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Exhibit 10.37
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AMENDED AND RESTATED
PURCHASE AND ADMINISTRATION AGREEMENT
Dated as of October 31, 1997
Among
RETAILER FUNDING CORPORATION,
KEYBOARD ACCEPTANCE CORPORATION
and
▇▇▇▇▇▇▇ PIANO & ORGAN COMPANY
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TABLE OF CONTENTS
Page
ARTICLE II
DEFINITIONS...................................................................2
Section 1.01 Definitions............................................2
ARTICLE II
PURCHASE OF ELIGIBLE RECEIVABLES.............................................12
Section 2.01 The Initial Purchase..................................13
Section 2.02 Additional Purchases..................................13
Section 2.03 Deferred Purchase Price...............................14
Section 2.04 Increase of Commitment................................14
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS....................................15
Section 3.01 Representations and Warranties of Seller..............15
Section 3.02 Representations and Warranties of the Company.........17
Section 3.03 Covenants of Seller...................................18
Section 3.04 Representations and Warranties Deemed Made............22
Section 3.05 Receivable Repurchases................................23
ARTICLE IV
CONDITIONS PRECEDENT.........................................................23
Section 4.01 Conditions to the Obligations of the Company..........23
ARTICLE V
ADMINISTRATION, COLLECTIONS AND OTHER OBLIGATIONS............................25
Section 5.01 Appointment of Collection Agent.......................25
Section 5.02 Collections...........................................25
Section 5.03 Application of Collections............................27
Section 5.04 Settlement Statements; Weekly Reports.................29
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Section 5.05 Appointment of Successor Collection Agent.............30
Section 5.06 Compromise and Adjustment.............................31
Section 5.07 Interest Deficiency Payments..........................32
Section 5.08 Net Deposits..........................................32
Section 5.09 SWAPs.................................................32
Section 5.10 SWAP Advances.........................................32
Section 5.11 Grant of Security Interest; Remedies...................33
ARTICLE VI
PARENT GUARANTEE.............................................................34
Section 6.01 Unconditional Parent Guarantee........................34
Section 6.02 Validity..............................................35
Section 6.03 Waivers...............................................35
Section 6.04 Subrogation...........................................35
Section 6.05 Grant of Security Interest; Remedies..................35
ARTICLE VII
MISCELLANEOUS................................................................37
Section 7.01 Notices, etc..........................................37
Section 7.02 Successors and Assigns................................39
Section 7.03 Severability Clause...................................39
Section 7.04 Amendments; Governing Law.............................39
Section 7.05 Seller's Obligations..................................39
Section 7.06 Servicing Fee.........................................39
Section 7.07 Subordination of Deferred Purchase Price..............40
Section 7.08 Facility Fee..........................................43
Section 7.09 Bankruptcy Petition Against the Company...............43
Section 7.10 Setoff................................................43
Section 7.11 Remedies..............................................43
Section 7.12 Costs, Expenses and Taxes.............................43
Section 7.13 Optional Repurchase...................................43
Section 7.14 Further Assurances....................................43
ANNEX A Form of Monthly Portfolio Statement
ANNEX B Form of Monthly Settlement Statement
ANNEX C Purchase Discount Adjustment Criteria
ANNEX D Form of Sale and Assignment
ANNEX E Form of Additional Assignment
ANNEX F Form of Blocked Deposit Agreement
ANNEX G Form of Weekly Activity Report
ANNEX H Form of Support Agreement
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AMENDED AND RESTATED
PURCHASE AND ADMINISTRATION AGREEMENT
AMENDED AND RESTATED PURCHASE AND ADMINISTRATION AGREEMENT
(the "Agreement") dated as of October 31, 1997 among RETAILER FUNDING
CORPORATION, a Delaware corporation (together with its successors and assigns,
hereinafter referred to as the "Company"), KEYBOARD ACCEPTANCE CORPORATION, a
Delaware corporation (together with its successors and assigns hereinafter
referred to as the "Seller") and ▇▇▇▇▇▇▇ PIANO & ORGAN COMPANY, a Delaware
corporation (together with its successors and assigns, hereinafter referred to
as the "Parent"), to which General Electric Capital Corporation ("GECC") has
joined as a consenting party.
W I T N E S S E T H :
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WHEREAS, the Company, the Seller and the Parent entered into a
Purchase and Administration Agreement dated as of October 1, 1990, which
Purchase and Administration Agreement was amended by a First Amendment dated as
of February 15, 1994, a Second Amendment dated as of December 1, 1994, a Third
Amendment dated as of December 1, 1995 and a Fourth Amendment dated as of
November 1, 1996 (such Purchase and Administration Agreement as so amended, the
"Original Agreement");
WHEREAS, the Company, the Seller and the Parent wish to
further amend and restate the Original Agreement and GECC wishes to consent to
such further amendment and restatement;
WHEREAS, the Company and GECC have entered into a Liquidity
Agreement (the "Liquidity Agreement") dated as of the date of the Original
Agreement pursuant to which GECC has agreed to make available to the Company the
credit facilities described therein and the Company may issue Commercial Paper
(as hereinafter defined) to finance the purchase by the Company of
Receivables (as hereinafter defined) from the Seller;
WHEREAS, the Liquidity Agreement contemplates that Receivables
will be assigned by the Company as security for the Commercial Paper and for the
credit facilities described in the Liquidity Agreement;
WHEREAS, it is contemplated that following such purchase and
assignment of Receivables, the Seller will, as agent for the Company, collect
the sums due thereon from the obligors on the Receivables and account to the
Company therefor as provided for herein; and
WHEREAS, the Company has requested the Seller to undertake the
collection and servicing responsibilities in respect of the Receivables owned by
the Company from time to time;
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NOW, THEREFORE, the parties hereto agree that the Original
Agreement is amended and restated in its entirety as of the date hereof as
follows (as hereby amended and restated, the "Agreement"):
ARTICLE I
DEFINITIONS
Section 1.01 DEFINITIONS. As used herein the following terms
shall have the meanings herein specified:
"Additional Assignment" shall have the meaning set forth in
Section 2.02 hereof.
"Additional Receivable" shall have the meaning set forth in
Section 2.02 hereof.
"Adjustment Payment" shall have the meaning specified in
Section 5.06 hereof.
"Aggregate Interest Component" shall mean, with respect to any
Settlement Period, the sum for all Commercial Paper outstanding at any time
during such Settlement Period of an amount with respect to each Commercial Paper
Note outstanding at any time during such Settlement Period equal to the product
of (x) the Interest Component of such Commercial Paper Note multiplied by (y) a
fraction the numerator of which is the number of days during such Settlement
Period that such Commercial Paper Note was outstanding and the denominator of
which is the total number of days such Commercial Paper Note was or is scheduled
to be outstanding, as the case may be.
"Applicable Program Fee Percentage" shall mean, with respect
to any Settlement Period, (a) if Consolidated Book Net Worth is $35,000,000 or
less, 1.75%, (b) if Consolidated Book Net Worth is greater than $35,000,000 and
less than or equal to $40,000,000, 1.50%, (c) if Consolidated Book Net Worth is
greater than $40,000,000 and less than or equal to $50,000,000, 1.25%, or (d) if
Consolidated Book Net Worth is greater than $50,000,000, 1.00%.
"Blocked Deposit Account" shall have the meaning specified in
Section 5.02(b).
"Blocked Deposit Agreement" means an agreement by and among
the Seller, the Company, the Collateral Agent and a Blocked Deposit Bank in
substantially the form attached hereto as Annex F, establishing a Blocked
Deposit Account and specifying the rights of the Company and the Collateral
Agent in such Blocked Deposit Account.
"Blocked Deposit Bank" means any bank maintaining one or more
Blocked Deposit Accounts.
"Book Net Worth" shall mean, with respect to any Person, the
total assets less the total liabilities of such Person, as determined in
accordance with GAAP.
"Business Day" shall mean a day on which each of GECC, the
Collateral Agent and the Depositary is open at its respective address specified
in this Agreement or in the Security Agreement or Depositary Agreement, as the
case may be, for the purpose of conducting its business.
"Carrying Costs" shall mean, with respect to any Settlement
Period, the sum of (i) the Aggregate Interest Component for such Settlement
Period PLUS (ii) the aggregate amount of interest accrued during such Settlement
Period with respect to all Loans outstanding during such Settlement Period PLUS
(iii) the Program Fee payable with respect to such Settlement Period PLUS
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(iv) the fixed interest component, if any, payable by the Company on the
notional principal amount of SWAPs outstanding at any time during such
Settlement Period accrued from the first day through the last day of such
Settlement Period whether or not such fixed interest component is due and owing
during such Settlement Period PLUS (v) the amount, if any, paid by the Company
during such Settlement Period in connection with any termination of any SWAP
MINUS (vi) the sum of (1) the variable interest component, if any, receivable by
the Company on the notional principal amount of SWAPs outstanding at any time
during such Settlement Period accrued from the first day through the last day of
such Settlement Period whether or not such variable interest component is due
and owing during such Settlement Period and (2) the amount, if any, received by
the Company during such Settlement Period in connection with any termination of
any SWAP.
"Cash Percentage" shall mean at any time 90%, as the same may
be adjusted from time to time in accordance with the policies and criteria set
forth on Annex C hereto.
"Collateral Agent" shall have the meaning assigned to such
term in Section 7.01 of the Security Agreement.
"Collection Account" shall have the meaning assigned to such
term in Section 5.03 of the Liquidity Agreement and in Section 5.01 of the
Security Agreement.
"Collection Agent" shall have the meaning set forth in Section
5.01 hereof.
"Collection Agent Event of Default" shall have the meaning set
forth in Section 5.05 hereof.
"Collections" shall mean (i) all payments received in respect
of the Receivables, in the form of cash, checks, wire transfers, ATM transfers
or any other form of payment in accordance with the terms of a Receivable or
otherwise, (ii) all proceeds from the sale or other disposition of the
collateral securing a Receivable, (iii) any Adjustment Payments made pursuant to
Section 5.06 hereof and (iv) any dealer recourse payments or reserves which
dealer recourse payments or reserves are applied in respect of a Receivable.
"Commercial Paper" shall mean promissory notes of the Company
in the form of Exhibit B to the Depositary Agreement issued by the Company in
the commercial paper market pursuant to the Liquidity Agreement and the
Depositary Agreement, each such promissory note being referred to herein as a
"Commercial Paper Note".
"Commitment" shall mean the obligation of GECC to make Loans
with respect to the Seller in the maximum principal amount at any time
outstanding of $100,000,000, as such amount may be (x) terminated or reduced
from time to time pursuant to Section 4.02 of the Liquidity Agreement or (y)
increased from time to time as provided in Section 2.04 hereof.
"Commitment Commission" shall have the meaning specified in
Section 4.01 of the Liquidity Agreement.
"Company" shall have the meaning assigned to that term in the
introduction to this Agreement.
"Company Default" shall mean any event which with notice or
lapse of time, or both, would become a Company Event of Default.
"Company Event of Default" shall have the meaning set forth in
Section 8.01 of the Liquidity Agreement.
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"Consolidated Book Net Worth" shall mean, with respect to any
Settlement Period, the Book Net Worth of the Parent and its Subsidiaries as of
the last day of the preceding Settlement Period.
"Cumulative SWAP Payable" shall mean, as of any date of
determination thereof, the amount, if any, by which (x) the fixed interest
component payable by the Company on the notional principal amount of all
outstanding SWAPs accrued from the preceding SWAP Payment Date for each such
SWAP through the last day of the preceding Settlement Period exceeds (y) the
variable interest component receivable by the Company on the notional principal
amount of all outstanding SWAPs accrued from the preceding SWAP Payment Date for
each such SWAP through the last day of the preceding Settlement Period.
"Cut-Off Date" shall mean September 30, 1990.
"D&P" shall mean Duff & ▇▇▇▇▇▇ Credit Rating Co.
"Daily Accrual Factor" shall mean, with respect to any day, a
fraction the numerator of which is the number of days that have elapsed in the
current calendar month prior to such day and the denominator of which is the
total number of days in the current calendar month.
"Deferred Purchase Price" shall have the meaning set forth in
Section 2.03 hereof.
"Deposits Letter of Credit" shall mean an irrevocable letter
of credit in a stated amount of $1,500,000 naming the Collateral Agent as
beneficiary and permitting the Collateral Agent to make drawings thereunder for
any amounts required to be deposited in the Collection Account by the Seller or
the Collection Agent which are not so deposited on the date due; provided that
such letter of credit must be in form and substance satisfactory to the
Collateral Agent and must be issued by a banking institution approved by the
Collateral Agent.
"Documents" shall mean all documentation relating to the
Receivables including, without limitation, credit applications, billing
statements and computer records and programs.
"EBITDA" shall mean, for any period, the consolidated net
income (or net loss) of the Parent and its Subsidiaries for such period as
determined in accordance with GAAP, plus the sum of the following amounts of the
Parent and its Subsidiaries for such period to the extent included in the
determination of such net income (or net loss), (i) depreciation expense, (ii)
amortization expense, (iii) interest expense, and (iv) income tax expense.
"Effective Yield" shall mean the ratio (expressed as a
percentage) computed as of the last day of each Settlement Period by dividing
(a) the product of (x) 2 and (y) the sum of (1) the aggregate amount of all
interest and finance charges (and excluding in any event any late fees,
prepayment fees or other similar charges) accruing in respect of all Eligible
Receivables during the period of six consecutive Settlement Periods then ended
and (2) the amount, if any, by which (i) the variable interest component, if
any, receivable by the Company on the notional principal amount of all SWAPs
outstanding at any time during the period of six consecutive Settlement Periods
then ended accrued from the first day through the last day of such six-month
period whether or not such variable interest component is due and owing during
such six-month period exceeds (ii) the fixed interest component, if any, payable
by the Company on the notional principal amount of SWAPs outstanding at any time
during such six-month period accrued from the first day through the last day of
such six-month period whether or not such fixed interest component is due and
owing during such six-month period by (b) the average Unpaid Balance of
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all Eligible Receivables as of the first day of each of the seven consecutive
Settlement Periods commencing with the first Settlement Period occurring during
such six-month period.
"Effective Yield Adjuster" shall mean, with respect to any
Settlement Period, an amount (but not less than zero) equal to the product of
(a) 1.5 and (b) the amount, if any, by which (x) 13.37% exceeds (y) the
Effective Yield as of the last day of the preceding Settlement Period.
"Eligible Receivable" shall mean each Receivable:
(a) which was originated in compliance with all applicable
requirements of law (including, without limitation, all laws, rules and
regulations relating to truth in lending, fair credit billing, fair
credit reporting, fair debt collection practices and privacy) and which
as of the date of this Purchase Agreement complies with all applicable
requirements of law;
(b) with respect to which all consents, licenses, approvals or
authorizations of, or registrations or declarations with, any
governmental authority required to be obtained, effected or given by
the Seller or the Parent in connection with the creation or the
execution, delivery and performance of such Receivable, have been duly
obtained, effected or given and are in full force and effect;
(c) as to which, at the time of the sale of such Receivable to
the Company, the Seller was the sole owner thereof and had good and
marketable title thereto free and clear of all Liens;
(d) which is the legal, valid and binding payment obligation
of the Obligor thereon enforceable against such Obligor in accordance
with its terms and is not subject to any right of rescission, setoff,
counterclaim or defense (including the defense of usury) or to any
repurchase obligation or return right;
(e) which constitutes "chattel paper" under and as defined in
Article 9 of the UCC of all applicable jurisdictions;
(f) which was established in accordance with the normal credit
extension procedures and standards of the Parent, the Seller or
Wurlitzer in the regular and ordinary course of the business of the
Parent, the Seller or Wurlitzer, as the case may be, and, subject to
review and approval by the Company of the applicable policies,
procedures and underwriting, may include Receivables originated from
non-Parent dealer programs;
(g) which is denominated and payable in U.S. dollars and is
only payable in the United States of America;
(h) other than a Receivable (A) as to which (i) as of the
Cut-Off Date (or in the case of Additional Receivables, as of the last
day of the preceding Settlement Period), any payment, or part thereof,
remains unpaid for 30 days or more past the due date for such payment
determined by reference to the original contractual payment terms
thereof, or (ii) the Obligor thereon shall generally not be paying its
debts as such debts become due or shall have admitted in writing its
inability to pay its debts generally or shall have made a general
assignment for the benefit of creditors or any proceeding shall have
been instituted by or against such Obligor seeking to adjudicate it a
bankrupt or insolvent or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or
composition of its or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of
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debtor or seeking the entry of an order for relief or the appointment
of a receiver, trustee or other similar official for it or for any
substantial part of its property or such Obligor shall have taken any
corporate action to authorize any of the foregoing, or (iii) all of the
original obligors obligated thereon are deceased, or (B) which,
consistent with the internal credit and collection policies of the
Seller, the Parent or Wurlitzer, has been or should have been written
off as uncollectible;
(i) the terms of which at the time of its transfer to the
Company have not been modified or waived except as permitted under this
Purchase Agreement;
(j) which has no Obligor thereon that is an officer, director
or employee of the Parent, the Seller or any Subsidiary of the Parent;
and
(k) which bears interest on the principal balance thereof or
provides for the payment of finance charges in respect of the amount
financed at a rate per annum of not less than 9.9% (or such lower rate
as shall be approved from time to time by the Collateral Agent in a
particular case or generally, with the Collateral Agent hereby
approving a rate of not less than 6.9% per annum with respect to
Receivables constituting not more than 10% of the Outstanding Principal
Receivables) and is in substantially the form of one of the form
contracts set forth as Annex F hereto with such changes therein as may
be necessary or desirable from time to time in light of local statutes
or regulations.
"Excess Finance Charge Amount" shall mean with respect to any
Settlement Period (i) the aggregate Collections received during such Settlement
Period allocable to Finance Charge Receivables less (ii) the Carrying Costs with
respect to such Settlement Period.
"Facility Fee" shall have the meaning specified in Section
7.08 hereof.
"Finance Charge Receivables" shall mean all interest, finance
charges, late fees, prepayment fees or other fees which become due or owing
under a Receivable after the Cut-Off Date or, in the case of Additional
Receivables, the applicable Notice Date.
"Fixed Amount" shall mean, at any time, the aggregate notional
principal amount of all SWAPs outstanding at such time.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as from time to time in effect.
"GECC" shall mean General Electric Capital Corporation, a New
York corporation.
"Guarantor" shall mean General Electric Capital Corporation as
issuer of the Guaranty.
"Guaranty" shall mean a Guaranty Agreement in the form of
Exhibit C to the Liquidity Agreement entered into by GECC with respect to the
Receivables purchased by the Company from the Seller from time to time and
certain obligations of the Seller hereunder and any guaranty issued in
substitution therefor.
"Guaranty Fee" shall mean the fee payable by the Company to
GECC in respect of the Guaranty.
"Guaranty Letter of Credit" shall mean an irrevocable letter
of credit naming GECC as beneficiary and permitting GECC to make drawings
thereunder from time to time, in an aggregate principal amount not less than 2%
of the Outstanding Principal Receivables as of the earlier of (x) the Settlement
Date in the calendar month preceding the date of the related
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payment under the Guaranty and (y) the Wind-Down Date, for any amounts required
to be reimbursed to GECC under the Guaranty which are not so reimbursed on the
date due; provided that such letter of credit must be in form and substance
satisfactory to GECC and must be issued by The Fifth Third Bank, NBD Bank, N.A.
or another banking institution approved by GECC.
"Indemnification Agreement" shall mean the indemnification
agreement among the Seller, GECC and each dealer for the Commercial Paper in the
form of Exhibit H to the Liquidity Agreement as the same may at any time be
further amended or modified and in effect.
"Ineligible Receivables" shall mean all Receivables which were
not Eligible Receivables on the date such Receivables were sold and assigned to
the Company pursuant to the terms of the Purchase Agreement.
"Initial Purchase Date" shall have the meaning set forth in
Section 2.01 hereof.
"Intercreditor Agreement" shall mean that certain letter
agreement dated as of October 31, 1997 by and among the Company, GECC, The Fifth
Third Bank, Seller and Parent, as the same shall be amended, modified or
supplemented from time to time in accordance with the terms thereof.
"Interest" shall mean, for any Person, determined on a
consolidated basis in accordance with GAAP, for any period, the net interest
expense for such period, plus (a) interest expense capitalized for such period
to the extent deducted in the determination of such net interest expense, less
(b) the sum of the following amounts with respect to such Person to the extent
included in such net interest expense of such Person for such period: (A) the
amount of amortized debt discount, (B) charges relating to write-ups or
write-downs in the book or carrying value of existing indebtedness, and (C) any
increase in pay-in-kind interest payable.
"Interest Component" shall mean (a) the portion of the face
amount of Commercial Paper issued on a discount basis representing the discount
incurred in respect thereof and (b) the amount of interest payable in respect of
such Commercial Paper issued on an interest-bearing basis.
"Interest Deficiency Payment" shall have the meaning set forth
in Section 5.07 hereof.
"KAC Obligations" shall mean all obligations and liabilities
of the Seller or the Collection Agent to the Company, GECC or the Collateral
Agent, howsoever created, arising or evidenced, whether direct or indirect,
absolute or contingent, now or hereafter existing, or due or to become due,
under or in connection with this Agreement, including but not limited to the
obligation to make deposits of Collections and Seller Payables as provided
herein.
"Lien" shall mean any mortgage, pledge, assignment, lien,
security interest or other charge or encumbrance of any kind, including the
retained security title of a conditional vendor or a lessor.
"Loans" shall mean the Revolving Loans and the Refunding Loans
made to the Company pursuant to Article III of the Liquidity Agreement.
"Lockbox Account" shall have the meaning specified in Section
5.02(a).
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
"Notice Date" shall mean, with respect to each Purchase Date
subsequent to the Initial Purchase Date, the last day of the calendar month
preceding such Purchase Date.
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"Obligor" shall mean, with respect to any Receivable, the
Person or Persons obligated to make payments with respect to such Receivable,
including any guarantor thereof.
"Origination Agreement" shall mean any agreement pursuant to
which KAC acquires a Receivable or agrees with a manufacturer to provide
financing to dealers or purchasers that results in the origination or
acquisition by KAC of Receivables.
"Outstanding Principal Receivables" shall mean at any time,
all Principal Receivables which have not been paid (but only to the extent
unpaid) and which do not constitute Uncollectible Receivables or Repurchased
Receivables.
"Outstanding Unpaid Receivable Losses Funding Amount" shall
mean, as of any date of determination thereof, the aggregate Unpaid Receivables
Losses Funding Amounts for all prior Settlement Periods which have not been paid
from the Excess Finance Charge Amount or the Purchase Discount Collections in
any subsequent Settlement Period or otherwise.
"Over-Collateralization Amount" shall mean with respect to any
Purchase Date an amount equal to the product of (a) the Outstanding Principal
Receivables being purchased on such Purchase Date and (b) the Purchase Discount.
"Parent" means ▇▇▇▇▇▇▇ Piano & Organ Company, a Delaware
corporation and the parent corporation of the Seller and Wurlitzer.
"Parent Credit Agreement" shall mean that certain Credit
Agreement dated October 16, 1997 by and among Parent, the Fifth Third Bank, as
agent, and the lenders party thereto, as the same may be amended, modified or
supplemented from time to time in accordance with the terms thereof.
"Permitted Investments" means investments, having maturities
of not more than 270 days at the date of purchase, made by the Collateral Agent
from time to time with Deposited Funds in the following: (i) obligations issued
by, or the principal of and interest on which is fully guaranteed by, the United
States of America; (ii) commercial paper rated A-1+ by S&P and P-1 by Moody's;
(iii) certificates of deposit, other deposits or bankers' acceptances issued by
or established with commercial banks having (or in the case of a bank which is
the principal subsidiary of a bank holding company, such bank holding company
has) unimpaired capital and unimpaired surplus of at least $250,000,000 and (a)
whose commercial paper is rated A-1+ by S&P and P-1 by Moody's, and (b) the
deposits in which are insured by the Federal Deposit Insurance Corporation; and
(iv) repurchase agreements, with a term of no more than 30 days, involving any
of the Permitted Investments described in clauses (i) through (iii) hereof.
"Person" shall mean and include an individual, a partnership,
a corporation (including a business trust), a joint stock company, a trust, an
unincorporated association, a joint venture or other entity or a government or
an agency or political subdivision thereof.
"Portfolio Settlement Statement" shall have the meaning
provided in Section 5.04 hereof.
"Principal Component" shall mean (A) the excess of the face
amount of Commercial Paper issued on a discount basis over the Interest
Component thereof and (B) the principal amount of Commercial Paper issued on an
interest-bearing basis.
"Principal Receivables" shall mean all amounts due or owing in
respect of a Receivable other than Finance Charge Receivables.
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"Program Fee" shall mean, with respect to each Settlement
Period, an amount equal to the sum of (i) the product of (x) the Applicable
Program Fee Percentage with respect to such Settlement Period MULTIPLIED BY (y)
the actual number of days elapsed during such Settlement Period divided by 360
MULTIPLIED BY (z) the average daily amount of Commercial Paper outstanding
during such Settlement Period plus (ii) the product of (x) 0.50% MULTIPLIED BY
(y) the number of days elapsed during such Settlement Period divided by 360
MULTIPLIED BY (z) an amount equal to (1) the Commitment MINUS (2) the sum of the
average daily amount of Commercial Paper outstanding during such Settlement
Period and the average daily amount of Loans outstanding during such Settlement
Period.
"Purchase Date" shall have the meaning set forth in Section
2.02 hereof.
"Purchase Discount" shall mean 10%, as the same may be
adjusted from time to time in accordance with the policies and criteria set
forth on Annex C hereto.
"Purchase Discount Collections" shall mean, with respect to
any Settlement Period, the product of (x) the sum of (i) the Collections
received during such Settlement Period allocable to Principal Receivables plus
(ii) the amount of any repurchase payment made by the Seller pursuant to Section
3.05 hereof on the Settlement Date immediately succeeding such Settlement Period
which is allocable to Principal Receivables plus (iii) the amount of any
purchase payment made by the Collection Agent pursuant to Section 5.02(c) hereof
on the Settlement Date immediately succeeding such Settlement Period which is
allocable to Principal Receivables, and (y) the Purchase Discount.
"Receivable" shall mean a retail installment sales contract
executed by the respective Obligor and identified by account number, account
name and outstanding principal balance on Schedule I hereto; PROVIDED that from
and after each Purchase Date subsequent to the Initial Purchase Date, each
Additional Receivable identified on Schedule I to an Additional Assignment
delivered in accordance with Section 2.02 hereof shall be a Receivable and
Schedule I hereto shall be deemed to be amended and supplemented to include each
such Additional Receivable; and PROVIDED FURTHER, that from and after the date
of any repurchase of a Receivable by the Seller in accordance with Section 3.05
hereof or by the Collection Agent in accordance with Section 5.02(c) hereof,
such Repurchased Receivable shall no longer be a Receivable.
"Receivable Losses" shall mean, with respect to any Settlement
Period, the Unpaid Balance of the Receivables which became Uncollectible
Receivables during such Settlement Period.
"Receivable Losses Funding Amount" shall mean, with respect to
any Settlement Period, the product of (x) the Cash Percentage and (y) the
Receivables Losses for such Settlement Period.
"Recoveries" shall mean, with respect to any Settlement
Period, all Collections received during such Settlement Period in respect of
Receivables which became Uncollectible Receivables prior to the first day of
such Settlement Period.
"Refunding Loans" shall mean the Refunding Loans made to the
Company by GECC pursuant to Section 3.01(c) of the Liquidity Agreement.
"Repurchased Receivable" shall mean any Receivable which is
repurchased by the Seller pursuant to Section 3.05 hereof.
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"Retail Purchase Agreement" shall mean the Retail Accounts
Receivable Purchase Agreement dated as of October 1, 1990 by and among the
Parent, Wurlitzer and the Seller as amended, supplemented and modified through
the date hereof.
"Revolving Loans" shall mean the Revolving Loans made to the
Company by GECC pursuant to Section 3.01(b) of the Liquidity Agreement.
"S&P" shall mean Standard & Poor's Corporation.
"Security Agreement" shall mean the Security Agreement among
the Company, GECC and the Collateral Agent, dated as of June 28, 1988, as the
same may at any time be amended or modified and in effect, in accordance with
the terms hereof and thereof.
"Seller" shall mean Keyboard Acceptance Corporation (formerly
BPO Finance Corporation), a Delaware corporation.
"Seller Default" shall mean any event which with notice or
lapse of time, or both, would become a Seller Event of Default.
"Seller Documents" shall mean and include this Agreement, the
Guaranty, the Indemnification Agreement, the Assignment, each Additional
Assignment and the Consent and Acknowledgment to Security Agreement executed by
the Seller.
"Seller Event of Default" shall have the meaning set forth in
Section 8.02 of the Liquidity Agreement.
"Seller Payables" shall mean (i) the obligation of the Seller
to repurchase, pursuant to Section 3.05 hereof, any Receivable which was not an
Eligible Receivable on the date such Receivable was sold by the Seller to the
Company, (ii) the Seller's obligation to make Interest Deficiency Payments
pursuant to Section 5.07 hereof, and (iii) all other amounts owed by the Seller
to the Company from time to time pursuant to this Agreement.
"Senior Indebtedness" shall have the meaning specified in
Section 7.07 hereof.
"Servicing Fee" shall have the meaning specified in Section
7.06 hereof.
"Settlement Date" shall mean, with respect to each Settlement
Period, the fifteenth Business Day following the last day of such Settlement
Period.
"Settlement Period" shall mean the period of time commencing
on the first day in a calendar month to and including the last day in such
calendar month, PROVIDED that the initial Settlement Period shall commence on
October 1, 1990 and end on October 31, 1990.
"Settlement Statement" shall have the meaning provided in
Section 5.04 hereof.
"Subsidiary" of any Person means any corporation, of which
more than 50% of the total voting power of voting securities shall at the time
be owned or controlled, either directly or indirectly, by such Person or one or
more other Subsidiaries of such Person.
"Support Agreements" shall mean letter agreements in the form
attached hereto as Annex H executed by certain officers of the Parent.
"SWAP" shall mean an interest rate exchange agreement (i)
entered into by the Company at the request of the Seller as provided in Section
5.09 hereof and (ii) satisfying all of the terms and conditions of Section 10.15
of the Liquidity Agreement.
"SWAP Advance" shall have the meaning specified in Section
5.10 hereof.
"SWAP Counterparty" shall have the meaning specified in
Section 10.15 of the Liquidity Agreement.
"SWAP Deficit" shall have the meaning specified in Section
5.10 hereof.
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"SWAP Excess" shall mean, with respect to any Settlement
Period, the amount, if any, by which (x) the variable interest component, if
any, receivable by the Company on the notional principal amount of SWAPs
outstanding at any time during such Settlement Period accrued from the first day
through the last day of such Settlement Period whether or not such variable
interest component is due and owing during such Settlement Period EXCEEDS (y)
the fixed interest component, if any, payable by the Company on the notional
principal amount of SWAPs outstanding at any time during such Settlement Period
accrued from the first day through the last day of such Settlement Period
whether or not such fixed interest component is due and owing during such
Settlement Period.
"SWAP Notice" shall have the meaning specified in Section 5.09
hereof.
"SWAP Payment Date" shall mean any day designated as a payment
date pursuant to the terms of a SWAP.
"SWAP Shortfall" shall mean, with respect to any Settlement
Period, the amount, if any, by which (x) the fixed interest component, if any,
payable by the Company on the notional principal amount of SWAPs outstanding at
any time during such Settlement Period accrued from the first day through the
last day of such Settlement Period whether or not such fixed interest component
is due and owing during such Settlement Period EXCEEDS (y) the variable
interest component, if any, receivable by the Company on the notional principal
amount of SWAPs outstanding at any time during such Settlement Period accrued
from the first day through the last day of such Settlement Period whether or
not such variable interest component is due and owing during such Settlement
Period.
"SWAPs Sub-Account" shall have the meaning specified in
Section 5.03 of the Liquidity Agreement.
"Tangible Net Worth" shall mean of any Person, at any date,
determined on a consolidated basis in accordance with GAAP, the total assets of
such Person (which shall be valued at cost less normal depreciation) less:
(a) all items which are treated as intangibles in accordance
with GAAP, including, without limitation, (i) excess cost over book value of
businesses acquired; (ii) patents and patent rights; (iii) trademarks and trade
names; (iv) copyrights; (v) goodwill; (vi) organization cost; (vii) government
licenses; (viii) franchises; (ix) mailing lists; (x) exploration permits; (xi)
import and export permits; and (xii) bond or debenture discounts; and
(b) Total Liabilities.
"Termination Date" shall mean the date on which GECC gives
the Depositary and the Company instructions to cease issuing or delivering
Commercial Paper in accordance with the terms of Section 2.01(a) of the
Liquidity Agreement.
"Total Liabilities" of any Person means, at any date, the
total liabilities of such Person and its Subsidiaries at such date determined
on a consolidated basis in accordance with GAAP. "UCC" shall mean, with respect
to any state, the Uniform Commercial Code as from time to time in effect in
such state.
"Uncollectible Receivable" shall mean any Receivable (i)
which has been written off as uncollectible by the Seller in its capacity as
Collection Agent for the Company pursuant to
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this Agreement, in accordance with the customary and usual servicing procedures
of the Seller and the Parent for servicing retail installment sale contracts or
(ii) as to which any payment, or part thereof, remains unpaid for 121 days or
more past the due date for such payment determined by reference to the original
contractual payment terms of such Receivable.
"Unpaid Balance" shall mean with respect to any Receivable the
aggregate amount required to prepay in full the principal of, and all interest,
finance, prepayment and other fees or charges of any kind payable in respect of,
such Receivable.
"Unpaid Receivable Losses Funding Amount" shall mean, with
respect to any Settlement Period, the amount, if any, by which (x) the
Receivable Losses Funding Amount with respect to such Settlement Period exceeds
(y) the sum of (1) the Excess Finance Charge Amount for such Settlement Period
and (2) the Purchase Discount Collections for such Settlement Period.
"Weekly Activity Report" shall have the meaning specified in
Section 5.04(b).
"Wind-Down Date" shall mean the earliest to occur of (i) the
Settlement Date immediately following any period of three consecutive Settlement
Periods in which the Receivable Losses exceeds an annualized rate equal to 12%
of the average outstanding Principal Receivables, (ii) the first Settlement Date
to occur after (w) the Termination Date, (x) the 30th day following the date on
which GECC gives the Seller notice of its decision to cease providing credit
support for the purchase of Additional Receivables by the Company, (y) GECC has
notified the Company pursuant to Section 8.01 of the Liquidity Agreement that a
Company Event of Default exists or (z) GECC has notified the Company pursuant to
Section 8.02 of the Liquidity Agreement that a Seller Event of Default exists,
(iii) the first Settlement Date on which the product of the Cash Percentage and
the Unpaid Balance of the Receivables is less than or equal to the greater of
(x) $25,000,000 or (y) the Fixed Amount at such time, (iv) October 31, 2001, (v)
the first Settlement Date to occur after any date on which the Seller is not a
Subsidiary of the Parent unless GECC shall have given its prior written consent
to such change in the ownership of the Seller, (vi) the first Settlement Date to
occur after the Expiration Date (as defined in the Liquidity Agreement), (vii)
the first Settlement Date on which the Outstanding Principal Receivables divided
by the Principal Component of outstanding Commercial Paper shall be less than
1.09, as such number may be adjusted from time to time in accordance with the
policies and criteria set forth on Annex C hereto, (viii) the 120th day
following the delivery by the Seller of a termination notice in accordance with
the provisions of Section 2.04(b) of this Agreement, (ix) the first Settlement
Date on which the ratio of (a) all Outstanding Principal Receivables that are
less than 31 days past due to (b) all Outstanding Principal Receivables, is less
than 85% or (x) the date which is eighteen (18) months prior to the expiry date
of the Guaranty Letter of Credit, as such expiry date may be extended form time
to time.
"Written" or "in writing" shall mean any form of written
communication or communication by means of telex, telecopier or telegraph.
"Wurlitzer" shall mean The Wurlitzer Company, a Delaware
corporation which is a wholly-owned subsidiary of the Parent.
ARTICLE II
PURCHASE OF ELIGIBLE RECEIVABLES
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Section 2.01 THE INITIAL PURCHASE. (a) Subject to and upon the
terms and conditions herein set forth, the Company shall purchase from the
Seller, and the Seller shall sell and assign to the Company, on October 25, 1990
(the "Initial Purchase Date"), pursuant to the form of Sale and Assignment
attached hereto as Annex D, all right, title and interest of the Seller in, to
and under the Receivables existing on the Cut-Off Date, together with all monies
due or to become due and all amounts received with respect thereto (including
all Finance Charge Receivables), all proceeds thereof, including the proceeds of
any sale or disposition of any goods or merchandise subject thereto and all
right, title and interest of the Seller in, to and under the Retail Purchase
Agreement in respect thereof. The purchase price for such Receivables shall
consist of (1) an amount equal to the product of (x) the Outstanding Principal
Receivables on the Cut-Off Date and (y) the Cash Percentage, which amount shall
be paid by the Company in cash to the Seller on the Initial Purchase Date and
(2) the Deferred Purchase Price specified in Section 2.03.
(b) In connection with such sale, the Seller shall, at its own
expense, on or prior to the Initial Purchase Date (1) indicate in its computer
files that the Receivables have been transferred to the Company, (2) deliver to
the Company a computer printout containing a true and complete list showing for
each Receivable, as of the Cut-Off Date: (i) its account number, (ii) its
account name and (iii) the unpaid principal balance thereof and (3) execute and
file UCC-1 financing statements with respect to the Receivables now existing and
hereafter acquired by the Company from the Seller pursuant to this Agreement
meeting the requirements of the UCC and all other applicable state law in such
manner and in such jurisdictions as are necessary to perfect the sale of the
Receivables from the Seller to the Company.
Section 2.02 ADDITIONAL PURCHASES. (a) Subject to and upon the
terms and conditions herein set forth, on the first Settlement Date and on each
Settlement Date thereafter prior to the earlier of a Wind-Down Date or the date
of a Collection Agent Event of Default specified in Section 5.05(g) (the Initial
Purchase Date and each such Settlement Date on which a purchase shall occur, a
"Purchase Date"), the Seller shall offer to sell and assign to the Company, and
the Company shall purchase from the Seller, all right, title and interest of the
Seller in, to and under each retail installment sale contract originated by the
Parent, the Seller or Wurlitzer during or prior to the preceding Settlement
Period which satisfies each of the criteria specified in the definition of
Eligible Receivable (each such retail installment sale contract, an "Additional
Receivable"), together with all monies due or to become due and all amounts
received with respect thereto (including Finance Charge Receivables), and all
proceeds thereof, including the proceeds of any sale or disposition of any goods
or merchandise subject thereto and all right, title and interest of the Seller
in, to and under the Retail Purchase Agreement or any other Origination
Agreement in respect thereof. The purchase price for such Additional Receivables
shall consist of (1) an amount equal to the product of (x) the Outstanding
Principal Receivables being purchased as of the Notice Date and (y) the Cash
Percentage, which shall be payable in cash on such Purchase Date and (2) the
Deferred Purchase Price specified in Section 2.03. All such subsequent sales and
assignments shall be made pursuant to the form of Additional Assignment attached
hereto as Annex E. No purchase of Receivables shall be made pursuant to this
Section 2.02 (i) after a Wind-Down Date shall have occurred or (ii) if after
giving effect thereto the
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Outstanding Principal Receivables would exceed the Commitment. If at any time
the Commercial Paper shall no longer be rated at least "D-1" in the case of D&P,
"P-1" in the case of Moody's and "A-1" in the case of S&P, the Seller shall not
be obligated to offer to sell and assign Additional Receivables to the Company,
but may, at its option, unless a Wind-Down Date shall have occurred, elect to do
so, in which event the Company shall be obligated to purchase such Additional
Receivables from the Seller in accordance with the terms hereof.
(b) In connection with each sale pursuant to Section 2.02(a)
hereof, the Seller shall, at its own expense, on or prior to the related
Purchase Date (1) deliver to the Company an executed Additional Assignment which
shall have attached thereto as Schedule I a list identifying each Additional
Receivable being sold and assigned to the Company on such Purchase Date by
account number, account name and outstanding principal balance, (2) indicate in
its own computer files that such Additional Receivables have been transferred to
the Company pursuant to this Agreement, (3) make such additional UCC financing
statement filings, if any, as may be necessary under the UCC and applicable law
to perfect the sale of such Additional Receivables from the Seller to the
Company and (4) ▇▇▇▇ each Additional Receivable with a legend stating that such
Additional Receivable has been transferred to the Company pursuant to this
Agreement.
Section 2.03 DEFERRED PURCHASE PRICE. On the Initial Purchase
Date and on each subsequent Purchase Date the Company shall create an obligation
(the "Deferred Purchase Price") in favor of the Seller in respect of the
Receivables purchased on such Purchase Date in an amount equal to the
Over-Collateralization Amount, which shall represent contingent deferred
purchase price for such Receivables and shall be payable only to the extent
provided in, and solely in accordance with the terms of, Section 5.03(b) and
Section 7.07 hereof. The Deferred Purchase Price will be reduced on each
Settlement Date by an amount equal to the sum of (i) the Purchase Discount
Collections plus (ii) the product of (x) the Purchase Discount and (y) the
Receivable Losses for such preceding Settlement Period.
Section 2.04 INCREASE OF COMMITMENT. (a) The Seller shall have
the right from time to time to increase the Commitment to an amount not in
excess of $150,000,000 by giving at least thirty days' prior written notice to
the Company and GECC; PROVIDED that, unless such increase in the Commitment
causes the Commitment to equal $150,000,000 such increase must be in an amount
equal to $10,000,000 or an integral multiple thereof and there must not have
been more than one prior increase in the Commitment during the preceding twelve
months. Any such increase in the Commitment shall be effective on the scheduled
date specified in the Seller's notice.
(b) The Seller shall have the right, at any time and from time
to time, to request in writing that the Commitment be increased to an amount in
excess of $150,000,000. Upon the concurrence of the Company and GECC, in their
sole and absolute discretion, this Agreement shall be amended to reflect the
increased Commitment. In the event that (x) the Seller requests an increase in
the Commitment pursuant to this Section 2.04(b), such request is accompanied by
financial and portfolio projections supporting the amount of such increase, the
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Seller has provided the Company with such information as the Company shall
reasonably request in connection with its approval process, and the sum of the
outstanding Commercial Paper and Loans on the date of such request is in excess
of $142,500,000 and (y) GECC and the Company shall not have agreed to such
increase within 90 days following the date of such request, the Seller shall
have the right to terminate this Agreement, without any premium or penalty
whatsoever, by providing the Company with 120 days' prior written notice
thereof.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.01 REPRESENTATIONS AND WARRANTIES OF SELLER. The
Seller represents and warrants to the Company that:
(a) Each of the Seller and the Parent has been duly organized
and is validly existing and in good standing under the laws of the
State of Delaware, with full corporate power and authority to own its
properties and to conduct its business as presently conducted. Each of
the Seller and the Parent is duly qualified to do business and is in
good standing as a foreign corporation (or is exempt from such
requirements), and has obtained all necessary licenses and approvals,
in each jurisdiction in which failure to so qualify or to obtain such
licenses and approvals would have a material adverse effect on the
conduct of the Seller's or the Parent's business.
(b) The sale of Receivables pursuant to this Agreement, the
performance of its obligations under this Agreement and the
consummation of the transactions herein contemplated have been duly
authorized by all requisite corporate action and will not conflict with
or result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any of its property or assets or
upon that of the Parent or any Subsidiary pursuant to the terms of any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which it, the Parent or any Subsidiary is a party or
by which it, the Parent or any Subsidiary is bound or to which any
property or assets of it, the Parent or any Subsidiary is subject, nor
will such action result in any violation of the provisions of its
articles of incorporation or by-laws or of any statute or any order,
rule or regulation of any federal or state court or governmental agency
or body having jurisdiction over it, the Parent or any Subsidiary or
any of their respective properties; and no consent, approval,
authorization, order, registration or qualification of or with any such
court or any such regulatory authority or other such governmental
agency or body is required to be obtained by or with respect to the
Seller, the Parent or any Subsidiary for the sale of Receivables or the
consummation of the transactions contemplated by this Agreement.
(c) This Agreement has been duly executed and delivered by the
Seller and constitutes a valid and legally binding obligation of the
Seller, enforceable against the
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Seller in accordance with its terms, except that the enforceability
thereof may be subject to (a) the effects of any applicable bankruptcy,
insolvency, reorganization, receivership, conservatorship or other
laws, regulations and administrative orders affecting the rights of
creditors generally and (b) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or
law). This Agreement has been duly executed and delivered by the Parent
and constitutes a valid and legally binding obligation of the Parent,
enforceable against the Parent in accordance with its terms, except
that the enforceability thereof may be subject to (a) the effects of
any applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship or other laws, regulations and administrative orders
affecting the rights of creditors generally and (b) general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or law).
(d) The Seller is, as of the time of the transfer to the
Company of each Receivable being sold to the Company on the Initial
Purchase Date, and will be, as of the time of the transfer to the
Company of each Receivable sold to the Company on any subsequent
Purchase Date, the sole owner of such Receivable free from any lien,
security interest, encumbrance or other right, title or interest of any
Person. Each Receivable existing on the Initial Purchase Date has been,
and in the case of Additional Receivables sold hereafter such
Additional Receivables will be, on the applicable Purchase Date,
conveyed to the Company free and clear of any Lien.
(e) There is no effective financing statement (or similar
statement or instrument of registration under the law of any
jurisdiction) now on file or registered in any public office filed by
or against the Seller, the Parent or any Subsidiary or purporting to be
filed on behalf of the Seller, the Parent or any Subsidiary covering
any interest of any kind in any Receivables which are being, or which
hereafter will be, sold to the Company, and the Seller will not execute
nor will there be on file in any public office any effective financing
statement (or similar statement or instrument of registration under the
laws of any jurisdiction) or statements relating to such Receivables,
except in each case any financing statements filed in respect of and
covering the purchase of the Receivables by the Company pursuant to
this Agreement, the security interest created pursuant to the Security
Agreement and the security interests created pursuant to the Revolving
Credit and Security Agreement and the Subsidiary Security Agreement.
(f) All filings and recordings (including pursuant to the UCC)
required to perfect the title of the Company in each Receivable sold
hereunder have been accomplished and are in full force and effect and
the Seller shall at its expense perform all acts and execute all
documents reasonably requested by the Company at any time and from time
to time to evidence, perfect, maintain and enforce the title or the
security interest of the Company or the Collateral Agent in the
Receivables and the priority thereof.
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(g) All Receivables sold and assigned to the Company on the
Initial Purchase Date are Eligible Receivables and all Receivables sold
and assigned to the Company on any Purchase Date subsequent to the
Initial Purchase Date will be Eligible Receivables as of such Purchase
Date.
(h) As of the Initial Purchase Date, Schedule 1 to this
Agreement is, and as of the applicable Purchase Date with respect to
Additional Receivables, Schedule I to the applicable Additional
Assignment will be, an accurate and complete listing of all the
Receivables as of the Cut-Off Date or the last day of the Settlement
Period preceding such Purchase Date, as the case may be, and the
information contained therein with respect to such Receivables is true
and correct as of such date. As of the Initial Purchase Date the
aggregate amount of the Outstanding Principal Receivables was
$45,486,051.16.
(i) With respect to the Receivables existing as of the Cut-Off
Date, this Agreement and the Sale and Assignment referred to in Section
2.01, and, in the case of Additional Receivables sold to the Company
hereafter, the related Additional Assignment, constitute a valid sale,
transfer and assignment to the Company of all right, title and interest
in the Receivables and Additional Receivables and the proceeds thereof,
or, if this Agreement does not constitute a sale of such property, it
constitutes a grant of a "security interest" in such property to the
Company, which, in the case of existing Receivables and the proceeds
thereof, is enforceable upon execution and delivery of this Agreement
and which will be enforceable with respect to Additional Receivables
and the proceeds thereof upon the transfer and assignment of such
Additional Receivables to the Company. Upon the filing of the financing
statements described in Section 3.01(f) and, in the case of the
Additional Receivables hereafter sold to the Company and the proceeds
thereof, upon the transfer thereof to the Company, the Company shall
have a first priority perfected security or ownership interest in such
property. Except as otherwise provided in this Agreement, neither the
Seller nor the Parent nor any Subsidiary of the Parent nor any Person
claiming through or under the Seller, the Parent or any Subsidiary of
the Parent has any claim to or interest in the Collection Account, the
Cash Collateral Account or the Commercial Paper Account.
Section 3.02 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Seller that:
(a) The Company has been duly organized and is validly
existing and in good standing as a corporation under the laws of the
State of Delaware, with full corporate power and authority to own its
properties and to transact the business in which it is now engaged or
in which it proposes to engage.
(b) The purchase by the Company of Receivables pursuant to
this Agreement and the consummation of the transactions herein
contemplated will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under or, except as
contemplated hereby and by the Security Agreement, result in the
creation or
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imposition of any lien, charge or encumbrance upon any of the property
or assets of the Company pursuant to the terms of, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company is a party or by which it is bound or
to which any of the property or assets of the Company is subject, nor
will such action result in any violation of the provisions of the
certificate of incorporation or the by-laws of the Company or of any
statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its
properties or assets; and no consent, approval, authorization, order,
registration or qualification of or with any court or any such
regulatory authority or other governmental agency or body is required
for the purchase by the Company of Receivables hereunder.
(c) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid and legally binding
obligation of the Company enforceable against the Company in accordance
with its terms, except that the enforceability thereof may be subject
to (a) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
and (b) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or law).
Section 3.03 COVENANTS OF SELLER. The Seller covenants and
agrees with the Company as follows:
(a) The chief executive office of each of the Seller, the
Parent and Wurlitzer is located in Loveland, Ohio. Originals or
duplicates of Documents evidencing all Receivables are kept at, and
only at, said offices, or at Parent offices located in Loveland, Ohio,
and neither the Parent nor the Seller nor Wurlitzer will move its chief
executive office or permit the Documents and books evidencing the
Receivables to be moved unless (i) the Seller shall have given to the
Company and GECC not less than 45 days' prior written notice thereof,
clearly describing the new location, and (ii) the Seller shall have
taken such action, satisfactory to the Company and GECC, to maintain
the title or ownership of the Company and any security interest of, or
any filing in respect of title of, the Company or the Collateral Agent
in the Receivables at all times fully perfected and in full force and
effect.
(b) The Seller, the Parent and Wurlitzer shall duly fulfill
all obligations on their part to be fulfilled under or in connection
with the Receivables, including complying with all requirements of law
applicable thereto, and will do nothing to impair the right, title and
interest of the Company in the Receivables; PROVIDED, HOWEVER, that an
adjustment or compromise of a Receivable pursuant to Section 5.06 shall
not be deemed to be a violation of this paragraph.
(c) The Seller agrees to indemnify, defend and hold the
Company harmless from and against any and all loss, liability, damage,
judgment, claim, deficiency or expense (including interest, penalties,
reasonable attorneys' fees and disbursements and
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amounts paid in settlement) to which the Company may become subject
insofar as such loss, liability, damage, judgment, claim, deficiency or
expense arises out of, is based upon or relates to (i) a breach by the
Seller of any warranty, representation, covenant or agreement contained
in this Agreement; (ii) any Receivable sold by the Seller to the
Company hereunder on any Purchase Date not being an Eligible Receivable
on the date of purchase by the Company; (iii) any breach by the Seller,
the Parent or a Subsidiary of any obligation under a Receivable or
under any other agreement between the Seller, the Parent or a
Subsidiary and the Obligor under the related Receivable or any
indebtedness or liability at any time owing to or in favor of such
Obligor by the Seller, the Parent or any Subsidiary in connection
therewith; (iv) any claim or demand of a Person claiming a Receivable
sold by the Seller to the Company hereunder or claiming any interest
therein adverse to the Company; or (v) this Agreement or the
acquisition or ownership by the Company of the Receivables; provided,
that the Seller shall have no liability for any loss, claim or amount
pursuant to this clause (v) to the extent that such loss, claim or
amount is found to have resulted from the negligence, bad faith or
wilful misconduct of the Company or a breach by the Company of its
obligations hereunder. The obligations of the Seller under this Section
3.03(c) shall be considered to have been relied upon by the Company and
shall survive the execution and delivery of this Agreement regardless
of any investigation made by the Company or on its behalf.
(d) The Seller shall defend each Receivable sold by it to the
Company and not repurchased by it against all claims and demands of all
Persons at any time claiming the same or any interest therein adverse
to the Company through the Seller, the Parent or a Subsidiary.
(e) The Seller will not execute any effective financing
statement (or similar statement or instrument of registration under the
laws of any jurisdiction) or statements relating to any Receivables
sold to the Company, except any financing statements filed or to be
filed in respect of and covering the purchase of the Receivables by the
Company pursuant to this Agreement and the security interest created in
favor of the Collateral Agent pursuant to the Security Agreement.
(f) The Seller shall at its expense perform all acts and
execute all documents reasonably requested by the Company at any time
to evidence, perfect, maintain and enforce the title or the security
interest of the Company or the Collateral Agent in the Receivables and
the priority thereof. The Seller will, at the reasonable request of a
duly authorized officer of the Company, execute and deliver financing
statements relating to or covering the Receivables sold to the Company
(reasonably satisfactory in form and substance to the Company) and,
where permitted by law, the Seller will authorize the Company to file
one or more financing statements signed only by the Company.
(g) The Seller shall use all reasonable measures to prevent or
minimize any loss being realized on a Receivable in which the Company
owns an interest and shall take all reasonable steps to recover the
full amount of such loss. The Seller shall, at its own
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expense, take such steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related goods and
merchandise subject thereto. The Seller shall use its best efforts,
consistent with prudent servicing procedures, to repossess or otherwise
convert the ownership of the goods or merchandise securing any
Receivable which becomes an Uncollectible Receivable. The Seller shall
follow such practices and procedures for servicing the Receivables as
would be customary and usual for a prudent commercial lender under
similar circumstances, including using reasonable efforts to realize
upon any recourse to the dealer of the goods or merchandise securing a
Receivable and selling such goods or merchandise at a public or private
sale.
(h) The Seller agrees to immediately cease selling Receivables
to the Company pursuant to this Agreement upon the occurrence of a
Wind-Down Date.
(i) Except for the sale of Receivables to the Company pursuant
to the terms hereof, the Seller shall not sell all or substantially all
of its property and assets to, or consolidate with or merge into, any
other corporation, unless (x) the obligations of the Seller under this
Agreement shall be expressly and effectively assumed by such transferee
or purchasing or successor corporation, (y) immediately after giving
effect to such sale, transfer or other disposition or consolidation or
merger, no Seller Event of Default shall have occurred and be
continuing and (z) unless such transferee or purchasing or successor
corporation is the Parent, the Seller shall have obtained the prior
written consent of GECC; provided that nothing contained in this
Agreement shall prevent the Seller from merging into itself any other
corporation which is a Subsidiary of the Parent or acquiring by
purchase or otherwise all or any part of the, share capital, other
securities or property of any other corporation which is a Subsidiary
of the Parent, provided that no Seller Event of Default shall have
occurred and be continuing or would result from such transaction.
(j) The Seller shall permit the Company, the Collateral Agent
or their duly authorized representatives, attorneys or auditors to
inspect the Receivables, the Documents and the related accounts,
records and computer systems maintained by the Seller at such times as
the Company or the Collateral Agent may reasonably request. Upon
instructions from the Company or the Collateral Agent, the Seller shall
release any Document to the Company or the Collateral Agent, as the
case may be.
(k) The Seller shall deliver to the Company, (i) on or before
March 30, 1991 and (ii) on each March 30th thereafter, an officer's
certificate signed by the President or any Vice President of the
Seller, dated as of December 31 of the preceding year, stating that (a)
a review of the activities of the Seller during the preceding 12-month
period and of its performance under this Agreement has been made under
such officer's supervision and (b) to the best of such officer's
knowledge, based on such review, the Seller has fulfilled its
obligations under the Agreement throughout such year, or, if there has
been a default in the fulfillment of any such obligation, specifying
each such default known to such officer and the nature and status
thereof.
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(l) The Seller shall provide such cooperation, information and
assistance, and prepare and supply the Company with such data regarding
the performance by the Obligors of their obligations under the
Receivables and the performance by the Seller of its obligations under
the Seller Documents, as may be reasonably requested by the Company
from time to time in connection with any audit of the financial
statements or books and records of the Company.
(m) The Seller shall maintain its facility from which it
services the Receivables in its present condition, ordinary wear and
tear excepted, or such other facility of similar quality, security and
safety as the Seller may select from time to time. The Seller shall
make all property tax payments, lease payments and all other payments
with respect to such facility. The Seller shall, until the payment in
full of all Senior Indebtedness, (i) ensure that the Collateral Agent
shall have complete and unrestricted access during regular business
hours upon reasonable notice, at the Seller's expense, to such facility
and all computers and other systems relating to the servicing of the
Receivables and all persons employed at such facility, (ii) use its
best efforts to retain the employees based at such facility to provide
assistance to the Collateral Agent and (iii) continue to store on a
daily basis all back-up files relating to the Receivables and the
servicing of the Receivables at the current facilities used for such
purpose or such other storage facility of similar quality, security and
safety as the Seller may select from time to time. The Seller shall
cooperate with the Collateral Agent in connection with the writing and
development of a conversion program (to be retained by the Collateral
Agent) in respect of all computer files relating to the Receivables or
the servicing and collection thereof (including but not limited to each
of the computer files listed on Schedule 3.03(m) hereto).
(n) Seller shall at all times maintain in effect interest-rate
cap agreements with respect to no less than 80% of an amount equal to
(i) the Credits Outstanding, less (ii) the Fixed Amount. With respect
to any interest-rate cap purchased or maintained hereunder, Seller
shall use its best efforts to secure the acknowledgement of its
counterparty that Seller's right to receive payments thereunder is
subject to a first priority Lien in favor of the Collateral Agent or
shall otherwise assign such right to the Collateral Agent.
(o) As long as this Agreement remains in effect, Seller shall
deliver or cause to be delivered to Company:
(1) Within 30 days after the end of each fiscal
month, Parent's consolidated and consolidating unaudited
balance sheet as of the close of such month and the related
statements of income and changes in financial position for
such month, all prepared by Parent in conformity with GAAP,
and accompanied by the certification of Parent's chief
executive officer or chief financial officer that such
financial statements present fairly the financial position of
Parent as at the end of such month and that there is no Seller
Event of Default or Collection Agent Event of Default, or
event which with the passage of time or the giving of notice
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or both would constitute a Seller Event of Default or
Collection Agent Event of Default.
(2) Within 120 days after the close of each fiscal
year of the Parent, a copy of Parent's annual financial
statements, consisting of a balance sheet and statements of
income and changes in financial position, all prepared in
conformity with GAAP, certified without qualification, except
for changes in accounting principles with which the
accountants agree, litigation or tax controversies which are
being contested in good faith, by the independent certified
public accountants regularly retained by Parent and acceptable
to Seller, and accompanied by a certificate from such
accountants to the effect that during the course of their
examination they have not become aware of any Seller Event of
Default or Collection Agent Event of Default, or event which
with the passage of time or giving of notice or both would
constitute a Seller Event of Default or Collection Agent Event
of Default (it being understood that such accountants shall
not be required to undertake any investigation other than as
may be required in accordance with generally accepted auditing
standards and that such accountants must have actual knowledge
of such Seller Event of Default or Collection Agent Event of
Default other than of a financial or accounting nature).
(3) Not later than December 15 of each year, on a
consolidated and consolidating basis;
(i) projected balance sheets for the
forthcoming 12 fiscal months, month by month;
(ii) a projected cash flow statement,
including reasonable details of cash disbursements,
for the forthcoming 12 fiscal months, month by month;
and
(iii) a projected income statement for the
forthcoming 12 months, month by month, together with
appropriate supporting details as requested by
Seller.
(4) Such other information respecting the business,
financial condition or prospects of the Parent or the Seller
as Seller or GECC may, from time to time, request.
Section 3.04 Representations and Warranties Deemed Made. The
sale of Additional Receivables on each Purchase Date pursuant to Section 2.02 of
this Agreement shall be deemed to constitute a representation and warranty by
the Seller that the representations and warranties made under Section 3.01 of
this Agreement are true and correct on such Purchase Date as if made on such
Purchase Date.
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Section 3.05 RECEIVABLE REPURCHASES. In the event that any
Receivable sold by the Seller to the Company on any Purchase Date pursuant to
the terms hereof was not an Eligible Receivable on the applicable Purchase Date,
the Seller shall repurchase such Receivable on the Settlement Date following the
Settlement Period in which (i) the Company or the Collateral Agent requests the
Seller to repurchase such Receivable or (ii) the Seller or the Parent discovers
that such Receivable was not an Eligible Receivable on such applicable Purchase
Date. The purchase price for any such Receivable shall be an amount equal to the
Unpaid Balance thereof as of the last day of the Settlement Period preceding
such Settlement Date. The Seller's obligation to repurchase Receivables pursuant
to this Section 3.05 shall constitute a Seller Payable.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company hereunder on each Purchase Date (including the
Initial Purchase Date) shall be subject to the satisfaction of the following
conditions:
(a) All representations and warranties of the Seller contained
in this Agreement shall be true and correct on such Purchase Date and
the Seller shall be in compliance in all material respects with its
respective obligations hereunder.
(b) On or prior to such Purchase Date, there shall have been
made and there shall be in full force and effect all filings
(including, without limitation, UCC filings), recordings and/or
registrations, and there shall have been given, or taken, any notice or
any other similar action as may be necessary or, to the extent
requested by the Company, advisable, in order to establish, perfect,
protect and preserve the right, title and interest, remedies, powers,
privileges, liens and security interests of the Company and the
Collateral Agent granted pursuant to this Agreement or the Security
Agreement, as the case may be, and the Company and the Collateral Agent
shall have received evidence satisfactory to them of all of the
foregoing.
(c) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall
be satisfactory in form and substance to the Company and the Company
shall have received from the Seller copies of all documents (including,
without limitation, records of corporate proceedings) relevant to the
transactions herein contemplated as the Company may have reasonably
requested.
(d) The Company shall be permitted by the Liquidity Agreement
to purchase Receivables on such Purchase Date and shall have cash in
the Collection Account or shall have obtained Loans or issued
Commercial Paper in an amount sufficient to fund such purchase.
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(e) The Seller shall be in compliance in all material respects
with its obligations hereunder.
(f) No Company Event of Default described in clause (d) or (e)
of Section 8.01 of the Liquidity Agreement shall have occurred and be
continuing.
(g) No Seller Event of Default shall have occurred and be
continuing.
(h) The Wind-Down Date shall not have occurred.
(i) No Collection Agent Event of Default as defined in Section
5.05 hereof shall have occurred.
(j) Each of the Parent Credit Agreement and the Intercreditor
Agreement shall be in full force and effect and no event of default
under the Parent Credit Agreement shall have occurred and be
continuing.
(k) The Guaranty Letter of Credit shall be in full force and
effect and there shall be available for drawing thereunder an amount
that is not less than 2% of the Outstanding Principal Receivables after
giving effect to the purchase to be made on such Purchase Date.
(l) The Seller and GECC shall have received Support Agreements
executed by the chief executive officer, treasurer and data processing
manager of the Parent and the president and data processing manager of
the Seller.
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ARTICLE V
ADMINISTRATION, COLLECTIONS AND OTHER OBLIGATIONS
Section 5.01 APPOINTMENT OF COLLECTION AGENT. Until such time
as the Company shall notify the Seller in writing pursuant to Section 5.05
hereof of the revocation of such power and authority, the Company hereby
appoints the Seller as its agent ("Collection Agent") to collect all amounts
owing under or on account of all Receivables purchased by the Company from the
Seller and to perform as administrative agent for the Company all tasks and
duties in connection therewith that may be necessary or advisable and permitted
for carrying out the transactions contemplated by this Agreement, the Liquidity
Agreement and the Security Agreement. The Collection Agent shall keep separate
records on behalf of the Company covering the transactions contemplated by this
Agreement including the identity and collection status of each Receivable
purchased by the Company from the Seller and the Seller Payables. In collection
of the Receivables, the Collection Agent shall exercise the same care that it
has exercised in handling similar matters for its own account, and shall create
and administer policies and practices consistent with the policies and practices
applied in handling similar matters for its own account and as if it had not
sold the Receivables to the Company. The Collection Agent is further authorized,
upon prior notice to GECC and subject to Section 5.05, to delegate certain of
its service, collection, enforcement and administrative duties hereunder with
respect to the Receivables to the Parent or, with the prior written consent of
GECC, to any other Person who agrees to conduct such duties in accordance with
this Agreement; PROVIDED, HOWEVER, that the Collateral Agent shall have notified
S&P, D&P and ▇▇▇▇▇'▇ in writing in advance of any such proposed delegation of
its duties to a Person other than the Parent and none of S&P, D&P or ▇▇▇▇▇'▇
shall have advised that it would or might reduce the rating of the RFC
Commercial Paper as a result thereof; and PROVIDED FURTHER, that no delegation
will relieve the Collection Agent of its liability and responsibility with
respect to such duties. Upon the revocation of the power and authority granted
pursuant to the first sentence of this Section 5.01, the Company shall appoint a
successor Collection Agent in accordance with Section 5.05 hereof.
Section 5.02 COLLECTIONS. (a) The Seller shall take or cause
to be taken all such action as may be necessary or advisable to collect each
Receivable from time to time, all in accordance with applicable laws, rules and
regulations and with reasonable care and diligence. The Seller will keep and
maintain at its own cost and expense satisfactory and complete records of the
Receivables sold to the Company by it, including, but not limited to, a record
of all payments received and all other dealings therewith, and the Seller will
make the same available to the Company at any reasonable time upon demand. The
Seller shall, at its own cost and expense, deliver such books and records and
all Documents relating to the Receivables to the Company or to its
representatives at any time upon its demand. The Seller shall identify in form
and manner satisfactory to the Company, such Receivables and the other books,
records and Documents of the Seller pertaining to such Receivables with an
appropriate reference to the fact that such Receivables have been sold and
assigned to the Company and that the Company is the lawful owner thereof and has
legal title therein. All payments made by obligors with respect to the
Receivables are required to be sent to ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇-▇▇▇▇ (the
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"Lockbox Account") maintained with The Provident Bank. The Lockbox Account shall
be established by the Seller and the Collection Agent in the name of, and for
the benefit of, the Collateral Agent pursuant to a lockbox agreement in form and
substance satisfactory to the Company and the Collateral Agent and containing
terms substantially the same as the form of Blocked Deposit Agreement attached
as Annex F hereto. Exclusive dominion and control of the Lockbox Account shall
be vested in the Collateral Agent, subject to the right of the Collection Agent
to have access thereto for purposes of its collection and servicing duties
hereunder. The Seller shall have no right to make withdrawals from the Lockbox
Account. The Collection Agent's right of access to the Lockbox Account shall be
revocable at the option of the Collateral Agent upon the occurrence of any
Seller Default, Seller Event of Default or Collection Agent Event of Default. In
addition, after the occurrence of any Seller Default, any Seller Event of
Default or any Collection Agent Event of Default, the Seller agrees that it
shall, upon the written request of the Company or the Collateral Agent, notify
all Obligors under Receivables sold to the Company by it to make payment thereof
to (i) one or more other bank accounts and/or post-office boxes designated by
the Company or the Collateral Agent and specified in such notice or (ii) any
successor Collection Agent appointed hereunder.
(b) The Seller and the Collection Agent shall cause to be
established, and shall maintain thereafter, Account No. ▇▇▇▇▇▇▇ (the "Blocked
Deposit Account") with The Provident Bank. The Blocked Deposit Account shall be
established in the name, and for the benefit, of the Collateral Agent pursuant
to a Blocked Deposit Agreement. The Collateral Agent shall have exclusive
dominion and control over, and the sole right of withdrawal from, the Blocked
Deposit Account. All funds received in the Lockbox Account shall be transferred
on the date received to the Blocked Deposit Account. In the event that,
notwithstanding the requirement that all Obligors be required to make payments
directly to the Lockbox Account, any Collections of Receivables are received by
the Seller, the Parent or the Collection Agent, such Collections shall be
deposited into the Account on the date received. The Collateral Agent shall on
each Business Day cause the Collections on deposit in the Blocked Deposit
Account to be transferred to an account designated by the Collection Agent;
PROVIDED that the Collateral Agent shall retain in the Blocked Deposit Account
on each day its estimate of the amount, if any, by which (A) the sum of (1) the
Collections of Finance Charge Receivables received in the Blocked Deposit
Account during the current Settlement Period and (2) the excess, if any, of the
Collections of Principal Receivables received in the Blocked Deposit during the
current Settlement Period over the principal amount of new retail installment
sale contracts acquired by the Seller during such Settlement Period that meet
the criteria to be Eligible Receivables, exceeds (B) an amount equal to the
product of (x) the Daily Accrual Factor for such day and (y) the amount
available to be drawn on the Deposits Letter of Credit on such day. All
Collections released to the Seller pursuant to this Section 5.02(b), will,
pending remittance to the Collection Account as provided in Section 5.03 hereof,
be held by the Seller for the benefit of the Company and shall be payable to the
Company in accordance with Section 5.03 hereof.
(c) In performing its duties and obligations hereunder, the
Collection Agent (i) shall not impair the rights of the Company in any
Receivable, (ii) shall not amend the terms of any Receivable such that the
maturity of any payment due thereunder is extended more than 180
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days, (iii) shall not release any goods or merchandise securing a Receivable
from the lien created by such Receivable except as specifically provided for
herein, and (iv) shall be entitled to commence or settle any legal action to
enforce collection of any Receivable or to foreclose upon or repossess any goods
or merchandise securing such Receivable. In the event that the Collection Agent
shall breach any of its covenants set forth in clauses (i), (ii) or (iii) of
this Section 5.02(c), the Collection Agent shall repurchase each Receivable
affected thereby on the Settlement Date following the Settlement Period in which
such breach occurs for a purchase price equal to the Unpaid Balance of such
Receivable as of the last day of such Settlement Period. For the purposes of
Section 5.05 hereof, the Collection Agent shall not be deemed to have breached
its obligations under this Section 5.02(c) unless it shall fail to so purchase
any Receivable affected by the Collection Agent's noncompliance with clauses
(i), (ii) or (iii) of this Section 5.02(c).
(d) All payments or other amounts collected or received by the
Collection Agent in respect of a Receivable shall be applied to the Unpaid
Balance of such Receivable and allocated first to the amount of any outstanding
Finance Charge Receivables due in respect thereof and then to the amount of any
Principal Receivables due in respect thereof.
Section 5.03 APPLICATION OF COLLECTIONS. (a) On the second
Business Day preceding each Settlement Date (a "Deposit Date"), (1) the
Collection Agent shall deposit or cause to be deposited in the Collection
Account an amount equal to (i) the aggregate purchase price of all Receivables
being purchased by the Collection Agent on such Settlement Date pursuant to
Section 5.02(c) hereof PLUS (ii) the aggregate amount of all Collections
released to it pursuant to Section 5.02(b) during the immediately preceding
Settlement Period MINUS (iii) the amount of any SWAP Advances made by the
Collection Agent out of such Collections pursuant to Section 5.10 hereof, (2)
the Seller shall deposit or cause to be deposited in the Collection Account the
aggregate amount of Seller Payables with respect to the immediately preceding
Settlement Period (including, but not limited to, the amount of any Interest
Deficiency Payment for such Settlement Period pursuant to Section 5.07 hereof
and the amount of the aggregate purchase price for any Receivables being
repurchased on such Settlement Date pursuant to Section 3.05 hereof), (3)
following a Settlement Period with respect to which a SWAP Excess existed, the
Collateral Agent shall transfer from the SWAPs Sub-Account of the Collection
Account to the Collection Account an amount equal to the lesser of (i) the
amount of the SWAP Excess and (ii) the amount then on deposit in the SWAPs
Sub-Account of the Collection Account and (4) the Collateral Agent shall
transfer from the Blocked Deposit Account to the Collection Account any amounts
retained in the Blocked Deposit Account as of the close of business on the last
day of the immediately preceding Settlement Period in accordance with Section
5.02(b). On the fifth Settlement Date following each Settlement Date on which
the Parent makes a Loss Shortfall Payment (as defined in the Guaranty) to the
Guarantor pursuant to Section 9(a) of the Guaranty, the Guarantor shall deposit
or cause to be deposited in the Collection Account an amount equal to such Loss
Shortfall Payment. On each Settlement Date, the Collateral Agent shall deposit
or cause to be deposited in the Collection Account the proceeds of any
Commercial Paper sold on such Settlement Date and any Revolving Loans made by
GECC on such Settlement Date, in each case to the extent such proceeds are not
used to pay Commercial Paper maturing on such Settlement Date.
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(b) On each Settlement Date, the Company shall apply the
amounts then on deposit in the Collection Account (including any proceeds of any
Commercial Paper sold on such Settlement Date and any Revolving Loans made by
GECC on such Settlement Date, in each case to the extent such proceeds are not
used to pay Commercial Paper maturing on such Settlement Date) to the payment of
the following amounts in the following order of priority:
(i) an amount equal to (1) the Aggregate Interest Component
for the preceding Settlement Period LESS (2) the amount, if any, by
which the SWAP Excess with respect to such Settlement Period, if any,
exceeds the amount on deposit in the SWAPs Sub-Account of the
Collection Account at the opening of business on the preceding Deposit
Date, shall be retained in the Collection Account and used for the
payment of Commercial Paper maturing on or subsequent to such
Settlement Date,
(ii) the amount of interest accrued during the preceding
Settlement Period with respect to all Loans that were repaid during
such Settlement Period with the proceeds of Commercial Paper shall be
retained in the Collection Account and used for the payment of
Commercial Paper maturing on or subsequent to such Settlement Date,
(iii) an amount equal to (1) the SWAP Shortfall with respect to
the preceding Settlement Period LESS (2) the amount of any SWAP
Advances made by the Collection Agent out of the Collections for such
Settlement Period, shall be transferred to the SWAPs Sub-Account of the
Collection Account and applied in accordance with Section 5.03(c),
(iv) an amount equal to the lesser of (1) the Purchase Discount
Collections for the preceding Settlement Period and (2) the amount, if
any, by which (x) the sum of the Receivable Losses Funding Amount for
the preceding Settlement Period PLUS the Outstanding Unpaid Receivable
Losses Funding Amount for all prior Settlement Periods exceeds (y) the
Excess Finance Charge Amount for such preceding Settlement Period,
shall be retained in the Collection Account and used for the payment of
Commercial Paper maturing on or subsequent to such Settlement Date,
(v) the amount of interest accrued during the preceding
Settlement Period with respect to all Loans which remain outstanding on
the last day of such Settlement Period shall be paid to GECC,
(vi) the Purchase Price of Additional Receivables, if any,
being purchased on such Settlement Date pursuant to Section 2.02 shall
be paid to the Seller,
(vii) on each Settlement Date prior to the Wind-Down Date, an
amount equal to (1) the Purchase Discount Collections for the preceding
Settlement Period LESS (2) the amount, if any, by which (x) the sum of
the Receivable Losses Funding Amount for the preceding Settlement
Period PLUS the Outstanding Unpaid Receivable Losses Funding Amount
with respect to all prior Settlement Periods exceeds (y) the Excess
Finance
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Charge Amount for such preceding Settlement Period, representing a
portion of the Deferred Purchase Price created pursuant to Section
2.03, shall be paid to the Seller,
(viii) prior to the Termination Date and provided that no Seller
Default or Seller Event of Default shall have occurred and be
continuing, the Recoveries with respect to the preceding Settlement
Period shall be paid to the Seller,
(ix) an amount equal to the Program Fee for the preceding
Settlement Period shall be used to pay the Commitment Commission and
the Guaranty Fee for such preceding Settlement Period to GECC,
(x) the Servicing Fee for the preceding Settlement Period
shall be paid to the Seller or, if the Seller is no longer the
Collection Agent, to the successor Collection Agent,
(xi) the amount of any outstanding Loans shall be paid to
GECC,
(xii) an amount equal to the lesser of (1) the Recoveries with
respect to the preceding Settlement Period and (2) the amount of any
unreimbursed payments made by the Guarantor pursuant to Section 2 of
the Guaranty, shall be paid to the Guarantor, and
(xiii) the balance, if any, shall be retained in the Collection
Account and used for the payment of Commercial Paper maturing on or
subsequent to such Settlement Date.
(c) Any amounts received from any SWAP Counterparty on any
SWAP Payment Date shall be deposited in the SWAPs Sub-Account of the Collection
Account. On each SWAP Payment Date, amounts on deposit in the SWAPs Sub-Account
of the Collection Account (including any amounts received from any SWAP
Counterparty on such SWAP Payment Date) shall be applied by the Collateral Agent
to the payment of any amounts owing to any SWAP Counterparty on such SWAP
Payment Date. On each SWAP Payment Date, the excess of (x) any amounts remaining
on deposit in the SWAPs Sub-Account of the Collection Account after the payment
in full of all amounts owing to each SWAP Counterparty on such SWAP Payment Date
OVER (y) the Cumulative SWAP Payable as of such date for any SWAPs not payable
on such SWAP Payment Date, shall be transferred by the Collateral Agent to the
Collection Account and used for the payment of Commercial Paper maturing on or
subsequent to the date of such transfer.
(d) If as of the close of business on any Settlement Date, the
amount on deposit in the SWAPs Sub-Account of the Collection Account exceeds the
Cumulative SWAP Payable as of such date, then the amount of such excess shall be
transferred by the Collateral Agent to the Collection Account and used for the
payment of Commercial Paper maturing on or subsequent to the date of such
transfer.
Section 5.04 SETTLEMENT STATEMENTS; WEEKLY REPORTS. (a) Not
later than the sixth Business Day following the last day of each Settlement
Period, the Seller shall deliver or cause to
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be delivered to the Company and GECC a report in the form of Annex A hereto
(each such report, a "Portfolio Settlement Statement"). Not later than the tenth
Business Day following the last day of each Settlement Period, the Collateral
Agent shall deliver to the Company, the Seller and GECC a report in the form of
Annex B hereto (each such report, a "Settlement Statement"). The Collateral
Agent will send a copy of each Portfolio Settlement Statement to each rating
agency then rating the Commercial Paper promptly after its receipt thereof.
(b) Not later than 10:00 a.m. on the second Business Day in
each calendar week, the Seller shall deliver or cause to be delivered to the
Collateral Agent a report (each such report, a "Weekly Activity Report") in the
form of Annex G hereto with respect to the Receivables origination and
collection activity during the preceding calendar week.
Section 5.05 APPOINTMENT OF SUCCESSOR COLLECTION AGENT. Upon
the occurrence of any of the following events (each a "Collection Agent Event of
Default"), and so long as such Collection Agent Event of Default shall continue
unremedied:
(a) failure by the Seller to make any payments required to be
made by it hereunder or pursuant to any other Seller Document on the
day on which such payment is required to be made;
(b) failure on the part of the Seller duly to observe or
perform in any respect any other covenants or agreements of the Seller
contained herein or in any other Seller Document which continues
unremedied for a period of 15 days after written notice thereof; or the
delegation by the Seller of its duties hereunder, except as expressly
permitted in accordance with the terms hereof;
(c) any representation, warranty or certification made by the
Seller herein or in any other Seller Document proves to have been
incorrect when made and which continues to be incorrect for a period of
15 days after written notice thereof;
(d) a Seller Event of Default described in clause (b) or (c)
of Section 8.02 of the Liquidity Agreement shall have occurred and be
continuing;
(e) the occurrence of an event of default under the Parent
Credit Agreement;
(f) the Parent's Tangible Net Worth at any time shall be less
than $40,000,000;
(g) the Parent's ratio of EBITDA (excluding any expenses in
connection with the closing of any factory of Parent) to Interest at
any time shall be less than 2.0:1, with EBITDA and Interest calculated
monthly based upon a rolling twelve-month period;
(h) the Parent's ratio of Total Liabilities to Tangible Net
Worth shall be more than 2.5:1;
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(i) the Seller shall pay any dividend on its capital stock or
repurchase any shares thereof and, on the date of such payment or
repurchase (after giving effect to such payment or repurchase),
Seller's Book Net Worth is less than $4,000,000 based upon Seller's
most recent financial statements submitted to the Company; or
(j) the Parent shall employ any person as its chief executive
officer, treasurer or date processing manager, or the Seller shall
employ any person as its president or data processing manager, unless
in each such case such person has executed and delivered to the Company
and GECC a Support Agreement;
the Company may, and upon the direction of GECC shall, notify the Seller in
writing of the revocation of the Seller's appointment as the Company's
Collection Agent hereunder. In addition, at any time following the occurrence of
a Wind-Down Date, the Company may, and upon the direction of GECC shall notify
the Seller in writing of the revocation of the Seller's appointment as
Collection Agent hereunder. Upon revocation of the Seller's appointment as
Collection Agent hereunder, the Company shall appoint GECC as its Collection
Agent and GECC shall perform all of the duties required of the Collection Agent
hereunder. In addition, following the receipt of such a written revocation
notice, the Seller will (i) deliver and turn over to the Collateral Agent or to
its representatives at any time on demand of the Collateral Agent all the
Seller's books and records pertaining to the Receivables and the servicing
thereof including, without limitation, all original sales slips, invoices,
credit files and computer tapes or disks relating to Receivables and/or (ii)
subject to the rights of any owner of any such premises or equipment that is
leased by the Seller, allow the Collateral Agent to occupy the premises of the
Seller where such books, records, contracts, credit files and computer tapes are
maintained and utilize such premises, the equipment thereon and any personnel of
the Seller that the Collateral Agent may wish to employ, to administer, service
and collect the Receivables.
The Seller agrees that upon receipt of written notification
from the Company of the revocation of the Seller's appointment as Collection
Agent hereunder, the Seller shall upon the written request of the Company (which
request may be contained in the notification of revocation) (i) notify all
Obligors under the Receivables sold to the Company by the Seller to make payment
thereof to a bank account(s) designated by the Company and specified in such
notice, and (ii) pay to the Company immediately all Collections then held or
thereafter received by the Seller of Receivables sold by it to the Company
together with all other payment obligations of the Seller hereunder owing to the
Company.
Section 5.06 COMPROMISE AND ADJUSTMENT. The Seller or the
Parent shall be entitled to compromise, adjust, modify or cancel any
indebtedness evidenced by any Receivable sold to the Company, or settle any
dispute, claim, suit or legal proceeding relating thereto all in accordance with
its then current business practices; PROVIDED, HOWEVER, that in such event the
Seller shall deposit an amount of cash equal to any reduction in the amount
payable under such Receivable (an "Adjustment Payment") into the Collection
Account on the Deposit Date following the Settlement Period in which such event
occurs. The amount of any such
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Adjustment Payment shall be deemed to have been collected within the meaning of
Section 5.02 of this Agreement.
Section 5.07 INTEREST DEFICIENCY PAYMENTS. On each Deposit
Date, the Seller shall deposit into the Collection Account an amount with
respect to the preceding Settlement Period (an "Interest Deficiency Payment")
equal to (a) the Carrying Costs for such Settlement Period less (b) that portion
of the aggregate amount scheduled to be paid on the Receivables during such
Settlement Period which is allocable to Finance Charge Receivables.
Section 5.08 NET DEPOSITS. For so long as the Seller shall be
the Collection Agent hereunder, the Seller may make any remittances required to
be made to the Collection Account on any Deposit Date pursuant to Section
5.03(a) hereof net of any amounts which are to be distributed to the Seller on
the related Settlement Date pursuant to clauses (v), (vi), (vii) and (ix) of
Section 5.03(b) hereof, as specified in the Settlement Statement in respect of
such Settlement Period.
Section 5.09 SWAPs. Subject to the terms and conditions set
forth herein and in Section 10.15 of the Liquidity Agreement, the Company shall,
from time to time, upon receipt of not less than ten Business Days' prior notice
from the Seller (any such notice, a "SWAP Notice"), enter into one or more SWAPs
in the aggregate notional principal amount specified in such SWAP Notice;
PROVIDED that the aggregate notional principal amount of all SWAPs outstanding
at any time may not exceed $40,000,000. Each SWAP Notice shall designate (i) the
aggregate notional principal amount of the related SWAP (which notional
principal amount may not be less than $20,000,000), (ii) the term of the related
SWAP (which term may not be less than three years nor extend beyond the
Expiration Date then in effect) and (iii) the Business Day (not earlier than the
tenth Business Day following the date of such SWAP Notice) by which the Company
shall enter into the related SWAP. The Company shall not enter into any SWAP
unless the Company shall have notified the Seller of the pricing terms
applicable to such SWAP and the Seller shall have approved such pricing terms.
The Company shall not terminate any SWAP prior to the occurrence of a Wind-Down
Date. Upon or at any time following, the occurrence of a Wind-Down Date, the
Company may, in its sole discretion, elect to terminate any SWAP.
Section 5.10 SWAP ADVANCES. In the event that, on the Business
Day preceding any SWAP Payment Date, the amount on deposit in the SWAPs
Sub-Account of the Collection Account is insufficient to make the payments due
from the Company to all SWAP Counterparties under all SWAPs on such SWAP Payment
Date (the amount of such insufficiency, a "SWAP Deficit"), the Collection Agent
shall, to the extent available, remit Collections of Finance Charge Receivables
then held by the Collection Agent in an amount equal to such SWAP Deficit to the
SWAPs Sub-Account of the Collection Account (any amount so remitted, a "SWAP
Advance"). Collections required to be remitted by the Collection Agent pursuant
to this Section 5.10 on the Business Day preceding any SWAP Payment Date shall
be made to the SWAPs Sub-Account of the Collection Account no later than 12:00
noon, New York City time, on the Business Day preceding such SWAP Payment Date.
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Section 5.11 GRANT OF SECURITY INTEREST; REMEDIES. (a) As
security for the prompt payment or performance in full when due of all of the
KAC Obligations, the Seller hereby assigns and pledges to the Company a security
interest in and lien upon, all of the Seller's right, title, and interest in and
to the following, in each case whether now or hereafter existing or in which the
Seller now has or hereafter acquires an interest and wherever the same may be
located (collectively, the "Seller Collateral");
(i) all retail installment sale contracts, chattel paper
and/or accounts that have not been sold to the Company pursuant to
Sections 2.01 or 2.02 hereof, together with all monies due or to become
due and all amounts received with respect thereto, and all proceeds
thereof;
(ii) the Retail Purchase Agreement, including (i) all rights of
the Seller to receive moneys due and to become due under or pursuant to
the Retail Purchase Agreement, (ii) all rights of the Seller to receive
proceeds of any insurance, indemnity, warranty or guaranty with respect
to the Retail Purchase Agreement, (iii) claims of the Seller for
damages arising out of or for breach of or default under the Retail
Purchase Agreement and (iv) the right of the Seller to amend, waive or
terminate the Retail Purchase Agreement, to perform under the Retail
Purchase Agreement and to compel performance and otherwise exercise all
remedies and rights under the Retail Purchase Agreement;
(iii) the Blocked Deposit Account, all funds held in the Blocked
Deposit Account and all certificates and instruments, if any, from time
to time representing or evidencing each such account;
(iv) the Lockbox Account, all funds held in the Lockbox
Account, and all certificates and instruments, if any, from time to
time representing or evidencing the Lockbox Account or such funds; and
(v) all proceeds, accessions, substitutions, rents and profits
of any and all of the foregoing.
(b) If any KAC Obligation is not paid when due, then the
Company may exercise in respect of the Seller Collateral, in addition to any and
all other rights and remedies otherwise available to it, all of the rights and
remedies of a secured party upon default under the UCC (such rights and remedies
to be cumulative and nonexclusive), and may take the following remedial actions:
(i) The Company may, without notice except as specified below,
solicit and accept bids for and sell the Seller Collateral or any part
of the Seller Collateral in one or more parcels at public or private
sale, at any exchange, broker's board or at any of the Company's or
Collateral Agent's offices or elsewhere, for cash, on credit or for
future delivery, and upon such other terms as the Company may deem
commercially reasonable.
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The Seller agrees that, to the extent notice of sale shall be required
by law, at least ten Business Days' notice to the Seller of the time
and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. The Company
shall not be obligated to make any sale of Seller Collateral regardless
of notice of sale having been given. The Company may adjourn any public
or private sale from time to time by announcement at the time and place
fixed for such sale, and such sale may, without further notice, be made
at the time and place to which it was so adjourned. Every such sale
shall operate to divest all right, title, interest, claim and demand
whatsoever of the Seller in and to the Seller Collateral so sold, and
shall be a perpetual bar, both at law and in equity, against the
Seller, any Person claiming the Seller Collateral through the Seller
and their respective successors or assigns.
(ii) Upon the completion of any sale under subsection (i)
above, the Seller will deliver or cause to be delivered all of the
Seller Collateral sold to the purchaser or purchasers at such sale on
the date of sale, or within a reasonable time thereafter if it shall be
impractical to make immediate delivery, but in any event full title and
right of possession to such property shall pass to such purchaser or
purchasers forthwith upon the completion of such sale. Nevertheless, if
so requested by the Company or by any purchaser, the Seller shall
confirm any such sale or transfer by executing and delivering to such
purchaser all proper instruments of conveyance and transfer and
releases as may be designated in any such request.
(iii) At any sale under subsection (i) above, the Company or the
Collateral Agent may bid for and purchase the property offered for sale
and, upon compliance with the terms of sale, may hold, retain and
dispose of such property without further accountability therefor.
(iv) The Company may exercise at the Seller's expense any and
all rights and remedies of the Seller under or in connection with the
Retail Purchase Agreement or the other Seller Collateral, including any
and all rights of the Seller to demand or otherwise require payment of
any amount under, or performance of any provisions of, the Retail
Purchase Agreement.
ARTICLE VI
PARENT GUARANTEE
Section 6.01 UNCONDITIONAL PARENT GUARANTEE. For valuable
consideration, and to induce the Company to enter into this Agreement and GECC
to enter into the Liquidity Agreement, Parent hereby guarantees to the Company
and the Collateral Agent the performance of all obligations of the Seller
pursuant to this Agreement, including, without limitation, the performance of
all covenants and agreements herein set forth, the payment of all Seller
Payables and the deposit of all Collections in accordance with the terms hereof,
notwithstanding the
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occurrence of any Seller Default, Seller Event of Default or Collection Agent
Event of Default, or any termination of this Agreement. Parent hereby
unconditionally agrees that upon any default in the performance or payment of
any of Seller's obligations under this Agreement, Parent shall immediately
perform or pay the same without setoff or counterclaim or any other deduction
whatsoever.
Section 6.02 VALIDITY. The obligation of Parent pursuant to
Section 6.01 hereof shall be unconditional regardless of the genuineness,
validity, regularity, or enforceability of the obligations of the Seller
pursuant to this Agreement or, to the fullest extent permitted by law, any other
circumstance that might constitute a legal or equitable discharge of a surety or
guarantor.
Section 6.03 WAIVERS. Parent hereby expressly waives
diligence, presentment, protest, and any requirement that any right or power be
exhausted or any action be taken against the Seller and all notice and demand
whatsoever.
Section 6.04 SUBROGATION. Parent shall not exercise any rights
it may acquire by way of subrogation, in whole or in part, to the rights of the
Company or the Collateral Agent against the Seller until the Company shall have
received payment in full of all of the Sellers' obligations under this
Agreement. Parent agrees that, to the fullest extent permitted by law, as
between Parent and the Company or the Collateral Agent, any amounts due pursuant
to this Article VI may be declared to be immediately due and payable as provided
herein notwithstanding any stay, injunction, or other prohibition preventing
such declaration as against the Seller and that, in the event of such
declaration, such obligations (whether or not due and payable by the Seller)
shall immediately become due and payable by Parent for purposes of, and to the
extent provided in, this Article VI.
Section 6.05 GRANT OF SECURITY INTEREST; REMEDIES. (a) As
security for the prompt payment or performance in full when due of all of the
obligations of the Parent hereunder (the "Parent Obligations"), the Parent (i)
hereby assigns and pledges to the Company a security interest in and lien upon,
all of the Parent's right, title, and interest in and to all issued and
outstanding capital stock of the Seller at any time owned by the Parent (the
"Stock") together with all proceeds thereof (the Stock and all such proceeds,
the "Parent Collateral") and (ii) hereby pledges and deposits as security with
the Company the Stock owned by the Parent on the date hereof and delivers to the
Company certificates therefor accompanied by stock powers duly executed in blank
by the Parent or such other instruments or transfer as are acceptable to the
Company.
(b) If the Parent shall acquire (by purchase, stock dividend
or otherwise) any additional Stock at any time or from time to time after the
date hereof, the Parent will forthwith pledge and deposit such Stock as security
with the Company and deliver to the Parent certificates therefor accompanied by
stock powers duly executed in blank by the Parent or such other instruments of
transfer as are acceptable to the Company.
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(c) Unless and until the Parent shall have failed to perform
any of its obligations hereunder when due (any such failure, a "Parent Event")
the Parent shall be entitled to vote any and all Stock and to give consents,
waivers or ratifications in respect thereof, provided that no vote shall be cast
or any consent, waiver or ratification given or any action taken which would
violate or be inconsistent with any of the terms of this Agreement or any other
instrument or agreement referred to herein, or which would have the effect of
impairing the position or interests of the Company. All such rights of the
Parent to vote and to give consents, waivers and ratifications shall cease in
case a Parent Event shall occur and be continuing.
(d) Unless and until a Parent Event shall have occurred and be
continuing, all cash dividends payable in respect of the Stock shall be paid to
the Parent. The Company shall be entitled to receive directly, and to retain as
part of the Collateral: (i) all other or additional stock or securities or
property (other than cash) paid or distributed by way of dividend in respect of
the Stock; (ii) all other or additional stock or other securities or property
paid or distributed in respect of the Stock by way of stock-split, spin-off,
split-up, reclassification, combination of shares or similar rearrangement; and
(iii) all other or additional stock or other securities or property which may be
paid in respect of the Collateral by reason of any consolidation, merger,
exchange of stock, conveyance of assets, liquidation or similar corporate
reorganization.
(e) In case a Parent Event shall have occurred and be
continuing, the Company shall be entitled to exercise all of the rights, powers
and remedies of secured party upon default under the UCC (such rights and
remedies to be cumulative and non-exclusive), and the Company shall be entitled,
without limitation, to exercise the following rights, which the Parent hereby
agrees to be commercially reasonable:
(i) to receive all amounts payable in respect of the
Collateral otherwise payable under Section 6.05(d) to the Parent;
(ii) to transfer all or any part of the Stock into the
Company's name or the name of its nominee or nominees;
(iii) to vote all or any part of the Stock (whether or not
transferred into the name of the Company) and give all consents,
waivers and ratifications in respect of the Stock and otherwise act
with respect thereto as though it were the outright owner thereof (the
Parent hereby irrevocably constituting and appointing the Company the
proxy and attorney-in-fact of the Parent, with full power of
substitution to do so); and
(iv) at any time or from time to time to sell, assign and
deliver, or grant options to purchase, all or any part of the
Collateral, or any interest therein, at any public or private sale,
without demand of performance, advertisement or notice of intention to
sell or of the time or place of sale or adjournment thereof or to
redeem of otherwise (all of which are hereby waived by the Parent), for
cash, on credit or for other property, for immediate or future delivery
without any assumption of credit risk, and its absolute discretion may
determine, provided that at least ten days' notice of the time and
place of
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any such sale shall be given to the Parent. The Parent hereby waives
and releases to the fullest extent permitted by law any right or equity
of redemption with respect to the Collateral, whether before or after
sale hereunder, and all rights, if any, of marshalling the Collateral
and any other security for the Parent Obligations or otherwise. At any
such sale, unless prohibited by applicable law, the Company or the
Collateral Agent may bid for and purchase all or any part of the
Collateral so sold free from any such right or equity of redemption.
Neither the Company nor the Collateral Agent shall be liable for
failure to collect or realize upon any or all of the Collateral or for
any delay in so doing nor shall any of them be under any obligation to
take any action whatsoever with regard thereto.
(f) All moneys collected by the Company upon any sale or other
disposition of the Collateral, together with all other moneys received by the
Company hereunder, shall be applied to the payment of all costs and expenses
incurred by the Company in connection with such sale, the delivery of the
Collateral or the collection of any such moneys (including, without limitation,
attorneys fees and expenses), and the balance of such moneys shall be held by
the Company and applied by it to satisfy the Parent Obligations. Upon payment in
full of all such Parent Obligations, any remaining balance will be paid to the
Parent.
ARTICLE VII
MISCELLANEOUS
Section 7.01 NOTICES, ETC. Except where telephonic
instructions or notices are authorized herein to be given, all notices, demands,
instructions and other communications required or permitted to be given to or
made upon any party hereto shall be in writing and shall be personally delivered
or sent by registered, certified or express mail, postage prepaid, return
receipt requested, or by telecopier or prepaid telegram (with messenger delivery
specified in the case of a telegram) and shall be deemed to be given for
purposes of this Agreement on the day that such writing is delivered or sent to
the intended recipient thereof in accordance with the provisions of this
Section. Unless otherwise specified in a notice sent or delivered in accordance
with the foregoing provisions of this Section, notices, demands, instructions
and other communications in writing shall be given to or made upon the
respective parties hereto at their respective addresses (or to their respective
telecopier numbers) indicated below, and, in the case of telephonic instructions
or notices, by calling the telephone number or numbers indicated for such party
below:
If to the Company:
Retailer Funding Corporation
c/o Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
General Electric Capital Corporation
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Seller:
Keyboard Acceptance Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Parent:
▇▇▇▇▇▇▇ Piano & Organ Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to GECC:
General Electric Capital Corporation
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇
▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
General Electric Capital Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 7.02 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon the Seller, the Parent and the Company and their respective
successors and assigns and shall inure to the benefit of the Seller, the Parent
and the Company and their respective successors and assigns; PROVIDED that,
except as permitted by Section 5.01 hereof, neither the Seller nor the Parent
shall assign any of its rights or obligations hereunder without the prior
written consent of the Company and GECC. Except as expressly permitted hereunder
or in any of the Company Documents, the Company shall not assign any of its
rights or obligations hereunder without the prior written consent of the Seller
and GECC.
Section 7.03 SEVERABILITY CLAUSE. Any provisions of this
Agreement which are 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 hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 7.04 AMENDMENTS; GOVERNING LAW. This Agreement and the
rights and obligations of the parties hereunder may not be changed orally but
only by an instrument in writing signed by the party against which enforcement
is sought and shall be construed in accordance with and governed by the laws of
the State of New York.
Section 7.05 SELLER'S OBLIGATIONS. It is expressly agreed
that, anything in this Agreement contained to the contrary notwithstanding, the
Seller, Wurlitzer and Parent shall be liable to perform all of the obligations
assumed by them under each Receivable and the Company shall have no obligations
or liability under the Receivables to any Obligor thereunder by reason of or
arising out of this Agreement nor shall the Company be required or obligated in
any manner to perform or fulfill any of the obligations of the Seller or the
Parent under or pursuant to any Receivable.
Section 7.06 SERVICING FEE. Subject to the provisions of
Section 5.03(b) hereof, the Company agrees to pay to the Collection Agent or any
successor Collection Agent, as the
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case may be, on each Settlement Date an amount (the "Servicing Fee") in respect
of its collection agent and related duties hereunder during the immediately
preceding Settlement Period equal to the excess, if any, of (i) the aggregate
Collections received during the immediately preceding Settlement Period
allocable to Finance Charge Receivables over (ii) the sum of (1) the Carrying
Costs for such immediately preceding Settlement Period, (2) the Receivable
Losses Funding Amount with respect to such immediately preceding Settlement
Period and (3) the Outstanding Unpaid Receivable Losses Funding Amount for all
prior Settlement Periods.
If any funds remain on deposit in the Collection Account on
the Expiration Date or any Collections of Receivables are received thereafter,
and after the payment in full of all of the Company's obligations under the
Liquidity Agreement, the Security Agreement, the Purchase Agreement, any
Commercial Paper, the Guaranty or in any other agreement or document related
thereto, an amount equal to such funds shall be paid by the Company to the
Seller as a special termination fee under this Agreement.
Section 7.07 SUBORDINATION OF DEFERRED PURCHASE PRICE.
(a) SUBORDINATION OF LIABILITIES. The Seller, for itself and
its successors and assigns, covenants and agrees that, except as provided in
Section 5.03(b), the Deferred Purchase Price is hereby expressly subordinated,
to the extent and in the manner hereinafter set forth, to the prior payment in
full of all Senior Indebtedness (as defined in paragraph (f) of this Section
7.07). The provisions of this Section 7.07 shall constitute a continuing offer
to all persons who, in reliance upon such provisions, become holders of, or
continue to hold, Senior Indebtedness, and such provisions are made for the
benefit of the holders of Senior Indebtedness, and such holders are hereby made
obligees hereunder the same as if their names were written herein as such, and
they and/or each of them may proceed to enforce such provisions.
(b) COMPANY NOT TO MAKE PAYMENTS WITH RESPECT TO DEFERRED
PURCHASE PRICE. (i) Except to the limited extent provided in Section 5.03(b)
hereof, no payment shall be made in respect of the Deferred Purchase Price until
the Senior Indebtedness shall have been paid in full.
(ii) In the event that notwithstanding the provisions of the
preceding subsection (i) of this paragraph (b), the Company shall make any
payment on account of the Deferred Purchase Price at a time when payment is not
permitted by said subsection (i), such payment shall be held by any recipient of
such payment, in trust for the benefit of, and shall be paid forthwith over and
delivered to, the holders of Senior Indebtedness or their representatives under
the agreements pursuant to which the Senior Indebtedness may have been issued,
as their respective interests may appear, for application PRO RATA to the extent
necessary to pay all Senior Indebtedness in full accordance with the terms of
such Senior Indebtedness, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
(c) Deferred Purchase Price Subordinated to Prior Payment of
all Senior Indebtedness on Dissolution, Liquidation or Reorganization of the
Company. Upon any distribution of assets of the Company upon any dissolution,
winding up, liquidation or
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reorganization of the Company (whether in bankruptcy, insolvency or receivership
proceeding or upon an assignment for the benefit of creditors or otherwise):
(i) the holders of all Senior Indebtedness shall first be
entitled to receive payment in full of the principal thereof, premium,
if any, and interest (including postpetition interest) and all other
amounts due thereon before the holders of the Deferred Purchase Price
are entitled to receive any payment on account thereon;
(ii) any payment or distributions of assets of the Company or
any kind or character, whether in cash, property or securities to which
the holders of the Deferred Purchase Price would be entitled except for
the provisions of this Section 7.07, shall be paid by the liquidating
trustee or agent or other person making such payment or distribution,
whether a trustee in bankruptcy, a receiver or liquidating trustee or
other trustee or agent, directly to the holders of Senior Indebtedness
or their representative or representatives under the agreements
pursuant to which the Senior Indebtedness may have been issued, to the
extent necessary to make payment in full of all Senior Indebtedness
remaining unpaid, after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness; and
(iii) in the event that, notwithstanding the foregoing
provisions of this paragraph (c), any payment or distribution of assets
of the Company of any kind or character, whether in cash, property or
securities, shall be received by holders of the Deferred Purchase Price
on account of any Deferred Purchase Price before all Senior
Indebtedness is paid in full, or effective provision made for its
payment, such payment or distribution shall be received and held in
trust for and shall be paid over to the holders of the Senior
Indebtedness remaining unpaid or unprovided for or their representative
or representatives under the agreements pursuant to which the Senior
Indebtedness may have been issued, for application to the payment of
such Senior Indebtedness until all such Senior Indebtedness shall have
been paid in full, after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness.
(d) SUBROGATION. Subject to the prior payment in full of all
Senior Indebtedness, the holders of the Deferred Purchase Price shall be
subrogated to the rights of the holders of Senior Indebtedness to receive
payments or distributions of assets of the Company applicable to the Senior
Indebtedness until all amounts owing on the Senior Indebtedness shall be paid in
full, and for the purpose of such subrogation no payments or distributions to
the holders of the Senior Indebtedness by or on behalf of the Company or by or
on behalf of the holders of the Deferred Purchase Price by virtue of this
paragraph (d) which otherwise would have been made to the holders of the
Deferred Purchase Price shall, as between the Company, its creditors other than
the holders of Senior Indebtedness, and the holders of the Deferred Purchase
Price be deemed to be payment by the Company to or on account of the Senior
Indebtedness, it being understood that the provisions of this Section 7.07 are
and are intended solely for the purpose of defining the relative rights of the
holders of the Deferred Purchase Price on the one hand, and the holders of the
Senior Indebtedness, on the other hand.
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(e) SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF
THE COMPANY OR HOLDERS OF SENIOR INDEBTEDNESS. No right of any present or future
holders of any Senior Indebtedness to enforce subordination as herein provided
shall at any time in any way be prejudiced or impaired by an act or failure to
act on the part of the Company or by any act or failure to act in good faith by
any such holder, or by any noncompliance by the Company with the terms and
provisions hereof or any agreement related hereto or of the Liquidity Agreement
or any agreement related thereto regardless of any knowledge thereof which any
such holder may have or be otherwise charged with. The holders of the Senior
Indebtedness may, without in any way affecting the obligations of the holders of
the Deferred Purchase Price with respect thereto, at any time or from time to
time and in their absolute discretion, change the manner, place or terms of
payment of, or renew or alter, any Senior Indebtedness, or amend, modify or
supplement any agreement or instrument governing or referred to therein, or
exercise or refrain from exercising any other of their rights under the Senior
Indebtedness including, without limitation, the waiver of default thereunder or
the release of any collateral securing such Senior Indebtedness, all without
notice to or assent from the holders of the Deferred Purchase Price.
(f) SENIOR INDEBTEDNESS. The term "Senior Indebtedness" shall
mean all indebtedness whether principal, interest (post-petition or otherwise),
fees or any other amount of the Company owing under (i) the Liquidity Agreement
and all documents and instruments referred to therein including, without
limitation, Commercial Paper, the Revolving Loan Note, the Refunding Loan Note,
the Guaranty and the Security Agreement, and (ii) any renewal, extension,
restatement or refunding of any of the obligations referred to in the preceding
clause (i), PROVIDED that Senior Indebtedness shall not include the Deferred
Purchase Price.
(g) TRANSFER OF DEFERRED PURCHASE PRICE. The Seller for itself
and its successors and assigns, agrees that it will not sell, assign or
otherwise transfer any Deferred Purchase Price or any interest therein without
the prior written consent of GECC.
(h) SUSPENSION OF CERTAIN REMEDIES. Until such time as it has
been informed in writing by GECC that all Senior Indebtedness now or hereafter
existing has been paid in full, the Seller for itself and its successors and
assigns, will not (x) make demand or ▇▇▇ for any payment of or distribution in
respect of any Deferred Purchase Price except such as may be due pursuant to
Section 5.03(b) hereof or (y) commence, or join with any creditor in commencing,
any proceeding for the liquidation or dissolution of the Company or for a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property or an assignment for the benefit of
creditors for any marshalling of the assets and liabilities of the Company;
PROVIDED, HOWEVER, that nothing in this paragraph (h) shall prohibit the Seller,
its successors or assigns from participating in any proceeding which has been
commenced by any other person.
(i) Any Deferred Purchase Price remaining after the payment of
all Senior Indebtedness will be paid by the Company to the Seller.
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Section 7.08 FACILITY FEE. In consideration of the Company's
agreement to purchase Receivables hereunder from time to time, the Seller agrees
to pay or cause to be paid to the Company an annual fee (the "Facility Fee"),
payable in advance on the date of this Agreement and on each anniversary
thereof, in the amount of $35,000.
Section 7.09 BANKRUPTCY PETITION AGAINST THE COMPANY. Each of
the Seller and the Parent covenants and agrees that prior to the date which is
one year and one day after the payment in full of all Commercial Paper issued by
the Company it will not institute against, or join any other person in
instituting against, the Company any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any Federal or
state bankruptcy or similar law.
Section 7.10 SETOFF. Each of the Seller and the Parent hereby
irrevocably and unconditionally waives all right of setoff that it may have
under contract (including this Agreement), applicable law or otherwise with
respect to any funds or monies of the Company at any time held by or in the
possession of the Seller or the Parent.
Section 7.11 REMEDIES. In addition to any rights and remedies
now or hereafter granted under applicable law and not by way of limitation of
any such rights and remedies the Company shall have all of the rights and
remedies under the UCC as enacted in any applicable jurisdiction in addition to
the rights and remedies provided in this Agreement.
Section 7.12 COSTS, EXPENSES AND TAXES. The Seller agrees to
pay all reasonable costs and expenses in connection with the negotiation,
preparation, printing, typing, reproduction, execution and delivery of this
Agreement, the Liquidity Agreement, the Security Agreement and the Consent and
Acknowledgment to Security Agreement and any amendments or modifications of (or
supplements to) any of the foregoing and any and all other documents furnished
pursuant hereto or thereto or in connection herewith or therewith.
Section 7.13 OPTIONAL REPURCHASE. On any Settlement Date on
which the Unpaid Balance of the Receivables does not exceed $4,548,605, the
Seller shall have the right to reacquire all such Receivables at a price equal
to the Unpaid Balance thereof plus any accrued and unpaid Carrying Costs through
such Settlement Date. The amount of such purchase price shall be treated as a
Collection with respect to the Receivables and applied in accordance with
Article V hereof.
Section 7.14 FURTHER ASSURANCES. The Seller agrees to do such
further acts and things and to execute and deliver to the Company or the
Collateral Agent such additional assignments, agreements, powers and instruments
as are required by the Company to carry into effect the purposes of this
Agreement or to better assure and confirm unto the Company or the Collateral
Agent its rights, powers and remedies hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this
Purchase and Administration Agreement to be executed and delivered by their duly
authorized officers as of the date hereof.
RETAILER FUNDING CORPORATION
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Authorized Signatory
KEYBOARD ACCEPTANCE CORPORATION
By /s/ ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇
-------------------------------
Authorized Signatory
▇▇▇▇▇▇▇ PIANO & ORGAN COMPANY
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Authorized Signatory
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Consented to:
GENERAL ELECTRIC CAPITAL
CORPORATION
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------
Authorized Signatory
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