Revolving Credit Facility

EXHIBIT 10.40


BANKVEST CAPITAL CORP.


REVOLVING CREDIT FACILITY


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August 21, 1998

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TABLE OF CONTENTS
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Page
---- ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS.


Section 1.1 Definitions..................................... 1 Section 1.2 Accounting Terms................................ 13 Section 1.3 Other Terms..................................... 14 ARTICLE 2. COMMITMENT, LOANS AND COLLATERAL


Section 2.1 Loans........................................... 14 Section 2.2 Procedure for Borrowings; Continuations
and Conversions......................................... 14 Section 2.3 Borrowing Computation........................... 16 Section 2.4 Borrowings...................................... 16 Section 2.5 Facility Fee; Commitment Fee.................... 16 Section 2.6 Borrowing Base; Prepayments..................... 17 Section 2.7 Use of Proceeds of Loans........................ 17 Section 2.8 Interest........................................ 17 Section 2.9 Note............................................ 18 Section 2.10 Payments....................................... 19 Section 2.11 Computations................................... 20 Section 2.12 Minimum Amounts of Borrowings and Prepayments.. 20 Section 2.13 Renewal of Commitment; Extension of
Commitment Termination Date............................ 20 Section 2.14 Regulatory Changes in Capital Requirements..... 20 Section 2.15 Security....................................... 21 Section 2.16 Termination or Reduction of Commitment......... 22 Section 2.17 Increased Costs................................ 22 Section 2.18 Yield Maintenance.............................. 23 Section 2.19 Alternate Rate of Interest..................... 24 Section 2.20 Change in Legality............................. 24 ARTICLE 3. REPRESENTATION AND WARRANTIES


Section 3.1 Organization.................................... 25 Section 3.2 Power, Authority, Consents...................... 25 Section 3.3 No Violation of Law or Agreements............... 26 Section 3.4 Due Execution, Validity, Enforceability......... 26 Section 3.5 Properties, Priority of Liens................... 26 Section 3.6 Judgements, Actions, Proceedings................ 27 Section 3.7 No Defaults, Compliance With Laws............... 27 Section 3.8 Burdensome Documents............................ 27 Section 3.9 Financial Statements............................ 28 Section 3.10 Tax Returns.................................... 28 Section 3.11 Intellectual Property.......................... 28 Section 3.12 Regulations G and U............................ 28 Section 3.13 Name Changes................................... 29


Section 3.14 Full Disclosure................................ 29 Section 3.15 Condition of Assets; Permits................... 29 Section 3.16 ERISA.......................................... 29 Section 3.17 Principal Place of Business.................... 30 Section 3.18 Absence of Default............................. 30 Section 3.19 Regulated Company.............................. 30 Section 3.20 Indebtedness................................... 30 Section 3.21 Solvency....................................... 30 Section 3.22 Eligibility.................................... 31


ARTICLE 4. THE CLOSING; CONDITIONS TO THE LOANS


Section 4.1 Conditions to Effectiveness of Agreement........ 31 Section 4.2 Conditions to Loans............................. 33


ARTICLE 5. DELIVERY OF FINANCIAL REPORTS, DOCUMENTS AND
OTHER INFORMATION


Section 5.1 Annual Financial Statements..................... 34 Section 5.2 Quarterly Financial Statements.................. 34 Section 5.3 Monthly Financial Statements.................... 35 Section 5.4 No Default Certificate.......................... 35 Section 5.5 Borrowing Base Reports.......................... 35 Section 5.6 Concentration of Equipment and Leases........... 35 Section 5.7 Accounts Receivable Aging....................... 35 Section 5.8 Certificate of Accountants; Management Letter... 36 Section 5.9 Annual Budget................................... 36 Section 5.10 Cumulative Nature of Financial Statements
and Comparisons........................................ 36 Section 5.11 Notice of Litigation........................... 36 Section 5.12 Copies of Documents............................ 36 Section 5.13 Notice of Defaults............................. 36 Section 5.14 ERISA Notices.................................. 36 Section 5.15 UCC Acknowledgments............................ 37 Section 5.16 Other Information.............................. 37 ARTICLE 6. AFFIRMATIVE COVENANTS


Section 6.1 Books and Records................................ 37 Section 6.2 Inspections and Audits........................... 37 Section 6.3 Maintenance and Repairs.......................... 38 Section 6.4 Continuance of Business.......................... 38 Section 6.5 Copies of Corporate Documents.................... 38 Section 6.6 Perform Obligations.............................. 38 Section 6.7 Insurance........................................ 39 Section 6.8 Legending of Leases.............................. 39 Section 6.9 Financial Covenants.............................. 39 Section 6.10 Reportable Events............................... 40 Section 6.11 Compliance with Laws, etc....................... 40 Section 6.12 Borrowing Base.................................. 41


ARTICLE 7. NEGATIVE COVENANTS


Section 7.1 Indebtedness..................................... 41 Section 7.2 Liens............................................ 41 Section 7.3 Guaranties....................................... 42 Section 7.4 Mergers, Acquisitions............................ 42 Section 7.5 Dividends........................................ 42 Section 7.6 Stock Issuance................................... 43 Section 7.7 Changes in Business; Sale of Assets.............. 43 Section 7.8 Fiscal Year...................................... 43 Section 7.9 ERISA Obligations................................ 43 Section 7.10 Amendment of Documents.......................... 44 Section 7.11 Transactions with Affiliates.................... 44 Section 7.12 Multiple Agreements............................. 44


ARTICLE 8. EVENTS OF DEFAULT


Section 8.1 Payments......................................... 45 Section 8.2 Covenants........................................ 45 Section 8.3 Other Covenants.................................. 45 Section 8.4 Other Defaults................................... 45 Section 8.5 Representations and Warranties................... 45 Section 8.6 Bankruptcy....................................... 46 Section 8.7 Judgments........................................ 46 Section 8.8 ERISA............................................ 46 Section 8.9 Ownership of Stock and Control of Borrower....... 47 Section 8.10 Liens........................................... 47


ARTICLE 9. ADDITIONAL LENDERS; PARTICIPATIONS


Section 9.1 Assignments...................................... 47 Section 9.2 Participations................................... 47


ARTICLE 10. MISCELLANEOUS PROVISIONS


Section 10.1 Fees and Expenses; Indemnity.................... 48 Section 10.2 Taxes........................................... 49 Section 10.3 Payments........................................ 50 Section 10.4 Survival of Agreements and Representations...... 50 Section 10.5 Lien on and Set-off of Deposits................. 50 Section 10.6 Modifications, Consents and Waivers;
Entire Agreement............................... 51 Section 10.7 Remedies Cumulative............................. 51 Section 10.8 Further Assurances.............................. 51 Section 10.9 Notices......................................... 52 Section 10.10 Construction; Governing Law; Consent to
Jurisdiction; Waiver of Jury Trial, Set-off
and Counterclaim............................... 53 Section 10.11 Severability................................... 54


(4)


Section 10.12 Binding Effect; No Assignment or Delegation.... 54 Section 10.13 Counterparts................................... 54 Section 10.14 Pledge to Federal Reserve...................... 54 Section 10.15 Lost Notes..................................... 54


Exhibit A-Loan Notice Exhibit B-Form of Note Exhibit C-Security Agreement Exhibit D-Assignment of Leases Exhibit E-Legal Opinion Exhibit F-Borrowing Base Report Exhibit G-Compliance Certificate Exhibit H-Form of Omnibus UCC Assignment


Schedule 3.1(a)-Authorized and Outstanding Shares; Subsidiaries Schedule 3.1(b)-States Where Conduct Business Schedule 3.5-Existing Liens Schedule 3.20-Existing Indebtedness


(5)


CREDIT AGREEMENT
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CREDIT AGREEMENT, dated as of August 21, 1998, by and between BANKVEST CAPITAL CORPORATION, a Massachusetts corporation, having an office at 200 Nickerson Road, Marlborough, Massachusetts 01752 (the "Borrower") and FLEET BANK, NATIONAL ASSOCIATION, a national banking association having an office at 1185 Avenue of the Americas, New York, New York 10036 (the "Lender").


W I T N E S S E T H :


WHEREAS, the Borrower has requested and the Lender has agreed to make available a revolving credit facility to the Borrower on the terms and conditions set forth herein.


NOW, THEREFORE, the parties hereto hereby agree as follows:


ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS.


SECTION 1.1. DEFINITIONS.


As used in this Agreement, the following terms shall have the following meanings:


"ADDITIONAL COSTS" - as defined in Section 2.14.


"ADJUSTED COST" - the Original Equipment Cost, less the actual amount
---- of any dealer reserve, holdbacks, security deposits, advance payments and discounts to the Borrower.


"AFFILIATE" - as to any Person, any other Person which directly or indirectly Controls, or is under common Control with, or is Controlled by, such Person; provided that (i) any Person which owns directly or indirectly 5% or
-------- more of the securities having ordinary voting power for the election of directors or other governing body of a corporation or 5% or more of the partnership or other ownership interests of any other Person (other than as a limited partner of such other Person), in each case with respect to any corporation or other Person with a class of securities registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or 10% or more of such securities or partnership or other ownership interests, with respect to any corporation or other Person which does not have a class of securities registered under the Exchange Act, will be deemed to Control such corporation or other Person and (ii) each stockholder, director


and officer of the Borrower shall be deemed to be an Affiliate of the Borrower.


"AGREEMENT" - this Agreement, as the same may, from time to time, be amended, supplemented or modified.


"ALLOWANCE FOR DOUBTFUL ACCOUNTS" - the allowance made by the Borrower for Leases more than 180 days past due, or for which, in accordance with GAAP, are deemed doubtful or uncollectible accounts.


"ASSIGNMENT" - as defined in Section 9.1.


"ASSIGNMENT OF LEASES" - as defined in Section 2.15(a)(ii).


"BORROWING BASE" - as at the date of any determination thereof, an amount equal to the sum of the Eligible Contract Value of all Eligible Contracts financed by Revolving Loans. Determination of the amount of Revolving Credit Loan Borrowing Base shall be made on a lease by lease basis but shall be comprised of the aggregate of all such calculations as of the date of any determination thereof, provided, that in no event will any such advance (x) exceed 100% of the Adjusted Cost of the pertinent Equipment or (y) be made with respect to an otherwise Eligible Contract unless such Contract is subject to a written financing commitment issued by a third party acceptable to the Lender.


"BORROWING BASE REPORT" - as defined in Section 5.5.


"BORROWING DATE" - the Business Day specified in a Notice delivered pursuant to Section 2.2 as the date on which the Borrower requests the Lender to make a Loan.


"BORROWING RATE" - LIBOR plus 1.85% in the case of LIBOR Loans, Cost of Funds plus 1.85% in the case of Cost of Funds Loans and the Prime Rate in the case of Fluctuating Rate Loans, as such LIBOR Loans and/or Fluctuating Rate Loans are selected in accordance with Section 2.2 hereof.


"BUSINESS DAY" - a day other than a Saturday, Sunday or other day on which commercial banks in New York are required or permitted by law to remain closed, except that "Business Day" in the context of a specific city shall mean any date on which commercial banks are open for business in that city.


"CHANGE OF CONTROL" - (i) should Paul Gass or John Colton cease (whether due to retirement, disability, death or


otherwise) to hold the office, serve in the capacity or exercise the managerial policy-making responsibilities which on the date hereof he now holds, serves in or exercises with or on behalf of the Borrower and within thirty days of such cessation the Borrower has not employed a replacement officer selected by the Borrower and reasonably satisfactory to the Lender, or (ii) Paul Gass and John Colton shall collectively cease to own beneficially and of record, in the aggregate, at least 10% of the issued and outstanding capital stock of the Borrower having ordinary voting power for the election of directors of the Borrower, whether on a fully diluted basis or otherwise.


"CODE" - the Internal Revenue Code of 1986, as it may be amended from time to time, and any successor statute.


"COLLATERAL" - as defined in the Security Documents.


"COMMITMENT" - the Commitment of the Lender hereunder to make Revolving Credit Loans pursuant to the loan facility provided under this Agreement upon the terms and subject to the conditions of this Agreement up to an aggregate principal amount of such Loans, at any time outstanding, of $15,000,000, which Commitment shall, subject to the terms of Section 2.13 and Article 8, terminate on the Commitment Termination Date.


"COMMITMENT FEE" - shall have the meaning given thereto in Section 2.5.


"COMMITMENT TERMINATION DATE" - the Business Day immediately preceding the first anniversary of the date hereof, unless extended pursuant to Section 2.13.


"COMPLIANCE CERTIFICATE" - as defined in Section 4.2.


"CONTROL" OR "CONTROLLED BY" - as to any Person, the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or partnership or other ownership interests, by contract or otherwise.


"CONTROLLED GROUP" - all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower, are treated as a single employer under Section 414(b), 414(c) or 414(m) of the Internal Revenue Code of 1986, as amended, and Section 4001(a)(2) of ERISA.


"COST OF FUNDS" - the per annum rate of interest which the Lender is required to pay, or is offering to pay, for


wholesale liabilities, adjusted for reserve requirements and such other requirements as may be imposed by federal, state or local government and regulatory agencies, as determined by the Lender.


"COST OF FUNDS LOANS" - shall mean Loans hereunder that bear interest for the Interest Period applicable thereto at a rate of interest based upon the Costs of Funds.


"CREDIT PERIOD" - as defined in Section 2.1.


"DEBT INSTRUMENT" - as defined in Section 8.4.


"DEFAULT" - an event which with notice or lapse of time or both would constitute an Event of Default.


"DEFAULTED LEASE RECEIVABLES" - the aggregate of the fixed rentals remaining to be paid under Leases (i) where all or any portion of the payments due thereunder are past due for more than 120 days, or (ii) that have been deemed not collectable (or are subject to actual repossession activities) by the Borrower, or (iii) that should be deemed not collectable in accordance with the Borrower's credit and collection policy.


"DELINQUENCY" or "DELINQUENCIES" - as of any date, the ratio of (i) Lease Receivables for Owned Leases and Managed Leases collectively which are past due for more than 30 days, divided by (ii) Net Lease Receivables for Owned Leases and Managed Leases collectively.


"DOLLARS" - and "$" - lawful money of the United States of America.


"ELIGIBLE CONTRACT" - a Lease:


(a) Which is in full force and effect;


(b) The lessor under which is the Borrower;


(c) Which is fully assignable by the lessor thereunder and which has
been assigned by the Borrower to the Lender pursuant to the terms
of the Loan Documents;


(d) Which is non-cancellable and provides that the lessee's
obligations thereunder are absolute and unconditional, which
obligations are not, pursuant to the terms of such contract,
subject to contingencies, defense, deduction, set-off or claim,
and as to which no defenses, set-offs,


claims or counterclaims exist or have been asserted by the lessee
or anyone on its behalf;


(e) Which is not subject to any Lien other than Permitted Liens and
other than the Lien in favor of the Lender, and in which the
Lender has a duly perfected first priority security interest under
the UCC;


(f) The lessee under which has not filed a petition for bankruptcy or
any other petition for relief under the U.S. Bankruptcy Code or
any other bankruptcy or insolvency law or made an assignment for
the benefit of creditors, nor has any petition or other
application for relief under the U.S. Bankruptcy Code or any other
bankruptcy or insolvency law been filed against such lessee, nor
has such lessee so filed, suspended its business operations,
become insolvent, or suffered a receiver or a trustee to be
appointed for any of its assets or affairs;


(g) Which has not been amended, modified or supplemented other than to
include upgrades of Equipment or increase the number of units
leased (and accordingly the aggregate amount of rentals payable)
thereunder, nor have any rights of the lessor thereunder been
waived, except in each case to the extent approved by the Lender
in writing;


(h) Under which no payment is more than 60 days past due beyond the
payment date therefor set forth in the Lease or schedule thereto;


(i) Under which no default has occurred;


(j) Which covers Eligible Equipment;


(k) Which, at the date of inclusion thereof in the Borrowing Base,
shall have a remaining term of not more than eighty-four (84)
months;


(l) Which is with a Person which is not an Affiliate of the Borrower
or Controlled by an Affiliate of the Borrower;


(m) The lessee under which is not located outside the United States;
and


(n) Which is a net lease and the lessee thereunder is responsible for
all payments in connection there-


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with, including, but not limited to, payment of all taxes,
insurance and maintenance expenses, provided, that the Borrower
--------
may be responsible for maintenance of Equipment under such Lease
if such obligation of the Borrower shall, pursuant to the terms of
such Lease, expressly be made independent of, and not limit or in
any way affect, the provisions of the Lease (and the obligations
of the lessee) described in paragraph (d) of this definition.


"ELIGIBLE CONTRACT VALUE" - with respect to each Eligible Contract, the lesser of (i) ninety-two (92%) percent of the Net Present Value of Fixed Rentals remaining to be paid under such Eligible Contract or (ii) one hundred (100%) percent of the Adjusted Cost of the Equipment subject to such Eligible Contract.


"ELIGIBLE EQUIPMENT" - Equipment:


(a) Which is not subject to any Lien other than Permitted Liens and
the Lien in favor of the Lender, and in which the Lender has a
duly perfected first priority security interest under the UCC or
other similar law (subject to the provisions of Section 4.2(c));


(b) Which is to be used in the ordinary course of business by the
Borrower's lessees;


(c) Which is insured by either the Borrower in accordance with current
practice or the lessee thereof in accordance with industry
standards and in amounts satisfactory to the Lender;


(d) Which is in good working order and condition and can readily be
sold, rented or leased;


(e) Which is located within the United States;


(f) Which the Borrower has good and marketable title or in which it
has a first priority security interest which is assignable;


(g) Which is acceptable to the Lender in all respects; and


(h) Which is subject to an Eligible Contract.


"EQUIPMENT" - as defined in the UCC, (a) to which the Borrower has good and marketable title or has a first priority perfected security interest which has been assigned to the Lender


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and (b) which is not deemed a fixture (unless a fixture filing and landlord waiver has been obtained) or consumer good as such terms are defined in the UCC.


"ERISA" - the Employee Retirement Income Security Act of 1974, as it may be amended from time to time, and the regulations thereunder.


"EVENT(S) OF DEFAULT" - as defined in Article 8.


"FINAL MATURITY DATE" - the Business Day immediately preceding the first anniversary of the date hereof, unless extended pursuant to Section 2.13.


"FINANCIAL STATEMENTS" - the more recent of (a) the audited balance sheet and statements of income and retained earnings and of cash flows of the Borrower as at and for the fiscal year ended June 30, 1997 or (b) the most recent financial statements delivered by the Borrower to the Lender pursuant to Sections 5.1, 5.2 and 5.3.


"FIXED RATE LOAN" - any LIBOR Loan or Cost of Funds Loan.


"FIXED RATE LOANS" - collectively LIBOR Loans and Cost of Funds Loans.


"FLUCTUATING RATE LOANS" - Loans hereunder that bear interest at a rate of interest based upon the Prime Rate plus the applicable margin, if indicated.


"GAAP" - generally accepted accounting principles, in effect from time to time in the United States, consistently applied, provided that for the purposes of Sections 5.1, 5.2 and 5.3 and the definitions used therein, "GAAP" shall mean generally accepted accounting principles in effect on the date hereof and consistent with those used in the preparation of the financial statements delivered pursuant to Section 4.1(g)(i)(a).


"INDEBTEDNESS" - with respect to any Person, all (i) liabilities or obligations, direct and contingent, which in accordance with GAAP would be included in determining total liabilities as shown on the liability side of a balance sheet of such Person at the date as of which Indebtedness is to be determined, including, without limitation, lease obligations required to be shown as a liability on the balance sheet of the lessee in accordance with GAAP; (ii) liabilities or obligations of others for which such Person is directly or indirectly liable, by way of guaranty (whether by direct guaranty, suretyship, discount,


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endorsement, take-or-pay agreement, agreement to purchase or advance or keep in funds or other agreement having the effect of a guaranty) or otherwise; (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; (iv) non-cancellable liabilities under all operating leases and (v) liabilities or obligations of such Person, direct or contingent, with respect to letters of credit issued for the account of such Person and bankers' acceptances credited for such Person.


"INTEREST PERIOD" - any period during which a Loan bears interest at a fixed rate as elected by the Borrower in accordance with the terms of this Agreement.


(a) If any Interest Period would otherwise end on a day which is not a Business Day, that Interest Period shall be extended to the next succeeding Business Day unless such Interest Period is with respect to a LIBOR Loan and the result of such extension would be to extend such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Business Day.


(b) No Interest Period shall extend beyond the Maturity Date.


"INVESTMENT" - any investment in any Person by means of purchase of shares of stock or Indebtedness, capital contribution, loan, advance or guarantee, or any acquisition of all or any part of the business or assets of any Person, or any commitment or option to make any Investment.


"IRS" - Internal Revenue Service.


"LATEST BALANCE SHEET" - as defined in Section 3.10.


"LEASE" - any lease agreement or rental contract (including any and all schedules, supplements and amendments thereon and modifications thereof) entered into by the Borrower as lessor with respect to Equipment.


"LEASE RECEIVABLES" - Fixed rentals remaining to be paid under Leases.


"LENDER" - Fleet Bank N.A., any of its permitted successors and assigns pursuant to Section 9.1, and any oth ...