RECEIVABLES PURCHASE AGREEMENT
among
VANSTAR FINANCE CO.,
as Seller,
VANSTAR CORPORATION,
as Servicer,
POOLED ACCOUNTS RECEIVABLE CAPITAL CORPORATION
as Purchaser,
and
XXXXXXX XXXXX SECURITIES INC.,
as Agent.
TABLE OF CONTENTS
PAGE
----
ARTICLE I. AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. Purchase Facility . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Making Purchases. . . . . . . . . . . . . . . . . . . . . 2
Section 1.3. Participation Computation . . . . . . . . . . . . . . . . 3
Section 1.4. Settlement Procedures . . . . . . . . . . . . . . . . . . 3
Section 1.5. Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 1.6. Payments and Computations, Etc. . . . . . . . . . . . . . 8
Section 1.7. Dividing or Combining Portions of the Investment
of the Participation. . . . . . . . . . . . . . . . . . . 8
Section 1.8. Increased Costs . . . . . . . . . . . . . . . . . . . . . 8
Section 1.9. Additional Discount on Portions of Participation
Bearing a Eurodollar Rate . . . . . . . . . . . . . . . . 9
Section 1.10. Requirements of Law . . . . . . . . . . . . . . . . . . . 10
Section 1.11. Inability to Determine Eurodollar Rate. . . . . . . . . . 11
ARTICLE II. REPRESENTATIONS AND WARRANTIES; COVENANTS;
TERMINATION EVENTS
Section 2.1. Representations and Warranties; Covenants . . . . . . . . 12
Section 2.2. Termination Events. . . . . . . . . . . . . . . . . . . . 12
ARTICLE III. INDEMNIFICATION
Section 3.1. Indemnities by the Seller . . . . . . . . . . . . . . . . 12
ARTICLE IV. ADMINISTRATION AND COLLECTIONS
Section 4.1. Appointment of Servicer . . . . . . . . . . . . . . . . . 15
Section 4.2. Duties of Servicer. . . . . . . . . . . . . . . . . . . . 16
Section 4.3. Establishment and Use of Certain Accounts . . . . . . . . 17
Section 4.4. Enforcement Rights. . . . . . . . . . . . . . . . . . . . 18
Section 4.5. Responsibilities of the Seller. . . . . . . . . . . . . . 19
Section 4.6. Servicing Fee . . . . . . . . . . . . . . . . . . . . . . 20
-i-
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
ARTICLE V. MISCELLANEOUS
Section 5.1. Amendments, Etc.. . . . . . . . . . . . . . . . . . . . . 20
Section 5.2. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.3. Assignability . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.4. Costs, Expenses and Taxes . . . . . . . . . . . . . . . . 21
Section 5.5. No Proceedings; Limitation on Payments. . . . . . . . . . 22
Section 5.6. Confidentiality . . . . . . . . . . . . . . . . . . . . . 23
Section 5.7. GOVERNING LAW AND JURISDICTION. . . . . . . . . . . . . . 23
Section 5.8. Execution in Counterparts . . . . . . . . . . . . . . . . 24
Section 5.9. Survival of Termination . . . . . . . . . . . . . . . . . 24
Section 5.10. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . 24
Section 5.11. Entire Agreement. . . . . . . . . . . . . . . . . . . . . 24
Section 5.12. Headings. . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.13. Purchaser's Liabilities . . . . . . . . . . . . . . . . . 25
EXHIBIT I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . I-1
EXHIBIT II CONDITIONS OF PURCHASES . . . . . . . . . . . . . . . . . . .II-1
EXHIBIT III REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . III-1
EXHIBIT IV COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . .IV-1
EXHIBIT V TERMINATION EVENTS. . . . . . . . . . . . . . . . . . . . . . V-1
EXHIBIT VI COLLECTION ACCOUNT AGREEMENT. . . . . . . . . . . . . . . . .VI-1
EXHIBIT VII LIQUIDATION ACCOUNT AGREEMENT . . . . . . . . . . . . . . . VII-1
EXHIBIT VIII PORTFOLIO CERTIFICATE . . . . . . . . . . . . . . . . . . . . .IX
SCHEDULE I CREDIT AND COLLECTION POLICY. . . . . . . . . . . . . . . . . I-1
SCHEDULE II LOCKBOX BANKS AND LOCKBOX ACCOUNTS. . . . . . . . . . . . . .II-1
SCHEDULE III TRADE NAMES . . . . . . . . . . . . . . . . . . . . . . . . III-1
ANNEX A FORM OF LOCKBOX AGREEMENT
ANNEX B FORM OF NOTICE OF PURCHASE
ANNEX C FORM OF CORPORATE OPINION
ANNEX D FORM OF BANKRUPTCY OPINION
-ii-
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
ANNEX E FORM OF SERVICER REPORT
-iii-
RECEIVABLES PURCHASE AGREEMENT
This RECEIVABLES PURCHASE AGREEMENT (this "AGREEMENT") is entered into as
of December 20, 1996 among VANSTAR FINANCE CO., a Delaware corporation, as
seller (the "SELLER"), VANSTAR CORPORATION, a Delaware corporation ("VANSTAR"),
as initial servicer (in such capacity, together with its successors and
permitted assigns in such capacity, the "SERVICER"), POOLED ACCOUNTS RECEIVABLE
CAPITAL CORPORATION, a Delaware corporation ("PAR") (together with its
successors and permitted assigns, the "PURCHASER"), and XXXXXXX XXXXX SECURITIES
INC., a Delaware corporation ("XXXXXXX XXXXX") as agent for the Purchaser (in
such capacity, together with its successors and assigns in such capacity, the
"AGENT").
PRELIMINARY STATEMENTS. Certain terms that are capitalized and used
throughout this Agreement are defined in EXHIBIT I to this Agreement.
References in the Exhibits hereto to "the Agreement" refer to this Agreement, as
amended, modified or supplemented from time to time.
The Seller desires to sell, transfer and assign an undivided variable
percentage interest in a pool of receivables, and the Purchaser desires to
acquire such undivided variable percentage interest, as such percentage interest
shall be adjusted from time to time based upon, in part, reinvestment payments
which are made by the Purchaser and additional incremental payments made to the
Seller.
In consideration of the mutual agreements, provisions and covenants
contained herein, the parties hereto agree as follows:
ARTICLE I.
AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. PURCHASE FACILITY. (a) On the terms and conditions
hereinafter set forth, the Purchaser hereby agrees to purchase and make
reinvestments of undivided percentage ownership
interests with regard to the Participation from the Seller from time to time
during the period from the date hereof to the Facility Termination Date.
Under no circumstances shall the Purchaser make any such purchase or
reinvestment if, after giving effect to such purchase or reinvestment, the
aggregate outstanding Investment of the Participation would exceed the
Purchase Limit.
(b) The Seller may, upon at least 30 Business Days' notice to the Agent,
terminate the purchase facility provided in this SECTION 1 in whole or, from
time to time, irrevocably reduce in part the unused portion of the Purchase
Limit; PROVIDED that each partial reduction shall be in the amount of at least
$5,000,000, or an integral multiple of $500,000 in excess thereof; provided
further that after giving effect to such partial reduction, the sum of the
Investment plus the unused portion of the Purchase Limit shall not be less than
$50,000,000.
Section 1.2. MAKING PURCHASES. (a) Each purchase (but not reinvestments)
of undivided ownership interests with regard to the Participation hereunder
shall be made upon the Seller's irrevocable written notice in the form of Annex
B delivered to the Agent in accordance with SECTION 5.2 (which notice must be
received by the Agent prior to noon, Chicago time) on the second Business Day
next preceding the date of such proposed purchase. Each such notice of any such
proposed purchase shall specify the desired amount and date of such purchase and
the desired duration of the initial Yield Period for the resulting
Participation. The Agent shall select the duration of such initial Yield
Period, and each subsequent Yield Period in its discretion; PROVIDED that it
shall use reasonable efforts, taking into account market conditions, to
accommodate Seller's preferences.
(b) On the date of each purchase (but not reinvestment) of undivided
ownership interests with regard to the Participation hereunder, the Purchaser
shall, upon satisfaction of the applicable conditions set forth in EXHIBIT II
hereto, make available to the Agent at its office at 000 Xxxx Xxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000, the amount of such purchase in same day funds, and
after the Agent's receipt of such funds, the Agent shall make such funds
immediately available to the Seller at such office.
-2-
(c) Effective on the date of each purchase pursuant to this SECTION 1.2
and each reinvestment pursuant to SECTION 1.4, the Seller hereby sells and
assigns to the Purchaser an undivided percentage ownership interest in (i) each
Pool Receivable then existing, (ii) all Related Security with respect to such
Pool Receivables, and (iii) Collections with respect to, and other proceeds of,
such Pool Receivables and Related Security.
(d) To secure all of the Seller's obligations (monetary or otherwise)
under this Agreement and the other Transaction Documents to which it is a party,
whether now or hereafter existing or arising, due or to become due, direct or
indirect, absolute or contingent, the Seller hereby grants to the Purchaser a
security interest in all of the Seller's right, title and interest (including
without limitation any undivided interest of the Seller) in, to and under all of
the following, whether now or hereafter owned, existing or arising: (A) all
Pool Receivables, (B) all Related Security with respect to each such Pool
Receivable, (C) all Collections with respect to each such Pool Receivable, (D)
the Lock-Box Accounts, Collection Account and Liquidation Account, any reserve
account established by a Lock-Box Bank, Collection Account Bank or Liquidation
Account Bank, and all amounts on deposit therein representing Collections and
other proceeds of the foregoing and all certificates and instruments, if any,
from time to time, evidencing such Lock-Box Accounts, Collection Account and
Liquidation Account and amounts on deposit therein, (E) all rights of the Seller
under the Purchase and Contribution Agreement, and (F) all proceeds of, and all
amounts received or receivable under any or all of, the foregoing. The
Purchaser shall have, with respect to the property described in this
SECTION 1.2(D), and in addition to all the other rights and remedies available
to the Purchaser, all the rights and remedies of a secured party under any
applicable UCC.
Section 1.3. PARTICIPATION COMPUTATION. The Participation shall be
initially computed on the date of the initial purchase hereunder. Thereafter
until the Termination Date, the Participation shall be automatically recomputed
(or deemed to be recomputed) on each Business Day other than a Termination Day.
The Participation, as computed (or deemed recomputed) as of the day immediately
preceding the Termination Date, shall thereafter remain constant. The
Participation shall become zero when the
-3-
Investment thereof and Discount thereon shall have been paid in full, all the
amounts owed by the Seller hereunder to the Purchaser, the Agent, and any
other Indemnified Party or Affected Person are paid in full and the Servicer
shall have received the accrued Servicing Fee thereon.
Section 1.4. SETTLEMENT PROCEDURES. (a) Collection of the Pool
Receivables shall be administered by the Servicer in accordance with the terms
of this Agreement. The Seller shall provide to the Servicer (if other than the
Seller) on a timely basis all information needed for such administration,
including notice of the occurrence of any Termination Day and current
computations of the Participation.
(b) The Servicer shall, on each day on which Collections of Pool
Receivables are received (or deemed received) pursuant to this Agreement by the
Seller or Servicer, transfer such Collections in available funds from the Lock-
Box Accounts and deposit such Collections into the Collection Account. With
respect to such Collections on such day, the Servicer shall:
(i) transfer from the Collection Account to the Liquidation Account,
set aside for the benefit of the Purchaser, out of the percentage of such
Collections represented by the Participation, FIRST an amount equal to the
Discount accrued through such day for each Portion of Investment and not
previously set aside and SECOND, to the extent funds are available
therefor, an amount equal to the Servicing Fee (if the Originator or any
Affiliate thereof is not the Servicer), the Commitment Fee and the Program
Fee accrued through such day for the Participation and not previously set
aside; and
(ii) subject to SECTION 1.4(F), if such day is not a Termination Day,
remit to the Seller, on behalf of the Purchaser, the remainder of the
percentage of such Collections, represented by the Participation, to the
extent representing a return on the Investment; such Collections shall be
automatically reinvested in Pool Receivables, and in the Related Security
and Collections and other proceeds with respect thereto, and the
Participation shall be automatically recomputed pursuant to SECTION 1.3; IT
BEING
-4-
UNDERSTOOD, that prior to remitting to the Seller the remainder of such
Collections by way of reinvestment in Pool Receivables, the Servicer
shall have calculated the Participation on such day, and if such
Participation shall exceed 100% of the Net Receivables Pool Balance on such
day, such Collections shall not be remitted to the Seller but shall be
transferred to the Liquidation Account for the benefit of the Purchaser in
accordance with PARAGRAPH (iii) below;
(iii) if such day is a Termination Day, transfer to the Liquidation
Account for the Purchaser the entire remainder of the percentage of the
Collections represented by the Participation; PROVIDED that so long as the
Facility Termination Date has not occurred if any amounts are so
transferred to the Liquidation Account on any Termination Day and
thereafter, the conditions set forth in SECTION 2 of EXHIBIT II are
satisfied or are waived by the Agent, such previously set aside amounts
shall, to the extent representing a return on the Investment, be reinvested
in accordance with the preceding PARAGRAPH (ii) on the day of such
subsequent satisfaction or waiver of conditions; and
(iv) during such times as amounts are required to be reinvested in
accordance with the foregoing PARAGRAPH (ii) or the proviso to PARAGRAPH
(iii), release to the Seller (subject to SECTION 1.4(f)) for its own
account any Collections in excess of (x) such amounts, (y) the amounts that
are required to be transferred to the Liquidation Account pursuant to
PARAGRAPH (i) above and (z) in the event the Seller is not the Servicer,
all reasonable and appropriate out-of-pocket costs and expenses of such
Servicer of servicing, collecting and administering the Pool Receivables.
(c) (i) The Servicer shall deposit into the Purchaser's Account (or such
other account designated by the Agent), on each Servicer Report Date:
(A) Collections held on deposit in the Liquidation Account for the
benefit of the Purchaser pursuant to SECTION 1.4(b)(i) in respect of
accrued Discount and the Program
-5-
Fees and Commitment Fees with respect to such Portion of Investment;
(B) Collections held on deposit in the Liquidation Account for the
benefit of the Purchaser pursuant to SECTION 1.4(f) with respect to such
Portion of Investment; and
(C) the lesser of (x) the amount of Collections then held on deposit
in the Liquidation Account for the benefit of the Purchaser pursuant to
SECTION 1.4(b)(iii) and (y) such Portion of Investment.
(ii) The Servicer shall deposit to its own account from Collections held on
deposit in the Liquidation Account pursuant to SECTION 1.4(b)(i) in respect of
the accrued Servicing Fee, an amount equal to such accrued Servicing Fee on each
Servicer Report Date.
(d) Upon receipt of funds deposited into the Purchaser's Account pursuant
to SECTION 1.4(c)(i) with respect to any Portion of Investment, the Agent shall
cause such funds to be distributed as follows:
(i) if such distribution occurs on a day that is not a Termination
Day, FIRST to the Purchaser in payment in full of all accrued Discount with
respect to such Portion of Investment, SECOND, to the Purchaser in payment
of accrued and unpaid Program Fees and Commitment Fees, and THIRD, if the
Servicer has set aside amounts in respect of the Servicing Fee pursuant to
SECTION 1.4(b)(i), to the Servicer (payable in arrears on the last day of
each calendar month) in payment in full of accrued Servicing Fees so set
aside with respect to such Portion of Investment; and
(ii) if such distribution occurs on a Termination Day, FIRST to the
Purchaser in payment in full of all accrued Discount with respect to such
Portion of Investment, SECOND to the Purchaser in payment of accrued and
unpaid Program Fees and Commitment Fees, THIRD, to the Purchaser in payment
in full of such Portion of Investment, FOURTH, if Vanstar or any of its
Affiliates is not the Servicer, to the Servicer in payment in full of all
accrued Servicing Fees with
-6-
respect to such Portion of Investment, and FIFTH, if the Investment and
accrued Discount with respect to each Portion of Investment have been
reduced to zero, and all accrued Servicing Fees payable to the Servicer
(if other than the Seller or an Affiliate of the Seller) have been paid
in full, to the Purchaser, the Agent and any other Indemnified Party or
Affected Person in payment in full of any other amounts owed thereto by
the Seller hereunder and then to the Servicer (if the Servicer is the
Seller or an Affiliate of the Seller) in payment in full of all accrued
Servicing Fees.
After the Investment, Program Fees, Discount and Servicing Fees with respect to
the Participation, and any other amounts payable by the Seller to the Purchaser,
the Agent or any other Indemnified Party or Affected Person hereunder, have been
paid in full, all additional Collections with respect to the Participation shall
be paid to the Seller for its own account.
(e) For the purposes of this SECTION 1.4:
(i) if on any day the Outstanding Balance of any Pool Receivable is
reduced or adjusted as a result of any defective, rejected, returned,
repossessed or foreclosed goods or services, or any discount, rebate or
other adjustment (other than any adjustment relating to Ineligible Amounts)
made by the Originator, Seller or Servicer, or any setoff or dispute
between the Seller, Originator or the Servicer and an Obligor, the Seller
shall be deemed to have received on such day a Collection of such Pool
Receivable in the amount of such reduction or adjustment;
(ii) if on any day any of the representations or warranties in
PARAGRAPHS (g) or (m) of SECTION A of EXHIBIT III is not true with respect
to any Pool Receivable, the Seller shall be deemed to have received on such
day a Collection of such Pool Receivable in full;
(iii) except as provided in PARAGRAPH (i) or (ii) of this
SECTION 1.4(e), or as otherwise required by applicable law or the relevant
Contract, all Collections received from an Obligor of any Receivable shall
be applied to the
-7-
Receivables of such Obligor in the order of the age of such Receivables,
starting with the oldest such Receivable, unless such Obligor designates
in writing or otherwise specifies its payment for application to
specific Receivables; and
(iv) if and to the extent the Agent or the Purchaser shall be
required for any reason to pay over to an Obligor (or any trustee,
receiver, custodian or similar official in any Insolvency Proceeding) any
amount received by it hereunder, such amount shall be deemed not to have
been so received but rather to have been retained by the Seller and,
accordingly, the Agent or the Purchaser, as the case may be, shall have a
claim against the Seller for such amount, payable when and to the extent
that any distribution from or on behalf of such Obligor is made in respect
thereof.
(f) If at any time the Seller shall wish to cause the reduction of a
Portion of Investment (but not to commence the liquidation, or reduction to
zero, of the entire Investment of the Participation), the Seller may do so as
follows:
(i) the Seller shall give the Agent at least two Business Days' prior
written notice thereof (including the amount of such proposed reduction and
the proposed date on which such reduction will commence),
(ii) on the proposed date of commencement of such reduction and on
each day thereafter, the Servicer shall cause Collections with respect to
such Portion of Investment not to be reinvested until the amount thereof
not so reinvested shall equal the desired amount of reduction, and
(iii) the Servicer shall hold such Collections in the Liquidation
Account for the benefit of the Purchaser, for payment to the Agent on the
last day of the current Settlement Period relating to such Portion of
Investment, and the applicable Portion of Investment shall be deemed
reduced in the amount to be paid to the Agent only when in fact finally so
paid;
provided that,
-8-
A. the amount of any such reduction shall be not less than
$1,000,000 and shall be an integral multiple of $500,000 (except in
connection with a reduction to zero of such Portion of Investment),
B. the Seller shall choose a reduction amount, and the date of
commencement thereof, so that to the extent practicable such reduction
shall commence and conclude in the same Yield Period, and
C. if two or more Portions of Investment shall be outstanding at the
time of any proposed reduction, such proposed reduction shall be applied,
unless the Seller shall otherwise specify in the notice given pursuant to
SECTION 1.4(f)(i), to the Portion of Investment with the shortest remaining
Yield Period.
Section 1.5. FEES. The Seller shall pay to the Agent certain fees in the
amounts and on the dates set forth in a letter dated December 20, 1996 between
the Seller and the Agent (as the same may be amended, amended and restated,
supplemented or modified, the "FEE LETTER") delivered pursuant to SECTION 1 of
EXHIBIT II, as such letter agreement may be amended, supplemented or otherwise
modified from time to time.
Section 1.6. PAYMENTS AND COMPUTATIONS, ETC. (a) All amounts to be paid
or deposited by the Seller or the Servicer to, or for the benefit of, the Agent
or the Purchaser hereunder shall be paid or deposited no later than noon
(Chicago time) on the day when due in same day funds to the Purchaser's Account.
All amounts received after 2:00 p.m. (Chicago time) will be deemed to have been
received on the immediately succeeding Business Day.
(b) The Seller shall, to the extent permitted by law, pay interest on any
amount not paid or deposited by the Seller or Servicer when due hereunder, at an
interest rate equal to 2.0% PER ANNUM above the Base Rate, payable on demand.
(c) All computations of interest under SUBSECTION (b) above and all
computations of Discount, fees, and other amounts hereunder shall be made on the
basis of a year of 360 days for the actual number of days elapsed. Whenever any
payment or
-9-
deposit to be made hereunder shall be due on a day other than a Business Day,
such payment or deposit shall be made on the next succeeding Business Day and
such extension of time shall be included in the computation of such payment
or deposit.
Section 1.7. DIVIDING OR COMBINING PORTIONS OF THE INVESTMENT OF THE
PARTICIPATION. The Seller may, on the last day of any Yield Period, either (i)
divide the Investment of the Participation into two or more portions, but not to
exceed (x) five (5) portions with a Yield Period of thirty days or less and (y)
five portions with a yield Period of greater than 30 days, in each case, in
effect at any time (each, a "PORTION OF INVESTMENT"), equal, in aggregate, to
the Investment of the Participation, PROVIDED that after giving effect to such
division the amount of each such Portion of Investment shall be not less than
$1,000,000, or (ii) combine any two or more Portions of Investment outstanding
on such last day and having Yield Periods ending on such last day into a single
Portion of Investment equal to the aggregate of the Investment of such Portions
of Investment.
Section 1.8. INCREASED COSTS. (a) If the Agent, the Purchaser, any
Liquidity Bank, any other Program Support Provider or any of their respective
Affiliates (each an "AFFECTED PERSON") determines that the existence of or
compliance with (i) any law or regulation or any change therein or in the
interpretation or application thereof, in each case adopted, issued or occurring
after the date hereof or (ii) any request, guideline or directive from any
central bank or other Governmental Authority (whether or not having the force of
law) issued or occurring after the date of this Agreement affects or would
affect the amount of capital required or expected to be maintained by such
Affected Person and such Affected Person determines that the amount of such
capital is increased by or based upon the existence of any commitment to make
purchases of or otherwise to maintain the investment in Pool Receivables related
to this Agreement or any related liquidity facility or credit enhancement
facility and other commitments of the same type, then, upon demand by such
Affected Person (with a copy to the Agent), the Seller shall immediately pay to
the Agent, for the account of such Affected Person, from time to time as
specified by such Affected Person, additional amounts sufficient to compensate
such Affected Person in the light of
-10-
such circumstances, to the extent that such Affected Person reasonably
determines such increase in capital to be allocable to the existence of any
of such commitments. A certificate as to such amounts submitted to the
Seller and the Agent by such Affected Person shall be conclusive and binding
for all purposes, absent manifest error.
(b) If, due to either (i) the introduction of or any change (other than
any change by way of imposition or increase of reserve requirements referred to
in SECTION 1.9) in or in the interpretation of any law or regulation or (ii)
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
any increase in the cost to any Affected Person of agreeing to purchase or
purchasing, or maintaining the ownership of the Participation in respect of
which Discount is computed by reference to the Eurodollar Rate, then, upon
demand by such Affected Person, the Seller shall immediately pay to such
Affected Person, from time to time as specified, additional amounts sufficient
to compensate such Affected Person for such increased costs to the extent that
such Affected Person reasonably determines such increased costs are allocable to
the Seller. A certificate as to such amounts submitted to the Seller by such
Affected Person shall be conclusive and binding for all purposes, absent
manifest error.
Section 1.9. ADDITIONAL DISCOUNT ON PORTIONS OF PARTICIPATION BEARING A
EURODOLLAR RATE. The Seller shall pay to any Affected Person, so long as such
Affected Person shall be required under regulations of the Board of Governors of
the Federal Reserve System to maintain reserves with respect to liabilities or
assets consisting of or including "Eurocurrency Liabilities", additional
Discount on the unpaid Investment of the applicable Portion of Investment during
each Yield Period in respect of which Discount is computed by reference to the
Eurodollar Rate, for such Yield Period, at a rate per annum equal at all times
during such Yield Period to the remainder obtained by subtracting (i) the
Eurodollar Rate for such Yield Period from (ii) the rate obtained by dividing
such Eurodollar Rate referred to in clause (i) above by that percentage equal to
100% minus the Eurodollar Rate Reserve Percentage for such Yield Period, payable
on each date on which Discount is payable on the applicable
-11-
Portion of Investment. Such additional Discount shall be determined by the
Affected Person and notified to the Seller through the Agent within 30 days
after any Discount payment is made with respect to which such additional
Discount is requested. A certificate as to such additional Discount
submitted to the Seller by the Affected Person shall be conclusive and
binding for all purposes, absent manifest error.
Section 1.10. REQUIREMENTS OF LAW. In the event that any Affected Person
determines that the existence of or compliance with (i) any law or regulation or
any change therein or in the interpretation or application thereof, in each case
adopted, issued or occurring after the date hereof or (ii) any request,
guideline or directive from any central bank or other Governmental Authority
(whether or not having the force of law) issued or occurring after the date of
this Agreement:
(i) does or shall subject such Affected Person to any tax of any kind
whatsoever with respect to this Agreement, any increase in the
Participation or in the amount of Investment relating thereto, or does or
shall change the basis of taxation of payments to such Affected Person on
account of Collections, Discount or any other amounts payable hereunder
(excluding taxes imposed on the overall net income of such Affected Person,
and franchise taxes imposed on such Affected Person, by the jurisdiction
under the laws of which such Affected Person is organized or a political
subdivision thereof);
(ii) does or shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held
by, or deposits or other liabilities in or for the account of, purchases,
advances or loans by, or other credit extended by, or any other acquisition
of funds by, any office of such Affected Person which are not otherwise
included in the determination of the Eurodollar Rate or the Base Rate
hereunder; or
(iii) does or shall impose on such Affected Person any other
condition;
-12-
and the result of any of the foregoing is (x) to increase the cost to such
Affected Person of acting as Agent, or of agreeing to purchase or purchasing or
maintaining the ownership of undivided ownership interests with regard to the
Participation (or interests therein) or any Portion of Investment in respect of
which Discount is computed by reference to the Eurodollar Rate or the Base Rate
or (y) to reduce any amount receivable hereunder (whether directly or
indirectly) funded or maintained by reference to the Eurodollar Rate or the Base
Rate, then, in any such case, upon demand by such Affected Person the Seller
shall pay such Affected Person any additional amounts necessary to compensate
such Affected Person for such additional cost or reduced amount receivable to
the extent that such Affected Person reasonably determines such additional cost
or reduced amount receivable is allocable to the Seller. All such amounts shall
be payable as incurred. A certificate from such Affected Person to the Seller
certifying, in reasonably specific detail, the basis for, calculation of, and
amount of such additional costs or reduced amount receivable shall be conclusive
in the absence of manifest error; PROVIDED, however, that no Affected Person
shall be required to disclose any confidential or tax planning information in
any such certificate.
Section 1.11. INABILITY TO DETERMINE EURODOLLAR RATE. In the event that
the Agent shall have determined prior to the first day of any Yield Period
(which determination shall be conclusive and binding upon the parties hereto) by
reason of circumstances affecting the interbank Eurodollar market, either (a)
dollar deposits in the relevant amounts and for the relevant Yield Period are
not available, (b) adequate and reasonable means do not exist for ascertaining
the Eurodollar Rate for such Yield Period or (c) the Eurodollar Rate determined
pursuant hereto does not accurately reflect the cost to the Purchaser (as
conclusively determined by the Agent) of maintaining any Portion of Investment
during such Yield Period, the Agent shall promptly give telephonic notice of
such determination, confirmed in writing, to the Seller prior to the first day
of such Yield Period. Upon delivery of such notice (a) no Portion of Investment
shall be funded thereafter at the Bank Rate determined by reference to the
Eurodollar Rate, unless and until the Agent shall have given notice to the
Seller that the circumstances giving rise to such determination no longer exist,
and (b) with respect to any
-13-
outstanding Portions of Investment then funded at the Bank Rate determined by
reference to the Eurodollar Rate, such Bank Rate shall automatically be
converted to the Bank Rate determined by reference to the Base Rate at the
respective last days of the then-current Yield Periods relating to such
Portions of Investment.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES; COVENANTS;
TERMINATION EVENTS
Section 2.1. REPRESENTATIONS AND WARRANTIES; COVENANTS. Each of the
Seller and the Servicer hereby makes the representations and warranties, and
hereby agrees to perform and observe the covenants, in each case applicable to
it, set forth in EXHIBITS III and IV, respectively hereto.
Section 2.2. TERMINATION EVENTS. If any of the Termination Events set
forth in EXHIBIT V hereto shall occur, the Agent may, by notice to the Seller,
declare the Facility Termination Date to have occurred (in which case the
Facility Termination Date shall be deemed to have occurred); PROVIDED that,
automatically upon the occurrence of any event (without any requirement for the
passage of time or the giving of notice) described in SUBSECTION (e), (g), (h),
(i) or (k) of EXHIBIT V, the Facility Termination Date shall occur. Upon any
such declaration, occurrence or deemed occurrence of the Facility Termination
Date, the Purchaser and the Agent shall have, in addition to the rights and
remedies which they may have under this Agreement, all other rights and remedies
provided after default under the UCC and under other applicable law, which
rights and remedies shall be cumulative.
ARTICLE III.
INDEMNIFICATION
Section 3.1. INDEMNITIES BY THE SELLER. Without limiting any other rights
that any Affected Person or any of its respective Affiliates, employees, agents,
successors, transferees
-14-
or assigns (each, an "INDEMNIFIED PARTY") may have hereunder or under
applicable law, the Seller hereby agrees to indemnify each Indemnified Party
from and against any and all claims, damages, expenses, losses and
liabilities (including Attorney Costs) (all of the foregoing being
collectively referred to as "INDEMNIFIED AMOUNTS") arising out of or
resulting from this Agreement or other Transaction Documents (whether
directly or indirectly) or the use of proceeds of purchases or reinvestments
or the ownership of the Participation, or any interest therein, or in respect
of any Receivable or any Contract, excluding, however, (a) Indemnified
Amounts to the extent resulting from gross negligence or willful misconduct
on the part of such Indemnified Party, (b) recourse (except as otherwise
specifically provided in this Agreement) for uncollectible Receivables to be
written off consistent with the Credit and Collection Policy, (c) to the
extent that this facility is terminated prior to the scheduled Facility
Termination Date, fees or margin (other than the Termination Fee and other
amounts then due and owing by the Seller or Servicer under this Agreement or
any other Transaction Document) which would have accrued after such date had
the facility not been terminated, or (d) any overall net income taxes or
franchise taxes imposed on such Indemnified Party by the jurisdiction under
the laws of which such Indemnified Party is organized or any political
subdivision thereof. Without limiting or being limited by the foregoing, and
subject to the exclusions set forth in the preceding sentence, the Seller
shall pay on demand to each Indemnified Party any and all amounts necessary
to indemnify such Indemnified Party from and against any and all Indemnified
Amounts relating to or resulting from any of the following:
(i) the failure of any Receivable included in the calculation of the
Net Receivables Pool Balance as an Eligible Receivable to be an Eligible
Receivable, the failure of any information contained in a Servicer Report
to be true and correct, or the failure of any other information provided by
the Seller or the Servicer to the Purchaser or the Agent with respect to
Receivables or this Agreement to be true and correct;
(ii) the failure of any representation or warranty or statement made
or deemed made by the Seller (or any of its
-15-
officers) under or pursuant to this Agreement to have been true and correct
in all respects when made;
(iii) the failure by the Seller to comply with any applicable law,
rule or regulation with respect to any Pool Receivable or the related
Contract; or the failure of any Pool Receivable or the related Contract to
conform to any such applicable law, rule or regulation;
(iv) the failure to vest in the Purchaser a valid and enforceable (A)
perfected undivided percentage ownership interest, to the extent of the
Participation, in the Receivables in, or purporting to be in, the
Receivables Pool and the Related Security and Collections with respect
thereto and (B) first priority perfected security interest in the items
described in SECTION 1.2(d), in each case, free and clear of any Adverse
Claim;
(v) the failure to have filed, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any
Receivables in, or purporting to be in, the Receivables Pool and the
Related Security and Collections in respect thereof, whether at the time of
any purchase or reinvestment or at any subsequent time;
(vi) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any Receivable
in, or purporting to be in, the Receivables Pool (including, without
limitation, a defense based on such Receivable or the related Contract not
being a legal, valid and binding obligation of such Obligor enforceable
against it in accordance with its terms), or any other claim resulting from
the sale of the goods or services related to such Receivable or the
furnishing or failure to furnish such goods or services or relating to
collection activities with respect to such Receivable (if such collection
activities were performed by the Seller or any of its Affiliates acting as
Servicer or by any agent or independent contractor retained by the Seller
or any of its Affiliates);
-16-
(vii) any failure of the Seller to perform its duties or obligations
in accordance with the provisions hereof or to perform its duties or
obligations under the Contracts;
(viii) any products liability or other claim, investigation,
litigation or proceeding arising out of or in connection with merchandise,
insurance or services which are the subject of any Contract;
(ix) the commingling of Collections of Pool Receivables at any time
with other funds;
(x) any investigation, litigation or proceeding related to this
Agreement or the use of proceeds of purchases or reinvestments or the
ownership of the Participation or in respect of any Receivable, Related
Security or Contract;
(xi) any reduction in Investment as a result of the distribution of
Collections pursuant to SECTION 1.4(D), in the event that all or a portion
of such distributions shall thereafter be rescinded or otherwise must be
returned for any reason; or
(xii) any tax or governmental fee or charge (other than any tax upon
or measured by net income or gross receipts), all interest and penalties
thereon or with respect thereto, and all out-of-pocket costs and expenses,
including the reasonable fees and expenses of counsel in defending against
the same, which may arise by reason of the purchase or ownership of the
Participation, or other interests in the Receivables Pool or in any Related
Security or Contract.
ARTICLE IV.
ADMINISTRATION AND COLLECTIONS
Section 4.1. APPOINTMENT OF SERVICER. (a) The servicing, administering
and collection of the Pool Receivables shall be conducted by the Person so
designated from time to time as
-17-
Servicer in accordance with this SECTION 4.1. Until the Agent gives notice to
the Seller and the Servicer (in accordance with this SECTION 4.1) of the
designation of a new Servicer, Vanstar is hereby designated as, and hereby
agrees to perform the duties and obligations of, the Servicer pursuant to the
terms hereof. Upon the occurrence of a Termination Event, the Agent may
designate as Servicer any Person (including itself) to succeed the Servicer
or any successor Servicer, on the condition in each case that any such Person
so designated shall agree to perform the duties and obligations of the
Servicer pursuant to the terms hereof.
(b) Upon the designation of a successor Servicer as set forth in
SECTION 4.1(A) hereof, the Servicer agrees that it will terminate its
activities as Servicer hereunder in a manner which the Agent determines will
facilitate the transition of the performance of such activities to the new
Servicer, and the Servicer shall cooperate with and assist such new Servicer.
Such cooperation shall include (without limitation) access to and transfer
of records and use by the new Servicer of all licenses, hardware or software
necessary or desirable to collect the Pool Receivables and the Related
Security.
(c) The Servicer acknowledges that, in making their decision to execute
and deliver this Agreement, the Agent and the Purchaser have relied on the
Servicer's agreement to act as Servicer hereunder. Accordingly, the Servicer
agrees that it will not voluntarily resign as Servicer.
(d) The Servicer may delegate its duties and obligations hereunder to
Quantum Information Corporation to the extent currently delegated and to any
other subservicer (each, a "SUB-SERVICER"); provided that, in each such
future delegation, (i) such Sub-Servicer shall agree in writing to perform
the duties and obligations of the Servicer pursuant to the terms hereof, (ii)
the Servicer shall remain primarily liable to the Purchaser and the Agent for
the performance of the duties and obligations so delegated, (iii) the Seller,
the Agent and the Purchaser shall have the right to look solely to the
Servicer for performance (iv) the terms of any agreement with any
Sub-Servicer shall provide that the Agent may terminate such agreement upon
the termination of the Servicer hereunder by giving notice of its
-18-
desire to terminate such agreement to the Servicer (and the Servicer shall
provide appropriate notice to such Sub-Servicer) and (v) with respect to the
delegation of material duties to a Sub-Servicer after the date of the initial
purchase hereunder, the Servicer shall have received the prior written
consent of the Agent.
Section 4.2. DUTIES OF SERVICER. (a) The Servicer shall take or cause
to be taken all such action as the Servicer determines may be necessary or
advisable to collect each Pool Receivable from time to time, all in
accordance with this Agreement and all applicable laws, rules and
regulations, with the same degree of care and diligence as the Servicer would
use if it owned the Pool Receivables, and in accordance with the Credit and
Collection Policy. The Servicer shall set aside for the accounts of the
Seller and the Purchaser the amount of the Collections to which each is
entitled in accordance with ARTICLE II hereto. The Servicer may, in
accordance with the Credit and Collection Policy, extend the maturity of any
Pool Receivable (but not beyond thirty (30) days) and extend the maturity or
adjust the Outstanding Balance of any Defaulted Receivable as the Servicer
may determine to be appropriate to maximize Collections thereof; PROVIDED,
HOWEVER, that (i) such extension or adjustment shall not alter the status of
such Pool Receivable as a Delinquent Receivable or a Defaulted Receivable or
limit the rights of the Purchaser or the Agent under this Agreement and (ii)
if a Termination Event has occurred and Seller or any of its Affiliates is
still serving as Servicer, the Seller may make such extension or adjustment
only upon the prior written approval of the Agent. The Seller shall deliver
to the Servicer and the Servicer shall hold for the benefit of the Seller and
the Agent (for the benefit of the Purchaser and individually) in accordance
with their respective interests, all records and documents (including without
limitation computer tapes or disks) with respect to each Pool Receivable.
Notwithstanding anything to the contrary contained herein, the Agent may
direct the Servicer to commence or settle any legal action to enforce
collection of any Pool Receivable or to foreclose upon or repossess any
Related Security; PROVIDED, HOWEVER, that no such direction may be given
unless either (i) a Termination Event has occurred or (ii) the Agent believes
in good faith that failure to commence, settle, or effect such legal action,
foreclosure or repossession could
-19-
adversely effect Receivables constituting a material portion of the Pool
Receivables.
(b) Following notification from the Originator to the Servicer or
discovery by the Servicer that any amounts not constituting Collections or
other proceeds of Pool Receivables or Related Security have been deposited
into a Lock-Box Account or Collection Account, within two Business Days after
such misapplied collections have been identified by the Servicer (and upon
the occurrence of and continuation of a Termination Event, after the Servicer
provides the Agent evidence of such misapplication satisfactory to the
Agent), Servicer shall remit to the Originator (or shall permit the
Originator to withdraw from the appropriate Lock-Box Account) all such
misapplied collections less all reasonable costs and expenses, if any,
incurred by Servicer in collecting such amounts; PROVIDED, HOWEVER, that no
such amounts shall be so remitted (or withdrawn) unless any amounts required
to be transferred to a Lock-Box Account pursuant to Section 7.2(a) of the
Purchase and Contribution Agreement have been (or are concurrently)
transferred to such Lock-Box Account.
(c) The Servicer's obligations hereunder shall terminate on the Final
Payout Date.
After such termination, the Servicer shall promptly deliver to the
Seller all books, records and related materials that the Seller previously
provided to the Servicer in connection with this Agreement.
Section 4.3. ESTABLISHMENT AND USE OF CERTAIN ACCOUNTS.
(a) LOCK-BOX ACCOUNTS. Prior to the initial purchase hereunder, the
Seller shall enter into Lock-Box Agreements establishing the Lock-Box
Accounts listed on SCHEDULE II with all of the Lock-Box Banks, and deliver
original counterparts thereof to the Agent.
(b) COLLECTION ACCOUNT. The Servicer agrees to establish the
Collection Account on or before the date of the first purchase hereunder.
The Collection Account shall be used to accept the transfer of Collections of
Pool Receivables from the
-20-
Lock-Box Accounts pursuant to SECTION 1.4(B) and for such other purposes
described in the Transaction Documents.
(c) LIQUIDATION ACCOUNT. The Servicer agrees to establish the
Liquidation Account on or before the date of the first purchase hereunder.
The Liquidation Account shall be used to receive transfers of certain amounts
of the Purchaser's share of Collections of Pool Receivables prior to the
Settlement Dates and for such other purposes described in the Transaction
Documents. No funds other than those transferred in accordance with SECTION
1.4 shall be intentionally transferred into the Liquidation Account.
(d) PERMITTED INVESTMENTS. Any amounts in the Liquidation Account or
the Collection Account, as the case may be, may be invested by the
Liquidation Account Bank or Collection Account Bank, respectively, at
Servicer's direction, in Permitted Investments, so long as Purchaser's
interest in such Permitted Investments is perfected and such Permitted
Investments are subject to no Adverse Claims other than those of the
Purchaser provided hereunder.
(e) CONTROL OF LOCK-BOX ACCOUNTS. Upon the occurrence of any
Termination Event or Unmatured Termination Event, the Agent may give notice
to each Lock-Box Bank, the Collection Account Bank and the Liquidation
Account Bank that the Agent is exercising its rights under the Lock-Box
Agreements, the Collection Account Agreement and the Liquidation Account
Agreement to do any or all of the following: (i) to have the exclusive
ownership and control of the Lock-Box Accounts, the Collection Account and
the Liquidation Account transferred to the Agent and to exercise exclusive
dominion and control over the funds deposited therein, (ii) to have the
proceeds that are sent to the respective Lock-Box Accounts be redirected
pursuant to its instructions rather than deposited in the applicable Lock-Box
Account, and (iii) to take any or all other actions permitted under the
applicable Lock-Box Agreement, the Collection Account Agreement and the
Liquidation Account Agreement. The Seller hereby agrees that if the Agent at
any time takes any action set forth in the preceding sentence, the Agent
shall have exclusive control of the proceeds (including Collections) of all
Pool Receivables and the Seller hereby further agrees to take any
-21-
other action that the Agent may reasonably request to transfer such control.
Any proceeds of Pool Receivables received by the Seller, as Servicer or
otherwise, thereafter shall be sent immediately to the Agent. The parties
hereto hereby acknowledge that if at any time the Agent takes control of any
Lock-Box Account, the Collection Account and the Liquidation Account, the
Agent shall not have any rights to the funds therein in excess of the unpaid
amounts due to the Agent, the Purchaser or any other Person hereunder; it
being understood that the Agent and the Purchaser shall have no rights
hereunder with respect to any misapplied collections referred to in SECTION
4.2(B) above.
Section 4.4. ENFORCEMENT RIGHTS. (a) At any time following the
occurrence of a Termination Event or Unmatured Termination Event:
(i) the Agent may direct the Obligors that payment of all amounts
payable under any Pool Receivable be made directly to the Agent or its
designee;
(ii) the Agent may instruct the Seller or the Servicer to give notice
of the Purchaser's interest in Pool Receivables to each Obligor, which
notice shall direct that payments be made directly to the Agent or its
designee, and upon such instruction from the Agent, the Seller or the
Servicer, as applicable, shall give such notice at the expense of the
Seller; provided, that if the Seller or the Servicer fails to so notify
each Obligor, the Agent may so notify the Obligors; and
(iii) the Agent may request the Seller or the Servicer to, and upon
such request the Seller or the Servicer, as applicable, shall, (A) assemble
all of the records necessary or desirable to collect the Pool Receivables
and the Related Security, and transfer or license to any new Servicer the
use of all software necessary or desirable to collect the Pool Receivables
and the Related Security, and make the same available to the Agent or its
designee at a place selected by the Agent, and (B) segregate all cash,
checks and other instruments received by it from time to time constituting
Collections with respect to the Pool Receivables in a manner acceptable to
the Agent and, promptly upon receipt, remit
-22-
all such cash, checks and instruments, duly endorsed or with duly executed
instruments of transfer, to the Agent or its designee.
(b) The Seller hereby authorizes the Agent, and irrevocably appoints
the Agent as its attorney-in-fact with full power of substitution and with
full authority in the place and stead of the Seller, which appointment is
coupled with an interest, to take any and all steps in the name of the Seller
and on behalf of the Seller necessary or desirable, in the determination of
the Agent, to collect any and all amounts or portions thereof due under any
and all Pool Receivables or Related Security, including, without limitation,
endorsing the name of the Seller on checks and other instruments representing
Collections and enforcing such Pool Receivables, Related Security and the
related Contracts. Notwithstanding anything to the contrary contained in this
SUBSECTION (b), none of the powers conferred upon such attorney-in-fact
pursuant to the immediately preceding sentence shall subject such
attorney-in-fact to any liability if any action taken by it shall prove to be
inadequate or invalid, nor shall they confer any obligations upon such
attorney-in-fact in any manner whatsoever.
Section 4.5. RESPONSIBILITIES OF THE SELLER. Anything herein to the
contrary notwithstanding, the Seller shall (i) perform all of its
obligations, if any, under the Contracts related to the Pool Receivables to
the same extent as if interests in such Pool Receivables had not been
transferred hereunder, and the exercise by the Agent or the Purchaser of its
rights hereunder shall not relieve the Seller from such obligations and (ii)
pay when due any taxes, including, without limitation, any sales taxes
payable in connection with the Pool Receivables and their creation and
satisfaction. The Agent and the Purchaser shall not have any obligation or
liability with respect to any Pool Receivable, any Related Security or any
related Contract, nor shall any of them be obligated to perform any of the
obligations of the Seller under any of the foregoing.
Section 4.6. SERVICING FEE. The Servicer shall be paid a fee, through
distributions contemplated by SECTION 1.4(d), in an amount equal to 0.50% PER
annum of the average Outstanding Balance of Pool Receivables.
-23-
ARTICLE V.
MISCELLANEOUS
Section 5.1. AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement or consent to any departure by the Seller or Servicer
therefrom shall be effective unless in a writing signed by the Agent, and, in
the case of any amendment, by the Seller and the Servicer and then such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; PROVIDED, HOWEVER, that no
material amendment of this Agreement (other than an amendment to extend the
scheduled Facility Termination Date) shall be effective unless the Purchaser
(or the Agent on its behalf) shall have received written confirmation by the
Rating Agencies that such amendment shall not cause the rating on the then
outstanding Notes to be downgraded or withdrawn. No failure on the part of
the Purchaser or Agent to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right.
Section 5.2. NOTICES, ETC. All notices and other communications
hereunder shall, unless otherwise stated herein, be in writing (which shall
include facsimile communication) and sent or delivered, to each party hereto,
at its address set forth under its name on the signature pages hereof or at
such other address as shall be designated by such party in a written notice
to the other parties hereto. Notices and communications by facsimile shall
be effective when sent (and shall be followed by hard copy sent by first
class mail), and notices and communications sent by other means shall be
effective when received.
Section 5.3. ASSIGNABILITY. (a) This Agreement and the Purchaser's
rights and obligations herein (including ownership of the Participation)
shall be assignable, in whole or in part, by the Purchaser and its successors
and assigns to any Person that is not a competitor of Vanstar with the prior
written consent of the Seller; PROVIDED, HOWEVER, that no such consent shall
be
-24-
required if the assignment is made to any Affiliate of the Purchaser, any
Liquidity Bank or other Program Support Provider or any Person which is (i)
in the business of issuing Notes and (ii) associated with or administered by
the Agent or any Affiliate of the Purchaser (each such Person, a "NOTE
ISSUER"). Subject to SECTION 5.6, each assignor may, in connection with the
assignment, disclose to the applicable assignee any information relating to
the Seller or the Pool Receivables furnished to such assignor by or on behalf
of the Seller, the Purchaser or the Agent. Upon the assignment by the
Purchaser in accordance with this SECTION 5.3(a), the assignee receiving such
assignment shall have all of the rights and, to the extent so assigned, the
obligations (which, in any case, shall include the obligations referred to in
SECTION 5.6 herein) of the Purchaser with respect to the Transaction
Documents and the Investment (or such portion thereof as has been assigned).
(b) The Purchaser may at any time grant to one or more banks or other
institutions that are not competitors of Vanstar (each a "LIQUIDITY BANK")
party to the Liquidity Agreement or to any other Program Support Provider
participating interests or security interests in the Participation. In the
event of any such grant by the Purchaser of a participating interest to a
Liquidity Bank or other Program Support Provider, the Purchaser shall remain
responsible for the performance of its obligations hereunder. The Seller
agrees that each Liquidity Bank or other Program Support Provider shall be
entitled to the benefits of SECTIONS 1.8, 1.9 and 1.10.
(c) This Agreement and the rights and obligations of the Agent
hereunder shall be assignable, in whole or in part, by the Agent and its
successors and assigns to any Person that is not a competitor of Vanstar;
PROVIDED, HOWEVER, that if such assignment is to any Person that is not an
Affiliate of the Agent, a Person designated by Capital Markets Assurance
Corporation or a Program Support Provider; the Agent must receive the prior
written consent of the Seller (which consent shall not be unreasonably
withheld).
(d) Except as provided in SECTION 4.1(d), neither the Seller nor the
Servicer may assign its rights or delegate its
-25-
obligations hereunder or any interest herein without the prior written consent
of the Agent.
(e) Without limiting any other rights that may be available under
applicable law, the rights of the Purchaser may be enforced through it or by
its agents.
Section 5.4. COSTS, EXPENSES AND TAXES. (a) In addition to the rights
of indemnification granted under SECTION 3.1 hereof, the Seller agrees to pay
on demand all costs and expenses in connection with the preparation,
execution, delivery and administration (including periodic auditing of Pool
Receivables) of this Agreement, the Liquidity Agreement, and the other
documents and agreements to be delivered hereunder, including all costs and
expenses relating to the amending, amending and restating, modifying or
supplementing of this Agreement, the Liquidity Agreement and the other
documents and agreements to be delivered hereunder and the waiving of any
provisions thereof, and including in all cases, without limitation,
reasonable Attorney Costs for the Agent, the Purchaser, Capital Markets
Assurance Corporation and their respective Affiliates and agents with respect
thereto and with respect to advising the Agent, the Purchaser, Capital
Markets Assurance Corporation and their respective Affiliates and agents as
to their rights and remedies under this Agreement and the other Transaction
Documents, and all costs and expenses, if any (including reasonable Attorney
Costs), of the Agent, the Purchaser, Capital Markets Assurance Corporation
and their respective Affiliates and agents, in connection with the
enforcement of this Agreement and the other Transaction Documents.
(b) In addition, the Seller shall pay on demand any and all stamp and
other taxes and fees payable in connection with the execution, delivery,
filing and recording of this Agreement or the other documents or agreements
to be delivered hereunder, and agrees to save each Indemnified Party harmless
from and against any liabilities with respect to or resulting from any delay
in paying or omission to pay such taxes and fees.
Section 5.5. NO PROCEEDINGS; LIMITATION ON PAYMENTS. (a) Each of the
Seller, the Servicer, the Agent, each assignee of the Participation or any
interest therein, and each Person which
-26-
enters into a commitment to purchase the Participation or interests therein,
hereby covenants and agrees that it will not institute against, or join any
other Person in instituting against, any Note Issuer, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding, or other
proceeding under any federal or state bankruptcy or similar law, for one year
and one day after the latest maturing Note issued by any such Note Issuer is
paid in full.
(b) Notwithstanding any provisions contained in this Agreement to the
contrary, the Purchaser shall not, and shall not be obligated to, pay any
amount pursuant to this Agreement unless (i) the Purchaser has excess cash
flow from operations or has received funds with respect to such obligation
which may be used to make such payment and which funds or excess cash flow
are not required to repay the Notes when due and (ii) each "Participation"
owned by the Purchaser pursuant to any receivables purchase agreement
(including this Agreement) is less than or equal to 100%. Any amount which
the Purchaser does not pay pursuant to the operation of the preceding
sentence shall not constitute a claim against the Purchaser for any such
insufficiency unless and until the conditions described in CLAUSES (i) and
(ii) of the preceding sentence are satisfied. Nothing in this SUBSECTION (b)
shall be construed to forgive or cancel any obligations of the Purchaser
hereunder
Section 5.6. CONFIDENTIALITY. The Seller, the Servicer, the Purchaser
and the Agent each agrees to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of this Agreement, the
other Transaction Documents (and all drafts thereof), all reports and other
information delivered by Seller or Vanstar in connection with the
transactions contemplated by this Agreement or any other Transaction Document
and all other information provided after the date hereof and identified as
"confidential" or "secret" by the Seller or Vanstar and provided to the other
parties by the Seller or Vanstar and no such person nor any of their
respective Affiliates shall use any such information other than in connection
with or in enforcement of this Agreement and the other Transaction Documents,
except to the extent such information (i) was or becomes generally available
to the public other than as a result of disclosure by such Person, or (ii)
was or becomes
-27-
available on a non-confidential basis from a source other than such Person,
provided that such source is not bound by a confidentiality agreement with
respect thereto; PROVIDED, HOWEVER, that any Person may disclose such
information (A) at the request or pursuant to any requirement of any
Governmental Authority to which such Person is subject or in connection with
an examination of such Person by any such authority; (B) pursuant to subpoena
or other court process; (C) when required to do so in accordance with the
provisions of any applicable requirement of law (including, without
limitation, in connection with any public filing with (whether or not
required by) the Securities and Exchange Commission); (D) to the extent
reasonably required in connection with any litigation or proceeding to which
such Person or its Affiliates may be party; (E) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under any
other Transaction Document; (F) to such Person's independent auditors and
other professional advisors; (G) to the Rating Agencies; (H) to any assignee,
Purchaser, or assignee or participant of a Purchaser, actual or potential,
provided that such Person agrees in writing to keep such information
confidential to the same extent required hereunder; (I) with the prior
consent of the Agent, in a press release by the Seller or the Servicer and
(J) as expressly permitted under the terms of any other document or agreement
regarding confidentiality to which such Person and any of the other parties
hereto is party.
Section 5.7. GOVERNING LAW AND JURISDICTION. (a) THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF),
EXCEPT TO THE EXTENT THAT THE PERFECTION (OR THE EFFECT OF PERFECTION OR
NON-PERFECTION) OF THE INTERESTS OF THE PURCHASER IN THE POOL RECEIVABLES AND
THE OTHER ITEMS DESCRIBED IN SECTION 1.2(d) IS GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY
BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE PURCHASER, THE SELLER, THE SERVICER AND THE AGENT
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE PURCHASER, THE SELLER,
-28-
THE SERVICER AND THE AGENT IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT
PERMITTED BY LAW, ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.
THE PURCHASER, THE SELLER, THE SERVICER AND THE AGENT EACH WAIVE PERSONAL
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY
OTHER MEANS PERMITTED BY NEW YORK LAW.
Section 5.8. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one
and the same agreement.
Section 5.9. SURVIVAL OF TERMINATION. The provisions of SECTIONS 1.8,
1.9, 1.10, 3.1, 5.4, 5.5, 5.6, 5.7 and 5.10 shall survive any termination of
this Agreement.
Section 5.10. WAIVER OF JURY TRIAL. THE PURCHASER, THE SELLER, THE
SERVICER AND THE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES
AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS,
TORT CLAIMS OR OTHERWISE. THE PURCHASER, THE SELLER, THE SERVICER AND THE
AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH OF THE
PARTIES HERETO FURTHER AGREES THAT ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IS
WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT.
Section 5.11. ENTIRE AGREEMENT. This Agreement and the other
Transaction Documents embody the entire agreement and understanding between
the Purchaser, the Seller, the Servicer and the Agent, and supersede all
prior or contemporaneous agreements
-29-
and understandings of such Persons, verbal or written, relating to the
subject matter hereof and thereof, except for any prior arrangements made
with respect to the payment by the Purchaser of (or any indemnification for)
any fees, costs or expenses payable to or incurred (or to be incurred) by or
on behalf of the Seller, the Servicer and the Agent.
Section 5.12. HEADINGS. The captions and headings of this Agreement
and in any Exhibit hereto are for convenience of reference only and shall not
affect the interpretation hereof or thereof.
Section 5.13. PURCHASER'S LIABILITIES. The obligations of the
Purchaser under this Agreement are solely the corporate obligations of the
Purchaser. No recourse shall be had for any obligation or claim arising out
of or based upon this Agreement against any stockholder, employee, officer,
director or incorporator of the Purchaser, and provided, however, that this
Section 5.13 shall not relieve any such Person of any liability it might
otherwise have for its own gross negligence or willful misconduct. The
agreements provided in this Section 5.13 shall survive termination of this
Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the
date first above written.
-30-
VANSTAR FINANCE CO., as Seller
By: /s/ Xxxx X. Xxxxxxx, Xx.
-------------------------------------
Name: Xxxx X. Xxxxxxx, Xx.
Title: Treasurer
Address:
Attention:
---------------------------
Telephone:
---------------------------
Facsimile:
---------------------------
VANSTAR CORPORATION, as Servicer
By: /s/ Xxxx X. Xxxxxxx, Xx.
-------------------------------------
Name: Xxxx X. Xxxxxxx, Xx.
Title: Treasurer
Address:
Attention:
---------------------------
Telephone:
---------------------------
Facsimile:
---------------------------
XXXXXXX XXXXX SECURITIES INC., as Agent
By: /s/ Xxxx X. Xxxxx
-------------------------------------
Name: Xxxx X. Xxxxx
Title: Managing Director
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Executive Vice President
XXXXXXX XXXXX SECURITIES INC.
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention:
Facsimile:
POOLED ACCOUNTS RECEIVABLE CAPITAL
CORPORATION, as Purchaser
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
Pooled Accounts Receivable Capital
Corporation
c/x Xxxxxxxxxxx Contract Services,
Inc.
Xxx Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
---------------------------
Telephone:
---------------------------
Facsimile:
---------------------------
EXHIBIT I
DEFINITIONS
As used in the Agreement (including its Exhibits), the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined). Unless otherwise
indicated, all Section, Annex, Exhibit and Schedule references in this
Exhibit are to Sections of and Annexes, Exhibits and Schedules to the
Agreement.
"ADVERSE CLAIM" means a lien, security interest or other charge or
encumbrance, or any other type of preferential arrangement, it being
understood that a lien, security interest or other charge or encumbrance, or
any other type of preferential arrangement, in favor of the Purchaser shall
not constitute an Adverse Claim.
"AFFECTED PERSON" has the meaning set forth in SECTION 1.8.
"AFFILIATE" means, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by or is under common
control with such Person or is a director or officer of such Person, except
that with respect to the Purchaser, Affiliate shall mean the holder(s) of a
majority of its capital stock.
"AGENT" has the meaning set forth in the preamble to the Agreement.
"APPLICABLE MARGIN" has the meaning set forth in the Fee Letter.
"ASSIGNMENT OF CLAIMS ACT" means the Assignment of Claims Act of
1990 (31 U.S.C. Section 3727 and 41 U.S.C. Section 15), as amended from time
to time.
"ATTORNEY COSTS" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the
I-1
allocated cost of internal legal services and all disbursements of internal
counsel, to be paid as set forth in the Fee Letter.
"AVERAGE DAYS SALES OUTSTANDING" means, as of any day, the quotient
of (a) the sum of (i) the aggregate Outstanding Balance of Pool Receivables
that remain outstanding 0 to 30 days from their respective original invoice
dates TIMES 30; PLUS (i) the aggregate Outstanding Balance of Pool
Receivables that remain outstanding 1 to 30 days from their respective
original due dates TIMES 60; PLUS (iii) the aggregate Outstanding Balance of
Pool Receivables that remain outstanding 31 to 60 days from their respective
original due dates TIMES 90; PLUS (iv) the aggregate Outstanding Balance of
Pool Receivables that remain outstanding 61 to 90 days from their respective
original due dates TIMES 120; PLUS (v) the aggregate Outstanding Balance of
Pool Receivables that remain outstanding 91 to 120 days from their respective
original due dates TIMES 150; PLUS (vi) the aggregate Outstanding Balance of
Pool Receivables that remain outstanding 121 to 150 days from their
respective original due dates TIMES 180; PLUS the aggregate Outstanding
Balance of Pool Receivables that remain outstanding more than 151 days from
their respective original due dates TIMES 210; DIVIDED BY (b) the aggregate
Outstanding Balance of all Pool Receivables.
"AVERAGE MATURITY" means at any time that period of days equal to
the Average Days Sales Outstanding of the Pool Receivables calculated by the
Servicer in the then most recent Servicer Report; PROVIDED, that if such
calculation is not made according to the formula set forth in the definition
of Average Days Sales Outstanding or is incorrectly calculated under such
formula, the Agent may recalculate such Average Maturity, and any such
recalculation in accordance with such formula shall be prima facie evidence
of such Average Maturity.
"BANK OF MONTREAL" means Bank of Montreal, a Canadian chartered
bank.
"BANK RATE" for any Yield Period for any Portion of Investment of
the Participation means an interest rate PER ANNUM equal to the Applicable
Margin above the Eurodollar Rate for such Yield Period; provided, further,
that in the case of
I-2
(i) any Yield Period on or prior to the first day of which the
Agent shall have been notified by a Liquidity Bank or the Purchaser
that the introduction of or any change in or in the interpretation of
any law or regulation makes it unlawful, or any central bank or other
Governmental Authority asserts that it is unlawful, for such Liquidity
Bank or the Purchaser to fund any Portion of Investment (based on the
Eurodollar Rate) set forth above (and such Liquidity Bank or the
Purchaser, as applicable, shall not have subsequently notified the
Agent that such circumstances no longer exist),
(ii) any Yield Period of one to (and including) 13 days,
(iii) any Yield Period as to which the Agent does not receive
notice, by no later than 12:00 noon (Chicago time) on (w) the second
Business Day preceding the first day of such Yield Period that the
Seller desires that the related Portion of Investment be funded at the
CP Rate, (x) the third Business Day preceding the first day of such
Yield Period that the Seller desires that the related Portion of
Investment be funded at the Bank Rate, or (y) the Seller has given the
notice contemplated by clause (w) of this CLAUSE (iii) and the Agent
shall have notified the Seller that funding the related Portion of
Investment at the CP Rate is unacceptable to the Purchaser, or
(iv) any Yield Period relating to a Portion of Investment which
is less than $1,000,000.
the "BANK RATE" for each such Yield Period shall be an interest rate per
annum equal to the Base Rate in effect on each day of such Yield Period.
Notwithstanding the foregoing, the "BANK RATE" for each day in a Yield Period
occurring during the continuance of a Termination Event shall be an interest
rate equal to 1.5% PER ANNUM above the Base Rate in effect on such day.
I-3
"BANKRUPTCY CODE" means the United States Bankruptcy Reform Act of
1978 (11 U.S.C. Section 101, ET SEQ.), as amended from time to time.
"BASE RATE" means for any day, a fluctuating interest rate per annum
as shall be in effect from time to time, which rate shall be at all times equal
to the higher of: (x) the rate of interest most recently announced by Bank of
Montreal at its branch in Chicago, Illinois as its prime commercial rate for
United States loans made in the United States and (y) 0.50% per annum above the
latest Federal Funds Rate.
"BUSINESS DAY" means any day on which (i) both (A) the Agent at its
branch office in Chicago, Illinois is open for business and (B) commercial banks
in New York City are not authorized or required to be closed for business, and
(ii) if this definition of "Business Day" is utilized in connection with the
Eurodollar Rate, dealings are carried out in the London interbank market.
"CAPITAL LEASE" means, with respect to any Person, any lease of (or
other agreement conveying the right to use) any real or personal property by
such Person that, in conformity with generally accepted accounting principles,
is accounted for as a capital lease on the consolidated balance sheet of such
Person.
"CHANGE IN CONTROL" means
(a) the acquisition by any Person (other than Warburg Pincus Capital
Company and its Affiliates), or two or more Persons acting in concert, of
beneficial ownership (within the meaning of Rule 13d-3 of the Securities
and Exchange Commission under the Securities and Exchange Act of 1934) of
37.5% or more of any outstanding shares of voting stock of Vanstar having
ordinary voting power in the election of directors of Vanstar or (ii)
obtain the power (whether or not exercised) to elect a majority of
Vanstar's directors; or
(b) the failure of Vanstar to own, free and clear of all liens or
other encumbrances, at least 100% of the outstanding shares of voting stock
of the Seller, subject to
I-4
the pledge of IBM Credit Corporation under the IBM Financing Agreement.
"CLASS-1 OBLIGOR" means any Obligor (other than a Special Obligor) any
Rated Debt of which has an actual rating (or, if provided in writing to the
Agent by the Rating Agencies, an implied rating) of at least AA- or A-1, as
applicable, by S&P and Aa3 or P-1, as applicable, by Xxxxx'x.
"CLASS-2 OBLIGOR" means any Obligor (other than a Special Obligor or a
Class-1 Obligor) any Rated Debt of which has an actual rating (or, if provided
in writing to the Agent by the Rating Agencies, an implied rating) of at least
A- or A-2, as applicable, by S&P and A3 or P-2, as applicable, by Xxxxx'x.
"CLASS-3 OBLIGOR" means any Obligor (other than a Special Obligor, a
Class-1 Obligor or a Class-2 Obligor) any Rated Debt of which has an actual
rating (or, if provided in writing to the Agent by the Rating Agencies, an
implied rating) of at least BBB- or A-3, as applicable, by S&P and Baa3 or P-2,
as applicable, by Xxxxx'x.
"COLLECTION ACCOUNT" means that certain bank account (x) numbered 099-
0761 maintained at Mellon Bank, N.A. or (y) such other bank approved by the
Agent, in either case, which is (i) identified as the "VANSTAR FINANCE CO.
COLLECTION ACCOUNT," (ii) in the Seller's name, (iii) pledged, on a first-
priority basis, to the Purchaser pursuant to SECTION 1.2(d), and (iv) is
governed by the Collection Account Agreement.
"COLLECTION ACCOUNT AGREEMENT" means a letter agreement, in the form
of EXHIBIT VI to the Agreement, among the Seller, the Agent and the Collection
Account Bank, as the same may be amended, supplemented, amended and restated, or
otherwise modified from time to time in accordance with the Agreement.
"COLLECTION ACCOUNT BANK" means the bank holding the Collection
Account.
"COLLECTION DELAY PERIOD" means 0.5 times the Average Maturity or such
other number of days not exceeding the Average
I-5
Maturity as the Agent may from time to time reasonably select upon three
Business Days' notice to the Seller.
"COLLECTIONS" means, with respect to any Pool Receivable, (a) all
funds which are received by the Seller, an Originator or the Servicer in payment
of any amounts owed in respect of such Pool Receivable (including, without
limitation, purchase price, finance charges, interest and all other charges), or
applied to amounts owed in respect of such Pool Receivable (including, without
limitation, insurance payments and net proceeds of the sale or other disposition
of repossessed goods or other collateral or property of the related Obligor or
any other Person directly or indirectly liable for the payment of such Pool
Receivable and available to be applied thereon), (b) all Collections deemed to
have been received pursuant to SECTION 1.4(e) and (c) all other proceeds of such
Pool Receivable.
"COMMITMENT FEE" has the meaning set forth in the Fee Letter.
"COMPANY NOTE" has the meaning set forth in Section 3.2 of the
Purchase and Contribution Agreement.
"COMPUTATION PERIOD" means any period of four Fiscal quarters ending
on the last day of a Fiscal Quarter.
"CONSOLIDATED NET INCOME" means, with respect to the Originator and
its Subsidiaries for any Period, the net income (or loss) of the Originator and
its Subsidiaries for such period calculated in conformance with generally
accepted accounting principles and as reported on the consolidated financial
statements of Vanstar.
"CONSOLIDATED NET WORTH" means, with respect to any Person, all items
which would be included under stockholders' equity on a consolidated balance
sheet of such Person plus any amounts included on such consolidated balance
sheet in respect of the preferred stock of such Person (except to the extent
that such preferred stock is mandatorily redeemable at the option of the holder
thereof or upon the happening of any contingency on or prior to the scheduled
Facility Termination Date) plus, if such
I-6
Person is Vanstar, any amounts included on such consolidated balance sheet in
respect of the Convertible Preferred Trust Interests.
"CONTRACT" means, with respect to any Pool Receivable, any and all
contracts, understandings, instruments, agreements, leases, invoices, notes, or
other writings pursuant to which such Pool Receivable arises or which evidences
such Pool Receivable or under which an Obligor becomes or is obligated to make
payment in respect of such Pool Receivable.
"CONVERTIBLE PREFERRED TRUST INTERESTS" means the 6 3/4% Trust
Convertible Preferred Securities issued by the Vanstar Financing Trust described
in the Offering Circular dated September 26, 1996.
"CP RATE" for any Yield Period for any Portion of Investment of the
Participation means, to the extent the Purchaser funds such Portion of
Investment for such Yield Period by issuing Notes, a rate PER ANNUM equal to the
sum of (i) the rate (or if more than one rate, the weighted average of the
rates) at which Notes of the Purchaser having a term equal to such Yield Period
and to be issued to fund such Portion of Investment may be sold by any placement
agent or commercial paper dealer selected by the Agent on behalf of the
Purchaser, as agreed between each such agent or dealer and the Agent and
notified by the Agent to the Servicer; PROVIDED, that if the rate (or rates) as
agreed between any such agent or dealer and the Agent with regard to any Yield
Period for such Portion of Investment is a discount rate (or rates), then such
rate shall be the rate (or if more than one rate, the weighted average of the
rates) resulting from converting such discount rate (or rates) to an interest-
bearing equivalent rate per annum, PLUS (ii) the commissions and charges charged
by such placement agent or commercial paper dealer with respect to such Notes,
expressed as a percentage of such face amount and converted to an interest-
bearing equivalent rate PER ANNUM.
"CREDIT AND COLLECTION POLICY" means those receivables credit and
collection policies and practices relating to Product Business Receivables
(other than Excluded Receivables) of the
I-7
Servicer in effect on the date of the Agreement and described in SCHEDULE I
hereto, as modified in compliance with the Agreement.
"DEBT" means (i) indebtedness for borrowed money, (ii) obligations
evidenced by bonds, debentures, notes or other similar instruments, (iii)
obligations to pay the deferred purchase price of property or services, (iv)
obligations as lessee under leases which shall have been or should be, in
accordance with generally accepted accounting principles, recorded as capital
leases, (v) obligations under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of kinds referred to in CLAUSES (i) through (iv) above,
and (vi) liabilities in respect of unfunded vested benefits under plans covered
by Title IV of ERISA.
"DEFAULT RATIO" means the ratio (expressed as a percentage and rounded
upward to the nearest 1/100 of 1%) computed as of the last day of each calendar
month by dividing (i) the sum (without duplication) of (a) the aggregate
Outstanding Balance (without subtracting any amounts in respect of credit
memoranda) of Pool Receivables that were outstanding 121 to 150 days after their
respective original due dates, as determined as of such day PLUS (b) the
aggregate Outstanding Balance of Pool Receivables that were written off as
uncollectible during the calendar month ending on such day and that, if not so
written off, would have been outstanding not more than 150 days after their
respective original due dates, net of recoveries in respect of Pool Receivables
that were previously written off as uncollectible, as determined as of such day
by (ii) the aggregate amount payable pursuant to invoices giving rise to Pool
Receivables that were generated by the Originator during the calendar month that
occurred four calendar months prior to the calendar month ending on such day.
"DEFAULTED RECEIVABLE" means, without duplication, a Pool Receivable:
(i) as to which any payment, or part thereof, remains unpaid for
at least 121 days from the original due date for such payment;
I-8
(ii) as to which the Obligor thereof or any other Person
obligated thereon has taken any action, or suffered any event to
occur, of the type described in PARAGRAPH (g) of EXHIBIT V hereto; or
(iii) which, consistent with the Credit and Collection Policy,
would be written off the Seller's books as uncollectible.
"DELINQUENCY RATIO" means the ratio (expressed as a percentage and
rounded upward to the nearest 1/100 of 1%) computed as of the last day of each
calendar month by dividing (i) the portion of the aggregate Outstanding Balance
(without subtracting any amounts in respect of credit memoranda) of all Pool
Receivables that remained outstanding 31 to 60 days after their respective
original due dates on such day by (ii) the aggregate Outstanding Balance of all
Pool Receivables on such day (without subtracting any amounts in respect of
credit memoranda).
"DELINQUENT RECEIVABLE" means a Pool Receivable which is not a
Defaulted Receivable as to which any payment, or part thereof, remains unpaid
for at least 31 days from the original due date for such payment.
"DESIGNATED EXCLUDED OBLIGOR" means IBM Corporation, Merisel FAB,
their respective Affiliates, and any other Excluded Obligor designated in
writing by the Agent to the Seller and the Servicer as such; it being understood
that no Excluded Obligor shall be a "Designated Excluded Obligor" unless and
until the Originator shall have implemented arrangements satisfactory to the
Agent for collections and other proceeds of all Receivables generated by such
Excluded Obligor to be remitted to an account other than any Lock-Box Account
and shall have taken such other actions and provided such other information as
required by the Agent in connection with such designation.
"DILUTION PERCENTAGE" means the greater of (a) 8% and (b) the Dilution
Reserve Ratio.
"DILUTION RATIO" means, for any calendar month, the ratio (expressed
as a percentage and rounded upwards to the nearest 1/100th of 1%) of (a) the
portion of the aggregate
I-9
Outstanding Balance of all Pool Receivables during such period that have been
reduced or adjusted as a result of any defective, rejected, returned,
repossessed or foreclosed goods or services, or any discount or adjustment
made by the Originator, Seller or Servicer (other than any adjustment
relating to Ineligible Amounts) or any setoff or dispute between the Seller,
Originator or the Servicer and an Obligor, to (b) the aggregate amounts
payable pursuant to invoices giving rise to Pool Receivables that were
generated by the Originator during the preceding calendar month.
"DILUTION RESERVE" for the Participation at any time means an amount
equal to the product of (a) the quotient obtained by dividing (x) the Dilution
Percentage by (y) 1 minus the Dilution Percentage and (b) the sum of the
Investment, the Discount Reserve and the Servicing Fee Reserve at such time.
"DILUTION RESERVE RATIO" means, as calculated as of the last day of
each calendar month, the product (expressed as a percentage) of (a) 1.5,
multiplied by (b) the average of the Dilution Ratios for each of the three
consecutive calendar months ending on such day multiplied by (c) a fraction
having (i) a numerator equal to the aggregate amount of Pool Receivables
generated by the Originator during the calendar month preceding the calendar
month ending on such day and (ii) a denominator equal to the aggregate
Outstanding Balance of all Eligible Receivables, as determined as of such day.
"DISCOUNT" means:
(i) for the Portion of Investment of the Participation for any
Yield Period to the extent the Purchaser will be funding such Portion
of Investment on the first day of such Yield Period through the
issuance of Notes,
CPR x I x ED + TF
--
360
(ii) for the Portion of Investment of the Participation for any
Yield Period to the extent the
I-10
Purchaser will not be funding such Portion of Investment on the first
day of such Yield Period through the issuance of Notes,
ED
--
BR x I x 360 + TF
where:
BR = the Bank Rate for the Portion of Investment of the
Participation for such Yield Period
I = the Portion of Investment of the Participation during such
Yield Period
CPR = the CP Rate for the Portion of Investment of the
Participation for such Yield Period
ED = the actual number of days during such Yield Period
TF = the Termination Fee, if any, for the Portion of Investment
of the Participation for such Yield Period
; PROVIDED, that no provision of the Agreement shall require the payment or
permit the collection of Discount in excess of the maximum permitted by
applicable law; and PROVIDED, FURTHER, that Discount for the Portion of
Investment of the Participation shall not be considered paid by any distribution
to the extent that at any time all or a portion of such distribution is
rescinded or must otherwise be returned for any reason.
"DISCOUNT RESERVE" for the Participation at any time means the sum of
(i) the Termination Discount at such time for the Participation, and (ii) the
then accrued and unpaid Discount for the Participation.
"DIVIDENDS" means any dividend or distribution (in cash or
obligations) on any shares of any class of Seller's capital stock or any
warrants, options or other rights with respect to shares of any class of
Seller's capital stock.
I-11
"ELIGIBLE RECEIVABLES" means, at any time, Pool Receivables:
(i) the Obligor of which is not an Excluded Obligor, is not an
Affiliate of the Seller (unless (x) supported by a letter of credit in
a face amount at least equal to the Outstanding Balance of such
Receivables issued for the benefit of the Liquidity Banks and/or the
Purchaser and in a form acceptable to the Agent and Liquidity Agent
and issued by a financial institution with a short-term unsecured
credit rating of at least A-1/P-1 by the Rating Agencies which is
acceptable to the Agent and the Liquidity Agent or (y) approved by the
Purchaser, the Liquidity Agent and the Rating Agencies), is not
subject to any action of the type described in PARAGRAPH (g) of
EXHIBIT V;
(ii) which are denominated and payable only in U.S. dollars in
the United States;
(iii) which have a stated maturity and which stated maturity is
not more than 60 days after the date on which such Receivable was
generated;
(iv) which arise under a Contract which is in full force and
effect and which is a legal, valid and binding obligation of the
related Obligor, enforceable against such Obligor in accordance with
its terms;
(v) which conform with all applicable laws, rulings and
regulations in effect;
(vi) which are not the subject of any asserted dispute, offset,
hold back defense, Adverse Claim or other claim and which do not arise
from the sale of inventory which is subject to any Adverse Claim
(other than a Permitted IBMCC Claim or a Permitted Inventory Claim);
(vii) which comply with the requirements of the Credit and
Collection Policy and the payment and other terms of the Contract
related to the Receivable are
I-12
consistent with customary terms for the Originator and Product
Business Receivables (other than Excluded Receivables);
(viii) which arise from the sale and delivery of goods or
performance of services in the ordinary course of an Originator's
business;
(ix) which are not subject to any "exchange agreement" with the
Seller or Originator thereof or any contingent performance
requirements of an Originator;
(x) which do not require the consent of the related Obligor to
be sold or assigned;
(xi) which have not been modified or restructured since their
creation, except as permitted pursuant to SECTION 4.2 of the
Agreement;
(xii) in which the Seller owns good and marketable title and
which are freely assignable by the Seller;
(xiii) for which the Purchaser shall have a valid and
enforceable undivided percentage ownership interest, to the extent of
the Participation, and a valid and enforceable first priority
perfected security interest therein and in the Related Security and
Collections with respect thereto, in each case free and clear of any
Adverse Claim;
(xiv) which constitute accounts as defined in the UCC, and which
are not evidenced by instruments or chattel paper;
(xv) which are not Defaulted Receivables or which are not
Receivables the payment of which remains unpaid for more than 90 days
past the original due date for such payment;
(xvi) the Obligor of which is not the Obligor of Defaulted
Receivables in an aggregate amount in excess
I-13
of 20% of the aggregate Outstanding Balance of all Receivables of
such Obligor;
(xvii) which do not constitute "xxxx and hold" receivables; and
(xviii) which do not constitute "re-stocking fee" receivables;
PROVIDED, HOWEVER, that Ineligible Amounts shall be deducted from the Eligible
Receivables of each Obligor when calculating the aggregate Outstanding Balance
of Eligible Receivables.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute of similar import, together
with the regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA also refer to any successor sections.
"ERISA AFFILIATE" shall mean with respect to any Person, at any time,
each trade or business (whether or not incorporated) that would, at the time, be
treated together with such Person as a single employer under Section 4001 of
ERISA or Sections 414(b), (c), (m) or (o) of the Code.
"EURODOLLAR RATE" means, for any Yield Period, an interest rate per
annum (rounded upward to the nearest 1/16th of 1%) determined pursuant to the
following formula:
Eurodollar Rate = LIBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"EURODOLLAR RESERVE PERCENTAGE" means, for any Yield Period, the
maximum reserve percentage (expressed as a decimal, rounded upward to the
nearest 1/100th of 1%) in effect on the date LIBOR for such Yield Period is
determined under regulations issued from time to time by the Federal
Reserve Board for determining the maximum reserve requirement (including
any emergency, supplemental or other
I-14
marginal reserve requirement) with respect to "Eurocurrency" funding
(currently referred to as "Eurocurrency liabilities") having a term
comparable to such Yield Period; and
"LIBOR" means the rate of interest per annum determined by the
Liquidity Agent to be the arithmetic mean (rounded upward to the nearest
1/16th of 1%) of the rates of interest per annum notified to the Liquidity
Agent as the rate of interest at which dollar deposits in the approximate
amount of the Investment associated with such Yield Period would be offered
to major banks in the London interbank market at their request at or about
11:00 a.m. (London time) on the second Business Day prior to the
commencement of such Yield Period.
"EXCLUDED OBLIGOR" means IBM Corporation, Merisel FAB and their
respective Affiliates and any other Obligor, so designated in writing as such by
the Agent in its sole discretion to the Seller, from time to time, it being
understood that from time to time the Agent may revoke its designation of one or
more Obligors as Excluded Obligors by written notice to the Seller.
"EXCLUDED RECEIVABLE" means a Receivable, the related Obligor of which
is a Designated Excluded Obligor.
"EXTENDED MATURITY EXCESS AMOUNT" means, at any time, the amount by
which (A) the aggregate Outstanding Balance of all Extended Maturity Receivables
exceeds (B) 10% of the Outstanding Balance of all Eligible Receivables then in
the Receivables Pool.
"EXTENDED MATURITY RECEIVABLE" means an Eligible Receivable which has
a stated maturity of greater than 30 days after the date on which such
Receivable was generated.
"FACILITY TERMINATION DATE" means the earlier to occur of (x) December
7, 2001, (y) the scheduled termination date of any Program Support Agreement, as
extended from time to time, and (z) the date determined pursuant to SECTION 2.2.
"FEDERAL FUNDS RATE" means, for any period, the PER ANNUM rate set
forth in the weekly statistical release designated
I-15
as H.15(519), or any successor publication, published by the Federal Reserve
Board (including any such successor, "H.15(519)") for such day opposite the
caption "Federal Funds (Effective)". If on any relevant day such rate is not
yet published in H.15(519), the rate for such day will be the rate set forth
in the daily statistical release designated as the Composite 3:30 p.m.
Quotations for U.S. Government Securities, or any successor publication,
published by the Federal Reserve Bank of New York (including any such
successor, the "Composite 3:30 p.m. Quotation") for such day under the
caption "Federal Funds Effective Rate." If on any relevant day the
appropriate rate for such previous day is not yet published in either
H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day will
be the arithmetic mean as determined by the Agent of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York
time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Agent.
"FEDERAL OBLIGOR" means an Obligor that is the United States or any
agency, department or instrumentality thereof.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System, or any entity succeeding to any of its principal functions.
"FEE LETTER" has the meaning set forth in SECTION 1.5.
"FINAL PAYOUT DATE" means 92 days after the date following the
Facility Termination Date on which no Investment or Discount in respect of the
Participation under the Agreement shall be outstanding and all other amounts
payable by the Originator, the Seller or the Servicer to the Purchaser, the
Agent or any other Affected Person under the Transaction Documents shall have
been paid in full.
"FISCAL QUARTER" means a fiscal quarter of a Fiscal Year.
"FISCAL YEAR" means the fiscal year of the Originator and its
Subsidiaries, which period shall be the 12-month period ending on April 30 of
each year.
I-16
"FOREIGN OBLIGOR RECEIVABLE" means an Eligible Receivable the Obligor
of which is not a United States Resident unless (A) such Receivable is backed by
an irrevocable letter of credit issued by a bank or financial institution that
is rated at least "A" by S&P and "A2" by Xxxxx'x or (B) the Obligor of such
Receivable has a rating of at least Investment Grade with respect to its Rated
Debt.
"FOREIGN RECEIVABLE EXCESS AMOUNT" means, at any time, the amount by
which (A) the aggregate Outstanding Balance of all Foreign Obligor Receivables
exceeds (B) 10% of the Outstanding Balance of all Eligible Receivables then in
the Receivables Pool.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any body or entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including without limitation any court, and any Person owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"GOVERNMENT RECEIVABLE EXCESS AMOUNT" means, at any time, the amount
by which (A) the aggregate Outstanding Balance of all Eligible Receivables the
Obligors of which are a government or governmental subdivision or agency exceeds
(B) 10% of the Outstanding Balance of all Eligible Receivables then in the
Receivables Pool.
"IBM FINANCING AGREEMENT" means the Second Amended and Restated
Financing Program Agreement, dated as of April 30, 1995, as amended or otherwise
modified, by and between IBMCC and Vanstar.
"IBMCC" means IBM Credit Corporation, a Delaware corporation.
"INDEMNIFIED AMOUNTS" has the meaning set forth in SECTION 3.1.
"INDEMNIFIED PARTY" has the meaning set forth in SECTION 3.1.
I-17
"INELIGIBLE AMOUNTS" means, with respect to any Pool Receivable, any
amounts outstanding with respect to interest charges, finance charges, "t-
debits", re-stocking fees, "xxxx and hold" amounts, intra-company adjustments,
and charges to suppliers to reflect price protection credit provided to
Obligors.
"INSOLVENCY PROCEEDING" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidations, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; in each case (a) and (b) undertaken under U.S. Federal, state or
foreign law, including the Bankruptcy Code.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement, dated as
of December 20, 1996, among IBMCC, the Agent, the Purchaser, the Seller and
Vanstar, as amended or otherwise modified from time to time.
"INTEREST COVERAGE RATIO" means the ratio of (a) Consolidated Net
Income before deducting Interest Expense and income tax expense for any
Computation Period to (b) Interest Expense for such Computation Period; provided
that for any period prior to the first anniversary of each of the Vanstar IPO,
the issuance of the Convertible Preferred Trust Interests, and the transactions
contemplated by this Agreement and the other Transaction Documents, the Interest
Coverage Ratio for the portion of such period prior to each such anniversary
shall be calculated on a pro forma basis as if the Vanstar IPO, the issuance of
the Convertible Preferred Trust Interests, or the transactions contemplated by
this Agreement and the other Transaction Documents, as applicable, had been
effective during all of such period.
"INTEREST EXPENSE" means for any period the consolidated interest
expense of Vanstar and its Subsidiaries for such period (including all imputed
interest on Capital Leases and before giving effect to any capitalization of
interest but
I-18
excluding amortization of deferred financing costs) excluding any interest
expense of Vanstar pursuant to the Indenture, dates as of October 2, 1996,
between Vanstar and Wilmington Trust Company, as Trustee entered into in
connection with the issuance of the Convertible Preferred Trust Interests, in
each case, calculated in conformity with generally accepted accounting
principles and as reported on the consolidated financial statements of
Vanstar.
"INVESTMENT" means the amount paid to the Seller in respect of the
Participation by the Purchaser pursuant to the Agreement, or such amount divided
or combined in accordance with SECTION 1.7, in each case reduced from time to
time by Collections distributed and applied on account of such Investment
pursuant to SECTION 1.4(d) and increased from time to time by reinvestments
pursuant to SECTION 1.4(b)(ii); PROVIDED, that if such Investment shall have
been reduced by any distribution and thereafter all or a portion of such
distribution is rescinded or must otherwise be returned for any reason, such
Investment shall be increased by the amount of such rescinded or returned
distribution, as though it had not been made.
"INVESTMENT GRADE" means with respect to any Person's Rated Debt, an
actual rating (or, if provided in writing to the Agent by the Rating Agencies,
an implied rating) of at least BBB- or A-3, as applicable, by S&P and Baa3 or
P-3, as applicable, by Xxxxx'x; PROVIDED, that if such Person's Rated Debt is
rated by both S&P and Xxxxx'x, then each Rating Agency shall have given a rating
at least equal to the rating specified above.
"LIQUIDATION ACCOUNT" means that (x) certain bank account numbered
099-1086 maintained at Mellon Bank, N.A. or (y) such other bank approved by the
Agent, in either case, which is (i) identified as the "VANSTAR FINANCE CO.
LIQUIDATION ACCOUNT," (ii) in the Seller's name, (iii) pledged, on a first-
priority basis, to the Purchaser pursuant to SECTION 1.2(d), and (iv) is
governed by the Liquidation Account Agreement.
"LIQUIDATION ACCOUNT AGREEMENT" means a letter agreement, in the form
of EXHIBIT VII to the Agreement, among the Seller, the Agent and the Liquidation
Account Bank, as the same may be amended, supplemented, amended and restated, or
otherwise modified from time to time in accordance with the Agreement.
I-19
"LIQUIDATION ACCOUNT BANK" means the bank holding the Liquidation
Account.
"LIQUIDITY AGENT" means Bank of Montreal in its capacity as Liquidity
Agent pursuant to the Liquidity Agreement.
"LIQUIDITY AGREEMENT" means that certain Liquidity Asset Purchase
Agreement in form and substance satisfactory to the Rating Agencies and the
Agent and entered into among Bank of Montreal, such other financial institutions
as may be parties thereto, Bank of Montreal, as Liquidity Agent, Xxxxxxx Xxxxx,
as servicing agent, and PAR, as amended, amended and restated, supplemented or
otherwise modified from time to time.
"LIQUIDITY BANK" has the meaning set forth in SECTION 5.3(b).
"LOCAL GOVERNMENT OBLIGOR" means an Obligor that is a State or any
agency, department, instrumentality or municipality thereof.
"LOCK-BOX ACCOUNT" means an account maintained at a bank or other
financial institution for the purpose of receiving Collections established
pursuant to SECTION 4.3 and as listed on SCHEDULE II.
"LOCK-BOX AGREEMENT" means an agreement, in substantially the form of
ANNEX A, between the Seller and each Lock-Box Bank.
"LOCK-BOX BANK" means any of the banks or other financial institutions
holding one or more Lock-Box Accounts.
"LOSS PERCENTAGE" means, on any date, the greatest of (i) 3 times the
highest Default Ratio as of the last day of each of the three (3) calendar
months ended immediately preceding such date, (ii) the Loss Reserve Ratio, (iii)
6% and (iv) 3 times the Normal Concentration Percentage.
"LOSS RESERVE" means, for the Participation, on any date, an amount
equal to the product of (a) the quotient obtained by dividing (x) the Loss
Percentage by (y) 1 minus the Loss
I-20
Percentage and (b) the sum of the Investment, the Discount Reserve and the
Servicing Fee Reserve at such time.
"LOSS RESERVE RATIO" means, as calculated as of the last day of each
calendar month, a percentage equal to (a) 1.5 multiplied by (b) the highest
average of the Default Ratios for any three consecutive calendar months that
occurred during the twelve consecutive calendar months ending on such last day,
multiplied by (c) a fraction having (i) a numerator equal to the sum of the
aggregate amount of Pool Receivables generated by the Originator during the four
consecutive calendar months ending on such day and (y) 10% of the sum of the
aggregate amount of Pool Receivables generated by the Originator during the
month which was four months prior to the month ending on such day, and (ii) a
denominator equal to the Net Receivables Pool Balance, as determined as of such
day.
"MATERIAL ADVERSE EFFECT" means, with respect to any event or
circumstance, a material adverse effect on:
(i) the business, assets, or financial condition of the Seller or the
Servicer (if it is the Originator) and its subsidiaries, taken as a whole;
(ii) the ability of the Originator or the Servicer (if it is the
Originator) to perform its obligations under the Transaction Documents to
which it is a party or the performance of any such obligations;
(iii) the validity or enforceability of, or collectibility of amounts
payable under, the Receivables Purchase Agreement or any other Transaction
Document;
(iv) the rights and remedies of the Purchaser, the Agent, any Program
Support Provider or any of their respective Affiliates under the
Receivables Purchase Agreement or any other Transaction Document;
(v) the status, existence, perfection, priority or enforceability of
the Seller's or Purchaser's interest in the Pool Receivables, Related
Rights, or Related Security; or
I-21
(vi) the validity, enforceability or collectibility of the Pool
Receivables.
"XXXXX'X" means Xxxxx'x Investors Services, Inc.
"NET RECEIVABLES POOL BALANCE" means at any time an amount equal to
the excess of (a) the aggregate Outstanding Balances of Eligible Receivables
then in the Receivables Pool MINUS (b) the sum of (i) the aggregate amount by
which the Outstanding Balance of the Eligible Receivables of each Obligor then
in the Receivables Pool (or, if such Obligor is a Supplier Obligor, the Supplier
Obligor Net Amount) exceeds the product of (A) the Permitted Concentration
Percentage for such Obligor multiplied by (B) the aggregate Outstanding Balances
of all Eligible Receivables then in the Receivables Pool, plus (ii) the Extended
Maturity Excess Amount at such time, plus (iii) the Foreign Receivable Excess
Amount at such time, plus (iv) the Government Receivable Excess Amount at such
time.
"NORMAL CONCENTRATION PERCENTAGE" means, at any time, 2%.
"NOTE ISSUER" has the meaning set forth in SECTION 5.3(a).
"NOTES" means short-term promissory notes issued or to be issued by
any Note Issuer (including, without limitation, PAR) to fund its investments in
accounts receivable or other financial assets.
"OBLIGOR" means, with respect to any Receivable, the Person obligated
to make payments pursuant to the Contract relating to such Receivable.
"ORIGINATOR" has the meaning set forth in the Purchase and
Contribution Agreement.
"ORIGINATOR NOTE" has the meaning set forth in Section 1.4 of the
Purchase and Contribution Agreement.
I-22
"OUTSTANDING BALANCE" of any Receivable at any time means the then
outstanding principal balance thereof.
"PAR" has the meaning set forth in the Preamble to this Agreement.
"PARTICIPATION" means, at any time, the undivided percentage ownership
interest in (i) each and every Pool Receivable now existing or hereafter
arising, other than any Pool Receivable that arises on or after the Facility
Termination Date, (ii) all Related Security with respect to such Pool
Receivables, and (iii) all Collections with respect to, and other proceeds of,
such Pool Receivables and Related Security. Such undivided percentage interest
shall be computed as
I + DR + LR + DIR + SFR
-----------------------
NRB
where:
I = the Investment of the Participation at the time of
computation.
DR = the Discount Reserve of the Participation at the time of
computation.
LR = the Loss Reserve of the Participation at the time of
computation.
DIR = the Dilution Reserve of the Participation at the time of the
computation.
SFR = the Servicing Fee Reserve of the Participation at the time
of computation.
NRB = the Net Receivables Pool Balance at the time of computation.
The Participation shall be determined from time to time pursuant to the
provisions of SECTION 1.3.
"PERMITTED INVENTORY CLAIM" means an Adverse Claim in favor of a
supplier of inventory to Originator upon or with
I-23
respect to inventory of Originator and proceeds thereof, but only to the
extent that such supplier has executed a release of its security interest in
form and substance acceptable to the Agent pursuant to which such Adverse
Claim upon or with respect to Pool Receivables, Related Rights, Collections
and proceeds of the foregoing is automatically and irrevocably released upon
each sale, purported sale, contribution, transfer, conveyance or assignment
of such Pool Receivables, Related Rights, Collections and proceeds of the
foregoing by Originator to Seller pursuant to the Purchase and Contribution
Agreement from time to time.
"PERMITTED CONCENTRATION PERCENTAGE" means for any Obligor, at any
time, (i) if such Obligor is a Special Obligor, such percentage as has been so
designated in writing by the Agent to the Seller as the "Permitted Concentration
Percentage" for such Obligor, (ii) if such Obligor is a Class-1 Obligor, 8%,
(iii) if such Obligor is a Class-2 Obligor, 6%, (iv) if such Obligor is a
Class-3 Obligor, 4% and (v) for all other Obligors, the Normal Concentration
Percentage.
"PERMITTED IBMCC CLAIM" means any Adverse Claim in favor of IBMCC to
the extent such claim is permitted pursuant to the Intercreditor Agreement.
"PERMITTED INVESTMENTS" means certificates of deposit that are not
represented by instruments, have a maturity of one week or less and (x) are
rated at least A-1 by S&P and P-1 by Xxxxx'x or (y) are issued by, or maintained
by, the Collection Account Bank or Liquidation Account Bank (with respect to the
investment of funds in the Collection Account or Liquidation Account,
respectively); PROVIDED that such investments are rated at least A-1 by S&P and
P-1 by Xxxxx'x and, if not rated A-1+ by S&P, do not in the aggregate principal
amount exceed 20% of that portion of the Investment that is funded with Notes;
PROVIDED, HOWEVER, that the Agent (on behalf of Purchaser) may, from time to
time, upon three Business Days' prior written notice to Servicer, remove from
the scope of "Permitted Investments" certificates of deposit of any such bank(s)
and specify to be within such scope, certificates of deposit of any other bank;
provided that such bank (or the certificates of deposit issued or maintained by
such bank) meet the requirements set forth above.
I-24
"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, limited liability company or other entity, or a government or any
political subdivision or agency thereof.
"POOL RECEIVABLE" means a Receivable in the Receivables Pool.
"PORTFOLIO CERTIFICATE" means a certificate substantially in the form
of EXHIBIT VIII to the Agreement.
"PORTION OF INVESTMENT" has the meaning set forth in SECTION 1.7. In
addition, at any time when the Investment of the Participation is not divided
into two or more portions, "Portion of Investment" means 100% of the Investment
of the Participation.
"PRODUCT BUSINESS RECEIVABLE" means a Receivable which arises from the
sale to an obligor of (x) personal computers, network products, computer
peripherals and software manufactured or licensed by third parties, (y) product
configuration, distribution, installation, cabling and connectivity services
related to the sales referred to in CLAUSE (x) hereof and (z) services related
to the selection, design, planning and execution of a network project and
training; IT BEING UNDERSTOOD that Product Business Receivables shall not
include any Receivables arising from the provision of ongoing support and
consulting services related to computer networks provided through the "Service
Business" of the Originator unless approved in writing by the Agent.
"PROGRAM FEE" has the meaning set forth in the Fee Letter.
"PROGRAM SUPPORT AGREEMENT" means and includes the Liquidity Agreement
and any other agreement entered into by any Program Support Provider providing
for the issuance of one or more letters of credit for the account of the
Purchaser, the issuance of one or more surety bonds for which the Purchaser is
obligated to reimburse the applicable Program Support Provider for any drawings
thereunder, the sale by the Purchaser to any Program Support Provider of the
Participation (or portions
I-25
thereof) and/or the making of loans and/or other extensions of credit to the
Purchaser in connection with the Purchaser's securitization program, together
with any letter of credit, surety bond or other instrument issued thereunder.
"PROGRAM SUPPORT PROVIDER" means and includes any Liquidity Bank and
any other or additional Person (other than any customer of the Purchaser) now or
hereafter extending credit or having a commitment to extend credit to or for the
account of, or to make purchases from, the Purchaser or issuing a letter of
credit, surety bond or other instrument to support any obligations arising under
or in connection with PAR's securitization program.
"PURCHASE AND CONTRIBUTION AGREEMENT" means the Purchase and
Contribution Agreement, dated as of December 20, 1996, among the Originator and
the Seller, as the same may be modified, supplemented, amended and amended and
restated from time to time in accordance with the Transaction Documents.
"PURCHASE AND CONTRIBUTION TERMINATION EVENT" has the meaning set
forth in Section 8.1 of the Purchase and Contribution Agreement.
"PURCHASE LIMIT" means $175,000,000, as such amount may be reduced
pursuant to SECTION 1.1(b); PROVIDED, HOWEVER, that following the written
request of the Seller, the Purchaser may, in its sole and absolute discretion,
increase the Purchase Limit. References to the unused portion of the Purchase
Limit shall mean, at any time, the Purchase Limit minus the then outstanding
Investment of the Participation under the Agreement.
"PURCHASER" has the meaning set forth in the preamble to the
Agreement.
"PURCHASER'S ACCOUNT" means the special account (account number
0000000) of the Purchaser maintained at the office of Xxxxxx Trust and Savings
Bank in Chicago, Illinois (ABA #071-000288), or such other account as may be so
designated in writing by the Agent to the Seller and the Servicer.
I-26
"RATE VARIANCE FACTOR" means 1.50; PROVIDED, that the "Rate Variance
Factor" may be changed from time to time upon at least five days' prior notice
from the Agent to the Servicer.
"RATED DEBT" means with respect to any Person, (a) the long term
senior unsecured and uncredit-enhanced debt securities of such Person or (b) the
short term senior unsecured and uncredit-enhanced debt securities of such
Person.
"RATING AGENCIES" means Xxxxx'x and S&P.
"RECEIVABLE" means any indebtedness and other obligations owed to the
Originator or Seller or any right of the Seller or Originator to payment from or
on behalf of an Obligor, whether constituting an account, chattel paper,
instrument or general intangible, arising in connection with the sale of goods
or the rendering of services by the Originator or Seller, and includes, without
limitation, the obligation to pay any finance charges, fees and other charges
with respect thereto. Indebtedness and other obligations arising from any one
transaction, including, without limitation, indebtedness and other obligations
represented by an individual invoice or agreement, shall constitute a Receivable
separate from a Receivable consisting of the indebtedness and other obligations
arising from any other transaction.
"RECEIVABLES POOL" means at any time all of the then outstanding
Product Business Receivables other than Excluded Receivables.
"RELATED SECURITY" means, with respect to any Receivable:
(i) all of the Seller's interest in any goods (including
returned goods), and documentation or title evidencing the shipment or
storage of any goods (including returned goods), relating to any sale
giving rise to such Pool Receivable;
(ii) all other security interests or liens and property subject
thereto from time to time purporting to secure payment of such Pool
Receivable, whether
I-27
pursuant to the Contract related to such Pool Receivable or otherwise,
together with all UCC financing statements or similar filings signed
by an Obligor relating thereto; and
(iii) all guaranties, indemnities, insurance and other agreements
(including the related Contract) or arrangements of whatever character
from time to time supporting or securing payment of such Pool
Receivable or otherwise relating to such Pool Receivable whether
pursuant to the Contract related to such Pool Receivable or otherwise.
"RESTRICTED PAYMENTS" has the meaning set forth in clause (o) of
EXHIBIT IV of the Agreement.
"S&P" means Standard and Poor's Ratings Services.
"SELLER" has the meaning set forth in the preamble to the Agreement.
"SERVICER" has the meaning set forth in the preamble to the Agreement.
"SERVICER REPORT" means a report, in substantially the form of ANNEX E
hereto, furnished by the Servicer to the Agent pursuant to the Agreement.
"SERVICER REPORT DATE" means the 15th day of each month, or if such
day is not a Business Day, the next Business Day.
"SERVICING FEE" shall mean the fee referred to in SECTION 4.6.
"SERVICING FEE RESERVE" for the Participation at any time means the
sum of (i) the unpaid Servicing Fee relating to the Participation accrued to
such time, plus (ii) an amount equal to (a) the Outstanding Balance of the
Receivables Pool at the time of computation multiplied by (b) the product of (x)
1.0% times (y) a fraction having the sum of the Average Maturity plus
I-28
the Collection Delay Period (each as in effect at such date) as its numerator
and 360 as its denominator.
"SETTLEMENT PERIOD" for each Portion of Investment means each period
commencing on the first day and ending on the last day of each Yield Period for
such Portion of Investment and, on and after the Termination Date, such period
(including, without limitation, a period of one day) as shall be selected from
time to time by the Agent.
"SOLVENT" means, with respect to any Person, that such Person (i) is
and shall continue to be able to pay all of its liabilities as such liabilities
mature, (ii) does not have unreasonably small capital with which to engage in
its current and in its anticipated business and (iii) is not "insolvent" as such
term is defined in each of the Bankruptcy Code, the Uniform Fraudulent Transfers
Act as from time to time in effect in the applicable jurisdiction, and the
Uniform Fraudulent Conveyances Act as from time to time in effect in the
applicable jurisdiction.
"SPECIAL OBLIGOR" means an Obligor, so designated in writing by the
Agent, and with respect to which each of the Rating Agencies shall have provided
a notice in writing to the Agent to the effect that the inclusion of such
Obligor as a Special Obligor with the proposed Permitted Concentration
Percentage will not result in the downgrading or withdrawal of such Rating
Agencies' current rating of the Notes; it being understood that the Seller may
request from time to time that the Agent designate additional Obligors as
Special Obligors.
"SUBSIDIARY" means, with respect to any Person, a corporation of which
such Person and/or its other Subsidiaries own, directly or indirectly, such
number of outstanding shares as have more than 50% of the ordinary voting power
for the election of directors. Unless the content otherwise requires, each
reference to Subsidiaries herein shall be a reference to Subsidiaries of the
Originator.
"SUPPLIER OBLIGOR" means an Obligor that sells, leases or otherwise
provides goods or services to the Originator.
I-29
"SUPPLIER OBLIGOR NET AMOUNT" means as of any date, for any Supplier
Obligor, the excess of (i) the aggregate Outstanding Balances of all Eligible
Receivables of such Supplier Obligor over (i) the aggregate outstanding amount
owed by the Originator to such Supplier Obligor for goods or services provided
to the Originator by such Supplier Obligor.
"TANGIBLE NET WORTH" means total stockholders' equity minus goodwill,
patents, trade names, trade marks, copyrights, prepaid insurance and prepaid
taxes and such other assets as are properly classified as "intangible assets",
for any corporation as determined in accordance with generally accepted
accounting principals.
"TERMINATION DATE" means the earlier of (i) the Business Day which the
Seller so designates by notice to the Agent at least 30 Business Days in advance
and (ii) the Facility Termination Date.
"TERMINATION DAY" means (i) each day on which the conditions set forth
in SECTION 2 of EXHIBIT II are not satisfied and (ii) each day which occurs on
or after the Termination Date.
"TERMINATION DISCOUNT" means, for the Participation on any date, an
amount equal to the Rate Variance Factor on such date multiplied by the product
of (i) the Investment of the Participation on such date and (ii) the product of
(a) the Base Rate for the Participation plus 2% per annum for a 30-day Yield
Period deemed to commence on such date and (b) a fraction having as its
numerator the greater of (1) two TIMES the Average Maturity (as in effect at
such date) and (2) the Weighted Average CP Maturity and 360 as its denominator.
"TERMINATION EVENT" has the meaning specified in EXHIBIT V.
"TERMINATION FEE" means, for any Yield Period during which a
Termination Day occurs, the amount, if any, by which (i) the additional Discount
(calculated without taking into account any Termination Fee or any shortened
duration of such Yield Period pursuant to CLAUSE (iv) of the definition thereof)
which would have accrued during such Yield Period on the reductions of
I-30
Investment of the Participation relating to such Yield Period had such
reductions remained as Investment, exceeds (ii) the income, if any, received by
the Purchaser from the Purchaser investing the proceeds of such reductions of
Investment, as determined by the Agent, which determination shall be binding and
conclusive for all purposes, absent manifest error.
"TRANSACTION DOCUMENTS" means the Agreement, the Lock-Box Agreements,
the Collection Account Agreement, the Liquidation Account Agreement, the
Purchase and Contribution Agreement and all other certificates, instruments, UCC
financing statements, reports, notices, agreements and documents executed or
delivered under or in connection with the Agreement, in each case as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with the Agreement.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the applicable jurisdiction.
"UNMATURED TERMINATION EVENT" means an event which, with the giving of
notice or lapse of time, or both, would constitute a Termination Event; it being
understood that an event or condition described in PARAGRAPH (e) of EXHIBIT V
shall constitute an "Unmatured Termination Event" during any applicable grace
period described therein.
"VANSTAR IPO" means the initial public offering of the common stock of
Vanstar on March 11, 1996.
"WEIGHTED AVERAGE CP MATURITY" means, as of any day, the REMAINDER of
(a) the SUM of the PRODUCTS obtained by multiplying each Portion of Investment
outstanding which is funded through the issuance of Notes by the number of days
remaining in the Yield Period for such Portion of Investment DIVIDED BY (b) the
aggregate amount of all Portions of Investment then outstanding which are funded
through the issuance of Notes.
"YIELD PERIOD" means, with respect to each Portion of Investment:
(a) initially the period commencing on the date of a purchase
pursuant to SECTION 1.2 and ending such number of
I-31
days as the Seller shall select, subject to the approval of the Agent
pursuant to SECTION 1.2, up to 60 days after such date; and
(b) thereafter each period commencing on the last day of the
immediately preceding Yield Period for any Portion of Investment of the
Participation and ending such number of days (not to exceed 60 days) as the
Seller shall select, subject to the approval of the Agent pursuant to
SECTION 1.2, on notice by the Seller received by the Agent (including
notice by telephone, confirmed in writing) not later than noon (Chicago
time) on such last day, EXCEPT that if the Agent shall not have received
such notice or approved such period on or before noon (Chicago time) on
such last day, such period shall be one day; PROVIDED, that
(i) any Yield Period in respect of which Discount is computed by
reference to the Bank Rate shall be a period from one to and including
60 days;
(ii) any Yield Period (other than of one day) which would
otherwise end on a day which is not a Business Day shall be extended
to the next succeeding Business Day; PROVIDED, HOWEVER, if Discount in
respect of such Yield Period is computed by reference to the
Eurodollar Rate, and such Yield Period would otherwise end on a day
which is not a Business Day, and there is no subsequent Business Day
in the same calendar month as such day, such Yield Period shall end on
the next preceding Business Day;
(iii) in the case of any Yield Period of one day, (A) if such
Yield Period is the initial Yield Period for a purchase pursuant to
SECTION 1.2, such Yield Period shall be the day of purchase of the
Participation; (B) any subsequently occurring Yield Period which is
one day shall, if the immediately preceding Yield Period is more than
one day, be the last day of such immediately preceding Yield Period,
and, if the immediately preceding Yield Period is one day, be the day
next following such immediately preceding Yield Period; and (C) if
such Yield Period
I-32
occurs on a day immediately preceding a day which is not a Business
Day, such Yield Period shall be extended to the next succeeding
Business Day; and
(iv) in the case of any Yield Period for any Portion of
Investment of the Participation which commences before the Termination
Date and would otherwise end on a date occurring after the Termination
Date, such Yield Period shall end on such Termination Date and the
duration of each Yield Period which commences on or after the
Termination Date shall be of such duration as shall be selected by the
Agent.
OTHER TERMS. All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting principles. All
terms used in Article 9 of the UCC in the State of New York, and not
specifically defined herein, are used herein as defined in such Article 9.
Unless the context otherwise requires, "or" means "and/or," and "including" (and
with correlative meaning "include" and "includes") means including without
limiting the generality of any description preceding such term.
I-33
EXHIBIT II
CONDITIONS OF PURCHASES
1. CONDITIONS PRECEDENT TO INITIAL PURCHASE. The initial purchase
under the Agreement is subject to the conditions precedent that the Agent shall
have received on or before the date of such purchase the following, each in form
and substance (including the date thereof) satisfactory to the Agent:
(a) A counterpart of this Agreement and the other Transaction
Documents duly executed by the parties thereto, together with each of the
closing documents required to be delivered under any Transaction Document.
(b) Certified copies of (i) the resolutions of the Board of Directors
of each of the Seller, the Servicer, and any Originator authorizing the
execution, delivery, and performance by the Seller, the Servicer and any
Originator of the Agreement and the other Transaction Documents, (ii) all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to the Agreement and the other Transaction
Documents and (iii) the certificate of incorporation and by-laws of the Seller,
the Servicer, and any Originator.
(c) A certificate of the Secretary or Assistant Secretary of the
Seller, the Servicer, and any Originator certifying the names and true
signatures of the officers of the Seller, the Servicer, and any Originator
authorized to sign the Agreement and the other Transaction Documents. Until the
Agent receives a subsequent incumbency certificate from the Seller, the
Servicer, and any other Originator in form and substance satisfactory to the
Agent, the Agent shall be entitled to rely on the last such certificate
delivered to it by the Seller, the Servicer, and any Originator.
(d) Acknowledgment copies, or time-stamped receipt copies of proper
financing statements, duly filed on or before the date of such initial purchase
under the UCC or any comparable law of all jurisdictions that the Agent may deem
necessary or
II-1
desirable in order to perfect the interests of the Purchaser contemplated by
the Agreement and other Transaction Documents.
(e) Acknowledgment copies, or time-stamped receipt copies of proper
financing statements, if any, necessary to release all security interests and
other rights of any Person in the Pool Receivables, Contracts or Related
Security previously granted by the Seller.
(f) Completed UCC requests for information, dated on or before the
date of such initial purchase, listing the financing statements referred to in
SUBSECTION (e) above and all other effective financing statements filed in the
jurisdictions referred to in SUBSECTION (e) above that name the Seller or any
Originator as debtor, together with copies of such other financing statements
(none of which shall cover any Pool Receivables, Contracts or Related Security),
and similar search reports with respect to federal tax liens and liens of the
Pension Benefit Guaranty Corporation in such jurisdictions as the Agent may
request, showing no such liens on any of the Pool Receivables, Contracts or
Related Security.
(g) Copies of executed (i) Lock-Box Agreements with the Lock-Box
Banks, (ii) the Collection Account Agreement with the Collection Account Bank,
and (iii) the Liquidation Account Agreement with the Liquidation Account Bank.
(h) Favorable opinions of Xxxxx & Xxxxxx, counsel for the Seller,
substantially in the form of Annex C hereto and as to corporate and such other
matters as the Agent may reasonably request.
(i) Favorable opinions of Xxxxx & Xxxxxx, counsel for the Seller,
substantially in the form of Annex D and as to bankruptcy matters.
(j) Servicer Report representing the performance of the portfolio
purchased through the Purchase and Contribution Agreement and the Agreement for
the month prior to closing.
(k) Evidence (i) of the execution and delivery by each of the parties
thereto of the Purchase and Contribution Agreement
II-2
and all documents, agreements and instruments contemplated thereby (which
evidence shall include copies, either original or facsimile, of each of such
documents, instruments and agreements), (ii) that each of the conditions
precedent to the execution and delivery of the Purchase and Contribution
Agreement has been satisfied to the Administrator's satisfaction, and (iii)
that the initial purchases under the Purchase and Contribution Agreement have
been consummated.
(l) Evidence of payment by the Seller of all accrued and unpaid fees
(including those contemplated by the Fee Letter), costs and expenses to the
extent then due and payable on the date thereof, together with Attorney Costs of
the Agent to the extent invoiced prior to or on such date, plus such additional
amounts of Attorney Costs as shall constitute the Agent's reasonable estimate of
Attorney Costs incurred or to be incurred by it through the closing proceedings;
including any such costs, fees and expenses arising under or referenced in
SECTION 5.4.
(m) The Fee Letter between the Seller and the Agent contemplated by
SECTION 1.5.
(n) Good standing certificates with respect to each of the Seller,
the Servicer and Originator issued by the Secretaries of the States of Delaware
and each other jurisdiction where the nature of its business requires it to be
so qualified and where the failure to so qualify would be reasonably expected to
have a Material Adverse Effect.
(o) Letters from the Rating Agencies confirming in effect that the
existing ratings of the Notes will remain in effect after giving effect to the
transactions contemplated hereby.
(p) An Intercreditor Agreement, duly executed by the Purchaser, the
Agent and IBM Credit Corporation.
(q) Releases of security interests in form and substance acceptable
to the Agent executed by each of the following suppliers of inventory to
Originator: (i) Compaq Computer Corporation, (ii) Hewlett Packard Company (iii)
Apple Computers Inc. and (iv) IBM Corporation.
II-3
(r) Such other approvals, opinions or documents as the Agent may
reasonably request.
2. CONDITIONS PRECEDENT TO ALL PURCHASES AND REINVESTMENTS. Each
purchase (including the initial purchase) and each reinvestment shall be subject
to the further conditions precedent that:
(a) in the case of each purchase, the Servicer shall have delivered
to the Agent on or prior to such purchase, in form and substance satisfactory to
the Agent, a completed Servicer Report with respect to the immediately preceding
calendar month, dated within 4 days prior to the date of such purchase together
with a listing by Obligor of all Pool Receivables and such additional
information as may reasonably be requested by the Agent;
(b) on the date of such purchase or reinvestment the following
statements shall be true (and acceptance of the proceeds of such purchase or
reinvestment shall be deemed a representation and warranty by the Seller that
such statements are then true):
(i) the representations and warranties contained in EXHIBIT III
are true and correct on and as of the date of such purchase or reinvestment
as though made on and as of such date; and
(ii) in the case of each purchase, no event has occurred and is
continuing, or would result from such purchase, that constitutes a
Termination Event or an Unmatured Termination Event; and
(iii) in the case of each reinvestment, no event has occurred
and is continuing, or would result from such reinvestment that constitutes
(x) any Termination Event or (y) an Unmatured Termination Event under
CLAUSE (g) or (i) of EXHIBIT V to the Receivables Purchase Agreement; and
(iv) the Termination Date has not occurred; and
II-4
(c) the Agent shall have received such other approvals, opinions or
documents as it may reasonably request and which the Seller or the Servicer can
provide without unreasonable burden or expense.
II-5
EXHIBIT III
REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents
and warrants as follows:
(a) The Seller is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, and is duly
qualified to do business, and is in good standing, as a foreign corporation in
every jurisdiction where the nature of its business requires it to be so
qualified and where the failure to so qualify would be reasonably expected to
have a Material Adverse Effect.
(b) The execution, delivery and performance by the Seller of the
Agreement and the other Transaction Documents to which each is a party,
including the Seller's use of the proceeds of purchases and reinvestments, (i)
are within the Seller's corporate powers, (ii) have been duly authorized by all
necessary corporate action, (iii) do not contravene or result in a default under
or conflict with (1) the Seller's charter or by-laws, (2) any law, rule or
regulation applicable to the Seller, (3) any contractual restriction binding on
or affecting the Seller or its property or (4) any order, writ, judgment, award,
injunction or decree binding on or affecting the Seller or its property, and
(iv) do not result in or require the creation of any Adverse Claim upon or with
respect to any of its properties. The Agreement and the other Transaction
Documents to which it is a party have been duly executed and delivered by the
Seller.
(c) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority or other Person is required for the
due execution, delivery and performance by the Seller of the Agreement or any
other Transaction Document to which it is a party other than (x) those
previously obtained or UCC filings and (y) in respect of enforceability against
(1) a Federal Obligor, any filings required under the Assignment of Claims Act
and (2) a Local
III-1
Government Obligor, any filings required by any applicable state or local
Governmental Authority.
(d) Each of the Agreement and the other Transaction Documents to
which it is a party constitutes the legal, valid and binding obligation of the
Seller enforceable against the Seller in accordance with its terms except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditor's rights generally and by
general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
(e) Since its date of formation, there has been no change in the
business, operations, property or financial or other condition or operations of
the Seller, the ability of the Seller to perform its obligations under the
Agreement or the other Transaction Documents to which it is a party or the
collectibility of the Pool Receivables, or which affects the legality, validity
or enforceability of the Agreement or the other Transaction Documents, in any
case, which would be reasonably expected to have a Material Adverse Effect.
(f) There is no pending or threatened action or proceeding affecting
the Seller before any Governmental Authority or arbitrator which would
reasonably be expected to have a Material Adverse Effect.
(g) The Seller is the legal and beneficial owner of the Pool
Receivables and Related Security, free and clear of any Adverse Claim; upon each
purchase or reinvestment, the Purchaser shall acquire a valid and enforceable
perfected undivided percentage ownership interest, to the extent of the
Participation, in each Pool Receivable then existing or thereafter arising and
in the Related Security and Collections and other proceeds, with respect
thereto, free and clear of any Adverse Claim; the Agreement creates a security
interest in favor of the Purchaser in the items described in SECTION 1.2(d), and
the Purchaser has a first priority perfected security interest in such items,
free and clear of any Adverse Claims. No effective financing statement or other
instrument similar in effect covering any Contract or any Pool Receivable or the
Related
III-2
Security or Collections with respect thereto or any Lock-Box Account is on
file in any recording office, except those filed in favor of the Purchaser
relating to the Agreement.
(h) Each Servicer Report, information, exhibit, financial statement,
document, book, record or report furnished or to be furnished at any time by or
on behalf of the Seller to the Agent in connection with the Agreement is or will
be accurate in all material respects as of its date or (except as otherwise
disclosed to the Agent at such time) as of the date so furnished, and no such
item contains or will contain any untrue statement of a material fact or omits
or will omit to state a material fact necessary in order to make the statements
contained therein, in the light of the circumstances under which they were made,
not misleading.
(i) The principal place of business and chief executive office (as
such terms are used in the UCC) of the Seller and the office where the Seller
keeps its records concerning the Pool Receivables are located at the address
referred to in PARAGRAPH (b) of EXHIBIT IV.
(j) The names and addresses of all the Lock-Box Banks, together with
the account numbers of the Lock-Box Accounts of the Seller at such Lock-Box
Banks, are specified in SCHEDULE II to the Agreement (or at such other Lock-Box
Banks and/or with such other Lock-Box Accounts as have been notified to the
Agent in accordance with the Agreement) and all Lock-Box Accounts are subject to
Lock-Box Agreements. All Obligors have been directed to make all payment with
respect to each Contract to a Lock-Box Account.
(k) The Seller is not in violation of any order of any court,
arbitrator or Governmental Authority.
(l) Neither the Seller nor any Affiliate of the Seller has any direct
or indirect ownership or other financial interest in the Purchaser.
(m) Each Pool Receivable included as an Eligible Receivable in the
calculation of the Net Receivables Pool Balance is an Eligible Receivable as of
the date of such calculation.
III-3
(n) No event has occurred and is continuing, or would result from a
purchase in respect of, or reinvestment in respect of, the Participation or from
the application of the proceeds therefrom, which constitutes a Termination
Event.
(o) The Seller (and the Servicer) have complied in all material
respects with the Credit and Collection Policy with regard to each Pool
Receivable.
(p) The Seller has complied with all of the terms, covenants and
agreements contained in the Agreement and the other Transaction Documents and
applicable to it.
(q) The Seller's complete corporate name is set forth in the preamble
to the Agreement, and the Seller does not use and has not during the last six
years used any other corporate name, trade name, doing-business name or
fictitious name, except as set forth on SCHEDULE III and except for names first
used after the date of the Agreement and set forth in a notice delivered to the
Agent pursuant to PARAGRAPH (l)(ix) of EXHIBIT IV.
(r) The authorized capital stock of Seller consists of 1000 shares of
common stock, without par value, 100 shares of which are currently issued and
outstanding. All of such outstanding shares are validly issued, fully paid and
nonassessable and are owned (beneficially and of record) by Vanstar, subject to
a pledge to IBM Credit Corporation under the IBM Financing Agreement.
(s) Seller has filed all federal and other tax returns and reports
required by law to have been filed by it and has paid all taxes and governmental
charges thereby shown to be owing.
(t) The Seller is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
B. REPRESENTATIONS AND WARRANTIES OF THE SERVICER. The Servicer
represents and warrants as follows:
(a) The Servicer is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, and is duly
qualified to do business, and is in good
III-4
standing, as a foreign corporation in every jurisdiction where the nature of
its business requires it to be so qualified and where the failure to so
qualify would be reasonably expected to have a Material Adverse Effect.
(b) The execution, delivery and performance by the Servicer of the
Agreement and the other Transaction Documents to which it is a party, (i) are
within the Servicer's corporate powers, (ii) have been duly authorized by all
necessary corporate action, (iii) do not contravene or result in a default under
or conflict with (1) the Servicer's charter or by-laws, (2) any law, rule or
regulation applicable to the Servicer, (3) any contractual restriction binding
on or affecting the Servicer or its property or (4) any order, writ, judgment,
award, injunction or decree binding on or affecting the Servicer or its
property, and (iv) do not result in or require the creation of any Adverse Claim
upon or with respect to any of its properties. The Agreement and the other
Transaction Documents to which it is a party have been duly executed and
delivered by the Servicer.
(c) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority or other Person is required for the
due execution, delivery and performance by the Servicer of the Agreement or any
other Transaction Document to which it is a party.
(d) Each of the Agreement and the other Transaction Documents to
which it is a party constitutes the legal, valid and binding obligation of the
Servicer enforceable against the Servicer in accordance with its terms except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditor's rights generally and by
general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
(e) The consolidated balance sheets of the Servicer and its
subsidiaries as at April 30, 1996, a copy of which has been furnished to the
Agent, fairly presents the financial condition of the Servicer and its
subsidiaries, as at such date, and the consolidated balance sheets of the
Servicer and its subsidiaries as at July 31, 1996, a copy of which has been
III-5
delivered to the Agent, fairly presents the financial condition of the Servicer
and its subsidiaries as at such date, and since April 30, 1996 there has been no
change in the ability of the Servicer to perform its obligations under the
Agreement or the other Transaction Documents to which it is a party or the
collectibility of the Pool Receivables, or which affects the legality, validity
or enforceability of the Agreement or the other Transaction Documents which
would be reasonably expected to have a Material Adverse Effect.
(f) There is no pending or threatened action or proceeding affecting
the Servicer before any Governmental Authority or arbitrator which would be
reasonably expected to have a Material Adverse Effect.
(g) The Servicer has complied in all material respects with the
Credit and Collection Policy with regard to each Pool Receivable.
III-6
EXHIBIT IV
COVENANTS
COVENANTS OF THE SELLER AND THE SERVICER. Until the latest of the Facility
Termination Date, the date on which no Investment of or Discount in respect of
the Participation shall be outstanding or the date all other amounts owed by the
Seller under the Agreement to the Purchaser, the Agent and any other Indemnified
Party or Affected Person shall be paid in full:
(a) COMPLIANCE WITH LAWS, ETC. Each of the Seller and the Servicer
shall comply with all applicable laws, rules, regulations and orders, and
preserve and maintain its corporate existence, rights, franchises,
qualifications, and privileges except to the extent that the failure so to
comply with such laws, rules and regulations or the failure so to preserve and
maintain such existence, rights, franchises, qualifications, and privileges
would not be reasonably expected to have a Material Adverse Effect.
(b) OFFICES, RECORDS AND BOOKS OF ACCOUNT, ETC. The Seller (i) shall
keep its principal place of business and chief executive office (as such terms
are used in the UCC) at the address of the Seller set forth under its name on
the signature page to the Agreement and each of the Seller and the Servicer
shall keep the offices where it keeps its records concerning the Pool
Receivables at the addresses set forth in SCHEDULE IV hereto or, upon at least
60 days' prior written notice of a proposed change to the Agent, at any other
locations in jurisdictions where all actions reasonably requested by the Agent
to protect and perfect the interest of the Purchaser in the Pool Receivables and
related items (including without limitation the items described in SECTION
1.2(d)) have been taken and completed and (ii) shall provide the Agent with at
least 60 days' written notice prior to making any change in the Seller's name or
making any other change in the Seller's identity or corporate structure
(including a merger) which could render any UCC financing statement filed in
connection with this Agreement "seriously misleading" as such term is used in
the UCC; each notice to the Agent pursuant to this sentence shall set forth the
applicable
IV-1
change and the effective date thereof. The Servicer, on behalf of the
Seller, also will maintain and implement administrative and operating
procedures (including, without limitation, an ability to recreate records
evidencing Pool Receivables and related Contracts in the event of the
destruction of the originals thereof), and keep and maintain all documents,
books, records, computer tapes and disks and other information reasonably
necessary or advisable for the collection of all Pool Receivables (including,
without limitation, records adequate to permit the daily identification of
each Pool Receivable and all Collections of and adjustments to each existing
Pool Receivable).
(c) PERFORMANCE AND COMPLIANCE WITH CONTRACTS AND CREDIT AND
COLLECTION POLICY. The Seller shall, at its expense, (or shall cause the
Servicer on its behalf, to) timely and fully perform and comply with all
material provisions, covenants and other promises required to be observed by it
under the Contracts related to the Pool Receivables, and timely and fully comply
in all material respects with the Credit and Collection Policy with regard to
each Pool Receivable and the related Contract except to the extent that all such
failures to comply therewith would not be reasonably expected to have a Material
Adverse Effect.
(d) OWNERSHIP INTEREST, ETC. The Seller shall, at its expense, take
all action necessary or desirable to establish and maintain a valid and
enforceable undivided ownership interest, to the extent of the Participation, in
the Pool Receivables and the Related Security and Collections and other proceeds
with respect thereto, and a first priority perfected security interest in the
items described in SECTION 1.2(d), in each case free and clear of any Adverse
Claim, in favor of the Purchaser, including, without limitation, taking such
action to perfect, protect or more fully evidence the interest of the Purchaser
under the Agreement as the Purchaser, through the Agent, may request.
(e) SALES, LIENS, ETC. Except as provided in PARAGRAPHS (i) AND (j)
of this EXHIBIT IV, the Seller 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 with respect to, any or all of its right, title or interest in, to
or under, any item described in SECTION 1.2(d) (including without limitation the
Seller's undivided interest in any Pool
IV-2
Receivable, Related Security, or Collections, or upon or with respect to any
account to which any Collections of any Pool Receivables are sent), or assign
any right to receive income in respect of any items contemplated by this
PARAGRAPH (e).
(f) EXTENSION OR AMENDMENT OF RECEIVABLES. Except as provided in the
Agreement, neither the Seller nor the Servicer shall extend the maturity or
adjust the Outstanding Balance or otherwise modify the terms of any Pool
Receivable, or amend, modify or waive any term or condition of any related
Contract (which term or condition relates to payments under, or the enforcement
of, such Contract).
(g) CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. Neither the
Seller nor the Servicer shall make any material change in the character of its
business or in the Credit and Collection Policy that would (i) adversely affect
the collectibility of the Receivables Pool, (ii) create a material defense to
the payment of any Pool Receivable in the Receivables Pool or (iii) adversely
affect the credit criteria used in approving customers that are potential
Obligors of Product Business Receivables. Neither the Seller nor the Servicer
shall make any other change in the Credit and Collection Policy without the
prior written consent of the Agent if such change would be reasonably expected
to have a Material Adverse Effect.
(h) AUDITS. (i) At any time and from time to time (but not more than
three audits during any calendar year during the term of this Agreement and so
long as no Termination Event has occurred and is continuing shall be paid for by
Seller) during regular business hours, upon reasonable prior notice, permit the
Agent, or its agents or representatives, (A) to examine, audit and make copies
of and abstracts from all books, records and documents (including, without
limitation, computer tapes and disks) in the possession or under the control of
the Seller or the Servicer relating to the Pool Receivables and Related
Security, including, without limitation, the related Contracts and other
agreements related thereto, and (B) to visit offices and properties of the
Seller and the Servicer for the purpose of examining such materials described in
the foregoing CLAUSE (A) and discussing matters relating to the Pool Receivables
and Related Security or the Seller's or Servicer's
IV-3
performance hereunder or under the Contracts with any of the officers or
employees of the Seller or the Servicer having knowledge of such matters; and
(ii) without limiting the provisions of CLAUSE (i) next above, from time to
time on request of the Agent, permit certified public accountants or other
auditors acceptable to the Agent to conduct a review of its books and records
with respect to the Pool Receivables and Related Security.
(i) CHANGE IN LOCK-BOX BANKS, LOCK-BOX ACCOUNTS AND PAYMENT
INSTRUCTIONS TO OBLIGORS. Neither the Seller nor the Servicer shall add or
terminate any bank as a Lock-Box Bank or any account as a Lock-Box Account from
those listed in Schedule II to the Agreement, or make any change in its
instructions to Obligors regarding payments to be made to the Seller or the
Servicer or payments to be made to any Lock-Box Account (or related post office
box), unless the Agent shall have consented thereto in writing and the Agent
shall have received copies of all agreements and documents (including without
limitation Lock-Box Agreements) that it may request in connection therewith.
(j) DEPOSITS TO LOCK-BOX ACCOUNTS. The Seller shall, or shall cause
the Servicer to, (i) instruct all Obligors to make payments of all Pool
Receivables to one or more Lock-Box Accounts or to post office boxes to which
only Lock-Box Banks have access (and shall instruct the Lock-Box Banks to cause
all items and amounts relating to such Pool Receivables received in such post
office boxes to be removed and deposited into a Lock-Box Account on a daily
basis), and (ii) deposit, or cause to be deposited, any Collections of Pool
Receivables received by it or the Servicer into Lock-Box Accounts not later than
one Business Day after receipt thereof. Each Lock-Box Account, the Collection
Account and the Liquidation Account shall at all times be subject to a Lock-Box
Agreement, Collection Account Agreement or Liquidation Account Agreement,
respectively. Neither the Seller nor the Servicer will deposit or otherwise
credit, or cause or permit to be so deposited or credited, to any Lock-Box
Account cash or cash proceeds other than Collections of Pool Receivables; it
being understood that misapplied collections shall be remitted as set forth
under SECTION 4.2(b).
IV-4
(k) MARKING OF RECORDS. At its expense, each of the Servicer and the
Seller (or the Servicer on its behalf) shall xxxx its master data processing
records relating to Pool Receivables and related Contracts, including with a
legend evidencing that the undivided percentage ownership interests with regard
to the Participation related to such Pool Receivables and related Contracts have
been sold in accordance with the Agreement.
(l) REPORTING REQUIREMENTS. The Seller or the Servicer, as
applicable, will provide to the Agent (in multiple copies, if requested by the
Agent) the following:
(i) as soon as available and in any event within 45 days after
the end of the first three quarters of each fiscal year of the Seller,
consolidated balance sheets of the Seller as of the end of such quarter and
statements of income, retained earnings and cash flows of the Seller for
the period commencing at the end of the previous fiscal year and ending
with the end of such quarter, certified by the chief financial officer of
the Seller;
(ii) as soon as available and in any event within 90 days after
the end of each fiscal year of the Seller, a copy of the annual report for
such year for the Seller, containing financial statements for such year
audited by Ernst & Young, LLP or other independent certified public
accountants acceptable to the Agent;
(iii) as soon as available and in any event within 45 days after
the end of the first three quarters of each fiscal year of the Servicer, (a)
consolidated balance sheets of the Servicer and its subsidiaries as of the end
of such quarter and statements of income, retained earnings and cash flows of
the Servicer and its subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, in each case,
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission then in effect for preparation of a Form 10-Q, and (b) a
compliance certificate setting forth a calculation of the financial ratios
referred to in CLAUSES (l) and (m) of EXHIBIT V and verifying
IV-5
compliance therewith, each certified by the chief financial officer of the
Servicer;
(iv) as soon as available and in any event within 90 days after
the end of each fiscal year of the Servicer, (a) a copy of the annual report for
such year for the Servicer and its subsidiaries, containing financial statements
for such year prepared in accordance with the rules and regulations of the
Securities and Exchange Commission then in effect for preparation of a Form
10-K, audited by Ernst & Young, LLP or other independent certified public
accountants acceptable to the Agent, and (b) a compliance certificate setting
forth a calculation of the financial ratios referred to in CLAUSES (l) and (m)
of EXHIBIT V and verifying compliance therewith, each certified by the chief
financial officer of Vanstar;
(v) as soon as available and in any event no later than the last
Business Day of each week, a weekly Portfolio Certificate;
(vi) as soon as available and in any event not later than the
Servicer Report Date, a Servicer Report as of the calendar month ended
immediately prior to such Servicer Report Date;
(vii) as soon as possible and in any event within three Business
Days after the Seller or Servicer has knowledge (or a reasonable
expectation) of the occurrence of each Termination Event or Unmatured
Termination Event, a statement of the chief financial officer of the Seller
(in the case of such event primarily related to the Seller) and the chief
financial officer of Vanstar (in all other cases) setting forth details of
such Termination Event or event and the action that the Seller or Vanstar,
as applicable, has taken and proposes to take with respect thereto;
(viii) promptly after the filing or receiving thereof, copies of
all reports and notices that the Seller or any Affiliate files under ERISA
with the Internal Revenue Service or the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or that the Seller or any
Affiliate receives from any of the foregoing or from any multiemployer
IV-6
plan (within the meaning of Section 4001(a)(3) of ERISA) to which the
Seller or any Affiliate is or was, within the preceding five years, a
contributing employer, in each case in respect of the assessment of
withdrawal liability or an event or condition which would be reasonably
expected to have, in the aggregate, result in the imposition of
liability on the Seller and/or any such Affiliate in excess of $100,000;
(ix) at least thirty days prior to any change in the Seller's
name or any other change requiring the amendment of UCC financing
statements, a notice setting forth such changes and the effective date
thereof;
(x) promptly after the sending or filing thereof, copies of all
financial reports that Vanstar sends to any of its public security holders,
and copies of all reports (without exhibits) on forms 10-K, 10-Q or 8-K and
all proxy statements and all registration statements that Vanstar files
with the Securities and Exchange Commission or any national securities
exchange (unless otherwise provided pursuant to any other clause of this
PARAGRAPH (l));
(xi) such other information respecting the Pool Receivables
(including a Servicer's Report on a more frequent basis than provided in
CLAUSE (vi) above) or the condition or operations, financial or otherwise,
of the Seller, the Servicer, Originator or any of their respective
Affiliates as the Agent may from time to time reasonably request;
(xii) promptly after the Seller or Servicer obtains knowledge
thereof, notice of any (a) litigation, investigation or proceeding which
may exist at any time between the Seller, the Servicer or any Originator,
on the one hand, and any Governmental Authority which, if not cured or if
adversely determined, as the case may be, would be reasonably expected to
have a Material Adverse Effect or, (b) litigation or proceeding adversely
affecting the Seller, the Servicer or any of its subsidiaries, or any
Originator, as the case may be, in which the amount involved is $100,000 or
more and not covered by insurance or for which adequate
IV-7
reserves are not maintained on the financial statements of such Person
or the consolidated balance sheet of Vanstar or in which injunctive or
similar relief is sought or (c) litigation or proceeding relating to any
Transaction Document; and
(xiii) promptly after the occurrence thereof, notice of a change
in the business, operations, property or financial or other condition of
the Seller which could be reasonably expected to have a Material Adverse
Effect.
(m) SEPARATE CORPORATE EXISTENCE. Each of the Seller and the Servicer
hereby acknowledges that Purchaser and the Agent are entering into the
transactions contemplated by the Agreement and the Transaction Documents in
reliance upon the Seller's identity as a legal entity separate from the Servicer
and the Originator. Therefore, from and after the date hereof, the Seller and
the Servicer shall take all reasonable steps to continue the Seller's identity
as a separate legal entity and to make it apparent to third Persons that the
Seller is an entity with assets and liabilities distinct from those of the
Servicer, the Originator and any other Person, and is not a division of the
Servicer or the Originator or any other Person. Without limiting the generality
of the foregoing and in addition to and consistent with the covenant set forth
in PARAGRAPH (a) of this EXHIBIT IV, the Seller and the Servicer shall take such
actions as shall be required in order that:
(i) The Seller will be a limited purpose corporation whose
primary activities are restricted in its certificate of incorporation to
purchasing Receivables from the Originator, entering into agreements for
the servicing of such Receivables, selling undivided interests in such
Receivables and conducting such other activities as it deems necessary or
appropriate to carry out its primary activities;
(ii) Not less than one member of Seller's Board of Directors
(the "INDEPENDENT DIRECTORS") shall be individuals who are not direct,
indirect or beneficial stockholders, officers, directors, employees,
affiliates, associates, customers or suppliers of the Originator or any
IV-8
of its Affiliates. The Seller's Board of Directors shall not approve,
or take any other action to cause the commencement of a voluntary case
or other proceeding with respect to the Seller under any applicable
bankruptcy, insolvency, reorganization, debt arrangement, dissolution or
other similar law, or the appointment of or taking possession by, a
receiver, liquidator, assignee, trustee, custodian, or other similar
official for the Seller unless in each case the Independent Directors
shall approve the taking of such action in writing prior to the taking
of such action. The Independent Directors' fiduciary duty shall be to
the Seller (and creditors) and not to the Seller's shareholders in
respect of any decision of the type described in the preceding sentence.
In the event an Independent Director resigns or otherwise ceases to be
a director of the Seller, there shall be selected a replacement
Independent Director who shall not be an individual within the
proscriptions of the first sentence of this CLAUSE (ii) or any
individual who has any other type of professional relationship with the
Originator or any of its Affiliates or any management personnel of any
such Person or Affiliate and who shall be (x) a tenured professor at a
business or law school, (y) a retired judge or (z) an established
independent member of the business community, having a sound reputation
and experience relative to the duties to be performed by such individual
as an Independent Director;
(iii) No Independent Director shall at any time serve as a
trustee in bankruptcy for Originator or any Affiliate thereof;
(iv) Any employee, consultant or agent of the Seller will be
compensated from the Seller's own bank accounts for services provided to
the Seller except as provided herein in respect of the Servicer's Fee. The
Seller will engage no agents other than a Servicer for the Receivables,
which Servicer will be fully compensated for its services to the Seller by
payment of the Servicer's Fee;
(v) The Seller will contract with the Servicer to perform for
the Seller all operations required on a daily
IV-9
basis to service its Receivables. The Seller will pay the Servicer a
monthly fee based on the level of Receivables being managed by the
Servicer. The Seller will not incur any material indirect or overhead
expenses for items shared between the Seller and the Originator or any
Affiliate thereof which are not reflected in the Servicer's Fee. To the
extent, if any, that the Seller and the Originator or any Affiliate
thereof share items of expenses not reflected in the Servicer's Fee,
such as legal, auditing and other professional services, such expenses
will be allocated to the extent practical on the basis of actual use or
the value of services rendered, and otherwise on a basis reasonably
related to the actual use or the value of services rendered, it being
understood that Originator shall pay all expenses relating to the
preparation, negotiation, execution and delivery of the Transaction
Documents, including, without limitation, legal and other fees;
(vi) The Seller's operating expenses will not be paid by
Originator or any Affiliate thereof unless the Seller shall have agreed in
writing with such Person to reimburse such Person for any such payments;
(vii) The Seller will have its own separate mailing address and
stationery;
(viii) The Seller's books and records will be maintained
separately from those of the Originator or any Affiliate thereof;
(ix) Any financial statements of the Originator or any Affiliate
thereof which are consolidated to include the Seller will contain detailed
notes clearly stating that the Seller is a separate corporate entity and
has sold ownership interests in the Seller's accounts receivable;
(x) The Seller's assets will be maintained in a manner that
facilitates their identification and segregation from those of the
Originator and any Affiliate thereof;
(xi) The Seller will strictly observe corporate formalities in
its dealings with the Originator and any
IV-10
Affiliate thereof, and funds or other assets of the Seller will not be
commingled with those of the Originator or any Affiliate thereof. The
Seller shall not maintain joint bank accounts or other depository
accounts to which the Originator or any Affiliate thereof (other than
Vanstar in its capacity as Servicer) has independent access. None of
the Seller's funds will at any time be pooled with any funds of the
Originator or any Affiliate thereof;
(xii) The Seller shall pay to the Originator the marginal
increase (or, in the absence of such increase, the market amount of its
portion) of the premium payable with respect to any insurance policy that
covers the Seller and any Affiliate thereof, but the Seller shall not,
directly or indirectly, be named or enter into an agreement to be named, as
a direct or contingent beneficiary or loss payee, under any such insurance
policy, with respect to any amounts payable due to occurrences or events
related to the Originator or any Affiliate thereof; and
(xiii) The Seller will maintain arm's length relationships with
the Originator and any Affiliate thereof. The Originator or any Affiliate
thereof that renders or otherwise furnishes services to the Seller will be
compensated by the Seller at market rates for such services. Neither the
Seller nor any Originator or any Affiliate thereof will be or will hold
itself out to be responsible for the debts of the other or the decisions or
actions respecting the daily business and affairs of the other.
(n) MERGERS, ACQUISITIONS, SALES, ETC.
(i) The Seller shall not
(A) be a party to any merger or consolidation, or directly or
indirectly purchase or otherwise acquire, whether in one or a series
of transactions, all or substantially all of the assets or any stock
of any class of, or any partnership or joint venture interest in, any
other Person, or sell, transfer, assign, convey or lease any of its
property and assets (including,
IV-11
without limitation, any Pool Receivable or any interest therein)
other than pursuant to this Agreement;
(B) make, incur or suffer to exist an investment in, equity
contribution to, loan, credit or advance to, or payment obligation in
respect of the deferred purchase price of property from, any other
Person, except for obligations incurred pursuant to the Transaction
Documents; or
(C) create any direct or indirect Subsidiary or otherwise
acquire direct or indirect ownership of any equity interests in any
other Person.
(o) RESTRICTED PAYMENTS.
(i) GENERAL RESTRICTION. Except in accordance with this
SUBPARAGRAPH (i), the Seller shall not (A) purchase or redeem any shares of
its capital stock, (B) declare or pay any Dividend or set aside any funds
for any such purpose, (C) prepay, purchase or redeem any subordinated
indebtedness of the Seller, (D) lend or advance any funds, including in
respect of the Originator Note, or (E) repay any loans or advances to, for
or from the Originator. Actions of the type described in this CLAUSE (i)
are herein collectively called "RESTRICTED PAYMENTS".
(ii) TYPES OF PERMITTED PAYMENTS. Subject to the limitations
set forth in CLAUSE (III) below, the Seller may make Restricted Payments so
long as such Restricted Payments are made only to the Originator (or IBMCC,
if permitted pursuant to the Intercreditor Agreement) and only in one or
more of the following ways:
(A) Seller may make cash payments (including prepayments) on the
Company Note in accordance with its terms; and
(B) if no amounts are then outstanding under the Company Note,
the Seller may (1) declare and pay Dividends and (2) make demand loans
to Vanstar, so long as each such loan is evidenced by the Originator
Note.
IV-12
(iii) SPECIFIC RESTRICTIONS. The Seller may make Restricted
Payments only out of Collections paid or released to the Seller pursuant to
SECTIONS 1.4(b). Furthermore, the Seller shall not pay, make or declare
(A) any Dividend if, after giving effect thereto, Seller's
Tangible Net Worth would be less than Twenty-Five Million Dollars
($25,000,000); or
(B) any Restricted Payment (including any Dividend) if, after
giving effect thereto, any Termination Event or Unmatured Termination
Event shall have occurred and be continuing.
(p) USE OF SELLER'S SHARE OF COLLECTIONS. The Seller shall apply its
share of Collections to make payments in the following order of priority:
FIRST, the payment of its expenses (including, without limitation, the
obligations payable to Purchaser, the Affected Persons and the Agent under the
Transaction Documents), SECOND, the payment of accrued and unpaid interest on
the Company Note, THIRD, the payment of the outstanding principal amount of the
Company Note, and FOURTH, other legal and valid corporate purposes, including,
without limitation, the payment of dividends as permitted by PARAGRAPH (o)
above.
(q) AMENDMENTS TO CERTAIN DOCUMENTS.
(i) The Seller shall not amend, supplement, amend and restate,
or otherwise modify the Purchase and Contribution Agreement, the Company
Note, the Originator Note, any other document executed under the Purchase
and Contribution Agreement, the Collection Account Agreement, the Lock-Box
Agreements, the Liquidation Account Agreement or the Seller's certificate
of incorporation or by-laws, except (A) in accordance with the terms of
such document, instrument or agreement and (B) with the advance written
consent of the Agent.
(ii) The Originator shall not enter into or otherwise become
bound by, any agreement, instrument, document or other arrangement that
restricts its right to
IV-13
amend, supplement, amend and restate or otherwise modify, or to extend or
renew, or to waive any right under, this Agreement or any other Transaction
Document.
(r) INCURRENCE OF INDEBTEDNESS. The Seller shall not (i) create,
incur or permit to exist, any Debt or liability or (ii) cause or permit to be
issued for its account any letters of credit or bankers' acceptances, except for
Debt incurred pursuant to the Company Note and liabilities incurred pursuant to
or in connection with the Transaction Documents or otherwise permitted therein.
(s) USE OF PROCEEDS. No proceeds of any purchase or reinvestment
will be used in connection with any hostile tender offer. No proceeds of any
purchase or reinvestment will be used for any purpose that violates any
applicable law, rule or regulation, including, without limitation, Regulations G
or U of the Federal Reserve Board.
IV-14
EXHIBIT V
TERMINATION EVENTS
Each of the following shall be a "Termination Event":
(a) (i) The Servicer shall fail to make when due any payment or
deposit to be made by it under the Agreement and such failure shall remain
unremedied for two Business Days or (ii) the Servicer shall fail to perform or
observe any other term, covenant or agreement under the Agreement and any such
failure shall remain unremedied for 30 days after the earlier of (x) the date on
which the Servicer shall have knowledge thereof and (y) notice to the Servicer
from the Agent (or, with respect to a failure to deliver the Servicer Report or
the Portfolio Certificate pursuant to the Agreement, such failure shall remain
unremedied for two Business Days, with respect to a Portfolio Certificate, and
five business Days, with respect to a Servicer Report);
(b) The Seller shall fail (i) to transfer to any successor Servicer
when required any rights, pursuant to the Agreement, which the Seller then has
as Servicer and such failure shall remain unremedied for two Business Days, or
(ii) to make any payment required under the Agreement and such failure shall
remain unremedied for two Business Days; or
(c) Any representation or warranty made or deemed made by the Seller
or the Servicer (or any of their respective officers) under or in connection
with the Agreement or any information or report delivered by the Seller or the
Servicer pursuant to the Agreement shall prove to have been incorrect or untrue
in any material respect when made or deemed made or delivered; or
(d) The Seller shall fail to perform or observe any other term,
covenant or agreement contained in the Agreement on its part to be performed or
observed and any such failure shall remain unremedied for 30 days after the
earlier of (x) the date
V-1
on which the Seller shall have knowledge thereof and (y) notice to the Seller
from the Agent; or
(e) The Originator or any of its subsidiaries shall fail to pay any
principal of or premium or interest on any of its Debt which is outstanding in a
principal amount of at least $10,000,000 in the aggregate when the same becomes
due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue after the
applicable grace period, if any, specified in the instrument, mortgage,
indenture or other agreement relating to such Debt; or any other event shall
occur or condition shall exist under any instrument, mortgage, indenture or
other agreement relating to any such Debt and shall continue after the
applicable grace period, if any, specified in such instrument, mortgage,
indenture or other agreement, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or any
such Debt shall be declared to be due and payable, or required to be prepaid,
redeemed, purchased or defeased, or an offer to repay, redeem, purchase or
defease such Debt shall be required to be made in each case prior to the stated
maturity thereof (other than by a regularly scheduled required payment or in
connection with sales of assets or the issuance of Debt or other securities, if
the instrument, mortgage, indenture or other agreement relative to such Debt
requires the prepayment, redemption, purchase or defeasance of such Debt in
connection with such sale or issuance and the proceeds from such sale or
issuance are used to prepay, redeem, purchase or defease such Debt in accordance
with its terms); or
(f) The Agreement or any purchase or any reinvestment pursuant to the
Agreement shall for any reason (other than pursuant to the terms hereof) (i)
cease to create, or the Participation shall for any reason cease to be, a valid
and enforceable perfected undivided percentage ownership interest to the extent
of the Participation in each Pool Receivable and the Related Security and
Collections and other proceeds with respect thereto, free and clear of any
Adverse Claim or (ii) cease to create with respect to the items described in
SECTION 1.2(d), or the interest of the Purchaser with respect to such items
shall
V-2
cease to be, a valid and enforceable first priority perfected security
interest, free and clear of any Adverse Claim; or
(g) The Originator or Seller shall generally not pay its debts as
such debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against the Originator or Seller
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other similar
official for it or for any substantial part of its property and, in the case of
any such proceeding instituted against it (but not instituted by it), either
such proceeding shall remain undismissed or unstayed for a period of 60 days, or
any of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of its
property) shall occur; or the Originator or Seller shall take any corporate
action to authorize any of the actions set forth above in this PARAGRAPH (g); or
(h) As of the last day of any calendar month, (i)(x) the arithmetic
average of the Default Ratios for the most recent three calendar months ending
on such day shall exceed 2.5% or (y) the Default Ratio calculated as of such day
shall exceed 4%, (ii) the arithmetic average of the Delinquency Ratio for the
most recent three calendar months ending on such day shall exceed 11% or
(iii)(x) the average of the Dilution Ratios for the most recent three calendar
months ending on such day shall exceed 8% or (y) the Dilution Ratio calculated
on such day shall exceed 11%; or
(i) The Participation shall exceed 100% and such condition shall
continue unremedied for three consecutive Business Days; or
(j) A Change in Control shall occur; or
V-3
(k) The Internal Revenue Service shall file notice of a lien pursuant
to Section 6323 of the Internal Revenue Code with regard to any assets of Seller
and such lien shall not have been released within ten Business Days or the
Pension Benefit Guaranty Corporation shall, or shall indicate its intention to,
file notice of a lien pursuant to Section 4068 of ERISA with regard to any of
the assets of Seller or any Originator; or
(l) The Interest Coverage Ratio of Vanstar and its Subsidiaries
calculated on a consolidated basis shall be less than 2.0 to 1 for the most
recently ended Computation Period.
(m) The Consolidated Net Worth of Vanstar and its Subsidiaries at the
end of any Fiscal Quarter shall be less than $300,000,000.
(n) The Tangible Net Worth of the Seller shall be less than
$20,000,000.
(o) A Purchase and Contribution Termination Event shall occur.
V-4
EXHIBIT VI
COLLECTION ACCOUNT AGREEMENT
VI-1
EXHIBIT VII
LIQUIDATION ACCOUNT AGREEMENT
VII-1
EXHIBIT VIII
PORTFOLIO CERTIFICATE
VII-2
SCHEDULE I
CREDIT AND COLLECTION POLICY
Schedule I-1
SCHEDULE II
LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS
LOCK-BOX BANK LOCK-BOX ACCOUNT
------------- ----------------
Mellon Bank, N.A. 099-0753
Three Mellon Bank Center 099-0930
Room 3119 099-0809
Xxxxxxxxxx, XX 00000 099-0948
Schedule II-1
SCHEDULE III
TRADE NAMES
Schedule III-1
ANNEX A
FORM OF LOCK-BOX AGREEMENT
[Letterhead of Seller]
LOCK-BOX AGREEMENT
___________, 199__
[Name and Address of
Lock-Box Bank]
Gentlemen:
Reference is made to our [lock-box](1) account[s] no[s]. maintained
with you (the "Account[s]"). Pursuant to a Receivables Purchase Agreement
dated as of December 20, 1996, among us, as Seller, Vanstar Corporation, as
Servicer, Pooled Accounts Receivable Capital Corporation, as purchaser
(Pooled Accounts Receivable Capital Corporation, or any successors and
assigns in such capacity, the "Purchaser"), and Xxxxxxx Xxxxx Securities
Inc., as agent (the "Agent"), we have assigned and/or may hereafter assign to
the Purchaser one or more undivided percentage ownership interests in
accounts, chattel papers, instruments or general intangibles (collectively,
"Receivables") with respect to which payments are or may hereafter be made to
the Account[s], and have granted to the Purchaser a security interest in such
Receivables, the Account[s], amounts on deposit therein and related property.
Your execution of this letter agreement is a condition precedent to our
continued maintenance of the Account[s] with you.
--------------------
(1) Delete in the case of direct wire transfer accounts.
Annex A-1
We hereby transfer exclusive ownership and control of the Account[s] to
the Agent on behalf of the Purchaser, subject only to the condition
subsequent that the Agent shall have given you notice of its election to
assume such ownership and control, which notice may be in the form attached
hereto as Exhibit A or in any other form that gives you reasonable notice of
such election.
We hereby irrevocably instruct you, at all times from and after the date
of your receipt of notice from the Agent as described above, to make all
payments to be made by you out of or in connection with the Account[s]
directly to the Agent, at its address set forth below its signature hereto or
as the Agent otherwise notifies you, for the account of the Purchaser
(account #__________, ABA #_________), or otherwise in accordance with the
instructions of the Agent.
We also hereby notify you that, at all times from and after the date of
your receipt of notice from the Agent as described above, the Agent shall be
irrevocably entitled to exercise in our place and stead any and all rights in
respect of or in connection with the Account[s], including, without
limitation, (a) the right to specify when payments are to be made out of or
in connection with the Account[s] and (b) the right to require preparation of
duplicate monthly bank statements on the Account[s] for the Agent's audit
purposes and mailing of such statements directly to an address specified by
the Agent.
Notice from the Agent may be personally served or sent by Telex,
facsimile or U.S. mail, certified return receipt requested, to the address,
[Telex] or facsimile number set forth under your signature to this letter
agreement (or to such other address, [Telex] or facsimile number as to which
you shall notify the Agent in writing). If notice is given by [Telex] or
facsimile, it will be deemed to have been received when the notice is sent
[and the answerback is received (in the case of Telex)] or receipt is
confirmed by telephone or other electronic means (in the case of facsimile).
All other notices will be deemed to have been received when actually received
or, in the case of personal delivery, delivered.
Annex A-2
By executing this letter agreement, you acknowledge and consent to the
existence of the Agent's right to ownership and control of the Account[s] and
the Purchaser's security interest in the Account[s] and amounts from time to
time on deposit therein and agree that from the date hereof the Account[s]
shall be maintained by you for the benefit of, and amounts from time to time
therein held by you as agent for, the Agent on the terms provided herein.
The Account[s] [is/are] to be titled "[Name of Seller] and Xxxxxxx Xxxxx
Securities Inc. as the Agent for Pooled Accounts Receivable Capital
Corporation, its successors and assigns, as their interests may appear."
Except as otherwise provided in this letter agreement, payments to the
Account[s] are to be processed in accordance with the standard procedures
currently in effect. All service charges and fees with respect to the
Account[s] shall continue to be payable by us as under the arrangements
currently in effect.
By executing this letter agreement, you irrevocably waive and agree not
to assert, claim or endeavor to exercise, irrevocably bar and estop yourself
from asserting, claiming or exercising, and acknowledge that you have not
heretofore received a notice, writ, order or any form of legal process from
any other person or entity asserting, claiming or exercising, any right of
set-off, banker's lien or other purported form of claim with respect to
[any of] the Account[s] or any funds from time to time therein. Except for
your right to payment of your service charges and fees and to make deductions
for returned items, you shall have no rights in the Account[s] or funds
therein. To the extent you may ever have such rights, you hereby expressly
subordinate all such rights to all rights of the Agent.
You may terminate this letter agreement by cancelling the Account[s]
maintained with you, which cancellation and termination shall become
effective only upon thirty days' prior written notice thereof from you to the
Agent. Incoming [mail addressed to] [wire transfers to] the Account[s]
received after such cancellation shall be forwarded in accordance with the
Agent's instructions. This letter agreement may also be terminated upon
written notice to you by the Agent stating that the Receivables Purchase
Agreement pursuant to which this letter agreement was obtained is no longer
in effect. Except as otherwise provided in this paragraph, this letter
agreement may
Annex A-3
not be terminated or amended without the prior written consent of the Agent.
This letter agreement may be executed in any number of counterparts, and by
the parties hereto on 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.
Please acknowledge your agreement to the terms set forth in this letter
agreement by signing the two copies of this letter agreement enclosed
herewith in the space provided below, sending one such signed copy to the
Agent at its address provided above and returning the other signed copy to us.
Very truly yours,
[NAME OF SELLER]
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Acknowledged and agreed to as of
the date first written above:
XXXXXXX XXXXX SECURITIES INC.,
as Agent
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Address for notice:
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 00 Xxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Director
Annex A-4
Telephone:
Facsimile: (000) 000-0000
[NAME OF LOCK-BOX BANK]
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Address for notice:
Attention:
Telex No.:
(Answerback:)
Telephone:
Facsimile:
Annex A-5
EXHIBIT A to
Lock-Box Agreement
[Xxxxxxx Xxxxx Securities Inc.]
[Name and Address
of Lock-Box Bank]
Re: [Name of Seller]
[LOCK-BOX]* ACCOUNT NO[S]. [AND ]
---------------------------------------------
Gentlemen:
Reference is made to the letter agreement dated ______________, 199__
(the "Letter Agreement") among [Name of Seller], Vanstar Corporation, as
Servicer, Pooled Accounts Receivable Capital Corporation (Pooled Accounts
Receivable Capital Corporation, or any successors and assigns thereof, the
"Purchaser"), the undersigned, as Agent and you concerning the above
described [lock-box]* account[s] (the "Account[s]"). We hereby give you
notice of our assumption of ownership and control of the Account[s] as
provided in the Letter Agreement.
We hereby instruct you to make all payments to be made by you out of
or in connection with the Account[s] [directly to the undersigned, at
[our address set forth above], for the account of the Purchaser (account no.
____________)].
[other instructions]
Very truly yours,
XXXXXXX XXXXX SECURITIES INC.,
as Agent
--------------------
* Delete in the case of direct wire transfer accounts.
Annex A-6
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Annex A-7
ANNEX C
FORM OF CORPORATE OPINIONS
ANNEX D
FORM OF BANKRUPTCY OPINION
ANNEX E
FORM OF SERVICER REPORT
