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EXHIBIT 10.169
RECEIVABLES PURCHASE AGREEMENT
Dated as of July 31, 1998
Among
MAXTOR RECEIVABLES CORPORATION
as Seller
and
MAXTOR CORPORATION
as initial Servicer
and
BLUE KEEL FUNDING, LLC
as Purchaser
and
FLEET NATIONAL BANK
as Administrator
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TABLE OF CONTENTS
Page
ARTICLE I
PURCHASES AND REINVESTMENTS
SECTION 1.01. Commitment to Purchase; Limits on Purchaser's Obligations ...........2
SECTION 1.02. Purchase Procedures; Assignment of Purchaser's Interests ............2
SECTION 1.03. Reinvestments of Certain Collections; Payment of Remaining
Collections..........................................................2
SECTION 1.04. Asset Interest.......................................................3
SECTION 1.05. Voluntary Termination of Purchase and Reinvestment
Obligations or Reduction of Purchase Limit...........................4
SECTION 1.06. Post Closing Audit...................................................4
ARTICLE II
COMPUTATIONAL RULES
SECTION 2.01. Computation of Capital...............................................5
SECTION 2.02. Computation of Concentration Limit...................................5
SECTION 2.03. Computation of Earned Discount.......................................5
SECTION 2.04. Estimates of Earned Discount Rate, Fees, Etc.........................5
ARTICLE III
SETTLEMENTS
SECTION 3.01. Settlement Procedures................................................6
SECTION 3.02. Deemed Collections; Reduction of Capital, Etc........................8
SECTION 3.03. Payments and Computations, Etc.......................................9
ARTICLE IV
FEES AND YIELD PROTECTION
SECTION 4.01. Fees................................................................10
SECTION 4.02. Yield Protection....................................................10
SECTION 4.03. Funding Losses......................................................12
ARTICLE V
CONDITIONS TO PURCHASES
SECTION 5.01. Conditions Precedent to Initial Purchase............................12
SECTION 5.02. Conditions Precedent to All Purchases and Reinvestments ............14
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01. Representations and Warranties of Seller............................15
SECTION 6.02. Representations and Warranties of Parent............................18
ARTICLE VII
GENERAL COVENANTS
SECTION 7.01. Affirmative Covenants...............................................19
SECTION 7.02. Reporting Requirements..............................................21
SECTION 7.03. Negative Covenants..................................................23
SECTION 7.04. Separate Existence..................................................24
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ARTICLE VIII
ADMINISTRATION AND COLLECTION
SECTION 8.01. Designation of Servicer.............................................26
SECTION 8.02. Duties of Servicer..................................................27
SECTION 8.03. Rights of the Administrator.........................................29
SECTION 8.04. Responsibilities of Seller..........................................30
SECTION 8.05. Further Action Evidencing Purchases and Reinvestments ..............30
SECTION 8.06. Application of Collections..........................................31
ARTICLE IX
SECURITY INTEREST
SECTION 9.01. Grant of Security Interest..........................................31
SECTION 9.02. Further Assurances..................................................31
SECTION 9.03. Remedies............................................................32
ARTICLE X
LIQUIDATION EVENTS
SECTION 10.01. Liquidation Events..................................................32
SECTION 10.02. Remedies............................................................34
ARTICLE XI
THE ADMINISTRATOR
SECTION 11.01. Authorization and Action............................................35
SECTION 11.02. Administrator's Reliance, Etc.......................................35
SECTION 11.03. Fleet and Affiliates................................................35
ARTICLE XII
ASSIGNMENT OF PURCHASER'S INTEREST
SECTION 12.01. Restrictions on Assignments.........................................36
SECTION 12.02. Rights of Assignee..................................................36
ARTICLE XIII
INDEMNIFICATION
SECTION 13.01. Indemnities.........................................................36
ARTICLE XIV
MISCELLANEOUS
SECTION 14.01. Amendments, Etc.....................................................39
SECTION 14.02. Notices, Etc........................................................39
SECTION 14.03. No Waiver; Remedies.................................................39
SECTION 14.04. Binding Effect; Survival............................................39
SECTION 14.05. Costs, Expenses and Taxes...........................................40
SECTION 14.06. No Proceedings......................................................40
SECTION 14.07. Confidentiality of Program Information..............................40
SECTION 14.08. Confidentiality of Parent Information...............................42
SECTION 14.09. Captions and Cross References.......................................43
SECTION 14.10. Integration.........................................................43
SECTION 14.11. Governing Law.......................................................43
SECTION 14.12. Waiver Of Jury Trial................................................44
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SECTION 14.13. Consent To Jurisdiction; Waiver Of Immunities.......................44
SECTION 14.14. Execution in Counterparts...........................................45
SECTION 14.15. No Recourse Against Other Parties...................................45
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APPENDICES
APPENDIX A Definitions
SCHEDULES
SCHEDULE 6.01(m) List of Offices of Seller where Records Are Kept
SCHEDULE 6.01(n) List of Lock-Box Banks
SCHEDULE 7.01(e) Forms of Contracts
SCHEDULE 7.01(g) Description of Credit and Collection Policy
SCHEDULE 14.02 Notice Addresses
EXHIBITS
EXHIBIT 1.02(a) Form of Purchase Notice
EXHIBIT 3.01 Form of Servicer Report
EXHIBIT 5.01(g)-1 Form of In-House Counsel Opinion
EXHIBIT 5.01(g)-2 Form of Enforceability Opinion
EXHIBIT 5.01(g)-3 Form of True Sale Opinion
EXHIBIT 5.01(g)-4 Form of Substantive Consolidation Opinion
EXHIBIT 5.01 Form of Lock-Box Agreement
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RECEIVABLES PURCHASE AGREEMENT
Dated as of July 31, 1998
THIS IS A RECEIVABLES PURCHASE AGREEMENT, among MAXTOR RECEIVABLES
CORPORATION, a California corporation ("Seller"), MAXTOR CORPORATION, a Delaware
corporation ("Parent"), as initial Servicer, BLUE KEEL FUNDING, LLC, a Delaware
limited liability company ("Purchaser"), and FLEET NATIONAL BANK, a national
banking association ("Fleet"), as administrator for Purchaser (in such capacity,
the "Administrator"). Unless otherwise indicated, capitalized terms used in this
Agreement are defined in Appendix A.
Background
1. Parent is engaged in the business of manufacturing hard disk
drives.
2. Seller is a single purpose corporation formed for the purpose of
purchasing, and accepting contributions of, Receivables generated by Parent or
other Originator in the ordinary course of its business.
3. Seller has, and expects to have, Pool Receivables in which
Seller intends to sell an undivided interest. Seller has requested Purchaser to,
and Purchaser shall, subject to the terms and conditions contained in this
Agreement, fund the purchase of such undivided interest, referred to herein as
the Asset Interest, from Seller from time to time during the term of this
Agreement.
4. Seller and Purchaser also desire that, subject to the terms and
conditions of this Agreement, certain of the daily Collections in respect of the
Asset Interest be reinvested in Pool Receivables, which reinvestment shall
constitute part of the Asset Interest.
5. Parent has been requested, and is willing, to act as initial
Servicer.
6. Fleet has been requested, and is willing, to act as the
Administrator.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
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ARTICLE I
PURCHASES AND REINVESTMENTS
SECTION 1.01. Commitment to Purchase; Limits on Purchaser's Obligations.
Upon the terms and subject to the conditions of this Agreement, from time to
time prior to the Termination Date, Seller may request that Administrator, for
the benefit of Purchaser, purchase from Seller an undivided ownership interest
in the Pool Assets (each being a "Purchase") and Purchaser shall fund such
Purchase; provided that no Purchase shall be funded by Purchaser if, after
giving effect thereto, either (a) the then Capital would exceed an amount equal
to $200,000,000 (the "Purchase Limit"), as such amount may be decreased from
time to time as provided in Section 1.05, or (b) the Asset Interest would exceed
100% (the "Allocation Limit"); and provided further that each Purchase made
pursuant to this Section 1.01 shall have a purchase price of at least
$1,000,000.
SECTION 1.02. Purchase Procedures; Assignment of Purchaser's Interests.
(a) Notice of Purchase. Each Purchase from Seller shall be made on
notice from Seller to the Administrator received by the Administrator not later
than 11:00 a.m. (San Francisco, California, time) on the second Business Day
next preceding the date of such proposed Purchase. Each such notice of a
proposed Purchase shall be substantially in the form of Exhibit 1.02(a) (each a
"Purchase Notice"), and shall specify the desired amount and date of such
Purchase, which shall be a Settlement Date.
(b) Funding of Purchase. On the date of each Purchase, Purchaser shall,
upon satisfaction of the applicable conditions set forth in Article V, make
available to the Administrator at the Administrator's Office the amount of its
Purchase in immediately available funds, and after receipt by the Administrator
of such funds, the Administrator will make such funds immediately available to
Seller at such office.
(c) Assignment of Asset Interest. Seller hereby sells, assigns and
transfers to Administrator, for the benefit of Purchaser, the Asset Interest.
(d) First Purchase. Purchaser shall use the proceeds of the first
Purchase, to the extent necessary, to pay all outstanding amounts owed to
Corporate Receivables Corporation in order to effect the repurchase of the
Receivables existing on the date of such Purchase from Corporate Receivables
Corporation pursuant to the Repurchase Agreement.
SECTION 1.03. Reinvestments of Certain Collections; Payment of Remaining
Collections. (a) On the close of business on each day during the period from the
date hereof to the Termination Date, Servicer will, out of all Collections
received on such day:
(i) determine the portion of Collections attributable on any day
to the Asset Interest by multiplying (x) the amount of all Collections
times (y) the Asset Interest;
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(ii) out of the portion of Collections allocated to the Asset
Interest pursuant to clause (i), set aside and hold in trust for
Purchaser an amount equal to the sum of the estimated amount of Earned
Discount accrued in respect of the Capital (based on rate information
provided by the Administrator pursuant to Section 2.04), the accrued
Fees, all other amounts due to Purchaser, the Administrator, the
Affected Parties or the Indemnified Parties hereunder (other than the
Capital) and the Purchaser's Share of the Servicer's Fee (in each case,
accrued through such day) and not so previously set aside; provided that
unless the Administrator shall request it to do so in writing, Servicer
shall not be required to hold Collections that have been set-aside in a
separate deposit account containing only such Collections;
(iii) apply the Collections allocated to the Asset Interest
pursuant to clause (i) and not set aside pursuant to clause (ii) to the
purchase from Seller of ownership interests in Pool Assets (each such
purchase being a "Reinvestment"); provided that (A) if the Excess Amount
exceeds zero, then Servicer shall not reinvest, but shall set aside and
hold for the benefit of Purchaser, a portion of such Collections which,
together with other Collections previously set aside and then so held,
shall equal the Excess Amount; and (B) if the conditions precedent to
Reinvestment in Section 5.02 are not satisfied, then Servicer shall not
reinvest any of such Collections;
(iv) pay to Seller (A) the portion of Collections not allocated
to the Asset Interest pursuant to clause (i), less the Seller's Share of
the Servicer's Fee, and (B) the Collections applied to Reinvestment
pursuant to clause (iii); and
(v) out of the portion of Collections not allocated to the Asset
Interest pursuant to clause (i), pay to the Servicer the Seller's Share
of the Servicer's Fee accrued through such day.
(b) Unreinvested Collections. Servicer shall set aside and hold in trust
for the benefit of Purchaser all Collections which pursuant to clause (iii) of
Section 1.03(a) may not be reinvested in Pool Assets; provided that unless the
Administrator shall request it to do so in writing, Servicer shall not be
required to hold Collections that have been set-aside in a separate deposit
account containing only such Collections. If, prior to the date when such
Collections are required to be paid to the Administrator pursuant to Section
3.01, the amount of Collections set aside pursuant to clause (iii) of Section
1.03(a) exceeds the Excess Amount, if any, and the conditions precedent to
Reinvestment set forth in Section 5.02 are satisfied, then the Servicer shall
apply such Collections (or, if less, a portion of such Collections equal to the
amount of such excess) to the making of a Reinvestment.
SECTION 1.04. Asset Interest. On any date the Asset Interest will
represent Administrator's (for the benefit of Purchaser) combined undivided
percentage ownership interest in (i) all then outstanding Pool Receivables, (ii)
all Related Security with respect to such Pool Receivables, (iii)
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all of Seller's right and claims under the Purchase Agreement, (iv) all
Collections with respect to, and other proceeds of, the foregoing as at such
date, (v) all lock-boxes and lock-box or collection accounts into which
Collections of Pool Receivables are or may be deposited, and all investments
therein, and (vi) all books and records (including computer disks, tapes and
software) evidencing or relating to any of the foregoing, in each case, whether
now owned by Seller or hereafter acquired or arising, and wherever located (all
of the foregoing, collectively referred to as "Pool Assets").
(b) Computation of Asset Interest. On any date, the Asset Interest will
be equal to a percentage, expressed as the following fraction:
C + RR
------
NPB
where:
C = the then Capital.
RR = the then Required Reserves.
NPB = the then Net Pool Balance;
provided, however, that the Asset Interest, as computed as of the day
immediately preceding the Termination Date, will remain constant at all times on
and after the Termination Date until the Final Payout Date, unless at any time
the Administrator requests a recalculation of the Asset Interest, in which case,
if such recalculated Asset Interest is higher, the Asset Interest shall remain
constant following such recalculation until the Final Payout Date, or, if
earlier, until the date of the next such recalculation of a higher Asset
Interest.
(c) Frequency of Computation. The Asset Interest shall be computed as of
the Cut-Off Date for each Settlement Period. In addition, the Administrator may
require Servicer to provide a Servicer Report for purposes of computing the
Asset Interest as of any other date, and the Servicer agrees to do so within two
Business Days of its receipt of the Administrator's request.
SECTION 1.05. Voluntary Termination of Purchase and Reinvestment
Obligations or Reduction of Purchase Limit. Seller may, upon at least 15 days'
prior written notice to the Administrator, either (a) terminate Purchaser's
commitment to fund Purchases and Reinvestments hereunder, or (b) reduce the
Purchase Limit to an amount not less than $50,000,000; provided, however, that
(i) each partial reduction of the Purchase Limit shall be in an amount equal to
$1,000,000 or an integral multiple thereof, and (ii) after giving effect to such
reduction, the Capital will not exceed the Purchase Limit as so reduced. The
Purchase Limit may be increased upon the request of Seller and the written
consent of the Administrator
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and Purchaser thereto, which consent may be granted or withheld in their sole
discretion and may be subject to such conditions as they may require.
SECTION 1.06. Post Closing Audit. Within 60 days of the first Purchase
hereunder, Fleet shall conduct a review and audit of the Parent's collection,
operating and reporting systems, Credit and Collection Policy, historical
receivables data and accounts, including a review of the Parent's operating
locations and the Eligible Receivables existing on the date of such Purchase;
provided that Parent shall be responsible for the cost of such audit and review
as the one such audit and review in the calender year of 1998, in accordance
with the proviso to each of Section 7.01(c) and Section 6.1(c) of the Purchase
Agreement. In the event that Fleet determines in good faith that as a result of
such review and audit either the Required Reserves, or the calculation or level
of any of the performance ratios of the Receivables, need to be adjusted to
reflect the performance of the Receivables, or Purchaser's risk with respect
thereto, Seller and Parent agree to enter into such amendments hereto as Fleet
may request in good faith to evidence such adjustments.
ARTICLE II
COMPUTATIONAL RULES
SECTION 2.01. Computation of Capital. In making any determination of
Capital, the following rules shall apply:
(a) Capital shall not be considered reduced by any allocation,
setting aside or distribution of any portion of Collections unless such
Collections shall have been actually delivered to the Administrator
pursuant hereto for application to the Capital; and
(b) Capital shall not be considered reduced by any distribution
of any portion of Collections if at any time such distribution is
rescinded or must otherwise be returned for any reason.
SECTION 2.02. Computation of Concentration Limit. In the case of any
Obligor that is an Affiliate of any other Obligor, the Concentration Limit and
the aggregate Unpaid Balance of Pool Receivables of such Obligors shall be
calculated as if such Obligors were one Obligor.
SECTION 2.03. Computation of Earned Discount. In making any
determination of Earned Discount, the following rules shall apply:
(a) no provision of this Agreement shall require the payment or
permit the collection of Earned Discount in excess of the maximum
permitted by Applicable Law; and
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(b) Earned Discount for any period shall not be considered paid
by any distribution if at any time such distribution is rescinded or
must otherwise be returned for any reason.
SECTION 2.04. Estimates of Earned Discount Rate, Fees, Etc. For purposes
of determining the amounts required to be set aside by Servicer pursuant to
Section 1.03, the Administrator shall notify Servicer from time to time of the
Earned Discount Rate applicable to the Capital and the rates at which fees and
other amounts are accruing hereunder. It is understood and agreed that (i) the
Earned Discount Rate may change from time to time, (ii) certain rate information
provided by the Administrator to Servicer shall be based upon the
Administrator's good faith estimate, (iii) the amount of Earned Discount
actually accrued with respect to the Capital during any Settlement Period may
exceed, or be less than, the amount set aside with respect thereto by Servicer,
and (iv) the amount of fees or other payables accrued hereunder with respect to
any Settlement Period may exceed, or be less than, the amount set aside with
respect thereto by Servicer. Failure to set aside any amount so accrued shall
not relieve Servicer of its obligation to remit Collections to the Administrator
with respect to such accrued amount, as and to the extent provided in Section
3.01.
ARTICLE III
SETTLEMENTS
SECTION 3.01. Settlement Procedures.
The parties hereto will take the following actions with respect to each
Settlement Period:
(a) Servicer Report. On or before the sixth Business Day after
each Cut-Off Date (each, a "Reporting Date"), Servicer shall deliver to
the Administrator a report containing the information described in
Exhibit 3.01 (each, a "Servicer Report").
(b) Earned Discount; Other Amounts Due. Two Business Days prior
to each Reporting Date, the Administrator shall notify Servicer of (i)
the amount of Earned Discount that will have accrued in respect of the
Capital as of the next Settlement Date and (ii) all Fees and other
amounts that will have accrued and be payable by Seller under this
Agreement on the next Settlement Date (other than Capital).
(c) Settlement Date Procedure - Reinvestment Period. On the
eighth Business Day after each Cut-Off Date (each, a "Settlement Date")
prior to the Termination Date, the Servicer shall distribute from
Collections set aside pursuant to Sections 1.03(a)(i)
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through (iii) during the immediately preceding Settlement Period the
following amounts in the following order:
(1) to the Administrator, an amount equal to the Earned
Discount accrued during such Settlement Period, plus any
previously accrued Earned Discount not paid on a prior Settlement
Date, which amount shall be distributed by the Administrator to
the Purchaser for application to such Earned Discount;
(2) to the Administrator, an amount equal to the Program
Fee and Commitment Fee accrued during such Settlement Period,
plus any previously accrued amounts described in this clause (2)
not paid on a prior Settlement Date;
(3) to the Servicer, if the Servicer is not Parent, an
amount equal to the Purchaser's Share of the Servicer's Fee
accrued during such Settlement Period, plus any previously
accrued Purchaser's Share of the Servicer's Fee not paid on a
prior Settlement Date;
(4) to the Administrator, all other amounts (other than
Capital) then due under this Agreement to the Administrator, the
Purchaser, the Affected Parties or the Indemnified Parties;
(5) to the Administrator, an amount equal to the Excess
Amount, if any, which amount shall be distributed by the
Administrator to the Purchaser for application to the Capital;
(6) to the Servicer, if the Servicer is Parent, an amount
equal to the Purchaser's Share of the Servicer's Fee accrued
during such Settlement Period, plus any previously accrued
Purchaser's Share of the Servicer's Fee not paid on a prior
Settlement Day; and
(7) to the Seller, any remaining amounts.
(d) Settlement Date Procedure - Liquidation Period. On each Settlement
Date during the Liquidation Period, the Servicer shall distribute from
Purchaser's Share of Collections received or deemed received pursuant to Section
3.02 during the immediately preceding Settlement Period the following amounts in
the following order:
(1) to the Administrator, an amount equal to the Earned
Discount accrued during such Settlement Period, plus any
previously accrued Earned Discount not paid on a prior
Settlement Date, which amount shall be distributed by the
Administrator to the Purchaser for application to such Earned
Discount;
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(2) to the Administrator, an amount equal to the Program
Fee and Commitment Fee accrued during such Settlement Period,
plus any previously accrued Program Fee and Commitment Fee not
paid on a prior Settlement Date;
(3) to the Servicer, if the Servicer is not Parent, an
amount equal to the Purchaser's Share of the Servicer's Fee
accrued during such preceding Settlement Period, plus any
previously accrued Purchaser's Share of the Servicer's Fee not
paid on a prior Settlement Date;
(4) to the Administrator, an amount equal to the
remaining Purchaser's Share of Collections until the Capital is
reduced to zero, which amount shall be distributed by the
Administrator to the Purchaser for application to the Capital;
(5) to the Administrator, all other amounts (other than
Capital) then due under this Agreement to the Administrator, the
Purchaser, the Affected Parties or the Indemnified Parties;
(6) to the Servicer, if the Servicer is Parent, an
amount equal to the Purchaser's Share of the Servicer's Fee
accrued during such Settlement Period, plus any previously
accrued Purchaser's Share of the Servicer's Fee not paid on a
prior Settlement Date; and
(7) to the Seller, any remaining amounts.
(e) Delayed Payment. If on any day described in this Section
3.01, because Collections during the relevant Settlement Period were
less than the aggregate amounts payable, Servicer does not make any
payment otherwise required, the next available Collections in respect of
the Asset Interest shall be applied to such payment, and no Reinvestment
shall be permitted hereunder until such amount payable has been paid in
full.
SECTION 3.02. Deemed Collections; Reduction of Capital, Etc.
(a) Deemed Collections. If on any day
(i) a Dilution occurs or the Unpaid Balance of any Pool
Receivable is less than the amount included in calculating the Net Pool
Balance for purposes of any Servicer Report for any other reason, or
(ii) any of the representations or warranties of Seller set
forth in Section 6.01(k) or (o) with respect to any Pool Receivable were
not true when made with respect to any Pool Receivable, or any of the
representations or warranties of Seller set forth in Section 6.01(k) are
no longer true with respect to any Pool Receivable, or
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(iii) without duplication, Seller receives a Deemed Collection
pursuant to the Purchase Agreement,
then, on such day, Seller shall be deemed to have received a Collection of such
Pool Receivable
(I) in the case of clause (i) above, in the amount of such
Dilution or the difference between the actual Unpaid Balance and
the amount included in calculating such Net Pool Balance, as
applicable; and
(II) in the case of clause (ii) above, in the amount of
the Unpaid Balance of such Pool Receivable; and
(III) in the case of clause (iii) above, in the amount of
such Deemed Collection.
(b) Seller's Optional Reduction of Capital. Seller may at any time elect
to reduce the Capital as follows:
(i) Seller shall give the Administrator at least five (5)
Business Days' prior written notice of such reduction (including the
amount of such proposed reduction and the proposed date on which such
reduction will commence),
(ii) on the proposed date of commencement of such reduction and
on each day thereafter, Servicer shall refrain from reinvesting
Collections pursuant to Section 1.03 until the amount thereof not so
reinvested shall equal the desired amount of reduction, and
(iii) Servicer shall hold such Collections in trust for
Purchaser, pending payment to the Administrator on the next Settlement
Date, as provided in Section 1.03;
provided that,
(A) the amount of any such reduction shall be not less
than $5,000,000, and the Capital after giving effect to such
reduction shall be not less than $50,000,000 (unless Capital
shall thereby be reduced to zero), and
(B) Seller shall use reasonable efforts to attempt to
choose a reduction amount, and the date of commencement thereof,
so that such reduction shall commence and conclude in the same
Settlement Period.
SECTION 3.03. Payments and Computations, Etc.
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(a) Payments. All amounts to be paid or deposited by Seller or Servicer
to the Administrator or any other Person (other than to Seller, Parent or
Servicer) hereunder (other than amounts payable under Section 4.02) shall be
paid or deposited in accordance with the terms hereof no later than 11:00 a.m.
(Boston, Massachusetts time) on the day when due in lawful money of the United
States of America in immediately available funds to the Administrator at ABA#
011 000 138, account # ▇▇▇ ▇▇▇ ▇▇▇▇; attention: Blue Keel.
(b) Late Payments. Seller or Servicer, as applicable, shall, to the
extent permitted by law, pay to Purchaser or the Administrator, as the case may
be, interest on all amounts not paid or deposited when such amount is due
hereunder at 2% per annum above the Alternate Base Rate, payable on demand,
provided, however, that such interest rate shall not at any time exceed the
maximum rate permitted by Applicable Law, and provided, further that such late
interest rate shall not begin to accrue with respect to any payment until such
payment is at least three (3) hours late.
(c) Method of Computation. All computations of interest, Earned Discount
and any fees payable hereunder shall be made on the basis of a year of 360 days
for the actual number of days (including the first day but excluding the last
day) elapsed.
ARTICLE IV
FEES AND YIELD PROTECTION
SECTION 4.01. Fees. Seller shall pay to the Administrator and Purchaser
the fees in the amounts and at the times set forth in the fee letter, dated as
of the date hereof, between the Administrator and Seller (as amended or
supplemented from time to time, the "Fee Letter").
SECTION 4.02. Yield Protection.
(a) If (i) Regulation D or (ii) any Regulatory Change occurring after
the date hereof
(A) shall subject an Affected Party to any tax, duty or other
charge with respect to any Asset Interest owned by or funded by it, or
any obligations or right to make Purchases or Reinvestments or to
provide funding therefor, or shall change the basis of taxation of
payments to the Affected Party of any Capital or Earned Discount owned
by, owed to or funded in whole or in part by it or any other amounts due
under this Agreement in respect of the Asset Interest owned by or funded
by it or its obligations or rights, if any, to make Purchases or
Reinvestments or to provide funding therefor (except for franchise taxes
or changes in the rate of tax on the overall net income of such Affected
Party imposed by the United States of America, by the jurisdiction in
which such Affected Party's principal executive office is located and,
if such Affected Party's principal executive
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office is not in the United States of America, by the jurisdiction where
such Affected Party's principal office in the United States is located);
or
(B) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Federal
Reserve Board), special deposit, compulsory loan or similar requirement
against assets of any Affected Party, deposits or obligations with or
for the account of any Affected Party or with or for the account of any
affiliate (or entity deemed by the Federal Reserve Board to be an
affiliate) of any Affected Party, or credit extended by any Affected
Party, but excluding any reserve, special deposit or similar requirement
included in the determination of Earned Discount; or
(C) shall change the amount of capital maintained or required or
requested or directed to be maintained by any Affected Party; or
(D) shall impose any other condition affecting any Asset Interest
owned or funded in whole or in part by any Affected Party, or its
obligations or rights, if any, to make Purchases or Reinvestments or to
provide funding therefor; or
(E) shall change the rate for, or the manner in which the Federal
Deposit Insurance Corporation (or a successor thereto) assesses, deposit
insurance premiums or similar charges;
and the result of any of the foregoing is
(x) to increase the cost to or to impose a cost on an Affected
Party funding or making or maintaining any Purchases or Reinvestments,
any purchases, reinvestments, or loans or other extensions of credit
under any Program Agreement, or any commitment of such Affected Party
with respect to any of the foregoing,
(y) to reduce the amount of any sum received or receivable by an
Affected Party under this Agreement, or under any Program Agreement with
respect thereto, or
(z) to reduce the rate of return on the capital of an Affected
Party as a consequence of its obligations hereunder or under any Program
Agreement or arising in connection herewith to a level below that which
such Affected Party could otherwise have achieved,
then within thirty days after demand by such Affected Party (which demand shall
be accompanied by a statement setting forth the basis for, calculation of, and
amount of such additional costs or reduced amount receivable; provided, however,
that no Affected Party shall be required to disclose any confidential or tax
planning information in any such statement), Seller shall pay directly to such
Affected Party such additional amount or amounts as will compensate such
Affected Party for such additional or increased cost or such reduction.
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(b) Each Affected Party will promptly notify Seller and the
Administrator of any event of which it has knowledge which will entitle such
Affected Party to compensation pursuant to this Section 4.02; provided, however,
no failure to give or delay in giving such notification shall adversely affect
the rights of any Affected Party to such compensation.
(c) In determining any amount provided for or referred to in this
Section 4.02, an Affected Party may use any reasonable averaging and attribution
methods that it shall deem applicable. Any Affected Party when making a claim
under this Section 4.02 shall submit to Seller a statement as to such increased
cost or reduced return (including a calculation thereof in reasonable detail),
which statement shall, in the absence of demonstrable error, be conclusive and
binding upon Seller.
SECTION 4.03. Funding Losses. In the event that any Affected Party shall
incur any loss or expense (including any loss or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Affected Party to make or maintain any funding with respect to the Asset
Interest) as a result of (i) any settlement with respect to any portion of
Capital funded by such Affected Party being made on any day other than the
scheduled last day of an applicable Settlement Period with respect thereto, or
(ii) any Purchase not being made in accordance with a request therefor under
Section 1.02, then, within thirty days of written notice from the Administrator
to Seller, Seller shall pay to the Administrator for the account of such
Affected Party, the amount of such loss or expense. Such written notice (which
shall include calculations in reasonable detail) shall, in the absence of
demonstrable error, be conclusive and binding upon the Seller.
ARTICLE V
CONDITIONS TO PURCHASES
SECTION 5.01. Conditions Precedent to Initial Purchase. The initial
Purchase hereunder is subject to the condition precedent that the Administrator
shall have received, on or before the date of such Purchase, the following, each
(unless otherwise indicated) dated such date and in form and substance
satisfactory to the Administrator:
(a) Good standing certificates for each of Parent and Seller
issued by the Secretary of State of the jurisdiction of its
incorporation and its principal place of business;
(b) A certificate of the Secretary of each of Seller and Parent
certifying (i) a copy of the resolutions of its Board of Directors
approving this Agreement and the other Transaction Documents to be
delivered by it hereunder and the transactions contemplated hereby; (ii)
the names and true signatures of the officers authorized on its behalf
to sign this Agreement and the other Transaction Documents to be
delivered by it hereunder (on
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which certificate the Administrator and Purchaser may conclusively rely
until such time as the Administrator shall receive from Seller or
Parent, as the case may be, a revised certificate meeting the
requirements of this subsection (b)); (iii) a copy of its by-laws; and
(iv) all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this Agreement and the
other Transaction Documents;
(c) The Certificate of Incorporation or Articles of
Incorporation, as applicable, of each of Seller and Parent, duly
certified by the Secretary of State of California (in the case of
Seller) and Delaware (in the case of Parent), as of a recent date
acceptable to Administrator;
(d) Acknowledgment copies, or time stamped receipt copies, of
proper financing statements (Form UCC-1), filed on or prior to the date
of the initial Purchase, naming (i) Parent as the debtor and seller of
Receivables, Seller as the secured party and purchaser and
Administrator, for the benefit of Purchaser, as the assignee and (ii)
Seller as the debtor and seller of Receivables or an undivided interest
therein and Administrator, for the benefit of Purchaser, as the secured
party and purchaser, or other, similar instruments or documents, as may
be necessary or, in the opinion of the Administrator, desirable under
the UCC or any comparable law of all appropriate jurisdictions to
perfect Seller's and Purchaser's interests in the Pool Assets;
(e) A search report provided in writing to and approved by the
Administrator listing all effective financing statements that name
Parent or Seller as debtor or assignor and that are filed in the
jurisdictions in which filings were made pursuant to subsection (d)
above and in such other jurisdictions that Administrator shall
reasonably request, together with copies of such financing statements
(none of which shall cover any Pool Assets, unless executed termination
statements with respect thereto have been delivered to the
Administrator), and tax and judgment lien search reports from a Person
satisfactory to Servicer and the Administrator showing no evidence of
such liens filed against Parent or Seller;
(f) Duly executed copies of the Lock-Box Agreements with the
Lock-Box Banks;
(g) Favorable opinions of (i) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, general counsel
to Parent and Seller, in substantially the form of Exhibit 5.01(g)-1 and
(ii) ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, special counsel to Parent and Seller, in
substantially the forms of Exhibits 5.01(g)-2, 5.01(g)-3 and 5.01(b)-4,
respectively;
(h) Such powers of attorney as the Administrator shall reasonably
request to enable the Administrator to collect all amounts due under any
and all Pool Assets;
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(i) A pro forma Servicer Report, prepared in respect of the
proposed initial Purchase, assuming a Cut-Off Date of June 30, 1998;
(j) Evidence of payment by the Seller of all accrued and unpaid
fees (including those contemplated by the letter agreement referred to
in Section 4.01), costs and expenses to the extent then due and payable
on the date thereof, together with attorneys' fees of the Administrator
to the extent invoiced prior to or on such date, plus such additional
amounts of attorneys' fees as shall constitute the Administrator's
reasonable estimate of attorneys' fees incurred or to be incurred by it
through the closing proceedings (provided that such estimate shall not
thereafter preclude final settling of accounts between the Seller and
the Administrator), including any such costs, fees and expenses arising
under or referenced in Section 14.05;
(k) The Liquidity Agreement, duly executed by Purchaser, the
Liquidity Agent and each Liquidity Bank;
(l) The Purchase Agreement, duly executed by Parent and Seller,
and a copy of all documents required to be delivered thereunder; and
(m) Such other documents, certificates or opinions as the
Administrator may reasonably request.
SECTION 5.02. Conditions Precedent to All Purchases and Reinvestments.
Each Purchase (including the initial Purchase) and each Reinvestment hereunder,
shall be subject to the further conditions precedent that:
(a) in the case of each Purchase, the Servicer shall have
delivered to the Administrator on or prior to such purchase, in form and
substance satisfactory to the Administrator, a completed Servicer Report
with respect to the immediately preceding calendar month, dated within
two (2) Business Days prior to the date of such Purchase, together with
such additional information as may be reasonably requested by the
Administrator; and
(b) on the date of such Purchase or Reinvestment the following
statements shall be true (and Seller by accepting the amount of such
Purchase or by receiving the proceeds of such Reinvestment shall be
deemed to have certified that):
(i) the representations and warranties contained in
Article VI are correct on and as of such day as though made on
and as of such day and shall be deemed to have been made on such
day (except that any such representation or warranty that is
expressly stated as being made only as of a specified earlier
date shall be true and correct in all material respects as of
such earlier date),
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(ii) no event has occurred and is continuing, or would
result from such Purchase or Reinvestment, that constitutes a
Liquidation Event or Unmatured Liquidation Event,
(iii) after giving effect to each proposed Purchase or
Reinvestment, Capital will not exceed the Purchase Limit and the
Asset Interest will not exceed the Allocation Limit, and
(iv) the Termination Date shall not have occurred;
provided, however, the absence of the occurrence and continuance of an Unmatured
Liquidation Event shall not be a condition precedent to any Reinvestment.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01. Representations and Warranties of Seller. Seller
represents and warrants as follows:
(a) Organization and Good Standing. Seller has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of California, with power and authority to
own its properties and to conduct its business as such properties are
presently owned and such business is presently conducted, and had at all
relevant times, and now has, all necessary power, authority, and legal
right to acquire and own the Pool Assets.
(b) Due Qualification. Seller is duly qualified to do business as
a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all other jurisdictions in which the
ownership or lease of property or the conduct of its business requires
such qualification, licenses or approvals has not had, and except where
the failure to so qualify or have such licenses or approvals has not
had, and could not reasonably be expected to have, a Material Adverse
Effect.
(c) Power and Authority; Due Authorization. Seller (i) has all
necessary power, authority and legal right to (A) execute and deliver
this Agreement and the other Transaction Documents to which it is a
party, (B) carry out the terms of the Transaction Documents to which it
is a party, and (C) sell and assign the Asset Interest on the terms and
conditions herein provided and (ii) has duly authorized by all necessary
corporate action the execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party and
the sale and assignment of the Asset Interest on the terms and
conditions herein provided.
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(d) Valid Transfer; Binding Obligations. This Agreement
constitutes a valid transfer and assignment of the Asset Interest to the
Administrator, for the benefit of Purchaser, enforceable against
creditors of, and purchasers from, Seller; and this Agreement
constitutes, and each other Transaction Document to be signed by Seller
when duly executed and delivered will constitute, a legal, valid and
binding obligation of Seller enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity,
regardless of whether such enforceability is considered in a proceeding
in equity or at law.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the other Transaction Documents to
which it is a party and the fulfillment of the terms hereof and thereof
will not (i) conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time or
both) a default under, the Seller's certificate of incorporation or
by-laws or any Contractual Obligation of Seller, (ii) result in the
creation or imposition of any Lien upon any of Seller's properties
pursuant to the terms of any such Contractual Obligation, other than
this Agreement, or (iii) violate any Applicable Law.
(f) No Proceedings. There is no litigation, proceedings or
investigations pending, or to the best of Seller's knowledge,
threatened, before any Governmental Authority or arbitrator (i)
asserting the invalidity of this Agreement or any other Transaction
Document to which Seller is a party, (ii) seeking to prevent the sale
and assignment of the Asset Interest or the consummation of any of the
other transactions contemplated by this Agreement or any other
Transaction Document, or (iii) seeking any determination or ruling that
could reasonably be expected to have a Material Adverse Effect.
(g) Bulk Sales Act. No transaction contemplated hereby requires
compliance with any bulk sales act or similar law.
(h) Government Approvals. No Governmental Action is required for
the due execution, delivery and performance by Seller of this Agreement
or any other Transaction Document to which Seller is a party, except for
the filing of the UCC financing statements referred to in Article V, all
of which, at the time required in Article V, shall have been duly made
and shall be in full force and effect.
(i) Financial Condition. Since the date of Seller's formation,
there has been no material adverse change in Seller's financial
condition, business, assets or operations.
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(j) Margin Regulations. The use of all funds obtained by Seller
under this Agreement will not conflict with or contravene any of
Regulations G, T, U and X promulgated by the Board of Governors of the
Federal Reserve System from time to time.
(k) Quality of Title. Upon consummation of the first Purchase,
each Pool Asset is legally and beneficially owned by Seller free and
clear of any Lien (other than any Lien arising solely as the result of
any action taken by Purchaser or the Administrator); when the
Administrator, for the benefit of Purchaser, makes a Purchase or
Reinvestment, it shall have acquired a valid and enforceable perfected
first priority undivided percentage interest to the extent of the Asset
Interest in each Pool Asset, free and clear of any Lien (other than any
Lien arising solely as the result of any action taken by Purchaser or
the Administrator), enforceable against any creditor of, or purchaser
from, Seller or any Originator; and no financing statement or other
instrument similar in effect covering any Pool Asset is on file in any
recording office except such as may be filed (i) in favor of an
Originator in accordance with the Contracts, (ii) in favor of Seller in
accordance with the Purchase Agreement, or (iii) in favor of Purchaser
or the Administrator in accordance with this Agreement or in connection
with any Lien arising solely as the result of any action taken by
Purchaser or the Administrator.
(l) Accurate Reports. No Servicer Report (if prepared by Seller,
or to the extent information therein was supplied by Seller) or other
information, exhibit, financial statement, document, book, record or
report furnished or to be furnished by or on behalf of Seller to the
Administrator or Purchaser in connection with this Agreement was or will
be inaccurate in any material respect as of the date it was or will be
dated or (except as otherwise disclosed to the Administrator at such
time) as of the date so furnished, or contained or will contain any
material misstatement of fact or omitted or will omit to state a
material fact or any fact necessary to make the statements contained
therein not materially misleading.
(m) Offices. The principal place of business and chief executive
office of Seller are located at the address of Seller referred to in
Section 14.02, and the offices where Seller keeps all its books, records
and documents evidencing or relating to Pool Receivables are located at
the addresses specified in Schedule 6.01(m) (or at such other locations,
notified to the Administrator in accordance with Section 7.01(f), in
jurisdictions where all action required by Section 8.05 has been taken
and completed).
(n) Lock-Box Accounts. The names and addresses of all the
Lock-Box Banks, together with the account numbers of the lock-box
accounts of Seller at such Lock-Box Banks, are specified in Schedule
6.01(n) (or have been notified to the Administrator in accordance with
Section 7.03(d)).
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(o) Eligible Receivables. Each Receivable included in the Net
Pool Balance as an Eligible Receivable on the date of any Purchase,
Reinvestment or other calculation of Net Pool Balance shall be an
Eligible Receivable on such date.
(p) Accounting Sale. The Seller has accounted for each sale of
undivided percentage ownership interests in Receivables in its books and
financial statements as sales, consistent with GAAP.
(q) Credit and Collection Policy. The Seller has complied in all
material respects with the Credit and Collection Policy with regard to
each Receivable.
(r) Corporate Name. The Seller's complete corporate name is set
forth in the preamble to this Agreement, and the Seller does not use and
has not during the last six years used any other corporate name, trade
name, doing business name or fictitious name.
SECTION 6.02. Representations and Warranties of Parent. Parent
represents and warrants as follows:
(a) Organization and Good Standing. Parent has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of California, with power and authority to
own its properties and to conduct its business as such properties are
presently owned and such business is presently conducted.
(b) Due Qualification. Parent is duly qualified to do business as
a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or
lease of property or the conduct of its business requires such
qualification, licenses or approvals, except where the failure to so
qualify or have such licenses or approvals has not had, and could not
reasonably be expected to have, a Material Adverse Effect.
(c) Power and Authority; Due Authorization. Parent (i) has all
necessary power, authority and legal right to (A) execute and deliver
this Agreement and the other Transaction Documents to which it is a
party and (B) carry out the terms of the Transaction Documents to which
it is a party and (ii) has duly authorized by all necessary corporate
action the execution, delivery and performance of this Agreement and the
other Transaction Documents to which it is a party.
(d) Binding Obligations. This Agreement constitutes, and each
other Transaction Document to be signed by Parent when duly executed and
delivered will constitute, a legal, valid and binding obligation of
Parent enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting the enforcement of creditors' rights
generally
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and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the other Transaction Documents to
which Parent is a party and the fulfillment of the terms hereof and
thereof will not (i) conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse
of time or both) a default under the Parent's articles of incorporation
or by-laws or any Contractual Obligation of Parent, (ii) result in the
creation or imposition of any Lien upon any of Parent's properties
pursuant to the terms of any such Contractual Obligation (other than any
Lien created pursuant to the Transaction Documents), or (iii) violate
any Applicable Law.
(f) No Proceedings. There is no litigation, proceedings or
investigations pending or, to the best of Parent's knowledge,
threatened, before any Governmental Authority or arbitrator (i)
asserting the invalidity of this Agreement or any other Transaction
Document to which Parent is a party, (ii) seeking to prevent the sale
and assignment of the Asset Interest or the consummation of any of the
other transactions contemplated by this Agreement or any other
Transaction Document, or (iii) seeking any determination or ruling that
could reasonably be expected to have a Material Adverse Effect.
(g) Government Approvals. No Governmental Action is required for
the due execution, delivery and performance by Parent of this Agreement
or any other Transaction Document to which it is a party.
(h) Financial Condition. (x) The consolidated balance sheets of
Parent and its consolidated Subsidiaries as at December 28, 1997, and
the related statements of earnings, shareholders' equity and cash flows
of Parent and its consolidated Subsidiaries for the fiscal year then
ended, certified by Coopers & ▇▇▇▇▇▇▇, and the consolidated balance
sheets of Parent and its consolidated Subsidiaries as at March 28, 1998,
and the related statements of earnings, shareholders' equity and cash
flows of Parent and its consolidated Subsidiaries for the fiscal quarter
then ended, copies of which have been furnished to the Administrator,
fairly present the consolidated financial condition, business and
operations of Parent and its consolidated Subsidiaries as at such dates
and the consolidated results of the operations of Parent and its
consolidated Subsidiaries for the period ended on such dates, all in
accordance with GAAP consistently applied, and (y) as of the date
hereof, since March 28, 1998 there has been no material adverse change
in any such condition, business or operations.
(i) Accurate Reports. No Servicer Report (if prepared by Parent,
or to the extent information therein was supplied by Parent) or other
information, exhibit, financial statement, document, book, record or
report furnished or to be furnished by or on behalf
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of Parent to the Administrator or Purchaser, in connection with this
Agreement was or will be inaccurate in any material respect as of the
date it was or will be dated or (except as otherwise disclosed to the
Administrator at such time) as of the date so furnished, or contained or
will contain any material misstatement of fact or omitted or will omit
to state a material fact or any fact necessary to make the statements
contained therein not materially misleading.
ARTICLE VII
GENERAL COVENANTS
SECTION 7.01. Affirmative Covenants. From the date hereof until the
Final Payout Date:
(a) Compliance with Laws, Etc. Each of Seller and Parent will
comply in all material respects with all Applicable Laws, including
those with respect to the Pool Receivables and the related Contracts,
except where noncompliance could not reasonably be expected to have a
Material Adverse Effect.
(b) Preservation of Corporate Existence. Each of Seller and
Parent will preserve and maintain its corporate existence, rights,
franchises and privileges in the jurisdiction of its formation, and
qualify and remain qualified in good standing as a foreign corporation
in each jurisdiction where the failure to preserve and maintain such
existence, rights, franchises, privileges and qualification could
reasonably be expected to have a Material Adverse Effect.
(c) Audits. (i) Each of Parent and Seller will at any time and
from time to time during regular business hours, permit the
Administrator or any of its agents or representatives, (A) to examine
and make copies of and abstracts from all books, records and documents
(including, without limitation, computer tapes and disks) in its
possession or under its control relating to Pool Assets, (B) to visit
its offices and properties for the purpose of examining such materials
described in clause (i)(A) above, and to discuss matters relating to
Pool Assets or its performance hereunder with any of its officers or
employees having knowledge of such matters, and (C) to verify the
existence and amount of the Receivables; and (ii) without limiting the
provisions of clause (i) above, from time to time on request of
Administrator, permit certified public accountants or other auditors
acceptable to the Administrator to conduct, at Seller's or Parent's, as
the case may be, expense, a review of its books and records with respect
to the Pool Receivables; provided that unless a Liquidation Event
exists, neither Seller nor Parent shall be responsible for the cost of
more than one such audit in any calendar year.
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(d) Keeping of Records and Books of Account. Each of Seller and
Parent will maintain and implement administrative and operating
procedures (including, without limitation, an ability to recreate
records evidencing Pool Receivables in the event of the destruction of
the originals thereof), and keep and maintain all documents, books,
records and other information reasonably necessary or advisable for the
collection of all Pool Assets (including, without limitation, records
adequate to permit the daily identification of each new Pool Receivable
and all Collections of and adjustments to each existing Pool
Receivable).
(e) Performance and Compliance with Receivables and Contracts.
Seller will, at its expense, timely and fully perform and comply (or
cause an Originator to perform and comply pursuant to the Purchase
Agreement) with all provisions, covenants and other promises required to
be observed by it under the Contracts related to the Pool Receivables
and all other agreements related to such Pool Receivables.
(f) Location of Records. Each of Seller and Parent will keep its
principal place of business and chief executive office, and the offices
where it keeps its records concerning the Pool Receivables and all
related Contracts and all other agreements related to such Pool
Receivables (and all original documents relating thereto), at its
address(es) referred to in Section 14.02 or, upon 30 days' prior written
notice to the Administrator, at such other locations in jurisdictions
where all action required by Section 8.05 shall have been taken and
completed.
(g) Credit and Collection Policies. Each of Seller and Parent, at
its own expense, will timely and fully perform and comply in all
material respects with the Credit and Collection Policy in regard to
each Pool Receivable and the related Contracts.
(h) Collections. Each of Seller and Parent will instruct (i) all
Obligors to cause all Collections to be sent to a Lock-Box that is the
subject of a Lock-Box Agreement and (ii) each Lock-Box Bank to deposit
all such Collections directly into a Lock-Box Account that is the
subject of a Lock-Box Agreement. In the event that Parent or Seller
receives Collections directly from any Obligor, Parent or Seller, as the
case may be, shall deposit such Collections into a Lock-Box Account
within two Business Days of receipt thereof.
(i) Net Worth. Seller will maintain a Tangible Net Worth of at
least $1,000,000.
(j) Quality of Title. Each of Seller and Parent will take all
action necessary or desirable to establish and maintain a valid and
enforceable perfected first priority undivided percentage interest in
favor of the Administrator, for the benefit of the Purchaser, to the
extent of the Asset Interest in each Pool Asset, free and clear of any
Lien (other than any Lien arising solely as a result of any action taken
by Purchaser or the Administrator), enforceable against any creditor of,
or purchaser from, Seller or Parent.
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SECTION 7.02. Reporting Requirements. From the date hereof until the
Final Payout Date:
(a) Quarterly Financial Statements. As soon as available and in
any event within 45 days after the end of each of the first three
quarters of each fiscal year (i) Seller will furnish to the
Administrator copies of its financial statements, consisting of at least
a balance sheet as at the close of such quarter and statements of
earnings for such quarter and for the period from the beginning of the
fiscal year to the close of such quarter, in each case in conformity
with GAAP (except for footnote disclosures), duly certified by the chief
financial officer of Seller and (ii) Parent will furnish to the
Administrator copies of the financial statements of Parent and its
Subsidiaries prepared on a consolidated basis, consisting of at least a
balance sheet as at the close of such quarter and statements of earnings
for such quarter and for the period from the beginning of the fiscal
year to the close of such quarter, in each case in conformity with GAAP
(except for footnote disclosures), duly certified by the chief financial
officer of Parent;
(b) Annual Financial Statements. As soon as available and in any
event within 120 days after the end of each fiscal year (i) Seller will
furnish to the Administrator copies of its financial statements,
consisting of at least a balance sheet of Seller for such year and
statements of earnings, cash flows and shareholders' equity, in each
case in conformity with GAAP, consistently applied, setting forth in
each case in comparative form corresponding figures from the preceding
fiscal year, with all such statements duly certified by independent
certified public accountants of recognized standing selected by Seller
and (ii) Parent will furnish to the Administrator copies of the
financial statements of Parent and its Subsidiaries prepared on a
consolidated basis, consisting of at least a balance sheet of Parent and
its Subsidiaries for such year and consolidated statements of earnings,
cash flows and shareholders' equity, in each case in conformity with
GAAP, consistently applied, setting forth in each case in comparative
form corresponding consolidated figures from the preceding fiscal year,
with all such statements duly certified by independent certified public
accountants of recognized standing selected by Parent;
(c) Compliance Certificate. Together with each quarterly and
annual financial statement delivered in accordance with the preceding
paragraphs, Parent will furnish to the Administrator a compliance
certificate showing a calculation of the financial covenants set forth
in Sections 10.01(n), (o) and (p) certified by an authorized officer of
Parent;
(d) Liquidation Events. Each of Seller and Parent will furnish to
the Administrator, as soon as possible and in any event within two (2)
Business Days after the occurrence of each Liquidation Event and each
Unmatured Liquidation Event, a written statement of an authorized
officer of Seller or Parent, as the case may be, setting forth details
of such event and the action that Seller or Parent, as the case may be,
proposes to take with respect thereto;
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(e) Litigation. Each of Seller and Parent will furnish to the
Administrator, as soon as possible and in any event within five Business
Days of Seller's or Parent's knowledge thereof, notice of (i) any
litigation, investigation or proceeding which may exist at any time
which could be reasonably expected to have a Material Adverse Effect and
(ii) any material adverse development in previously disclosed
litigation;
(f) Change in Credit and Collection Policy. Each of Seller and
Parent will furnish to the Administrator, prior to its effective date,
notice of any material change in the Credit and Collection Policy;
(g) Change in Name. Seller will furnish to the Administrator, at
least thirty days prior to any change in the Seller's name, location or
any other change requiring the amendment of UCC financing statements, a
notice setting forth such changes and the effective date thereof; and
(h) Other Information. Each of Seller and Parent will furnish to
the Administration such other information respecting the Receivables or
the condition or operations, financial or otherwise, of the Parent or
Seller or any of its Affiliates as the Administrator may from time to
time reasonably request.
SECTION 7.03. Negative Covenants. From the date hereof until the Final
Payout Date:
(a) Sales, Liens, Etc. Seller will not, except as otherwise
provided herein, sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Lien upon or with
respect to, any Pool Asset or any interest therein.
(b) Extension or Amendment of Receivables. Neither Parent nor
Seller will, except as otherwise permitted in Section 8.02, extend,
amend or otherwise modify, or permit Servicer to extend, amend or
otherwise modify, the terms of any Pool Receivable; or amend, modify or
waive, or permit Servicer to amend, modify or waive, any term or
condition of any Contract related to a Pool Receivable.
(c) Change in Business or Credit and Collection Policy. Neither
Parent nor Seller will make any change in the character of its business
or in the Credit and Collection Policy, which change could impair the
collectibility of any Pool Receivable or otherwise adversely affect the
interests or remedies of the Administrator or Purchaser under this
Agreement or any other Transaction Document.
(d) Change in Payment Instructions to Obligors. Neither Parent or
Seller will add or terminate any bank as a Lock-Box Bank or any Lock-Box
Account from those listed in Schedule 6.01(n) or make any change, or
permit Servicer to make any change, in
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its instructions to Obligors regarding payments to be made to Seller or
Servicer or payments to be made to any Lock-Box Bank, unless the
Administrator shall have received notice of such addition, termination
or change and duly executed copies of Lock-Box Agreements with each new
Lock-Box Bank or with respect to each new Lock-Box Account, as the case
may be.
(e) Mergers, Acquisitions, Sales, etc. Neither Parent nor Seller
will (i) be a party to any merger or consolidation, or purchase or
otherwise acquire all or substantially all of the assets or any stock of
any class of, or any partnership or joint venture interest in, any other
Person without the consent of the Administrator, unless, in the case of
Parent, Parent is the surviving corporation and no Liquidation Event has
occurred and is continuing or would result therefrom or (ii) sell,
transfer, convey or lease all or any substantial part of its assets
(except to the extent such transaction does not result in a Liquidation
Event pursuant to Section 10.01(n)), or sell or assign with or without
recourse any Receivables or any interest therein (other than pursuant
hereto or to the Purchase Agreement). Parent will not sell any of the
capital stock of Seller, or permit any Lien to exist thereon.
(f) Deposits to Special Accounts. Neither Parent nor Seller will
deposit or otherwise credit, or cause or permit to be so deposited or
credited, to any Lock-Box Account cash or cash proceeds other than
Collections of Pool Receivables.
(g) Other Business. Seller will not (i) engage in any business
other than the transactions contemplated by the Transaction Documents;
(ii) incur any indebtedness, obligation, liability or contingent
obligation of any kind other than pursuant to this Agreement or the
Purchase Agreement; or (iii) form any Subsidiary or make any investments
in any other Person.
(h) Certificate of Incorporation; Purchase Agreement. Seller will
not amend, modify, terminate, revoke or waive any provision of its
certificate of incorporation, the Initial Purchaser Note or the Purchase
Agreement.
(i) Restricted Payments. Seller will not declare or make any
dividend or other distributions to any of its shareholders, redeem or
purchase any of its capital stock or make any loan or other payments to
any of its shareholders (other than (1) payments of the purchase price
of Receivables as set forth in the Purchase Agreement, (2) the turnover
of Collections of Reconveyed Receivables to an Originator as set forth
in the Purchase Agreement, (3) payment of the Servicer's Fee so long as
Parent is the Servicer and (4) payment of reasonable management fees and
reimbursement of reasonable expenses of Parent incurred in connection
with managing Seller, so long as such fees and expenses are in an amount
not in excess of those that would be paid in a similar arms'- length
transaction) unless, in each case, no Liquidation Event or Unmatured
Liquidation Event has occurred and is continuing or would result
therefrom.
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(j) Change of Name or Location. Seller will not change its name
or the location of its principal place of business or chief executive
office or its corporate structure, unless Seller has given the
Administrator at least thirty (30) days prior notice thereof, and has
taken all steps necessary or advisable under the UCC to continue the
perfection and priority of the Administrator's and Purchaser's interest
in the Pool Assets.
SECTION 7.04. Separate Existence. Each of Seller and Parent hereby
acknowledges that Purchaser, the Program Support Providers and the Administrator
are entering into the transactions contemplated by this Agreement and the other
Transaction Documents in reliance upon Seller's identity as a legal entity
separate from Parent. Therefore, from and after the date hereof, each of Seller
and Parent shall take all steps specifically required by this Agreement or by
the Purchaser or Administrator to continue Seller's identity as a separate legal
entity and to make it apparent to third Persons that Seller is an entity with
assets and liabilities distinct from those of Parent and any other Person, and
is not a division of Parent or any other Person. Without limiting the generality
of the foregoing and in addition to and consistent with the other covenants set
forth herein, each of Seller and Parent shall take such actions as shall be
required in order that:
(a) Seller will be a limited purpose corporation whose primary
activities are restricted in its certificate of incorporation to
purchasing or otherwise acquiring from the Originators, owning, holding,
granting security interests, or selling interests, in Pool Assets,
entering into agreements for the selling and servicing of the
Receivables Pool, and conducting such other activities as it deems
necessary or appropriate to carry out its primary activities;
(b) Seller shall not engage in any business or activity, or incur
any indebtedness or liability other than as expressly permitted by the
Transaction Documents;
(c) Not less than one member of Seller's Board of Directors shall
be an Independent Director. The articles of incorporation or the by-laws
of Seller shall provide that (i) Seller's Board of Directors shall not
approve, or take any other action to cause the filing of, a voluntary
bankruptcy petition or a merger or dissolution with respect to Seller
unless the Independent Director shall approve the taking of such action
in writing prior to the taking of such action and (ii) such provision
cannot be amended without the prior written consent of the Independent
Director;
(d) The Independent Director shall not at any time serve as a
trustee in bankruptcy for Seller, Parent or any Affiliate thereof;
(e) Any employee, consultant or agent of Seller will be
compensated from Seller's funds for services provided to Seller. Seller
will not engage any agents other than its attorneys, auditors and other
professionals, and a Servicer as contemplated by the Transaction
Documents for the Receivables Pool, which Servicer will be fully
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compensated for its services by payment of the Servicer's Fee and a
manager, which manager will be fully compensated from Seller's funds;
(f) Seller will not incur any material indirect or overhead
expenses for items shared with Parent (or any other Affiliate thereof)
which are not reflected in the Servicer's Fee or the fee to Parent in
its role as manager for Seller. To the extent, if any, that Seller (or
any other Affiliate thereof) share items of expenses not reflected in
the Servicer's Fee or the manager's fee, such as legal, auditing and
other professional services, such expenses will be allocated to the
extent practical on the basis of actual use or the value of services
rendered, and otherwise on a basis reasonably related to the actual use
or the value of services rendered, it being understood that Parent shall
pay all expenses relating to the preparation, negotiation, execution and
delivery of the Transaction Documents, including, without limitation,
legal, rating agency and other fees;
(g) Seller's operating expenses will not be paid by Parent or any
other Affiliate thereof, other than certain expenses and liabilities
related to basic corporate overhead that may be allocated between Seller
and Parent ;
(h) Seller and Parent will have taken all steps necessary to make
the assumptions set forth in the substantive consolidation opinion
delivered by ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP in connection with this Agreement
true and correct;
(i) Seller's books and records will be maintained separately from
those of Parent and any other Affiliate thereof;
(j) All financial statements of Parent or any Affiliate thereof
that are consolidated to include Seller will contain detailed notes
clearly stating that (A) all of Seller's assets are owned by Seller, and
(B) Seller is a separate entity with creditors who have received
security interests in Seller's assets;
(k) Seller's assets will be maintained in a manner that
facilitates their identification and segregation from those of Parent or
any Affiliate thereof;
(l) Seller will strictly observe corporate formalities in its
dealings with Parent or any Affiliate thereof, and funds or other assets
of Seller will not be commingled with those of Parent or any Affiliate
thereof except as permitted by this Agreement in connection with
servicing the Pool Receivables. Seller shall not maintain joint bank
accounts or other depository accounts to which Parent or any Affiliate
thereof (other than Parent in its capacity as Servicer) has independent
access; and
(m) Seller will maintain arms'-length relationships with Parent
(and any Affiliate thereof). Any Person that renders or otherwise
furnishes services to Seller will be compensated by Seller at market
rates for such services it renders or otherwise furnishes
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to Seller. Neither Seller nor Parent will be or will hold itself out to
be responsible for the debts of the other or the decisions or actions
respecting the daily business and affairs of the other. Seller and
Parent will immediately correct any known misrepresentation with respect
to the foregoing, and they will not operate or purport to operate as an
integrated single economic unit with respect to each other or in their
dealing with any other entity.
ARTICLE VIII
ADMINISTRATION AND COLLECTION
SECTION 8.01. Designation of Servicer.
(a) Parent as Initial Servicer. The servicing, administering and
collection of the Pool Receivables shall be conducted by the Person designated
as Servicer hereunder ("Servicer") from time to time in accordance with this
Section 8.01. Until the Administrator gives to Parent a Successor Notice, Parent
is hereby designated as, and hereby agrees to perform the duties and obligations
of, Servicer pursuant to the terms hereof.
(b) Successor Notice; Servicer Transfer Events. Upon Parent's receipt of
notice from the Administrator of the Administrator's designation of a new
Servicer (a "Successor Notice"), Parent agrees that it will terminate its
activities as Servicer hereunder in a manner that the Administrator reasonably
believes will facilitate the transition of the performance of such activities to
the new Servicer, and the new Servicer shall assume each and all of Parent's
obligations to service and administer such Pool Receivables, on the terms and
subject to the conditions herein set forth, and Parent shall use its best
efforts to assist the new Servicer in assuming such obligations. The
Administrator agrees not to give Parent a Successor Notice until after the
occurrence of a Liquidation Event (any such Liquidation Event being herein
called a "Servicer Transfer Event"), in which case such Successor Notice may be
given at any time in the Administrator's discretion.
(c) Resignation. The Parent acknowledges that the Administrator and
Purchaser have relied on the Parent's agreement to act as Servicer hereunder in
making their decision to execute and deliver this Agreement. Accordingly, the
Parent agrees that it will not voluntarily resign as Servicer.
(d) Subcontracts. Servicer may, with the prior consent of the
Administrator, subcontract with any other Person for servicing, administering or
collecting the Pool Receivables, provided that (i) such Sub-Servicer shall agree
in writing to perform the duties and obligations of the Servicer pursuant to the
terms hereof; (ii) Servicer shall remain primarily liable for the performance of
the duties and obligations of Servicer pursuant to the terms hereof, (iii)
Seller, the Administrator and Purchaser shall have the right to look solely to
the Servicer for performance,
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and (iv) any such subcontract may be terminated at the option of the
Administrator upon the occurrence of a Servicer Transfer Event.
(e) Servicing Programs. In the event that Servicer uses any software
program in servicing the Pool Receivables that it licenses from a third party,
Servicer shall use its best efforts to obtain whatever licenses or approvals are
necessary to allow the Administrator or the new Servicer to use such program.
SECTION 8.02. Duties of Servicer.
(a) Appointment; Duties in General. Each of Seller, Purchaser and the
Administrator hereby appoints as its agent Servicer, as from time to time
designated pursuant to Section 8.01, to enforce its rights and interests in and
under the Pool Assets. Servicer shall take or cause to be taken all such actions
as may be necessary or advisable to collect each Pool Receivable from time to
time, all in accordance with Applicable Law, with reasonable care and diligence
and in accordance with the Credit and Collection Policy.
(b) Allocation of Collections; Segregation. Servicer shall set aside for
the account of Seller and Purchaser their respective allocable shares of the
Collections of Pool Receivables in accordance with Section 1.03 but shall not be
required (unless otherwise instructed by the Administrator) to segregate the
funds constituting such portions of such Collections prior to the remittance
thereof in accordance with Section 3.01. If instructed by the Administrator,
Servicer shall segregate and deposit with a bank designated by the
Administrator, Purchaser's Share of Collections, on the second Business Day
following receipt by Servicer of such Collections in immediately available
funds.
(c) Modification of Receivables. So long as no Liquidation Event or
Unmatured Liquidation Event shall have occurred and be continuing, Servicer may
(i) in accordance with the Credit and Collection Policy, adjust the Unpaid
Balance of any Defaulted Receivable or extend the time for payment of any
Defaulted Receivable (but in no event to a date later than 120 days from the
date of the original invoice), provided that (A) such extension or adjustment
shall not alter the status of such Pool Receivable as a Delinquent Receivable or
a Defaulted Receivable or limit the rights of Purchaser or the Administrator
under this Agreement, and (B) the aggregate amount of all such adjustments made
in any Settlement Period, plus the aggregate Unpaid Balance of all Pool
Receivables that have been extended during such Settlement Period, shall not
exceed 2% of the aggregate Unpaid Balance of all Pool Receivables as at the
Cut-Off Date for such Settlement Period and (ii) adjust the Unpaid Balance of
any Receivable to reflect the reductions or cancellations described in the first
sentence of Section 3.02(a).
(d) Documents and Records. Seller shall deliver to Servicer, and
Servicer shall hold in trust for Seller and Purchaser in accordance with their
respective interests, all documents, instruments and records (including, without
limitation, computer tapes or disks) that evidence or relate to Pool
Receivables.
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(e) Certain Duties to Seller. Servicer shall, as soon as practicable
following receipt, turn over to Seller (i) that portion of Collections of Pool
Receivables representing its undivided interest therein, less the Seller's Share
of the Servicer's Fee, and (ii) the Collections of any Receivable which is not a
Pool Receivable. Seller hereby directs Servicer to pay any Collections of any
Reconveyed Receivable directly to the related Originator to be applied pursuant
to the Purchase Agreement. Servicer shall, as soon as practicable upon demand,
deliver to Seller copies of documents, instruments and records in its possession
that evidence or relate to Pool Receivables.
(f) Termination. Servicer's authorization under this Agreement shall
terminate upon the Final Payout Date.
(g) Power of Attorney. Seller hereby grants to Servicer an irrevocable
power of attorney, with full power of substitution, coupled with an interest, to
take in the name of Seller all steps which are necessary or advisable to
endorse, negotiate or otherwise realize on any writing or other right of any
kind held or transmitted by Seller or transmitted or received by Purchaser
(whether or not from Seller) in connection with any Receivable. Notwithstanding
anything to the contrary contained herein, the Administrator may direct the
Servicer to commence or settle any legal action to enforce collection of any
Pool Receivable or to foreclose upon or repossess any Related Security;
provided, however, that no such direction may be given unless either (i) a
Liquidation Event has occurred or (ii) the Administrator believes in good faith
that failure to commence, settle, or effect such legal action, foreclosure or
repossession, could adversely affect Receivables constituting a material portion
of the Pool Receivables.
SECTION 8.03. Rights of the Administrator
(a) Notice to Obligors. At any time after the occurrence of a
Liquidation Event, the Administrator may notify the Obligors of Pool
Receivables, or any of them, of the ownership of the Asset Interest by the
Administrator, for the benefit of Purchaser.
(b) Notice to Lock-Box Banks. At any time following the earlier to occur
of (i) the occurrence of a Liquidation Event, and (ii) the commencement of the
Liquidation Period, the Administrator is hereby authorized to give notice to the
Lock-Box Banks, as provided in the Lock-Box Agreements, of the transfer to the
Administrator of dominion and control over the lock-boxes and Lock-Box Accounts.
Seller hereby transfers to the Administrator, effective when the Administrator
shall give notice to the Lock-Box Banks as provided in the Lock-Box Agreements,
the exclusive dominion and control over such lock-boxes and accounts, and shall
take any further action that the Administrator may reasonably request to effect
such transfer. Any proceeds of Pool Receivables received by the Seller or
Parent, as Servicer or otherwise, thereafter shall be sent immediately to the
Administrator.
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(c) Rights on Servicer Transfer Event. At any time following the
designation of a Servicer other than Parent pursuant to Section 8.01:
(i) The Administrator may direct the Obligors of Pool
Receivables, or any of them, to pay all amounts payable under any Pool
Receivable directly to the Administrator or its designee.
(ii) Parent shall, at the Administrator's request and at Parent's
expense, give notice of such ownership to each said Obligor and direct
that payments be made directly to the Administrator or its designee.
(iii) Parent and Seller shall, at the Administrator's request,
(A) assemble all of the documents, instruments and other records
(including, without limitation, computer programs, tapes and disks)
which evidence the Pool Receivables and the related Contracts and
Related Security, or which are otherwise necessary or desirable to
collect such Pool Receivables and make the same available to the
Administrator at a place selected by the Administrator, and (B)
segregate all cash, checks and other instruments received by it from
time to time constituting Collections in a manner acceptable to the
Administrator and promptly upon receipt, remit all such cash, checks and
instruments, duly endorsed or with duly executed instruments of
transfer, to the Administrator.
(iv) Each of Seller and Purchaser hereby authorizes the
Administrator, and grants to the Administrator an irrevocable power of
attorney, to take any and all steps in Seller's name and on behalf of
Seller and Purchaser which are necessary or desirable, in the reasonable
determination of the Administrator, to collect all amounts due under any
and all Pool Receivables including, without limitation, endorsing
Seller's name on checks and other instruments representing Collections
and enforcing such Pool Receivables and the related Contracts.
SECTION 8.04. Responsibilities of Seller. Anything herein to the
contrary notwithstanding:
(a) Contracts. Seller shall perform, or cause an Originator to
perform under the Purchase Agreement, all of its obligations under the
Contracts related to the Pool Receivables and under the other agreements
related thereto to the same extent as if the Asset Interest had not been
sold hereunder, and the exercise by the Administrator or its designee of
its rights hereunder shall not relieve Seller from such obligations.
(b) Limitation of Liability. Neither the Administrator nor
Purchaser shall have any obligation or liability with respect to any
Pool Receivables, the related Contracts or any other related agreements,
nor shall any of them be obligated to perform any of the obligations of
Seller or any Originator thereunder.
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SECTION 8.05. Further Action Evidencing Purchases and Reinvestments.
(a) Further Assurances. The Seller shall, at its expense, take all
action necessary or desirable to establish and maintain a valid and enforceable
first priority perfected undivided interest, to the extent of the Asset
Interest, in the Pool Assets, free and clear of any Lien, in favor of the
Administrator, for the benefit of Purchaser. Without limiting the generality of
the foregoing, Seller will upon the request of the Administrator or its designee
execute and file such financing or continuation statements, or amendments
thereto or assignments thereof, and such other instruments or notices, as may be
necessary or appropriate to evidence or perfect the interest described in the
previous sentence.
(b) Data Processing Records. Each of Parent and Seller will ▇▇▇▇ its
master data processing records evidencing the Pool Receivables with a legend,
acceptable to the Administrator, evidencing that the Asset Interest has been
sold in accordance with this Agreement.
(c) Additional Financing Statements; Performance by Administrator.
Seller hereby authorizes the Administrator or its designee to file one or more
financing or continuation statements, and amendments thereto and assignments
thereof, relative to all or any portion of the Asset Interest now existing or
hereafter arising in the name of Seller. If Seller or Parent fails to perform
any of its agreements or obligations under this Agreement, the Administrator or
its designee may (but shall not be required to) itself perform, or cause
performance of, such agreement or obligation, and the expenses of the
Administrator or its designee incurred in connection therewith shall be payable
by Seller or Parent, as the case may be.
(d) Continuation Statements; Opinion. Without limiting the generality of
subsection (a), Seller will, not earlier than six (6) months and not later than
three (3) months prior to the fifth anniversary of the date of filing of the
financing statement referred to in Section 5.01(d) or any other financing
statement filed pursuant to this Agreement or in connection with any Purchase
hereunder, unless the Final Payout Date shall have occurred:
(i) execute and deliver and file or cause to be filed an
appropriate continuation statement with respect to such financing
statement; and
(ii) deliver or cause to be delivered to the Administrator an
opinion of the counsel for Seller, in form and substance reasonably
satisfactory to the Administrator, confirming and updating the opinion
delivered pursuant to Section 5.01(g) with respect to perfection and
otherwise to the effect that the Asset Interest hereunder continues to
be an enforceable and perfected ownership or security interest, subject
to no other Liens of record except as provided herein or otherwise
permitted hereunder, which opinion may contain usual and customary
assumptions, limitations and exceptions.
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SECTION 8.06. Application of Collections. Any payment by an Obligor in
respect of any indebtedness owed by it to Seller shall, except as otherwise
specified by such Obligor, required by the underlying Contract or law or unless
the Administrator instructs otherwise, be applied, first, as a Collection of any
Pool Receivable or Receivables then outstanding of such Obligor in the order of
the age of such Pool Receivables, starting with the oldest of such Pool
Receivable and, second, to any other indebtedness of such Obligor.
ARTICLE IX
SECURITY INTEREST
SECTION 9.01. Grant of Security Interest. To secure all obligations of
Seller arising in connection with this Agreement and each other Transaction
Document, whether now or hereafter existing, due or to become due, direct or
indirect, or absolute or contingent, including, without limitation, all
Indemnified Amounts, payments on account of Collections of Pool Receivables
received or deemed to be received and fees, effective as of the date of the
first Purchase, Seller hereby assigns and grants to Administrator, for the
benefit of the Secured Parties, a security interest in all of Seller's right,
title and interest (including specifically any undivided interest retained by
Seller hereunder) now or hereafter existing in, to and under all the Pool
Assets.
SECTION 9.02. Further Assurances. The provisions of Section 8.05 shall
apply to the security interest granted under Section 9.01 as well as to the
Purchases, Reinvestments and the Asset Interest hereunder.
SECTION 9.03. Remedies. Upon the occurrence of a Liquidation Event, the
Administrator and Purchaser shall have, with respect to the collateral granted
pursuant to Section 9.01, and in addition to all other rights and remedies
available to Purchaser or the Administrator under this Agreement or other
applicable law, all the rights and remedies of a secured party upon default
under the UCC.
ARTICLE X
LIQUIDATION EVENTS
SECTION 10.01. Liquidation Events. The following events shall be
"Liquidation Events" hereunder:
(a) (i) Servicer (if Parent or its Affiliate is Servicer) shall
fail to perform or observe any material term, covenant or agreement that
is an obligation of Servicer
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hereunder (other than as referred to in clause (ii) next following) and
such failure shall remain unremedied for more than five Business Days or
(ii) Seller or Servicer (if Parent or its Affiliate is Servicer) shall
fail to make any payment or deposit to be made by it hereunder when due;
or
(b) Any representation or warranty made or deemed to be made by
Seller or Parent under or in connection with this Agreement, any other
Transaction Document or any Servicer Report or other information or
report delivered pursuant hereto shall prove to have been false or
incorrect in any material respect when made; or
(c) Seller or Parent shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement or any of the
other Transaction Documents on its part to be performed or observed and
any such failure shall remain unremedied for fifteen (15) Business Days
after written notice thereof shall have been given by the Administrator
to Seller or Parent, as the case may be; or
(d) A default shall have occurred and be continuing under any
instrument or agreement evidencing, securing or providing for the
issuance of indebtedness for borrowed money in excess of $5,000,000 of,
or guaranteed by, Parent or any Subsidiary thereof, which default is a
payment default that continues beyond the applicable grace period, if
any; or
(e) This Agreement or any Purchase or any Reinvestment pursuant
to this Agreement shall for any reason (other than pursuant to the terms
hereof) (i) cease to create, or the Asset Interest shall for any reason
cease to be, a valid and enforceable perfected undivided percentage
interest to the extent of the Asset Interest in each Pool Asset, free
and clear of any other Lien or (ii) cease to create with respect to the
items described in Section 9.01, or the interest of the Administrator
(for the benefit of Purchaser) with respect to such items shall cease to
be, a valid and enforceable first priority perfected security interest,
free and clear of any other Lien; or
(f) An Event of Bankruptcy shall have occurred and remain
continuing with respect to Seller, Parent or any Subsidiary thereof; or
(g) The average of the Sales-Based Dilution Ratios for any three
consecutive Cut-Off Dates exceeds 9%; or
(h) The Sales-Based Default Ratio for any Cut-Off Date exceeds
5%; or
(i) On any Settlement Date, after giving effect to the payments
made under Section 3.01(c), the Asset Interest exceeds the Allocation
Limit; or
(j) The Delinquency Ratio for any Cut-Off Date is greater than
10%; or
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(k) There shall exist any event or occurrence that has caused, or
has a reasonable possibility of causing, a Material Adverse Effect
(other than a Material Adverse Effect described in clause (i) of the
definition thereof); or
(l) Seller, any Originator or Parent is subject to a
Change-in-Control; or
(m) The Internal Revenue Service shall file notice of a lien
pursuant to Section 6323 of the Internal Revenue Code with regard to any
of the assets of Seller or Parent and such lien shall not have been
released within 5 Business Days, or the Pension Benefit Guaranty
Corporation shall file notice of a lien pursuant to Section 4068 of the
Employee Retirement Income Security Act of 1974 with regard to any of
the assets of Seller or Parent and such lien shall not have been
released within 5 Business Days; or
(n) Parent sells, assigns (by operation of law or otherwise) or
otherwise disposes of any of its assets, or any interest therein, other
than (i) sales of inventory in the ordinary course of business, (ii)
sales of surplus, damaged, worn or obsolete assets, or assets that are
promptly being replaced, (iii) sales of assets on commercially
reasonable terms, (iv) sales of receivables in connection with a
securitization transaction, (v) sales to Subsidiaries, and (vi) sales of
other assets, provided that the aggregate fair market value of such
assets sold in any period of four consecutive fiscal quarters does not
exceed the greater of (1) 25% of the Parent's Tangible Net Worth as of
the last day of such fourth fiscal quarter and (2) $75,000,000; or
(o) Parent makes any Investments other than (i) Permitted
Investments, (ii) Investments existing on the date hereof, (iii)
Investments in Subsidiaries, (iv) Investments in the nature of
acquisitions, provided that the aggregate amount of such acquisitions in
any period of four consecutive fiscal quarters does not exceed 25% of
Parent's Tangible Net Worth as of the last day of such fourth fiscal
quarter, (v) Investments in businesses related to data and information
storage, and (vi) Investments not otherwise permitted by this
subparagraph (o), provided that the aggregate amount of such Investments
does not exceed the greater of (i) 25% of Parent's Tangible Net Worth as
of the last day of the most recently ended fiscal quarter and (ii) $50,
000,000; or
(p) Parent permits:
(i) its Tangible Net Worth to be less than (A) at all
times prior to the IPO, an amount equal to (1) its Tangible Net
Worth as of March 31, 1998, minus (2) $25,000,000, plus (iii) 50%
of Consolidated Net Income (not to be reduced by losses) from
March 31, 1998 to the end of the most recently ended fiscal
quarter and (B) at all times after the IPO, an amount equal to
(i) 70% of the sum of its Tangible Net Worth as of the end of
June, 1998, plus the net proceeds of the IPO,
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plus (iii) 50% of Consolidated Net Income (not to be reduced by
losses) from the date of the IPO to the end of the most recently
ended fiscal quarter.
(ii) (1) prior to the IPO, the EBITDAR Ratio to be less
than (A) 2.25:1 for the fiscal quarter ending in June and
September of 1998, (B) 2.50:1 for the fiscal quarter ending in
December of 1998, (C) 2.75:1 for the fiscal quarter ending in
March of 1999, and (D) 3.00:1 for each fiscal quarter thereafter
and (2) after the IPO, the EBITDAR Ratio to be less than 1.50:1
for any fiscal quarter.
SECTION 10.02. Remedies.
(a) Optional Liquidation. Upon the occurrence of a Liquidation Event
(other than a Liquidation Event described in subsection (f) of Section 10.01),
the Administrator shall, at the request, or may with the consent, of Purchaser,
by notice to Seller declare the Purchase Termination Date to have occurred and
the Liquidation Period to have commenced.
(b) Automatic Liquidation. Upon the occurrence of a Liquidation Event
described in subsection (f) of Section 10.01, the Purchase Termination Date
shall occur and the Liquidation Period shall commence automatically.
(c) Additional Remedies. Upon any Purchase Termination Date occurring
pursuant to this Section 10.02, no Purchases or Reinvestments thereafter will be
made, and the Administrator and Purchaser shall have, in addition to all other
rights and remedies under this Agreement or otherwise, all other rights and
remedies provided under the UCC of each applicable jurisdiction and other
Applicable Law, which rights shall be cumulative.
ARTICLE XI
THE ADMINISTRATOR
SECTION 11.01. Authorization and Action. Pursuant to the Program
Agreements, Purchaser has appointed and authorized the Administrator (or its
designees) to take such action as agent on its behalf and to exercise such
powers under this Agreement as are delegated to the Administrator by the terms
hereof, together with such powers as are reasonably incidental thereto.
SECTION 11.02. Administrator's Reliance, Etc. The Administrator and its
directors, officers, agents or employees shall not be liable for any action
taken or omitted to be taken by it or them under or in connection with the
Transaction Documents (including, without limitation, the servicing,
administering or collecting of Pool Receivables as Servicer pursuant to Section
8.01), except for its or their own gross negligence or willful misconduct.
Without limiting the generality of the
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foregoing, the Administrator: (a) may consult with legal counsel (including
counsel for Seller), independent certified public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (b) makes no warranty or representation to Purchaser or
any other holder of any interest in Pool Receivables and shall not be
responsible to Purchaser or any such other holder for any statements, warranties
or representations made in or in connection with any Transaction Document; (c)
shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of any Transaction
Document on the part of Seller or Parent or to inspect the property (including
the books and records) of Seller, any Originator or Parent; (d) shall not be
responsible to Purchaser or any other holder of any interest in Pool Receivables
for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of any Transaction Document; and (e) shall incur no
liability under or in respect of this Agreement by acting upon any notice
(including notice by telephone), consent, certificate or other instrument or
writing (which may be by facsimile or telex) believed by it to be genuine and
signed or sent by the proper party or parties.
SECTION 11.03. Fleet and Affiliates. Fleet and any of its Affiliates may
generally engage in any kind of business with Seller, Parent, any Originator or
any Obligor, any of their respective Affiliates and any Person who may do
business with or own securities of Seller, Parent, any Originator or any Obligor
or any of their respective Affiliates, all as if Fleet were not the
Administrator, and without any duty to account therefor to Purchaser or any
other holder of an interest in Pool Receivables.
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ARTICLE XII
ASSIGNMENT OF PURCHASER'S INTEREST
SECTION 12.01. Restrictions on Assignments.
(a) Neither Seller nor Parent may assign its rights, or delegate its
duties, hereunder or any interest herein without the prior written consent of
the Administrator. Purchaser may not assign its rights hereunder (although it
may delegate its duties hereunder as expressly indicated herein) or the Asset
Interest (or any portion thereof) to any Person without the prior written
consent of Seller, which consent shall not be unreasonably withheld; provided,
however, that Purchaser may assign all of its rights and interests in the
Transaction Documents, together with all its interest in the Asset Interest, to
(i) Fleet or any Affiliate thereof, or (ii) to any "bankruptcy remote" special
purpose entity the business of which is administered by Fleet or any Affiliate
thereof, so long as such entity has the ability to issue commercial paper notes,
or to cause the issuance of commercial paper notes, to fund the Asset Interest
or (iii) to any Program Support Provider. If Purchaser notifies Seller and
Parent that it has decided to assign its rights and delegate its duties
hereunder to one or more Program Support Providers (or an agent therefor),
Seller and Parent agree to enter into such amendments hereto and to the other
Transaction Documents as the Administrator may reasonably request to reflect
such assignment and delegation.
(b) Seller agrees to advise the Administrator within five (5) Business
Days after notice to Seller of any proposed assignment by Purchaser of the Asset
Interest (or any portion thereof), not otherwise permitted under subsection (a),
of Seller's consent or non-consent to such assignment and if it does not
consent, the reasons therefor. If Seller does not respond in such time period,
Seller shall be deemed to have consented to such assignment. All of the
aforementioned assignments shall be upon such terms and conditions as Purchaser
and the assignee may mutually agree.
SECTION 12.02. Rights of Assignee. Upon the assignment by Purchaser in
accordance with this Article XII, the assignee receiving such assignment shall
have all of the rights of Purchaser with respect to the Transaction Documents
and the Asset Interest (or such portion thereof as has been assigned).
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ARTICLE XIII
INDEMNIFICATION
SECTION 13.01. Indemnities.
(a) General Indemnity by Seller. Without limiting any other rights which
any such Person may have hereunder or under Applicable Law, Seller hereby agrees
to indemnify each of the Administrator, Purchaser, each Program Support
Provider, each of their respective Affiliates, and all successors, permitted
transferees, participants and permitted assigns and all officers, directors,
shareholders, controlling persons, employees and agents of any of the foregoing
(each an "Indemnified Party"), within five Business Days of demand, from and
against any and all damages, losses, claims, liabilities and related costs and
expenses, including reasonable attorneys' fees and disbursements (all of the
foregoing being collectively referred to as "Indemnified Amounts") awarded
against or incurred by any of them arising out of or relating to the Transaction
Documents or the ownership or funding of the Asset Interest or in respect of any
Receivable or any Contract, excluding, however, (a) Indemnified Amounts to the
extent resulting from gross negligence or willful misconduct on the part of any
Indemnified Party or (b) Indemnified Amounts which have the effect of recourse
for non-payment of the Pool Receivables due to credit problems of the Obligors
(except as otherwise specifically provided in this Agreement). Without limiting
the foregoing, Seller shall indemnify each Indemnified Party for Indemnified
Amounts arising out of or relating to:
(i) the transfer by Seller of any interest in any Pool Receivable
other than the transfer of an Asset Interest to the Administrator, for
the benefit of Purchaser, pursuant to this Agreement and the grant of a
security interest to the Administrator pursuant to Section 9.01;
(ii) any representation or warranty made by Seller under or in
connection with any Transaction Document, any Servicer Report or any
other information or report delivered by or on behalf of Seller pursuant
hereto, which shall have been false, incorrect or misleading in any
respect when made or deemed made;
(iii) the failure by Seller to comply with any Applicable Law, or
the nonconformity of any Pool Receivable or the related Contract with
any Applicable Law;
(iv) the failure to vest and maintain vested in the
Administrator, for the benefit of Purchaser, an undivided percentage
ownership or security interest, to the extent of the Asset Interest, in
the Pool Assets, free and clear of any Lien, other than a Lien arising
solely as a result of an act of Purchaser or the Administrator, whether
existing at the time of any Purchase or Reinvestment of such Asset
Interest or at any time thereafter;
(v) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of
any applicable jurisdiction or other applicable laws with respect to any
Pool Assets, whether at the time of any Purchase or Reinvestment or at
any time thereafter;
(vi) any dispute, claim, offset or defense (other than discharge
in bankruptcy or payment) of the Obligor to the payment of any
Receivable included in the Net Pool
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Balance (including, without limitation, a defense based on such
Receivable or the related Contract not being a legal, valid and binding
obligation of such Obligor enforceable against it in accordance with its
terms), or any other claim resulting from the sale of the merchandise or
services related to such Receivable or the furnishing or failure to
furnish such merchandise or services;
(vii) any failure of Seller to perform its duties or obligations
in accordance with this Agreement;
(viii) any products liability claim arising out of or in
connection with merchandise or services that are the subject of any Pool
Receivable;
(ix) any litigation, proceedings or investigation against Seller
other than by an Indemnified Person; or
(x) any tax or governmental fee or charge (but not including
taxes upon or measured by net income or representing a franchise or
unincorporated business tax of such Person), all interest and penalties
thereon or with respect thereto, and all out-of-pocket costs and
expenses, including the reasonable fees and expenses of counsel in
defending against the same, which may arise by reason of the purchase or
ownership of any Asset Interest, or any other interest in the Pool
Receivables or in any goods which secure any such Pool Receivables.
(b) Indemnity by Servicer. Without limiting any other rights which any
such Person may have hereunder or under applicable law, Servicer hereby agrees
to indemnify each Indemnified Party, forthwith on demand, from and against any
and all Indemnified Amounts awarded against or incurred by any of them arising
out of or relating to (i) any representation or warranty made by Servicer under
or in connection with any Transaction Document, any Servicer Report or any other
information or report delivered by or on behalf of Servicer pursuant hereto,
which shall have been false, incorrect or misleading in any material respect
when made or deemed made, (ii) the failure by Servicer to comply with any
Applicable Law, (iii) the failure of Servicer to perform its duties or
obligations in accordance with this Agreement or (iv) the commingling of any
Collections with other funds.
(c) After-Tax Basis. Indemnification hereunder shall be in an amount
necessary to make the Indemnified Party whole after taking into account any tax
consequences to the Indemnified Party of the receipt of the indemnity provided
hereunder, including the effect of such tax or refund on the amount of tax
measured by net income or profits which is or was payable by the Indemnified
Party.
(d) Contribution. If for any reason the indemnification provided above
in this Section 13.01 is unavailable to an Indemnified Party or is insufficient
to hold an Indemnified Party harmless, then Seller or Servicer, as the case may
be, shall contribute to the amount paid or
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payable by such Indemnified Party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by such Indemnified Party on the one hand and Seller or
Servicer, as the case may be, on the other hand but also the relative fault of
such Indemnified Party as well as any other relevant equitable considerations.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.01. Amendments, Etc. Amendments, Etc. No amendment or waiver
of any provision of this Agreement nor consent to any departure by any party
therefrom shall in any event be effective unless the same shall be in writing
and signed by (a) Seller, the Administrator, Parent and Purchaser (with respect
to an amendment) or (b) the Administrator and Purchaser (with respect to a
waiver or consent by them) or Seller or Parent (with respect to a waiver or
consent by it), as the case may be, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. The parties acknowledge that, before entering into such an amendment or
granting such a waiver or consent, Purchaser may also be required to obtain the
approval of some or all of the Program Support Providers.
SECTION 14.02. Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including facsimile communication) and shall be personally delivered or sent by
express mail or courier or by certified mail, postage prepaid, or by facsimile,
to the intended party at the address or facsimile number of such party set forth
under its name on Schedule 14.02 or at such other address or facsimile number as
shall be designated by such party in a written notice to the other parties
hereto. All such notices and communications shall be effective, (a) if
personally delivered or sent by express mail or courier or if sent by certified
mail, when received, and (b) if transmitted by facsimile, when sent, receipt
confirmed by telephone or electronic means.
SECTION 14.03. No Waiver; Remedies. No failure on the part of the
Administrator, any Affected Party, any Indemnified Party, Purchaser or any other
holder of the Asset Interest (or any portion thereof) to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
SECTION 14.04. Binding Effect; Survival. This Agreement shall be binding
upon and inure to the benefit of Seller, Parent, the Administrator, Purchaser
and their respective successors and assigns, and the provisions of Section 4.02
and Article XIII shall inure to the benefit of the Affected Parties and the
Indemnified Parties, respectively, and their respective successors and assigns;
provided, however, nothing in
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the foregoing shall be deemed to authorize any assignment not permitted by
Section 12.01. This Agreement shall create and constitute the continuing
obligations of the parties hereto in accordance with its terms, and shall remain
in full force and effect until the Final Payout Date. The rights and remedies
with respect to any breach of any representation and warranty made by Seller or
Parent pursuant to Article VI and the indemnification and payment provisions of
Article XIII and Sections 4.02, 14.05, 14.06, 14.07, 14.08 and 14.15 shall be
continuing and shall survive any termination of this Agreement.
SECTION 14.05. Costs, Expenses and Taxes. In addition to its obligations
under Article XIII, Seller or Parent, as the case may be, agrees to pay within
five Business Days of demand;
(a) all costs and expenses incurred (i) by the Administrator and
Purchaser, and their respective Affiliates, in connection with the
negotiation, preparation, execution and delivery of, and (ii) by the
Administrator, any Program Support Provider and Purchaser and their
respective Affiliates, in connection with the enforcement against Seller
or Parent, as the case may be, of, or any actual or claimed breach by
Seller or Parent, as the case may be, of, this Agreement and the other
Transaction Documents, including, without limitation (A) the reasonable
fees and expenses of counsel to any of such Persons incurred in
connection with any of the foregoing or in advising such Persons as to
their respective rights and remedies under any of the Transaction
Documents, and (B) all reasonable out-of-pocket expenses incurred in
connection with the foregoing (including reasonable fees and expenses of
independent accountants incurred in connection with any review of
Seller's or Parent's, as the case may be, books and records either
pursuant to Section 7.01(c) or otherwise); and
(b) all stamp and other taxes and fees payable or determined to
be payable in connection with the execution, delivery, filing and
recording of this Agreement or the other Transaction Documents, and
agrees to indemnify each Indemnified Party against any liabilities with
respect to or resulting from any delay in paying or omission to pay such
taxes and fees.
SECTION 14.06. No Proceedings. Seller, Parent, Servicer and Fleet
(individually and as Administrator) each hereby agrees that it will not
institute against Purchaser, or join any other Person in instituting against
Purchaser, any insolvency proceeding (namely, any proceeding of the type
referred to in the definition of Event of Bankruptcy) so long as any Commercial
Paper Notes shall be outstanding or there shall not have elapsed one year plus
one day since the last day on which any such Commercial Paper Notes shall have
been outstanding.
SECTION 14.07. Confidentiality of Program Information.
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(a) Confidential Information. Each party hereto acknowledges that Fleet
regards the structure of the transactions contemplated by this Agreement to be
proprietary, and each such party severally agrees that:
(i) it will not disclose without the prior consent of Fleet or as
is required or authorized by the Transaction Documents (other than to
the directors, employees, agents, auditors, counsel or affiliates
(collectively, "representatives") of such party, each of whom shall be
informed by such party of the confidential nature of the Program
Information (as defined below) and of the terms of this Section 14.07),
(A) any information regarding the pricing in, or copies of, this
Agreement or any transaction contemplated hereby, (B) any information
regarding the organization, business or operations of Purchaser
generally or the services performed by the Administrator for Purchaser,
or (C) any information which is furnished by Fleet to such party and
which is designated by Fleet to such party in writing or otherwise as
confidential or not otherwise available to the general public (the
information referred to in clauses (A), (B) and (C) is collectively
referred to as the "Program Information"); provided, however, that such
party may disclose any such Program Information (I) to any other party
to this Agreement for the purposes contemplated hereby, (II) as may be
required by any Governmental Authority having or claiming to have
jurisdiction over such party, (III) in order to comply with Applicable
Law, (IV) to the underwriters for securities to be issued by the Parent,
and their counsel, and the Securities and Exchange Commission in
connection with any public offering of such securities (provided that in
no event shall such disclosure include the Fee Letter) or (v) subject to
subsection (c), in the event such party is legally compelled (by
interrogatories, requests for information or copies, subpoena, civil
investigative demand or similar process) to disclose any such Program
Information;
(ii) it will use the Program Information solely for the purposes
of evaluating, administering and enforcing the transactions contemplated
by this Agreement and making any necessary business judgments with
respect thereto; and
(iii) it will, upon demand, return (and cause each of its
representatives to return) to Fleet, all documents or other written
material (other than documents executed by such party) received from
Fleet, as the case may be, in connection with (a)(i)(B) or (C) above and
all copies thereof made by such party which contain the Program
Information.
(b) Availability of Confidential Information. This Section 14.07 shall
be inoperative as to such portions of the Program Information which are or
become generally available to the public or such party on a nonconfidential
basis from a source other than Fleet or were known to such party on a
nonconfidential basis prior to its disclosure by Fleet.
(c) Legal Compulsion to Disclose. In the event that any party or anyone
to whom such party or its representatives transmits the Program Information is
requested or becomes legally compelled (by interrogatories, requests for
information or documents, subpoena, civil
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investigative demand or similar process) to disclose any of the Program
Information, such party will, to the extent that it may legally do so,
(i) provide Fleet with prompt written notice so that Fleet may
seek a protective order or other appropriate remedy and/or waive
compliance with the provisions of this Section 14.07; and
(ii) unless Fleet waives compliance by such party with the
provisions of this Section 14.07, make a timely objection to the request
or confirmation to provide such Program Information on the basis that
such Program Information is confidential and subject to the agreements
contained in this Section 14.07.
In the event that such protective order or other remedy is not obtained, or
Fleet waives compliance with the provisions of this Section 14.07, such party
will furnish only that portion of the Program Information which (in such party's
good faith judgment) is legally required to be furnished and will exercise
reasonable efforts to obtain reliable assurance that confidential treatment will
be accorded the Program Information.
(d) Survival. This Section 14.07 shall survive termination of this
Agreement.
SECTION 14.08. Confidentiality of Parent Information.
(a) Confidential Information. Each party hereto acknowledges that Parent
regards certain information to be proprietary, and each such party severally
agrees that:
(i) it will not disclose without the prior consent of Parent or
as is required or authorized by the Transaction Documents (other than to
the directors, employees, agents, auditors, counsel or affiliates
(collectively, "representatives") of such party, each of whom shall be
informed by such party of the confidential nature of the Parent
Information (as defined below) and of the terms of this Section 14.08),
any information which is furnished by Parent to such party and which is
designated by Parent to such party in writing or otherwise as
confidential or not otherwise available to the general public ("Parent
Information"); provided, however, that such party may disclose any such
Parent Information (I) to any other party to this Agreement for the
purposes contemplated hereby, (II) as may be required by any
Governmental Authority having or claiming to have jurisdiction over such
party, (III) in order to comply with any Applicable Law, (IV) subject to
subsection (c), in the event such party is legally compelled (by
interrogatories, requests for information or copies, subpoena, civil
investigative demand or similar process) to disclose any such Program
Information, (V) to any Affected Party, (VI) to the Rating Agencies, or
(VII) to any potential Liquidity Bank or any potential assignee or
participant of any Liquidity Bank, and any placement agent for, or
investor or potential investor in, the Commercial Paper Notes, provided,
in each case set forth in this clause
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(VII), that such Person has agreed to be bound by confidentiality
restrictions substantially similar to this Section 14.08 ; and
(ii) it will use the Parent Information solely for the purposes
of evaluating, administering and enforcing the transactions contemplated
by this Agreement and making any necessary business judgments with
respect thereto.
(b) Availability of Confidential Information. This Section 14.08 shall
be inoperative as to such portions of the Parent Information which are or become
generally available to the public or such party on a nonconfidential basis from
a source other than Parent or were known to such party on a nonconfidential
basis prior to its disclosure by Parent.
(c) Legal Compulsion to Disclose. In the event that any party or anyone
to whom such party or its representatives transmits the Parent Information is
requested or becomes legally compelled (by interrogatories, requests for
information or documents, subpoena, civil investigative demand or similar
process) to disclose any of the Parent Information, such party will, to the
extent that it may legally do so,
(i) provide Parent with prompt written notice so that Parent may
seek a protective order or other appropriate remedy and/or waive
compliance with the provisions of this Section 14.08; and
(ii) unless Parent waives compliance by such party with the
provisions of this Section 14.08, make a timely objection to the request
or confirmation to provide such Parent Information on the basis that
such Parent Information is confidential and subject to the agreements
contained in this Section 14.08.
In the event that such protective order or other remedy is not obtained, or
Parent waives compliance with the provisions of this Section 14.08, such party
will furnish only that portion of the Parent Information which (in such party's
good faith judgment) is legally required to be furnished and will exercise
reasonable efforts to obtain reliable assurance that confidential treatment will
be accorded the Parent Information.
(d) Survival. This Section 14.08 shall survive termination of this
Agreement.
SECTION 14.09. Captions and Cross References. The various captions
(including, without limitation, the table of contents) in this Agreement are
provided solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Agreement. Unless otherwise indicated,
references in this Agreement to any Section, Appendix, Schedule or Exhibit are
to such Section of or Appendix, Schedule or Exhibit to this Agreement, as the
case may be, and references in any Section, subsection, or clause to any
subsection, clause or subclause are to such subsection, clause or subclause of
such Section, subsection or clause.
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SECTION 14.10. Integration. This Agreement and the other Transaction
Documents contain a final and complete integration of all prior expressions by
the parties hereto with respect to the subject matter hereof and shall
constitute the entire understanding among the parties hereto with respect to the
subject matter hereof, superseding all prior oral or written understandings.
SECTION 14.11. GOVERNING LAW. THIS AGREEMENT, INCLUDING THE RIGHTS AND
DUTIES OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF), EXCEPT TO THE EXTENT THAT THE PERFECTION
OF THE INTERESTS OF THE ADMINISTRATOR IN THE POOL ASSETS IS GOVERNED BY THE LAWS
OF THE JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 14.12. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER TRANSACTION
DOCUMENT OR UNDER ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY
BE IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING
OR OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT A JURY TRIAL.
SECTION 14.13. CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES. EACH OF
PARENT AND SELLER HEREBY ACKNOWLEDGES AND AGREES THAT:
(a) IT HEREBY IRREVOCABLY (I) SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF ANY NEW YORK STATE OR UNITED STATES FEDERAL COURT
SITTING IN THE BOROUGH OF MANHATTAN, STATE OF NEW YORK, OVER ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO ANY TRANSACTION DOCUMENT;
(II) AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN SUCH STATE OR UNITED STATES FEDERAL COURT;
(III) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE
OF SUCH ACTION OR PROCEEDING; (IV) CONSENTS TO THE SERVICE OF ANY AND
ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
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COPIES OF SUCH PROCESS TO SUCH PERSON AT ITS ADDRESS SPECIFIED IN
SECTION 14.02; AND (V) TO THE EXTENT ALLOWED BY LAW, AGREES THAT A FINAL
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW. NOTHING IN THIS SECTION 14.13 SHALL AFFECT THE
ADMINISTRATOR'S OR PURCHASER'S RIGHT TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO BRING ANY ACTION OR PROCEEDING AGAINST ANY
OF SELLER OR PARENT OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTIONS.
(b) TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM THE JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID TO EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, IT HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN
RESPECT OF ITS OBLIGATIONS UNDER OR IN CONNECTION WITH THIS AGREEMENT.
SECTION 14.14. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
agreement.
SECTION 14.15. No Recourse Against Other Parties. No recourse under any
obligation, covenant or agreement of Purchaser contained in this Agreement shall
be had against any stockholder (solely in its capacity as stockholder),
employee, officer, director, member or incorporator of Purchaser, provided,
however, that nothing in this Section 14.15 shall relieve any of the foregoing
Persons from any liability which such Person may otherwise have for his/her or
its gross negligence or willful misconduct.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
MAXTOR RECEIVABLES CORPORATION, as
Seller
By:
Name Printed:
Title:
MAXTOR CORPORATION, as initial Servicer
By:
Name Printed:
Title:
BLUE KEEL FUNDING, LLC,
as Purchaser
By:
Name Printed:
Title:
FLEET NATIONAL BANK, as Administrator
By:
Name Printed:
Title:
S-1
53
SCHEDULE 6.01(m)
LIST OF OFFICES OF SELLER WHERE RECORDS ARE KEPT
Maxtor Receivables Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
54
SCHEDULE 6.01(n)
LIST OF LOCK-BOX BANKS
First Union National Bank
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Account No. 0109-7086
55
SCHEDULE 7.01(e)
FORMS OF CONTRACTS
56
SCHEDULE 7.01(g)
DESCRIPTION OF CREDIT AND COLLECTION POLICY
57
SCHEDULE 14.02
NOTICE ADDRESSES
Purchaser:
Blue Keel Funding, LLC
c/o Global Securitization Services, LLC
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Telephone: 212/▇▇▇-▇▇▇▇
Facsimile: 212/302-8767
Administrator:
Fleet National Bank
Fleet Corporate Finance
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Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: 617/▇▇▇-▇▇▇▇
Facsimile: 617/346-4690
Seller:
Maxtor Receivables Corporation
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Attention: Raja Venkatesh, Treasurer
Parent:
Maxtor Receivables Corporation
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Attention: Raja Venkatesh, Treasurer
Telephone: 408/▇▇▇-▇▇▇▇
Facsimile: 408/432-4480
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EXHIBIT 5.01
FORM OF LOCK-BOX AGREEMENT
[Letterhead of Seller]
LOCK-BOX AGREEMENT
___________, 199__
[Name and Address of
Lock-Box Bank]
Ladies and Gentlemen:
Reference is made to our [lock-box]* account[s]
no[s]. maintained with you (the "Account[s]"). Pursuant to a Receivables
Purchase Agreement dated as of July 31, 1998 among us, as Seller, Blue Keel
Funding, LLC ("Blue Keel"), as Purchaser, Maxtor Corporation, as Servicer, and
Fleet National Bank, as administrator (the "Administrator"), we have assigned
and/or may hereafter assign to the Administrator, for the benefit of Blue Keel
and its assigns, one or more undivided percentage interests in accounts, chattel
paper, instruments or general intangibles (collectively, "Receivables") with
respect to which payments are or may hereafter be made to the Account[s], and
have granted to the Administrator, for the benefit of Blue Keel and its assigns,
a security interest in such Receivables, the Account[s], amounts on deposit
therein and related property. Your execution of this letter agreement is a
condition precedent to our continued maintenance of the Account[s] with you.
We hereby transfer exclusive ownership and control of the Account[s] to the
Administrator on behalf of Blue Keel and its assigns, subject only to the
condition subsequent that the Administrator shall have given you notice of its
election to assume such ownership and control, which notice may be in the form
attached hereto as Exhibit A or in any other form that gives you reasonable
notice of such election.
We hereby irrevocably instruct you, at all times from and after the date of
your receipt of notice from the Administrator as described above, to make all
payments to be made by you out of
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*/ Delete in the case of direct wire transfer accounts.
59
or in connection with the Account[s] directly to the Administrator, at its
address set forth below its signature hereto or as the Administrator otherwise
notifies you, for the account of Blue Keel (account #__________, ABA
#_________), or otherwise in accordance with the instructions of the
Administrator.
We also hereby notify you that, at all times from and after the date of
your receipt of notice from the Administrator as described above, the
Administrator shall be irrevocably entitled to exercise in our place and stead
any and all rights in respect of or in connection with the Account[s],
including, without limitation, (a) the right to specify when payments are to be
made out of or in connection with the Account[s] and (b) the right to require
preparation of duplicate monthly bank statements on the Account[s] for the
Administrator's audit purposes and mailing of such statements directly to an
address specified by the Administrator.
Notice from the Administrator may be personally served or sent by facsimile
or U.S. mail, certified return receipt requested, to the address or facsimile
number set forth under your signature to this letter agreement (or to such other
address or facsimile number as to which you shall notify the Administrator in
writing). If notice is given by facsimile, it will be deemed to have been
received when the notice is sent and the receipt is confirmed by telephone or
other electronic means. All other notices will be deemed to have been received
when actually received or, in the case of personal delivery, delivered.
By executing this letter agreement, you acknowledge and consent to the
existence of the Administrator's right to ownership and control of the
Account[s] and the Administrator's security interest in the Account[s] and
amounts from time to time on deposit therein and agree that from the date hereof
the Account[s] shall be maintained by you for the benefit of, and amounts from
time to time therein held by you as agent for, the Administrator on the terms
provided herein. The Account[s] [is/are] to be titled "Maxtor Receivables
Corporation and Fleet National Bank as the Administrator for Blue Keel and its
assigns, as their interests may appear". Except as otherwise provided in this
letter agreement, payments to the Account[s] are to be processed in accordance
with the standard procedures currently in effect. All service charges and fees
with respect to the Account[s] shall continue to be payable by us as under the
arrangements currently in effect.
By executing this letter agreement, you irrevocably waive and agree not to
assert, claim or endeavor to exercise, irrevocably bar and estop yourself from
asserting, claiming or exercising, and acknowledge that you have not heretofore
received a notice, writ, order or any form of legal process from any other
person or entity asserting, claiming or exercising, any right of set-off,
banker's lien or other purported form of claim with respect to [any of] the
Account[s] or any funds from time to time therein. Except for your right to
payment of your service charges and fees and to make deductions for returned
items, you shall have no rights in the Account[s] or funds therein. To the
extent you may ever have such rights, you hereby expressly subordinate all such
rights to all rights of the Administrator.
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You may terminate this letter agreement by canceling the Account[s]
maintained with you, which cancellation and termination shall become effective
only upon thirty days' prior written notice thereof from you to the
Administrator. Incoming [mail addressed to] [wire transfers to] the Account[s]
received after such cancellation shall be forwarded in accordance with the
Administrator's instructions. This letter agreement may also be terminated upon
written notice to you by the Administrator stating that the Receivables Purchase
Agreement pursuant to which this letter agreement was obtained is no longer in
effect. Except as otherwise provided in this paragraph, this letter agreement
may not be terminated or amended without the prior written consent of the
Administrator. This letter agreement may be executed in any number of
counterparts, and by the parties hereto on separate counterparts, each of which
when so executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same agreement.
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Please acknowledge your agreement to the terms set forth in this letter
agreement by signing the two copies of this letter agreement enclosed herewith
in the space provided below, sending one such signed copy to the Administrator
at its address provided above and returning the other signed copy to us.
Very truly yours,
MAXTOR RECEIVABLES CORPORATION
By:
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Name:
Title:
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Acknowledged and agreed to as of the
date first written above:
BLUE KEEL FUNDING, LLC
By:
Name:
Title:
FLEET NATIONAL BANK, as Administrator
By:
Name:
Title:
Address for notice:
Fleet Corporate Finance
Mail Stop MA-OF-DO36
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Tel. No. 617/▇▇▇-▇▇▇▇
Facsimile No. 617/346-4690
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[NAME OF LOCK-BOX BANK]
By:
Name:
Title:
Address for notice:
Attention:
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Tel. No.: Facsimile No.:
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EXHIBIT A to
Lock-Box Agreement
[Letterhead of Fleet National Bank]
[Name and Address
of Lock-Box Bank]
Re: Maxtor Receivables Corporation
[Lock-Box]**/ Account No[s]. [and ]
Ladies and Gentlemen:
Reference is made to the letter agreement dated ________________, 199__
(the "Letter Agreement") among Maxtor Receivables Corporation, Blue Keel
Funding, LLC ("Blue Keel"), the undersigned, as Administrator and you concerning
the above described [lock-box]* account[s] (the "Account[s]"). We hereby give
you notice of our assumption of ownership and control of the Account[s] as
provided in the Letter Agreement.
We hereby instruct you to make all payments to be made by you out of or in
connection with the Account[s] [directly to the undersigned, at [our address set
forth above], for the account of Blue Keel (account no. ______)].
[other instructions]
Very truly yours,
FLEET NATIONAL BANK, as Administrator
By:
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Name:
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Title:
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**/ Delete in the case of direct wire transfer accounts.