EXHIBIT 10.54
RECEIVABLES FUNDING AGREEMENT
Dated as of July 29, 2004
by and among
▇▇▇▇▇▇ FUNDING INC.,
as Borrower,
▇▇▇▇▇▇ MICRO INC.,
as Servicer,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Lender
TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS AND INTERPRETATION........................................................................ 1
Section 1.01. Definitions.............................................................................. 1
Section 1.02. Rules of Construction.................................................................... 1
ARTICLE II. AMOUNTS AND TERMS OF ADVANCES........................................................................ 2
Section 2.01. Advances................................................................................. 2
Section 2.02. Optional Changes in Commitment........................................................... 2
Section 2.03. Procedures for Making Advances........................................................... 3
Section 2.04. Pledge of Transferred Receivables and other Receivable Assets............................ 4
Section 2.05. Commitment Termination Date.............................................................. 4
Section 2.06. Interest; Charges........................................................................ 4
Section 2.07. Fees..................................................................................... 5
Section 2.08. Application of Funds in Collection Account; Time and Method of Payments.................. 6
Section 2.09. Capital Requirements; Additional Costs................................................... 9
Section 2.10. Breakage Costs........................................................................... 10
Section 2.11. Funding Excess........................................................................... 10
ARTICLE III. CONDITIONS PRECEDENT................................................................................ 11
Section 3.01. Conditions to Effectiveness of Agreement................................................. 11
Section 3.02. Conditions Precedent to All Advances..................................................... 12
ARTICLE IV. REPRESENTATIONS AND WARRANTIES....................................................................... 12
Section 4.01. Representations and Warranties of the Borrower........................................... 12
ARTICLE V. GENERAL COVENANTS OF THE BORROWER..................................................................... 17
Section 5.01. Affirmative Covenants of the Borrower.................................................... 17
Section 5.02. Reporting Requirements of the Borrower................................................... 18
Section 5.03. Negative Covenants of the Borrower....................................................... 18
ARTICLE VI. ACCOUNTS............................................................................................. 20
Section 6.01. Establishment of Accounts................................................................ 20
ARTICLE VII. SERVICER PROVISIONS................................................................................. 22
Section 7.01. Appointment of the Servicer.............................................................. 22
Section 7.02. Duties and Responsibilities of the Servicer.............................................. 23
Section 7.03. Collections on Receivables and other Receivable Assets................................... 23
Section 7.04. Authorization of the Servicer............................................................ 23
Section 7.05. Servicing Fees........................................................................... 24
Section 7.06. Representations and Warranties of the Servicer........................................... 24
Section 7.07. Covenants of the Servicer................................................................ 25
Section 7.08. Reporting Requirements of the Servicer................................................... 26
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ARTICLE VIII. GRANT OF SECURITY INTERESTS........................................................................ 26
Section 8.01. Borrower's Grant of Security Interest.................................................... 26
Section 8.02. Borrower's Agreements.................................................................... 28
Section 8.03. Delivery of Collateral................................................................... 28
Section 8.04. Borrower Remains Liable.................................................................. 28
Section 8.05. Covenants of the Borrower and the Servicer Regarding the Borrower Collateral............. 28
ARTICLE IX. TERMINATION EVENTS................................................................................... 30
Section 9.01. Termination Events....................................................................... 30
Section 9.02. Events of Servicer Termination........................................................... 33
ARTICLE X. REMEDIES.............................................................................................. 35
Section 10.01. Actions Upon Termination Event.......................................................... 35
Section 10.02. Exercise of Remedies.................................................................... 36
Section 10.03. Power of Attorney....................................................................... 36
Section 10.04. Continuing Security Interest............................................................ 36
ARTICLE XI. SUCCESSOR SERVICER PROVISIONS........................................................................ 37
Section 11.01. Servicer Not to Resign.................................................................. 37
Section 11.02. Appointment of the Successor Servicer................................................... 37
Section 11.03. Duties of the Servicer.................................................................. 37
Section 11.04. Effect of Termination or Resignation.................................................... 38
ARTICLE XII. INDEMNIFICATION..................................................................................... 38
Section 12.01. Indemnities by the Borrower............................................................. 38
Section 12.02. Indemnities by the Servicer............................................................. 39
ARTICLE XIII. [RESERVED]......................................................................................... 40
ARTICLE XIV. MISCELLANEOUS....................................................................................... 40
Section 14.01. Notices................................................................................. 40
Section 14.02. Binding Effect; Assignability........................................................... 40
Section 14.03. Termination; Survival of Borrower Obligations Upon Commitment Termination Date.......... 41
Section 14.04. Costs, Expenses and Taxes............................................................... 42
Section 14.05. Confidentiality......................................................................... 42
Section 14.06. Complete Agreement; Modification of Agreement........................................... 44
Section 14.07. Amendments and Waivers.................................................................. 44
Section 14.08. No Waiver; Remedies..................................................................... 44
Section 14.09. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL............................ 45
Section 14.10. Counterparts............................................................................ 46
Section 14.11. Severability............................................................................ 46
Section 14.12. Section Titles.......................................................................... 46
Section 14.13. Further Assurances...................................................................... 46
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EXHIBITS
Exhibit 2.01(b) Form of Revolving Note
Exhibit 2.02(a) Form of Commitment Reduction Notice
Exhibit 2.02(b) Form of Commitment Termination Notice
Exhibit 2.02(c) Form of Commitment Increase Notice
Exhibit 2.03(a) Form of Borrowing Request
Exhibit 2.03(c) Form of Repayment Notice
Exhibit 2.06(c) Notice of Conversion/Continuation
Exhibit 5.02(b) Form of Borrowing Base Certificate
Exhibit 10.03 Form of Power of Attorney
Exhibit A Credit and Collection Policy
Schedule 4.01(c) Jurisdiction of Organization; Organizational Identification
Numbers; Executive Offices; Collateral Locations
Schedule 4.01(e) Litigation
Schedule 4.01(o) Lockboxes and Lockbox Accounts
Schedule 5.03(b) Liens
Schedule 9.01(s) Financial Covenants
Schedule 14.01 Notice Addresses
Annex 5.02(a) Reporting Requirements of the Borrower (including Form of
Monthly Report)
Annex W Borrower Account
Annex X Definitions
Annex Y Schedule of Documents
Annex Z Special Concentration Percentages
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THIS RECEIVABLES FUNDING AGREEMENT (as amended, supplemented or otherwise
modified and in effect from time to time, the "Agreement") is entered into as of
July 29, 2004 by and among ▇▇▇▇▇▇ FUNDING INC., a Delaware corporation (the
"Borrower"), ▇▇▇▇▇▇ MICRO INC., a Delaware corporation, in its capacity as
servicer hereunder (in such capacity, the "Servicer"), and GENERAL ELECTRIC
CAPITAL CORPORATION, a Delaware corporation (the "Lender").
RECITALS
A. The Borrower is a corporation the sole shareholder of which is the
Parent.
B. The Borrower intends to purchase, or otherwise acquire by capital
contribution, Receivables and other Receivable Assets related thereto of the
Originators party to the Sale Agreement.
C. The Borrower intends to fund its purchases of the Receivables and
other Receivable Assets, in part, by borrowing Advances hereunder and pledging
all of its right, title and interest in and to the Receivables and other
Receivable Assets as security therefor, and, subject to the terms and conditions
hereof, the Lender intends to make such Advances, from time to time, as
described herein.
D. In order to effectuate the purposes of this Agreement, the Lender
desires to appoint ▇▇▇▇▇▇ Micro Inc. to service, administer and collect the
Receivables securing the Advances pursuant to this Agreement and ▇▇▇▇▇▇ Micro
Inc. is willing to act in such capacity as Servicer hereunder on the terms and
conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I.
DEFINITIONS AND INTERPRETATION
Section 1.01. Definitions. Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to them in Annex X.
Section 1.02. Rules of Construction. For purposes of this Agreement, the
rules of construction set forth in Annex X shall govern. All Appendices hereto,
or expressly identified to this Agreement, are incorporated herein by reference
and, taken together with this Agreement, shall constitute but a single
agreement.
ARTICLE II.
AMOUNTS AND TERMS OF ADVANCES
Section 2.01. Advances.
(a) From and after the Effective Date and until the Commitment
Termination Date and subject to the terms and conditions hereof, the Lender
agrees to make advances (each such advance hereunder, an "Advance") to the
Borrower from time to time. The Outstanding Principal Amount shall not at any
time exceed the Commitment. Under no circumstances shall the Lender make any
Advance if, after giving effect thereto, a Funding Excess would exist. The
Borrower may from time to time borrow, repay and reborrow Advances hereunder on
the terms and conditions set forth herein.
(b) The Borrower shall execute and deliver to the Lender a note to
evidence the Advances which may be made hereunder from time to time. Such note
shall be in the principal amount of the Commitment and substantially in the form
of Exhibit 2.01(b) (the "Revolving Note"). The Revolving Note shall represent
the obligation of the Borrower to pay the amount of the Lender's Commitment or,
if less, the aggregate unpaid principal amount of all outstanding Advances made
by the Lender to the Borrower, together with interest thereon as prescribed in
Section 2.06. The Outstanding Principal Amount of Advances and all other accrued
and unpaid Borrower Obligations shall be immediately due and payable in full in
immediately available funds on the Commitment Termination Date.
Section 2.02. Optional Changes in Commitment.
(a) So long as no Incipient Termination Event or Termination Event shall
have occurred and be continuing, the Borrower may, not more than twice during
each calendar year, reduce the Commitment permanently; provided, that (i) the
Borrower shall give ten Business Days' prior written notice of any such
reduction to the Lender substantially in the form of Exhibit 2.02(a) (each such
notice, a "Commitment Reduction Notice"), (ii) any partial reduction of the
Commitment shall be in a minimum amount of $5,000,000 or an integral multiple
thereof, and (iii) no such partial reduction shall reduce the Commitment below
the greater of (x) the Outstanding Principal Amount at such time and (y)
$50,000,000.
(b) The Borrower may, at any time, on at least 30 days' prior written
notice by the Borrower to the Lender, irrevocably terminate the Commitment;
provided, that (i) such notice of termination shall be substantially in the form
of Exhibit 2.02(b) (the "Commitment Termination Notice"), and (ii) the Borrower
shall reduce the Outstanding Principal Amount to zero and make all payments
required by Section 2.03(c) at the time and in the manner specified therein.
Upon such termination, the Borrower's right to request that the Lender make
Advances hereunder shall simultaneously terminate and the Commitment Termination
Date shall automatically occur.
(c) So long as no Incipient Termination Event or Termination Event shall
have occurred and be continuing, the Borrower may, at any time during the period
from and after the Effective Date to and including July 29, 2006, increase the
Commitment to an amount up to
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$600,000,000; provided, that (i) the Borrower shall give thirty (30) days' prior
written notice of any such increase to the Lender substantially in the form of
Exhibit 2.02(c) (the "Commitment Increase Notice") and (ii) prior to any such
increase being effective, the Borrower shall pay to the Lender a fee in an
amount equal to the product of (x) the amount by which the Commitment is being
increased and (y) the percentage specified as the Commitment Increase Fee
Percentage in the Fee Letter.
(d) Each written notice required to be delivered pursuant to Sections
2.02(a), (b) or (c) shall be irrevocable and shall be effective (i) on the day
of receipt if received by the Lender not later than 4:00 p.m. (California time)
on any Business Day and (ii) on the immediately succeeding Business Day if
received by the Lender after such time on such Business Day or if any such
notice is received on a day other than a Business Day (regardless of the time of
day such notice is received). Each such notice of reduction or increase shall
specify, respectively, the amount of the proposed reduction in, or the amount of
the proposed increase in, the Commitment.
Section 2.03. Procedures for Making Advances.
(a) Borrowing Requests. Each Advance shall be made upon notice by the
Borrower to the Lender in the manner provided herein. Any such notice must be
given in writing so that it is received no later than (1) 10:00 a.m. (California
time) on the Business Day of the proposed Advance Date set forth therein in the
case of an Index Rate Advance or (2) 10:00 a.m. (California time) on the date
which is three (3) Business Days prior to the proposed Advance Date set forth
therein in the case of a LIBOR Rate Advance. Each such notice (a "Borrowing
Request") shall (i) be substantially in the form of Exhibit 2.03(a), (ii) be
irrevocable and (iii) specify the amount of the requested Advance (which shall
be in a minimum amount of $250,000) and the proposed Advance Date (which shall
be a Business Day), and shall include such other information as may be required
by the Lender. If the Borrower requests LIBOR Rate Advances, it must comply with
Section 2.06(c).
(b) Advances; Payments. Subject to the terms hereof (including, without
limitation, the satisfaction of the conditions precedent set forth in Section
3.02), the Lender shall make available to the Borrower by deposit into the
Borrower Account on the Advance Date therefor, the lesser of (x) the amount of
the requested Advance and (y) the Funding Availability. All payments by the
Lender under this Section 2.03(b) shall be made without setoff, counterclaim or
deduction of any kind.
(c) Principal Repayments. The Borrower may at any time repay outstanding
Advances hereunder; provided that (i) the Borrower shall give written notice of
any such repayment to the Lender substantially in the form of Exhibit 2.03(c)
(each such notice, a "Repayment Notice"), (ii) each such notice shall be
irrevocable, (iii) each such notice shall specify the amount of the requested
repayment and the proposed date of such repayment (which shall be a Business
Day) and (iv) any such repayment must be accompanied by payment of (A) all
interest accrued and unpaid on the portion of the Outstanding Principal Amount
being repaid through but excluding the date of such repayment and (B) any
amounts required to be paid in accordance with Section 2.10, if any. Any such
notice of repayment must be received by the
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Lender no later than 10:00 a.m. (California time) on the date of the proposed
repayment; provided, further, that the foregoing requirements shall not apply to
repayment of the outstanding principal amount of Advances as a result of the
application of amounts on deposit in the Collection Account pursuant to Section
2.08.
Section 2.04. Pledge of Transferred Receivables and other Receivable
Assets. The Borrower shall indicate in its master database of Receivables that
the Transferred Receivables have been pledged hereunder and that the Lender has
a lien on and security interest in all such Transferred Receivables. The
Borrower and the Servicer shall hold all Contracts and other documents relating
to such Transferred Receivables in trust for the benefit of the Lender. The
Borrower and the Servicer hereby acknowledge that their retention and possession
of such Contracts and documents shall at all times be at the sole discretion of
the Lender and in a custodial capacity for the Lender's benefit only.
Section 2.05. Commitment Termination Date. Notwithstanding anything to the
contrary set forth herein, the Lender shall not have any obligation to make any
Advances from and after the Commitment Termination Date.
Section 2.06. Interest; Charges.
(a) The Borrower shall pay interest to the Lender, with respect to each
Advance made or maintained by it, in arrears on each applicable Interest Payment
Date, (i) for each LIBOR Rate Advance, at the applicable LIBOR Rate for the
relevant LIBOR Period then ending, and (ii) for all of the Index Rate Advances
outstanding from time to time, at the applicable Index Rate as in effect from
time to time during the immediately preceding calendar month, based on the
aggregate outstanding amount of Index Rate Advances outstanding from time to
time during such month. Interest for each LIBOR Rate Advance or Index Rate
Advance shall be calculated based upon actual days elapsed during the related
LIBOR Period, with respect to each LIBOR Rate Advance, or during the applicable
calendar month, with respect to each Index Rate Advance, for a 360 day year
based upon actual days elapsed since the last Interest Payment Date. Anything
herein to the contrary notwithstanding, the Borrower and the Lender hereby agree
that until such time as the parties hereto agree otherwise, each Advance made
hereunder shall be an Index Rate Advance.
(b) So long as any Termination Event shall have occurred and be
continuing, the interest rates applicable to each Advance and any other unpaid
Borrower Obligation hereunder shall be increased by two percent (2.0%) per annum
(such increased rate, the "Default Rate"), and all outstanding Borrower
Obligations shall bear interest at the applicable Default Rate from the date of
such Termination Event until such Termination Event is waived or cured.
(c) So long as no Incipient Termination Event or Termination Event shall
have occurred and be continuing, and subject to the additional conditions
precedent set forth in Section 3.02, the Borrower shall have the option to (i)
request that any Advance be made as an Index Rate Advance or as a LIBOR Rate
Advance, (ii) convert at any time all or any part of the outstanding Advances
from Index Rate Advances to LIBOR Rate Advances, (iii) convert at any time all
or any part of the outstanding LIBOR Rate Advances to Index Rate Advances,
subject to
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payment of Breakage Costs in accordance with Section 2.10 if such conversion is
made prior to the expiration of the LIBOR Period applicable thereto, or (iv)
continue all or any portion of the LIBOR Rate Advances upon the expiration of
the applicable LIBOR Period, in which case the succeeding LIBOR Period of those
continued LIBOR Rate Advances shall commence on the last day of the LIBOR Period
of the LIBOR Rate Advances to be continued. Any Advances to be made or continued
as, or converted into, LIBOR Rate Advances must be in an aggregate amount equal
to $1,000,000 or an integral multiple of $500,000 in excess of $1,000,000. Any
such election must be made by 10:00 a.m. (California time) on (A) the third
(3rd) Business Day prior to (1) the date of any proposed LIBOR Rate Advances,
(2) the end of each LIBOR Period with respect to any LIBOR Rate Advances to be
continued as such, or (3) the date on which Borrower wishes to convert any Index
Rate Advances to LIBOR Rate Advances for a LIBOR Period designated by the
Borrower in such election, or (B) the Business Day of any proposed Advances
which are to bear interest at the Index Rate. If no election is received with
respect to any LIBOR Rate Advances by 10:00 a.m. (California time) on the third
(3rd) Business Day prior to the end of the LIBOR Period with respect thereto (or
if an Incipient Termination Event or a Termination Event shall have occurred and
be continuing or the additional conditions precedent set forth in Section 3.02
shall not have been satisfied), those LIBOR Rate Advances shall be converted to
Index Rate Advances at the end of the applicable LIBOR Period. The Borrower must
make each such election by notice to the Lender in writing, by telecopy or
overnight courier. In the case of any conversion or continuation, such election
must be made pursuant to a written notice (a "Notice of
Conversion/Continuation") in the form of Exhibit 2.06(c).
(d) The Lender is authorized to, and at its sole election may, charge to
the Borrower as Advances and cause to be paid all Fees, expenses, charges,
costs, interest and principal, other than principal of the Advances, owing by
the Borrower under this Agreement or any of the other Related Documents if and
to the extent the Borrower fails to pay any such amounts as and when due, and
any charges so made shall constitute part of the Outstanding Principal Amount
hereunder even if such charges would cause the aggregate balance of the
Outstanding Principal Amount to exceed the Borrowing Base.
Section 2.07. Fees.
(a) On the Effective Date, the Borrower shall pay to the Lender the fees
set forth in the Fee Letter that are payable on the Effective Date.
(b) From and after the Effective Date, as additional compensation for
the Lender, the Borrower agrees to pay to the Lender, monthly in arrears, on the
first Business Day of each month prior to the Commitment Termination Date and on
the Commitment Termination Date, the Unused Commitment Fee.
(c) On each Settlement Date, and with respect to the immediately
preceding Settlement Period, the Borrower shall pay to the Servicer or to the
Successor Servicer, as applicable, the aggregate Servicing Fee for each day
during the relevant Settlement Period or the Successor Servicing Fees and
Expenses, respectively, in each case to the extent of available funds therefor.
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Section 2.08. Application of Funds in Collection Account; Time and Method
of Payments.
(a) Each Index Rate Advance shall mature, and be payable, on the earlier
of (i) the date funds are allocated to such Index Rate Advance pursuant to
clause (iii) of the following subsection (b) (and in such case only to the
extent of the funds so allocated), and (ii) the Commitment Termination Date (in
which case such Index Rate Advance shall be payable in full). Each LIBOR Rate
Advance shall mature, and be payable in full, on the earliest of (1) the date on
which funds are allocated therefor pursuant to clause (iv) of the following
subsection (b), (2) the last day of the LIBOR Period with respect thereto
(unless such LIBOR Rate Advance is converted or continued in compliance with the
terms hereof) and (3) the Commitment Termination Date (in which case such LIBOR
Rate Advance shall be payable in full).
(b) On each Business Day, the Lender shall allocate amounts on deposit
in the Collection Account on such day as follows:
(i) first, to the extent then due and payable, to the payment of
all Fees accrued and unpaid through such date and all unreimbursed
expenses of the Lender which are reimbursable pursuant to the terms
hereof, including, without limitation, the expenses of the Lender
reimbursable under Section 14.04;
(ii) second, if such Business Day is an Interest Payment Date for
any Advances, to the payment of interest accrued through such date with
respect to such Advances;
(iii) third, to the payment of the outstanding principal balance of
the Advances which constitute Index Rate Advances;
(iv) fourth, to the payment of the outstanding principal balance of
Advances which constitute LIBOR Rate Advances together with amounts
payable with respect thereto under Section 2.10; and
(v) fifth, to the extent then due and payable, to the payment of
all other obligations of the Borrower accrued and unpaid hereunder.
On any such Business Day on which funds on deposit in the Collection Account are
allocated pursuant to the foregoing, the Lender shall withdraw the funds so
allocated and pay the same to the parties entitled thereto. To the extent that
on any Business Day funds remain in the Collection Account unallocated after
application of the foregoing clauses (i) through (v), such remaining funds shall
be remitted to the Borrower Account.
(c) On each Interest Payment Date with respect to Index Rate Advances,
the Lender shall withdraw funds allocated on such Interest Payment Date pursuant
to clause (ii) of the foregoing subsection (b), and apply the same in payment of
accrued and unpaid interest on the Index Rate Advances. On each Interest Payment
Date with respect to LIBOR Rate Advances, the Lender shall withdraw funds
allocated on such Interest Payment Date pursuant to clause (ii) of the foregoing
subsection (b), and apply the same in payment of accrued and unpaid
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interest on such LIBOR Rate Advances. On each Business Day on which any other
amounts are payable hereunder or under any other Related Document, the Lender
shall withdraw funds allocated on such Business Day pursuant to clause (i) or
clause (v) of the foregoing subsection (b), and pay the same, pro rata, to such
Persons as may be entitled to receive such amounts pursuant to the terms hereof
or of any other Related Document. To the extent that amounts on deposit in the
Collection Account on any day are insufficient to pay amounts due on such day in
respect of the matured portion of any Advances or any interest, Fees or any
other amounts due and payable by the Borrower hereunder, the Borrower shall pay,
upon notice from the Lender received prior to 10:00 a.m. (California time), the
amount of such insufficiency to the Lender in Dollars, in immediately available
funds (for the account of the Lender or the applicable Affected Parties or
Indemnified Persons) not later than 1:00 p.m. (California time) on such day. Any
such payment made on such date but after such time shall be deemed to have been
made on, and interest shall continue to accrue and be payable thereon at the
LIBOR Rate (in the case of LIBOR Rate Advances) or the Index Rate (in all other
cases) until, the next succeeding Business Day.
(d) The Borrower hereby irrevocably waives the right to direct the
application of any and all payments received from or on behalf of the Borrower,
and the Borrower hereby irrevocably agrees that any and all such payments shall
be applied by the Lender in accordance with this Section 2.08.
(e) All payments of principal of the Advances and all payments of
interest, Fees and other amounts payable by the Borrower hereunder shall be made
in Dollars, in immediately available funds. If any such payment becomes due on a
day other than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period)
and interest thereon at the LIBOR Rate (in the case of LIBOR Rate Advances) or
Index Rate (in all other cases) shall be payable during such extension. Payments
received prior to 12:00 Noon (California time) on any Business Day shall be
deemed to have been received on such Business Day. Payments received after 12:00
Noon (California time) on any Business Day or on a day that is not a Business
Day shall be deemed to have been received on the following Business Day.
(f) All payments made by the Borrower under this Agreement shall be made
free and clear of, and without deduction or withholding for or on account of,
any present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority with respect to
any payment by the Borrower ("Taxes"), excluding Taxes imposed (i) on the net
income or franchise taxes imposed on the net income (or in lieu of net income)
of the Lender by (A) the United States or any political subdivision or taxing
authority thereof or therein, or (B) any jurisdiction under the laws of which
the Lender is organized or in which its lending office is located, managed or
controlled or in which its principal office is located or any political
subdivision or taxing authority thereof or therein or (ii) as a result of a
present or former connection between the Lender and the governmental authority
imposing such tax other than as a result of this Agreement or any transaction
hereunder (the Taxes referred to in the foregoing clauses (i) and (ii)
individually or collectively being referred to as "Excluded Taxes" and any and
all other Taxes, collectively or individually, being referred to
7
as "Non-Excluded Taxes"). If any such Non-Excluded Taxes are required to be
withheld from any amounts payable to the Lender hereunder, the Borrower shall
pay additional amounts to the Lender to the extent necessary to yield to the
Lender (after giving effect to all deductions and withholdings in respect of
Non-Excluded Taxes, including Non-Excluded Taxes upon or in respect of such
additional amounts) interest or any such other amounts payable hereunder at the
rates or in the amounts otherwise specified in this Agreement. Whenever any
Non-Excluded Taxes are payable by the Borrower, as promptly as possible
thereafter the Borrower shall send to the Lender a certified copy of any
original official receipt received by the Borrower showing payment thereof or
any other proof reasonably acceptable to the Lender. In addition, the Borrower
agrees to pay any and all present or future stamp or documentary taxes and any
other excise or property taxes or charges or similar levies that arise from any
payment made under this Agreement or from the execution or delivery of, or
otherwise with respect to, this Agreement (collectively, "Other Taxes"). The
Borrower agrees to indemnify the Lender for the full amount of any Non-Excluded
Taxes and Other Taxes paid by the Lender and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto other than any
penalties, interest or expense to the extent arising from the failure of the
Lender to pay such Non-Excluded Taxes or other Taxes on a timely basis. If the
Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing
authority or fails to remit to the Lender the required receipts or any other
proof reasonably acceptable to the Lender, the Borrower shall indemnify the
Lender for any incremental taxes, interest or penalties that may become payable
by the Lender as a result of any such failure. If the Lender shall become aware
that it is entitled to receive a refund or other tax credit or benefit in
respect of any Non-Excluded Taxes, it shall promptly notify the Borrower thereof
and, in the case of a refund, shall within 30 days after receipt of a request by
the Borrower, apply for such refund at the Borrower's expense. If the Lender
receives a refund or the benefit of a refund in respect of any Non-Excluded
Taxes for which the Borrower has made a payment hereunder, it shall promptly
notify the Borrower thereof and shall promptly repay such refund or the amount
of the benefit derived from such refund, as the case may be, to the Borrower
without interest and net of any expenses incurred, except to the extent interest
shall have explicitly accompanied such refund; provided that the Borrower, upon
the request of the Lender, agrees to return the amount paid in respect of such
refund (plus any penalties that are not attributable to the negligence or
misconduct of the Lender, interest or other charges required to be paid) to the
Lender in the event the Lender is required to repay such amount to the relevant
taxing authority. If the Borrower is obligated to pay any Non-Excluded Taxes or
Other Taxes pursuant to this Section 2.08(f), then the Lender shall use
reasonable efforts (which shall not require the Lender to incur an unreimbursed
loss or unreimbursed cost or expense or otherwise take any action inconsistent
with its internal policies or legal or regulatory restrictions or suffer any
disadvantage or burden reasonably deemed by it to be significant) to (A) file
any certificate or document reasonably requested in writing by the Borrower or
(B) assign its rights and delegate and transfer its obligations hereunder to
another of its offices, branches or affiliates, if such filing or assignment
would reduce or eliminate amounts payable pursuant to this Section 2.08(f) in
the future. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by the Lender in connection with any such filing or assignment,
delegation and transfer. This Section 2.08(f) shall survive the termination of
this Agreement and the repayment of all Borrower Obligations.
8
Section 2.09. Capital Requirements; Additional Costs.
(a) If the Lender shall have determined that the adoption after the date
hereof of any law, treaty, governmental rule, regulation, guideline or order
regarding capital adequacy, reserve requirements or similar requirements or
compliance by the Lender with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not having
the force of law) from any central bank or other Governmental Authority
increases or would have the effect of increasing the amount of capital, reserves
or other funds required to be maintained by the Lender against commitments made
by it under this Agreement or any other Related Document and thereby reducing
the rate of return on its capital as a consequence of its commitments hereunder
or thereunder by an amount deemed by the Lender in its reasonable judgment to be
material, then the Borrower shall from time to time upon demand by the Lender
pay to the Lender additional amounts sufficient to compensate the Lender for
such reduction together with interest thereon from the date of any such demand
until payment in full at the applicable Index Rate. A certificate as to the
amount of such reduction and showing the basis of the computation thereof
submitted by the Lender to the Borrower shall be final, binding and conclusive
on the parties hereto (absent manifest error) for all purposes.
(b) If, due to any Regulatory Change, there shall be any increase in the
cost to the Lender of agreeing to make or making, funding or maintaining any
commitment hereunder or under any other Related Document, including with respect
to any Advances or Outstanding Principal Amount, or any reduction in any amount
receivable by the Lender hereunder or thereunder, including with respect to any
Advances or Outstanding Principal Amount (any such increase in cost or reduction
in amounts receivable are hereinafter referred to as "Additional Costs"), in
each case by an amount deemed by the Lender in its reasonable judgment to be
material, then the Borrower shall, from time to time upon demand by the Lender,
pay to the Lender additional amounts sufficient to compensate the Lender for
such Additional Costs together with interest thereon from the date demanded
until payment in full thereof at the applicable Index Rate. The Lender agrees
that, as promptly as practicable after it becomes aware of any circumstance
referred to above that would result in any such Additional Costs, it shall, to
the extent not inconsistent with its internal policies of general application,
use reasonable commercial efforts to minimize costs and expenses incurred by it
and payable to it by the Borrower pursuant to this Section 2.09(b).
(c) Determinations by the Lender for purposes of this Section 2.09 of
the effect of any Regulatory Change on its costs of making, funding or
maintaining any commitments hereunder or under any other Related Document or on
amounts payable to it hereunder or thereunder or of the additional amounts
required to compensate it in respect of any Additional Costs shall be set forth
in a written notice to the Borrower in reasonable detail and shall be calculated
in the same way as comparable claims with respect to similarly situated sellers
or borrowers of the Lender and shall be final, binding and conclusive on the
Borrower (absent manifest error) for all purposes. The Borrower shall not be
required to compensate the Lender pursuant to this Section 2.09 for any
increased costs, reduced returns or other losses incurred more that 360 days
prior to the date that the Lender notifies the Borrower of its intention to
claim compensation therefor.
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(d) Notwithstanding anything to the contrary contained herein, if the
introduction of or any change in any law or regulation (or any change in the
interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for the Lender to agree
to make or to make or to continue to fund or maintain any LIBOR Rate Advance,
then, unless the Lender is able to make or to continue to fund or to maintain
such LIBOR Rate Advance at another branch or office of the Lender without, in
its good faith opinion, adversely affecting it or its Advances or the income
obtained therefrom, on notice thereof and demand therefor by the Lender to the
Borrower, (i) the obligation of the Lender to agree to make or to make or to
continue to fund or maintain LIBOR Rate Advances shall terminate and (ii)
Borrower shall forthwith prepay in full all outstanding LIBOR Rate Advances
owing to the Lender, together with interest accrued thereon, unless Borrower,
within five (5) Business Days after the delivery of such notice and demand,
converts all such LIBOR Rate Advances into Index Rate Advances.
Section 2.10. Breakage Costs. To induce the Lender to provide the LIBOR
Rate option on the terms provided herein, if (i) any LIBOR Rate Advances are
repaid in whole or in part prior to the last day of any applicable LIBOR Period
(whether that repayment is made pursuant to any other provision of this
Agreement or any other Related Document or is the result of acceleration, by
operation of law or otherwise); (ii) the Borrower shall default in making
payment when due of the principal amount of or interest on any LIBOR Rate
Advance; (iii) the Borrower shall default in making any borrowing of, conversion
into or continuation of LIBOR Rate Advances after the Borrower has given notice
requesting the same in accordance herewith (including any failure to satisfy
conditions precedent to the making of, or conversion or continuation of, any
LIBOR Rate Advances); or (iv) the Borrower shall fail to make any prepayment of
a LIBOR Rate Advance after the Borrower has given a notice thereof in accordance
herewith; then, in any such case, the Borrower shall indemnify and hold harmless
the Lender from and against all losses, costs and expenses resulting from or
arising from any of the foregoing (any such loss, cost or expense, "Breakage
Costs"). Such indemnification shall include any loss (including loss of margin)
or expense arising from the reemployment of funds obtained by it or from fees
payable to terminate deposits from which such funds were obtained (if any). For
the purpose of calculating amounts payable to the Lender under this subsection,
the Lender shall be deemed to have actually funded its relevant LIBOR Rate
Advance through the purchase of a deposit bearing interest at the LIBOR Rate in
an amount equal to the amount of that LIBOR Rate Advance and having a maturity
comparable to the relevant LIBOR Period; provided, however, that the Lender may
fund LIBOR Rate Advances in any manner it sees fit, and the foregoing assumption
shall be utilized only for the calculation of amounts payable under this
subsection. This covenant shall survive the termination of this Agreement and
the payment of the Revolving Notes and all other amounts payable hereunder. The
determination by the Lender of the amount of any such loss or expense shall be
set forth in a written notice to the Borrower in reasonable detail and shall be
final, binding and conclusive on the Borrower (absent manifest error) for all
purposes.
Section 2.11. Funding Excess. On each Business Day during the Revolving
Period, the Lender shall notify the Borrower and the Servicer of the existence
of any Funding Excess on such day, and the Borrower shall deposit the amount of
such Funding Excess in the
10
Collection Account by 11:00 a.m. (California time) on the immediately succeeding
Business Day.
ARTICLE III.
CONDITIONS PRECEDENT
Section 3.01. Conditions to Effectiveness of Agreement. This Agreement
shall not be effective until the date on which each of the following conditions
have been satisfied, in the sole discretion of, or waived in writing by, the
Lender:
(a) Funding Agreement; Other Related Documents. This Agreement and the
Revolving Note shall have been duly executed by, and delivered to, the parties
hereto and the Lender shall have received such other documents, instruments,
agreements and legal opinions as it shall reasonably request in connection with
the transactions contemplated by this Agreement, including all those listed in
the Schedule of Documents, each in form and substance satisfactory to the
Lender.
(b) Governmental Approvals. The Lender shall have received (i)
satisfactory evidence that the Borrower, the Servicer and the Originators have
obtained all required consents and approvals of all Persons, including all
requisite Governmental Authorities, to the execution, delivery and performance
of this Agreement and the other Related Documents and the consummation of the
transactions contemplated hereby or thereby or (ii) an Officer's Certificate
from each of the Borrower and the Servicer in form and substance satisfactory to
the Lender affirming that no such consents or approvals are required.
(c) Payment of Fees. The Borrower shall have paid all fees required to
be paid by it on the Effective Date, including all fees required hereunder and
under the Fee Letter, and shall have reimbursed the Lender for all reasonable
fees, costs and expenses of closing the transactions contemplated hereunder and
under the other Related Documents, including the Lender's legal expenses, and
other document preparation costs.
(d) Representations and Warranties. Each representation and warranty by
the Borrower and the Servicer contained herein shall be true and correct in all
material respects as of the Effective Date, except to the extent that such
representation or warranty expressly relates solely to an earlier date.
(e) No Termination Event. No Incipient Termination Event or Termination
Event hereunder or any "Event of Default" or "Default" (each as defined in the
Credit Agreement) under the Credit Agreement shall have occurred and be
continuing or would result after giving effect to any of the transactions
contemplated to occur on the Effective Date.
(f) Existing Securitization. Evidence satisfactory to the Lender that
the Existing Securitization has been paid in full and all liens associated
therewith have been released.
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Section 3.02. Conditions Precedent to All Advances. The Lender shall not
be obligated to make any Advances hereunder (including the initial Advances) on
any date if, as of the date thereof:
(a) any representation or warranty of the Borrower or the Servicer
contained herein shall be untrue or incorrect in any material respect as of such
date, either before or after giving effect to the Advances to be made on such
date and to the application of the proceeds therefrom, except to the extent that
such representation or warranty expressly relates to an earlier date;
(b) any event shall have occurred, or would result from such Advances or
from the application of the proceeds therefrom, that constitutes an Incipient
Termination Event or a Termination Event;
(c) the Borrower shall not be in compliance in any material respect with
any of its covenants or other agreements set forth herein;
(d) the Commitment Termination Date shall have occurred;
(e) either before or after giving effect to such Advance and to the
application of the proceeds therefrom, a Funding Excess would exist; or
(f) the Borrower or the Servicer shall have failed to deliver, on or
prior to such date, any Monthly Report or Borrowing Base Certificate required to
be delivered in accordance with Section 5.02 hereof.
The delivery by the Borrower of a Borrowing Request and the acceptance by the
Borrower of the funds from the related Advance on any Advance Date shall be
deemed to constitute, as of any such Advance Date, a representation and warranty
by the Borrower that the conditions in this Section 3.02 have been satisfied.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the Borrower. To induce
the Lender to make Advances from time to time, the Borrower makes the following
representations and warranties to the Lender on the Effective Date and each
Advance Date, each and all of which shall survive the execution and delivery of
this Agreement:
(a) Existence; Powers. The Borrower (i) is a corporation duly formed,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and is a "registered organization" as defined in the UCC of such
jurisdiction; (ii) is duly qualified to conduct business and is in good standing
in each other jurisdiction where its ownership or lease of property or the
conduct of its business requires such qualification, except where the failure to
so qualify could not reasonably be expected to result in a Borrower Material
Adverse Effect; and
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(iii) has the requisite corporate power and authority to own its properties and
assets and to conduct its business as now conducted and as proposed to be
conducted.
(b) Governmental Approvals. No action, consent or approval of,
registration or filing with or any other action by any Governmental Authority is
or will be required in connection with this Agreement or the other Related
Documents, except for (i) the filing of appropriate UCC financing statements and
(ii) such as have been made or obtained and are in full force and effect.
(c) Executive Offices; Collateral Locations; Corporate or Other Names.
The jurisdiction of organization and the organizational identification number of
the Borrower and current location of the Borrower's chief executive office,
principal place of business and the offices at which the Borrower keeps its
records concerning the Borrower Collateral (including originals of the Borrower
Assigned Agreements) are set forth in Schedule 4.01(c) and none of such
locations has changed within the past four months. The Borrower has no
fictitious or trade names.
(d) Power, Authorization, Enforceable Obligations. The execution,
delivery and performance by the Borrower of this Agreement and the other Related
Documents to which it is a party, and the creation and perfection of all Liens
and ownership interests provided for herein and therein: (i) are within the
Borrower's corporate power; (ii) have been duly authorized by all necessary or
proper corporate actions; (iii) do not contravene any provision of the
Borrower's certificate of incorporation or bylaws; (iv) do not violate any law
or regulation, or any order or decree of any court or Governmental Authority, in
each case applicable to or binding upon the Borrower or any of its property or
to which the Borrower or any of its property is subject; (v) do not conflict
with or result in the breach or termination of, constitute a default under or
accelerate or permit the acceleration of any performance required by, any
indenture, mortgage, deed of trust, lease, agreement or other instrument to
which the Borrower is a party or by which the Borrower or any of the property of
the Borrower is bound; and (vi) do not result in the creation or imposition of
any Adverse Claim upon any of the property of the Borrower or any Originator. On
or prior to the Effective Date, each of the Related Documents to which the
Borrower is a party shall have been duly executed and delivered by the Borrower
and each such Related Document shall then constitute a legal, valid and binding
obligation of the Borrower enforceable against it in accordance with its terms,
subject (x) to applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting the enforcement of creditors' rights generally from
time to time in effect and (y) to general principles of equity (whether
enforcement is sought by a proceeding in equity or at law).
(e) No Litigation. No Litigation is now pending or, to the knowledge of
the Borrower, threatened against the Borrower that (i) challenges the Borrower's
right or power to enter into or perform any of its obligations under the Related
Documents to which it is a party, or the validity or enforceability of any
Related Document or any action taken thereunder, (ii) seeks to prevent the
transfer, sale, pledge or contribution of any Receivable or other Receivable
Assets or the consummation of any of the transactions contemplated under this
Agreement or the other Related Documents, or (iii) except as set forth on
Schedule 4.01(e), that, if adversely determined, could reasonably be expected to
have a Borrower Material Adverse Effect.
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(f) Solvency. After giving effect to the Advances to be made on such
date and to the application of the proceeds therefrom, the Borrower is and will
be Solvent.
(g) Material Adverse Effect. Since the end of the most recent fiscal
year of the Borrower, no event has occurred with respect to the Borrower that,
alone or together with other events, has had a Borrower Material Adverse Effect.
(h) Liens. None of the Transferred Receivables or any other Receivable
Assets are subject to any Adverse Claims.
(i) Ventures and Subsidiaries; Outstanding Indebtedness. The Borrower
has no Subsidiaries, and is not engaged in any joint venture or partnership with
any other Person. After giving effect to (x) the execution and delivery of this
Agreement and the other Related Documents and (y) termination and payment in
full of the Existing Securitization, the Borrower has no Debt other than (A)
Debt incurred pursuant to this Agreement and the other Related Documents
(including the Subordinated Note), (B) immaterial amounts due and payable in the
ordinary course of business of a special purpose company which shall not exceed
$10,000 in the aggregate at any time outstanding and (C) any other Debt that is
not prohibited by Section 5.03(h). Other than the restrictions created by the
Related Documents, the Borrower is not subject to any corporate restriction that
could reasonably be expected to have a Borrower Material Adverse Effect.
(j) Taxes. The Borrower has filed or caused to be filed all material tax
returns (Federal, state or local) which it reasonably believes are required to
have been filed by it and has paid or caused to be paid or made adequate
provision for all taxes due and payable by it and all assessments received by it
except to the extent that any failure to file or nonpayment (i) is being
contested in good faith or (ii) could not reasonably be expected to result in a
Borrower Material Adverse Effect.
(k) Full Disclosure. With respect to each Receivable, all information
furnished by or on behalf of the Borrower to the Lender relating to (i) the name
of the related Obligor and (ii) the aggregate Outstanding Balance of such
Receivable, is true and correct (except for any errors or omissions that do not
result in material impairment of the interests, rights or remedies of the Lender
with respect to any Receivable).
(l) Margin Regulations. The Borrower is not engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of "purchasing" or "carrying" any "margin security," as such terms are
defined in Regulation U of the Federal Reserve Board as now and from time to
time hereafter in effect. No part of the proceeds of the Advances made hereunder
will be used, whether directly or indirectly, and whether immediately,
incidentally or ultimately, for any purpose that entails a violation of, or that
is inconsistent with, the provisions of the Regulations of the Federal Reserve
Board, including Regulation U or Regulation X.
(m) Government Regulation. The Borrower is not an "investment company",
as such term is defined in the Investment Company Act.
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(n) Nonconsolidation. (i) The Borrower has not entered into any
agreement other than this Agreement, the other Related Documents to which it is
a party, the agreements relating to the Existing Securitization to which it is a
party, any other agreements or instruments that, in the aggregate, neither
contain payment obligations or other liabilities on the part of the Borrower in
excess of $100,000 nor would upon default result in a Borrower Material Adverse
Effect, and, with the prior written consent of the Lender, any other agreement
necessary to carry out more effectively the provisions and purposes hereof or
thereof;
(ii) the Borrower's business is managed solely by its own officers
and directors, each of whom when acting for the Borrower shall be acting
solely in his or her capacity as an officer or director of the Borrower
and not as an officer, director, employee or agent of any member of the
Parent Group;
(iii) the Borrower shall compensate all employees, consultants and
agents directly or indirectly through reimbursement of the Parent, from
the Borrower's bank accounts, for services provided to the Borrower by
such employees, consultants and agents and, to the extent any employee,
consultant or agent of the Borrower is also an employee, consultant or
agent of such member of the Parent Group, on a basis which reflects the
respective services rendered to the Borrower and such member of the Parent
Group and in accordance with the terms of the Administrative Services
Agreement;
(iv) the Borrower shall pay its own incidental administrative costs
and expenses not covered under the terms of the Administrative Services
Agreement from its own funds, and shall allocate all other shared overhead
expenses (including, without limitation, telephone and other utility
charges, the services of shared employees, consultants and agents, and
reasonable legal and auditing expenses) which are not reflected in the
Servicing Fee, and other items of cost and expense shared between the
Borrower and the Parent pursuant to the terms of the Administrative
Services Agreement, on the basis of actual use to the extent practicable
and, to the extent such allocation is not practicable, on a basis
reasonably related to actual use or the value of services rendered;
(v) the Borrower maintains financial statements, records and books
of account separate from that of each member of the Parent Group;
(vi) the financial statements and books and records of the Borrower
reflect the separate existence of the Borrower;
(vii) (A) the Borrower maintains its assets separately from the
assets of each member of the Parent Group (including through the
maintenance of separate bank accounts and except for any Records to the
extent necessary to assist the Servicer in connection with the servicing
of the Transferred Receivables) and (B) except as contemplated by the
Administrative Services Agreement, the Borrower's funds (including all
money, checks and other cash proceeds) and assets, and records relating
thereto, have not been and are not commingled with those of any member of
the Parent Group;
15
(viii) except as otherwise expressly permitted hereunder, under the
other Related Documents and under the Borrower's organizational documents,
no member of the Parent Group (A) pays the Borrower's expenses, (B)
guarantees the Borrower's obligations, or (C) advances funds to the
Borrower for the payment of expenses or otherwise;
(ix) all business correspondence and other communications of the
Borrower are conducted in the Borrower's own name and on its own
stationery;
(x) Borrower shall maintain separate office space from the offices
of any member of the Parent Group (which office space may be located at
the same address as any member of the Parent Group) and identify such
office by a sign in its own name; and
(xi) the Borrower maintains at least one independent director who
(A) is not a Stockholder, director, officer, employee or associate, or any
immediate family of the foregoing, of any member of the Parent Group
(other than a director of the Borrower) and either (B) has (1) prior
experience as an independent director for an entity whose organizational
documents required the unanimous consent of all independent directors
thereof before such corporation could consent to the institution of
bankruptcy or insolvency proceedings against it or could file a petition
seeking relief under any applicable federal or state law relating to
bankruptcy and (2) at least three years of employment experience with one
or more entities that provide, in the ordinary course of their respective
businesses, advisory, management, independent director services or
placement services to issuers of securitization or structured finance
instruments, agreements or securities, or (C) is otherwise acceptable to
the Lender.
(o) Lockboxes and Lockbox Accounts. Schedule 4.01(o) lists all banks and
other financial institutions at which the Borrower maintains any Lockboxes or
Lockbox Accounts, and such schedule correctly identifies the name, address and
telephone number of each depository, the name in which each Lockbox Account is
held, and the complete account number therefor. The Borrower (or the Servicer on
its behalf) has delivered to the Lender a fully executed agreement pursuant to
which each Lockbox Account Bank (with respect to each Lockbox Account) has
agreed to comply with all instructions originated by the Lender directing the
disposition of funds in such Lockbox Account without further consent by the
Borrower, the Servicer or any Originator. No Lockbox Account is in the name of
any person other than the Borrower or the Lender, and the Borrower has not
consented to any Lockbox Account Bank following the instructions of any Person
other than the Lender.
(p) Transferred Receivables and other Receivable Assets.
(i) Transfers. Each Transferred Receivable and other Receivable
Assets was purchased by or contributed to the Borrower on the relevant
Transfer Date pursuant to the Sale Agreement.
(ii) Eligibility. Each Transferred Receivable designated as an
Eligible Receivable in each Borrowing Base Certificate or Monthly Report,
as the case may be,
16
constitutes an Eligible Receivable as of the date specified in such
Borrowing Base Certificate or Monthly Report, as the case may be.
(q) Assignment of Interest in Related Documents. The Borrower's
interests in, to and under the Sale Agreement and the Parent Agreement have been
assigned by the Borrower to the Lender.
(r) Representations and Warranties in Other Related Documents. Each of
the representations and warranties of the Borrower contained in the Related
Documents (other than this Agreement) is true and correct in all respects and
the Borrower hereby makes each such representation and warranty to, and for the
benefit of, the Lender as if the same were set forth in full herein.
ARTICLE V.
GENERAL COVENANTS OF THE BORROWER
Section 5.01. Affirmative Covenants of the Borrower. The Borrower
covenants and agrees that from and after the Effective Date and until the
Termination Date:
(a) Compliance with Agreements and Applicable Laws. The Borrower shall
(i) perform each of its obligations under this Agreement and the other Related
Documents and (ii) comply with all federal, state and local laws and regulations
applicable to it and the Transferred Receivables and other Receivable Assets,
except where the failure to so perform (in the case of clause (i)) or to so
comply (in the case of clause (ii)) would not reasonably be expected to have a
Borrower Material Adverse Effect.
(b) Maintenance of Existence and Conduct of Business. The Borrower
shall: (i) do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence and its rights and franchises in
its jurisdiction of incorporation; and (ii) continue to conduct its business
substantially as now conducted or as otherwise permitted hereunder and in
accordance with (1) the terms of its certificate of incorporation and bylaws,
(2) Section 4.01(n) and (3) the assumptions set forth in each legal opinion of
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇ or other counsel to the Borrower delivered pursuant to
Section 3.01(a) hereof with respect to issues of substantive consolidation and
true sale and absolute transfer.
(c) Lockboxes; Deposit of Collections. The Borrower shall deposit or
cause to be deposited promptly into a Lockbox Account, and in any event no later
than the second Business Day after receipt thereof, all Collections it may
receive with respect to any Transferred Receivable.
17
(d) Payment, Performance and Discharge of Obligations.
(i) Subject to Section 5.01(d)(ii), the Borrower shall pay,
perform and discharge or cause to be paid, performed and discharged
promptly all charges and claims payable by it before any thereof shall
become past due.
(ii) The Borrower may in good faith contest, by appropriate
proceedings, the validity or amount of any charges or claims described in
Section 5.01(d)(i); provided, that adequate reserves with respect to such
contest are maintained on the books of the Borrower, in accordance with
GAAP.
Section 5.02. Reporting Requirements of the Borrower. The Borrower hereby
agrees that from and after the Effective Date until the Termination Date, it
shall furnish or cause to be furnished to the Lender:
(a) The financial statements, notices and other information at the
times, to the Persons and in the manner set forth in Annex 5.02(a).
(b) As soon as available, and in any event no later than 12:30 p.m.
(California time) on each Business Day, a completed certificate in the form
attached hereto as Exhibit 5.02(b) (each, a "Borrowing Base Certificate"), each
of which shall be prepared by the Borrower or the Servicer as of the close of
business on the immediately preceding Business Day.
(c) Such other reports, statements and reconciliations with respect to
the Borrowing Base or Borrower Collateral as the Lender shall from time to time
request in its reasonable discretion.
Section 5.03. Negative Covenants of the Borrower. The Borrower covenants
and agrees that, without the prior written consent of the Lender, from and after
the Effective Date until the Termination Date:
(a) Sale of Assets. The Borrower shall not sell, transfer, convey,
assign or otherwise dispose of, or assign any right to receive income in respect
of, any Transferred Receivable or Contract therefor except as otherwise
expressly permitted by this Agreement or any of the other Related Documents. The
Servicer may in its sole discretion arrange for the Borrower to enter into an
agreement to sell any Defaulted Receivable provided that no later than 10
Business Days before the Borrower enters into any such agreement, the Servicer
shall deliver to the Lender an Officer's Certificate of the Servicer certifying
that (i) such sale is to be made without credit recourse to the Borrower, (ii)
such sale is an arm's-length, fair market transaction to a purchaser that is not
an Affiliate of the Borrower, (iii) the purchaser of such Defaulted Receivables
will agree in writing not to institute or join in instituting a bankruptcy or
similar insolvency proceeding against the Borrower, (iv) such Defaulted
Receivables are excluded from the Borrowing Base in the most recent Borrowing
Base Certificate delivered to the Lender and (v) the form of documents attached
to such Officer's Certificate will constitute the material operative documents
for such sale agreed to by the Borrower and the purchaser of such Defaulted
Receivables. Each party hereto agrees that the purchase price paid upon any such
sale
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of Defaulted Receivables shall constitute Collections hereunder and shall be
remitted directly to the Collection Account.
(b) Liens. The Borrower shall not create, incur, assume or permit to
exist (i) any Adverse Claim on or with respect to its Transferred Receivables or
other Receivable Assets or (ii) any Adverse Claim on or with respect to its
other properties or assets (whether now owned or hereafter acquired) except for
the Liens set forth in Schedule 5.03(b) and other Permitted Encumbrances. In
addition, the Borrower shall not become a party to any agreement, note,
indenture or instrument or take any other action that would prohibit the
creation of a Lien on any of its properties or other assets in favor of the
Lender as additional collateral for the Borrower Obligations, except as
otherwise expressly permitted by this Agreement or any of the other Related
Documents.
(c) Changes in Instructions to Obligors. The Borrower shall not make any
change in its instructions to Obligors regarding the deposit of Collections with
respect to the Transferred Receivables, except to the extent the Lender directs
the Borrower to change such instructions to Obligors in accordance with the
terms hereof or the Lender consents in writing to such change.
(d) Business; Charter. The Borrower shall not (i) make any changes in
any of its business objectives, purposes or operations, (ii) amend or make any
change or modification to Articles III, V, IX, XI, XII or XIII of its
certificate of incorporation without first obtaining the written consent of the
Lender (which consent shall not be unreasonably withheld) (provided that,
notwithstanding anything to the contrary in this clause (ii), the Borrower may
make amendments, changes or modifications pursuant to changes in law of the
state of its incorporation or amendments to change the Borrower's registered
agent or the address of its registered office), (iii) make any change to its
name indicated on the public records of its jurisdiction of organization without
30 days' prior written notice to the Lender or (iv) change its jurisdiction of
organization without 30 days' prior written notice to the Lender. The Borrower
shall not engage in any business other than as provided in its certificate of
incorporation, bylaws and the Related Documents.
(e) Mergers, Subsidiaries, Etc. The Borrower shall not directly or
indirectly, by operation of law or otherwise merge with, consolidate with,
acquire all or substantially all of the assets or capital Stock of, or otherwise
combine with or acquire, any Person.
(f) Sale Characterization; Sale Agreement. The Borrower shall not make
statements or disclosures, prepare any financial statements or in any other
respect account for or treat the transactions contemplated by the Sale Agreement
(including for accounting and reporting purposes) in any manner other than (i)
with respect to each Sale of each Sold Receivable and other Receivable Assets
effected pursuant to the Sale Agreement, as a true sale and absolute assignment
of the title to and sole record and beneficial ownership interest of the
Transferred Receivables and other Receivable Assets by the Originators to the
Borrower and (ii) with respect to each contribution of Contributed Receivables
and other Receivable Assets thereunder, as an increase in the stated capital of
the Borrower; provided, however, that this subsection (f) shall not apply for
any tax or tax accounting purposes.
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(g) Restricted Payments. Except for the Subordinated Loans, the Borrower
shall not enter into any lending transaction in which the Borrower acts as
lender with any other Person. The Borrower shall not at any time (i) advance
credit to any Person or (ii) declare any distributions, repurchase any shares of
capital stock, or make any other payment or distribution of cash or other
property or assets in respect of the Borrower's capital stock or make a
repayment with respect to any Subordinated Loans if, after giving effect to any
such advance or distribution, a Funding Excess or Termination Event would exist
or otherwise result therefrom.
(h) Indebtedness. Except as required by law or as a result of operation
of law, the Borrower shall not create, incur, assume or permit to exist any
Debt, other than (i) Debt of the Borrower to any Affected Party, Indemnified
Person, the Servicer or any other Person expressly permitted by this Agreement
or any other Related Document, (ii) Subordinated Loans pursuant to the
Subordinated Notes, (iii) deferred taxes, (iv) unfunded pension fund and other
employee benefit plan obligations and liabilities to the extent they are
permitted to remain unfunded under applicable law, (v) endorser liability in
connection with the endorsement of negotiable instruments for deposit or
collection in the ordinary course of business, and (vi) liabilities or
obligations for services supplied or furnished to the Borrower in an amount not
to exceed $100,000 at any time outstanding.
(i) Prohibited Transactions. The Borrower shall not enter into, or be a
party to, any transaction with any Person except as expressly permitted
hereunder or under any other Related Document and except for leases of office
space, equipment or other facilities for use by the Borrower in its ordinary
course of business, employment agreements, service agreements, agreements
relating to shared employees, the Related Documents and agreements necessary to
perform its obligations under the Related Documents.
(j) Commingling. The Borrower shall not deposit any funds that do not
constitute Collections of Transferred Receivables into any Lockbox Account.
(k) Related Documents. The Borrower shall not amend, modify or waive any
term or provision of the Sale Agreement without the prior written consent of the
Lender (which consent shall not be unreasonably withheld).
ARTICLE VI.
ACCOUNTS
Section 6.01. Establishment of Accounts.
(a) The Lockbox Accounts.
(i) The Borrower has established with each Lockbox Account Bank
one or more Lockbox Accounts. The Borrower agrees that the Lender shall
have exclusive dominion and control of each Lockbox Account and all
monies, instruments and other property from time to time on deposit
therein. The Borrower shall not make or cause to be made, or have any
ability to make or cause to be made, any withdrawals from any Lockbox
Account except as provided in Section 6.01(b)(ii).
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(ii) The Borrower and the Servicer have instructed all existing
Obligors of Transferred Receivables, and shall instruct all future
Obligors of such Receivables, to make payments in respect thereof only (A)
by check or money order mailed to one or more lockboxes or post office
boxes under the control of the Lender (each a "Lockbox" and collectively
the "Lockboxes") or (B) by wire transfer or moneygram directly to a
Lockbox Account. Schedule 4.01(o) lists all Lockboxes and all Lockbox
Account Banks at which the Borrower maintains Lockbox Accounts as of the
Effective Date, and such schedule correctly identifies (1) with respect to
each such Lockbox Account Bank, the name, address and telephone number
thereof, (2) with respect to each Lockbox Account, the name in which such
account is held and the complete account number therefor, and (3) with
respect to each Lockbox, the lockbox number and address thereof. The
Borrower and the Servicer shall endorse, to the extent necessary, all
checks or other instruments received in any Lockbox so that the same can
be deposited in the Lockbox Account, in the form so received (with all
necessary endorsements), on the second Business Day after the date of
receipt thereof. In addition, each of the Borrower and the Servicer shall
deposit or cause to be deposited into a Lockbox Account all cash, checks,
money orders or other proceeds of Transferred Receivables or Borrower
Collateral received by it other than in a Lockbox or a Lockbox Account, in
the form so received (with all necessary endorsements), not later than the
close of business on the second Business Day following the date of receipt
thereof, and until so deposited all such items or other proceeds shall be
held in trust for the benefit of the Lender. Neither the Borrower nor the
Servicer shall make any deposits into a Lockbox or any Lockbox Account
except in accordance with the terms of this Agreement or any other Related
Document.
(iii) If, for any reason, a Lockbox Account Agreement terminates or
any Lockbox Account Bank fails to comply with its obligations under the
Lockbox Account Agreement to which it is a party, then the Borrower shall
promptly notify all Obligors of Transferred Receivables who had previously
been instructed to make wire payments to a Lockbox Account maintained at
any such Lockbox Account Bank to make all future payments to a new Lockbox
Account in accordance with this Section 6.01(a)(iii). The Borrower shall
not close any such Lockbox Account unless it shall have (A) received the
prior written consent of the Lender (which consent shall not be
unreasonably withheld), (B) established a new account with the same
Lockbox Account Bank or with a new depositary institution satisfactory to
the Lender in its reasonable discretion, (C) entered into an agreement
covering such new account with such Lockbox Account Bank or with such new
depositary institution substantially in the form of such Lockbox Account
Agreement or that is satisfactory in all respects to the Lender in its
reasonable discretion (whereupon, for all purposes of this Agreement and
the other Related Documents, such new account shall become a Lockbox
Account, such new agreement shall become a Lockbox Account Agreement and
any new depositary institution shall become a Lockbox Account Bank), and
(D) taken all such action as the Lender shall require to grant and perfect
a first priority Lien in such new Lockbox Account to the Lender under
Section 8.01 of this Agreement. Except as permitted by this Section
6.01(a), neither the Borrower nor the Servicer shall open any new Lockbox
or
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Lockbox Account without the prior written consent of the Lender (which
consent shall not be unreasonably withheld).
(b) Collection Account.
(i) The Lender has established and shall maintain the Collection
Account with Deutsche Bank Trust Company Americas (the "Depositary"). The
Collection Account shall be registered in the name of the Lender and the
Lender shall, subject to the terms of this Agreement, have exclusive
dominion and control thereof and of all monies, instruments and other
property from time to time on deposit therein.
(ii) The Borrower shall instruct each Lockbox Account Bank to
transfer, and the Borrower hereby grants the Lender the authority to
instruct each such Lockbox Account Bank to transfer, on each Business Day
in same day funds, all available funds in each Lockbox Account to the
Collection Account. The Lender may deposit into the Collection Account
from time to time all monies, instruments and other property it receives
as proceeds of the Transferred Receivables.
(iii) The Lender shall not close the Collection Account unless (A) a
new deposit account has been established with a new depositary
institution, (B) the Lender has entered into an agreement covering such
new account with such new depositary institution (whereupon such new
account shall become the Collection Account and such new depositary
institution shall become the Depositary for all purposes of this Agreement
and the other Related Documents), and (C) the Lender shall have taken all
such action as is required to grant and perfect a first priority Lien in
such new Collection Account to the Lender.
(c) Borrower Account.
(i) The Borrower has established the Borrower Account and agrees
that the Lender shall have exclusive dominion and control of such Borrower
Account and all monies, instruments and other property from time to time
on deposit therein.
(ii) The Lender hereby agrees that until such time as it instructs
the Borrower Account Bank otherwise, the Borrower shall have the right to
give instruction for the withdrawal, transfer or payment of funds on
deposit in the Borrower Account. The Lender further agrees that it shall
not instruct the Borrower Account Bank to no longer accept instructions
from the Borrower unless an Incipient Termination Event or a Termination
Event shall have occurred and be continuing.
ARTICLE VII.
SERVICER PROVISIONS
Section 7.01. Appointment of the Servicer. The Lender hereby appoints the
Servicer as its agent, and the Borrower hereby acknowledges and agrees to such
appointment, to service the Transferred Receivables and enforce the Borrower's
and the Lender's rights and
22
interests in and under each Transferred Receivable and Contract therefor and to
serve in such capacity until the termination of its responsibilities pursuant to
Sections 9.02 or 11.01. In connection therewith, the Servicer hereby accepts
such appointment and agrees to perform the duties and obligations set forth
herein. The Servicer may, with the prior written consent of the Lender,
subcontract with a Sub-Servicer for the collection, servicing or administration
of the Transferred Receivables and other Receivable Assets; provided, that (a)
the Servicer shall remain liable for the performance of the duties and
obligations of such Sub-Servicer pursuant to the terms hereof, (b) any
Sub-Servicing Agreement that may be entered into and any other transactions or
services relating to the Transferred Receivables involving a Sub-Servicer shall
be deemed to be between the Sub-Servicer and the Servicer alone, and the Lender
shall not be deemed a party thereto and shall have no obligations, duties or
liabilities with respect to the Sub-Servicer and (c) each Sub-Servicing
Agreement shall expressly provide that it shall automatically terminate upon the
termination of the Servicer's responsibilities hereunder in accordance with the
terms hereof.
Section 7.02. Duties and Responsibilities of the Servicer. Subject to the
provisions of this Agreement, the Servicer shall conduct the servicing,
administration and collection of the Transferred Receivables and shall take, or
cause to be taken, all actions that (i) may be necessary or advisable to
service, administer and collect each Transferred Receivable from time to time,
(ii) the Servicer would take if the Transferred Receivables were owned by the
Servicer, and (iii) are consistent with industry practice for the servicing of
such Transferred Receivables.
Section 7.03. Collections on Receivables and other Receivable Assets.
(a) In the event that the Servicer is unable to determine the specific
Transferred Receivables on which Collections have been received from the Obligor
thereunder, the parties agree for purposes of this Agreement only that such
Collections shall be deemed to have been received on such Receivables in the
order in which they were originated with respect to such Obligor. In the event
that the Servicer is unable to determine the specific Transferred Receivables on
which discounts, offsets or other non-cash reductions have been granted or made
with respect to the Obligor thereunder, the parties agree for purposes of this
Agreement only that such reductions shall be deemed to have been granted or made
in the order in which they were originated with respect to such Obligor.
(b) If in respect of Collections on account of a Receivable, the
Servicer deposits into the Collection Account an amount that is less than or
more than the actual amount of such Collections, the Servicer shall, in lieu of
making a reconciling withdrawal or deposit, as the case may be, adjust the
amount subsequently deposited into such Collection Account to reconcile such
mistake.
Section 7.04. Authorization of the Servicer. The Lender hereby authorizes
the Servicer, and the Borrower acknowledges and agrees to such authorization, to
take any and all reasonable steps in its name and on its behalf necessary or
desirable and not inconsistent with the rights of the Lender hereunder, in the
determination of the Servicer, to (a) collect all amounts due under any
Transferred Receivable, including endorsing the applicable name on checks and
other
23
instruments representing Collections on such Receivable, and execute and deliver
any and all instruments of satisfaction or cancellation or of partial or full
release or discharge and all other comparable instruments with respect to any
such Receivable and (b) after any Transferred Receivable becomes a Defaulted
Receivable and to the extent permitted under and in compliance with applicable
law and regulations, commence proceedings with respect to the enforcement of
payment of any such Receivable and the Contract therefor and adjust, settle or
compromise any payments due thereunder, in each case to the same extent as the
applicable Originator could have done if it had continued to own such
Receivable. The Borrower and the Lender shall furnish the Servicer with any
powers of attorney and other documents necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties hereunder. In no
event shall the Servicer be entitled to make the Borrower or the Lender a party
to any Litigation without such Person's express prior written consent.
Section 7.05. Servicing Fees. As compensation for its servicing activities
and as reimbursement for its reasonable expenses in connection therewith, the
Servicer shall be entitled to receive the Servicing Fees in accordance with
Section 2.07. The Servicer shall be required to pay for all expenses incurred by
it in connection with its activities hereunder (including any payments to
accountants, counsel or any other Person) and shall not be entitled to any
payment therefor other than the Servicing Fees.
Section 7.06. Representations and Warranties of the Servicer. To induce
the Lender to make Advances from time to time, the Servicer makes the following
representations and warranties to the Lender on the Effective Date and each
Advance Date, which shall survive the execution and delivery of this Agreement:
(a) Corporate Existence; Compliance with Law. The Servicer (i) is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation; (ii) is duly qualified to conduct business
and is in good standing in each other jurisdiction where its ownership or lease
of property or the conduct of its business requires such qualification, except
where the failure to so qualify could not reasonably be expected to result in a
Servicer Material Adverse Effect; and (iii) has the requisite corporate power
and authority to own its properties and assets and to conduct its business as
now, heretofore and proposed to be conducted.
(b) Corporate Power, Authorization, Enforceable Obligations. The
execution, delivery and performance by the Servicer of this Agreement and the
other Related Documents to which it is a party (i) are within the Servicer's
corporate power; (ii) have been duly authorized by all necessary or proper
corporate and shareholder action; (iii) do not contravene any provision of the
Servicer's certificate of incorporation or bylaws; (iv) do not violate any law
or regulation, or any order or decree of any court or Governmental Authority
applicable to the Servicer; (v) do not conflict with or result in the breach or
termination of, constitute a default under or accelerate or permit the
acceleration of any performance required by, any indenture, mortgage, deed of
trust, lease, agreement or other instrument to which the Servicer is a party or
by which the Servicer or any of the property of the Servicer is bound, except
where any such conflict, violation, breach or default referred to in clauses
(iv) or (v), individually or in the aggregate, could not reasonably be expected
to have a Servicer Material Adverse Effect; (vi) do not result in the creation
or
24
imposition of any Adverse Claim upon the Receivables or other Receivable Assets;
and (vii) do not require the consent or approval of any Governmental Authority
or any other Person, except those which have been duly obtained, made or
complied with prior to the Effective Date as provided in Section 3.01(b). On or
prior to the Effective Date, each of the Related Documents to which the Servicer
is a party shall have been duly executed and delivered by the Servicer and each
such Related Document shall then constitute a legal, valid and binding
obligation of the Servicer enforceable against it in accordance with its terms,
subject (i) to applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting the enforcement of creditors' rights generally from
time to time in effect and (ii) to general principles of equity (whether
enforcement is sought by a proceeding in equity or at law).
(c) Governmental Approvals. No action, consent or approval of,
registration or filing with or any other action by any Governmental Authority is
or will be required in connection with the Related Documents, except for (i) the
filing of UCC financing statements and (ii) such as have been made or obtained
and are in full force and effect.
(d) Litigation; Compliance with Laws. (i) There are no actions, suits or
proceedings at law or in equity or by or before any Governmental Authority now
pending or, to its knowledge, threatened against it or any Significant
Subsidiary (A) that involve any Related Document or the transactions
contemplated thereby or (B) as to which there is a reasonable possibility of an
adverse determination and that, if adversely determined, could reasonably be
expected, individually or in the aggregate, to result in a Servicer Material
Adverse Effect.
(ii) Neither it nor any Significant Subsidiary is in default with
respect to any judgment, writ, injunction, decree or order of any
Governmental Authority, where such violation or default could reasonably
be expected to result in a Servicer Material Adverse Effect.
Section 7.07. Covenants of the Servicer. The Servicer covenants and agrees
that from and after the Effective Date and until the Termination Date:
(a) Compliance with Agreements and Applicable Laws. The Servicer shall
(i) perform each of its obligations under this Agreement and the other Related
Documents and (ii) comply with all federal, state and local laws and regulations
applicable to it and the Transferred Receivables and other Receivable Assets,
except where the failure to so perform (in the case of clause (i)) or to so
comply (in the case of clause (ii)) could not reasonably be expected to result
in a Servicer Material Adverse Effect.
(b) Deposit of Collections. The Servicer shall deposit or cause to be
deposited promptly into a Lockbox Account, and in any event no later than the
second Business Day after receipt thereof, all Collections it may receive with
respect to any Transferred Receivable. As soon as practicable, but in any event
not later than the Business Day following the date that the Servicer identifies
any of the collected funds received in the Collection Account as funds that do
not constitute Collections on account of the Receivables, the Servicer shall
notify the Lender in writing (which notice may be given by delivery of a
Borrowing Base Certificate or a Monthly Report reflecting the amount of such
collected funds that do not
25
constitute Collections), and the Lender shall promptly remit (or direct the
applicable Lockbox Account Bank to remit) any such amounts that are not
Collections to the applicable Originator or other Person designated in such
notice from the Servicer.
(c) Extension, Amendment and Adjustment of Receivables; Amendment of
Credit and Collection Policy. (i) The Servicer hereby covenants and agrees that
it shall not extend, rescind, cancel, amend or otherwise modify, or attempt or
purport to extend, rescind, cancel, amend or otherwise modify, the terms of, or
grant any Dilution Adjustment to, any Receivable, or otherwise take any action
that is intended to cause or permit a Receivable that is an Eligible Receivable
to cease to be an Eligible Receivable, except in any such case (i) in accordance
with the terms of its Credit and Collection Policy, (ii) as required by
applicable law or (iii) in the case of any Dilution Adjustments, upon the
payment by or on behalf of the applicable Originator of the Dilution Adjustment
Payment required to be paid in respect of such Dilution Adjustment pursuant to
the terms of Section 2.05 of the Sale Agreement.
(ii) The Servicer shall not change or modify its Credit and
Collection Policy in any material respect, except (i) if such change or
modification is necessary under any applicable law (which for the purposes
of this Section shall not include the certificate of incorporation or
by-laws or other organizational or governing documents of the Servicer) or
(ii) if the prior written consent of the Lender is obtained (which consent
shall not be unreasonably withheld). The Servicer shall provide notice to
the Borrower and the Lender of any change or modification of its Credit
and Collection Policy.
(d) Ownership of Transferred Receivables. The Servicer shall identify
the Transferred Receivables clearly and unambiguously in its master database of
Receivables to reflect that a Lien on such Transferred Receivables has been
granted to the Lender.
Section 7.08. Reporting Requirements of the Servicer. The Servicer hereby
agrees that, from and after the Effective Date and until the Termination Date,
it shall deliver or cause to be delivered to the Lender the financial
statements, notices, and other information at the times and in the manner set
forth in Section 5.02 and Annex 5.02(a).
Section 7.09. Floorplan Agreements. The Servicer hereby agrees that it
shall deliver or cause to be delivered to the Lender, no later than 90 days
after the date hereof (or such later date as may be agreed by the Lender) a
certified copy of each material inventory repurchase or floorplan agreement to
which the Servicer is a party or is bound by, together with (if required by the
Lender) a non-contravention opinion from external counsel to the Servicer in
form and substance acceptable to the Lender.
ARTICLE VIII.
GRANT OF SECURITY INTERESTS
Section 8.01. Borrower's Grant of Security Interest. To secure the prompt
and complete payment, performance and observance of all Borrower Obligations,
and to induce the Lender to enter into this Agreement and perform the
obligations required to be performed by them hereunder in accordance with the
terms and conditions hereof, the Borrower hereby grants,
26
assigns, conveys, pledges, hypothecates and transfers to the Lender, a Lien upon
and security interest in all of the Borrower's right, title and interest in, to
and under, but none of its obligations arising from, the following property,
whether now owned by or owing to, or hereafter acquired by or arising in favor
of, the Borrower (including under any trade names, styles or derivations of the
Borrower), and regardless of where located (all of which being hereinafter
collectively referred to as the "Borrower Collateral"):
(a) all Receivables and other Receivable Assets;
(b) the Sale Agreement, all Lockbox Account Agreements and all other
Related Documents now or hereafter in effect relating to the purchase, servicing
or processing of Receivables and other Receivable Assets (collectively, the
"Borrower Assigned Agreements"), including (i) all rights of the Borrower to
receive moneys due and to become due thereunder or pursuant thereto, (ii) all
rights of the Borrower to receive proceeds of any insurance, indemnity, warranty
or guaranty with respect thereto, (iii) all claims of the Borrower for damages
or breach with respect thereto or for default thereunder and (iv) the right of
the Borrower to amend, waive or terminate the same and to perform and to compel
performance and otherwise exercise all remedies thereunder;
(c) all of the following (collectively, the "Borrower Account
Collateral"):
(i) the Lockbox Accounts, the Lockboxes, and all funds on deposit
therein and all certificates and instruments, if any, from time to time
representing or evidencing the Lockbox Accounts, the Lockboxes or such
funds,
(ii) the Collection Account and all funds on deposit therein and
all certificates and instruments, if any, from time to time representing
or evidencing the Collection Account or such funds,
(iii) the Borrower Account and all funds on deposit therein and all
certificates and instruments, if any, from time to time representing or
evidencing the Borrower Account or such funds,
(iv) all notes, certificates of deposit and other instruments from
time to time delivered to or otherwise possessed by the Lender or any
assignee or agent on behalf of the Lender in substitution for or in
addition to any of the then existing Borrower Account Collateral, and
(v) all interest, dividends, cash, instruments, investment
property and other property from time to time received, receivable or
otherwise distributed with respect to or in exchange for any and all of
the then existing Borrower Account Collateral; and
(d) to the extent not otherwise included, all proceeds and products of
the foregoing and all accessions to, substitutions and replacements for, and
profits of, each of the foregoing Borrower Collateral (including proceeds that
constitute property of the types described in Sections 8.01(a) through (c)).
27
Section 8.02. Borrower's Agreements. The Borrower hereby (a) assigns,
transfers and conveys the benefits of the representations, warranties and
covenants of each Originator made to the Borrower under the Sale Agreement to
the Lender hereunder; (b) acknowledges and agrees that the right to require
payment of an Originator Adjustment Payment from an Originator under the Sale
Agreement may be enforced by the Lender (it being understood that the Lender
shall have no right to enforce payment of such amount to the extent such amount
was paid by the Parent pursuant to the terms of the Parent Agreement); and (c)
certifies that the Sale Agreement provides that the representations and
warranties set forth in Sections 4.01 and 4.02 thereof and the indemnification
provisions set forth in Section 8.02 thereof shall survive any termination of
the Sale Agreement.
Section 8.03. Delivery of Collateral. All certificates or instruments
representing or evidencing all or any portion of the Borrower Collateral shall
be delivered to and held by or on behalf of the Lender and shall be in suitable
form for transfer by delivery or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Lender. The Lender shall have the right (a) at any time to
exchange certificates or instruments representing or evidencing Borrower
Collateral for certificates or instruments of smaller or larger denominations
and (b) at any time in its discretion following the occurrence and during the
continuation of a Termination Event and without notice to the Borrower, to
transfer to or to register in the name of the Lender or its nominee any or all
of the Borrower Collateral.
Section 8.04. Borrower Remains Liable. It is expressly agreed by the
Borrower that, anything herein to the contrary notwithstanding, the Borrower
shall remain liable under any and all of the Transferred Receivables, the
Contracts therefor, the Borrower Assigned Agreements and any other agreements
constituting the Borrower Collateral to which it is a party to observe and
perform all the conditions and obligations to be observed and performed by it
thereunder. The Lender shall not have any obligation or liability under any such
Receivables, Contracts or agreements by reason of or arising out of this
Agreement or the granting herein or therein of a Lien thereon or the receipt by
the Lender of any payment relating thereto pursuant hereto or thereto. The
exercise by the Lender of any of its respective rights under this Agreement
shall not release any Originator, the Borrower or the Servicer from any of their
respective duties or obligations under any such Receivables, Contracts, or
agreements. The Lender shall not be required or obligated in any manner to
perform or fulfill any of the obligations of any Originator, the Borrower or the
Servicer under or pursuant to any such Receivable, Contract or agreement, or to
make any payment, or to make any inquiry as to the nature or the sufficiency of
any payment received by it or the sufficiency of any performance by any party
under any such Receivable, Contract or agreement, or to present or file any
claims, or to take any action to collect or enforce any performance or the
payment of any amounts that may have been assigned to it or to which it may be
entitled at any time or times.
Section 8.05. Covenants of the Borrower and the Servicer Regarding the
Borrower Collateral.
(a) Offices and Records. The Borrower shall maintain its chief executive
office and the office at which it stores its Records at the respective locations
specified in
28
Schedule 4.01(c) or, upon 30 days' prior written notice to the Lender, at such
other location in a jurisdiction where all action requested by the Lender
pursuant to Section 14.13 shall have been taken with respect to the Borrower
Collateral. Each of the Borrower and the Servicer shall, at its own cost and
expense, maintain adequate and complete records of the Transferred Receivables,
other Receivable Assets and the Borrower Collateral, including records of any
and all payments received, credits granted and merchandise returned with respect
thereto and all other dealings therewith.
(b) Access. Each of the Borrower and the Servicer shall, at any
reasonable time during normal business hours on any Business Day, and from time
to time, upon reasonable prior notice, and as often as may reasonably be
requested, and at any time after the occurrence of a Termination Event, and in
any case subject to its security and confidentiality requirements, (i) permit
the Lender or any of its agents or representatives, (A) to examine and make
copies of and abstracts from its records, books of account and documents
(including computer tapes and disks) relating to the Receivables and other
Receivable Assets and (B) with respect to the Servicer, following the
termination of its appointment as Servicer to be present at its offices and
properties to administer and control the collection of the Receivables and to
allow the Lender access to documents, instruments and other records, equipment
and personnel that are necessary to enable a Successor Servicer to continue
servicing operations in accordance with the terms of this Agreement and (ii)
permit the Lender or any of its agents or representatives to visit its
properties to discuss its affairs, finances and accounts relating to the
Receivables and other Receivable Assets or its performance hereunder or under
any of the other Related Documents to which it is a party with any of its
officers or directors and with its independent public accountants; provided that
the Lender shall notify the Borrower or the Servicer, as the case may be, prior
to any contact with such accountants and shall give the Borrower or the
Servicer, as the case may be, the opportunity to participate in such
discussions; and provided further that, except as otherwise provided in Section
14.04(b) hereof, any such examination or visit shall be at the cost and expense
of the party or parties making such examination or visit, including without
limitation any costs incurred in respect of fees of such independent public
accountants.
(c) Collection of Transferred Receivables. Except as otherwise provided
in this Section 8.05(c), the Servicer shall continue to collect or cause to be
collected, at its sole cost and expense, all amounts due or to become due to the
Borrower under the Transferred Receivables, the Borrower Assigned Agreements and
any other Borrower Collateral. In connection therewith, the Borrower and the
Servicer shall take such action as it, and from and after the occurrence and
during the continuance of a Termination Event, the Lender, may deem necessary or
desirable to enforce collection of the Transferred Receivables, the Borrower
Assigned Agreements and the other Borrower Collateral; provided that the
Borrower or the Servicer may, rather than commencing any such action or taking
any other enforcement action, at its option, elect to pay to the Lender, for
deposit into the Collection Account, an amount equal to the Outstanding Balance
of any such Transferred Receivable; provided, further, that if an Incipient
Termination Event or a Termination Event shall have occurred and be continuing,
then the Lender may, without prior notice to the Borrower or the Servicer,
notify any Obligor under any Transferred Receivable or obligors under the
Borrower Assigned Agreements of the pledge of such Transferred Receivables or
Borrower Assigned Agreements, as the case may be, to the Lender hereunder and
direct that payments of all amounts due or to become due to the Borrower
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thereunder be made directly to the Lender or any servicer, collection agent or
lockbox or other account designated by the Lender and, upon such notification
and at the sole cost and expense of the Borrower, the Lender may enforce
collection of any such Transferred Receivable or the Borrower Assigned
Agreements and adjust, settle or compromise the amount or payment thereof. The
Lender shall provide prompt notice to the Borrower and the Servicer of any such
notification of pledge or direction of payment to the Obligors under any
Transferred Receivables.
(d) Performance of Borrower Assigned Agreements. Each of the Borrower
and the Servicer shall perform and observe all the terms and provisions of the
Borrower Assigned Agreements to be performed or observed by it, maintain the
Borrower Assigned Agreements in full force and effect, enforce the Borrower
Assigned Agreements in accordance with their terms and take all action as may
from time to time be reasonably requested by the Lender in order to accomplish
the foregoing.
ARTICLE IX.
TERMINATION EVENTS
Section 9.01. Termination Events. If any of the following events (each, a
"Termination Event") shall occur (regardless of the reason therefor):
(a) (i) the Borrower shall fail to make any payment in respect of
principal or interest when due and payable (including, without limitation,
payments required to be made in respect of a Funding Excess pursuant to the
terms of Section 2.11 hereof) and the same shall remain unremedied for five (5)
Business Days or more, or (ii) the Borrower shall fail to make any payment of
any other monetary Borrower Obligation when due and payable and the same shall
remain unremedied for five (5) Business Days or more after the earlier to occur
of (x) the date on which a Responsible Officer of the Borrower obtains knowledge
of such failure and (y) the date on which written notice of such failure is
given to the Borrower by the Lender; or
(b) the Borrower shall fail or neglect to perform, keep or observe any
covenant or other provision of this Agreement or the other Related Documents
(other than any provision embodied in or covered by any other clause of this
Section 9.01) and the same shall remain unremedied for thirty (30) days or more
after the earlier to occur of (x) the date on which a Responsible Officer of the
Borrower obtains actual knowledge of such failure and (y) the date on which
written notice of such failure is given to the Borrower by the Lender; or
(c) any representation or warranty made by the Borrower in this
Agreement shall prove to have been incorrect in any material respect when made
or deemed made and the same shall continue to be incorrect for thirty (30) days
or more after the earlier to occur of (x) the date on which a Responsible
Officer of the Borrower or the Servicer obtains actual knowledge of such failure
and (y) the date on which written notice of such failure is given to the
Borrower by the Lender; or
(d) (i) a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of the Borrower in an involuntary case under the
Bankruptcy Code or any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect (the Bankruptcy
30
Code and all other such applicable laws being, collectively, "Applicable
Insolvency Laws"), which decree or order is not stayed or any other similar
relief shall be granted under any applicable federal or state law now or
hereafter in effect and shall not be stayed; (ii) (A) an involuntary case is
commenced against the Borrower under any Applicable Insolvency Law now or
hereafter in effect, a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over the Borrower or over all
or a substantial part of the property of the Borrower shall have been entered,
an interim receiver, trustee or other custodian of the Borrower for all or a
substantial part of the property of the Borrower is involuntarily appointed, a
warrant of attachment, execution or similar process is issued against any
substantial part of the property of the Borrower, and (B) any event referred to
in clause (ii)(A) above continues for 60 days unless dismissed, bonded or
discharged; provided, however, that such 60-day period shall be deemed
terminated immediately upon the occurrence of any of the events referred to in
this Section 9.01(d) other than those referred to in clause (ii)(A) above; and
(iii) the Borrower shall at its request have a decree or an order for relief
entered with respect to it or commence a voluntary case under any Applicable
Insolvency Law, consent to the entry of a decree or an order for relief in an
involuntary case, or to the conversion of an involuntary case to a voluntary
case, under any Applicable Insolvency Law, consent to the appointment of or
taking possession by a receiver, trustee or other custodian for all or a
substantial part of its property; (iv) the making by the Borrower of any general
assignment for the benefit of creditors; (v) the inability or failure of the
Borrower generally to pay its debts as such debts become due; or (vi) the board
of directors of the Borrower adopts any resolution or otherwise authorizes
action to approve any of the foregoing;
(e) a final judgment or judgments for the payment of money (to the
extent not bonded or covered by insurance to the reasonable satisfaction of the
Lender) in an aggregate amount greater than the lesser of (x) 7.25% of the
consolidated tangible net worth of ▇▇▇▇▇▇ Micro at the end of the most recently
ended fiscal quarter and (y) $80,000,000, shall be rendered against any
Originator or the Servicer and the same shall remain undischarged for a period
of 30 consecutive days during which execution shall not be effectively stayed,
or any action shall be legally taken by a judgment creditor to levy upon assets
or properties of the Servicer or such Originator to enforce any such judgment
and no stay of enforcement shall be in effect;
(f) a final judgment or order for the payment of money (to the extent
not bonded or covered by insurance to the reasonable satisfaction of the Lender)
shall be rendered against the Borrower in an aggregate amount greater than
$100,000 and the same shall remain undischarged for a period of 30 consecutive
days during which execution shall not be effectively stayed, or any action shall
be legally taken by a judgment creditor to levy upon assets or properties of the
Borrower to enforce any such judgment and no stay of enforcement shall be in
effect; or
(g) any information contained in any Borrowing Base Certificate or any
Borrowing Request is untrue or incorrect in any material respect; or
(h) a federal tax notice of a Lien shall have been filed against the
Borrower unless there shall have been delivered to the Lender proof of release
of such Lien;
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(i) fifteen (15) days shall have elapsed after a Responsible Officer of
the Borrower receives notice as to, or becomes aware of, a notice of a Lien
having been filed by the PBGC against the Borrower under Section 412(n) of the
IRC or Section 302(f) of ERISA for a failure to make a required installment or
other payment to a plan to which Section 412(n) of the IRC or Section 302(f) of
ERISA applies unless there shall have been delivered to the Lender proof of the
release of such Lien;
(j) the Sale Agreement shall for any reason cease to evidence the
transfer to the Borrower of the legal and equitable title to, and ownership of,
the Transferred Receivables and other Receivable Assets; or
(k) except as otherwise expressly provided herein, the Sale Agreement
shall have been modified, amended or terminated without the prior written
consent of the Lender (which consent shall not be unreasonably withheld); or
(l) an Event of Servicer Termination shall have occurred and be
continuing; or
(m) a Purchase Termination Event shall have occurred and be continuing;
or
(n) the Lender shall cease to hold a first priority, perfected security
interest in the Transferred Receivables and other Receivable Assets or any of
the Borrower Collateral and such cessation would, individually or together with
other cessations, have a Material Adverse Effect, a Borrower Material Adverse
Effect or a Servicer Material Adverse Effect; or
(o) a Change of Control shall occur; or
(p) except as otherwise expressly permitted herein, the Borrower shall
amend its certificate of incorporation without the express prior written consent
of the Lender (which consent shall not be unreasonably withheld); or
(q) the Borrower shall have received an Election Notice pursuant to
Section 2.01(d) of the Sale Agreement; or
(r) (i) the Default Ratio as of the last day of any Settlement Period
shall exceed 5.00%; (ii) the Dilution Ratio as of the last day of any Settlement
Period shall exceed 8.00%; or (iii) the Receivables Collection Turnover as of
the last day of any Settlement Period shall exceed 36 days; or
(s) a default or breach shall occur of any of the financial covenants of
▇▇▇▇▇▇ Micro and its Subsidiaries set forth in Schedule 9.01(s) hereto; or
(t) this Agreement, the Parent Agreement or the Sale Agreement shall
cease, for any reason, to be in full force and effect, or the Borrower, the
Servicer or any Originator, or any Affiliate of any of the foregoing, shall so
assert in writing;
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then, and in any such event, the Lender may, by written notice to the Borrower,
declare the Commitment Termination Date to have occurred without demand, protest
or further notice of any kind, all of which are hereby expressly waived by the
Borrower; provided, that the Commitment Termination Date shall automatically
occur (i) upon the occurrence of any of the Termination Events described in
Section 9.01(d) or (ii) five days after the occurrence of the Termination Event
described in Section 9.01(a)(i) if the same shall not have been remedied by such
time, in each case without demand, protest or any notice of any kind, all of
which are hereby expressly waived by the Borrower. Upon the occurrence of the
Commitment Termination Date, all Borrower Obligations shall automatically be and
become due and payable in full, without any action to be taken on the part of
any Person.
Section 9.02. Events of Servicer Termination. If any of the following
events (each, an "Event of Servicer Termination") shall occur (regardless of the
reason therefor):
(a) the Servicer shall fail to make any payment required to be paid by
it hereunder (it being acknowledged that for such purpose the responsibility of
the Servicer is limited to payment of amounts actually received) and the same
shall remain unremedied for five (5) Business Days or more after the earlier to
occur of (1) the date on which a Responsible Officer of the Servicer obtains
knowledge of such failure and (2) the date on which written notice of such
failure, requiring the same to be remedied, is given to the Servicer by the
Lender; or
(b) the Servicer shall (i) fail to deliver when due any of the reports
required to be delivered pursuant to Section 5.02 and 7.08 or any other report
related to the Receivables as required by the other Related Documents and the
same shall remain unremedied for three (3) Business Days or (ii) fail or neglect
to perform, keep or observe any other provision of this Agreement (other than
any provision embodied in or covered by any other clause of this Section 9.02)
and the same shall remain unremedied for thirty (30) days or more after the
earlier to occur of (x) the date on which a Responsible Officer of the Servicer
obtains actual knowledge of such failure and (y) the date on which written
notice of such failure is given to the Servicer by the Lender; provided, that no
Event of Servicer Termination shall be deemed to occur under this subsection
with respect to a failure on the part of the Servicer if the Servicer shall have
complied with the provisions of Section 12.02 with respect thereto; or
(c) any representation or warranty made by the Servicer in this
Agreement shall prove to have been incorrect in any material respect when made
or deemed made and the same shall continue to be incorrect for thirty (30) days
or more after the earlier to occur of (x) the date on which a Responsible
Officer of the Servicer obtains actual knowledge that such representation or
warranty was incorrect in any material respect when made or deemed made and (y)
the date on which written notice that such representation or warranty was
incorrect in any material respect when made or deemed made is given to the
Servicer by the Lender; provided, that no Event of Servicer Termination shall be
deemed to occur under this subsection with respect to a failure on the part of
the Servicer if the Servicer shall have complied with the provisions of Section
12.02 with respect thereto; or
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(d) a court having jurisdiction in the premises shall enter a decree or
order for relief in respect of the Servicer in an involuntary case under any
Applicable Insolvency Laws, which decree or order is not stayed, or any other
similar relief shall be granted under any applicable federal or state law and
shall not be stayed; (ii) an involuntary case is commenced against the Servicer
under any Applicable Insolvency Laws, a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers over the
Servicer or over all or a substantial part of the property of the Servicer shall
have been entered, an interim receiver, trustee or other custodian of the
Servicer for all or a substantial part of the property of the Servicer is
involuntarily appointed or a warrant of attachment, execution or similar process
is issued against any substantial part of the property of the Servicer and the
continuance of any such events in this clause (ii) for 60 days unless dismissed,
bonded or discharged; (iii) the Servicer shall at its request have a decree or
an order for relief entered with respect to it, commence a voluntary case under
any Applicable Insolvency Laws, consent to the entry of a decree or an order for
relief in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or consent to the appointment of or taking
possession by a receiver, trustee or other custodian of all or a substantial
part of its property; (iv) the making by the Servicer of any general assignment
for the benefit of creditors; (v) the inability or failure of the Servicer
generally to pay its debts as such debts become due; or (vi) the board of
directors of the Servicer adopts any resolution or otherwise authorizes action
to approve any of the foregoing; or
(e) any information contained in any Monthly Report is untrue or
incorrect in any material respect; or
(f) a Termination Event (other than Termination Events set forth in
Sections 9.01(b), (c), (n) and (o)) shall have occurred or this Agreement shall
have been terminated; or
(g) at a time when a Termination Event or Incipient Termination Event
shall have occurred and is continuing, the Servicer delivers to the Lender an
Officer's Certificate regarding a proposed sale of Defaulted Receivables
pursuant to Section 5.03(a) of this Agreement;
then, and in any such event, the Lender may, by delivery of a Servicer
Termination Notice to the Borrower and the Servicer, terminate all or any part
of the servicing responsibilities of the Servicer hereunder, without demand,
protest or further notice of any kind, all of which are hereby waived by the
Servicer. Upon the delivery of any such notice, all authority and power of the
Servicer under this Agreement and the Sale Agreement shall pass to and be vested
in the Successor Servicer acting pursuant to Section 11.02; provided, that
notwithstanding anything to the contrary herein, the Servicer agrees to continue
to follow the procedures set forth in Section 7.02 with respect to Collections
on the Transferred Receivables until a Successor Servicer has assumed the
responsibilities and obligations of the Servicer in accordance with Section
11.02.
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ARTICLE X.
REMEDIES
Section 10.01. Actions Upon Termination Event. If any Termination Event
shall have occurred and be continuing and the Lender shall have declared the
Commitment Termination Date to have occurred or the Commitment Termination Date
shall be deemed to have occurred pursuant to Section 9.01, then the Lender may
exercise in respect of the Borrower Collateral, in addition to any and all other
rights and remedies granted to it hereunder, under any other Related Document or
under any other instrument or agreement securing, evidencing or relating to the
Borrower Obligations or otherwise available to it, all of the rights and
remedies of a secured party upon default under the UCC (such rights and remedies
to be cumulative and nonexclusive), and, in addition, may take the following
actions:
(a) The Lender may, without notice to the Borrower except as required by
law and at any time or from time to time, charge, offset or otherwise apply
amounts payable to the Borrower from the Collection Account, the Borrower
Account or any Lockbox Account against all or any part of the Borrower
Obligations.
(b) The Lender may, without notice except as specified below, solicit
and accept bids for and sell the Borrower Collateral or any part thereof in one
or more parcels at public or private sale, at any exchange, broker's board or
the Lender's offices or elsewhere, for cash, on credit or for future delivery,
and upon such other terms as the Lender may deem commercially reasonable. The
Lender shall have the right to conduct such sales on the Borrower's premises or
elsewhere and shall have the right to use any of the Borrower's premises without
charge for such sales at such time or times as the Lender deems necessary or
advisable. The Borrower agrees that, to the extent notice of sale shall be
required by law, at least ten days' notice to the Borrower of the time and place
of any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Lender shall not be obligated to make
any sale of Borrower Collateral regardless of notice of sale having been given.
The Lender may adjourn any public or private sale from time to time by
announcement at the time and place fixed for such sale, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. Every such sale shall operate to divest all right, title, interest,
claim and demand whatsoever of the Borrower in and to the Borrower Collateral so
sold, and shall be a perpetual bar, both at law and in equity, against each
Originator, the Borrower, any Person claiming the Borrower Collateral sold
through any Originator or the Borrower, and their respective successors or
assigns. The Lender shall deposit the net proceeds of any such sale in the
Collection Account and such proceeds shall be applied against all or any part of
the Borrower Obligations.
(c) Upon the completion of any sale under Section 10.01(b), the Borrower
or the Servicer shall deliver or cause to be delivered to the purchaser or
purchasers at such sale on the date thereof, or within a reasonable time
thereafter if it shall be impracticable to make immediate delivery, all of the
Borrower Collateral sold on such date, but in any event full title and right of
possession to such property shall vest in such purchaser or purchasers upon the
completion of such sale. Nevertheless, if so requested by the Lender or by any
such purchaser, the Borrower shall confirm any such sale or transfer by
executing and delivering to such purchaser all proper instruments of conveyance
and transfer and releases as may be designated in any such request.
35
(d) At any sale under Section 10.01(b), the Lender may bid for and
purchase the property offered for sale and, upon compliance with the terms of
sale, may hold, retain and dispose of such property without further
accountability therefor.
(e) The Lender may (but in no event shall be obligated to) exercise, at
the sole cost and expense of the Borrower, any and all rights and remedies of
the Borrower under or in connection with the Borrower Assigned Agreements or the
other Borrower Collateral, including any and all rights of the Borrower to
demand or otherwise require payment of any amount under, or performance of any
provisions of, the Borrower Assigned Agreements.
Section 10.02. Exercise of Remedies. No failure or delay on the part of
the Lender in exercising any right, power or privilege under this Agreement and
no course of dealing between any Originator, the Borrower or the Servicer, on
the one hand, and the Lender, on the other hand, shall operate as a waiver of
such right, power or privilege, nor shall any single or partial exercise of any
right, power or privilege under this Agreement preclude any other or further
exercise of such right, power or privilege or the exercise of any other right,
power or privilege. The rights and remedies under this Agreement are cumulative,
may be exercised singly or concurrently, and are not exclusive of any rights or
remedies that the Lender would otherwise have at law or in equity. No notice to
or demand on any party hereto shall entitle such party to any other or further
notice or demand in similar or other circumstances, or constitute a waiver of
the right of the party providing such notice or making such demand to any other
or further action in any circumstances without notice or demand.
Section 10.03. Power of Attorney. On the Effective Date, each of the
Borrower and the Servicer shall execute and deliver a power of attorney
substantially in the form attached hereto as Exhibit 10.03 (each, a "Power of
Attorney"). The power of attorney granted pursuant to each Power of Attorney is
a power coupled with an interest and shall be irrevocable until this Agreement
has terminated in accordance with its terms and all of the Borrower Obligations
are indefeasibly paid or otherwise satisfied in full. The powers conferred on
the Lender under each Power of Attorney are solely to protect the Liens of the
Lender upon and interests in the Borrower Collateral and shall not impose any
duty upon the Lender to exercise any such powers. The Lender shall not be
accountable for any amount other than amounts that it actually receives as a
result of the exercise of such powers and none of the Lender's officers,
directors, employees, agents or representatives shall be responsible to the
Borrower, any Originator, the Servicer or any other Person for any act or
failure to act, except to the extent of damages attributable to their own gross
negligence or willful misconduct as finally determined by a court of competent
jurisdiction.
Section 10.04. Continuing Security Interest. This Agreement shall create a
continuing Lien in the Borrower Collateral until the Termination Date.
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ARTICLE XI.
SUCCESSOR SERVICER PROVISIONS
Section 11.01. Servicer Not to Resign. The Servicer shall not resign from
the obligations and duties hereby imposed on it except upon a determination that
(a) the performance of its duties hereunder has become impermissible under
applicable law or regulation and (b) there is no reasonable action that the
Servicer could take to make the performance of its duties hereunder become
permissible under applicable law. Any such determination shall (i) with respect
to clause (a) above, be evidenced by an opinion of counsel to such effect and
(ii) with respect to clause (b) above, be evidenced by an Officer's Certificate
to such effect, in each case delivered to the Lender.
Section 11.02. Appointment of the Successor Servicer. In connection with
the termination of the Servicer's responsibilities or the resignation by the
Servicer under this Agreement pursuant to Sections 9.02 or 11.01, the Lender (a)
shall succeed to and assume all of the Servicer's responsibilities, rights,
duties and obligations as Servicer (but not in any other capacity, including
specifically not the obligations of the Servicer set forth in Section 12.02)
under this Agreement (and except that the Lender makes no representations and
warranties pursuant to Section 4.02) and (b) may at any time appoint a successor
servicer to the Servicer that shall be acceptable to the Lender and shall
succeed to all rights and assume all of the responsibilities, duties and
liabilities of the Servicer under this Agreement (the Lender, in such capacity,
or such successor servicer being referred to as the "Successor Servicer");
provided, that the Successor Servicer shall have no responsibility for any
actions of the Servicer prior to the date of its appointment or assumption of
duties as Successor Servicer. In selecting a Successor Servicer, the Lender may
obtain bids from any potential Successor Servicer and may agree to any bid it
deems appropriate; provided, that the Successor Servicer shall not be a direct
competitor of ▇▇▇▇▇▇ Micro (except for affiliates of the Lender other than GE's
IT Solutions business) unless such restriction is waived by ▇▇▇▇▇▇ Micro. The
Successor Servicer shall accept its appointment by executing, acknowledging and
delivering to the Lender an instrument in form and substance acceptable to the
Lender.
Section 11.03. Duties of the Servicer. The Servicer covenants and agrees
that, following the appointment of, or assumption of duties by, a Successor
Servicer:
(a) The Servicer shall terminate its activities as Servicer hereunder in
a manner that facilitates the transfer of servicing duties to the Successor
Servicer and is otherwise acceptable to the Lender and, without limiting the
generality of the foregoing, shall timely deliver (i) any funds to the Lender
that were required to be remitted to the Lender for deposit in the Collection
Account and (ii) all Servicing Records and other information with respect to the
Transferred Receivables to the Successor Servicer at a place selected by the
Successor Servicer. The Servicer shall account for all funds and shall execute
and deliver such instruments and do such other things as may be reasonably
required to vest and confirm in the Successor Servicer all rights, powers,
duties, responsibilities, obligations and liabilities of the Servicer.
(b) The Servicer shall terminate each existing Sub-Servicing Agreement
and the Successor Servicer shall not be deemed to have assumed any of the
Servicer's interests therein or to have replaced the Servicer as a party
thereto.
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Section 11.04. Effect of Termination or Resignation. Any termination of or
resignation by the Servicer hereunder shall not affect any claims that the
Borrower or the Lender may have against the Servicer for events or actions taken
or not taken by the Servicer arising prior to any such termination or
resignation.
ARTICLE XII.
INDEMNIFICATION
Section 12.01. Indemnities by the Borrower.
(a) Without limiting any other rights that the Lender may have hereunder
or under applicable law, the Borrower hereby agrees to indemnify the Lender and
any of its agents, officers, directors and employees (each, a "Lender
Indemnified Person") from and against any and all Indemnified Amounts that may
be awarded against or incurred by any such Lender Indemnified Person in
connection with the entering into or performance of this Agreement or any other
Related Document (other than any action successfully brought by or on behalf of
the Borrower with respect to any determination by the Lender not to fund any
Advance or any action by the Lender to terminate or reduce the Commitment in
violation of the terms of this Agreement); provided, that the Borrower shall not
be liable for any indemnification to a Lender Indemnified Person (1) to the
extent that any such Indemnified Amount results from such Lender Indemnified
Person's gross negligence or willful misconduct, (2) to the extent otherwise
provided for in Sections 2.08(f) and 2.09, (3) in respect of special, punitive,
exemplary or consequential damages under this Section 12.01, except to the
extent that such damages are imposed on a Lender Indemnified Person as a result
of claims in respect of Indemnified Amounts asserted by an unaffiliated Person
not party to any of the Related Documents or any of the transactions
contemplated thereby, or (4) to the extent that any such Indemnified Amount
constitutes recourse (except as otherwise specifically provided herein or in any
other Related Document) for Charged-Off Receivables.
(b) In case any proceeding by any Person shall be instituted involving
any Lender Indemnified Person in respect of which indemnity may be sought
pursuant to subsection (a) of this Section 12.01, such Lender Indemnified Person
shall promptly notify the Borrower, and the Borrower, upon request of the Lender
Indemnified Person, shall retain counsel reasonably satisfactory to such Lender
Indemnified Person to represent such Lender Indemnified Person and shall pay the
reasonable fees and disbursements of such counsel related to such proceeding. In
any such proceeding, any Lender Indemnified Person shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Lender Indemnified Person unless (i) the Borrower has agreed
to pay such fees and expenses, (ii) the Borrower shall have failed to assume the
defense of such action or proceeding and employ counsel reasonably satisfactory
to the Lender in any such action or proceeding or (iii) the named parties to any
such action or proceeding (including any impleaded parties) include both the
Lender Indemnified Person and the Borrower, and the Lender Indemnified Person
shall have been advised by counsel that (A) there may be one or more legal
defenses available to it which are different from or additional to those
available to the Borrower and (B) the representation of the Borrower and the
Lender Indemnified Person by the same counsel would be inappropriate or
38
contrary to prudent practice (in which case, if the Lender Indemnified Person
notifies the Borrower in writing that it elects to employ separate counsel at
the expense of the Borrower, the Borrower shall not have the right to assume the
defense of such action or proceeding on behalf of such Lender Indemnified
Person, it being understood, however, that the Borrower shall not, in connection
with any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any time (in addition to
local counsel, if necessary) for the Lender Indemnified Persons, which firm (or
firms) shall be designated in writing by the Lender). The Borrower shall not be
liable for any settlement of any such action or proceeding effected without its
written consent to the extent that any such settlement shall be prejudicial to
the Borrower, but, if settled with its written consent, or if there be a final
judgment for the plaintiff in any such action or proceeding with respect to
which the Borrower shall have received notice in accordance with this subsection
(b), the Borrower agrees to indemnify and hold the Lender Indemnified Persons
harmless from and against any loss or liability by reason of such settlement or
judgment.
(c) Any payments to be made by the Borrower pursuant to this Section
12.01 shall not constitute a general recourse claim against the Borrower then
due at any time during the period of one year and one day following the date on
which all Borrower Obligations have been paid in full, except to the extent that
funds are available (including, but not limited to, funds available to the
Borrower pursuant to the exercise of its right to indemnity and other payments
pursuant to the Sale Agreement) to the Borrower to make such payments.
Section 12.02. Indemnities by the Servicer. The Servicer hereby agrees to
indemnify and hold harmless each Lender Indemnified Person, the Borrower and any
of its officers, directors, employees or agents (each, an "Indemnified Person")
from and against any loss, liability, expense, damage or injury suffered or
sustained by reason of any acts, omissions or alleged acts or omissions arising
out of, or relating to, its activities pursuant to this Agreement, including,
but not limited to, any judgment, award, settlement, reasonable attorneys fees
and other reasonable costs or expenses incurred in connection therewith;
provided that the Servicer shall not indemnify any Indemnified Person for any
liability, cost or expense of such Indemnified Person (i) arising from a default
by an Obligor with respect to any Receivable (except that indemnification shall
be made to the extent that such default arises out of the Servicer's failure to
perform its duties or obligations under this Agreement), (ii) to the extent that
such liability, cost or expense arises from the gross negligence, bad faith or
willful misconduct of such Indemnified Person, or (iii) with respect to any
federal, state or local income or franchise taxes or any other taxes imposed on
or measured by income (or any interest or penalties or additions with respect
thereto) required to be paid by the Lender in connection herewith to any taxing
authority. The provisions of this indemnity shall run directly to, and be
enforceable by, any injured party and shall survive the termination of this
Agreement or the resignation of the Servicer. In addition to the foregoing, the
Servicer shall indemnify and hold harmless each Indemnified Person from and
against any loss, liability, expense, damage or injury suffered or sustained by
reason of a breach by the Servicer of any covenant contained in this Agreement
that materially adversely affects the interests of the Borrower or the Lender
under this Agreement and the other Related Documents with respect to any
Receivable (an "Indemnification Event"), in an amount equal to the Outstanding
Balance at such time of such Receivable. Payment shall occur
39
on or prior to the 30th Business Day after the day such Indemnification Event
becomes known to the Servicer unless such Indemnification Event shall have been
cured on or before such day.
ARTICLE XIII.
[RESERVED]
ARTICLE XIV.
MISCELLANEOUS
Section 14.01. Notices. Except as otherwise provided herein, whenever it
is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by any other parties, or whenever any of the parties desires to
give or serve upon any other parties any communication with respect to this
Agreement, each such notice, demand, request, consent, approval, declaration or
other communication shall be in writing and shall be deemed to have been validly
served, given or delivered (a) upon the earlier of actual receipt and three
Business Days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid, (b) upon receipt,
when sent by facsimile (with receipt of such facsimile promptly confirmed by
delivery of a copy by personal delivery or United States Mail as otherwise
provided in this Section 14.01), (c) one Business Day after deposit with a
reputable overnight courier with all charges prepaid or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address or facsimile number set forth on Schedule 14.01
hereto or to such other address (or facsimile number) as may be substituted by
notice given as herein provided. The giving of any notice required hereunder may
be waived in writing by the party entitled to receive such notice. Subject to
the immediately succeeding sentence, failure or delay in delivering copies of
any notice, demand, request, consent, approval, declaration or other
communication to any Person designated in any written notice provided hereunder
to receive copies shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other communication.
Notwithstanding the foregoing, whenever it is provided herein that a notice is
to be given to any other party hereto by a specific time, such notice shall only
be effective on the date of receipt if actually received by such party at or
prior to such time, and if such notice is received after such time or on a day
other than a Business Day, such notice shall only be effective on the
immediately succeeding Business Day.
Section 14.02. Binding Effect; Assignability.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Servicer and the Lender and their respective successors and
permitted assigns. Neither the Borrower nor the Servicer may assign, transfer,
hypothecate or otherwise convey any of their respective rights or obligations
hereunder or interests herein without the express prior written consent of the
Lender. Any such purported assignment, transfer, hypothecation or other
conveyance by the Borrower or the Servicer without the prior express written
consent of the Lender shall be void.
40
(b) The Lender may at any time grant to one or more banks or other
institutions (each, a "Participant") participating interests in the Commitment
or any or all of the Advances in an amount at least equal to $5,000,000, with
(and subject to) the written consent of the Borrower, which consent shall not be
unreasonably withheld. In the event of any such grant by the Lender of a
participating interest to a Participant, the Lender shall remain responsible for
the performance of its obligations hereunder, and the Borrower shall continue to
deal directly with the Lender in connection with the Lender's rights and
obligations under this Agreement. Each Participant shall be entitled to the
benefits of Sections 2.08(f), 2.09, 2.10 and 12.01, but shall not be entitled to
receive any greater payment under any of such Sections than the Lender would
have been entitled to receive with respect to the rights transferred. Any
agreement pursuant to which the Lender may grant such a participating interest
shall provide that the Lender shall retain the sole right and responsibility to
enforce the obligations of the Borrower hereunder including, without limitation,
the right to approve any amendment, modification or waiver of any provision of
this Agreement; provided that such participation agreement may provide that the
Lender will not agree to any modification, amendment or waiver of this Agreement
with respect to (i) any reduction in the principal amount of, or interest rate
or Fees payable with respect to, any Advance in which such holder participates,
(ii) any extension of any scheduled payment of the principal amount of any
Advance in which such holder participates or the final maturity date thereof,
and (iii) any release of all or substantially all of the Borrower Collateral
(other than in accordance with the terms of this Agreement or the other Related
Documents).
(c) Except as expressly provided in this Section 14.02, the Lender shall
not be relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all or
any part of the Advances, the Revolving Note or other Borrower Obligations owed
to the Lender (it being understood that nothing in this subsection (c) shall be
construed to permit any transfer except those expressly contemplated by
subsection (b) above).
(d) The Borrower shall assist the Lender permitted to sell
participations under this Section 14.02 as reasonably required to enable the
selling Lender to effect any such participation, including the execution and
delivery of any and all agreements, notes and other documents and instruments as
shall be reasonably requested and the participation of management in meetings
with potential assignees or participants. The Borrower shall, if the Lender so
requests in connection with an initial syndication of the Advances hereunder,
assist in the preparation of informational materials for such syndication.
(e) The Lender may furnish any information concerning the Borrower in
the possession of the Lender from time to time to participants (including
prospective participants). The Lender shall obtain from all prospective and
actual participants confidentiality covenants substantially equivalent to those
contained in Section 14.05.
Section 14.03. Termination; Survival of Borrower Obligations Upon
Commitment Termination Date.
41
(a) 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 the Termination Date.
(b) Except as otherwise expressly provided herein or in any other
Related Document, no termination or cancellation (regardless of cause or
procedure) of any commitment made by the Lender under this Agreement shall in
any way affect or impair the obligations, duties and liabilities of the Borrower
or the Servicer or the rights of any Affected Party relating to any unpaid
portion of the Borrower Obligations, due or not due, liquidated, contingent or
unliquidated or any transaction or event occurring prior to such termination, or
any transaction or event, the performance of which is required after the
Commitment Termination Date. Except as otherwise expressly provided herein or in
any other Related Document, all undertakings, agreements, covenants, warranties
and representations of or binding upon the Borrower or the Servicer, and all
rights of any Affected Party hereunder, all as contained in the Related
Documents, shall not terminate or expire, but rather shall survive any such
termination or cancellation and shall continue in full force and effect until
the Termination Date; provided, that the rights and remedies provided for herein
with respect to any breach of any representation or warranty made by the
Borrower or the Servicer pursuant to Article IV, the indemnification and payment
provisions of Article XII and Sections 14.04, 14.05 and 14.06 shall be
continuing and shall survive the Termination Date.
Section 14.04. Costs, Expenses and Taxes. (a) The Borrower agrees to pay
all reasonable fees and out-of-pocket costs and expenses of the Lender
(including, without limitation, reasonable fees and disbursements of counsel to
the Lender) in connection with (i) the preparation, execution and delivery of
this Agreement and the other Related Documents and amendments or waivers of any
such documents, (ii) the enforcement by the Lender of the obligations and
liabilities of the Borrower and the Servicer under this Agreement or any Related
Document and (iii) any restructuring or workout of this Agreement or any Related
Document.
(b) (i) Prior to the occurrence and continuance of a Termination Event,
the Borrower agrees to pay reasonable fees, out-of-pocket costs and expenses
incurred by representatives of the Lender, in an aggregate amount not to exceed
$35,000 in any calendar year, in connection with any inspection of the
Borrower's or the Servicer's offices, properties, books and records and/or any
discussions with the officers, employees and independent public accountants of
the Borrower or the Servicer.
(ii) Following the occurrence and during the continuance of a
Termination Event, the Borrower agrees to pay reasonable fees and
out-of-pocket costs and expenses of representatives of the Lender in
connection with any inspection of the Borrower's or the Servicer's
offices, properties, books and records and any discussions with the
officers, employees and the independent public accountants of the Borrower
or the Servicer.
Section 14.05. Confidentiality.
42
(a) Except to the extent otherwise required by applicable law or
regulation or subpoena or similar legal process or as required to be filed
publicly with the Securities and Exchange Commission, or unless the Lender shall
otherwise consent in writing, the Borrower and the Servicer each agrees to
maintain the confidentiality of this Agreement (and all drafts hereof and
documents ancillary hereto), in its communications with third parties other than
any Affected Party or any Indemnified Person and otherwise and not to disclose,
deliver or otherwise make available to any third party (other than its
directors, officers, employees, accountants or counsel or ratings agencies or
credit insurance providers) the original or any copy of all or any part of this
Agreement (or any draft hereof and documents ancillary hereto) except to an
Affected Party or an Indemnified Person.
(b) The Borrower and the Servicer each agrees that it shall not (and
shall not permit any of its Subsidiaries to) issue any news release or make any
public announcement pertaining to the transactions contemplated by this
Agreement and the other Related Documents without the prior written consent of
the Lender (which consent shall not be unreasonably withheld) unless such news
release or public announcement is required by law, in which case the Borrower or
the Servicer, as applicable, shall consult with the Lender prior to the issuance
of such news release or public announcement. The Borrower may, however, disclose
the general terms of the transactions contemplated by this Agreement and the
other Related Documents to trade creditors, suppliers and other
similarly-situated Persons so long as such disclosure is not in the form of a
news release or public announcement.
(c) The Lender agrees to maintain the confidentiality of the Information
(as defined below), and will not use such confidential Information for any
purpose or in any matter except in connection with this Agreement, except that
Information may be disclosed (1) to (i) each Affected Party and (ii) its and
each Affected Party's and their respective Affiliates' directors, officers,
employees and agents, including accountants, legal counsel and other advisors
(it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential and to not disclose or use such Information in
violation of Regulation FD (17 C.F.R. Section 243.100-243.103)), (2) any
regulatory authority (it being understood that it will to the extent reasonably
practicable provide the Borrower with an opportunity to request confidential
treatment from such regulatory authority), (3) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (4)
to any other party to this Agreement, (5) to the extent required in connection
with the exercise of any remedies hereunder or any suit, action or proceeding
relating to this Agreement or any other Related Document or the enforcement of
rights hereunder or thereunder, (6) subject to an agreement containing
provisions substantially the same as those of this Section, to any participant
in, or any prospective participant in, any of its rights or obligations under
this Agreement, (7) with the consent of the Borrower or (8) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or any other confidentiality agreement to which the Lender is party
with the Borrower or the Parent or any subsidiary thereof or (ii) becomes
available to the Lender on a nonconfidential basis from a source other than the
Parent or any subsidiary thereof. For the purposes of this Section,
"Information" means all information received from or on behalf of the Borrower
and the Servicer relating to the Borrower, the Servicer, the Parent or any
subsidiary thereof or their businesses, or any Obligor, other than any such
information that is available to the Lender on a
43
nonconfidential basis prior to disclosure by the Borrower or Servicer; provided
that in the case of information (other than any information related to an
Obligor or financial projections) received from the Borrower or Servicer after
the date hereof, such information is clearly identified at the time of delivery
as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.
Section 14.06. Complete Agreement; Modification of Agreement. This
Agreement and the other Related Documents constitute the complete agreement
among the parties hereto with respect to the subject matter hereof and thereof,
supersede all prior agreements and understandings relating to the subject matter
hereof and thereof, and may not be modified, altered or amended except as set
forth in Section 14.07.
Section 14.07. Amendments and Waivers.
(a) Except for actions expressly permitted to be taken by the Lender, no
amendment, modification, termination or waiver of any provision of this
Agreement or the Revolving Note, or any consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Borrower and the Lender.
(b) Each amendment, modification, termination or waiver shall be
effective only in the specific instance and for the specific purpose for which
it was given. No notice to or demand on the Borrower in any case shall entitle
the Borrower to any other or further notice or demand in similar or other
circumstances.
(c) Upon indefeasible payment in full in cash and performance of all of
the Borrower Obligations (other than indemnification Borrower Obligations under
Section 12.01), termination of the Commitment and a release of all claims
against the Lender, and so long as no suits, actions, proceedings or claims are
pending or threatened against any Indemnified Person asserting any damages,
losses or liabilities that are Indemnified Liabilities, the Lender shall deliver
to the Borrower termination statements and other documents necessary or
appropriate to evidence the termination of the Liens securing payment of the
Borrower Obligations.
Section 14.08. No Waiver; Remedies. The failure by the Lender, at any time
or times, to require strict performance by the Borrower or the Servicer of any
provision of this Agreement, any Receivables Assignment or any other Related
Document shall not waive, affect or diminish any right of the Lender thereafter
to demand strict compliance and performance herewith or therewith. Any
suspension or waiver of any breach or default hereunder shall not suspend, waive
or affect any other breach or default whether the same is prior or subsequent
thereto and whether the same or of a different type. None of the undertakings,
agreements, warranties, covenants and representations of the Borrower or the
Servicer contained in this Agreement, any Receivables Assignment or any other
Related Document, and no breach or default by the Borrower or the Servicer
hereunder or thereunder, shall be deemed to have been suspended or waived by the
Lender unless such waiver or suspension is by an instrument in writing signed by
an officer of or other duly authorized signatory of the Lender and directed to
44
the Borrower or the Servicer, as applicable, specifying such suspension or
waiver. The rights and remedies of the Lender under this Agreement and the other
Related Documents shall be cumulative and nonexclusive of any other rights and
remedies that the Lender may have hereunder, thereunder, under any other
agreement, by operation of law or otherwise. Recourse to the Borrower Collateral
shall not be required.
Section 14.09. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL.
(a) THIS AGREEMENT AND EACH OTHER RELATED DOCUMENT (EXCEPT TO THE EXTENT
THAT ANY RELATED DOCUMENT EXPRESSLY PROVIDES TO THE CONTRARY) AND THE
OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL IN ALL RESPECTS, INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
(INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAWS BUT OTHERWISE WITHOUT
REGARD TO CONFLICTS OF LAW PRINCIPLES) EXCEPT TO THE EXTENT THAT THE PERFECTION,
EFFECT OF PERFECTION OR PRIORITY OF THE INTERESTS OF THE LENDER IN THE
RECEIVABLES OR REMEDIES HEREUNDER OR THEREUNDER, IN RESPECT THEREOF, ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK, AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
(b) EACH PARTY HERETO HEREBY CONSENTS AND AGREES THAT THE STATE OR
FEDERAL COURTS LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THEM
PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER RELATED DOCUMENT; PROVIDED, THAT EACH PARTY HERETO
ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT
LOCATED OUTSIDE OF THE BOROUGH OF MANHATTAN IN NEW YORK CITY; PROVIDED FURTHER
THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE LENDER
FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO
REALIZE ON THE BORROWER COLLATERAL OR ANY OTHER SECURITY FOR THE BORROWER
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE
LENDER. EACH PARTY HERETO SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION
IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH PARTY HERETO HEREBY
WAIVES, TO THE EXTENT PERMITTED BY LAW, ANY OBJECTION THAT SUCH PARTY MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS
AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY SUCH COURT. EACH PARTY HERETO HEREBY WAIVES
45
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PARTY AT
THE ADDRESS PROVIDED FOR IN SECTION 14.01 HEREOF AND THAT SERVICE SO MADE SHALL
BE DEEMED COMPLETED UPON THE EARLIER OF SUCH PARTY'S ACTUAL RECEIPT THEREOF OR
THREE DAYS AFTER DEPOSIT IN THE UNITED STATES MAIL, PROPER POSTAGE PREPAID.
NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
(c) BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE, TO THE EXTENT PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED
TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER RELATED DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
Section 14.10. Counterparts. This Agreement may be executed in any number
of separate counterparts, each of which shall collectively and separately
constitute one agreement.
Section 14.11. Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
Section 14.12. Section Titles. The section, titles and table of contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
Section 14.13. Further Assurances.
(a) Each of the Borrower and the Servicer shall, at its sole cost and
expense, upon request of the Lender, promptly and duly execute and deliver any
and all further instruments and documents and take such further action that may
be necessary or desirable or
46
that the Lender may reasonably request to (i) perfect, protect, preserve,
continue and maintain fully the Liens granted to the Lender under this
Agreement, (ii) enable the Lender to exercise and enforce its rights under this
Agreement or any of the other Related Documents or (iii) otherwise carry out
more effectively the provisions and purposes of this Agreement or any other
Related Document. Without limiting the generality of the foregoing, the Borrower
shall, upon request of the Lender, (A) authorize for filing such financing or
continuation statements, or amendments thereto or assignments thereof, and
execute such other instruments or notices, in each case that may be necessary or
desirable or that the Lender may request to perfect, protect and preserve the
Liens granted pursuant to this Agreement, free and clear of all Adverse Claims
and (B) from and after the occurrence of a Termination Event, notify or cause
the Servicer to notify Obligors of the Liens on the Transferred Receivables and
other Receivable Assets granted hereunder.
(b) Without limiting the generality of the foregoing, the Borrower
hereby authorizes the Lender to file one or more financing or continuation
statements, or amendments thereto or assignments thereof, relating to all or any
part of the Transferred Receivables and other Receivable Assets, including
Collections with respect thereto, or the Borrower Collateral without the
signature of the Borrower or, as applicable, the Lender to the extent permitted
by applicable law. A carbon, photographic or other reproduction of this
Agreement or of any notice or financing statement covering the Transferred
Receivables and other Receivable Assets, the Borrower Collateral or any part
thereof shall be sufficient as a notice or financing statement where permitted
by law.
47
IN WITNESS WHEREOF, the parties have caused this Receivables Funding
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
▇▇▇▇▇▇ FUNDING INC., as the Borrower
By /s/ ▇▇▇ ▇▇▇▇▇
-----------------------------------
Name ▇▇▇ ▇▇▇▇▇
Title Assistant Treasurer
▇▇▇▇▇▇ MICRO INC., as the Servicer
By /s/ P. ▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
Name P. ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title Senior Director and Worldwide
Assistant Treasurer
Signature Page
to
Receivables Funding Agreement
GENERAL ELECTRIC CAPITAL CORPORATION,
as Lender
By /s/ ▇▇▇▇▇▇ ▇▇▇▇
-----------------------------------
Name ▇▇▇▇▇▇ ▇▇▇▇
---------------------------------
Duly Authorized Signatory
Signature Page
to
Receivables Funding Agreement
Schedule 9.01(s) to Funding Agreement
Financial Covenants
During any period in which the long-term senior unsecured debt of ▇▇▇▇▇▇
Micro is rated "BB" or lower by S&P or "Ba2" or lower by ▇▇▇▇▇'▇, ▇▇▇▇▇▇ Micro
will not permit any of the following:
(i) the ratio of (x) Consolidated EBITDA for any period of four
consecutive Fiscal Periods to (y) Consolidated Interest Charges for such period
to be less than 2.5 to 1.0; provided that, for purposes of calculating the
preceding ratio the contribution of any Subsidiary of ▇▇▇▇▇▇ Micro acquired (to
the extent the acquisition is treated for accounting purposes as a purchase)
during those four Fiscal Periods to Consolidated EBITDA shall be calculated on a
pro forma basis as if it had been a Subsidiary of ▇▇▇▇▇▇ Micro during all of
those four Fiscal Periods.
(ii) The Consolidated Tangible Net Worth at the end of any Fiscal Period
to be less than the sum of (x) $1,066,056,000, plus (y) 50% of Consolidated Net
Income (without taking into account any losses incurred in any Fiscal Year) for
each Fiscal Year ended on or after January 3, 2004.
Unless otherwise specifically defined below, each capitalized term used in this
Schedule 9.01(s) has the meaning assigned to such term in the Funding Agreement.
"Business Improvement Program Charges" means, for any period, the
aggregate business improvement program charges recorded in accordance with GAAP
by ▇▇▇▇▇▇ Micro and its Consolidated Subsidiaries during such period with
respect to the comprehensive business improvement program described in the
September 18, 2002 press release of ▇▇▇▇▇▇ Micro.
"Capitalized Lease Liabilities" of any Person means, at any time, any
obligation of such Person at such time to pay rent or other amounts under a
lease of (or other agreement conveying the right to use) real and/or personal
property, which obligation is, or in accordance with GAAP (including FASB
Statement 13) is required to be, classified and accounted for as a capital lease
on a balance sheet of such Person at the time incurred; and for purposes of the
Funding Agreement the amount of such obligation shall be the capitalized amount
thereof determined in accordance with such FASB Statement 13.
"Cash Business Improvement Program Charges" means Business Improvement
Program Charges that will require corresponding cash expenditure.
"Consolidated Assets" means, at any date, the total assets of ▇▇▇▇▇▇ Micro
and its Consolidated Subsidiaries as at such date in accordance with GAAP.
"Consolidated EBITDA" means, for any period, Consolidated Income (or Loss)
from Operations for such period adjusted by adding thereto (a) the amount of all
amortization of intangibles, depreciation and any other non-cash charges that
were deducted in arriving at Consolidated Income (or Loss) from Operations for
such period and (b) the amount of Cash Business Improvement Program Charges
recorded in accordance with GAAP during such period;
51
provided that the cumulative amount of Cash Business Improvement Program Charges
added may not exceed $50,000,000.
"Consolidated Income (or Loss) from Operations" means, for any period, the
amount of "income or loss from operations" (or any substituted or replacement
line item) reflected on a consolidated statement of net income of ▇▇▇▇▇▇ Micro
and its Consolidated Subsidiaries for such period in accordance with GAAP.
"Consolidated Interest Charges" means, with respect to any period, the sum
(without duplication) of the following (in each case, eliminating all offsetting
debits and credits between ▇▇▇▇▇▇ Micro and its Subsidiaries and all other items
required to be eliminated in the course of the preparation of consolidated
financial statements of ▇▇▇▇▇▇ Micro and its Subsidiaries in accordance with
GAAP):
(a) aggregate Net Interest Expense for such period plus, to the
extent not deducted in determining Consolidated Net Income for such
period, the amount of all interest previously capitalized or deferred that
was amortized during such period, plus
(b) all debt discount and expense amortized or required to be
amortized in the determination of Consolidated Net Income for such period,
plus
(c) all attributable interest and fees in lieu of interest
associated with any securitizations by ▇▇▇▇▇▇ Micro or any of its
Subsidiaries.
"Consolidated Liabilities" means, at any date, the sum of all obligations
of ▇▇▇▇▇▇ Micro and its Consolidated Subsidiaries as at such date in accordance
with GAAP.
"Consolidated Net Income" means, for any period, the consolidated net
income of ▇▇▇▇▇▇ Micro and its Consolidated Subsidiaries as reflected on a
statement of income of ▇▇▇▇▇▇ Micro and its Consolidated Subsidiaries for such
period in accordance with GAAP.
"Consolidated Stockholders' Equity" means, at any date:
(a) Consolidated Assets as at such date,
less
(b) Consolidated Liabilities as at such date.
"Consolidated Subsidiary" means any Subsidiary whose financial statements
are required in accordance with GAAP to be consolidated with the consolidated
financial statements delivered by ▇▇▇▇▇▇ Micro from time to time in accordance
with the Funding Agreement.
"Consolidated Tangible Net Worth" means, at any date:
(a) Consolidated Stockholders' Equity as at such date plus the
accumulated after-tax amount of non-cash charges and adjustments to income
and
52
Consolidated Stockholders' Equity attributable to employee stock options
and stock purchases through such date,
less
(b) goodwill and other Intangible Assets of ▇▇▇▇▇▇ Micro and its
Consolidated Subsidiaries.
"Fiscal Period" means a fiscal period of ▇▇▇▇▇▇ Micro or any of its
Subsidiaries, which shall be either a calendar quarter or an aggregate period
comprised of three (3) consecutive periods of four (4) weeks and five (5) weeks
(or, on occasion, six (6) weeks instead of five), currently commencing on or
about each January 1, April 1, July 1 or October 1.
"Fiscal Year" means, with respect to any Person, the fiscal year of such
Person. The term Fiscal Year, when used without reference to any Person, shall
mean a Fiscal Year of ▇▇▇▇▇▇ Micro, which currently ends on the Saturday nearest
December 31.
"GAAP" means U.S. generally accepted accounting principles as of the date
hereof; provided, however, that if, after the date hereof, there shall be any
change in ▇▇▇▇▇▇ Micro's Fiscal Year or GAAP (whether such modification is
adopted or imposed by the Federal Accounting Standards Board, the American
Institute of Certified Public Accountants or any other professional body) which
changes result in a change in the method of calculation of financial covenants
set forth in this Schedule 9.01(s), the parties hereto agree to promptly enter
into negotiations in order to amend such financial covenants so as to reflect
equitably such changes, with the desired result that the evaluations of ▇▇▇▇▇▇
Micro's financial condition shall be the same after such changes as if such
changes had not been made; provided, further, that until the parties hereto have
reached a definitive agreement on such amendments, ▇▇▇▇▇▇ Micro's financial
condition shall continue to be evaluated on the same principles as those in
effect on the date hereof.
"Intangible Assets" means, with respect to any Person, that portion of the
book value of the assets of such Person which would be treated as intangibles
under GAAP, including all items such as goodwill, trademarks, trade names,
brands, trade secrets, customer lists, copyrights, patents, licenses, franchise
conversion rights and rights with respect to any of the foregoing and all
unamortized debt or equity discount and expenses.
"Net Interest Expense" means, for any applicable period, the aggregate
interest expense of ▇▇▇▇▇▇ Micro and its Consolidated Subsidiaries (including
computed interest on Capitalized Lease Liabilities) deducted in determining
Consolidated Net Income for such period, net of interest income of ▇▇▇▇▇▇ Micro
and its Consolidated Subsidiaries included in determining Consolidated Net
Income for such applicable period.
"Person" means any natural person, company, partnership, firm, limited
liability company or partnership, association, trust, government, government
agency or any other entity, whether acting in an individual, fiduciary, or other
capacity.
"Subsidiary" means, with respect to any Person, any corporation, company,
partnership or other entity of which more than fifty percent (50%) of the
outstanding shares or
53
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors of, or other persons performing
similar functions for, such corporation, company, partnership or other entity
(irrespective of whether at the time shares or other ownership interests of any
other class or classes of such corporation, company, partnership or other entity
shall or might have voting power upon the occurrence of any contingency) is at
the time directly or indirectly owned by such Person, by such Person and one or
more Subsidiaries of such Person, or by one or more Subsidiaries of such Person.
54
ANNEX X
to
RECEIVABLES SALE AGREEMENT
and
RECEIVABLES FUNDING AGREEMENT
each dated as of
July 29, 2004
Definitions and Interpretation
SECTION 1. Definitions and Conventions. Capitalized terms used in the Sale
Agreement and the Funding Agreement shall have (unless otherwise provided
elsewhere therein) the following respective meanings:
"Additional Amounts" shall mean any amounts payable to any Affected Party
under Sections 2.09 or 2.10 of the Funding Agreement.
"Additional Costs" shall have the meaning assigned to it in Section
2.09(b) of the Funding Agreement.
"Additional Originator Supplement" shall have the meaning assigned to it
in Section 3.05(i) of the Sale Agreement.
"Adjustment Amount" shall have the meaning assigned to it in Section
2.06(a) of the Sale Agreement.
"Administrative Services Agreement" shall mean that certain Administrative
Services Agreement dated as of the date hereof between the Borrower and the
Parent, as the same may be amended, restated, supplemented or otherwise modified
from time to time.
"Advance" shall have the meaning assigned to it in Section 2.01 of the
Funding Agreement.
"Advance Date" shall mean each day on which any Advance is made.
"Adverse Claim" shall mean any claim of ownership or any Lien, other than
any ownership interest or Lien created under the Related Documents.
"Affected Party" shall mean each of the following Persons: the Lender, the
Depositary and each Affiliate of the foregoing Persons.
"Affiliate" shall mean, with respect to any specified Person, any other
Person which, directly or indirectly, is in control of, is controlled by, or is
under common control with, such specified Person, or in any event, a Person
which has the power to vote 25% or more of the securities having ordinary voting
power for the election of directors of the specified Person. For purposes of
this definition, "control" of a Person means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or
otherwise, and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Aged Receivables Ratio" shall mean, as of the last day of each Settlement
Period, the percentage equivalent of a fraction, (i) the numerator of which
shall be equal to the sum of (a) the aggregate Outstanding Balance of
Receivables originated by the Originators that were 91 to 120 days past due as
of
such day and (b) the aggregate Outstanding Balance of Charged-Off Receivables
of the Originators that were charged off during such Settlement Period as
uncollectible prior to the day that is 91 days after the original due date of
each such Receivable, and (ii) the denominator of which shall be the aggregate
Outstanding Balance of Receivables originated by the Originators during the
fourth prior Settlement Period.
"Appendices" shall mean, with respect to any Related Document, all
exhibits, schedules, annexes and other attachments thereto, or expressly
identified thereto.
"Applicable Insolvency Laws" shall have the meaning assigned to it in
Section 9.01(d) of the Funding Agreement.
"Applicable Margin" shall mean, as of any date of determination, the
margin set forth in the table below opposite the then current long-term senior
unsecured debt rating of ▇▇▇▇▇▇ Micro:
Long-Term Senior Unsecured Debt
Rating of ▇▇▇▇▇▇ Micro Applicable Margin
---------------------- -----------------
"BBB-" or higher by S&P and "Baa3" 0.70%
or higher by ▇▇▇▇▇'▇
"BB+" or lower by S&P or "Ba1" 0.75%
or lower by ▇▇▇▇▇'▇
"Bankruptcy Code" shall mean the provisions of title 11 of the United
States Code, 11 U.S.C. Sections 101 et seq.
"Billed Amount" shall mean, with respect to any Receivable, the amount
billed on the Billing Date to the Obligor thereunder.
"Billing Date" shall mean, with respect to any Receivable, the date on
which the invoice with respect thereto was generated.
"Board" shall mean the Board of Governors of the Federal Reserve system of
the United States of America.
"Borrower" shall mean ▇▇▇▇▇▇ Funding Inc., a Delaware corporation, in its
capacity as Borrower under the Funding Agreement.
"Borrower Account" shall mean the account designated as such on Annex W to
the Funding Agreement, which account shall be maintained at the Borrower Account
Bank.
"Borrower Account Bank" shall mean the bank or other financial institution
at which the Borrower Account is maintained. As of the Effective Date, the
"Borrower Account Bank" is the financial institution identified as the "Borrower
Account Bank" on Annex W to the Funding Agreement.
"Borrower Account Collateral" shall have the meaning assigned to it in
Section 8.01(c) of the Funding Agreement.
"Borrower Assigned Agreements" shall have the meaning assigned to it in
Section 8.01(b) of the Funding Agreement.
"Borrower Collateral" shall have the meaning assigned to it in Section
8.01 of the Funding Agreement.
"Borrower Material Adverse Effect" shall mean (i) any material impairment
of the Borrower's ability to perform any of its material obligations or to
comply with or conduct its business in accordance with any of its material
representations, warranties, covenants or agreements under any Related Document
or (ii) any material impairment of the interests, rights or remedies of the
Lender against or with respect to the Borrower, in the Receivables or under any
Related Document.
"Borrower Obligations" shall mean all loans, advances, debts, liabilities,
indemnities and obligations for the performance of covenants, tasks or duties or
for payment of monetary amounts (whether or not such performance is then
required or contingent, or such amounts are liquidated or determinable) owing by
the Borrower to any Affected Party under the Funding Agreement and any document
or instrument delivered pursuant thereto, and all amendments, extensions or
renewals thereof, and all covenants and duties regarding such amounts, of any
kind or nature, present or future, whether or not evidenced by any note,
agreement or other instrument, arising thereunder, including the Outstanding
Principal Amount, interest, Unused Commitment Fees, amounts in reduction of
Funding Excess, Successor Servicing Fees and Expenses, Additional Amounts and
Indemnified Amounts. This term includes all principal, interest (including all
interest that accrues after the commencement of any case or proceeding by or
against the Borrower in bankruptcy, whether or not allowed in such case or
proceeding), fees, charges, expenses, attorneys' fees and any other sum
chargeable to the Borrower under any of the foregoing, whether now existing or
hereafter arising, voluntary or involuntary, whether or not jointly owed with
others, direct or indirect, absolute or contingent, liquidated or unliquidated,
and whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such obligations that
are paid to the extent all or any portion of such payment is avoided or
recovered directly or indirectly from the Lender or any assignee of the Lender
as a preference, fraudulent transfer or otherwise.
"Borrowing Base" means, as of any date of determination, the amount equal
to
the lesser of:
(a) the Commitment, and
(b) the product of (1) the Dynamic Advance Rate multiplied by (2) the Net
Receivables Balance;
in each case as disclosed in the most recently submitted Borrowing Base
Certificate or Borrowing Request or as otherwise determined by the Lender in its
good faith judgment based on Borrower Collateral information available to it,
including any information obtained from any audit or from any other reports with
respect to the Borrower Collateral, which determination shall be final, binding
and conclusive on all parties to the Funding Agreement (absent manifest error).
"Borrowing Base Certificate" shall have the meaning assigned to it in
Section 5.02(b) of the Funding Agreement.
"Borrowing Request" shall have the meaning assigned to it in Section
2.03(a) of the Funding Agreement.
"Breakage Costs" shall have the meaning assigned to it in Section 2.10 of
the Funding Agreement.
"Business Day" shall mean any day that is not a Saturday, a Sunday or a
day on which banks are required or permitted to be closed in the State of New
York, the State of California or, with respect to any remittances to be made by
a Lockbox Account Bank or to any related Lockbox Account, in the jurisdiction(s)
in which the Lockbox Account(s) maintained by such Lockbox Account Bank is
located.
"Buyer" shall mean ▇▇▇▇▇▇ Funding Inc., a Delaware corporation, in its
capacity as Buyer under the Sale Agreement.
"Capital Lease" shall mean, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, would be required to be classified and accounted for as a
capital lease on a balance sheet of such Person.
"Capital Lease Obligation" shall mean, with respect to any Capital Lease
of any Person, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease.
"Change of Control" shall mean the occurrence of any event the result of
which causes ▇▇▇▇▇▇ Funding Inc. not to be a direct or indirect, wholly owned
Subsidiary of ▇▇▇▇▇▇ Micro Inc.
"Charged-Off Receivables" shall mean, with respect to any Settlement
Period, all Receivables which, in accordance with the Credit and Collection
Policy, have been or should have been written off during such Settlement Period
as uncollectible, including without limitation the Receivables of any Obligor
(other than a Qualifying DIP Obligor) which becomes the subject of any voluntary
or involuntary bankruptcy proceeding.
"Collection Account" shall mean account number ▇▇-▇▇▇-▇▇▇ with the
Depositary in the name of the Lender.
"Collections" shall mean, with respect to any Receivable, all cash
collections and other proceeds of such Receivable (including late charges, fees
and interest arising thereon, and all recoveries with respect thereto that have
been written off as uncollectible).
"Commitment" shall mean the commitment of the Lender to make Advances,
which commitment shall be Five Hundred Million Dollars ($500,000,000) on the
Effective Date, as such amount may be adjusted, if at all, from time to time in
accordance with the Funding Agreement.
"Commitment Increase Notice" shall have the meaning assigned to it in
Section 2.02(c) of the Funding Agreement.
"Commitment Reduction Notice" shall have the meaning assigned to it in
Section 2.02(a) of the Funding Agreement.
"Commitment Termination Date" shall mean the earliest of (a) the date so
designated pursuant to Section 9.01 of the Funding Agreement, (b) the Final
Advance Date, and (c) the date of termination of the Commitment specified in a
notice from the Borrower to the Lender delivered pursuant to and in accordance
with Section 2.02(b) of the Funding Agreement.
"Commitment Termination Notice" shall have the meaning assigned to it in
Section 2.02(b) of the Funding Agreement.
"Concentration Percentage" shall mean, with respect to an Obligor as of
any date of determination, the General Concentration Percentage or, if
applicable, the Special Concentration Percentage for such Obligor at such date
of determination.
"Contract" shall mean any agreement or invoice pursuant to, or under
which, an Obligor shall be obligated to make payments with respect to any
Receivable.
"Contractual Obligation" shall mean, as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Contributed Receivables" shall have the meaning assigned to it in Section
2.01(d) of the Sale Agreement.
"Credit Agreement" shall mean that certain Credit Agreement, dated as of
December 13, 2002, among ▇▇▇▇▇▇ Micro, as an initial borrower and guarantor,
Ingram European Coordination Center N.V., as an initial borrower, certain
financial institutions party thereto, as lenders, The Bank of Nova Scotia, as
administrative agent and ABN AMRO Bank N.V., as syndication agent, and as in
effect on the Effective Date together with such amendments, restatements,
supplements or modifications thereto, or any refinancings, replacements or
refundings thereof.
"Credit and Collection Policy" shall mean the written credit and
collection policy of the Servicer in effect on the Effective Date and attached
as Exhibit A to the Funding Agreement, as the same may from time to time be
amended, restated, supplemented or otherwise modified in accordance with the
Related Documents.
"Days Sales Outstanding" shall mean, as of any Settlement Date and
continuing until the next Settlement Date, the number of days equal to the
product of (a) 91 and (b) the amount obtained by dividing (i) the aggregate
Outstanding Balance of Receivables as of the last day of the Settlement Period
immediately preceding such earlier Settlement Date, by (ii) the aggregate
Outstanding Balance of Receivables generated by the Originators during the three
Settlement Periods immediately preceding such earlier Settlement Date.
"DCM" shall refer to the operations categorized as the Direct Consumer
Marketing from time to time on the internal records of ▇▇▇▇▇▇ Micro or any
Subsidiary, which operations generally include the marketing of products to
certain retailers engaged in mass marketing. The activities so categorized and
the specific obligors included therein may change from time to time in the good
faith determination of ▇▇▇▇▇▇ Micro or any Subsidiary.
"Debt" shall mean, with respect to any Person at any date, (a) all
indebtedness of such Person for borrowed money, (b) any obligation owed for the
deferred purchase price of property or services which purchase price is
evidenced by a note or similar written instrument, (c) notes payable and drafts
accepted representing extensions of credit whether or not representing
obligations for borrowed money, (d) that portion of obligations of such Person
under capital leases which is properly classified as a liability on a balance
sheet in conformity with GAAP, (e) all liabilities of the type described in the
foregoing clauses (a)
through (d) secured by any Lien on any property owned by such Person even though
such Person has not assumed or otherwise become liable for the payment thereof
and (f) guarantees made by such Person with respect to liabilities of the type
described in the foregoing clauses (a) through (e).
"Default Rate" shall have the meaning assigned to such term in Section
2.06(b) of the Funding Agreement.
"Default Ratio" shall mean, as of any date of determination, the ratio
(expressed as a percentage) of:
(a) the aggregate Outstanding Balance of all Defaulted Receivables as of
the last day of the six Settlement Periods immediately preceding such date;
to
(b) the aggregate Outstanding Balance of all Transferred Receivables as
of the last day of the six Settlement Periods immediately preceding such date.
"Defaulted Receivable" shall mean any Receivable (a) with respect to which
any payment, or part thereof, remains unpaid for more than 60 days after its
Maturity Date, or (b) which is a Charged-Off Receivable.
"Depositary" has the meaning given such term in Section 6.01(b)(i) of the
Funding Agreement.
"Dilution Adjustment" shall mean the amount (expressed in Dollars) by
which the Outstanding Balance of a Receivable is reduced as a result of a
Dilution Factor with respect to such Receivable.
"Dilution Adjustment Payment" has the meaning given such term in Section
2.05 of the Sale Agreement.
"Dilution Factors" shall mean, with respect to any Receivable, (x) any
portion of such Receivable that was reduced, canceled or written-off as a result
of any payments, rebates, discounts, refunds or adjustments (including without
limitation, as a result of the application of any special or other discounts or
any reconciliations) with respect to such Receivable, (y) the amount owing for
any returns (including, without limitation, as a result of the return of any
defective goods) or cancellations and (z) the amount of any other reduction of
any payment under any Receivable, in each case granted or made by the Originator
thereof to the related Obligor; provided that a "Dilution Factor" does not
include any Charged-Off Receivable.
"Dilution Horizon" shall mean the number of days from the Billing Date of
a Receivable until the earlier of (i) the date on which the Outstanding Balance
of such Receivable is adjusted by the Borrower or the Servicer as a result of a
Dilution Factor with respect to such Receivable and (ii) the date on which the
Borrower or the Servicer receives notice that the Outstanding Balance of such
Receivable will have to be adjusted by the Borrower or the Servicer as a result
of a Dilution Factor with respect to such Receivable.
"Dilution Horizon Factor" shall mean, as of any date of determination and
relating to the six Settlement Periods preceding such date, a fraction, the
numerator of which is the dollar weighted average Dilution Horizon (based upon
the aggregate amount of the Dilution Adjustments of the selected Receivables)
for such six Settlement Periods (which shall be calculated by the Servicer, in
accordance with its past procedures for such calculations, selecting a random
sample of approximately 1000 Dilution Adjustment memos created during such
period and determining the dollar weighted average Dilution Horizon therefrom)
and the denominator of which is 30.
"Dilution Period" shall mean, as of any Settlement Date and continuing
until (but not including) the next Settlement Date, the quotient of (i) the
product of (A) the aggregate Outstanding Balance of Receivables that were
originated by the Originators during the Settlement Period preceding such
earlier Settlement Date and (B) the Dilution Horizon Factor divided by (ii) the
aggregate Outstanding Balance of Receivables as of the last day of the
Settlement Period preceding such earlier Settlement Date.
"Dilution Ratio" shall mean, as of the last day of any Settlement Period,
the ratio (expressed as a percentage) of:
(a) the aggregate amount of Dilution Adjustments for all Transferred
Receivables during the Settlement Period then ended
to
(b) the aggregate Billed Amount of all Transferred Receivables
originated during the Settlement Period then ended.
"Dilution Reserve Ratio" shall mean, as of any Settlement Date and
continuing until (but not including) the next Settlement Date, the ratio
(expressed as a percentage) calculated as follows:
DRR = [(c * d) + [(e-d) * (e/d)]] * f
Where:
DRR = Dilution Reserve Ratio;
c = 2.00;
d = the twelve-month rolling average of the Dilution Ratios
calculated as of the last day of each of the twelve consecutive
Settlement Periods immediately preceding such earlier Settlement Date;
e = the highest Dilution Ratio calculated during the twelve
consecutive Settlement Periods immediately preceding such earlier
Settlement Date; and
f = the Dilution Period as of the last day of the Settlement
Period immediately preceding such earlier Settlement Date.
"Discounted Percentage" shall mean (a) from the Effective Date until the
date which is 90 days after the Effective Date, 25% and (b) thereafter, the
percentage obtained from the following formula as determined by ▇▇▇▇▇▇ Micro for
each Originator as of each Settlement Date:
100% - (A + B + C + D)
Where:
A = Adjusted Loss Reserve Percentage, which as of such Settlement Date
will equal the ratio obtained by dividing (a) Charged-Off Receivables (net of
recoveries in respect of Charged-Off Receivables) with respect to such
Originator during the six-fiscal-month period immediately preceding such
Settlement Date by (b) two times the aggregate amount of Collections during the
three-fiscal-month period immediately preceding such Settlement Date with
respect to Receivables originated by such Originator.
B = Adjusted Interest Reserve Percentage, which as of such Settlement Date
will equal the amount obtained by dividing (a) the product of (i) 1.5, (ii) Days
Sales Outstanding and (iii) the LIBOR Rate for a LIBOR Period of one month plus
2% by (b) 360.
C = The Servicing Fee Rate divided by 360.
D = Processing Expense Reserve Percentage, which will equal 0.50% and
reflects the cost of the ▇▇▇▇▇▇ Micro's overhead, including costs of processing
the purchase of Receivables and other normal operating costs and a reasonable
profit margin.
None of the elements of the above-referenced formula, in respect of any
purchase of Receivables, will be adjusted following the related Settlement Date.
With respect to each calculation set forth above with respect to a
Settlement Date, such calculation as calculated on such Settlement Date shall
remain in effect from and including such Settlement Date to but excluding the
following Settlement Date.
"Documents" shall have the meaning assigned to it in Section 7.02(b)(iii)
of the Sale Agreement.
"Dollars" or "$" shall mean lawful currency of the United States of
America.
"Dynamic Advance Rate" shall mean, as of any date of determination, the
lesser of (i) 80% and (ii) a percentage equal to 100% minus the sum of (a) the
Dilution Reserve Ratio as of such date, (b) the Interest Reserve Ratio as of
such date, (c) the Loss Reserve Ratio as of such date, and (d) the Servicing
Reserve Ratio as of such date.
"Early Termination" shall have the meaning assigned to it in Section 7.01
of the Sale Agreement.
"Effective Date" shall mean July 29, 2004, the date on which the Funding
Agreement shall be effective in accordance with Section 3.01 thereof.
"Eligible Letter of Credit" shall mean any irrevocable documentary credit
(a direct-pay letter of credit) or any irrevocable standby letter of credit
supporting a Receivable, or two or more Receivables sold to the Borrower by the
same Originator, that is (a) either (i) issued in favor of such Originator or
the Borrower and the right to draw under which is, or the proceeds of which are,
legally transferable and assignable to the Lender or (ii) issued in favor of the
Lender, (b) governed by the UCC of a state of the United States of America,
governed by the UCP 500 or governed as to certain terms by the UCP 500 and as to
any remaining terms by the UCC of a state of the United States of America, (c)
issued by a commercial bank that (i) has a combined capital and surplus of at
least $50,000,000 (ii) has (or the holding company parent of which has) either a
long-term or a short-term senior unsecured debt rating in the highest rating
category by each of ▇▇▇▇▇'▇ and S&P and (iii) is either organized under the laws
of (A) the United States or a State thereof or is a U.S. branch or agency of
such commercial bank, or (B) a country having sovereign rating of "AA" or
better, (d) permits the beneficiary to draw, upon notice to the issuing bank, an
amount equal to the entire Outstanding Balance of any Receivable supported
thereby in U.S. Dollars payable by the issuing bank to the Lender, as assignee
or as original beneficiary, in the case of a documentary credit (a direct-pay
letter of credit), on or before the due date of such Receivable and, in the case
of a standby letter of credit, on or before the fifth day following the due date
of such Receivable and (e) with respect to which the prior written consent of
the Lender has been obtained if the Receivables supported by such Letter of
Credit are to be considered "Eligible Receivables".
"Election Notice" shall have the meaning assigned to it in Section 2.01(d)
of the Sale Agreement.
"Eligible Receivable" shall mean, as of any date of determination, a
Transferred Receivable:
E. that is not a Defaulted Receivable;
F. the goods related to it shall have been shipped (and such goods are
not subject to a ▇▇▇▇ and hold arrangement) or the services related to it shall
have been performed and such Receivable shall have been billed to the related
Obligor;
G. that is denominated and payable only in U.S. Dollars in the United
States and Collections on which ultimately are deposited to a Lockbox, a Lockbox
Account or the Collection Account in the United States;
H. that arose in the ordinary course of business from the sale of
goods, products or services by the Originator thereof and in accordance with the
Credit and Collection Policy;
I. that does not contravene any applicable law, rule or regulation and
the Originator thereof is not in violation of any law, rule or regulation in
connection with it, in each case which in any way renders such Receivable
unenforceable or would otherwise impair in any material respect the
collectibility of such Receivable;
J. that is an account receivable 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;
K. that is not a Receivable for which the Originator thereof has
established an offsetting specific reserve; provided that a Receivable subject
only in part to the foregoing shall be an Eligible Receivable to the extent not
so subject;
L. that is not a Receivable with original payment terms in excess of 90
days from its original Billing Date, or in respect of which the Originator
thereof has (i) entered into an arrangement with the Obligor pursuant to which
payment of any portion of the purchase price has been extended or deferred,
whether by means of a promissory note or by any other means, to a date more than
90 days from its original Billing Date or (ii) altered the basis of the aging
from the initial due date for payment such that the final due date extends to a
date more than 90 days from its original Billing Date or (iii) otherwise made
any modification except in the ordinary course of business and consistent with
the Credit and Collection Policy;
M. with respect to which all required consents, approvals or
authorizations necessary for the creation and enforceability of such Receivable
and the effective assignment and sale thereof by the Originator thereof to the
Borrower shall have been obtained;
N. the Originator thereof is not in default in any material respect
under the terms of the Contract, if any, from which such Receivable arose;
O. with respect to which all right, title and interest in it has been
validly sold by the Originator thereof to the Borrower pursuant to the Sale
Agreement;
P. with respect to which the Borrower will have legal and beneficial
ownership thereof free and clear of all Liens other than Liens created pursuant
to the Related Documents in favor of the Lender;
Q. that is not subject to any dispute in whole or in part or to any
offset, counterclaim or defense;
R. that did not arise as a result of a charge-back; provided that a
Receivable which would otherwise not qualify as an Eligible Receivable because
of a failure to comply with this clause (n) shall constitute an Eligible
Receivable to the extent of the Outstanding Balance of such Receivable minus the
amount of such Receivable which fails to comply with such clause;
S. that is at all times the legal, valid and binding obligation of the
Obligor thereon, enforceable against such Obligor in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or law);
T. as of the date on which such Receivable was sold to the Borrower,
neither the Borrower nor the Originator thereof has (i) taken any action in
contravention of the terms of any Related Document or (ii) failed to take any
action required to be taken by the terms of any Related Document that, in either
case, would materially impair the rights therein of the Lender with respect to
such Receivable;
U. as of the date on which such Receivable was sold to the Borrower,
each of the representations and warranties with respect to such Receivable made
in the Sale Agreement by the Originator thereof is true and correct in all
material respects; and
V. at the time such Receivable was sold by the Originator thereof to
the Borrower under the Sale Agreement, no event described of the type
described in Sections 9.01(d) in the Funding Agreement had occurred with respect
to such Originator;
W. that is not a liability of an Excluded Obligor or an Obligor with
respect to which more than 50% of the aggregate Outstanding Balance of all
Receivables owing by such Obligor are Defaulted Receivables;
X. that is not a liability of an Obligor organized under the laws of
any jurisdiction outside of the United States of America (including the District
of Columbia but otherwise excluding its territories and possessions) unless the
Receivables of such Obligor are supported by an Eligible Letter of Credit;
Y. with respect to which no proceedings or investigations are pending
or threatened before any Governmental Authority (i) asserting the invalidity of
such Receivable or the Contract therefor, (ii) asserting the bankruptcy or
insolvency of the Obligor thereunder; provided, however, that if a Receivable is
not eligible as a result of this clause (ii) but would otherwise constitute an
Eligible Receivable hereunder, such Receivable shall be an Eligible Receivable
so long as it arose post-petition and the Obligor thereon is a "Qualifying DIP
Obligor", (iii) seeking payment of such Receivable or payment and performance of
such Contract or (iv) seeking any determination or ruling that could reasonably
be expected to materially and adversely affect the validity or enforceability of
such Receivable or such Contract; and
Z. that is an account, instrument, chattel paper or general intangible
within the meaning of the UCC (or any other applicable legislation) of the state
the laws of which govern perfection.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974 and
any regulations promulgated thereunder.
"ERISA Affiliate" shall mean with respect to any Person, any trade or
business (whether or not incorporated) that is a member of a group of which such
Person is a member and which is treated as a single employer under Section 414
of the IRC.
"Event of Servicer Termination" shall have the meaning assigned to it in
Section 9.02 of the Funding Agreement.
"Excess Concentration Amount" shall mean, with respect to any Obligor of a
Receivable and as of any date of determination after giving effect to all
Eligible Receivables to be transferred on such date, the amount by which the
Outstanding Balance of Eligible Receivables owing by such Obligor exceeds (i)
the Concentration Percentage for such Obligor multiplied by (ii) the Outstanding
Balance of all Eligible Receivables on such date.
"Excluded Obligor" shall mean any Obligor (a) that is an Affiliate of any
Originator or (b) that is a Governmental Authority.
"Excluded Receivable" shall mean, as of any date of determination, any
indebtedness and payment obligations of any Person to an Originator arising from
a sale of merchandise or services by such Originator that has the attributes set
forth in any of the following paragraphs:
(a) it is owing by an Obligor that is an Affiliate of such Originator;
(b) it is owing by an Obligor that is not "located" (within the meaning
of Section 9-307 of the UCC as in effect in the State of New York) in the United
States and it is not supported by an Eligible Letter of Credit;
(c) it was originated by DCM; or
(d) it is owing by a Governmental Authority; or
(e) it is a Receivable originated through the Select Source Program.
"Excluded Taxes" shall have the meaning assigned to it in Section 2.08(f)
of the Funding Agreement.
"Existing Securitization" shall mean that certain ▇▇▇▇▇▇ Funding Master
Trust Series 2000-1 Supplement dated as of March 8, 2000, as amended, to the
Amended and Restated Pooling Agreement among ▇▇▇▇▇▇ Funding Inc., ▇▇▇▇▇▇ Micro
Inc., GE Capital, JPMorgan Chase Bank (formerly known as The Chase Manhattan
Bank), Redwood Receivables Corporation and the several financial institutions
party thereto from time to time, and each other document relating to the ▇▇▇▇▇▇
Funding Master Trust.
"Federal Reserve Board" shall mean the Board of Governors of the Federal
Reserve System.
"Fees" shall mean any and all fees payable to the Lender pursuant to the
Funding Agreement or any other Related Document.
"Fee Letter" shall mean that certain letter agreement dated July 29, 2004
between the Parent and the Lender.
"Final Advance Date" shall mean March 31, 2008.
"Funding Agreement" shall mean that certain Receivables Funding Agreement
dated as of July 29, 2004, among the Borrower, the Servicer and the
Lender as amended, supplemented, restated or otherwise modified from time to
time.
"Funding Availability" shall mean, as of any date of determination, the
amount, if any, by which the Borrowing Base exceeds the Outstanding Principal
Amount, in each case as of the end of the immediately preceding day.
"Funding Excess" shall mean, as of any date of determination, the amount
by which the Outstanding Principal Amount exceeds the Borrowing Base, in each
case as disclosed in the then most recently submitted Borrowing Base Certificate
or Borrowing Request or as otherwise determined by the Lender in its good faith
judgment based on Borrower Collateral information available to it, including any
information obtained from any audit or from any other reports with respect to
the Borrower Collateral, which determination shall be final, binding and
conclusive on all parties to the Funding Agreement (absent manifest error).
"GAAP" shall mean generally accepted accounting principles in the United
States of America as in effect from time to time, consistently applied as such
term is further defined in Section 2(a) of this Annex X.
"GE Capital" shall mean General Electric Capital Corporation, a Delaware
corporation, and its successors and assigns.
"General Concentration Percentage" shall mean at any time of determination
with respect to any Obligor, 10.0%.
"General Trial Balance" shall mean, with respect to any Originator and as
of any date of determination, such Originator's accounts receivable trial
balance (whether in the form of a computer printout, magnetic tape or diskette)
as of such date, listing Obligors and the Receivables owing by such Obligors as
of such date together with the aged Outstanding Balances of such Receivables, in
form and substance satisfactory to the Borrower and the Lender.
"Governmental Authority" shall mean any nation or government, any state,
province or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation of
such Person guaranteeing any indebtedness, lease, dividend, or other obligation
("primary obligation") of any other Person (the "primary obligor") in any
manner, including any obligation or arrangement of such Person to (a) purchase
or repurchase any such primary obligation, (b) advance or supply funds (i) for
the purchase or payment of any such primary obligation or (ii) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet condition of the primary
obligor, (c) purchase property, securities or services primarily for the purpose
of
assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation, or (d) indemnify the owner
of such primary obligation against loss in respect thereof. The amount of any
Guaranteed Indebtedness at any time shall be deemed to be the amount equal to
the lesser at such time of (x) the stated or determinable amount of the primary
obligation in respect of which such Guaranteed Indebtedness is incurred and (y)
the maximum amount for which such Person may be liable pursuant to the terms of
the instrument embodying such Guaranteed Indebtedness; or, if not stated or
determinable, the maximum reasonably anticipated liability (assuming full
performance) in respect thereof.
"Incipient Termination Event" shall mean any event that, with the passage
of time or the giving of notice or both, would, unless cured or waived, become a
Termination Event.
"Indemnification Event" shall have the meaning assigned to it in Section
12.02 of the Funding Agreement.
"Indemnified Amounts" shall mean, with respect to any Person, any and all
claims, damages, losses, liabilities and reasonable expenses (including, but not
limited to, reasonable attorneys' fees and reasonable disbursements.
"Indemnified Liabilities" shall have the meaning assigned to it in Section
8.02 of the Sale Agreement.
"Indemnified Person" shall have the meaning assigned to it in Section
12.02 of the Funding Agreement.
"Index Rate" shall mean, for any day, a floating rate equal to the sum of
(a) (i) the latest month-end published rate for 30-day dealer commercial paper
(high grade unsecured notes sold through dealers by major corporations in
multiples of $1,000), which normally appears in the "Money Rates" column of The
Wall Street Journal or, in the event that The Wall Street Journal ceases
publication of such rate, in such other publication of general circulation as
the Lender in its reasonable discretion may, from time to time, designate in
writing, or (ii) if such rate is not determinable pursuant to clause (i) hereof,
such rate as the Lender in its reasonable discretion may, from time to time,
designate in writing, plus (b) the Applicable Margin in effect as of such day.
Each change in any interest rate provided for in the Funding Agreement based
upon the Index Rate shall take effect at the time of such change in the Index
Rate.
"Index Rate Advance" shall mean an Advance or portion thereof bearing
interest by reference to the Index Rate.
"Ineligibility Event" shall have the meaning assigned to it in Section
2.06(a) of the Sale Agreement.
"Ineligible Receivable" shall have the meaning assigned to it in Section
2.06(a) of the Sale Agreement.
"▇▇▇▇▇▇ Micro" shall mean ▇▇▇▇▇▇ Micro Inc., a Delaware corporation.
"Insolvency Event" ,with respect to any Originator, shall mean the
occurrence of any one or more of the Purchase Termination Events specified in
Section 7.01(d) of the Sale Agreement.
"Interest Payment Date" shall mean, with respect to any Advance, (a) as to
any Index Rate Advance, the first Business Day of each month to occur while such
Index Rate Advance is outstanding, (b) as to any LIBOR Rate Advance, the last
day of the applicable LIBOR Period and (c) any Business Day on which all or any
portion of such Advance is repaid; provided, further, that, in addition to the
foregoing, each of (x) the date upon which all of the Commitments have been
terminated and the aggregate Outstanding Principal Amount has been paid in full
and (y) the Commitment Termination Date shall be deemed to be an "Interest
Payment Date" with respect to any interest which is then accrued under the
Funding Agreement.
"Interest Reserve Ratio" shall mean, as of any Settlement Date and
continuing until (but not including) the next Settlement Date, the ratio
(expressed as a percentage) of (a) the product of (i) 2.0 times Days Sales
Outstanding as of such earlier Settlement Date, and (ii) 1.30 times the Index
Rate in effect as of such earlier Settlement Date, to (b) 365.
"Investment Company Act" shall mean the provisions of the Investment
Company Act of 1940, 15 U.S.C. Sections 80a et seq., and any regulations
promulgated thereunder.
"Investments" shall mean, with respect to any Borrower Account Collateral,
the certificates, instruments, investment property or other investments in which
amounts constituting such collateral are invested from time to time.
"IRC" shall mean the Internal Revenue Code of 1986 and any regulations
promulgated thereunder.
"IRS" shall mean the Internal Revenue Service.
"Lender" shall mean General Electric Capital Corporation, and its
successors and permitted assigns.
"Lender Indemnified Person" shall have the meaning assigned to it in
Section 12.01(a) of the Funding Agreement.
"LIBOR Business Day" shall mean a Business Day on which banks in the city
of London are generally open for interbank or foreign exchange transactions.
"LIBOR Period" shall mean, with respect to any LIBOR Rate Advance, each
period commencing on a LIBOR Business Day selected by the Borrower pursuant to
the Funding Agreement and ending one, two or three months thereafter, as
selected by Borrower's irrevocable notice to the Lender in a Borrowing Request
as set forth in Section 2.03(a) of the Funding Agreement or a Notice of
Continuation/Conversion as set forth in Section 2.06(c) of the Funding
Agreement; provided that the foregoing provision relating to LIBOR Periods is
subject to the following:
(a) if any LIBOR Period would otherwise end on a day that is not a LIBOR
Business Day, such LIBOR Period shall be extended to the next succeeding
LIBOR Business Day unless the result of such extension would be to carry
such LIBOR Period into another calendar month in which event such LIBOR
Period shall end on the immediately preceding LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond the Commitment
Termination Date shall end two (2) LIBOR Business Days prior to such date;
(c) any LIBOR Period pertaining to a LIBOR Rate Advance that begins on the
last LIBOR Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month during which
such LIBOR Period would otherwise end) shall end on the last LIBOR
Business Day of the calendar month during which such LIBOR Period would
otherwise end;
(d) Borrower shall select LIBOR Periods so as not to require a payment or
prepayment of any LIBOR Rate Advance during a LIBOR Period for such
Revolving Advance; and
(e) Borrower shall select LIBOR Periods so that there shall be no more
than ten (10) Borrowings consisting of LIBOR Rate Advances in existence at
any one time.
"LIBOR Rate" shall mean for each LIBOR Period, a rate of interest
determined by the Lender equal to the sum of the Applicable Margin plus:
(a) the offered rate for deposits in United States Dollars for the
applicable LIBOR Period which appears on Telerate Page 3750 as of 11:00
a.m., London time, on the second full LIBOR Business Day next preceding
the first day of each LIBOR Period (unless the first day of such
Settlement Period is not a Business Day, in which event the next
succeeding Business Day will be used); divided by
(b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) LIBOR Business Days
prior to the beginning of such LIBOR Period (including basic,
supplemental, marginal and emergency reserves under any regulations of the
Board of Governors of the Federal Reserve system or other governmental
authority having jurisdiction with respect thereto, as now and from time
to time in effect) for Eurocurrency funding (currently referred to as
"Eurocurrency liabilities" in Regulation D of such Board) which are
required to be maintained by a member bank of the Federal Reserve System;
provided, that if the introduction of or any change in any law or regulation (or
any change in the interpretation thereof) shall make it unlawful, or any central
bank or other Governmental Authority shall assert that it is unlawful, for a
Lender to agree to make or to make or to continue to fund or maintain any
Advances at the LIBOR Rate, then, unless that Lender is able to make or to
continue to fund or to maintain such Advances at another branch or office of
such Lender without, in such Lender's good faith opinion, adversely affecting it
or its Outstanding Principal Amount or the income obtained therefrom, the LIBOR
Rate shall in all such cases be equal to the Index Rate.
If such interest rates shall cease to be available from Telerate News
Service, the LIBOR Rate shall be determined from such financial reporting
service or other information as shall be mutually acceptable to the Lender and
the Borrower.
"LIBOR Rate Advance" shall mean an Advance or portion thereof bearing
interest by reference to the LIBOR Rate.
"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any lease
or title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement perfecting a security interest under the UCC or
comparable law of any jurisdiction).
"Litigation" shall mean, with respect to any Person, any action, claim,
lawsuit, demand, investigation or proceeding pending or threatened against such
Person before any court, board, commission, agency or instrumentality of
any federal, state, local or foreign government or of any agency or subdivision
thereof or before any arbitrator or panel of arbitrators.
"Lockbox" shall have the meaning assigned to it in Section 6.01(a)(ii) of
the Funding Agreement.
"Lockbox Account" shall mean any deposit account established by or
assigned to the Borrower for the deposit of Collections pursuant to and in
accordance with Section 6.01(a) of the Funding Agreement.
"Lockbox Account Agreement" shall mean any agreement among an Originator,
the Borrower, GE Capital, as Lender, and a Lockbox Account Bank with respect to
a Lockbox and Lockbox Account that provides, among other things, that (a) all
items of payment deposited in such Lockbox and Lockbox Account are held by such
Lockbox Account Bank as custodian for GE Capital, as Lender, (b) such Lockbox
Account Bank has no rights of setoff or recoupment or any other claim against
such Lockbox Account, as the case may be, other than for payment of its service
fees and other charges directly related to the administration of such Lockbox
Account and for returned checks or other items of payment and (c) such Lockbox
Account Bank agrees to forward all Collections received in such Lockbox Account
to the Collection Account within one Business Day of receipt, and is otherwise
in form and substance acceptable to the Lender.
"Lockbox Account Bank" shall mean any bank or other financial institution
(and the successors of such bank or financial institution) at which one or more
Lockbox Accounts are maintained.
"Loss Reserve Ratio" shall mean, as of any Settlement Date and continuing
until (but not including) the next Settlement Date, an amount (expressed as a
percentage) that is calculated as follows:
LRR = [(a * b)/c] * d * e
Where:
LRR = Loss Reserve Ratio;
a = the aggregate Outstanding Balance of Receivables originated by the
Originators during the three Settlement Periods immediately preceding such
earlier Settlement Date;
b = the highest three-month rolling average of the Aged Receivables Ratio
during the twelve consecutive Settlement Periods ending prior to such earlier
Settlement Date;
c = the aggregate Outstanding Balance of Receivables as of the last day of
the Settlement Period immediately preceding such earlier Settlement Date;
d = 2.00; and
e = the Payment Terms Factor as of such earlier Settlement Date.
"Margin Stock" shall have the meaning given to such term in Regulation U
of the Board.
"Material Adverse Effect" shall mean a material impairment of (a) the
legality, validity or enforceability of any of the Related Documents against any
Originator, the Servicer, or the Borrower or (b) the collectibility of the
Receivables taken as a whole or of any significant portion of the Receivables.
"Maturity Date" shall mean, with respect to any Receivable, the due date
for payment therefor specified in the Contract therefor, or, if no date is so
specified, 30 days from the Billing Date.
"Monthly Report" shall have the meaning assigned to it in paragraph (a) of
Annex 5.02(a) to the Funding Agreement.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc. or any successor
thereto.
"Net Receivables Balance" means, as of any date of determination, the
amount equal to:
(a) the Outstanding Balance of Eligible Receivables,
minus
(b) the Excess Concentration Amount;
in each case as disclosed in the most recently submitted Borrowing Base
Certificate or Borrowing Request or as otherwise determined by the Lender based
on Borrower Collateral information available to it, including information
relating to the timely processing of credit memos related to the Receivables,
any information obtained from any audit or from any other reports with respect
to the Borrower Collateral, which determination shall be final, binding and
conclusive on all parties to the Funding Agreement (absent manifest error).
"Non-Excluded Taxes" shall have the meaning assigned to it in Section
2.08(f) of the Funding Agreement.
"Notice of Continuation/Conversion" shall have the meaning assigned to
such term in Section 2.06(c) of the Funding Agreement.
"Obligor" shall mean, with respect to any Receivable, the Person primarily
obligated to make payments in respect thereof.
"Officer's Certificate" shall mean, with respect to any Person, a
certificate signed by an Authorized Officer of such Person.
"Originator" shall mean each of the Subsidiaries of Parent which is a
party to the Sale Agreement and any other Person approved by the Lender in
writing.
"Originator Addition Date" shall have the meaning assigned to it in
Section 3.05 of the Sale Agreement.
"Originator Adjustment Payment" shall have the meaning assigned to it in
Section 2.06(a) of the Sale Agreement.
"Originator Indemnification Event" shall have the meaning assigned to it
in Section 2.06(b) of the Sale Agreement.
"Originator Indemnification Payment" shall have the meaning assigned to it
in Section 2.06(b) of the Sale Agreement.
"Originator Material Adverse Effect" shall mean, with respect to any
Originator, (i) any material impairment of such Originator's ability to perform
any of its material obligations or to comply with or conduct its business in
accordance with any of its material representations, warranties, covenants or
agreements under any Related Document or (ii) any material impairment of the
interests, rights or remedies of the Lender against or with respect to such
Originator, in the Receivables or under any Related Document.
"Other Taxes" shall have the meaning assigned to it in Section 2.08(f) of
the Funding Agreement.
"Outstanding Balance" shall mean, with respect to any Receivable, as of
any date of determination, the amount (which amount shall not be less than zero)
equal to (a) the Billed Amount thereof, minus (b) all Collections received from
the Obligor thereunder, minus (c) all discounts to, or any other modifications
by, the Originator, the Borrower or the Servicer that reduce such Billed Amount;
provided, that if the Lender or the Servicer makes a good faith determination
that all payments by such Obligor with respect to such Billed Amount have been
made, the Outstanding Balance shall be zero.
"Outstanding Principal Amount" shall mean, as of any date of
determination, the amount equal to (a) the aggregate Advances made by the
Lender under the Funding Agreement on or before such date, minus (b) the
aggregate amounts disbursed to the Lender in reduction of the principal of such
Advances pursuant to the Funding Agreement on or before such date.
"Parent" shall mean ▇▇▇▇▇▇ Micro Inc., a Delaware corporation.
"Parent Agreement" shall an agreement entered into between the Parent and
the Lender pursuant to Section 2.03 of the Sale Agreement, as the same may be
amended, restated, supplemented or otherwise modified from time to time.
"Parent Group" shall mean the Parent and each of its Affiliates other than
the Borrower.
"Participant" shall have the meaning assigned to it in Section 14.02(b) of
the Funding Agreement.
"Payment Terms Factor" shall mean (a) for the period from the Effective
Date until the third Settlement Date to occur thereafter, 0.89 and (b) for each
three-month period to occur after such initial period, a fraction, the numerator
of which is the sum of (i) the weighted average payment terms (based upon the
aggregate Outstanding Balance of the Receivables and expressed as a number of
days) for the Receivables originated during such period and (ii) 60, and the
denominator of which is 90; provided, however, that if the Payment Terms Factor
for any period is less than the Payment Terms Factor for the immediately
preceding period, then the actual Payment Terms Factor for such current period
shall be recalculated to equal a fraction, the numerator of which is equal to
the average of the numerators used to calculate the Payment Terms Factor for
such current period and the three immediately preceding periods, and the
denominator of which is 90.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Pension Plan" shall mean a Plan described in Section 3(2) of ERISA.
"Permitted Encumbrances" shall mean the following encumbrances: (a) Liens
for taxes or assessments or other governmental charges or levies not yet due and
payable; (b) pledges or deposits securing obligations under workmen's
compensation, unemployment insurance, social security or public liability laws
or similar legislation; (c) pledges or deposits securing bids, tenders,
government contracts, contracts (other than contracts for the payment of money)
or leases to which any Originator, the Borrower or the Servicer is a party as
lessee made in the ordinary course of business; (d) deposits securing statutory
obligations of any Originator, the Borrower or the Servicer; (e) inchoate and
unperfected workers', mechanics', suppliers' or similar Liens arising in the
ordinary course of business; (f) carriers', warehousemen's or other similar
possessory Liens arising in the ordinary course of business; (g) deposits
securing, or in lieu of, surety, appeal or customs bonds in proceedings to which
any Originator, the Borrower or the Servicer is a party; (h) any attachment or
judgment Lien not constituting a Termination Event under Section 9.01(f) of the
Funding Agreement; (i) Liens relating to the lease of office equipment in the
ordinary course of business; (j) Liens existing on the Effective Date and listed
on Schedule 4.03(b) of the Sale Agreement or Schedule 5.03(b) of the Funding
Agreement; and (k) presently existing or hereinafter created Liens in favor of
the Buyer, the Borrower or the Lender.
"Permitted Lien" shall mean at any time, for any Person:
(i) Liens which are in all respects junior under the applicable UCC to
the Liens created under the Related Documents and which secure the payment of
taxes, assessments or other governmental charges or levies (a) not yet due or
(b) that are being contested in good faith by appropriate legal or
administrative proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of such Person; and
(ii) Liens for federal taxes not in excess of $100,000 in the aggregate
at any one time outstanding which are being contested in good faith by
appropriate legal or administrative proceedings and as to which action is being
taken with due diligence to resolve or remove.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, unincorporated organization, trust, association, corporation
(including a business trust), limited liability company, institution, public
benefit corporation, joint stock company, Governmental Authority or any other
entity of whatever nature.
"Plan" shall mean, at any time during the preceding five years, an
"employee benefit plan," as defined in Section 3(3) of ERISA, that any
Originator or ERISA Affiliate maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed by any
Originator or ERISA Affiliate.
"Potential Purchase Termination Event" shall mean any condition or act
that, with the giving of notice or the lapse of time or both, would become a
Purchase Termination Event.
"Power of Attorney" shall have the meaning assigned to it in Section 10.03
of the Funding Agreement.
"Purchase Termination Event" shall have the meaning assigned to it in
Section 7.01 of the Sale Agreement.
"Qualifying DIP Obligor" shall mean, as of any date of determination, an
Obligor (i) that is a "debtor in possession", for which no trustee or examiner
has been appointed and no application is pending for the appointment of a
trustee or examiner, in a case under Chapter 11 of the Bankruptcy Code in which
no motion has been made for an order liquidating all or any substantial portion
of such debtor's assets and no motion has been made for the conversion of such
case to a case under Chapter 7 of the Bankruptcy Code and no restriction
prescribed by the bankruptcy court is in effect, which would restrict such
Obligor's payments under the Receivables, (ii) in the case of any proposed
Qualifying DIP Obligor whose Receivables would account for 5% or more of the
aggregate Outstanding Balance of all Receivables, the Lender has been given
notice at least five Business Days prior to any transfer of Receivables owing by
such Obligor to the Borrower of the proposed sale of such Receivables to the
Borrower on the basis of being a Qualifying DIP Obligor, (iii) that has
designated the applicable Originator as a "critical vendor" and obtained the
requisite court approval to pay the post-petition claims of such Originator on
an administrative priority basis, and (iv) as to which the Lender has not, in
the exercise of its reasonable discretion, given notice to the Borrower and the
Servicer that such Obligor is an Excluded Obligor.
"Ratios" shall mean, collectively, the Default Ratio, Interest Reserve
Ratio, the Loss Reserve Ratio, the Servicing Reserve Ratio, the Receivables
Collection Turnover and the Dilution Reserve Ratio.
"Receivable" shall mean, with respect to any Obligor, the indebtedness and
payment obligations of such Obligor to any Originator (including, without
limitation, obligations evidenced by an account, note, instrument, contract,
security agreement, chattel paper, general intangible or other evidence of
indebtedness or security) arising from a sale of merchandise or services by such
Originator, including, without limitation, any right to payment for goods sold
or for services rendered, and including the right to payment of any interest,
sales taxes, finance charges, returned check or late charges and other
obligations of such Obligor with respect thereto, but not including any Excluded
Receivable.
"Receivable Assets" shall mean:
(i) all Receivables transferred to the Buyer pursuant to the Sale
Agreement from time to time;
(ii) the Related Property with respect to such Receivables;
(iii) all Collections with respect to such Receivables;
(iv) all rights (including rescission, replevin or reclamation) relating
to such Receivables or arising therefrom;
(v) subject to the provisions of the UCC as in effect in the State of New
York, all proceeds of or payments in respect of any and all of the foregoing
clauses (i) through (iv) (including Collections).
"Related Property" shall mean, with respect to each Receivable:
(a) all of the right, title and interest of the Originator thereof and the
Buyer in the goods (including returned goods), if any, relating to the sale
which gave rise to such Receivable;
(b) all other property 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 describing any collateral securing such Receivable;
(c) all guarantees, insurance, letters of credit (including Eligible
Letters of Credit) and other agreements 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
(d) all other instruments and all rights under the Contracts and other
documents related to the Receivables and all rights (but not obligations)
relating to such Receivables;
including in the case of clauses (b) and (c), without limitation, pursuant to
any obligations evidenced by an account, note, instrument, contract, security
agreement, chattel paper, general intangible, or other evidence of indebtedness
or security.
"Receivables Assignment" shall have the meaning assigned to such term in
Section 2.01(a) of the Sale Agreement.
"Receivables Collection Turnover" shall mean, as of any date of
determination, the amount (expressed in days) equal to:
(a) a fraction, (i) the numerator of which is equal to the average of
the aggregate Outstanding Balance of Receivables as of the first day of the 6
Settlement Periods immediately preceding such date and (ii) the denominator of
which is equal to aggregate Collections received during such 6 Settlement
Periods,
multiplied by
(b) the number of days contained in such 6 Settlement Periods.
"Records" shall mean all Contracts and other documents, books, records and
other information (including customer lists, credit files, computer
programs, tapes, disks, data processing software and related property and
rights) prepared and maintained by any Originator, the Servicer, any
Sub-Servicer or the Borrower with respect to the Receivables and the Obligors
thereunder and the Borrower Collateral.
"Regulation U" shall mean Regulation U of the Board as from time to time
in effect and all official rulings and interpretations thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board as from time to time
in effect and all official rulings and interpretations thereunder or thereof.
"Regulatory Change" shall mean any change after the Effective Date in any
federal, state or foreign law or regulation (including Regulation D of the
Federal Reserve Board) or the adoption or making after such date of any
interpretation, directive or request under any federal, state or foreign law or
regulation (whether or not having the force of law) by any Governmental
Authority charged with the interpretation or administration thereof that, in
each case, is applicable to any Affected Party.
"Related Documents" shall mean each Lockbox Account Agreement, the Sale
Agreement, the Funding Agreement, each Receivables Assignment, the Subordinated
Notes, the Parent Agreement and all other agreements, instruments, documents and
certificates identified in the Schedule of Documents and including all other
pledges, powers of attorney, consents, assignments, contracts, notices, and all
other written matter whether heretofore, now or hereafter executed by or on
behalf of any Person, or any employee of any Person, and delivered in connection
with the Sale Agreement, the Funding Agreement or the transactions contemplated
thereby. Any reference in the Sale Agreement, the Funding Agreement or any other
Related Document to a Related Document shall include all Appendices thereto, and
all amendments, restatements, supplements or other modifications thereto, and
shall refer to such Related Document as the same may be in effect at any and all
times such reference becomes operative.
"Repayment Notice" shall have the meaning assigned to it in Section
2.03(c) of the Funding Agreement.
"Reportable Event" shall mean any reportable event as defined in Section
4043(b) of ERISA or the regulations issued thereunder with respect to a Plan
(other than a Plan maintained by an ERISA Affiliate which is considered an ERISA
Affiliate only pursuant to subsection (m) or (o) of Section 414 of the IRC).
"Requirement of Law" for any Person shall mean the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation, or determination of an
arbitrator or
a court or other Governmental Authority, in each case applicable to or binding
upon such Person or any of its property or to which such Person or any of its
property is subject.
"Responsible Officer" shall mean, with respect to any Person, the Chairman
of the Board, any Vice Chairman of the Board, the Chief Executive Officer, the
President, the Chief Financial Officer, any Vice President or the Treasurer or
Assistant Treasurer of such Person.
"Revolving Note" shall have the meaning assigned to such term in Section
2.01(b) of the Funding Agreement.
"Revolving Period" shall mean the period from and including the Effective
Date through and including the day immediately preceding the Commitment
Termination Date.
"S&P" means Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or any successor thereto.
"Sale" shall mean with respect to a sale of receivables under the Sale
Agreement, a sale of Receivables by an Originator to the Borrower in accordance
with the terms of the Sale Agreement.
"Sale Agreement" shall mean that certain Receivables Sale Agreement dated
as of July 29, 2004, among each Originator, the Parent and the Borrower, as the
Buyer thereunder, as the same may be amended, restated, supplemented, or
otherwise modified from time to time.
"Sale Price" shall mean, with respect to any Sale of Sold Receivables and
other Receivable Assets, a price calculated by the Borrower equal to the product
of (i) the Outstanding Balance of such Sold Receivables and (ii) the Discounted
Percentage.
"Sale Termination Date" shall have the meaning assigned to it in Section
8.11(b) of the Sale Agreement.
"Schedule of Documents" shall mean the schedule, including all appendices,
exhibits or schedules thereto, listing certain documents and information to be
delivered in connection with the Sale Agreement, the Funding Agreement and the
other Related Documents and the transactions contemplated thereunder,
substantially in the form attached as Annex Y to the Funding Agreement and the
Sale Agreement.
"Securities Act" shall mean the provisions of the Securities Act of 1933,
15 U.S.C. Sections 77a et seq., and any regulations promulgated thereunder.
"Securities Exchange Act" shall mean the provisions of the Securities
Exchange Act of 1934, 15 U.S.C. Sections 78a et seq., and any regulations
promulgated thereunder.
"Select Source Program" shall refer to the operations categorized as the
Select Source Program from time to time on the internal records of ▇▇▇▇▇▇ Micro
or any Subsidiary, which operations shall include the sale of products by ▇▇▇▇▇▇
Micro or any Subsidiary of ▇▇▇▇▇▇ Micro to certain participating resellers and
the subsequent sale of such products by such resellers to end-users, whereby
▇▇▇▇▇▇ Micro or a Subsidiary of ▇▇▇▇▇▇ Micro ships to end-users the products so
sold by resellers, invoices such end-users and collects the related accounts
receivable, and pays over to resellers the profits on their respective sales to
end-users.
"Servicer" shall mean ▇▇▇▇▇▇ Micro Inc., a Delaware corporation, in its
capacity as the Servicer under the Funding Agreement, or any other Person
designated as a Successor Servicer in accordance with the terms of the Funding
Agreement.
"Servicer Material Adverse Effect" shall mean (i) any material impairment
of the Servicer's ability to perform any of its material obligations or to
comply with or conduct its business in accordance with any of its material
representations, warranties, covenants or agreements under any Related Document,
or (ii) any material impairment of the interests, rights or remedies of the
Lender against or with respect to the Servicer, in the Receivables or under any
Related Document.
"Servicer Termination Notice" shall mean any notice by the Lender to the
Servicer that (a) an Event of Servicer Termination has occurred and (b) the
Servicer's appointment under the Funding Agreement has been terminated.
"Servicing Fee" shall mean, for any day within a Settlement Period, the
amount equal to (a) (i) the Servicing Fee Rate divided by (ii) 360, multiplied
by (b) the aggregate Outstanding Balance of Receivables on such day.
"Servicing Fee Rate" shall mean 1.00%.
"Servicing Records" shall mean all Records prepared and maintained by the
Servicer with respect to the Transferred Receivables and the Obligors
thereunder.
"Servicing Reserve Ratio" shall mean, as of any Settlement Date and
continuing until (but not including) the next Settlement Date, an amount
(expressed as a percentage) equal to (i) the product of (A) the Servicing Fee
Rate and (B) 2.0 times Days Sales Outstanding as of such earlier Settlement
Date, divided by (ii) 360.
"Settlement Date" shall mean the tenth calendar day following the end of
each Settlement Period or, if such day is not a Business Day, the next
succeeding Business Day.
"Settlement Period" shall mean (a) solely for purposes of determining the
Ratios, (i) with respect to all Settlement Periods other than the final
Settlement Period, each calendar month, whether occurring before or after the
Effective Date, and (ii) with respect to the final Settlement Period, the period
ending on the Termination Date and beginning with the first day of the calendar
month in which the Termination Date occurs, and (b) for all other purposes, (i)
with respect to the initial Settlement Period, the period from and including the
Effective Date through and including the last day of the calendar month in which
the Effective Date occurs, (ii) with respect to the final Settlement Period, the
period ending on the Termination Date and beginning with the first day of the
calendar month in which the Termination Date occurs, and (iii) with respect to
all other Settlement Periods, each calendar month.
"Significant Subsidiary" shall mean, with respect to any Subsidiary of
▇▇▇▇▇▇ Micro as of the date hereof, a Subsidiary of ▇▇▇▇▇▇ Micro that (as of any
date of determination), (i) on an average over the three (3) most recently
preceding fiscal years of ▇▇▇▇▇▇ Micro contributed at least five percent (5%) to
consolidated net income of ▇▇▇▇▇▇ Micro or (ii) on an average at the end of the
three (3) most recently preceding fiscal years of ▇▇▇▇▇▇ Micro owned assets
constituting at least five percent (5%) of consolidated assets.
"Sold Receivable" shall have the meaning assigned to it in Section 2.01(b)
of the Sale Agreement.
"Solvent" shall mean, with respect to any Person on a particular date,
that on such date (a) the fair value of the property of such Person is greater
than the total amount of liabilities, including contingent liabilities, of such
Person; (b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its Debts as they become absolute and matured; (c) such Person does
not intend to, and does not believe that it will, incur Debts beyond such
Person's ability to pay as such Debts mature, taking into account the timing of
and amounts of cash to be reserved by it and the timing of and amounts of cash
payable in respect of such Debts; and (d) such Person is not engaged in a
business or transaction, and is not about to engage in a business or
transaction, for which such Person's property would constitute an unreasonably
small capital. For purposes of this definition, the amount of contingent
liabilities (such as Litigation, guaranties and pension plan liabilities) at any
time shall be computed as the amount that, in light of all the facts and
circumstances existing at the time, represents the amount that can reasonably be
expected to become an actual or matured liability.
"Special Concentration Percentage" shall mean, with respect to any
Obligor, that percentage, if any, designated by the Lender in its sole
discretion (after a review of the creditworthiness of such Obligor and a
complete review of the Receivables data) with respect to such Obligor in Annex Z
to the Funding Agreement or otherwise in a written notification to the Borrower
(provided that the Lender retains the discretion to change or eliminate any such
Special Concentration Percentage at any time).
"Stock" shall mean all shares, options, warrants, member interests,
general or limited partnership interests or other equivalents (regardless of how
designated) of or in a corporation, limited liability company, partnership,
business trust or equivalent entity whether voting or nonvoting, including
common stock, preferred stock or any other "equity security" (as such term is
defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act).
"Stockholder" shall mean, with respect to any Person, each holder of Stock
of such Person.
"Subordinated Loan" shall have the meaning given such term in Section
2.01(c) of Sale Agreement.
"Subordinated Note" shall have the meaning given such term in Section
2.01(c) of Sale Agreement.
"Subsequent Cut-Off Date" shall have the meaning given such term in
Section 2.01(h) of Sale Agreement.
"Sub-Servicer" shall mean any Person with whom the Servicer enters into a
Sub-Servicing Agreement.
"Sub-Servicing Agreement" shall mean any written contract entered into
between the Servicer and any Sub-Servicer pursuant to and in accordance with
Section 7.01 of the Funding Agreement relating to the servicing, administration
or collection of the Transferred Receivables.
"Subsidiary" shall mean, with respect to any Person, any corporation or
other entity (a) of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other
Persons performing similar functions are at the time directly or indirectly
owned by such Person or (b) that is directly or indirectly controlled by such
Person within the meaning of control under Section 15 of the Securities Act.
"Successor Servicer" shall have the meaning assigned to it in Section
11.02 of the Funding Agreement.
"Successor Servicing Fees and Expenses" shall mean the fees and expenses
payable to the Successor Servicer as agreed to by the Borrower and the Lender.
"Taxes" shall have the meaning assigned to it in Section 2.08(f) of the
Funding Agreement.
"Termination Date" shall mean the date on which (a) the Outstanding
Principal Amount has been permanently reduced to zero, (b) all other Borrower
Obligations under the Funding Agreement and the other Related Documents have
been indefeasibly repaid in full and completely discharged and (c) the
Commitment has been irrevocably terminated in accordance with the provisions of
Section 2.02(b) of the Funding Agreement.
"Termination Event" shall have the meaning assigned to it in Section 9.01
of the Funding Agreement.
"Title IV Plan" shall mean a Pension Plan (other than a Multiemployer
Plan) that is covered by Title IV of ERISA and that any Originator or ERISA
Affiliate maintains, contributes to or has an obligation to contribute to on
behalf of participants who are or were employed by any of them.
"Transactions" shall have the meaning assigned to it in Section 4.01(b) of
the Sale Agreement.
"Transfer" shall mean any Sale or contribution of Transferred Receivables
and other Receivables Assets by any Originator to the Borrower pursuant to the
terms of the Sale Agreement.
"Transfer Date" shall have the meaning assigned to it in Section 2.01(a)
of the Sale Agreement.
"Transferred Receivable" shall mean any Sold Receivable or Contributed
Receivable.
"UCC" shall mean, with respect to any jurisdiction, the Uniform Commercial
Code as the same may, from time to time, be enacted and in effect in such
jurisdiction.
"UCP 500" shall mean "The Uniform Customs and Practices for Documentary
Credits", 1993 Revision, International Chamber of Commerce Publication No. 500.
"Unused Commitment Fee" shall mean a fee equal to the product of (i) the
amount by which the Commitment exceeds the Outstanding Principal Amount (in each
case, as of any date of determination) and (ii) 0.375% per annum.
SECTION 2. Other Terms and Rules of Construction.
(a) Accounting Terms. Unless otherwise specifically provided therein,
any accounting term used in any Related Document shall have the meaning
customarily given such term in accordance with GAAP, and all financial
computations thereunder shall be computed in accordance with GAAP consistently
applied. That certain items or computations are explicitly modified by the
phrase "in accordance with GAAP" shall in no way be construed to limit the
foregoing.
(b) Other Terms. All other undefined terms contained in any of the
Related Documents shall, unless the context indicates otherwise, have the
meanings provided for by the UCC as in effect in the State of New York to the
extent the same are used or defined therein.
(c) Rules of Construction. Unless otherwise specified, references in any
Related Document or any of the Appendices thereto to a Section, subsection or
clause refer to such Section, subsection or clause as contained in such Related
Document. The words "herein," "hereof" and "hereunder" and other words of
similar import used in any Related Document refer to such Related Document as a
whole, including all annexes, exhibits and schedules, as the same may from time
to time be amended, restated, modified or supplemented, and not to any
particular section, subsection or clause contained in such Related Document or
any such annex, exhibit or schedule. Any reference to or definition of any
document, instrument or agreement shall, unless expressly noted otherwise,
include the same as amended, restated, supplemented or otherwise modified from
time to time. Wherever from the context it appears appropriate, each term stated
in either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words "including," "includes" and
"include" shall be deemed to be followed by the words "without limitation"; the
word "or" is not exclusive; references to Persons include their respective
successors and assigns (to the extent and only to the extent permitted by the
Related Documents) or, in the case of Governmental Authorities, Persons
succeeding to the relevant functions of such Persons; and all references to
statutes and related regulations shall include any amendments of the same and
any successor statutes and regulations.
(d) Rules of Construction for Determination of Ratios. The Ratios as of
the last day of the Settlement Period immediately preceding the Effective Date
shall be established by the Lender on or prior to the Effective Date and the
underlying calculations for periods immediately preceding the Effective Date to
be used in future calculations of the Ratios shall be established by the Lender
on or prior to the Effective Date in accordance with the form of Monthly Report.
For purposes of calculating the Ratios, (i) averages shall be computed by
rounding to the second decimal place and (ii) the Settlement Period in which the
date of
determination thereof occurs shall not be included in the computation thereof
and the first Settlement Period immediately preceding such date of determination
shall be deemed to be the Settlement Period immediately preceding the Settlement
Period in which such date of determination occurs.