RECEIVABLES PURCHASE AGREEMENT
dated as of December 30, 1997
among
LINC RECEIVABLES CORPORATION,
as Seller
LINC CAPITAL, INC.
as Servicer
BLUE KEEL FUNDING, LLC
as Purchaser
and
FLEET BANK, N.A.
as Agent
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS
SECTION 1.1 Defined Terms............................................1
SECTION 1.2 Other Definitional Provisions...........................25
SECTION 1.3 Other Terms.............................................26
SECTION 1.4 Computation of Time Periods.............................26
ARTICLE I PURCHASE PROCEDURES
SECTION 2.1 Offer and Acceptance....................................26
SECTION 2.2 Purchase Limits.........................................26
SECTION 2.3 Making Purchases from Seller............................27
SECTION 2.4 Facility Termination Date...............................27
SECTION 2.5 Representation and Warranty.............................27
SECTION 2.6 Voluntary Termination of Facility;
Reduction of Purchase Limit...............27
SECTION 2.7 Increase of Purchase Limit..............................28
ARTICLE III FEES, ETC.
SECTION 3.1 Fees....................................................28
SECTION 3.2 Computation of Earned Yield and Fees....................28
ARTICLE IV ESTABLISHMENT AND USE OF ACCOUNTS; SETTLEMENTS
SECTION 4.1 Accounts................................................28
SECTION 4.2 Settlements.............................................29
SECTION 4.3 Interest Rate Swaps.....................................30
SECTION 4.4 Withdrawals from Reserve Account........................30
SECTION 4.5 Deemed Collections; Repurchases.........................30
SECTION 4.6 Servicer Advances.......................................31
ARTICLE V PAYMENTS
SECTION 5.1 Making of Payments......................................31
ARTICLE VI INCREASED COSTS, ETC.
SECTION 6.1 Increased Costs.........................................32
SECTION 6.2 Funding Losses..........................................33
ARTICLE VII CONDITIONS TO PURCHASES
SECTION 7.1 Initial Purchase........................................33
SECTION 7.2 All Purchases...........................................35
ARTICLE VIII REPRESENTATIONS AND WARRANTIES OF SELLER
SECTION 8.1 Representations and Warranties of Seller................36
SECTION 8.2 Organization and Good Standing, Etc.....................36
SECTION 8.3 Power and Authority; Due Authorization..................36
SECTION 8.4 No Violation............................................37
SECTION 8.5 Validity and Binding Nature.............................37
SECTION 8.6 Bulk Sales Act..........................................37
SECTION 8.7 Government Approvals....................................37
SECTION 8.8 Financial Condition.....................................38
SECTION 8.9 Margin Regulations......................................38
SECTION 8.10 Quality of Title.......................................38
SECTION 8.11 Accuracy of Information................................38
SECTION 8.12 Offices................................................38
SECTION 8.13 Capitalization.........................................39
SECTION 8.14 Trade Names............................................39
SECTION 8.15 Taxes..................................................39
SECTION 8.16 Compliance with Applicable Laws, etc...................39
SECTION 8.17 No Proceedings.........................................39
SECTION 8.18 Investment Company Act, Etc............................40
SECTION 8.19 Eligible Contracts.....................................40
ARTICLE IX REPRESENTATIONS AND WARRANTIES OF SERVICER
SECTION 9.1 Representations and Warranties of
Servicer..................................40
SECTION 9.2 Organization and Good Standing, Etc.....................40
SECTION 9.3 Power and Authority; Due Authorization..................40
SECTION 9.4 No Violation............................................40
SECTION 9.5 Validity and Binding Nature.............................41
SECTION 9.6 Government Approvals....................................41
SECTION 9.7 Financial Condition.....................................41
SECTION 9.8 Accuracy of Information.................................42
SECTION 9.9 Offices.................................................42
SECTION 9.10 Taxes..................................................42
SECTION 9.11 Compliance with Applicable Laws........................42
SECTION 9.12 No Proceedings.........................................42
SECTION 9.13 Investment Company Act, Etc............................43
SECTION 9.14 Software Programs......................................43
ARTICLE X COVENANTS OF SELLER
SECTION 10.1 Affirmative Covenants of Seller........................43
SECTION 10.2 Negative Covenants of Seller...........................49
ARTICLE XI COVENANTS OF SERVICER
SECTION 11.1 Affirmative Covenants of Servicer......................51
SECTION 11.2 Negative Covenants of Servicer.........................55
ARTICLE XII TERMINATION EVENTS AND THEIR EFFECT; REMEDIES
SECTION 12.1 Termination Events.....................................56
SECTION 12.2 Effect of Termination Event............................58
ARTICLE XIII THE SERVICER
SECTION 13.1 LINC as Initial Servicer...........................59
SECTION 13.2 Duties of Servicer.................................59
SECTION 13.3 Rights of the Agent................................60
SECTION 13.4 Responsibilities of Seller.........................61
SECTION 13.5 Further Action.....................................62
SECTION 13.6 Application of Collections.........................62
SECTION 13.7 Servicing Compensation; Costs
of Servicing..............................62
ARTICLE XIV THE AGENT
SECTION 14.1 Authorization and Action...............................63
SECTION 14.2 Exculpation............................................63
SECTION 14.3 Agent and Affiliates...................................63
SECTION 14.4 Contract Schedules.....................................64
ARTICLE XV ASSIGNMENTS
SECTION 15.1 Restrictions on Assignments............................64
SECTION 15.2 Documentation..........................................64
SECTION 15.3 Rights of Assignee.....................................65
SECTION 15.4 Notice of Assignment...................................65
ARTICLE XVI INDEMNIFICATION
SECTION 16.1 General Indemnity of Seller............................65
SECTION 16.2 Indemnity by Servicer..................................67
SECTION 16.3 Contribution...........................................67
ARTICLE XVII SECURITY INTEREST
SECTION 17.1 Grant of Security Interest.............................67
SECTION 17.2 Further Assurances.....................................68
SECTION 17.3 Remedies...............................................68
ARTICLE XVIII MISCELLANEOUS
SECTION 18.1 No Waiver; Remedies....................................69
SECTION 18.2 Amendments, Etc........................................69
SECTION 18.3 Notices, Etc...........................................69
SECTION 18.4 Costs, Expenses and Taxes..............................70
SECTION 18.5 Binding Effect; Survival...............................70
SECTION 18.6 Captions and Cross References..........................71
SECTION 18.7 Severability...........................................71
SECTION 18.8 Governing Law..........................................71
SECTION 18.9 Counterparts...........................................71
SECTION 18.10 WAIVER OF JURY TRIAL..................................71
SECTION 18.11 Recourse to Directors or Officers.....................72
SECTION 18.12 No Proceedings........................................72
SECTION 18.13 ENTIRE AGREEMENT......................................72
EXHIBITS
Exhibit A Form of Purchase Request
Exhibit B Form of Seller Opinion of Counsel
Exhibit C Form of Portfolio Certificate
Exhibit D Form of Lockbox Agreement
Exhibit E Form of Contract
SCHEDULES
Schedule I Categories
Schedule 8.17 Seller Proceedings
Schedule 9.12 Servicer Proceedings
Schedule 11.1.7 Credit Policy
Schedule 18.3 Notice Addresses
RECEIVABLES PURCHASE AGREEMENT
THIS RECEIVABLES PURCHASE AGREEMENT is made and entered into as of
December 30, 1997, among LINC RECEIVABLES CORPORATION, a Delaware corporation
("Seller"), LINC CAPITAL, INC., a Delaware corporation ("LINC"), as initial
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Servicer, BLUE KEEL FUNDING, LLC, a Delaware limited liability company
("Purchaser"), and FLEET BANK, N.A., a national banking association ("Fleet"),
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as agent for Purchaser (in such capacity, together with its successors and
assigns, the "Agent").
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BACKGROUND
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1. The Originator originates and acquires Contracts in the ordinary
course of its business, certain of which it intends to sell or contribute to
Seller pursuant to the Purchase and Sale Agreement. Seller intends to sell
undivided interests in its portfolio of Contracts and other Contract Assets (the
"Portfolio") which interests are referred to herein as Participations. Seller
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has requested Purchaser, and Purchaser has agreed on the terms and subject to
the conditions contained in this Agreement, to purchase Participations from
Seller from time to time during the term of this Agreement.
2. Fleet has been requested, and is willing, to act as the Agent.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Defined Terms. As used in this Agreement, the following
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terms have the following meanings:
"Adjusted Tangible Net Worth" means at any time, the difference between
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(a) the sum of (i) the non-current portion of Subordinated Debt, (ii) the total
of shareholders' equity calculated in accordance with GAAP, and (iii) deferred
income tax credits, minus (b) the sum of (i) deferred charges (after tax), and
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(ii) the total amount of any intangible assets which shall include, without
limitation, (A) unamortized debt discount after taxes, (B) prepaid expenses
after tax, and (C) goodwill.
"Administration Fee" means the administration fee payable pursuant to the
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Fee Letter.
"Advance" has the meaning set forth in Section 4.6.
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"Adverse Claim" means a lien, security interest, pledge, charge,
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mortgage or encumbrance, or similar right or claim of any Person.
"Affected Party" means each of Purchaser, each Program Support
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Provider, any permitted assignee of Purchaser or any Program Support Provider,
the Agent, and the holding company of any Program Support Provider and any
successor holding company thereof.
"Affiliate" of any Person means any other Person that (i) directly or
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indirectly controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any employee benefit plan) or (ii) is an executive officer or
director of such Person. A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power
(a) to vote 10% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or
managing partners; or
(b) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
The word "Affiliated" has a correlative meaning.
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"Agent" has the meaning set forth in the Preamble.
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"Aggregate Principal Balance" means at any time the aggregate
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Outstanding Principal Balance of all Contracts.
"Agreement" shall mean this Receivables Purchase Agreement, as it may
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be amended, supplemented or otherwise modified from time to time.
"Alternate Base Rate" means, on any date, a fluctuating rate of
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interest per annum equal to the higher of:
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(a) the rate of interest most recently announced by the Agent
in New York, New York as its prime commercial rate for United States
loans made in the United States, which rate is not necessarily intended
to be the lowest rate of interest determined by Fleet in connection
with extensions of credit; or
(b) the Federal Funds Rate most recently determined by the
Agent plus 1.0% per annum.
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"Bankruptcy Code" means the Bankruptcy Code of 1986, 11 U.S.C. ss. 101, et
------------------ --
seq. as amended.
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"Booked Residual Value" means, with respect to any item of Equipment,
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the residual value thereof that was established by the Originator at the time of
the origination or acquisition of the related Contract by the Originator as
reflected on the books and records of the Originator.
"Business Day" shall mean any day other than a Saturday, a Sunday or
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day on which commercial banks in New York City or Chicago, Illinois are
authorized or required to be closed for business and in the case of determining
the Eurodollar Rate, on which banks are open for business in London, England.
"Capital" means, an amount equal to (a) the amount paid to (or as
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directed by) Seller for the Participation pursuant to Section 2.3 of this
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Agreement less (b) the aggregate amount of Collections received and actually
distributed to the Purchaser on account of such Capital pursuant to clause (vii)
of Section 4.2.
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"Category" means (i) the traditional portfolio, (ii) the LQA portfolio
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and (iii) the emerging growth portfolio, all as more fully described on Schedule
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I.
-
"Change in Control" means, (i) with respect to Seller, that LINC shall
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fail to own, directly or indirectly, free and clear of all Adverse Claims (other
than an Adverse Claim in favor of the lenders under the Credit Agreement), 100%
of the shares of the outstanding voting stock of Seller on a fully diluted
basis, or (ii) with respect to LINC, that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇ shall
cease for any reason to be executive officers of LINC or to actively participate
in the management thereof.
"Collateral" has the meaning set forth in Section 17.1.
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"Collection Account" means a bank account maintained at the Collection
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Account Bank (which initially shall be account numbered 9403543609 at Fleet in
New York, New York), which is (i) a blocked account, (ii) identified as the
"LINC Receivables Corporation Collection Account", (iii) in Purchaser's name,
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and (iv) pledged to Purchaser pursuant to Section 17.1.
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"Collection Account Bank" means the bank holding the Collection
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Account, which bank shall initially be Fleet.
"Collections" means, without duplication, with respect to any Contract,
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all funds other than scheduled payments that were due and received with respect
to such Contract prior to the applicable Cut-off Date and late fees that (a) are
received by the Originator, Servicer or Seller, from or on behalf of the related
Obligors in payment of any amounts owed (including, without limitation,
principal, finance charges, interest, rent and all other amounts and charges) in
respect of such Contract, (b) received by the Originator, Servicer or Seller and
applied to such amounts owed by such Obligors (including, without limitation,
insurance payments or proceeds on account of any casualty loss with respect to
the related Equipment and net proceeds of sale or other disposition of
repossessed Equipment or other collateral or property of the Obligor or any
other party directly or indirectly liable for payment of such Contract and
available to be applied thereon), (c) received by Seller from the Originator in
respect of the purchase price of Contracts re-purchased by the Originator from
Seller pursuant to the Purchase and Sale Agreement, (d) representing deemed
collections pursuant to this Agreement or the Purchase and Sale Agreement or (e)
representing Repurchase Amounts.
"Commercial Paper Notes" means short-term promissory notes issued or to
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be issued by Purchaser, or the proceeds of which are loaned or are to be loaned
to Purchaser, to fund its loans or investments in Contracts or other financial
assets.
"Contract" means each finance lease, true lease, retail installment
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sale contract or note and security agreement that is or has been listed on a
Contract Schedule and that has not been repurchased by the Seller pursuant to
this Agreement.
"Contract Assets" means the assets sold, contributed, transferred,
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conveyed and assigned, or purported to have been sold, contributed, transferred,
conveyed or assigned, by the Originator to the Seller pursuant to the Purchase
and Sale Agreement, which shall consist of all of the Seller's right, title and
interest in and to (i) the Contracts, including all interest, finance charges,
rent payments and principal due on or with respect to the Contracts from and
after the applicable Cut-off Date, and all rights, powers and remedies under or
in connection with the Contracts; (ii) the Equipment related to the Contracts;
(iii) all property which secures a Contract; (iv) all rights to guaranties or
other agreements providing support or credit enhancement for such Contracts; (v)
all insurance policies related to the Contracts or the Equipment; (vi) all
rights and claims under the dealer agreements related to the Contracts, or any
other agreement pursuant to which the Originator acquired any Contract, in each
case to the extent related to such Contract; (vii) the Collections; (viii) all
lock-boxes and accounts to which Collections are sent or deposited, including
the Collection Account and the Reserve Account, and all monies, funds and
investments therein; (ix) a Pro-Rata Share of all warrants and similar equity
participation agreements, and the proceeds thereof; (x) the Purchase and Sale
Agreement, and all claims thereunder; (xi) all books and records, including
computer records, evidencing or relating to the foregoing; (xii) all proceeds of
the foregoing and the rights to enforce the foregoing.
"Contract Payment Date" means, with respect to any Contract, each date
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shown as a "Contract Payment Date" for such Contract on the related Contract
Schedule.
"Contract Schedule" means a schedule of Contracts delivered to the
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Agent with each Purchase Request and approved by the Agent, such schedule
identifying each Contract to be sold to Purchaser in connection with such
Purchase Request by the name of the Obligor thereof and setting forth as to each
Contract the Outstanding Principal Balance, the Category of each Contract, loan
or lease number, scheduled payments, final maturity date, and the Contract
Payment Dates for each such Contract.
"Convertible Subordinated Debt" means the balance (approximately
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$7,700,000 in principal amount outstanding as of the date of this Agreement) of
the $25,000,000 in original face principal amount of 8-1/4% Convertible
Subordinated Debentures due 2003 issued by LINC pursuant to the Convertible
Subordinated Debt Indenture dated as of June 15, 1983 between LINC and United
States Trust Company of New York.
"Cost of Funds Rate" for any Settlement Period means the sum of (i) the
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rate equivalent to the rate (or if more than one rate, the weighted average of
rates) at which Commercial Paper Notes having a term equal to such Settlement
Period and to be issued to fund or maintain the Capital may be sold by any
placement agent or commercial paper dealer selected by the Purchaser or a
Program Support Provider, as agreed between each such agent or dealer and the
Purchaser or such Program Support Provider and notified by the Purchaser to the
Agent and the Servicer; provided, however, if the rate (or rates) as agreed
between any such agent or dealer and the Purchaser with regard to any Settlement
Period is a discount rate (or rates), the "Cost of Funds Rate" for such
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Settlement Period shall be the rate (or if more than one rate, the weighted
average of the rates) resulting from converting such discount rate (or rates) to
an interest-bearing equivalent rate (or rates) per annum, plus (ii), without
duplication, the commissions and charges charged as a percentage of such face
amount and converted to an interest-bearing equivalent rate per anum.
"Credit Agreement" means the Third Amended and Restated Loan Agreement,
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dated as of July 22, 1997, by and among LINC, LINC Quantum Analytics, Inc.,
Fleet and the banks from time to time signatory thereto, as amended pursuant to
Amendment No. 1 dated October 29, 1997.
"Credit Policy" means those underwriting, credit and collection
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policies of LINC with respect to the Contracts as described in Schedule 11.1.7
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hereto, as amended from time to time in accordance with this Agreement.
"Custodian" means LINC initially, and any other Person appointed as
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custodian pursuant to Section 13.2(c).
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"Cut-off Date" means, with respect to any Funding Date, the first day
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of the month following the month in which such Funding Date occurs.
"Defaulted Contract" means, with respect to a Contract: (a) a Contract
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as to which all or any part of any scheduled payment was (1) delinquent for 91
or more days from the original due date for such payment or (2) delinquent for
60 or more days and which was repurchased prior to becoming 91 days past due by
Seller or the Originator or (b) a Contract as to which any of the following has
occurred: (i) the Contract has been charged off, or should have been charged
off, by the Servicer in accordance with the Credit Policy, (ii) the related
Equipment has been repossessed without reinstatement of such Contract, (iii) the
Servicer has determined that eventual payment of the Contract in full is
unlikely or (iv) foreclosure proceedings have been initiated and are continuing
or (c) a Contract as to which the Obligor thereof is the subject of an Event of
Bankruptcy.
"Default Proxy Ratio" means the ratio (expressed as a percentage)
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computed as of a Month End Date for any Category by dividing (i) the aggregate
Gross Contract Amount of all Contracts of such Category that are Past Due
Contracts as of such Month End Date by (ii) the aggregate Gross Contract Amount
of all Contracts of such Category on such Month End Date.
"Delinquency Ratio" means the ratio (expressed as a percentage)
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computed as of a Month End Date by dividing (i) the aggregate Gross Contract
Amount of all Contracts as to which any scheduled payment or part thereof
remains unpaid for 61 days or more from the original due date for such payment
as of such Month End Date by (ii) the aggregate Gross Contract Amount of all
Contracts on such Month End Date.
"Delinquent Contract" means a Contract that is not a Defaulted Contract
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(i) as to which any scheduled payment or part thereof remains unpaid for 31 days
or more from the original due date for such payment or (ii) which has been, or
should have been, classified as delinquent by the Servicer in accordance with
the Credit Policy.
"Dilutions" means all setoffs, discounts, credit memos, rebates,
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refunds and other reductions of amounts originally scheduled to be paid under
the Contracts (other than write-offs for credit losses and reductions resulting
from prepayments).
"Discount Rate" means, as of any Settlement Date or other date of
----------------
determination, the sum of (A) with respect to those Contracts that are not the
subject of an Interest Rate Swap, the Eurodollar Rate (Reserve Adjusted) as of
two Business Days prior to such Settlement Date or other date of determination,
plus 1.00%, and, with respect to those Contracts that are the subject of an
Interest Rate Swap, the fixed rate (or, if there is more than one Interest Rate
Swap, the weighted average blended fixed rate) payable by Seller thereunder,
plus (B) the Fee Percentage, plus (C) the Servicing Fee Rate.
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"Dividend" means any dividend or distribution (in cash, property or
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obligations) on any shares of any class of Seller's capital stock or any
warrants, options or other rights with respect to shares of any class of
Seller's capital stock.
"Dollar(s)" and the sign "$" shall mean lawful money of the United
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States of America.
"Dynamic Credit Enhancement Percentage" means as of any date for any
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Category, the greater of (A) 10% and (B) the product of (i) the average of the
Default Proxy Ratio for such Category over the last 12 months, times (ii) the
weighted average remaining life of the Contracts in such Category, expressed in
years, times (iii) the applicable Stress Factor.
"Earned Yield" means for any Settlement Period, an amount equal to the
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product of (i) the Capital on the first day of such Settlement Period, (ii) the
Purchaser Rate for such Settlement Period, and (iii) the number of days in such
Settlement Period divided by 360.
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"Eligible Contract" means at any time a Contract:
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(i) that constitutes "chattel paper" as defined in the
applicable Uniform Commercial Code as in effect in all applicable
jurisdictions, and, if more than one original was executed, then either
such Contract contains a provision stating that only counterpart number
one shall constitute "chattel paper" within the meaning of the Uniform
Commercial Code as in effect in all applicable jurisdictions, which
counterpart is in the possession of the Custodian, or each and every
original counterpart is in the possession of the Custodian;
(ii) the Obligor of which is a United States resident, duly
organized and existing under the laws of its jurisdiction of
organization, is not an Affiliate of Seller, and is not a government or
a governmental subdivision or agency;
(iii) that is not a Delinquent Contract or a Defaulted
Contract at the time of Purchase hereunder;
(iv) with regard to which the warranty of Seller in Section
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8.10 is true and correct;
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(v) the assignment of which (including, without limitation,
the sale or contribution of which to Seller by the Originator) does not
contravene or conflict in any material respect with any law, rule or
regulation or any contractual or other restriction, limitation or
encumbrance, and the sale or assignment of which does not require the
consent of the Obligor thereof or any other Person which has not been
obtained and is in full force and effect;
(vi) that is denominated and payable only in Dollars;
(vii) that is in full force and effect and constitutes the
legal, valid and binding obligation of the Obligor of such Contract,
enforceable against such Obligor in accordance with its terms, and is
not subject to any dispute, offset, counterclaim or defense whatsoever
(except the discharge in bankruptcy of such Obligor) that could
reasonably be expected to have a material adverse effect on the
collectibility of such Contract;
(viii) that does not contravene in any material respect any laws,
rules or regulations applicable thereto (including, without limitation,
laws, rules and regulations relating to usury, 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 thereto is in violation of any such law, rule or regulation in
any material respect;
(ix) that satisfies in all material respects all applicable
requirements of the Credit Policy;
(x) as to which each of Seller's and Purchaser's first-priority
security interest in such Contract and, unless the Equipment is owned
by Seller, in the related Equipment, respectively, have been perfected
under the applicable UCC and other applicable laws (if any);
(xi) that has a scheduled maturity date of not more than 84
(or, in the case of any Contract in the emerging growth Category, 72)
months from the date of such Contract;
(xii) that was originated or acquired by the Originator in the
ordinary course of its business to finance the sale or lease of
Equipment to the related Obligor and was sold, transferred and assigned
to Seller pursuant to the Purchase and Sale Agreement;
(xiii) the scheduled payments under which will be sufficient
to fully amortize such Contract at maturity, assuming that each
scheduled payment is made on the date due in accordance with such
Contract; such scheduled payments are applicable only to payment of
principal and interest (or imputed principal and interest) on such
Contract, and which does not have a balloon payment in excess of 30% of
the Gross Contract Amount thereof and which otherwise provides for
monthly or quarterly payments in substantially equal installments;
(xiv) related to Equipment that has been delivered and
unconditionally accepted by the related Obligor;
(xv) that provides for insurance coverage that covers such
risks, and is in such amounts, as a prudent person in a similar
circumstance would carry
(xvi) the obligations of the Obligor under which have not been
cancelled or terminated, and the execution and delivery by such Obligor
of, and the performance of its obligations under such Contract do not,
and will not, conflict with or result in any violation of or constitute
a default under the organizational documents of such Obligor;
(xvii) the term of which has commenced; the Obligor under such
Contract has made at lease two regularly scheduled payments thereunder;
(xviii) the Obligor of which has no right to prepay such
Contract unless the payment which the Obligor is required to make in
connection with any prepayment is at least equal to the Outstanding
Principal Balance of such Contract;
(xix) the Obligor of which has not denied any liability
thereunder in whole or in part, or been released in whole or in part
from its obligations thereunder, and the payments due under such
Contract are subject to no conditions precedent that are unsatisfied,
and no agreement relating to such Contract imposes any obligation of
the Originator (other than a warranty of title and quiet enjoyment)
that if not performed would give rise to a right of offset,
counterclaim or defense on the part of the Obligor;
(xx) which includes an obligation on the part of the Obligor
to maintain or cause to be maintained the related Equipment, at such
Obligor's expense, in good condition repair and working order, and
neither the Originator nor Seller have any reason to believe such
Equipment is not in good condition, repair and working order;
(xxi) which relates to Eligible Equipment;
(xxii) which is in substantially the form of one of the forms
included in Exhibit E, and such Contract constitutes the entire
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agreement of the parties with respect thereto; such Contract has not
been amended, altered or modified in any respect and no provision
thereof has been waived, in each case, in any way that is not reflected
in a writing that is part of the contract file or in any manner adverse
to the Originator;
(xxiii) with respect to which neither the Originator nor
Seller knows of any facts or circumstances that might reasonably be
expected to render such Contract less valuable than it purports to be,
and neither the Originator nor Seller has taken any action that might
reasonably be expected to impair the value of such Contract or the
related Equipment or the rights of any party with respect to such
Contract or the related Equipment;
(xxiv) which has not been rejected or refused as unacceptable
for inclusion in any securitization transaction or under any
warehousing loan agreement or under any permanent financing transaction
for any reason other than obligor concentration issues, geographical
location criteria, equipment type criteria, dollar size or similar
criteria;
(xxv) the payment terms of which have not been restructured
due to the Obligor's financial condition or inability to make payment
under the original contract, unless such Obligor has remained current
with respect to all payments due under such restructured contract for a
period of at least 180 consecutive days;
(xxvi) no matured or unmatured default or event of default
under any third-party servicing agreement for the Equipment related to
such Contract shall have occurred and be continuing;
(xxvii) neither the Originator nor any Affiliate thereof has
given or loaned to the Obligor thereof, directly or indirectly, any
unpaid rent or other amount due thereunder; and
(xxviii) which is not assignable by the Obligor thereof
without the prior consent of the Originator.
"Eligible Equipment" means any item of Equipment that meets all of the
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following requirements at all times:
(i) such Equipment is personalty (including software) and does
not constitute a fixture, except for portions thereof that are
immaterial in type, quantity and value;
(ii) such Equipment is not used or intended for use primarily
for personal, family or household purposes and is not consumer goods or
gaming equipment;
(iii) such Equipment (other than vehicles) is located at the
related Obligor's premises in the United States;
(iv) such Equipment is not installed in or affixed to other
equipment that is not Equipment subject to a Contract;
(v) if such Equipment includes software, Seller has, or will
have after foreclosure or repossession, the right to remarket such
equipment with the associated software remaining in place without
obtaining any consent or approval from the license source of such
software (unless such software is not material to the operation or
value of such Equipment), and such software is covered by the Contract
that relates to such Equipment;
(vi) if such Equipment is a motor vehicle, the certificate of
title therefor shows the Originator as owner and the Agent as the sole
lienholder; and
(vii) either such Equipment is owned by Seller or Seller has a
first priority perfected security interest in such Equipment.
"ERISA" means the U.S. Employee Retirement Income Security Act of 1974, as
-------
amended from time to time.
"Equipment" means non-consumer equipment, as generally described in the
-----------
Credit Policy.
"Eurodollar Rate (Reserve Adjusted)" means, with respect to any
---------------------------------------
Settlement Period, a rate per annum (rounded upwards, if necessary, to the
---------
nearest 1/100 of 1%) determined pursuant to the following formula:
Eurodollar Rate = Eurodollar Rate
---------------
(Reserve Adjusted) 1-Eurodollar
Reserve Percentage
where: "Eurodollar Rate" means, with respect to any Settlement Period, the rate
-----------------
per annum that appears on page 3750 (or any successor page) of the Dow ▇▇▇▇▇
---------
Telerate Quotation Service (or if no such rate appears, on the display
designated "LIBO" on the Reuter Monitor Money Rates Service) as of 11:00 a.m.,
London time two Business Days prior to the first day of such Settlement Period;
provided that if no such rate is shown on the foregoing services, "Eurodollar
--------
Rate" shall mean the rate at which deposits in Dollars are offered to the Agent
at approximately 11:00 a.m. London time two Business Days prior to the first day
of such Settlement Period; provided, further that for purposes of the definition
-------- -------
of Purchaser Rate, the Eurodollar Rate (Reserve Adjusted) shall be determined on
the first day of the related Settlement Period. "Eurodollar Reserve Percentage"
-------------------------------
means, with respect to each Settlement Period, the then-applicable percentage
(expressed as a decimal) prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining reserve requirements
applicable to "Eurocurrency Liabilities" pursuant to Regulation D or any other
then-applicable regulation of the Board of Governors (or any successor) that
prescribes reserve requirements applicable to "Eurocurrency Liabilities" as
presently defined in Regulation D.
"Event of Bankruptcy" shall be deemed to have occurred with respect to
---------------------
a Person if either:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, (i) seeking (A)
the liquidation, reorganization, debt arrangement, dissolution, winding
up, or composition or readjustment of debts of such Person; (B) the
appointment of a trustee, receiver, custodian, liquidator, assignee,
sequestrator or the like for such Person or all or substantially all of
its assets; or (C) any similar action with respect to such Person under
any law relating to bankruptcy, insolvency, reorganization, winding up
or composition or adjustment of debts, and such case or proceeding
shall continue undismissed, or unstayed and in effect, for a period of
60 consecutive days; or (ii) an order for relief in respect of such
Person shall be entered in an involuntary case under the federal
bankruptcy laws or other similar laws now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other
proceeding under any applicable bankruptcy, insolvency, reorganization,
debt arrangement, dissolution or other similar law now or hereafter in
effect, or shall consent to the appointment of or taking possession by
a receiver, liquidator, assignee, trustee, custodian, sequestrator (or
other similar official) for such Person or for any substantial part of
its property, or shall make any general assignment for the benefit of
creditors, or shall fail to, or admit in writing its inability to, pay
its debts generally as they become due, or, if a corporation or similar
entity, its board of directors shall vote to implement any of the
foregoing.
"Excess Concentration Amount" means, with respect to any date of
-------------------------------
determination, the sum of(A) the amount, if any, by which the aggregate
Outstanding Principal Balance of the Obligors with the five largest Outstanding
Principal Balances exceeds an amount equal to 12% of the Aggregate Principal
Balance (after giving effect to any Purchase taking place on the date of
determination), plus (B) the sum, for all Obligors other than the Obligors with
the five largest Outstanding Principal Balances, of the excess, if any, of the
Outstanding Principal Balance of all Contracts of an Obligor and its Affiliates
over an amount equal to 3% of the Aggregate Principal Balance(after giving
effect to any Purchase taking place on the date of determination).
"Facility" means the right of Seller to offer Participations to Purchaser
----------
hereunder.
"Facility Termination Date" has the meaning set forth in Section 2.4.
--------------------------- ------------
"Federal Funds Rate" means, for any period, a fluctuating interest rate
--------------------
per annum equal (for each day during such period) to:
---------
(i) 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
(ii) if such rate is not so published for any day
that is a Business Day, the average of the quotations for such
day on such transactions received by the Agent from three
federal funds brokers of recognized standing selected by it.
"Fee Letter" means the letter agreement between Seller and the Agent,
------------
dated as of December 30, 1997, as it may be amended, supplemented or otherwise
modified from time to time.
"Fee Percentage" means the sum of (i) the Program Fee Rate, plus (ii)
----------------- ----
the Liquidity Fee Rate.
"Fees" means all fees and other amounts payable by Seller to the Agent
------
or Purchaser pursuant to the Fee Letter.
"Final Payoff Date" has the meaning set forth in Section 10.1.
------------------- ------------
"Financial Officer" has the meaning set forth in Section 10.1.9(a).
------------------- ------------------
"Fiscal Quarter" means any quarter in a Fiscal Year.
----------------
"Fiscal Year" means any period of twelve consecutive calendar months
-------------
ending on December 31.
"Fleet" has the meaning set forth in the preamble.
-------
"Funding Date" means any date, which shall be a Settlement Date (except
--------------
with respect to the first Purchase), on which a Purchase occurs.
"GAAP" means generally accepted United States accounting principles.
------
"Gross Contract Amount" means, with respect to any Contract as of any
------------------------
date, the aggregate amount of scheduled payments remaining to be paid by the
Obligor as of such date.
"Hedge Trigger Event" means that either (i) the Eurodollar Rate
-----------------------
(Reserve Adjusted) has increased by more than 0.50% from the immediately
preceding Settlement Date or (ii) the Swap Cost exceeds the Eurodollar Rate
(Reserve Adjusted) as of the immediately preceding Settlement Date plus 0.75%.
"Indebtedness" means, with respect to any Person, all (a) liabilities
--------------
or obligations, direct and contingent, which liabilities or obligations would,
in accordance with GAAP, be included in determining total liabilities as show on
the liability side of a balance sheet of such Person at the date as of which
Indebtedness is to be determined, including, without limitation, (i) contingent
liabilities which, in accordance with such principles, would be set forth in a
specific Dollar amount on the liability side of such balance sheet, (ii)
capitalized lease obligations of such Person, (iii) obligations in respect of
interest rate exchange, swap, cap and other agreements or arrangements designed
to provide protection against fluctuation in interest rates; (b) liabilities or
obligations of others for which such Person is directly or indirectly liable, by
way of guaranty (whether by direct guaranty, suretyship, discount, endorsement,
reimbursement of amounts drawn under letters of credit, take-or-pay agreement,
agreement to purchase or advance or keep in funds or other agreement having the
effect of a guaranty other than endorsements of negotiable instruments for
deposit or collection in the ordinary course of business) or otherwise whether
or not such liabilities would, in accordance with GAAP, be included in
determining total liabilities as shown on a balance sheet; and (c) without
duplication, liabilities or obligations secured by liens on any assets of such
Person, whether or not such liabilities or obligations shall have been assumed
by it.
"Indemnified Amounts" has the meaning set forth in Section 16.1.
--------------------- ------------
"Indemnified Party" has the meaning set forth in Section 16.1.
------------------- ------------
"Independent Director" has the meaning set forth in Section 10.1.8(b).
---------------------- -----------------
"Interest Rate Swap" means any one of, and "Interest Rate Swaps" means
--------------------- ---------------------
all of, the interest rate swap agreements entered into by Seller and a
counterparty to hedge its interest rate risk with respect to the Contracts
hereunder, in each case, as the same may be amended, supplemented, modified,
renewed, extended or replaced from time to time.
"Liquidity Agent" means Fleet, as liquidity agent for the Liquidity
------------------
Banks pursuant to the Liquidity Agreement.
"Liquidity Agreement" means and includes (a) the Liquidity Asset
----------------------
Purchase Agreement dated as of December 30, 1997, among Purchaser, Fleet, as
liquidity agent for the Liquidity Banks and as administrator for Purchaser, and
the Liquidity Banks, and (b) any other agreement hereafter entered into by
Purchaser providing for the sale by Purchaser of Participations (or portions
thereof or participations therein), or the making of loans or other extensions
of credit to Purchaser secured by security interests in the Participations (or
portions thereof), to support all or part of Purchaser's payment obligations
with respect to the Commercial Paper Notes or to provide an alternate means of
funding Purchaser's investments in accounts receivable or other financial
assets, and under which the amount available from such sale or such extension of
credit is limited to an amount calculated by reference to the value or eligible
unpaid balance of such accounts receivable or other financial assets or any
portion thereof, in each case as amended, supplemented or otherwise modified
from time to time.
"Liquidity Bank" means and includes Fleet and the various financial
-----------------
institutions as are, or may become, parties to the Liquidity Agreement, as
purchasers thereunder, and any other or additional bank or other financial
institution hereafter purchasing Participations (or portions thereof), extending
credit to or for the account of Purchaser or having a commitment to do either of
the foregoing under the Liquidity Agreement.
"Liquidity Fee" means the liquidity fee payable pursuant to Section 3.1.
--------------- -----------
"Liquidity Fee Rate" shall have the meaning given to such term in the
---------------------
Fee Letter.
"Lockbox Agreement" means an agreement, substantially in the form of
--------------------
Exhibit D, among Seller, Servicer, the Agent and any bank where a lockbox and/or
---------
an account (including the Collection Account and the Reserve Account) where
Collections are sent or deposited is located.
"Lockbox Bank" means a bank (including the Collection Account Bank)
--------------
where a lockbox and/or an account to which Collections are deposited or sent
(including the Reserve Account) is located.
"Material Adverse Effect" means, with respect to any event or
----------------------------
circumstance, a material adverse effect on:
(a) the business, assets, financial condition or operations
of LINC or of Seller, as applicable;
(b) the ability of LINC or Seller, as applicable, to perform
their respective obligations under this Agreement or any other
Transaction Document;
(c) the validity, enforceability or collectibility against
Seller or LINC, as applicable of this Agreement or the other
Transaction Documents;
(d) the status, existence, perfection or priority of (i) the
Purchaser's ownership interest in the Portfolio or its security
interest in the Collateral, or (ii) Seller's interest in the Contracts
or the Contract Assets; or
(e) the validity, enforceability or collectibility of the Contracts.
"Month-End Date" means the last day of each calendar month.
----------------
"Monthly Report" has the meaning set forth in Section 11.1.8(c).
----------------
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
---------
"Net Offering Proceeds" means $27,000,000.
-----------------------
"Net Portfolio Principal Balance" means, with respect to any date of
-----------------------------------
determination, an amount equal to the then aggregate Outstanding Principal
Balances of all Eligible Contracts (it being understood that for purposes of
calculating Net Portfolio Principal Balance at any time, the Outstanding
Principal Balance of each Contract that is a Defaulted Contract at such time
shall be deemed to be zero), minus the Overcollateralization Amount, minus, the
------ -----
Excess Concentration Amount, minus, the amount by which the aggregate
-----
Outstanding Principal Balances of all Eligible Contracts that relate solely or
primarily to software exceeds 5% of the aggregate Outstanding Principal Balances
of all Eligible Contracts, minus the amount by which the portion of the
-----
aggregate Outstanding Principal Balances of all Eligible Contracts attributable
to the Scheduled Residual Value of the Equipment related to such Eligible
Contracts exceeds 4% of the aggregate Outstanding Principal Balances of all
Eligible Contracts.
"Obligations" means all obligations (monetary or otherwise) of Seller
-------------
to Purchaser, the Agent and their respective successors, permitted transferees
and assigns arising under or in connection with this Agreement and each other
Transaction Document, in each case however created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter existing,
or due or to become due.
"Obligor" means a Person obligated to make payments with respect to a
---------
Contract.
"Operating Agreement" means the Operating Agreement, dated as of
----------------------
December 30, 1997, between LINC and Seller.
"Original Contract Balance" means, with respect to any Contract, the
----------------------------
original Outstanding Principal Balance of such Contract as of the date of its
Purchase.
"Originator" means LINC in its capacity as an originator and seller of
------------
Contracts pursuant to the Purchase and Sale Agreement.
"Outstanding Principal Balance" means, as of any date with respect to
---------------------------------
any Contract, an amount equal to the remaining scheduled payments on such
Contract (including the Scheduled Residual Payment), as set forth on the
Contract Schedule, discounted on a monthly basis, from the 15th day of the month
in which such payments are due to the date of determination at the applicable
Discount Rate.
"Overcollateralization Amount" means with respect as of any date the
-------------------------------
sum of (i) the greatest of (a) the sum, for each Category, of the sum of (1) (x)
the current Dynamic Credit Enhancement Percentage for such Category (or, in the
case of the emerging growth Category, the greatest Dynamic Credit Enhancement
Percentage to have occurred in the prior 3 years), times (y) the aggregate
-----
Outstanding Principal Balances of the Contracts in such Category calculated,
until the Residual Inclusion Date, without regard to the Scheduled Residual
Payment on each such Contract, plus (2) until the Residual Inclusion Date, the
aggregate of the Scheduled Residual Payments under the Contracts in such
Category, in each case, discounted as described in the definition of Outstanding
Principal Balance, (b) 25% of an amount equal to the greatest
Overcollateralization Amount determined pursuant to the foregoing clause (a)
----------
that existed during the period from the last date on which the Capital was, or
was reduced to, zero until the date of determination, provided that, if the
--------
Residual Inclusion Date has occurred during such period, all amounts determined
pursuant to clause (a) shall be calculated as if the Residual Inclusion Date
occurred prior to the commencement of such period, and (c) the sum of the five
largest Outstanding Principal Balances owed by a single Obligor and its
Affiliates, minus (ii) the amount in the Reserve Account at such time (after
-----
taking into account any amount to be deposited therein on such date).
"Participations" means each undivided interest in the Contracts and the
----------------
other Contract Assets purchased by Purchaser pursuant to Section 2.1.
------------
"Past Due Contract" means a Contract as to which all or any part of any
-------------------
scheduled payment is more than 60, but less than 91, days past due or that has
been charged-off or repurchased by Seller prior to becoming more than 60, but
less than 91, days past due.
"Pay-Out Amount Limit" shall have the meaning given to such term in
------------------------
Section 2.2(b).
---------------
"Permitted Investment" means, at any time, determined as of the time of
-----------------------
investment:
(a) any evidence of debt, maturing not more than one year
after such time, issued or guaranteed by the United States Government
or any agency thereof;
(b) commercial paper, maturing not more than nine months from
the date of issue or corporate demand notes, in each case issued by a
corporation (other than Seller or any Affiliate of Seller) organized
under the laws of any state of the United States or of the District of
Columbia and rated at least A-1 by S&P and P-1 by Moody's;
(c) any certificate of deposit (or time deposits represented
by such certificates of deposit) or bankers acceptance, maturing not
more than one year after such time, or overnight federal funds
transactions that are issued or sold by a commercial banking
institution that is a member of the Federal Reserve System and has a
combined capital and surplus and undivided profits of not less than
$500,000,000 and is rated at least A-1 by S&P and P-1 by Moody's;
(d) any repurchase agreement entered into with a commercial
banking institution of the stature referred to in clause (c)(i) that:
-------------
(i) is secured by a fully perfected security interest
in any obligation of the type described in any of
clauses (a) through (c); and
-------------------------
(ii) has a market value at the time such repurchase
agreement is entered into of not less than 100% of
the repurchase obligation of Fleet (or other
commercial banking institution) thereunder; or
(e) shares in a mutual fund investing solely in short-term
securities of the United States government and/or securities described
in clause (d) above where the mutual fund custodian has taken delivery
----------
of the collateralizing securities, provided that (i) such fund shall
--------
have the highest short-term credit rating available from Moody's and
S&P and (ii) such shares shall be hereby transferrable by the holder on
a daily basis.
"Person" means an individual, partnership, corporation (including a
--------
business trust), joint stock company, trust, unincorporated association, joint
venture, limited liability company, government or any agency or political
subdivision thereof or any other entity.
"Portfolio" has the meaning set forth in the first recital.
-----------
"Portfolio Certificate" has the meaning set forth in Section 11.1.8(c).
---------------------- -----------------
"Pro Rata Share" of any warrant or similar equity participation
------------------
agreement, and the proceeds thereof, means such percentage interest in such
warrant or other agreement shown on the Contract Schedule for the Contract
related to such warrant or other agreement.
"Program Documents" means the Liquidity Agreement, each agreement
--------------------
pursuant to which Purchaser obtains funding, through the issuance of Commercial
Paper Notes or otherwise, and the other documents executed or to be executed and
delivered in connection with Purchaser's securitization program, as amended,
supplemented or otherwise modified from time to time.
"Program Fee" means the program fee payable pursuant to Section 3.1.
------------- ------------
"Program Fee Rate" shall have the meaning assigned to such term in
------------------
the Fee Letter. "Program Support Provider" means each Liquidity Bank, the Agent
and any entity that issues Commercial Paper Notes.
"Purchase" has the meaning set forth in Section 2.1.
---------- -----------
"Purchase and Sale Agreement" means the Purchase and Sale Agreement
-------------------------------
dated as of December 30, 1997 between LINC and Seller, as the same may be
amended, amended and restated, supplemented or otherwise modified from time to
time in accordance with the Transaction Documents.
"Purchase and Sale Termination Event" has the meaning set forth in
--------------------------------------
the Purchase and Sale Agreement.
"Purchase Limit" has the meaning set forth in Section 2.2(a).
---------------- ---------------
"Purchase Request" has the meaning set forth in Section 2.3.
----------------- ------------
"Purchaser" has the meaning set forth in the Preamble.
----------- ---------
"Purchaser Rate" for any Settlement Period means:
----------------
(A) (i) with respect to any portion of the Capital that is subject to
an Interest Swap Agreement, the Eurodollar Rate (Reserve Adjusted) for such
Settlement Period and (ii) with respect to that portion, if any, of the Capital
not related to an Interest Swap Agreement, either (1) the Eurodollar Rate
(Reserve Adjusted) for such Settlement Period, or (2) the Cost of Funds Rate for
such Settlement Period, as designated by Seller in a written notice delivered to
the Agent and the Purchaser at least two Business Days prior to the first day of
such Settlement Period, provided that if no option is designated by Seller the
--------
Purchaser Rate shall be the rate set forth in the foregoing clause (ii)(1) and
--------------
provided, further, that with respect to any portion of the Capital funded
-------------------
pursuant to the Liquidity Agreement, the Purchaser Rate shall be the sum of the
Eurodollar Rate (Reserve Adjusted) for such Settlement Period, plus 1.25%; and
----
(B) with respect to any day on which a Termination Event shall have
occurred and shall be continuing, notwithstanding clause (A) of this definition,
----------
the "Purchaser Rate" shall be a rate per annum equal to the rate then in effect
on such day pursuant to the foregoing clause (A), plus 2% per annum.
----------
No provision of this Agreement shall require the payment or permit the
collection of interest in excess of the maximum permitted by applicable law.
"Qualified Interest Swap Agreement" means an Interest Swap Agreement
-------------------------------------
that meets all of the following criteria: (i) the counterparty to such agreement
is Fleet or a bank whose short term unsecured debt is rated at least A-1/P-1 by
the Rating Agencies, (ii) the benefits of such agreement have been assigned to
the Agent, for the benefit of the Purchaser, and (iii) all payments by the
counterparty thereto will be made directly to the Collection Account and (iv) is
otherwise reasonably acceptable to the Agent.
"Quarterly Payment Date" means the Settlement Date occurring in
--------------------------
January, April, July and October, provided that the first Quarterly Payment Date
--------
shall occur in April, 1998.
"Rating Agencies" means Standard & Poor's and ▇▇▇▇▇'▇ Investors Service,
------------------
Inc.
"Regulatory Change" means, relative to any Affected Party:
-------------------
(a) any change in (or the adoption, implementation, change
in the phase-in or commencement of effectiveness of) any: (i) United
States Federal or state law or foreign law applicable to such Affected
Party;
(ii) regulation, interpretation, directive, or
requirement (whether or not having the force of law)
applicable to such Affected Party of (A) any court or
government authority charged with the interpretation or
administration of any law referred to in clause (a)(i), or of
-------------
(B) any rating agency rating the Commercial Paper Notes,
fiscal, monetary or other authority having jurisdiction over
such Affected Party; or
(iii) GAAP or regulatory accounting principles
applicable to such Affected Party and affecting the
application to such Affected Party of any law, regulation,
interpretation, directive, or requirement referred to in
clause (a)(i) or (a)(ii) above;
(b) any change in the application to such Affected Party of
any existing law, regulation, interpretation, directive, requirement or
accounting principles referred to in clause (a)(i), (a)(ii) or (a)(iii)
---------------------------
above; or
(c) the issuance, publication or release of any regulation,
interpretation, directive, or requirement of a type described in clause
------
(a)(ii) above to the effect that the obligations of any Liquidity Bank
-------
under the Liquidity Agreement are not entitled to be included in the
zero percent category of off-balance sheet assets for purposes of any
risk-weighted capital guidelines applicable to such Liquidity Bank or
any related Affected Party.
"Repurchase Amounts" means the amounts paid by Seller in connection
---------------------
with the repurchase by Seller of any Contracts pursuant to Section 4.5.
------------
"Required Reduction Amount" for any Settlement Date means the amount
-----------------------------
equal to (i) if no Termination Event has occurred, the excess of the Capital
over the Net Portfolio Principal Balance calculated as of the first day of the
next month following the month in which such Settlement Date occurs and (ii) if
a Termination Event has occurred, the Capital.
"Required Reserve Amount" means, as of any Settlement Date or date of
---------------------------
Purchase the greater of (i) 1% of the Aggregate Principal Balance as of such
Settlement Date or date of Purchase and (ii) the amount necessary so that the
Capital does not exceed the Pay-Out Limit, provided that if the average of the
---------
Delinquency Ratio at the end of the three previous months exceeds 4%, the
Required Reserve Amount shall equal the greater of the amount set forth in the
foregoing clause (ii) and 4% of the Aggregate Principal Balance as of such
------------
Settlement Date or date of Purchase.
"Reserve Account" means a bank account maintained at a Lockbox Bank
------------------
(which initially shall be account numbered 9403543596 maintained at Fleet in New
York, New York), which is (i) a blocked account, (ii) identified as the "LINC
-----
Receivables Corporation Reserve Account", (iii) in Purchaser's name and (iv)
-------------------------------------------
pledged to Purchaser pursuant to Section 17.1.
-------------
"Residual Inclusion Date" means the date which the Agent identifies in
--------------------------
writing to the Seller as such.
"S & P" means Standard & Poor's Rating Services, a division of The
-------
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"Scheduled Facility Termination Date" has the meaning set forth in Section
-------------------------------------- -------
2.4.
----
"Scheduled Residual Payment" means, with respect to any Contract, the
-----------------------------
Scheduled Residual Value of the related Equipment, which shall be assumed to be
due on the date which is three months after the last scheduled payment under
such Contract is otherwise due.
"Scheduled Residual Value" means, with respect to any item of
-----------------------------
Equipment, the lesser of (a) the Booked Residual Value of such Equipment and (b)
15% of the original purchase price for such Equipment.
"Seller" has the meaning set forth in the preamble.
-------- ---------
"Servicer" has the meaning set forth in Section 13.1.
---------- -------------
"Servicer Termination Event" means any one of the following events: (i)
---------------------------
Servicer fails to make any payment or deposit to be made by it hereunder when
due; (ii) Servicer shall fail to perform or observe in any material respect any
term, covenant or agreement contained in this Agreement or any other Transaction
Document on its part to be performed or observed (other than as set forth in
clause (i)), which failure shall continue for more than ten Business Days after
----------
notice to Servicer; (iii) Servicer shall fail to deliver any Monthly Report on
or before the day that is two Business Days prior to the related Settlement
Date; (iv) any representation or warranty made by Servicer under or in
connection with any Transaction Document, any Report or any other information
delivered pursuant to or in connection with any Transaction Document shall prove
to have been false or incorrect in any material respect when made and, if such
circumstances are capable of cure, shall continue to be incorrect for more than
ten Business Days after notice to Servicer; provided, however, that if any
representation or warranty related to a Contract that is repurchased by Seller,
then the breach of such representation or warranty shall not give rise to a
Servicer Termination Event; (v) Servicer is the subject of an Event of
Bankruptcy; (vi) Servicer shall fail to have an Adjusted Tangible Net Worth of
at least the sum of (A) $10,500,000, plus (B) Net Offering Proceeds, minus
$3,000,000, plus (C) 75% of consolidated net income (with no deduction for
losses) of Servicer commencing from the calendar quarter ending December 31,
1997 and all subsequent quarters thereto; or (vii) the average of the
Delinquency Ratios at the end of the three consecutive prior months exceeds 8%.
"Servicing Fee" means, for any Settlement Period an amount equal to (i)
---------------
the Servicing Fee Rate, times (ii) the Aggregate Principal Balance on the first
-----
day of such Settlement Period, times (iii) the number of days in such Settlement
-----
Period divided by 360.
"Servicing Fee Rate" means (i) 0.75% so long as LINC is Servicer and
---------------------
(ii) if LINC is no longer the Servicer, such annual percentage rate as may be
charged by any replacement Servicer, provided such rate is a market rate.
--------
"Settlement Date" means the twentieth (20th) day of each calendar
------------------
month, commencing with February, 1998 (or if such day is not a Business Day, the
next Business Day).
"Settlement Period" means:(i) in the case of the first Settlement Period,
--------------------
the date from, and including, the date of the first Purchase hereunder to, but
excluding, the first Settlement Date and (ii) thereafter, the period from, and
including, the last day of the immediately preceding Settlement Period to, but
excluding, the next Settlement Date.
"Stress Factor" means (i) 3 for the traditional Category and the LQA
----------------
Category and (ii) 4 for the emerging growth Category (provided that any such
--------
stress factor may be changed at the discretion of the Agent by notice to
Servicer in order to reflect current market conditions for similar asset-backed
securities).
"Subordinated Debt" means (i) the Convertible Subordinated Debt; and
--------------------
(ii) any unsecured Indebtedness for money borrowed by LINC and which is
subordinated to the debt under the Credit Agreement.
"Subsidiary" means, with respect to any Person, a corporation of which
------------
such Person and/or its other Subsidiaries own, directly or indirectly, such
number of outstanding shares as have more than 50% of the ordinary voting power
for the election of directors.
"Successor Notice" has the meaning set forth in Section 13.1.
------------------ -------------
"Swap Cost" means, as of any date, the sum of (A) a market swap spread,
----------
as reasonably determined by the Agent, for an amortizing interest rate swap for
a portfolio similar to the Contracts, pursuant to which the Seller would pay a
fixed rate equal to the yield of a United States Treasury Note with an average
life equal to the expected average life of the Contracts and the counterparty to
such interest rate swap would pay a floating rate equal to the Eurodollar Rate
(Reserve Adjusted), plus (B) the fixed rate described in the foregoing clause
----
(A).
"Swap Date" means the date that is 270 days from the Closing Date and
-----------
the date that is 270 days after the later of the date on which the Capital has
been reduced to zero and the immediately preceding Swap Date.
"Tangible Net Worth" means, with respect to Seller the net worth of
---------------------
Seller calculated in accordance with GAAP after subtracting therefrom the
aggregate amount of Seller's intangible assets, including, without limitation,
goodwill, franchises, licenses, patents, trademarks, trade names, copyrights and
service marks.
"Termination Event" shall mean any of the events described in Section 12.1.
------------------- -------------
"Transaction Documents" means this Agreement, the Purchase and Sale
------------------------
Agreement, the Fee Letter, the Interest Rate Swaps, the Lockbox Agreements, any
custodian agreement entered into in connection herewith and the other
instruments, certificates, agreements, reports and documents to be executed and
delivered under or in connection with this Agreement and the Purchase and Sale
Agreement (except the Program Documents), as any of the foregoing may be
amended, supplemented, amended and restated or otherwise modified from time to
time in accordance with this Agreement and the Purchase and Sale Agreement.
"UCC" means the Uniform Commercial Code as from time to time in effect in
-----
the applicable jurisdiction or jurisdictions.
"Unmatured Termination Event" shall mean any event that, if it
-------------------------------
continues uncured, will, with the lapse of time or notice or the lapse of time
and notice, constitute a Termination Event.
"Unrecoverable Advance" means any Advance made by the Servicer that has
-----------------------
not previously been reimbursed and that, in the reasonable opinion of the
Servicer, will not be ultimately recoverable from the related Obligor, the
related Equipment or otherwise.
SECTION 1.2 Other Definitional Provisions.
------------------------------
(a) Unless otherwise specified therein, all terms defined in this
Agreement have the meanings as so defined herein when used in any other
Transaction Document, certificate, report or other document made or delivered
pursuant hereto.
(b) Each term defined in the singular form in Section 1.1 or elsewhere
-----------
in this Agreement shall mean the plural thereof when the plural form of such
term is used in this Agreement or any other Transaction Document, certificate,
report or other document made or delivered pursuant hereto, and each term
defined in the plural form in Section 1.1 shall mean the singular thereof when
-----------
the singular form of such term is used herein or therein.
(c) The words "hereof," "herein," "hereunder" and similar terms when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and article, section, subsection,
schedule and exhibit references herein are references to articles, sections,
subsections, schedules and exhibits to this Agreement unless otherwise
specified.
SECTION 1.3 Other Terms. All accounting terms not specifically defined
-----------
herein shall be construed in accordance with GAAP. All terms used in Article 9
of the UCC in the State of Illinois, and not specifically defined herein, are
used herein as defined in such Article 9.
SECTION 1.4 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
PURCHASE PROCEDURES
SECTION II.1 Offer and Acceptance. On the terms and subject to the
---------------------
conditions set forth in this Agreement, Purchaser shall purchase from Seller
Participations from time to time during the period from the date hereof to the
Facility Termination Date. Each such purchase and, as the context may require,
the purchase price paid by Purchaser to Seller in respect thereof, is called a
"Purchase."
SECTION II.2 Purchase Limits. Under no circumstances shall Purchaser
---------------
make any Purchase to the extent that, after giving effect to such Purchase, as
the case may be:
(a) Purchase Limit. The Capital would exceed an amount (the "Purchase
--------------- --------
Limit") equal to $60,000,000, as such amount may be reduced pursuant to Section
------ -------
2.6 or increased pursuant to Section 2.7; or
---- -----------
(b) Pay-Out Amount Limit. The Capital would exceed an amount
---------------------
(the "Pay-Out Amount Limit") equal to 100% of the Net Portfolio
------------------------
Principal Balance (as calculated on such date of Purchase).
SECTION II.3 Making Purchases from Seller. (a) Notice of Purchase.
------------------------------- -------------------
Seller may request a Purchase by delivering a notice substantially in the form
of Exhibit A (a "Purchase Request") to the Agent and Purchaser not later than
--------- -----------------
11:00 a.m. (Chicago time) on the second Business Day preceding the date of such
proposed Purchase. Each such notice of a proposed Purchase shall include a
Contract Schedule and shall specify (i) the Funding Date for such Purchase
(which, except for the initial Purchase, shall be a Settlement Date), and (ii)
the calculation of the amount of the Purchase for such Participation.
(b) Amount of Purchase. The amount of each Purchase shall be equal to
------------------
the lesser of (x) the amount requested by Seller in the applicable Purchase
Notice and (y) the maximum amount permitted under Section 2.2; provided,
------------------------
however, that each such Purchase shall be in an amount of at least $5,000,000
-------
(or, in the case of the first Purchase, $10,000,000).
(c) Funding of Purchase. On the date of each Purchase, Purchaser shall,
-------------------
upon satisfaction of the applicable conditions set forth in Article VII, make
-----------
available to Seller the amount of its Purchase (determined pursuant to Section
-------
2.3(b)), in same-day funds, to such account as is designated by Seller to the
------
Agent in writing.
SECTION II.4 Facility Termination Date. The "Facility Termination Date"
------------------------- --------------------------
shall be the earliest of (i) December 30, 2000 (herein, as such date may be
extended, called the "Scheduled Facility Termination Date"), (ii) the
-----------------------------------------
termination or expiration of the Liquidity Banks' commitments under the
Liquidity Facility and (iii) the date of termination of the Facility pursuant to
Section 2.6 or Section 12.2.
----------- -------------
SECTION II.5 Representation and Warranty. Each request for a Purchase
---------------------------
pursuant to Section 2.3 shall automatically constitute a representation and
-----------
warranty by Seller to the Agent and Purchaser that on the requested date of such
Purchase, (a) the representations and warranties contained in Article VIII will
------------
be true and correct in all material respects as of such requested date as though
made on such date, (b) no Termination Event or Unmatured Termination Event has
occurred and is continuing or will result from the making of such Purchase, and
(c) after giving effect to such requested Purchase, the Capital will not exceed
the Pay-Out Limit.
SECTION II.6 Voluntary Termination of Facility; Reduction of Purchase
----------------------------------------------------------
Limit. Seller may, in its sole discretion for any reason, upon at least fifteen
-----
(15) days' notice to the Agent (with a copy to Purchaser), terminate the
Facility in whole or reduce in part the unused portion of the Purchase Limit;
provided, however, that (a) each such partial reduction will be in a minimum
------------------
amount of $5,000,000 or a higher integral multiple of $1,000,000, and (b) in the
event of a partial reduction and after giving effect to any such partial
reduction and any prior partial reduction, the remaining Purchase Limit will not
be less than $25,000,000.
SECTION II.7 Increase of Purchase Limit. Seller may, in its sole
-----------------------------
discretion, upon at least fifteen (15) days' notice to the Agent (with a copy to
Purchaser) increase the Purchase Limit to an amount not to exceed $100,000,000;
provided, however (a) the Liquidity Banks have increased their commitments under
-----------------
the Liquidity Agreement, which increase shall be at their sole discretion, to an
aggregate amount equal to not less than 102% of such increased Purchase Limit
and (ii) any such increase shall be in multiples of $10,000,000.
ARTICLE III
FEES, ETC.
SECTION III.1 Fees. Seller agrees to pay the Agent the following fees:
----
(i) a program fee for each Settlement Period equal to
(i) the daily outstanding Capital during such Settlement
Period, times (ii) the Program Fee Rate, times (iii) the
----- -----
number of days in such Settlement Period, divided by 360; and
(ii) a liquidity fee for each Settlement Period equal
to (i) the unfunded amount of the Liquidity Banks' commitments
under the Liquidity Agreement times (ii) the Liquidity Fee
-----
Rate, times (iii) the number of days in such Settlement Period
divided by 360.
SECTION III.2 Computation of Earned Yield and Fees. All Earned Yield
-------------------------------------
and fees shall be computed on the basis of the actual number of days (including
the first day but excluding the last day) occurring during the period for which
such interest or fee is payable over a year comprised of 360 days.
ARTICLE IV
ESTABLISHMENT AND USE OF ACCOUNTS; SETTLEMENTS
SECTION IV.1 Accounts. (a) Collection Account. Seller hereby agrees to
-------- ------------------
establish the Collection Account on or before the date of the first Purchase
hereunder. Seller and Servicer hereby agree to direct all Obligors to make all
payments due under the Contracts to an account that is the subject of a Lock-Box
Agreement. Servicer shall transfer all Collections received to the Collection
Account within two Business Days of receipt.
(b) Reserve Account. Seller hereby agrees to establish the Reserve
----------------
Account on or before the date of the first Purchase hereunder.
(c) Permitted Investments. Funds on deposit in the Collection Account
----------------------
or the Reserve Account may be invested at the direction of Seller in Permitted
Investments, provided that such Permitted Investments mature on or prior to the
--------
next occurring Settlement Date. Interest earned on such Permitted Investments
shall be distributed pursuant to Section 4.3, with respect to the Collection
-----------
Account, and Section 4.4, with respect to the Reserve Account.
-----------
SECTION IV.2 Settlements. On each Settlement Date, all Collections
-----------
received on or prior to such date and not previously distributed, all interest
earned on investments in the Collection Account (net of expenses related to such
investments), all Advances made by the Servicer pursuant to Section 4.6 and all
-----------
net payments received from the counterparties to the Interest Rate Swaps shall
be distributed in the following order:
(i) first, to the Servicer in any amount equal to all
-----
Unrecoverable Advances, if any, for which the Servicer has not
previously been reimbursed;
(ii) second, to the counterparties of the Interest Rate Swaps any
------
net payment due to such counterparties from Seller,
(iii) third, to the Servicer (if Servicer is not LINC) in an amount
-----
equal to the Servicing Fee due on such date,
(iv) fourth, to the Agent in an amount equal to the accrued and
------
unpaid Program Fee and Liquidity Fee,
(v) fifth, to Purchaser an amount equal to the accrued and unpaid
-----
Earned Yield,
(vi) sixth, if such Settlement Date is a Quarterly Payment Date, to
-----
the Agent an amount equal to the Administration Fee payable on
such Settlement Date,
(vii) seventh, to Purchaser an amount equal to the Required
-------
Reduction Amount for application to the Capital,
(viii) eighth, to Purchaser and the Agent, on a pro rata
------
basis, in payment of all other amounts then due hereunder or
under the Fee Letter,
(ix) ninth, to the Reserve Account to the extent necessary
-----
to result in the funds therein being equal to the Required
Reserve Amount,
(x) tenth, to the counterparties of the Interest Rate Swaps any
-----
payments due, if any, resulting from the early termination
thereof or other amounts (other than net payments) owed by
Seller thereunder;
(xi) eleventh, if LINC is the Servicer, an amount equal to
--------
the Servicing Fee due on such date and
(xii) twelfth, any remaining amounts to Seller.
-------
SECTION IV.3 Interest Rate Swaps. If (i) a Hedge Trigger Event has
--------------------
occurred, (ii) a Termination Event has occurred and is continuing or (iii) on a
Swap Date, the Capital exceeds zero, then, within five Business Days of such
event or date, unless Seller has already entered into such a Qualified Interest
Swap Agreement, Seller shall execute and deliver one or more Qualified Interest
Swap Agreements (or other interest rate hedging arrangement acceptable to the
Agent, in its sole discretion), with a notional principal amount equal to the
Gross Contract Amount as of such date, which shall amortize in accordance with
the expected schedule of Contract payments. Such Interest Rate Swap shall
provide for fixed rate payments by Seller equal to the Swap Cost and floating
rate payments by the counterparty equal to the one-month Eurodollar Rate
(Reserve Adjusted) with a same day settlement in effect from time to time.
SECTION IV.4 Withdrawals from Reserve Account. To the extent that on
-----------------------------------
any Settlement Date, there are insufficient funds to distribute in full the
amounts set forth in clauses first through seventh of Section 4.2, Servicer
------- -------------
shall withdraw the lesser of (1) the amount of such deficiency and (ii) the
amounts on deposit in such Reserve Account from the Reserve Account and
distribute it pursuant to such Section 4.2. If on any Settlement Date, after
-----------
giving effect to the distributions on such date pursuant to Section 4.2 and any
-----------
Purchase on such date, the funds in the Reserve Account (including net
investment earnings thereon) exceed the Required Reserve Amount, such excess
shall be withdrawn and distributed to Seller.
SECTION IV.5 Deemed Collections; Repurchases. If on any day the Gross
------------------
Contract Amount of any Contract is reduced or cancelled as a result of a
Dilution, or the Originator is required to make a deemed Collection payment with
respect thereto pursuant to the Purchase and Sale Agreement, then Seller shall
be deemed to have received a Collection in the amount of such Dilution. If any
of the representations or warranties set forth in Section 8.10 or 8.19 is no
------------ ----
longer true with respect to a Contract, and such breach, in the sole judgment of
the Agent, materially and adversely affects the value, enforceability or
collectibility of such Contract or the related Equipment (it being understood
that any Contract shall be deemed to be materially and adversely affected by any
inaccurate representation as to its validity or enforceability or as to the
amount of payments due thereunder) then, on the next occurring Settlement Date,
Seller shall repurchase such Contract from Purchaser for an amount equal to the
Outstanding Principal Balance thereof. Upon receipt of such amount by Purchaser,
such repurchased Contract shall be released from the lien of this Agreement and
reconveyed by Purchaser to Seller (without recourse or warranty) and shall no
longer be considered part of the Portfolio.
SECTION IV.6 Servicer Advances. The Servicer shall make an advance (an
-----------------
"Advance") with respect to each Contract that is not a Defaulted Contract in an
----------
amount equal to the scheduled payment (other than the Scheduled Residual
Payment) with respect to such Contract that became, or will become, due during
the calendar month in which the related Settlement Date occurs to the extent
that such payment has not previously been deposited to the Collection Account,
subject to the Servicer's reasonable determination that any such Advance would
not constitute an Unrecoverable Advance if made. Each such Advance shall be
remitted to the Collection Account on the Business Day immediately preceding
such Settlement Date. To the extent that the Servicer subsequently receives the
scheduled payment with respect to which it made an Advance, the Servicer shall
be entitled to retain such payment in reimbursement of such Advance.
ARTICLE V
PAYMENTS
SECTION V.1 Making of Payments. All payments of Capital or Earned Yield
------------------
and of all Fees, and all amounts to be deposited by Seller or Servicer
hereunder, shall be made by Seller or Servicer, as the case may be, no later
than 10:00 a.m. (Chicago time), on the day when due in lawful money of the
United States of America in same-day funds to such account as is specified by
Purchaser or the Agent to Servicer. Funds received by the Purchaser or the Agent
after 10:00 a.m. (Chicago time) on the date when due will be deemed to have been
received by the Purchaser or the Agent, as the case may be, on the next
following Business Day.
ARTICLE VI
INCREASED COSTS, ETC.
SECTION VI.1 Increased Costs. If (i) any change in Regulation D of the
----------------
Board of Governors of the Federal Reserve System, or (ii) any Regulatory Change,
in each case occurring after the date hereof:
(A) shall subject any Affected Party to any tax, duty or other
charge with respect to any Participation owned by or funded by it, or
any obligations or rights to provide funding therefor, or shall change
the basis of taxation of payments to such Affected Party of any Capital
or Earned Yield made by or owed to or funded by it or any other amounts
due under this Agreement in respect of any Participation owned by or
funded by it (except for changes in the rate of tax on the overall net
income of such Affected Party imposed by the jurisdiction in which such
Affected Party's principal executive office (or, in the case of a
Eurodollar Office of such Affected Party, in which such Eurodollar
Office) is located); or
(B) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Board of
Governors of the Federal Reserve System, but excluding any such reserve
included in the determination of any Purchaser Rate), special deposit
or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Affected Party;
(C) shall change the amount of capital maintained or required or
requested or directed to be maintained by any Affected Party; or
(D) shall impose on any Affected Party any other condition
affecting any Participation made or funded by any Affected Party; and
the result of any of the foregoing is or would be to increase the cost
to or, to impose a cost on (a) an Affected Party funding or making or
maintaining any Participation (including extensions of credit under the
Liquidity Agreement, or any commitment of such Affected Party with
respect to any of the foregoing), or (b) the Agent for continuing its
or Seller's relationship with Purchaser, to reduce the amount of any
sum received or contract by an Affected Party under this Agreement or
the Liquidity Agreement with respect thereto, or in the sole good faith
determination of such Affected Party, to reduce the rate of return on
the capital of an Affected Party as a consequence of its obligations
hereunder or arising in connection herewith to a level below that which
such Affected Party would otherwise have achieved, then within five
Business Days after demand by such Affected Party to Seller (which
demand shall be accompanied by a written statement setting forth the
basis of such demand), Seller shall pay to the Agent for the account of
such Affected Party such additional amount or amounts as will (in the
reasonable determination of such Affected Party) compensate such
Affected Party for such increased cost or such reduction. Such written
statement (which shall include calculations in reasonable detail)
shall, in the absence of manifest error, be rebuttably presumptive
evidence of the subject matter thereof.
SECTION VI.2 Funding Losses. Seller hereby agrees that upon demand by
---------------
any Affected Party (which demand shall be accompanied by a statement setting
forth the basis for the calculations of the amount being claimed) Seller will
indemnify such Affected Party against any net loss or expense which such
Affected Party may sustain or incur (including, without limitation, any net loss
or expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Affected Party to fund or maintain any
Participation), as reasonably determined by such Affected Party, as a result of
(a) any payment of any Capital or Earned Yield thereon on a date other than a
Settlement Date, or (b) any failure of Seller to sell any Participation to
Purchaser on a date specified therefor in a related Purchase Request. Such
written statement shall, in the absence of manifest error, be rebuttably
presumptive evidence of the subject matter thereof.
ARTICLE VII
CONDITIONS TO PURCHASES
The making of any Purchase hereunder is subject to the following
conditions precedent:
SECTION VII.1 Initial Purchase. The making of the initial Purchase is,
----------------
in addition to the conditions precedent specified in Section 7.2, subject to the
-----------
condition precedent that the Agent shall have received all of the following,
each duly executed and dated the date of such Purchase (or such earlier date as
shall be satisfactory to the Agent), in form and substance reasonably
satisfactory to the Agent:
VII.1.1 Resolutions; Corporate Documents. Certified copies of
---------------------------------
resolutions of the Board of Directors of each of LINC and Seller authorizing or
ratifying the execution, delivery and performance, respectively, of this
Agreement and the other Transaction Documents to which it is a party, together
with a certified copy of its articles or certificate of incorporation and
by-laws.
VII.1.2 Consents, Etc. Certified copies of all documents
---------------
evidencing any necessary consents and governmental approvals (if any) with
respect to this Agreement and the other Transaction Documents.
VII.1.3 Incumbency and Signatures. A certificate of the
---------------------------
Secretary or an Assistant Secretary of each of LINC and Seller certifying the
names of officer or officers of each of LINC and Seller authorized to sign this
Agreement and the other Transaction Documents to which it is a party.
VII.1.4 Good Standing Certificates. Good standing certificates
--------------------------
for LINC and Seller, issued as of a recent date acceptable to the Agent by (a)
the Secretary of State of the jurisdiction of such Person's formation, and (b)
the Secretary of State of the jurisdiction where such Person's chief executive
office and principal place of business are located.
VII.1.5 Search Reports. A written search report provided to
---------------
the Agent by a search service acceptable to the Agent, listing all effective
financing statements that name Seller or LINC as debtor or assignor and that are
filed in the jurisdictions in which filings were made pursuant to Section 7.1.12
--------------
with respect to the first Purchase and in such other jurisdictions that Agent
shall reasonably request, together with copies of such financing statements
(none of which shall cover any Contract or any property or interests therein or
proceeds of any thereof, unless an executed termination statement therefor has
been delivered to the Agent), and tax and judgment lien search reports from a
Person satisfactory to the Agent showing no evidence of such lien filed against
Seller or LINC.
VII.1.6 Fee Letter; Payment of Fees. The Fee Letter, together
---------------------------
with all Fees payable pursuant to the Fee Letter and all costs and expenses due
and payable pursuant to Section 18.4, if then invoiced.
------------
VII.1.7 Closing Certificate. A certificate from an
--------------------
authorized officer of Seller as to the satisfaction of the conditions set forth
in Section 7.2.1.
-------------
VII.1.8 Purchase and Sale Agreement. A duly executed and
-----------------------------
delivered copy of the Purchase and Sale Agreement of even date herewith, in form
and substance reasonably acceptable to the Agent, together with evidence that
all of the conditions precedent set forth therein have been satisfied.
VII.1.9 Opinions of Counsel to Seller and LINC. Favorable
-----------------------------------------
opinions of counsel to the Seller and LINC, substantially in the form of
Exhibits B-1 and B-2.
------------ ---
VII.1.10 Monthly Report. A Monthly Report, together with a Portfolio
---------------
Certificate as of the date of such initial Purchase.
VII.1.11 Lockbox Agreement. Lockbox Agreements, duly executed
-----------------
by LINC, Seller, the Agent and the respective Lockbox Banks, with respect to the
Collection Account and any other account to which Collections are sent.
VII.1.12 UCC Filings. Acknowledgment copies of such proper
------------
financing statements (Form UCC-1), filed on or prior to the date of such
Purchase, naming (i) the Originator as debtor/seller, Seller as secured
party/purchaser and Purchaser as assignee, filed in the State of the
Originator's principal place of business and (ii) Seller as debtor/seller and
Purchaser as the secured party/purchaser filed in the State of Seller's
principal place of business and the States with the 10 greatest concentrations
of Obligor locations after giving effect to such Purchase.
VII.1.13 Liquidity Agreement. The Liquidity Agreement, duly executed by the
-------------------
Liquidity Banks, Purchaser and the Liquidity Agent.
VII.1.14 Other. Such other documents as the Agent may
-----
reasonably request.
SECTION VII.2 All Purchases. The making of the initial Purchase and
--------------
each subsequent Purchase, are subject to the following further conditions
precedent that:
VII.2.1 No Termination Event, Etc. (a) No Termination Event or
-------------------------
Unmatured Termination Event has occurred and is continuing or will result from
the making of such Purchase or increase, (b) the representations and warranties
of Seller and Servicer contained in Article VIII are true and correct as of the
------------
date of such Purchase or increase, with the same effect as though made on the
date of such Purchase or increase and (c) after giving effect to such Purchase
or increase, the Capital will not exceed the Purchase Limit and the Capital will
not exceed the Pay-Out Limit.
VII.2.2 Purchase Request. The Agent and Purchaser shall have
-----------------
received a Purchase Request for such Purchase in accordance with Section 2.3
-----------
(which may be a facsimile transmission of a properly completed and executed
Purchase Request followed on that same day with actual delivery of the original
thereof), together with all items required to be delivered in connection
therewith.
VII.2.3 Facility Termination Date. The Facility Termination Date shall not
--------------------------
have occurred. VII.2.4 Commercial Paper Notes. Purchaser is able to obtain funds
in the commercial paper market pursuant to its Program Documents.
VII.2.5 Reserve Account. The amount in the Reserve Account is
---------------
at least equal to the Required Reserve Amount, after giving effect to such
Purchase.
VII.2.6 Financing Statements. Executed copies of proper
---------------------
Uniform Commercial Code Form UCC-3 termination statements necessary to release
all liens and other Adverse Claims of any Person in any Contract related to such
Purchase or the proceeds thereof granted by any Person.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF SELLER
SECTION VIII.1 Representations and Warranties of Seller. In order to
-----------------------------------------
induce Purchaser and the Agent to enter into this Agreement and, in the case of
Purchaser, to make Purchases hereunder, Seller hereby represents and warrants to
the Agent and Purchaser as follows:
SECTION VIII.2 Organization and Good Standing, Etc. Seller has been
--------------------------------------
duly organized and is validly existing as a corporation in good standing under
the laws of its state of incorporation, with power and authority to own its
properties and to conduct its business as such properties are presently owned
and such business is presently conducted. It is duly licensed or qualified to do
business as a foreign corporation in good standing in the jurisdiction where its
principal place of business and chief executive office are located and in each
other jurisdiction in which the failure to be so licensed or qualified would be
reasonably likely to have a Material Adverse Effect.
SECTION VIII.3 Power and Authority; Due Authorization. Seller has (a)
----------------------------------------
all necessary power, authority and legal right to (i) execute, deliver and
perform its obligations under this Agreement and each of the other Transaction
Documents to which it is a party, and (ii) to sell Participations on the terms
and subject to the conditions herein provided, and (b) duly authorized by all
necessary corporate action the execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party and such
sales and the granting of a security interest in the Collateral on the terms and
conditions provided herein.
SECTION VIII.4 No Violation. The consummation of the transactions
-------------
contemplated by this Agreement and the other Transaction Documents and the
fulfillment of the terms hereof will not (a) conflict with, result in any breach
of any of the terms and provisions of, or constitute (with or without notice or
lapse of time or both) a default under, (i) the certificate of incorporation or
by-laws of Seller, or (ii) any indenture, loan agreement, pooling and servicing
agreement, contract purchase agreement, mortgage, deed of trust, or other
agreement or instrument to which Seller is a party or by which it or any of
their its properties is bound, (b) result in or require the creation or
imposition of any Adverse Claim upon any of its properties pursuant to the terms
of any such indenture, loan agreement, pooling and servicing agreement, contract
purchase agreement, mortgage, deed of trust, or other agreement or instrument,
other than the Transaction Documents, or (c) violate any law, rule, or
regulation applicable to Seller or any order of any court or of any federal,
state or foreign regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over Seller or any of its properties, which
violation would be reasonably likely to have a Material Adverse Effect.
SECTION VIII.5 Validity and Binding Nature. This Agreement is, and the
---------------------------
other Transaction Documents to which it is a party when duly executed and
delivered by Seller will be, the legal, valid and binding obligation of Seller,
enforceable in accordance with their respective terms except as enforceability
may be limited by bankruptcy, insolvency, reorganization, or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity, regardless of whether such enforceability is considered in
effect or at law.
SECTION VIII.6 Bulk Sales Act. No transaction contemplated by this
--------------
Agreement or any of the other Transaction Documents requires compliance with, or
will be subject to avoidance under, any bulk sales act or similar law.
SECTION VIII.7 Government Approvals. No authorization or approval or
---------------------
other action by, and no notice to or filing with, any governmental authority or
regulatory body required of Seller for the due execution, delivery or
performance by Seller of any Transaction Document to which it is a party remains
unobtained or unfiled, other than the UCC filings referred to in Section 7.1.12.
---------------
SECTION VIII.8 Financial Condition.
-------------------
(a Seller's pro forma balance sheet as of the date hereof, certified by
---------
the Financial Officer, copies of which have been furnished to the Agent and
Purchaser, fairly presents Seller's respective assets and liabilities at such
date.
(b Since the date of Seller's incorporation, no event has occurred that
has had, or is reasonably likely to have, a Material Adverse Effect.
SECTION VIII.9 Margin Regulations. Seller is not engaged in the
-------------------
business of extending credit for the purpose of purchasing or carrying margin
stock, and no proceeds of any Participation, directly or indirectly, will be
used for a purpose that violates, or would be inconsistent with, Regulations G,
T, U and X promulgated by the Federal Reserve Board from time to time.
SECTION VIII.10 Quality of Title. Seller owns each Contract, and the
----------------
Contract Assets related thereto, free and clear of any Adverse Claim (other than
any Adverse Claim arising solely as the result of any action taken by the Agent
or Purchaser and any interest in the Equipment by the Obligors under the
Contracts). Seller has a first priority perfected ownership interest in the
Contracts. Seller either owns the Equipment related to the Contracts or has a
valid and perfected first priority security interest therein. No effective
financing statement or other instrument similar in effect covering any Contract,
any Contract Asset or any interest therein is on file in any recording office,
except for financing statements that may be filed (i) in favor of Purchaser,
(ii) in favor of Seller in accordance with the Purchase and Sale Agreement,
(iii) in connection with any Adverse Claim arising solely as the result of any
action taken by Purchaser or the Agent or (iv) in favor of the Originator (or
any party from which it purchased such Contract) in accordance with the
Contract.
SECTION VIII.11 Accuracy of Information. All factual written
--------------------------
information heretofore or contemporaneously furnished by, or on behalf of,
Seller to Purchaser or the Agent for purposes of or in connection with any
Transaction Document or any transaction contemplated hereby or thereby is, and
all other such factual, written information hereafter furnished by, or on behalf
of, Seller to Purchaser or the Agent pursuant to or in connection with any
Transaction Document will be, true and accurate in all material respects on the
date as of which such information is dated or certified.
SECTION VIII.12 Offices. The principal place of business and chief
-------
executive office of Seller is located at the address referred to in Section 18.3
------------
(or at such other locations, notified to the Agent in accordance with Section
-------
10.1.6, in jurisdictions where all action required thereby has been taken and
------
completed).
SECTION VIII.13 Capitalization. The authorized capital stock of Seller
--------------
consists of one thousand (1,000) shares of common stock, $0.01 par value, of
which all are currently issued and outstanding. All of such outstanding shares
are validly issued, fully paid and nonassessable and are owned (beneficially and
of record), free and clear of any Adverse Claim, by LINC.
SECTION VIII.14 Trade Names. Seller does not use any trade name other
-----------
than its actual corporate name.
SECTION VIII.15 Taxes. Seller has filed all tax returns and reports
-----
required by law to have been filed by it and has paid all taxes and governmental
charges thereby shown to be owing, except any such taxes or charges that are
being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside on its
books.
SECTION VIII.16 Compliance with Applicable Laws, etc. Seller is in
---------------------------------------
compliance with the requirements of all applicable laws, rules, regulations, and
orders of all governmental authorities (including, without limitation, the
Federal Consumer Credit Protection Act, as amended, Regulation Z of the Board of
Governors of the Federal Reserve System, as amended, laws, rules and regulations
relating to usury, truth in lending, fair credit billing, fair credit reporting,
equal credit opportunity, fair debt collection practices and privacy and all
other consumer laws, rules and regulations applicable to the Contracts), a
breach of any of which, individually or in the aggregate, would be reasonably
likely to have a Material Adverse Effect.
SECTION VIII.17 No Proceedings. Except as described in Schedule 8.17,
--------------- -------------
there is no order, judgment, decree, injunction, stipulation or consent order of
or with any court or other government authority which Seller is named, and there
is no action, suit, arbitration, or regulatory proceeding pending, or, to the
knowledge of Seller, threatened, nor, to the best of Seller's knowledge, is
there any investigation pending or threatened before or by any court, regulatory
body, administrative agency or other tribunal or governmental instrumentality,
against Seller (A) asserting the invalidity of this Agreement or any other
Transaction Document or (B) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any other Transaction Document or
(C) that, individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect.
SECTION VIII.18 Investment Company Act, Etc. Seller is not an
-------------------------------
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company," or a "subsidiary company" of
a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
SECTION VIII.19 Eligible Contracts. Each Contract included in the
-------------------
calculation of the Net Portfolio Principal Balance as an Eligible Contract is an
Eligible Contract on such date of calculation.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES OF SERVICER
SECTION IX.1 Representations and Warranties of Servicer. In order to
-------------------------------------------
induce Purchaser and the Agent to enter into this Agreement and, in the case of
Purchaser, to make Purchases hereunder, Servicer hereby represents and warrants
to the Agent and Purchaser as follows:
SECTION IX.2 Organization and Good Standing, Etc. Servicer has been
--------------------------------------
duly organized and is validly existing as a corporation in good standing under
the laws of its state of incorporation, with power and authority to own its
properties and to conduct its business as such properties are presently owned
and such business is presently conducted. It is duly licensed or qualified to do
business as a foreign corporation in good standing in the jurisdiction where its
principal place of business and chief executive office are located and in each
other jurisdiction in which the failure to be so licensed or qualified would be
reasonably likely to have a Material Adverse Effect.
SECTION IX.3 Power and Authority; Due Authorization. Servicer has (a)
---------------------------------------
all necessary power, authority and legal right to execute, deliver and perform
its obligations under this Agreement and each of the other Transaction Documents
to which it is a party, and (b) duly authorized by all necessary corporate
action the execution, delivery and performance of this Agreement and the other
Transaction Documents to which it is a party.
SECTION IX.4 No Violation. The consummation of the transactions
-------------
contemplated by this Agreement and the other Transaction Documents and the
fulfillment of the terms hereof will not (a) conflict with, result in any breach
of any of the terms and provisions of, or constitute (with or without notice or
lapse of time or both) a default under, (i) the certificate of incorporation or
by-laws of Servicer, or (ii) any indenture, loan agreement, pooling and
servicing agreement, contracts purchase agreement, mortgage, deed of trust, or
other agreement or instrument to which Servicer is a party or by which it or any
of its properties is bound, (b) result in or require the creation or imposition
of any Adverse Claim upon any of its properties pursuant to the terms of any
such indenture, loan agreement, pooling and servicing agreement, contracts
purchase agreement, mortgage, deed of trust, or other agreement or instrument,
or (c) violate any law, rule, or regulation applicable to Servicer or any order
of any court or of any federal, state or foreign regulatory body, administrative
agency, or other governmental instrumentality having jurisdiction over Servicer
or any of its properties, which in the case of clause (a) (ii), (b) or (c) would
---------------------------
be reasonably likely to have a Material Adverse Effect.
SECTION IX.5 Validity and Binding Nature. This Agreement is, and the
----------------------------
other Transaction Documents to which it is a party when duly executed and
delivered by Servicer will be, the legal, valid and binding obligation of
Servicer, enforceable in accordance with their respective terms except as
enforceability may be limited by bankruptcy, insolvency, reorganization, or
similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity, regardless of whether such enforceability is
considered in equity or at law.
SECTION IX.6 Government Approvals. No authorization or approval or
---------------------
other action by, and no notice to or filing with, any governmental authority or
regulatory body required of Servicer for the due execution, delivery or
performance by Servicer of any Transaction Document to which it is a party
remains unobtained or unfiled.
SECTION IX.7 Financial Condition.
-------------------
(a Servicer's consolidated balance sheet as of June 30, 1997, and the
related statements of earnings and cash flows of Servicer and its consolidated
Subsidiaries for the six months then ended, certified by Peat Marwick,
independent certified public accountants, and Servicer's consolidated balance
sheet as of September 30, 1997, and the related statements of earnings and cash
flows of Servicer and its consolidated Subsidiaries for the nine months then
ended, certified by Servicer's chief financial officer, copies of which have
been furnished to the Agent and Purchaser, fairly present in all material
respects the consolidated financial condition, business and operations of
Servicer and its consolidated Subsidiaries as at such dates and the consolidated
results of operation of Servicer and its consolidated Subsidiaries for the
periods ended on such dates.
(b Since June 30, 1997 no event has occurred that has had, or is
reasonably likely to have, a Material Adverse Effect.
SECTION IX.8 Accuracy of Information. All factual written information
-----------------------
heretofore or contemporaneously furnished by, or on behalf of, Servicer to
Purchaser or the Agent for purposes of or in connection with any Transaction
Document or any transaction contemplated hereby or thereby is, and all other
such factual, written information hereafter furnished by Servicer, or on behalf
of, to Purchaser or the Agent pursuant to or in connection with any Transaction
Document will be, true and accurate in every material respect on the date as of
which such information is dated or certified. No information contained in any
report or certificate delivered pursuant to this Agreement or any other
Transaction Document shall be incomplete by omitting to state a material fact or
any fact necessary to make the statements contained therein not misleading on
the date as of which such information is dated or certified.
SECTION IX.9 Offices. The principal place of business and chief
-------
executive office of Servicer is located at the address referred to in Section
-------
18.3 (or at such other locations, notified to the Agent in accordance with
----
Section 11.1.6, in jurisdictions where all action required thereby has been
--------------
taken and completed).
SECTION IX.10 Taxes. Servicer has filed all tax returns and reports
-----
required by law to have been filed by it and has paid all taxes and governmental
charges thereby shown to be owing, except any such taxes or charges that are
being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside on its
books.
SECTION IX.11 Compliance with Applicable Laws. Servicer is in
-----------------------------------
compliance with the requirements of all applicable laws, rules, regulations, and
orders of all governmental authorities (including, without limitation, the
Federal Consumer Credit Protection Act, as amended, Regulation Z of the Board of
Governors of the Federal Reserve System, as amended, laws, rules and regulations
relating to usury, truth in lending, fair credit billing, fair credit reporting,
equal credit opportunity, fair debt collection practices and privacy and all
other consumer laws, rules and regulations applicable to the Contracts), a
breach of any of which, individually or in the aggregate, would be reasonably
likely to have a Material Adverse Effect.
SECTION IX.12 No Proceedings. Except as described in Schedule 9.12,
--------------- ---------------
there is no order, judgment, decree, injunction, stipulation or consent order of
or with any court or other government authority to which Servicer is named, and
there is no action, suit, arbitration, or regulatory proceeding pending, or, to
the knowledge of Servicer, threatened, nor, to the best of Servicer's knowledge,
is there any investigation pending or threatened before or by any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality, against Servicer (A) asserting the invalidity of this Agreement
or any other Transaction Document or (B) seeking to prevent the consummation of
any of the transactions contemplated by this Agreement or any other Transaction
Document or (C) that, individually or in the aggregate, is reasonably likely to
have a Material Adverse Effect.
SECTION IX.13 Investment Company Act, Etc. Servicer is not an
-------------------------------
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company," or a "subsidiary company" of
a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
SECTION IX.14 Software Programs. Servicer owns, or has valid and
------------------
existing licenses of or subcontracts with respect to, all software programs
sufficient to service the Portfolio and produce the Monthly Reports and
Portfolio Certificates, of which software, licenses and subcontracts is either
assignable to a successor Servicer or is readily available without undue cost.
ARTICLE X
COVENANTS OF SELLER
SECTION X.1 Affirmative Covenants of Seller. From the date hereof until
-------------------------------
the first day following the Facility Termination Date on which all
Participations have been reduced to zero and all Obligations shall have been
finally and fully paid and performed (the "Final Payoff Date"), unless Purchaser
-----------------
and the Agent shall otherwise consent in writing Seller hereby covenants and
agrees with Purchaser and the Agent that it shall:
X.1.1 Compliance with Laws, Etc. Comply in all material
----------------------------
respects with all applicable laws, rules, regulations and orders of all
governmental authorities (including those which relate to the Contracts), except
to the extent the failure to so comply would not have a Material Adverse Effect.
X.1.2 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 the jurisdiction where its principal place
of business and its chief executive office are located and in each other
jurisdiction where the failure to preserve and maintain such existence, rights,
franchises, privileges and qualifications would have a Material Adverse Effect.
X.1.3 Audits. (i) At any time and from time to time during
------
regular business hours upon reasonable prior notice (provided that if a
Termination Event or Unmatured Termination Event shall have occurred and be
continuing, no notice shall be required), permit the Agent, or its agents or
representatives (A) to examine and make copies of and abstracts from all books,
records and documents (including, without limitation, computer tapes and disks)
in possession or under the control of Seller relating to the Contracts, and (B)
to visit the offices and properties of Seller for the purpose of examining such
materials described in clause (i)(A) next above, and to discuss matters relating
------------
to the Contracts or the performance hereunder with any of the officers or
employees of Seller having knowledge of such matters, and (ii) without limiting
the foregoing clause (i) above, from time to time on request of the Agent,
----------
permit certified public accountants or other auditors reasonably acceptable to
the Agent to conduct, at Seller's expense (provided that, so long as no
Termination Event or Unmatured Termination Event has occurred and is continuing,
Seller shall only be responsible for the expense of one such audit in any
calendar year), a review of Seller's books and records with respect to the
Contracts, and all other documents related thereto.
X.1.4 Keeping of Records and Books of Account. Keep books and
---------------------------------------
records that accurately reflect in all material respects Seller's business
affairs and transactions.
X.1.5 Performance and Compliance with Contracts. Timely and
------------------------------------------
fully perform and comply with all provisions, covenants and other promises
required to be observed by it under the Contracts and all other agreements
related to such Contracts, unless Seller is disputing the applicability of any
such provision, covenant or promise in good faith and except to the extent that
failure to comply therewith would not have a Material Adverse Effect.
X.1.6 Location of Records. Keep its principal place of
---------------------
business and chief executive office at the address referred to in Section 8.12
------------
or, upon 30 days' prior written notice to the Agent, at such other locations in
jurisdictions in the continental United States where all action required to
maintain the Purchaser's perfected ownership and security interest pursuant to
Section 17.1 shall have been taken and completed or shall be so taken and
-------------
completed prior to the loss of any perfection thereof arising from such
relocation.
X.1.7 Separate Corporate Existence. Seller hereby acknowledges
----------------------------
that Purchaser and the Agent are entering into the transactions contemplated by
this Agreement and the other Transaction Documents in reliance upon Seller's
identity as a legal entity separate from LINC. Therefore, from and after the
date hereof, Seller shall take all reasonable steps specifically required by
this Agreement to continue Seller's identity as a separate legal entity and to
make it apparent to third Persons that Seller is an entity with assets and
liabilities distinct from those of LINC and any other Person, and is not a
division of LINC or any other Person. Without limiting the generality of the
foregoing, Seller shall take such actions as shall be required in order that:
(a Seller will be a limited purpose corporation whose primary
activities are restricted in its certificate of incorporation to
acquiring retail installment contracts and leases, and the related
equipment from the Originator, entering into this Agreement to finance
such purchases and conducting such other activities as it deems
necessary or appropriate to carry out its primary activities;
(b Not less than one member of Seller's Board of Directors
(the "Independent Director") shall be an individual who is not a
---------------------
direct, indirect or beneficial stockholder, officer, director,
employee, customer or supplier of LINC or any of its Affiliates (other
than Seller and other special purpose, "bankruptcy remote"
corporations). The Certificate of Incorporation of Seller shall provide
that (i) Seller's Board of Directors shall not approve, or take any
other action to cause the filing of, a voluntary bankruptcy petition or
dissolution proceeding with respect to Seller unless all of the Board
of Director's, including the Independent Director, shall approve the
taking of such action in writing prior to the taking of such action and
(ii) such provision cannot be amended without the prior written consent
of the Independent Director;
(c The Independent Director shall not at any time serve
as a trustee in bankruptcy for Seller, LINC or any Affiliate thereof;
(d Any employee, consultant or agent of Seller will be
compensated from funds of Seller for services provided to Seller.
Seller will engage no agents other than a Servicer for the Contracts,
which Servicer will be fully compensated for its services to Seller by
payment of the Servicing Fee, and attorneys and accountants, who will
be compensated from funds of Seller, and other than LINC pursuant to
the Operating Agreement, provided that LINC shall pay the attorneys'
--------
fees and disbursements incurred in connection with the initial closing
of the transactions contemplated hereby;
(e Seller will not incur any material indirect or overhead
expenses for items shared between Seller and LINC (or any other
Affiliate thereof), except as set forth in the Operating Agreement. To
the extent, if any, that Seller and LINC (or any other Affiliate
thereof) share items of expenses such as legal, auditing and other
professional services, such expenses will be allocated to the extent
practical on the basis of actual use or the value of services rendered,
and otherwise on a basis reasonably related to the actual use or the
value of services rendered, it being understood that LINC shall pay all
expenses relating to the preparation, negotiation, execution and
delivery of the Transaction Documents, including, without limitation,
legal, commitment, agency and other up-front fees;
(f Seller's operating expenses will not be paid by LINC or any
other Affiliate thereof, except as permitted under the terms of this
Agreement or otherwise consented to by the Agent and Purchaser;
(g Seller will have its own stationery;
(h Seller's books and records will be maintained separately from those of
LINC and any other Affiliate thereof;
(i All audited financial statements of LINC or any Affiliate
thereof that are consolidated to include Seller will contain detailed
notes clearly stating that (A) all of Seller's assets are owned by
Seller, and (B) Seller is a separate corporate entity with creditors
who have received ownership and/or security interests in Seller's
assets;
(j Seller's assets will be maintained in a manner that facilitates their
identification and segregation from those of LINC or any Affiliate thereof;
(k Seller will strictly observe corporate formalities in its
dealings with LINC or any Affiliate thereof, and funds or other assets
of Seller will not be commingled with those of LINC or any Affiliate
thereof (other than in connection with LINC's role as Servicer to the
extent permitted hereby). Seller shall not maintain joint bank accounts
or other depository accounts to which LINC or any Affiliate thereof has
independent access, except as Servicer hereunder. None of Seller's
funds will at any time be pooled with any funds of LINC or any
Affiliate thereof, except for Collections to the extent permitted by
this Agreement;
(l Seller shall pay to LINC (or any Affiliate thereof) the
marginal increase (or, in the absence of such increase, the market
amount of its portion of) in the premium payable with respect to any
insurance policy that covers Seller and LINC (or any Affiliate
thereof), but Seller shall not, directly or indirectly, be named or
enter into an agreement to be named, as a direct or contingent
beneficiary or loss payee under any such insurance policy with respect
to any amounts payable due to occurrences or events related to LINC (or
any Affiliate thereof); and
(m Seller will maintain arm's-length relationships with LINC
(and any Affiliate thereof). Any Person, including Seller's Affiliates,
that renders or otherwise furnishes services to Seller will be
compensated by Seller at market rates for such services it renders or
otherwise furnishes to Seller. Neither Seller nor LINC will be or will
hold itself out to be responsible for the debts of the other or the
decisions or actions respecting the daily business and affairs of the
other.
X.1.8 Reporting Requirements of Seller. Until the Final Payout Date, Seller
--------------------------------
will furnish to the Agent and Purchaser:
(a Quarterly Financial Statements. As soon as available and in
------------------------------
any event within 45 days after the end of each of the first three
Fiscal Quarters of each fiscal year of Seller, (i) copies of the
unaudited balance sheet of Seller, as at the end of such Fiscal
Quarter, together with unaudited statements of earnings for such Fiscal
Quarter and for the period commencing at the end of the previous Fiscal
Year and ending with the end of such Fiscal Quarter, certified by the
chief financial officer, treasurer, assistant treasurer or chief
accounting officer (such officer being herein called the "Financial
---------
Officer") of Seller and (ii) a letter from the Financial Officer of
-------
Seller certifying whether a Termination Event or an Unmatured
Termination Event has occurred and is continuing;
(b Annual Financial Statements. As soon as available and in
-----------------------------
any event within 90 days after the end of each Fiscal Year of each of
Seller, (i) a copy of the unaudited balance sheet of Seller, as at the
end of such Fiscal Year together with the related statements of
earnings and cash flows for such Fiscal Year, certified by the
Financial Officer of Seller, and (ii) a letter from the Financial
Officer of Seller certifying whether a Termination Event or an
Unmatured Termination Event has occurred and is continuing;
(c ERISA. Promptly after receiving notice of any Reportable Event (as
-----
defined in Title IV of ERISA) with respect to Seller (or any Affiliate thereof),
a copy of such notice;
(d Proceedings. As soon as possible and in any event within
-----------
three Business Days after Seller receives notice thereof, any
settlement of, material judgment (including a material judgment with
respect to the liability phase of a bifurcated trial) in or
commencement of any labor controversy, litigation, action or proceeding
of the type described in Section 8.17, notice thereof and, upon the
-------------
Agent's reasonable request, copies of all non-confidential or
non-privileged documentation relating thereto;
(e Litigation. As soon as possible, and in any event within
three days of Seller's knowledge thereof, notice of (i) any litigation,
investigation or proceeding of the type described in Schedule 8.17 not
previously disclosed to the Agent, and (ii) any material adverse
development in any previously disclosed litigation, investigation or
proceeding;
(f Notice of Material Events. Promptly after becoming aware thereof, notice
-------------------------
of any other event or circumstance that, in the reasonable judgment of Seller,
is likely to have a Material Adverse Effect;
(g Termination Events. As soon as possible, and in any event
-------------------
within three Business Days after the occurrence of each Termination
Event or Unmatured Termination Event, a written statement of the
Financial Officer of Seller setting forth details of such event and the
action that Seller proposes to take with respect thereto; and
(h Other. Promptly, from time to time, such other information,
-----
documents, records or reports respecting the Collateral, the Contracts,
or the condition or operations, financial or otherwise, of Seller as
the Agent may from time to time reasonably request in order to protect
the interests of the Agent or Purchaser under or as contemplated by
this Agreement or the other Transaction Documents.
X.1.9 Use of Proceeds. Seller shall use the proceeds of the
----------------
Purchases made hereunder solely to fund the purchase price for the Contracts
purchased from LINC pursuant to the Purchase and Sale Agreement.
X.1.10 Collections.
-----------
(a Promptly (and in any event within two Business Days of
receipt) remit to the Collection Account all Collections, if any,
received directly by Seller from the Obligors; and
(b Instruct all Obligors to cause all Collections of Contracts
to be deposited directly to a lock-box that is the subject of a Lockbox
Agreement.
SECTION X.2 Negative Covenants of Seller. From the date hereof until
------------------------------
the Final Payout Date, unless Purchaser and the Agent shall otherwise consent in
writing, Seller shall perform its Obligations under this Section 10.2.
X.2.1 Sales, Liens, Etc. Except pursuant to, or as
---------------------
contemplated by, the Transaction Documents, Seller shall not sell, assign (by
operation of law or otherwise) or otherwise dispose of, or create or suffer to
exist voluntarily or involuntarily any Adverse Claims upon or with respect to
any of its assets, including, without limitation, the Portfolio, any interest
therein or any right to receive any amount from or in respect thereof.
X.2.2 Mergers, Acquisitions, Sales, Subsidiaries, etc. Seller shall not:
-----------------------------------------------
(i be a party to any merger or consolidation, or
directly or indirectly purchase or otherwise acquire all or
substantially all of the assets or any stock of any class of,
or any partnership or joint venture interest in, any other
Person, or sell, transfer, assign, convey or lease any of its
property and assets (or any interest therein) other than
pursuant to, or as contemplated by, this Agreement;
(ii make, incur or suffer to exist an investment in,
equity contribution to, loan or advance to, or payment
obligation in respect of the deferred purchase price of
property from, any other Person (other than Permitted
Investments); or
(iii create any direct or indirect Subsidiary or
otherwise acquire direct or indirect ownership of any equity
interests in any other Person.
X.2.3 Restricted Payments.
-------------------
(a Seller shall not (i) declare, pay or make any Dividend
(other than dividends or distributions payable in its common stock or
split-ups or reclassifications of its stock into additional or other
shares of its common stock) or (ii) apply any of its funds, property or
assets to the purchase, redemption, sinking fund or other retirement
of, any shares of any class of capital stock (now or hereafter
outstanding) of Seller, or warrants, options or other rights with
respect to any shares of any class of capital stock (now or hereafter
outstanding) of Seller or (iii) make any loan or other advance to any
shareholder; and
(b Seller will not make any deposit for any of the foregoing
purposes; except that Seller may declare, pay or make Dividends if,
immediately before and after giving effect to any proposed action
described above,
(i) no Termination Event or Unmatured Termination Event
shall have occurred and be continuing and(ii) the
Tangible Net Worth of Seller is not less than $1,000,000.
X.2.4 Amendments to Certain Documents.
-------------------------------
(a) Seller shall not amend, supplement, amend and restate, or
otherwise modify or agree to any waiver of any provision contained in
any Transaction Document or Seller's certificate of incorporation or
by-laws, except (i) in accordance with the terms of such document,
instrument or agreement and (ii) with the prior written consent of the
Agent and Purchaser; and
(b) Except for the Transaction Documents, Seller shall not
enter into, execute and deliver, or otherwise become bound by any
agreement, instrument, document or other arrangement that restricts its
right to amend, supplement, amend and restate or otherwise modify, or
to extend or renew, or to waive any right under, this Agreement or any
other Transaction Document.
X.2.5 Incurrence of Indebtedness. Seller shall not create,
----------------------------
incur or permit to exist any Indebtedness, except for indebtedness and
liabilities incurred pursuant to the Transaction Documents (including Interest
Rate Swaps) and normal trade payables incurred in the ordinary course of its
business that do not exceed $4,500 in the aggregate at any time.
X.2.6 Deposits to the Collection Account. Seller shall not
------------------------------------
deposit or otherwise credit, or cause or permit to be so deposited or credited
by any Person, to the Collection Account cash or cash proceeds other than
Collections with respect to the Contracts or proceeds of the Collateral and
payments under Interest Rate Swaps.
X.2.7 Change in Business Policy. Seller shall not make any
--------------------------
change in the character of its business which would impair in any material
respect the collectibility of any Contract.
X.2.8 Change in Payment Instructions to Obligors. Seller shall
------------------------------------------
not make any change in its instructions to Obligors regarding Collections or
payments to be made to a lock-box that is the subject of a Lockbox Agreement,
unless (i) the Agent shall have received notice of such change and (ii) the
Agent previously shall have consented in writing to such change. Seller shall
not add or terminate any bank as a Lockbox Bank or make any change in its
instructions regarding payments to be made by the Lockbox Bank, unless (A) the
Agent shall have received duly executed counterparts of a Lockbox Agreement with
each new Lockbox Bank and copies of such instructions (which shall be in form
and substance acceptable to the Agent) and (B) the Agent previously shall have
consented in writing to such termination or change.
X.2.9 Amendments to Contracts. Seller shall not amend, modify
-----------------------
or waive any provision of any Contract except as permitted by Section 13.2(b).
---------------
ARTICLE XI
COVENANTS OF SERVICER
SECTION XI.1 Affirmative Covenants of Servicer. From the date hereof
----------------------------------
until the Final Payout Date, unless Purchaser and the Agent otherwise consent in
writing, Servicer hereby covenants and agrees with Purchaser and the Agent that
it shall:
XI.1.1 Compliance with Laws, Etc. Comply in all material
----------------------------
respects with all applicable laws, rules, regulations and orders of all
governmental authorities (including those which relate to the Contracts) except
to the extent the failure to so comply would not have a Material Adverse Effect.
XI.1.2 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 the jurisdiction where its principal place
of business and its chief executive office are located and in each other
jurisdiction where the failure to preserve and maintain such existence, rights,
franchises, privileges and qualifications would have a Material Adverse Effect.
XI.1.3 Audits. (i) At any time and from time to time during
------
regular business hours upon reasonable prior notice (provided that if a
Termination Event or Unmatured Termination Event shall have occurred and be
continuing, no notice shall be required), permit the Agent, or its agents or
representatives (A) to examine and make copies of and abstracts from all books,
records and documents (including, without limitation, computer tapes and disks)
in possession or under the control of Servicer relating to the Contracts, and
(B) to visit the offices and properties of Servicer for the purpose of examining
such materials described in clause (i)(A) next above, and to discuss matters
-------------
relating to the Contracts or the performance hereunder with any of the officers
or employees of Servicer having knowledge of such matters, and (ii) without
limiting the foregoing clause (i) above, from time to time on request of the
----------
Agent, permit certified public accountants or other auditors reasonably
acceptable to the Agent to conduct, at Servicer's expense (provided that, so
long as no Termination Event or Unmatured Termination Event has occurred and is
continuing, Servicer shall only be responsible for the expense of one such audit
in any calendar year), a review of Servicer's books and records with respect to
the Contracts and all other documents related thereto.
XI.1.4 Keeping of Records and Books of Account. Keep books and
---------------------------------------
records that accurately reflect in all material respects Servicer's business
affairs and transactions, and maintain and implement administrative and
operating procedures (including, without limitation, an ability to re-create
records evidencing the Contracts in the event of the destruction of the
originals thereof) and keep and maintain all documents, books, records and other
information reasonably necessary or advisable for the collection of all
Contracts.
XI.1.5 Performance and Compliance with Contracts. Timely and
-----------------------------------------
fully perform and comply with all material provisions, covenants and other
promises required to be observed by it under the Contracts and all other
agreements related to such Contracts, unless Servicer is disputing the
applicability of any such provision, covenant or promise in good faith and
except to the extent that the failure to comply therewith would not have a
Material Adverse Effect.
XI.1.6 Location of Records. Keep its principal place of
---------------------
business and chief executive office at the address referred to in Section 9.9
-----------
or, upon 30 days' prior written notice to the Agent, at such other locations in
jurisdictions in the continental United States where all action required to
maintain the Purchaser's perfected ownership and security interest pursuant to
Section 17.1 shall have been taken and completed or shall be so taken and
-------------
completed prior to the loss of any perfection thereof arising from such
relocation.
XI.1.7 Credit Policy. Comply in all material respects with the Credit
--------------
Policy in regard to each Contract.
XI.1.8 Reporting Requirements of Servicer. Furnish to the Agent and
-------------------------------------
Purchaser:
(a) Quarterly Financial Statements. As soon as available and
-------------------------------
in any event within 45 days after the end of each of the first three
Fiscal Quarters of each fiscal year of Servicer, (i) copies of the
unaudited consolidated balance sheet of Servicer and its consolidated
Subsidiaries, as at the end of such Fiscal Quarter, together with
unaudited statements of earnings for such Fiscal Quarter and for the
period commencing at the end of the previous Fiscal Year and ending
with the end of such Fiscal Quarter, certified by a Financial Officer
of Servicer and (ii) a letter from the Financial Officer of Servicer
certifying that neither a Termination Event nor an Unmatured
Termination Event nor a Servicer Termination Event has occurred and is
continuing;
(b) Annual Financial Statements. As soon as available and in
----------------------------
any event within 90 days after the end of each Fiscal Year of Servicer,
a copy of the annual audit report for such Fiscal Year of Servicer,
including a copy of the consolidated balance sheet of Servicer and its
consolidated Subsidiaries, as at the end of such Fiscal Year together
with the related statements of earnings and cash flows for such Fiscal
Year, certified by Peat Marwick or other independent public accountants
reasonably acceptable to the Agent and Purchaser, and a certificate
from such accountant stating that, relying (without independent
verification) upon internal management reports, they have reviewed and
independently computed for each Fiscal Quarter during such Fiscal Year,
compliance with the Pay Out Amount Limit as of the last Business Day in
the final calendar month in such Fiscal Year and as of the last
Business Day in one randomly selected calendar month in such Fiscal
Year and have compared their calculations of the Net Portfolio
Principal Balance with the corresponding Portfolio Certificates and
stating whether such computations indicate that such Portfolio
Certificates accurately reflected the Net Portfolio Principal Balance
as of the respective applicable dates;
(c) Monthly Reports. On or before the day that is two Business
---------------
Days prior to each Settlement Date, Servicer shall prepare and deliver
to the Agent and Purchaser a report (a "Monthly Report"), substantially
--------------
in the form of the form of monthly report approved by the Purchaser and
Agent, together with a certificate substantially in the form of Exhibit
-------
C (a "Portfolio Certificate"), setting forth a calculation of the Net
----------------------
Portfolio Principal Balance (together with such other information set
forth therein) as of such Month-End Date, signed by a Financial Officer
of Servicer;
(d) Weekly Calculation. On or before the Friday of each week
-------------------
(or if such day is not a Business Day, the immediately preceding
Business Day), Servicer shall prepare and deliver to the Agent and
Purchaser a calculation to determine whether a Hedge Trigger Event has
occurred;
(e) ERISA. Promptly after receiving notice of any Reportable
-----
Event (as defined in Title IV of ERISA) with respect to Servicer (or
any Affiliate thereof), a copy of such notice;
(f) Proceedings. As soon as possible and in any event within
-----------
three Business Days after Servicer receives notice thereof, any
settlement of, material judgment (including a material judgment with
respect to the liability phase of a bifurcated trial) in or
commencement of any labor controversy, litigation, action or proceeding
of the type described in Section 9.12, notice thereof and, upon the
-------------
Agent's reasonable request, copies of all non-confidential or
non-privileged documentation relating thereto;
(g) Litigation. As soon as possible, and in any event within
----------
three days of Servicer's knowledge thereof, notice of (i) any
litigation, investigation or proceeding of the type described in
Schedule 9.12 not previously disclosed to the Agent, and (ii) any
--------------
material adverse development in any previously disclosed litigation,
investigation or proceeding;
(h) SEC and Other Reports. Within 30 days after the sending or
---------------------
filing thereof, copies of all reports that Servicer or any of its
Subsidiaries is required (by any regulatory agency) to send to its
securityholders generally, and all reports and registration statements
that Servicer or any of its Subsidiaries files with the Securities and
Exchange Commission or any national securities exchange;
(i) Notice of Material Events. Promptly after becoming aware
--------------------------
thereof, notice of any Hedge Trigger Event and any event or
circumstance that, in the reasonable judgment of Servicer, is likely to
have a Material Adverse Effect;
(j) Termination Events. As soon as possible, and in any event
------------------
within three Business Days after the occurrence of each Servicer
Termination Event, Termination Event or Unmatured Termination Event, a
written statement of the Financial Officer of Servicer setting forth
details of such event and the action that Servicer proposes to take
with respect thereto; and
(k) Other. Promptly, from time to time, such other
-----
information, documents, records or reports respecting the Collateral,
the Contracts, or the condition or operations, financial or otherwise,
of Servicer as the Agent may from time to time reasonably request in
order to protect the interests of the Agent or Purchaser under or as
contemplated by this Agreement or the other Transaction Documents.
XI.1.9 Collections.
-----------
(a) Promptly (and in any event within two Business Days of
receipt) remit to the Collection Account all Collections, if any,
received directly by Servicer from the Obligors; and
(b) Instruct all Obligors to cause all Collections of
Contracts to be deposited directly to a lock-box that is the subject of
a Lockbox Agreement.
SECTION XI.2 Negative Covenants of Servicer. From the date hereof until
------------------------------
the Final Payout Date, unless Purchaser and the Agent shall otherwise consent in
writing, Servicer shall perform its Obligations under this Section 11.2.
------------
XI.2.1 Mergers, Acquisitions, Sales, Subsidiaries, etc.
------------------------------------------------------
Servicer shall not be a party to any merger or consolidation, or directly or
indirectly purchase or otherwise acquire all or substantially all of the assets
or any stock of any class of, or any partnership or joint venture interest in,
any other Person, or sell, transfer, assign, convey or lease any of its property
and assets (or any interest therein) other than pursuant to, or as contemplated
by, the Purchase and Sale Agreement, unless (i) Servicer is the surviving
corporation, or the surviving entity as a Person organized under the
jurisdiction of a state of the United States and expressly assumes all of
Servicer's obligations under this Agreement and the other Transaction Documents
pursuant to an agreement reasonably satisfactory to the Agent, (ii) the tangible
net worth of survivor is not less than the tangible net worth of Servicer
immediately prior to such transaction, (iii) Servicer remains in substantially
the same business that it was in on the date hereof, (iv) no Termination Event
or Servicer Termination Event has occurred and is continuing, or would result
therefrom, and (v) the Agent reasonably determines that such transaction will
not have a Material Adverse Effect.
XI.2.2 Deposits to the Collection Account. Servicer shall not
----------------------------------
deposit or otherwise credit, or cause or permit to be so deposited or credited
by any Person, to the Collection Account cash or cash proceeds other than
Collections with respect to the Contracts, proceeds of the Collateral and
payments under Interest Rate Swaps.
XI.2.3 Change in Business or Credit Policy. Servicer shall not
-----------------------------------
make any change in the character of its business or in the Credit Policy which
would impair in any material respect the collectibility of a significant portion
of the Contracts.
XI.2.4 Change in Payment Instructions to Obligors. Servicer
--------------------------------------------
shall not make any change in its instructions to Obligors regarding Collections
or payments to be made to a lock-box that is the subject of a Lockbox Agreement,
unless (i) the Agent shall have received notice of such change and (ii) the
Agent previously shall have consented in writing to such change. Servicer shall
not add or terminate any bank as the Lockbox Bank or make any change in its
instructions regarding payments to be made by the Lockbox Bank, unless (A) the
Agent shall have received duly executed counterparts of a Lockbox Agreement with
each new Lockbox Bank and copies of such instructions (which shall be in form
and substance acceptable to the Agent) and (B) the Agent previously shall have
consented in writing to such termination or change.
XI.2.5 Amendment of Contracts. Servicer shall not amend,
------------------------
modify or waive any provision of any Contract except in accordance with Section
-------
13.2(b).
-------
ARTICLE XII
TERMINATION EVENTS AND THEIR EFFECT; REMEDIES
SECTION XII.1 Termination Events. Each of the following shall constitute a
-------------------
Termination Event under this Agreement:
XII.1.1 Non-Payment, Etc. Seller shall fail to make any payment or deposit
-----------
to be made by it hereunder when due.
XII.1.2 Non-Compliance with Other Provisions. Seller shall
--------------------------------------
fail to perform or observe in any material respect any other term, covenant or
agreement contained in this Agreement, or any other Transaction Document on its
part to be performed or observed and any such failure shall remain unremedied
for ten Business Days after knowledge thereof or after written notice thereof
shall have been given by the Agent or Purchaser to Seller.
XII.1.3 Breach of Representations and Warranties. Any
----------------------------------------------
representation or warranty of Seller made or deemed to have been made hereunder
or in any other Transaction Document or any other writing or certificate
furnished by or on behalf of Seller to the Agent or Purchaser for purposes of or
in connection with this Agreement or any other Transaction Document (including
any certificates delivered pursuant to Section 11.1.8(a) or (b) and any Monthly
------------------------
Report or Portfolio Certificate delivered pursuant to Section 11.1.8(c)) shall
-----------------
prove to have been false or incorrect in any material respect when made or
deemed to have been made and, if such circumstance is capable of cure, it shall
continue to be incorrect for more than ten Business Days after knowledge thereof
or written notice shall have been given by the Agent or Purchaser to Seller;
provided that if such representation or warranty relates to a Contract that is
--------
repurchased by Seller in accordance with this Agreement, then such inaccuracy
shall not constitute a Termination Event.
XII.1.4 Non-Payment of Other Indebtedness, etc. A default
------------------------------------------
shall occur in the payment of principal when due of any Indebtedness of LINC or
any Subsidiary thereof having a principal amount in excess of $1,000,000, and
such default continues after the expiration of any applicable grace period, or
any other default shall occur with respect to such Indebtedness and shall
continue after the applicable grace period, if any, if the effect of such
default is to cause or permit, if unremedied, uncured or unwaived, the holder or
trustee of such indebtedness to accelerate the maturity of any such indebtedness
(including by way of any consensual re-scheduling of principal payments), or any
such Indebtedness shall be declared to be due and payable or required to be
prepaid (other than by regularly scheduled required prepayments) prior to the
stated maturity thereof.
XII.1.5 Bankruptcy. An Event of Bankruptcy shall have occurred
----------
and remained continuing with respect to Seller.
XII.1.6 Purchase and Sale Termination Event. A Purchase and Sale
-----------------------------------------
Termination Event shall have occurred and be continuing.
XII.1.7 Ratio. The average of the Delinquency Ratios for any
-----
three consecutive calendar months exceeds 8%.
XII.1.8 Material Adverse Effect. The warranty in Section 8.8(b) or 9.7(b)
------------------------ ------------------------
shall not be true at any time.
XII.1.9 Tax Liens; ERISA Liens. The Internal Revenue Service
-----------------------
shall file notice of a lien pursuant to Section 6323 of the Internal Revenue
Code with regard to any of the assets of Seller, and such lien shall not have
been released within 5 days, or the Pension Benefit Guaranty Corporation shall
file notice of a lien pursuant to Section 4068 of ERISA with regard to any of
the assets of Seller.
XII.1.10 Validity of Transaction Documents. (a) Any
---------------------------------------
Transaction Document, or any lien or security interest granted thereunder, shall
(except in accordance with its terms), in whole or in part, terminate, cease to
be effective or cease to be the legally valid, binding and enforceable
obligation of Seller or LINC, (b) Seller or any other party to the Transaction
Documents shall, directly or indirectly, contest in any manner such
effectiveness, validity, binding nature or enforceability, or (c) any
Participation, or any security interest securing any Obligation, shall, in whole
or in part, cease to be a perfected first priority ownership or security
interest; provided that if any such cessation relates to a Contract repurchased
by Seller in accordance with this Agreement, such event shall not result in a
Termination Event.
XII.1.11 Change in Control. A Change in Control shall have
------------------
occurred.
XII.1.12 Servicer Termination Event. A Servicer Termination Event shall
----------------------------
occur and be continuing.
XII.1.13 Pay-Out Limit. The Capital exceeds the Pay-Out Limit.
-------------
SECTION XII.2 Effect of Termination Event.
---------------------------
(a) Optional Termination. Upon the occurrence of a Termination
--------------------
Event (other than a Termination Event described in Section 12.1.5), the
--------------
Agent may, and at the request of Purchaser shall, by notice to Seller,
declare the Facility Termination Date to have occurred.
(b) Automatic Termination. Upon the occurrence of a
-----------------------
Termination Event described in Section 12.1.5, the Facility Termination
--------------
Date shall be deemed to have occurred automatically upon the occurrence
of such event.
(c) Additional Remedies. Upon the occurrence of a Termination
-------------------
Event, the Agent and Purchaser, in addition to all other rights and
remedies under this Agreement or otherwise, shall have all other rights
and remedies provided under the UCC and other applicable laws, which
rights shall be cumulative. Without limiting the foregoing or the
general applicability of Article XII hereof, (i) the occurrence of a
-----------
Termination Event shall not deny Purchaser any remedy in addition to
termination of the Facility to which Purchaser may be otherwise
appropriately entitled, whether at law or in equity, and (ii) Purchaser
may elect to assign any Participation owned by Purchaser to an assignee
following the occurrence of any Termination Event.
ARTICLE XIII
THE SERVICER
SECTION XIII.1 LINC as Initial Servicer. (a) Initial Servicer. The
------------------------- -----------------
servicing, administering and collection of the Contracts shall be conducted by
the Person designated from time to time as servicer hereunder (the "Servicer").
-------------
Until the Agent gives notice to the Servicer (the "Successor Notice"), which
-----------------
notice may be given at any time by the Agent after and during the continuation
of a Servicer Termination Event, LINC is hereby designated as, and hereby agrees
to perform the duties and obligations of, the Servicer pursuant to the terms
hereof and the other Transaction Documents.
(b) Successor Notice. Upon LINC's receipt of a Successor
-----------------
Notice, LINC agrees that it will terminate its activities as Servicer hereunder
in a manner so as to facilitate the transition of the performance of such
activities to the new Servicer, and the Agent (or its designee) shall assume
each and all of LINC's obligations hereunder to service and administer the
Contracts, on the terms and subject to the conditions herein set forth and LINC
shall use its reasonable efforts to assist the Agent (or its designee) in
assuming such obligations.
(c) Subcontracts. Servicer, with the prior consent of the
------------
Agent, may subcontract with any other Person for servicing, administering or
collecting the Collateral, provided that Servicer shall remain liable for the
--------
performance of the duties and obligations of Servicer pursuant to the terms
hereof and that such subcontract may be terminated upon the appointment of any
successor Servicer hereunder.
SECTION XIII.2 Duties of Servicer. (a) Appointment; General Duties.
------------------ ----------- ---------------
Each of Seller, Purchaser and the Agent hereby appoints as its agent, the
Servicer, as from time to time designated pursuant to Section 13.1, to enforce
------------
its rights and interests in and under the Contracts. The Servicer shall take or
cause to be taken all such actions as may be necessary or advisable to collect
each Contract from time to time, all in accordance in all material respects with
applicable laws, rules and regulations, with reasonable care and diligence, and
in accordance in all material respects with the Credit Policy.
(b) Modification and Early Termination of Contracts. So long
------------------------------------------------
as no Servicer Termination Event shall have occurred and be continuing, LINC,
while it is Servicer, may, in accordance with the Credit Policy, (i) extend the
maturity or adjust the Outstanding Principal Balance of any Defaulted Contract
as LINC may determine to be appropriate to maximize Collections thereof
(provided that such extension or adjustment shall not affect the categorization
--------
of such Contract as a Defaulted Contract); and (ii) adjust the Outstanding
Principal Balance of any Contract to reflect the reductions or cancellations
described in the first clause of Section 4.5. So long as no Servicer Termination
-----------
event shall have occurred and be continuing, Servicer may permit the early
termination of any Contract at the request of the Obligor thereof if Servicer
either (i) remits, or causes Obligor to remit, an amount equal to the
Outstanding Principal Balance thereof to the Collection Amount or (ii)
substitutes another Contract that is an Eligible Contract on the date of such
substitution with an Outstanding Principal Balance at least equal to the
Outstanding Principal Balance of such terminated Contract.
(c) Documents and Records. Seller shall deliver to the
-----------------------
Servicer, and the Servicer shall hold in trust, as custodian and bailee, for
Seller and Purchaser in accordance with their respective interests, all
documents, instruments and records (including, without limitation, computer
tapes or disks) that evidence or relate to the Contracts. If any payment due
under a Contract is evidenced by an instrument, Seller and the Servicer agree to
promptly deliver the original thereof, properly endorsed, to the Agent; any
payments made thereunder shall be Collections for all purposes of this
Agreement. If requested by the Agent, Servicer shall deliver all original
Contracts and the documents related thereto to a third-party custodian pursuant
to a custodial agreement reasonably satisfactory in form and substance to the
Agent and Seller.
(d) Collections. Seller hereby agrees that, after the
-----------
occurrence and during the continuance of any Servicer Termination Event, the
Agent shall have the right to instruct the Servicer and the Obligor to deposit
all payments in respect of Collections directly to the Agent on a daily basis.
(e) Termination. The Servicer's authorization under this
-----------
Agreement shall terminate upon the Final Payout Date.
SECTION XIII.3 Rights of the Agent. (a) At any time that a Servicer
--------------------
Termination Event has occurred and is continuing, upon at least three (3)
Business Days' prior notice to Seller, the Agent may notify the Obligors, or any
of such Obligors, of the interest of Purchaser.
(b) At any time following the designation of a Servicer other
than LINC pursuant to Section 13.1:
------------
(i) The Agent may direct the Obligors or any of them, that
payment of all amounts payable under any Contract be made directly to
the Agent or its designee;
(ii) At the Agent's request and at Seller's expense, Seller
shall give notice of Purchaser's interest to each such Obligor and
direct that payments be made directly to the Agent or its designee;
(iii) At the Agent's request, Seller and Servicer shall (A)
assemble all of the documents, instruments and other records
(including, without limitation, computer programs, tapes and disks) in
their possession which evidence the Contracts, or which are otherwise
necessary or desirable to collect such Contracts, 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, in a manner
reasonably acceptable to the Agent and shall remit promptly upon
receipt, all such cash, checks and instruments, duly endorsed or with
duly executed instruments of transfer, to the Agent or its designee;
and
(iv) Each of Seller and Purchaser hereby authorizes the
Agent to take any and all steps in Seller's name and on behalf of
Seller and Purchaser necessary or desirable, in the reasonable
determination of the Agent, to collect all amounts due under any and
all Contracts, including, without limitation, endorsing Seller's name
on checks and other instruments representing Collections and enforcing
such Contracts and disposing of related Equipment.
SECTION XIII.4 Responsibilities of Seller. Anything herein to the contrary
--------------------------
notwithstanding:
(a) Seller shall perform, or cause to be performed, all of its
obligations under the Contracts and under the other agreements included in, or
related to, the Contract Assets, to the same extent as if an interest had not
been conveyed hereunder and the Agent's exercise of its rights hereunder shall
not relieve Seller from such obligations.
(b) Neither the Agent nor Purchaser shall have any obligation
or liability with respect to any Contract, nor shall any of them be obligated to
perform any of the obligations of Seller thereunder.
(c) Seller hereby grants to the Servicer an irrevocable power
of attorney, with full power of substitution, coupled with an interest, to take
in the name of Seller all steps necessary or advisable to endorse, negotiate or
otherwise realize on any writing or other right of any kind held or transmitted
by Seller or transmitted or received by Purchaser (whether or not from Seller)
in connection with any Contract.
SECTION XIII.5 Further Action. Seller agrees that from time to time, at
--------------
its expense, it will promptly execute and deliver all further instruments and
documents, and take all further action that the Agent may reasonably request in
order to perfect, protect or more fully evidence the security interest granted
hereunder, or to enable the Purchaser or the Agent to exercise or enforce any of
their respective rights hereunder. Without limiting the generality of the
foregoing, Seller will: (i) upon the request of the Agent, 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
appropriate; (ii) ▇▇▇▇ conspicuously each Contract with a legend, acceptable to
the Agent, evidencing that such interest has been granted in accordance with
this Agreement; and (iii) ▇▇▇▇ its data processing records evidencing such
Contracts with such legend. Seller hereby authorizes the Agent to file one or
more financing or continuation statements, and amendments thereto and
assignments thereof, relative to all or any of the Contracts now existing or
hereafter arising in the name of Seller. If Seller fails to perform any of its
agreements or obligations under this Agreement, the Agent may (but shall not be
required to) itself perform, or cause performance of, such Agreement or
obligation, and the reasonable expenses of the Agent incurred in connection
therewith shall be payable by Seller.
SECTION XIII.6 Application of Collections. Any payment by an Obligor in
--------------------------
respect of any indebtedness (including payments on leases and the Contracts)
owed by it to Seller shall, except as otherwise specified by such Obligor or
otherwise required by contract or law and be applied in accordance with the
Servicer's usual and customary practice.
SECTION XIII.7 Servicing Compensation; Costs of Servicing. (a) For its
----------------------
services hereunder, the Servicer shall be entitled to receive the Servicing Fee
for each Settlement Period, payable on the Settlement Date occurring on the day
immediately following the last day of such Settlement Period in accordance with
Section 4.2. As additional compensation for its services hereunder, the Servicer
shall be entitled to any late fees collected by the Servicer with respect to any
Contract.
(b) All costs of servicing the Contract Assets as required
hereunder shall be borne by the Servicer, provided that the Servicer shall be
entitled to retain, out of any amounts actually recovered by the Servicer with
respect to a Defaulted Contract or any Equipment related thereto, the Servicer's
actual out-of-pocket expenses reasonably incurred in connection therewith.
ARTICLE XIV
THE AGENT
SECTION XIV.1 Authorization and Action. Purchaser hereby appoints Fleet
------------------------
as its Agent for purposes of the Transaction Documents and authorizes Fleet in
such capacity to take such action on its behalf under each Transaction Document
and to exercise such powers hereunder and thereunder as are delegated to Fleet
by the terms hereof and thereof, together with such powers as are reasonably
incidental thereto.
SECTION XIV.2 Exculpation. Neither the Agent (acting in such capacity under
-----------
the Transaction Documents) 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 under or in connection with the Transaction Documents, except for its or
their own gross negligence or willful misconduct. Without limiting the
generality of the foregoing, the Agent: (a) may consult with legal counsel
(including counsel for Seller or LINC), independent certified 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; (b) makes no warranty or representation to
Purchaser or any other holder of a Participation, and shall not be responsible
to Purchaser or any other holder of a Participation, for any statements,
warranties or representations made by Seller or LINC in or in connection with
any Transaction Document; (c) 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 Transaction Document on the part of Seller, LINC, or Servicer or to
inspect the property (including the books and records) of Seller, LINC, or
Servicer; (d) shall not be responsible to Purchaser or any other holder of a
Participation for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement, any other Transaction
Document or any other instrument or document provided for herein or delivered or
to be delivered hereunder or in connection herewith; and (e) shall incur no
liability under or in respect of any Transaction Document by acting upon any
notice (including notice by telephone), consent, certificate or other instrument
or writing (which may be by facsimile transmission) believed by it to be genuine
and signed or sent by the proper party or parties.
SECTION XIV.3 Agent and Affiliates. Fleet and any of its Affiliates may
---------------------
generally engage in any kind of business with Seller, LINC, Servicer, any
Obligor, any of their respective Affiliates and any Person who may do business
with or own securities of Seller, LINC, Servicer, any Obligor or any of their
respective Affiliates, all as if Fleet were not the Agent and without any duty
to account therefor to Purchaser.
SECTION XIV.4 Contract Schedules. The Agent shall at all times maintain
------------------
a copy for public inspection during normal business hours of the Contract
Schedules delivered hereunder and under the Purchase and Sale Agreement at its
address set forth on Schedule 18.3 or such other address as it shall notify
--------------
Purchaser and Seller of.
ARTICLE XV
ASSIGNMENTS
SECTION XV.1 Restrictions on Assignments. Neither Seller nor Servicer
---------------------------
(except in connection with transactions permitted pursuant to Section 11.2.1)
---------------
may assign its rights hereunder or any interest herein without the prior written
consent of the Agent, and Purchaser may not assign its rights hereunder, or any
Participation (or any portion thereof) to any Person without the prior written
consent of Seller (which consent shall not be unreasonably withheld); provided,
---------
however, that Purchaser may assign all or any portion of the Participations (or
-------
a participation therein) to the Liquidity Banks or the Liquidity Agent in
accordance with the Liquidity Agreement and, provided that the Purchaser Rate
shall not increase as a result thereof, to any other commercial paper conduit
administered by Fleet.
Within five Business Days after notice to Seller of any proposed
assignment by Purchaser for which Seller's consent is required, Seller agrees to
advise the Agent of its consent or non-consent thereto. If Seller does not
consent to such assignment, Purchaser may immediately assign the Participations
(or portion thereof) that was subject to such proposal to Fleet, any Liquidity
Bank or any Affiliate of Fleet or any Liquidity Bank. Subject to Section 15.2,
-------------
all of the aforementioned assignments shall be upon such terms and conditions as
Purchaser and the assignee may mutually agree.
SECTION XV.2 Documentation. Purchaser shall deliver to each assignee an
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assignment, in such form as Purchaser and the related assignee may agree, duly
executed by Purchaser, assigning any such Participation to the assignee, and
Purchaser 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 Participation, and to enable the
assignee to exercise or enforce any rights hereunder.
SECTION XV.3 Rights of Assignee. Upon any assignment of any
--------------------
Participation from Purchaser pursuant to this Article XV, the respective
-----------
assignee receiving such assignment shall have all of the rights of Purchaser
hereunder with respect to such Participation and all references to Purchaser in
Article VI shall be deemed to apply to such assignee.
SECTION XV.4 Notice of Assignment. Purchaser shall provide notice to Seller
--------------------
of any assignment hereunder by Purchaser to any assignee (other than to a
Liquidity Bank).
ARTICLE XVI
INDEMNIFICATION
SECTION XVI.1 General Indemnity of Seller. Without limiting any other
----------------------------
rights which any such Person may have hereunder or under applicable law, Seller
hereby agrees to indemnify the Agent, Purchaser, the Liquidity Banks, the
Program Support Providers, and each of their respective successors, transferees,
participants and assigns and all officers, directors, shareholders, controlling
persons, employees and agents of any of the foregoing (each of the foregoing
Persons being individually called an "Indemnified Party"), forthwith on demand,
-----------------
from and against any and all damages, losses, claims, liabilities and related
costs and expenses, including reasonable attorneys' fees and disbursements (all
of the foregoing being collectively called "Indemnified Amounts") awarded
--------------------
against or incurred by any of them arising out of or relating to the failure of
Seller to perform its obligations under any Transaction Document or arising out
of claims asserted against an Indemnified Party relating to the transactions
contemplated thereby or the use of proceeds therefrom, including (without
limitation) in respect of the funding of any Participation or in respect of any
Contract, excluding, however, (a) Indemnified Amounts to the extent resulting
-------------------
from gross negligence or willful misconduct on the part of any Indemnified
Party, (b) recourse (except as otherwise provided in this Agreement) for credit
losses with respect to the Contracts, (c) any tax based upon or measured by net
income and (d) subject to Section 18.4, normal and customary expenses incurred
------------
in the ordinary course of business in the preparation, execution, delivery and
administration of this Agreement. Without limiting the foregoing, but subject to
the foregoing exclusions, Seller agrees to indemnify each Indemnified Party for
Indemnified Amounts arising out of or relating to:
(i) the sale of any Participation, or the grant of a security interest to
the Purchaser, pursuant to this Agreement;
(ii) the breach of any representation or warranty made by
Seller (or any of its officers) under or in connection with this
Agreement or the other Transaction Documents, any Monthly Report,
Portfolio Certificate or any other information, report or certificate
delivered by Seller pursuant hereto or thereto, which shall have been
false or incorrect when made or deemed made;
(iii) the failure by Seller to comply with any applicable law,
rule or regulation with respect to any Contract, or the nonconformity
of any Contract with any such applicable law, rule or regulation;
(iv) the failure to vest and maintain vested in the Purchaser
a first-priority perfected ownership interest in the Portfolio and a
first-priority security interest in all the Collateral, free and clear
of any Adverse Claim, other than an Adverse Claim arising solely as a
result of an act of Purchaser or the Agent, or any assignee of
Purchaser or the Agent, and the failure to vest and maintain vested in
the Seller a first-priority perfected ownership interest in all
Contracts and in the security interests in all related Equipment, free
and clear of any Adverse Claim, other than an Adverse Claim arising
solely as a result of an act of Purchaser or the Agent, or any assignee
thereof;
(v) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of
any applicable jurisdiction or other applicable laws with respect to
any Collateral;
(vi) any dispute, claim, offset or defense of an Obligor to
the payment of any Contract based on such Contract not being a legal,
valid and binding obligation of such Obligor, enforceable against it in
accordance with its terms(other than discharge in bankruptcy or
resulting from credit matters) ;
(vii) any claim in connection with any Equipment related to
the Contracts; or
(viii) any tax or governmental fee or charge (but not
including taxes upon or measured by net income), all interest and
penalties thereon or with respect thereto, and all out-of-pocket costs
and expenses, including the reasonable fees and expenses of counsel in
defending against the same, which may arise by reason of the making,
maintenance or funding, directly or indirectly, of any Participation,
or any other interest in the Collateral.
SECTION XVI.2 Indemnity by Servicer. Without limiting any other rights
---------------------
which any such Person may have hereunder or under applicable law, Servicer
hereby agrees to indemnify each Indemnified Party, forthwith on demand, from and
against any and all Indemnified Amounts awarded against or incurred by any of
them arising out of or relating to (i) the failure of Servicer to perform its
obligations under any Transaction Document, (ii) the inaccuracy of any
representation or warranty made by Servicer in any Transaction Document, or in
any Monthly Report, Portfolio Certificate or any other information, report or
certificate delivered by Servicer pursuant hereto or thereto, (iii) the failure
by Servicer to comply with any applicable law, rule or regulation with respect
to any Contract or the servicing thereof or (iv) the commingling of any
Collections.
SECTION XVI.3 Contribution. If for any reason (other than the
------------
exclusions (a) and (b) set forth in the first paragraph of Section 16.1) the
-------------
indemnification provided above in Section 16.1 or 16.2 is unavailable to an
---------------------
Indemnified Party or is insufficient to hold an Indemnified Party harmless, then
Seller or Servicer, as the case may be, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by such Indemnified Party, on the one hand, and Seller or
Servicer, as the case may be, on the other hand, but also the relative fault of
such Indemnified Party, on the one hand, and Seller or Servicer, as the case may
be, on the other hand, as well as any other relevant equitable considerations.
ARTICLE XVII
SECURITY INTEREST
SECTION XVII.1 Grant of Security Interest. Each of the parties hereto
---------------------------
expressly intends that the transfer of the Participation to Purchaser hereunder
is a complete and absolute sale and transfer. In the event that a court shall
determine that, notwithstanding the intent of the parties, such transfer does
not constitute a sale, this Agreement shall be a security agreement, and to
secure the prompt payment and performance of all Obligations of Seller arising
in connection with this Agreement, whether now or hereafter existing, due or to
become due, direct or indirect, or absolute or contingent, including, without
limitation, all Indemnified Amounts, payments on account of Collections received
or deemed to be received and fees, Seller hereby assigns and grants to Purchaser
a first priority security interest in all of Seller's right, title and interest
in, to and under all of the following property, whether now or hereafter
existing (the "Collateral"): (a) all Contracts and other Contract Assets, all
----------
Collections with respect to, and other proceeds of, such Contracts and Contract
Assets; (b) all of Seller's rights, remedies, powers and privileges under, or in
respect of, the Purchase and Sale Agreement; (c) all Lock-box Accounts, the
Collection Account, the Reserve Account, all funds on deposit in each of the
foregoing accounts and all certificates and instruments, if any, from time to
time evidencing such accounts and funds on deposit therein, all investments made
with such funds, all claims thereunder or in connection therewith, and all
interest, dividends, moneys, instruments, securities and other property from
time to time received, receivable or otherwise distributed in respect or in
exchange for any or all of the foregoing; and (d) all proceeds and amounts
received or receivable by Seller under any or all of the foregoing. This
Agreement shall constitute a security agreement under applicable law with regard
to security interest granted pursuant to this Section 17.1.
------------
SECTION XVII.2 Further Assurances. Seller agrees that from time to
-------------------
time, at its expense, it will promptly execute and deliver all further
instruments and documents, and take all further action that the Agent may
reasonably request in order to perfect, protect or more fully evidence the
Participations purchased by Purchaser hereunder, or to enable any of Purchaser,
any other holder of a Participation or the Agent to exercise or enforce any of
their respective rights hereunder. Without limiting the generality of the
foregoing, Seller will upon the request of the Agent execute and file such
financing or continuation statements, or amendments thereto or assignments
thereof, and such other instruments or notices, as may be reasonably necessary
or appropriate. Seller hereby authorizes the Agent to file one or more financing
or continuation statements, and amendments thereto and assignments thereof,
relative to all or any of the Contracts and other Collateral now existing or
hereafter arising in the name of Seller. If Seller fails to perform any of its
agreements or obligations under this Section 17.2, the Agent may (but shall not
------------
be required to) itself perform, or cause performance of, such agreement or
obligation, and the expenses of the Agent incurred in connection therewith shall
be payable by Seller as provided in Section 18.4. The provisions of this Section
-------
17.2 shall apply to the security interest granted under Section 17.1 as well as
---- ------------
to the Purchase and all Participations hereunder.
SECTION XVII.3 Remedies. Upon the occurrence of a Termination Event,
--------
Purchaser shall have, with respect to the collateral granted pursuant to Section
-------
17.1, and in addition to all other rights and remedies available to Purchaser or
----
the Agent under this Agreement or other applicable law, all the rights and
remedies of a secured party upon default under the UCC.
ARTICLE XVIII
MISCELLANEOUS
SECTION XVIII.1 No Waiver; Remedies. No failure on the part of
---------------------
Purchaser, the Agent, any Indemnified Party or any Affected Party to exercise,
and no delay in exercising, any right, power or remedy hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise by any of them of
any right, power or remedy hereunder preclude any other or further exercise
thereof, or the exercise of any other right, power or remedy. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law. Without limiting the foregoing, each of Fleet and the Liquidity Banks is
hereby authorized by Seller at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by Fleet and the Liquidity Banks to or for the
credit or the account of Seller, now or hereafter existing under this Agreement,
to the Agent, any Affected Party, any Indemnified Party or Purchaser or their
respective successors and assigns.
SECTION XVIII.2 Amendments, Etc. No amendment, modification or waiver of,
----------------
or consent with respect to, any provision of this Agreement and any Schedules
hereto shall in any event be effective unless the same shall be in writing and
signed and delivered by (a) Seller, Servicer, the Agent and Purchaser (with
respect to an amendment), or (b) the Agent and Purchaser (with respect to a
waiver or consent by them) or Seller or Servicer (with respect to a waiver or
consent by it), as the case may be, and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
SECTION XVIII.3 Notices, Etc. All notices and other communications provided
------------
for hereunder shall, unless otherwise stated herein, be in writing (including
facsimile communication) and shall be personally delivered or sent by certified
mail, postage prepaid, or by facsimile, to the intended party at the address or
facsimile number of such party opposite its name on Schedule 18.3, or at such
--------------
other address or facsimile number as shall be designated by such party in a
written notice to the other parties hereto. All such notices and communications
shall be effective (a) if personally delivered, when received, (b) if sent by
certified mail, three Business Days after having been deposited in the mail,
postage prepaid, (c) if sent by overnight courier, one Business Day after having
been given to such courier and (d) if transmitted by facsimile, when sent,
receipt confirmed by telephone or electronic means, except that notices and
communications pursuant to Section 2.3 shall not be effective until received.
-----------
SECTION XVIII.4 Costs, Expenses and Taxes. In addition to its obligations
--------------------------
under Section 16.1, Seller agrees to pay on demand:
------------
(a) (i) all reasonable costs and expenses incurred by the Agent,
Purchaser, the Liquidity Banks and the Program Support Providers in connection
with the negotiation, preparation, execution and delivery of this Agreement the
other Transaction Documents (including any amendments or modifications or of
supplements to the Program Documents entered into directly related to this
Agreement) and any amendments, consents or waivers executed in connection
therewith, including, without limitation (A) the reasonable fees and expenses of
counsel to any of such Persons incurred in connection with any of the foregoing
or in advising such Persons as to their respective rights and remedies under any
of the Transaction Documents or (to the extent directly related to this
Agreement) the Program Documents and (B) all reasonable out-of-pocket expenses
(including reasonable fees and expenses of independent accountants) incurred in
connection with any audit of Seller's or Servicer's books and records permitted
hereunder and (ii) all costs and expenses incurred by the Agent, Purchaser, the
Liquidity Banks and the Program Support Providers in connection with the
enforcement, or any actual or claimed breach, of this Agreement, the other
Transaction Documents and, to the extent directly related to this Agreement, the
Program Documents (including any amendments or modifications of or supplements
to the Program Documents directly related to this Agreement), including, without
limitation, the reasonable fees and expenses of counsel to any of such Persons
incurred in connection therewith;
(b) all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording of this
Agreement, the other Transaction Documents, or (to the extent directly related
to this Agreement) the Program Documents, and Seller agrees to indemnify each
Indemnified Party against any liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes and fees.
SECTION XVIII.5 Binding Effect; Survival. This Agreement shall be
--------------------------
binding upon and inure to the benefit of Seller, Purchaser, the Agent and their
respective successors and assigns, and the provisions of Article VI and Article
----------------------
XVI shall inure to the benefit of the Affected Parties and the Indemnified
---
Parties, respectively, and their respective successors and assigns; provided,
---------
however, that nothing in the foregoing shall be deemed to authorize any
-------
assignment not permitted by Article XV. This Agreement shall create and
-----------
constitute the continuing obligations of the parties hereto in accordance with
its terms, and shall remain in full force and effect until such time after the
Final Payoff Date. The rights and remedies with respect to any breach of any
representation and warranty made by Seller or Servicer pursuant hereto and the
indemnification and payment provisions of Article XVI and Article VI, Sections
------------------------------------
18.4 and 18.12 shall be continuing and shall survive any termination of this
--------------
Agreement and any termination of Servicer's rights to act as Servicer hereunder
or under any other Transaction Document.
SECTION XVIII.6 Captions and Cross References. The various captions
--------------------------------
(including, without limitation, the table of contents) in this Agreement are
provided solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Agreement. Unless otherwise indicated,
references in this Agreement to any Section, Appendix, Schedule or Exhibit are
to such Section of or Appendix, Schedule or Exhibit to this Agreement, as the
case may be, and references in any Section, subsection, or clause to any
subsection, clause or subclause are to such subsection, clause or subclause of
such Section, subsection or clause.
SECTION XVIII.7 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION XVIII.8 Governing Law. THIS AGREEMENT SHALL BE A CONTRACT MADE
--------------
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD
TO ANY OTHERWISE APPLICABLE CONFLICT OF LAW PRINCIPLES THEREOF.
SECTION XVIII.9 Counterparts. This Agreement may be executed by the parties
------------
hereto in several counterparts, each of which shall be deemed to be an original
but all of which shall constitute together but one and the same agreement.
SECTION XVIII.10 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
---------------------
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO
A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF SELLER, THE AGENT, PURCHASER OR ANY OTHER AFFECTED PARTY.
EACH OF SERVICER AND SELLER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL
AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF
EACH OTHER TRANSACTION DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION
IS A MATERIAL INDUCEMENT FOR THE AGENT AND PURCHASER ENTERING INTO THIS
AGREEMENT AND EACH SUCH OTHER TRANSACTION DOCUMENT.
SECTION XVIII.11 Recourse to Directors or Officers. The obligations of
---------------------------------
Purchaser under this Agreement are solely the corporate obligations of
Purchaser. No recourse shall be had for the payment of any amount owing in
respect to this Agreement or for the payment of any fee hereunder or for any
other obligation or claim arising out of or based upon this Agreement against
any member of the Purchaser. The obligations of Seller under this Agreement are
solely the corporate obligations of Seller. No recourse shall be had for the
payment of any claim against Seller arising out of or based upon this Agreement
against any stockholder of Seller.
SECTION XVIII.12 No Proceedings. Each of Servicer and Seller hereby
---------------
agree that it will not institute against Purchaser, or join any other Person in
instituting against Purchaser, any insolvency proceeding (namely, any proceeding
of the type referred to in the definition of Event of Bankruptcy) so long as any
Commercial Paper Notes 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 be outstanding.
SECTION XVIII.13 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER
-----------------
TRANSACTION DOCUMENTS EXECUTED AND DELIVERED HEREWITH REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
[signature pages begin on next page]
S-1
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
LINC RECEIVABLES CORPORATION
/s/ M. ▇▇▇▇▇▇ ▇'▇▇▇▇▇
By_________________________________
M. ▇▇▇▇▇▇ ▇'▇▇▇▇▇
Name:____________________________
VP & Treasurer
Title:___________________________
LINC CAPITAL, INC.
/s/ R. E. ▇▇▇▇▇
By_________________________________
R. E. ▇▇▇▇▇
Name:____________________________
President
Title:___________________________
BLUE KEEL FUNDING, LLC, as Purchaser
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
By_________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇
Name:____________________________
Vice President
Title:___________________________
FLEET BANK, N.A., as Agent
/s/ ▇▇▇▇▇▇ ▇ ▇▇▇▇▇
By_________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name:____________________________
Vice President
Title:___________________________
