Exhibit 10.1
RECEIVABLES PURCHASE AGREEMENT
Dated as of October 22, 2001
Among
LEXMARK RECEIVABLES CORPORATION
as the Seller
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and
CIESCO L.P.
as the Investor
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and
CITIBANK, N.A.
and
CITICORP NORTH AMERICA, INC.
as the Agent
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and
LEXMARK INTERNATIONAL, INC.
as Collection Agent and Originator
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TABLE OF CONTENTS
Page
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PRELIMINARY STATEMENT........................ .........................................................1
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ARTICLE I
DEFINITIONS.......................................................................................1
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SECTION 1.01. Certain Defined Terms...................................................1
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SECTION 1.02. Other Terms............................................................23
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ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES...............................................................23
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SECTION 2.01. Purchase Facility......................................................23
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SECTION 2.02. Making Purchases.......................................................24
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SECTION 2.03. Receivable Interest Computation........................................25
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SECTION 2.04. Settlement Procedures..................................................25
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SECTION 2.05. Fees...................................................................30
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SECTION 2.06. Payments and Computations, Etc.........................................30
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SECTION 2.07. Dividing or Combining Receivable Interests.............................31
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SECTION 2.08. Increased Costs........................................................31
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SECTION 2.09. Additional Yield on Receivable Interests Bearing a Eurodollar Rate.....32
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SECTION 2.10. Taxes..................................................................32
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SECTION 2.11. Security Interest......................................................33
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ARTICLE III
CONDITIONS OF PURCHASES..........................................................................34
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SECTION 3.01. Conditions Precedent to Initial Purchase...............................34
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SECTION 3.02. Conditions Precedent to All Purchases and Reinvestments................35
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES...................................................................36
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SECTION 4.01. Representations and Warranties of the Seller...........................36
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SECTION 4.02. Representations and Warranties of the Collection Agent.................39
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ARTICLE V
COVENANTS........................................................................................40
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SECTION 5.01. Covenants of the Seller................................................40
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SECTION 5.02. Covenant of the Seller and the Originator..............................46
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ARTICLE VI
ADMINISTRATION AND COLLECTION OF POOL RECEIVABLES ...............................................47
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SECTION 6.01. Designation of Collection Agent........................................47
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SECTION 6.02. Duties of Collection Agent.............................................48
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SECTION 6.03. Certain Rights of the Agent............................................49
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SECTION 6.04. Rights and Remedies....................................................50
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SECTION 6.05. Further Actions Evidencing Purchases...................................50
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SECTION 6.06. Covenants of the Collection Agent and the Originator...................51
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SECTION 6.07. Indemnities by the Collection Agent....................................51
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SECTION 6.08. Cash Collateral Account................................................52
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ARTICLE VII
EVENTS OF TERMINATION............................................................................53
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SECTION 7.01. Events of Termination..................................................53
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ARTICLE VIII
THE AGENT .......................................................................................56
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SECTION 8.01. Authorization and Action...............................................56
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SECTION 8.02. Agent's Reliance, Etc..................................................56
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SECTION 8.03. CNAI and Affiliates....................................................57
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SECTION 8.04. Bank's Purchase Decision...............................................57
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ARTICLE IX
INDEMNIFICATION..................................................................................57
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SECTION 9.01. Indemnities by the Seller..............................................57
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ARTICLE X
MISCELLANEOUS....................................................................................60
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SECTION 10.01. Amendments, Etc.......................................................60
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SECTION 10.02. Notices, Etc..........................................................60
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SECTION 10.03. Assignability.........................................................60
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SECTION 10.04. Costs, Expenses and Taxes.............................................61
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SECTION 10.05. No Proceedings........................................................62
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SECTION 10.06. Confidentiality.......................................................62
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SECTION 10.07. GOVERNING LAW.........................................................62
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SECTION 10.08. Execution in Counterparts.............................................63
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SECTION 10.09. Survival of Termination...............................................63
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SECTION 10.10. Consent to Jurisdiction...............................................63
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SECTION 10.11. WAIVER OF JURY TRIAL..................................................63
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SCHEDULES
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SCHEDULE I - Lock-Box Banks
SCHEDULE II - Credit and Collection Policy
ANNEXES
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ANNEX A-1 - Form of Monthly Report
ANNEX A-2 - Form of Weekly Report
ANNEX A-3 - Form of Daily Report
ANNEX B - Form of Lock-Box Agreement
ANNEX C - Form of Opinion of Counsel to
the Seller
ANNEX D - Assignment and Acceptance
ANNEX E - Form of Funds Transfer Letter
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RECEIVABLES
PURCHASE AGREEMENT
Dated as of October 22, 2001
LEXMARK RECEIVABLES CORPORATION, a Delaware corporation (the
"Seller"), CIESCO L.P., a New York limited partnership, CITIBANK, N.A., and
CITICORP NORTH AMERICA, INC., a Delaware corporation ("CNAI"), as agent (the
"Agent") for the Investors and the Banks (as defined herein), and LEXMARK
INTERNATIONAL, INC., a Delaware corporation, as Collection Agent and Originator,
agree as follows:
PRELIMINARY STATEMENT. The Seller has acquired, and may
continue to acquire, Receivables from the Originator (as hereinafter defined),
either by purchase or by contribution to the capital of the Seller, as
determined from time to time by the Seller and the Originator. The Seller is
prepared to sell undivided fractional ownership interests (referred to herein as
"Receivable Interests") in the Receivables. CIESCO may, in its sole discretion,
purchase such Receivable Interests, and the Banks are prepared to purchase such
Receivable Interests, in each case on the terms set forth herein. Accordingly,
the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement,the following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):
"Adjusted Eurodollar Rate" means, for any Fixed Period, an
interest rate per annum equal to the rate per annum obtained by dividing (i) the
Eurodollar Rate for such Fixed Period by (ii) a percentage equal to 100% minus
the Eurodollar Rate Reserve Percentage for such Fixed Period.
"Adverse Claim" means a lien, security interest or other
charge or encumbrance, or any other type of preferential arrangement.
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by or is under common
control with such Person or is a director or officer of such Person.
"Affiliated Obligor" means any Obligor that is an Affiliate
of another Obligor.
"Agent's Account" means the special account (account number
38858248) of the Agent maintained at the office of Citibank at 399 Park Avenue,
New York, New York.
"Allocation Percentage" means, at any time, the sum of the
Receivable Interest percentages at such time, based on the information in the
most recent Daily Report.
"Alternate Base Rate" means a fluctuating interest rate per
annum as shall be in effect from time to time, which rate shall be at all times
equal to the highest of:
(a) the rate of interest announced publicly by Citibank
in New York, New York, from time to time as Citibank's base
rate;
(b) 1/2 of one percent above the latest three-week moving
average of secondary market morning offering rates in the
United States for three-month certificates of deposit of major
United States money market banks, such three-week moving
average being determined weekly on each Monday (or, if such
day is not a Business Day, on the next succeeding Business
Day) for the three-week period ending on the previous Friday
by Citibank on the basis of such rates reported by certificate
of deposit dealers to and published by the Federal Reserve
Bank of New York or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received
by Citibank from three New York certificate of deposit dealers
of recognized standing selected by Citibank, in either case
adjusted to the nearest 1/4 of one percent or, if there is no
nearest 1/4 of one percent, to the next higher 1/4 of one
percent; and
(c) the Federal Funds Rate.
"Applicable Margin" means, at any time, a rate per annum equal
to the sum of (x) the then applicable "Eurocurrency Margin" plus (y) the then
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applicable "Facility Fee Rate" (in each case, as set forth in the definition of
"Applicable Rate" in the Credit Facility) plus (z) 0.25%.
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"Asset Purchase Agreement" means (a) in the case of any Bank
other than Citibank, the asset purchase agreement entered into by such Bank
concurrently with the Assignment and Acceptance pursuant to which it became
party to this Agreement and (b) in the case of Citibank, the secondary market
agreement, asset purchase agreement or other similar liquidity agreement entered
into by Citibank for the benefit of CIESCO, to the extent relating to the sale
or transfer of interests in Receivable Interests.
"Assignee Rate" for any Fixed Period for any Receivable
Interest means an interest rate per annum equal to the Applicable Margin at such
time plus the Eurodollar Rate for such Fixed Period; provided, however, that in
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case of:
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(i) any Fixed Period on or prior to the first day of
which an Investor or Bank shall have notified the Agent that
the introduction of or any change in or in the interpretation
of any law or regulation makes it unlawful, or any central
bank or other governmental authority asserts that it is
unlawful, for such Investor or Bank to fund such Receivable
Interest at the Assignee Rate set forth above (and such
Investor or Bank shall not have subsequently notified the
Agent that such circumstances no longer exist),
(ii) any Fixed Period of one to (and including) 29 days
(it being understood and agreed that this clause (ii) shall
not be applicable to a Fixed Period for which Yield is to be
computed by reference to the Eurodollar Rate that is intended
to have a one-month duration but due solely to LIBOR interest
period convention the duration thereof will be less than 30
days),
(iii) any Fixed Period as to which the Agent does not
receive notice, by no later than 12:00 noon (New York City
time) on the third Business Day preceding the first day of
such Fixed Period, that the related Receivable Interest will
not be funded by issuance of commercial paper, or
(iv) any Fixed Period for a Receivable Interest the
Capital of which allocated to the Investors or the Banks is
less than $500,000,
the "Assignee Rate" for such Fixed Period shall be an interest rate per annum
equal to the Alternate Base Rate in effect from time to time during such Fixed
Period; provided further that the Agent and the Seller may agree in writing from
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time to time upon a different "Assignee Rate".
"Assignment and Acceptance" means an assignment and acceptance
agreement entered into by a Bank, an Eligible Assignee and the Agent, pursuant
to which such Eligible Assignee may become a party to this Agreement, in
substantially the form of Annex D hereto.
"Bank Commitment" of any Bank means, (a) with respect to
Citibank, $225,000,000 or such amount as reduced by any Assignment and
Acceptance entered into between Citibank and other Banks; or (b) with respect to
a Bank that has entered into an Assignment and Acceptance, the amount set forth
therein as such Bank's Bank Commitment, in each case as such amount may be
reduced by an Assignment and Acceptance entered into between such Bank and an
Eligible Assignee, and as may be further reduced (or terminated) pursuant to the
next sentence. Any reduction (or termination) of the Purchase Limit pursuant to
the terms of this Agreement shall reduce ratably (or terminate) each Bank's Bank
Commitment.
"Banks" means Citibank and each Eligible Assignee that shall
become a party to this Agreement pursuant to Section 10.03.
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"Business Day" means any day on which (i) banks are not
authorized or required to close in New York City, and (ii) if this definition of
"Business Day" is utilized in connection with the Eurodollar Rate, dealings are
carried out in the London interbank market.
"Capital" of any Receivable Interest means the original amount
paid to the Seller for such Receivable Interest at the time of its purchase by
CIESCO or a Bank pursuant to this Agreement, or such amount divided or combined
in accordance with Section 2.07, in each case reduced from time to time by
Collections distributed on account of such Capital pursuant to Section 2.04(d);
provided that if such Capital shall have been reduced by any distribution and
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thereafter all or a portion of such distribution is rescinded or must otherwise
be returned for any reason, such Capital shall be increased by the amount of
such rescinded or returned distribution, as though it had not been made.
"Cash Collateral Account" has the meaning specified in Section
6.08.
"Cash Collateral Agreement" has the meaning specified in
Section 6.08.
"Cash Collateral Bank" has the meaning specified in Section
6.08.
"Cash Control Triggering Event" means the occurrence of any of
the following: (i) (A) the Agent shall send a notice of an Event of Termination
or (B) an Event of Termination under Section 7.01(g) shall occur, (ii) an
Incipient Event of Termination shall occur pursuant to Section 7.01(c), (iii)
there shall occur (in the Agent's reasonable judgment) a material adverse change
in collectibility of more than 20% of the Receivables in the Receivables Pool or
(iv) a Level II Downgrade Event shall occur.
"CIESCO" means CIESCO L.P. and any successor or assign of
CIESCO that is a receivables investment company which in the ordinary course of
its business issues commercial paper or other securities to fund its acquisition
and maintenance of receivables.
"Citibank" means Citibank, N.A., a national banking
association.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Collection Agent" means at any time the Person then
authorized pursuant to Section 6.01 to administer and collect Pool Receivables.
"Collection Agent Default" means the occurrence of an Event of
Termination described in Sections 7.01(a), 7.01(c), 7.01(e) or 7.01(g), in each
case with respect to the Collection Agent.
"Collection Agent Fee" has the meaning specified in Section
2.05(a).
"Collection Delay Period" means 10 days.
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"Collections" means, with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable, including, without
limitation, all cash proceeds of Related Security with respect to such
Receivable, and any Collection of such Receivable deemed to have been received
pursuant to Section 2.04.
"Commitment Termination Date" means the earliest of (a)
October 21, 2002, unless, prior to such date (or the date so extended pursuant
to this clause), upon the Seller's request, made not more than 90 nor less than
45 days prior to the then Commitment Termination Date, one or more Banks having
Bank Commitments equal to 100% of the Purchase Limit shall in their sole
discretion consent, which consent shall be given not more than 30 days prior to
the then Commitment Termination Date, to the extension of the Commitment
Termination Date to the date occurring 364 days after the then Commitment
Termination Date; provided, however, that any failure of any Bank to respond to
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the Seller's request for such extension shall be deemed a denial of such request
by such Bank, (b) the Facility Termination Date, (c) the date determined
pursuant to Section 7.01, and (d) the date the Purchase Limit reduces to zero
pursuant to Section 2.01(b).
"Concentration Limit" at any time means (x) for any Group A
Obligor, 20%, (y) for any Group B Obligor, 10%, and (z) for any Group C Obligor
5%, or such other higher percentage ("Special Concentration Limit") for such
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Obligor or Obligor Group designated by the Agent in a writing delivered to the
Seller; provided that in the case of an Obligor with any Affiliated Obligor, the
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Concentration Limit shall be calculated as if such Obligor and such Affiliated
Obligor are one Obligor; provided further that the Agent may cancel any Special
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Concentration Limit upon three Business Days' notice to the Seller.
"Consolidated EBITDA" has the meaning set forth in such
definition in the Credit Facility as in effect on the date hereof and any
additional defined terms used in such definition shall have their meanings as in
effect on the date hereof.
"Consolidated Interest Coverage Ratio" means, for any period,
the ratio of (a) Consolidated EBITDA for such period to (b) Consolidated
Interest Expense for such period.
"Consolidated Interest Expense" has the meaning set forth in
such definition in the Credit Facility as in effect on the date hereof and any
additional defined terms used in such definition shall have their meanings as in
effect on the date hereof.
"Consolidated Leverage Ratio" means, at any date, the ratio of
(a) Consolidated Total Debt on such date to (b) Consolidated EBITDA for the
period of four consecutive fiscal quarters ending with the most recent fiscal
quarter for which the relevant financial information is available.
"Consolidated Total Debt" has the meaning set forth in such
definition in the Credit Facility as in effect on the date hereof and any
additional defined terms used in such definition shall have their meanings as in
effect on the date hereof.
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"Contract" means an agreement between the Originator and an
Obligor, substantially in the form of one of the written contracts or (in the
case of any open account agreement) one of the invoices approved by the Agent,
pursuant to or under which such Obligor shall be obligated to pay for
merchandise, insurance or services from time to time.
"CP Fixed Period Date" means, for any Receivable Interest, the
date of purchase of such Receivable Interest and thereafter the 20th day of each
calendar month (or, if such day is not a Business Day, the immediately
succeeding Business Day) or any other day as shall have been agreed to in
writing by the Agent and the Seller prior to the first day of the preceding
Fixed Period for such Receivable Interest or, if there is no preceding Fixed
Period, prior to the first day of such Fixed Period.
"Credit and Collection Policy" means those receivables credit
and collection policies and practices of the Seller in effect on the date of
this Agreement and described in Schedule II hereto, as modified in compliance
with this Agreement.
"Credit Facility" means the Credit Agreement, dated as of
January 27, 1998 among the Originator, as borrower, the lenders party thereto,
Fleet National Bank, as documentation agent, Morgan Guaranty Trust Company of
New York, as syndication agent and The Chase Manhattan Bank, as administrative
agent, as amended, restated, modified or supplemented from time to time, and all
agreements, documents and instruments executed in connection therewith together
with any replacement facility or refinancing thereof entered into by the
Originator.
"Cure Period" means the period beginning on and including a
Pool Non-compliance Date and ending on but excluding the earlier of (a) the
first date thereafter on which the Net Receivables Pool Balance equals or
exceeds the Required Net Receivables Pool Balance and (b) the Business Day
following the delivery of the next Daily Report.
"Daily Report" means a report in substantially the form of
Annex A-3 hereto and containing such additional information as the Agent may
reasonably request from time to time, furnished by the Collection Agent to the
Agent pursuant to Section 6.02(g)(iii) following the occurrence of a Level II
Downgrade Event.
"Days Sales Outstanding" means, on any date, an amount equal
to
[OBPR x 91] + CDP
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S
where:
OBPR = the aggregate Outstanding Balance of all
Receivables at the end of the most recently
ended month.
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S = the aggregate Outstanding Balance (in each
case at the time of creation) of all
Receivables created during the most recently
ended three month period.
CDP = the Collection Delay Period.
"Debt" means (i) indebtedness for borrowed money, (ii)
obligations evidenced by bonds, debentures, notes or other similar instruments,
(iii) obligations to pay the deferred purchase price of property or services
(but excluding trade accounts payable or accrued liabilities arising in the
ordinary course of business consistent with past practices), (iv) obligations as
lessee under leases which shall have been or should be, in accordance with GAAP,
recorded as capital leases, and (v) obligations under direct or indirect
guaranties in respect of, and obligations (contingent or otherwise) to purchase
or otherwise acquire, or otherwise to assure a creditor against loss in respect
of, indebtedness or obligations of others of the kinds referred to in clauses
(i) through (iv) above.
"Debt Rating" for any Person, means the rating by S&P or
Moody's of such Person's long-term public senior unsecured non-credit-enhanced
debt.
"Default Ratio" means the ratio (expressed as a percentage)
computed as of the last day of each calendar month by dividing (i) the sum of
the aggregate Outstanding Balances of all Originator Receivables that were
Defaulted Receivables as of the last day of each of the three most recently
ended calendar months (including the calendar month then ending), or that would
have been Defaulted Receivables as of the last day of the applicable month had
they not been written off the books of the Originator or the Seller during the
applicable month, by (ii) the sum of the aggregate Outstanding Balances of all
Originator Receivables as of the last day of each of the three most recently
ended calendar months (including the calendar month then ending).
"Defaulted Receivable" means an Originator Receivable:
(i) as to which any payment, or part thereof, remains
unpaid for 91 or more days from the original due date for such
payment;
(ii) as to which the Obligor thereof or any other Person
obligated thereon or owning any Related Security in respect
thereof has taken any action, or suffered any event to occur,
of the type described in Section 7.01(g); or
(iii) which, consistent with the Credit and Collection
Policy, would be written off the Originator's or the Seller's
books as uncollectible.
"Deferred Purchase Price" has the meaning specified in the
Originator Purchase Agreement.
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"Delinquency Ratio" means the ratio (expressed as a
percentage) computed as of the last day of each calendar month by dividing (i)
the aggregate Outstanding Balances of all Originator Receivables that were
Delinquent Receivables as of the last day of each of the three most recently
ended calendar months (including the calendar month then ending) by (ii) the
aggregate Outstanding Balances of all Originator Receivables as of the last day
of each of the three most recently ended calendar months (including the calendar
month then ending).
"Delinquent Receivable" means an Originator Receivable that is
not a Defaulted Receivable and:
(i) as to which any payment, or part thereof, remains
unpaid for 31 or more days from the original due date for such
payment; or
(ii) which, consistent with the Credit and Collection
Policy, would be classified as delinquent by the Originator or
the Seller.
"Deposit Date" means each day on which any Collections are
deposited in any of the Lock-Box Accounts or on which the Collection Agent shall
receive Collections of Pool Receivables.
"Designated Obligor" means, at any time, each Obligor;
provided, however, that with respect to any Group C Obligor, if the Agent has
determined to de-designate such Designated Obligor for bona fide credit-related
reasons, such Group C Obligor shall cease to be a Designated Obligor upon three
Business Days' notice by the Agent to the Seller.
"Diluted Receivable" means that portion (and only that
portion) of any Originator Receivable which is either (a) reduced or canceled as
a result of (i) any defective, rejected or returned merchandise or services or
any failure by the Originator to deliver any merchandise or provide any services
or otherwise to perform under the underlying Contract or invoice, (ii) any
change in the terms of or cancellation of, a Contract or invoice or any cash
discount, discount for quick payment or other adjustment by the Originator which
reduces the amount payable by the Obligor on the related Originator Receivable
(except any such change or cancellation resulting from or relating to the
financial inability to pay or insolvency of the Obligor of such Originator
Receivable) or (iii) any set-off by an Obligor in respect of any claim by such
Obligor as to amounts owed by it on the related Originator Receivable (whether
such claim arises out of the same or a related transaction or an unrelated
transaction) or (b) subject to any specific dispute, offset, counterclaim or
defense whatsoever (except the discharge in bankruptcy of the Obligor thereof);
provided that Diluted Receivables are calculated assuming that all chargebacks
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are resolved in the Obligor's favor and do not include contractual adjustments
to the amount payable by an Obligor that are eliminated from the Originator
Receivables balance sold to the Seller through a reduction in the purchase price
for the related Originator Receivable.
"Dilution Horizon Factor" means, as of any date, a ratio
computed by dividing (i) the aggregate original Outstanding Balance of all
Originator Receivables created by the
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Originator during the three most recently ended calendar months by (ii) the
Outstanding Balance of Originator Receivables (other than Defaulted Receivables)
as at the last day of the most recently ended calendar month.
"Dilution Percentage" means, as of any date, the product of
(a) the sum of (i) the product of (x) 1.5, multiplied by (y) the average of the
Dilution Ratios for each of the twelve most recently ended calendar months, plus
(ii) the Dilution Volatility Ratio as at the last day of the most recently ended
calendar month, multiplied by (b) the Dilution Horizon Factor as of such date.
"Dilution Ratio" means, as of any date, the ratio (expressed
as a percentage) computed for the most recently ended calendar month by dividing
(i) the aggregate amount of Originator Receivables which became Diluted
Receivables during such calendar month by (ii) the aggregate Outstanding Balance
(in each case, at the time of creation) of all Originator Receivables created
during the third calendar month immediately preceding such calendar month.
"Dilution Reserve" means, for any Receivable Interest on any
date $0, unless (i) a Dilution Reserve Trigger Event (but no Level I Downgrade
Event) shall have occurred and be continuing in which case the "Dilution
Reserve" for each Receivable Interest on such date shall be an amount equal to:
0.5 x ADR x NPRB
where:
ADR = the average Dilution Ratio for the twelve most
recently ended months.
NRPB = the Net Receivables Pool Balance at the time
of computation;
or (ii) a Level I Downgrade Event shall have occurred and be continuing in which
case the "Dilution Reserve" for each Receivable Interest on such date shall be
an amount equal to:
DP x NRPB
where:
DP = the Dilution Percentage for such Receivable
Interest on such date.
NRPB = the Net Receivables Pool Balance at the time
of computation.
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"Dilution Reserve Trigger Event" means the Debt Rating of the
Originator is rated lower than BBB by S&P or lower than Baa2 by Moody's but no
Level I Downgrade Event shall have occurred and be continuing.
"Dilution Volatility Ratio" means, as of any date, a ratio
(expressed as a percentage) equal to the product of (a) the highest of the
Dilution Ratios calculated for each of the twelve most recently ended calendar
months minus the average of the Dilution Ratios for each of the twelve most
recently ended calendar months, and (b) a ratio calculated by dividing the
highest of the Dilution Ratios calculated for each of the twelve most recently
ended calendar months by the average of the Dilution Ratios for each of the
twelve most recently ended calendar months.
"Downgraded Loss Horizon Factor" means, as of any date, ratio
computed by dividing (i) the aggregate Outstanding Balance (in each case, at the
time of creation) of all Originator Receivables created by the Originator during
the four most recently ended calendar months by (ii) the Outstanding Balance of
Originator Receivables (other than Defaulted Receivables) as at the last day of
the most recently ended calendar month.
"Downgraded Loss Percentage" means, as of any date, the
greatest of (a) the product of (i) two multiplied by (ii) the Downgraded Loss
Horizon Factor as of the last day of the most recently ended calendar month
multiplied by (iii) the highest of the Downgraded Loss Ratios for the twelve
most recently ended calendar months, (b) four times the Concentration Limit
applicable to Group C Obligors and (c) 20%.
"Downgraded Loss Ratio" means, as of any date, the average of
the ratios (each expressed as a percentage) for each of the three most recently
ended calendar months computed for each such month by dividing (a) the sum of
the aggregate Outstanding Balance of Originator Receivables which were 91-120
days past due (or otherwise would have been classified during such month as
Defaulted Receivables in accordance with clauses (ii) or (iii) of the definition
of "Defaulted Receivables") as at the last day of such month plus (without
duplication) write-offs (which are less than 91 days past due) during such
month, by (b) the aggregate Outstanding Balance (in each case, at the time of
creation) of Originator Receivables created during the fourth preceding month.
"E-Mail Report" has the meaning specified in Section 6.02(g).
"Eligible Assignee" means CNAI, any of its Affiliates, any
Person managed by Citibank, CNAI or any of their Affiliates, or any financial or
other institution acceptable to the Agent.
"Eligible Receivable" means, at any time, a Receivable:
(i) the Obligor of which is a United States resident
(and shall include without limitation, Government Obligors,
state and local governments of
10
jurisdictions located in the United States, or any agency or
subdivision thereof) and is not an Affiliate of any of the
parties hereto;
(ii) the Obligor of which, at the later of the date of
this Agreement and the date such Receivable is created, is a
Designated Obligor;
(iii) which is not a Defaulted Receivable and the Obligor
of which is not the Obligor of any Defaulted Receivables which
in the aggregate constitute 25% or more of the aggregate
Outstanding Balance of all Receivables of such Obligor;
(iv) which, according to the Contract related thereto, is
required to be paid in full within 90 days of the original
billing date therefor;
(v) which is an obligation representing all or part of
the sales price of merchandise, insurance or services within
the meaning of Section 3(c)(5) of the Investment Company Act
of 1940, as amended, and the nature of which is such that its
purchase with the proceeds of notes would constitute a
"current transaction" within the meaning of Section 3(a)(3) of
the Securities Act of 1933, as amended;
(vi) which is an "account" within the meaning of Article
9 of the UCC of the applicable jurisdictions governing the
perfection of the interest created by a Receivable Interest;
(vii) which is denominated and payable only in United
States dollars in the United States;
(viii) which arises under a Contract which, together with
such Receivable, is in full force and effect and constitutes
the legal, valid and binding obligation of the Obligor of such
Receivable and is not subject to any Adverse Claim or any
dispute, offset, counterclaim or defense whatsoever (except
the potential discharge in bankruptcy of such Obligor);
(ix) which, together with the Contract related thereto,
does not contravene in any material respect any laws, rules or
regulations applicable thereto (including, without limitation,
laws, rules and regulations relating to usury, consumer
protection, truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection
practices and privacy) and with respect to which none of the
Seller, the Originator or the Obligor is in violation of any
such law, rule or regulation in any material respect;
(x) Intentionally omitted;
11
(xi) which was generated in the ordinary course of the
Originator's business;
(xii) which has not been extended, rewritten or otherwise
modified from the original terms thereof (except as permitted
by Section 6.02(c);
(xiii) the transfer, sale or assignment of which does not
contravene any applicable law, rule or regulation;
(xiv) which satisfies all applicable requirements of the
Credit and Collection Policy; and
(xv) as to which, at or prior to the later of the date of
this Agreement and the date such Receivable is created, the
Agent has not notified the Seller that such Receivable (or
class of Receivables) is no longer acceptable for purchase by
CIESCO and the Banks hereunder for bona fide credit-related
reasons.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Seller, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated finding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Seller or any ERISA Affiliate of
any liability under Title IV of ERISA with respect to the termination of any
Plan; (e) the receipt by the Seller or any ERISA Affiliate from the PBGC or a
plan administrator of any notice relating to an intention to terminate any Plan
or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by
the Seller or any ERISA Affiliate of any liability with respect to the
withdrawal or partial withdrawal form any Plan or Multiemployer Plan; or (g) the
receipt by the Seller or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Seller or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Eurocurrency Liabilities" has the meaning assigned to that
term in Regulation D of the Board of Governors of the Federal Reserve System, as
in effect from time to time.
12
"Eurodollar Rate" means, for any Fixed Period, an interest
rate per annum equal to the rate per annum at which deposits in U.S. dollars are
offered by the principal office of Citibank in London, England to prime banks in
the London interbank market at 11:00 A.M. (London Time) two Business Days before
the first day of such Fixed Period in an amount substantially equal to the
Capital associated with such Fixed Period on such first day and for a period
equal to such Fixed Period.
"Eurodollar Rate Reserve Percentage" of any Investor or Bank
for any Fixed Period in respect of which Yield is computed by reference to the
Eurodollar Rate means the reserve percentage applicable two Business Days before
the first day of such Fixed Period under regulations issued from time to time by
the Board of Governors of the Federal Reserve System (or any successor) (or if
more than one such percentage shall be applicable, the daily average of such
percentages for those days in such Fixed Period during which any such percentage
shall be so applicable) for determining the maximum reserve requirement
(including, without limitation, any emergency, supplemental or other marginal
reserve requirement) for such Investor or Bank with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities (or with respect to
any other category of liabilities that includes deposits by reference to which
the interest rate on Eurocurrency Liabilities is determined) having a term equal
to such Fixed Period.
"Event of Termination" has the meaning specified in Section
7.01.
"Excluded Receivables" means the payment obligations of (i)
KeyTronicEMS Co., (ii) any Obligor located outside of the fifty states of the
United States and the District of Columbia, but solely to the extent such
payment obligation arises from goods delivered or services rendered exclusively
outside of the fifty states of the United States and the District of Columbia,
and (iii) any Obligor of the Lexmark Solution Services business of the
Originator (but only with respect to such Obligor's payment obligations to the
Lexmark Solution Services business), in each case resulting from the provision
or sale of merchandise, insurance or services by the Originator under a
Contract.
"Existing Receivables Purchase Agreement" means the Amended
and Restated Receivables Purchase Agreement, dated as of March 31, 1998 among
the Originator, the Seller, Delaware Funding Corporation and Morgan Guaranty
Trust Company of New York, as amended from time to time.
"Facility Termination Date" means the earliest of (a) October
19, 2004 or (b) the date determined pursuant to Section 7.01 or (c) the date the
Purchase Limit reduces to zero pursuant to Section 2.01(b) or (d) the Commitment
Termination Date.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for
13
any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Fee Agreement" has the meaning specified in Section 2.05(b).
"Fees" has the meaning specified in Section 2.05(b).
"Fixed Period" means, with respect to any Receivable Interest:
(a) in the case of any Fixed Period in respect of which Yield
is computed by reference to the Investor Rate, each successive
period commencing on each CP Fixed Period Date for such
Receivable Interest and ending on the next succeeding CP Fixed
Period Date for such Receivable Interest; and
(b) in the case of any Fixed Period in respect of which Yield
is computed by reference to the Assignee Rate, each successive
period of from one to and including 29 days, or a period of
one, two or three months, as the Seller shall select and the
Agent may approve on notice by the Seller received by the
Agent (including notice by telephone, confirmed in writing)
not later than 11:00 A.M. (New York City time) on (A) the day
which occurs three Business Days before the first day of such
Fixed Period (in the case of Fixed Periods in respect of which
Yield is computed by reference to the Eurodollar Rate) or (B)
the first day of such Fixed Period (in the case of Fixed
Periods in respect of which Yield is computed by reference to
the Alternate Base Rate), each such Fixed Period for such
Receivable Interest to commence on the last day of the
immediately preceding Fixed Period for such Receivable
Interest (or, if there is no such Fixed Period, on the date of
purchase of such Receivable Interest), except that if the
Agent ------ shall not have received such notice, or the Agent
and the Seller shall not have so mutually agreed, before 11:00
A.M. (New York City time) on such day, such Fixed Period shall
be one day;
provided, however, that:
- -------- -------
(i) any Fixed Period (other than of one day) which
would otherwise end on a day which is not a Business
Day shall be extended to the next succeeding Business
Day (provided, however, if Yield in respect of such
-------- -------
Fixed Period is computed by reference to the
Eurodollar Rate, and such Fixed Period would
otherwise end on a day which is not a Business Day,
and there is no subsequent Business Day in the same
calendar month as such day, such Fixed Period shall
end on the next preceding Business Day);
(ii) in the case of any Fixed Period of one day, (A)
if such Fixed Period is the initial Fixed Period for
a Receivable Interest, such Fixed Period shall
14
be the day of the purchase of such Receivable
Interest; (B) any subsequently occurring Fixed Period
which is one day shall, if the immediately preceding
Fixed Period is more than one day, be the last day of
such immediately preceding Fixed Period and, if the
immediately preceding Fixed Period is one day, be the
day next following such immediately preceding Fixed
Period; and (C) if such Fixed Period occurs on a day
immediately preceding a day which is not a Business
Day, such Fixed Period shall be extended to the next
succeeding Business Day; and
(iii) in the case of any Fixed Period for any
Receivable Interest which commences before the
Termination Date for such Receivable Interest and
would otherwise end on a date occurring after such
Termination Date, such Fixed Period shall end on such
Termination Date and the duration of each Fixed
Period which commences on or after the Termination
Date for such Receivable Interest shall be of such
duration (including, without limitation, one day) as
shall be selected by the Agent or, in the absence of
any such selection, each period of thirty days from
the last day of the immediately preceding Fixed
Period.
"Funds Transfer Letter" means a letter in substantially the
form of Annex E hereto executed and delivered by the Seller to the Agent, as the
same may be amended or restated in accordance with the terms thereof.
"GAAP" means generally accepted accounting principles in the
United States of America.
"Government Obligor" means an Obligor which is the federal
government of the United States of America or a subdivision or agency thereof.
"Group A Obligor" means any Obligor whose (or if such Obligor
is a subsidiary of another Person, whose ultimate parent's) unsecured short-term
senior non-credit-enhanced debt, is rated no lower than A-1 by S&P and P-1 by
Moody's, if such rating exists, or if such Obligor's unsecured short-term senior
non-credit-enhanced debt is not rated by either S&P or Moody's, such Obligor's
Debt Rating, if such rating exists, is no lower than A by S&P and A2 by Moody's;
provided, that if none of the foregoing ratings exist, such Obligor shall not be
- --------
a "Group A Obligor".
"Group B Obligor" means any Obligor (i) which is not a Group A
Obligor and (ii) whose (or if such Obligor is a subsidiary of another Person,
whose ultimate parent's) unsecured short-term senior non-credit-enhanced debt is
rated no lower than A-3 by S&P and P-3 by Moody's, if such rating exists, or if
such Obligor's unsecured short-term senior non-credit-enhanced debt is not rated
by either S&P or Moody's, such Obligor's Debt Rating is no lower than BBB- by
S&P and Baa3 by Moody's; provided, that if none of the foregoing ratings exist,
--------
such Obligor shall not be a "Group B Obligor".
15
"Group C Obligor" means any Obligor which is not a Group A
Obligor or a Group B Obligor.
"Incipient Event of Termination" means an event that but for
notice or lapse of time or both would constitute an Event of Termination.
"Investor" means CIESCO and all other owners by assignment or
otherwise of a Receivable Interest originally purchased by CIESCO and, to the
extent of the undivided interests so purchased, shall include any participants.
"Investor Rate" for any Fixed Period for any Receivable
Interest means the per annum rate equivalent to the weighted average of the per
annum rates paid or payable by CIESCO from time to time as interest on or
otherwise (by means of interest rate hedges or otherwise) in respect of those
promissory notes issued by CIESCO that are allocated, in whole or in part, by
the Agent (on behalf of CIESCO) to fund the purchase or maintenance of such
Receivable Interest during such Fixed Period as determined by the Agent (on
behalf of CIESCO) and reported to the Seller and, if the Collection Agent is not
the Seller, the Collection Agent, which rates shall reflect and give effect to
the commissions of placement agents and dealers in respect of such promissory
notes, to the extent such commissions are allocated, in whole or in part, to
such promissory notes by the Agent (on behalf of CIESCO); provided, however,
that if any component of such rate is a discount rate, in calculating the
"Investor Rate" for such Fixed Period the Agent shall for such component use the
rate resulting from converting such discount rate to an interest bearing
equivalent rate per annum.
"Level I Downgrade Event" means the Debt Rating of the
Originator is rated lower than BBB- by S&P or lower than Baa3 by Moody's (and
includes each Level II Downgrade Event).
"Level II Downgrade Event" means the Debt Rating of the
Originator is rated lower than BB by S&P or lower than Ba2 by Moody's.
"Liquidation Day" means, for any Receivable Interest, (i) each
day during a Fixed Period for such Receivable Interest on which the conditions
set forth in Section 3.02 are not satisfied, and (ii) each day which occurs on
or after the Termination Date for such Receivable Interest.
"Liquidation Fee" means, for (i) any Fixed Period for which
Yield is computed by reference to the Investor Rate and a reduction of Capital
is made for any reason in any amount on any day other than a Settlement Date or
(ii) any Fixed Period for which Yield is computed by reference to the Eurodollar
Rate and a reduction of Capital is made for any reason on any day other than the
last day of such Fixed Period, the amount, if any, by which (A) the additional
Yield (calculated without taking into account any Liquidation Fee or any
shortened duration of such Fixed Period pursuant to clause (iii) of the
definition thereof) which would have accrued from the date of such repayment to
the last day of such Fixed Period (or, in the case of clause (i)
16
above, the maturity of the underlying commercial paper tranches) on the
reductions of Capital of the Receivable Interest relating to such Fixed Period
had such reductions remained as Capital, exceeds (B) the income, if any,
received by the Investors or the Banks which hold such Receivable Interest from
the investment of the proceeds of such reductions of Capital.
"Liquidation Period" means the period commencing on the day
following the last day of the Revolving Period and ending on the later of the
Facility Termination Date and the date on which no Capital of or Yield on any
Receivable Interest shall be outstanding and all other amounts owed by the
Seller to the Investors, the Banks, the Agent and the Collection Agent shall be
paid in full.
"Lock-Box Account" means a post office box administered by a
Lock-Box Bank or an account maintained at a Lock-Box Bank, in each case for the
purpose of receiving Collections.
"Lock-Box Agreement" means an agreement, in substantially the
form of Annex B.
"Lock-Box Bank" means any of the banks holding one or more
Lock-Box Accounts.
"Loss Percentage" means, for any Receivable Interest on any
date, the greatest of (i) three times the Default Ratio as of the most recently
ended calendar month, (ii) four times the Concentration Limit applicable to
Group C Obligors and (iii) 20%.
"Loss-to-Liquidation Ratio" means the ratio (expressed as a
percentage) computed as of the last day of each calendar month by dividing (i)
the aggregate Outstanding Balances (as of the last day of each of the three most
recently ended calendar months (including the calendar month then ending)) of
all Originator Receivables written off by the Originator or the Seller, or which
should have been written off by the Originator or the Seller in accordance with
the Credit and Collection Policy, during each such calendar month by (ii) the
aggregate amount of Collections of Originator Receivables actually received
during such three calendar month period.
"Loss Reserve" means, for any Receivable Interest on any date
(i) on which no Level I Downgrade Event shall have occurred and be continuing,
an amount equal to
LP x OBER
where:
LP = the Loss Percentage for such Receivable
Interest on such date.
17
OBER = the Outstanding Balance of Eligible
Receivables calculated at the close of
business of the Collection Agent on such date;
or
(ii) following the occurrence and during the
continuation of a Level I Downgrade Event, an amount equal to
DLP x OBER
where:
DLP = the Downgraded Loss Percentage for such
Receivable Interest on such date.
OBER = the Outstanding Balance of Eligible
Receivables calculated at the close of
business of the Collection Agent on such date.
"Monthly Report" means a report in substantially the form of
Annex A-1 hereto and containing such additional information as the Agent may
reasonably request from time to time, furnished by the Collection Agent to the
Agent pursuant to Section 6.02(g).
"Multiemployer Plan" means a Multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"Moody's" means Moody's Investors Service, Inc.
"Net Receivables Pool Balance" means at any time the
Outstanding Balance of Eligible Receivables then in the Receivables Pool reduced
by the sum of (i) the aggregate amount by which the Outstanding Balance of
Eligible Receivables of each Obligor then in the Receivables Pool exceeds the
product of (A) the Concentration Limit for such Obligor multiplied by (B) the
Outstanding Balance of the Eligible Receivables then in the Receivables Pool,
(ii) the aggregate amount of Collections on hand at such time for payment on
account of any Eligible Receivables, the Obligor of which has not been
identified, (iii) the aggregate Outstanding Balance of all Eligible Receivables
in respect of which any credit memo issued by the Originator or the Seller is
outstanding at such time to the extent deemed Collections have not been paid
pursuant to Section 2.04(e), and (iv) the aggregate amount by which the
Outstanding Balance of Eligible Receivables the Obligor of which is a Government
Obligor exceeds three percent of the Outstanding Balance of Eligible Receivables
then in the Receivables Pool.
"Obligor" means a Person obligated to make payments pursuant
to a Contract.
"Obligor Group" means the Group A Obligors, Group B Obligors
or the Group C Obligors.
18
"Originator" means Lexmark International, Inc., a Delaware
corporation.
"Originator Purchase Agreement" means the Purchase and
Contribution Agreement dated as of the date of this Agreement between the
Originator, as seller, and the Seller, as purchaser, as the same may be amended,
modified or restated from time to time.
"Originator Receivable" means the indebtedness of any Obligor
resulting from the provision or sale of merchandise, insurance or services by
the Originator under a Contract (other than Excluded Receivables), and includes
the right to payment of any interest or finance charges and other obligations of
such Obligor with respect thereto.
"Other Companies" means the Originator and all of its
Subsidiaries except the Seller.
"Outstanding Balance" of any Receivable at any time means the
then outstanding principal balance thereof.
"PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA and any successor entity performing similar functions.
"Percentage" of any Bank means, (a) with respect to Citibank,
the percentage set forth on the signature page to this Agreement, or such amount
as reduced by any Assignment and Acceptance entered into with an Eligible
Assignee, or (b) with respect to a Bank that has entered into an Assignment and
Acceptance, the amount set forth therein as such Bank's Percentage, or such
amount as reduced by an Assignment and Acceptance entered into between such Bank
and an Eligible Assignee.
"Person" means an individual, partnership, corporation
(including a business trust), limited liability company, joint stock company,
trust, unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Seller or
any ERISA Affilate is (or, if such plan were terminated, would under Section
4069 or ERISA be deemed to be) an "employer" as defined in Sectin 3(5) of ERISA.
"Pool Non-compliance Date" means any day on which the Net
Receivables Pool Balance as shown in the most recent Monthly Report (prior to a
Level I Downgrade Event), Weekly Report (following a Level I Downgrade Event but
prior to a Level II Downgrade Event) or Daily Report (following a Level II
Downgrade Event) is less than the Required Net Receivables Pool Balance.
19
"Pool Receivable" means a Receivable in the Receivables Pool.
"Purchase Limit" means $225,000,000, as such amount may be
reduced pursuant to Section 2.01(b). References to the unused portion of the
Purchase Limit shall mean, at any time, the Purchase Limit, as then reduced
pursuant to Section 2.01(b), minus the then outstanding Capital of Receivable
Interests under this Agreement.
"Purchaser Collections" means, as of any Deposit Date, that
portion of the Collections deposited to the Lock-Box Accounts on such date or
received by the Collection Agent on such date equal to the product of (i) the
Allocation Percentage on such date times (ii) the aggregate amount of such
Collections.
"Receivable" means any Originator Receivable which has been
acquired by the Seller from the Originator by purchase or by capital
contribution pursuant to the Originator Purchase Agreement.
"Receivable Interest" means, at any time, an undivided
percentage ownership interest in (i) all then outstanding Pool Receivables
arising prior to the time of the most recent computation or recomputation of
such undivided percentage interest pursuant to Section 2.03, (ii) all Related
Security with respect to such Pool Receivables, and (iii) all Collections with
respect to, and other proceeds of, such Pool Receivables. Such undivided
percentage interest shall be computed as
C + YFR + LR + DR
-----------------
NRPB
where:
C = the Capital of such Receivable Interest at the
time of computation.
YFR = the Yield and Fee Reserve of such Receivable
Interest at the time of computation.
LR = the Loss Reserve of such Receivable Interest
at the time of computation.
DR = the Dilution Reserve of such Receivable
Interest at the time of computation.
NRPB = the Net Receivables Pool Balance at the time
of computation.
Each Receivable Interest shall be determined from time to time pursuant to the
provisions of Section 2.03.
20
"Receivables Pool" means at any time the aggregation of each
then outstanding Receivable in respect of which the Obligor is a Designated
Obligor at such time or was a Designated Obligor on the date of the initial
creation of an interest in such Receivable under this Agreement.
"Related Security" means with respect to any Receivable
(i) all of the Seller's interest in any merchandise
(including returned merchandise) relating to any sale giving
rise to such Receivable;
(ii) all security interests or liens and property
subject thereto from time to time purporting to secure payment
of such Receivable, whether pursuant to the Contract related
to such Receivable or otherwise, together with all financing
statements signed by an Obligor describing any collateral
securing such Receivable;
(iii) all guaranties, insurance and other agreements
or arrangements 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; and
(iv) the Contract and all other books, records and
other information (including, without limitation, computer
programs, tapes, discs, punch cards, data processing software
and related property and rights) relating to such Receivable
and the related Obligor.
"Required Net Receivables Pool Balance" means, as of any day,
the sum of (i) the aggregate Reserves for all Receivable Interests calculated as
of such day, plus (ii) the aggregate outstanding Capital for all Receivable
Interests as of such day. For purposes of such calculation, Capital shall be
reduced by the aggregate amount of funds then held in the Cash Collateral
Account, and (to the extent applicable) the Reserves shall be computed on such
reduced Capital.
"Reserves" means, with respect to any Receivable Interest as
of any day, the sum of the Yield and Fee Reserve, the Loss Reserve and the
Dilution Reserve for such Receivable Interest as of such day.
"Responsible Financial Officer" means, for any Person, its
chief financial officer, controller, treasurer or assistant treasurer.
"Revolving Period" means the period beginning on the date of
the initial purchase hereunder and terminating at the close of business on the
Business Day immediately preceding the date on which the Termination Date shall
have occurred for all Receivable Interests.
"S&P" means Standard and Poors, a division of the McGraw-Hill
Companies, Inc.
21
"SEC" means the Securities and Exchange Commission.
"Seller Collections" means, with respect to any Deposit Date,
that portion of the Collections deposited to the Lock-Box Accounts on such date
or received by the Collection Agent on such date equal to the product of (i)
100% minus the Allocation Percentage on such date times (ii) the aggregate
amount of such Collections.
"Seller Report" means a Monthly Report, a Weekly Report or a
Daily Report.
"Settlement Date" for any Receivable Interest means the last
day of each Fixed Period for such Receivable Interest; provided, however, that
-------- -------
if Yield with respect to such Receivable Interest is computed by reference to
the Investor Rate and no Liquidation Day exists on the last day of a Fixed
Period for such Receivable Interest, the Settlement Date for such Receivable
Interest for such Fixed Period shall be the second Business Day after the last
day of such Fixed Period.
"Subsidiary" means any corporation or other entity of which
securities having ordinary voting power to elect a majority of the board of
directors or other person performing similar function are at the time directly
or indirectly owned by the Seller or the Originator, as the case may be, or one
or more Subsidiaries, or by the Seller or the Originator, as the case may be,
and one or more Subsidiaries.
"Tangible Net Worth" means at any time the excess of (i) the
sum of (a) the product of (x) 100% minus the Discount (as such term is defined
in the Originator Purchase Agreement) multiplied by (y) the Outstanding Balance
of all Receivables other than Defaulted Receivables plus (b) cash and cash
equivalents of the Seller plus (c) the outstanding principal amount of Purchaser
Loans (as such term is defined in the Originator Purchase Agreement), minus (ii)
the sum of (a) Capital plus (b) the Deferred Purchase Price.
"Termination Date" for any Receivable Interest means (i) in
the case of a Receivable Interest owned by an Investor, the earlier of (a) the
Business Day which the Seller or the Agent so designates by notice to the other
at least one Business Day in advance for such Receivable Interest and (b) the
Facility Termination Date and (ii) in the case of a Receivable Interest owned by
a Bank, the earlier of (a) the Business Day which the Seller so designates by
notice to the Agent at least one Business Day in advance for such Receivable
Interest and (b) the Commitment Termination Date.
"Transaction Document" means any of this Agreement, the
Originator Purchase Agreement, the Lock-Box Agreements, the Cash Collateral
Agreement, the Fee Agreement and all other agreements and documents delivered
and/or related hereto or thereto.
"UCC" means the Uniform Commercial Code as from time to time
in effect in the specified jurisdiction.
22
"Week" means each calendar week beginning on Monday and ending
on (and including) the following Sunday.
"Weekly Report" means a report in substantially the form of
Annex A-2 hereto and containing such additional information as the Agent may
reasonably request from time to time, furnished by the Collection Agent to the
Agent pursuant to Section 6.02(g)(ii).
"Withdrawal Liability" means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
"Yield" means:
-----
(i) for each Receivable Interest for any Fixed Period to the
extent CIESCO will be funding such Receivable Interest through
the issuance of commercial paper or other promissory notes,
IR x C x ED + LF
--
360
(ii) for each Receivable Interest for any Fixed Period to the
extent (x) the Investors will not be funding such Receivable
Interest through the issuance of commercial paper or other
promissory notes, or (y) the Banks will be funding such
Receivable Interest,
AR x C x ED + LF
--
360
where:
AR = the Assignee Rate for such Receivable Interest
for such Fixed Period
C = the Capital of such Receivable Interest during
such Fixed Period
IR = the Investor Rate for such Receivable Interest
for such Fixed Period
ED = the actual number of days elapsed during such
Fixed Period
LF = the Liquidation Fee, if any, for such
Receivable Interest for such Fixed Period
23
provided that no provision of this Agreement shall require the payment or permit
- --------
the collection of Yield in excess of the maximum permitted by applicable law;
and provided further that Yield for any Receivable Interest shall not be
-------- -------
considered paid by any distribution to the extent that at any time all or a
portion of such distribution is rescinded or must otherwise be returned for any
reason.
"Yield and Fee Reserve" means, for any Receivable Interest on
any date, an amount equal to
(C x YFRP) + AUYF
where:
C = the Capital of such Receivable Interest at
the close of business of the Collection Agent
on such date.
YFRP = the Yield and Fee Reserve Percentage on such
date.
AUYF = accrued and unpaid Yield, Collection Agent
Fee and Fees on such date, in each case for
such Receivable Interest.
"Yield and Fee Reserve Percentage" means, on any date, a
percentage equal to
[(AER x SF) + AM + PF + CAF] x DSO
----------------------------------
360
where:
AER = the one-month Adjusted Eurodollar Rate in
effect on such date.
SF = 1.1
AM = the applicable spread or margin used in the
calculation of the Assignee Rate in effect on
such date.
PF = the Program Fee (as defined in the Fee
Agreement), in effect on such date.
CAF = the percentage per annum used in the
calculation of the Collection Agent Fee in
effect on such date.
DSO = the Days Sales Outstanding on such date.
24
SECTION 1.2. Other Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. All terms used in
Article 9 of the UCC in the State of New York, and not specifically defined
herein, are used herein as defined in such Article 9.
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 2.1. Purchase Facility. (a) On the terms and conditions
hereinafter set forth, CIESCO may, in its sole discretion, and the Banks shall,
ratably in accordance with their respective Bank Commitments, purchase
Receivable Interests from the Seller from time to time during the period from
the date hereof to the Facility Termination Date (in the case of CIESCO) and to
the Commitment Termination Date (in the case of the Banks). Under no
circumstances shall CIESCO make any such purchase, or the Banks be obligated to
make any such purchase, if after giving effect to such purchase the aggregate
outstanding Capital of Receivable Interests would exceed the Purchase Limit.
(b) The Seller may at any time after December 31, 2001, upon at
least five Business Days' notice to the Agent, terminate the facility provided
for in this Agreement in whole or, from time to time, reduce in part the unused
portion of the Purchase Limit; provided that each partial reduction shall be in
--------
the amount of at least $1,000,000 or an integral multiple thereof.
(c) Until the Agent gives the Seller the notice provided in
Section 3.02(c)(iii), the Agent, on behalf of the Investors which own Receivable
Interests, may have the Collections attributable to such Receivable Interests
automatically reinvested pursuant to Section 2.04 in additional undivided
percentage interests in the Pool Receivables by making an appropriate
readjustment of such Receivable Interests. The Agent, on behalf of the Banks
which own Receivable Interests, shall have the Collections attributable to such
Receivable Interests automatically reinvested pursuant to Section 2.04 in
additional undivided percentage interests in the Pool Receivables by making an
appropriate readjustment of such Receivable Interests.
SECTION 2.02. Making Purchases. (a) Each purchase by CIESCO or the
Banks shall be made on at least one Business Day's notice from the Seller to the
Agent. Each such notice of a purchase shall specify (i) the amount requested to
be paid to the Seller (such amount, which shall not be less than $1,000,000,
being referred to herein as the initial "Capital" of the Receivable Interest
then being purchased), (ii) the date of such purchase (which shall be a Business
Day), and (iii) if the Assignee Rate based on the Eurodollar Rate is to apply to
such Receivable Interest, the duration of the initial Fixed Period for such
Receivable Interest. The Agent shall promptly thereafter notify the Seller
whether CIESCO has determined to make a purchase and, if so, whether all of the
terms specified by the Seller are acceptable to CIESCO.
25
If CIESCO has determined not to make a proposed purchase, the
Agent shall promptly send notice of the proposed purchase to all of the Banks
concurrently by telecopier, telex or cable specifying the date of such purchase,
each Bank's Percentage multiplied by the aggregate amount of Capital of
Receivable Interest being purchased, whether the Yield for the Fixed Period for
such Receivable Interest is calculated based on the Eurodollar Rate (which may
be selected only if such notice is given at least three Business Days prior to
the purchase date) or the Alternate Base Rate, and the duration of the Fixed
Period for such Receivable Interest (which shall be one day if the Seller has
not selected another period).
(b) On the date of each such purchase of a Receivable Interest,
CIESCO or the Banks, as the case may be, shall, upon satisfaction of the
applicable conditions set forth in Article III, make available to the Seller in
same day funds an amount equal to the initial Capital of such Receivable
Interest, at the account set forth in the Funds Transfer Letter.
(c) Effective on the date of each purchase pursuant to this
Section 2.02 and each reinvestment pursuant to Section 2.04, the Seller hereby
sells and assigns to the Agent, for the benefit of the parties making such
purchase, an undivided percentage ownership interest, to the extent of the
Receivable Interest then being purchased, in each Pool Receivable then existing
and in the Related Security and Collections with respect thereto.
(d) Notwithstanding the foregoing, a Bank shall not be obligated
to make purchases under this Section 2.02 at any time in an amount which would
exceed such Bank's Bank Commitment less the sum of (i) the aggregate outstanding
and unpaid amount of any purchases made by such Bank under the Asset Purchase
Agreement plus (ii) such Bank's ratable share of the aggregate outstanding
Capital held by CIESCO. Each Bank's obligation shall be several, such that the
failure of any Bank to make available to the Seller any funds in connection with
any purchase shall not relieve any other Bank of its obligation, if any,
hereunder to make funds available on the date of such purchase, but no Bank
shall be responsible for the failure of any other Bank to make funds available
in connection with any purchase.
SECTION 2.03. Receivable Interest Computation. Each Receivable
Interest shall be initially computed on its date of purchase. Thereafter until
the Termination Date for such Receivable Interest, such Receivable Interest
shall be automatically recomputed (or deemed to be recomputed) on each day other
than a Liquidation Day. Any Receivable Interest, as computed (or deemed
recomputed) as of the day immediately preceding the Termination Date for such
Receivable Interest, shall thereafter remain constant; provided, however, that
-------- -------
from and after the date on which the Termination Date shall have occurred for
all Receivable Interests and until each Receivable Interest becomes zero in
accordance with the next sentence, each Receivable Interest shall be calculated
as the percentage equivalent of a fraction the numerator of which is the
percentage representing such Receivable Interest immediately prior to such date
and the denominator of which is the sum of the percentages representing all
Receivable Interests which were outstanding immediately prior to such date. Each
Receivable Interest shall become zero when Capital thereof and Yield thereon
shall have been paid in full, and all Fees and other
26
amounts owed by the Seller hereunder to the Investors, the Banks or the Agent
are paid and the Collection Agent shall have received the accrued Collection
Agent Fee thereon.
SECTION 2.04. Settlement Procedures. (a) Collection of the Pool
Receivables shall be administered by a Collection Agent, in accordance with the
terms of Article VI of this Agreement. The Seller shall provide to the
Collection Agent (if other than the Seller) on a timely basis all information
needed for such administration, including notice of the occurrence of any
Liquidation Day and current computations of each Receivable Interest.
(b) So long as no Level II Downgrade Event shall have occurred,
the Collection Agent shall, on each Deposit Date, with respect to Collections
deposited in any of the Lock-Box Accounts on such Deposit Date or received by
the Collection Agent on such Deposit Date (in the following order and priority):
(i) with respect to each Receivable Interest, set
aside and hold in trust (and, at the request of the Agent
following the occurrence and during the continuation of a
Collection Agent Default, segregate) for the Investors or the
Banks that hold such Receivable Interest, out of the
percentage of such Collections represented by such Receivable
Interest, an amount equal to the Yield, Fees and Collection
Agent Fee accrued through such day for such Receivable
Interest and not previously set aside;
(ii) with respect to each Receivable Interest, if such
day is not a Liquidation Day for such Receivable Interest,
reinvest with the Seller on behalf of the Investors or the
Banks that hold such Receivable Interest the percentage of
such Collections represented by such Receivable Interest, to
the extent representing a return of Capital, by recomputation
of such Receivable Interest pursuant to Section 2.03;
(iii) if such day is a Liquidation Day for any one or
more Receivable Interests, set aside and hold in trust (and,
at the request of the Agent, segregate) for the Investors or
the Banks that hold such Receivable Interests (x) if such day
is a Liquidation Day for less than all of the Receivable
Interests, the percentage of such Collections represented by
such Receivable Interests, and (y) if such day is a
Liquidation Day for all of the Receivable Interests, all of
the remaining Collections (but not in excess of the Capital of
such Receivable Interests); provided that if amounts are set
--------
aside and held in trust on any Liquidation Day occurring prior
to the Termination Date, and thereafter prior to the
Settlement Date for such Fixed Period the conditions set forth
in Section 3.02 are satisfied or waived by the Agent, such
previously set aside amounts shall, to the extent representing
a return of Capital, be reinvested in accordance with the
preceding subsection (ii) on the day of such subsequent
satisfaction or waiver of conditions; and
27
(iv) during such times as amounts are required to be
reinvested in accordance with the foregoing subsection (ii) or
the proviso to subsection (iii), release to the Seller for its
own account any Collections in excess both of such amounts and
of the amounts that are required to be set aside pursuant to
subsection (i) above.
(c) If a Level II Downgrade Event shall have occurred and be
continuing, the Collection Agent shall comply with the following:
(I) On each Deposit Date during the Revolving Period,
the Collection Agent shall, by no later than 3:00 P.M. (New York City time),
deliver to the Agent the Daily Report for such date. If the Collection Agent
shall fail to deliver the Daily Report on any Deposit Date during the Revolving
Period, the Collection Agent shall not be permitted to withdraw any amounts from
the Lock-Box Accounts on any date thereafter unless and until the Collection
Agent shall be in compliance with this subsection (I) (but subject to the right
of the Agent to prohibit withdrawals by the Collection Agent from the Lock-Box
Accounts to the extent provided in Section 6.03).
(II) On the first Business Day following each Deposit
Date during the Revolving Period, if the Daily Report for such date shows that
no Cure Period shall have occurred and be continuing, the Collection Agent
shall, in the following order:
(i) based on the Allocation Percentage on such day,
determine the amount of Purchaser Collections and Seller
Collections;
(ii) withdraw from the Lock-Box Accounts and from
Collections of Pool Receivables which the Collection Agent
received on such Deposit Date and set aside and hold in trust
(and, at the request of the Agent, segregate) for the
Investors and Banks that hold Receivable Interests, out of
Purchaser Collections, an amount equal to the Yield, Fees and
Collection Agent Fee accrued through such day for the
Receivable Interests and not previously withdrawn and set
aside;
(iii) withdraw from the Lock-Box Accounts and from
Collections of Pool Receivables which the Collection Agent
received on such Deposit Date and release to the Seller the
remainder of Purchaser Collections, in each instance to the
extent representing a return of Capital, to be reinvested with
the Seller in Receivable Interests; provided that, if
immediately following any such reinvestment such Deposit Date
would be a Pool Non-compliance Date, the Collection Agent
shall retain all such remaining Collections in (or, to the
extent the Collection Agent has received any such Collections,
redeposit such Collections into) the Lock-Box Accounts (and
deposit the other such remaining Collections received
28
by it into the Lock-Box Accounts) to be applied pursuant to
Section 2.04(c)(III)(iii); and
(iv) remit the Seller Collections to the Seller.
(III) On the first Business Day following each
Deposit Date during the Revolving Period, if the Daily Report for such date
shows that a Cure Period shall have occurred and be continuing, the Collection
Agent shall, in the following order:
(i) based on the Allocation Percentage on such day,
determine the amount of Purchaser Collections and Seller
Collections;
(ii) withdraw from the Lock-Box Accounts and from
Collections of Pool Receivables which the Collection Agent
received on such Deposit Date and set aside and hold in trust
(and, at the request of the Agent, segregate) for the
Investors and Banks that hold Receivable Interests, out of
Purchaser Collections, an amount equal to the Yield, Fees and
Collection Agent Fee accrued through such day for the
Receivable Interests and not previously withdrawn and set
aside;
(iii) remit to the Cash Collateral Account from the
Lock-Box Accounts and from Collections of Pool Receivables
which the Collection Agent received on such Deposit Date an
amount equal to the lesser of (x) the sum of the remaining
Collections in the Lock-Box Accounts (and Collections received
by the Collection Agent from the Lock-Box Accounts on such
Deposit Date) and the remaining Collections of Pool
Receivables received by it on such Deposit Date and (y) an
amount equal to the excess of the Required Net Receivables
Pool Balance over the Net Receivables Pool Balance;
(iv) withdraw from the Lock-Box Accounts and from
Collections of Pool Receivables which the Collection Agent
received on such Deposit Date and release to the Seller the
remainder of Purchaser Collections, in each instance to the
extent representing a return of Capital, to be reinvested with
the Seller in Receivable Interests (for purposes of
determining the remainder of Purchaser Collections, any
Collections which have previously been applied pursuant to
Section 2.04(c)(III)(iii) shall be deemed to be first Seller
Collections and then Purchaser Collections); and
(v) remit the Seller Collections to the Seller.
(IV)On the first Business Day following each Deposit
Date during the Liquidation Period, the Collection Agent shall, by no later than
3:00P.M.(New York City time),
29
remit to the Agent's Account all Collections in the Lock-Box Accounts and all
Collections of Pool Receivables which the Collection Agent received on such
Deposit Date.
(d) The Collection Agent shall deposit into the Agent's
Account (i) on the fourth Business day of each calendar month, Collections held
for the Investors or the Banks during the prior calendar month pursuant to
Sections 2.04(b)(i), 2.04(c)(II)(ii) and 2.04(c)(III)(ii), (excluding, however,
so long as the Originator is the Collection Agent, the Collection Agent Fee) and
(ii) on the Settlement Date for each Receivable Interest, Collections held for
the Investors or the Banks that relate to such Receivable Interest pursuant to
Section 2.04(b) or (c) (other than as set forth in clause (i)). After the
occurrence and during the continuation of Level I Downgrade Event which is not a
Level II Downgrade Event, on the Business Day immediately following the delivery
of any Weekly Report which sets forth a Pool Non-Compliance Date as of the close
of business on the last Business Day of the preceding Week, and on each Business
Day thereafter until a Pool Non-Compliance Date no longer exists, the Collection
Agent shall deposit into the Agent's Account Collections set aside pursuant to
clause (iii) of Section 2.04(b), provided that the aggregate amount deposited
pursuant to this sentence with respect to any Weekly Report shall not exceed an
amount such that, after giving effect to the application of such amount to the
reduction of Capital, the sum of the Receivable Interests is equal to 100%. The
Collection Agent shall pay to itself on each Settlement Date which is not a
Liquidation Day Collections set aside with respect to each Receivable Interest
on account of accrued Collection Agent Fee. On any Business Day on which funds
are on deposit in the Cash Collateral Account, the Collection Agent (i) shall,
upon written notice from the Agent, and may (if the funds in the Cash Collateral
Account exceed $10,000,000), upon written notice to the Agent, remit such funds
from the Cash Collateral Account to the Agent's Account, such remittance to be
applied as a reduction of Capital, or (ii) may, following delivery of the Weekly
Report or Daily Report to the Agent, as the case may be, withdraw from the Cash
Collateral Account and remit to the Seller all or a portion of the funds in the
Cash Collateral Account; provided that such Weekly Report or Daily Report, as
the case may be, shall state that, after taking account of the proposed
withdrawal, the Net Receivables Pool Balance on such day will be equal to or
greater than the Required Net Receivables Pool Balance, and such Weekly Report
or such Daily Report, as the case may be, shall set forth the calculation
supporting such statement.
(e) Upon receipt of funds deposited into the Agent's Account,
the Agent shall distribute them as follows:
(i) if such distribution occurs on a day that is not a
Liquidation Day, first to the Investors or the Banks that hold
the relevant Receivable Interest and to the Agent in payment
in full of all accrued Yield and Fees and then to the
Collection Agent in payment in full of all accrued Collection
Agent Fee; provided, that if such distribution related to
--------
Collections remitted from the Cash Collateral Account, such
distribution shall be paid to the Investors and the Banks that
hold the Receivable Interest in respect thereof, in reduction
of Capital.
30
(ii) if such distribution occurs on a Liquidation Day,
first to the Investors or the Banks that hold the relevant
Receivable Interest and to the Agent in payment in full of all
accrued Yield and Fees, second to such Investors or Banks in
reduction to zero of all Capital, third to such Investors,
Banks or the Agent in payment of any other amounts owed by the
Seller hereunder, and fourth to the Collection Agent in
payment in full of all accrued Collection Agent Fee.
After the Capital, Yield, Fees and Collection Agent Fee with
respect to a Receivable Interest, and any other amounts payable by the Seller to
the Investors, the Banks or the Agent hereunder, have been paid in full, all
additional Collections with respect to such Receivable Interest shall be paid to
the Seller for its own account.
(f) For the purposes of this Section 2.04:
(i) if on any day the Outstanding Balance of any Pool
Receivable is reduced or adjusted as a result of any
defective, rejected or returned merchandise or services, or
any cash discount, discount for quick payment or other
adjustment made by the Seller or the Originator, or any
setoff, the Seller shall be deemed to have received on such
day a Collection of such Pool Receivable in the amount of such
reduction or adjustment;
(ii) if on any day upon each purchase or reinvestment
(A) any of the representations or warranties contained in
Section 4.01(h) is no longer true with respect to any Pool
Receivable or (B) the Investors or the Banks, as the case may
be, shall not acquire a valid and perfected first priority
undivided percentage ownership interest to the extent of the
pertinent Receivable Interest in each Pool Receivable then
existing or thereafter arising and in the Related Security and
Collections with respect thereto, then the Seller shall be
deemed to have received on such day a Collection of such Pool
Receivable in full;
(iii) except as provided in subsection (i) or (ii) of
this Section 2.04(f), or as otherwise required by applicable
law or the relevant Contract, all Collections received from an
Obligor of any Receivables shall be applied to the Receivables
of such Obligor in the order of the age of such Receivables,
starting with the oldest such Receivable, unless such Obligor
designates its payment for application to specific
Receivables; and
(iv) if and to the extent the Agent, the Investors or
the Banks shall be required for any reason to pay over to an
Obligor any amount received on its behalf hereunder, such
amount shall be deemed not to have been so received but rather
to have been retained by the Seller and, accordingly, the
Agent, the Investors or the Banks, as the case may be, shall
have a claim against the Seller for such amount, payable when
and to the extent that any distribution from or on behalf of
such Obligor is made in respect thereof.
31
(g) In the event that the Agent receives Collections in
respect of any Receivable directly from an Obligor, the Agent shall, at its
option, either (i) promptly forward such Collections to the Collection Agent
(and the Collection Agent shall apply such Collections in accordance with this
Section 2.04) or (ii) promptly apply such Collections in accordance with this
Section 2.04 in the same manner that Collection Agent would apply such
Collections.
SECTION 2.05. Fees. (a) Each Investor and Bank shall pay to
the Collection Agent a fee (the "Collection Agent Fee") of l/2 of 1% per annum
on the average daily Capital of each Receivable Interest owned by such Investor
or Bank, from the date of purchase of such Receivable Interest until the later
of the Termination Date for such Receivable Interest or the date on which such
Capital is reduced to zero, payable on the Settlement Date for such Receivable
Interest. Upon three Business Days' notice to the Agent, the Collection Agent
(if not the Originator, the Seller or its designee or an Affiliate of the
Seller) may elect to be paid, as such fee, another percentage per annum on the
average daily Capital of such Receivable Interest, but in no event in excess for
all Receivable Interests relating to the Receivables Pool of 110% of the
reasonable costs and expenses of the Collection Agent in administering and
collecting the Receivables in the Receivables Pool. The Collection Agent Fee
shall be payable only from Collections pursuant to, and subject to the priority
of payment set forth in, Section 2.04. So long as the Originator is acting as
the Collection Agent hereunder, amounts paid as the Collection Agent Fee
pursuant to this Section 2.05(a) shall reduce, on a dollar-for-dollar basis, the
obligation of the Seller to pay the "Collection Agent Fee" pursuant to Section
6.03 of the Originator Purchase Agreement, provided that such obligation of the
Seller shall in no event be reduced below zero.
(b) The Seller shall pay to the Agent certain fees
(collectively, the "Fees") in the amounts and on the dates set forth in a
separate fee agreement of even date between the Seller and the Agent, as the
same may be amended or restated from time to time (the "Fee Agreement").
SECTION 2.06. Payments and Computations, Etc. (a) All amounts
to be paid or deposited by the Seller or the Collection Agent hereunder shall be
paid or deposited no later than 12:00 noon (New York City time) on the day when
due in same day funds to the Agent's Account, provided, that all amounts to be
--------
deposited into the Cash Collateral Account shall be deposited no later than
12:00 noon (New York City time) on the date when due, and in any event such
amounts shall be deposited into the Cash Collateral Account prior to any
withdrawal from a Lock-Box Account (other than to directly fund a deposit into
the Cash Collateral Account).
(b) Each of the Seller and the Collection Agent shall, to the
extent permitted by law, pay interest on any amount not paid or deposited by it
when due hereunder, at an interest rate per annum equal to 2.00% per annum above
the Alternate Base Rate, payable on demand.
(c) All computations of interest under subsection (b) above
and all computations of Yield, fees, and other amounts 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.
32
Whenever any payment or deposit to be made hereunder shall be due on a day other
than a Business Day, such payment or deposit shall be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of such payment or deposit.
SECTION 2.07. Dividing or Combining Receivable Interests.
Either the Seller or the Agent may, upon notice to the other party received at
least three Business Days prior to the last day of any Fixed Period in the case
of the Seller giving notice, or up to the last day of such Fixed Period in the
case of the Agent giving notice, either (i) divide any Receivable Interest into
two or more Receivable Interests having aggregate Capital equal to the Capital
of such divided Receivable Interest, or (ii) combine any two or more Receivable
Interests originating on such last day or having Fixed Periods ending on such
last day into a single Receivable Interest having Capital equal to the aggregate
of the Capital of such Receivable Interests; provided, however, that no
Receivable Interest owned by CIESCO may be combined with a Receivable Interest
owned by any Bank.
SECTION 2.08. Increased Costs. (a) If CNAI, any Investor, any
Bank, any entity which enters into a commitment to purchase Receivable Interests
or interests therein, or any of their respective Affiliates (each an "Affected
Person") determines that compliance with any law or regulation or any guideline
or request from any central bank or other governmental authority (whether or not
having the force of law) affects or would affect the amount of the capital
required or expected to be maintained by such Affected Person and such Affected
Person determines that the amount of such capital is increased by or based upon
the existence of any commitment to make purchases of or otherwise to maintain
the investment in Pool Receivables or interests therein related to this
Agreement or to the funding thereof and other commitments of the same type,
then, upon demand by such Affected Person (with a copy to the Agent), the Seller
shall immediately pay to the Agent for the account of such Affected Person (as a
third-party beneficiary), from time to time as specified by such Affected
Person, additional amounts sufficient to compensate such Affected Person in the
light of such circumstances, to the extent that such Affected Person reasonably
determines such increase in capital to be allocable to the existence of any of
such commitments. A certificate as to such amounts submitted to the Seller and
the Agent by such Affected Person shall be conclusive and binding for all
purposes, absent manifest error.
(b) If, due to either (i) the introduction of or any change
(other than any change by way of imposition or increase of reserve requirements
referred to in Section 2.09) in or in the interpretation of any law or
regulation or (ii) compliance with any guideline or request from any central
bank or other governmental authority (whether or not having the force of law),
there shall be any increase in the cost to any Investor or Bank of agreeing to
purchase or purchasing, or maintaining the ownership of Receivable Interests in
respect of which Yield is computed by reference to the Eurodollar Rate, then,
upon demand by such Investor or Bank (with a copy to the Agent), the Seller
shall immediately pay to the Agent, for the account of such Investor or Bank (as
a third-party beneficiary), from time to time as specified by such Investor or
Bank, additional amounts sufficient to compensate such Investor or Bank for such
increased
33
costs. A certificate as to such amounts submitted to the Seller and the Agent by
such Investor or Bank shall be conclusive and binding for all purposes, absent
manifest error.
SECTION 2.09. Additional Yield on Receivable Interests Bearing
a Eurodollar Rate. The Seller shall pay to any Investor or Bank, so long as such
Investor or Bank shall be required under regulations of the Board of Governors
of the Federal Reserve System to maintain reserves with respect to liabilities
or assets consisting of or including Eurocurrency Liabilities, additional Yield
on the unpaid Capital of each Receivable Interest of such Investor or Bank
during each Fixed Period in respect of which Yield is computed by reference to
the Eurodollar Rate, for such Fixed Period, at a rate per annum equal at all
times during such Fixed Period to the remainder obtained by subtracting (i) the
Eurodollar Rate for such Fixed Period from (ii) the rate obtained by dividing
such Eurodollar Rate referred to in clause (i) above by that percentage equal to
100% minus the Eurodollar Rate Reserve Percentage of such Investor or Bank for
such Fixed Period, payable on each date on which Yield is payable on such
Receivable Interest. Such additional Yield shall be determined by such Investor
or Bank and notice thereof given to the Seller through the Agent within 30 days
after any Yield payment is made with respect to which such additional Yield is
requested. A certificate as to such additional Yield submitted to the Seller and
the Agent by such Investor or Bank shall be conclusive and binding for all
purposes, absent manifest error.
SECTION 2.10. Taxes. (a) Any and all payments and deposits
required to be made hereunder or under any other Transaction Document by the
Collection Agent or the Seller shall be made free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding net
---------
income taxes that are imposed by the United States and franchise taxes and net
income taxes that are imposed on an Affected Person by the state or foreign
jurisdiction under the laws of which such Affected Person is organized or any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If the Seller or the Collection Agent shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder to any Affected
Person, (i) the Seller shall make an additional payment to such Affected Person,
in an amount sufficient so that, after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.10), such
Affected Person receives an amount equal to the sum it would have received had
no such deductions been made, (ii) the Seller or the Collection Agent, as the
case may be, shall make such deductions and (iii) the Seller or the Collection
Agent, as the case may be, shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.
(b) In addition, the Seller agrees to pay any present or
future stamp or other documentary taxes or any other excise or property taxes,
charges or similar levies which arise from any payment made hereunder or under
any other Transaction Document or from the execution, delivery or registration
of, or otherwise with respect to, this Agreement or any other Transaction
Document (hereinafter referred to as "Other Taxes").
34
(c) The Seller will indemnify each Affected Person for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section
2.10) paid by such Affected Person and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto whether or not
such Taxes or Other Taxes were correctly or legally asserted. This
indemnification shall be made within thirty days from the date the Affected
Person makes written demand therefor (and a copy of such demand shall be
delivered to the Agent). A certificate as to the amount of such indemnification
submitted to the Seller and the Agent by such Affected Person, setting forth, in
reasonable detail, the basis for and the calculation thereof, shall be
conclusive and binding for all purposes absent manifest error.
SECTION 2.11. Security Interest. As collateral security for
the performance by the Seller of all the terms, covenants and agreements on the
part of the Seller (whether as Seller or otherwise) to be performed under this
Agreement or any document delivered in connection with this Agreement in
accordance with the terms thereof, including the punctual payment when due of
all obligations of the Seller hereunder or thereunder, whether for
indemnification payments, fees, expenses or otherwise, the Seller hereby assigns
to the Agent for its benefit and the ratable benefit of the Investors and the
Banks, and hereby grants to the Agent for its benefit and the ratable benefit of
the Investors and the Banks, a security interest in, all of the Seller's right,
title and interest in and to (A) the Originator Purchase Agreement, including,
without limitation, (i) all rights of the Seller to receive moneys due or to
become due under or pursuant to the Originator Purchase Agreement, (ii) all
security interests and property subject thereto from time to time purporting to
secure payment of monies due or to become due under or pursuant to the
Originator Purchase Agreement, (iii) all rights of the Seller to receive
proceeds of any insurance, indemnity, warranty or guaranty with respect to the
Originator Purchase Agreement, (iv) claims of the Seller for damages arising out
of or for breach of or default under the Originator Purchase Agreement, and (v)
the right of the Seller to compel performance and otherwise exercise all
remedies thereunder,(B) all Receivables, whether now owned and existing or
hereafter acquired or arising, the Related Security with respect thereto and the
Collections and all other assets, including, without limitation, accounts,
chattel paper, instruments and general intangibles (as those terms are defined
in the UCC), including undivided interests in any of the foregoing, owned by the
Seller and not otherwise purchased under this Agreement, (C) the Lock-Box
Accounts and the Cash Collateral Account and (D) to the extent not included in
the foregoing, all proceeds of any and all of the foregoing.
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01. Conditions Precedent to Initial Purchase. The
initial purchase of a Receivable Interest under this Agreement is subject to the
conditions precedent that the Agent
35
shall have received on or before the date of such purchase the following, each
(unless otherwise indicated) dated such date, in form and substance satisfactory
to the Agent:
(a) Certified copies of the resolutions of the Board of
Directors of the Seller and the Originator approving this Agreement and the
Originator Purchase Agreement and certified copies of all documents evidencing
other necessary corporate action and governmental approvals, if any, with
respect to this Agreement and the Originator Purchase Agreement.
(b) A certificate of the Secretary or Assistant Secretary of
the Seller and the Originator certifying the names and true signatures of the
officers of the Seller and the Originator authorized to sign the Originator
Purchase Agreement and this Agreement and the other documents to be delivered by
it hereunder and thereunder.
(c) Acknowledgment copies or time stamped receipt copies of
proper financing statements, duly filed on or before the date of such initial
purchase under the UCC of all jurisdictions that the Agent may deem necessary or
desirable in order to perfect the ownership and security interests contemplated
by this Agreement and the Originator Purchase Agreement.
(d) Acknowledgment copies or time stamped receipt copies of
proper financing statements, if any, necessary to release all security interests
and other rights of any Person in (i) the Receivables, Contracts or Related
Security previously granted by the Seller or the Originator and (ii) the
collateral security referred to in Section 2.11 previously granted by the
Seller.
(e) Completed requests for information, dated on or before the
date of such initial purchase, listing all effective financing statements filed
in the jurisdictions referred to in subsection (c) above that name the Seller or
the Originator as debtor, together with copies of such financing statements
(none of which shall cover any Receivables, Contracts, Related Security or the
collateral security referred to in Section 2.11).
(f) Intentionally omitted.
(g) A favorable opinion of Pepper Hamilton LLP, counsel for
the Seller and the Originator, substantially in the form of Annex C hereto and
as to such other matters as the Agent may reasonably request.
(h) The Fee Agreement.
(i) The Funds Transfer Letter.
(j) An executed copy of the Originator Purchase Agreement.
(k) A copy of the by-laws of the Seller, certified by the
Secretary or Assistant Secretary of the Seller.
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(l) (i) A copy of the certificate or articles of incorporation
of the Seller (which shall have been amended in a manner satisfactory to the
Agent), certified as of a recent date by the Secretary of State or other
appropriate official of the state of its organization, and (ii) a certificate as
to the good standing of the Seller from such Secretary of State or other
official, dated as of a recent date.
(m) A favorable opinion of Kaye Scholer LLP, counsel for the
Agent, as to such matters as the Agent may reasonably request.
(n) The pro forma balance sheet of the Seller referred to in
Section 4.01(e).
(o) Evidence satisfactory to the Agent that the Seller has
satisfied all of its obligations under the Existing Receivables Purchase
Agreement and that the Existing Receivables Purchase Agreement has been
terminated and all security interests granted thereunder have been released.
(p) An effective amendment executed by each Loan Party (as
defined in the Credit Facility) and lenders constituting Required Lenders (as
defined in the Credit Facility) party to the Credit Facility in form and
substance satisfactory to the Agent.
(q) A fully executed Re-Purchase Agreement, dated the date
hereof, between the Seller and the Originator, in form and substance
satisfactory to the Agent.
(r) A fully executed payoff and termination letter with
respect to the Existing Receivables Purchase Agreement, in form and substance
satisfactory to the Agent.
SECTION 3.02. Conditions Precedent to All Purchases and
Reinvestments. Each purchase (including the initial purchase) and each
reinvestment shall be subject to the further conditions precedent that (a) in
the case of each purchase, the Collection Agent shall have delivered to the
Agent at least one Business Day prior to such purchase (in the case of a Monthly
Report or a Weekly Report) and on the same day of (but prior to) such purchase
(in the case of a Daily Report), in form and substance satisfactory to the
Agent, a completed Monthly Report or, if required by Section 6.02(g)(ii) a
completed Weekly Report or if required by Section 6.02(g)(iii) a completed Daily
Report, containing information covering the most recently ended reporting period
for which information is required pursuant to Section 6.02(g)(i), (ii) or (iii),
as the case may be, and demonstrating that after giving effect to such purchase
no Pool Non-Compliance Date, Event of Termination or Incipient Event of
Termination under Section 7.01(i) would occur, (b) in the case of each
reinvestment, the Collection Agent shall have delivered to the Agent on or prior
to the date of such reinvestment, in form and substance satisfactory to the
Agent, a completed Monthly Report or, if required by Section 6.02(g)(ii) a
completed Weekly Report or if required by Section 6.02(g)(iii) a completed Daily
Report, in each case containing information covering the most recently ended
reporting period for which information is required pursuant to Section
6.02(g)(i), (ii) or (iii), as the case may be, (c) on the date of such purchase
or
37
reinvestment the following statements shall be true, except that the statement
in clause (iii) below is required to be true only if such purchase or
reinvestment is by an Investor (and acceptance of the proceeds of such purchase
or reinvestment shall be deemed a representation and warranty by the Seller and
the Collection Agent (each as to itself) that such statements are then true):
(i) The representations and warranties contained in
Section 4.01 and 4.02 are correct on and as of the date of
such purchase or reinvestment as though made on and as of such
date,
(ii) No event has occurred and is continuing, or would
result from such purchase or reinvestment, that constitutes an
Event of Termination or an Incipient Event of Termination,
(iii) The Agent shall not have given the Seller at
least one Business Day's notice that the Investors have
terminated the reinvestment of Collections in Receivable
Interests, and
(iv) The Originator shall have sold or contributed to
the Seller, pursuant to the Originator Purchase Agreement, all
Originator Receivables arising on or prior to such date, and
(d) The Agent shall have received such other approvals, opinions or documents as
it may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Seller.
The Seller hereby represents and warrants as follows:
(a) The Seller is a corporation duly incorporated and validly
existing under the laws of Delaware, and is duly qualified to do business, and
is in good standing, in every jurisdiction where the nature of its business
requires it to be so qualified (including, without limitation, the State of
Delaware) except to the extent that the failure so to be so qualified would not
reasonably be expected to materially adversely affect the collectibility of the
Receivables in the Receivables Pool or the ability of the Seller to perform its
obligations under this Agreement.
(b) The execution, delivery and performance by the Seller of
the Transaction Documents and the other documents to be delivered by it
hereunder, including the Seller's use of the proceeds of purchases and
reinvestments, (i) are within the Seller's corporate powers, (ii) have been duly
authorized by all necessary corporate action, (iii) do not contravene (1) the
Seller's charter or by-laws, (2) any law, rule or regulation applicable to the
Seller, (3) any
38
contractual restriction binding on or affecting the Seller or its property or
(4) any order, writ, judgment, award, injunction or decree binding on or
affecting the Seller or its property, and (iv) do not result in or require the
creation of any lien, security interest or other charge or encumbrance upon or
with respect to any of its properties (except for the interest created pursuant
to this Agreement). Each of the Transaction Documents has been duly executed and
delivered by the Seller.
(c) 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, delivery and performance by the Seller of the
Transaction Documents or any other document to be delivered thereunder, or to
ensure that the Agent will have an undivided ownership interest in and to the
Receivables, the Related Security and the Collections which is perfected and
prior to all other Liens, except for the filing of UCC financing statements
which are referred to therein (including, without limitation, the filing of
releases of UCC financing statements described in Section 3.01(d) hereof and
Section 3.01(d) of the Originator Purchase Agreement).
(d) Each of the Transaction Documents constitutes the legal,
valid and binding obligation of the Seller enforceable against the Seller in
accordance with its terms.
(e) The balance sheets of the Originator and its Subsidiaries
as at December 31, 2000, and the related statements of income and retained
earnings of the Originator and its Subsidiaries for the fiscal year then ended,
copies of which have been furnished to the Agent, fairly present the financial
condition of the Originator and its Subsidiaries as at such date and the results
of the operations of the Originator and its Subsidiaries for the period ended on
such date, all in accordance with GAAP consistently applied, and since December
31, 2000 there has been no material adverse change in the business, operations,
property or financial or other condition of the Originator. The pro forma
balance sheet of the Seller as at September 30, 2001, giving effect to the
initial purchase to be made under this Agreement, a copy of which has been
furnished to the Agent, fairly presents the financial condition of the Seller as
at such date, in accordance with GAAP, and since December 31, 2000 there has
been no material adverse change in the business, operations, property or
financial or other condition of the Seller.
(f) There is no pending or threatened action or proceeding
affecting the Originator or any of its Subsidiaries before any court,
governmental agency or arbitrator which may materially adversely affect the
financial condition or operations of the Originator or any of its Subsidiaries
or the ability of the Seller or the Originator to perform their respective
obligations under the Transaction Documents, or which purports to affect the
legality, validity or enforceability of the Transaction Documents; neither the
Originator nor any Subsidiary is in default with respect to any order of any
court, arbitration or governmental body except for defaults with respect to
orders of governmental agencies which defaults are not material to the business
or operations of the Originator and its Subsidiaries, taken as a whole.
(g) The use of all funds acquired by the Seller under this
Agreement will not conflict with or contravene any of Regulations T, U and X of
the Board of Governors of the
39
Federal Reserve System as the same may from time to time be amended,
supplemented or otherwise modified.
(h) Immediately prior to the purchase by the Investor or the
Banks, as the case may be, the Seller is the legal and beneficial owner of the
Pool Receivables and Related Security free and clear of any Adverse Claim; upon
each purchase or reinvestment, the Investors or the Banks, as the case may be,
shall acquire an undivided percentage ownership interest to the extent of the
pertinent Receivable Interest in each Pool Receivable then existing or
thereafter arising and in the Related Security and Collections with respect
thereto. No effective financing statement or other instrument similar in effect
covering any Contract or any Pool Receivable or the Related Security or
Collections with respect thereto is on file in any recording office, except
those filed in favor of the Agent relating to this Agreement and those filed by
the Seller pursuant to the Originator Purchase Agreement.
(i) Each Seller Report (if prepared by the Seller or one of
its Affiliates, or to the extent that information contained therein is supplied
by the Seller or an Affiliate), information, exhibit, financial statement,
document, book, record or report furnished or to be furnished at any time by or
on behalf of the Seller to the Agent, the Investors or the Banks in connection
with this Agreement is or will be accurate in all material respects as of the
date so furnished, and no such document contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading.
(j) The principal place of business and chief executive office
of the Seller and the office where the Seller keeps its records concerning the
Pool Receivables are located at the address or addresses referred to in Section
5.01(b).
(k) The names and addresses of all the Lock-Box Banks and the
Cash Collateral Bank, together with the account numbers of the Lock-Box Accounts
and the Cash Collateral Account of the Seller at such Lock-Box Banks and the
Cash Collateral Bank, respectively, are as specified in Schedule I hereto, as
such Schedule I may be updated from time to time pursuant to Section 5.01(g).
(l) Each purchase of a Receivable Interest and each
reinvestment of Collections in Pool Receivables will constitute (i) a "current
transaction" within the meaning of Section 3(a)(3) of the Securities Act of
1933, as amended, and (ii) a purchase or other acquisition of notes, drafts,
acceptances, open accounts receivable or other obligations representing part or
all of the sales price of merchandise, insurance or services within the meaning
of Section 3(c)(5) of the Investment Company Act of 1940, as amended.
(m) The Seller is not known by and does not use any tradename
or doing-business-as name.
40
(n) Immediately prior to the effectiveness of this Agreement
the Seller has no Debt, Adverse Claims on any of its assets, liabilities
(including contingent obligations) other than accrued administrative expenses
(including, without limitation, accrued rent) in an aggregate amount no to
exceed $20,000. The Seller has no Subsidiaries.
(o) (i) The fair value of the property of the Seller is
greater than the total amount of liabilities, including contingent liabilities,
of the Seller, (ii) the present fair salable value of the assets of the Seller
is not less than the amount that will be required to pay all probable
liabilities of the Seller on its debts as they become absolute and matured,
(iii) the Seller does not intend to, and does not believe that it will, incur
debts or liabilities beyond the Seller's abilities to pay such debts and
liabilities as they mature and (iv) the Seller is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction, for
which the Seller's property would constitute unreasonably small capital.
(p) With respect to each Pool Receivable, the Seller (i) shall
have received such Pool Receivable as a contribution to the capital of the
Seller by the Originator or (ii) shall have purchased such Pool Receivable from
the Originator in exchange for payment (made by the Seller to the Originator in
accordance with the provisions of the Originator Purchase Agreement) of cash,
Deferred Purchase Price, or a combination thereof in an amount which constitutes
fair consideration and reasonably equivalent value. Each such sale referred to
in clause (ii) of the preceding sentence shall not have been made for or on
account of an antecedent debt owed by the Originator to the Seller and no such
sale is or may be voidable or subject to avoidance under any section of the
Federal Bankruptcy Code.
SECTION 4.02. Representations and Warranties of the Collection
Agent. The Collection Agent (so long as the Originator or its designee is the
Collection Agent) hereby represents and warrants as follows:
(a) The Collection Agent is a corporation duly incorporated
and validly existing under the laws of Delaware, and is duly qualified to do
business, and is in good standing, in every jurisdiction where the nature of its
business requires it to be so qualified (including without limitation, the State
of Delaware) except to the extent that the failure so to be so qualified would
not reasonably be expected to materially adversely affect the collectibility of
the Receivables in the Receivables Pool or the ability of the Seller to perform
its obligations under this Agreement.
(b) The execution, delivery and performance by the Collection
Agent of this Agreement and any other documents to be delivered by it hereunder
(i) are within the Collection Agent's corporate powers, (ii) have been duly
authorized by all necessary corporate action, (iii) do not contravene (1) the
Collection Agent's charter or by-laws, (2) any law, rule or regulation
applicable to the Collection Agent, (3) any contractual restriction binding on
or affecting the Collection Agent or its property or (4) any order, writ,
judgment, award, injunction or decree binding on or affecting the Collection
Agent or its property, and (iv) do not result in or require the creation of any
lien, security interest or other charge or encumbrance upon or with respect to
41
any of its properties. This Agreement has been duly executed and delivered by
the Collection Agent.
(c) 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, delivery and performance by the Collection Agent
of this Agreement or any other document to be delivered by it hereunder.
(d) This Agreement constitutes the legal, valid and binding
obligation of the Collection Agent enforceable against the Collection Agent in
accordance with its terms.
(e) The balance sheets of the Collection Agent and its
Subsidiaries as at December 31, 2000, and the related statements of income and
retained earnings of the Collection Agent and its Subsidiaries for the fiscal
year then ended, copies of which have been furnished to the Agent, fairly
present the financial condition of the Collection Agent and its Subsidiaries as
at such date and the results of the operations of the Collection Agent and its
Subsidiaries for the period ended on such date, all in accordance with GAAP
consistently applied, and since December 31, 2000 there has been no material
adverse change in the business, operations, property or financial or other
condition of the Collection Agent. The pro forma balance sheet of the Seller as
at September 30, 2001, giving effect to the initial purchase to be made under
this Agreement, a copy of which has been furnished to the Agent, fairly presents
the financial condition of the Seller as at such date, in accordance with GAAP,
and since December 31, 2000 there has been no material adverse change in the
business, operations, property or financial or other condition of the Seller.
(f) There is no pending or threatened action or proceeding
affecting the Collection Agent or any of its Subsidiaries before any court,
governmental agency or arbitrator which may materially adversely affect the
financial condition or operations of the Collection Agent or any of its
Subsidiaries or the ability of the Collection Agent to perform its obligations
under this Agreement, or which purports to affect the legality, validity or
enforceability of this Agreement.
(g) On the date of each purchase and reinvestment (and after
giving effect thereto), the Net Receivables Pool Balance is not less than the
Required Net Receivable Pool Balance.
(h) Immediately prior to the effectiveness of this Agreement
the Seller has no Debt, Adverse Claims on any of its assets, liabilities
(including contingent obligations) other than accrued administrative expenses
(including, without limitation, accrued rent) in an aggregate amount no to
exceed $20,000.
ARTICLE V
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COVENANTS
SECTION 5.01. Covenants of the Seller. Until the latest of
the Facility Termination Date or the date on which no Capital of or Yield on any
Receivable Interest shall be outstanding or the date all other amounts owed by
the Seller hereunder to the Investors, the Banks or the Agent are paid in full:
(a) Compliance with Laws, Etc. The Seller will comply in all
material respects with all applicable laws, rules, regulations and orders and
preserve and maintain its corporate existence, rights, franchises,
qualifications, and privileges except to the extent that the failure so to
comply with such laws, rules and regulations or the failure so to preserve and
maintain such rights, franchises, qualifications, and privileges would not
materially adversely affect the collectibility of the Receivables Pool or the
ability of the Seller to perform its obligations under the Transaction
Documents.
(b) Offices, Records, Name and Organization. The Seller will
keep its principal place of business and chief executive office and the office
where it keeps its records concerning the Pool Receivables at the address of the
Seller set forth under its name on the signature pages to this Agreement or,
upon 30 days' prior written notice to the Agent, at any other locations within
the United States. The Seller will not change its name or its state of
organization, unless (i) the Seller shall have provided the Agent with at least
30 days' prior written notice thereof and (ii) no later than the effective date
of such change, all actions reasonably requested by the Agent to protect and
perfect the interest in the Pool Receivables have been taken and completed. The
Seller also will maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records evidencing Pool
Receivables and related Contracts in the event of the destruction of the
originals thereof), and keep and maintain all documents, books, records and
other information reasonably necessary or advisable for the collection of all
Pool Receivables (including, without limitation, records adequate to permit the
daily identification of each Pool Receivable and all Collections of and
adjustments to each existing Pool Receivable).
(c) Performance and Compliance with Contracts and Credit and
Collection Policy. The Seller will, at its expense, timely and fully perform and
comply with all material provisions, covenants and other promises required to be
observed by it under the Contracts related to the Pool Receivables, and timely
and fully comply in all material respects with the Credit and Collection Policy
in regard to each Pool Receivable and the related Contract.
(d) Sales, Liens, Etc. Except for the ownership and security
interests created hereunder in favor of the Agent, the Seller will not sell,
assign (by operation of law or otherwise) or otherwise dispose of, or create or
suffer to exist any Adverse Claim upon or with respect to, the Seller's
undivided interest in any Pool Receivable, Related Security, related Contract or
Collections, or upon or with respect to any account to which any Collections of
any Pool Receivable are sent, or assign any right to receive income in respect
thereof.
43
(e) Extension or Amendment of Receivables. Except as provided
in Section 6.02(c), the Seller will not extend, amend or otherwise modify the
terms of any Pool Receivable, or amend, modify or waive any term or condition of
any Contract related thereto.
(f) Change in Business or Credit and Collection Policy. The
Seller will not make any change in the character of its business or in the
Credit and Collection Policy that would, in either case, materially adversely
affect the collectibility of the Receivables Pool or the ability of the Seller
to perform its obligations under this Agreement.
(g) Change in Payment Instructions to Obligors. The Seller
will not add or terminate any bank as a Lock-Box Bank or the Cash Collateral
Bank from those listed in Schedule I to this Agreement, or make any change in
its instructions to Obligors regarding payments to be made to the Seller or
payments to be made to any Lock-Box Bank, unless the Agent shall have received
notice of such addition, termination or change (including an updated Schedule I)
and a fully executed Lock-Box Agreement with each new Lock-Box Bank (or a fully
executed Cash Collateral Agreement with the new Cash Collateral Bank).
(h) Deposits to Lock-Box Accounts. The Seller will instruct
all Obligors to remit all their payments in respect of Receivables to Lock-Box
Accounts. If the Seller shall receive any Collections directly, it shall
immediately (and in any event within two Business Days) deposit the same to a
Lock-Box Account.
(i) Marking of Records. At its expense, the Seller will mark
its master data processing records evidencing Pool Receivables with a legend
evidencing that Receivable Interests related to such Pool Receivables have been
sold in accordance with this Agreement.
(j) Further Assurances. (i) The Seller agrees from time to
time, at its expense, promptly to execute and deliver all further instruments
and documents, and to take all further actions, that may be necessary or
desirable, or that the Agent may reasonably request, to perfect, protect or more
fully evidence the Receivable Interests purchased under this Agreement, or to
enable the Investors, the Banks or the Agent to exercise and enforce their
respective rights and remedies under this Agreement. Without limiting the
foregoing, the Seller will, upon the request of the Agent, execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments and documents, that may be necessary or desirable, or that the Agent
may reasonably request, to perfect, protect or evidence such Receivable
Interests.
(ii) The Seller authorizes the Agent to file financing or
continuation statements, and amendments thereto and assignments thereof,
relating to the Pool Receivables and the Related Security, the related Contracts
and the Collections with respect thereto without the signature of the Seller
where permitted by law. A photocopy or other reproduction of this Agreement
shall be sufficient as a financing statement where permitted by law.
(k) Reporting Requirements. The Seller will provide to the
Agent (in multiple copies, if requested by the Agent) the following:
44
(i) as soon as available and in any event within 60
days after the end of the first three quarters of each fiscal
year of the Originator, consolidated balance sheets of the
Originator and its Subsidiaries as of the end of such quarter
and consolidated statements of income and retained earnings of
the Originator and its Subsidiaries for the period commencing
at the end of the previous fiscal year and ending with the end
of such quarter, certified by a Responsible Financial Officer
of the Originator;
(ii) as soon as available and in any event within 105
days after the end of each fiscal year of the Originator, a
copy of the annual report for such year for the Originator and
its Subsidiaries on a consolidated basis, containing financial
statements for such year audited by PricewaterhouseCoopers LLP
or other independent public accountants acceptable to the
Agent;
(iii) as soon as available and in any event within 60
days after the end of the first three quarters and within 105
days after the end of the fourth fiscal quarter of each fiscal
year of the Seller, a balance sheet of the Seller as of the
end of such quarter and a statement of income and retained
earnings of the Seller for the period commencing at the end of
the previous fiscal year and ending with the end of such
quarter, certified by a Responsible Financial Officer of the
Seller;
(iv) as soon as possible and in any event within five
days after the occurrence of each Event of Termination or
Incipient Event of Termination, a statement of a Responsible
Financial Officer of the Seller setting forth details of such
Event of Termination or Incipient Event of Termination and the
action that the Seller has taken and proposes to take with
respect thereto;
(v) promptly after the sending or filing thereof,
copies of all reports that the Originator sends to any of its
security holders, and copies of all reports and registration
statements that the Originator or any of its Subsidiaries
files with the SEC or any national securities exchange;
(vi) promptly after the Seller obtains knowledge
thereof, notice of the occurrence of any ERISA Event that,
alone or together with any other ERISA Events that have
occurred, could reasonably be expected to result in liability
of the Seller and any ERISA Affiliates in an aggregate amount
exceeding $25,000,000;
(vii) at least 30 days prior to any change in the name
or jurisdiction of organization of the Originator, a notice
setting forth the new name or jurisdiction of organization and
the effective date thereof;
45
(viii) promptly after the Seller obtains knowledge
thereof, notice of any "Event of Termination" or "Facility
Termination Date" under the Originator Purchase Agreement or
any "Event of Default" under the Credit Facility;
(ix) so long as any Capital shall be outstanding, as
soon as possible and in any event no later than the day of
occurrence thereof, notice that the Originator has stopped
selling or contributing to the Seller, pursuant to the
Originator Purchase Agreement, all newly arising Originator
Receivables;
(x) at the earlier of the time of the delivery of the
financial statements provided for in clauses (i) and (ii) of
this paragraph or the date on which such financial statement
are required to be delivered, a certificate of a Responsible
Financial Officer of the Seller to the effect that, to the
best of such officer's knowledge, no Event of Termination has
occurred and is continuing or, if any Event of Termination has
occurred and is continuing, specifying the nature and extent
thereof;
(xi) promptly after receipt thereof, copies of all
notices received by the Seller from the Originator under the
Originator Purchase Agreement
(xii) promptly after the Seller obtains knowledge
thereof, notice that the aggregate Outstanding Balance of
Originator Receivables is greater than $450,000,000; and
(xiii) such other information respecting the
Receivables or the condition or operations, financial or
otherwise, of the Seller as the Agent may from time to time
reasonably request.
Reports and financial statements required to be delivered
pursuant to clauses (i), (ii) and (v) of this Section 5.01(k) shall be deemed to
have been delivered on the date on which such reports, or reports containing
such financial statements are posted on the SEC's website at www.sec.gov.
(1) Corporate Separateness. (i) The Seller shall at all times
maintain at least one independent director who is not currently and has not been
during the five years preceding the date of this Agreement an officer, director,
employee or shareholder of an Affiliate of the Seller or any Other Company.
(ii) The Seller shall not direct or participate in the
management of any of the Other Companies' operations.
(iii) The Seller shall conduct a portion of its
business from an office separate from that of the Other
Companies (but which may be located in the same facility as
one or more of the Other Companies). The Seller shall have
stationery
46
and other business forms and a mailing address and a telephone
number separate from that of the Other Companies.
(iv) The Seller shall at all times be adequately
capitalized in light of its contemplated business.
(v) The Seller shall at all times provide for its own
operating expenses and liabilities from its own funds.
(vi) The Seller shall maintain its assets and
transactions separately from those of the Other Companies and
reflect such assets and transactions in financial statements
separate and distinct from those of the Other Companies and
evidence such assets and transactions by appropriate entries
in books and records separate and distinct from those of the
Other Companies. The Seller shall hold itself out to the
public under the Seller's own name as a legal entity separate
and distinct from the Other Companies. The Seller shall not
hold itself out as having agreed to pay, or as being liable,
primarily or secondarily, for, any obligations of the Other
Companies.
(vii) The Seller shall not maintain any joint account
with any Other Company or become liable as a guarantor or
otherwise with respect to any Debt or contractual obligation
of any Other Company.
(viii) The Seller shall not make any payment or
distribution of assets with respect to any obligation of any
Other Company or grant an Adverse Claim on any of its assets
to secure any obligation of any Other Company.
(ix) The Seller shall not make loans, advances or
otherwise extend credit to any of the Other Companies other
than Purchaser Loans on the terms and conditions set forth in
the Originator Purchase Agreement.
(x) The Seller shall comply with all requirements of
the laws of the State of Delaware with respect to its
corporate formation and maintenance of its independent
corporate existence.
(xi) The Seller shall have bills of sale (or similar
instruments of assignment) and, if appropriate, UCC-1
financing statements, with respect to all assets purchased
from any of the Other Companies.
(xii) The Seller shall not engage in any transaction
with any of the Other Companies, except as permitted by this
Agreement and as contemplated by the Originator Purchase
Agreement.
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(xiii) The Seller shall comply with (and cause to be
true and correct) each of the facts and assumptions contained
in the "true sale/non-consolidation" opinion of Pepper
Hamilton LLP delivered pursuant to Section 3.01(g) and
designated as Annex C to this Agreement.
(m) Originator Purchase Agreement. The Seller will not amend,
waive or modify any provision of the Originator Purchase Agreement (provided
that the Seller may extend the "Facility Termination Date" thereunder) or waive
the occurrence of any "Event of Termination" under the Originator Purchase
Agreement, without in each case the prior written consent of the Agent. The
Seller will perform all of its obligations under the Originator Purchase
Agreement in all material respects and will enforce the Originator Purchase
Agreement in accordance with its terms in all material respects.
(n) Nature of Business. The Seller will not engage in any
business other than the purchase of Receivables, Related Security and
Collections from the Originator and the transactions contemplated by this
Agreement. The Seller will not create or form any Subsidiary.
(o) Mergers, Etc. The Seller will not merge with or into or
consolidate with or into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions), all or
substantially all of its assets (whether now owned or hereafter acquired) to, or
acquire all or substantially all of the assets or capital stock or other
ownership interest of, or enter into any joint venture or partnership agreement
with, any Person, other than as contemplated by this Agreement and the
Originator Purchase Agreement.
(p) Distributions, Etc. The Seller will not declare or make
any dividend payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of any shares of any class of capital stock
of the Seller, or return any capital to its shareholders as such, or purchase,
retire, defease, redeem or otherwise acquire for value or make any payment in
respect of any shares of any class of capital stock of the Seller or any
warrants, rights or options to acquire any such shares, now or hereafter
outstanding; provided, however, that the Seller may declare and pay cash
-------- -------
dividends on its capital stock to its shareholders so long as (i) no Event of
Termination shall then exist or would occur as a result thereof, (ii) such
dividends are in compliance with all applicable law including the corporate law
of the state of Seller's incorporation, and (iii) such dividends have been
approved by all necessary and appropriate corporate action of the Seller.
(q) Debt. The Seller will not incur any Debt, other than any
Debt incurred pursuant to this Agreement and the Deferred Purchase Price.
(r) Certificate of Incorporation. The Seller will not amend or
delete Articles THIRD, FIFTH, SEVENTH, TENTH, ELEVENTH, TWELFTH or FOURTEENTH of
its certificate of incorporation.
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(s) Tangible Net Worth. The Seller will maintain Tangible Net
Worth at all times equal to at least 3% of the Outstanding Balance of the
Receivables at such time.
(t) Misdirected Payments. The Seller will not deposit or
otherwise credit, or cause to be so deposited or credited, to any Lock-Box
Account cash or cash proceeds other than Collections of Receivables. The Seller
shall use commercially reasonable efforts (including, without limitation,
sending notices from time to time to any Person depositing or crediting to any
Lock-Box Account cash or cash proceeds which are not Collections of Receivables)
to prevent cash or cash proceeds other than Collections of Receivables from
being deposited or credited to any Lock-Box.
(u) No Commingling. In the event that any cash or cash
proceeds other than Collections of Receivables are deposited or credited to any
Lock-Box Account, the Seller shall, or shall cause, such cash or cash proceeds
to be identified and withdrawn from the Lock-Box Account within three Business
Days of such deposit or credit.
(v) Lock-Box Agreement. No later than 45 days from the date
hereof the Seller shall deliver to the Agent a fully executed Lock-Box Agreement
with respect to each Lock-Box Account.
SECTION 5.02. Covenant of the Seller and the Originator.
Until the latest of the Facility Termination Date or the date on which no
Capital of or Yield on any Receivable Interest shall be outstanding or the date
all other amounts owed by the Seller hereunder to the Investors, the Banks or
the Agent are paid in full, each of the Seller and the Originator will, at their
respective expense (other than expenses incurred in connection with the Agent's
routine annual due diligence visit), from time to time during regular business
hours as requested by the Agent, permit the Agent or its agents or
representatives (including independent public accountants, which may be the
Seller's or the Originator's independent public accountants), (i) to conduct, on
a reasonable and customary basis, periodic audits of the Receivables, the
Related Security and the related books and records and collections systems of
the Seller or the Originator, as the case may be, (ii) to examine and make
copies of and abstracts from all books, records and documents (including,
without limitation, computer tapes and disks) in the possession or under the
control of the Seller or the Originator, as the case may be, relating to Pool
Receivables and the Related Security, including, without limitation, the
Contracts, and (iii) to visit the offices and properties of the Seller or the
Originator, as the case may be, for the purpose of examining such materials
described in clause (ii) above, and to discuss matters relating to Pool
Receivables and the Related Security or the Seller's or the Originator's
performance under the Transaction Documents or under the Contracts with any of
the officers or employees of the Seller or the Originator, as the case may be,
having knowledge of such matters. In addition, upon the Agent's request at least
once per year, the Seller will, at its expense, appoint independent public
accountants (which may, with the consent of the Agent, be the Seller's regular
independent public accountants), or utilize the Agent's representatives or
auditors, to prepare and deliver to the Agent a written report with respect to
the Receivables and the Credit and Collection Policy (including, in each case,
the
49
systems, procedures and records relating thereto) on a scope and in a form
reasonably and customarily requested by the Agent.
ARTICLE VI
ADMINISTRATION AND COLLECTION
OF POOL RECEIVABLES
SECTION 6.01. Designation of Collection Agent. The servicing,
administration and collection of the Pool Receivables shall be conducted by the
Collection Agent so designated hereunder from time to time. Until the Agent
gives notice to the Seller of the designation of a new Collection Agent (which
notice may only be given following the occurrence of a Collection Agent
Default), the Originator is hereby designated as, and hereby agrees to perform
the duties and obligations of, the Collection Agent pursuant to the terms
hereof. The Agent, at any time after the occurrence of a Collection Agent
Default, may designate as Collection Agent any Person (including itself) to
succeed the Originator or any successor Collection Agent, if such Person shall
consent and agree to the terms hereof. The Collection Agent may, with the prior
consent of the Agent, subcontract with any other Person for the servicing,
administration or collection of the Pool Receivables. Any such subcontract shall
not affect the Collection Agent's liability for performance of its duties and
obligations pursuant to the terms hereof.
SECTION 6.02. Duties of Collection Agent. (a) The Collection
Agent shall take or cause to be taken all such actions as may be necessary or
advisable to collect each Pool Receivable from time to time, all in accordance
with applicable laws, rules and regulations, with reasonable care and diligence,
and in accordance with the Credit and Collection Policy. The Seller and the
Agent hereby appoint the Collection Agent, from time to time designated pursuant
to Section 6.01, as agent for themselves and for the Investors and the Banks to
enforce their respective rights and interests in the Pool Receivables, the
Related Security and the related Contracts. In performing its duties as
Collection Agent, the Collection Agent shall exercise the same care and apply
the same policies as it would exercise and apply if it owned such Receivables
and shall act in the best interests of the Seller, the Investors and the Banks.
(b) The Collection Agent shall administer the Collections in
accordance with the procedures described in Section 2.04.
(c) If no Event of Termination or Incipient Event of
Termination shall have occurred and be continuing, the Originator, while it is
the Collection Agent, may, in accordance with the Credit and Collection Policy,
extend the maturity or adjust the Outstanding Balance of any Receivable as the
Originator deems appropriate to maximize Collections thereof, or otherwise amend
or modify the terms of any Receivable, provided that the classification of any
such Receivable as a Delinquent Receivable or Defaulted Receivable shall not be
affected by any such extension.
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(d) The Collection Agent shall hold in trust for the Seller
and each Investor and Bank, in accordance with their respective interests, all
documents, instruments and records (including, without limitation, computer
tapes or disks) which evidence or relate to Pool Receivables. The Collection
Agent shall mark the Seller's master data processing records evidencing the Pool
Receivables with a legend, acceptable to the Agent, evidencing that Receivable
Interests therein have been sold and, at the request of the Agent, shall mark
conspicuously each invoice evidencing each Pool Receivable and the related
Contract with such a legend.
(e) The Collection Agent shall, within three Business Days
following receipt thereof, turn over to the Originator any cash collections or
other cash proceeds received with respect to Excluded Receivables, and, turn
over to the Seller any cash collections or other cash proceeds received with
respect to Receivables not constituting Pool Receivables.
(f) The Collection Agent shall, from time to time at the
request of the Agent, furnish to the Agent (promptly after any such request) a
calculation of the amounts set aside for the Investors and the Banks pursuant to
Section 2.04.
(g) (i) On or prior to the 20th calendar day of each month (or
if such day is not a Business Day, the next Business Day), the Collection Agent
shall prepare and forward to the Agent a Monthly Report relating to the
Receivable Interests outstanding on the last day of the immediately preceding
month.
(ii) If a Level I Downgrade Event (but no Level II
Downgrade Event) shall have occurred and be continuing, on or prior to the close
of business on the second Business Day of each Week, the Collection Agent shall
prepare and forward to the Agent a Weekly Report which shall contain information
related to the Receivables current as of the close of business on the last
Business Day of the preceding Week.
(iii) If a Level II Downgrade Event shall have
occurred and be continuing, the Collection Agent shall, by no later than 3:00
P.M. (New York City time) on each Business Day, prepare and forward to the Agent
a Daily Report which shall contain information relating to the Receivables
current as of the close of business on the immediately prior Business Day.
The Collection Agent may elect to transmit Seller Reports to
the Agent by electronic mail (each an "E-Mail Seller Report") provided, that (i)
the Collection Agent shall (A) make arrangements with VeriSign, Inc. (or another
authenticating organization acceptable to the Agent) to enable the Collection
Agent to generate digital signatures and (B) safeguard the keys, access codes or
other means of generating its digital signature, (ii) each E-Mail Seller Report
shall be (A) formatted as the Agent may designate from time to time and shall be
digitally signed and (B) sent to the Agent at an electronic mail address
designated by the Agent, and (iii) the Agent (A) shall be authorized to rely
upon such E-Mail Seller Report for purposes of this
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Agreement to the same extent as if the contents thereof had been otherwise
delivered to the Agent in accordance with the terms of this Agreement and (B)
may, upon notice in writing to the Collection Agent and the Seller, terminate
the right of the Collection Agent to transmit E-Mail Seller Reports.
SECTION 6.03. Certain Rights of the Agent. (a) The Agent shall
not deliver to the Lock-Box Banks the Notices of Effectiveness attached to the
Lock-Box Agreements unless and until a Cash Control Triggering Event shall have
occurred. The Seller hereby transfers to the Agent the exclusive ownership and
control of the Lock-Box Accounts to which the Obligors of Pool Receivables shall
make payments and the Cash Collateral Account.
(b) At any time following a Cash Control Triggering Event:
(i) The Agent may notify the Obligors of Pool
Receivables, at the Seller's expense, of the ownership of
Receivable Interests under this Agreement and direct that all
payments be made directly to the Agent or its designee.
(ii) At the Agent's request and at the Seller's
expense, the Seller shall notify each Obligor of Pool
Receivables of the ownership of Receivable Interests under
this Agreement and direct that payments be made directly to
the Agent or its designee.
(iii) At the Agent's request and at the Seller's
expense, the Seller and the Collection Agent shall (A)
assemble all of the documents, instruments and other records
(including, without limitation, computer tapes and disks) that
evidence or relate to the Pool Receivables and the related
Contracts and Related Security, or that are otherwise
necessary or desirable to collect the Pool Receivables, and
shall make the same available to the Agent at a place selected
by the Agent or its designee, and (B) segregate all cash,
checks and other instruments received by it from time to time
constituting Collections of Pool Receivables in a manner
acceptable to the Agent and, promptly upon receipt, remit all
such cash, checks and instruments, duly indorsed or with duly
executed instruments of transfer, to the Agent or its
designee.
(iv) The Seller authorizes the Agent to take any and
all steps in the Seller's name and on behalf of the Seller
that are necessary or desirable, in the determination of the
Agent, to collect amounts due under the Pool Receivables,
including, without limitation, endorsing the Seller's name on
checks and other instruments representing Collections of Pool
Receivables and enforcing the Pool Receivables and the Related
Security and related Contracts.
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SECTION 6.04. Rights and Remedies. (a) If the Collection Agent
fails to perform any of its obligations under this Agreement, the Agent may (but
shall not be required to) itself perform, or cause performance of, such
obligation; and the Agent's costs and expenses incurred in connection therewith
shall be payable by the Collection Agent.
(b) The Seller and the Originator shall perform their
respective obligations under the Contracts related to the Pool Receivables to
the same extent as if Receivable Interests had not been sold and the exercise by
the Agent on behalf of the Investors and the Banks of their rights under this
Agreement shall not release the Collection Agent or the Seller from any of their
duties or obligations with respect to any Pool Receivables or related Contracts.
Neither the Agent, the Investors nor the Banks shall have any obligation or
liability with respect to any Pool Receivables or related Contracts, nor shall
any of them be obligated to perform the obligations of the Seller thereunder.
(c) In the event of any conflict between the provisions of
Article VI of this Agreement and Article VI of the Originator Purchase
Agreement, the provisions of this Agreement shall control.
SECTION 6.05. Further Actions Evidencing Purchases. The
Originator agrees from time to time, at its expense, to promptly execute and
deliver all further instruments and documents, and to take all further actions,
that may, to its knowledge, be necessary or desirable, or that the Agent may
reasonably request, to perfect, protect or more fully evidence the Receivable
Interests purchased hereunder, or to enable the Investors, the Banks or the
Agent to exercise and enforce their respective rights and remedies hereunder.
Without limiting the foregoing, the Originator will (i) upon the request of the
Agent, execute and file such financing or continuation statements, or amendments
thereto, and such other instruments and documents, that the Agent may reasonably
request, to perfect, protect or evidence such Receivable Interests; (ii) mark
its master data processing records evidencing the Pool Receivables with a
legend, acceptable to the Agent, evidencing that Receivable Interests therein
have been sold; and (iii) upon an Event of Termination and the request of the
Agent, mark conspicuously each invoice evidencing each Pool Receivable with such
a legend.
SECTION 6.06. Covenants of the Collection Agent and the
Originator. (a) Audits. The Collection Agent will, from time to time during
regular business hours as requested by the Agent, on a reasonable and customary
basis, permit the Agent, or its agents or representatives (including independent
public accountants, which may be the Collection Agent's independent public
accountants), (i) to conduct periodic audits of the Receivables, the Related
Security and the related books and records and collections systems of the
Collection Agent, (ii) to examine and make copies of and abstracts from all
books, records and documents (including, without limitation, computer tapes and
disks) in the possession or under the control of the Collection Agent relating
to Pool Receivables and the Related Security, including, without limitation, the
Contracts, and (iii) to visit the offices and properties of the Collection Agent
for
53
the purpose of examining such materials described in clause (ii) above, and
to discuss matters relating to Pool Receivables and the Related Security or the
Collection Agent's performance hereunder with any of the officers or employees
of the Collection Agent having knowledge of such matters.
(b) Change in Credit and Collection Policy. The Originator
will not make any change in the Credit and Collection Policy that would impair
the collectibility of any Pool Receivable or the ability of the Originator (if
it is acting as Collection Agent) to perform its obligations under this
Agreement. In the event that the Collection Agent or the Originator makes any
change to the Credit and Collection Policy, it shall, within five Business Days
of such change, provide the Agent with an updated Credit and Collection Policy
and a summary of all material changes.
SECTION 6.07. Indemnities by the Collection Agent. Without
limiting any other rights that the Agent, any Investor, any Bank or any of their
respective Affiliates (each, a "Special Indemnified Party") may have hereunder
or under applicable law, and in consideration of its appointment as Collection
Agent, the Collection Agent hereby agrees to indemnify each Special Indemnified
Party from and against any and all claims, losses and liabilities (including
reasonable attorneys' fees) (all of the foregoing being collectively referred to
as "Special Indemnified Amounts") arising out of or resulting from any of the
following (excluding, however, (a) Special Indemnified Amounts to the extent
found by a court of competent jurisdiction to have resulted from gross
negligence or willful misconduct on the part of such Special Indemnified Party,
(b) recourse for uncollectible Receivables or (c) any income taxes or any other
tax or fee measured by income incurred by such Special Indemnified Party arising
out of or as a result of this Agreement or the ownership of Receivable Interests
or in respect of any Receivable or any Contract):
(i) any representation made or deemed made by the
Collection Agent pursuant to Section 4.02(g) hereof which
shall have been incorrect in any respect when made or any
other representation or warranty or statement made or deemed
made by the Collection Agent under or in connection with this
Agreement which shall have been incorrect in any material
respect when made;
(ii) the failure by the Collection Agent to comply
with any applicable law, rule or regulation with respect to
any Pool Receivable or Contract; or the failure of any Pool
Receivable or Contract to conform to any such applicable law,
rule or regulation;
(iii) 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 Receivables in, or
purporting to be in, the Receivables Pool, the Contracts and
the Related Security
54
and Collections in respect thereof, whether at the time of any
purchase or reinvestment or at any subsequent time;
(iv) any failure of the Collection Agent to perform
its duties or obligations in accordance with the provisions of
this Agreement;
(v) the commingling of Collections of Pool Receivables
at any time by the Collection Agent with other funds;
(vi) any action or omission by the Collection Agent
reducing or impairing the rights of the Investors or the Banks
with respect to any Pool Receivable or the value of any Pool
Receivable;
(vii) any Collection Agent Fees or other costs and
expenses payable to any replacement Collection Agent, to the
extent in excess of the Collection Agent Fees payable to the
Collection Agent hereunder; or
(viii) any claim brought by any Person other than a
Special Indemnified Party arising from any activity by the
Collection Agent or its Affiliates in servicing, administering
or collecting any Receivable.
SECTION 6.08. Cash Collateral Account. Within 10 Business Days
following a Level I Downgrade Event (and in any event within two Business Days
following a Level II Downgrade Event), the Collection Agent shall establish and
maintain or cause to be established and maintained in the name of the Seller,
for the benefit of the Investors and the Banks and under the sole dominion and
control of the Agent, with a financial institution acceptable to the Agent a
segregated interest bearing deposit account (the "Cash Collateral Account", and
such financial institution holding such account a "Cash Collateral Bank"). Such
Cash Collateral Account shall be subject to a Cash Collateral Agreement in form
and substance satisfactory to the Agent, the Seller, the Collection Agent and
the Cash Collateral Bank (the "Cash Collateral Agreement".
ARTICLE VII
EVENTS OF TERMINATION
SECTION 7.01. Events of Termination. If any of the following
events ("Events of Termination") shall occur and be continuing:
(a) The Collection Agent (i) shall fail to perform or observe
any term, covenant or agreement under this Agreement (other than as referred to
in clauses (ii), (iii), (iv), (v) or (vi) of this subsection (a)) and such
failure shall remain unremedied for 10 Business Days,
55
(ii) shall fail to make when due any payment or deposit with respect to Fees or
Yield to be made by it under this Agreement and such failure shall remain
unremedied for one Business Day after notice thereof has been delivered by the
Agent, (iii) shall fail to make when due any payment or deposit with respect to
Capital to be made by it under this Agreement, (iv) (A) shall fail to deliver
when due any Weekly Report or Daily Report and such failure shall remain
unremedied for more than two Business Days, in the case of a Weekly Report, or
for more than one Business Day, in the case of a Daily Report, or (B) shall fail
to deliver when due more than two Weekly Reports in any calendar month or more
than two Daily Reports in any calendar week, (v) shall fail to deposit into the
Cash Collateral Account, when due, the correct amount of any deposit required to
be made into such account, or (vi) shall fail to perform or observe any term,
covenant or agreement contained in Sections 6.02 or 6.08 (other than as set
forth in clauses (ii), (iii), (iv) or (v) of this subsection) and such failure
shall remain unremedied for more than five Business Days; or
(b) The Seller shall fail to make any payment required under
Section 2.04(f) on the Business Day on which the next payment in respect of
Capital is required to be made hereunder; or
(c) Any representation or warranty made or deemed made by the
Seller or the Collection Agent (or any of their respective officers) under or in
connection with this Agreement or any other Transaction Document or any
information or report delivered by the Seller or the Collection Agent pursuant
to this Agreement or any other Transaction Document shall prove to have been
incorrect or untrue in any material respect when made or deemed made or
delivered; provided, however, the making or deemed making of a incorrect or
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untrue representation or warranty with respect to clause (iii)(2) of Section
4.01(b) or Sections 4.01(d), (e), (f), (g), (i), (j), (k) or (m), or clause
(iii)(2) of Section 4.02(b) or Sections 4.02(d), (e) or (f) shall not constitute
an Event of Termination so long as within 10 Business Days after the earliest
date on which the Seller, the Originator or the Collection Agent obtains
knowledge or receives notice that any such representation or warranty is
incorrect or untrue (i) the Agent expressly waives in writing (at its sole and
absolute discretion), the Event of Termination which would otherwise arise
therefrom or (ii) the outstanding Capital hereunder is reduced to $0; or
(d) The Seller or the Originator (i) shall fail to perform or
observe any other term, covenant or agreement contained in this Agreement (other
than as referred to in clauses (ii), (iii) or (iv) of this subsection (d)) on
its part to be performed or observed, (ii) shall fail to make when due any
payment or deposit with respect to Fees or Yield to be made by it under this
Agreement and such failure shall remain unremedied for one Business Day after
notice thereof has been delivered by the Agent, (iii) shall fail to make when
due any payment or deposit with respect to Capital to be made by it under this
Agreement, or (iv) shall fail to perform or observe any term, covenant or
agreement contained in (x) Section 5.01 (b), (e), (g), (h),(k)(vii), (t) or
Section 5.02 and such failure shall remain unremedied for 10 Business Days from
the earliest date that the Seller, the Originator or the Collection Agent
obtains knowledge or receives notice
56
of such failure (provided, that with respect to Section 5.01(g) and (h) no such
--------
grace period shall apply if the aggregate amount of Collections subject to such
failure shall exceed $1,000,000, and provided, further, that with respect to
-------- -------
Section 5.01(t) no such grace period shall apply if the aggregate amount of
Collections subject to such failure shall exceed $10,000,000) or (y) Section
5.01(a), (c), (f), (i), (k)(i), (k)(ii), (k)(iii), (k)(v), (k)(vi), (k)(x),
(k)(xi) and (k)(xiii) and such failure shall remain unremedied for 20 Business
Days from the earliest date that the Seller, the Originator or the Collection
Agent obtains knowledge or receives notice of such failure; or
(e) The Collection Agent or the Originator shall fail to pay
any principal of or premium or interest on any of its Debt which is outstanding
in a principal amount of at least $25,000,000 (such amount to be adjusted to
reflect any change after the date hereof in the amount set forth in the
definition of "Material Indebtedness" in the Credit Facility (which amount is
$20,000,000 as of the date hereof) on a dollar for dollar basis) in the
aggregate when the same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in the agreement
or instrument relating to such Debt; or any other event shall occur or condition
shall exist under any agreement or instrument relating to any such Debt and
shall continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or any
such Debt shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), redeemed, purchased
or defeased, or an offer to repay, redeem, purchase or defease such Debt shall
be required to be made, in each case prior to the stated maturity thereof; or
(f) Any purchase or any reinvestment pursuant to this
Agreement shall for any reason (other than pursuant to the terms hereof) cease
to create, or any Receivable Interest shall for any reason cease to be, a valid
and perfected first priority undivided percentage ownership interest to the
extent of the pertinent Receivable Interest in each applicable Pool Receivable
and the Related Security and Collections with respect thereto; or the security
interest created pursuant to Section 2.11 shall for any reason cease to be a
valid and perfected first priority security interest in the collateral security
referred to in that section; or
(g) The Seller, Collection Agent or the Originator 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 any proceeding shall be instituted by or against
the Seller or the Originator seeking to adjudicate it a 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,
custodian or other similar official for it or for any substantial part of its
property and, in the case of any such proceeding instituted against it (but not
instituted by it), either such proceeding shall remain undismissed or unstayed
for a period of 60 days, or
57
any of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of its
property) shall occur; or the Seller or the Originator shall take any corporate
action to authorize any of the actions set forth above in this subsection (g);
or
(h) As of the last day of any calendar month, (i) the
three-month rolling weighted average Dilution Ratio shall exceed 18%, (ii) the
Default Ratio shall exceed 11%, (iii) the Delinquency Ratio shall exceed 11% or
(iv) the Loss-to-Liquidation Ratio shall exceed 1.0%; provided, however, the
-------- -------
foregoing shall not constitute an Event of Termination so long as within 10
Business Days after the earlier of (A) the date that the Seller Report setting
forth such calculations is required to be delivered by the Collection Agent
pursuant to Section 6.01(g) and (B) the actual date of delivery of such Seller
Report, either (i) the Agent expressly waives in writing, the Event of
Termination which would otherwise arise therefrom or (ii) the outstanding
Capital hereunder is reduced to $0; or
(i) (A) Prior to the occurrence of a Level I Downgrade Event,
the sum of the Receivable Interests shall on any Business Day be greater than
100% and shall remain greater than 100% for a period of five consecutive
Business Days; (B) after the occurrence and during the continuation of a Level I
Downgrade Event (so long as no Level II Downgrade Event shall have occurred),
the Net Receivables Pool Balance is less than the Required Net Receivables Pool
Balance as of the close of business on the last Business Day of any Week and the
Net Receivables Pool Balance shall remain less than the Required Net Receivables
Pool Balance for a period of one Business Day after the delivery of the Weekly
Report for such Week; or (C) after the occurrence and during the continuation of
a Level II Downgrade Event, the Net Receivables Pool Balance is less than the
Required Net Receivables Pool Balance as of the close of business on any
Business Day and the Net Receivables Pool Balance shall remain less than the
Required Net Receivables Pool Balance for a period of one Business Day after the
delivery of the Daily Report for such Business Day;
(j) There shall occur any event which may (in the Agent's
reasonable judgment) materially adversely affect (i) the collectibility of more
than 20% of the Receivables in the Receivables Pool or (ii) the ability of the
Seller or the Collection Agent to collect Receivables which constitute more than
20% of the Receivables which are Pool Receivables or otherwise perform its
obligations under this Agreement; provided, however, the foregoing clause (i)
-------- -------
shall not constitute an Event of Termination so long as within 10 Business Days
thereafter, either (A) the Agent expressly waives in writing, the Event of
Termination which would otherwise arise therefrom or (B) the outstanding Capital
hereunder is reduced to $0; or
(k) An "Event of Termination" or "Facility Termination Date"
shall occur under the Originator Purchase Agreement, or the Originator Purchase
Agreement shall cease to be in full force and effect, or the Seller or
Originator shall state so in writing; or
58
(l) All of the outstanding capital stock of the Seller shall
cease to be owned, directly or indirectly, by the Originator; or
(m) (i) The Consolidated Leverage Ratio shall exceed 3.5:1.00
at any time or (ii) the Consolidated Interest Coverage Ratio for any period of
four consecutive fiscal quarters of the Originator shall be less than 4.00:1.00;
or
(n) a Collection Agent Default shall occur; or
then, and in any such event, any or all of the following actions may be taken by
notice to the Seller: (x) the Investor or the Agent may declare the Facility
Termination Date to have occurred (in which case the Facility Termination Date
shall be deemed to have occurred), (y) the Agent may declare the Commitment
Termination Date to have occurred (in which case the Commitment Termination Date
shall be deemed to have occurred), and (z) without limiting any right under this
Agreement to replace the Collection Agent, the Agent may designate another
Person to succeed the Originator as the Collection Agent so long as a Collection
Agent Default shall have occurred and be continuing; provided, that,
--------
automatically upon the occurrence of any event (without any requirement for the
passage of time or the giving of notice) described in paragraph (g) of this
Section 7.01, the Facility Termination Date and the Commitment Termination Date
shall occur, the Originator (if it is then serving as the Collection Agent)
shall cease to be the Collection Agent, and the Agent or its designee shall
become the Collection Agent. Upon any such declaration or designation or upon
such automatic termination, the Investors, the Banks and the Agent shall have,
in addition to the rights and remedies which they may have under this Agreement,
all other rights and remedies provided after default under the UCC and under
other applicable law, which rights and remedies shall be cumulative.
ARTICLE VIII
THE AGENT
SECTION 8.01. Authorization and Action. Each Investor and each
Bank hereby appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement as are delegated to
the Agent by the terms hereof, together with such powers as are reasonably
incidental thereto.
SECTION 8.02. Agent's Reliance, Etc. Neither the Agent nor any
of its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them as Agent under or in connection with
this Agreement (including, without limitation, the Agent's servicing,
administering or collecting Pool Receivables as Collection Agent), except for
its or their own gross negligence or willful misconduct. Without limiting the
generality of the foregoing, the Agent: (a) may consult with legal counsel
(including counsel for the Seller and
59
the Collection Agent), independent certified public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (b) makes no warranty or representation to any Investor
or Bank (whether written or oral) and shall not be responsible to any Investor
or Bank for any statements, warranties or representations (whether written or
oral) made in or in connection with this Agreement; (c) shall not have any duty
to ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions of this Agreement on the part of the Seller or
the Collection Agent or to inspect the property (including the books and
records) of the Seller or the Collection Agent; (d) shall not be responsible to
any Investor or Bank for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other instrument or
document furnished pursuant hereto; and (e) shall incur no liability under or in
respect of this Agreement by acting upon any notice (including notice by
telephone), consent, certificate or other instrument or writing (which may be by
telecopier or telex) believed by it to be genuine and signed or sent by the
proper party or parties.
SECTION 8.03. CNAI and Affiliates. The obligation of Citibank
to purchase Receivable Interests under this Agreement may be satisfied by CNAI
or any of its Affiliates. With respect to any Receivable Interest or interest
therein owned by it, CNAI shall have the same rights and powers under this
Agreement as any Bank and may exercise the same as though it were not the Agent.
CNAI and any of its Affiliates may generally engage in any kind of business with
the Seller, the Collection Agent or any Obligor, any of their respective
Affiliates and any Person who may do business with or own securities of the
Seller, the Collection Agent or any Obligor or any of their respective
Affiliates, all as if CNAI were not the Agent and without any duty to account
therefor to the Investors or the Banks.
SECTION 8.04. Bank's Purchase Decision. Each Bank acknowledges
that it has, independently and without reliance upon the Agent, any of its
Affiliates or any other Bank and based on such documents and information as it
has deemed appropriate, made its own evaluation and decision to enter into this
Agreement. Each Bank also acknowledges that it will, independently and without
reliance upon the Agent, any of its Affiliates or any other Bank and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own decisions in taking or not taking action under this
Agreement.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. Indemnities by the Seller. Without limiting any
other rights that the Agent, the Investors, the Banks or any of their respective
Affiliates (each, an "Indemnified Party") may have hereunder or under applicable
law, the Seller hereby agrees to indemnify each
60
Indemnified Party from and against any and all claims, losses and liabilities
(including reasonable attorneys' fees) (all of the foregoing being collectively
referred to as "Indemnified Amounts") arising out of or resulting from this
Agreement or the other Transaction Documents or the use of proceeds of purchases
or reinvestments or the ownership of Receivable Interests or in respect of any
Receivable or any Contract, excluding, however, (a) Indemnified Amounts to the
extent found by a court of competent jurisdiction to have resulted from gross
negligence or willful misconduct on the part of such Indemnified Party, (b)
recourse (except as otherwise specifically provided in this Agreement) for
uncollectible Receivables or (c) any income taxes incurred by such Indemnified
Party arising out of or as a result of this Agreement or the ownership of
Receivable Interests or in respect of any Receivable or any Contract. Without
limiting or being limited by the foregoing, the Seller shall pay on demand to
each Indemnified Party any and all amounts necessary to indemnify such
Indemnified Party from and against any and all Indemnified Amounts relating to
or resulting from any of the following:
(i) the characterization in any Seller Report or other
written statement made by or on behalf of the Seller of any
Receivable as an Eligible Receivable or as included in the Net
Receivables Pool Balance which, as of the date of such Seller
Report or other statement, is not an Eligible Receivable or
should not be included in the Net Receivables Pool Balance;
(ii) any representation or warranty or statement made
or deemed made by the Seller (or any of its officers) under or
in connection with this Agreement or any of the other
Transaction Documents which shall have been incorrect in any
material respect when made;
(iii) the failure by the Seller or the Originator to
comply with any applicable law, rule or regulation with
respect to any Pool Receivable or the related Contract; or the
failure of any Pool Receivable or the related Contract to
conform to any such applicable law, rule or regulation;
(iv) the failure to vest in the Investors or the
Banks, as the case may be, (a) a perfected undivided
percentage ownership interest, to the extent of each
Receivable Interest, in the Receivables in, or purporting to
be in, the Receivables Pool and the Related Security and
Collections in respect thereof, or (b) a perfected security
interest as provided in Section 2.11, in each case free and
clear of any Adverse Claim;
(v) 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 Receivables in, or
purporting to be in, the Receivables Pool and the Related
Security and Collections
61
in respect thereof, whether at the time of any purchase or
reinvestment or at any subsequent time;
(vi) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the Obligor to the
payment of any Receivable in, or purporting to be in, the
Receivables Pool (including, without limitation, a defense
based on such Receivable or the related Contract not being a
legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms), or any
other claim resulting from the sale of the merchandise or
services related to such Receivable or the furnishing or
failure to furnish such merchandise or services or relating to
collection activities with respect to such Receivable (if such
collection activities were performed by the Seller or any of
its Affiliates acting as Collection Agent);
(vii) any failure of the Seller to perform its duties
or obligations in accordance with the provisions hereof or to
perform its duties or obligations under the Contracts;
(viii) any products liability or other claim arising
out of or in connection with merchandise, insurance or
services which are the subject of any Contract;
(ix) the commingling of Collections of Pool
Receivables at any time with other funds;
(x) any third party investigation, litigation or
proceeding related to this Agreement or the use of proceeds of
purchases or reinvestments or the ownership of Receivable
Interests or in respect of any Receivable or Related Security
or Contract (excluding any collection costs of the Agent, the
Investors or the Banks arising directly from the financial
inability of an Obligor to pay in respect of any Receivable);
(xi) any failure of the Seller to comply with its
covenants contained in this Agreement or any other Transaction
Document;
(xii) any claim brought by any Person other than an
Indemnified Party arising from any activity by the Seller or
any Affiliate of the Seller in servicing, administering or
collecting any Receivable; or
(xiii) the failure of the Seller or the Originator to
comply with any term or provision of any Contract that
contains a confidentiality provision that purports to restrict
the ability of the Agent, the Investors or the Banks to
exercise their
62
rights under this Agreement, including, without limitation,
their right to review the Contract.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or consent to any departure by the Seller therefrom
shall be effective unless in a writing signed by the Agent, as agent for the
Investors and the Banks (and, in the case of any amendment, also signed by the
Seller), and then such amendment, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; provided,
--------
however, that no amendment, waiver or consent shall, unless in writing and
- -------
signed by the Collection Agent in addition to the Agent, affect the rights or
duties of the Collection Agent under this Agreement. No failure on the part of
the Investors, the Banks or the Agent to exercise, and no delay in exercising,
any right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right.
SECTION 10.02. Notices, Etc. All notices and other
communications hereunder shall, unless otherwise stated herein, be in writing
(which shall include facsimile communication) and faxed or delivered, to each
party hereto, at its address set forth under its name on the signature pages
hereof or at such other address as shall be designated by such party in a
written notice to the other parties hereto. Notices and communications by
facsimile shall be effective when sent (and shall be followed by hard copy sent
by regular mail), and notices and communications sent by other means shall be
effective when received.
SECTION 10.03. Assignability. (a) This Agreement and the
Investors' rights and obligations herein (including ownership of each Receivable
Interest) shall be assignable by the Investors and their successors and assigns
(prior to an Event of Termination or Incipient Event of Termination, with the
prior written consent of the Seller, such consent not to be unreasonably
withheld or delayed; provided that assignments to the Agent or an Affiliate of
--------
the Agent or to a receivables securitization company administered by the Agent
or an Affiliate of the Agent shall not require such consent). Each assignor of a
Receivable Interest or any interest therein shall notify the Agent and the
Seller of any such assignment. Each assignor of a Receivable Interest or any
interest therein may, in connection with the assignment or participation,
disclose to the assignee or participant any information relating to the Seller
or the Originator, including the Receivables, furnished to such assignor by or
on behalf of the Seller or by the Agent; provided that, prior to any such
disclosure, the assignee or participant agrees to preserve the confidentiality
of any confidential information relating to the Seller or the Originator
received by it from any of the foregoing entities.
63
(b) Each Bank may assign to any Eligible Assignee or to any
other Bank all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Bank Commitment and any
Receivable Interests or interests therein owned by it) (prior to an Event of
Termination or Incipient Event of Termination, with the prior written consent of
the Seller, such consent not to be unreasonably withheld or delayed; provided
that assignments to the Agent or an Affiliate of the Agent shall not require
such consent). The parties to each such assignment shall execute and deliver to
the Agent an Assignment and Acceptance. In addition, Citibank or any of its
Affiliates may assign any of its rights (including, without limitation, rights
to payment of Capital and Yield) under this Agreement to any Federal Reserve
Bank without notice to or consent of the Seller or the Agent.
(c) This Agreement and the rights and obligations of the Agent
herein shall be assignable by the Agent and its successors and assigns.
(d) The Seller may not assign its rights or obligations
hereunder or any interest herein without the prior written consent of the Agent.
SECTION 10.04. Costs, Expenses and Taxes. (a) In addition to
the rights of indemnification granted under Section 9.01 hereof, the Seller
agrees to pay on demand all costs and expenses in connection with the
preparation, execution, delivery and administration (including periodic auditing
and the other activities contemplated in Section 5.02) of this Agreement, any
Asset Purchase Agreement and the other documents and agreements to be delivered
hereunder, including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for the Agent, CNAI, CIESCO, Citibank and their respective
Affiliates with respect thereto and with respect to advising the Agent, CNAI,
CIESCO, Citibank and their respective Affiliates as to their rights and remedies
under this Agreement, and all costs and expenses, if any (including reasonable
counsel fees and expenses), of the Agent, CNAI, the Investors, the Banks and
their respective Affiliates, in connection with the enforcement of this
Agreement and the other documents and agreements to be delivered hereunder.
(b) In addition, the Seller shall pay (i) to the extent not
included in the calculation of Yield, any and all commissions of placement
agents and dealers in respect of commercial paper notes issued to fund the
purchase or maintenance of any Receivable Interest, and (ii) any and all costs
and expenses of any issuing and paying agent or other Person responsible for the
administration of CIESCO's commercial paper program in connection with the
preparation, completion, issuance, delivery or payment of commercial paper notes
issued to fund the purchase or maintenance of any Receivable Interest.
(c) The Seller also shall pay on demand all other costs,
expenses and taxes (excluding the cost of auditing CIESCO's books by certified
public accountants, the cost of rating CIESCO's commercial paper by independent
financial rating agencies and income taxes)
64
incurred by CIESCO or any partner of CIESCO ("Other Costs"), including the taxes
(excluding income taxes) resulting from CIESCO's operations, and the reasonable
fees and out-of-pocket expenses of counsel for any partner of CIESCO with
respect to advising as to rights and remedies under this Agreement, the
enforcement of this Agreement or advising as to matters relating to CIESCO's
operations; provided that the Seller and any other Persons who from time to time
--------
sell receivables or interests therein to CIESCO ("Other Sellers") each shall be
liable for such Other Costs ratably in accordance with the usage under their
respective facilities; and provided further that if such Other Costs are
-------- -------
attributable to the Seller and not attributable to any Other Seller, the Seller
shall be solely liable for such Other Costs.
SECTION 10.05. No Proceedings. Each of the Seller, the Agent,
the Collection Agent, each Investor, each Bank, each assignee of a Receivable
Interest or any interest therein and each entity which enters into a commitment
to purchase Receivable Interests or interests therein hereby agrees that it will
not institute against, or join any other Person in instituting against, CIESCO
any proceeding of the type referred to in Section 7.01(g) so long as any
commercial paper or other senior indebtedness issued by CIESCO shall be
outstanding or there shall not have elapsed one year plus one day since the last
day on which any such commercial paper or other senior indebtedness shall have
been outstanding.
SECTION 10.06. Confidentiality. (a) The Seller, the
Originator and the Collection Agent each agrees to maintain the confidentiality
of this Agreement in communications with third parties and otherwise; provided
that this Agreement may be disclosed (i) to third parties to the extent such
disclosure is made pursuant to a written agreement of confidentiality in form
and substance reasonably satisfactory to the Agent, (ii) to the legal counsel
and auditors of the Seller and the Collection Agent if they agree to hold it
confidential and (iii) to the extent required by applicable law or regulation or
by any court, regulatory body or agency having jurisdiction over such party; and
provided, further, that such party shall have no obligation of confidentiality
- -------- -------
in respect of any information which may be generally available to the public or
becomes available to the public through no fault of such party.
(b) Each Investor, each Bank and the Agent agrees to maintain
the confidentiality of all information with respect to the Seller, the
Originator or the Receivables Pool (including the Seller Reports) furnished or
delivered to it pursuant to this Agreement; provided, that such information may
--------
be disclosed (i) to such party's legal counsel and auditors and to such party's
assignees and participants and potential assignees and participants and their
respective counsel if they agree to hold it confidential, (ii) to the rating
agencies and the providers of credit enhancement or liquidity for each Investor,
and (iii) to the extent required by applicable law or regulation or by any
court, regulatory body or agency having jurisdiction over such party; and
provided, further, that such party shall have no obligation of confidentiality
- -------- -------
in respect of any information which may be generally available to the public or
becomes available to the public through no fault of such party.
65
SECTION 10.07. GOVERNING LAW. THIS AGREEMENT SHALL, IN
ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK, BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF NEW YORK WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES THEREOF THAT WOULD
CALL FOR THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION, EXCEPT TO THE
EXTENT THAT, PURSUANT TO THE UCC OF THE STATE OF NEW YORK, THE PERFECTION AND
THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE INTERESTS OF THE INVESTORS AND
THE BANKS IN THE RECEIVABLES AND THE ORIGINATOR PURCHASE AGREEMENT ARE GOVERNED
BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 10.08. Execution in Counterparts. This Agreement may
be executed in any number of counterparts, each of which when so executed shall
be deemed to be an original and all of which when taken together shall
constitute one and the same agreement.
SECTION 10.09. Survival of Termination. The provisions of
Sections 2.08, 2.09, 6.07, 9.01, 10.04, 10.05 and 10.06 shall survive any
termination of this Agreement.
SECTION 10.10. Consent to Jurisdiction. (a) Each party
hereto hereby irrevocably submits to the non-exclusive jurisdiction of any New
York State or Federal court sitting in New York City in any action or proceeding
arising out of or relating to this Agreement, and each party hereto hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such New York State court or, to the extent permitted
by law, in such Federal court. The parties hereto hereby irrevocably waive, to
the fullest extent they may effectively do so, the defense of an inconvenient
forum to the maintenance of such action or proceeding. The parties hereto agree
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.
(b) Each of the Seller, the Collection Agent and the
Originator consents to the service of any and all process in any such action or
proceeding by the mailing of copies of such process to it at its address
specified in Section 10.02. Nothing in this Section 10.10 shall affect the right
of the Investors, any Bank or the Agent to serve legal process in any other
manner permitted by law.
SECTION 10.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, 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
66
CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED OR DELIVERED PURSUANT
HERETO.
[Remainder of this page intentionally left blank.]
67
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
SELLER: LEXMARK RECEIVABLES CORPORATION
By: /s/Kurt Braun
---------------------------------------
Title: Treasurer
639 Isbell Road
Suite 390
Reno, Nevada 89509
Facsimile No. 775-823-3099
Telephone No. 775-823-3080
INVESTOR: CIESCO L.P.
By: Citicorp North America,
Inc., as Attorney-in-Fact
By: /s/Lain Gutierrez
-------------------------------------
Vice President
450 Mamaroneck Avenue
Harrison, N.Y. 10528
Attention: Global Securitization
Facsimile No. 914-899-7890
AGENT: CITICORP NORTH AMERICA, INC.,
as Agent
By: /s/Lain Gutierrez
----------------------------------------
Vice President
450 Mamaroneck Avenue
Harrison, N.Y. 10528
Attention: Global Securitization
Facsimile No. 914-899-7890
BANK: CITIBANK, N.A.
By: /s/Lain Gutierrez
---------------------------------------
Attorney-in-Fact
Percentage Interest: 100%
450 Mamaroneck Avenue
Harrison, N.Y.10528
Facsimile No. 914-899-7890
ORIGINATOR
AND COLLECTION
AGENT: LEXMARK INTERNATIONAL, INC.
By: /s/Kurt Braun
---------------------------------------
Title: Treasurer
740 West New Circle Road
Building 1, Dept. 857
Lexington, Kentucky 40550
Facsimile No. 859-232-5137
Telephone No. 859-232-3645