EXECUTION COPY
---------------------------------------------------------------
PURCHASE AGREEMENT
between
LEXMARK INTERNATIONAL, INC.,
as Originator,
and
LEXMARK RECEIVABLES CORPORATION,
as Buyer,
Dated as of March 31, 1997
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1
Certain Defined Terms.................................................... 1
SECTION 1.2
Interpretation and Construction ......................................... 11
ARTICLE II
SALES AND TRANSFERS; SETTLEMENTS
SECTION 2.1
General Terms........................................................... 12
SECTION 2.2
Purchase and Sale ..................................................... 12
SECTION 2.3
Transfers and Assignments ............................................. 13
SECTION 2.4
Protection of Ownership of the Buyer ................................... 15
SECTION 2.5
Mandatory Repurchase Under Certain Circumstances ....................... 15
SECTION 2.6
Transfers by Buyer ..................................................... 15
SECTION 2.7
Payment Procedures ................................................... 16
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1
General Representations and Warranties of the Originator ............... 16
SECTION 3.2.
Representations and Warranties
of the Originator With Respect
to Each Sale of Receivables ........................................... 20
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.1
Conditions to Closing ................................................ 21
SECTION 4.2
Conditions to Purchases ............................................... 23
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SECTION 4.3
Effect of Payment of Purchase Price ................................... 24
ARTICLE V
COVENANTS
SECTION 5.1
Affirmative Covenants of the Originator ............................... 24
SECTION 5.2
Negative Covenants of the Originator ................................. 29
ARTICLE VI
TERMINATION EVENTS
SECTION 6.1
Term .................................................................. 30
SECTION 6.2
Efect of Termination ................................................. 31
ARTICLE VII
MISCELLANEOUS
SECTION 7.1
Expenses .............................................................. 31
SECTION 7.2
Indemnity for Taxes, Reserves and Expenses ........................... 32
SECTION 7.3
Indemnity ............................................................. 33
SECTION 7.4
Holidays ............................................................. 35
SECTION 7.5
Records .............................................................. 35
SECTION 7.6
Amendments and Waivers ............................................... 35
SECTION 7.7
Term of Agreement .................................................... 35
SECTION 7.8
No Implied Waiver; Cumulative Remedies ................................ 35
SECTION 7.9
No Discharge ......................................................... 36
SECTION 7.10
Notices .............................................................. 36
SECTION 7.11
Severability ......................................................... 36
ii
SECTION 7.12
Governing Law; Submission to Jurisdiction ............................. 36
SECTION 7.13
Prior Understandings ................................................. 37
SECTION 7.14
Survival ............................................................. 37
SECTION 7.15
Counterparts ......................................................... 37
SECTION 7.16
Set-Off .............................................................. 37
SECTION 7.17
Successors and Assigns ............................................... 38
SECTION 7.18
Confidentiality ...................................................... 38
SECTION 7.19
Payments Set Aside ................................................... 38
SECTION 7.20
No Petition .......................................................... 38
SECTION 7.21Third-Party Beneficiary ..................................... 39
Exhibit A [Reserved]
Exhibit B Schedule of Litigation
Exhibit C Schedule of Names and Locations of Offices and Records
Exhibit D Form of Compliance Certificate
Exhibit E [Reserved]
Exhibit F Credit and Collection Policy
Exhibit G Form of Subordinated Note
Exhibit H Material Adverse Changes
Exhibit I Forms of Officers' Certificate
Exhibit J Description of Qualifying Receivables
Exhibit K Officer's Certificate Pursuant to Section 4.1(j)
Schedule 1 Schedule of Receivables
iii
PURCHASE AGREEMENT
This PURCHASE AGREEMENT, dated as of March 31, 1997 (as amended,
supplemented or otherwise modified and in effect from time to time, this
"Agreement"), made by and between Lexmark International, Inc., a Delaware
corporation, as originator (the "Originator") and Lexmark Receivables
Corporation, a Delaware corporation, as buyer (the "Buyer").
R E C I T A L S:
WHEREAS, subject to the terms and conditions of this Agreement, the
Originator desires to sell from time to time to the Buyer, and the Buyer desires
to purchase from time to time from the Originator, all of Originator's trade
and/or retail or consumer receivables resulting from the sale of goods or
services by the Originator to its customers, subject to the terms and conditions
of this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, and for good and sufficient consideration, the parties hereto,
intending to be legally bound, do hereby agree as follows:
ARTICLE I ARTICLE IARTICLE I
DEFINITIONS
SECTION 1.1. Certain Defined Terms1.1. Certain Defined TermsCertain Defined
Terms. As used in this Agreement, the following capitalized terms shall have the
following meanings:
"Administrative Agent"
--------------------- shall mean Morgan Guaranty Trust Company of New
York, a New York banking corporation, and its successors and assigns.
"Affiliate"
--------- shall mean, with respect to a Person, any other Person which
directly or indirectly controls, is controlled by or is under common control
with, such Person. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
1
"Amended and Restated Intercreditor Agreement"
---------------------------------------------- shall mean the Amended and
Restated Consent and Intercreditor Agreement, dated as of December 12, 1996,
among the Seller, the Buyer, Delaware Funding Corporation, a Delaware
corporation, the Administrative Agent, the Credit Providers named therein, the
Credit Provider Agent named therein, and Morgan Guaranty Trust Company of New
York (successor to J.P. Morgan Delaware), as Security Agent for the Credit
Providers, as the same may be amended, supplemented or otherwise modified.
"Business Day"
------------- shall mean any day other than a Saturday, Sunday, public
holiday under the Laws of the State of Delaware or the State of New York or any
other day on which banking institutions are authorized or obligated to close in
the State of Delaware or the State of New York.
"Capitalized Lease"
------------------ of a Person shall mean any lease of property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with GAAP.
"Chief Executive Office"
------------------------ shall mean, with respect to the Originator, the
place where the Originator is located, within the meaning of Section
9-103(3)(d), or any analogous provision, of the UCC, in effect in the
jurisdiction whose Law governs the perfection of the Buyer's ownership interests
in any Receivables.
"Closing Date"
------------ shall mean April 15, 1997.
"Collections"
----------- shall mean, for any Receivable as of any date, (i) the sum of
all amounts, whether in the form of wire transfer, cash, checks, drafts, or
other instruments, received by the Originator or the Servicer in a Permitted
Lockbox or otherwise in payment of, or applied to, any amount owed by an Obligor
on account of such Receivable on or before such date, including, without
limitation, all amounts received on account of such Receivable, and all other
fees and charges, (ii) cash proceeds of Related Security with respect to such
Receivable and (iii) all amounts deemed to have been received by the Originator
or the Servicer as a Collection.
"Consolidated Subsidiaries"
-------------------------- shall mean with respect to any Person, at any
date, any one or more Subsidiaries of such Person the accounts of which would be
consolidated with those of such Person in its consolidated statements if such
statements were prepared as of such date.
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"Contract"
-------- shall mean, with respect to any Receivable, a binding contract
(including a binding invoice) between the Originator and an Obligor which gives
rise to a (i) short-term trade receivable with a maturity of not greater than
one year, (ii) a short-term retail or consumer receivable with a maturity of not
greater than one year, in each case arising from the sale by the Originator of
goods or services in the ordinary course of the Originator's business, or (iii)
a receivable arising in connection with the sale to IBM Credit Corporation or to
another similar institution providing credit to such Obligor (provided such
institution satisfies any of the definitions of Group A Obligor, Group B
Obligor, Group C Obligor or Group D Obligor) of the original indebtedness
incurred by an Obligor to the Originator in connection with such a sale of goods
or the rendering of such services.
"Credit and Collection Policy"
------------------------------- shall mean the Originator's credit,
collection enforcement and other policies and practices relating to Contracts
and Receivables existing on the date hereof and as set forth on Exhibit F
hereto, as the same may be modified from time to time in compliance with Section
5.2(e) hereof.
"Credit Providers"
----------------- shall mean the institutions designated as such on the
signature pages of, and parties to, the Amended and Restated Intercreditor
Agreement.
"Debt"
---- of a Person shall mean such Person's (i) obligations for borrowed
money, (ii) obligations representing the deferred purchase price of property,
(iii) obligations, whether or not assumed, which are secured by liens or payable
out of the proceeds or production from property now or hereafter owned or
acquired by such Person, (iv) obligations which are evidenced by notes,
acceptances or other instruments, (v) Capitalized Lease obligations and (vi)
obligations pursuant to a Guarantee.
"Dilution Factors"
----------------- shall mean credits, cancellations, cash discounts,
warranties, allowances, Disputes, rebates, charge backs, returned or repossessed
goods, and other allowances, adjustments and deductions (including, without
limitation, any special or other discounts or any reconciliations caused by
price protection agreements or otherwise) that are given to an Obligor in
accordance with the Credit and Collection Policy.
"Dispute"
------- shall mean any dispute, deduction, claim, offset, defense,
counterclaim, set-off or obligation of any kind, contingent or otherwise,
relating to a Receivable, including, without limitation, any dispute relating to
goods or services already paid for.
"Dollars"
------- or "$" shall mean the lawful currency of the United States of
America.
3
"ERISA"
----- shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor thereto, and the regulations
promulgated and rulings issued thereunder.
"ERISA Affiliate"
--------------- shall mean any corporation or person which is a member of
any group of organizations (i) described in Section 414(b) or (c) of the
Internal Revenue Code of which the Originator is a member, or (ii) solely for
purposes of potential liability under Section 302(c)(11) of ERISA and Section
412(c)(11) of the Internal Revenue Code and the lien created under Section
302(f) of ERISA and Section 412(n) of the Internal Revenue Code, described in
Section 414(m) or (o) of the Internal Revenue Code of which the Originator is a
member.
"Event of Bankruptcy"
------------------- shall mean, for any Person:
(a) that such Person shall admit in writing its inability to pay its debts
as they become due; or
(b) a proceeding shall have been instituted in a court having jurisdiction
in the premises seeking a decree or order for relief in respect of such Person
in an involuntary case under any applicable bankruptcy, insolvency or other
similar Law now or hereafter in effect, or for the appointment of a receiver,
liquidator, assignee, trustee, custodian, sequestrator, conservator (under the
Bank Conservation Act, as amended from time to time, or otherwise) or other
similar official of such Person or for any substantial part of its property, or
for the winding-up or liquidation of its affairs; or
(c) the commencement by such Person of a voluntary case under any
applicable bankruptcy, insolvency or other similar Law now or hereafter in
effect, or such Person's consent to the entry of an order for relief in an
involuntary case under any such Law, or consent to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator, conservator (under the Bank Conservation Act, as amended from time
to time, or otherwise) or other similar official of such Person or for any
substantial part of its property, or any general assignment for the benefit of
creditors; or
(d) if such Person is a corporation, such Person, or (if such Person is not
an Obligor) any Subsidiary of such Person, shall take any corporate action in
furtherance of any of the actions set forth in the preceding clause (a), (b) or
(c).
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"Event of Termination"
---------------------- shall mean (i) with respect to any Plan, a
reportable event, as defined in Section 4043(b) of ERISA, as to which the PBGC
has not by regulation waived the requirement of Section 4043(a) of ERISA that it
be notified within 30 days of the occurrence of such event, or (ii) the
withdrawal of the Originator or any ERISA Affiliate from a Plan during a plan
year in which it is a substantial employer, as defined in Section 4001(a)(2) of
ERISA, or (iii) the failure by the Originator or any ERISA Affiliate to meet the
minimum funding standard of Section 412 of the Internal Revenue Code or Section
302 of ERISA with respect to any Plan, or (iv) the distribution under Section
4041 of ERISA of a notice of intent to terminate any Plan or any action taken by
the Originator or any ERISA Affiliate to terminate any Plan, or (v) the adoption
of an amendment to any Plan that pursuant to Section 401(a)(29) of the Internal
Revenue Code or Section 307 of ERISA would result in the loss of tax-exempt
status of the trust of which such Plan is a part if the Originator or an ERISA
Affiliate fails to timely provide security to the Plan in accordance with the
provisions of said Sections, or (vi) the institution by the PBGC of proceedings
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or (vii) the receipt by the Originator or any
ERISA Affiliate of a notice from a Multiemployer Plan that action of the type
described in the previous clause (vi) has been taken by the PBGC with respect to
such Multiemployer Plan, or (viii) the complete or partial withdrawal from a
Multiemployer Plan by the Originator or any ERISA Affiliate that results in
liability under Section 4201 or 4204 of ERISA (including the obligation to
satisfy secondary liability as a result of a purchaser default), or (ix) the
receipt by the Originator or any ERISA Affiliate of notice from a Multiemployer
Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245
of ERISA or that it intends to terminate or has terminated under Section 4041A
of ERISA, or (x) any event or circumstance exists which may reasonably be
expected to constitute grounds for the Originator or any ERISA Affiliate to
incur liability under Section 4069 or Section 4212(c) of ERISA or under Sections
412(c)(11) or 412(n) of the Internal Revenue Code with respect to any Plan.
"Expense and Tax-Sharing Agreement"
------------------------------------ shall mean the Administrative and
Office Support Services, and Tax Allocation Agreement dated as of March 31,
1997, between the Originator and the Buyer.
"Expiration Date"
---------------- shall mean the earlier of (i) the date of termination of
the Receivables Purchase Agreement and (ii) the day on which a Termination Event
occurs.
5
"Facility Documents"
-------------------- shall mean collectively, this Agreement, the
Receivables Purchase Agreement, the Expense and Tax-Sharing Agreement, the
Subordinated Note and such other agreements, documents and instruments delivered
by Originator in connection with the transactions contemplated by this Agreement
and pursuant hereto or in connection therewith.
"GAAP"
---- shall mean generally accepted accounting principles in the United
States of America, applied on a consistent basis and applied to both
classification of items and amounts, and shall include, without limitation, the
official interpretations thereof by the Financial Accounting Standards Board,
its predecessors and successors.
"Government Obligor"
------------------ means an Obligor that is the United States of America,
any State thereof, or an agency, department, instrumentality or political
subdivision of the United States of America or of any State thereof.
"Guarantee"
--------- shall mean, as applied to any Debt, (i) a guarantee (other than
by endorsement for collection in the ordinary course of business), direct or
indirect, in any manner, of any part or all of such Debt or (ii) an agreement,
direct or indirect, contingent or otherwise, providing assurance of the payment
or performance (or payment of damages in the event of non-performance) of any
part or all of such Debt, including, without limiting the foregoing, the payment
of amounts drawn down by letters of credit. The amount of any Guarantee shall be
deemed to be the maximum amount of the Debt guaranteed for which the guarantor
could be held liable under such Guarantee.
"IBM Receivable"
--------------- shall mean any Receivable the Obligor of which is IBM
Credit Corporation or any Subsidiary or Affiliate thereof that maintains a
senior unsecured long-term debt rating from S&P and Moody's which is equal to or
higher than such ratings for IBM.
"Indemnified Parties"
-------------------- shall have the meaning ascribed to such term in
Section 7.2 hereof.
"Initial Purchase"
---------------- shall mean the Purchase made on the date hereof pursuant
to Section 2.1 hereof.
"Initial Purchase Date"
----------------------- shall mean the date the Initial Purchase is made
pursuant to Section 2.1 hereof.
"Internal Revenue Code"
----------------------- shall mean the Internal Revenue code of 1986, as
amended from time to time and any successor thereto, and the regulations
promulgated and rulings issued thereunder.
"Law"
--- shall mean any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, order, injunction, writ, decree or award of
any Official Body.
6
"Lien",
---- in respect of the property of any Person, shall mean any ownership
interest of any other Person, any mortgage, deed of trust, hypothecation,
pledge, lien, security interest, grant of a power to confess judgment, filing of
any financing statement, or charge or other encumbrance or security arrangement
of any nature whatsoever, including, without limitation, any conditional sale or
title retention arrangement, and any assignment, deposit arrangement,
consignment or lease intended as, or having the effect of, security; provided,
however, that no offset, counterclaim or other defense to payment of a
Receivable that an Obligor may assert shall be deemed to be a "Lien" on such
Receivable hereunder.
"Lockbox Account"
----------------- shall have the meaning ascribed thereto in the
Receivables Purchase Agreement.
"Lockbox Servicing Instructions"
------------------------------ shall have the meaning ascribed thereto in
the Receivables Purchase Agreement.
"Multiemployer Plan"
------------------- shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current year
or the immediately preceding five years contributed to by the Originator or any
ERISA Affiliate on behalf of its employees and which is covered by Title IV of
ERISA.
"Notice of Termination Event"
----------------------------- shall have the meaning set forth in Section
5.1(a) hereof.
"Obligor"
------- shall mean, for any Receivable, (i) each and every Person who
purchased goods or services on credit under a Contract and who is obligated to
make payments to the Originator pursuant to such Contract and (ii) IBM Credit
Corporation.
"Office"
------ shall mean, when used in connection with the Buyer or the
Originator, their respective offices as set forth on the signature pages hereto,
or at such other office or offices of the Buyer or the Originator or branch,
Subsidiary or Affiliate of either thereof as may be designated in writing from
time to time by the Buyer or the Originator to the Buyer or the Originator, as
appropriate.
"Official Body"
-------------- shall mean any government or political subdivision or any
agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.
"Outstanding Balance"
-------------------- of any Receivable shall mean, at any time, the then
outstanding amount thereof.
"PBGC"
---- means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
7
"Permitted Lien"
--------------- shall mean (i) a Lien imposed by any Official Body for
taxes, assessments or charges not yet due or that are being contested in good
faith and by appropriate proceedings if adequate reserves with respect thereto
are maintained on the books of the Originator in accordance with GAAP, or (ii) a
carriers', warehousemen's, mechanics' or other like Lien arising in the ordinary
course of business for amounts that are not overdue for a period of more than 30
days or that are being contested in good faith and by appropriate proceedings
and for payment of which the Originator has adequately bonded or provided
adequate reserves on its books in accordance with GAAP or (iii) a Lien arising
out of a judgment or award against the Originator with respect to which a stay
of execution has been obtained pending appeal or other proceeding for review and
for the payment of which the Originator has adequately bonded or provided
adequate reserves in accordance with GAAP or (iv) the second priority Lien
granted to Morgan Guaranty Trust Company of New York, as security agent for the
Credit Providers, under the Amended and Restated Intercreditor Agreement.
"Permitted Lockbox"
------------------ shall have the meaning ascribed thereto in the
Receivables Purchase Agreement.
"Permitted Lockbox Bank"
------------------------ shall have the meaning ascribed thereto in the
Receivables Purchase Agreement.
"Person"
------ shall mean an individual, corporation, partnership (general or
limited), trust, business trust, unincorporated association, joint venture,
joint-stock company, Official Body or any other entity of whatever nature.
"Plan"
---- means any employee benefit or other plan which is or was at any time
during the current year or immediately preceding five years established or
maintained by the Originator or any ERISA Affiliate and which is covered by
Title IV of ERISA, other than a Multiemployer Plan.
"Potential Termination Event"
----------------------------- shall mean an event or condition which with
the giving of notice, the passage of time or any combination of the foregoing,
would constitute a Termination Event.
8
"Principal Balance"
------------------ of a Receivable, as of the close of business on the
last day of a calendar month, means the original principal amount owed by the
Obligor and financed by the Originator, minus the sum of (i) that portion of all
amounts paid by or on behalf of the related Obligor allocable to principal, (ii)
any payments made by the Originator and allocable to principal pursuant to a
deemed Collection under Section 2.7, and (iii) any payment of the Repurchase
Amount with respect to the Receivable allocable to principal (but only where the
application of such Repurchase Amount does not result in the full repurchase of
such Receivable by the Originator), in each case, prior to such date.
"Proceeds"
-------- shall mean "proceeds" as defined in Section 9-306(1) of the
Uniform Commercial Code as in effect in the State of New York and the
jurisdiction whose Law governs the perfection of the Buyer's ownership interests
therein.
"Purchase"
-------- means a purchase of Receivables, Related Security with respect
to such Receivables, and rights to Collections with respect thereto by the Buyer
from the Originator pursuant to Sections 2.1 and 2.2 hereof.
"Purchase Date"
-------------- means the Initial Purchase Date and thereafter, each
Business Day.
"Purchase Price"
-------------- shall have the meaning specified in Section 2.2(c).
"Purchased Assets"
---------------- shall mean, at any time, the Buyer's undivided ownership
interest in (i) each and every Receivable purchased hereunder, (ii) all Related
Security with respect to each such Receivable, (iii) all Collections, including
all cash collections and other cash proceeds, with respect thereto, and (iv) all
cash and non-cash Proceeds of the foregoing.
"Receivable"
---------- shall mean, all indebtedness owed to the Originator by any
Obligor, (without giving effect to any purchase hereunder by the Buyer at any
time) under a Contract, whether now existing or hereafter arising and wherever
located, arising in connection with
(a) the sale of goods or the rendering of services
in the ordinary course of business by the Originator
or
(b) The sale to IBM Credit Corporation or to another
similar institution providing credit to such
Obligor (provided such institution satisfies any
of the definitions of Group A Obligor, Group B
Obligor or Group D Obligor) of the original
9
indebtedness incurred by an Obligor to the Originator
in connection with such sale of goods or the
rendering of such services,
and satisfying the description set forth on Exhibit J hereto, and including all
moneys due and to become due under such Contract and other obligations of such
Obligor with respect thereto, but excluding any amount of sales tax, excise tax
or other similar tax or charge incurred in connection with the sale of the goods
or services which gave rise to such indebtedness. Notwithstanding the foregoing,
once a Receivable has been deemed collected pursuant to Section 2.7(b) hereof
and the Originator has complied with its obligations in respect of such deemed
Collection set forth in Section 2.7(c) hereof, it shall no longer constitute a
Receivable hereunder. Any such indebtedness originally incurred by an Obligor to
the Originator that the Originator assigns or sells to IBM Credit Corporation or
another similar institution providing credit to such Obligor simultaneously with
such incurrence shall not be a "Receivable" hereunder and shall not be purchased
by Buyer pursuant to this Agreement; provided, however, in each such case, such
assignment or sale to IBM Credit Corporation or to another similar institution
providing credit to such Obligor (provided such institution satisfies any of the
definitions of Group A Obligor, Group B Obligor, Group C Obligor or Group D
Obligor) of such indebtedness shall give rise to a Receivable hereunder the
Obligor of which is IBM Credit Corporation. Nothing in this Agreement shall be
deemed to prohibit any such simultaneous assignment or sale to IBM Credit
Corporation or another similar institution provided that such assignment or sale
gives rise to a Receivable hereunder the Obligor of which is IBM Credit
Corporation or to such other similar institution.
"Receivables Purchase Agreement"
-------------------------------- shall mean that certain Receivables
Purchase Agreement, dated as of the date hereof, by and among Lexmark
Receivables Corporation, as Seller, Lexmark International, Inc., in its
individual capacity and as Servicer, Delaware Funding Corporation, a Delaware
Corporation, as Buyer, and Morgan Guaranty Trust Company of New York, a trust
company organized under the laws of the State of New York, as Administrative
Agent, as the same may be amended, modified or supplemented and as in effect
from time to time.
"Records"
------- shall mean correspondence, memoranda, computer programs, tapes,
discs, papers, books or other documents or transcribed information of any type
whether expressed in ordinary or machine-readable language.
"Related Security"
---------------- shall mean with respect to any Receivable:
10
(a) all of the Originator's interest, if any, in the goods, merchandise
(including returned merchandise) or equipment, if any, the sale of which by
Originator gave rise to such Receivable;
(b) all other security interests or liens and property subject thereto from
time to time, if any, purporting to secure payment of such Receivable, whether
pursuant to the Contract related to such Receivable or otherwise, together with
all financing statements signed by an Obligor describing any collateral securing
such Receivable;
(c) all guarantees, insurance or other agreements or arrangements of any
kind from time to time supporting or securing payment of such Receivable whether
pursuant to the Contract related to such Receivable or otherwise;
(d) all Records relating to, and all service contracts and any other
contracts associated with, such Receivable or the Contracts or the Obligors
relating thereto;
(e) all proceeds of the foregoing.
"Relevant UCC"
------------- shall mean the Uniform Commercial Code as in effect from
time to time in Kentucky or any other applicable jurisdictions.
"Repurchase Amount"
------------------ shall mean an amount equal to the aggregate Principal
Balance of the Receivables to be repurchased on the repurchase date.
"Responsible Officer"
-------------------- shall mean, with respect to any Person, the chief
executive officer, chief financial officer, the treasurer, the Treasury
Financial Analyst, the Cash Manager, any vice president or any assistant
treasurer of such Person or controller of such Person.
"Servicer"
-------- shall mean, initially, the Originator, and, upon execution
thereof, the Servicer designated pursuant to the Receivables Purchase Agreement
or any successor Servicer designated pursuant to a Servicing Agreement.
"Servicing Agreement"
-------------------- shall mean any agreement between the Buyer and any
Person which contains provisions concerning the servicing of the Receivables
substantially similar to the servicing provisions contained in the Receivables
Purchase Agreement, pursuant to which such Person performs servicing functions
for the Receivables that constitute Purchased Assets, and all agreements,
instruments and documents attached thereto or delivered in connection therewith,
as any of the same may from time to time be amended, supplemented or otherwise
modified.
"Subordinated Loan"
------------------ shall have the meaning specified in Section 2.2(d)
hereof.
11
"Subordinated Note"
------------------ shall have the meaning specified in Section 2.2(d)
hereof.
"Subsidiary"
---------- shall mean any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by the Originator.
"Termination Date"
---------------- shall have the meaning set forth in Section 6.1 hereof.
"UCC"
--- shall mean, with respect to any jurisdiction, the Uniform Commercial
Code, or any successor statute, or any comparable law, as the same may from time
to time be amended, supplemented or otherwise modified and in effect in such
jurisdiction.
SECTION 1.2. Interpretation and Construction.
------------------------------- Unless the context of this
Agreement otherwise clearly requires, references to the plural include the
singular, the singular the plural and the part the whole. References in this
Agreement to "determination", "determine" and "determined" by the Buyer shall be
conclusive absent manifest error and include good faith estimates by the Buyer
(in the case of quantitative determinations), and the good faith belief of the
Buyer (in the case of qualitative determinations). The words "hereof", "herein",
"hereunder" and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. Unless otherwise
stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding." The
section and other headings contained in this Agreement are for reference
purposes only and shall not control or affect the construction of this Agreement
or the interpretation hereof in any respect. Section, subsection and exhibit
references are to this Agreement unless otherwise specified. As used in this
Agreement, the masculine, feminine or neuter gender shall each be deemed to
include the others whenever the context so indicates. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP. Terms
not otherwise defined herein which are defined in the UCC as in effect in the
State of New York on the date hereof shall have the respective meanings ascribed
to such terms therein unless the context otherwise clearly requires.
ARTICLE II
SALES AND TRANSFERS; SETTLEMENTS
12
SECTION 2.1. General Terms.
-------------- On the terms and conditions hereinafter set
forth, on each Purchase Date from the date the conditions precedent to the
Initial Purchase in Section 4.1 are satisfied to the Expiration Date under the
Receivables Purchase Agreement, the Originator shall sell to the Buyer,
without recourse, except as specifically set forth herein, and the Buyer shall
purchase, all right, title and interest of the Originator in, to and under all
of the Receivables owned by the Originator on such date, along with Related
Security with respect to such Receivables and Collections with respect
thereto.
SECTION 2.2 Purchase and Sale.
----------------- (a) The Originator hereby irrevocably sells,
sets over, assigns, transfers and conveys to the Buyer and its successors and
assigns, and the Buyer hereby accepts, purchases and receives, all of the
Originator's right, title, and interest in and to the Purchased Assets,
whether such Purchased Assets are now owned or hereafter created or acquired
by the Originator, along with all monies, instruments, securities, documents
and other property from time to time on deposit in or credited to the
Lockbox Accounts relating to the Purchased Assets.
(b) The consideration to the Originator for the Initial Purchase shall be
the execution and delivery by the Buyer of the Receivables Purchase Agreement on
the date hereof and the making by the Buyer thereunder of the "Initial Purchase"
(as defined thereunder). The Initial Purchase hereunder shall be made subject to
the satisfaction of the conditions to purchase specified in Section 4.2.
(c) The "Purchase Price" for the Purchased Assets which came into existence
on or prior to the Closing Date and which are conveyed to the Buyer under this
Agreement shall be payable on the Closing Date and shall be an amount equal to
100% of the aggregate Outstanding Balance of the Receivables so conveyed,
adjusted to reflect such factors as the Originator and the Buyer mutually agree
will result in a Purchase Price determined to approximate the fair market value
of such Purchased Assets. Such computation of the initial Purchase Price shall
assume no reinvestment in new Purchased Assets. The "Purchase Price" for the
Purchased Assets to be conveyed to the Buyer under this Agreement that come into
existence after the Closing Date shall be payable on the Purchase Date in an
amount equal to 100% of the aggregate Outstanding Balance of the Receivables so
conveyed (the "New Purchased Assets"), adjusted to reflect such factors as the
Originator and the Buyer mutually agree will result in a Purchase Price
determined to approximate the fair market value of such New Purchased Assets.
13
(d) The Purchase Price to be paid by the Buyer on the Closing Date and on
each subsequent Purchase Date shall be paid (i) in cash, (ii) with the consent
of the Originator, by means of capital contributed by the Originator to the
Buyer in the form of a contribution of the Purchased Assets, and/or (iii) if
consented to by the Originator, in its sole discretion, by means of a loan by
the Originator to the Buyer (each a "Subordinated Loan" and collectively, the
"Subordinated Loans") evidenced by the subordinated note (the "Subordinated
Note") in substantially the form attached hereto as Exhibit G. The Subordinated
Loans shall be made on a revolving basis from time to time during the term of
this Agreement as the Buyer may from time to time request and the Originator
shall agree for the sole purpose of purchasing Receivables from the Originator.
Interest on and principal of the Subordinated Note shall be payable in the
amounts and at the times specified in the Subordinated Note. The Originator
shall maintain records of the date and amounts of each Subordinated Loan and
payments thereon on the payment grid attached to the Subordinated Note.
(e) The sale of the Purchased Assets by the Originator hereunder shall be
made without recourse except as specifically provided herein.
14
SECTION 2.3. Transfers and Assignments.
------------------------- (a) It is the intention of the
parties hereto that each Purchase made hereunder shall constitute a sale and
assignment, which sales and assignments are absolute, irrevocable and
without recourse except as specifically provided herein and shall provide
the Buyer with the full benefits of ownership of the Receivables and the other
related Purchased Assets. In the event that a Purchase is deemed to constitute
a pledge rather than a sale and assignment of the aforementioned property,
then (i) this Agreement also shall be deemed to be and hereby is a security
agreement within the meaning of the UCC and (ii) the Originator does
hereby grant to the Buyer a first priority perfected security interest in
and to and lien on all of the Originator's right, title and interest in, to and
under the Purchased Assets. The Originator and the Buyer shall, to the extent
consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest
in the Receivables, such security interest would be deemed to be a perfected
security interest of first priority under applicable law and will be maintained
as such throughout the term of this Agreement. The possession by the Buyer or
its transferee or agent of notes and such other goods, letters of credit,
advices of credit, money, documents, instruments, chattel paper or
certificated securities related thereto shall be deemed to be "possession by the
secured party" for purposes of perfecting such security interest pursuant to the
Relevant UCC (including, without limitation, Section 9-305 thereof).
Notifications to persons holding such property, and acknowledgments, receipts or
confirmations from persons holding such property, shall be deemed to be
notifications to, or acknowledgments, receipts or confirmations from, bailees or
agents (as applicable) of, the Buyer or its transferee for the purpose of
perfecting such security interest under the Relevant UCC and other applicable
laws. The sale and conveyance hereunder of the Purchased Assets does not
constitute an assumption by the Buyer or its successors and assigns of any
obligations of the Originator to Obligors or to any other Person in connection
with Receivables or under any agreement or instrument relating to the
Receivables.
15
(b) In connection with the sale and transfer under Section 2.2(a), the
Originator agrees to record and file, at its own expense, financing statements,
with respect to the Purchased Assets now existing and hereafter created or
acquired, suitable to reflect the transfer of chattel paper and general
intangibles (each as defined in Article 9 of the Relevant UCC) and meeting the
requirements of applicable state law in such manner and in such jurisdictions as
are necessary to perfect the sale, transfer and assignment of the Purchased
Assets to the Buyer, and to deliver a file-stamped copy of such financing
statements or other evidence of such filing satisfactory to the Buyer on or
prior to the applicable Purchase Date. In addition to, and without limiting the
foregoing, the Originator shall, upon the request of the Buyer, in order to
accurately reflect this transaction, execute and file such financing or
continuation statements or amendments thereto or assignments thereof (as
permitted pursuant to Section 7.6 hereof) as may be reasonably requested by the
Buyer.
(c) The Originator shall maintain its books and records so that such
records that refer to a Receivable shall indicate clearly that the Originator's
right, title and interest in such Receivable has been sold to the Buyer and mark
its master data processing records with a notation describing the acquisition
(or assignment) by, the Buyer of the Purchased Assets, as the Buyer may
reasonably request. Indication of the Buyer's interest in a Receivable shall be
deleted from or modified on the Originator's records when, and only when, the
Receivable shall have been paid in full or the Buyer's interest in such
Receivable shall have been repurchased or repaid by the Originator hereunder. In
addition, the Originator shall maintain its computer systems so that the
Originator's master computer records (including any back-up archives) that refer
to a Receivable shall indicate clearly that such Receivable has been sold to the
Buyer pursuant to this Agreement and that an interest in such Receivable has
been transferred and assigned by the Buyer to the Administrative Agent. The
Originator agrees to deliver to the Buyer upon request with respect to each
Purchase Date an updated list, which may be a computer file or microfiche list,
containing a true and complete schedule of all Receivables constituting
Purchased Assets, identified by account number and by Principal Balance as of
the origination date of each such Receivable. When and if delivered, such file
or list shall be marked as the "Receivables Schedule" and as Schedule 1 to this
Agreement, shall be delivered to the Buyer as confidential and proprietary, and
is hereby incorporated into and made a part of this Agreement.
16
SECTION 2.4. Protection of Ownership of the Buyer
------------------------------------ The Originator agrees
that from time to time, at its expense, it shall promptly execute and
deliver all additional instruments and documents and take all additional action
that the Buyer may reasonably request in order to perfect the interests of the
Buyer in and to, or to protect, the Purchased Assets or to enable the Buyer to
exercise or enforce any of its rights hereunder. To the fullest extent permitted
by applicable Law, the Buyer shall be permitted to sign and file continuation
statements and amendments thereto and assignments thereof without the
Originator's signature in such cases where the Originator is obligated hereunder
or under the Relevant UCC to sign such statements, amendments or assignments if,
after written notice to the Originator, the Originator shall have failed to sign
such continuation statements, amendments or assignments within ten (10) Business
Days after receipt of such notice from the Buyer. Carbon, photographic or other
reproduction of this Agreement or any financing statement shall be sufficient as
a financing statement.
SECTION 2.5. Mandatory Repurchase Under Certain Circumstances
------------------------------------------------ The
Originator agrees to repurchase from the Buyer or its assignee each
Purchased Asset if at any time the Buyer shall cease to have a perfected
ownership interest, or a first priority perfected security interest, in the
Receivables, free and clear of any Lien (except for (x) any adverse claim
with respect to a Receivable the Obligor of which is a Governmental Obligor, (y)
the Lien arising in connection with this Agreement, and (z) any Permitted Liens
which are in an aggregate dollar amount that is determined by the Administrative
Agent, in its sole discretion, to be de minimis), within five days of notice
thereof by the Buyer. The repurchase price shall be paid by the Originator to
the Buyer on such fifth day in an amount equal to the Repurchase Amount.
SECTION 2.6. Transfers by Buyer.
------------------ The Originator acknowledges and agrees
that (a) the Buyer will, pursuant to the Receivables Purchase Agreement, sell
such of the Purchased Assets as constitute "Receivables" within the meaning
set forth in the Receivables Purchase Agreement and assign its rights under
this Agreement to the Administrative Agent (for the ratable benefit of the
Owners under the Receivables Purchase Agreement), (b) the representations and
warranties contained in this Agreement and the rights of the Buyer under this
Agreement are intended to benefit the "Buyer" and "Owners" under the
Receivables Purchase Agreement and (c) the Buyer shall have the right to
appoint a servicer of the Receivables purchased hereunder, and shall appoint
a Servicer under the Receivables Purchase Agreement. The Originator hereby
consents to all such sales and assignments and to the appointment of a Servicer
under the Receivables Purchase Agreement.
17
SECTION 2.7. Payment Procedures.
------------------
(a) If on any day the Outstanding Balance of a Receivable is (w) reduced or
canceled as a result of any defective or rejected goods or services, any cash
discount or any adjustment by the Originator, or (x) reduced or canceled as a
result of a set-off in respect of any claim by any Person (whether such claim
arises out of the same or a related transaction or an unrelated transaction),
including without limitation any set-off against IBM Receivables arising under
the Master Set-Off and Guarantee Agreement dated as of March 27, 1991, among
IBM, Lexington Holding Corporation, the Originator and Lexmark Europe
Corporation, Inc., or (y) reduced or canceled as a result of any forgiveness of
the obligation or of any adjustment by the Originator, or (z) otherwise reduced
or canceled as a result of any Dilution Factor with respect to such Receivable,
the Originator shall be deemed to have received on such day a Collection of such
Receivable in the amount of such reduction or cancellation. If on any day any of
the representations or warranties in Section 3.2 hereof is no longer true or was
not true when made with respect to a Receivable, the Originator shall be deemed
to have received on such day a Collection of such Receivable in full.
(b) Any Collections deemed to be received by the Originator pursuant to
Section 2.7(a) hereof shall be paid by the Originator to the Buyer on the next
Business Day or on such other day as specified by the Buyer and the Servicer
shall hold or distribute all Collections deemed received pursuant to Section
2.7(a) hereof to the same extent as if such Collections had actually been
received. So long as the Originator shall hold any Collections or deemed
Collections required to be paid to the Buyer, it shall hold such Collections in
trust for the Buyer.
(c) Following the date on which the Buyer shall be deemed to have
reconveyed to the Seller any interest it may have in the Receivables (including
the Purchased Assets), together with the Related Security and Collections with
respect thereto, the Originator shall pay to the Buyer any remaining Collections
set aside and held by the Originator pursuant to the first sentence of this
Section 2.7, and the Buyer shall execute and deliver to the Originator, at
Originator's expense, such documents or instruments as are reasonably necessary
to terminate the Buyer's interest in the Receivables, together with the Related
Security and Collections with respect thereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. General Representations and Warranties of the Originator.
----------------------------------------------------------
The Originator, in addition to its other representations and warranties
contained herein or made pursuant hereto, hereby represents and warrants to
the Buyer on and as of the Closing Date and on and as of the date of each
Purchase that:
18
(a) Organization and Qualification.
------------------------------- The Originator is a corporation duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of incorporation. The Originator is duly qualified to do business
as a foreign corporation in good standing in each jurisdiction in which the
ownership of its properties or the nature of its activities (including
transactions giving rise to Receivables), or both, requires it to be so
qualified or, if not so qualified, the failure to so qualify would not have a
material adverse effect on its financial condition or results of operations.
(b) Authorization.
------------- The Originator has the corporate power and authority to
execute and deliver the Facility Documents, to make the sales provided for
herein and to perform its obligations hereunder and thereunder.
(c) Execution and Binding Effect.
------------------------------ Each of this Agreement and the other
Facility Documents has been duly and validly executed and delivered by the
Originator and (assuming the due and valid execution and delivery thereof by the
other party thereto), constitutes a legal, valid and binding obligation of the
Originator enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization
or other similar Laws of general application relating to or affecting the
enforcement of creditors' rights or by general principles of equity, and will
vest absolutely and unconditionally in the Buyer a valid undivided ownership
interest in the Receivables purported to be assigned hereby or thereby, subject
to no Liens whatsoever (other than (x) the Lien arising in connection with this
Agreement and (y) any Permitted Liens). Upon the filing of the necessary
financing statements under the UCC as in effect in the jurisdiction whose Law
governs the perfection of the Buyer's ownership interests in the Receivables,
the Buyer's ownership interests in the Receivables will be perfected under
Article Nine of such UCC, prior to and enforceable against all creditors of and
purchasers from the Originator and all other Persons whatsoever (other than the
Buyer and its successors and assigns and Government Obligors).
19
(d) Authorizations and Filings.
---------------------------- No authorization, consent, approval,
license, exemption or other action by, and no registration, qualification,
designation, declaration or filing with, any Official Body is or will be
necessary or, in the opinion of the Originator, advisable in connection with the
execution and delivery by the Originator of the Facility Documents, the
consummation by the Originator of the transactions herein or therein
contemplated or the performance by the Originator of or the compliance by the
Originator with the terms and conditions hereof or thereof, to ensure the
legality, validity or enforceability hereof or thereof, or to ensure that the
Buyer will have an undivided ownership interest in and to the Receivables which
is perfected and prior to all other Liens (including competing ownership
interests but excluding any Permitted Liens), other than the filing of financing
statements under the UCC in the jurisdiction of the Originator's Chief Executive
Office in the Commonwealth of Kentucky and any filing that may be required under
the Receivables Purchase Agreement to implement any transfer to a Buyer, the
Administrative Agent or any Owner thereunder.
(e) Absence of Conflicts.
--------------------- Neither the execution and delivery by the
Originator of the Facility Documents, nor the consummation by the Originator of
the transactions herein or therein contemplated, nor the performance by the
Originator of or the compliance by the Originator with the terms and conditions
hereof or thereof, will (i) violate any Law or (ii) conflict with or result in a
breach of or a default under (A) the Articles of Incorporation or By-laws of the
Originator or (B) any agreement or instrument, including, without limitation,
any and all indentures, debentures, loans or other agreements to which the
Originator is a party or by which it or any of its properties (now owned or
hereafter acquired) may be subject or bound, which would have a material adverse
effect on the financial position or results of operations of the Originator or
result in rendering any Debt evidenced thereby due and payable prior to its
maturity or result in the creation or imposition of any Lien pursuant to the
terms of any such instrument or agreement upon any property (now owned or
hereafter acquired) of the Originator.
(f) Location of Chief Executive Office, etc.
----------------------------------------- As of the Closing Date: (i)
the Originator's Chief Executive Office is located at the address set forth on
Exhibit E hereto; (ii) each domestic Subsidiary of the Originator is listed on
Exhibit C hereto; (iii) the offices where the Originator keeps all of its
Records are listed on Exhibit C hereto; and (iv) the Originator has since the
date of its incorporation, operated only under the trade names identified in
Exhibit C hereto, and, since the date of its incorporation, has not changed its
name, merged or consolidated with any other corporation or been the subject of
any proceeding under Title 11, United States Code (Bankruptcy), except as
disclosed in Exhibit C hereto.
20
(g) No Termination Event.
--------------------- No event has occurred and is continuing and no
condition exists which constitutes a Termination Event or a Potential
Termination Event.
(h) Accurate and Complete Disclosure.
-------------------------------- No information referred to in any of
the Exhibits and furnished in writing in final form on or prior to the date
hereof by the Originator, nor any information furnished in writing after the
date hereof by the Originator, in each such case to the Buyer or any purchaser
of Receivables from the Buyer, pursuant to or in connection with this Agreement
or any transaction contemplated hereby is false or misleading in any material
respect as of the date as of which such information was furnished (including by
omission of material information necessary to make such information not
misleading).
(i) No Proceedings.
-------------- There are no proceedings or investigations pending, or
to the knowledge of the Originator, threatened, before any Official Body (A)
asserting the invalidity of the Facility Documents, (B) seeking to prevent the
consummation of any of the transactions contemplated by the Facility Documents,
or (C) seeking any determination or ruling that might materially and adversely
affect (i) the performance by the Originator of its obligations under the
Facility Documents or (ii) the validity or enforceability of the Facility
Documents, all of the Contracts taken as a whole or any material amount of the
Receivables.
(j) Bulk Sales Act.
-------------- No transaction contemplated hereby requires compliance
with any bulk sales act or similar law.
(k) Financial Condition.
-------------------- (x) The consolidated balance sheet of the
Originator and its Consolidated Subsidiaries as at December 31, 1996 and the
related statements of income and cash flows of the Originator and its
Consolidated Subsidiaries for the fiscal year then ended, certified by Coopers &
Lybrand, independent accountants, copies of which have been furnished to the
Buyer and to the "Buyer" (as defined in the Receivables Purchase Agreement) and
the Administrative Agent, fairly present the consolidated financial position of
the Originator and its Consolidated Subsidiaries as at such date and the
consolidated results of the operations of and changes in consolidated cash flows
of the Originator and its Consolidated Subsidiaries for the period ended on such
date, all in accordance with GAAP, and (y) since December 31, 1996, there has
been no material adverse change in any such financial condition or results of
operations or in the Originator's ability to perform its obligations under the
Facility Documents, except as set forth on Exhibit H.
21
(l) Litigation.
---------- No injunction, decree or other decision has been issued or
made by any Official Body that prevents, and to the knowledge of the Originator,
no threat by any Person has been made to attempt to obtain any such decision
that would have a material adverse impact on, the conduct by the Originator of a
significant portion of the Originator's business operations or any portion of
its business operations affecting the Receivables, and no litigation,
investigation or proceeding of the type referred to in Section 5.1(j) hereof
exists except as set forth on Exhibit B.
(m) Margin Regulations.
------------------- The use of all funds acquired by the Originator
under this Agreement will not conflict with or contravene any of Regulations G,
T, U and X of the Board of Governors of the Federal Reserve System, as the same
may from time to time be amended, supplemented or otherwise modified.
(n) ERISA.
----- No event or condition is occurring or exists with respect to
any Plan or Multiemployer Plan concerning which the Originator would be under an
obligation to furnish a report to the Buyer in accordance with Section 5.1(p)
hereof.
(o) Taxes.
----- The Originator and its Consolidated Subsidiaries have filed all
United States Federal income tax returns and all other material tax returns
which are required to be filed by them and have paid all taxes due pursuant to
such returns or pursuant to any assessment received by the Originator or any of
its Consolidated Subsidiaries for taxable periods ending after March 27, 1996
except for (i) taxes or assessments that are not yet delinquent and (ii) taxes
that are being contested by appropriate proceedings conducted in good faith and
with due diligence. The charges, accruals and reserves on the books of the
Originator and its Consolidated Subsidiaries in respect of taxes and other
governmental charges are, in the opinion of the Originator, adequate.
(p) Books and Records.
------------------ The Originator has indicated on its books and
records (including any computer files) that the Purchased Assets are the
property of the Buyer.
(q) Investment Company.
------------------ The Originator is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
22
(r) Separate Corporate Existence.
------------------------------- Notwithstanding that Buyer is a
Subsidiary of Originator, the Originator is entering into the transactions
contemplated by this Agreement in reliance on the Buyer's identity as a separate
legal entity from the Originator and each of its Affiliates, and acknowledges
that the Buyer and the other parties to the Facility Documents are similarly
entering into the transactions contemplated by the other Facility Documents in
reliance on the Buyer's identity as a separate legal entity from the Originator
and each such other Affiliate.
SECTION 3.2. Representations and Warranties of the Originator With Respect
-------------------------------------------------------------
to Each Sale of Receivables.
- --------------------------- By selling the Receivables to the Buyer either by
Initial Purchase or subsequent Purchase, the Originator represents and
warrants to the Buyer as of the Closing Date and of the date of each such
subsequent Purchase (in addition to its other representations and warranties
contained herein or made pursuant hereto) that:
(a) Assignment.
---------- This Agreement vests in the Buyer all the right, title and
interest of the Originator in and to the Purchased Assets, and constitutes a
valid sale of the Purchased Assets, enforceable against all creditors of and
purchasers from the Originator.
(b) No Liens.
-------- Each Receivable, together with the related Contract and all
purchase orders and other agreements related to such Receivable, is owned by the
Originator free and clear of any Lien (other than any Permitted Liens), and when
the Buyer makes a purchase of a Purchased Asset it shall have acquired and shall
continue to have maintained an undivided percentage ownership interest in such
Receivable and in the Related Security and the Collections with respect thereto
free and clear of any Lien (other than (x) the Lien arising in connection with
this Agreement and (y) any Permitted Liens). The Originator has not and will not
have sold, pledged, assigned, transferred or subjected to a Lien any of the
Receivables, other than the assignment of the Purchased Assets to the Buyer in
accordance with the terms of this Agreement except for (x) the Lien arising in
connection with this Agreement, and (y) any Permitted Lien.
(c) Filings.
------- On or prior to the date hereof and each Purchase Date, all
financing statements and other documents required to be recorded or filed in
order to perfect and protect the Purchased Assets against all creditors of and
purchasers from the Originator and all other Persons whatsoever other than
Government Obligors will have been duly filed in each filing office necessary
for such purpose and all filing fees and taxes, if any, payable in connection
with such filings will have been paid in full.
23
(d) Credit and Collection Policy.
------------------------------ The Originator has complied in all
material respects with the Credit and Collection Policy in regard to each
Receivable and related Contract.
(e) Nature of Receivables.
---------------------- Each Receivable is, or will be, an eligible
asset within the meaning of Rule 3a-7 promulgated under the Investment Company
Act of 1940, as amended from time to time, and, assuming that the Buyer has no
business with the Originator other than the purchase of Receivables from the
Originator from time to time as contemplated by this Agreement, a purchase by
the Buyer of each Receivable with the proceeds of commercial paper issued by the
"Buyer" (as defined in the Receivables Purchase Agreement) would constitute a
"current transaction" of the Buyer within the meaning of Section 3(a)(3) of the
Securities Act of 1933, as amended from time to time.
(f) No Fraudulent Conveyance.
-------------------------- The transactions contemplated by this
Agreement and by each of the Facility Documents are being consummated by the
Originator in furtherance of the Originator's ordinary business, with no
contemplation of insolvency and with no intent to hinder, delay or defraud any
of its present or future creditors. By its receipt of the Purchase Price
hereunder and its ownership of the capital stock of the Buyer, the Originator
shall have received reasonably equivalent value for the Purchased Assets sold or
otherwise conveyed to the Buyer under this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.1. Conditions to Closing.
--------------------- On or prior to the Initial Purchase
Date, the Originator shall deliver to the Buyer the following documents and
instruments, all of which shall be in form and substance acceptable to the
Buyer:
(a) A copy of the resolutions of the Board of Directors of the Originator
certified as of the Closing Date by its secretary authorizing the execution,
delivery and performance of this Agreement and the other documents to be
delivered by the Originator hereunder and approving the transactions
contemplated hereby and thereby;
(b) The Articles of Incorporation of the Originator certified as of a date
reasonably near the Closing Date by the Secretary of State or other similar
official of the Originator's jurisdiction or incorporation;
24
(c) A good standing certificate for the Originator issued by the Secretary
of State or other similar official of the Originator's jurisdiction of
incorporation, certificates of qualification as a foreign corporation issued by
the Secretaries of State or other similar officials of each jurisdiction where
such qualification is material to the transactions contemplated by this
Agreement and certificates of the appropriate state official in each
jurisdiction specified by the Buyer as to the absence of any tax Liens against
the Originator under the Laws of such jurisdiction, each such certificate to be
dated a date reasonably near the Closing Date;
(d) A certificate of the secretary of the Originator dated the Closing
Date and certifying (i) the names and signatures of the officers authorized on
its behalf to execute, and the officers and other employees authorized to
perform, this Agreement and any other documents to be delivered by the
Originator hereunder (on which certificate the Buyer may conclusively rely until
such time as the Buyer shall receive from the Originator a revised certificate
meeting the requirements of this clause (d)(i)) and (ii) a copy of the
Originator's By-laws;
(e) (i) Acknowledgment copies of proper financing statements (Form UCC-l)
dated a date reasonably near the Closing Date naming the Originator as the
debtor of Receivables and Buyer, as the secured party or other similar
instruments or documents as may be necessary or, in the opinion of the Buyer,
desirable under the UCC of all appropriate jurisdictions to evidence or perfect
the Buyer's ownership interests in all Receivables and (ii) acknowledgment
copies of proper financing statements (Form UCC-l) dated a date reasonably near
the Closing Date naming the Originator as the debtor of Receivables and Buyer,
as the secured party or other similar instruments or documents as may be
necessary or, in the opinion of the Buyer, desirable under the UCC of all
appropriate jurisdictions to evidence or perfect the Buyer's security interest
in the Receivables;
(f) Acknowledgment copies of proper financing statements (Form UCC-3), if
any, necessary under the laws of all appropriate jurisdictions to release all
security interests and other rights of any Person in Receivables previously
granted by the Originator;
(g) Certified copies of requests for information or copies (Form UCC-11)
(or a similar search report certified by parties acceptable to the Buyer) dated
a date reasonably near the Closing Date listing all effective financing
statements which name the Originator (under its present name and any previous
name) as debtor and which are filed in jurisdictions in which the filings were
made pursuant to item (f) above, together with copies of such financing
statements;
(h) An officer's certificate dated the Closing Date in the form of
Exhibit I hereto executed by a Responsible Officer;
25
(i) A form of Contract or Contracts;
(j) Executed copies of the Subordinated Note and if requested by the
Administrative Agent on or after the Closing Date, the Officer's Certificate
attached hereto as Exhibit K;
(k) An executed copy of the Expense and Tax-Sharing Agreement;
(l) No later than 10 Business Days after the Closing Date, a list of the
Originator's customers in connection with Receivables, such customers identified
by name, address and telephone number;
(m) Such other documents as the Buyer shall reasonably request; and
(n) A duly executed waiver from IBM Credit Corporation waiving all
provisions in the contract between IBM Credit Corporation and the Originator
concerning restrictions on the transfer, sale or assignment of the rights and
duties of the Originator under such contract.
SECTION 4.2. Conditions to Purchases.
----------------------- The Buyer's obligation to make a
Purchase (other than the Initial Purchase) on any Purchase Date shall be subject
to satisfaction of the following applicable conditions precedent:
(a) the truth and correctness of the representations and warranties in
Article III hereof as of the date of such Purchase as though made on and as of
such date;
(b) compliance with the covenants and agreements in Articles II and V
hereof;
(c) the requirement that no Termination Event or Potential Termination
Event shall exist or occur as a result of such Purchase;
(d) the satisfactory completion of any due diligence conducted by the
Buyer with respect to the Receivables and the related Obligors and Contracts
which are the subject of such Purchase; and
(e) the receipt by the Buyer of any approvals, opinions or other
documents as the Buyer shall have reasonably requested.
26
SECTION 4.3. Effect of Payment of Purchase Price.
------------------------------------ Upon the payment of the
Purchase Price for any Purchase (whether through a capital contribution or a
Subordinated Loan), title to the Receivables and to the other related Purchased
Assets subject to such Purchase shall vest in the Buyer, whether or not the
conditions precedent to such Purchase were in fact satisfied; provided, however,
that if one or more conditions precedent to such Purchase was in fact not
satisfied, the Buyer shall not be deemed to have waived any claim it may have
under this Agreement for the failure by the Originator in fact to satisfy any
such condition precedent.
ARTICLE V
COVENANTS
SECTION 5.1. Affirmative Covenants of the Originator.
------------------------------------------- In addition
to its other covenants contained herein or made pursuant hereto, the Originator
covenants to the Buyer as follows:
(a) Notice of Termination Event.
----------------------------- Promptly upon becoming aware of any
Termination Event or Potential Termination Event the Originator shall give the
Buyer and the Administrative Agent notice thereof (a "Notice of Termination
Event"), together with a written statement of a Responsible Officer setting
forth the details thereof and any action with respect thereto taken or
contemplated to be taken by the Originator.
(b) Notice of Material Adverse Change.
----------------------------------- Promptly upon becoming aware
thereof, the Originator shall give the Buyer notice of any material adverse
change in the business, operations or financial condition of the Originator
which reasonably could affect adversely the collectibility of a material part of
the Receivables or the ability to service such Receivables. In order to verify
compliance with this Section 5.1(b) and otherwise verify compliance with this
Agreement, the Originator shall, unless the "Administrative Agent" under the
Receivables Purchase Agreement shall otherwise consent in writing, furnish the
following to the Buyer and the Administrative Agent:
27
(i) as soon as practicable and in any event within 45 days following
the close of each fiscal quarter, excluding the last fiscal quarter, of
each fiscal year during the term of this Agreement, an unaudited
consolidated balance sheet of the Originator as at the end of such quarter
and unaudited consolidated statements of income and cash flows of the
Originator for such quarter and for the fiscal year through such quarter,
setting forth in comparative form the corresponding figures for the
corresponding quarter of the preceding fiscal year, all in reasonable
detail and certified by the chief financial officer or chief accounting
officer of the Originator, subject to adjustments of the type which would
occur as a result of a year-end audit, as having been prepared in
accordance with GAAP;
(ii) as soon as practicable and in any event within 90 days after
the close of each fiscal year during the term of this Agreement, a
consolidated balance sheet of the Originator as at the close of such fiscal
year and consolidated statements of income and cash flows of the Originator
for such fiscal year, setting forth in comparative form the corresponding
figures for the preceding fiscal year, all in reasonable detail and
certified by Coopers & Lybrand or other independent certified public
accountants of nationally recognized standing, whose certificate or opinion
accompanying such financial statements shall not contain any material
qualification not satisfactory to the Administrative Agent; and
(iii) together with the financial statements required in clauses (i)
and (ii) above, a certificate of the chief financial officer or chief
accounting officer of the Originator in the form of Exhibit D hereto
stating that no Termination Event or Potential Termination Event exists, or
if any Termination Event or Potential Termination Event exists, stating the
nature and status thereof.
(c) Preservation of Corporate Existence.
-------------------------------------- The Originator shall
preserve and maintain its corporate existence, rights, franchises and
privileges in the jurisdiction of its incorporation, and qualify and remain
qualified in good standing as a foreign corporation in each jurisdiction
where the failure to preserve and maintain such existence, rights,
franchises, privileges and qualification would materially adversely affect
(i) the interests of the Buyer hereunder or (ii) the ability of the
Originator or the Servicer to perform their respective obligations under
the Facility Documents or under the Servicing Agreement.
28
(d) Compliance with Laws.
--------------------- The Originator shall comply in all material
respects with all Laws applicable to the Originator, its business and
properties, and all Receivables related to the Purchased Assets, other than Laws
which would not affect the collectibility of the Receivables and the validity or
applicability of which the Originator is contesting in good faith.
(e) Enforceability of Obligations.
----------------------------- The Originator shall take such actions
as are reasonable and within its power to ensure that, with respect to each
Receivable, the obligation of any related Obligor to pay the unpaid balance of
such Receivable in accordance with the terms of the related Contract remains
legal, valid, binding and enforceable against such Obligor.
(f) Books and Records.
----------------- The Originator shall, to the extent practicable,
maintain and implement administrative and operating procedures (including,
without limitation, the ability to recreate Records evidencing the Receivables
in the event of the destruction of the originals thereof), and keep and maintain
all documents, books, Records and other information reasonably necessary or
advisable for the collection of all Receivables (including, without limitation,
Records adequate to permit the identification of all Related Security and
Collections and adjustments to each existing Receivable).
(g) Fulfillment of Obligations.
--------------------------- The Originator will duly observe and
perform, or cause to be observed or performed, all material obligations and
undertakings on its part to be observed and performed under or in connection
with the Receivables, including its obligations as initial Servicer, duly
observe and perform all material provisions, covenants and other promises
required to be observed by it under the Contracts related to the Receivables,
will do nothing to impair the rights, title and interest of the Buyer in and to
the Purchased Assets (except pursuant to the Credit and Collection Policy), and
shall pay when due (or contest in good faith) any taxes, including without
limitation any sales tax, excise tax or other similar tax or charge, payable in
connection with the Receivables and their creation and satisfaction.
(h) Customer List.
-------------- The Originator shall at all times maintain (or cause
the Servicer to maintain) current information (which may be stored on magnetic
tapes or disks) listing all Obligors under Contracts related to Receivables,
including the name, address, telephone number and account number of each such
Obligor. The Originator shall deliver or cause to be delivered a copy of such
list to the Buyer as soon as practicable following the Buyer's request.
(i) Copies of Reports, Filings, Opinions, etc.
------------------------------------------- If any of the securities
of the Originator are registered under the Securities Act of 1933, as amended,
or the Securities Exchange Act of 1934, as amended, the Originator shall furnish
to the Buyer, as soon as practicable after the filing thereof, copies of all
29
proxy statements, financial statements, reports and other communications which
the Originator files with the Securities and Exchange Commission.
(j) Litigation.
---------- As soon as possible, and in any event within 15 days of a
Responsible Officer's knowledge thereof, the Originator shall give the Buyer
notice of the commencement of, or of a material threat of the commencement of,
an action, suit or proceeding against the Originator before any Official Body in
which there is a reasonable possibility of a decision which in the reasonable
judgment of the Originator, could reasonably be expected to have a material
adverse effect on the financial condition or results of operations of the
Originator or impair the ability of the Originator or the Servicer to perform
its obligations under this Agreement.
(k) Notice of Relocation.
--------------------- The Originator shall give the Buyer 45 days'
prior written notice of any relocation of its Chief Executive Office if, as a
result of such relocation, the applicable provisions of the UCC of any
applicable jurisdiction or other applicable Laws would require the filing of any
amendment of any previously filed financing statement or continuation statement
or of any new financing statement. The Originator will at all times maintain its
Chief Executive Office within a jurisdiction in the United States in which
Article Nine of the UCC (1972 or later revision) is in effect as of the Closing
Date or the date of any such relocation.
(l) Further Information.
-------------------- The Originator shall furnish or cause to be
furnished to the Buyer such other information with respect to the financial
position or business of the Originator or with respect to the Credit and
Collection Policy, the Receivables, the Contracts, the Related Security or the
Obligors, all as promptly as practicable and in such form and detail as the
Buyer may reasonably request.
(m) Treatment of Purchase.
--------------------- For accounting purposes, the Originator shall
treat each Purchase as a sale of the Purchased Assets sold on the related
Purchase Date. The Originator shall also maintain its records and books of
account in a manner which clearly reflects each such sale of the Purchased
Assets to the Buyer and the Purchase Price paid therefor.
(n) Fees, Taxes and Expenses.
------------------------ The Originator shall pay all filing fees,
stamp taxes, other taxes (other than taxes imposed directly on the overall net
income of the Buyer) and expenses, including the fees and expenses set forth in
Section 7.1 hereof, if any, which may be incurred on account of or arise out of
this Agreement and the documents and transactions entered into pursuant to this
Agreement.
(o) Administrative and Operating Procedures.
------------------------------------------ The Originator shall
maintain and implement administrative and operating procedures adequate to
30
permit the identification of the Receivables and all collections and adjustments
attributable thereto and shall comply in all material respects with the Credit
and Collection Policy in regard to each Receivable and related Contract.
(p) ERISA Events.
------------
(i) Promptly upon becoming aware of the occurrence of any Event of
Termination which together with all other Events of Termination occurring
within the prior 12 months involve a payment of money by or a potential
aggregate liability of the Originator or any ERISA Affiliate or any
combination of such entities in excess of $5,000,000, the Originator shall
give the Buyer a written notice specifying the nature thereof, what action
the Originator or any ERISA Affiliate has taken and, when known, any action
taken or threatened by the Internal Revenue Service, the Department of
Labor or the PBGC with respect thereto.
(ii) Promptly upon receipt thereof, the Originator shall furnish to
the Buyer copies of (i) all notices received by the Originator or any ERISA
Affiliate of the PBGC's intent to terminate any Plan or to have a trustee
appointed to administer any Plan; (ii) all notices received by the
Originator or any ERISA Affiliate from the sponsor of a Multiemployer Plan
pursuant to Section 4202 of ERISA involving a withdrawal liability in
excess of $5,000,000; and (iii) all funding waiver requests filed by the
Originator or any ERISA Affiliate with the Internal Revenue Service with
respect to any Plan, the accrued benefits of which exceed the present value
of the plan assets as of the date the waiver request is filed by more than
$5,000,000, and all communications received by the Originator or any ERISA
Affiliate from the Internal Revenue Service with respect to any such
funding waiver request.
(q) Collections.
----------- The Originator shall instruct all Obligors to cause all
Collections to be mailed to a Permitted Lockbox or electronically transferred to
a Lockbox Account.
(r) Notice of Ratings Change.
------------------------ The Originator shall promptly notify the
Buyer if the Originator's commercial paper, long term debt securities or any
other securities become rated by a nationally recognized rating agency or
agencies and, in such event, the Originator shall thereafter give the Buyer
prompt notice of any change in the ratings of the Originator's commercial paper,
long term debt securities or other securities by such rating agency or agencies.
31
(s) Insurance.
--------- The Originator shall, and shall cause each of its
Consolidated Subsidiaries to, keep insured by financially sound and reputable
insurers all property of a character usually insured by corporations engaged in
the same or similar business similarly situated against loss or damage of the
kinds and in the amounts customarily insured against by such corporations and
carry such other insurance as is usually carried by such corporations.
(t) No Other Business.
----------------- The Originator shall engage in no business other
than the business contemplated under its certificate of incorporation in effect
as of the Closing Date.
(u) Separate Identity.
----------------- The Originator shall take all actions required to
maintain the Buyer's status as a separate legal entity, including, without
limitation, (i) not holding the Buyer out to third parties, including in any
written financial statements, as other than an entity with assets and
liabilities distinct from the Originator and the Originator's Affiliates; (ii)
not holding itself out to be responsible for the debts of the Buyer or, other
than by reason of owning capital stock of the Buyer, for any decisions or
actions relating to the Buyer; (iii) prepare separate financial statements for
the Buyer (which shall disclose the effect of the transaction between the
Originator and the Buyer hereunder in accordance with GAAP); (iv) cause any
financial statements consolidated with those of the Buyer to contain language to
the effect that the Buyer is a separate legal entity with its own separate
creditors which, in any liquidation of the Buyer, will be entitled to be
satisfied out of the Buyer's assets prior to any value in the Buyer becoming
available to the Buyer's equity holders; (v) taking such other actions as are
necessary on its part to ensure that all corporate procedures required by its
and the Buyer's respective certificates of incorporation and by-laws are duly
and validly taken; (vi) keeping correct and complete records and books of
account and corporate minutes; and (vii) not acting in any other manner that
could foreseeably mislead others with respect to the Buyer's separate identity.
(v) Subordinated Note.
------------------- The Originator shall not transfer the
Subordinated Note to any Person other than the Security Agent pursuant to the
Amended and Restated Intercreditor Agreement.
SECTION 5.2. Negative Covenants of the Originator.
------------------------------------ During the term
of this Agreement, unless the Buyer shall otherwise consent in writing:
(a) Statement for and Treatment of Sales.
-------------------------------------- The Originator shall not
prepare any financial statements for financial accounting or reporting purposes
which shall account for the transactions contemplated herein in any manner other
than as a sale of the Purchased Assets to the Buyer.
32
(b) No Rescissions or Modifications.
------------------------------- The Originator shall not rescind or
cancel any Receivable or related Contract or modify any terms or provisions
thereof or grant any Dilution Factors to an Obligor, except in accordance with
the Credit and Collection Policy or otherwise with the prior written consent of
the Buyer.
(c) No Liens.
-------- The Originator shall not cause any of the Receivables or
related Contracts, or any inventory or goods the sale of which may give rise to
a Receivable, or any Permitted Lockbox or Lockbox Account or any right to
receive any payments received therein or deposited thereto, to be sold, pledged,
assigned or transferred or to be subject to a Lien, other than the sale and
assignment of the Purchased Assets to the Buyer, the Lien created in connection
with the transactions contemplated by this Agreement and any Permitted Lien.
(d) Consolidations, Mergers and Sales of Assets.
-------------------------------------------- The Originator shall
not (i) consolidate or merge with or into any other Person, or (ii) sell, lease
or otherwise transfer all or substantially all of its assets to any other
Person; provided that the Originator may merge with another Person if (A) the
Originator is the corporation surviving such merger, and (B) immediately after
and giving effect to such merger, no Termination Event or Potential Termination
Event shall have occurred and be continuing.
(e) No Changes.
----------- The Originator shall not make any change in the
character of its business or in the Credit and Collection Policy, which change
would, in either case, impair the collectibility of any Receivable, or make any
material change in the Credit and Collection Policy without prior written
notification to, and prior written consent of, the Buyer, or change its name,
identity or corporate structure in any manner which would make any financing
statement or continuation statement filed in connection with this Agreement or
the transactions contemplated hereby seriously misleading within the meaning of
Section 9-402(7) of the UCC of any applicable jurisdiction or other applicable
Laws unless it shall have given the Buyer at least 30 days' prior written notice
thereof and unless prior thereto it shall have caused such financing statement
or continuation statement to be amended or a new financing statement to be filed
such that such financing statement or continuation statement would not be
seriously misleading.
(f) Change in Payments or Deposits of Payments.
------------------------------------------ The Originator shall not
add or terminate any Person as a Permitted Lockbox Bank from those Persons
listed in the Receivables Purchase Agreement, make or permit any change in the
location of any Permitted Lockbox or the location or account number of any
Lockbox Account, or make any change in the instructions to its Obligors
regarding payments to be made to the Originator or payments to be made to any
33
Permitted Lockbox, unless the Buyer shall have been given at least 10 Business
Days of prior written notice of such change.
(g) ERISA Matters.
-------------- The Originator shall not permit any event or
condition which is described in any of clauses (i) through (iv), clause (vi) or
clause (viii) of the definition of "Event of Termination" to occur or exist with
respect to any Plan or Multiemployer Plan if such event or condition, together
with all other events or conditions described in the definition of Event of
Termination occurring within the prior 12 months, involve the payment of money
by or an incurrence of liability of the Originator or any ERISA Affiliate in an
amount in excess of $10,000,000.
ARTICLE VI
TERMINATION EVENTS
SECTION 6.1. Term.
---- This Agreement shall commence as of the date of
execution and delivery hereof and shall continue in full force and effect until
the earlier of (a) the termination of the Receivables Purchase Agreement unless
extended by the Seller in its sole discretion and (b) upon the occurrence of any
of the following events: the Buyer or the Originator shall (i) become insolvent,
(ii) experience an Event of Bankruptcy, or (iii) become unable for any reason to
convey or reconvey Receivables in accordance with the provisions of this
Agreement (any such date set forth in clause (a) or (b) hereof being a
"Termination Date"); provided, however, that (i) the termination of this
Agreement pursuant to this Section 6.1 shall not discharge any Person from any
obligations incurred prior to such termination, including, without limitation,
any obligations to repurchase Receivables sold prior to such termination
pursuant to Section 2.5 or 2.7 hereof and (ii) the indemnification and payment
provisions set forth in Article VII hereof and the provisions and agreement set
forth in Section 7.20 hereof shall be continuing and shall survive termination
of this Agreement. Neither the Originator nor the Buyer will extend the term of
this Agreement with an intent to mitigate losses on the Receivables previously
sold by the Originator to the Buyer hereunder.
SECTION 6.2. Effect of Termination.
---------------------- No termination or rejection or
failure to assume the executory obligations of this Agreement in the Event
of Bankruptcy of the Originator or the Buyer shall be deemed to impair or
affect the obligations pertaining to any executed sale or executed obligations,
including, without limitation, pretermination breaches of representations
and warranties by the Originator or the Buyer.
ARTICLE VII
MISCELLANEOUS
34
SECTION 7.1. Expenses.
-------- The Originator agrees, upon receipt of a written
invoice, to pay or cause to be paid, and to save the Buyer and each of its
assignees of Purchased Assets harmless against liability for the payment of, all
reasonable out-of-pocket expenses (including, without limitation, attorneys',
accountant's and other third parties' fees and expenses (including the allocated
costs of internal counsel), any filing fees and expenses incurred by officers or
employees of the Buyer but excluding salaries and similar overhead costs of the
Buyer which are incurred notwithstanding the execution and performance of this
Agreement) incurred by or on behalf of the Buyer (i) in connection with the
negotiation, execution, delivery and preparation of the Facility Documents and
the transactions contemplated by or undertaken pursuant to or in connection
herewith or therewith (including, without limitation, the perfection or
protection of the Purchased Assets and (ii) from time to time (a) relating to
any requested amendments, waivers or consents under the Facility Documents, (b)
arising in connection with the Buyer's enforcement or preservation of its rights
(including, without limitation, the perfection and protection of the Purchased
Assets) under the Facility Documents, or (c) arising in connection with any
audit, dispute, disagreement, litigation or preparation for litigation involving
the Facility Documents.
SECTION 7.2. Indemnity for Taxes, Reserves and Expenses.
-------------------------------------------
(a) If after the date hereof, the adoption of any Law or bank regulatory
guideline or any amendment or change in the interpretation of any existing or
future Law or bank regulatory guideline by any Official Body charged with the
administration, interpretation or application thereof, or the compliance with
any directive of any Official Body (in the case of any bank regulatory
guideline, whether or not having the force of Law):
(i) shall subject any Buyer and any of its successors and assigns and
any permitted assigns (collectively, the "Indemnified Parties") to any
cost, liability, tax, duty or other charge with respect to the Facility
Documents, the Purchased Assets, the Receivables or payments of amounts due
thereunder, or shall change the basis of taxation of payments to any
Indemnified Party of amounts payable in respect of the Facility Documents,
the Purchased Assets, the Receivables or payments of amounts due thereunder
or its obligation to advance funds in respect of the Facility Documents,
the Purchased Assets or the Receivables (except for changes in the rate of
general corporate, franchise, net income or other income tax imposed on
such Indemnified Party by the jurisdiction in which such Indemnified
Party's principal executive office is located); or
35
(ii) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve
System) against assets of, deposits with or for the account of, or credit
extended by, any Indemnified Party or shall impose on any Indemnified Party
or on the United States market for certificates of deposit or the London
interbank market any other condition affecting the Facility Documents, the
Purchased Assets, the Receivables or payments of amounts due thereunder or
its obligation to advance funds in respect of the Facility Documents, the
Purchased Assets or the Receivables; or
(iii) imposes upon any Indemnified Party any other expense
(including, without limitation, reasonable attorneys' fees and expenses,
and expenses of litigation or preparation therefor in contesting any of the
foregoing) with respect to the Facility Documents, the Purchased Assets,
the Receivables or payments of amounts due thereunder or its obligation to
advance funds in respect of the Facility Documents, the Purchased Assets or
the Receivables;
and the result of any of the foregoing is to increase the cost to such
Indemnified Party with respect to the Facility Documents, the Purchased Assets,
the Receivables, the obligations thereunder, or the funding of any purchases
thereunder, by an amount deemed by such Indemnified Party to be material, then,
within 10 days after demand by the Buyer or other Indemnified Party, the
Originator shall pay or cause to be paid to the Buyer or such other Indemnified
Party such additional amount or amounts as will compensate such Indemnified
Party for such increased cost.
(b) If any Indemnified Party shall have determined that, after the date
hereof, the adoption of any applicable Law or bank regulatory guideline
regarding capital adequacy, or any change therein, or any change in the
interpretation thereof by any Official Body, or any directive regarding capital
adequacy (in the case of any bank regulatory guideline, whether or not having
the force of law) of any such Official Body, has or would have the effect of
reducing the rate of return on capital of such Indemnified Party (or its parent)
as a consequence of such Indemnified Party's obligations hereunder or with
respect hereto to a level below that which such Indemnified Party (or its
parent) could have achieved but for such adoption, change, request or directive
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by such Indemnified Party to be material, then from time to time,
within 10 days after demand by any Indemnified Party the Originator shall pay to
such Indemnified Party such additional amount or amounts as will compensate such
Indemnified Party (or its parent) for such reduction.
36
(c) The Buyer will promptly notify the Originator of any event of which
it has knowledge, occurring after the date hereof, which will entitle an
Indemnified Party to compensation pursuant to this Section 7.2. A notice by the
Buyer on behalf of an Indemnified Party claiming compensation under this Section
and setting forth the additional amount or amounts to be paid to it hereunder
shall be conclusive in the absence of manifest error. In determining such
amount, the Buyer may use any reasonable averaging and attributing methods.
SECTION 7.3. Indemnity
---------
(a) The Originator agrees to indemnify, defend and save harmless the
Buyer and each of its directors, officers, shareholders, employees, agents,
successors and assigns (including any assignees of Purchased Assets) other than
for the indemnitee's own gross negligence or willful misconduct, forthwith on
demand, from and against any and all losses, claims, damages, liabilities, costs
and expenses (including, without limitation, all reasonable attorneys' fees and
expenses (including the allocated costs of internal counsel), expenses incurred
by their respective credit recovery groups (or any successors thereto) and
expenses of settlement, litigation or preparation therefor) which the Buyer may
incur or which may be asserted against the Buyer by any Person (including,
without limitation, any Obligor or any other Person whether on its own behalf or
derivatively on behalf of the Originator) arising from or incurred in connection
with (i) any breach of a representation, warranty or covenant by the Originator
made or deemed made hereunder or under the other Facility Documents or in
connection herewith or therewith or the transactions contemplated hereby or
thereby or any statements made by any Responsible Officer of the Originator in
connection herewith or therewith or the transactions contemplated hereby or
thereby which shall have been incorrect in any material respect when made, (ii)
any action taken or, if the Originator is otherwise obligated to take action,
failed to be taken, by the Originator with respect to the Purchased Assets or
any of its obligations hereunder or under the other Facility Documents (whether
in its capacity as Originator or Servicer), including, without limitation, the
Originator's failure to comply with an applicable law or regulation, (iii) any
failure to vest and maintain vested in the Buyer an undivided ownership interest
in the Receivables included in the Purchased Assets, free and clear of any Lien
(other than (x) the Lien arising in connection with this Agreement and (y) any
Permitted Lien) or other adverse claim, whether existing at the time of Purchase
of such Receivables or at any time thereafter, (iv) any failure to pay when due
any taxes, including without limitation any sales tax, excise tax or other
similar tax or charge payable in connection with the Receivables and their
creation or satisfaction, (v) any products liability claim or claim of
infringement of proprietary rights, in any such case, arising out of or which
relates to the Purchased Assets in the Receivables or the related Contracts,
(vi) any dispute, suit, action, claim, proceeding or governmental investigation,
pending or threatened, whether based on statute, regulation or order, on tort,
on contract or otherwise, before any Official Body which arises out of or
relates to the Facility Documents, the Purchased Assets in the Receivables or
related Contracts, or the use of the proceeds of the sale of the Purchased
Assets in the Receivables pursuant hereto, (vii) any reductions in the amount of
a Purchased Receivable the Obligor of which is a Government Obligor, and the
Related Security and Collections with respect thereto, as the result of
appropriation or other authorized funding by the applicable governmental entity,
or the lack of such appropriation or funding, or the inability to collect any
37
amount from a Government Obligor due to the operation of any applicable statute
or otherwise, or (viii) the existence of any provision in any Contract that may
(x) require the related Obligor to consent to the transfer, sale or assignment
of the rights of the Originator under such Contracts other than the right of the
Originator to sell, distribute or otherwise provide goods or services to such
Obligor, or (y) restrict the ability of the Buyer to exercise its rights under
this Agreement, including without limitation, its right to review such Contract.
(b) Promptly upon receipt by any indemnified party under this Section
7.3 of notice of the commencement of any suit, action, claim, proceeding or
governmental investigation against such indemnified party, such indemnified
party shall, if a claim in respect thereof is to be made against the Originator
hereunder, notify the Originator in writing of the commencement thereof. The
Originator may participate in and assume the defense of any such suit, action,
claim, proceeding or investigation at its expense, and no settlement thereof
shall be made without the approval of the Originator and the indemnified party.
The approval of the Originator will not be unreasonably withheld or delayed.
After notice from the Originator to the indemnified party of its intention to
assume the defense thereof with counsel reasonably satisfactory to the Buyer,
and so long as the Originator so assumes the defense thereof in a manner
reasonably satisfactory to the Buyer, the Originator shall not be liable for any
legal expenses of counsel unless there shall be a conflict between the interests
of the Originator and the indemnified party.
SECTION 7.4. Holidays.
-------- Except as may be provided in this Agreement to the
contrary, if any payment due hereunder shall be due on a day which is not a
Business Day, such payment shall instead be due the next succeeding
Business Day.
SECTION 7.5. Records.
------- All amounts calculated or due
hereunder shall be determined from the records of the Buyer, which
determinations shall be conclusive absent manifest error.
SECTION 7.6. Amendments and Waivers.
---------------------- No amendment or modification of,
supplement to, or waiver of, the provisions of, or consent to a departure
from the due performance of the obligations of the Originator under, this
Agreement may be made without the prior written consent of the
"Administrative Agent" under the Receivables Purchase Agreement. Any such
agreement, waiver or consent must be in writing and shall be effective only
to the extent specifically set forth in such writing. Any waiver of any
provision hereof, and any consent to a departure by the Originator from
any of the terms of this Agreement, shall be effective only in the specific
instance and for the specific purpose for which given.
38
SECTION 7.7. Term of Agreement.
----------------- This Agreement shall terminate following
the Expiration Date upon the final termination of the Receivables Purchase
Agreement; provided, however, that (i) the rights and remedies of the Buyer
with respect to any representation and warranty made or deemed to be made by
the Originator pursuant to this Agreement, (ii) the indemnification and
payment provisions set forth in Sections 7.1, 7.2 and 7.3 hereof and (iii) the
agreement set forth in Section 7.20 hereof shall be continuing and shall
survive any termination of this Agreement.
SECTION 7.8. No Implied Waiver; Cumulative Remedies.
--------------------------------------- No course of dealing
and no delay or failure of the Buyer in exercising any right, power or
privilege under the Facility Documents shall affect any other or future exercise
thereof or the exercise of any other right, power or privilege; nor shall any
single or partial exercise of any such right, power or privilege or any
abandonment or discontinuance of steps to enforce such a right, power or
privilege preclude any further exercise thereof or of any other right, power or
privilege. The rights and remedies of the Buyer under the Facility Documents are
cumulative and not exclusive of any rights or remedies which the Buyer would
otherwise have.
SECTION 7.9. No Discharge.
------------ The obligations of the Originator under the
Facility Documents shall be absolute and unconditional and shall remain in
full force and effect without regard to, and shall not be released,
discharged or in any way affected by (a) any exercise or nonexercise of any
right, remedy, power or privilege under or in respect of the Facility
Documents or applicable Law, including, without limitation, any failure to
set-off or release in whole or in part by the Buyer of any balance of any
deposit account or credit on its books in favor of the Originator or any waiver,
consent, extension, indulgence or other action or inaction in respect of any
thereof, or (b) any other act or thing or omission or delay to do any other act
or thing which would operate as a discharge of the Originator as a matter of
Law.
39
SECTION 7.10. Notices.
------- All notices under Section 6.2 hereof shall be
given to the Originator by telephone or facsimile, confirmed by first-class
mail, first-class express mail or courier, in all cases with charges prepaid.
All other notices, requests, demands, directions and other communications
(collectively "notices") under the provisions of this Agreement shall be in
writing (including telexed or facsimile communication) unless otherwise
expressly permitted hereunder and shall be sent by first-class mail,
first-class express mail, or by telex or facsimile with confirmation in writing
mailed first-class mail, in all cases with charges prepaid. Any such properly
given notice shall be effective when received. All notices shall be sent to the
applicable party at the Office stated on the signature page hereof or in
accordance with the last unrevoked written direction from such party to the
other parties hereto.
SECTION 7.11. Severability.
------------ The provisions of this Agreement are intended
to be severable. If any provision of this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction, such provision shall,
as to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
of such provision in any other jurisdiction or the remaining provisions hereof
in any jurisdiction.
SECTION 7.12. Governing Law; Submission to Jurisdiction.
-------------------------------------------- THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK. The Originator hereby submits to the nonexclusive
jurisdiction of the courts of the State of New York and the courts of the
United States located in the State of New York for the purpose of
adjudicating any claim or controversy arising in connection with any of the
Facility Documents or any of the transactions contemplated thereby, and for such
purpose, to the extent it may lawfully do so, waives any objection which it may
now or hereafter have to such jurisdiction or to venue therein and any claim of
inconvenient forum with respect thereto. Nothing in this Section 7.12 shall
affect the right of the Buyer to bring any action or proceeding against the
Originator or its property in the courts of other jurisdictions.
SECTION 7.13. Prior Understandings.
---------------------- This Agreement sets forth the
entire understanding of the parties relating to the subject matter
hereof, and supersedes all prior understandings and agreements, whether
written or oral.
SECTION 7.14. Survival.
-------- All representations and warranties of the
Originator contained herein or made in connection herewith shall survive the
making thereof, and shall not be waived by the execution and delivery of this
Agreement, any investigation by the Buyer, the purchase or payment in
respect of any Purchased Assets, or any other event or condition whatsoever
40
(other than a written waiver complying with Section 7.6 hereof). The covenants
and agreements contained in or given pursuant to this Agreement
(including, without limitation, those contained in Article V hereof) shall
continue in full force and effect until the termination of this Agreement.
SECTION 7.15. Counterparts.
------------ This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument.
SECTION 7.16. Set-Off.
------- In case a Termination Event shall occur and be
continuing, the Buyer and, to the fullest extent permitted by Law, the holder
of any assignment of the Buyer's rights hereunder pursuant to any security
agreement or assignment agreement, shall each have the right, in addition to
all other rights and remedies available to it, without notice to the Originator,
to set-off against and to appropriate and apply to any amount owing by the
Originator hereunder which has become due and payable, any debt owing to,
and any other funds held in any manner for the account of, the Buyer or any such
holder of any assignment, including, without limitation, all funds in all
deposit accounts (whether time or demand, general or special, provisionally
credited or finally credited, or otherwise) now or hereafter maintained by the
Originator with the Buyer under any such security agreement or assignment
agreement. Such right shall exist whether or not such debt owing to, or funds
held for the account of, the Originator is or are matured other than by
operation of this Section 7.16 and regardless of the existence or adequacy of
any collateral, guaranty or any other security, right or remedy available to the
Buyer or any holder. Nothing in this Agreement shall be deemed a waiver or
prohibition or restriction of the Buyer's or any holder's rights of set-off or
other rights under applicable Law.
SECTION 7.17. Successors and Assigns.
---------------------- This Agreement shall be binding on
the parties hereto and their respective successors and assigns; provided,
however, that the Originator may not assign any of its rights or delegate any
of its duties hereunder without the prior written consent of the
"Administrative Agent" under the Receivables Purchase Agreement. No
provision of this Agreement shall in any manner restrict the ability of the
Buyer to assign, participate, grant security interests in, or otherwise
transfer any portion of the Purchased Assets owned by the Buyer. The
Administrative Agent and the Owners under the Receivables Purchase Agreement
shall be third-party beneficiaries of this Agreement.
SECTION 7.18. Confidentiality.
--------------- The Buyer shall keep confidential any
information provided by the Originator and clearly identified as confidential,
provided that nothing herein shall prevent the Buyer from disclosing such
information (i) to its officers, directors, employees, agents, attorneys
and accountants who have a need to know such information in accordance with
customary banking or financial practices and who receive such information
41
having been made subject to the restrictions set forth in this Section,(ii)
upon the order of a court or administrative agency, (iii) upon the request or
demand of any regulatory agency or authority having jurisdiction over
such party, (iv) which has become publicly available without breach of any
agreement between the parties hereto, (v) as necessary for the exercise of
any remedy hereunder, (vi) subject to provisions similar to those contained
in this Section, to any Eligible Assignee (as defined in the
Receivables Purchase Agreement), any commercial paper dealer providing funding
to any assignee of the Buyer, any APA Lending Bank (as defined in the
Receivables Purchase Agreement), and any other institution that provides
liquidity or enhancement for any assignee of the Buyer, or (vii) any nationally
recognized rating agency.
SECTION 7.19. Payments Set Aside.
------------------
To the extent that the Originator or any Obligor makes a payment to the Buyer or
the Buyer exercises its rights of set-off and such payment or set-off or any
part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside, recovered from, disgorged by, or is required to be
refunded, rescinded, returned, repaid or otherwise restored to the Originator,
such Obligor, a trustee, a receiver or any other Person under any Law,
including, without limitation, any bankruptcy law, any state or federal law,
common law or equitable cause, the obligation or part thereof originally
intended to be satisfied shall, to the extent of any such restoration, be
reinstated, revived and continued in full force and effect as if such payment
had not been made or such set-off had not occurred. The provisions of this
Section 7.19 shall survive the termination of this Agreement.
SECTION 7.20. No Petition.
------------ The Originator agrees that, prior to the
date which is one year and five days after the date upon which all
obligations of the Buyer to the Originator hereunder and under the
Subordinated Note are paid in full and all indebtedness relating to the
Purchased Assets of any assignee of the Buyer are paid in full, it will not
institute against, or join any other Person in instituting against, the Buyer
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding or other similar proceeding under the laws of the United States or
any state of the United States.
SECTION 7.21. Third-Party Beneficiary.
----------------------- The parties hereto acknowledge
that the Administrative Agent, for the benefit of the Owners, is an intended
third-party beneficiary of this Agreement, entitled to enforce the provisions
hereof.
42
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above set forth.
LEXMARK RECEIVABLES CORPORATION
By: /s/ Gary E. Morin
----------------------------
Name: Gary E. Morin
Title: President
Address for Notices:
Lexmark Receivables Corporation
Gary E. Morin /s/
1325 Airmotive Way, Suite 130
Reno, Nevada 89502
Attention: Ms. Janice C. George
Tel. No.: (702) 322-2221
Fax No.: (702) 322-8808
LEXMARK INTERNATIONAL, INC.
By: /s/ Gary E. Morin
----------------------------
Name: Gary E. Morin
Title: Vice President & CFO
Address for Notices:
Lexmark International, Inc.
740 New Circle Road NW
Building 1, Dept. 857
Lexington, KY 40550
Attention: Richard A. Pelini
Tel. No.: (606) 232-7449
Fax No.: (606) 232-5137
With a copy to:
Lexmark International, Inc.
740 New Circle Road NW
Building 4, Dept. 742
Lexington, KY 40550
Attention: Vincent J. Cole, Esq.
Tel. No.: (606) 232-2700
Fax No.: (606) 232-3128
43
[Purchase Agreement Signature Page]
44
EXHIBIT A
---------
[RESERVED]
1
EXHIBIT B
---------
SCHEDULE OF LITIGATION
----------------------
None
1
EXHIBIT C
---------
SCHEDULE OF NAMES, LOCATIONS OF OFFICES AND RECORDS
---------------------------------------------------
(i) Originator's Chief Executive Office:
-----------------------------------
One Lexmark Centre Drive
740 New Circle Road NW
Lexington, KY 40550
(ii) Domestic Subsidiaries of the Originator:
---------------------------------------
Lexmark Asia Pacific Corporation, Inc. (Delaware)
Lexmark Espana, L.L.C. (Delaware)
Lexmark Europe Holding Company I, L.L.C. (Delaware)
Lexmark Europe Holding Company II, L.L.C. (Delaware)
Lexmark Europe Trading Corporation, Inc. (Delaware)
Lexmark Foreign Sales Corporation (Barbados)
Lexmark International De Argentina, Inc. (Delaware)
Lexmark International De Mexico, Inc. (Delaware)
Lexmark International Trading Corp. (Delaware)
Lexmark Mexico Holding Company, Inc. (Delaware)
Lexmark Nordic, L.L.C. (Delaware)
Lexmark Receivables Corporation (Delaware)
Lexmark Tooling Corporation (Delaware)
Divisions of Originator:
-----------------------
None
(iii) Office where Originator's Records Located:
One Lexmark Centre Drive
740 New Circle Road NW
Lexington, KY 40550
(iv) Originator's Trade Names:
------------------------
None
(v) Other Names and Mergers of Originator:
-------------------------------------
o Incorporated as New York Libra Corporation on 5/25/90.
o Changed name to IBM Information Products Corporation on
12/13/90.
o Changed name to Lexmark International, Inc. on 3/27/91.
o On 10/29/93, Lexmark Europe Corporation, Inc., a wholly-owned
subsidiary of Lexmark International, Inc., was merged with
and into Lexmark International, Inc., with Lexmark
1
International, Inc. being the surviving entity.
2
EXHIBIT D
---------
FORM OF COMPLIANCE CERTIFICATE
------------------------------
Certificate of
[Responsible Officer]
I, the undersigned [Responsible Officer] of __________ (the "Originator")
do hereby CERTIFY pursuant to Section 5.1(b)(iii) of the Purchase Agreement,
dated as of March 31, 1997 (as amended, supplemented or otherwise modified and
in effect, the "Purchase Agreement"), by and between the Originator and the
Buyer, that on and as of the date hereof, there exists no Termination Event or
Potential Termination Event.
Capitalized terms not otherwise defined herein have the
meanings assigned to them in the Purchase Agreement.
Date: ------------- ------------------------------
Name:
Title:
1
EXHIBIT E
---------
[RESERVED]
1
EXHIBIT F
---------
CREDIT AND COLLECTION POLICY
----------------------------
[Included as Exhibit A in Receivables Purchase Agreement]
1
EXHIBIT G
---------
[FORM OF SUBORDINATED NOTE]
LEXMARK RECEIVABLES CORPORATION
SUBORDINATED NOTE
LEXMARK RECEIVABLES CORPORATION, a Delaware corporation (the "Issuer"), for
value received, hereby promises to pay to Lexmark International, Inc., a
Delaware corporation and the sole shareholder of the Issuer (the "Holder"), or
its registered assigns, the aggregate amount of all principal sums of the
Subordinated Loans which shall have been made from time to time under the
Agreement (as defined below), upon the earlier to occur of (i) April 14, 1998,
or (ii) the date upon which all Receivables (as defined in the Agreement) have
been collected or charged off as uncollectible (the "Stated Maturity") and to
pay interest (computed on the basis of a 360-day year and the actual number of
days elapsed) on the outstanding amount of each Subordinated Loan, such interest
being payable on May 20, 1997 and the fourteenth Business day of each month
thereafter and on the Stated Maturity (each, a "Payment Date") until the Stated
Maturity, at a rate per annum equal to then-current LIBOR (as defined below)
plus .45%. For purposes of this Subordinated Note (the "Note"), "LIBOR" shall
mean, for each Payment Date, a rate per annum equal to (i) the rate for
Eurodollar deposits having a one-month maturity that appears on Telerate Page
3750 as of 11:00 a.m. (London time) on the second Business Day before the
immediately preceding Payment Date (or in the case of the first Payment Date, on
the date hereof) or (ii) if such rate does not appear on Telerate Page 3750 as
of 11:00 a.m. (London time) on the second LIBOR Business Day before any Payment
Date, LIBOR will be the arithmetic mean (if necessary rounded upwards to the
nearest whole multiple of .00001%) of the rates (expressed as percentages per
annum) for Eurodollar deposits having a one-month maturity that appear on
Reuters Monitor Money Rates Page LIBO ("Reuters Page LIBO") as of 11:00 a.m.
(London time) on such second LIBOR Business Day. A "LIBOR Business Day" shall
mean any business day on which commercial banks are open for business in Dollar
deposits in London.
Principal of this Note shall be payable on each Payment Date
to the extent of the difference between (i) amounts received or allocated to the
Issuer upon the sale of an interest in additional Receivables pursuant to the
Receivables Purchase Agreement (as defined below) and Collections received by
the Issuer pursuant to the Receivables Purchase Agreement on the Issuer's
retained interest in the Receivables and (ii) the amount required to be (a)
applied to pay the Purchase Price of additional Purchased Assets pursuant to the
1
Purchase Agreement and (b) used or retained by the Issuer as capital to carry
out its other obligations and satisfy its covenants under the Receivables
Purchase Agreement and the Purchase Agreement. In addition, the principal amount
of this Note is subject to prepayment in full or in part at the option of the
Issuer at any time without a premium.
This Note is issued under the Purchase Agreement dated as of March 31,
1997, between the Issuer and the Holder (as amended, restated, supplemented or
otherwise modified from time to time, the "Agreement") and evidences the
Subordinated Loans made from time to time by the Holder, in its sole discretion,
pursuant to Section 2.2(d) of the Agreement. This Note represents all or a
portion of the Purchase Price for Receivables purchased by the Issuer pursuant
to the terms of the Agreement. This Subordinated Note is included as a "Purchase
Document" under the Receivables Purchase Agreement dated as of March 31, 1997
(the Receivables Purchase Agreement") by and among the Issuer, as seller, the
Holder, as servicer and in its individual capacity, Delaware Funding Corporation
and MGT, as administrative agent. This Note is a revolving note. The Issuer
hereof may, at any time, repay principal in whole or in part and the Holder, at
its option, may advance additional amounts hereon from time to time as
additional Subordinated Loans in accordance with the terms of the Purchase
Agreement. Each capitalized term used herein which is defined in the Agreement
shall have the meaning ascribed to it in the Agreement.
Payments of the principal of and interest on this Subordinated Note (the
"Note") will be made in such coin or currency of the United States of America as
at the time of payment is legal tender for payment of public and private debts
by check mailed to, or wire transfer in federal funds to the account of, the
Holder as directed by the Holder. If any payment on this Note shall remain
unpaid on the due date thereof, the same shall thereafter be payable with
interest thereon (to the extent permitted by law) at a rate equal to
then-current LIBOR plus 2.45% (the "Default Rate") from such due date to the
date of payment thereof. The Holder shall enter on the grid attached hereto, as
Attachment A, information reflecting the date and the amount of each
Subordinated Loan made under the Agreement and the date and amount of each
principal payment made hereon.
The Issuer shall be in "default" under this Note if (i) Issuer shall fail
to pay when due any interest or principal under this Note and such failure shall
continue for seven (7) Business Days or (ii) The Issuer shall be the subject of
an Event of Bankruptcy. If the Issuer is in "default" hereunder, the Holder
shall make no further Subordinated Loans to the Issuer and all principal and
accrued but unpaid interest on this Note shall become immediately due and
payable.
Payments of principal and interest by the Issuer shall be made only from
assets of the Issuer, including Collections received by the Issuer, and not
2
required to be applied to the Purchase Price of additional Receivables or to be
used or retained to satisfy the Issuer's obligations and covenants under the
Receivables Purchase Agreement (such available funds, collectively, "Funds"). To
the extent Funds are not available, payments of interest or principal shall not
be considered due until Funds become available. In such event, interest shall
continue to accrue on the unpaid principal sums of this Note until payment is
made at the "Default Rate" provided above.
The Holder of this Note, by its acceptance hereof, hereby covenants and
agrees that it will not at any time institute against the Issuer any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law.
This Note shall be governed by, and construed in accordance with, the laws
and decisions of the State of New York (including, without limitation, Section
5-1401 of the General Obligations Law of New York but otherwise without regard
to conflicts of laws principles).
3
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed manually by its undersigned officer duly authorized thereunto.
Dated: April 15, 1997
LEXMARK RECEIVABLES CORPORATION
By: ----------------------------
Name:
Title:
[Subordinated Note Signature Page]
4
ATTACHMENT A
To Subordinated Note
Dated April 15, 1997
--------------------
Date Principal Principal Balance
Amount Amount Outstanding
Advanced Paid
1. 4/15/97 $49,595,718.96 $ ----------- $ -------------
2. ------- ------------- ----------- -------------
3. ------- ------------- ----------- -------------
4. ------- ------------- ----------- -------------
5. ------- ------------- ----------- -------------
6. ------- ------------- ----------- -------------
7. ------- ------------- ----------- -------------
8. ------- ------------- ----------- -------------
9. ------- ------------- ----------- -------------
10.------- ------------- ----------- -------------
5
EXHIBIT H
---------
MATERIAL ADVERSE CHANGES
------------------------
None
1
EXHIBIT I
---------
to
Purchase Agreement
LEXMARK INTERNATIONAL, INC.
OFFICERS' CERTIFICATE
I, Vincent J. Cole, the undersigned Vice President and Secretary of Lexmark
International, Inc., a Delaware corporation ("Lexmark"), DO HEREBY CERTIFY that:
11. Attached hereto as Annex A is a true and complete copy of the By-laws
of Lexmark as in effect on the date hereof.
12. Attached hereto as Annex B is a true and complete copy of the
resolutions duly adopted by the Board of Directors of Lexmark on February 13,
1997, authorizing the execution, delivery and performance of the Purchase
Agreement, dated as of March 31, 1997 (the "Purchase Agreement"), by and between
Lexmark, as Originator, and Lexmark Receivables Corporation ("LRC"), as Buyer,
and the Receivables Purchase Agreement, dated as of March 31, 1997 (the "RPA"),
by and among LRC, as Seller (the "Seller"), Morgan Guaranty Trust Company of New
York, as Administrative Agent for the Owners, Lexmark, as Servicer and in its
individual capacity, and Delaware Funding Corporation, as Buyer, and each of the
other documents mentioned therein and approving the transactions contemplated
thereunder, which resolutions have not been revoked, modified, amended or
rescinded and are still in full force and effect as of the date hereof.
13. The below-named persons are, on and as of the date hereof, officers or
employees of LRC holding the respective offices or positions below set opposite
their names, and the below-named officers are authorized to execute the Purchase
Agreement and the RPA and any other documents to be delivered by Lexmark
thereunder, and the signatures below set opposite their names are their genuine
signatures:
Name Office Signature
Gary E. Morin Vice President & ---------------------
Chief Financial ---------------------
Officer ---------------------
Terence P. Chin Treasurer ---------------------
David L. Goodnight Controller ---------------------
Richard A. Pelini Assistant Treasurer ---------------------
Michelle R. Cabbage Treasury Financial Analyst---------------------
Katherine C. Winebrenner Cash Manager ---------------------
1
WITNESS my hand and seal of Lexmark as of this ____ day of April, 1997.
By:___________________________
Vincent J. Cole
Vice President and Secretary
I, Terence P. Chin, the undersigned Treasurer of Lexmark, DO HEREBY CERTIFY
that:
1. Vincent J. Cole is the duly elected and qualified Vice President and
Secretary of Lexmark and the signature above is his genuine signature.
2. All of the terms, covenants, agreements and conditions of the Purchase
Agreement and the RPA to be complied with and performed by Lexmark at or before
the date hereof have been complied with and performed.
3. The representations and warranties of Lexmark, in whatever capacity,
contained in the Purchase Agreement and the RPA are true and correct as if made
on and as of the date hereof.
4. Lexmark has not filed or consented to the filing of any UCC-1 Financing
Statement relating to the Receivables sold and to be sold pursuant to the
Purchase Agreement and the RPA and, to the best of Lexmark's knowledge, no such
Financing Statements have been filed other than Financing Statements naming (i)
Lexmark as "debtor" and LRC as "secured party", (ii) LRC as "debtor" and Morgan
Guaranty Trust Company of New York, as Administrative Agent, as "secured party",
(iii) Lexmark as "debtor" and Morgan Guaranty Trust Company of New York, as
Security Agent, as "secured party" and (iv) LRC as "debtor" and Morgan Guaranty
Trust Company of New York, as Security Agent, as "secured party."
5. No Termination Event and no event which with the giving of notice or
passage of time or both would constitute a Termination Event has occurred or is
continuing.
Capitalized terms used herein and not otherwise defined shall have the
meanings specified in the RPA.
WITNESS my hand this ____ day of April, 1997.
By:---------------------
Terence P. Chin
Treasurer
2
LEXMARK RECEIVABLES CORPORATION
OFFICERS' CERTIFICATE
---------------------
I, Vincent J. Cole, the undersigned Vice President and Secretary of Lexmark
Receivables Corporation, a Delaware corporation ("LRC"), DO HEREBY CERTIFY that:
6. Attached hereto as Annex A is a true and complete copy of the By-laws
of LRC as in effect on the date hereof.
7. Attached hereto as Annex B is a true and complete copy of the
resolutions duly adopted by the Board of Directors of LRC on March 24, 1997,
authorizing the execution, delivery and performance of the Purchase Agreement,
dated as of March 31, 1997 (the "Purchase Agreement"), by and between Lexmark
International, Inc. ("Lexmark"), as Originator, and LRC, as Buyer, and the
Receivables Purchase Agreement, dated as of March 31, 1997 (the "RPA"), by and
among LRC, as Seller (the "Seller"), Morgan Guaranty Trust Company of New York,
as Administrative Agent for the Owners, Lexmark, as Servicer and in its
individual capacity, and Delaware Funding Corporation, as Buyer, and each of the
other documents mentioned therein and approving the transactions contemplated
thereunder, which resolutions have not been revoked, modified, amended or
rescinded and are still in full force and effect as of the date hereof.
8. The below-named persons are, on and as of the date hereof, officers or
employees of LRC holding the respective offices or positions below set opposite
their names, and the below-named officers are authorized to execute the Purchase
Agreement and the RPA and any other documents to be delivered by LRC thereunder,
and the signatures below set opposite their names are their genuine signatures:
Name Office Signature
Gary E. Morin Vice President & ---------------------
Chief Financial ---------------------
Officer ---------------------
Terence P. Chin Treasurer ---------------------
David L. Goodnight Controller ---------------------
Richard A. Pelini Assistant Treasurer ---------------------
Michelle R. Cabbage Treasury Financial Analyst---------------------
Katherine C. Winebrenner Cash Manager ---------------------
1
WITNESS my hand and seal of LRC as of this ____ day of April, 1997.
By:---------------------
Vincent J. Cole
Vice President and Secretary
I, Terence P. Chin, the undersigned Treasurer of LRC, DO HEREBY CERTIFY
that:
1. Vincent J. Cole is the duly elected and qualified Vice President and
Secretary of LRC, and the signature above is his genuine signature.
2. All of the terms, covenants, agreements and conditions of the Purchase
Agreement and the RPA to be complied with and performed by LRC at or before the
date hereof have been complied with and performed.
3. The representations and warranties of LRC, in whatever capacity,
contained in the Purchase Agreement and the RPA are true and correct as if made
on and as of the date hereof.
4. LRC has not filed or consented to the filing of any UCC-1 Financing
Statement relating to the Receivables sold and to be sold pursuant to the
Purchase Agreement and the RPA and, to the best of LRC's knowledge, no such
Financing Statements have been filed other than Financing Statements naming (i)
Lexmark as "debtor" and LRC as "secured party", (ii) LRC as "debtor" and Morgan
Guaranty Trust Company of New York, as Morgan Guaranty Trust Company of New
York, as "secured party", (iii) Lexmark as "debtor" and Morgan Guaranty Trust
Company of New York, as Security Agent, as "secured party" and (iv) LRC as
"debtor" and Morgan Guaranty Trust Company of New York, as Security Agent, as
"secured party."
5. No Termination Event and no event which with the giving of notice or
passage of time or both would constitute a Termination Event has occurred or is
continuing.
Capitalized terms used herein and not otherwise defined shall have the
meanings specified in the RPA.
WITNESS my hand this ____ day of April, 1997.
By:---------------------
Terence P. Chin
Treasurer
2
EXHIBIT J
---------
to
Purchase Agreement
DESCRIPTION OF QUALIFYING RECEIVABLES
-------------------------------------
Each and every Receivable (as that term is defined in the Purchase
Agreement to which this exhibit is attached), whether now existing or hereafter
arising and wherever located, (a) arising in connection with the sale of goods
or the rendering of services in the ordinary course of business by Lexmark
International, Inc., or (b) arising in connection with the sale to IBM Credit
Corporation or another similar institution providing credit to an Obligor
(provided such institution, as an Obligor, satisfies any of the definitions of
Group A Obligor, Group B Obligor, Group C Obligor or Group D Obligor) of the
original indebtedness incurred by an Obligor to Lexmark International, Inc. in
connection with such a sale of goods or the rendering of such services, the
Obligor of which is either (i) a Person organized under the laws of the United
States or any state thereof that maintains its principal place of business in
the United States or (ii) a Government Obligor.
1
EXHIBIT K
---------
OFFICER'S CERTIFICATE
OF LEXMARK INTERNATIONAL, INC.
-----------------------------
The undersigned, Gary E. Morin, does hereby certify on behalf of Lexmark
International, Inc. (the "Company") in connection with the Receivables Purchase
Agreement, dated as of March 31, 1997 (the "LRC Agreement"), among Lexmark
Receivables Corporation ("LRC"), as Seller, the Company, as Servicer and in its
individual capacity, Delaware Funding Corporation ("DFC"), and Morgan Guaranty
Trust Company of New York, as administrative agent (the "Administrative Agent"),
pursuant to which LRC transfers to the Administrative Agent (for the benefit of
DFC and the other Owners under the LRC Agreement) all of its right, title and
interest in the Purchased Interest (as defined in LRC Agreement) in the
Receivables. LRC acquired the Receivables from the Company pursuant to the
Purchase Agreement, dated as of March 31, 1997 (the "Purchase Agreement"; with
the LRC Agreement, the "Documents") between the Company and LRC; that s/he is
the duly elected, qualified, and acting Vice President and Chief Financial
Officer of the Company, and further that:
1. S/he has made such investigation, including discussions with
responsible officers of the Company and its certified public accountants, as is
necessary to enable him/her to deliver this Officer's Certificate.
2. Immediately prior to the transfer of the Receivables to LRC pursuant to
the Purchase Agreement, the Company had good title and was the sole owner and
holder of such Receivables, free and clear of any and all adverse claims, liens,
pledges, offsets, defenses, counterclaims, charges, or security interests, of
any nature, and had the full right and authority, subject to no interest or
participation of, or agreement with, any other person, to transfer and assign
the same.
1
3. On the date hereof, the Receivables are sold by the Company to LRC
pursuant to the Purchase Agreement in exchange for cash and a capital
contribution by the Company to LRC, which consideration has a fair market value
equal to the fair market value of such Receivables. Certain of the cash was
loaned by the Company to LRC pursuant to the Purchase Agreement, as evidenced by
the Subordinated Note executed by LRC for the benefit of the Company. Subsequent
to the date hereof, the Company is obligated to sell additional Receivables to
LRC in certain circumstances, but LRC is required to pay cash for such
additional Receivables, unless the Company agrees to make a loan to LRC, or
agrees to contribute such additional Receivables to LRC as a capital
contribution. The consideration received by the Company in return for such
additional Receivables shall have a fair market value equal to the fair market
value of such additional Receivables. Such additional Receivables are not sold
by the Company to LRC with the intent (on the part of either the Company or LRC)
to mitigate losses on the Receivables previously sold by the Company to LRC. The
proceeds of the Company's sale of such Receivables to LRC accrue strictly to the
Company, and the Company's use of the proceeds is not restricted by LRC, the
Administrative Agent or DFC.
4. The Company may cease selling Receivables to LRC on and after April 14,
1998, unless extended by the Company in its sole discretion, without incurring
any penalty or loss. Neither the Company nor LRC will extend the term of the
Purchase Agreement with the intent (on the part of either the Company or LRC) to
mitigate losses on the Receivables previously sold by the Company to LRC.
5. The Company marks its records to indicate that the Receivables have
been sold to LRC and that such Receivables have been transferred by LRC to the
Administrative Agent (for the benefit of DFC and the other Owners under the LRC
Agreement). The Company properly treats the transfer of Receivables to LRC as a
sale for accounting purposes, and the independent certified public accountants
for the Company concur in such treatment. For tax reporting purposes, and any
applicable regulatory purposes, the Company properly treats such transfer in a
manner consistent with the treatment for accounting purposes. The Obligors on
the Receivables are not notified of the transfer of such Receivables to LRC or
LRC's transfer to the Administrative Agent (for the benefit of DFC and the other
Owners under the LRC Agreement). Any such notification would be time-consuming
and expensive, would be confusing to Obligors, and would impair customer
relations with Obligors. In transactions similar to those contemplated by the
Documents involving the transfer of large numbers of receivables arising under
short-term trade receivable contracts (including binding invoices), it is
standard industry practice not to notify the Obligors of the transfer.
2
6. The obligation of the Company under the Purchase Agreement to
repurchase certain Receivables as to which there exists a breach of its
representations and warranties, or which the Company, in breach of its duties,
impairs or adversely affects, is of a type commonly found in comparable asset
sale transactions. The repurchase price to be paid by the Company represents the
return of the consideration LRC paid for the repurchased Receivable.
7. The obligation of the Company to indemnify LRC for the imposition of
any transfer taxes arising upon the sale or contribution of the Receivables to
LRC is of a type commonly found in comparable asset sale transactions. The
Company does not expect that any transfer taxes will be imposed with respect to
the sale or contribution of such Receivables. The obligation of the Company to
indemnify the Buyer, the Administrative Agent, DFC and the other Owners under
the LRC Agreement with respect to any claim asserted by an Obligor with respect
to the Company's obligations under the Contracts are also of a type commonly
found in comparable asset sale transactions.
8. The Company acts as servicer of the Receivables under the LRC
Agreement. The terms of this servicing arrangement are of a type commonly found
in servicing arrangements in other comparable asset sale transactions. The fees
paid to the Servicer under the LRC Agreement constitute a fair and reasonable
price for the obligations to be performed by the Servicer under the LRC
Agreement. Payment of the Servicer's Compensation is not subordinate to amounts
due DFC, the Administrative Agent or otherwise, and the Company is paid the full
amount of the Servicer's Compensation and reimbursed for all of its
out-of-pocket expenses.
9. The Company, as Servicer, is obligated under the LRC Agreement to
service and administer the Receivables and to collect all payments due under the
Receivables in accordance with (i) its customary and usual servicing procedures
for servicing trade receivables comparable to the Receivables and (ii) its
Credit and Collection Policy. Such a provision is commonly found in comparable
asset sale transactions involving a third-party servicer.
3
10. LRC may borrow money from the Company pursuant to the Purchase
Agreement from time to time to purchase Receivables from the Company. These
loans are made on arm's-length terms that could be obtained from an unrelated
third-party lender. These loans can be repaid from any funds available to LRC
other than funds required to be used to make payments on the Purchased
Interests, and funds required to be used to purchase additional Receivables. Any
such loans will be fully repaid on a timely basis from funds other than funds
received from the Company. To assure that LRC has adequate capital to meet such
obligations on the date hereof, the Company has contributed cash and other
assets in the amount of $9 million which is in excess of the amount determined
to be adequate for such purposes using the factors set forth in Schedule A to
this Certificate.
11. The Company is not obligated to pay, nor does it pay, any insurance
premiums in connection with any Receivable or Contract, and the Company is not
obligated to, and does not, reimburse any insurer for any losses such insurer
suffers in connection with a Receivable or a Contract.
12. There are no other agreements to which LRC is a party relating to the
Receivables, other than the Documents and the documents referred to therein.
13. The Company does not make any payments to LRC, the Administrative Agent
or DFC in connection with the Receivables, except pursuant to the Documents.
14. The Company does not receive any payments with respect to the
Receivables or the Contracts, except pursuant to the Documents.
15. The Company does not own or hold any Purchased Interest in the
Receivables.
16. The Company does not control, is not controlled by, and is not under
common control with, DFC or the Administrative Agent.
17. The formulae for calculating the yields on the Purchased Interest in
the Receivables were agreed upon by the Company, the Administrative Agent and
DFC based upon the then-current market rates for comparable interests in the
Receivables. Neither the yields nor the rates of return on the Purchased
Interest in the Receivables is based on the rate at which the Company could
obtain a secured loan.
18. The Receivables are not interest-bearing.
19. The Company and LRC each intend the transfer of the Receivables by the
Company to LRC pursuant to the Purchase Agreement, to be an absolute assignment,
or a contribution to capital, as applicable, rather than a secured borrowing.
4
20. The Company does not transfer any Receivables with the intent to
hinder, delay, or defraud any person or entity. The Company receives reasonably
equivalent value in exchange for its transfer of Receivables.
21. As of the date hereof, (i) the Company is not insolvent nor does the
Company expect to become insolvent, (ii) the Company does not engage in nor does
it expect to engage in a business for which its remaining property represents an
unreasonably small capitalization, (iii) the capitalization of the Company is
adequate in light of its proposed business and purpose, and (iv) the Company is
able to pay its debts as they mature, and does not intend to incur, or believe
that it will incur, indebtedness that it will not be able to repay at its
maturity.
All capitalized terms used herein and not otherwise defined herein shall
have the same meaning herein as in the Opinion.
IN WITNESS WHEREOF, I have hereunto signed my name this ____th day of
April, 1997.
LEXMARK INTERNATIONAL, INC.
By: ---------------------------
Name: Gary E. Morin
Title: Vice President and Chief
Financial Officer
5
SCHEDULE A
NET PURCHASE PRICE OF RECEIVABLES
A. Face amount of new Receivables
B. A x (12 month average Charge-off Ratio x 2.1)
C. A - B
D. A x Yield Rate x 60 days
--------------------
360
Yield Rate = LIBOR + .50%
E. C - D
F. A x 1.00% x 60 days
---------------
360
G. E - F (Purchase Price of new Receivables)
6
OFFICER'S CERTIFICATE
OF LEXMARK RECEIVABLES CORPORATION
----------------------------------
The undersigned, Gary E. Morin, does hereby certify on behalf of Lexmark
Receivables Corporation (the "Company") in connection with the Receivables
Purchase Agreement, dated as of March 31, 1997 (the "LRC Agreement"), among the
Company, as Seller, Lexmark International, Inc. ("LII"), as Servicer and in its
individual capacity, Delaware Funding Corporation ("DFC"), and Morgan Guaranty
Trust Company of New York, as administrative agent (the "Administrative Agent"),
pursuant to which the Company transfers to the Administrative Agent, for the
benefit of DFC and the other Owners under the LRC Agreement, all of its right,
title and interest in the Purchased Interest (as defined in the LRC Agreement)
in the Receivables. The Company acquired the Receivables from LII pursuant to
the Purchase Agreement dated as of March 31, 1997 (the "Purchase Agreement")
between LII and the Company; that s/he is the duly elected, qualified, and
acting President of the Company, and further that:
1. S/he has made such investigation, including discussions with
responsible officers of the Company and its certified public accountants, as is
necessary to enable him/her to deliver this Officer's Certificate.
2. On the date hereof, the Receivables are sold by LII to the Company in
exchange for cash and capital contributions by LII to the Company, which
consideration has a fair market value equal to the fair market value of such
Receivables. Certain of the cash was loaned by LII to the Company pursuant to
the Purchase Agreement, as evidenced by the Subordinated Note executed by the
Company. Subsequent to the date hereof, LII is obligated to sell additional
Receivables to the Company in certain circumstances, but the Company is required
to pay cash for such additional Receivables, unless LII agrees to make loans to
the Company, or agrees to contribute such additional Receivables to the Company
as capital contributions. The consideration received by LII in return for such
additional Receivables shall have a fair market value equal to the fair market
value of such additional Receivables. Such additional Receivables are not sold
by LII to the Company with the intent (on the part of LII or the Company) to
mitigate losses on the Receivables previously sold by LII to the Company. The
proceeds of LII's sale of such Receivables to the Company accrue strictly to
LII, and LII's use of the proceeds is not restricted by the Company, the
Administrative Agent or DFC.
3. LII may cease selling Receivables to the Company on and after April 14,
1998, unless such date is extended by LII in its sole discretion, without
incurring any penalty or loss. Neither LII nor the Company will extend the term
of the Purchase Agreement with the intent (on the part of either LII or the
Company) to mitigate losses on the Receivables previously sold by LII to the
Company.
1
4. On the date hereof, the Company sells the Purchased Interest in the
Receivables to the Administrative Agent, for the benefit of DFC and the other
Owners under the LRC Agreement, in return for cash in an aggregate amount equal
to the fair market value of such Purchased Interest. The aggregate amount of
such cash received by the Company, together with the undivided interest in
Receivables retained by the Company, has a fair market value equal to the fair
market value of the Receivables as of the date hereof.
5. The Company marks its records to indicate that the Receivables have been
sold to the Company by LII and that the Purchased Interest has been transferred
by the Company to the Administrative Agent, for the benefit of DFC and the other
Owners under the LRC Agreement. The Company properly treats the transfer of
Receivables to it as a sale for accounting purposes, and the independent
certified public accountants for the Company concur in such treatment. For tax
reporting purposes, and any applicable regulatory purposes, the Company properly
treats such transfer in a manner consistent with the treatment for accounting
purposes. The Obligors on the Receivables are not notified of the transfer of
such Receivables to the Company or the Company's transfer to the Administrative
Agent, for the benefit of DFC and the other Owners under the LRC Agreement. Any
such notification would be time-consuming and expensive, would be confusing to
Obligors, and would impair customer relations with Obligors. In transactions
similar to those contemplated by the Documents involving the transfer of large
numbers of receivables arising under trade receivable contracts (including
binding invoices), it is standard industry practice not to notify the Obligors
of the transfer.
6. The Company may borrow money from LII pursuant to the Purchase
Agreement from time to time to purchase Receivables from LII. These loans are
made on arm's-length terms that could be obtained from an unrelated third-party
lender. These loans can be repaid from any funds available to the Company other
than funds required to be used to make payments on the Purchased Interests, and
funds required to be used to purchase additional Receivables. Any such loans
will be fully repaid on a timely basis from funds other than funds received from
LII. To assure that the Company has adequate capital to meet such obligations on
the date hereof, LII has contributed cash and other assets in the amount of $9
million which is in excess of the amount determined to be adequate for such
purposes using the factors set forth in Schedule A to this Certificate.
7. There are no other agreements to which the Company is a party relating
to the Receivables, other than the Documents and the documents referred to
therein.
2
8. The Company intends the transfers of the Receivables by LII to the
Company pursuant to the Purchase Agreement, to be an absolute assignment, or a
contribution to capital, as applicable, rather than a secured borrowing.
9. The Company does not transfer any Receivables with the intent to
hinder, delay, or defraud any person or entity. The Company receives reasonably
equivalent value in exchange for its transfer of Receivables.
10. The formulae for calculating the yields on the Purchased Interest in
the Receivables were agreed upon by the Company, the Administrative Agent and
DFC based upon the then-current market rates for comparable interests in the
Receivables. Neither the yields nor the rates of return on the Purchased
Interest in the Receivables is based on the rate at which the Company could
obtain a secured loan.
11. As of the date hereof, (i) the Company is not insolvent nor does the
Company expect to become insolvent, (ii) the Company does not engage in nor does
it expect to engage in a business for which its remaining property represents an
unreasonably small capitalization, (iii) the capitalization of the Company is
adequate in light of its proposed business and purpose, and (iv) the Company is
able to pay its debts as they mature, and does not intend to incur, or believe
that it will incur, indebtedness that it will not be able to repay at its
maturity.
All capitalized terms used herein and not otherwise defined herein shall
have the same meaning herein as in the Opinion.
IN WITNESS WHEREOF, I have hereunto signed my name this ____th day of
April, 1997.
LEXMARK RECEIVABLES CORPORATION
By: ------------------------
Name: Gary E. Morin
Title: President
3
SCHEDULE A
NET PURCHASE PRICE OF RECEIVABLES
---------------------------------
A. Face amount of new Receivables
B. A x (12 month average Charge-off Ratio x 2.1)
C. A - B
D. A x Yield Rate x 60 days
--------------------
360
Yield Rate = LIBOR + .50%
E. C - D
F. A x 1.00% x 60 days
---------------
360
G. E - F (Purchase Price of new Receivables)
4
Schedule 1
SCHEDULE OF RECEIVABLES
[On file with Administrative Agent]
1