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EXHIBIT 10.45
RECEIVABLES PURCHASE AND SALE AGREEMENT
Dated as of April 8, 1998
among
MAXTOR RECEIVABLES CORPORATION,
as Seller,
MAXTOR CORPORATION,
as Collection Agent,
CORPORATE RECEIVABLES CORPORATION,
as Purchaser,
CITICORP NORTH AMERICA, INC.,
as Agent,
and
BANKERS TRUST COMPANY,
as Trustee.
RECEIVABLES PURCHASE AND SALE AGREEMENT
Dated as of April 8, 1998
MAXTOR RECEIVABLES CORPORATION, a California corporation (the
"Seller"), MAXTOR CORPORATION, a Delaware corporation (together with any
successors thereto appointed in accordance with Article VI hereof, the
"Collection Agent"), CORPORATE RECEIVABLES CORPORATION, a California corporation
(the "Purchaser"), CITICORP NORTH AMERICA, INC., a Delaware corporation
("CNAI"), as agent for the Purchaser and the
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other Owners (as defined below) (the "Agent") and BANKERS TRUST COMPANY, a New
York banking corporation, as trustee (the "Trustee"), agree as follows:
PRELIMINARY STATEMENTS:
(1) Certain terms which are capitalized and used throughout this
Agreement are defined in Article I of this Agreement.
(2) Maxtor Corporation, a Delaware corporation ("Maxtor"), the Purchaser
and CNAI, as Agent, were each party to the Receivables Purchase and Sale
Agreement dated as of March 30, 1996 (the "Original Agreement"), whereby Maxtor
had from time to time sold to the Purchaser, and the Purchaser had from time to
time purchased from Maxtor, "Purchased Interests" (as defined in the Original
Agreement).
(3) On the Closing Date, the Purchaser and Maxtor each will have entered
into, and fully performed, the Receivables Repurchase Agreement dated as of
April 8, 1998 (as amended, supplemented or otherwise modified from time to time,
the "Repurchase Agreement"), whereby Maxtor will have repurchased each
"Purchased Interest" previously purchased by the Purchaser pursuant to the
Original Agreement.
(4) Maxtor and the Seller have entered into the Receivables Contribution
and Sale Agreement pursuant to which the Seller will, from time to time,
purchase from Maxtor "Receivables" (as defined therein) in which the Seller
intends to sell interests in Subject Receivables to the Purchaser, represented
by Purchased Interests, hereunder.
(5) The Trustee has agreed to (i) maintain certain accounts in which
Collections are held, (ii) at the written direction of the Collection Agent,
distribute such Collections, (iii) review the Purchaser Reports and the Daily
Reports prepared by the Collection Agent and (iv) perform various other
functions in connection therewith, in each case on the terms and conditions
hereinafter set forth.
(6) The parties hereto have agreed, on the terms and conditions
hereinafter set forth, to provide for, among other things, the sale by the
Seller of such Purchased Interests.
(7) CNAI has been requested and is willing to act as Agent.
NOW, THEREFORE, the parties agree, effective as of the Closing Date and
subject to the satisfaction of the conditions precedent set forth in Section
3.01 hereof, as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Additional Assigned Rights" means all of the Seller's right, title and
interest in, to and under the following:
(i) each Purchase Document to which it is a party;
(ii) all rights to receive moneys due and to become due under
or pursuant to each such Purchase Document;
(iii) all rights to receive proceeds of any indemnity, warranty
or guaranty with respect to each such Purchase Document;
(iv) claims for damages arising out of or for breach of or
default under each such Purchase Document;
(v) the right to perform under each such Purchase Document and
to compel performance and otherwise exercise all remedies thereunder;
and
(vi) all proceeds of any and all of the foregoing Additional
Assigned Rights (including, without limitation, proceeds which
constitute property of the types described in clauses (i) through (v)).
"Adjusted Eurodollar Rate" means, with respect to any Purchased
Interest for any period, an interest rate per annum equal to the rate per annum
obtained by dividing (i) the rate per annum at which deposits in U.S. Dollars
are offered by the principal office of Citibank in London, England to prime
banks in the London interbank market at 11:00 a.m. (London time) two Business
Days before the first day of such period in an amount substantially equal to the
amount to which the "Adjusted Eurodollar Rate" is to be applied and for a period
equal to such period by (ii) a percentage equal to 100% minus the Eurodollar
Reserve Percentage for such period.
"Adverse Claim" means any claim of ownership or any lien, security
interest or other charge or encumbrance, or other type of preferential
arrangement having the effect of a lien or security interest.
"Affiliate" means (i) as to any Person, any other Person that (x)
directly or indirectly, is in control of, is controlled by or is under common
control with such Person (provided that if such Person is a proposed Selling
Affiliate at the time of determination, a Person shall be deemed to
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"control" another Person only if such Person, directly or indirectly,
beneficially owns or holds at least 51% of the issued and outstanding shares of
the capital stock of such other Person), or (y) is a director or officer of such
Person or of any other Person that, directly or indirectly, is in control of, is
controlled by or is under common control with such Person, and (ii) as to CNAI
or the Purchaser, shall also include the Purchaser and CNAI, respectively, and
any other Person who has a relationship to CNAI comparable to that of the
Purchaser.
"Affiliated Obligor" means any Obligor which is an Affiliate of another
Obligor.
"Agent" has the meaning specified in the recital of parties to this
Agreement.
"Agent's Account" means the special account (account number ▇▇▇▇▇▇▇▇) of
the Agent maintained at the office of Citibank, ABA No.: ▇▇▇▇▇▇▇▇▇; at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇; Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Re: Maxtor Receivables
Corporation.
"Allocation Percentage" means, at any time, the sum of the Purchased
Interests (expressed in percentage terms) at such time.
"Alternate Base Rate" means, with respect to any Purchased Interest for
any period, a fluctuating interest rate per annum in effect from time to time,
which rate per annum shall at all times be equal to the sum of (1) 2%, and (2)
the highest of:
(i) the rate of interest announced publicly by Citibank in New
York, New York from time to time as Citibank's base rate;
(ii) the stun (adjusted to the nearest 1/4 of 1% or, if there
is no nearest 1/4 of 1%, to the next higher 1/4 of 1%) of (A) 1/2 of 1%
per annum, plus (B) the rate obtained by dividing (1) the latest
three-week moving average of secondary market morning offering rates in
the United States for three-month certificates of deposit of major
United States money market banks, such three-week moving average
(adjusted to the basis of a year of 360 days) being determined weekly on
each Monday (or, if such day is not a Business Day on the next
succeeding Business Day) for the three-week period ending on the
previous Friday by Citibank on the basis of such rates reported by
certificate of deposit dealers to and published by the Federal Reserve
Bank of New York or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by
Citibank from three certificate of deposit dealers of recognized
standing selected by Citibank, by (2) a percentage equal to 100% minus
the average of the daily percentages specified during such three-week
period by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including,
but not limited to, any emergency, supplemental or other marginal
reserve requirement) for Citibank with respect to liabilities consisting
of or including (among other liabilities) three-month U.S. Dollar
nonpersonal time deposits in the United States, plus (C) the average
during such three-week period of the annual assessment rates estimated
by Citibank for determining the then current annual assessment payable
by Citibank to the Federal Deposit Insurance Corporation (or any
successor) for insuring U.S. Dollar deposits of Citibank in the United
States; and
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(iii) 1/2 of 1% per annum above the fluctuating interest rate
per annum equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day (or, if
such day is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average of the
quotations for such day for such transactions received by Citibank from
three Federal funds brokers of recognized standing selected by it.
"Amortization Period" means the period beginning on the Termination Date
and ending upon the payment in full to each Owner of each Purchased Interest of
the Capital with respect thereto, all accrued and unpaid yield thereon and all
other amounts owed to any Beneficiaries under any Purchase Document.
"Arrangement Fee" has the meaning specified in Section 2.08.
"Assignee" means any Person as the assignee of all or any portion of any
Purchased Interest pursuant to Section 9.01.
"Assignee Rate" means, with respect to any Purchased Interest for any
period, an interest rate per annum equal to the Adjusted Eurodollar Rate plus
3%; provided, however, that if (i) it shall become unlawful for any Bank to
obtain funds in the London interbank market in order to purchase, fund or
maintain any Purchased Interest hereunder or deposits in dollars (in the
applicable amounts) are not being offered by banks in the London interbank
market, or (ii) any Bank is unable to establish the Adjusted Eurodollar Rate for
any applicable period due to the amount of applicable Capital to which the
Adjusted Eurodollar Rate is to be applied, the period in respect of which the
Adjusted Eurodollar Rate is to be applied or circumstances affecting the London
interbank market generally or (iii) a majority of Owners notifies the Seller and
the Agent of their determination that the Adjusted Eurodollar Rate will not
adequately reflect the cost of funding or maintaining any Purchased Interest
hereunder (until a majority of Owners shall have notified the Seller and the
Agent that such majority has determined that the Adjusted Eurodollar Rate will
adequately reflect such cost), then, in each case, the Assignee Rate shall be
the Alternate Base Rate in effect from time to time; provided further, that if
(i) any Purchase is made on a day which is not the first day of an Interest
Period, and (ii) any Purchase is made without the Agent having received notice
in writing thereof by 11:00 a.m. (New York City time) on the third Business Day
prior to the date of such Purchase, then, in each case, the Assignee Rate shall,
in respect of the Purchased Interest so purchased, be the Alternate Base Rate in
effect from time to time for the duration of the current Interest Period and
shall thereafter be the Adjusted Eurodollar Rate in effect from time to time;
provided that following the occurrence and during the continuation of an Event
of Termination, the "Assignee Rate" shall be the applicable interest rate per
annum determined pursuant to the provisions set forth above plus 2% per annum,
"Assignment" means an assignment by the Seller to the Agent in
substantially the form of Exhibit A hereto, evidencing ownership of a Purchased
Interest.
"Available Investments" means (i) short-term obligations of the United
States or any agency thereof, (ii) commercial paper issued from time to time by
the Purchaser, and any
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commercial paper having, at the time of acquisition thereof, a rating of A-1 or
better from S&P or P-1 from ▇▇▇▇▇'▇, (iii) money market mutual funds registered
under the Investment Company Act of 1940, as amended, having a rating at the
time of such investment, in the highest investment category granted by S&P and
▇▇▇▇▇'▇ (including, without limitation, funds for which the Trustee or any of
its Affiliates is investment manager or investment adviser) and (iv), in
connection with any Purchased Interest, other promissory notes, certificates of
deposit or other debt instruments selected by the Owner of such Purchased
Interest and approved by the Agent.
"Average Maturity" means, on any day, that period (expressed in days)
equal to the average maturity of the Subject Receivables as shall be calculated
by the Collection Agent as set forth in the most recent Purchaser Report in
accordance with the provisions thereof; provided, however, that, if the Agent,
upon consultation with Maxtor, shall in its reasonable judgment disagree with
any such calculation, the Agent may recalculate the Average Maturity for such
day.
"Bank Agreement" means the Receivables Purchase and Sale Agreement dated
as of the date hereof among the Seller, the banks, financial institutions and
other institutional lenders party thereto, CNAI, individually and as Agent, and
the Trustee, as the same may from time to time be amended, supplemented or
otherwise modified pursuant to the terms thereof and hereof.
"Banks" means the banks and financial institutions (other than the
Agent) parties to the Bank Agreement, together with their successors and
assigns.
"Beneficiaries" means the Trustee, the Purchaser, the Banks, the Owners,
the Participants and the Agent.
"Breakage Costs" means, for each reduction of the Capital held by CRC
other than such reductions occurring on a Settlement Date, the amount, if any,
by which (i) the additional interest at the Purchaser Rate (calculated without
taking into account any breakage costs) which would have accrued on an amount
equal to the amount of such reduction from the time of such reduction to the
Settlement Date next succeeding such reduction exceeds (ii) the income received
by CRC to the Settlement Date next succeeding such reduction from investing the
proceeds of such reduction; except that, if the Seller gives at least five
Business Days' prior written notice to the Agent that the Seller intends on a
specified Business Day to reduce such Capital by a specified amount and the
Agent agrees to such reduction, then the excess resulting from that reduction
shall be deemed to be zero.
"Business Day" means any day on which banks are not authorized or
required to close in New York City and, in connection with the Adjusted
Eurodollar Rate, on which dealings are carried on in the London interbank
market.
"Capital" of any Purchased Interest means, at any time, the original
amount paid to the Seller for such Purchased Interest at the time of its
acquisition by the Purchaser pursuant to Sections 2.01 and 2.02, in each case
reduced from time to time by Collections distributed on account of such Capital
pursuant to Section 2.06; provided that if such Capital shall have been reduced
by any distribution and thereafter all or a portion of such distribution is
rescinded or
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must otherwise be returned for any reason, such Capital shall be increased by
the amount of such rescinded or returned distribution, as though it had not been
made.
"Citibank" means Citibank, N.A., a national banking association.
"Closing Date" means the date on which the initial Purchase hereunder is
made.
"CNAI" has the meaning specified in the recital of parties to this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated and rulings issued thereunder.
"Collection Agent" has the meaning specified in the recital of parties
to this Agreement.
"Collection Agent Fee" has the meaning specified in Section 2.08.
"Collection Date" means the date following the earlier to occur of (i)
the Settlement Date on which the aggregate Capital for all Purchased Interests
shall have been reduced to zero and each of the Indemnified Parties shall have
received all Yield, Collection Agent Fees, Trustee's Fee and other fees and
other amounts payable to it hereunder, and under the other Purchase Documents,
with respect to the Purchased Interests or otherwise and (ii) the date occurring
two years after the Termination Date, provided that the Seller, the Company,
Maxtor and the Selling Affiliates, respectively, shall have paid in full all
amounts owed by them hereunder and under the other Purchase Documents prior to
such date.
"Collection Delay Period" means ten (10) Business Days or such other
number of days as the Agent may reasonably select upon three (3) Business Days'
notice to the Seller.
"Collections" means, with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable, including, without
limitation, all cash proceeds of finance charges and Related Security with
respect to such Receivable, and any Collection of such Receivable deemed to have
been received pursuant to Section 2.05(f), and shall also include all
investments, and all amounts earned as a result of such investments, of the
Collections held by the Agent pursuant to Sections 6.06 and 6.07.
"Commercial Paper Note" means a promissory note having a term not
exceeding 270 days.
"Company" means Hyundai Heavy Industries Co., Ltd., a company
incorporated and existing under the laws of the Republic of Korea.
"Company/Maxtor Agreement" means an agreement in substantially the form
of Exhibit D-I hereto, duly executed and delivered by the parties thereto, as
such agreement may from time to time be amended, supplemented or otherwise
modified pursuant to the terms thereof and hereof.
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"Company/Seller Agreement" means an agreement in substantially the form
of Exhibit D-2 hereto, duly executed and delivered by the parties thereto, as
such agreement may be amended, supplemented or otherwise modified pursuant to
the terms thereof and hereof.
"Concentration Account" has the meaning specified in Section 6.06(a).
"Concentration Account Bank" has the meaning specified in Section
6.06(a).
"Concentration Limit" means, for any Designated Obligor at any time, a
figure equal to the greater of. (a) 5%, and (b) the amount specified by the
Agent to the Seller in writing from time to time; provided that, the Agent may
cancel any "Concentration Limit" at any time upon three Business Days' notice to
the Seller; provided further that in the case of a Designated Obligor and any
Affiliated Obligor, the "Concentration Limit" for such Obligor shall be
calculated as if such Obligor and such Affiliated Obligor are one Obligor.
"Consent and Agreement" means a consent and agreement of a Selling
Affiliate, in form and substance reasonably satisfactory to the Agent, with
respect to the Selling Affiliate Receivables Contribution and Sale Agreement of
such Selling Affiliate and the rights and interests of the Seller with respect
thereto in which an interest is granted hereunder, as such consent and agreement
may from time to time be amended, supplemented or otherwise modified pursuant to
the terms thereof.
"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to any
Debt, lease, dividend, letter of credit or other obligation of another Person,
including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed (otherwise than for collection or deposit in the ordinary
course of business), co-made, or discounted or sold with recourse by that
Person, or in respect of which that Person is otherwise directly or indirectly
liable, including, without limitation, any such obligation for which that Person
is in effect liable through any agreement (contingent or otherwise) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of loans, advances, stock purchases, capital contributions or otherwise),
or to maintain the solvency or any balance sheet, income or other financial
condition of the obligor of such obligation, or to make payment for any
products, materials or supplies or for any transportation, services or lease
regardless of the non-delivery or non-furnishing thereof, in any case if the
purpose or intent of such agreement is to provide assurance that such obligation
will be paid or discharged, or that any agreements relating thereto will be
complied with, or that the holders of such obligation will be protected (in
whole or in part) against loss in respect thereof. The amount of any Contingent
Obligation shall be equal to the amount of the obligation so guaranteed or
otherwise supported.
"Contract" means an agreement between Maxtor or a Selling Affiliate and
an Obligor, in substantially the form of one of the forms of written contract
set forth in Schedule III hereto or otherwise approved by the Agent (or, for
Receivables with respect to which "Purchased Interests" have been repurchased by
Maxtor pursuant to the Repurchase Agreement, as otherwise approved by the Agent
under the Original Agreement), or in the case of an open account agreement, as
evidenced by one of the forms of invoices set forth in Schedule III hereto or
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otherwise approved by the Agent (which approval shall not be unreasonably
withheld), pursuant to or under which such Obligor shall be obligated to pay for
merchandise or services from time to time (whether such merchandise or services
are to be furnished to such Obligor or to an Affiliate of such Obligor specified
in such Contract).
"Corporate Trust Office" has the meaning specified in Section 11.13.
"CP Rate" means, with respect to CRC for any Purchased Interest for any
Interest Period, the per annum rate equivalent to the weighted average of the
per annum rates paid or payable by CRC from time to time as interest on or
otherwise (by means of interest rate ▇▇▇▇▇▇ or otherwise) with respect to those
Commercial Paper Notes issued by CRC that are allocated, in whole or in part, by
the Agent (on behalf of CRC or such other company) to fund or maintain such
Purchased Interest during such Interest Period, as determined by the Agent (on
behalf of CRC), which rates shall reflect and give effect to the commissions of
placement agents and dealers with respect to such Commercial Paper Notes, to the
extent such commissions are allocated, in whole or in part, to such Commercial
Paper Notes by the Agent (on behalf of CRC); provided, however, that, if any
component of such rate is a discount rate, in calculating the "CP Rate" for such
Interest Period, the Agent shall for such component use the rate resulting from
converting such discount rate to an interest-bearing equivalent rate per annum.
"CRC" means Corporate Receivables Corporation, a California corporation
and any other securitization company administered by Citicorp North America,
Inc., which is an assignee of CRC under the Purchase Documents.
"Credit and Collection Policy" means (i) those credit and collection
policies and practices of the Seller in effect on the date hereof and described
in Schedule II hereto, relating to Contracts and Receivables, and (ii) in the
case of any Person becoming a Selling Affiliate after the date hereof, those
credit and collection policies and practices of such Selling Affiliate in effect
on the date on which such Person shall become a Selling Affiliate and described
in Schedule II to the Selling Affiliate Receivables Contribution and Sale
Agreement of such Selling Affiliate, relating to Contracts and Receivables, in
each case of clauses (i) and (ii) as modified in compliance with Section
5.03(c).
"Cure Account" has the meaning specified in Section 6.07.
"Cure Funds" means Collections which, from time to time, are deposited
into the Cure Account.
"Cure Period" means the period beginning on and including a Pool
Noncompliance Date and ending on but excluding the earlier of (a) the first date
thereafter on which the Net Subject Receivables Balance equals or exceeds the
Required Net Subject Receivables Balance and (b) the fifth consecutive Business
Day following the occurrence of such Pool Non-compliance Date.
"Daily Report" means an Officer's Certificate of the Collection Agent
substantially in the form of Exhibit I hereto.
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"Debt" means (i) indebtedness for borrowed money, (ii) obligations
evidenced by bonds, debentures, notes or other similar instruments, (iii)
obligations with a term i n excess of 90 days to pay the deferred purchase price
of property or services, (iv) obligations as lessee under leases which shall
have been or should be, in accordance with generally accepted accounting
principles, recorded as capital leases, and (v) obligations under direct or
indirect guaranties in respect of, and obligations (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds referred to in
clauses (i) through (iv) above.
"Default Ratio" means, as of any date, the ratio (expressed as a
percentage) that is obtained by dividing (i) the aggregate Outstanding Balance
of all Receivables that became Defaulted Receivables during the Fiscal Month
most recently ended on or before such date by (ii) the aggregate Outstanding
Balance (measured for each Receivable at the time of acquisition) of all
Receivables that were acquired by the Seller during the fourth Fiscal Month
immediately preceding the Fiscal Month most recently ended on or before such
date, provided that the "Default Ratio" with respect to any date prior to the
Closing Date shall be set forth on Schedule A to the Purchaser Report delivered
pursuant to Section 3.01(z).
"Default Termination Ratio" means, as of any date, the ratio (expressed
as a percentage) that is obtained by dividing (i) the aggregate Outstanding
Balance of all Defaulted Receivables on such date by (ii) the aggregate
Outstanding Balance of all Receivables as of such date, provided that the
"Default Termination Ratio" with respect to any date prior to the Closing Date
shall be set forth on Schedule A to the Purchaser Report delivered pursuant to
Section 3.01(z).
"Defaulted Receivable" means a Receivable:
(i) as to which any payment, or part thereof, remains unpaid for
91 days or more from the original due date for such payment;
(ii) as to which the Obligor thereof has taken any action, or
suffered any event to occur, of the type described in Section 7.01 (g); or
(iii) which, consistent with the applicable Credit and Collection
Policy, would be written off the Seller's, Maxtor's or any Selling Affiliate's
books, as applicable, as uncollectible.
"Delinquency Ratio" means, as of any date, the ratio (expressed as a
percentage) that is obtained by dividing (i) the aggregate Outstanding Balance
of all Receivables that were Delinquent Receivables on such day by (ii) the
aggregate Outstanding Balance of all Receivables on such day provided that the
"Delinquency Ratio" with respect to any date prior to the Closing Date shall be
set forth on Schedule A to the Purchaser Report delivered pursuant to Section
3.01(z).
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"Delinquent Receivable" means a Receivable that is not a Defaulted
Receivable and:
(i) as to which any payment, or part thereof, remains unpaid for
31 days or more from the original due date for such payment; or
(ii) which, consistent with the applicable Credit and Collection
Policy, would be classified as delinquent by the Seller, Maxtor or any
Selling Affiliate, as applicable.
"Deposit Date" means each Business Day on which any Collections are
deposited in the Concentration Account.
"Designated Obligor" means, at any time, each Obligor; provided,
however, that any Obligor shall cease to be a Designated Obligor upon at least
three Business Days' notice by the Agent to the Seller, or by the Seller to the
Agent.
"Dilution Horizon Factor" means, as of any date, the fraction (i) the
numerator of which is the aggregate Outstanding Balance (measured for each
Receivable at the time of acquisition) of all Eligible Receivables and Foreign
Receivables acquired by the Seller during the two Fiscal Months most recently
ended on or before such date and (ii) the denominator of which is the
Outstanding Balance of all Eligible Receivables as of the last day of the Fiscal
Month most recently ended on or before such date; provided that the "Dilution
Horizon Factor" with respect to any date prior to the Closing Date shall be set
forth on Schedule A to the Purchaser Report delivered pursuant to Section 3.01
(z).
"Dilution Ratio" means, as of any date, a fraction (expressed as a
percentage), the numerator of which is (i) the aggregate Dilutions recorded
during the Fiscal Month most recently ended on or before such date, and the
denominator of which is (ii) the aggregate Outstanding Balance (measured for
each Receivable at the time of acquisition) of all Receivables that were
acquired by the Seller during the second Fiscal Month most recently ended on or
before such date, provided that the "Dilution Ratio" with respect to any date
prior to the Closing Date shall be set forth on Schedule A to the Purchaser
Report delivered pursuant to Section 3.01(z).
"Dilution Reserve" or "DR" means, on any date, an amount equal to:
DR = NSRB x DRP
where NSRB = Net Subject Receivables Balance as of the
close of such Business Day
DRP = The Dilution Reserve Percentage, as of the
close of business of the Collection Agent
on such date.
"Dilution Reserve Percentage" means, as of any date, the product of (A)
the sum of (i) the product of (x) one and one-half (1.5) and (y) the average of
the Dilution Ratios calculated for
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each of the twelve (12) Fiscal Months most recently ended on or before such
date and (ii) the Dilution Volatility Factor as of such date, and (B) the
Dilution Horizon Factor as of such date.
"Dilution Volatility Factor" means, as of any date, a percentage equal
to the product of (A) the amount by which (i) the highest Dilution Ratio
calculated for any Fiscal Month during the 12 Fiscal Month period most recently
ended on or before such date exceeds (ii) the average of the Dilution Ratio
calculated for each Fiscal Month during such period, and (B) the ratio of (i)
the highest Dilution Ratios calculated for any Fiscal Month during such period
to (ii) the average of the Dilution Ratios calculated for each Fiscal Month
during such period.
"Dilutions" means, for any period, the aggregate amount of any
reductions or cancellations of the Outstanding Balance of the Subject
Receivables for any reason other than (i) the Obligors in respect thereto having
made payments thereon; or (ii) the Seller having written off such Subject
Receivables in accordance with the Credit and Collection Policy.
"Dynamic Loss Reserve Percentage" means, as of any date, the product of
(i) the highest average of Default Ratios for any period of three (3)
consecutive Fiscal Months, ending during the preceding twelve (12) Fiscal
Months, (ii) two (2), and (iii) the Loss Horizon Ratio as of such date.
"Eligible Institution" means a depository institution organized under
the laws of the United States of America or any state thereof or the District of
Columbia (or any domestic branch of a foreign bank authorized under any such
laws), (a) whose senior long-term unsecured debt obligations are rated at least
A- or better by S&P and A3 or better by Moody's, and (b) which is subject to
regulation regarding fiduciary funds on deposit substantially similar to 12
C.F.R. Section 9.10(b), if applicable, and (c) which has a combined capital and
surplus of at least $1 00,000,000.
"Eligible Receivable" means, at any time, a Receivable:
(i) the Obligor of which is a United States resident, is not an
Affiliate of any of the parties hereto or of any Selling Affiliate at such time,
and is not a government or a governmental subdivision or agency;
(ii) the Obligor of which at the time of any Purchase of an
interest therein under this Agreement is a Designated Obligor;
(iii) the Obligor of which at the time of any Purchase of an
interest therein under this Agreement is not the Obligor of Defaulted
Receivables in an aggregate amount in excess of 10% of the aggregate Outstanding
Balance of all Subject Receivables of such Obligor;
(iv) which at the time of any Purchase of an interest therein
under this Agreement is not a Defaulted Receivable or Delinquent Receivable
except for Delinquent Receivables at the time of the initial purchase hereunder
which were "Delinquent Receivables" under the Original Agreement;
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(v) which, according to the Contract related thereto, is required
to be paid in full within no more than 90 days, of the original billing date
therefor;
(vi) which is an account receivable representing all or part of
the sales price of merchandise, insurance and services within the meaning of
Section 3(c)(5) of the Investment Company Act of 1940, as amended;
(vii) a purchase of which with the proceeds of notes would
constitute a "current transaction" within the meaning of Section 3(a)(3) of the
Securities Act of 1933, as amended;
(viii) which is an "account" within the meaning of Section 9-106
of the UCC of the jurisdiction(s) the law of which governs the perfection of the
interest created by any Purchased Interest;
(ix) which is denominated and payable only in U.S. dollars in the
United States;
(x) which is assignable and arises under a Contract which has
been duly authorized, executed and delivered by each of the parties thereto and
which, together with such Receivable, is in full force and effect and on the
date of acquisition thereof by the Seller constitutes the legal, valid and
binding obligation of the Obligor of such Receivable enforceable against such
Obligor in accordance with its terms, has not been subordinated by the Seller,
Maxtor or the Selling Affiliate, as applicable, to any other indebtedness of
such Obligor and is not subject to any existing, asserted or effected dispute,
offset, counterclaim or defense whatsoever (except the discharge in bankruptcy
or other insolvency proceeding of such Obligor); .
(xi) which, together with the Contract related thereto, on the
date of acquisition thereof by the Seller does not contravene in any material
respect any laws, rules or regulations applicable thereto (including, without
limitation, laws, rules and regulations relating to usury, consumer protection,
truth in lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy) and with respect to
which no party to the Contract related thereto is in violation of any such law,
rule or regulation in any material respect;
(xii) with respect to which performance (other than by the
Obligor thereof, or by the Seller, Maxtor or any Selling Affiliate, as
applicable, under any related warranty to the extent not required to have been
performed by the Seller, Maxtor or such Selling Affiliate by the time of
determination) under the related Contract has been completed;
(xiii) which is, concurrently with the time of the acquisition
thereof by the Seller, legally and beneficially owned by the Seller free and
clear of any Adverse Claim except as created hereunder;
(xiv) which (A) on the date of the acquisition thereof by the
Seller satisfies all applicable requirements of the applicable Credit and
Collection Policy and (B) complies with such other criteria and requirements
(other than those relating to the collectibility of such
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Receivable) as the Agent may from time to time reasonably specify to the Seller
prior to such date; and
(xv) as to which, at least five Business Days prior to the date
of acquisition thereof by the Seller, the Agent has not notified the Seller that
the Agent has determined, in its reasonable discretion, that such Receivable (or
class of Receivables) is not acceptable for purchase by the Purchaser hereunder.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time,, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" means any Person who for purposes of Title IV of ERISA
is a member of the Seller's, Maxtor's or any Selling Affiliate's controlled
group, or under common control with the Seller, Maxtor or any Selling Affiliate,
within the meaning of Section 414 of the Code.
"ERISA Event" means (i) the occurrence with respect to a Plan of a
reportable event, within the meaning of Section 4043 of ERISA, unless the 30-day
notice requirement with respect thereto has been waived by the PBGC; (ii) the
provision by the administrator of any Plan of a notice of intent to terminate
such Plan, pursuant to Section 4041(a)(2) of ERISA (including any such notice
with respect to a plan amendment referred to in Section 4041(e) of ERISA);
(iii) the cessation of operations at a facility of the Seller, Maxtor or any
Selling Affiliate or any ERISA Affiliate of any thereof in the circumstances
described in Section 4062(e) of ERISA; (iv) the withdrawal by the Seller, Maxtor
or any Selling Affiliate or any ERISA Affiliate of any thereof from a Multiple
Employer Plan during a plan year for which it was a substantial employer, as
defined in Section 4001(a)(2) of ERISA; (v) the conditions set forth in Section
302(f)(1)(A) and (B) of ERISA to the creation of a lien upon property or rights
to property of the Seller, Maxtor or any Selling Affiliate or any ERISA
Affiliate of any thereof for failure to make a required payment to a Plan are
satisfied; (vi) the adoption of an amendment to a Plan requiring the provision
of security to such Plan, pursuant to Section 307 of ERISA; or (vii) the
institution by the PBGC of proceedings to terminate a Plan, pursuant to Section
4042 of ERISA, or the occurrence of any event or condition described in Section
4042 of ERISA that could constitute grounds for the termination of, or the
appointment of a trustee to administer, a Plan.
"Eurodollar Increased Costs" means an increase in the cost to any Owner
of agreeing to purchase or purchasing, or maintaining the ownership of, any
Purchased Interest in respect of which Yield is computed by reference to the
Adjusted Eurodollar Rate due to either (i) the introduction of or any change
(other than any change by way of imposition or increase of the Eurodollar
Reserve Percentage) in or in the interpretation of any law or regulation, or
(ii) the compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law).
"Eurodollar Reserve Percentage" means, with respect to any Purchased
Interest for any period, the reserve percentage applicable two Business Days
before the first day of such period under regulations issued from time to time
by the Board of Governors of the Federal Reserve System (or any successor) (or,
if more than one such percentage shall be so applicable, the daily average of
such percentages for those days in such period during which any such percentage
shall
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so be applicable) for determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement) for Citibank with
respect to liabilities or assets consisting of or including "eurocurrency
liabilities" as that term is used in Regulation D, as in effect from time to
time, of the Board of Governors of the Federal Reserve System (or with respect
to any other category of liabilities that includes deposits by reference to
which the Adjusted Eurodollar Rate is determined) having a term equal to such
period.
"Event of Insecurity" means any Event of Termination or Incipient Event
of Termination or any failure of any condition set forth in Section 3.02(b)(iv)
to be satisfied, provided, that the Seller is promptly notified of any such
failure (if such failure or event occurs as a result of a deemed rating) of any
condition set forth in Section 3.02(b)(iv).
"Event of Termination" has the meaning specified in Section 7.01.
"Facility" means the willingness of the Purchaser to consider, in its
sole discretion pursuant to Article II, the purchase from the Seller of
Purchased Interests from time to time.
"Facility Fee" has the meaning specified in Section 2.08.
"Facility Termination Date" means the earlier of April 6, 2001 or the
date of termination of the Facility pursuant to Section 2.03 or Section 7.01.
"Fee Letter" means the letter agreement regarding additional fees, dated
the date hereof, between the Seller and the Agent, as such letter agreement may
from time to time be amended, modified or supplemented pursuant to the terms
thereof.
"Financial Officer" means, with respect to any Person, the chief
financial officer, treasurer, controller or other officer or member of
management of such Person with significant responsibility for the financial
affairs of such Person.
"Fiscal Month" means an accounting period of such number of consecutive
days commencing on the day after the day as of which Maxtor closes its books of
account for a month and ending on the day as of which Maxtor next closes its
books of account for a month, as Maxtor may from time to time specify in writing
to the Agent; provided that 12 of such consecutive accounting periods shall
constitute a fiscal year of Maxtor.
"GAAP" means generally accepted accounting principles in the United
States of America, consistently applied, in effect from time to time.
"HC" means Hyundai Corporation, a company duly organized under the laws
of the Republic of Korea.
"HEA" means Hyundai Electronics America, a California corporation.
"HEI" means Hyundai Electronics Industries Co., Ltd., a company
incorporated and existing under the laws of the Republic of Korea.
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"HMM" means Hyundai Merchant Marine Co., Ltd., a company duly organized
under the laws of the Republic of Korea.
"Incipient Event of Termination" means an event which would constitute
an Event of Termination but for the requirement that notice be given or time
elapse or both.
"Included Foreign Country" means a Tier I Foreign Country or a Tier II
Foreign Country.
"Included Foreign Receivable" means, at any time, a Receivable of an
Obligor located in any Included Foreign Country which is not an Eligible
Receivable but would qualify as an Eligible Receivable except that the Obligor
of such a Receivable is not a United States resident.
"Indemnified Party" means the Purchaser, any Bank, CNAI, the Trustee,
any Owner, any Participant, the Agent, or any Affiliate of any thereof and their
respective officers, directors, employees and agents.
"Insufficiency" means, with respect to any Plan, the amount, if any, of
its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.
"Interest Period" means:
(i) with respect to the CP Rate and the Alternate Base Rate, the
period from the Closing Date to the end of the first Settlement Period ending
after the Closing Date and thereafter a period equal to each Settlement Period,
and
(ii) with respect to the Adjusted Eurodollar Rate, the period
from the Closing Date to the first Settlement Date after the Closing Date and
thereafter a period from each Settlement Date to the first or, upon the request
of the Seller and with the consent of the Agent, second or third next succeeding
Settlement Date; provided, however that, with respect to any Interest Period
ending on such second or third next succeeding Settlement Date, for purposes of
calculating "Yield" and the "Yield/Fee Reserve" for any Purchased Interest with
respect to any Settlement Date occurring prior to the end of such Interest
Period, the "Interest Period" shall be deemed for purposes of such calculations
to be the period from the previous Settlement Date to such Settlement Date.
"Limited Foreign Country" means any Included Foreign Country designated
as a "Limited Foreign Country" in a Limited Foreign Country Notice which (i) is
delivered by the Agent to the Seller at least three Business Days prior to the
effectiveness of such designation at any time on or after any date on which (A)
the long-term public senior debt securities of such Included Foreign Country
shall not have a rating by S&P and Moody's, respectively, at least as high as
the rating of such debt securities by S&P and Moody's, respectively, on the date
hereof or, if later, the date such Limited Foreign Country became an Included
Foreign Country hereunder, (B) the Agent shall have determined that the
Purchaser or other applicable Owner, as the case may be, does not have a valid
and perfected first priority ownership interest in any Subject Receivable owed
by any Obligor which is a resident of such Included Foreign Country enforceable
under the laws of such Included Foreign Country or the Agent shall have
determined
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that it, for the benefit of the Beneficiaries, does not have a valid and
perfected first priority security interest in such Subject Receivable, (C) any
of the Company's long-term public senior debt securities are not rated at least
BB+ by S&P and at least Bal by Moody's or, if such securities are not rated by
S&P and Moody's, any of such securities do not have a deemed rating of at least
BBB- and Baa3, as determined by the Agent in its sole discretion, (D) either S&P
or Moody's shall have requested such designation or (E) there shall have been a
material adverse change in the consolidated financial condition, or the
consolidated results of the operations of Maxtor and its subsidiaries since
December 30, 1996 except as and to the extent projected or otherwise disclosed
in Maxtor's quarterly reports on Form I0-Q for the fiscal quarters ending March
29, 1997, June 28, 1997 and September 27, 1997 or in Schedule V hereto, and (ii)
specifies the reason for such designation.
"Limited Foreign Country Limit" means, with respect to any Limited
Foreign Country, the lesser of (i) a limit (which may be zero), on the aggregate
Outstanding Balance of Subject Receivables which are Included Foreign
Receivables owed by Obligors which are residents of such Limited Foreign
Country, established pursuant to a Limited Foreign Country Notice and (ii) a
limit on the aggregate Outstanding Balance of Subject Receivables which are
Included Foreign Receivables owed by Obligors which are residents of Tier II
Foreign Countries equal to the product of: (a) the percentage referred to in
clause (a) of the definition of "Concentration Limit", multiplied by (b) the Net
Subject Receivables Balance as of such date.
"Limited Foreign Country Notice" means a written notice by the Agent to
the Seller delivered in accordance with the definition of Limited Foreign
Country with respect to any Included Foreign Country, establishing for such
Included Foreign Country a Limited Foreign Country Limit.
"Lock Box Account" has the meaning specified in Section 6.06(b).
"Lock Box Agreement" has the meaning specified in Section
6.06(b).
"Lock Box Bank" has the meaning specified in Section 6.06(b).
"Loss Horizon Ratio" means, as of any date, the fraction (i) the
numerator of which is the Outstanding Balance (measured for each Receivable at
the time of acquisition) of all Receivables acquired by the Seller during the
four Fiscal Months most recently ended on or before such date and (ii) the
denominator of which is the Outstanding Balance of all Eligible Receivables and
Included Foreign Receivables as of such date, provided that the "Loss Horizon
Ratio" with respect to any date prior to the Closing Date shall be set forth on
Schedule A to the Purchaser Report delivered Section 3.01(2).
"Loss Reserve" or "LR" means, on any date, an amount equal to:
LR = NSRB x LRP
where: NSRB = Net Subject Receivables Balance as of the
close of such Business Day
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LRP = The Loss Reserve Percentage
as of the close of business of
the Collection Agent on such
date.
"Loss Reserve Percentage" means, as of any date, the greatest of (a)
10%, (b) four (4) times the percentage referred to in clause (a) of the
definition of "Concentration Limit" and (c) the Dynamic Loss Reserve Percentage.
"Loss-to-Liquidation Ratio" means, as of any date, the ratio (expressed
as a percentage) that is obtained by dividing (i) an amount equal to the
aggregate Outstanding Balance of all Receivables that were written off by the
Seller, or that should have been written off by the Seller in accordance with
the Credit and Collection Policy, during the Fiscal Month most recently ended on
or before such date by (ii) the aggregate amount of Collections (other than any
deemed Collections) received during such Fiscal Month.
"Maxtor" has the meaning specified in Preliminary Statement 2 to this
Agreement.
"Maxtor Agreement" means an agreement in substantially the form of
Exhibit J hereto, duly executed and delivered by the parties thereto, as such
agreement may from time to time be amended, supplemented or otherwise modified
pursuant to the terms thereof and hereof.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., or any successor
thereof.
"Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which the Seller, Maxtor or any Selling Affiliate or
any ERISA Affiliate of any thereof is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years made or
accrued an obligation to make contributions.
"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the
Seller, Maxtor or any Selling Affiliate or an ERISA Affiliate of any thereof and
at least one Person other than the Seller, Maxtor or any Selling Affiliate,
respectively, and its ERISA Affiliates or (ii) was so maintained and in respect
of which the Seller, Maxtor or any Selling Affiliate, respectively, or such an
ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the
event such plan has been or were to be terminated.
"Net Subject Receivables Balance" means, at any time, the excess of (i)
the Outstanding Balance of the Subject Receivables existing at such time which
are Eligible Receivables or Included Foreign Receivables over (ii) the sum of,
without duplication (A) the Outstanding Balance of such Subject Receivables that
have become Defaulted Receivables at such time, plus (B) the aggregate amount by
which the aggregate Outstanding Balance of all Subject Receivables owed by each
Obligor existing at such time exceeds the product of (1) the Concentration Limit
for such Obligor as of such date multiplied by (2) the Net Subject Receivables
Balance as of such date plus (C) the aggregate amount by which the aggregate
Outstanding Balance of all such Subject Receivables which are owed by Obligors
which are residents of a Tier II Foreign Country exceeds 10% of the Net Subject
Receivables Balance as of such date, plus (D) the
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aggregate amount by which the aggregate Outstanding Balance of all such Subject
Receivables which are Included Foreign Receivables owed by Obligors which are
residents of any Limited Foreign Country at such time therefor exceeds the
Limited Foreign Country Limit for such Limited Foreign Country, plus (E) the
aggregate amount by which the aggregate Outstanding Balance of all such Subject
Receivables which are Included Foreign Receivables exceeds 35% of the Net
Subject Receivables Balance as of such date, plus (F) the aggregate amount of
Collections deposited in the Concentration Account at such time for payment of
any Subject Receivable the Obligor of which has not been identified, plus (G)
the aggregate Outstanding Balance of all Subject Receivables in respect of which
any credit memo is outstanding and unapplied at such time, plus (H) the amount,
if any, by which (i) the aggregate Outstanding Balance of all Eligible
Receivables required to be paid in full within more than 60 days, but not more
than 90 days, of the original billing date therefor, exceeds (ii) 5% of the
aggregate Outstanding Balance of all Subject Receivables existing at such time.
As used in this definition, "Net Subject Receivables Balance" means the "Net
Subject Receivables Balance" as disclosed on the Daily Report.
"Obligor" means a Person (other than the Seller, Maxtor or any Selling
Affiliate) which is obligated to make payments pursuant to a Contract of the
type described in the definition of the term "Contract" contained in this
Section 1.01.
"Officer's Certificate" means a certificate signed by a Financial
Officer of the Seller or Collection Agent and delivered to the Trustee.
"Original Agreement" has the meaning specified in Preliminary Statement
2 to this Agreement.
"Outstanding Balance" of any Receivable at any time means the then
outstanding principal balance thereof.
"Owner" means, for each Purchased Interest, upon the making of the
Purchase thereof, the Purchaser; provided, however, that, upon any assignment of
all or any portion of such Purchased Interest pursuant to Article IX, the
Assignee thereof shall be the Owner thereof to the extent of such assignment.
"Owner Collections" means, as of any date, that portion of the
Collections deposited to the Concentration Account on such date equal to the
product of (A) the Allocation Percentage on such date and (B) the aggregate
amount of such Collections.
"Participant" means, at any time for each Purchased Interest, each
Person which at such time shall have purchased from the Purchaser which
originally purchased such Purchased Interest or any successive Assignee thereof
an undivided interest in such Purchased Interest or shall have made a commitment
to the Agent to so purchase such an interest.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto performing similar functions.
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"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, limited liability company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Pool Non-compliance Date" means any day on which the Net Subject
Receivables Balance falls below the Required Net Subject Receivables Balance.
"Program Fee" has the meaning specified in Section 2.08.
"Purchase" means a purchase by the Purchaser of a Purchased Interest
from the Seller pursuant to Article II hereof.
"Purchase Date" means, for any Purchased Interest, the date as of which
such Purchased Interest shall be purchased by the Purchaser from the Seller
pursuant to Article II.
"Purchase Documents" means this Agreement, the Repurchase Agreement, the
Assignments, the Receivables Contribution and Sale Agreement, each Selling
Affiliate Receivables Contribution and Sale Agreement, the Company/Maxtor
Agreement, the Company/Seller Agreement, the Maxtor Agreement, the Bank
Agreement, each Consent and Agreement and the Fee Letter, and the documents and
instruments delivered in connection herewith and therewith.
"Purchased Interest" means, at any time on any date, an undivided
percentage ownership interest at such time in (i) all then outstanding Subject
Receivables arising prior to the time of the most recent computation or
recomputation of such undivided percentage interest pursuant to Section 2.04,
(ii) all Related Security with respect to such Subject Receivables, (iii) all
Collections with respect to, and other proceeds of, such Subject Receivables and
Related Security and (iv) the Additional Assigned Rights. Such undivided
percentage interest shall be a fraction expressed as a percentage and shall be
computed as follows:
C +TR
-----
NSRB
where: C = the Capital of such Purchased Interest at the time of
computation.
TR = the Total Reserves with respect to such
Purchased Interest at the time of
computation.
NSRB = the Net Subject Receivables Balance at the
time of computation.
Each Purchased Interest shall be determined from time to time pursuant to the
provisions of Section 2.04, giving effect to the deposit of Owner Collections to
the Seller's Account as provided in Section 2.05.
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"Purchase Limit" means, with respect to the Bank Agreement and this
Agreement, in the aggregate, $150,000,000, as such amount may be reduced
pursuant to Section 2.03; provided, however, that on and as of the Closing Date
the Purchase Limit means, with respect to the Bank Agreement and this Agreement,
in the aggregate, $100,000,000, as such amount may be reduced pursuant to
Section 2.03, until all of the following conditions have been satisfied: (i) no
Event of Insecurity has occurred and is continuing, (ii) the Seller has provided
to the Agent all reports and information required to be provided by it under
this Agreement, including, without limitation, the Purchaser Report dated as of
the Closing Date (and all Purchaser Reports required to be provided thereafter)
and each Daily Report required hereunder, and such other reports and information
as the Agent may request, (iii) each of the documents referred to in Sections
3.01 (o), (p), (q) and (r) shall have been delivered to the Agent, in form and
substance satisfactory to it in its sole discretion, and (iv) all of the credit
facilities of Maxtor shall have been amended or any defaults thereunder waived
or cured all on terms satisfactory to the Agent in its sole discretion.
"Purchase Price" means, for any Purchased Interest, the original amount
paid to the Seller for such Purchased Interest by the Purchaser pursuant to
Section 2.02(c).
"Purchaser" has the meaning specified in the recital of parties to this
Agreement.
"Purchaser Fee" has the meaning specified in Section 2.08.
"Purchaser Rate" for any Interest Period for any Purchased Interest
means the CP Rate for such Interest Period; provided, however, that if any Owner
shall not, at any time and for any reason, fund its Purchase or maintenance of
such Purchased Interest for such Interest Period by issuing Commercial Paper
Notes, the "Purchaser Rate" for such Interest Period shall then be the Assignee
Rate for such Interest Period or such other rate as the Agent and the Seller
shall agree to in writing.
"Purchaser Report" means a report, in substantially the form of Exhibit
B hereto, furnished by the Collection Agent to the Agent and the Trustee for
each Owner pursuant to Section 2.06(e).
"Receivable" means the indebtedness of any Obligor under a Contract of
the type described in the definition of the term "Contract" arising from a sale
of merchandise or services by Maxtor or by any Selling Affiliate (whether such
merchandise or services are to be furnished to such Obligor or to an Affiliate
of such Obligor specified in such Contract), and includes the right to payment
of any interest or finance charges and other obligations of such Obligor with
respect thereto.
"Receivables Contribution and Sale Agreement" means a receivables
contribution and sale agreement in substantially the form of Exhibit H hereto,
entered into by Maxtor and the Seller, as amended, supplemented or otherwise
modified from time to time.
"Related Security" means with respect to any Receivable:
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(i) all of the Seller's, Maxtor's and the Selling Affiliates'
interest in the merchandise (including returned merchandise), if any, relating
to the sale which gave rise to such Receivable;
(ii) all other security interests or liens and property subject
thereto from time to time purporting to secure payment of such Receivable,
whether pursuant to the Contract related to such Receivable or otherwise,
together with all financing statements signed by an Obligor describing any
collateral securing such Receivable; and
(iii) all guarantees, insurance and other agreements or
arrangements of whatever character from time to time supporting or securing
payment of such Receivable whether pursuant to the Contract related to such
Receivable or otherwise.
"Repurchase Agreement" has the meaning specified in Preliminary
Statement 3 to this Agreement.
"Required Net Subject Receivables Balance" means, as of any day of
determination, the sum of (i) the Total Reserves as of such day, plus (ii) the
aggregate Capital outstanding for all Purchased Interests on such day (computed
as if reduced by the aggregate amount of Cure Funds held in the Cure Account).
"Responsible Official" means, when used with respect to the Trustee, any
officer within the Corporate Trust Office of the Trustee including any Managing
Director, Vice President, Assistant Vice-President, Assistant Secretary,
Assistant Treasurer or any other officer of the Trustee who customarily performs
functions similar to those performed by any of the above designated Persons who
at the time shall be such officers, respectively, and also, with respect to a
particular matter, any other officer to whom any matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
"Revolving Period" means the period beginning on the Closing Date and
terminating on the close of business on the Business Day immediately preceding
the Termination Date.
"Seller" has the meaning specified in the recital of parties to this
Agreement.
"Seller Assets" means all of the Seller's right, title and interest in,
to and under all Receivables, all Related Security with respect thereto, all
Collections with respect thereto, all the Seller's rights, remedies, powers and
privileges with respect to such Receivables and the related Contracts existing
at the close of business of Maxtor on the Closing Date and arising from time to
time thereafter, all Additional Assigned Rights of the Seller, and all proceeds
of each of the foregoing.
"Seller Collections" means, with respect to any date, that portion of
the Collections deposited to the Concentration Account equal to the product of
(i) 100% minus the Allocation Percentage on such date times (ii) the aggregate
amount of such Collections.
"Seller's Account" has the meaning specified in Section 2.02(c).
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"Selling Affiliate" means any Affiliate of the Seller which shall have
been identified by the Seller to the Agent, and approved by the Agent, in
writing as a "Selling Affiliate", provided that each such Affiliate (and, in the
case of the Selling Affiliate Receivables Contribution and Sale, Agreement, the
Seller) shall have executed and delivered to the Agent a Selling Affiliate
Receivables Contribution and Sale Agreement and a Consent and Agreement
hereunder and under the Bank Agreement, and shall have furnished to the Agent,
in form and substance reasonably satisfactory to the Agent, (i) documents of the
type described in Section 3.01 relating to such Affiliate, such Selling
Affiliate Receivables Contribution and Sale Agreement, such Consent and
Agreement and the Seller and (ii) the consent of the Company to the addition of
such Affiliate as a "Selling Affiliate" hereunder and under the Bank Agreement,
an agreement substantially similar to the Company/Maxtor Agreement with respect
to such Affiliate and its Selling Affiliate Receivables Contribution and Sale
Agreement, and documents for the Company of the type described in Sections 3.01
(o), (p), (q) and (r) hereof and of the Bank Agreement and relating to such
consent.
"Selling Affiliate Receivables Contribution and Sale Agreement" means,
with respect to any Selling Affiliate, a receivables contribution and sale
agreement, substantially in the form of Exhibit H hereto, between the Seller and
such Selling Affiliate.
"Settlement Date" means the eighth Business Day of any calendar month.
"Settlement Period" for any Purchased Interest means (i) each period
commencing on the first day of a calendar month and ending on the last day of
such calendar month for such Purchased Interest; and, on and after the
Termination Date for such Purchased Interest, such period (including, without
limitation, a period of one day) as shall be selected from time to time by the
Agent or, in the absence of any such selection, each period of thirty (30) days
from the last day of the immediately preceding Settlement Period and (ii) in the
event Maxtor is no longer acting as Collection Agent, a period of one day.
"Single Employer Plan" means a single employer plan, as defined in
Section 4001 (a)(I 5) of ERISA, that (i) is maintained for employees of the
Seller or an ERISA Affiliate and no Person other than the Seller and its ERISA
Affiliates or (ii) was so maintained and in respect of which the Seller or an
ERISA Affiliate could have liability under Section 4069 of ERISA in the event
such plan has been or were to be terminated.
"S&P" means Standard & Poor's Ratings Services, a division of the
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or any successor thereof.
"Subject Receivable" means, at any time, any Receivable in respect of
which the Obligor is a Designated Obligor at such time or was a Designated
Obligor on the date of Purchase of an interest therein hereunder other than any
such Receivable (x) which shall have been repurchased by the Seller as
contemplated by Section 2.05 (and in respect of which the Agent or any Owner has
not been required to return all or any portion of the payment received from the
Seller effecting such repurchase) or (y) with respect to which Collections in
the entire amount of the Outstanding Balance of such Receivable shall have been
received in respect of any Related Security supporting or securing payment of
such Receivable and applied and distributed pursuant
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to Sections 2.05 and 2.06 (if and so long as neither the Agent nor any Owner is
at any time required to return all or any portion of such amount for any
reason).
"Termination Date" means the earlier of (i) the Facility Termination
Date and (ii) that Business Day which the Seller designates or, if the
conditions precedent in Section 3.02 are not satisfied, such Business Day which
the Agent designates, as the Termination Date by notice to the Agent (if the
Seller so designates) or to the Seller (if the Agent so designates) at least one
Business Day prior to such Business Day.
"Tier I Foreign Country" means (i) Canada, the Federal Republic of
Germany, France or the United Kingdom or (ii) any other country or territory the
inclusion of which as a "Tier I Foreign Country" shall have been requested by
the Seller, and consented to by the Agent (in the Agent's sole discretion) in
writing.
"Tier II Foreign Country" means (i) Belgium, Denmark, Ireland Italy,
Japan, Luxembourg, The Netherlands, Norway, Portugal, Spain, Sweden or
Switzerland or (ii) any other country or territory the inclusion of which as a
"Tier II Foreign Country" shall have been requested by the Seller, and consented
to by the Agent (in the Agent's sole discretion) in writing, so long as any such
country or territory referred to in clauses (i) or (ii) is a "Limited Foreign
Country".
"Total Reserves" means, as of any date, the sum of the Loss Reserve, the
Dilution Reserve, the Yield/Fee Reserve and the Transfer Risk Reserve.
"Transfer Risk Reserve" or "TRR" means, on any date, an amount equal to:
TRR = NSRB x TRRP
where: NSRB = Net Subject Receivables Balance as of the
close of such Business Day
TRRP = The Transfer Risk Reserve Percentage, as
of the close of business of the Collection
Agent on such date.
"Transfer Risk Reserve Percentage" means, as of any date, the product of
(i) 6.8% (or such other percentage as shall be specified by the Agent in writing
from time to time), (ii) a fraction (a) the numerator of which is the
Outstanding Balance of all Included Foreign Receivables as of the last day of
the Fiscal Month most recently ended on or before such date and (b) the
denominator of which is the Outstanding Balance of all Receivables as of the
last day of the Fiscal Month most recently ended on or before such date and
(iii) the excess of (a) 100% over (b) the sum of (1) the Dynamic Loss Reserve
Percentage as of such date plus (2) the Dilution Reserve Percentage as of such
date.
"Trustee" has the meaning specified in the recital of parties to this
Agreement.
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"Trustee's Account" has the meaning specified in Section 6.07.
"Trustee Accounts" has the meaning specified in Section 6.07(c).
"Trustee's Fee" has the meaning specified in Section 11.05.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the specified jurisdiction.
"United States" means the United States of America.
"Withdrawal Liability" has the meaning given such term under Part I of
Subtitle E of Title IV of ERISA.
"Yield" means with respect to any Purchased Interest for any Settlement
Date:
(i) if the Purchaser Rate for such Purchased Interest for the
immediately preceding Interest Period is the CP Rate:
PRxCxED
-------
360
(ii) if the Purchaser Rate for such Purchased Interest for the
immediately preceding Interest Period is the Assignee Rate:
ARxCxED
-------
360
where: PR = the Purchaser Rate for such Purchased
Interest for such Interest Period
AR = the Assignee Rate for such Purchased
Interest for such Interest Period
C = The average actual Capital outstanding
for such Purchased Interest for such
Interest Period
ED = the actual number of days elapsed during
such Interest Period
provided that no provision of this Agreement shall require the
payment or permit the collection of Yield in excess of the
maximum permitted by applicable law; and provided further that
Yield for any Purchased Interest shall not be considered paid by
any distribution to the extent that at any time all or a portion
of such distribution is rescinded or must otherwise be returned
for any reason.
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"Yield/Fee Amount" means, with respect to any Purchased Interest
for any date, an amount equal to:
{[(AR - AS) x 1.3] + AS + PF) x C x D} + SF + TF
------------------------------------------------
360
where: AR = (a) If the Purchaser Rate for the
Interest Period during which such date
occurs is the CP Rate, AR is equal to
the Adjusted Eurodollar Rate for such
Interest Period (calculated as if in all
cases such Interest Period were equal to
a period of one month);
(b) If the Purchaser Rate for the Interest
Period during which such date occurs is
the Assignee Rate: (i) if the Assignee
Rate is based on the Alternate Base
Rate, AR is the Assignee Rate on the
date occurring two Business Days prior
to the first day of such Interest
Period; and (ii) if the Assignee Rate is
based on the Adjusted Eurodollar Rate,
AR is the Assignee Rate for such
Interest Period
AS = 1.00% or such other percentage specified
in the first sentence of the definition
of the Assignee Rate
PF = A percentage per annum equal to the per
annum rate of the Program Fee in effect
on the first day of the Settlement
Period during which such date occurs
C = The larger of (i) the actual aggregate
Capital for all outstanding Purchased
Interests on such date and (ii) the
largest Capital for all outstanding
Purchased Interests estimated in good
faith by the Seller for the Interest
Period during which such date occurs (in
both cases computed as if reduced
dollar-for-dollar by the amount of Cure
Funds held in the Cure Account at such
time)
D = The actual number of days in the
applicable Settlement Period.
SF = An amount equal to the Collection Agent
Fee paid for the mostly recently ended
Settlement Period
TF = An amount equal to the aggregate of all
other fees and expenses paid for the
most recently ended Settlement Period
other than SF and PF
"Yield/Fee Reserve" means, on any date, an amount equal to:
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YFR = C x YFRP
Where: C = The larger of (i) the actual aggregate
Capital for all outstanding Purchased
Interests on such date and (ii) the
largest Capital for all outstanding
Purchased Interests estimated in good
faith by the Seller for the Interest
Period during which such date occurs (in
both cases computed as if reduced
dollar-for-dollar by the amount of Cure
funds held in the Cure Account at such
time)
YFRP = The Yield/Fee Reserve Percentage as of
the close of business of the Collection
Agent on such date.
"Yield/Fee Reserve Percentage" means, as of any date, a percentage equal
to:
([AR - AS) x 1.3] + AS + PF + RSF + TF) x POP
---------------------------------------------
1-(LRP + DRP)
where: AR = (a) if the Purchaser Rate for the
Interest Period during which such date
occurs is the CP Rate, AR is equal to
the Adjusted Eurodollar Rate for such
Interest Period (calculated as if in all
cases such Interest Period (calculated
as if in all cases such Interest Period
were equal to a period of one month);
(b) If the Purchaser Rate for the
Interest Period during which such date
occurs is the Assignee Rate (i) if the
Assignee Rate is based on the Alternate
Base Rate, AR is the Assignee Rate on
the date occurring two Business Days
prior to the first day of such Interest
Period, and (ii) if the Assignee Rate is
based on the Adjusted Eurodollar Rate,
AR is the Assignee Rate for such
Interest Period.
AS = 1.00% or such other percentage
specified in the first sentence of the
definition of the Assignee Rate
PF = A percentage per annum equal to
the per annum rate of the Program
Fee in effect on the first day of
the Settlement Period during which
such date occurs
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RSF = 1.00% or such other percentage as the
Agent may from time to time reasonably
determine reflects the fee payable to a
successor Collection Agent
TF = A percentage fee equal to 0.01% or such
other percentage as the Agent may from
time to time reasonably determine
reflects the fees and expenses of the
Trustee
POP = A percentage equal to the quotient of
(a) the sum of (i) the Collection Delay
Period plus (ii) the Average Maturity on
such date divided by (b) 360 days
LRP = A percentage equal to the Loss Reserve
Percentage as of such date
DRP = A percentage equal to the Dilution
Reserve Percentage as of such date
SECTION 1.02. Other Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles. All terms used in Article 9 of the UCC in the State of
California, and not specifically defined herein, are used herein as defined in
such Article 9.
SECTION 1.03. Computation of Time Periods. Unless otherwise
stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each mean "to but excluding".
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 2.01. Facility. On the terms and conditions hereinafter
set forth, the Purchaser may, in its sole discretion, make Purchases from time
to time on any Purchase Date during the period from the date hereof to the
Termination Date. Under no circumstances shall the Purchaser make any Purchase
if after giving effect to such Purchase, the aggregate Capital with respect to
all Purchased Interests, together with the aggregate "Capital" with respect to
all "Purchased Interests" under the Bank Agreement, would exceed the Purchase
Limit. Nothing in this Agreement shall be deemed to be or construed as a
commitment by the Purchaser to purchase any Purchased Interest at any time.
Under no circumstances shall the Purchaser make any Purchase, other than the
Purchase made on the Closing Date, until April 20, 1998.
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SECTION 2.02. Making Purchases. (a) Each Purchase shall be made
(x) if the Purchase Price thereof is less than $20,000,000, on notice from the
Seller to the Agent by 11:00 a.m. (New York City time) on the relevant Purchase
Date, and (y) if the Purchase Price thereof equals or exceeds $20,000,000, on
notice from the Seller to the Agent by 11:00 a.m. (New York City time) one
Business Day prior the relevant Purchase Date. Each such notice of a proposed
Purchase shall specify (i) the desired Purchase Price to be paid to the Seller
(which shall be in a minimum amount of $2,000,000 or an integral multiple of $
100,000 in excess thereof), and (ii) the desired Purchase Date (which date shall
be a Business Day). The Purchaser shall promptly notify the Agent, and the Agent
shall promptly thereafter notify the Seller, whether the Purchaser has
determined to make such Purchase.
(b) If the Purchaser determines not to make the requested
Purchase, the Seller may send notice of the requested Purchase to the Agent
under the Bank Agreement, which notice shall be by telecopier, telex or cable
and shall comply with Section 2.02 of the Bank Agreement.
(c) On the date of each Purchase, the Purchaser shall, upon
satisfaction of the applicable conditions set forth in Article III, make
available to the Agent the Purchase Price for such Purchase by deposit of such
amount in same day funds to the Agent's Account. After receipt by the Agent of
such funds, the Agent will cause such funds to be made immediately available
(and in any event, if the Agent shall have received such funds by 2:00 p.m. (New
York City time) on any Business Day, no later than 5:00 p.m. (New York City
time) on such Business Day) to the Seller at Bank of America, ABA: ▇▇▇▇▇▇▇▇▇,
Beneficiary: Maxtor Receivables Corporation, Account: ▇▇▇▇-▇-▇▇▇▇▇ (the
"Seller's Account").
SECTION 2.03. Termination or Reduction of the Purchase Limit. (a)
Optional. The Seller may, upon at least five Business Days' notice to the Agent,
terminate in whole or reduce in part the unused portion of the Purchase Limit;
provided, however that for purposes of this Section 2.03(a), the unused portion
of the Purchase Limit shall be computed as the excess of (i) the Purchase Limit
immediately prior to giving effect to such termination or reduction over (ii)
the sum of (A) the aggregate Capital with respect to all Purchased Interests
outstanding at the time of such computation and (B) the aggregate "Capital" with
respect to all "Purchased Interests" outstanding at the time of such computation
under the Bank Agreement; provided further that each partial reduction shall be
in an amount equal to $5,000,000 or an integral multiple thereof.
(b) Mandatory. On each day on which the Seller shall, pursuant to
Section 2.03(a) of the Bank Agreement, reduce in part the unused portion of the
"Purchase Limit" under and as defined in the Bank Agreement, the Purchase Limit
hereunder shall automatically reduce by an equal amount. The Purchase Limit
hereunder shall automatically terminate in whole on any day on which the Seller
shall terminate in whole the Purchase Limit under and as defined in the Bank
Agreement pursuant to Section 2.03(a) of the Bank Agreement.
SECTION 2.04. Purchased Interest. Each Purchased Interest shall
be initially computed as of the opening of business of the Collection Agent on
the date of purchase of such Purchased Interest. Thereafter until the
Termination Date, such Purchased Interest shall be
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automatically recomputed as of the close of business of the Collection Agent on
each day (giving effect to the deposit of Owner Collections to the Seller's
Account pursuant to Section 2.05). Such Purchased Interest shall remain constant
from the time as of which any such computation or recomputation is made until
the time as of which the next such recomputations if any, shall be made. Any
Purchased Interest, as computed as of the day immediately preceding the
Termination Date, shall remain constant at all times on and after such
Termination Date.
SECTION 2.05. Settlement Procedures. (a) On each Deposit Date
during each Settlement Period during the Revolving Period, unless a Cure Period
shall have occurred and be continuing, the Collection Agent shall instruct the
Trustee by a Daily Report delivered to the Trustee by 2:00 p.m. (New York City
time) to, and the Trustee shall, at such time and in the following order:
(i) allocate Collections received since receipt of the last such Daily
Report and held in the Concentration Account on such day, based on the Daily
Report, either as Owner Collections or Seller Collections;
(ii) out of such Owner Collections, allocate to, and hold in the
Concentration Account, in trust for the Owners, the Trustee and the Collection
Agent, an amount equal to the Yield/Fee Amount for such Deposit Date to the
extent such amount has not been previously so allocated;
(iii) deposit the remainder of such Owner Collections to the Seller's
Account, provided that, if immediately following any such deposit such Deposit
Date would be a Pool Non-compliance Date, the Trustee shall retain all such
remaining Owner Collections in the Concentration Account to be applied pursuant
to Section 2.05(b)(iii); and
(iv) deposit to the Seller's Account the Seller Collections.
On the Business Day immediately prior to each Settlement Date during the
Revolving Period, unless a Cure Period shall have occurred and be continuing,
the Collection Agent shall direct the Trustee in writing to deposit to the
Trustee's Account the amounts allocated and held in trust as described in clause
(ii) above; provided, however, that the portion of such deposit allocable to the
Trustee's expenses shall only be in an amount equal to the expenses reimbursable
under the Purchase Documents actually incurred by the Trustee (as certified in
reasonable detail to the Collection Agent in writing by the Trustee) during the
current Interest Period or remaining unpaid with respect to any prior Interest
Period. The Daily Report delivered by the Collection Agent to the Trustee on the
first day of each Interest Period shall set forth the Yield/Fee Amount for such
Settlement Date.
(b) On each Deposit Date during each Settlement Period if and so
long as a Cure Period shall have occurred and be continuing, the Collection
Agent shall instruct the Trustee by a Daily Report delivered to the Trustee by
2:00 p.m. (New York City time) to, and the Trustee shall, at that time and in
the following order:
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(i) allocate Collections received since receipt of the last such Daily
Report and held in the Concentration Account on such day, based on the Daily
Report, either as Owner Collections or Seller Collections;
(ii) out of Owner Collections, allocate to, and hold in the
Concentration Account, in trust for the Owners, the Trustee and the Collection
Agent, an amount equal to the Yield/Fee Amount for such date to the extent such
amount has not been previously so allocated;
(iii) deposit, out of the remainder of such Owner Collections, to the
Cure Account in an amount sufficient to make the Net Subject Receivables Balance
equal or exceed the Required Net Subject Receivables Balance;
(iv) deposit the remainder of such Owner Collections to the Seller's
Account; provided that, if immediately following any such deposit such Deposit
Date would be a Pool Non-compliance Date, the Trustee shall retain all such
remaining Owner Collections in the Concentration Account to be applied pursuant
to Section 2.05(b)(iii); and
(v) deposit to the Seller's Account the Seller Collections.
On the Business Day immediately prior to each Settlement Date
during a Cure Period, the Collection Agent shall direct the Trustee in writing
to deposit to the Trustee's Account the amounts allocated and held in trust as
described in clause (iii) of this Section 2.05(b).
On each Business Day during each Settlement Period, if and so
long as a Cure Period shall have occurred and be continuing, the Collection
Agent shall direct the Trustee in writing to deposit to the Trustee's Account
the amounts allocated and held in trust as described in clause (ii) above;
provided, however, that the portion of such deposit allocable to the Trustee's
expenses shall only be in an amount equal to the expenses reimbursable under the
Purchase Documents actually incurred by the Trustee (as certified in reasonable
detail to the Collection Agent in writing by the Trustee) during the current
Interest Period or remaining unpaid with respect to any prior Interest Period.
The Daily Report delivered by the Collection Agent to the Trustee on the first
day of each Interest Period shall set forth the Yield/Fee Amount for such
Settlement Date.
(c) On each Deposit Date during the Amortization Period, the
Collection Agent shall instruct the Trustee by a Daily Report delivered to the
Trustee by 2:00 p.m. (New York City time) to, and the Trustee shall, at that
time and in the following order:
(i) allocate Collections received since receipt of the last such Daily
Report and held in the Concentration Account, based on the Daily Report, either
as Owner Collections or as Seller Collections;
(ii) set aside and hold in the Concentration Account, in trust for the
Owners, the Trustee and the Collection Agent, such Owner Collections; and
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(iii) deposit to the Seller's Account the Seller Collections.
On the Business Day immediately prior to each Settlement Date
during an Amortization Period, the Trustee shall deposit to the Trustee's
Account (A) all amounts set aside as described in clause (ii) of this Section
2.05(c) and (B) the amount of Cure Funds on deposit in the Cure Account.
(d) On any Business Day during the Revolving Period, unless a
Cure Period shall have occurred and be continuing, the Seller may instruct the
Collection Agent to direct the Trustee (as set forth in the Daily Report) to
deposit to the Trustee's Account all or a portion of (A) the Collections
otherwise to be deposited into the Seller's Account pursuant to Sections
2.05(a)(iii) and (iv) and (B) the Yield/Fee Amount held in the Concentration
Account pursuant to Section 2.05(a)(ii).
(e) On any Business Day during the Revolving Period, the Seller
may instruct the Trustee by an Officer's Certificate (which may be a standing
instruction) delivered to the Trustee by 2:00 p.m. (New York City time) to, and
the Trustee shall, transfer to the Seller's Account Cure Funds, if any, held in
the Cure Account; provided that the Seller shall have delivered to the Trustee
at the time of such request an Officer's Certificate stating that, after taking
account of the requested withdrawal, the Net Subject Receivables Balance on such
day is equal to or greater than the Required Net Subject Receivables Balance and
setting forth the calculation supporting such statement.
(f) If on any day the Outstanding Balance of any Subject
Receivable is either (i) reduced as a result of any defective, rejected or
returned merchandise or services, any cash discount, or any adjustment by the
Seller, Maxtor or any Selling Affiliate or any Affiliate of any thereof, or (ii)
reduced or canceled as a result of any dispute or claim, or any setoff in
respect of any dispute or claim, by the Obligor thereof against the Seller,
Maxtor or any Selling Affiliate or any Affiliate of any thereof (whether such
dispute or claim arises out of the same or a related transaction or an unrelated
transaction), the Seller shall be deemed to have received on such day a
Collection of such Receivable in the amount of such reduction or cancellation
(unless such Seller shall be deemed to have received on such day a collection in
full of such Subject Receivable pursuant to the succeeding sentence), and the
Seller shall make the payment required to be made by it in connection with such
deemed Collection on the day required under, and otherwise pursuant to, Section
5.01(h). If on any day any of the representations or warranties in Section 4. 01
(h) is violated with respect to any Subject Receivable, the Seller shall be
deemed to have received on such day a Collection in full of such Subject
Receivable and shall make the payment required to be made by it in connection
with such deemed Collection on the day required under, and otherwise pursuant
to, Section 5.01 (h). In the case of each of the two preceding sentences, upon
any actual payment in full by the Seller of any such Receivable, the Seller
shall be deemed to have repurchased (without recourse and without representation
or warranty, express or implied) such Receivable and such Receivable shall cease
to be a "Subject Receivable" for purposes of this Agreement (unless and until
the Agent or any Owner is at any time required to return all or any portion of
such payment for any reason).
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(g) Except as otherwise stated in this Section 2.05 or as
otherwise required by law or the underlying contract or the applicable Credit
and Collection Policy, all Collections received from an Obligor of any
Receivable shall be applied to Receivables then outstanding of such Obligor in
the order of the age of such Receivables, starting with the oldest such
Receivable unless such Obligor designated its payment for application to
specific Receivables, and, in any case, no later than ten Business Days after
such payment shall have been made by such Obligor.
SECTION 2.06. Distributions. (a) During the Revolving Period, on
each Settlement Date, the Trustee shall distribute the funds on deposit in the
Trustee's Account on such Settlement Date, in the following order of priority,
in accordance with the Purchaser Report:
(i) to the Trustee as the accrued and unpaid Trustee's Fee and
reasonable expenses of the Trustee reimbursable under the Purchase Documents, in
an amount not in excess of $1,000 for such Settlement Date;
(ii) to the Agent's Account for the Collection Agent for the accrued and
unpaid Collection Agent Fee;
(iii) unless otherwise instructed by the Agent, to the Agent's Account:
(A) for payment of the fees and any other amounts due under the
Fee Letter other than Breakage Costs; and
(B) for distribution to each Owner by the Agent, ratably in
accordance with such Owner's Purchased Interest, for payment of Yield on such
Purchased Interest;
(iv) to the Trustee as Trustee's expenses reimbursable under the
Purchase Documents in excess of $1,000 for such Settlement Date;
(v) unless otherwise instructed by the Agent, to the Agent's Account for
payment of Breakage Costs;
(vi) to the Agent's Account for the Owners, the Banks and the Agent for
payment of any other amounts (other than Capital) due thereto under any of the
Purchase Documents;
(vii) to the Concentration Account, amounts required to be allocated to
the Yield/Fee Amount for the immediately succeeding Settlement Date; and
(viii) after the payment in full of the amounts specified in clauses (i)
through (vii) above, to the Seller.
(b) On each Settlement Date during the Amortization Period, the
Trustee shall distribute the funds on deposit in the Trustee's Account on such
Settlement Date, in the following order of priority, in accordance with the
Purchaser Report:
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(i) to the Trustee as the accrued and unpaid Trustee's Fee and
reasonable expenses of the Trustee reimbursable under the Purchase Documents, in
an amount not in excess of $ 1,000 for such Settlement Date;
(ii) to the Agent's Account for the Collection Agent as the accrued and
unpaid Collection Agent Fee;
(iii) unless otherwise instructed by the Agent, to the Agent's Account:
(A) for payment of the fees and any other amounts due under the
Fee Letter other than Breakage Costs; and
(B) for distribution to each Owner by the Agent, ratably in
accordance with such Owner's Purchased Interest, for payment of Yield on such
Purchased Interest;
(iv) to the Agent's Account for each Owner, ratably in accordance with
such Owner's Purchased Interest, in reduction of the Capital for such Purchased
Interest until such Capital is reduced to zero;
(v) to the Trustee as Trustee's expenses reimbursable under the Purchase
Documents in excess of $1,000 for such Settlement Date;
(vi) unless otherwise instructed by the Agent, to the Agent's Account
for payment of Breakage Costs;
(vii) to the Agent's Account for the Owners and the Agent for payment of
any other amounts due the Owners and the Agent under the Purchase Documents;
(viii) after the payment in full of the amounts specified in clauses (i)
through (vii) above, to the Seller.
(c) In accordance with the provisions of Section 2.05(d), on each
Settlement Date the Trustee shall distribute the funds on deposit in the
Trustee's Account to the Agent's Account, unless otherwise instructed by the
Agent in writing, in reduction of any Capital and any payment of Yield, any
Breakage Costs and any other amounts due the Owners under the Purchase Documents
in respect of any Purchased Interest.
(d) Pursuant to Section 2.05(b), on each Settlement Date the
Trustee shall distribute the amounts withdrawn from the Cure Account under
Section 2.05(b), that have been deposited to the Trustee's Account, promptly
upon receipt thereof, to the Agent's Account for distribution to each Owner,
ratably in accordance with such Owner's Purchased Interest, in reduction of the
Capital for such Purchased Interest, unless otherwise instructed by the Agent in
writing.
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Upon payment in full to all of the Owners of the aggregate
Capital for all Purchased Interests outstanding, all accrued and unpaid Yield
thereon and all other amounts due the Owners and the Agent under the Purchase
Documents, payment in full to the Collection Agent of the Collection Agent Fee,
and payment in full to the Trustee of the Trustee's Fee and all reasonable
expenses of the Trustee reimbursable under the Purchase Documents, all amounts
remaining on deposit in the Trustee's Account and the Cure Account shall be
distributed by the Trustee to the Seller, and all amounts, if any, remaining in
the Lock Box Accounts and the Concentration Account shall be distributed by the
Agent to the Seller; provided, however, that if at any time after the payment
that would have otherwise resulted in such payment in full, such payment is
rescinded or must otherwise be returned for any reason, effective upon such
rescission or return, such payment in full shall automatically be deemed, as
between the Owners and the Seller, never to have occurred, and the Seller shall
be required, to the extent it received any amounts under this Section 2.06, to
remit to the Trustee an amount equal to the rescinded or returned payment.
(e) Prior to the 6th Business Day of each calendar month, the
Collection Agent shall prepare and forward to the Agent and the Trustee for each
Owner of a Purchased Interest (A) a Purchaser Report relating to such Purchased
Interest, as of the close of business of the Collection Agent on the last day of
the immediately preceding month, and (B) an analysis as to the aging of all
Subject Receivables, as of such last day.
(f) On each Business Day, by. no later than 2:00 p.m. (New York
City time), the Collection Agent shall prepare and forward to the Agent for each
Owner of a Purchased Interest and the Trustee, a Daily Report relating to such
Purchased Interest.
SECTION 2.07. Payments and Computations, Etc. All amounts to be
paid or deposited by the Seller, the Collection Agent or the Trustee hereunder
shall be paid or deposited in accordance with the terms hereof no later than
4:00 p.m. (New York City time) on the day when due in lawful money of the United
States of America in same day funds to the Agent's Account. The Seller shall, to
the extent permitted by law, pay to the Agent interest on all amounts not paid
or deposited when due hereunder at 1% per annum above the Alternate Base Rate in
effect from time to time, payable on demand, provided, however, that such
interest rate shall not at any time exceed the maximum rate permitted by
applicable law. Such interest shall be retained by the Agent except to the
extent that such failure to make a timely payment or deposit has continued
beyond the date for distribution by the Agent of such overdue amount to an Owner
of a Purchased Interest, in which case such interest accruing after such date
shall be for the account of, and distributed by the Agent to, such Owner. All
computations of interest and fees hereunder shall be made on the basis of a year
of 360 days for the actual number of days (including the first but excluding the
last day) elapsed.
SECTION 2.08. Fees. (a) The Seller shall pay the following fees:
(i) to the Agent, in consideration for the support of the Purchased
Interests purchased hereunder, a fee (the "Program Fee") as set forth in the Fee
Letter;
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(ii) to the Agent for the account of the Purchaser a fee (the "Purchaser
Fee") as set forth in the Fee Letter; and
(iii) to the Agent for the account of the Banks and the Participants
(the "Facility Fee") as set forth in the Fee Letter.
(b) The Seller shall also pay to the Agent for the account of the
Agent a fee (the "Arrangement Fee") as set forth in the Fee Letter, payable on
the date of execution of this Agreement.
(c) Each Owner shall pay to the Collection Agent a collection fee
(the "Collection Agent Fee"), from the Closing Date until the Collection Date,
payable on each Settlement Date, in an amount equal to the greater of (i) 0.25
of 1% per annum on the average daily amount of Capital for each Purchased
Interest owned by such Owner, or (ii) 110% of the reasonable out-of-pocket costs
and expenses of the Collection Agent of servicing, administering and collecting
such Owner's ratable share of the Subject Receivables if and to the extent that
such costs and expenses are specified in reasonable detail, including copies of
supporting documentation, in a writing delivered to the Agent no later than
three Business Days prior to such Settlement Date.
SECTION 2.09. Eurodollar Increased Costs. (a) If any Owner shall
be subject to any Eurodollar Increased Costs, then, upon demand by such Owner
(with a copy to the Agent), the Seller shall immediately pay to the Agent, for
the account of such Owner (as a third-party beneficiary), from time to time as
specified, additional amounts sufficient to compensate such Owner for such
Eurodollar Increased Costs. A certificate as to such amounts submitted to the
Seller and the Agent shall be conclusive and binding for all purposes, absent
manifest error.
(b) If any Owner shall, pursuant to Section 2.09(a), make a
demand for compensation for Eurodollar Increased Costs, the Seller shall have
the right, upon at least thirty (3 0) days' prior written notice to such Owner
(with a copy to the Agent), to cause such Owner to use its best efforts to
assign to an Assignee selected by the Seller and consented to in writing by the
Agent (which consent shall not be unreasonably withheld) the Purchased Interests
of such Owner and its rights in respect thereof, all in accordance with Section
9.01; provided that no action taken under this subsection (b) shall affect the
Seller's obligation to compensate any such Owner for Eurodollar Increased Costs
for the period prior to the effectiveness of such assignment.
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01. Condition Precedent to Initial Purchase. The
initial Purchase hereunder is subject to the condition precedent that (without
the satisfaction of such condition precedent imposing any obligation on the
Purchaser) the Agent shall have received on or before
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the Purchase Date for such Purchase, the following, each (unless otherwise
indicated) dated, or dated as of, such Purchase Date, in form and substance
satisfactory to the Agent:
(a) The initial Assignment, duly executed by the Seller, dated the date
hereof.
(b) The Receivables Contribution and Sale Agreement, duly executed by
the Seller and Maxtor, and acknowledged by the Agent, together with:
(i) Stamped receipt copies of proper financing statements naming
Maxtor as seller, the Seller as purchaser and CNAI, as Agent and as assignee,
together with evidence reasonably satisfactory to the Agent of the due filing
thereof on or before the Closing Date, under the UCC of all jurisdictions that
the Agent may deem necessary or desirable in order to perfect the Seller's
interests created or purported to be created by the Receivables Contribution and
Sale Agreement and the Agent's interests created or purported to be created by
this Agreement;
(ii) Proper financing statements, if any, necessary to release
all security interests and other rights of any Person in the Seller Assets
previously granted by Maxtor;
(iii) [Intentionally left blank]
(iv) The Maxtor Agreement, duly executed by Maxtor.
(c) Certified copies of the charter and by-laws, as amended, of each of
the Seller and Maxtor.
(d) Certified copies of the resolutions of the Boa rd of Directors of
each of the Seller and Maxtor approving this Agreement and the other Purchase
Documents to be delivered by the Seller and Maxtor respectively, hereunder and
the transactions contemplated hereby and thereby, and of all documents
evidencing other necessary corporate action and governmental approvals, if any,
with respect to such Purchase Documents. Documented evidence, in form and
substance satisfactory to the Agent, of all requisite corporate action having
been taken by the Trustee to approve and authorize the execution and delivery by
the Trustee of each of the Purchase Documents to which it is party and
performance of its obligations thereunder.
(e) A certificate of the Secretary or Assistant Secretary (or, in the
case of the Trustee, an Assistant Treasurer) of each of the Seller, Maxtor and
the Trustee certifying the names and true signatures of the officers of the
Seller, Maxtor and the Trustee, respectively, authorized to sign this Agreement
and the other Purchase Documents to be delivered by it hereunder.
(f) Good standing certificates issued by the Secretary of State of the
jurisdictions of incorporation of each of the Seller and Maxtor, respectively.
(g) Stamped receipt copies of proper financing statements, duly filed
with respect to all Seller Assets, on or before the Closing Date under the UCC
of all jurisdictions that the Agent may deem necessary or desirable in order to
perfect the sales and transfers of legal and equitable title, and ownership
interests, or the grant of a security interest therein, contemplated hereby.
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(h) Proper financing statements, if any, necessary to release all
security interests and other rights of any Person in the Seller Assets,
previously granted by the Seller.
(i) [Intentionally left blank].
(j) Lock Box Agreements duly executed by the Lock Box Banks, the Agent
and the Seller.
(k) A favorable opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the
Seller and Maxtor, substantially in the form of Exhibit E-I hereto, which shall
include, without limitation, (A) an opinion as to perfection, (B) an opinion as
to enforceability, (C) a general corporate opinion and (D) such other matters as
the Agent may reasonably request.
(1) A favorable opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the
Seller and Maxtor, substantially in the Form of Exhibit E-2 hereto, which shall
include (A) a "true sale" opinion with respect to the sales of Receivables from
Maxtor to the Seller, (B) an opinion relating to the likelihood of a substantive
consolidation of Maxtor with the Seller and (C) such other matters as the Agent
may reasonably request.
(m) A favorable opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇, in-house counsel for the
Seller, substantially in the form of Exhibit E-3 hereto, as to such matters as
the Agent may reasonably request.
(n) A letter of the Seller to the Purchaser, Citibank and CNAI,
individually and as the Agent, substantially in the form of Exhibit F hereto.
(o) The Company/Maxtor Agreement and the Company/Seller Agreement, each
duly executed by the Company.
(p) Certified copies of the resolutions of the Board of Directors of the
Company approving the Company/Maxtor Agreement and the Company/Seller Agreement
and the other Purchase Documents to be delivered by it hereunder and the
transactions contemplated thereby, and of all documents evidencing other
necessary corporate action and governmental approvals, if any, with respect to
such Purchase Documents.
(q) A certificate of a Representative Director of the Company certifying
the names and true signatures of the officers of the Company authorized to sign
the Purchase Documents to be delivered by it hereunder.
(r) Favorable opinions of ▇▇▇ & ▇▇▇▇▇, counsel for the Company, and
special Korean in-house counsel for the Company, substantially in the forms of
Exhibits G-I and G-2, respectively, hereto and as to such other matters as the
Agent may reasonably request.
(s) The Bank Agreement, duly executed by each of the parties thereto.
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(t) The Fee Letter, in form and substance satisfactory to the Agent,
duly executed by the Seller.
(u) Evidence that all bank accounts required to be established and
maintained under the Purchase Documents shall have been established.
(v) The Repurchase Agreement and each other Purchase Document, duly
executed by each party thereto.
(w) Evidence that all related fees and expenses then due and payable in
connection with the Purchase Documents have been paid.
(x) The Daily Report, in form and substance satisfactory to the Agent
and the Trustee, prepared on a pro forma basis and showing that the Seller is in
compliance with all the Purchase Documents (after giving effect to the initial
Purchase), to the extent a showing of such compliance is called for in the form
thereof.
(y) An accounts receivable trial balance as of the initial Purchase Date
(which if, in magnetic tape or diskette format, shall be compatible with the
Seller's, or, if applicable, the Collection Agent's equipment).
(z) A completed Purchaser Report, together with historical Receivables
portfolio data attached thereto as Schedule A, in each case in form and
substance satisfactory to the Agent and the Trustee.
(aa) A favorable opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel for the Trustee,
in form and substance satisfactory to the Agent.
(bb) A favorable opinion of Shearman & Sterling, counsel for the Agent,
as to such matters as the Agent may reasonably request.
SECTION 3.02. Conditions Precedent to All Purchases and Deposits.
Each Purchase (including the initial Purchase) hereunder pursuant to Section
2.02 and each deposit of Owner Collections to the Seller's Account shall be
subject to the conditions precedent set forth in Section 3.01 and to the further
conditions precedent that (a) the Collection Agent shall have delivered to the
Agent, in form and substance satisfactory to the Agent, (i) all Purchaser
Reports and Daily Reports, as and when due under Section 2.06, and (ii) such
additional information as may be reasonably requested by the Agent, (b) on the
date of each such Purchase or deposit of Owner Collections to the Seller's
Account the following statements shall be true (and the acceptance by the Seller
of the proceeds of such Purchase or deposit shall constitute a representation
and warranty by the Seller that on such date in the case of each Purchase such
statements are true):
(i) The representations and warranties contained in this Agreement and
each other Purchase Document are correct on and as of the date of such Purchase,
before and after giving
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effect to such Purchase and to the application of the proceeds therefrom, as
though made on and as of such date,
(ii) No event has occurred and is continuing, or would result from such
Purchase or from the application of the proceeds therefrom, which constitutes an
Event of Termination or Incipient Event of Termination,
(iii) The Agent shall not have delivered to the Seller a notice that the
Purchaser shall not make any further Purchases hereunder and/or any deposits of
Owner Collections to the Seller's Account hereunder,
(iv) On such date, all of the Company's long-term public senior debt
securities are rated at least B- by S&P and at least B3 by ▇▇▇▇▇'▇ or, if such
securities are not rated by S&P and ▇▇▇▇▇'▇, such securities have a deemed
rating of at least B- and B3, as determined by the Agent in its sole discretion,
(v) The Net Subject Receivables Balance is at least equal to Required
Net Subject Receivables Balance, and
(vi) The Agent shall not have received any notification from S&P or
▇▇▇▇▇'▇ that the transactions contemplated and effected by the Purchase
Documents are not of a type which it is desirable for the Purchaser to
consummate;
(c) the Bank Agreement shall be in form and substance satisfactory to the Agent
and shall be in full force and effect and (d) the Agent shall have received such
other approvals, opinions or documents as the Agent may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Seller. The
Seller represents and warrants, as of the date hereof and as of the date of each
Purchase hereunder and each "Sale" under the Receivables Contribution and Sale
Agreement and each Selling Affiliate Receivables Contribution and Sale
Agreement, as follows:
(a) The Seller is a corporation duly incorporated, validly existing and
in good standing under the laws of the jurisdiction indicated at the beginning
of this Agreement.
(b) The execution, delivery and performance by the Seller of each
Purchase Document to be delivered by it hereunder and the transactions
contemplated hereby and thereby, and the Seller's use of the proceeds of
Purchases and deposits to the Seller's Account, are within the Seller's
corporate powers, have been duly authorized by all necessary corporate action,
do not contravene (i) the Seller's charter or by-laws or (ii) any law or
Contract or other contractual restriction binding on or affecting the Seller,
and do not result in or require the creation of any
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Adverse Claim (other than pursuant hereto) upon or with respect to any of its
properties; and no transaction contemplated hereby requires compliance with any
bulk sales act or similar law.
(c) No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body or other Person is
required for the due execution, delivery and performance by the Seller of any
Purchase Document to be delivered by it hereunder or thereunder, or for the
perfection of or the exercise by the Agent or any Owner of its rights and
remedies under each such Purchase Document, except for (i) the filings of the
financing statements referred to in Article III, all of which, on or prior to
the Closing Date, will have been duly made and be in full force and effect, and
(ii) upon any Person's becoming a Selling Affiliate hereunder, the filings of
the financing statements required pursuant to the definition of the term
"Selling Affiliate", all of which, on or prior to the date such Person shall
become a Selling Affiliate, will have been duly made and be in full force and
effect.
(d) Each Purchase Document is, or when delivered hereunder will be, the
legal, valid and binding obligation of the Seller, enforceable against the
Seller in accordance with its respective terms (except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally and except as such
enforceability may be limited by general principles of equity, whether
considered in a suit in law or in equity). Each Assignment, when delivered
hereunder, will evidence the transfer to the Purchaser of legal and equitable
title to, and ownership of, an undivided percentage ownership interest in the
Seller Assets, or a valid and perfected first priority security interest
therein.
(e) The consolidated pro-forma balance sheet of the Seller as at the
Closing Date, copies of which have been furnished to the Agent, fairly presents
the consolidated pro-forma financial condition of the Seller as at such date
after giving effect to the transactions contemplated to take place on the date
hereof pursuant to the Purchase Documents, all in accordance with generally
accepted accounting principles consistently applied.
(f) There is no pending or threatened action or proceeding affecting the
Seller, Maxtor or any Selling Affiliate or any of their subsidiaries before any
court, governmental agency or arbitrator which may materially adversely affect
(i) the collectibility of the Subject Receivables or the ability of Maxtor, the
Seller, any Selling Affiliate or the Collection Agent to collect Subject
Receivables or (ii) the ability of Maxtor, the Seller or any Selling Affiliate
to perform its obligations under any Purchase Document to be delivered by it
hereunder, or which purports to affect the legality, validity or enforceability
of any Purchase Document.
(g) No proceeds of any Purchase or deposit to the Seller's Account
(other than the proceeds of Seller Collections) will be used to purchase or
carry any margin stock (within the meaning of Regulation U issued by the Board
of Governors of the Federal Reserve System).
(h) Immediately prior to the time of the initial creation of an interest
hereunder in any Seller Asset, the Seller is the legal and beneficial owner of
the Seller Asset, in each case free and
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clear of any Adverse Claim except as created by this Agreement or to the extent
created by the Agent or the Purchaser or any Owner. On the date of the initial
creation of an interest in each Subject Receivable hereunder, such Subject
Receivable (except as otherwise set forth on the Daily Report) constitutes an
Eligible Receivable or Included Foreign Receivable. Upon each Purchase and
deposit to the Seller's Account, the Seller shall (i) transfer to the Owner
making such Purchase or deposit (and such Owner shall acquire) a valid and
perfected undivided percentage ownership interest in each Seller Asset, or (ii)
grant to the Agent, for the benefit of the Beneficiaries, a valid and perfected
first priority security interest in each Seller Asset, free and clear of any
Adverse Claim except as created by this Agreement and the Assignments or to the
extent created by the Agent or the Purchaser or any Owner. No effective
financing statement or other instrument similarly in effect covering any Seller
Asset or any Lock Box Account or other deposit account to the extent any
Collections are from time to time deposited therein is on file in any recording
office, except those filed in favor of the Agent relating to the Purchase
Documents, or in favor of the Seller and the Agent or those listing the Seller
or Maxtor as secured party and the applicable Obligor as debtor.
(i) Each Purchaser Report and Daily Report (in each case if prepared by
the Seller, Maxtor or any Selling Affiliate or any Affiliate of any thereof, or
to the extent that information contained therein is supplied by the Seller,
Maxtor or any Selling Affiliate or any Affiliate of any thereof), notice or
other written item of information, exhibit, financial statement, document, book,
record or report furnished or to be furnished at any time by the Seller, Maxtor
or any Selling Affiliate to the Agent, the Trustee or any Owner in each case in
connection with this Agreement is or will be accurate in all material respects
as of its date or (except as otherwise disclosed to the Agent, the Trustee or
such Owner, as the case may be, at such time) as of the date so furnished, and
as of such relevant date no such document contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading.
(j) The chief place of business and chief executive office of the Seller
and the office where the Seller keeps its records concerning the Seller Assets
are located at the address specified in Section 13.02 hereto (or at such other
locations, notified to the Agent and the Trustee in accordance with Section
5.01(f), in jurisdictions where all action required by Section 6.05 has been
taken and completed).
(k) The names and addresses of all the Lock Box Banks, together with the
account numbers of the Lock Box Accounts of the Seller and the Selling
Affiliates, respectively, at such Lock Box Banks, are specified in Schedule I
hereto (or at such other Lock Box Banks and/or with such other Lock Box Accounts
as have been notified to the Agent and for which Lock Box Agreements have been
executed in accordance with Section 6.06(b)).
(1) Neither the Seller nor any Affiliate (of the type set forth in
clause (i)(x) of the definition of the term "Affiliate") of the Seller has any
direct or indirect ownership or other financial interest in the Agent, the
Purchaser or any Bank.
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(m) The use by the Purchaser of the proceeds of its issuance of
commercial paper having a maturity of not more than nine months to make each
respective Purchase will constitute (i) a "current transaction" within the
meaning of Section 3(a)(3) of the Securities Act of 1933, as amended, and (ii) a
purchase or other acquisition of notes, drafts, acceptances, open accounts
receivable or other obligations representing part or all of the sales price of
merchandise, insurance or services with the meaning of Section 3(c)(5) of the
Investment Company Act of 1940, as amended.
(n) None of the Seller Assets is evidenced by any "instrument" or
"chattel paper" within the meaning of the UCC in effect in the State of
California other than any Receivable (i) which shall have become a Defaulted
Receivable after the date on which such Receivable became a Subject Receivable
hereunder or under the Original Agreement and (ii) in connection with which
Defaulted Receivable the Collection Agent shall have accepted an instrument,
which instrument shall have been duly endorsed and delivered to the Agent by the
Seller, to maximize the Collections thereof as contemplated by Section 6.02(c).
(o) No ERISA Event has occurred or is reasonably expected to occur with
respect to any Plan that has resulted or is reasonably likely to result in a
material liability of the Seller, Maxtor or any Selling Affiliate.
(p) The aggregate Insufficiency under all Plans does not exceed
$10,000,000.
(q) None of the Seller, Maxtor, any Selling Affiliate or any ERISA
Affiliate of any thereof has incurred or is reasonably expected to incur any
material Withdrawal Liability (that has not been satisfied) to any Multiemployer
Plan.
(r) None of the Seller, Maxtor, any Selling Affiliate or any ERISA
Affiliate of any thereof has been notified by the sponsor of a Multiemployer
Plan that such Multiemployer Plan is in reorganization or has been terminated,
within the meaning of Title IV of ERISA, and no Multiemployer Plan is reasonably
expected to be in reorganization or to be terminated, within the meaning of
Title IV of ERISA.
(s) The Seller and its subsidiaries have no material liability with
respect to "expected postretirement benefit obligations" within the meaning of
Statement of Financial Accounting Standards No. 106.
(t) The Seller has not changed its name during the four month period
prior to the date hereof, and has no tradenatnes, fictitious names, assumed
names or "doing business as" names.
(u) With respect to all Seller Assets, the Seller has purchased such
Seller Assets from Maxtor or the applicable Selling Affiliate (in accordance
with the provisions of the Receivables Contribution and Sale Agreement or the
Selling Affiliate Receivables Contribution and Sale Agreement, as applicable)
for fair consideration and approximate fair market value for such Seller Assets
and in a sale the terms and conditions of which (including, without limitation,
the purchase price thereof) reasonably approximate an arm's-length transaction
between unaffiliated parties. No such sale has been made for or on account of an
antecedent debt owed by Maxtor or
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such Selling Affiliate to the Seller, and no such sale or contribution is or may
be voidable or subject to avoidance under any section of the Federal Bankruptcy
Code.
(v) The Seller has not sold, assigned, transferred, pledged or
hypothecated any interest in any Seller Asset to any Person other than as
contemplated by the Purchase Documents.
(w) Each of the Seller, Maxtor and each Selling Affiliate has complied
with the Credit and Collection Policy in all material respects and since the
date of this Agreement there has been no change in the Credit and Collection
Policy except as permitted hereunder.
(x) The obligations of the Seller hereunder to make payments in respect of
fees and indemnities payable. to any Beneficiary rank at least equally with
indebtedness of the Seller which is not contractually subordinated.
(y) The Seller has not granted any Person other than the Agent dominion
and control of any Lock Box Account, or the right to take dominion and control
over any Lock Box Account at a future time or upon the occurrence of a future
event.
(z) The Seller has no subsidiaries and shall not establish or acquire any
subsidiaries.
(aa) The Seller has filed, or caused to be filed or be included in, all
tax reports and returns (federal, state, local and foreign), if any, required to
be filed by it and paid, or cause to be paid, all amounts of taxes, including
interest and penalties required to be paid by it, except for such taxes (i) as
are being contested in good faith by proper proceedings and (ii) against which
adequate reserves shall have been established in accordance with and to the
extent required by GAAP, but only so long as the proceedings refer-red to in
clause (i) above could not subject the Agent or any other Indemnified Party to
any civil or criminal penalty or liability or involve any material risk of the
loss, sale or forfeiture of any property, rights or interests covered hereunder
or under any other Purchase Document.
(bb) There are no Adverse Claims (including, without limitation, liens
or retained security titles of conditional vendors, but excluding any Adverse
Claims created hereunder) of any nature whatsoever on any properties of the
Seller. The Seller is not a party to any contract, agreement, lease or
instrument the performance of which, either unconditionally or upon the
happening of an event, will result in or require the creation of any Adverse
Claim on the property or assets of the Seller, or otherwise result in a
violation of this Agreement or any other Purchase Document, other than any
Adverse Claims created pursuant to any Purchase Document.
(cc) (i) The Seller is not a party to any indenture, loan or credit
agreement or any lease or other agreement or instrument or subject to any
organizational restriction that could reasonably be expected to have, and no
provision of applicable law or governmental regulation could reasonably be
expected to have, a material adverse effect on the condition (financial or
otherwise), business, operations, properties or prospects of the Seller, or may
reasonably be expected to have such an effect on the ability of the Seller to
carry out its obligations hereunder or under any other Purchase Document, and
(ii) neither the Seller nor, to the best of the knowledge of the Seller, any
other party is in default under or with respect to this Agreement,
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any other Purchase Document or any other contract, agreement, lease or other
instrument to which the Seller is a party and which is material to the Seller's
condition (financial or otherwise), business, operations, properties or
prospects, and neither the Seller nor any such other party has delivered or
received any notice of default thereunder.
(dd) The Lock Box Banks are the only institutions holding Lock Box
Accounts for the receipt of payments from all Obligors, and such Obligors have
been instructed or, upon the creation of Receivables owed by them, will be
instructed to make payments only to Lock Box Accounts, and such instructions
have not been modified or revoked by the Seller and are in full force and
effect.
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ARTICLE V
GENERAL COVENANTS OF THE SELLER
SECTION 5.0 1. Affirmative Covenants of the Seller. Until the
Collection Date, the Seller will, unless the Agent shall otherwise consent in
writing:
(a) Compliance with Laws, Etc. Comply in all material respects with all
applicable laws, rules, regulations and orders with respect to it, its business
and properties and all Seller Assets.
(b) Preservation of Corporate Existence. Preserve and maintain its
corporate existence, rights, franchises and privileges in the jurisdiction of
its incorporation, and qualify and remain qualified in good standing as a
foreign corporation in each jurisdiction where the failure to preserve and
maintain such existence, rights, franchises, privileges and qualification would
materially adversely affect the interests of the Owners or the Agent hereunder
or in and to the Seller Assets, or the ability of the Seller or the Collection
Agent to perform its obligations under any Purchase Document or the ability of
the Seller to perform its obligations under the Contracts.
(c) Audits. (i) At any time and from time to time during regular
business hours and upon reasonable prior notice, permit the Agent, or its agents
or representatives, at the Seller's expense, if any Event of Insecurity shall
have occurred and be continuing, or, otherwise, at the Agent's expense, (A) to
examine and make copies of and abstracts from all books, records and documents
(including, without limitation, computer tapes and disks) in the possession or
under the control of the Seller, Maxtor, their Affiliates or the agents of the
Seller, Maxtor or their Affiliates relating to the Seller Assets and the Lock
Box Account activity, and (B) to visit the offices and properties of the Seller
for the purpose of examining such materials described in clause (A) above, and
to discuss matters relating to the Seller Assets and the Lock Box Account
activity or the Seller's, Maxtor's or the Selling Affiliates' performance under
the Purchase Documents or under the Contracts with any of the officers or
employees of the Seller having knowledge of such matters, and (ii) within 90
days after the end of each fiscal year of the Seller, at the Seller's expense,
cause Coopers & ▇▇▇▇▇▇▇ to perform, and deliver to the Agent a written report
of, or permit other independent public accountants specified by the Agent (upon
the occurrence and during the continuance of any Event of Insecurity) or
otherwise acceptable to the Agent to perform and deliver to the Agent a written
report of, an audit with respect to the Receivables, the Related Security, the
Credit and Collection Policies, the Lock Box Account activity and the
performance by the Seller, Maxtor and the Selling Affiliates of their respective
obligations, covenants and duties under the Purchase Documents, in substantially
the scope and form set forth in Schedule IV hereto.
(d) Keeping of Records and Books of Account. Maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing Receivables in the event of the
destruction of the originals thereof), and keep and maintain all documents,
books, records and other information, reasonably necessary or advisable for the
collection of all Receivables (including, without limitation, records adequate
to
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permit the daily identification of each Receivable and all Collections of and
adjustments to each Receivable).
(e) Performance and Compliance with Receivables and Contracts. At its
expense timely and fully perform and comply with all material provisions,
covenants and other promises required to be observed by it under the Contracts
related to the Receivables.
(f) Location of Records. Keep its chief place of business and chief
executive office and the office where it keeps the originals of its records
concerning the Seller Assets at the address of the Seller referred to in Section
4.01 0) on the date hereof or, upon 30 days' prior written notice to the Agent
and the Trustee, at any other locations in a jurisdiction within the United
States where all action required by Section 6.05 shall have been taken.
(g) Credit and Collection Policies. Comply in all material respects with
the applicable Credit and Collection Policy in regard to each Receivable and the
related Contract.
(h) Collections.
(i) Instruct, or cause to be instructed, all Obligors to make all
payments in respect of Subject Receivables directly to a Lock Box
Account,
(ii) if the Seller shall otherwise receive any Collections,
deposit such Collections to a Lock Box Account by the second Business
Day (or, upon the occurrence and during the continuance of any Event of
Insecurity, the first Business Day) following such receipt or, if such
Collections were paid by the applicable Obligor in respect of any
merchandise which shall not have been shipped at the time of such
payment and the shipping of which shall cause the Receivable resulting
from the sale of such merchandise to arise, by the second Business Day
(or, upon the occurrence and during the continuance of any Event of
Insecurity, the first Business Day) following the shipping of such
merchandise,
(iii) if the Seller shall be deemed to receive any Collections
pursuant to Section 2.05, deposit the Owners' respective allocable
shares of such Collections directly to the Agent's Account (A) if and so
long as no Event of Insecurity shall have occurred and be continuing, on
the day of such receipt or deemed receipt, and (B) if and so long as any
Event of Insecurity shall have occurred and be continuing, promptly upon
such receipt or deemed receipt and in any event no later than one
Business Day following such receipt or deemed receipt, and
(iv) upon the occurrence of any Event of Insecurity, cause the
Lock Box Banks to immediately sweep Collections from the Lock Box
Accounts to the Concentration Account.
(i) Selling Affiliate Receivables Contribution and Sale Agreements. At
its expense, timely and fully perform and comply in all material respects with
all provisions, covenants and other promises required to be observed by it under
the respective Selling Affiliate Receivables
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Contribution and Sale Agreements, maintain the respective Selling Affiliate
Receivables Contribution and Sale Agreements in full force and effect, enforce
the respective Selling Affiliate Receivables Contribution and Sale Agreements in
accordance with its terms, take all such action to such end as may be from time
to time reasonably requested by the Agent, and make to any party to the
respective Selling Affiliate Receivables Contribution and Sale Agreements such
demands and requests for information and reports or for action as the Seller is
entitled to make thereunder and as may be from time to time reasonably requested
by the Agent.
(j) Maintenance of Separate Existence. Do all things necessary to
maintain its corporate existence separate and apart from Maxtor and other
Affiliates of the Seller, including, without limitation, (i) maintaining proper
corporate records and books of account separate from those of such Affiliates;
(ii) maintaining its assets, funds and transactions separate from those of such
Affiliates, reflecting such assets and transactions in financial statements
separate and distinct from those of such Affiliates, and evidencing such assets,
funds and transactions by appropriate entries in the books and records referred
to in clause (i) above, and providing for its own operating expenses and
liabilities from its own assets and funds other than certain expenses and
liabilities relating to basic corporate overhead which may be allocated between
the Seller and such Affiliates; (iii) holding such appropriate meetings or
obtaining such appropriate consents of its Board of Directors as are necessary
to authorize all the Seller's corporate actions required by law to be authorized
by the Board of Directors, keeping minutes of such meetings and of meetings of
its stockholders and observing all other customary corporate formalities (and
any successor Seller not a corporation shall observe similar procedures in
accordance with its governing documents and applicable law); (iv) at all times
entering into its contracts and otherwise holding itself out to the public under
the Seller's own name as a legal entity separate and distinct from such
Affiliates; and (v) conducting all transactions and dealings between the Seller
and such Affiliates on an arm's-length basis.
(k) Compliance with Opinion Assumptions and Constituent Documents.
Without limiting the generality of Section 5.01(j) above, maintain in place all
policies and procedures, and take and continue to take all actions, described in
the assumptions as to facts set forth in, and forming the basis of, the opinions
set forth in the opinion delivered to the Agent in substantially the form of the
opinion delivered pursuant to Section 3. 0 1 (1), and comply with, and cause
compliance with, the provisions of the constituent documents of the Seller
delivered to the Agent pursuant to Section 3.01 as the same may, from time to
time, be amended, modified or otherwise supplemented with the prior written
consent of the Agent.
(1) Purchase of Seller Assets from Maxtor. With respect to all Seller
Assets outstanding from time to time, purchase from Maxtor or such Selling
Affiliate (in accordance with the Receivables Contribution and Sale Agreement or
the respective Selling Affiliate Receivables Contribution and Sale Agreement, as
applicable) for fair consideration and approximate fair market value for such
Seller Assets and in a sale the terms and conditions of which ('including,.
without limitation, the purchase price thereof) reasonably approximate an
arm's-length transaction between unaffiliated parties.
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(m) Nature of Business and Permitted Transactions. Engage solely in the
following businesses and transactions, directly or indirectly: purchasing Seller
Assets from Maxtor and the Selling Affiliates and selling interests in such
Seller Assets to the Owners hereunder and the other transactions permitted or
contemplated hereby.
(n) Receivables Contribution and Sale Agreement. At its expense, timely
and fully perform and comply in all material respects with all provisions,
covenants and other promises required to be observed by it under the Receivables
Contribution and Sale Agreement and all Selling Affiliate Receivables
Contribution and Sale Agreements, maintain the Receivables Contribution and Sale
Agreement and all Selling Affiliate Receivables Contribution and Sale Agreements
in full force and effect, enforce the Receivables Contribution and Sale
Agreement in accordance with their respective terms, take all such action to
such end as may be from time to time reasonably requested by the Agent, and make
to any party to the Receivables Contribution and Sale Agreement or any Selling
Affiliate Receivables Contribution and Sale Agreement such demands and requests
for information and reports or for action as the Seller is entitled to make
thereunder and as may be from time to time reasonably requested by the Agent.
(o) Conditions Subsequent to Initial Purchase. Deliver to the Agent (i)
as soon as possible, and in any event within 30 days after the Closing Date (or
such later date as may be agreed in writing by the Seller and the Agent),
completed requests for information, dated after the Closing Date, listing the
financing statements referred to in Section 3.01 (b) and (g) and all other
effective financing statements filed in the jurisdictions referred to in
subsection 3.01(b) and (g) that name the Seller or Maxtor as debtor or seller,
together with copies of such other financing statements (none of which shall
cover any Seller Assets other than Seller Assets covered by financing statements
with respect to which the Agent received financing statements of the type
described in Section 3. 01 (b) and (g)), and (ii) on or before April 10, 1998
(or such later date as may be agreed in writing by the Seller and the Agent), a
Parent Undertaking in substantially the form of Exhibit K duly executed by
Hyundai Electronics Industries Co., LTD. (which undertaking shall be released
upon satisfaction of the conditions precedent referred to in Section 3.01(o),
(p), (q) and (r)).
SECTION 5.02. Reporting Requirements of the Seller. Until the
Collection Date, the Seller will, unless the Agent shall otherwise consent in
writing, furnish to the Agent and the Trustee:
(a) as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of the
Seller, a balance sheet of the Seller as of the end of such quarter and
statements of income and of cash flows of the Seller for the period
commencing at the end of the previous fiscal year and ending with the
end of such quarter, certified by the chief financial officer of the
Seller;
(b) as soon as available and in any event within 90 days after
the end of each fiscal year of the Seller, a copy of the Seller's annual
audit report containing a balance sheet of the Seller as of the end of
such year and statements of income and of cash flows
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for such year, certified in a manner acceptable to the Agent by Coopers
& ▇▇▇▇▇▇▇ or other independent public accountants acceptable to the
Agent;
(c) as soon as possible and in any event within five days after
the Seller's chief financial officer, chief accounting officer,
treasurer or assistant treasurer obtains knowledge of the occurrence of
each Event of Termination and each Incipient Event of Termination
continuing on the date of such statement, a statement of such officer of
the Seller setting forth details of such Event of Termination or
Incipient Event of Termination and the action which the Seller has taken
and proposes to take with respect thereto;
(d) promptly and in any event within five Business Days after the
Seller's receipt or delivery thereof, copies of all notices, requests,
reports, certificates, and other information and documents delivered or
received by the Seller from time to time under or in connection with any
Purchase Document;
(e) not later than eight Business Days after the last day of each
Fiscal Month, at the request of the Agent, and in any event within five
days after the occurrence of any Event of Termination or Incipient Event
of Termination, a list of the outstanding Receivables on such day; and
(f) such other information, documents, records or reports
respecting the Seller Assets or the condition or operations, financial
or otherwise, of the Seller, the Selling Affiliates or any of their
respective subsidiaries as the Agent may from time to time reasonably
request.
SECTION 5.03. Negative Covenants of the Seller. Until the
Collection Date, the Seller will not, without the written consent of the Agent:
(a) Sales, Liens, Etc. Except as otherwise provided in the
Purchase Documents, sell, assign (by operation of law or otherwise) or
otherwise dispose of, or grant any option with respect to, or create or
suffer to exist any Adverse Claim (except to the extent created by the
Agent or the Purchaser or any Owner) upon or with respect to, the
Seller's undivided interest in any Seller Assets or any Lock Box Account
or other deposit account to which any Collections of any Receivable are
sent or assign any right to receive income in respect thereof.
(b) Extension or Amendment of Receivables. Except as otherwise
permitted in Section 6.02 if Maxtor is the Collection Agent, (i) extend
the terms of any Receivable, or (ii) amend or otherwise modify the terms
of any Receivable, or terminate or permit the termination of, or amend,
modify or waive any term or condition of, any Contract related thereto,
other than in connection with Maxtor's standard sales programs, if in
any such case such amendment, modification or waiver would be reasonably
likely to impair the collectibility of any Receivable or materially
adversely affect the rights or interests of the Agent or the Purchaser
or any Owner with respect thereto or hereunder; provided, however, that,
except as so permitted in Section 6.02, in no event shall the Seller
amend
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or otherwise modify the terms of any Subject Receivable unless the Agent
shall have otherwise notified the Seller.
(c) Change in Business or Credit and Collection Policy. Make any
change in the character of its business or in its Credit and Collection
Policy, which change would, in either case, be reasonably likely to
impair the collectibility of any Receivable.
(d) Change in Payment Instructions to Obligors. Add or terminate
any bank as a Lock Box Bank or any account as a Lock Box Account from
those listed in Schedule I hereto, or make any change in its
instructions to Obligors regarding payments to be made to any Lock Box
Bank, unless the Agent shall have received notice of such addition,
termination or change, executed copies of Lock Box Agreements with
respect to each new Lock Box Bank and each new Lock Box Account and
delivered an updated Schedule I hereto to the Agent, as applicable.
(e) Deposits to Lock Box Accounts. Deposit or otherwise credit,
or cause or permit to be so deposited or credited, to any Lock Box
Account cash or cash proceeds other than Collections of Receivables.
(f) Mergers, Etc. Merge with or into or consolidate with or into,
or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of
its assets (whether now owned or hereafter acquired) to, any Person.
(g) Change in Corporate Name, Etc. Make any change to its name,
identity, structure or chief executive office, or use any tradenames,
fictitious names, assumed names or "doing business as" names, unless,
prior to the effective date of any such change or use, the Seller
delivers to the Agent (i) UCC financing statements, executed by the
Seller and, if applicable, Maxtor and the Selling Affiliates, necessary
to reflect such change or use and to continue the perfection of the
ownership interests or security interests in the Seller Assets, and (ii)
new Lock Box Agreements executed by the Seller, necessary to reflect
such change and to continue to enable the Agent to exercise its rights
contained in Section 6.03(a), and (iii) in the case of any such change
in its structure, a favorable opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP or
other counsel of the Seller reasonably satisfactory to the Agent, in
substantially the form of Exhibit E-1 hereto, giving effect to such
change, in each case of clauses (i), (ii) and (iii) together with such
other documents and instruments as the Agent may reasonably request in
connection therewith.
(h) Other Adverse Claims. Except as otherwise provided in the
Purchase Documents, create or suffer to exist any Adverse Claim upon or
with respect to any of the Seller's property, or assign any right to
receive income, to secure any Debt of any Person.
(i) Debt. Except as otherwise provided in the Purchase
Documents, create, incur, assume or suffer to exist any Debt.
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(j) Contingent Obligations. Except as otherwise provided in the
Purchase Documents, create, incur, assume or suffer to exist any
Contingent Obligation.
(k) Distributions, Etc. Declare or make any dividend payment or
other distribution of assets, properties, cash, rights, obligations or
securities on account of any interest in the Seller, or return any
capital to its owners as such, or purchase, retire, defease, redeem or
otherwise acquire for value of make any payment in respect of any
interest in the Seller or any warrants, rights or options to acquire any
such interest, now or hereafter outstanding, other than, in any such
case, as shall have been duly authorized by all necessary action of the
Seller and in accordance with applicable law, provided that no event has
occurred and is continuing, or would result from such declaration,
dividend, distribution, return, purchase, retirement, defeasance,
redemption, acquisition or payment, which constitutes an Event of
Termination or an Incipient Event of Termination.
(1) Transactions with Affiliates. Enter into or permit to exist
any transaction (including, without limitation, the purchase, sale,
lease or exchange of any property or the rendering of any service) with
Maxtor or any other Affiliate of the Seller, other than on terms that
are fair and reasonable in the circumstances and that reasonably
approximate an arm's-length transaction between unaffiliated parties.
(m) Receivables Contribution and Sale Agreement. (i) Cancel or
terminate the Receivables Contribution and Sale Agreement or any Selling
Affiliate Receivables Contribution and Sale Agreement or consent to or
accept any cancellation or termination thereof, (ii) amend or otherwise
modify any term or condition of the Receivables Contribution and Sale
Agreement or any Selling Affiliate Receivables Contribution and Sale
Agreement or give any consent, waiver or approval thereunder, (iii)
waive any default under or breach of the Receivables Contribution and
Sale Agreement or any Selling Affiliate Receivables Contribution and
Sale Agreement, or (iv) take any other action under the Receivables
Contribution and Sale Agreement or any Selling Affiliate Receivables
Contribution and Sale Agreement not required by the terms thereof that
would impair the value of any Seller Assets or the rights or interests
of the Seller thereunder or of the Agent or any owner or Indemnified
Party hereunder or thereunder.
ARTICLE VI
ADMINISTRATION AND COLLECTION
SECTION 6.01. Designation of Collection Agent. (a) The Subject
Receivables shall be serviced, administered and collected by the Person (the
"Collection Agent") designated to do so from time to time in accordance with
this Section 6.01. Until the Agent designates a new Collection Agent, Maxtor is
hereby designated as, and hereby agrees to perform the duties and obligations
of, the Collection Agent pursuant to the terms hereof. The Agent may, at any
time, designate as Collection Agent any Person (including itself) to succeed
Maxtor or any successor Collection Agent upon such terms and conditions as the
Agent may require. The Collection
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Agent may, with the prior consent of the Agent, subcontract with any other
Person to service, administer or collect the Subject Receivables, provided that
the Person with whom the Collection Agent so subcontracts shall not become the
Collection Agent hereunder and the Collection Agent shall remain liable for the
performance of the duties and obligations of the Collection Agent pursuant to
the terms hereof The Agent hereby consents to the subcontracting by Maxtor, as
Collection Agent, with each Selling Affiliate from time to time to service,
administer and collect the Subject Receivables originally owed to such Selling
Affiliate, subject to the proviso to the preceding sentence, and provided that
the Agent may at any time require the Collection Agent to, and the Collection
Agent shall at the Agent's request, terminate such subcontracting with such
Selling Affiliate.
(b) The Collection Agent is hereby authorized and empowered to
instruct the Trustee to make withdrawals and payments from the Concentration
Account, subject to the limitations set forth in Section 6.06(a) and as
otherwise set forth in this Agreement.
SECTION 6.02. Duties of Collection Agent. (a) The Collection
Agent shall (unless the Agent directs otherwise and subject to the Agent's
direction and control to the extent consistent with the applicable Credit and
Collection Policy) take or cause to be taken all such actions as may be
necessary or advisable to collect each Subject Receivable from time to time, all
in accordance with applicable laws, rules and regulations, with reasonable care
and diligence, and in accordance with the applicable Credit and Collection
Policy. Each of the Seller, the Purchaser and the Agent hereby appoints as its
agent the Collection Agent, from time to time designated pursuant to Section
6.01, to enforce its respective rights and interests in and under the Seller
Assets. In no event shall the Collection Agent be entitled to make the
Purchaser, the Agent or any Owner a party to any litigation without the express
prior written consent of such party. Notwithstanding anything to the contrary
contained herein, the Agent shall have the absolute and unlimited right to
direct the Collection Agent to commence or settle any legal action or proceeding
to enforce collection of Subject Receivables to the extent consistent with the
applicable Credit and Collection Policy.
(b) The Collection Agent shall instruct the Trustee in writing to
set aside and hold in trust for the account of the Seller and each Owner their
respective allocable shares of the Collections of Subject Receivables in
accordance with Section 2.05. The Collection Agent shall take all other actions
required to be taken by it under this Agreement, including, without limitation,
delivery of the Daily Report and Purchaser Report pursuant to Section 2.06
(c) The Collection Agent may not extend the maturity or adjust
the Outstanding Balance, or otherwise amend or modify the terms, of any Subject
Receivable or amend, modify or waive any term or condition, or terminate or
permit the termination, of any Contract related thereto; provided, however that
if and so long as no Event of Insecurity shall have occurred and be continuing,
and unless the Agent shall have otherwise notified Maxtor, Maxtor, while it is
the Collection Agent, may, in accordance with the Credit and Collection Policy,
extend the maturity of any Defaulted Receivable as Maxtor may determine to be
appropriate to maximize Collections thereof.
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(d) The Seller shall deliver to the Collection Agent, and the
Collection Agent shall hold in trust for the Seller and each Owner in accordance
with their respective interests, all documents, instruments and records
(including, without limitation, computer tapes or disks) which evidence or
relate to Subject Receivables.
(e) The Collection Agent, if other than the Seller, shall as soon
as practicable upon demand deliver to the Seller all documents, instruments and
records in its possession which evidence or relate to Receivables of the Seller
other than Subject Receivables, and copies of documents, instruments and records
in its possession which evidence or relate to Subject Receivables.
(f) The Collection Agent's authorization under this Agreement
shall terminate on the Collection Date.
SECTION 6.03. Rights of the Agent. (a) The Agent may, at any time
after the occurrence and during the continuance of any Event of Insecurity and
at the Seller's expense, notify the Obligors of Subject Receivables, or any of
them, of the ownership of Purchased Interests by the Owners.
(b) At any time following the designation of a Collection Agent
other than Maxtor pursuant to Section 6.01:
(i) The Agent may direct the Obligors of Subject Receivables, or
any of them, to make payment of all amounts due or to become due to the
Seller under any Subject Receivable directly to the Agent or its
designee.
(ii) The Seller shall, at the Agent's request and at the Seller's
expense, give notice of the ownership of Purchased Interests to such
Obligors and direct them to make such payments directly to the Agent or
its designee.
(iii) The Seller shall, at the Agent's request and at the
Seller's expense, (A) assemble all of the documents, instruments and
other records (including, without limitation, computer tapes and disks)
which evidence the Seller Assets, or which are otherwise necessary or
desirable to collect such Subject Receivables, and shall make the same
available to the Agent at a place selected by the Agent or its designee,
and (B) segregate all cash, checks and other instruments received by it
from time to time constituting Collections of Subject Receivables in a
manner acceptable to the Agent and shall, promptly upon receipt, remit
all such cash, checks and instruments, duly endorsed or with duly
executed instruments of transfer, to a Lock Box Account.
(iv) The Seller and Maxtor hereby irrevocably authorize the Agent
to take any and all steps in the Seller's, Maxtor's or the respective
Selling Affiliates' name and on behalf of the Seller and the Owners,
necessary or desirable, in the determination of the Agent, to collect
all amounts due under any and all Seller Assets, including, without
limitation, endorsing the Seller's, Maxtor's or such Selling Affiliate's
name on checks and other instruments representing Collections, enforcing
Subject Receivables and the related
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Contracts, and adjusting, settling or compromising the amount or payment
thereof, in the same manner and to the same extent as the Seller, Maxtor
or such Selling Affiliate might have done absent the Purchases
hereunder, and the Seller and Maxtor hereby appoints the Agent as its
attorney-in-fact to carry out the intent and purpose of this
subparagraph.
SECTION 6.04. Responsibilities of the Seller. Anything herein to
the contrary notwithstanding:
(a) The Seller and the respective Selling Affiliates shall perform all
of their respective obligations under the Contracts related to the Subject
Receivables to the same extent as if Purchased Interests had not been sold
hereunder and the exercise by the Agent of its rights hereunder shall not
relieve the Seller or any Selling Affiliate from such obligations or its
obligations with respect to Subject Receivables; and
(b) Neither the Agent nor the Owners shall have any obligation or
liability with respect to any Seller Assets, nor shall any of them be obligated
to perform any of the obligations of the Seller or any Selling Affiliate
thereunder.
SECTION 6.05. Further Action Evidencing Purchases. (a) The Seller
agrees that from time to time, at its expense, it will, and will cause the
respective Selling Affiliates to, promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that the Agent may reasonably request, in order to perfect,
protect or more fully evidence the Purchased Interests, or to enable any of them
or the Agent to exercise and enforce any of their respective rights and remedies
hereunder or under the Assignments. Without limiting the generality of the
foregoing, the Seller will, and will cause the respective Selling Affiliates to,
upon the request of the Agent: (i) execute and file such financing or
continuation statements, or amendments thereto or assignments thereof, and such
other instruments or notices, as may be necessary or desirable, or as the Agent
may request, in order to perfect, protect or evidence such Purchased Interests;
(ii) at any time after the occurrence and during the continuance of any Event of
Insecurity (A) ▇▇▇▇ conspicuously each invoice evidencing each Subject
Receivable and the related Contract with a legend, acceptable to the Agent,
evidencing that such Purchased Interests have been sold in accordance with this
Agreement; and (B) ▇▇▇▇ its master data processing records evidencing such
Subject Receivables and related Contracts with such legend.
(b) The Seller hereby authorizes the Agent to file one or more
financing or continuation statements, and amendments thereto and assignments
thereof, relating to all or any Seller Assets now existing or hereafter arising
without the signature of the Seller where permitted by law. A photocopy or other
reproduction of this Agreement or any financing statement covering all or any of
the Seller Assets shall be sufficient as a financing statement where permitted
by law.
(c) If the Seller fails to perform any agreement contained
herein, the Agent may itself perform, or cause performance of, such agreement,
and the expenses of the Agent
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incurred in connection therewith shall be payable by the Seller under Section
10.01 or Section 13.06, as applicable.
SECTION 6.06. Establishment of Concentration Account and Lock Box
Accounts. (a) Concentration Account. On or prior to the Closing Date, the
Collection Agent, for the benefit of the Beneficiaries, shall establish and
maintain or cause to be established and maintained in the name of the Agent with
Bankers Trust Company a segregated trust account (such account being the
"Concentration Account" and such institution holding such account being the
"Concentration Account Bank"), such account bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Beneficiaries. The Agent shall possess all right, title and interest in and to
all funds from time to time on deposit in the Concentration Account and in all
proceeds thereof. The Concentration Account shall be under the sole dominion and
control of the Agent for the benefit of the Beneficiaries, and neither the
Seller, nor any Person claiming by, through or under the Seller, shall have any
right, title or interest in, or any right to withdraw any amount from, the
Concentration Account. Except as expressly provided, in this Agreement, the
Collection Agent agrees that it shall have no right of set-off or banker's lien
against, and no right to otherwise deduct from, any funds held in the
Concentration Account for any amount owed to it by the Trustee or any
Beneficiary. The Collection Agent shall cause Collections to be deposited into
the Concentration Account on each Business Day as promptly as is reasonably
practicable after receipt in a Lock Box Account, and in any event no later than
the day on which such Collections become available funds in such Lock Box
Account. The Seller will require Maxtor and the Selling Affiliates, if any, to
deposit any Collections received by it into a Lock Box Account within two
Business Days following the Business Day on which such Collections are so
received. Notwithstanding the foregoing, if and to the extent that funds that
are not Collections are deposited into the Concentration Account, the Collection
Agent may direct the Trustee in writing to withdraw such funds from the
Concentration Account and deposit them in the Seller's Account. The Agent hereby
authorizes the Trustee to make withdrawals and payments from the Concentration
Account, and to invest the funds in the Concentration Account, in accordance
with the provisions of this Agreement.
If, at any time, the institution holding the Concentration
Account ceases to be an Eligible Institution, the Collection Agent, upon
obtaining actual knowledge thereof, shall, within 15 Business Days (i) establish
a new Concentration Account meeting the conditions specified above with an
Eligible Institution, (ii) transfer any cash and/or any investments held in the
old Concentration Account or with respect thereto to such new Concentration
Account and (iii) in the case of any new Concentration Account, deliver to all
Lock Box Banks new Lock Box Agreements (with copies thereof to the Trustee)
referring to such new Concentration Account, and from the date such new
Concentration Account is established, it shall be the "Concentration Account".
Pursuant to the authority granted to the Collection Agent in Section 6.02, the
Collection Agent shall have the power to instruct the Trustee to make
withdrawals and payments from the Concentration Account for the purposes of
carrying out the Collection Agent's or the Trustee's duties specified in this
Agreement.
Funds on deposit in the Concentration Account, shall, at the
written direction of the Collection Agent, be invested by the Trustee or the
Eligible Institution maintaining such
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accounts in Available Investments as instructed by the Collection Agent in
writing (which may be a standing instruction). All such Available Investments
shall be held by the Trustee or the Eligible Institution maintaining such
accounts for the benefit of the Beneficiaries. Such funds shall be invested in
Available Investments that will mature so that funds will be available on or
before the close of business on the Business Day next preceding the following
Settlement Date in amounts sufficient for the Trustee to make each distribution
required under this Agreement on the next Settlement Date. All interest and
other investment earnings (net of losses and investment expenses) received on
funds on deposit in the Concentration Account, to the extent such investment
income is not needed to pay the Beneficiaries on such Settlement Date, shall be
added to the Concentration Account and allocated in accordance with Section
2.06. The Trustee is hereby authorized, unless otherwise directed in writing by
the Collection Agent, to effect transactions in Available Investments through a
capital markets affiliate of the Trustee.
(b) Lock Box Accounts. On or prior to the Closing Date, the
Collection Agent for the benefit of the Beneficiaries, shall establish and
maintain or cause to be established and maintained in the name of the Agent with
an Eligible Institution, lock boxes or segregated accounts (each such lockbox
and account, a "Lock Box Account"). Obligors will be directed to remit payments
with respect to their Receivables to a Lock Box Account. The Lock Box Accounts
shall be under the sole dominion and control of the Agent for the benefit of the
Beneficiaries, and neither the Seller, nor any Person claiming by, through or
under the Seller, shall have any right, title or interest in, or any right to
withdraw any amount from, any Lock Box Account. The Collection Agent shall cause
the Agent to transfer Collections to the Concentration Account in the manner set
forth in Section 6.06(a). Each Lock Box Account shall be maintained with
documentation and instructions in form and substance satisfactory to the Trustee
and the Agent. Such documentation shall provide, among other things, that
available amounts shall be immediately transferred to the Concentration Account.
The Collection Agent will not (i) make any change in the name, address or ABA
number of any Lock Box Account Bank, the account number of any Lock Box Account,
the name, address or ABA number of any Concentration Account Bank, or the
account number for any Concentration Account from that set forth in Schedule I
hereto or (ii) amend any instruction to any Obligor or any instruction to or
agreement with any Lock Box Bank with respect to any Lock Box Account (other
than to (A) redirect payments of Obligors to a different Lock Box Account or to
the Concentration Account, (B) close unused Lock Box Accounts and (C) open new
Lock Box Accounts if the Trustee shall have received executed copies of the Lock
Box Agreements with each new Lock Box Bank, and an updated Schedule I) unless
the Trustee (if directed in writing to do so by the Agent), shall have given its
prior consent to such change or amendment. Upon notice from any Lock Box Bank
that any Lock Box Account or Lock Box Agreement is to be terminated by such Lock
Box Bank, the Collection Agent shall forthwith (and in any event within 15 days
after receipt of such notice), (i) establish a new Lock Box Account (if the Lock
Box Account in respect of which the notice of termination has been given is the
only Lock Box Account hereunder), and (ii) instruct each Obligor to make all
payments made by it to the Collection Agent thereafter to a Lock Box Account in
respect of which no notice of termination has been given, or, if there is no
such Lock Box Account, to the Concentration Account.
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The Collection Agent hereby agrees and acknowledges that (i) it
has executed and delivered to the Trustee and the Agent a letter and executed
acknowledgment thereto substantially in the form of Exhibit C hereto (each, a
"Lock Box Agreement" as the case may be), addressed to and executed by each
banking institution or other Person with which a Lock Box Account is maintained
(each such banking institution with which a Lock Box Account is maintained being
a "Lock Box Bank") and (ii) it shall execute and deliver a substantially similar
Lock Box Agreement, prior to the establishment by it of any additional or
alternative Lock Box Account. The Collection Agent hereby agrees, and the
Trustee and the Agent hereby each acknowledges, that the execution and delivery
of each Lock Box Agreement transfers all right, title and interest in all
monies, securities and instruments in the applicable Lock Box Account to the
Agent.
SECTION 6.07. Establishment of Trustee's Account and Cure Account. (a)
(i) The Collection Agent, for the benefit of the Beneficiaries, shall establish
and maintain in the name of the Trustee, with an Eligible Institution a
segregated trust account accessible only by the Trustee (the "Trustee's
Account"), which shall be identified as the "Trustee's Account for the Maxtor
Receivables Purchase and Sale Agreement" and shall bear a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Beneficiaries. The Trustee's Account initially shall be established at Bankers
Trust Company and thereafter may only be established or maintained at an
Eligible Institution.
(ii) At the written direction of the Collection Agent (which may be a
standing direction), funds on deposit in the Trustee's Account shall be invested
by the Trustee in Available Investments selected by the Collection Agent that
will mature so that such funds will be available on or before the close of
business on the Business Day next preceding the following Settlement Date. All
such Available Investments shall be held by the Trustee for the benefit of the
Beneficiaries. On each Settlement Date, all interest and other investment
earnings (net of losses and investment expenses) on funds on deposit in the
Trustee's Account shall be applied as set forth in Section 2.06. Funds deposited
in the Trustee's Account on a Business Day which immediately precedes a
Settlement Date upon the maturity of any Available Investments are not required
to be invested overnight.
(b) (i) The Collection Agent, for the benefit of the
Beneficiaries, shall establish and maintain in the name of the Trustee a
segregated trust account accessible only by the Trustee (the "Cure Account"),
which shall be identified as the "Cure Account for the Maxtor Receivables
Corporation Receivables Purchase and Sale Agreement" and shall bear a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Beneficiaries. The Cure Account shall initially be established
with Bankers Trust Company and thereafter may only be established or maintained
at an Eligible Institution.
(ii) At the written direction of the Collection Agent (which may
be a standing direction), funds on deposit in the Cure Account shall be invested
by the Trustee in Available Investments selected by the Collection Agent that
will mature so that such funds will be available on or before the close of
business on the Business Day next preceding the following Settlement Date. All
such Available Investments shall be held by the Trustee for the benefit of the
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Beneficiaries. On each Settlement Date, all interest and other investment
earnings (net of losses and investment expenses) on funds on deposit in the Cure
Account shall be applied as set forth in Section 2.06. Funds deposited in the
Cure Account on a Business Day which immediately precedes a Settlement Date upon
the maturity of any Available Investments are not required to be invested
overnight.
(c) (i) The Trustee shall possess all right, title and interest
in and to all funds on deposit from time to time in, and all Available
Investments credited to, the Trustee's Account and the Cure Account
(collectively, the "Trustee Accounts") and in all proceeds thereof. The Trustee
Accounts shall be under the sole dominion and control of the Trustee for the
benefit of the Beneficiaries. If, at any time, any Trustee Account is held by an
institution other than an Eligible Institution, the Trustee (or the Collection
Agent, at the direction of the Trustee and on its behalf) shall within 10
Business Days establish a new Trustee Account meeting the conditions specified
in paragraph (a)(i) or (b)(i) above, as applicable, and shall transfer any cash
and/or any investments to such new Trustee Account. Neither the Seller, the
Collection Agent nor any Person or entity claiming by, through or under the
Seller, the Collection Agent or any such Person or entity shall have any right,
title or interest in, or any right to withdraw any amount from, any Trustee
Account, except as expressly provided herein. Schedule VI identifies each
Trustee Account by setting forth the identification name of such account, the
account number of each such account, the account designation of each such
account and the name and location of the institution with which such account has
been established. If a substitute Trustee Account is established pursuant to
this Section 6.06, the party establishing such substitute Trustee Account shall
promptly provide to the Collection Agent or the Trustee, as applicable, an
amended Schedule VI, setting forth the relevant information for such substitute
Trustee Account.
(ii) Notwithstanding anything herein to the contrary, the
Collection Agent shall have the power, revocable by the Trustee at the direction
of the Agent, to instruct the Trustee in writing to make withdrawals and
payments from the Trustee Accounts for the purposes of carrying out the
Collection Agent's or Trustee's duties hereunder.
(d) At no time may greater than 10% of the funds on deposit in
any Trustee Account be invested in Available Investments (other than obligations
of the United States government or agencies the obligations of which are
guaranteed by the United States government and money market funds) of any single
entity or its Affiliates. Nothing herein shall be construed to impose any
obligation on the Trustee to monitor compliance with this Section 6.07(d).
(e) Any request by the Collection Agent to invest funds on
deposit in any Trustee Account shall be in writing (which may be a standing
instruction) and shall state that the requested investment is an Available
Investment.
(f) The Trustee is hereby authorized, unless otherwise directed
in writing by the Collection Agent, to effect transactions in Available
Investments through a capital markets affiliate of the Trustee.
(g) In no event shall the Trustee be liable for the selection of
Available Investments or for investment losses incurred thereon. The Trustee
shall have no liability in
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respect of losses incurred as a result of the liquidation of any investment
prior to its stated maturity or the failure of the Collection Agent to provide
timely written investment direction. The Trustee shall have no obligation to
invest or reinvest any amounts held hereunder in the absence of written
investment direction.
(h) The Trustee will periodically report to the Collection Agent,
the Seller and the Agent from time to time on such investments, and at such
other times that are reasonably requested by the Seller or the Collection Agent.
ARTICLE VII
EVENTS OF TERMINATION
SECTION 7.01. Events of Termination. If any of the following
events ("Events of Termination") shall occur and be continuing:
(a) (i) The Collection Agent (if the Collection Agent is the
Company or Maxtor or any Selling Affiliate or any of their respective
Affiliates) shall fail to perform or observe any term, covenant or agreement
hereunder (other than as referred to in clause (ii) of this Section 7.01 (a))
and such failure shall remain unremedied for three Business Days or (ii) the
Collection Agent (if the Collection Agent is the Company or Maxtor or any
Selling Affiliate or any of their respective Affiliates) or the Seller or any
Selling Affiliate shall fail to make any payment or deposit to be made by it
hereunder or under any Purchase Document when due, in the case of any payment in
respect of any Purchase Price or Yield (unless such Collection Agent or the
Seller or such Selling Affiliate shall have initiated such payment or deposit by
wire transfer on or before the day when due and the failure of such payment or
deposit to have been made when due shall have been beyond the control of such
Collection Agent or the Seller or such Selling Affiliate, in which case no Event
of Termination shall occur solely as a result of such failure unless and until
such payment or deposit shall also not have been made on the Business Day
following the day when due), or by the first Business Day following the day when
due in the case of any payment or deposit not in respect of any Purchase Price
or Yield; or
(b) The Seller, Maxtor or the Company shall fail to perform or observe
any term, covenant or agreement contained in Section 5.01 (i) (except that no
Event of Termination shall occur solely as a result of any failure to make a
payment or deposit when due under any Selling Affiliate Receivables Contribution
and Sale Agreement unless such payment shall also not be made within the
applicable cure period set forth in Section 7.01 (a)(ii) above), 5.01(l),
5.02(c), 5.03 or 6.03(a) hereof, or any Selling Affiliate shall fail to perform
or observe any corresponding term, covenant or agreement contained in its
Selling Affiliate Receivables Contribution and Sale Agreement (except that no
Event of Termination shall occur solely as a result of any failure to make a
payment or deposit when due under any Selling Affiliate Receivables Contribution
and Sale Agreement unless such payment shall also not be made within the
applicable cure period set forth in Section 7.01 (a)(ii) above); or
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(c) Any representation or warranty or statement made by the Seller,
Maxtor, the Company or any Selling Affiliate (or any of their respective
officers) under or in connection with any Purchase Document shall prove to have
been incorrect in any material respect when made; or
(d) The Seller, the Company, Maxtor or any Selling Affiliate shall fail
to perform or observe any other term, covenant or agreement contained in any
Purchase Document on its part to be performed or observed and any such failure
shall remain unremedied for 10 days after written notice thereof shall have been
given to the Seller, the Company, Maxtor or any Selling Affiliate, as
applicable, by the Agent; or
(e) The Seller, the Company, Maxtor, HEA, HEI or any Selling Affiliate
shall fail to pay any principal of or premium or interest on any Debt which is
outstanding in a principal amount of at least $5,000,000 in the aggregate when
the same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or any other event shall occur or condition
shall exist under any agreement or instrument relating to any such Debt and
shall continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or any
such Debt shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), redeemed, purchased
or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall
be required to be made, in each case prior to the stated maturity thereof; or
(f) Any Purchase shall for any reason (other than pursuant to the terms
hereof) cease to create, or any Purchased Interest shall for any reason cease to
be, a valid and perfected first priority undivided percentage ownership interest
in the Seller Assets, or the Agent, for the benefit of the Beneficiaries, shall
cease to have a valid and perfected first priority security interest in the
Seller Assets, or the Assignment shall for any reason cease to evidence in the
Owner of such Purchased Interest legal and equitable title to, and ownership of,
an undivided percentage ownership interest in the Seller Assets or valid and
perfected first priority security interest therein; or
(g) The Seller, the Company, Maxtor, HEA or any Selling Affiliate shall
generally not pay its debts as such debts become due, or shall admit in writing
its inability to pay its debts generally, or shall make a general assignment for
the benefit of creditors; or any proceeding shall be instituted by or against
the Seller, the Company, Maxtor or any Selling Affiliate seeking to adjudicate
it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee,
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custodian or other similar official for it or for any substantial part of its
property and, in the case of any such proceeding instituted against it (but not
instituted by it), either such proceeding shall remain undismissed or unstayed
for a period of 60 days, or any of the actions sought in such proceeding
(including, without limitation, the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar official for, it
or for any substantial part of its property) shall occur; or the Seller, the
Company, Maxtor or any Selling Affiliate shall take any corporate action to
authorize any of the actions set forth above in this subsection (g); or
(h) The average Default Termination Ratio for any Purchased Interest as
at the last day of any three successive Fiscal Months most recently ended shall
exceed 6.0%, or the average Delinquency Ratio for any Purchased Interest as at
the last day of any three successive Fiscal Months most recently ended shall
exceed 10.0%, or the average Loss-to-Liquidation Ratio for any Purchased
Interest as at the last day of any three successive Fiscal Months most recently
ended shall exceed 1.0%, or the average Dilution Ratio for any Purchased
Interest as at the last day of any three successive Fiscal Months most recently
ended shall exceed 9.0%; or
(i) There shall have occurred any event which materially adversely
affects the collectibility of the Subject Receivables, or there shall have
occurred any other event which materially adversely affects the ability of the
Seller, the Company, Maxtor or any Selling Affiliate to collect Subject
Receivables or the ability of the Seller, the Company, Maxtor or any Selling
Affiliate to perform its obligations under any Purchase Document or Contract; or
(j) Any ERISA Event shall have occurred with respect to a Plan and the
sum (determined as of the date of occurrence of such ERISA Event) of the
Insufficiency of such Plan and the Insufficiency of any and all other Plans with
respect to which an ERISA Event shall have occurred and then exist (or the
liability of the Seller, the Company, Maxtor or any Selling Affiliate or any
ERISA Affiliate of either thereof related to such ERISA Event) exceeds
$10,000,000; or
(k) The Seller, the Company, Maxtor or any Selling Affiliate or any
ERISA Affiliate of either thereof shall have been notified by the sponsor of a
Multiemployer Plan that it has incurred Withdrawal Liability to such
Multiemployer Plan in an amount which, when aggregated with all other amounts
required to be paid to Multiemployer Plans by the Seller, the Company, Maxtor or
any Selling Affiliate, respectively, and its ERISA Affiliates as Withdrawal
Liability (determined as of the date of such notification), exceeds $ 1
0,000,000 or requires payments exceeding $10,000,000 per annum; or
(1) The Seller, the Company, Maxtor or any Selling Affiliate or any
ERISA Affiliate of either thereof shall have been notified by the sponsor of a
Multiemployer Plan that such Multiemployer Plan is in reorganization or is being
terminated, within the meaning of Title IV of ERISA, and as a result of such
reorganization or termination the aggregate annual contributions of the Seller,
the Company, Maxtor or any Selling Affiliate, respectively, and its ERISA
Affiliates to all Multiemployer Plans which are then in reorganization or being
terminated have been or will be increased over the amounts contributed to such
Multiemployer Plans for the respective plan years of such Multiemployer Plans
immediately preceding the plan year in which the reorganization or termination
occurs by an amount exceeding $10,000,000; or
(m) Any material provision of any Purchase Document after delivery
thereof pursuant to Section 3.01 shall for any reason cease to be valid and
binding on the Seller, the Company, Maxtor or any Selling Affiliate, as
applicable to such Purchase Document, or the Seller, the
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Company, Maxtor or any Selling Affiliate, as applicable, shall so state in
writing, or any Purchase Document shall cease to be in full force and effect; or
(n) The Company shall, at any time, together with HEI, HMM and HC cease
to own directly or indirectly (i) at least 30% of the issued and outstanding
shares of the capital stock of Maxtor, (ii) at least 30% of the issued and
outstanding shares of the capital stock of each Selling Affiliate, or (iii) at
least 51% of the issued and outstanding shares of the capital stock of Maxtor
while any Person (other than HEI, the Company, HMM or HC) directly or indirectly
owns 5% or greater of the issued and outstanding shares of the capital stock of
Maxtor, or Maxtor shall, at any time, cease to own 100% of the issued and
outstanding shares of the capital stock of the Seller; or
(o) Any of the Company's long-term public senior debt securities shall
be rated less than B- or B3 by S&P and ▇▇▇▇▇'▇, respectively or, if such
securities are not rated by S&P and ▇▇▇▇▇'▇, such securities have a deemed
rating of at least B- and B3, as determined by the Agent in its sole discretion;
or
(p) the Seller's constituent documents shall be amended, supplemented or
otherwise modified; or
(q) the Net Subject Receivables Balance shall, for a period of five (5)
consecutive Business Days, be less than the Required Net Subject Receivables
Balance; or
(r) the sum of the Purchased Interests shall equal or exceed 90% until
the Agent is satisfied with the Daily Report procedures hereunder, and 100%
thereafter.
then, and in any such event, the Agent shall, at the request, or may with the
consent, of any Owner, by notice to the Seller (with a copy of such notification
to the Trustee) declare the Facility Termination Date to have occurred,
whereupon the Facility Termination Date shall forthwith occur, without demand,
protest or further notice of any kind, all of which are hereby expressly waived
by the Seller; provided, however, that in the event of an actual or deemed entry
of an order for relief with respect to the Seller, the Company, Maxtor or any
Selling Affiliate under the Federal Bankruptcy Code or the occurrence of any
event described above in subsection (f), the Facility Termination Date shall
automatically so occur, without demand, protest or any notice of any kind, all
of which are hereby expressly waived by the Seller. Upon any such occurrence of
the Facility Termination Date, the Facility shall terminate, and no further
Purchases shall be made hereunder. Furthermore, the Agent and the Owners shall
have, in addition to all other rights and remedies under this Agreement or
otherwise, all other rights and remedies provided under the UCC of the
applicable jurisdiction and other applicable laws (to the extent consistent with
an ownership interest in the Subject Receivables), which rights shall be
cumulative.
ARTICLE VIII
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THE AGENT
SECTION 8.01. Authorization and Action. The Purchaser hereby
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under the Purchase Documents as are delegated to the
Agent by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto.
SECTION 8.02. Agent's Reliance, Etc. Neither the Agent nor any of
its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them as Agent under or in connection with
this Agreement any other Purchase Document or any instrument or document
furnished pursuant hereto (including, without limitation, the Agent's servicing,
administering or collecting Subject Receivables as Collection Agent pursuant to
Section 6.01), except for its or their own gross negligence or willful
misconduct. Without limiting the generality of the foregoing, except as
otherwise agreed by the Agent and any Owner, the Agent: (i) may consult with
legal counsel (including counsel for the Seller, Maxtor, the respective Selling
Affiliates or the Company), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (ii) makes no warranty or representation to any Owner
and shall not be responsible to any Owner for any statements, warranties or
representations (whether written or oral) made in or in connection with any
Purchase Document or any other instrument or document furnished pursuant hereto;
(iii) shall not have any duty to ascertain or to inquire as to the performance
or observance of any of the terms, covenants or conditions of any Purchase
Document or any other instrument or document furnished pursuant hereto on the
part of the Seller, Maxtor, the respective Selling Affiliates or the Company or
to inspect the property (including the books and records) of the Seller, Maxtor,
the respective Selling Affiliates or the Company; (iv) shall not be responsible
to any Owner for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of any Purchase Document or any other
instrument or document furnished pursuant hereto or thereto or any Subject
Receivable or Purchased Interest; and (v) shall incur no liability under or in
respect of any Purchase Document or any other instrument or document furnished
pursuant hereto by acting upon any notice (including notice by telephone),
consent, certificate or other instrument or writing (which may be by telecopier,
telegram, cable or telex) believed by it to be genuine and signed or sent by the
proper party or parties.
SECTION 8.03. CNAI and Affiliates. With respect to any Purchased
Interest owned by it, CNAI shall have the same rights and powers under this
Agreement as any other Owner and may exercise the same as though it were not the
Agent. CNAI and its Affiliates may generally engage in any kind of business with
the Seller, Maxtor, the respective Selling Affiliates or the Company or any
Obligor, any of their respective Affiliates and any Person who may do business
with or own securities of the Seller, Maxtor, the respective Selling Affiliates
or the Company or any Obligor or any of their respective Affiliates, all as if
CNAI were not the Agent and without any duty to account therefor to the Owners.
ARTICLE IX
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ASSIGNMENT OF PURCHASED INTERESTS
SECTION 9.01. Assignment. (a) The Purchaser may assign to any
Assignee, and any such Assignee may assign to any other Assignee, all or any
portion of any of its Purchased Interests pursuant to a written assignment with
respect to each such Purchased Interest in such form, and upon such other terms
and conditions, if any, as the parties thereto may mutually agree. Upon any such
assignment, (i) the Assignee shall become the Owner of such Purchased Interest
or portion thereof for all purposes of the Purchase Documents and any other
instrument or document furnished pursuant hereto and (ii) the Owner assignor
thereof shall relinquish its rights with respect to such Purchased Interest or
portion thereof for all purposes of the Purchase Documents and any other
instrument or document furnished pursuant hereto. The parties to each such
assignment shall deliver to the Agent the related written assignment, duly
executed by such parties, and each assignor shall promptly execute and deliver
all further instruments and documents, and take all further action, that the
Assignee may reasonably request in order to perfect, protect or more fully
evidence the Assignee's right, title and interest in and to such Purchased
Interest, and to enable the Assignee to exercise or enforce any rights under the
Purchase Documents and any other instrument or document furnished pursuant
hereto with respect to such Purchased Interest or portion thereof. The Agent
shall (i) provide notice to the Seller of any assignment of a Purchased Interest
or portion thereof hereunder and (ii) maintain at its office referred to in
Section 13.02 a copy of each written assignment delivered to it and a register
for the recordation of the names and addresses of the Owners, and the Purchased
Interests or portions thereof owned by such Owners, from time to time. The
entries in such register shall constitute prima facie evidence of the accuracy
of the information contained therein, and the Seller, the Agent, the Purchaser
and the Owners may treat each Person whose name is recorded therein as an Owner
hereunder for all purposes of this Agreement. Such register shall be available
for inspection by the Seller or any Owner at any reasonable time and from time
to time upon reasonable prior notice.
(b) By executing and delivering an assignment (in the case of an Owner
assignor) and executing and accepting an assignment (in the case of an
Assignee), the Owner assignor thereunder and the Assignee thereunder confirm and
agree with each other and the other parties hereto as follows: (i) other than as
provided in such assignment, such assigning Owner makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any other Purchase Document or any other instrument or document furnished
pursuant hereto or thereto or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other Purchase
Document or any other instrument or document furnished pursuant hereto or
thereto, or the perfection, priority or value of any ownership or security
interest created or purported to be created hereunder or under any other
Purchase Document; (ii) such assigning Owner makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Seller or Maxtor or the performance or observance by the Seller or Maxtor of any
of its obligations under this Agreement, or any other Purchase Document or any
other instrument or document furnished pursuant hereto or thereto; (iii) such
Assignee confirms that it has received a copy of this Agreement, each other
Purchase Document and any other instrument or document furnished pursuant hereto
or thereto, together with copies of the
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most recent annual and periodic financial statements delivered pursuant to
clauses (a) and (b) of Section 5.02 and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and to purchase such Purchased Interest; (iv) such Assignee
will, independently and without reliance upon the Agent, any of its Affiliates,
such assigning Owner or any other Owner and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
Assignee appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement, the other Purchase
Documents and any other instrument or document furnished pursuant hereto or
thereto as are delegated to the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; (vi) such Assignee appoints as its
agent the Collection Agent -from time to time designated pursuant to Section
6.01 to enforce its respective rights and interests in and under the Seller
Assets; and (vii) such Assignee agrees that it will not institute against the
Purchaser any proceeding of the type referred to in Section 7.01 (g) so long as
any Commercial Paper Notes issued by the Purchaser shall be outstanding or there
shall not have elapsed one year plus one day since the last day on which any
such Commercial Paper Notes shall have been outstanding.
SECTION 9.02. Annotation of the Assignment. The Agent shall
annotate the Assignment to reflect any assignments made pursuant to Section 9.01
or otherwise.
ARTICLE X
INDEMNIFICATION
SECTION 10.1. Indemnities by the Seller. Without limiting any
other rights which any Indemnified Party may have under any Purchase Document or
under applicable law, the Seller hereby agrees to indemnify each Indemnified
Party from and against any and all claims, losses and liabilities (including
reasonable attorneys' fees and expenses, but excluding (a) any amount to the
extent resulting from gross negligence or willful misconduct on the part of such
Indemnified Party, (b) recourse (except as otherwise specifically provided in
this Agreement) for uncollectible Receivables or (c) any income taxes (other
than any withholding taxes in respect of any Included Foreign Receivable)),
incurred by such Indemnified Party arising out of or as a result of any Purchase
Document or any transaction contemplated thereby, the ownership of Purchased
Interests, the use of proceeds of any Purchase or deposit of Owner Collections
to the Seller's Account or in respect of any Seller Asset (all of the foregoing,
to the extent not so excluded, being collectively referred to as "Indemnified
Amounts"). Without limiting or being limited by the foregoing and whether or not
any of the transactions contemplated hereby are consummated, the Seller shall
pay on demand to each Indemnified Party any and all amounts necessary to
indemnify such Indemnified Party from and against all Indemnified Amounts
relating to, resulting from, or which would not have occurred but for:
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(i) any Receivable becoming a Subject Receivable which is not at
the applicable Purchase Date thereof an Eligible Receivable (including
without limitation any Included Foreign Receivable);
(ii) reliance on any representation or warranty or statement made
or deemed made by the Seller, Maxtor, the Company or any Selling
Affiliate or any of their respective Affiliates (or any of their
respective officers) under or in connection with any Purchase Document
which shall have been incorrect in any material respect when made;
(iii) the failure by the Seller, Maxtor or any Selling Affiliate
to comply with any applicable law, rule or regulation with respect to
any Seller Asset, or the nonconformity of any Seller Asset with any such
applicable law, rule or regulation;
(iv) the failure to either (a) vest in the Owner of a Purchased
Interest a valid and perfected first priority undivided percentage
ownership interest, to the extent of each Purchased Interest, in each
Seller Asset; or (b) vest in the Agent, for the benefit of the
Beneficiaries, a valid and perfected first priority security interest in
any Seller Asset; or the failure of the Seller to have obtained a first
priority perfected ownership interest in the Seller Assets transferred
or purported to be transferred to the Seller under the Receivables
Contribution and Sale Agreement or any Selling Affiliate Receivables
Contribution and Sale Agreement, free and clear of any Adverse Claim;
(v) the failure of the Seller, Maxtor or any Selling Affiliate to
have filed, or any delay by the Seller, Maxtor or any Selling Affiliate
in filing, financing statements or other similar instruments or
documents under the UCC of any applicable jurisdiction or other
applicable laws with respect to any Seller Asset at any time;
(vi) any defense (other than discharge in bankruptcy or other
insolvency proceeding of the Obligor) of the Obligor to the payment of
any Receivable which is, or purports to be, a Subject Receivable
(including, without limitation, a defense based on such Receivable or
the related Contract not being a legal, valid and binding obligation of
such Obligor enforceable against it in accordance with its terms), or
any other claim resulting from the sale of the merchandise or services
related to such Receivable or the furnishing or failure to furnish such
merchandise or services;
(vii) any failure of the Seller, the Company, Maxtor or any
Selling Affiliate or any of their respective Affiliates, as Collection
Agent or otherwise, to perform its duties or obligations in accordance
with the provisions of Article VI or to perform its duties or
obligations under the Contracts or under the Purchase Documents;
(viii) any products liability, personal injury or property damage
or other similar or related claim or action of whatever sort allegedly
arising out of or in connection with merchandise, insurance or services
which are the subject of any Contract;
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(ix) any investigation, litigation or proceeding related to any
Purchase Document or any other instrument or document furnished pursuant
hereto or the use of proceeds of Purchases or deposit to the Seller's
Account or the ownership of Purchased Interests or the security or in
respect of any Receivable, Related Security, Contract, Collections or
Additional Assigned Rights, in each case other than any investigation,
litigation or proceeding (A) relating solely to any violation by any
Indemnified Party of any banking, bank holding company or securities
laws or any Owner's sale of commercial paper or other funding source and
(B) not relating to or based upon or otherwise attributable to any act,
statement, omission or violation by the Seller, Maxtor, the Company, any
Selling Affiliate or any Affiliate of any thereof;
(x) the failure to pay when due any taxes payable by the Seller,
the Company, Maxtor or any Selling Affiliate (other than any Owner's
taxes), including without limitation sales taxes, shipping charges or
other similar charges or taxes due on merchandise or services sold by
the Seller, Maxtor or any Selling Affiliate to Obligors; or
(xi) the commingling of Collections of Subject Receivables at any
time with other funds.
Any amounts subject to the indemnification provisions of this Section
10.01 shall be paid by the Seller to the Agent for the account of the applicable
Indemnified Party promptly but in any event within five Business Days following
demand therefor by the Agent or such Indemnified Party. The indemnification
provisions of this Section 10.01 shall survive the termination of this
Agreement.
ARTICLE XI
THE TRUSTEE
SECTION 11.01. Duties of the Trustee. (a) The Trustee undertakes
to perform such duties and only such duties as are specifically set forth in
this Agreement, and no implied duties or covenants shall be read into this
Agreement against the Trustee.
(b) The Trustee, upon receipt of any resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
substantially conform to the requirements of this Agreement. The Trustee shall
give prompt written notice to the Seller and the Agent of any material lack of
conformity of any such instrument to the applicable requirements of this
Agreement discovered by the Trustee.
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(c) Subject to Section 11.01 (a), no provision of this Agreement
shall be construed to relieve the Trustee from liability for its own grossly
negligent action, its own grossly negligent failure to act or its own willful
misconduct; provided, however, that:
(i) the Trustee shall not be personally liable for an error of
judgment made in good faith by any Responsible Official of the Trustee,
unless it shall be proved that the Trustee was grossly negligent in
ascertaining the pertinent facts;
(ii) the Trustee shall not be personally liable with respect to
any action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Agent relating to the time, method
and place of conducting any proceeding for any remedy available to the
Trustee in accordance with the terms of this Agreement, or exercising
any trust or power conferred upon the Trustee under this Agreement; and
(iii) the Trustee shall not be charged with knowledge of any
failure by the Collection Agent to comply with any obligations of the
Collection Agent contained herein or of any Event of Termination unless
a Responsible Official of the Trustee obtains actual knowledge of such
failure or such event or the Trustee receives written notice of such
failure or such event from the Collection Agent, the Agent, any Owner or
any Bank.
(d) The Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties hereunder or in the exercise of any of its rights or powers if there are
reasonable grounds for believing that the repayment of such funds or indemnity
satisfactory to it against such risk or liability is not reasonably assured to
it and none of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any obligations of the Collection Agent under this Agreement.
(e) Except for actions expressly authorized by this Agreement,
the Trustee shall take no action reasonably likely to impair the interests of
the Agent (for the benefit of the Owners) in any Receivable now existing or
hereafter created or impair the value of any Receivable now existing or
hereafter created.
(f) The Trustee shall have no responsibility or liability for the
selection of, or investment losses on, Available Investments. The Trustee shall
have no liability in respect of losses incurred as a result of the liquidation
of any investment prior to its stated maturity or the failure of the party to
provide timely written investment direction.
(g) The Trustee shall, with respect to each Daily Report (upon
which the Trustee may conclusively rely and be fully protected in acting or re g
from acting in such reliance), (A) compare the Collections reported that day by
the Collection Agent to the actual Collections deposited to the Lock Box
Accounts and the Concentration Account, (B) perform each of the account
transfers set forth in the Daily Report as directed in writing by the Collection
Agent;
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(h) The Trustee shall with respect to each Purchaser Report (upon
which the Trustee may conclusively rely and be fully protected in acting or
refraining from acting in such reliance) examine such Purchaser Report for
indications of the occurrence of any Events of Termination arising from under
clause (h) of Section 7.01.
(i) Notwithstanding any other provision of this Agreement, upon
discovery by a Responsible Official of Trustee of any material discrepancy
between the amounts reported by the Collection Agent and the amounts calculated
as provided above, the Trustee shall promptly notify the Collection Agent and
the Agent thereof.
SECTION 11.02. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 11.01:
(a) the Trustee may conclusively rely on and shall be fully
protected in acting on, or in refraining from acting in accord with, any
resolution, officer's certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, consent, order,
appraisal, bond or other paper or document believed by it in good faith to be
genuine and to have been signed or presented to it pursuant to this Agreement by
the proper party or parties;
(b) the Trustee may consult with counsel and, as a condition to
taking, suffering or omitting to take any action, may demand an opinion of
counsel and any such opinion of counsel shall be full and complete authorization
and protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such opinion of counsel;
(c) the Trustee shall be under no obligation to exercise any of
the rights or powers vested 'm it by this Agreement, or to institute, conduct or
defend any litigation hereunder or in relation hereto, at the request, order or
direction of any of the Beneficiaries, unless such Beneficiaries shall have
offered to the Trustee security or indemnity satisfactory to it against the
costs, expenses and liabilities which may be incurred therein or thereby;
(d) subject to Section 11.0 1 (c), the Trustee shall not be
personally liable for any action taken, suffered or omitted by it in good faith
and believed by it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement;
(e) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
approval, bond or other paper or document unless requested in writing so to do
by the Agent;
(f) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys, custodians or nominees, and the Trustee shall not be responsible for
any misconduct or negligence on the part of, or for the supervision of any such
agent, attorney, custodian or nominee appointed with due care by it hereunder;
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(g) except as required by Section 11.01, the Trustee shall not be
required to make any initial or periodic examination of any documents or records
related to the Receivables for the purpose of establishing the presence or
absence of defects, the compliance by the Seller with its representations and
warranties or for any other purpose; and
(h) nothing in this Agreement shall be construed to require the
Trustee to act as a guarantor of the Collection Agent's performance.
SECTION 11.03. Trustee Not Liable for Recitals in Certificates or
Receivables. The Trustee assumes no responsibility for the correctness of the
recitals contained herein. Except as set forth in Section 11.12, the Trustee
makes no representations as to the validity or sufficiency of this Agreement or
of any Receivable or related document. The Trustee shall not be accountable for
the use or application of any funds paid to the Seller in respect of the
Receivables or deposited in or withdrawn from the Concentration Account, any
Lock Box Account, the Seller's Account, or any other account hereafter
established in accordance with the terms of this Agreement. The Trustee shall at
no time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any security interest in any Receivable
or the perfection and priority of such security interest or the maintenance of
any such perfection and priority.
SECTION 11.04. Trustee May Own Purchased Interests. The Trustee
in its individual or any other capacity may become the owner or pledgee of
Purchased Interests and may otherwise deal, and transact banking business, with
the Collection Agent and the Seller with the same rights as it would have if it
were not the Trustee.
SECTION 11.05. Compensation and Indemnification: Trustee's
Expenses. (a) The Trustee shall be entitled to receive a monthly Trustee's fee
(which fee, to the extent permitted by applicable law, shall not be limited by
any provision of law, such fee being the "Trustee's Fee") in respect of each
Fiscal Month (or portion thereof from the Closing Date hereunder until the
Facility Termination Date, payable in arrears on each Settlement Date in an
amount agreed upon in writing by the Trustee and the Seller. The Trustee's Fee
shall be payable, first, from amounts distributed pursuant to Section 2.06,
second, to the extent not paid from such amounts, by the Seller, and third, to
the extent not paid from such amounts or by the Seller, by the Collection Agent.
When the Trustee incurs expenses or renders services in connection with
bankruptcy, insolvency, reorganization or similar proceedings affecting any
Person, such expenses (including the reasonable fees and expenses of its
counsel) and the compensation for such services are intended to constitute
expenses of administration under any bankruptcy law or law relating to
creditors' rights generally.
(b) Without limiting any of the rights the Trustee has under
Section 10.01 the Seller shall indemnify the Trustee in its individual capacity
and any of its officers, directors, employees and agents against any and all
loss, liability or expense (including reasonable attorneys' fees) incurred by it
in connection with the performance of its duties under this Agreement and the
other Purchase Documents except any loss, liability or expense resulting from
the gross negligence or willful misconduct of such Indemnified Party.
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(c) Expenses. The Seller will pay or reimburse the Trustee upon
its request on at least 5 Business Days' notice providing reasonable detail, and
if the Seller shall fail to do so, the Collection Agent will so pay or reimburse
the Trustee (with a right to reimbursement from the Seller), and if both the
Seller and the Collection Agent shall fail to do so, the Agent will have the
right, but not the obligation, to so pay or reimburse the Trustee (with a right
to reimbursement from the Seller), for all reasonable expenses, disbursements
and advances incurred or made by the Trustee in accordance with any of the
provisions of this Agreement or in connection with any amendment hereto
(including the reasonable fees and expenses of its agents, any co-trustee and
counsel and fees incurred in connection with an Event of Termination) except any
such expense, disbursement or advance as may arise from its gross negligence or
willful misconduct. The Seller's and Collection Agent's covenant provided in
this Section 11.05 shall survive the termination of this Agreement.
SECTION 11.06. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be an Eligible Institution. If the Trustee
publishes reports of condition at least annually, pursuant to law or to the
requirements of any supervising or examining authority, then, for the purpose of
this Section 1 1.06, the combined capital and surplus of such corporation shall
be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease to
be eligible in accordance with the provisions of this Section 11.06, the Trustee
shall resign immediately in the manner and with the effect specified in Section
11.07.
SECTION 11.07. Resignation or Removal of Trustee. (a) The Trustee
may at any time resign and be discharged from its obligations hereunder by
giving 30 days' written notice thereof to the Seller, the Agent and the
Collection Agent. Upon receiving such notice of resignation, the Collection
Agent shall promptly appoint a successor trustee acceptable to the Agent by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor trustee. If no
successor trustee shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 11.06 and shall fail to resign after
written request therefor by the Collection Agent or if at any time the Trustee
shall be legally unable to act, or shall be adjudged as bankrupt or insolvent,
or if a receiver of the Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Collection Agent may remove the Trustee and promptly appoint a successor trustee
acceptable to the Agent by written instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor trustee.
(c) If at any time the Trustee shall fail to perform its
obligations under this Agreement, the Agent may remove the Trustee and direct
the Collection Agent to promptly appoint a successor trustee acceptable to the
Agent by written instrument, in duplicate, one copy
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of which instrument shall be delivered to the Trustee so removed and one copy to
the successor trustee; provided that if all other procedures fail and a
successor trustee has not accepted an appointment pursuant to this Section
11.07(c) within 30 days after the Trustee shall have received notice from the
Agent of its intention to remove such Trustee, the Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee.
(d) Notwithstanding anything herein to the contrary, any
resignation or removal of the Trustee and appointment of a successor trustee
pursuant to any of the provisions of this Section 11.07 shall not become
effective until acceptance of appointment by the successor trustee as provided
in Section 11.08.
SECTION 11.08. Successor Trustee. (a) Any successor trustee
appointed as provided in Section 11.07 shall execute, acknowledge and deliver to
the Seller, the Collection Agent, the Agent and its predecessor Trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor Trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as Trustee herein. The
predecessor Trustee after payment of all monies due and owing to it, shall
deliver to the successor trustee all documents or copies thereof and statements
held by it hereunder, and the Seller and the predecessor Trustee shall execute
and deliver such instruments and do such other things as may reasonably be
required for fully and certainly vesting and confirming in the successor trustee
all such rights, powers, duties and obligations.
(b) No successor trustee shall accept appointment as provided in
this Section 11.08 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 11.06.
SECTION 11.09. Merger or Consolidation of Trustee. Any Person
into which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided that such corporation shall be eligible under the
provisions of Section 11.06.
SECTION 11.10. Tax Returns. In the event any tax returns shall be
required to be filed by the Trustee in connection with any of the trust accounts
hereunder, the Collection Agent shall prepare or shall cause to be prepared any
such tax returns and shall remit such returns to the Trustee for signature at
least five days before such returns are due to be filed. The Trustee shall
promptly sign such returns and deliver such returns after signature to the
Collection Agent, and such returns shall be filed by the Collection Agent. In no
event shall the Trustee be liable for any liabilities, costs or expenses of the
Owners, the Banks or the Agent arising out of the application of any tax law,
including federal, state, foreign or local income or franchise taxes or any
other tax imposed on or measured by income (or any interest, penalty or addition
to tax with respect thereto or arising from a failure to comply therewith).
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SECTION 11.11. Right of Agent to Direct Trustee. The Agent shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee under any Purchase Document or
exercising any trust or power conferred on the Trustee under any Purchase
Document; provided, however, that, subject to Section 11.01, the Trustee shall
have the right to decline to follow any such direction if the Trustee after
receiving an opinion of counsel determines that the action so directed may not
lawfully be taken, or if the Trustee in good faith shall, by any Responsible
Official of the Trustee, determine that the proceedings so directed would be
illegal or involve it in personal liability.
SECTION 11.12. Representations and Warranties of Trustee. The
Trustee represents and warrants that:
(a) the Trustee is a banking corporation duly organized, validly
existing and in good standing under the laws of the State of New York, and has
the power to own its assets and to transact the business in which it is
presently engaged;
(b) the Trustee has the full power, authority and right to execute,
deliver and perform this Agreement, and has taken all necessary action to
authorize the execution, delivery and performance by it of this Agreement; and
(c) this Agreement has been duly executed and delivered by the Trustee
and constitutes a legal, valid and binding obligation of the Trustee enforceable
against the Trustee in accordance with its terms (except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally and except as such
enforceability may be limited by general principles of equity, whether
considered in a suit at law or in equity).
SECTION 11.13. Maintenance of Office or Agency. The Trustee will
maintain at its expense in New York, New York an office or agency (the
"Corporate Trust Office") where its corporate mat office shall be administered
and where notices and demands to or upon the Trustee in respect of this
Agreement shall be served. The Trustee initially designates its office or agency
at Four ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust and
Agency Group/Structured Finance, as such office. The Trustee will give prompt
written notice to the Seller, the Collection Agent and the Agent of any change
in the location of any such office or agency.
ARTICLE XII
CONSENT
SECTION 12.0 1. Consent to Assignment. Maxtor hereby
acknowledges notice of, and consents to, the assignment by the Seller under this
Agreement of all Additional Assigned Rights now existing or hereafter arising.
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SECTION 12.02. Agreements as to Additional Assigned Rights.
Maxtor and the Seller agree for the benefit of the Agent and the Owners as
follows:
(a) Maxtor shall make all payments to be made by it to the Seller
under or in connection with any Purchase Document, directly to the Agent
by payment to the account (account number ▇▇▇▇▇▇▇▇) of the Agent
maintained at the office of Citibank, at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, or otherwise in accordance with the instructions of the Agent,
such payments to be made to the Agent.
(b) All payments to be made by Maxtor to the Seller under or in
connection with any Purchase Document, shall be made by Maxtor
irrespective of, and without deduction for, any counterclaim, defense,
recoupment or set-off and shall be final, and Maxtor will not seek to
recover from the Agent or any Owner for any reason any such payment once
made.
(c) To the extent the Purchaser receives any payments relating to
the Additional Assigned Rights to which the Purchaser is not entitled,
the Purchaser shall remit such payments to the Seller or any other
Person designated by the Seller.
(d) The Agent shall be entitled, except to the extent limited by
agreement among the Seller, the Owners and the Agent, to exercise any
and all rights and remedies of the Seller under any Purchase Document to
which it is a party, including without limitation rights of the Seller
to make requests, demands for payment and other demands, determinations
and designations, to amend, supplement or modify, to give consents or
waivers, and to deliver notices to Maxtor, and to receive notices,
requests, reports and other information to be delivered by Maxtor, from
time to time thereunder; and Maxtor shall in all respects comply with
and perform in respect of each such exercise. Neither the Agent nor any
Owner shall have any obligation or liability with respect to any of the
Seller's obligations under any Purchase Document.
SECTION 12.03. Further Agreements. In order to induce the Owners
to purchase interests from time to time in Subject Receivables, Maxtor hereby
acknowledges and agrees as follows:
(a) On the date hereof and as of the Closing Date, Maxtor hereby
reaffirms for the benefit of the Agent and the Owners the representations and
warranties made by Maxtor in Section 3.01 of the Receivables Contribution and
Sale Agreement, in Section 5 of the Maxtor Agreement and in the Repurchase
Agreement, respectively.
(b) Each of the Purchase Documents to which Maxtor is a party is and on
the Closing Date will be (i) the legal, valid and binding obligation of each
party thereto enforceable against Maxtor and each other party thereto in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium or other laws affecting rights of creditors generally and to general
equitable principles, and (ii) in full force and effect, and is not subject to
any dispute, offset, counterclaim or defense whatsoever.
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(c) Maxtor will, at is expense, timely and fully perform and comply in
all material respects with, and cause each of the Seller and any Selling
Affiliates to timely and fully perform and comply in all material respects with,
all provisions, covenants and other promises required to be observed by Maxtor,
such Selling Affiliate or the Seller, as applicable, under- each Purchase
Document to which it is a party, maintain, and cause the Seller and any Selling
Affiliate to maintain, each Purchase Document to which it is a party in full
force and effect, enforce, and cause the Seller and any Selling Affiliate to
enforce, each Purchase Document to which it is a party in accordance with its
respective terms, take, and cause the Seller and any Selling Affiliate to take,
all such action to such end as may be from time to time reasonably requested by
the Agent, and make, and cause the Seller or any Selling Affiliate to make, to
any party to any Purchase Document to which it is a party such demands and
requests for information and reports or for action as Maxtor or the Seller,
respectively, are entitled to make thereunder and as may be from time to time
reasonably requested by the Agent.
(d) Maxtor will promptly and in any event within five Business Days
after its receipt or delivery thereof, deliver to the Agent copies of all
notices, requests, reports, certificates, and other documents and information
delivered or received by Maxtor from time to time under or in connection with
any Purchase Document.
(e) Maxtor will not (A) cancel or terminate any Purchase Document to
which it is a party or consent to or accept any cancellation or termination
thereof, (B) amend or otherwise modify any term or condition of any Purchase
Document to which it is a party or give any consent, waiver or approval
thereunder, (C) waive any default under or breach of any Purchase Document to
which it is a party or (D) take any other action under any Purchase Document to
which it is a party not required by the terms thereof that would impair the
value of any Additional Assigned Rights or the Seller's rights or interests
thereunder or the rights or interests of the Agent or the Owners hereunder or
thereunder, or permit the Seller or any Selling Affiliate to take any of the
actions set forth in clauses (A) through (D) above with respect to any Purchase
Document to which it is a party.
SECTION 12.04. Seller Remains Liable. Anything herein to the
contrary notwithstanding, (a) the Seller shall remain liable under each Purchase
Document to which it is a party to the extent set forth therein to perform all
of its duties and obligations thereunder to the same extent as if this Agreement
had not been executed, (b) the exercise by the Agent of any of the rights
hereunder shall not release the Seller from any of its duties or obligations
under each Purchase Document to which it is a party, and (c) neither the Agent
nor the Purchaser nor any other Indemnified Party shall have any obligation or
liability under any Purchase Document by reason of this Article XII, nor shall
the Agent or the Purchaser or any other Indemnified Party be obligated to
perform any of the obligations or duties of the Seller thereunder.
SECTION 12.05. Agent Appointed Attorney-in-Fact. The Seller
hereby irrevocably appoints the Agent the Seller's attorney-in-fact, with full
authority in the place and stead of the Seller and in the name of the Seller or
otherwise, from time to time in the Agent's discretion, to take any action and
to execute any instrument which the Agent may deem
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necessary or advisable to accomplish the purposes of the assignment hereunder,
including, without limitation:
(a) to ask, demand, collect, ▇▇▇ for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in connection with the Additional Assigned Rights,
(b) to receive, indorse and collect any drafts or other
instruments, documents and chattel paper in connection therewith, and
(c) to file any claims or take any action or institute any
proceedings which the Agent may deem necessary or desirable for the
collection of any of the Additional Assigned Rights or otherwise to
enforce compliance with the terms and conditions of the Purchase
Documents or the rights of the Agent with respect to any of the
Additional Assigned Rights.
SECTION 12.06. Agent May Perform. If the Seller fails to perform
any agreement contained herein, the Agent may itself perform, or cause
performance of, such agreement, and the reasonable expenses of the Agent
incurred in connection therewith shall be payable by the Seller under Section
13.06(a).
SECTION 12.07. The Agents Duties. The powers conferred on the
Agent hereunder are solely to protect its interest in the Additional Assigned
Rights and shall not impose any duty upon it to exercise any such powers. Except
for the safe custody of any Additional Assigned Rights in its possession and the
accounting for moneys actually received by it hereunder, the Agent shall have no
duty as to any Additional Assigned Rights or as to the taking of any necessary
steps to preserve rights against any parties or any other rights pertaining to
any Additional Assigned Rights. The Agent shall be deemed to have exercised
reasonable care in the custody and preservation of any Additional Assigned
Rights in its possession if such Additional Assigned Rights are accorded
treatment substantially equal to that which it accords its own property.
SECTION 12.08. Remedies. If any Event of Termination shall have
occurred and be continuing:
(a) The Agent may exercise any and all rights and remedies of the
Seller under or in connection with each Purchase Document to which the
Seller is a party or otherwise in respect of the Additional Assigned
Rights, including, without limitation, any and all rights of the Seller
to demand or otherwise require performance of any provision of any
Purchase Document.
(b) The Agent may exercise in respect of the Additional Assigned
Rights, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of an owner of
such Additional Assigned Rights to the extent of the interest therein
assigned under this Agreement under applicable law in effect in the
State of New York.
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(c) All payments received by the Seller in respect of the
Additional Assigned Rights shall be received in trust for the benefit of
the Agent, shall be segregated from other funds of the Seller and shall
be forthwith paid over to the Agent in the same form as so received
(with any necessary endorsement).
ARTICLE XIII
MISCELLANEOUS
SECTION 13.01. Amendments, Integration, Etc. No amendment or
waiver of any provision of this Agreement, and no consent to any departure by
the Seller herefrom, shall in any event be effective unless the same shall be in
writing and signed by the Agent, each Owner and the Purchaser, and then such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. This Agreement contains a final
and complete integration of all prior expressions by the parties hereto with
respect to the subject matter hereof and shall constitute the entire agreement
among the parties hereto with respect to the subject matter hereof, superseding
all prior oral or written understandings.
SECTION 13.02. Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including communication by telefax) and mailed, telefaxed or delivered, as to
each party hereto, at its address and telefax number set forth under its name on
the signature pages hereof or in the case of any Assignee, at its address set
forth in the notice delivered to the Agent pursuant to Section 9.01 (a) or at
such other address or telefax number as shall be designated by such party in a
written notice to the other parties hereto. All such notices and communications
shall, when mailed or telefaxed, be effective when delivered by mail or when
telefaxed, respectively, except that notices and communications to the Agent,
the Trustee and the Owners pursuant to Article II shall not be effective until
received by the Agent, the Trustee or the Owners, as the case may be.
SECTION 13.03. No Waiver; Remedies. No failure on the part of any
Owner, Indemnified Party, the Purchaser, the Agent, the Seller or the Trustee to
exercise, and no delay in exercising, any right under any Purchase Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right under any Purchase Document preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 13.04. Binding Effect; Assignability. This Agreement
shall be binding upon and inure to the benefit of the Seller, the Agent, the
Purchaser, the Trustee, each Owner and each Indemnified Party and their
respective successors and assigns, except that the Seller shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Agent. This Agreement shall create and constitute the
continuing obligation of the parties hereto in accordance with its terms, and
shall remain in full force and effect until the Collection Date; provided,
however, that rights and remedies with respect to the indemnification
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provisions of this Agreement shall be continuing and shall survive any
termination of this Agreement.
SECTION 13.05. Governing Law. This Agreement and the Assignments
shall be governed by, and construed in accordance with, the laws of the State of
California, except (i) to the extent that the perfection or the effect of
non-perfection of the interests of the Owners, or remedies hereunder, in respect
of the Seller Assets in respect thereof are governed by the laws of a
jurisdiction other than the State of California and (ii) for the rights, duties,
privileges, immunities and indemnities of the Trustee, which shall be governed
by the laws of the State of New York.
SECTION 13.06. Costs, Expenses and Taxes. (a) In addition to the
rights of indemnification granted to the Indemnified Parties under Article X
hereof, the Seller agrees to pay on demand all costs and expenses in connection
with the preparation, execution, delivery, periodic auditing (to the extent the
costs and expenses related thereto are required to be paid by the Seller
pursuant to Section 5.01 (c)), modification and amendment of the Purchase
Documents and the other documents to be delivered hereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Agent, with respect thereto and with respect to advising the Agent as to its
rights and remedies under the Purchase Documents and the other documents to be
delivered hereunder. The Seller further agrees to pay on demand all costs and
expenses, if any (including, without limitation, reasonable counsel fees and
expenses), in connection with the enforcement (whether through negotiations,
legal proceedings or otherwise) of the Purchase Documents and the other
documents to be delivered hereunder, including, without limitation, reasonable
counsel fees and expenses in connection with the enforcement of rights under
this Section 13.06(a).
(b) In addition, the Seller shall pay when due (to the extent not
already included within the computation of the CP Rate) (i) any and all
commissions of placement agents and dealers in respect of the Commercial Paper
Notes of the Purchaser issued to fund the Purchase or maintenance of any
Purchased Interest, (ii) any and all costs and expenses of any issuing agent or
other Person responsible for the administration of the Purchaser's Commercial
Paper Note program in connection with the preparation, completion, issuance,
delivery or payment of Commercial Paper Notes issued to fund the Purchase or
maintenance of any Purchased Interest, and (iii) any and all stamp and other
taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing, recording or searching in respect of, or
enforcement, of the Purchase Documents and the other documents to be delivered
hereunder, and agrees to save each Indemnified Party harmless from and against
any and all liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes and fees (including, without limitation, sales taxes,
shipping charges or other similar taxes and charges due on merchandise or
services sold by the Seller, Maxtor or any Selling Affiliate to Obligors),
provided that each Owner will pay (or reimburse the Seller for) all property,
excise or similar taxes and any other taxes imposed by reason of ownership of
Subject Receivables, but only to the extent of the percentage interest therein
represented by the Purchased Interests.
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(c) The Seller also shall pay on demand all other costs, expenses
and taxes (excluding income taxes) incurred by each Owner or any general or
limited partner or shareholder of each such Owner ("Other Costs"), including,
without limitation, (i) any and all costs relating to all arrangements
contemplated hereby with any of the Lock Box Banks, (ii) the costs of auditing
the Purchaser's books by certified public accountants and of rating each Owner's
Commercial Paper Notes by independent financial rating agencies, the cost of
issuing each Owner's Commercial Paper Notes, (iii) the taxes (excluding income
taxes) resulting from each Owner's operations, (iv) the reasonable fees and
disbursements of counsel for each Owner with respect to advising as to rights
and remedies under Purchase Documents or the agreements and documents entered
into in connection therewith, the enforcement of the Purchase Documents or the
agreements and documents entered into in connection therewith, or advising as to
matters relating to each Owner's operations or (v) advising the Purchaser or any
general or limited partner or shareholder of the Purchaser as to the issuance of
the Purchaser's Commercial Paper Notes and acting in connection with such
issuance.
SECTION 13.07. No Proceedings. (a) The Seller and the Agent each
hereby agree that it will not institute against the Purchaser any proceeding of
the type referred to in Section 7.01(g) so long as any Commercial Paper Notes
issued by the Purchaser shall be outstanding or there shall not have elapsed one
year plus one day since the last day on which any such Commercial Paper Notes
shall have been outstanding.
(b) Each of the parties hereto hereby agrees that they will not
institute against the Seller any proceeding of the type referred to in Section
7.01(g).
SECTION 13.08. Confidentiality. Except to the extent otherwise
required by applicable law, each of the parties hereto agrees to maintain the
confidentiality of the Purchase Documents (and all drafts thereof) and not to
disclose any Purchase Document or such drafts to third parties (other than to
its directors, officers, employees, accountants or counsel); provided, however,
that the Agreement may be disclosed to third parties to the extent such
disclosure is (i) required by any applicable securities laws, (ii) made solely
to persons who are legal counsel for the purchaser or underwriter of such
securities, (iii) limited in scope to the provisions of Articles V, VII, X and,
to the extent defined terms are used in Articles V, VII and X, such terms
defined in Article I of this Agreement and (iv) made pursuant to a written
agreement of confidentiality in form and substance reasonably satisfactory to
the Agent.
SECTION 13.09. Intent of Agreement. It is the intention of this
Agreement that each Purchase and deposit to the Seller's Account shall convey to
the Owner, to the extent of its Purchased Interest, an undivided ownership
interest in the Seller Assets and that such transaction shall constitute a
purchase and sale and not a secured loan for all purposes other than for federal
income tax purposes. If, notwithstanding such intention, the conveyance of the
Purchased Interest from the Seller to any Owner shall ever be recharacterized as
a secured loan and not a sale, it is the intention of this Agreement that this
Agreement shall constitute a security agreement under applicable law, and that
the Seller shall be deemed to have granted to the Agent, for the benefit of the
Beneficiaries, a duly perfected first priority security interest in all of the
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Seller's right, title and interest in, to and under the Seller Assets, free and
clear of Adverse Claims.
SECTION 13. 10. Execution in Counterparts; Severability. This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and
the same agreement. In case any provision in or obligation under this Agreement
or the Assignments should be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
MAXTOR RECEIVABLES
CORPORATION
By: /s/ Authorized Signatory
--------------------------------------
Title: President
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Attention: Raja Venkatesh
Telefax No.: (▇▇▇) ▇▇▇-▇▇▇▇
MAXTOR
CORPORATION
By: /s/ Authorized Signatory
--------------------------------------
Title: Vice President and
Chief Financial Officer
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Attention: Raja Venkatesh
Telefax No.: (▇▇▇) ▇▇▇-▇▇▇▇
CORPORATE RECEIVABLES
CORPORATION, as Purchaser
By: Citicorp North America, Inc., as
Attorney-in-Fact
By: Authorized Signatory
--------------------------------------
Vice President
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: President
Telefax No.: (▇▇▇) ▇▇▇-▇▇▇▇
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CITICORP NORTH AMERICA, INC.,
as Agent
By: /s/ Authorized Signatory
--------------------------------------
Vice President
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Asset
Funding Department
Telefax No.: (▇▇▇) ▇▇▇-▇▇▇▇
BANKERS TRUST COMPANY.
as Trustee
By: /s/ Authorized Signatory
--------------------------------------
Title: ▇▇▇▇▇ ▇▇▇▇
VICE PRESIDENT
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust and
Agency Group
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
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RECEIVABLES PURCHASE AND SALE AGREEMENT
Dated as of April 8, 1998
MAXTOR RECEIVABLES CORPORATION, a California corporation (the
"Seller"), MAXTOR CORPORATION, a Delaware corporation (together with any
successors thereto appointed in accordance with Article VI hereof, the
"Collection Agent"), the banks, financial institutions and other institutional
lenders listed on the signature pages hereof (together with their successors and
assigns, each a "Secondary Purchaser" and collectively, the "Secondary
Purchasers"), CITICORP NORTH AMERICA, INC., a Delaware corporation ("CNAI"), as
agent for the Secondary Purchasers and the other Owners (as defined below) (the
"Agent") and BANKERS TRUST COMPANY, a New York banking corporation, as trustee
(the "Trustee"), agree as follows:
PRELIMINARY STATEMENTS:
(1) Certain terms which are capitalized and used throughout this
Agreement are defined in Article I of this Agreement.
(2) Maxtor Corporation, a Delaware corporation ("Maxtor"),
Corporate Receivables Corporation, a California corporation (the "Purchaser")
and CNAI, as Agent, were each party to the Receivables Purchase and Sale
Agreement dated as of March 30, 1996 (the "Original Agreement"), whereby Maxtor
had from time to time sold to the Purchaser, and the Purchaser had from time to
time purchased from Maxtor, "Purchased Interests" (as defined in the Original
Agreement).
(3) On the Closing Date, the Purchaser and Maxtor each will have
entered into, and fully performed, the Receivables Repurchase Agreement dated as
of April 8, 1998 (as amended, supplemented or otherwise modified from time to
time, the "Repurchase Agreement"), whereby Maxtor will have repurchased each
"Purchased Interest" previously purchased by the Purchaser pursuant to the
Original Agreement.
(4) The Seller will on the Closing Date purchase from Maxtor
"Receivable Assets" pursuant to a Receivables Contribution and Sale Agreement
between the Seller and Maxtor dated as of April 8, 1998. The Seller intends to
sell interests in "Receivable Assets" to the Purchaser represented by "
Purchased Interests" under the Receivables Purchase and Sale Agreement between
the Seller, the Purchaser, the Agent, the Trustee, and Maxtor dated as of April
8, 1998 (as amended, supplemented or modified from time to time in accordance
with its terms, the "Receivables Purchase and Sale Agreement").
(5) In addition, the Seller intends to sell interests in Subject
Receivables to the Secondary Purchasers represented by Purchased Interests on
the terms and subject to the conditions of this Agreement.
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(6) The Trustee has agreed to (i) maintain certain accounts in
which Collections are held, (ii) at the written direction of the Collection
Agent, distribute such Collections, (iii) review the Purchaser Reports and the
Daily Reports prepared by the Collection Agent and (iv) perform various other
functions in connection therewith, in each case on the terms and conditions
hereinafter set forth.
(7) The parties hereto have agreed, on the terms and conditions
hereinafter set forth, to provide for, among other things, the sale by the
Seller to the Secondary Purchasers of such Purchased Interests.
(7) CNAI has been requested and is willing to act as Agent.
NOW, THEREFORE, the parties agree, effective as of the Closing
Date and subject to the satisfaction of the conditions precedent set forth in
Section 3.01 hereof, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Additional Assigned Rights" means all of the Seller's right,
title and interest in, to and under the following:
(i) each Purchase Document to which it is a party;
(ii) all rights to receive moneys due and to become due
under or pursuant to each such Purchase Document;
(iii) all rights to receive proceeds of any indemnity,
warranty or guaranty with respect to each such Purchase
Document;
(iv) claims for damages arising out of or for breach of or
default under each such Purchase Document;
(v) the right to perform under each such Purchase Document
and to compel performance and otherwise exercise all remedies
thereunder; and
(vi) all proceeds of any and all of the foregoing Additional
Assigned Rights (including, without limitation, proceeds which
constitute property of the types described in clauses (i)
through (v)).
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"Adjusted Eurodollar Rate" means, with respect to any Purchased Interest
for any period, an interest rate per annum equal to the rate per annum obtained
by dividing (i) the rate per annum at which deposits in U.S. Dollars are offered
by the principal office of Citibank in London, England to prime banks in the
London interbank market at 11:00 a.m. (London time) two Business Days before the
first day of such period in an amount substantially equal to the amount to which
the "Adjusted Eurodollar Rate" is to be applied and for a period equal to such
period by (ii) a percentage equal to 100% minus the Eurodollar Reserve
Percentage for such period.
"Adverse Claim" means any claim of ownership or any lien, security
interest or other charge or encumbrance, or other type of preferential
arrangement having the effect of a lien or security interest.
"Affiliate" means (i) as to any Person, any other Person that (x)
directly or indirectly, is in control of, is controlled by or is under common
control with such Person (provided that if such Person is a proposed Selling
Affiliate at the time of determination, a Person shall be deemed to "control"
another Person only if such Person, directly or indirectly, beneficially owns or
holds at least 51 % of the issued and outstanding shares of the capital stock of
such other Person), or (y) is a director or officer of such Person or of any
other Person that, directly or indirectly, is in control of, is controlled by or
is under common control with such Person, and (ii) as to CNAI or the Purchaser,
shall also include the Purchaser and CNAI, respectively, and any other Person
who has. a relationship to CNAI comparable to that of the Purchaser.
"Affiliated Obligor" means any Obligor which is an Affiliate of another
Obligor.
"Agent" has the meaning specified in the recital of parties to this
Agreement.
"Agent's Account" means the special account (account number ▇▇▇▇▇▇▇▇) of
the Agent maintained at the office of Citibank, ABA No.: ▇▇▇▇▇▇▇▇▇; at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇; Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Re: Maxtor Receivables
Corporation.
"Allocation Percentage" means, at any time, the sum of the Purchased
Interests (expressed in percentage terms) at such time.
"Alternate Base Rate" means, with respect to any Purchased Interest for
any period, a fluctuating interest rate per annum in effect from time to time,
which rate per annum shall at all times be equal to the sum of (1) 2%, and (2)
the highest of:
(i) the rate of interest announced publicly by Citibank in New
York, New York from time to time as Citibank's base rate;
(ii) the sum (adjusted to the nearest 1/4 of 1% or, if there is
no nearest 1/4 of 1%, to the next higher 1/4 of 1%) of (A) 1/2 of 1%
per annum, plus (B) the rate obtained by dividing (1) the latest
three-week moving average of secondary market morning offering rates in
the United States for three-month certificates of deposit of major
United States money market banks, such three-week moving average
(adjusted to the basis of a year of
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360 days) being determined weekly on each Monday (or, if such day is not
a Business Day on the next succeeding Business Day) for the three-week
period ending on the previous Friday by Citibank on the basis of such
rates reported by certificate of deposit dealers to and published by the
Federal Reserve Bank of New York or, if such publication shall be
suspended or terminated, on the basis of quotations for such rates
received by Citibank from three certificate of deposit dealers of
recognized standing selected by Citibank, by (2) a percentage equal to
100% minus the average of the daily percentages specified during such
three-week period by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve
requirement (including, but not limited to, any emergency, supplemental
or other marginal reserve requirement) for Citibank with respect to
liabilities consisting of or including (among other liabilities)
three-month U.S. Dollar non-personal time deposits in the United States,
plus (C) the average during such three-week period of the annual
assessment rates estimated by Citibank for determining the then current
annual assessment payable by Citibank to the Federal Deposit Insurance
Corporation (or any successor) for insuring U.S. Dollar deposits of
Citibank in the United States; and
(iii) 1/2 of 1% per annum above the fluctuating interest rate
per annum equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day (or, if
such day is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average of the
quotations for such day for such transactions received by Citibank from
three Federal funds brokers of recognized standing selected by it.
"Amortization Period" means the period beginning on the Termination Date
and ending upon the payment in full to each Owner of each Purchased Interest of
the Capital with respect thereto, all accrued and unpaid yield thereon and all
other amounts owed to any Beneficiaries under any Purchase Document.
"Arrangement Fee" has the meaning specified in Section 2.08.
"Assignee" means any Person as the assignee of all or any portion of any
Purchased Interest pursuant to Section 9.01.
"Assignee Rate" means, with respect to any Purchased Interest for any
period, an interest rate per annum equal to the Adjusted Eurodollar Rate plus
3%; provided, however, that if (i) it shall become unlawful for any Bank to
obtain funds in the London interbank market in order to purchase, fund or
maintain any Purchased Interest hereunder or deposits in dollars (in the
applicable amounts) are not being offered by banks in the London interbank
market, or (ii) any Bank is unable to establish the Adjusted Eurodollar Rate for
any applicable period due to the amount of applicable Capital to which the
Adjusted Eurodollar Rate is to be applied, the period in respect of which the
Adjusted Eurodollar Rate is to be applied, or circumstances affecting the London
interbank market generally or (iii) a majority of Owners notifies the Seller and
the Agent of their determination that the Adjusted Eurodollar Rate will not
adequately reflect the cost of funding or maintaining any Purchased Interest
hereunder (until a majority of Owners shall have notified the Seller and the
Agent that such majority has determined that the Adjusted Eurodollar Rate will
adequately
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reflect such cost), then, in each case, the Assignee Rate shall be the Alternate
Base Rate in effect from time to time; provided further that if (i) any Purchase
is made on a day which is not the first day of an Interest Period, and (ii) any
Purchase is made without the Agent having received notice in writing thereof by
11:00 a.m. (New York City time) on the third Business Day prior to the date of
such Purchase, then, in each case, the Assignee Rate shall, in respect of the
Purchased Interest so purchased, be the Alternate Base Rate in effect from time
to time; provided that following the occurrence and during the continuation of
an Event of Termination, the "Assignee Rate" shall be the applicable interest
rate per annum determined pursuant to the provisions set forth above plus 2% per
annum.
"Assignment" means an assignment by the Seller to the Agent in
substantially the form of Exhibit A hereto, evidencing ownership of a Purchased
Interest.
"Available Investments" means (i) short-term obligations of the United
States or any agency thereof, (ii) commercial paper issued from time to time by
the Purchaser, and any commercial paper having, at the time of acquisition
thereof, a rating of A-1 or better from S&P or P-1 from ▇▇▇▇▇'▇, (iii) money
market mutual funds registered under the Investment Company Act of 1940, as
amended, having a rating at the time of such investment, in the highest
investment category granted by S&P and ▇▇▇▇▇'▇ (including, without limitation,
funds for which the Trustee or any of its Affiliates is investment manager or
investment adviser) and (iv) in connection with any Purchased Interest, other
promissory notes, certificates of deposit or other debt instruments selected by
the Owner of such Purchased Interest and approved by the Agent.
"Average Maturity" means, on any day, that period (expressed in days)
equal to the average maturity of the Subject Receivables as shall be calculated
by the Collection Agent as set forth in the most recent Purchaser Report in
accordance with the provisions thereof; provided, however, that, if the Agent,
upon consultation with Maxtor, shall in its reasonable judgment disagree with
any such calculation, the Agent may recalculate the Average Maturity for such
day.
"Banks" means the banks and financial institutions and other
institutional lenders (other than the Agent) parties to this Agreement, together
with their successors and assigns.
"Beneficiaries" means the Trustee, the Purchaser, the Banks, the Owners,
the Participants and the Agent.
"Breakage Costs" means, with respect to a Bank and for each reduction of
Capital for a Purchased Interest other than such reductions occurring on a
Settlement Date, an amount equal to the sum of (i) the additional interest at
the Assignee Rate (calculated without taking into account any breakage costs)
which would have accrued on an amount equal to the amount of such reduction, or
its pro rata portion thereof, from the time of such reduction through the last
day of the period for which the Adjusted Eurodollar Rate has been set minus (ii)
the income
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received by such Bank through the last day of such period from investing the
proceeds of such reductions, or its pro rata portion of such proceeds, plus
(iii) any loss, cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Bank to fund or
maintain its share of such Capital; provided that, if the Assignee Rate at the
time of such reduction is determined by reference to the Alternate Base Rate,
then the amount under this clause shall be deemed to be zero.
"Business Day" means any day on which banks are not authorized or
required to close in New York City and, in connection with the Adjusted
Eurodollar Rate, on which dealings are carried on in the London interbank
market.
"Capital" of any Purchased Interest means, at any time, the original
amount paid to the Seller for such Purchased Interest at the time of its
acquisition by the Secondary Purchasers pursuant to Sections 2.01 and 2.02, in
each case reduced from time to time by Collections distributed on account of
such Capital pursuant to Section 2.06; provided that if such Capital shall have
been reduced by any distribution and thereafter all or a portion of such
distribution is rescinded or must otherwise be returned for any reason, such
Capital shall be increased by the amount of such rescinded or returned
distribution, as though it had not been made.
"Citibank" means Citibank, N.A., a national banking association.
"Closing Date" means the date on which the initial Purchase is made
under the Receivables Purchase and Sale Agreement.
"CNAI" has the meaning specified in the recital of parties to this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated and rulings issued thereunder.
"Collection Agent" has the meaning specified in the recital of parties
to this Agreement.
"Collection Agent Fee" has the meaning specified in Section 2.08.
"Collection Date" means the date following the earlier to occur of (i)
the Settlement Date on which the aggregate Capital for all Purchased Interests
shall have been reduced to zero and each of the Indemnified Parties shall have
received all Yield, Collection Agent Fees, Trustee's Fee and other fees and
other amounts payable to it hereunder and under the other Purchase Documents,
with respect to the Purchased Interests or otherwise and (ii) the date occurring
two years after the Termination Date, provided that the Seller, the Company,
Maxtor and the Selling Affiliates, respectively, shall have paid in fall all
amounts owed by them hereunder and under the other Purchase Documents prior to
such date.
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"Collection Delay Period" means ten (10) Business Days or such other
number of days as the Agent may reasonably select upon three (3) Business Days'
notice to the Seller.
"Collections" means, with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable, including, without
limitation, all cash proceeds of finance charges and Related Security with
respect to such Receivable, and any Collection of such Receivable deemed to have
been received pursuant to Section 2.05(f), and shall also include all
investments, and all amounts earned as a result of such investments, of the
Collections held by the Agent pursuant to Sections 6.06 and 6.07.
"Company" means Hyundai Heavy Industries Co., Ltd., a company
incorporated and existing under the laws of the Republic of Korea.
"Company/Maxtor Agreement" means an agreement in substantially the form
of Exhibit D-1 hereto, duly executed and delivered by the parties thereto, as
such agreement may from time to time be amended, supplemented or otherwise
modified pursuant to the terms thereof and hereof.
"Company/Seller Agreement" means an agreement in substantially the form
of Exhibit D-2 hereto, duly executed and delivered by the parties thereto, as
such agreement may be amended, supplemented or otherwise modified pursuant to
the terms thereof and hereof.
"Concentration Account" has the meaning specified in Section 6.06(a).
"Concentration Account Bank" has the meaning specified in Section
6.06(a).
"Concentration Limit" means, for any Designated Obligor at any time, a
figure equal to the greater of: (a) 5%, and (b) the amount specified by the
Agent to the Seller in writing from time to time; provided that, the Agent may
cancel any "Concentration Limit" at any time upon three Business Days' notice to
the Seller; provided further that in the case of a Designated Obligor and any
Affiliated Obligor, the "Concentration Limit" for such Obligor shall be
calculated as if such Obligor and such Affiliated Obligor are one Obligor.
"Consent and Agreement" means a consent and agreement of a Selling
Affiliate, in form and substance reasonably satisfactory to the Agent, with
respect to the Selling Affiliate Receivables Contribution and Sale Agreement of
such Selling Affiliate and the rights and interests of the Seller with respect
thereto in which an interest is granted hereunder, as such consent and agreement
may from time to time be amended, supplemented or otherwise modified pursuant to
the terms thereof.
"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to any
Debt, lease, dividend, letter of credit or other obligation of another Person,
including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed (otherwise than for collection or deposit in the ordinary
course of business), co-made, or discounted or sold with recourse by that
Person, or in respect of which
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that Person is otherwise directly or indirectly liable, including, without
limitation, any such obligation for which that Person is in effect liable
through any agreement (contingent or otherwise) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to provide funds
for the payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), or to maintain
the solvency or any balance sheet, income or other financial condition of the
obligor of such obligation, or to make payment for any products, materials or
supplies or for any transportation, services or lease regardless of the
non-delivery or non-furnishing thereof, in any case if the purpose or intent of
such agreement is to provide assurance that such obligation will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such obligation will be protected (in whole or in part)
against loss in respect thereof. The amount of any Contingent Obligation shall
be equal to the amount of the obligation so guaranteed or otherwise supported.
"Contract" means an agreement between Maxtor or a Selling Affiliate and
an Obligor, in substantially the form of one of the forms of written contract
set forth in Schedule III hereto or otherwise approved by the Agent (or, for
Receivables with respect to which "Purchased Interests" have been repurchased by
Maxtor pursuant to the Repurchase Agreement, as otherwise approved by the Agent
under the Original Agreement), or in the case of an open account agreement, as
evidenced by one of the forms of invoices set forth in Schedule III hereto or
otherwise approved by the Agent (which approval shall not be unreasonably
withheld), pursuant to or under which such Obligor shall be obligated to pay for
merchandise or services from time to time (whether such merchandise or services
are to be furnished to such Obligor or to an Affiliate of such Obligor specified
in such Contract).
"Corporate Trust Office" has the meaning specified in Section 11.13.
"Credit and Collection Policy" means (i) those credit and collection
policies and practices of the Seller in effect on the date hereof and described
in Schedule II hereto, relating to Contracts and Receivables, and (ii) in the
case of any Person becoming a Selling Affiliate after the date hereof, those
credit and collection policies and practices of such Selling Affiliate in effect
on the date on which such Person shall become a Selling Affiliate and described
in Schedule II to the Selling Affiliate Receivables Contribution and Sale
Agreement of such Selling Affiliate, relating to Contracts and Receivables, in
each case of clauses (i) and (ii) as modified in compliance with Section
5.03(c).
"Cure Account" has the meaning specified in Section 6.07.
"Cure Funds" means Collections which, from time to time, are deposited
into the Cure Account.
"Cure Period" means the period beginning on and including a Pool
Non-compliance Date and ending on but excluding the earlier of (a) the first
date thereafter on which the Net Subject Receivables Balance equals or exceeds
the Required Net Subject Receivables Balance and (b) the fifth consecutive
Business Day following the occurrence of such Pool Non-compliance Date.
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"Daily Report" means an Officer's Certificate of the Collection Agent
substantially in the form of Exhibit I hereto.
"Debt" means (i) indebtedness for borrowed money, (ii) obligations
evidenced by bonds, debentures, notes or other similar instruments, (iii)
obligations with a term in excess of 90 days to pay the deferred purchase price
of property or services, (iv) obligations as lessee under leases which shall
have been or should be, in accordance with generally accepted accounting
principles, recorded as capital leases, and (v) obligations under direct or
indirect guaranties in respect of, and obligations (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds referred to in
clauses (i) through (iv) above.
"Default Ratio" means, as of any date, the ratio (expressed as a
percentage) that is obtained by dividing (i) the aggregate Outstanding Balance
of all Receivables that became Defaulted Receivables during the Fiscal Month
most recently ended on or before such date by (ii) the aggregate Outstanding
Balance (measured for each Receivable at the time of acquisition) of all
Receivables that were acquired by the Seller during the fourth Fiscal Month
immediately preceding the Fiscal Month most recently ended on or before such
date, provided that the "Default Ratio" with respect to any date prior to the
Closing Date shall be set forth on Schedule A to the Purchaser Report delivered
pursuant to Section 3.01 (z).
"Default Termination Ratio" means, as of any date, the ratio (expressed
as a percentage) that is obtained by dividing (i) the aggregate Outstanding
Balance of all Defaulted Receivables on such date by (ii) the aggregate
Outstanding Balance of all Receivables as of such date, provided that the
"Default Termination Ratio" with respect to any date prior to the Closing Date
shall be set forth on Schedule A to the Purchaser Report delivered pursuant to
Section 3.01(z).
"Defaulted Receivable" means a Receivable:
(i) as to which any payment, or part thereof, remains unpaid for
91 days or more from the original due date for such payment;
(ii) as to which the Obligor thereof has taken any action, or
suffered any event to occur, of the type described in Section 7.01 (g);
or
(iii) which, consistent with the applicable Credit and
Collection Policy, would be written off the Seller's, Maxtor's or any
Selling Affiliate's books, as applicable, as uncollectible.
"Delinquency Ratio" means, as of any date, the ratio (expressed as a
percentage) that is obtained by dividing (i) the aggregate Outstanding Balance
of all Receivables that were Delinquent Receivables on such day by (ii) the
aggregate Outstanding Balance of all Receivables on such day; provided that the
"Delinquency Ratio" with respect to any date prior to the Closing Date shall be
set forth on Schedule A to the Purchaser Report delivered pursuant to Section
3.01 (z).
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"Delinquent Receivable" means a Receivable that is not a Defaulted
Receivable and:
(i) as to which any payment, or part thereof, remains unpaid for
31 days or more from the original due date for such payment; or
(ii) which, consistent with the applicable Credit and Collection
Policy, would be classified as delinquent by the Seller, Maxtor or any
Selling Affiliate, as applicable.
"Deposit Date" means each Business Day on which any Collections are
deposited in the Concentration Account.
"Designated Obligor" means, at any time, each Obligor; provided,
however, that any Obligor shall cease to be a Designated Obligor upon at least
three Business Days' notice by the Agent to the Seller, or by the Seller to the
Agent.
"Dilution Horizon Factor" means, as of any date, the fraction (i) the
numerator of which is the aggregate Outstanding Balance (measured for each
Receivable at the time of acquisition) of all Eligible Receivables and Foreign
Receivables acquired by the Seller during the two Fiscal Months most recently
ended on or before such date and (ii) the denominator of which is the
Outstanding Balance of all Eligible Receivables as of the last day of the Fiscal
Month most recently ended on or before such date; provided that the "Dilution
Horizon Factor" with respect to any date prior to the Closing Date shall be set
forth on Schedule A to the Purchaser Report delivered pursuant to Section 3.01
(z).
"Dilution Ratio" means, as of any date, a fraction (expressed as a
percentage), the numerator of which is (i) the aggregate Dilutions recorded
during the Fiscal Month most recently ended on or before such date, and the
denominator of which is (ii) the aggregate Outstanding Balance (measured for
each Receivable at the time of acquisition) of all Receivables that were
acquired by the Seller during the second Fiscal Month most recently ended on or
before such date; provided that the "Dilution Ratio" with respect to any date
prior to the Closing Date shall be set forth on Schedule A to the Purchaser
Report delivered pursuant to Section 3.01 (z).
"Dilution Reserve" or "DR" means, on any date, an amount equal to:
DR = NSRB x DRP
where: NSRB = Net Subject Receivables Balance as of the
close of such Business Day
DRP = The Dilution Reserve Percentage, as of the
close of business of the Collection Agent on
such date.
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"Dilution Reserve Percentage" means, as of any date, the product of (A)
the sum of (i) the product of (x) one and one-half (1.5) (y) the average of the
Dilution Ratios calculated for each of the twelve (12) Fiscal Months most
recently ended on or before such date and (ii) the Dilution Volatility Factor as
of such date, and (B) the Dilution Horizon Factor as of such date.
"Dilution Volatility Factor" means, as of any date, a percentage equal
to the product of (A) the amount by which (i) the highest Dilution Ratio
calculated for any Fiscal Month during the 12 Fiscal Month period most recently
ended on or before such date exceeds (ii) the average of the Dilution Ratio
calculated for each Fiscal Month during such period, and (B) the ratio of (i)
the highest Dilution Ratios calculated for any Fiscal Month during such period
to (ii) the average of the Dilution Ratios calculated for each Fiscal Month
during such period.
"Dilutions" means, for any period, the aggregate amount of any
reductions or cancellations of the Outstanding Balance of the Subject
Receivables for any reason other than (i) the Obligors in respect thereto having
made payments thereon; or (ii) the Seller having written off such Subject
Receivables in accordance with the Credit and Collection Policy.
"Dynamic Loss Reserve Percentage" means, as of any date, the product of
(i) the highest average of Default Ratios for any period of three (3)
consecutive Fiscal Months, ending during the preceding twelve (12) Fiscal
Months, (ii) two (2), and (iii) the Loss Horizon Ratio as of such date.
"Eligible Institution" means a depository institution organized under
the laws of the United States of America or any state thereof or the District of
Columbia (or any domestic branch of a foreign bank authorized under any such
laws), (a) whose senior long-term unsecured debt obligations are rated at least
A- or better by S&P and A3 or better by Moody's, and (b) which is subject to
regulation regarding fiduciary funds on deposit substantially similar to 12
C.F.R. Section 9.10(b), if applicable, and (c) which has a combined capital and
surplus of at least $100,000,000.
"Eligible Receivable" means, at any time, a Receivable:
(i) the Obligor of which is a United States resident, is not an
Affiliate of any of the parties hereto or of any Selling Affiliate at
such time, and is not a government or a governmental subdivision or
agency;
(ii) the Obligor of which at the time of any Purchase of an
interest therein under this Agreement is a Designated Obligor;
(iii) the Obligor of which at the time of any Purchase of an
interest therein under this Agreement is not the Obligor of Defaulted
Receivables in an aggregate amount in excess of 10% of the aggregate
Outstanding Balance of all Subject Receivables of such Obligor;
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(iv) which at the time of any Purchase of an interest therein
under this Agreement is not a Defaulted Receivable or Delinquent
Receivable except for Delinquent Receivables at the time of the initial
purchase hereunder which were "Delinquent Receivables" under the
Original Agreement;
(v) which, according to the Contract related thereto, is
required to be paid in full either (x) within no more than 90 days, of
the original billing date;
(vi) which is an account receivable representing all or part of
the sales price of merchandise, insurance and services within the
meaning of Section 3(c)(5) of the Investment Company Act of 1940, as
amended;
(vii) a purchase of which with the proceeds of notes would
constitute a "current transaction" within the meaning of Section 3(a)(3)
of the Securities Act of 1933, as amended;
(viii) which is an "account" within the meaning of Section 9-106
of the UCC of the jurisdiction(s) the law of which governs the
perfection of the interest created by any Purchased Interest;
(ix) which is denominated and payable only in U.S. dollars in
the United States;
(x) which is assignable and arises under a Contract which has
been duly authorized, executed and delivered by each of the parties
thereto and which, together with such Receivable, is in full force and
effect and on the date of acquisition thereof by the Seller constitutes
the legal, valid and binding obligation of the Obligor of such
Receivable enforceable against such Obligor in accordance with its
terms, has not been subordinated by the Seller, Maxtor or the Selling
Affiliate, as applicable, to any other indebtedness of such Obligor and
is not subject to any existing, asserted or effected dispute, offset,
counterclaim or defense whatsoever (except the discharge in bankruptcy
or other insolvency proceeding of such Obligor);
(xi) which, together with the Contract related thereto, on the
date of acquisition thereof by the Seller does not contravene in any
material respect any laws, rules or regulations applicable thereto
(including, without limitation, laws, rules and regulations relating to
usury, consumer protection, truth in lending, fair credit billing, fair
credit reporting, equal credit opportunity, fair debt collection
practices and privacy) and with respect to which no party to the
Contract related thereto is in violation of any such law, rule or
regulation in any material respect;
(xii) with respect to which performance (other than by the
Obligor thereof, or by the Seller, Maxtor or any Selling Affiliate, as
applicable, under any related warranty to the extent not required to
have been performed by the Seller, Maxtor or such Selling Affiliate by
the time of determination) under the related Contract has been
completed;
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(xiii) which is, concurrently with the time of the acquisition
thereof by the Seller, legally and beneficially owned by the Seller free
and clear of any Adverse Claim except as created hereunder;
(xiv) which (A) on the date of the acquisition thereof by the
Seller satisfies all applicable requirements of the applicable Credit
and Collection Policy and (B) complies with such other criteria and
requirements (other than those relating to the collectibility of such
Receivable) as the Agent may from time to time reasonably specify to the
Seller prior to such date; and
(xv) as to which, at least five Business Days prior to the date
of acquisition thereof by the Seller, the Agent has not notified the
Seller that the Agent has determined, in its reasonable discretion, that
such Receivable (or class of Receivables) is not acceptable for purchase
by the Secondary Purchasers hereunder.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" means any Person who for purposes of Title IV of ERISA
is a member of the Seller's, Maxtor's or any Selling Affiliate's controlled
group, or under common control with the Seller, Maxtor or any Selling Affiliate,
within the meaning of Section 414 of the Code.
"ERISA Event" means (i) the occurrence with respect to a Plan of a
reportable event, within the meaning of Section 4043 of ERISA, unless the 30-day
notice requirement with respect thereto has been waived by the PBGC; (ii) the
provision by the administrator of any Plan of a notice of intent to terminate
such Plan, pursuant to Section 4041(a)(2) of ERISA (including any such notice
with respect to a plan amendment referred to in Section 4041 (e) of ERISA);
(iii) the cessation of operations at a facility of the Seller, Maxtor or any
Selling Affiliate or any ERISA Affiliate of any thereof in the circumstances
described in Section 4062(e) of ERISA; (iv) the withdrawal by the Seller, Maxtor
or any Selling Affiliate or any ERISA Affiliate of any thereof from a Multiple
Employer Plan during a plan year for which it was a substantial employer, as
defined in Section 4001(a)(2) of ERISA; (v) the conditions set forth in Section
302(f)(1)(A) and (B) of ERISA to the creation of a lien upon property or rights
to property of the Seller, Maxtor or any Selling Affiliate or any ERISA
Affiliate of any thereof for failure to make a required payment to a Plan are
satisfied; (vi) the adoption of an amendment to a Plan requiring the provision
of security to such Plan, pursuant to Section 307 of ERISA; or (vii) the
institution by the PBGC of proceedings to terminate a Plan, pursuant to Section
4042 of ERISA, or the occurrence of any event or condition described in Section
4042 of ERISA that could constitute grounds for the termination of, or the
appointment of a trustee to administer, a Plan.
"Eurodollar Increased Costs" means an increase in the cost to any Owner
of agreeing to purchase or purchasing, or maintaining the ownership of, any
Purchased Interest in respect of which Yield is computed by reference to the
Adjusted Eurodollar Rate due to either (i) the
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introduction of or any change (other than any change by way of imposition or
increase of the Eurodollar Reserve Percentage) in or in the interpretation of
any law or regulation, or (ii) the compliance with any guideline or request from
any central bank or other governmental authority (whether or not having the
force of law).
"Eurodollar Reserve Percentage" means, with respect to any Purchased
Interest for any period, the reserve percentage applicable two Business Days
before the first day of such period under regulations issued from time to time
by the Board of Governors of the Federal Reserve System (or any successor) (or,
if more than one such percentage shall be so applicable, the daily average of
such percentages for those days in such period during which any such percentage
shall so be applicable) for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve requirement)
for Citibank with respect to liabilities or assets consisting of or including
"eurocurrency liabilities" as that term is used in Regulation D, as in effect
from time to time, of the Board of Governors of the Federal Reserve System (or
with respect to any other category of liabilities that includes deposits by
reference to which the Adjusted Eurodollar Rate is determined) having a term
equal to such period.
"Event of Insecurity" means any Event of Termination or Incipient Event
of Termination or any failure of any condition set forth in Section 3.02(b)(iv)
to be satisfied, provided, that the Seller is promptly notified of any such
failure (if such failure or event occurs as a result of a deemed rating) of any
condition set forth in Section 3.02(b)(iv).
"Event of Termination" has the meaning specified in Section 7.01.
"Facility" means the Commitment of each Secondary Purchaser to purchase
from the Seller Purchased Interests from time to time pursuant to the terms
hereof.
"Facility Fee" has the meaning specified in Section 2.08.
"Facility Termination Date" means the earlier of April 6, 1999 or the
date of termination of the Facility pursuant to Section 2.03 or Section 7.01.
"Fee Letter" means the letter agreement regarding additional fees, dated
the date hereof, between the Seller and the Agent, as such letter agreement may
from time to time be amended, modified or supplemented pursuant to the terms
thereof.
"Financial Officer" means, with respect to any Person, the chief
financial officer, treasurer, controller or other officer or member of
management of such Person with significant responsibility for the financial
affairs of such Person.
"Fiscal Month" means an accounting period of such number of consecutive
days commencing on the day after the day as of which Maxtor closes its books of
account for a month and ending on the day as of which Maxtor next closes its
books of account for a month, as Maxtor may from time to time specify in writing
to the Agent; provided that 12 of such consecutive accounting periods shall
constitute a fiscal year of Maxtor.
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"GAAP" means generally accepted accounting principles in the United
States of America, consistently applied, in effect from time to time.
"HC" means Hyundai Corporation, a company duly organized under the laws
of the Republic of Korea.
"HEA" means Hyundai Electronics America, a California corporation.
"HEI" means Hyundai Electronics Industries Co., Ltd., a company
incorporated and existing under the laws of the Republic of Korea.
"HMM" means Hyundai Merchant Marine Co., Ltd., a company duly organized
under the laws of the Republic of Korea.
"Incipient Event of Termination" means an event which would constitute
an Event of Termination but for the requirement that notice be given or time
elapse or both.
"Included Foreign Country" means a Tier I Foreign Country or a Tier II
Foreign Country.
"Included Foreign Receivable" means, at any time, a Receivable of an
Obligor located in any Included Foreign Country which is not an Eligible
Receivable but would qualify as an Eligible Receivable except that the Obligor
of such a Receivable is not a United States resident.
"Indemnified Party" means the Secondary Purchasers, any Bank, CNAI, the
Trustee, any Owner, any Participant, the Agent, or any Affiliate of any thereof
and their respective officers, directors, employees and agents.
"Insufficiency" means, with respect to any Plan, the amount, if any, of
its unfunded benefit liabilities, as defined in Section 4001 (a)(18) of ERISA.
"Interest Period" means:
(i) with respect to the Alternate Base Rate, the period from the
Closing Date to the end of the first Settlement Period ending after the
Closing Date and thereafter a period equal to each Settlement Period,
and
(ii) with respect to the Adjusted Eurodollar Rate, the period
from the Closing Date to the first Settlement Date after the Closing
Date and thereafter a period from each Settlement Date to the first or,
upon the request of the Seller and with the consent of the Agent, second
or third next succeeding Settlement Date; provided, however, that, with
respect to any Interest Period ending on such second or third next
succeeding Settlement Date, for purposes of calculating "Yield" and the
"Yield/Fee Reserve" for any Purchased Interest with respect to
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any Settlement Date occurring prior to the end of such Interest Period,
the "Interest Period" shall be deemed for purposes of such calculations
to be the period from the previous Settlement Date to such Settlement
Date.
"Limited Foreign Country" means any Included Foreign Country designated
as a "Limited Foreign Country" in a Limited Foreign Country Notice which (i) is
delivered by the Agent to the Seller at least three Business Days prior to the
effectiveness of such designation at any time on or after any date on which (A)
the long-term public senior debt securities of such Included Foreign Country
shall not have a rating by S&P and Moody's, respectively, at least as high as
the rating of such debt securities by S&P and Moody's, respectively, on the date
hereof or, if later, the date such Limited Foreign Country became an Included
Foreign Country hereunder, (B) the Agent shall have determined that the
Secondary Purchasers or any other applicable Owner, as the case may be, does not
have a valid and perfected first priority ownership interest in any Subject
Receivable owed by any Obligor which is a resident of such Included Foreign
Country enforceable under the laws of such Included Foreign Country or the Agent
shall have determined that it, for the benefit of the Beneficiaries, does not
have a valid and perfected first priority security interest in such Subject
Receivable, (C) any of the Company's long-term public senior debt securities are
not rated at least BB+ by S&P and at least Bal by Moody's or, if such securities
are not rated by S&P and Moody's, any of such securities do not have a deemed
rating of at least BBB- and Baa3, as determined by the Agent in its sole
discretion, (D) either S&P or Moody's shall have requested such designation or
(E) there shall have been a material adverse change in the consolidated
financial condition, or the consolidated results of the operations of Maxtor and
its subsidiaries since December 30, 1996 except as and to the extent projected
or otherwise disclosed in Maxtor's quarterly reports on Form 10-Q for the fiscal
quarters ending March 29, 1997, June 28, 1997 and September 27, 1997 or in
Schedule V hereto, and (ii) specifies the reason for such designation.
"Limited Foreign Country Limit" means, with respect to any Limited
Foreign Country, the lesser of (i) a limit (which may be zero), on the aggregate
Outstanding Balance of Subject Receivables which are Included Foreign
Receivables owed by Obligors which are residents of such Limited Foreign
Country, established pursuant to a Limited Foreign Country Notice and (ii) a
limit on the aggregate Outstanding Balance of Subject Receivables which are
Included Foreign Receivables owed by Obligors which are residents of Tier II
Foreign Countries equal to the product of (a) the percentage referred to in
clause (a) of the definition of "Concentration Limit" multiplied by (b) the Net
Subject Receivables Balance as of such date.
"Limited Foreign Country Notice" means a written notice by the Agent to
the Seller delivered in accordance with the definition of Limited Foreign
Country with respect to any Included Foreign Country, establishing for such
Included Foreign Country a Limited Foreign Country Limit.
"Lock Box Account" has the meaning specified in Section 6.06(b).
"Lock Box Agreement" has the meaning specified in Section 6.06(b).
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"Lock Box Bank" has the meaning specified in Section 6.06(b).
"Loss Horizon Ratio" means, as of any date, the fraction (i) the
numerator of which is the Outstanding Balance (measured for each Receivable at
the time of acquisition) of all Receivables acquired by the Seller during the
four Fiscal Months most recently ended on or before such date and (ii) the
denominator of which is the Outstanding Balance of all Eligible Receivables and
Included Foreign Receivables as of such date, provided that the "Loss Horizon
Ratio" with respect to any date prior to the Closing Date shall be set forth on
Schedule A to the Purchaser Report delivered Section 3.01(2).
"Loss Reserve" or "LR" means, on any date, an amount equal to:
LR = NSRB x LRP
where: NSRB = Net Subject Receivables Balance as of the close
of such Business Day
LRP = The Loss Reserve Percentage as of the close of
business of the Collection Agent on such date.
"Loss Reserve Percentage" means, as of any date, the greatest of (a)
10%, (b) four (4) times the percentage referred to in clause (a) of the
definition of "Concentration Limit" and (c) the Dynamic Loss Reserve Percentage.
"Loss-to-Liquidation Ratio" means, as of any date, the ratio (expressed
as a percentage) that is obtained by dividing (i) an amount equal to the
aggregate Outstanding Balance of all Receivables that were written off by the
Seller, or that should have been written off by the Seller in accordance with
the Credit and Collection Policy, during the Fiscal Month most recently ended on
or before such date by (ii) the aggregate amount of Collections (other than any
deemed Collections) received during such Fiscal Month.
"Maxtor" has the meaning specified in Preliminary Statement 2 to this
Agreement.
"Maxtor Agreement" means an agreement in substantially the form of
Exhibit J hereto, duly executed and delivered by the parties thereto, as such
agreement may from time to time be amended, supplemented or otherwise modified
pursuant to the terms thereof and hereof.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., or any successor
thereof.
"Multiemployer Plan" means a multiemployer plan, as defined in Section
4001 (a)(3) of ERISA, to which the Seller, Maxtor or any Selling Affiliate or
any ERISA Affiliate of any thereof is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years made or
accrued an obligation to make contributions.
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"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the
Seller, Maxtor or any Selling Affiliate or an ERISA Affiliate of any thereof and
at least one Person other than the Seller, Maxtor or any Selling Affiliate,
respectively, and its ERISA Affiliates or (ii) was so maintained and in respect
of which the Seller, Maxtor or any Selling Affiliate, respectively, or such an
ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the
event such plan has been or were to be terminated.
"Net Subject Receivables Balance" means, at any time, the excess of (i)
the Outstanding Balance of the Subject Receivables existing at such time which
are Eligible Receivables or Included Foreign Receivables over (ii) the sum of,
without duplication (A) the Outstanding Balance of such Subject Receivables that
have become Defaulted Receivables at such time, plus (B) the aggregate amount by
which the aggregate Outstanding Balance of all Subject Receivables owed by each
Obligor existing at such time exceeds the product of (1) the Concentration Limit
for such Obligor as of such date multiplied by (2) the Net Subject Receivables
Balance as of such date plus (C) the aggregate amount by which the aggregate
Outstanding Balance of all such Subject Receivables which are owed by Obligors
which are residents of a Tier II Foreign Country exceeds 10% of the aggregate
Outstanding Balance of all Eligible Receivables and Included Foreign Receivables
as of such date, plus (D) the aggregate amount by which the aggregate
Outstanding Balance of all such Subject Receivables which are Included Foreign
Receivables owed by Obligors which are residents of any Limited Foreign Country
at such time therefor exceeds the Limited Foreign Country Limit for such Limited
Foreign Country, plus (E) the aggregate amount by which the aggregate
Outstanding Balance of all such Subject Receivables which are Included Foreign
Receivables exceeds 35% of the Net Subject Receivables Balance as of such date,
plus (F) the aggregate amount of Collections deposited in the Concentration
Account at such time for payment of any Subject Receivable the Obligor of which
has not been identified, plus (G) the aggregate Outstanding Balance of all
Subject Receivables in respect of which any credit memo is outstanding and
unapplied at such time, plus (H) the amount, if any, by which (i) the aggregate
Outstanding Balance of all Eligible Receivables required to be paid in full
within more than 60 days, but not more than 90 days, of the original billing
date therefor, exceeds (ii) 5% of the aggregate Outstanding Balance of all
Eligible Receivables and Included Foreign Receivables as of such date. As used
in this definition, "Net Subject Receivables Balance" means the "Net Subject
Receivables Balance" means the "Net Subject Receivables Balance" as disclosed on
the Daily Report.
"Obligor" means a Person (other than the Seller, Maxtor or any Selling
Affiliate) which is obligated to make payments pursuant to a Contract of the
type described in the definition of the term "Contract" contained in this
Section 1.01.
"Officer's Certificate" means a certificate signed by a Financial
Officer of the Seller or Collection Agent and delivered to the Trustee.
"Original Agreement" has the meaning specified in Preliminary Statement
2 to this Agreement.
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"Outstanding Balance" of any Receivable at any time means-the then
outstanding principal balance thereof.
"Owner" means, for each Purchased Interest, upon the making of the
Purchase thereof, each Secondary Purchaser; provided, however, that, upon any
assignment of all or any portion of such Purchased Interest pursuant to Article
IX, the Assignee thereof shall be the Owner thereof to the extent of such
assignment.
"Owner Collections" means, as of any date, that portion of the
Collections deposited to the Concentration Account on such date equal to the
product of (A) the Allocation Percentage on such date and (B) the aggregate
amount of such Collections.
"Participant" means, at any time for each Purchased Interest, each
Person which at such time shall have purchased from the Secondary Purchaser
which originally purchased such Purchased Interest or any successive Assignee
thereof an undivided interest in such Purchased Interest or shall have made a
commitment to the Agent to so purchase such an interest.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto performing similar functions.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, limited liability company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Pool Non-Compliance Date" means any day on which the Net Subject
Receivables Balance falls below the Required Net Subject Receivables Balance.
"Program Fee" has the meaning specified in Section 2.08.
"Pro Rata Share" means, for each Secondary Purchaser, the percentage for
such Secondary Purchaser set forth on Schedule VII hereto, which percentage
together with such percentages for all other Secondary Purchasers shall in the
aggregate equal 100%.
"Purchase" means a purchase by the Secondary Purchasers of a Purchased
Interest from the Seller pursuant to Article II hereof.
"Purchase Date" means, for any Purchased Interest, the date as of which
such Purchased Interest shall be purchased by the Secondary Purchasers from the
Seller pursuant to Article II.
"Purchase Documents" means this Agreement, the Receivables Purchase and
Sale Agreement, the Repurchase Agreement, the Assignments, the Receivables
Contribution and Sale Agreement, each Selling Affiliate Receivables Contribution
and Sale Agreement, the Company/Maxtor Agreement, the Company/Seller Agreement,
the Maxtor Agreement, each
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Consent and Agreement and the Fee Letter, and the documents and instruments
delivered in connection herewith and therewith.
"Purchased Interest" means, at any time on any date, an undivided
percentage ownership interest of the Secondary Purchasers at such time in (i)
all then outstanding Subject Receivables arising prior to the time of the most
recent computation or recomputation of such undivided percentage interest
pursuant to Section 2.04, (ii) all Related Security with respect to such Subject
Receivables, (iii) all Collections with respect to, and other proceeds of, such
Subject Receivables and Related Security and (iv) the Additional Assigned
Rights. Such undivided percentage interest shall be a fraction expressed as a
percentage and shall be computed as follows:
C + TR
------
NSRB
where: C = the Capital of such Purchased Interest at the
time of computation.
TR = the Total Reserves with respect to such
Purchased Interest at the time of computation.
NSRB = the Net Subject Receivables Balance at the time
of computation.
Each Purchased Interest shall be determined from time to time pursuant to the
provisions of Section 2.04 giving effect to the deposit of Owner Collections to
the Seller's Account as provided in Section 2.05.
"Purchase Limit" means, with respect to the Receivables Purchase and
Sale Agreement and this Agreement, in the aggregate, $150,000,000, as such
amount may be reduced pursuant to Section 2.03; provided, however, that on and
as of the Closing Date the Purchase Limit means, with respect to the Receivables
Purchase and Sale Agreement and this Agreement, in the aggregate, $100,000,000,
as such amount may be reduced pursuant to Section 2.03, until all of the
following conditions have been satisfied: (i) no Event of Insecurity has
occurred and is continuing, (ii) the Seller has provided to the Agent all
reports and information required to be provided by it under this Agreement,
including, without limitation, the Purchaser Report dated as of the Closing Date
(and all Purchaser Reports required to be provided thereafter) and each Daily
Report required hereunder, and such other reports and information as the Agent
may request, (iii) each of the documents referred to in Sections 3.01
(o),(p),(q) and (r) shall have been delivered to the Agent, in form and
substance satisfactory to it in its sole discretion, and (iv) all of the credit
facilities of Maxtor shall have been amended or any defaults thereunder waived
or cured all on terms satisfactory to the Agent in its sole discretion.
"Purchase Price" means, for any Purchased Interest, the original amount
paid to the Seller for such Purchased Interest by the Secondary Purchasers
pursuant to Section 2.02(c).
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"Purchaser" has the meaning specified in the recital of parties to this
Agreement.
"Purchaser Report" means a report, in substantially the form of Exhibit
B hereto, furnished by the Collection Agent and to the Agent and the Trustee for
each Owner pursuant to Section 2.06(e).
"Receivable" means the indebtedness of any Obligor under a Contract of
the type described in the definition of the term "Contract" arising from a sale
of merchandise or services by Maxtor or by any Selling Affiliate (whether such
merchandise or services are to be furnished to such Obligor or to an Affiliate
of such Obligor specified in such Contract), and includes the right to payment
of any interest or finance charges and other obligations of such Obligor with
respect thereto.
"Receivables Contribution and Sale Agreement" means a receivables
contribution and sale agreement in substantially the form of Exhibit H hereto,
entered into by Maxtor and the Seller, as amended, supplemented or otherwise
modified from time to time.
"Receivables Purchase and Sale Agreement" has the meaning specified in
the Preliminary Statements.
"Related Security" means with respect to any Receivable:
(i) all of the Seller's, Maxtor's and the Selling Affiliates'
interest in the merchandise (including returned merchandise), if any,
relating to the sale which gave rise to such Receivable;
(ii) all other security interests or liens and property subject
thereto from time to time purporting to secure payment of such
Receivable, whether pursuant to the Contract related to such Receivable
or otherwise, together with all financing statements signed by an
Obligor describing any collateral securing such Receivable; and
(iii) all guarantees, insurance and other agreements or
arrangements of whatever character from time to time supporting or
securing payment of such Receivable whether pursuant to the Contract
related to such Receivable or otherwise.
"Repurchase Agreement" has the meaning specified in Preliminary
Statement 3 to this Agreement.
"Required Net Subject Receivables Balance" means, as of any day of
determination, the sum of (i) the Total Reserves as of such day, plus (ii) the
aggregate Capital outstanding for all Purchased Interests on such day (computed
as if reduced by the aggregate amount of Cure Funds held in the Cure Account).
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"Responsible Official" means, when used with respect to the Trustee, any
officer within the Corporate Trust Office of the Trustee including any Managing
Director, Vice-President, Assistant Vice-President, Assistant Secretary,
Assistant Treasurer or any other officer of the Trustee who customarily performs
functions similar to those performed by any of the above designated Persons who
at the time shall be such officers, respectively, and also, with respect to a
particular matter, any other officer to whom any matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
"Revolving Period" means the period beginning on the Closing Date and
terminating on the close of business on the Business Day immediately preceding
the Termination Date.
"Secondary Purchasers" has the meaning specified in the recital of
parties to this Agreement.
"Secondary Purchasers Fee" has the meaning specified in Section 2.08.
"Seller" has the meaning specified in the recital of parties to this
Agreement.
"Seller Assets" means all of the Seller's right, title and interest in,
to and under all Receivables, all Related Security with respect thereto, all
Collections with respect thereto, all the Seller's rights, remedies, powers and
privileges with respect to such Receivables and the related Contracts existing
at the close of business of Maxtor on the Closing Date and arising from time to
time thereafter, all Additional Assigned Rights of the Seller, and all proceeds
of each of the foregoing.
"Seller Collections" means, with respect to any date, that portion of
the Collections deposited to the Concentration Account equal to the product of
(i) 100% minus the Allocation Percentage on such date times (ii) the aggregate
amount of such Collections.
"Seller's Account" has the meaning specified in Section 2.02(b).
"Selling Affiliate" means any Affiliate of the Seller which shall have
been identified by the Seller to the Agent, and approved by the Agent, in
writing as a "Selling Affiliate", provided that each such Affiliate (and, in the
case of the Selling Affiliate Receivables Contribution and Sale Agreement, the
Seller) shall have executed and delivered to the Agent a Selling Affiliate
Receivables Contribution and Sale Agreement and a Consent and Agreement
hereunder and under the Receivables Purchase and Sale Agreement, and shall have
furnished to the Agent, in form and substance reasonably satisfactory to the
Agent, (i) documents of the type described in Section 3.01 relating to such
Affiliate, such Selling Affiliate Receivables Contribution and Sale Agreement,
such Consent and Agreement and the Seller and (ii) the consent of the Company to
the addition of such Affiliate as a "Selling Affiliate" hereunder and under the
Receivables Purchase and Sale Agreement, an agreement substantially similar to
the Company/Maxtor Agreement with respect to such Affiliate and its Selling
Affiliate Receivables Contribution and Sale Agreement, and documents for the
Company of the type described in Sections 3.01(o), (p),
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(q) and (r) hereof and of the Receivables Purchase and Sale Agreement and
relating to such consent.
"Selling Affiliate Receivables Contribution and Sale Agreement" means,
with respect to any Selling Affiliate, a receivables contribution and sale
agreement, substantially in the form of Exhibit H hereto, between the Seller and
such Selling Affiliate.
"Settlement Date" means the eighth Business Day of any calendar month.
"Settlement Period" for any Purchased Interest means (i) each period
commencing on the first day of a calendar month and ending on the last day of
such calendar month for such Purchased Interest; and, on and after the
Termination Date for such Purchased Interest, such period (including, without
limitation, a period of one day) as shall be selected from time to time by the
Agent or, in the absence of any such selection, each period of thirty (30) days
from the last day of the immediately preceding Settlement Period and (ii) in the
event Maxtor is no longer acting as Collection Agent, a period of one day.
"Single Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the Seller
or an ERISA Affiliate and no Person other than the Seller and its ERISA
Affiliates or (ii) was so maintained and in respect of which the Seller or an
ERISA Affiliate could have liability under Section 4069 of ERISA in the event
such plan has been or were to be terminated.
"S&P" means Standard & Poor's Ratings Services, a division of the
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or any successor thereof.
"Subject Receivable" means, at any time, any Receivable in respect of
which the Obligor is a Designated Obligor at such time or was a Designated
Obligor on the date of Purchase of an interest therein hereunder other than any
such Receivable (x) which shall have been repurchased by the Seller as
contemplated by Section 2.05 (and in respect of which the Agent or any Owner has
not been required to return all or any portion of the payment received from the
Seller effecting such repurchase) or (y) with respect to which Collections in
the entire amount of the Outstanding Balance of such Receivable shall have been
received in respect of any Related Security supporting or securing payment of
such Receivable and applied and distributed pursuant to Sections 2.05 and 2.06
(if and so long as neither the Agent nor any Owner is at any time required to
return all or any portion of such amount for any reason).
"Termination Date" means the earlier of (i) the Facility Termination
Date and (ii) that Business Day which the Seller designates or, if the
conditions precedent in Section 3.02 are not satisfied, such Business Day which
the Agent designates, as the Termination Date by notice to the Agent (if the
Seller so designates) or to the Seller (if the Agent so designates) at least one
Business Day prior to such Business Day.
"Tier I Foreign Country" means (i) Canada, the Federal Republic of
Germany, France or the United Kingdom or (ii) any other country or territory the
inclusion of which as a "Tier I
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Foreign Country" shall have been requested by the Seller, and consented to by
the Agent (in the Agent's sole discretion) in writing.
"Tier II Foreign Country" means (i) Belgium, Denmark, Ireland, Italy,
Japan Luxembourg, The Netherlands, Norway, Portugal, Spain, Sweden or
Switzerland or (ii) any other country or territory the inclusion of which as a
"Tier II Foreign Country" shall have been requested by the Seller, and consented
to by the Agent (in the Agent's sole discretion) in writing, so long as any such
country or territory referred to in clauses (i) or (ii) is a "Limited Foreign
Country".
"Total Reserves" means, as of any date, the sum of the Loss Reserve, the
Dilution Reserve, the Yield/Fee Reserve and the Transfer Risk Reserve.
"Transfer Risk Reserve" or "TRR" means, on any date, an amount equal to:
TRR = NSRB x TRRP
where: NSRB = Net Subject Receivables Balance as of the close
of such Business Day
TRRP = The Transfer Risk Reserve Percentage, as of the
close of business of the Collection Agent on
such date.
"Transfer Risk Reserve Percentage" means, as of any date, the product of
(i) 6.8% (or such other percentage as shall be specified by the Agent in writing
from time to time), (ii) a fraction (a) the numerator of which is the
Outstanding Balance of all Included Foreign Receivables as of the last day of
the Fiscal Month most recently ended on or before such date and (b) the
denominator of which is the Outstanding Balance of all Receivables as of the
last day of the Fiscal Month most recently ended on or before such date and
(iii) the excess of (a) 100% over (b) the sum of (1) the Dynamic Loss Reserve
Percentage as of such date plus (2) the Dilution Reserve Percentage as of such
date.
"Trustee" has the meaning specified in the recital of parties to this
Agreement.
"Trustee's Account" has the meaning specified in Section 6.07.
"Trustee Accounts" has the meaning specified in Section 6.07(c).
"Trustee's Fee" has the meaning specified in Section 11.05.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the specified jurisdiction.
"United States" means the United States of America.
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"Withdrawal Liability" has the meaning given such term under Part I of
Subtitle E of Title IV of ERISA.
"Yield" means with respect to any Purchased Interest for any Settlement
Date:
ARxCxED
-------
360
where: AR = the Assignee Rate for such Purchased Interest
for such Interest Period
C = The average actual Capital outstanding for such
Purchased Interest for such Interest Period
ED = the actual number of days elapsed during such
Interest Period
provided that no provision of this Agreement shall require the payment or permit
the collection of Yield in excess of the maximum permitted by applicable law;
and provided further that Yield for any Purchased Interest shall not be
considered paid by any distribution to the extent that at any time all or a
portion of such distribution is rescinded or must otherwise be returned for any
reason.
"Yield/Fee Amount" means, with respect to any Purchased Interest for any
date, an amount equal to:
{([(AR - AS) x 1.3] + AS + PF) x C x D} + SF + TF
---------------------------------------
360
Where AR = (i) if the Assignee Rate is based on the
Alternate Base Rate, AR is the Assignee Rate on
the date occurring two Business Days prior to
the first day of such Interest Period; and (ii)
if the Assignee Rate is based on the Adjusted
Eurodollar Rate, AR is the Assignee Rate for
such Interest Period
Where: AS = 1.00% or such other percentage specified in the
first sentence of the definition of the
Assignee Rate
PF = A percentage per annum equal to the per annum
rate of the Program Fee in effect on the first
day of the Settlement Period during which such
date occurs
C = The larger of (i) the actual aggregate Capital
for all outstanding Purchased Interests on such
date and
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(ii) the largest Capital for all outstanding
Purchased Interests estimated in good faith by
the Seller for the Interest Period during which
such date occurs (in both cases computed as if
reduced dollar-for-dollar by the amount of Cure
Funds held in the Cure Account at such time)
D = The actual number of days in the applicable
Settlement Period
SF = An amount equal to the Collection Agent Fee
paid for the most recently ended Settlement
Period
TF = An amount equal to the aggregate of all other
fees and expenses paid for the most recently
ended Settlement Period other than SF and PF.
"Yield/Fee Reserve" means, on any date, an amount equal to:
YFR = C x YFRP
Wher e: C = The larger of (i) the actual aggregate Capital
for all outstanding Purchased Interests on such
date and (ii) the largest Capital for all
outstanding Purchased Interests estimated in
good faith by the Seller for the Interest
Period during which such date occurs (in both
cases computed as if reduced dollar-for-dollar
by the amount of Cure Funds held in the Cure
Account at such time)
YFRP = The Yield/Fee Reserve Percentage as of the
close of business of the Collection Agent on
such date.
"Yield/Fee Reserve Percentage" means, as of any date, a percentage equal
to:
([(AR - AS) x 1.3] + AS + PF + RSF + TF) x POP
----------------------------------------------
1 - (LRP + DRP)
Where: AR = (i) if the Assignee Rate is based on the
Alternate Base Rate, AR is the Assignee Rate on
the date occurring two Business Days prior to
the first day of such Interest Period, and (ii)
if the Assignee Rate is based on the Adjusted
Eurodollar Rate, AR is the Assignee Rate for
such Interest Period
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AS = 1.00% or such other percentage specified in the
flat sentence of the definition of the Assignee
Rate
PF = A percentage per annum equal to the per annum
rate of the Program Fee in effect on the first
day of the Settlement Period during which such
date occurs
RSF = 1.00% or such other percentage as the Agent may
from time to time reasonably determine reflects
the fee payable to a successor Collection Agent
TF = A percentage fee equal to 0.01% or such other
percentage as the Agent may from time to time
reasonably determine reflects the fees and
expenses of the Trustee
POP = A percentage equal to the quotient of (a) the
sum of (i) the Collection Delay Period plus
(ii) the Average Maturity on such date divided
by (b) 360 days
LRP = A percentage equal to the Loss Reserve
Percentage as of such date
DRP = A percentage equal to the Dilution Reserve
Percentage as of such date.
SECTION 1.02. Other Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles. All terms used in Article 9 of the UCC in the State of California,
and not specifically defined herein, are used herein as defined in such Article
9.
SECTION 1.03. Computation of Time Periods. Unless otherwise stated in
this Agreement, in the computation of a period of time from a specified date to
a later specified date, the word "from" means "from and including" and the words
"to" and "until" each mean "to but excluding".
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 2.01. Facility. On the terms and conditions hereinafter set
forth, each Secondary Purchaser, severally and not jointly, shall make Purchases
from time to time on any Purchase Date during the period from the date hereof to
the Termination Date. Under no circumstances shall a Secondary Purchaser make
any Purchase if after giving effect to such Purchase, (i) the aggregate Capital
with respect to all Purchased Interests owned by such
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Secondary Purchaser, together with the product of (A) such Secondary Purchaser's
Pro Rata Share, and (B) the aggregate "Capital" of "Purchased Interests" under
the Receivables Purchase and Sale Agreement would exceed such Secondary
Purchaser's Pro Rata Share of the Purchase Limit; or (ii) the aggregate Capital
of Interests, together with the aggregate "Capital" of "Purchased Interests"
under the Receivables Purchase and Sale Agreement, would exceed the Purchase
Limit. Under no circumstances shall a Secondary Purchaser make any Purchase
until April 20, 1998. The Purchases by the Secondary Purchasers of Purchased
Interests on each Purchase Date shall be made simultaneously and ratably in
accordance with the Pro Rata Shares of each Secondary Purchaser.
SECTION 2.02. Making Purchases. (a) Each Purchase shall be made on
notice from the Seller to the Agent pursuant to Section 2.02(b) of the
Receivables Purchase and Sale Agreement, which notice shall be given not later
than 11:00 a.m. (New York City time) one Business Day prior to the date of any
such Purchase; provided, however, that if the Purchase Price requested in such
notice is less than $20,000,000, such notice shall be given not later than 11:00
a.m. (New York City time) on the Business Day of the requested Purchase. Each
such notice shall specify (i) the desired Purchase Price to be paid to the
Seller (which shall be in a minimum amount of $2,000,000 or an integral multiple
of $100,000 in excess thereof), and (ii) the desired Purchase Date (which shall
be a Business Day). Upon receipt of such notice the Agent shall promptly notify
each Secondary Purchaser of the Purchase requested by the Seller and each such
notice to the Secondary Purchasers shall be by telephone (confirmed promptly
thereafter in writing), facsimile, telex or cable, specifying the requested (A)
amount of such Purchase to be paid by each Secondary Purchaser to the Seller
(which amount shall be each Secondary Purchaser's Pro Rata Share of the
aggregate amounts requested to be paid by all Secondary Purchasers on the day
specified in such notice for such Purchase), and (B) Business Day of such
Purchase. No Secondary Purchaser shall be responsible for any failure by any
other Secondary Purchaser to perform its obligation to make a Purchase under
this Agreement. On the date of each Purchase, each Secondary Purchaser shall,
upon satisfaction of the applicable conditions set forth in Article III, cause
funds in the amount of its Purchase to be made available to the Seller at the
Seller's Account.
(b) On the date of each Purchase, each Secondary Purchaser shall, upon
satisfaction of the applicable conditions set forth in Article III, cause funds
in the amount of such Secondary Purchaser's Pro Rata Share of the Purchase Price
to the Seller at Bank of America, ABA: ▇▇▇▇▇▇▇▇▇, Beneficiary: Maxtor
Receivables Corporation, Account: ▇▇▇▇-▇-▇▇▇▇▇ (the "Seller's Account").
SECTION 2.03. Termination or Reduction of the Purchase Limit. (a)
Optional. The Seller may, upon at least five Business Days' notice to the Agent
and the Owners, terminate in whole or reduce in part the unused portion of the
Purchase Limit; provided, however, that for purposes of this Section 2.03(a),
the unused portion of the Purchase Limit shall be computed as the excess of (i)
the Purchase Limit immediately prior to giving effect to such termination or
reduction over (ii) the sum of (A) the aggregate Capital with respect to all
Purchased Interests outstanding at the time of such computation and (B) the
aggregate "Capital" with respect to all "Purchased Interests" outstanding at the
time of such computation under the Receivables
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Purchase and Sale Agreement; provided further that each partial reduction shall
be in an amount equal to $5,000,000 or an integral multiple thereof
(b) Mandatory. On each day on which the Seller shall, pursuant to
Section 2.03(a) of the Receivables Purchase and Sale Agreement, reduce in part
the unused portion of the "Purchase Limit" under and as defined in the Bank
Agreement, the Purchase Limit hereunder shall automatically reduce by an equal
amount. The Purchase Limit hereunder shall automatically terminate in whole on
any day on which the Seller shall terminate in whole the Purchase Limit under
and as defined in the Receivables Purchase and Sale Agreement pursuant to
Section 2.03(a) of the Receivables Purchase and Sale Agreement.
SECTION 2.04. Purchased Interest. Each Purchased Interest shall be
initially computed as of the opening of business of the Collection Agent on the
date of purchase of such Purchased Interest. Thereafter until the Termination
Date, such Purchased Interest shall be automatically recomputed as of the close
of business of the Collection Agent on each day (giving effect to the deposit of
Owner Collections to the Seller's Account pursuant to Section 2.05). Such
Purchased Interest shall remain constant from the time as of which any such
computation or recomputation is made until the time as of which the next such
recomputations if any, shall be made. Any Purchased Interest, as computed as of
the day immediately preceding the Termination Date, shall remain constant at all
times on and after such Termination Date.
SECTION 2.05. Settlement Procedures. (a) On each Deposit Date during
each Settlement Period during the Revolving Period, unless a Cure Period shall
have occurred and be continuing, the Collection Agent shall instruct the Trustee
by a Daily Report delivered to the Trustee by 2:00 p.m. (New York City time) to,
and the Trustee shall, at such time and in the following order:
(i) allocate Collections received since receipt of the last such
Daily Report and held in the Concentration Account on such day, based on
the Daily Report, either as Owner Collections or Seller Collections;
(ii) out of such Owner Collections, allocate to, and hold in the
Concentration Account, in trust for the Owners, the Trustee and the
Collection Agent, an amount equal to the Yield/Fee Amount for such
Deposit Date to the extent such amount has not been previously so
allocated;
(iii) deposit the remainder of such Owner Collections to the
Seller's Account, provided that, if immediately following any such
deposit such Deposit Date would be a Pool Non-compliance Date, the
Trustee shall retain all such remaining Owner Collections in the
Concentration Account to be applied pursuant to Section 2.05(b)(iii);
and
(iv) deposit to the Seller's Account the Seller Collections.
On the Business Day immediately prior to each Settlement Date during the
Revolving Period, unless a Cure Period shall have occurred and be continuing,
the Collection
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Agent shall direct the Trustee in writing to deposit to the Trustee's Account
the amounts allocated and held in trust as described in clause (ii) above;
provided, however, that the portion of such deposit allocable to the Trustee's
expenses shall only be in an amount equal to the expenses reimbursable under the
Purchase Documents actually incurred by the Trustee (as certified in reasonable
detail to the Collection Agent in writing by the Trustee) during the current
Interest Period or remaining unpaid with respect to any prior Interest Period.
The Daily Report delivered by the Collection Agent to the Trustee on the first
day of each Interest Period shall set forth the Yield/Fee Amount for such
Settlement Date.
(b) On each Deposit Date during each Settlement Period if and so long as
a Cure Period shall have occurred and be continuing, the Collection Agent shall
instruct the Trustee by a Daily Report delivered to the Trustee by 2:00 p.m.
(New York City time) to, and the Trustee shall, at that time and in the
following order:
(i) allocate Collections received since receipt of the last such
Daily Report and held in the Concentration Account on such day, based on
the Daily Report, either as Owner Collections or Seller Collections;
(ii) out of Owner Collections, allocate to, and hold in the
Concentration Account, in trust for the Owners, the Trustee and the
Collection Agent, an amount equal to the Yield/Fee Amount for such date
to the extent such amount has not been previously so allocated;
(iii) deposit, out of the remainder of such Owner Collections,
to the Cure Account in an amount sufficient to make the Net Subject
Receivables Balance equal or exceed the Required Net Subject Receivables
Balance;
(iv) deposit the remainder of such Owner Collections to the
Seller's Account; provided that, if immediately following any such
deposit such Deposit Date would be a Pool Non-compliance Date, the
Trustee shall retain all such remaining Owner Collections in the
Concentration Account to be applied pursuant to Section 2.05(b)(iii);
and
(v) deposit to the Seller's Account the Seller Collections.
On the Business Day immediately prior to each Settlement Date during a
Cure Period, the Collection Agent shall direct the Trustee in writing to deposit
to the Trustee's Account the amounts allocated and held in trust as described in
clause (iii) of this Section 2.05(b).
On each Business Day during each Settlement Period, if and so long as a
Cure Period shall have occurred and be continuing, the Collection Agent shall
direct the Trustee in writing to deposit to the Trustee's Account the amounts
allocated and held in trust as described in clause (ii) above; provided,
however, that the portion of such deposit allocable to the Trustee's expenses
shall only be in an amount equal to the expenses reimbursable under the Purchase
Documents actually incurred by the Trustee (as certified in reasonable detail to
the Collection
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Agent in writing by the Trustee) during the current Interest Period Date or
remaining unpaid with respect to any prior Interest Period. The Daily Report
delivered by the Collection Agent to the Trustee on the first day of each
Interest Period shall set forth the Yield/Fee Amount for such Settlement Date.
(c) On each Deposit Date during the Amortization Period, the Collection
Agent shall instruct the Trustee by a Daily Report delivered to the Trustee by
2:00 p.m. (New York City time) to, and the Trustee shall, at that time and in
the following order:
(i) allocate Collections received since receipt of the last such
Daily Report and held in the Concentration Account, based on the Daily
Report, either as Owner Collections or as Seller Collections;
(ii) set aside and hold in the Concentration Account, in trust
for the Owners, the Trustee and the Collection Agent, such Owner
Collections; and
(iii) deposit to the Seller's Account the Seller Collections.
On the Business Day immediately prior to each Settlement Date during an
Amortization Period, the Trustee shall deposit to the Trustee's Account (A) all
amounts set aside as described in clause (ii) of this Section 2.05(c) and (B)
the amount of Cure Funds on deposit in the Cure Account.
(d) On any Business Day during the Revolving Period, unless a Cure
Period shall have occurred and be continuing, the Seller may instruct the
Collection Agent to direct the Trustee (as set forth in the Daily Report) to
deposit to the Trustee's Account all or a portion of (A) the Collections
otherwise to be deposited into the Seller's Account pursuant to Sections
2.05(a)(iii) and (iv) and (B) the Yield/Fee Amount held in the Concentration
Account pursuant to Section 2.05(a)(ii).
(e) On any Business Day during the Revolving Period, the Seller may
instruct the Trustee by an Officer's Certificate (which may be a standing
instruction) delivered to the Trustee by 2:00 p.m. (New York City time) to, and
the Trustee shall, transfer to the Seller's Account Cure Funds, if any, held in
the Cure Account; provided that the Seller shall have delivered to the Trustee
at the time of such request an Officer's Certificate stating that, after taking
account of the requested withdrawal, the Net Subject Receivables Balance on such
day is equal to or greater dm the Required Net Subject Receivables Balance and
setting forth the calculation supporting such statement.
(f) If on any day the Outstanding Balance of any Subject Receivable is
either reduced as a result of any defective, rejected or returned merchandise or
services, any cash discount, or any adjustment by the Seller, Maxtor or any
Selling Affiliate or any Affiliate of any thereof, or (ii) reduced or canceled
as a result of any dispute or claim, or any setoff in respect of any dispute or
claim, by the Obligor thereof against the Seller, Maxtor or any Selling
Affiliate or any Affiliate of any thereof (whether such dispute or claim arises
out of the same or a related
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transaction or an unrelated transaction), the Seller shall be deemed to have
received on such day a Collection of such Receivable in the amount of such
reduction or cancellation (unless such Seller shall be deemed to have received
on such day a collection in full of such Subject Receivable pursuant to the
succeeding sentence), and the Seller shall make the payment required to be made
by it in connection with such deemed Collection on the day required under, and
otherwise pursuant to, Section 5.01(h). If on any day any of the representations
or warranties in Section 4.01(h) is violated with respect to any Subject
Receivable, the Seller shall be deemed to have received on such day a Collection
in full of such Subject Receivable and shall make the payment required to be
made by it in connection with such deemed Collection on the day required under,
and otherwise pursuant to, Section 5.01(h). In the case of each of the two
preceding sentences, upon any actual payment in full by the Seller of any such
Receivable, the Seller shall be deemed to have repurchased (without recourse and
without representation or warranty, express or implied) such Receivable and such
Receivable shall cease to be a "Subject Receivable" for purposes of this
Agreement (unless and until the Agent or any Owner is at any time required to
return all or any portion of such payment for any reason).
(g) Except as otherwise stated in this Section 2.05 or as otherwise
required by law or the underlying contract or the applicable Credit and
Collection Policy, all Collections received from an Obligor of any Receivable
shall be applied to Receivables then outstanding of such Obligor in the order of
the age of such Receivables, starting with the oldest such Receivable unless
such Obligor designated its payment for application to specific Receivables,
and, in any case, no later than ten Business Days after such payment shall have
been made by such Obligor.
SECTION 2.06. Distributions. (a) During the Revolving Period, on each
Settlement Date, the Trustee shall distribute the funds on deposit in the
Trustee's Account on such Settlement Date, in the following order of priority,
in accordance with the Purchaser Report:
(i) to the Trustee as the accrued and unpaid Trustee's Fee and
reasonable expenses of the Trustee reimbursable under the Purchase
Documents, in an amount not in excess of $1,000 for such Settlement
Date;
(ii) to the Agent's Account for the Collection Agent for the
accrued and unpaid Collection Agent Fee;
(iii) unless otherwise instructed by the Agent, to the Agent's
Account:
(A) for payment of the fees and any other amounts due under
the Fee Letter other than Breakage Costs; and
(B) for distribution to each Owner by the Agent, ratably in
accordance with such Owner's Purchased Interest, for payment of
Yield on such Purchased Interest;
(iv) to the Trustee as Trustee's expenses reimbursable under the
Purchase Documents in excess of $1,000 for such Settlement Date;
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(v) unless otherwise instructed by the Agent, to the Agent's
Account for payment of Breakage Costs;
(vi) to the Agent's Account for the Owners, the Banks and the
Agent for payment of any other amounts (other than Capital) due thereto
under any of the Purchase Documents;
(vii) to the Concentration Account, amounts required to be
allocated to the Yield/Fee Amount for the immediately succeeding
Settlement Date; and
(viii) after the payment in full of the amounts specified in
clauses (i) through (vii) above, to the Seller.
(b) On each Settlement Date during the Amortization Period, the
Trustee shall distribute the funds on deposit in the Trustee's Account on such
Settlement Date, in the following order of priority, in accordance with the
Purchaser Report:
(i) to the Trustee as the accrued and unpaid Trustee's Fee and
reasonable expenses of the Trustee reimbursable under the Purchase
Documents, in an amount not in excess of $1,000 for such Settlement
Date;
(ii) to the Agent's Account for the Collection Agent as the
accrued and unpaid Collection Agent Fee;
(iii) unless otherwise instructed by the Agent, to the Agent's
Account:
(A) for payment of the fees and any other amounts due under
the Fee Letter other than Breakage Costs; and
(B) for distribution to each Owner by the Agent, ratably in
accordance with such Owner's Purchased Interest, for payment of
Yield on such Purchased Interest;
(iv) to the Agent's Account for each Owner, ratably in
accordance with such Owner's Purchased Interest, in reduction of the
Capital for such Purchased Interest until such Capital is reduced to
zero;
(v) to the Trustee as Trustee's expenses reimbursable under the
Purchase Documents in excess of $1,000 for such Settlement Date;
(vi) unless otherwise instructed by the Agent, to the Agent's
Account for payment of Breakage Costs;
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(vii) to the Agent's Account for the Owners and the Agent for
payment of any other amounts due the Owners and the Agent under the
Purchase Documents;
(viii) after the payment in full of the amounts specified in
clauses (i) through (vii) above, to the Seller.
(c) In accordance with the provisions of Section 2.05(d), the
Trustee shall distribute the funds on deposit in the Trustee's Account to the
Agent's Account, unless otherwise instructed by the Agent in writing, in
reduction of any Capital and any payment of Yield, any Breakage Costs and any
other amounts due the Owners under the Purchase Documents in respect of any
Purchased Interest.
(d) Pursuant to Section 2.05(b), on each Settlement Date the
Trustee shall distribute the amounts withdrawn from the Cure Account under
Section 2.05(b), that have been deposited to the Trustee's Account, promptly
upon receipt thereof, to the Agent's Account for distribution to each Owner,
ratably in accordance with such Owner's Purchased Interest, in reduction of the
Capital for such Purchased Interest, unless otherwise instructed by the Agent in
writing.
Upon payment in full to all of the Owners of the aggregate
Capital for all Purchased Interests outstanding, all accrued and unpaid Yield
thereon and all other amounts due the Owners and the Agent under the Purchase
Documents, payment in full to the Collection Agent of the Collection Agent Fee,
and payment in full to the Trustee of the Trustee's Fee and all reasonable
expenses of the Trustee reimbursable under the Purchase Documents, all amounts
remaining on deposit in the Trustee's Account and the Cure Account shall be
distributed by the Trustee to the Seller, and all amounts, if any, remaining in
the Lock Box Accounts and the Concentration Account shall be distributed by the
Agent to the Seller; provided, however, that if at any time after the payment
that would have otherwise resulted in such payment in full, such payment is
rescinded or must otherwise be returned for any reason, effective upon such
rescission or return, such payment in full shall automatically be deemed, as
between the Owners and the Seller, never to have occurred, and the Seller shall
be required, to the extent it received any amounts under this Section 2.06, to
remit to the Trustee an amount equal to the rescinded or returned payment.
(e) Prior to the 6th Business Day of each calendar month, the
Collection Agent shall prepare and forward to the Agent and the Trustee for each
Owner of a Purchased Interest (A) a Purchaser Report relating to such Purchased
Interest, as of the close of business of the Collection Agent on the last day of
the immediately preceding month, and (B) an analysis as to the aging of all
Subject Receivables, as of such last day.
(f) On each Business Day, by no later than 2:00 p.m. (New York
City time), the Collection Agent shall prepare and forward to the Agent for each
Owner of a Purchased Interest and the Trustee, a Daily Report relating to such
Purchased Interest.
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SECTION 2.07. Payments and Computations, Etc. All amounts to be paid or
deposited by the Seller, the Collection Agent or the Trustee hereunder shall be
paid or deposited in accordance with the terms hereof no later than 4.00 p.m.
(New York City time) on the day when due in lawful money of the United States of
America in same day funds to the Agent's Account. The Seller shall, to the
extent permitted by law, pay to the Agent interest on all amounts not paid or
deposited when due hereunder at 1% per annum above the Alternate Base Rate in
effect from time to time, payable on demand, provided, however, that such
interest rate shall not at any time exceed the maximum rate permitted by
applicable law. Such interest shall be retained by the Agent except to the
extent that such failure to make a timely payment or deposit has continued
beyond the date for distribution by the Agent of such overdue amount to an Owner
of a Purchased Interest, in which case such interest accruing after such date
shall be for the account of, and distributed by the Agent to, such Owner. All
computations of interest and fees hereunder shall be made on the basis of a year
of 360 days for the actual number of days (including the first but excluding the
last day) elapsed.
SECTION 2.08. Fees. (a) The Seller shall pay the following fees:
(i) to the Agent, in consideration for the support of the
Purchased Interests purchased hereunder, a fee (the "Program Fee") as
set forth in the Fee Letter;
(ii) to the Agent for the account of the Secondary Purchasers a
fee (the "Secondary Purchasers Fee") as set forth in the Fee Letter; and
(iii) to the Agent for the account of the Banks and the
Participants (the "Facility Fee") as set forth in the Fee Letter.
(b) The Seller shall also pay to the Agent for the account of the Agent
a fee (the "Arrangement Fee") as set forth in the Fee Letter, payable on the
date of execution of this Agreement.
(c) Each Owner shall pay to the Collection Agent a collection fee (the
"Collection Agent Fee"), from the Closing Date until the Collection Date,
payable on each Settlement Date, in an amount equal to the greater of (i) 0.25
of 1% per annum on the average daily amount of Capital for each Purchased
Interest owned by such Owner, or (ii) 110% of the reasonable out-of-pocket costs
and expenses of the Collection Agent of servicing, administering and collecting
such Owner's ratable share of the Subject Receivables if and to the extent that
such costs and expenses are specified in reasonable detail, including copies of
supporting documentation, in a writing delivered to the Agent no later than
three Business Days prior to such Settlement Date.
SECTION 2.09. Eurodollar Increased Costs. (a) If any Owner shall be
subject to any Eurodollar Increased Costs, then, upon demand by such Owner (with
a copy to the Agent), the Seller shall immediately pay to the Agent, for the
account of such Owner (as a third-party beneficiary), from time to time as
specified, additional amounts sufficient to compensate such
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Owner for such Eurodollar Increased Costs. A certificate as to such amounts
submitted to the Seller and the Agent shall be conclusive and binding for all
purposes, absent manifest error.
(b) If any Owner shall, pursuant to Section 2.09(a), make a
demand for compensation for Eurodollar Increased Costs, the Seller shall have
the right, upon at least thirty (30) days' prior written notice to such Owner
(with a copy to the Agent), to cause such Owner to use its best efforts to
assign to an Assignee selected by the Seller and consented to in writing by the
Agent (which consent shall not be unreasonably withheld) the Purchased Interests
of such Owner and its rights in respect thereof, all in accordance with Section
9.01; provided that no action taken under this subsection (b) shall affect the
Seller's obligation to compensate any such Owner for Eurodollar Increased Costs
for the period prior to the effectiveness of such assignment.
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01. Condition Precedent to Initial Purchase. The initial
Purchase hereunder is subject to the condition precedent that the Agent and each
Secondary Purchaser shall have received on or before the Purchase Date for such
Purchase, the following, each (unless otherwise indicated) dated, or dated as
of, such Purchase Date, in form and substance satisfactory to the Agent and each
of the Secondary Purchasers:
(a) The initial Assignment, duly executed by the Seller, dated
the date hereof.
(b) The Receivables Contribution and Sale Agreement, duly
executed by the Seller and Maxtor, and acknowledged by the Agent,
together with:
(i) Stamped receipt copies of proper financing statements
naming Maxtor as seller, the Seller as purchaser and CNAI, as
Agent and as assignee, together with evidence reasonably
satisfactory to the Agent of the due filing thereof on or before
the Closing Date, under the UCC of all jurisdictions that the
Agent may deem necessary or desirable in order to perfect the
Seller's interests created or purported to be created by the
Receivables Contribution and Sale Agreement and the Agent's
interests created or purported to be created by this Agreement;
(ii) Proper financing statements, if any, necessary to
release all security interests and other rights of any Person in
the Seller Assets previously granted by Maxtor;
(iii) [Intentionally left blank]
(iv) The Maxtor Agreement, duly executed by Maxtor.
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(c) Certified copies of the charter and by-laws, as amended, of
each of the Seller and Maxtor.
(d) Certified copies of the resolutions of the Board of
Directors of each of the Seller and Maxtor approving this Agreement and
the other Purchase Documents to be delivered by the Seller and Maxtor,
respectively, hereunder and the transactions contemplated hereby and
thereby, and of all documents evidencing other necessary corporate
action and governmental approvals, if any, with respect to such Purchase
Documents. Documented evidence, in form and substance satisfactory to
the Agent, of all requisite corporate action having been taken by the
Trustee to approve and authorize the execution and delivery by the
Trustee of each of the Purchase Documents to which it is party and
performance of its obligations thereunder.
(e) A certificate of the Secretary or Assistant Secretary (or,
in the case of the Trustee, an Assistant Treasurer) of each of the
Seller, Maxtor and the Trustee certifying the names and true signatures
of the officers of the Seller, Maxtor and the Trustee, respectively,
authorized to sign this Agreement and the other Purchase Documents to be
delivered by it hereunder.
(f) Good standing certificates issued by the Secretary of State
of the jurisdictions of incorporation of each of the Seller and Maxtor,
respectively.
(g) Stamped receipt copies of proper financing statements, duly
filed with respect to all Seller Assets, on or before the Closing Date
under the UCC of all jurisdictions that the Agent may deem necessary or
desirable in order to perfect the sales and transfers of legal and
equitable title, and ownership interests, or the grant of a security
interest therein, contemplated hereby.
(h) Proper financing statements, if any, necessary to release
all security interests and other rights of any Person in the Seller
Assets, previously granted by the Seller.
(i) [Intentionally left blank].
(j) Lock Box Agreements duly executed by the Lock Box Banks, the
Agent and the Seller.
(k) A favorable opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for
the Seller and Maxtor, substantially in the form of Exhibit E- I hereto,
which shall include, without limitation, (A) an opinion as to
perfection, (B) an opinion as to enforceability, (C) a general corporate
opinion and (D) such other matters as the Agent may reasonably request.
(l) A favorable opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for
the Seller and Maxtor, substantially in the Form of Exhibit E-2 hereto,
which shall include (A) a
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"true sale" opinion with respect to the sales of Receivables from Maxtor
to the Seller, (B) an opinion relating to the likelihood of a
substantive consolidation of Maxtor with the Seller and (C) such other
matters as the Agent may reasonably request.
(m) A favorable opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇, in-house counsel for
the Seller, substantially in the form of Exhibit E-3 hereto, as to such
matters as the Agent may reasonably request.
(n) A letter of the Seller to the Secondary Purchasers, Citibank
and CNAI, individually and as the Agent, substantially in the form of
Exhibit F hereto.
(o) The Company/Maxtor Agreement and the Company/Seller
Agreement, each duly executed by the Company.
(p) Certified copies of the resolutions of the Board of
Directors of the Company approving the Company/Maxtor Agreement and the
Company/Seller Agreement and the other Purchase Documents to be
delivered by it hereunder and the actions contemplated thereby, and of
all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to such Purchase Documents.
(q) A certificate of a Representative Director of the Company
certifying the names and true signatures of the officers of the Company
authorized to sign the Purchase Documents to be delivered by it
hereunder.
(r) Favorable opinions of ▇▇▇ & ▇▇▇▇▇, counsel for the Company,
and special Korean in-house counsel for the Company, substantially in
the forms of Exhibits G-1 and G-2, respectively, hereto and as to such
other matters as the Agent may reasonably request.
(s) The Bank Agreement, duly executed by each of the parties
thereto.
(t) The Fee Letter, in form and substance satisfactory to the
Agent duly executed by the Seller.
(u) Evidence that all bank accounts required to be established
and maintained under the Purchase Documents shall have been established.
(v) The Repurchase Agreement and each other Purchase Document,
duly executed by each party thereto.
(w) Evidence that all related fees and expenses then due and
payable in connection with the Purchase Documents have been paid.
(x) The Daily Report, in form and substance satisfactory to the
Agent and the Trustee, prepared on a pro forma basis and showing that
the Seller is in compliance with
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all the Purchase Documents (after giving effect to the initial
Purchase), to the extent a showing of such compliance is called for in
the form thereof.
(y) An accounts receivable trial balance as of the initial
Purchase Date (which if, in magnetic tape or diskette format, shall be
compatible with the Seller's, or, if applicable, the Collection Agent's
equipment).
(z) A completed Purchaser Report, together with historical
Receivables portfolio data attached thereto as Schedule A, in each case
in form and substance satisfactory to the Agent and the Trustee.
(aa) A favorable opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel for the
Trustee, in form and substance satisfactory to the Agent.
(bb) A favorable opinion of Shearman & Sterling, counsel for the
Agent, as to such matters as the Agent may reasonably request.
SECTION 3.02. Conditions Precedent to All Purchases and Deposits. (a)
Each Purchase (including the initial Purchase) and each deposit of Owner
Collections to the Seller's Account hereunder pursuant to Section 2.02 and each
deposit of Owner Collections to the Seller's Account shall be subject to the
conditions Precedent set forth in Section 3.01 and to the further conditions
precedent that the Collection Agent shall have delivered to each Secondary
Purchaser and the Agent, in form and substance satisfactory to the Agent and the
Secondary Purchasers, (i) all Purchaser Reports and Daily Reports, as and when
due under Section 2.06, and (ii) such additional information as may be
reasonably requested by any Secondary Purchaser or the Agent, (b) on the date of
each such Purchase and each deposit of Owner Collections to the Seller's Account
the following statements shall be true (and the acceptance by the Seller of the
proceeds of such Purchase or deposit shall constitute a representation and
warranty by the Seller that on such date in the case of each Purchase or deposit
such statements are true):
(i) The representations and warranties contained in this Agreement and
each other Purchase Document are correct on and as of the date of such Purchase,
before and after giving effect to such Purchase and to the application of the
proceeds therefrom, as though made on and as of such date,
(ii) No event has occurred and is continuing, or would result from such
Purchase or from the application of the proceeds therefrom, which constitutes an
Event of Termination or Incipient Event of Termination,
(iii) On such date, all of the Company's long-term public senior debt
securities are rated at least B- by S&P and at least B3 by ▇▇▇▇▇'▇ or, if such
securities are not rated by S&P and ▇▇▇▇▇'▇, such securities have a deemed
rating of at least B- and B3, as determined by the Agent in its sole discretion,
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(iv) The Net Subject Receivables Balance is at least equal to Required
Net Subject Receivables Balance, and
(v) The Agent shall not have received any notification from S&P or
▇▇▇▇▇'▇ that the transactions contemplated or effected by the Purchase Documents
are not of a type which it is desirable for the Purchaser to consummate;
(c) the Receivables Purchase and Sale Agreement shall be in form and substance
satisfactory to the Agent and the Secondary Purchasers and shall be in full
force and effect and (d) the Agent and the Secondary Purchasers shall have
received such other approvals, opinions or documents as the Agent and the
Secondary Purchasers may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Seller. The Seller
represents and wan-ants, as of the date hereof and as of the date of each
Purchase hereunder and each "Sale" under the Receivables Contribution and Sale
Agreement and each Selling Affiliate Receivables Contribution and Sale
Agreement, as follows:
(a) The Seller is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction
indicated at the beginning of this Agreement.
(b) The execution, delivery and performance by the Seller of
each Purchase Document to be delivered by it hereunder and under the
Receivables Purchase and Sale Agreement and the transactions
contemplated hereby and thereby, and the Seller's use of the proceeds of
Purchases and deposits to the Seller's Account, are within the Seller's
corporate powers, have been duly authorized by all necessary corporate
action, do not contravene (i) the Seller's charter or by-laws or (ii)
any law or Contract or other contractual restriction binding on or
affecting the Seller, and do not result in or require the creation of
any Adverse Claim (other than pursuant hereto) upon or with respect to
any of its properties; and no transaction contemplated hereby requires
compliance with any bulk sales act or similar law.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
or other Person is required for the due execution, delivery and
performance by the Seller of any Purchase Document to be delivered by it
hereunder or thereunder, or for the perfection of or the exercise by the
Agent or any Owner of its rights and remedies under each such Purchase
Document, except for (i) the filings of the financing statements
referred to in Article III, all of which, on or prior to the Closing
Date, will have been duly made and be in full force and effect, and (ii)
upon any Person's becoming a Selling Affiliate hereunder, the filings of
the financing statements required pursuant to the definition of the term
"Selling Affiliate", all
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of which, on or prior to the date such Person shall become a Selling
Affiliate, will have been duly made and be in full force and effect.
(d) Each Purchase Document is, or when delivered hereunder will
be, the legal, valid and binding obligation of the Seller, enforceable
against the Seller in accordance with its respective terms (except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and except as such enforceability may be limited by
general principles of equity, whether considered in a suit in law or in
equity). Each Assignment, when delivered hereunder, will evidence the
transfer to the Secondary Purchasers of legal and equitable title to,
and ownership of, an undivided percentage ownership interest in the
Seller Assets, or a valid and perfected first priority security interest
therein.
(e) The consolidated pro-forma balance sheet of the Seller as at
the Closing Date, copies of which have been furnished to the Agent,
fairly presents the consolidated pro-forma financial condition of the
Seller as at such date after giving effect to the transactions
contemplated to take place on the date hereof pursuant to the Purchase
Documents, all in accordance with generally accepted accounting
principles consistently applied.
(f) There is no pending or threatened action or proceeding
affecting the Seller, Maxtor or any Selling Affiliate or any of their
subsidiaries before any court, governmental agency or arbitrator which
may materially adversely affect (i) the collectibility of the Subject
Receivables or the ability of Maxtor, the Seller, any Selling Affiliate
or the Collection Agent to collect Subject Receivables or (ii) the
ability of Maxtor, the Seller or any Selling Affiliate to perform its
obligations under any Purchase Document to be delivered by it hereunder,
or which purports to affect the legality, validity or enforceability of
any Purchase Document.
(g) No proceeds of any Purchase or deposit to the Seller's
Account (other than the proceeds of Seller Collections) will be used to
purchase or carry any margin stock (within the meaning of Regulation U
issued by the Board of Governors of the Federal Reserve System).
(h) Immediately prior to the time of the initial creation of an
interest hereunder in any Seller Asset, the Seller is the legal and
beneficial owner of the Seller Asset, in each case free and clear of any
Adverse Claim except as created by this Agreement or to the extent
created by the Agent or the Secondary Purchasers or any Owner. On the
date of the initial creation of an interest in each Subject Receivable
hereunder, such Subject Receivable (except as otherwise set forth on the
Daily Report) constitutes an Eligible Receivable or Included Foreign
Receivable. Upon each Purchase and deposit to the Seller's Account, the
Seller shall (i) transfer to the Owner making such Purchase or deposit
(and such Owner shall acquire) a valid and perfected undivided
percentage ownership interest in each Seller Asset, or (ii) grant to the
Agent, for the
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benefit of the Beneficiaries, a valid and perfected first priority
security interest in each Seller Asset, free, and clear of any Adverse
Claim except as created by this Agreement and the Assignments or to the
extent created by the Agent or the Secondary Purchasers or any Owner. No
effective financing statement or other instrument similarly in effect
covering any Seller Asset or any Lock Box Account or other deposit
account to the extent any Collections are from time to time deposited
therein is on file in any recording office, except those filed in favor
of the Agent relating to the Purchase Documents, or in favor of the
Seller and the Agent or those listing the Seller or Maxtor as secured
party and the applicable Obligor as debtor.
(i) Each Purchaser Report and Daily Report (in each case if
prepared by the Seller, Maxtor or any Selling Affiliate or any Affiliate
of any thereof, or to the extent that information contained therein is
supplied by the Seller, Maxtor or any Selling Affiliate or any Affiliate
of any thereof), notice or other written item of information, exhibit,
financial statement, document, book, record or report furnished or to be
furnished at any time by the Seller, Maxtor or any Selling Affiliate to
the Agent, the Trustee or any Owner in each case in connection with this
Agreement is or will be accurate in all material respects as of its date
or (except as otherwise disclosed to the Agent, the Trustee or such
Owner, as the case may be, at such time) as of the date so furnished,
and as of such relevant date no such document contains or will contain
any untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements contained
therein, in the light of the circumstances under which they were made,
not misleading.
(j) The chief place of business and chief executive office of
the Seller and the office where the Seller keeps its records concerning
the Seller Assets are located at the address specified in Section 13.02
hereto (or at such other locations, notified to the Agent and the
Trustee in accordance with Section 5.01(f), in jurisdictions where all
action required by Section 6.05 has been taken and completed).
(k) The names and addresses of all the Lock Box Banks, together
with the account numbers of the Lock Box Accounts of the Seller and the
Selling Affiliates, respectively, at such Lock Box Banks, are specified
in Schedule I hereto (or at such other Lock Box Banks and/or with such
other Lock Box Accounts as have been notified to the Agent and for which
Lock Box Agreements have been executed in accordance with Section
6.06(b)).
(1) Neither the Seller nor any Affiliate (of the type set forth
in clause (i)(x) of the definition of the term "Affiliate") of the
Seller has any direct or indirect ownership or other financial interest
in the Agent, the Secondary Purchasers or any Bank.
(m) Any use by any Secondary Purchaser of the proceeds of its
issuance of commercial paper having a maturity of not more than nine
months to make each respective Purchase will constitute (i) a "current
transaction" within the meaning of Section 3(a)(3) of the Securities Act
of 1933, as amended, and (ii) a purchase or other acquisition of notes,
drafts, acceptances, open accounts receivable or other obligations
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representing part or all of the sales price of merchandise, insurance or
services within the meaning of Section 3(c)(5) of the Investment Company
Act of 1940, as amended.
(n) None of the Seller Assets is evidenced by any "instrument"
or "chattel paper" within the meaning of the UCC in effect in the State
of California other than any Receivable (i) which shall have become a
Defaulted Receivable after the date on which such Receivable became a
Subject Receivable hereunder or under the Original Agreement and (ii) in
connection with which Defaulted Receivable the Seller as Collection
Agent shall have accepted an instrument, which instrument shall have
been duly endorsed and delivered to the Agent by the Seller, to maximize
the Collections thereof as contemplated by Section 6.02(c).
(o) No ERISA Event has occurred or is reasonably expected to
occur with respect to any Plan that has resulted or is reasonably likely
to result in a material liability of the Seller, Maxtor or any Selling
Affiliate.
(p) The aggregate Insufficiency under all Plans does not exceed
$10,000,000.
(q) None of the Seller, Maxtor, any Selling Affiliate or any
ERISA Affiliate of any thereof has incurred or is reasonably expected to
incur any material Withdrawal Liability (that has not been satisfied) to
any Multiemployer Plan.
(r) None of the Seller, Maxtor, any Selling Affiliate or any
ERISA Affiliate of any thereof has been notified by the sponsor of a
Multiemployer Plan that such Multiemployer Plan is in reorganization or
has been terminated, within the meaning of Title IV of ERISA, and no
Multiemployer Plan is reasonably expected to be in reorganization or to
be terminated, within the meaning of Title IV of ERISA.
(s) The Seller and its subsidiaries have no material liability
with respect to "expected postretirement benefit obligations" within the
meaning of Statement of Financial Accounting Standards No. 106.
(t) The Seller has not changed its name during the four month
period prior to the date hereof, and has no tradenames, fictitious
names, assumed names or "doing business as" names.
(u) With respect to all Seller Assets, the Seller has purchased
such Seller Assets from Maxtor or the applicable Selling Affiliate (in
accordance with the provisions of the Receivables Contribution and Sale
Agreement or the Selling Affiliate Receivables Contribution and Sale
Agreement, as applicable) for fair consideration and approximate fair
market value for such Seller Assets and in a sale the terms and
conditions of which (including, without limitation, the purchase price
thereof) reasonably approximate an arm's-length transaction between
unaffiliated parties. No such sale has been made for or on account of an
antecedent debt owed by Maxtor or such Selling Affiliate to the Seller,
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and no such sale or contribution is or may be voidable or subject to
avoidance under any section of the Federal Bankruptcy Code.
(v) The Seller has not sold, assigned, transferred, pledged or
hypothecated any interest in any Seller Asset to any Person other than
as contemplated by the Purchase Documents.
(w) Each of the Seller, Maxtor and each Selling Affiliate has
complied with the Credit and Collection Policy in all material respects
and since the date of this Agreement there has been no change in the
Credit and Collection Policy except as permitted hereunder.
(x) The obligations of the Seller hereunder to make payments in
respect of fees and indemnities payable to any Beneficiary rank at least
equally with indebtedness of the Seller which is not contractually
subordinated.
(y) The Seller has not granted any Person other than the Agent
dominion and control of any Lock Box Account, or the right to take
dominion and control over any Lock Box Account at a future time or upon
the occurrence of a future event.
(z) The Seller has no subsidiaries and shall not establish or
acquire any subsidiaries.
(aa) The Seller has filed, or caused to be filed or be included
in, all tax reports and returns (federal, state, local and foreign), if
any, required to be filed by it and paid, or cause to be paid, all
amounts of taxes, including interest and penalties required to be paid
by it, except for such taxes (i) as are being contested in good faith by
proper proceedings and (ii) against which adequate reserves shall have
been established in accordance with and to the extent required by GAAP,
but only so long as the proceedings referred to in clause (i) above
could not subject the Agent or any other Indemnified Party to any civil
or criminal penalty or liability or involve any material risk of the
loss, sale or forfeiture of any property, rights or interests covered
hereunder or under any other Purchase Document.
(bb) There are no Adverse Claims (including, without limitation,
liens or retained security titles of conditional vendors, but excluding
any Adverse Claims created hereunder) of any nature whatsoever on any
properties of the Seller. The Seller is not a party to any contract,
agreement, lease or instrument the performance of which, either
unconditionally or upon the happening of an event, will result in or
require the creation of any Adverse Claim on the property or assets of
the Seller, or otherwise result in a violation of this Agreement or any
other Purchase Document, other than any Adverse Claims created pursuant
to any Purchase Document.
(cc) (i) The Seller is not a party to any indenture, loan or
credit agreement or any lease or other agreement or instrument or
subject to any organizational restriction that
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could reasonably be expected to have, and no provision of applicable law
or governmental regulation could reasonably be expected to have, a
material adverse effect on the condition (financial or otherwise),
business, operations, properties or prospects of the Seller, or may
reasonably be expected to have such an effect on the ability of the
Seller to carry out its obligations hereunder or under any other
Purchase Document, and (ii) neither the Seller nor, to the best of the
knowledge of the Seller, any other party is in default under or with
respect to this Agreement, any other Purchase Document or any other
contract, agreement, lease or other instrument to which the Seller is a
party and which is material to the Seller's condition (financial or
otherwise), business, operations, properties or prospects, and neither
the Seller nor any such other party has delivered or received any notice
of default thereunder.
(dd) The Lock Box Banks are the only institutions holding Lock
Box Accounts for the receipt of payments from all Obligors, and such
Obligors have been instructed or, upon the creation of Receivables owed
by them, will be instructed to make payments only to Lock Box Accounts,
and such instructions have not been modified or revoked by the Seller
and are in full force and effect.
ARTICLE V
GENERAL COVENANTS OF THE SELLER
SECTION 5.01. Affirmative Covenants of the Seller. Until the Collection
Date, the Seller will, unless the Agent shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply in all material respects
with all applicable laws, rules, regulations and orders with respect to
it, its business and properties and all Seller Assets.
(b) Preservation of Corporate Existence. Preserve and maintain
its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified in
good standing as a foreign corporation in each jurisdiction where the
failure to preserve and maintain such existence, rights, franchises,
privileges and qualification would materially adversely affect the
interests of the Owners or the Agent hereunder or in and to the Seller
Assets, or the ability of the Seller or the Collection Agent to perform
its obligations under any Purchase Document or the ability of the Seller
to perform its obligations under the Contracts.
(c) Audits. (i) At any time and from time to time during regular
business hours and upon reasonable prior notice, permit the Agent, or
its agents or representatives, at the Seller's expense, if any Event of
Insecurity shall have occurred and be continuing, or, otherwise, at the
Agent's expense, (A) to examine and make copies of and abstracts from
all books, records and documents (including, without limitation,
computer tapes and disks) in the possession or under the control of the
Seller, Maxtor, their Affiliates or the
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agents of the Seller, Maxtor or their Affiliates relating to the Seller
Assets and the Lock Box Account activity, and (B) to visit the offices
and properties of the Seller for the purpose of examining such materials
described in clause (A) above, and to discuss matters relating to the
Seller Assets and the Lock Box Account activity or the Seller's,
Maxtor's or the Selling Affiliates' performance under the Purchase
Documents or under the Contracts with any of the officers or employees
of the Seller having knowledge of such matters, and (ii) within 90 days
after the end of each fiscal year of the Seller, at the Seller's
expense, cause Coopers & ▇▇▇▇▇▇▇ to perform, and deliver to the Agent a
written report of, or permit other independent public accountants
specified by the Agent (upon the occurrence and during the continuance
of any Event of Insecurity) or otherwise acceptable to the Agent to
perform and deliver to the Agent and the Owners a written report of, an
audit with respect to the Receivables, the Related Security, the Credit
and Collection Policies, the Lock Box Account activity and the
performance by the Seller, Maxtor and the Selling Affiliates of their
respective obligations, covenants and duties under the Purchase
Documents, in substantially the scope and form set forth in Schedule IV
hereto.
(d) Keeping of Records and Books of Account. Maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing Receivables in the
event of the destruction of the originals thereof), and keep and
maintain all documents, books, records and other information, reasonably
necessary or advisable for the collection of all Receivables (including,
without limitation, records adequate to permit the daily identification
of each Receivable and all Collections of and adjustments to each
Receivable).
(e) Performance and Compliance with Receivables and Contracts.
At its expense timely and fully perform and comply with all material
provisions, covenants and other promises required to be observed by it
under the Contracts related to the Receivables.
(f) Location of Records. Keep its chief place of business and
chief executive office and the office where it keeps the originals of
its records concerning the Seller Assets at the address of the Seller
referred to in Section 4.01(j) on the date hereof or, upon 30 days'
prior written notice to the Agent and the Trustee, at any other
locations in a jurisdiction within the United States where all action
required by Section 6.05 shall have been taken.
(g) Credit and Collection Policies. Comply in all material
respects with the applicable Credit and Collection Policy in regard to
each Receivable and the related Contract.
(h) Collections.
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(i) Instruct, or cause to be instructed, all Obligors to
make all payments in respect of Subject Receivables directly to
a Lock Box Account,
(ii) if the Seller shall otherwise receive any Collections,
deposit such Collections to a Lock Box Account by the second
Business Day (or, upon the occurrence and during the continuance
of any Event of Insecurity, the first Business Day) following
such receipt or, if such Collections were paid by the applicable
Obligor in respect of any merchandise which shall not have been
shipped at the time of such payment and the shipping of which
shall cause the Receivable resulting from the sale of such
merchandise to arise, by the second Business Day (or, upon the
occurrence and during the continuance of any Event of
Insecurity, the first Business Day) following the shipping of
such merchandise,
(iii) if the Seller shall be deemed to receive any
Collections pursuant to Section 2.05, deposit the Owners'
respective allocable shares of such Collections directly to the
Agent's Account (A) if and so long as no Event of Insecurity
shall have occurred and be continuing, on the day of such
receipt or deemed receipt, and (B) if and so long as any Event
of Insecurity shall have occurred and be continuing, promptly
upon such receipt or deemed receipt and in any event no later
than one Business Day following such receipt or deemed receipt,
and
(iv) upon the occurrence of any Event of Insecurity, cause
the Lock Box Banks to immediately sweep Collections from the
Lock Box Accounts to the Concentration Account.
(i) Selling Affiliate Receivables Contribution and Sale
Agreements. At its expense, timely and fully perform and comply in all
material respects with all provisions, covenants and other promises
required to be observed by it under the respective Selling Affiliate
Receivables Contribution and Sale Agreements, maintain the respective
Selling Affiliate Receivables Contribution and Sale Agreements in full
force and effect, enforce the respective Selling Affiliate Receivables
Contribution and Sale Agreements in accordance with its terms, take all
such action to such end as may be from time to time reasonably requested
by the Agent, and make to any party to the respective Selling Affiliate
Receivables Contribution and Sale Agreements such demands and requests
for information and reports or for action as the Seller is entitled to
make thereunder and as may be from time to time reasonably requested by
the Agent.
(j) Maintenance of Separate Existence. Do all things necessary
to maintain its corporate existence separate and apart from Maxtor and
other Affiliates of the Seller, including, without limitation, (i)
maintaining proper corporate records and books of account separate from
those of such Affiliates; (ii) maintaining its assets, funds and
transactions separate from those of such Affiliates, reflecting such
assets and transactions in financial statements separate and distinct
from those of such Affiliates, and evidencing such assets, funds and
transactions by appropriate entries in the books and records referred to
in clause (i) above, and providing for its own operating expenses and
liabilities
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from its own assets and funds other than certain expenses and
liabilities relating to basic corporate overhead which may be allocated
between the Seller and such Affiliates; (iii) holding such appropriate
meetings or obtaining such appropriate consents of its Board of
Directors as are necessary to authorize all the Seller's corporate
actions required by law to be authorized by the Board of Directors,
keeping minutes of such meetings and of meetings of its stockholders and
observing all other customary corporate formalities (and any successor
Seller not a corporation shall observe similar procedures in accordance
with its governing documents and applicable law); (iv) at all times
entering into its contracts and otherwise holding itself out to the
public under the Seller's own name as a legal entity separate and
distinct from such Affiliates; and (v) conducting all transactions and
dealings between the Seller and such Affiliates on an arm's-length
basis.
(k) Compliance with Opinion Assumptions and Constituent
Documents. Without limiting the generality of Section 5.01(j) above,
maintain in place all policies and procedures, and take and continue to
take all actions, described in the assumptions as to facts set forth in,
and forming the basis of, the opinions set forth in the opinion
delivered to the Agent in substantially the form of the opinion
delivered pursuant to Section 3.01 (1), and comply with, and cause
compliance with, the provisions of the constituent documents of the
Seller delivered to the Agent pursuant to Section 3.01 as the same may,
from time to time, be amended, modified or otherwise supplemented with
the prior written consent of the Agent.
(1) Purchase of Seller Assets from Maxtor. With respect to all
Seller Assets outstanding from time to time, purchase from Maxtor or
such Selling Affiliate (in accordance with the Receivables Contribution
and Sale Agreement or the respective Selling Affiliate Receivables
Contribution and Sale Agreement, as applicable) for fair consideration
and approximate fair market value for such Seller Assets and in a sale
the terms and conditions of which (including, without limitation, the
purchase price thereof) reasonably approximate an arm's-length
transaction between unaffiliated parties.
(m) Nature of Business and Permitted Transactions. Engage solely
in the following businesses and transactions, directly or indirectly:
purchasing Seller Assets from Maxtor and the Selling Affiliates and
selling interests in such Seller Assets to the Owners hereunder and the
other transactions permitted or contemplated hereby.
(n) Receivables Contribution and Sale Agreement. At its expense,
timely and fully perform and comply in all material respects with all
provisions, covenants and other promises required to be observed by it
under the Receivables Contribution and Sale Agreement and all Selling
Affiliate Receivables Contribution and Sale Agreements, maintain the
Receivables Contribution and Sale Agreement and all Selling Affiliate
Receivables Contribution and Sale Agreements in full force and effect,
enforce the Receivables Contribution and Sale Agreement in accordance
with their respective terms, take all such action to such end as may be
from time to time reasonably requested by the Agent, and make to any
party to the Receivables Contribution and Sale Agreement or any Selling
Affiliate Receivables Contribution and Sale Agreement such demands and
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requests for information and reports or for action as the Seller is
entitled to make thereunder and as may be from time to time reasonably
requested by the Agent.
(o) Conditions Subsequent to Initial Purchase. Deliver to the
Agent (i) as soon as possible, and in any event within 30 days after the
Closing Date (or such later date as may be agreed in writing by the
Seller and the Agent), completed requests for information, dated after
the Closing Date, listing the financing statements referred to in
Section 3.01(b) and (g) and all other effective financing statements
filed in the jurisdictions referred to in subsection 3.01(b) and (g)
that name the Seller or Maxtor as debtor or seller, together with copies
of such other financing statements (none of which shall cover any Seller
Assets other than Seller Assets covered by financing statements with
respect to which the Agent received financing statements of the type
described in Section 3.01(b) and (g)), and (ii) on or before April 10,
1998 (or such later date as may be agreed in writing by the Seller and
the Agent), a Parent Undertaking in substantially the form of Exhibit J,
duly executed by Hyundai Electronics Industries Co., Ltd (which
undertaking shall be released upon satisfaction of the conditions
precedent referred to in Section 3.01(o), (p), (q) and (r)).
SECTION 5.02. Reporting Requirements of the Seller. Until the Collection
Date, the Seller will, unless the Agent shall otherwise consent in writing,
furnish to the Agent, each owner and the Trustee:
(a) as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of the
Seller, a balance sheet of the Seller as of the end of such quarter and
statements of income and of cash flows of the Seller for the period
commencing at the end of the previous fiscal year and ending with the
end of such quarter, certified by the chief financial officer of the
Seller;
(b) as soon as available and in any event within 90 days after
the end of each fiscal year of the Seller, a copy of the Seller's annual
audit report containing a balance sheet of the Seller as of the end of
such year and statements of income and of cash flows for such year,
certified in a manner acceptable to the Agent by Coopers & ▇▇▇▇▇▇▇ or
other independent public accountants acceptable to the Agent and the
Owners;
(c) as soon as possible and in any event within five days after
the Seller's chief financial officer, chief accounting officer,
treasurer or assistant treasurer obtains knowledge of the occurrence of
each Event of Termination and each Incipient Event of Termination
continuing on the date of such statement, a statement of such officer of
the Seller setting forth details of such Event of Termination or
Incipient Event of Termination and the action which the Seller has taken
and proposes to take with respect thereto;
(d) promptly and in any event within five Business Days after
the Seller's receipt or delivery thereof, copies of all notices,
requests, reports, certificates, and other
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information and documents delivered or received by the Seller from time
to time under or in connection with any Purchase Document;
(e) not later than eight Business Days after the last day of
each Fiscal Month, at the request of the Agent, and in any event within
five days after the occurrence of any Event of Termination or Incipient
Event of Transaction, a list of the outstanding Receivables on such day;
and
(f) such other information, documents, records or reports
respecting the Seller Assets or the condition or operations, financial
or otherwise, of the Seller, the Selling Affiliates or any of their
respective subsidiaries as the Agent or any Owner may from time to time
reasonably request.
SECTION 5.03. Negative Covenants of the Seller. Until the Collection
Date, the Seller will not, without the written consent of the Agent:
(a) Sales, Liens, Etc. Except as otherwise provided in the
Purchase Documents, sell, assign (by operation of law or otherwise) or
otherwise dispose of, or grant any option with respect to, or create or
suffer to exist any Adverse Claim (except to the extent created by the
Agent or the Secondary Purchasers or any Owner) upon or with respect to,
the Seller's undivided interest in any Seller Assets or any Lock Box
Account or other deposit account to which any Collections of any
Receivable are sent or assign any right to receive income in respect
thereof.
(b) Extension or Amendment of Receivables. Except as otherwise
permitted in Section 6.02 if Maxtor is the Collection Agent, (i) extend
the terms of any Receivable, or (ii) amend or otherwise modify the terms
of any Receivable, or terminate or permit the termination of, or amend,
modify or waive any term or condition of, any Contract related thereto,
other than in connection with Maxtor's standard sales programs, if in
any such case such amendment, modification or waiver would be reasonably
likely to impair the collectibility of any Receivable or materially
adversely affect the rights or interests of the Agent or the Secondary
Purchasers or any Owner with respect thereto or hereunder; provided
however, that, except as so permitted in Section 6.02, in no event shall
the Seller amend or otherwise modify the terms of any Subject Receivable
unless the Agent shall have otherwise notified the Seller.
(c) Change in Business or Credit and Collection Policy. Make any
change in the character of its business or in its Credit and Collection
Policy, which change would, in either case, be reasonably likely to
impair the collectibility of any Receivable.
(d) Change in Payment Instructions to Obligors. Add or terminate
any bank as a Lock Box Bank or any account as a Lock Box Account from
those listed in Schedule I hereto, or make any change in its
instructions to Obligors regarding payments to be made to any Lock Box
Bank, unless the Agent shall have received notice of such addition,
termination or change, executed copies of Lock Box Agreements with
respect to
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each new Lock Box Bank and each new Lock Box Account and delivered an
updated Schedule I hereto to the Agent, as applicable.
(e) Deposits to Lock Box Accounts. Deposit or otherwise credit,
or cause or permit to be so deposited or credited, to any Lock Box
Account cash or cash proceeds other than Collections of Receivables.
(f) Mergers, Etc. Merge with or into or consolidate with or
into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of
its assets (whether now owned or hereafter acquired) to, any Person.
(g) Change in Corporate Name, Etc. Make any change to its name,
identity, structure or chief executive office, or use any tradenames,
fictitious names, assumed names or "doing business as" names, unless,
prior to the effective date of any such change or use, the Seller
delivers to the Agent (i) UCC financing statements, executed by the
Seller and, if applicable, Maxtor and the Selling Affiliates, necessary
to reflect such change or use and to continue the perfection of the
ownership interests or security interests in the Seller Assets, and (ii)
new Lock Box Agreements executed by the Seller, necessary to reflect
such change and to continue to enable the Agent to exercise its rights
contained in Section 6.03(a), and (iii) in the case of any such change
in its structure, a favorable opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP or
other counsel of the Seller reasonably satisfactory to the Agent, in
substantially the form of Exhibit E-1 hereto, giving effect to such
change, in each case of clauses (i), (ii) and (iii) together with such
other documents and instruments as the Agent may reasonably request in
connection therewith.
(h) Other Adverse Claims. Except as otherwise provided in the
Purchase Documents, create or suffer to exist any Adverse Claim upon or
with respect to any of the Seller's property, or assign any right to
receive income, to secure any Debt of any Person.
(i) Debt. Except as otherwise provided in the Purchase
Documents, create, incur, assume or suffer to exist any Debt.
(j) Contingent Obligations. Except as otherwise provided in the
Purchase Documents, create, incur, assume or suffer to exist any
Contingent Obligation.
(k) Distributions, Etc. Declare or make any dividend payment or
other distribution of assets, properties, cash, rights, obligations or
securities on account of any interest in the Seller, or return any
capital to its owners as such, or purchase, retire, defease, redeem or
otherwise acquire for value of make any payment in respect of any
interest in the Seller or any warrants, rights or options to acquire any
such interest, now or hereafter outstanding, other than, in any such
case, as shall have been duly authorized by all necessary action of the
Seller and in accordance with applicable law, provided that no event has
occurred and is continuing, or would result from such declaration,
dividend,
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distribution, return, purchase, retirement, defeasance, redemption,
acquisition or payment, which constitutes an Event of Termination or an
Incipient Event of Termination.
(1) Transactions with Affiliates. Enter into or permit to exist
any transaction (including, without limitation, the purchase, sale,
lease or exchange of any property or the rendering of any service) with
Maxtor or any other Affiliate of the Seller, other than on terms that
are fair and reasonable in the circumstances and that reasonably
approximate an arm's-length transaction between unaffiliated parties.
(m) Receivables Contribution and Sale Agreement. (i) Cancel or
terminate the Receivables Contribution and Sale Agreement or any Selling
Affiliate Receivables Contribution and Sale Agreement or consent to or
accept any cancellation or termination thereof, (ii) amend or otherwise
modify any term or condition of the Receivables Contribution and Sale
Agreement or any Selling Affiliate Receivables Contribution and Sale
Agreement or give any consent, waiver or approval thereunder, (iii)
waive any default under or breach of the Receivables Contribution and
Sale Agreement or any Selling Affiliate Receivables Contribution and
Sale Agreement, or (iv) take any other action under the Receivables
Contribution and Sale Agreement or any Selling Affiliate Receivables
Contribution and Sale Agreement not required by the terms thereof that
would impair the value of any Seller Assets or the rights or interests
of the Seller thereunder or of the Agent or any owner or Indemnified
Party hereunder or thereunder.
ARTICLE VI
ADMINISTRATION AND COLLECTION
SECTION 6.01. Designation of Collection Agent. (a) The Subject
Receivables shall be serviced, administered and collected by the Person (the
"Collection Agent") designated to do so from time to time in accordance with
this Section 6.01. Until the Agent designates a new Collection Agent, Maxtor is
hereby designated as, and hereby agrees to perform the duties and obligations
of, the Collection Agent pursuant to the terms hereof. The Agent may, at any
time, designate as Collection Agent any Person (including itself) to succeed
Maxtor or any successor Collection Agent upon such terms and conditions as the
Agent may require. The Collection Agent may, with the prior consent of the
Agent, subcontract with any other Person to service, administer or collect the
Subject Receivables, provided that the Person with whom the Collection Agent so
subcontracts shall not become the Collection Agent hereunder and the Collection
Agent shall remain liable for the performance of the duties and obligations of
the Collection Agent pursuant to the terms hereof. The Agent hereby consents to
the subcontracting by Maxtor, as Collection Agent, with each Selling Affiliate
from time to time to service, administer and collect the Subject Receivables
originally owed to such Selling Affiliate, subject to the proviso to the
preceding sentence, and provided that the Agent may at any time require the
Collection Agent to, and the Collection Agent shall at the Agent's request,
terminate such subcontracting with such Selling Affiliate.
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(b) The Collection Agent is hereby authorized and empowered to instruct
the Trustee to make withdrawals and payments from the Concentration Account,
subject to the limitations set forth in Section 6.06(a) and as otherwise set
forth in this Agreement.
SECTION 6.02. Duties of Collection Agent. (a) The Collection Agent shall
(unless the Agent directs otherwise and subject to the Agent's direction and
control to the extent consistent with the applicable Credit and Collection
Policy) take or cause to be taken all such actions as may be necessary or
advisable to collect each Subject Receivable from time to time, all in
accordance with applicable laws, rules and regulations, with reasonable care and
diligence, and in accordance with the applicable Credit and Collection Policy.
Each of the Seller, the Owners and the Agent hereby appoints as its agent the
Collection Agent, from time to time designated pursuant to Section 6.01, to
enforce its respective rights and interests in and under the Seller Assets. In
no event shall the Collection Agent be entitled to make the Secondary
Purchasers, the Agent or any Owner a party to any litigation without the express
prior written consent of such party. Notwithstanding anything to the contrary
contained herein, the Agent shall have the absolute and unlimited right to
direct the Collection Agent to commence or settle any legal action or proceeding
to enforce collection of Subject Receivables to the extent consistent with the
applicable Credit and Collection Policy.
(b) The Collection Agent shall instruct the Trustee in writing to set
aside and hold in trust for the account of the Seller and each Owner their
respective allocable shares of the Collections of Subject Receivables in
accordance with Section 2.05. The Collection Agent shall take all other actions
required to be taken by it under this Agreement, including, without limitation,
delivery of the Daily Report and Purchaser Report pursuant to Section 2.06.
(c) The Collection Agent may not extend the maturity or adjust the
Outstanding Balance, or otherwise amend or modify the terms, of any Subject
Receivable or amend, modify or waive any term or condition, or terminate or
permit the termination, of any Contract related thereto; provided, however, that
if and so long as no Event of Insecurity shall have occurred and be continuing,
and unless the Agent shall have otherwise notified Maxtor, Maxtor, while it is
the Collection Agent, may, in accordance with the Credit and Collection Policy,
extend the maturity of any Defaulted Receivable as Maxtor may determine to be
appropriate to maximize Collections thereof.
(d) The Seller shall deliver to the Collection Agent, and the Collection
Agent shall hold in trust for the Seller and each Owner in accordance with their
respective interests, all documents, instruments and records (including, without
limitation, computer tapes or disks) which evidence or relate to Subject
Receivables.
(e) The Collection Agent, if other than the Seller, shall as soon as
practicable upon demand deliver to the Seller all documents, instruments and
records in its possession which evidence or relate to Receivables of the Seller
other dm Subject Receivables, and copies of documents, instruments and records
in its possession which evidence or relate to Subject Receivables.
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(f) The Collection Agent's authorization under this Agreement shall
terminate on the Collection Date.
SECTION 6.03. Rights of the Agent. (a) The Agent may, at any time after
the occurrence and during the continuance of any Event of Insecurity and at the
Seller's expense, notify the Obligors of Subject Receivables, or any of them, of
the ownership of Purchased Interests by the Owners.
(b) At any time following the designation of a Collection Agent other
than Maxtor pursuant to Section 6.01:
(i) The Agent may direct the Obligors of Subject Receivables, or
any of them, to make payment of all amounts due or to become due to the
Seller under any Subject Receivable directly to the Agent or its
designee.
(ii) The Seller shall, at the Agent's request and at the
Seller's expense, give notice of the ownership of Purchased Interests to
such Obligors and direct them to make such payments directly to the
Agent or its designee.
(iii) The Seller shall, at the Agent's request and at the
Seller's expense, (A) assemble all of the documents, instruments and
other records (including, without limitation, computer tapes and disks)
which evidence the Seller Assets, or which are otherwise necessary or
desirable to collect such Subject Receivables, and shall make the same
available to the Agent at a place selected by the Agent or its designee,
and (B) segregate all cash, checks and other instruments received by it
from time to time constituting Collections of Subject Receivables in a
manner acceptable to the Agent and shall, promptly upon receipt, remit
all such cash, checks and instruments, duly endorsed or with duly
executed instruments of transfer, to a Lock Box Account.
(iv) The Seller and Maxtor hereby irrevocably authorize the
Agent to take any and all steps in the Seller's, Maxtor's or the
respective Selling Affiliates' name and on behalf of the Seller and the
Owners, necessary or desirable, in the determination of the Agent, to
collect all amounts due under any and all Seller Assets, including,
without limitation, endorsing the Seller's, Maxtor's or such Selling
Affiliate's name on checks and other instruments representing
Collections, enforcing Subject Receivables and the related Contracts,
and adjusting, settling or compromising the amount or payment thereof,
in the same manner and to the same extent as the Seller, Maxtor or such
Selling Affiliate might have done absent the Purchases hereunder, and
the Seller and Maxtor hereby appoints the Agent as its attorney-in-fact
to carry out the intent and purpose of this subparagraph.
SECTION 6.04. Responsibilities of the Seller. Anything herein to the
contrary notwithstanding:
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(a) The Seller and the respective Selling Affiliates shall
perform all of their respective obligations under the Contracts related
to the Subject Receivables to the same extent as if Purchased Interests
had not been sold hereunder and the exercise by the Agent of its rights
hereunder shall not relieve the Seller or any Selling Affiliate from
such obligations or its obligations with respect to Subject Receivables;
and
(b) Neither the Agent nor the Owners shall have any obligation
or liability with respect to any Seller Assets, nor shall any of them be
obligated to perform any of the obligations of the Seller or any Selling
Affiliate thereunder.
SECTION 6.05. Further Action Evidencing Purchases. (a) The Seller agrees
that from time to time, at its expense, it will, and will cause the respective
Selling Affiliates to, promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that the Agent or any Owner may reasonably request, in order to perfect, protect
or more fully evidence the Purchased Interests, or to enable any of them or the
Agent to exercise and enforce any of their respective rights and remedies
hereunder or under the Assignments. Without limiting the generality of the
foregoing, the Seller will, and will cause the respective Selling Affiliates to,
upon the request of the Agent or any Owner: (i) execute and file such financing
or continuation statements, or amendments thereto or assignments thereof, and
such other instruments or notices, as may be necessary or desirable, or as the
Agent or any Owner may request, in order to perfect, protect or evidence such
Purchased Interests; (ii) at any time after the occurrence and during the
continuance of any Event of Insecurity (A) ▇▇▇▇ conspicuously each invoice
evidencing each Subject Receivable and the related Contract with a legend,
acceptable to the Agent, evidencing that such Purchased Interests have been sold
in accordance with this Agreement; and (B) ▇▇▇▇ its master data processing
records evidencing such Subject Receivables and related Contracts with such
legend.
(b) The Seller hereby authorizes the Agent to file one or more financing
or continuation statements, and amendments thereto and assignments thereof,
relating to all or any Seller Assets now existing or hereafter arising without
the signature of the Seller where permitted by law. A photocopy or other
reproduction of this Agreement or any financing statement covering all or any of
the Seller Assets shall be sufficient as a financing statement where permitted
by law.
(c) If the Seller fails to perform any agreement contained herein, the
Agent may itself perform, or cause performance of, such agreement, and the
expenses of the Agent incurred in connection therewith shall be payable by the
Seller under Section 10.01 or Section 13.06, as applicable.
SECTION 6.06. Establishment of Concentration Account and Lock Box
Accounts. (a) Concentration Account. On or prior to the Closing Date, the
Collection Agent, for the benefit of the Beneficiaries, shall establish and
maintain or cause to be established and maintained in the name of the Agent with
Bankers Trust Company a segregated trust account (such account being the
"Concentration Account" and such institution holding such account being the
"Concentration Account Bank"), such account bearing a designation clearly
indicating
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that the funds deposited therein are held for the benefit of the Beneficiaries.
The Agent shall possess all right, title and interest in and to all funds from
time to time on deposit in the Concentration Account and in all proceeds
thereof. The Concentration Account shall be under the sole dominion and control
of the Agent for the benefit of the Beneficiaries, and neither the Seller, nor
any Person claiming by, through or under the Seller, shall have any right, title
or interest in, or any right to withdraw any amount from, the Concentration
Account. Except as expressly provided in this Agreement, the Collection Agent
agrees that it shall have no right of set-off or banker's lien against, and no
right to otherwise deduct from, any funds held in the Concentration Account for
any amount owed to it by any Beneficiary. The Collection Agent shall cause
Collections to be deposited into the Concentration Account on each Business Day
as promptly as is reasonably practicable after receipt in a Lock Box Account,
and in any event no later than the day on which such Collections become
available funds in such Lock Box Account. The Seller will require Maxtor and the
Selling Affiliates, if any, to deposit any Collections received by it into a
Lock Box Account within two Business Days following the Business Day on which
such Collections are so received. Notwithstanding the foregoing, if and to the
extent that funds that are not Collections are deposited into the Concentration
Account, the Collection Agent may direct the Trustee in writing to withdraw such
funds from the Concentration Account and deposit them in the Seller's Account.
The Agent hereby authorizes the Trustee to make withdrawals and payments from
the Concentration Account, and to invest the funds in the Concentration Account,
in accordance with the provisions of this Agreement.
If, at any time, the institution holding the Concentration Account
ceases to be an Eligible Institution, the Collection Agent, upon obtaining
actual knowledge thereof, shall, within 15 Business Days (i) establish a new
Concentration Account meeting the conditions specified above with an Eligible
Institution, (ii) transfer any cash and/or any investments held in the old
Concentration Account or with respect thereto to such new Concentration Account
and (iii) in the case of any new Concentration Account, deliver to all Lock Box
Banks new Lock Box Agreements (with copies thereof to the Trustee) referring to
such new Concentration Account, and from the date such new Concentration Account
is established, it shall be the "Concentration Account". Pursuant to the
authority granted to the Collection Agent in Section 6.02, the Collection Agent
shall have the power to instruct the Trustee to make withdrawals and payments
from the Concentration Account for the purposes of carrying out the Collection
Agent's or the Trustee's duties specified in this Agreement.
Funds on deposit in the Concentration Account, shall, at the written
direction of the Collection Agent, be invested by the Trustee or the Eligible
Institution maintaining such accounts in Available Investments as instructed by
the Collection Agent in writing (which may be a standing instruction). All such
Available Investments shall be held by the Trustee or the Eligible Institution
maintaining such accounts for the benefit of the Beneficiaries. Such funds shall
be invested in Available Investments that will mature so that funds will be
available on or before the close of business on the Business Day next preceding
the following Settlement Date in amounts sufficient for the Trustee to make each
distribution required under this Agreement on the next Settlement Date. All
interest and other investment earnings (net of losses and investment expenses)
received on funds on deposit in the Concentration Account, to the extent
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such investment income is not needed to pay the Beneficiaries on such Settlement
Date, shall be added to the Concentration Account and allocated in accordance
with Section 2.06. The Trustee is hereby authorized, unless otherwise directed
in writing by the Collection Agent, to effect transactions in Available
Investments through a capital markets affiliate of the Trustee.
(b) Lock Box Accounts. On or prior to the Closing Date, the Collection
Agent for the benefit of the Beneficiaries, shall establish and maintain or
cause to be established and maintained in the name of the Agent with an Eligible
Institution, lock boxes or segregated accounts (each such lockbox and account, a
"Lock Box Account"). Obligors will be directed to remit payments with respect to
their Receivables to a Lock Box Account. The Lock Box Accounts shall be under
the sole dominion and control of the Agent for the benefit of the Beneficiaries,
and neither the Seller, nor any Person claiming by, through or under the Seller,
shall have any right, title or interest in, or any right to withdraw any amount
from, any Lock Box Account. The Collection Agent shall cause the Agent to
transfer Collections to the Concentration Account in the manner set forth in
Section 6.06(a). Each Lock Box Account shall be maintained with documentation
and instructions in form and substance satisfactory to the Trustee and the
Agent. Such documentation shall provide, among other things, that available
amounts shall be immediately transferred to the Concentration Account. The
Collection Agent will not (i) make any change in the name, address or ABA number
of any Lock Box Account Bank, the account number of any Lock Box Account, the
name, address or ABA number of any Concentration Account Bank, or the account
number for any Concentration Account from that set forth in Schedule I hereto or
(ii) amend any instruction to any Obligor or any instruction to or agreement
with any Lock Box Bank with respect to any Lock Box Account (other than to (A)
redirect payments of Obligors to a different Lock Box Account or to the
Concentration Account, (B) close unused Lock Box Accounts and (C) open new Lock
Box Accounts if the Trustee shall have received executed copies of the Lock Box
Agreements with each new Lock Box Bank, and an updated Schedule I) unless the
Trustee (if directed in writing to do so by the Agent), shall have given its
prior consent to such change or amendment. Upon notice from any Lock Box Bank
that any Lock Box Account or Lock Box Agreement is to be terminated by such Lock
Box Bank, the Collection Agent shall forthwith (and in any event within 10 days
after receipt of such notice), (i) establish a new Lock Box Account (if the Lock
Box Account in respect of which the notice of termination has been given is the
only Lock Box Account hereunder), and (ii) instruct each Obligor to make all
payments made by it to the Collection Agent thereafter to a Lock Box Account in
respect of which no notice of termination has been given, or, if there is no
such Lock Box Account, to the Concentration Account.
The Collection Agent hereby agrees and acknowledges that (i) it has
executed and delivered to the Trustee and the Agent a letter and executed
acknowledgment thereto substantially in the form of Exhibit C hereto (each, a
"Lock Box Agreement" as the case may be), addressed to and executed by each
banking institution or other Person with which a Lock Box Account is maintained
(each such banking institution with which a Lock Box Account is maintained being
a "Lock Box Bank") and (ii) it shall execute and deliver a substantially similar
Lock Box Agreement, prior to the establishment by it of any additional or
alternative Lock Box Account. The Collection Agent hereby agrees, and the
Trustee and the Agent hereby each acknowledges, that the execution and delivery
of each Lock Box Agreement transfers all right,
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title and interest in all monies, securities and instruments in the applicable
Lock Box Account to the Agent.
SECTION 6.07. Establishment of Trustee's Account and Cure Account (a)
(i) The Collection Agent, for the benefit of the Beneficiaries, shall establish
and maintain in the name of the Trustee, with an Eligible Institution a
segregated trust account accessible only by the Trustee (the "Trustee's
Account"), which shall be identified as the "Trustee's Account for the Maxtor
Receivables Purchase and Sale Agreement" and shall bear a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Beneficiaries. The Trustee's Account initially shall be established at Bankers
Trust Company and thereafter may only be established or maintained at an
Eligible Institution.
(ii) At the written direction of the Collection Agent (which may be a
standing direction), funds on deposit in the Trustee's Account shall be invested
by the Trustee in Available Investments selected by the Collection Agent that
will mature so that such funds will be available on or before the close of
business on the Business Day next preceding the following Settlement Date. All
such Available Investments shall be held by the Trustee for the benefit of the
Beneficiaries. On each Settlement Date, all interest and other investment
earnings (net of losses and investment expenses) on funds on deposit in the
Trustee's Account shall be applied as set forth in Section 2.06. Funds deposited
in the Trustee's Account on a Business Day which immediately precedes a
Settlement Date upon the maturity of any Available Investments are not required
to be invested overnight.
(b) (i) The Collection Agent, for the benefit of the Beneficiaries,
shall establish and maintain in the name of the Trustee a segregated trust
account accessible only by the Trustee (the "Cure Account"), which shall be
identified as the "Cure Account for the Maxtor Receivables Corporation
Receivables Purchase and Sale Agreement" and shall bear a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Beneficiaries. The Cure Account shall initially be established with Bankers
Trust Company and thereafter may only be established or maintained at an
Eligible Institution.
(ii) At the written direction of the Collection Agent (which may be a
standing direction), funds on deposit in the Cure Account shall be invested by
the Trustee in Available Investments selected by the Collection Agent that will
mature so that such funds will be available on or before the close of business
on the Business Day next preceding the following Settlement Date. All such
Available Investments shall be held by the Trustee for the benefit of the
Beneficiaries. On each Settlement Date, all interest and other investment
earnings (net of losses and investment expenses) on funds on deposit in the Cure
Account shall be applied as set forth in Section 2.06. Funds deposited in the
Cure Account on a Business Day which immediately precedes a Settlement Date upon
the maturity of any Available Investments are not required to be invested
overnight.
(c) (i) The Trustee shall possess all right, title and interest in and
to all funds on deposit from time to time in, and all Available Investments
credited to, the Trustee's Account and the Cure Account (collectively, the
"Trustee Accounts") and in all proceeds
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thereof. The Trustee Accounts shall be under the sole dominion and control of
the Trustee for the benefit of the Beneficiaries. If, at any time, any Trustee
Account is held by an institution other than an Eligible Institution, the
Trustee (or the Collection Agent, at the direction of the Trustee and on its
behalf) shall within 10 Business Days establish a new Trustee Account meeting
the conditions specified in paragraph (a)(i) or (b)(i) above, as applicable, and
shall transfer any cash and/or any investments to such new Trustee Account.
Neither the Seller, the Collection Agent nor any Person or entity claiming by,
through or under the Seller, the Collection Agent or any such Person or entity
shall have any right, title or interest in, or any right to withdraw any amount
from, any Trustee Account, except as expressly provided herein. Schedule VI
identifies each Trustee Account by setting forth the identification name of such
account, the account number of each such account, the account designation of
each such account and the name and location of the institution with which such
account has been established. If a substitute Trustee Account is established
pursuant to this Section 6.06, the party establishing such substitute Trustee
Account shall promptly provide to the Collection Agent or the Trustee, as
applicable, an amended Schedule VI, setting forth the relevant information for
such substitute Trustee Account.
(ii) Notwithstanding anything herein to the contrary, the Collection
Agent shall have the power, revocable by the Trustee at the direction of the
Agent, to instruct the Trustee in writing to make withdrawals and payments from
the Trustee Accounts for the purposes of carrying out the Collection Agent's or
Trustee's duties hereunder.
(d) At no time may greater than 10% of the funds on deposit in any
Trustee Account be invested in Available Investments (other than obligations of
the United States government or agencies the obligations of which are guaranteed
by the United States government and money market funds) of any single entity or
its Affiliates. Nothing herein shall be construed to impose any obligation on
the Trustee to monitor compliance with this Section 6.07(d).
(e) Any request by the Collection Agent to invest funds on deposit in
any Trustee Account shall be in writing (which may be a standing instruction)
and shall state that the requested investment is an Available Investment.
(f) The Trustee is hereby authorized, unless otherwise directed by the
Collection Agent, to effect transactions in Available Investments through a
capital markets Affiliate of the Trustee.
(g) In no event shall the Trustee be liable for the selection of
Available Investments or for investment losses incurred thereon. The Trustee
shall have no liability in respect of losses incurred as a result of the
liquidation of any investment prior to its stated maturity or the failure of the
Collection Agent to provide timely written investment direction. The Trustee
shall have no obligation to invest or reinvest any amounts held hereunder in the
absence of written investment direction.
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(h) The Trustee will periodically report to the Collection Agent, the
Seller and the Agent from time to time on such investments, and at such other
times that are reasonably requested by the Seller or the Collection Agent.
ARTICLE VII
EVENTS OF TERMINATION
SECTION 7.01. Events of Termination. If any of the following events
("Events of Termination") shall occur and be continuing:
(a) (i) The Collection Agent (if the Collection Agent is the
Company or Maxtor or any Selling Affiliate or any of their respective
Affiliates) shall fail to perform or observe any term, covenant or
agreement hereunder (other dm as referred to in clause (ii) of this
Section 7.01 (a)) and such failure shall remain unremedied for three
Business Days or (ii) the Collection Agent (if the Collection Agent is
the Company or Maxtor or any Selling Affiliate or any of their
respective Affiliates) or the Seller or any Selling Affiliate shall fail
to make any payment or deposit to be made by it hereunder or under any
Purchase Document when due, in the case of any payment in respect of any
Purchase Price or Yield (unless such Collection Agent or the Seller or
such Selling Affiliate shall have initiated such payment or deposit by
wire transfer on or before the day when due and the failure of such
payment or deposit to have been made when due shall have been beyond the
control of such Collection Agent or the Seller or such Selling
Affiliate, in which case no Event of Termination shall occur solely as a
result of such failure unless and until such payment or deposit shall
also not have been made on the Business Day following the day when due),
or by the first Business Day following the day when due in the case of
any payment or deposit not in respect of any Purchase Price or Yield; or
(b) The Seller, Maxtor or the Company shall fail to perform or
observe any term, covenant or agreement contained in Section 5.01 (i)
(except that no Event of Termination shall occur solely as a result of
any failure to make a payment or deposit when due under any Selling
Affiliate Receivables Contribution and Sale Agreement unless such
payment shall also not be made within the applicable cure period set
forth in Section 7.01 (a)(ii) above), 5.01(l), 5.02(c), 5.03 or 6.03 (a)
hereof, or any Selling Affiliate shall fail to perform or observe any
corresponding term, covenant or agreement contained in its Selling
Affiliate Receivables Contribution and Sale Agreement (except that no
Event of Termination shall occur solely as a result of any failure to
make a payment or deposit when due under any Selling Affiliate
Receivables Contribution and Sale Agreement unless such payment shall
also not be made within the applicable cure period set forth in Section
7.01 (a)(ii) above); or
(c) Any representation or warranty or statement made by the
Seller, Maxtor, the Company or any Selling Affiliate (or any of their
respective officers) under or in
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connection with any Purchase Document shall prove to have been incorrect
in any material respect when made; or
(d) The Seller, the Company, Maxtor or any Selling Affiliate
shall fail to perform or observe any other term, covenant or agreement
contained in any Purchase Document on its part to be performed or
observed and any such failure shall remain unremedied for 10 days after
written notice thereof shall have been given to the Seller, the Company,
Maxtor or any Selling Affiliate, as applicable, by the Agent; or
(e) The Seller, the Company, Maxtor or any Selling Affiliate
shall fail to pay any principal of or premium or interest on any Debt
which is outstanding in a principal amount of at least $5,000,000 in the
aggregate when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), and
such failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Debt; or any
other event shall occur or condition shall exist under any agreement or
instrument relating to any such Debt and shall continue after the
applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate,
or to permit the acceleration of, the maturity of such Debt; or any such
Debt shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), redeemed,
purchased or defeased, or an offer to prepay, redeem, purchase or
defease such Debt shall be required to be made, in each case prior to
the stated maturity thereof; or
(f) Any Purchase shall for any reason (other than pursuant to
the terms hereof) cease to create, or any Purchased Interest shall for
any reason cease to be, a valid and perfected first priority undivided
percentage ownership interest in the Seller Assets, or the Agent, for
the benefit of the Beneficiaries, shall cease to have a valid and
perfected flat priority security interest in the Seller Assets, or the
Assignment shall for any reason cease to evidence in the Owner of such
Purchased Interest legal and equitable title to, and ownership of, an
undivided percentage ownership interest in the Seller Assets or valid
and perfected first priority security interest therein; or
(g) The Seller, the Company, Maxtor, HEA, HEI or any Selling
Affiliate shall generally not pay its debts as such debts become due, or
shall admit in writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against the Seller, the Company,
Maxtor or any Selling Affiliate seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization
or relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official
for it or for any substantial part of its property and, in the case of
any such proceeding instituted against it (but not instituted by it),
either such proceeding shall remain undismissed or unstayed for a period
of 60 days, or any of the actions sought in such proceeding (including,
without
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limitation, the entry of an order for relief against, or the appointment
of a receiver, trustee, custodian or other similar official for, it or
for any substantial part of its property) shall occur; or the Seller,
the Company, Maxtor or any Selling Affiliate shall take any corporate
action to authorize any of the actions set forth above in this
subsection (g); or
(h) The average Default Termination Ratio for any Purchased
Interest as at the last day of any three successive Fiscal Months most
recently ended shall exceed 6.0%, or the average Delinquency Ratio for
any Purchased Interest as at the last day of any three successive Fiscal
Months most recently ended shall exceed 10.0%, or the average Loss-to
Liquidation Ratio for any Purchased Interest as at the last day of any
three successive Fiscal Months most recently ended shall exceed 1.0%, or
the average Dilution Ratio for any Purchased Interest as at the last day
of any three successive Fiscal Months most recently ended shall exceed
9.0%; or
(i) There shall have occurred any event which materially
adversely affects the collectibility of the Subject Receivables, or
there shall have occurred any other event which materially adversely
affects the ability of the Seller, the Company, Maxtor or any Selling
Affiliate to collect Subject Receivables or the ability of the Seller,
the Company, Maxtor or any Selling Affiliate to perform its obligations
under any Purchase Document or Contract; or
(j) Any ERISA Event shall have occurred with respect to a Plan
and the sum (determined as of the date of occurrence of such ERISA
Event) of the Insufficiency of such Plan and the Insufficiency of any
and all other Plans with respect to which an ERISA Event shall have
occurred and then exist (or the liability of the Seller, the Company,
Maxtor or any Selling Affiliate or any ERISA Affiliate of either thereof
related to such ERISA Event) exceeds $10,000,000; or
(k) The Seller, the Company, Maxtor or any Selling Affiliate or
any ERISA Affiliate of either thereof shall have been notified by the
sponsor of a Multiemployer Plan that it has incurred Withdrawal
Liability to such Multiemployer Plan in an amount which, when aggregated
with all other amounts required to be paid to Multiemployer Plans by the
Seller, the Company, Maxtor or any Selling Affiliate, respectively, and
its ERISA Affiliates as Withdrawal Liability (determined as of the date
of such notification), exceeds $10,000,000 or requires payment exceeding
$10,000,000 per annum; or
(1) The Seller, the Company, Maxtor or any Selling Affiliate or
any ERISA Affiliate of either thereof shall have been notified by the
sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of
ERISA, and as a result of such reorganization or termination the
aggregate annual contributions of the Seller, the Company, Maxtor or any
Selling Affiliate, respectively, and its ERISA Affiliates to all
Multiemployer Plans which are then in reorganization or being terminated
have been or will be increased over the amounts contributed to such
Multiemployer Plans for the respective plan years of such
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Multiemployer Plans immediately preceding the plan year in which the
reorganization or termination occurs by an amount exceeding $10,000,000;
or
(m) Any material provision of any Purchase Document after
delivery thereof pursuant to Section 3.01 shall for any reason cease to
be valid and binding on the Seller, the Company, Maxtor or any Selling
Affiliate, as applicable to such Purchase Document, or the Seller, the
Company, Maxtor or any Selling Affiliate, as applicable, shall so state
in writing, or any Purchase Document shall cease to be in full force and
effect; or
(n) The Company shall, at any time, together with HEI, HMM and
HC cease to own directly or indirectly (i) at least 30% of the issued
and outstanding shares of the capital stock of Maxtor, (ii) at least 30%
of the issued and outstanding shares of the capital stock of each
Selling Affiliate, or (iii) at least 51% of the issued and outstanding
shares of the capital stock of Maxtor while any Person (other than HEI,
the Company, or HC) directly or indirectly owns 5% or greater of the
issued and outstanding shares of the capital stock of Maxtor, or Maxtor
shall, at any tixne, cease to own 100% of the issued and outstanding
shares of the capital stock of the Seller; or
(o) Any of the Company's long-term public senior debt securities
shall be rated less than B- or B3 by S&P and ▇▇▇▇▇'▇, respectively or,
if such securities are not rated by S&P and ▇▇▇▇▇'▇, such securities
have a deemed rating of at least B- and B3, as determined by the Agent
in its sole discretion; or
(p) the Seller's constituent documents shall be amended,
supplemented or otherwise modified; or
(q) the Net Subject Receivables Balance shall, for a period of
five (5) consecutive Business Days, be less than the Required Net
Subject Receivables Balance; or
(r) the sum of the Purchased Interests shall equal or exceed 90%
until the Agent is satisfied with the Daily Report procedures hereunder,
and 100% thereafter.
then, and in any such event, the Agent shall, at the request, or may with the
consent, of any Owner, by notice to the Seller (with a copy of such notification
to the Trustee) declare the Facility Termination Date to have occurred,
whereupon the Facility Termination Date shall forthwith occur, without demand,
protest or further notice of any kind, all of which are hereby expressly waived
by the Seller; provided, however, that in the event of an actual or deemed entry
of an order for relief with respect to the Seller, the Company, Maxtor or any
Selling Affiliate under the Federal Bankruptcy Code or the occurrence of any
event described above in subsection (f), the Facility Termination Date shall
automatically so occur, without demand, protest or any notice of any kind, all
of which are hereby expressly waived by the Seller. Upon any such occurrence of
the Facility Termination Date, the Facility shall terminate, and no further
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Purchases shall be made hereunder. Furthermore, the Agent and the Owners shall
have, in addition to all other rights and remedies under this Agreement or
otherwise, all other rights and remedies provided under the UCC of the
applicable jurisdiction and other applicable laws (to the extent consistent with
an ownership interest in the Subject Receivables), which rights shall be
cumulative.
ARTICLE VIII
THE AGENT
SECTION 8.01. Authorization and Action. Each Owner hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under the Purchase Documents as are delegated to the Agent by the
terms hereof and thereof, together with such powers as are reasonably incidental
thereto.
SECTION 8.02. Agent's Reliance, Etc. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them as Agent under or in connection with this
Agreement any other Purchase Document or any instrument or document furnished
pursuant hereto (including, without limitation, the Agent's servicing,
administering or collecting Subject Receivables as Collection Agent pursuant to
Section 6.01), except for its or their own gross negligence or willful
misconduct. Without limiting the generality of the foregoing, the Agent: (i) may
consult with legal counsel (including counsel for the Seller, Maxtor, the
respective Selling Affiliates or the Company), independent public accountants
and other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (ii) makes no warranty or representation to any
Owner and shall not be responsible to any Owner for any statements, warranties
or representations (whether written or oral) made in or in connection with any
Purchase Document or any other instrument or document furnished pursuant hereto;
(iii) shall not have any duty to ascertain or to inquire as to the performance
or observance of any of the terms, covenants or conditions of any Purchase
Document or any other instrument or document furnished pursuant hereto on the
part of the Seller, Maxtor, the respective Selling Affiliates or the Company or
to inspect the property (including the books and records) of the Seller, Maxtor,
the respective Selling Affiliates or the Company; (iv) shall not be responsible
to any Owner for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of any Purchase Document or any other
instrument or document furnished pursuant hereto or thereto or any Subject
Receivable or Purchased Interest; and (v) shall incur no liability under or in
respect of any Purchase Document or any other instrument or document furnished
pursuant hereto by acting upon any notice (including notice by telephone),
consent, certificate or other instrument or writing (which may be by telecopier,
telegram, cable or telex) believed by it to be genuine and signed or sent by the
proper party or parties.
SECTION 8.03. CNAI and Affiliates. With respect to any Purchased
Interest owned by it, CNAI shall have the same rights and powers under this
Agreement as any other Owner and may exercise the same as though it were not the
Agent. CNAI and its Affiliates may
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generally engage in any kind of business with the Seller, Maxtor, the respective
Selling Affiliates or the Company or any Obligor, any of their respective
Affiliates and any Person who may do business with or own securities of the
Seller, Maxtor, the respective Selling Affiliates or the Company or any Obligor
or any of their respective Affiliates, all as if CNAI were not the Agent and
without any duty to account therefor to the Owners.
ARTICLE IX
ASSIGNMENT OF PURCHASED INTERESTS
SECTION 9.01. Assignment. (a) Any Secondary Purchaser may assign to any
Assignee, and any such Assignee may assign to any other Assignee, all or any
portion of any of its Purchased Interests pursuant to a written assignment with
respect to each such Purchased Interest in such form, and upon such other terms
and conditions, if any, as the parties thereto may mutually agree. Upon any such
assignment, (i) the Assignee shall become the Owner of such Purchased Interest
or portion thereof for all purposes of the Purchase Documents and any other
instrument or document furnished pursuant hereto and (ii) the Owner assignor
thereof shall relinquish its rights with respect to such Purchased Interest or
portion thereof for all purposes of the Purchase Documents and any other
instrument or document furnished pursuant hereto. The parties to each such
assignment shall deliver to the Agent the related written assignment, duly
executed by such parties, and each assignor shall promptly execute and deliver
all further instruments and documents, and take all other action, that the
Assignee may reasonably request in order to perfect, protect or more fully
evidence the Assignee's right, title and interest in and to such Purchased
Interest, and to enable the Assignee to exercise or enforce any rights under the
Purchase Documents and any other instrument or document furnished pursuant
hereto with respect to such Purchased Interest or portion thereof The Agent
shall (i) provide notice to the Seller of any assignment of a Purchased Interest
or portion thereof hereunder and (ii) maintain at its office referred to in
Section 13.02 a copy of each written assignment delivered to it and a register
for the recordation of the names and addresses of the Owners, and the Purchased
Interests or portions thereof owned by such Owners, from time to time. The
entries in such register shall constitute prima facie evidence of the accuracy
of the information contained therein, and the Seller, the Agent, the Secondary
Purchasers and the Owners may treat each Person whose name is recorded therein
as an Owner hereunder for all purposes of this Agreement. Such register shall be
available for inspection by the Seller or any Owner at any reasonable time and
from time to time upon reasonable prior notice.
(b) By executing and delivering an assignment (in the case of an Owner
assignor) and executing and accepting an assignment (in the case of an
Assignee), the Owner assignor thereunder and the Assignee thereunder confirm and
agree with each other and the other parties hereto as follows: (i) other dm as
provided in such assignment, such assigning Owner makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any other Purchase Document or any other instrument or document furnished
pursuant hereto or thereto or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of
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this Agreement or any other Purchase Document or any other instrument or
document furnished pursuant hereto or thereto, or the perfection, priority or
value of any ownership or security interest created or purported to be created
hereunder or under any other Purchase Document; (ii) such assigning Owner makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of the Seller or Maxtor or the performance or observance by
the Seller or Maxtor of any of its obligations under this Agreement, or any
other Purchase Document or any other instrument or document furnished pursuant
hereto or thereto; (iii) such Assignee confirms that it has received a copy of
this Agreement, each other Purchase Document and any other instrument or
document furnished pursuant hereto or thereto, together with copies of the most
recent annual and periodic financial statements delivered pursuant to clauses
(a) and (b) of Section 5.02 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and to purchase such Purchased Interest; (iv) such Assignee
will, independently and without reliance upon the Agent, any of its Affiliates,
such assigning Owner or any other Owner and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
Assignee appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement, the other Purchase
Documents and any other instrument or document furnished pursuant hereto or
thereto as are delegated to the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; and (vi) such Assignee appoints as
its agent the Collection Agent from time to time designated pursuant to Section
6.01 to enforce its respective rights and interests in and under the Seller
Assets.
SECTION 9.02. Annotation of the Assignment. The Agent shall annotate the
Assignment to reflect any assignments made pursuant to Section 9.01 or
otherwise.
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ARTICLE X
INDEMNIFICATION
SECTION 10.01. Indemnities by the Seller. Without limiting any other
rights which any Indemnified Party may have under any Purchase Document or under
applicable law, the Seller hereby agrees to indemnify each Indemnified Party
from and against any and all claims, losses and liabilities (including
reasonable attorneys' fees and expenses, but excluding (a) any amount to the
extent resulting from gross negligence or willful misconduct on the part of such
Indemnified Party, (b) recourse (except as otherwise specifically provided in
this Agreement) for uncollectible Receivables or (c) any income taxes (other
than any withholding taxes in respect of any Included Foreign Receivable)),
incurred by such Indemnified Party arising out of or as a result of any Purchase
Document or any transaction contemplated thereby, the ownership of Purchased
Interests, the use of proceeds of any Purchase or deposit of Owner Collections
to the Seller's Account or in respect of any Seller Asset (all of the foregoing,
to the extent not so excluded, being collectively referred to as "Indemnified
Amounts"). Without limiting or being limited by the foregoing and whether or not
any of the transactions contemplated hereby are consummated, the Seller shall
pay on demand to each Indemnified Party any and all amounts necessary to
indemnify such Indemnified Party from and against all Indemnified Amounts
relating to, resulting from, or which would not have occurred but for:
(i) any Receivable becoming a Subject Receivable which is not at
the applicable Purchase Date thereof an Eligible Receivable (including
without limitation any Included Foreign Receivable);
(ii) reliance on any representation or warranty or statement
made or deemed made by the Seller, Maxtor, the Company or any Selling
Affiliate or any of their respective Affiliates (or any of their
respective officers) under or in connection with any Purchase Document
which shall have been incorrect in any material respect when made;
(iii) the failure by the Seller, Maxtor or any Selling Affiliate
to comply with any applicable law, rule or regulation with respect to
any Seller Asset, or the nonconformity of any Seller Asset with any such
applicable law, rule or regulation;
(iv) the failure to either (a) vest in the Owner of a Purchased
Interest a valid and perfected first priority undivided percentage
ownership interest, to the extent of each Purchased Interest, in each
Seller Asset; or the failure to (b) vest in the Agent, for the benefit
of the Beneficiaries, a valid and perfected first priority security
interest in any Seller Asset; or the failure of the Seller to have
obtained a first priority perfected ownership interest in the Seller
Assets transferred or purported to be transferred to the Seller under
the Receivables Contribution and Sale Agreement or any Selling Affiliate
Receivables Contribution and Sale Agreement, free and clear of any
Adverse Claim;
(v) the failure of the Seller, Maxtor or any Selling Affiliate
to have filed, or any delay by the Seller, Maxtor or any Selling
Affiliate in filing, financing statements or
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other similar instruments or documents under the UCC of any applicable
jurisdiction or other applicable laws with respect to any Seller Asset
at any time;
(vi) any defense (other than discharge in bankruptcy or other
insolvency proceeding of the Obligor) of the Obligor to the payment of
any Receivable which is, or purports to be, a Subject Receivable
(including, without limitation, a defense based on such Receivable or
the related Contract not being a legal, valid and binding obligation of
such Obligor enforceable against it in accordance with its terms), or
any other claim resulting from the sale of the merchandise or services
related to such Receivable or the furnishing or failure to furnish such
merchandise or services;
(vii) any failure of the Seller, the Company, Maxtor or any
Selling Affiliate or any of their respective Affiliates, as Collection
Agent or otherwise, to perform its duties or obligations in accordance
with the provisions of Article VI or to perform its duties or
obligations under the Contracts or under the Purchase Documents;
(viii) any products liability, personal injury or property
damage or other similar or related claim or action of whatever sort
allegedly arising out of or in connection with merchandise, insurance or
services which are the subject of any Contract;
(ix) any investigation, litigation or proceeding related to any
Purchase Document or any other instrument or document furnished pursuant
hereto or the use of proceeds of Purchases or deposit to the Seller's
Account or the ownership of Purchased Interests or the security or in
respect of any Receivable, Related Security, Contract, Collections or
Additional Assigned Rights, in each case other than any investigation,
litigation or proceeding (A) relating solely to any violation by any
Indemnified Party of any banking bank holding company or securities laws
or any Owner's sale of commercial paper or other funding source and (B)
not relating to or based upon or otherwise attributable to any act,
statement, omission or violation by the Seller, Maxtor, the Company, any
Selling Affiliate or any Affiliate of any thereof;
(x) the failure to pay when due any taxes payable by the Seller,
the Company, Maxtor or any Selling Affiliate (other than any Owner's
taxes), including without limitation sales taxes, shipping charges or
other similar charges or taxes due on merchandise or services sold by
the Seller, Maxtor or any Selling Affiliate to Obligors; or
(xi) the commingling of Collections of Subject Receivables at
any time with other funds.
Any amounts subject to the indemnification provisions of this Section
10.01 shall be paid by the Seller to the Agent for the account of the applicable
Indemnified Party promptly but in any event within five Business Days following
demand therefor by the Agent or such Indemnified Party. The indemnification
provisions of this Section 10.01 shall survive the termination of this
Agreement.
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ARTICLE XI
THE TRUSTEE
SECTION 11.01. Duties of the Trustee. (a) The Trustee undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement, and no implied duties or covenants shall be read into this Agreement
against the Trustee.
(b) The Trustee, upon receipt of any resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
substantially conform to the requirements of this Agreement. The Trustee shall
give prompt written notice to the Seller and the Agent of any material lack of
conformity of any such instrument to the applicable requirements of this
Agreement discovered by the Trustee.
(c) Subject to Section 11.01(a), no provision of this Agreement shall be
construed to relieve the Trustee from liability for its own grossly negligent
action, its own grossly negligent failure to act or its own willful misconduct;
provided, however, that:
(i) the Trustee shall not be personally liable for an error of
judgment made in good faith by any Responsible Official of the Trustee,
unless it shall be proved that the Trustee was grossly negligent in
ascertaining the pertinent facts;
(ii) the Trustee shall not be personally liable with respect to
any action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Agent relating to the time, method
and place of conducting any proceeding for any remedy available to the
Trustee in accordance with the terms of this Agreement, or exercising
any trust or power conferred upon the Trustee under this Agreement; and
(iii) the Trustee shall not be charged with knowledge of any
failure by the Collection Agent to comply with any obligations of the
Collection Agent contained herein or of any Event of Termination unless
a Responsible Official of the Trustee obtains actual knowledge of such
failure or such event or the Trustee receives written notice of such
failure or such event from the Collection Agent, the Agent, any Owner or
any Bank.
(d) The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers if there are
reasonable grounds for believing that the repayment of such funds or indemnity
satisfactory to it against such risk or liability is not reasonably assured to
it and none of the provisions contained in this Agreement shall in any
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event require the Trustee to perform, or be responsible for the manner of
performance of, any obligations of the Collection Agent under this Agreement.
(e) Except for actions expressly authorized by this Agreement, the
Trustee shall take no action reasonably likely to impair the interests of the
Agent (for the benefit of the Owners) m any Receivable now existing or hereafter
created or impair the value of any Receivable now existing or hereafter created.
(f) The Trustee shall have no responsibility or liability for the
selection of, or investment losses on, Available Investments. The Trustee shall
have no liability in respect of losses incurred as a result of the liquidation
of any investment prior to its stated maturity or the failure of the relevant
party to provide timely written investment direction.
(g) The Trustee shall, with respect to each Daily Report (upon which the
Trustee may conclusively rely and be fully protected in acting or refraining
from acting in such reliance), (A) compare the Collections reported that day by
the Collection Agent to the actual Collections deposited to the Lock Box
Accounts and the Concentration Account, and (B) perform each of the account
transfers set forth in the Daily Report as directed in writing by the Collection
Agent;
(h) The Trustee shall with respect to each Purchaser Report (upon which
the Trustee may conclusively rely and be fully protected in acting or refraining
from acting in such reliance) examine such Purchaser Report for indications of
the occurrence of any Events of Termination arising from under clause (h) of
Section 7.01 for positive indications of actual Events of Termination.
(i) Notwithstanding any other provision of this Agreement, upon
discovery by a Responsible Official of Trustee of any material discrepancy
between the amounts reported by the Collection Agent and the amounts calculated
as provided above, the Trustee shall promptly notify the Collection Agent and
the Agent thereof.
SECTION 11.02. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 11.01:
(a) the Trustee may conclusively rely on and shall be fully
protected in acting on, or in refraining from acting in accord with, any
resolution, officer's certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, consent,
order, appraisal, bond or other paper or document believed by it in good
faith to be genuine and to have been signed or presented to it pursuant
to this Agreement by the proper party or parties;
(b) the Trustee may consult with counsel and, as a condition to
taking, suffering or omitting to take any action, may demand an opinion
of counsel and any such opinion of counsel shall be fall and complete
authorization and protection in respect of
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any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such opinion of counsel;
(c) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation hereunder or in relation hereto, at the
request, order or direction of any of the Beneficiaries, unless such
Beneficiaries shall have offered to the Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities which may
be incurred therein or thereby;
(d) subject to Section 11.01(c), the Trustee shall not be
personally liable for any action taken, suffered or omitted by it in
good faith and believed by it to be authorized or within the discretion
or rights or powers conferred upon it by this Agreement;
(e) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, approval, bond or other paper or document unless requested in
writing so to do by the Agent;
(f) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys, custodians or nominees, and the Trustee
shall not be responsible for any misconduct or negligence on the part
of, or for the supervision of any such agent, attorney, custodian or
nominee appointed with due care by it hereunder;
(g) except as required by Section 11.01, the Trustee shall not
be required to make any initial or periodic examination of any documents
or records related to the Receivables for the purpose of establishing
the presence or absence of defects, the compliance by the Seller with
its representations and warranties or for any other purpose; and
(h) nothing in this Agreement shall be construed to require the
Trustee to act as a guarantor of the Collection Agent's performance.
SECTION 11.03. Trustee Not Liable for Recitals in Certificates or
Receivables. The Trustee assumes no responsibility for the correctness of the
recitals contained herein. Except as set forth in Section 11.12, the Trustee
makes no representations as to the validity or sufficiency of this Agreement or
of any Receivable or related document. The Trustee shall not be accountable for
the use or application of any funds paid to the Seller in respect of the
Receivables or deposited in or withdrawn from the Concentration Account, any
Lock Box Account, the Seller's Account, or any other account hereafter
established in accordance with the terms of this Agreement. The Trustee shall at
no time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any security interest in any Receivable
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or the perfection and priority of such security interest or the maintenance of
any such perfection and priority.
SECTION 11.04. Trustee May Own Purchased Interests. The Trustee in its
individual or any other capacity may become the owner or pledgee of Purchased
Interests and may otherwise deal, and transact banking business, with the
Collection Agent and the Seller with the same rights as it would have if it were
not the Trustee.
SECTION 11.05. Compensation: and Indemnification: Trustee's Expenses.
(a) The Trustee shall be entitled to receive a monthly Trustee's fee (which fee,
to the extent permitted by applicable law, shall not be limited by any provision
of law, such fee being the "Trustee's Fee") in respect of each Fiscal Month (or
portion thereof) from the Closing Date hereunder until the Facility Termination
Date, payable in arrears on each Settlement Date in an amount agreed upon in
writing by the Trustee and the Seller. The Trustee's Fee shall be payable,
first, from amounts distributed pursuant to Section 2.06, second, to the extent
not paid from such amounts, by the Seller, and third, to the extent not paid
from such amounts or by the Seller, by the Collection Agent. When the Trustee
incurs expenses or renders services in connection with bankruptcy, insolvency,
reorganization or similar proceedings affecting any Person, such expenses
(including the reasonable fees and expenses of its counsel) and the compensation
for such services are intended to constitute expenses of administration under
any bankruptcy law or law relating to creditors' rights generally.
(b) Without limiting any of the rights the Trustee has under Section
10.01 the Seller shall indemnify the Trustee in its individual capacity and any
of its officers, directors, employees and agents against any and all loss,
liability or expense (including reasonable attorneys' fees) incurred by it in
connection with the performance of its duties under this Agreement and the other
Purchase Documents except any loss, liability or expense resulting from the
gross negligence or willful misconduct of such Indemnified Party.
(c) Expenses. The Seller will pay or reimburse the Trustee upon its
request on at least 5 Business Days' notice providing reasonable detail, and if
the Seller shall fail to do so, the Collection Agent will so pay or reimburse
the Trustee (with a right to reimbursement from the Seller), and if both the
Seller and the Collection Agent shall fail to do so, the Agent will have the
right, but not the obligation, to so pay or reimburse the Trustee (with a right
to reimbursement from the Seller), for all reasonable expenses, disbursements
and advances incurred or made by the Trustee in accordance with any of the
provisions of this Agreement or in connection with any amendment hereto
(including the reasonable fees and expenses of its agents, any co-trustee and
counsel and fees incurred in connection with an Event of Termination) except any
such expense, disbursement or advance as may arise from its gross negligence or
willful misconduct. The Seller's and Collection Agent's covenant provided in
this Section 11.05 shall survive the termination of this Agreement.
SECTION 11.06. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be an Eligible Institution. If the Trustee
publishes reports of condition at least annually, pursuant to law or to the
requirements of any supervising or examining authority, then,
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for the purpose of this Section 11.06, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section 11.06, the Trustee shall resign immediately in the manner and with the
effect specified in Section 11.07.
SECTION 11.07. Resignation or Removal of Trustee. (a) The Trustee may at
any time resign and be discharged from its obligations hereunder by giving 30
days' written notice thereof to the Seller, the Agent and the Collection Agent.
Upon receiving such notice of resignation, the Collection Agent shall promptly
appoint a successor trustee acceptable to the Agent by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor trustee. If no successor trustee shall
have been so appointed and have accepted appointment within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section II. 06 and shall fail to resign after written
request therefor by the Collection Agent or if at any time the Trustee shall be
legally unable to act, or shall be adjudged as bankrupt or insolvent, or if a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Collection Agent may remove the Trustee and promptly appoint a successor trustee
acceptable to the Agent by written instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor trustee.
(c) If at any time the Trustee shall fail to perform its obligations
under this Agreement, the Agent may remove the Trustee and direct the Collection
Agent to promptly appoint a successor trustee acceptable to the Agent by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor appointment; provided that if
all other procedures fail and a successor trustee has not accepted an
appointment pursuant to this Section 11.07(c) within 30 days after the Trustee
shall have received notice from the Agent of its intention to remove such
Trustee, the Trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee.
(d) Notwithstanding anything herein to the contrary, any resignation or
removal of the Trustee and appointment of a successor trustee pursuant to any of
the provisions of this Section 11.07 shall not become effective until acceptance
of appointment by the successor trustee as provided in Section 11.08.
SECTION 11.08. Successor Trustee. (a) Any successor trustee appointed as
provided in Section 11.07 shall execute, acknowledge and deliver to the Seller,
the Collection Agent, the Agent and its predecessor Trustee an instrument
accepting such appointment hereunder, and thereupon the resignation or removal
of the predecessor Trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become
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fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with like effect as if originally named as Trustee
herein. The predecessor Trustee after payment of all monies due and owing to it,
shall deliver to the successor trustee all documents or copies thereof and
statements held by it hereunder, and the Seller and the predecessor Trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for fully and certainly vesting and confirming in the
successor trustee all such rights, powers, duties and obligations.
(b) No successor trustee shall accept appointment as provided in this
Section 11.08 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 11.06.
SECTION 11.09. Merger or Consolidation of Trustee. Any Person into which
the Trustee may be merged or converted or with which it may be consolidated, or
any Person resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any Person succeeding to the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be eligible under the provisions of Section
11.06.
SECTION 11.10. Tax Returns. In the event any tax returns shall be
required to be filed by the Trustee in connection with any of the trust accounts
hereunder, the Collection Agent shall prepare or shall cause to be prepared any
such tax returns and shall remit such returns to the Trustee for signature at
least five days before such returns are due to be filed. The Trustee shall
promptly sign such returns and deliver such returns after signature to the
Collection Agent, and such returns shall be filed by the Collection Agent. In no
event shall the Trustee be liable for any liabilities, costs or expenses of the
Owners, the Banks or the Agent arising out of the application of any tax law,
including federal, state, foreign or local income or franchise taxes or any
other tax imposed on or measured by income (or any interest, penalty or addition
to tax with respect thereto or arising from a failure to comply therewith).
SECTION 11.11. Right of Agent to Direct Trustee. The Agent shall have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee under any Purchase Document or exercising
any trust or power conferred on Trustee under any Purchase Document; provided,
however that, subject to Section 11.01, the Trustee shall have the right to
decline to follow any such direction if the Trustee after receiving an opinion
of counsel determines that the action so directed may not lawfully be taken, or
if the Trustee in good faith shall, by any Responsible Official of the Trustee,
determine that the proceedings so directed would be illegal or involve it in
personal liability.
SECTION 11.12. Representations and Warranties of Trustee. The Trustee
represents and warrants that:
(a) the Trustee is a banking corporation duly organized, validly
existing and in good standing under the laws of the State of New York,
and has the power to own its assets and to transact the business in
which it is presently engaged;
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(b) the Trustee has the full power, authority and right to
execute, deliver and perform this Agreement, and has taken all necessary
action to authorize the execution, delivery and performance by it of
this Agreement; and
(c) this Agreement has been duly executed and delivered by the
Trustee and constitutes a legal, valid and binding obligation of the
Trustee enforceable against the Trustee in accordance with its terms
(except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and except as such enforceability may be
limited by general principles of equity, whether considered in a suit at
law or in equity).
SECTION 11.13. Maintenance of Office or Agency. The Trustee will
maintain at its expense in New York, New York an office or agency (the
"Corporate Trust Office") where its corporate trust office shall be administered
and where notices and demands to or upon the Trustee in respect of this
Agreement shall be served. The Trustee initially designates its office or agency
at Four ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust and
Agency Group/Structured Finance, as such office. The Trustee will give prompt
written notice to the Seller, the Collection Agent and the Agent of any change
in the location of any such office or agency.
ARTICLE XII
CONSENT
SECTION 12.01. Consent to Assignment. Maxtor hereby acknowledges notice
of, and consents to, the assignment by the Seller under this Agreement of all
Additional Assigned Rights now existing or hereafter arising.
SECTION 12.02. Agreements as to Additional Assigned Rights. Maxtor and
the Seller agree for the benefit of the Agent and the Owners as follows:
(a) Maxtor shall make all payments to be made by it to the
Seller under or in connection with any Purchase Document, directly to
the Agent by payment to the account (account number ▇▇▇▇▇▇▇▇) of the
Agent maintained at the office of Citibank, at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇, or otherwise in accordance with the instructions of the
Agent, such payments to be made to the Agent.
(b) All payments to be made by Maxtor to the Seller under or in
connection with any Purchase Document, shall be made by Maxtor
irrespective of, and without deduction for, any counterclaim, defense,
recoupment or set-off and shall be final, and Maxtor will not seek to
recover from the Agent or any Owner for any reason any such payment once
made.
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(c) To the extent the Secondary Purchasers receive any payments
relating to the Additional Assigned Rights to which the Secondary
Purchasers are not entitled, the Secondary Purchasers shall remit such
payments to the Seller or any other Person designated by the Seller.
(d) The Agent shall be entitled, except to the extent limited by
agreement among the Seller, the Owners and the Agent, to exercise any
and all rights and remedies of the Seller under any Purchase Document to
which it is a party, including without limitation rights of the Seller
to make requests, demands for payment and other demands, determinations
and designations, to amend, supplement or modify, to give consents or
waivers, and to deliver notices to Maxtor, and to receive notices,
requests, reports and other information to be delivered by Maxtor, from
time to time thereunder; and Maxtor shall in all respects comply with
and perform in respect of each such exercise. Neither the Agent nor any
Owner shall have any obligation or liability with respect to any of the
Seller's obligations under any Purchase Document.
SECTION 12.03. Further Agreements. In order to induce the Owners to
purchase interests from time to time in Subject Receivables, Maxtor hereby
acknowledges and agrees as follows:
(a) On the date hereof and as of the Closing Date, Maxtor hereby
reaffirms for the benefit of the Agent and the Owners the
representations and warranties made by Maxtor in Section 3.01 of the
Receivables Contribution and Sale Agreement, in Section 5 of the Maxtor
Agreement and in the Repurchase Agreement, respectively.
(b) Each of the Purchase Documents to which Maxtor is a party is
and on the Closing Date will be (i) the legal, valid and binding
obligation of each party thereto enforceable against Maxtor and each
other party thereto in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium or other laws affecting rights of
creditors generally and to general equitable principles, and (ii) in
full force and effect, and is not subject to any dispute, offset,
counterclaim or defense whatsoever.
(c) Maxtor will, at is expense, timely and fully perform and
comply in all material respects with, and cause each of the Seller and
any Selling Affiliates to timely and fully perform and comply in all
material respects with, all provisions, covenants and other promises
required to be observed by Maxtor, such Selling Affiliate or the Seller,
as applicable, under each Purchase Document to which it is a party,
maintain, and cause the Seller and any Selling Affiliate to maintain,
each Purchase Document to which it is a party in full force and effect,
enforce, and cause the Seller and any Selling Affiliate to enforce, each
Purchase Document to which it is a party in accordance with its
respective terms, take, and cause the Seller and any Selling Affiliate
to take, all such action to such end as may be from time to time
reasonably requested by the Agent, and make, and cause the Seller or any
Selling Affiliate to make, to any party to any Purchase Document to
which it is a party such demands and requests for information and
reports or for action as
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Maxtor or the Seller, respectively, are entitled to make thereunder and
as may be from time to time reasonably requested by the Agent.
(d) Maxtor will promptly and in any event within five Business
Days after its receipt or delivery thereof, deliver to the Agent copies
of all notices, requests, reports, certificates, and other documents and
information delivered or received by Maxtor from time to time under or
in connection with any Purchase Document.
(e) Maxtor will not (A) cancel or terminate any Purchase
Document to which it is a party or consent to or accept any cancellation
or termination thereof, (B) amend or otherwise modify any term or
condition of any Purchase Document to which it is a party or give any
consent, waiver or approval thereunder, (C) waive any default under or
breach of any Purchase Document to which it is a party or (D) take any
other action under any Purchase Document to which it is a party not
required by the terms thereof that would impair the value of any
Additional Assigned Rights or the Seller's rights or interests
thereunder or the rights or interests of the Agent or the Owners
hereunder or thereunder, or permit the Seller or any Selling Affiliate
to take any of the actions set forth in clauses (A) through (D) above
with respect to any Purchase Document to which it is a party.
SECTION 12.04. Seller Remains Liable. Anything herein to the contrary
notwithstanding, (a) the Seller shall remain liable under each Purchase Document
to which it is a party to the extent set forth therein to perform all of its
duties and obligations thereunder to the same extent as if this Agreement had
not been executed, (b) the exercise by the Agent of any of the rights hereunder
shall not release the Seller from any of its duties or obligations under each
Purchase Document to which it is a party, and (c) neither the Agent nor the
Secondary Purchasers nor any other Indemnified Party shall have any obligation
or liability under any Purchase Document by reason of this Article XII, nor
shall the Agent or the Secondary Purchasers or any other Indemnified Party be
obligated to perform any of the obligations or duties of the Seller thereunder.
SECTION 12.05. Agent Appointed Attorney-in-Fact. The Seller hereby
irrevocably appoints the Agent the Seller's attorney-in-fact, with full
authority in the place and stead of the Seller and in the name of the Seller or
otherwise, from time to time in the Agent's discretion, to take any action and
to execute any instrument which the Agent may deem necessary or advisable to
accomplish the purposes of the assignment hereunder, including, without
limitation:
(a) to ask, demand, collect, ▇▇▇ for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in connection with the Additional Assigned Rights,
(b) to receive, indorse and collect any drafts or other
instruments, documents and chattel paper in connection therewith, and
(c) to file any claims or take any action or institute any
proceedings which the
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Agent may deem necessary or desirable for the collection of any of the
Additional Assigned Rights or otherwise to enforce compliance with the
terms and conditions of the Purchase Documents or the rights of the
Agent with respect to any of the Additional Assigned Rights.
SECTION 12.06. Agent May Perform. If the Seller fails to perform any
agreement contained herein, the Agent may itself perform, or cause performance
of, such agreement, and the reasonable expenses of the Agent incurred in
connection therewith shall be payable by the Seller under Section 13.06(a).
SECTION 12.07. The Agent's Duties. The powers conferred on the Agent
hereunder are solely to protect its interest in the Additional Assigned Rights
and shall not impose any duty upon it to exercise any such powers. Except for
the safe custody of any Additional Assigned Rights in its possession and the
accounting for moneys actually received by it hereunder, the Agent shall have no
duty as to any Additional Assigned Rights or as to the taking of any necessary
steps to preserve rights against any parties or any other rights pertaining to
any Additional Assigned Rights. The Agent shall be deemed to have exercised
reasonable care in the custody and preservation of any Additional Assigned
Rights in its possession if such Additional Assigned Rights are accorded
treatment substantially equal to that which it accords its own property.
SECTION 12.08. Remedies. If any Event of Termination shall have occurred
and be continuing:
(a) The Agent may exercise any and all rights and remedies of
the Seller under or in connection with each Purchase Document to which
the Seller is a party or otherwise in respect of the Additional Assigned
Rights, including, without limitation, any and all rights of the Seller
to demand or otherwise require performance of any provision of any
Purchase Document.
(b) The Agent may exercise in respect of the Additional Assigned
Rights, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of an owner of
such Additional Assigned Rights to the extent of the interest therein
assigned under this Agreement under applicable law in effect in the
State of New York.
(c) All payments received by the Seller in respect of the
Additional Assigned Rights shall be received in trust for the benefit of
the Agent, shall be segregated from other funds of the Seller and shall
be forthwith paid over to the Agent in the same form as so received
(with any necessary endorsement).
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ARTICLE XIII
MISCELLANEOUS
SECTION 13.01. Amendments, Integration, Etc. No amendment or waiver of
any provision of this Agreement, and no consent to any departure by the Seller
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Agent, each Owner and the Purchaser, and then such amendment,
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. This Agreement contains a final and complete
integration of all prior expressions by the parties hereto with respect to the
subject matter hereof and shall constitute the entire agreement among the
parties hereto with respect to the subject matter hereof, superseding all prior
oral or written understandings.
SECTION 13.02. Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including communication by telefax) and mailed, telefaxed or delivered, as to
each party hereto, at its address and telefax number set forth under its name on
the signature pages hereof or in the case of any Assignee, at its address set
forth in the notice delivered to the Agent pursuant to Section 9. 01 (a) or at
such other address or telefax number as shall be designated by such party in a
written notice to the other parties hereto. All such notices and communications
shall, when mailed or telefaxed, be effective when delivered by mail or when
telefaxed, respectively, except that notices and communications to the Agent,
the Trustee and the Owners pursuant Article II shall not be effective until
received by the Agent, the Trustee or the Owners, as the case may be.
SECTION 13.03. No Waiver; Remedies. No failure on the part of any Owner,
Indemnified Party, the Secondary Purchaser, the Agent, the Seller or the Trustee
to exercise, and no delay in exercising, any right under any Purchase Document
shall operate as a waiver thereof; nor, shall any single or partial exercise of
any right under any Purchase Document preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 13.04. Binding Effect; Assignability. This Agreement shall be
binding upon and inure to the benefit of the Seller, the Agent, the Purchaser,
the Secondary Purchasers, the Trustee, each Owner and each Indemnified Party and
their respective successors and assigns, except that the Seller shall not have
the right to assign its rights hereunder or any interest herein without the
prior written consent of the Agent. This Agreement shall create and constitute
the continuing obligation of the parties hereto in accordance with its terms,
and shall remain in full force and effect until the Collection Date; provided,
however, that rights and remedies with respect to the indemnification provisions
of this Agreement shall be continuing and shall survive any termination of this
Agreement.
SECTION 13.05. Governing Law. This Agreement and the Assignments shall
be governed by, and construed in accordance with, the laws of the State of
California, except (i) to the extent that the perfection or the effect of
non-perfection of the interests of the Owners, or remedies hereunder, in respect
of the Seller Assets in respect thereof are governed by the laws of
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a jurisdiction other than the State of California and (ii) for the rights,
duties, privileges, immunities and indemnities of the Trustee, which shall be
governed by the laws of the State of New York.
SECTION 13.06. Costs, Expenses and Taxes. (a) In addition to the rights
of indemnification granted to the Indemnified Parties under Article X hereof,
the Seller agrees to pay on demand all costs and expenses in connection with the
preparation, execution, delivery, periodic auditing (to the extent the costs and
expenses related thereto are required to be paid by the Seller pursuant to
Section 5. 01 (c)), modification and amendment of the Purchase Documents and the
other documents to be delivered hereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Agent, with
respect thereto and with respect to advising the Agent as to its rights and
remedies under the Purchase Documents and the other documents to be delivered
hereunder. The Seller further agrees to pay on demand all costs and expenses, if
any (including, without limitation, reasonable counsel fees and expenses), in
connection with the enforcement (whether through negotiations, legal proceedings
or otherwise) of the Purchase Documents and the other documents to be delivered
hereunder, including, without limitation, reasonable counsel fees and expenses
in connection with the enforcement of rights under this Section 13.06(a).
(b) In addition, the Seller shall pay when due any and all stamp and
other taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing, recording or searching in respect of, or
enforcement, of the Purchase Documents and the other documents to be delivered
hereunder, and agrees to save each Indemnified Party harmless from and against
any and all liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes and fees (including, without limitation, sales taxes,
shipping charges or other similar taxes and charges due on merchandise or
services sold by the Seller, Maxtor or any Selling Affiliate to Obligors),
provided that each Owner will pay (or reimburse the Seller for) all property,
excise or similar taxes and any other taxes imposed by reason of ownership of
Subject Receivables, but only to the extent of the percentage interest therein
represented by the Purchased Interests.
(c) The Seller also shall pay on demand all other costs, expenses and
taxes (excluding income taxes) incurred by each Owner or any general or limited
partner or shareholder of each such Owner ("Other Costs"), including, without
limitation, (i) any and all costs relating to all arrangements contemplated
hereby with any of the Lock Box Banks, (ii) the taxes (excluding income taxes)
resulting from each Owner's operations, or (iii) the reasonable fees and
disbursements of counsel for each Owner with respect to advising as to rights
and remedies under Purchase Documents or the agreements and documents entered
into in connection therewith, the enforcement of the Purchase Documents or the
agreements and documents entered into in connection therewith, or advising as to
matters relating to each Owner's operations.
SECTION 13.07. No Proceedings. Each of the parties hereto hereby agrees
that they will not institute against the Seller any proceeding of the type
referred to in Section 7.01(g).
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SECTION 13.08. Confidentiality. Except to the extent otherwise required
by applicable law, each of the parties hereto agrees to maintain the
confidentiality of the Purchase Documents (and all drafts thereof) and not to
disclose any Purchase Document or such drafts to third parties (other than to
its directors, officers, employees, accountants or counsel); provided, however,
that the Agreement may be disclosed to third parties to the extent such
disclosure is (i) required by any applicable securities laws, (ii) made solely
to persons who are legal counsel for the purchaser or underwriter of such
securities, (iii) limited in scope to the provisions of Articles V, VII, X and,
to the extent defined terms are used in Articles V, VII and X, such terms
defined in Article I of this Agreement and (iv) made pursuant to a written
agreement of confidentiality in form and substance reasonably satisfactory to
the Agent.
SECTION 13.09. Intent of Agreement. It is the intention of this
Agreement that each Purchase and deposit to the Seller's Account shall convey to
the Owner, to the extent of its Purchased Interest, an undivided ownership
interest in the Seller Assets and that such transaction shall constitute a
purchase and sale and not a secured loan for all purposes other than for federal
income tax purposes. If, notwithstanding such intention, the conveyance of the
Purchased Interest from the Seller to any Owner shall ever be recharacterized as
a secured loan and not a sale, it is the intention of this Agreement that this
Agreement shall constitute a security agreement under applicable law, and that
the Seller shall be deemed to have granted to the Agent, for the benefit of the
Beneficiaries, a duly perfected first priority security interest in all of the
Seller's right, title and interest in, to and under the Seller Assets, free and
clear of Adverse Claims.
SECTION 13.10. Execution in Counterparts; Severability. This Agreement
may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
agreement. In case any provision in or obligation under this Agreement or the
Assignments should be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
MAXTOR RECEIVABLES CORPORATION,
as Seller
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Title: President
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Raja Venkatesh
Telefax No.: 408/432-4480
MAXTOR CORPORATION,
as Collection Agent
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Title: Vice President and
Chief Financial Officer
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telefax No.: (▇▇▇) ▇▇▇-▇▇▇▇
82
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, INC.,
as Agent
By: /s/
-----------------------------------------
Vice President
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Asset Funding
Department
Telefax No.: (▇▇▇) ▇▇▇-▇▇▇▇
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BANKERS TRUST COMPANY,
as Trustee
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-----------------------------------------
Title: Vice President
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust and
Agency Group
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
CITIBANK, N.A.,
as Secondary Purchaser
By: /s/
-----------------------------------------
Title:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Asset
Funding Department
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
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Exhibit E-1 as executed
April 8, 1998
Corporate Receivables Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Citicorp North America, Inc.,
as Agent
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Bankers Trust Company
as Trustee
Four ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Maxtor Corporation; Perfection and Enforceability Issues
Ladies and Gentlemen:
We have acted as special counsel for Maxtor Corporation ("Maxtor") and
Maxtor Receivables Corporation ("MRC") in connection with the transactions
contemplated by (i) the Receivables Purchase and Sale Agreement, dated as of
April 8, 1998, among MRC, as Seller, Maxtor, as Collection Agent, Corporate
Receivables Corporation ("CRC"), as Purchaser, Citicorp North America, Inc.
("CNAI"), as Agent, and Bankers Trust Company, as Trustee (the "Purchase
Agreement") and (ii) the Bank Agreement (together with the Purchase Agreement,
the "Purchase and Bank Agreements"). This opinion is furnished to you pursuant
to Section 3.01(k) of each Purchase and Bank Agreement. Terms defined in the
Purchase Agreement are used herein as therein defined. The term "Receivable
Assets" shall have the meaning provided in the Maxtor Sales Agreement. The term
"security interest" shall have the meaning provided in Section 1201(36)(a) of
the California Uniform Commercial Code ("CUCC"), so as to include both an
interest in personal property that secures payment and performance of an
obligation and an interest of a buyer of "accounts" or "chattel paper" (as those
terms are defined in the CUCC).
We have examined originals or copies of the following documents, all
dated as of April 8, 1998, unless otherwise indicated (the "Documents"):
169
Corporate Receivables Corporation
Citicorp North America, Inc.
Bankers Trust Company
April 8, 1998
Page Two
1. The Repurchase Agreement.
2. The Receivables Contribution and Sale Agreement among Maxtor, as
Seller, and MRC, as Buyer (the "Maxtor Sales Agreement" and together with the
Purchase and Bank Agreements, the "Agreements").
3. The Purchase Agreement.
4. The Bank Agreement.
5. The Assignment delivered on the date hereof.
6. The Maxtor Agreement.
7. The Fee Letter.
8. Stamped receipt copies of a financing statement, naming Maxtor as
Debtor, MRC as Secured Party, and CNAI (as Agent) as Assignee with respect to
Receivable Assets sold by Maxtor to MRC under the Maxtor Sales Agreement (the
"MRC Financing Statement").
9. Stamped receipt copies of a financing statement, naming MRC as Debtor
and CNAI, as Agent and as Secured Party with respect to Purchased Interests sold
by MRC to CRC under the Purchase Agreement (the "CRC Financing Statement" and
together with the MRC Financing Statement, the "Financing Statements").
10. Such other documents, agreements, and instruments as we have
considered necessary or relevant in order to provide this opinion.
In addition, we have examined such records, documents, certificates of
public officials and of Maxtor and MRC, made such inquiries of officials of
Maxtor and MRC, and considered such questions of law as we have deemed necessary
for the purpose of rendering the opinions set forth herein.
We have assumed (i) the genuineness of all signatures and the
authenticity of all items submitted to us as originals and the conformity with
originals of all items submitted to us as copies, (ii) that each party (other
than Maxtor and MRC) to one or more of the Documents has the power and authority
to execute and deliver, and to perform and observe the provisions of, the
Documents to which it is a party, and has duly authorized, executed and
delivered such Documents, and that such Documents constitute valid and binding
obligations of such party.
In rendering the opinions set forth below, insofar as they relate to the
power and authority of Maxtor and MRC to execute and deliver, and to perform and
observe the provisions of, the
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Page Three
Documents to which each is a party, and to their due authorization, execution
and delivery of such Documents, we have relied upon the opinion of ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, General Counsel of Maxtor and MRC, dated of even date herewith. Insofar
as they relate to such matters, our opinions are subject to all of the
exceptions, limitations and qualifications set forth in that opinion.
For purposes of the opinions expressed in paragraphs (a) and (e) below,
we have assumed that California Civil Code Section 1646.5 would be applied in
accordance with its terms.
Our opinions in paragraphs (b)(i) and (f)(i) below are based solely on
knowledge we have gained from certificates of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Secretary of
Maxtor and MRC, copies of which are attached hereto. We have made no independent
investigations as to whether such certificates are accurate or complete, but we
have no knowledge of any such inaccuracy or incompleteness. As to agreements
described in such certificates that by their terms are or may be governed by the
laws of a jurisdiction other than California, we assume that such agreements are
governed by the law of California for purposes of the opinion expressed in such
paragraphs (b) and (f) below. In addition, we exclude from the scope of such
opinions any potential violation of financial covenants contained in such
agreements. The knowledge referred to above is actual knowledge obtained in the
course of representation of Maxtor and MRC in connection with the matter
described in the first paragraph hereof. No inference as to our knowledge should
be drawn from the fact of our representation of Maxtor or MRC. In addition, in
rendering the opinion in paragraphs (d) and (h) below, we have relied on the
representation and warranty of MRC and Maxtor set forth in Section 4.01(j) of
each Purchase and Bank Agreement and Section 3.01(j) of the Maxtor Sales
Agreement, respectively.
We express no opinion as to (i) the enforceability of a security
interest in any property excluded from the CUCC by Section 9104 thereof, (ii)
the perfection of any security interest created by the Documents, except as set
forth in paragraphs (d) and (h) below, (iii) the priority of any such security
interest, (iv) the effect of the absence of such perfection or priority, (v) the
state of title to the personal property (the "Personal Property") described in
the Agreements or the Financing Statements, (vi) the accuracy of the description
of the Personal Property contained in the Agreements or the Financing
Statements, (vii) the legal sufficiency of the description of the Personal
Property contained in the Agreements or the Financing Statements, (viii) whether
a transfer of any such Personal Property under or pursuant to any Agreement or
Assignment constitutes a sale of such Personal Property for purposes of the
CUCC, (ix) the perfection of a security interest in property of the type
specified in CUCC Section 9401(1)(a) or (b), or (x) the enforceability or
perfection of a security interest in Receivable Assets if the Obligor under the
related Contract is a government or any political subdivision or agency thereof.
We have also assumed that (i) the granting of a security interest in
Personal Property consisting of rights under a contract is not restricted by the
terms of such contract or by law,
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April 8, 1998
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(ii) at all times material to our opinions Maxtor and MRC have "rights" in the
Personal Property within the meaning of Section 9203(l)(c) of the CUCC, and
(iii) the California usury laws are not applicable to Citibank, CNAI, any other
Purchaser, Owner or the Agent.
With respect to our opinions in paragraphs (a) and (e) below, we note
that if Purchased Interests are simultaneously outstanding under both the
Purchase Agreement and the Bank Agreement, then arrangements coordinating the
operation of such agreements will need to be agreed.
The opinion hereinafter expressed is subject to the following further
qualifications:
(1) The effect of bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws relating to or affecting the rights of
creditors generally, including, without limitation, laws relating to fraudulent
transfers or conveyances, preferences and equitable subordination.
(2) Limitations imposed by general principles of equity upon the
availability of equitable remedies or the enforcement of provisions of the
Documents; and the effect of judicial decisions which have held that certain
provisions are unenforceable where their enforcement would violate the implied
covenant of good faith and fair dealing, or would be commercially unreasonable,
or where a default under the Documents is not material.
(3) We express no opinion as to the effect on the opinions expressed
herein of (i) the compliance or non-compliance of any party to the Documents
(other than Maxtor and MRC) with any laws or regulations applicable to it, or
(ii) the legal or regulatory status or the nature of the business of any such
party.
(4) Limitations imposed by Part 5 of Division 9 of the CUCC upon the
rights, powers and remedies of MRC under the Maxtor Sales Agreement and of CNAI,
as Agent, and the Owners under each Purchase and Bank Agreement.
(5) The effect of judicial decisions permitting the introduction of
extrinsic evidence to modify the terms or the interpretation of the Documents.
(6) The enforceability of Receivable Assets or a Purchased Interest may
be subject to the terms of the related Contract or another agreement and claims
and defenses of parties thereto against Maxtor or MRC.
(7) Insofar as our opinions relative to Receivable Assets or a Purchased
Interest encompass "proceeds" as defined in CUCC Section 9306, such opinions are
limited to the extent set forth in that section.
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April 8, 1998
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(8) The enforceability of provisions of the Documents providing for
indemnification to the extent such indemnification is against public policy.
(9) The enforceability of provisions of the Documents which purport to
transfer governmental pen-nits, licenses or other authorizations, or claims
against governmental entities, the transfer of which is restricted by law.
(10) The effect of California law which provides that where a contract
permits one party to the contract to recover attorney's fees, the prevailing
party in any action to enforce any provision of the contract shall be entitled
to recover its reasonable attorney's fees notwithstanding the absence of a
written agreement to such effect.
(11) The enforceability of a requirement that provisions of the
Documents may only be modified in writing to the extent that an oral agreement
has been executed modifying provisions of the Documents.
(12) The enforceability of provisions of the Documents imposing or which
are construed as effectively imposing penalties or forfeitures.
Based upon and subject to the foregoing, we are of the opinion that:
(a) Each Agreement, the Assignment delivered on the date hereof and the
Fee Letter (collectively, the "MRC Agreements") constitute valid and binding
obligations of MRC enforceable against MRC in accordance with their respective
terms. The Assignment delivered on the date hereof and the Purchase Agreement
constitutes a valid and binding assignment of MRC's rights to an undivided
percentage interest in the Subject Receivables to the extent of the Purchased
Interest evidenced by such Assignment, enforceable against MRC in accordance
with its terms.
(b) The execution, delivery and performance by MRC of the MRC Agreements
(i) to our knowledge, do not result in or require the creation of any Adverse
Claim (other than pursuant to the Agreements) upon or with respect to the
Purchased Interest purchased pursuant to the Purchase Agreement; and (ii) do not
require compliance with the California bulk sales law.
(c) Each Purchased Interest purchased pursuant to the Purchase Agreement
will constitute a valid undivided security interest ("Undivided Interest") in
MRC's rights in the related Subject Receivables.
(d) The CRC Financing Statement is in appropriate form and has been duly
filed pursuant to the CUCC in the office of the California Secretary of State.
The filing of the CRC Financing Statement with the California Secretary of State
and the execution and delivery of an Assignment and the Purchase Agreement
operate to perfect the Undivided Interest of CNAI, as
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Bankers Trust Company
April 8, 1998
Page Six
Agent, for the benefit of the Purchaser and each other Owner in the Purchased
Interest described in such Assignment to the extent that such security interest
can be perfected by the filing of a financing statement in the State of
California. As of March 30, 1998, there were no financing statements naming MRC
as debtor or seller and covering the Subject Receivables. The conclusions
expressed in this paragraph (d) pertaining to absence of filings are subject to
the accuracy of the personnel in the filing offices referred to above with
regard to the filing, indexing and recording of financing statements, and to the
correctness of uncertified UCC search reports provided to us by Shearman &
Sterling and obtained through Access Information Services, Inc., a private
search company, which performed the searches of such records. In expressing our
conclusions herein with respect to the filing of the CRC Financing Statement, we
have also relied, without independent investigation, upon notice of such filings
received from the office of the Secretary of State of California.
(e) Each Agreement, the Repurchase Agreement and the Maxtor Agreement
(collectively, the "Maxtor Agreements") constitute valid and binding obligations
of Maxtor enforceable against Maxtor in accordance with their respective terms.
(f) The execution, delivery and performance by Maxtor of the Maxtor
Agreements (i) to our knowledge do not result in or require the creation of any
Adverse Claim (other than pursuant to the Agreements) upon or with respect to
the Receivable Assets; and (ii) do not require compliance with the California
bulk sales law.
(g) The Maxtor Sales Agreement conveys a valid security interest in
Maxtor's rights in the Receivables transferred pursuant thereto.
(h) The MRC Financing Statement is in appropriate form and has been duly
filed pursuant to the CUCC in the office of the California Secretary of State.
The filing of the MRC Financing Statement with the California Secretary of State
and the execution and delivery of the Maxtor Sales Agreement operate to perfect
the security interest of MRC in the Receivables transferred pursuant to the
Maxtor Sales Agreement to the extent that such security interest can be
perfected by the filing of a financing statement in the State of California. As
of March 30, 1998, there were no financing statements naming Maxtor as debtor or
seller and covering the Receivables other than (x) a financing statement naming
CNAI, as Agent, as secured party under the Original Agreement, which has been
terminated and (y) with respect to Receivables arising from the sale or lease of
goods identified in the financing statements listed on Schedule I hereto (the
"Existing Financing Statements"). The conclusions expressed in this paragraph
(h) pertaining to absence of filings except as noted above are subject to the
accuracy of the personnel in the filing office referred to above with regard to
the filing, indexing and recording of financing statements, and to the
correctness of uncertified UCC search reports provided to us by Shearman &
Sterling and obtained through Access Information Services, Inc., a private
search company, which performed the searches of such records. In expressing our
conclusions herein
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April 8, 1998
Page Seven
with respect to the filing of the MRC Financing Statement, the absence of
filings except as noted above, and termination of the Existing Financing
Statements, we have also relied, without independent investigation, upon notice
of the filings and termination referenced above received from the office of the
Secretary of the State of California.
Continuation statements complying with the CUCC must be filed with the
office of the Secretary of State of California not more than six months prior to
the expiration of the five-year period dating from the date of filing of the
Financing Statements, and not more than six months prior to the expiration of
each subsequent five-year period after the original filings, in order to
continue the perfection of such security interest. We also advise you that
additional action may be necessary to continue such perfection (i) if either MRC
or Maxtor changes its name, identity or structure, or there is a change in the
jurisdiction in which its place of business (or, if it has more than one place
of business, its chief executive office) is located, or (ii) with respect to
Personal Property constituting "proceeds" under Section 9306 of the CUCC.
We express no opinion as to matters governed by any laws other than the
laws of the State of California and federal laws of the United States, which are
in effect on the date hereof. We express no opinion as to the enforceability of
the New York choice of law provisions contained in the Documents or the internal
laws of the State of New York.
This opinion has been furnished to you solely in connection with the
transactions described herein and on the condition that the opinions expressed
herein may not be published or otherwise communicated by you or any of your
agents to any other Person (other than accountants for Maxtor and MRC for the
sole purpose of preparing financial statements for Maxtor and MRC) without our
specific prior written approval in each instance except to your successors,
assigns, transferees or prospective transferees and as provided below. By
relying on this opinion, each successor, assign and transferee and the Trustee
shall be deemed to have concurred in your permission for us to make the
assumptions we have made herein. No one other than you, your successors, assigns
and transferees and the Trustee, in connection with the transactions described
herein, may rely upon the opinion expressed herein.
Very truly yours
/s/ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
Attachments
175
Exhibit E-2 as executed
▇▇▇▇▇ ▇, ▇▇▇▇
▇▇▇▇▇▇▇▇, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Citicorp North America, Inc.,
individually and as Agent
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Bankers Trust Company
as Trustee
Four ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Maxtor Corporation; True Sale Analysis
Ladies and Gentlemen:
We have acted as special counsel for Maxtor Corporation ("Maxtor") and
Maxtor Receivables Corporation ("MRC") in connection with the transactions
contemplated by (i) the Receivables Purchase and Sale Agreement, dated as of
April 8, 1998 (the "Purchase Agreement"), among MRC, as Seller, Maxtor, as
Collection Agent, Corporate Receivables Corporation ("CRC"), Citicorp North
America, Inc. ("CNAI"), individually and as Agent, and Bankers Trust Company, as
Trustee, (ii) the Bank Agreement (together with the Purchase Agreement, the
"Purchase and Bank Agreements"), and (iii) the Receivables Contribution and
Sales Agreement, dated as of April 8, 1998, between Maxtor, as Seller, and MRC,
as Buyer (the "Maxtor Sales Agreement," and, together with the Purchase and Bank
Agreements, the "Agreements"). This opinion is furnished to you pursuant to
Section 3.01(l)(A) of each Purchase and Bank Agreement. Terms defined in the
Maxtor Sales Agreement are used herein as therein defined.
You have requested our opinion as to whether, if either Maxtor or MRC
were to become a debtor in a case under the Title 11 of the United States Code
(the "Bankruptcy Code"), a federal bankruptcy court, exercising reasonable
judgment after consideration of all relevant factors, would hold that the
transfer of the Receivables from Maxtor to MRC pursuant to the
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Bankers Trust Company
April 8, 1998
Page Two
Maxtor Sales Agreement is not a "true sale" and accordingly that the Receivables
and Collections thereon are not property of the estate of MRC for purposes of
Bankruptcy Code Section 541.
Documents Examined
We have examined originals or copies of the following documents, all
dated as of April 8, 1998, unless otherwise indicated (the "Documents"):
(i) The Agreements.
(ii) The Maxtor Agreement.
We have assumed (i) the genuineness of all signatures and the
authenticity of all items submitted to us as originals and the conformity with
originals of all items submitted to us as copies, (ii) that each party to one or
more of the Documents has the power and authority to execute and deliver, and to
perform and observe the provisions of, the Documents to which it is a party, and
has duly authorized, executed and delivered such Documents, and that such
Documents constitute valid and binding obligations of such party.
Facts and Assumptions
In rendering our opinions, we have relied upon facts set forth or
provided for in the Documents, including the Officers Certificates, in which the
facts and assumptions set forth herein are represented to be accurate, and upon
representations and warranties of Maxtor and MRC as to matters of fact set forth
in the Documents to which they are a party. We have not made independent inquiry
with regard to the accuracy of the matters stated in the Officers Certificates
or the Documents. In rendering our opinions, we have assumed that the facts and
assumptions outlined below are now and will at all relevant times remain
correct.
We have been advised of the following facts by Maxtor:
Pursuant to the Maxtor Sales Agreement, MRC will acquire from Maxtor all
of Maxtor's right, title and interest in, to and under all Receivables. The
parties intend and the applicable Documents provide that the transfer of an
undivided 5% interest in the Receivables existing on the Closing Date will be
transferred as a contribution of capital by Maxtor to MRC, and that the
remaining 95% undivided interest in such Receivables existing on the Closing
Date, as well as a 100% interest in all Receivables created after the Closing
Date, will be sold by Maxtor to MRC for their fair market value. Except to the
extent of such capital contribution on the Closing Date, Maxtor will treat its
transfer of such Receivables to MRC as, and the records of Maxtor will reflect
such transfer as, a sale of such Receivables for accounting and other purposes
(other than federal income tax purposes), in accordance with the preceding
sentence.
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Bankers Trust Company
April 8, 1998
Page Three
The Purchase Price payable by MRC for the Receivables reflects the good
faith arm's-length determination by MRC and Maxtor of the fair market value of
the Receivables, reflecting a reasonable estimate of default rates and
collection experience based on Maxtor's prior experience with comparable
receivables. Maxtor will receive the entire consideration for each Receivable on
the date of sale thereof, and there are no provisions for retroactive adjustment
of the consideration for any Receivable after the date of sale.
Maxtor will irrevocably transfer and relinquish its ownership rights
with respect to the Receivables, and will have no rights to sell, pledge or
otherwise dispose of any of the Receivables. Except under the limited
circumstances provided in the Maxtor Sales Agreement with respect to Maxtor's
obligation to repurchase certain Receivables in the event of reductions,
cancellations, or set off in relation to defective, rejected or returned
merchandise or in respect of a violation of representations or warranties in
Section 3.01(h) of the Maxtor Sales Agreement made by Maxtor with respect to
such Receivables, Maxtor will not have any obligation to repurchase Receivables,
or to deliver other receivables or any other assets either in substitution for
or in addition to the Receivables in the event of a credit loss or decline in
value of the Receivables. Maxtor's obligation to repurchase Receivables is
limited and does not result from a decline in the value of or payment defaults
on the Receivables and does not, except in the limited circumstances described
above, give Maxtor a right to repurchase or otherwise reacquire any of the
Receivables or to reclaim any of the benefits of ownership. We understand that
Maxtor's repurchase obligations under the Maxtor Sales Agreement are similar to
the obligations of other sellers in comparable sales transactions.
Maxtor will continue to act as Collection Agent with respect to the
Receivables pursuant to Section 5.01 of the Maxtor Sales Agreement and in such
capacity will administer the collection of payments due under the Receivables,
determine whether to extend the term of or modify Receivables and administer the
repossession and liquidation of Receivable Assets. Maxtor will receive
compensation for performing such functions in an amount comparable to that
payable to third-party servicers of comparable receivable assets, which
compensation will be payable from Collections and will be prior to all other
applications of Collections in respect of the Receivables (other than fees of
the Trustee).
Discussion
Section 541 of the Bankruptcy Code provides that property of the estate
of a bankrupt entity includes "all legal or equitable interests of the debtor in
property as of the commencement of the case." A trustee in bankruptcy of Maxtor
might assert that the sale of Receivables from Maxtor to MRC was not a sale but
instead the grant of a security interest in the Receivables to MRC to secure a
borrowing by Maxtor from MRC. Such trustee in bankruptcy might therefore seek a
court order to turn over the Receivables or Collections thereon to Maxtor, as
provided in Section 542 of the Bankruptcy Code, or an order enforcing Section
362(a) of the Bankruptcy
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Bankers Trust Company
April 8, 1998
Page Four
Code, the automatic stay provision, to prevent the making of payments on the
Receivables to the Trust.
Few courts have had occasion to distinguish between a sale and a secured
loan. The limited case law that exists indicates that in determining whether to
treat a transfer of property as a sale or a secured loan, a case-by-case
approach, based upon the facts of specific transactions, is employed. See Bear
▇. ▇▇▇▇▇ (In re Golden Plan of Cal., Inc.), 829 F.2d 705, 709 (9th Cir. 1986)
("Whether the parties intended outright sales or loans for security is
determined from all the facts and circumstances surrounding the transactions at
issue."). As a result, a particular ruling based on one set of facts is of
limited value in determining how a court might decide in a different factual
setting. In considering our opinion expressed below, you should understand that,
to our knowledge, there is no judicial precedent directly on point. However,
courts have relied upon, and accorded differing degrees of significance to, a
variety of factors, including the following factors.
A. Intention of and Treatment by the Parties
Most courts attempt to ascertain the true intentions of the parties,
evidenced not only by the actual words used in the applicable agreements, but
also by the treatment accorded by the parties themselves to a transfer of
receivable assets. See, e.g., Mapco, Inc. v. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ F.2d 1107,
1111-12 (Ct. Cl. 1977) (buyer's failure to report receivables purchased as
income earned deemed evidence that the transaction was a loan). We understand
that Maxtor will treat the sale of the Receivables to MRC as a sale for all
purposes (other than federal income tax purposes) and that Maxtor's records will
reflect the transaction as a sale. We further understand that the sale of
Receivables will be disclosed as such to third parties if necessary.
B. Risk of Loss
Allocation of credit risk (i.e., the risk of loss resulting from default
by obligors) as between transferor and transferee is generally considered by
courts to be the most significant factor in distinguishing between a sale and a
secured loan. Where the transferor retains that risk, courts are likely to
conclude that a given transaction is, in substance, a loan secured by the
property transferred and not a "true" sale. The risk can be retained through
various means, including full recourse to the seller in the event of nonpayment
of the receivables by account debtors, a "guaranty" of collectibility by the
seller, representations as to such collectibility or the solvency of account
debtors, a holdback of reserves from the purchase price, or a letter of credit,
guaranty, insurance or other source of payment to the seller on defaulted loans
established in connection with the transaction. See Major's Furniture Mart, Inc.
v. Castle Credit Corp., 602 F.2d 538, 545 (3d Cir. 1979) (Seller retained full
risk of uncollectibility where accounts were sold with full recourse to the
seller). The presence of limited recourse, however, may be viewed as consistent
with a sale. See Major's, 602 F.2d at 545; UCC Section 9-502 Official Comment 4
179
Citibank, N.A.
Citicorp North America, Inc.
Bankers Trust Company
April 8, 1998
Page Five
("there may be a true sale of accounts . . . although recourse exists"). If
there is a significant shifting of risk, sale characterization is possible
notwithstanding the existence of recourse.
The sale of the Receivables to MRC is to be made without recourse
(except as specifically provided in the Documents and discussed below) in the
event of Obligor defaults. No representation regarding yield, return or
collection with respect to any Receivable is made and Maxtor has no obligation
to deliver other receivables or any other assets either in substitution for or
in addition to the Receivables in the event of credit loss or decline in value
of any Receivable.
Although Maxtor will be obligated to repurchase Receivables in the event
of a breach of customary representations regarding the characteristics of the
Receivables, such arrangements are common in and not inconsistent with "true"
asset sale transactions. In addition, except for the repurchase of certain
Receivables for breaches of such representations, Maxtor will have no obligation
to repurchase Receivables, or to deliver other receivables or any other assets
either in substitution for or in addition to the Receivables in the event of a
credit loss or decline in value of the Receivables. Maxtor's representations as
to the Receivables under the Maxtor Sales Agreement do not relate to credit risk
or Obligor default, but instead relate to matters within Maxtor's control and
susceptible to prevention or cure.
We know of no other device established in connection with the
transaction that has the effect of allocating the risk of credit loss to Maxtor.
While Maxtor does provide a guaranty to the Agent on behalf of the Beneficiaries
with respect to the indemnity obligations of MRC under Article X of each
Purchase and Bank Agreement, those indemnity obligations do not provide
protection in respect of financial loss resulting from nonpayment of Receivables
by Obligors.
C. Economic Benefits
The extent to which the "seller" retains, and the "buyer" fails to
receive, the economic benefits of ownership of the property transferred may be
significant. If the transferor is entitled to surplus from collections above a
fixed amount or has an unlimited right to repurchase transferred receivables, a
financing rather than a sale may be suggested. See In re ▇▇▇▇▇▇ ▇▇▇▇▇▇ Hat Co.,
482 F.2d 937 (2d Cir. 1973); Mapco, Inc., 556 F.2d at 1111; Fox ▇. ▇▇▇▇ Iron &
Metal Co., Inc., ▇▇ ▇▇▇▇▇. ▇▇▇, ▇▇▇ (▇▇▇▇▇. S.D. Cal. 1982) (option to
repurchase provided seller with the "ability to deprive . . . [buyer] of any
increase in value").
Maxtor will transfer all of its right, title and interest in and to the
Receivables to MRC, which will receive all of the economic benefits of ownership
of the transferred Receivables. Maxtor will not have any right to any surplus
from Collections on the Receivables
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Bankers Trust Company
April 8, 1998
Page Six
above the consideration received for such Receivables, will have no right to
reacquire Receivables sold, and will have no right to reclaim any benefits of
ownership.
D. Transferor's Continued Control
Continued collection or control of receivables or payments with respect
thereto by the transferor following a purported sale is not indicative of the
transfer of control usually associated with a financing sales transaction. See,
e.g., Mapco, Inc., 556 F.2d at 1111 (buyer "had no dominion or control over
revenue payments"); Commercial Security Co. ▇. ▇▇▇▇▇▇▇▇, 262 F. 657, 661 (5th
Cir. 1920) (collections and payment of collection expenses by the seller). This
is particularly problematic where the seller is entitled to commingle
collections from receivables "sold" with its own assets. See e.g., ▇▇▇▇▇ v.
Major Funding Corp., 82 B.R. 443 (Bankr. S.D. Tex. 1987).
In analyzing whether a transfer of the ownership of loans has occurred,
courts have also considered the involvement of loan participants in the
servicing and management decisions. In re ▇▇▇▇ Commercial Corporation, 327
F.Supp. 1315 (S.D.N.Y. 1971). The ▇▇▇▇ court held that the loans remained part
of the bankrupt's estate because, among other factors cited, the participants
"did not manage the accounts or have any say as to how the bankrupt would attain
security or arrange for collections."(1) Id. at 1317.
In the present transaction, Maxtor will continue to service the
Receivables pursuant to Section 5.01 of the Maxtor Sales Agreement as Collection
Agent for the benefit of MRC. However, this should not be regarded as a factor
suggesting a financing transaction in the circumstances presented, where (i)
Section 5.01 of the Maxtor Sales Agreement, by cross-reference to Article VI of
each Purchase and Bank Agreement, contains detailed provisions with respect to
the servicing procedures that must be observed by the Collection Agent
including, among other things, limitations upon the right of the Collection
Agent to extend the term of
--------
(1) The courts adjudicating the claims arising out of the liquidation of Penn
Square Bank also analyzed the involvement of the participants in servicing
decisions. Seattle-First National Bank v. FDIC, 619 F.Supp. 1351 (W.D. Okla.
1985); Northern Trust Co. v. FDIC, 619 F.Supp. 1340 (W.D. Okla. 1985); Hibernia
National Bank v. FDIC, 733 F.2d 403 (10th Cir. 1984) and Chase Manhattan Bank v.
FDIC, 554 F.Supp. 251 (W.D. Okla. 1983). The issues in the cases involved
borrowers' rights to set off amounts owed to them by Penn Square Bank against
loans made to them by Penn Square Bank in which Penn Square Bank had sold
participation interests. In the context of determining the borrower's set off
rights, which if permitted would have decreased or eliminated the unpaid
principal balance from the loans in which the participants contended they owned
interests, the courts considered it significant that Penn Square Bank remained
the manager, sole secured party and sole authority for collecting on the loans
and concluded that the setoffs were proper. Even though these cases are
inapposite, a court could analyze the degree of control over the administration
and servicing of the Receivables as a characteristic of ownership in a manner
similar to the analysis in the Penn Square Bank liquidation cases.
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Page Seven
Receivables or otherwise modify the Receivables, (ii) Article II of the Maxtor
Sales Agreement provides for all Collections to be deposited in the Lock-Box
Accounts and segregated from all other Maxtor funds, (iii) we understand that
Maxtor will receive compensation for performing such functions in an amount
comparable to that payable to third-party servicers of comparable receivable
assets, and (iv) Maxtor can be replaced as Collection Agent by the Agent.
E. Adequacy of Consideration
A transfer in which fair and reasonably equivalent value is received is
more likely to be viewed as a sale than one in which the transferor does not
receive such value. See, e.g., Fox ▇. ▇▇▇▇ Iron & Metal Co., Inc., ▇▇ ▇▇▇▇▇.
▇▇▇, ▇▇▇ (▇▇▇▇▇. S.D. Cal. 1982) (receivables transferred by debtor worth at
least twice what the debtor received for them, suggesting "a disguised financing
scheme"). We understand that Maxtor is receiving consideration for the
Receivables sold pursuant to the Maxtor Sales Agreement that is fair and
reasonably equivalent in value to the value of the Receivables determined on an
arm's-length basis between non-affiliated parties, that the entire purchase
price for each Receivable will be received by Maxtor (either in the form of cash
or a promissory note) on the date of its sale, with no retroactive adjustment of
that price thereafter to reflect actual collections.
F. Notification of Obligors
The failure to notify the underlying obligors on receivables of a
transfer of such receivables to a transferee has been deemed indicative of a
secured loan rather than a true sale of receivable assets. Commercial Security
Co. ▇. ▇▇▇▇▇▇▇▇, 262 F. at 661; People v. Service Institute, Inc. 421 N.Y.S.2d
325 (Sup. Ct. 1979). In this case, while the Obligors under the Receivables may,
but are not required to be notified of the sale of the Receivables, they are
required to be instructed to make payments on the Receivables to a Lock Box
Account maintained in the name of the Agent.
G. Documentation of the Transaction
In recharacterizing a purported sale as a loan, consideration may be
given to whether a transaction utilizes loan terminology, and whether provisions
commonly found in loan but not sale contracts are contained in the transaction
documentation. See, e.g., In re Evergreen Valley Resort, Inc., 23 Bankr. 659
(Bankr. D. Me. 1982). The Maxtor Sales Agreement is in the form of, and contains
provisions typically found in, a sale and purchase agreement, and does not, for
instance, contain financial covenants or terminology of the type usually found
in loan agreements.
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Conclusion
Based on the foregoing and subject to the further qualifications and
limitations hereinafter set forth, it is our opinion that, under present
reported decisional authority and statutes applicable to federal bankruptcy
cases, if Maxtor were to become a debtor in a case under the Bankruptcy Code, a
federal bankruptcy court, exercising reasonable judgment after full
consideration of all relevant facts, would hold that the Receivables and
Collections thereon transferred by Maxtor to MRC are not the property of the
estate of Maxtor under Bankruptcy Code Section 541 and, therefore are not
subject to the stay provisions of Bankruptcy Code Section 362.
We are not aware of any judicial authority on these issues decided on
facts similar to those involved in the transactions contemplated by or in
connection with the Documents. Accordingly, while our opinions reflect the
result that we believe would be reached on the basis of the transactions
contemplated by and in connection with the Documents, certainty as to such
result is not possible.
We express no opinion as to the availability or effect of a preliminary
injunction, temporary restraining order or such other temporary relief affording
delay pending a determination on the merits in the event that substantive
consolidation is sought.
This opinion has been furnished to you solely in connection with the
transactions described herein and on the condition that the opinions expressed
herein may not be published or otherwise communicated by you or any of your
agents to any other Person (other than accountants for Maxtor and MRC for the
sole purpose of preparing financial statements for Maxtor and MRC) without our
specific prior written approval in each instance except to your successors,
assigns, transferees or prospective transferees and as provided below. We
understand that you may furnish a copy of this opinion to Standard & Poor's
Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Duff & ▇▇▇▇▇▇ Credit
Rating Co., ▇▇▇▇▇'▇ Investors Services, Inc. and Fitch Investors Service, which
shall be entitled to rely hereon for the sole purpose of issuing or confirming
its rating of a securitization which includes the Receivables. By relying on
this opinion, each successor, assign and transferee and the Trustee shall be
deemed to have concurred in your permission for us to make the assumptions we
have made herein. No one other than you, your successors, assigns and
transferees and the Trustee, in connection with the transactions described
herein, may rely upon the opinion expressed herein.
This opinion should be interpreted in accordance with the Special Report
by the TriBar Opinion Committee, Opinions in the Bankruptcy Context: Rating
Agency, Structured Financing, and Chapter 11 Transactions, 46 Bus. Law. 717
(1991).
Very truly yours,
/s/ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
183
Exhibit E-2 as executed
▇▇▇▇▇ ▇, ▇▇▇▇
▇▇▇▇▇▇▇▇, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Citicorp North America, Inc.,
individually and as Agent
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Bankers Trust Company
as Trustee
Four Albany Street, 10th Floor
New York, New York 10006
Re: Maxtor Corporation; Consolidation Issues
Ladies and Gentlemen:
We have acted as special counsel for Maxtor Corporation ("Maxtor") and
Maxtor Receivables Corporation ("MRC") in connection with the transactions
contemplated by (i) the Receivables Purchase and Sale Agreement, dated as of
April 8, 1998 (the "Purchase Agreement"), among MRC, as Seller, Maxtor, as
Collection Agent, Corporate Receivables Corporation ("CRC"), Citicorp North
America, Inc. ("CNAI"), as Agent, and Bankers Trust Company, as Trustee, (ii)
the Bank Agreement, and (iii) the Receivables Contribution and Sale Agreement,
dated as of April 8, 1998, between Maxtor, as Seller, and MRC, as Buyer (the
"Maxtor Sales Agreement"). The Purchase Agreement and the Bank Agreement are
herein referred to as the "Purchase and Bank Agreements" and, together with the
Maxtor Sales Agreement, as the "Agreements." This opinion is furnished to you
pursuant to Section 3.01(1)(B) of each Purchase and Bank Agreement. Terms
defined in the Purchase Agreement are used herein as therein defined.
You have requested our opinion as to whether, in connection with any
bankruptcy proceedings instituted by, on behalf of, or against Maxtor under
Title 11 of the United States Code (the "Bankruptcy Code"), a United States
bankruptcy court or other court exercising jurisdiction over such case would
order the substantive consolidation of MRC with Maxtor, thereby pooling the
assets and liabilities of MRC with those of Maxtor.
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Documents Examined
We have examined originals or copies of the following documents, all
dated as of April 8, 1998, unless otherwise indicated (the "Documents"):
(i) The Agreements.
(ii) The Maxtor Agreement.
Facts and Assumptions
We have assumed (i) the genuineness of all signatures and the
authenticity of all items submitted to us as originals and the conformity with
originals of all items submitted to us as copies, (ii) that each party (other
than Maxtor and MRC) to one or more of the Documents has the power and authority
to execute and deliver, and to perform and observe the provisions of, the
Documents to which it is a party, and has duly authorized, executed and
delivered such Documents, and that such Documents constitute valid and binding
obligations of such party. In addition, we have relied on the opinion of ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, General Counsel of Maxtor, of even date herewith with respect to
such power and authority of, and such due authorization, execution and delivery
by, Maxtor and MRC, and our opinions are subject to all of the exceptions,
limitations and qualifications set forth in that opinion.
We have also been advised of the following facts by Maxtor and MRC:
1. The Purchase and Bank Agreements and MRC's Articles of Incorporation,
by their terms, limit MRC's activities to purchasing Receivable Assets (as
defined in the Maxtor Sales Agreement) from Maxtor and the Selling Affiliates,
and selling interests in such Receivable Assets pursuant to and in accordance
with the Purchase Documents.
2. The Purchase and Bank Agreements, MRC's Articles of Incorporation
and/or MRC's Bylaws, by their terms, limit MRC's activities or otherwise require
that MRC:
a. will conduct all transactions and dealings between MRC
and Affiliates on an arm's-length basis;
b. has not made and will not make any loans or advances to
any third party (other than intercompany loans between
Maxtor (or any Selling Affiliates) and MRC) and has not
and will not hold itself out to be responsible for the
debts or obligations of any other Person;
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c. will not fail to do all things necessary to preserve its
existence as a special purpose vehicle, and will not,
nor will any shareholder thereof, amend, modify or
otherwise change its articles of incorporation or bylaws
in a manner which adversely affects MRC's existence as a
special purpose vehicle;
d. will not enter into any transaction of merger or
consolidation, or liquidate or dissolve itself (or
suffer any liquidation or dissolution), or acquire by
purchase or otherwise all or substantially all of the
business or assets of, or any stock or other evidence of
beneficial ownership of, any Person;
e. is and will be, and at all times enter into its
contracts and otherwise hold itself out to the public
under MRC's own name as a legal entity separate and
distinct from any Affiliate;
f. will maintain proper corporate records and books of
separate account from those of Affiliates;
g. will maintain its assets, funds and transactions
separate from and not commingled with those of any
Affiliate, reflecting such assets and transactions in
financial statements separate and distinct from those of
such Affiliates, and evidencing such assets, funds and
transactions by appropriate entries in the books and
records referred to above, and providing for its own
operating expenses and liabilities from its own assets
and funds other than certain expenses and liabilities
relating to basic corporate overhead which may be
allocated between MRC and its Affiliates;
h. shall hold appropriate meetings or obtain such
appropriate consents of its Board of Directors as are
necessary to authorize all MRC's corporate actions
required by law to be authorized by the Board of
Directors, keeping minutes of such meetings and of
meetings of its stockholders and observing all other
customary corporate formalities;
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Page Four
i. shall cause its Board of Directors to include at least
one individual who is an Independent Director;(1) and
j. will establish and maintain an office through which its
business shall be conducted separate and apart from
those of Maxtor and any Affiliate and will allocate
fairly and reasonably any overhead for shared office
space.
3. The Maxtor Agreement requires that Maxtor do all things necessary to
maintain its corporate existence separate and apart from MRC, and by its terms
requires that Maxtor:
a. will conduct all transactions and dealings between
Maxtor and MRC on an arm's-length basis;
b. will not amend, modify or otherwise change the articles
of incorporation or bylaws of MRC in a manner which
adversely affects MRC's existence as a special purpose
vehicle;
c. will not permit, suffer or cause MRC to enter into any
transaction of merger or consolidation, liquidation or
dissolution, or permit, suffer or cause MRC to acquire
by purchase or otherwise all or substantially all of the
business or assets of, or any stock or other evidence of
beneficial ownership of, any Person;
d. is and will be, and at all times enter into its
contracts and otherwise hold itself out to the public
separate and distinct from MRC;
e. will maintain proper corporate records and books of
separate account from those of MRC;
---------------------
(1) "Independent Director" is defined in MRC's bylaws as follows:
"Independent Director" shall be an individual who: (i) is not and has not been
(and is not affiliated with a company or fin-n that is or has been) within the
five years immediately prior to such individual's appointment as an Independent
Director either (a) employed as a director, officer, or employee by, (b) a
significant advisor or consultant to, (c) affiliated with a significant customer
or supplier of, (d) engaged under significant personal service contract(s) with,
or (e) affiliated with a tax exempt entity that receives significant
contributions from, the corporation or any of its subsidiaries or affiliates;
(ii) at the time of such individual's appointment as an Independent Director, or
at any time thereafter while serving as Independent Director, is not a legal or
beneficial owner of any direct or indirect equity interest in the corporation or
any of its subsidiaries or affiliates; and (iii) is not a spouse, parent,
sibling or child of any person described by paragraphs (i) and (ii) above.
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f. will maintain its assets, funds and transactions
separate from MRC, reflecting such assets and
transactions in financial statements separate and
distinct from those of MRC, and evidencing such assets,
funds and transactions by appropriate entries in the
books and records referred to above, and providing for
its own operating expenses and liabilities from its own
assets and funds other than certain expenses and
liabilities relating to basic corporate overhead which
may be allocated between Maxtor and MRC;
g. shall hold appropriate meetings or obtain such
appropriate consents of its Board of Directors as are
necessary to authorize all Maxtor's corporate actions
required by law to be authorized by the Board of
Directors, keeping minutes of such meetings and of
meetings of its stockholders and observing all other
customary corporate formalities;
4. CRC and the Agent are relying on the separate credit and separateness
of MRC from Maxtor; would be prejudiced by any consolidation of Maxtor with MRC;
and would actively oppose any attempt under the Bankruptcy Code to substantively
consolidate the entities.
5. MRC will comply with the terms of its Articles of Incorporation, the
Bylaws, and the Purchase and Bank Agreements and Maxtor will comply with the
terms of the Maxtor Agreement, with respect to the matters described above.
Based on the representations in the Purchase and Bank Agreements, we
have assumed that MRC, as of the date hereof, has adequate capital for the
normal obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations.
Discussion
The equitable doctrine of substantive consolidation permits a court in a
bankruptcy case to disregard the separateness of two or more entities and to
consolidate the assets and liabilities of those entities as though held and
incurred by a single entity. See, e.g., Chemical Bank New York Trust Co. ▇.
▇▇▇▇▇, 369 F.2d 845, 847 (2d Cir. 1966).(2) Although the Bankruptcy Code does
----------------------
(2) Substantive consolidation should not be confused with procedural
consolidation. Procedural consolidation merely involves combining estates for
administrative matters in the bankruptcy proceeding so as to reduce costs. See,
e.g., In re Delta Corp. v. Hong Kong and Shanghai Banking (In re Delta Corp.),
179 B.R. 773, 777 (Bankr. S.D.N.Y. 1995); In re Amdura Corp., 121 B.R. 862, 868
(Bankr. D. Colo. 1990).
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not expressly provide for the substantive consolidation of different entities,
courts have exercised their equitable jurisdiction and ordered substantive
consolidation in appropriate circumstances.(3) See, e.g., In re ▇▇▇▇▇▇, 94 B.R.
553, 554 (Bankr. N.D. Ind. 1988); In re Vecco Construction Indus., Inc., 4 B.R.
407, 409 (Bankr. E.D. Va. 1980). Because the disregarding of separate entities
is not generally favored, however, a presumption exists against substantive
consolidation, and the party seeking such consolidation has the burden of
establishing the necessity for it. See, e.g., In re Auto-Train Corp. Inc., 810
▇.▇▇ ▇▇▇, ▇▇▇ (▇.▇. Cir. 1987).
"Although the term consolidation has a disarmingly innocent sound, it is
no mere instrument of procedural convenience . . . but a measure vitally
affecting substantive rights in equity." In re ▇▇▇▇▇ ▇▇▇ Candy Corp., 432 F.2d
1060, 1062 (2d Cir. 1970). Therefore, courts generally have treated substantive
consolidation as the exception rather than the rule because of the "possibility
of unfair treatment of creditors who have dealt solely with the Corporation
having a surplus as opposed to those who have dealt with related entities with
deficiencies." In re Continental Vending Machine Corp., 517 F.2d 997, 1001 (2d
Cir. 1975), cert. denied sub nom. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc. ▇. ▇▇▇▇▇▇▇, ▇▇▇ ▇.▇. ▇▇▇
(1976); see also Kheel, 369 F.2d at 847 (it should be the "rare case" where
substantive consolidation is granted); In re DRW Property Co., 54 B.R. 489, 494
(Bankr. N.D. Tex. 1985) (courts should grant substantive consolidation sparingly
because of the possibility of unfair treatment of some creditors). Furthermore,
because the rules for substantive consolidation are not statutorily provided,
courts must examine the facts and circumstances of each case to determine if
such an order is warranted.(4)
Substantive consolidation was accomplished in early cases by "piercing
the corporate veil" of the debtor, i.e., by finding that the entity with which
consolidation was sought was the "alter ego" or an "instrumentality" of the
debtor which was used by the debtor to hinder, delay or otherwise defraud
creditors. See, e.g., ▇▇▇▇▇ Industries, Inc. v. ▇▇▇▇▇▇▇▇, ▇▇▇ ▇.▇▇ ▇▇▇ (▇▇▇ ▇▇▇.
▇▇▇▇); Fish v. East, 114 F.2d 177 (10th Cir. 1940). Although later cases relaxed
the requirement of fraud in favor of the two-part test described below, courts
will still ▇▇▇▇▇▇ the corporate veil to effect a substantive consolidation if
fraud or similar activity is present. See, e.g., ▇▇▇▇▇ ▇▇▇▇▇▇▇ (Singapore) Pte.,
Ltd. v. Diners Club International Inc., 2 ▇.▇▇ ▇▇, ▇▇ (▇▇ ▇▇▇. 1993) (noting
that exceptions to corporate separateness are made "to prevent fraud or other
wrong, or where a
-------------------
(3) The power to consolidate is derived from the general equitable powers set
forth in section 105 of the Bankruptcy Code, which provides that "the court may
issue any order, process, or judgment that is necessary or appropriate to carry
out the provisions of this title." 11 U.S.C. Section 105(a).
(4) See 5 ▇▇▇▇▇▇▇ on Bankruptcy Section 1100.061 at 1100-35 (15th ed. 1995),
stating that substantive consolidation cases are, to a great degree, sui
generis.
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parent dominates and controls a subsidiary"). See also, e.g., In re Daily, 107
B.R. 996 (Bankr. D. Hawaii 1989), rev'd on other grounds, 940 F.2d 1306 (9th
Cir. 1991); In re Stop & Go of America, Inc., 49 B.R. 743 (Bankr. D. Mass.
1985); In re ▇▇▇▇▇▇▇, 45 B.R. 658, 662-63 (Bankr. N.D. Okla. 1985), aff'd, 59
B.R. 973 (N.D. Okla. 1986).
Although in early substantive consolidation cases involving the
consolidation of corporate entities, courts looked to state corporate "piercing"
law for guidance, recent decisions have recognized that the comparison of the
two doctrines is not particularly suitable. See, e.g., F.D.I.C. v. Colonial
Realty Co., 966 ▇.▇▇ ▇▇, ▇▇-▇▇ (▇▇ ▇▇▇. 1992) ("The focus of piercing the
corporate veil is the limited liability afforded to a corporation"; whereas, the
focus of substantive consolidation is "the equitable treatment of all
creditors."). Consequently, modern federal courts have increasingly looked to
federal bankruptcy law precedent rather than state corporate law doctrine when
ruling on substantive consolidation motions. See, e.g., Colonial Realty, 966
F.2d at 60-61; Eastgroup Property v. Southern Motel Assoc., Ltd., 935 F.2d 245
(11th Cir. 1991); In re Augie/▇▇▇▇▇▇▇ Banking Co., 860 F.2d 515 (2d Cir. 1988);
In re Auto-Train Corp., Inc., 810 F.2d 270 (D.C. Cir. 1987); Continental
Vending, 517 F.2d at 1001; In re ▇▇▇▇▇ ▇▇▇ Candy Corp., 432 F.2d 1060 (2d Cir.
1970); Kheel, 369 F.2d at 847; ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ National Bank of Long Island,
328 F.2d 446 (2d Cir. 1964); Stone ▇. ▇▇▇▇▇, 127 F.2d 284 (4th Cir.), cert.
denied, ▇▇▇ ▇.▇. ▇▇▇ (1942); but see In re ▇▇▇▇▇ Pipe & Supply Co., Inc., 130
B.R. 588 (Bankr. E.D. Okla. 1991) (substantive consolidation invoked based on
alter-ego theory).
Two similar, but not identical, circuit-level tests have evolved to
determine whether to order substantive consolidation, one from the United States
Court of Appeals for the Second Circuit and one from the United States Court of
Appeals for the D.C. Circuit.
Under the D.C. Circuit test, the proponent of substantive consolidation
must show: (1) a substantial identity between the entities to be consolidated;
(2) that consolidation is necessary to avoid some harm or to realize some
benefit; and (3) if a creditor objects and demonstrates that it relied on the
separate credit of one of the entities and that it will be prejudiced by the
consolidation, then the court may order consolidation only if it determines that
the demonstrated benefits of consolidation "heavily" outweigh the harm. See In
re Auto Train Corp., Inc., 810 ▇.▇▇ ▇▇▇, ▇▇▇ (▇.▇. Cir. 1987); In re Standard
Brands Paint Co., 154 B.R. 563, 571-72 (Bankr. C.D. Cal. 1993); see also ▇▇▇▇▇▇
v. FDIC (In re ▇▇▇▇▇▇), 31 F.3d 1102,1108-09 (11th Cir. 1994) (adopting D.C.
Circuit standard as modified for the spousal contract); In re ▇▇▇▇▇▇, 962 F.2d
796 (8th Cir. 1992) (adopting similar test considering: (1) the necessity of
consolidation due to the interrelationship among the debtors; (2) whether the
benefits of consolidation outweigh the harm to creditors; and (3) prejudice
resulting from not consolidating the debtors); Eastgroup Property, 935 F.2d at
249 (adopting D.C. Circuit test).
Under the Second Circuit test, the proponent must show one of two
alternative grounds for substantive consolidation: (1) that the creditors dealt
with the entities as a single unit and did
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Page Eight
not rely on their separate identity in extending credit or (2) that the affairs
of the entities are so entangled that consolidation will benefit all creditors
because untangling is either impossible or so costly as to consume the assets.
See Colonial Realty, 966 F.2d at 61; In re Augie/▇▇▇▇▇▇▇ Baking Co., Ltd., 860
F.2d 515, 518 (2d Cir. 1988). If a party in interest objects and demonstrates
one of the two alternative grounds, then the court may order consolidation only
if it determines "that consolidation yields benefits offsetting the harm it
inflicts on objecting parties." F.D.I.C. v. Colonial Realty Co., 966 F.2d at 61
(quoting In re Auto-Train, 810 F.2d at 276).
A. Application of D.C. Circuit Test
1. Establishing a Prima Facie Case for Substantive
Consolidation: Substantive Identity and Avoidance of
Harm or Realization of Benefit
With respect to the first two prongs of the D.C. Circuit test, proof of
which can establish a prima facie case for substantive consolidation, many
federal courts have utilized an objective list of factors. See, e.g., Eastgroup
Property, 935 F.2d at 249-50. The court in Vecco Construction, 4 B.R. 407, 410
(Bankr. E.D. Va. 1980), enumerated the most widely cited criteria (the "Vecco
criteria" and collectively, the "Vecco test") for determining whether
consolidation is prima facie appropriate:
1. The commingling of assets and business functions.
2. The degree of difficulty in segregating and ascertaining
individual assets and liabilities.
3. The existence of parent and intercorporate guarantees on
loans.
4. The transfer of assets without observance of corporate
formalities.
5. The presence or absence of consolidated financial
statements.
6. The unity of interests and ownership between the various
corporate entities.
7. The profitability of consolidating at a single physical
location.(5)
-------------------------
(5) Accord In re ▇▇▇▇▇▇ Indus., Inc., 119 B.R. 820, 830 (Bankr. M.D. Fla. 1990);
In re Mortgage Investment Company of El Paso, Tex., 111 B.R. 604, 610 (Bankr.
W.D. Tex. 1990); Holywell Corp. v. Bank of New York, 59 B.R. 340, 347 (S.D. Fla.
1986). See also Fish v. East, 114 F.2d 177, 191 (10th Cir. 1940) (setting forth
list of ten substantially similar factors). It should be stressed, however, that
the factors set forth in Vecco Construction, along
(footnote continued on next page)
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On the basis of the facts and assumptions set forth herein, we believe
that at least four of the seven factors listed in Vecco Construction - 1, 2, 4
and 7 - have little or no applicability here and factors 3, 5 and 6, although
present here to a certain degree, when properly analyzed should not lead a court
to substantively consolidate Maxtor and MRC. Moreover, we note that the presence
of even several of the Vecco Construction factors does not require
consolidation. See Eastgroup Property, 935 F.2d at 250; In re Donut Queen Ltd.,
41 B.R. 706, 709-10 (Bankr. E.D.N.Y. 1984); In re ▇▇▇▇▇▇ Bros. Inc., 18 B.R.
230, 234 (Bankr. D. Mass. 1982).
With regard to the first factor, we note that the Documents prohibit
commingling of the assets of MRC with those of Maxtor and its Affiliates. With
regard to commingling business functions, the Documents require that MRC not
engage in any business other than the purchase and sale of Receivable Assets as
permitted under the Purchase Documents, which would thereby preclude the
possibility of Maxtor acting with respect to the business functions of MRC.
With regard to the second factor, it should not be difficult, at any
time, to segregate and ascertain the individual assets and liabilities of MRC
since the Documents require that MRC maintain its assets so that they may be
easily segregated and ascertained. Moreover, with regard to MRC's liabilities,
the Documents require that separate books and records be maintained for MRC. MRC
is also required to keep separate and distinct financial statements from those
of Maxtor. Given these requirements, it should not be difficult to ascertain and
segregate the individual assets and liabilities of MRC and Maxtor.
With regard to the third factor, we note that the Maxtor Agreement,
which runs in favor of the Agent for the Beneficiaries, is an absolute guaranty
of obligations of MRC by Maxtor, specifically covering the covenants, agreements
and undertakings of MRC under the Purchase Documents. MRC's obligations under
the Maxtor Sales Agreement, however, should not be considered loan or financing
obligations(6) and this third factor should not be relevant. As to the Purchase
and Bank Agreements, even if MRC's obligations thereunder were determined to be
in the nature of loan or financing obligations, the Maxtor Agreement does not
guarantee such loan
---------------------
(footnote continued from previous page)
with additional factors formulated in other cases, are merely "examples of
information that may be useful to courts charged with deciding whether there is
a substantial identity between the entities to be consolidated and whether
consolidation is necessary to avoid some harm or realize some benefit."
Eastgroup Property, 935 F.2d at 250. Therefore, although a "proponent of
consolidation may want to frame his argument using the seven factors outlined in
Vecco Construction Industries, Inc.," the existence or absence of any number of
those factors is not necessarily determinative. Id.
(6) See the reasoned opinion letter of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP dated the date
hereof regarding true sale of the Receivable Assets from Maxtor to MRC.
192
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Bankers Trust Company
April 8, 1998
Page Ten
or financing obligations since it expressly states that it creates no recourse
to Maxtor in respect of the collectibility of the Receivables. Rather, it
guarantees MRC's covenants, agreements and undertakings, which do not provide
for recourse to MRC in the event of defaults on payment of Receivables. Thus,
the Agent and the Beneficiaries ultimately look to the Receivable Assets as the
source of funds to repay the Capital and Yield outstanding under the Purchase
and Bank Agreements, and the Maxtor Agreement does not guarantee payment of such
amounts. Consequently, this third factor should have no applicability here.
With regard to the fourth factor, we note that (1) all arrangements and
agreements between MRC and Maxtor will be on terms that are not more or less
favorable than the terms and conditions that could have been obtained, under
similar circumstances, from unaffiliated Persons, (2) there will be no
commingling of assets between MRC and Maxtor, (3) there will be no transfers of
assets (other than on an arm's-length basis) between Maxtor and MRC, and (4)
corporate formalities will be observed by Maxtor and MRC in connection with the
transfer of Receivable Assets under the Agreements.
With regard to the fifth factor, we believe that the court in Vecco
Construction was concerned that the presence of consolidated financial
statements would make it impossible for those creditors who read such statements
to ascertain which assets were owned by which corporation within the
consolidated group. MRC is required to maintain its financial statements and
accounting records separate from those of Maxtor and any Affiliate. To effect
this requirement, the financial statements delivered by MRC to its creditors
will not include assets of Maxtor and the financial statements delivered by
Maxtor to its creditors will contain footnotes or other information establishing
MRC's separate ownership of the Receivable Assets.
The importance of the sixth Vecco Construction factor, the "unity of
interest and ownership," is based upon considerations relating to creditors'
perception of the entities. This factor also should not support an attempt to
substantively consolidate Maxtor and MRC, provided that MRC holds itself out and
operates as a separate entity and otherwise complies with the Documents.
Although there is or may be common ultimate ownership of Maxtor and MRC, the
courts have recognized a distinction between the ownership of a corporation's
stock and of its assets. See In re ▇▇▇▇ Indus., Inc., 479 F.2d 410, 415 (2d
Cir.), cert. denied sub nom. Trustees of ▇▇▇▇ Indus. Inc. ▇. ▇▇▇▇▇▇▇, ▇▇▇ ▇.▇.
▇▇▇ (1973).
The seventh factor identified in Vecco Construction goes to the question
of whether, in a reorganization of Maxtor, it would be more economically
efficient to operate Maxtor with MRC as a single entity. Although the corporate
offices of Maxtor and MRC are physically located on the same premises, this
factor should not in itself result in a substantive consolidation of MRC with
Maxtor, provided that MRC holds out and operates itself as a separate entity and
otherwise complies with the Documents and its Articles of Incorporation.
193
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Bankers Trust Company
April 8, 1998
Page Eleven
2. Objecting Creditor's Showing and the Balance of Benefit
Against ▇▇▇▇▇ of Consolidation
When a proponent of substantive consolidation establishes a prima facie
case by meeting the first two elements of the D.C. Circuit test, the burden
shifts to an objecting creditor to show that it relied on the separate credit of
the entities to be consolidated and will be prejudiced by consolidation. See,
e.g., Eastgroup Property, 935 F.2d at 249. If an objecting creditor makes this
showing, then the court must determine whether the demonstrated benefits of
consolidation "heavily" outweigh the harm. Id.
Here, the Agent and Beneficiaries rely on the separate credit and assets
of MRC and not on the credit of any other entity, except to the limited extent
provided in the Maxtor Agreement. Because the Agent and Beneficiaries have
relied on the separate credit of MRC, dealt with MRC separately from all other
parties referenced herein and would be prejudiced by consolidation, as discussed
in the application of the Second Circuit test below, it is unlikely that a court
would find that the benefit of consolidation "heavily" outweighs the harm.
B. Application of the Second Circuit Test
The Second Circuit has stated that the "sole purpose of substantive
consolidation is to ensure the equitable treatment of all creditors" and that
the Vecco factors are "merely variants on two critical factors: (i) whether
creditors dealt with the entities as a single economic unit and 'did not rely on
their separate identity in extending credit,'. . . or (ii) whether the affairs
of the debtors are so entangled that consolidation will benefit all creditors."
In re Augie/▇▇▇▇▇▇▇ Baking Co., Ltd., 860 F.2d at 518-19; see Colonial Realty,
966 F.2d at 61. Under the Second Circuit standard, proponents of consolidation
must establish one of the above-stated critical factors before consolidation
will be ordered. Where creditors rely on the separate existence of corporate and
other entities in extending credit, or would suffer more than minimal harm from
disregarding such separate existence, the balance of equities weighs against
substantive consolidation. In re Donut Queen, Ltd., 41 B.R. at 710; Holywell
Corp. v. Bank of New York, 59 B.R. at 347.
1. Creditor Reliance
The parties to the Documents are entering into the transactions
contemplated thereby in reliance on the separateness of MRC. One element of such
reliance is based on the premise that the Receivable Assets are subject only to
claims of creditors of MRC and not to the claims of creditors of any other
Person, such as Maxtor. Thus, such parties would be harmed if consolidation were
ordered. Under such circumstances, we assume that the Agent, and if the
194
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Bankers Trust Company
April 8, 1998
Page Twelve
Agent does not have standing, another creditor of MRC would oppose any motion to
consolidate Maxtor and MRC arguing that such consolidation would prejudice
them.(7) Courts have relied upon the existence of such prejudice as grounds for
denying substantive consolidation. See, e.g., In re ▇▇▇▇▇ ▇▇▇ Candy Corp., 432
F.2d 1060, 1062-63 (2d Cir. 1970); see also Anaconda Building Materials Co. ▇.
▇▇▇▇▇▇▇, 336 F.2d 625, 628 (9th Cir. 1964).(8)
As noted above, a court would also consider the resulting harm to
creditors of any such other Person if consolidation were not ordered. As
previously described, any consolidated financial statements of Maxtor and its
subsidiaries will contain footnotes or other information establishing MRC's
separate corporate existence and ownership of the Receivable Assets. Future
creditors therefore should not be able to claim reasonably that they had assumed
that MRC was merely a division or part of another Person. Furthermore, none of
the creditors of any such other Person should be unduly prejudiced as a result
of a court's refusing to consolidate MRC and such other Person.
2. Entanglement of Entities.
Based on the facts and assumptions set forth herein, and as discussed
above in relation to the Vecco criteria and the substantial identity prong of
the D.C. Circuit test, the assets and business functions of MRC will not be so
entangled with those of Maxtor as to make separate identification of their
respective assets impossible or prohibitively costly and therefore enable
consolidation to benefit all creditors.
Some courts, in assessing substantive consolidation, have considered
whether it increases the likelihood of the debtor's rehabilitation and
reorganization. Factors considered in making this determination include the
potential savings in cost and time, the elimination of duplicate
---------------------
(7) We express no opinion as to whether a bankruptcy court would order
consolidation should none of the parties to the Documents nor any other party in
interest timely present an objection to substantive consolidation and properly
brief and argue such objection.
(8) Conversely, courts have also noted the absence of objecting parties as a
factor favoring consolidation. See, e.g., In re Standard Brands Paint Co., 154
B.R. 563, 571-72 (Bankr. C.D. Cal. 1993) (court inferred lack of harm to
creditors from the fact that no party in interest objected to consolidation); In
re Buckhead America Corp. et al., Case Nos. 91-978 through ▇▇-▇▇▇ (▇▇▇▇▇. D.
Del. Aug. 13, 1992) (order granting substantive consolidation of a special
purpose subsidiary with its parent after all objections from the subsidiary's
creditors had been resolved through settlement); In re ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Group, Inc., 138 B.R. 723, 766-68 (Bankr. S.D.N.Y. 1992) (citing lack of
objections from creditors in approving a plan of reorganization premised on
substantive consolidation); U.S. v. Frontier Airlines, Inc., 93 B.R. 1014, 1016
(Bankr. D. Colo. 1988) (granting substantive consolidation where "complete
financial separation of the entities would be difficult to accomplish" and "no
party in interest" had objected).
195
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Bankers Trust Company
April 8, 1998
Page Thirteen
claims and whether there is a question of who among the debtors is liable. See
Continental Vending, 517 F.2d at 1001.(9) Eliminating the need to disentangle
assets, however, does not, without more, justify consolidation. "Substantive
consolidation should be used only after it has been determined that all
creditors will benefit because untangling is either impossible or so costly as
to consume the assets." Augie/▇▇▇▇▇▇▇, 860 F.2d at 519. Based on the facts and
assumptions set forth herein, the assets and business functions of MRC will not
be so entangled with those of Maxtor as to make separate identification of the
MRC's assets impossible or prohibitively costly.
In the event that Maxtor is a debtor in a case under the Bankruptcy
Code, but MRC is not a debtor in such a case, we also note the following: "While
consolidation of debtor and non-debtor entities is possible, it should be
undertaken only in the most unusual circumstances . . . Substantive
consolidation of a separate non-debtor may result in irreparable harm to the
non-debtor affiliate and its creditors." 5 ▇▇▇▇▇▇▇ on Bankruptcy paragraph
1100.06 at 1100-33-37 (15th ed. 1995).
Under the circumstances applicable to this transaction, and based upon
the facts and assumptions contained herein, which we have assumed are true and
will continue in the future to be true, we believe that it would be difficult
for a creditor or a trustee of Maxtor in a federal bankruptcy proceeding to
claim justifiably that recognition of MRC as separate from Maxtor would be
inequitable, or result in a fraud or injustice on creditors. Similarly, we
believe it would be difficult for such a party to contend justifiably that the
affairs of MRC and Maxtor were so entangled that it would be too costly or time
consuming to deal with them separately, or that it appeared that the assets of
Maxtor and MRC were available to meet claims of each other's creditors.
Furthermore, based on the facts and assumptions contained herein, we believe
that creditors of MRC and Maxtor, respectively, should be able to show both
reliance solely on the credit and assets of MRC or Maxtor, respectively, and
that they would suffer substantial harm from the consolidation of MRC with
Maxtor.
Based on the foregoing facts, representations, statements and
assumptions being correct and continuing to be correct at all relevant times,
and based on and subject to the qualifications, discussions and analysis
contained herein and the reasoned analysis of analogous case law (although there
is no precedent directly on point), it is our opinion that a United States
bankruptcy court or other court exercising jurisdiction over the case, in the
event of a case under
----------------------
(9) See also In re ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Group, Inc., 138 B.R. at 766
(approving a plan of reorganization premised on substantive consolidation where
no creditors had objected and where establishing to whom actual liability, if
any, should be allocated would be a "herculean task, consuming years of costly
professional services, thereby draining significant amounts of value from the
Debtors' estates").
196
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Citicorp North America, Inc.
Bankers Trust Company
April 8, 1998
Page Fourteen
the Bankruptcy Code instituted by or on behalf of or against Maxtor, as debtor,
would not disregard the separate existence of MRC so as to substantively
consolidate the assets and liabilities of MRC with those of Maxtor. Our opinion
is subject to the further qualifications that (i) the assumptions set forth
herein are and continue to be true in all material respects, (ii) there are no
facts unknown to us that would materially affect the validity of the assumptions
and conclusions set forth herein or upon which this opinion is based, (iii) such
case is properly presented and argued, and (iv) the law is properly applied. We
note, however, that substantive consolidation is an equitable doctrine, that
courts have accorded different degrees of importance to the factual elements
before them in determining whether to exercise their equitable power to order
substantive consolidation, and that facts may arise in the future which could
affect a court's determination of whether substantive consolidation is
appropriate. Additionally, any Bankruptcy Code analysis must recognize that the
power of a court of competent jurisdiction with respect to a Bankruptcy Code
case, proceeding or matter is extremely broad. For instance, pursuant to the
powers granted in Section 105(a) of the Bankruptcy Code, "[t]he court may issue
any order, process, or judgment that is necessary or appropriate to carry out
the provisions of the [Bankruptcy Code]."11 U.S.C. Section 105(a). Therefore,
the conclusions reached herein must be considered in light of these broad
statutory and equitable powers of the relevant court over a debtor's property,
estate, creditors and equity interest holders.
We express no opinion as to the availability or effect of a preliminary
injunction, temporary restraining order or such other temporary relief affording
delay pending a determination on the merits in the event that substantive
consolidation is sought.
We have assumed throughout this opinion (i) that there has been no (and
will not be any) fraud in connection with the transactions described herein, and
(ii) the accuracy of the representations and warranties in the Documents as to
the matters set forth herein. The opinions expressed herein are being delivered
to you as of the date hereof, and we assume no obligations to advise you of any
changes of law or fact that may occur after the date hereof, notwithstanding
that such changes may affect the legal analysis or conclusions contained herein.
This opinion has been furnished to you solely in connection with the
transactions described herein and on the condition that the opinions expressed
herein may not be published or otherwise communicated by you or any of your
agents to any other Person without our specific prior written approval in each
instance except to your successors,
197
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Bankers Trust Company
April 8, 1998
Page Fifteen
assigns, transferees or prospective transferees and as provided below. We
understand that you may furnish a copy of this opinion to Standard & Poor's
Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Duff & ▇▇▇▇▇▇ Credit
Rating Co., ▇▇▇▇▇'▇ Investors Services, Inc. and Fitch Investors Service, which
shall be entitled to rely hereon for the sole purpose of issuing or confirming
its rating of a securitization which includes the Receivable Assets. By relying
on this opinion, each successor, assign and transferee and the Trustee shall be
deemed to have concurred in your permission for us to make the assumptions we
have made herein. No one other than you, your successors, assigns and
transferees and the Trustee, in connection with the transactions described
herein, may rely upon the opinion expressed herein.
This opinion should be interpreted in accordance with the Special Report
by the TriBar Opinion Committee, Opinions in the Bankruptcy Context: Rating
Agency, Structured Financing, and Chapter 11 Transactions, 46 Bus. Law. 717
(1991).
Very truly yours,
/s/ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
198
Exhibit F as executed
Dated as of April 8, 1998
Corporate Receivables Corporation Bankers Trust Company,
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Four ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ 10006
Citicorp North America, Inc.
individually and as Agent
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Receivables Purchase and Sale Agreements dated as of April 8, 1998
Ladies and Gentlemen:
Each of Maxtor Receivables Corporation, as the Seller under the
Receivables Purchase and Sale Agreements each dated as of April 8, 1998 entered
into by it with each of you, as applicable, and Maxtor Corporation, as the
Seller under the Receivables Contribution and Sale Agreement dated as of April
8, 1998, entered into by Maxtor Corporation and Maxtor Receivables Corporation
(such agreements collectively being the "Agreements"), hereby acknowledges and
agrees that (i) it has received the respective forms of the Agreements and the
other instruments and documents to be furnished by it pursuant thereto, (ii) the
form and substance of the Agreements, each other Purhase Document referred to
therein and such other instruments and documents are satisfactory to it
regarding the consequences and implications of the transactions contemplated
thereby and the terms thereof, and (iii) it has, independently and wihtout
reliance upon any of you, your affiliates or your counsel, made its own
evaluation and decision to enter into the Agreements.
Very truly yours,
MAXTOR RECEIVABLES CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name:
Title:
MAXTOR CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name:
Title:
199
Exhibit E-3 as executed
April 8, 1998
Corporate Receivables Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Citicorp North America, Inc.,
as Agent
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Bankers Trust Company
as Trustee
Four ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Maxtor Corporation
Ladies and Gentlemen:
I am ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President and General Counsel of Maxtor Corporation
and MRC. This opinion is furnished to you pursuant to Section 3.01(m) of each of
(i) the Receivables Purchase and Sale Agreement, dated as of April 7, 1998,
among Maxtor Receivables Corporation ("MRC"), as Seller, Maxtor Corporation, as
Collection Agent, Corporate Receivables Corporation ("CRC"), Citicorp North
America, Inc. ("CNAI"), individual and as Agent, and Bankers Trust Company, as
Trustee (the "Purchase Agreement"), and (ii) the Bank Agreement (together with
the Purchase Agreement, the "Purchase and Bank Agreements"). Terms defined in
the Purchase Agreement are used herein as therein defined.
In connection herewith, I have examined:
1. The Repurchase Agreement.
2. The Receivables Contribution and Sales Agreement, dated as of
April 7, 1998, between Maxtor Corporation, as Seller, and MRC, as Buyer (the
"Maxtor Sales Agreement").
3. The Purchase Agreement.
4. The Bank Agreement.
5. The Assignment delivered on the date hereof.
200
Corporate Receivables Corporation
Citicorp North America, Inc.
Bankers Trust Company
April 8, 1998
Page 2
6. The Maxtor Agreement.
7. The Fee Letter.
8. The documents furnished by the Maxtor Corporation and MRC
pursuant to Sections 3(c) and 3(d) of each Purchase and Bank
Agreement including, without limitation, the following:
a) The Articles of Incorporation of Maxtor Corporation and all
amendments thereto (the "Maxtor Charter");
b) The Bylaws of Maxtor Corporation and all amendment thereto
(the "Maxtor Bylaws");
c) The Articles of Incorporation of MRC and all amendments
thereto (the "MRC Charter"); and
d) The Bylaws of MRC and all amendments thereto (the "MRC
Bylaws").
9. Such other documents, agreements, and instruments as I have
considered necessary or relevant in order for me to provide this opinion.
My opinions expressed below are limited to the General Corporation Law of the
State of Delaware, the laws of the State of California and the federal laws of
the United States as in effect on the date hereof.
Based upon the foregoing and upon such investigation as I have deemed necessary,
I am of the following opinion:
1. Maxtor Corporation is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.
2. MRC is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of California. Maxtor Corporation is
the owner of 100% of the issued and outstanding shares of capital stock of MRC.
3. The execution, delivery and performance by Maxtor Corporation of
the Repurchase Agreement, the Maxtor Sales Agreement, the Purchase and Bank
Agreements and the Maxtor Agreement (collectively, the "Maxtor Documents") are
within its corporate powers, have been duly authorized by all necessary
corporate action, and do not contravene (i) the Maxtor Charter or the Maxtor
Bylaws, (ii) any material law, rule or regulation applicable to Maxtor
Corporation or (iii) any material contractual or legal restriction applicable to
Maxtor
201
Corporate Receivables Corporation
Citicorp North America, Inc.
Bankers Trust Company
April 8, 1998
Page 3
Corporation. The Maxtor Documents have been duly executed and delivered
on behalf of Maxtor Corporation.
4. The execution, delivery and performance by MRC of the Maxtor
Sales Agreement, each Purchase and Bank Agreement and the Fee Letter
(collectively, the "MRC Documents"), are within its corporate powers, have been
duly authorized by all necessary corporate action, and do not contravene (i) the
MRC Charter or the MRC Bylaws, (ii) any material law, rule or regulation
applicable to MRC or (iii) any material contractual or legal restriction
applicable to MRC. The MRC Documents have been duly executed and delivered on
behalf of MRC.
5. No authorization, approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by Maxtor Corporation of the Maxtor
Documents except for the filings of the Financing Statements referred to in
paragraph (d) of the opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP and as otherwise stated
in such paragraph (d).
6. No authorization, approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by MRC of the MRC Documents except
for the filings of the Financing Statements referred to in paragraph (h) of the
opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP and as otherwise stated in such paragraph
(h).
7. To my knowledge, there are no pending or overtly threatened
actions or proceedings against Maxtor Corporation or any of its subsidiaries
before any court, governmental agency or arbitrator which purport to affect the
legality, validity, binding effect or enforceability of the Maxtor Documents
which are likely to materially adversely affect the ability of Maxtor
Corporation to perform its obligations thereunder.
8. To my knowledge, there are no pending or overtly threatened
actions or proceedings against MRC or any of its subsidiaries before any court,
governmental agency or arbitrator which purport to affect the legality,
validity, binding effect or enforceability of the MRC Documents which are likely
to materially adversely affect the ability of MRC to perform its obligations
thereunder.
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP may rely upon the opinions set forth in paragraphs 1
through 8 of this opinion in rendering its opinions furnished pursuant to
Sections 3.01(k) and (l) of each Purchase and Bank Agreement.
Very truly yours,
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
202
Corporate Receivables Corporation
Citicorp North America, Inc.
Bankers Trust Company
April 8, 1998
Page 4
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President, General Counsel
and Secretary
203
Exhibit H as executed
RECEIVABLES CONTRIBUTION AND SALE AGREEMENT
Dated as of April 8, 1998
Between
MAXTOR CORPORATION,
as the Seller
and
MAXTOR RECEIVABLES CORPORATION,
as the Buyer
204
RECEIVABLES CONTRIBUTION AND SALE AGREEMENT
Dated as of April 8, 1998
MAXTOR CORPORATION, a Delaware corporation (the "Seller"), and
MAXTOR RECEIVABLES CORPORATION, a California corporation (the "Buyer"), agree as
follows:
PRELIMINARY STATEMENTS.
(1) Certain terms which are capitalized and used throughout this
Agreement, unless otherwise defined in this Agreement, are defined in Article I
of the Purchase Agreement referred to below.
(2) The Seller, Corporate Receivables Corporation, a California
corporation (the "Purchaser") and Citicorp North America, Inc. ("CNAI"), as
Agent, were each party to the Receivables Purchase and Sale Agreement dated as
of March 30, 1996 (the "Original Purchase Agreement"), whereby the Seller had
from time to time sold to the Purchaser, and the Purchaser had from time to time
purchased from the Seller, "Purchase Interests" (as defined in the Original
Purchase Agreement). The Seller, Citibank, N.A. ("Citibank"), and CNAI were each
party to a Receivables Purchase and Sale Agreement dated as of March 30, 1996,
(the "Original Bank Agreement" and, together with the Original Purchase
Agreement, the "Original Agreements").
(3) On the Closing Date, the Purchaser and the Seller each will
have entered into, and fully performed, the Receivables Repurchase Agreement
dated as of April 8, 1998 by and among the Purchaser, the Seller, Citibank and
the Agent (as amended, supplemented or otherwise modified from time to time, the
"Repurchase Agreement"), whereby the Seller will have repurchased each
"Purchased Interest" previously purchased by the Purchaser pursuant to the
Original Purchase Agreement.
(4) The buyer is entered into (a) the Receivables Purchase and
Sale Agreement dated as of April 8, 1998 (as the same may from time to time be
amended, supplemented or otherwise modified in accordance with its terms, the
"Purchase Agreement") among the Buyer (as the "Seller" thereunder), Maxtor
Corporation, as Collection Agent, the Purchase, CNAI, as Agent for the Purchaser
and any other Owners of Purchased Interest, and Bankers Trust Company, as
Trustee (the "Trustee"), and (b) the Receivables Purchase and Sale Agreement
dates as of April 8, 1998 (as the same may from time to time be amended,
supplemented or otherwise modified in accordance with its terms, the "Bank
Agreement" and, together with the Purchase Agreement, the "Purchase and Bank
Agreements") among the Buyer (as the "Seller") thereunder), the banks and other
financial institutions parties thereto (collectively, the "Secondary
Purchasers"), CNAI, as Agent for the Secondary Purchasers, and the Trustee.
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(5) Pursuant to the Purchase and Bank Agreements the Buyer will
sell interests in the Subject Receivables existing at the close of business of
the Buyer on the Closing Date and arising from time to time thereafter to the
extent of the Purchased Interests as defined in the Purchase and Bank
Agreements.
(6) The Seller is, effective as of the Closing Date, assigning to
the Buyer all of the Seller's right, title and interest in and to the Receivable
Assets existing at the close of business of the Seller on the Closing Date.
(7) The Trustee has agreed to (i) maintain certain accounts in
which Collections are held, (ii) at the direction of the Collection Agent,
distribute such Collections, (iii) review certain reports prepared by the
Collection Agent and (iv) perform various other functions in connection
therewith, in each case on the terms and conditions set forth in the Purchase
and Bank Agreements.
(8) The Seller wishes to sell to the Buyer, and the Buyer wishes
to buy from the Seller, on the terms and conditions set forth herein, from time
to time, all Receivable Assets existing at the close of business of the Seller
on the Closing Date and arising from time to time thereafter.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):
"Closing Sale" has the meaning specified in Section 2.02(b).
"Discount Percentage" has the meaning specified for such term in
Schedule I to this Agreement.
"Indemnified Party" has the meaning specified for such term in
Section 6.01.
"Initial Capital Contribution" has the meaning specified in
Section 2.02(b).
"Purchase Price" has the meaning specified in Section 2.02(c).
"Receivable Assets" has the meaning specified in Section 2.01(a).
"Related Security" means, with respect to any Receivable:
(i) all of the Seller's interest in any merchandise
(including returned merchandise), if any, relating to the sale which gave rise
to such Receivable;
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(ii) all other security interests or liens and property
subject thereto from time to time purporting to secure payment of such
Receivable, whether pursuant to the Contract related to such Receivable or
otherwise, together with all financing statements signed by an Obligor
describing any collateral securing such Receivable;
(iii) all guarantees, insurance and other agreements or
arrangements of whatever character from time to time supporting or securing
payment of such Receivable whether pursuant to the Contract related to such
Receivable or otherwise.
"Re-Purchase Price" has the meaning specified in Section 2.02(b).
"Sale" has the meaning specified in Section 2.02(a).
"Termination Date" means the later of (i) the Facility
Termination Date under and as defined in the Purchase Agreement and (ii) the
Facility Termination Date under and as defined in the Bank Agreement.
SECTION 1.02. Other Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles. All terms used in Article 9 of the UCC in the State of
California, and not specifically defined herein, are used herein as defined in
such Article 9.
SECTION 1.03. Computation of Time Periods. Unless otherwise
stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from" means "from and
including" and each of the words "to" and "until" means "to but excluding".
ARTICLE II
SALE OF RECEIVABLES
SECTION 2.01. Sale of Receivables. (a) The Seller hereby agrees
to sell and assign, without recourse (except as expressly provided in the
Purchase Document), to the Buyer, on the terms and subject to the conditions set
forth herein, all the Seller's right, title and interest in, to and under all
Receivables, all Related Security with respect thereto, all Collections with
respect thereto and all proceeds of the foregoing, together with all the
Seller's rights, remedies, powers and privileges with respect to such
Receivables and the related Contracts, existing at the close of business of the
Seller on the Closing Date and arising from time to time thereafter (all such
Receivables, Related Security, Collections, proceeds, rights, remedies, powers
and privileges related to such Receivables and the related contracts being
referred to collectively as the "Receivable Assets").
(b) The parties to this Agreement intend that the transactions
contemplated hereby shall be, and shall be treated as, a purchase by the Buyer
and a sale by the Seller of Receivable Assets and not as a lending transaction.
The foregoing sales and assignments do not constitute and are not intended to
result in a creation of assumption by the Buyer of any
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obligation or liability with respect to any Receivable Asset or Contract, nor
shall the Buyer be obligated to perform or otherwise be responsible for any
obligation of the Seller or any other Person in connection with any Receivable
Asset or under any agreement or instrument relating thereto, including but not
limited to any Contract or any other obligation to any Obligor.
(c) In connection with the foregoing sales and assignments, the
Seller agrees to record and file, at its own expense, proper financing
statements (and proper continuation statements with respect to such financing
statements when applicable) with respect to the Receivable Assets now and
hereafter from time to time acquired by the Buyer under this Agreement, in such
manner and in such jurisdictions as are necessary to perfect the sales and
assignments of the Receivable Assets to the Buyer hereunder, and to deliver
file-stamped copies of such financing statements or other evidence of such
filings to the Buyer and the Agent on or prior to the initial Purchase under the
Purchase and Bank Agreements. Such financing statements shall name the Buyer as
buyer/secured party, the Seller as seller/debtor and the Agent, as assignee.
SECTION 2.02. Terms of Sales. (a) On the terms and subject to the
conditions set forth in this Agreement, the Buyer agrees to make all or part of
the payments of Purchase Price and Re-Purchase Price (as determined in
accordance with paragraph (b) and (c) below) by issuing (or increasing the
principal amount outstanding under) a subordinated promissory note in the form
of Exhibit A to be issued by the Buyer to the Seller (each such subordinated
promissory note, together with all promissory notes issued from time to time in
substitution therefor or renewal thereof (which substitutions or renewals shall
also be in the from of Exhibit A), a "Term Note").
(b) On the Closing Date, (i) the Seller shall contribute an
undivided 5% interest in the Seller's right, title and interests in, to and
under the Receivables existing on the Closing Date, including, without
limitation, all Receivables repurchased by the Seller under the Repurchase
Agreement, as a contribution of capital by the Seller to the Buyer (the "Initial
Capital Contribution") the remainder of such Receivables being, the "Adjusted
Receivables," and (ii) the Buyer shall buy from the Seller, and the Seller shall
sell and assign to the Buyer, the remainder of the Seller's right, title and
interest in, to and under such Receivable Assets existing at the close of
business of the Seller on the Closing Date (the "Closing Sale"). As
consideration for the Closing Sale, the Buyer shall deliver to the Seller a duly
executed Term Note made payable to the Seller. The principal amount outstanding
under the Term Note on the Closing Date shall be equal to the product of (i) the
aggregate Outstanding Balance of the Adjusted Receivables, and (ii) the Discount
Percentage.
(c) On each Business Day after the Closing Date (each, a
"Purchase Date"), the Buyer shall buy from the Seller, and the Seller shall sell
and assign to the Buyer, the Seller's right, title and interests in, to and
under those Receivable Assets that arise on such Business Day (each such
transaction being a "Sale"). As consideration for such continuing ale and
assignment of Receivable Assets after the Closing Date, the Buyer shall pay (or
cause to be paid) to the Seller on the day of each Sale an amount (the "Purchase
Price") equal to the product of (i) the aggregate Outstanding Balance and
Receivables that are newly created from time to time on the
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day of such Sale, and (ii) the Discount Percentage applicable to such
Receivables; provided, however, that the Purchase Price shall not be less than
the reasonably equivalent value of the Receivable Assets to which such Purchase
Price relates, and in the event that, in the reasonable judgment of either the
Seller or the Buyer, such Purchase Price is less than such reasonably equivalent
value or does not reflect the fair market value of such Receivable Assets,
within five Business Days after the Business Day on which such receivable Assets
are sold, each of the Seller and the Buyer (after notice to the other party)
shall appoint a Person (other than an Affiliate of the Buyer or Seller) in the
business of purchasing trade receivables, and such Persons shall appoint a
Person (other than an Affiliate of the Buyer or Seller) in such business, and
such Persons shall make an independent appraisal of the value of such Receivable
Assets and shall determine a Purchase Price which reasonably reflects the fair
market value of such Receivable Assets.
(d) On each Purchase Date, the actual Purchase Price for
Receivable Assets sold on such Purchase Date shall be determined in the Daily
Report and shall be paid by the Buyer. Such Purchase Price to be so paid by the
Buyer shall be paid in cash to the Seller in U.S. dollars, in same day funds, to
the extent of funds available to the Buyer; provided, however, that the excess,
if any, of the Purchase Price over the cash payment therefor shall be paid
first, by reducing the principal amount outstanding under the Demand Note (as
defined below) in an amount up to but no exceeding the lesser of (i) the amount
of such excess and (ii) the then outstanding principal amount of the Demand
Note, and second, to the extent of any remaining excess by increasing the
principal amount outstanding under the Term Note in an amount equal to such
remaining excess. To the extent that a payment is due and payable (and permitted
to be paid) under the Term Note issued to the Seller, any amount of cash
available to the Buyer from time to time in excess of cash needed to purchase
Receivable Assets pursuant to this paragraph (d) shall be paid directly to the
Seller and applied first to pay accrued and unpaid interest on the Term Note and
second to reduce the principal amount outstanding under the Term Note.
(e) On the terms and subject to the conditions set forth in this
Agreement, so long as there is no principal amount outstanding under the Term
Note, the Buyer agrees to make demand loans ("Demand Loans") to the Seller prior
to the Termination Date in such amounts as the Seller may request (through the
Collection Agent) from time to time in amounts not exceeding the amount of cash
available to the Buyer from time to time in excess of cash needed to purchase
Receivable Assets pursuant to Section 2.02(d), which Demand Loans shall be
evidenced by a demand promissory note in the form of Exhibit B issued by the
Seller to the order of the Buyer (each such demand promissory note, together
with all promissory notes issued from time to time in substitution therefor or
renewal thereof (which substitutions and renewals shall also be in the form of
Exhibit B), a "Demand Note").
(f) The Collection Agent shall make all appropriate record
keeping entries with respectzzmpTabHolderto the Term Note and the Demand Note or
otherwise to reflect the foregoing payments and adjustments and toe reflect
disbursements and payments to the Term Loan and the Demand Loan, and the
Collection Agent's books and records shall constitute rebuttable presumptive
evidence of the principal amount of and accrued interest on any Term
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Note or Demand Note at any time. Further, the Collection Agent shall hold each
Term Note or Demand Note for the benefit of Seller. The Seller hereby
irrevocably authorizes the Collection Agent to ▇▇▇▇ the Demand Note "CANCELLED"
and to return such Demand Note to the Buyer upon the final payment thereof after
the occurrence of the Termination Date.
SECTION 2.03. General Settlement Procedures. (a) If on any day
the Outstanding Balance o any Receivable is either (i) reduced as a result of
any defective, rejected or returned merchandise or services, any cash discount,
or any adjustment by the "Seller" (as defined in the Purchase and Bank
Agreements), the Seller or any Affiliate thereof or (ii) reduced or canceled as
a result of any dispute or claim, of any setoff in respect of any dispute or
claim, by the Obligor thereof against such "Seller", the Seller or any Affiliate
thereof (whether such dispute or claim arises out of the same or a related
transaction or any unrelated transaction), the Seller shall be deemed to have
received on such day a Collection of such Receivable in the amount of such
reduction or cancellation (unless such Seller shall be deemed to have received
on such day a Collection in full of such Receivable pursuant to the succeeding
sentence) and the Seller shall make the payment required to be made by it in
connection with such deemed Collection on the day required under, and otherwise
pursuant to, Section 4.01(h). If on any day any of the representations or
warranties in Section 3.01(h) is no longer true with respect to a Receivable
Asset, the Seller shall be deemed to have received on such day a Collection in
full of the relevant Receivable, and the Seller shall make the payment required
to be made by it in connection with such deemed Collection on the day required
under, and otherwise pursuant to Section 4.01(h). In the case of each of the two
preceding sentences, upon any actual payment in full by the Seller of any such
Receivable, the Seller shall be deemed to have repurchased (without recourse and
without representation or warranty, express or implied) such receivable and such
Receivable shall cease to be a "Receivable" for purposes of this Agreement
(unless and until the Agent or any Owner is at any time required to return all
or any portion of such payment for any reason).
(b) Except as otherwise stated in this Section 2.03 or as
otherwise required by law or the underlying contract or the applicable Credit
and Collection Policy, all Collections received from an Obligor of any
Receivable shall be applied to Receivables then outstanding of such Obligor in
the other of the age of such Receivables, starting with the oldest such
Receivable, except if payment is designated by such Obligor, no later than ten
Business Days after such payment shall have been made by such Obligor, for
application to specific Receivables.
SECTION 2.04. Payments and Computations, Etc. (a) All amounts to
be paid or deposited by the Seller hereunder shall be paid or deposited in
accordance with the terms hereof no later than 2:00 p.m. (New York City time) on
the day when due in lawful money of the United States of America in same day
funds to the Buyer as directed by the Buyer to the Seller in writing or by
adjustments to the Term Note or Demand Note, as applicable. The Seller shall, to
the extent permitted by law, pay to the Buyer interest on all amounts not paid
or deposited when due hereunder at 1% per annum above the Alternate Base Rate in
effect from time to time, payable on demand, provided, however, that such
interest rate shall not at any time exceed the maximum rate permitted by
applicable law. All computations of interest and fees hereunder
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shall be made on the basis of a year of 360 days for the actual number of days
(including the first but excluding the last day) elapsed.
(b) The Seller hereby irrevocably and unconditionally waives and
relinquishes to the fullest extent it may legally do so (i) any express or
implied vendor's lien, and any other lien, security interest, charge or
encumbrance, which would otherwise e imposed on or affect any Receivable Asset
on account of any unpaid amount of any Purchase Price therefor or an account of
any other unpaid amounts otherwise payable by the Buyer under or in connection
with this Agreement or otherwise and (ii) with respect to the obligations of the
Seller to make payments or deposits under this Agreement (including, without
limitation, payments under Sections 2.03 and 6.01), any set-off (other than as
permitted under Section 2.20 or under Section 2.03), counterclaim, recoupment,
defense and other right or claim which the Seller may have against the Buyer as
a result of or arising out of the failure of the Buyer to pay any amount on
account of any Purchase Price under Sections 2.01 and 2.02 or any other amount
payable by the Buyer to the Seller under this Agreement or otherwise.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Seller. The
Seller represents and warrants as of the date hereof and as of the date of each
Sale hereunder, as follows:
(a) The Seller is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction indicated at
the beginning of this Agreement.
(b) The execution, delivery and performance by the Seller of each
Purchase Document to be delivered by it hereunder and the transactions
contemplated hereby and thereby, and the Seller's use of the proceeds of Sales,
are within the Seller's corporate powers, have been duly authorized by all
necessary corporate action, do not contravene (i) the Seller's charter or
by-laws or (ii) any law or Contract or other contractual restrictions binding on
or affecting the Seller, and do not result in or require the creation of any
Adverse Claim (other than pursuant hereto) upon or with respect to any of its
properties; and no transaction contemplated hereby requires compliance with any
bulk sales act or similar law.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body or other
person is required for the due execution, delivery and performance by the Seller
of any Purchase Document to be delivered by it hereunder or thereunder, or for
the perfection of or the exercise by the Agent or any Owner of its rights and
remedies under each such Purchase Document, except for (i) the filings of the
financing statements referred to in Article III of the Purchase and Bank
Agreements, all of which, on or prior to the Closing Date, will have been duly
made and be in full force and effect, and (ii) upon any Person's becoming a
Selling Affiliate under the Purchase and Bank Agreements, the filings of the
financing statements required pursuant to the definition of the term "Selling
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Affiliate" in the Purchase and Bank Agreements, all of which, on or prior to the
date such person become a Selling Affiliate, will have been duly made and be in
full force and effect.
(d) Each Purchase Document is, or when delivered hereunder or
thereunder will be, the legal, valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its respective terms.
(e) The consolidated balance sheets of the Seller and its
subsidiaries as at September 27, 1997 and the related consolidated statements of
income and cash flows of the Seller and its subsidiaries for the nine months
then ended, copies of which have been furnished to the Agent, fairly present,
subject to year-end audit adjustments, the consolidated financial condition of
the Seller and its subsidiaries as at such date and consolidated results of the
operations o the Seller and its subsidiaries for the period ended on such date,
all in accordance with generally accepted accounting principles consistently
applied, and, since September 27, 1997, there has been no material adverse
change in such condition or operations except as and to the extent projected or
otherwise disclosed in the Seller's quarterly report on Form 10-Q for the fiscal
quarter ending September 27, 1997 or in Schedule V hereto.
(f) There is no pending or to the knowledge of the executive
officers of the Seller threatened action or proceeding affecting the Seller or
any of its subsidiaries before an court, governmental agency or arbitrator which
may materially adversely affect (i) the collectibility of the Receivables or the
ability of the Seller, any Selling Affiliate or the Collection Agent to collect
the Receivables or (ii) the ability of the Seller or any Selling Affiliate to
perform its obligations under any Purchase Document to be delivered by it
hereunder, or which purports to affect the legality, validity or enforceability
of any Purchase Document.
(g) No proceeds of any Sale will be used to purchase or carry any
margin stock (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System).
(h) Immediately prior to the Closing Sale and each Sale hereunder
of any Receivable Asset, the Seller is the legal and beneficial owner of the
Receivable Assets, free and clear of any Adverse Claim except as created by this
Agreement, or to the extent created by the Agent or the Purchaser or any Owner.
Upon each Sale, the Seller shall transfer to the Buyer (and the Buyer shall
acquire) a valid and perfected ownership interest in each Receivable Asset, free
and clear of any Adverse Claim except as created by this Agreement, or to the
extent created by the Agent or the Purchaser or any Owner. No effective
financing statement or other instrument similarly in effect covering any
Receivable Asset or any Lock Box Account or other deposit account, to the extent
any Collections are from time to time deposited therein, is on file in any
recording office, except those filed in favor of the Agent relating to the
Purchase Documents, or in favor of the Buyer and the Agent hereunder or those
listing the Seller as secured party and the applicable Obligor as debtor.
(i) Each Purchase Report or Daily Report (in each case if
prepared by the Seller or any Selling Affiliate or any Affiliate of any thereof,
or to the extent that information contained therein is supplied by the Seller or
any Selling Affiliate or any Affiliate of any
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thereof), notice or other written item of information, exhibit, financial,
statement, document, book, record ore report furnished or to be furnished at any
time by the Seller or any Selling Affiliate to the Agent of any Owner in each
case in connection with the Purchase and Bank Agreements is or will be accurate
in all material respects as of its date of (except as otherwise disclosed in
writing to the Agent or such Owner, as the case may be, at such time) as of the
date so furnished and as of such relevant date no such document contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements contained therein, in
the light of the circumstances under which they were made, not misleading.
(j) The chief place of business and chief executive office of the
Seller and the office where the Seller keeps its records concerning the
Receivable Assets are located at the address specified in Section 7.02 hereto
(or at such other locations, notified to the Agent in accordance with Section
4.01(f), in jurisdiction where all action required by Section 5.04 has been
taken and completed).
(k) The names and addresses of all the Lock Box Banks, together
with the account numbers of the Lock Box Accounts at such Lock Box Banks, are
specified in Schedule I to the Purchase and Bank Agreements (or at such other
Lock Box Banks and/or with such other Lock Box Accounts as have been notified to
the Agent and for which Lock Box Agreements have been executed in accordance
with Section 6.06(b) of the Purchase and Bank Agreements).
(l) Neither the Seller nor any Affiliate (of the type set forth
in clause (i)(x) of the definition of the term "Affiliate") of the Seller has
any direct or indirect ownership or other financial interests in the Agent, the
Purchaser or any Bank.
(m) Each purchase of Receivable Assets hereunder will constitute
(i) a "current transaction" within the meaning of Section 3(a)(3) of the
Securities Act of 1933, as amended, and (ii) a purchase or other acquisition of
notes, drafts, acceptances, open accounts receivable or other obligations
representing part or all of the sales price of merchandise, insurance or
services within the meaning of Section 3(c)(5) of the Investment Company Act of
1940, as amended.
(n) None of the Receivable Assets is evidenced by any
"instrument" or "chattel paper" within the meaning of the UCC in effect in the
State of California other than any Receivable (i) which shall have become a
Defaulted Receivable after the date on which such Receivable became a Receivable
Asset hereunder (or which was a Defaulted Receivable on the Closing Date) and
(ii) in connection with which Defaulted Receivable the Seller s Collection Agent
shall have accepted an instrument, which instrument shall have been duly
endorsed and delivered to the Agent by the Seller, to maximize the Collections
thereof as contemplated by Section 6.02(c) of the Purchase and Bank Agreements.
(o) No ERISA Event has occurred or is reasonably expected to
occur with respect to any Plan that has resulted or is reasonably likely to
result in a material liability of the Seller.
(p) The aggregate Insufficiency under all Plans does not exceed
$10,000,000.
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(q) Neither the Seller nor any ERISA Affiliate of any thereof has
incurred or is reasonably expected to incur any material Withdrawal Liability
(that has not been satisfied) to any Multiemployer Plan.
(r) Neither the Seller nor any ERISA Affiliate of any thereof has
been notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or has been terminated, within the meaning of Title IV
of ERISA, and no Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated, within the meaning of Title IV of ERISA.
(s) The Seller and its subsidiaries have no material liability
with respect to "expected postretirement benefit obligations" within the meaning
of Statement of Financial Accounting Standard No. 106.
(t) The Seller has not changed its name during the four month
period prior to the date hereto, and has no trade names, fictitious names,
assumed names or "doing business as" names.
(u) With respect to all Receivable Assets (other than the Initial
Capital Contribution), the Buyer has purchased such Receivable Assets from the
Seller in exchange for payment (made by the Buyer to the Seller in accordance
with the provisions of this Agreement) in an amount which constitutes fair
consideration and approximates fair market value for such Receivable Assets and
in a sale the terms and conditions of which (including, without limitation, the
purchase price thereof) reasonably approximate an arm's-length transaction
between unaffiliated parties. No such sale has been made for or on account of an
antecedent debt owed by the Seller or to the Buyer, and no such sale or
contribution is or may be voidable or subject to avoidance under any section of
the Federal Bankruptcy Code.
(v) The Seller has not sold, assigned, transferred, pledged or
hypothecated any interest in any Receivable Assets to any Person other than as
contemplated by this Agreement.
(w) The Seller has complied with the Credit and Collection Policy
in all material respects and since the date of this Agreement there has been no
change in the Credit and Collection Policy except as permitted hereunder.
(x) The obligations of the Seller hereunder to make payments in
respect of fees and indemnities payable to the Buyer or any Indemnified Party
rank at least equally with indebtedness of the Seller which is not contractually
subordinated.
(y) The Seller has not granted any Person other than the Agent
dominion and control of any Lock Box Account, or the right to take dominion and
control over any Lock Box Account at a future time or upon the occurrence of a
future event.
(z) The Seller has filed, or caused to be filed or be included
in, all tax reports and returns (federal, state, local and foreign), if any,
required to be filed by it and paid, or caused to be paid, all amounts of taxes,
including interest and penalties required to be paid by it, except
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for such taxes (i) as are being contested in good faith by proper proceedings
and (ii) against which adequate reserves shall have been established in
accordance with and to the extent required by GAAP, but only so long as the
proceedings referred to in clause (i) above could not subject the Agent or any
other Indemnified Party to any civil or criminal penalty or liability or involve
any material risk of the loss, sale or forfeiture of any property, rights or
interests covered hereunder or under any other Purchase Document.
(aa) There are no Adverse Claims (including, without limitation,
liens or retained security titles of conditional vendors, but excluding any
Adverse Claims created hereunder) of any nature whatsoever on the Receivable
Assets. The Seller is not a party to any contract, agreement, lease or
instrument the performance of which, either unconditionally or upon the
happening of an event, will result in or require the creation of any Adverse
Claim on the Receivable Assets, or otherwise result in a violation of this
Agreement or any other Purchase Document, other than any Adverse Claims created
pursuant to any Purchase Document.
(bb) (i) The Seller is not a party to any indenture, loan or
credit agreement or any lease or other agreement or instrument or subject to any
organization restriction that could reasonably be expected to have, and no
provision of applicable law or governmental regulation could reasonably be
expected to have such an effect on the ability of the Seller to carry out its
obligations hereunder or under any other Purchase Document, and (ii) neither the
Seller not, to the best of the knowledge of the Seller, any other party is in
default under or with respect to this Agreement or any other contract,
agreement, lease or other instrument to which the Seller is a party and which is
material to the Seller's condition (financial or otherwise), business,
operations, property or prospects, and neither the Seller nor any such other
party has delivered or received any notice of default thereunder.
(cc) The Lock Box Banks are the only institutions holding Lock
Box Accounts for the receipt of payments from all Obligors, and such Obligors
have been instructed or, upon the creation of Receivables owed by them, will be
instructed to make payments only to Lock Box Accounts, and such instructions
have not been modified or revoked by the Seller and are in full force and
effect.
ARTICLE IV
GENERAL COVENANTS OF THE SELLER
SECTION 4.01. Affirmative Covenants of the Seller. Until the
Collection Date, the Seller, will, unless the Buyer shall otherwise consent in
writing:
(a) Compliance with Laws, Etc. Comply in all material respects
with all applicable laws, rules, regulations and orders with respect to it, its
business and properties and all Receivable Assets.
(b) Preservation of Corporate Existence. Preserve and maintain
its corporate existence, rights, franchises and privileges in the jurisdiction
of its incorporation, and qualify and remain qualified in good standing as a
foreign corporation in each jurisdiction where the failure
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to preserve and maintain such existence, rights, franchises, privileges and
qualifications would materially adversely affect the interests of the Buyer
hereunder or in and to the Receivable Assets, or the ability of the Seller or
the Collection Agent to perform its obligations under any Purchase Document or
the ability of the Seller to perform its obligations under the Contracts.
(c) Audits. (i) At any time and from time to time during regular
business hours and upon reasonable prior notice, permit the Buyer, or its agents
or representatives, at the Seller's expense, (A) to examine and make copies of
and abstracts from all books, records and documents (including, without
limitation, computer tapes and disks) in the possession or under the control of
the Seller, its Affiliates or the agents of the Seller or its Affiliates
relating to the Receivable Assets and the Lock Box Account activity and (B) to
visit the offices and properties of the Seller for the purpose of examining such
materials described in clause (A) above, and to discuss matters relating to the
Receivable Assets and the Lock Box Account activity or the Seller's or the
Selling Affiliates' performance under the Purchase Documents or under the
Contracts with any of the officers or employees of the Seller having knowledge
of such matters, and (ii) within 90 days after the end of each fiscal year of
the Seller, at the Seller's expense, cause Ernst & Young LLP or Coopers &
▇▇▇▇▇▇▇ to perform, and deliver to the Buyer a written report of, or permit
other independent public accountants specified by (upon the occurrence and
during the continuance of any Event of Insecurity) or otherwise acceptable to
the Buyer to perform and deliver to the Buyer a written report of, an audit with
respect to the Receivable Assets, the Credit and Collection Policies, the Lock
Box Account activity and the performance by the Seller and the Selling
Affiliates of their respective obligations, covenants and duties under the
Purchase Documents, on a scope and in a form substantially in the scope and form
set forth in Schedule IV to the Purchase and Bank Agreements.
(d) Keeping of Records and Books of Account. Maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing Receivables in the event
of the destruction of the originals thereof), and keep and maintain all
documents, books, records and other information, reasonably necessary or
advisable for the collection of all Receivables (including, without limitation,
records adequate to permit the daily identification of each Receivable and all
Collections of and adjustments to each Receivable).
(e) Performance and Compliance with Receivables and Contracts. At
its expense timely and fully perform and comply with all material provisions,
covenants and other promises required to be observed by it under the Contracts
related to the Receivables.
(f) Location of Records. Keep its chief place of business and
chief executive office and the office where it keeps the originals of its
records concerning the Receivable Assets at the address of the Seller referred
to in Section 3.01(j) on the date hereof or, upon 30 days' prior written notice
to the Buyer, at any other locations in a jurisdiction within the United States
where all action required by Section 5.04 shall have been taken.
(g) Credit and Collection Policies. Comply in all material
respects with the applicable Credit and Collection Policy in regard to each
Receivable and the related Contract.
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(h) Collections. (i) Instruct, or cause to be instructed, all
Obligors to make all payments in respect of Receivable Assets directly to a Lock
Box Account,
(ii) if the Seller shall otherwise receive any
Collections, deposit such Collections to a Lock Box Account by the second
Business Day (or, upon the occurrence and during the continuance of any Event of
Insecurity, the first Business Day) following such receipt or, if such
Collections were paid by the applicable Obligor in response of any merchandise
which shall not have been shipped at the time of such payment and the shipping
of which shall cause the Receivable resulting from the sale of such merchandise
to arise, by the second Business Day (or, upon the occurrence and during the
continuance of any Event of Insecurity, the first Business Day) following the
shipping of such merchandise, and
(iii) upon the occurrence of any Event of Insecurity,
cause the Lock Box Banks to immediately sweep Collections from the Lock Box
Accounts to the Concentration Account.
(i) Maintenance of Separate Exercise. Do all things necessary to
maintain its corporate existence separate and apart from the Buyer, including,
without limitation, (i) maintaining proper corporate records and books of
account separate from those of the Buyer; (ii) maintaining its assets, fund, and
transactions separate from those of the Buyer, reflecting such assets and
transactions in financial statements separate and distinct from those of the
Buyer, and evidencing such assets, funds and transactions by appropriate entries
in the books and records referred to in clause (i) above, and providing for its
own operating expenses and liabilities from its own assets and funds other than
certain expenses and liabilities relating to basic corporate overhead which may
be allocated between itself and the Buyer; (iii) holding such appropriate
meetings or obtaining such appropriate consents of its Board of Directors as are
necessary to authorize all the Seller's corporate actions required by law to be
authorized by the Board of Directors, keeping minutes of such meetings and of
meetings of its stockholders and observing all other customary corporate
formalities (and any successor Seller not a corporation shall observe similar
procedures in accordance with its governing documents and applicable law); (iv)
at all times entering into its contracts and otherwise holding itself out to the
public under the Seller's own name as a legal entity separate and distinct from
the Buyer; and (v) conducting all transactions and dealings between the Seller
and the Buyer on an arm's-length basis.
(j) Compliance with Opinion Assumptions and Constituent
Documents. Without limiting the generality of Section 4.01(i) above, maintain in
place all policies and procedures, and take and continue to take all actions,
described in the assumptions as to facts set forth in, and forming the basis of,
the opinions set forth in the opinion delivered to the Agent in substantially
the form of the opinion delivered pursuant to Section 3.01(a) of the Purchase
and Bank Agreements, and comply with, and cause compliance with, the provisions
of the constituent documents of the Buyer delivered to the Agent pursuant to
Section 3.01 of the Purchase and Bank Agreements as the same may, from time to
time, be amended, modified or otherwise supplemented with the prior written
consent of the Agent.
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(k) Purchase of Receivable Assets from the Seller. With respect
to all Receivable Assets outstanding from time to time (other than the Initial
Capital Contribution) this Agreement, sell such Receivable Assets to the Buyer
in exchange for payment (made in accordance with this Agreement) in an amount
which constitutes fair consideration and approximates fair market value for such
Receivable Asset and in a sale the terms and conditions of which (including,
without limitation, the purchase price thereof) reasonably approximate an
arm's-length transaction between unaffiliated parties.
(l) Maxtor Agreement. At is expense, timely and fully perform and
comply in all material respects with all provisions, covenants and other
promises required to be observed by it under the Maxtor Agreement, maintain the
Maxtor Agreement in full force and effect, enforce the Maxtor Agreement in
accordance with its terms, take all such action to such end as may be from time
to time reasonably requested by the Agent, and make to any party to the Maxtor
Agreement such demands and requests for information and reports or for action as
the Seller is entitled to make thereunder and as may be from time to time
reasonably requested by the Agent.
SECTION 4.02. Reporting Requirements of the Seller. Until the
Collection Date, the Seller will, unless the Buyer shall otherwise consent in
writing, furnish to the Agent and the Trustee:
(a) as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of the Seller, a
consolidated balance sheet of the Seller and its subsidiaries as of the end of
such quarter and consolidated statements of income and of cash flows of the
Seller and its subsidiaries for the period commencing at the end of the previous
fiscal year and ending with the end of such quarter, certified by the chief
financial officer of the Seller;
(b) as soon as available and in any event within 90 days after
the end of each fiscal year of the Seller, a copy of the Seller's annual audit
report containing a consolidated balance sheet of the Seller and its
subsidiaries as of the end of such year and consolidated statements of income
and of cash flows for such year, certified in a manner acceptable to the Agent
by Ernst & Young LLP or other independent public accountants acceptable to the
Agent;
(c) as soon as possible and in any event within five days after
the Seller's chief executive officer, chief operating officer, chief financial
officer, chief accounting officer, treasurer or assistant treasurer obtains
knowledge of the occurrence of each Event of Termination and each Incipient
Event of Termination continuing on the date of such statement, a statement of
such officer of the Seller setting forth details of such Event of Termination or
Incipient Event of Termination and the action which the Seller has taken and
proposes to take with respect thereto;
(d) promptly and in any event within five Business Days after the
Seller's receipt or delivery thereof, copies of all notices, requests, reports,
certificates and other information and documents delivered or received by the
Seller from time to time under or in connection with this Agreement;
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(e) not later than eight Business Days after the last day of each
Fiscal Month, at the request of the Agent, and in any event within five days
after the occurrence of any Event of Termination or Incipient Event of
Termination, a list of the outstanding Receivable Assets on such day; and
(f) such other information, documents, records or reports
respecting the Receivable Assets or the condition or operations, financial or
otherwise, of the Seller or any of its subsidiaries as the Agent may from time
to time reasonably request.
SECTION 4.03. Negative Covenants of the Seller. Until the
Collection Date, the Seller will not, without the written consent of the Buyer:
(a) Sales, Liens, Etc. Except as otherwise provided in the
Purchase Documents, sell, assign (by operation of law or otherwise) or otherwise
dispose of, or grant any option with respect to, or create or suffer to exist
any Adverse Claim (except to the extent created by the Agent or the Purchaser or
any Owner) upon or with respect to, the Seller's undivided interest in any
Receivable Asset or any Lock Box Account or other deposit account to which any
Collections of any Receivable are sent or assign any right to receive income in
respect thereof.
(b) Extension or Amendment of Receivables. Except as otherwise
permitted in Section 6.02 of the Purchase and Bank Agreements if the Seller is
the Collection Agent, (i) extend the terms of any Receivable, or (ii) amend or
otherwise modify the terms of any Receivable, or terminate or permit the
termination of, or amend, modify or waive any term or condition of, any Contract
related thereto, other than in connection with the Seller's standard sales
programs, if in any such case such amendment, modification or waiver would be
reasonably likely to impair the collectibility of any Receivable or materially
adversely affect the rights or interests of the Agent or the Purchaser or any
Owner with respect thereto or hereunder; provided, however, that, except as so
permitted in Section 6.02 of the Purchase and Bank Agreements, in no event shall
the Seller amend or otherwise modify the terms of any Receivable unless the
Agent shall have otherwise notified the Seller.
(c) Change in Business or Credit and Collection Policy. Make any
change in the character of its business or in its Credit and Collection Policy,
which change would, in either case, be reasonably likely to impair the
collectibility of any Receivable.
(d) Change in Payment Instructions to Obligors. Add or terminate
any bank as a Lock Box Bank or any account as a Lock Box Account from those
listed in Schedule I to the Purchase and Bank Agreements, or make any change in
its instructions to Obligors regarding payments to be made to any Lock Box Bank,
unless the Agent shall have received notice of such addition, termination or
change and executed copies of Lock Box Agreements with respect to each new Lock
Box Bank and each new Lock Box Account, as applicable.
(e) Deposits to Lock Box Accounts. Deposit or otherwise credit,
or cause or permit to be so deposited or credited, to any Lock Box Account cash
or cash proceeds other than Collections of Receivables.
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(f) Mergers, Etc. Merge with or into or consolidate with or into,
or convey, transfer, lease or otherwise dispose of (whether in one transaction
or in a series of transactions) all or substantially all of its assets (whether
now owned or hereafter acquired) to, any Person, unless (i) immediately after
giving effect to such merger or consolidation, no Event of Termination or
Incipient Event of Termination shall occur and be continuing and (ii) the
corporation into which the Seller shall be merged or consolidated or which is
otherwise formed pursuant to such merger or consolidation shall assume the
Seller's obligations and grants of interests under the Purchase Documents in a
written agreement satisfactory in form and substance to the Agent and shall
furnish to the Agent, together with (and with reference to such agreement),
documents satisfactory in form and substance to the Agent and of the kinds
referred to in Section 3.01, in each case giving effect to such merger or
consolidation, and the consent of the Company with respect to such merger or
consolidation in form and substance satisfactory to the Agent.
(g) Change in Corporate Name, Etc. Make any change to its name,
identity, structure or chief executive office, or use any trade names,
fictitious names, assumed names or "doing business as" names, unless, prior to
the effective date of any such change or use, the Seller delivers to the Agent
(i) UCC financing statements, executed by the Seller and, if applicable, the
Buyer, necessary to reflect such change or use and to continue the perfection of
the ownership interests or security interests in the Receivable Assets, and (ii)
new Lock Box Agreements executed by the Seller, necessary to reflect such change
and to continue to enable the Agent to exercise its rights contained in Section
6.03(a) of the Purchase and Bank Agreements, and (iii) in the case of any such
change in its structure, a favorable opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP or other
counsel of the Seller reasonably satisfactory to the Agent, in substantially the
form of Exhibit E-1 to the Purchase and Bank Agreements, giving effect to such
change, in each case of clauses (i), (ii) and (iii) together with such other
documents and instruments as the Agent may reasonably request in connection
therewith.
(h) Transactions with Affiliates. Enter into or permit to exist
any transaction (including, without limitation, the purchase, sale, lease or
exchange of any property or the rendering of any service) with the Buyer, other
than on terms that are fair and reasonable in the circumstances and that
reasonably approximate an arm's-length transaction between unaffiliated parties.
(i) Maxtor Agreement. (i) Cancel or terminate the Maxtor
Agreement or consent to or accept any cancellation or termination thereof, (ii)
amend or otherwise modify any term or condition of the Maxtor Agreement or give
any consent, waiver or approval thereunder, (iii) waive any default under or
breach of the Maxtor Agreement or (iv) take any other action under the Maxtor
Agreement not required by the terms thereof that would impair the value of any
Receivable Asset or the rights or interests of the Buyer thereunder or of the
Agent or any Owner or Indemnified Party thereunder.
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ARTICLE V
ADMINISTRATION AND COLLECTION
SECTION 5.01. Designation of Collection Agent. The Receivable
Assets shall be serviced, administered and collected by the Person designated as
the Collection Agent from time to time in accordance with Section 6.01 of the
Purchase and Bank Agreements, including any Person subcontracted to perform the
duties of Collection Agent under the Purchase and Bank Agreements from time to
time in accordance with Section 6.01 of the Purchase and Bank Agreements, and
shall be serviced, administered and collected by the Collection Agent in the
manner set forth in Section 6.02 of the Purchase and Bank Agreements, provided
that after a Collection Date, the Seller shall continue to act as Collection
Agent for the purposes of this Agreement unless otherwise agreed between the
Buyer and the Seller.
SECTION 5.02. Rights of the Buyer. The Buyer may notify at any
time after the occurrence and during the continuance of any Event of Termination
(or an event which with the passage of time or notice, or both, would constitute
an Event of Termination) under the Purchase and Bank Agreements, and at the
Seller's expense, the Obligors of Receivable Assets, or any of them, of the
ownership of Receivable Assets by the Buyer.
SECTION 5.03. Responsibilities of the Seller. Anything herein to
the contrary notwithstanding:
(a) The Seller shall perform all of its obligations under the
Contracts related to the Receivable Assets to the same extent as if Receivable
Assets had not been sold and the exercise by the Buyer of its rights hereunder
shall not relieve the Seller from such obligations or its obligations with
respect to any Receivable Assets or under the related Contracts; and
(b) Neither the Buyer nor any other Indemnified Party shall have
any obligation or liability with respect to any Receivable Assets or related
Contracts except for liabilities arising from its or their willful misconduct,
nor shall any of them be obligated to perform any of the obligations of the
Seller thereunder.
SECTION 5.04. Further Action Evidencing Purchases. (a) The Seller
agrees that from time to time, at its expense, it will, and will cause its
subsidiaries to, promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that the Buyer may reasonably request, in order to perfect, protect or more
fully evidence the purchase of Receivable Assets, or to enable any of them to
exercise and enforce any of their respective rights and remedies hereunder or
under any other Purchase Document. Without limiting the generality of the
foregoing, the Seller will, and will cause its subsidiaries to, upon the request
of the Buyer: (i) execute and file such financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as may be necessary or desirable, or as the Buyer may request, in order
to perfect, protect or evidence such purchase of Receivable Assets; and (ii) at
any time after the occurrence and during the continuance of any Event of
Insecurity (A) ▇▇▇▇ conspicuously each invoice evidencing each Receivable and
the related Contract with a legend, acceptable to the Buyer, evidencing that
such
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purchase of Receivable Assets has been made in accordance with this Agreement
and (B) ▇▇▇▇ its master data processing records evidencing such Receivables and
related Contracts with such legend.
(b) The Seller hereby authorizes the Buyer to file one or more
financing or continuation statements, and amendments thereto and assignments
thereof, relating to all or any of the Receivable Assets now existing or
hereafter arising without the signature of the Seller where permitted by law. A
photocopy or other reproduction of this Agreement or any financing statement
covering all or any of the Receivable Assets shall be sufficient as a financing
statement where permitted by law.
(c) If the Seller fails to perform any agreement contained
herein, the Buyer or its designee may itself perform, or cause performance of,
such agreement, and the expenses of the Buyer or its designee incurred in
connection therewith shall be payable by the Seller under Section 6.01 or
Section 7.06, as applicable.
ARTICLE VI
INDEMNIFICATION
SECTION 6.01. Indemnities by the Seller. Without limiting any
other rights which the Buyer, any Affiliate thereof and their respective
permitted designees and assignees (each an "Indemnified Party") may have under
any Purchase Document or under applicable law, the Seller hereby agrees to
indemnify each Indemnified Party from and against any and all claims, losses and
liabilities (including reasonable attorneys' fees and expenses, but excluding
(a) any amount to the extent resulting from gross negligence or willful
misconduct on the part of such Indemnified Party, (b) recourse (except as
otherwise specifically provided in this Agreement) for uncollectible Receivables
or (c) any income taxes (other than any withholding taxes in respect of any
Included Foreign Receivable) incurred by such Indemnified Party arising out of
or as a result of any Purchase Document or the ownership of Purchased Interests
or in respect of any Receivable, any Contract, any Related Security or any
Additional Assigned Rights) (all of the foregoing, to the extent not so
excluded, being collectively referred to as "Indemnified Amounts"), and shall
pay on demand to each Indemnified Party any and all amounts necessary to
indemnify such Indemnified Party from and against any and all Indemnified
Amounts, resulting from:
(i) reliance on any representation or warranty or
statement made or deemed made by the Seller or the Company or any of their
respective Affiliates (or any of their respective officers) under or in
connection with any Purchase Document which shall have been incorrect in any
material respect when made;
(ii) the failure by the Seller or any Affiliate thereof to
comply with any applicable law, rule or regulation with respect to any
Receivable or the related Contract, or the nonconformity of any Receivable or
the related Contract with any such applicable law, rule or regulation;
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(iii) the failure to vest in the Buyer a valid and
perfected ownership interest in each Receivable Asset; or the failure of the
Buyer to have obtained a first priority perfected ownership interest in the
Receivable Assets transferred or purported to be transferred to the Buyer under
this Agreement, free and clear of any Adverse Claim;
(iv) the failure of the Seller or any Affiliate thereof to
have filed, or any delay by the Seller or any Affiliate thereof, in filing,
financing statements or other similar instruments or documents under the UCC of
any applicable jurisdiction or other applicable laws with respect to any
Receivable Assets, at any time;
(v) any defense (other than discharge in bankruptcy or
other insolvency proceeding of the Obligor) of the Obligor to the payment of any
Receivable (including, without limitation, a defense based on such Receivable or
the related Contract not being a legal, valid and binding obligation of such
Obligor enforceable against it in accordance with its terms), or any other claim
resulting from the sale of the merchandise or services related to such
Receivable or the furnishing or failure to furnish such merchandise or services;
(vi) any failure of the Seller or any Affiliate thereof,
as Collection Agent or otherwise, to perform its duties or obligations in
accordance with the provisions of Article V hereof or to perform its duties or
obligations under the Contracts;
(vii) any products liability, personal injury or property
damage or other similar or related claim or action of whatever sort allegedly
arising out of or in connection with merchandise, insurance or services which
are the subject of any Contract;
(viii) any investigation, litigation or proceeding related
to any Purchase Document or any other instrument or document furnished pursuant
hereto or the use of proceeds of Sales or Purchases or the ownership of
Receivable Assets or in respect of any Receivable Asset, in each case other than
any investigation, litigation or proceeding (A) relating solely to any violation
by any Indemnified Party of any banking, bank holding company or securities laws
or any sale of commercial paper or other funding source and (B) not relating to
or based upon or otherwise attributable to any act, statement, omission or
violation by the Seller, the Company, any Selling Affiliate or any Affiliate of
any thereof;
(ix) the failure to pay when due any taxes payable by the
Seller or any Affiliate thereof (other than any Owner's taxes), including,
without limitation, sales taxes, shipping charges or other similar charges or
taxes due on merchandise or services sold by the Seller; or
(x) the commingling of Collections of Receivables at any
time with other funds.
Any amounts subject to the indemnification provisions of this
Section 6.01 shall be paid by the Seller to the Agent for the account of the
applicable Indemnified Party promptly but in any event within five Business Days
following demand therefor by the Agent or such Indemnified Party.
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ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendments, Integration, Etc. No amendment or
waiver of any provision of this Agreement, and no consent to any departure by
the Seller herefrom, shall in any event be effective unless the same shall be in
writing and signed by the Buyer and then such amendment, waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given. This Agreement contains a final and complete integration of all
prior expressions by the parties hereto with respect to the subject matter
hereof and shall constitute the entire agreement among the parties hereto with
respect to the subject matter hereof, superseding all prior oral or written
understandings.
SECTION 7.02. Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including communication by telefax) and mailed, telefaxed or delivered, as to
each party hereto, at its address and telefax number set forth under its name on
the signature pages hereof or at such other address or telefax number as shall
be designated by such party in a written notice to the other parties hereto. All
such notices and communications shall, when mailed or telefaxed, be effective
when delivered by mail or when telefaxed, respectively.
SECTION 7.03. No Waiver; Remedies. No failure on the part of the
Buyer or any Indemnified Party to exercise, and no delay in exercising, any
right under any Purchase Document shall operate as a waiver thereof, nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
SECTION 7.04. Binding Effect; Assignability. This Agreement shall
be binding upon the Seller and the Buyer and shall inure to the benefit of the
Seller, the Buyer and each Indemnified Party and their respective successors and
assigns, except that the Seller shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of the Buyer.
This Agreement shall create and constitute the continuing obligation of the
parties hereto in accordance with its terms, and shall remain in full force and
effect until the Collection Date; provided, however, that rights and remedies
with respect to the indemnification provisions of Section 7.06 and Article VII
shall be continuing and shall survive any termination of this Agreement.
SECTION 7.05. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of California, except to
the extent that the perfection or the effect of non-perfection of the interests
of the Buyer, or remedies hereunder, in respect of the Receivable Assets are
governed by the laws of a jurisdiction other than the State of California.
SECTION 7.06. Confidentiality. Except to the extent otherwise
required by applicable law, each of the parties hereto agrees to maintain the
confidentiality of the Purchase Documents (and all drafts thereof) and not to
disclose any Purchase Document or such drafts to
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third parties (other than to its directors, officers, employees, accountants or
counsel); provided, however, that the Agreement may be disclosed to third
parties to the extent such disclosure is (i) required by any applicable
securities laws, (ii) made solely to persons who are legal counsel for the
purchaser or underwriter of such securities, (iii) limited in scope to the
provisions of Articles IV and VI, to the extent defined terms are used in
Articles IV and VI, such terms defined in Article I of this Agreement and the
Purchase and Bank Agreements and (iv) made pursuant to a written agreement of
confidentiality in form and substance reasonably satisfactory to the Agent.
SECTION 7.07. [INTENTIONALLY OMITTED]
SECTION 7.08. [INTENTIONALLY OMITTED]
SECTION 7.09. Execution in Counterparts; Severability. This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and
the same agreement. In case any provision in or obligation under this Agreement
should be invalid, illegal or unenforceable in any jurisdiction,
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the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
MAXTOR CORPORATION, as Seller
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Title: Vice President and
Chief Financial Officer
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telephone No: 408/▇▇▇-▇▇▇▇
Facsimile No.: 408/432-4480
MAXTOR RECEIVABLES
CORPORATION, as Buyer
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Title: President
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Raja Venkatesh
Telephone No: 408/▇▇▇-▇▇▇▇
Facsimile No.: 408/432-4480
Agreed to and acknowledged by:
CITICORP NORTH AMERICA, INC.,
as Agent
By: /s/
-------------------------------
Title:
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SCHEDULE 1
Discount Percentage
"Discount Percentage" means, for each Receivable Asset purchased
on any date, (a) for purposes of calculating the Purchase Price in respect of
the Closing Sale, 98.59% and (b) for purposes of calculating any Purchase Price
with respect to any Purchase Date, or the value of any Receivable Assets on any
date, a percentage equal to:
100% - (LD + PDRR)
where:
LD = the amount (expressed as a percentage) equal to the greater of
(i) one-fourth of one percent and (ii) 1.5 times the average of
the Loss-to-Liquidation Ratios for the three consecutive Fiscal
Months most recently ended; and
PDRR = the amount (expressed as a percentage) equal to:
TD x DR
-------
360
where:
TD = the "Turnover Days" ratio for the Receivable Assets
originated during the most recently ended Fiscal Month,
calculated by multiplying the fraction, the numerator of
which is the aggregate Outstanding Balance of all
Receivable Assets computed as of the last day of such
Fiscal Month and the denominator of which is the aggregate
amount of Collections (other than any deemed Collections)
received during such Fiscal Month with respect to
Receivable Assets, by 30;
DR = the rate of interest announced publicly by Citibank,
N.A. in New York, New York from time to time, as
Citibank's prime rate;
227
Exhibit A to
Receivables
Contribution & ▇▇▇
as executed
NON-NEGOTIABLE TERM NOTE
Milpitas, California
April 8, 1998
FOR VALUE RECEIVED, the undersigned, MAXTOR RECEIVABLES CORPORATION, a
California corporation ("MRC"), promises to pay to MAXTOR CORPORATION, a
Delaware corporation ("Seller"), on the terms and subject to the conditions set
forth herein and in the Maxtor Sales Agreement referred to below, the aggregate
unpaid Purchase Price of all Receivable Assets purchased by MRC from Seller and
not paid in cash pursuant to such Maxtor Sales Agreement during the period from
(and including) the Closing Date (as defined in the Maxtor Sales Agreement) to
(but excluding) the Final Maturity Date referred to below.
1. Maxtor Sales Agreement. This Term Note is the Term Note described in,
and is subject to the terms and conditions set forth in, that certain
Receivables Contribution and Sale Agreement dated as of April 8, 1998 (as the
same may be amended, supplemented, amended and restated, or otherwise modified
from time to time in accordance with its terms, the "Maxtor Sales Agreement")
among MRC and Seller. Reference is hereby made to the Maxtor Sales Agreement for
a statement of certain other rights and obligations of MRC and Seller.
2. Definitions. Capitalized terms used but not defined herein have the
meanings assigned thereto in the Maxtor Sales Agreement. In addition, as used
herein, the following terms have the following meanings:
"Bankruptcy Proceedings" has the meaning set forth in Section
9(b) hereof.
"Base Rate" means the rate of interest publicly announced by
Citibank, N.A. in New York, New York from time to time as Citibank's base rate,
plus one percent (1%).
"Final Maturity Date" means the Settlement Date immediately
following the date that falls one hundred twenty-one (121) days after the
Termination Date of the Maxtor Sales Agreement.
"Senior Interests" means the obligations of MRC to the
Beneficiaries under the Purchase Documents to which MRC is a party.
"Senior Interest Holders" means the Beneficiaries.
228
"Subordination Provisions" means, collectively, clauses (a)
through (m) of Section 7 hereof.
3. Interest.
(a) The aggregate unpaid principal amount from time to time
outstanding under this Term Note shall bear interest at a rate per annum equal
to the Base Rate; provided that notwithstanding anything in this Term Note to
the contrary, the foregoing interest rate shall be subject to the limitation
that such interest rate shall not at any time exceed the maximum rate permitted
by applicable law.
(b) Subject to the Subordination Provisions below, MRC shall pay
accrued interest on this Term Note on each Settlement Date.
(c) Interest accrued hereunder shall be computed for the actual
number of days elapsed on the basis of a year consisting of 365 or, where
appropriate, 366 days.
4. Principal.
(a) On the Closing Date, the principal amount outstanding under
this Term Note shall equal the product of (i) the aggregate Outstanding Balance
of the Adjusted Receivables and (ii) the Discount Percentage, as determined in
accordance with Section 2.02(b) of the Maxtor Sales Agreement.
(b) Prior to the Final Maturity Date, the principal amount of
this Term Note shall be increased on any Business Day if, and to the extent
that, the Purchase Price of Receivable Assets purchased by MRC on such Business
Day exceeds the aggregate amount of Collections received by MRC on such Business
Day and, subject to the Subordination Provisions below, shall be reduced if, and
to the extent that the Collections received by MRC on such Business Day exceed
the aggregate Purchase Price of Receivable Assets purchased by MRC on such
Business Day, in each case in accordance and as more specifically described in
Section 2.02(d) of the Maxtor Sales Agreement.
(c) The entire remaining unpaid principal amount of this Term
Note shall be paid on the Final Maturity Date.
(d) Subject to the Subordination Provisions set forth below, the
principal amount of and accrued interest on this Term Note may be prepaid, in
whole or in part, on any Business Day without premium or penalty.
5. Cash Payment Mechanics. All payments of principal and interest
hereunder are to be made in lawful money of the United States of America.
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229
6. Enforcement Expenses. In addition to and not in limitation of the
foregoing, but subject to the Subordination Provisions set forth below and to
any limitation imposed by applicable law, MRC agrees to pay all expenses,
including reasonable attorneys' fees and legal expenses, incurred by Seller in
seeking to collect any amounts payable hereunder which are not paid when due.
7. Subordination Provisions. MRC covenants and agrees, and Seller, by
its acceptance of this Term Note, likewise covenants and agrees on behalf of
itself and any holder of this Term Note, that the payment of the principal
amount of and interest on this Term Note is hereby expressly subordinated in
right of payment to the payment of the Senior Interests to the extent and in the
manner set forth in the following clauses of this Section 7:
(a) No payment or other distribution of MRC's assets of any kind
or character, whether in cash, securities, or other rights or property, shall be
made on account of this Term Note except to the extent such payment or other
distribution is (i) permitted under Section 5.03(k) of the Purchase and Bank
Agreements or (ii) made pursuant to Section 4 of this Term Note;
(b) In the event of any dissolution, winding up, liquidation,
readjustment, reorganization or other similar event relating to MRC, whether
voluntary or involuntary, partial or complete, and whether in bankruptcy,
insolvency or receivership proceedings, or upon an assignment for the benefit of
creditors, or any other marshalling of the assets and liabilities of MRC (such
proceedings being herein collectively called "Bankruptcy Proceedings"), the
Senior Interests shall first be paid in full before Seller shall be entitled to
receive and to retain any payment or distribution in respect of this Term Note;
and in any event any payment or distribution of any kind or character (whether
in cash or other property) in respect of this Term Note to which Seller would be
entitled except for this clause (b) shall be made directly to the Agent (for the
benefit of the Senior Interest Holders);
(c) Until such time as the Senior Interests shall have been paid
in full, if any Bankruptcy Proceeding is commenced by or against MRC, the Agent
is hereby irrevocably. authorized and empowered, in its own name, on behalf of
the Senior Interest Holders, or in the name of Seller, (i) to collect and
receive every payment or distribution referred to in clause (b) above and give
acquittance therefor and (ii) to file claims and proofs of claim and take such
other action (including, without limitation, voting with respect to any claims
of Seller relating to this Term Note) as it may deem necessary or advisable for
the exercise or enforcement of any of the rights or interests of the Senior
Interest Holders; and Seller agrees to take such action as the Agent may
reasonably request to collect every payment or distribution to which it is
entitled with respect to this Term Note for the account of the Senior Interest
Holders and to file appropriate claims and proofs of claim in respect thereof;
(d) If Seller receives any payment or other distribution of any
kind or character from MRC or from any other source whatsoever, in respect of
this Term Note, other than as expressly permitted by the terms of this Term
Note, such payment or other distribution shall be received in trust for the
Senior Interest Holders and shall be turned over by Seller to the
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230
Agent (for the benefit of the Senior Interest Holders) forthwith in the same
form as so received (with any necessary endorsement);
(e) Notwithstanding any payments or distributions received by the
Senior Interest Holders in respect of this Term Note, while any Bankruptcy
Proceedings are pending Seller shall not be subrogated to the then existing
rights of the Senior Interests Holders in respect of the Senior Interests until
the Senior Interests have been paid in full. If no Bankruptcy Proceedings are
pending, Seller shall only be entitled to exercise any subrogation rights that
it may acquire (by reason of a payment or distribution to the Senior Interest
Holders in respect of this Term Note) to the extent that any payment arising out
of the exercise of such rights would be permitted under Section 5.03(k) of the
Purchase and Bank Agreements;
(f) These Subordination Provisions are intended solely for the
purpose of defining the relative rights of Seller, on the one hand, and the
Senior Interest Holders on the other hand. Nothing contained in these
Subordination Provisions or elsewhere in this Term Note is intended to or shall
impair, as between MRC, its creditors (other than the Senior Interest Holders)
and Seller, MRC's obligation, which is unconditional and absolute, to pay Seller
the principal of and interest on this Term Note in accordance with the terms
hereof or to affect the relative rights of Seller and creditors of MRC (other
than the Senior Interest Holders);
(g) Seller shall not, until the Senior Interests have been paid
in full, (i) cancel, waive, forgive, transfer or assign, or commence legal
proceedings to enforce or collect, or subordinate to any obligation of MRC,
other than the Senior Interests, this Term Note or any rights in respect hereof
or (ii) convert this Term Note into an equity interest in MRC, unless Seller
shall have received the prior written consent of the Agent;
(h) Seller shall not institute against MRC any Bankruptcy
Proceeding so long as any Commercial Paper Notes issued by the Purchaser shall
be out g or there shall not have elapsed one year plus one day since the last
day on which any such Commercial Paper Notes shall have been outstanding. Seller
hereby agrees not to cause MRC to file a voluntary petition under the Federal
Bankruptcy Code or any other bankruptcy or insolvency laws unless, and only
unless, such filing has been authorized in accordance with MRC's constituent
documents, and by the Board of Directors of MRC which (as defined in such
constituent documents) have taken into consideration the interests of the
creditors of MRC, rather than solely the interests of the shareholders of MRC;
(i) If, at any time, any payment (in whole or in part) of any
Senior Interest is rescinded or must be restored or returned by a Senior
Interest Holder (whether in connection with Bankruptcy Proceedings or
otherwise), these Subordination Provisions shall continue to be effective or
shall be reinstated, as the case may be, as though such payment had not been
made;
(j) The Senior Interest Holders may, from time to time, without
notice to Seller, and without waiving any of its rights under these
Subordination Provisions, take any or all of the following actions (assuming
that such Senior Interest Holder is entitled to take any of the following
actions pursuant to the Purchase Document (other than this Term Note) or
pursuant to applicable law): (i) retain or obtain an interest in any property to
secure any of the Senior
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Interests; (ii) retain or obtain the obligations of any other obligors with
respect to any of the Senior Interests; (iii) extend or renew, alter or exchange
any of the Senior Interests, or release or compromise any obligation of any
nature with respect to any of the Senior Interests; (iv) amend, supplement,
amend and restate, or otherwise modify any Purchase Document; and (v) release
any security interest in, or surrender, release or permit any substitution or
exchange for all or any part of any rights or property securing any of the
Senior Interests;
(k) Seller hereby waives: (i) notice of acceptance of these
Subordination Provisions by any of the Senior Interest Holders; (ii) notice of
the existence, creation, nonpayment or non-performance of all or any of the
Senior Interests Holders; and (iii) all diligence in enforcement, collection or
protection of, or realization upon the interests of the Senior Interests, or any
thereof, or any security therefor;
(1) Each of the Senior Interest Holders may, from time to time,
on the terms and subject to the conditions set forth in the Purchase Documents
to which such Senior Interest Holders are party, but without notice to Seller,
assign or transfer any or all of the Senior Interests, or any interest therein;
and, notwithstanding any such assignment or transfer, such Senior Interests
shall be and remain Senior Interests for the purposes of these Subordination
Provisions, and every immediate and successive assignee or transferee of the
Senior Interests or of any interest of such assignee or transferee in the Senior
Interests shall be entitled to the benefits of these Subordination Provisions to
the same extent as if such assignee or transferee were the assignor or
transferor; and
(m) These Subordination Provisions are made for the benefit of
the Senior Interest Holders, and the Agent may proceed to enforce such
provisions on behalf of each of such Senior Interest Holders.
8. General. No failure or delay on the part of Seller in exercising any
power or right hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such power or right preclude any other or further
exercise thereof or to the exercise of any other power or right. No amendment,
modification or waiver of, or consent with respect to, any provision of this
Term Note shall in any event be effective unless (i) the same shall be in
writing and signed and delivered by MRC, Seller and the Agent and (ii) all
consents required for such actions under the Purchase Documents shall have been
received by the appropriate Senior Interest Holders.
9. No Negotiation. This Term Note is not negotiable.
10. Captions. Section captions used in this Term Note are for
convenience only and shall not affect the meaning or interpretation of any
provision of this Term Note.
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11. Governing Law. This Term Note shall be governed by, and construed in
accordance with, the laws of the State of California.
MAXTOR RECEIVABLES CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Title:
---------------------------
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Exhibit B to the
Receivables
Contribution & Sale
Agreement
DEMAND NOTE
Milpitas, California
April 8, 1998
The undersigned, MAXTOR CORPORATION, a Delaware corporation ("Seller"),
for value received, promises to pay to the order of MAXTOR RECEIVABLES
CORPORATION, a California corporation ("MRC"), ON DEMAND, the aggregate unpaid
principal amount of all loans made by MRC to Seller (the "Seller Loans") as
shown in the records of the Collection Agent (as such term is defined in the
Maxtor Sales Agreement hereinafter referred to), together with accrued interest
on such amounts from time to time outstanding hereunder at the rate provided
below.
The unpaid principal amount of each Seller Loan from time to time
outstanding shall bear interest (which also shall be payable ON DEMAND) from
(and including) the date on which such Seller Loan was made to (but excluding)
the date on which such Seller Loan is paid in full at a rate per annum equal to
the rate of interest publicly announced by Citibank Bank, N.A. from time to time
as the Citibank base rate, plus 1%. Interest hereunder shall be computed for the
actual number of days elapsed on the basis of a year consisting of 365 or, where
appropriate, 366 days. Notwithstanding anything in this Demand Note to the
contrary, the foregoing interest rate shall be subject to the limitation that
such interest rate shall not at any time exceed the maximum rate permitted by
applicable law.
This Demand Note is one of the Demand Notes described in, and is subject
to the terms and conditions set forth in, that certain Receivables Contribution
and Sale Agreement, dated as of April 8 1998 (as the same may be amended,
supplemented, amended and restated or otherwise modified from time to time in
accordance with its terms, the "Maxtor Sales Agreement"), between MRC and
Seller. Reference is hereby made to the Maxtor Sales Agreement for a statement
of certain other rights and obligations of MRC. All capitalized terms used but
not otherwise defined herein have the meanings assigned thereto in the Maxtor
Sales Agreement.
All payments of principal and interest hereunder are to be made in
lawful money of the United States of America in same day funds to the account
designated from time to time by the Collection Agent.
234
In addition to and not in limitation of the foregoing, Seller further
agrees, subject to any limitation imposed by applicable law, to pay all
expenses, including reasonable attorneys' fees and legal expenses, incurred by
the holder of this Demand Note in seeking to collect any amounts payable
hereunder which are not paid when due.
No failure or delay on the part of MRC or any other holder of this
Demand Note in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power or right
preclude any other or further exercise thereof or the exercise of any other
power or right. No notice to or demand on Seller shall entitle it to any notice
or demand in similar or other circumstances. No amendment, modification or
waiver of, or consent with respect to, any provision of this Demand Note shall
in any event be effective unless (i) the same shall be in writing and signed and
delivered by the holder hereof and (ii) all consents required for such action
under the Purchase Documents shall have been received by the appropriate
Persons.
THIS DEMAND NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA.
MAXTOR CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Title:
----------------------------
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TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS .............................................. 2
SECTION 1.01. Certain Defined Terms ...................... 2
SECTION 1.02. Other Terms ................................ 3
SECTION 1.03. Computation of Time Periods ................ 3
ARTICLE II SALE OF RECEIVABLES ..................................... 3
SECTION 2.01. Sale of Receivables ........................ 3
SECTION 2.02. Terms of Sales ............................. 4
SECTION 2.03. General Settlement Procedures .............. 6
SECTION 2.04. Payments and Computations, Etc ............. 6
ARTICLE III REPRESENTATIONS AND WARRANTIES ......................... 7
SECTION 3.01. Representations and Warranties of the Seller 7
ARTICLE IV GENERAL COVENANTS OF THE SELLER ......................... 11
SECTION 4.01. Affirmative Covenants of the Seller ........ 11
SECTION 4.02. Reporting Requirements of the Seller ....... 14
SECTION 4.03. Negative Covenants of the Seller ........... 15
ARTICLE V ADMINISTRATION AND COLLECTION ............................ 17
SECTION 5.01. Designation of Collection Agent ............ 17
SECTION 5.02. Rights of the Buyer ........................ 17
SECTION 5.03 Responsibilities of the Seller ............. 17
SECTION 5.04. Further Action Evidencing Purchases ........ 17
ARTICLE VI INDEMNIFICATION ......................................... 18
SECTION 6.01. Indemnities by the Seller .................. 18
ARTICLE VII MISCELLANEOUS .......................................... 20
SECTION 7.01. Amendments, Integration, Etc ............... 20
SECTION 7.02. Notices, Etc ............................... 20
SECTION 7.03. No Waiver; Remedies ........................ 20
SECTION 7.04. Binding Effect; Assignability .............. 20
SECTION 7.05. Governing Law .............................. 20
SECTION 7.06. Confidentiality ............................ 20
SECTION 7.07. [INTENTIONALLY OMITTED] .................... 21
SECTION 7.08. [INTENTIONALLY OMITTED] .................... 21
SECTION 7.09. Execution in Counterparts; Severability .... 21
SCHEDULES
Schedule 1 - Discount Percentage
236
EXHIBITS
Exhibit A - Form of Term Note
Exhibit B - Form of Demand Note
-ii-
237
Exhibit J
MAXTOR UNDERTAKING AGREEMENT
Dated as of April 8, 1998
among
MAXTOR CORPORATION,
as Parent,
and
CITICORP NORTH AMERICA, INC.
as Agent.
238
MAXTOR UNDERTAKING AGREEMENT
MAXTOR UNDERTAKING AGREEMENT (this "Agreement"), dated as of
April 8, 1998, made by MAXTOR CORPORATION, a Delaware corporation (the
"Parent"), in favor of CITICORP NORTH AMERICA, INC., a Delaware corporation
("CNAI"), as Agent (the "Agent") for the Beneficiaries (as defined in the Second
Purchase Agreement referred to below).
PRELIMINARY STATEMENTS.
1. The Parent and its wholly owned subsidiary, Maxtor Receivables
Corporation, a California corporation (the "Seller"), have entered into a
Receivables Contribution and Sale Agreement (as amended, supplemented or
otherwise modified from time to time, the "First Purchase Agreement").
2. The Seller, the Parent, as Collection Agent, Corporate
Receivables Corporation, as Purchaser, CNAI, as Agent, and Bankers Trust
Company, as Trustee, have entered into a Receivables Purchase and Sale Agreement
(as amended, supplemented or otherwise modified from time to time, the "Second
Purchase Agreement", together with the First Purchase Agreement and the Bank
Agreement referred to in the Second Purchase Agreement, the "Purchase
Agreements"). Capitalized terms used herein and not herein defined, are used
herein as defined in the Purchase Agreements.
3. It is a condition precedent to the Purchase of any Purchased
Interest by the Purchaser pursuant to the Second Purchase Agreement, and the
"Purchase" of any "Purchased Interest" by any "Purchaser" pursuant to the Bank
Agreement, that the Parent shall have executed and delivered this Agreement.
NOW, THEREFORE, in consideration of the premises, and the
substantial direct and indirect benefits to the Parent from the financing
arrangements contemplated by the Purchase Documents and other good and valuable
consideration, the receipt of which is hereby acknowledged, and in order to
induce the Purchaser to make Purchases, and the "Purchaser" to make "Purchases"
pursuant to the Bank Agreement, the Parent hereby agrees as follows:
SECTION 1. Unconditional Guarantee. The Parent hereby
unconditionally and irrevocably guarantees the punctual payment and performance
when due by the Seller and each Selling Affiliate, if any (the Seller and each
such Selling Affiliate are, collectively, the "Obligated Parties"), of all of
such Obligated Party's respective covenants, agreements and undertakings now or
hereafter existing under each Purchase Document to which such Obligated Party is
a party (whether for Collections actually received or deemed to have been
received, yield or indemnity payments, fees, expenses or otherwise, such
covenants, agreements, and other obligations being the "Guaranteed
Obligations"), and agrees to pay any and all expenses (including counsel fees
and expenses) incurred by the Agent in enforcing any rights under this
Agreement. Without limiting the generality of the foregoing, the Parent's
liability shall extend to all amounts which constitute part of the Guaranteed
Obligations and would be owed by an Obligated Party but for the fact that such
Guaranteed Obligations are unenforceable or not
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allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving such Obligated Party. In the event that any Obligated Party
shall fail in any manner whatsoever to perform or observe any of its Guaranteed
Obligations when the same shall be required to be performed, then the Parent
will itself duly and punctually perform or observe, or cause to be duly and
punctually performed and observed, such Guaranteed Obligation, and it shall not
be a condition to the accrual of the obligation of the Parent hereunder to
perform or observe any Guaranteed Obligation (or to cause the same to be
performed or observed) that the Agent shall have first made any request of or
demand upon or given any notice to any Obligated Party or its respective
successors or assigns, or have instituted any action or proceedings against any
Obligated Party or its respective successors or assigns in respect thereof.
SECTION 2. Guaranty Absolute. The Parent guarantees that the
Guaranteed Obligations will be paid and performed strictly in accordance with
the terms of the Purchase Documents or any document delivered in connection
therewith, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of any Beneficiary
with respect thereto. The obligations of the Parent under this Agreement are
independent of the Guaranteed Obligations and a separate action or actions may
be brought and prosecuted against the Parent to enforce this Agreement,
irrespective of whether any action is brought against any Obligated Party or
whether any Obligated Party is joined in any such action or actions. The
liability of the Parent under this Agreement shall be irrevocable, absolute and
unconditional irrespective of, and the Parent hereby irrevocably waives any
defenses it may now or hereafter have in any way relating to, any or all of the
following:
(a) any lack of validity or enforceability of any Purchase
Document or any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of,
or in any other term of, all or any of the Guaranteed Obligations under the
Purchase Documents, or any other amendment or waiver of or any consent to
departure from any Purchase Document;
(c) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed Obligations;
(d) any manner of application of collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of sale or
other disposition of any collateral for all or any of the Guaranteed Obligations
or any other obligations of any Obligated Party under the Purchase Documents;
(e) any change, restructuring or termination of the
corporate structure or existence of any Obligated Party or any of its
subsidiaries;
(f) any failure of any Beneficiary to disclose to the
Parent any information relating to the financial condition, operations,
properties or prospects of any Obligated Party now or in the future known to any
Beneficiary (the Parent waiving any duty on the part of any Beneficiary to
disclose such information); or
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(g) any other circumstance (including, without limitation,
any statute of limitations) or any existence of or reliance on any
representation by any Beneficiary that might otherwise constitute a defense
available to, or a discharge of, the Parent or any other guarantor or surety.
This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time (x) any payment in connection with any of the Guaranteed
Obligations is rescinded or must otherwise be returned by the Agent or any
Beneficiary, or (y) any performance or satisfaction of any Guaranteed Obligation
is rescinded or otherwise invalidated, upon the insolvency, bankruptcy or
reorganization of any party to any Purchase Document, all as though payment had
not been made or as though such Guaranteed Obligation had not been performed or
satisfied.
SECTION 3. Waivers and Acknowledgments. (a) The Parent hereby
waives promptness, diligence, notice of acceptance and any other notice with
respect to any of the Guaranteed Obligations and this Agreement and any
requirement that any Beneficiary protect, secure, perfect or insure any Lien or
any property subject thereto or exhaust any right or take any action against any
Obligated Party or any other Person or any collateral.
(b) The Parent hereby waives any right to revoke this
Agreement, and acknowledges that this Agreement is continuing in nature and
applies to all Guaranteed Obligations, whether existing now or in the future.
SECTION 4. Subrogation. The Parent will not exercise any rights
that it may now or hereafter acquire against any Obligated Party that arise from
the existence, payment, performance or enforcement of the Parent's obligations
under this Agreement or any other Purchase Document, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution
or indemnification and any right to participate in any claim or remedy of any
Beneficiary against any Obligated Party or any collateral, whether or not such
claim, remedy or right arises in equity or under contract, statute or common
law, including, without limitation, the right to take or receive from any
Obligated Party, directly or indirectly, in cash or other property or by set-off
or in any other manner, payment or security on account of such claim, remedy or
right, unless and until all amounts in connection with the Guaranteed
Obligations, all amounts payable under this Agreement shall have been paid in
full and all other amounts payable by each Obligated Party to all Beneficiaries
under the Purchase Documents shall have been paid in full. If any amount shall
be paid to the Parent in violation of the preceding sentence at any time prior
to the later of (i) the payment in full of the Guaranteed Obligations and all
other amounts payable under this Agreement and all amounts payable to the
Beneficiaries under the Purchase Documents and (ii) the termination of this
Agreement, such amount shall be held in trust for the benefit of the
Beneficiaries and shall forthwith be paid to the Agent to be credited and
applied to the Guaranteed Obligations, whether matured or unmatured, in
accordance with the terms of the Purchase Documents or to be held by the Agent
as collateral security for any Guaranteed Obligations payable under this
Agreement thereafter arising.
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SECTION 5. Representations and Warranties. The Parent hereby
represents and warrants as follows:
(a) The Parent is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction indicated at
the beginning of this Agreement.
(b) The execution, delivery and performance by the Parent
of each Purchase Document to be delivered by it hereunder and thereunder and the
transactions contemplated hereby and thereby, and the Parent's use of the
proceeds of Purchases, are within the Parent's corporate powers, have been duly
authorized by all necessary corporate action, do not contravene (i) the Parent's
charter or by-laws or (ii) law or any Contract or other contractual restriction
binding on or affecting the Parent, and do not result in or require the creation
of any Adverse Claim (other than pursuant hereto) upon or with respect to any of
its properties; and no transaction contemplated hereby requires compliance with
any bulk sales act or similar law.
(c) No authorization or approval or other action by, and
no notice to or filing with, any governmental authority or regulatory body or
other Person is required for the due execution, delivery and performance by the
Parent of any Purchase Document to be delivered by it hereunder or thereunder,
or for the perfection of or the exercise by the Agent or any Owner of its rights
and remedies under each such Purchase Document, except for (i) the filings of
the financing statements referred to in Article III of the Purchase Agreements,
all of which, on or prior to the Closing Date, will have been duly made and be
in full force and effect, and (ii) upon any Person's becoming a Selling
Affiliate under the Purchase Agreements, the filings of the financing statements
required pursuant to the definition of the term "Selling Affiliate" in the
Purchase Agreements, all of which, on or prior to the date such Person shall
become a Selling Affiliate, will have been duly made and be in full force and
effect.
(d) Each Purchase Document is, or when delivered hereunder
or thereunder will be, the legal, valid and binding obligation of the Parent,
enforceable against the Parent in accordance with its respective terms. Each
Assignment, when delivered under the Purchase Agreements, will evidence the
transfer to the Purchaser of legal and equitable title to, and ownership of, an
undivided percentage ownership interest in the Receivable Assets, and a valid
and perfected first priority security interest therein.
(e) The consolidated balance sheets of the Parent and its
subsidiaries as at September 27, 1997 and the related consolidated statements of
income and cash flows of the Parent and its subsidiaries for the nine months
then ended, copies of which have been furnished to the Agent, fairly present,
subject to year-end audit adjustments, the consolidated financial condition of
the Parent and its subsidiaries as at such date and the consolidated results of
the operations of the Parent and its subsidiaries for the period ended on such
date, all in accordance with generally accepted accounting principles
consistently applied, and, since September 27, 1997, there has been no material
adverse change in such condition or operations except as and to the extent
projected or otherwise disclosed in the Parent's quarterly report on Form 10-Q
for the fiscal quarter ending September 27, 1997 or in Schedule ▇ ▇▇▇▇▇▇.
-▇-
▇▇▇
(▇) There is no pending or threatened action or proceeding
affecting the Parent or any of its subsidiaries before any court, governmental
agency or arbitrator which may materially adversely affect (i) the
collectibility of the Subject Receivables or the ability of the Parent, any
Selling Affiliate or the Collection Agent to collect Subject Receivables or (ii)
the ability of the Parent or any Selling Affiliate to perform its obligations
under any Purchase Document to be delivered by it hereunder or thereunder, or
which purports to affect the legality, validity or enforceability of any
Purchase Document.
(g) No proceeds of any Purchase will be used to purchase
or carry any margin stock (within the meaning of Regulation U issued by the
Board of Governors of the Federal Reserve System).
(h) Immediately prior to the time of the initial creation
of an interest under the First Purchase Agreement in any Receivable Asset, the
Parent is the legal and beneficial owner of the Receivable Assets (as defined in
the First Purchase Agreement), free and clear of any Adverse Claim except as
created by such agreement or to the extent created by the Agent or the Purchaser
or any Owner. On the date of the initial creation of an interest in each Subject
Receivable under the Second Purchase Agreement or any Selling Affiliate
Receivables Contribution and Sale Agreement, such Subject Receivable (except as
otherwise set forth on the Daily Report) constitutes an Eligible Receivable or
an Included Foreign Receivable. Upon each sale, the Parent or the respective
Selling Affiliate shall transfer to the Seller (and the Seller shall acquire) a
valid and perfected ownership interest in each Receivable Asset, free and clear
of any Adverse Claim except as created by the First Purchase Agreement or any
Selling Affiliate Receivables Contribution and Sale Agreement, or to the extent
created by the Agent or the Purchaser or any Owner. No effective financing
statement or other instrument similarly in effect covering any Receivable Asset
or any Lock Box Account or other deposit account, to the extent any Collections
are from time to time deposited therein, is on file in any recording office,
except those filed in favor of the Agent relating to the Purchase Documents, or
in favor of the Seller and the Agent under the First Purchase Agreement or any
Selling Affiliate Receivables Contribution and Sale Agreement or those listing
the Parent or the respective Selling Affiliate as secured party and the
applicable Obligor as debtor.
(i) Each Purchaser Report and Daily Report (in each case
if prepared by the Parent or any Selling Affiliate or any Affiliate of any
thereof, or to the extent that information contained therein is supplied by the
Parent or any Selling Affiliate or any Affiliate of any thereof), notice or
other written item of information, exhibit, financial statement, document, book,
record or report furnished or to be furnished at any time by the Parent or any
Selling Affiliate to the Agent or any Owner in each case in connection with the
Purchase Agreements is or will be accurate in all material respects as of its
date or (except as otherwise disclosed in writing to the Agent or such Owner, as
the case may be, at such time) as of the date so furnished, and as of such
relevant date no such document contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact necessary in
order to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading.
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(j) The chief place of business and chief executive office
of the Parent and the office where the Parent keeps its records concerning the
Receivable Assets are located at the address specified in Section 7.02 of the
First Purchase Agreement (or at such other locations, notified to the Agent in
accordance with Section 4.01(f) of the First Purchase Agreement, in
jurisdictions where all action required by Section 5.04 of the First Purchase
Agreement has been taken and completed).
(k) The names and addresses of all the Lock Box Banks,
together with the account numbers of the Lock Box Accounts at such Lock Box
Banks, are specified in Schedule I to the Purchase Agreements (or at such other
Lock Box Banks and/or with such other Lock Box Accounts as have been notified to
the Agent and for which Lock Box Agreements have been executed in accordance
with Section 6.06(b) of the Purchase Agreements).
(l) Neither the Parent nor any Affiliate (of the type set
forth in clause (i)(x) of the definition of the term "Affiliate") of the Parent
has any direct or indirect ownership or other financial interest in the Agent,
the Purchaser or any Bank.
(m) Each purchase of Receivable Assets under the First
Purchase Agreement and each Selling Affiliate Receivables Contribution and Sale
Agreement and each purchase of a Purchased Interest under the Purchase
Agreements will constitute (i) a "current transaction" within the meaning of
Section 3(a)(3) of the Securities Act of 1933, as amended, and (ii) a purchase
or other acquisition of notes, drafts, acceptances, open accounts receivable or
other obligations representing part or all of the sales price of merchandise,
insurance or services within the meaning of Section 3(c)(5) of the Investment
Company Act of 1940, as amended.
(n) None of the Receivable Assets is evidenced by any
"instrument" or "chattel paper" within the meaning of the UCC in effect in the
State of California other than any Receivable (i) which shall have become a
Defaulted Receivable after the date on which such Receivable became a Receivable
under the First Purchase Agreement or as transferred under the Repurchase
Agreement and (ii) in connection with which Defaulted Receivable the Parent as
Collection Agent shall have accepted an instrument, which instrument shall have
been duly endorsed and delivered to the Agent by the Parent, to maximize the
Collections thereof as contemplated by Section 6.02(c) of the Purchase
Agreements.
(o) No ERISA Event has occurred or is reasonably expected
to occur with respect to any Plan that has resulted or is reasonably likely to
result in a material liability of the Parent.
(p) The aggregate Insufficiency under all Plans does not
exceed $10,000,000.
(q) Neither the Parent nor any ERISA Affiliate of any
thereof has incurred or is reasonably expected to incur any material Withdrawal
Liability (that has not been satisfied) to any Multiemployer Plan.
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(r) Neither the Parent nor any ERISA Affiliate of any
thereof has been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or has been terminated, within the
meaning of Title IV of ERISA, and no Multiemployer Plan is reasonably expected
to be in reorganization or to be terminated, within the meaning of Title IV of
ERISA.
(s) The Parent and its subsidiaries have no material
liability with respect to "expected postretirement benefit obligations" within
the meaning of Statement of Financial Accounting Standards No. 106.
(t) The Parent has not changed its name during the four
month period prior to the date hereof, and has no tradenames, fictitious names,
assumed names or "doing business as" names.
(u) With respect to all Receivable Assets (other than the
Initial Capital Contribution (as defined in the First Purchase Agreement)), the
Seller has purchased such Receivable Assets from the Parent in exchange for
payment (made by the Seller to the Parent in accordance with the provisions of
the First Purchase Agreement) in an amount which constitutes fair consideration
and approximates fair market value for such Receivable Assets and in a sale the
terms and conditions of which (including, without limitation, the purchase price
thereof) reasonably approximate an arm's-length transaction between unaffiliated
parties. No such sale has been made for or on account of an antecedent debt owed
by the Parent or to the Seller, and no such sale or contribution is or may be
voidable or subject to avoidance under any section of the Federal Bankruptcy
Code.
(v) The Parent has not sold, assigned, transferred,
pledged or hypothecated any interest in any Receivable Assets to any Person
other than as contemplated by the First Purchase Agreement and any Selling
Affiliate Contribution and Sale Agreement.
(w) The Parent has complied with the Credit and Collection
Policy in all material respects and since the date of this Agreement there has
been no change in the Credit and Collection Policy except as permitted under the
Purchase Documents.
(x) The obligations of the Parent and under the First
Purchase Agreement to make payments in respect of fees and indemnities payable
to any Beneficiary rank at least equally with indebtedness of the Parent which
is not contractually subordinated.
(y) The Parent has not granted any Person other than the
Agent dominion and control of any Lock Box Account, or the right to take
dominion and control over any Lock Box Account at a future time or upon the
occurrence of a future event.
(z) The Parent has filed, or caused to be filed or be
included in, all tax reports and returns (federal, state, local and foreign), if
any, required to be filed by it and paid, or caused to be paid, all amounts of
taxes, including interest and penalties required to be paid by it, except for
such taxes (i) as are being contested in good faith by proper proceedings and
(ii) against which adequate reserves shall have been established in accordance
with and to the
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extent required by GAAP, but only so long as the proceedings referred. to in
clause (i) above could not subject the Agent or any other Indemnified Party to
any civil or criminal penalty or liability or involve any material risk of the
loss, sale or forfeiture of any property, rights or interests covered hereunder
or under any other Purchase Document.
(aa) There are no Adverse Claims (including, without
limitation, liens or retained security titles of conditional vendors, but
excluding any Adverse Claims created under the First Purchase Agreement) of any
nature whatsoever on the Receivable Assets. The Parent is not a party to any
contract, agreement, lease or instrument the performance of which, either
unconditionally or upon the happening of an event, will result in or require the
creation of any Adverse Claim on the Receivable Assets or otherwise result in a
violation of this Agreement or any other Purchase Document, other than any
Adverse Claims created pursuant to any Purchase Document.
(bb) (i) The Parent is not a party to any indenture, loan
or credit agreement or any lease or other agreement or instrument or subject to
any organizational restriction that could reasonably be expected to have, and no
provision of applicable law or governmental regulation could reasonably be
expected to have, a material adverse effect on the condition (financial or
otherwise), business, operations, properties or prospects of the Parent, or may
reasonably be expected to have such an effect on the ability of the Parent to
carry out its obligations hereunder or under any other Purchase Document, and
(ii) neither the Parent nor, to the best of the knowledge of the Parent, any
other party is in default under or with respect to this Agreement or any other
contract, agreement, lease or other instrument to which the Parent is a party
and which is material to the Parent's condition (financial or otherwise),
business, operations, properties or prospects, and neither the Parent nor any
such other party has delivered or received any notice of default thereunder.
(cc) The Lock Box Banks are the only institutions holding
Lock Box Accounts for the receipt of payments from all Obligors, and such
Obligors have been instructed or, upon the creation of Receivables owed by them,
will be instructed to make payments only to Lock Box Accounts, and such
instructions have not been modified or revoked by the Parent and are in full
force and effect.
(dd) There are no conditions precedent to the
effectiveness of this Agreement that have not been satisfied or waived.
SECTION 6. Covenants. (a) Affirmative Covenants of the Parent.
Until the Collection Date, the Parent will, unless the Seller and the Agent
shall otherwise consent in writing:
(i) Compliance with Laws, Etc. Comply in all material
respects with all applicable laws, rules, regulations and orders with respect to
it, its business and properties and all Receivable Assets.
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(ii) Preservation of Corporate Existence. Preserve
and maintain its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified in good
standing as a foreign corporation in each jurisdiction where the failure to
preserve and maintain such existence, rights, franchises, privileges and
qualification would materially adversely affect the interests of the Owners or
the Agent under the Purchase Documents or in and to the Receivable Assets, or
the ability of the Parent or the Collection Agent to perform its obligations
under any Purchase Document or the ability of the Parent to perform its
obligations under the Contracts.
(iii) Audits. (A) At any time and from time to time
during regular business hours and upon reasonable prior notice, permit the
Agent, or its agents or representatives, at the Parent's expense, (1) to examine
and make copies of and abstracts from all books, records and documents
(including, without limitation, computer tapes and disks) in the possession or
under the control of the Parent, its Affiliates or the agents of the Parent or
its Affiliates relating to the Receivable Assets and the Lock Box Account
activity and (2) to visit the offices and properties of the Parent for the
purpose of examining such materials described in clause (1) above, and to
discuss matters relating to the Receivable Assets and the Lock Box Account
activity or the Parent's or the Selling Affiliates' performance under the
Purchase Documents or under the Contracts with any of the officers or employees
of the Parent having knowledge of such matters, and (B) within 90 days after the
end of each fiscal year of the Parent, at the Parent's expense, cause Ernst &
Young LLP or Coopers & ▇▇▇▇▇▇▇ to perform, and deliver to the Agent a written
report of, or permit other independent public accountants specified by (upon the
occurrence and during the continuance of any Event of Insecurity) or otherwise
acceptable to the Agent to perform and deliver to the Agent a written report of,
an audit with respect to the Receivable Assets, the Credit and Collection
Policies, the Lock Box Account activity and the performance by the Parent and
the Selling Affiliates of their respective obligations, covenants and duties
under the Purchase Documents, on a scope and in a form substantially in the
scope and form set forth in Schedule IV to the Purchase Agreements.
(iv) Keeping of Records and Books of Account.
Maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing Receivables in the
event of the destruction of the originals thereof), and keep and maintain all
documents, books, records and other information, reasonably necessary or
advisable for the collection of all Receivables (including, without limitation,
records adequate to permit the daily identification of each Receivable and all
Collections of and adjustments to each Receivable).
(v) Performance and Compliance with Receivables and
Contracts. At its expense timely and fully perform and comply with all material
provisions, covenants and other promises required to be observed by it under the
Contracts related to the Receivables.
(vi) Location of Records. Keep its chief place of
business and chief executive office and the office where it keeps the originals
of its records concerning the Receivable Assets at the address of the Parent
referred to in Section 3.01(j) of the First Purchase
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Agreement on the date hereof or, upon 30 days' prior written notice to the
Agent, at any other locations in a jurisdiction within the United States where
all action required by Section 5.04 of the First Purchase Agreement shall have
been taken.
(vii) Credit and Collection Policies. Comply in all
material respects with the applicable Credit and Collection Policy in regard to
each Receivable and the related Contract.
(viii) Collections. (A) Instruct, or cause to be
instructed, all Obligors to make all payments in respect of Subject Receivables
directly to a Lock Box Account,
(B) if the Parent shall otherwise receive any
Collections, deposit such Collections to a Lock Box Account by the second
Business Day (or, upon the occurrence and during the continuance of any Event of
Insecurity, the first Business Day) following such receipt or, if such
Collections were paid by the applicable Obligor in respect of any merchandise
which shall not have been shipped at the time of such payment and the shipping
of which shall cause the Receivable resulting from the sale of such merchandise
to arise, by the second Business Day (or, upon the occurrence and during the
continuance of any Event of Insecurity, the first Business Day) following the
shipping of such merchandise,
(C) if the Parent shall be deemed to receive any
Collections pursuant to Section 2.03 of the First Purchase Agreement, deposit
the Owners' respective allocable shares of such Collections directly to the
Agent's Account (1) if and so long as no Event of Insecurity shall have occurred
and be continuing, on the day of such receipt or deemed receipt, and (2) if and
so long as any Event of Insecurity shall have occurred and be continuing,
promptly upon such receipt or deemed receipt and in any event no later than one
Business Day following such receipt or deemed receipt, and
(D) upon the occurrence of any Event of
Insecurity, cause the Lock Box Banks to immediately sweep Collections from the
Lock Box Accounts to the Concentration Account.
(ix) Maintenance of Separate Existence. Do all things
necessary to maintain its corporate existence separate and apart from the
Seller, including, without limitation, (A) maintaining proper corporate records
and books of account separate from those of the Seller; (B) maintaining its
assets, funds and transactions separate from those of the Seller, reflecting
such assets and transactions in financial statements separate and distinct from
those of the Seller, and evidencing such assets, funds and transactions by
appropriate entries in the books and records referred to in clause (A) above,
and providing for its own operating expenses and liabilities from its own assets
and funds other than certain expenses and liabilities relating to basic
corporate overhead which may be allocated between itself and the Seller; (C)
holding such appropriate meetings or obtaining such appropriate consents of its
Board of Directors as are necessary to authorize all the Parent's corporate
actions required by law to be authorized by the Board of Directors, keeping
minutes of such meetings and of meetings of its stockholders and observing all
other customary corporate formalities (and any successor Parent not a
corporation shall observe similar procedures in accordance with its governing
documents
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and applicable law); (D) at all times entering into its contracts and otherwise
holding itself out to the public under the Parent's own name as a legal entity
separate and distinct from the Seller; and (E) conducting all transactions and
dealings between the Parent and the Seller on an arm's-length basis.
(x) Compliance with Opinion Assumptions and
Constituent Documents. Without limiting the generality of Section 6(a)(ix)
above, maintain in place all policies and procedures, and take and continue to
take all actions, described in the assumptions as to facts set forth in, and
forming the basis of, the opinions set forth in the opinion delivered to the
Agent in substantially the form of the opinion delivered pursuant to Section
3.01(l) of the Purchase Agreements, and comply with, and cause compliance with,
the provisions of the constituent documents of the Seller delivered to the Agent
pursuant to Section 3.01 of the Purchase Agreements as the same may, from time
to time, be amended, modified or otherwise supplemented with the prior written
consent of the Agent.
(xi) Purchase of Subject Receivables from the Parent.
With respect to all Receivable Assets outstanding from time to time (other than
the Initial Capital Contribution), sell such Receivable Assets to the Seller in
exchange for payment (made in accordance with the First Purchase Agreement) in
an amount which constitutes fair consideration and approximates fair market
value for such Receivable Asset and in a sale the terms and conditions of which
(including, without limitation, the purchase price thereof) reasonably
approximate an arm's-length transaction between unaffiliated parties.
(xii) Purchase Documents. At its expense, timely and
fully perform and. comply in all material respects with all provisions,
covenants and other promises required to be observed by it under each Purchase
Document to which it is party, maintain each such Purchase Document in full
force and effect, enforce each such Purchase Document in accordance with its
respective terms, take all such action to such end as may be from time to time
reasonably requested by the Agent, and make to any party to each such Purchase
Document such demands and requests for information and reports or for action as
the Parent is entitled to make thereunder and as may be from time to time
reasonably requested by the Agent.
(xiii) Subsidiaries. Cause each of its subsidiaries
to comply with all provisions of the Purchase Documents to which each such
subsidiary is a party.
(b) Reporting Requirements of the Parent. Until the
Collection Date, the Parent will, unless the Seller and the Agent shall
otherwise consent in writing, furnish to the Agent and the Trustee:
(i) as soon as available and in any event within 45
days after the end of each of the first three quarters of each fiscal year of
the Parent, a consolidated balance sheet of the Parent and its subsidiaries as
of the end of such quarter and consolidated statements of income and of cash
flows of the Parent and its subsidiaries for the period commencing at the end of
the previous fiscal year and ending with the end of such quarter, certified by
the chief financial officer of the Parent;
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(ii) as soon as available and in any event within 90
days after the end of each fiscal year of the Parent, a copy of the Parent's
annual audit report containing a consolidated balance sheet of the Parent and
its subsidiaries as of the end of such year and consolidated statements of
income and of cash flows for such year, certified in a manner acceptable to the
Agent by Coopers & ▇▇▇▇▇▇▇ or other independent public accountants acceptable to
the Agent;
(iii) as soon as possible and in any event within
five days after the Parent's chief executive officer, chief operating officer,
chief financial officer, chief accounting officer, treasurer or assistant
treasurer obtains knowledge of the occurrence of each Event of Termination and
each Incipient Event of Termination continuing on the date of such statement, a
statement of such officer of the Parent setting forth details of such Event of
Termination or Incipient Event of Termination and the action which the Parent
has taken and proposes to take with respect thereto;
(iv) promptly and in any event within five Business
Days after the Parent's receipt or delivery thereof, copies of all notices,
requests, reports, certificates and other information and documents delivered or
received by the Parent from time to time under or in connection with the First
Purchase Agreement and this Agreement;
(v) not later than eight Business Days after the last
day of each Fiscal Month, at the request of the Agent, and in any event within
five days after the occurrence of any Event of Termination or Incipient Event of
Termination, a list of the outstanding Receivable Assets on such day; and
(vi) such other information, documents, records or
reports respecting the Receivable Assets or the condition or operations,
financial or otherwise, of the Parent or any of its subsidiaries as the Agent
may from time to time reasonably request.
(c) Negative Covenants of the Parent. Until the Collection
Date, the Parent will not, without the written consent of the Seller and the
Agent:
(i) Sales, Liens, Etc. Except as otherwise provided
in the Purchase Documents, sell, assign (by operation of law or otherwise) or
otherwise dispose of, or grant any option with respect to, or create or suffer
to exist any Adverse Claim (except to the extent created by the Agent or the
Purchaser or any Owner) upon or with respect to, the Parent's undivided interest
in any Receivable Asset or any Lock Box Account or other deposit account to
which any Collections of any Receivable are sent or assign any right to receive
income in respect thereof.
(ii) Extension or Amendment of Receivables. Except as
otherwise permitted in Section 6.02 of the Purchase Agreements if the Parent is
the Collection Agent, (A) extend the terms of any Receivable, or (B) amend or
otherwise modify the terms of any Receivable, or terminate or permit the
termination of, or amend, modify or waive any term or condition of, any Contract
related thereto, other than in connection with the Parent's standard sales
programs, if in any such case such amendment modification or waiver would be
reasonably
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likely to impair the collectibility of any Receivable or materially adversely
affect the rights or interests of the Agent or the Purchaser or any Owner with
respect thereto or hereunder; provided, however, that, except as so permitted in
Section 6.02 of the Purchase Agreements, in no event shall the Parent amend or
otherwise modify the terms of any Subject Receivable unless the Agent shall have
otherwise notified the Parent.
(iii) Change in Business or Credit and Collection
Policy. Make any change in the character of its business or in its Credit and
Collection Policy, which change would, in either case, be reasonably likely to
impair the collectibility of any Receivable.
(iv) Change in Payment Instructions to Obligors. Add
or terminate any bank as a Lock Box Bank or any account as a Lock Box Account
from those listed in Schedule I to the Purchase Agreements, or make any change
in its instructions to Obligors regarding payments to be made to any Lock Box
Bank, unless the Agent shall have received notice of such addition, termination
or change and executed copies of Lock Box Agreements with respect to each new
Lock Box Bank and each new Lock Box Account, as applicable.
(v) Deposits to Lock Box Accounts. Deposit or
otherwise credit, or cause or permit to be so deposited or credited, to any Lock
Box Account cash or cash proceeds other than Collections of Receivables.
(vi) Mergers, Etc. Merge with or into or consolidate
with or into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to, any Person, unless (A)
immediately after giving effect to such merger or consolidation, no Event of
Termination or Incipient Event of Termination shall occur and be continuing and
(B) the corporation into which the Parent shall be merged or consolidated or
which is otherwise formed pursuant to such merger or consolidation shall assume
the Parent's obligations and grants of interests under the Purchase Documents in
a written agreement satisfactory in form and substance to the Agent and shall
furnish to the Agent, together with (and with reference to such agreement)
documents satisfactory in form and substance to the Agent and of the kinds
referred to in Section 3.01 of the Purchase Agreements, in each case giving
effect to such merger or consolidation, and the consent of the Company with
respect to such merger or consolidation in form and substance satisfactory to
the Agent.
(vii) Change in Corporate Name, Etc. Make any change
to its name, identity, structure or chief executive office, or use any
tradenames, fictitious names, assumed names or "doing business as" names,
unless, prior to the effective date of any such change or use, the Parent
delivers to the Agent (A) UCC financing statements, executed by the Parent and,
if applicable, the Seller, necessary to reflect such change or use and to
continue the perfection of the ownership interests or security interests in the
Receivable Assets, (B) new Lock Box Agreements executed by the Parent, necessary
to reflect such change and to continue to enable the Agent to exercise its
rights contained in Section 6.03(a) of the Purchase Agreements, and (C) in the
case of any such change in its structure, a favorable opinion of ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP or other counsel of the Parent reasonably satisfactory to the
Agent, in substantially
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the form of Exhibit E-1 to the Purchase Agreements, giving effect to such
change, in each case of clauses (A), (B) and (C) together with such other
documents and instruments as the Agent may reasonably request in connection
therewith.
(viii) Transactions with Affiliates. Enter into or
permit to exist any transaction (including, without limitation, the purchase,
sale, lease or exchange of any property or the rendering of any service) with
the Seller, other than on terms that are fair and reasonable in the
circumstances and that reasonably approximate an arm's-length transaction
between unaffiliated parties.
(ix) Purchase Documents. (A) Cancel or terminate any
Purchase Document to which it is party or consent to or accept any cancellation
or termination thereof, (B) amend or otherwise modify any term or condition of
any Purchase Document to which it is party or give any consent, waiver or
approval thereunder, (C) waive any default under or breach of any Purchase
Document to which it is party or (D) take any other action under any Purchase
Document to which it is party not required by the terms thereof that would
impair the value of any Receivable Asset or the rights or interests of the
Seller thereunder or of the Agent or any Owner or Indemnified Party thereunder.
(x) Insolvency Event. Commence or institute, or join
any other Person in commencing or instituting, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any federal or state bankruptcy or similar law, against the Seller or any
successor to the Seller which becomes a party to any of the Purchase Documents.
(xi) Seller Organizational Documents. Amend, modify
or otherwise change the articles of incorporation or bylaws of the Seller in a
manner that adversely affects the Seller's existence as a special purpose
corporation.
(xii) Seller Merger, Etc. Not permit, suffer or cause
the Seller to enter into any transaction of merger or consolidation, liquidation
or dissolution, or permit, suffer or cause the Seller to acquire by purchase or
otherwise all or substantially all of the business or assets of, or the stock or
other evidence of beneficial ownership of any Person.
SECTION 7. Amendments, Etc. (a) This Agreement may be amended
from time to time by the Parent and the Agent, without the consent of any Owner
(i) to cure any ambiguity, (ii) to correct or supplement any provision herein
which may be inconsistent with any other provision herein or (iii) to add any
other provisions with respect to matters or questions arising under this
Agreement which are not inconsistent with the provisions of this Agreement.
(b) This Agreement may be amended from time to time by the
Parent and the Agent, with the consent of a majority of the Owners, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the Owners; provided, however, that no such amendment shall (i) reduce in any
manner the amount of, or delay the timing of, any payment to
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be made hereunder without the consent of each such Owner or (ii) reduce the
aforesaid percentage required to consent to any such amendment without the
consent of each such Owner.
(c) Promptly after the execution of any such amendment or
consent (other than an amendment pursuant to clause (a)), the Agent shall
furnish written notification of the substance of such amendment to each Owner.
(d) It shall not be necessary for the consent of the
Owners to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by the Owners shall be subject to such reasonable requirements as the
Agent may prescribe.
SECTION 8. Addresses for Notices. All notices and other
communications provided for hereunder shall, unless otherwise stated herein, be
in writing (including communication by telefax) and mailed, telefaxed or
delivered, as to each party hereto, at its address and telefax number set forth
below or at such other address or telefax number as shall be designated by such
party in a written notice to the other parties hereto. All such notices and
communications shall, when mailed or telefaxed, be effective when delivered by
mail or when telefaxed, respectively.
If to the Parent,
Maxtor Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Raja Venkatesh, Treasurer
If to the Agent,
Citicorp North America, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Corporate Asset Funding Department
SECTION 9. No Waiver; Remedies. No failure on the part of any
Beneficiary to exercise, and no delay in exercising, any right under any
Purchase Document shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under any Purchase Document preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
SECTION 10. Indemnification; Costs, Expenses and Taxes; No
Proceedings. (a) Without limitation on any other obligations of the Parent or
remedies of the Agent or the Beneficiaries under this Agreement, the Parent
shall, to the fullest extent permitted by law,
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indemnify, defend and save and hold harmless the Agent and each Beneficiary from
and against, and shall pay on demand, any and all losses, liabilities, damages,
costs, expenses and charges (including the reasonable fees and disbursements of
the Agent or such Beneficiary's legal counsel) suffered or incurred by the Agent
or such Beneficiary as a result of any failure of any Guaranteed Obligations to
be the legal, valid and binding obligations of the Parent enforceable against
the Parent in accordance with their terms.
(b) The Parent agrees to pay on demand all costs and
expenses in connection with the preparation, execution, delivery, periodic
auditing, modification and amendment of the Purchase Documents and the other
documents to be delivered thereunder and hereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Agent, with respect thereto and with respect to advising the Agent as to its
rights and remedies under the Purchase Documents and the other documents to be
delivered hereunder and thereunder. The Parent further agrees to pay on demand
all costs and expenses, if any (including, without limitation, reasonable
counsel fees and expenses), in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of the Purchase Documents and the
other documents to be delivered hereunder and thereunder, including, without
limitation, reasonable counsel fees and expenses in connection with the
enforcement of rights under this Section 10(b).
(c) In addition, the Parent shall pay when due (i) any and
all commissions of placement agents and dealers in respect of the Commercial
Paper Notes of the Purchaser issued to fund the Purchase or maintenance of any
Purchased Interest, (ii) any and all costs and expenses of any issuing agent or
other Person responsible for the administration of the Purchaser's Commercial
Paper Note program in connection with the preparation, completion, issuance,
delivery or payment of Commercial Paper Notes issued to fund the Purchase or
maintenance of any Purchased Interest, and (iii) any and all stamp and other
taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing, recording or searching in respect of, or
enforcement, of the Purchase Documents and the other documents to be delivered
hereunder, and agrees to save each Indemnified Party harmless from and against
any and all liabilities with respect. to or resulting from any delay in paying
or omission to pay such taxes and fees (including, without limitation, sales
taxes, shipping charges or other similar taxes and charges due on merchandise or
services sold by the Parent or any Affiliate thereof to Obligors), provided that
the Agent will, to the extent, if at all, received from each Owner, pay (or
reimburse the Parent for) all property, excise or similar taxes and any other
taxes imposed by reason of ownership of Receivables, but only to the extent of
the percentage interest therein represented by the Purchased Interests.
(d) The Parent also shall pay on demand all other costs,
expenses and taxes (excluding income taxes) incurred by each Owner or any
general or limited partner or shareholder of each such Owner ("Other Costs"),
including, without limitation, (i) any and all costs relating to all
arrangements contemplated hereby with any of the Lock-Box Banks, (ii) the costs
of auditing the Purchaser's books by certified public accountants and of rating
each Owner's Commercial Paper Notes by independent financial rating agencies,
the cost of issuing each Owner's Commercial Paper Notes, (iii) the taxes
(excluding income taxes) resulting from
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each Owner's operations, (iv) the reasonable fees and disbursements of counsel
for each Owner with respect to advising as to rights and remedies under Purchase
Documents or the agreements and documents entered into in connection therewith,
the enforcement of the Purchase Documents or the agreements and documents
entered into in connection therewith, or advising as to matters relating to each
Owner's operations or (v) advising the Purchaser or any general or limited
partner or shareholder of the Purchaser as to the issuance of the Purchaser's
Commercial Paper Notes and acting in connection with such issuance.
(e) The Parent hereby agrees that it will not institute
against the Buyer any proceeding of the type referred to in Section 7.01(g) of
the Purchase and Bank Agreements so long as any Commercial Paper Notes issued by
the Purchaser shall be outstanding or there shall not have elapsed one year plus
one day since the last day on which any such Commercial Paper Notes shall have
been outstanding. The Parent hereby agrees not to cause the Buyer to file a
voluntary petition under the Federal Bankruptcy Code or any other bankruptcy or
insolvency laws unless, and only unless, such filing has been authorized in
accordance with the Buyer's constituent documents, and by the Board of Directors
of the Buyer which (as defined in such constituent documents) have taken into
consideration the interests of the creditors of the Buyer, rather than solely
the interests of the members of the Buyer.
SECTION 11. Receivables Contribution and Sale Agreement. (a) The
Parent acknowledges notice of and consents to (i) the execution, delivery and
performance by the Seller at each of the Purchase Documents to which it is party
including, without limitation, the assignment by the Seller of all of its right,
title and interest in, to and under, each of the Purchase Documents to which it
is party, and (ii) the irrevocable appointment of the Agent as the Sellers
attorney-in-fact pursuant to the Purchase Documents.
(b) The Parent agrees that:
(i) the Agent shall be entitled to exercise any and
all rights and remedies of the Seller against the Parent under the Purchase
Documents in accordance with the terms thereof.
(ii) the right to make any request, consent, waiver,
amendment, direction, determination or similar action which is vested in the
Seller under any Purchase Document to which the Parent is party, has been
assigned to the Agent by the Seller and no such request, consent, waiver,
amendment, direction, determination or similar action shall be effect unless
given or made by the Agent.
SECTION 11A Continuing Agreement.. This Agreement is a continuing
guaranty and shall (a) remain in full force and effect until (i) the later of
the payment in fall in cash of the Guaranteed Obligations and all other amounts
payable under this Agreement, (ii) the payment of all other amounts payable
under this Agreement and the other Purchase Documents and (iii) the Collection
Date, (b) be binding upon the Parent, its successors and assigns and (c) inure
to the benefit of, and be enforceable by, the Agent and its respective
successors and permitted transferees and assigns.
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SECTION 12. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of California.
SECTION 13. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by the different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
Agreement. Delivery of an executed counterpart of a signature page of this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 14. Waiver of Jury Trial. The Parent hereby irrevocably
waives any right to a trial by jury in any action, proceeding or counterclaim
(whether based on contract, tort or otherwise) arising out of or relating to
this Agreement or any other Purchase Document or any amendment, instrument,
document or agreement delivered or which may in the future be delivered in
connection herewith or therewith or arising from any course of conduct, course
of dealing, statements (whether verbal or written), actions of any of the
parties hereto or any other relationship existing in connection with this
Agreement or any other Purchase Document, and agrees that any such action or
proceeding shall be tried before a court and not before a jury.
IN WITNESS WHEREOF, the Parent has caused this Agreement to be
duly executed and delivered by its respective officers thereunto duly authorized
as of the date first above written.
MAXTOR CORPORATION
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and
Chief Financial Officer
AGREED AND ACCEPTED:
CITICORP NORTH AMERICA, INC.,
as Agent
By /s/ Authorized Signatory
-------------------------------
Name:
Title:
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256
TABLE OF CONTENTS
Page
----
SECTION 1. Unconditional Guarantee ................................... 1
SECTION 2. Guaranty Absolute ......................................... 2
SECTION 3. Waivers and Acknowledgments ............................... 3
SECTION 4. Subrogation ............................................... 3
SECTION 5. Representations and Warranties ............................ 4
SECTION 6. Covenants ................................................. 8
SECTION 7. Amendments, Etc ........................................... 14
SECTION 8. Addresses for Notices ..................................... 15
SECTION 9. No Waiver; Remedies ....................................... 15
SECTION 10. Indemnification; Costs, Expenses and Taxes; No Proceedings 15
SECTION 11. Receivables Contribution and Sale Agreement .............. 17
SECTION 11A. Continuing Agreement .................................... 18
SECTION 12. Governing Law ............................................ 18
SECTION 13. Execution in Counterparts ................................ 18
SECTION 14. Waiver of Jury Trial ..................................... 18
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Exhibit K
Dated as of April 8, 1998
Corporate Receivables Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
U. S. A.
Citicorp North America, Inc.,
individually and as Agent
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇.▇.▇.
Maxtor Corporation
Ladies and Gentlemen:
We, Hyundai Electronics Industries Co., Ltd., a company duly
incorporated and validly existing under the laws of the Republic of Korea, refer
to each of (i) the Receivables Purchase and Sale Agreement dated as of April 8,
1998 (such Agreement as it may be amended, supplemented or otherwise modified
from time to time being the "Purchaser Agreement") among Maxtor Corporation
("Maxtor"), Maxtor Receivables Corporation (the "Seller"), Corporate Receivables
Corporation (together with its respective successors and assigns from time to
time, the "Purchaser") and Citicorp North America, Inc. ("CNAI"), as agent for
the Purchaser and the other Owners thereunder (the "Agent") and (ii) the
Receivables Purchase and Sale Agreement dated as of April 8, 1998 (such
Agreement as it may be amended, supplemented or otherwise modified from time to
time being the "Bank Agreement", and together with the Purchaser Agreement,
collectively the "Facilities", the terms defined therein being used herein as
therein defined) among Maxtor. the Seller, and the other financial institutions
party thereto from time to time as "Banks", and CNAI, individually and as agent
(CNAI in its capacity as agent thereunder and under the Purchasers Agreement
being the "Agent"). It is a condition precedent to the initial Purchase under
either of the Facilities that we shall have executed and delivered this letter.
We hereby irrevocably and unconditionally agree as follows:
1. We represent and warrant that we currently own, directly or
indirectly and beneficially at least 51 % of the issued share capital of Maxtor.
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258
2. We will at all times take all measures necessary or desirable to keep
the billing, credit and collection standards, policies and procedures of the
Collection Agent, so long as it is Maxtor or any of our other affiliates.
unchanged from those set forth in the Facilities and in the Credit and
Collection Policies referred to in the Facilities, and we will cause (a) the
Collection Agent, so long as it is Maxtor or any of our other affiliates, at all
times to duly perform and comply with all of its obligations as Collection Agent
under or in connection with the Facilities, and (b) Maxtor at all times to duly
perform and comply with all of its obligations as Seller under or in connection
with the Facilities. If the Collection Agent (so long as it is Maxtor or any of
our other affiliates) or the Seller fails to perform any of its obligations as
specified in either of the Facilities (excluding (i) the obligation of the
Collection Agent or the Seller to pay to the Agent or any Owner, by deposit to
the Agent's Account or otherwise, Collections received from Obligors from time
to time by the Collection Agent or the Seller, (ii) any obligation of the Seller
under clause (ii) of Section 10.01 of such Facility to indemnify the Indemnified
Parties in connection with any representation or warranty by the Seller under
Section 4.01(e) of such Facility which shall have been incorrect in any material
respect when made, and (iii) any interest accruing under Section 2.05 of such
Facility in connection with such Collections or such indemnification to the
extent not paid by the Collection Agent or the Seller, as applicable, when due
under such Facility), we will, upon notice to us by the Agent or demand for
performance under this letter, duly promptly perform such obligation as though
we were the Collection Agent or the Seller, as applicable, under such Facility.
3. We will promptly upon demand pay to the Agent the amount of any and
all reasonable expenses, including legal fees and expenses, and taxes thereon,
which the Agent may incur in connection with the exercise or enforcement of any
of its rights hereunder.
4. No amendment or waiver of any provision of this letter, and no
consent to any departure by us herefrom, shall be effective unless in writing
and signed by the Agent, and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
5. This letter shall be governed by, and construed in accordance with,
the laws of the State of California, U.S.A. We irrevocably submit to the
jurisdiction of any New York State or Federal court sitting in New York City,
and any California State or Federal court sitting in the City of San ▇▇▇▇,
respectively, and any appellate court from any thereof in any action or
proceeding arising out of or relating to this letter. We hereby irrevocably
waive the defense of an inconvenient forum to the maintenance of such action or
proceeding. Service of copies of the summons and complaint and any other process
which may be served in any such action or proceeding may be made by mailing (by
international courier service) or delivering a copy of such process to us at our
address (and to the attention of the officer) set forth below or by any other
method permitted by law.
6. Any amount to be paid by us hereunder will be paid in United States
dollars in the United States in same day funds, and in the event any judgment by
any court results in any such amount being paid by us in any currency other than
United States dollars, we will be liable to you for the amount of any related
conversion deficiency.
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259
7. We hereby agree that, to the extent that we or any of our agents have
acquired or hereafter may acquire any right of immunity, whether characterized
as sovereign immunity or otherwise, from any legal proceedings, regardless of
the jurisdiction, to enforce this letter or any of our obligations to you
hereunder, including without limitation immunity from service of process,
immunity from jurisdiction or judgment and immunity from execution of a
judgment, we hereby expressly and irrevocably waive any such immunity.
Yours faithfully,
HYUNDAI ELECTRONICS INDUSTRIES CO., LTD.
By: /s/
-------------------------------
Title: Director
Address:
6th Floor Hyundai ▇▇▇▇▇▇▇▇
▇▇▇-▇, ▇▇▇-▇▇▇▇, ▇▇▇▇▇▇▇-▇▇
▇▇▇▇▇, ▇▇▇▇▇
Attention: Representative Director
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260
LOCK BOX AGREEMENT
March 26, 1998
CoreStates Bank, N.A.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇-▇▇ 1 8
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Ladies and Gentlemen:
Reference is made to Maxtor Corporation account no. 0109-7086 into which certain
monies, instruments and other properties are deposited from time to time (the
"Lock Box Account") maintained with CoreStates ("you" or the "Bank") by Maxtor
Corporation (the "Customer"). The Customer and certain of its affiliates have
entered into a transaction pursuant to which the Lock Box Account and the other
Account Collateral (as defined below) are to be transferred to Citicorp North
America, Inc., as Agent (the "Agent") for the Beneficiaries referred to in the
Receivables Purchase and Sale Agreement (the "Receivables Purchase and Sale
Agreement"), dated as of April 8, 1998, among Maxtor Receivables Corporation, as
Seller, Maxtor Corporation, as Collection Agent, Corporate Receivables
Corporation, as Purchaser (the "Purchaser"), Citicorp North America, Inc., as
Agent for the Purchaser and the Owners referred to therein, and Bankers Trust
Company, as Trustee (the "Receivables Transaction"). It is a condition precedent
to the Receivables Transaction that you execute and deliver this Lock Box
Agreement. Terms defined in the Receivables Purchase and Sale Agreement, unless
otherwise defined herein, are used herein as therein defined.
261
Pursuant to the Purchase Documents, the Customer and certain of its affiliates
have granted to the Agent, for the benefit of the Beneficiaries, a security
interest in certain property of the Customer, including, among other things, the
following (the "Account Collateral"): the Lock Box Account, all funds held
therein and all certificates and instruments, if any, from time to time
representing or evidencing such Lock Box Account, all interest, dividends, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for nay or al of the then
existing Account Collateral and all proceeds of any and all of the foregoing
Account Collateral and, to the extent not otherwise included, all (i) payments
under insurance (whether or not the Agent is the loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Account Collateral and (ii) cash
on deposit in the Lock Box Account. It is a condition to the continued
maintenance of the Lock Box Account with you that you agree to this Lock Box
Agreement.
You hereby agree that the Agent, for the benefit of the Beneficiaries, possesses
all right, title and interest in and to the Lock Box Account and all Account
Collateral now or hereinafter on deposit in the Lock Box Account and further
agrees that all funds in the Lock Box Account shall be transferred to the Agent
on behalf of the Beneficiaries in accordance with the instructions set forth
herein. You also agree that the Agent shall have full irrevocable right, power
and authority to demand, collect, withdraw, receive or ▇▇▇ for all amounts now
or hereafter on deposit in the Lock Box Account and at its discretion to take
any other action which it deems necessary or appropriate to protect its
interest, on behalf of the Beneficiaries, in the Lock Box Account. Except as
provided in paragraph (i) below, the Lock Box Account shall not be subject to
deductions, set-off, banker's liens or any other right in favor of any person or
entity other than the Agent or the Beneficiaries.
By signing this Lock Box Agreement you acknowledge that, as of the date hereof,
you have received no notice of any other pledge or assignment of the Lock Box
Account. Further, you hereby agree with the Agent as follows:
(a) Notwithstanding anything to the contrary in the Lock Box Account and all or
any other agreement relating to the Lock Box Account, the Lock Box Account is
and will be, subject to the terms and conditions of the Purchase Documents,
maintained solely for the benefit of the Agent, will be entitled "Citicorp North
America, Inc., as Agent, Re: Maxtor Corporation" and will be subject to written
instructions only from an authorized officer of the Agent. The Lock Box Account
and all of the Account Collateral shall be in the sole dominion and control of
the Agent, and the Customer shall have no control thereover.
(b) You will collect mail from the Lock Box Account on each Business Day at
times which coincide with the delivery of mail thereto.
(c) You will follow your usual operating procedures for the handling of any
remittance received in the Lock Box Account that contains restrictive
endorsements, irregularities (such as a variance between the written and
numerical amounts), updated or postdated items, missing signatures, incorrect
payees, etc.
262
(d) You will endorse and process all eligible checks and other remittance items
not covered by paragraph (c) and deposit such checks and remittance items in the
Lock Box Account. You will mail all checks returned unpaid because of
uncollected or insufficient funds under appropriate advice to the Customer (with
a copy of the notification of return to the Agent). The Customer shall indemnify
you for the uncollected amounts of any such items.
(e) You will mail all checks returned unpaid because of uncollected or
insufficient funds under appropriate advice to the Customer (with a copy of the
notification of return to the Agent). The Customer shall indemnify you of the
uncollected amounts of any such items.
(f) You will maintain a record of all checks and other remittance items received
in the Lock Box Account and, in addition to providing the Customer with
photostats, vouchers, enclosures, etc. of such checks and remittance items on a
daily basis, furnish to the Agent a monthly statement of the Lock Box Account
to: Citicorp North America, Inc., as Agent, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇. Attention: ▇▇▇ ▇▇▇▇▇, with a copy to the Customer.
(g) You will transfer, in available funds, on each Business Day, all funds on
deposit in the Lock Box Account to the following account (the "Concentration
Account"):
ABA Number: ▇▇▇▇▇▇▇▇▇
Bankers Trust Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Account Name: BTCO f/a/o Maxtor
Concentration Account
Account Number: ▇▇-▇▇▇-▇▇▇
Reference: Maxtor Concentration Account
Attention: Structured Finance Team/▇▇▇ ▇▇▇▇
or to such other account as the Agent may from time to time designated in
writing.
(h) Subject to paragraph (i) below, all transfers referred to in paragraph (g)
above shall be made by the undersigned irrespective of, and without deduction
for, any counterclaims, defense, recoupment or set-off and shall be final, and
the undersigned will not seek to recover from the Agent for any reason any such
payment once made.
(i) All customary service charges and fees with respect to the Lock Box Account
shall be debited to the Lock Box Account, together with any items deposited to
the Lock Box Account which are returned unpaid. In the event insufficient funds
remain in such Lock Box Account to cover such customary service charges and
fees, the Customer shall pay and indemnify you for the amounts of such customary
service charges and fees.
(j) The Agent shall be entitled to exercise any and all rights of the Customer
in respect of the Lock Box Account in accordance with the terms of the Purchase
Documents, and the undersigned shall comply in all respects with such exercise.
263
This Lock Box Agreement shall be binding upon and shall inure to the benefit of
you, the Customer, the Agent, the Beneficiaries and their respective successors,
transferees and assigns. You may terminate the Lock Box Agreement only upon
thirty days prior written notice to the Customer and the Agent. The Agent may
terminate this Lock Box Agreement upon ten days prior written notice to you and
the Customer. Upon such termination you shall close the Lock Box Account and
transfer all funds in the Lock Box Account to the Concentration Account. After
any such termination, you shall nonetheless remain obligated promptly to
transfer to the Concentration Account or to the Agent all funds and other
property received in respect of the Lock Box Account.
This Lock Box Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement. Delivery of an executed counterpart
of a signature page to this Lock Box Agreement by telecopier shall be effective
as delivery of a manually executed counterpart of this Lock Box Agreement.
This Lock Box Agreement supersedes all prior agreements, oral or written, with
respect to the subject matte hereof and may not be amended, modified or
supplemented except by a written signed and agreed upon by the Agent, the
Customer and you.
Upon acceptance of this Lock Box Agreement it will be the valid and binding
obligation of the Customer, the Agent and you, in accordance with its terms.
This Lock Box Agreement shall be governed by, and construed in accordance with,
the law of the State of New York.
Very truly yours,
MAXTOR CORPORATION
By: /s/: ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Treasurer
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, INC., as Agent
By: /s/
-------------------------------
Name:
Title:
Acknowledged and agreed to as of
the date first above written:
CORESTATE BANK, N.A.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Vice President
265
EXHIBIT C
FORM OF LOCK BOX AGREEMENT
[Date]
[Bank]
[Address]
Attention:
Ladies and Gentlemen:
Reference is made to [lock box][deposit] account no. _______________
into which certain monies, instruments and other properties are deposited from
time to time (the "Lock Box Account") maintained with [Bank] ("you" or the
"Bank") by Maxtor Corporation and [Maxtor Receivables Corporation] (together
being the "Customer"). The Customer and certain of its affiliates have entered
into a transaction pursuant to which the Lock Box Account and the other Account
Collateral (as defined below) are to be transferred to Citicorp North America,
Inc., as Agent (the "Agent") for the Beneficiaries referred to in the
Receivables Purchase and Sale Agreement (the "Receivables Purchase and Sale
Agreement"), dated as of March _, 1998, among [Maxtor Receivables Corporation,
as Seller, Maxtor Corporation, as Collection Agent, Corporate Receivables
Corporation, as Purchaser (the "Purchaser"), Citicorp North America, Inc., as
Agent for the Purchaser and the Owners referred to therein, and Bankers Trust
Company, as Trustee (the "Receivables Transaction"). It is a condition precedent
to the Receivables Transaction that you execute and deliver this Lock Box
Agreement. Terms defined in the Receivables Purchase and Sale Agreement, unless
otherwise defined herein, are used herein as therein defined.
Pursuant to the Purchase Documents, the Customer and certain of its
affiliates have granted to the Agent, for the benefit of the Beneficiaries, a
security interest in certain property of the Customer, including, among other
things, the following (the "Account Collateral"): the Lock Box Account, all
funds held therein and all certificates and instruments, if any, from time to
time representing or evidencing such Lock Box Account, all interest, dividends,
cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the then
existing Account Collateral and all proceeds of any and all of the foregoing
Account Collateral and, to the extent not otherwise included, all (i) payments
under insurance (whether or not the Agent is the loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Account Collateral and (ii) cash.
It is a condition to the continued maintenance of the Lock Box Account with you
that you agree to this Lock Box Agreement.
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You hereby agree that the Agent, for the benefit of the Beneficiaries,
possesses all right, title and interest in and to the Lock Box Account and all
Account Collateral now or hereinafter on deposit in the Lock Box Account and
further agree that all funds in the Lock Box Account shall be transferred to the
Agent on behalf of the Beneficiaries in accordance with the instructions set
forth herein. You also agree that the Agent shall have full and irrevocable
right, power and authority to demand, collect, withdraw, receive or ▇▇▇ for all
amounts now or hereafter on deposit in the Lock Box Account and at its
discretion to take any other action which it deems necessary or appropriate to
protect its interest, on behalf of the Beneficiaries, in the Lock Box Account.
Except as provided in paragraph (i) below, the Lock Box Account shall not be
subject to deductions, set-off, banker's liens or any other right in favor of
any person or entity other than the Agent or the Beneficiaries.
By signing this Lock Box Agreement you acknowledge that, as of the date
hereof, you have received no notice of any other pledge or assignment of the
Lock Box Account. Further, you hereby agree with the Agent as follows:
(a) Notwithstanding anything to the contrary in the Lock Box Account and all or
any other agreement relating to the Lock Box Account, the Lock Box Account is
and will be, subject to the terms and conditions of the Purchase Documents,
maintained solely for the benefit of the Agent, will be entitled "Citicorp North
America, Inc., as Agent, Re: Maxtor Corporation" and will be subject to written
instructions only from an authorized officer of the Agent. The Lock Box Account
and all of the Account Collateral shall be in the sole dominion and control of
the Agent, and the Customer shall have no control thereover.
(b) You will collect mail from the Lock Box Account on each Business Day at
times which coincide with the delivery of mail thereto.
(c) You will follow your usual operating procedures for the handling of any
remittance received in the Lock Box Account that contains restrictive
endorsements, irregularities (such as a variance between the written and
numerical amounts), undated or postdated items, missing signatures, incorrect
payees, etc.
(d) You will endorse and process all eligible checks and other remittance items
not covered by paragraph (c) and deposit such checks and remittance items in the
Lock Box Account.
(e) You will mail all checks returned unpaid because of uncollected or
insufficient funds under appropriate advice to the Customer (with a copy of the
notification of return to the Agent). The Customer shall indemnify you for the
uncollected amounts of any such items.
(f) You will maintain a record of all checks and other remittance items received
in the Lock Box Account and, in addition to providing the Customer with
photostats, vouchers, enclosures, etc. of such checks and remittance items on a
daily basis, furnish to the Agent a monthly statement of the Lock Box Account
to: Citicorp North America, Inc., as Agent, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: _______________, with a copy to the Customer.
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(g) You will transfer, in available funds, on each Business Day, all funds on
deposit in the Lock Box Account to the following account (the "Concentration
Account"):
ABA Number: ______________
Bankers Trust Company
Four ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Account Name: BTCO f/a/o Maxtor
Concentration Account
Account Number: _______________
Reference: Maxtor Concentration Account
Attention: Structured Finance Team
or to such other account as the Agent may from time to time designate in
writing.
(h) Subject to paragraph (i) below, all transfers referred to in paragraph (g)
above shall be made by the undersigned irrespective of, and without deduction
for, any counterclaim, defense, recoupment or set-off and shall be final, and
the undersigned will not seek to recover from the Agent for any reason any such
payment once made.
(i) All customary service charges and fees with respect to the Lock Box Account
shall be debited to the Lock Box Account, together with any items deposited to
the Lock Box Account which are returned unpaid. In the event insufficient funds
remain in such Lock Box Account to cover such customary service charges and
fees, the Customer shall pay and indemnify you for the amounts of such customary
service charges and fees.
(j) The Agent shall be entitled to exercise any and all rights of the Customer
in respect of the Lock Box Account in accordance with the terms of the Purchase
Documents, and the undersigned shall comply in all respects with such exercise.
This Lock Box Agreement shall be binding upon and shall inure to the
benefit of you, the Customer, the Agent, the Beneficiaries and their respective
successors, transferees and assigns. You may terminate the Lock Box Agreement
only upon sixty days' prior written notice to the Customer and the Agent. The
Agent may terminate this Lock Box Agreement upon ten days' prior written notice
to you and the Customer. Upon such termination you shall close the Lock Box
Account and transfer all funds in the Lock Box Account to the Concentration
Account. After any such termination, you shall nonetheless remain obligated
promptly to transfer to the Concentration Account or to the Agent all funds and
other property received in respect of the Lock Box Account.
This Lock Box Agreement may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement. Delivery of an executed counterpart
of a signature page to this Lock Box Agreement by telecopier shall be effective
as delivery of a manually executed counterpart of this Lock Box Agreement.
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This Lock Box Agreement supersedes all prior agreements, oral or
written, with respect to the subject matter hereof and may not be amended,
modified or supplemented except by a writing signed and agreed upon by the
Agent, the Customer and you.
Upon acceptance of this Lock Box Agreement it will be the valid and
binding obligation of the Customer, the Agent and you, in accordance with its
terms.
This Lock Box Agreement shall be governed by, and construed in
accordance with, the law of the State of New York.
Very truly yours,
MAXTOR CORPORATION
By: /s/ Authorized Signatory
-------------------------------
Name:
Title:
[MAXTOR RECEIVALBES CORPORATION]
By: /s/ Authorized Signatory
-------------------------------
Name:
Title:
CITICORP NORTH AMERICA, INC., as Agent
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Vice President
Acknowledged and agreed to as of the date first above written:
[BANK]
By: /s/ Authorized Signatory
-------------------------------
Name:
Title: