and transfers (or cause the same to be done), and will deliver to Lender such instruments and/or documentation evidencing items of Collateral, as may be requested by Lender to better secure or perfect Lender's security interest in the Collateral or any Lien with respect thereto. Borrower acknowledges that it is not authorized to file any Financing Statement or amendment or termination statement with respect to any Financing Statement without the prior written consent of Lender and agrees that it will not do so without the prior written consent of Lender. In addition, Borrower hereby authorizes Lender to record the Liens in favor of the Lender in (i) the U.S. Patent and Trademark Office and the U.S. Copyright Office, as applicable, and the taking of any actions required under the laws of jurisdictions outside the United States with respect to Intellectual Property included in the Collateral and (ii) applicable motor vehicle offices with respect to motor vehicles. Upon the indefeasible payment in full of the Obligations, as confirmed in writing by Lender, Lender shall authorize Borrower to file and record, or cause to be filed or recorded, such releases and termination statements in the appropriate jurisdictions and offices in order to effect the termination of Lender’s Liens hereunder.

 

5.3     License Grant.  Borrower hereby grants to Lender an irrevocable, non-exclusive, worldwide license without payment of royalty or other compensation to Borrower, upon the occurrence and during the continuance of an Event of Default, to use or otherwise exploit in any manner as to which authorization of the holder of such Intellectual Property would be required, and to license or sublicense such rights in to and under, any Intellectual Property now or hereafter owned by or licensed to Borrower, and wherever the same may be located, including in such license access to all media in which any of such Intellectual Property may be recorded or stored and to all software and hardware used for the compilation or printout thereof, and represents, warrants and agrees that any such license or sublicense is not and will not be in conflict with the contractual, proprietary or commercial rights of any third Person and subject, in the case of trademarks and service marks, to sufficient rights to quality control and inspection in favor of Borrower to avoid the risk of invalidation of said trademarks and service marks.  The foregoing license will terminate on the indefeasible payment in full of all Obligations; provided, however, that any license, sublicense, or other rights granted by Lender pursuant to such license during its term shall remain in effect in accordance with its terms.

 

5.4    Representations, Warranties and Covenants Concerning the Collateral.  Borrower covenants, represents and warrants (each of which such representations and warranties shall survive execution of this Agreement) as follows:

 

(a)           (i) Borrower owns all of the Collateral free and clear of all Liens (including any claim of infringement) except those in Lender’s favor and Permitted Encumbrances and (ii) none of the Collateral is subject to any agreement prohibiting the granting of a Lien or requiring notice of or consent to the granting of a Lien.

 

(b)           It shall not encumber, mortgage, pledge, assign or grant any Lien upon any Collateral or any other assets to anyone other than the Lender and except for Permitted Encumbrances.

 

  

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(c)           The Liens granted pursuant to this Agreement, upon the notation of Lender’s security interest on motor vehicle titles under, and in accordance with, applicable motor vehicle statutes and the filing thereof in the applicable state, the filing of Financing Statements in respect of Borrower in favor of the Lender in the applicable filing office of the state of organization of Borrower, the recording of the Liens in favor of the Lender in the U.S. Patent and Trademark Office and the U.S. Copyright Office, as applicable, and the taking of any actions required under the laws of jurisdictions outside the United States with respect to Intellectual Property included in the Collateral which is created under such laws, constitute valid perfected first priority security interests in all of the Collateral in favor of the Lender, as security for the prompt and complete payment and performance of the Obligations, enforceable in accordance with the terms hereof.

 

(d)           No security agreement, mortgage, deed of trust, financing statement, equivalent security or Lien instrument or continuation statement covering all or any part of the Collateral is or will be on file or of record in any public office, except those relating to Permitted Encumbrances.

 

(e)           It shall not dispose of any of the Collateral whether by sale, lease or otherwise except for (i) the disposition or transfer in the ordinary course of business of worn out or obsolete Equipment if consented to in advance in writing by Lender, in Lender’s sole discretion, and then only to the extent that Proceeds of any such disposition are used to acquire replacement Equipment which is subject to the Lender’s security interest or are used to repay the Obligations as determined by Lender, or (ii) the sale of a motor vehicle received by Borrower upon the termination of the Eligible Lease to which such motor vehicle is subject (either as a result of the end of the applicable term, repossession or otherwise) or the sale by Borrower of any other motor vehicle Inventory in the usual course of Borrower’s business; provided that, in each such case, the proceeds of such sale are immediately applied to the payment of the Obligations in such manner as Lender shall determine in accordance with Section 4.2(d) hereof, in which event, following receipt of such payment,  Lender agrees to not withhold, delay, or unreasonably condition the release and transfer of the vehicle title held as Collateral in connection with any such sale.

 

(f)           It shall defend the right, title and interest of the Lender in and to the Collateral against the claims and demands of all Persons whomsoever, and take such actions, including (i) all actions necessary to grant the Lender “control” of any Investment Property, Deposit Accounts, Letter-of-Credit Rights or Electronic Chattel Paper owned by it, with any agreements establishing control to be in form and substance satisfactory to the Lender, (ii) the prompt (but in no event later than three (3) Business Days following the Lender’s request therefor) delivery to the Lender or the Custodian of all original Instruments, Chattel Paper, negotiable Documents and certificated Securities owned by it (in each case, accompanied by stock powers, allonges or other instruments of transfer executed in blank), (iii) notification to third parties of the Lender’s interest in Collateral at the Lender’s request, and (iv) the institution of litigation against third parties as shall be prudent in order to protect and preserve its and/or the Lender’s interests in the Collateral.

 

(g)           It shall promptly, and in any event within three (3) Business Days after the same is acquired by it, notify the Lender of any Commercial Tort Claim acquired by it and, unless otherwise consented to by the Lender, it shall enter into a supplement to this Agreement granting to the Lender a Lien in such Commercial Tort Claim for the benefit of Lender.

 

(h)           It shall perform in a reasonable time all other steps requested by the Lender to create and maintain in the Lender’s favor a valid perfected first Lien in all Collateral.

 

  

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(i)           It shall notify the Lender promptly and in any event within three (3) Business Days of Borrower’s knowledge of any loss, damage or destruction of any of the Collateral.

 

(j)           Section 5.4(j) of the Borrower’s Disclosure Schedule contains a true and complete list of all Equipment and Inventory (including motor vehicles) owned by Borrower as of the Closing Date and the location of such Equipment and Inventory.  Borrower shall not permit any Equipment or Inventory to become a fixture to real estate or accessions to other personal property.  Borrower owns no Equipment or Inventory other than as set forth in such Section 5.4(j).   Borrower shall keep and maintain its Equipment and Inventory in good operating condition, except for ordinary wear and tear, and shall make all necessary repairs and replacements thereof so that the value and operating efficiency shall at all times be maintained and preserved.  It shall not permit any such items to become a fixture to real estate or accessions to other personal property.

 

(k)           It shall maintain and keep all of its books and records concerning the Collateral at its executive offices listed in Section 5.4(n) of the Borrower’s Disclosure Schedule.

 

(l)           Section 5.4(l) of the Borrower’s Disclosure Schedule lists all banks and other financial institutions at which it maintains deposits and/or other accounts, and such Schedule correctly identifies the name, address and telephone number of each such depository, the name in which the account is held, a description of the purpose of the account, and the complete account number. Borrower shall not establish any depository or other bank account with any financial institution (other than the accounts set forth on Section 5.4(l) of the Borrower’s Disclosure Schedule) without Lender’s prior written approval in Lender’s sole and absolute discretion.

 

(m)           On the date hereof, its exact legal name (as indicated in the public record of its jurisdiction of organization), jurisdiction of organization, organizational identification number, if any, from the jurisdiction of organization, and the location of its chief executive office and all other offices or locations out of which it conducts business or operations, are specified on Section 5.4(n) of the Borrower’s Disclosure Schedule.  It has furnished to the Lender a certified charter, certificate of incorporation or other organization document and long-form good standing certificate as of a date which is within thirty (30) days of the date hereof.  It is organized solely under the law of the jurisdiction so specified and has not filed any certificates of domestication, transfer or continuance in any other jurisdiction.  Except as otherwise indicated on Section 5.4(n) of the Borrower’s Disclosure Schedule, the jurisdiction of its organization of formation is required to maintain a public record showing it to have been organized or formed.  Except as specified on Section 5.4(n) of the Borrower’s Disclosure Schedule, it has not changed its name, jurisdiction of organization, chief executive office or sole place of business or its corporate structure in any way (e.g., by merger, consolidation, change in corporate form or otherwise) within the last five years and has not within the last five years become bound (whether as a result of merger or otherwise) as a grantor under a security agreement entered into by another Person, which has not heretofore been terminated.

 

(n)           It will not, except with Lender’s prior written consent and upon delivery to the Lender of all additional financing statements and other documents and legal opinions requested by the Lender to maintain the validity, perfection and priority of the security interests provided for herein:  (i) change its jurisdiction of organization or the location of its chief executive office from that referred to in Section 5.4(n) of the Borrower’s Disclosure Schedule;  (ii) change its name or (iii) change its organizational structure from a corporate structure to another entity structure.

 

  

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(o)           None of the Collateral is subject to any prohibition against encumbering, pledging, hypothecating or assigning the same or requires notice or consent to Borrower’s doing of the same.

 

(p)           A complete and accurate list of all policies of insurance currently held by Borrower on the date hereof (collectively, “Existing Insurance Policies”) is set forth in Section 5.4(p) of the Borrower’s Disclosure Schedule.

 

SECTION 6. CONDITIONS TO LOAN.

 

The obligation of Lender to make the Loan shall be subject to the satisfaction or waiver by Lender, prior thereto or concurrently therewith, of each of the following conditions precedent:

 

6.1     Loan Documents.  Each of the Loan Documents shall have been duly and properly authorized, executed and delivered by Borrower and the other parties thereto and shall be in full force and effect as of the date hereof.

 

6.2     Representations and Warranties.  Each of the representations and warranties made by or on behalf of Borrower to Lender in this Agreement and in other Loan Documents shall be true and correct in all material respects as of the date hereof, provided that any such representation or warranty that is qualified by materiality shall be true and correct in all respects as of the date hereof.

 

6.3     Certified Copies of Corporate Documents.  Lender shall have received from Borrower, certified by a duly authorized officer to be true and complete on and as of a date which is not more than ten (10) Business Days prior to the date hereof, a copy of each of (a) the certificate of incorporation or such other formation documents of Borrower in effect on such date of certification, and (b) the by-laws of Borrower in effect on such date.

 

6.4     Proof of Corporate Action.  Lender shall have received from Borrower a copy, certified by a duly authorized officer to be true and complete on and as of the date which is not more than ten (10) Business Days prior to the date hereof, of the records of all corporate action taken by Borrower to authorize (a) its execution and delivery of each of the Loan Documents to which it is or is to become a party as contemplated or required by this Agreement, (b) its performance of all of its agreements and obligations under each of such documents, and (c) the incurring of the Obligations contemplated by this Agreement.

 

6.5     Legal Opinion.  Lender shall have received a written legal opinion, addressed to Lender, dated the date hereof, from counsel for Borrower.  Such legal opinion shall be acceptable to Lender and its counsel.

 

6.6     Collateral.  Lender shall have obtained a first priority, perfected security interest in the Collateral of Borrower.

 

6.7     Insurance.  Lender shall have received evidence of insurance, additional insured and loss payee endorsements required hereunder and under the other Loan Documents, in form and substance satisfactory to Lender, and certificates of insurance policies and/or endorsements naming Lender as additional insured and loss payee under such of the Existing Insurance Policies or other insurance policies as may be required by Lender under Section 9.8 or otherwise.

 

  

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6.8     Validity of Collateral Representation.  Lender shall have received a statement by the appropriate officers of Borrower which shall represent and certify the validity of the Collateral.

 

6.9     IRS Form 4506.  Lender shall have received from Borrower an executed Form 4506 to be submitted to the Internal Revenue Service which shall grant Lender access to Borrower’s tax returns.

 

6.10    IRS Form W-9.  Lender shall have received from Borrower an executed Form W-9 to be submitted to the Internal Revenue Service which shall allow Lender to verify Borrower’s tax identification number(s).

 

6.11    Pay Proceeds Letter.  Borrower shall have delivered to Lender a pay proceeds letter with respect to the disbursement of the proceeds of the Loan in form and substance satisfactory to Lender, which letter shall provide for, among other things, the payment or reimbursement of all costs and expenses incurred by Lender in connection with this Agreement and the other Loan Documents.

 

6.12    Payoff Letter.  Borrower shall have delivered to Lender a payoff letter in form and substance satisfactory to Lender from Comerica Bank, and Comerica Bank shall have released all of its Liens on the Collateral and dismissed with prejudice any pending litigation between Comerica Bank and Borrower.

 

6.13    Motor Vehicle Title Documents. For each Eligible Lease, Lender shall have received an original manufacturer’s statement of origin (MSO) or certificate of title for the underlying motor vehicle reflecting Borrower as owner and Lender as sole lienholder in form and substance satisfactory to Lender, or escrow arrangements shall have been made for delivery of same to Lender, which escrow arrangements shall be in form and substance satisfactory to Lender in its sole and absolute discretion.

 

6.14        Eligible Leases. Lender shall have received originals of each Eligible Lease.

 

6.15    Other Documentation. Borrower shall have delivered to Lender all other instruments, documents and certificates reasonably requested by Lender.

 

SECTION 7. [RESERVED] 

 

SECTION 8. REPRESENTATIONS AND WARRANTIES.

 

Borrower hereby represents and warrants to Lender, knowing and intending that Lender shall rely thereon in making the Loan contemplated hereby (each of which representations and warranties shall be continuing unless expressly made in relation only to a specific date), that:

8.1     Corporate Existence:

 

(a)           Borrower (i) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (ii) is in good standing in all other jurisdictions in which it is required to be qualified to do business as a foreign corporation, and (iii) has all requisite corporate power and authority and full legal right to own or to hold under lease its properties and to carry on the business as presently engaged.

 

  

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(b)           Borrower has corporate power and authority and has full legal rights to enter into each of the Loan Documents to which it is a party, and to perform, observe and comply with all of its agreements and obligations under each of such documents.

 

8.2     No Violation, etc.  The execution and delivery by Borrower of the Loan Documents to which Borrower is a party, the performance by Borrower of all of its agreements and obligations under each of such documents, and the incurring by Borrower of all of the Obligations contemplated by this Agreement, have been duly authorized by all necessary corporate actions on the part of Borrower and, if required, its shareholders, and do not and will not (a) contravene any provision of Borrower’s charter, bylaws or other governing documents or this Agreement (each as from time to time in effect), (b) conflict with, or result in a breach of the terms, conditions, or provisions of, or constitute a default under, or result in the creation of any Lien upon any of the property of Borrower under, any agreement, mortgage or other instrument to which Borrower is or may become a party, (c) violate or contravene any provision of any law, regulation, order, ruling or interpretation thereunder or any decree, order or judgment or any court or governmental or regulatory authority, bureau, agency or official (all as from time to time in effect and applicable to such entity), (d) require any waivers, consents or approvals by any third party, including any creditors or trustees for creditors of Borrower, or (e) require any approval, consent, order, authorization, or license by, or giving notice to, or taking any other action with respect to, any Governmental Authority.

 

8.3     Binding Effect of Documents, etc.  Borrower has duly executed and delivered each of the Loan Documents to which Borrower is a party, and each of the Loan Documents is valid, binding and in full force and effect. The agreements and obligations of Borrower as contained in each of the Loan Documents constitute, or upon execution and delivery thereof will constitute, legal, valid and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, subject, as to the enforcement of remedies only, to limitations imposed by federal and state laws regarding bankruptcy, insolvency, reorganization, moratorium and other laws affecting creditors' rights and remedies generally, and by general principles of law and equity.

 

8.4     No Events of Default.

(a)           No Event of Default has occurred and is continuing and no event has occurred and is continuing and no condition exists that would, with notice or the lapse of time, or both, constitute an Event of Default.

 

(b)           Borrower is not in default under any Material Contract to which Borrower is a party or by which Borrower or any property of Borrower is bound.

 

(c)           Borrower’s execution, delivery and performance of and compliance with this Agreement and the other Loan Documents  will not, with or without the passage of time or giving of notice, result in any material violation of law, or be in conflict with or constitute a default under any term or provision, or result in the creation of any Lien upon any of Borrower’s  properties or assets or the suspension, revocation, impairment, forfeiture or nonrenewal, of any permit, license, authorization or approval applicable to Borrower, or any of its businesses or operations or any of its assets or properties.

 

  

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8.5     No Governmental Consent Necessary.  No consent or approval of, giving of notice to, registration with or taking of any other action in respect of, any Governmental Authority is required with respect to the execution, delivery and performance by Borrower of this Agreement and the other Loan Documents to which it is a party.

 

8.6     No Proceedings.  There are no actions, suits, or proceedings pending or, to the best of Borrower’s knowledge, threatened against or affecting Borrower in any court or before any Governmental Authority which, if adversely determined, would have an adverse effect on the ability of Borrower to perform its obligations under this Agreement or the other Loan Documents to which it is a party.

 

8.7     No Violations of Laws; Licenses and Permits.  Borrower has conducted, and is conducting, its Business, so as to comply in all material respects with all applicable federal, state, county and municipal statutes and regulations.  Neither Borrower nor any officer, director or shareholder of Borrower is or has been charged with, or so far as is known by Borrower, is under investigation with respect to, any violation of any such statutes, regulations or orders, which could have a Material Adverse Effect. Borrower has been issued all required federal, state and local licenses, certificates or permits required for the operation of its business.

8.8          Use of Proceeds of the Loan.  Proceeds from the Loan shall be used only for those purposes set forth in this Agreement.  No part of the proceeds of the Loan shall be used, directly or indirectly, for the purpose of purchasing or carrying any margin stock or for the purpose of purchasing or carrying or trading in any stock under such circumstances as to involve Borrower in a violation of any statute or regulation.  In particular, without limitation of the foregoing, no part of the proceeds from the Loan is intended to be used to acquire any publicly-held stock of any kind.

8.9     Financial Statements; Indebtedness.

 

(a)           The audited and unaudited financial statements contained in the SEC Reports (collectively, the “Financial Statements”) (x) fairly present, as of the respective dates thereof, the financial position of Borrower, and the results of its operations, cash flows and stockholders’ equity in all material aspects, and (y) except for the fact that the unaudited financial statements omit notes to such statements and year-end adjustments thereto, have been prepared in accordance with GAAP in conformity with the rules and regulations of the SEC.

(b)           Except as shown on the most recent Financial Statements, (i) Borrower has no other Indebtedness as of the date hereof, and (ii) Borrower has no liabilities, contingent or otherwise, except those which, individually or in the aggregate, are not material to the financial condition or operating  results of Borrower.

8.10    Changes in Financial Condition.  Since the Balance Sheet Date, there has been no material adverse change and no material adverse development in the business, properties, operations, condition (financial or otherwise), results of operations or prospects of Borrower, except to the extent relating to Borrower’s credit facility with Comerica Bank as disclosed in Borrower’s SEC filings.  Since the Balance Sheet Date, Borrower has not (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, outside of the ordinary course of business, (iii) had capital expenditures outside of the ordinary course of business, (iv) engaged in any transaction with any Affiliate or (v) engaged in any other transaction outside of the ordinary course of business.

 

  

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8.11    Equipment.  Borrower shall keep its Equipment in good order and repair, and in running and marketable condition, ordinary wear and tear excepted.

 

8.12    Taxes and Assessments.

 

(a)           Borrower has paid and discharged when due all taxes, assessments and other governmental charges which may lawfully be levied or assessed upon its income and profits, or upon all or any portion of any property belonging to it, whether real, personal or mixed, to the extent that such taxes, assessment and other charges have become due.  Borrower has filed all tax returns, federal, state and local, and all related information, required to be filed by it.

 

(b)           Borrower shall make all payments to be made by it hereunder without any Tax Deduction (as defined below), unless a Tax Deduction is required by law. If Borrower is aware that it must make a Tax Deduction (or that there is a change in the rate or the basis of a Tax Deduction), it shall promptly notify Lender.  If a Tax Deduction is required by law to be made by Borrower, the amount of the payment due from Borrower shall be increased to an amount which (after making the Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required. If Borrower is required to make a Tax Deduction, Borrower shall make the minimum Tax Deduction allowed by law and shall make any payment required in connection with that Tax Deduction within the time allowed by law. Within thirty (30) days of making either a Tax Deduction or a payment required in connection with a Tax Deduction, Borrower shall deliver to Lender evidence satisfactory to Lender that the Tax Deduction has been made or (as applicable) the appropriate payment has been paid to the relevant taxing authority.

 

(c)           “Tax Deduction” means a deduction or withholding for or on account of Tax from a payment under a Loan Document. “Tax” means any tax, levy, impost, duty or other charge or withholding of a similar nature, including any income, franchise, stamp, documentary, excise or property tax, charge or levy (in each case, including any related penalty or interest).

 

8.13    ERISA.  Borrower is in compliance in all material respects with the applicable provisions of ERISA and all regulations issued thereunder by the United States Treasury Department, the Department of Labor and the Pension Benefit Guaranty Corporation.

 

8.14    Environmental Matters.

 

(a)           Borrower has duly complied with, and its facilities, business assets, property, leaseholds and equipment are in compliance in all respects with, the provisions of all Environmental Laws.

 

(b)           Borrower has been issued all required federal, state and local licenses, certificates or permits required under Environmental Laws for the operation of its business.

 

8.15    United States Anti-Terrorism Laws; Holding Company Status.

 

(a)           In this Section 8.15:

 

  

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“Anti-Terrorism Law” means each of:  (i) Executive Order No. 13224 of September 23, 2001  Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten To Commit, or Support Terrorism (the “Executive Order”); (ii) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 (commonly known as the USA Patriot Act); (iii) the Money Laundering Control Act of 1986, Public Law 99-570; and (iv) any similar law enacted in the United States of America subsequent to December 31, 2004.

 

“holding company” has the meaning given to it in the United States Public Utility Holding Company Act of 1935, and any successor legislation and rules and regulations promulgated thereunder.

“investment company” has the meaning given to it in the United States Investment Company Act of 1940.

“public utility” has the meaning given to it in the United States Federal Power Act of 1920.

“Restricted Party” means any person listed: (i) in the Annex to the Executive Order; (ii) on the Specially Designated Nationals and Blocked Persons list maintained by the Office of Foreign Assets Control of the United States Department of the Treasury; or (iii) in any successor list to either of the foregoing.

(b)           Borrower is not (i) a holding company or subject to regulation under the United States Public Utility Holding Company Act of 1935; (ii) a public utility or subject to regulation under the United States Federal Power Act of 1920; (iii) required to be registered as an investment company or subject to regulation under the United States Investment Company Act of 1940; or (iv) subject to regulation under any United States Federal or State law or regulation that limits its ability to incur or guarantee indebtedness.

 

(c)           To the best of Borrower’s knowledge, Borrower (i) is not, and is not controlled by, a Restricted Party; (ii) has not received funds or other property from a Restricted Party; and (iii) is not in breach of and is not the subject of any action or investigation under any Anti-Terrorism Law.

 

(d)           Borrower has taken reasonable measures to ensure compliance with the Anti-Terrorism Laws.

 

8.16    Customers and Vendors.  There are no disputes with any customers, suppliers, manufacturers, vendors and independent contractors of Borrower in excess of $5,000 in the aggregate with any such party.

 

8.17    Representations, Warranties and Covenants Concerning the Collateral.  The representations and warranties of Borrower set forth in Section 5.4 hereof are incorporated in this Section 8.17 by reference.

 

8.18    Books and Records.  Borrower maintains its chief executive office and its books and records related to all Collateral at its address set forth in Section 5.4(n) of Borrower’s Disclosure Schedule.

 

  

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8.19    [RESERVED] 

 

8.20    SEC Reports. The SEC Reports do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading.

8.21    Changes Since Balance Sheet Date.  Since the Balance Sheet Date, except as disclosed in Section 8.21 of Borrower’s Disclosure Schedule, with respect to Borrower, there has not been:

(a)           any change in its business, assets, liabilities, condition (financial or otherwise), properties, operations or prospects, which, individually or in the aggregate, has had, or could reasonably be expected to have, a Material Adverse Effect;

 

(b)           any resignation or termination of any of its officers, key employees or groups of employees;

 

(c)           any material change, except in the ordinary course of business, in its contingent obligations by way of guaranty, endorsement, indemnity, warranty or otherwise;

 

(d)           any damage, destruction or loss, whether or not covered by insurance, which has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

 

(e)           any waiver by it of a valuable right or of a material debt owed to it;

 

(f)           any direct or indirect material loans made by it to any of its stockholders, managers, members, employees, managers, officers or directors, other than advances made in the ordinary course of business;

 

(g)           any material change in any compensation arrangement or agreement with any employee, officer, manager, director or equity holder;

 

(h)           any declaration or payment of any dividend or other distribution of its assets;

 

(i)           any labor organization activity related to it;

 

(j)           any debt, obligation or liability incurred, assumed or guaranteed by it, except those for immaterial amounts and for current liabilities incurred in the ordinary course of business;

 

(k)           any sale, assignment, transfer, abandonment or other disposition of any Collateral other than Inventory in the ordinary course of business;

 

(l)           any change in any Material Contract to which it is a party or by which it is bound which, either individually or in the aggregate, has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

 

  

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(m)           any other event or condition of any character that, either individually or in the aggregate, has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; or

 

(n)           any arrangement or commitment by it to do any of the acts described in subsection (a) through (m) of this Section 8.21.

 

8.22    Intellectual Property.

 

(a)           (1) Borrower holds all Intellectual Property that it owns free and clear of all Liens and restrictions on use or transfer, whether or not recorded, and has sole title to and ownership of or has the full, exclusive (subject to the rights of its licensees) right to use in its field of business such Intellectual Property; and Borrower holds all Intellectual Property that it uses but does not own under valid licenses or sub-licenses from others; (2) the use of the Intellectual Property by Borrower does not, to the knowledge of Borrower, violate or infringe on the rights of any other Person; (3) Borrower has  not received any notice of any conflict between the asserted rights of others and Borrower with respect to any Intellectual Property; (4) Borrower has used its commercially reasonable best efforts to protect its rights in and to all Intellectual Property; (5) Borrower is in compliance with all material terms and conditions of its agreements relating to the Intellectual Property; (6) Borrower is not, and since the Balance Sheet Date  has not been, a defendant in any action, suit, investigation or proceeding relating to infringement or misappropriation by Borrower of any Intellectual Property nor has Borrower been notified of any alleged claim of infringement or misappropriation by Borrower of any Intellectual Property; (7) to the knowledge of Borrower, none of the products or services Borrower is researching, developing, proposes to research and develop, make, have made, use, or sell, infringes or misappropriates any Intellectual Property right of any third party; (8) none of the trademarks and service marks used by Borrower, to the knowledge of Borrower, infringes the trademark or service mark rights of any third party; and (9) to Borrower’s knowledge, none of the material processes and formulae, research and development results and other know-how relating to Borrower's business, the value of which to Borrower is contingent upon maintenance of the confidentiality thereof, has been disclosed to any Person other than Persons bound by written confidentiality agreements.

 

(b)           Section 8.22 of Borrower’s Disclosure Schedule sets forth a true and complete list of (i) all Intellectual Property owned or claimed by Borrower, together with any and all registration or application numbers for any Intellectual Property filed or issued by any Intellectual Property registry (and, in the case of any and all domain names registered by or on behalf of Borrower, the names of the registrar(s) thereof) and (ii) all Intellectual Property licenses which are either material to the business of Borrower or relate to any material portion of Borrower’s Inventory, including licenses for standard software having a replacement value of more than $10,000.  None of such Intellectual Property licenses are reasonably likely to be construed as an assignment of the licensed Intellectual Property to Borrower.  Borrower shall update such Section 8.22 of the Borrower’s Disclosure Schedule upon each new claim, use, registration or application of or for Intellectual Property by Borrower, and upon Borrower becoming the licensee under any license described in the foregoing clause (b)(ii).

 

  

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8.23    Employees.  Borrower has no collective bargaining agreements with any of its employees.  There is no labor union organizing activity pending or, to Borrower’s knowledge, threatened with respect to Borrower.  Except as set forth in Section 8.23 of Borrower’s Disclosure Schedule, Borrower is not a party to or bound by any currently effective deferred compensation arrangement, bonus plan, incentive plan, profit sharing plan, retirement agreement or other employee compensation plan or agreement.  To Borrower’s knowledge, no employee of Borrower, nor any consultant with whom Borrower has contracted, is in violation of any material term of any employment contract or any other contract relating to the right of any such individual to be employed by, or to contract with, Borrower or to receive any benefits; and, to  Borrower’s knowledge, the continued employment by Borrower of its present employees, and the performance of Borrower’s contracts with its independent contractors, will not result in any such violation.  Except for employees who have a current effective employment agreement with Borrower, as set forth in Section 8.23 of Borrower’s Disclosure Schedule, no employee of Borrower has been granted the right to continued employment by Borrower or to any material compensation following termination of employment with Borrower.  Borrower is not aware that any officer, director, manager, partner, key employee or group of employees intends to terminate his, her or their employment with Borrower, nor does Borrower have a present intention to terminate any of the same.

 

8.24    Tax Status.  Borrower (i) has made or filed all federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and for which it has set aside on its books a provision in the amount of such taxes being contested in good faith and (iii) has set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply.  There are no unpaid taxes payable by Borrower claimed to be due by the taxing authority of any jurisdiction, and the officers of the Borrower know of no basis for any such claim.

 

8.25      Representations and Warranties: True, Accurate and Complete.  None of the representations, certificates, reports, warranties or statements now or hereafter made or delivered to Lender pursuant hereto or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact necessary in order to make the statements contained herein and therein, in light of the circumstances in which they are made, not misleading.

 

8.26    Fees; Brokers; Finders.  There are no fees, commissions or other compensation due to any third party acting on behalf of or at the direction of Borrower in connection with the Loan Documents other than commissions due to Borrower’s broker, which commissions shall be the sole responsibility of Borrower. Except with respect to the foregoing commissions, all negotiations relative to the Loan Documents, and the transactions contemplated thereby, have been carried on by the Borrower with the Lender without the intervention of any other person or entity acting on behalf of the Borrower, and in such manner as not to give rise to any claim against the Borrower or the Lender for any finder's fee, brokerage commission or like payment due to any third party acting on behalf of or at the direction of Borrower, and if any such fee, commission or payment is payable, it shall be the sole responsibility of the Borrower and the Borrower shall pay, and indemnify the Lender for, the same.

 

SECTION 9. AFFIRMATIVE COVENANTS.

 

Until the indefeasible payment and satisfaction in full of all Obligations and the termination of this Agreement, Borrower hereby covenants and agrees as follows:

  

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9.1     Notify Lender.  Borrower shall promptly, and in any event within three (3) Business Days of determining of any of the following, inform Lender (a) if any one or more of the representations and warranties made by Borrower in this Agreement or in any document related hereto shall no longer be entirely true, accurate and complete in any respect, (b) of any event or circumstance that, to its knowledge, would cause Lender to consider any then Eligible Leases as no longer constituting Eligible Leases, (c) of any Equipment which is not in good order and repair, and in running and marketable condition, ordinary wear and tear excepted; (d) of all material adverse information relating to the financial condition of Borrower; (e) of any material return of goods; and (f) of any loss, damage or destruction of any of the Collateral.

 

9.2     Change in Directors or Officers.  Borrower shall promptly notify Lender of any changes in Borrower’s Directors or Officers and any material change in the ownership of Borrower.

 

9.3     Pay Taxes and Liabilities; Comply with Agreement.  Borrower shall promptly pay, when due, or otherwise discharge, all Indebtedness, sums and liabilities of any kind now or hereafter owing by Borrower to its employees as wages or salaries or to Lender and Governmental Authorities however created, incurred, evidenced, acquired, arising or payable, including, without limitation, the Obligations, income taxes, excise taxes, sales and use taxes, license fees, and all other taxes with respect to any of the Collateral, or any wages or salaries paid by Borrower or otherwise, unless the validity of which are being contested in good faith by Borrower by appropriate proceedings, provided that Borrower shall have maintained reasonably adequate reserves and accrued the estimated liability on Borrower’s balance sheet for the payment of same.

 

9.4     Observe Covenants, etc.  Borrower shall observe, perform and comply with the covenants, terms and conditions of this Agreement and the other Loan Documents.

 

9.5     Maintain Corporate Existence and Qualifications.  Borrower shall maintain and preserve in full force and effect, its corporate existence and rights, franchises, licenses and qualifications necessary to continue its business, and comply with all applicable statutes, rules and regulations pertaining to the operation, conduct and maintenance of its existence and business including, without limitation, all federal, state and local laws relating to benefit plans, environmental safety, or health matters, and hazardous or liquid waste or chemicals or other liquids (including use, sale, transport and disposal thereof).

 

9.6     Financial Reports and other Information and Documents to be Furnished to Lender.  Borrower shall deliver or cause to be delivered to Lender, unless such information has been filed with the SEC:

 

(a)           Annual Financial Statements.  Annual financial statements of Borrower, certified by the Chief Financial Officer of each and reviewed by an outside accounting firm acceptable to Lender, as soon as available, but in any event within ninety (90) days after the end of Borrower’s Fiscal Year during the Term, provided that if Borrower has otherwise timely filed with the SEC all periodic reports then due and Borrower shall timely file a Form 12b-25 filing extension for its Form 10-K Annual Report with the SEC for such fiscal year, such 90-day period shall be extended until the end of the period provided by such Form 12b-25 filing extension.  Such financial statements shall (x) fairly present the financial position of Borrower as of the dates thereof and the results of its operations, cash flows and stockholders’ equity for each of the periods then ended in all material aspects; and (y) be prepared in accordance with GAAP.

 

  

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(b)           Quarterly Financial Statements.  Quarterly financial statements of the Borrower, as soon as available but in any event no later than forty-five (45) days after the close of each calendar quarter (provided that if Borrower has otherwise timely filed with the SEC all periodic reports then due and Borrower shall timely file a Form 12b-25 filing extension for its Form 10-Q Quarterly Report with the SEC for such calendar quarter, such 45-day period shall be extended until the end of the period provided by such Form 12b-25 filing extension) the unaudited balance sheet and the related statement of income of the Borrower, prepared in accordance with GAAP, subject to year-end audit adjustments, together with such other information with respect to the business of Borrower as Lender may request.

 

(c)           Monthly Financial Statements.  Not later than five (5) days after the end of each calendar month, the unaudited balance sheets and the related statements of income of Borrower, certified by the Chief Financial Officer of Borrower, subject to year-end audit adjustments, with an aging schedule for all accounts receivable and accounts payable, together with such other information with respect to the business of Borrower as Lender may request.

 

(d)           Other Reports.  (i) Weekly aging schedule for all accounts receivable and accounts payable, and inventory schedules and financial projections, in such form and at such intervals as Lender may request, and (ii) Eligible Lease Receivables Certificates delivered in accordance with Section 4.2(c)(i).

 

(e)           Notice of Litigation, Judgments, Environmental, Health or Safety Complaints.

 

(i)           Immediately after commencement thereof, notice in writing of all litigation and of all proceedings before any Governmental Authority affecting the Borrower or any of its assets;

 

(ii)           Within three (3) Business Days thereafter, written notice to Lender of the entry of any judgment or the institution of any lawsuit or of other legal or equitable proceedings or the assertion of any crossclaim or counterclaim seeking monetary damages from Borrower in an amount exceeding $25,000; and

 

(iii)           Within three (3) Business Days thereafter, notice or copies if written of all claims, complaints, orders, citations or notices, whether formal or informal, written or oral, from a governmental body or private person or entity, relating to air emissions, water discharge, noise emission, solid or liquid waste disposal, hazardous waste or materials, or any other environmental, health or safety matter, which adversely affect Borrower.  Such notices shall include, among other information, the name of the party who filed the claim, the potential amount of the claim, and the nature of the claim.

 

(f)           Other Information.  Upon demand,

 

(i)           Certificates of insurance for all policies of insurance to be maintained by Borrower pursuant hereto;

 

  

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(ii)           An estoppel certificate executed by an authorized officer of Borrower indicating that there then exists no Event of Default and no event which, with the giving of notice or lapse of time, or both, would constitute an Event of Default; and

 

(iii)           All information received by Borrower affecting the financial status or condition of any Eligible Lease.

 

(g)           Additional Information.  From time to time, such other information as Lender may reasonably request, including financial projections and cash flow analysis.

 

(h)           Financial Information Default.  Without affecting Lender’s other rights and remedies, in the event any Borrower has failed to deliver the financial information required by Section 9.6(a), (b) or (c) on or before the date required by this Agreement three (3) times during the Term, the Borrower shall pay Lender a fee in the amount of $250 per week (or portion thereof) for each such failure thereafter until such failure is cured to Lender’s satisfaction or waived in writing by Lender.  All amounts that are incurred pursuant to this Section 9.5(h) shall constitute Obligations hereunder.

 

9.7     Comply with Laws.  Borrower shall comply with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority, compliance with which is necessary to maintain its corporate existence or the conduct of its business or non-compliance with which would adversely affect in any respect its ability to perform its obligations or any security given to secure its obligations.

 

9.8     Insurance Required.

 

(a)           Borrower shall cause to be maintained, in full force and effect on all property of Borrower including, without limitation, all Inventory and Equipment, insurance in such amounts against such risks as is reasonably satisfactory to Lender, including, but without limitation, business interruption, liability, casualty, fire, boiler, theft, burglary, pilferage, vandalism, malicious mischief, loss in transit, and hazard insurance and, if as of the date hereof, any of the leased real property of Borrower is in an area that has been identified by the Secretary of Housing and Urban Development as having special flood or mudslide hazards, and on which the sale of flood insurance has been made available under the National Flood Insurance Act of 1968, then Borrower shall maintain flood insurance.  Said policy or policies shall:

 

(i)           Be in a form and with insurers which are satisfactory to Lender;

(ii)           Be for such risks, and for such insured values as Lender or its assigns may reasonably require in order to replace the property in the event of actual or constructive total loss;

(iii)           Designate Lender as additional insured and loss payee as Lender’s interest may from time to time appear;

(iv)           Contain a “breach of warranty clause” whereby the insurer agrees that a breach of the insuring conditions or any negligence by Borrower or any other person shall not invalidate the insurance as to Lender and its assignee;

  

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(v)           Provide that they may not be canceled or altered without thirty (30) days prior written notice to Lender; and

(vi)           Upon demand, be delivered to Lender.

(b)           Borrower shall obtain such additional insurance as Lender may reasonably require.

 

(c)           Borrower shall, in the event of loss or damage, forthwith notify Lender and file proofs of loss with the appropriate insurer.  Borrower hereby authorizes Lender to endorse any checks or drafts constituting insurance Proceeds.

 

(d)           Borrower shall forthwith upon receipt of insurance Proceeds endorse and deliver the same to Lender.

 

(e)           In no event shall Lender be required either to (i) ascertain the existence of or examine any insurance policy or (ii) advise Borrower in the event such insurance coverage shall not comply with the requirements of this Agreement.

 

9.9     Condition of Collateral; No Liens.  Borrower shall maintain all Collateral in good condition and repair at all times, and preserve it against any loss, damage, or destruction of any nature whatsoever relating to said Collateral or its use, and keep said Collateral free and clear of any Liens, except for the Permitted Encumbrances, and shall not permit Collateral to become a fixture to real estate or accessions to other personal property.

 

9.10    Payment of Proceeds.  Borrower shall forthwith upon receipt of all Proceeds of Collateral, pay such Proceeds (insurance or otherwise) up to the amount of the then-outstanding Obligations over to Lender for application against the Obligations in such order and manner as Lender may elect.

 

9.11    Records.  Borrower shall at all times keep accurate and complete records of its operations, of the Collateral and the status of each Account, which records shall be maintained at its executive offices as set forth on Section 5.4(n) of Borrower’s Disclosure Schedule.

 

9.12    Delivery of Documents. If any Proceeds of Accounts shall include, or any of the Accounts shall be evidenced by, notes, trade acceptances or instruments or documents, or if any Inventory is covered by documents of title or chattel paper, whether or not negotiable, then Borrower waives protest regardless of the form of the endorsement.  If Borrower fails to endorse any instrument or document, Lender is authorized to endorse it on Borrower’s behalf.

 

9.13    United States Contracts. If any of the Accounts arise out of contracts with the United States or any of its departments, agencies or instrumentalities, Borrower will notify Lender and, if requested by Lender, execute any necessary instruments in order that all monies due or to become due under such contract shall be assigned to Lender and proper notice of the assignment given under the Federal Assignment of Claims Act.

 

  

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9.14    Name Changes; Location Changes.

 

(a)           Borrower shall promptly notify Lender if Borrower is known by or conducting business under any names other than those set forth in this Agreement.

 

(b)           Borrower shall deliver not less than thirty (30) Business Days prior written notice to Lender if Borrower intends to conduct any of its business or operations at or out of offices or locations other than those set forth in this Agreement, or if it changes the location of its chief executive office or the address at which it maintains its books and records.

 

9.15      Further Assurances.  Borrower shall at any time or from time to time upon request of Lender take such steps and execute and deliver such Financing Statements and other documents (including, without limitation,  the Lender’s receipt of original title certificates of motor vehicles included in the Collateral and subject to certificate of title statutes in the United States) all in the form of substance satisfactory to Lender relating to the creation, validity or perfection of the security interests provided for herein, under the UCC or which are reasonably necessary to effectuate the purposes and provisions of this Agreement. Borrower  shall defend the right, title and interest of Lender in and to the Collateral against the claims and demands of all Persons whomsoever, and take such actions, including (i) all actions necessary to grant Lender “control” of any Investment Property, Deposit Accounts, Letter-of-Credit Rights or Electronic Chattel Paper owned by it, with any agreements establishing control to be in form and substance satisfactory to Lender, (ii) the prompt (but in no event later than three (3) Business Days following Lender’s request therefor) delivery to Lender of all original Instruments, Chattel Paper, negotiable Documents and certificated Securities owned by it (in each case, accompanied by stock powers, allonges or other instruments of transfer executed in blank), (iii) notification of Lender’s interest in Collateral at Lender’s request, and (iv) the institution of litigation against third parties as shall be prudent in order to protect and preserve Borrower’s and/or Lender’s respective and several interests in the Collateral.

 

9.16    Indemnification.  Borrower shall indemnify, protect, defend and save harmless Lender, as well as Lender's directors, officers, trustees, employees, agents, attorneys, members and shareholders (hereinafter referred to collectively as the “Indemnified Parties” and individually as an “Indemnified Party”) from and against (a) any and all losses, damages, expenses or liabilities of any kind or nature and from any suits, claims or demands, by third parties (including, without limitation, claims of brokers and finders), including reasonable counsel fees incurred in investigating or defending such claim, suffered by any of them and caused by, relating to, arising out of, resulting from, or in any way connected with the Loan, the transactions contemplated herein and the Loan Documents, and (b) any and all losses, damages, expenses or liabilities sustained by Lender in connection with any Environmental Liabilities and Costs. In case any action shall be brought against an Indemnified Party based upon any of the above and in respect to which indemnity may be sought against Borrower, the Indemnified Party against whom such action was brought shall promptly notify Borrower in writing, and Borrower shall assume the defense thereof, including the employment of counsel selected by Borrower and reasonably satisfactory to the Indemnified Party, the payment of all costs and expenses and the right to negotiate and consent to settlement.  Upon reasonable determination made by the Indemnified Party, the Indemnified Party shall have the right to employ separate counsel in any such action and to participate in the defense thereof; provided, however, that the Indemnified Party shall pay the costs and expenses incurred in connection with the employment of separate counsel.  Borrower shall not be liable for any settlement of any such action effected without their consent, but if settled with Borrower’s consent, or if there be a final judgment for the claimant in any such action, Borrower agrees to indemnify and save harmless said Indemnified Party against whom such action was brought from and against any loss or liability by reason of such settlement or judgment, except as otherwise provided above. The provisions of this Section shall survive the termination of this Agreement and the final repayment of the Obligations.

 

  

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SECTION 10.  NEGATIVE COVENANTS.

 

Until payment and satisfaction in full of all Obligations and the termination of this Agreement, Borrower hereby covenants and agrees as follows:

10.1    Change of Control; No Creation of Subsidiaries.  Borrower will not consolidate with, merge with, or acquire the stock or a material portion of the assets of any person, firm, joint venture, partnership, corporation, or other entity, whether by merger, consolidation, purchase of stock or otherwise if any such action results in a Change of Control (as defined below). Borrower will not create or permit to exist any Subsidiary unless such new Subsidiary is a wholly-owned Subsidiary and is designated by Lender as either a co-borrower or guarantor hereunder and such Subsidiary shall have entered into all such documentation required by Lender, including, without limitation, to grant to Lender a first priority perfected security interest in substantially all of such Subsidiary’s assets to secure the Obligations.  In addition, Borrower will not acquire a material portion of the assets of any entity in a manner that is not addressed by the foregoing provisions of this Section 10.1 if such action would impair Lender’s rights hereunder or in the Collateral.

A “Change of Control” shall be deemed to have occurred if:

(i)           any “Person,” which shall mean a “person” as such term is used in Sections 13(d) and 14(d) of the 1934 Act, or group of Persons , other than Persons that are holders of voting securities of the Borrower as of the date of the execution of this Agreement, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of securities of Borrower representing 50% or more of the combined voting power of Borrower’s then outstanding voting securities;

(ii)           individuals, who at the Closing Date constitute the Board of Directors  of Borrower, and any new director whose election by the Board of Directors of Borrower, or whose nomination for election by Borrower’s stockholders, was approved by a vote of at least one-half (1/2) of the directors then in office (other than in connection with a contested election), cease for any reason to constitute at least a majority of the Board of Directors of Borrower;

(iii)           the stockholders or members of Borrower approve (I) a plan of complete liquidation of Borrower or (II) the sale or other disposition by Borrower of all or substantially all of Borrower’s assets; or

(iv)           a merger or consolidation of Borrower with any other entity is consummated, other than:

(A)   a merger or consolidation which results in the voting securities of Borrower outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the surviving entity's outstanding voting securities immediately after such merger or consolidation; or

  

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(B)   a merger or consolidation which would result in the directors or managers of Borrower (who were directors or managers immediately prior thereto) continuing to constitute more than 50% of all directors or managers of the surviving entity immediately after such merger or consolidation.

In this paragraph (iv), “surviving entity” shall mean only an entity in which all of Borrower’s stockholders immediately before such merger or consolidation (determined without taking into account any stockholders or members properly exercising appraisal or similar rights) become stockholders by the terms of such merger or consolidation, and the phrase “directors of Borrower (who were directors immediately prior thereto)” shall include only individuals who were directors of Borrower at the Closing Date.

10.2    Disposition of Assets or Collateral.  Borrower will not sell, lease, transfer, convey, or otherwise dispose of any or all of its assets or Collateral, other than the sale of Equipment and motor vehicles to the extent expressly permitted under Section 5.4(e) hereof.

 

10.3    Other Liens.  Borrower will not incur, create or permit to exist any Lien on any of its property or assets, whether now owned or hereafter acquired, except for (a) those Liens in favor of Lender created by this Agreement and the other Loan Documents; and (b) the Permitted Encumbrances.

 

10.4    Other Liabilities.  Borrower will not incur, create, assume, or permit to exist, any Indebtedness or liability on account of either borrowed money or the deferred purchase price of property, except (i) Obligations to Lender, (ii) debt expressly subordinated to Borrower’s Obligations to Lender pursuant to a subordination agreement in form and substance satisfactory to Lender or (iii) Indebtedness incurred in connection with any of the Permitted Encumbrances.

 

10.5    Loans.  Borrower will not make any loans to any Person, other than advances to employees of Borrower in the ordinary course of business, with outstanding advances to any employee not to exceed $1,000 at any time.

 

10.6    Guaranties.  Borrower will not assume, guaranty, endorse, contingently agree to purchase or otherwise become liable upon the obligation of any Person, except by the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business.

 

10.7    Transfers of Notes or Accounts.  Borrower will not sell, assign, transfer, discount or otherwise dispose of any Accounts or any promissory note payable to Borrower, with or without recourse.

 

10.8    Dividends.  Borrower will not declare or pay any cash dividend, make any distribution on, redeem, retire or otherwise acquire directly or indirectly, any shares of its stock or other Equity Interests without the prior written consent of Lender.

 

  

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10.9    Payments to Affiliates.  Except as set forth in Section 10.9 of the Borrower’s Disclosure Schedule,  or as otherwise approved by Lender in writing in advance, Borrower shall not make any payments of cash or other property to any Affiliate.

 

10.10   Modification of Documents.  Borrower will not change, alter or modify, or permit any change, alteration or modification of its certificate of incorporation, by-laws or other governing documents in any manner that might adversely affect Lender’s rights hereunder as a secured lender or its Collateral without Lender's prior written consent.

 

10.11   Change Business or Name.  Borrower will not change or alter the nature of its business, or change its names as it appears in the official filings of its state of organization.

 

10.12   Settlements.  Other than in the ordinary course of its business, Borrower will not compromise, settle or adjust any claims in any amount relating to any of the Collateral, without the prior written consent of Lender.

 

SECTION 11. EVENTS OF DEFAULT.

 

The occurrence of any of the following shall constitute an event of default (hereinafter referred to as an “Event of Default”):

11.1    Failure to Pay.  The failure by Borrower to pay, when due, (a) any payment of principal, interest or other charges due and owing to Lender pursuant to any obligations of Borrower to Lender including, without limitation, those Obligations arising pursuant to this Agreement or any Loan Document, or under any other agreement for the payment of monies then due and payable to Lender, or (b) any taxes due to any Governmental Authority.

 

11.2    Failure of Insurance.  Failure of one or more of the insurance policies required hereunder to remain in full force and effect; failure on the part of Borrower to pay or cause to be paid all premiums when due on the insurance policies pursuant to this Agreement; failure on the part of Borrower to take such other action as may be requested by Lender in order to keep said policies of insurance in full force and effect until all Obligations have been indefeasibly paid in full; and failure on the part of Borrower to execute any and all documentation required by the insurance companies issuing said policies to effectuate said assignments.

 

11.3        Failure to Perform.  Borrower’s failure to perform or observe any covenant, term or condition of this Agreement or in any other Loan Document.

 

11.4    Cross Default.  Borrower’s default under any agreement or contract with a third party which default would result in a liability to Borrower in excess of $50,000.

 

11.5    False Representation or Warranty.  Borrower shall have made any statement, representation or warranty in this Agreement or in any other Loan Document to which Borrower is a party or in a certificate executed by Borrower incident to this Agreement, which is at any time found to have been false in any material respect at the time such representation or warranty was made.

 

  

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11.6    Liquidation, Voluntary Bankruptcy, Dissolution, Assignment to Creditors.  Any resolution shall be passed or any action (including a meeting of creditors) shall be taken by Borrower for the termination, winding up, liquidation or dissolution of Borrower, or Borrower shall make an assignment for the benefit of creditors, or Borrower shall file a petition in voluntary liquidation or bankruptcy, or Borrower shall file a petition or answer or consent seeking, or consenting to, the reorganization of Borrower or the readjustment of any of the indebtedness of Borrower under any applicable insolvency or bankruptcy laws now or hereafter existing (including the United States Bankruptcy Code), or Borrower shall consent to the appointment of any receiver, administrator, liquidator, custodian or trustee of all or any part of the property or assets of Borrower or any corporate action shall be taken by Borrower for the purposes of effecting any of the foregoing.

 

11.7    Involuntary Petition Against Borrower.  Any petition or application for any relief is filed against Borrower under applicable insolvency or bankruptcy laws now or hereafter existing (including the United States Bankruptcy Code) or under any insolvency, reorganization, receivership, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction now or hereafter in effect (whether at law or in equity), and is not dismissed or stayed within thirty (30) days of the filing thereof.

 

11.8    Judgments; Levies.  Judgments or attachments aggregating in excess of $50,000 at any given time are obtained against Borrower which remain unstayed for a period of ten (10) days or are enforced.

 

11.9    Change in Condition.  There occurs any event or a change in the condition or affairs, financial or otherwise, of Borrower which, in the reasonable opinion of Lender, has a Material Adverse Effect or impairs Lender's security or ability of Borrower to discharge its obligations hereunder or any other Loan Document or which impairs the rights of Lender in Borrower’s Collateral.

 

11.10   Environmental Claims.  Lender determines that any Environmental Liabilities and Costs or Environmental Lien with respect to Borrower will have a potentially adverse effect on the financial condition of Borrower or on the Collateral.

 

11.11   Failure to Notify.  If at any time Borrower fails to provide Lender immediately with notice or copies, if written, of all complaints, orders, citations or notices with respect to environmental, health or safety complaints.

 

11.12   Failure to Deliver Documentation.  Borrower shall fail to obtain and deliver to Lender any other documentation required to be signed or obtained as part of this Agreement, or shall have failed to take any reasonable action requested by Lender to perfect, protect, preserve and maintain the security interests and Lien on the Collateral provided for herein.

 

11.13   Change of Control.  Borrower undergoes a Change of Control.

 

11.14   [RESERVED]

 

11.15   Dissolution; Maintenance of Existence.  Borrower is dissolved, or Borrower fails to maintain its corporate existence in good standing, or the usual business of Borrower ceases or is suspended in any respect.

 

11.16   Indictment.  The indictment of Borrower or any director or Responsible Officer of Borrower under any criminal statute, or commencement of criminal or civil proceedings against Borrower, pursuant to which statute or proceedings the penalties or remedies sought or available include forfeiture of any portion of the property of Borrower.

 

  

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11.17   Tax Liens.  The filing of a Lien for any unpaid taxes filed by any Governmental Authority against Borrower or any of its assets.

 

11.18   Challenge to Validity of Loan Documents.  Borrower attempts to terminate, or challenges the validity of, or its liability under, this Agreement or any other Loan Document, or any proceeding shall be brought to challenge the validity, binding effect of Loan Document, or any Loan Document ceases to be a valid, binding and enforceable obligation of Borrower.

 

11.19   Claims Against Lender.  Any claims asserted by Borrower seeking to challenge the Loan Documents, Lender’s Lien in the Collateral or otherwise commencing any cause of action against Lender.

 

11.20   Change in Ownership of Subsidiaries. Mint Nevada ceases to be the record and beneficial owner of 100% of the Equity Interests of each of Mint Texas, Mint South and The Mint Leasing North, Inc., a Texas corporation.

 

SECTION 12.  REMEDIES.

 

12.1    Acceleration; Other Remedies.  Upon the occurrence and during the continuation of an Event of Default:

 

(a)           Lender shall have all rights and remedies provided in this Agreement, any of the other Loan Documents, the UCC or other applicable law, all of which rights and remedies may be exercised without notice to Borrower, all such notices being hereby waived, except such notice as is expressly provided for hereunder or is not waivable under applicable law.  All rights and remedies of Lender are cumulative and not exclusive and are enforceable, in Lender's discretion, alternatively, successively, or concurrently on any one or more occasions and in any order Lender may determine.  Without limiting the foregoing, Lender may (i) accelerate the payment of all Obligations and demand immediate payment thereof to Lender, (ii) with or without judicial process or the aid or assistance of others, enter upon any premises on or in which any of the Collateral may be located and take possession of the Collateral or complete processing, manufacturing and repair of all or any portion of the Collateral, (iii) require Borrower, at Borrower’s expense, to assemble and make available to Lender any part or all of the Collateral at any place and time designated by Lender, (iv) collect, foreclose, receive, appropriate, setoff and realize upon any and all Collateral, (v) notify Account Debtors or other obligors to make payment directly to Lender, or notify bailees as to the disposition of Collateral, (vi) extend the time of payment of, compromise or settle for cash, credit, return of merchandise, and upon any terms or conditions, any and all Accounts or other Collateral which includes a monetary obligation and discharge or release the Account Debtor or other obligor, without affecting any of the Obligations, and (vii) sell, lease, transfer, assign, deliver or otherwise dispose of any and all Collateral (including, without limitation, entering into contracts with respect thereto, by public or private sales at any exchange, broker's board, any office of Lender or elsewhere) at such prices or terms as Lender may deem reasonable, for cash, upon credit or for future delivery, with Lender having the right to purchase the whole or any part of the Collateral at any such public sale, all of the foregoing being free from any right or equity of redemption of Borrower, which right or equity of redemption is hereby expressly waived and released by Borrower.  If any of the Collateral or other security for the Obligations is sold or leased by Lender upon credit terms or for future delivery, the Obligations shall not be reduced as a result thereof until payment therefor is finally collected by Lender. If notice of disposition of Collateral is required by law, ten (10) days prior notice by Lender to Borrower designating the time and place of any public sale or the time after which any private sale or other intended disposition of Collateral is to be made, shall be deemed to be reasonable notice thereof and Borrower waives any other notice.  In the event Lender institutes an action to recover any Collateral or seeks recovery of any Collateral by way of prejudgment remedy, Borrower waives the posting of any bond which might otherwise be required.

 

  

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(b)           Lender may apply the Proceeds of Collateral actually received by Lender from any sale, lease, foreclosure or other disposition of the Collateral to payment of any of the Obligations, in whole or in part (including attorneys' fees and legal expenses incurred by Lender with respect thereto or otherwise chargeable to Borrower) and in such order as Lender may elect, whether or not then due.  Borrower shall remain liable to Lender for the payment on demand of any deficiency together with interest at the Default Interest Rate and all costs and expenses of collection or enforcement, including reasonable attorneys' fees and legal expenses.

 

(c)           Lender may, at its option, cure any default by Borrower under any agreement with a third party or pay or bond on appeal any judgment entered against Borrower, discharge taxes and Liens at any time levied on or existing with respect to the Collateral, and pay any amount, incur any expense or perform any act which, in Lender's sole judgment, is necessary or appropriate to preserve, protect, insure, maintain, or realize upon the Collateral.  Such amounts paid by Lender shall be repayable by Borrower on demand and added to the Obligations, with interest payable thereon at the Default Interest Rate. Lender shall be under no obligation to effect such cure, payment, bonding or discharge, and shall not, by doing so, be deemed to have assumed any obligation or liability of Borrower.

 

(d)           Lender and Lender’s agents shall have the right to utilize any of Borrower’s customer lists, registered names, trade names or trademarks to publicly advertise the sell, lease, transfer, assign, deliver or otherwise dispose of any and all Collateral and Borrower will be deemed to have waived and voided any confidentiality agreements by and between Borrower and Lender.

 

12.2    Set-off.  Lender shall have the right, immediately and without notice of other action, to set-off against any of Borrower’s liabilities to Lender any money or other liability owed by Lender or any Affiliate of Lender (and such Affiliate of Lender is hereby authorized to effect such set-off) in any capacity to Borrower, whether or not due, and Lender or such Affiliate shall be deemed to have exercised such right of set-off and to have made a charge against any such money or other liability immediately upon the occurrence of such Event of Default even though the actual book entries may be made at a time subsequent thereto.  The right of set-off granted hereunder shall be effective irrespective of whether Lender shall have made demand under or in connection with the Loan.  None of the rights of Lender described in this Section are intended to diminish or limit in any way Lender's or Affiliates of Lender's common-law set-off rights.

 

12.3    Costs and Expenses.  Borrower shall be liable for all costs, charges and expenses, including attorney's fees and disbursements, incurred by Lender by reason of the occurrence of any Event of Default or the exercise of Lender's remedies with respect thereto, each of which shall be repayable by Borrower on demand with interest at the Default Interest Rate, and added to the Obligations.

 

  

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12.4    No Marshalling.  Lender shall be under no obligation whatsoever to proceed first against any of the Collateral or other property which is security for the Obligations before proceeding against any other of the Collateral.  It is expressly understood and agreed that all of the Collateral or other property which is security for the Obligations stands as equal security for all Obligations, and that Lender shall have the right to proceed against any or all of the Collateral or other property which is security for the Obligations in any order, or simultaneously, as in its sole and absolute discretion it shall determine.  It is further understood and agreed that Lender shall have the right to sell any or all of the Collateral or other property which is security for the Obligations in any order or simultaneously, as Lender shall determine in its sole and absolute discretion.

 

12.5    No Implied Waivers; Rights Cumulative.  No delay on the part of Lender in exercising any right, remedy, power or privilege hereunder or under any other Loan Document or provided by statute or at law or in equity or otherwise shall impair, prejudice or constitute a waiver of any such right, remedy, power or privilege or be construed as a waiver of any Event of Default or as an acquiescence therein.  No right, remedy, power or privilege conferred on or reserved to Lender hereunder or under any other Loan Document or otherwise is intended to be exclusive of any other right, remedy, power or privilege.  Each and every right, remedy, power or privilege conferred on or reserved to Lender under this Agreement or under any of the other Loan Documents or otherwise shall be cumulative and in addition to each and every other right, remedy, power or privilege so conferred on or reserved to Lender and may be exercised by Lender at such time or times and in such order and manner as Lender shall (in its sole and complete discretion) deem expedient.

 

SECTION 13. OTHER RIGHTS OF LENDER.

 

13.1    Collections.  Borrower hereby authorizes Lender to, and Lender shall make such arrangements as it shall deem necessary or appropriate to, collect the Accounts and any other monetary obligations included in, or Proceeds of, the Collateral at any time whether or not an Event of Default has occurred.  Borrower shall, at Borrower’s expense and in the manner requested by Lender from time to time, direct that remittances and all other Proceeds of accounts and other Collateral up to the amount of the then-current Obligations shall be (a) remitted in kind to Lender,  (b) sent to a post office box designated by and/or in the name of Lender, or in the name of Borrower, but as to which access is limited to Lender and/or (c) deposited into a bank account maintained in the name of Lender and/or a blocked bank account under arrangements with the depository bank under which all funds deposited to such blocked bank account are required to be transferred solely to Lender.  In connection therewith, Borrower shall execute such post office box and/or blocked bank account agreements as Lender shall specify.

 

13.2    Repayment of Obligations.  All Obligations shall be payable at Lender's office set forth below or at a bank or such other place as Lender may expressly designate from time to time for purposes of this Section.  Lender shall apply all Proceeds of Accounts, or other Collateral received by Lender and all other payments in respect of the Obligations to the Loan whether or not then due or to any other Obligations then due, in whatever order or manner Lender shall determine.

 

  

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13.3    Lender Appointed Attorney-in-Fact.

 

(a)           Borrower hereby irrevocably constitutes and appoints Lender, with full power of substitution, as its true and lawful attorney-in-fact, with full irrevocable power and authority in its place and stead and in its name or otherwise, from time to time in Lender's discretion, at Borrower’s sole cost and expense, to take any and all appropriate action and to execute and deliver any and all documents and instruments which Lender may deem reasonably necessary or advisable to accomplish the purposes of this Agreement, including, without limiting the generality of the foregoing, (i) at any time any of the Obligations are outstanding, (A) to transmit to Account Debtors (including lessees under Eligible Leases), other obligors or any bailees notice of the interest of Lender in the Collateral or request from Account Debtors or such other obligors or bailees at any time, in the name of Borrower or Lender or any designee of Lender, information concerning the Collateral and any amounts owing with respect thereto; (B) to execute in the name of Borrower and file against Borrower in favor of Lender Financing Statements or amendments with respect to the Collateral, or record a copy or an excerpt hereof in the United States Copyright Office or the United States Patent and Trademark Office and to take all other steps as are necessary in the reasonable opinion of Lender under applicable law to perfect the security interests granted herein; and (C) to pay or discharge taxes, Liens, security interests or other encumbrances levied or placed on or threatened against the Collateral; and (ii) after and during the continuation of an Event of Default, (A) to receive, take, endorse, assign, deliver, accept and deposit, in the name of Lender or Borrower, any and all cash, checks, commercial paper, drafts, remittances and other instruments and documents relating to the Collateral or the Proceeds thereof, (B) to notify Account Debtors (including lessees under Eligible Leases) or other obligors to make payment directly to Lender, or notify bailees as to the disposition of Collateral, (C) to change the address for delivery of mail to Borrower and to receive and open mail addressed to Borrower, (D) take or bring, in the name of Lender or Borrower, all steps, actions, suits or proceedings deemed by Lender necessary or desirable to effect collection of or other realization upon the Collateral; (E) to obtain and adjust insurance required pursuant to this Agreement and to pay all or any part of the premiums therefor and the costs thereof, and (F) to extend the time of payment of, compromise or settle for cash, credit, return of merchandise, and upon any terms or conditions, any and all Accounts or other Collateral which includes a monetary obligation and discharge or release the Account Debtor or other obligor, without affecting any of the Obligations.

 

(b)           Borrower hereby ratifies, to the extent permitted by law, all that Lender shall lawfully and in good faith do or cause to be done by virtue of and in compliance with this Agreement.  The powers of attorney granted pursuant to this Agreement are each a power coupled with an interest and shall be irrevocable until the Obligations are paid indefeasibly in full.  Borrower shall promptly comply with Lender’s requests, including, without limitation, any request to provide Lender with access to Borrower’s premises, to enable Lender to exercise its remedies in accordance with Section 13.3(a).

 

13.4    Release of Lender.  Borrower hereby releases and exculpates Lender, its officers, partners, members, directors, employees, agents, representatives and designees, from any liability arising from any acts or occurrences under this Agreement or in furtherance thereof, whether as attorney-in-fact or otherwise, whether of omission or commission, and whether based upon any error of judgment or mistake of law or fact, except for gross negligence or willful misconduct as determined by a final and non-appealable order from a court of competent jurisdiction.  In no event will Lender have any liability to Borrower for lost profits or other special or consequential damages.

 

  

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13.5    Uniform Commercial Code.  At all times prior and subsequent to an Event of Default hereinafter, Lender shall be entitled to all the rights and remedies of a secured party under the UCC with respect to all Collateral.

 

13.6    Preservation of Collateral.  At all times prior and subsequent to an Event of Default hereinafter, Lender may (but without any obligation to do so) take any and all action which in its sole and absolute discretion is necessary and proper to preserve its interest in the Collateral consisting of Accounts, including without limitation the payment of debts of Borrower which might, in Lender's sole and absolute discretion, impair the Collateral or Lender's security interest therein, and the sums so expended by Lender shall be secured by the Collateral, shall be added to the amount of the Obligations due Lender and shall be payable on demand with interest at the rate applicable to the Term Loan set forth in Section 3.1 hereof from the date expended by Lender until repaid by Borrower.  After written notice by Lender to Borrower and automatically, without notice, after an Event of Default, Borrower shall not, without the prior written consent of Lender in each instance, (a) grant any extension of time of payment of any Accounts, (b) compromise or settle any Accounts for less than the full amount thereof, (c) release in whole or in part any Account Debtor or other person liable for the payment of any of the Accounts or any such other Collateral, or (d) grant any credits, discounts, allowances, deductions, return authorizations or the like with respect to any of the Accounts.

 

13.7    Lender's Right to Cure.  In the event Borrower shall fail to perform any of its Obligations hereunder or under any other Loan Document, then Lender, in addition to all of its rights and remedies hereunder, may perform the same, but shall not be obligated to do so, at the cost and expense of Borrower. Such costs and expenses shall be added to the amount of the Obligations due Lender, and Borrower shall promptly reimburse Lender for such amounts together with interest at the Default Interest Rate from the date such sums are expended until repaid by Borrower.

 

13.8    Inspection of Collateral; Access to Records.  From time to time as requested by Lender, Lender or its designee shall have access, (a) prior to an Event of Default, at the sole expense of Borrower, during reasonable business hours to all of  the premises where Collateral is located for the purpose of inspecting the Collateral and to all of Borrower’s Collateral, inclusive of books and records, and Borrower shall permit Lender or Lender’s designees to examine, audit, copy or make extracts from such books and records as Lender may request, and (b) on or after an Event of Default, at the sole expense of Borrower, at any time, to all of the premises where Collateral is located for the purposes of inspecting, disposing and realizing upon the Collateral, and all Borrower’s books and records, and Borrower shall permit Lender or its designee to make such copies of such books and records or extracts therefrom as Lender may request.  Without expense to Lender, Lender may use such of Borrower’s personnel, equipment, including computer equipment, programs, printed output and computer readable media, supplies and premises for the collection of Accounts and realization on other Collateral as Lender, in its sole discretion, deems appropriate.  Borrower hereby irrevocably authorizes all accountants and third parties to disclose and deliver to Lender at Borrower’s expense all financial information, books and records, work papers, management reports and other information in its possession regarding Borrower.

 

SECTION 14. PROVISIONS OF GENERAL APPLICATION.

 

14.1   Waivers.  Borrower waives demand, presentment, notice of dishonor, protest and notice of protest of any instrument of Borrower or others which may be included in the Collateral.

 

  

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14.2    Survival.  All covenants, agreements, representations and warranties made by Borrower herein or in any other Loan Document or in any certificate, report or instrument contemplated hereby shall survive any independent investigation made by Lender and the execution and delivery of this Agreement, and such certificates, reports or instruments and shall continue so long as any Obligations are outstanding and unsatisfied, applicable statutes of limitations to the contrary notwithstanding.

 

14.3       Notices.  All notices, requests and demands to or upon the respective parties hereto shall be in writing and either (a) delivered by registered or certified mail, (b) delivered by hand, or (c) delivered by national overnight courier service with next Business Day delivery,  and shall be deemed to have been duly given or made  (i) upon the earlier of actual receipt and three (3) Business Days after deposit in the United States Mail, registered or certified mail, return receipt requested, with proper postage prepaid, (ii) one (1) Business Day after deposit with a national overnight courier with all charges prepaid, or (iii) when hand-delivered. All notices, requests and demands are to be given or made to the respective parties at the following addresses (or to such other addresses as either party may designate by notice in accordance with the provisions of this paragraph):

 

If to Borrower:

The Mint Leasing, Inc.

323 N. Loop West

Houston, TX 77008

Attention: Jerry Parish

With a copy to:

The Loev Law Firm, PC

6300 West Loop South, Suite 280

Bellaire, Texas 77401

Attention: David M. Loev

If to Lender:

MNH Management LLC

7 West 51st Street

New York, NY 10019

Attention: Greg Zilberstein and Alexandre Speaker

With a copy to:

Cohen Tauber Spievack & Wagner P.C.

420 Lexington Avenue, Suite 2400

New York, New York 10170

Attention:  Adam Stein

Notwithstanding the foregoing, that parties expressly acknowledge and agree that foregoing provisions of notice by Lender to Borrower’s counsel is an accommodation  only, and that Lender shall have fulfilled its notice obligation hereunder if notice shall have been received by  Borrower at the address set forth above, irrespective of whether such notice is received by Borrower’s counsel.

  

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14.4    Amendments; Waiver of Defaults.  The terms of this Agreement shall not be amended, waived, altered, modified, supplemented or terminated in any manner whatsoever except by a written instrument signed by Lender and Borrower.  Any default or Event of Default by Borrower may only be waived by a written instrument specifically describing such default or Event of Default and signed by the Lender.

14.5    Binding on Successors.

 

(a)           This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided, however, that Borrower may not assign any of its rights or obligations under this Agreement or the other Loan Documents to any Person without the prior written consent of Lender.

 

(b)           Lender may assign any or all of the Obligations together with any or all of the security therefor to any Person and any such assignee shall succeed to all of Lender’s rights with respect thereto.  Lender shall notify Borrower of any such assignment. Upon such assignment, Lender shall have no further obligations under the Loan Documents.  Lender may from time to time sell or otherwise grant participations in any of the Obligations and the holder of any such participation shall, subject to the terms of any agreement between Lender and such holder, be entitled to the same benefits as Lender with respect to any security for the Obligations in which such holder is a participant.

 

14.6        Invalidity.  Any provision of this Agreement which may be determined by competent authority to be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

14.7    Publicity.  Borrower hereby authorizes Lender to make appropriate announcements of the financial arrangement entered into by and between Borrower and Lender, including, without limitation, announcements which are commonly known as tombstones, in such publications and to such selected parties as Lender shall in its sole and absolute discretion deem appropriate, or as required by applicable law. Lender hereby authorizes Borrower to disclose the material terms of this Agreement, including, but not limited to the name of Lender, in Borrower’s SEC filings, subject to Lender’s prior review and approval of the sections thereof relating to this Agreement, and to file the material Loan Documents as exhibits thereto to the extent required under applicable law.

 

14.8    Section or Paragraph Headings.  Section and paragraph headings are for convenience only and shall not be construed as part of this Agreement.

 

14.9    APPLICABLE LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, THE LAWS OF WHICH THE BORROWER HEREBY EXPRESSLY ELECTS TO APPLY TO THIS AGREEMENT, WITHOUT GIVING EFFECT TO PROVISIONS FOR CHOICE OF LAW THEREUNDER.  THE BORROWER AGREES THAT ANY ACTION OR PROCEEDING BROUGHT TO ENFORCE OR ARISING OUT OF THIS AGREEMENT SHALL BE COMMENCED IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT.

 

  

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14.10   WAIVER OF JURY TRIAL.  BORROWER HEREBY WAIVES ANY AND ALL RIGHTS THAT IT MAY NOW OR HEREAFTER HAVE UNDER THE LAWS OF THE UNITED STATES OF AMERICA OR ANY STATE TO A TRIAL BY JURY OF ANY AND ALL ISSUES ARISING EITHER DIRECTLY OR INDIRECTLY IN ANY ACTION OR PROCEEDING BETWEEN BORROWER, LENDER OR ITS SUCCESSORS AND ASSIGNS, OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, THE OBLIGATIONS AND/OR THE COLLATERAL.  IT IS INTENDED THAT SAID WAIVER SHALL APPLY TO ANY AND ALL DEFENSES, RIGHTS, AND/OR COUNTERCLAIMS IN ANY ACTION OR PROCEEDINGS BETWEEN BORROWER AND LENDER.  BORROWER WAIVES ALL RIGHTS TO INTERPOSE ANY CLAIMS, DEDUCTIONS, SETOFFS OR COUNTERCLAIMS OF ANY KIND, NATURE OR DESCRIPTION IN ANY ACTION OR PROCEEDING INSTITUTED BY LENDER WITH RESPECT TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, THE OBLIGATIONS, THE COLLATERAL OR ANY MATTER ARISING THEREFROM OR RELATING THERETO, EXCEPT COMPULSORY COUNTERCLAIMS.

 

14.11   CONSENT TO JURISDICTION.  BORROWER HEREBY (a) IRREVOCABLY SUBMITS AND CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK, NEW YORK  COUNTY WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, THE OBLIGATIONS AND/OR THE COLLATERAL OR ANY MATTER ARISING THEREFROM OR RELATING THERETO, AND (b) WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE OR FORUM NON CONVENIENS WITH RESPECT THERETO.  IN ANY SUCH ACTION OR PROCEEDING, BORROWER WAIVES PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT OR OTHER PROCESS AND PAPERS THEREIN AND AGREES THAT THE SERVICE THEREOF MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO BORROWER AT ITS OFFICES SET FORTH HEREIN OR OTHER ADDRESS THEREOF OF WHICH LENDER HAS RECEIVED NOTICE AS PROVIDED IN THIS AGREEMENT.  NOTWITHSTANDING THE FOREGOING, BORROWER CONSENTS TO THE COMMENCEMENT BY LENDER OF ANY SUIT, ACTION OR PROCEEDING IN ANY OTHER JURISDICTION TO ENFORCE LENDER’S RIGHTS AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING.

 

14.12   Entire Agreement.  This Agreement, the other Loan Documents, any supplements or amendments hereto or thereto, and any instruments or documents delivered or to be delivered in connection herewith or therewith contains the entire agreement and understanding concerning the subject matter hereof and thereof between the parties hereto, and supersede all other prior agreements, understandings, negotiations and discussions, representations, warranties, commitments, proposals, offers and contracts concerning the subject matter hereof, whether oral or written.  In the event of any inconsistency between the terms of this Agreement and any schedule or exhibit hereto, the terms of this Agreement shall govern.

 

  

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14.13   Counterparts.  This Agreement may be executed in counterparts and by facsimile or other electronic signatures, each of which when so executed, shall be deemed an original, but all of which shall constitute but one and the same instrument.

 

14.14   Joint and Several Obligations. If more than one Person is a Borrower hereunder, the following shall apply:

 

(a)           All Obligations, covenants and liabilities of Borrower hereunder shall be the joint and several Obligations, covenants and liabilities of each Borrower. All representations and warranties of Borrower hereunder shall be deemed made by each Borrower with respect to such Borrower.  The Borrower shall make payment upon the maturity of the Obligations by acceleration or otherwise, and such obligation and liability on the part of the Borrower shall in no way be affected by the failure of Lender to pursue or preserve its rights against any Borrower or the release by Lender of any Collateral now or thereafter acquired from any Borrower.

 

(b)           Each Borrower expressly waives any and all rights of subrogation, reimbursement, indemnity, exoneration, contribution or any other claim which such Borrower may now or hereafter have against any other Borrower or against any other Person directly or contingently liable for the Obligations until all Obligations have been indefeasibly paid in full as determined by Lender.

(c)           Each Borrower represents and warrants to Lender that (i) the Borrowers have one or more common or affiliated shareholders, directors and officers, (ii) the businesses and corporate activities of each Borrower are closely related to, and substantially benefit, the business and corporate activities of the other, (iii) each Borrower will receive a substantial economic benefit from entering into this Agreement and will receive a substantial economic benefit from the application of the Loan hereunder, in each case, whether or not such amount is used directly by such Borrower and (iv) the Loans made hereunder are for the exclusive and indivisible benefit of the Borrower as though, for purposes of this Agreement, the Borrowers constituted a single entity.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

  

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EXECUTION

IN WITNESS WHEREOF, this Amended and Restated Loan and Security Agreement has been duly executed as of the day and year first above written.

	  	
BORROWERS:

	  	  
	  	
THE MINT LEASING, INC., a Nevada corporation

	  	  
	  	
By:  /s/ Jerry Parish__________________________

	  	
Name: Jerry Parish

	  	
Title: President

	  	  
	  	  
	  	
THE MINT LEASING, INC., a Texas corporation

	  	  
	  	
By: /s/ Jerry Parish__________________________

	  	
Name: Jerry Parish

	  	
Title: President

	  	  
	  	
THE MINT LEASING SOUTH, INC., a Texas corporation

	  	  
	  	
By: /s/ Jerry Parish__________________________

	  	
Name: Jerry Parish

	  	
Title: President

	  	  
	  	  
	  	
LENDER:

	  	  
	  	
MNH MANAGEMENT LLC

	  	  
	  	
By: MORIAH CAPITAL PARTNERS, LLC, its Managing Member

	  	  
	  	
By: /s/ A. Speaker_____________________________

	  	
Name: A. Speaker

	  	
Title: Managing Member

 

 

 

[SIGNATURE PAGE OF LOAN AND SECURITY AGREEMENT]

  

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Borrower’s Disclosure Schedule

	
Section

	
Description

	  	  
	
5.4(j)

	
Equipment

	
5.4(l)

	
Bank Accounts

	
5.4(n)

	
Corporate Information

	
5.4(p)

	
Existing Insurance Policies

	
8.19

	
Organizational Structure and Percentage Ownership

	
8.21

	
Changes in Business

	
8.22

	
Intellectual Property

	
8.23

	
Employees

	
10.9

	
Payments to Affiliates

 

 

 

 

 

 

48

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