Exhibit 10 (av)
Form 10-K for 1997
File no. 1-11237
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
[EXECUTION COPY]
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FINANCIAL SERVICES AGREEMENT
DATED AS OF MARCH 9, 1998
BETWEEN
LUCENT TECHNOLOGIES INC.
A DELAWARE CORPORATION
AND
NEWCOURT CREDIT GROUP INC.
AN ONTARIO CORPORATION
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Exhibit 10 (av)
Form 10-K for 1997
File no. 1-11237
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
FINANCIAL SERVICES AGREEMENT
FINANCIAL SERVICES AGREEMENT dated as of March 9, 1998 (this
"Agreement") between LUCENT TECHNOLOGIES INC. a Delaware corporation ("Lucent")
and NEWCOURT CREDIT GROUP INC., an Ontario corporation ("Newcourt").
WHEREAS, Newcourt is a controlling affiliate of Capital;
WHEREAS, Capital and Lucent are parties to the Intercompany
Agreement, the License Agreement, and the Operating Agreement (collectively, the
"Original Agreements") and other related agreements;
WHEREAS, it is the intention of the parties hereto that the
Original Agreements and certain other related agreements be replaced by this
Agreement;
WHEREAS, Lucent's Customers from time to time finance their
purchases of Products, making their intent to do so known to Lucent or its
Authorized Dealers;
WHEREAS, Lucent desires LTPF to provide such financing on ready
and competitive terms to enhance the sales of its Products;
WHEREAS, LTPF desires to make credit available on terms seen as
competitive by both it and Lucent and to compensate Lucent for introduction to
such Customers;
WHEREAS, Lucent desires to promote LTPF as its primary provider
of Financing Services and Ancillary Services so long as LTPF does so on ready
and competitive terms; and
WHEREAS, it is the mutual objective of the parties to this
Agreement that during the term of this Agreement: LTPF will, either through
Newcourt or one or more of its Subsidiaries or third parties acceptable to
Lucent, (i) make available to Customers of Lucent and Authorized Dealers
appropriate forms of Customer Financings for the purchase, lease or other
acquisition of Products, and otherwise provide Lucent and Authorized Dealers
with Customer Financing in the form of purchases or financings of receivables
arising from the sale, lease or other furnishing by Lucent or Authorized Dealers
of Products to Customers; (ii) make available to Authorized Dealers appropriate
forms of Dealer Financing and make available to Lucent appropriate forms of
Outsource Financing; and (iii) make available to Lucent, Customers and
Authorized Dealers, where appropriate, various types of Ancillary Services.
NOW, THEREFORE, in consideration of the mutual promises herein
set forth and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and subject to the conditions and
upon the terms hereof, the parties hereby agree as follows:
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CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
ARTICLE I
DEFINITIONS
SECTION 1.1. Defined Terms. As used in this Agreement, the following terms will
have the following meanings, applicable both to the singular and the plural
forms of the terms defined:
"AAA" has the meaning ascribed thereto in SECTION 14.4(b).
"ADJUSTED FINANCEABLE PRODUCT SALES" has the meaning for such or
similar term in the then current Annual Operating Plan, or if no definition is
specified, means, with respect to any measurement period, the aggregate purchase
price (net of discount) paid by or on behalf of Customers to Lucent Entities or
Authorized Dealers, together with any related sales taxes and installation and
similar costs, for Financeable Products during such measurement period.
"ADJUSTED FINANCING AMOUNT" has the meaning for such or similar
term in the then current Annual Operating Plan, or if no definition is
specified, means, with respect to any measurement period, the aggregate amount
paid by NCT for Financeable Products sold by Lucent Entities during such
measurement period, together with the aggregate amount of Financings of any
related sales taxes and installation and similar costs. If during any period for
which Adjusted Financeable Product Sales are calculated there has occurred a
disposition, phase-in or an acquisition by Lucent Entities of any significant
Financeable Product line, the Adjusted Financing Amount and Adjusted Financeable
Product Sales amount with respect to such period shall be normalized in a fair
and reasonable manner.
"ADJUSTED NOTIONAL FEE BASE" shall mean the (a) Notional Fee Base
for each period during the Term minus (b) (i) *** as to the each of the first
*** consecutive Monthly Payments, or (ii) *** as to the next *** such payments,
or (iii) *** as to all subsequent such payments, as the case may be, of the ***
for such period.
"AFFILIATE" means, with respect to any Person, any other Person
that directly or indirectly controls, is controlled by or is under common
control with such Person. For purposes of this definition, "control" (including,
with correlative meanings, the terms "controlled by" and "under common control
with"), as applied to any Person, means the possession, directly or indirectly,
of the power to vote a majority of the securities having voting power for the
election of directors (or other Persons acting in similar capacities) of such
Person or otherwise to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or
by contract or otherwise.
"AFTER-TAX BASIS" means, with respect to any payment to be
received or accrued by any Person, the amount of such payment supplemented by a
further payment or payments (which shall be payable either simultaneously with
the initial payment or, in the event that taxes resulting from the receipt or
accrual of such initial payment are not payable in the year of receipt or
accrual, at the time or times such taxes become payable) so that the sum of all
such initial and supplemental payments, after deduction of all taxes imposed by
any taxing authority (after taking into account any credits or deductions or
other tax benefits arising
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CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
therefrom to the extent such are currently utilized) resulting from the receipt
or accrual of such payments (whether or not such taxes are payable in the year
of receipt or accrual) will be equal to the initial payment to be so received or
accrued.
"AGREEMENT" has the meaning ascribed thereto in the preamble
hereto, as such agreement is amended and supplemented from time to time in
accordance with its terms.
"ALTERNATIVE FINANCING SERVICE" means a Financing offered or
provided to Lucent, Customers or Authorized Dealers by a Person (other than an
Affiliate of Lucent or NCT, or a Person that contracts with NCT to enable NCT to
indirectly provide such Financing program) that offers financings or other
services competitive with Financings or Ancillary Services offered by NCT
hereunder.
"ALTERNATIVE FINANCING SERVICE PROVIDER" means a Person which
provides Alternative Financing Services.
"ANCILLARY SERVICES" means (i) the provision of property,
casualty or similar types of insurance with respect to Products, (ii) asset
monitoring, recovery and remarketing services with respect to Products, and
(iii) any other value-added services relating to Products or Financings offered
by NCT from time to time and agreed to by the parties to be treated as Ancillary
Services for purposes of this Agreement.
"ANNUAL OPERATING PLAN" has the meaning ascribed thereto in
SECTION 12.1.
"AT&T" means AT&T Corp., a New York corporation, formerly known
as American Telephone and Telegraph Company.
"AUTHORIZED DEALER" means any Person that is authorized by BCS to
acquire Products directly or indirectly from Lucent for resale on a wholesale or
retail basis.
"BASE RATE" means as of any date, the implicit annual rate of a
Payment Stream generally applicable with respect to comparable equipment under a
comparable Finance Contract to a comparable Customer, all as determined from
time to time by LTPF in accordance with generally accepted financial principles
and in a manner consistent with the Annual Operating Plan and by reference to
LTPF's standard rates for such transactions. The Base Rate shall be calculated
in a manner consistent with the methodology used to determine the Implicit Rate.
"BCS" means the business unit of the Lucent Entities now commonly
known as Business Communications Systems, as such business may be renamed or
divided into separate divisions of Lucent Entities or consolidated with other
divisions of Lucent Entities, in which later case this Agreement shall apply to
the portion of the divisions which are continuing the BCS business.
"BUSINESS DAY" means any day other than a Saturday, Sunday or
other day on which banking institutions in New Jersey are authorized or required
by law to be closed.
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CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
"BUY-OUT NOTICE" has the meaning ascribed thereto in SECTION
16.1.
"BUY-OUT OPTION" has the meaning ascribed thereto in SECTION
16.1.
"CAPITAL" means AT&T Capital Corporation, a Delaware corporation,
and its successors and permitted assigns.
***
"CEO" has the meaning ascribed thereto in SECTION 11.3(a).
"CHANGE OF CONTROL" means, with respect to a Person, the
occurrence of any of the following events: (a) the consummation of a merger or
consolidation of the Person with any other entity resulting in holders of the
Person's voting Securities receiving less than 50% of the voting Securities of
the surviving entity; (b) the sale, lease, exchange or transfer of all or
substantially all of the Person's assets; (c) the approval by the holders of the
Person's voting Securities of any plan or proposal for the liquidation or
dissolution of the Person; (d) the acquisition by any other Person of *** or
more of the outstanding voting power of the Person's Securities; or (f) a change
in a majority of the directors of the Person in any period of less than two
years, not counting persons elected or nominated by a vote of at least
two-thirds of the directors in office at the beginning of such period or whose
election or nomination was previously so approved; provided, however, that no
transaction with respect to an NCT Entity shall constitute a Change of Control
hereunder if, following such transaction, 100% of the capital stock or equity
interests in such NCT Entity is owned directly or indirectly by Newcourt.
"CODE" means the Internal Revenue Code of 1986, as amended, or
any successor Federal income tax code.
"COMMENCEMENT DATE" has the meaning ascribed thereto in SECTION
15.1(a).
"CREDIT LOSS RESERVE" means the credit loss reserve for LTPF
established from time to time by LTPF which is intended to provide for LTPF's
future expected or estimated credit losses on all Finance Contracts included
within the Old Portfolio and the New Portfolio at the time the amount of the
reserve is established. The amount of the Credit Loss Reserve shall be
established by LTPF pursuant to the Annual Operating Plan, evaluating all
relevant factors and criteria with respect thereto including the historical
performance of the Old and New Portfolio, trends and standards in the industry
for losses and reserves and all other published industry credit loss information
which is relevant to the establishment of the Credit Loss Reserve. The adequacy
of, and the method for calculating, the Credit Loss Reserve shall be evaluated
and, as necessary, adjusted by LTPF, from time to time, but in no event less
than annually.
"CUSTOMER" means any Person that is an end user of Products, and
does not include Authorized Dealers.
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CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
"CUSTOMER FINANCING" means any direct or indirect (i) financing
of the sale, lease or other furnishing of Products by Lucent Entities (or
Authorized Dealer) to Customers, and includes, without limitation, Finance
Contracts entered into directly with Customers and (ii) purchase or financing of
receivables arising form such sales, leases or other furnishings of Products by
Lucent Entities (or Authorized Dealer).
"CUSTOMER OUTSOURCING PROGRAM" means any program of Lucent
Entities for the acquisition, maintenance and/or operation by Lucent Entities of
telecommunications, computer, data and/or information networks or operations for
Customers and Authorized Dealers under what is generally referred to in the
industry as an outsourcing or network or systems management contract
("Outsourcing Contract") between the applicable Customer and the applicable
Lucent Entities.
"DEALER FINANCING" means any direct or indirect (i) financing of
the purchase or lease by Authorized Dealers of Products for resale or re-lease
to Customers, including, without limitation, floor planning loans and other
forms of inventory financing and (ii) provision of other types of secured loans
to such Authorized Dealers.
"DEDICATED EMPLOYEES" has the meaning ascribed thereto in SECTION
16.3(f).
"DISCOUNT RATE" means, for any Funding Date, a per annum rate
equal to (a) the Discount Rate Margin plus (b) the Weighted Average Terms
Treasury Rate.
"DISCOUNT RATE MARGIN" means, initially, *** as modified in
accordance with SECTION 3.4.
"DISCOUNT RATE PROPOSAL" has the meaning ascribed thereto in
SECTION 3.4.
"DOLLARS" and "$" mean the lawful money of the United States of
America.
***
"ESTIMATED RESIDUAL VALUE" means the estimated residual value, at
the end of the term of the Finance Contract of the Financed Product, as
determined by LTPF at the inception of the Financing in accordance with GAAP and
the Annual Operating Plan.
"FINANCE CONTRACT" means a lease, conditional sale contract,
promissory note or other financing contract, entered into between LTPF (or NCT
on behalf of LTPF) and a Customer from time to time with respect to a Financing
and any and all amendments, riders and other documents which pertain thereto.
"FINANCE MARKETING SUPPORT" has the meaning ascribed thereto in
SECTION 6.1(a).
"FINANCED PRODUCTS" means Products with respect to which
Financing has been provided.
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CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
"FINANCEABLE PRODUCTS" means all Products (other than consumables
or maintenance, service or similar contracts) sold to Customers within the
applicable area and marketing channel.
"FINANCING" means Customer Financing, Dealer Financing and
Outsource Financing.
***
"FINANCING SERVICES" means the offering or providing of (i)
Financings with respect to the sale or furnishing of Products and related
services by Lucent including, without limitation, leases, installment sales
contracts, conditional sales contracts and loans (whether secured or unsecured)
and (ii) any other forms of financing or extensions of credit.
"FUNDING DATE" shall have the meaning set forth in SECTION
3.2(a).
"GAAP" means generally accepted accounting principles in the
United States, consistently applied, as may be in effect from time to time.
"IMPLICIT RATE" means the annual implicit rate of return under a
Finance Contract, as calculated by LTPF utilizing (a) generally accepted
financial principles; (b) the Estimated Residual Value (the future value for
purposes of such calculation); (c) the True Product Cost (the present value for
purposes of such calculation); and (d) the Payment Stream (the payments for
purposes of such calculation).
"INFORMATION SUPPORT" has the meaning ascribed thereto in SECTION
6.1(e).
"INITIAL TERM" has the meaning ascribed thereto in SECTION
15.1(a).
"INTERCOMPANY AGREEMENT" means the Intercompany Agreement between
Capital and AT&T dated as of June 25, 1993, to the extent such agreement applies
to Lucent pursuant to a letter agreement dated as of April 2, 1996, regarding
"Applicability of Intercompany Agreement to Lucent Technologies, Inc." among
Lucent, AT&T and Capital.
"INVESTMENT BALANCE" means as of any date of determination with
respect to a Finance Contract, an amount equal to (a) all Payments due, past
due, and to become due LTPF under such Finance Contract (excluding rental taxes,
if applicable), discounted to their then net present value using the Discount
Rate for such Finance Contract as of the Funding date for such Finance Contract,
plus ***.
"LIBOR" means, for any month, a rate of interest determined on
the basis of at least two offered rates for deposits in United States dollars
for a 30 day period appearing on the Reuters Screen LIBO Page as of 11:00 a.m.
(London time) on the day that is two London business days prior to the first day
of such month. If at least two such offered rates appear on the Reuters Screen
LIBO Page, the rate with respect to the month will be the arithmetic
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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
average (rounded upwards to the next 1/16th of 1%) of such offered rates. If
fewer than two offered rates appear, LIBOR in respect of that month will be
determined on the basis of the rates at which deposits in United States dollars
are offered by The Chase Manhattan Bank at approximately 11:00 a.m. (London
time) on the day that is two London business days preceding the first day of
such month to prime banks in the London interbank market for a 30 day period
commencing on the first day of such month.
"LICENSE AGREEMENT" means the License Agreement between Capital
and AT&T dated as of June 25, 1993, to the extent such agreement applies to
Lucent pursuant to a letter agreement dated as of April 2, 1996 regarding
"License to Use Lucent Name and Mark" among Lucent, AT&T and Capital.
"LOCATION SUPPORT" has the meaning ascribed thereto in SECTION
6.1(c).
"LTPF" has the meaning ascribed thereto in SECTION 2.1.
"LUCENT" has the meaning ascribed thereto in the preamble.
"LUCENT ENTITIES" means Lucent (and its successors) and all
Persons that constitute Subsidiaries of Lucent from time to time.
"LUCENT MANAGEMENT FEE" has the meaning ascribed thereto in
SECTION 4.1(a).
"LUCENT RESPONSIBILITY" has the meaning ascribed thereto in
SECTION 9.2(b).
"MAJORITY VOTE" means, with respect to actions by the Operating
Committee, *** of the *** votes which can be cast.
"MARKS" means the Lucent trade names, trademarks and service
marks specified on SCHEDULE 1.1, which shall be agreed to by the parties within
30 days of the date of this Agreement and which may be updated or modified from
time to time by mutual agreement of the parties.
"MEMBERS" means the Persons designated to serve on the Operating
Committee in accordance with SECTION 11.2(a).
"MONTHLY PAYMENT DATE" means the fifteenth calendar day of each
calendar month during the Term (except for that calendar month or portion
thereof which occurs during the Initial Term), and if such date is not a
Business Day, the next succeeding Business Day.
"NCT" shall mean Newcourt and/or one or more of its Subsidiaries
reasonably acceptable to Lucent which shall be performing under this Agreement
or provide Financing.
8
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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
"NCT PURCHASER" means the Newcourt Entitiy through which LTPF
shall be deemed to be operating in order to most efficiently and effectively
underwrite transactions in a given country, channel or product line.
"NEW PORTFOLIO" means the Finance Contracts and related equipment
subject thereto which are originated by the Newcourt Entities through LTPF after
***.
"NEW PORTFOLIO FEE BASE" means, in any month, all New Portfolio
Proceeds realized by LTPF.
"NEW PORTFOLIO PROCEEDS" means, in any month, an amount equal to:
(a) the net present value of the Payment Stream under each Finance Contract
originated in the New Portfolio during such month, calculated as of the
applicable Funding Date for each Finance Contract, ***, minus (b) the net
present value of the Payment Stream under each such Finance Contract, calculated
as of the applicable Funding Date for each Finance Contract, utilizing ***; plus
(c) all proceeds realized by LTPF during such month from *** with respect to
Products subject to Finance Contracts included within the New Portfolio which
proceeds are in excess of the *** and which are net of all costs and expenses
incurred by LTPF in connection with such sale or other disposition ***.
"NEWCOURT" means Newcourt Credit Group Inc., an Ontario
corporation, and its successors.
"NEWCOURT ENTITIES" means Newcourt and all Persons that
constitute Subsidiaries of Newcourt from time to time.
"NEXT YEAR" has the meaning ascribed thereto in SECTION 3.4.
"NON-RENEWAL NOTICE" has the meaning ascribed in SECTION 15.1(a).
"NOTIFICATION" means all notices permitted or required to be
given to any Person hereunder. Such Notification must be given in writing and
will be deemed to be duly given on the date of delivery if delivered in person
or sent by facsimile transmission or on the earlier of actual receipt or 3
Business Days after the date of mailing if mailed by registered or certified
mail, first class postpaid, return receipt requested, to such Person, at the
last known address of such Person.
"NOTIONAL EQUITY CHARGE" means, in any month, the sum of the
following items which are properly allocable to such month:
(a) an amount equal to (i) *** of the *** for each Finance
Contract deemed to be purchased by NCT from LTPF during such month multiplied
by (ii) the *** then in effect; and
(b) an amount equal to (i) (A) the aggregate amount of all
outstanding *** as of the end of the previous month plus the aggregate amount
of all outstanding
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CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
*** as of the end of the current month, divided by (B) 2, multiplied by (ii)
the *** then in effect.
"NOTIONAL FEE BASE" shall have the meaning set forth in SECTION
4.2.
"NOTIONAL FEE CHARGES" means, in any month, the following:
(a) all of the following expenses incurred during such month by
or on behalf of LTPF, determined in accordance with GAAP, which are properly
allocable to LTPF:
(i) ***
(ii) all credit losses of LTPF under the Old Portfolio or New Portfolio
which are in excess of the Credit Loss Reserve, and
(iii) all SG&A Expenses; plus
(b) the Notional Equity Charge for such month; plus
(c) any net increase in the Credit Loss Reserve during such
month; minus
(d) any net decrease in the Credit Loss Reserve during such
month; plus
(e) any residual value insurance premiums.
"NOTIONAL RESIDUAL EQUITY RATE" means for one year the period of
*** through ***, an annual rate of interest equal to ***, compounded monthly,
and for each succeeding one year period ending on ***, an annual rate of
interest, compounded monthly, equal to the sum of (x) the average asking yield
for U.S. Treasury Notes with maturities one year from the last day of
immediately preceding one year period, as published in The Wall Street Journal,
plus (y) *** basis points.
"NOTIONAL STREAM EQUITY RATE" means a monthly rate of interest
equal to *** during the period of *** through ***, and thereafter during each
month, a monthly rate of interest equal to (i) (a) the sum of (x) LIBOR, plus
(y) *** basis points, divided by (b) 12, or if LIBOR can not be determined prior
to the first day of the month, the parties shall equitably adjust the formula
using the Prime Rate or such other measure as the parties shall mutually agree.
"NOTIONAL THIRD PARTY DIRECT FEES" means all gross fees, income
or revenues received by LTPF for any Financings or Ancillary Services performed
by a third party financing source on behalf of LTPF or which contracted with
LTPF to provide such Financings or Ancillary Services.
"NOTIONAL THIRD PARTY INDIRECT FEES" means any net fees, income
or revenue (after all related costs , expenses and charges of Lucent Entities)
received by Lucent Entities if (i) a third party financing source is selected by
LTPF to provide Financings or Ancillary Services for a particular market channel
or geographic region or a Product line within a particular market channel or
geographic region, (ii) ***, and (iii) ***.
10
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
"OLD PORTFOLIO" means the Old Securitized Portfolio and the Old
Unsecuritized Portfolio.
"OLD PORTFOLIO BASE RTE" means a cumulative *** return *** on
equity to Newcourt of ***, compounded monthly, with respect to the average net
book value of (a) the ***, (b) the ***, and (c) the net of any other balance
sheet accounts pertaining to the items described in clauses (a) and (b) hereof
(all as reflected on Newcourt's books maintained in accordance with GAAP without
regard to any sale, syndication or securitization of the Finance Contracts ***),
determined utilizing a notional debt to equity ratio of ***.
"OLD PORTFOLIO FEE BASE" means in any month, all Old Securitized
Portfolio Proceeds and all Old Unsecuritized Portfolio Proceeds realized by
Newcourt in excess of the Old Portfolio Base RTE.
"OLD SECURITIZED PORTFOLIO" means the Finance Contracts and any
related equipment subject thereto being serviced by Capital or its Subsidiaries
that were originated by Capital or its Subsidiaries prior to ***, and sold,
syndicated or securitized prior to such date ***.
"OLD SECURITIZED PORTFOLIO PROCEEDS" means, in any month (a) the
*** included with the Old Securitized Portfolio determined in accordance with
GAAP, plus (b) the income recognized by LTPF during such month *** of the Old
Securitized Portfolio that was sold, syndicated or securitized ***, plus (c) any
gain or loss realized by LTPF during such month in connection with *** of the
Old Securitized Portfolio, determined in accordance with GAAP, ***, plus (d) any
*** realized by LTPF during such month with respect to the Old Securitized
Portfolio, which *** shall be determined in accordance with ***.
"OLD UNSECURITIZED PORTFOLIO" means the Finance Contracts and any
related equipment subject thereto being serviced by Capital or its Subsidiaries
that were originated by Capital or its Subsidiaries prior to ***, but which are
not included within the Old Securitized Portfolio.
"OLD UNSECURITIZED PORTFOLIO PROCEEDS" means, in any month (a)
the *** included within the Old Unsecuritized Portfolio, determined in
accordance with GAAP without regard to any sale, syndication, or securitization
of such Finance Contracts; plus (b) any gain or loss realized during such month
in connection with *** of the Old Unsecuritized Portfolio, determined in
accordance with GAAP, ***.
"OPERATING AGREEMENT" means the Lucent Operating Agreement
between Capital and Lucent dated as of April 2, 1996.
"OPERATING COMMITTEE" means the Operating Committee designated in
accordance with SECTION 11.1.
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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
"ORIGINAL AGREEMENTS" has the meaning ascribed thereto in the
preamble hereto.
"OUTSOURCE FINANCING" means any direct or indirect financing
(including, without limitation, through secured loans and leases) of or with
respect to any Customer Outsourcing Program.
"OWNED AND MANAGED ASSETS" shall mean the Old Portfolio assets
and New Portfolio assets which are managed by LTPF. For purposes of this
definition, the value of portfolio assets that have been securitized will be
equal to the present value of the contracted lease or loan payments discounted
at the implicit rate of the financing.
"PARTIAL TERMINATION NOTICE" has the meaning ascribed thereto in
SECTION 15.3(a).
"PAYMENT STREAM" means the fixed monthly or periodic amounts a
Customer is required to pay under the terms of a Finance Contract and shall not
include any end of the term extension, renewal or buy-out payment.
"PERFORMANCE METRICS" means the performance metrics *** set forth
in the then current Annual Operating Plan, as modified from time to time by the
parties for the following measures of LTPF's performance: ***.
"PERMITTED GENERAL PURPOSES" means, with respect to the use of
the Marks by Newcourt Entities, the use of such Marks solely in connection with
the operations of LTPF for purposes of identifying NCT as the provider of
Financing Services or such Ancillary Services as Lucent may agree to Customers
(including, without limitation, in agreements, letterheads, brochures, building
directories, signs, computer programs, newsletters and other publications and
other forms of communication or advertising).
"PERSON" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization, government (and any department
or agency thereof) or other entity.
"PERSONNEL SUPPORT" has the meaning ascribed thereto in SECTION
6.1(b).
"PRIME RATE" means, for any month, the rate of interest per annum
publicly announced by The Chase Manhattan Bank as its prime rate in effect at
its principal office in New York City as of the first day of that month.
"PRODUCTS" means any products (including, without limitation,
related Software licenses, but not including real estate) and related
installation and maintenance services provided, furnished, manufactured, sold
and/or marketed by BCS which results in revenue or income to BCS, and such
additional Lucent goods or services as the parties may from time to time agree.
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406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
"RENEWAL TERM" has the meaning ascribed thereto in SECTION 15.1.
"REPLACEMENT FUNDING AGREEMENT" has the meaning ascribed thereto
in SECTION 3.4.
"RESIDUAL INVESTMENT" means the present value, as of the Funding
Date, of the Estimated Residual Value discounted at the Implicit Rate.
"RETROACTIVE DATE" means ***.
***
"SALES SITE" means any site, office or location from which Lucent
conducts the sale or marketing of Products.
"SERVICE AREAS" has the meaning ascribed thereto in SECTION
2.3(a).
"SENIOR MANAGEMENT EXECUTIVES" has the meaning ascribed thereto
in SECTION 14.3.
***
"SG&A EXPENSES" means, with respect to any period, all expenses
or costs incurred by LTPF or allocated to LTPF from other sources (e.g., from a
Lucent Entity or Newcourt Entity) in connection with the management, operation,
promotion or administration of LTPF which are properly deductible in accordance
with GAAP as an expense for such period, including but not limited to salaries &
benefits (including commissions); bonuses; relocation expenses; travel, living
and conferences; dues and memberships; occupancy costs; professional fees; data
processing costs; telecommunications costs; operational expenses; external
administration costs (including warehousing, portfolio servicing, debt
servicing, etc.); repairs and maintenance for off-lease equipment, repossession
and restructuring charges; advertising and promotions; supplies, postage and
contributions; trustee fees; outside printing; subscriptions and memberships;
and loss on disposal of support assets.
"SIGNIFICANT ACCOUNT" means an Authorized Dealer or a Customer
that (i) has one or more Finance Contracts with an aggregate accounting net
investment balance in excess of *** (ii) has been designated by BCS as a Global
account, or (iii) has been reasonably designated by BCS as a "Significant
Account" by notice to LTPF.
"SOFTWARE" means any Product comprising intellectual property
commonly or generically known as software, together with related storage disks
and instructional and other documents, the acquisition or use of which by any
Person is customarily financed by NCT Entities.
"STANDARD DOCUMENTS" means forms of documents prepared (and
periodically revised) by NCT Entities in connection with the offering of various
types of Financings and
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406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Ancillary Services, including forms of leases, loan agreements, security
agreements, guarantees, financing statements and other documents appropriate for
the conducting of NCT Entities' business of providing Financing and Ancillary
Services.
"START-UP DATE" means the date on which LTPF commences
operations, which date shall be as soon as reasonably practicable following the
Commencement Date.
"SUBSIDIARY" means, with respect to any Person, any other Person
which is directly or indirectly controlled by such Person. For purposes of this
definition, "control", as applied to any Person, means the possession, directly
or indirectly, of the power to vote a majority of the securities having voting
power for the election of directors (or other Persons acting in similar
capacities) of such Person or otherwise to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
"SYSTEMS SUPPORT" has the meaning ascribed thereto in SECTIONS
5.3(b) AND 6.1(d).
"TERM" means the Initial Term and any Renewal Term.
"TRANSITION PERIOD" has the meaning ascribed thereto in SECTION
15.1(b).
"TRUE PRODUCT COST" means the price shown on the invoice for the
Financed Product, including any applicable sales and similar taxes, shipping,
installation and other costs, less any down payments or capital cost reductions
made by the Customer and any discounts paid or payable to Customer.
"U.S. RATING AGENCY" means any of the following: ***.
"VIRTUAL PURCHASE PRICE" means, with respect to each Finance
Contract, the present value, as of the Funding Date, of the Payment Stream,
discounted at ***.
***
"WEIGHTED AVERAGE TERMS TREASURY RATE" means a rate equal to the
average of the asking yield for Treasury Notes with a period to maturity
equivalent to the weighted average of the original term (rounded to the nearest
month) of all Finance Contracts added to the New Portfolio on a Funding Date, as
published in The Wall Street Journal, for each Funding Date.
SECTION 1.2. CORRELATIVE MEANINGS. Capitalized terms used herein without
definition (such as "Financed") that have correlative defined terms (such as
"Financing") will have a meaning correlative to the defined term.
14
ARTICLE II
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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
LEASING VEHICLE
SECTION 2.1 LEASING VEHICLE--LTPF.
(a) NCT shall cooperate with Lucent to provide Financing Services and
Ancillary Services using the name "Lucent Technologies Product Finance" ("LTPF")
or such other name as the parties hereto may agree. LTPF shall be a division of
one or more Newcourt Entities (which is managed as provided in this Agreement)
and, for all purposes including legal, tax and accounting purposes, shall not be
a corporation, partnership, joint venture, limited liability company or any
other form of distinct legal entity separate from NCT. NCT shall maintain fair,
accurate, detailed, independent and separate books and records for purposes of
reflecting the financial status of, results of operations of, and for gauging
the business efficiency of LTPF and determining the separate fee payments to be
made by NCT to Lucent hereunder, including the provision of credit by third
parties with whom NCT contracts.
(b) Lucent and NCT shall at all times be and remain independent
contractors with respect to each other and the operation of LTPF and neither
shall have any fiduciary duty to the other as a partner, co-venturer, joint
owner or the like.
SECTION 2.2 PURPOSE. The primary purpose of NCT in operating LTPF will be to
support and enhance sales of Products by providing for its sole profit
integrated Financing Services and Ancillary Services for Customers and
Authorized Dealers in all direct and indirect marketing channels worldwide.
Financing Services and Ancillary Services will cover Products, but may also
include incidental related products and services (which may be manufactured,
marketed or sold by third parties). LTPF may engage in such other business
activities related to the purpose set forth above (including providing
additional financial products and asset management services) as are approved by
the parties.
SECTION 2.3 SCOPE OF LTPF SERVICES.
(a) LTPF shall be the select provider of Financing Services (directly or
indirectly) for the geographic areas set forth in the initial Annual Operating
Plan (each such area being a "Service Area") ***, except that initially the only
Service Areas shall be the United States and Canada.
(b) New Service Areas (i.e., geographic areas or specific channels
within geographic areas) will be added as LTPF demonstrates that it has the
ability to (i) commence providing Financing Services within the period set forth
in the Annual Operating Plan (or any proposed amendment thereto) on a ready and
competitive basis and (ii) meet the Performance Metrics for the new Service
Area. New Services Areas shall be designated or added by ***. LTPF shall be
considered for any potential new Service Area, and Lucent and Newcourt agree
that their preference is to have LTPF be the Financing Service provider for a
potential Service Area ***.
(c) If a new Service Area is added, LTPF shall meet the time
requirements set forth in the Annual Operating Plan to begin providing Financing
Services in the new Service Area and shall begin meeting the Performance Metrics
within the timeframes set forth in the Annual
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PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Operating Plan for the new Service Area. If LTPF fails to begin providing
Financing Services within the required time, or fails to meet the Performance
Metrics, the Service Area shall become subject to partial termination pursuant
to the provisions of SECTION 15.3.
(d) LTPF will select, for any Service Area and any market channel,
geographic region or Product line within a Service Area, the financing or
funding source best able in its opinion (and reasonably acceptable to Lucent) to
meet the service and performance requirements of Lucent.
(e) The goal of Newcourt and Lucent is that LTPF eventually have the
capability to be the worldwide provider directly and indirectly of Financing
Services for the sale of Products and that as LTPF develops these capabilities
and performs under this Agreement, more areas may be added as Service Areas.
SECTION 2.4 LOCATION. LTPF will have its administrative headquarters in New
Jersey (or such other location as the parties may agree). The parties shall
determine an suitable co-location plan with respect to the appropriate employees
of Lucent and LTPF in accordance with the primary purpose of LTPF as described
in SECTION 2.2 above.
ARTICLE III
CERTAIN MECHANICS AND PROCEDURES RELATING TO
FINANCINGS UNDERTAKEN BY LTPF
SECTION 3.1 IN GENERAL. All Financings shall be booked in the name of LTPF or
such other names as shall from time to time be designated by LTPF. Except as
otherwise set forth herein, LTPF shall maintain segregated books and records for
business of LTPF including all transactions and activities relating to the Old
Portfolio and the New Portfolio as if LTPF were a separate entity as opposed to
a division of one or more NCT entities. All such books and records shall be
maintained in accordance with GAAP, except as otherwise directed by the
Operating Committee in order to reflect the virtual nature of LTPF.
SECTION 3.2 LTPF PAYMENTS TO LUCENT.
(a) True Product Cost. On the Business Day immediately following the
date on which NCT receives such customary documents as NCT and the Operating
Committee may from time to time require in order to evidence the origination of
a Financing, LTPF shall pay Lucent or its designees on the aggregate True
Product Costs with respect to Financings originated on that immediately
preceding Business Day (such date on which LTPF is required to fund Lucent or
its designee shall be referred to as a "Funding Date").
(b) ***
SECTION 3.3 NCT VIRTUAL PURCHASE. (a) Pursuant to the terms and conditions of
this Agreement, LTPF shall be deemed to have sold, assigned and conveyed to the
NCT Purchaser
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PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
on each Funding Date all LTPF rights in the Payment Stream for each Financing
Contract originating on that Funding Date.
(b) The purchase price which NCT shall be deemed to have paid to LTPF in
consideration of its deemed sale to NCT of a Finance Contract shall be the
Virtual Purchase Price.
SECTION 3.4 ADJUSTMENT TO DISCOUNT RATE. *** LTPF shall deliver to Lucent a
written proposal ("Discount Rate Proposal") setting forth the applicable
"Discount Rate Margin" to be used in determining the Virtual Purchase Price for
Finance Contracts ***. Lucent shall have a period of 45 days after LTPF's
delivery to Lucent of the Discount Rate Proposal to (i) accept the Discount Rate
Proposal with respect to all Finance Contracts originated ***, which acceptance
shall be in writing; or (ii) reject the Discount Rate Proposal with respect to
all Finance Contracts originated ***. If Lucent accepts the Discount Rate
Proposal, then the applicable Discount Rate Margin set forth in the Discount
Rate Proposal shall become effective, as of ***, with respect to all Finance
Contracts and such Discount Rate Margin shall be deemed to replace the
definition of Discount Rate Margin in the Agreement. Conversely, if Lucent
rejects the Discount Rate Proposal, then ***.
ARTICLE IV
NOTIONAL FEE BASE AND MANAGEMENT FEE
SECTION 4.1 LUCENT MANAGEMENT FEE
(a) NCT shall pay to Lucent (the "Lucent Management Fee"): (i) on each
of the first *** consecutive Monthly Payment Dates (beginning ***), an amount
equal to *** of the Adjusted Notional Fee Base for the immediately preceding
calendar month; (ii) on *** Monthly Payment Dates, an amount equal to *** of the
Adjusted Notional Fee Base for the immediately preceding calendar month; and
(iii) on *** Monthly Payment Dates, an amount equal to *** of the Adjusted
Notional Fee Base for the immediately preceding calendar month ***.
(b) If the Adjusted Notional Fee Base is ever less than $0, then any
such deficiency (a "Deficiency") shall be subtracted from the Adjusted Notional
Fee Base in each of the next succeeding months until such time as the Adjusted
Notional Fee Base for any of such months is a positive number. In no event shall
Lucent ever have any liability or obligation to NCT to repay any portion of the
Lucent Management Fee or compensate NCT for any portion of a Deficiency;
provided, however, this sentence shall not prohibit NCT from receiving from
Lucent any portion of any Lucent Management Fee which is in excess of the proper
amount of such Fee as determined pursuant to any audit of the books and records
of LTPF pursuant to SECTION 4.4.
SECTION 4.2 NOTIONAL FEE BASE
The notional fee base ("Notional Fee Base") for each period during the
Term shall be equal to: (a) the Old Portfolio Fee Base, plus (b) the New
Portfolio Fee Base, plus (c) Notional
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PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Third Party Direct Fees, plus (d) Notional Third Party Indirect Fees minus (e)
all Notional Fee Charges, in each case determined on an accrual basis for the
period to which the Notional Fee Base relates.
SECTION 4.3 RETROACTIVE ECONOMIC BENEFITS. Within 30 days after the Commencement
Date, NCT shall pay to Lucent an amount equal to *** of NCT's estimate of the
*** for the period beginning *** and ending *** utilizing the methodology set
forth in the initial Annual Operating Plan. NCT shall provide Lucent with
detailed, supporting information as to NCT's calculation of the amount of such
payment. For a period of thirty (30) days after the date on which such sum is
paid (the "True-up Period"), either NCT or Lucent may propose any adjustments to
such payment amount. At the end of such thirty (30) day period, if the agreed
upon adjustments indicate that NCT has overpaid Lucent, Lucent shall pay NCT
such overpayment, or if such adjustments indicate NCT has underpaid such
payment, NCT shall pay Lucent such underpayment.
SECTION 4.4 RIGHT TO INSPECT AND AUDIT. At any time during the Term, Lucent
shall have the right at reasonable times and places, to inspect and audit any
NCT records or books of account necessary to determine the fairness and accuracy
of the Lucent Management Fee and NCT's efficient operation of LTPF and
achievement of the Performance Metrics. For these purposes NCT will secure the
full cooperation of its personnel and any independent accountants who have
examined such books and records for NCT or otherwise reported on the fair and
accurate nature of NCT's financial statements. Such full cooperation will
include granting Lucent access to any such accountant's work papers.
ARTICLE V
COVENANTS OF NEWCOURT ENTITIES
SECTION 5.1 FINANCING SERVICES PROVIDED BY LTPF.
(a) LTPF shall, during the Term of this Agreement and within the Service
Areas, through Newcourt Entities or third parties reasonably acceptable to
Lucent:
(1) provide Financing Services and Ancillary Services to
Customers and Authorized Dealers;
(2) as BCS introduces new Products, use its good faith efforts,
in cooperation with Lucent, to modify existing or devise new Financing Services
and Ancillary Services to support the sale, lease or other furnishings of such
new Products;
(3) cooperate with BCS and Authorized Dealers, as requested, in
promoting and advertising the availability of the Financing Services and
Ancillary Services to Customers, including providing their sales and marketing
personnel with information with respect to such Financings and Ancillary
Services and generally responding to inquiries made by Customers or
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PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
the employees of BCS or Authorized Dealers with respect to such Financing
Services and Ancillary Services;
(4) prepare Standard Documents for use in connection with
standardized types of Financings and maintain the capacity to (A) modify such
Standard Documents to document particular Financings and Ancillary Services and
(B) prepare appropriate documentation for any customized Financings and
Ancillary Services that LTPF may offer to particular Customers or Authorized
Dealers pursuant to this Agreement;
(5) cooperate with BCS and Authorized Dealers to facilitate
Financings (including, where appropriate, extensions, renewals or modifications
of existing Financings) of replacements or upgrades of Financed Products or
additions of Products to previously Financed Products (subject to adequate
protection of the interests of LTPF in any Financings that would be affected
thereby);
(6) employ or retain personnel having the requisite financial,
legal and other skills to respond to the requests of Customers or Authorized
Dealers with respect to unusual, specialized or complex Financings and Ancillary
Services; and
(7) endeavor to maintain good relations with Customers and
Authorized Dealers and, by offering courteous, efficient and informed Financing
Services and Ancillary Services, promote and support the efforts of BCS and
Authorized Dealers to sell, distribute and market the Products.
(b) In connection with the activities described in paragraph (a) above,
NCT shall, during the term of this Agreement and within the Service Areas:
(1) employ and train appropriate personnel and maintain, adapt
and upgrade its telecommunications, information-processing and record-keeping
systems as it deems necessary or appropriate for the purpose of carrying out
such activities; and
(2) obtain and maintain such franchises, licenses and permits as
it deems necessary or appropriate for the purpose of carrying out such
activities.
SECTION 5.2 TRAINING OF LUCENT PERSONNEL. LTPF shall conduct training programs
for appropriate sales personnel employed by Lucent and Authorized Dealers at
which such individuals shall be trained in the proper documentation of
Financings, the techniques of using Financing Services and Ancillary Services
offered by LTPF as sales tools and the details of such Financing Services and
Ancillary Services. LTPF shall also provide appropriate training and assistance
to the Lucent Entities' operational and office support personnel with respect to
the implementation of any procedures for implementing Financing Services, the
electronic systems interfaces between the Lucent Entities and the NCT Entities'
computer systems and related matters.
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PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
SECTION 5.3 PROVIDING LUCENT WITH INFORMATION AS TO FINANCINGS AND FINANCE
MARKETS. (a) LTPF shall provide to Lucent on a monthly basis (or as otherwise
reasonably requested) information concerning levels of applications for and
approvals of Financings and Ancillary Services, turn-around times for processing
applications for Financings and Ancillary Services, levels of completed and
outstanding Financings, payment and delinquency histories with respect to
Financings and Ancillary Services, and any other information with respect to
Financings and Ancillary Services under this Agreement reasonably requested by
Lucent, including on a monthly basis specific reports showing Customer
end-of-term status.
(b) NCT shall permit and facilitate reasonable and appropriate
linkages between the NCT Entities' and Lucent Entities' computer and
telecommunications systems for the purpose of retrieving and transmitting
between the systems information and documentation in connection with the
offering, documentation and monitoring of Financings and Ancillary Services
(including the information described in SECTION 5.3(a) and otherwise
facilitating the efficient implementation of the relationships and activities
contemplated in this Agreement as more fully described in the Annual Operating
Plan (which type of support is referred to herein as "Systems Support");
SECTION 5.4 SUPPORTING WORLDWIDE ACTIVITIES. LTPF will perform any commercially
reasonable services required by Lucent to facilitate centralized control for
Lucent to track and monitor Customers and Customer Financings. BCS and NCT will
use all commercially reasonable efforts to have any other financing sources
operate through LTPF to help in this worldwide coordination and control. ***
ARTICLE VI
COVENANTS OF LUCENTARTICLE COVENANTS OF LUCENT
SECTION 6.1 SUPPORT OF NCT ENTITIES.
Lucent agrees that during the Term of this Agreement in connection with
the offering or provision of Financing Services or Ancillary Services in the
Service Areas by LTPF:
(a) Lucent shall promote LTPF to Customers and Authorized Dealers
as its select provider of Customer Financings and Dealer Financings, as
appropriate, and Ancillary Services made available by LTPF (which type of
support described in this paragraph is referred to herein as "Finance Marketing
Support"), in the Service Areas. Lucent covenants and agrees that Lucent's sales
representatives engaged in the sale or marketing of Products for which LTPF
offers Customer Financing or Dealer Financings or Ancillary Services shall be
made aware of Lucent promotional and informational literature provided by LTPF
concerning such Financing Services and Ancillary Services and, where
appropriate, Standard Documents. Lucent covenants and agrees that such sales
representatives shall make Financing options offered by LTPF known to Customers
and Authorized Dealers interested in Financing the purchase, lease or other
acquisition of Products and, where appropriate, shall make the Ancillary
Services offered by LTPF known to such Customers and Authorized Dealers. In
addition, Lucent covenants and agrees that such sales representatives shall make
the
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PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
existence of LTPF Financing Services and Ancillary Services of LTPF known to
Customers and Authorized Dealers.
(b) Lucent shall cooperate with LTPF by causing Lucent sales
representatives to make available to Customers and Authorized Dealers access to
LTPF Customer Financings and Dealer Financings and, as appropriate, Ancillary
Services, and to provide training to appropriate personnel employed by LTPF with
respect to the Products and the sales and marketing thereof (which type of
support described in this paragraph is referred to herein as "Personnel
Support").
(c) Lucent shall provide appropriate personnel of designate by
LTPF with office space at appropriate Sales Sites and appropriate office support
services on the terms and conditions set forth in SCHEDULE 6.1 attached hereto
and made a part hereof (which type of support is referred to herein as "LOCATION
SUPPORT");
(d) Lucent shall permit and facilitate reasonable and appropriate
linkages between the Newcourt Entities' and Lucent Entities' computer and
telecommunications systems for the purpose of retrieving and transmitting
between the systems information and documentation in connection with the
offering, documentation and monitoring of Financings and Ancillary Services and
otherwise facilitating the efficient implementation of the relationships and
activities contemplated in this Agreement (which type of support shall be
referred to "Systems Support");
(e) Lucent shall, subject to confidentiality terms of this
Agreement, provide to LTPF appropriate information with respect to Lucent's
Product development and marketing plans for the purposes of permitting LTPF to
more effectively design appropriate programs for Financing Services and
Ancillary Services and to determine the likely residual values of Products
(which type of support described in this paragraph is referred to herein as
"Information Support"). Without limiting the foregoing, Lucent shall keep LTPF
informed on a regular and timely basis of Product development and marketing
plans and results to the extent Lucent deems it relevant to the activities
contemplated under this Agreement. Lucent agrees that Lucent shall also provide
LTPF with appropriate information within the possession or control of Lucent
that is relevant to an analysis of the credit standing of any Customer or
Authorized Dealer proposed to directly or indirectly receive Financing Services
or Ancillary Services from LTPF.
SECTION 6.2 OTHER FINANCING SOURCES.
(a) Subject to SECTION 2.3, this Agreement shall, at any time, apply
only to the then current Service Areas, ***, and in any areas which are not
Service Areas, Lucent may, subject to SECTION 2.3, provide or set up any
Financing or Ancillary programs with any Persons Lucent Entities may desire. ***
(b) Notwithstanding the other provisions of this ARTICLE VI, Lucent may,
but shall not be required to, provide to LTPF any (i) Finance Marketing Support
in connection with any Customer Outsourcing Program, (ii) Location Support or
Systems Support in connection with
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PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
any Customer Outsourcing Program in addition to that currently provided by
Lucent, and (iii) Information Support in connection with any Customer
Outsourcing Program except that Lucent shall provide information to NCT relating
to the specific Products being Financed by NCT in connection with any Customer
Outsourcing Program. In addition to the foregoing, Lucent may, in connection
with any Customer Outsourcing Program with any Customer, without providing a
right to bid thereon to LTPF or NCT, (x) guarantee or assume the payment
obligations of such Customer under financings for products provided to such
Customer by any Alternative Financing Service Provider and (y) finance, through
the financing program or arrangement in effect with such alternative financing
source, upgrades or add-ons to the products that have been so financed through
such Alternative Financing Service Provider.
(c) *** the Alternative Financing Service Providers set forth on
Schedule 6.2 *** (and any fees, income or revenue *** from these programs shall
be included as Notional Third Party Indirect Fees).
ARTICLE VII
COVENANT NOT TO COMPETE
7.1 COVENANT NOT TO COMPETE
(a) In General. Subject to SECTION 7.1(b), the Newcourt Entities shall
not at any time during the Term, directly or indirectly, enter into any program,
joint venture or similar arrangement relating to the financing or leasing within
any Service Area of the following entities' products which compete with Products
financed by or through LTPF or relating to the provision of Ancillary Services
(collectively the "Competing Business") to the following entities and their
respective Affiliates ("Lucent Competitors"):
***
(b) Exceptions. Notwithstanding SECTION 7.1(a), the restrictions set
forth in SECTION 7.1(a) shall not impair, affect or interfere with the ability
of the Newcourt Entities to:
(i) enter into any relationship with any Lucent Competitor which
Lucent has consented to in writing;
(ii) purchase only the indebtedness portion of completed
transactions of any type; provided that the Newcourt Entities shall not provide
a quote, provide an indication of interest, letter of intent or similar
interest, or agree or commit to purchase any such transaction or an interest in
such transaction until ***
(iii) lease products directly to, provide loans directly to, or
otherwise provide financial services directly to a Lucent Competitor;
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406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
(iv) enter into any programs, joint ventures or other similar
arrangements or to effect any fundings or the purchase of any transactions
originated outside any Service Area; provided, however, in the event that a
Newcourt Entity enters into a relationship with a Lucent Competitor in a
geographic territory which is not then a Service Area and such territory later
becomes a Service Area, the Newcourt Entities shall be entitled to continue such
relationship; provided that such arrangement shall not be continued beyond the
later of (A) 180 days after the date the geographic territory becomes a Service
Area or (B) the then applicable term specified in the program, joint venture or
other applicable documents
(v) continue the relationships described on Schedule 7.1;
(vi) continue a program or joint venture which constitutes a
Competing Business that has been acquired by a Newcourt Entity; provided,
however, (I) such business shall not be continued beyond 180 days after the date
of such acquisition, and (II) the Newcourt Entities shall not acquire a business
or entity which has, as substantially all of its business, a Competing Business,
unless the Newcourt Entities divested or discontinued within 180 days after such
acquisition.
(c) During the Term, Lucent may add in good faith additional Lucent
Competitors, provided, however, that if Newcourt has an existing program, joint
venture or similar arrangement with any of these additional Lucent Competitors,
Newcourt may continue such arrangement as if such arrangement were listed on
Schedule 7.1.
SECTION 7.2 COVENANT NOT TO SOLICIT. The Lucent Entities and the Newcourt
Entities agree that during the Term they shall not solicit for employment any
employees of each other who are engaged, in any significant manner, in the
activities subject to this Agreement.
SECTION 7.3 MUTUAL STANDSTILL. During the Term and any Transition Period,
neither the Newcourt Entities, on one hand, nor the Lucent Entities, on the
other hand, will, without the prior written consent of the other party, (i)
propose any transaction between the parties or their respective security holders
involving any of the other party's (or its ultimate parent company's) securities
or security holders or (ii) acquire, or assist, advise or encourage any other
Person in acquiring, directly or indirectly, control of the other party (other
than the party's interest in LTPF).
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PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
ARTICLE VIII
REMARKETING OF PRODUCTS
SECTION 8.1 IN GENERAL. (a) The Operating Committee and NCT shall develop and
coordinate the strategies with respect to the disposition or re-lease (whether
by the extension of the existing lease or by a new lease to a third party) of
Products financed by NCT (whether at the end of the lease term or upon the
return or repossession of the leased Product prior to the end of such term),
with the objective of maintaining the relevant Customers and Authorized Dealers
as purchasers and users of Products. Subject to (b) below, NCT will not be
restricted in terms of its right to sell, release or otherwise dispose of
returned or repossessed Products (including Products that have been leased by or
subject to security interests or other claims in favor of NCT).
(b) Lucent shall have the right to purchase any Products which
are returned to LTPF at ***. If Lucent does not exercise this option, Lucent
shall have the right to match any bid received by LTPF for any such Products if
the bid is less than ***. Lucent may exercise this option to purchase Products
for an aggregate purchase price payable by Lucent not in excess of *** of
Financings expected to be originated in the then current fiscal year based upon
the then current Annual Operating Plan.
SECTION 8.2 RIGHTS TO USE SOFTWARE. Lucent hereby grants, on behalf of itself
and any other applicable Lucent Entity, a license to the appropriate Newcourt
Entity to use any and all Software associated with routine use of Products,
which license shall with respect to any such Software be effective automatically
and immediately upon Financing by NCT through LTPF of such Products in
connection with which such Software is to be used. Except as provided herein,
the scope of the license granted to NCT shall be consistent with the scope of
the license granted by Lucent in its standard form of sales agreement with
respect to such Software. NCT shall (i) not be required to pay any license fee
for such Software or otherwise comply with the terms of any applicable license
agreement for so long as NCT is merely providing Financing for such Software or
any related Products or has foreclosed on or otherwise repossessed or reacquired
such Software in connection with a default under or expiration or termination of
the related Financing but is not using such Software (except for purposes of
testing or demonstrating such Software in connection with any proposed
disposition of such Software) and (ii) be entitled to assign its license to any
other Person, provided that if such Person is not NCT and Lucent's standard form
of license agreement for such Software requires the prior consent of Lucent to
assign such license, NCT shall assign such license only upon execution and
delivery by the assignee of the Lucent's standard form of license agreement for
such Software and agreement by such assignee to pay, at the then-prevailing
rate, any fees required to be paid by a licensee of such Software to Lucent
pursuant to the terms of such license agreement.
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PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
ARTICLE IX
ARTICLE REPRESENTATIONS AND WARRANTIES;
ALLOCATION OF RISKS
SECTION 9.1 REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) Unless otherwise agreed with respect to particular Financings or
Ancillary Services or programs with respect thereto, Lucent will be deemed to
make the following representations, warranties and covenants to NCT when NCT
initially provides a Financing or Ancillary Service with respect to a Product
(to the extent such representations, warranties or covenants are applicable to
the particular Financing or Ancillary Service):
(1) NCT will, upon payment to Lucent of the True Product Cost of
any Product being Financed, receive (A) if the Financing involves a lease or an
installment sale, whereby title to the Product shall be transferred by a Lucent
Entity to NCT, marketable title to the Product (other than Products constituting
Software) free and clear of any lien or charge thereon created by or through any
Lucent Entity and (B) to the extent any portion of such Product is not
manufactured or developed by a Lucent Entity and with respect to which a Lucent
Entity has received a warranty or indemnity from another Person, an assignment
by the Lucent Entity of the remaining portion of any such applicable warranty,
express or implied, and indemnity rights applicable to such Product to the
extent that such warranty and indemnity rights are assignable (and if any such
warranty or indemnity rights are not so assignable, the Lucent Entity will hold
any such warranty and indemnity rights for the benefit of NCT and will, at the
direction and expense of NCT, take all such actions as such NCT Entity
reasonably requests to enforce all or any part of such warranty and indemnity
rights);
(2) none of the Lucent Entities nor, to Lucent's knowledge, any
of their employees or agents will knowingly participate in, or fail to disclose
to NCT any knowledge of, any fraudulent or illegal act in connection with the
Financing or Ancillary Service;
(3) the Products financed by NCT, if sold by a Lucent Entity to
the Customer or NCT, will be delivered to the Customer or Authorized Dealer
named in the applicable Financing agreement and installed at the location, if
any, indicated in the applicable Financing agreement in accordance with such
Lucent Entity's normal operating practices and the terms of the contract with
the Customer or Authorized Dealer, and the Lucent Entity will honor all express
and implied warranties and agreements, representations and assurances made by it
to any Customer or Authorized Dealer with respect to any such Product; and
(4) if an employee of a Lucent Entity obtained the Customer's
signature on a Finance Contract, Lucent has delivered or will deliver such
Finance Contract to NCT, and to the Lucent Entity and its employees' knowledge,
there are no other original copies; and
(5) the Lucent Entities and their employees, agents and
representatives will not make any representation, warranty or covenant on behalf
of LTPF or any Newcourt Entity to a
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PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Customer or Authorized Dealer with respect to the: (A) Financing, (B) the
Standard Documents, (C) or other documents provided by an NCT Entity, or (D) the
Ancillary Service, except (i) with the consent of a Newcourt Entity, (ii) in
accordance with standard operating practices between the Lucent Entities, on the
one hand, and LTPF and/or the Newcourt Entities, on the other hand, or (iii) at
the direction of LTPF or any Newcourt Entity.
(b) Unless otherwise agreed with respect to particular Financings,
Ancillary Services or programs with respect thereto, NCT will be deemed to make
the following representations, warranties and covenants to Lucent each time that
NCT resells a Financed Product to Lucent or provides Financing or Ancillary
Service with respect to a Product (to the extent such representations,
warranties or covenants are applicable to the particular Financing or Ancillary
Service), or if Lucent purchases a Finance Contract from NCT or LTPF:
(1) Lucent will, upon payment of the purchase price of any
Financed Product, receive (A) marketable title to the Product free and clear of
any lien or charge thereon created by or through NCT and (B) to the extent any
portion of such Product is not manufactured or developed by Lucent and with
respect to which NCT has received a warranty or indemnity from a Person other
than Lucent, an assignment of any such applicable warranty, express or implied,
and indemnity rights to the extent that such rights are assignable (and if any
such warranty or indemnity rights are not so assignable, NCT will hold any such
warranty and indemnity rights for the benefit of such Lucent Entity and will, at
the direction and expense of Lucent, take all such actions as Lucent reasonably
requests to enforce all or any part of such warranty and indemnity rights);
(2) neither NCT nor, to its knowledge any employees or agents
thereof will knowingly participate in, or fail to disclose to Lucent any
knowledge of, any fraudulent or illegal act in connection with the Financing or
Ancillary Service;
(3) Lucent will, upon payment of the Investment Balance (or such
other amount as may be agreed upon for Lucent to purchase a Finance Contract),
receive title to the Finance Contract free and clear of any lien or charge
thereon created by or through any Newcourt Entity, except for rights of the
Customer under the Finance Contract; and
(4) The Newcourt Entities and their employees, agents and
representatives will not make any representation, warranty or covenant on behalf
of any Lucent Entity to a Customer or Authorized Dealer with respect to the any
products and any contract, agreement or other documents provided by a Lucent
Entity or related to the furnishing of products or services by any Lucent
Entity.
SECTION 9.2 ALLOCATION OF CERTAIN RISKS.
(a) LTPF shall assume responsibility for and bear the risks of
delinquency, default and non-payment under any Financings unless (i) Lucent and
NCT agree otherwise in writing, (ii) NCT is entitled to indemnification for such
risks pursuant to the terms of ARTICLE XIII, or (iii) such delinquency, default
or non-payment is a Lucent Responsibility, as defined below (in which event such
risks will be borne in accordance with this SECTION 9.2).
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(b) A "Lucent Responsibility" means a delinquency, default or
non-payment by a Customer or an Authorized Dealer under any Financing resulting
from:
(1) a demonstrated failure by a Lucent Entity to deliver, install
or service, as the case may be, such Product in accordance with its contractual
or legal obligation to deliver, install or service such Product;
(2) a demonstrated failure of any Product to comply with any
contractual representation, warranty or covenant provided by a Lucent Entity
with respect to such Product or with any warranty of a Lucent Entity applicable
to such Product by operation of law;
(3) any adjudicated offset or counterclaim prevailed upon by the
relevant Customer or Authorized Dealer against the amounts due by it under the
Financing on the basis of disputes between such Customer or Authorized Dealer
and a Lucent Entity (or on the basis of amounts owing by a Lucent Entity to such
Customer or Authorized Dealer) under any business dealings between such Customer
or Authorized Dealer and a Lucent Entity, whether or not related to such Product
or such Financing;
(4) a demonstrated breach or violation by a Lucent Entity or any
of its employees of the provisions of SECTION 9.1(a) (whether or not such breach
or violation gives rise to a right of termination of this Agreement);
(5) a finding as a matter of law or equity, that any Lucent
Entity is responsible for the Customer's or Authorized Dealer's failure to honor
its obligations under a Financing or such Customer or Authorized Dealer is able
to avail itself of a defense to any claim asserted by the relevant NCT Entity
with respect to such Financing based on non-performance by any Lucent Entity of
any obligations of any such Lucent Entity (whether or not related to the
Financed Product) or any breach by a Lucent Entity of any warranty (at contract
or at law) with respect to any Product, despite customary "hell or high water"
contained in the Finance Contract.
(c) If a Lucent Responsibility occurs, or Lucent breaches a
representation or warranty contained in SECTION 9.1(a), then Lucent shall pay to
LTPF the amount of the damages to LTPF or NCT as a result of such event, not to
exceed the Investment Balance, and if such damages were incurred by NCT, LTPF
shall pay over such amount to NCT. If Lucent pays the Investment Balance, Lucent
shall be entitled to purchase the Finance Contract and title to the related
Equipment, which shall be conveyed to Lucent in accordance with the
representations and warranties contained in SECTION 9.1(b)(3).
(d) If NCT breaches a representation or warranty contained in SECTION
9.1(b), NCT shall pay to Lucent the amount of Lucent's daamages, not to exceed
the amount Lucent paid LTPF or NCT for the relevant Product and/or Finance
Contract.
SECTION 9.3 COLLECTION AND REPOSSESSION ACTIONS. Except as provided in SECTION
9.4, NCT will be entitled, in its discretion, and on behalf of LTPF, to take or
not to take any and all
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actions to collect amounts due and unpaid or otherwise enforce its rights upon
the occurrence of a default by a Customer or Authorized Dealer under a Financing
including, without limitation, to make demand for payment or performance,
institute an action for payment of amounts due or for specific performance,
institute collection proceedings, effect acceleration or termination of the
Financing, foreclose upon or take possession of security (which may include the
Financed Product) provided by or on behalf of the Customer or Authorized Dealer
or enforce remedies to take possession and control of the Product.
SECTION 9.4 ACTIONS AGAINST SIGNIFICANT ACCOUNTS. LTPF shall, to the extent
practicable, provide advance notice to Lucent of any legal proceeding or
repossession action to be initiated against a Significant Account.
ARTICLE X
GRANT OF LICENSE
SECTION 10.1 GRANT OF LICENSE. Lucent hereby grants to NCT a non-exclusive,
non-transferable, worldwide license and right to use the Marks for Permitted
General Purposes. Under such license, NCT shall be entitled to use the Marks for
purposes of identifying NCT as the source of any Financing Services or Ancillary
Services offered or provided by NCT hereunder from time to time (including,
without limitation, in agreements, business cards, letterheads, brochures, and
computer programs) in a manner satisfactory to Lucent and in accordance with
SECTION 10.3 below.
SECTION 10.2 TERMINATION OF LICENSE. From and after the earlier of (i) *** days
after notice by Lucent to NCT and (ii) the termination of this Agreement, NCT
shall discontinue use of the Marks and the license granted to NCT shall
terminate, except that to the extent the existing Finance Contracts utilize the
Marks in the Finance Contracts and related documentation, NCT may continue to
use the marks to the extent reasonably necessary to facilitate the orderly
servicing and disposition of such Finance Contracts.
SECTION 10.3 OTHER ISSUES.
(a) NCT agrees to abide by Lucent's guidelines specifying the dimensions
and other aspects of the use and appearance of the Marks as they may be
generally in effect from time to time.
(b) NCT's use of the Marks shall be subject to prepublication review and
approval with respect to, but not limited to, content, style, appearance,
composition, timing and media. One copy of all such marketing material shall be
provided to Lucent (Attention: ***).
(c) NCT agrees to provide Lucent with any documents reasonably requested
by Lucent in connection with its registration and enforcement of the Marks
worldwide.
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PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
(d) NCT agrees that it acquires no rights to the Marks by its use and
that any use of the Marks by NCT inures to the sole benefit of Lucent.
(e) In the event that NCT becomes aware of any unauthorized use of the
Marks by third parties, NCT agrees to promptly notify Lucent and to cooperate
fully, at Lucent's expense, in any enforcement of Lucent's rights against such
third parties. Nothing contained in this paragraph shall be construed to require
Lucent to enforce any rights against third parties or to restrict Lucent's
rights to license or consent to such third parties' use of the Marks.
ARTICLE XI
MANAGEMENT OF LTPF
SECTION 11.1 MANAGEMENT OF LTPF. Except as otherwise expressly provided in this
Agreement, NCT shall, in accordance with SECTION 11.3, operate LTPF in
consultation with, as to certain matters, and with the consent of as to other
matters, an operating committee (the "Operating Committee").
SECTION 11.2 OPERATING COMMITTEE; NUMBER AND ELECTION OF MEMBERS; ADDITIONAL
COMMITTEES.
(a) The Operating Committee shall initially consist of four members
(each, a "Member"), two designated by Lucent and two by NCT.
(b) If additional committees of LTPF are formed by the Operating
Committee, NCT and Lucent shall be entitled to the same representation on any
such additional committee as NCT and Lucent receive on the Operating Committee.
(c) ***
(d) The Members of the Operating Committee shall conduct the affairs of
the Operating Committee in a commercially reasonable manner.
SECTION 11.3 POWERS OF OPERATING COMMITTEE; IMPASSE.
(a) Newcourt shall extensively consult with the Operating Committee on
the operation of LTPF as to:
(1) Financing product and market strategy;
(2) internal audits;
(3) appointment, termination and compensation of senior
officers of LTPF, other than the chief executive officer,
or officer holding the equivalent position, of LTPF (the
"CEO");
(4) LTPF's compliance with its Performance Metric targets and
other obligations;
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(5) matters specified in an Annual Operating Plan; and
(6) other matters agreed upon by Lucent and Newcourt.
(b) Operating Committee approval and consent shall be necessary for the
approval or amendment of each Annual Operating Plan; provided, that if the
Operating Committee reaches an impasse with respect to any matter related to the
business affairs of LTPF, or fails to approve any Annual Operating Plan after
employing all reasonable efforts to resolve such impasse, the matter will be
resolved in accordance with ARTICLE XIV.
(c) The CEO shall be nominated by Newcourt, and Operating Committee
approval shall be required to appoint the CEO.
(d) Either Newcourt or the Operating Committee may request the removal
of the CEO, but the CEO may not be removed without the approval of the other
party or group. If Newcourt and the Operating Committee can not reach agreement
on the removal of the CEO, the matter shall be resolved in accordance with
ARTICLE XIV.
SECTION 11.4 PLACE OF MEETINGS. Meetings of the Operating Committee may be held
either within or without the State of New Jersey. The Members serving on the
Operating Committee, by Majority Vote, may appoint from among themselves a
chairperson to preside at meetings of the Operating Committee. Any Member shall
be permitted to attend any meeting of the Operating Committee in person or by
conference call.
SECTION 11.5 REGULAR MEETINGS. The Operating Committee shall meet at least once
a month (unless otherwise agreed by the parties). No notice need be given to
Members of regular meetings for which the Members have previously designated a
time and place for the meeting.
SECTION 11.6 SPECIAL MEETINGS. Special meetings of the Operating Committee may
be held at any time upon the request of at least two Members. Notification of
any special meeting shall be given to each Member at least two Business Days
before the meeting. Notification of the time, place and purpose of such meeting
may be waived in writing before or after such meeting. Attendance of a Member at
such meeting shall also constitute a waiver of Notification thereof. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Operating Committee need be specified in the notice or waiver of notice
of such meeting.
SECTION 11.7 QUORUM OF AND ACTION BY OPERATING COMMITTEE. The presence, in
person or by written proxy, of a majority of the Members shall constitute a
quorum for the transaction of business at any meeting of the Operating
Committee. Except as otherwise expressly set forth in this Agreement, any action
to be taken or approved by the Operating Committee hereunder must be taken or
approved by Majority Vote of the Operating Committee and any action so taken or
approved shall constitute the act of the Operating Committee.
SECTION 11.8 COMPENSATION; REIMBURSEMENT.
(a) The Members shall serve in such capacity without compensation from
LTPF therefor. The Members at all times shall remain the employees of their
respective employers
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and shall owe duties of loyalty and care to such respective employers, and not
to any other Persons.
(b) The compensation policies and arrangements (including base salaries,
bonuses and incentive programs) applicable to members of the Operating Committee
who are "dedicated" to LTPF will be set by the senior executive management
representatives of Lucent and NCT, and the compensation policies and
arrangements (including base salaries, bonuses and incentive programs)
applicable to all other LTPF dedicated employees will be set as indicated in the
Annual Operating Plan. Incentive compensation shall be equally aligned with the
economic performance of LTPF and with Lucent's applicable sales targets.
(c) LTPF will reimburse each of the parties for the direct costs
reflected in the Annual Operating Plan, incurred in performed administrative or
other services that are outsourced to or otherwise performed by such party on
behalf of LTPF, as agreed to between NCT and Lucent.
SECTION 11.9 RESIGNATION AND REMOVAL. Any Member may resign at any time. Such
resignation shall be made in writing and shall take effect at the time specified
therein, or if no time is specified, at the time of its receipt by LTPF. Each
party hereto will have the right to remove and replace its designees to the
Operating Committee at any time. In addition, each party will have the right to
propose the removal of the other party's designees at any time; provided, that
the removal of a party's designees may be effected only with that party's
consent, which consent shall not be unreasonably withheld or delayed.
SECTION 11.10 ACTION BY WRITTEN CONSENT. Any action that may be taken at a
meeting of the Operating Committee may be taken without a meeting if a consent
in writing, setting forth the action to be taken, shall be signed by all of
those Persons entitled to vote at that meeting, and such consent shall have the
same force and effect as a unanimous vote of the Operating Committee at a
meeting duly called and held. No notice shall be required in connection with the
use of a written consent pursuant to this SECTION 11.10.
SECTION 11.11 OFFICERS; EMPLOYEES.
(a) The officers of LTPF will consist of the CEO and such other or
alternative senior officers as may be appointed from time to time in
consultation with the Operating Committee or its designee. Except with respect
to the CEO, each party will have the right to nominate officers, but the
appointment of any them requires consultation with the Operating Committee. The
Operating Committee may request LTPF to remove and replace any officer, except
the CEO, at any time and from time to time. Unless NCT objects, NCT shall
promptly remove any such officer. If NCT objects, NCT shall set forth its basis
for such objection. In the event NCT and the Operating Committee reach an
impasse on such issue, such issue shall be resolved pursuant to the procedure
set forth in ARTICLE XIV.
(b) The officers of LTPF will be responsible for identifying managing
the day to day operations of LTPF, including any employees within or external to
NCT's organization who will be providing services to LTPF and any third party
financing sources which will be funding or
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originating Financings on behalf of or in coordination with LTPF. Lucent may
identify employees of Lucent who will be "dedicated" to LTPF, with the
reasonable consent of the CEO.
(c) The appropriate officers of LTPF will submit to the Operating
Committee such reasonable periodic reports regarding the actual and planned
business activities of LTPF as the Operating Committee reasonably directs. In
addition, the officers of LTPF will cooperate fully with each of the parties
hereto (including submitting requested forecasts, projections and other reports)
as may be reasonably requested as a part of such party's own business planning
and forecasting activities.
ARTICLE XII
ANNUAL OPERATING PLAN; BOOKS AND RECORDS
SECTION 12.1 ANNUAL OPERATING PLAN.
(a) The business activities of LTPF will be conducted by NCT pursuant to
an annual operating plan (the "Annual Operating Plan"). The Annual Operating
Plan will be prepared by LTPF and approved by the Operating Committee. The
Annual Operating Plan, covering the period from the Commencement Date through
September 30, 1998, which will include the financial commitments of LTPF for the
periods of October 1, 1997, to September 30, 1998, and October 1, 1998 to
September 30, 1999, will be mutually agreed to by Newcourt and Lucent as soon as
possible. The appropriate officers of LTPF will prepare and submit subsequent
Annual Operating Plans by June 30 of each year during the Term for the next one
year period, commencing June 30, 1998 with an Annual Operating Plan for the
period October 1, 1998 to September 30, 1999, and in such detail as will allow
the Operating Committee to consider and approve the plans prior to the beginning
of the fiscal year covered by any such plans.
(b) Each Annual Operating Plan will address such matters as the CEO
determines or the Operating Committee directs; and should, address at least the
following (and where appropriate, by channel, product line and geographic
region): (i) fully detailed financial projections and assumptions as to such
period's Notional Fee Base; (ii) organizational structure and staffing
requirements; (iii) compensation structure; (iv) Financing product offerings;
(v) target credit approval rates; (vi) ***; (vii) target customer response
times; (viii) lease rate *** policies; (ix) residual policies; (x) ***; (xi) bad
debt reserve levels, usage and reserve policies; (xii) ***; and (xiii) ***.
(c) Should the Operating Committee fail to approve an Annual Operating
Plan, the impasse will be resolved according to the process set forth in ARTICLE
XIV hereof. If an Annual Operating Plan has not been established with respect to
any fiscal year NCT shall be responsible for operating LTPF in accordance with
the parameters set forth in the prior fiscal year's Annual Operating Plan
(except that the *** shall be increased by *** over the
target for the prior fiscal year) until an Annual Operating Plan is established
for the then current period, in which event NCT shall be responsible to operate
LTPF in accordance with the newly established Annual Operating Plan.
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406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
SECTION 12.2 BOOKS AND RECORDS; RIGHT OF INSPECTION.
(a) During the Term, NCT shall maintain LTPF's management books and
records appropriate or necessary in connection with the conduct of the business
of LTPF pursuant to the terms of this Agreement.
(b) Lucent may examine and copy in person, at any reasonable time and
for any reasonable purpose, such information as it deems necessary regarding the
business, affairs and operations of LTPF.
SECTION 12.3 *** If for any fiscal year, LTPF shall achieve a *** for that year
which is less than *** of the amount specified for the Annual Operating Plan
for that year, the *** shall be *** for the next fiscal year, unless the
Operating Committee agrees otherwise by a Majority Vote. Any revision to the
Annual Operation Plan for the next fiscal year shall specify whether or not the
*** is included.
ARTICLE XIII
INDEMNIFICATION
SECTION 13.1 NEWCOURT INDEMNITY. Newcourt agrees to save, protect, indemnify and
hold harmless, on an After-Tax Basis, the Lucent Entities and their respective
employees, officers, directors, agents and representatives from and against all
liabilities, costs (including attorneys fees and disbursements), claims and
charges arising from or relating to: (i) the breach by any Newcourt Entity of
any representations, warranties or covenants of any Newcourt Entity contained in
or delivered pursuant to this Agreement, or any other agreement of any Newcourt
Entity relating to Products, Financings or Ancillary Services; or (ii) any
violation by any Newcourt Entity or any of its employees or agents of any law
applicable to the sale, lease or other furnishing of Products or to any related
Financings or Ancillary Services (including, without limitation, any law
relating to the reporting of or extension or denial of credit, the collection of
debt or the repossession or disposition of products). The foregoing indemnity
shall not apply in respect of liabilities, costs, claims or charges to the
extent arising from or relating to (x) any action, sufferance or omission by any
Lucent Entity or its employees effected in bad faith or (y) any breach or
violation by a Lucent Entity of the provisions of this Agreement or any such
other applicable agreement between a Lucent Entity and a Newcourt Entity
(whether or not such breach or violation gives rise to a right of termination of
this Agreement or such other agreement).
SECTION 13.2 LUCENT INDEMNITY. Lucent agrees to save protect, indemnify and hold
harmless, on an After-Tax Basis, the Newcourt Entities and their respective
employees, officers, directors, agents and representatives of each of the
foregoing from and against all liabilities, costs (including attorneys fees and
disbursements), claims and charges arising from or relating to: (i) breach by a
Lucent Entity of any representations, warranties or covenants contained in or
delivered pursuant to this Agreement or any other agreement relating to
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PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
Products, Financings or Ancillary Services; (ii) any products, environmental or
other similar adjudicated liability relating to the Products ; (iii) any
misrepresentation made by any employee or agent of a Lucent Entity to any
Customer or Authorized Dealer as to the commitment of a Newcourt Entity to
provide any Financings or Ancillary Services to such Customer or Authorized
Dealer or the likely availability thereof; (iv) Lucent's rights to or ownership
interests in the Marks or the invalidity or ineffectiveness of or any
infringement against the Marks to the extent such liabilities, costs, claims or
damages arise or are asserted (or are sustainable) under applicable United
States federal, state or local law; (v) the invalidity or ineffectiveness of the
license granted under this Agreement or pursuant hereto to the extent such
liabilities, costs, claims or damages are asserted (or are sustainable) under
applicable United States federal, state or local law. The foregoing indemnity
shall not apply in respect of liabilities, costs, claims or charges to the
extent arising from or relating to (x) any action, sufferance or omission by a
Newcourt Entity or an employee of a Newcourt Entity that is effected in bad
faith or (y) any breach or violation by Newcourt Entity or any employee of
Newcourt Entity of the provisions of this Agreement or any such other applicable
agreement between a Lucent Entity and a Newcourt Entity (whether or not such
breach or violation gives rise to a right of termination of this Agreement or
such other agreement).
SECTION 13.3 INDEMNITY PROCEDURE. Each indemnified party under SECTION 13.1 or
SECTION 13.2 shall, promptly after receipt of notice of a claim or action
against such indemnified party in respect of which indemnity may be sought
hereunder, notify the indemnifying party in writing of the claim or action;
provided, that the failure to notify the indemnifying party will not relieve it
from any liability which it may have to an indemnified party on account of the
indemnity agreement contained in SECTION 13.1 or SECTION 13.2 unless, and only
to the extent that, the indemnifying party was prejudiced by such failure, and
in no event will such failure relieve the indemnifying party from any other
liability which it may have to such indemnified party. If any such claim or
action shall be brought against an indemnified party, and it shall have notified
the indemnifying party thereof, the indemnifying party will be entitled to
participate therein, and, to the extent that it wishes, to assume the defense
thereof with counsel satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of any claim or action, the indemnifying party will not be liable to the
indemnified party under SECTION 13.1 or SECTION 13.2 for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided, that the
indemnified party will have the right to employ separate counsel to represent it
if, in the reasonable judgment of such indemnified party, it is advisable for it
to be represented by separate counsel, and in such event the fees and expenses
of such separate counsel will be paid by such indemnified party. The
indemnifying party may not without the prior written consent of the indemnified
party agree to any settlement of any claim or action as the result of which any
remedy or relief, other than solely for monetary damages for which the
indemnifying party will be responsible hereunder, will be applied to or against
the indemnified party. In any action hereunder as to which the indemnifying
party has assumed the defense thereof with counsel satisfactory to the
indemnified party, the indemnified party will continue to be entitled to
participate in the defense thereof, with counsel of its own choice, but the
indemnifying party will not be obligated hereunder to reimburse the indemnified
party for the costs thereof.
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PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
ARTICLE XIV
DISPUTE RESOLUTION
SECTION 14.1 DISPUTES. The procedures for discussion, negotiation and
arbitration set forth in this ARTICLE XIV will apply to all disputes solely
between the parties or their respective Affiliates under this Agreement.
SECTION 14.2 RESOLUTION OF DISPUTES. The parties hereto agree and acknowledge
that they shall use good faith to resolve all differences and disputes.
Consistent with the foregoing principles, the parties desire to avoid the
expense and delay of resolving disputes by use of traditional civil litigation.
Accordingly the parties agree to resolve their differences and disputes by first
engaging in extensive discussions at the Operating Committee level.
SECTION 14.3 REFERRAL TO EXECUTIVE OFFICERS. Either party may, by giving written
notice to the other party, demand that any dispute or difference be referred to
the President of Newcourt Financial and the *** of Lucent (or such other senior
executive appointed by the applicable party) (the "Senior Management
Executives") who will attempt in good faith and reasonable diligence to resolve
the dispute. Any such notice shall state, with reasonable particularity, the
nature of the dispute. The parties and their respective Senior Management
Executives shall endeavor in good faith to resolve the dispute. If the dispute
is not resolved by the Senior Management Executives within 30 calendar days,
either party may have the matter will be submitted to mediation pursuant to the
provisions of SECTION 14.4 hereof.
SECTION 14.4 MEDIATION.
(a) If, and only if, a notice pursuant to SECTION 14.3 has been given
and the Senior Management Executives of the parties have not resolved the
dispute within 30 days after the giving of such notice, then either party may
submit the dispute to mediation.
(b) Except as otherwise provided in this Section or as otherwise agreed
upon, in writing by the parties, such mediation shall be administered by the
American Arbitration Association (the "AAA") under its Commercial Mediation
Rules as in effect at such time (the "Mediation Rules").
(c) The party desiring such mediation shall first provide notice to the
other party requesting mediation. If the other party objects to mediation within
10 days after the request for mediation has been given, the dispute shall not be
submitted for mediation. If the other party does not object in writing to the
request for mediation within 10 days, the party sending the request for
mediation shall initiate the mediation by filing a written request for mediation
with the AAA and delivering a copy of such request to the other party. Such
request shall state, with reasonable particularity, the nature of the dispute
and shall include such additional information as may be required by the
Mediation Rules.
(d) Upon delivery of the mediation request, the parties shall endeavor
in good faith to select a neutral mediator who is acceptable to each party. If
the parties have not selected a
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mutually acceptable neutral mediator within five Business Days after the
delivery of the mediation request, they shall so notify the AAA and the AAA
shall appoint a mediator in accordance with the Mediation Rules. Unless
otherwise agreed upon by the parties, all mediation sessions shall be held at
the AAA's regional office in New Jersey. The parties shall endeavor in good
faith to resolve the dispute through the mediation process contemplated by this
Section and neither party shall be entitled unilaterally to terminate the
mediation prior to thirty days after the appointment of a mediator.
(e) The fees and expenses of the mediator and AAA will be borne one-half
by Lucent and one-half by NCT. All other expenses in connection with the
arbitration shall be the responsibility of the party incurring such expense.
SECTION 14.5 ARBITRATION.
(a) If a party receiving a request for mediation pursuant to SECTION
14.4 has objected to mediation in accordance with SECTION 14.4 or if the dispute
has been submitted to mediation pursuant to SECTION 14.4 and such mediation has
been properly terminated (without resolution of the dispute) pursuant to the
Mediation Rules and this Agreement, then either party may demand that the
dispute be resolved by binding arbitration.
(b) The party desiring such arbitration shall initiate the arbitration
by delivering a written demand for arbitration to the other party and taking
such other action as is required by the Arbitration Rules. Such demand shall
state, with reasonable particularity, the nature of the Dispute and shall
include such additional information as may be required by the Arbitration Rules.
(c) The parties shall attempt to select, within 5 days after such notice
of demand for arbitration is given, a neutral arbitrator satisfactory to each.
(d) If the parties are not able to jointly select an arbitrator within
such 5 day period, the parties shall each appoint, by notice to the other party,
a reasonably qualified neutral arbitrator within 10 days after provision of the
notice referred to in paragraph (c) above. If one party appoints such an
arbitrator within such time period and the other party fails to appoint an
arbitrator within such time period, the arbitrator appointed by the one party
shall be the sole arbitrator of the dispute.
(e) In the event that an arbitrator is not selected pursuant to
paragraph (c) or (d) above, and, instead, two arbitrators are selected pursuant
to paragraph (d) above, the two arbitrators will, within 10 days after the
appointment of the later of them to be appointed, select a third reasonably
qualified neutral arbitrator who will act as the sole arbitrator of the dispute.
After selection of such sole arbitrator, the two initial arbitrators shall have
no further role with respect to the dispute.
(f) The sole arbitrator selected pursuant to paragraph (c), (d) or (e)
above will set a time for the hearing of the dispute which will not be later
than 30 days after the date of appointment of the sole arbitrator pursuant to
paragraph (c), (d) or (e) above, and the final decision of such
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arbitrator will be rendered in writing to the parties not later than 30 days
after the last hearing date, unless otherwise agreed by the parties in writing.
(g) Except as otherwise set forth herein or agreed to by the parties,
any arbitration hereunder will be conducted in accordance with the Commercial
Arbitration Rules of the AAA then prevailing, and the decision of the arbitrator
will be final and binding on the parties, and will be enforceable in any court
having jurisdiction over the parties. Compliance with the provisions of this
Agreement concerning arbitration of disputes is a condition precedent to the
commencement of any suit, action or proceeding in any Federal, state or local
court with respect to any dispute governed by this ARTICLE XIV.
(h) The arbitrator will be limited to interpreting or construing the
applicable provisions of this Agreement, and will have no authority or power to
alter, amend, revoke or suspend any provision of this Agreement; it being
understood, however, that the arbitrator will have full authority to implement
the provisions of this Agreement and to fashion appropriate remedies for
breaches of this Agreement; provided that the arbitrator shall not (1) have any
authority in excess of the authority a court having jurisdiction over the
parties and the controversy or dispute would have absent these arbitration
provisions and (2) have any right or power to award punitive, special, indirect,
consequential or exemplary damages.
(i) If a party fails or refuses to appear at and participate in an
arbitration hearing after due notice, the arbitrator may hear and determine the
controversy upon evidence produced by the appearing party.
(j) The fees and expenses of the arbitrator and AAA will be borne
one-half by Lucent and one-half by NCT. All other expenses in connection with
the arbitration shall be the responsibility of the party incurring such expense.
SECTION 14.6 CONFIDENTIALITY. The existence, substance and results of any
mediation or arbitration hereunder shall be held confidential by the parties and
their Affiliates and shall not be disclosed to other Persons except (1) to their
respect legal counsel, auditors or directors, or (2) to the extent such
disclosure is either (I) required to enforce the arbitration award or remedy or
(II) required by applicable law, regulation, rule, court order or similar legal
process. The existence and results of any dispute resolution procedure under
this Article shall be held in confidence by the parties and their Affiliates and
shall not be disclosed to any third party. All views expressed and suggestions,
admissions and proposals made by the parties during the course of the procedures
contemplated by this ARTICLE XIV shall be entitled to the same degree of
confidentiality as they would enjoy under a mediation or arbitration proceeding
pursuant to the Mediation Rules or Arbitration Rules. Notwithstanding any other
provision of this Agreement, the Mediation Rules and/or the Arbitration Rules to
the contrary, the foregoing restrictions do not apply to disclosures (a) to the
parties' attorneys, auditors, and/or directors, (b) which are necessary or
appropriate to enforce or apply any resolution of the Dispute (including,
without limitation, any arbitration decision, award or remedy), and/or (c) which
are required by applicable law, regulation, court order or rule, or similar
legal process.
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PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
SECTION 14.7 LITIGATION. Compliance with the provisions of this Article is a
condition precedent to the commencement or maintenance of any action, claim,
suit or proceeding (whether in the form of an original action, third-party
action, counterclaim, cross claim or otherwise) with respect to any Dispute in
any court (federal, state, local, foreign or otherwise) or other judicial
tribunal and no such action, suit or proceeding may be commenced or maintained
unless and until the dispute resolution procedures contemplated by SECTIONS 14.2
through 14.6 have been exhausted by the parties.
SECTION 14.8 CONTINUITY OF SERVICE AND PERFORMANCE. Unless otherwise agreed in
writing, the parties will continue to provide service and honor all other
commitments under this Agreement during the course of dispute resolution
pursuant to the provisions of this ARTICLE XIV.
ARTICLE XV
TERM AND TERMINATION; TRANSITION PERIOD
SECTION 15.1 INITIAL TERM AND RENEWAL.
(a) This Agreement shall become effective on the date hereof (the
"Commencement Date") and, subject to SECTION 15.2, shall remain in effect until,
and shall terminate on, September 30, 2002 (the "Initial Term"). This Agreement
shall automatically be renewed and remain in effect for a period of three years
(the "Renewal Term"), commencing upon the expiration of the Initial Term or any
previous Renewal Term, unless either party elects not to extend the terms of
this Agreement beyond the Initial Term by giving the other party notice of such
election (a "Non-Renewal Notice") at least 6 months prior to the expiration of
the Initial Term or the Renewal Term (it being understood that failure to give
timely notice of non-renewal (which time for the delivery of notice shall be of
the essence of this Agreement) will be deemed to constitute an election by the
parties to renew the term of this Agreement for the Renewal Term as provided
herein).
(b) If this Agreement is not renewed at the end of the Initial Term or
any Renewal Term, then this Agreement shall remain in effect for a period of 18
months beginning on the later of one year before the scheduled end of the Term
or the day the Non-Renewal Notice is delivered (the "Transition Period"). During
the last 6 months of the Transition Period (the "Wind Down Period"), (i) except
as set forth in SECTION 15.5, all of the parties' rights and obligations under
this Agreement shall continue in full force and effect, and (ii) the parties
shall take appropriate steps to wind down the operations of LTPF in an orderly
manner in accordance with SECTION 15.5(a). Upon the expiration of the Transition
Period, this Agreement shall terminate.
SECTION 15.2 EARLY TERMINATION. This Agreement may be terminated in its entirety
prior to the expiration of the Term:
(a) at any time, by the mutual written consent of Newcourt and Lucent;
or
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PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
(b) at the election of Lucent, by notice to NCT, in the event that NCT
commences a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy or similar law or statute or makes an assignment of its property or
any substantial portion thereof for the benefit of creditors and such proceeding
or assignment is continuing or in effect as the time of such notice; or
(c) at the election of Lucent, by notice to NCT, in the event that there
is commenced against NCT an involuntary proceeding seeking to have NCT declared
a bankrupt or seeking to have a receiver appointed with respect to a substantial
portion of its property which is not dismissed within 60 days of commencement or
there is entered an order declaring NCT a bankrupt or appointing a receiver with
respect to a substantial portion of its property and such order is not dismissed
within 60 days and such proceeding or order is continuing or in effect at the
time of such notice; or
(d) at the election of NCT, by notice to Lucent, in the event that
Lucent commences a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy or similar law or statute or makes an assignment of its property or
any substantial portion thereof for the benefit or creditors and such proceeding
or assignment is continuing or in effect at the time of such notice; or
(e) at the election of NCT, by notice to Lucent, in the event that there
is commenced against Lucent an involuntary proceeding seeking to have Lucent
declared a bankrupt or seeking to have a receiver appointed with respect to a
substantial portion of its property which is not dismissed within 60 days of
commencement, or there is entered an order declaring Lucent a bankrupt or
appointing a receiver with respect to a substantial portion of its property and
such order is not dismissed within 60 days and such proceeding or order is
continuing or in effect at the time of such notice; or
(f) at the election of Lucent by notice to Newcourt, if (i) for any
period of ninety (90) consecutive days, the long-term senior unsecured debt of
Newcourt shall not be rated investment grade credit or equivalent by at least
one U.S. Rating Agency; and (ii) within such 90 day period Newcourt shall be
unable to secure a six month or longer forward funding commitment from one or
more financial or insurance institutions with long-term senior unsecured debt
rated investment grade credit or equivalent by at least one U.S. Rating Agency
to ensure sufficient funding of LTPF; and (iii) such forward funding commitment
(or its replacement) is not renewed or replaced with a similar forward funding
commitment at least 90 days prior to its scheduled expiration date; or
(g) at the election of Lucent by notice to Newcourt, if LTPF fails ***;
or
(h) at the election of Lucent by notice to Newcourt upon a Change in
Control of NCT by a Person that (i) is a Lucent Competitor or (ii) does
financings for products of a Lucent Competitor that if performed by NCT, would
violate NCT's covenants set forth in SECTION 7.1, unless within 90 days of the
acquisition, the entity that finances the Lucent Competitor divests itself of
such financing arrangement; or
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(i) at the election of Lucent by notice to Newcourt, if any Newcourt
Entity shall materially breach any of its obligations under SECTION 7.1 or
ARTICLE X, and either (I) such breach is not cured within 15 days after notice
or (II) within 15 days after notice, Newcourt fails to submits to Lucent a
written explanation of the manner in which the breach shall be cured, or (III)
Newcourt provides Lucent with a written explanation of the manner in which it
will cure the breach, but and in any event such breach is not cured within 45
days after notice; or
(j) at the election of Lucent by notice to Newcourt if any amounts due
to Lucent under Articles III or IV or *** are not paid when due (other than
amounts which are being disputed in good faith) and such failure is not cured
within 30 days after notice to Newcourt; or
(k) at the election of Newcourt by notice to Lucent, if any Lucent
Entity shall materially breach any of (x) its obligations under Article XVII or
(y) its material obligations under Article VI, and in the case of Article VI,
such breach is not cured within 30 days after notice to Lucent.
SECTION 15.3 PARTIAL EARLY TERMINATIONS AND PERFORMANCE METRICS.
(a) Performance Metrics Partial Termination Events. If any of the
Performance Metrics set forth below in this Section 15.3(a) are in any material
respects not satisfied and are not remedied within the applicable cure period
specified in paragraphs (i) through (iii) of this Section 15.3(a), Lucent may,
upon written notice to NCT ("Partial Termination Notice") within 30 days after
the expiration of the applicable cure period specified below, terminate this
Agreement as to ***:
(i) If LTPF *** fails to achieve ***, Lucent may give NCT written
notice of such failure. NCT shall, within thirty (30) days of the
date of delivery of such notice, supply Lucent with a plan to
remedy the situation. Unless NCT, within *** after the date of
the delivery of such notice, (A) ***, or (B) ***, Lucent shall be
entitled, upon delivery of the Partial Termination Notice, to
***. If LTPF, *** after the delivery by Lucent to NCT of the
notice indicating that *** has not been accomplished, is unable
cure the deficiency as required above or ***, Lucent shall be
entitled, upon delivery of the Partial Termination Notice, to
***. If LTPF, within the applicable cure period, achieves *** and
LTPF, ***, Lucent shall be entitled, upon delivery of the Partial
Termination Notice, to ***.
(ii) If LTPF *** fails to ***, Lucent may give NCT written notice of
such failure. NCT shall, within thirty (30) days of the date of
delivery of such notice, supply Lucent with a plan to remedy the
situation. Unless NCT, within *** after the date of the delivery
of such notice, (A) ***, or (B) ***, Lucent shall be entitled,
upon delivering a Partial Termination Notice, to ***. If LTPF,
within *** after the delivery by Lucent to NCT of the notice ***,
is unable to ***, Lucent shall be entitled, upon delivery of the
Partial Termination Notice, to ***. If LTPF ***, and LTPF, ***,
Lucent shall be entitled, upon delivery of the Partial
Termination Notice, to ***; and
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PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
(iii) If LTPF fails ***, Lucent may give LTPF written notice of such
failure. If Lucent provides such notice, LTPF shall, within 30
days after the notice, supply Lucent with a plan to remedy the
deficiency or situation. Unless LTPF *** or ***, Lucent shall be
entitled, upon delivery of a Partial Termination Notice, to ***.
As used in this paragraph, ***.
(b) Consequences of Partial Terminations. If Lucent terminates this
Agreement with respect to *** prior to the expiration of the Term in accordance
with SECTION 15.3(a), (x) Lucent shall be free to establish a joint venture,
strategic alliance or other vendor financing relationship with one or more other
parties with respect to ***; (y) the non-competition provisions of ARTICLE VII
shall, effective 180 days after the delivery of the applicable Termination
Notice, cease and be of no further force or effect with respect to ***; and (z)
the parties shall wind down the operations of LTPF with respect to *** pursuant
to provisions which are substantially similar to those set forth in SECTION
15.5(a). Notwithstanding the foregoing, all of the Outstanding Portfolio that
was originated in the Product line, channel, region, country or area, subject to
the termination, shall continue to be part of the Old or New Portfolio, as
applicable.
(c) Performance Metric Makeup/Payment. If any of the Performance Metrics
set forth below in this SECTION 15.3(c) is in any material respect not satisfied
and is not remedied within the applicable cure period specified in paragraphs
(i), (ii) or (iii) of this SECTION 15.3(c), Newcourt shall pay damages to Lucent
according to the following:
(i) If LTPF *** fails to *** Lucent may give Newcourt written notice
of such failure. Within *** of receipt of ***.
(ii) If LTPF *** fails to *** Lucent may give notice to Newcourt of
***. Newcourt shall, within thirty (30) days of the date of
delivery of such notice, supply Lucent with a plan designed to
address the problem and within ***.
(iii) If *** Newcourt shall ***.
SECTION 15.4 OVERRIDING PRINCIPLES.
Notwithstanding anything else contained in SECTION 15.2 or SECTION 15.3 to the
contrary, if a Performance Metrics is not achieved as a result of an event
which: (a) arises by reason of Lucent's material breach of this Agreement, or
(b) is beyond the control of NCT and generally effects comparable financing
sources in materially adverse and similar manner, then the portion of the
non-performance which is attributable to such event shall not serve as a basis
or part of the basis for Lucent to exercise any of its termination rights under
this ARTICLE XV. Newcourt will bear the burden of proving that the exception in
clause (b) has been met. Thereafter, LTPF will utilize commercially reasonable
efforts to cure such failure. To the extent that the effect of such
non-performance is a *** or less reduction of the *** and is not caused by
Lucent's material breach, such reduction shall be *** for the following
year.
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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
SECTION 15.5 EFFECT OF TERMINATION.
(a) Non-Renewal. If Lucent or Newcourt delivers a timely Non-Renewal
Notice pursuant to SECTION 15.1(a), the parties rights and obligations under
this Agreement shall continue in full force and effect, except with respect to
the following:
(i) The parties shall immediately enter into good faith negotiations
regarding a final 18-month transition Operating Plan or shorter
period if the Non-Renewal Notice is delivered in the First
Renewal Period or any subsequent Renewal Period (the "Transition
Operating Plan"). Such Transition Operating Plan shall (A)
supersede any existing Operating Plan (including any Performance
Matrix in any prior Operating Plan), and (B) provide for (1) the
continued operation of LTPF during the period prior to the Wind
Down Period in a manner that will not require any material
capital commitments; and (2) the orderly winding down of LTPF
during the Wind Down Period. The Transition Operating Plan will
provide for orderly removal of co-located employees and the
de-installation of all systems during the Wind Down Period.
(ii) During the Transition Period, LTPF shall establish and maintain
appropriate accruals and reserves in anticipation of the
additional charges and costs, including employee terminations to
be incurred in connection with the wind down of the operations of
LTPF throughout the Transition Period and Wind Down Period and so
long as the Old Portfolio and New Portfolio have Finance
Contracts with remaining unpaid payments or unrealized Residual
Investments. Throughout the Transition Period and Wind Down
Period and so long as the Old Portfolio and New Portfolio have
Finance Contracts with remaining unpaid payments or unrealized
Residual Investments, NCT shall continue to maintain segregated
books and records for the business of LTPF and shall continue to
pay Lucent the Lucent Management Fee.
(iii) The covenants of NCT and its affiliates set forth in Article VII
shall cease to be of any effect as of ***.
(iv) The covenants of Lucent in SECTION 6.1 AND 6.2 shall cease to be
of any effect as of ***.
(v) Upon the expiration of the Transition Period, Lucent may purchase
one or more Finance Contracts by giving NCT three (3) business
days written notice that it desires to purchase such Finance
Contract. The purchase price for such Finance Contract shall be
an amount equal to (a) all Payments due, past due, and to become
due LTPF under such Finance Contract (excluding rental taxes, if
applicable), discounted to their net present value as of the
applicable date of purchase at an interest rate of ***.
42
CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
(vi) Except as provided in SECTIONS 15.5(a)(v) AND (x), Lucent shall
have no additional rights to any property of LTPF, including, but
not limited to the operating systems, the interfaces or equipment
of LTPF or used by LTPF.
(vii) Throughout the Transition Period and a period of *** thereafter,
neither Lucent nor any Lucent Entity will, without the prior
written consent of NCT, hire or engage, as an employee,
independent contractor or in any other similar capacity, any
Dedicated Employee whose primary duties are related to the
servicing of either the Old Portfolio or the New Portfolio.
(viii) Throughout the Transition Period and a period of *** thereafter,
neither Lucent nor any Lucent Entity will, without the prior
written consent of NCT, hire or engage, as an employee,
independent contractor or in any other similar capacity, any
Dedicated Employee whose primary duties are not related to the
servicing of either the Old Portfolio or the New Portfolio.
(ix) NCT shall deliver to Lucent an image of the then current Lucent
customer database and lease portfolio in a mutually agreed upon
medium and format with recognizably defined fields (for example,
defined fields for "customer", "product" and others).
(x) NCT shall service all owned and managed assets in the Old
Portfolio and New Portfolio pursuant to the terms and conditions
set forth in SECTION 16.3(g), and Lucent shall continue to have
systems interfaces to track and monitor the Customers and the
Finance Contracts.
(xi) Any time during the Wind Down Period, Lucent may terminate the
Location Support upon *** notice to Newcourt.
(xii) Except as specified in SECTION 15.6, upon the expiration of the
Transition Period, all obligations of NCT and Lucent under this
Agreement shall terminate.
(b) Complete Early Termination by Lucent. If Lucent terminates this
Agreement in its entirety prior to the expiration of the Term in accordance with
SECTION 15.2, the following terms and conditions shall be applicable:
(i) The parties shall immediately enter into good faith negotiations
regarding a final 6-month transition Operating Plan (the "Early
Termination Transition Operating Plan"). Such Early Termination
Transition Operating Plan shall (a) supersede any existing
Operating Plan, and (b) provide for the immediately orderly
winding down of LTPF during the six months transition period (the
"Early Termination Wind Down Period") including the immediate
orderly removal of co-located employees and the de-installation
of all systems.
(ii) During the Early Termination Wind Down Period, LTPF shall
establish and maintain appropriate accruals and reserves in
anticipation of the additional
43
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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
charges and costs associated to be incurred in connection with
the wind down of the operations of LTPF. Throughout the
Transition Period and Wind Down Period and so long as the Old
Portfolio and New Portfolio have Finance Contracts with remaining
unpaid payments or unrealized Residual Investments, NCT shall
continue to maintain segregated books and records for the
business of LTPF and shall continue to pay Lucent the Lucent
Management Fee.
(iii) The covenants of NCT and its affiliates set forth in Article VII
shall cease to be of any effect on ***.
(iv) The covenants of Lucent in SECTION 6.1 AND 6.2 shall cease to be
of any effect as of ***.
(v) Upon the expiration of the Early Termination Wind Down Period,
Lucent may purchase one or more Finance Contracts by giving NCT
three (3) business days written notice that it desires to
purchase such Finance Contract. The purchase price for such
Finance Contract shall be an amount equal to (a) all Payments
due, past due, and to become due LTPF under such Finance Contract
(excluding rental taxes, if applicable), discounted to their net
present value as of the applicable date of purchase at an
interest rate of ***.
(vi) Except as provided in SECTIONS 15.5(b)(v) AND (viii), Lucent
shall have no additional rights to any property of LTPF,
including, but not limited to the operating systems, the
interfaces or equipment of LTPF or used by LTPF.
(vii) NCT shall deliver to Lucent an image of the then current Lucent
customer database and lease portfolio in a mutually agreed upon
medium and format with recognizably defined fields (for example,
defined fields for "customer", "Product" and others).
(viii) Newcourt shall service the owned and managed assets in the Old
Portfolio and New Portfolio pursuant to the terms and conditions
set forth in Section 16.3(g), and Lucent shall continue to have
systems interfaces to track and monitor the Customers and the
Finance Contracts.
(ix) Except as specified in SECTION 15.6, upon the expiration of the
Transition Period, all obligations of NCT and Lucent under this
Agreement shall terminate.
(x) Throughout the Early Termination Wind Down Period and a period of
*** thereafter, neither Lucent nor any Lucent Entity will,
without the prior written consent of Newcourt, hire or engage, as
an employee, independent contractor or in any other similar
capacity, any Dedicated Employee whose primary duties are related
to the servicing of either the Old Portfolio or the New
Portfolio.
(xi) If the termination is pursuant to Section 15.2(g), Newcourt shall
pay to Lucent upon demand, as liquidated damages and not as a
penalty and in lieu of all other
44
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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
damages, losses or expenses suffered or incurred by Lucent as a
result of the occurrence the termination event set forth in
Section 15.2(g), the sum of ***.
(c) Complete Early Termination by Newcourt. If Newcourt terminates this
Agreement in its entirety prior to the expiration of the Term in accordance with
SECTION 15.2, the following terms and conditions shall be applicable:
(i) The parties shall immediately enter into good faith negotiations
regarding a final 6-month transition Operating Plan (the "Early
Termination Transition Operating Plan"). Such Early Termination
Transition Operating Plan shall (a) supersede any existing
Operating Plan, and (b) provide for the immediately orderly
winding down of LTPF during the six months transition period (the
"Early Termination Wind Down Period") including the immediate
orderly removal of co-located employees and the de-installation
of all systems.
(ii) During the Early Termination Wind Down Period, LTPF shall
establish and maintain appropriate accruals and reserves in
anticipation of the additional charges and costs associated to be
incurred in connection with the wind down of the operations of
LTPF. Throughout the Transition Period and Wind Down Period and
so long as the Old Portfolio and New Portfolio have Finance
Contracts with remaining unpaid payments or unrealized Residual
Investments, NCT shall continue to maintain segregated books and
records for the business of LTPF and shall continue to pay Lucent
the Lucent Management Fee.
(iii) The covenants of Newcourt and its affiliates set forth in Article
VII shall cease to be of any effect as of ***.
(iv) The covenants of Lucent in SECTION 6.1 AND 6.2 shall cease to be
of any effect as of ***.
(v) Except as provided in SECTIONS 15.5(c)(vii) AND (ix), Lucent
shall have no additional rights to any property of LTPF,
including, but not limited to the operating systems, the
interfaces or equipment of LTPF or used by LTPF.
(vi) NCT shall deliver to Lucent an image of the then current Lucent
customer database and lease portfolio in a mutually agreed upon
medium and format with recognizably defined fields (for example,
defined fields for "customer", "Product" and others).
(vii) Upon the expiration of the Early Termination Wind Down Period,
Lucent may purchase one or more Finance Contracts by giving NCT
three (3) business days written notice that it desires to
purchase such Finance Contract. The purchase price for such
Finance Contract shall be an amount equal to (a) all Payments
due, past due, and to become due LTPF under such Finance Contract
(excluding rental taxes, if applicable), discounted to their net
present value as of the applicable date of purchase at an
interest rate of ***.
45
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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
(viii) Throughout the Early Termination Wind Down Period and a period of
*** thereafter, neither Lucent nor any Lucent Entity will,
without the prior written consent of Newcourt, hire or engage, as
an employee, independent contractor or in any other similar
capacity, any Dedicated Employee whose primary duties are related
to the servicing of either the Old Portfolio or the New
Portfolio.
(ix) Newcourt shall service the owned and managed assets in the Old
Portfolio and New Portfolio pursuant to the terms and conditions
set forth in SECTION 16.3(g), and Lucent shall continue to have
systems interfaces to track and monitor the Customers and the
Finance Contracts.
(x) Except as specified in SECTION 15.6, upon the expiration of the
Transition Period, all obligations of Newcourt and Lucent under
this Agreement shall terminate.
SECTION 15.6 EFFECT OF TERMINATION. Upon the termination of this Agreement as
provided in this ARTICLE XV, all obligations of the parties hereto with respect
to any future Financings and Ancillary Services under this Agreement will cease;
provided, that the obligations of the parties set forth herein as they relate to
completed Financings and Ancillary Services (including the obligations set forth
in SECTION 8.2, ARTICLE IX, SECTION 10.2, SECTION 15.5 and this SECTION 15.6 and
the provisions herein as to indemnification, dispute resolution, confidentiality
and miscellaneous matters (ARTICLES XIII, XIV, XVII AND XVIII) will continue in
full force and effect.
ARTICLE XVI
BUY-OUT OPTION
SECTION 16.1 BUY-OUT OPTION NOTICE. At least *** prior to the expiration of the
Term, Lucent, may, by delivery of notice (the "Buy-Out Notice") to Newcourt,
elect to have the fair market value of LTPF determined in order for Lucent to
determine whether to exercise its Buy-Out Option (the "Buy-Out Option") under
SECTION 16.2.
SECTION 16.2 BUY-OUT OPTION.
(a) The fair market value of LTPF shall be an amount equal to: (x)
Notional Fee Base for (i) the latest full fiscal year of LTPF's operations, or
(ii) the twelve (12) month period ending on the last day of the calendar month
of the Buy-Out Notice, whichever is greater, multiplied by (y) the average
earnings multiples at which "Three Comparables" trade or would be purchased in
the United States as of the date of the Buy-Out Notice, as determined by a
mutually acceptable independent investment bank or appraisal firm. "Three
Comparables" shall mean three equipment finance companies with similar
businesses, portfolios and operations which are most comparable to the LTPF
operation and the Old Portfolio and the New Portfolio. If the parties can not
agree on an investment bank or appraisal firm, each party shall select its own
investment bank or appraisal firm, and those two banks or firms shall select a
third independent investment bank or appraisal firm.
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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
(b) The parties shall instruct the investment bank or appraisal firm to
complete the determination of the Three Comparables and issue a final report
within 45 days after Lucent provided the Buy-Out Notice. During this period,
Newcourt shall also provide Lucent with an accounting or an estimate of the
components set forth in clauses (ii) to (iv) of Section 16.3(c) that Lucent
would be required to pay at the closing of any purchase if Lucent were to
exercise the Buy-Out Option.
(c) Upon Lucent's receipt of a final report by the investment bank or
appraisal firm establishing the average earnings multiples for the Three
Comparables and Newcourt's estimate of the notional debt of LTPF pursuant to
Section 16.2(b), Lucent shall have 15 days to determine whether it will exercise
its Buy-Out Option. Lucent shall exercise its Buy-Out Option by giving notice to
Newcourt within the foregoing 15 day period that Lucent is exercising its
Buy-Out Option. If Lucent fails to make any election or fails provide the
appropriate notice to Newcourt within the 15 day period, Lucent shall be deemed
to have elected not to exercise its Buy-Out Option. If Lucent elects not to
exercise the Buy-Out Option, or fails to properly exercise the Buy-Out Option in
accordance with this paragraph (c), then the Buy-Out Option shall terminate.
(d) If Lucent shall have exercised its Buy-Out Option, then Lucent,
effective as of the Purchase Effective Date (as defined below), shall purchase
from NCT all of NCT's interest in the Old Portfolio and New Portfolio as of the
Purchase Effective Date and all of the assets of NCT relating to the LTPF
(collectively, "NCT's Interest") for a purchase price (the "Purchase Price")
equal to ***.
SECTION 16.3 CLOSING AND PURCHASE. The following terms and conditions shall
govern the purchase and sale of NCT's Interest:
(a) Unless otherwise agreed by Lucent and NCT, the closing of such
purchase and sale shall occur at the principal offices NCT where LTPF maintained
its headquarters, on the expiration of the Term or as soon as practical
thereafter (the "Purchase Effective Date").
(b) At the closing, NCT shall sell, assign, transfer and convey its
NCT's Interests to Lucent, free and clear of all liens, claims and other
encumbrances (other than those arising pursuant to this Agreement).
(c) At the closing, Lucent shall pay to NCT an amount equal to ***.
(d) ***
(e) The following assets shall be included within the definition of
NCT's Interest:
(i) all of NCT's interest in the Old Portfolio and the New Portfolio
as of the Purchase Effective Date;
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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
(ii) all fixed and other assets of NCT with respect to which
allocations previously were made in calculating the Management
Fee accrued to Lucent and that were still being utilized to
operate LTPF as of the date of the Buy-Out Notice; and
(iii) a non-exclusive, non-transferable perpetual license in all the
operating systems and software of NCT which were being utilized
to operate LTPF as of the date of the Buy-Out Notice.
(f) NCT shall provide Lucent with the opportunity to hire any NCT
employees who are dedicated on a full-time basis to LTPF other than any member
of NCT's Senior Management team dedicated to the Business (the "Dedicated
Employees"), and shall support Lucent's efforts to hire the Dedicated Employees.
(g) Servicing. Subsequent to the Closing, NCT shall continue servicing
the Old and New Portfolios for the account of Lucent pursuant to a servicing
agreement to be entered into between Newcourt and Lucent based on then market
fees and standards.
(h) The remaining terms and conditions of the purchase and sale of NCT's
Interest shall be negotiated in good faith promptly after Lucent delivers to
Newcourt the Buy-Out Notice. If the parties do not finalize the purchase and
sale agreement within 90 days after the establishment of the fair market value
and Lucent's confirmation that it will be exercising its option, the matter will
be resolved pursuant to Article XIV.
ARTICLE XVII
CONFIDENTIALITY
SECTION 17.1 CONFIDENTIALITY. Newcourt and Lucent agree that the terms of this
Agreement may be publicly disclosed to the extent required in any public filing
made by the Lucent Entities or Newcourt Entities with the Securities and
Exchange Commission, the Canadian securities commission or similar securities
agencies (collectively "Securities Commissions"); however, Newcourt and Lucent
covenant and agree that each shall, and shall cause its respective Affiliates
to, treat any information provided by the Lucent Entities (including the
Customer list) to Newcourt Entities (in the case of Newcourt's obligations
hereunder) or by the Newcourt Entities to the Lucent Entities (in the case of
Lucent's obligations hereunder) pursuant to this Agreement (including, without
limitation, any proprietary information otherwise acquired hereunder) as
confidential and to hold such information and use it solely for purposes of this
Agreement and not without the prior consent of the other party hereto, to
disclose, or cause to be disclosed, such information to any Person, except that
any such information may be disclosed (a) to the Newcourt Entities' or the
Lucent Entities' agents, directors, officers, employees, representatives,
accountants, counsel or special counsel who have a need to know or have access
to such information and who have been instructed or have a duty to keep such
information confidential in accordance with the terms hereof, (b) to the
Affiliates of Newcourt and Lucent, and such Affiliates' agents, directors,
officers, employees, representatives, accountants, counsel or special counsel
who have a need to know or have access to such information and who have been
instructed or have a duty to keep such information confidential and to use it in
accordance with the terms hereof, (c) to such other Persons who are reasonably
48
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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
deemed necessary by Newcourt and Lucent, as the case may be, in connection with
the enforcement of their rights under this Agreement, (d) to the extent required
pursuant to applicable law or any governmental authority (including, but not
limited to, the IRS, state taxing authorities, any Securities Commission or
federal or state judicial authorities), (e) to the extent required or
appropriate to be disclosed in response to a reasonable request by rating
agencies, underwriters, or creditors in connection with financing transactions
undertaken by Newcourt or Lucent or their Affiliates, who agree or are under a
duty to hold such information confidential in accordance with the terms hereof,
(f) to the extent that prior to such disclosure, such information is in the
public domain or (g) to Persons other than Lucent Competitors involved in
potential acquisitions of, mergers with or purchase of all or substantially all
of the assets of Newcourt (or any other Newcourt Entity) or Lucent (or any other
Lucent Entity) who, in each case, agree in writing to hold such information
confidential in accordance with the terms hereof. Newcourt and Lucent will take
such action as may be reasonably necessary to ensure that the competitors of the
other party do not acquire such information.
ARTICLE XVIII
MISCELLANEOUS
SECTION 18.1 AMENDMENTS; WAIVERS.
(a) This Agreement can be amended only by a writing duly executed by the
parties hereto.
(b) Any waiver of a breach or non-performance, or any failure to
exercise any remedy within the time periods set forth in this Agreement, shall
not be deemed a waiver of any other breach or non-performance, or subsequent
breach or non-performance, whether or not similar or identical in nature.
SECTION 18.2 NO PARTNERSHIP. Nothing contained in this Agreement will be
construed in any manner to constitute the creation of a partnership between the
parties. All Lucent Entities and all NCT Entities are, and will at all times be
and remain independent contractors with respect to the subject matter of this
Agreement.
SECTION 18.3 THIRD PARTIES. Nothing in this Agreement, expressed or implied, is
intended or will be construed to confer upon any Person (including Customers and
Authorized Dealers) other than the parties hereto and their permitted successors
and assigns any right, remedy or claim under or by reason of this Agreement.
SECTION 18.4 INTELLECTUAL PROPERTY RIGHTS AND CUSTOMER LISTS. Any software or
management system developed solely for and paid for by LTPF will be the sole
property of LTPF. ***
SECTION 18.5 TRANSFER OF INTERESTS. (a) Newcourt will not sell, assign, transfer
or otherwise dispose of or encumber (collectively, "assign"), this Agreement or
its interest in LTPF to another Person, except a wholly-owned Subsidiary of
Newcourt without the prior written consent of Lucent.
49
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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
(b) Lucent will not sell, assign, transfer or otherwise dispose of
(collectively, "assign") or encumber its rights under this Agreement without the
prior written consent of Newcourt except (i) to a Lucent Entity or (ii) to
another Person which acquires all or substantially all of the assets now
comprising BCS (the "Assets"). Lucent shall use its diligent efforts to have
this Agreement assigned to and assumed by a Person acquiring the Assets.
SECTION 18.6 SUBSIDIARIES.
(a) Lucent agrees and acknowledges that Lucent shall be responsible for,
and hereby guarantees, the due and punctual payment and performance, in
accordance with their terms, of the obligations hereunder applicable to any
Lucent Entity or any business unit or division within a Lucent Entity or in any
other agreement or commitment of a Lucent Entity or any business unit or
division within a Lucent Entity entered into at any time and from time to time
in connection with this Agreement with or for the benefit of any Newcourt Entity
or any business unit or division within a Newcourt Entity. Lucent further
acknowledges and agrees that the foregoing undertaking and guarantee shall
extend for the benefit of any permitted assignee of Newcourt or such business
unit's or division's rights and benefits with respect to any such agreement or
commitment and, if reasonably requested by Newcourt, Lucent shall affirm such
undertaking and guarantee for the benefit of any such assignee. Newcourt agrees
that any obligation of Lucent hereunder or thereunder that is paid or performed
by a Lucent Entity (other than Lucent) shall be deemed to be paid or performed,
as the case may be, by Lucent.
(b) Newcourt agrees and acknowledges that Newcourt shall be responsible
for and hereby guarantees the due and punctual payment and performance, in
accordance with their terms, of the obligations hereunder applicable to any
Newcourt Entity or any business unit or division of any Newcourt Entity or in
any other agreement or commitment of such Newcourt Entity or any business unit
or division within any Newcourt Entity entered into at any time and from time to
time in connection with this Agreement with or for the benefit of the Lucent
Entities or any business unit or division within a Lucent Entity. Newcourt
further acknowledges and agrees that the foregoing undertaking and guarantee
shall extend for the benefit of any permitted assignee of Lucent's, with respect
to any such agreement or commitment and, if reasonably requested by Lucent,
Newcourt shall affirm such undertaking and guarantee for the benefit of any such
assignee. Lucent agrees that any obligation of Newcourt hereunder or thereunder
that is paid or performed by any Newcourt Entity shall be deemed to be paid or
performed, as the case may be, by Newcourt.
SECTION 18.7 NOTICES. All notices, consents, deliveries, demands, approvals and
other communications which are required or permitted to be given hereunder will
be in writing and will be deemed to have been duly given if personally delivered
(including overnight courier service), telecopied or mailed certified first
class mail, postage prepaid, addressed as follows:
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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
(a) if to Lucent, to:
Lucent Technologies Inc.
600 Mountain Avenue
Murray Hill, New Jersey 07974
Telecopier Number:
Attn: Treasurer
with a copy to: Paul D. Diczok
Lucent Technologies Inc.
219 Mt. Airy Road
Room 2F220
Basking Ridge, New Jersey 07920
Telecopier Number: 908-953-4912
Attn: Paul D. Diczok, Esq.
(b) If to NCT, to:
NEWCOURT CREDIT GROUP INC.
BCE Place
181 Bay Street
Suite 3500
P.O. Box 827
Toronto, Ontario, Canada M5J2T3
Telecopier Number: 416-594-2515
Attn: Bradley D. Nullmeyer
with a copy to:
AT&T/Newcourt
44 Whippany Road
Morristown, NJ 07962
Telecopier Number: 973-397-4440
Attn: Scott Moore, General Counsel
SECTION 18.8 ORIGINAL AGREEMENTS. (a) Upon the Commencement Date, the following
agreements, as between Lucent and Capital, shall terminate the Original
Agreements, the Location Support Agreement (as defined in the Operating
Agreement (and any related letter supplements), and any agreements relating to
the payment of sales assistance or similar fees to Lucent and their employees,
except to the extent any term of any of the Original Agreements or such other
agreement specifies that it survives termination of that agreement.
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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
(b) Lucent and Newcourt each hereby mutually waive and release
any and all claims each party or any of its Affiliates may have has against the
other party or its Affiliates as a result of any actual or purported breach or
violation of the Original Agreements and the other agreements terminated
pursuant to SECTION 18.8(a).
SECTION 18.9 GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of New Jersey, without giving effect to
the choice of law provisions of its conflicts of law rules.
SECTION 18.10 HEADINGS. This article and section headings and subheading
contained in this Agreement are intended solely for the convenience of reference
and will not affect in any manner the meaning or interpretation of this
Agreement.
SECTION 18.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original instrument, but all of
which together will constitute one and the same agreement, and will become
binding when one or more counterparts have been executed and delivered by each
of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered as of the date first above written.
[Signatures on following page]
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LUCENT TECHNOLOGIES INC. NEWCOURT CREDIT GROUP INC.
/s/ William T. O'Shea /s/ Robert J. Hicks
BY: _______________________________ BY: ______________________________
NAME: William T. O'Shea NAME: Robert J. Hicks
TITLE: Group President--BCS TITLE: Senior Vice President
/s/ Donald K. Peterson /s/ Daniel A. Jauernig
BY: _______________________________ BY: ______________________________
NAME: Donald K. Peterson NAME: Daniel A. Jauernig
TITLE: Executive Vice President TITLE: Chief Financial Officer
and CFO
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PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
SCHEDULES
SCHEDULE 1.1 APPLICABLE TRADE NAMES AND SERVICE MARKS
SCHEDULE 6.1 LOCATION SUPPORT
SCHEDULE 6.2 EXISTING ALTERNATIVE FINANCING SERVICE PROVIDERS
SCHEDULE 7.1 PERMITTED LUCENT COMPETITORS
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PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
SCHEDULE 1.1
APPLICABLE TRADE NAMES AND SERVICE MARKS
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SCHEDULE 6.1
LOCATION SUPPORT
(a) SUPPORT SPACE AND SERVICES. Subject to the availability of space in
each appropriate Sales Site, Lucent agrees to provide to LTPF, (i) appropriate
furnished office space ("Support Space"), and (ii) basic office support services
for such Support Space during regular business hours (including, cleaning,
relamping, data and telephone lines, duplicating facilities, file storage, mail
room and similar services), which service shall be limited in any event to the
support services that are regularly available at such Sales Site. Lucent further
agrees that, to the extent practicable, the Support Space shall be located in
reasonable proximity to the appropriate Lucent sales personnel.
(b) COMPLIANCE WITH RULES AND REGULATIONS AND LEASES. NCT agrees that
LTPF shall occupy its respective Support Space in accordance with the rules and
regulations and general office business practices for the Sales Site in
question, whether such Sales Site is owned or leased by a Lucent Entity. Lucent
shall provide LTPF with a copy of such rules and regulations and advise LTPF
regarding any other general office business practices to permit the LTPF to
fulfill its obligations hereunder. LTPF's occupancy of any leased or subleased
sales sites shall be in compliance with any applicable leases or subleases with
third parties.
(c) REIMBURSEMENT FOR SUPPORT SPACE. NCT agrees to reimburse (on behalf
of LTPF) Lucent for the proportionate costs of provision of the Support Space
and of such Support Space's allocable share of any common expenses associated
with the Sales Site, including, but not limited to, (i) building operating
expenses, (ii) utility user charges (at actual cost for dedicated utilities and
as appropriately apportioned or otherwise measured if not so dedicated to LTPF)
and (iii) fixed general charges for building amenities or services that are not
charged on a per-use basis (collectively, the "Reimbursement Cost"). The
Reimbursement Cost for each Support Space (i) shall be mutually agreed on a
periodic basis by Lucent and NCT as part of the Annual Operating Plan and (ii)
shall be paid by NCT, on behalf of LTPF, without requiring any prior invoice
therefor, in equal monthly installments in advance on the first day of each
calendar month. NCT further agrees to pay or reimburse, on behalf of LTPF,
Lucent (i) for the office support services (if same have not previously been
included in the Reimbursement Cost) and (iii) for any specially-ordered building
services incurred with respect to the use and occupancy of the Support Space by
LTPF, for which all such payments should be due within 30 days of receipt of a
periodic statement for such user and office service charges.
(d) TERM OF OCCUPANCY. The term of occupancy (the "Support Space Term")
for each Support Space identified by the parties shall commence, for those
Support Spaces occupied by LTPF personnel on the Commencement Date on such date
and shall commence for each Support Space hereafter identified pursuant to the
terms hereof on the date LTPF shall first occupy such Support Space. The Support
Space Term for any given Support Space shall expire and terminate on the
earliest to occur of (i) the effective date of the termination of the Agreement,
(ii) the date the Sales Site containing the Support Space is vacated for any
reason
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by Lucent, or (iii) the date which is 90 days from the date of notice of
termination given by the LTPF to Lucent.
(e) END OF SUPPORT SPACE TERM. Upon the expiration of the Support Space
Term in accordance with the terms of this Agreement or other termination of
occupancy of any Support Space by LTPF, LTPF shall (i) vacate and surrender the
Support Space to Lucent or the Company owning or controlling the Sales Site,
broom clean and in good order, condition and repair, ordinary wear and tear and
damage by the elements, fire or other casualty excepted, (ii) on or prior to
such date, at LTPF's sole cost and expense, remove from the Support Space any
unauthorized alterations and restore the Support Space as appropriate, and (iii)
remove all of the LTPF's personal property.
(f) NO LEASE. The terms of this SCHEDULE 6.1 and LTPF's occupancy of any
Support Space are intended to provide for "location support" and shall not
constitute or be deemed to constitute a lease, sublease or co-tenancy agreement.
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PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
SCHEDULE 6.2
EXISTING ALTERNATIVE FINANCING SERVICE PROVIDERS
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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
406 PROMULGATED UNDER THE SECURITIES ACT OF 1934, AS AMENDED, AND RULE 24B-2
PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
SCHEDULE 7.1
PERMITTED LUCENT COMPETITORS
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