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TRANSFER AND ADMINISTRATION AGREEMENT
among
DIRECT MERCHANTS CREDIT CARD BANK, NATIONAL ASSOCIATION,
as the Transferor and as the Collection Agent,
ENTERPRISE FUNDING CORPORATION
and
SHEFFIELD RECEIVABLES CORPORATION,
as Purchasers,
BARCLAYS BANK PLC,
as Sheffield Agent
and
NATIONSBANK, N.A.,
as a Bank Investor and Enterprise Agent,
and
NATIONSBANK, N.A.,
as Administrative Agent
Dated as of June 30, 1999
GE CAPITAL CONSUMER CARD CO. PORTFOLIO
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SECTION 10.3.Notices................................................96
SECTION 10.4.Governing Law; Submission to Jurisdiction;
Integration............................................99
SECTION 10.5.Severability; Counterparts.............................99
SECTION 10.6.Successors and Assigns................................100
SECTION 10.7.Waiver of Confidentiality.............................101
SECTION 10.8.Confidentiality Agreement.............................101
SECTION 00.0.Xx Bankruptcy Petition Against the Purchasers.........102
SECTION 00.00.Xx Recourse Against Stockholders, Officers or
Directors............................................102
SECTION 10.11.Characterization of the Transactions Contemplated
by the Agreement.....................................103
SECTION 10.12.Conflict Waiver......................................104
SECTION 10.13.Limitation of Liability..............................104
SECTION 10.14.Pari Passu Interests.................................105
SECTION 10.15.Further Assurances...................................105
EXHIBIT A Form of Additional Investment Certificates
EXHIBIT B Form of Assignment and Assumption Agreement
EXHIBIT C Form of Agreed Upon Procedures
EXHIBIT D Form of Investor Report
EXHIBIT E Form of Certificates
EXHIBIT F Form of Transfer Certificates
EXHIBIT G Location of Records
EXHIBIT H List of Subsidiaries, Divisions and Tradenames
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TRANSFER AND ADMINISTRATION AGREEMENT
TRANSFER AND ADMINISTRATION AGREEMENT (as amended, supplemented or
otherwise modified and in effect from time to time, this "Agreement"), dated as
of June 30, 1999, by and among DIRECT MERCHANTS CREDIT CARD BANK, NATIONAL
ASSOCIATION, a national banking association with its principal offices located
in Arizona (together with its successors and assigns, "DMCCB"), as transferor
(in such capacity, the "Transferor") and as collection agent (in such capacity,
the "Collection Agent"), ENTERPRISE FUNDING CORPORATION, a Delaware corporation
(together with its successors and assigns, "Enterprise"), as a Purchaser,
SHEFFIELD RECEIVABLES CORPORATION, a Delaware corporation (together with its
successors and assigns, "Sheffield"), as a Purchaser, BARCLAYS BANK PLC, an
English banking corporation (together with its successors and assigns,
"Barclays"), as the Sheffield Agent, NATIONSBANK, N.A., a national banking
association (together with its successors and assigns, "NationsBank"), as a Bank
Investor and the Enterprise Agent, and NationsBank, as the agent for the
Enterprise Agent and the Sheffield Agent (in such capacity, the "Administrative
Agent").
PRELIMINARY STATEMENTS
WHEREAS, the Transferor may desire to convey, transfer and assign, from
time to time, undivided percentage interests in certain accounts receivable, and
the Purchasers may desire to, and the Bank Investors, if requested, shall,
accept such conveyance, transfer and assignment of such undivided percentage
interests, subject to the terms and conditions of this Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Defined Terms.
As used in this Agreement, the following terms shall have the following
meanings:
"Account" shall mean each VISA or MasterCard account in existence as of the
Cut-Off Date pursuant to an Account Agreement, which accounts were sold by GE to
the Transferor pursuant to the GE Agreement, which is identified by account
number and by the outstanding balance as of the Cut-Off Date and referred to in
the Account Schedule delivered to the Purchaser Agents on the Closing Date
pursuant to Section 2.8, including any Related Account, and any Related Account
established after the Cut-Off Date and any Account converted
to the Transferor's systems, shall be identified on the Account Schedule, as
such schedule is delivered from time to time pursuant to Section 2.8 hereof.
"Account Agreement" shall mean the cardholder agreements and Federal Truth
in Lending Statement for Accounts, between an Obligor and, originally, GE, or to
which the Transferor has become a party, as such agreements or statement may be
amended, modified or otherwise changed from time to time.
"Account Schedule" shall mean the schedule of Accounts (which schedule may
be in the form of a computer file or microfiche) of the Transferor delivered to
the Purchaser Agents on the Closing Date, as delivered from time to time
pursuant to the terms of this Agreement.
"Accrued Interest Component" means, for any Collection Period, that portion
of the Interest Component of all Related Commercial Paper outstanding at any
time during such Collection Period which has accrued from the first day through
the last day of such Collection Period whether or not such Related Commercial
Paper matures during such Collection Period, based on the actual number of days
in such Collection Period that such Related Commercial Paper was outstanding.
"Additional Investment Certificate" means a certificate, in substantially
the form attached hereto as Exhibit A or in such other form as is mutually
agreed to by the Transferor and the Purchaser Agents, furnished by the
Collection Agent pursuant to Section 2.11 hereof.
"Adjusted LIBOR Rate" means, with respect to any funding period during
which the return to any Bank Investor or any Liquidity Provider is to be
calculated by reference to the London interbank offered rate, a rate which is
1.0% in excess of a rate per annum equal to the sum (rounded upwards, if
necessary, to the next higher 1/100 of 1%) of (A) the rate obtained by dividing
(i) the applicable LIBOR Rate by (ii) a percentage equal to 100% minus the
reserve percentage, if any, used for determining the maximum reserve requirement
as specified in Regulation D (including, without limitation, any marginal,
emergency, supplemental, special or other reserves) that is applicable to the
applicable Purchaser Agent during such period in respect of eurocurrency or
eurodollar funding, lending or liabilities (or, if more than one percentage
shall be so applicable, the daily average of such percentage for those days in
such period during which any such percentage shall be applicable) plus (B) the
then daily net annual assessment rate (rounded upwards, if necessary, to the
nearest 1/100 of 1%) as estimated by the applicable Purchaser Agent for
determining the current annual assessment payable by the applicable Purchaser
Agent to the Federal Deposit Insurance Corporation in respect of eurocurrency or
eurodollar funding, lending or liabilities.
"Adjustment Payment" has the meaning assigned to that term in Section
2.9(a).
"Administrative Agent" means NationsBank, N.A., in its capacity as agent
for the Purchaser Agents, together with its successors, including any successor
thereto appointed pursuant to Article IX.
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"Administrative Fee" means the fee payable by the Transferor to Enterprise
pursuant to Section 2.7 hereof, the terms of which are set forth in the Fee
Letter.
"Adverse Claim" means a lien, security interest, charge or encumbrance, or
other right or claim in, of or on any Person's assets or properties in favor of
any other Person (including any UCC financing statement or any similar
instrument filed against such Person's assets or properties), excluding any
liens created under this Agreement or liens that secure the payment of taxes,
assessments and governmental charges or levies, if such taxes are either (a) not
delinquent or (b) being contested in good faith by appropriate legal or
administrative proceedings and as to which adequate reserves in accordance with
generally accepted accounting principles shall have been established.
"Affected Assets" means, collectively, the Receivables, the Related
Security, the Collections and Proceeds relating thereto.
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. A Person shall be deemed to control another Person if
the controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of voting stock, by contract or otherwise.
"Aggregate Interest Component" means aggregate sum of the Interest
Components of all issued and outstanding Related Commercial Paper.
"Aggregate Unpaids" means, at any time, an amount equal to the sum of (i)
the aggregate accrued and unpaid Carrying Costs at such time, (ii) all amounts
of the type included in the definition of Carrying Costs which will accrue after
such time, (iii) the Net Investments at such time, and (iv) all other amounts
owed (whether due or accrued) hereunder by the Transferor or the Collection
Agent to the Purchasers, the Administrative Agent, the Purchaser Agents or the
Bank Investors at such time.
"Applicable Purchaser" means (a) Enterprise, with respect to the Enterprise
Bank Investors and the Enterprise Agent and (b) Sheffield, with respect to the
Sheffield Bank Investors and the Sheffield Agent.
"Applicable Purchaser Percentage" means (i) with respect to Enterprise,
56.25% and (ii) with respect to Sheffield, 43.75%.
"Assignment Amount" with respect to a Bank Investor shall mean at any time
an amount equal to the least of (i) such Bank Investor's Special Pro Rata Share
of the applicable Net Investment at such time, (ii) such Bank Investor's Special
Pro Rata Share of the aggregate outstanding principal balance of Receivables
(other than Defaulted Receivables as shown on the most recently delivered
Investor Report hereunder) at such time, and (iii) such Bank Investor's unused
Commitment.
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"Assignment and Assumption Agreement" means (i) with respect to any
Enterprise Bank Investor, an Assignment and Assumption Agreement substantially
in the form of Exhibit B attached hereto and (ii) with respect to any Sheffield
Bank Investor, the Sheffield Agreement.
"Bank Investors" shall mean, collectively, the Enterprise Bank Investors
and the Sheffield Bank Investors.
"Bank Receivables Purchase Facility" means the Amended and Restated Bank
Receivables Purchase Agreement, dated as of July 30, 1998, between DMCCB, as
seller, and MCI, as buyer, as amended from time to time.
"Bankruptcy Code" means Xxxxx 00, Xxxxxx Xxxxxx Code, as amended,
supplemented or otherwise modified.
"Barclays" shall have the meaning set forth in the preamble to this
Agreement.
"Base Rate" or "BR" means (x) with respect to Enterprise and the Enterprise
Bank Investors, a rate per annum equal to the greater of (i) the prime rate of
interest announced by the Liquidity Provider (or, if more than one Liquidity
Provider, then by NationsBank) from time to time, changing when and as said
prime rate changes (such rate not necessarily being the lowest or best rate
charged by the Liquidity Provider (or NationsBank, as applicable) and (ii) the
sum of (a) 1.50% and (b) the rate equal to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day for such transactions
received by the Liquidity Provider (or, if more than one Liquidity Provider,
then by NationsBank) from three (3) Federal funds brokers of recognized standing
selected by it and (y) with respect to Sheffield and the Sheffield Bank
Investors, a rate per annum equal to the greater of (i) the prime rate of
interest announced by the Sheffield Agent from time to time, changing when and
as said prime rate changes (such rate not necessarily being the lowest or best
rate charged by the Sheffield Agent) and (ii) the sum of (a) 1.50% and (b) the
rate equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day that is a Business Day, the
average of the quotations for such day for such transactions received by the
Sheffield Agent from three (3) Federal funds brokers of recognized standing
selected by it.
"Benefit Plan" means any employee benefit plan as defined in Section 3(3)
of ERISA in respect of which the Transferor or any ERISA Affiliate of the
Transferor is, or at any time during the immediately preceding six years was, an
"employer" as defined in Section 3(5) of ERISA.
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"Business Day" means any day excluding Saturday, Sunday and any day on
which banks in New York, New York, Charlotte, North Carolina or in the States of
Minnesota or Arizona are authorized or required by law to close, and, when used
with respect to the determination of any Adjusted LIBOR Rate or any notice with
respect thereto, any such day which is also a day for trading by and between
banks in United States dollar deposits in the London interbank market.
"Buyer's Percentage Factor" shall mean, with respect to any Collection
Period, the fraction (expressed as a percentage) computed at any time of
determination as follows:
NI
---
PRB
Where:
NI = the Net Investments at the time of such computation.
PRB = the amount of Principal Receivables minus all Defaulted Receivables
for such Collection Period (which were not excluded from the calculation of
"Principal Receivables" used herein) plus the amount on deposit in the Excess
Funding Account at the time of such computation.
Notwithstanding the foregoing computation, (i) the Buyer's Percentage
Factor shall not exceed 100%, and (ii) the Buyer's Percentage Factor with
respect to Principal Collections at any time on and after the earlier of the
Termination Date and a Special Termination Date shall be the percentage
equivalent of a fraction the numerator of which is the Net Investments as of
such earlier date and the denominator of which is the lesser of (x) the
Principal Receivables plus the amount on deposit in the Excess Funding Account
on the last day of the Collection Period immediately prior to such earlier date
or (y) the Principal Receivables plus the amount on deposit in the Excess
Funding Account on the last day of the immediately preceding Collection Period.
"Capitalized Lease" of a Person means 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.
"Carrying Costs" means for a Collection Period, the sum of (i) the sum of
the dollar amount of the Purchasers' obligations for such Collection Period
determined on an accrual basis in accordance with GAAP consistently applied (a)
as to Enterprise, to pay interest with respect to Purchased Interests pursuant
to the provisions of each Liquidity Provider Agreement (such interest to be
calculated based on the Adjusted LIBOR Rate, provided that if a Termination
Event shall have occurred, such interest shall be calculated at the Base Rate
with respect to Enterprise plus 2.00%) outstanding at any time during such
Collection Period accrued from the first day through the last day of such
Collection Period whether or not such interest is payable during such Collection
Period and to pay interest with respect to amounts disbursed by each
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Credit Support Provider pursuant to the applicable Credit Support Agreement
outstanding at any time during such Collection Period accrued from the first day
through the last day of such Collection Period whether or not such interest is
payable during such Collection Period, (b) as to the Sheffield Bank Investors,
to pay interest accrued from the first day through the last day of such
Collection Period whether or not such interest is payable during such Collection
Period on the applicable portions of the Net Investment of Sheffield allocated
to funding periods outstanding at any time during such Collection Period in
respect of which the applicable interest rate is the Base Rate with respect to
Sheffield or the Adjusted LIBOR Rate with respect to Sheffield (it being
understood that, if a Termination Event shall have occurred with respect to the
Sheffield Bank Investors, such interest shall be calculated at the Base Rate
plus 2.00%), (c) to pay the Accrued Interest Component of Related Commercial
Paper with respect to any Collection Period (and, for purposes of this clause
(c), Related Commercial Paper shall include Commercial Paper issued to fund the
Net Investments even if such Commercial Paper is issued in an amount in excess
of the Net Investments), (d) as to Enterprise, to pay the Dealer Fee with
respect to Related Commercial Paper issued during such Collection Period and (e)
to pay the costs of the Purchasers with respect to the operation of Sections
8.1, 8.2, 8.3 and 8.4; (ii) as to Enterprise, the Program Fee, the
Administrative Fee and the Facility Fee accrued from the first day through the
last day of such Collection Period whether or not such amount is payable during
such Collection Period; (iii) all amounts due the Bank Investors in accordance
with Section 2.3(c), (d), (e) and (f) hereof which accrued during such
Collection Period, whether or not payable during such Collection Period; (iv) as
to Sheffield, the fees specified in the Sheffield Fee Letter (which accrued
during such Collection Period, whether or not payable during such Collection
Period); and (v) any of the foregoing amounts which have not been paid in
respect of any prior Collection Period.
"Certificates" means the certificates issued to the Purchaser Agents for
the benefit of their related Purchasers and their related Bank Investors
pursuant to Section 2.2(g) hereof.
"Closing Date" means June 30, 1999.
"Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time.
"Collateral Agent" means NationsBank, N.A., as collateral agent for each
Liquidity Provider, each Credit Support Provider, the holders of Commercial
Paper and certain other parties.
"Collection Account" shall have the meaning assigned to that term in
Section 2.12(a).
"Collection Agent" means at any time the Person then authorized pursuant to
Section 6.1 hereof to service, administer and collect Receivables, and its
successors and permitted assigns.
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"Collection Agent Default" has the meaning specified in Section 6.4 hereof.
"Collection Period" means the calendar month preceding the Remittance Date,
or in the case of the first Collection Period, the period commencing on the
Cut-Off Date to the end of the calendar month preceding the first Remittance
Date.
"Collections" means, with respect to any Receivable, all cash collections
and other cash proceeds of such Receivable, including, without limitation, all
Recoveries and collections on Finance Charge Receivables, if any, and cash
proceeds of Related Security with respect to such Receivable.
"Commercial Paper" means the promissory notes, having a maturity date of
270 days or less, issued by the Purchasers in the commercial paper market.
"Commitment" (i) means with respect to each Enterprise Bank Investor party
hereto, (A) the Commitment of such Enterprise Bank Investor to make acquisitions
from the Transferor or Enterprise in accordance herewith in an amount not to
exceed the dollar amount set forth opposite such Enterprise Bank Investor's
signature on the signature page hereto under the heading "Commitment" minus the
dollar amount of any Commitment or portion thereof assigned pursuant to an
Assignment and Assumption Agreement plus the dollar amount of any increase to
such Enterprise Bank Investor's Commitment consented to by such Enterprise Bank
Investor prior to the time of determination and (B) with respect to any assignee
of such Enterprise Bank Investor party hereto taking pursuant to an Assignment
and Assumption Agreement, the Commitment of such assignee to make acquisitions
from the Transferor or Enterprise not to exceed the amount set forth in such
Assignment and Assumption Agreement minus the dollar amount of any Commitment or
portion thereof assigned pursuant to an Assignment and Assumption Agreement
prior to such time of determination plus the dollar amount of any increase to
such assignee's Commitment consented to it prior to the time of determination
and (ii) with respect to each Sheffield Bank Investor party hereto, means an
amount not to exceed the dollar amount set forth opposite such Sheffield Bank
Investor's signature on the signature page of the Sheffield Agreement; provided,
however, that in the event that the Facility Limit is reduced, in any case, the
aggregate Commitment of all Bank Investors shall be reduced in a like amount and
the Commitment of each Bank Investor shall be reduced in proportion to such
reduction.
"Commitment Termination Date" means June 28, 2000, or such later date to
which the Commitment Termination Date may be extended by the Transferor, the
Administrative Agent, the Purchaser Agents, the Purchasers and the Bank
Investors not later than 60 days prior to the then current Commitment
Termination Date.
"Conduit Assignee" shall mean, as to Enterprise or Sheffield (a) any
commercial paper conduit administered by NationsBank or Bank of America N.T. &
S.A. ("BofA") or Barclays or (b) any commercial paper conduit, the commercial
paper notes of which are rated at least A-2 by S&P and at least P-2 by Xxxxx'x,
and designated by NationsBank or Barclays,
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respectively, from time to time to accept an assignment from a related Purchaser
of all or a portion of the applicable Net Investment.
"Conversion/Continuation Notice" shall have the meaning specified in
Section 2.3(e) hereof.
"Conversion Date" means the date on which the Collection Agent converts the
Accounts to its own bank identification number using the First Data Resources,
Inc. system instead of the Total System Services, Inc. system.
"Credit Agreement" means the Amended and Restated Revolving Credit
Agreement (as amended, supplemented or otherwise modified from time to time),
dated as of June 30, 1998, among MCI, The Chase Manhattan Bank, as
administrative agent, and the lenders and other parties named therein.
"Credit and Collection Policy" means the written policies and procedures of
the DMCCB relating to the operation of its consumer revolving credit card
business, including, without limitation, the written policies and procedures for
determining the creditworthiness of credit card customers, the extension of
credit to credit card customers and relating to the maintenance of credit card
accounts and collection of receivables with respect thereto, as such policies
and procedures are amended, modified or otherwise changed from time to time.
"Credit Support Agreement" means any agreement between a Purchaser and a
Credit Support Provider evidencing the obligation of such Credit Support
Provider to provide credit support to such Purchaser in connection with the
issuance by such Purchaser of Commercial Paper.
"Credit Support Provider" means the Person or Persons who provides credit
support to a Purchaser in connection with the issuance by such Purchaser of
Commercial Paper.
"Cut-Off Date" means June 29, 1999.
"Date of Processing" means, with respect to any transaction giving rise to
a Receivable, the date on which such transaction is settled according to the
Collection Agent's computer master file of Accounts.
"Dealer Fee" means the fee payable by the Transferor to Enterprise,
pursuant to Section 2.5 hereof, the terms of which are set forth in the Fee
Letter.
"Default Rate" means the ratio (expressed as a percentage) computed as of
the last day of each Collection Period by dividing (i) the aggregate outstanding
balance of all Defaulted Receivables as of such date by (ii) the aggregate
outstanding balance of all Receivables as of such date.
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"Defaulted Receivable" means a Receivable in an Account with respect to
which, in accordance with the Credit and Collection Policy or the Collection
Agent's customary and usual servicing procedures, the Collection Agent has
charged off such Receivable as uncollectible, and in any event shall include, by
the last day of the month in which it became 180 days past due, any Receivable
that is more than 180 days past due; a Receivable shall become a Defaulted
Receivable on the day on which it is recorded as charged off as uncollectible on
the Collection Agent's computer master file of consumer credit card revolving
accounts. Notwithstanding any other provision hereof, any Defaulted Receivables
that were not Eligible Receivables on the date on which an ownership interest
hereunder was initially purchased by the Purchasers or the Bank Investors
hereunder shall be treated as Receivables which are not Eligible Receivables
rather than as Defaulted Receivables.
"Defaulting Bank Investor" has the meaning specified in Section 2.2(d)(iii)
hereof.
"Determination Date" shall mean with respect to any Collection Period, the
date which is two Business Days before the related Remittance Date.
"Discount Percentage" means the Percentage designated by the Transferor
pursuant to Section 2.5(e).
"Discount Receivables" shall have the meaning specified in Section 2.5(e)
hereof.
"Discount Receivables Collections" means, for any day, the product of (a)
the Discount Percentage and (b) Principal Collections on such day.
"DMCCB" means Direct Merchants Credit Card Bank, National Association, a
national banking association, and its successors and permitted assigns.
"Document Agent Fee" means the fee payable by the Transferor to the
Enterprise Agent pursuant to Section 4.1 hereof, the terms of which are set
forth in the Fee Letter.
"Early Collection Fee" means, for any funding period during which the
portion of any Net Investment that was allocated to such funding period is
reduced for any reason whatsoever, an amount (which is payable in accordance
with Section 8.4(b) hereof) equal to the excess, if any, of (i) the additional
interest that would have accrued during such funding period if such reductions
had not occurred, minus (ii) the income, if any, received by the recipient of
such reductions from investing the proceeds of such reductions.
"Eligible Account" means, as of the Cut-Off Date (or, with respect to
Accounts arising after the Cut-Off Date, as of the date of creation), each
Account in existence and owned by the Transferor:
(i) the credit card or cards related thereto have not been reported
lost or stolen or designated fraudulent;
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(ii) the Obligor on which has provided, as its most recent billing
address, an address located in the United States or its territories or
possessions, or Canada, or which is a United States military address;
(iii) which is not an Account as to which any of the Receivables
existing thereunder are Defaulted Receivables;
(iv) which was purchased by the Transferor from GE pursuant to the GE
Agreement (or is a Related Account) and to which the Transferor has good
title, free and clear of all Adverse Claims; and
(v) as to which no Event of Bankruptcy shall have occurred with
respect to the Obligor of any Receivable with respect thereto.
"Eligible Investments" means any of the following (a) negotiable
instruments or securities represented by instruments in bearer or registered or
in book-entry form which evidence (i) obligations fully guaranteed by the United
States of America; (ii) time deposits in, or bankers acceptances issued by, any
depositary institution or trust company incorporated under the laws of the
United States of America or any state thereof and subject to supervision and
examination by Federal or state banking or depositary institution authorities;
provided, however, that at the time of investment or contractual commitment to
invest therein, the certificates of deposit or short-term deposits, if any, or
long-term unsecured debt obligations (other than such obligation whose rating is
based on collateral or on the credit of a Person other than such institution or
trust company) of such depository institution or trust company shall have a
credit rating from Xxxxx'x and S&P of at least "P-1" and "A-1+", respectively,
in the case of the certificates of deposit or short-term deposits, or a rating
not lower than one of the two highest investment categories granted by Xxxxx'x
and by S&P; (iii) certificates of deposit having, at the time of investment or
contractual commitment to invest therein, a rating from Xxxxx'x and S&P of at
least "P-1" and "A-1+", respectively; or (iv) investments in money market funds
rated in the highest investment category or otherwise approved in writing by the
applicable rating agencies; (b) demand deposits in any depositary institution or
trust company referred to in (a)(ii) above; (c) commercial paper (having
original or remaining maturities of no more than 30 days) having, at the time of
investment or contractual commitment to invest therein, a credit rating from
Xxxxx'x and S&P of at least "P-1" and "A-1+", respectively; (d) Eurodollar time
deposits having a credit rating from Xxxxx'x and S&P of at least "P-1" and
"A-1+", respectively; and (e) repurchase agreements involving any of the
Eligible Investments described in clauses (a)(i), (a)(iii) and (d) hereof so
long as the other party to the repurchase agreement has at the time of
investment therein, a rating from Xxxxx'x and S&P of at least "P-1" and "A-1+",
respectively.
"Eligible Receivable" means, at any time, any Receivable:
(i) with respect to which the related Account is an Eligible Account;
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(ii) to which, immediately prior to the transfer to a Purchaser, the
Transferor has good title thereto, free and clear of all Adverse Claims;
(iii) which (together with the Related Security, Collections and
Proceeds related thereto) has been the subject of either a valid transfer
and sale from the Transferor to each of the Purchaser Agents, on behalf of
the applicable Purchaser and its related Bank Investors, of all of the
Transferor's right, title and interest therein or the grant of a first
priority perfected security interest therein (and in the Related Security,
Collections and Proceeds related thereto), effective until the termination
of this Agreement;
(iv) the Obligor of which is not a government or a government
subdivision or agency;
(v) which is not a Defaulted Receivable at the time of the initial
creation of an interest therein hereunder;
(vi) which is an "eligible asset" as defined in Rule 3a-7 under the
Investment Company Act of 1940, as amended;
(vii) a purchase of which with the proceeds of Commercial Paper would
constitute a "current transaction" within the meaning of Section 3(a)(3) of
the Securities Act of 1933, as amended;
(viii) which is an "account" or "general intangible" within the
meaning of Article 9 of the UCC of the applicable jurisdiction;
(ix) which is denominated and payable only in United States dollars in
the United States;
(x) which arises under an Account that, together with the Receivable
related thereto, is in full force and effect and constitutes the legal,
valid and binding obligation of the related Obligor enforceable against
such Obligor in accordance with its terms and is not, at the time of
transfer hereunder, subject to any litigation, right of recission, dispute,
offset, counterclaim or other defense;
(xi) which, together with the Account related thereto, complies in all
material respects with all laws, rules or regulations applicable thereto
(including, without limitation, laws, rules and regulations relating to
truth in lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy) and with respect
to which the Account Agreement related thereto is not in violation of any
such law, rule or regulation in any material respect;
(xii) which is assignable without the consent of, or notice to, the
Obligor thereunder;
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(xiii) the transfer of which hereunder by the Transferor and the
transfer of which under the GE Agreement does not violate, breach or
contravene any applicable laws, rules, regulations, orders or writs or any
contractual or other restriction, limitation or encumbrance;
(xiv) which, at the time of transfer hereunder, has not been
compromised, adjusted or modified (including the granting of any discounts,
allowances or credits); provided, however, that only such portion of such
Receivable that is the subject of such compromise, adjustment or
modification shall be deemed to be ineligible pursuant to the terms of this
clause (xiv);
(xv) as to which no effective financing statement or other instrument
similar in effect covering such Receivable, any interest therein, Account
or Collections with respect thereto is on file in any recording office
except such as may be filed in favor of DMCCB under the GE Agreement or a
Purchaser hereunder;
(xvi) with respect to which all material consents, licenses, approvals
or authorizations of, or registrations or declarations with, any
governmental authority required to be obtained, effected or given by the
Transferor in connection with the creation of such Receivable or the
execution, delivery, creation and performance by the Transferor of the
Account Agreement pursuant to which such Receivable was created, have been
duly obtained, effected or given and are in full force and effect; and
(xvii) which was originated by GE or (as to Related Accounts) the
Transferor in the ordinary course of its business and was validly assigned
to the Transferor under the GE Agreement.
"Enterprise" shall have the meaning set forth in the preamble to this
Agreement.
"Enterprise Agent" means NationsBank or any other entity which has been
appointed as the administrator of Enterprise and agent for the Enterprise Bank
Investors.
"Enterprise Bank Investors" shall mean NationsBank and each other financial
institution that becomes a Bank Investor with respect to any Transferred
Interest held by Enterprise, pursuant to an Assignment and Assumption Agreement,
together with its successors and permitted assigns.
"Enterprise Majority Investors" shall have the meaning specified in Section
9.7(h) hereof.
"Enterprise Wind-Down Event" means the occurrence of any of the following
events:
12
(a) any Liquidity Provider with respect to Enterprise or any Credit Support
Provider with respect to Enterprise shall have given notice that an event of
default has occurred and is continuing under any of its respective agreements
with Enterprise, or the Commitment of such Liquidity Provider under its
Liquidity Provider Agreement or such Credit Support Provider under its Credit
Support Agreement shall have terminated;
(b) the short-term unsecured debt of Enterprise shall not be rated at least
"A-2" by Standard & Poor's and at least "P-2" by Moody's, respectively;
(c) a Termination Event or Potential Termination Event shall have occurred
and be continuing;
(d) Enterprise has notified the Transferor that, in its sole discretion, it
(i) no longer wishes to, or is unable to, issue Commercial Paper with respect to
this Agreement, (ii) elects to commence a Reinvestment Termination Date or (iii)
elects to amortize its Net Investment or elects not to make an additional
Incremental Transfer; and
(e) the date which is five Business Days prior to the Commitment
Termination Date shall have occurred.
"ERISA" means the U.S. Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" means, with respect to any Person, (i) any corporation
which is a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Code) as such Person; (ii) a trade or business
(whether or not incorporated) under common control (within the meaning of
Section 414(c) of the Code) with such Person; or (iii) a member of the same
affiliated service group (within the meaning of Section 414(n) of the Code) as
such Person, any corporation described in clause (i) above or any trade or
business described in clause (ii) above; provided, however, that none of FCI and
its Affiliates (other than the Initial Purchaser and its Subsidiaries) shall be
an ERISA Affiliate.
"Event of Bankruptcy" means, with respect to any Person, (i) that such
Person (a) shall generally not pay its debts as such debts become due, (b) shall
admit in writing its inability to pay its debts generally or (c) shall make a
general assignment for the benefit of creditors; (ii) any proceeding shall be
instituted by or against such Person seeking to adjudicate it as bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a conservator,
receiver, trustee or other similar official for it or any substantial part of
its property, and in the case of any such proceeding instituted against such
Person (other than the Transferor), such proceeding shall continue undismissed
for a period of 30 days; or (iii) if such Person is a corporation, such Person
or any Subsidiary shall take any corporate action to authorize any of the
actions set forth in the preceding clauses (i) or (ii).
13
"Excess Funding Account" shall have the meaning assigned to that term in
Section 2.12(c).
"Excess Spread" means, with respect to any Collection Period, the
annualized percentage equivalent of a fraction the numerator of which is equal
to the Buyer's Percentage Factor of Finance Charge Collections for such
Collection Period minus the Carrying Costs for such Collection Period minus the
Buyer's Percentage Factor of the aggregate amount of Principal Receivables which
became Defaulted Receivables during such Collection Period minus the Buyer's
Percentage Factor of the Servicing Fee with respect to such Collection Period,
and the denominator of which is equal to the average amount of the Net
Investments during such Collection Period.
"Excluded Taxes" shall have the meaning specified in Section 8.3 hereof.
"Facility Fee" means the fee payable by the Transferor to the Enterprise
Agent for distribution to the Bank Investors pursuant to Section 2.7 hereof, the
terms of which are set forth in the Fee Letter.
"Facility Limit" means $800,000,000. Following the earlier of the
Termination Date and Special Termination Date, the Facility Limit shall at all
times equal the Net Investments outstanding as of such date.
"FCI" means Fingerhut Companies, Inc., a Minnesota corporation.
"Fee Letter" means the confidential letter agreement dated the date hereof
among the Transferor, the Enterprise Agent and Enterprise with respect to the
fees to be paid by the Transferor hereunder, as amended, modified or
supplemented from time to time.
"FDIA" means the Federal Deposit Insurance Act.
"FDIC" means the Federal Deposit Insurance Corporation.
"Finance Charge Collections" shall mean, with respect to any Business Day,
Collections received by the Collection Agent with respect to Finance Charge
Receivables and unless otherwise specified herein, Discount Receivables
Collections on such Business Day.
"Finance Charge Receivables" shall mean the sum of all amounts billed from
time to time to the Obligors on any Account in respect of (i) Periodic Finance
Charges, (ii) over limit fees, (iii) late charges, (iv) returned check fees, (v)
annual membership fees and annual service charges, if any, (vi) transaction
charges, (vii) cash advance fees and (viii) similar fees and charges, excluding
fees and charges for insurance and insurance type products, plus (x) Recoveries
and (y) Discount Receivables, if any.
"Fitch" means Fitch Investors Service, L.P., and its successors and
assigns.
14
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
accounting profession, which are in effect from time to time.
"GE" means GE Capital Consumer Card Co., an Ohio state-chartered bank and
shall include, with respect to the origination or creation of any Account sold
pursuant to the GE Agreement, any predecessor in interest to GE which actually
originated such Account.
"GE Agreement" means the Purchase and Sale Agreement, dated as of May 10,
1999, by and between GE and DMCCB, and all schedules and exhibits thereto,
together with all agreements, instruments and documents executed in connection
therewith, including, without limitation, the Interim Servicing Agreement with
respect thereto, as they may be modified, amended and supplemented from time to
time.
"Guaranty" means, with respect to any Person, any agreement by which such
Person assumes, guarantees, endorses, contingently agrees to purchase or provide
funds for the payment of, or otherwise becomes liable upon, the obligation of
any other Person, or agrees to maintain the net worth or working capital or
other financial condition of any other Person or otherwise assures any other
creditor of such other Person against loss, including, without limitation, any
comfort letter, operating agreement or take-or-pay contract and shall include,
without limitation, the contingent liability of such Person in connection with
any application for a letter of credit.
"Incremental Transfer" means a Transfer which is made pursuant to Section
2.2(a) hereof.
"Indebtedness" means, with respect to any Person such Person's (i)
obligations for borrowed money, (ii) obligations representing the deferred
purchase price of property other than accounts payable arising in the ordinary
course of such Person's business on terms customary in the trade, (iii)
obligations, whether or not assumed, secured by liens or payable out of the
proceeds or products of 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 for which
such Person is obligated pursuant to a Guaranty.
"Indemnified Amounts" has the meaning specified in Section 8.1 hereof.
"Indemnified Parties" has the meaning specified in Section 8.1 hereof.
"Interest Component" means (i) with respect to Enterprise, (a) with respect
to any Commercial Paper issued on an interest-bearing basis, the interest
payable on such Commercial Paper at its maturity (including any Dealer Fee) and
(b) with respect to any Commercial Paper issued on a discount basis, the portion
of the face amount of such Commercial Paper representing the discount incurred
in respect thereof (including any Dealer Fee to the extent included as part
15
of such discount) and (ii) with respect to Sheffield, with respect to any
funding period with respect to Sheffield during which all or a portion of its
Net Investment is funded by Commercial Paper of Sheffield, the rate equivalent
to the rate (or, if more than one rate, the weighted average of the rates) at
which such Commercial Paper outstanding during such funding period with respect
to its Net Investment may be sold by any placement agent or commercial paper
dealer selected by Sheffield, which rates shall reflect and give effect to the
commissions of placement agents and dealers in respect of such Commercial Paper,
to the extent such commissions are allocated, in whole or in part, to such
Commercial Paper by the Sheffield Agent (on behalf of Sheffield); provided,
however, that if the rate (or rates) as agreed between any such agent or dealer
and Sheffield is a discount rate, then the rate (or if more than one rate, the
weighted average of the rates) resulting from Sheffield's converting such
discount rate (or rates) to an interest-bearing equivalent rate per annum.
"Interest Rate Cap" shall have the meaning specified in Section 5.1(n)(i).
"Interest Rate Cap Agreement" means each agreement providing for an
Interest Rate Cap between the Transferor and an Interest Rate Cap Provider,
which is satisfactory in form and substance to the Purchaser Agents, together
with any amendment, modification or supplement thereto.
"Interest Rate Cap Provider" means collectively, the providers of an
Interest Rate Cap, each of which shall have a short-term rating from Standard &
Poor's of at least "A-1" or a long-term rating from Standard & Poor's of at
least "A" and a short-term rating of at least "P-1" from Moody's or a long-term
rating of at xxxxx "X0" from Moody's.
"Investor Report" means a report, in substantially the form attached hereto
as Exhibit D or in such other form as is mutually agreed to by the Transferor
and the Purchaser Agents, furnished by the Collection Agent pursuant to Section
2.11 hereof.
"Law" means any law (including common law), constitution, statute, treaty,
regulation, rule, ordinance, order, injunction, writ, decree or award of any
Official Body.
"LIBOR Cap Rate" means for any Collection Period, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Telerate Page 3750 (or any successor page) as the London interbank offered rate
for deposits in U.S. dollars at approximately 11:00 a.m. (London time) two
London Business Days prior to the first day of such Collection Period for a term
of one month.
"LIBOR Rate" means with respect to any funding period, for the Net
Investment of Enterprise and the Enterprise Bank Investors, and the Net
Investment of Sheffield and the Sheffield Bank Investors, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Telerate Page 3750 (or any successor page) as the London interbank offered rate
for deposits in U.S. dollars at approximately 11:00 a.m. (London time) two
London Business Days prior to the first day of each such funding period for a
term of one month. If for any reason
16
such rate is not available, the term "LIBOR Rate" shall mean, for any funding
period, the rate per annum (rounded upwards, if necessary, to the nearest 1/100
of 1%) appearing on Reuters Screen LIBO Page as the London interbank offered
rate for deposits in dollars at approximately 11:00 a.m. (London time) two
London Business Days prior to the first day of such funding period for a term of
one month; provided, however, if more than one rate is specified on the Reuters
Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such
rates; and provided further that if such funding period would expire on (i) a
day which is not a Business Day, such funding period shall expire on the next
succeeding Business Day, (ii) a day which is not a Business Day but is a day of
the month after which no further Business Day occurs in such month, such funding
period shall expire on the next preceding Business Day or (iii) a Business Day
for which there is no numerically corresponding day in the applicable subsequent
calendar month, such funding period shall expire on the last Business Day of
such month.
"Liquidity Provider" means the Person or Persons who will provide liquidity
support to a Purchaser in connection with the issuance by such Purchaser of
Commercial Paper.
"Liquidity Provider Agreement" means (i) with respect to Enterprise, the
agreement between Enterprise and a Liquidity Provider evidencing the obligation
of such Liquidity Provider to provide liquidity support to Enterprise in
connection with the issuance by Enterprise of Commercial Paper and (ii) with
respect to Sheffield, the Sheffield Agreement.
"Loss Sharing Agreement" means any agreement (other than any credit
insurance policies or rights under any such policies), an interest in which was
acquired from GE under the GE Agreement, by which any Person has agreed to make
payments with respect to any losses with respect to any Account or Receivable,
including without limitation, any such agreements as are referenced in the GE
Agreement.
"Material Adverse Effect" means any event or condition which could
reasonably be expected to have a material adverse effect on (i) the
collectibility of the Receivables, taken as a whole, (ii) the condition
(financial or otherwise), businesses or properties of the Transferor or the
Collection Agent, (iii) the ability of the Transferor or the Collection Agent to
perform its respective obligations under the Transaction Documents to which it
is a party or (iv) the legality, binding effect or enforceability of any
material provision of the Transaction Documents or on the rights and remedies of
the Administrative Agent, the Purchaser Agents, the Purchasers or the Bank
Investors under the Transaction Documents.
"Maximum Buyer's Percentage Factor" means 81%.
"MCI" means Metris Companies Inc., a Delaware corporation, and its
successors and permitted --- assigns.
"Moody's" means Xxxxx'x Investors Service, Inc., and its successors and
assigns.
"Multiemployer Plan" means a "multi-employer plan" as defined in Section
4001(a)(3) of ERISA which is or was at any time during the current year or the
immediately
17
preceding five years contributed to by the Transferor or any ERISA Affiliate of
the Transferor on behalf of its employees.
"NationsBank" shall have the meaning set forth in the preamble to this
Agreement.
"Net Investments" means the sum of the cash amounts paid to the Transferor
for each Incremental Transfer by each of the Purchaser Agents, on behalf of its
related Purchaser or its related Bank Investors, less the aggregate amount of
Collections received and applied by the applicable Purchaser Agent to reduce the
applicable Net Investment pursuant to Section 2.5, 2.6 or 2.9 hereof; provided,
however, that each Net Investment shall be restored and reinstated in the amount
of any Collections so received and applied if at any time the distribution of
such Collections is rescinded or must otherwise be returned for any reason; and,
provided, further, that, in the case of the Enterprise Bank Investors, the
related Net Investment may be increased by the amount described in Section
9.7(d) hereof as described therein.
"Non-Defaulting Bank Investor" has the meaning specified in Section
2.2(d)(iii) hereof.
"Obligor" means a Person obligated to make payments pursuant to an Account
or a Receivable, including any guarantor thereunder.
"Official Body" means any government or political subdivision or any
agency, authority, bureau, central bank, commission, department or
instrumentality of any such government or political subdivision, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
"Other Transferor" means any Person other than the Transferor that has
entered into a receivables purchase agreement, loan and security agreement, note
purchase agreement, transfer and administration agreement or any other similar
agreement with a Purchaser.
"Payment Rate" means, for any Collection Period, the percentage equivalent
of a fraction, the numerator of which is equal to the amount of all cash
Collections during such Collection Period and the denominator of which is equal
to the average amount of Receivables outstanding during the prior Collection
Period.
"Periodic Finance Charges" shall have, with respect to any Account, the
meaning specified in the Account Agreement applicable to such Account for
finance charges (due to periodic rate) or any similar term.
"Person" means any corporation, limited liability company, natural person,
firm, joint venture, partnership, trust, unincorporated organization,
enterprise, government or any department or agency of any government.
18
"Potential Termination Event" means an event which but for the lapse of
time or the giving of notice, or both, would constitute a Termination Event.
"Principal Collections" means, with respect to any Collection Period, all
Collections received during such period other than Finance Charge Collections.
"Principal Receivables" means amounts shown on the Collection Agent's
records as amounts payable by Obligors with respect to Eligible Receivables on
any Account other than such amounts that are Finance Charge Receivables or
Defaulted Receivables and shall include, without limitation, amounts payable for
purchases of goods or services or cash advances. A Receivable shall be deemed to
have been created at the end of the day on the Date of Processing of such
Receivable. In calculating the aggregate amount of Principal Receivables on any
day, the amount of Principal Receivables shall be reduced by the aggregate
amount of credit balances in the Accounts on such day.
"Pro Rata Share" means, with respect to each Purchaser and its related Bank
Investors, the percentage obtained by dividing such Purchaser's and its related
Bank Investors' Net Investment by the aggregate Net Investments of the
Purchasers and the Bank Investors.
"Proceeds" means "proceeds" as defined in Section 9-306(1) of the UCC of
the states set forth -------- in Section 2.8(a) hereof.
"Program Fee" means the fee payable by the Transferor to Enterprise
pursuant to Section 2.7 hereof, the terms of which are set forth in the Fee
Letter.
"Purchased Interest" means the interest in the Receivables acquired by a
Liquidity Provider through purchase pursuant to the terms of the Liquidity
Provider Agreement to which it is a party.
"Purchaser" means any of Enterprise, Sheffield or any Conduit Assignee, as
the context requires, and "Purchasers" means all of Enterprise, Sheffield and
all Conduit Assignees.
"Purchaser Agent" means any of the Enterprise Agent, the Sheffield Agent or
the agent for any Conduit Assignee, as the context requires. "Purchaser Agents"
means all of the Enterprise Agent, the Sheffield Agent and any agent for a
Conduit Assignee.
"Rating Agencies" means, collectively, Standard & Poor's, Moody's and
Fitch.
"Receivable" means all of the indebtedness of any Obligor to the
Transferor, whether now existing or hereafter created, under an Account,
including the right to receive payment of any interest or finance charges and
other obligations of such Obligor with respect thereto. Each Receivable
includes, without limitation, all rights of the Transferor under the applicable
Account Agreement.
19
"Receivable Systems" shall have the meaning set forth in Section 3.1(v)(ii)
hereof.
"Records" means all right, title and interest of the Transferor in and to
all Account Agreements and other documents, books, records and other information
(including, without limitation, computer programs, tapes, discs, punch cards,
data processing software and related property and rights) maintained with
respect to Receivables and the related Obligors.
"Recoveries" means all amounts received or collected by the Collection
Agent with respect to Defaulted Receivables.
"Reinvestment Termination Date" means the second Business Day after the
delivery by a Purchaser to the Transferor of written notice that such Purchaser
elects to assign its Net Investment to the Bank Investors pursuant to (i)
Section 9.7, in the case of Enterprise or (ii) the Sheffield Agreement, in the
case of Sheffield.
"Related Account" shall mean an Account having each of the following
characteristics: (i) such Related Account is being established in accordance
with the Credit and Collection Policy; (ii) the Obligor or Obligors with respect
to such Related Account are the same Person or Persons as the Obligor or
Obligors of an Account; (iii) such Related Account is originated as a result of
(x) the credit card with respect thereto being lost or stolen or (y) the
Obligor's requesting a VISA account rather than a MasterCard account and (iv)
such Related Account can be traced or identified as a successor account to an
Account by reference to or by way of the computer or other records of the
Collection Agent or the Transferor.
"Related Commercial Paper" shall mean Commercial Paper issued by a
Purchaser the proceeds of which were used to acquire, or refinance the
acquisition of, its interest in Receivables with respect to the Transferor.
"Related Security" means all of the Transferor's right, title and interest
in, to and under:
(i) all guarantees, indemnities, warranties, insurance (and proceeds
and premium refunds thereof), credit enhancement, reimbursement agreement,
Loss Sharing Agreements or other agreements or arrangements of any kind
from time to time directly or indirectly supporting or securing payment of
a Receivable or holding harmless or assuring any Person against loss in
connection with a Receivable, whether pursuant to the Account related to
such Receivable or otherwise;
(ii) all Records related to the Receivables (which, if necessary to
comply with applicable law applicable to the Collection Agent or
Transferor, the Transferor or Collection Agent may remove therefrom the
names, addresses, Social Security numbers or other personal identifiers of
Obligors);
20
(iii) all rights and remedies of the Transferor under or in connection
with the GE Agreement including all financing statements filed in
connection therewith on which the Purchaser Agents are listed as assignees;
(iv) all right, title and interest of the Transferor under each
Interest Rate Cap Agreement; and
(v) all Proceeds of any of the foregoing.
"Remittance Date" means the fifteenth day of each calendar month, or if
such day is not a Business Day, the next succeeding Business Day; provided,
however, that the first Remittance Date shall be August 16, 1999.
"Required Purchaser Agents" means, for so long as (i) two Purchaser Agents
are parties to this Agreement, either of such Purchaser Agents, (ii) more than
two Purchaser Agents are parties to this Agreement, Purchaser Agents
representing holders of at least 66 and 2/3% of the Net Investment at the time
of any determination thereof and (iii) if only one Purchaser Agent is a party to
this Agreement, such Purchaser Agent.
"Section 8.2 Costs" has the meaning specified in Section 8.2(d) hereof.
"Servicing Fee" means the fee payable to the Collection Agent in an amount
equal to 2% per annum on the average daily amount of the Principal Receivables;
provided, however, after the occurrence of a Collection Agent Default and in the
event the Collection Agent is replaced, such fee may be increased, at the
discretion of the Administrative Agent to an amount determined by the
Administrative Agent to be the then current market rate, not to exceed 3% per
annum on the average daily amount of the Principal Receivables. Such fee shall
accrue from the date of the initial purchase of an interest in the Receivables
to the date on which the Buyer's Percentage Factor is reduced to zero. Such fee
shall be payable only from Collections pursuant to, and subject to the priority
of payments set forth in, Section 2.5 hereof.
"Sheffield" shall have the meaning set forth in the preamble to this
Agreement.
"Sheffield Agent" means Barclays or any other entity which has been
appointed as administrator of Sheffield and agent for the Sheffield Bank
Investors.
"Sheffield Agreement" means that certain Revolving Asset Purchase
Agreement, dated as of the Closing Date, by and among the Sheffield Agent, the
Sheffield Bank Investors and Sheffield, as the same may from time to time be
amended, supplemented or otherwise modified and in effect.
"Sheffield Bank Investors" shall mean each financial institution that
becomes a Bank Investor with respect to any Transferred Interest held by
Sheffield, pursuant to an Assignment and Assumption Agreement, together with its
successors and permitted assigns.
21
"Sheffield Fee Letter" means that certain Fee Letter, dated as of the
Closing Date, between the Transferor and the Sheffield Agent, as the same may
from time to time be amended, supplemented or otherwise modified and in effect.
"Sheffield Wind-Down Event" means the occurrence of any of the following
events:
(a) the fifth (5th) Business Day prior to the Commitment Termination Date;
(b) any provider of Sheffield's liquidity and/or program enhancement shall
have given notice that an event of default has occurred and is continuing under
its agreement with Sheffield;
(c) Sheffield has notified the Transferor that it no longer wishes to, or
is unable to, issue Commercial Paper with respect to this Agreement;
(d) Sheffield's Commercial Paper shall not be rated at least A-1+/P-1 by
Standard & Poor's and Moody's, respectively; and
(e) a Termination Event or Potential Termination Event shall have occurred
and be continuing.
"Special Pro Rata Share" means, for a Bank Investor, the Commitment of such
Bank Investor divided by the sum of the Commitments of all Bank Investors
related to the same Purchaser.
"Special Termination Date" means (a) with respect to Enterprise or the
related Bank Investors, (i) the date of termination of the Commitment of the
Liquidity Provider under the Liquidity Provider Agreement with respect to
Enterprise's commercial paper program or (ii) the date of termination of the
Commitment of the Credit Support Provider under the Credit Support Agreement
with respect to Enterprise's commercial paper program, and (b) with respect to
any Purchaser and related Bank Investors, five Business Days prior to the
Commitment Termination Date if such Purchaser or Bank Investor does not agree to
extend the Commitment Termination Date.
"Spread Account" shall have the meaning assigned to that term in Section
2.12(b).
"Spread Account Cap Percentage Amount", as of any Determination Date, means
the product of the Net Investments on such Determination Date and the applicable
"Spread Account Cap Percentage" determined as set forth in the chart immediately
below, subject to the following: (a) any decrease in the Spread Account Cap
Percentage will take effect only after three consecutive Determination Dates
during which such decrease (or any greater decrease) shall have prevailed; (b)
any calculation of the "Spread Account Percentage" based on the Collection
Periods ending in April 1999 and May 1999 shall assume that, for each such
22
Collection Period, (x) Excess Spread was 5.30% and 5.91%, respectively and (y)
the Payment Rate was 7.67% and 8.16%, respectively.
The Spread Account Cap Percentage Amount applicable on the Closing Date
shall be $0.
Average Excess Spread for the three
consecutive Collection Periods immediately Spread Account Cap Percentage(1) Spread Account Cap Percentage(2)
preceding the Determination Date
Greater than 4.50% 0% 1%
Greater than 4.00% and less than or equal 1% 2%
to 4.50%
Greater than 3.00% and less than or equal 2% 3%
to 4.00%
Greater than 2.00% and less than or equal 3% 4%
to 3.00%
2.00% and less 4% 5%
(1) Spread Account Cap Percentage in effect if average Payment Rate for the
three consecutive Collection Periods immediately preceding the
Determination Date is greater than 6%.
(2) Spread Account Cap Percentage in effect if average Payment Rate for the
three consecutive Collection Periods immediately preceding the
Determination Date is less than or equal to 6%.
"Standard & Poor's" or "S&P" means Standard & Poor's Ratings Services, a
division of The XxXxxx-Xxxx Companies, Inc., and its successors and assigns.
"Structuring Fee" means the fee payable by the Transferor to the Enterprise
Agent pursuant to Section 4.1 hereof, the terms of which are set forth in the
Fee Letter.
"Subsidiary" of a Person means any Person more than 50% of the outstanding
voting interests of which shall at any time be owned or controlled, directly or
indirectly, by such Person or by one or more Subsidiaries of such Person or any
similar business organization which is so owned or controlled.
"Taxes" shall have the meaning specified in Section 8.3 hereof.
23
"Termination Date" means the earlier of (i) the Business Day designated by
the Transferor to the Purchaser Agents as the Termination Date at any time
following 60 days' written notice to the Purchaser Agents and (ii) the day upon
which the Termination Date is declared or automatically occurs pursuant to
Section 7.2(a) hereof.
"Termination Event" means an event described in Section 7.1 hereof.
"Transaction Costs" has the meaning specified in Section 8.4(a) hereof.
"Transaction Documents" means, collectively, this Agreement, the GE
Agreement, the Fee Letter, the Sheffield Fee Letter, the Certificates, the
Transfer Certificate, each Interest Rate Cap Agreement and all of the other
instruments, documents and other agreements executed and delivered by the
Transferor in connection with any of the foregoing, in each case, as the same
may be amended, restated, supplemented or otherwise modified from time to time.
"Transfer" means a conveyance, transfer and assignment by the Transferor to
a Purchaser or the Bank Investors, as applicable, of an undivided percentage
ownership interest in Receivables hereunder (including, without limitation, as a
result of any reinvestment of Collections in Transferred Interests pursuant to
Sections 2.2(e) and 2.5 hereof).
"Transfer Certificate" has the meaning specified in Section 2.2(c) hereof.
"Transfer Date" means, with respect to each Transfer, the Business Day on
which such Transfer is made.
"Transfer Price" means with respect to any Incremental Transfer, the amount
paid to the Transferor by a Purchaser or the Bank Investors as described in the
applicable Transfer Certificate.
"Transfer Price Deficit" has the meaning specified in Section 2.2(d)(iii)
hereof.
"Transferor" means DMCCB and its successors and permitted assigns.
"Transferor's Percentage Interest" means, on any date of determination,
100% minus the Buyer's Percentage Factor on such date.
"Transferred Interest" means, at any time of determination, an undivided
percentage ownership interest in (i) each and every then outstanding Receivable,
(ii) all Related Security, (iii) all Collections with respect thereto, and (iv)
other Proceeds of the foregoing, which undivided ownership interest shall be
equal to the Buyer's Percentage Factor at such time, and only at such time
(without regard to prior calculations). The Transferred Interest in each
Receivable, together with Related Security, Collections and Proceeds with
respect thereto, shall at all times be equal to the Transferred Interest in each
other Receivable, together with Related Security, Collections and Proceeds with
respect thereto. To the extent that the Transferred
24
Interest shall decrease as a result of a recalculation of the Buyer's Percentage
Factor, each of the Purchaser Agents, on behalf of each of their respective
Purchasers or Bank Investors shall be considered to have reconveyed the
Transferor an undivided percentage ownership interest in each Receivable,
together with Collections and Proceeds with respect thereto, in an amount equal
to its Pro Rata Share of such decrease such that in each case the Transferred
Interest in each Receivable shall be equal to the Transferred Interest in each
other Receivable.
"UCC" means, with respect to any state, the Uniform Commercial Code as from
time to time in effect in such state.
"U.S." or "United States" means the United States of America.
"Valuation Date" means June 21, 1999.
"Year 2000 Compliant" shall have the meaning set forth in Section 3.1(v)(i)
hereof.
"Year 2000 Problem" shall have the meaning set forth in Section 3.1(v)(i)
hereof.
SECTION 1.2. Other Terms.
All accounting terms not specifically defined herein shall be construed in
accordance with GAAP. All terms used in Article 9 of the UCC in the State of New
York, and not specifically defined herein, are used herein as defined in such
Article 9.
SECTION 1.3. Computation of Time Periods.
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", the words "to" and "until" each means "to but excluding",
and the word "within" means "from and excluding a specified date and to and
including a later specified date".
SECTION 1.4. NationsBank/Bank of America Merger.
The parties hereto (i) acknowledge that on or about July 23, 1999,
NationsBank will be merged with Bank of America National Trust and Savings
Association, a national banking association, and the combined entity will be
renamed "Bank of America, National Association", and (ii) acknowledge and agree
that upon such merger, without any further action, the combined entity will be a
party hereto in place of NationsBank, and each reference to NationsBank will
mean and be a reference to such combined entity.
25
ARTICLE II
PURCHASES AND SETTLEMENTS
SECTION 2.1. Facility.
Upon the terms and subject to the conditions herein set forth, (x) the
Transferor may, at its option, convey, transfer and assign to the Purchaser
Agents, on behalf of their related Purchasers or Bank Investors, as applicable,
and (y) (i) each of the Enterprise Agent, on behalf of and at the option of
Enterprise (prior to an Enterprise Wind-Down Event) and the Sheffield Agent, on
behalf of and at the option of Sheffield (prior to a Sheffield Wind-Down Event),
may or (ii) the Purchaser Agents, on behalf of their respective Bank Investors
shall, unless a Termination Date or Special Termination Date with respect to
such Bank Investors shall have occurred, severally but not jointly, accept such
conveyance, transfer and assignment from the Transferor, without recourse except
as provided herein, of an undivided percentage ownership interest in the
Affected Assets, from time to time. By accepting any conveyance, transfer and
assignment hereunder, none of the Purchasers, any Bank Investor, the
Administrative Agent or any of the Purchaser Agents assumes or shall have any
obligations or liability under any of the Accounts, all of which shall remain
the obligations and liabilities of the Transferor.
SECTION 2.2. Transfers; Certificates; Eligible Receivables.
(a) Upon the terms and subject to the conditions herein set forth
(including pursuant to Section 3.2 hereof), (x) the Transferor may, at its
option, convey, transfer and assign to the Purchaser Agents, on behalf of their
related Purchasers or Bank Investors, as applicable, and (y) the Enterprise
Agent, on behalf of Enterprise (prior to an Enterprise Wind-Down Event) and the
Sheffield Agent, on behalf of Sheffield (prior to a Sheffield Wind-Down Event),
may, at each such Purchaser's option, or (z) the Purchaser Agents, on behalf of
their related Bank Investors, provided that the Termination Date or a Special
Termination Date with respect to such Bank Investors shall not have occurred and
that the Bank Investors shall have previously accepted the assignment by the
applicable Purchaser of all of its interest in the Affected Assets, shall (in
accordance with Section 9.7(a) hereof), if so requested by the Transferor,
accept such conveyance, transfer and assignment from the Transferor, without
recourse except as provided herein, of undivided percentage ownership interests
in the Affected Assets (each, an "Incremental Transfer"); provided, however,
that after giving effect to the payment to the Transferor of the Transfer Price
by each Purchaser Agent, (i) the sum of the Net Investments plus, in the case
where the Transferred Interest is held on behalf of the Purchasers, the Interest
Component of all outstanding Related Commercial Paper, would not exceed the
Facility Limit; (ii) a Purchaser's applicable Net Investment, plus, in the case
where the Transferred Interest is held on behalf of the Purchasers, the Interest
Component of all outstanding Related Commercial Paper issued by such Purchaser,
would not exceed its Applicable Purchaser Percentage of the Facility Limit, and
the share of any Bank Investor therein would not exceed its Special Pro Rata
Share of such amount, and (iii) the Buyer's Percentage Factor shall not exceed
the Maximum Buyer's Percentage Factor. With respect to Enterprise and the
Enterprise Bank Investors, the parties
26
hereto understand that in no event shall the Net Investment be held by the
Enterprise Agent on behalf of Enterprise and the Enterprise Bank Investors
simultaneously, except in the case of an assignment, if any, to an Enterprise
Bank Investor in accordance with Section 9.7(g) hereof.
(b) The Transferor shall, by notice to the Purchaser Agents given by no
later than 1:00 p.m. (New York City time) at least one (1) Business Day (and, in
the case of any Incremental Transfer for which the initial funding period will
be based on the Adjusted LIBOR Rate, three (3) Business Days) prior to the
proposed date of any Incremental Transfer by telecopy, offer to convey, transfer
and assign to the Purchaser Agents, on behalf of their related Purchasers or the
Bank Investors, as applicable, undivided percentage ownership interests in the
Receivables and the other Affected Assets relating thereto. Each such notice
shall specify (w) the Purchaser Agents to which such request is being made,
which shall make a Transfer, at the sole discretion of such Purchaser Agents, on
behalf of the applicable Purchaser or on behalf of the applicable Bank
Investors, (x) the desired Transfer Price (which shall be, for each Purchaser,
at least $1,000,000 or integral multiples of $250,000 in excess thereof) or, to
the extent that the then available unused portion of the Facility Limit is less
than $250,000, such lesser amount, (y) the desired date of such Incremental
Transfer and (z) with respect to Sheffield, the desired funding periods and
allocations of its Net Investment of such Incremental Transfer thereto as
required by Section 2.3. The Purchaser Agents will promptly notify the
applicable Purchaser or each of the applicable Bank Investors, as the case may
be, of any of the Purchaser Agents' receipt of any request for an Incremental
Transfer to be made to any of the Purchaser Agents on behalf of such Person. To
the extent that any such Incremental Transfer is requested of any of the
Purchaser Agents, on behalf of the Purchasers, the Purchasers shall instruct the
applicable Purchaser Agent to accept or reject such offer by notice given to the
Transferor and the applicable Purchaser Agents by telephone or telecopy by no
later than the close of its business on the Business Day following its receipt
of any such request. Each notice of proposed Transfer shall be irrevocable and
binding on the Transferor and the Transferor shall indemnify the Purchasers and
each Bank Investor against any loss or expense incurred by the Purchasers or any
Bank Investor, either directly or indirectly (including, in the case of the
Purchasers, through the Liquidity Provider Agreement) as a result of any failure
by the Transferor to complete such Incremental Transfer including, without
limitation, any loss (including loss of anticipated profits) or expense incurred
by the Purchasers or any Bank Investor, either directly or indirectly
(including, in the case of the Purchasers, pursuant to the Liquidity Provider
Agreement) by reason of the liquidation or reemployment of funds acquired by the
Purchasers (or the Liquidity Providers) or any Bank Investor (including, without
limitation, funds obtained by issuing commercial paper or promissory notes or
obtaining deposits as loans from third parties) for the Purchasers or any Bank
Investor to fund such Incremental Transfer.
(c) On the date of the initial Incremental Transfer, each Purchaser Agent,
on behalf of its applicable Purchaser or Bank Investors, as applicable, shall
deliver written confirmation to the Transferor of its Transfer Price and the
Transferor shall deliver to each of the Purchaser Agents a Transfer Certificate
in the form of Exhibit F hereto (each, a "Transfer Certificate"). Each Purchaser
Agent shall indicate the Pro Rata Share of the related Purchaser or Bank
Investor, as applicable, of the amount of the initial Incremental Transfer
together with the
27
date thereof on the grid attached to its Transfer Certificate. On the date of
each subsequent Incremental Transfer, the Purchaser Agents shall (i) with
respect to Enterprise, send written confirmation to the Transferor of its
Transfer Price applicable to such Incremental Transfer and (ii) with respect to
Sheffield, send written confirmation to the Transferor of its Transfer Price,
the Transfer Date and the funding period(s) applicable to such Incremental
Transfer. Each Purchaser Agent shall indicate the applicable Pro Rata Share of
the amount of the Incremental Transfer together with the date thereof as well as
the Pro Rata Share of any decrease in the applicable Net Investment on the grid
attached to its Transfer Certificate. The Transfer Certificates shall evidence
the Incremental Transfers. Following each Incremental Transfer, each Purchaser
Agent shall deposit to the Transferor's account at the location indicated in
Section 10.3 hereof, on behalf of the applicable Purchaser or Bank Investor, in
immediately available funds, its Transfer Price for such Incremental Transfer.
(d) (i) By no later than 1:00 p.m. (New York time) on any Transfer Date,
each Purchaser shall remit an amount equal to its Transfer Price for such
Transfer (and, in the case of a Bank Investor, such Bank Investor shall remit
its Special Pro Rata Share of such amount) to the account of the applicable
Purchaser Agents, specified therefor from time to time by the Purchaser Agent by
notice to the applicable Persons; provided, that, the face amount of Commercial
Paper issued by any Purchaser (minus the Interest Component thereon with respect
to such Purchaser) to fund its Transfer Price shall not exceed $1,000,000 more
or less than its Applicable Purchaser Percentage of the aggregate amount of all
Commercial Paper issued on such Transfer Date (minus the Interest Component
thereon with respect to such Purchaser) to fund such Transfer. The obligation of
each Purchaser and Bank Investor to remit its Transfer Price shall be several
from that of each other Purchaser and Bank Investor, and the failure of any
Purchaser or Bank Investor to so make such amount available to the applicable
Purchaser Agent shall not relieve any other Purchaser or Bank Investor of its
obligation hereunder. Following each Incremental Transfer and each Purchaser
Agent's receipt of funds from the applicable Purchaser or Bank Investors as
aforesaid, each Purchaser Agent shall remit such funds received in respect of
the Transfer Price to the Transferor's account at the location indicated in
Section 10.3 hereof, in immediately available funds. Unless a Purchaser Agent
shall have received notice from a related Purchaser or Bank Investor, that such
Person will not make its Transfer Price relating to any Incremental Transfer
available on the applicable Transfer Date therefor, such Purchaser Agent may
(but shall have no obligation to) make such Purchaser's or any such Bank
Investor's Transfer Price available to the Transferor in anticipation of the
receipt by such Purchaser Agent of such amount from such Purchaser or such Bank
Investor. To the extent such Purchaser or any such Bank Investor fails to remit
any such amount to the applicable Purchaser Agent after any such advance by such
Purchaser Agent on such Transfer Date, such Purchaser or such Bank Investor, on
the one hand, and the Transferor, on the other hand, shall be required to pay
such amount, together with interest thereon at a per annum rate equal to the
Federal funds rate (as determined in accordance with clause (ii) of clause (x)
or (y), as applicable, of the definition of "Base Rate"), in the case of such
Purchaser, any such Bank Investor, or the Transferor, to the applicable
Purchaser Agent upon its demand therefor (provided that such Purchaser shall
have no obligation to pay such interest amounts except to the extent that it
shall have sufficient funds to pay the face amount of its Commercial Paper in
full). Until such amount
28
shall be repaid, such amount shall be deemed to be Net Investment paid by the
applicable Purchaser Agent, and the applicable Purchaser Agent shall be deemed
to be the owner of a Transferred Interest hereunder. Upon the payment of such
amount to the applicable Purchaser Agent (x) by the Transferor, the amount of
the aggregate Net Investment shall be reduced by such amount or (y) by such
Purchaser or such Bank Investor, such payment shall constitute such Person's
payment of its share of the applicable Transfer Price for such Transfer.
(ii) Notwithstanding anything contained in this Section 2.2(d) or elsewhere
in this Agreement to the contrary, no Bank Investor shall be obligated to
provide its related Purchaser Agent or the Transferor with aggregate funds in
connection with an Incremental Transfer in an amount that would exceed such Bank
Investor's unused Commitment then in effect. The failure of any Bank Investor to
make its Special Pro Rata Share of the Transfer Price available to the
applicable Purchaser Agent shall not relieve any other Bank Investor of its
obligations hereunder.
(iii) If, by 2:00 p.m. (New York time) on any Transfer Date, one or more
Enterprise Bank Investors (each, a "Defaulting Bank Investor", and each
Enterprise Bank Investor other than the Defaulting Bank Investor being referred
to as a "Non-Defaulting Bank Investor") fails to make its Special Pro Rata Share
of the Transfer Price available to the Enterprise Agent pursuant to Section
2.2(d) or the Assignment Amount payable by it pursuant to Section 9.7 (the
aggregate amount not so made available to the Enterprise Agent being herein
called in either case the "Transfer Price Deficit"), then the Enterprise Agent
shall, by no later than 2:30 p.m. (New York time), instruct each Non-Defaulting
Bank Investor to pay, by no later than 3:00 p.m. (New York time), in immediately
available funds, to the account designated by the Enterprise Agent, an amount
equal to the lesser of (x) such Non-Defaulting Bank Investor's proportionate
share (based upon the relative Commitments of the Non-Defaulting Bank Investors)
of the Transfer Price Deficit and (y) its unused Commitment. A Defaulting Bank
Investor shall forthwith, upon demand, pay to the Enterprise Agent for the
ratable benefit of the Non-Defaulting Bank Investors all amounts paid by each
Non-Defaulting Bank Investor on behalf of such Defaulting Bank Investor,
together with interest thereon, for each day from the date a payment was made by
a Non-Defaulting Bank Investor until the date such Non-Defaulting Bank Investor
has been paid such amounts in full, at a rate per annum equal to the sum of Base
Rate plus 2%.
(e) On each Business Day occurring after the initial Incremental Transfer
hereunder, the Transferor hereby agrees to convey, transfer and assign to the
Purchaser Agents, on behalf of their related Purchasers or Bank Investors, and
the Purchaser Agents, on behalf of their related Purchasers, may, provided there
is no Enterprise Wind-Down Event or Sheffield Wind-Down Event, as applicable,
and the Purchaser Agents, on behalf of their related Bank Investors, shall,
provided there is no Termination Date or applicable Special Termination Date,
agree to purchase from the Transferor an undivided percentage ownership
interests in each and every Receivable, together with Collections, Proceeds and
Related Security with respect thereto, to the extent that Collections are
available for such Transfer in accordance with Section 2.5 hereof, such that
after giving effect to such Transfer, (i) the amount of the Net Investments at
the close of business on such Business Day shall be equal to the amount of the
Net Investments at the
29
close of the business on the Business Day immediately preceding such Business
Day plus the aggregate Transfer Price paid by the Purchaser Agents (on behalf of
their Purchasers or related Bank Investors) of any Incremental Transfer made on
such day, if any, and (ii) the Transferred Interest in each Receivable, together
with Collections, Proceeds and Related Security with respect thereto, shall be
equal to the Transferred Interest in each other Receivable, together with
Collections, Proceeds and Related Security with respect thereto.
(f) Each Transfer shall constitute a transfer to the Purchaser Agents, on
behalf of their related Purchasers or Bank Investors, of undivided percentage
ownership interests in each and every Receivable, together with Collections,
Proceeds and Related Security with respect thereto, then existing, as well as in
each and every Receivable, together with Collections, Proceeds and Related
Security with respect thereto, which arises at any time after the date of such
Transfer. The Purchaser Agents' aggregate undivided percentage ownership
interest in the Receivables, together with Collections, Proceeds and Related
Security with respect thereto, held on behalf of the Purchasers or the Bank
Investors, as applicable, shall equal the Buyer's Percentage Factor in effect
from time to time. The Purchaser Agents shall hold the Transferred Interests on
behalf of each applicable Purchaser and each applicable Bank Investor in
accordance with each of the Purchaser's and each Bank Investor's percentage
interest in the Transferred Interest (determined on the basis of the
relationship that the portion of the applicable Net Investment funded by such
Person bears to the aggregate Net Investments of the Purchasers and all of the
Bank Investors at such time).
(g) The Transferor shall issue to each Purchaser Agent a Certificate, in
the form of Exhibit E, on or prior to the date hereof.
(h) The Buyer's Percentage Factor shall be initially computed as of the
opening of business of the Collection Agent on the date of the initial
Incremental Transfer hereunder. Thereafter until the later of the Termination
Date or Special Termination Date, the Buyer's Percentage Factor shall be
automatically recomputed as of the close of business of the Collection Agent on
each day (other than a day after the later of the Termination Date or Special
Termination Date). The Buyer's Percentage Factor shall remain constant from the
time as of which any such computation or recomputation is made until the time as
of which the next such recomputation, if any, shall be made.
SECTION 2.3. Selection of Interest Rates and Interest Periods; LIBOR
Protection; Illegality.
(a) Prior to a Wind-Down Event; Transferred Interest Held on Behalf of the
Purchasers. At all times hereafter, but prior to the occurrence of an Enterprise
Wind-Down Event or Sheffield Wind-Down Event, as applicable, and not with
respect to any portion of the Transferred Interest held on behalf of the Bank
Investors (or any of them), the Transferor may, subject to the approval of each
Purchaser and the limitations described below, request that the applicable Net
Investment of such Purchaser be allocated among one or more funding periods, so
30
that the aggregate amounts so allocated at all times shall equal the Net
Investments held on behalf of the Purchasers. The Transferor shall give the
Purchaser Agents irrevocable notice by telephone of the new requested funding
period(s) by 1:00 p.m. at least one (1) Business Day prior to the expiration of
any then existing funding period; provided, however, that each of the Purchaser
Agents may select, in its sole discretion, any such new funding period with
respect to its respective Purchaser's Net Investment if (i) the Transferor fails
to provide such notice on a timely basis or (ii) the applicable Purchaser Agent
determines, in its sole discretion, that the funding period requested by the
Transferor is unavailable or for any reason commercially undesirable. Each
Purchaser confirms that it is its intention to fund all or substantially all of
its Net Investment by issuing Related Commercial Paper (in the case of (A)
Enterprise, prior to an Enterprise Wind-Down Event and (B) Sheffield, prior to a
Sheffield Wind-Down Event); provided that a Purchaser may determine, from time
to time, in its sole discretion, that funding its Net Investment by means of
Related Commercial Paper is not possible or is not desirable for any reason. If
a Liquidity Provider acquires from a Purchaser a Purchased Interest with respect
to the Receivables pursuant to the terms of a Liquidity Provider Agreement,
NationsBank or Barclays, as applicable, on behalf of the Liquidity Provider, may
exercise the right of selection granted to such Purchaser hereby. The initial
funding period applicable to any such Purchased Interest shall be a period of
not greater than 14 days and shall accrue Carrying Costs on the basis of the
Base Rate. Thereafter, provided that the Termination Date or a Special
Termination Date shall not have occurred, Carrying Costs shall accrue on the
basis of either the Base Rate or the Adjusted LIBOR Rate, as determined by
NationsBank or Barclays, as applicable. In the case of any funding period
outstanding upon the Termination Date or a Special Termination Date, such
funding period shall end on such date. Any funding made by Sheffield hereunder
by issuing its Commercial Paper shall accrue Carrying Costs on the basis of the
Interest Component with respect thereto.
(b) After a Wind-Down Event; Transferred Interest Held on Behalf of the
Purchasers. At all times on and after an Enterprise Wind-Down Event or a
Sheffield Wind-Down Event, with respect to any portion of the Transferred
Interest which shall be held by the Purchaser Agents on behalf of the
Purchasers, the affected Purchaser Agent, shall select all funding periods and
rates applicable thereto.
(c) Prior to the Termination Date or Special Termination Date; Transferred
Interest Held on Behalf of Bank Investors. At all times with respect to any
portion of the Transferred Interest held on behalf of the Bank Investors, but
prior to the earlier of a Termination Date or Special Termination Date, the
initial funding period applicable to such portion of the applicable Net
Investment allocable thereto shall be a period of not greater than (i) 14 days,
with respect to the Enterprise Bank Investors or (ii) 3 days with respect to the
Sheffield Bank Investors, and shall accrue Carrying Costs on the basis of the
Base Rate. Thereafter, with respect to such portion, and with respect to any
other portion of the Transferred Interest held on behalf of the Bank Investors
(or any of them), provided that the Termination Date or Special Termination Date
shall not have occurred, Carrying Costs shall accrue with respect thereto at
either the Base Rate or the Adjusted LIBOR Rate, at the Transferor's option. The
Transferor shall give the Purchaser Agents irrevocable notice by telephone of
the new requested funding period at least
31
three (3) Business Days prior to the expiration of any then existing funding
period. In the case of any funding period outstanding upon the occurrence of the
Termination Date or Special Termination Date, such funding period shall end on
the date of such occurrence.
(d) After the Termination Date or Special Termination Date; Transferred
Interest Held on behalf of Bank Investor. At all times on and after the
Termination Date or Special Termination Date, with respect to any portion of the
Transferred Interest held by any of the Purchaser Agents on behalf of the Bank
Investors, the affected Purchaser Agent shall select all funding periods and
rates applicable thereto.
(e) Conversion and Continuation of Outstanding Funding Periods Funded by
the Bank Investors. Subject to paragraph (c) of this Section 2.3, the Transferor
may (a) convert each funding period during which the applicable interest rate is
the Base Rate hereunder to a funding period during which the applicable interest
rate is the Adjusted LIBOR Rate and (b)(i) continue each funding period during
which the applicable interest rate is the Adjusted LIBOR Rate as a funding
period during which the applicable interest rate is the Adjusted LIBOR Rate or
(ii) convert each funding period during which the applicable interest rate is
calculated at the Adjusted LIBOR Rate to a funding period during which the
applicable interest rate is the Base Rate. If a Termination Event or a Potential
Termination Event has occurred and is continuing, then (x) no outstanding
funding period funded by the Bank Investors may be converted to, or continued
as, a funding period during which the applicable interest rate is the Adjusted
LIBOR Rate and (y) unless repaid, each funding period during which the
applicable interest rate is the Adjusted LIBOR Rate shall be converted to a
funding period during which the applicable interest rate is the Base Rate on the
last day of the funding period related thereto. The Transferor shall give any of
the Purchaser Agents, as applicable, irrevocable notice (each, a
"Conversion/Continuation Notice") of such request not later than 12:30 p.m. (New
York time) (i) in the case of a conversion described in clause (a) above, or a
continuation described in clause (b)(i) above, three (3) Business Days before
the date of such conversion or continuation, as applicable, and (ii) following
the occurrence and continuation of a Termination Event or Potential Termination
Event, in the case of a conversion as described in clause (b)(ii) above or a
continuation of a funding period during which the applicable interest rate is
the Base Rate as a funding period during which the applicable interest rate is
the Base Rate, on the Business Day of such conversion. If a
Conversion/Continuation Notice has not been timely delivered with respect to any
funding period during which the applicable interest rate is the Base Rate or
funding period during which the applicable interest rate is the Adjusted LIBOR
Rate, such funding shall be automatically continued as, or converted to, a
funding period during which the applicable interest rate is the Base Rate. Each
Conversion/Continuation Notice shall specify (a) the requested date (which shall
be a Business Day) of such conversion or continuation, (b) the aggregate amount
and rate option applicable to the funding period which is to be converted or
continued and (c) the amount and rate option(s) of funding period(s) into which
such funding period is to be converted or continued.
(f) LIBOR Rate Protection; Illegality.
32
(i) Notwithstanding any other provision of this Section 2.3, if any of
the Purchaser Agents is unable to obtain on a timely basis the information
necessary to determine the applicable LIBOR Rate for any proposed funding
period, then
(A) such Purchaser Agent shall forthwith notify the applicable
Purchaser or Bank Investors, as applicable, and the Transferor that
the Adjusted LIBOR Rate cannot be determined for such funding period,
and
(B) while such circumstances exist, none of the affected
Purchasers, the Bank Investors or any of the Purchaser Agents shall
allocate its Net Investment of any additional Transferred Interests
purchased during such period or reallocate its Net Investment
allocated to any then existing funding period ending during such
period, to a funding period which accrues Carrying Costs on the basis
of the Adjusted LIBOR Rate.
(ii) If, with respect to any outstanding funding period which accrues
Carrying Costs on the basis of the Adjusted LIBOR Rate, a Purchaser or any
of the Bank Investors on behalf of which any of the Purchaser Agents holds
any Transferred Interest therein notifies the applicable Purchaser Agent
that it is unable to obtain matching deposits in the London inter-bank
market to fund its purchase or maintenance of such Transferred Interest or
that the Adjusted LIBOR Rate applicable to such Transferred Interest will
not adequately reflect the cost to the Person of funding or maintaining its
respective Transferred Interest for such funding period then the applicable
Purchaser Agent shall forthwith so notify the Transferor, whereupon none of
the affected Purchaser Agents, the affected Purchasers or the affected Bank
Investors, as applicable, shall, while such circumstances exist, allocate
its Net Investment of any additional Transferred Interest purchased during
such period or reallocate the applicable Net Investment allocated to any
funding period ending during such period, to a funding period which accrues
Carrying Costs on the basis of the Adjusted LIBOR Rate.
(iii) Notwithstanding any other provision of this Agreement, if a
Purchaser or any of the Bank Investors shall notify any of the Purchaser
Agents that such Person has determined (or has been notified by any
Liquidity Provider) that the introduction of or any change in or in the
interpretation of any law or regulation after the Closing Date makes it
unlawful (either for such Purchaser, such Bank Investor, or such Liquidity
Provider, as applicable), or any central bank or other governmental
authority asserts that it is unlawful, for such Purchaser, such Bank
Investor or such Liquidity Provider, as applicable, to fund the purchases
or maintenance of Transferred Interests with respect to which the interest
is calculated by reference to the Adjusted LIBOR Rate, then (x) as of the
effective date of such notice from such Person to the applicable Purchaser
Agent, the obligation or ability of such Purchaser or such Bank Investor to
fund its purchase or maintenance of Transferred Interests with respect to
which the interest is calculated by reference to the Adjusted LIBOR Rate
shall be suspended until such Person notifies the applicable Purchaser
Agent that the circumstances causing such suspension no longer exist and
(y) the applicable Net Investment allocated to each funding period which
33
accrues Carrying Costs on the basis of the Adjusted LIBOR Rate in which
such Person owns an interest shall either (1) if such Person may lawfully
continue to maintain such Transferred Interest at the Adjusted LIBOR Rate
until the last day of the applicable funding period, be reallocated on the
last day of such funding period to another funding period in respect of
which the applicable Net Investment allocated thereto which accrues
Carrying Costs on a basis other than the Adjusted LIBOR Rate or (2) if such
Person shall determine that it may not lawfully continue to maintain such
Transferred Interest at the Adjusted LIBOR Rate until the end of the
applicable funding period, such Person's Net Investment allocated to such
funding period shall be deemed to accrue Carrying Costs on the basis of the
Base Rate from the effective date of such notice until the end of such
funding period.
SECTION 2.4. Carrying Costs, Fees and Other Costs and Expenses.
The Transferor agrees to pay, as and when due in accordance with this
Agreement, each Early Collection Fee and all Carrying Costs and Servicing Fees.
On each Remittance Date, the Transferor shall pay to the Purchaser Agents, on
behalf of their related Purchasers or Bank Investors, as applicable, an amount
equal to the accrued and unpaid Carrying Costs of such Purchasers or Bank
Investors for the related Collection Period; provided that (i) in the event of
any repayment or prepayment of a funding period during which the applicable
interest rate is the Base Rate or a funding period during which the applicable
interest rate is the Adjusted LIBOR Rate, interest on the principal amount
repaid or prepaid shall be payable on the date of such repayment or prepayment,
(ii) in the event of any conversion of a funding period during which the
applicable interest rate is the Base Rate or a funding period during which the
applicable interest rate is the Adjusted LIBOR Rate, accrued interest on such
funding periods shall be payable by the Transferor to each Purchaser Agent on
the effective date of such conversion and (iii) on the last day of each funding
period, the Transferor shall pay to each Purchaser Agent an amount equal to
accrued and unpaid interest for such funding period (together with the Interest
Component accrued on any Commercial Paper issued to fund any transfer hereunder,
including the Interest Component in excess of any Transfer Price of an
Incremental Transfer). Interest shall accrue with respect to each funding period
on each day occurring during such funding period. The Transferor shall pay to
the Enterprise Agent, on behalf of Enterprise, on each day on which Related
Commercial Paper is issued by Enterprise, the Dealer Fee with respect to such
Related Commercial Paper. All payments referred to in this Section shall be made
solely out of Collections, and amounts paid to the Transferor pursuant to each
Interest Rate Cap Agreement, except for the amounts described in clause (i)(e)
of the definition of "Carrying Costs," which shall be paid directly by the
Transferor to the extent Collections are not available therefor. Payment of the
amounts described herein may be made from amounts on deposit in the Collection
Account at the time payment of such amounts is due.
SECTION 2.5. Allocations of Collections; Non-Liquidation Settlement and
Reinvestment Procedures.
(a) On each Determination Date, the Collection Agent shall allocate all
Collections received during the preceding Collection Period as Principal
Collections or Finance
34
Charge Collections. Principal Collections shall be applied by the Collection
Agent as described in subsection (d) below. On each Remittance Date, (A) the
product of (i) the daily average of the Buyer's Percentage Factor over the
preceding Collection Period and (ii) the aggregate Finance Charge Collections
for such preceding Collection Period (plus any investment earnings on the Excess
Funding Account) plus (B) any amounts deposited in the Collection Account with
respect to proceeds received by the Transferor under an Interest Rate Cap
Agreement, shall be applied by the Collection Agent, without duplication, in the
following order of priority, provided, that, if there shall be insufficient
funds on deposit to pay in full the amounts specified in any clause below, then
payments shall be made pursuant to each such clause as between each group of
Purchasers, and their related Bank Investors, on a pro rata basis:
(i) first, an amount equal to any accrued and unpaid Carrying Costs
(except for the costs described in clause (i)(e) of the
definition thereof) for such Collection Period, shall be paid, as
applicable, to each Purchaser Agent for the account of the
applicable Purchasers and the Bank Investors; provided, however,
in the case of the final Remittance Date, Carrying Costs in
respect of the period commencing on the day following the last
day of the related Collection Period and ending on the final
Remittance Date shall also be paid on the final Remittance Date;
(ii) second, to the payment to the Collection Agent of the Buyer's
Percentage Factor of any Servicing Fee due and owing;
(iii) third, an amount equal to each Purchaser's Pro Rata Share of the
Buyer's Percentage Factor of Defaulted Receivables for the
related Collection Period plus an amount equal to such
Purchaser's Pro Rata Share of the Buyer's Percentage Factor of
any unpaid amount of Principal Receivables which are Defaulted
Receivables from prior Collection Periods shall be applied as
Principal Collections in accordance with Section 2.5(d) hereof;
(iv) fourth, to the payment of any Adjustment Payments which the
Transferor was required, but failed, to make under Section 2.9(a)
or any payment which the Transferor was required, but failed, to
make under Section 2.9(b), in each case during the related
Collection Period or any prior Collection Period, which payment
shall be applied as Principal Collections in accordance with
Section 2.5(d) below;
(v) fifth, an amount equal to any accrued and unpaid Carrying Costs
pursuant to clause (i)(e) of the definition thereof; and
(vi) sixth, to the extent any Finance Charge Collections remain after
application in accordance with clauses (i) through (v) above, (A)
if prior to the earlier of the Termination Date and Special
Termination Date, such excess amounts shall be (i) deposited in
the Spread Account, up to the
35
Spread Account Cap Percentage Amount and (ii) thereafter, paid to
the Transferor and (B) if on or after the earlier of the
Termination Date and Special Termination Date, such excess
amounts shall be paid to each Purchaser Agent, in accordance with
such Purchaser's Pro Rata Share thereof, in reduction of the
applicable Net Investment, until the applicable Net Investment
has been reduced to zero and thereafter to the Transferor.
(b) On each Remittance Date, the product of (A) the daily average of the
Transferor's Percentage Interest during the preceding Collection Period and (B)
the aggregate Finance Charge Collections for the preceding Collection Period
shall be applied to the payment to the Collection Agent of the Transferor's
Percentage Interest of any Servicing Fee due and owing, and the remainder of
such amount shall be applied, subject to Section 2.5(c), as follows:
(i) first, an amount equal to the Transferor's Percentage Interest of
any Defaulted Receivables for the related Collection Period and any such
amount unpaid for prior Collection Periods shall be applied as Principal
Collections in accordance with Section 2.5(d) below; and
(ii) second, any remaining amounts shall be remitted to the
Transferor.
(c) In the event that, on any Remittance Date, the Buyer's Percentage
Factor of Finance Charge Collections is insufficient to pay the sum of the
amounts due and payable pursuant to Section (a)(i) above, then, in such event,
on such Remittance Date the entire amount of Finance Charge Collections
distributable or allocable to the Transferor (after payment of the Transferor's
Percentage Interest of any Servicing Fee in accordance with Section 2.5(b)), up
to the amount of any such insufficiency, shall be reduced by the amount of such
insufficiency, and to the extent any such insufficiency continues to remain, the
amounts then on deposit in the Spread Account, then the amounts on deposit in
the Excess Funding Account, and then the amounts distributable to the Transferor
pursuant to Section 2.5(d), shall be reduced by the amount of such
insufficiency. In the event that, on any Remittance Date, the Buyer's Percentage
Factor of Finance Charge Collections is insufficient to pay the sum of the
amounts due and payable pursuant to clauses (a)(ii) through (a)(vi) of Section
2.5 above, then, in such event, on such Remittance Date the amount of Finance
Charge Collections distributable or allocable to the Transferor pursuant to
clauses (b)(i) and (b)(ii) of Section 2.5 above, up to the amount of any such
insufficiency, and to the extent any such insufficiency continues to remain, the
amounts then on deposit in the Spread Account, then the amounts on deposit in
the Excess Funding Account, and then the amounts distributable to the Transferor
pursuant to Section 2.5(d), shall be reduced by the amount of such
insufficiency, in each case after giving effect to the application of funds in
the preceding sentence. All amount(s) against which any insufficiency described
in this paragraph is to be applied shall be applied as Finance Charge
Collections and distributed in accordance with the priority set forth in clauses
(i) through (vi) of Section 2.5(a).
(d) On each Remittance Date prior to the Termination Date or a Special
Termination Date (i) the Collection Agent shall allocate to the applicable
Purchasers and/or the
36
Bank Investors their Pro Rata Share of the Buyer's Percentage Factor of
Principal Collections received during the related Collection Period and not
previously accounted for or applied toward reinvestment in new Receivables or
reduction of the applicable Net Investment, and, at the Transferor's option, (A)
pay such amount to the Transferor, for the benefit of the applicable Purchasers
and/or the Bank Investors, and the Transferor shall apply such amount toward the
purchase of additional undivided percentage interests in each Receivable
pursuant to Section 2.2(b), or (B) pay such amount plus, at the Transferor's
option, subject to Section 2.5(f) below, all or a portion of the amount on
deposit in the Excess Funding Account, to each of the Purchaser Agents in
reduction of the related Purchaser's applicable Net Investment and (ii) the
Collection Agent shall pay to the Transferor the portion of such Principal
Collections not allocated to the Transferred Interest and remaining after any
reallocations pursuant to Section 2.5(c) above.
On each Remittance Date on or subsequent to the Termination Date or a
Special Termination Date, the Collection Agent shall allocate to the applicable
Purchasers or the Bank Investors, as applicable, their respective Pro Rata
Shares of the Buyer's Percentage Factor of all Principal Collections received
during the related Collection Period and not previously applied or accounted
for, plus all amounts on deposit in the Excess Funding Account, and pay such
amount to each of the Purchaser Agents in reduction of the related Purchaser's
applicable Net Investment. In the event the Termination Date occurred as a
result of a Termination Event, the portion of such Principal Collections not
allocated to the Transferred Interest and remaining after any reallocations
pursuant to Section 2.5(c) above shall be distributed to each of the Purchaser
Agents in reduction of the related Purchaser's applicable Net Investment and, in
the case of any other Termination Date or a Special Termination Date, the
portion of such Principal Collections not allocated to the Transferred Interest
and remaining after any allocations pursuant to Section 2.5(c) above shall be
distributed to the Transferor.
(e) The Transferor shall have the option to designate a fixed or variable
percentage (the "Discount Percentage") of all Principal Receivables to be
treated as Finance Charge Receivables ("Discount Receivables") in accordance
with the provisions of this Section 2.5(e), and shall be applied in accordance
with Section 2.5(a), which percentage shall remain fixed and in effect until
such time as the Transferor has provided a subsequent designation to the
Purchaser Agents and all shall consent thereto. The initial Discount Percentage
shall equal 3%, and such percentage shall not be increased or decreased by more
than 2% unless the Transferor shall have obtained written confirmation from each
Rating Agency then rating the commercial paper of any Purchaser that such change
will not result in a reduction or withdrawal of any such rating.
(f) On any Business Day prior to the Termination Date on which the Buyer's
Percentage Factor of the aggregate Principal Receivables is equal to or greater
than the Net Investments, the Transferor or Collection Agent may request that
any or all amounts in the Excess Funding Account be distributed to the
Transferor.
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SECTION 2.6. Liquidation Settlement Procedures.
On each Remittance Date occurring on and following the earlier of a
Termination Date or a Special Termination Date, Principal Collections shall be
applied in accordance with Section 2.5(d). Each Purchaser Agent, as applicable,
upon its receipt of such amounts in its account, shall distribute such amounts
to the applicable Purchasers and/or Bank Investors entitled thereto as set forth
above; provided that if the Collection Agent shall have insufficient funds to
pay all of the above amounts in full on any such date, the Collection Agent
shall pay such amounts in the order of priority set forth above and, with
respect to any such category above for which the Collection Agent shall have
insufficient funds to pay all amounts owing on such date, ratably (based on the
amounts in such categories owing to such Persons) among all such Persons
entitled to payment thereof.
Following the date on which the Net Investments have been reduced to zero
and all other Aggregate Unpaids have been paid in full, (i) the Collection Agent
shall recompute the Buyer's Percentage Factor as zero, (ii) the Purchaser
Agents, on behalf of their related Purchasers and Bank Investors shall be deemed
to have reconveyed to the Transferor all of the Purchaser Agents' right, title
and interest in and to the Affected Assets (including the Transferred Interest),
(iii) the Collection Agent shall pay to the Transferor any remaining Collections
held by any of the Purchaser Agents or the Collection Agent pursuant to Section
2.5 or 2.12 and (iv) the Purchaser Agents, on behalf of their related Purchasers
and Bank Investors shall execute and deliver to the Transferor, at the
Transferor's expense, such documents or instruments as are necessary to
terminate the applicable Purchase Agent's interests in the Affected Assets. Any
such documents shall be prepared by or on behalf of the Transferor.
SECTION 2.7. Fees.
On each Remittance Date the Transferor shall pay (which payments shall be
made from Collections in the order of priority set forth in Section 2.5), with
respect to the preceding Collection Period, (i) to Enterprise solely for its own
account, the Program Fee and the Administrative Fee, and to the Enterprise
Agent, for distribution to the Enterprise Bank Investors, the Facility Fee and
(ii) to Sheffield, the fees specified in the Sheffield Fee Letter.
SECTION 2.8. Protection of Ownership Interest of the Purchasers and the
Bank Investors.
(a) The Transferor agrees that it will, from time to time, at Transferor's
expense, promptly execute and deliver all instruments and documents and take all
actions as may be necessary or as the Administrative Agent or any of the
Purchaser Agents may reasonably request in order to perfect or protect the
Transferred Interest or to enable the Administrative Agent, each of the
Purchaser Agents, the Purchasers or the Bank Investors to exercise or enforce
any of their respective rights hereunder. Without limiting the foregoing, the
Transferor will, upon the request of the Administrative Agent, any of the
Purchaser Agents, a Purchaser or any of the Bank Investors, in order to
accurately reflect this purchase and sale transaction, execute and
38
file such financing or continuation statements or amendments thereto or
assignments thereof (as permitted, as applicable, pursuant to Section 9.7 hereof
or the Sheffield Agreement) as may be requested by the Administrative Agent, any
of the Purchaser Agents, a Purchaser or any of the Bank Investors. The
Transferor shall, upon request of the Administrative Agent or any of the
Purchaser Agents (on behalf of the related Purchaser or Bank Investors) obtain
such additional search reports as the Administrative Agent or such Purchaser
Agents shall reasonably request. To the fullest extent permitted by applicable
law, the Administrative Agent and the Purchaser Agents shall be permitted to
sign and file continuation statements and assignments thereof without the
Transferor's signature. Carbon, photographic or other reproduction of this
Agreement or any financing statement shall be sufficient as a financing
statement. The Transferor shall not change its respective name, identity or
corporate structure (within the meaning of Section 9-402(7) of the UCC as in
effect in the States of New York and Arizona, as applicable) or relocate its
respective chief executive office unless it shall have: (i) given the
Administrative Agent and the Purchaser Agents at least ten (10) days prior
notice thereof and (ii) prepared at Transferor's expense and delivered to the
Administrative Agent and the Purchaser Agents all financing statements,
instruments and other documents necessary to preserve and protect the
Transferred Interest or as otherwise requested by the Administrative Agent and
the Purchaser Agents in connection with such change or relocation. Any filings
under the UCC or otherwise that are occasioned by such change in name or
location shall be made at the expense of Transferor. The Transferor shall notify
the Administrative Agent promptly after it relocates any office where Records
are kept of any such new location.
(b) The Transferor agrees that it will, and will cause each other Person
having possession of any Records to, at Transferor's expense, on or prior to the
Closing Date indicate clearly and unambiguously in its master data processing
records and on any storage containers containing Records that the Receivables
created in connection with the Accounts have been conveyed to the Transferor and
transferred to the Purchaser Agents, for the benefit of the Purchasers and the
Bank Investors. The Transferor further agrees to deliver by no later than July
9, 1999, or to cause the Collection Agent to deliver to the Administrative Agent
by such date, (x) a computer file or microfiche list containing a true and
complete list of all such Accounts, identified by account number and by
Receivable balance as of the Cut-Off Date and (y) an officer's certificate
setting forth as of the Cut-Off Date (i) the aggregate outstanding balance of
the Receivables and (ii) a computation of the Buyer's Percentage Factor. Such
file or list shall be marked as the Account Schedule delivered to the
Administrative Agent as confidential and proprietary, and is hereby incorporated
into and made a part of this Agreement. The Transferor agrees to deliver or to
cause the Collection Agent to deliver to the Administrative Agent within five
(5) Business Days of the request therefor by any of the Purchaser Agents and in
any event promptly after any conversion of record-keeping and servicing
functions related to the ongoing activity of the Accounts from GE to the
Collection Agent, a computer file or microfiche list containing a true and
complete list of all Accounts, including all Related Accounts created on or
after the Cut-Off Date, in existence as of the last day of the prior Collection
Period, identified by account number and by Receivable balance as of the last
day of the prior Collection Period. Such file or list shall be marked as the
Account Schedule delivered to the Administrative Agent as confidential and
proprietary, shall replace the previously delivered Account Schedule and shall
39
be incorporated into and made a part of this Agreement. The Collection Agent
agrees, on behalf of the Transferor, at its own expense, by the end of each
Collection Period in which any Accounts or Related Accounts have been originated
to indicate clearly and unambiguously in its master data processing records and
any storage containers containing Records that the Receivables created in
connection with such Accounts have been conveyed to the Transferor and
transferred to the Purchaser Agents, for the benefit of the Purchasers and the
Bank Investors, pursuant to this Agreement.
SECTION 2.9. Application of Payments.
(a) If on any day any Receivable is either (x) reduced or canceled as a
result of any defective, rejected or returned merchandise or services, any
discount, credit, rebate, dispute, warranty claim, chargeback, allowance or any
billing or other adjustment, or (y) reduced or canceled as a result of a setoff
or offset in respect of any claim by any Person (whether such claim arises out
of the same or a related transaction or an unrelated transaction and whether
such reduction or cancellation is effected through the granting of credits
against the applicable Receivables or by the issuance of a check or other
payment in respect of, and as payment for, such reduction) or (z) any other
downward adjustments to the balance of such Receivable without receiving
Collections therefor and prior to such Receivable becoming a Defaulted
Receivable, then such amount shall thereafter be deducted from the aggregate
balance of the Receivables and the Principal Receivables. If such reduction
would result in a Buyer's Percentage Factor greater than the Maximum Buyer's
Percentage Factor, the Transferor shall pay (or direct the Collection Agent to
pay from Collections otherwise distributable to the Transferor) to each of the
Purchaser Agents its respective Purchaser's or Bank Investor's Pro Rata Share of
an amount (the payment of such amount is herein referred to as an "Adjustment
Payment") equal to the amount that, when (A) deposited into the Excess Funding
Account or (B) applied in reduction of the related Purchaser's applicable Net
Investment, will result in a Buyer's Percentage Factor less than or equal to the
Maximum Buyer's Percentage Factor. At the Transferor's election, such amount
shall be (A) deposited into the Excess Funding Account or (B) applied by the
applicable Purchaser Agent to the reduction of the related Purchaser's
applicable Net Investment.
(b) If on any day any of the representations or warranties set forth in (x)
Section 3.1 (d), (j) or (l) or Section 3.3(f) was or becomes untrue with respect
to a Receivable or (y) Section 3.1(e) or Section 3.3(d) was or becomes untrue
with respect to the existence or amount of any Receivable (whether, in any case,
on or after the date of any transfer of an interest therein to any of the
Purchaser Agents, the Purchasers or the Bank Investors as contemplated
hereunder), then such Receivable shall thereafter not be included in any
calculation of the outstanding Receivables or the Principal Receivables;
provided, however, that if such representations and warranties shall on any day
thereafter be true and correct in all material respects as if such Receivable
had then been created, such Receivable shall be eligible for purchase hereunder.
If such reduction would result in a Buyer's Percentage Factor greater than the
Maximum Buyer's Percentage Factor, the Transferor shall pay (or direct the
Collection Agent to pay from Collections otherwise distributable to the
Transferor) to each of the Purchaser
40
Agents its respective Purchaser's or Bank Investor's Pro Rata Share of an amount
equal to the amount that, when (A) deposited into the Excess Funding Account or
(B) applied in reduction of the applicable Net Investment, will result in a
Buyer's Percentage Factor less than or equal to the Maximum Buyer's Percentage
Factor. At the Transferor's election, such amount shall be (A) deposited into
the Excess Funding Account or (B) applied by the applicable Purchaser Agent to
the reduction of the applicable Net Investment.
SECTION 2.10. Payments and Computations, Etc.
All amounts to be paid or deposited by the Transferor or the Collection
Agent hereunder shall be paid or deposited in accordance with the terms hereof
no later than 11:00 a.m. (New York City time) on the day when due in immediately
available funds; if such amounts are payable to the Purchaser Agents (whether on
behalf of a Purchaser or any Bank Investor or otherwise) they shall be paid or
deposited in the account indicated in Section 10.3 hereof, until otherwise
notified by the Purchaser Agents. The Transferor shall, to the extent permitted
by law, pay to the Purchaser Agents, for the benefit of the Purchasers and the
Bank Investors upon demand, interest on all amounts not paid or deposited when
due hereunder at a rate equal to 2% per annum plus the Base Rate. All
computations of interest and all per annum fees hereunder shall be made on the
basis of a year of 360 days for the actual number of days (including the first
but excluding the last day) elapsed, provided, that any interest which accrues
at the Base Rate shall be computed on the basis of a year of 365 or 366 days, as
applicable, for such actual number of days elapsed. Any computations by the
Administrative Agent or any of the Purchaser Agents of amounts payable by the
Transferor hereunder shall create a rebuttable presumption of correctness.
SECTION 2.11. Reports.
(a) Prior to each Determination Date after the Closing Date, beginning with
the August 1999 Determination Date, the Collection Agent shall prepare and
forward to the Purchaser Agents (i) an Investor Report as of the end of the last
day of the immediately preceding month, (ii) if requested by any of the
Purchaser Agents, a listing by Obligor Account Number of all Receivables
together with an aging of such Receivables for any month and (iii) such other
information as any of the Purchaser Agents may reasonably request.
(b) On or before the date of an Incremental Transfer, the Transferor shall
prepare and forward to the Purchaser Agents an Additional Investment
Certificate, reporting the Principal Receivables, the Buyer's Percentage Factor,
the most recent Spread Account Cap Percentage Amount, the amount on deposit in
the Spread Account and such other information as any of the Purchaser Agents may
request as of the close of business on the Business Day preceding the date of
the requested Incremental Transfer.
41
SECTION 2.12. Collection Account, Spread Account and Excess Funding
Account.
(a) There shall be established on the day of the initial Incremental
Transfer hereunder and maintained with the Administrative Agent (or a designee
thereof), a segregated account (the "Collection Account"), bearing a designation
clearly indicating that the funds deposited therein are held for the benefit of
the Administrative Agent and the Purchaser Agents. The Collection Agent shall
remit daily to the Collection Account but in any event within seventy-two hours
after receipt, from the Closing Date through the Conversion Date and, after the
Conversion Date, forty-eight hours of receipt, (a) if prior to the occurrence of
a Termination Event, the Buyer's Percentage Factor of all Finance Charge
Collections, and (b) if on or after the occurrence of a Termination Event, all
Collections received with respect to any Receivables. In addition, the
Transferor shall remit or cause to be remitted to the Collection Account all
proceeds received by it under each Interest Rate Cap Agreement, on the same
Business Day received by it pursuant to such agreement. For purposes of this
Section 2.12(a), the Buyer's Percentage Factor during any Collection Period
shall be the Buyer's Percentage Factor at the opening of business on the first
day of such Collection Period. Funds on deposit in the Collection Account (other
than investment earnings) shall be invested by the Administrative Agent in
Eligible Investments that will mature so that such funds will be available prior
to the Remittance Date following such investment (or any earlier date on which
such funds are needed pursuant to Section 2.4 hereof). On each Remittance Date,
all interest and earnings (net of losses and investment expenses) on funds on
deposit in the Collection Account shall be applied as if such amounts were the
Buyer's Percentage Factor of Finance Charge Collections. In addition, amounts on
deposit in the Collection Account may be applied toward payments to be made
pursuant to Section 2.4. On the date on which the Net Investments and all
Aggregate Unpaids have been paid in full, any funds remaining on deposit in the
Collection Account shall be paid to the Transferor.
(b) (i) There shall be established on the Closing Date hereunder and
maintained with the Administrative Agent (or a designee thereof), a segregated
account (the "Spread Account"), bearing a designation clearly indicating that
the funds deposited therein are held for the benefit of the Administrative Agent
and the Purchaser Agents. On each Determination Date, the Spread Account Cap
Percentage Amount for such Determination Date shall be calculated by the
Purchaser Agents. If the funds on deposit in the Spread Account on such
Determination Date are less than the Spread Account Cap Percentage Amount,
Collections shall be deposited into the Spread Account on the next succeeding
Remittance Date in accordance with Section 2.5 up to the Spread Account Cap
Percentage Amount.
(ii) Funds on deposit in the Spread Account (other than investment
earnings) shall be invested by the Administrative Agent in Eligible
Investments that will mature so that funds will be available prior to the
Remittance Date following such investment. On each Remittance Date, all
interest and earnings (net of losses and investment expenses) on funds on
deposit in the Spread Account shall be applied as if such amounts were the
Buyer's Percentage Factor of Finance Charge Collections. On the date on
which the Net Investments and all
42
Aggregate Unpaids have been paid in full, any funds remaining on deposit in
the Spread Account shall be paid to the Transferor.
(c) (i) There shall be established on the Closing Date hereunder and
maintained with the Administrative Agent (or a designee thereof), either a
separate, segregated account or a subaccount of the Collection Account (the
"Excess Funding Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Administrative Agent and
the Purchaser Agents. In the event that on any day the Buyer's Percentage Factor
exceeds the Maximum Buyer's Percentage Factor, the Collection Agent shall remit
to the Excess Funding Account an amount of Principal Collections which would
cause the Buyer's Percentage Factor not to exceed the Maximum Buyer's Percentage
Factor.
(ii) Funds on deposit in the Excess Funding Account (other than
investment earnings) shall be invested by the Administrative Agent at the
direction of the Collection Agent in Eligible Investments that will mature
so that funds will be available prior to the Remittance Date following such
investment. On each Remittance Date, all funds on deposit in the Excess
Funding Account shall be available to make any payments required to be made
from the Excess Funding Account in accordance with Section 2.5. On the date
on which the Net Investments and all Aggregate Unpaids have been paid in
full, any funds remaining on deposit in the Excess Funding Account shall be
paid to the Transferor.
(d) All payments to be made out of funds on deposit in the Collection
Account, Spread Account and Excess Funding Account pursuant to Sections 2.4, 2.5
and 2.6 shall be remitted by the Administrative Agent pursuant to instructions
and computations provided by the Collection Agent, including pursuant to the
Investor Reports. The Administrative Agent shall have no responsibility
whatsoever for the accuracy of any such computations or information provided
pursuant to the Investor Reports.
SECTION 2.13. Sharing of Payments, Etc.
If a Purchaser or any Bank Investor (for purposes of this Section only,
being a "Recipient") shall obtain any payment (whether voluntary, involuntary,
through the exercise of any right of setoff, or otherwise) on account of the
Transferred Interest owned by it (other than pursuant to Section 2.7, or Article
VIII and other than as a result of the differences in the timing of the
applications of Collections pursuant to Section 2.5 or 2.6) in excess of its
ratable share of payments on account of Transferred Interest obtained by the
Purchasers and/or the Bank Investors entitled thereto, such Recipient shall
forthwith purchase from the Purchasers and/or the Bank Investors entitled to a
share of such amount participations in the Percentage Interests owned by such
Persons as shall be necessary to cause such Recipient to share the excess
payment ratably with each such other Person entitled thereto; provided, however,
that if all or any portion of such excess payment is thereafter recovered from
such Recipient, such purchase from each such other Person shall be rescinded and
each such other Person shall repay to the Recipient the purchase price paid by
such Recipient for such participation to the extent of such recovery, together
with an amount equal to such other Person's ratable share (according to the
proportion
43
of (a) the amount of such other Person's required payment to (b) the
total amount so recovered from the Recipient) of any interest or other amount
paid or payable by the Recipient in respect of the total amount so recovered.
SECTION 2.14. Right of Setoff.
(a) Without in any way limiting the provisions of Section 2.13, each of the
Purchasers and the Bank Investors is hereby authorized (in addition to any other
rights it may have) at any time after the occurrence of the earlier of a Special
Termination Date or Termination Date or during the continuance of a Potential
Termination Event to setoff, appropriate and apply (without presentment, demand
or protest, which are hereby expressly waived, but with notice (which may be
given after such setoff, provided that failure to give such notice shall not
impair any right of setoff, appropriation or application hereunder)) any
deposits held by such Purchaser or such Bank Investor in the Collection Account,
the Excess Funding Account or the Spread Account to, or for the account of, the
Transferor against the amount of the Aggregate Unpaids owing by the Transferor
to such Person or to any Purchaser Agent, on behalf of such Person.
(b) Each of the Transferor and the Collection Agent hereby waives any right
of setoff it may have or to which it may be entitled under this Agreement or the
other Transaction Documents from time to time against any of the other parties
to this Agreement or any of their assets.
SECTION 2.15. Special Termination Date with Respect to a Particular
Purchaser.
Notwithstanding anything to the contrary contained in this Agreement, if
there shall occur a Special Termination Date with respect to a Purchaser or
related Bank Investors, then, from and after such Termination Date, (a) no
further Transfers shall be made to such Purchaser or Bank Investor, (b) the Pro
Rata Share of such Purchaser or Bank Investor of the Buyer's Percentage Factor
shall remain constant until the Net Investment owing to such Purchaser or Bank
Investor has been reduced to zero and the Aggregate Unpaids owing to such
Purchaser or Bank Investor have been paid in full, (c) the Collection Agent
shall distribute Collections to such Purchaser or Bank Investor in accordance
with the provisions of Sections 2.5 and 2.6 applicable to a Termination Date,
(d) in all respects, the provisions of this Agreement with respect to a
Termination Date shall be deemed to apply only to such Purchaser or Bank
Investor, and (e) all provisions of this Agreement shall continue to apply to
the other Purchasers and Bank Investors as if no Termination Date has occurred
with respect thereto unless and until a Termination Date shall occur separately
with respect thereto.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of the Transferor.
On the Closing Date and on the date of each Transfer, the Transferor
represents and warrants to the Administrative Agent, Purchaser Agents, each
Purchaser and the Bank Investors that:
(a) Corporate Existence and Power.
The Transferor is a national banking association duly organized, validly
existing and in good standing under the laws of the United States and has all
corporate power and all material governmental licenses, authorizations, consents
and approvals required to carry on its business in each jurisdiction in which
its business is now conducted. The Transferor is duly qualified to do business
in, and is in good standing in, every other jurisdiction in which the nature of
its business requires it to be so qualified, except where the failure to be so
qualified or in good standing would not have a Material Adverse Effect.
(b) Corporate and Governmental Authorization; Contravention.
The execution, delivery and performance by the Transferor of this
Agreement, the Fee Letter, the Sheffield Fee Letter, the Certificates, the
Transfer Certificates and the other Transaction Documents to which the
Transferor is a party (i) are within the Transferor's corporate powers, have
been duly authorized by all necessary corporate action, require no action by or
in respect of, or filing with, any Official Body or official thereof (except as
contemplated by Section 2.8 hereof) and (ii) do not contravene, or constitute a
default under, any provision of applicable law, rule or regulation or of the
Articles of Association or Bylaws of the Transferor or of any agreement,
judgment, injunction, order, writ, decree or other instrument binding upon the
Transferor or result in the creation or imposition of any Adverse Claim on the
assets of the Transferor or any of its Subsidiaries (except as contemplated by
Section 2.8 hereof).
(c) Binding Effect.
Each of this Agreement, the Fee Letter, the Sheffield Fee Letter, the
Certificates and the other Transaction Documents to which the Transferor is a
party has been duly executed and delivered and constitutes, and the Transfer
Certificates upon payment of the Transfer Price set forth therein by each
Purchaser Agent will constitute, the legal, valid and binding obligation of the
Transferor, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws affecting
the rights of creditors generally and as such enforceability may be limited by
general principles of equity (whether considered in a proceeding at law or in
equity).
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(d) Perfection.
Immediately preceding each Transfer hereunder, the Transferor shall be the
lawful owner of all of the Receivables and the Related Security and Collections,
free and clear of all Adverse Claims. On or prior to each Transfer and each
recomputation of the Transferred Interest, all financing statements and other
documents required to be recorded or filed in order to perfect and protect the
Transferred Interest against all creditors of and purchasers from the Transferor
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 shall
have been paid in full.
(e) Accuracy of Information.
All information heretofore furnished by or on behalf of the Collection
Agent or the Transferor (including without limitation, the Account Schedule, the
Investor Reports, any reports delivered pursuant to Section 2.11 hereof and the
Transferor's financial statements) to a Purchaser, any Bank Investors, the
Administrative Agent or any of the Purchaser Agents for purposes of or in
connection with this Agreement or any transaction contemplated hereby is, and
all such information hereafter furnished by the Transferor to a Purchaser, any
Bank Investors, the Administrative Agent or any of the Purchaser Agents will be,
true, accurate and complete in every material respect, and the Transferor has
not omitted to disclose any information which is material to the transactions
contemplated hereby, on the date such information is stated or certified.
(f) Tax Status.
The Transferor has filed all tax returns (federal, state and local)
required to be filed and has paid or made adequate provision for the payment of
all taxes, assessments and other governmental charges, except to the extent it
is contesting any such payment in good faith, through appropriate proceedings
and after having set aside adequate reserves therefor.
(g) No Actions, Suits.
There are no actions, suits or proceedings pending or, to the knowledge of
the Transferor, threatened against or affecting the Transferor or its
properties, in or before any court, arbitrator or other body, which question the
validity of the transactions contemplated hereby or which, individually or in
the aggregate, have or could reasonably be expected to have a Material Adverse
Effect. The Transferor is not in violation of any order of any court, arbitrator
or Official Body.
(h) Use of Proceeds.
No proceeds of any Transfer will be used by the Transferor to acquire any
security in any transaction which is subject to Section 13 or 14 of the
Securities Exchange Act of
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1934, as amended, or for any purpose that violates any applicable law, rule or
regulation, including Regulation T, U or X of the Federal Reserve Board.
(i) Place of Business.
The principal place of business and chief executive office (within the
meaning of the UCC) of the Transferor are located at the address of the
Transferor indicated in Section 10.3 hereof and the offices where the Transferor
keeps all its Records, are located in Arizona, Nebraska, Oklahoma, Florida and
Minnesota and such other addresses as are described on Exhibit G or such other
locations notified to the Purchasers in accordance with Section 2.8 hereof in
jurisdictions where all action required by Section 2.8 hereof has been taken and
completed.
(j) Good Title.
Upon each Transfer and each recomputation of the Transferred Interest, the
Purchaser Agents shall acquire a valid and perfected first priority undivided
percentage ownership interest to the extent of the Transferred Interest or a
first priority perfected security interest in each Receivable that exists on the
date of such Transfer and recomputation and in the Collections with respect
thereto free and clear of any Adverse Claim.
(k) Tradenames, Etc.
Except as set forth on Exhibit H, as amended from time to time, (i) the
Transferor's chief executive office is located at the address for notices set
forth in Section 10.3 hereof; (ii) as of the Closing Date, the Transferor has no
subsidiaries; and (iii) the Transferor has, within the last five (5) years,
operated only under its legal name, and, within the last five (5) years, has not
changed its name, merged with or into or consolidated with any other corporation
or been the subject of any insolvency proceeding or similar proceeding under the
FDIA, except for the merger in July 1998 into DMCCB of Direct Merchants Credit
Card Bank, National Association, a national banking association, with its
principal place of business in Utah.
(l) Nature of Receivables.
Each Receivable (x) represented by the Transferor or the Collection Agent
to be an Eligible Receivable (including in any Investor Report or other report
delivered pursuant to Section 2.11 hereof) or (y) included in the calculation of
Principal Receivables in fact satisfies at such time the definition thereof.
(m) Coverage Requirement; Amount of Receivables.
The Buyer's Percentage Factor does not exceed the Maximum Buyer's
Percentage Factor. As of the Valuation Date, the aggregate outstanding balance
of the Principal Receivables in existence was $1,168,762,778.00.
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(n) Collections and Servicing; Material Adverse Effect.
Since December 31, 1998, there has been no material adverse change in the
ability of the Collection Agent (to the extent it is the Transferor or any
Subsidiary or Affiliate of any of the foregoing) to service and collect the
Receivables or a Material Adverse Effect.
(o) No Termination Event.
No event has occurred and is continuing and no condition exists which
constitutes a Termination Event or a Potential Termination Event.
(p) Not an Investment Company.
The Transferor is not, and is not controlled by, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, or is
exempt from all provisions thereof.
(q) ERISA.
Each of the Transferor and its ERISA Affiliates is in compliance in all
material respects with ERISA and no lien exists in favor of the Pension Benefit
Guaranty Corporation on any of the Receivables.
(r) Bulk Sales.
No transaction contemplated hereby requires compliance with any bulk sales
act or similar law.
(s) MasterCard and Visa Member.
The Transferor is qualified to participate in, and is a member in good
standing of either or both of the MasterCard and Visa credit card programs, as
is necessary for the operation of its business.
(t) Preference; Voidability.
The Transferor has given reasonably equivalent value to GE, in
consideration for the transfer to the Transferor of the Receivables from GE, and
such transfer shall not have been made for or on account of an antecedent debt
owed by GE to the Transferor and no such transfer is or may be voidable under
any provision of the FDIA.
(u) Representations and Warranties.
Each of the representations and warranties of the Transferor in each other
Transaction Document (other than the GE Agreement) to which it is a party are
true and correct in all material respects and the Transferor hereby remakes all
such representations and warranties
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for the benefit of the Purchasers, the Bank Investors, the Administrative Agent
and the Purchaser Agents. Any document, instrument, certificate or notice
delivered to the Purchasers hereunder shall be deemed a representation and
warranty by the Transferor.
(v) Year 2000 Compliance.
(i) The Transferor has (x) initiated a review and assessment of all
areas within its and each of its Subsidiaries' business and operations
(including those affected by suppliers, vendors and customers) that could
be adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by the Transferor or any of its Subsidiaries (or
suppliers, vendors and customers) may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and any
date after December 31, 1999), (y) developed a plan and timeline for
addressing the Year 2000 Problem on a timely basis, and (z) to date,
implemented that plan in accordance with that timetable. Based on the
foregoing, the Transferor believes that all computer applications
(including those of its suppliers, vendors and customers) that are material
to its or any of its Subsidiaries' business and operations are reasonably
expected on a timely basis to 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 that extent that a failure to do so could not
reasonably be expected (A) to have a Material Adverse Effect or (B) to
result in a Termination Event.
(ii) The Transferor (x) has completed a review and assessment of all
computer applications (including, but not limited to those of its
suppliers, vendors, customers and any third party servicers but excluding
GE and its suppliers, vendors, customers and third party servicers) (the
"Receivable Systems"), which are related to or involved in the collection,
management or servicing of the Receivables and (y) has determined in its
reasonable judgment based upon current information that such Receivable
Systems are Year 2000 Compliant, except to the extent that a failure to be
Year 2000 Compliant could not reasonably be expected (A) to have a Material
Adverse Effect or (B) to result in a Termination Event.
(iii) The costs of all assessment, remediation, testing and
integration related to the Transferor's plan for becoming Year 2000
Compliant will not have a Material Adverse Effect.
(w) FDIC Requirements.
(i) The resolutions of the Board of Directors of the Transferor
approving this Agreement and all documents related hereto are reflected in
the minutes of the Board of Directors, (ii) this Agreement, the other
Transaction Documents and all documents related hereto and thereto are and
have continuously been official records of the Transferor and (iii) the
Transferor is a member of the FDIC.
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(x) Transaction Documents.
Each of the Transaction Documents and the transactions contemplated
thereby is not (i) subject to any order of the type described in 12 U.S.C.
1818(b)(6)(D) and (ii) inconsistent with any formal or informal enforcement
action by a bank regulatory agency relating to the Transferor.
(y) Insolvency Considerations.
The Transferor did not (i) execute any Transaction Document to which
it is a party, (ii) convey the Transferred Interest hereunder, (iii) cause,
permit or suffer the perfection or attachment of such Transferred Interest
or (iv) otherwise effectuate or consummate any transfer pursuant to this
Agreement, in each case: (A) in contemplation of insolvency, (B) after
committing an act of insolvency, (C) with any intent to hinder, delay or
defraud itself or its creditors or (D) with a view to preferring one
creditor over another or to preventing the application of its assets in the
manner required by applicable law or regulations.
SECTION 3.2. Reaffirmation of Representations and Warranties by the
Transferor.
On each day that a Transfer is made hereunder, the Transferor, by accepting
the proceeds of such Transfer, whether delivered to the Transferor pursuant to
Section 2.2(a) or Section 2.5 hereof, shall be deemed to have certified that all
representations and warranties described in Section 3.1 hereof are correct on
and as of such day as though made on and as of such day both immediately before
and immediately after giving effect to any such Transfer. Each Incremental
Transfer shall be subject to the further conditions precedent that: (a) prior to
the date of such Incremental Transfer, the Collection Agent shall have delivered
to each of the Purchaser Agents, in form and substance satisfactory to the
Purchaser Agents, a completed Additional Investment Certificate, together with
such additional information as may be reasonably requested by any of the
Purchaser Agents; and the Transferor shall be deemed to have represented and
warranted that such conditions precedent have been satisfied, (b) all
representations and warranties of the Collection Agent shall be true and correct
on and as of the date of such Incremental Transfer and, (c) no Potential
Termination Event or Termination Event shall occur as a result of such
Incremental Transfer and (d) the amount on deposit in the Spread Account will be
equal to the Spread Account Cap Percentage Amount, calculated by using the
"Spread Account Cap Percentage" (as determined for the preceding Determination
Date pursuant to the definition of "Spread Account Cap Percentage Amount") and
taking into account the Incremental Transfer as part of the "Net Investments"
used in such calculation.
SECTION 3.3. Representations and Warranties of the Collection Agent.
On the Closing Date and on the date of each Transfer, the Collection Agent
represents and warrants to the Administrative Agent, Purchaser Agents, each
Purchaser and the Bank Investors that:
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(a) Corporate Existence and Power.
The Collection Agent is a national banking association duly organized,
validly existing and in good standing under the laws of the United States and
has all corporate power and all material governmental licenses, authorizations,
consents and approvals required to carry on its business in each jurisdiction in
which its business is now conducted. The Collection Agent is duly qualified to
do business in, and is in good standing (or is exempt from such requirements)
in, every other jurisdiction in which the nature of its business requires it to
be so qualified, except where the failure to be so qualified or in good standing
would not have a Material Adverse Effect.
(b) Corporate and Governmental Authorization; Contravention.
The execution, delivery and performance by the Collection Agent of this
Agreement are within the Collection Agent's corporate powers, have been duly
authorized by all necessary corporate action, require no action by or in respect
of, or filing with, any Official Body or official thereof, and do not
contravene, or constitute a default under, any provision of applicable law, rule
or regulation or of the Articles of Association or Bylaws of the Collection
Agent or of any agreement, judgment, injunction, order, writ, decree or other
instrument binding upon the Collection Agent or result in the creation or
imposition of any Adverse Claim on the assets of the Collection Agent or any of
its Subsidiaries (except as contemplated by Section 2.8).
(c) Binding Effect.
This Agreement and each other Transaction Document to which the Collection
Agent is a party has been duly executed and delivered and constitutes the legal,
valid and binding obligation of the Collection Agent, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws affecting the rights of creditors and as such enforceability
may be limited by general principles of equity (whether considered in a
proceeding at law or in equity).
(d) Accuracy of Information.
All information heretofore furnished by the Collection Agent to a
Purchaser, any Bank Investor, the Administrative Agent or any of the Purchaser
Agents for purposes of or in connection with this Agreement or any transaction
contemplated hereby is, and all such information hereafter furnished by the
Collection Agent to a Purchaser, any Bank Investor, the Administrative Agent and
the Purchaser Agents will be, true and accurate in every material respect and
the Collection Agent has not omitted to disclose any information which is
material to the transactions contemplated hereby, on the date such information
is stated or certified.
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(e) Actions, Suits.
There are no actions, suits or proceedings pending, or to the knowledge of
the Collection Agent threatened, against or affecting the Collection Agent or
its properties, in or before any court, arbitrator or other body, which have or
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. The Collection Agent is not in violation of any order
of any court, arbitrator or Official Body.
(f) Nature of Receivables.
Each Receivable included in the calculation of the Principal Receivables in
fact satisfies at such time the definition of "Eligible Receivable". Each
Account is either a VISA or MasterCard account.
(g) Amount of Receivables.
As of the Valuation Date, the aggregate outstanding balance of the
Principal Receivables in existence was $1,168,762,778.00.
(h) Collections and Servicing.
Since December 31, 1998, there has been no material adverse change in the
ability of the Collection Agent to service and collect the Receivables or a
Material Adverse Effect.
(i) Not an Investment Company.
The Collection Agent is not, and is not controlled by, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
or is exempt from all provisions thereof.
(j) Tax Status.
The Collection Agent has filed all tax returns (federal, state and local)
required to be filed and has paid or made adequate provision for the payment of
all taxes, assessments and other governmental charges, except to the extent it
is contesting any such payment in good faith, through appropriate proceedings
and after having set aside adequate reserves therefor.
(k) ERISA.
The Collection Agent is in compliance in all material respects with ERISA.
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(l) Chief Executive Office.
Its chief executive office for purposes of Article 9 of the UCC is located
as specified below its name in Section 10.3.
(m) Year 2000 Compliance.
(i) The Collection Agent has (x) initiated a review and assessment of
all areas within its and each of its Subsidiaries' business and operations
(including those affected by suppliers, vendors and customers) that could
be adversely affected by the Year 2000 Problem, (y) developed a plan and
timeline for addressing the Year 2000 Problem on a timely basis, and (z) to
date, implemented that plan in accordance with that timetable. Based on the
foregoing, the Collection Agent believes that all computer applications
(including those of its suppliers, vendors and customers) that are material
to its or any of its Subsidiaries' business and operations are reasonably
expected on a timely basis to be Year 2000 Compliant, except to the extent
that a failure to do so could not reasonably be expected (A) to have a
Material Adverse Effect or (B) to result in a Termination Event.
(ii) The Collection Agent (x) has completed a review and assessment of
all the Receivable Systems and (y) has determined in its reasonable
judgment based on current information that such Receivable Systems are Year
2000 Compliant except to the extent that a failure to be Year 2000
Compliant could not be reasonably expected (A) to have a Material Adverse
Effect or (B) to result in a Termination Event.
(iii) The costs of all assessment, remediation, testing and
integration related to the Collection Agent's plan for becoming Year 2000
Compliant will not have a Material Adverse Effect.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Conditions to Closing.
On or prior to the date of execution hereof, the Transferor shall deliver
to the Administrative Agent and the Purchaser Agents the following documents,
instruments and fees, all of which shall be in a form and substance acceptable
to the Administrative Agent and the Purchaser Agents:
(a) A copy of the resolutions of the Board of Directors of the Transferor
certified by its Secretary approving the execution, delivery and performance by
the Transferor of this Agreement and the other Transaction Documents to be
delivered by the Transferor hereunder or thereunder and all other documents
evidencing necessary corporate action and governmental approvals, if any.
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(b) The Articles of Association and the bylaws of the Transferor, certified
by its corporate secretary.
(c) A Certificate of the Comptroller of the Currency as to the
authorization of the Transferor to conduct the business of banking, dated a date
reasonably prior to the Closing Date.
(d) A Certificate of an officer of the Transferor as to the truth of
representations and warranties on the Closing Date, and a certificate of the
Secretary of the Transferor as to the incumbency of all officers signing
Transaction Documents on its behalf, with such attachments, and including such
other matters, as are requested by the Administrative Agent or any of the
Purchaser Agents.
(e) Acknowledgment copies of proper financing statements (Form UCC-1)
naming the Transferor as the debtor in favor of the Purchaser Agents, for the
benefit of the Purchasers and the Bank Investors, as secured party or other
similar instruments or documents as may be necessary or in the reasonable
opinion of the Purchaser Agents desirable under the UCC of all appropriate
jurisdictions or any comparable law to perfect the Purchaser Agents' undivided
percentage interest in all Receivables, Related Security, Collections and
Proceeds relating thereto.
(f) Copies of proper financing statements (Form UCC-3), if any, necessary
to terminate all security interests and other rights of any person in
Receivables previously granted by Transferor.
(g) Copies of proper financing statements (Form UCC-3), if any, necessary
to terminate all security interests and other rights of any person in
Receivables previously granted by GE and copies of proper financing statements
(Form UCC-1) naming the Transferor as the secured party against GE, as debtor,
to be filed in all appropriate jurisdictions in order to perfect the
Transferor's interest in all property purchased by it pursuant to the GE
Agreement.
(h) Certified copies of request for information (Form UCC-11) (or a similar
search report certified by parties acceptable to the Administrative Agent and
the Purchaser Agents) dated a date reasonably near the date of the initial
Incremental Transfer listing all effective financing statements which name the
Transferor (under its present name and any previous names) as debtor and which
are filed in jurisdictions in which the filings were made pursuant to item (e)
above together with copies of such financing statements (none of which shall
cover any Receivables or Accounts.
(i) An opinion of in-house counsel to the Transferor and the Collection
Agent, covering the matters requested by the Administrative Agent and the
Purchaser Agents.
(j) A copy of an executed notice to MCI from the Transferor excluding the
Receivables from being conveyed pursuant to the Bank Receivables Purchase
Facility.
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(k) An executed copy of the GE Agreement pursuant to which all conditions
precedent shall have been satisfied or waived (with the prior consent of the
Administrative Agent and the Purchaser Agents), and all other documents,
instruments and agreements executed in connection therewith.
(l) An opinion of X'Xxxxxx, Cavanagh, Anderson, Xxxxxxxxxxxxx & Xxxxxxxx,
special Arizona counsel to the Transferor, as to the perfection and priority of
the ownership or security interests created hereunder.
(m) An opinion of Xxxxxx & Whitney LLP, counsel to the Transferor, as to
(i) the enforceability of any security interest created hereunder
notwithstanding any insolvency of the Transferor, (ii) creation of the ownership
or security interests under this Agreement and (iii) the characterization of the
Receivables as accounts or general intangibles.
(n) Opinions of counsel to GE (or letters with respect thereto entitling
the Administrative Agent and the Purchaser Agent to rely thereupon) regarding
(i) the enforceability of the GE Agreement against GE and (ii) perfection and
priority of the ownership or security interests under the GE Agreement.
(o) A computer tape (to the Administrative Agent only) setting forth as of
the Valuation Date all Receivables and the Receivables balances thereon and such
other information as the Administrative Agent or any Purchaser Agent may
reasonably request.
(p) An executed copy of this Agreement, the Fee Letter, the Sheffield Fee
Letter, the Sheffield Agreement and each of the other Transaction Documents to
be executed by the Transferor.
(q) The Transfer Certificates, duly executed by the Transferor.
(r) The Certificates, duly executed by the Transferor and appropriately
completed.
(s) The Additional Investment Certificate, duly executed by the Transferor.
(t) Evidence that the fees due and owing on the Closing Date under the Fee
Letter and the Sheffield Fee Letter have been paid.
(u) Evidence that the Spread Account, the Excess Funding Account and the
Collection Account have been established in accordance with Section 2.12 hereof.
(v) An opinion of in-house counsel to MCI to the effect that (i) the
execution, delivery, and performance by the Transferor of this Agreement, the GE
Agreement and the transactions contemplated hereby and thereby will not create a
default under, or a violation of, the Credit Agreement and (ii) the amendments
to the Credit Agreement described in Section 4.1(x) hereof have been, assuming
due authorization by the other parties thereto and the
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genuineness of all signatures, in each case other than those of MCI, approved in
accordance with the provisions thereof.
(w) Sheffield shall have received a letter from Moody's confirming the
rating of Sheffield's Commercial Paper after taking into effect Sheffield's
execution and performance of this Agreement.
(x) Copies of (i) the amendment dated as of May 7, 1999 to the Credit
Agreement and (ii) the amendment dated as of June 10, 1999 to the Credit
Agreement, in each case, duly executed by each party thereto.
(y) A draft confirmation with respect to the Interest Rate Cap, which shall
be in effect on the Closing Date.
(z) Copies of proper financing statements (Form UCC-2) amending any
existing financing statements naming the Transferor as debtor in favor of MCI as
secured party, having the effect that the Receivables, Related Security
Collections and Proceeds relating thereto will be excluded from the liens
described in any such financing statements.
(aa) A certificate of an officer of MCI to the effect that: (i) the
amendments to the Credit Agreement described in clause 4.1(x) have been executed
and delivered by the requisite number of lenders to the Credit Agreement and are
in full force and effect and (ii) the execution, delivery and performance by the
Transferor of the Transaction Documents to which it is a party do not breach and
will not result in or constitute a default under the Credit Agreement.
(bb) Such other documents, approvals, instruments, certificates and
opinions as the Administrative Agent and the Purchaser Agents shall reasonably
request.
ARTICLE V
COVENANTS
SECTION 5.1 Affirmative Covenants of Transferor.
At all times from the date hereof to the latest to occur of (i) the
Termination Date, (ii) the last Special Termination Date with respect to all
Purchasers and (iii) the date on which the Net Investments have been reduced to
zero and all other Aggregate Unpaids shall have been paid in full, in cash,
unless the Purchaser Agents shall otherwise consent in writing:
(a) Financial Reporting and Other Information.
The Transferor will maintain, for itself and each of its Subsidiaries, a
system of accounting established and administered in accordance with GAAP, and
furnish or cause to be furnished to the Purchaser Agents:
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(i) Annual Reporting.
Within one hundred (100) days after the close of MCI's and the
Transferor's fiscal years, (i) in the case of MCI, audited financial
statements, prepared in accordance with GAAP on a consolidated basis for
MCI and its Subsidiaries, in each case, including balance sheets as of the
end of such period, related statements of income and cash flows,
accompanied by an opinion (which shall not be qualified in any material
respect) of a "Big Five" independent certified public accounting firm,
prepared in accordance with generally accepted auditing standards and (ii)
in the case of the Transferor, its annual call report filed with the Office
of the Comptroller of the Currency, accompanied by a certificate of said
accountants that, in the course of the foregoing, they have obtained no
knowledge of any Termination Event or Potential Termination Event, or if,
in the opinion of such accountants, any Termination Event or Potential
Termination Event shall exist, stating the nature and status thereof.
(ii) Quarterly Reporting.
Within fifty (50) days after the close of the first three quarterly
periods of MCI's and the Transferor's fiscal years (i) in the case of MCI,
for MCI and its Subsidiaries, in each case, consolidated unaudited balance
sheets as at the close of each such period and consolidated related
statements of income and cash flows for the period from the beginning of
such fiscal year to the end of such quarter, all as contained in MCI's
filing with the Securities and Exchange Commission on Form 10-Q and (ii) in
the case of the Transferor, the call report filed for such quarterly period
with the Office of the Comptroller of the Currency.
(iii) Compliance Certificate.
Together with the call reports required to be delivered hereunder, a
compliance certificate signed by the Transferor's chief financial officer
stating that (x) the attached call reports have been prepared in accordance
with GAAP, except to the extent regulatory accounting principles applicable
to national banking associations require different treatment, and
accurately reflect the financial condition of the Transferor and its
Subsidiaries, if any, as applicable, and (y) in the case of the Transferor
only, to the best of such Person's knowledge, no Termination Event or
Potential Termination Event exists, or if any Termination Event or
Potential Termination Event exists, stating the nature and status thereof.
(iv) Notice of Termination Events or Potential Termination Events.
As soon as possible and in any event within two (2) Business Days
after the occurrence of each Termination Event or each Potential
Termination Event, a statement of the chief financial officer or chief
accounting officer of the Transferor setting forth details of such
Termination Event or Potential Termination Event and the action which the
Transferor proposes to take with respect thereto.
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(v) Debt Ratings.
Within five (5) days after the date of any change in the Transferor's
or MCI's public or private debt ratings, if any, a written certification of
the Transferor's or MCI's public and private debt ratings after giving
effect to any such change.
(vi) ERISA.
Promptly after the filing or receiving thereof, copies of all reports
and notices with respect to any Reportable Event (as defined in Article IV
of ERISA) which the Transferor, MCI or any ERISA Affiliate of the
Transferor files under ERISA with the Internal Revenue Service, the Pension
Benefit Guaranty Corporation or the U.S. Department of Labor or which the
Transferor, MCI or any ERISA Affiliates of the Transferor receives from the
Internal Revenue Service, the Pension Benefit Guaranty Corporation or the
U.S. Department of Labor.
(vii) Year 2000 Reporting.
The certificate referred to in Section 5.1(m)(ii) as and when required
to be delivered and shall cause the Collection Agent to deliver the
certificate referred to in Section 5.3(e) as and when required to be
delivered.
(viii) Litigation.
Promptly upon the commencement thereof, notice of all legal or
arbitral proceedings and of all proceedings by or before any governmental
or regulatory authority or agency, and (promptly upon the occurrence
thereof) of any material development in respect of such legal or other
proceedings, affecting the Transferor.
(ix) Change in Accountants or Accounting Policy.
Promptly, notice of any change in accountants or accounting policy of
either the Transferor or MCI.
(x) Notice of Changes.
The Transferor shall promptly, and in any event within 5 days of such
occurrence, notify the Administrative Agent of any change with respect to
any matters regarding (A) the location of Transferor's chief executive
office, (B) the Transferor's Subsidiaries, if any, or (C) the Transferor's
legal name, insolvency proceedings with respect to the Transferor or any
merger or consolidation with respect to the Transferor.
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(xi) Amendments.
The Transferor shall notify the Administrative Agent of any amendment
to the GE Agreement or any Loss Sharing Agreement within at least 10 days
prior to the contemplated effective date of such amendment.
(xii) Other Information.
Such other information (including non-financial information) as the
Administrative Agent or the Purchaser Agents may from time to time
reasonably request with respect to MCI, the Transferor or any Subsidiary of
either of the foregoing.
(b) Conduct of Business.
The Transferor will carry on and conduct its business in substantially the
same manner and in substantially the same fields of enterprise as it is
presently conducted, and will do all things necessary to remain duly
incorporated, validly existing and in good standing as a domestic corporation in
its jurisdiction of incorporation and maintain all requisite authority to
conduct its business in each jurisdiction in which its business is conducted.
(c) Compliance with Laws.
The Transferor will comply in all material respects with all laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it or its respective properties may be subject, where the failure to comply with
the foregoing could be reasonably expected to have a Material Adverse Effect.
(d) Furnishing of Information and Inspection of Records.
The Transferor will furnish to the Administrative Agent and the Purchaser
Agents from time to time such information with respect to the Receivables as the
Administrative Agent or any of the Purchaser Agents may reasonably request,
including, without limitation, listings identifying the Obligor and the
outstanding balance for each Receivable. The Transferor will at any time and
from time to time during regular business hours and after reasonable notice
permit the Administrative Agent and the Purchaser Agents, or their respective
agents or representatives, (i) to examine and make copies of and take abstracts
from all Records and (ii) to visit the offices and properties of the Transferor
for the purpose of examining such Records, and to discuss matters relating to
Receivables or the Transferor's performance hereunder and under the other
Transaction Documents to which such Person is a party with any of the officers,
directors, employees or independent public accountants of the Transferor having
knowledge of such matters.
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(e) Keeping of Records and Books of Account.
The Transferor will maintain and implement administrative and operating
procedures (including, without limitation, an ability to recreate records
evidencing Receivables in the event of the destruction of the originals
thereof), and keep and maintain, all documents, books, records and other
information reasonably necessary or advisable for the collection of all
Receivables (including, without limitation, records adequate to permit the daily
identification of each new Receivable and all Collections of and adjustments to
each existing Receivable).
(f) Performance and Compliance with Receivables and Accounts.
The Transferor, at its expense, will timely and fully perform and comply
with all material provisions, covenants and other promises required to be
observed by the Transferor under the Accounts related to the Receivables.
(g) Credit and Collection Policies.
The Transferor will and will cause the Collection Agent to, comply with the
Credit and Collection Policy in regard to the Receivables and the related
Accounts, except insofar as any failure to so comply could not be reasonably
expected to impair the collectibility of the Receivables, on the whole, or a
substantial amount thereof, or otherwise have a Material Adverse Effect.
(h) Collections Received.
The Transferor shall, and shall cause the Collection Agent to, hold in
trust, and deposit, immediately, but in any event not later than seventy-two
hours of its receipt thereof from the Closing Date through the Conversion Date,
and after the Conversion Date, forty-eight hours of its receipt thereof, to the
Collection Account all Collections received from time to time by the Transferor
in accordance with Section 2.12(a).
(i) Sale Treatment.
The Transferor will not account for, or otherwise treat, the transactions
contemplated by the GE Agreement in any manner other than as a sale of
Receivables by GE to the Transferor or account for (other than for tax purposes
or for the calculation of risk based capital requirements applicable to the
Transferor) or otherwise treat the transactions contemplated hereby in any
manner other than as a sale of Receivables by the Transferor to the Purchaser
Agents, on behalf of the Purchasers or the Bank Investors, as applicable. In
addition, the Transferor shall disclose (in a footnote or otherwise) in all of
its statements (including any such financial statements consolidated with any
other Persons' financial statements) the existence and nature of the transaction
contemplated hereby and the interest of the Transferor and the Purchaser Agents,
on behalf of the Purchasers and the Bank Investors, in the Affected Assets.
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(j) FDIC Requirements.
The resolutions of the Board of Directors of the Transferor approving this
Agreement and all documents related hereto shall continuously be reflected in
the minutes of the Board of Directors of the Transferor and this Agreement, the
other Transaction Documents, and all documents related hereto and thereto shall
continuously from the time of their respective execution by the Transferor, be
maintained as official records of the Transferor.
(k) [Intentionally omitted]
(l) Ownership Interest.
The Transferor shall, at its expense, take all action necessary or
desirable to establish and maintain a valid and enforceable undivided percentage
ownership or security interest, to the extent of the Transferred Interest, in
the Receivables, the Related Security, Collections and Proceeds with respect
thereto, and a first priority perfected security interest in the Affected
Assets, in each case free and clear of any Adverse Claim, in favor of the
Purchaser Agents for the benefit of the Purchasers and the Bank Investors,
including taking such action to perfect, protect or more fully evidence the
interest of the Purchaser Agents, as any Purchaser Agent may reasonably request.
(m) Year 2000 Compliance.
(i) The Transferor will promptly notify the Administrative Agent and
the Purchaser Agents in the event the Transferor discovers or determines
that any computer application (including those of its suppliers, vendors
and customers) (x) that is necessary for the origination, collection,
management, or servicing of the Receivables is not Year 2000 Compliant, or
(y) that is otherwise material to its or any of its Subsidiaries' business
and operations will not be Year 2000 Compliant on a timely basis, except to
the extent that, in the case of (y) above, such failure could not
reasonably be expected (A) to have a Material Adverse Effect or (B) to
result in a Termination Event.
(ii) Further, the Transferor will deliver simultaneously with any
quarterly or annual financial statements or reports to be delivered under
this Agreement, a certificate signed by its chief financial officer that no
material event, problems or conditions have occurred which in the opinion
of management would (x) prevent or materially delay the Transferor's plan
to become Year 2000 Compliant or (y) cause or be likely to cause the
Transferor's representations and warranties with respect to being or
becoming Year 2000 Compliant no longer to be true.
(n) Interest Rate Cap.
(i) The Transferor will, on or prior to the Closing Date, obtain and
at all times prior to a date (the "Cap Termination Date") which is
forty-two months after the Closing Date, maintain one or more interest rate
caps (collectively, "Interest Rate Cap"), the
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notional amounts of which, individually or in the aggregate, shall equal or
exceed $800,000,000 (the "Initial Notional Amount") until the first
anniversary of the Closing Date and thereafter, such notional amount shall
decrease for each month until the Cap Termination Date by an amount equal
to one-thirtieth of the Initial Notional Amount. Pursuant to the Interest
Rate Cap, on each Remittance Date on which the LIBOR Cap Rate for a related
Collection Period exceeds 11%, the Interest Rate Cap Provider will make a
payment to the Transferor in an amount equal to the product of (i) such
excess, (ii) the notional amount as of such Remittance Date and (iii) the
actual number of days in the related Collection Period divided by 360. The
Interest Rate Cap will terminate on the Cap Termination Date; provided,
however, that the Interest Rate Cap may be terminated at an earlier date if
the Transferor has obtained a substitute interest rate cap or entered into
an alternative arrangement satisfactory to the Purchaser Agents and each
Rating Agency then rating the Commercial Paper of any Purchaser, which in
each case will not result in the reduction or withdrawal of the rating of
any such Commercial Paper (such substitute interest rate cap, a
"Replacement Interest Rate Cap"; such alternative arrangement, a "Qualified
Substitute Arrangement").
(ii) In the event that the rating of an Interest Rate Cap Provider is
reduced or withdrawn, as specified in the Interest Rate Cap, the Transferor
will obtain for each such Interest Rate Cap a Replacement Interest Rate
Cap, or enter into a Qualified Substitute Arrangement. It shall be a
condition to any such Replacement Interest Rate Cap or Qualified Substitute
Arrangement that there be delivered to the Purchaser Agents an Officer's
Certificate by the Transferor stating that the conditions to such
substitution set forth in this Section 5.1(n) have been satisfied.
(iii) Each Interest Rate Cap Agreement will provide that payments due
to the Transferor shall be deposited into the Collection Account.
(iv) The Transferor agrees to notify the Rating Agencies rating the
Commercial Paper of any Purchaser of any assignment by an Interest Rate Cap
Provider and shall, prior to amending any Interest Rate Cap Agreement,
obtain confirmation from each such Rating Agency that such assignment will
not result in the reduction or withdrawal of the rating of any such
Commercial Paper.
(v) Within five Business Days after the Closing Date, the Transferor
shall deliver to the Purchaser Agents and the Rating Agencies a fully
executed Interest Rate Cap Agreement satisfactory to the Rating Agencies
and all fees payable by the Transferor thereunder to the Interest Rate Cap
Provider shall have been paid by the Transferor to the Interest Rate Cap
Provider.
(o) Losses covered by Loss Sharing Agreements
(i) The Transferor shall diligently pursue all rights and remedies
with respect to the Accounts under any Loss Sharing Agreement, and shall
comply in a timely manner with all procedures set forth therein. In
connection therewith, the Transferor shall (i) promptly
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notify the Administrative Agent in writing upon the occurrence of any event
which could or would give rise to a payment obligation in favor of the
Transferor thereunder; (ii) take any and all action and cause GE or any
other relevant party to take any and all actions pursuant to the related
agreement necessary to obtain all amounts payable in connection therewith;
and (iii) cause all amounts received in connection therewith immediately to
be deposited in the Collection Account.
(ii) Upon the occurrence of a Termination Event or Potential
Termination Event, with notice to the Transferor, the Administrative Agent
shall have the exclusive right to enforce all rights of the Transferor
under any Loss Sharing Agreement; provided, however, failure by the
Administrative Agent to provide such notice shall not impair its rights in
respect of any Loss Sharing Agreement.
(iii) The Transferor shall take any action reasonably requested by the
Administrative Agent or the Purchaser Agents in connection with any Loss
Sharing Agreement and shall furnish to such Persons all information
requested thereby.
(iv) The Transferor shall deliver to the Administrative Agent copies
of all notices and other material communications delivered by or to the
Transferor, GE or any other relevant party under any Loss Sharing
Agreement.
SECTION 5.2. Negative Covenants of the Transferor.
At all times from the date hereof to the latest to occur of (i) the
Termination Date, (ii) the last Special Termination Date with respect to all
Purchasers and (iii) the date on which the Net Investments have been reduced to
zero and all other Aggregate Unpaids shall have been paid in full, in cash,
unless the Purchaser Agents shall otherwise consent in writing:
(a) No Sales, Liens, Etc.
Except as otherwise provided herein the Transferor will not sell, assign
(by operation of law or otherwise) or otherwise dispose of, or create or suffer
to exist any Adverse Claim upon (or the filing of any financing statement) or
with respect to any of the Affected Assets, or assign any right to receive
income in respect thereof.
(b) No Extension or Amendment of Receivables.
The Transferor will not extend, amend or otherwise modify the terms of any
Receivable, or amend, modify or waive any term or condition of any Account
related thereto if such action could have a Material Adverse Effect. The
Transferor further covenants that, except as otherwise required by law, it shall
not, and shall not cause or otherwise permit the Collection Agent at any time to
reduce the periodic finance charges assessed on any Receivable or other fees on
any Account if, as a result of such reduction, the reasonable expectation of the
Excess Spread as of such date would be less than 2.00% and unless (i) such
reduction is made applicable to the comparable segment of the consumer revolving
credit accounts owned and
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serviced by the Collection Agent that have characteristics the same as, or
substantially similar to, the Accounts that are the subject of such change or
(ii) if it does not own such a comparable segment, it will not make any such
change with the intent to materially benefit itself over the Purchasers and the
Bank Investors.
(c) No Change in Business or Credit and Collection Policy.
The Transferor will 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 the Receivables or otherwise have a Material Adverse
Effect.
(d) No Mergers, Etc.
The Transferor will not (i) consolidate or merge with or into any other
Person, or (ii) sell, lease or transfer all or substantially all of its assets
to any other Person.
(e) Change of Name, Etc.
The Transferor will not change its name, identity or structure or the
location of its chief executive office, unless at least 10 days prior to the
effective date of any such change the Transferor delivers to the Administrative
Agent and the Purchaser Agents such documents, instruments or agreements,
executed by the Transferor as are necessary to reflect such change and to
continue the perfection of the Purchaser Agents' ownership interests or security
interests in the Affected Assets.
(f) Amendment to Transaction Documents.
The Transferor will not amend, modify, or supplement the Transaction
Documents (excluding the GE Agreement) or waive any provision thereof, in each
case except with the prior written consent of the Administrative Agent and the
Purchaser Agents (which shall not be unreasonably withheld or delayed); nor
shall the Transferor take any other action under the Transaction Documents
(excluding the GE Agreement) that shall have a material adverse affect on the
Administrative Agent, any of the Purchaser Agents, a Purchaser or any Bank
Investor or which is inconsistent with the terms of this Agreement.
(g) [Reserved]
(h) ERISA Matters.
The Transferor will not (i) engage or permit any of its respective ERISA
Affiliates to engage in any prohibited transaction (as defined in Section 4975
of the Code and Section 406 of ERISA) for which an exemption is not available or
has not previously been obtained from the U.S. Department of Labor; (ii) permit
to exist any accumulated funding deficiency (as defined in Section 302(a) of
ERISA and Section 412(a) of the Code) or funding deficiency with respect to any
Benefit Plan other than a Multiemployer Plan; (iii) fail to make
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any payments to any Multiemployer Plan that the Transferor or any ERISA
Affiliate of the Transferor is required to make under the agreement relating to
such Multiemployer Plan or any law pertaining thereto; (iv) terminate any
Benefit Plan so as to result in any liability; or (v) permit to exist any
occurrence of any reportable event described in Title IV of ERISA which
represents a material risk of a liability to the Transferor or any ERISA
Affiliate of the Transferor under ERISA or the Code.
(i) Performance of Account Agreements.
The Transferor shall not fail to comply with and perform its obligations
under the applicable Account Agreements relating to the Accounts and the Credit
and Collection Policy except insofar as any such failure to comply or perform
would not materially and adversely affect the rights of a Purchaser, the
Administrative Agent, any of the Purchaser Agents or any Bank Investor in the
Receivables or the collectibility of the Receivables. The Transferor shall not
change the terms and provisions of the Account Agreement or the Credit and
Collection Policy in any respect (including, without limitation, the calculation
of the amount, and the timing, of uncollectible Receivables) with the intent to
materially benefit itself over a Purchaser, the Administrative Agent, any of the
Purchaser Agents or any Bank Investor, unless such change does not materially
and adversely affect the rights of a Purchaser, the Administrative Agent, any of
the Purchase Agents or any Bank Investor in the Receivables or the
collectibility of the Receivables.
(j) Actions Under GE Agreement and Loss Sharing Agreement.
(i) The Transferor shall not, nor will it permit GE to take, any
action under the GE Agreement which could reasonably be expected to have a
Material Adverse Effect or which is inconsistent with the material terms of
this Agreement. (ii) The Transferor shall not, nor will it permit any
relevant party to take, any action under any Loss Sharing Agreement which
could reasonably be expected to have a Material Adverse Effect or which is
inconsistent with the material terms of this Agreement.
SECTION 5.3. Affirmative Covenants of the Collection Agent.
At all times from the date hereof to the latest to occur of (i) the
Termination Date, (ii) the last Special Termination Date with respect to all
Purchasers and (iii) the date on which the Net Investments have been reduced to
zero and all other Aggregate Unpaids shall have been paid in full, in cash,
unless the Purchaser Agents shall otherwise consent in writing:
(a) Conduct of Business.
The Collection Agent shall carry on and conduct its business in
substantially the same manner and in substantially the same fields of enterprise
as it is presently conducted and do all things necessary to remain duly
chartered, validly existing and in good standing as a national banking
association and maintain all requisite authority to conduct its business in each
jurisdiction in which its business is conducted.
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(b) Compliance with Laws.
The Collection Agent shall comply in all material respects with all laws,
rules, regulations, orders, writs, judgments, injunctions, decrees or awards to
which it or its properties may be subject which pertain to its duties hereunder
and shall maintain in effect all material qualifications required by law to
service the Receivables and Accounts properly.
(c) Furnishing of Information and Inspection of Records.
The Collection Agent shall furnish to the Administrative Agent and the
Purchaser Agents from time to time such information with respect to the
Receivables as the Administrative Agent and the Purchaser Agents may reasonably
request, including, without limitation, listings identifying the Obligor by
Account number and the outstanding balance for each Receivable. The Collection
Agent shall, at any time and from time to time during regular business hours and
upon reasonable notice permit the Administrative Agent, any of the Purchaser
Agents, or its agents or representatives, (i) to examine and make copies of and
take abstracts from all Records and (ii) to visit the offices and properties of
the Collection Agent for the purpose of examining such Records, and to discuss
matters relating to Receivables or the Transferor's or the Collection Agent's
performance hereunder and under the other Transaction Documents to which such
Person is a party with any of the officers, directors, employees or independent
public accountants of the Collection Agent having knowledge of such matters.
(d) Keeping of Records and Books of Account.
The Collection Agent shall maintain and implement operating procedures
(including, without limitation, an ability to recreate records evidencing
Receivables in the event of the destruction of the originals thereof), and keep
and maintain, all documents, books, records and other information reasonably
necessary or advisable for the collection of all Receivables (including, without
limitation, records adequate to permit the daily identification of each new
Receivable and all Collections of and adjustments to each existing Receivable).
The Collection Agent will give the Administrative Agent notice of any material
change in its administrative and operating procedures referred to in the
previous sentence.
(e) Year 2000 Compliance.
(i) The Collection Agent will promptly notify the Administrative Agent
and the Purchaser Agents in the event the Collection Agent discovers or
determines that any computer application (including those of its suppliers,
vendors and customers) (x) that is necessary for the origination,
collection, management, or servicing of the Receivables is not Year 2000
Compliant, or (y) that is otherwise material to its or any of its
Subsidiaries' business and operations will not be Year 2000 Compliant on a
timely basis, except to the extent that, in the case of (y) above, such
failure could not reasonably be expected (A) to have a Material Adverse
Effect or (B) to result in a Termination Event.
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(ii) Further, the Collection Agent will deliver simultaneously with
any quarterly or annual financial statements or reports to be delivered
under this Agreement, a certificate signed by its chief financial officer
that no material event, problems or conditions have occurred which in the
opinion of management would (x) prevent or materially delay the
Transferor's plan to become Year 2000 Compliant or (y) cause or be likely
to cause the Transferor's representations and warranties with respect to
being or becoming Year 2000 Compliant no longer to be true.
(f) Credit and Collection Policies.
The Collection Agent shall comply with the Credit and Collection Policy in
regard to the Receivables and each related Account, except insofar as any
failure to so comply could not be reasonably expected to impair the
collectibility of the Receivables, on the whole, or a substantial amount
thereof, or otherwise have a Material Adverse Effect.
(g) No Rescission or Cancellation.
The Collection Agent shall not permit any rescission or cancellation of a
Receivable except as ordered by a court of competent jurisdiction or other
governmental authority or in the ordinary course of its business and in
accordance with the Credit and Collection Policy.
(h) Protection of Purchasers' Rights.
The Collection Agent shall take no action, nor omit to take any action,
which would impair the rights of the Purchasers in the Receivables or the
related Accounts.
(i) Litigation.
Promptly upon the commencement thereof, the Collection Agent shall give to
the Purchaser Agents notice of all legal or arbitral proceedings and of all
proceedings by or before any governmental or regulatory authority or agency,
affecting the Collection Agent or any of its respective Subsidiaries (i)
involving amounts in excess of $10,000,000, (ii) which could reasonably be
expected to have a Material Adverse Effect, or (iii) which could otherwise
result in a Termination Event or Potential Termination Event, and (promptly upon
the occurrence thereof) notice of any material development in respect of any
such legal or other proceedings.
(j) Notice of Termination Events, Potential Termination Events or
Collection Agent Default.
As soon as possible and in any event within two (2) Business Days after the
occurrence of each Termination Event, Potential Termination Event or Collection
Agent Default, the Collection Agent shall deliver to the Administrative Agent
and the Purchaser Agents a statement of the chief financial officer or chief
accounting officer of the Collection Agent
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setting forth details of such Termination Event, Potential Termination Event or
Collection Agent Default and the action which the Collection Agent proposes to
take with respect thereto.
(k) Conversion Date.
The Collection Agent shall use its best efforts to cause the Conversion
Date to occur by no later than October 31, 1999.
(l) The GE Agreement.
(i) The Collection Agent shall deliver to the Purchaser Agents copies
of all notices and other communications delivered by or to the Collection
Agent under the GE Agreement after the Closing Date, promptly upon such
delivery or receipt thereof, as the case may be, involving any claim
against GE in excess of $1,000,000. The Collection Agent shall notify the
Purchaser Agents of any breach by GE of any term of the GE Agreement which
involves an amount in excess of $1,000,000, upon its knowledge thereof.
(ii) The Collection Agent shall take all commercially reasonable
actions necessary to collect payments due to it under the GE Agreement and
shall exercise diligently and promptly all its rights and remedies
thereunder unless and until the Administrative Agent provides the notice to
the Collection Agent pursuant to clause (iii) below.
(iii) The Administrative Agent may, in its discretion, provide to the
Collection Agent a notice that it desires to exercise directly against GE
all rights and remedies of DMCCB under the GE Agreement upon the occurrence
of any one or more of the following: (A) the occurrence of a Termination
Event which involves an amount in excess of $1,000,000 that is caused by or
related to a breach by GE under the GE Agreement or would be cured by a
payment made by GE under the GE Agreement, (B) a Collection Agent Default
or Termination Event with respect to the Collection Agent which involves an
amount in excess of $1,000,000, or (C) an Event of Bankruptcy with respect
to the Transferor.
(iv) In the event that the Administrative Agent agrees to settle any
claim against GE for an amount that is less than the original amount of the
claim (the difference between such original amount and the amount of such
settlement being the "Claim Amount") (x) any such claim shall be settled by
the Administrative Agent consistent with the manner of a prudent business
entity in the position of owning a portfolio of receivables similar to the
Receivables in the conduct of such entity's own affairs, and (y) the
Administrative Agent and the Purchaser Agents agree that the Transferor, to
the extent it was liable therefor, shall remain liable for the payment
thereof.
(v) The Collection Agent shall, within one Business Day after the
Collection Agent's receipt thereof, remit to the Collection Account any
payment received by the Collection Agent pursuant to the GE Agreement which
relates to an amount due and owing under this Agreement, unless otherwise
previously paid by the Collection Agent or Transferor hereunder or by GE
directly to the Administrative Agent.
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SECTION 5.4. Negative Covenants of the Collection Agent.
At all times from the date hereof to the latest to occur of (i) the
Termination Date, (ii) the last Special Termination Date with respect to all
Purchasers and (iii) the date on which the Net Investments have been reduced to
zero and all other Aggregate Unpaids shall have been paid in full, in cash,
unless the Purchaser Agents shall otherwise consent in writing.
(a) No Sales, Liens, Etc.
Except as otherwise provided herein, the Collection Agent shall not sell,
assign (by operation of law or otherwise) or otherwise dispose of, or create or
suffer to exist any Adverse Claim upon (or the filing of any financing
statement) or with respect to (x) any of the Affected Assets or (y) any account
to which any Collections of any Receivable are sent, or assign any right to
receive income in respect thereof.
(b) No Change in Business or Credit Collection Policy. The Collection Agent
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 the Receivables, on the whole, or otherwise have a Material Adverse Effect.
(c) No Extension or Amendment of Receivables.
Except as otherwise permitted in Section 6.2 hereof, the Collection Agent
shall not extend, amend or otherwise modify the terms of any Receivable, or
amend, modify or waive any term or condition of any Account related thereto if
such action could have a Material Adverse Effect.
(d) No Mergers, Etc.
The Collection Agent shall not (i) consolidate or merge with or into any
other Person, or (ii) sell, lease or transfer all or substantially all of its
assets to any other Person, unless (a) the Collection Agent is the surviving
corporation, or the entity or Person formed by or surviving any such
consolidation or merger (if other than the Collection Agent) or to which such
sale, lease or transfer shall have been made is a national bank organized or
existing under the laws of the United States; (b) the entity or Person formed by
or surviving any such consolidation or merger (if other than the Collection
Agent) or the entity or Person to which such sale, lease or transfer shall have
been made assumes all the obligations of the Collection Agent under this
Agreement and the other Transaction Documents pursuant to an agreement in form
and substance satisfactory to the Administrative Agent and each Purchaser Agent;
and (c) immediately after such transaction, no Potential Termination Event or
Termination Event will result therefrom.
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ARTICLE VI
ADMINISTRATION AND COLLECTIONS
SECTION 6.1 Appointment of Collection Agent.
The servicing, administering and collection of the Receivables shall be
conducted by such Person (the "Collection Agent") so designated from time to
time in accordance with this Section 6.1. The Collection Agent shall be paid a
Servicing Fee in accordance with Section 2.5 hereof. Until the Administrative
Agent gives notice to the Transferor of the designation of a new Collection
Agent, under the circumstances set forth below, the Transferor is hereby
designated as, and hereby agrees to perform the duties and obligations of, the
Collection Agent pursuant to the terms hereof. The Collection Agent may not
delegate any of its material rights, duties or obligations hereunder without
prior notice to the Administrative Agent and the Purchaser Agents or designate a
substitute Collection Agent, without the prior written consent of the
Administrative Agent and the Purchaser Agents, and provided that in all events
the Collection Agent shall continue to remain solely liable for the performance
of the duties as Collection Agent hereunder notwithstanding any such delegation
hereunder. The Administrative Agent shall, after the occurrence of a Collection
Agent Default or any other Termination Event, and at the direction of the
Required Purchaser Agents, or if there are only two Purchaser Agents, both
Purchaser Agents, designate as Collection Agent any Person (including itself)
approved by such Required Purchaser Agents, or both Purchaser Agents, as the
case may be, to succeed the Transferor or any successor Collection Agent, on the
condition in each case that any such Person so designated shall agree to perform
the duties and obligations of the Collection Agent pursuant to the terms hereof.
The Collection Agent may notify any Obligor of the Transferred Interest.
SECTION 6.2. Duties of Collection Agent.
(a) The Collection Agent shall take or cause to be taken all such action as
may be necessary or advisable to collect each Receivable from time to time, all
in accordance with applicable laws, rules and regulations, with reasonable care
and diligence, and in accordance with the Credit and Collection Policy. Each of
the Transferor, the Purchasers, the Purchaser Agents and the Bank Investors
hereby appoints as its agent the Collection Agent, from time to time designated
pursuant to Section 6.1 hereof, to enforce its respective rights and interests
in and under the Affected Assets. To the extent permitted by applicable law, the
Transferor (to the extent not then acting as Collection Agent hereunder) hereby
grants to any Collection Agent appointed hereunder an irrevocable power of
attorney to take any and all steps in the Transferor's name and on behalf of the
Transferor necessary or desirable, in the reasonable determination of the
Collection Agent, to collect all amounts due under any and all Receivables,
including, without limitation, endorsing the Transferor's name on checks and
other instruments representing Collections and enforcing such Receivables and
the related Account Agreements. The Collection Agent shall set aside for the
account of the Transferor and the Purchaser Agents their respective allocable
shares of the Collections of Receivables in accordance with Sections 2.5 and 2.6
hereof. The Collection Agent shall segregate and deposit to each Purchaser
Agent's account
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its allocable share of Collections of Receivables when required pursuant to
Article II hereof. So long as no Termination Event resulting from a Collection
Agent Default shall have occurred and be continuing, the Collection Agent may,
in accordance with the Credit and Collection Policy, extend the maturity of
Receivables and extend the maturity or adjust the outstanding balance as the
Collection Agent may determine to be appropriate to maximize Collections
thereof; provided, however, that such extension or adjustment shall not alter
the status of such Receivable as a Defaulted Receivable. The Transferor shall
deliver to the Collection Agent or its designee(s) and the Collection Agent or
its designees shall hold in trust for the Transferor and the Purchaser Agents,
on behalf of their related Purchasers and Bank Investors, in accordance with
their respective interests, all Records which evidence or relate to Receivables.
The Collection Agent shall not make the Administrative Agent, any of the
Purchaser Agents, a Purchaser or any of the Bank Investors a party to any
litigation with respect to the Receivables without the prior written consent of
such Person, unless such joinder is required by law and such Person would not
become subject to any liability for which it is not indemnified hereunder.
(b) The Collection Agent shall, as soon as practicable following receipt
thereof, turn over to the Transferor any collections of any indebtedness of any
Person which is not on account of a Receivable. If the Collection Agent is not
the Transferor or an Affiliate of the Transferor, the Collection Agent, by
giving three Business Days' prior written notice to the Purchaser Agents, may
revise the percentage used to calculate the Servicing Fee so long as the revised
percentage will not result in a Servicing Fee that exceeds 110% of the
reasonable and appropriate out-of-pocket costs and expenses of such Collection
Agent incurred in connection with the performance of its obligations hereunder
as documented to the reasonable satisfaction of the Purchaser Agents; provided,
however, that at any time after the Buyer's Percentage Factor equals or exceeds
100%, any compensation to the Collection Agent in excess of the Servicing Fee
initially provided for herein shall be an obligation of the Transferor and shall
not be payable, in whole or in part, from Collections allocated to the
Purchasers or the Bank Investors, as applicable. The Collection Agent, if other
than the Transferor or an Affiliate of the Transferor, shall as soon as
practicable upon demand, deliver to the Transferor all Records in its possession
which evidence or relate to indebtedness of an Obligor which is not a
Receivable.
(c) On or before 100 days after the end of each fiscal year of the
Collection Agent, beginning with the fiscal year ending December 31, 1999, the
Collection Agent shall cause a firm of nationally recognized independent public
accountants (who may also render other services to the Collection Agent, the
Transferor or any Affiliates of any of the foregoing) to furnish a report to the
Purchaser Agents to the effect that they have (i) applied certain procedures,
agreed upon with the Collection Agent and the Purchaser Agents and substantially
as set forth in Exhibit C hereto, which would re-perform certain accounting
procedures performed by the Collection Agent pursuant to certain documents and
records relating to the servicing of the Accounts under this Agreement; in
addition, each report shall set forth the agreed upon procedures performed and
the results of such procedures; and (ii) compared the amounts and percentages
set forth in the Investor Reports forwarded by the Collection Agent pursuant to
Section 2.11 during the period covered by such report with the computer reports
which may include personal computer generated reports that summarize data from
the computer reports
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generated by either the Transferor or Collection Agent which are used to prepare
the Investor Reports) which were the source of such amounts and percentages and
that on the basis of such comparison, such amounts and percentages are in
agreement except as shall be set forth in such report.
(d) Notwithstanding anything to the contrary contained in this Article VI,
the Collection Agent, if not the Transferor or any Affiliate of the Transferor,
shall have no obligation to collect, enforce or take any other action described
in this Article VI with respect to any indebtedness that is not included in the
Transferred Interest other than to deliver to the Transferor the collections and
documents with respect to any such indebtedness as described in Section 6.2(b)
hereof.
SECTION 6.3. Rights After Designation of New Collection Agent.
At any time following the designation of a Collection Agent (other than the
Transferor or any Affiliate of the Transferor) pursuant to Section 6.1 hereof:
(i) The Administrative Agent may or shall, at the direction of the
Purchaser Agents, direct that payment of all amounts payable under any
Receivable be made directly to the Administrative Agent or its designee, to
be applied in accordance with Sections 2.5, 2.6 and 2.12(d), as applicable.
(ii) In the event that a Termination Event has occurred, the
Transferor shall, at the Administrative Agent's request and at the
Transferor's expense, direct that payments be made directly by each Obligor
to the Administrative Agent or its designee, and, if necessary, give notice
of any of the Purchaser Agents', the Transferor's and/or the Bank
Investors' ownership of Receivables to each Obligor.
(iii) The Transferor shall, at the Administrative Agent's request, (A)
assemble all of the Records, and shall make the same available to the
Administrative Agent or its designee at a place selected by the
Administrative Agent or its designee, and (B) segregate all cash, checks
and other instruments received by it from time to time constituting
Collections of Receivables in a manner acceptable to the Administrative
Agent and shall, promptly upon receipt, remit all such cash, checks and
instruments, duly endorsed or with duly executed instruments of transfer,
to the Administrative Agent or its designee.
(iv) The Transferor hereby authorizes the Administrative Agent to take
any and all lawful steps in the Transferor's name and on behalf of the
Transferor necessary or desirable and reasonable, in the determination of
the Administrative Agent, to collect all amounts due under any and all
Receivables, including, without limitation, endorsing the Transferor's name
on checks and other instruments representing Collections and enforcing such
Receivables and the related Account Agreements, and the Transferor shall
request any third party holding any Records to provide the
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Administrative Agent with access to such Records to same extent as the
Transferor have such access.
SECTION 6.4. Collection Agent Default.
The occurrence of any one or more of the following events shall constitute
a Collection Agent Default:
(a) the Collection Agent or, to the extent that the Transferor or any
Affiliate of the Transferor is then acting as Collection Agent, the Transferor
or such Affiliate, as applicable, shall fail to (i) observe or perform any term,
covenant or agreement to be observed or performed under Section 5.3(a), (f), (g)
or (h) or Section 5.4(b), (c) or (d), and any such failure to observe Section
5.3(a), (g) or (h) or Section 5.4(c) shall have a Material Adverse Effect, or
(ii) observe or perform any term, covenant or agreement hereunder (other than as
referred to in clause (i) or (iii) of this Section 6.4(a)) or under any of the
other Transaction Documents to which such Person is a party or by which such
Person is bound, which failure shall have a Material Adverse Effect and shall
remain unremedied for ten (10) days, or (iii) make any payment or deposit
required to be made by it hereunder when due or the Collection Agent shall fail
to observe or perform any term, covenant or agreement on the Collection Agent's
part to be performed under Section 2.8(b) hereof; or
(b) any representation, warranty, certification or statement made by the
Collection Agent (in the event that the Transferor or such Affiliate is then
acting as the Collection Agent) in this Agreement or in any other Transaction
Documents or in any certificate or report delivered by it pursuant to any of the
foregoing shall prove to have been incorrect in any material adverse respect
when made or deemed made; or
(c) any event of default by the Collection Agent or any of its Subsidiaries
in the performance of any term, provision or condition contained in any
agreement under which any Indebtedness greater than $10,000,000 was created or
is governed, if the effect of such event of default is to cause that
Indebtedness to become or be declared due and payable prior to its stated
maturity or the stated maturity of any underlying obligation, as the case may
be; or
(d) any Event of Bankruptcy shall occur with respect to the Collection
Agent or any of its Subsidiaries; or
(e) there shall have occurred any material adverse change in the operations
of the Collection Agent since the end of the last fiscal year ending prior to
the date of its appointment as Collection Agent hereunder which, in the
commercially reasonable judgment of the Required Purchaser Agents, materially
and adversely affects the Collection Agent's ability to either collect the
Receivables or to perform under this Agreement; or
(f) a final judgment or judgments for the payment of money in excess of
$10,000,000 individually or in the aggregate shall be rendered by one or more
courts, administrative tribunals or other bodies having jurisdiction against the
Collection Agent and the
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same shall not be discharged (or provision shall not be made for such
discharge), or a stay of execution thereof shall not be procured, within 30 days
from the date of entry thereof.
SECTION 6.5. Responsibilities of the Transferor.
Anything herein to the contrary notwithstanding, the Transferor shall (i)
perform all of its obligations under the Accounts related to the Receivables to
the same extent as if interests in such Receivables had not been sold hereunder
and under the GE Agreement and the exercise by the Administrative Agent, the
Purchaser Agents, the Purchasers and the Bank Investors of their rights
hereunder and under the GE Agreement shall not relieve the Transferor from such
obligations and (ii) pay when due any taxes, including without limitation, any
sales taxes payable in connection with the Receivables and their creation and
satisfaction. Neither the Administrative Agent, any of the Purchaser Agents, the
Purchasers nor any of the Bank Investors shall have any obligation or liability
with respect to any Receivable or related Accounts, nor shall it be obligated to
perform any of the obligations of the Transferor thereunder.
ARTICLE VII
TERMINATION EVENTS
SECTION 7.1 Termination Events.
The occurrence of any one or more of the following events shall constitute
a Termination Event:
(a) the Transferor or the Collection Agent shall fail to make any payment
or deposit to be made by it hereunder (including, without limitation, any
payment received under any Loss Sharing Agreement) when due hereunder or
thereunder, and such failure shall continue for 2 Business Days; or
(b) any representation, warranty, certification or statement made by (x)
the Transferor in this Agreement, any other Transaction Document to which it is
a party or in any other document delivered pursuant hereto or thereto or (y) MCI
in the officer's certificate described in Section 4.1(aa) hereof, shall prove to
have been incorrect in any material adverse respect when made or deemed made
and, if susceptible of being remedied, has not been remedied within 30 days
thereafter; or
(c) the Transferor or the Collection Agent, shall default in the
performance of any payment, covenant or undertaking (other than those covered by
clause (a) above): (i) to be performed or observed under Sections 5.1(a)(iv),
5.1(b), 5.1(f), 5.1(g), 5.1(i), 5.1(j), 5.2(a), 5.2(c), 5.2(d) or 5.2(g); (ii)
to be performed or observed under Section 5.1(a)(vi) or Section 5.3, and such
default in the case of this clause (ii) shall continue for two (2) Business
Days; and (iii) to be performed or observed under any other provision hereof or
any other Transaction Document and such default in the case of this clause (iii)
shall continue for ten (10) days; or
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(d) any event of default by the Transferor, MCI or any Subsidiary of the
Transferor or MCI in the performance of any term, provision or condition
contained in any agreement to which any such Person is a party or under which
any Indebtedness owing by the Transferor or any Subsidiary of the Transferor
greater than $10,000,000 was created or is governed if the effect of such event
of default is to cause that Indebtedness to become or be declared due and
payable prior to its stated maturity or the stated maturity of any underlying
obligation, as the case may be; or
(e) an Event of Bankruptcy shall occur with respect to the Transferor, the
Collection Agent, MCI or any Subsidiary of any of the foregoing (which, in the
case of such Subsidiary, could reasonably be expected to have a Material Adverse
Effect); or
(f) the Transferor shall, for any reason, fail to have a valid ownership
interest in the Affected Assets or any of the Purchaser Agents, on behalf of
their related Purchasers and Bank Investors shall, for any reason, fail or cease
to have a valid and perfected first priority ownership or security interest in
the Affected Assets free and clear of any Adverse Claims; or
(g) a Collection Agent Default shall have occurred; or
(h) (x) the GE Agreement shall have terminated other than pursuant to its
terms or a default shall occur thereunder, in either case, which has a Material
Adverse Effect; (y) any Loss Sharing Agreement shall have terminated, other than
pursuant to its terms; or (z) any payment default or defaults shall occur under
any Loss Sharing Agreement, and so long as no other Termination Event has
occurred or is then continuing, such payment default or defaults shall be
continuing uncured for a period of (i) if Excess Spread, determined by reference
to the most recent Investor Report, is greater than 4%, 45 days after the party
obligated to make payments under such Loss Sharing Agreement receives the
documentation required thereunder from the Transferor or GE, or (ii) if Excess
Spread, determined by reference to the most recent Investor Report, is less than
or equal to 4%, 30 days after the party obligated to make payments under such
Loss Sharing Agreement receives the documentation required thereunder from the
Transferor or GE; or
(i) the Transferor or the Collection Agent (if at the time DMCCB or an
Affiliate thereof is serving as such) (except as permitted under Section
5.4(d)), shall enter into any transaction or merger whereby it is not the
surviving entity; or
(j) there shall have occurred any material adverse change in the operations
of the Transferor or MCI since December 31, 1998 or any other Material Adverse
Effect shall have occurred; or
(k) on any date (i) the Buyer's Percentage Factor shall exceed the Maximum
Buyer's Percentage Factor and shall not be cured within one Business Day
thereafter or (ii) the Buyer's Percentage Factor shall equal or exceed 100% at
any time; or
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(l) on any Remittance Date, the Spread Account balance shall be less than
the Spread Account Cap Percentage Amount and such deficiency shall continue to
exist unremedied at the close of business on the second Remittance Date
thereafter; or
(m) the average Excess Spread (not including any amounts received under any
Loss Sharing Agreement) for any three rolling consecutive Collection Periods
shall be less than or equal to 2% but greater than 0%; or
(n) MCI shall cease to own, directly or indirectly, all of the outstanding
capital stock of DMCCB; or
(o) any failure by the Transferor or any of its ERISA Affiliates to
maintain its Benefit Plans in accordance with ERISA or the occurrence of any
event of the type set forth in clauses (i) through (v) of Section 5.2(h) with
respect to any such entity which, in any case, results in a lien on the
Receivables or otherwise has a Material Adverse Effect; or
(p) (i) the Net Investments plus, in the case where the Transferred
Interest is held by a Purchaser, the Interest Component of all outstanding
Related Commercial Paper, shall exceed the Facility Limit or (ii) any
Purchaser's applicable Net Investment (together with the Interest Component of
all its outstanding Related Commercial Paper) shall exceed its Applicable
Purchaser Percentage of the Facility Limit; or
(q) a final judgment or judgments for the payment of money in excess of
$10,000,000 individually or in the aggregate shall be rendered by one or more
courts, administrative tribunals or other bodies having jurisdiction against the
Collection Agent (if at the time, DMCCB or an Affiliate thereof is serving as
such) or any of its Subsidiaries and the same shall not be discharged (or
provision shall not be made for such discharge), or a stay of execution thereof
shall not be procured, within 30 days from the date of entry thereof; or
(r) the Interest Rate Cap Agreement shall not be in full force and effect
and no substitute shall have been obtained therefor within 10 days thereafter,
or an Event of Bankruptcy shall have occurred with respect to the Interest Rate
Cap Provider or the Interest Rate Cap Provider shall repudiate the Interest Rate
Cap Agreement or refuse to make a payment thereunder; or
(s) the Interest Rate Cap Provider is downgraded below the ratings
specified in the definition thereof by either Standard & Poor's or Moody's,
respectively, and is not replaced with a substitute Interest Rate Cap Provider
within 10 days; or
(t) the average Excess Spread (not including any amounts received hereunder
under any Loss Sharing Agreement) for any three rolling consecutive Collection
Periods shall be 0% or less; or
(u) (i) the Transferor or GE shall amend, modify, supplement or waive any
provision of the GE Agreement in any manner which could reasonably be expected
to have a
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Material Adverse Effect or which is inconsistent with the material terms of this
Agreement; or (ii) the Transferor or any relevant party shall amend, modify,
supplement or waive any provision of any Loss Sharing Agreement which could
reasonably be expected to have a Material Adverse Effect or which is
inconsistent with the material terms of this Agreement; or
(v) the computer applications of GE, its suppliers, vendors, customers or
third-party servicers related to or involved in the collection, management or
servicing of the Receivables shall fail to be Year 2000 Compliant, and such
failure (i) has, or could reasonably be expected to have, a Material Adverse
Effect or (ii) results in, or could reasonably be expected to result in, another
Termination Event.
SECTION 7.2. Termination.
(a) Upon the occurrence of any Termination Event, the Required Purchaser
Agents may, by notice to the other Purchaser Agent and to the Transferor and the
Collection Agent, declare the Termination Date to have occurred; provided,
however, that in the case of any event described in Section 7.1(e), 7.1(f),
7.1(k)(ii), 7.1(p), 7.1(r), 7.1(s) or 7.1(t) above, the Termination Date shall
be deemed to have occurred automatically upon the occurrence of such event. Upon
any such declaration or automatic occurrence, the Purchaser Agents shall have,
in addition to all other rights and remedies under this Agreement or otherwise,
all other rights and remedies provided under the UCC of the applicable
jurisdiction and other applicable laws, all of which rights shall be cumulative.
(b) At all times after the declaration or automatic occurrence of the
Termination Date pursuant to Section 7.2(a), interest shall thereafter be
calculated on the basis of the Base Rate plus 2.00% and all other Carrying Costs
shall accrue interest on the basis of the Base Rate plus 2.00% until, in each
case, such interest and Carrying Costs are paid in full.
ARTICLE VIII
INDEMNIFICATION; EXPENSES; RELATED MATTERS
SECTION 8.1 Indemnities by the Transferor.
Without limiting any other rights which the Administrative Agent, any of
the Purchaser Agents, the Purchasers or the Bank Investors may have hereunder or
under applicable law, each of the Transferor and the Collection Agent hereby
severally agrees to indemnify the Purchasers, the Bank Investors, the
Administrative Agent, the Purchaser Agents, the Collateral Agent, each Liquidity
Provider and each Credit Support Provider and any successors and permitted
assigns and their respective officers, directors, employees and agents
(collectively, "Indemnified Parties") from and against any and all damages,
losses, claims, liabilities, costs and expenses, including, without limitation,
reasonable attorneys' fees (which such attorneys may be employees of a Liquidity
Provider, a Credit Support Provider, the Administrative Agent, any of the
Purchaser Agents or the Collateral Agent, as applicable) and disbursements (all
of the
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foregoing being collectively referred to as "Indemnified Amounts") awarded
against or incurred by any of them in any action or proceeding between the
Transferor (including, in its capacity as the Collection Agent, except for
indemnification which is being sought against the Collection Agent) and any of
the Indemnified Parties or between any of the Indemnified Parties and any third
party or otherwise arising out of or as a result of this Agreement, the other
Transaction Documents, the ownership or maintenance, either directly or
indirectly, by the Administrative Agent, any of the Purchaser Agents, a
Purchaser or any Bank Investor of the Transferred Interest or any of the other
transactions contemplated hereby or thereby, excluding, however, (i) Indemnified
Amounts to the extent resulting from gross negligence or willful misconduct on
the part of an Indemnified Party or (ii) recourse (except as otherwise
specifically provided in this Agreement) for uncollectible Receivables.
Notwithstanding the foregoing, the indemnity of the Collection Agent pursuant to
this Section shall be limited to Indemnified Amounts relating to or resulting
from any of the following which relate to the failure, breach or other action of
the Collection Agent. Without limiting the generality of the foregoing, the
Transferor shall indemnify each Indemnified Party for Indemnified Amounts
relating to or resulting from all matters set forth below (other than those
described in the preceding sentence):
(i) any representation or warranty made by the Transferor (including,
in its capacity as the Collection Agent) or any officers of the Transferor
(including, in its capacity as the Collection Agent) under or in connection
with this Agreement, the GE Agreement, any of the other Transaction
Documents, any Investor Report or any other information or report delivered
by the Transferor or the Collection Agent pursuant hereto, which shall have
been false or incorrect in any material respect when made or deemed made;
(ii) the failure by the Transferor (including, in its capacity as the
Collection Agent) to comply with any applicable law, rule or regulation
with respect to any Receivable or the related Account, or the nonconformity
of any Receivable or the related Account with any such applicable law, rule
or regulation;
(iii) the failure (x) to vest and maintain vested in the Purchaser
Agents, on behalf of their related Purchasers and Bank Investors, an
undivided first priority, perfected percentage ownership interest (to the
extent of the Transferred Interest) in the Affected Assets free and clear
of any Adverse Claim or (y) to create or maintain a valid and perfected
first priority security interest in favor of the Purchaser Agents, for the
benefit of their related Purchasers and Bank Investors, in the Affected
Assets as contemplated pursuant to Section 10.11 hereof, free and clear of
any Adverse Claim, except that any ownership interest or security interest
created hereunder with respect to Related Security shall be a first
priority perfected interest only to the extent possible by filing the
financing statements contemplated to be filed hereunder on the Closing Date
(and any amendments thereto or continuations thereof);
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(iv) the failure to file, or any delay in filing, financing
statements, continuation statements, or other similar instruments or
documents under the UCC of any applicable jurisdiction or other applicable
laws with respect to any of the Affected Assets;
(v) any dispute, claim, offset or defense (other than discharge in
bankruptcy) of the Obligor to the payment of any Receivable (including,
without limitation, a defense based on such Receivable or the related
Account not being the legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms);
(vi) any failure of the Collection Agent to perform its duties or
obligations in accordance with the provisions hereof;
(vii) any products liability claim or personal injury or property
damage suit or other similar or related claim or action of whatever sort
arising out of or in connection with merchandise or services which are the
subject of any Receivable;
(viii) the transfer of an ownership interest in any Receivable other
than an Eligible Receivable;
(ix) the failure by the Transferor (individually or as Collection
Agent) to comply with any term, provision or covenant contained in this
Agreement or any of the other Transaction Documents to which it is a party
or to perform any of its respective duties under the Account Agreements;
(x) [Reserved]
(xi) the failure of GE to pay when due any taxes, including without
limitation, sales, excise or personal property taxes payable in connection
with any of the Receivables;
(xii) any repayment by any Indemnified Party of any amount previously
distributed in reduction of Net Investments which such Indemnified Party
believes in good faith is required to be made;
(xiii) the commingling by the Transferor or the Collection Agent of
Collections of Receivables at any time with other funds;
(xiv) any investigation, litigation or proceeding related to this
Agreement, any of the other Transaction Documents, the use of proceeds of
Transfers by the Transferor, the ownership of Transferred Interests, or any
Receivable or Account;
(xv) any inability to obtain any judgment in or utilize the court or
other adjudication system of, any state in which an Obligor may be located
as a result of the
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failure of the Transferor to qualify to do business or file any notice of
business activity report or any similar report;
(xvi) any failure of the Transferor to give reasonably equivalent
value to GE in consideration of the transfer by GE of any Receivable, or
any attempt by any Person to void, rescind or set aside any such transfer
under statutory provisions or common law or equitable action, including,
without limitation, any provision of the Bankruptcy Code;
(xvii) any action taken by the Transferor or the Collection Agent (if
the Transferor or any Affiliate or designee of the Transferor) in the
enforcement or collection of any Receivable; or
(xviii) the failure of any information contained in the Investor
Report and other reports delivered pursuant to Section 2.11 to be true and
correct;
provided, however, that if a Purchaser enters into agreements for the purchase
of interests in receivables from one or more Other Transferors, such Purchaser
shall allocate such Indemnified Amounts which are in connection with the
Liquidity Provider Agreement, the Credit Support Agreement or the credit support
furnished by the Credit Support Provider to the Transferor and each Other
Transferor; and, provided, further, that if such Indemnified Amounts are
attributable to the Transferor or the Collection Agent and not attributable to
any Other Transferor, the Transferor shall be solely liable for such Indemnified
Amounts or if such Indemnified Amounts are attributable to Other Transferors and
not attributable to the Transferor or the Collection Agent, such Other
Transferors shall be solely liable for such Indemnified Amounts.
SECTION 8.2. 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 Indemnified Party (or its applicable lending
office) to any tax, duty or other charge (other than Excluded Taxes) with
respect to this Agreement, the other Transaction Documents, the ownership,
maintenance or financing of the Transferred Interest, the Receivables or
payments of amounts due hereunder, or shall change the basis of taxation of
payments to any Indemnified Party of amounts payable in respect of this
Agreement, the other Transaction Documents, the ownership,
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maintenance or financing of the Transferred Interest, the Receivables or
payments of amounts due hereunder or its obligation to advance funds
hereunder, under a Liquidity Provider Agreement or the credit support
furnished by a Credit Support Provider or otherwise in respect of this
Agreement, the other Transaction Documents, the ownership, maintenance or
financing of the Transferred Interest 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);
(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 this Agreement, the other
Transaction Documents, the ownership, maintenance or financing of the
Transferred Interest, the Receivables or payments of amounts due hereunder
or its obligation to advance funds hereunder under the Liquidity Provider
Agreement or the credit support provided by a Credit Support Provider or
otherwise in respect of this Agreement, the other Transaction Documents,
the ownership, maintenance or financing of the Transferred Interest or the
Receivables; or
(iii) imposes upon any Indemnified Party any other condition or
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 this Agreement, the other Transaction
Documents, the ownership, maintenance or financing of the Transferred
Interest, the Receivables or payments of amounts due hereunder or its
obligation to advance funds hereunder under a Liquidity Provider Agreement
or the credit support furnished by a Credit Support Provider or otherwise
in respect of this Agreement, the other Transaction Documents, the
ownership, maintenance or financing of the Transferred Interests or the
Receivables,
and the result of any of the foregoing is to increase the cost to or to reduce
the amount of any sum received or receivable by such Indemnified Party with
respect to this Agreement, the other Transaction Documents, the ownership,
maintenance or financing of the Transferred Interest, the Receivables, the
obligations hereunder, the funding of any purchases hereunder, the Liquidity
Provider Agreement or the Credit Support Agreement, by an amount deemed by such
Indemnified Party to be material, then, within ten (10) days after demand by
such Indemnified Party, the Transferor shall pay to such Indemnified Party, such
additional amount or amounts as will compensate such Indemnified Party for such
increased cost or reduction.
(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 or administration thereof by any Official Body, or any request or
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
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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 ten (10) days
after demand by such Indemnified Party through any of the Purchaser Agents, the
Transferor shall pay to the applicable Purchaser Agent, for the benefit of such
Indemnified Party, such additional amount or amounts as will compensate such
Indemnified Party (or its parent) for such reduction.
(c) The applicable Purchaser Agent will promptly notify the Transferor 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 8.2. A
notice by any of the Purchaser Agents or the applicable 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, any of the Purchaser Agents or any
applicable Indemnified Party may use any reasonable averaging and attributing
methods.
(d) Anything in this Section 8.2 to the contrary notwithstanding, if a
Purchaser enters into agreements for the acquisition of interests in receivables
from one or more Other Transferors, such Purchaser shall allocate the liability
for any amounts under this Section 8.2 which are in connection with the
Liquidity Provider Agreement, the Credit Support Agreement or the credit support
provided by the Credit Support Provider ("Section 8.2 Costs") to the Transferor
and each Other Transferor; provided, however, that if such Section 8.2 Costs are
attributable to the Transferor or the Collection Agent and not attributable to
any Other Transferor, the Transferor shall be solely liable for such Section 8.2
Costs or if such Section 8.2 Costs are attributable to Other Transferors and not
attributable to the Transferor or the Collection Agent, such Other Transferors
shall be solely liable for such Section 8.2 Costs.
SECTION 8.3. Taxes.
All payments made hereunder by the Transferor or the Collection Agent
(each, a "payor") to a Purchaser, any Bank Investor, the Administrative Agent or
any of the Purchaser Agents (each, a "recipient") shall be made free and clear
of and without deduction for any present or future income, excise, stamp or
franchise taxes and any other taxes, fees, duties, withholdings or other charges
of any nature whatsoever imposed by any taxing authority on any recipient (or
any assignee of such parties) (such nonexcluded items being called "Taxes"), but
excluding franchise taxes and taxes imposed on or measured by the recipient's
net income or gross receipts ("Excluded Taxes"). In the event that any
withholding or deduction from any payment made by the payor hereunder is
required in respect of any Taxes, then such payor shall:
(a) pay directly to the relevant authority the full amount required to be
so withheld or deducted;
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(b) promptly forward to the Purchaser Agents an official receipt or other
documentation satisfactory to the Purchaser Agents evidencing such payment to
such authority; and
(c) pay to the recipient such additional amount or amounts as is necessary
to ensure that the net amount actually received by the recipient will equal the
full amount such recipient would have received had no such withholding or
deduction been required.
Moreover, if any Taxes are directly asserted against any recipient with respect
to any payment received by such recipient hereunder, the recipient may pay such
Taxes and the payor will promptly pay such additional amounts (including any
penalties, interest or expenses) as shall be necessary in order that the net
amount received by the recipient after the payment of such Taxes (including any
Taxes on such additional amount) shall equal the amount such recipient would
have received had such Taxes not been asserted.
If the payor fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the recipient the required receipts or other
required documentary evidence, the payor shall indemnify the recipient for any
incremental Taxes, interest, or penalties that may become payable by any
recipient as a result of any such failure.
SECTION 8.4. Other Costs, Expenses and Related Matters.
(a) The Transferor agrees, upon receipt of a written invoice, to pay or
cause to be paid, and to save the Purchasers, the Bank Investors, the
Administrative Agent and the Purchaser Agents harmless against liability for the
payment of, all reasonable out-of-pocket expenses (including, without
limitation, attorneys', accountants', rating agencies' and other third parties'
fees and expenses, any filing fees and expenses incurred by officers or
employees of the Purchasers, the Bank Investors, the Administrative Agent and/or
any of the Purchaser Agents) or intangible, documentary or recording taxes
incurred by or on behalf of a Purchaser, any Bank Investor, the Administrative
Agent and the Purchaser Agents (i) in connection with the negotiation,
execution, delivery and preparation of this Agreement, the other Transaction
Documents and any documents or instruments delivered pursuant hereto and thereto
and the transactions contemplated hereby or thereby (including, without
limitation, the perfection or protection of the Transferred Interest) whether or
not the transactions contemplated hereby are consummated and (ii) from time to
time (a) relating to any amendments, waivers or consents under this Agreement
and the other Transaction Documents, (b) arising in connection with a
Purchaser's, any Bank Investor's, the Administrative Agent's, any of the
Purchaser Agents' or the Collateral Agent's enforcement or preservation of
rights (including, without limitation, the perfection and protection of the
Transferred Interest under this Agreement), or (c) arising in connection with
any audit, dispute, disagreement, litigation or preparation for litigation
involving this Agreement or any of the other Transaction Documents (all of such
amounts, collectively, "Transaction Costs").
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(b) The Transferor shall pay the Purchaser Agents, for the account of the
Purchasers and the Bank Investors, as applicable, on demand any Early Collection
Fee, including interest thereon, due on account of the receipt by a Purchaser or
any Bank Investor of any amounts applied in reduction of the applicable Net
Investment on any day other than the next Remittance Date or the last day of any
applicable funding period (in the case of any LIBOR-based funding).
SECTION 8.5. Reconveyance Under Certain Circumstances.
The Transferor agrees to accept the reconveyance from the Purchaser Agents,
on behalf of the applicable Purchaser and/or applicable Bank Investors, of the
Transferred Interest if any of the Purchaser Agents notifies Transferor of a
breach of any representation or warranty made or deemed made pursuant to
Sections 3.1(a), (b), (c), (d) or (j) hereof and Transferor shall fail to cure
such breach (including, without limitation, pursuant to Section 2.9(b)) within
15 days (or, in the case of the representations and warranties in Sections
3.1(d) and 3.1(j) hereof 3 days) of such notice. The reconveyance price shall be
paid by the Transferor to the applicable Purchaser Agent for the account of the
related Purchasers and the Bank Investors, as applicable, in immediately
available funds on such 15th day (or 3rd day, if applicable) in an amount equal
to the Aggregate Unpaids.
ARTICLE IX
THE ADMINISTRATIVE AGENT; BANK COMMITMENT;
PURCHASER AGENTS
SECTION 9.1 Authorization and Action of Administrative Agent.
(a) Each of the Purchaser Agents hereby appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Transaction Documents as are
expressly delegated to the Administrative Agent by the terms hereof and thereof,
together with such powers as are reasonably incidental thereto. In furtherance,
and without limiting the generality, of the foregoing, each of the Purchaser
Agents hereby appoints the Administrative Agent as its agent to execute and
deliver all further instruments and documents, and take all further action that
the Administrative Agent may deem necessary or appropriate or that the Purchaser
Agents may reasonably request in order to perfect, protect or more fully
evidence the interests transferred or to be transferred from time to time by the
Transferor hereunder, or to enable any of them to exercise or enforce any of
their respective rights hereunder, including, without limitation, the execution
by the Administrative Agent as secured party/assignee of such financing or
continuation statements, or amendments thereto or assignments thereof, relative
to all or any of the Receivables now existing or hereafter arising, and such
other instruments or notices, as may be necessary or appropriate for the
purposes stated herein above. With respect to any actions which are incidental
to the actions specifically delegated to the Administrative Agent hereunder,
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and in any event with respect to any action taken or to be taken by the
Administrative Agent with respect to any Loss Sharing Agreement, the
Administrative Agent shall not be required to take any such incidental action
hereunder, but shall be required to act or to refrain from acting (and shall be
fully protected in acting or refraining from acting) upon the direction of the
Purchaser Agents; provided, however, that the Administrative Agent shall not be
required to take any action hereunder if the taking of such action, in the
reasonable determination of the Administrative Agent, shall be in violation of
any applicable law, rule or regulation or contrary to any provision of this
Agreement or shall expose the Administrative Agent to liability hereunder or
otherwise.
(b) The Administrative Agent shall exercise such rights and powers vested
in it by this Agreement and the other Transaction Documents, and use the same
degree of care and skill in their exercise, as a prudent person would exercise
or use under the circumstances in the conduct of such person's own affairs.
SECTION 9.2. Administrative Agent's Reliance, Etc.
Neither the Administrative Agent nor any of its directors, officers, agents
or employees shall be liable for any action taken or omitted to be taken by it
or them as Administrative Agent under or in connection with this Agreement or
any of the other Transaction Documents, except for its or their own gross
negligence or willful misconduct. Without limiting the foregoing, the
Administrative Agent: (i) may consult with legal counsel (including counsel for
the Transferor), independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts; (ii) makes no warranty or representation, and shall not be responsible
for, any statements, warranties or representations made in or in connection with
this Agreement; (iii) shall not have any duty to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or conditions of
this Agreement or any of the other Transaction Documents on the part of the
Transferor or the Collection Agent to inspect the property (including the books
and records) of the Transferor, the Collection Agent; (iv) shall not be
responsible for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement, any of the other
Transaction Documents or any other instrument or document furnished pursuant
hereto or thereto; and (v) shall incur no liability under or in respect of this
Agreement or any of the other Transaction Documents by acting upon any notice
(including notice by telephone), consent, certificate or other instrument or
writing (which may be by telex) believed by it to be genuine and signed or sent
by the proper party or parties.
SECTION 9.3. Credit Decision With Respect to Administrative Agent.
Each of the Purchaser Agents, and each of their related Purchasers and Bank
Investors, acknowledges that it has, independently and without reliance upon the
Administrative Agent, or any of the Administrative Agent's Affiliates, and based
upon such documents and information as it has deemed appropriate, made its own
evaluation and decision to enter into this Agreement and the other Transaction
Documents to which it is a party and, if it so determines, to
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accept the transfer of any undivided ownership interest in the Affected Assets
hereunder. Each of the Purchaser Agents, and each of their related Purchasers
and Bank Investors, also acknowledges that it will, independently and without
reliance upon the Administrative Agent or any of the Administrative Agent's
Affiliates, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own decisions in taking or not
taking action under this Agreement and the other Transaction Documents to which
it is a party.
SECTION 9.4. Indemnification of the Administrative Agent.
Each of the Purchaser Agents and Bank Investors agrees to indemnify the
Administrative Agent (to the extent not reimbursed by or on behalf of the
Transferor or the Collection Agent under the Transaction Documents, and without
limiting the obligation of such Persons to do so in accordance with the
Transaction Documents), ratably in accordance with its Pro Rata Share, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against the
Administrative Agent in any way relating to or arising out of this Agreement or
any action taken or omitted by the Administrative Agent, any of the other
Transaction Documents hereunder or thereunder; provided, however, that none of
the Purchaser Agents shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Administrative Agent's gross
negligence or willful misconduct. Without limitation of the foregoing, each of
the Purchaser Agents agrees to reimburse the Administrative Agent, ratably as
above described, promptly upon demand for any out-of-pocket expenses (including
counsel fees) incurred by the Administrative Agent in connection with the
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement and the other Transaction
Documents, to the extent that such expenses are incurred in the interests of or
otherwise in respect of the Purchaser Agents hereunder and/or thereunder and to
the extent that the Administrative Agent is not reimbursed for such expenses by
the Transferor.
SECTION 9.5. Successor Administrative Agent.
The Administrative Agent may resign at any time by giving five (5) days'
prior written notice thereof to each of the Purchaser Agents and the Transferor,
such resignation to be effective when the Administrative Agent is discharged
from its duties and obligations as set forth below, and may be removed at any
time with cause by the Purchaser Agents. Upon any such resignation or removal,
the Purchaser Agents shall appoint a successor Administrative Agent. Each of the
Purchaser Agents agrees that it shall not unreasonably withhold or delay its
approval of the appointment of a successor Administrative Agent. If no such
successor Administrative Agent shall have been so appointed, and shall have
accepted such appointment, within 30 days after the retiring Administrative
Agent's giving of notice of resignation or the removal of the retiring
Administrative Agent, then the retiring Administrative Agent may, on behalf of
the Purchaser Agents, appoint a successor Administrative Agent which successor
Administrative Agent shall be either (i) a commercial bank organized under the
laws of the United States or of
any state thereof and have a combined capital and surplus of at least
$50,000,000 or (ii) an Affiliate of such a bank. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations under this Agreement. After any retiring
Administrative Agent's resignation or removal hereunder as Administrative Agent,
the provisions of this Article IX shall continue to inure to its benefit as to
any actions taken or omitted to be taken by it while it was Administrative Agent
under this Agreement.
SECTION 9.6. Payments by the Administrative Agent.
Unless specifically allocated to the Purchaser Agents pursuant to the terms
of this Agreement, all amounts (if any) received by the Administrative Agent on
behalf of the Purchaser Agents shall be paid by the Administrative Agent to the
Purchaser Agents (at their respective accounts specified in their respective
Assignment and Assumption Agreements) in accordance with their respective
related pro rata interests in the applicable Net Investment on the Business Day
received by the Administrative Agent, unless such amounts are received after
12:00 noon on such Business Day, in which case the Administrative Agent shall
use its reasonable efforts to pay such amounts to the Purchaser Agents on such
Business Day, but, in any event, shall pay such amounts to the Purchaser Agents
in accordance with their respective related pro rata interests in the applicable
Net Investment not later than the following Business Day.
SECTION 9.7. Bank Commitment; Assignment to Bank Investors.
(a) Bank Commitment.
At any time on or prior to the Commitment Termination Date, in the event
that Enterprise does not effect an Incremental Transfer as requested under
Section 2.2(a), then at any time, the Transferor shall have the right to require
Enterprise to assign its interest in the Transferred Interest and the Net
Investment in whole to the Enterprise Bank Investors pursuant to this Section
9.7. In addition, at any time on or prior to the Commitment Termination Date (i)
upon the occurrence of an Enterprise Wind-Down Event or (ii) upon the occurrence
of a Termination Event that results in the Termination Date or Special
Termination Date with respect to Enterprise or (iii) Enterprise elects to give
notice to the Transferor of a Reinvestment Termination Date or (iv) after
Enterprise elects to amortize its Net Investment or elects not to make an
additional Incremental Transfer, the Transferor hereby requests and directs that
Enterprise assign its Net Investment in whole to the Enterprise Bank Investors
pursuant to this Section 9.7 and the Transferor hereby agrees to pay the amounts
described in Section 9.7(d) below. No further documentation or action on the
part of Enterprise shall be required to exercise the rights set forth in the
immediately preceding sentence, other than, in the case of clause (i) of such
sentence, receipt of notice by the Enterprise Bank Investors from the Enterprise
Agent that a Termination Date has occurred or, in the case of clause (ii) of
such sentence, the giving of the notice set forth in such clause and the
delivery by the Enterprise Agent of a copy of such notice
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to each Enterprise Bank Investor (the date of the receipt of a notice referred
to in such clauses being the "Effective Date"). Each Enterprise Bank Investor
hereby agrees, unconditionally and irrevocably and under all circumstances,
without setoff, counterclaim or defense of any kind, to pay the full amount of
its Assignment Amount on such Effective Date to Enterprise in immediately
available funds to an account designated by the Enterprise Agent. Upon payment
of its Assignment Amount, each Enterprise Bank Investor shall acquire its
Special Pro Rata Share of the Transferred Interest and the Investment and shall
assume its respective portion of Enterprise's obligations hereunder, and
Enterprise shall be released from such portion of such obligations. If, by 2:00
P.M. (New York time) on the Effective Date, one or more Enterprise Bank
Investors (each, a "Defaulting Bank Investor", and each Enterprise Bank Investor
other than any Defaulting Bank Investor being referred to as a "Non-Defaulting
Bank Investor") fails to pay its Assignment Amount (the aggregate amount not so
made available to Enterprise being herein called the "Assignment Amount
Deficit"), then the Enterprise Agent shall, by no later than 2:30 P.M. (New York
time) on the Effective Date, instruct each Non-Defaulting Bank Investor to pay,
by no later than 3:00 P.M. (New York time) on the Effective Date, in immediately
available funds, to the account designated by Enterprise, an amount equal to the
lesser of (x) such Non-Defaulting Bank Investor's proportionate share (based
upon the relative Commitments of the Non-Defaulting Bank Investors) of the
Assignment Amount Deficit and (y) its unused Commitment. A Defaulting Bank
Investor shall forthwith, upon demand, pay to the Enterprise Agent for the
ratable benefit of the Non-Defaulting Bank Investors all amounts paid by each
Non-Defaulting Bank Investor on behalf of such Defaulting Bank Investor,
together with interest thereon for each day from the date a payment was made by
a Non-Defaulting Bank Investor until the date such Non-Defaulting Bank Investor
has been paid such amounts in full at a rate per annum equal to the rate
determined in accordance with clause (i) of the definition of "Base Rate" plus
two percent (2%). In addition, if, after giving effect to the provisions of the
immediately preceding sentence, any Assignment Amount Deficit continues to
exist, each such Defaulting Bank Investor shall pay interest to the Enterprise
Agent on such Defaulting Bank Investor's portion of such remaining Assignment
Amount Deficit, at a rate per annum equal to the rate determined in accordance
with clause (i) of the definition of "Base Rate" plus two percent (2%), for each
day from the Effective Date until the date such Defaulting Bank Investor shall
pay its portion of such remaining Assignment Amount Deficit in full to
Enterprise. Upon any assignment by Enterprise to the Enterprise Bank Investors
contemplated hereunder, Enterprise shall cease to make any additional
Incremental Transfers hereunder.
(b) Assignment.
No Enterprise Bank Investor may assign all or a portion of its interests in
its Commitment the applicable Net Investment, the Receivables, and Collections,
Proceeds and Related Security with respect thereto and its rights and
obligations hereunder to any Person unless approved in writing by the
Transferor, the Administrative Agent, and the Enterprise Agent. In connection
with any such assignment by an Enterprise Bank Investor to another Person, the
assignor shall deliver to the assignee(s) an Assignment and Assumption
Agreement, substantially in the form of Exhibit B hereto, duly executed,
assigning to the assignee all of any portion of (A) such assignor's Commitment
and other obligations hereunder and (B) such
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assignor's pro rata interest in its Net Investment, the Receivables, and
Collections, Proceeds and Related Security with respect thereto and other rights
hereunder, and such assignor shall promptly execute and deliver all further
instruments and documents, and take all further action, that the assignee may
reasonably request, in order to protect, or more fully evidence the assignee's
right, title and interest in and to such interest and to enable the Enterprise
Agent, on behalf of such assignee, to exercise or enforce any rights hereunder
and under the other Transaction Documents to which such assignor is or,
immediately prior to such assignment, was a party. Upon any such assignment, (i)
the assignee shall have all of the rights and obligations of the assignor
hereunder and under the other Transaction Documents to which such assignor is
or, immediately prior to such assignment, was a party with respect to such
assignor's Commitment and interest in its Net Investment, the Receivables, and
Collections, Related Security and Proceeds with respect thereto for all purposes
of this Agreement and under the other Transaction Documents to which such
assignor is or immediately prior to such assignment was a party and (ii) the
assignor shall have no further obligations with respect to the portion of its
Commitment hereunder which has been assigned and shall relinquish its rights
with respect to such interest for all purposes of this Agreement and under the
other Transaction Documents to which such assignor is or, immediately prior to
such assignment, was a party. No such assignment shall be effective unless a
fully executed copy of the related Assignment and Assumption Agreement shall be
delivered to the Administrative Agent, the Enterprise Agent and the Transferor.
All costs and expenses of the Administrative Agent, the Enterprise Agent and the
assignor and assignee incurred in connection with any assignment hereunder shall
be borne by the Transferor and not by the assignor or any such assignee. No
Enterprise Bank Investor shall assign any portion of its Commitment hereunder
without also simultaneously assigning an equal portion of its interest in the
related Liquidity Provider Agreement.
(c) Effects of Assignment.
By executing and delivering an Assignment and Assumption Agreement, the
assignor and assignee thereunder confirm to and agree with each other and the
other parties hereto as follows: (i) other than as provided in such Assignment
and Assumption Agreement, the assignor makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement, the other
Transaction Documents or any other instrument or document furnished pursuant
hereto or thereto or the execution, legality, validity, enforceability,
genuineness, sufficiency or value or this Agreement, the other Transaction
Documents or any such other instrument or document; (ii) the assignor makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Transferor or the Collection Agent or the performance
or observance by the Transferor or the Collection Agent of any of their
respective obligations under this Agreement, the other Transaction Documents or
any other instrument or document furnished pursuant hereto; (iii) such assignee
confirms that it has received a copy of this Agreement and such other
instruments, documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Assumption
Agreement and to purchase such interest; (iv) such assignee will, independently
and without reliance upon the Administrative Agent, the Enterprise Agent or any
of their Affiliates, or the assignor and based
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on such agreements, documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under this Agreement and the other Transaction Documents; (v) such
assignee appoints and authorizes the Enterprise Agent to take such action as
agent on its behalf and to exercise such powers under this Agreement, the other
Transaction Documents and any other instrument or document furnished pursuant
hereto or thereto as are delegated to such agent by the terms hereof or thereof,
together with such powers as are reasonably incidental thereto and to enforce
its respective rights and interests in and under this Agreement, the other
Transaction Documents, the Receivables, Related Security and the Account
Agreements; (vi) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Agreement and the
other Transaction Documents are required to be performed by it as the assignee
of the assignor; and (vii) such assignee agrees that it will not institute
against Enterprise any proceeding of the type referred to in Section 10.9 hereof
prior to the date which is one year and one day after the payment in full of all
Commercial Paper issued by Enterprise.
(d) Transferor's Obligation to Pay Certain Amounts; Additional Assignment
Amount.
The Transferor shall pay to the Enterprise Agent for the account of
Enterprise, in connection with any assignment by Enterprise to the Enterprise
Bank Investors pursuant to this Section 9.7, an aggregate amount equal to all
Carrying Costs to accrue through the end of each outstanding funding period plus
all other Aggregate Unpaids (other than the Net Investment). To the extent that
such Carrying Costs relate to interest or discount on Related Commercial Paper,
if the Transferor fails to make payment of such amounts at or prior to the time
of assignment by Enterprise to the Enterprise Bank Investors, such amount shall
be paid by the Enterprise Bank Investors (in accordance with their respective
Special Pro Rata Shares) to Enterprise as additional consideration for the
interests assigned to the Enterprise Bank Investors and the amount of the "Net
Investments" hereunder held by the Enterprise Bank Investors shall be increased
by an amount equal to the additional amount so paid by the Enterprise Bank
Investors.
(e) Administration of Agreement After Assignment.
After any assignment by Enterprise to the Enterprise Bank Investors
pursuant to this Section 9.7 (and the payment of all amounts owing to Enterprise
in connection therewith), all rights of the Enterprise Agent and the Collateral
Agent set forth herein shall be deemed to be afforded to the Enterprise Agent on
behalf of the Enterprise Bank Investors instead of either such party.
(f) Payments.
After any assignment by Enterprise to the Enterprise Bank Investors
pursuant to this Section 9.7, all payments to be made hereunder by the
Transferor or the Collection Agent to Enterprise shall be made to the account of
the Enterprise Agent, as such
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account shall have been notified to the Transferor and the Collection Agent. In
the event that the Assignment Amount paid by the Enterprise Bank Investors
pursuant to Section 9.7(a) is less than the sum of the applicable Net Investment
plus the Interest Component of all outstanding Related Commercial Paper, then to
the extent payments made hereunder in respect of the applicable Net Investment
(excluding interest) exceed the Assignment Amount, such excess amounts shall be
remitted by the Enterprise Agent to Enterprise.
(g) Downgrade of Bank Investor.
If at any time prior to any assignment by Enterprise to the Enterprise Bank
Investors as contemplated pursuant to this Section 9.7, the short term debt
rating of any Enterprise Bank Investor shall be "A-2" or "P-2" from Standard &
Poor's or Moody's, respectively, with negative credit implications, such
Enterprise Bank Investor, upon request of the Enterprise Agent, shall, within 30
days of such request, assign its rights and obligations hereunder to another
financial institution (which institution's short term debt shall be rated at
least "A-2" and "P-2" from Standard & Poor's and Moody's, respectively, and
which shall not be so rated with negative credit implications). If the short
term debt rating of an Enterprise Bank Investor shall be "A-3" or "P-3", or
lower, from Standard & Poor's or Moody's, respectively (or such rating shall
have been withdrawn by Standard & Poor's or Moody's), such Bank Investor, upon
request of the Enterprise Agent, shall, within five (5) Business Days of such
request, assign its rights and obligations hereunder to another financial
institution (which institution's short term debt shall be rated at least "A-2"
and "P-2" from Standard & Poor's and Moody's, respectively, and which shall not
be so rated with negative credit implications and which is acceptable to
Enterprise and the Enterprise Agent). In either such case, if any such
Enterprise Bank Investor shall not have assigned its rights and obligations
under this Agreement within the applicable time period described above,
Enterprise shall have the right to require such Enterprise Bank Investor to pay
to the Enterprise Agent an amount equal to such Enterprise Bank Investor's
Commitment for deposit by the Enterprise Agent into an account, in the name of
the Enterprise Agent, which shall be in satisfaction of such Enterprise Bank
Investor's obligation to make Incremental Purchases to accept an assignment from
Enterprise in accordance with this Section 9.7 and to pay its Assignment Amount.
The amount on deposit in such account shall be invested by the Enterprise Agent
in Eligible Investments and such Eligible Investments shall have a term selected
by the Enterprise Agent, in the Enterprise Agent's sole discretion. The
Enterprise Agent shall remit to such Enterprise Bank Investor, monthly, the
income thereon. Nothing in the three preceding sentences shall affect or
diminish in any way any such downgraded Enterprise Bank Investor's Commitment to
the Transferor, Enterprise or such downgraded Enterprise Bank Investor's other
obligations and liabilities hereunder and under the other Transaction Documents.
(h) Bank Investor Consent.
Upon the occurrence and during the continuance of any Termination Event or
Potential Termination Event, the Enterprise Agent shall take no action hereunder
(other than ministerial actions or such actions as are specifically provided for
herein) without the prior consent of the Enterprise Majority Investors (which
consent shall not be unreasonably withheld
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or delayed). The Enterprise Agent shall not, without the prior written consent
of all Enterprise Bank Investors, agree to (i) amend, modify or waive any
provision of this Agreement in any way which would (A) reduce or impair
Collections or the payment of interest or fees payable hereunder to such Bank
Investors or delay the scheduled dates for payment of such amounts, (B) increase
the Servicing Fee (other than as permitted pursuant to Section 6.2(b)), (C)
modify any provisions of this Agreement relating to the timing of payments
required to be made by the Transferor or the application of the proceeds of such
payments, (D) permit the appointment of any Person (other than the
Administrative Agent) as successor Collection Agent, (E) release any property
from the lien provided by this Agreement (other than as expressly contemplated
herein) or (F) extend or permit the extension of the Commitment Termination Date
without the consent of each such Enterprise Bank Investor. The Enterprise Agent
shall not agree to any amendment of this Agreement which increases the dollar
amount of an Enterprise Bank Investor's Commitment without the prior consent of
such Enterprise Bank Investor. In addition, the Enterprise Agent shall not agree
to any amendment of this Agreement not specifically described in the two
preceding sentences without the consent of the Enterprise Majority Investors
(which consent shall not be unreasonably withheld or delayed). "Enterprise
Majority Investors" shall mean at any time, the Enterprise Agent and those
Enterprise Bank Investors which hold Commitments aggregating in excess of 66 and
2/3% of Enterprise's Pro Rata Share of the Facility Limit as of such date. In
the event the Enterprise Agent requests an Enterprise Bank Investor's consent
pursuant to the foregoing provisions and the Enterprise Agent does not receive a
consent (either positive or negative) from such Enterprise Bank Investor within
10 Business Days of such Enterprise Bank Investor's receipt of such request,
then such Enterprise Bank Investor (and its percentage interest hereunder) shall
be disregarded in determining whether the Enterprise Agent shall have obtained
sufficient consent hereunder.
SECTION 9.8. Authorization and Action of Enterprise Agent.
(a) Enterprise and each Enterprise Bank Investor hereby appoints and
authorizes the Enterprise Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement and the other Transaction Documents
as are delegated to the Enterprise Agent by the terms hereof and thereof,
together with such powers as are reasonably incidental thereto. In furtherance,
and without limiting the generality, of the foregoing, Enterprise and each
Enterprise Bank Investor hereby appoints the Enterprise Agent as its agent to
execute and deliver all further instruments and documents, and take all further
action that the Enterprise Agent may deem necessary or appropriate or that
Enterprise or an Enterprise Bank Investor may reasonably request in order to
perfect, protect or more fully evidence the interests transferred or to be
transferred from time to time by the Transferor hereunder, or to enable any of
them to exercise or enforce any of their respective rights hereunder, including,
without limitation, the execution by the Enterprise Agent as secured
party/assignee of such financing or continuation statements, or amendments
thereto or assignments thereof, relative to all or any of the Receivables now
existing or hereafter arising, and such other instruments or notices, as may be
necessary or appropriate for the purposes stated herein above. Enterprise and
the Enterprise Majority Investors may direct the Enterprise Agent to take any
such incidental action hereunder. With respect to other actions which are
incidental to the actions specifically delegated to the
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Enterprise Agent hereunder, the Enterprise Agent shall not be required to take
any such incidental action hereunder, but shall be required to act or to refrain
from acting (and shall be fully protected in acting or refraining from acting)
upon the direction of Enterprise and the Enterprise Majority Investors;
provided, however, that the Enterprise Agent shall not be required to take any
action hereunder if the taking of such action, in the reasonable determination
of the Enterprise Agent, shall be in violation of any applicable law, rule or
regulation or contrary to any provision of this Agreement or shall expose the
Enterprise Agent to liability hereunder or otherwise.
(b) The Enterprise Agent shall exercise such rights and powers vested in it
by this Agreement and the other Transaction Documents, and use the same degree
of care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of such person's own affairs.
SECTION 9.9. Reliance, Etc. of Enterprise Agent.
Neither the Enterprise Agent nor any of its directors, officers, agents or
employees shall be liable for any action taken or omitted to be taken by it or
them as Enterprise Agent under or in connection with this Agreement or any of
the other Transaction Documents, except for its or their own gross negligence or
willful misconduct. Without limiting the foregoing, the Enterprise Agent: (i)
may consult with legal counsel (including counsel for the Transferor),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (ii) makes
no warranty or representation to Enterprise or any Enterprise Bank Investor and
shall not be responsible to Enterprise or any Enterprise Bank Investor for any
statements, warranties or representations made in or in connection with this
Agreement; (iii) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or any of the other Transaction Documents on the part of the
Transferor or the Collection Agent or to inspect the property (including the
books and records) of the Transferor or the Collection Agent; (iv) shall not be
responsible to a Purchaser or any Bank Investor for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any of the other Transaction Documents or any other instrument or document
furnished pursuant hereto or thereto; and (v) shall incur no liability under or
in respect of this Agreement or any of the other Transaction Documents by acting
upon any notice (including notice by telephone), consent, certificate or other
instrument or writing (which may be by telex) believed by it to be genuine and
signed or sent by the proper party or parties.
SECTION 9.10. Credit Decision with respect to Enterprise.
Enterprise and each Enterprise Bank Investor acknowledges that it has,
independently and without reliance upon the Enterprise Agent, any of the
Enterprise Agent's Affiliates, any other Enterprise Bank Investor or Enterprise
(in the case of any Enterprise Bank Investor) and based upon such documents and
information as it has deemed appropriate, made its
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own evaluation and decision to enter into this Agreement and the other
Transaction Documents to which it is a party and, if it so determines, to accept
the transfer to the Enterprise Agent on its behalf of any undivided ownership
interest in the Affected Assets hereunder. Enterprise and each Enterprise Bank
Investor also acknowledges that it will, independently and without reliance upon
the Enterprise Agent, any of the Enterprise Agent's Affiliates, any other
Enterprise Bank Investor or Enterprise (in the case of any Enterprise Bank
Investor) and based on such documents and information as it shall deem
appropriate at the time, continue to make its own decisions in taking or not
taking action under this Agreement and the other Transaction Documents to which
it is a party.
SECTION 9.11. Indemnification of Enterprise Agent.
The Enterprise Bank Investors agree to indemnify the Enterprise Agent (to
the extent not reimbursed by the Transferor), ratably in accordance with their
Special Pro Rata Shares, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including attorneys' fees) or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by, or asserted against the Enterprise Agent
(including by Enterprise or any Enterprise Bank Investor in any way relating to
or arising out of this Agreement or any other Transaction Document or the
transactions contemplated thereby or any action taken or omitted by the
Enterprise Agent under this Agreement or any other Transaction Document;
provided, however, that the Enterprise Bank Investors shall be liable for any of
the foregoing to the extent they arise from the gross negligence or willful
misconduct of such person. Without limitation of the foregoing, the Enterprise
Bank Investors agree to reimburse the Enterprise Agent, ratably in accordance
with their Special Pro Rata Shares, promptly upon demand for any out-of-pocket
expenses (including counsel fees) incurred by the Enterprise Agent in connection
with the administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement and the other Transaction
Documents, to the extent that such expenses are incurred in the interests of or
otherwise in respect of the Enterprise Bank Investors hereunder and/or
thereunder and to the extent that the Enterprise Agent is not reimbursed for
such expenses by the Transferor. The agreements contained in this section shall
survive payment in full of the Net Investments and all other amounts payable
hereunder.
SECTION 9.12. Successor Agent to Enterprise Agent.
The Enterprise Agent may resign at any time by giving notice thereof to
each Enterprise Bank Investor, Enterprise, the Administrative Agent and the
Transferor. Upon any such resignation, Enterprise and the Enterprise Majority
Investors shall have the right to appoint a successor Enterprise Agent. If no
such successor Enterprise Agent shall have been so appointed, and shall have
accepted such appointment, within 30 days after the retiring Enterprise Agent's
giving of notice of resignation, then the retiring Enterprise Agent may, on
behalf of Enterprise and the Enterprise Bank Investors, appoint a successor
Enterprise Agent which successor Enterprise Agent shall be a commercial bank
organized under the laws of the United
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States and have a combined capital and surplus of at least $100,000,000. Upon
the acceptance of any appointment as Enterprise Agent hereunder by a successor
Enterprise Agent, such successor Enterprise Agent shall thereupon succeed to and
become vested with all the rights, powers, discretion, privileges and duties of
the retiring Enterprise Agent, and the retiring Enterprise Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Enterprise Agent's resignation hereunder as Enterprise Agent, the
provisions of this Article IX shall continue to inure to its benefit as to any
actions taken or omitted to be taken by it while it was Enterprise Agent under
this Agreement.
SECTION 9.13. Payments by the Purchaser Agents.
Unless specifically allocated to a Bank Investor pursuant to the terms of
this Agreement, all amounts received by the applicable Purchaser Agent on behalf
of the Bank Investors shall be paid by such Purchaser Agent to the Bank
Investors (at their respective accounts specified in their respective Assignment
and Assumption Agreements) in accordance with their respective related pro rata
interests in the applicable Net Investment on the Business Day received by such
Purchaser Agent, unless such amounts are received after 12:00 noon on such
Business Day, in which case such Purchaser Agent shall use its reasonable
efforts to pay such amounts to the Bank Investors on such Business Day, but, in
any event, shall pay such amounts to the Bank Investors in accordance with their
respective related pro rata interests in the applicable Net Investment not later
than the following Business Day.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Term of Agreement.
This Agreement shall terminate on the date following the later of a
Termination Date and a Special Termination Date upon which the Net Investments
have been reduced to zero and all other Aggregate Unpaids have been paid in
full, in each case, in cash; provided, however, that (i) the rights and remedies
of the Administrative Agent, the Purchaser Agents, the Purchasers and the Bank
Investors with respect to any representation and warranty made or deemed to be
made by the Transferor pursuant to this Agreement, (ii) the indemnification and
payment provisions of Article VIII, and (iii) the agreement set forth in Section
10.9 hereof, shall be continuing and shall survive any termination of this
Agreement.
SECTION 10.2. Waivers; Amendments.
No failure or delay on the part of the Administrative Agent, any of the
Purchaser Agents, a Purchaser or any Bank Investor in exercising any power,
right or remedy under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power, right or remedy preclude
any other further exercise thereof or the exercise of any other power, right or
remedy. The rights and remedies herein provided shall be cumulative and
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nonexclusive of any rights or remedies provided by law. Any provision of this
Agreement may be amended or waived if, but only if, in the case of any
amendment, such amendment is in writing and is signed by the Transferor, the
Purchasers, the Administrative Agent, the Purchaser Agents and the Bank
Investors holding Commitments aggregating 66 and 2/3 % of the Pro Rata Share of
its related Purchaser's Facility Limit and in the case of any waiver, such
waiver is granted in writing by the Administrative Agent, Purchaser Agents and
such Bank Investors. The Transferor shall notify each Rating Agency then rating
the Commercial Paper of any Purchaser of any waiver or amendment with respect to
this Agreement, and, as to each material waiver or amendment (other than any
extension of the Commitment Termination Date or decrease in the Facility Limit),
shall obtain confirmation by such Rating Agency that such material waiver or
amendment shall not result in a reduction or withdrawal of any such rating.
SECTION 10.3. Notices.
Except as provided below, all communications and notices provided for
hereunder shall be in writing (including telecopy or electronic facsimile
transmission or similar writing) and shall be given to the other party at its
address or telecopy number set forth below or at such other address or telecopy
number as such party may hereafter specify for the purposes of notice to such
party. Each such notice or other communication shall be effective (i) if given
by telecopy, when such telecopy is transmitted to the telecopy number specified
in this Section 10.3 and confirmation is received, (ii) if given by mail 3
Business Days following such posting, postage prepaid, U.S. certified or
registered, (iii) if given by overnight courier, one (1) Business Day after
deposit thereof with a national overnight courier service, or (iv) if given by
any other means, when received at the address specified in this Section 10.3.
However, anything in this Section to the contrary notwithstanding, the
Transferor hereby authorizes the Purchasers to effect Transfers and funding
period selections based on telephonic notices made by any Person which the
Purchasers in good faith believe to be acting on behalf of the Transferor. The
Transferor agrees to deliver promptly to the Purchasers a written confirmation
of each telephonic notice signed by an authorized officer of Transferor.
However, the absence of such confirmation shall not affect the validity of such
notice. If the written confirmation differs in any material respect from the
action taken by the Purchasers, the records of the Purchasers shall govern
absent manifest error.
If to Enterprise:
Enterprise Funding Corporation
c/o Global Securitization Services, LLC
00 Xxxx 00xx Xxxxxx Xxxxx 000 Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx, Vice President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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(with a copy to the Enterprise Agent)
Payment Information:
Bankers Trust Company
New York, New York
ABA: 021 001 033
BNF: BTCo as Depository for EFC
Account #: 000 362 917
Ref: Metris - GE
Attention: Xxxxx Xxxxxx
If to Sheffield:
Sheffield Receivables Corporation
c/o Barclays Bank plc
000 Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(with a copy to the Sheffield Agent)
Payment Information:
Barclays Bank plc
Xxx Xxxx, Xxx Xxxx 00000
ABA: 026 0025-74
Account #: 050 791 516
Ref: Sheffield Funding Account/Metris
If to the Transferor:
Direct Merchants Credit Card Bank, N.A.
0000 Xxxx Xxxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Payment Information:
Bank: Norwest Bank, N.A. Minnesota
ABA: 000000000
Account #: 6355021385
Reference: EFC/GE
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If to the Collection Agent:
Direct Merchants Credit Card Bank, N.A.
0000 Xxxx Xxxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to the Collateral Agent:
NationsBank, N.A.
Bank of America Corporate Center -- 00xx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx, Structured Finance
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to the Sheffield Agent:
Barclays Bank plc,
000 Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to the Enterprise Agent or the Administrative Agent:
NationsBank, N.A.
Bank of America Corporate Center, -- 00xx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx, Structured Finance
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Payment Information:
NationsBank, N.A.
ABA: 000000000
for the account of IBG Operations/Admin.
Account #: 1093601650000
Ref: GE Capital
Attention: Xxxxxxxx Luhia
If to the Bank Investors, at their respective addresses set forth on the
signature pages hereto or of the Assignment and Assumption Agreement pursuant to
which it became a party hereto.
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SECTION 10.4. Governing Law; Submission to Jurisdiction; Integration.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAW
PRINCIPLES THEREOF. EACH OF THE TRANSFEROR AND THE COLLECTION AGENT HEREBY
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN THE
CITY OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. Each of the
Collection Agent and the Transferor hereby irrevocably waives, to the fullest
extent it may effectively do so, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum. Nothing in this Section 10.4 shall affect the right of
the Purchasers to bring any action or proceeding against the Transferor, the
Collection Agent or their respective property in the courts of other
jurisdictions.
(b) EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE AMONG ANY OF THEM ARISING OUT OF, CONNECTED WITH, RELATING TO OR
INCIDENTAL TO THE RELATIONSHIP BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR
THE OTHER TRANSACTION DOCUMENTS.
(c) This Agreement contains the final and complete integration of all prior
expressions by the parties hereto with respect to the subject matter hereof and
shall constitute the entire Agreement among the parties hereto with respect to
the subject matter hereof superseding all prior oral or written understandings.
(d) Each of the parties hereto irrevocably consents to service of process
in the manner provided for notices in Section 10.3. Nothing in this Agreement
will affect the right of any party hereto to serve process in any other manner
permitted by law.
SECTION 10.5. Severability; Counterparts.
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same Agreement. Any provisions of this Agreement
which are prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
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SECTION 10.6. Successors and Assigns.
(a) This Agreement shall be binding on the parties hereto and their
respective successors and assigns; provided, however, that the Transferor may
not assign any of its rights or delegate any of its duties hereunder or under
the GE Agreement or under any of the other Transaction Documents to which it is
a party without the prior written consent of the Administrative Agent and the
Purchaser Agents. Notwithstanding any other provision of this Agreement to the
contrary, no provision of this Agreement shall in any manner restrict the
ability of a Purchaser or any Bank Investor to assign, participate, grant
security interests in, or otherwise transfer any portion of the Transferred
Interest.
(b) Without limiting the foregoing, a Purchaser may, from time to time,
with prior or concurrent notice to Transferor and Collection Agent, in one
transaction or a series of transactions, assign all or a portion of its Net
Investment and its rights and obligations under this Agreement and any other
Transaction Documents to which it is a party to a Conduit Assignee. Upon and to
the extent of such assignment by such Purchaser to a Conduit Assignee, (i) such
Conduit Assignee shall be the owner of the assigned portion of the applicable
Net Investment, (ii) the related administrative or managing agent for such
Purchaser will act as the agent hereunder for such Conduit Assignee, with all
corresponding rights and powers, express or implied, granted to the Purchaser
Agent hereunder or under the other Transaction Documents, (iii) such Conduit
Assignee and its liquidity support provider(s) and credit support provider(s)
and other related parties shall have the benefit of all the rights and
protections provided to such Purchaser and its Liquidity Provider(s) and Credit
Support Provider(s), respectively, herein and in the other Transaction Documents
(including, without limitation, any limitation on recourse against such
Purchaser or related parties, any agreement not to file or join in the filing of
a petition to commence an insolvency proceeding against such Purchaser, and the
right to assign to another Conduit Assignee as provided in this paragraph), (iv)
such Conduit Assignee shall assume all (or the assigned or assumed portion) of
such Purchaser's obligations, if any, hereunder or any other Transaction
Document, and such Purchaser shall be released from such obligations, in each
case to the extent of such assignment, and the obligations of such Purchaser and
such Conduit Assignee shall be several and not joint, (v) all distributions in
respect of the Net Investments shall be made to the applicable Purchaser Agent
or administrative agent, as applicable, on behalf of such Purchaser and such
Conduit Assignee on a pro rata basis according to their respective interests,
(vi) the definition of the term "Interest Component" with respect to the portion
of the Net Investments funded with commercial paper issued by such Purchaser
from time to time shall be determined in the manner set forth in the definition
of " Interest Component" applicable to such Purchaser on the basis of the
interest rate or discount applicable to commercial paper issued by such Conduit
Assignee (rather than such Purchaser), (vii) the defined terms and other terms
and provisions of this Agreement and the other Transaction Documents shall be
interpreted in accordance with the foregoing, and (viii) if requested by any of
the Purchaser Agents or the administrative agent with respect to the Conduit
Assignee, the parties will execute and deliver such further agreements and
documents and take such other actions as the applicable Purchaser Agent or such
administrative agent may reasonably request to evidence and give effect to the
foregoing. No Assignment by such Purchaser to a Conduit
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Assignee of all or any portion of the applicable Net Investment shall (A) in any
way diminish the related Bank Investors' obligation pursuant to Section 9.7, in
the case of Enterprise Bank Investors, and pursuant to the Sheffield Agreement,
in the case of the Sheffield Bank Investors, to fund any Incremental Transfer
not funded by such Purchaser or such Conduit Assignee or to acquire from such
Purchaser or such Conduit Assignee all or any portion of the applicable Net
Investment or (B) result in the liability of the Transferor for any Section 8.2
Costs which are higher than those then applicable to such Purchaser. In
connection with any assignment to a Conduit Assignee, the Transferor and
Collection Agent agree to any amendments to this Agreement and the exhibits and
schedules hereto reasonably required by the Administrative Agent, the Purchaser
Agents and such Conduit Assignee in order to implement such assignment.
(c) Each of the Transferor and the Collection Agent hereby agrees and
consents to the assignment by a Purchaser from time to time of all or any part
of its rights under, interest in and title to this Agreement and the Transferred
Interest to any Liquidity Provider or to any Conduit Assignee as set forth in
Section 10.6(b). In addition, each of the Transferor and the Collection Agent
hereby consents to and acknowledges the assignment by such Purchaser of all of
its rights under, interest in and title to this Agreement and the Transferred
Interest to the Collateral Agent, in the case of Enterprise, and the collateral
agent for each of the other Purchasers in the case of such other Purchasers.
SECTION 10.7. Waiver of Confidentiality.
Each of the Transferor and the Collection Agent hereby consents to the
disclosure of any nonpublic information with respect to it received by a
Purchaser, the Administrative Agent, any of the Purchaser Agents or any Bank
Investor to any of a Purchaser, the Administrative Agent, any of the Purchaser
Agents, any nationally recognized rating agency rating such Purchaser's
Commercial Paper, the Collateral Agent, any Bank Investor or potential Bank
Investor, the Liquidity Provider, the Credit Support Provider or any dealers of
Commercial Paper in relation to this Agreement; provided, that each Purchaser
Agent will notify the Transferor in advance of its sending nonpublic information
to a potential related Bank Investor and will use its best efforts to obtain
executed confidentiality agreements covering the disclosure of any such
information to any Bank Investor, potential Bank Investor, Liquidity Provider or
Credit Support Provider other than the Purchaser Agents.
SECTION 10.8. Confidentiality Agreement.
Each of the Transferor and the Collection Agent hereby agrees that it will
not disclose the contents of this Agreement or any other proprietary or
confidential information of a Purchaser, the Administrative Agent, any of the
Purchaser Agents, the Collateral Agent, any Liquidity Provider or any Bank
Investor to any other Person except (i) its auditors and attorneys, employees or
financial advisors (other than any commercial bank) and any nationally
recognized rating agency, provided such auditors, attorneys, employees,
financial advisors or rating agencies are informed of the highly confidential
nature of such information or (ii) as otherwise required by
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applicable law (including any disclosure required to be made under the rules of
the Securities and Exchange Commission) or order of a court of competent
jurisdiction.
SECTION 10.9. No Bankruptcy Petition Against the Purchasers.
(a) Each of the Transferor and the Collection Agent hereby covenants and
agrees that, prior to the date which is one year and one day after the payment
in full of all outstanding Commercial Paper or other indebtedness of Enterprise,
it will not institute against, or join any other Person in instituting against,
Enterprise any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceeding under the laws of the United
States or any state of the United States.
(b) Each of the parties hereto (other than Sheffield) hereby covenants and
agrees that, prior to the date which is one year and one day after the payment
in full of all outstanding Commercial Paper or other indebtedness of Sheffield,
it will not institute against, or join any other Person in instituting against,
Sheffield any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceedings under the laws of the United States or
any state of the United States.
SECTION 10.10. No Recourse Against Stockholders, Officers or Directors.
(a) (i) No recourse under any obligation, covenant or agreement of
Enterprise contained in this Agreement shall be had against Global
Securitization Services, LLC, any stockholder, officer or director of
Enterprise, as such, by the enforcement of any assessment or by any legal or
equitable proceeding, by virtue of any statute or otherwise; it being expressly
agreed and understood that this Agreement is solely a corporate obligation of
Enterprise, and that no personal liability whatsoever shall attach to or be
incurred by Global Securitization Services, LLC, the stockholders, officers or
directors of such Purchaser, as such, or any of them, under or by reason of any
of the obligations, covenants or agreements of Enterprise contained in this
Agreement, or implied therefrom, and that any and all personal liability for
breaches by Enterprise of any of such obligations, covenants or agreements,
either at common law or at equity, or by statute or constitution, of Global
Securitization Services, LLC, every such stockholder, officer or director of
Enterprise is hereby expressly waived as a condition of and consideration for
the execution of this Agreement; provided that the foregoing shall not relieve
any such Person from any liability it might otherwise have as a result of its
fraudulent actions or omissions. The provisions of this Section 10.10(a)(i)
shall survive termination of this Agreement.
(ii) No recourse under any obligation, covenant or agreement of
Sheffield contained in this Agreement shall be had against any
incorporator, stockholder, officer, director, employee or agent of
Sheffield, the Sheffield Agent or any of their Affiliates (solely by virtue
of such capacity) by the enforcement of any assessment or by any legal or
equitable proceeding, by virtue of any statute or otherwise, it being
expressly agreed and understood that this Agreement is solely a corporate
obligation of Sheffield, and that no personal liability
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whatever shall attach to or be incurred by any incorporator, stockholder,
officer, director, employee or agent of Sheffield, the Sheffield Agent or
any of their Affiliates (solely by virtue of such capacity) or any of them
under or by reason of any of the obligations, covenants or agreements of
Sheffield contained in this Agreement, or implied therefrom, and that any
and all personal liability for breaches by Sheffield of any of such
obligations, covenants or agreements, either at common law or at equity, or
by statute, rule or regulation, of every such incorporator, stockholder,
officer, director, employee or agent is hereby expressly waived as a
condition of and in consideration for the execution of this Agreement;
provided that the foregoing shall not relieve any -------- such Person from
any liability it might otherwise have as a result of its fraudulent actions
or fraudulent omissions. The provisions of this Section 10.10(a)(ii) shall
survive termination of this Agreement.
(b) Notwithstanding anything to the contrary contained herein, the
obligations of each Purchaser under this Agreement and all other Transaction
Documents are solely the corporate obligations of such Purchaser and, in the
case of obligations of such Purchaser other than such Purchaser's Commercial
Paper, shall be payable at such time as funds are received by or are available
to such Purchaser in excess of funds necessary to pay in full all of such
Purchaser's outstanding Commercial Paper, as applicable, and, to the extent
funds are not available to pay such obligations, the claims relating thereto
shall not constitute a claim against such Purchaser but shall continue to
accrue. Each party hereto agrees that the payment of any claim (as defined in
Section 101 of Title 11 of the Bankruptcy Code) of any such party against any
Purchaser shall be subordinated to the payment in full of all of such
Purchaser's Commercial Paper.
SECTION 10.11. Characterization of the Transactions Contemplated by the
Agreement.
It is the intention of the parties that the transactions contemplated
hereby constitute the sale of the Transferred Interest, conveying good title
thereto free and clear of any Adverse Claims to the Purchaser Agents, on behalf
of their related Purchasers and Bank Investors, and that the Transferred
Interest not be part of the Transferor's estate in the event of an insolvency.
If, notwithstanding the foregoing, in the event that the transactions
contemplated hereby are deemed a financing, the Transferor hereby grants to the
Purchaser Agents, on behalf of their Related Purchasers and Bank Investors, and
the Transferor hereby grants to the Purchaser Agents, on behalf of their related
Purchasers and Bank Investors, a first priority perfected and continuing
security interest in all of the Transferor's right, title and interest in, to
and under the Receivables, together with Collections, Proceeds and (to the
extent that a security interest therein can be perfected and have first priority
by the filing of the financing statements contemplated to be filed hereunder on
the Closing Date, together with amendments thereto and continuations thereof)
Related Security with respect thereto, and together with all of the Transferor's
rights under the GE Agreement and any Loss Sharing Agreement with respect to the
Receivables and with respect to any obligations thereunder of the other parties
thereto with respect to the Receivables, and that this Agreement shall
constitute a security agreement under applicable law. The Transferor hereby
assigns to the Purchaser Agents, on behalf of their related Purchasers and
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Bank Investors, all of its rights and remedies under the GE Agreement and any
Loss Sharing Agreement with respect to the Receivables and with respect to any
obligations thereunder of the other parties thereto with respect to the
Receivables.
SECTION 10.12. Conflict Waiver.
(a) NationsBank acts as Enterprise's administrative agent, as provider of
other facilities for Enterprise, and may provide other services or facilities
from time to time (the "NationsBank Roles"). Each party hereto hereby
acknowledges and consents to any and all NationsBank Roles, waives any
objections it may have to any actual or potential conflict of interest caused by
NationsBank's acting as the Enterprise Agent or as a Bank Investor hereunder and
acting as or maintaining any of the NationsBank Roles, and agrees that in
connection with any NationsBank Role, NationsBank may take, or refrain from
taking, any action which it in its discretion deems appropriate.
(b) Barclays acts as Sheffield's administrative agent, as issuing and
paying agent for Sheffield's Commercial Paper, as provider of other backup
facilities for Sheffield, and may provide other services or facilities from time
to time (the "Barclays Roles"). Each party hereto hereby acknowledges and
consents to any and all Barclays Roles, waives any objections it may have to any
actual or potential conflict of interest caused by Barclays' acting as the
Sheffield Agent or as a Bank Investor hereunder and acting as or maintaining any
of the Barclays Roles, and agrees that in connection with any Barclays Role,
Barclays may take, or refrain from taking, any action which it in its discretion
deems appropriate.
SECTION 10.13. Limitation of Liability.
Notwithstanding any provision of this Agreement or any other Transaction
Document: (i) none of the Purchaser Agents shall have any obligations under this
Agreement or any other Transaction Document other than those specifically set
forth herein and therein, and no implied obligations of any of the Purchaser
Agents shall be read into this Agreement or any other Transaction Document; and
(ii) in no event shall any of the Purchaser Agents be liable under or in
connection with this Agreement or any other Transaction Document for indirect,
special, or consequential losses or damages of any kind, including lost profits,
even if advised of the possibility thereof and regardless of the form of action
by which such losses or damages may be claimed. None of the Purchaser Agents nor
any of its respective directors, officers, agents or employees shall be liable
for any action taken or omitted to be taken in good faith by it or them under or
in connection with this Agreement or any other Transaction Document, except for
its or their own gross negligence or willful misconduct. Without limiting the
foregoing, each Purchaser Agent (a) may consult with legal counsel (including
counsel for the Purchasers), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts, (b) shall not be responsible to any party to this
Agreement for any statements, warranties or representations made in or in
connection with this Agreement or the other Transaction Documents (other than
its own), (c) shall not be responsible to any party to
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this Agreement for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or the other Transaction
Documents (except with respect to itself), (d) shall incur no liability under or
in respect of any of the Commercial Paper or other obligations of any Purchaser
under this Agreement or the other Transaction Documents and (e) shall incur no
liability under or in respect of this Agreement or the other Transaction
Documents by acting upon any notice (including notice by telephone), consent,
certificate or other instrument or writing (which may be by facsimile) believed
by it to be genuine and signed or sent by the proper party or parties.
Notwithstanding anything else herein or in the other Transaction Documents, it
is agreed that where any of the Purchaser Agents may be required under this
Agreement or the other Transaction Documents to give notice of any event or
condition or to take any action as a result of the occurrence of any event or
the existence of any condition, the applicable Purchaser Agent agrees to give
such notice or take such action only to the extent that it has actual knowledge
of the occurrence of such event or the existence of such condition, and shall
incur no liability for any failure to give such notice or take such action in
the absence of such knowledge.
SECTION 10.14. Pari Passu Interests.
It is the intention of the parties hereto that the interests being acquired
hereunder by the Purchaser Agents, on behalf of their related Purchasers and
Bank Investors, shall rank equally in priority.
SECTION 10.15. Further Assurances.
Each of the Transferor and Collection Agent agrees to do and perform from
time to time any and all acts and to execute any and all further instruments
required or reasonably requested by the Administrative Agent or the Purchaser
Agents more fully to effect the purposes of this Agreement and the other
Transaction Documents in a manner consistent with this Agreement and such other
Transaction Documents, including, without limitation, to take any actions or
execute any amendments or other documents required in connection with any
assignment by a Purchaser to a Conduit Assignee.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered the
Transfer and Administration Agreement as of the date first written above.
ENTERPRISE FUNDING CORPORATION,
as Purchaser
By: /s/Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: President
SHEFFIELD RECEIVABLES CORPORATION,
as Purchaser
By: /s/ Xxxxxxx Xxxx
Name: Xxxxxxx Xxxx
Title: Director
DIRECT MERCHANTS CREDIT CARD BANK,
NATIONAL ASSOCIATION,
as Transferor and Collection Agent
By: /s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: Assistant Treasurer and Cashier
Commitment NATIONSBANK, N.A.,
$450,000,000 as a Bank Investor, Enterprise Agent and
Administrative Agent
By: /s/ Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
Title: Vice President
BARCLAYS BANK PLC,
as Sheffield Agent
By: ______________________________________
Name:
Title:
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