Exhibit 10.1
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RECEIVABLES PURCHASE AGREEMENT
AMONG
LINCOLNSHIRE FUNDING, LLC,
AS SELLER,
STAPLES, INC.,
AS SERVICER,
CORPORATE RECEIVABLES CORPORATION,
AS CONDUIT PURCHASER,
THE FINANCIAL INSTITUTIONS FROM TIME TO TIME
PARTY HERETO,
AS COMMITTED PURCHASERS
AND
CITICORP NORTH AMERICA, INC.,
AS AGENT
DATED AS OF OCTOBER 27, 2000
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ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms................................................1
SECTION 1.02. Other Terms.........................................................20
SECTION 1.03. Computation of Time Periods.........................................21
SECTION 1.04. Calculation of Certain Ratios.......................................21
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 2.01. The Purchase Facility...............................................21
SECTION 2.02. Making the Purchases................................................21
SECTION 2.03. Yield and Fees......................................................23
SECTION 2.04. Settlement Procedures...............................................23
SECTION 2.05. Payments and Computations, Etc......................................25
SECTION 2.06. Additional Yield....................................................26
SECTION 2.07. Yield Protection....................................................26
SECTION 2.08. Increased Capital...................................................27
SECTION 2.09. Taxes...............................................................28
SECTION 2.10. Tax Treatment.......................................................29
SECTION 2.11. Sale Agreement Assets...............................................29
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01. Conditions Precedent to Initial Purchase............................30
SECTION 3.02. Conditions Precedent to All Purchases...............................30
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Seller........................30
SECTION 4.02. Representations and Warranties of the Servicer......................34
ARTICLE V
GENERAL COVENANTS
SECTION 5.01. Affirmative Covenants of the Seller.................................36
SECTION 5.02. Reporting Requirements of the Seller................................38
SECTION 5.03. Negative Covenants of the Seller....................................39
SECTION 5.04. Covenants of the Servicer...........................................41
ARTICLE VI
ADMINISTRATION OF RECEIVABLES
SECTION 6.01. Designation of Servicer.............................................45
SECTION 6.02. Duties of the Servicer..............................................46
SECTION 6.03. Rights of the Agent.................................................47
SECTION 6.04. Responsibilities of the Seller......................................48
SECTION 6.05. Further Action Evidencing Agent's Interest..........................48
ARTICLE VII
EVENTS OF TERMINATION
SECTION 7.01. Events of Termination...............................................49
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Indemnities by the Seller...........................................51
SECTION 8.02. Indemnities by the Servicer.........................................53
SECTION 8.03. Materiality Considerations..........................................54
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, Etc.....................................................54
SECTION 9.02. Notices, Etc........................................................54
SECTION 9.03. No Waiver; Remedies.................................................55
SECTION 9.04. Binding Effect; Assignability.......................................55
SECTION 9.05. GOVERNING LAW; WAIVER OF JURY TRIAL.................................56
SECTION 9.06. Costs, Expenses and Taxes...........................................56
SECTION 9.07. No Proceedings......................................................57
SECTION 9.08. Execution in Counterparts; Severability.............................58
SECTION 9.09. Confidentiality.....................................................58
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RECEIVABLES PURCHASE AGREEMENT
This RECEIVABLES PURCHASE AGREEMENT dated as of October 27,
2000 among LINCOLNSHIRE FUNDING, LLC, a Delaware limited liability company, as
Seller, STAPLES, INC., a Delaware corporation, as Servicer, CORPORATE
RECEIVABLES CORPORATION, a Delaware corporation, as Conduit Purchaser, THE
FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY HERETO, as Committed Purchasers,
and CITICORP NORTH AMERICA, INC., a Delaware corporation, as Agent. Capitalized
terms used herein shall have the meanings specified in SECTION 1.01.
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Agreement (both
above and elsewhere), 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):
"ADDITIONAL YIELD" has the meaning assigned to that term in
SECTION 2.06.
"ADJUSTED NET RECEIVABLES POOL BALANCE" means at any time of
calculation hereunder, the Net Receivables Pool Balance MINUS the sum of (i) the
Loss Reserve, (ii) the amount (if any) by which the Dilution Reserve exceeds the
Sr. Portion Valuation Amount and (iii) the Yield and Fee Reserve at such time.
"ADJUSTMENT AMOUNT" means at any time of calculation hereunder
the lesser of (i) the Sr. Portion Valuation Amount and (ii) the amount by which
Maximum Capital exceeds the outstanding Capital.
"ADVERSE CLAIM" means a Lien other than any Lien created (a)
in favor of Hackensack under the Originator Sale Agreement, (b) in favor of the
Seller under the Sale and Contribution Agreement or (c) in favor of the Agent
and the Purchasers under this Agreement.
"AFFECTED PARTY" means the Purchasers, CNAI, individually and
in its capacity as Agent, any Liquidity Provider and any parent company
controlling any of the foregoing.
"AFFILIATE" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by or under direct or
indirect common control with such specified Person (excluding, with respect to
the Seller, Hackensack, Staples or either Originator, any Person whose sole
relationship is the ownership of preferred stock in Hackensack and who would
otherwise be unaffiliated with such Person) and, without limiting the generality
of the foregoing, shall be presumed to include (a) any Person which beneficially
owns or holds 20% or more of any class of voting securities of such specified
Person or 20% or more of the equity interest in such specified Person and (b)
any Person of which such specified Person beneficially owns or holds 20% or more
of any class of voting securities or in which such specified Person beneficially
owns or holds 20% or more of the equity interest. For the purposes of this
definition, (i) "voting securities" of a Person means any securities which
confer upon the holder thereof a right to vote with respect to the election of
members of the board of directors or other analogous governing body of such
Person (excluding voting power arising only upon the occurrence of a
contingency), (ii) "control" when used with respect to any specified Person
means the power to direct the management and policies of such specified Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise, and (iii) the terms "controlling" and "controlled" have
meanings correlative to the foregoing CLAUSE (ii).
"AGENT" means CNAI, in its capacity as administrative agent
for the Purchasers together with its successors and permitted assigns.
"AGREEMENT" means this Receivables Purchase Agreement, as the
same may from time to time be amended, restated, supplemented or otherwise
modified.
"ASSET PURCHASE AGREEMENT" means any asset purchase or other
agreements pursuant to which the Conduit Purchaser may from time to time assign
part or all of its Receivables Interest, as such agreements may be amended from
time to time.
"ASSIGNEE RATE" for any Yield Period means a rate per annum
equal to the LIBO Rate PLUS 1.25%; PROVIDED, HOWEVER, that the Assignee Rate
shall be equal to the Base Rate in effect from time to time (i) for any Yield
Period not equal to a month, (ii) with respect to any portion of Capital not
outstanding during an entire Yield Period and (iii) at any time when it is
unlawful for Citibank to obtain funds in, or Citibank is not offering deposits
in dollars in, the London interbank market; and PROVIDED FURTHER that, following
the occurrence and during the continuation of any Event of Termination, the
Assignee Rate for each Yield Period shall be the sum of the Base Rate in effect
from time to time PLUS 1.50% per annum.
"ASSIGNMENT OF CLAIMS ACT" means, the Assignment of Claims Act
of 1940, as amended, 41 U.S.C. Section 15, 31 U.S.C. Section 3727 and any
regulations issued thereunder or pursuant thereto.
"BANKRUPTCY CODE" means Title 11 of the United States Code (11
U.S.C. Section 101 ET SEQ.), as amended from time to time, or any successor
thereto.
"BASE RATE" means a fluctuating interest rate per annum equal
to the rate of interest announced publicly by Citibank in New York, New York,
from time to time as Citibank's base rate.
"BENEFIT PLAN" means, with respect to any Person, a defined
benefit plan as defined in Section 3(35) of ERISA (other than a Multiemployer
Plan) in respect of which such Person or any ERISA Affiliate of such Person is,
or at any time within the immediately preceding six (6) years was, an "employer"
as defined in Section 3(5) of ERISA.
"BREAKAGE AMOUNT" means, for any Settlement Period during
which Capital is reduced pursuant to SECTION 2.02(f) or during which any Capital
Purchase for which a Purchase Request has been submitted is not made for any
reason, the amount, if any, by which (i) the additional Yield (calculated
without taking into account any Breakage Amount) which would
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have accrued on the reductions of such Capital during such Settlement Period (as
so computed) if such reductions had remained as Capital or on the amount of the
Capital Purchase had such Purchase been made, exceeds (ii) the income, if any,
received by the applicable Purchaser or the applicable Liquidity Provider from
the investment by such Person of the proceeds of such reductions of Capital or
the amounts of such unfunded Capital Purchase.
"BUSINESS DAY" means any day other than a Saturday, Sunday or
public holiday or the equivalent for banks in New York City, New York and, if
the term "Business Day" is used in connection with the LIBO Rate, which day is a
day on which dealings are carried on in the London interbank market.
"CAPITAL" means, at any time, the sum of amounts paid to the
Seller pursuant to SECTION 2.02(b), reduced from time to time by Collections
received and distributed on account of such Capital pursuant to SECTION 2.04.
"CAPITAL PURCHASE" has the meaning set forth in SECTION 2.02.
"CITIBANK" means Citibank, N.A., a national banking
association.
"CNAI" means Citicorp North America, Inc., a Delaware
corporation.
"COLLECTION ACCOUNT" means the account maintained in the name
of Agent on behalf of the Purchasers at Citibank, N.A., account no. 4051-7805,
account name: CRC Redemption Account, for the purpose of receiving Collections.
"COLLECTION DELAY PERIOD" means ten (10) days, or such other
number of days as the Agent may reasonably select upon three Business Days'
notice to the Servicer.
"COLLECTIONS" means, with respect to any Receivables Asset,
any and all related cash collections and proceeds, all amounts due as fees or
charges for late payments, and any Collections deemed to have been received
pursuant to SECTION 2.04(a).
"COLLECTION TRIGGER NOTICE" means a written notice from the
Agent to Quill that all Obligors must remit their Collections directly to the
Collection Account which notice has been delivered at any time after either (i)
the long-term unsecured debt of Staples shall have been rated less that BB+ by
S&P or Ba1 by Moody's (or, in the event S&P or Xxxxx'x is not rating Staples,
such unsecured long-term debt shall have a Deemed Rating below BB+ by S&P or Ba1
by Moody's, as determined by the Agent in its sole discretion) or (ii) an Event
of Termination has occurred.
"COMMITMENT" means, for any Committed Purchaser, the maximum
amount of Capital which may be advanced by such Committed Purchaser as set forth
opposite such Committed Purchaser's name on the signature pages to this
Agreement under the caption "Commitment", subject to assignment pursuant to
SECTION 9.04, as such amount may be reduced in accordance with SECTION 2.01(b).
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"COMMITTED PURCHASER" means each of the financial institutions
listed on the signature pages to this Agreement as "Committed Purchasers",
together with their respective successors and permitted assigns.
"CONCENTRATION LIMIT" means, for any Obligor, at any time,
either (a) 2% or (b) such other percentage ("SPECIAL CONCENTRATION LIMIT") for
any Obligor designated by the Agent in a writing from time to time, which
designation shall be subject to change by the Agent upon three (3) Business
Days' prior notice to the Seller; PROVIDED, HOWEVER, that in the case of an
Obligor with any affiliated Obligors, the Concentration Limit shall be
calculated as if such Obligor and such one or more affiliated Obligors were one
Obligor.
"CONDUIT PURCHASER" means Corporate Receivables Corporation, a
Delaware corporation, together with its successors and permitted assigns (other
than the Liquidity Providers).
"CONDUIT FEE" has the meaning set forth in the Fee Letter.
"CONTRACT" means an agreement between an Originator and an
Obligor, pursuant to or under which such Obligor shall be obligated to pay for
merchandise sold or services rendered from time to time.
"CP NOTE" means any commercial paper note issued by the
Conduit Purchaser.
"CP RATE" shall mean, for any Yield Period, the per annum rate
equal to the weighted average of the per annum rates paid or payable by the
Conduit Purchaser from time to time as interest on or otherwise (by means of
interest rate xxxxxx or otherwise) in respect of the CP Notes that are
allocated, in whole or in part, by the Agent (on behalf of the Conduit
Purchaser) to fund or maintain the Conduit Purchaser's Receivables Interest
during such Yield Period, as determined by the Agent (on behalf of the Conduit
Purchaser) and reported to the Seller and the Servicer, which rates shall
reflect and give effect to the commissions of placement agents and dealers in
respect of CP Notes, to the extent such commissions are allocated, in whole or
in part, to such CP Notes by the Agent (on behalf of the Conduit Purchaser);
PROVIDED, HOWEVER, that if any component of such rate is a discount rate, in
calculating the "CP RATE" for such Yield Period, the Agent shall for such
component use the rate resulting from converting such discount rate to an
interest bearing equivalent rate per annum. Following the occurrence and during
the continuation of any Event of Termination, the CP Rate for each Conduit
Purchaser for each Yield Period shall be the sum of the applicable interest rate
per annum determined pursuant to provisions set forth above plus 1.50% per
annum.
"CREDIT AND COLLECTION POLICY" means those credit and
collection policies and practices relating to the Receivables and Obligors
described in EXHIBIT A.
"DEEMED RATING" means, at any time that either S&P or Xxxxx'x
is not rating Staples' unsecured senior long-term debt, a determination as to
Staples' rating from either S&P and/or Moody's, as applicable, made by the
Agent, in its sole discretion, based on its proprietary debt ratings models
and/or compliance with certain financial ratios.
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"DEFAULT RATIO" means, for any calendar month, a fraction
(expressed as a percentage) determined as of the last day of such calendar month
by dividing (i) the aggregate Outstanding Balance of all Receivables that were
Defaulted Receivables on such date or were written off the books of the Seller
at any time during such calendar month by (ii) the aggregate Outstanding Balance
of all Receivables on such day.
"DEFAULTED RECEIVABLE" means a Receivable: (i) as to which any
payment, or part thereof, remains unpaid for ninety-one (91) days or more from
the original due date for such payment, (ii) as to which the Obligor thereof has
taken any action, or suffered any event to occur, of the type described in
SECTION 7.01(e), or (iii) which, consistent with the Credit and Collection
Policy, has been or should be written off as uncollectible.
"DELINQUENCY RATIO" means, for any calendar month, a fraction
(expressed as a percentage) determined as of the last day of such calendar month
by dividing (i) the aggregate Outstanding Balance of all Receivables that are
Delinquent Receivables on such date by (ii) the aggregate Outstanding Balance of
all Receivables on such day.
"DELINQUENT RECEIVABLE" means a Receivable that is not a
Defaulted Receivable and (i) as to which any payment remains unpaid for more
than thirty (30) days from the original due date for such payment or (ii) which,
consistent with the Credit and Collection Policy, has been or should be
classified as delinquent.
"DESIGNATED OBLIGOR" means, at any time, any Obligor of any
Receivable, unless the Agent, acting in good faith and based on a reason
relating to the creditworthiness of such Obligor or the aggregate exposure by
the Agent and its Affiliates to a single such Obligor, has provided the Seller
with three (3) Business Days' prior notice that such Obligor shall not be
considered a Designated Obligor.
"DILUTED RECEIVABLE" means that portion of any Receivable
which is either (a) reduced or canceled by any Person as a result of a Dilution
Factor or (b) subject to any specific dispute, offset, counterclaim or defense
whatsoever (except the discharge in bankruptcy of the Obligor thereof, the entry
of an automatic stay relating to an insolvency proceeding in respect of the
Obligor thereof or any comparable event in a state court insolvency proceeding
relating to the Obligor thereof).
"DILUTION FACTOR" means any of the following factors giving
rise to the reduction in the Outstanding Balance of, or cancellation of, a
Receivable: (i) any defective, rejected or returned merchandise or services, any
cash discount, or any failure by an Originator to deliver any merchandise or
otherwise perform under the underlying contract or invoice, (ii) any change or
cancellation of any terms of such contract or invoice or any other adjustment by
an Originator which reduces the amount payable by the Obligor on the related
Receivable (except for changes or cancellations made solely for credit reasons
in accordance with SECTION 6.02) and (iii) any setoff in respect of any claim by
the Obligor thereof (whether such claim arises out of the same or a related
transaction or an unrelated transaction).
"DILUTION HORIZON FACTOR" means, as of any date, the ratio
(expressed as a percentage) computed by dividing (a) the aggregate original
Outstanding Balance for all
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Receivables (calculated as of the time of Purchase of each such Receivable)
originated during the two Settlement Periods preceding such date, BY (b) the
excess of (i) Outstanding Balance of all Receivables as of the last day of the
immediately preceding Settlement Period, MINUS (ii) the aggregate Outstanding
Balance of all Defaulted Receivables as of the last day of the immediately
preceding Settlement Period.
"DILUTION PERCENTAGE" means, as of any date, the product of
(A) the sum of (i) the product of (a) two, MULTIPLIED BY (b) the average of the
Dilution Ratios calculated for each of the twelve preceding Settlement Periods,
PLUS (ii) the Dilution Volatility Ratio as of the last day of the immediately
preceding Settlement Period, MULTIPLIED BY (B) the Dilution Horizon Factor.
"DILUTION RATIO" means, for any Settlement Period, a ratio
(expressed as a percentage) determined as of the last day of such calendar month
by dividing (i) the aggregate Outstanding Balance of all Receivables which
became Diluted Receivables during such Settlement Period by (ii) the aggregate
original Outstanding Balance of all Receivables (calculated as of the time of
Purchase of each such Receivable) originated during the second Settlement Period
preceding such Settlement Period.
"DILUTION RESERVE" means an amount equal to (A) the product of
(i) the Dilution Percentage, TIMES (ii) the aggregate amount of Capital
outstanding at the time of determination, DIVIDED BY (B) 1 minus the Loss
Percentage.
"DILUTION VOLATILITY RATIO" means, as of any date, a ratio
(expressed as a percentage) equal to the product of (a) a number equal to the
difference between (i) the highest of the Dilution Ratios calculated for any of
the twelve preceding Settlement Periods and (ii) the average of the Dilution
Ratios for each of the twelve preceding Settlement Periods, TIMES (b) a ratio
calculated by dividing (i) the highest of the Dilution Ratios calculated for any
of the twelve preceding Settlement Periods, and (ii) the average of the Dilution
Ratios for each of the twelve preceding Settlement Periods.
"DOWNGRADE EVENT" means the downgrade of the long-term
unsecured debt of Staples to below BBB- by S&P or below Baa3 by Moody's, or, in
the event that either S&P or Xxxxx'x is not rating Staples, such long-term
unsecured debt shall have a Deemed Rating below the equivalent of BBB- by S&P or
Baa3 by Moody's, as determined by the Agent in its sole discretion.
"EFFECTIVE DATE" means the first Business Day on which all of
the conditions precedent to the initial Purchase, as described in SECTION 3.01,
have been satisfied.
"ELIGIBLE RECEIVABLE" means a Receivable:
(i) which arises from the sale of an Originator's merchandise,
products or services in the ordinary course of such Originator's
business, and represents amounts earned and payable by the related
Obligor that are not subject to the performance of additional services
by such Originator, the Servicer or the Seller;
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(ii) the Obligor of which (w) is a United States resident, (x)
is not an affiliate or employee of Hackensack, an Originator, or the
Seller, (y) is not a Governmental Authority except to the extent that
the aggregate Outstanding Balance of all Receivables for which the
Obligor is a Government Authority would not exceed 5% of the
Outstanding Balance of all Receivables, and (z) is a Designated
Obligor;
(iii) which is not a Defaulted Receivable, and the Obligor of
which is not the Obligor of any Defaulted Receivables in the aggregate
amount of 20% or more of the aggregate Outstanding Balance of all
Receivables of such Obligor;
(iv) which is denominated and payable only in United States
dollars within the United States;
(v) which, together with the Contract related thereto, does
not contravene in any material respect any laws, rules or regulations
applicable thereto (including, without limitation, laws, rules or
regulations relating to truth in lending, fair credit billing, fair
credit reporting, equal credit opportunity, fair debt collection
practices and privacy) and with respect to which no party to the
Contract related thereto is in violation of any such law, rule or
regulation in any material respect;
(vi) which is freely assignable and does not require the
consent, authorization, approval or notice to the Obligor thereof or
any Governmental Authority (except for such consents, authorizations,
approvals or notices which have already been obtained or are not
required under applicable law) in connection with the conveyance of
such Receivable, the related Contract, the Related Security and the
Collections from the applicable Originator to Hackensack, from
Hackensack to the Seller and from the Seller to the Purchasers;
(vii) which satisfies all applicable requirements of the
Credit and Collection Policy and is in compliance with any other
reasonable criteria specified by the Agent upon at least 30 days' prior
written notice to the Seller and the Originators;
(viii) which, according to the Contract or invoice related
thereto, is required to be paid in full within 60 days of the original
billing date therefor except to the extent that the aggregate
Outstanding Balance of all Receivables for which payment is required
within 61-90 days of the original billing date therefor would not
exceed 3% of the Outstanding Balance of all Receivables;
(ix) which (1) is an "account" within the meaning of Article 9
of the UCC, (2) is an account receivable representing all or part of
the sales price of merchandise, insurance or services within the
meaning of Section 3(c)(5) of the Investment Company Act of 1940, as
amended, (3) a purchase of which with the proceeds of notes would
constitute a "current transaction" within the meaning of Section
3(a)(3) of the Securities Act of 1933, as amended, (4) has been duly
authorized by the related Obligor, (5) together with the Contract
related thereto, is in full force and effect and constitutes the legal,
valid and binding obligation of the Obligor thereof enforceable against
such Obligor in accordance with its terms, subject to Enforceability
Exceptions,
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(6) has not been satisfied, released, canceled, subordinated or
rescinded, nor has any instrument been executed by an Originator,
Hackensack or the Seller which would effect any such satisfaction,
release, cancellation, subordination or rescission, and (7) is not
subject to any existing dispute, right of rescission, setoff,
recoupment, counterclaim or defense (other than an Enforceability
Exception), whether arising out of transactions concerning such
Receivable or otherwise;
(x) good and marketable title to which (including a 100% first
priority ownership interest in all Related Security and Collections
with respect thereto) has been conveyed by the related Originator to
Hackensack under the Originator Sale Agreement, and by Hackensack to
the Seller under the Sale and Contribution Agreement free of any Lien
(other than Permitted Liens);
(xi) which has not been compromised, adjusted or modified
(including by extension of time of payment or the granting of any
discounts, allowances or credits) other than in accordance with the
Credit and Collection Policy for the purpose of maximizing collections
thereof or as a result of a Dilution Factor;
(xii) with respect to which the representations and warranties
set forth in SECTION 4.01(f) are true and correct; and
(xiii) no portion of which is payable on the account of sales
taxes.
"ENFORCEABILITY EXCEPTIONS" means exceptions to the
enforceability of an obligation arising under (i) bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting creditors'
rights generally, and (ii) general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair dealing
and the possible unavailability of specific performance, regardless of whether
considered in a proceeding at equity or at law.
"ERISA" means the U.S. Employee Retirement Income Security Act
of 1974, as amended from time to time, and any successor statute.
"ERISA AFFILIATE" means, with respect to any Person, any (i)
corporation which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the IRC) as such Person; (ii)
partnership or other trade or business (whether or not incorporated) under
common control (within the meaning of Section 414(c) of the IRC) with such
Person or (iii) member of the same affiliated service group (within the meaning
of Section 414(m) of the IRC) as such Person, any corporation described in
CLAUSE (i) above or any partnership or other trade or business described in
CLAUSE (ii) above.
"EUROCURRENCY LIABILITIES" has the meaning assigned to that
term in Regulation D of the Board of Governors of the Federal Reserve System, as
in effect from time to time.
"EURODOLLAR RESERVE PERCENTAGE" for any Yield Period means the
reserve percentage applicable to Citibank during such Yield Period under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) (or if more
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than one such percentage shall be so applicable, the daily average of such
percentages for those days in such Yield Period during which any such percentage
shall be so applicable) under regulations issued from time to time by the Board
of Governors of the Federal Reserve System (or any successor) for determining
the maximum reserve requirement (including, without limitation, any emergency,
supplemental or other marginal reserve requirement) for Citibank in respect of
liabilities or assets consisting of or including Eurocurrency Liabilities having
a term equal to such Yield Period.
"EVENT OF TERMINATION" has the meaning assigned to that term
in SECTION 7.01.
"FACILITY DOCUMENTS" shall mean collectively, this Agreement,
the Sale and Contribution Agreement, the Originator Sale Agreement, the Asset
Purchase Agreements, the Fee Letter, each Lock-Box Agreement, the Quill P.O. Box
Certificate, the Quill Account Control Agreement, the Parent Undertaking, the
Rochester Note, and all other agreements, documents and instruments delivered
pursuant thereto or in connection therewith.
"FEE LETTER" means that certain Fee Letter dated as of the
date hereof among the Agent and the Seller, as the same may be amended from time
to time.
"FINAL COLLECTION DATE" means the date following the
Termination Date on which the aggregate outstanding Capital has been reduced to
zero and the Affected Parties have received all amounts payable to the Affected
Parties (including Yield) pursuant to this Agreement or any other agreement
executed pursuant thereto.
"GAAP" means generally accepted accounting principles,
consistently applied.
"GOVERNMENTAL AUTHORITY" means any federal, state, local or
foreign government, any political subdivision of any of the foregoing and any
agency or instrumentality of any of the foregoing.
"HACKENSACK" means Hackensack Funding, LLC, a Delaware limited
liability company, together with its successors and permitted assigns.
"INDEBTEDNESS" of any Person means (i) indebtedness of such
Person for borrowed money, (ii) obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) obligations of such Person
to pay the deferred purchase price of property or services, (iv) obligations of
such Person as lessee or payor under leases which shall have been or should be,
in accordance with generally accepted accounting principles, recorded as capital
leases, (v) obligations secured by any lien or other charge upon property or
assets owned by such Person, even though such Person has not assumed or become
liable for the payment of such obligations, (vi) obligations of such Person in
connection with any letter of credit issued for the account of such Person,
(vii) obligations of such Person under any foreign exchange contract, currency
swap agreement, interest rate swap, cap or collar agreement or other similar
agreement or arrangement designed to alter the risks of that Person arising from
fluctuations in currency values or interest rates, in each case whether
contingent or matured and (viii) obligations of such Person under direct or
indirect guaranties in respect of, and obligations (contingent or otherwise)
9
to purchase or otherwise acquire, or otherwise to assure a creditor against loss
in respect of, indebtedness or obligations of others of the kinds referred to in
CLAUSES (i) through (vii) above.
"INITIAL PURCHASE DATE" means the date the first Purchase is
made pursuant to this Agreement.
"IRC" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute.
"IRS" means the Internal Revenue Service of the United States
of America.
"LIBO RATE" for any Yield Period means the rate of interest
per annum at which deposits in U.S. Dollars are offered by the principal office
of Citibank in London, England to prime banks in the London interbank market at
11:00 a.m. (London time) two Business Days before the first day of such Yield
Period in an amount approximately equal or comparable to the portion of the then
outstanding Capital accruing Yield by reference to the Assignee Rate and for a
period equal to such Yield Period.
"LIEN" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or otherwise), or preference,
priority, or other security agreement or preferential arrangement of any kind or
nature whatsoever.
"LIQUIDITY PROVIDER" means any of the financial institutions
from time to time party to any Asset Purchase Agreement.
"LOCK-BOX ACCOUNT" means any account, including, without
limitation, those accounts listed on EXHIBIT G, maintained at a Lock-Box Bank
for the purpose of receiving Collections.
"LOCK-BOX AGREEMENT" means an agreement with respect to a
Lock-Box Account at a Lock-Box Bank, in substantially the form of EXHIBIT D to
this Agreement, among the Seller, Hackensack, the Servicer, an Originator, the
Agent and such Lock-Box Bank, as the same may be amended from time to time.
"LOCK-BOX BANK" means any of the banks holding one or more
Lock-Box accounts for receiving Collections from Receivables.
"LOSS HORIZON FACTOR" means, an amount, calculated as of the
end of the most recent Settlement Period, equal to the quotient of (i) the
aggregate Outstanding Balance of the Receivables originated during the preceding
four Settlement Periods and (ii) the aggregate Outstanding Balance of all
Eligible Receivables as of the end of the most recent Settlement Period.
"LOSS PERCENTAGE" means a percentage, calculated as of the end
of the most recent Settlement Period, equal to the greatest of (i) 10%, (ii)
four (4) times the percentage set forth in CLAUSE (a) of the definition of
"Concentration Limit" and (iii) the product of (A) two, TIMES (B) the Loss
Horizon Factor, TIMES (C) the highest average of the Loss Ratios for any three
10
consecutive calendar month period during the twelve Settlement Periods preceding
the date of calculation (including the Settlement Period in which such
calculation occurs).
"LOSS RATIO" means, for any Settlement Period, a fraction
(expressed as a percentage) determined as of the last day of such Settlement
Period by dividing (i) the aggregate Outstanding Balance of all Receivables (A)
which are at least 91 but not more than 120 days past due or (B) otherwise
became Defaulted Receivables during such Settlement Period or (C) were written
off during such Settlement Period by (ii) the aggregate Outstanding Balance of
all Receivables originated during the fourth Settlement Period immediately
preceding the date of such determination.
"LOSS RESERVE" means, at any time, (A) a fraction (expressed
as a percentage) (i) the numerator of which is the Loss Percentage and (ii) the
denominator of which is equal to one MINUS the Loss Percentage, TIMES (B) the
sum of the aggregate outstanding Capital and the Yield and Fee Reserve at such
time.
"LOSS-TO-LIQUIDATION RATIO" means, as of the last day of any
Settlement Period, the ratio (expressed as a percentage) determined by dividing
(i) the aggregate Outstanding Balance of all Receivables which became Defaulted
Receivables or should have been otherwise written off by the Seller in
accordance with the Credit and Collection Policy during such Settlement Period,
by (ii) the aggregate amount of cash Collections from Receivables received by
the Servicer during such Settlement Period.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(i) the financial condition or operations of any Transaction Party, (ii) the
ability of any Transaction Party to perform its obligations under this Agreement
or any other Facility Document, (iii) the legality, validity or enforceability
of this Agreement or any other Facility Document, (iv) the Seller's, the Agent's
or any Purchaser's interest in the Receivables Assets generally or in any
significant portion of the Receivables Assets, or (v) the collectibility of the
Receivables generally or of any material portion of the Receivables.
"MAXIMUM CAPITAL" means at any time of calculation hereunder
the lesser of (a) the difference between (i) the Net Receivables Pool Balance
TIMES 97%, MINUS (ii) the Required Reserves and (b) the Purchase Limit.
"MONTHLY REPORTING DATE" means, with respect to a calendar
month, the tenth (10th) Business Day of such calendar month.
"MOODY'S" means Xxxxx'x Investors Service, Inc., and its
successors.
"MULTIEMPLOYER PLAN" means, with respect to any Person, a
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA which is, or
within the immediately preceding six (6) years was, contributed to by either
such Person or any ERISA Affiliate of such Person.
"NET RECEIVABLES POOL BALANCE" means at any time of
calculation hereunder, (i) the sum of the Outstanding Balances of all Eligible
Receivables MINUS (ii) the aggregate amount by which the aggregate Outstanding
Balance of all Receivables of each Obligor exceeds the
11
product of (x) the Concentration Limit, for such Obligor and (y) the aggregate
outstanding Capital at such time, MINUS (iii) any Collections in respect of any
such Eligible Receivable or other credits owing to the applicable Obligor that
have not yet been applied to reduce the Outstanding Balance of such Eligible
Receivable, MINUS (iv) with respect to any Eligible Receivable owed by an
Obligor to whom the related Originator owes any payment obligations, the lesser
of (x) the amount of such payment obligations and (y) the Outstanding Balance
thereof.
"OBLIGATIONS" means all present and future indebtedness and
other liabilities and obligations (howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, or due or to become due) of
the Seller to the Purchasers, the Agent and/or any other Person, arising under
or in connection with this Agreement or any other Facility Document to which the
Seller is a party or the transactions contemplated hereby or thereby, and shall
include, without limitation, all Capital, Yield, Servicing Fees, Program Fees,
Ongoing Liquidity Fees, Conduit Fees, Other Fees, all liability for principal of
and interest on the Capital, the closing fees, unused line fees, expense
reimbursements, indemnifications, and other amounts due or to become due under
the Facility Documents to which the Seller is a party, including, without
limitation, interest, fees and other obligations that accrued after the
commencement of an insolvency proceeding (in each case whether or not allowed as
a claim in such insolvency proceeding).
"OBLIGOR" means any Person obligated to make payments pursuant
to a Contract.
"ONGOING LIQUIDITY FEE" has the meaning set forth in the Fee
Letter.
"ORIGINATOR" means SCC or Quill, and "ORIGINATORS" means SCC
and Quill, together with their successors and permitted assigns.
"ORIGINATOR SALE AGREEMENT" means that certain Receivables
Sale Agreement dated as of the date hereof between the Originators and
Hackensack, as the same may be amended from time to time.
"OTHER FEES" means amounts owed by the Seller hereunder
pursuant to SECTIONS 2.06, 2.07, 2.08, 8.01 and 9.06.
"OUTSTANDING BALANCE" means, with respect to a Receivable at
any time, the outstanding principal balance thereof.
"PARENT UNDERTAKING" means that certain Parent Undertaking of
the obligations of the Originators and Hackensack under the Facility Documents
executed on the date hereof by Staples for the benefit of the Agent and the
Purchasers.
"PAYMENT DATE" means, (a) the seventeenth calendar day of each
calendar month (or, if such day is not a Business Day, the next succeeding
Business Day) and (b) following the occurrence and during the continuation of an
Event of Termination, each other Business Day so designated by the Agent in its
sole discretion.
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"PERMITTED INVESTMENTS" shall mean:
(a) direct obligations of, or guaranteed as to the full and
timely payment of principal and interest by, the United States or obligations of
any agency or instrumentality thereof, if such obligations are backed by the
full faith and credit of the United States;
(b) federal funds, certificates of deposit, time deposits and
bankers' acceptances (which shall each have an original maturity of not more
than 90 days and, in the case of bankers' acceptances, shall in no event have an
original maturity of more than 365 days) of any United States depository
institution or trust company organized under the laws of the United States or
any state and subject to authorities; PROVIDED, that the short-term obligations
of such depository institution or trust company are rated in one of the two
highest available rating categories by the Rating Agencies;
(c) commercial paper (having original maturities of not more
than 30 days) of any corporation incorporated under the laws of the United
States or any state thereof which on the date of the acquisition are rated A-1
or better by S&P and P-1 by Moody's;
(d) securities of money market funds rated Aam or better by
S&P and Aa2 or better by Moody's; and
(e) repurchase obligations secured by an investment described
in CLAUSE (a) above with a market value greater than the repurchase obligation,
PROVIDED that such security is held by a third party custodian which has a
rating for its short-term, unsecured debt or commercial paper (other than such
obligations the rating of which is based on the credit of a Person other than
such custodian) of P-1 by Moody's and at least A-1 by S&P.
"PERMITTED LIENS" means any of the following:
(a) liens, charges or other encumbrances for taxes and
assessments (i) which are not yet due and payable or (ii) the validity of which
are being contested in good faith by appropriate proceedings and with respect to
which the Seller is maintaining adequate reserves in accordance with generally
accepted accounting principles;
(b) liens, charges or encumbrances in favor of the Purchasers,
any Liquidity Provider (but only in connection with this Agreement) or the
Agent;
(c) liens, charges or other encumbrances related to storage,
work, labor, usage or other liens of like general nature incurred in the
ordinary course of business and not in connection with the borrowing of money,
provided in each case, the obligation secured is not overdue or, if overdue, is
being contested in good faith by appropriate actions or proceedings the effect
of which is to stay the enforcement of any such lien, charge or encumbrance; and
(d) imperfections in title or liens arising by operation of
law not material in amount and which, individually or in the aggregate, do not
materially interfere with the rights hereunder of any Purchaser or the Agent in
the Receivables Assets.
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"PERSON" means an individual, partnership, corporation
(including a business trust), joint stock company, limited liability company,
trust, unincorporated association, joint venture, Governmental Authority or
other entity.
"PLAN" means, with respect to any Person, an employee benefit
plan defined in Section 3(3) of ERISA in respect of which such Person or any
ERISA Affiliate of such Person is, or within the immediately preceding six (6)
years was, an "employer" as defined in Section 3(5) of ERISA.
"PLEDGED COLLATERAL" has the meaning given such term in the
Sale and Contribution Agreement.
"PRO RATA SHARE" means, for any Committed Purchaser, a
fraction (expressed as a percentage) computed by dividing such Committed
Purchaser's Commitment by the Purchase Limit.
"PROGRAM FEE" has the meaning given such term in the Fee
Letter.
"PURCHASE" means a purchase by a Purchaser of an undivided
percentage ownership interest in the Receivables Assets from the Seller pursuant
to SECTION 2.01 and SECTION 2.02.
"PURCHASE LIMIT" means at any time $175,000,000, PROVIDED,
HOWEVER, that at all times on and after the Termination Date, the "PURCHASE
LIMIT" shall mean the aggregate outstanding Capital.
"PURCHASE PRICE" has the meaning given such term in SECTION
2.02(d).
"PURCHASE REQUEST" means a written notice, in substantially
the form of EXHIBIT B, delivered by the Seller to the Agent for the Purchasers
and requesting a Purchase pursuant to SECTIONS 2.01 and 2.02.
"PURCHASER" means the Conduit Purchaser or a Committed
Purchaser, as applicable, and "PURCHASERS" means the Conduit Purchaser and the
Committed Purchasers.
"PURCHASER RATE" means, for any Yield Period (i) with respect
to any portion of the Capital held by the Committed Purchasers or any of the
Liquidity Providers, a rate equal to the Assignee Rate for such Yield Period,
and (ii) with respect to the Conduit Purchaser, (x) the CP Rate, or (y) a rate
equal to the Assignee Rate for such Yield Period if at any time and for any
reason whatsoever, (1) the Conduit Purchaser shall not fund Purchases or
maintain Capital during such Yield Period through the issuance of CP Notes in
the United States commercial paper market, (2) the Agent shall have required
that Payment Dates occur more frequently than monthly pursuant to the definition
of "Payment Date" or (3) the Purchaser shall have assigned Capital to a
Liquidity Provider assignee pursuant to SECTION 9.04.
"QUILL" means Quill Corporation, a Delaware corporation,
together with its successors and permitted assigns.
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"QUILL ACCOUNT" means that certain account maintained by Quill
at American National Bank and Trust Company account no. 667986, account name:
"Quill Corporation as Servicer for Lincolnshire Funding, LLC and Citicorp North
America, Inc. as Agent", for the purpose of receiving Collections related to the
Quill Receivables.
"QUILL ACCOUNT CONTROL AGREEMENT" means that certain agreement
regarding the Quill Account by and among Quill, the Seller, Hackensack, the
Servicer, the Agent and American National Bank and Trust Company, as the same
may be amended from time to time.
"QUILL P.O. BOX" means that certain Post Office Box at Quill
Corporation, X.X. Xxx 00000, Xxxxxxxx, XX 00000-0000.
"QUILL P.O. BOX CERTIFICATE" means that certain certificate
executed by Quill and delivered to the Agent.
"QUILL RECEIVABLE" means any Receivable originated by Quill.
"RATE VARIANCE FACTOR" means 1.5 or such other number selected
by the Agent as reflecting the potential variance in selected interest rates
over a period of time equivalent to the Turnover Days and notified by the Agent
to the Servicer upon at least five (5) days' notice.
"RATING AGENCY" means, as applicable, either or both of S&P
and Moody's or their respective successors.
"RECEIVABLE" means all indebtedness of an Obligor arising
under a Contract from the sale or merchandise or provision of services by an
Originator, including all interest and finance charges.
"RECEIVABLES ASSETS" means, at any time, all then outstanding
Receivables, Related Security with respect to such Receivables, the Lock-Box
Accounts, the Quill P.O. Box, the Quill Account, all right, title and interest
of the Seller in, to and under the Sale and Contribution Agreement, the
Originator Sale Agreement and all Pledged Collateral all other proceeds of the
foregoing, including, without limitation, all Collections of Receivables.
"RECEIVABLES INTEREST" means the undivided percentage
ownership interest of a Purchaser in the Receivables Assets, including the
Receivables and the Related Security and Collections related thereto. The
Receivables Interest of any Purchaser is expressed as a fraction of the total
Receivables Assets, and shall at any time be equal to such Purchaser's ratable
share (in accordance with each Purchaser's Capital) of an amount computed as
follows:
C + RR + AA
-----------
NRPB
where:
C = The aggregate outstanding amount of Capital at such time.
RR = The Required Reserves at such time.
15
AA = The Adjustment Amount.
NRPB = The Net Receivables Pool Balance at such time.
PROVIDED, that from and after the Termination Date until the Final Collection
Date the aggregate Receivables Interests of all Purchasers shall be equal to
100% and the Receivables Interest of each individual Purchaser shall be equal to
a fraction the numerator of which is equal to such Purchaser's Capital and the
denominator of which is equal to the aggregate outstanding Capital hereunder. On
the Final Collection Date, the aggregate Receivables Interests of all Purchasers
shall reduce to zero.
"RECORDS" means all agreements, documents, instruments, books,
records and other information maintained by or on behalf of the Seller with
respect to the Receivables, the related Obligors, the Pledged Collateral and the
other Related Security.
"REINVESTMENT PURCHASE" has the meaning assigned to that term
in SECTION 2.02(a).
"RELATED SECURITY" means, with respect to any Receivable, (i)
all security interests or liens and property subject thereto from time to time
purporting to secure payment of such Receivable, whether pursuant to the related
contract with the Obligor or otherwise, (ii) the assignment to the Agent, for
the benefit of the Purchasers, of all UCC financing statements or other filings
covering any collateral securing payment of such Receivable, (iii) all
guarantees, prepayment penalties, indemnities, warranties, letters of credit,
insurance policies and proceeds and premium refunds thereof and other agreements
or arrangements of whatever character from time to time supporting or securing
payment of such Receivable, (iv) all Records related to such Receivable, (v) the
Sale Agreement Assets and (vi) all proceeds of the foregoing.
"REQUIRED RESERVES" means, at any time, the sum of (i) the
Loss Reserve, (ii) the Yield and Fee Reserve, and (iii) the excess, if any, of
the Dilution Reserve over the Sr. Portion Valuation Amount in effect at such
time.
"RESPONSIBLE OFFICER" means, with respect to any Person, the
chief executive officer, the chief financial officer, the treasurer or
controller, or such other senior officers having titles or responsibilities
comparable to such officers, of such Person.
"ROCHESTER" means Rochester Capital, LLC a Delaware limited
liability company.
"ROCHESTER NOTE" means that certain intercompany note in the
amount of $2.2 billion issued by Rochester for the benefit of Staples West and
contributed by Staples West to Hackensack.
"SALE AND CONTRIBUTION AGREEMENT" means that certain
Receivables Sale and Contribution Agreement dated as of the date hereof between
Hackensack and the Seller, as the same may be amended from time to time.
16
"SALE AGREEMENT ASSETS" means all right, title and interest of
the Seller in, to and under the Sale and Contribution Agreement, the Originator
Sale Agreement, and the Pledged Collateral, including, without limitation, (x)
all obligations due and to become due to the Seller thereunder or in connection
therewith, whether as principal, interest, fees, expenses, costs, indemnities,
insurance recoveries, damages for breach or otherwise, (y) all right of the
Seller to amend, modify or waive, or to direct, instruct or request any action
under, any term or provision thereof and (z) all rights, remedies, powers,
privileges and claims of the Seller against either Originator, Hackensack,
Staples, Rochester or any other Person thereunder.
"S&P" means Standard & Poor's Ratings Services, a division of
The XxXxxx-Xxxx Companies, Inc., and its successors.
"SCC" means Staples Contract & Commercial, Inc., a Delaware
corporation, together with its permitted successors and assigns.
"SCC RECEIVABLE" means any Receivable originated by SCC.
"SCHEDULED TERMINATION DATE" means October 25, 2001, as such
date may be extended from time to time with the consent of the parties hereto.
"SELLER" means Lincolnshire Funding, LLC., a Delaware limited
liability company, in its capacity as Seller hereunder, together with its
successors and permitted assigns.
"SELLER REPORT" means a report, in substantially the form of
EXHIBIT C, furnished by the Servicer to the Agent for the Purchasers pursuant to
SECTION 5.02(c).
"SERVICER" means at any time the Person(s) then authorized
pursuant to SECTION 6.01 to service, administer, xxxx and collect Receivables.
"SERVICER DEFAULT" means the occurrence of any of the
following with respect to the Servicer:
(a) the Servicer shall fail to forward any deposit of
Collections to be forwarded by it hereunder (i) in respect of Capital, when due,
and (ii) in respect of Yield or any other amount owed by the Servicer, within
three Business Days after such payment or deposit was due to be made or
forwarded; or
(b) the Servicer shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement or any other Facility
Document on its part to be performed or observed and any such failure shall
remain unremedied for three (3) Business Days after the Servicer obtains
knowledge of such failure or notice of such failure is delivered by the Agent to
the Servicer, except that the failure to perform or observe any such term or
covenant which is related to the generation or delivery of a Seller Report shall
be a "Servicer Default" if such failure remains unremedied for five days; or
(c) any representation or warranty made or deemed to be made
by the Servicer (or any of its Designated Officers) under this Agreement, any
Seller Report or any Purchase Request shall prove to have been false or
incorrect in any material respect when made; or
17
(d) (i) the Servicer 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 Servicer
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, or other similar official for
it or for any substantial part of its property which proceeding has not been
dismissed or stayed within sixty days; or (ii) the Servicer's Board of Directors
shall vote affirmatively to authorize any of the actions set forth in CLAUSE (i)
above in this SUBSECTION (d); or
(e) there shall have occurred any event which materially and
adversely affects the ability of the Servicer to collect Receivables generally
or the ability of the Servicer to perform its obligations hereunder;
(f) an Event of Termination shall occur that is not an Event
of Termination described in any of SECTIONS 7.01(g) or (h);
(g) the Servicer shall fail to pay any principal of or premium
or interest on any Indebtedness having a principal amount of $10,000,000 or
greater when the same becomes due and payable; or
(h) the Servicer shall resign, be replaced or otherwise cease
to perform as Servicer hereunder (other than pursuant to SECTION 6.01(a)) or the
Servicer shall resign, be replaced or otherwise cease to perform as Servicer
with respect to the "Purchased Assets" and Related Security under the Sale and
Contribution Agreement (other than pursuant to SECTION 2.06 thereof).
"SERVICER FEE" means a fee with respect to each Settlement
Period, payable in arrears on each Payment Date for the account of the Servicer,
in an amount equal to (a) so long as Staples is the Servicer, the product of (i)
the outstanding Capital as of the last day of the immediately prior Settlement
Period times (ii) a per annum rate of one-fourth of one percent (0.25%) times
(iii) a fraction equal to the number of actual days elapsed in such Settlement
Period divided by 360 and (b) if Staples is not the Servicer, the lesser of (i)
the product of (A) the outstanding Capital as of the last day of the immediately
prior Settlement Period times (B) a per annum rate of one percent (1.0%) times
(C) a fraction equal to the number of actual days elapsed in such Settlement
Period divided by 360 and (ii) 110% of such Servicer's reasonable costs and
expenses of servicing the Receivables.
"SETTLEMENT PERIOD" means a period equal to one calendar
month, provided however, that the first Settlement Period shall commence on the
Effective Date and terminate on the last day of the calendar month in which such
Settlement Period commenced.
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"SR. PORTION" means that certain senior interest in an amount
of $25,000,000 in the Rochester Note pledged by Hackensack to the Seller
pursuant to SECTION 2.14 of the Sale and Contribution Agreement.
"SR. PORTION VALUATION AMOUNT" means, at any time, (i) if
Staples is rated at least BBB- by S&P and Baa3 by Moody's or each Deemed Rating,
if applicable, is at least equal to an equivalent rating, an amount not to
exceed $25,000,000 and (ii) if Staples is rated below BBB- by S&P or Baa3 by
Moody's or any Deemed Rating, if applicable, is less than an equivalent rating,
an amount, not to exceed $25,000,000 to be determined by the Agent in its sole
discretion; PROVIDED that (x) if there has been a default under the Rochester
Note, the Sr. Portion Valuation Amount shall be zero; and (y) in no event shall
the Sr. Portion Valuation Amount be greater that the principal balance of the
Rochester Note.
"STAPLES" means Staples, Inc., a Delaware corporation,
together with its successors and permitted assigns.
"STAPLES WEST" means Staples the Office Superstore, Inc., a
Delaware corporation, together with its successors and permitted assigns.
"STRUCTURING FEE" has the meaning given such term in the Fee
Letter.
"SUBSIDIARY" means, as to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the Board of Directors or other Persons performing
similar functions are at the time directly or indirectly owned by such Person.
"TERMINATION DATE" means the earliest to occur of (i) the
Scheduled Termination Date, (ii) the declaration or automatic occurrence of the
Termination Date pursuant to SECTION 7.01, (iii) that Business Day which the
Seller designates as the Termination Date by notice to the Agent at least thirty
(30) days prior to such Business Day, (iv) the fifth anniversary of the Initial
Purchase Date and (v) the occurrence of the "Termination Date" under and as
defined in the Sale and Contribution Agreement.
"TRANSACTION PARTY" means the Seller, Hackensack, either
Originator, Staples and the Servicer (so long as it is Staples or an Affiliate
thereof).
"TURNOVER DAYS" means, at any time, the product of (i) the
average, for the immediately preceding three calendar months, of the aggregate
Outstanding Balance of all Receivables at the end of each such month, DIVIDED BY
the average, for each such month, of the aggregate Collections received during
each such month, TIMES (ii) the average weighted payment terms in days, which
number shall be no less than 61.
"UCC" means the Uniform Commercial Code as from time to time
in effect in the specified jurisdiction.
"UPFRONT LIQUIDITY FEE" has the meaning given such term in the
Fee Letter.
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"YIELD" means, for any Yield Period, an amount equal to:
(PR x C x ED/360) + AY
where:
C = the average daily outstanding Capital during such Yield
Period;
PR = the weighted average daily (calculated as a function of not
only the interest rate but also the amount of Capital
allocated to such interest rate) Purchaser Rate for such Yield
Period;
ED = the actual number of days elapsed during such Settlement
Period;
AY = any accrued and unpaid Additional Yield which became due and
owing during such Yield Period.
"YIELD AND FEE RESERVE" means, the sum of (x) accrued and
unpaid Yield, Servicer Fees, Program Fees, Ongoing Liquidity Fees and Conduit
Fees and (y) an amount equal to the product of (i) the outstanding Capital and
(ii) an amount equal to the following:
((RV x LR) + PF + SF + 1.5%) x (TD + CDP)/360
where:
RV = the Rate Variance Factor;
LR = the LIBO Rate for a one-month Yield Period commencing on the
date the Yield and Fee Reserve is calculated;
PF = the percentage per annum used to calculate the Program Fee;
SF = the percentage per annum used to calculate the Servicing Fee;
TD = the calculation of Turnover Days; and
CDP = the Collection Delay Period.
"YIELD PERIOD" means (a) with respect to any portion of the
Capital for which the Purchase Rate is equal to the CP Rate, each Settlement
Period and (b) with respect to any other portion of Capital, the period from and
including a Payment Date (or, if later, the Initial Purchase Date) to but not
excluding the next succeeding Payment Date.
SECTION 1.02. OTHER TERMS. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles. Each of the foregoing definitions shall be
equally applicable to both the singular and plural forms of the defined terms.
Unless specifically stated otherwise, all references herein to any agreements,
documents or instruments shall be references to the same as amended, restated,
supplemented or otherwise modified from time to time. 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.
20
SECTION 1.03. COMPUTATION OF TIME PERIODS. Unless otherwise
stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding."
SECTION 1.04. CALCULATION OF CERTAIN RATIOS. The parties
hereto acknowledge that the Servicer lacks complete aging information with
respect to the Quill Receivables for purposes of calculating, as of any date or
during any Settlement Period prior to the Effective Date, the outstanding amount
of Defaulted Receivables, Delinquent Receivables, or Receivables which are more
than 90 days but less than and equal to 120 days past due. To the extent that
the calculations of the Eligible Receivables, Net Receivables Pool Balance,
Required Reserves, Default Ratio, Delinquency Ratio, Loss-to-Liquidation Ratio,
or the calculation of any other ratios required to be made hereunder are based
on such characteristics of the Receivables during any period or as of any date
prior to the Effective Date and for which there is insufficient information, the
parties agree that such missing information shall be as determined by the Agent
based on its review of the available historical information provided by the
Servicer for such periods and reasonably agreed to by the Servicer.
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 2.01. THE PURCHASE FACILITY. (a) Upon the terms and
subject to the conditions set forth in this Agreement, from the Effective Date
through the Business Day immediately preceding the Termination Date, the Seller
agrees to sell undivided percentage ownership interests in the Receivables
Assets, and the Conduit Purchaser may, in its sole discretion, purchase, and if
the Conduit Purchaser declines to so purchase, the Committed Purchasers shall
purchase, such undivided percentage ownership interests.
(b) The Seller may, upon at least five Business Days' notice
to the Agent, terminate in whole or reduce in part (ratably among the Committed
Purchasers) the unused portion of the Purchase Limit; PROVIDED that each partial
reduction of the Purchase Limit shall be in an amount equal to $5,000,000 or an
integral multiple of $1,000,000 in excess thereof; and PROVIDED FURTHER that in
no event may the Purchase Limit be reduced to an amount less than the aggregate
outstanding Capital hereunder.
SECTION 2.02. MAKING THE PURCHASES. (a) Each purchase of
undivided percentage ownership interests in the Receivables Assets by the
Purchasers hereunder shall consist of either (i) a purchase made by the
applicable Purchasers with new funds provided by such Purchasers (each, a
"CAPITAL PURCHASE") or (ii) a purchase made by the applicable Purchasers with
funds consisting of Collections allocated to the Capital of such Purchasers
pursuant to the terms of this Agreement (each, a "REINVESTMENT PURCHASE"). The
first purchase hereunder shall be a Capital Purchase.
(b) CAPITAL PURCHASES. The Seller shall provide the Agent with
a purchase notice, in the form of EXHIBIT B (each a "PURCHASE REQUEST"), at
least three Business Days prior
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to each Capital Purchase. Each Purchase Request shall, except as set forth
below, be irrevocable and shall specify the requested Purchase Price (not to be
less than $1,000,000) and date of purchase (which shall be a Business Day).
Following receipt of a Purchase Request, the Agent will determine whether the
Conduit Purchaser will make the requested Capital Purchase. If the Conduit
Purchaser declines to make such Capital Purchase, the Agent shall promptly
notify the Seller and the Seller may, on the day it receives such notice, either
(x) cancel the applicable Purchase Request or (y) request that the Committed
Purchasers make such Capital Purchase, in each case by notice to the Agent. If
the Seller does not so notify the Agent, then the applicable Purchase Request is
canceled. On the date of each Capital Purchase, upon satisfaction of the
applicable conditions precedent set forth in ARTICLE III, the Conduit Purchaser
or each Committed Purchaser, as applicable, shall make available to the Agent at
its address listed beneath its signature on its signature page to this
Agreement, in same day funds, an amount equal to (1) in the case of the Conduit
Purchaser, the aggregate Purchase Price with respect to such Capital Purchase,
and (2) in the case of a Committed Purchaser, such Committed Purchaser's Pro
Rata Share of the aggregate Purchase Price with respect to such Capital
Purchase. After receipt by the Agent of such funds, the Agent will make such
funds available to the Seller by wire transfer to such account as shall have
been designated by the Seller.
(c) REINVESTMENT PURCHASES. On each Business Day until the
Business Day immediately preceding the Termination Date on which Collections are
received by the Servicer, the Seller hereby requests that the Purchasers make,
and the Purchasers hereby agree to make and shall automatically be deemed to
have made a Reinvestment Purchase with a Purchase Price equal to the aggregate
amount of Collections allocated to the Capital of such Purchaser on such
Business Day pursuant to SECTION 2.04, if any, unless, with respect to the
Conduit Purchaser, the Agent shall have notified the Seller and the Servicer
that the Conduit Purchaser shall not make such Reinvestment Purchase for any
reason. If the Agent provides such notice, the Collections allocated to the
Capital of the Conduit Purchaser on such Business Day pursuant to SECTION 2.04
shall be applied in reduction of the Conduit Purchaser's Capital in accordance
with such Section.
(d) PURCHASE PRICE. The purchase price (the "PURCHASE PRICE")
(i) with respect to a Capital Purchase shall be equal to the amount requested by
the Seller to be paid by the applicable Purchasers pursuant to SECTION 2.02(A),
and (ii) with respect to a Reinvestment Purchase shall be equal to the amount of
Collections allocated to the Capital of the relevant Purchasers and available
for such purpose pursuant to SECTION 2.04. The Purchase Price for a Capital
Purchase may in no event be greater than the excess, if any, of (1) the lesser
of the Purchase Limit and the Adjusted Net Receivables Pool Balance on the date
of such Purchase, OVER (2) the aggregate amount of outstanding Capital (before
giving effect to such Purchase).
(e) EFFECT OF PURCHASES. Upon each Purchase, the Seller sells,
assigns and conveys an undivided percentage ownership interest in the
Receivables Assets to the Agent for the benefit of the applicable Purchasers,
and such Purchasers hereby purchase and acquire such undivided percentage
ownership interest. If at any time a court characterizes the transactions
hereunder as loans by the Purchasers to the Seller, then this agreement will
constitute a security agreement under the applicable law. The Seller hereby
pledges, grants a security interest in and assigns to the Agent, for the benefit
of the Purchasers, all of the right and title to and interest in the Receivables
Assets, including the Receivables, the Related Security and Collections, as
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security for such loans and for the payment and performance of all obligations
of the Seller hereunder (including, if a court characterizes the transactions
hereunder as loans by the Purchasers to the Seller, the Seller's obligation to
repay such loans).
(f) VOLUNTARY REDUCTIONS IN CAPITAL. The Seller may, upon two
(2) Business Days' prior notice to the Agent, reduce the outstanding Capital in
the minimum amount of $5,000,000 and increments of $1,000,000 in excess thereof
by remitting cash to the Agent for application against Capital, together with,
if such reduction in Capital occurs on any date other than a Payment Date, the
Breakage Amount, PROVIDED, HOWEVER, that if such reduction of Capital is being
made in connection with a termination of the facility pursuant to SECTION 7.01,
the aforesaid notice requirement and dollar limitations shall not apply.
SECTION 2.03. YIELD AND FEES. (a) Yield shall accrue on the
outstanding Capital on each day during each Yield Period at the applicable
Purchaser Rate. On each Payment Date, the Seller shall pay to the Purchasers an
amount equal to accrued and unpaid Yield with respect to each Yield Period
ending on or prior to such Payment Date from Collections in accordance with
SECTION 2.04.
(b) On each Payment Date, the Seller shall pay to the
Purchasers an amount equal to the sum of the Program Fees, the Ongoing Liquidity
Fees, the Conduit Fees and Other Fees with respect to the immediately preceding
Settlement Period from Collections in accordance with SECTION 2.04.
SECTION 2.04. SETTLEMENT PROCEDURES.
(a) DEEMED COLLECTIONS. If on any day the Outstanding Balance
of a Receivable is either reduced or canceled as a result of a Dilution Factor,
the Seller shall be deemed to have received on such day a Collection of such
Receivable in an amount equal to the amount of such reduction or, in the case of
a cancellation, in an amount equal to the Outstanding Balance of such Diluted
Receivable. If the Seller is on any day deemed to have received Collections
pursuant to this SECTION 2.04(a), the Seller shall pay to the Servicer on such
day an amount of funds equal to such deemed Collections.
(b) DAILY ALLOCATION OF COLLECTIONS. Both before and after the
Termination Date, on each Business Day during a Settlement Period, the Servicer
shall determine the Collections of Receivables received on such day and shall:
(i) first, set aside and hold in trust for the Purchasers for
further application on the succeeding Payment Date pursuant to SECTION
2.04(c) or (d) below, the sum of (A) the aggregate of the amounts
required to be paid to the Affected Parties on the next Payment Date
pursuant to SECTION 2.04(c)(i) or (d)(i), as applicable, accrued
through such day and not so previously set aside, PLUS (B) subject to
the provisions of SECTION 2.04(e)(i), if the Agent has notified the
Seller and the Servicer that the Conduit Purchaser will not make any
more Reinvestment Purchases, an amount equal to the outstanding Capital
of the Conduit Purchaser, PLUS (C) if outstanding Capital exceeds
Maximum Capital on such Business Day, the amount of such excess (it
being understood that the amount set aside in this clause (C) may be
released for further application under this
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SECTION 2.04(b) on a subsequent Business Day prior to the next
succeeding Payment Date if and to the extent that outstanding Capital
on such subsequent Business Day no longer exceeds Maximum Capital) plus
(D) if the Termination Date has occurred, all remaining amounts; and
(ii) second, pay the balance of such Collections to the Seller
in payment of the Purchase Price for a Reinvestment Purchase (allocated
ratably among all of the Purchasers or, if the Agent has notified the
Seller and the Servicer that the Conduit Purchaser shall not make any
more Reinvestment Purchases, allocated ratably among the Committed
Purchasers).
(c) ALLOCATION OF COLLECTIONS ON PAYMENT DATES PRE-TERMINATION
DATE. On each Payment Date before the Termination Date, the Servicer shall
deposit into the Collection Account all Collections set aside and held in trust
pursuant to SECTION 2.04(b) above during the immediately preceding Settlement
Period, and the Agent shall apply all such Collections as follows:
(i) first, in payment of the following amounts in the
following order for allocation to the relevant Affected Parties: (1)
Yield, (2) Ongoing Liquidity Fees, (3) Program Fees, (4) Conduit Fees,
(5) Other Fees and (6) Servicer Fees, in each case to the extent
accrued and unpaid;
(ii) second, to the extent of any amounts set aside under
CLAUSES (B) or (C) of SECTION 2.04(b)(i), to the Purchasers in
reduction of outstanding Capital, to be distributed (x) in the case of
amounts set aside under clause (C), to the Purchasers ratably in
accordance with the Receivables Interests of the Purchasers and (y) in
the case of amounts set aside under clause (B), to the Conduit
Purchaser in an amount equal to the Conduit Purchaser's ratable share
(in accordance with the Receivables Interests of the Purchasers) of
such amounts until the Conduit Purchaser's outstanding Capital is
reduced to zero; and
(iii) third, to the Seller in payment of the Purchase Price
for a Reinvestment Purchase (allocated ratably among all of the
Purchasers or, if the Agent has notified the Seller and the Servicer
that the Conduit Purchaser shall not make any more Reinvestment
Purchases, allocated ratably among the Committed Purchasers).
(d) ALLOCATION OF COLLECTIONS ON PAYMENT DATES
POST-TERMINATION DATE. On each Payment Date on and after the Termination Date,
the Servicer shall deposit into the Collection Account all Collections set aside
and held in trust pursuant to SECTION 2.04(b) above during the immediately
preceding Settlement Period, and the Agent shall apply all such Collections as
follows:
(i) first, in payment of accrued and unpaid Yield for each
Yield Period ending on or prior to such Payment Date, for allocation
ratably among the Purchasers;
(ii) second, in payment of the following amounts in the
following order, for allocation to the relevant Affected Parties (to
the extent then accrued and unpaid): (1) Ongoing Liquidity Fees, (2)
Program Fees, (3) Conduit Fees, (4) Other Fees, and (5) Servicer Fees;
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(iii) third, in payment of outstanding Capital, for allocation
ratably among the Purchasers;
(iv) fourth, in payment of all other amounts due and payable
to the Affected Parties; and
(v) fifth, following the Final Collection Date, the balance to
the Seller.
(e) ASSIGNMENTS FROM THE CONDUIT PURCHASER TO THE LIQUIDITY
PROVIDERS.
(i) If the Agent has notified the Seller and the Servicer that
the Conduit Purchaser has elected in its discretion not to make any
more Reinvestment Purchases, the Conduit Purchaser will, if the Seller
so requests and so long as the Termination Date shall not have
occurred, assign to the Liquidity Providers pursuant to SECTION 9.04
all of the Conduit Purchaser's right, title to and interest in, all
Receivables Interests then owned by the Conduit Purchaser. All such
assignments shall be subject to the terms of the related Asset Purchase
Agreement (it being understood that no Liquidity Provider shall be
required to purchase any Receivables Interest to the extent that, after
giving effect thereto, such Liquidity Provider's Capital (including any
Capital for Receivables Interests purchased from the Conduit Purchaser
as described below) would exceed the amount of its Commitment under
such Asset Purchase Agreement).
(ii) Upon each assignment described in subsection (i) and upon
any other assignment of Receivables Interests by the Conduit Purchaser
to the Liquidity Providers, (i) all Receivables Interests previously
owned by the Conduit Purchaser and so assigned shall become Receivables
Interests owned by the Liquidity Providers, (ii) the Capital so
assigned and previously allocated to the Conduit Purchaser shall be
deemed reduced for all purposes of this Agreement; (iii) all such
Capital shall be allocated to new Yield Periods commencing on the date
of such assignment, the Purchaser Rate for which shall equal the
Assignee Rate; and (iv) the Seller shall be responsible for any
Breakage Amounts associated with such assignment. No such assignment
shall relieve the Seller's obligation to pay to the Conduit Purchaser
all accrued and unpaid Yield with respect to the Receivables Interests
so assigned, to the same extent as would have been required upon an
optional reduction of all Capital of such Receivables Interests on such
date, together with all fees and other amounts then owing to the
Conduit Purchaser hereunder as of such date.
(iii) Nothing in this Section 2.04(e) shall be deemed to limit
any rights of the Conduit Purchaser under any other provisions of this
Agreement to assign its right, title to and interest in any Receivables
Interests owned by the Conduit Purchaser.
SECTION 2.05. PAYMENTS AND COMPUTATIONS, ETC. All amounts to
be paid or deposited by the Seller or the Servicer hereunder shall be paid or
deposited in accordance with the terms hereof no later than 12:00 noon (New York
City time) on the day when due in lawful
25
money of the United States of America in immediately available funds to such
account as the Agent may designate from time to time in writing. The Seller and
the Servicer shall, to the extent permitted by law, pay to the Agent interest on
all amounts not paid or deposited by such Person when due hereunder at 2% per
annum above the Base Rate, payable on demand. Such interest shall be retained by
the Agent except to the extent that such failure to make a timely payment or
deposit has continued beyond the date for distribution by the Agent of such
overdue amount to the applicable Purchaser or the applicable Liquidity Provider,
in which case such interest accruing after such date shall be for the account
of, and distributed by the Agent to, such Purchaser or such Liquidity Provider.
All computations of interest and all computations of Yield, Ongoing Liquidity
Fees, Program Fees, Conduit Fees, Servicer Fees and Other Fees hereunder shall
be made on the basis of a year of 360 days for the actual number of days
(including the first but excluding the last day) elapsed. In no event shall any
provision of this Agreement require the payment or permit the collection of
Yield or interest in excess of the maximum permitted by applicable law. In the
event that any payment hereunder (whether constituting a payment of Capital,
Yield or any other amount) is rescinded or must otherwise be returned for any
reason, the amount of such payment shall be restored and such payment shall be
considered not to have been made.
SECTION 2.06. ADDITIONAL YIELD. To the extent Yield is
calculated during any Yield Period by reference to the LIBO Rate, the Seller
shall pay to the Agent for the account of the Purchasers and the Liquidity
Providers (without duplication of amounts otherwise payable hereunder) so long
as Citibank shall be required under regulations of the Board of Governors of the
Federal Reserve System to maintain reserves with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities, additional Yield
("ADDITIONAL YIELD") on outstanding Capital for each day during such Yield
Period, at a rate per annum equal at all times to the remainder obtained by
subtracting (i) the LIBO Rate of such Yield Period from (ii) the rate obtained
by dividing such LIBO Rate by the percentage equal to 100% minus the Eurodollar
Reserve Percentage for such Yield Period.
SECTION 2.07. YIELD PROTECTION. (a) If due to either: (i) the
introduction of or any change (including, without limitation, any change by way
of imposition or increase of reserve requirements) in or in the interpretation
by any Governmental Authority of any law or regulation (other than laws or
regulations relating to taxes) after the date hereof or (ii) the compliance by
any Purchaser, any Liquidity Provider or CNAI with any guideline or request from
any central bank or other Governmental Authority (whether or not having the
force of law) imposed after the date hereof, (1) there shall be an increase in
the cost to such Purchaser or such Liquidity Provider of accepting, funding or
maintaining any Purchase hereunder, (2) there shall be a reduction in the amount
receivable with regard to any Receivables Asset (3) such Purchaser or such
Liquidity Provider shall be required to make a payment calculated by reference
to the Receivables Interests purchased by it or Yield received by it, then the
Seller shall, from time to time, upon demand by the Agent, pay the Agent for the
account of such Purchaser or such Liquidity Provider (as a third party
beneficiary, in the case of any Affected Party other than one of the
Purchasers), that portion of such increased costs incurred, amounts not received
or required payment made or to be made, which the Agent reasonably determines is
attributable to accepting, funding and maintaining any Purchase hereunder. In
determining such amount, the Agent may use any reasonable averaging and
attribution methods. The applicable Purchaser or
26
the applicable Liquidity Provider shall submit to the Seller a certificate
describing in reasonable detail the basis for and the calculation of such
increased costs incurred, amounts not received or receivable or required payment
made or to be made, which certificate shall, in the absence of manifest error,
be conclusive and binding for all purposes. Each of the Agent, each Purchaser
and each Liquidity Provider agrees to use reasonable efforts to promptly notify
the Seller upon learning that amounts for which it is entitled to seek
reimbursement under this SECTION 2.07 have begun to accrue.
(b) Prior to demand by any Affected Party of amounts owing
under this SECTION 2.07, the Affected Party agrees (in order to receive amounts
due pursuant to this SECTION 2.07) that it will use reasonable efforts to reduce
or eliminate any claim for compensation pursuant to said SECTION 2.07 including,
subject to applicable law, a change in its applicable lending office for this
transaction; PROVIDED, HOWEVER, that nothing herein contained shall obligate an
Affected Party to take any action which, in the reasonable opinion of such
Affected Party, is unlawful, otherwise adverse to its interests or results in
any unreimbursed cost or expense to such Affected Party, which cost or expense
would not have been incurred but for such action.
(c) Notwithstanding anything herein to the contrary, the
Seller shall not be obligated to pay any amounts under this SECTION 2.07, to the
extent such amounts resulted from an increased cost incurred, amount not
received or required payment made or to be made occurring or imposed more than
180 days prior to the date of the certificate in which such amounts were set
forth; PROVIDED, THAT, for the purposes of the foregoing, any such increased
cost, reduction or required payment shall be deemed to have been incurred or
imposed, as applicable, on the date on which such increased cost, reduction or
required payment is actually incurred or imposed, whether or not such increased
cost relates back to a period of time prior to such date.
SECTION 2.08. INCREASED CAPITAL. (a) If either (i) the
introduction of or any change in or in the interpretation by any Governmental
Authority of any law or regulation or (ii) compliance by any Affected Party with
any guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law) after the date hereof affects or would
affect the amount of capital required or expected to be maintained by such
Affected Party or such Affected Party reasonably determines that the amount of
such capital is increased by or based upon the existence of any Purchaser's
agreement to make or maintain Purchases hereunder and other similar agreements
or facilities, then, upon demand by such Affected Party or the Agent, the Seller
shall immediately pay to such Affected Party (as a third party beneficiary, in
the case of any Affected Party other than one of the Purchasers) or the Agent
for the account of such Affected Party from time to time, as specified by such
Affected Party or the Agent, additional amounts sufficient to compensate such
Affected Party in light of such circumstances, to the extent that such Affected
Party or the Agent on behalf of such Affected Party reasonably determines such
increase in capital to be allocable to the existence of the applicable
Purchaser's agreements hereunder. A certificate describing in reasonable detail
the basis for and calculation of such amounts submitted to the Seller by such
Affected Party or the Agent, shall, in the absence of manifest error, be
conclusive and binding for all purposes.
27
(b) If any reduction in the Capital of any Purchaser occurs on
any date other than a Payment Date or any Capital Purchase to be made on the
date specified in the applicable Purchase Request is not made for any reason,
the Seller shall, upon demand by the Agent, pay the Agent for the account of
such Affected Party any Breakage Amounts in connection therewith. Such Affected
Party shall submit to the Seller and the Agent a certificate as to such amounts,
which certificate shall, in the absence of manifest error, be conclusive and
binding for all purposes.
(c) Prior to demand by any Affected Party of amounts owing
under this SECTION 2.08, such Affected Party agrees (in order to receive amounts
due pursuant to this SECTION 2.08) that it will use its reasonable efforts to
reduce or eliminate any claim for compensation pursuant to said SECTION 2.08
including, subject to applicable law, a change in its applicable lending office
for this transaction; PROVIDED, HOWEVER, that nothing herein contained shall
obligate any Affected Party to take any action which, in the reasonable opinion
of such Affected Party, is unlawful, otherwise adverse to its interests or
results in any unreimbursed cost or expense to such Affected Party, which cost
or expense would not have been incurred but for such action.
(d) Notwithstanding anything herein to the contrary, the
Seller shall not be obligated to pay any amounts under SECTION 2.08(a), to the
extent such amounts resulted from an increased cost or expense incurred or
imposed more than 180 days prior to the date of the certificate in which such
amounts were set forth; PROVIDED, THAT, for the purposes of the foregoing, any
such increased cost or expense shall be deemed to have been incurred or imposed,
as applicable, on the date on which such increased cost or expense is actually
incurred or imposed, whether or not such increased cost relates back to a period
of time prior to such date.
SECTION 2.09. TAXES. (a) Except to the extent required by
applicable law, any and all payments and deposits required to be made hereunder
or under any instrument delivered hereunder by the Seller hereunder shall be
made, in accordance with SECTION 2.05, free and clear of and without deduction
for any and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto (except for net income
taxes that are imposed by the United States and franchise taxes and net income
taxes that are imposed on such Affected Party by the state or foreign
jurisdiction under the laws of which such Affected Party is organized or in
which it is otherwise doing business or any political subdivision thereof). If
the Seller or the Servicer shall be required by law to make any such deduction,
(i) the Seller shall make an additional payment to such Affected Party, in an
amount sufficient so that, after making all required deductions (including
deductions applicable to additional sums payable under this SECTION 2.09), such
Affected Party receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Seller or the Servicer, as the case may be,
shall make such deductions and (iii) the Seller or the Servicer, as the case may
be, shall pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law.
(b) In addition, the Seller agrees to pay any present or
future stamp or other documentary taxes or any other excise or property taxes or
similar levies which arise from any payment made hereunder or under any
instrument delivered hereunder or from the execution,
28
delivery or registration of, or otherwise with respect to, this Agreement or any
instrument delivered hereunder.
(c) Each Affected Party which is not organized under the laws
of the United States or any State thereof shall, prior to the time at which such
Affected Party becomes a party to or obtains rights under this Agreement, and
prior to any payment being made by the Seller to such Affected Party, deliver to
the Seller (to the extent it may do so under applicable laws and regulations)
(i) two duly completed and executed copies of the IRS Form 1001 or 4224 (or any
successor form) as applicable; or (ii) an IRS Form W-8 (or any successor form),
as applicable; and (iii) such other forms or certificates as may be required
under the laws of any applicable jurisdiction (on or before the date that any
such form expires or becomes obsolete), in order to permit the Seller to make
payments to, and deposit funds to or for the account of, such Affected Party
hereunder and under the other Facility Documents without any deduction or
withholding for or on account of any tax. Each such Affected Party shall submit
to the Seller (copied to the Agent) two updated, completed, and duly executed
versions of: (i) all forms referred to in the previous sentence upon the expiry
of, or the occurrence of any event requiring a change in, the most recent form
previously delivered by it to the Seller or the substitution of such form; and
(ii) such extensions or renewals thereof as may reasonably be requested by the
Seller.
SECTION 2.10. TAX TREATMENT. It is the intention of the
Seller, the Servicer, the Agent and the Purchasers that, with respect to all
state, federal and local taxes, the Purchases hereunder and any outstanding
Capital will be treated as indebtedness of the Seller to the Purchasers secured
by the Receivables Assets (the "Intended Characterization"). Each of the Seller,
the Servicer, the Agent and the Purchasers, by entering into this Agreement,
agrees to report such transactions for the purposes of all taxes in a manner
consistent with the Intended Characterization.
SECTION 2.11. SALE AGREEMENT ASSETS. (a) The Seller
acknowledges that all of the Seller's right, title and interest in, to and under
the Sale Agreement Assets (including rights relating to the pledge of the Sr.
Portion) are part of the Receivables Assets assigned to the Agent for the
benefit of the Purchasers hereunder. The Agent agrees that, without limiting the
provisions of SECTION 5.01(l) or SECTION 5.03(n), until the occurrence and
continuance of an Event of Termination, the Seller shall have the right to
enforce the Seller's rights and remedies under the Sale and Contribution
Agreement. The assignment to the Agent pursuant to this SECTION 2.11 shall
terminate upon the Final Collection Date; PROVIDED, HOWEVER, that the rights of
the Agent pursuant to such assignment with respect to rights and remedies in
connection with any indemnification or any breach of any representation,
warranty or covenant made by Hackensack in the Sale and Contribution Agreement
shall be continuing and shall survive any termination of such assignment.
(b) The Seller shall cause all instruments representing or
evidencing the Pledged Collateral to be delivered to and held by the Agent. Each
such instrument shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in blank, all
in form and substance satisfactory to the Agent. The Seller shall instruct
Hackensack and Rochester to cause all payments in respect of the Pledged
Collateral to be made directly to the Agent. In the event the Seller shall at
any time receive any
29
payment on or with respect to any Pledged Collateral, the Seller shall
immediately so notify the Agent and shall forthwith deliver the same to the
Agent in the form received to be held by the Agent. Any Pledged Collateral
delivered to the Agent hereunder shall be held and applied by the Agent in
accordance with the terms of the Sale and Contribution Agreement and this
Agreement.
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01. CONDITIONS PRECEDENT TO INITIAL PURCHASE. The
Agent shall have received all fees due and payable on the Effective Date in
accordance with the terms of the Fee Letter and shall have also received each of
the documents, instruments, opinions and other agreements listed on EXHIBIT H as
a condition precedent to the initial Purchase.
SECTION 3.02. CONDITIONS PRECEDENT TO ALL PURCHASES. Each
Purchase (including the initial Purchase and each Reinvestment Purchase) by the
Purchasers from the Seller shall be subject to the further conditions precedent
that on the date of each Purchase, each of the following shall be true and
correct both before and after giving effect to such Purchase:
(i) The representations and warranties contained in ARTICLE IV
are correct on and as of such day as though made on and as of such date
(except for those representations and warranties which are made only as
of a certain date, in which case such representations and warranties
shall be correct on and as of the date made),
(ii) No event has occurred and is continuing, or would result
from such Purchase which constitutes an Event of Termination or would
constitute an Event of Termination but for the requirement that notice
be given or time elapse or both, and
(iii) With respect to Purchases requested to be made by the
Conduit Purchaser, the Agent shall not have delivered to the Seller a
notice stating that the Conduit Purchaser shall not make any further
Purchases hereunder.
Each delivery of a Purchase Request to the Agent, and the acceptance by the
Seller of the Purchase Price with respect to any Purchase, shall constitute a
representation and warranty by the Seller that, as of the date of such Purchase,
both before and after giving effect thereto and the application of the proceeds
thereof, each of the foregoing statements are true and correct.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller represents and warrants as follows:
(a) DUE FORMATION AND GOOD STANDING. The Seller is a Delaware
limited liability company, duly organized, 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, in every
30
jurisdiction in which the nature of its business requires it to be so qualified,
except where the failure to be so qualified would not have a material adverse
effect on the collectibility of the Receivables Assets, its ability to perform
its obligations under any Facility Document or the financial condition or
operations of the Seller.
(b) DUE AUTHORIZATION AND NO CONFLICT. The execution, delivery
and performance by the Seller of this Agreement, the Sale and Contribution
Agreement and all other Facility Documents to which it is a party, and the
transactions contemplated hereby and thereby, are within the Seller's limited
liability powers, have been duly authorized by all necessary limited liability
company action on the part of the Seller, do not contravene (i) the Seller's
certificate of formation or limited liability company agreement, (ii) any law,
rule or regulation applicable to the Seller (including, but not limited to, all
laws, rules and regulations under the IRC and the applicable state tax codes),
(iii) any contractual restriction contained in any indenture, loan or credit
agreement, lease, mortgage, security agreement, bond, note, or other agreement
or instrument binding on the Seller or its property or (iv) any order, writ,
judgment, award, injunction or decree binding on the Seller or its property, and
do not result in or require the creation of any Adverse Claim upon or with
respect to any of its properties pursuant to any indenture, loan or credit
agreement, lease, mortgage, security agreement, bond, note or other agreement
binding on the Seller or its properties; and no transaction contemplated hereby
requires compliance with any bulk sales act or similar law. This Agreement, the
Sale and Contribution Agreement and the other Facility Documents to which the
Seller is a party have been duly executed and delivered on behalf of the Seller.
(c) GOVERNMENTAL CONSENT. No authorization or approval or
other action by, and no notice to or filing with, any Governmental Authority is
required for the due execution, delivery and performance by the Seller of this
Agreement, the Sale and Contribution Agreement or any other agreement, document
or instrument to be delivered by it hereunder, except for filings under the UCC
required under Article III.
(d) ENFORCEABILITY OF FACILITY DOCUMENTS. This Agreement and
each other Facility Document to be delivered by the Seller in connection
herewith constitute the legal, valid and binding obligation of the Seller
enforceable against the Seller in accordance with their respective terms,
subject to the Enforceability Exceptions.
(e) NO LITIGATION. There are no actions, suits or proceedings
pending, or to the knowledge of the Seller threatened in writing, against the
Seller, or the property of the Seller, in any court, or before any arbitrator of
any kind, or before or by any Governmental Authority, which (i) assert the
invalidity of any Facility Document or any action to be taken by the Seller in
connection therewith, or (ii) seek to prevent the consummation of the
transactions contemplated by this Agreement and the other Facility Documents.
The Seller is not in default with respect to any order of any court, arbitrator
or Governmental Authority.
(f) PERFECTION OF INTEREST IN RECEIVABLES AND RECEIVABLES
ASSETS. Each Receivable is owned by the Seller free and clear of any Adverse
Claim, and the Purchasers have acquired a valid and perfected first priority
ownership interest or security interest in each Receivable and in the Related
Security, Collections and other Receivables Assets with respect
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thereto, in each case free and clear of any Adverse Claim; and (x) no effective
financing statement or other instrument similar in effect, is filed in any
recording office listing the Seller as debtor, covering any Receivable, Related
Security, Collections or other Receivables Assets except such as may be filed in
favor of the Agent in accordance with this Agreement, (y) no effective financing
statement or other instrument similar in effect, is filed in any recording
office listing Hackensack as debtor, covering any Receivable, Related Security,
Collections or other Receivables Assets except such as may be filed in favor of
the Seller and assigned to the Agent in accordance with this Agreement and (z)
no effective financing statement or other instrument similar in effect, is filed
in any recording office listing either Originator as debtor, covering any
Receivable, Related Security, Collections or other Receivables Assets except
such as may be filed in favor of Hackensack and assigned to the Seller in
accordance with this Agreement.
(g) ACCURACY OF INFORMATION. No Seller Report or Purchase
Request furnished or to be furnished by the Seller or the Servicer to the Agent,
any Purchaser or any Liquidity Provider in connection with this Agreement is or
shall be inaccurate in any material respect as of the date it is or shall be
dated or (except as otherwise disclosed to the Agent, such Purchaser or such
Liquidity Provider, as the case may be, at such time) as of the date so
furnished.
(h) LOCATION OF CHIEF EXECUTIVE OFFICE AND RECORDS. The chief
place of business and chief executive office of the Seller are located at the
address of the Seller referred to in SECTION 9.02 hereof and the locations of
the offices where the Seller keeps all the Records are listed on EXHIBIT F (or
at such other locations, notified to the Agent in accordance with SECTION
5.01(f), in jurisdictions where all action required by SECTION 6.05 has been
taken and completed).
(i) ACCOUNT INFORMATION. The Collection Account, the Lock-Box
Accounts, the Quill Account and the Quill P.O. Box (in respect to Quill
Receivables) are the only accounts to which Collections of Receivables are
remitted by Obligors.
(j) NO TRADE NAMES. The Seller has no trade names, fictitious
names, assumed names or "doing business as" names.
(k) INVESTMENTS. The Seller does not own or hold, directly or
indirectly, (i) any capital stock or equity security of, or any equity interest
in, any Person, nor (ii) except for Permitted Investments, any debt security or
other evidence of Indebtedness of any Person.
(l) FACILITY DOCUMENTS. The Sale and Contribution Agreement is
the only agreement pursuant to which the Seller purchases and receives
contributions of Receivables or any other accounts receivable from Hackensack
and the Facility Documents delivered to the Agent represent all agreements
between Hackensack and the Seller. Upon the purchase and/or contribution of each
Receivable pursuant to the Sale and Contribution Agreement, the Seller shall be
the lawful owner of, and have good title to, such Receivable and all Related
Security and Collections with respect thereto, free and clear of any Adverse
Claims.
(m) BUSINESS. Since its formation, the Seller has conducted no
business other than the purchase and receipt of Receivables and related assets
from Hackensack under the Sale and Contribution Agreement, the transfer of
Receivables Assets under this Agreement to finance
32
any such purchases, and such other activities as are incidental to the
foregoing. The Facility Documents delivered to the Agent are the only agreements
to which Seller is a party. The Seller does not own or hold, directly or
indirectly, any capital stock or equity security of, or any equity interest in,
any Person.
(n) TAXES. The Seller has filed or caused to be filed all
Federal, state and local tax returns which are required to be filed by it, and
has paid or caused to be paid all taxes prior to such taxes becoming delinquent,
other than any taxes or assessments the validity of which are being contested in
good faith by appropriate proceedings.
(o) SOLVENCY. The Seller (i) is not "insolvent" (as such term
is defined in Section 101(32)(A) of the Bankruptcy Code), (ii) is able to pay
its debts as they mature, and (iii) does not have unreasonably small capital for
the business in which it is engaged or for any business or transaction in which
it is about to engage.
(p) INVESTMENT COMPANY ACT. The Seller is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
(q) USE OF PROCEEDS. No proceeds of any Purchase will be used
by the Seller to acquire any security in any transaction which is subject to
Section 13 or 14 of the Securities Exchange Act of 1934, as amended.
(r) CURRENT TRANSACTIONS. The Purchase of Receivables
Interests and the reinvestment of Collections pursuant to SECTION 2.02 will
constitute a "current transaction" within the meaning of Section 3(a)(3) of the
Securities Act of 1933, as amended, and (ii) a purchase or other acquisition of
notes, drafts, acceptances, open accounts receivable or other obligations
representing part or all of the sales price of merchandise, insurance or
services within the meaning of Section 3(c)(5) of the Investment Company Act of
1940, as amended.
(s) OWNERSHIP. All of the outstanding membership interests of
the Seller are directly or indirectly owned of record by Hackensack, all of
which is fully paid and nonassessable.
(t) NON-AFFILIATE. The Seller is not an Affiliate of any
Purchaser hereunder.
(u) CAPITAL. The sum of (i) the aggregate Capital, (ii) the
Loss Reserve, (iii) the excess, if any, of the Dilution Reserve over the Sr.
Portion Valuation Amount, and (iv) and the Yield and Fee Reserve does not exceed
97% of the Net Receivables Pool Balance (after giving effect to any increases or
reductions to Capital on such date).
(v) ELIGIBILITY OF ELIGIBLE RECEIVABLES. Each Receivable
satisfied the requirements of eligibility contained in the definition of
"ELIGIBLE RECEIVABLE" on the later of (i) the Effective Date and (ii) the date
such Receivable was purchased by the Seller from Hackensack.
(w) MATERIAL ADVERSE CHANGE. Since July 29, 2000, there has
been no material adverse change in the business, operations, property, or
financial or other condition of Staples
33
and since the date of its formation, there has been no material adverse change
in the business, operations, property, or financial or other condition of the
Seller.
SECTION 4.02. REPRESENTATIONS AND WARRANTIES OF THE SERVICER.
The Servicer represents and warrants as follows:
(a) DUE INCORPORATION AND GOOD STANDING. The Servicer is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation and is duly qualified to do business,
and is in good standing, in every jurisdiction in which the nature of its
business requires it to be so qualified, except where the failure to be so
qualified would not have a material adverse effect on the collectibility of the
Receivables Assets, its ability to perform its obligations under any Facility
Document or the financial condition or operations of the Servicer.
(b) DUE AUTHORIZATION AND NO CONFLICT. The execution, delivery
and performance by the Servicer of this Agreement and all other agreements,
instruments and documents to be delivered by it hereunder, and the transactions
contemplated hereby and thereby, are within the Servicer's corporate powers,
have been duly authorized by all necessary corporate action on the part of the
Servicer, do not contravene (i) the Servicer's charter or by-laws, (ii) any law,
rule or regulation applicable to the Servicer, (iii) any contractual restriction
contained in any indenture, loan or credit agreement, lease, mortgage, security
agreement, bond, note, or other agreement or instrument binding on the Servicer
or its property or (iv) any order, writ, judgment, award, injunction or decree
binding on the Servicer or its property, and do not result in or require the
creation of any Adverse Claim upon or with respect to any of its properties
pursuant to any indenture, loan or credit agreement, lease, mortgage, security
agreement, bond, note or other agreement binding on the Servicer or its
properties, the contravention of which would have a material adverse effect on
the collectibility of the Receivables Assets, its ability to perform its
obligations under any Facility Document or the financial condition or operations
of the Servicer. This Agreement and the other Facility Documents to which the
Servicer is a party have been duly executed and delivered on behalf of the
Servicer.
(c) GOVERNMENTAL CONSENT. No authorization or approval or
other action by, and no notice to or filing with, any Governmental Authority is
required for the due execution, delivery and performance by the Servicer of this
Agreement, the Sale and Contribution Agreement, the Originator Sale Agreement or
any other agreement, document or instrument to be delivered by it hereunder.
(d) ENFORCEABILITY OF FACILITY DOCUMENTS. This Agreement and
each other Facility Document to be delivered by the Servicer in connection
herewith constitute the legal, valid and binding obligation of the Servicer
enforceable against the Servicer in accordance with their respective terms,
subject to the Enforceability Exceptions.
(e) NO LITIGATION. There are no actions, suits or proceedings
pending, or to the knowledge of the Servicer, threatened in writing, against or
affecting the Servicer, or the property of the Servicer, in any court, or before
any arbitrator of any kind, or before or by any
34
Governmental Authority, which (i) assert the invalidity of any Facility Document
or any action to be taken by the Servicer in connection therewith, or (ii) seek
to prevent the consummation of the transactions contemplated by this Agreement
and the other Facility Documents. The Servicer is not in default with respect to
any order of any court, arbitrator or Governmental Authority.
(f) ACCURACY OF INFORMATION. No Seller Report or Purchase
Request (if prepared by the Servicer), furnished or to be furnished by the
Servicer to the Agent, any Purchaser or any Liquidity Provider in connection
with this Agreement is or shall be inaccurate in any material respect as of the
date it is or shall be dated or (except as otherwise disclosed to the Agent,
such Purchaser or such Liquidity Provider, as the case may be, at such time) as
of the date so furnished.
(g) ACCOUNT INFORMATION. The Collection Account, the Quill
P.O. Box (in respect to Quill Receivables) and the Lock-Box Accounts are the
only accounts to which Collections of Receivables are remitted by Obligors.
(h) SOFTWARE. The Servicer has (or will have, concurrently
with the effectiveness hereof) the right (whether by license, sublicense or
assignment) to use all of the computer software used to account for the
Receivables Assets to the extent necessary to administer the Receivables Assets,
except where the failure to have or obtain such right would not have a material
adverse effect on the collectibility of the Receivables Assets, its ability to
perform its obligations under any Facility Document or the financial condition
or operations of the Servicer.
(i) FINANCIAL STATEMENTS. The balance sheets of the Servicer
and its consolidated subsidiaries as at July 29, 2000, and the related
statements of income and retained earnings for the fiscal year then ended,
copies of which have been furnished to the Agent and the Purchasers (unless the
Agent is readily able to obtain such financial statements from an on-line
database), fairly present the financial condition and operations of the Servicer
and its consolidated subsidiaries as at such date and the results of operations
of the Servicer and its consolidated subsidiaries for the period ended on such
date, all in accordance with generally accepted accounting principles,
consistently applied, and, since such date, there has been no material adverse
change in the business, operations, property or condition (financial or
otherwise) of the Servicer and its consolidated subsidiaries nor any other
change which has had or could reasonably be expected to have a material adverse
effect on the collectibility of the Receivables Assets, its ability to perform
its obligations under any Facility Document or the financial condition or
operations of the Servicer.
The representations and warranties of the Servicer set forth
in this Section 4.02 shall be deemed to have been re-made by the Servicer as of
the date of each Purchase hereunder.
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ARTICLE V
GENERAL COVENANTS
SECTION 5.01. AFFIRMATIVE COVENANTS OF THE SELLER. From the
Initial Purchase Date until the Final Collection Date, the Seller will, unless
the Agent shall otherwise consent in writing:
(a) COMPLIANCE WITH LAWS, ETC. Comply in all material respects
with all applicable laws, rules, regulations and orders with respect to all
Receivables and the agreements and documents related thereto.
(b) PRESERVATION OF EXISTENCE. Observe all procedures required
by its certificate or formation and limited liability company agreement and
preserve and maintain its limited liability company existence, rights,
franchises and privileges in the jurisdiction of its formation, and qualify and
remain qualified in good standing as a foreign entity in each jurisdiction where
the failure to preserve and maintain such rights, franchises, privileges and
qualifications would have a material adverse effect on the financial condition
or operations of Staples and its subsidiaries taken as a whole or of the Seller,
the collectibility of the Receivables Assets or its ability to perform its
obligations under any Facility Document.
(c) AUDITS. From time to time upon reasonable prior written
notice to the Seller and during regular business hours, permit the Agent, or its
agents or representatives, (i) to have access to all records, files, books of
account, data bases and information pertaining to all Receivables Assets,
including the Records, (ii) to discuss matters relating to the Receivables or
the Seller's performance hereunder with any of the officers or employees of the
Seller having knowledge of such matters, and (iii) permit such Persons to
inspect, audit and to make extracts therefrom at Seller's expense subject to
SECTION 9.06; PROVIDED, THAT, unless an Event of Termination or a Downgrade
Event has occurred, the Seller shall not be required to pay for the costs of
such audit if the Seller and its Affiliates have collectively paid the costs of
more than two audits in that particular calendar year (which number shall
include any related audits conducted by the Agent pursuant to the Sale and
Contribution Agreement or the Originator Sale Agreement it being understood,
however, that an audit of the Seller, Servicer, Hackensack, Quill and SCC shall
be considered a single audit for purposes of such number).
(d) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing the Receivables Assets in
the event of the destruction of the originals thereof) and keep and maintain,
all documents, books, records and other information reasonably necessary or
advisable for the collection of all Receivables Assets (including, without
limitation, records adequate to permit the daily identification of all
Collections of and adjustments to each Receivable).
(e) PERFORMANCE AND COMPLIANCE WITH RECEIVABLES AND CONTRACTS.
At its expense timely and fully perform and comply, in all material respects,
with all material provisions, covenants and other promises required to be
observed by it under the Receivables Assets.
(f) LOCATION OF RECORDS. Keep its chief place of business and
chief executive office, and the offices where it keeps the Records, at the
address(es) of the Seller referred to in
36
SECTION 4.01(h), or, in any such case, upon 30 days' prior written notice to the
Agent, at such other locations within the United States where all action
required by SECTION 6.05 shall have been taken and completed.
(g) CREDIT AND COLLECTION POLICIES. Comply in all material
respects with its Credit and Collection Policy in regard to each Receivable.
(h) COLLECTIONS. (i) Instruct (A) all Obligors of SCC
Receivables to cause all Collections to be deposited directly to the Collection
Account or one of the Lock-Box Accounts and (B) all Obligors of Quill
Receivables to cause all Collections to be deposited directly to the Collection
Account or, so long as the Agent shall not have delivered a Collection Trigger
Notice, to the Quill P.O. Box or the Quill Account and (ii) prevent the deposit
of any funds other than Collections in respect of Receivables into any of the
Lock-Box Accounts or the Quill Account and, to the extent that any such funds
are nevertheless deposited into any of such Lock-Box Accounts or the Quill
Account, promptly identify any such funds to the Agent for segregation and
remittance to the owner thereof. If at any time such Collections are deposited
into the Quill P.O. Box or the Seller shall receive any Collections on Quill
Receivables, the Seller shall remit or cause to be remitted such Collections to
the Quill Account within two Business Days (or, if an Event of Termination or a
Downgrade Event has occurred, within one Business Day) following the receipt and
identification thereof. If the Seller shall receive any Collections on SCC
Receivables, the Seller shall remit or cause to be remitted such Collections to
the Lock-Box Accounts within two Business Days following the Seller's receipt
and identification thereof (or, if an Event of Termination or a Downgrade Event
has occurred, within one Business Day), and cause all such amounts deposited in
the Lock-Box Accounts to be transferred to the Collection Account in accordance
with SECTION 2.04.
(i) POSTING OF COLLECTIONS AND RECEIVABLES. Apply all
Collections to the applicable Receivables pursuant to the terms of this
Agreement within two Business Days following the Seller's or the Servicer's
receipt of information in respect of such Collections but in no event more than
three Business Days after the earliest date on which such Collections are
deposited in the Collection Account, the Quill P.O. Box, the Quill Account, one
of the Lock-Box Accounts or otherwise received by the Servicer or the Seller.
(j) FACILITY DOCUMENTS. Subject to SECTION 2.11, comply in all
material respects with the terms of and employ the procedures outlined in and
enforce its rights with respect to the material obligations of Hackensack under
the Sale and Contribution Agreement and all of the other Facility Documents to
which it is a party and with respect to Rochester in connection with the pledge
of the Sr. Portion.
(k) SEPARATE CORPORATE EXISTENCE. Take all reasonable steps
(including, without limitation, all steps that the Agent may from time to time
reasonably request) to maintain the Seller's identity as a separate legal entity
from Hackensack and each other Affiliate and to make it manifest to third
parties that the Seller is an entity with assets and liabilities distinct from
those of Hackensack and each other Affiliate of Hackensack. Without limiting the
generality of the foregoing, the Seller shall (i) at all times have at least two
"Independent Directors" as defined in and as required under the Seller's limited
liability company agreement dated as of October 27,
37
2000 as in effect on the date hereof; (ii) maintain the Seller's books and
records separate from those of any Affiliate; (iii) use its best efforts not to
commingle funds or other assets of the Seller with those of any other Affiliate,
and not maintain bank accounts or other depository accounts to which any
Affiliate is an account party, into which any Affiliate makes deposits or from
which any Affiliate has the power to make withdrawals; (iv) not enter into or
permit to exist any transaction (including, without limitation, the purchase,
sale, lease or exchange of any property or the rendering of any service) with
any Affiliate which is on terms that are less favorable to the Seller than those
that might be obtained in an arm's length transaction at the time from Persons
who are not an Affiliate; and (v) take all other actions reasonably necessary on
its part to operate its business and perform its obligations under the Facility
Documents in a manner consistent with the factual assumptions described in the
legal opinion of Xxxx and Xxxx LLP pertaining to nonconsolidation as delivered
pursuant to Article III.
(l) RIGHTS UNDER THE SALE AND CONTRIBUTION AGREEMENT, ETC. In
connection with the Sale and Contribution Agreement, the Originator Sale
Agreement and the Pledged Collateral, direct, instruct, demand or request any
action thereunder, including without limitation, in connection with enforcement
of its rights thereunder, as instructed by the Agent.
(m) QUILL P.O. BOX. Cause the Agent to have, at all times, a
duplicate key for the Quill P.O. Box.
SECTION 5.02. REPORTING REQUIREMENTS OF THE SELLER. From the
Initial Purchase Date until the Final Collection Date, the Seller will, unless
the Agent shall otherwise consent in writing, furnish to the Agent:
(a) EVENT OF TERMINATION. As soon as reasonably practicable
and in any event within two (2) Business Days after the occurrence of each Event
of Termination or each event which, with the giving of notice or lapse of time
(for tolling of grace periods) or both, would constitute an Event of
Termination, the statement of a Designated Officer of the Seller setting forth
details of such Event of Termination or event and the action which the Seller
proposes to take with respect thereto.
(b) FINANCIAL STATEMENTS. Furnish to the Agent or cause to be
furnished to the Agent: (i) as soon as available (unless the Agent is readily
able to obtain such financial statements from an on-line database), and in any
event within ninety days after the end of each fiscal year of Staples, (A)
copies of the audited consolidated and consolidating financial statements of
Staples, certified in a manner acceptable to the Agent by Ernst & Young, LLP or
by another nationally recognized independent public accounting firm acceptable
to the Agent and (B) unaudited financial statements of the Seller and
Hackensack, including an unaudited balance sheet of such Person and statements
of income and retained earnings and a cashflow for such Person, all in
reasonable detail and certified by a Responsible Officer of Staples as having
been prepared in accordance with GAAP, and (ii) within sixty (60) days after the
end of the first, second and third quarterly accounting periods in each fiscal
year of Staples, copies of the unaudited financial statements of each of
Staples, Hackensack and the Seller, including an unaudited balance sheet of such
Person as of the end of such quarterly accounting period and statements of
income and retained earnings and cashflows of such Person for such period, all
in
38
reasonable detail and certified by a Responsible Officer of Staples as having
been prepared in accordance with GAAP.
(c) SELLER REPORTS. Provide or cause to be provided to the
Agent, on each Monthly Reporting Date, a Seller Report with respect to the
preceding fiscal month and, if so requested by the Agent following the
occurrence of a Downgrade Event or Event of Termination, on each Business Day so
requested by the Agent, an updated Seller Report reflecting changes in such
information since the most recent Seller Report (in each case if not provided by
the Servicer in accordance with SECTION 5.04(b)(v)).
(d) REPORTING ON LITIGATION AND ADVERSE EFFECTS. Notify the
Agent promptly and in no event more than five (5) Business Days after the
occurrence of the Seller's obtaining actual knowledge (through any of its
officers) of any and all litigation or any other matters or events concerning
the Seller or any Obligor which would be reasonably likely to affect adversely
the Seller's or such Obligor's ability to perform its obligations with respect
to the Receivables or any of the Agent's or any Purchaser's rights under this
Agreement.
(e) ERISA. Promptly after filing or receipt 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 Plan to which the Seller or any
Affiliate is or was, within the preceding five (5) years, a contributing
employer, but only in cases in respect of the assessment of withdrawal liability
or an event or condition which could, in the aggregate, result in the imposition
of liability on the Seller and/or any such Affiliate in excess of $1,000,000.
(f) OTHER INFORMATION. As soon as reasonably practicable, from
time to time, such other information, documents, records or reports respecting
the Receivables Assets or the conditions or operations, financial or otherwise,
of the Seller as the Agent may from time to time reasonably request in order to
protect the interests of the Agent, any Purchaser or any Liquidity Provider
under or as contemplated by this Agreement.
SECTION 5.03. NEGATIVE COVENANTS OF THE SELLER. From the
Initial Purchase Date until the Final Collection Date, the Seller will not,
without the written consent of the Agent:
(a) SALES, LIENS, ETC. AGAINST RECEIVABLES AND RELATED ASSETS.
Except as otherwise provided herein, 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 Receivable, Related Security or Collections
or any other Receivables Asset, or assign any right to receive income in respect
thereof.
(b) EXTENSION OR AMENDMENT OF RECEIVABLES. Except as otherwise
permitted in SECTION 6.02, extend, amend, waive or otherwise modify, the terms
of any Receivable, or amend, modify or waive any term or condition of any
contract related thereto.
39
(c) CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. Make
any change in the character of its business or make or consent to any change in
the Credit and Collection Policy, which change would, in either case, have a
Material Adverse Effect.
(d) CHANGE IN PAYMENT INSTRUCTIONS TO OBLIGORS; LOCK-BOX
AGREEMENTS. Add or terminate any bank as a Lock-Box Bank or other account
(including the Quill P.O. Box and the Quill Account) from those listed in
EXHIBIT G or make any change in its instructions to Obligors regarding payments
to be made to any Lock-Box Account at a Lock-Box Bank or, for Quill Receivables,
to the Quill Account or the Quill P.O. Box, without the Agent's consent and
unless the Agent shall have received (i) 30 days' prior notice of such addition,
termination or change; (ii) written confirmation from the Seller that after the
effectiveness of any such termination, there shall be at least one (1) Lock-Box
Account in existence; and (iii) prior to the effective date of such addition,
termination or change, (x) executed copies of Lock-Box Agreements executed by
each new Lock-Box Bank, the Seller, the Servicer, an Originator, if necessary,
and the Agent and (y) copies of all agreements and documents signed by the
Seller, the applicable Originator or the respective Lock-Box Bank with respect
to any new Lock-Box Account.
(e) CHANGE IN ACCOUNT AGREEMENT OR INSTRUCTIONS TO OBLIGORS.
Make any amendment, change or other modification, without the Agent's consent,
to the terms of any Lock-Box Agreement, the Quill Account Control Agreement or
to its instructions to Obligors in compliance with SECTION 5.01(h) hereof.
(f) MERGER, CONSOLIDATION, ETC. Sell any equity interest to
any Person (other than Hackensack) or consolidate with or merge into or with any
Person, or purchase or otherwise acquire all or substantially all of the assets
or capital stock, or other ownership interest of, any Person or sell, transfer,
lease or otherwise dispose of all or substantially all of its assets to any
Person, except as expressly consented to by the Agent.
(g) CHANGE IN NAME. Make any change to its name or use any
trade names, fictitious names, assumed names or "doing business as" names.
(h) ERISA MATTERS. Establish or be a party to any Plan,
Multiemployer Plan or Benefit Plan other than any such plan established by an
Affiliate of the Seller.
(i) INDEBTEDNESS. Create, incur, assume or suffer to exist any
Indebtedness except for (i) Indebtedness to the Agent, any Purchaser or any
Affected Party expressly contemplated hereunder or (ii) Indebtedness to
Hackensack pursuant to the Sale and Contribution Agreement or any other Facility
Document.
(j) GUARANTEES. Guarantee, endorse or otherwise be or become
contingently liable (including by agreement to maintain balance sheet tests) in
connection with the obligations of any other Person, except endorsements of
negotiable instruments for collection in the ordinary course of business and
reimbursement or indemnification obligations in favor of the Agent, any
Purchaser or any Affected Party as provided for under this Agreement.
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(k) LIMITATION ON TRANSACTIONS WITH AFFILIATES. Enter into, or
be a party to any transaction with any Affiliate of the Seller, except for:
(i) the transactions contemplated by the Sale and Contribution
Agreement and the other Facility Documents;
(ii) to the extent not otherwise prohibited under this
Agreement, other transactions in the nature of employment contracts and
directors' fees, upon fair and reasonable terms materially no less
favorable to the Seller than would be obtained in a comparable
arm's-length transaction with a Person not an Affiliate; and
(iii) transactions between the Seller and Hackensack, which
transactions consist of ordinary course of business transactions
between a parent corporation and its Subsidiary.
(l) FACILITY DOCUMENTS. Terminate, amend or otherwise modify
any Facility Document, or grant any waiver or consent thereunder, without the
prior written consent of the Agent.
(m) LIMITATION ON INVESTMENTS. Make or suffer to exist any
loans or advances to, or extend any credit to, or make any investments (by way
of transfer of property, contributions to capital, purchase of stock or
securities or evidences of indebtedness, acquisition of the business or assets,
or otherwise) in, any Affiliate or any other Person except for Permitted
Investments and the purchase of Receivables Assets and related assets pursuant
to the terms of the Sale and Contribution Agreement.
(n) ORGANIZATIONAL DOCUMENTS. Without the prior written
consent of the Agent, which consent will not unreasonably be withheld, the
Seller will not (x) change, amend, alter or otherwise modify its certificate of
formation or limited liability company agreement dated as of October 27, 2000 or
(y) pursuant to its rights under the Sale and Contribution Agreement, allow
Hackensack to amend, alter or otherwise modify its certificate of formation or
limited liability company agreement.
(o) RIGHTS UNDER THE SALE AND CONTRIBUTION AGREEMENTS, ETC. In
connection with the Sale and Contribution Agreement, the Originator Sale
Agreement and the Pledged Collateral, appoint any Person other than Staples,
Inc. as Servicer thereunder, consent to any amendments, modifications or waivers
thereof, or direct, instruct or request any action thereunder in contravention
of the direction of the Agent.
SECTION 5.04. COVENANTS OF THE SERVICER.
(a) AFFIRMATIVE COVENANTS OF THE SERVICER. From the Initial
Purchase Date until the Final Collection Date, the Servicer will, unless the
Agent shall otherwise consent in writing:
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(i) COMPLIANCE WITH LAWS, ETC. Comply in all material respects
with all applicable laws, rules, regulations and orders with respect
to, and the servicing of, all Receivables Assets and the agreements and
documents related thereto.
(ii) PRESERVATION OF CORPORATE EXISTENCE. Observe all
corporate procedures required by its Certificate of Incorporation and
By-Laws and preserve and maintain its corporate existence, rights,
franchises and privileges in the jurisdiction of its incorporation, and
qualify and remain qualified in good standing as a foreign corporation
in each jurisdiction where the failure to preserve and maintain such
existence, rights, franchises, privileges and qualifications would have
a Material Adverse Effect.
(iii) AUDITS. From time to time upon reasonable prior written
notice to the Servicer and during regular business hours, permit the
Agent, or its agents or representatives, (i) to have access to all
records, files, books of account, data bases and information pertaining
to all Receivables Assets, including the Records, (ii) to discuss
matters relating to the Receivables Assets or the Servicer's
performance hereunder with any of the officers or employees of the
Servicer having knowledge of such matters, and (iii) permit such
Persons to inspect, audit and to make extracts therefrom at Servicer's
expense subject to SECTION 9.06; PROVIDED, THAT, unless an Event of
Termination or a Downgrade Event has occurred, the Servicer shall not
be required to pay for the costs of such audit if the Servicer or any
of its Affiliates has paid the costs of more than two audits in that
particular calendar year (which number shall include any related audits
conducted by the Agent pursuant to the Sale and Contribution Agreement
or the Originator Sale Agreement, it being understood, however, that an
audit of the Seller, Servicer, Hackensack, Quill and SCC shall be
considered a single audit for purposes of such number).
(iv) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing the Receivables
in the event of the destruction of the originals thereof) and keep and
maintain, all documents, books, records and other information
reasonably necessary for the collection of all Receivables Assets
(including, without limitation, records adequate to permit the daily
identification of all Collections of and adjustments to each
Receivable).
(v) PERFORMANCE AND COMPLIANCE WITH RECEIVABLES. At its
expense timely perform and comply, in all material respects, with all
material provisions, covenants and other promises required to be
observed by it under the Receivables Assets.
(vi) CREDIT AND COLLECTION POLICIES. Comply in all material
respects with its Credit and Collection Policy in regard to each
Receivable.
(vii) COLLECTIONS. (i) Instruct (A) all Obligors of SCC
Receivables to cause all Collections to be deposited directly to the
Collection Account or one of the Lock-Box Accounts and (B) all Obligors
of Quill Receivables to cause all Collections to be deposited directly
to the Collection Account or, so long as the Agent shall not have
42
delivered a Collection Trigger Notice, to the Quill P.O. Box or the
Quill Account and (ii) prevent the deposit of any funds other than
Collections in respect of Receivables into any of the Lock-Box Accounts
or the Quill Account and, to the extent that any such funds are
nevertheless deposited into any of such Lock-Box Accounts or the Quill
Account, promptly identify any such funds to the Agent for segregation
and remittance to the owner thereof. If at any time such Collections
are deposited into the Quill P.O. Box or the Servicer shall receive any
Collections on Quill Receivables, the Servicer shall remit or cause to
be remitted such Collections to the Quill Account within two Business
Days (or, if an Event of Termination or a Downgrade Event has occurred,
within one Business Day) following the receipt and identification
thereof. If the Servicer shall receive any Collections on SCC
Receivables, the Servicer shall remit or cause to be remitted such
Collections to the Lock-Box Accounts within two Business Days following
the Servicer's receipt and identification thereof (or if an Event of
Termination or a Downgrade Event has occurred, within one Business
Day); and cause all such amounts deposited in the Lock-Box Accounts to
be transferred to the Collection Account in accordance with SECTION
2.04.
(viii) POSTING OF COLLECTIONS AND RECEIVABLES. Apply all
Collections to the applicable Receivables pursuant to the terms of this
Agreement within two Business Days following the Seller's or the
Servicer's receipt of information in respect of such Collections but in
no event more than three Business Days after the earliest date on which
such Collections are deposited in the Collection Account, the Quill
P.O. Box, the Quill Account or one of the Lock-Box Accounts or
otherwise received by the Servicer or the Seller.
(ix) FACILITY DOCUMENTS. Subject to SECTION 2.11, comply in
all material respects with the terms of and employ the procedures
outlined in the Sale and Contribution Agreement, and all of the other
Facility Documents to which it is a party.
(x) MAINTENANCE OF INTERESTS. Cause the Agent to have a first
priority perfected security or ownership interest in each of the
Receivables Assets, free and clear of any Adverse Claim, whether
existing at the time such Receivables Asset arose or at any time
thereafter; and cause the Seller to acquire and maintain legal and
equitable title to, and ownership of all of the Receivables Assets,
free and clear of any Adverse Claim; and cause the Seller to have a
first priority perfected security interest in the Pledged Collateral,
free and Clear of any Adverse Claim;
(b) REPORTING REQUIREMENTS OF THE SERVICER. From the Initial
Purchase Date until the Final Collection Date, the Servicer will, unless the
Agent shall otherwise consent in writing, furnish to the Agent:
(i) As soon as reasonably practicable and in any event within
five Business Days after the occurrence of each Event of Termination or
event which, with the giving of notice or lapse of time or both, would
constitute an Event of Termination, a notice setting forth details of
such Event of Termination or event.
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(ii) As soon as reasonably practicable and in any event within
five Business Days after the occurrence of each event described in the
definition of "Servicer Default" or each event which, with the giving
of notice or lapse of time (for tolling of grace periods) or both,
would constitute such a Servicer Default, the statement of a Designated
Officer of the Servicer setting forth details of such Servicer Default
or event and the action which the Servicer proposes to take with
respect thereto.
(iii) As soon as reasonably practicable, from time to time,
such other information, documents, records or reports within its
possession respecting the Receivables or the conditions or operations,
financial or otherwise, of the Servicer as the Agent may from time to
time reasonably request in order to protect the interests of the Agent,
any Purchaser or any Liquidity Provider under or as contemplated by
this Agreement.
(iv) Promptly after 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
Plan to which the Seller or any Affiliate is or was, within the
preceding five years, a contributing employer, but only in cases in
respect of the assessment of withdrawal liability or an event or
condition which could, in the aggregate, result in the imposition of
liability on the Seller and/or any such Affiliate in excess of
$1,000,000.
(v) On each Monthly Reporting Date, a Seller Report with
respect to the preceding fiscal month and, if so requested by the Agent
following the occurrence of a Downgrade Event or Event of Termination,
on each Business Day so requested by the Agent, an updated Seller
Report reflecting changes in such information since the most recent
Seller Report, in each case to be sent by electronic mail (each an
"E-mail Report") in accordance with the following procedures:
(A) The Servicer shall make arrangements
with VeriSign, Inc. (or another authenticating organization
acceptable to the Agent) to enable the Servicer to generate
digital signatures. The Servicer shall safeguard the keys,
access codes or other means of generating its digital
signature.
(B) Each E-mail Report shall be formatted as
the Agent may designate from time to time and shall be
digitally signed. Each E-mail Report shall be sent to the
Agent at an electronic mail address designated by the Agent.
(C) Each E-mail Report shall be deemed given
when receipt of such transmission thereof is acknowledged by
the Agent.
(c) NEGATIVE COVENANTS OF THE SERVICER. From the Initial
Purchase Date until the Final Collection Date, the Servicer will not, without
the written consent of the Agent:
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(i) EXTENSION OR AMENDMENT OF RECEIVABLES. Except as otherwise
permitted in SECTION 6.02, extend, amend, waive or otherwise modify,
the terms of any Receivable or other Receivables Asset.
(ii) CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. Make
any material change in the character of its business or in the Credit
and Collection Policy, which change would, in either case, have a
Material Adverse Effect.
(iii) CHANGE IN ACCOUNT AGREEMENT OR INSTRUCTIONS TO OBLIGORS.
Make any amendment, change or other modification, without the Agent's
consent, to the terms of any Lock-Box Agreement, the Quill Account
Control Agreement or to its instructions to Obligors.
ARTICLE VI
ADMINISTRATION OF RECEIVABLES
SECTION 6.01. DESIGNATION OF SERVICER.
(a) The servicing, administering and collection of the
Receivables shall be conducted by the Person (the "SERVICER") so designated from
time to time in accordance with this SECTION 6.01. Until the Agent gives notice
to the Seller and the Servicer (as provided in CLAUSE (b) below) of the
designation of a new Servicer as provided in CLAUSE (b) below, Staples is hereby
designated as, and hereby agrees to perform the duties and obligations of, the
Servicer pursuant to the terms hereof. The Servicer may, upon written notice to
the Agent but otherwise without the prior written consent of any Purchasers, the
Agent, or any Liquidity Provider, subcontract with any Affiliate for the
collection, servicing or administration of the Receivables; provided, however,
that (a) the Servicer shall remain liable for the timely and complete
performance of its duties and obligations pursuant to the terms hereof and (b)
any sub-servicing agreement that may be entered into and any other transactions
or services relating to the Receivables involving an Affiliate as sub-servicer
shall be deemed to be between the sub-servicer and the Servicer alone, and the
Purchasers, the Agent, and the Liquidity Providers shall not be deemed parties
thereto and shall have no obligations, duties or liabilities with respect to
such sub-servicer.
(b) The Agent may only designate as Servicer any Person to
succeed Staples or any successor Servicer upon written notice following the
occurrence of a Servicer Default, and 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 (with such changes to such duties and
obligations as the Agent may approve in its sole discretion). The Servicer shall
not resign from the obligations and duties hereby imposed on it except upon the
reasonable determination by the Servicer that (i) the performance of its duties
hereunder is no longer permissible under applicable law and (ii) there is no
reasonable action which the Servicer could take to make the performance of its
duties hereunder permissible under applicable law.
(c) Staples agrees that, upon its resignation or replacement
as Servicer pursuant to CLAUSE (b) above, it will cooperate with the Agent and
the successor Servicer in effecting the termination of its responsibilities and
rights as Servicer hereunder, including,
45
without limitation, (i) assisting the successor Servicer in enforcing all rights
under the Receivables and Related Security, (ii) transferring, promptly upon
receipt, to the successor Servicer any Collections or other amounts related to
the Receivables received by Staples, (iii) transferring to the successor
Servicer all Records held by or under the control of Staples and (iv) permitting
the successor Servicer to have access to all tapes, discs, diskettes and related
property containing information concerning the Receivables and the Records and
permit the successor Servicer to use all computer software that may facilitate
the Servicer's access to and use of such information. Upon the resignation or
replacement of Staples as Servicer, Staples shall no longer be entitled to the
Servicer Fee accruing from and after the effective date of such resignation or
replacement.
SECTION 6.02. DUTIES OF THE SERVICER. (a) The Servicer shall
take or cause to be taken all such actions as it deems necessary or advisable to
collect each Receivable from time to time, all in accordance with applicable
laws, rules and regulations, with reasonable care and diligence, and in
accordance with the Credit and Collection Policy. Each of the Seller, each
Purchaser, each Liquidity Provider and the Agent hereby appoints as its nominee
the Servicer, from time to time designated pursuant to SECTION 6.01, to enforce
its respective rights and interests in and under the Receivables and the Related
Security. The Servicer will at all times apply the same standards and follow the
same procedures with respect to the decision to commence, and in prosecuting and
litigating with respect to Receivables as it applies and follows with respect to
accounts receivable which are not Receivables. In no event shall the Servicer be
entitled to make the Agent, any Purchaser or any Liquidity Provider a party to
any litigation without the Agent's express prior written consent.
(b) The Servicer shall as soon as practicable following
receipt turn over to the Seller or Person entitled thereto the collections of
any account receivable or other indebtedness which is not a Receivable less, to
the extent the Servicer performed any collection or enforcement actions for
which it was authorized by the Seller to perform, all reasonable and appropriate
out-of-pocket costs and expenses of such Servicer incurred in collecting and
enforcing such receivables or other indebtedness. The Servicer shall as soon as
practicable upon demand deliver to the Seller all records in its possession
relating to receivables of the Seller other than Receivables Assets, and copies
of Records in its possession relating to Receivables Assets. The Servicer's
authorization under this Agreement shall terminate on the Business Day
immediately after the Final Collection Date.
(c) The Servicer shall notify all Obligors to make payment (i)
with respect to the SCC Receivables solely to a Lock-Box Account or (ii) with
respect to the Quill Receivables (A) at any time so long as the Agent shall not
have delivered a Collection Trigger Notice, to the Quill P.O. Box or the Quill
Account, and (B) at any other time solely to the Collection Account or the Quill
Account. The Servicer shall set aside for the account of the Purchasers and the
Liquidity Providers the Collections of Receivables Assets in accordance with
SECTION 2.04. The Servicer shall, upon the request of the Agent, segregate, in a
manner reasonably acceptable to the Agent, all cash, checks and other
instruments received by it from time to time constituting Collections from the
general funds of the Servicer or the Seller prior to the remittance thereof in
accordance with ARTICLE II. If the Servicer shall be required to segregate
Collections pursuant to the preceding sentence, the Servicer shall segregate and
deposit with a bank designated by the
46
Agent such allocable share of Collections set aside for the Purchasers on the
first Business Day following receipt by the Servicer of such Collections, duly
endorsed or with duly executed instruments of transfer. At any time following a
Downgrade Event or an Event of Termination, the Agent may exercise its exclusive
control over the Lock-Box Accounts, the Quill Account or the Quill P.O. Box. The
Seller shall deliver to the Servicer, and the Servicer shall hold in trust for
the Seller, the Purchasers and the Liquidity Providers in accordance with their
respective interests, all Records. Notwithstanding anything to the contrary
contained herein, the Agent shall, upon the occurrence and continuance of an
Event of Termination, have the absolute and unlimited right to direct the
Servicer to commence or settle any legal action to enforce collection of any
Receivable or to foreclose upon or repossess any Related Security. The
Servicer's authorization under this Agreement shall terminate on the Final
Collection Date.
(d) The Servicer may, in accordance with the Credit and
Collection Policy, extend the maturity of any Receivable or adjust the
outstanding balance of any Receivable as the Servicer determines to be
appropriate to maximize Collections thereof. Notwithstanding anything herein to
the contrary, upon the request of the Agent from and after the Termination Date
until this Agreement is terminated, neither the Seller nor the Servicer shall,
without the consent of the Agent, grant any discount or take any other action
the effect of which would be to reduce the outstanding balance of any Receivable
or modify the obligation of any Obligor to pay the full outstanding balance of
any Receivable or extend the maturity thereof
(e) On each Business Day on or after the Termination Date,
whether or not the Agent is in possession of cash proceeds of the Sr. Portion as
contemplated under SECTION 2.11(b), the Servicer shall be responsible for
monitoring the aggregate amount of deemed Collections arising under SECTION
2.02(c) of the Sale and Contribution Agreement and any other recourse
obligations of Hackensack due and owing thereunder, and shall report such
amounts to the Agent so that the Agent may release any such cash proceeds held
by it in satisfaction of such obligations, such released proceeds to be applied
as Collections in accordance with ARTICLE II of this Agreement. In the event
that the Agent is not in possession of such cash proceeds, the Servicer shall,
to the extent of the Seller's rights under the Pledged Collateral and the
Rochester Note, make demand on and enforce all rights to payment from Hackensack
and/or Rochester, as applicable, in respect of the Pledged Collateral.
SECTION 6.03. RIGHTS OF THE AGENT. The Seller hereby transfers
to the Agent the exclusive ownership and control of the Lock-Box Accounts, the
Quill P.O. Box and the Quill Account, and the Seller hereby agrees to take any
further action necessary that the Agent may reasonably request to effect such
transfer. The Agent is hereby authorized at any time following a Downgrade Event
or an Event of Termination (a) to notify any or all of the Lock-Box Banks and
American National Bank and Trust Company to remit all amounts deposited in the
applicable Lock-Box Accounts, the Quill Account or other accounts directly to
the Agent or its designee and (b) to deliver to any appropriate official of the
United States Postal Service the Quill P.O. Box Certificate delivered hereunder
and take any action with respect to the Quill P.O. Box that Quill or the
Servicer was entitled to take prior to the delivery of the Quill P.O. Box
Certificate, including, without limitation, receiving or otherwise directing the
delivery of all moneys, instruments, checks and other remittances or documents
delivered to the Quill P.O. Box. At any time following the occurrence and
continuance of an Event of Termination or the
47
designation of a Servicer other than Staples pursuant to SECTION 6.01, (i) the
Agent may notify (or may direct the Servicer to notify) at any time the Obligors
of Receivables, or any of them, of the Purchasers' and the Liquidity Providers'
interest in Receivables Assets and direct such Obligors, or any of them, that
payment of all amounts payable under any Receivable be made directly to the
Agent or its designee; (ii) the Seller shall, at the Agent's request and at the
Seller's expense, give notice of the Purchasers' and the Liquidity Providers'
interest in Receivables to each Obligor and direct that payments be made
directly to the Agent or its designee; and (iii) each of the Seller, each
Purchaser and the Liquidity Providers hereby authorizes the Agent to take any
and all steps in the Seller's name and on behalf of the Seller, the Purchasers
and the Liquidity Providers necessary or desirable, in the determination of the
Agent, to collect all amounts due under any and all Receivables, including,
without limitation, endorsing any Transaction Party's name on checks and other
instruments representing Collections and enforcing such Receivables.
Notwithstanding the assignment of any rights by Hackensack or the Seller under
the Originator Sale Agreement or the Sale and Contribution Agreement,
respectively, the Agent shall not exercise any of Hackensack's or the Seller's
rights to give or require notice to Obligors at any time that it would not be
entitled to give such notice under this SECTION 6.03.
SECTION 6.04. RESPONSIBILITIES OF THE SELLER. Anything herein
to the contrary notwithstanding, the Seller shall (i) perform all of its
obligations under the Receivables to the same extent as if Receivables Assets
had not been assigned hereunder and the exercise by Agent of its rights
hereunder shall not relieve Seller from such obligations and (ii) pay when due
any taxes, including without limitation, sales, excise and personal property
taxes payable in connection with the Receivables. None of the Agent, the
Purchasers or the Liquidity Providers shall have any obligation or liability
with respect to any Receivables or Receivables Assets, nor shall any of them be
obligated to perform any of the obligations of the Seller thereunder.
SECTION 6.05. FURTHER ACTION EVIDENCING AGENT'S INTEREST. The
Seller agrees that from time to time, at its expense, it will promptly execute
and deliver all further instruments and documents, and take all further action
that the Agent may reasonably request in order to perfect, protect or more fully
evidence the interest of the Agent granted hereunder or the enable the Agent to
exercise or enforce any of its rights hereunder. Without limiting the generality
of the foregoing, the Seller will (and the Servicer shall cause the Seller to)
(i) xxxx (1) its master data processing records evidencing the Receivables
Assets or (2) the file drawers containing the Records with a legend, acceptable
to the Agent, evidencing that an interest therein has been assigned to the Agent
under this Agreement, and (ii) upon the request of the Agent, execute and file
such financing statements, continuation statements or amendments thereto or
assignments thereof, and execute and file such other instruments or notices, as
may be necessary or appropriate or as the Agent may reasonably request. The
Seller hereby authorizes the Agent to file one or more financing statements,
continuation statements and amendments thereto and assignments thereof, relative
to all or any of the Receivables Assets now existing or hereafter arising
without the signature of the Seller where permitted by law. A carbon,
photographic or other reproduction of this Agreement or any financing statement
covering the Receivables Assets, or any part thereof, shall be sufficient as a
financing statement. If the Seller fails to perform any of its agreements or
obligations under this Agreement, the Agent may (but shall not be required to)
itself perform, or cause performance of, such agreement or obligation, and the
expenses of the Agent incurred in connection therewith shall be payable by the
Seller upon the
48
Agent's demand therefor; PROVIDED, HOWEVER, prior to taking any such action, the
Agent shall give notice of such intention to the Seller and provide the Seller
with a reasonable opportunity to take such action itself.
ARTICLE VII
EVENTS OF TERMINATION
SECTION 7.01. EVENTS OF TERMINATION. If any of the following
events ("Events of Termination") shall occur:
(a) Any Transaction Party shall fail to make any payment or
deposit to be made by it hereunder when due; or
(b) Any Transaction Party shall fail to perform or observe any
term, covenant or agreement contained in this Agreement or any other Facility
Document on its part to be performed or observed and any such failure shall
remain unremedied for ten days after the earlier of the date on which such
Transaction Party obtains knowledge of such failure or written notice of such
failure from the Agent; or
(c) Any representation or warranty made or deemed to be made
by any Transaction Party (or any of their respective Designated Officers) under
or in connection with this Agreement, any other Facility Document, any Seller
Report, any Purchase Request or other information or report delivered pursuant
hereto shall prove to have been false or incorrect in any material respect when
made; or
(d) Except to the extent permitted by the terms hereof, the
Agent on behalf of the Purchasers shall cease to have a valid and perfected
first priority ownership or security interest in each of the Receivables Assets;
or
(e) (i) Any Transaction Party 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 against any
Transaction Party (an "Involuntary Proceeding") or by any Transaction Party
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, or other similar official for
it or for any substantial part of its property; or (ii) any Transaction Party's
Board of Directors (or equivalent governing body) shall vote affirmatively to
authorize any of the actions set forth in CLAUSE (i) above in this SUBSECTION
(e); or
(f) A Servicer Default shall occur and be continuing; or
(g) As of the last day of any calendar month, (1) the average
of the Default Ratios for the three preceding calendar months (including the
calendar month ending upon such date) shall exceed 12%, (2) the average of the
Delinquency Ratios for the three preceding calendar months (including the
calendar month ending upon such date) shall exceed 14%, (3) the
49
average of the Dilution Ratios for the three preceding calendar months
(including the calendar month ending upon such date) shall exceed 9% or (4) the
average of the Loss-to-Liquidation Ratios for the three preceding calendar
months (including the calendar month ending upon such date) shall exceed 5%; or
(h) The Receivables Interest exceeds 97% and such condition
shall remain unremedied for a period of five (5) consecutive Business Days; or
(i) There shall have occurred any event which has or is likely
to have a Material Adverse Effect or a material adverse change shall occur in
the financial condition or operations of Staples and its subsidiaries, taken as
a whole, since July 29, 2000; or
(j) There shall have occurred any commingling of the
Collections of Receivables at any time following their deposit into the
Collection Account, the Quill Account, the Quill P.O. Box or a Lock-Box Account
with other funds (unless such commingling was caused by the Agent);
(k) Any Transaction Party shall fail to pay any taxes (except
such taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided in accordance with GAAP and which have not
given rise to any liens or encumbrances on the Receivables Assets) when due in
the aggregate in excess of $1,000,000, including, without limitation, sales,
excise or personal property taxes payable by such Transaction Party;
(l) Any Transaction Party shall fail to pay any principal of
or premium or interest on any Indebtedness having a principal amount of
$10,000,000 or greater when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise), and
any such failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Indebtedness; or any
other default under any agreement or instrument relating to any such
Indebtedness of such Transaction Party or any other event shall occur and shall
continue after the applicable grace period, if any, specified in such agreement
or instrument either if (x) the effect of such default or event is to accelerate
the maturity of such Indebtedness or (y) the effect of such default would permit
the holder of such Indebtedness to accelerate the maturity of such Indebtedness
and such default or event continues unremedied or unwaived for more than 90 days
after the Agent or the Purchasers give notice to the holder of such Indebtedness
of such default or event; or any such Indebtedness shall be declared to be due
and payable or required to be prepaid (other than by a regularly scheduled
required prepayment) prior to the stated maturity thereof; or
(m) An "Event of Termination" as defined in the Sale and
Contribution Agreement shall occur or Hackensack or the Seller shall have
declared the "Termination Date" as defined in and in accordance with such Sale
and Contribution Agreement; or
(n) An "Event of Termination" as defined in the Originator
Sale Agreement shall occur or either Originator or Hackensack shall have
declared the "Termination Date" as defined in and in accordance with the
Originator Sale Agreement; or
(o) An "Event of Default" under the Rochester Note shall have
occurred; or
50
(p) A default shall occur under the Parent Undertakings or
Staples or any other Person (other than the Agent or a Purchaser) shall attempt
to terminate or assert the invalidity or unenforceability of the Parent
Undertakings or any provision hereof; or
(q) The long term unsecured debt obligations of Staples (i) if
rated by S&P, are rated below BB by S&P or, if rated by Xxxxx'x, are rated below
Ba2 by Xxxxx'x, or (ii) if not rated by S&P or by Xxxxx'x, the Deemed Rating is
below the equivalent of BB by S&P or Ba2 by Xxxxx'x,
then, and in any such event, the Purchaser may, by notice to the Seller, declare
the Termination Date to have occurred, EXCEPT that, in the case of any event
described in CLAUSE (i) of SUBSECTION (e) above, the Termination Date shall be
deemed to have occurred automatically upon the occurrence of such event. Upon
any such declaration or automatic occurrence, the Agent and the Purchasers shall
have, in addition to all other rights and remedies under this Agreement or
otherwise, all other rights and remedies provided under the UCC of the
applicable jurisdiction and other applicable laws, which rights shall be
cumulative. Upon the occurrence of the Termination Date, all Obligations shall
be immediately due and payable and all Capital shall be immediately due and
payable, PROVIDED, however, that Capital shall be payable solely out of
Collections and other amounts payable pursuant to the terms of this Agreement
and the other Facility Documents.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. INDEMNITIES BY THE SELLER. Without limiting any
other rights which any Affected Party may have hereunder or under applicable
law, the Seller hereby agrees to indemnify any Purchaser, CNAI, individually and
in its capacity as Agent, the Servicer, if not an Affiliate of the Seller, and
any Liquidity Provider (the "INDEMNIFIED PARTIES"), from and against any and all
damages, losses, claims, liabilities and related costs and expenses, including
reasonable attorneys' fees and disbursements (all of the foregoing being
collectively referred to as "LOSSES") awarded against or incurred by such
Indemnified Party to the extent relating to or arising from this Agreement
(excluding, however, (a) Losses to the extent a final judgment of a court of
competent jurisdiction holds that such Losses resulted from gross negligence or
willful misconduct on the part of the Indemnified Party seeking indemnification
and (b) Losses to the extent the same includes losses in respect of Receivables
that are uncollectible on account of the insolvency, bankruptcy or lack of
creditworthiness of the related Obligor) (all of the foregoing being
collectively referred to as "INDEMNIFIED AMOUNTS"). Without limiting the
generality of the foregoing, the Seller shall indemnify each indemnified Party
for Indemnified Amounts relating to or arising from:
(i) the transfer of an interest in any Receivable other than
an Eligible Receivable;
(ii) reliance on any representation or warranty made or deemed
made by the Seller, Hackensack, the Originators, the Servicer or
Staples (or any of their
51
respective officers) under this Agreement or any other Facility
Document to which any of the foregoing is a party, which shall have
been false or incorrect in any respect when made or deemed made or
delivered;
(iii) the failure by the Seller, Hackensack, the Originators,
the Servicer or Staples to comply with any term, provision or covenant
contained in this Agreement, the Sale and Contribution Agreement, the
Originator Sale Agreement, the Parent Undertaking or any other Facility
Document to which it is party or with any applicable law, rule or
regulation with respect to any Receivables Asset, the related Contract,
or the Related Security, or the nonconformity of any Receivables Asset,
the related Contract or the Related Security with any such applicable
law, rule or regulation (including, in each case, any such law, rule or
regulation under the IRS or relating to state taxes);
(iv) any Adverse Claim with respect to any Receivable or any
Related Security or Collections with respect thereto, whether existing
at the time that such Receivable initially arose or at any time
thereafter;
(v) any products liability claim or personal injury or
property damage suit or other similar or related claim or action of
whatever sort arising out of or in connection with goods, merchandise
and/or services the sale, lease or provision of which gave rise to any
Receivable;
(vi) the failure to pay when due any taxes, including, without
limitation, sales, excise or personal property taxes payable by the
Seller, Hackensack or either Originator in connection with the
Receivables Assets;
(vii) the failure of the Seller to have a perfected Lien on
any Related Security which secures the payment of a Receivable;
(viii) the failure to vest and maintain vested in the Agent or
to transfer to the Agent, on behalf of the Purchasers and the Liquidity
Providers, a first priority perfected ownership or security interest in
the Receivables Asset, together with all Collections and Related
Security, free and clear of any Adverse Claim, whether existing at the
time such Receivables Asset arose or at any time thereafter; or any
failure of the Seller to acquire and maintain legal and equitable title
to, and ownership of all of the Receivables Assets, free and clear of
any Adverse Claim; or any failure of the Seller to give reasonably
equivalent value to Hackensack under the Sale and Contribution
Agreement in consideration of the transfer by Hackensack or any
Receivables Assets or interest therein, or any attempt by any Person to
void such transfer under statutory provisions or common law or
equitable action; or any failure of the Seller to have a first priority
perfected security interest in the Pledged Collateral, free and Clear
of any Adverse Claim;
(ix) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the UCC or
other applicable laws against the Seller with respect to any
Receivables Assets;
52
(x) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor thereof, the entry of an
automatic stay relating to an insolvency proceeding in respect of the
Obligor thereof or any comparable event in a state court insolvency
proceeding relating to the Obligor thereof) of the Obligor to the
payment of any Receivable (including, without limitation, a defense
based on such Receivable 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 or lease of the
goods, merchandise and/or services related to such Receivable or the
furnishing or failure to furnish such goods, merchandise and/or
services; or any dispute, claim, offset or defense (other than a
discharge in bankruptcy of Rochester) of Rochester to any payment of
the Rochester Note (including, without limitation, a defense based on
the Rochester Note not being a legal, valid and binding obligation of
Rochester enforceable against it in accordance with its terms);
(xi) the commingling of funds or other assets of the Seller
with those of any Affiliate of the Seller, or maintaining any bank
account or other depository account to which such Affiliate is an
account party, into which any such Affiliate makes deposits or from
which any such Affiliate has the power to make withdrawals;
(xii) any investigation, litigation or proceeding related to
or arising from this Agreement or any other Facility Document, the
transactions contemplated hereby, the used of the proceeds of a
Purchase or a Reinvestment Purchase, the ownership of the Receivables
Interests or any other investigation, litigation or proceeding relating
to the Seller, the Servicer, either Originator or Staples in which any
Indemnified Party becomes involved as a result of any of the
transaction contemplated hereby;
(xiii) any failure of the Seller to perform its duties or
obligations in accordance with the provisions of ARTICLE VI; or
(xiv) the failure of the Seller or any predecessor in interest
to comply with any applicable law, rule or regulation (whether official
or unofficial) of the IRS or any state tax authority related to this
Agreement or any other Facility Document.
Any amounts subject to the indemnification provisions of this SECTION 8.01 shall
be paid by the Seller to the Agent within five Business Days following Agent's
demand therefor.
SECTION 8.02. INDEMNITIES BY THE SERVICER. The Servicer agrees
to indemnify each Indemnified Party for Indemnified Amounts arising out of or
resulting from any of the following:
(i) reliance on any representation or warranty made or deemed
made by the Servicer (or any of its officers) under this Agreement or
any other Facility Document to which it is a party, which shall have
been false or incorrect in any respect when made or deemed made or
delivered; or
(ii) the failure by the Servicer, to comply with any term,
provision or covenant contained in this Agreement, the Sale and
Contribution Agreement or any other
53
Facility Document or with any applicable law, rule or regulation with
respect to any Receivables Asset or;
(iii) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the UCC or
other applicable laws against the Seller with respect to any
Receivables Assets;
(iv) the commingling of Collections with any other funds; or
(v) any action or omission by the Servicer which reduces or
impairs the rights of the Agent or the Purchasers with respect to any
Receivables Asset or the value of any such Receivables Asset.
SECTION 8.03. MATERIALITY CONSIDERATIONS. Notwithstanding
anything to the contrary in this Agreement, solely for purposes of the Seller's
and the Servicer's indemnification obligations in this Article VIII, any
representation, warranty or covenant qualified by the occurrence of a Material
Adverse Effect or similar concepts of materiality shall be deemed to be not so
qualified.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. AMENDMENTS, ETC. No amendment to or waiver of
any provision of this Agreement nor consent to any departure by the Seller or
the Servicer, shall in any event be effective unless the same shall be in
writing and signed by (i) the Seller, the Agent and such percentage of the
Purchasers as shall be required pursuant to the terms of an agency agreement
among the Purchasers and the Agent (the "REQUIRED PURCHASERS") (with respect to
an amendment) or (ii) the Agent and the Required Purchasers (with respect to a
waiver or consent by them) or the Seller (with respect to a waiver or consent by
it), as the case may be, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; PROVIDED,
HOWEVER, that no such amendment, modification or waiver shall affect the rights
or duties of the Servicer hereunder without the prior written consent of the
Servicer. This Agreement contains a final and complete integration of all prior
expressions by the parties hereto with respect to the subject matter hereof and
shall constitute the entire agreement (together with the exhibits hereto) among
the parties hereto with respect to the subject matter hereof, superseding all
prior oral or written understandings.
SECTION 9.02. NOTICES, ETC. All notices and other
communications provided for hereunder shall, unless otherwise stated herein, be
in writing (including telex communication and communication by facsimile copy)
and shall be personally delivered or sent by first class mail, postage prepaid,
or by courier or by facsimile, 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. All
such notices and communications shall be effective, upon receipt, or in the case
of delivery by mail, three days after being deposited in the mails, or, in the
case of notice by facsimile, when electronic communication of receipt is
obtained, in each case addressed as aforesaid.
54
SECTION 9.03. NO WAIVER; REMEDIES. No failure on the part of
the Agent, any Purchaser or any Liquidity Provider 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. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Without limiting the foregoing, the Agent is hereby authorized by the Seller at
any time following the occurrence of an Event of Termination or an Downgrade
Event to the fullest extent permitted by law, to instruct Citibank or any
Affiliate of Citibank to set off and apply any and all deposits (whether general
or special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by Citibank or such Affiliate to or for the
credit or the account of the Seller against any and all of the obligations of
Seller, now or hereafter existing under this Agreement or under any agreement
executed pursuant hereto, to the Agent, any Purchaser or any Liquidity Provider
or their respective successors and assigns irrespective of whether or not demand
therefor shall have been made under this Agreement or under any agreement
executed pursuant hereto. The Seller acknowledges that the rights of the Agent,
the Purchasers and the Liquidity Providers or any of their respective successors
and assigns described in this paragraph are in addition to other rights and
remedies (including, without limitation, other rights of set-off) such parties
may have.
SECTION 9.04. BINDING EFFECT; ASSIGNABILITY. (a) This
Agreement shall be binding upon and inure to the benefit of the Seller, the
Servicer, the Agent, the Purchasers and their respective successors and
permitted assigns (which successors of the Seller shall include a trustee in
bankruptcy). This Agreement shall create and constitute the continuing
obligations of the parties hereto in accordance with its terms, and shall remain
in full force and effect until the Final Collection Date; PROVIDED, HOWEVER,
that the rights and remedies with respect to any breach of any representation
and warranty made by the Seller pursuant to ARTICLE IV and the indemnification
and payment provisions of SECTIONS 2.06, 2.07, 2.08, ARTICLE VI and ARTICLE VII
shall be continuing and shall survive any termination of this Agreement.
(b) The Seller and the Servicer may not assign any of their
respective rights and obligations hereunder or any interest herein without the
prior written consent of the Purchasers and the Agent. The Conduit Purchaser
may, without the consent of the Seller or the Servicer, assign at any time all
or any portion of its rights and obligations hereunder and interests herein to
any other Person including, without limitation, (a) CNAI, any affiliate of CNAI
or any special purpose receivables investment vehicle managed by CNAI or any
affiliate of CNAI, or (b) any Person pursuant to an Asset Purchase Agreement.
Any Committed Purchaser or Liquidity Provider may, with the consent of the Agent
and, prior to an Event of Termination, with the consent of the Seller, not to be
unreasonably withheld, assign at any time all or any portion of its rights and
obligations hereunder and interests herein to any Person; PROVIDED, HOWEVER,
that prior to the effectiveness of any such assignment, the successor Committed
Purchaser or Liquidity Provider, as the case may be, shall have provided all of
the forms described in SECTION 2.09(c); provided that any Committed Purchaser or
Liquidity Provider may, without the consent of the Seller, sell a participation
in its rights and obligations hereunder to any Person. Upon any such assignment,
the assignee shall succeed to and become vested with all the rights, powers,
privileges and duties of such Purchaser, and the resigning Purchaser shall be
discharged from its duties and obligations as Purchaser hereunder. The Seller
and the Servicer
55
agree to execute or obtain such other documentation as may be reasonably
requested by the assigning Purchaser in order to effectuate such assignment.
Notwithstanding any other provisions of this Agreement, any
Purchaser may at any time create a security interest in all or a portion of its
rights under this Agreement or any other Facility Document in favor of the
Federal Reserve Bank in accordance with Regulation A of the Board of Governors
of the Federal Reserve System.
SECTION 9.05. GOVERNING LAW; WAIVER OF JURY TRIAL. THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAWS
BUT OTHERWISE WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES), EXCEPT TO THE
EXTENT THAT THE VALIDITY OR PERFECTION OF THE INTERESTS OF THE SELLER IN THE
RECEIVABLES ASSETS OR REMEDIES HEREUNDER OR THEREUNDER, IN RESPECT THEREOF, ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. THE
SELLER AND THE SERVICER EACH HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE
IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE AMONG
ANY OF THE SELLER, THE SERVICER, ANY LIQUIDITY PROVIDER OR THE AGENT ARISING OUT
OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP BETWEEN THEM
IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL
BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY. WITH RESPECT TO THE FOREGOING
CONSENT TO JURISDICTION, EACH OF THE SELLER AND THE SERVICER HEREBY WAIVES ANY
OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY
ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION
9.05 SHALL AFFECT THE RIGHT OF THE SELLER, THE SERVICER, ANY LIQUIDITY PROVIDER
OR THE AGENT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
AFFECT THE RIGHT OF THE SELLER, THE SERVICER, SUCH LIQUIDITY PROVIDER OR THE
AGENT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY OTHER PARTY HERETO OR ITS
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 9.06. COSTS, EXPENSES AND TAXES. (a) In addition to
the rights of indemnification under Article VIII hereof, the Seller agrees to
pay on demand (i) all reasonable costs and expenses incurred in the periodic
auditing of the Seller or the Servicer pursuant to SECTION 5.01(c) or
5.04(a)(iii), as applicable and (ii) all reasonable costs and expenses in
connection with the preparation, execution and delivery (including any requested
amendments, waivers or consents) of this Agreement and the other documents to be
delivered hereunder, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Agent and the Purchasers with respect
thereto and with respect to advising the Agent and the Purchasers as to their
respective rights and remedies under this Agreement, and the other agreements
executed pursuant hereto and all costs and expenses, if any (including
reasonable
56
counsel fees and expenses), in connection with the enforcement of this Agreement
and the other agreements and documents to be delivered hereunder.
(b) In addition, the Seller shall pay any and all stamp,
sales, excise and other taxes and fees (including, without limitation UCC filing
fees and any penalties associated with the late payment of any UCC filing fees)
payable or determined to be payable in connection with the execution, delivery,
filing and recording of this Agreement or the other agreements and documents to
be delivered hereunder (including any UCC financing statements) and agrees to
indemnify the Agent, the Purchasers and the Liquidity Providers against any
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes and fees.
(c) In addition, the Seller shall pay on demand all other
costs and expenses incurred by the Conduit Purchaser or any general or limited
partner or shareholder of the Conduit Purchaser ("Other Costs"), including,
without limitation, the cost of auditing the Conduit Purchaser's books by
certified public accountants, the cost of rating the Conduit Purchaser's
Commercial Paper Notes by independent financial rating agencies and the
reasonable fees and out-of-pocket expenses of counsel for the Conduit Purchaser
or any counsel for any general or limited partner or shareholder of the Conduit
Purchaser with respect to (i) advising the Conduit Purchaser or such general or
limited partner or shareholder as to its rights and remedies under this
Agreement, (ii) the enforcement of this Agreement and the other documents to be
delivered hereunder or (iii) advising the Conduit Purchaser or such general or
limited partner or shareholder as to matters relating to the Conduit Purchaser's
operations; PROVIDED, HOWEVER, that if the Conduit Purchaser enters into
agreements for the purchase of or the grant of a security interest in
receivables from one or more other Persons ("Other Sellers"), the Seller and
such Other Sellers shall each be liable for such Other Costs ratably in
accordance with the usage under the respective facilities of the Conduit
Purchaser to acquire by purchase or as security receivables from the Seller and
each Other Seller; PROVIDED, FURTHER, that if such Other Costs are attributable
to the Seller and not attributable to any Other Seller, the Seller shall be
solely liable for such Other Costs, but if such Other Costs are attributable to
any Other Seller and not the Seller, the Seller shall not be liable for such
Other Costs. It is expressly understood and agreed that the Administration Fee
payable under the Fee Letter is intended to cover the payment of Other Costs and
that the Seller's obligations under this SECTION 9.06(c) shall be limited to the
amount, if any, by which the Seller's ratable share of such Other Costs as
determined above exceeds the Administration Fee.
(d) In addition, the Seller shall pay to the Agent on demand
all reasonable costs and expenses (including reasonable attorney's fees and
expenses but excluding costs of internal counsel) associated with the release of
the Agent's lien pursuant to SECTION 2.05 and SECTION 6.02.
SECTION 9.07. NO PROCEEDINGS. The Seller, each Liquidity
Provider and the Agent each hereby agrees that it will not institute against the
Conduit Purchaser any proceeding of the type referred to in CLAUSE (i) of
SECTION 7.01(e) so long as any CP Notes shall be outstanding or there shall not
have elapsed one year PLUS one day since the last day on which any such CP Notes
shall have been outstanding.
57
SECTION 9.08. EXECUTION IN COUNTERPARTS; SEVERABILITY. This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and
the same agreement. Delivery of an executed counterpart of a signature page to
this Agreement by telecopier shall be effective as delivery of a manually
executed counterpart of this Agreement. In case any provision in or obligation
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 9.09. CONFIDENTIALITY. The Seller, the Servicer and
each Purchaser shall maintain and shall cause each of its employees and officers
to maintain the confidentiality of this Agreement and the other confidential or
proprietary information with respect to the Agent and the Purchaser and their
respective businesses obtained by it or them, PROVIDED, HOWEVER that (i) the
Seller, the Servicer and their respective Affiliates are not obligated to keep
confidential or otherwise limit the use of any element of this Agreement, the
Facility Documents or any other information in connection with the structuring,
negotiating and execution of the transactions contemplated herein or therein
that is necessary to understand or support any intended income tax benefits and
(ii) the Agent and the Purchaser do not assert any claim of proprietary
ownership in respect of any element of this Agreement, the Facility Documents or
any other information in connection with the structuring, negotiating and
execution of the transactions contemplated herein or therein intended to give
rise to significant income tax benefits. Furthermore, the Seller, the Servicer
and such Purchaser and its officers and employees may disclose such information
to the Seller's, the Servicer's or such Purchaser's external accountants and
attorneys and as required by any applicable law or order of any judicial or
administrative proceeding and to any institution extending credit or providing
financial services to the Seller or the Servicer.
58
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
SELLER: LINCOLNSHIRE FUNDING, LLC
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxxx
Title: President
000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
SERVICER: STAPLES, INC.
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxxx
Title: SVP, Finance & Treasurer
000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
AGENT: CITICORP NORTH AMERICA, INC., as Agent
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President
000 Xxxxxxxxxx Xxx.
Xxxxxxxx, Xxx Xxxx 00000
Attn: Corporate Assets Funding
Telecopy: 000-000-0000
CONDUIT PURCHASER: CORPORATE RECEIVABLES CORPORATION
By: Citicorp North America, Inc., as
Attorney-in-Fact
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President
000 Xxxxxxxxxx Xxx.
Xxxxxxxx, Xxx Xxxx 00000
Attn: Corporate Assets Funding
Telecopy: 000-000-0000
COMMITTED PURCHASERS: CITIBANK, N.A.
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Corporate Assets Funding
Telecopy: 000-000-0000
