Exhibit 10.8
VENDOR PROGRAM AGREEMENT
THIS VENDOR PROGRAM AGREEMENT is dated as of March 30, 1999, between
NATIONSCREDIT COMMERCIAL CORPORATION, a Delaware corporation with a place of
business at 1355 Windward Concourse, Alpharetta, Georgia 30005 ("NCC"), and
EXCEL SWITCHING CORPORATION, a Massachusetts corporation with its principal
place of business at 255 Independence Drive, Hyannis, Massachusetts 03601
("CLIENT").
R E C I T A L S
WHEREAS, Client desires a financing program to support the sale of its
products ("EQUIPMENT"), and Client and NCC wish to establish a financing program
to enable Customers of Client to finance the purchase or lease of such Equipment
("PROGRAM"), on the terms and conditions set forth herein;
NOW, THEREFORE, for valuable consideration hereby acknowledged, the parties
agree as follows:
1. DEFINITIONS.
For purposes of this Agreement:
"AGREEMENT" means this Vendor Program Agreement, as amended, modified,
renewed or extended from time to time.
"APPLICATION" means a credit application completed by a prospective
Customer, which shall include the prospective Customer's financial statements
for the previous three years and interim financial statements for the current
fiscal year, bank references and other credit information concerning a Customer,
as well as any other documents or information required by NCC to initiate its
consideration of a proposed Transaction.
"BUSINESS DAY" means a day other than Saturday or Sunday and any legal
holidays observed in the States of Georgia, Texas or Massachusetts.
"CONTRACT" means any Lease, conditional sales agreement, loan agreement, or
other instrument or agreement evidencing or securing a Transaction.
"CUSTOMER" means a customer of Client who is an obligor under a Transaction
and/or a guarantor of such obligations.
"DEFAULT BY CLIENT" means a material breach by Client of any of its
representations, warranties or obligations under this Agreement or under any
other material agreement between Client and NCC or NCC's affiliates.
"EQUIPMENT" has the meaning set forth in the recitals of this Agreement.
"EVENT OF BANKRUPTCY" means, with respect to any person or entity, its
insolvency, inability to pay debts as they mature, failure to operate as a going
concern, a voluntary or involuntary filing under Title 11 of the United States
Code or any successor or similar federal or state statute or any applicable
foreign law, assignment for the benefit of creditors, appointment of a receiver,
or death or dissolution.
"EVENT OF CANCELLATION" means, with respect to a Transaction, (a) a
Material Adverse Change in the financial or other condition of Client since the
date of this Agreement or of the Customer since the date of the related
Application, (b) any Default by Client, (c) notification by a Customer either to
Client or NCC of its intent to cancel all or any part of its Transaction or to
reject or refuse to accept any Equipment, (d) the inaccuracy of any credit
information supplied to NCC with respect to the Customer or Transaction, or (e)
any failure by Client to fulfill any of the obligations it may have to NCC with
respect to such Transaction.
"FINAL DOCUMENT PACKAGE" means such documents as NCC deems necessary to the
complete the Transaction and to pay the Funded Amount to Client.
"FINANCING TRANSACTION" means a Transaction which constitutes a loan,
conditional sales contract, a lease intended as security (i.e., a contract
between NCC and a Customer for a specified term where legal title to the
Equipment passes to the Customer or which contains a purchase option for a
bargain or nominal amount) or other similar forms of financing whereby NCC
finances the Purchase Price and the Customer grants a security interest in the
related Equipment to NCC.
"FISCAL YEAR" means calendar year ending on or after the date of this
Agreement.
"FUNDED AMOUNT" means the Purchase Price of the applicable Equipment, net
of any down payment or deposit paid to Client by the Customer.
"LEASE" means a contract between NCC and a Customer for a specified term
during which NCC is the owner of the Equipment and the Customer is allowed use
of the Equipment subject to the terms of the contract.
"MATERIAL ADVERSE CHANGE" means, as to Client or a Customer, (a) a material
adverse change in its financial condition, properties, assets, business,
operations or prospects, (b) a material change in its corporate structure,
ownership, management or control, or (c) the occurrence of an Event of
Bankruptcy.
"NET BOOK VALUE" means the value of a Transaction, as reflected on NCC's
books and records, calculated on the basis of: (a) all accrued and unpaid sums
due under the Transaction; plus (b) all future payments due during the remaining
term of the Transaction, with each such payment discounted to its present value
at the rate applicable to the Transaction (or such other special rate as may be
applicable thereto) as of the date of payment due NCC under this Agreement; plus
(c) an amount equal to the residual value of the Equipment assumed by NCC,
discounted to its present value at the rate applicable to the Transaction as of
the date of payment due NCC under this Agreement; plus (d) all unpaid or accrued
taxes, insurance if any, collection costs and other sums, including court costs
and reasonable attorney's fees, due NCC under the Transaction.
"NET LOSS" has the meaning set forth in Section 8(b).
"NET SALE PROCEEDS" means gross proceeds realized by NCC from the sale of
any Equipment, net of costs of repossession, storage and sale of Equipment,
Taxes, court costs and reasonable attorneys' fees, and other expenses incurred
or payable by NCC in connection with realization on the Equipment or enforcement
of the related Contract. If Equipment is sold on credit, gross sale proceeds
will include any cash down payment, any trade-in allowed by NCC and the portion
of the sales price financed by NCC.
"OFF-LEASE" has the meaning set forth in Section 10(a).
"PROGRAM" has the meaning set forth in the recitals of this Agreement.
"PURCHASE PRICE" means the invoiced cost of the Equipment, plus any
applicable delivery and installation charges and sales taxes, paid to Client by
NCC with respect thereto, the cost of which shall not be greater than the
published list price of equivalent equipment.
"REMARKET" means the re-lease or sale of Off-Lease Equipment by Client
pursuant to Section 10.
"REPRESENTATIVE" means a representative of Client.
"TAXES" has the meaning set forth in Section 10(f).
"TERM" has the meaning set forth in Section 13.
"TRANSACTION" means a lease or financing of Equipment for a Customer by NCC
in the form of a Lease, Financing Transaction or other financing product.
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"ULTIMATE NET LOSS LIMIT" has the meaning set forth in Section 8(a).
2. ORIGINATING TRANSACTIONS.
Subject to the terms hereof, NCC may from time to time develop and make
available to Customers certain financing products for use under the Program.
Client shall (a) promote NCC as its financing company of choice with respect to
the financing or leasing of Equipment, and (b) encourage each of its
Representatives to make financing options through NCC known to Client's
customers and to utilize such financing options, as appropriate, in the conduct
of his or her sales efforts pursuant to the terms and conditions of this
Agreement. NCC shall have the right of first refusal on any transaction
originated by Client involving the financing or leasing of Equipment during the
Term of this Agreement; provided, however, that Client may find another
financing source for a proposed transaction, if Client can find better terms and
pricing than those approved by NCC for the transaction.
3. CONSIDERATION OF TRANSACTIONS.
(a) NCC and/or Client will cause each prospective Customer to complete and
deliver to NCC an Application. NCC will review such Application upon its receipt
and will notify Client of NCC's credit decision. All credit decisions will be at
the sole discretion of NCC. NCC will use its best efforts to either approve or
reject any proposed Transaction of $500,000 or less within two Business Days of
its receipt of a completed Application, and will use its best efforts to either
approve or reject any proposed Transaction between $500,000 and $2,000,000
within five Business Days of receipt of a completed Application.
(b) Upon the approval of an Application, NCC shall cause a Final Document
Package to be delivered to a Customer.
(c) NCC shall not be obligated to enter into a Transaction or to purchase
the related Equipment, if either (i) NCC has not received the Final Document
Package within 90 days after NCC sent such package to the Customer, or (ii)
prior to payment by NCC of the Funded Amount for the Transaction, NCC
determines, in its good faith judgment after consultation with Client, that an
Event of Cancellation has occurred. Upon the passage of such 90 day period or
NCC's determination of an Event of Cancellation, NCC shall transfer to Client
any interest which NCC may have in such Transaction or the related Equipment.
Thereafter, NCC shall have no further liability to the Customer or Client in
connection with such Transaction.
4. ACQUISITION OF EQUIPMENT.
Subject to Section 3, and provided Client has fulfilled all of its
obligations relating to a Transaction, NCC will pay Client the Funded Amount
with respect to such Transaction by wire transfer within two Business Days after
NCC's receipt of a complete Final Document Package therefor.
5. PURCHASE ORDER AND WARRANTY.
(a) As to each Lease, Client (i) consents to the assignment by the
applicable Customer to NCC of any purchase order for, and all warranty rights in
connection with, the Equipment related to such Transaction; (ii) agrees that NCC
will not be liable for any obligations of the Customer under any Transaction
documents; and (iii) agrees, upon such acceptance, to deliver to NCC an invoice
or bill of sale conveying to NCC good title to such Equipment, free and clear of
all liens and encumbrances.
(b) As to each Financing Transaction, Client (i) acknowledges that it has
transferred to the applicable Customer all warranty rights in connection with
the Equipment; (ii) agrees that NCC will not be liable for any obligations of
the Customer under any Transaction documents; and (iii) agrees, upon the
acceptance of such Equipment by the applicable Customer, to deliver to NCC a
copy of an invoice or bill of sale evidencing that good title to such Equipment,
free and clear of all liens and encumbrances, has passed to the Customer.
(c) NCC shall not bear any risk of loss to any Equipment until the date of
acceptance by the Customer and NCC's payment of the Funded Amount relating
thereto.
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6. ADMINISTRATION.
(a) NCC will provide general administrative and operations services in
connection with the Program, including but not limited to sales support,
operations support, credit investigation, and billing and collections. NCC will
work with Client to originate, structure and negotiate new Transactions and
otherwise support the Program and Client's sales efforts. NCC will monitor the
quality of customer service and provide for the continuous improvement of such
areas as necessary. Except as otherwise provided in this Agreement, NCC will
perform all usual and customary duties in the operation of a business engaged in
the provision of financing services, including (i) maintaining and operating
systems which track the status of each Transaction; (ii) billing Customers and
receiving and applying funds; (iii) preparing, executing and filing documents,
including leases, notes, security agreements, guaranties and UCC financing
statements; and (iv) collecting and paying all applicable property, sales, use
or similar taxes with respect to Leases and, as appropriate, preparing and
filing tax returns in connection therewith. NationsCredit will provide Client
with monthly reports showing the agings of rentals on Leases and payments on
Financing Transactions, as well as such other information as Client may
reasonably request from time to time.
(b) Client irrevocably appoints NCC, with power of substitution, as
Client's attorney-in-fact to act in Client's name and stead with respect to the
Transactions, and to endorse or sign Client's name on all checks and collections
relating to the Transactions, as NCC deems necessary or appropriate to protect
NCC's interest in the Equipment, the Transactions and any security therefor. NCC
will use its best efforts to deliver copies to Client of any items endorsed with
Client's name pursuant to this Section, other than routine payments on
Transactions.
(c) NCC and Client will each appoint a Program manager to serve as the
primary contact between Client and NCC under the Program. The Program managers
will be charged with the management of the relationship between Client and NCC
under the Program, including compliance by the parties with this Agreement. The
Program managers will (i) facilitate the day to day interactions between the
parties; (ii) assess and resolve disputes between the parties arising from the
day to day operations of the Program; (iii) review from time to time the
documents required to be used under the Program; and (iv) perform such other
functions required of each from time to time pursuant to this Agreement.
(d) At Client's request, NCC will sponsor training programs for Client
sales representatives and manufacturer representatives. Such programs would
include training in the proper documentation of Transactions, techniques in the
use of leases and other financial products as sales tools, and such other
matters as the parties may mutually agree. Client will use its best efforts to
encourage its Representatives to attend such training programs. Each party shall
pay the transportation, facilities and accommodation costs for the training
programs for its own employees or representatives.
(e) Client will invite the appropriate managers of NCC to participate in
selected sales and marketing meetings, product announcements and such other
events as the Program managers deem appropriate. All of the foregoing will be
subject to compliance with all applicable laws, including the securities laws of
the United States and any other applicable jurisdiction.
7. REPURCHASE OF CONTRACTS.
(a) If NCC or Client reasonably determines that:
(i) any Equipment has been surrendered, damaged beyond repair, destroyed
or abandoned by a Customer, or repossessed;
(ii) an Event of Bankruptcy has occurred with respect to a Customer; or
(iii) any Customer has defaulted in the payment of its obligations and such
default has continued uncured for 61 days or more;
then Client may, and shall upon demand by NCC, repurchase the applicable
Contract and related Equipment by paying the Net Book Value therefor. Such
repurchase shall occur within 10 Business Days after NCC makes demand therefor;
provided, however, that in the case of clause (iii), Client may cure all payment
and other defaults
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under a Contract in lieu of repurchase; and provided further, that such cure may
only be effected up to four times for any given Contract. The obligation of
Client to repurchase Contracts and Equipment pursuant to this Section shall be
limited as set forth in Section 8.
(b) If Client fails to repurchase any Contract and Equipment as required
herein, NCC may (but shall not be required to) liquidate same, including
repossession and disposition of the Equipment, and Client shall be liable for
any resulting deficiencies and all reasonable expenses incurred in connection
therewith. Any Equipment may be sold by NCC for cash or on credit, and the Net
Sale Proceeds received by NCC shall be deducted from Client's deficiency
obligation.
(c) Concurrently with the payment by Client of the Net Book Value for any
Contract and Equipment, NCC shall assign same to Client, without recourse,
representation or warranty of any kind, except that NCC shall warrant that it
has title free from liens and encumbrances created by or through NCC. All
financing statements relating to the Contract and/or Equipment shall be assigned
to Client, and NCC shall deliver to Client such original copies of the Contract
and all related Transaction documents held by NCC.
8. ULTIMATE NET LOSS LIMIT.
(a) The aggregate Net Loss incurred by Client pursuant to Section 7 with
respect to Contracts funded by NCC in any Fiscal Year shall not exceed an amount
("ULTIMATE NET LOSS LIMIT"), determined as of the last day of such year, equal
to (i) the aggregate Net Book Value of all Contracts having a risk rating of 8
or higher (as determined by NCC's credit department using its customary
criteria) funded by NCC during such year, plus (ii) the greater of (A)
$2,000,000 or (B) 20% of the aggregate Net Book Value of all other Contracts
funded by NCC during such year. Separate calculations of Net Loss and Ultimate
Net Loss Limit shall be made for each pool of Contracts funded by NCC during
each Fiscal Year.
(b) As used herein, "NET LOSS" means, with respect to any Contract, the sum
of (i) all payments made by Client to NCC to repurchase such Contract, plus (ii)
any cure payments made by Client to NCC with respect to such Contract, minus
(iii) the total amount realized by Client (net of reasonable expenses) upon the
liquidation or disposition of such Contract and the related Equipment, including
recoveries from any Customer and from the sale, lease or other disposition of
the Equipment. In computing Net Loss, amounts paid by Client with respect to a
Contract may only be included if Client shall have Remarketed the related
Equipment within 120 days following the date on which NCC requested repurchase
of the Contract.
(c) Client shall keep records with respect to each Contract that it
repurchases from NCC, showing amounts paid by Client to NCC with respect to such
Contract, amounts realized by it from the liquidation of Equipment, amounts
otherwise recovered and costs of recovery. Upon request, Client will furnish a
written report to NCC, within 10 days after the request, showing such amounts
for any or all Contracts. NCC shall be entitled, on reasonable notice and at
reasonable times, to audit such records of Client.
(d) Client may not, without the prior written consent of NCC (which shall
not be unreasonably withheld), sell any Equipment for a price less than the Net
Book Value of such Contract, or compromise or settle the amount owing on any
repurchased Contract for an amount less than the Net Book Value thereof. If
Client incurs 100% of the Ultimate Net Loss Limit with respect to any Fiscal
Year, NCC may apply any further Net Losses for such year to the Ultimate Net
Loss Limits for other Fiscal Year(s), in such order and timing as NCC deems
appropriate.
9. RETURN OF EQUIPMENT; CAPITAL LEASES; INDEMNIFICATION.
(a) With respect to each Contract under which the Equipment is located
outside the United States, Client will ensure the return of such Equipment to a
U.S. location specified by NCC upon expiration or other termination of the
Contract, whether due to default under a Transaction Document, early
termination, failure to purchase any Equipment under the Contract, expiration of
the lease term or otherwise. If any such Equipment is not so returned, Client
shall, at its option, (i) deliver to NCC replacement equipment of comparable
value, technology and utility, or (ii) repurchase the Equipment and related
Contract from NCC for the Net Book Value of the Contract.
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(b) Client will use its best efforts to ensure that all Leases funded
hereunder may be treated by NCC as capital leases for tax and other purposes.
(c) If (i) Client breaches any representation, warranty or covenant or
fails to perform its obligations in this Agreement, or any related instrument or
agreement, (ii) any Customer returns or fails to accept any Equipment for any
reason, (iii) any Customer fails to make its first rental payment following
NCC's funding of a Contract, or (iv) any Customer fails to make payments under
any Contract alleging action or inaction (including breach of any agreement or
warranty) on the part of Client, then NCC may require that Client repurchase the
affected Contract(s) and NCC's rights respecting the applicable Equipment for
the Net Book Value thereof. Such repurchase shall occur within 10 Business Days
after NCC makes demand therefor.
(d) Client agrees to indemnify and hold harmless NCC from and against any
loss, cost, claim, action, damage, injury or expense, including reasonable
attorneys' fees, that NCC may incur in connection with or by reason of Client's
failure to observe or perform any provision of this Agreement, or any related
instrument or agreement. Client agrees to pay all costs and expenses (including
reasonable attorneys' fees) incurred by NCC in the enforcement of this
Agreement.
(e) Client's repurchase, remarketing, indemnification and other obligations
under this Agreement shall not be avoided or limited for any reason, including
without limitation usury or any other defenses to payment claimed or alleged by
any Customer, release of any security for a Transaction by NCC, or waivers,
extensions or other accommodations made by NCC with respect to Customer's
obligations under any Contract or Transaction. NCC shall not be required to
attempt to collect amounts owing under any Contract, to commence legal action
against any Customer, to realize value from any Equipment, or to enforce any
rights against Client, as a precondition to demanding that Client repurchase any
Contract or Equipment or otherwise fulfill its obligations hereunder. To the
fullest extent permitted by law, Client waives any defense or offset it may now
have or hereafter acquire to its repurchase obligations hereunder, including any
defense under suretyship laws or principles. Client waives presentment for
payment, acceptance, protest and notice of protest and all other notices to
which it might be entitled by law, except as provided in this Agreement. NCC's
rights hereunder are cumulative.
(f) Client's obligations under this Section are not subject to the
limitations of Section 8 and will not be included in calculating Net Loss.
10. REMARKETING.
(a) Client will, at the request of NCC, assist NCC in Remarketing any
Equipment returned to or repossessed by NCC, whether due to expiration of a
Lease, default under a Contract, early or scheduled termination of a Lease,
voluntary return of Equipment, or otherwise (such Equipment being "OFF-LEASE").
Remarketing shall be performed as provided below. Client shall not discriminate
against Equipment being Remarketed hereunder in favor of any other used
equipment owned, managed, sold or remarketed by Client.
(b) Client will diligently perform the following Remarketing services with
respect to each item of Equipment (including any Equipment covered by a Contract
as a result of previous Remarketing):
(i) Communicate directly with the Customer to solicit and/or present
renewal and purchase options for the Equipment at least 90 days prior
to scheduled expiration of the Contract;
(ii) Provide telephonic and written feedback to NCC regarding the status
of Remarketing negotiations with a Customer, including the Customer's
intentions, counterproposals, and any new equipment or upgrade
requests; and
(iii) At least 75 days in advance, use reasonable efforts to inspect any
Equipment that is scheduled to become Off-Lease and make
recommendations to NCC as to any refurbishment, upgrades, performance
improvements and engineering changes (including projected costs and
estimated fair market value upon completion) appropriate for
Remarketing of the Equipment.
(c) Upon request by NCC, Client will use reasonable efforts to perform the
following Remarketing services for any Equipment that is or is becoming
Off-Lease:
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(i) Peaceably take possession of Equipment as it becomes Off-Lease,
transport it to storage facilities, store the Equipment and insure
the Equipment against all risks of casualty, theft and destruction;
(ii) With NCC's prior written approval, repair and refurbish the Equipment
to return it to a marketable condition, cause the Equipment to
perform and be warranted up to the warranty that Client then makes
available for similar models of used equipment, and provide all
engineering changes appropriate for equipment of the same model;
(iii) Provide or obtain a manufacturer's written certification that the
Equipment is qualified for inclusion under the manufacturer's
standard maintenance policy for any new lessee or owner, and certify
the Equipment to any applicable statutory or regulatory standard or
specification;
(iv) Seek new lessees or purchasers; and
(v) Relicense all software used with the Equipment to the new lessee or
purchaser.
(d) Client will provide Remarketing reports to NCC, within 10 days after
the end of each month, detailing as of the end of the prior month (i) any
Equipment becoming Off-Lease within the next 90 days, and any negotiated
extension, renewal or disposition thereof, (ii) all Equipment disposed of or
re-leased during such month, showing the terms of such Remarketing, (iii) a
description of all Off-Lease Equipment, including model and serial number, (iv)
prices, if any, obtained in the marketing or remarketing of similar equipment by
Client, (v) prices, if any, obtained at scrap or salvage for similar equipment
by Client, and (vi) such other information as NCC may reasonably request.
(e) In establishing rental or sales rates for the Remarketing of any
Equipment, Client shall apply rates that, in its best commercial judgment, are
the most favorable rates obtainable for equipment of such types. Client shall
not offer credits or discounts without NCC's prior approval. Client will
promptly identify to NCC any prospective lessees or purchasers of any Equipment,
and will promptly transmit any proposed lease, renewal, extension or sales
contract relating to Equipment and any related materials. Client shall use its
best efforts to provide NCC with such credit information as NCC may request with
respect to any prospective lessee or purchaser, but it is understood that such
information is provided without warranty by Client as to accuracy or
completeness. NCC may approve the Customer, price, terms and conditions of any
Remarketing transaction in NCC's sole discretion, and Client will not consummate
any transaction unless it is approved. If NCC approves of a transaction, it will
notify Client in writing of the approval. NCC's failure to notify Client of
approval within five Business Days after receipt of complete credit and other
information will constitute disapproval. NCC will, concurrently, use its
reasonable efforts to remarket any Off-Lease Equipment.
(f) Upon the Remarketing of any Equipment, Client will promptly pay all
sales, use, property, excise, ad valorem or other taxes payable to any
governmental body in connection with the Remarketing (collectively, "TAXES")
from any cash proceeds derived in the Remarketing, and will deliver the
remaining cash proceeds to NCC. Upon Remarketing in a cash sale, Client shall
deliver to NCC the executed sales contract and all other documents evidencing
the sale. Upon Remarketing through a re-lease, extension, renewal or installment
sale, Client will promptly deliver to NCC:
(i) The executed lease, installment sales agreement, or extension or
renewal agreement, together with all related instruments and
agreements, in form and substance satisfactory to NCC, and an
assignment thereof signed by Client in favor of NCC;
(ii) A notice of assignment addressed to the lessee or purchaser, executed
by Client, in a form acceptable to NCC;
(iii) Such UCC and lien filings, title information and evidence of
insurance as NCC may require;
(iv) An installation certificate showing the Equipment has been installed,
is ready for use and has been unqualifiedly accepted by the lessee,
purchaser and/or user; and
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(v) Such other instruments, agreements and information as NCC may
reasonably request.
(g) NCC will promptly reimburse Client for all reasonable out-of-pocket
expenditures made by Client for transportation, storage, refurbishment, upgrade,
improvement, reengineering, remarketing and sale of any Off-Lease Equipment
returned by a lessee at the scheduled expiration of a Lease (and not as a result
of early termination, default or other cause), to the extent such expenditures
were approved in writing, in advance, by NCC with respect to the Equipment. Upon
Client's successful Remarketing of any other Off-Lease Equipment, and payment of
all Taxes relating thereto, Client shall be reimbursed from the remaining
Remarketing proceeds received upon the sale, or from the initial rental payments
under any lease or extension, for any such expenditures made by Client and
approved in writing, in advance, by NCC with respect to such Equipment. For
purposes of this Section, Client's expenditures will be calculated at Client's
actual cost, not its customary retail price, for the applicable services or
parts. In addition, once NCC has received the Net Book Value of the applicable
Contract, NCC shall share with Client 35% of all additional amounts realized
from Client's Remarketing of the Equipment (whether such Equipment was returned
upon scheduled expiration of a Lease, as a result of early termination or
default, or otherwise), as and when received by NCC.
11. REPRESENTATIONS, WARRANTIES AND COVENANTS OF CLIENT.
Client hereby represents, warrants and covenants to NCC, as of the date
hereof, the date of each Application, the date of payment by NCC of any Funded
Amount, and throughout the term of any Transaction, that:
(a) Client is a duly organized and validly existing corporation, and has
full power to enter into this Agreement and to carry out the transactions
contemplated hereby; the execution and delivery of this Agreement and the
performance by Client of the transactions contemplated hereby have been duly
authorized by all necessary corporate action; and this Agreement constitutes a
legal, valid and binding obligation of Client, enforceable in accordance with
its terms, except as may be limited by bankruptcy, insolvency or similar laws
affecting the rights and remedies of creditors generally and the availability of
equitable remedies;
(b) Neither the execution of this Agreement nor the consummation of the
transactions contemplated hereby will constitute a violation or default of any
statute, rule, or decree of any court, administrative agency or governmental
body to which Client is or may be subject, or any material agreement by which
Client or any of its assets is bound;
(c) All documents relating to a Transaction to which Client is a party or
by which it is bound will be genuine, legal, valid, and binding obligations of
Client enforceable in accordance with their terms, except as may be limited by
bankruptcy, insolvency or similar laws affecting the rights and remedies of
creditors generally and the availability of equitable remedies;
(d) To the best of Client's knowledge, the signature of the Customer is
genuine on its Transaction documents, and the individual signing on behalf of
the Customer holds the office set forth below his name;
(e) Client has not received nor will it receive any rent or other monies
from any Customer in respect of any Transaction (other than any required advance
rent or down payments disclosed in the Application and Final Document Package),
and Client will immediately remit any advance rent or other funds owed to NCC
with respect to any Transaction;
(f) Client will deliver to NCC good title to the Equipment governed by any
Transaction which constitutes a Lease, free and clear of all liens, claims,
security interests and encumbrances (other than the rights of the applicable
Customer to use the Equipment pursuant to the terms of the applicable
Transaction), on and as of the date of the Customer's acceptance of the
Equipment;
(g) The Equipment covered by any Contract funded by NationsCredit has been
delivered to and accepted by the named Customer, and is in good working order,
condition and repair, conforming to specifications; the Equipment satisfies all
federal, state, local and applicable foreign governmental standards for its use,
existence and operations; Client will service and maintain the Equipment in
compliance with any service or maintenance contracts it has with the Customer;
and Client will honor any agreements made or warranties given by Client to any
Customer in connection with any Transaction;
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(h) Client has disclosed to NCC all credit information known to Client that
could be reasonably relevant to a credit determination concerning a Customer or
Transaction; and Client has not participated in, nor has knowledge of, any
fraudulent act in connection with any Transaction or any Customer;
(i) Client shall pay all applicable sales, use or property taxes which may
apply to the Equipment assessed or imposed on or prior to the time NCC or the
applicable Customer acquires the Equipment, and, upon NCC's request, Client will
use its best efforts to provide NCC with proof of such payment as promptly as
possible;
(j) The Customer under each Contract is a "resident" of the United States
for all taxing purposes; NCC is not required to be licensed or to obtain any
licenses or governmental approvals (whether U.S. or foreign) for any Contract
relating to Equipment located outside the United States; no taxes, withholdings,
imposts, duties, assessments or similar items are payable by NCC in connection
with any such Contract or Equipment; and all rentals and other amounts payable
under the Contract are denominated and payable in U.S. dollars;
(k) For each Contract relating to Equipment located outside the United
States, Client or Customer has paid (or when due will promptly pay) all sales,
use, property, installation or other taxes, duties, withholdings, assessments,
licenses, tolls, inspection fees or other fees, bonds, permits, certificates or
taxes which were (or may be) required to be paid or obtained, as the case may
be, in connection with (i) Customer's acquisition of the Equipment; (ii) the
execution or delivery of the Contract; (iii) the acquisition of the Equipment by
NCC; and (iv) the Contract and Equipment;
(l) Client will deliver to NCC, within 120 days after the end of Client's
fiscal year, its annual audited financial statements or annual report for such
fiscal year, and within 60 days after the end of each fiscal quarter, Client's
unaudited quarterly financial statements, in form and substance satisfactory to
NCC, and certified by an officer of Client in a manner acceptable to NCC; and
the financial statements of Client delivered to NCC from time to time fairly
present the financial position of Client as of the dates thereof and the results
of operations of Client for the periods covered thereby, all in conformity with
generally accepted accounting principles applied on a consistent basis; and
(m) No Material Adverse Change has occurred with respect to Client since
the date of this Agreement; and Client will promptly notify NCC immediately upon
becoming aware that any such Material Adverse Change could occur or has
occurred.
12. REPRESENTATIONS AND WARRANTIES OF NCC.
NCC hereby represents, warrants and covenants to Client, as of the date
hereof, that:
(a) NCC is a duly organized and validly existing corporation, and has full
power to enter into this Agreement and to carry out the transactions
contemplated hereby; the execution and delivery of this Agreement and the
performance by NCC of the transactions contemplated hereby have been duly
authorized by all necessary corporate action; and this Agreement constitutes a
legal, valid and binding obligation of NCC, enforceable in accordance with its
terms, except as may be limited by bankruptcy, insolvency or similar laws
affecting the rights and remedies of creditors generally and the availability of
equitable remedies; and
(b) Neither the execution of this Agreement nor the consummation of the
transactions contemplated hereby will constitute a violation or default of any
statute, rule or decree of any court, administrative agency or governmental body
to which NCC is or may be subject, or any material agreement by which Client or
any of its assets is bound.
13. TERM AND TERMINATION.
This Agreement will be effective upon execution by NCC and Client and will
continue from such effective date for a period of two years ("TERM"). Upon
expiration of the Term, this Agreement will automatically renew and the Term
will extend for successive terms of one year, unless either party has
theretofore notified the other party that this Agreement shall terminate at the
end of its current Term. This Agreement may also be terminated (a) by NCC upon
90 days prior written notice to Client if NCC does not receive annual credit
approval from its senior
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management for the Program, or if an Event of Cancellation occurs that is
applicable to all Transactions, or (b) by Client upon 90 days prior written
notice to NCC if Client's Board of Directors hereafter disapproves the Program.
Termination of this Agreement shall not affect Client's repurchase, remarketing,
indemnification and other obligations relating to Transactions funded or
committed by NCC prior to such termination, which obligations shall continue
until all such Transactions are paid in full and NCC has disposed of all related
Equipment.
14. ASSIGNMENT OF RIGHTS.
The rights and obligations of NCC and Client under this Agreement may not
be assigned without the prior written consent of the other party; provided,
however, that NCC may, without prior written consent, assign any of its rights
hereunder or under any Transaction to an affiliate (but such assignment shall
not relieve NCC of its obligations hereunder), and Client may, without prior
written consent, assign any of its rights to payment hereunder to any party. NCC
may, in its sole discretion, securitize or syndicate its rights under any
Transaction.
15. Y2K COMPLIANCE.
Client represents, warrants and covenants that it (a) has initiated a
review and assessment of all areas within its and its affiliates' business and
operations (including those affected by suppliers and vendors) that could be
adversely affected by the "Year 2000 Problem" (i.e., the risk that computer
applications used by it or any of its affiliates (or its suppliers and vendors)
may be unable to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after December 31, 1999), (b) has
developed a plan and timeline for addressing the Year 2000 Problem on a timely
basis, (c) has, to date, implemented that plan in accordance with that
timetable, (d) reasonably believes that all computer applications (including
those of its suppliers and vendors) that are material to its or any of its
affiliates' business and operations will on a timely basis be able to perform
properly date-sensitive functions for all dates before and after January 1, 2000
(that is, be "Year 2000 Compliant"), except to the extent that a failure to do
so could not reasonably be expected to have a material adverse effect on it, and
(e) will promptly notify NCC in the event it discovers or determines that any
computer application (including those of its suppliers and vendors) that is
material to its or any of its affiliates' business and operations will not be
Year 2000 Compliant on a timely basis, except to the extent that such failure
could not reasonably be expected to have a material adverse effect on Client.
16. MISCELLANEOUS.
(a) Client will have no right nor will it attempt to accept collections,
repossess or consent to the return of any Equipment involved in a Transaction
funded by NCC, unless Client obtains the prior written consent of NCC, nor will
Client otherwise modify the terms of any such Transaction in any way whatsoever.
(b) Notices to Client or NCC under this Agreement will be deemed to have
been given when sent by recognized overnight delivery service or by certified
mail, return receipt requested, to the other party at the address first stated
above or such other address as such party may have provided by notice. Notices
will be effective one Business Day after deposit with an overnight courier or
five Business Days after transmittal by certified mail.
(c) This Agreement constitutes the entire agreement between the parties
concerning the subject matter hereof, and supersedes all prior understandings or
agreements of the parties relating thereto. The terms of this Agreement, or any
related instrument or agreement, may not be modified orally, but only by a
writing duly executed by both parties. If any provision of this Agreement is
held by any court of competent jurisdiction to be illegal, void or
unenforceable, such provision will be of no force and effect, but the illegality
or unenforceability of such provision will not impair the enforceability of any
other provision of this Agreement.
(d) The failure of any party at any time to require performance of any
provision hereof will not affect the right to require full performance thereof
at any time thereafter, and the waiver by either party of a breach of any
provision will not constitute a waiver of any subsequent breach or nullify the
effectiveness of such provision.
(e) This Agreement may be executed in one or more counterparts, all of
which together will constitute one and the same instrument. If there is any
conflict between this Agreement and any ancillary agreements with respect to any
Transaction or the related Equipment, then as between NCC and Client, the terms
and conditions of this Agreement will control.
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(f) This Agreement and any amendments hereto will be binding on and inure
to the benefit of the parties hereto, and their respective permitted successors
and assigns. This Agreement will not benefit or be enforceable by any other
person or entity, including any Customer.
(g) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York. The parties agree that the state and federal
courts located in New York, New York shall have jurisdiction to hear and
determine any dispute pertaining to this Agreement and the matters contemplated
hereby, and the parties expressly submit and consent to such jurisdiction. TO
THE MAXIMUM EXTENT PERMITTED BY THE LAWS OF ANY FORUM STATE, CLIENT AND NCC EACH
HEREBY WAIVE TRIAL BY JURY IN ANY PROCEEDING RELATING TO THIS AGREEMENT, ANY
TRANSACTION HEREUNDER OR ANY RELATED MATTERS.
IN WITNESS WHEREOF, this Vendor Program Agreement is executed as of the
date set forth above.
NATIONSCREDIT COMMERCIAL EXCEL SWITCHING CORPORATION
CORPORATION
By /s/ WILLIAM GMAZ By /S/ STEPHEN S. GALLIKER
------------------------------ ----------------------------------
Title: Senior Vice President Title: Chief Financial Officer
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