Exhibit 10.2
EXECUTION COPY
RECEIVABLES SALE AGREEMENT
dated as of
October 19, 2001
by and among
PIONEER-STANDARD ELECTRONICS, INC.,
PIONEER-STANDARD ILLINOIS, INC.,
PIONEER-STANDARD MINNESOTA, INC.
and
PIONEER-STANDARD ELECTRONICS, LTD.,
as Originators
and
PIONEER-STANDARD FUNDING CORPORATION,
as Buyer
TABLE OF CONTENTS
Page
ARTICLE I
AMOUNTS AND TERMS..............................................................1
Section 1.1 Purchase of Receivables..................................1
Section 1.2 Payment for the Purchase.................................2
Section 1.3 Purchase Price Credit Adjustments........................4
Section 1.4 Payments and Computations, Etc...........................5
Section 1.5 Transfer of Records......................................5
Section 1.6 Characterization.........................................6
Section 1.7 Additional Originators...................................6
ARTICLE II
REPRESENTATIONS AND WARRANTIES.................................................6
Section 2.1 Representations and Warranties of Originator.............6
ARTICLE III
CONDITIONS OF PURCHASE........................................................10
Section 3.1 Conditions Precedent to Purchase........................10
Section 3.2 Conditions Precedent to Subsequent Payments.............10
ARTICLE IV
COVENANTS.....................................................................10
Section 4.1 Affirmative Covenants of the Originators................10
Section 4.2 Negative Covenants of the Originators...................15
ARTICLE V
AMORTIZATION EVENTS...........................................................16
Section 5.1 Amortization Events.....................................16
Section 5.2 Remedies................................................18
ARTICLE VI
INDEMNIFICATION...............................................................18
Section 6.1 Indemnities by the Originators..........................18
Section 6.2 Other Costs and Expenses................................20
ARTICLE VII
MISCELLANEOUS.................................................................20
Section 7.1 Waivers and Amendments..................................20
Section 7.2 Notices.................................................21
Section 7.3 Protection of Ownership Interests of the Buyer..........21
Section 7.4 Confidentiality.........................................22
Section 7.5 Bankruptcy Petition.....................................22
Section 7.6 CHOICE OF LAW...........................................22
Section 7.7 CONSENT TO JURISDICTION.................................22
Section 7.8 WAIVER OF JURY TRIAL....................................23
Section 7.9 Integration; Binding Effect; Survival of Terms..........23
Section 7.10 Counterparts; Severability; Section References..........24
EXHIBITS AND SCHEDULES
EXHIBIT I -- Definitions
EXHIBIT II -- Principal Places of Business; Locations of Records;
Federal Employer Identification Numbers; Other Names
EXHIBIT III -- [Reserved]
EXHIBIT IV -- Form of Compliance Certificate
EXHIBIT V -- Credit and Collection Policy
EXHIBIT VI -- Form of Subordinated Note
SCHEDULE A -- List of Documents to Be Delivered to Buyer Prior to
the Purchase
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RECEIVABLES SALE AGREEMENT
THIS RECEIVABLES SALE AGREEMENT, dated as of October 19, 2001,
is by and among Pioneer-Standard Electronics, Inc., an Ohio corporation (the
"PARENT"), Pioneer-Standard Illinois, Inc., a Delaware corporation,
Pioneer-Standard Minnesota, Inc., a Delaware corporation, and Pioneer-Standard
Electronics, Ltd., a Delaware limited partnership (each an "ORIGINATOR", and
collectively the "ORIGINATORS"), and Pioneer-Standard Funding Corporation, a
Delaware corporation (the "BUYER"). Unless defined elsewhere herein, capitalized
terms used in this Agreement shall have the meanings assigned to such terms in
EXHIBIT I.
PRELIMINARY STATEMENTS
The Originators now own, and from time to time hereafter will
own, Receivables. The Originators wish to sell and assign to the Buyer, and the
Buyer wishes to purchase from the Originators, all of the Originators' right,
title and interest in and to such Receivables, together with the Related
Security and Collections with respect thereto.
The Originators and the Buyer intend the transactions
contemplated hereby to be true sales of the Receivables from the Originators to
the Buyer, providing the Buyer with the full benefits of ownership of the
Receivables, and the Originators and the Buyer do not intend these transactions
to be, or for any purpose to be characterized as, loans from the Buyer to the
Originators.
Following the purchase of Receivables from the Originators,
the Buyer will sell undivided interests therein and in the associated Related
Security and Collections pursuant to that certain Receivables Purchase Agreement
dated as of October 19, 2001 (as the same may from time to time hereafter be
amended, supplemented, restated or otherwise modified, the "PURCHASE AGREEMENT")
among the Buyer, the Parent, as Servicer, Falcon Asset Securitization
Corporation and Three Rivers Funding Corporation, as conduits (the "CONDUITS"),
the funding entities from time to time party thereto as committed purchasers
(the "COMMITTED PURCHASERS" and together with the Conduits, the "PURCHASERS"),
the managing agents from time to time party thereto (the "MANAGING AGENTS") and
Bank One, NA (Main Office Chicago) or any successor collateral agent appointed
pursuant to the terms of the Purchase Agreement, as collateral agent for the
Purchasers (in such capacity, the "COLLATERAL AGENT").
ARTICLE I
AMOUNTS AND TERMS
Section 1.1 PURCHASE OF RECEIVABLES.
(a) Effective on the date hereof, in consideration for the Purchase
Price and upon the terms and subject to the conditions set forth herein, each
Originator does hereby sell, assign, transfer, set-over and otherwise convey to
the Buyer, without recourse (except to the
extent expressly provided herein), and the Buyer does hereby purchase from each
Originator, all of such Originator's right, title and interest in and to all
Receivables existing as of the close of business on the Business Day immediately
prior to the date hereof and all Receivables thereafter arising through and
including the Amortization Date, together with, in each case, all Related
Security, such Originator's interest in the Lock-Boxes and the Collection
Accounts relating thereto, the Collections with respect to such Receivables and
all proceeds of any of the foregoing. In accordance with the preceding sentence,
on the date hereof the Buyer shall acquire all of each Originator's right, title
and interest in and to all Receivables existing as of the close of business on
the Business Day immediately prior to the date hereof and thereafter arising
through and including the Amortization Date, together with all Related Security,
such Originator's interest in the Lock-Boxes and the Collection Accounts
relating thereto, the Collections with respect to such Receivables and all
proceeds of any of the foregoing; PROVIDED, that the Buyer shall be obligated to
pay the Purchase Price therefor in accordance with SECTION 1.2. In connection
with the payment of the Purchase Price for any Receivables purchased hereunder,
the Buyer may request that each Originator deliver, and each Originator shall
deliver, such approvals, opinions, information, reports or documents as the
Buyer may reasonably request.
(b) It is the intention of the parties hereto that the Purchase of
Receivables made hereunder shall constitute a "sale of accounts" (as such term
is used in Article 9 of the UCC), which sale is absolute and irrevocable and
provides the Buyer with the full benefits of ownership of the Receivables.
Except for the Purchase Price Credits owed pursuant to SECTION 1.3, the sale of
Receivables hereunder is made without recourse to the Originators; PROVIDED,
HOWEVER, that (i) each Originator shall be liable to the Buyer for all
representations, warranties and covenants made by such Originator pursuant to
the terms of the Transaction Documents to which such Originator is a party, and
(ii) such sale does not constitute and is not intended to result in an
assumption by the Buyer or any assignee thereof of any obligation of any
Originator or any other Person arising in connection with the Receivables, the
related Contracts and/or other Related Security or any other obligations of any
Originator. In view of the intention of the parties hereto that the Purchase of
Receivables made hereunder shall constitute a sale of such Receivables rather
than loans secured thereby, each Originator agrees that it will, on or prior to
the date hereof and in accordance with SECTION 4.1(e)(ii), mark its master data
processing records relating to the Receivables with a legend acceptable to the
Buyer and to the Collateral Agent and each Managing Agent (as the Buyer's
assignees), evidencing that the Buyer has purchased such Receivables as provided
in this Agreement and to note in its financial statements that its Receivables
have been sold to the Buyer. Upon the request of the Buyer or the Collateral
Agent or any Managing Agent (as the Buyer's assignees), each Originator will
execute and file such financing or continuation statements, or amendments
thereto or assignments thereof, and such other instruments or notices, as may be
necessary or appropriate to perfect and maintain the perfection of the Buyer's
ownership interest in the Receivables and the Related Security and Collections
with respect thereto, or as the Buyer (or the Collateral Agent or any Managing
Agent, as the Buyer's assignees) may reasonably request.
Section 1.2 PAYMENT FOR THE PURCHASE.
(a) The Purchase Price for the Purchase of Receivables in existence on
the close of business on the Business Day immediately preceding the date hereof
(the "INITIAL CUTOFF
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DATE") shall be payable in full by the Buyer to each Originator on the date
hereof, and shall be paid to each Originator in the following manner:
(i) by delivery of immediately available funds, to the extent
of funds made available to the Buyer in connection with its subsequent
sale of an interest in such Receivables to the Purchasers under the
Purchase Agreement, such funds to be allocated among the Originators as
determined by the Buyer in its sole discretion;
(ii) by delivery of the proceeds of a subordinated revolving
loan from such Originator to the Buyer (a "SUBORDINATED LOAN") in an
amount not to exceed the least of (i) the remaining unpaid portion of
such Purchase Price and (ii) the maximum Subordinated Loan that could
be borrowed without rendering Buyer's Net Worth less than the Required
Capital Amount. Each Originator is hereby authorized by the Buyer to
endorse on the schedule attached to the Subordinated Note an
appropriate notation evidencing the date and amount of each advance
thereunder, as well as the date of each payment with respect thereto,
provided that the failure to make such notation shall not affect any
obligation of the Buyer thereunder; and
(iii) in respect of the Purchase Price allocable to the
Parent, by accepting a contribution to the Buyer's capital in an amount
equal to the remaining unpaid balance of such Purchase Price.
The Purchase Price for each Receivable coming into existence after the Initial
Cutoff Date shall be due and owing in full by the Buyer to each Originator or
its designee on the date each such Receivable came into existence (except that
the Buyer may, with respect to any such Purchase Price, offset against such
Purchase Price any amounts owed by such Originator to the Buyer hereunder and
which have become due but remain unpaid) and shall be paid to each Originator in
the manner provided in the following paragraphs (b), (c) and (d).
(b) With respect to any Receivables coming into existence after the
date hereof, on each Settlement Date, the Buyer shall pay the Purchase Price
therefor in accordance with Section 1.2(d) and in the following manner:
FIRST, by delivery of immediately available funds, to the extent of
funds available to the Buyer from its subsequent sale of an interest in the
Receivables to each Managing Agent for the benefit of the Purchasers under
the Purchase Agreement or other cash on hand, such funds to be allocated
among the Originators as determined by the Buyer in its sole discretion;
SECOND, by delivery of the proceeds of a Subordinated Loan, PROVIDED
that the making of any such Subordinated Loan shall be subject to the
provisions set forth in SECTION 1.2(a)(ii); and
THIRD, unless the Amortization Date has been declared to have occurred
pursuant to SECTION 5.2, by accepting a contribution to its capital in an
amount equal to the
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remaining unpaid balance of such Purchase Price, such capital contribution
to be allocated among the Originators as determined by the Buyer in its
sole discretion.
Subject to the limitations set forth in SECTION 1.2(a)(ii), each Originator
irrevocably agrees to advance each Subordinated Loan requested by the Buyer on
or prior to the Amortization Date. The Subordinated Loans shall be evidenced by,
and shall be payable in accordance with the terms and provisions of the
Subordinated Notes and shall be payable solely from funds which the Buyer is not
required under the Purchase Agreement to set aside for the benefit of, or
otherwise pay over to, the Purchasers, the Collateral Agent, the Managing Agents
or any other Person then entitled to any amounts as specified in the Purchase
Agreement.
(c) From and after the Amortization Date, no Originator shall be
obligated to (but may, at its option) sell Receivables to the Buyer.
(d) Although the Purchase Price for each Receivable coming into
existence after the date hereof shall be due and payable in full by the Buyer to
each Originator on the date such Receivable came into existence, settlement of
the Purchase Price between the Buyer and each Originator shall be effected on a
monthly basis on Settlement Dates with respect to all Receivables coming into
existence during the related Calculation Period and based on the information
contained in the Monthly Report delivered by the Servicer pursuant to ARTICLE
VIII of the Purchase Agreement for the Calculation Period then most recently
ended. Although settlement shall be effected on Settlement Dates, increases or
decreases in the amount owing under the Subordinated Notes made pursuant to
SECTION 1.2(b) shall be deemed to have occurred and shall be effective as of the
last Business Day of the Calculation Period to which such settlement relates.
Section 1.3 PURCHASE PRICE CREDIT ADJUSTMENTS. If on any day:
(a) the Outstanding Balance of a Receivable is:
(i) reduced as a result of any defective or rejected goods or
services, any discount or any adjustment by an Originator (other than
cash Collections on account of the Receivables),
(ii) reduced or canceled as a result of a setoff in respect of any
claim by any Person (whether such claim arises out of the same or a
related transaction or an unrelated transaction), or
(b) any of the representations and warranties set forth in ARTICLE II
are no longer true with respect to any Receivable,
then, in such event, the Buyer shall be entitled to a credit (each, a "PURCHASE
PRICE CREDIT") against the Purchase Price otherwise payable hereunder equal to
(x) in the case of SECTION 1.3(a), such reduction or (y) in the case of SECTION
1.3(b), the Outstanding Balance of such Receivable. If such Purchase Price
Credit exceeds the Original Balance of the Receivables coming into existence on
any day, then the applicable Originator shall pay the remaining amount of such
Purchase Price Credit in cash within five (5) Business Days thereafter, PROVIDED
that if the Amortization Date has not occurred, such Originator shall be allowed
to deduct the remaining
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amount of such Purchase Price Credit from any indebtedness owed to it under the
Subordinated Note.
Section 1.4 PAYMENTS AND COMPUTATIONS, ETC. All amounts to be paid or
deposited by the Buyer hereunder shall be paid or deposited in accordance with
the terms hereof on the day when due in immediately available funds to the
account of the applicable Originator designated from time to time by such
Originator or as otherwise directed by such Originator. In the event that any
payment owed by any Person hereunder becomes due on a day that is not a Business
Day, then such payment shall be made on the next succeeding Business Day unless
such next succeeding Business Day does not occur within the same calendar month,
in which case such payment shall be made on the immediately preceding Business
Day. If any Originator fails to pay any amount hereunder when due, such
Originator agrees to pay, on demand, the Default Fee in respect thereof until
paid in full; PROVIDED, HOWEVER, that such Default Fee shall not at any time
exceed the maximum rate permitted by applicable law. All computations of
interest payable hereunder shall be made on the basis of a year of 360 days for
the actual number of days (including the first but excluding the last day)
elapsed; PROVIDED, HOWEVER, that all computations of interest payable hereunder
calculated with respect to the Prime Rate shall be made on the basis of a year
of 365 or 366 days, as applicable, for the actual number of days (including the
first but excluding the last day) elapsed.
Section 1.5 TRANSFER OF RECORDS.
(a) In connection with the Purchase of Receivables hereunder, each
Originator hereby sells, transfers, assigns and otherwise conveys to the Buyer
all of such Originator's right and title to and interest in the Records relating
to all Receivables sold hereunder, without the need for any further
documentation in connection with the Purchase. In connection with such transfer,
Originator hereby grants to each of the Buyer, the Collateral Agent and the
Servicer an irrevocable, non-exclusive license to use, without royalty or
payment of any kind, all software used by such Originator to account for the
Receivables, to the extent necessary to administer the Receivables, whether such
software is owned by such Originator or is owned by others and used by such
Originator under license agreements with respect thereto, PROVIDED that should
the consent of any licensor of such Originator to such grant of the license
described herein be required, such Originator hereby agrees that upon the
request of the Buyer (or the Collateral Agent or any Managing Agent as the
Buyer's assignees), such Originator will use its reasonable efforts to obtain
the consent of such third-party licensor. The license granted hereby shall be
irrevocable, and shall terminate on the date this Agreement terminates in
accordance with its terms.
(b) Each Originator (i) shall take such action requested by the Buyer
and/or the Collateral Agent or any Managing Agent (as the Buyer's assignees),
from time to time hereafter, that may be necessary or appropriate to ensure that
the Buyer and its assigns under the Purchase Agreement have an enforceable
ownership interest in the Records relating to the Receivables purchased from
such Originator hereunder, and (ii) shall use its reasonable efforts to ensure
that the Buyer, the Collateral Agent and the Servicer each has an enforceable
right (whether by license or sublicense or otherwise) to use all of the computer
software used to account for the Receivables and/or to recreate such Records.
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Section 1.6 CHARACTERIZATION. If, notwithstanding the intention of the
parties expressed in SECTION 1.1(b), any sale or contribution by any Originator
to the Buyer of Receivables hereunder shall be characterized as a secured loan
and not a sale or such sale shall for any reason be ineffective or
unenforceable, then this Agreement shall be deemed to constitute a security
agreement under the UCC and other applicable law. For this purpose and without
being in derogation of the parties' intention that the sale of Receivables
hereunder shall constitute a true sale thereof, each Originator hereby grants to
the Buyer a duly perfected security interest in all of such Originator's right,
title and interest in, to and under all Receivables now existing and hereafter
arising, all Collections, Related Security and Records with respect thereto,
each Lock-Box and Collection Account and all proceeds of the foregoing, which
security interest shall be prior to all other Adverse Claims thereto. After the
occurrence of an Amortization Event, the Buyer and its assigns shall have, in
addition to the rights and remedies which they may have under this Agreement,
all other rights and remedies provided to a secured creditor after default under
the UCC and other applicable law, which rights and remedies shall be cumulative.
Section 1.7 ADDITIONAL ORIGINATORS. From time to time any Subsidiary of
the Parent may become an Originator hereunder with the prior written consent of
the Buyer (and the Collateral Agent and each Managing Agent, as the Buyer's
assignees).
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 REPRESENTATIONS AND WARRANTIES OF ORIGINATOR. Each
Originator hereby represents and warrants to the Buyer that:
(a) CORPORATE EXISTENCE AND POWER. Such Originator is duly organized,
validly existing and in good standing under the laws of the State indicated in
the Preamble to this Agreement and is a "registered organization" (as defined in
the UCC) of such State. Such Originator is duly qualified to do business and is
in good standing as a foreign entity, and has and holds all power, corporate or
otherwise, and all governmental licenses, authorizations, consents and approvals
required to carry on its business in each jurisdiction in which its business is
conducted except where the failure to so qualify or so hold could not reasonably
be expected to have a Material Adverse Effect.
(b) POWER AND AUTHORITY; DUE AUTHORIZATION, EXECUTION AND DELIVERY. The
execution and delivery by such Originator of this Agreement and each other
Transaction Document to which it is a party, and the performance of its
obligations hereunder and thereunder and, such Originator's use of the proceeds
of the Purchase made hereunder, are within its powers and authority, corporate
or otherwise, and have been duly authorized by all necessary action, corporate
or otherwise, on its part. This Agreement and each other Transaction Document to
which such Originator is a party has been duly executed and delivered by such
Originator.
(c) NO CONFLICT. The execution and delivery by such Originator of this
Agreement and each other Transaction Document to which it is a party, and the
performance of its obligations hereunder and thereunder do not contravene or
violate (i) its certificate or articles of incorporation or by-laws (or
equivalent organizational documents), (ii) any law, rule or
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regulation applicable to it, (iii) any restrictions under any agreement,
contract or instrument to which it is a party or by which it or any of its
property is bound, or (iv) any order, writ, judgment, award, injunction or
decree binding on or affecting it or its property, and do not result in the
creation or imposition of any Adverse Claim on assets of Originator or its
Subsidiaries (except as created hereunder) except, in any case, where such
contravention or violation could not reasonably be expected to have a Material
Adverse Effect; and no transaction contemplated hereby requires compliance with
any bulk sales act or similar law.
(d) GOVERNMENTAL AUTHORIZATION. Other than the filing of the financing
statements required hereunder, no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or regulatory body
is required for the due execution and delivery by such Originator of this
Agreement and each other Transaction Document to which it is a party and the
performance of its obligations hereunder and thereunder.
(e) ACTIONS, SUITS. There are no actions, suits or proceedings pending,
or to the best of such Originator's knowledge, threatened, against or affecting
such Originator, or any of its properties, in or before any court, arbitrator or
other body, that could reasonably be expected to have a Material Adverse Effect.
Such Originator is not in default with respect to any order of any court,
arbitrator or governmental body except, in the case of the Parent, when any such
default could not reasonably be expected to have a Material Adverse Effect.
(f) BINDING EFFECT. This Agreement and each other Transaction Document
to which such Originator is a party constitute the legal, valid and binding
obligations of such Originator enforceable against such Originator in accordance
with their respective terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws relating
to or limiting creditors' rights generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law).
(g) ACCURACY OF INFORMATION. All information heretofore furnished by
such Originator or any of its Affiliates to the Buyer (or to the Collateral
Agent or any Managing Agent, as the Buyer's assignees) for purposes of or in
connection with this Agreement, any of the other Transaction Documents or any
transaction contemplated hereby or thereby is, and all such information
hereafter furnished by such Originator or any of its Affiliates to the Buyer (or
to the Collateral Agent or any Managing Agent, as the Buyer's assignees) will
be, true and accurate in every material respect on the date such information is
stated or certified and does not and will not contain any material misstatement
of fact or omit to state a material fact or any fact necessary to make the
statements contained therein not misleading.
(h) USE OF PROCEEDS. No proceeds of the Purchase hereunder will be used
(i) for a purpose that violates, or would be inconsistent with, Regulation T, U
or X promulgated by the Board of Governors of the Federal Reserve System from
time to time or (ii) to acquire any security in any transaction which is subject
to Section 12, 13 or 14 of the Securities Exchange Act of 1934, as amended.
(i) GOOD TITLE. Immediately prior to the time each Receivable is
transferred to the Buyer hereunder, such Originator shall be the legal and
beneficial owner of each such Receivable and Related Security with respect
thereto, free and clear of any Adverse Claim,
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except as created by the Transaction Documents. There have been duly filed all
financing statements or other similar instruments or documents necessary under
the UCC (or any comparable law) of all appropriate jurisdictions to perfect such
Originator's ownership interest in each Receivable, its Collections and the
Related Security.
(j) PERFECTION. This Agreement, together with the filing of the
financing statements contemplated hereby, is effective to, and shall, upon each
purchase hereunder, transfer to the Buyer (and the Buyer shall acquire from such
Originator) legal and equitable title to, with the right to sell and encumber
each Receivable existing and hereafter arising, together with the Related
Security (to the extent such Related Security is covered by Article 9 of the
UCC), the Lock-Boxes and the Collection Accounts and Collections with respect to
such Receivables, free and clear of any Adverse Claim except as created by the
Transactions Documents. There have been duly filed all financing statements or
other similar instruments or documents necessary under the UCC (or any
comparable law) of all appropriate jurisdictions to perfect the Buyer's
ownership interest in the Receivables, the Related Security (to the extent such
Related Security is covered by Article 9 of the UCC), the Lock-Boxes and the
Collection Accounts and the Collections.
(k) PLACES OF BUSINESS. The principal places of business and chief
executive office of such Originator and the offices where it keeps all of its
Records are located at the address(es) listed on EXHIBIT II or such other
locations of which the Buyer has been notified in accordance with SECTION 4.2(a)
in jurisdictions where all action required by SECTION 4.2(a) has been taken and
completed. Such Originator's Federal Employer Identification Number and
organizational identification number, if any, are correctly set forth on EXHIBIT
II.
(l) COLLECTIONS. The conditions and requirements set forth in SECTION
4.1(j) have at all times been satisfied and duly performed. The names and
addresses of all Collection Banks, together with the account numbers of the
Collection Accounts of such Originator at each Collection Bank and the post
office box number of each Lock-Box, are listed in the Side Letter.
(m) MATERIAL ADVERSE EFFECT. Since March 31, 2001, except as has been
disclosed to the public between March 31, 2001 and the date of this Agreement,
no event has occurred that would have a Material Adverse Effect.
(n) NAMES. In the past five (5) years, such Originator has not used any
corporate names, trade names or assumed names other than the name in which it
has executed this Agreement and the corporate names, trade names or assumed
names, if any, listed on EXHIBIT II.
(o) OWNERSHIP OF THE BUYER. Pioneer owns, directly or indirectly, 100%
of the issued and outstanding capital stock of the Buyer, free and clear of any
Adverse Claim. Such capital stock is validly issued, fully paid and
nonassessable, and there are no options, warrants or other rights to acquire
securities of the Buyer.
(p) NOT A HOLDING COMPANY OR AN INVESTMENT COMPANY. Such Originator is
not a "holding company" or a "subsidiary holding company" of a "holding company"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended, or any successor
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statute. Such Originator is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended, or any successor statute.
(q) COMPLIANCE WITH LAW. Such Originator has complied in all respects
with all applicable laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject, except where the
failure to so comply could not reasonably be expected to have a Material Adverse
Effect. Each Receivable, together with the Contract related thereto, does not
contravene any laws, rules or regulations applicable thereto (INCLUDING, WITHOUT
LIMITATION, laws, rules and regulations relating to truth in lending, fair
credit billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy), and no part of such Contract is in violation
of any such law, rule or regulation.
(r) COMPLIANCE WITH CREDIT AND COLLECTION POLICY. Such Originator has
complied in all material respects with the Credit and Collection Policy with
regard to each Receivable and the related Contract, and has not made any
material change to such Credit and Collection Policy, except such material
change as to which the Buyer (and the Collateral Agent and each Managing Agent,
as the Buyer's assignees) have been notified in writing in accordance with
SECTION 4.1(a)(7).
(s) PAYMENTS TO ORIGINATORS. With respect to each Receivable
transferred to the Buyer hereunder, the Purchase Price received by the related
Originator constitutes reasonably equivalent value in consideration therefor and
such transfer was not made for or on account of an antecedent debt. No transfer
by such Originator of any Receivable hereunder is or may be voidable under any
section of the Federal Bankruptcy Code.
(t) ENFORCEABILITY OF CONTRACTS. Each Contract with respect to each
Receivable is effective to create, and has created, a legal, valid and binding
obligation of the related Obligor to pay the Outstanding Balance of the
Receivable created thereunder and any accrued interest thereon, enforceable
against the Obligor in accordance with its terms, except as such enforcement may
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law), it being understood that Dilutions occur in the
ordinary course of business of the Originators, and that upon the occurrence of
any such Dilutions, the Buyer (and the Collateral Agent, as assignee of the
Buyer) shall have legal, valid and binding claim against the related Originator
in an amount equal to the amount of such Dilutions.
(u) ELIGIBLE RECEIVABLES. Each Receivable included in the Net
Receivables Balance as an Eligible Receivable on the date of its purchase
hereunder was an Eligible Receivable on such date, it being understood that
Dilutions occur in the ordinary course of business of the Originators, and that
upon the occurrence of any such Dilutions, the Buyer (and the Collateral Agent,
as assignee of the Buyer) shall have legal, valid and binding claim against the
related Originator in an amount equal to the amount of such Dilutions.
(v) ACCOUNTING. The manner in which such Originator accounts for the
transactions contemplated by this Agreement does not jeopardize the
characterization of each transfer hereunder as being in the nature of a true
sale.
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(w) COMPLIANCE WITH REPRESENTATIONS. On and as of the date of the
Purchase and on and as of each subsequent date each Receivable came into
existence, such Originator hereby represents and warrants that all of the other
representations and warranties set forth in this ARTICLE II (including, without
limitation, the representations and warranties relating to the names and
locations of offices and records of such Originator, as such information may be
updated in accordance with SECTION 4.2(a)) are true and correct on and as of
each such date (and after giving effect to all Receivables in existence on each
such date) as though made on and as of each such date.
ARTICLE III
CONDITIONS OF PURCHASE
Section 3.1 CONDITIONS PRECEDENT TO PURCHASE. The Purchase under this
Agreement is subject to the conditions precedent that (a) the Buyer shall have
received on or before the date of such purchase those documents listed on
SCHEDULE A and (b) all of the conditions to the initial purchase under the
Purchase Agreement shall have been satisfied or waived in accordance with the
terms thereof.
Section 3.2 CONDITIONS PRECEDENT TO SUBSEQUENT PAYMENTS. The Buyer's
obligation to pay for Receivables coming into existence after the date hereof
shall be subject to the further conditions precedent that (a) the Facility
Termination Date shall not have occurred; and (b) the Buyer (or the Collateral
Agent and each Managing Agent, as the Buyer's assignees) shall have received
such other approvals, opinions or documents as it may reasonably request. Each
Originator represents and warrants that the representations and warranties set
forth in ARTICLE II (including, without limitation, the representations and
warranties relating to the names and locations of offices and records of such
Originator, as such information may be updated in accordance with SECTION
4.2(a)) are true and correct on and as of the date each Receivable came into
existence as though made on and as of such date.
ARTICLE IV
COVENANTS
Section 4.1 AFFIRMATIVE COVENANTS OF THE ORIGINATORS. Until the date on
which this Agreement terminates in accordance with its terms and all obligations
of the Originators hereunder have been paid in full, each Originator hereby
covenants as set forth below:
(a) FINANCIAL REPORTING. Such Originator will maintain, for itself and
each of its Subsidiaries, a system of accounting established and administered in
accordance with generally accepted accounting principles, and furnish to the
Buyer (and to the Collateral Agent and each Managing Agent as the Buyer's
assignees):
(i) ANNUAL REPORTINg. Within ninety (90) days after the close of
each of its respective fiscal years, audited, unqualified (except for
qualifications relating to changes in accounting principles or
practices reflecting changes in generally accepted accounting
principles and required or approved by such
10
Originator's independent certified public accountants) consolidated and
consolidating financial statements (which shall include balance sheets,
statements of income and retained earnings and a statement of cash
flows) for such Originator for such fiscal year certified in a manner
acceptable to the Buyer (and the Collateral Agent, as the Buyer's
assignee) by independent public accountants which are (A) acceptable to
the "Lenders" party to the Credit Agreement so long as Bank One is a
party to the Credit Agreement, or (B) reasonably acceptable to the
Buyer (and the Collateral Agent, as the Buyer's assignee); PROVIDED,
HOWEVER, that consolidating statements may be internally prepared and
do not need to be certified by independent certified public accountants
and shall not be required to be delivered until one hundred (100) days
after the close of each fiscal year.
(ii) QUARTERLY REPORTING. Within forty-five (45) days after the
close of the first three (3) quarterly periods of each of its
respective fiscal years, consolidated unaudited balance sheets of the
Parent and its Subsidiaries as at the close of each such period and
consolidated statements of income and retained earnings and a
consolidated statement of cash flows for the Parent and its
Subsidiaries for the period from the beginning of such fiscal year to
the end of such quarter, all certified by the Parent's chief financial
officer or corporate controller.
(iii) COMPLIANCE CERTIFICATE. Together with the financial
statements required hereunder, a compliance certificate in
substantially the form of EXHIBIT IV signed by such Originator's
Authorized Officer and dated the date of such annual financial
statement or such quarterly financial statement, as the case may be.
(iv) SHAREHOLDERS STATEMENTS AND REPORTS. Promptly upon the
furnishing thereof to the shareholders of such Originator or the
Provider, copies of all financial statements, reports and proxy
statements so furnished.
(v) S.E.C. FILINGS. Promptly upon the filing thereof, copies of
all registration statements and annual, quarterly, monthly or other
regular reports which the Provider or any of its Subsidiaries files
with the Securities and Exchange Commission.
(vi) COPIES OF NOTICES. Promptly upon its receipt of any notice,
request for consent, financial statements, certification, report or
other communication under or in connection with any Transaction
Document from any Person other than the Buyer, the Collateral Agent,
the Managing Agents or the Purchasers, copies of the same.
(vii) CHANGE IN CREDIT AND COLLECTION POLICY. At least thirty (30)
days prior to the effectiveness of any material change in or amendment
to the Credit and Collection Policy, a copy of the Credit and
Collection Policy then in effect and a notice (A) indicating such
change or amendment and (B) if such proposed change or amendment would
be reasonably likely to adversely affect the
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collectibility of the Receivables or decrease the credit quality of any
newly created Receivables, requesting the consent of the Buyer (and of
the Collateral Agent and the Required Committed Purchasers, as the
Buyer's assignees) thereto.
(viii) OTHER INFORMATION. Promptly, from time to time, such other
information, documents, records or reports relating to the Receivables
or the condition or operations, financial or otherwise, of such
Originator as the Buyer (or the Collateral Agent or any Managing Agent
as the Buyer's assignees) may from time to time reasonably request in
order to protect the interests of the Buyer (and its assigns) under or
as contemplated by this Agreement.
(b) NOTICES. Such Originator will notify the Buyer (and the Collateral
Agent and each Managing Agent, as the Buyer's assignees) in writing of any of
the following promptly upon learning of the occurrence thereof, describing the
same and, if applicable, the steps being taken with respect thereto:
(i) AMORTIZATION EVENTS OR POTENTIAL AMORTIZATION EVENTS. The
occurrence of each Amortization Event and each Potential Amortization
Event.
(ii) DOWNGRADE OF THE PROVIDER. Any downgrade in the rating of
any Indebtedness of the Provider by Standard & Poor's Ratings Group or
by Moody's Investors Service, Inc., setting forth the Indebtedness
affected and the nature of such change.
(c) COMPLIANCE WITH LAWS AND PRESERVATION OF CORPORATE EXISTENCE. Such
Originator will comply in all respects with all applicable laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it may be subject, except where the failure to so comply could not reasonably be
expected to have a Material Adverse Effect. Such Originator will preserve and
maintain its corporate existence, rights, franchises and privileges in the
jurisdiction of its organization, and qualify and remain qualified in good
standing as a foreign entity in each jurisdiction where its business is
conducted, except where the failure to so preserve and maintain or qualify could
not reasonably be expected to have a Material Adverse Effect.
(d) AUDITS. Such Originator will furnish to the Buyer (and to the
Collateral Agent and each Managing Agent, as the Buyer's assignees) from time to
time such information with respect to it and the Receivables as the Buyer (or
the Collateral Agent or any Managing Agent, as the Buyer's assignees) may
reasonably request. Such Originator will, from time to time during regular
business hours as requested by the Buyer (or the Collateral Agent or any
Managing Agent, as the Buyer's assignees), upon reasonable notice and at the
sole cost of such Originator (which such costs shall be reasonable and properly
documented), permit the Buyer (or the Collateral Agent or any Managing Agent, as
the Buyer's assignees) or their respective agents or representatives, (i) to
examine and make copies of and abstracts from all Records in the possession or
under the control of such Originator relating to the Receivables and the Related
Security, including, without limitation, the related Contracts, and (ii) to
visit the offices and properties of such Originator for the purpose of examining
such materials described in clause (i) above, and to discuss matters relating to
such Originator's financial condition or the Receivables and the Related
Security or such Originator's performance under any of the Transaction
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Documents or such Originator's performance under the Contracts and, in each
case, with any of the officers or employees of such Originator having knowledge
of such matters.
(e) KEEPING AND MARKING OF RECORDS AND BOOKS.
(i) Such Originator will maintain and implement administrative and
operating procedures (including, without limitation, an ability to
recreate records evidencing Receivables in the event of the destruction
of the originals thereof), and keep and maintain all documents, books,
records and other information reasonably necessary or advisable for the
collection of all Receivables (including, without limitation, records
adequate to permit the immediate identification of each new Receivable
and all Collections of and adjustments to each existing Receivable).
Originator will give to the Buyer (and to the Collateral Agent and each
Managing Agent, as the Buyer's assignees) notice of any material change
in the administrative and operating procedures referred to in the
previous sentence.
(ii) Such Originator will (A) on or prior to the date hereof, mark
its master data processing records and other books and records relating
to the Receivables with a legend, acceptable to the Buyer (and to the
Collateral Agent, as the Buyer's assignee), describing the Buyer's
ownership interests in the Receivables and further describing the
Purchaser Interests of the Collateral Agent (on behalf of the
Purchasers) under the Purchase Agreement and (B) following the
occurrence of an Amortization Event, upon the request of the Buyer (or
the Collateral Agent, as the Buyer's assignee), (x) mark each Contract
with a legend describing the Buyer's ownership interests in the
Receivables and further describing the Purchaser Interests of the
Collateral Agent (on behalf of the Purchasers) and (y) deliver to the
Buyer (or the Collateral Agent, as the Buyer's assignee) all Contracts
(including, without limitation, all multiple originals of any such
Contract) relating to the Receivables.
(f) COMPLIANCE WITH CONTRACTS AND CREDIT AND COLLECTION POLICY. Such
Originator will timely and fully (i) perform and comply in all material respects
with all provisions, covenants and other promises required to be observed by it
under the Contracts related to the Receivables, and (ii) comply in all material
respects with the Credit and Collection Policy in regard to each Receivable and
the related Contract. Such Originator will pay when due any taxes payable in
connection with the Receivables, exclusive of taxes on or measured by income or
gross receipts of the Buyer and its assigns.
(g) OWNERSHIP. Such Originator will take all necessary action to
establish and maintain, irrevocably in the Buyer, such Originator's legal and
equitable title to the Receivables, the Related Security (to the extent such
Related Security is covered by Article 9 of the UCC), the Lock-Boxes and the
Collection Accounts and the Collections, free and clear of any Adverse Claims
other than Adverse Claims in favor of the Buyer (and its assigns) (INCLUDING,
WITHOUT LIMITATION, the filing of all financing statements or other similar
instruments or documents necessary under the UCC (or any comparable law) of all
appropriate jurisdictions to perfect the Buyer's interest in such Receivables,
Related Security (to the extent such Related Security is covered by Article 9 of
the UCC), the Lock-Boxes and the Collection Accounts and the
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Collections and such other action to perfect, protect or more fully evidence the
interest of the Buyer as the Buyer (or the Collateral Agent, as the Buyer's
assignee) may reasonably request).
(h) PURCHASERS' RELIANCE. Such Originator acknowledges that the
Collateral Agent, the Managing Agents and the Purchasers are entering into the
transactions contemplated by the Purchase Agreement in reliance upon the Buyer's
identity as a legal entity that is separate from the Originators, the Provider
and any Affiliate or Subsidiary thereof (other than the Buyer). Therefore, from
and after the date of execution and delivery of this Agreement, such Originator
will take all reasonable steps including, without limitation, all steps that the
Buyer or any assignee of the Buyer may from time to time reasonably request to
maintain the Buyer's identity as a separate legal entity and to make it manifest
to third parties that the Buyer is an entity with assets and liabilities
distinct from those of the Originators, the Provider and any Affiliate or
Subsidiary thereof (other than the Buyer) and not just a division of any
Originator or any such Affiliate or Subsidiary. Without limiting the generality
of the foregoing and in addition to the other covenants set forth herein, such
Originator (i) will not hold itself out to third parties as liable for the debts
of the Buyer nor purport to own the Receivables and other assets acquired by the
Buyer, (ii) will take all other actions necessary on its part to ensure that the
Buyer is at all times in compliance with the covenants set forth in SECTION
7.1(i) of the Purchase Agreement and (iii) will cause all tax liabilities
arising in connection with the transactions contemplated herein or otherwise to
be allocated between such Originator and the Buyer on an arm's-length basis and
in a manner consistent with the procedures set forth in U.S. Treasury
Regulations Sections 1.1502-33(d) and 1.1552-1.
(i) COLLECTIONS. Such Originator will cause (1) all proceeds from all
Lock-Boxes to be directly deposited by a Collection Bank into a Collection
Account and (2) each Lock-Box and Collection Account to be subject at all times
to a Collection Account Agreement that is in full force and effect. In the event
any payments relating to Receivables are remitted directly to such Originator or
any Affiliate of such Originator, such Originator will remit (or will cause all
such payments to be remitted) directly to a Collection Bank for deposit into a
Collection Account within one (1) Business Day following receipt thereof and, at
all times prior to such remittance, such Originator will itself hold or, if
applicable, will cause such payments to be held in trust for the exclusive
benefit of the Buyer and the Collateral Agent, as the Buyer's assignee. Such
Originator will transfer exclusive ownership, dominion and control of each
Lock-Box and Collection Account to the Buyer and, will not grant the right to
take dominion and control of any Lock-Box or Collection Account at a future time
or upon the occurrence of a future event to any Person, except to the Buyer (and
the Collateral Agent, as the Buyer's assignee) as contemplated by this Agreement
and the Purchase Agreement.
(j) TAXES. Such Originator will file all tax returns and reports
required by law to be filed by it and promptly pay all taxes and governmental
charges at any time owing, except any such taxes which are not yet delinquent or
are being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with generally accepted accounting
principles shall have been set aside on its books.
(k) INSURANCE. Such Originator will maintain in effect, or cause to be
maintained in effect, at such Originator's own expense, such casualty and
liability insurance as such Originator deems appropriate in its good faith
business judgement.
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(l) CUSTOMER BILLING. All Receivables will be evidenced by one or more
instruments, agreements, invoices or other writings that specify a Lock-Box into
which payments with respect to such indebtedness or obligations shall be made.
Section 4.2 NEGATIVE COVENANTS OF THE ORIGINATORS. Until the date on
which this Agreement terminates in accordance with its terms and all obligations
of the Originators hereunder have been paid in full, each Originator hereby
covenants that:
(a) NAME CHANGE, OFFICES AND RECORDS. Such Originator will not (i)
change its name, identity, legal structure, organizational identification
number, if any, or jurisdiction of organization (within the meaning of any
applicable enactment of the UCC) or relocate its chief executive office or any
office where Records are kept, or (ii) cause any Unit to be converted into a
legal entity separate from such Originator, unless, in each case, such
Originator shall have: (1) given the Buyer (and the Collateral Agent and each
Managing Agent, as the Buyer's assignees) at least thirty (30) days' prior
written notice thereof and (2) delivered to the Buyer (and the Collateral Agent
and each Managing Agent, as the Buyer's assignees) file-stamped copies of all
financing statements, instruments and other documents requested by the Buyer (or
by the Collateral Agent or any Managing Agent, as the Buyer's assignees) in
connection with such change or relocation.
(b) CHANGE IN PAYMENT INSTRUCTIONS TO OBLIGORS. Such Originator will
not add or terminate any bank as a Collection Bank, or make any change in the
instructions to Obligors regarding payments to be made to any Lock-Box or
Collection Account, unless the Buyer (and the Collateral Agent and each Managing
Agent, as the Buyer's assignees) shall have received, at least ten (10) days
before the proposed effective date therefor, (i) written notice of such
addition, termination or change and (ii) with respect to the addition of a
Collection Bank or a Collection Account or Lock-Box, an executed Collection
Account Agreement with respect to the new Collection Account or Lock-Box;
PROVIDED, HOWEVER, that (A) such Originator may make changes in instructions to
Obligors regarding payments if such new instructions require such Obligor to
make payments to another existing Collection Account or (B) under the following
circumstances such Originator may instruct an Obligor to remit payments to the
Servicer at a location of the Servicer that does not constitute a Collection
Account: (1) the amount of such payment, when added to all other payments
redirected under this CLAUSE (B) during the same calendar month, does not exceed
$2,000,000 and (2) such redirection is made in the ordinary course of business
and in accordance with the Credit and Collection Policy.
(c) MODIFICATIONS TO CONTRACTS AND CREDIT AND COLLECTION POLICY. Such
Originator will not make any change to the Credit and Collection Policy that
could adversely affect the collectibility of the Receivables or decrease the
credit quality of any newly created Receivables. Except as otherwise permitted
in its capacity as Servicer pursuant to ARTICLE VIII of the Purchase Agreement,
the Parent will not extend, amend or otherwise modify the terms of any
Receivable or any Contract related thereto in any material respect other than in
accordance with the Credit and Collection Policy.
(d) SALES, LIENS. Such Originator will not sell, assign (by operation
of law or otherwise) or otherwise dispose of, or grant any option with respect
to, or create or suffer to exist any Adverse Claim upon (including, without
limitation, the filing of any financing statement) or
15
with respect to, any Receivable, Related Security or Collections, or upon or
with respect to any Contract under which any Receivable arises, or any Lock-Box
or Collection Account, or assign any right to receive income with respect
thereto (other than, in each case, the creation of the interests therein in
favor of the Buyer provided for herein), and such Originator will defend the
right, title and interest of the Buyer in, to and under any of the foregoing
property, against all claims of third parties claiming through or under such
Originator. Such Originator shall not create or suffer to exist any mortgage,
pledge, security interest, encumbrance, lien, charge or other similar
arrangement on any of its inventory other than any Permitted Lien.
(e) ACCOUNTING FOR PURCHASE. Such Originator will not, and will not
permit any Affiliate or Subsidiary of such Originator to, account for or treat
(whether in financial statements or otherwise) the transactions contemplated
hereby in any manner other than the sale of the Receivables and the Related
Security by such Originator to the Buyer or in any other respect account for or
treat the transactions contemplated hereby in any manner other than as a sale of
the Receivables and the Related Security by such Originator to the Buyer except
to the extent that such transactions are not recognized on account of
consolidated financial reporting in accordance with generally accepted
accounting principles.
(f) MODIFICATIONS TO ALLOCATION METHODOLOGY. Such Originator will not,
and will not permit any Affiliate or Subsidiary of such Originator to, (i) make
any material change in the procedures governing the allocation of payments from
Obligors residing in certain zip codes to specific Lock-Boxes, except as
permitted by the Buyer (and the Collateral Agent and the Managing Agents as the
Buyer's assignees) in writing or (ii) make any change to the payment remittance
instructions issued to the applicable Obligor on any receivable which would have
the effect of directing or authorizing payment to a lock-box or deposit account
identified with Excluded Receivables.
ARTICLE V
AMORTIZATION EVENTS
Section 5.1 AMORTIZATION EVENTS. The occurrence of any one or more of
the following events shall constitute an Amortization Event:
(a) Any Originator shall fail (i) to make any payment or deposit
required hereunder when due and such failure continues for one (1) day, or (ii)
to perform or observe any term, covenant or agreement hereunder (other than as
referred to in clause (i) of this paragraph (a)) or any other Transaction
Document to which it is a party and such failure shall continue for five (5)
consecutive Business Days.
(b) (i) Any representation or warranty made by any Originator in this
Agreement or any other Transaction Document shall prove to have been incorrect
when made or deemed made or (ii) any representation or warranty made by any
Originator in any notice, report, certificate or other communication hereunder
or in connection with any other Transaction Document shall prove to have been
incorrect in any material respect when made or deemed made.
16
(c) Failure of any Originator or the Provider to pay any Indebtedness
when due in excess of $5,000,000; or the default by any Originator or the
Provider in the performance of any term, provision or condition contained in any
agreement under which any such Indebtedness was created or is governed, the
effect of which is to cause, or to permit the holder or holders of such
Indebtedness to cause, such Indebtedness to become due prior to its stated
maturity; or any such Indebtedness of any Originator or the Provider shall be
declared to be due and payable or required to be prepaid (other than by a
regularly scheduled payment) prior to the date of maturity thereof.
(d) (i) Any Originator, the Provider or any of their respective
Subsidiaries shall generally not pay its debts as such debts become due or shall
admit in writing its inability to pay its debts generally or shall make a
general assignment for the benefit of creditors; or (ii) any proceeding shall be
instituted by or against any Originator, the Provider or any of their respective
Subsidiaries seeking to adjudicate it bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee or other similar
official for it or any substantial part of its property; PROVIDED that, in the
case of any proceeding instituted against any Originator other than the Parent,
such event shall not constitute an Amortization Event until either (A) such
proceeding shall have remained undismissed or unstayed for a period of thirty
(30) days, (B) an order for relief shall have been entered against such
Originator under the Federal bankruptcy laws or (C) such Originator shall have
taken corporate action consenting to, approving or acquiescing in the
commencement or maintenance of such proceeding; or (iii) any Originator, the
Provider or any of their respective Subsidiaries shall take any corporate action
to authorize any of the actions set forth in the foregoing clauses (i) or (ii)
of this subsection (d).
(e) A Change of Control shall occur.
(f) One or more final judgments for the payment of money (in excess of
$5,000,000 in the aggregate for all such judgements) shall be entered against
the Originators or the Provider on claims not covered by insurance or as to
which the insurance carrier has denied its responsibility, and such judgment
shall continue unsatisfied and in effect for thirty (30) consecutive days
without a stay of execution.
(g) The Provider shall fail to comply with the financial covenants (the
"FINANCIAL COVENANTS") set forth in SECTION 6.17 of the Credit Agreement, as
such covenants may be amended, modified or waived in accordance with the terms
of the Credit Agreement so long as the Collateral Agent has consented to such
amendment, modification or waiver. The Financial Covenants, as so amended,
modified or waived in accordance with the terms of the Credit Agreement and with
the consent of the Collateral Agent and the Required Committed Purchasers
(together with any necessary defined terms), are incorporated herein by this
reference thereto and shall remain in effect in their then most recent
formulations for purposes of this Agreement notwithstanding the expiration or
termination of the Credit Agreement after the date hereof unless amended or
waived in accordance with the terms of this Agreement.
17
(h) The Provider shall take any action (i) to revoke all or any part of
the Performance Undertaking, (ii) to recharacterize the Performance Undertaking
as a guaranty of collection or as any type of obligation other than an
unconditional guaranty of the due and punctual performance by the Originators of
their obligations to the Buyer hereunder, or (iii) to require the Collateral
Agent to commence an action against the Seller or any Originator as a condition
to the Provider honoring its obligations as set forth in the Performance
Undertaking.
Section 5.2 REMEDIES. Upon the occurrence and during the continuation
of an Amortization Event, the Buyer may take any of the following actions: (i)
declare the Amortization Date to have occurred, whereupon the Amortization Date
shall forthwith occur, without demand, protest or further notice of any kind,
all of which are hereby expressly waived by each Originator; PROVIDED, HOWEVER,
that upon the occurrence of Amortization Event described in SECTION 5.1(d), or
of an actual or deemed entry of an order for relief with respect to any
Originator under the Federal Bankruptcy Code, the Amortization Date shall
automatically occur, without demand, protest or any notice of any kind, all of
which are hereby expressly waived by each Originator and (ii) to the fullest
extent permitted by applicable law, declare that the Default Fee shall accrue
with respect to any amounts then due and owing by the Buyer to the Originators.
The aforementioned rights and remedies shall be in addition to all other rights
and remedies of the Buyer and its assigns available under this Agreement, by
operation of law, at equity or otherwise, all of which are hereby expressly
preserved, including, without limitation, all rights and remedies provided under
the UCC, all of which rights shall be cumulative.
ARTICLE VI
INDEMNIFICATION
Section 6.1 INDEMNITIES BY THE ORIGINATORS. Without limiting any other
rights that the Buyer may have hereunder or under applicable law, each
Originator, jointly and severally, hereby agrees to indemnify the Buyer and the
Collateral Agent, each Managing Agent and each Purchaser, as the Buyer's
assignees, and their respective assigns, officers, directors, agents and
employees (each an "INDEMNIFIED PARTY") from and against any and all damages,
losses, claims, taxes, liabilities, costs, expenses and for all other amounts
payable, including reasonable attorneys' fees (which attorneys may be employees
of the Buyer, the Collateral Agent or any Managing Agent) and disbursements (all
of the foregoing being collectively referred to as "INDEMNIFIED AMOUNTS")
awarded against or incurred by any of them arising out of or as a result of this
Agreement or the acquisition, either directly or indirectly, by the Buyer of an
interest in the Receivables, excluding, however:
(x) Indemnified Amounts to the extent a final judgment of a
court of competent jurisdiction holds that such Indemnified Amounts
resulted from gross negligence or willful misconduct on the part of the
Indemnified Party seeking indemnification;
(y) Indemnified Amounts to the extent the same includes
losses in respect of Receivables that are uncollectible on account of
the insolvency, bankruptcy or lack of creditworthiness of the related
Obligor; or
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(z) taxes imposed by the jurisdiction in which such
Indemnified Party's principal executive office is located, on or
measured by the overall net income of such Indemnified Party to the
extent that the computation of such taxes is consistent with the
Intended Characterization;
PROVIDED, HOWEVER, that nothing contained in this sentence shall limit the
liability of any Originator or limit the recourse of the Buyer to any Originator
for amounts otherwise specifically provided to be paid by such Originator under
the terms of this Agreement. Without limiting the generality of the foregoing
indemnification, each Originator shall indemnify the Buyer for Indemnified
Amounts (including, without limitation, losses in respect of uncollectible
receivables, regardless of whether reimbursement therefor would constitute
recourse to such Originator) relating to or resulting from:
(i) any representation or warranty made by such
Originator (or any officers of such Originator) under or in connection
with this Agreement, any other Transaction Document or any other
information or report delivered by such Originator pursuant hereto or
thereto, which shall have been false or incorrect when made or deemed
made;
(ii) the failure by such Originator, to comply with any
applicable law, rule or regulation with respect to any Receivable or
Contract related thereto, or the nonconformity of any Receivable or
Contract included therein with any such applicable law, rule or
regulation or any failure of such Originator to keep or perform any of
its obligations, express or implied, with respect to any Contract;
(iii) any failure of such Originator to perform its
duties, covenants or other obligations in accordance with the
provisions of this Agreement or any other Transaction Document;
(iv) any products liability, personal injury or damage
suit, or other similar claim arising out of or in connection with
merchandise, insurance or services that are the subject of any Contract
or any Receivable;
(v) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the Obligor to the payment
of any Receivable (including, without limitation, a defense based on
such Receivable or the related Contract not being a legal, valid and
binding obligation of such Obligor enforceable against it in accordance
with its terms), or any other claim resulting from the sale of the
merchandise or service related to such Receivable or the furnishing or
failure to furnish such merchandise or services;
(vi) the commingling of Collections of Receivables at
any time with other funds;
(vii) any investigation, litigation or proceeding
related to or arising from this Agreement or any other Transaction
Document, the transactions contemplated hereby, the use of the proceeds
of the Purchase, the ownership of the Receivables or any other
investigation, litigation or proceeding relating to any Originator in
19
which any Indemnified Party becomes involved as a result of any of the
transactions contemplated hereby;
(viii) any inability to litigate any claim against any
Obligor in respect of any Receivable as a result of such Obligor being
immune from civil and commercial law and suit on the grounds of
sovereignty or otherwise from any legal action, suit or proceeding;
(ix) any Amortization Event described in SECTION 5.1(d);
(x) any failure to vest and maintain vested in the
Buyer, or to transfer to the Buyer, legal and equitable title to, and
ownership of, the Receivables, the Related Security and the
Collections, free and clear of any Adverse Claim;
(xi) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents under
the UCC of any applicable jurisdiction or other applicable laws with
respect to any Receivable, the Related Security and Collections with
respect thereto, and the proceeds of any thereof, whether at the time
of the Purchase or at any subsequent time;
(xii) any action or omission by such Originator which
reduces or impairs the rights of the Buyer with respect to any
Receivable or the value of any such Receivable; and
(xiii) any attempt by any Person to void the Purchase
hereunder under statutory provisions or common law or equitable action.
Section 6.2 OTHER COSTS AND EXPENSES. The Originators shall pay to the
Buyer on demand all reasonable and properly documented costs and out-of-pocket
expenses in connection with the preparation, execution, delivery and
administration of this Agreement, the transactions contemplated hereby and the
other documents to be delivered hereunder. The Originators shall pay to the
Buyer on demand any and all costs and expenses of the Buyer, if any, including
reasonable counsel fees and expenses in connection with the enforcement of this
Agreement and the other documents delivered hereunder and in connection with any
restructuring or workout of this Agreement or such documents, or the
administration of this Agreement following an Amortization Event.
ARTICLE VII
MISCELLANEOUS
Section 7.1 WAIVERS AND AMENDMENTS.
(a) No failure or delay on the part of the Buyer (or the Collateral
Agent or any Managing Agent, as the Buyer's assignees) in exercising any power,
right or remedy under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power, right or remedy preclude
any other further exercise thereof or the exercise of any other power, right or
remedy. The rights and remedies herein provided shall be cumulative and
20
nonexclusive of any rights or remedies provided by law. Any waiver of this
Agreement shall be effective only in the specific instance and for the specific
purpose for which given.
(b) No provision of this Agreement may be amended, supplemented,
modified or waived except in writing signed by the Originators and the Buyer
and, to the extent required under the Purchase Agreement, the Collateral Agent,
each Managing Agent and the Committed Purchasers or the Required Committed
Purchasers.
Section 7.2 NOTICES. Except as provided below, all communications and
notices provided for hereunder shall be in writing (including bank wire,
telecopy or electronic facsimile transmission or similar writing) and shall be
given to the other parties hereto at their respective addresses or telecopy
numbers set forth on the signature pages hereof or at such other address or
telecopy number as such Person may hereafter specify for the purpose of notice
to each of the other parties hereto. Each such notice or other communication
shall be effective (i) if given by telecopy, upon the receipt thereof, (ii) if
given by mail, three (3) Business Days after the time such communication is
deposited in the mail with first class postage prepaid or (iii) if given by any
other means, when received at the address specified in this SECTION 7.2.
Section 7.3 PROTECTION OF OWNERSHIP INTERESTS OF THE BUYER.
(a) Each Originator agrees that from time to time, at its expense, it
will promptly execute and deliver all instruments and documents, and take all
actions, that may be necessary or desirable, or that the Buyer (or the
Collateral Agent or any Managing Agent, as the Buyer's assignees) may request,
to perfect, protect or more fully evidence the Purchaser Interests, or to enable
the Buyer (or the Collateral Agent or any Managing Agent, as the Buyer's
assignees) to exercise and enforce their rights and remedies hereunder. At any
time, the Buyer (or the Collateral Agent or any Managing Agent, as the Buyer's
assignees) may, at each Originator's sole cost and expense, direct such
Originator to notify the Obligors of Receivables of the ownership interests of
the Buyer and its assigns under this Agreement and the other Transaction
Documents and may also direct that payments of all amounts due or that become
due under any or all Receivables be made directly to the Buyer or its designee.
(b) If any Originator fails to perform any of its obligations
hereunder, the Buyer (or its assigns) may (but shall not be required to)
perform, or cause performance of, such obligation, and Buyer's (or such
assigns') costs and expenses incurred in connection therewith shall be payable
by such Originator as provided in SECTION 6.2. Each Originator irrevocably
authorizes the Buyer (and its assigns) at any time and from time to time in the
sole discretion of the Buyer (or its assigns), and appoints the Buyer (and its
assigns) as its attorney(es)-in-fact, to act on behalf of such Originator (i) to
execute on behalf of such Originator as debtor and to file financing statements
necessary or desirable in the Buyer's (or its assigns') sole discretion to
perfect and to maintain the perfection and priority of the interest of the Buyer
in the Receivables and (ii) to file a carbon, photographic or other reproduction
of this Agreement or any financing statement with respect to the Receivables as
a financing statement in such offices as the Buyer (or its assigns) in their
sole discretion deem necessary or desirable to perfect and to maintain the
perfection and priority of the Buyer's interests in the Receivables. This
appointment is coupled with an interest and is irrevocable.
21
Section 7.4 CONFIDENTIALITY.
(a) Each Originator shall maintain and shall cause each of its
employees and officers to maintain the confidentiality of this Agreement and the
other confidential proprietary information with respect to the Collateral Agent,
each Managing Agent and each Purchaser and their respective businesses obtained
by it or them in connection with the structuring, negotiating and execution of
the transactions contemplated herein, except that such Originator and its
officers and employees may disclose such information to such Originator's
external accountants and attorneys and as required by any applicable law or
order of any judicial or administrative proceeding.
(b) Anything herein to the contrary notwithstanding, each Originator
hereby consents to the disclosure of any nonpublic information with respect to
it (i) to the Buyer, the Collateral Agent, each Managing Agent or the Purchasers
by each other, (ii) by the Buyer, the Collateral Agent, the Managing Agents or
the Purchasers to any prospective or actual assignee or participant of any of
them or (iii) by the Collateral Agent or the Managing Agents to any rating
agency, Commercial Paper dealer or provider of a surety, guaranty or credit or
liquidity enhancement to any Conduit or any entity organized for the purpose of
purchasing, or making loans secured by, financial assets for which any Managing
Agent acts as the administrative agent and to any officers, directors,
employees, outside accountants and attorneys of any of the foregoing. In
addition, the Purchasers, the Collateral Agent and the Managing Agents may
disclose any such nonpublic information pursuant to any law, rule, regulation,
direction, request or order of any judicial, administrative or regulatory
authority or proceedings (whether or not having the force or effect of law) or
in connection with the enforcement of their rights or the defense of any action.
Section 7.5 BANKRUPTCY PETITION. Each Originator and the Buyer each
hereby covenants and agrees that, prior to the date that is one year and one day
after the payment in full of all outstanding senior Indebtedness of any Conduit,
it will not institute against, or join any other Person in instituting against,
such Conduit any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceeding under the laws of the United
States or any state of the United States.
Section 7.6 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF
THE STATE OF ILLINOIS.
Section 7.7 CONSENT TO JURISDICTION. EACH ORIGINATOR HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE
COURT SITTING IN CHICAGO, ILLINOIS OR IN NEW YORK, NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED
BY SUCH ORIGINATOR PURSUANT TO THIS AGREEMENT AND EACH ORIGINATOR HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH
22
A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT
THE RIGHT OF THE BUYER (OR ITS ASSIGNS) TO BRING PROCEEDINGS AGAINST ANY
ORIGINATOR IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY
ANY ORIGINATOR AGAINST THE BUYER (OR ITS ASSIGNS) OR ANY AFFILIATE THEREOF
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED
TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH ORIGINATOR
PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO,
ILLINOIS.
Section 7.8 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES TRIAL
BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ANY
ORIGINATOR PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER
OR THEREUNDER.
Section 7.9 INTEGRATION; BINDING EFFECT; SURVIVAL OF TERMS.
(a) This Agreement, the Subordinated Notes and each Collection Account
Agreement contain the final and complete integration of all prior expressions by
the parties hereto with respect to the subject matter hereof and shall
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof superseding all prior oral or written understandings.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns
(including any trustee in bankruptcy); PROVIDED, HOWEVER, that the Originators
may not assign and of their rights or delegate any of their duties hereunder or
under any of the other Transaction Documents to which it is a party without the
prior written consent of the Buyer (and its assignees). The Buyer may assign at
any time any or all of its rights and obligations hereunder and interests herein
to any other Person without the consent of the Originators. Without limiting the
foregoing, the Originators acknowledge that the Buyer, pursuant to the
Receivables Purchase Agreement, shall assign to the Collateral Agent, on behalf
of the Purchasers, all of its rights, remedies, powers and privileges to further
assign such rights, remedies, powers and privileges to the extent permitted by
the Receivables Purchase Agreement. The Originators agree that the Collateral
Agent, as the assignee of the Buyer, shall, subject to the terms of the
Receivables Purchase Agreement, have the right to enforce this Agreement and to
exercise directly all of the Buyer's rights and remedies under this Agreement.
This Agreement shall create and constitute the continuing obligations of the
parties hereto in accordance with its terms and shall remain in full force and
effect until terminated in accordance with its terms; PROVIDED, HOWEVER, that
the rights and remedies with respect to (i) any breach of any representation and
warranty made by any Originator pursuant to ARTICLE II and (ii) the
indemnification and payment provisions of ARTICLE VI, and SECTION 7.5 shall be
continuing and shall survive any termination of this Agreement.
23
Section 7.10 COUNTERPARTS; SEVERABILITY; SECTION REFERENCES. This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and
the same Agreement. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. Unless otherwise expressly indicated, all references herein
to "Article," "Section," "Schedule" or "Exhibit" shall mean articles and
sections of, and schedules and exhibits to, this Agreement.
24
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date hereof.
PIONEER-STANDARD ELECTRONICS, INC.
By: /s/ Jean M. Miklosko
----------------------------------
Name: Jean M. Miklosko
Title: Vice President & Treasurer
Address: Office of the Treasurer
6065 Parkland
Mayfield Heights, OH 44124
Fax: (440) 720-8677
PIONEER-STANDARD ILLINOIS, INC.
By: /s/ Jean M. Miklosko
----------------------------------
Name: Jean M. Miklosko
Title: Vice President & Treasurer
Address: Office of the Treasurer
6065 Parkland
Mayfield Heights, OH 44124
Fax: (440) 720-8677
PIONEER-STANDARD MINNESOTA, INC.
By: /s/ Jean M. Miklosko
----------------------------------
Name: Jean M. Miklosko
Title: Vice President & Treasurer
Address: Office of the Treasurer
6065 Parkland
Mayfield Heights, OH 44124
Fax: (440) 720-8677
Signature Page to Receivables Sale Agreement
PIONEER-STANDARD ELECTRONICS, LTD.
By: /s/ Jean M. Miklosko
----------------------------------
Name: Jean M. Miklosko
Title: Vice President & Treasurer
Address: Office of the Treasurer
6065 Parkland
Mayfield Heights, OH 44124
Fax: (440) 720-8677
PIONEER-STANDARD FUNDING CORPORATION
By: /s/ Jean M. Miklosko
----------------------------------
Name: Jean M. Miklosko
Title: Vice President & Treasurer
Address: Office of the Treasurer
6065 Parkland
Mayfield Heights, OH 44124
Fax: (440) 720-8677
2
EXHIBIT I
---------
DEFINITIONS
This is EXHIBIT I to the Agreement (as hereinafter defined).
As used in the Agreement and the Exhibits, Schedules and Annexes thereto,
capitalized terms have the meanings set forth in this EXHIBIT I (such meanings
to be equally applicable to the singular and plural forms thereof). If a
capitalized term is used in the Agreement, or any Exhibit, Schedule or Annex
thereto, and not otherwise defined therein or in this EXHIBIT I, such term shall
have the meaning assigned thereto in EXHIBIT I to the Purchase Agreement.
"AGREEMENT" means this Receivables Sale Agreement, as it may
be amended, restated, supplemented or otherwise modified from time to time.
"AMORTIZATION DATE" means the earliest to occur of (i) the
Facility Termination Date, (ii) the Business Day immediately prior to the
occurrence of an Amortization Event set forth in SECTION 5.1(d), (iii) the
Business Day specified in a written notice from the Buyer to the Originators
following the occurrence of any other Amortization Event, and (iv) the date
which is thirty (30) Business Days after the Buyer's receipt of written notice
from the Originators that they wish to terminate the facility evidenced by this
Agreement.
"AMORTIZATION EVENT" has the meaning set forth in SECTION 5.1
of the Agreement.
"AUTHORIZED OFFICER" means, with respect to any Originator,
its president, corporate controller, treasurer or chief financial officer or any
other individual designated in writing by such president, corporate controller,
treasurer or chief financial officer to act as an Authorized Officer in
connection herewith.
"BUSINESS DAY" means any day on which banks are not authorized
or required to close in New York, New York or Chicago, Illinois and The
Depository Trust Company of New York is open for business.
"BUYER" has the meaning set forth in the Preamble to the
Agreement.
"CALCULATION PERIOD" means each calendar month or portion
thereof which elapses during the term of the Agreement. The first Calculation
Period shall commence on the date of the Purchase of Receivables hereunder and
the final Calculation Period shall terminate on the Amortization Date.
"CHANGE OF CONTROL" means (i) the acquisition by any Person,
or two or more Persons acting in concert, of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934) of thirty percent (30%) or more of the
outstanding shares of voting stock of the Parent, and (ii) with respect to any
other Originator, the Parent shall cease to own directly or indirectly 100% of
the issued and outstanding shares of voting or other capital stock or similar
interests therein.
Exh. I-1
"COLLATERAL AGENT" has the meaning set forth in the
Preliminary Statements to the Agreement.
"COMMITTED PURCHASER" has the meaning set forth in the
Preliminary Statements to the Agreement.
"CONDUIT" has the meaning set forth in the Preliminary
Statements to the Agreement.
"CREDIT AND COLLECTION POLICY" means the Originators' credit
and collection policies and practices relating to Contracts and Receivables
existing on the date hereof and summarized in EXHIBIT V, as modified from time
to time in accordance with the Agreement.
"DEFAULT FEE" means, with respect to any unpaid amount which
is due and payable by any Originator hereunder, an amount equal to the greater
of (i) $1,000 and (ii) interest on such unpaid amount at a per annum rate of
interest equal to two percent (2%) above the Prime Rate.
"DILUTIONS" means, at any time, the aggregate amount of
reductions or cancellations described in SECTION 1.3(a) of the Agreement.
"DISCOUNT FACTOR" means a percentage calculated to provide the
Buyer with a reasonable return on its investment in the Receivables after taking
account of (i) the time value of money based upon the anticipated dates of
collection of the Receivables and the cost to the Buyer of financing its
investment in the Receivables during such period and (ii) the risk of nonpayment
by the Obligors. The Originators and the Buyer may agree from time to time to
change the Discount Factor based on changes in one or more of the items
affecting the calculation thereof, PROVIDED that any change to the Discount
Factor shall take effect as of the commencement of a Calculation Period, shall
apply only prospectively and shall not affect the Purchase Price payment in
respect of Purchase which occurred during any Calculation Period ending prior to
the Calculation Period during which the Originators and the Buyer agree to make
such change.
"EXCLUDED RECEIVABLE" means all indebtedness and other
obligations owed to an Originator (at the time it arises, and before giving
effect to any transfer or conveyance under this Agreement) or in which an
Originator has a security interest or other interest, (i) arising in connection
with the sale of goods or the rendering of services by the Industrial
Electronics Components Division of such Originator and identified in the books
and records of such Originator as owing from those obligors who are instructed
to make payments to any "Excluded Lock-Box" identified in the Side Letter, or
(ii) the obligors on which constitute obligors under the Third Party Lock-Box
Program (as described in the following sentence). An obligor under the Third
Party Lock-Box Program means an obligor which is identified as such on the books
and records of the Parent in accordance with the Parent's customary practice and
in respect of which remittance on any related indebtedness owing to the Parent
is made first by such obligor's customer to an intermediary fiduciary specified
for purposes of the Third Party Lock-Box Program and then remitted by such
intermediary fiduciary to the Parent. Whether any indebtedness or obligations
shall constitute an Excluded Receivable shall be determined solely
Exh. I-2
on the date of creation of such indebtedness or obligations and the initial
issuance to the obligor thereon of payment remittance instructions. At all times
thereafter, the classification of such indebtedness or obligations as being or
not being an Excluded Receivable shall not change without the consent of the
Buyer (and the Collateral Agent as the Buyer's assignee).
"FEDERAL BANKRUPTCY CODE" means Title 11 of the United States
Code entitled "Bankruptcy", as amended and any successor statute thereto.
"INTENDED CHARACTERIZATION" means, for income tax purposes,
the characterization of the acquisition by the Purchasers of Purchaser Interests
under the Purchase Agreement as a loan or loans by the Purchasers to the Buyer
secured by the Receivables, the Related Security, the Lock-Boxes, the Collection
Accounts and the Collections.
"MANAGING AGENT" has the meaning set forth in the Preliminary
Statements to the Agreement.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(i) the financial condition or operations of any Originator and its Subsidiaries
on a consolidated basis, (ii) the ability of any Originator to perform its
obligations under the Agreement or any other Transaction Document or the
Provider to perform its obligations under the Performance Undertaking, (iii) the
legality, validity or enforceability of the Agreement or any other Transaction
Document, (iv) any Originator's, the Buyer's, the Collateral Agent's or any
Purchaser's interest in the Receivables generally or in any significant portion
of the Receivables, the Related Security or Collections with respect thereto, or
(v) the collectibility of the Receivables generally or of any material portion
of the Receivables.
"NET VALUE" means, as of any date of determination, an amount
equal to the sum of (i) the aggregate Outstanding Balance of the Receivables at
such time, MINUS (ii) the sum of (A) the aggregate Capital outstanding at such
time, PLUS (B) the Aggregate Reserves.
"NET WORTH" means as of the last Business Day of each
Calculation Period preceding any date of determination, the excess, if any, of
(a) the aggregate Outstanding Balance of the Receivables at such time, OVER (b)
the sum of (i) the aggregate Capital outstanding at such time, PLUS (ii) the
aggregate outstanding principal balance of the Subordinated Loans (including any
Subordinated Loan proposed to be made on the date of determination).
"ORIGINAL BALANCE" means, with respect to any Receivable, the
Outstanding Balance of such Receivable on the date it was purchased by the
Buyer.
"ORIGINATOR" has the meaning set forth in the Preamble to the
Agreement.
"PARENT" has the meaning set forth in the Preamble to the
Agreement.
"PERMITTED LIEN" of a Person means (i) any lien for taxes,
assessments or governmental charges or levies on its property which are not yet
due and payable or which are being contested in good faith and by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on its books, and (ii) any bankers lien permitted
Exh. I-3
under any Collection Account Agreement and existing in respect of any obligation
or liability owing to a Collection Bank which is not yet due and payable.
"POTENTIAL AMORTIZATION EVENT" means an event which, with the
passage of time or the giving of notice, or both, would constitute an
Amortization Event.
"PRIME RATE" means a rate per annum equal to the prime rate of
interest announced from time to time by Bank One or its parent (which is not
necessarily the lowest rate charged to any customer), changing when and as such
rate changes.
"PURCHASE" means the purchase under the Agreement by the Buyer
from the Originators of the Receivables, the Related Security and the
Collections related thereto, together with all related rights in connection
therewith.
"PURCHASE AGREEMENT" has the meaning set forth in the
Preliminary Statements to the Agreement.
"PURCHASE PRICE" means, with respect to any Purchase on any
date, the aggregate price to be paid by the Buyer to the Originators for such
Purchase in accordance with SECTION 1.2 of the Agreement for the Receivables,
Collections and Related Security being sold to the Buyer on such date, which
price shall equal (i) the product of (x) the Original Balance of such
Receivables, MULTIPLIED BY (y) one minus the Discount Factor then in effect,
MINUS (ii) any Purchase Price Credits to be credited against the Purchase Price
otherwise payable in accordance with SECTION 1.3 of the Agreement.
"PURCHASE PRICE CREDIT" has the meaning set forth in SECTION
1.3 of the Agreement.
"PURCHASER" means any Conduit or Committed Purchaser, as
applicable, and "Purchasers" means all Conduits and all Committed Purchasers.
"RECEIVABLE" means all indebtedness and other obligations owed
to an Originator (at the time it arises, and before giving effect to any
transfer or conveyance under this Agreement) or in which an Originator has a
security interest or other interest, including, without limitation, any
indebtedness, obligation or interest constituting an account, contract right,
payment intangible, promissory note, chattel paper, instrument, document,
investment property, financial asset or general intangible, arising in
connection with the sale of goods or the rendering of services by such
Originator, and further includes, without limitation, the obligation to pay any
Finance Charges with respect thereto; PROVIDED, HOWEVER, that no Excluded
Receivable shall constitute a "Receivable" hereunder. Indebtedness and other
rights and obligations arising from any one transaction, including, without
limitation, indebtedness and other rights and obligations represented by an
individual invoice, shall constitute a Receivable separate from a Receivable
consisting of the indebtedness and other rights and obligations arising from any
other transaction; PROVIDED, HOWEVER, that any indebtedness, rights or
obligations referred to in the immediately preceding sentence shall be a
Receivable regardless of whether the account debtor or the related Originator
treats such indebtedness, rights or obligations as a separate payment
obligation.
Exh. I-4
"RECORDS" means, with respect to any Receivable, all
enforcement rights or rights to receive payment with respect to all Contracts
relating to such Receivable, and all other documents, books, records and other
information (including, without limitation, computer programs, tapes, disks,
punch cards, data processing software and related property and rights) relating
to such Receivable, any Related Security therefor and the related Obligor.
"RELATED SECURITY" means, with respect to any Receivable:
(i) all of the related Originator's interest in the
inventory and goods (including returned or repossessed inventory or goods), if
any, the sale, financing or lease of which by such Originator gave rise to such
Receivable, and all insurance contracts with respect thereto,
(ii) all other security interests or liens and property
subject thereto from time to time, if any, purporting to secure payment of such
Receivable, whether pursuant to the Contract related to such Receivable or
otherwise, together with all financing statements and security agreements
describing any collateral securing such Receivable,
(iii) all guaranties, letters of credit, letter of credit
rights, supporting obligations, insurance and other similar agreements or
arrangements in the nature of supporting obligations of whatever character from
time to time supporting or securing payment of such Receivable whether pursuant
to the Contract related to such Receivable or otherwise,
(iv) all enforcement rights or rights to receive payment
with respect to all service contracts and other contracts and agreements
associated with such Receivable,
(v) all Records related to such Receivable, and
(vi) all proceeds of any of the foregoing.
"REQUIRED CAPITAL AMOUNT" means an amount equal to ten percent
(10%) of the aggregate Outstanding Balance of all Receivables, which amount has
been agreed upon by the parties hereto based upon assumptions relied upon in
good faith with the view toward having the Subordinated Notes be capable of
having an imputed credit rating of investment grade. If circumstances change
following the date hereof, the Borrower (and its assignees) reserves the right
to revise the Required Capital Amount with a view toward preserving such imputed
credit rating.
"SETTLEMENT DATE" means the fourteenth day of each calendar
month, or, if such date is not a Business Day, the next succeeding Business Day.
"SIDE LETTER" means that certain letter agreement dated as of
October 19, 2001 by and among the Buyer, the Originators, the Managing Agents
and the Collateral Agent, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"SUBORDINATED LOAN" has the meaning set forth in SECTION
1.2(a) of the Agreement.
Exh. I-5
"SUBORDINATED NOTE" means a promissory note in substantially
the form of EXHIBIT VI hereto as more fully described in SECTION 1.2 of the
Agreement, as the same may be amended, restated, supplemented or otherwise
modified from time to time.
"SUBSIDIARY" of a Person means (i) any corporation more than
fifty percent (50%) of the outstanding securities having ordinary voting power
of which shall at the time be owned or controlled, directly or indirectly, by
such Person or by one or more of its Subsidiaries or by such Person and one or
more of its Subsidiaries, or (ii) any partnership, association, limited
liability company, joint venture or similar business organization more than
fifty percent (50%) of the ownership interests having ordinary voting power of
which shall at the time be so owned or controlled.
"TRANSACTION DOCUMENTS" means, collectively, this Agreement,
each Collection Account Agreement, the Performance Undertaking, the Fee Letters,
the Side Letter, the Subordinated Notes and all other instruments, documents and
agreements executed and delivered in connection herewith.
"UNIT" means each of the following: (i) the Computer Systems
Division of each Originator and (ii) the Industrial Electronics Components
Division of each Originator.
All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting principles. All terms
used in Article 9 of the UCC in the State of Illinois, and not specifically
defined herein, are used herein as defined in such Article 9.
Exh. I-6
EXHIBIT II
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PLACES OF BUSINESS; LOCATIONS OF RECORDS;
FEDERAL EMPLOYER IDENTIFICATION NUMBER(S); CORPORATE NAMES,
TRADE NAMES AND ASSUMED NAMES
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NAME AND JURISDICTION FEDERAL EMPLOYER
OF ORGANIZATION ADDRESSES LOCATIONS OF RECORDS I.D. NUMBER
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Pioneer-Standard 6065 Parkland Blvd. 6065 Parkland 34-0907152
Electronics, Inc., an Ohio Cleveland, Ohio Mayfield Heights, OH
corporation
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Pioneer-Standard Illinois, 2171 Executive Dr., #200 6065 Parkland 36-4082140
Inc., a Delaware corporation Addison, Illinois Mayfield Heights, OH
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Pioneer-Standard Minnesota, 7625 Golden Triangle Dr. 6065 Parkland 41-1839039
Inc., a Delaware corporation Suite G Mayfield Heights, OH
Eden Prarie, Minnesota
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Pioneer-Standard 23550 Commerce Park Road 6065 Parkland 75-2649947
Electronics, Ltd., a Beachwood, Ohio Mayfield Heights, OH
Delaware limited partnership
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Pioneer-Standard Funding 7625 Golden Triangle Dr. 6065 Parkland [________]
Corporation, a Delaware Suite G - 100 Mayfield Heights, OH
corporation Eden Prarie, Minnesota
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Places of Business:
Locations of Records:
Federal Employer Identification Number:
Corporate, Trade and Assumed Names: KeyLink Systems
Exh. II-1
EXHIBIT III
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[Reserved]
Exh. III-1
EXHIBIT IV
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FORM OF COMPLIANCE CERTIFICATE
This Compliance Certificate is furnished pursuant to that
certain Receivables Sale Agreement dated as of October 19, 2001, by and among
Pioneer-Standard Electronics, Inc., Pioneer-Standard Illinois, Inc.,
Pioneer-Standard Minnesota, Inc. and Pioneer-Standard Electronics, Ltd. (each an
"ORIGINATOR", and collectively, the "ORIGINATORS") and Pioneer-Standard Funding
Corporation (as amended, restated, supplemented or otherwise modified from time
to time, the "AGREEMENT"). Capitalized terms used and not otherwise defined
herein are used with the meanings attributed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES, SOLELY IN HIS OR HER
CAPACITY AS AN OFFICER OF THE ORIGINATORS, THAT:
1. I am the duly elected ______________ of the Originators.
2. I have reviewed the terms of the Agreement and I have made,
or have caused to be made under my supervision, a detailed review of the
transactions and conditions of the Originators and their Subsidiaries during the
accounting period covered by the attached financial statements.
3. The examinations described in PARAGRAPH 2 did not disclose,
and I have no knowledge of, the existence of any condition or event which
constitutes an Amortization Event or a Potential Amortization Event, as each
such term is defined under the Agreement, during or at the end of the accounting
period covered by the attached financial statements or as of the date of this
Certificate, except as set forth below.
4. Described below are the exceptions, if any, to paragraph 3
by listing, in detail, the nature of the condition or event, the period during
which it has existed and the action which the Originators have taken, are
taking, or propose to take with respect to each such condition or event:
The foregoing certifications, together with the computations
set forth in SCHEDULE I hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this _____ day of _______,
20__.
------------------------------------------
[Name]
----
Exh. IV-1
SCHEDULE I TO COMPLIANCE CERTIFICATE
Schedule of Compliance as of ___________ __, 20__ with Section
_____ of the Agreement. Unless otherwise defined herein, the terms used in this
Compliance Certificate have the meanings ascribed thereto in the Agreement.
This Schedule relates to the month ended __________ __, 20__.
Exh. IV-2
EXHIBIT V
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CREDIT AND COLLECTION POLICY
Attached.
Exh. V-1
EXHIBIT VI
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FORM OF SUBORDINATED NOTE
SUBORDINATED NOTE
October 19, 2001
1. NOTE. FOR VALUE RECEIVED, the undersigned, Pioneer-Standard
Funding Corporation, a Delaware corporation (the "SPV"), hereby unconditionally
promises to pay to the order of [ORIGINATOR NAME], a(n) __________ [corporation]
[partnership] (the "ORIGINATOR"), in lawful money of the United States of
America and in immediately available funds, on the date following the
Amortization Date which is one year and one day after the date on which (i) the
Outstanding Balance of all Receivables sold under the "Sale Agreement" referred
to below has been reduced to zero and (ii) the Pioneer Entities (as defined
below) have paid to the Buyer all indemnities, adjustments and other amounts
which may be owed thereunder in connection with the Purchases (the "COLLECTION
DATE"), the aggregate unpaid principal sum outstanding of all "Subordinated
Loans" made from time to time by the Pioneer Entities to the SPV pursuant to and
in accordance with the terms of that certain Receivables Sale Agreement dated as
of October 19, 2001 by and among [insert names of other originators] and the
Originator (collectively, the "PIONEER ENTITIES") and the SPV (as amended,
restated, supplemented or otherwise modified from time to time, the "SALE
AGREEMENT"). Reference to SECTION 1.2 of the Sale Agreement is hereby made for a
statement of the terms and conditions under which the loans evidenced hereby
have been and will be made. All terms which are capitalized and used herein and
which are not otherwise specifically defined herein shall have the meanings
ascribed to such terms in the Sale Agreement.
2. INTEREST. The SPV further promises to pay interest on the
outstanding unpaid principal amount hereof from the date hereof until payment in
full hereof at a rate equal to the "LIBOR Rate" (as defined in the Receivables
Purchase Agreement) in effect as of the last Business Day of each calendar
month, with a Tranche Period equal to one month; PROVIDED, HOWEVER, that if the
SPV shall default in the payment of any principal hereof, the SPV promises to
pay, on demand, interest at the rate of the Prime Rate plus two percent (2%) per
annum on any such unpaid amounts, from the date such payment is due to the date
of actual payment. Interest shall be payable on the first Business Day of each
month in arrears; PROVIDED, HOWEVER, that the SPV may elect on the date any
interest payment is due hereunder to defer such payment and upon such election
the amount of interest due but unpaid on such date shall constitute principal
under this Subordinated Note. The outstanding principal of any loan made under
this Subordinated Note shall be due and payable on the Collection Date and may
be repaid or prepaid at any time without premium or penalty.
3. PRINCIPAL PAYMENTS. The Originator is authorized and
directed by the SPV to enter on the grid attached hereto, or, at its option, in
its books and records, the date and amount of each loan made by it which is
evidenced by this Subordinated Note and the amount of each payment of principal
made by the SPV, and absent manifest error, such entries shall
Exh. VI-1
constitute prima facie evidence of the accuracy of the information so entered;
PROVIDED that neither the failure of the Originator to make any such entry or
any error therein shall expand, limit or affect the obligations of the SPV
hereunder.
4. SUBORDINATION. The indebtedness evidenced by this
Subordinated Note is subordinated to the prior payment in full of all of the
SPV's recourse obligations under that certain Receivables Purchase Agreement
dated as of October 19, 2001 by and among the SPV, Originator, as Servicer,
various "Purchasers" and "Managing Agents" from time to time party thereto, and
Bank One, NA (having its main office in Chicago), as the "Collateral Agent" (as
amended, restated, supplemented or otherwise modified from time to time, the
"PURCHASE AGREEMENT"). The subordination provisions contained herein are for the
direct benefit of, and may be enforced by, the Collateral Agent, each Managing
Agent and the Purchasers and/or any of their respective assignees (collectively,
the "SENIOR CLAIMANTS") under the Purchase Agreement. Until the date on which
all "Capital" outstanding under the Purchase Agreement has been repaid in full
and all other obligations of the SPV and/or the Servicer thereunder and under
the "Fee Letters" referenced therein (all such obligations, collectively, the
"SENIOR CLAIM") have been indefeasibly paid and satisfied in full, the
Originator shall not demand, accelerate, sue for, take, receive or accept from
the SPV, directly or indirectly, in cash or other property or by set-off or any
other manner (including, without limitation, from or by way of collateral) any
payment or security of all or any of the indebtedness under this Subordinated
Note or exercise any remedies or take any action or proceeding to enforce the
same; PROVIDED, HOWEVER, that (i) the Originator hereby agrees that it will not
institute against the SPV any proceeding of the type described in SECTION 5.1(d)
of the Sale Agreement unless and until the Collection Date has occurred and the
Senior Claim has been indefeasibly satisfied and paid in full and (ii) nothing
in this paragraph shall restrict the SPV from paying, or the Originator from
requesting, any payments under this Subordinated Note so long as the SPV is not
required under the Purchase Agreement to set aside for the benefit of, or
otherwise pay over to, the funds used for such payments to any of the Senior
Claimants and further provided that the making of such payment would not
otherwise violate the terms and provisions of the Purchase Agreement. Should any
payment, distribution or security or proceeds thereof be received by the
Originator in violation of the immediately preceding sentence, the Originator
agrees that such payment shall be segregated, received and held in trust for the
benefit of, and deemed to be the property of, and shall be immediately paid over
and delivered to the Collateral Agent for the benefit of the Senior Claimants.
5. BANKRUPTCY; INSOLVENCY. Upon the occurrence of any
proceeding of the type described in SECTION 5.1(d) of the Sale Agreement
involving the SPV as debtor, then and in any such event the Senior Claimants
shall receive payment in full of all amounts due or to become due on or in
respect of Capital and the Senior Claim (including "Yield" as defined and as
accruing under the Purchase Agreement after the commencement of any such
proceeding, whether or not any or all of such Yield is an allowable claim in any
such proceeding) before the Originator is entitled to receive payment on account
of this Subordinated Note, and to that end, any payment or distribution of
assets of the SPV of any kind or character, whether in cash, securities or other
property, in any applicable insolvency proceeding, which would otherwise be
payable to or deliverable upon or with respect to any or all indebtedness under
this Subordinated Note, is hereby assigned to and shall be paid or delivered by
the Person making such payment or delivery (whether a trustee in bankruptcy, a
receiver, custodian or liquidating trustee or
Exh. VI-2
otherwise) directly to the Collateral Agent for application to, or as collateral
for the payment of, the Senior Claim until such Senior Claim shall have been
paid in full and satisfied.
6. AMENDMENTS. This Subordinated Note shall not be amended or
modified except in accordance with SECTION 7.1 of the Sale Agreement. The terms
of this Subordinated Note may not be amended or otherwise modified without the
prior written consent of the Collateral Agent and the Managing Agents for the
benefit of the Purchasers.
7. GOVERNING LAW. THIS SUBORDINATED NOTE HAS BEEN MADE AND
DELIVERED AT CHICAGO, ILLINOIS, AND SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS AND
DECISIONS OF THE STATE OF ILLINOIS. WHEREVER POSSIBLE EACH PROVISION OF THIS
SUBORDINATED NOTE SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND
VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS SUBORDINATED NOTE SHALL
BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE
INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT
INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS
SUBORDINATED NOTE.
8. WAIVERS. All parties hereto, whether as makers, endorsers,
or otherwise, severally waive presentment for payment, demand, protest and
notice of dishonor. The Originator additionally expressly waives all notice of
the acceptance by any Senior Claimant of the subordination and other provisions
of this Subordinated Note and expressly waives reliance by any Senior Claimant
upon the subordination and other provisions herein provided.
9. ASSIGNMENT. This Subordinated Note may not be assigned,
pledged or otherwise transferred to any party other than the Originator without
the prior written consent of the Collateral Agent, and any such attempted
transfer shall be void.
PIONEER-STANDARD FUNDING CORPORATION
By:
--------------------------------------
Name:
Title:
Exh. VI-3
Schedule
to
SUBORDINATED NOTE
SUBORDINATED LOANS AND PAYMENTS OF PRINCIPAL
Amount of Amount of Unpaid
Subordinated Principal Principal Notation made
Date Loan Paid Balance by
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SCHEDULE A
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DOCUMENTS TO BE DELIVERED TO THE BUYER
ON OR PRIOR TO THE PURCHASE
See Attached.
Sch. A