Master Business Lease Financing Agreement - AMRESCO Leasing Corp., eRoom System SPE Inc., RoomSystems Inc. and eRoomSystem Technologies Inc.
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AMENDED AND RESTATED
MASTER BUSINESS LEASE FINANCING AGREEMENT
AMRESCO LEASING CORPORATION,
as Lender
eRoom System SPE, Inc.,
as Borrower
ROOMSYSTEMS, INC.
and
eRoomSystem Technologies, Inc.
Dated February 23, 2001
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TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS; ACCOUNTING TERMS.....................................2
Section 1.1 Definitions.......................................................2
Section 1.2 Accounting Terms.................................................17
ARTICLE 2 BUSINESS LEASES, LEASE FINANCING LOANS; SERVICING................17
Section 2.1 The Business Leases..............................................17
Section 2.2 The Lease Financing Loans........................................18
Section 2.3 Conditions to Borrowing; Transaction Approval or Denial..........19
Section 2.4 Advance Funded Lease Financing Loans.............................20
Section 2.5 Advance Funding Transaction Approval.............................20
Section 2.6 Borrowings During Term...........................................21
Section 2.7 Use of Proceeds..................................................21
Section 2.8 Pre-Securitization Period........................................21
Section 2.9 Timeline of Events...............................................24
Section 2.10 Interest Rates and Payment Dates.................................25
Section 2.11 Prepayments......................................................25
Section 2.12 Interest Computations............................................25
Section 2.13 Evidence of Indebtedness.........................................25
Section 2.14 Equipment Servicing..............................................26
Section 2.15 Consolidation of Lease Financing Notes into Credit
Enhancement Notes................................................27
ARTICLE 3 SECURITY INTEREST................................................27
Section 3.1 Grant of Security Interest.......................................27
Section 3.2 Chief Executive Office; Location of Pledged Assets...............28
Section 3.3 Perfection of Security Interest..................................29
Section 3.4 General Covenants................................................29
Section 3.5 Assignment of Insurance Proceeds.................................30
Section 3.6 Legends..........................................................30
Section 3.7 Release of Renewed Business Leases...............................30
Section 3.8 Release of Lien on Equipment.....................................30
ARTICLE 4 REPRESENTATIONS, WARRANTIES AND COVENANTS........................30
Section 4.1 Representations, Warranties and Covenants of the eRoom Parties...30
Section 4.2 Representations and Warranties of the Lender.....................33
ARTICLE 5 CONDITIONS PRECEDENT TO EFFECTIVENESS, EACH LOAN POOL AND THE
LEASE FINANCING LOANS ...........................................35
Section 5.1 Effectiveness....................................................35
Section 5.2 The Initial Lease Financing Loan.................................37
Section 5.3 The Lease Financing Loans........................................38
Section 5.4 Subsequent Loan Pools............................................38
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ARTICLE 6 DELIVERY OF FINANCIAL REPORTS, DOCUMENTS AND OTHER INFORMATION...39
Section 6.1 Annual Financial Statements......................................39
Section 6.2 Quarterly Financial Statements...................................39
Section 6.3 Other Information................................................40
Section 6.4 No Default Certificate...........................................40
Section 6.5 Other Documents..................................................40
Section 6.6 Notices of Defaults..............................................40
ARTICLE 7 AFFIRMATIVE COVENANTS............................................40
Section 7.1 Books and Records................................................40
Section 7.2 Inspections and Audits...........................................41
Section 7.3 Perform Obligations..............................................41
Section 7.4 Notice of Litigation.............................................41
Section 7.5 Insurance........................................................41
Section 7.6 Priority of Lien on Equipment and Leases; Further Security.......41
Section 7.7 Maintenance of Separate Existence................................42
Section 7.8 Taxes............................................................42
Section 7.9 Business Lease Production Requirement............................42
Section 7.10 Direction to Lessees.............................................42
Section 7.11 Safe Unit Refreshment Centers....................................42
Section 7.12 Casualty Events..................................................42
Section 7.13 Servicing, Billing and Maintenance Manual........................43
Section 7.14 Installation and Maintenance of Equipment........................43
Section 7.15 Misapplied Payments..............................................43
Section 7.16 Servicing Agreement.............................................43
ARTICLE 8 NEGATIVE COVENANTS...............................................43
Section 8.1 Liens............................................................43
Section 8.2 Changes in Business..............................................43
Section 8.3 Change of Office Address.........................................43
Section 8.4 Amendment of the Charter Documents...............................43
Section 8.5 Sale, Transfer or Termination of Pledged Assets..................43
Section 8.6 Change in Name...................................................44
ARTICLE 9 ADDITIONAL COVENANTS OF THE PARTIES..............................44
Section 9.1 Exclusivity......................................................44
Section 9.2 Right of First Refusal...........................................44
Section 9.3 Marketing; Traditional Equipment Financing.......................45
Section 9.4 Merger; Consolidation............................................45
Section 9.5 Lender Covenant to Finance; Borrower's Exclusive Remedy..........46
Section 9.6 Termination of Existing Liens....................................46
Section 9.7 Creation of New Loan Pools.......................................46
Section 9.8 Direction to Lessees.............................................46
Section 9.9 Principal Place of Business......................................46
Section 9.10 Renewed Business Lease...........................................46
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ARTICLE 10 EVENTS OF DEFAULT; EVENTS OF ACCELERATION........................47
Section 10.1 Events of Default................................................47
Section 10.2 Rights and Remedies on Event of Default..........................48
Section 10.3 Events of Acceleration...........................................49
Section 10.4 Rights and Remedies on Event of Acceleration.....................50
ARTICLE 11 LIQUIDATED DAMAGES...............................................52
Section 11.1 Liquidated Damages...............................................52
Section 11.2 Pledge and Grant of Security Interest for Liquidated Damage
Obligation.......................................................52
ARTICLE 12 MISCELLANEOUS PROVISIONS.........................................53
Section 12.1 Fees and Expenses................................................53
Section 12.2 Indemnification..................................................53
Section 12.3 Waiver of Trial by Jury..........................................54
Section 12.4 Modifications, Consents and Waivers; Entire Agreement............54
Section 12.5 Remedies Cumulative..............................................54
Section 12.6 Further Assurances...............................................55
Section 12.7 Notices..........................................................55
Section 12.8 Construction; Governing Law; Consent to Jurisdiction.............56
Section 12.9 Confidentiality..................................................56
Section 12.10 Severability.....................................................57
Section 12.11 Binding Effect: No Assignment or Delegation......................57
Section 12.12 Term of Agreement; Termination...................................57
Section 12.13 No Joint Venture.................................................57
Section 12.14 Counterparts.....................................................57
Section 12.15 Certain Remedies.................................................57
Section 12.16 Usury............................................................58
Section 12.17 Survival of Certain Provisions...................................58
ARTICLE 13 SECURITIZATION SERVICES..........................................58
Section 13.1 Securitization...................................................58
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SCHEDULE I - Refreshment Center Loan Amount
EXHIBIT A - GUIDELINES
EXHIBIT B - FORM OF LEASE FINANCING NOTE
EXHIBIT C - FORM OF CREDIT ENHANCEMENT NOTE
EXHIBIT D - FORM OF BORROWING NOTICE
EXHIBIT E - FORM OF TRANSACTION APPROVAL
EXHIBIT F - FORM OF ACKNOWLEDGMENT
EXHIBIT G - FORMS OF BUSINESS LEASE
EXHIBIT H - FORM OF CUSTODIAL AGREEMENT
EXHIBIT I - FORM OF MASTER CUSTODIAL AGREEMENT
EXHIBIT J - FORM OF LOCKBOX AGREEMENT
EXHIBIT K - FORM OF LICENSE AGREEMENT
EXHIBIT L - FORM OF PURCHASE AGREEMENT
EXHIBIT M - FORM OF SERVICING AGREEMENT
EXHIBIT N - FORM OF STOCK PLEDGE AGREEMENT
EXHIBIT O - FORM OF PLEDGE AND SECURITY AGREEMENT
EXHIBIT P - FORM OF LEGAL OPINION OF OUTSIDE COUNSEL TO THE eROOM PARTIES
EXHIBIT Q - CONFIDENTIAL eROOM DOMESTIC PRICE AND PRODUCT SCHEDULE
EXHIBIT R - THRESHOLD PLAN CALCULATION
EXHIBIT S - PERCENTAGE PLAN CALCULATION
EXHIBIT T - PLATINUM PLAN CALCULATION
EXHIBIT U - ACTUAL COST OF GOODS SOLD
EXHIBIT V - FORM OF CONFIDENTIALITY AGREEMENT
EXHIBIT W - FORM OF COMPLIANCE CERTIFICATE
EXHIBIT X - FORM OF CERTIFICATION
EXHIBIT Y - FORM OF PRELIMINARY APPROVAL REQUEST
EXHIBIT Z-1 - FORM OF LEGAL OPINION OF COUNSEL TO THE eROOM PARTIES FOR THE
INITIAL LOAN IN EACH LOAN POOL
EXHIBIT Z-2 - FORM OF LEGAL OPINION OF COUNSEL TO THE eROOM PARTIES REGARDING
THE CONSOLIDATION OF LEASE FINANCING NOTES INTO A CREDIT
ENHANCEMENT NOTE
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AMENDED AND RESTATED
MASTER BUSINESS LEASE FINANCING AGREEMENT
THIS AMENDED AND RESTATED MASTER BUSINESS LEASE FINANCING AGREEMENT
(this "Agreement") is made as of this 23rd day of February 2001, by and among
eRoom System SPE, Inc., a Nevada corporation, having an office at 1221 W. Hays
Street, Boise, Idaho 83702 (the "Borrower"), RoomSystems Inc., a Nevada
corporation, having an office at 390 North 3050 E., St. George, Utah 84790
("RSi"), eRoomSystem Technologies, Inc., a Nevada corporation having an office
at 3770 Howard Hughes Parkway, Suite 175, Las Vegas, Nevada 89109 ("eRoom"; and
collectively, with the Borrower and RSi, the "eRoom Parties") and AMRESCO
Leasing Corporation, 412 E. ParkCenter Blvd., Suite 300, Boise, Idaho 83767 (the
"Lender").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Lender, RSi and eRoom are parties to the Program Agreement
which provides for the creation of a program to engage in (i) the origination by
eRoom of Business Leases for the Equipment to hotels and time-shares located in
the United States, (ii) the purchase by the Borrower from eRoom of certain
Business Leases and Equipment, (iii) the receipt by the Borrower and RSi of a
License to use the Equipment Intellectual Property, (iv) the making of Lease
Financing Loans by the Lender to the Borrower secured by the Pledged Assets to
enable eRoom and the Borrower to engage in (i) - (iii) above, and (v) the
disposition of pools of Business Leases or Lease Financing Loans through
Securitizations (collectively, the "Program");
WHEREAS, to more fully document the Program, the eRoom Parties and the
Lender entered into that certain Master Business Lease Financing Agreement dated
May 11, 2000 (the "Original Agreement");
WHEREAS, the eRoom Parties and the Lender desire to amend and restate
the Original Agreement in its entirety as set forth herein;
WHEREAS, subject to the terms and conditions hereinafter set forth, to
finance the operation of the Program the Lender is willing to extend Lease
Financing Loans to the Borrower; and
WHEREAS, the parties agree that in order to facilitate Securitizations
it may be necessary to consolidate the Lease Financing Loans into several Loan
Pools, each of which will be separate from the other Loan Pools (except as
otherwise described herein);
NOW, THEREFORE, in consideration of the premises and covenants herein
contained, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:
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ARTICLE 1
DEFINITIONS; ACCOUNTING TERMS
Section 1.1 Definitions. As used in this Agreement, the following terms
shall have the following meanings:"Accelerated Loan Amount" shall mean for any
Lease Financing Loan, all amounts owed under the related Note, including but not
limited to all unamortized principal, all accrued and unpaid interest (and
interest thereof) and the Prepayment Amount.
"ACH System" or "ACH" shall mean the National Automated Clearing House
System.
"Acknowledgement" shall mean an Acknowledgement by the eRoom Parties in
substantially the form set out hereto as Exhibit F.
"Actual Cost of Goods Sold" shall mean the actual cost incurred by the
eRoom Parties in connection with the manufacture, assembly and installation
(excluding all internal costs, expenses and overhead of any of the eRoom
Parties) of the related Refreshment Centers, as described in more detail on
Exhibit U hereto.
"Advance Funded Lease Financing Loan" shall mean any Lease Financing
Loan funded by the Lender in connection with an Advance Funding Transaction
Approval Obligation.
"Advance Funding Transaction Approval Obligation" shall mean, prior to
the expiration of the Seasoning Period for the Business Leases relating to a
Lease Financing Loan, the Lender's obligation to make a decision regarding
Transaction Approval for such Lease Financing Loan as provided in Sections 2.4
and 2.5 hereof.
"Affiliate" shall mean, as to any Person, any other Person that directly
or indirectly controls, or is under common control with, or is controlled by,
such Person and includes (i) any Person who directly or indirectly holds 5% or
more of any class of voting stock of such Person or (ii) an Affiliate of such
Person. As used in this definition, the term "control" (including its use in the
phrases "controlled by" and "under common control with") shall mean possession,
directly or indirectly, of power to direct or cause the direction of management
or policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise); provided, that at all times
Sunyich shall be an Affiliate.
"Aggregate Credit Enhancement Amount" shall mean, for a Loan Pool, a
limited guarantee from the Borrower guaranteeing all Program Loans in the
Program Pool of which such Loan Pool is a part, in an amount equal to 1.01% of
the then outstanding Loan Amount of all of the Lease Financing Loans in such
Loan Pool.
"Agreement" shall mean this Amended and Restated Master Business Lease
Financing Agreement, as it may be amended from time to time.
"Average Daily eRoom Threshold Plan Revenue" shall have the meaning as
set forth in Schedule I.
"Average Daily eRoom Platinum Plan Revenue" shall have the meaning as
set forth in
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Schedule I.
Average Daily eRoom Percentage Plan Revenue" shall have the meaning as
set forth in Schedule I.
"Average Gross Revenue" shall mean the average revenue per day produced
by the Refreshment Centers subject to a Business Lease.
"Back-up Servicing Items" shall have the meaning assigned to such term
in Section 2.14(f) hereof.
"Borrower" shall have the meaning assigned to such term in the first
paragraph of this Agreement.
"Borrowing Date" shall mean, subject to the terms and conditions of this
Agreement, the Business Day upon which the Lender makes a Lease Financing Loan
hereunder.
"Borrowing Notice" shall mean a notice of the Borrower to the Lender in
substantially the form set out as Exhibit D hereto certifying that each of the
requirements for the issuance of a Lease Financing Loan have been satisfied.
"Business Day" shall mean any day that is not a Saturday, Sunday or
other day on which commercial banking institutions in the States of Texas,
Idaho, Minnesota, Utah or Nevada are authorized or obligated by law or executive
order to be closed.
"Business Lease" shall mean a lease (or revenue sharing agreement),
substantially in the form of Exhibit G hereto (including any and all schedules,
supplements and amendments thereto and modifications thereto), providing for the
leasing and/or use of the Equipment and/or Refreshment Centers by hotels and
time-shares located in the United States that provides for a sharing of
revenues, or any other kind of payment or arrangement between one of the eRoom
Parties (or any of their Affiliates) and such hotels and time-shares.
"Cancelled Business Lease" shall mean a Business Lease that has been
paid in full and for which the related Lease Financing Loan has been paid in
full.
"Carry Forward Amount" shall mean, for each Loan Pool an amount equal to
the sum of (i) the difference between (A) the Monthly Payment Amount due on all
prior Disbursement Dates and (B) the amount actually distributed to the Lender
pursuant to Section 2.8(c)(iii) as the Monthly Payment Amount on all prior
Disbursement Dates and (ii) interest at the then current Interest Rate on the
amount determined by clause (i) hereof.
"Casualty Event" shall mean an event that causes all or a portion of the
Equipment leased pursuant to a Business Lease to be lost, stolen, damaged beyond
repair or destroyed.
"Certificate" shall have the meaning set forth in Section 6.2(b) hereof.
"Collected Funds" shall mean, for each Loan Pool, all revenues, lease
payments and other amounts actually collected by the Lockbox Custodian and/or
the Collection Custodian on all
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Business Leases (including Renewed Business Leases) related to such Loan Pool
commencing upon the Funding Date of each Lease Financing Loan and terminating on
the date that all Lease Financing Loans funded under this Agreement have been
paid in full.
"Collection Account" shall mean for each Loan Pool, the account of such
name established and maintained by the Collection Custodian pursuant to the
related Custodial Agreement.
"Collection Custodian" shall mean Wells Fargo Bank, N.A., a national
banking association, or some other bank or trust company acting as custodian
under a Custodial Agreement.
"Commitment Termination Date" shall mean the seventh anniversary of the
Start Date.
"Compliance Certificate" shall have the meaning set forth in Section
5.3(b)(iv) hereof.
"Confidential Information" shall mean all information which has or will
be disclosed by any party to this Agreement in connection with the Program and
all terms contained in this Agreement, provided that Confidential Information
shall not include information which is publicly available, was acquired by any
party to this Agreement from third parties or is required to be disclosed by
law.
"Credit Enhancement Amount" shall mean, for a Lease Financing Loan, a
limited guarantee from the Borrower guaranteeing all Program Loans in the
Program Pool of which such Lease Financing Loan is a part in an amount equal to
1.01% of the then outstanding Loan Amount of such Lease Financing Loan.
"Credit Enhancement Note" shall mean the promissory note, or other
evidence of indebtedness, evidencing the indebtedness, including the then
outstanding Loan Amount, accrued interest and the Aggregate Credit Enhancement
Amount, of the Borrower under all the Lease Financing Loans relating to a Loan
Pool amended, restated and consolidated into such Credit Enhancement Note, in
substantially the form set forth in Exhibit C hereto.
"Credit Enhancement Prepayment" shall mean for any Lease Financing Loan
and Prepayment Date, the lesser of (i) the outstanding Credit Enhancement Amount
for such Lease Financing Loan and (ii) the Program Credit Enhancement Amount.
"Cumulative Lease Financing Loans" shall mean the sum of the original
Loan Amount of all Lease Financing Loans funded under the Program.
"Custodial Account" shall mean for each Loan Pool, the account of such
name established and maintained by the Document and Disbursements Custodian
pursuant to the related Custodial Agreement.
"Custodial Agreement" shall mean the Custodial Agreement executed in
connection with each Loan Pool by and among the Borrower, the Lender, the
Servicer, the Collection Custodian and the Documents and Disbursements Custodian
as amended and in effect at any time, a form of which is attached hereto as
Exhibit H.
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"Customer" shall mean any customer or potential customer of the eRoom
Parties (or any of their Affiliates) that desires to have a Refreshment Center
or Equipment.
"Cutoff Date" shall mean for any Disbursement Date, all payments on a
Business Lease made by a Lessee: (i) through the ACH System, the twenty-sixth
(26th) day of the calendar month preceding such Disbursement Date, and (ii)
through check or other acceptable payment method, the nineteenth (19th) day of
the calendar month preceding such Disbursement Date.
"Default" shall mean an event that with notice or lapse of time or both
would constitute an Event of Default or an Event of Acceleration.
"Delinquent Program Loan" shall mean a Program Loan on which any portion
of the Monthly Payment Amount is delinquent or otherwise in default.
"Disbursement Date" shall mean, for each Loan Pool, the 10th day of each
month, or if such day is not a Business Day, the next succeeding Business Day
beginning for each Lease Financing Loan in the month following the month in
which the Funding Date occurs.
"Discounted Value" shall mean, with respect to each Lease Financing
Loan, the amount calculated by discounting all remaining scheduled Monthly
Payment Amounts from their respective due dates to the Prepayment Date of such
Lease Financing Loan in accordance with acceptable financial practices and at a
discount factor (applied on a monthly basis) equal to the Reinvestment Rate.
"Documents and Disbursements Custodian" shall mean Wells Fargo Bank
Minnesota, National Association, a national banking association, or some other
bank or trust company acting as documents and disbursements custodian under a
Custodial Agreement and the Master Custodial Agreement.
"Dollars" and "$" shall mean the lawful money of the United States of
America.
"Equipment" shall mean, individually or collectively, Standard Unit
Equipment and Safe Unit Equipment, as the context may require.
"Equipment Intellectual Property" shall mean all Intellectual Property
of any of the eRoom Parties (or any of their Affiliates) necessary to
manufacture, sell, lease, install, maintain, service or operate the Equipment.
"Equipment Release Trigger" shall mean for any Cancelled Business Lease,
the date upon which both of the following events have occurred and are then
continuing: (i) the General Underwriting Guidelines are satisfied in full
(provided, however, that item No. 1 of the General Underwriting Guidelines shall
be calculated without giving any credit for the revenue generated by the
Cancelled Business Lease under consideration), and (ii) there does not exist any
Event of Default or Event of Acceleration.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as it may be amended from time to time, and the regulations promulgated
thereunder.
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"eRoom Parties" shall mean eRoom, RSi and the Borrower.
"eRoom" shall have the meaning assigned to such term in the first
paragraph of this Agreement.
"Event of Acceleration" shall have the meaning specified in Section
10.3.
"Event of Default" shall have the meaning specified in Section 10.1.
"Final Payment Date" shall mean for each Lease Financing Loan, the date
on which a Lease Financing Loan is, by its terms, scheduled to terminate
assuming that all amounts owed thereunder shall be paid on a timely basis.
"Financial Statements" shall mean all financial statements delivered to
the Lender pursuant to Sections 6.1 and 6.2 hereof.
"Fixed Charge Coverage Ratio" shall mean for any Person, the ratio of
(a) the Person's cash flow to (b) the sum of fixed charges and rental expense of
such Person, determined by the Lender in its sole discretion consistent with the
Lender's normal business practices.
"Funding Date" shall mean, with respect to each Lease Financing Loan,
the date on which the Lender first funds such Lease Financing Loan, which in the
case of a Lease Financing Loan that is not an Advance Funded Lease Financing
Loan, shall be a date in the month following the end of the related Seasoning
Period.
"General Intangibles" shall mean any computer programs, source codes,
hardware schematics and working drawings, operating manuals, procedural
documentation, performance data, customer lists, guidelines, applications,
files, records, memoranda, reports, information (including sales, business,
financial, accounting, media and other information) or other similar items.
"General Underwriting Guidelines" shall mean the general underwriting
guidelines set out in Exhibit A hereto.
"Guidelines" shall mean the General Underwriting Guidelines and the
Business Specific Underwriting Requirements set out on Exhibit A hereto.
"Indebtedness" shall mean with respect to any Person all (i) liabilities
or obligations, direct and contingent, which in accordance with generally
accepted accounting principles would be included in determining total
liabilities as shown on the liability side of a balance sheet of such Person on
any given date, including, without limitation, lease obligations required to be
shown as a liability on the balance sheet of such Person in accordance with
generally accepted accounting principles; (ii) liabilities or obligations of
others for which such Person is directly or indirectly liable, by way of
guaranty or otherwise; and (iii) liabilities or obligations secured by Liens on
any assets of such Person, whether or not such liabilities or obligations shall
have been assumed by it.
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"Initial Loan Pool" shall mean the initial pool of Lease Financing Loans
accumulated from the Start Date through the initial Securitization of such Lease
Financing Loans.
"Intellectual Property" shall mean any patent, copyright, trademark,
service mark, trade name or other mark, license, invention, or design,
registered or unregistered.
"Interest Rate" shall mean the annual rate of interest (calculated on
the basis of a year of 360 days and subject to Section 2.15(d)) borne by each
Lease Financing Loan, as set forth in the related Note, which rate shall be
determined for each such Lease Financing Loan as follows:
(i) For all Lease Financing Loans until $10,000,000 in cumulative volume
of Lease Financing Loans have been funded, 7-Year Treasury plus 12.50%;
(ii) For all Lease Financing Loans funded after the first $10,000,000 in
cumulative volume of Lease Financing Loans have been funded but prior to
completion of the first Securitization, 7-Year Treasury plus 10.00%;
(iii) For all Lease Financing Loans funded after the first
Securitization until $125,000,000 in cumulative volume of Lease Financing Loans
have been funded, 7-Year Treasury plus 9.50%;
(iv) For all Lease Financing Loans funded during the time period that
the total amount of Lease Financing Loans funded is between $125,000,001 and
$150,000,000 in cumulative volume, 7-Year Treasury plus 8.50%;
(v) For all Lease Financing Loans funded during the time period that the
total amount of Lease Financing Loans funded is between $150,000,001 and
$175,000,000 in cumulative volume, 7-Year Treasury plus 7.50%; and
(vi) For all Lease Financing Loans funded after the total amount of all
Lease Financing Loans exceeds a cumulative volume of $175,000,001, 7-Year
Treasury plus 6.50%;
provided, that in the event that at any time the Borrower shall fail to meet the
production requirements set out in Section 7.9, (A) the interest rate on any
Lease Financing Loans previously funded by the Lender shall be automatically and
retroactively increased to 7-Year Treasury plus 12.50% and (B) the interest rate
on all future Lease Financing Loans shall be 7-Year Treasury plus 12.50%,
provided, further, that upon the Borrower's later satisfaction of the production
requirements set out in Section 7.9, the interest rate for all Lease Financing
Loans funded thereafter shall be as set forth in clauses (i) - (vi) above.
"Investors" shall mean the owners of the securities issued in a
Securitization.
"Latest Balance Sheet" shall have the meaning set forth in Section
4.1(m) hereof.
"Lease Financing Loan" shall mean a loan of funds, effected pursuant to
this Agreement, by the Lender to the Borrower, related to a Business Lease in
the United States of America and secured by the related Pledged Assets.
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"Lease Financing Note" shall mean the promissory note, or other evidence
of indebtedness evidencing the obligations of the Borrower under a Lease
Financing Loan, in substantially the form set out as Exhibit B hereto.
"Lender" shall mean AMRESCO Leasing Corporation, a Nevada corporation,
and its successors and assigns.
"Lessee" shall mean the lessee under a Business Lease relating to a
Lease Financing Loan and each successor or assignee of such lessee's interest
under such Business Lease.
"License" shall mean a nonrevocable license to use all Equipment
Intellectual Property granted by eRoom to the Borrower and RSi for a term which
will end upon the satisfaction in full of all obligations of the eRoom Parties
to Lender under this Agreement and the Operative Documents.
"License Agreement" shall mean the License Agreement dated as of May 11,
2000, by and among eRoom, RSi and the Borrower as amended and in effect at any
time, pursuant to which a License is granted to RSi and the Borrower, a form of
which is attached hereto as Exhibit K.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
security interest, encumbrance, lien or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other title
retention agreement and any lease in the nature of a grant of a security
interest or lien).
"Liquidated Damages" shall mean an amount equal to 50% of the present
value of the Projected Annual Spread Income calculated as of the date the first
breach of any Liquidated Damages Obligation occurs, utilizing a discount rate of
10% per annum, and a term which begins in the year in which such breach occurs
(including such year), and which ends in the year 2006.
"Liquidated Damages Collateral" shall mean, collectively, the eRoom
Parties' right, title and interest in and to all Residual Profits, Refreshment
Centers, Equipment, Intellectual Property, Equipment Intellectual Property,
Licenses, Business Leases, accounts, goods, inventory, documents, chattel paper,
deposit accounts, equipment, General Intangibles, contracts, certificates of
title, fixtures, credits, claims, demands, assets and other personal property of
the eRoom Parties, whether now owned, existing, hereafter acquired, held, used,
or sold, and any other property, rights and interests of the eRoom Parties which
at any time relate to, arise out of or in connection with the foregoing or which
shall come into the possession or custody or under the control of the eRoom
Parties or any of their agents, representatives, associates or correspondents,
in connection with the foregoing; any and all additions and accessions,
replacements, substitutions, and improvements, of or to all of the foregoing and
all products, rents, profits, offspring, and proceeds thereof; provided,
however, that Liquidated Damages Collateral shall not include any of the
foregoing which constitutes Pledged Assets.
"Liquidated Damages Obligation" shall mean any obligation of the eRoom
Parties set forth in Sections 2.14(f), 9.1, 9.2, 9.3(a) 9.4, 9.6, 9.7, 9.8 or
9.9(a) hereof.
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"Loan Advance Holdback Amount" shall mean, for each Lease Financing
Loan, an amount equal to two (2) times the initial Monthly Payment Amount for
such Lease Financing Loan.
"Loan Amount" shall have the meaning specified in Section 2.2(b) for
Lease Financing Loans and Section 2.4 for Advance Funded Lease Financing Loans.
"Loan Payment Account" shall mean for each Loan Pool, the loan payment
account established and maintained by the Documents and Disbursements Custodian
pursuant to the related Custodial Agreement.
"Loan Payment Account Shortfall" shall mean, the Next Three Months
Payment Amount minus the amount on deposit in the Loan Payment Account as of
such Distribution Date without giving effect to any disbursements on such
Disbursement Date with respect to all Lease Financing Loans in such Loan Pool.
"Loan Pool" shall mean the pool of Lease Financing Loans extended by the
Lender to the Borrower from the cut-off date of the last Securitization of Lease
Financing Loans until the cut-off date of the next Securitization; provided that
all Lease Financing Loans extended by the Lender to the Borrower during the
period from the Start Date to the cut-off date of the initial Securitization
shall be the Initial Loan Pool.
"Loan Pool Accelerated Amount" shall mean for each Loan Pool, all
amounts owed under all the Lease Financing Loans advanced by the Lender
hereunder and included in such Loan Pool and all amounts owed under the related
Notes, including but not limited to, all unamortized principal, all accrued and
unpaid interest (and interest thereon) and the Prepayment Amount for the Lease
Financing Loans in such Loan Pool.
"Lockbox Agreement" shall mean the lockbox agreement executed in
connection with each Loan Pool by and among the Borrower, the Lender, the
Collection Custodian and the Lockbox Custodian, as amended and in effect at any
time, a form of which is attached hereto as Exhibit J.
"Lockbox Custodian" shall mean Regulus West LLC, or some other lockbox
services provider appointed by Lender and acting as lockbox custodian related to
this Agreement.
"Loss Reserve Account" shall mean for each Loan Pool, a loss reserve
account established and maintained by the Documents and Disbursements Custodian
pursuant to the related Custodial Agreement.
"Loss Reserve Amount" shall mean, for each Loan Pool, five percent (5%)
of the difference between (i) the monthly gross revenues and all other amounts
from all Business Leases collected by the Collection Custodian pursuant to the
Custodial Agreement related to such Loan Pool and (ii) the sum of the amounts
paid, disbursed or reserved pursuant to clauses (i) - (iii) of Section 2.8(c)
with respect to all Lease Financing Loans related to such Business Leases, until
the amounts reserved for such Lease Financing Loans equal the Reserve Cap for
such Lease Financing Loans.
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"Make Whole Premium" shall mean, with respect to any Lease Financing
Loan, a premium equal to the excess, if any, of the Discounted Value over the
outstanding Loan Amount of such Lease Financing Loan. The Make Whole Amount
shall in no event be less than zero.
"Master Custodial Agreement" shall mean the Master Custodial Agreement
dated October 2, 2000 by and among Borrower, the Lender, and the Documents and
Disbursements Custodian, as amended and in effect at any time, a form of which
is attached hereto as Exhibit I.
"Maturity Date" shall have the meaning set forth in Section 1(e) of the
Borrowing Notice.
"Minimum Daily Safe Unit Charge" shall have the meaning set forth in
Section 7.11(a).
"Monthly Documents and Disbursements Custodian Fee" shall mean the
monthly fee payable to the Documents and Disbursements Custodian on each
Disbursement Date which shall be in an amount set forth in the Custodial
Agreement.
"Monthly Payment Amount" shall mean, for each Lease Financing Loan (i)
the amount of principal due during the prior calendar month on such Lease
Financing Loan as provided in the related Note plus (ii) interest on such amount
in an amount equal to the product of (A) the Interest Rate for such Lease
Financing Loan and (B) the remaining principal balance of such Lease Financing
Loan and (iii) any other amounts owing under the related Note with respect to
such Lease Financing Loan.
"Net Borrower Percentage Plan Revenue" shall have the meaning as set
forth in Schedule I.
"Net Borrower Revenue" shall have the meaning as set forth in Schedule
I.
"Net Worth" shall mean, as at any date, all amounts which would be
included under shareholder's equity on a consolidated balance sheet of the eRoom
Parties as of such date in accordance with generally accepted accounting
principles, consistently applied.
"Next Three Months Payment Amount" shall mean, for all Lease Financing
Loans in a Loan Pool and for each Disbursement Date, the aggregate amount of the
next three Monthly Payment Amounts due for all such Lease Financing Loans.
"Note" shall mean, individually or collectively, as the context may
require, the Lease Financing Notes and/or the Credit Enhancement Notes.
"Operative Documents" shall mean collectively, this Agreement, the
Notes, the Program Agreement, the License Agreement, the Purchase Agreement, the
Stock Pledge Agreement, the Master Custodial Agreement, the Servicing
Agreements, the Custodial Agreements, the Lockbox Agreements and the Pledge and
Security Agreements.
"Original Agreement" shall have the meaning as set forth in the second
"WHEREAS" clause of the Agreement.
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"Overall Lease Financing Loans" shall mean the sum of the Cumulative
Lease Financing Loans and the Proposed Advance Funded Lease Financing Loans.
"Payment Date" shall mean for each Lease Financing Loan, the first
Business Day of each calendar month commencing in the second calendar month
following the month in which the Funding Date for such Lease Financing Loan
occurs, provided, however, if the Funding Date occurs on the first day of a
calendar month, the Payment Date shall mean the first Business Day of each month
commencing in the calendar month following the month in which the Funding Date
occurs.
"PBGC" shall have the meaning set forth in Section 4.1(p) hereof.
"Percentage Calculation" shall have the meaning as set forth in Schedule
I.
"Percentage Plan" shall mean any of the Percentage Plans set forth on
Exhibit Q.
"Permitted Liens" shall mean with respect to any Person, item of
Equipment or Business Leases: (i) Liens imposed by law, such as carriers',
warehousemen's, materialmen's and mechanics' liens, or Liens arising out of
judgments or awards against such Person with respect to which such Person at the
time shall currently be prosecuting an appeal or proceedings for review; and,
(ii) Liens for taxes not yet subject to penalties for nonpayment and Liens for
taxes the payment of which is being contested as permitted by Section 7.3
hereof.
"Person" shall mean any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
incorporated organization or government or any agency or political subdivision
thereof.
"Plan" shall have the meaning set forth in Section 4.1(p).
"Platinum Calculation" shall have the meaning as set forth in Schedule
I.
"Platinum Plan" shall mean any of the Platinum Plans set forth on
Exhibit Q.
"Pledged Assets" shall mean, for each Loan Pool, the collateral securing
all Lease Financing Loans included in such Loan Pool, which shall consist of (i)
the related Business Lease and the Refreshment Centers and Equipment leased
thereunder, (ii) all payments on Business Leases held by the Lockbox Custodian
pursuant to the related Lockbox Agreement, (iii) the Collected Funds and all
amounts held in the related Collection Account by the Collection Custodian
pursuant to the related Custodial Agreement, (iv) all amounts held in the
related Custodial Account by the Documents and Disbursements Custodian pursuant
to the related Custodial Agreement, (v) all amounts held in the related Loan
Payment Account, Property Tax Reserve Account and Loss Reserve Account by the
Documents and Disbursements Custodian pursuant to the related Custodial
Agreement, (vi) the stock of RSi pledged to the Lender pursuant to the related
Stock Pledge Agreement and (vii) the Licenses.
"Pledge and Security Agreement" shall mean the Pledge and Security
Agreement by and among the Borrower, eRoom and RSi in favor of the Lender
executed in connection with each Loan Pool, a form of which is attached as
Exhibit O.
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"Preliminary Approval Information" shall mean all of the information
listed in Section 2 of the Preliminary Approval Request form attached hereto as
Exhibit Y.
"Preliminary Approval Request" shall mean a request of the Borrower to
the Lender in the form attached hereto as Exhibit Y certifying that the Borrower
has submitted to the Lender all of the Preliminary Approval Information and that
to the best of Borrower's knowledge, such information is true and correct.
"Prepayment Amount" shall mean (i) with respect to a Lease Financing
Loan that has been consolidated into a Credit Enhancement Note, an amount equal
to the sum of (A) the outstanding Loan Amount of such Lease Financing Loan on
the Prepayment Date, (B) all interest accrued and unpaid on the Loan Amount of
such Lease Financing Loan from the immediately preceding Payment Date through
the Prepayment Date, if any, plus an additional month of interest on such Loan
Amount, (C) all accrued and unpaid Scheduled Monthly Credit Enhancement
Obligation Payments due through the Prepayment Date, (D) if any Program Loan
Deficiencies exist on the Prepayment Date, the Credit Enhancement Prepayment and
(E) the Make Whole Premium, and (ii) with respect to a Lease Financing Loan that
has not been consolidated into a Credit Enhancement Note, items (A), (B) and (E)
above for such Lease Financing Loan.
"Prepayment Date" shall have the meaning set forth in Section 2.11(a)
hereof.
"Prepayment Notice" shall have the meaning set forth in Section 2.11(a)
hereof.
"Pre-Securitization Period" with respect to a Lease Financing Loan shall
mean, the period of time between the funding of such Lease Financing Loan and
the Securitization of such Lease Financing Loan or the Business Lease pledged as
collateral for such Lease Financing Loan.
"Price and Product Schedule" shall mean the list of prices and products
offered by eRoom to hotels and time-shares, as set out in Exhibit Q hereto, as
such schedule may be amended by written agreement of eRoom and the Lender from
time to time.
"Program" shall have the meaning specified in the recitals hereto.
"Program Agreement" shall mean the Amended and Restated Program
Agreement dated as of March 10, 1999, by and among RSi, eRoom (formerly known as
RoomSystem Technologies, Inc. and RoomSystems International Corp.), Sunyich and
the Lender, as at any time amended and in effect.
"Program Credit Enhancement Amount" shall mean, with respect to each
Lease Financing Loan, an amount equal to the product of (i) the ratio of (A) the
outstanding Loan Amount plus the Credit Enhancement Amount on the Prepayment
Date of such prepaying Lease Financing Loan to (B) the outstanding loan amounts
plus the outstanding credit enhancement amounts of all Program Loans in the
related Program Pool that are not Delinquent Program Loans, multiplied by (ii)
the sum (without duplication) of (A) the Program Prepayment Amounts for all
Delinquent Program Loans in the related Program Pool on the Prepayment Date plus
(B) any other outstanding Program Loan Deficiencies with respect to such Program
Pool.
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"Program Loan" shall mean a commercial loan made by the Lender (or one
of its Affiliates) to a third party that is included in a pool of loans formed
by the Lender (or one of its Affiliates).
"Program Loan Deficiencies" shall mean any defaults or delinquencies on
any of the Program Loans, as determined by the Lender in its sole discretion.
"Program Pool" shall mean a pool of Program Loans.
"Program Prepayment Amount" shall mean, with respect to any Delinquent
Program Loan, an amount equal to the sum of (i) the outstanding loan amount of
such Delinquent Program Loan on the prepayment date, (ii) all accrued and unpaid
interest on such Delinquent Program Loan to the Prepayment Date, (iii) all
accrued and unpaid scheduled monthly credit enhancement obligation payments on
such Delinquent Program Loan to the Prepayment Date and (iv) the make whole
premium with respect to such Delinquent Program Loan.
"Projected Annual Spread Income" shall be equal to the number of
projected Refreshment Centers for each year shown below, multiplied by $122.40:
PROJECTED
REFRESHMENT
YEAR CENTERS
---- -------
2001 15,000
2002 35,000
2003 70,000
2004 100,000
2005 100,000
2006 100,000
"Property Tax Reserve Account" shall mean for each Loan Pool, an escrow
reserve account established and maintained by the Documents and Disbursements
Custodian pursuant to the related Custodial Agreement for payment of applicable
property or use taxes on the Equipment subject to each Business Lease related to
such Loan Pool.
"Property Tax Reserve Amount" shall mean for each Loan Pool and each
Disbursement Date, an amount equal to the product of (i) *** per day (ii) the
number of days since the last Disbursement Date (or 30 days in the case of the
first Disbursement Date) and (iii) the number of Refreshment Centers included in
the Business Leases relating to the Lease Financing Loans in such Loan Pool.
"Proposed Advance Funded Lease Financing Loans" shall mean the sum of
the Loan Amount of all Advance Funded Lease Financing Loans submitted by
Borrower to Lender and then under consideration for funding.
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
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"Proposed Lease Form" shall have the meaning assigned to such term in
Section 2.1(e) hereof.
"Purchase Agreement" shall mean the Business Lease and Equipment
Purchase and Sale Agreement dated as of May 11, 2000, by and between eRoom and
the Borrower, as amended and in effect at any time, pursuant to which the
Borrower will purchase Business Leases (other than the right to service such
Business Leases) and Equipment from eRoom, from time to time, a form of which is
attached hereto as Exhibit L.
"Recalculated Percentage Calculation" shall have the meaning as set
forth in Schedule I.
"Recalculated Threshold Calculation" shall have the meaning as set forth
in Schedule I.
"Refreshment Center" shall mean either a Standard Unit Refreshment
Center or a Safe Unit Refreshment Center, as applicable.
"Refreshment Center Loan Amount" for each Lease Financing Loan shall
have the meaning specified on Schedule I hereto under the Threshold Plan, the
Percentage Plan or the Platinum Plan, as applicable.
"Reinvestment Rate" shall mean the bond equivalent yield to maturity
implied by either (i) the yield reported, as of 10:00 A.M. (New York City time)
on the Business Day next preceding the Prepayment Date, on the display
designated as "Page 678" on the Bridge Capital Telerate Service (or such other
display as may replace Page 678 on the Bridge Capital Telerate Service) for
actively traded United States Treasury obligations having a maturity equal to
the Remaining Average Life, or (ii) if such yields shall not be reported as of
such time or the yields reported as of such times shall not be ascertainable,
the Treasury Constant Maturity Series yields reported (for the latest day for
which such yields shall have been so reported as of the Business Day next
preceding the Prepayment Date) in Federal Reserve Statistical Release H. 15
(519) (or any comparable successor publication) for actively traded United
States Treasury obligations having a constant maturity equal to the Remaining
Average Life. Such implied yield shall be determined, if necessary, by (A)
converting United States Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice, and (B) interpolating linearly
between reported yields.
"Remaining Average Life" shall mean, with respect to each Lease
Financing Loan, the number of years (calculated to the nearest one-twelfth year)
obtained by dividing (i) the outstanding Loan Amount on the Prepayment Date into
(ii) the sum of the products obtained by multiplying (A) the principal portion
of each remaining scheduled Monthly Payment Amount by (B) the number of years
(calculated to the nearest one-twelfth year) which will elapse between the
Prepayment Date and the Final Payment Date.
"Renewed Business Lease" shall have the meaning assigned to such term in
Section 9.10 hereof.
"Renewed Business Lease Release Trigger" shall mean for any Renewed
Business Lease, the date upon which both of the following events have occurred
and are then continuing: (i) the General Underwriting Guidelines are satisfied
in full (provided, however, that item No. 1 of the
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<PAGE>
General Underwriting Guidelines shall be calculated without giving any credit
for the revenue generated by the Renewed Business Lease under consideration);
and (ii) there does not exist any Event of Default or Event of Acceleration.
"Reserve Cap" shall mean with respect to all Lease Financing Loans in a
Loan Pool, an amount equal to 200% of the sum of all Monthly Payment Amounts on
such Lease Financing Loans.
"Residual Profits" shall mean, for each Loan Pool, all revenues and
other amounts collected and/or retained by the Documents and Disbursements
Custodian in the Custodial Account and not required to be disbursed or retained
pursuant to Section 2.8(c)(i) - (v).
"Residual Profits Collection Account" shall mean the account of such
name established and maintained by the Documents and Disbursements Custodian
pursuant to the Master Custodial Agreement.
"Right of First Refusal" shall have the meaning assigned to such term in
Section 9.2 hereof.
"RSi" shall have the meaning assigned to such term in the first
paragraph of this Agreement.
"RSi Stock" shall mean all of the issued and outstanding capital stock
of RSi.
"Safe Unit Equipment" shall mean all network computer systems, equipment
(including refrigerators and safes) and all other personal property related to a
Safe Unit Refreshment Center.
"Safe Unit Refreshment Center" shall mean a fully-automated refreshment
center (including but not limited to a Convenience Center) or RoomServ
refreshment center that includes an attached room safe (including but not
limited to RoomSafe).
"Scheduled Monthly Credit Enhancement Obligation Payment" shall mean,
with respect to a Lease Financing Loan, an amount equal to (i) the product of
(A) the Interest Rate on such Lease Financing Loan and (B) the Credit
Enhancement Amount for such Lease Financing Loan divided by (ii) twelve (12).
"Seasoning Period" shall mean the period beginning on the first day of
the month following the month in which all Equipment subject to the applicable
Business Lease is installed and fully operational, and ending ninety (90) days
thereafter; provided that in the case of any Lease Financing Loan that has a
remaining term of less than 82 months as provided in Section 2.2(c), the
Seasoning Period shall be the period beginning 90 days prior to the date of
funding of such Lease Financing Loan and ending on the date of such Lease
Financing Loan.
"Securitization" shall mean the disposition of pools of Business Leases
or Loan Pools of Lease Financing Loans through securitization or any other form
of transfer of such assets from the Borrower's or the Lender's balance sheet.
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<PAGE>
"7-Year Treasury" shall mean the yield to maturity for the United States
Treasury bond equal to seven (7) years (as determined by the Lender) as set
forth in The Wall Street Journal, as of the Business Day immediately preceding
the date of funding of the related Lease Financing Loan.
"Servicer" shall mean RSi, as servicer under the Servicing Agreement or
any successor or assign thereof.
"Servicing Agreement" shall mean the Servicing Agreement executed in
connection with each Loan Pool by and among the Servicer, the Borrower, the
Lender, as Lender and back-up servicer and the Documents and Disbursements
Custodian, as amended and in effect at any time, pursuant to which RSi will
service the Equipment and the Business Leases related to the Lease Financing
Loans in such Loan Pool, a form of which is attached hereto as Exhibit M.
"Servicing Fee" shall mean, for each Loan Pool and for each Disbursement
Date, the product of (i) ***/day (ii) the number of days since the last
Disbursement Date (or 30 days in the case of the first Disbursement Date) and
(iii) the number of units of installed Refreshment Centers included in the
Business Leases relating to the Lease Financing Loans in such Loan Pool.
"Standard Lease" shall mean a lease entered into between a Customer and
any party other than an eRoom Party or an Affiliate of an eRoom Party, providing
for the lease of Equipment or a Refreshment Center that does not provide for a
sharing of revenues between any eRoom Party or Affiliate and such Customer.
"Standard Unit Equipment" shall mean all network computer systems and
software (including network systems, room management systems and restocking
systems), equipment (including refrigerators) and other personal property
related to a Standard Unit Refreshment Center.
"Standard Unit Refreshment Center" shall mean a fully-automated
refreshment center (including but not limited to a Convenience Center or
RoomServ refreshment center) that does not include an attached room safe.
"Start Date" shall mean the date of the initial Lease Financing Loan
made hereunder.
"Stock Collateral" shall have the meaning given to such term in the
Stock Pledge Agreements.
"Stock Pledge Agreement" shall mean the Stock Pledge and Security
Agreement executed in connection with each Loan Pool by and among the Lender,
RSi and eRoom, as amended and in effect at any time, a form of which is attached
hereto as Exhibit N.
"Sunyich" shall mean Steve L. Sunyich.
"Term" shall mean have the meaning set forth in Section 12.12(a) hereof.
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
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<PAGE>
"Threshold" shall mean for each item of Equipment listed in the Domestic
Price and Product Schedule, the amount set forth in column 10 of the Domestic
Price and Product Schedule for such item of Equipment.
"Threshold Calculation" shall have the meaning as set forth in Schedule
I.
"Threshold Plan" shall mean any of the Threshold Plans set forth on
Exhibit Q.
"Traditional Equipment Financing" shall mean any financing requested or
obtained by a Customer to facilitate the Customer's purchase of Equipment, or
any Standard Lease requested or obtained by a Customer.
"Transaction" shall mean the funding of a Lease Financing Loan or an
Advance Funded Lease Financing Loan.
"Transaction Approval" shall mean a written approval of a Lease
Financing Loan, in substantially the form set forth in the attached Exhibit E,
and executed by the Lender.
"Transaction Submission Package" shall have the meaning assigned to such
term in Exhibit A hereto entitled "Guidelines."
"UCC" shall mean the Uniform Commercial Code (or any comparable law) in
effect in any relevant jurisdiction, the laws of which govern the attachment or
perfection of security interests under the Original Agreement and/or this
Agreement.
"Underperforming Property" shall mean a hotel or timeshare property
under (i) a Threshold Plan that earned a share of the Average Gross Revenues
(less the portion of such revenues paid to eRoom) during the Seasoning Period of
less than 20% of the total revenue generated by the Refreshment Centers in such
hotel or timeshare property during the Seasoning Period, or (ii) a Platinum Plan
that does not qualify for a Refreshment Center Loan Amount under Option 1 or
Option 2 of Section C to Schedule I to this Agreement and where such hotel or
time-share property earned a share of the Average Gross Revenues (less the
portion of such revenues paid to eRoom and the guaranteed payment to eRoom)
during the Seasoning Period of less than 20% of the total revenue generated by
the Refreshment Centers in such hotel or timeshare property during the Seasoning
Period.
Section 1.2 Accounting Terms. Except as otherwise defined or provided
herein, any accounting terms used in this Agreement which are not specifically
defined herein shall have the meanings customarily given thereto, and all
financial computations shall be made, in accordance with generally accepted
accounting principles, consistently applied.
ARTICLE 2
BUSINESS LEASES, LEASE FINANCING LOANS; SERVICING
Section 2.1 The Business Leases.
(a) Subject to the requirements of Section 2.1(c) below, eRoom
will be solely responsible for the negotiation, origination, servicing and
management of each Business Lease.
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<PAGE>
(b) Pursuant to the Purchase Agreement, eRoom will sell, assign,
transfer, set over and otherwise convey without recourse to the Borrower, each
Business Lease related to a Lease Financing Loan, other than the right to
service the Business Lease, which shall be transferred by eRoom to RSi pursuant
to the Servicing Agreement.
(c) Prior to or contemporaneously with the closing date of the
transfer of a Business Lease from eRoom to the Borrower as required by Section
2.1(b), eRoom shall sell, assign, transfer, set over and otherwise convey the
related Equipment to the Borrower pursuant to the Purchase Agreement and eRoom
shall, pursuant to the License Agreement, have granted to the Borrower and RSi a
License to use all of the related Equipment Intellectual Property.
(d) The Borrower and the Lender agree that in connection with any
Business Lease financing: (i) for each proposed Lease Financing Loan, the
related Business Lease and the Lessee thereof shall be underwritten by the
Lender as part of the Transaction Approval process; (ii) the form of Business
Lease must be substantially similar to one of the form(s) of Business Lease set
out in Exhibit G and must contain a term of 84 months and pricing terms that
incorporate one of the options set out on the Price and Product Schedule; and,
(iii) any proposed change to a form of Business Lease set out in Exhibit G must
be acceptable to the Lender in its reasonable discretion as evidenced by a
written acknowledgement of such changed form by the Lender.
(e) In the event the Borrower wishes to obtain Business Lease
Financing for a Business Lease that is in a form that is not substantially
similar to those set out in Exhibit G or that contains pricing terms that are
not one of the options set out in the Price and Product Schedule, the Borrower
shall submit a form of such proposed Business Lease (the "Proposed Lease Form")
and the proposed pricing terms to the Lender at least 30 days prior to the date
the Borrower wishes to obtain such Lease Financing Loan. Upon receipt of the
Proposed Lease Form and the proposed pricing terms, the Lender shall, within 14
days of receipt, indicate whether it will approve the Proposed Lease Form and
the proposed pricing terms.
Section 2.2 The Lease Financing Loans.
(a) The Lender hereby agrees, subject to the terms and conditions
of this Agreement, to make Lease Financing Loans to the Borrower during the Term
of this Agreement. Unless the Borrower and the Lender shall agree, in writing,
to extend the Term, the Lender shall have no obligation to make any Lease
Financing Loans after the Commitment Termination Date.
(b) The amount of each Lease Financing Loan shall be equal to the
Refreshment Center Loan Amount for all Refreshment Centers included in the
related Business Leases and installed at the related hotel or time-share
property or properties that secure such Lease Financing Loan (such amount, the
"Loan Amount").
(c) The term of each Lease Financing Loan (other than an Advance
Funded Lease Financing Loan) shall be eighty-two (82) months from the date of
such Lease Financing Loan. The term of each Advance Funded Lease Financing Loan
shall be eighty-four (84) months from the date of such Advance Funded Lease
Financing Loan, which shall be funded on the first Business Day in the Seasoning
Period. If the remaining term of the Business Lease related to a
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<PAGE>
Lease Financing Loan is less than eighty-two (82) months, upon the Lender's
consent (determined by the Lender in its sole and absolute discretion), the term
of such loan may be adjusted to correspond to the remaining term of the related
Business Lease (but not less than the remaining term of the related Business
Lease); provided, however, that the Loan Amount of such Lease Financing Loan
shall be reduced consistent with the methodology provided in the table below to
adjust for the reduced term of the related Business Lease.
Remaining Term of Term of Lease Net Borrower Revenue
Business Lease Financing Loan Advance Rate*
-------------- -------------- ------------
78 79 $9.95
72 73 $9.57
66 67 $9.14
61 62 $8.76
51 52 $7.89
41 42 $6.88
31 32 $5.70
21 22 $4.33
11 12 $2.74
* This amount shall be inserted in clause (i)(A) of the definition of
"Refreshment Center Loan Amount" for the Threshold Plan and clause (i)(A) of the
definition of "Refreshment Center Loan Amount" for the Percentage Plan.
(d) Notwithstanding the foregoing, if the Lessee of the Business
Lease related to a proposed Lease Financing Loan is an Underperforming Property,
the Lender shall have the right, but not the obligation to fund such proposed
Lease Financing Loan.
(e) For each Lease Financing Loan, Lender shall withhold the Loan
Advance Holdback Amount from the Loan Amount and shall deposit such Loan Advance
Holdback Amount into the Loan Payment Account for the Loan Pool related to such
Lease Financing Loan.
Section 2.3 Conditions to Borrowing; Transaction Approval or Denial.
(a) Prior to requesting a Lease Financing Loan hereunder, the
Borrower must submit to the Lender a Preliminary Approval Request on which the
Borrower shall certify that the Borrower has submitted to Lender all of the
Preliminary Approval Information and that to the best of Borrower's knowledge,
such information is true and correct.
(b) The Lender shall, within 7 Business Days after its receipt of
the Preliminary Approval Request for a requested Lease Financing Loan, determine
whether the proposed transaction is reasonably likely to satisfy the preliminary
requirements for a Lease Financing Loan.
(c) In the event that the Lender determines that the proposed
transaction is reasonably likely to satisfy the preliminary requirements for a
Lease Financing Loan, the Lender shall so inform the Borrower in writing, within
7 Business Days after Lender's receipt of the Preliminary Approval Request for
such requested Lease Financing Loan.
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(d) At the end of the Seasoning Period for a Business Lease
related to a proposed transaction that Lender determines is reasonably likely to
satisfy the preliminary requirements for a Lease Financing Loan (or, as provided
below, sooner in the case of Lease Financing Loans for which the Lender has an
Advance Funding Transaction Approval Obligation), the Borrower will present to
the Lender for its review a Borrowing Notice and a full and complete Transaction
Submission Package relating to such Business Lease; provided that Borrower need
not resubmit any Preliminary Approval Information previously submitted to Lender
for such Lease Financing Loan.
(e) Borrower shall certify that each of the requirements set
forth in the Borrowing Notice has been satisfied (or otherwise waived by Lender
in writing).
(f) Within seven (7) Business Days after its receipt of the
Borrowing Notice and Transaction Submission Package, the Lender shall determine,
in its reasonable discretion, whether the proposed transaction satisfies the
requirements for a Lease Financing Loan.
(g) In the event that the Lender determines that the proposed
transaction satisfies the requirements for a Lease Financing Loan, the Lender
shall approve the issuance of a Lease Financing Loan for a proposed transaction
by executing and delivering to the Borrower a Transaction Approval. In the event
that the Lender does not approve the issuance of a Lease Financing Loan for a
proposed transaction, the Lender shall execute and deliver to the Borrower a
transaction denial.
(h) On the Business Day prior to the closing of each Lease
Financing Loan, the eRoom Parties shall provide the Lender with an
Acknowledgement that the related Preliminary Approval Information, the
information in the Preliminary Approval Request, the Borrowing Notice, the
information in the Transaction Submission Package, and the representations and
warranties set forth in Section 4.1 hereto are, and will as of the date of such
closing, be true and correct in all material respects and that the Borrower has
satisfied the Guidelines and all terms and conditions of this Agreement. The
eRoom Parties agree that upon the Securitization of any Business Leases or Lease
Financing Loans, they will each execute a similar Acknowledgement in connection
with the Securitization.
(i) Notwithstanding the foregoing, the obligation of the Lender
to make a Lease Financing Loan is subject to the satisfaction (or waiver) of the
conditions set out in Section 5.3 hereof.
Section 2.4 Advance Funded Lease Financing Loans. Upon the satisfaction
of the requirements set out in Section 2.5(a) and (b), the Borrower can request
advance funding of certain Lease Financing Loans no less than ten (10) Business
Days prior to the first day of the Seasoning Period for the related Business
Lease and the Lender hereby agrees, on the terms and subject to the conditions
of this Agreement to make Advance Funded Lease Financing Loans. The "Loan
Amount" for each Advance Funded Lease Financing Loan shall equal (a) $600 for
each Standard Unit Refreshment Center and (b) $800 for each Safe Unit
Refreshment Center.
Section 2.5 Advance Funding Transaction Approval. Upon satisfaction of
the terms and conditions of this Agreement, the Borrower can request an Advance
Funded Lease Financing
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Loan from the Lender no less than ten (10) Business Days prior to the first day
of the Seasoning Period with respect to the related Business Lease upon the
satisfaction of the following additional conditions: (a) the eRoom Parties must
have at least 10,000 installed Refreshment Centers which have completed the
related Seasoning Period and which have been funded by the Lender through Lease
Financing Loans; and (b) as of the date of the request for such advance funding,
the average revenues received by the Borrower (after giving effect to the
revenue sharing allocations under the related Business Leases and excluding any
revenues for each Advance Funded Lease Financing Loan which has not completed
its respective Seasoning Period) must be at least 1 cent ($.01) per day for each
*** of Overall Lease Financing Loans.
Section 2.6 Borrowings During Term. On the Borrowing Date specified for
each Lease Financing Loan hereunder, the Lender shall make available the Loan
Amount (less the sum of: (a) accrued interest on such Lease Financing Loan, (b)
the initial Monthly Payment Amount for such Lease Financing Loan, and (c) the
Loan Advance Holdback Amount for such Lease Financing Loan) at the office of the
Lender or, if the Borrower shall make a written request to the Lender, wire or
cause to be wired such amount to such account or accounts of the Borrower
specified in such written request and which shall be located within the State of
Utah or State of Idaho.
Section 2.7 Use of Proceeds. The proceeds of each Lease Financing Loan
hereunder shall be used by the Borrower solely for lawful business or commercial
purposes.
Section 2.8 Pre-Securitization Period.
(a) During the Pre-Securitization Period, the Lender shall retain
the Lease Financing Loans in a Loan Pool in accordance with the terms hereof.
(b) The Documents and Disbursements Custodian shall, on behalf of
the Lender and the Borrower as their interests may appear, hold the Pledged
Assets for a Loan Pool (other than the stock of RSi, which shall be held by the
Lender). Pursuant to the related Custodial Agreement, the Collection Custodian
shall collect directly from each Lessee the Collected Funds and shall deposit
such Collected Funds into the Collection Account created pursuant to such
Custodial Agreement. Pursuant to the related Custodial Agreement, the Collection
Custodian will remit directly to the Custodial Account, all cleared and
collected amounts in the Collection Account as of the close of business on each
Business Day.
(c) On each Disbursement Date for each Loan Pool (including each
Loan Pool in which all of the related Lease Financing Loans have been paid in
full), the Documents and Disbursements Custodian (based on the report provided
to the Documents and Disbursements Custodian pursuant to the related Servicing
Agreement) shall disburse the amounts held on deposit in the Custodial Account
established for such Loan Pool which were received prior to the related Cutoff
Date to the parties or accounts indicated in the following priorities (to the
extent of funds available therefor):
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
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(i) ***;
(ii) ***;
(iii) ***;
(iv) ***;
(v) to the Residual Profits Collection Account, if necessary to cover a
shortfall in funds available to pay items (i) - (iv) of Section 2.8(c) with
respect to any other Loan Pools; and
(vi) ***
(d) Notwithstanding the foregoing, to the extent that amounts on
deposit in the Custodial Account for a Loan Pool for any Disbursement Date are
insufficient to make a full disbursement of the amounts required for such Loan
Pool in clauses (i) - (iii) above, the Documents and Disbursements Custodian
shall, to the extent of funds available therefor, withdraw amounts from (x)
first, the Loss Reserve Account for such Loan Pool and (y) second, the Residual
Profits Collection Account and disburse such amounts in accordance with the
priorities set out in such clauses (i) - (iii) of Section 2.8(c).
(e) Notwithstanding clause (d) above, to the extent that amounts
on deposit in the Custodial Account for a Loan Pool for any Disbursement Date
are insufficient to make a full payment to the related Loss Reserve Account for
such Loan Pool pursuant to clause (c)(iv) above, the Documents and Disbursements
Custodian shall, to the extent of funds available therefor, withdraw amounts
from the Residual Profits Collection Account and distribute such amounts to such
Loss Reserve Account pursuant to such clause (c)(iv) above.
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
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(f) On the Disbursement Date in May of each year, any amounts
remaining in the Property Tax Reserve Account with respect to each Loan Pool,
after the payment of all applicable taxes for the prior calendar year, will be
released and applied as payments in accordance with the priorities set out in
clauses (iii) - (vi) of Section 2.8(c) for the related Loan Pool.
(g) On each Disbursement Date, the Documents and Disbursements
Custodian will provide each of the eRoom Parties and the Lender with an
accounting for each Loan Pool of the disbursements and allocations of the
amounts on deposit in the Custodial Account with respect to each Loan Pool for
such Disbursement Date.
(h) In the event that on any Disbursement Date more than one Loan
Pool has a shortfall in the amounts on deposit in the related Custodial Accounts
and amounts on deposit in the related Loss Reserve Accounts such that such Loan
Pools require amounts on deposit in the Residual Profits Collection Account to
satisfy the payments required by Section 2.8(c)(i) - (iv) above, amounts
distributed from the Residual Profits Collection Account shall be allocated pro
rata among such Loan Pools based upon the then outstanding Loan Amount of all
Lease Financing Loans in such Loan Pools.
(i) On each Disbursement Date, after the making of all of the
disbursements from the related Custodial Account set out in Section 2.8(c)
above, the Documents and Disbursements Custodian shall disburse the amounts on
deposit in the related Loan Payment Account to the parties or accounts indicated
in the following priorities (to the extent of funds available therefor):
(i) to the Documents and Disbursements Custodian, the
Monthly Documents and Disbursements Custodian Fee;
(ii) to the Lender, an amount equal to the sum of (A) the
Monthly Payment Amount for such Disbursement Date with respect to all Lease
Financing Loans in such Loan Pool, (B) the Carry Forward Amount for such
Disbursement Date with respect to all Lease Financing Loans in such Loan Pool,
and (C) if applicable, the Accelerated Loan Amount for such Disbursement Date
with respect to all Lease Financing Loans in such Loan Pool;
(iii) to the Custodial Account for such Loan Pool, an
amount equal to the amount of interest accrued since the prior Disbursement Date
on funds on deposit in the Loan Payment Account on the day prior to such
Disbursement Date; and
(iv) any amount remaining in the Loan Payment Account
after making the disbursements set out in subclauses (i) and (ii) of this clause
(i) shall be retained in the Loan Payment Account.
(j) With respect to a Loan Pool, on the first Disbursement Date
following the date that all Lease Financing Loans related to such Loan Pool have
been paid in full, all amounts remaining on deposit in the Loss Reserve Account
and Loan Payment Account for such Loan Pool shall, to the extent not required to
be distributed pursuant to Section 2.8(c) or 2.8(i) for such Loan Pool, be
transferred by the Documents and Disbursements Custodian to the Residual Profits
Collection Account.
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Section 2.9 Timeline of Events. The following is a timeline showing the
sequence of events relating to a Lease Financing Loan.
February 15, 2001 Equipment installed at a hotel or time-share
property in connection with a Business Lease
between eRoom and a Lessee.
March 1 - May 31, 2001 Seasoning Period.
March 1, 2001 RSi bills the Lessee under the Business Lease
for the period from February 15-February 29.
April 1, 2001 Lessee's due date for lease payment for period
from February 15-February 29 (this payment
belongs to eRoom). Also RSi bills the Lessee
for the month of March.
May 1, 2001 Lessee's due date for lease payment for the
March lease payment - this payment belongs to
eRoom. Also RSi bills the Lessee for the month
of April.
June 1, 2001 Lessee's due date for the April lease payment
(this payment belongs to eRoom). RSi bills the
Lessee for the May lease payment.
June 15, 2001 Funding Date. Lender makes Lease Financing Loan
to the Borrower (which has acquired the
Business Lease and related Equipment from eRoom
pursuant to the Purchase Agreement). Lender
withholds Monthly Payment Amount for June from
amounts loaned on such Lease Financing Loan.
Lender also withholds the Loan Advance Holdback
Amount which will be deposited in the Loan
Payment Account for the Loan Pool related to
the Lease Financing Loan.
July 1, 2001 Initial Payment Date. Collection Custodian
receives the May lease payment directly from
the Lessee (this payment belongs to the Program
and will be distributed on the Disbursement
Date pursuant to Section 2.8). Also RSi bills
the Lessee for the June lease payment.
July 10, 2001 Initial Disbursement Date. Amounts received by
the Documents and Disbursements Custodian on
the Business Leases since the Funding Date will
be disbursed pursuant to Section 2.8.
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August 1, 2001 Payment Date. Lessee's due date for the June
lease payment and the billing date for the
month of July.
August 10, 2001 Disbursement Date. Amounts received by the
Documents and Disbursements Custodian on the
Business Leases since the prior Distribution
Date will be disbursed pursuant to Section 2.8.
Section 2.10 Interest Rates and Payment Dates. The Borrower shall pay
interest on the unpaid principal amount of each Lease Financing Loan from the
Borrowing Date of such Lease Financing Loan until the date such Lease Financing
Loan shall have been repaid in full (whether at scheduled maturity or by
acceleration or otherwise) at a rate per annum equal to the Interest Rate for
such Lease Financing Loan as specified in the related Note or this Agreement.
Section 2.11 Prepayments.
(a) Each Lease Financing Loan is subject to prepayment in whole,
but not in part. In the event of prepayment, the Borrower shall pay the related
Prepayment Amount. The Prepayment Amount is due and payable regardless of
whether the prepayment by the Borrower is made voluntarily or involuntarily,
including any prepayment required by the Lender's exercise of its rights upon
the occurrence of an Event of Acceleration. In the event that the Borrower
elects to prepay any Lease Financing Loan, the Borrower shall deliver written
notice (the "Prepayment Notice") of such prepayment election to the Lender not
less than thirty (30) days nor more than sixty (60) days from the proposed
prepayment date (such date or the date of the exercise of Lender's rights of
acceleration upon the occurrence of an Event of Acceleration, the "Prepayment
Date"). Within twenty (20) days of the Lender's receipt of such Prepayment
Notice, the Lender shall deliver a written notice to the Borrower setting forth
the estimated total amount of the Prepayment Amount payable on the proposed
Prepayment Date, which amount shall be subject to adjustment for changes in the
Reinvestment Rate.
(b) On the Prepayment Date, the Borrower shall pay the Lender the
related Prepayment Amount, with respect to the related Lease Financing Loan to
be prepaid.
Section 2.12 Interest Computations. All interest due on any Payment Date
shall be computed from and including the immediately preceding Payment Date to
but excluding such Payment Date.
Section 2.13 Evidence of Indebtedness.
(a) Each Lease Financing Loan shall be evidenced by a single
Lease Financing Note dated as of the related Borrowing Date payable to the order
of the Lender in the principal amount specified in such Note and otherwise duly
completed. As provided in Section 2.15, each Lease Financing Note may at any
time and at the discretion of the Lender be consolidated with other Lease
Financing Notes into a Credit Enhancement Note.
(b) The Lender shall maintain records showing all Lease Financing
Loans made by the Lender hereunder, all payments made on account of the Lease
Financing Loans, the computation and payment of interest, and other amounts due
and sums paid hereunder.
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Section 2.14 Equipment Servicing.
(a) In consideration for the Servicing Fee, RSi shall service all
of the Equipment and the Business Leases in accordance with the Servicing
Agreements.
(b) To secure RSi's obligations under the Servicing Agreements,
the eRoom Parties will pledge to the Lender (i) pursuant to Article 3 hereof,
the Equipment Intellectual Property and, (ii) pursuant to the Stock Pledge
Agreements, the stock of RSi.
(c) As more fully described in the Servicing Agreement, in the
event that a Lessee fails to make a payment under a Business Lease within 45
days of the due date thereof, RSi shall disrupt the related Equipment through
its electronic locking mechanism thereby rendering the Equipment unusable. In
the event that a Business Lease is in default for a period of sixty (60) days or
more, RSi shall promptly take all action (including legal action) necessary to
gain possession of the related Equipment and shall use its best efforts to enter
into a new Business Lease or sell the Equipment.
(d) In the event that any of the eRoom Parties receive proceeds
from any sale of Equipment pursuant to clause (c) above, the lesser of (i) the
then outstanding Loan Amount of the related Lease Financing Loan or (ii) the
proceeds actually received shall immediately be delivered to the Documents and
Disbursements Custodian for deposit in the Loss Reserve Account related to such
Loan Pool, but such proceeds shall not be counted toward the Reserve Cap.
(e) Any new Business Lease with respect to Equipment re-leased
pursuant to clause (c) above, shall be pledged as security for the applicable
Lease Financing Loan and all revenues received by the Collection Custodian with
respect to such new Business Lease shall be remitted to the Documents and
Disbursements Custodian to be deposited into the Custodial Account for the Loan
Pool related to such Lease Financing Loan and shall be disbursed by the
Documents and Disbursements Custodian pursuant to the priorities set out in
Section 2.8(c) for the related Loan Pool.
(f) As more fully described in the Servicing Agreements, within
thirty (30) days of the Start Date, the eRoom Parties shall cause to be
installed at Lender's computer system at Lender's Boise, Idaho office, all
computer software, computer hardware, Equipment Intellectual Property and data
(such items collectively the "Back-up Servicing Items") necessary or desirable
for the billing and collection of the Business Leases related to all Lease
Financing Loans and the operation, maintenance and servicing or repair of all
Equipment related to all Lease Financing Loans. Each month throughout the Term,
the eRoom Parties shall also cause all updates, modifications, and revisions to
the Back-up Servicing Items to be installed at Lender's computer system at
Lender's Boise, Idaho office. Furthermore, on the first day of the first month
in each calendar quarter throughout the Term, the eRoom Parties shall provide
Lender all Equipment Intellectual Property and information necessary or
desirable for the billing and collection of the Business Leases related to all
Lease Financing Loans and the operation, maintenance, billing, servicing or
repair of all Equipment related to all Lease Financing Loans, including, but not
limited to, information regarding manufacturer and vendor names and contacts,
part numbers, software, computer codes, manuals, and schematics and designs.
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Section 2.15 Consolidation of Lease Financing Notes into Credit
Enhancement Notes.
(a) The Lender, in its sole discretion, may at any time, and from
time to time, consistent with the terms of this Agreement, amend, restate and
consolidate all of the Lease Financing Notes relating to the Lease Financing
Loans in a Loan Pool into a Credit Enhancement Note.
(b) Each Credit Enhancement Note shall be substantially in the
form attached hereto as Exhibit C and shall include the Borrower's obligation to
pay the Aggregate Credit Enhancement Amount. The eRoom Parties shall cooperate
with the Lender in the process of consolidating such Lease Financing Notes and
shall execute and/or provide any and all documents or legal opinions required by
the Lender in connection therewith; including but not limited to, a Credit
Enhancement Note and the legal opinion required by Section 5.4(d) hereof.
(c) The interest rate on the Credit Enhancement Note shall be
equal to the weighted average of the Interest Rates (after making the adjustment
in such Interest Rates specified in clause (d) below) on all Lease Financing
Loans consolidated in such Credit Enhancement Note.
(d) Notwithstanding anything to the contrary herein, upon the
consolidation of Lease Financing Loans in a Loan Pool into a Credit Enhancement
Note, the Interest Rate otherwise determined pursuant to the definition of
"Interest Rate" shall be lowered on each such Lease Financing Loans by an amount
equal to *** per annum.
(e) Upon authorization, execution and delivery of a Credit
Enhancement Note, the Lease Financing Notes amended, restated and consolidated
in such Credit Enhancement Note shall automatically be cancelled.
(f) Following the amendment, restatement and consolidation of the
Lease Financing Notes relating to the Lease Financing Loans in a Loan Pool into
a Credit Enhancement Note, the related Pledge and Security Agreement, Stock
Pledge Agreement (as amended from time to time), and UCC-1 Financing Statements
shall continue to secure the prompt and complete payment and performance of such
Credit Enhancement Note and all obligations contained therein.
ARTICLE 3
SECURITY INTEREST
Section 3.1 Grant of Security Interest. To secure the due payment and
performance of any and all obligations of the eRoom Parties hereunder and under
any and all Notes executed in connection with or related to this Agreement (1)
eRoom hereby pledges and grants to the Lender, a continuing security interest
in, and Lien on, all of eRoom's right, title and interest in and to the
Equipment Intellectual Property, (2) eRoom shall execute a Stock Pledge
Agreement for each Loan Pool that provides for a grant by eRoom to the Lender of
a continuing Lien upon,
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
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and first priority security interest in, all of eRoom's right, title and
interest in, to and under the Stock Collateral and (3) the Borrower shall
execute a Pledge and Security Agreement for each Loan Pool which will provide
for (a) a grant by the Borrower to the Lender of a continuing Lien upon, and a
security interest in the Residual Profits Collection Account (which Lien and
security interest will be pari passu with the Liens and security interests
granted in favor of all other Loan Pools), and (b) a grant by the Borrower to
the Lender of a continuing Lien upon, and a first priority security interest in,
all of the Borrower's right, title and interest in, to and under all of the
Pledged Assets related to such Loan Pool including (without limitation) the
following:
(a) any and all Business Leases (including Renewed Business
Leases) included in all Transaction Submission Packages submitted to the Lender
pursuant to this Agreement and related to such Loan Pool and all of the
Borrower's right, title and interest in, to and under any contracts, including
any security agreements, or other documents executed by, or in favor of, the
Borrower in connection therewith;
(b) any and all Refreshment Centers and Equipment related to any
of the foregoing Business Leases;
(c) the Collected Funds, the Collection Account, the Custodial
Accounts, the Loss Reserve Accounts, the Loan Payment Accounts, the Property Tax
Reserve Accounts and any other bank or similar accounts in the name, or held for
the benefit of, the Borrower or the Lender and all amounts on deposit therein;
(d) the Licenses;
(e) all additions, accessions, replacements, substitutions and
improvements to any of the foregoing; and
(f) any and all proceeds of the foregoing, including all
insurance payments (whether or not the Lender is the loss payee thereof).
Section 3.2 Chief Executive Office; Location of Pledged Assets. The
Borrower represents and warrants to the Lender that (i) the address of the
Borrower's chief executive office is its address stated in Section 12.7, (ii)
all records (including books of account) pertaining to the Pledged Assets are
kept by the Borrower at such address or at the office of one of the eRoom
Parties set out in Section 12.7 and (iii) to the best of the Borrower's
knowledge, no Refreshment Center or Equipment is kept at any location that is
not expressly specified or permitted by any Business Lease applicable thereto.
The Borrower covenants to the Lender that the Borrower will notify the Lender of
any change in the foregoing representations not later than ten (10) Business
Days after such change shall have occurred. The Borrower covenants that the
Borrower shall maintain all records pertaining to the Pledged Assets at the
Borrower's chief executive office or at the office of one of the eRoom Parties
set out in Section 12.7 and that the Borrower will not store, use or locate any
of the Pledged Assets at any place other than its chief executive office or,
with respect to any Refreshment Centers and Equipment, at such locations as are
expressly specified or permitted under any Business Lease applicable thereto.
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Section 3.3 Perfection of Security Interest.
(a) To perfect the Lender's security interest in the Pledged
Assets with respect to each Loan Pool, the Borrower shall execute one or more
UCC financing statements and other UCC financing statement amendments and/or
assignments and other notices appropriate under applicable law in form and
substance satisfactory to the Lender. To perfect the Lender's security interest
in the Equipment Intellectual Property, eRoom shall execute one or more UCC
financing statements and other UCC financing statement amendments and/or
assignments and other notices appropriate under applicable law in form and
substance satisfactory to the Lender. The related eRoom Party will pay all
filing or recording costs with respect to such UCC financing statements and all
costs of filing or recording this Agreement or any other instrument, agreement
or document executed or delivered in connection with the transactions
contemplated hereby (including the cost of all federal, state or local,
documentary, stamp or other taxes), in each case, in all public offices where
filing or recording is deemed by the Lender to be necessary or desirable. The
Borrower and eRoom each hereby authorizes the Lender to take all action at the
expense of such party (including, without limitation, the filing of any UCC
financing statements or amendments thereto without the signature of such party)
which the Lender may deem necessary or desirable to perfect or otherwise protect
the Liens and security interest created hereunder or under any of the Operative
Documents and to obtain the benefits of this Agreement or any of the Operative
Documents. Without limiting the generality of the foregoing, the eRoom Parties
shall, at their own expense, execute and deliver such instructions, documents
and certificates and take and cause to be taken all such actions as the Lender
may request (including, without limitation, the execution and filing of all
financing and continuation statements under the UCC) to evidence, maintain,
protect, perfect and continue the perfection of the Liens and security interest
granted to the Lender in any Pledged Assets, the Equipment Intellectual Property
and the rights and interests of the Lender hereunder.
(b) On or prior to the date of this Agreement, eRoom shall
deliver the RSi Stock to the Lender along with all necessary stock powers duly
executed in blank.
(c) The Lender shall have the right at any time at Borrower's
expense, to the extent provided in Section 11.2, to cause the perfection of the
security interest granted to the Lender in the Liquidated Damages Collateral by
whatever means the Lender shall deem to be necessary, and the Borrower shall
cooperate fully with the Lender in connection therewith.
Section 3.4 General Covenants.
The Borrower (and, with respect to the Equipment Intellectual Property,
eRoom) shall:
(a) furnish the Lender from time to time at the Lender's request
written statements and schedules further identifying and describing the Pledged
Assets and Equipment Intellectual Property in such detail as the Lender may
reasonably require;
(b) advise the Lender promptly, in sufficient detail, of the
occurrence of any event which would have a material adverse effect on the value
of the Pledged Assets or Equipment Intellectual Property or on the Lender's
security interest therein;
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(c) promptly execute and deliver to the Lender such further
security agreements or other instruments, documents, certificates and assurances
and take such further actions as the Lender may from time to time in its sole
discretion deem reasonably necessary to perfect, protect or enforce its security
interest in the Pledged Assets or Equipment Intellectual Property or otherwise
to effectuate the intent of this Agreement; and
(d) use commercially reasonable efforts to enforce the provisions
of the Business Leases requiring the Lessees to maintain the Refreshment Centers
and Equipment leased thereunder.
Section 3.5 Assignment of Insurance Proceeds. The eRoom Parties shall,
or shall cause all Lessees to, maintain insurance in scope and amount required
by the related Business Lease. Each eRoom Party shall pay over to the Collection
Custodian as Collected Funds all sums it receives from Lessees which may have
become payable under or in respect of any policy of insurance owned by such
Lessees.
Section 3.6 Legends. The Borrower will conspicuously mark, or cause to
be conspicuously marked, with the following legend, the cover page of each
original copy of all Business Leases (including all security agreements, and all
promissory notes and instruments, as defined in the UCC, evidencing any monetary
obligation owing to the Borrower in connection with such Business Leases):
ALL OF THE RIGHTS OF eROOM HEREUNDER HAVE BEEN ASSIGNED TO AMRESCO LEASING
CORPORATION.
Section 3.7 Release of Renewed Business Leases. Within fourteen (14)
Business Days of Lender's receipt of a written notice from Borrower of the
occurrence of a Renewed Business Lease Release Trigger, Lender shall release its
lien and security interest in the related Renewed Business Lease and, as of the
receipt of such notice, the lease payments and/or revenue generated from such
Renewed Business Lease shall no longer be deemed to be "Collected Funds."
Section 3.8 Release of Lien on Equipment. Within fourteen (14) business
days of Lender's receipt of a written notice from Borrower of the occurrence of
an Equipment Release Trigger, Lender shall release its lien and security
interest in the Equipment and Refreshment Centers that were leased pursuant to
the related Cancelled Business Lease.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 4.1 Representations, Warranties and Covenants of the eRoom
Parties. Each of the eRoom Parties hereby represents and warrants to the Lender
as follows:
(a) Organization. Each of the eRoom Parties is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation with full power and authority to own its
properties and conduct its business as such properties are presently owned and
such business is presently conducted or is proposed to be conducted.
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(b) Qualification; Licenses. Each of the eRoom Parties is duly
qualified to do business as a foreign corporation in good standing, and has
obtained all necessary licenses and approvals in all jurisdictions in which the
ownership or leasing of its properties or the conduct of its business requires
such qualifications, except where the failure to be so qualified or to have
obtained such licenses or approvals would not have a material adverse effect on
the transactions contemplated by this Agreement and the other Operative
Documents to which it is a party.
(c) No Violation of Law or Agreements. The execution and delivery
of this Agreement by each of the eRoom Parties in the manner contemplated herein
and the performance and compliance with the terms hereof by it (i) shall not
violate: (A) its articles of incorporation or bylaws, or (B) any laws that could
have any material adverse effect whatsoever upon the validity, performance or
enforceability of any of the terms of this Agreement or the other Operative
Documents applicable to such eRoom Party, and (ii) will not constitute a
material default (or an event that, with notice or lapse of time or both, would
constitute a material default) under, or result in the breach of, any material
contract, agreement or other instrument to which such eRoom Party is a party or
that may be applicable to it or any of its assets.
(d) No Consent. The execution and delivery of this Agreement and
the other Operative Documents to which it is a party by each of the eRoom
Parties in the manner contemplated herein and the performance and compliance
with the terms hereof by it do not require the consent or approval of any
governmental authority, or if such consent or approval is required, it has been
obtained.
(e) Legal, Valid and Binding Obligations. Assuming due
authorization, execution and delivery by each other party hereto or thereto,
this Agreement and the other Operative Documents to which it is a party and all
of the obligations of each eRoom Party hereunder are the legal, valid and
binding obligations of such eRoom Party and are enforceable in accordance with
the terms of this Agreement, except as such enforcement may be limited by
applicable debtor relief laws.
(f) Power and Authority. Each of the eRoom Parties has the full
power and authority to enter into and consummate all transactions contemplated
by this Agreement and the other Operative Documents to which it is a party, has
duly authorized the execution, delivery and performance of this Agreement and
the other Operative Documents to which it is a party, and has duly executed and
delivered this Agreement and such other documents, and has taken all requisite
corporate action to make this Agreement and such other documents valid, binding
and enforceable upon such eRoom Party in accordance with its terms.
(g) No Violation of Law. Each eRoom Party's execution and
delivery of this Agreement and the other Operative Documents to which it is a
party and its performance and compliance with the terms hereof and thereof will
not constitute a violation of, any law, any order or decree of any court, or any
order, regulation or demand of any federal, state or local governmental or
regulatory authority.
(h) No Actions. No action, suit or other proceeding or
investigation is pending or, to the best of any eRoom Party's knowledge,
threatened before any court or any
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federal, state or local governmental or regulatory authority (i) asserting the
invalidity of this Agreement or the other Operative Documents to which it is a
party, (ii) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or the other Operative Documents to which it is a
party, or (iii) seeking any determination or ruling that would materially and
adversely affect the ability of a eRoom Party to perform its obligations under
this Agreement or the other Operative Documents to which it is a party.
(i) No Filings Required. No consent, approval, authorization or
order of, registration or filing with or notice to, any court or any federal,
state or local governmental or regulatory authority is required for the
execution, delivery and performance by the eRoom Parties of this Agreement
(other than those that have been obtained or will be obtained prior to the
effective date of this Agreement).
(j) Intellectual Property; No Infringement. No eRoom Party is
infringing upon, or otherwise violating the rights of any third party with
respect to any Intellectual Property. The use of General Intangibles by the
eRoom Parties in connection with their respective businesses and operations or
the transactions contemplated under this Agreement and the other Operative
Documents does not, and will not, violate or otherwise infringe the rights of
any third party. The eRoom Parties own and possess all Intellectual Property and
General Intangibles necessary for the conduct of their businesses and
operations, including, without limitation, the development, manufacture, sale,
leasing, maintenance, installation, servicing and operation of the Equipment and
no eRoom Party is aware of any claim to the contrary or challenge by any person
to the rights of a eRoom Party with respect to such Intellectual Property and
General Intangibles.
(k) Average Revenue. As of the date of this Agreement, the
average revenue per day of all installed Refreshment Centers (excluding revenue
generated from room safes) in businesses is at least $1.10/unit.
(l) Properties, Priority of Liens. As of the Funding Date of each
Lease Financing Loan, the Borrower will have good and marketable title to the
related Pledged Assets, free and clear of any Lien of any nature whatsoever,
except for Permitted Liens and the rights of the Lessees under the related
Business Leases. The Liens which have been created by the Original Agreement and
other Operative Documents and the Liens which will be created and granted to the
Lender by this Agreement and any other Operative Document shall constitute valid
first priority Liens on the Pledged Assets, subject to no Lien other than
Permitted Liens.
(m) Financial Statements. Each of the Financial Statements is
correct and complete in all material respects and presents fairly the financial
position of the eRoom Parties as of its date, and has been prepared in
accordance with generally accepted accounting principles consistently applied.
The eRoom Parties do not have any material obligation, liability or commitment,
direct or contingent, which is not reflected in the Financial Statements. There
has been no material adverse change in the financial position or operations of
the eRoom Parties since the date of the latest balance sheet included in the
Financial Statements (the "Latest Balance Sheet").
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(n) Tax Returns. Each eRoom Party has filed all federal and state
income tax returns required to be filed by it and has not failed to pay any
taxes, or interest and penalties relating thereto, on or before the due dates
thereof except with respect to which such eRoom Party has duly filed extensions.
Except to the extent that reserves therefor are reflected in the Financial
Statements, (i) there are no material federal, state or local tax liabilities of
a eRoom Party due or to become due for any tax year ended on or prior to the
date of the Latest Balance Sheet, whether incurred in respect of or measured by
the income of such entity, which are not properly reflected in the Latest
Balance Sheet, and (ii) there are no material claims pending or, to the
knowledge of any eRoom Party proposed or threatened against a eRoom Party for
past federal, state or local taxes, except those, if any, as to which proper
reserves are reflected in the Financial Statements.
(o) Full Disclosure. Neither the Financial Statements nor any
certificate, opinion, or any other statement made or furnished in writing to the
Lender by or on behalf of the eRoom Parties in connection with the Original
Agreement or this Agreement or the transactions contemplated herein, as of the
effective dates thereof or at the time such documents were delivered to the
Lender contained, or at the date hereof contains, any untrue statement of a
material fact, or as of the effective date thereof or at the time such documents
were delivered to the Lender omitted, or at the date hereof omits, to state a
material fact required to be stated therein or necessary to make the statements
contained therein or herein not misleading.
(p) ERISA. No eRoom Party has a pension or other employee benefit
plans which is subject to the provisions of Title IV of ERISA (any such plans
which have been or may hereafter be adopted or assumed by a eRoom Party are
hereinafter referred to individually as a "Plan" and, collectively, as the
"Plans"), the application of which could give rise to direct or contingent
liabilities of such eRoom Party to the Pension Benefit Guaranty Corporation
("PBGC"), the Department of Labor or the Internal Revenue Service. No eRoom
Party is a participating employer in any Plan under which more than one employer
makes contributions as described in Sections 4063 and 4064 of ERISA. No eRoom
Party is a participating employer in a multi-employer plan as defined in Section
4001(a) of ERISA, which participation could give rise to withdrawal liability on
the part of the eRoom Party under Subtitle E of Title IV of ERISA.
(q) Investment Company. The Borrower is not an "investment
company" or a company "controlled by" an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
Section 4.2 Representations and Warranties of the Lender. The Lender
hereby represents and warrants to the eRoom Parties as follows:
(a) Organization. The Lender is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation with full power and authority to own its properties and conduct
its business as such properties are presently owned and such business is
presently conducted.
(b) Qualifications. The Lender is duly qualified to do business
as a foreign corporation in good standing in all jurisdictions in which the
ownership or leasing of its properties or the conduct of its business requires
such qualifications, except where the failure to
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be so qualified would not have a material adverse effect on the transactions
contemplated by this Agreement and the other Operative Documents.
(c) No Violation of Law or Agreements. The execution and delivery
of this Agreement by the Lender in the manner contemplated herein and the
performance and compliance with the terms hereof by it (i) shall not violate:
(A) its articles of incorporation or bylaws, or (B) any laws that could have any
material adverse effect whatsoever upon the validity, performance or
enforceability of any of the terms of this Agreement and the other Operative
Documents applicable to the Lender, and (ii) will not constitute a material
default (or an event that, with notice or lapse of time or both, would
constitute a material default) under, or result in the breach of, any material
contract, agreement or other instrument to which the Lender is a party or that
may be applicable to it or any of its assets.
(d) No Consent. The execution and delivery of this Agreement and
the other Operative Documents by the Lender in the manner contemplated herein
and the performance and compliance with the terms hereof by it do not require
the consent or approval of any governmental authority, or if such consent or
approval is required, it has been obtained.
(e) Legal, Valid and Binding Obligations. Assuming due
authorization, execution and delivery by each other party hereto, this Agreement
and the other Operative Documents and all of the obligations of the Lender
hereunder are the legal, valid and binding obligations of the Lender,
enforceable in accordance with the terms of this Agreement, except as such
enforcement may be limited by applicable debtor relief laws.
(f) Power and Authority. The Lender has the full power and
authority to enter into and consummate all transactions contemplated by this
Agreement and the other Operative Documents, has duly authorized the execution,
delivery and performance of this Agreement and the other Operative Documents,
and has duly executed and delivered this Agreement and the other Operative
Documents, and has taken all requisite corporate action to make this Agreement
and the other Operative Documents valid, binding and enforceable upon the Lender
in accordance with its terms.
(g) No Violation of Law. The Lender's execution and delivery of
this Agreement and the other Operative Documents and all other related
documents, its performance and compliance with the terms hereof and thereof will
not constitute a violation of, any law, any order or decree of any court, or any
order, regulation or demand of any federal, state or local governmental or
regulatory authority.
(h) No Actions. No action, suit or other proceeding or
investigation is pending or, to the best of the Lender's knowledge, threatened
before any court or any federal, state or local governmental or regulatory
authority (i) asserting the invalidity of this Agreement and the other Operative
Documents to which it is a party, (ii) seeking to prevent the consummation of
any of the transactions contemplated by this Agreement and the other Operative
Documents or (iii) seeking any determination or ruling that would materially and
adversely affect the ability of the Lender to perform its obligations under the
Agreement or the other Operative Documents to which it is a party.
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(i) No Filings Required. No consent, approval, authorization or
order of, registration or filing with or notice to, any court or any federal,
state or local governmental or regulatory authority is required for the
execution, delivery and performance by the Lender of this Agreement (other than
those that have been obtained or will be obtained prior to the effective date of
this Agreement and other than any such actions, approvals, etc., under any state
securities laws or "Blue Sky" statutes, as to which the Lender makes no such
representation or warranty).
ARTICLE 5
CONDITIONS PRECEDENT TO EFFECTIVENESS, EACH LOAN POOL
AND THE LEASE FINANCING LOANS
Section 5.1 Effectiveness. This Agreement shall become effective upon
the satisfaction (or written waiver by the Lender in its sole discretion) of the
following conditions precedent:
(a) The Borrower shall have:
(i) duly executed and delivered to the Lender this
Agreement;
(ii) delivered to the Lender the fully executed Amended
and Restated Stock Pledge Agreement and Amended and Restated Pledge and Security
Agreement relating to the Initial Loan Pool;
(iii) delivered to the Lender the fully executed Amended
and Restated License Agreement and Amended and Restated Purchase Agreement;
(iv) duly executed and delivered to the Lender appropriate
UCC financing statements and all amendments thereto required by Lender to enable
the Lender to perfect and preserve its first priority security interest in the
Liquidated Damages Collateral and the Pledged Assets relating to the Initial
Loan Pool;
(v) otherwise fully complied with all of the terms and
conditions of the Operative Documents;
(vi) delivered to the Lender:
(A) a copy of the articles of incorporation of the
Borrower, certified by the Secretary of State of Nevada;
(B) a copy of the bylaws of the Borrower, certified
by the Secretary of the Borrower;
(C) a copy of all corporate action taken by the
Borrower to authorize the Borrower's execution and delivery of each of the
Operative Documents and the consummation of the transactions contemplated
thereby, certified by the Secretary of the Borrower;
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(D) a good standing certificate relating to the
Borrower dated as of a date not more than ten (10) days prior to the date of
this Agreement from the Secretary of State of Nevada;
(E) an incumbency certificate with respect to the
officers of the Borrower, certified by the Secretary of the Borrower;
(F) the legal opinion of Kummer Kaempfer, Bonner
and Renshaw, outside counsel to the Borrower, in the form set out as Exhibit P
hereto and satisfactory to the Lender; and
(G) copies of the Financial Statements, all of
which shall be certified as true and correct by an officer of the Borrower.
(b) RSi shall have delivered to the Lender:
(i) a copy of the articles of incorporation of RSi,
certified by the Secretary of State of Nevada;
(ii) a copy of the bylaws of RSi, certified by the
Secretary of RSi;
(iii) a copy of all corporate action taken by RSi to
authorize RSi's execution and delivery of each of the Operative Documents to
which it is a party and the consummation of the transactions contemplated
thereby, certified by the Secretary of RSi;
(iv) a good standing certificate relating to RSi dated as
of a date not more than ten (10) days prior to the date of the making of the
initial Lease Financing Loan from the Secretary of State of Nevada;
(v) an incumbency certificate with respect to the officers
of RSi, certified by the Secretary of RSi; and
(vi) the legal opinion of Kummer, Kaempfer, Bonner and
Renshaw, outside counsel to RSi, in the form set out as Exhibit P hereto and
satisfactory to the Lender.
(c) eRoom shall have delivered to the Lender:
(i) a copy of the articles of incorporation of eRoom,
certified by the Secretary of State of Nevada;
(ii) a copy of the bylaws of eRoom, certified by the
Secretary of eRoom;
(iii) a copy of all corporate action taken by eRoom to
authorize eRoom's execution and delivery of each of the Operative Documents to
which it is a party and the consummation of the transactions contemplated
thereby, certified by the Secretary of eRoom;
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(iv) a good standing certificate relating to eRoom dated
as of a date not more than ten (10) days prior to the date of the making of the
initial Lease Financing Loan from the Secretary of State of Nevada;
(v) an incumbency certificate with respect to the officers
of eRoom, certified by the Secretary of eRoom;
(vi) the legal opinion of Kummer, Kaempfer, Bonner and
Renshaw, outside counsel to eRoom, in the form set out as Exhibit P hereto and
satisfactory to the Lender; and
(vii) the RSi Stock with executed stock powers in blank.
(d) (i) The Borrower shall have complied and shall then be in
compliance with all the terms, covenants and conditions of this Agreement;
(ii) There shall exist no Default or Event of Default or
Event of Acceleration hereunder;
(iii) The representations and warranties contained in
Section 4.1 hereof shall be true and correct in all material respects; and
(iv) The Lender shall have received such other
documents, certificates and information as it may reasonably request.
Section 5.2 The Initial Lease Financing Loan. The obligation of the
Lender to make the initial Lease Financing Loan hereunder, shall be subject to
the following conditions precedent:
(a) The Lender shall have received evidence satisfactory to it
that the eRoom Parties have fully complied with all of the terms and conditions
of this Agreement (including the terms and conditions of Section 9.6 hereof) and
the other Operative Documents;
(b) The Lender shall have received duly executed appropriate UCC
financing statements (and where Lender deems necessary, amendments to such
Financing Statements) for filing in each jurisdiction in which Pledged Assets
would be deemed located or otherwise necessary or advisable to enable the Lender
to create and/or perfect and preserve a first priority security interest in all
of the Pledged Assets;
(c) The Lender shall have received a fully executed copy of the
Lockbox Agreement and Custodial Agreement relating to the Initial Loan Pool, the
Collection Custodian shall have established the Collection Account and the
Documents and Disbursements Custodian shall have established the Custodial
Account, the Loss Reserve Account, the Loan Payment Account and the Property Tax
Reserve Account with respect to the Initial Loan Pool in its name for the
benefit of the Borrower and the Lender, as their interest may appear;
(d) The Lender shall have received a fully executed copy of the
Servicing Agreement relating to the Initial Loan Pool; and
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(e) The Lender shall have received a legal opinion of outside
counsel to the eRoom Parties (which counsel must be acceptable to Lender,
provided that Kummer, Kaempfer, Bonner and Renshaw shall be deemed to be
acceptable to Lender) in the form set forth in Exhibit Z-1 and which must be
acceptable to Lender in its sole discretion.
Section 5.3 The Lease Financing Loans.
The obligation of the Lender to make any Lease Financing Loan hereunder,
including the initial Lease Financing Loan, shall be subject to the following
conditions:
(a) The Lender shall have received a Borrowing Notice relating to
such Lease Financing Loan
(b) (i) The Borrower shall have complied and shall then be in
compliance with all the terms, covenants and conditions of this Agreement and
the Operative Documents;
(ii) There shall exist no Default or Event of Default or
Event of Acceleration hereunder;
(iii) The representations and warranties contained in
Section 4.1 hereof shall be true and with the same effect as though such
representations and warranties had been made at the time of the making of such
Lease Financing Loan;
(iv) The Lender shall have received a certificate with
respect to the compliance by the Borrower with the conditions specified in
clauses (b)(i), (ii) and (iii) above (a "Compliance Certificate") dated the date
of the making of such Lease Financing Loan, executed on behalf of the Borrower
by one of its officers in the form attached hereto as Exhibit W;
(v) The Lender shall have received such other documents,
certificates and information as it may request;
(vi) The Lender shall have received copies of the most
recent Financial Statements then required to be delivered hereunder;
(v) The Guidelines and all terms and conditions of this
Agreement shall have been satisfied to the satisfaction of the Lender; and
(c) All legal matters incident to such Lease Financing Loan shall
be reasonably satisfactory to counsel for the Lender.
Section 5.4 Subsequent Loan Pools. The obligation of the Lender to
create any Loan Pool other than the Initial Loan Pool, to fund any Lease
Financing Loans in any such Loan Pool, and to perform any other obligation
hereunder, shall be subject to the following conditions precedent:
(a) The Borrower shall have delivered to the Lender the fully
executed Stock Pledge Agreement, Pledge and Security Agreement, Servicing
Agreement, Lockbox Agreement, and Custodial Agreement relating to such Loan
Pool;
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(b) The Borrower shall have duly executed and delivered to the
Lender the appropriate UCC financing statements to enable the Lender to perfect
and preserve the first priority security interest in the Pledged Assets relating
to such Loan Pool;
(c) The Borrower shall have complied and shall then be in
compliance with all the terms, covenants and conditions of this Agreement and
the Operative Documents;
(d) With respect to each new Loan Pool, the Lender shall have
received a legal opinion of outside counsel to the eRoom Parties (which counsel
must be acceptable to Lender, provided that Kummer, Kaempfer, Bonner and Renshaw
shall be deemed to be acceptable to Lender) in the form set forth in Exhibit Z-2
and which must be acceptable to Lender in its sole discretion, which, among
other things, provides an opinion regarding the consolidation of all of the
Lease Financing Notes related to the Lease Financing Loans included in the
preceding Loan Pool into a Credit Enhancement Note; and
(e) With respect to the first Lease Financing Loan in each Loan
Pool formed subsequent to the Initial Loan Pool, the Lender shall have received
a legal opinion of outside counsel to the eRoom Parties (which counsel must be
acceptable to Lender, provided that Kummer, Kaempfer, Bonner and Renshaw shall
be deemed to be acceptable to Lender) in the form set forth in Exhibit Z-1 and
which must be acceptable to Lender in its sole discretion.
ARTICLE 6
DELIVERY OF FINANCIAL REPORTS,
DOCUMENTS AND OTHER INFORMATION
So long as the Borrower is indebted to the Lender and until payment in full of
each of the Notes and full and complete performance of all of its other
obligations arising hereunder, the eRoom Parties shall deliver to the Lender:
Section 6.1 Annual Financial Statements. Annually, as soon as available,
but in any event within ninety (90) days after the last day of each of its
fiscal years, a balance sheet of the eRoom Parties as at such last day of the
fiscal year, and statements of income and retained earnings and changes in
financial position, for such fiscal year, each prepared in accordance with
generally accepted accounting principles consistently applied, in reasonable
detail, such financial statements of the eRoom Parties to be certified without
qualification by a firm of independent certified public accountants which, if
none of the eRoom Parties is then a public company traded on a nationally
recognized stock exchange, must be reasonably satisfactory to the Lender, as
fairly presenting the financial position and the results of operations of the
eRoom Parties as at and for the year ending on its date and as having been
prepared in accordance with generally accepted accounting principles.
Section 6.2 Quarterly Financial Statements.
(a) As soon as available, but in any event within sixty (60) days
after the end of each calendar quarter (other than the fourth calendar quarter
of each fiscal year) of the eRoom Parties a balance sheet as of the last day of
each such quarter and statements of income and retained earnings for such
quarter, all in reasonable detail, each such statement to be certified, on
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behalf of the eRoom Parties by an officer of eRoom, as fairly presenting the
financial position and the results of operations of the eRoom Parties at its
date and for such quarter and as having been prepared in accordance with
generally accepted accounting principles consistently applied (subject to
year-end audit adjustments).
(b) Simultaneously with the delivery of each set of quarterly and
annual financial statements required by Section 6.1 and Section 6.2 (a), a
certificate in the form attached hereto as Exhibit X (a "Certificate") of the
treasurer or chief financial officer of eRoom (i) certifying that none of the
eRoom Parties has violated the provisions of Section 9.4 (i)-(iii) and (ii) that
no Event of Default or Event of Acceleration then exists or if such event does
exist setting forth the details thereof and the action the eRoom Parties are
taking or are proposing to take with respect thereto.
(c) The Lender agrees to execute a Confidentiality Agreement
substantially in the form of Exhibit V hereto with respect to the information
provided by the eRoom Parties in Section 6.1 and 6.2.
Section 6.3 Other Information. Promptly after a written request thereof
such other financial data or information evidencing compliance with the
requirements of this Agreement as the Lender may reasonably request from time to
time.
Section 6.4 No Default Certificate. At the same time as it delivers the
financial statements required under the provisions of Sections 6.1 and 6.2, a
Certificate on behalf of each of the eRoom Parties by one of its officers to the
effect that, to the best of such officer's knowledge after due inquiry, there
has not occurred (i) any Default, Event of Default or Event of Acceleration
hereunder or (ii) any event which would constitute or cause a material adverse
change in the condition, financial or otherwise, of the operations of any of the
eRoom Parties or, if such cannot be so certified, specifying in reasonable
detail the exceptions, if any, to such statement.
Section 6.5 Other Documents. Such other documents, reports, notices,
financial statements or other financial information as shall be reasonably
requested by the Lender.
Section 6.6 Notices of Defaults. Promptly, notice of the occurrence of
any Default, Event of Default or Event of Acceleration hereunder, or any event
which would constitute or cause a material adverse change in the condition,
financial or otherwise, of the operations of the Borrower.
ARTICLE 7
AFFIRMATIVE COVENANTS
During the Term of this Agreement, and until payment in full of each of the
Notes and full and complete performance of all of its other obligations arising
hereunder the eRoom Parties shall:
Section 7.1 Books and Records. Keep proper books of record and account
in accordance with generally accepted accounting principles, consistently
applied in which full, true and correct entries shall be made of all dealings or
transactions in relation to its business and activities. All executed originals
of the Business Leases shall be marked with a legend on the
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cover page disclosing the security interest in favor of the Lender in a form and
format approved by the Lender.
Section 7.2 Inspections and Audits. Permit the Lender to make or cause
to be made, inspections and audits of any books, records and papers of the eRoom
Parties (including the Business Leases and financial and other information
pertaining to the Equipment) and to make extracts therefrom and copies thereof
at all such reasonable times as the Lender may reasonably require; provided that
unless an Event of Default or Event of Acceleration has occurred and is
continuing, the Lender agrees to limit such inspections to no more than one per
calendar quarter. Such originals shall be retained by the eRoom Parties and not
delivered to any third party. All costs associated with such inspections and
audits shall be at the expense of the Lender unless such inspection or audit
reveals a material misstatement, in which case the cost and expense of such
inspections or audit shall be borne by the eRoom Parties.
Section 7.3 Perform Obligations. Pay and discharge all of its
obligations and liabilities, including, without limitation, all taxes,
assessments and governmental charges upon its income and properties, when due,
unless and to the extent only that such obligations, liabilities, taxes,
assessment and governmental charges shall be contested in good faith and by
appropriate proceedings and that, to the extent required by generally accepted
accounting principles then in effect, proper and adequate book reserves relating
thereto are established by the eRoom Parties.
Section 7.4 Notice of Litigation. Immediately notify the Lender in
writing of any litigation, legal proceeding or dispute involving amounts in
excess of One Hundred Thousand Dollars ($100,000) instituted against any of the
eRoom Parties and regardless of the subject matter thereof (excluding, however,
any actions relating to workmen's compensation claims or negligence claims
relating to use of motor vehicles, if fully covered by insurance, subject to
deductibles). The parties agree that such notice has been provided with respect
to the Willow Creek matter.
Section 7.5 Insurance. (i) Maintain at its own expense or cause Lessees
to maintain all-risk insurance on each item of Equipment and other assets
material to the conduct of the business of the eRoom Parties in an amount at
least equal to the book or fair market value thereof, whichever is greater, and
liability insurance with respect to each item of Equipment in amounts
customarily maintained by similar businesses, (ii) maintain at its own expense
property insurance, all-risk liability insurance, business interruption
insurance and all other insurance material to the conduct of the business of the
eRoom Parties as set forth in each Pledge and Security Agreement, and (iii)
deliver to the Lender, upon the Lender's request, evidence (which shall be in
form and substance satisfactory to the Lender) of the maintenance thereof. The
eRoom Parties shall maintain the insurance policies required hereunder in the
name of the Lender, its successors and assigns, as loss payee and as named
insured.
Section 7.6 Priority of Lien on Equipment and Leases; Further Security.
Whenever any Borrowing Notice with respect to a Lease Financing Loan is
delivered, cause the Lender to have a valid first-priority, perfected Lien on
and security interest in the Pledged Assets including (i) all Refreshment
Centers and Equipment relating to the Business Lease to be financed with the
proceeds of such Lease Financing Loan, (ii) all Business Leases, and (iii) all
instruments and chattel paper evidencing any Business Leases. Each Business
Lease and the Refreshment Centers and Equipment related thereto shall be free
and clear of any Lien, charge or
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encumbrance other than Permitted Liens. The eRoom Parties shall assist the
Lender in evidencing and/or perfecting such security interest by completing and
assisting in filing or recording UCC financing statements and such other
instruments, certificates or agreements requested by the Lender.
Section 7.7 Maintenance of Separate Existence. Maintain (i) records and
books of account separate from those of any Affiliate and (ii) adequate
capitalization for the conduct of each of their respective business.
Section 7.8 Taxes. Pay all taxes, assessments and other governmental
impositions related to their properties, businesses and operations (including
property taxes on the Equipment which shall be funded from the Property Tax
Reserve Account related to the Equipment).
Section 7.9 Business Lease Production Requirement. Originate Business
Leases which result in Cumulative Lease Financing Loans as set forth in the
following table:
Cumulative Lease
Period Financing Loans
------ ---------------
February 6, 2000 - February 5, 2001 $10,000,000 or more
February 6, 2001 - February 5, 2002 $20,000,000 or more
If Cumulative Lease Financing Loans are equal to or greater than $20,000,000 as
of February 5, 2002, the production requirement will be satisfied in full. If
the Cumulative Lease Financing Loans are less than $20,000,000 as of February 5,
2002, the production requirement shall not be satisfied until such time as the
Cumulative Lease Financing Loans equal or exceed $25,000,000.
Section 7.10 Direction to Lessees. Upon the funding of a Lease Financing
Loan or Advance Funded Lease Financing Loan, the Borrower shall instruct the
Lessee, in writing, to make all payments under the related Business Lease to the
related Collection Account (or, if applicable, to the lockbox administered by
the Lockbox Custodian pursuant to a Lockbox Agreement).
Section 7.11 Safe Unit Refreshment Centers.
(a) Ensure that the daily minimum charge to hotel or time-share
guests for the room safe component of each Safe Unit Refreshment Center offered
pursuant to a Percentage Plan is equal to or greater than $1.34 per day (the
"Minimum Daily Safe Unit Charge").
(b) Contractually agree with the Customer in the related Business
Lease that the monthly payment from the Customer to the Borrower for each Safe
Unit Refreshment Center offered pursuant to a Percentage Plan shall be equal to
or greater than the sum of: (i) 25% of the monthly gross revenues generated from
each such Safe Unit Refreshment Center and (ii) the product of (A) .95, (B) the
Customer's daily room occupancy rate, (C) the Minimum Daily Safe Unit Charge,
and (D) the number of days in the applicable month. The Borrower shall promptly
enforce against each Customer the contractual agreement referenced in the
preceding sentence of this Section 7.11(b).
Section 7.12 Casualty Events. Upon the occurrence of a Casualty Event,
the Borrower shall either (i) pay the accelerated portion (on a pro rata basis)
of the Accelerated Loan Amount
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of any Lease Financing Loan relating to a Business Lease for which all or a
portion of the related Equipment has been lost, stolen, damaged beyond repair or
destroyed or (ii) within 90 days after such Casualty Event, replace such portion
of the related Equipment that has been lost, stolen, damaged beyond repair or
destroyed with similar Equipment that is in good working condition.
Section 7.13 Servicing, Billing and Maintenance Manual. Within 30 days
of the date of this Agreement, prepare a detailed Equipment servicing, billing
and maintenance manual in a form acceptable to the Lender.
Section 7.14 Installation and Maintenance of Equipment. Install or cause
the Lessee to install the Equipment in accordance with the customer installation
manual attached as an exhibit to the Servicing Agreement and maintain or cause
the Lessee to maintain the Equipment in accordance with the customer maintenance
manual attached as an exhibit to the Servicing Agreement.
Section 7.15 Misapplied Payments. Immediately upon receipt thereof, at
any time after the Funding Date with respect to any Lease Financing Loan,
forward any payments received by it with respect to the Business Lease related
to such Lease Financing Loan to the Collection Custodian for deposit in the
related Collection Account.
Section 7.16 Servicing Agreement. Deliver to the Lender within 60 days
of the date of this Agreement, a fully executed Servicing Agreement in form and
substance satisfactory to the Lender in its sole discretion .
ARTICLE 8
NEGATIVE COVENANTS
So long as the Borrower is indebted to the Lender and until payment in full of
each of the Notes and full and complete performance of all of its other
obligations arising hereunder:
Section 8.1 Liens. None of the eRoom Parties shall create, or assume or
permit to exist any Lien on any of the Equipment or any other equipment
purchased and provided as collateral or the Business Leases or any of the
Pledged Assets except (i) Liens in favor of the Lender and (ii) Permitted Liens.
Section 8.2 Changes in Business. None of the eRoom Parties shall make
any material change in its business, or in the nature of its operations, or
liquidate or dissolve itself (or suffer any liquidation or dissolution).
Section 8.3 Change of Office Address. The Borrower shall not change the
address of its principal office or place of business or open any other office or
place of business in any jurisdiction unless the Borrower shall have provided to
the Lender written notice thereof within ten (10) days prior to such action.
Section 8.4 Amendment of the Charter Documents. The Borrower shall not
amend the articles of incorporation or by-laws of the Borrower, or agree to do
the same, if the effect of any such amendment is to materially adversely affect
the Borrower's ability to perform its obligations hereunder.
Section 8.5 Sale, Transfer or Termination of Pledged Assets. The eRoom
Parties shall not sell or transfer any of the Pledged Assets without the prior
written consent of the Lender.
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The eRoom Parties shall not terminate any Business Lease or relocate any
Equipment without the prior written consent of the Lender.
Section 8.6 Change in Name. No eRoom Party shall change its name unless
it shall have provided to the Lender written notice of such name change ten (10)
days prior to the proposed effective date of such name change.
ARTICLE 9
ADDITIONAL COVENANTS OF THE PARTIES
Section 9.1 Exclusivity.
(a) During the Term of this Agreement, the eRoom Parties hereby
covenant and agree, with respect to each Business Lease to a hotel or time-share
property located in the United States that: (i) the eRoom Parties shall request
financing in the form of Lease Financing Loans from the Lender, (ii) the Lender
shall have the exclusive right to provide such financing and (iii) in connection
with such financing, the eRoom Parties shall use their best efforts to provide
Lender with the information required in items k, l, m and n of Section 1 of the
Business Specific Underwriting Requirements of the Guidelines, (iv) upon the
specific written request of Lender, the eRoom Parties shall use their best
efforts to provide the Lender with all of the information required in the
Business Specific Underwriting Requirements of the Guidelines and (v) shall use
their best efforts to facilitate communication and information exchange between
Lender and Lessees.
(b) During the Term of this Agreement, if the Guidelines and all
terms and conditions of this Agreement are not satisfied, the Lender shall
continue to have the exclusive right (but not the obligation) to provide Lease
Financing Loans to the Borrower pursuant to the terms of this Agreement,
however, in the event that the Lender declines to exercise its exclusive right
to engage in business lease financing for any Business Lease pursuant to the
terms of this Section 9.1(b), the eRoom Parties may sell or finance such
Business Lease to, or with, a third party.
Section 9.2 Right of First Refusal. During the Term of this Agreement,
the eRoom Parties hereby acknowledge and agree that the Lender shall have an
exclusive right of first refusal (the "Right of First Refusal") to provide
financing for all Refreshment Centers, Equipment or any other goods, equipment
or personal property provided by any of the eRoom Parties or their Affiliates to
all customers in all industries (other than the hotel and time-share industries
in which the Lender has the exclusive right set out in Section 9.1) pursuant to
a lease (or revenue sharing agreement) that provides for the sharing of revenue
or any other kind of payment or arrangement between any of the eRoom Parties (or
their Affiliates) and such customer. In the event that the Lender does not
exercise the Right of First Refusal with respect to a new industry within 90
days from the date the Lender receives notice from eRoom requesting the Lender
to consider such industry, this covenant shall be null and void with respect to
such industry. If the Lender agrees to exercise the Right of First Refusal for
an industry, the eRoom Parties and the Lender shall document such program in a
mutually agreed upon time period and upon mutually acceptable terms.
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Section 9.3 Marketing; Traditional Equipment Financing.
(a) (i) During the Term of this Agreement, the eRoom
Parties covenant and agree to use their best efforts to market Refreshment
Centers to Customers in the hotel and time-share industries through Business
Leases satisfying the requirements set forth herein and which offer Customers
lease terms of 84 months and the pricing terms set out in the Price and Product
Schedule (unless the Lender agrees in its sole discretion to lease or pricing
terms that either from those set out in the Price and Product Schedule).
Notwithstanding the foregoing, the eRoom Parties shall be allowed to sell
Refreshment Centers to Customers that do not finance such purchase or which
finance such purchase through Traditional Equipment Financing.
(ii) During the Term of this Agreement, the eRoom Parties
shall not offer Business Leases to Customers unless such Business Leases are for
a lease term of 84 months and are on the pricing terms set out in the Price and
Product Schedule.
(iii) During the Term of this Agreement, except as
expressly permitted by this Agreement, the eRoom Parties shall not allow or
permit any third party to offer or provide leases (or revenue sharing
arrangements) that provide for the leasing and use of Equipment and/or
Refreshment Centers to hotels or time-shares located within the United States
that provide for a sharing of revenue, or any other kind of payment or
arrangement.
(a) eRoom shall provide the Lender with written notice that a
proposed Customer intends to utilize or is considering utilizing Traditional
Equipment Financing within five (5) Business Days from the date eRoom first
becomes aware of such Customer's intentions.
(b) The Lender shall credit twenty-five percent (25%) of the
amount financed by the Lender through Traditional Equipment Financing
(calculated based on the cost of the Equipment financed) against the cumulative
volume amounts set forth in the definition of "Interest Rate" and for purposes
of Section 7.9.
(c) For each Traditional Equipment Financing Transaction entered
into between the Lender and a Customer and funded by the Lender, the Lender
shall pay eRoom a cash referral fee of 0.50% of the principal amount financed by
the Lender.
Section 9.4 Merger; Consolidation. Without the written consent of the
Lender, the eRoom Parties will not, nor will any of them permit any of their
subsidiaries or Affiliates to: (i) enter into any transaction of merger or
consolidation or amalgamation, unless the person or entity resulting from such
merger or consolidation (if not the relevant eRoom Party) shall expressly
assume, by supplemental agreement satisfactory in form to the Lender and
executed and delivered to the Lender, the due and punctual performance and
observance of each and every covenant and condition of this Agreement and the
other Operative Documents to be performed and observed by the eRoom Parties,
(ii) liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or (iii) convey, sell, lease, transfer or otherwise dispose of, in
one transaction or a series of transactions, all or a substantial part of its
assets, whether now owned or hereafter acquired (including without limitation)
receivables, but excluding any inventory or other assets sold or disposed of in
the ordinary course of business). The eRoom Parties shall not be in breach of
the covenant reflected in item (iii) unless the Lender provides the eRoom
Parties
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with notice of the violation of such covenant within ninety (90) days from the
date that the Lender receives Financial Statements from the eRoom Parties
pursuant to Section 6.1 and 6.2 that make such violation reasonably and clearly
apparent.
Section 9.5 Lender Covenant to Finance; Borrower's Exclusive Remedy. The
Lender hereby covenants and agrees that upon presentation by the Borrower of a
Borrowing Notice and Transaction Submission Package which includes a request for
a Lease Financing Loan that meets the requirements of this Agreement and the
Guidelines, the Lender shall provide Lease Financing Loans pursuant to the terms
hereof. In the event that the Lender fails to provide Lease Financing Loans
pursuant to the terms hereof after receipt of a Borrowing Notice and Transaction
Submission Package which includes a request for a Lease Financing Loan that
meets the requirements of this Agreement and the Guidelines, the Lender shall
have 90 days to cure such failure. If, at the end of such 90 day period, the
Lender has not cured such failure the Borrower's sole remedy shall be the right
to terminate the Lender's exclusive rights under Section 9.1 hereof.
Section 9.6 Termination of Existing Liens. Immediately upon completion
of the initial public offering of shares in any of the eRoom Parties or upon the
sale of ten percent (10%) or more of the capital stock of any of the eRoom
Parties in a single transaction or a series of transactions, the eRoom Parties
shall (i) pay in full all debt related to all existing Liens on any of the
property of any of the eRoom Parties, (ii) terminate all such Liens, and (iii)
evidence such termination by providing to the Lender copies of Uniform
Commercial Code termination statements relating to all such Liens.
Section 9.7 Creation of New Loan Pools. The eRoom Parties hereby
covenant and agree that they will cooperate with the Lender in the creation of
new Loan Pools, including executing all documents necessary to create such Loan
Pool and to secure the collateral comprising such Loan Pool
Section 9.8 Direction to Lessees. The eRoom Parties hereby covenant and
agree that until the termination of all of their obligations under this
Agreement, they shall instruct each Lessee to make all payments on its Business
Lease (after the Funding Date with respect to the related Lease Financing Loan)
directly to the Collection Custodian (or, if applicable, the Lockbox Custodian)
and not to any eRoom Party or any other entity.
Section 9.9 Principal Place of Business.
(a) The Borrower hereby covenants and agrees that it shall
maintain its principal place of business in the State of Idaho until such time
as the Lender becomes licensed in Nevada under the Nevada Installment Loan and
Finance Act (the "Nevada Installment Loan Act").
(b) The Lender hereby covenants and agrees that it shall use good
faith and its reasonable efforts to obtain all necessary licenses under the
Nevada Installment Loan Act.
Section 9.10 Renewed Business Lease.
At or prior to the expiration of the term of each Business Lease related to a
Lease Financing Loan, the eRoom Parties shall use their reasonable, good faith
best efforts to convince the related Lessee to renew and/or extend such Business
Lease (any such renewed and/or extended Business Lease, a "Renewed Business
Lease").
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ARTICLE 10
EVENTS OF DEFAULT; EVENTS OF ACCELERATION
Section 10.1 Events of Default. If any one or more of the following
events (each, an "Event of Default") shall occur and be continuing, the Lender
(i) shall be relieved of all its obligations hereunder (including the obligation
to fund any future Lease Financing Loans), but shall not be relieved of its
rights hereunder and (ii) shall have the rights and remedies set out in Section
10.2, upon written notice to that effect given to the Borrower by the Lender
(except that in the case of the occurrence of any Event of Default described in
paragraphs (c) - (e) of this Section 10.1 no such notice shall be required),
without presentment or demand for payment, notice of nonpayment, protest or
further notice or demand of any kind, all of which are expressly waived by the
Borrower, and the Lender may exercise any of the remedies specified in Section
10.2 or elsewhere in this Agreement:
(a) Any of the eRoom Parties shall fail to perform or observe
any of the covenants or conditions contained in Section 3.4, 3.5, 7.1, 7.2, 7.3,
7.4, 7.7, 7.8, 7.10, 7.15, 8.2, 8.3, 8.4, 8.5 or Article 9 (other than Section
9.9(b)) hereof and such failure shall continue for thirty (30) days (five (5)
days with respect to Section 7.15) after the earlier of such eRoom Party's
receipt of notice thereof or the occurrence of such event;
(b) Any representation or warranty made by any of the eRoom
Parties in writing to the Lender in any of the Operative Documents or in
connection with the making of any Lease Financing Loan, or any certificate,
statement or report made or delivered in compliance with this Agreement, shall
have been false or misleading in any material respect when made or delivered; or
(c) Any of the eRoom Parties shall make an assignment for the
benefit of creditors, file a petition in bankruptcy, be adjudicated insolvent,
petition or apply to any tribunal for the appointment of a receiver, custodian,
or any trustee for it or a substantial part of its assets, or shall commence any
proceeding under any bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution or liquidation law or statute of any jurisdiction, whether now
or hereafter in effect; or there shall have been filed any such petition or
application, or any such proceeding shall have been commenced against it, which
remains undismissed for a period of seventy-five (75) days or more; or any order
for relief shall be entered in any such proceeding; or any of the eRoom Parties
by any act or omission shall indicate its consent to, approval of or
`acquiescence in any such petition, application or proceeding or the appointment
of a custodian, receiver or any trustee for it or any substantial part of any of
its properties, or shall suffer any custodianship, receivership or trusteeship
to continue undischarged for a period of seventy-five (75) days or more; or
(d) Any of the eRoom Parties shall generally not pay their debts
as such debts become due or shall admit in writing their inability to pay their
debts as such debts become due; or
(e) Any of the eRoom Parties shall have concealed, removed, or
permitted to be concealed or removed, any part of its property, with intent to
hinder, delay or defraud its creditors or any of them or made or suffered a
transfer of any of its property which may be
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fraudulent under any bankruptcy, fraudulent conveyance or similar, law; or shall
have made any fraudulent transfer of its property to or for the benefit of a
creditor at a time when other creditors similarly situated have not been paid;
or shall have suffered or permitted, while insolvent, any creditor to obtain a
Lien upon any of its property through legal proceedings or distraint which is
not vacated within thirty (30) days from the date thereof; or
(f) Any judgment against any of the eRoom Parties or any
attachment, levy of execution against any of its assets or properties for any
amount in excess of Two Hundred Thousand Dollars ($200,000) (not covered by
insurance) shall remain unpaid, unstayed on appeal, undischarged, unbonded or
undismissed for a period of ninety (90) days or more; or
(g) This Agreement, the Master Custodial Agreement, the License
Agreement or the Purchase Agreement shall for any reason cease to be valid and
binding on any of the eRoom Parties, or any of the eRoom Parties shall so state
in writing.
Section 10.2 Rights and Remedies on Event of Default.
(a) If an Event of Default shall have occurred and be continuing,
the Lender shall have the right (but not the obligation), itself or through any
of its agents (including the Borrower), with or without notice to the Borrower
(as provided below), as to any or all of the Pledged Assets, by any available
judicial procedure, or without judicial process (provided, however, that it is
in compliance with the UCC), to take possession of the Pledged Assets and
without liability to the eRoom Parties for trespass to enter any premises where
the Pledged Assets may be located for the purpose of taking possession of or
removing the Pledged Assets, and, generally, to exercise any and all rights
afforded to a secured party under the UCC or other applicable law. Without
limiting the generality of the foregoing, the Borrower agrees that the Lender
shall have the right to sell, lease, or otherwise dispose of all or any part of
the Pledged Assets, whether in its then condition or after further preparation
or processing, either at public or private sale or any broker's board, in lots
or in bulk, for cash or for credit, with or without warranties or
representations, and upon such terms and conditions, all as the Lender in its
sole discretion may deem advisable, and it shall have the right to purchase such
Pledged Assets at any such sale; and, if any Pledged Assets shall require
rebuilding, repairing, maintenance, preparation, the Lender shall have the
right, at its option, to do such rebuilding or repairing for the purpose of
putting the Pledged Assets in such salable or disposable form as it shall deem
appropriate. At the Lender's request, the Borrower shall assemble the Pledged
Assets and make them available to the Lender at places which the Lender shall
select, whether at Borrower's premises or elsewhere, and make available to the
Lender, without rent, all of Borrower's premises and facilities for the purpose
of the Lender's taking possession of, removing or putting the Pledged Assets in
saleable or disposable form. The proceeds of any such sale, lease or other
disposition of the Pledged Assets shall be applied, first to the expenses of
retaking, holding, storing, processing and preparing for sale, selling, lease,
leasing and the like, and to the reasonable attorneys' fees and legal expenses
incurred by the Lender and to the payment of any other amounts required by
applicable law. To the extent permitted by applicable law, the Borrower waives
all claims, damages and demands against the Lender arising out of the
repossession, removal, retention or sale or lease of the Pledged Assets.
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(b) The Borrower authorizes the Lender and does hereby make,
constitute and appoint the Lender, and any officer, employee or agent of the
Lender, with full power of substitution, as Borrower's true and lawful
attorney-in-fact, effective as of the date hereof, with power, in its own name
or in the name of the Borrower, during the continuance of an Event of Default,
to endorse any notes, checks, drafts , money orders, or other instruments of
payment (including payments payable under or in respect of any policy of
insurance) in respect of the Pledged Assets that may come into possession of the
Lender, to sign and endorse any invoice, freight or express bill, bill of
lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts, and other documents
relating to Pledged Assets to pay or discharge taxes, Liens, security interests
or other encumbrances at any time levied or placed on or threatened against the
Pledged Assets; to demand, collect, issue receipt for, compromise, settle and
sue for monies due in respect of the Pledged Assets: to notify Lessees and other
persons obligated with respect to the Pledged Assets to make payments directly
to the Lender; and, generally, to do, at the Lender's option and at Borrower's
expense, at any time, or from time to time, all acts and things which the Lender
deems necessary to protect, preserve and realize upon the Pledged Assets and the
Lender's security interest therein to effect the intent of this Agreement all as
fully and effectually as the Borrower night or could do; and the Borrower hereby
ratifies all that said attorney shall lawfully do or cause to be done by virtue
hereof. This power of attorney shall be irrevocable as long as any of the
obligations of the eRoom Parties under the Operative Documents shall be
outstanding.
Section 10.3 Events of Acceleration. If any one or more of the following
events (each, an "Event of Acceleration") shall occur and be continuing with
respect to a Loan Pool, the Lender shall be relieved of its obligation to fund
any future Lease Financing Loans (but shall not be relieved of any of its rights
hereunder) and the Loan Pool Accelerated Amount related to each such Loan Pool
shall immediately become due and payable upon written notice to that effect
given to the Borrower by the Lender (except that in the case of the occurrence
of any Event of Acceleration described in paragraphs (c) - (e) of this Section
10.3 no such notice shall be required), without presentment or demand for
payment, notice of nonpayment, protest or further notice or demand of any kind,
all of which are expressly waived by the Borrower, and the Lender may exercise
any of the remedies specified in this Agreement:
(a) The Collected Funds and the amounts to be withdrawn from the
Loss Reserve Account and the Residual Profits Collection Account for each Loan
Pool pursuant to Section 2.8(d) of this Agreement on any Disbursement Date for
such Loan Pool shall be insufficient to pay the amounts specified in Section
2.8(c)(i) - (iii).
(b) Failure to perform or observe any of the covenants or
conditions contained in Sections 2.14, 7.5, 7.6, 7.11, 7.12, 7.13, 7.14, 7.16,
8.1, 8.5 or 9.10 hereof and such failure shall continue for thirty (30) days
after the earlier of the Borrower's having notice thereof or the occurrence of
such event;
(c) Any of the eRoom Parties shall make an assignment for the
benefit of creditors, file a petition in bankruptcy, be adjudicated insolvent,
petition or apply to any tribunal for the appointment of a receiver, custodian,
or any trustee for it or a substantial part of its assets, or shall commence any
proceeding under any bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution or liquidation law or statute of any jurisdiction, whether now
or
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hereafter in effect; or there shall have been filed any such petition or
application, or any such proceeding shall have been commenced against it, which
remains undismissed for a period of sixty (60) days or more; or any order for
relief shall be entered in any such proceeding; or any of the eRoom Parties by
any act or omission shall indicate its consent to, approval of or `acquiescence
in any such petition, application or proceeding or the appointment of a
custodian, receiver or any trustee for it or any substantial part of any of its
properties, or shall suffer any custodianship, receivership or trusteeship to
continue undischarged for a period of sixty (60) days or more;
(d) Any of the eRoom Parties shall generally not pay their debts
as such debts become due or shall admit in writing their inability to pay their
debts as such debts become due;
(e) Any of the eRoom Parties shall have concealed, removed, or
permitted to be concealed or removed, any part of its property, with intent to
hinder, delay or defraud its creditors or any of them or made or suffered a
transfer of any of its property which may be fraudulent under any bankruptcy,
fraudulent conveyance or similar, law; or shall have made any fraudulent
transfer of its property to or for the benefit of a creditor at a time when
other creditors similarly situated have not been paid; or shall have suffered or
permitted, while insolvent, any creditor to obtain a Lien upon any of its
property through legal proceedings or distraint which is not vacated within
thirty (30) days from the date thereof;
(f) Any Lien of the Lender against the Pledged Assets with
respect to such Loan Pool shall at any time fail to be a valid, first-priority
perfected Lien, subject to no prior or equal Lien other than a Permitted Lien;
(g) Any of the Operative Documents relating to such Loan Pool
shall for any reason cease to be valid and binding on any of the eRoom Parties
or any of the eRoom Parties shall so state in writing.
Section 10.4 Rights and Remedies on Event of Acceleration.
(a) If an Event of Acceleration shall have occurred and be
continuing, the Lender (and its successor and assigns) shall have the right,
itself or through any of its agents (including the Borrower), with or without
notice to the Borrower (as provided below), as to any or all of the Pledged
Assets related to such Loan Pool, by any available judicial procedure, or
without judicial process (provided, however, that it is in compliance with the
UCC), to take possession of the Pledged Assets related to such Loan Pool and
without liability for trespass to enter any premises where the Pledged Assets
related to such Loan Pool may be located for the purpose of taking possession of
or removing the Pledged Assets related to such Loan Pool, and, generally, to
exercise any and all rights afforded to a secured party under the UCC or other
applicable law. Without limiting the generality of the foregoing, the Borrower
agrees that the Lender shall have the right to sell, lease, or otherwise dispose
of all or any part of the Pledged Assets related to such Loan Pool, whether in
its then condition or after further preparation or processing, either at public
or private sale or any broker's board, in lots or in bulk, for cash or for
credit, with or without warranties or representations, and upon such terms and
conditions, all as the Lender in its sole discretion may deem advisable, and it
shall have the right to purchase at any such sale; and, if any Pledged Assets
related to such Loan Pool shall require rebuilding,
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repairing, maintenance, preparation, the Lender shall have the right, at its
option, to do such rebuilding or repairing for the purpose of putting the
Pledged Assets related to such Loan Pool in such salable or disposable form as
it shall deem appropriate. At the Lender's request, the Borrower shall assemble
the Pledged Assets related to such Loan Pool and make them available to the
Lender at places which the Lender shall select, whether at Borrower's premises
or elsewhere, and make available to the Lender, without rent, all of Borrower's
premises and facilities for the purpose of the Lender's taking possession of,
removing or putting the Pledged Assets related to such Loan Pool in saleable or
disposable form. The proceeds of any such sale, lease or other disposition of
the Pledged Assets related to such Loan Pool shall be applied, first to the
expenses of retaking, holding, storing, processing and preparing for sale,
selling, lease, leasing and the like, and to the reasonable attorneys' fees and
legal expenses incurred by the Lender and to the payment of any other amounts
required by applicable law. To the extent permitted by applicable law, the
Borrower waives all claims, damages and demands against the Lender arising out
of the repossession, removal, retention or sale or lease of the Pledged Assets
related to such Loan Pool.
(b) The Borrower authorizes the Lender and does hereby make,
constitute and appoint the Lender, and any officer, employee or agent of the
Lender, with full power of substitution, as Borrower's true and lawful
attorney-in-fact, effective as of the date hereof, with power, in its own name
or in the name of the Borrower, during the continuance of an Event of
Acceleration, to endorse any notes, checks, drafts , money orders, or other
instruments of payment (including payments payable under or in respect of any
policy of insurance) in respect of the Pledged Assets related to such Loan Pool
that may come into possession of the Lender, to sign and endorse any invoice,
freight or express bill, bill of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications and notices in connection with
accounts, and other documents relating to Pledged Assets related to such Loan
Pool to pay or discharge taxes, Liens, security interests or other encumbrances
at any time levied or placed on or threatened against the Pledged Assets related
to such Loan Pool; to demand, collect, issue receipt for, compromise, settle and
sue for monies due in respect of the Pledged Assets related to such Loan Pool:
to notify Lessees and other persons obligated with respect to the Pledged Assets
related to such Loan Pool to make payments directly to the Lender; and,
generally, to do, at the Lender's option and at Borrower's expense, at any time,
or from time to time, all acts and things which the Lender deems necessary to
protect, preserve and realize upon the Pledged Assets related to such Loan Pool
and the Lender's security interest therein to effect the intent of this
Agreement all as fully and effectually as the Borrower night or could do; and
the Borrower hereby ratifies all that said attorney shall lawfully do or cause
to be done by virtue hereof. This power of attorney shall be irrevocable as long
as any of the obligations of the eRoom Parties under the Operative Documents
shall be outstanding.
(c) If an Event of Acceleration shall have occurred and be
continuing, the Lender shall be allowed to, but shall not be obligated to,
service all of the Equipment and Business Leases related to all Lease Financing
Loans and shall be allowed to use, in perpetuity and free of charge, all Back-up
Servicing Items and other information and Equipment Intellectual Property
provided to Lender pursuant to Section 2.14 (f) hereof, to service such
Equipment and Business Leases.
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ARTICLE 11
LIQUIDATED DAMAGES
Section 11.1 Liquidated Damages.
(a) Notwithstanding the foregoing, if any of the eRoom Parties
breach any Liquidated Damages Obligation, the eRoom Parties shall pay to the
Lender Liquidated Damages within sixty (60) days of the Borrower's receipt of
notice of such breach, unless such breach is cured to the satisfaction of the
Lender within such sixty (60) day period.
(b) The eRoom Parties and the Lender expressly acknowledge and
agree that it would be extremely difficult to determine the Lender's actual
damages as a result of any breach of a Liquidated Damages Obligation, and that
the Liquidated Damages are a fair and reasonable estimate of such actual damages
in light of the magnitude of the actual or anticipated harm that will be caused
to the Lender by any such breach.
(c) The eRoom Parties acknowledge and agree that their
obligations to pay Liquidated Damages are joint and several.
(d) The Liquidated Damages shall be reduced by sixty-six and
two-thirds percent (66 2/3%) if both Donnelly Prehn and William Cole are not
employed on a full-time basis by the Lender (or AMRESCO Commercial Finance, Inc.
or AMRESCO, INC. or their successors or assigns) on the date the related breach
of a Liquidated Damages Obligation occurs, unless (1) both Derek Ellis and David
Harkness are not employed by eRoom on such date (unless eRoom replaces either
Messrs. Ellis or Harkness with a successor that holds a substantially similar
position and that is acceptable to the Lender as of the date of such replacement
in its reasonable and good faith judgment), and/or (2) the Lender replaces
either Donnelly Prehn or William Cole with a successor that holds a
substantially similar position and that is acceptable to eRoom as of the date of
such replacement in its reasonable and good faith judgment, in which event, the
Liquidated Damages shall not be reduced.
Section 11.2 Pledge and Grant of Security Interest for Liquidated Damage
Obligation.
(a) As collateral security for the prompt and complete payment
and performance when due of each Liquidated Damages Obligation, and of the eRoom
Parties' obligation to pay Liquidated Damages, the eRoom Parties hereby amend,
modify and restate the continuing security interest in, and lien on, all of the
eRoom Parties' right, title and interest in and to the Liquidated Damages
Collateral which lien and security interest were granted by the eRoom Parties
pursuant to the Program Agreement. Without limiting the generality of the
foregoing, this Agreement also secures the payment of all amounts that
constitute part of the Liquidated Damages that would be owed by the eRoom
Parties to the Lender, but for the fact they are unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or similar proceeding
involving any of the eRoom Parties.
(b) All rights of the Lender and security interests hereunder,
shall be absolute and unconditional irrespective of: (i) any change in the time,
manner, amount or place of payment of, or any other term of, all or any of the
Liquidated Damages Obligation or the
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Liquidated Damages or any other amendment or waiver of or any consent to any
departure from this Agreement; (ii) any exchange, release or non-perfection of
all or any part of the Liquidated Damages Collateral or any other collateral, or
any release from, amendment to, waiver of, or consent to departure from any or
all of the Liquidated Damage Obligation or the Liquidated Damages, or (iii) to
the fullest extent permitted by law, any other circumstances which might
otherwise constitute a defense available to, or a discharge of the eRoom
Parties.
(c) At the request of the Lender, the eRoom Parties shall execute
all UCC financing statements and other documents and shall deliver items
(including but not limited to stock certificates) to the Lender required to
continue the perfection of the Lender's security interests granted pursuant to
the Program Agreement and amended, modified and restated pursuant to this
Section 11.2.
ARTICLE 12
MISCELLANEOUS PROVISIONS
Section 12.1 Fees and Expenses. The Lender and the eRoom Parties: (i)
shall equally share all legal fees and related costs incurred by the Lender in
connection with the negotiation and drafting of this Agreement and the Operative
Documents and (ii) shall each pay their own legal fees and related costs
associated with each Lease Financing Loan. The eRoom Parties shall pay their own
legal fees and related costs in connection with the negotiation and drafting of
this Agreement and the Operative Documents. If it is determined in a judicial
proceeding that a party to this Agreement has failed to perform under any
provision of this Agreement or the Operative Documents, and if the other party
shall employ attorneys or incur other expenses for the enforcement, performance
or observance of the terms of this Agreement or the Operative Documents on the
part of the nonperforming party, then such other party, shall be reimbursed by
the nonperforming party, on demand, for reasonable attorneys' fees and other
out-of-pocket expenses including any such costs and expenses incurred in any
bankruptcy or insolvency proceedings or on appeal.
Section 12.2 Indemnification.
(a) The eRoom Parties agree to defend, indemnify, pay and hold
harmless (jointly and severally) the Lender and the officers, directors,
counsel, agents and affiliates of the Lender (collectively, the "ALC
Indemnitees") from and against any and all losses, liabilities, damages and
claims, whether based on any federal, state or foreign laws, statutes, rules and
regulations, on common law or equitable cause or on contract or otherwise, that
may be imposed on, incurred by or asserted against any ALC Indemnitee, in any
manner relating to, arising out of or resulting from any of the Operative
Documents, or the transactions contemplated thereby (collectively, the "ALC
Indemnified Liabilities"); provided, however, that none of the eRoom Parties
shall have any obligation to any ALC Indemnitee hereunder with respect to ALC
Indemnified Liabilities to the extent such ALC Indemnified Liabilities arise
from the gross negligence or willful misconduct of that ALC Indemnitee as
determined by a final judgment of a court of competent jurisdiction. To the
extent that the undertaking to defend, indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it is violative of
any law or public policy, the eRoom Parties shall contribute the maximum that
they are
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permitted to pay and satisfy under applicable law to the payment and
satisfaction of all ALC Indemnified Liabilities incurred by the ALC Indemnitee
or any of them.
(b) The Lender agrees to defend, indemnify, pay and hold harmless
the eRoom Parties and the officers, directors, counsel, agents and affiliates of
the eRoom Parties (collectively, the "eRoom Indemnitees") from and against any
and all losses, liabilities, damages and claims, whether based on any federal,
state or foreign laws, statutes, rules and regulations, on common law or
equitable cause or on contract or otherwise, that may be imposed on, incurred by
or asserted against any such eRoom Indemnitee, in any manner relating to,
arising out of or resulting from the Lender's disclosure of information, or
representations, regarding the Equipment or Refreshment Centers to third parties
(collectively, the "eRoom Indemnified Liabilities"); provided, however, that the
Lender shall have no obligation to any eRoom Indemnitee hereunder with respect
to Indemnified Liabilities to the extent such eRoom Indemnified Liabilities
arise from the gross negligence or willful misconduct of that eRoom Indemnitee
as determined by a final judgment of a court of competent jurisdiction. To the
extent that the undertaking to defend, indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it is violative of
any law or public policy, the Lender shall contribute the maximum that it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all eRoom Indemnified Liabilities incurred by the eRoom
Indemnitee or any of them.
Section 12.3 Waiver of Trial by Jury. THE PARTIES, INCLUDING ANY
ASSIGNEES, HEREBY WAIVE (A) THEIR RIGHT TO TRIAL BY JURY OF DISPUTES, CLAIMS OR
CONTROVERSIES BETWEEN THEMSELVES ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY AGREEMENTS, INSTRUMENTS OR TRANSACTIONS RELATING TO THIS AGREEMENT, WHETHER
ARISING IN CONTRACT, TORT OR OTHERWISE; AND (B) THEIR RIGHT TO ANY CONSEQUENTIAL
OR PUNITIVE DAMAGES.
Section 12.4 Modifications, Consents and Waivers; Entire Agreement. No
modification, amendment or waiver of or with respect to any provision of this
Agreement or the other Operative Documents, nor consent to any departure by any
of the eRoom Parties from any of the terms or conditions thereof, shall in any
event be effective unless it shall be in writing and signed by each of the eRoom
Parties and the Lender. Any such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No consent to or
demand on any of the eRoom Parties in any case shall entitle any of the eRoom
Parties to any other or further notice or demand in similar or other
circumstances. This Agreement embodies the entire agreement and understanding
between the Lender and each of the eRoom Parties relating to the subject matter
hereof and supersedes all prior agreements and understandings including the
Program Agreement; provided, however, that the parties hereto agree that Article
IV, "Traditional Equipment Financing" and Article III, Section 8,
"Securitization Services" of the Program Agreement and the acknowledgement of
the Original Agreement by Sunyich reflected in the signature page of the
Original Agreement shall remain in full force and effect and shall be binding on
the parties.
Section 12.5 Remedies Cumulative. Each and every right granted to the
Lender hereunder or under any Operative Document or other document delivered
hereunder or in connection herewith, or allowed it by law or equity, shall be
cumulative and may be exercised
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from time to time. No failure on the part of the Lender to exercise, and no
delay in exercising, any right shall operate as a waiver thereof, nor shall any
single or partial exercise of any right preclude any other or future exercise
thereof or the exercise of any other right. The due payment and performance of
the Borrower's indebtedness, liabilities and obligations under each Lease
Financing Loan and the related Note and the other documents delivered in
connection therewith shall be without regard to any counterclaim, right of
set-off or any other claim whatsoever which the Borrower may have against the
Lender and without regard to any other obligation of any nature whatsoever which
the Lender may have to the Borrower, and no such counterclaim or set-off shall
be asserted by the Borrower in any action, suit or proceeding instituted by the
Lender for payment or performance of the Borrower's indebtedness, liabilities or
obligations under any Note or any of the other documents delivered in connection
therewith, or otherwise other than that no Event of Default or Event of
Acceleration has occurred under any of the Operative Documents or that the
Lender has breached its obligations under any of the Operative Documents.
Section 12.6 Further Assurances. At any time and from time to time, upon
the request of the Lender, the Borrower shall execute, deliver and acknowledge
or cause to be executed, delivered and acknowledged, such further documents and
instruments and do such other acts and things as the Lender may reasonably
request to fully effect the purposes of any of the Operative Documents and any
other agreements, instruments and documents delivered pursuant hereto or in
connection with any Lease Financing Loan or Securitization, subject to the
confidentiality requirements set forth in Section 12.9 hereof.
Section 12.7 Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed, by
registered or certified mail, return receipt requested, or, if by other means,
when received by the other party at the address as follows:
(1) If to the Borrower:
eRoom System SPE, Inc.
1221 W. Hays Street
Boise, ID 83702
Attention: David Harkness, Gregory L. Hrncir and Derek Ellis
(2) If to RSi:
RoomSystems, Inc.
390 North 3050E.
St. George, Utah 84790
Attention: David Harkness, Gregory L. Hrncir and Derek Ellis
(3) If to eRoom:
eRoomSystem Technologies, Inc.
3770 Howard Hughes Parkway
Suite 175
Las Vegas, Nevada 89109
Attention: David Harkness, Gregory L. Hrncir and Derek Ellis
(4) If to ALC:
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AMRESCO Leasing Corporation
412 E. ParkCenter Boulevard
Suite 300
Boise, Idaho 83706
Attention: William C. Cole
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
Section 12.8 Construction; Governing Law; Consent to Jurisdiction.
(a) The headings used in this Agreement and the table of contents
are for convenience only and shall not be deemed to constitute a part hereof.
All uses herein of the masculine gender or of singular or plural terms shall be
deemed to include uses of the feminine or neuter gender or plural or singular
terms, as the context may require.
(b) Each party acknowledges that it has had the opportunity to
consult with legal counsel in the preparation and review of this Agreement. The
parties therefore stipulate that the rule of construction that ambiguities are
to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement to favor any party against the other.
(c) This Agreement shall be construed in accordance with the laws
of the State of Idaho, without regard to conflicts of law principles. The
parties hereto irrevocably (i) agree that any suit, action or other legal
proceeding arising out of or relating to this Agreement may be brought in a
court of record in the State of Idaho or in the courts of the United States of
America located in such state, (ii) consent to the jurisdiction of each such
court in any such suit, action or proceeding, and (iii) waive any objection
which it may have to the laying of venue of any such suit, action or proceeding
in any of such courts and any claim that any such suit, action or proceeding has
been brought in an inconvenient forum.
Section 12.9 Confidentiality. The parties, without the prior written
consent of the other party, will not disclose or use, and will direct their
agents and representatives not to disclose or use any Confidential Information
at any time or in any manner other than in connection with the parties'
participation in the Program. Notwithstanding the foregoing, (a) the Lender
shall be allowed to disclose Confidential Information to statistical rating
agencies, Investors, monoline insurers, investment bankers, equipment leasing or
financing companies, conduit purchasers, warehouse credit providers, other
potential sources of capital and other parties involved in a Securitization or
the providing of financing to the Lender and (b) eRoom shall be allowed to
disclose the general existence of the Program, the Lender's agreement to provide
Lease Financing Loans and eRoom's relationship with the Lender, but eRoom shall
have no authorization, without the Lender's express written consent, to disclose
the structure or financial terms of the Program or any Lease Financing Loans.
Upon the written request of any party to this Agreement ("Requesting Party"),
the party to whom such request is directed ("Recipient Party") will promptly
return to the Requesting Party all originals and all copies of Confidential
Information, and the Recipient Party will promptly destroy all written
information prepared by
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such Recipient Party or any of its agents or representatives which contain or
refer to Confidential Information.
Section 12.10 Severability. The provisions of this Agreement are
severable, and if any clause or provision hereof shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof, in
such jurisdiction and shall not in any manner affect such clause or provision in
any other jurisdiction, or any other clause or provision in this Agreement in
any jurisdiction. Each of the covenants, agreements and conditions contained in
this Agreement is independent and compliance by the Borrower with any of them
shall not excuse noncompliance by the Borrower with any other. The Borrower
shall not take any action the effect of which shall constitute a breach or
violation of any provision of this Agreement.
Section 12.11 Binding Effect: No Assignment or Delegation. This
Agreement shall be binding upon and inure to the benefit of the Borrower and its
successors and to the benefit of the Lender and its successors and assigns. The
rights and obligations of the Borrower under this Agreement, including the
Borrower's right to receive Residual Profits, shall not be assigned or delegated
without the prior written consent of the Lender, and any purported assignment or
delegation without such consent shall be void. The Lender may sell, assign,
delegate or otherwise transfer its rights and obligations under this Agreement
to one or more purchasers, assignees or transferees.
Section 12.12 Term of Agreement; Termination.
(a) This Agreement commenced on May 11, 2000, and shall continue
until the Commitment Termination Date unless terminated earlier pursuant to
Section 12.12(b) (such period is herein known as the "Term" of this Agreement).
(b) Notwithstanding anything to the contrary herein, this
Agreement shall terminate upon the earliest to occur of (x) the date on which
the Lender, in its sole discretion, terminates the agreement as a result of the
Borrower's failure to meet the production requirements set out in Section 7.9 or
(y) at the discretion of the Lender upon the occurrence of an Event of Default
or an Event of Acceleration.
(c) Upon termination of the Agreement, (i) the Lender shall have
no further obligation to provide Lease Financing Loans, (ii) the Lender's
exclusive right to provide business lease financing shall terminate and (iii) in
the event that such termination is as a result of an Event of Acceleration, the
Accelerated Loan Amount of all Lease Financing Loans which have not been
included in a Securitization shall immediately become due and payable.
Section 12.13 No Joint Venture. This Agreement and the Program are not
intended and shall not be construed as creating a partnership or joint venture
for any purpose whatsoever.
Section 12.14 Counterparts. This Agreement may be executed in
counterparts, so that when all parties have signed this form of Agreement, such
signatures taken together form one complete agreement.
Section 12.15 Certain Remedies. Without in any way limiting the remedies
otherwise available under this Agreement, the parties hereto acknowledge that in
the event of any breach or nonperformance by any party of the agreements or
covenants required by this Agreement to be
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performed or observed by it, the other parties shall be entitled to such
equitable remedies as may be appropriate, including without limitation specific
performance.
Section 12.16 Usury. The amount of interest payable or paid on any Lease
Financing Loan under the terms of this Agreement shall be limited to an amount
which shall not exceed the maximum nonusurious rate of interest allowed by the
applicable laws of the State of Idaho or any applicable law of the United States
permitting a higher maximum nonusurious rate that preempts such applicable Idaho
laws, which could lawfully be contracted for, charged or received.
Section 12.17 Survival of Certain Provisions. All agreements,
representations and warranties made herein shall survive the delivery of this
Agreement. In addition, the provisions of Sections 12.1, 12.2, 12.8(c) and 12.9
shall survive the termination of this Agreement.
ARTICLE 13
SECURITIZATION SERVICES
Section 13.1 Securitization.
(a) On or prior to the date on which $25,000,000 of Lease
Financing Loans have been funded hereunder, the Lender at its sole discretion
may choose to engage in a Securitization. Thereafter, the Lender will use its
best efforts to engage in a Securitization.
(b) The eRoom Parties agree to cooperate with the Lender in
effecting a Securitization (including signing any documents necessary thereto)
in such format as the Lender reasonably determines will maximize the economic
interests of the Lender. To such end the provisions of Article III, Section 8
"Securitization Services" of the Program Agreement are incorporated herein.
(c) The Lender agrees that, without the written consent of the
eRoom Parties, it will not take any action to effect a Securitization that would
result in the eRoom Parties receiving less than the Residual Profits from a Loan
Pool after such Residual Profits are first allocated as credit support on all
other Loan Pools as provided in Section 2.8 hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the date first above written.
eROOM SYSTEM SPE, INC.
By: /s/
---------------------------------------
Derek Ellis
Chief Financial Officer and Treasurer
ROOMSYSTEMS, INC.
By: /s/
---------------------------------------
Derek Ellis
Chief Financial Officer and Treasurer
eROOMSYSTEM TECHNOLOGIES, INC.
By: /s/
---------------------------------------
Derek Ellis
Chief Financial Officer and Treasurer
AMRESCO LEASING CORPORATION,
as Lender
By: /s/
---------------------------------------
Name:
Title:
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SCHEDULE I
Determination of Refreshment Center Loan Amount
With respect to each Refreshment Center, the Borrower in the related
Borrowing Notice shall indicate whether it is requesting a Lease Financing Loan
under the Threshold Plan, the Percentage Plan or the Platinum Plan (and, if the
Platinum Plan is selected, the type of Platinum Plan)
A. Threshold Plan.
The "Refreshment Center Loan Amount" for each Refreshment Center
financed under the Threshold Plan is equal to the lesser of (i) the product
obtained by multiplying (A) ***, (B) Net Borrower Revenue, and (C) *** and (ii)
*** times the Actual Cost of Goods Sold for such Refreshment Center; provided
that the Lender may in its sole discretion, adjust the Refreshment Center Loan
Amount to (A) be equal to the Actual Costs of Goods Sold even if such amount is
greater than the amount set out in clause (i) above or (B) be determined by
clause (i) above even if such clause (i) is greater than clause (ii) above.
"Net Borrower Revenue" with respect to a Business Lease is determined by
the Lender in its sole discretion as either (i) the Average Daily eRoom
Threshold Plan Revenue during the Seasoning Period less ***, or (ii) the highest
Average Daily eRoom Threshold Plan Revenue during any calendar month period
during the Seasoning Period less ***.
"Average Daily eRoom Threshold Plan Revenue" shall mean the average
revenue received by eRoom (or Borrower) per Refreshment Center per day using
either (i) if the Lease Financing Loan satisfies requirement number 3 of the
Business Specific Underwriting Requirements of the Guidelines, the Threshold
Calculation, or (ii) if the Lease Financing Loan does not satisfy requirement
number 3 of the Business Specific Underwriting Requirements of the Guidelines
(or if Lender does not receive information adequate to determine if requirement
number 3 has been satisfied), but Lender elects to fund such Lease Financing
Loan, either the Recalculated Threshold Calculation or the Threshold
Calculation, as determined in Lender's sole and absolute discretion.
"Threshold Calculation" shall mean a calculation of the revenue due
eRoom (or Borrower) from the Lessee under the applicable Threshold Plan, as
shown by way of example in Step 1 of Exhibit R.
"Recalculated Threshold Calculation" shall mean a calculation of the
revenue due eRoom (or Borrower) from the Lessee under the applicable Threshold
Plan, assuming for such calculation, that the related Lessee's occupancy during
the Seasoning Period was equal to the
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
I-1
<PAGE>
Lessee's average occupancy for the previous *** (or since the opening of the
related hotel or timeshare property if less than ***), as shown by way of
example in Step 2 of Exhibit R.
B. Percentage Plan.
The "Refreshment Center Loan Amount" for each Refreshment Center
financed under the Percentage Plan is equal to the lesser of (i) the product
obtained by multiplying (A) ***, (B) Net Borrower Percentage Plan Revenue, and
(C) *** and (ii) *** times the Actual Cost of Goods Sold for such Refreshment
Center; provided that the Lender may in its sole discretion, adjust the
Refreshment Center Loan Amount to (A) be equal to the Actual Costs of Goods Sold
even if such amount is greater than the amount set out in clause (i) above or
(B) be determined by clause (i) above even if such clause (i) is greater than
clause (ii) above.
"Net Borrower Percentage Plan Revenue" with respect to a Business Lease
is determined by the Lender in its sole discretion as either (i) the Average
Daily eRoom Percentage Plan Revenue during the Seasoning Period less ***, or
(ii) the highest Average Daily eRoom Percentage Plan Revenue during any calendar
month period during the Seasoning Period less ***.
"Average Daily eRoom Percentage Plan Revenue" shall mean the average
revenue received by eRoom (or Borrower) per Refreshment Center per day using
either: (i) if the Lease Financing Loan satisfies requirement number 3 of the
Business Specific Underwriting Requirements of the Guidelines, either (as
determined by Lender in its sole and absolute discretion), (A) the Percentage
Calculation, or (B) if the Lessee's average occupancy for the previous ***
months (or since the opening of the related hotel or time-share property if less
than *** months) is more than *** occupancy, the Recalculated Percentage
Calculation, assuming for purposes of such Recalculated Percentage Calculation,
that the Lessee's average occupancy for the previous *** months (or since the
opening of the related hotel or time-share property if less than *** months)
equals *** occupancy, or (ii) if the Lease Financing Loan does not satisfy
requirement number 3 of the Business Specific Underwriting Requirements of the
Guidelines (or if Lender does not receive information adequate to determine if
requirement number 3 has been satisfied), but Lender elects to fund such Lease
Financing Loan, either the Recalculated Percentage Calculation or the Percentage
Calculation, as determined in Lender's sole and absolute discretion.
"Percentage Calculation" shall mean a calculation of the revenue due
eRoom (or Borrower) from the Lessee under the applicable Percentage Plan, as
shown by way of example in Step 1 of Exhibit S.
"Recalculated Percentage Calculation" shall mean a calculation of the
revenue due eRoom (or Borrower) from the Lessee under the applicable Percentage
Plan, assuming for such calculation, that the related Lessee's occupancy during
the Seasoning Period was equal to the Lessee's average occupancy for the
previous *** (or since the opening of the related hotel or timeshare property if
less than ***), as shown by way of example in Step 2 of Exhibit S, and subject
to the minimum conditions described in Section 7.11 of the Agreement for any
such Percentage Plan.
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
I-2
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C. Platinum Plans.
The "Refreshment Center Loan Amount" for each Refreshment Center
financed under the Platinum Plan is calculated using the same methodology used
to calculate the "Refreshment Center Loan Amount" described in Section A of this
Schedule I under the Threshold Plan, except that the Average Daily eRoom
Platinum Plan Revenue (defined below) shall be substituted for the "Average
Daily eRoom Threshold Plan Revenue".
The "Average Daily eRoom Platinum Plan Revenue" shall mean the amount
calculated using either Option 1, Option 2 or Option 3 below, as applicable:
Option 1: If the Lessee has a Fixed Charge Coverage Ratio of at least
1.4:1 and occupancy of *** for the previous *** month period, the "Average Daily
eRoom Platinum Plan Revenue" shall be equal to the average revenue received by
eRoom (or Borrower) per Refreshment Center per day using the Platinum
Calculation.
Option 2: If the Lessee has a Fixed Charge Coverage Ratio between ***
and 1.4:1 and occupancy of at least *** for the previous *** month period, the
"Average Daily eRoom Platinum Plan Revenue" shall be equal to the average
revenue received by eRoom (or Borrower) per Refreshment Center per day using the
Platinum Calculation. Notwithstanding the foregoing, Lender may, in its sole and
absolute discretion, and at any time limit all such Lease Financing Loans funded
under this Option 2 to no more than *** of the then current Overall Lease
Financing Loans.
Option 3: In all other cases (including cases in which Lender does not
receive information adequate to determine the Lessee's Fixed Charge Coverage
Ratio), the "Average Daily eRoom Platinum Plan Revenue" shall be equal to the
Average Daily eRoom Threshold Plan Revenue (described in Section A of this
Schedule I) under the theoretical assumption that the Lessee to such Platinum
Plan Business Lease had selected a Threshold Plan instead of a Platinum Plan;
provided however, that the Average Daily eRoom Platinum Plan Revenue calculated
pursuant to Option 3 shall not exceed the amount calculated in Option 1 above,
assuming that the Lessee had qualified for Option 1 above.
"Platinum Calculation" shall mean a calculation of the revenue due eRoom
(or Borrower) from the Lessee under the applicable Platinum Plan, as shown by
way of example in Exhibit T.
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
I-3
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[Exhibits]