Exhibit 10.2
PURCHASE AND CONTRIBUTION AGREEMENT
Dated as of October 22, 2001
Between
LEXMARK INTERNATIONAL, INC.
as Seller
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and
LEXMARK RECEIVABLES CORPORATION
as Purchaser
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TABLE OF CONTENTS
Page
PRELIMINARY STATEMENTS........................................................... .........1
ARTICLE I
DEFINITIONS...........................................................................1
SECTION 1.01. Certain Defined Terms..........................................1
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SECTION 1.02. Other Terms....................................................9
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ARTICLE II
AMOUNTS AND TERMS OF PURCHASES AND CONTRIBUTIONS......................................9
SECTION 2.01. Facility.......................................................9
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SECTION 2.02. Making Purchases..............................................10
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SECTION 2.03. Collections...................................................10
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SECTION 2.04. Settlement Procedures.........................................11
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SECTION 2.05. Payments and Computations, Etc................................12
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SECTION 2.06. Contributions.................................................12
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ARTICLE III
CONDITIONS OF PURCHASES..............................................................12
SECTION 3.01. Conditions Precedent to Initial Purchase from the Seller......12
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SECTION 3.02. Conditions Precedent to All Purchases.........................14
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES.......................................................15
SECTION 4.01. Representations and Warranties of the Seller..................15
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ARTICLE V
COVENANTS............................................................................18
SECTION 5.01. Covenants of the Seller.......................................18
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SECTION 5.02. Grant of Security Interest....................................22
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SECTION 5.03. Covenant of the Seller and the Purchaser......................22
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ARTICLE VI
ADMINISTRATION AND COLLECTION........................................................23
SECTION 6.01. Designation of Collection Agent...............................23
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SECTION 6.02. Duties of Collection Agent....................................23
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SECTION 6.03. Collection Agent Fee..........................................25
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SECTION 6.04. Certain Rights of the Purchaser...............................25
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SECTION 6.05. Rights and Remedies...........................................26
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SECTION 6.06. Transfer of Records to Purchaser..............................26
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ARTICLE VII
EVENTS OF TERMINATION................................................................27
SECTION 7.01. Events of Termination.........................................27
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ARTICLE VIII
INDEMNIFICATION......................................................................29
SECTION 8.01. Indemnities by the Seller.....................................29
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ARTICLE IX
MISCELLANEOUS........................................................................31
SECTION 9.01. Amendments, Etc...............................................31
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SECTION 9.02. Notices, Etc. ...............................................32
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SECTION 9.03. Binding Effect; Assignability.................................32
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SECTION 9.04. Costs, Expenses and Taxes.....................................32
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SECTION 9.05. No Proceedings................................................33
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SECTION 9.06. Confidentiality...............................................33
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SECTION 9.07. GOVERNING LAW.................................................33
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SECTION 9.08. Third Party Beneficiary.......................................33
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SECTION 9.09. Execution in Counterparts.....................................33
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EXHIBITS
EXHIBIT A Credit and Collection Policy
EXHIBIT B Lock-Box Banks
EXHIBIT C Form of Promissory Note for Deferred Purchase Price
EXHIBIT D Form of Promissory Note for Purchaser Loans
EXHIBIT E Form of Monthly Report
EXHIBIT F Form of Weekly Report
EXHIBIT G Form of Daily Report
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PURCHASE AND CONTRIBUTION AGREEMENT
Dated as of October 22, 2001
LEXMARK INTERNATIONAL, INC., a Delaware corporation (the
"Seller"), and LEXMARK RECEIVABLES CORPORATION, a Delaware corporation (the
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"Purchaser"), agree as follows:
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PRELIMINARY STATEMENTS. (1) Certain terms which are
capitalized and used throughout this Agreement (in addition to those defined
above) are defined in Article I of this Agreement.
(2) The Seller has Receivables that it wishes to sell to the
Purchaser, and the Purchaser is prepared to purchase such Receivables on the
terms set forth herein.
(3) The Seller may also wish to contribute Receivables to the
capital of the Purchaser on the terms set forth herein.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):
"Adverse Claim" means a lien, security interest, or other
charge or encumbrance, or any other type of preferential arrangement.
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by or is under
common control with such Person or is a director or officer of such
Person.
"Alternate Base Rate" means a fluctuating interest rate per
annum as shall be in effect from time to time, which rate shall be at
all times equal to the highest of:
(a) the rate of interest announced publicly by
Citibank in New York, New York, from time to time as
Citibank's base rate;
(b) 1/2 of one percent above the latest three-week
moving average of secondary market morning offering rates in
the United States for three-month certificates of deposit of
major United States money market banks, such three-
week moving average being determined weekly on each Monday
(or, if such day is not a Business Day, on the next
succeeding Business Day) for the three-week period ending on
the previous Friday by Citibank on the basis of such rates
reported by certificate of deposit dealers to and published
by the Federal Reserve Bank of New York or, if such
publication shall be suspended or terminated, on the basis
of quotations for such rates received by Citibank from three
New York certificate of deposit dealers of recognized
standing selected by Citibank, in either case adjusted to
the nearest 1/4 of one percent or, if there is no nearest
1/4 of one percent, to the next higher 1/4 of one percent;
and
(c) the Federal Funds Rate.
"Business Day" means any day on which banks are not authorized
or required to close in New York City.
"Cash Control Triggering Event" has the meaning set forth in
the Sale Agreement.
"Citibank" means Citibank, N.A., a national banking
association.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Collection Agent" means at any time the Person then
authorized pursuant to Section 6.01 to service, administer and collect
Transferred Receivables.
"Collection Agent Default" has the meaning set forth in the
Sale Agreement.
"Collection Agent Fee" has the meaning specified in Section
6.03.
"Collections" means, with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable, including,
without limitation, all cash proceeds of Related Security with respect
to such Receivable, and all funds deemed to have been received by the
Seller or any other Person as a Collection pursuant to Section 2.04.
"Contract" means an agreement between the Seller and an
Obligor, substantially in the form of one of the written contracts or
(in the case of any open account agreement) one of the invoices
approved by the Purchaser, pursuant to or under which such Obligor
shall be obligated to pay for merchandise, insurance or services from
time to time.
"Contributed Receivable" has the meaning specified in Section
2.06.
"Credit and Collection Policy" means those receivables credit
and collection policies and practices of the Seller in effect on the
date of this Agreement applicable to the Receivables and described in
Exhibit A hereto, as modified in compliance with this Agreement.
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"Credit Facility" means the Credit Agreement, dated as of
January 27, 1998 among the Seller, as borrower, the lenders party
thereto, Fleet National Bank, as documentation agent, ▇▇▇▇▇▇ Guaranty
Trust Company of New York, as syndication agent and The Chase Manhattan
Bank, as administrative agent, as amended, restated, modified or
supplemented from time to time, and all agreements, documents and
instruments executed in connection therewith together with any
replacement facility or refinancing thereof entered into by the Seller.
"Daily Report" means a report in substantially the form of
Exhibit G hereto and containing such additional information as the
Purchaser may reasonably request from time to time, furnished by the
Collection Agent to the Purchaser pursuant to Section 6.02(b)(iii)
following the occurrence of a Level II Downgrade Event.
"Debt" means (i) indebtedness for borrowed money, (ii)
obligations evidenced by bonds, debentures, notes or other similar
instruments, (iii) obligations to pay the deferred purchase price of
property or services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business consistent with
past practices), (iv) obligations as lessee under leases which shall
have been or should be, in accordance with GAAP, recorded as capital
leases, and (v) obligations under direct or indirect guaranties in
respect of, and obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds referred
to in clauses (i) through (iv) above.
"Debt Rating" for any Person, means the rating by S&P or
▇▇▇▇▇'▇ of such Person's long-term public senior unsecured
non-credit-enhanced debt.
"Defaulted Receivable" means a Receivable:
(i) as to which any payment, or part thereof, remains
unpaid for 91 or more days from the original due date for such
payment;
(ii) as to which the Obligor thereof or any other
Person obligated thereon or owning any Related Security in
respect thereof has taken any action, or suffered any event to
occur, of the type described in Section 7.01(g); or
(iii) which, consistent with the Credit and
Collection Policy, would be written off as uncollectible.
"Deferred Purchase Price" means the portion of the Purchase
Price of Purchased Receivables purchased on any Purchase Date exceeding
the amount of the Purchase Price under Section 2.02 to be paid in cash,
which portion when added to the cumulative amount of all previous
Deferred Purchase Prices (after giving effect to any payments made on
account thereof) shall not exceed the lesser of 40% of the Outstanding
Balance of the Transferred Receivables. The obligations of the
Purchaser in respect of the
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Deferred Purchase Price shall be evidenced by the Purchaser's
subordinated promissory note in the form of Exhibit C hereto.
"Designated Obligor" means, at any time, each Obligor;
provided, however, that any Obligor shall cease to be a Designated
Obligor upon three Business Days' notice by the Purchaser to the
Seller.
"Dilution" means, with respect to any Receivable, the
aggregate amount of any reductions or adjustments in the Outstanding
Balance of such Receivable as a result of any defective, rejected, or
returned merchandise or services or any cash discount, discount for
quick payment or other adjustment or setoff.
"Discount" means, in respect of each Purchase, 0.69% of the
Outstanding Balance of the Receivables that are the subject of such
Purchase; provided, however, the foregoing Discount may be revised
prospectively by request of either of the parties hereto to reflect
changes in recent experience with respect to write-offs, timing and
cost of Collections and cost of funds, provided that such revision is
consented to by both of the parties (it being understood that each
party agrees to duly consider such request but shall have no obligation
to give such consent).
"Eligible Receivable" means a Receivable:
(i) the Obligor of which is a United States resident
(and shall include without limitation, Government Obligors,
state and local governments of jurisdictions located in the
United States, or any agency or subdivision thereof) and is
not an Affiliate of any of the parties hereto;
(ii) the Obligor of which, at the later of the date
of this Agreement and the date such Receivable is created, is
a Designated Obligor;
(iii) which is not a Defaulted Receivable and the
Obligor of which is not the Obligor of any Defaulted
Receivables which in the aggregate constitute 25% or more of
the aggregate Outstanding Balance of all Receivables of such
Obligor;
(iv) which, according to the Contract related
thereto, is required to be paid in full within 90 days of the
original billing date therefor;
(v) which is an obligation representing all or part
of the sales price of merchandise, insurance or services
within the meaning of Section 3(c)(5) of the Investment
Company Act of 1940, as amended, and the nature of which is
such that its purchase with the proceeds of notes would
constitute a "current transaction" within the meaning of
Section 3(a)(3) of the Securities Act of 1933, as amended;
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(vi) which is an "account" within the meaning of
Article 9 of the UCC of the applicable jurisdictions;
(vii) which is denominated and payable only in United
States dollars in the United States;
(viii) which arises under a Contract which, together
with such Receivable, is in full force and effect and
constitutes the legal, valid and binding obligation of the
Obligor of such Receivable and is not subject to any Adverse
Claim or any dispute, offset, counterclaim or defense
whatsoever (except the potential discharge in bankruptcy of
such Obligor);
(ix) which, together with the Contract related
thereto, does not contravene in any material respect any laws,
rules or regulations applicable thereto (including, without
limitation, laws, rules and regulations relating to usury,
consumer protection, truth in lending, fair credit billing,
fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy) and with respect to which no
party to the Contract related thereto is in violation of any
such law, rule or regulation in any material respect;
(x) Intentionally omitted;
(xi) which was generated in the ordinary course of
the Seller's business;
(xii) which has not been extended, rewritten or
otherwise modified from the original terms thereof (except as
permitted by Section 6.02(c));
(xiii) the transfer, sale or assignment of which does
not contravene any applicable law, rule or regulation; and
(xiv) which satisfies all applicable requirements of
the Credit and Collection Policy.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Seller, is treated as a single
employer under Section 414(b) or (c) of the Code or, solely for
purposes of Section 302 of ERISA and Section 412 of the Code, is
treated as a single employer under Section 414 of the Code.
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"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect
to a Plan (other than an event for which the 30-day notice period is
waived); (b) the existence with respect to any Plan of an "accumulated
finding deficiency" (as defined in Section 412 of the Code or Section
302 of ERISA), whether or not waived; (c) the filing pursuant to
Section 412(d) of the Code or Section 303(d) of ERISA of an application
for a waiver of the minimum funding standard with respect to any Plan;
(d) the incurrence by the Seller or any ERISA Affiliate of any
liability under Title IV of ERISA with respect to the termination of
any Plan; (e) the receipt by the Seller or any ERISA Affiliate from the
PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any
Plan; (f) the incurrence by the Seller or any ERISA Affiliate of any
liability with respect to the withdrawal or partial withdrawal form any
Plan or Multiemployer Plan; or (g) the receipt by the Seller or any
ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan
from the Seller or any ERISA Affiliate of any notice, concerning the
imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA.
"Event of Termination" has the meaning specified in Section
7.01.
"Excluded Receivables" means the payment obligations of (i)
KeyTronicEMS Co., (ii) any Obligor located outside of the fifty states
of the United States and the District of Columbia, but solely to the
extent such payment obligation arises from goods delivered or services
rendered exclusively outside of the fifty states of the United States
and the District of Columbia, and (iii) any Obligor of the Lexmark
Solution Services business of the Originator (but only with respect to
such Obligor's payment obligations to the Lexmark Solution Services
business), in each case resulting from the provision or sale of
merchandise, insurance or services by the Originator under a Contract.
"Existing Purchase Agreement" means the Amended and Restated
Purchase Agreement, dated as of March 31, 1998, by and between the
Seller, as originator, and the Purchaser, as buyer thereunder, as
amended from time to time.
"Facility" means the willingness of the Purchaser to consider
making Purchases of Receivables from the Seller from time to time
pursuant to the terms of this Agreement.
"Facility Termination Date" means the earliest of (i) October
19, 2004, (ii) the date of termination of the Facility pursuant to
Section 7.01, (iii) the date which the Seller designates by at least
two Business Days' notice to the Purchaser, and (iv) the Commitment
Termination Date (as defined in the Sale Agreement).
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by
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Federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day
on such transactions received by Citibank from three Federal funds
brokers of recognized standing selected by it.
"GAAP" means generally accepted accounting principles in the
United States of America.
"General Trial Balance" of the Seller on any date means the
Seller's accounts receivable trial balance (whether in the form of a
computer printout, magnetic tape or diskette) on such date, listing
Obligors and the Receivables respectively owed by such Obligors on such
date together with the aged Outstanding Balances of such Receivables,
in form and substance satisfactory to the Purchaser.
"Government Obligor" means an Obligor which is the federal
government of the United States of America or a subdivision or agency
thereof.
"Incipient Event of Termination" means an event that but for
notice or lapse of time or both would constitute an Event of
Termination.
"Indemnified Amounts" has the meaning specified in Section
8.01.
"Level I Downgrade Event" means the Debt Rating of the Seller
is rated lower than BBB- by S&P or lower than Baa3 by ▇▇▇▇▇'▇ (and
includes each Level II Downgrade Event).
"Level II Downgrade Event" means the Debt Rating of the Seller
is rated lower than BB by S&P or lower than Ba2 by ▇▇▇▇▇'▇.
"Lock-Box Account" means a post office box administered by a
Lock-Box Bank or an account maintained at a Lock-Box Bank, which in
each case shall be, no later than 45 days after the date hereof under
the exclusive ownership and control of the Purchaser (or its assignees
or designees), and maintained for the purpose of receiving Collections.
"Lock-Box Agreement" means an agreement among the Seller, the
Purchaser (or its assignees or designees) and any Lock-Box Bank in form
and substance satisfactory to the Purchaser (or its assignees or
designees).
"Lock-Box Bank" means any of the banks holding one or more
Lock-Box Accounts.
"Monthly Report" means a report in substantially the form of
Exhibit E hereto and containing such additional information as the
Purchaser may reasonably request from
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time to time, furnished by the Collection Agent to the Purchaser
pursuant to Section 6.02(b)(i).
"Multiemployer Plan" means a Multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Obligor" means a Person obligated to make payments to the
Seller pursuant to a Contract.
"Outstanding Balance" of any Receivable at any time means the
then outstanding principal balance thereof.
"PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA and any successor entity performing similar
functions.
"Person" means an individual, partnership, corporation
(including a business trust), limited liability company, joint stock
company, trust, unincorporated association, joint venture or other
entity, or a government or any political subdivision or agency thereof.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or
Section 412 of the Code or Section 302 of ERISA, and in respect of
which the Seller or any ERISA Affilate is (or, if such plan were
terminated, would under Section 4069 or ERISA be deemed to be) an
"employer" as defined in Sectin 3(5) of ERISA.
"Purchase" means a purchase by the Purchaser of Receivables
from the Seller pursuant to Article II.
"Purchase Date" means each day on which a Purchase is made
pursuant to Article II.
"Purchase Price" for any Purchase means an amount equal to the
Outstanding Balance of the Receivables that are the subject of such
Purchase as set forth in the Seller's General Trial Balance, minus the
Discount for such Purchase.
"Purchased Receivable" means any Receivable which is purchased
by the Purchaser pursuant to Section 2.02.
"Purchaser Loan" means any loan made by the Purchaser, at its
option, to the Seller, upon the Seller's request, provided that (a) the
aggregate principal amount at any one time outstanding of Purchaser
Loans shall not exceed $20,000,000 , and (b) no such Purchaser Loans
may be made if an Event of Termination or an Incipient Event of
Termination has occurred and is continuing, or would occur after giving
effect thereto, or
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if any amounts are outstanding under the Deferred Purchase Price.
Purchaser Loans made by the Purchaser hereunder shall be evidenced by
the promissory note of the Seller in substantially the form of Exhibit
D hereto.
"Receivable" means the indebtedness of any Obligor under a
Contract (other than Excluded Receivables), and includes the right to
payment of any interest or finance charges and other obligations of
such Obligor with respect thereto.
"Receivable Interest" has the meaning set forth in the Sale
Agreement.
"Receivables Purchase Request" has the meaning specified in
Section 2.02(a).
"Related Security" means with respect to any Receivable:
(i) all of the Seller's interest in any merchandise
(including returned merchandise) relating to any sale giving
rise to such Receivable;
(ii) all security interests or liens and property
subject thereto from time to time purporting to secure payment
of such Receivable, whether pursuant to the Contract related
to such Receivable or otherwise, together with all financing
statements signed by an Obligor describing any collateral
securing such Receivable;
(iii) all guaranties, insurance and other agreements
or arrangements of whatever character from time to time
supporting or securing payment of such Receivable whether
pursuant to the Contract related to such Receivable or
otherwise; and
(iv) the Contract and all other books, records and
other information (including, without limitation, computer
programs, tapes, discs, punch cards, data processing software
and related property and rights) relating to such Receivable
and the related Obligor.
"Responsible Financial Officer" means, for any Person, its
chief financial officer, controller, treasurer or assistant treasurer.
"Sale Agreement" means that certain Receivables Purchase
Agreement, dated as of the date hereof, among the Purchaser, as seller,
▇▇▇▇▇▇ ▇.▇., as purchaser, Citibank, N.A. and Citicorp North America,
Inc., as agent, and the Seller, as collection agent and originator, as
amended or restated from time to time.
"Seller Report" means a Monthly Report, a Weekly Report or a
Daily Report.
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"Settlement Date" means the twentieth day of each month (or if
such day is not a Business Day, the immediately succeeding Business
Day); provided, however, that following the occurrence of an Event of
Termination, Settlement Dates shall occur on such days as are selected
from time to time by the Purchaser or its designee in a written notice
to the Collection Agent.
"Transferred Receivable" means a Purchased Receivable or a
Contributed Receivable.
"UCC" means the Uniform Commercial Code as from time to time
in effect in the specified jurisdiction.
"Week" means each calendar week beginning on Monday and ending
on (and including) the following Sunday.
"Weekly Report" means a report in substantially the form of
Exhibit F hereto and containing such additional information as the
Purchaser may reasonably request from time to time, furnished by the
Collection Agent to the Purchaser pursuant to Section 6.02(b)(ii).
"Withdrawal Liability" means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer
Plan, as such terms are defined in Part I of Subtitle E of Title IV of
ERISA.
SECTION 1.02. Other Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP. All
terms used in Article 9 of the UCC in the State of New York, and not
specifically defined herein, are used herein as defined in such Article 9.
ARTICLE II
AMOUNTS AND TERMS OF PURCHASES AND CONTRIBUTIONS
SECTION 2.01. Facility. On the terms and conditions
hereinafter set forth and without recourse to the Seller (except to the extent
specifically provided herein), the Seller may at its option sell or contribute
to the Purchaser all Receivables originated by it from time to time and the
Purchaser may at its option purchase or accept as a contribution from the Seller
all Receivables of the Seller from time to time, in each case during the period
from the date hereof to the Facility Termination Date.
SECTION 2.02. Making Purchases.
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(a) Initial Purchase. The Seller shall give the Purchaser at
least one Business Day's notice of its request for the initial Purchase
hereunder, which request shall specify the date of such Purchase (which shall be
a Business Day) and the proposed Purchase Price for such Purchase. The Purchaser
shall promptly notify the Seller whether it has determined to make such
Purchase. On the date of such Purchase, the Purchaser shall, upon satisfaction
of the applicable conditions set forth in Article III, pay the Purchase Price
for such Purchase in the manner provided in Section 2.02(c).
(b) Subsequent Purchases. On each Business Day following the
initial Purchase, unless either party shall notify the other party to the
contrary, the Seller shall sell to the Purchaser and the Purchaser shall
purchase from the Seller, upon satisfaction of the applicable conditions set
forth in Article III, all Receivables originated by the Seller which have not
previously been sold or contributed to the Purchaser; provided, however, that
the Seller may, at its option on any Purchase Date, contribute all or any of
such Receivables to the Purchaser pursuant to Section 2.06, instead of selling
such Receivables to the Purchaser pursuant to this Section 2.02(b). On or within
five Business Days after the date of each such Purchase, the Purchaser shall pay
the Purchase Price for such Purchase in the manner provided in Section 2.02(c).
(c) Payment of Purchase Price. The Purchase Price for each
Purchase shall be paid on or within five Business Days after the Purchase Date
therefor by means of any one or a combination of the following: (i) a deposit in
same day funds to the Seller's account designated by the Seller, (ii) an
increase in the Deferred Purchase Price (subject at all times to the limitations
contained in the definition thereof), or (iii) a credit against interest and/or
principal owed by the Seller with respect to any Purchaser Loan. The allocation
of the Purchase Price as among such methods of payment shall be subject in each
instance to the approval of the Purchaser and the Seller.
(d) Ownership of Receivables and Related Security. On each
Purchase Date, after giving effect to the Purchase (and any contribution of
Receivables) on such date, the Purchaser shall own all Receivables originated by
the Seller as of such date (including Receivables which have been previously
sold or contributed to the Purchaser hereunder). The Purchase or contribution of
any Receivable shall include all Related Security with respect to such
Receivable.
SECTION 2.03. Collections. (a) The Collection Agent shall, on
each Settlement Date, deposit into an account of the Purchaser or the
Purchaser's assignee all Collections of Transferred Receivables then held by the
Collection Agent.
(b) In the event that the Seller believes that Collections
which are not Collections of Transferred Receivables have been deposited into an
account of the Purchaser or the Purchaser's assignee, the Seller shall so advise
the Purchaser and, on the Business Day following such identification, the
Purchaser shall remit, or shall cause to be remitted, all
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Collections so deposited which are identified, to the Purchaser's satisfaction,
to be Collections of Receivables which are not Transferred Receivables to the
Seller.
(c) On each Settlement Date, the Purchaser shall pay to the
Seller accrued interest on the Deferred Purchase Price and the Purchaser may, at
its option, prepay in whole or in part the principal amount of the Deferred
Purchase Price; provided that each such payment shall be made solely from (i)
Collections of Transferred Receivables after all other amounts then due from the
Purchaser under the Sale Agreement have been paid in full and all amounts then
required to be set aside by the Purchaser or the Collection Agent under the Sale
Agreement have been so set aside or (ii) excess cash flow from operations of the
Purchaser which is not required to be applied to the payment of other
obligations of the Purchaser; and provided further, that no such payment shall
be made at any time when an Event of Termination shall have occurred and be
continuing. At such time following the Facility Termination Date when all
Capital, Yield and other amounts owed by the Purchaser under the Sale Agreement
shall have been paid in full, the Purchaser shall apply, on each Settlement
Date, all Collections of Transferred Receivables received by the Purchaser
pursuant to Section 2.03(a) (and not previously distributed) first to the
payment of accrued interest on the Deferred Purchase Price, and then to the
reduction of the principal amount of the Deferred Purchase Price.
SECTION 2.04. Settlement Procedures. (a) If on any day the
Outstanding Balance of any Purchased Receivable is reduced or adjusted as a
result of any defective, rejected or returned merchandise or services or any
cash discount, discount for quick payment or other adjustment made by the
Seller, or any set-off or dispute in respect of any claim by the Obligor thereof
against the Seller (whether such claim arises out of the same or a related
transaction or an unrelated transaction but excluding adjustments, reductions or
---------
cancellations in respect of such Obligor's bankruptcy), the Seller shall be
deemed to have received on such day a Collection of such Purchased Receivable in
the amount of such reduction or adjustment. If the Seller is not the Collection
Agent, the Seller shall pay to the Collection Agent on or prior to the next
Settlement Date all amounts deemed to have been received pursuant to this
subsection.
(b) Upon discovery by the Seller or the Purchaser of a breach
of any of the representations and warranties made by the Seller in Section 2.06
or 4.01(j) with respect to any Transferred Receivable, such party shall give
prompt written notice thereof to the other party, as soon as practicable and in
any event within three Business Days following such discovery. The Seller shall,
upon not less than two Business Days' notice from the Purchaser or its assignee
or designee, repurchase such Transferred Receivable on the next succeeding
Settlement Date for a repurchase price equal to the Outstanding Balance of such
Transferred Receivable. Each repurchase of a Transferred Receivable shall
include the Related Security with respect to such Transferred Receivable. The
proceeds of any such repurchase shall be deemed to be a Collection in respect of
such Transferred Receivable. If the Seller is not the Collection Agent, the
Seller shall pay to the Collection Agent on or prior to the next Settlement Date
the repurchase price required to be paid pursuant to this subsection.
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(c) Except as stated in subsection (a) or (b) of this Section
2.04 or as otherwise required by law or the underlying Contract, all Collections
from an Obligor of any Transferred Receivable shall be applied to the
Receivables of such Obligor in the order of the age of such Receivables,
starting with the oldest such Receivable, unless such Obligor designates its
payment for application to specific Receivables.
SECTION 2.05. Payments and Computations, Etc. (a) All amounts
to be paid or deposited by the Seller or the Collection Agent hereunder shall be
paid or deposited no later than 12:00 noon (New York City time) on the day when
due in same day funds to an account or accounts designated by the Purchaser from
time to time, which accounts, during the existence of the Sale Agreement, shall
be those set forth in the Sale Agreement, provided, that all amounts to be
--------
deposited into the Cash Collateral Account (as defined in the Sale Agreement)
shall be deposited no later than 12:00 noon (New York City time) on the date
when due, and in any event such amounts shall be deposited into the Cash
Collateral Account prior to any withdrawal from a Lock-Box Account (other than
to directly fund a deposit into the Cash Collateral Account).
(b) The Seller shall, to the extent permitted by law, pay to
the Purchaser interest on any amount not paid or deposited by the Seller
(whether as Collection Agent or otherwise) when due hereunder at an interest
rate per annum equal to 2.00% per annum above the Alternate Base Rate, payable
on demand.
(c) All computations of interest and all computations of fees
hereunder shall be made on the basis of a year of 360 days for the actual number
of days (including the first but excluding the last day) elapsed. Whenever any
payment or deposit to be made hereunder shall be due on a day other than a
Business Day, such payment or deposit shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
such payment or deposit.
SECTION 2.06. Contributions. The Seller may from time to time
at its option, by notice to the Purchaser on or prior to the date of the
proposed contribution, identify Receivables which it proposes to contribute to
the Purchaser as a capital contribution. On the date of each such contribution
and after giving effect thereto, the Purchaser shall own the Receivables so
identified and contributed (collectively, the "Contributed Receivables") and all
Related Security with respect thereto. The foregoing notwithstanding, on the
date of the initial Purchase hereunder the Seller agrees to contribute to the
Purchaser all Receivables which are not included in such initial Purchase.
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01. Conditions Precedent to Initial Purchase from
the Seller. The initial Purchase of Receivables from the Seller hereunder is
subject to the conditions precedent
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that the Purchaser shall have received on or before the date of such Purchase
the following, each (unless otherwise indicated) dated such date, in form and
substance satisfactory to the Purchaser:
(a) Certified copies of the resolutions of the Board of
Directors of the Seller approving this Agreement and certified copies
of all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this Agreement.
(b) A certificate of the Secretary or Assistant Secretary of
the Seller certifying the names and true signatures of the officers of
the Seller authorized to sign this Agreement and the other documents to
be delivered by it hereunder.
(c) Acknowledgment copies or time stamped receipt copies of
proper financing statements, duly filed on or before the date of the
initial Purchase, naming the Seller as the seller/debtor and the
Purchaser as the purchaser/secured party, or other similar instruments
or documents, as the Purchaser may deem necessary or desirable under
the UCC of all appropriate jurisdictions or other applicable law to
perfect the Purchaser's ownership of and security interest in the
Transferred Receivables and Related Security and Collections with
respect thereto.
(d) Acknowledgment copies or time stamped receipt copies of
proper financing statements, if any, necessary to release all security
interests and other rights of any Person in the Transferred
Receivables, Contracts or Related Security previously granted by the
Seller.
(e) Completed requests for information, dated on or before the
date of such initial Purchase, listing the financing statements
referred to in subsection (c) above and all other effective financing
statements filed in the jurisdictions referred to in subsection (c)
above that name the Seller as debtor, together with copies of such
other financing statements (none of which shall cover any Transferred
Receivables, Contracts or Related Security).
(i) Evidence satisfactory to the Purchaser that the Seller has
satisfied all of its obligations under the Existing Purchase Agreement
and that the Existing Purchase Agreement has been terminated and all
security interests granted thereunder have been released.
(j) An effective amendment to the Credit Facility in form and
substance satisfactory to the Purchaser.
SECTION 3.02. Conditions Precedent to All Purchases. Each
Purchase (including the initial Purchase) hereunder shall be subject to the
further conditions precedent that:
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(a) with respect to any such Purchase, on or prior to the date
of such Purchase, the Seller shall have delivered to the Purchaser, (i)
if requested by the Purchaser, the Seller's General Trial Balance
(which if in magnetic tape or diskette format shall be compatible with
the Purchaser's computer equipment) as of a date not more than 31 days
prior to the date of such Purchase, and (ii) a written report
identifying, among other things, the Receivables to be included in such
Purchase and such additional information concerning such Receivables as
may reasonably be requested by the Purchaser;
(b) with respect to any such Purchase, the Collection Agent
shall have delivered to the Purchaser at least one Business Day prior
to such purchase (in the case of a Monthly Report or a Weekly Report)
and on the same day of (but prior to) such purchase (in the case of a
Daily Report), in form and substance satisfactory to the Purchaser, a
completed Monthly Report or, if required by Section 6.02(g)(ii) a
completed Weekly Report or if required by Section 6.02(g)(iii) a
completed Daily Report, containing information covering the most
recently ended reporting period for which information is required
pursuant to Section 6.02(g)(i), (ii) or (iii), as the case may be and
containing such additional information as may reasonably be requested
by the Purchaser;
(c) the Seller shall have marked its master data processing
records and, at the request of the Purchaser, each Contract giving rise
to Purchased Receivables and all other relevant records evidencing the
Receivables which are the subject of such Purchase with a legend,
acceptable to the Purchaser, stating that such Receivables, the Related
Security and Collections with respect thereto, have been sold in
accordance with this Agreement; and
(d) on the date of such Purchase the following statements
shall be true (and the Seller, by accepting the Purchase Price for such
Purchase, shall be deemed to have certified that):
(i) The representations and warranties contained in
Section 4.01 are correct on and as of the date of such
Purchase as though made on and as of such date,
(ii) No event has occurred and is continuing, or
would result from such Purchase, that constitutes an Event of
Termination or an Incipient Event of Termination and
(iii) The Purchaser shall not have delivered to the
Seller a notice that the Purchaser shall not make any further
Purchases hereunder; and
(e) the Purchaser shall have received such other approvals,
opinions or documents as the Purchaser may reasonably request.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Seller.
The Seller represents and warrants as follows:
(a) The Seller is a corporation duly incorporated and validly
existing under the laws of Delaware, and is duly qualified to do
business, and is in good standing, in every jurisdiction where the
nature of its business requires it to be so qualified (including
without limitation, the State of Delaware) except to the extent that
the failure so to be so qualified would not reasonably be expected to
materially adversely affect the collectibility of the Transferred
Receivables or the ability of the Seller to perform its obligations
under this Agreement.
(b) The execution, delivery and performance by the Seller of
this Agreement and the other documents to be delivered by it hereunder,
including the Seller's sale and contribution of Receivables hereunder
and the Seller's use of the proceeds of Purchases, (i) are within the
Seller's corporate powers, (ii) have been duly authorized by all
necessary corporate action, (iii) do not contravene (1) the Seller's
charter or by-laws, (2) any law, rule or regulation applicable to the
Seller, (3) any contractual restriction binding on or affecting the
Seller or its property or (4) any order, writ, judgment, award,
injunction or decree binding on or affecting the Seller or its
property, and (iv) do not result in or require the creation of any
lien, security interest or other charge or encumbrance upon or with
respect to any of its properties (except for the transfer of the
Seller's interest in the Transferred Receivables pursuant to this
Agreement). This Agreement has been duly executed and delivered by the
Seller.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
is required for the due execution, delivery and performance by the
Seller of this Agreement or any other document to be delivered by it
hereunder, or to ensure that the Purchaser will have an undivided
ownership interest in and to the Receivables, the Related Security and
the Collections which is perfected and prior to all other liens, except
for the filing of UCC financing statements which are referred to herein
(including, without limitation, the filing of releases of UCC financing
statements described in Section 3.01(d) hereof and Section 3.01(d) of
the Sale Agreement).
(d) This Agreement constitutes the legal, valid and binding
obligation of the Seller enforceable against the Seller in accordance
with its terms.
(e) Sales and contributions made pursuant to this Agreement
will constitute a valid sale, transfer, and assignment of the
Transferred Receivables to the Purchaser,
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enforceable against creditors of, and purchasers from, the Seller. The
Seller shall have no remaining property interest in any Transferred
Receivable.
(f) The balance sheets of the Seller and its subsidiaries as
at December 31, 2000, and the related statements of income and retained
earnings of the Seller and its subsidiaries for the fiscal year then
ended, copies of which have been furnished to the Purchaser, fairly
present the financial condition of the Seller and its subsidiaries as
at such date and the results of the operations of the Seller and its
subsidiaries for the period ended on such date, all in accordance with
GAAP consistently applied, and since December 31, 2000 there has been
no material adverse change in the business, operations, property or
financial or other condition of the Seller.
(g) There is no pending or threatened action or proceeding
affecting the Seller or any of its subsidiaries before any court,
governmental agency or arbitrator which may materially adversely affect
the financial condition or operations of the Seller or any of its
subsidiaries or the ability of the Seller to perform its obligations
under this Agreement, or which purports to affect the legality,
validity or enforceability of this Agreement.
(h) The use of all funds acquired by the Seller under this
Agreement will not conflict with or contravene any of Regulations T, U
and X of the Board of Governors of the Federal Reserve System as the
same may from time to time be amended, supplemented or otherwise
modified.
(i) No transaction contemplated hereby requires compliance
with any bulk sales act or similar law.
(j) Each Receivable purported to be sold by the Seller
hereunder is an Eligible Receivable, and each such Receivable and each
Transferred Receivable, together with the Related Security, is owned
(immediately prior to its sale or contribution hereunder) by the Seller
free and clear of any Adverse Claim (other than any Adverse Claim
arising solely as the result of any action taken by the Purchaser).
When the Purchaser makes a Purchase it shall acquire valid and
perfected first priority ownership of each Purchased Receivable and the
Related Security and Collections with respect thereto free and clear of
any Adverse Claim (other than any Adverse Claim arising solely as the
result of any action taken by the Purchaser), and no effective
financing statement or other instrument similar in effect covering any
Transferred Receivable, any interest therein, the Related Security or
Collections with respect thereto is on file in any recording office
except such as may be filed in favor of Purchaser in accordance with
this Agreement or in connection with any Adverse Claim arising solely
as the result of any action taken by the Purchaser.
(k) Each Seller Report (if prepared by the Seller, or to the
extent that information contained therein is supplied by the Seller),
information, exhibit, financial statement, document, book, record or
report furnished or to be furnished at any time by the Seller to the
Purchaser in connection with this Agreement is or will be accurate in
all
17
material respects as of the date so furnished, and no such document
contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary in order to make
the statements contained therein, in the light of the circumstances
under which they were made, not misleading.
(l) The principal place of business and chief executive office
of the Seller and the office where the Seller keeps its records
concerning the Transferred Receivables are located at the address or
addresses referred to in Section 5.01(b).
(m) The names and addresses of all the Lock-Box Banks,
together with the account numbers of the Lock-Box Accounts at such
Lock-Box Banks, are specified in Exhibit B (as the same may be updated
from time to time pursuant to Section 5.01(g)).
(n) The Seller is not known by and does not use any tradename
or doing-business-as name.
(o) With respect to any programs used by the Seller in the
servicing of the Receivables, no sublicensing agreements are necessary
in connection with the designation of a new Collection Agent pursuant
to Section 6.01(b) so that such new Collection Agent shall have the
benefit of such programs (it being understood that, however, the
-- ----- ---------- ----
Collection Agent, if other than the Seller, shall be required to be
bound by a confidentiality agreement reasonably acceptable to the
Seller).
(p) The transfers of Transferred Receivables by the Seller to
the Purchaser pursuant to this Agreement, and all other transactions
between the Seller and the Purchaser, have been and will be made in
good faith and without intent to hinder, delay or defraud creditors of
the Seller.
(q) If less than all of the Receivables of the Seller have
been transferred to the Purchaser pursuant to this Agreement, no
selection procedure was utilized by the Seller in selecting the
Contributed Receivables to be transferred to the Purchaser hereunder
which is adverse to the interests of the Purchaser or would reasonably
be expected to result in the Contributed Receivables containing a
higher percentage of Defaulted Receivables than the percentage of
Defaulted Receivables in the Receivables retained by the Seller.
(r) Immediately prior to the effectiveness of this Agreement
the Purchaser has no Debt, Adverse Claims on any of its assets,
liabilities (including contingent obligations) other than accrued
administrative expenses (including, without limitation, accrued rent)
in an aggregate amount not to exceed $20,000.
(s) The amendment to the Credit Facility referred to in
Section 3.01(j) hereof has been executed by each Loan Party (as defined
in the Credit Facility) and lenders constituting Required Lenders (as
defined in the Credit Facility).
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ARTICLE V
COVENANTS
SECTION 5.01. Covenants of the Seller. From the date hereof
until the first day following the Facility Termination Date on which all of the
Transferred Receivables are either collected in full or become Defaulted
Receivables:
(a) Compliance with Laws, Etc. The Seller will comply in all
material respects with all applicable laws, rules, regulations and
orders and preserve and maintain its corporate existence, rights,
franchises, qualifications and privileges except to the extent that the
failure so to comply with such laws, rules and regulations or the
failure so to preserve and maintain such rights, franchises,
qualifications, and privileges would not materially adversely affect
the collectibility of the Transferred Receivables or the ability of the
Seller to perform its obligations under this Agreement.
(b) Offices, Records, Name and Organization. The Seller will
keep its principal place of business and chief executive office and the
office where it keeps its records concerning the Transferred
Receivables at the address of the Seller set forth under its name on
the signature page to this Agreement or, upon 30 days' prior written
notice to the Purchaser, at any other locations within the United
States. The Seller will not change its name or its state of
organization, unless (i) the Seller shall have provided the Purchaser
with at least 30 days' prior written notice thereof and (ii) no later
than the effective date of such change, all actions reasonably
requested by the Purchaser to protect and perfect the interest in the
Transferred Receivable have been taken and completed. The Seller also
will maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records
evidencing Transferred Receivables and related Contracts in the event
of the destruction of the originals thereof), and keep and maintain all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Transferred Receivables (including,
without limitation, records adequate to permit the daily identification
of each new Transferred Receivable and all Collections of and
adjustments to each existing Transferred Receivable). The Seller shall
make a notation in its books and records, including its computer files,
to indicate which Receivables have been sold or contributed to the
Purchaser hereunder.
(c) Performance and Compliance with Contracts and Credit and
Collection Policy. The Seller will, at its expense, timely and fully
perform and comply with all material provisions, covenants and other
promises required to be observed by it under the Contracts related to
the Transferred Receivables, and timely and fully comply in all
material respects with the Credit and Collection Policy in regard to
each Transferred Receivable and the related Contract.
(d) Sales, Liens, Etc. Except for the sales and contributions
of Receivables contemplated herein, the Seller will not sell, assign
(by operation of law or otherwise) or
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otherwise dispose of, or create or suffer to exist any Adverse Claim
upon or with respect to, any Transferred Receivable, Related Security,
related Contract or Collections, or upon or with respect to any account
to which any Collections of any Transferred Receivable are sent, or
assign any right to receive income in respect thereof.
(e) Extension or Amendment of Transferred Receivables. Except
as provided in Section 6.02(c), the Seller will not extend, amend or
otherwise modify the terms of any Transferred Receivable, or amend,
modify or waive any term or condition of any Contract related thereto.
(f) Change in Business or Credit and Collection Policy. The
Seller will not make any change in the character of its business or in
the Credit and Collection Policy that would, in either case, materially
adversely affect the collectibility of the Transferred Receivables or
the ability of the Seller to perform its obligations under this
Agreement.
(g) Change in Payment Instructions to Obligors. The Seller
will not add or terminate any bank or bank account as a Lock-Box Bank
or Lock-Box Account from those listed in Exhibit B to this Agreement,
or make any change in its instructions to Obligors regarding payments
to be made to any Lock-Box Bank, unless the Purchaser shall have
received notice of such addition, termination or change (including an
updated Exhibit B) and fully executed copies of Lock-Box Agreements
with each new Lock-Box Bank or with respect to each new Lock-Box
Account.
(h) Deposits to Lock-Box Accounts. The Seller will instruct
all Obligors to remit all their payments in respect of Transferred
Receivables into Lock-Box Accounts. If the Seller shall receive any
Collections directly, it shall immediately (and in any event within two
Business Days) deposit the same to a Lock-Box Account.
(i) Audits. The Seller will, from time to time during regular
business hours as requested by the Purchaser or its assigns, permit the
Purchaser, or its agents, representatives or assigns, (i) to conduct,
on a reasonable and customary basis, periodic audits of the Transferred
Receivables, the Related Security and the related books and records and
collections systems of the Seller, (ii) to examine and make copies of
and abstracts from all books, records and documents (including, without
limitation, computer tapes and disks) in the possession or under the
control of the Seller relating to Transferred Receivables and the
Related Security, including, without limitation, the related Contracts,
and (iii) to visit the offices and properties of the Seller for the
purpose of examining such materials described in clause (ii) above, and
to discuss matters relating to Transferred Receivables and the Related
Security or the Seller's performance hereunder or under the Contracts
with any of the officers or employees of the Seller having knowledge of
such matters.
(j) Further Assurances. (i) The Seller agrees from time to
time, at its expense, promptly to execute and deliver all further
instruments and documents, and to
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take all further actions, that may be necessary or desirable, or that
the Purchaser or its assignee may reasonably request, to perfect,
protect or more fully evidence the sale and contribution of Receivables
under this Agreement, or to enable the Purchaser or its assignee to
exercise and enforce its respective rights and remedies under this
Agreement. Without limiting the foregoing, the Seller will, upon the
request of the Purchaser or its assignee, (A) execute and file such
financing or continuation statements, or amendments thereto, and such
other instruments and documents, that may be necessary or desirable to
perfect, protect or evidence such Transferred Receivables; and (B)
deliver to the Purchaser copies of all Contracts relating to the
Transferred Receivables and all records relating to such Contracts and
the Transferred Receivables, whether in hard copy or in magnetic tape
or diskette format (which if in magnetic tape or diskette format shall
be compatible with the Purchaser's computer equipment).
(ii) The Seller authorizes the Purchaser or its
assignee to file financing or continuation statements, and amendments
thereto and assignments thereof, relating to the Transferred
Receivables and the Related Security, the related Contracts and the
Collections with respect thereto without the signature of the Seller
where permitted by law. A photocopy or other reproduction of this
Agreement shall be sufficient as a financing statement where permitted
by law.
(iii) The Seller shall perform its obligations under
the Contracts related to the Transferred Receivables to the same extent
as if the Transferred Receivables had not been sold or transferred.
(k) Reporting Requirements. The Seller will provide to the
Purchaser the following:
(i) as soon as available and in any event within 60
days after the end of the first three quarters of each fiscal
year of the Seller, consolidated balance sheets of the Seller
and its subsidiaries as of the end of such quarter and
consolidated statements of income and retained earnings of the
Seller and its subsidiaries for the period commencing at the
end of the previous fiscal year and ending with the end of
such quarter, certified by a Responsible Financial Officer of
the Seller;
(ii) as soon as available and in any event within 105
days after the end of each fiscal year of the Seller, a copy
of the annual report for such year for the Seller and its
subsidiaries on a consolidated basis, containing financial
statements for such year audited by PricewaterhouseCoopers LLP
or other nationally recognized independent public accountants;
(iii) as soon as possible and in any event within
five days after the occurrence of each Event of Termination or
within five days after the Seller obtains knowledge of the
occurrence of Incipient Event of Termination, a
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statement of a Responsible Financial Officer of the Seller
setting forth details of such Event of Termination or
Incipient Event of Termination and the action that the Seller
has taken and proposes to take with respect thereto;
(iv) promptly after the sending or filing thereof,
copies of all reports that the Seller sends to any of its
securityholders, and copies of all reports and registration
statements that the Seller or any subsidiary files with the
Securities and Exchange Commission or any national securities
exchange;
(v) promptly after the Seller obtains knowledge
thereof, notice of the occurrence of any ERISA Event that,
alone or together with any other ERISA Events that have
occurred, could reasonably be expected to result in liability
of the Seller and any ERISA Affiliates in an aggregate amount
exceeding $25,000,000;
(vi) at least 30 days prior to any change in the
Seller's name or the Seller's jurisdiction of incorporation, a
notice setting forth the new name or jurisdiction of
incorporation and the effective date thereof;
(vii) promptly after the Seller obtains knowledge
thereof, notice of any "Event of Termination" or "Facility
Termination Date" under this Agreement or any "Event of
Default" under the Credit Facility;
(viii) concurrently with the delivery of each Seller
Report by the Collection Agent, a statement as to whether or
not all of the Receivables under all Contracts arising during
the immediately preceding month have been transferred by the
Seller to the Purchaser and, if less than all of such
Receivables have been transferred, a summary of those
Receivables not transferred; and
(ix) such other information respecting the
Transferred Receivables or the condition or operations,
financial or otherwise, of the Seller as the Purchaser may
from time to time reasonably request.
Reports and financial statements required to be delivered
pursuant to clauses (i), (ii) and (iv) of this Section 5.01(k) shall be deemed
to have been delivered on the date on which such reports, or reports containing
such financial statements are posted on the SEC's website at ▇▇▇.▇▇▇.▇▇▇.
(l) Separate Conduct of Business. The Seller will: (i)
maintain separate corporate records and books of account from those of
the Purchaser; (ii) conduct a portion of its business from an office
separate from that of the Purchaser; (iii) ensure that all oral and
written communications, including without limitation, letters,
invoices, purchase orders, contracts, statements and applications, will
be made solely in its own name; (iv) have stationery and other business
forms and a mailing address and a telephone
22
number separate from those of the Purchaser; (v) not hold itself out as
having agreed to pay, or as being liable for, the obligations of the
Purchaser; (vi) not engage in any transaction with the Purchaser except
as contemplated by this Agreement or as permitted by the Sale
Agreement; (vii) continuously maintain as official records the
resolutions, agreements and other instruments underlying the
transactions contemplated by this Agreement; and (viii) disclose on its
annual financial statements (A) the effects of the transactions
contemplated by this Agreement in accordance with generally accepted
accounting principles and (B) that the assets of the Purchaser are not
available to pay its creditors.
(m) Misdirected Payments. The Seller will not deposit or
otherwise credit, or cause to be so deposited or credited, to any
Lock-Box Account cash or cash proceeds other than Collections of
Receivables. The Seller shall use commercially reasonable efforts
(including, without limitation, sending notices from time to time to
any Person depositing or crediting to any Lock-Box Account cash or cash
proceeds which are not Collection of Receivables) to prevent cash or
cash proceeds other than Collections of Receivables from being
deposited or credited to any Lock-Box.
(n) No Commingling. In the event that any cash or cash
proceeds other than Collections of Receivables are deposited or
credited to any Lock-Box Account, the Seller shall, or shall cause,
such cash or cash proceeds to be identified and withdrawn from the
Lock-Box Account within three Business Days of such deposit or credit.
(o) Lock-Box Agreement. No later than 45 days from the date
hereof the Seller shall deliver to the Purchaser a fully executed
Lock-Box Agreement with respect to each Lock-Box Account.
SECTION 5.02. Grant of Security Interest. To secure all
obligations of the Seller arising in connection with this Agreement, and each
other agreement entered into in connection with this Agreement, whether now or
hereafter existing, due or to become due, direct or indirect, or absolute or
contingent, including, without limitation, Indemnified Amounts, payments on
account of Collections received or deemed to be received, and any other amounts
due the Purchaser hereunder, the Seller hereby assigns and grants to Purchaser a
security interest in all of the Seller's right, title and interest now or
hereafter existing in, to and under all Receivables which do not constitute
Transferred Receivables, the Related Security and all Collections with regard
thereto.
SECTION 5.03. Covenant of the Seller and the Purchaser. The
Seller and the Purchaser have structured this Agreement with the intention that
each Purchase of Receivables hereunder be treated as a sale of such Receivables
by the Seller to the Purchaser for all purposes and each contribution of
Receivables hereunder shall be treated as an absolute transfer of such
Receivables by the Seller to the Purchaser for all purposes. The Seller and the
Purchaser shall record each Purchase and contribution as a sale or purchase or
capital contribution, as the case may be, on its books and records, and reflect
each Purchase and contribution in its financial
23
statements and tax returns as a sale or purchase or capital contribution, as the
case may be. In the event that, contrary to the mutual intent of the Seller and
the Purchaser, any Purchase or contribution of Receivables hereunder is not
characterized as a sale or absolute transfer, the Seller shall, effective as of
the date hereof, be deemed to have granted (and the Seller hereby does grant) to
the Purchaser a first priority security interest in and to any and all
Receivables, the Related Security and the proceeds thereof to secure the
repayment of all amounts advanced to the Seller hereunder with accrued interest
thereon, and this Agreement shall be deemed to be a security agreement.
ARTICLE VI
ADMINISTRATION AND COLLECTION
SECTION 6.01. Designation of Collection Agent. The servicing,
administration and collection of the Transferred Receivables shall be conducted
by such Person (the "Collection Agent") so designated by the Purchaser and its
assigns pursuant to the Sale Agreement, from time to time. Until the Purchaser
or its assignee gives notice to the Seller of the designation of a new
Collection Agent, the Seller is hereby designated as, and hereby agrees to
perform the duties and obligations of, the Collection Agent pursuant to the
terms hereof. Upon the Seller's receipt of such notice, the Seller agrees that
it will terminate its activities as Collection Agent hereunder in a manner which
the Purchaser or its assigns (or their respective designee) believes will
facilitate the transition of the performance of such activities to the new
Collection Agent, and the Seller shall use its best efforts to assist the
Purchaser or its assign (or their respective designee) to take over the
servicing, administration and collection of the Transferred Receivables,
including, without limitation, providing access to and copies of all computer
tapes or disks and other documents or instruments that evidence or relate to
Transferred Receivables maintained in its capacity as Collection Agent and
access to all employees and officers of the Seller responsible with respect
thereto. The Collection Agent may, with the prior consent of the Purchaser,
subcontract with any other Person for the servicing, administration or
collection of Transferred Receivables. Any such subcontract shall not affect the
Collection Agent's liability for performance of its duties and obligations
pursuant to the terms hereof.
SECTION 6.02. Duties of Collection Agent. (a) The Collection
Agent shall take or cause to be taken all such actions as may be necessary or
advisable to collect each Transferred Receivable from time to time, all in
accordance with applicable laws, rules and regulations, with reasonable care and
diligence, and in accordance with the Credit and Collection Policy. The
Purchaser hereby appoints the Collection Agent, from time to time designated
pursuant to Section 6.01, as agent to enforce its ownership and other rights in
the Transferred Receivables, the Related Security and the Collections with
respect thereto. In performing its duties as Collection Agent, the Collection
Agent shall exercise the same care and apply the same policies as it would
exercise and apply if it owned the Transferred Receivables and shall act in the
best interests of the Purchaser and its assignees.
24
(b) (i) On or prior to the twentieth calendar day of each
month (or if such day is not a Business Day, the next Business Day), the
Collection Agent shall prepare and forward to the Purchaser a Monthly Report
relating to the Receivable Interests outstanding on the last day of the
immediately preceding month.
(ii) If a Level I Downgrade Event (but no Level II
Downgrade Event) shall have occurred and be continuing, on or prior to
the close of business on the second Business Day of each Week, the
Collection Agent shall prepare and forward to the Purchaser a Weekly
Report which shall contain information related to the Receivables
current as of the close of business on the last Business Day of the
preceding Week.
(iii) If a Level II Downgrade Event shall have
occurred and be continuing, the Collection Agent shall, by no later
than 3:00 P.M. (New York City time) on each Business Day, prepare and
forward to the Purchaser a Daily Report which shall contain information
relating to the Receivables current as of the close of business on the
immediately prior Business Day.
The Collection Agent may elect to transmit Seller Reports to
the Purchaser by electronic mail (each an "E-Mail Seller Report") provided, that
(i) the Collection Agent shall (A) make arrangements with VeriSign, Inc. (or
another authenticating organization acceptable to the Purchaser) to enable the
Collection Agent to generate digital signatures and (B) safeguard the keys,
access codes or other means of generating its digital signature, (ii) each
E-Mail Seller Report shall be (A) formatted as the Purchaser may designate from
time to time and shall be digitally signed and (B) sent to the Purchaser at an
electronic mail address designated by the Purchaser, and (iii) the Purchaser (A)
shall be authorized to rely upon such E-Mail Seller Report for purposes of this
Agreement to the same extent as if the contents thereof had been otherwise
delivered to the Purchaser in accordance with the terms of this Agreement and
(B) may, upon notice in writing to the Collection Agent and the Seller,
terminate the right of the Collection Agent to transmit E-Mail Seller Reports.
(c) If no Event of Termination or Incipient Event of
Termination shall have occurred and be continuing, the Seller, while it is the
Collection Agent, may, in accordance with the Credit and Collection Policy,
extend the maturity or adjust the Outstanding Balance of any Transferred
Receivable as the Seller deems appropriate to maximize Collections thereof, or
otherwise amend or modify the terms of any Transferred Receivable.
(d) The Seller shall deliver to the Collection Agent, and the
Collection Agent shall hold in trust for the Seller and the Purchaser in
accordance with their respective interests, all documents, instruments and
records (including, without limitation, computer tapes or disks) which evidence
or relate to Transferred Receivables.
(e) The Collection Agent shall within three Business Days
following receipt turn over to the Seller any cash collections or other cash
proceeds received with respect to Receivables not constituting Transferred
Receivables (including without limitation, Excluded
25
Receivables), less, in the event the Seller is not the Collection Agent, all
reasonable and appropriate out-of-pocket costs and expenses of the Collection
Agent of servicing, collecting and administering the Receivables to the extent
not covered by the Collection Agent Fee received by it.
(f) The Collection Agent also shall perform the other
obligations of the "Collection Agent" set forth in this Agreement with respect
to the Transferred Receivables.
SECTION 6.03. Collection Agent Fee. The Purchaser shall pay to
the Collection Agent, so long as it is acting as the Collection Agent hereunder,
a periodic collection fee (the "Collection Agent Fee") of 0.50% per annum on the
average daily aggregate Outstanding Balance of the Transferred Receivables,
payable on the twentieth day of each month (or, if such day is not a Business
Day, the immediately succeeding Business Day) or such other day during each
calendar month as the Purchaser and the Collection Agent shall agree.
SECTION 6.04. Certain Rights of the Purchaser. The Seller
hereby transfers to the Purchaser (and its assigns and designees) the exclusive
ownership and control of the Lock-Box Accounts maintained by the Seller for the
purpose of receiving Collections.
At any time following a Cash Control Triggering Event:
(i) The Purchaser may give notice of the Purchaser's
ownership to each Obligor of Transferred Receivables and any Person
obligated on any Related Security, and direct that all payments of all
amounts payable thereunder be made directly to the Purchaser or its
designee.
(ii) The Seller shall, at the Purchaser's request and
at the Seller's expense, give notice of the Purchaser's ownership to
each Obligor of Transferred Receivables and any Person obligated on any
Related Security, and direct that all payments of all amounts payable
thereunder be made directly to the Purchaser or its designee.
(iii) At the Purchaser's request and at the Seller's
expense, the Seller and the Collection Agent shall (A) assemble all of
the documents, instruments and other records (including, without
limitation, computer tapes and disks) that evidence or relate to the
Transferred Receivables, and the related Contracts and Related
Security, or that are otherwise necessary or desirable to collect the
Transferred Receivables, and shall make the same available to the
Purchaser at a place selected by the Purchaser or its designee, and (B)
segregate all cash, checks and other instruments received by it from
time to time constituting Collections of Transferred Receivables in a
manner acceptable to the Purchaser and, promptly upon receipt, remit
all such cash, checks and instruments, duly indorsed or with duly
executed instruments of transfer, to the Purchaser or its designee. The
Purchaser shall also have the right to make copies of all such
documents, instruments and other records at any time.
26
(iv) The Seller authorizes the Purchaser to take any
and all steps in the Seller's name and on behalf of the Seller that are
necessary or desirable, in the determination of the Purchaser, to
collect amounts due under the Transferred Receivables, including,
without limitation, endorsing the Seller's name on checks and other
instruments representing Collections of Transferred Receivables and
enforcing the Transferred Receivables and the Related Security and
related Contracts.
SECTION 6.05. Rights and Remedies. (a) If the Seller or the
Collection Agent fails to perform any of its obligations under this Agreement,
the Purchaser may (but shall not be required to) itself perform, or cause
performance of, such obligation, and, if the Seller (as Collection Agent or
otherwise) fails to so perform, the costs and expenses of the Purchaser incurred
in connection therewith shall be payable by the Seller as provided in Section
8.01 or Section 9.04 as applicable.
(b) The Seller shall perform all of its obligations under the
Contracts related to the Transferred Receivables to the same extent as if the
Seller had not sold or contributed Receivables hereunder and the exercise by the
Purchaser of its rights hereunder shall not relieve the Seller from such
obligations or its obligations with respect to the Transferred Receivables. The
Purchaser shall not have any obligation or liability with respect to any
Transferred Receivables or related Contracts, nor shall the Purchaser be
obligated to perform any of the obligations of the Seller thereunder.
(c) The Seller shall cooperate with the Collection Agent in
collecting amounts due from Obligors in respect of the Transferred Receivables.
(d) The Seller hereby grants to Collection Agent an
irrevocable power of attorney, with full power of substitution, coupled with an
interest, to take in the name of the Seller all steps necessary or advisable to
endorse, negotiate or otherwise realize on any writing or other right of any
kind held or transmitted by the Seller or transmitted or received by Purchaser
(whether or not from the Seller) in connection with any Transferred Receivable.
SECTION 6.06. Transfer of Records to Purchaser. Each Purchase
and contribution of Receivables hereunder shall include the transfer to the
Purchaser of all of the Seller's right and title to and interest in the records
relating to such Receivables and shall include an irrevocable non-exclusive
license to the use of the Seller's computer software system to access and create
such records. Such license shall be without royalty or payment of any kind, is
coupled with an interest, and shall be irrevocable until all of the Transferred
Receivables are either collected in full or become Defaulted Receivables.
The Seller shall take such action requested by the Purchaser,
from time to time hereafter, that may be necessary or appropriate to ensure that
the Purchaser has an enforceable ownership interest in the records relating to
the Transferred Receivables and rights (whether by ownership, license or
sublicense) to the use of the Seller's computer software system to access and
create such records.
27
In recognition of the Seller's need to have access to the
records transferred to the Purchaser hereunder, the Purchaser hereby grants to
the Seller an irrevocable license to access such records in connection with any
activity arising in the ordinary course of the Seller's business or in
performance of its duties as Collection Agent, provided that (i) the Seller
shall not disrupt or otherwise interfere with the Purchaser's use of and access
to such records during such license period and (ii) the Seller consents to the
assignment and delivery of the records (including any information contained
therein relating to the Seller or its operations) to any assignees or
transferees of the Purchaser provided they agree to hold such records
confidential.
ARTICLE VII
EVENTS OF TERMINATION
SECTION 7.01. Events of Termination. If any of the following
events ("Events of Termination") shall occur and be continuing:
(a) The Collection Agent (i) shall fail to perform or observe
any term, covenant or agreement under this Agreement (other than as
referred to in clauses (ii), (iii) of (iv) of this subsection (a)) and
such failure shall remain unremedied for 10 Business Days, (ii) shall
fail to make when due any payment or deposit to be made by it under
this Agreement and such failure shall remain unremedied for one
Business Day after notice thereof has been delivered by the Purchaser,
(iii) (A) shall fail to deliver any Weekly Report or Daily Report and
such failure shall remain unremedied for more than two Business Days,
in the case of a Weekly Report, or for more than one Business Day, in
the case of a Daily Report, or (B) shall fail to deliver when due more
than two Weekly Reports in any calendar month or more than two Daily
Reports in any calendar week, or (iv) shall fail to perform or observe
any term, covenant or agreement contained in Sections 6.02 (other than
as set forth in clauses (ii) or (iii) this subsection) and such failure
shall remain unremedied for more than five Business Days; or
(b) The Seller shall fail to make any payment required under
Section 2.04(a) or 2.04(b); or
(c) Any representation or warranty made or deemed made by the
Seller (or any of its officers) under or in connection with this
Agreement or any information or report delivered by the Seller pursuant
to this Agreement shall prove to have been incorrect or untrue in any
material respect when made or deemed made or delivered; provided,
--------
however, the making or deemed making of such incorrect or untrue
-------
representation or warranty with respect to clause (iii)(2), (3) or (4)
of ▇▇▇▇▇▇▇ ▇.▇▇(▇) ▇▇ ▇▇▇▇▇▇▇▇ ▇.▇▇(▇), (▇), (▇), (▇), (▇), (▇), (▇),
(▇) or (o) shall not constitute an Event of Termination so long as
within 10 Business Days after the earlier of the Seller obtaining
knowledge or receiving notice that any such representation or warranty
is incorrect or
28
untrue the Purchaser expressly waives, in writing, the Event of
Termination which would otherwise arise therefrom; or
(d) The Seller (i) shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement (other than as
referred to in clauses (ii) or (iii) of this subsection (d)) on its
part to be performed or observed, (ii) shall fail to make when due any
payment or deposit to be made by it under this Agreement and such
failure shall remain unremedied for one Business Day after notice
thereof has been delivered by the Purchaser after written notice
thereof shall have been given to the Seller by the Purchaser or its
assignees, or (iii) shall fail to perform or observe any term, covenant
or agreement contained in (x) Section 5.01 (b), (e), (g), (h),(k)(vi),
or (l) and any such failure shall remain unremedied for 10 Business
Days after the earlier of the Seller obtaining knowledge or receiving
notice of such failure (provided, that with respect to Section 5.01(g)
--------
and (h) no such grace period shall apply if the aggregate amount of
Collections subject to such failure shall exceed $1,000,000, and,
provided, further, that with respect to Section 5.01(m) no such grace
-------- -------
period shall apply if the aggregate amount of Collections subject to
such failure shall exceed $10,000,000) or (y) Section 5.01(a), (c),
(f), (i), (k)(i), (k)(ii), (k)(iv), (k)(v), (k)(ix) any such failure
shall remain unremedied for 20 Business Days after the earlier of the
Seller obtaining knowledge or receiving notice of such failure; or
(e) The Seller or the Collection Agent shall fail to pay any
principal of or premium or interest on any of its Debt which is
outstanding in a principal amount of at least $25,000,000 (such amount
to be adjusted to reflect any change after the date hereof in the
amount set forth in the definition of "Material Indebtedness" in the
Credit Facility (which amount is $20,000,000 as of the date hereof) on
a dollar for dollar basis) in the aggregate when the same becomes due
and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement
or instrument relating to such Debt; or any other event shall occur or
condition shall exist under any agreement or instrument relating to any
such Debt and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event
or condition is to accelerate, or to permit the acceleration of, the
maturity of such Debt; or any such Debt shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled
required prepayment), redeemed, purchased or defeased, or an offer to
repay, redeem, purchase or defease such Debt shall be required to be
made, in each case prior to the stated maturity thereof; or
(f) Any Purchase or contribution of Receivables hereunder, the
Related Security and the Collections with respect thereto shall for any
reason cease to constitute valid and perfected ownership of such
Receivables, Related Security and Collections free and clear of any
Adverse Claim; or
29
(g) The Seller or the Collection Agent shall generally not pay
its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be
instituted by or against the Seller or any of its subsidiaries seeking
to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for it or for
any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either
such proceeding shall remain undismissed or unstayed for a period of 60
days, or any of the actions sought in such proceeding (including,
without limitation, the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar official
for, it or for any substantial part of its property) shall occur; or
the Seller or any Material Subsidiary (as such term is defined in the
Credit Facility) shall take any corporate action to authorize any of
the actions set forth above in this subsection (g); or
(h) An "Event of Termination" shall have occurred under the
Sale Agreement or the Purchaser shall so state in writing;
then, and in any such event, the Purchaser may, by notice to the Seller, take
either or both of the following actions: (x) declare the Facility Termination
Date to have occurred (in which case the Facility Termination Date shall be
deemed to have occurred) and (y) without limiting any right under this Agreement
to replace the Collection Agent, designate another Person to succeed the Seller
as Collection Agent so long as a Collection Agent Default shall have occurred
and be continuing; provided, that, automatically upon the occurrence of any
--------
event (without any requirement for the passage of time or the giving of notice)
described in paragraph (g) of this Section 7.01, the Facility Termination Date
shall occur, the Seller (if it is then serving as the Collection Agent) shall
cease to be the Collection Agent, and the Purchaser (or its assigns or
designees) shall become the Collection Agent. Upon any such declaration or
designation or upon such automatic termination, the Purchaser shall have, in
addition to the rights and remedies under this Agreement, all other rights and
remedies with respect to the Receivables provided after default under the UCC
and under other applicable law, which rights and remedies shall be cumulative.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Indemnities by the Seller. Without limiting any
other rights which the Purchaser may have hereunder or under applicable law, the
Seller hereby agrees to indemnify the Purchaser and its assigns and transferees
(each, an "Indemnified Party") from and against any and all damages, claims,
losses, liabilities and related costs and expenses, including
30
reasonable attorneys' fees and disbursements (all of the foregoing being
collectively referred to as "Indemnified Amounts"), awarded against or incurred
by any Indemnified Party arising out of or as a result of this Agreement or the
purchase or contribution of any Transferred Receivables or in respect of any
Transferred Receivable or any Contract, including, without limitation, arising
out of or as a result of:
(i) the inclusion, or purported inclusion, in any
Purchase of any Receivable that is not an Eligible Receivable
on the date of such Purchase, or the characterization in any
Seller Report or other statement made by the Seller of any
Transferred Receivable as an Eligible Receivable which is not
an Eligible Receivable as of the date of such Seller Report or
statement;
(ii) any representation or warranty or statement made
or deemed made by the Seller (or any of its officers) under or
in connection with this Agreement, which shall have been
incorrect in any material respect when made;
(iii) the failure by the Seller to comply with any
applicable law, rule or regulation with respect to any
Transferred Receivable or the related Contract; or the failure
of any Transferred Receivable or the related Contract to
conform to any such applicable law, rule or regulation;
(iv) the failure to vest in the Purchaser absolute
ownership of the Receivables that are, or that purport to be,
the subject of a Purchase or contribution under this Agreement
and the Related Security and Collections in respect thereof,
free and clear of any Adverse Claim;
(v) the failure of the Seller to have filed, or any
delay in filing, financing statements or other similar
instruments or documents under the UCC of any applicable
jurisdiction or other applicable laws with respect to any
Receivables that are, or that purport to be, the subject of a
Purchase or contribution under this Agreement and the Related
Security and Collections in respect thereof, whether at the
time of any Purchase or contribution or at any subsequent
time;
(vi) any dispute, claim, offset or defense (other
than discharge in bankruptcy of the Obligor) of the Obligor to
the payment of any Receivable that is, or that purports to be,
the subject of a Purchase or contribution under this Agreement
(including, without limitation, a defense based on such
Receivable or the related Contract not being a legal, valid
and binding obligation of such Obligor enforceable against it
in accordance with its terms), or any other claim resulting
from the sale of the merchandise or services related to such
Receivable or the furnishing or failure to furnish such
merchandise or services or relating to collection activities
with respect to such Receivable (if such collection activities
were performed by the Seller acting as Collection Agent);
31
(vii) any failure of the Seller, as Collection Agent
or otherwise, to perform its duties or obligations in
accordance with the provisions hereof or to perform its duties
or obligations under any Contract related to a Transferred
Receivable;
(viii) any products liability or other claim arising
out of or in connection with merchandise, insurance or
services which are the subject of any Contract;
(ix) the commingling of Collections of Transferred
Receivables by the Seller or a designee of the Seller, as
Collection Agent or otherwise, at any time with other funds of
the Seller or an Affiliate of the Seller;
(x) any third party investigation, litigation or
proceeding related to this Agreement or the use of proceeds of
Purchases or the ownership of Receivables, the Related
Security, or Collections with respect thereto or in respect of
any Receivable, Related Security or Contract (excluding any
collection costs of the Purchaser arising directly from the
financial inability of an Obligor to pay in respect of any
Receivable);
(xi) any failure of the Seller to comply with its
covenants contained in this Agreement;
(xii) any Collection Agent Fees or other costs and
expenses payable to any replacement Collection Agent, to the
extent in excess of the Collection Agent Fees payable to the
Seller hereunder;
(xiii) any claim brought by any Person other than an
Indemnified Party arising from any activity by the Seller or
any Affiliate of the Seller in servicing, administering or
collecting any Transferred Receivable;
(xiv) any Dilution with respect to any Transferred
Receivable; or
(xv) the failure of the Seller to comply with any
term or provision of any Contract that contains a
confidentiality provision that purports to restrict the
ability of the Purchaser (or its assigns) to exercise its
rights under this Agreement, including, without limitation,
its right to review the Contract.
It is expressly agreed and understood by the parties hereto (i) that the
foregoing indemnification is not intended to, and shall not, constitute a
guarantee of the collectibility or payment of the Transferred Receivables and
(ii) that nothing in this Section 8.01 shall require the Seller to indemnify any
Person (A) for Receivables which are not collected, not paid or uncollectible on
account of the insolvency, bankruptcy, or financial inability to pay of the
applicable Obligor, (B) for damages, losses, claims or liabilities or related
costs or expenses to the extent found by a
32
court of competent jurisdiction to have resulted from such Person's gross
negligence or willful misconduct, or (C) for any income taxes or franchise taxes
incurred by such Person arising out of or as a result of this Agreement or in
respect of any Transferred Receivable or any Contract.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or consent to any departure by the Seller therefrom
shall be effective unless in a writing signed by the Purchaser and, in the case
of any amendment, also signed by the Seller, and then such amendment, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. No failure on the part of the Purchaser to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right.
SECTION 9.02. Notices, Etc. All notices and other
communications hereunder shall, unless otherwise stated herein, be in writing
(which shall include facsimile communication) and be faxed or delivered, to each
party hereto, at its address set forth under its name on the signature pages
hereof or at such other address as shall be designated by such party in a
written notice to the other parties hereto. Notices and communications by
facsimile shall be effective when sent (and shall be followed by hard copy sent
by regular mail), and notices and communications sent by other means shall be
effective when received.
SECTION 9.03. Binding Effect; Assignability. (a) This
Agreement shall be binding upon and inure to the benefit of the Seller, the
Purchaser and their respective successors and assigns; provided, however, that
-------- -------
the Seller may not assign its rights or obligations hereunder or any interest
herein without the prior written consent of the Purchaser. In connection with
any sale or assignment by the Purchaser of all or a portion of the Transferred
Receivables, the buyer or assignee, as the case may be, shall, to the extent of
its purchase or assignment, have all rights of the Purchaser under this
Agreement (as if such buyer or assignee, as the case may be, were the Purchaser
hereunder) except to the extent specifically provided in the agreement between
the Purchaser and such buyer or assignee, as the case may be.
(b) This Agreement shall create and constitute the continuing
obligations of the parties hereto in accordance with its terms, and shall remain
in full force and effect until such time, after the Facility Termination Date,
when all of the Transferred Receivables are either collected in full or become
Defaulted Receivables; provided, however, that rights and remedies with respect
-------- -------
to any breach of any representation and warranty made by the Seller pursuant to
Article IV and the provisions of Article VIII and Sections 9.04, 9.05 and 9.06
shall be continuing and shall survive any termination of this Agreement.
33
SECTION 9.04. Costs, Expenses and Taxes. (a) In addition to
the rights of indemnification granted to the Purchaser pursuant to Article VIII
hereof, the Seller agrees to pay on demand all costs and expenses in connection
with the preparation, execution and delivery of this Agreement and the other
documents and agreements to be delivered hereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Purchaser with respect thereto and with respect to advising the Purchaser as to
its rights and remedies under this Agreement, and the Seller agrees to pay all
costs and expenses, if any (including reasonable counsel fees and expenses), in
connection with the enforcement of this Agreement and the other documents to be
delivered hereunder excluding, however, any costs of enforcement or collection
--------- -------
of Transferred Receivables which are not paid on account of the insolvency,
bankruptcy or financial inability to pay of the applicable Obligor.
(b) In addition, the Seller agrees to pay any and all stamp
and other taxes and fees payable in connection with the execution, delivery,
filing and recording of this Agreement or the other documents or agreements to
be delivered hereunder, and the Seller agrees to save each Indemnified Party
harmless from and against any liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes and fees.
SECTION 9.05. No Proceedings. The Seller hereby agrees that it
will not institute against the Purchaser any proceeding of the type referred to
in Section 7.01(g) so long as there shall not have elapsed one year plus one day
since the later of (i) the Facility Termination Date and (ii) the date on which
all of the Transferred Receivables are either collected in full or become
Defaulted Receivables.
SECTION 9.06. Confidentiality. Unless otherwise required by
applicable law, each party hereto agrees to maintain the confidentiality of this
Agreement in communications with third parties and otherwise; provided that this
Agreement may be disclosed to (i) third parties to the extent such disclosure is
made pursuant to a written agreement of confidentiality in form and substance
reasonably satisfactory to the other party hereto, and (ii) such party's legal
counsel and auditors and the Purchaser's assignees, if they agree in each case
to hold it confidential.
SECTION 9.07. GOVERNING LAW. THIS AGREEMENT SHALL, IN
ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK, BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES THEREOF THAT
WOULD CALL FOR THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION, EXCEPT TO
THE EXTENT THAT, PURSUANT TO THE UCC OF THE STATE OF NEW YORK, THE PERFECTION
AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE PURCHASER'S OWNERSHIP OF
OR SECURITY INTEREST IN THE RECEIVABLES ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
34
SECTION 9.08. Third Party Beneficiary. Each of the parties
hereto hereby acknowledges that the Purchaser may assign all or any portion of
its rights under this Agreement and that such assignees may (except as otherwise
agreed to by such assignees) further assign their rights under this Agreement,
and the Seller hereby consents to any such assignments. All such assignees,
including parties to the Sale Agreement in the case of assignment to such
parties, shall be third party beneficiaries of, and shall be entitled to enforce
the Purchaser's rights and remedies under, this Agreement to the same extent as
if they were parties thereto, except to the extent specifically limited under
the terms of their assignment.
SECTION 9.09. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which when taken together shall constitute
one and the same agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
SELLER: LEXMARK INTERNATIONAL, INC.
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Executive Vice President and
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Chief Financial Officer
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Address: ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
Building 1, Dept. 857
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
PURCHASER: LEXMARK RECEIVABLES CORPORATION
By: /s/▇▇▇▇ ▇▇▇▇▇
--------------------------------
Title: Treasurer
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Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇