RECEIVABLES PURCHASE AGREEMENT
dated as of May 5, 1999
among
LINC RECEIVABLES 1999 CORPORATION,
as Seller
LINC CAPITAL, INC.
as Servicer
BLUE KEEL FUNDING, LLC
as Purchaser
and
FLEET BANK, N.A.
as Agent
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS..................................1
SECTION 1.1 Defined Terms....................................................1
SECTION 1.2 Other Definitional Provisions...................................28
SECTION 1.3 Other Terms.....................................................28
SECTION 1.4 Computation of Time Periods.....................................29
ARTICLE II
PURCHASE PROCEDURES..............................29
SECTION 2.1 Offer and Acceptance...........................................29
SECTION 2.2 Purchase Limits................................................29
SECTION 2.3 Making Purchases from Seller...................................29
SECTION 2.4 Facility Termination Date......................................30
SECTION 2.5 Representation and Warranty....................................30
SECTION 2.6 Voluntary Termination of Facility;
Reduction of Purchase Limit....................................30
ARTICLE III
FEES, ETC...................................31
SECTION 3.1 Fees...........................................................31
SECTION 3.2 Computation of Earned Yield and Fees...........................31
SECTION 3.3 Initial Settlement Period......................................31
ARTICLE IV
ESTABLISHMENT AND USE OF ACCOUNTS; SETTLEMENTS................31
SECTION 4.1 Accounts.......................................................31
SECTION 4.2 Settlements....................................................32
SECTION 4.3 Interest Rate Swaps............................................33
SECTION 4.4 Withdrawals from Reserve Account...............................33
SECTION 4.5 Deemed Collections; Repurchases................................34
SECTION 4.6 Servicer Advances..............................................34
SECTION 4.7 Clean-Up Call..................................................34
ARTICLE V
PAYMENTS...................................35
SECTION 5.1 Making of Payments.............................................35
ARTICLE VI
INCREASED COSTS, ETC..............................35
SECTION 6.1 Increased Costs................................................35
SECTION 6.2 Funding Losses.................................................37
ARTICLE VII
CONDITIONS TO PURCHASES............................37
SECTION 7.1 Initial Purchase.............................................37
7.1.1 Resolutions; Corporate Documents.............................37
7.1.2 Consents, Etc................................................37
7.1.3 Incumbency and Signatures....................................37
7.1.4 Good Standing Certificates...................................38
7.1.5 Search Reports...............................................38
7.1.6 Fee Letter; Payment of Fees..................................38
7.1.7 Closing Certificate..........................................38
7.1.8 Purchase and Sale Agreement..................................38
7.1.9 Opinions of Counsel to Seller and LINC.......................38
7.1.10 Monthly Report...............................................38
7.1.11 Lockbox Agreement............................................39
7.1.12 UCC Filings..................................................39
7.1.13 Liquidity Agreement..........................................39
7.1.14 Prior Transaction............................................39
7.1.15 Other........................................................39
SECTION 7.2 All Purchases................................................39
7.2.1 No Termination Event, Etc....................................39
7.2.2 Purchase Request.............................................39
7.2.3 Facility Termination Date....................................40
7.2.4 Reserve Account..............................................40
7.2.5 Release......................................................40
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF SELLER...................40
SECTION 8.1 Representations and Warranties of Seller.......................40
SECTION 8.2 Organization and Good Standing, Etc............................40
SECTION 8.3 Power and Authority; Due Authorization.........................40
SECTION 8.4 No Violation...................................................41
SECTION 8.5 Validity and Binding Nature....................................41
SECTION 8.6 Bulk Sales Act.................................................41
SECTION 8.7 Government Approvals...........................................41
SECTION 8.8 Financial Condition............................................42
SECTION 8.9 Margin Regulations.............................................42
SECTION 8.10 Quality of Title...............................................42
SECTION 8.11 Accuracy of Information........................................42
SECTION 8.12 Offices........................................................43
SECTION 8.13 Capitalization.................................................43
SECTION 8.14 Trade Names....................................................43
SECTION 8.15 Taxes..........................................................43
SECTION 8.16 Compliance with Applicable Laws, etc...........................43
SECTION 8.17 No Proceedings.................................................43
SECTION 8.18 Investment Company Act, Etc....................................44
SECTION 8.19 Eligible Contracts.............................................44
ARTICLE IX
REPRESENTATIONS AND WARRANTIES OF SERVICER..................44
SECTION 9.1 Representations and Warranties of Servicer.....................44
SECTION 9.2 Organization and Good Standing, Etc............................44
SECTION 9.3 Power and Authority; Due Authorization.........................44
SECTION 9.4 No Violation...................................................45
SECTION 9.5 Validity and Binding Nature....................................45
SECTION 9.6 Government Approvals...........................................45
SECTION 9.7 Financial Condition............................................45
SECTION 9.8 Accuracy of Information........................................46
SECTION 9.9 Offices........................................................46
SECTION 9.10 Taxes..........................................................46
SECTION 9.11 Compliance with Applicable Laws................................46
SECTION 9.12 No Proceedings.................................................47
SECTION 9.13 Investment Company Act, Etc....................................47
SECTION 9.14 Software Programs..............................................47
ARTICLE X
COVENANTS OF SELLER..............................47
SECTION 10.1 Affirmative Covenants of Seller.............................47
10.1.1 Compliance with Laws, Etc...................................48
10.1.2 Preservation of Corporate Existence.........................48
10.1.3 Audits......................................................48
10.1.4 Keeping of Records and Books of Account.....................48
10.1.5 Performance and Compliance with Contracts...................49
10.1.6 Location of Records.........................................49
10.1.7 Separate Corporate Existence................................49
10.1.8 Reporting Requirements of Seller............................52
10.1.9 Use of Proceeds.............................................53
10.1.10 Collections.................................................53
10.1.11 Liquidity Fundings..........................................53
10.1.12 Purchase and Sale Agreement.................................53
SECTION 10.2 Negative Covenants of Seller................................54
10.2.1 Sales, Liens, Etc...........................................54
10.2.2 Mergers, Acquisitions, Sales,
Subsidiaries, etc...........................................54
10.2.3 Restricted Payments.........................................54
10.2.4 Amendments to Certain Documents.............................55
10.2.5 Incurrence of Indebtedness; Other Transactions..............55
10.2.6 Deposits to the Collection Account..........................55
10.2.7 Change in Business Policy...................................56
10.2.8 Amendments to Contracts....................................56
ARTICLE XI
COVENANTS OF SERVICER.............................56
SECTION 11.1 Affirmative Covenants of Servicer...........................56
11.1.1 Compliance with Laws, Etc...................................56
11.1.2 Preservation of Corporate Existence.........................56
11.1.3 Audits......................................................56
11.1.4 Keeping of Records and Books of Account.....................57
11.1.5 Performance and Compliance with Contracts...................57
11.1.6 Location of Records.........................................57
11.1.7 Credit Policy...............................................58
11.1.8 Reporting Requirements of Servicer..........................58
11.1.9 Collections.................................................60
SECTION 11.2 Negative Covenants of Servicer..............................60
11.2.1 Mergers, Acquisitions, Sales, Subsidiaries, etc.............60
11.2.2 Deposits to the Collection Account..........................61
11.2.3 Change in Business or Credit Policy.........................61
11.2.4 Amendment of Contracts......................................61
ARTICLE XII
TERMINATION EVENTS AND THEIR EFFECT; REMEDIES.................61
SECTION 12.1 Termination Events............................................61
12.1.1 Non-Payment, Etc............................................61
12.1.2 Non-Compliance with Other Provisions........................61
12.1.3 Breach of Representations and Warranties....................62
12.1.4 Non-Payment of Other Indebtedness, etc......................62
12.1.5 Bankruptcy..................................................62
12.1.6 Purchase and Sale Termination Event.........................62
12.1.7 Ratio.......................................................62
12.1.8 Material Adverse Effect.....................................63
12.1.9 Tax Liens; ERISA Liens......................................63
12.1.10 Validity of Transaction Documents...........................63
12.1.11 Change in Control...........................................63
12.1.12 Servicer Termination Event..................................63
12.1.13 Pay-Out Amount Limit........................................63
SECTION 12.2 Effect of Termination Event...................................63
ARTICLE XIII
THE SERVICER.................................64
SECTION 13.1 LINC as Initial Servicer..................................64
SECTION 13.2 Duties of Servicer........................................65
SECTION 13.3 Rights of the Agent.......................................66
SECTION 13.4 Responsibilities of Seller................................67
SECTION 13.5 Further Action............................................67
SECTION 13.6 Application of Collections................................68
SECTION 13.7 Servicing Compensation; Costs of Servicing................68
ARTICLE XIV
THE AGENT...................................68
SECTION 14.1 Authorization and Action......................................68
SECTION 14.2 Exculpation...................................................69
SECTION 14.3 Agent and Affiliates..........................................69
SECTION 14.4 Contract Schedules............................................69
ARTICLE XV
ASSIGNMENTS..................................70
SECTION 15.1 Restrictions on Assignments...................................70
SECTION 15.2 Documentation.................................................70
SECTION 15.3 Rights of Assignee............................................70
SECTION 15.4 Notice of Assignment..........................................71
ARTICLE XVI
INDEMNIFICATION................................71
SECTION 16.1 General Indemnity of Seller...................................71
SECTION 16.2 Indemnity by Servicer.........................................73
SECTION 16.3 Contribution..................................................73
ARTICLE XVII
SECURITY INTEREST...............................73
SECTION 17.1 Grant of Security Interest....................................73
SECTION 17.2 Further Assurances............................................74
SECTION 17.3 Remedies......................................................75
ARTICLE XVIII
MISCELLANEOUS.................................75
SECTION 18.1 No Waiver; Remedies..........................................75
SECTION 18.2 Amendments, Etc..............................................75
SECTION 18.3 Notices, Etc................................................75
SECTION 18.4 Costs, Expenses and Taxes....................................76
SECTION 18.5 Binding Effect; Survival...................................77
SECTION 18.6 Captions and Cross References...............................77
SECTION 18.7 Severability..................................................77
SECTION 18.8 Governing Law................................................78
SECTION 18.9 Counterparts..................................................78
SECTION 18.10 WAIVER OF JURY TRIAL.........................................78
SECTION 18.11 Recourse to Directors or Officers; Limited Recourse..........78
SECTION 18.12 No Proceedings...............................................78
SECTION 18.13 ENTIRE AGREEMENT..............................................79
EXHIBITS
Exhibit A Form of Purchase Request
Exhibit B Form of Seller Opinion of Counsel
Exhibit C Form of Monthly Report
Exhibit D Form of Lockbox Agreement
SCHEDULES
Schedule I Categories
Schedule II Filing Requirements
Schedule 9.12 Servicer Proceedings
Schedule 11.1.7 Credit Policy
Schedule 18.3 Notice Addresses
RECEIVABLES PURCHASE AGREEMENT
THIS RECEIVABLES PURCHASE AGREEMENT is made and entered into as of May 5,
1999, among LINC RECEIVABLES 1999 CORPORATION, a Delaware corporation
("Seller"), LINC CAPITAL, INC., a Delaware corporation ("LINC"), as initial
Servicer, BLUE KEEL FUNDING, LLC, a Delaware limited liability company
("Purchaser"), and FLEET BANK, N.A., a national banking association ("Fleet"),
as agent for Purchaser (in such capacity, together with its successors and
assigns, the "Agent").
BACKGROUND
1. The Originator originates and acquires leases and installment sales
contracts in the ordinary course of its business, certain of which it intends to
sell or contribute to Seller pursuant to the Purchase and Sale Agreement. Seller
intends to sell undivided interests in its portfolio of Contracts and other
Contract Assets (the "Portfolio") which interests are referred to herein as
Participations. Seller has requested Purchaser, and Purchaser has agreed on the
terms and subject to the conditions contained in this Agreement, to purchase
Participations from Seller from time to time during the term of this Agreement.
2. Fleet has been requested, and is willing, to act as the Agent.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINED TERMS. As used in this Agreement, the following terms
have the following meanings:
"Adjusted Tangible Net Worth" means at any time, the difference between (a)
the sum of (i) the non-current portion of Subordinated Debt, (ii) the total of
shareholders' equity calculated in accordance with GAAP, and (iii) deferred
income tax credits, minus (b) the sum of (i) deferred charges (after tax), and
(ii) the total amount of any intangible assets which shall include, without
limitation, (A) unamortized debt discount after taxes, (B) prepaid expenses
after tax, and (C) goodwill.
"Administration Fee" means the administration fee payable pursuant to the
Fee Letter.
"Advance" has the meaning set forth in Section 4.6.
"Adverse Claim" means a lien, security interest, pledge, charge, mortgage
or encumbrance, or similar right or claim of any Person.
"Affected Party" means each of Purchaser, each Program Support Provider,
any permitted assignee of Purchaser or any Program Support Provider, the Agent,
and the holding company of any Program Support Provider and any successor
holding company thereof.
"Affiliate" of any Person means any other Person that (i) directly or
indirectly controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any employee benefit plan) or (ii) is an executive officer or
director of such Person. A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power
a) to vote 10% or more of the securities (on a fully diluted basis)
having ordinary voting power for the election of directors or managing
partners; or
b) to direct or cause the direction of the management and policies of
such Person whether by contract or otherwise.
The word "Affiliated" has a correlative meaning.
"Agent" has the meaning set forth in the Preamble.
"Aggregate Principal Balance" means at any time the aggregate Outstanding
Principal Balance of all Contracts.
"Agreement" shall mean this Receivables Purchase Agreement, as it may be
amended, supplemented or otherwise modified from time to time.
"Alternate Base Rate" means, on any date, a fluctuating rate of interest
per annum equal to the higher of:
(a) the rate of interest most recently announced by the Agent in New
York, New York as its prime commercial rate for United States loans
made in the United States, which rate is not necessarily intended to
be the lowest rate of interest determined by Fleet in connection
with extensions of credit; or
(b) the Federal Funds Rate most recently determined by the Agent
plus 1.0% per annum.
"Applicable Margin" means (i) 1.25% for the period from the date that any
portion of the Capital is funded pursuant to the Liquidity Agreement until the
date that is 120 days after such date of funding, (ii) 1.50% for the period from
the date that is 120 days after the date of such funding pursuant to the
Liquidity Agreement until the date that is 180 days after such funding, (iii)
1.75% for the period from the date that is 180 days after the date of such
funding pursuant to the Liquidity Agreement until the date that is 240 days
after such funding, and (iv) 2.00% thereafter.
"Bankruptcy Code" means the Bankruptcy Code of 1986, 11 U.S.C. ss. 101, et
seq. as amended.
"Booked Residual Value" means, with respect to any item of Equipment, the
residual value thereof that was established by the Originator at the time of the
origination or acquisition of the related Contract by the Originator as
reflected on the books and records of the Originator.
"Business Day" shall mean any day other than a Saturday, a Sunday, a day on
which The Depositary Trust Company is closed or day on which commercial banks in
New York City or Chicago, Illinois are authorized or required to be closed for
business and in the case of determining the LIBO Rate, on which banks are open
for business in London, England.
"Capital" means, an amount equal to (a) the amount paid to (or as directed
by) Seller for the Participations pursuant to Section 2.3 of this Agreement less
(b) the aggregate amount of Collections received and actually distributed to the
Purchaser on account of such Capital pursuant to clause (vii) of Section 4.2.
"Category" means (i) the traditional portfolio, (ii) the LQA portfolio and
(iii) the emerging growth portfolio, all as more fully described on Schedule I.
"Change in Control" means, (i) with respect to Seller, that LINC shall fail
to own, directly or indirectly, free and clear of all Adverse Claims (other than
an Adverse Claim in favor of the lenders under the Credit Agreement), 100% of
the shares of the outstanding voting stock of Seller on a fully diluted basis,
or (ii) with respect to LINC, that Xxxxxx Xxxxxxxxx or Xxxxx Xxxxxx shall cease
for any reason to be executive officers of LINC or to actively participate in
the management thereof.
"Collateral" has the meaning set forth in Section 17.1.
"Collection Account" means a bank account maintained at the Collection
Account Bank (which initially shall be account numbered 9403543609 at Fleet in
New York, New York), which is (i) a blocked account, (ii) identified as the
"LINC Receivables 1999 Corporation Collection Account", (iii) in Purchaser's
name, and (iv) pledged to Purchaser pursuant to Section 17.1.
"Collection Account Bank" means the bank holding the Collection Account,
which bank shall initially be Fleet.
"Collections" means, without duplication, with respect to any Contract and
the related Equipment, all funds (other than scheduled payments that were due
and received with respect to such Contract prior to the applicable Cut-off Date
and late fees) that (a) are received by the Originator, Servicer or Seller, from
or on behalf of the related Obligors in payment of any amounts owed (including,
without limitation, principal, finance charges, interest, rent and all other
amounts and charges) in respect of such Contract, (b) received by the
Originator, Servicer or Seller and applied to such amounts owed by such Obligors
(including, without limitation, insurance payments or proceeds on account of any
casualty loss with respect to the related Equipment and net proceeds of sale or
other disposition of repossessed Equipment or other collateral or property of
the Obligor or any other party directly or indirectly liable for payment of such
Contract and available to be applied thereon), (c) received by Seller from the
Originator in respect of the purchase price of Contracts re-purchased by the
Originator from Seller pursuant to the Purchase and Sale Agreement, (d)
representing deemed collections pursuant to this Agreement or the Purchase and
Sale Agreement, (e) representing Repurchase Amounts or (f) representing proceeds
from the disposition of Equipment or other proceeds of Contract Assets.
"Commercial Paper Notes" means short-term promissory notes issued or to be
issued by Purchaser, or the proceeds of which are loaned or are to be loaned to
Purchaser, to fund its loans or investments in Contracts or other financial
assets.
"Contract" means each finance lease, true lease, retail installment sale
contract or note and security agreement that is or has been listed on a Contract
Schedule and that has not been repurchased by the Seller pursuant to this
Agreement.
"Contract Assets" means the assets sold, contributed, transferred, conveyed
and assigned, or purported to have been sold, contributed, transferred, conveyed
or assigned, by the Originator to the Seller pursuant to the Purchase and Sale
Agreement, which shall consist of all of the Seller's right, title and interest
in and to (i) the Contracts, including all interest, finance charges, rent
payments and principal due on or with respect to the Contracts from and after
the applicable Cut-off Date, and all rights, powers and remedies under or in
connection with the Contracts; (ii) the Equipment related to the Contracts;
(iii) all property which secures a Contract; (iv) all rights to guaranties to
the extent related to the Contracts or other agreements providing support or
credit enhancement for such Contracts to the extent related to such Contracts;
(v) all insurance policies related to the Contracts or the Equipment; (vi) all
rights and claims under the dealer agreements related to the Contracts, or any
other agreement pursuant to which the Originator acquired any Contract, in each
case to the extent related to such Contract; (vii) the Collections; (viii) the
Collection Account and the Reserve Account, and all monies, funds and
investments therein; (ix) a Pro-Rata Share of all warrants and similar equity
participation agreements, and the proceeds thereof; (x) the Purchase and Sale
Agreement, and all claims thereunder; (xi) all books and records, including
computer records, to the extent evidencing or relating to the foregoing; and
(xii) all proceeds of the foregoing and the rights to enforce the foregoing.
"Contract Payment Date" means, with respect to any Contract, each date
shown as a "Contract Payment Date" for such Contract on the related Contract
Schedule.
"Contract Schedule" means a schedule of Contracts delivered to the Agent
with each Purchase Request and approved by the Agent, such schedule identifying
each Contract to be sold to Purchaser in connection with such Purchase Request
by the name of the Obligor thereof and setting forth as to each Contract the
Outstanding Principal Balance, the Category of each Contract, loan or lease
number, scheduled payments, final maturity date, and the Contract Payment Dates
for each such Contract.
"Convertible Subordinated Debt" means the balance (approximately $7,700,000
in principal amount outstanding as of the date of this Agreement) of the
$25,000,000 in original face principal amount of 8-1/4% Convertible Subordinated
Debentures due 2003 issued by LINC pursuant to the Convertible Subordinated Debt
Indenture dated as of June 15, 1983 between LINC and United States Trust Company
of New York.
"Cost of Funds Rate" for any Settlement Period means the sum of (i) the
rate equivalent to the rate (or if more than one rate, the weighted average of
rates) at which Commercial Paper Notes having a term equal to such Settlement
Period and to be issued to fund or maintain the Capital may be sold by any
placement agent or commercial paper dealer selected by the Purchaser or a
Program Support Provider, as agreed between each such agent or dealer and the
Purchaser or such Program Support Provider and notified by the Purchaser to the
Agent and the Servicer; provided, however, if the rate (or rates) as agreed
between any such agent or dealer and the Purchaser with regard to any Settlement
Period is a discount rate (or rates), the "Cost of Funds Rate" for such
Settlement Period shall be the rate (or if more than one rate, the weighted
average of the rates) resulting from converting such discount rate (or rates) to
an interest-bearing equivalent rate (or rates) per annum, plus (ii), without
duplication, the commissions and charges charged as a percentage of such face
amount and converted to an interest-bearing equivalent rate per annum.
"Credit Agreement" means the Third Amended and Restated Loan Agreement,
dated as of July 22, 1997, by and among LINC, LINC Quantum Analytics, Inc.,
Fleet and the banks from time to time signatory thereto, as amended pursuant to
Amendment No. 1 dated October 29, 1997.
"Credit Policy" means those underwriting, credit and collection policies of
LINC with respect to the Contracts as described in Schedule 11.1.7 hereto, as
amended from time to time in accordance with this Agreement.
"Custodian" means LINC initially, and any other Person appointed as
custodian pursuant to Section 13.2(c).
"Cut-off Date" means, with respect to any Funding Date, the first day of
the month following the month in which such Funding Date occurs.
"Defaulted Contract" means, with respect to a Contract: (a) a Contract as
to which all or any part of any scheduled payment was (1) delinquent for 91 or
more days from the original due date for such payment or (2) delinquent for 60
or more days and which was repurchased prior to becoming 91 days past due by
Seller or the Originator or (b) a Contract as to which any of the following has
occurred: (i) the Contract has been charged off, or should have been charged
off, by the Servicer in accordance with the Credit Policy, (ii) the related
Equipment has been repossessed without reinstatement of such Contract, (iii) the
Servicer has determined that eventual payment of the Contract in full is
unlikely or (iv) foreclosure proceedings have been initiated and are continuing
or (c) a Contract as to which the Obligor thereof is the subject of an Event of
Bankruptcy.
"Default Proxy Ratio" means the ratio (expressed as a percentage) computed
as of a Month End Date for any Category by dividing (i) the aggregate Gross
Contract Amount of all Contracts of such Category that are Past Due Contracts as
of such Month End Date by (ii) the aggregate Gross Contract Amount of all
Contracts of such Category on such Month End Date.
"Delinquency Ratio" means the ratio (expressed as a percentage) computed as
of a Month End Date by dividing (i) the aggregate Gross Contract Amount of all
Contracts as to which any scheduled payment or part thereof remains unpaid for
61 days or more from the original due date for such payment as of such Month End
Date by (ii) the aggregate Gross Contract Amount of all Contracts on such Month
End Date.
"Delinquent Contract" means a Contract that is not a Defaulted Contract (i)
as to which any scheduled payment or part thereof remains unpaid for 31 days or
more from the original due date for such payment or (ii) which has been, or
should have been, classified as delinquent by the Servicer in accordance with
the Credit Policy.
"Dilutions" means all setoffs, discounts, credit memos, rebates, refunds
and other reductions of amounts originally scheduled to be paid under the
Contracts (other than write-offs for credit losses and reductions resulting from
prepayments).
"Discount Rate" means, as of any Settlement Date or other date of
determination, the sum of (A) with respect to those Contracts that are not the
subject of an Interest Rate Swap, the LIBO Rate (Reserve Adjusted) as of two
Business Days prior to such Settlement Date or other date of determination, plus
1.00%, and, with respect to those Contracts that are the subject of an Interest
Rate Swap, the fixed rate (or, if there is more than one Interest Rate Swap, the
weighted average blended fixed rate) payable by Seller thereunder, plus (B) the
Fee Percentage, plus (C) the Servicing Fee Rate.
"Dividend" means any dividend or distribution (in cash, property or
obligations) on any shares of any class of Seller's capital stock or any
warrants, options or other rights with respect to shares of any class of
Seller's capital stock.
"Dollar(s)" and the sign "$" shall mean lawful money of the United States
of America.
"Dynamic Credit Enhancement Percentage" means as of any date for any
Category, the greater of (A) 10% and (B) the product of (i) the average of the
Default Proxy Ratios for such Category over the last 12 months, times (ii) the
weighted average remaining life of the Contracts in such Category, expressed in
years, times (iii) the applicable Stress Factor.
"Earned Yield" means for any Settlement Period, an amount equal to the
product of (i) the Capital on the first day of such Settlement Period, (ii) the
Purchaser Rate for such Settlement Period, and (iii) the number of days in such
Settlement Period divided by 360.
"Eligible Contract" means at any time a Contract:
(i) that constitutes "chattel paper" as defined in the applicable Uniform
Commercial Code as in effect in all applicable jurisdictions, and, if more than
one original was executed, then either such Contract contains a provision
stating that only counterpart number one shall constitute "chattel paper" within
the meaning of the Uniform Commercial Code as in effect in all applicable
jurisdictions, which counterpart is in the possession of the Custodian, or each
and every original counterpart is in the possession of the Custodian;
(ii) the Obligor of which is a United States resident, duly organized and
existing under the laws of its jurisdiction of organization, is not an Affiliate
of Seller, and is not a government or a governmental subdivision or agency;
(iii) that is not a Defaulted Contract or, except with respect to the
Contracts included in the Portfolio on the date of the first Purchase hereunder,
a Delinquent Contract at the time of Purchase hereunder;
(iv) with regard to which the warranty of Seller in Section 8.10 is true
and correct;
(v) the assignment of which (including, without limitation, the sale or
contribution of which to Seller by the Originator) does not contravene or
conflict in any material respect with any law, rule or regulation or any
contractual or other restriction, limitation or encumbrance, and the sale or
assignment of which does not require the consent of the Obligor thereof or any
other Person which has not been obtained and is in full force and effect;
(vi) that is denominated and payable only in Dollars;
(vii) that is in full force and effect and constitutes the legal, valid and
binding obligation of the Obligor of such Contract, enforceable against such
Obligor in accordance with its terms, and is not subject to any dispute, offset,
counterclaim or defense whatsoever (except the discharge in bankruptcy of such
Obligor) that could reasonably be expected to have a material adverse effect on
the collectibility of such Contract;
(viii) that does not contravene in any material respect any laws, rules or
regulations applicable thereto (including, without limitation, laws, rules and
regulations relating to usury, 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 thereto is in violation of any such
law, rule or regulation in any material respect;
(ix) that satisfies in all material respects all applicable requirements of
the Credit Policy;
(x) as to which each of Seller's and Purchaser's first-priority security
interest in such Contract have been perfected under the applicable UCC and other
applicable laws (if any);
(xi) that has a scheduled maturity date of not more than 84 (or, in the
case of any Contract in the emerging growth Category, 72) months from the date
of such Contract;
(xii) that was originated or acquired by the Originator in the ordinary
course of its business to finance the sale or lease of Equipment to the related
Obligor and was sold, transferred and assigned to Seller pursuant to the
Purchase and Sale Agreement;
(xiii) the scheduled payments under which will be sufficient to fully
amortize such Contract at maturity, assuming that each scheduled payment is made
on the date due in accordance with such Contract; such scheduled payments are
applicable only to payment of principal and interest (or imputed principal and
interest) on such Contract, and which does not have a balloon payment in excess
of 30% of the Gross Contract Amount thereof and which otherwise provides for
monthly or quarterly payments in substantially equal installments;
(xiv) related to Equipment that has been delivered and unconditionally
accepted by the related Obligor;
(xv) that requires insurance coverage that covers such risks, and is in
such amounts, as a prudent person in a similar circumstance would carry
(xvi) the obligations of the Obligor under which have not been canceled or
terminated, and the execution and delivery by such Obligor of, and the
performance of its obligations under such Contract do not, and will not,
conflict with or result in any violation of or constitute a default under the
organizational documents of such Obligor; (2) the term of which has commenced;
the Obligor under such Contract has made at lease two regularly scheduled
payments thereunder;
(xvii) the Obligor of which has no right to prepay such Contract unless the
payment which the Obligor is required to make in connection with any prepayment
is at least equal to the Outstanding Principal Balance of such Contract;
(xix) the Obligor of which has not denied any liability thereunder in whole
or in part, or been released in whole or in part from its obligations
thereunder, and the payments due under such Contract are subject to no
conditions precedent that are unsatisfied, and no agreement relating to such
Contract imposes any obligation of the Originator (other than a warranty of
title and quiet enjoyment) that if not performed would give rise to a right of
offset, counterclaim or defense on the part of the Obligor;
(xx) which includes an obligation on the part of the Obligor to maintain or
cause to be maintained the related Equipment, at such Obligor's expense, in good
condition repair and working order, and neither the Originator nor Seller have
any reason to believe such Equipment is not in good condition, repair and
working order;
(xxi) which relates to Eligible Equipment;
(xxii) which Contract constitutes the entire agreement of the parties with
respect thereto; such Contract has not been amended, altered or modified in any
respect and no provision thereof has been waived, in each case, in any way that
is not reflected in a writing that is part of the contract file or in any manner
adverse to the Originator;
(xxiii) with respect to which neither the Originator nor Seller knows of
any facts or circumstances that might reasonably be expected to render such
Contract less valuable than it purports to be, and neither the Originator nor
Seller has taken any action that might reasonably be expected to impair the
value of such Contract or the related Equipment or the rights of any party with
respect to such Contract or the related Equipment;
(xxiv) which has not been rejected or refused as unacceptable for inclusion
in any securitization transaction or under any warehousing loan agreement or
under any permanent financing transaction for any reason other than obligor
concentration issues, geographical location criteria, equipment type criteria,
dollar size or similar criteria, which is representative of the Originator's
portfolio of contracts and which has not been selected for inclusion in the
Portfolio on any basis that could reasonably be expected to have an adverse
effect on the Purchaser;
(xxv) the payment terms of which have not been restructured due to the
Obligor's financial condition or inability to make payment under the original
contract, unless such Obligor has remained current with respect to all payments
due under such restructured contract for a period of at least 180 consecutive
days;
(xxvi) no matured or unmatured default or event of default under any
third-party servicing agreement for the Equipment related to such Contract shall
have occurred and be continuing;
(xxvii) neither the Originator nor any Affiliate thereof has given or
loaned to the Obligor thereof, directly or indirectly, any unpaid rent or other
amount due thereunder;
(xxviii) which is not assignable by the Obligor thereof without the prior
consent of the Originator; and
(xxix) if such Contract was acquired by the Originator directly or
indirectly from another Person (a "Source") either (A) the Originator acquired
both such Contract and all of such Source's right, title and interest in and to
the related Equipment in a true sale transaction or (B) such Source sold and/or
contributed such Contract and the related Equipment to a special purpose,
bankruptcy remote subsidiary of such Source in a true sale/true contribution
transaction (as confirmed by appropriate legal opinions), which subsidiary in
turn sold such Contract to the Originator, provided that the requirements of
this clause (xxix) need not be met if the aggregate Outstanding Principal
Balance of Contracts acquired from such Source is $5,000,000 or less, unless the
aggregate Outstanding Principal Balance of all Contracts acquired by the
Originator that do not meet the requirements of this clause (xxix) exceeds 5% of
the aggregate Outstanding Principal Balance of all Contracts (in which case such
Contract must satisfy the requirements of this clause (xxix).
"Eligible Equipment" means any item of Equipment that meets all of the
following requirements at all times:
(i) such Equipment is personalty (including software) and does
not constitute a fixture, except for portions thereof that are
immaterial in type, quantity and value;
(ii) such Equipment is not used or intended for use primarily
for personal, family or household purposes and is not consumer goods or
gaming equipment;
(iii) such Equipment (other than vehicles) is located at the
related Obligor's premises in the United States;
(iv) such Equipment is not installed in or affixed to other
equipment that is not Equipment subject to a Contract;
(v) if such Equipment includes software, Seller has, or will
have after foreclosure or repossession, the right to remarket such
equipment with the associated software remaining in place without
obtaining any consent or approval from the license source of such
software (unless such software is not material to the operation or
value of such Equipment), and such software is covered by the Contract
that relates to such Equipment;
(vi) if such Equipment is a motor vehicle, the certificate of
title therefor shows the Originator as owner and the Agent as the sole
lienholder; and
(vii) with respect to which the filing requirements set forth
on Schedule II have been satisfied.
"ERISA" means the U.S. Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Equipment" means non-consumer equipment, as generally described in the
Credit Policy.
"Event of Bankruptcy" shall be deemed to have occurred with respect to a
Person if either:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, (i) seeking (A)
the liquidation, reorganization, debt arrangement, dissolution, winding
up, or composition or readjustment of debts of such Person; (B) the
appointment of a trustee, receiver, custodian, liquidator, assignee,
sequestrator or the like for such Person or all or substantially all of
its assets; or (C) any similar action with respect to such Person under
any law relating to bankruptcy, insolvency, reorganization, winding up
or composition or adjustment of debts, and such case or proceeding
shall continue undismissed, or unstayed and in effect, for a period of
60 consecutive days; or (ii) an order for relief in respect of such
Person shall be entered in an involuntary case under the federal
bankruptcy laws or other similar laws now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other
proceeding under any applicable bankruptcy, insolvency, reorganization,
debt arrangement, dissolution or other similar law now or hereafter in
effect, or shall consent to the appointment of or taking possession by
a receiver, liquidator, assignee, trustee, custodian, sequestrator (or
other similar official) for such Person or for any substantial part of
its property, or shall make any general assignment for the benefit of
creditors, or shall fail to, or admit in writing its inability to, pay
its debts generally as they become due, or, if a corporation or similar
entity, its board of directors shall vote to implement any of the
foregoing.
"Excess Concentration Amount" means, with respect to any date of
determination, the sum of (A) the amount, if any, by which the aggregate
Outstanding Principal Balance of the Obligors, and the Affiliates of such
Obligors, with the five largest Outstanding Principal Balances exceeds an amount
equal to 12% of the Aggregate Principal Balance (after giving effect to any
Purchase taking place on the date of determination), plus (B) the sum, for all
Obligors other than the Obligors with the five largest Outstanding Principal
Balances, of the excess, if any, of the Outstanding Principal Balance of all
Contracts of an Obligor and its Affiliates over an amount equal to 3% of the
Aggregate Principal Balance(after giving effect to any Purchase taking place on
the date of determination).
"Facility" means the right of Seller to offer Participations to Purchaser
hereunder.
"Facility Termination Date" has the meaning set forth in Section 2.4.
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal (for each day during such period) to: (i) the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York; or
(ii) if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day on
such transactions received by the Agent from three federal
funds brokers of recognized standing selected by it.
"Fee Letter" means the letter agreement between Seller and the Agent, dated
as of May 5, 1999, as it may be amended, supplemented or otherwise modified from
time to time.
"Fee Percentage" means the sum of (i) the Program Fee Rate, plus (ii) the
Liquidity Fee Rate.
"Fees" means all fees and other amounts payable by Seller to the Agent or
Purchaser pursuant to the Fee Letter.
"Final Payoff Date" has the meaning set forth in Section 10.1.
"Financial Officer" has the meaning set forth in Section 10.1.9(a).
"Fiscal Quarter" means any quarter in a Fiscal Year.
"Fiscal Year" means any period of twelve consecutive calendar months ending
on December 31.
"Fleet" has the meaning set forth in the preamble.
"Funding Date" means any date, which shall be a Settlement Date (except
with respect to the first Purchase), on which a Purchase occurs.
"GAAP" means generally accepted United States accounting principles.
"Gross Contract Amount" means, with respect to any Contract as of any date,
the aggregate amount of scheduled payments remaining to be paid by the Obligor
as of such date.
"Hedge Trigger Event" means that either (i) the LIBO Rate (Reserve
Adjusted) has increased by more than 0.50% from the immediately preceding
Settlement Date or (ii) the Swap Cost exceeds the LIBO Rate (Reserve Adjusted)
as of the immediately preceding Settlement Date plus 0.75%.
"Indebtedness" means, with respect to any Person, all (a) liabilities or
obligations, direct and contingent, which liabilities or obligations would, in
accordance with GAAP, be included in determining total liabilities as show on
the liability side of a balance sheet of such Person at the date as of which
Indebtedness is to be determined, including, without limitation, (i) contingent
liabilities which, in accordance with such principles, would be set forth in a
specific Dollar amount on the liability side of such balance sheet, (ii)
capitalized lease obligations of such Person, (iii) obligations in respect of
interest rate exchange, swap, cap and other agreements or arrangements designed
to provide protection against fluctuation in interest rates; (b) liabilities or
obligations of others for which such Person is directly or indirectly liable, by
way of guaranty (whether by direct guaranty, suretyship, discount, endorsement,
reimbursement of amounts drawn under letters of credit, take-or-pay agreement,
agreement to purchase or advance or keep in funds or other agreement having the
effect of a guaranty other than endorsements of negotiable instruments for
deposit or collection in the ordinary course of business) or otherwise whether
or not such liabilities would, in accordance with GAAP, be included in
determining total liabilities as shown on a balance sheet; and (c) without
duplication, liabilities or obligations secured by liens on any assets of such
Person, whether or not such liabilities or obligations shall have been assumed
by it.
"Indemnified Amounts" has the meaning set forth in Section 16.1.
"Indemnified Party" has the meaning set forth in Section 16.1.
"Independent Director" has the meaning set forth in Section 10.1.8(b).
"Interest Rate Swap" means any one of, and "Interest Rate Swaps" means all
of, the interest rate swap agreements entered into by Seller and a counterparty
to hedge its interest rate risk with respect to the Contracts hereunder, in each
case, as the same may be amended, supplemented, modified, renewed, extended or
replaced from time to time.
"LIBO Rate (Reserve Adjusted)" means, with respect to any Settlement
Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of
1%) determined pursuant to the following formula:
LIBO Rate = LIBO Rate
(Reserve Adjusted) 1-Eurodollar
Reserve Percentage
where: "LIBO Rate" means, with respect to any Settlement Period, the rate per
annum that appears on page 3750 (or any successor page) of the Dow Xxxxx
Telerate Quotation Service (or if no such rate appears, on the display
designated "LIBO" on the Reuter Monitor Money Rates Service) as of 11:00 a.m.,
London time two Business Days prior to the first day of such Settlement Period;
provided that if no such rate is shown on the foregoing services, "LIBO Rate"
shall mean the rate at which deposits in Dollars are offered to the Agent at
approximately 11:00 a.m. London time two Business Days prior to the first day of
such Settlement Period; provided, further that for purposes of the definition of
Purchaser Rate, the LIBO Rate (Reserve Adjusted) shall be determined on the
first day of the related Settlement Period. "Eurodollar Reserve Percentage"
means, with respect to each Settlement Period, the then-applicable percentage
(expressed as a decimal) prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining reserve requirements
applicable to "Eurocurrency Liabilities" pursuant to Regulation D or any other
then-applicable regulation of the Board of Governors (or any successor) that
prescribes reserve requirements applicable to "Eurocurrency Liabilities" as
presently defined in Regulation D.
"Liquidity Agent" means Fleet, as liquidity agent for the Liquidity Banks
pursuant to the Liquidity Agreement.
"Liquidity Agreement" means and includes (a) the Liquidity Agreement dated
as of May 5, 1999, among Purchaser, Fleet, as agent for the Liquidity Banks, and
the Liquidity Banks, and (b) any other agreement hereafter entered into by
Purchaser providing for the sale by Purchaser of Participations (or portions
thereof or participations therein), or the making of loans or other extensions
of credit to Purchaser secured by security interests in the Participations (or
portions thereof), to support all or part of Purchaser's payment obligations
with respect to the Commercial Paper Notes or to provide an alternate means of
funding Purchaser's investments in accounts receivable or other financial
assets, and under which the amount available from such sale or such extension of
credit is limited to an amount calculated by reference to the value or eligible
unpaid balance of such accounts receivable or other financial assets or any
portion thereof, in each case as amended, supplemented or otherwise modified
from time to time.
"Liquidity Bank" means and includes Fleet and the various financial
institutions as are, or may become, parties to the Liquidity Agreement, as
purchasers thereunder, and any other or additional bank or other financial
institution hereafter purchasing Participations (or portions thereof), extending
credit to or for the account of Purchaser or having a commitment to do either of
the foregoing under the Liquidity Agreement.
"Liquidity Fee" means the liquidity fee payable pursuant to Section 3.1
"Liquidity Fee Rate" shall have the meaning given to such term in the Fee
Letter.
"Lockbox Agreement" means an agreement, substantially in the form of
Exhibit D, among Seller, Servicer, the Agent and any bank where a lockbox and/or
an account (including the Collection Account and the Reserve Account) where
Collections are sent or deposited is located.
"Lockbox Bank" means a bank (including the Collection Account Bank) where a
lockbox and/or an account to which Collections are deposited or sent (including
the Reserve Account) is located.
"Material Adverse Effect" means, with respect to any event or circumstance,
a material adverse effect on:
(a) the business, assets, financial condition or operations of
LINC or of Seller, as applicable;
(b) the ability of LINC or Seller, as applicable, to perform
their respective obligations under this Agreement or any other
Transaction Document;
(c) the validity, enforceability or collectibility against Seller
or LINC, as applicable of this Agreement or the other Transaction
Documents;
(d) the status, existence, perfection or priority of (i) the
Purchaser's ownership interest in the Portfolio or its security
interest in the Collateral, or (ii) Seller's interest in the Contracts
or the Contract Assets; or
(e) the validity, enforceability or collectibility of the
Contracts.
"Month-End Date" means the last day of each calendar month.
"Monthly Report" has the meaning set forth in Section 11.1.8(c).
"Moody's" means Xxxxx'x Investors Service, Inc.
"Net Offering Proceeds" means $27,000,000.
"Net Portfolio Principal Balance" means, with respect to any date of
determination, an amount equal to the then aggregate Outstanding Principal
Balances of all Eligible Contracts (it being understood that for purposes of
calculating Net Portfolio Principal Balance at any time, the Outstanding
Principal Balance of each Contract that is a Defaulted Contract at such time
shall be deemed to be zero), minus the Overcollateralization Amount, minus, the
Excess Concentration Amount, minus, the amount by which the aggregate
Outstanding Principal Balances of all Eligible Contracts that relate solely or
primarily to software exceeds 5% of the aggregate Outstanding Principal Balances
of all Eligible Contracts, minus the amount by which the portion of the
aggregate Outstanding Principal Balances of all Eligible Contracts attributable
to the Scheduled Residual Value of the Equipment related to such Eligible
Contracts exceeds 4% of the aggregate Outstanding Principal Balances of all
Eligible Contracts, minus the amount by which the aggregate Outstanding
Principal Balance of all Eligible Contracts that are in the emerging growth
Category exceeds 10% of the aggregate Outstanding Principal Balances of all
Eligible Contracts, minus the amount by which the aggregate Outstanding
Principal Balances of all Eligible Contracts that were acquired by LINC from one
originator and its Affiliates exceeds 25% of the aggregate Outstanding Principal
Balance of all Eligible Contracts (or, for the first six months after each date
on which the Capital has been reduced to less than $25,000,000, the greater of
the foregoing amount and $25,000,000).
"Obligations" means all obligations (monetary or otherwise) of Seller to
Purchaser, the Agent and their respective successors, permitted transferees and
assigns arising under or in connection with this Agreement and each other
Transaction Document, in each case however created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter existing,
or due or to become due.
"Obligor" means a Person obligated to make payments with respect to a
Contract.
"Operating Agreement" means the Operating Agreement, dated as of May 5,
1999, between LINC and Seller.
"Original Contract Balance" means, with respect to any Contract, the
original Outstanding Principal Balance of such Contract as of the date of its
Purchase.
"Originator" means LINC in its capacity as an originator and seller of
Contracts pursuant to the Purchase and Sale Agreement.
"Outstanding Principal Balance" means, as of any date with respect to any
Contract, an amount equal to the remaining scheduled payments on such Contract
(including the Scheduled Residual Payment), as set forth on the Contract
Schedule, discounted on a monthly basis, from the 15th day of the month in which
such payments are due to the date of determination at the applicable Discount
Rate; provided, however, that if such Contract was purchased by the Originator
or an Affiliate thereof (other than Seller) and the Originator or such Affiliate
paid the seller thereof less than the full principal value of such Contract (as
determined pursuant to the agreement related to the acquisition of such Contract
by the Originator or such Affiliate), by way of discount, hold-back or
otherwise, then the "Outstanding Principal Balance" of such Contract shall mean
an amount equal to the foregoing described amount multiplied by a percentage
determined by dividing the amount paid by the Originator or such Affiliate, for
such Contract by the principal value of such Contract.
"Overcollateralization Amount" means with respect as of any date the amount
equal to (i) the greatest of (a) the sum, for each Category, of the sum of (1)
(x) the current Dynamic Credit Enhancement Percentage for such Category (or, in
the case of the emerging growth Category, the greatest Dynamic Credit
Enhancement Percentage to have occurred in the prior 3 years), times (y) the
aggregate Outstanding Principal Balances of the Contracts in such Category
calculated, including only 50% of the Scheduled Residual Payment on each such
Contract, plus (2) 50% of the aggregate of the Scheduled Residual Payments under
the Contracts in such Category, in each case, discounted as described in the
definition of Outstanding Principal Balance, (b) 25% of an amount equal to the
greatest Overcollateralization Amount determined pursuant to the foregoing
clause (a) that existed during the period from the last date on which the
Capital was, or was reduced to, zero until the date of determination, and (c)
the sum of the Outstanding Principal Balances owed by the Obligors and their
Affiliates with the five largest Outstanding Principal Balances, minus (ii) the
amount in the Reserve Account at such time (after taking into account any amount
to be deposited therein on such date).
"Participations" means each undivided interest in the Contracts and the
other Contract Assets purchased by Purchaser pursuant to Section 2.1.
"Past Due Contract" means a Contract as to which all or any part of any
scheduled payment is more than 60, but less than 91, days past due or that has
been charged-off or repurchased by Seller prior to becoming more than 60, but
less than 91, days past due.
"Pay-Out Amount Limit" shall have the meaning given to such term in Section
2.2(b).
"Permitted Investment" means, at any time, determined as of the time of
investment:
(a) any evidence of debt, maturing not more than one year
after such time, issued or guaranteed by the United States Government
or any agency thereof;
(b) commercial paper, maturing not more than nine months from
the date of issue or corporate demand notes, in each case issued by a
corporation (other than Seller or any Affiliate of Seller) organized
under the laws of any state of the United States or of the District of
Columbia and rated at least A-1 by S&P and P-1 by Moody's;
(c) any certificate of deposit (or time deposits represented
by such certificates of deposit) or bankers acceptance, maturing not
more than one year after such time, or overnight federal funds
transactions that are issued or sold by a commercial banking
institution that is a member of the Federal Reserve System and has a
combined capital and surplus and undivided profits of not less than
$500,000,000 and is rated at least A-1 by S&P and P-1 by Moody's;
(d) any repurchase agreement entered into with a commercial
banking institution of the stature referred to in clause (c)(i) that:
(i) is secured by a fully perfected security interest
in any obligation of the type described in any of clauses (a)
through (c); and
(ii) has a market value at the time such repurchase
agreement is entered into of not less than 100% of the
repurchase obligation of Fleet (or other commercial banking
institution) thereunder; or
(e) shares in a mutual fund investing solely in short-term
securities of the United States government and/or securities described
in clause (d) above where the mutual fund custodian has taken delivery
of the collateralizing securities, provided that (i) such fund shall
have the highest short-term credit rating available from Moody's and
S&P and (ii) such shares shall be hereby transferrable by the holder on
a daily basis.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, limited liability company, government or any agency or political
subdivision thereof or any other entity.
"Portfolio" has the meaning set forth in the first recital.
"Pro Rata Share" of any warrant or similar equity participation agreement,
and the proceeds thereof, means such percentage interest in such warrant or
other agreement shown on the Contract Schedule for the Contract related to such
warrant or other agreement.
"Program Documents" means the Liquidity Agreement, each agreement pursuant
to which Purchaser obtains funding, through the issuance of Commercial Paper
Notes or otherwise, and the other documents executed or to be executed and
delivered in connection with Purchaser's securitization program, as amended,
supplemented or otherwise modified from time to time.
"Program Fee" means the program fee payable pursuant to Section 3.1.
"Program Fee Rate" shall have the meaning assigned to such term in the Fee
Letter.
"Program Support Provider" means each Liquidity Bank, the Agent and any
entity that issues Commercial Paper Notes.
"Purchase" has the meaning set forth in Section 2.1.
"Purchase and Sale Agreement" means the Purchase and Sale Agreement dated
as of May 5, 1999 between LINC and Seller, as the same may be amended, amended
and restated, supplemented or otherwise modified from time to time in accordance
with the Transaction Documents.
"Purchase and Sale Termination Event" has the meaning set forth in the
Purchase and Sale Agreement.
"Purchase Limit" has the meaning set forth in Section 2.2(a).
"Purchase Request" has the meaning set forth in Section 2.3.
"Purchaser" has the meaning set forth in the Preamble.
"Purchaser Rate" for any Settlement Period means:
(A)(1) for any Settlement Period commencing prior to July 15, 1999, (i)
with respect to any portion of the Capital that is subject to an Interest Swap
Agreement, the LIBO Rate (Reserve Adjusted) for such Settlement Period and (ii)
with respect to that portion, if any, of the Capital not related to an Interest
Swap Agreement, either (1) the LIBO Rate (Reserve Adjusted) for such Settlement
Period, or (2) the Cost of Funds Rate for such Settlement Period, as designated
by Seller in a written notice delivered to the Agent and the Purchaser at least
two Business Days prior to the first day of such Settlement Period, provided
that if no option is designated by Seller, the Purchaser Rate shall be the rate
set forth in the foregoing clause (ii)(2) and (2) for any Settlement Period
commencing on or after July 15, 1999, the Cost of Funds Rate for such Settlement
Period; provided, however, that, in the case of both clauses (1) and (2), with
respect to any portion of the Capital funded pursuant to the Liquidity
Agreement, the Purchaser Rate shall be the sum of the LIBO Rate (Reserve
Adjusted) for such Settlement Period (or any portion thereof), plus the
Applicable Margin; and
(B) with respect to any day on which a Termination Event shall have
occurred and shall be continuing, notwithstanding clause (A) of this definition,
the "Purchaser Rate" shall be a rate per annum equal to (i) the rate then in
effect on such day pursuant to the foregoing clause (A), plus 2% per annum for
the first 180 days after the occurrence of such Termination Event and (ii) the
LIBO Rate (Reserve Adjusted) for such Settlement Period, plus 4% per annum
thereafter.
No provision of this Agreement shall require the payment or permit the
collection of interest in excess of the maximum permitted by applicable law.
"Qualified Interest Swap Agreement" means an Interest Swap Agreement that
meets all of the following criteria: (i) the counterparty to such agreement is a
bank (which may be Fleet) whose short term unsecured debt is rated at least
A-1/P-1 by the Rating Agencies, (ii) the benefits of such agreement have been
assigned to the Agent, for the benefit of the Purchaser, and (iii) all payments
by the counterparty thereto will be made directly to the Collection Account and
(iv) is otherwise reasonably acceptable to the Agent.
"Quarterly Payment Date" means the Settlement Date occurring in January,
April, July and October, provided that the first Quarterly Payment Date shall
occur in July, 1999.
"Rating Agencies" means Standard & Poor's and Xxxxx'x Investors Service,
Inc.
"Regulatory Change" means, relative to any Affected Party:
(a) any change in (or the adoption, implementation, change in the
phase-in or commencement of effectiveness of any:
(i) United States Federal or state law or foreign law
applicable to such Affected Party;
(ii) regulation, interpretation, directive, or
requirement (whether or not having the force of law)
applicable to such Affected Party of (A) any court or
government authority charged with the interpretation or
administration of any law referred to in clause (a)(i), or of
(B) any rating agency rating the Commercial Paper Notes,
fiscal, monetary or other authority having jurisdiction over
such Affected Party; or
(iii) GAAP or regulatory accounting principles
applicable to such Affected Party and affecting the
application to such Affected Party of any law, regulation,
interpretation, directive, or requirement referred to in
clause (a)(i) or (a)(ii) above;
(b) any change in the application to such Affected Party of any
existing law, regulation, interpretation, directive, requirement or
accounting principles referred to in clause (a)(i), (a)(ii) or
(a)(iii) above; or
(c) the issuance, publication or release of any regulation,
interpretation, directive, or requirement of a type described in
clause (a)(ii) above to the effect that the obligations of any
Liquidity Bank under the Liquidity Agreement are not entitled to be
included in the zero percent category of off-balance sheet assets for
purposes of any risk-weighted capital guidelines applicable to such
Liquidity Bank or any related Affected Party.
"Repurchase Amounts" means the amounts paid by Seller in connection with
the repurchase by Seller of any Contracts pursuant to Section 4.5.
"Required Reduction Amount" for any Settlement Date means the amount equal
to (i) if no Termination Event has occurred, the excess of the Capital over the
Net Portfolio Principal Balance calculated as of the first day of the next month
following the month in which such Settlement Date occurs and (ii) if a
Termination Event has occurred, the Capital.
"Required Reserve Amount" means, as of any Settlement Date or date of
Purchase the greater of (i) 1% of the Aggregate Principal Balance as of such
Settlement Date or date of Purchase and (ii) the amount necessary so that the
Capital does not exceed the Pay-Out Amount Limit, provided that if the average
of the Delinquency Ratio at the end of the three previous months exceeds 4%, the
Required Reserve Amount shall equal the greater of the amount set forth in the
foregoing clause (ii) and 4% of the Aggregate Principal Balance as of such
Settlement Date or date of Purchase.
"Reserve Account" means a bank account maintained at a Lockbox Bank (which
initially shall be account numbered 9403543596 maintained at Fleet in New York,
New York), which is (i) a blocked account, (ii) identified as the "LINC
Receivables 1999 Corporation Reserve Account", (iii) in Purchaser's name and
(iv) pledged to Purchaser pursuant to Section 17.1. "S & P" means Standard &
Poor's Rating Services, a division of The XxXxxx-Xxxx Companies, Inc.
"Scheduled Facility Termination Date" has the meaning set forth in Section
2.4.
"Scheduled Residual Payment" means, with respect to any Contract, the
Scheduled Residual Value of the related Equipment, which shall be assumed to be
due on the date which is three months after the last scheduled payment under
such Contract is otherwise due.
"Scheduled Residual Value" means, with respect to any item of Equipment,
the lesser of (a) the Booked Residual Value of such Equipment and (b) 15% of the
original purchase price for such Equipment.
"Seller" has the meaning set forth in the preamble.
"Servicer" has the meaning set forth in Section 13.1.
"Servicer Termination Event" means any one of the following events: (i)
Servicer fails to make any payment or deposit to be made by it hereunder when
due; (ii) Servicer shall fail to perform or observe in any material respect any
term, covenant or agreement contained in this Agreement or any other Transaction
Document on its part to be performed or observed (other than as set forth in
clause (i)), which failure shall continue for more than ten Business Days after
notice to Servicer; (iii) Servicer shall fail to deliver any Monthly Report on
or before the day that is two Business Days prior to the related Settlement
Date; (iv) any representation or warranty made by Servicer under or in
connection with any Transaction Document, any Monthly Report or any other
information delivered pursuant to or in connection with any Transaction Document
shall prove to have been false or incorrect in any material respect when made
and, if such circumstances are capable of cure, shall continue to be incorrect
for more than ten Business Days after notice to Servicer; provided, however,
that if any representation or warranty related to a Contract that is repurchased
by Seller, then the breach of such representation or warranty shall not give
rise to a Servicer Termination Event; (v) Servicer is the subject of an Event of
Bankruptcy; (vi) Servicer shall fail to have an Adjusted Tangible Net Worth of
at least the sum of (A) $10,500,000, plus (B) Net Offering Proceeds, minus
$3,000,000, plus (C) 75% of consolidated net income (with no deduction for
losses) of Servicer commencing from the calendar quarter ending December 31,
1997 and all subsequent quarters thereto; or (vii) the average of the
Delinquency Ratios at the end of the three consecutive prior months exceeds 8%.
"Servicing Fee" means, for any Settlement Period an amount equal to (i) the
Servicing Fee Rate, times (ii) the Aggregate Principal Balance on the first day
of such Settlement Period, times (iii) the number of days in such Settlement
Period divided by 360.
"Servicing Fee Rate" means (i) 0.75% so long as LINC is Servicer and (ii)
if LINC is no longer the Servicer, such annual percentage rate as may be charged
by any replacement Servicer, provided such rate is a market rate.
"Settlement Date" means the twentieth (20th) day of each calendar month,
commencing with May, 1999 (or if such day is not a Business Day, the next
Business Day).
"Settlement Period" means:(i) in the case of the first Settlement Period,
from, and including April 20, 1999 to, but excluding, the first Settlement Date
and (ii) thereafter, each period from, and including, a Settlement Date to, but
excluding, the next Settlement Date.
"Source" is defined in clause (xxix) of the definition of Eligible
Contract.
"Stress Factor" means (i) 3 for the traditional Category and the LQA
Category and (ii) 4 for the emerging growth Category (provided that any such
stress factor may be changed at the discretion of the Agent by notice to
Servicer in order to reflect current market conditions for similar asset-backed
securities).
"Subordinated Debt" means (i) the Convertible Subordinated Debt; and (ii)
any unsecured Indebtedness for money borrowed by LINC and which is subordinated
to the debt under the Credit Agreement.
"Subsidiary" means, with respect to any Person, a corporation of which such
Person and/or its other Subsidiaries own, directly or indirectly, such number of
outstanding shares as have more than 50% of the ordinary voting power for the
election of directors.
"Successor Notice" has the meaning set forth in Section 13.1.
"Swap Cost" means, as of any date, the sum of (A) a market swap spread, as
reasonably determined by the Agent, for an amortizing interest rate swap for a
portfolio similar to the Contracts, pursuant to which the Seller would pay a
fixed rate equal to the yield of a United States Treasury Note with an average
life equal to the expected average life of the Contracts and the counterparty to
such interest rate swap would pay a floating rate equal to the LIBO Rate
(Reserve Adjusted), plus (B) the fixed rate described in the foregoing clause
(A).
"Swap Date" means February 28, 2000 and thereafter the date that is 270
days after the later of the date on which the Capital has been reduced to less
than $25,000,000 and the immediately preceding Swap Date.
"Tangible Net Worth" means, with respect to Seller the net worth of Seller
calculated in accordance with GAAP after subtracting therefrom the aggregate
amount of Seller's intangible assets, including, without limitation, goodwill,
franchises, licenses, patents, trademarks, trade names, copyrights and service
marks.
"Termination Event" shall mean any of the events described in Section 12.1.
"Transaction Documents" means this Agreement, the Purchase and Sale
Agreement, the Fee Letter, the Interest Rate Swaps, the Lockbox Agreements, any
custodian agreement entered into in connection herewith and the other
instruments, certificates, agreements, reports and documents to be executed and
delivered under or in connection with this Agreement and the Purchase and Sale
Agreement (except the Program Documents), as any of the foregoing may be
amended, supplemented, amended and restated or otherwise modified from time to
time in accordance with this Agreement and the Purchase and Sale Agreement.
"UCC" means the Uniform Commercial Code as from time to time in effect in
the applicable jurisdiction or jurisdictions.
"Unmatured Termination Event" shall mean any event that, if it continues
uncured, will, with the lapse of time or notice or the lapse of time and notice,
constitute a Termination Event.
"Unrecoverable Advance" means any Advance made by the Servicer that has not
previously been reimbursed and that, in the reasonable opinion of the Servicer,
will not be ultimately recoverable from the related Obligor, the related
Equipment or otherwise.
SECTION 1.2 Other Definitional Provisions.
(a) Unless otherwise specified therein, all terms defined in this
Agreement have the meanings as so defined herein when used in any other
Transaction Document, certificate, report or other document made or delivered
pursuant hereto.
(b) Each term defined in the singular form in Section 1.1 or elsewhere
in this Agreement shall mean the plural thereof when the plural form of such
term is used in this Agreement or any other Transaction Document, certificate,
report or other document made or delivered pursuant hereto, and each term
defined in the plural form in Section 1.1 shall mean the singular thereof when
the singular form of such term is used herein or therein.
(c) The words "hereof," "herein," "hereunder" and similar terms when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and article, section, subsection,
schedule and exhibit references herein are references to articles, sections,
subsections, schedules and exhibits to this Agreement unless otherwise
specified.
SECTION 1.3 Other Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. All terms used in Article 9
of the UCC in the State of Illinois, and not specifically defined herein, are
used herein as defined in such Article 9.
SECTION 1.4 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 mean "to but excluding."
ARTICLE II
PURCHASE PROCEDURES
SECTION 2.1 Offer and Acceptance. On the terms and subject to the
conditions set forth in this Agreement, Purchaser may purchase from Seller
Participations from time to time during the period from the date hereof to the
Facility Termination Date. Each such purchase and, as the context may require,
the purchase price paid by Purchaser to Seller in respect thereof, is called a
"Purchase."
SECTION 2.2 Purchase Limits. Under no circumstances shall Purchaser make
any Purchase to the extent that, after giving effect to such Purchase, as the
case may be:
a) Purchase Limit. The Capital would exceed an amount (the "Purchase
Limit") equal to $289,000,000, as such amount may be reduced pursuant to
Section 2.6; or
b) Pay-Out Amount Limit. The Capital would exceed an amount (the "Pay-
Out Amount Limit") equal to 100% of the Net Portfolio Principal Balance (as
calculated on such date of Purchase).
SECTION 2.3 Making Purchases from Seller. (a) Notice of Purchase. Seller
may request a Purchase by delivering a notice substantially in the form of
Exhibit A (a "Purchase Request") to the Agent and Purchaser not later than 11:00
a.m. (Chicago time) on the second Business Day preceding the date of such
proposed Purchase. Each such notice of a proposed Purchase shall include a
Contract Schedule and shall specify (i) the Funding Date for such Purchase
(which, except for the initial Purchase, shall be a Settlement Date), and (ii)
the calculation of the amount of the Purchase for such Participation. If the
Agent or Purchaser informs Seller that Purchaser will not make such Purchase,
Seller may withdraw such Purchase Request.
(b) Amount of Purchase. The amount of each Purchase shall be equal to the
lesser of (x) the amount requested by Seller in the applicable Purchase Notice
and (y) the maximum amount permitted under Section 2.2; provided, however, that
each such Purchase shall be in an amount of at least $5,000,000 (or, in the case
of the first Purchase, $10,000,000).
(c) Funding of Purchase. On the date of each Purchase, if Purchaser has
determined to make such Purchase, Purchaser shall, upon satisfaction of the
applicable conditions set forth in Article VII, make available to Seller the
amount of its Purchase (determined pursuant to Section 2.3(b)), in same-day
funds, to such account as is designated by Seller to the Agent in writing.
SECTION 2.4 Facility Termination Date. The "Facility Termination Date"
shall be the earliest of (i) December 30, 2000 (herein, as such date may be
extended, called the "Scheduled Facility Termination Date"), (ii) the
termination, expiration or unavailability of the Liquidity Banks' commitments
under the Liquidity Facility and (iii) the date of termination of the Facility
pursuant to Section 2.6 or Section 12.2.
SECTION 2.5 Representation and Warranty. Each request for a Purchase
pursuant to Section 2.3 shall automatically constitute a representation and
warranty by Seller to the Agent and Purchaser that on the requested date of such
Purchase, (a) the representations and warranties contained in Article VIII will
be true and correct in all material respects as of such requested date as though
made on such date, (b) no Termination Event or Unmatured Termination Event has
occurred and is continuing or will result from the making of such Purchase, and
(c) after giving effect to such requested Purchase, the Capital will not exceed
the Pay-Out Amount Limit.
SECTION 2.6 Voluntary Termination of Facility; Reduction of Purchase Limit.
Seller may, in its sole discretion for any reason, upon at least fifteen (15)
days' notice to the Agent (with a copy to Purchaser), terminate the Facility in
whole or reduce in part the unused portion of the Purchase Limit; provided,
however, that (a) each such partial reduction will be in a minimum amount of
$5,000,000 or a higher integral multiple of $1,000,000, and (b) in the event of
a partial reduction and after giving effect to any such partial reduction and
any prior partial reduction, the remaining Purchase Limit will not be less than
$25,000,000.
ARTICLE III
FEES, ETC.
SECTION 3.1 Fees. Seller agrees to pay the Agent the following fees:
(i) a program fee for each Settlement Period equal to (i) the
daily outstanding Capital during such Settlement Period, times (ii)
the Program Fee Rate, times (iii) the number of days in such
Settlement Period, divided by 360; and
(ii) a liquidity fee for each Settlement Period equal to (i) the
unfunded amount of the Liquidity Banks' commitments under the
Liquidity Agreement times (ii) the Liquidity Fee Rate, times (iii) the
number of days in such Settlement Period divided by 360.
SECTION 3.2 Computation of Earned Yield and Fees. All Earned Yield and fees
shall be computed on the basis of the actual number of days (including the first
day but excluding the last day) occurring during the period for which such
interest or fee is payable over a year comprised of 360 days.
SECTION 3.3 Initial Settlement Period. Seller hereby agrees that, with
respect to the first Settlement Period, the Program Fee, Liquidity Fee and
Earned Discount that have accrued during such first Settlement Period pursuant
to the Receivables Purchase Agreement, dated as of December 30, 1997, among LINC
Receivables Corporation, LINC, Purchaser and the Agent are being assumed by
Seller, and shall be payable on the first Settlement Date hereunder as part of
the Program Fee, Liquidity Fee and Earned Discount due on such Settlement Date
pursuant to clauses (iv) and (v) of Section 4.2.
ARTICLE III
ESTABLISHMENT AND USE OF ACCOUNTS; SETTLEMENTS
SECTION 4.1 Accounts. (a) Collection Account. Seller hereby agrees to
establish the Collection Account on or before the date of the first Purchase
hereunder. Seller and Servicer hereby agree to direct all Obligors to make all
payments due under the Contracts to an account that is the subject of a Lock-Box
Agreement. Servicer shall transfer all Collections received to the Collection
Account within two Business Days of receipt.
(b) Reserve Account. Seller hereby agrees to establish the Reserve
Account on or before the date of the first Purchase hereunder.
(c) Permitted Investments. Funds on deposit in the Collection Account
or the Reserve Account may be invested at the direction of Seller in Permitted
Investments, provided that such Permitted Investments mature on or prior to the
next occurring Settlement Date. Interest earned on such Permitted Investments
shall be distributed pursuant to Section 4.2, with respect to the Collection
Account, and Section 4.4, with respect to the Reserve Account.
SECTION 4.2 Settlements. On each Settlement Date, all Collections received
on or prior to such date and not previously distributed, all interest earned on
investments in the Collection Account (net of expenses related to such
investments), all Advances made by the Servicer pursuant to Section 4.6 and all
net payments received from the counterparties to the Interest Rate Swaps shall
be distributed in the following order:
(i) first, to the Servicer in any amount equal to all Unrecoverable
Advances, if any, for which the Servicer has not previously been
reimbursed;
(ii) second, to the counterparties of the Interest Rate Swaps any net
payment due to such counterparties from Seller;
(iii) third, to the Servicer (if Servicer is not LINC) in an amount equal
to the Servicing Fee due on such date;
(iv) fourth, to the Agent in an amount equal to the accrued and unpaid
Program Fee and Liquidity Fee;
(v) fifth, to Purchaser an amount equal to the accrued and unpaid Earned
Yield, together with any Earned Yield due on any previous Settlement Date
and not paid, plus interest thereon as set forth in Section 5.1;
(vi) sixth, if such Settlement Date is a Quarterly Payment Date, to the
Agent an amount equal to the Administration Fee payable on such Settlement
Date;
(vii) seventh, to Purchaser an amount equal to the Required Reduction
Amount for application to the Capital;
(viii) eighth, to Purchaser and the Agent, on a pro rata basis, in payment
of all other amounts then due hereunder or under the Fee Letter;
(ix) ninth, to the Reserve Account to the extent necessary to result in the
funds therein being equal to the Required Reserve Amount;
(x) tenth, to the counterparties of the Interest Rate Swaps any payments
due, if any, resulting from the early termination thereof or other amounts
(other than net payments) owed by Seller thereunder;
(xi) eleventh, if LINC is the Servicer, an amount equal to the Servicing
Fee due on such date; and
(xii) twelfth, any remaining amounts to Seller.
SECTION 4.3 Interest Rate Swaps. If (i) a Hedge Trigger Event has occurred,
(ii) a Termination Event has occurred and is continuing or (iii) on a Swap Date,
the Capital exceeds zero, then, within five Business Days of such event or date,
unless Seller has already entered into such a Qualified Interest Swap Agreement,
Seller shall execute and deliver one or more Qualified Interest Swap Agreements
(or other interest rate hedging arrangement acceptable to the Agent, in its sole
discretion), with a notional principal amount equal to the Gross Contract Amount
of all Contracts as of such date, which shall amortize in accordance with the
expected schedule of Contract payments. Such Interest Rate Swap shall provide
for fixed rate payments by Seller equal to the Swap Cost and floating rate
payments by the counterparty equal to the one-month LIBO Rate (Reserve
Adjusted)with a same day settlement in effect from time to time.
SECTION 4.4 Withdrawals from Reserve Account. To the extent that on any
Settlement Date, there are insufficient funds to distribute in full the amounts
set forth in clauses first through seventh of Section 4.2, Servicer shall
withdraw the lesser of (1) the amount of such deficiency and (ii) the amounts on
deposit in such Reserve Account from the Reserve Account and distribute it
pursuant to such Section 4.2. If on any Settlement Date, after giving effect to
the distributions on such date pursuant to Section 4.2 and any Purchase on such
date, the funds in the Reserve Account (including net investment earnings
thereon) exceed the Required Reserve Amount, such excess shall be withdrawn and
distributed to Seller.
SECTION 4.5 Deemed Collections; Repurchases. If on any day the Gross
Contract Amount of any Contract is reduced or canceled as a result of a
Dilution, or the Originator is required to make a deemed Collection payment with
respect thereto pursuant to the Purchase and Sale Agreement, then Seller shall
be deemed to have received a Collection in the amount of such Dilution. If any
of the representations or warranties set forth in Section 8.10 or 8.19 is no
longer true with respect to a Contract, and such breach, in the sole judgment of
the Agent, materially and adversely affects the value, enforceability or
collectibility of such Contract or the related Equipment (it being understood
that any Contract shall be deemed to be materially and adversely affected by any
inaccurate representation as to its validity or enforceability or as to the
amount of payments due thereunder) then, on the next occurring Settlement Date,
Seller shall repurchase such Contract from Purchaser for an amount equal to the
Outstanding Principal Balance thereof. Upon receipt of such amount by Purchaser,
such repurchased Contract shall be released from the lien of this Agreement and
reconveyed by Purchaser to Seller (without recourse or warranty) and shall no
longer be considered part of the Portfolio.
SECTION 4.6 Servicer Advances. The Servicer shall make an advance (an
"Advance") with respect to each Contract that is not a Defaulted Contract in an
amount equal to the scheduled payment (other than the Scheduled Residual
Payment) with respect to such Contract that became, or will become, due during
the calendar month in which the related Settlement Date occurs to the extent
that such payment has not previously been deposited to the Collection Account,
subject to the Servicer's reasonable determination that any such Advance would
not constitute an Unrecoverable Advance if made. Each such Advance shall be
remitted to the Collection Account on the Business Day immediately preceding
such Settlement Date. To the extent that the Servicer subsequently receives the
scheduled payment with respect to which it made an Advance, the Servicer shall
be entitled to retain such payment in reimbursement of such Advance.
SECTION 4.7 Clean-Up Call. On any Settlement Date on which the Capital is
equal to or less than an amount equal to 15% of the largest amount of Capital
that has existed since the date of this Agreement, Seller may, at its option,
upon not less than five Business Days' prior written notice to the Agent,
repurchase from Purchaser all, but not less than all, of the Participations in
all Contracts for a purchase price equal to the sum of (i) the outstanding
Capital, plus (ii) all accrued and unpaid Earned Yield on such Capital, plus
(iii) all accrued and unpaid Program Fee, Liquidity Fee and Administration Fee,
plus (iv) any termination or other payments due to the counterparties of the
Interest Rate Swaps, plus (v) all other amounts then due and payable to
Purchaser, Agent, any Indemnified Party and any Affected Party hereunder. Upon
receipt by the Agent of the foregoing amount, Purchaser shall assign, transfer
and convey to Seller, without recourse, representation or warranty (other than
as to the absence of liens created by Seller) all of Purchaser's right, title
and interest in and to the Participations in the Contracts and the Contract
Assets related thereto.
ARTICLE V
PAYMENTS
SECTION 5.1 Making of Payments. All payments of Capital or Earned Yield and
of all Fees, and all amounts to be deposited by Seller or Servicer hereunder,
shall be made by Seller or Servicer, as the case may be, no later than 10:00
a.m. (Chicago time), on the day when due in lawful money of the United States of
America in same-day funds to such account as is specified by Purchaser or the
Agent to Servicer. Funds received by the Purchaser or the Agent after 10:00 a.m.
(Chicago time) on the date when due will be deemed to have been received by the
Purchaser or the Agent, as the case may be, on the next following Business Day.
Any amount not paid when due hereunder shall accrue interest at a rate equal to
the Alternate Base Rate, plus 2% per annum from the date due until the date
paid.
ARTICLE VI
INCREASED COSTS, ETC.
SECTION 6.1 Increased Costs. If any change in Regulation D of the Board of
Governors of the Federal Reserve System, or any Regulatory Change, in each case
occurring after the date hereof:
(A) shall subject any Affected Party to any tax, duty or other charge
with respect to any Participation owned by or funded by it, or any
obligations or rights to provide funding therefor, or shall change the
basis of taxation of payments to such Affected Party of any Capital or
Earned Yield made by or owed to or funded by it or any other amounts due
under this Agreement in respect of any Participation owned by or funded by
it (except for changes in the rate of tax on the overall net income of such
Affected Party imposed by the jurisdiction in which such Affected Party's
principal executive office (or, in the case of a Eurodollar Office of such
Affected Party, in which such Eurodollar Office) is located); or
(B) shall impose, modify or deem applicable any reserve (including,
without limitation, any reserve imposed by the Board of Governors of the
Federal Reserve System, but excluding any such reserve included in the
determination of any Purchaser Rate), special deposit or similar
requirement against assets of, deposits with or for the account of, or
credit extended by, any Affected Party;
(C) shall change the amount of capital maintained or required or
requested or directed to be maintained by any Affected Party; or
(D) shall impose on any Affected Party any other condition affecting
any Participation made or funded by any Affected Party; and the result of
any of the foregoing is or would be to increase the cost to or, to impose a
cost on (a) an Affected Party funding or making or maintaining any
Participation (including extensions of credit under the Liquidity
Agreement, or any commitment of such Affected Party with respect to any of
the foregoing), or (b) the Agent for continuing its or Seller's
relationship with Purchaser, to reduce the amount of any sum received or
contract by an Affected Party under this Agreement or the Liquidity
Agreement with respect thereto, or in the sole good faith determination of
such Affected Party, to reduce the rate of return on the capital of an
Affected Party as a consequence of its obligations hereunder or arising in
connection herewith to a level below that which such Affected Party would
otherwise have achieved, then within five Business Days after demand by
such Affected Party to Seller (which demand shall be accompanied by a
written statement setting forth the basis of such demand), Seller shall pay
to the Agent for the account of such Affected Party such additional amount
or amounts as will (in the reasonable determination of such Affected Party)
compensate such Affected Party for such increased cost or such reduction.
Such written statement (which shall include calculations in reasonable
detail) shall, in the absence of manifest error, be rebuttably presumptive
evidence of the subject matter thereof.
SECTION 6.2 Funding Losses. Seller hereby agrees that upon demand by any
Affected Party (which demand shall be accompanied by a statement setting forth
the basis for the calculations of the amount being claimed) Seller will
indemnify such Affected Party against any net loss or expense which such
Affected Party may sustain or incur (including, without limitation, any net loss
or expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Affected Party to fund or maintain any
Participation), as reasonably determined by such Affected Party, as a result of
(a) any payment of any Capital or Earned Yield thereon on a date other than a
Settlement Date, or (b) any failure of Seller to sell any Participation to
Purchaser on a date specified therefor in a related Purchase Request. Such
written statement shall, in the absence of manifest error, be rebuttably
presumptive evidence of the subject matter thereof.
ARTICLE VII
CONDITIONS TO PURCHASES
The making of any Purchase hereunder is subject to the following
conditions precedent:
SECTION 7.1 Initial Purchase. The making of the initial Purchase is, in
addition to the conditions precedent specified in Section 7.2, subject to the
condition precedent that the Agent shall have received all of the following,
each duly executed and dated the date of such Purchase (or such earlier date as
shall be satisfactory to the Agent), in form and substance reasonably
satisfactory to the Agent:
7.1.1 Resolutions; Corporate Documents. Certified copies of resolutions of
the Board of Directors of each of LINC and Seller authorizing or ratifying the
execution, delivery and performance, respectively, of this Agreement and the
other Transaction Documents to which it is a party, together with a certified
copy of its articles or certificate of incorporation and by-laws.
7.1.2 Consents, Etc. Certified copies of all documents evidencing any
necessary consents and governmental approvals (if any) with respect to this
Agreement and the other Transaction Documents.
7.1.3 Incumbency and Signatures. A certificate of the Secretary or an
Assistant Secretary of each of LINC and Seller certifying the names of officer
or officers of each of LINC and Seller authorized to sign this Agreement and the
other Transaction Documents to which it is a party.
7.1.4 Good Standing Certificates. Good standing certificates for LINC and
Seller, issued as of a recent date acceptable to the Agent by (a) the Secretary
of State of the jurisdiction of such Person's formation, and (b) the Secretary
of State of the jurisdiction where such Person's chief executive office and
principal place of business are located.
7.1.5 Search Reports. A written search report provided to the Agent by a
search service acceptable to the Agent, listing all effective financing
statements that name Seller or LINC as debtor or assignor and that are filed in
the jurisdictions in which filings were made pursuant to Section 7.1.12 with
respect to the first Purchase and in such other jurisdictions that Agent shall
reasonably request, together with copies of such financing statements (none of
which shall cover any Contract or any property or interests therein or proceeds
of any thereof, unless an executed termination statement therefor has been
delivered to the Agent), and tax and judgment lien search reports from a Person
satisfactory to the Agent showing no evidence of such lien filed against Seller
or LINC.
7.1.6 Fee Letter; Payment of Fees. The Fee Letter, together with all Fees
payable pursuant to the Fee Letter and all costs and expenses due and payable
pursuant to Section 18.4, if then invoiced.
7.1.7 Closing Certificate. A certificate from an authorized officer of
Seller as to the satisfaction of the conditions set forth in Section 7.2.1.
7.1.8 Purchase and Sale Agreement. A duly executed and delivered copy of
the Purchase and Sale Agreement of even date herewith, in form and substance
reasonably acceptable to the Agent, together with evidence that all of the
conditions precedent set forth therein have been satisfied.
7.1.9 Opinions of Counsel to Seller and LINC. Favorable opinions of counsel
to the Seller and LINC, substantially in the form of Exhibits X-0, X-0 and B-3.
7.1.10 Monthly Report. A Monthly Report as of the date of such initial
Purchase.
7.1.11 Lockbox Agreement. Lockbox Agreements, duly executed by LINC,
Seller, the Agent and the respective Lockbox Banks, with respect to the
Collection Account and the Reserve Account.
7.1.12 UCC Filings. Acknowledgment copies of such proper financing
statements (Form UCC-1), filed on or prior to the date of such Purchase, naming
(i) the Originator as debtor/seller, Seller as secured party/purchaser and
Purchaser as assignee, filed in the State of the Originator's principal place of
business and (ii) Seller as debtor/seller and Purchaser as the secured
party/purchaser filed in the State of Seller's principal place of business.
7.1.13 Liquidity Agreement. The Liquidity Agreement, duly executed by the
Liquidity Banks, Purchaser and the Liquidity Agent.
7.1.14 Prior Transaction. Evidence that the Receivables Purchase Agreement,
dated as of December 30, 1997, among LINC Receivables Corporation, LINC,
Purchaser and the Agent has been terminated.
7.1.15 Other. Such other documents as the Agent may reasonably request.
SECTION 7.2 All Purchases. The making of the initial Purchase and each
subsequent Purchase, are subject to the following further conditions precedent
that:
7.2.1 No Termination Event, Etc. (a) No Termination Event or Unmatured
Termination Event has occurred and is continuing or will result from the making
of such Purchase or increase, (b) the representations and warranties of Seller
and Servicer contained in Article VIII are true and correct as of the date of
such Purchase or increase, with the same effect as though made on the date of
such Purchase or increase and (c) after giving effect to such Purchase or
increase, the Capital will not exceed the Purchase Limit and the Capital will
not exceed the Pay-Out Amount Limit.
7.2.2. Purchase Request. The Agent and Purchaser shall have received a
Purchase Request for such Purchase in accordance with Section 2.3 (which may be
a facsimile transmission of a properly completed and executed Purchase Request
followed on that same day with actual delivery of the original thereof),
together with all items required to be delivered in connection therewith.
7.2.3 Facility Termination Date. The Facility Termination Date shall not
have occurred.
7.2.4 Reserve Account. The amount in the Reserve Account is at least equal
to the Required Reserve Amount, after giving effect to such Purchase.
7.2.5 Release. Executed copies of releases of all liens and other Adverse
Claims of any Person in any Contract related to such Purchase or the proceeds
thereof (which release may be specific as to such Contracts related to such
Purchase or general as to all Contracts).
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF SELLER
SECTION 8.1 Representations and Warranties of Seller. In order to induce
Purchaser and the Agent to enter into this Agreement and, in the case of
Purchaser, to make Purchases hereunder, Seller hereby represents and warrants to
the Agent and Purchaser as follows:
SECTION 8.2 Organization and Good Standing, Etc. Seller has been duly
organized and is validly existing as a corporation in good standing under the
laws of its state of incorporation, with power and authority to own its
properties and to conduct its business as such properties are presently owned
and such business is presently conducted. It is duly licensed or qualified to do
business as a foreign corporation in good standing in the jurisdiction where its
principal place of business and chief executive office are located and in each
other jurisdiction in which the failure to be so licensed or qualified would be
reasonably likely to have a Material Adverse Effect.
SECTION 8.3 Power and Authority; Due Authorization. Seller has (a) all
necessary power, authority and legal right to (i) execute, deliver and perform
its obligations under this Agreement and each of the other Transaction Documents
to which it is a party, and (ii) to sell Participations on the terms and subject
to the conditions herein provided, and (b) duly authorized by all necessary
corporate action the execution, delivery and performance of this Agreement and
the other Transaction Documents to which it is a party and such sales and the
granting of a security interest in the Collateral on the terms and conditions
provided herein.
SECTION 8.4 No Violation. The consummation of the transactions contemplated
by this Agreement and the other Transaction Documents and the fulfillment of the
terms hereof will not (a) conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse of time
or both) a default under, (i) the certificate of incorporation or by-laws of
Seller, or (ii) any indenture, loan agreement, pooling and servicing agreement,
contract purchase agreement, mortgage, deed of trust, or other agreement or
instrument to which Seller is a party or by which it or any of their its
properties is bound, (b) result in or require the creation or imposition of any
Adverse Claim upon any of its properties pursuant to the terms of any such
indenture, loan agreement, pooling and servicing agreement, contract purchase
agreement, mortgage, deed of trust, or other agreement or instrument, other than
the Transaction Documents, or (c) violate any law, rule, or regulation
applicable to Seller or any order of any court or of any federal, state or
foreign regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over Seller or any of its properties, which
violation would be reasonably likely to have a Material Adverse Effect.
SECTION 8.5 Validity and Binding Nature. This Agreement is, and the other
Transaction Documents to which it is a party when duly executed and delivered by
Seller will be, the legal, valid and binding obligation of Seller, enforceable
in accordance with their respective terms except as enforceability may be
limited by bankruptcy, insolvency, reorganization, or similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity,
regardless of whether such enforceability is considered in effect or at law.
SECTION 8.6 Bulk Sales Act. No transaction contemplated by this Agreement
or any of the other Transaction Documents requires compliance with, or will be
subject to avoidance under, any bulk sales act or similar law.
SECTION 8.7 Government Approvals. No authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body required of Seller for the due execution, delivery or
performance by Seller of any Transaction Document to which it is a party remains
unobtained or unfilled, other than the UCC filings referred to in Section
7.1.12.
SECTION 8.8 Financial Condition.
a) Seller's pro forma balance sheet as of the date hereof, certified by the
Financial Officer, copies of which have been furnished to the Agent and
Purchaser, fairly presents Seller's respective assets and liabilities at such
date.
b) Since the date of Seller's incorporation, no event has occurred that has
had, or is reasonably likely to have, a Material Adverse Effect.
SECTION 8.9 Margin Regulations. Seller is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock, and no
proceeds of any Participation, directly or indirectly, will be used for a
purpose that violates, or would be inconsistent with, Regulations T, U and X
promulgated by the Federal Reserve Board from time to time.
SECTION 8.10 Quality of Title. Seller owns each Contract, and the Contract
Assets related thereto, free and clear of any Adverse Claim (other than any
Adverse Claim arising solely as the result of any action taken by the Agent or
Purchaser and any interest in the Equipment by the Obligors under the
Contracts). Seller has a first priority perfected ownership interest in the
Contracts. All of the filings with respect to Equipment that are required
pursuant to the provisions of Schedule II have been made. No effective financing
statement or other instrument similar in effect covering any Contract, any
Contract Asset or any interest therein is on file in any recording office,
except for financing statements that may be filed (i) in favor of Purchaser,
(ii) in favor of Seller in accordance with the Purchase and Sale Agreement,
(iii) in connection with any Adverse Claim arising solely as the result of any
action taken by Purchaser or the Agent or (iv) in favor of the Originator (or
any party from which it purchased such Contract) in accordance with the
Contract.
SECTION 8.11 Accuracy of Information. All factual written information
heretofore or contemporaneously furnished by, or on behalf of, Seller to
Purchaser or the Agent for purposes of or in connection with any Transaction
Document or any transaction contemplated hereby or thereby is, and all other
such factual, written information hereafter furnished by, or on behalf of,
Seller to Purchaser or the Agent pursuant to or in connection with any
Transaction Document will be, true and accurate in all material respects on the
date as of which such information is dated or certified.
SECTION 8.12 Offices. The principal place of business and chief executive
office of Seller is located at the address referred to in Section 18.3 (or at
such other locations, notified to the Agent in accordance with Section 10.1.6,
in jurisdictions where all action required thereby has been taken and
completed).
SECTION 8.13 Capitalization. The authorized capital stock of Seller
consists of one thousand (1,000) shares of common stock, $0.01 par value, of
which all are currently issued and outstanding. All of such outstanding shares
are validly issued, fully paid and nonassessable and are owned (beneficially and
of record), free and clear of any Adverse Claim, by LINC.
SECTION 8.14 Trade Names. Seller does not use any trade name other than
its actual corporate name.
SECTION 8.15 Taxes. Seller has filed all tax returns and reports required
by law to have been filed by it and has paid all taxes and governmental charges
thereby shown to be owing, except any such taxes or charges that are being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP shall have been set aside on its
books.
SECTION 8.16 Compliance with Applicable Laws, etc. Seller is in compliance
with the requirements of all applicable laws, rules, regulations, and orders of
all governmental authorities (including, without limitation, the Federal
Consumer Credit Protection Act, as amended, Regulation Z of the Board of
Governors of the Federal Reserve System, as amended, laws, rules and regulations
relating to usury, truth in lending, fair credit billing, fair credit reporting,
equal credit opportunity, fair debt collection practices and privacy and all
other consumer laws, rules and regulations applicable to the Contracts), a
breach of any of which, individually or in the aggregate, would be reasonably
likely to have a Material Adverse Effect.
SECTION 8.17 No Proceedings. There is no order, judgment, decree,
injunction, stipulation or consent order of or with any court or other
government authority which Seller is named, and there is no action, suit,
arbitration, or regulatory proceeding pending, or, to the knowledge of Seller,
threatened, nor, to the best of Seller's knowledge, is there any investigation
pending or threatened before or by any court, regulatory body, administrative
agency or other tribunal or governmental instrumentality, against Seller (A)
asserting the invalidity of this Agreement or any other Transaction Document or
(B) seeking to prevent the consummation of any of the transactions contemplated
by this Agreement or any other Transaction Document or (C) that, individually or
in the aggregate, is reasonably likely to have a Material Adverse Effect.
SECTION 8.18 Investment Company Act, Etc. Seller is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
or a "holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company," or a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
SECTION 8.19 Eligible Contracts. Each Contract included in the calculation
of the Net Portfolio Principal Balance as an Eligible Contract is an Eligible
Contract on such date of calculation.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES OF SERVICER
SECTION 9.1 Representations and Warranties of Servicer. In order to induce
Purchaser and the Agent to enter into this Agreement and, in the case of
Purchaser, to make Purchases hereunder, Servicer hereby represents and warrants
to the Agent and Purchaser as follows:
SECTION 9.2 Organization and Good Standing, Etc. Servicer has been duly
organized and is validly existing as a corporation in good standing under the
laws of its state of incorporation, with power and authority to own its
properties and to conduct its business as such properties are presently owned
and such business is presently conducted. It is duly licensed or qualified to do
business as a foreign corporation in good standing in the jurisdiction where its
principal place of business and chief executive office are located and in each
other jurisdiction in which the failure to be so licensed or qualified would be
reasonably likely to have a Material Adverse Effect.
SECTION 9.3 Power and Authority; Due Authorization. Servicer has (a) all
necessary power, authority and legal right to execute, deliver and perform its
obligations under this Agreement and each of the other Transaction Documents to
which it is a party, and (b) duly authorized by all necessary corporate action
the execution, delivery and performance of this Agreement and the other
Transaction Documents to which it is a party.
SECTION 9.4 No Violation. The consummation of the transactions contemplated
by this Agreement and the other Transaction Documents and the fulfillment of the
terms hereof will not (a) conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse of time
or both) a default under, (i) the certificate of incorporation or by-laws of
Servicer, or (ii) any indenture, loan agreement, pooling and servicing
agreement, contracts purchase agreement, mortgage, deed of trust, or other
agreement or instrument to which Servicer is a party or by which it or any of
its properties is bound, (b) result in or require the creation or imposition of
any Adverse Claim upon any of its properties pursuant to the terms of any such
indenture, loan agreement, pooling and servicing agreement, contracts purchase
agreement, mortgage, deed of trust, or other agreement or instrument, or (c)
violate any law, rule, or regulation applicable to Servicer or any order of any
court or of any federal, state or foreign regulatory body, administrative
agency, or other governmental instrumentality having jurisdiction over Servicer
or any of its properties, which in the case of clause (a) (ii), (b) or (c) would
be reasonably likely to have a Material Adverse Effect.
SECTION 9.5 Validity and Binding Nature. This Agreement is, and the other
Transaction Documents to which it is a party when duly executed and delivered by
Servicer will be, the legal, valid and binding obligation of Servicer,
enforceable in accordance with their respective terms except as enforceability
may be limited by bankruptcy, insolvency, reorganization, or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity, regardless of whether such enforceability is considered in
equity or at law.
SECTION 9.6 Government Approvals. No authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body required of Servicer for the due execution, delivery or
performance by Servicer of any Transaction Document to which it is a party
remains unobtained or unfiled.
A. SECTION 9.7 Financial Condition.
a) Servicer's consolidated balance sheet as of December 31, 1998, and the
related statements of earnings and cash flows of Servicer and its consolidated
Subsidiaries for the fiscal year then ended, certified by KPMG LLP, independent
certified public accountants, copies of which have been furnished to the Agent
and Purchaser, fairly present in all material respects the consolidated
financial condition, business and operations of Servicer and its consolidated
Subsidiaries as at such date and the consolidated results of operation of
Servicer and its consolidated Subsidiaries for the period ended on such date.
b) Since December 31, 1998 no event has occurred that has had, or is
reasonably likely to have, a Material Adverse Effect.
SECTION 9.8 Accuracy of Information. All factual written information
heretofore or contemporaneously furnished by, or on behalf of, Servicer to
Purchaser or the Agent for purposes of or in connection with any Transaction
Document or any transaction contemplated hereby or thereby is, and all other
such factual, written information hereafter furnished by Servicer, or on behalf
of, to Purchaser or the Agent pursuant to or in connection with any Transaction
Document will be, true and accurate in every material respect on the date as of
which such information is dated or certified. No information contained in any
report or certificate delivered pursuant to this Agreement or any other
Transaction Document shall be incomplete by omitting to state a material fact or
any fact necessary to make the statements contained therein not misleading on
the date as of which such information is dated or certified.
SECTION 9.9 Offices. The principal place of business and chief executive
office of Servicer is located at the address referred to in Section 18.3 (or at
such other locations, notified to the Agent in accordance with Section 11.1.6,
in jurisdictions where all action required thereby has been taken and
completed).
SECTION 9.10 Taxes. Servicer has filed all tax returns and reports required
by law to have been filed by it and has paid all taxes and governmental charges
thereby shown to be owing, except any such taxes or charges that are being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP shall have been set aside on its
books.
SECTION 9.11 Compliance with Applicable Laws. Servicer is in compliance
with the requirements of all applicable laws, rules, regulations, and orders of
all governmental authorities (including, without limitation, the Federal
Consumer Credit Protection Act, as amended, Regulation Z of the Board of
Governors of the Federal Reserve System, as amended, laws, rules and regulations
relating to usury, truth in lending, fair credit billing, fair credit reporting,
equal credit opportunity, fair debt collection practices and privacy and all
other consumer laws, rules and regulations applicable to the Contracts), a
breach of any of which, individually or in the aggregate, would be reasonably
likely to have a Material Adverse Effect.
SECTION 9.12 No Proceedings. Except as described in Schedule 9.12, there is
no order, judgment, decree, injunction, stipulation or consent order of or with
any court or other government authority to which Servicer is named, and there is
no action, suit, arbitration, or regulatory proceeding pending, or, to the
knowledge of Servicer, threatened, nor, to the best of Servicer's knowledge, is
there any investigation pending or threatened before or by any court, regulatory
body, administrative agency or other tribunal or governmental instrumentality,
against Servicer (A) asserting the invalidity of this Agreement or any other
Transaction Document or (B) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any other Transaction Document or
(C) that, individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect.
SECTION 9.13 Investment Company Act, Etc. Servicer is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
or a "holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company," or a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
SECTION 9.14 Software Programs. Servicer owns, or has valid and existing
licenses of or subcontracts with respect to, all software programs sufficient to
service the Portfolio and produce the Monthly Reports, of which software,
licenses and subcontracts is either assignable to a successor Servicer or is
readily available without undue cost. All such software programs have been
certified or contractually guaranteed to be year 2000 compliant (i.e. able to
differentiate between 2000 and 1900) by the software vendors.
ARTICLE X
COVENANTS OF SELLER
SECTION 10.1 Affirmative Covenants of Seller. From the date hereof until
the first day following the Facility Termination Date on which all
Participations have been reduced to zero and all Obligations shall have been
finally and fully paid and performed (the "Final Payoff Date"), unless Purchaser
and the Agent shall otherwise consent in writing Seller hereby covenants and
agrees with Purchaser and the Agent that:
10.1.1 Compliance with Laws, Etc. Seller will comply in all material
respects with all applicable laws, rules, regulations and orders of all
governmental authorities (including those which relate to the Contracts),
except to the extent the failure to so comply would not have a Material
Adverse Effect.
10.1.2 Preservation of Corporate Existence. Seller will 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 the jurisdiction where its principal
place of business and its chief executive office are located and in each
other jurisdiction where the failure to preserve and maintain such
existence, rights, franchises, privileges and qualifications would have a
Material Adverse Effect.
10.1.3 Audits. (i) At any time and from time to time during regular
business hours upon reasonable prior notice (provided that if a Termination
Event or Unmatured Termination Event shall have occurred and be continuing,
no notice shall be required), Seller will permit the Agent, or its agents
or representatives (A) to examine and make copies of and abstracts from all
books, records and documents (including, without limitation, computer tapes
and disks) in possession or under the control of Seller relating to the
Contracts, and (B) to visit the offices and properties of Seller for the
purpose of examining such materials described in clause (i)(A) next above,
and to discuss matters relating to the Contracts or the performance
hereunder with any of the officers or employees of Seller having knowledge
of such matters, and (ii) without limiting the foregoing clause (i) above,
from time to time on request of the Agent, Seller will permit certified
public accountants or other auditors reasonably acceptable to the Agent to
conduct, at Seller's expense (provided that, so long as no Termination
Event or Unmatured Termination Event has occurred and is continuing, Seller
shall only be responsible for the expense of one such audit in any calendar
year), a review of Seller's books and records with respect to the
Contracts, and all other documents related thereto.
10.1.4 Keeping of Records and Books of Account. Seller will keep books
and records that accurately reflect in all material respects Seller's
business affairs and transactions.
10.1.5 Performance and Compliance with Contracts. Seller will timely
and fully perform and comply with all provisions, covenants and other
promises required to be observed by it under the Contracts and all other
agreements related to such Contracts, unless Seller is disputing the
applicability of any such provision, covenant or promise in good faith and
except to the extent that failure to comply therewith would not have a
Material Adverse Effect.
10.1.6 Location of Records. Seller will keep its principal place of
business and chief executive office at the address referred to in Section
8.12 or, upon 30 days' prior written notice to the Agent, at such other
locations in jurisdictions in the continental United States where all
action required to maintain the Purchaser's perfected ownership and
security interest pursuant to Section 17.1 shall have been taken and
completed or shall be so taken and completed prior to the loss of any
perfection thereof arising from such relocation.
10.1.7 Separate Corporate Existence. Seller hereby acknowledges that
Purchaser and the Agent are entering into the transactions contemplated by
this Agreement and the other Transaction Documents in reliance upon
Seller's identity as a legal entity separate from LINC. Therefore, from and
after the date hereof, Seller shall take all reasonable steps specifically
required by this Agreement to continue Seller's identity as a separate
legal entity and to make it apparent to third Persons that Seller is an
entity with assets and liabilities distinct from those of LINC and any
other Person, and is not a division of LINC or any other Person. Without
limiting the generality of the foregoing, Seller shall take such actions as
shall be required in order that:
a) Seller will be a limited purpose corporation whose primary
activities are restricted in its certificate of incorporation to
acquiring retail installment contracts and leases, and the related
equipment from the Originator, entering into this Agreement to finance
such purchases and conducting such other activities as it deems
necessary or appropriate to carry out its primary activities;
b) Not less than one member of Seller's Board of Directors (the
"Independent Director") shall be an individual who is not a direct,
indirect or beneficial stockholder, officer, director, employee,
customer or supplier of LINC or any of its Affiliates (other than
Seller and other special purpose, "bankruptcy remote" corporations).
The Certificate of Incorporation of Seller shall provide that (i)
Seller's Board of Directors shall not approve, or take any other
action to cause the filing of, a voluntary bankruptcy petition or
dissolution proceeding with respect to Seller unless all of the Board
of Director's, including the Independent Director, shall approve the
taking of such action in writing prior to the taking of such action
and (ii) such provision cannot be amended without the prior written
consent of the Independent Director;
c) The Independent Director shall not at any time serve as a
trustee in bankruptcy for Seller, LINC or any Affiliate thereof;
d) Any employee, consultant or agent of Seller will be
compensated from funds of Seller for services provided to Seller.
Seller will engage no agents other than a Servicer for the Contracts,
which Servicer will be fully compensated for its services to Seller by
payment of the Servicing Fee, and attorneys and accountants, who will
be compensated from funds of Seller, and other than LINC pursuant to
the Operating Agreement, provided that LINC shall pay the attorneys'
fees and disbursements incurred in connection with the initial closing
of the transactions contemplated hereby;
e) Seller will not incur any material indirect or overhead
expenses for items shared between Seller and LINC (or any other
Affiliate thereof), except as set forth in the Operating Agreement. To
the extent, if any, that Seller and LINC (or any other Affiliate
thereof) share items of expenses such as legal, auditing and other
professional services, such expenses will be allocated to the extent
practical on the basis of actual use or the value of services
rendered, and otherwise on a basis reasonably related to the actual
use or the value of services rendered, it being understood that LINC
shall pay all expenses relating to the preparation, negotiation,
execution and delivery of the Transaction Documents, including,
without limitation, legal, commitment, agency and other up-front fees;
f) Seller's operating expenses will not be paid by LINC or any
other Affiliate thereof, except as permitted under the terms of this
Agreement or otherwise consented to by the Agent and Purchaser;
g) Seller will have its own stationery;
h) Seller's books and records will be maintained separately from
those of LINC and any other Affiliate thereof;
i) All audited financial statements of LINC or any Affiliate
thereof that are consolidated to include Seller will contain detailed
notes clearly stating that (A) all of Seller's assets are owned by
Seller, and (B) Seller is a separate corporate entity with creditors
who have received ownership and/or security interests in Seller's
assets;
j) Seller's assets will be maintained in a manner that
facilitates their identification and segregation from those of LINC or
any Affiliate thereof;
k) Seller will strictly observe corporate formalities in its
dealings with LINC or any Affiliate thereof, and funds or other assets
of Seller will not be commingled with those of LINC or any Affiliate
thereof (other than in connection with LINC's role as Servicer to the
extent permitted hereby). Seller shall not maintain joint bank
accounts or other depository accounts to which LINC or any Affiliate
thereof has independent access, except as Servicer hereunder. None of
Seller's funds will at any time be pooled with any funds of LINC or
any Affiliate thereof, except for Collections to the extent permitted
by this Agreement;
l) Seller shall pay to LINC (or any Affiliate thereof) the
marginal increase (or, in the absence of such increase, the market
amount of its portion of) in the premium payable with respect to any
insurance policy that covers Seller and LINC (or any Affiliate
thereof), but Seller shall not, directly or indirectly, be named or
enter into an agreement to be named, as a direct or contingent
beneficiary or loss payee under any such insurance policy with respect
to any amounts payable due to occurrences or events related to LINC
(or any Affiliate thereof); and
m) Seller will maintain arm's-length relationships with LINC (and
any Affiliate thereof). Any Person, including Seller's Affiliates,
that renders or otherwise furnishes services to Seller will be
compensated by Seller at market rates for such services it renders or
otherwise furnishes to Seller. Neither Seller nor LINC will be or will
hold itself out to be responsible for the debts of the other or the
decisions or actions respecting the daily business and affairs of the
other.
10.1.8 Reporting Requirements of Seller. Until the Final Payoff Date,
Seller will furnish to the Agent and Purchaser:
a) Quarterly Financial Statements. As soon as available and in any
event within 45 days after the end of each of the first three Fiscal
Quarters of each fiscal year of Seller, (i) copies of the unaudited balance
sheet of Seller, as at the end of such Fiscal Quarter, together with
unaudited statements of earnings for such Fiscal Quarter and for the period
commencing at the end of the previous Fiscal Year and ending with the end
of such Fiscal Quarter, certified by the chief financial officer,
treasurer, assistant treasurer or chief accounting officer (such officer
being herein called the "Financial Officer") of Seller and (ii) a letter
from the Financial Officer of Seller certifying whether a Termination Event
or an Unmatured Termination Event has occurred and is continuing;
b) Annual Financial Statements. As soon as available and in any event
within 90 days after the end of each Fiscal Year of each of Seller, (i) a
copy of the unaudited balance sheet of Seller, as at the end of such Fiscal
Year together with the related statements of earnings and cash flows for
such Fiscal Year, certified by the Financial Officer of Seller, and (ii) a
letter from the Financial Officer of Seller certifying whether a
Termination Event or an Unmatured Termination Event has occurred and is
continuing;
c) ERISA. Promptly after receiving notice of any Reportable Event (as
defined in Title IV of ERISA) with respect to Seller (or any Affiliate
thereof), a copy of such notice;
d) Proceedings. As soon as possible and in any event within three
Business Days after Seller receives notice thereof, any settlement of,
material judgment (including a material judgment with respect to the
liability phase of a bifurcated trial) in or commencement of any labor
controversy, litigation, action or proceeding of the type described in
Section 8.17, notice thereof and, upon the Agent's reasonable request,
copies of all non-confidential or non-privileged documentation relating
thereto;
e) Litigation. As soon as possible, and in any event within three days
of Seller's knowledge thereof, notice of (i) any litigation, investigation
or proceeding of the type described in Schedule 8.17 not previously
disclosed to the Agent, and (ii) any material adverse development in any
previously disclosed litigation, investigation or proceeding;
f) Notice of Material Events. Promptly after becoming aware thereof,
notice of any other event or circumstance that, in the reasonable judgment
of Seller, is likely to have a Material Adverse Effect;
g) Termination Events. As soon as possible, and in any event within
three Business Days after the occurrence of each Termination Event or
Unmatured Termination Event, a written statement of the Financial Officer
of Seller setting forth details of such event and the action that Seller
proposes to take with respect thereto; and
h) Other. Promptly, from time to time, such other information,
documents, records or reports respecting the Collateral, the Contracts, or
the condition or operations, financial or otherwise, of Seller as the Agent
may from time to time reasonably request in order to protect the interests
of the Agent or Purchaser under or as contemplated by this Agreement or the
other Transaction Documents.
10.1.9 Use of Proceeds. Seller shall use the proceeds of the Purchases made
hereunder solely to fund the purchase price for the Contracts purchased from
LINC pursuant to the Purchase and Sale Agreement.
10.1.10 Collections. Seller will promptly (and in any event within two
Business Days of receipt) remit to the Collection Account all Collections, if
any, received directly by Seller from the Obligors.
10.1.11 Liquidity Fundings. In the event that all or any portion of the
Capital is funded pursuant to the Liquidity Agreement, at the request of the
Agent, Seller will use its best efforts to promptly arrange a sale or financing
of the Portfolio pursuant to a transaction that will provide sufficient funds to
pay the outstanding Capital, the Earned Yield thereon and all other amounts due
to the Purchaser and the Agent under this Agreement.
10.1.12 Purchase and Sale Agreement. Seller will enforce its rights and
claims against the Originator under the Purchase and Sale Agreement in a timely
manner.
SECTION 10.2 Negative Covenants of Seller. From the date hereof until the
Final Payoff Date, unless Purchaser and the Agent shall otherwise consent in
writing, Seller shall perform its Obligations under this Section 10.2.
10.2.1 Sales, Liens, Etc. Except pursuant to, or as contemplated by, the
Transaction Documents, Seller shall not sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist voluntarily or
involuntarily any Adverse Claims upon or with respect to any of its assets,
including, without limitation, the Portfolio, any interest therein or any right
to receive any amount from or in respect thereof.
10.2.2 Mergers, Acquisitions, Sales, Subsidiaries, etc. Seller shall not:
(i) be a party to any merger or consolidation, or directly or
indirectly purchase or otherwise acquire all or substantially all of the
assets or any stock of any class of, or any partnership or joint venture
interest in, any other Person, or sell, transfer, assign, convey or lease
any of its property and assets (or any interest therein) other than
pursuant to, or as contemplated by, this Agreement;
(ii) make, incur or suffer to exist an investment in, equity
contribution to, loan or advance to, or payment obligation in respect of
the deferred purchase price of property from, any other Person (other than
Permitted Investments); or
(iii) create any direct or indirect Subsidiary or otherwise acquire
direct or indirect ownership of any equity interests in any other Person.
10.23 Restricted Payments.
a) Seller shall not (i) declare, pay or make any Dividend (other than
dividends or distributions payable in its common stock or split-ups or
reclassifications of its stock into additional or other shares of its
common stock) or (ii) apply any of its funds, property or assets to the
purchase, redemption, sinking fund or other retirement of, any shares of
any class of capital stock (now or hereafter outstanding) of Seller, or
warrants, options or other rights with respect to any shares of any class
of capital stock (now or hereafter outstanding) of Seller or (iii) make any
loan or other advance to any shareholder; and
b) Seller will not make any deposit for any of the foregoing purposes;
except that Seller may declare, pay or make Dividends if, immediately
before and after giving effect to any proposed action described above, (i)
no Termination Event or Unmatured Termination Event shall have occurred and
be continuing and (ii) the Tangible Net Worth of Seller is not less than
$1,000,000.
10.2.4 Amendments to Certain Documents.
(a) Seller shall not amend, supplement, amend and restate, or
otherwise modify or agree to any waiver of any provision contained in any
Transaction Document or Seller's certificate of incorporation or by-laws,
except in accordance with the terms of such document, instrument or
agreement and with the prior written consent of the Agent and Purchaser;
and
b) Except for the Transaction Documents, Seller shall not enter into,
execute and deliver, or otherwise become bound by any agreement,
instrument, document or other arrangement that restricts its right to
amend, supplement, amend and restate or otherwise modify, or to extend or
renew, or to waive any right under, this Agreement or any other Transaction
Document.
10.2.5 Incurrence of Indebtedness; Other Transactions. Seller shall not
create, incur or permit to exist any Indebtedness, except for indebtedness and
liabilities incurred pursuant to the Transaction Documents (including Interest
Rate Swaps) and normal trade payables incurred in the ordinary course of its
business that do not exceed $4,500 in the aggregate at any time. Seller shall
not be a party to any securitization or other financing arrangement except
pursuant to the Transaction Documents.
10.2.6 Deposits to the Collection Account. Seller shall not deposit or
otherwise credit, or cause or permit to be so deposited or credited by any
Person, to the Collection Account cash or cash proceeds other than Collections
with respect to the Contracts or proceeds of the Collateral and payments under
Interest Rate Swaps.
10.2.7 Change in Business Policy. Seller shall not make any change in the
character of its business which would impair in any material respect the
collectibility of any Contract.
10.2.8 Amendments to Contracts. Seller shall not amend, modify or waive any
provision of any Contract except as permitted by Section 13.2(b).
ARTICLE XI
COVENANTS OF SERVICER
SECTION 11.1 Affirmative Covenants of Servicer. From the date hereof until
the Final Payoff Date, unless Purchaser and the Agent otherwise consent in
writing, Servicer hereby covenants and agrees with Purchaser and the Agent that
it shall:
11.1.1 Compliance with Laws, Etc. Comply in all material respects with all
applicable laws, rules, regulations and orders of all governmental authorities
(including those which relate to the Contracts) except to the extent the failure
to so comply would not have a Material Adverse Effect.
11.1.2 Preservation of Corporate Existence. 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 the jurisdiction where its principal place of business
and its chief executive office are located and in each other jurisdiction where
the failure to preserve and maintain such existence, rights, franchises,
privileges and qualifications would have a Material Adverse Effect.
11.1.3 Audits. (i) At any time and from time to time during regular
business hours upon reasonable prior notice (provided that if a Termination
Event or Unmatured Termination Event shall have occurred and be continuing, no
notice shall be required), permit the Agent, or its agents or representatives
(A) to examine and make copies of and abstracts from all books, records and
documents (including, without limitation, computer tapes and disks) in
possession or under the control of Servicer relating to the Contracts, and (B)
to visit the offices and properties of Servicer for the purpose of examining
such materials described in clause (i)(A) next above, and to discuss matters
relating to the Contracts or the performance hereunder with any of the officers
or employees of Servicer having knowledge of such matters, and (ii) without
limiting the foregoing clause (i) above, from time to time on request of the
Agent, permit certified public accountants or other auditors reasonably
acceptable to the Agent to conduct, at Servicer's expense (provided that, so
long as no Termination Event or Unmatured Termination Event has occurred and is
continuing, Servicer shall only be responsible for the expense of one such audit
in any calendar year), a review of Servicer's books and records with respect to
the Contracts and all other documents related thereto.
11.1.4 Keeping of Records and Books of Account. Keep books and records that
accurately reflect in all material respects Servicer's business affairs and
transactions, and maintain and implement administrative and operating procedures
(including, without limitation, an ability to re-create records evidencing the
Contracts 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 Contracts.
11.1.5 Performance and Compliance with Contracts. Timely and fully perform
and comply with all material provisions, covenants and other promises required
to be observed by it under the Contracts and all other agreements related to
such Contracts, unless Servicer is disputing the applicability of any such
provision, covenant or promise in good faith and except to the extent that the
failure to comply therewith would not have a Material Adverse Effect.
11.1.6 Location of Records. Keep its principal place of business and chief
executive office at the address referred to in Section 9.9 or, upon 30 days'
prior written notice to the Agent, at such other locations in jurisdictions in
the continental United States where all action required to maintain the
Purchaser's perfected ownership and security interest pursuant to Section 17.1
shall have been taken and completed or shall be so taken and completed prior to
the loss of any perfection thereof arising from such relocation. Cause
appropriate Form UCC-3 financing statements reflecting the release of the
related Contracts and Contract Assets from (i) the lien in favor of the agent
under the Third Amended and Restated Loan Agreement, dated as of July 22, 1997,
among LINC, Connor Capital Corporation, the banks from time to time parties
thereto and Fleet, as agent, and (ii) any other liens of record that may
hereafter exist to be filed promptly (but in any event within 5 Business Days)
after each Purchase with the Secretary of State of Illinois, provided that if
Servicer has caused a Form UCC-3 partial release to be filed with the Secretary
of State of Illinois evidencing the release of Contracts and Contract Assets
generally, which partial release is in form satisfactory to the Agent, such
filing shall satisfy the requirements set forth in this sentence for all
Purchases.
11.1.7 Credit Policy. Comply in all material respects with the Credit
Policy in regard to each Contract.
11.1.8 Reporting Requirements of Servicer. Furnish to the Agent and
Purchaser:
a) Quarterly Financial Statements. As soon as available and in any
event within 45 days after the end of each of the first three Fiscal
Quarters of each fiscal year of Servicer, (i) copies of the unaudited
consolidated balance sheet of Servicer and its consolidated Subsidiaries,
as at the end of such Fiscal Quarter, together with unaudited statements of
earnings for such Fiscal Quarter and for the period commencing at the end
of the previous Fiscal Year and ending with the end of such Fiscal Quarter,
certified by a Financial Officer of Servicer and (ii) a letter from the
Financial Officer of Servicer certifying that neither a Termination Event
nor an Unmatured Termination Event nor a Servicer Termination Event has
occurred and is continuing;
b) Annual Financial Statements. As soon as available and in any event
within 90 days after the end of each Fiscal Year of Servicer, a copy of the
annual audit report for such Fiscal Year of Servicer, including a copy of
the consolidated balance sheet of Servicer and its consolidated
Subsidiaries, as at the end of such Fiscal Year together with the related
statements of earnings and cash flows for such Fiscal Year, certified by
KPMG LLP or other independent public accountants reasonably acceptable to
the Agent and Purchaser, and a certificate from such accountant stating
that, relying (without independent verification) upon internal management
reports, they have reviewed and independently computed for each Fiscal
Quarter during such Fiscal Year, compliance with the Pay-Out Amount Limit
as of the last Business Day in the final calendar month in such Fiscal Year
and as of the last Business Day in one randomly selected calendar month in
such Fiscal Year and have compared their calculations of the Net Portfolio
Principal Balance with the corresponding Monthly Reports and stating
whether such computations indicate that such Monthly Reports accurately
reflected the Net Portfolio Principal Balance as of the respective
applicable dates;
c) Monthly Reports. On or before the day that is two Business Days
prior to each Settlement Date, Servicer shall prepare and deliver to the
Agent and Purchaser a report (a "Monthly Report"), substantially in the
form of the form of monthly report approved by the Purchaser and Agent,
setting forth a calculation of the Net Portfolio Principal Balance
(together with such other information set forth therein) as of such
Month-End Date, signed by a Financial Officer of Servicer;
d) Weekly Calculation. On or before the Friday of each week (or if
such day is not a Business Day, the immediately preceding Business Day),
Servicer shall prepare and deliver to the Agent and Purchaser a calculation
to determine whether a Hedge Trigger Event has occurred;
e) ERISA. Promptly after receiving notice of any Reportable Event (as
defined in Title IV of ERISA) with respect to Servicer (or any Affiliate
thereof), a copy of such notice;
f) Proceedings. As soon as possible and in any event within three
Business Days after Servicer receives notice thereof, any settlement of,
material judgment (including a material judgment with respect to the
liability phase of a bifurcated trial) in or commencement of any labor
controversy, litigation, action or proceeding of the type described in
Section 9.12, notice thereof and, upon the Agent's reasonable request,
copies of all non-confidential or non-privileged documentation relating
thereto;
g) Litigation. As soon as possible, and in any event within three days
of Servicer's knowledge thereof, notice of (i) any litigation,
investigation or proceeding of the type described in Schedule 9.12 not
previously disclosed to the Agent, and (ii) any material adverse
development in any previously disclosed litigation, investigation or
proceeding;
h) SEC and Other Reports. Within 30 days after the sending or filing
thereof, copies of all reports that Servicer or any of its Subsidiaries is
required (by any regulatory agency) to send to its securityholders
generally, and all reports and registration statements that Servicer or any
of its Subsidiaries files with the Securities and Exchange Commission or
any national securities exchange;
i) Notice of Material Events. Promptly after becoming aware thereof,
notice of any Hedge Trigger Event and any event or circumstance that, in
the reasonable judgment of Servicer, is likely to have a Material Adverse
Effect;
j) Termination Events. As soon as possible, and in any event within
three Business Days after the occurrence of each Servicer Termination
Event, Termination Event or Unmatured Termination Event, a written
statement of the Financial Officer of Servicer setting forth details of
such event and the action that Servicer proposes to take with respect
thereto; and
k) Other. Promptly, from time to time, such other information,
documents, records or reports respecting the Collateral, the Contracts, or
the condition or operations, financial or otherwise, of Servicer as the
Agent may from time to time reasonably request in order to protect the
interests of the Agent or Purchaser under or as contemplated by this
Agreement or the other Transaction Documents.
11.1.9 Collections. (a) Promptly (and in any event within two Business Days
of receipt) remit to the Collection Account all Collections, if any, received
directly by Servicer from the Obligors;
(b) Cause all Collections of Contracts to be deposited into accounts
that are free and clear of all liens or security interests in favor of any
Person other than Purchaser (or the Agent on its behalf), unless such lien
or security interest has been released; and
(c) With respect to all accounts established after the date hereof
into which Collections will be deposited, cause the bank at which such
account is located to waive any right of set-off such bank may have with
respect to such account, except for set-off for customary fees and returned
items.
SECTION 11.2 Negative Covenants of Servicer. From the date hereof until the
Final Payoff Date, unless Purchaser and the Agent shall otherwise consent in
writing, Servicer shall perform its Obligations under this Section 11.2.
11.2.1 Mergers, Acquisitions, Sales, Subsidiaries, etc. Servicer shall not
be a party to any merger or consolidation, or directly or indirectly purchase or
otherwise acquire all or substantially all of the assets or any stock of any
class of, or any partnership or joint venture interest in, any other Person, or
sell, transfer, assign, convey or lease any of its property and assets (or any
interest therein) other than pursuant to, or as contemplated by, the Purchase
and Sale Agreement, unless (i) Servicer is the surviving corporation, or the
surviving entity as a Person organized under the jurisdiction of a state of the
United States and expressly assumes all of Servicer's obligations under this
Agreement and the other Transaction Documents pursuant to an agreement
reasonably satisfactory to the Agent, (ii) the tangible net worth of survivor is
not less than the tangible net worth of Servicer immediately prior to such
transaction, (iii) Servicer remains in substantially the same business that it
was in on the date hereof, (iv) no Termination Event or Servicer Termination
Event has occurred and is continuing, or would result therefrom, and (v) the
Agent reasonably determines that such transaction will not have a Material
Adverse Effect.
11.2.2 Deposits to the Collection Account. Servicer shall not deposit or
otherwise credit, or cause or permit to be so deposited or credited by any
Person, to the Collection Account cash or cash proceeds other than Collections
with respect to the Contracts, proceeds of the Collateral and payments under
Interest Rate Swaps.
11.2.3 Change in Business or Credit Policy. Servicer shall not make any
change in the character of its business or in the Credit Policy which would
impair in any material respect the collectibility of a significant portion of
the Contracts.
11.2.4 Amendment of Contracts. Servicer shall not amend, modify or waive
any provision of any Contract except in accordance with Section 13.2(b).
ARTICLE XII
TERMINATION EVENTS AND THEIR EFFECT; REMEDIES
A. SECTION 12.1 Termination Events. Each of the following shall constitute
a Termination Event under this Agreement:
12.1.1 Non-Payment, Etc. Seller shall fail to make any payment or deposit
to be made by it hereunder when due.
12.1.2 Non-Compliance with Other Provisions. Seller shall fail to perform
or observe in any material respect any other term, covenant or agreement
contained in this Agreement, or any other Transaction Document on its part to be
performed or observed and any such failure shall remain unremedied for ten
Business Days after knowledge thereof or after written notice thereof shall have
been given by the Agent or Purchaser to Seller.
12.1.3 Breach of Representations and Warranties. Any representation or
warranty of Seller made or deemed to have been made hereunder or in any other
Transaction Document or any other writing or certificate furnished by or on
behalf of Seller to the Agent or Purchaser for purposes of or in connection with
this Agreement or any other Transaction Document (including any certificates
delivered pursuant to Section 11.1.8(a) or (b) and any Monthly Report delivered
pursuant to Section 11.1.8(c)) shall prove to have been false or incorrect in
any material respect when made or deemed to have been made and, if such
circumstance is capable of cure, it shall continue to be incorrect for more than
ten Business Days after knowledge thereof or written notice shall have been
given by the Agent or Purchaser to Seller; provided that if such representation
or warranty relates to a Contract that is repurchased by Seller in accordance
with this Agreement, then such inaccuracy shall not constitute a Termination
Event.
12.1.4 Non-Payment of Other Indebtedness, etc. A default shall occur in the
payment of principal when due of any Indebtedness of LINC or any Subsidiary
thereof having a principal amount in excess of $1,000,000, and such default
continues after the expiration of any applicable grace period, or any other
default shall occur with respect to such Indebtedness and shall continue after
the applicable grace period, if any, if the effect of such default is to cause
or permit, if unremedied, uncured or unwaived, the holder or trustee of such
indebtedness to accelerate the maturity of any such indebtedness (including by
way of any consensual re-scheduling of principal payments), or any such
Indebtedness shall be declared to be due and payable or required to be prepaid
(other than by regularly scheduled required prepayments) prior to the stated
maturity thereof.
12.1.5 Bankruptcy. An Event of Bankruptcy shall have occurred and remained
continuing with respect to Seller.
12.1.6 Purchase and Sale Termination Event. A Purchase and Sale Termination
Event shall have occurred and be continuing.
12.1.7 Ratio. The average of the Delinquency Ratios for any three
consecutive calendar months exceeds 8%.
12.1.8 Material Adverse Effect. The warranty in Section 8.8(b) or 9.7(b)
shall not be true at any time.
12.1.9. Tax Liens; ERISA Liens. The Internal Revenue Service shall file
notice of a lien pursuant to Section 6323 of the Internal Revenue Code with
regard to any of the assets of Seller, and such lien shall not have been
released within 5 days, or the Pension Benefit Guaranty Corporation shall file
notice of a lien pursuant to Section 4068 of ERISA with regard to any of the
assets of Seller.
12.1.10 Validity of Transaction Documents. (a) Any Transaction Document, or
any lien or security interest granted thereunder, shall (except in accordance
with its terms), in whole or in part, terminate, cease to be effective or cease
to be the legally valid, binding and enforceable obligation of Seller or LINC,
(b) Seller or any other party to the Transaction Documents shall, directly or
indirectly, contest in any manner such effectiveness, validity, binding nature
or enforceability, or (c) any Participation, or any security interest securing
any Obligation, shall, in whole or in part, cease to be a perfected first
priority ownership or security interest; provided that if any such cessation
relates to a Contract repurchased by Seller in accordance with this Agreement,
such event shall not result in a Termination Event.
12.1.11 Change in Control. A Change in Control shall have occurred.
12.1.12 Servicer Termination Event. A Servicer Termination Event shall
occur and be continuing.
12.1.13 Pay-Out Amount Limit. The Capital exceeds the Pay-Out Amount Limit.
SECTION 12.2 Effect of Termination Event.
a) Optional Termination. Upon the occurrence of a Termination Event
(other than a Termination Event described in Section 12.1.5), the Agent
may, and at the request of Purchaser shall, by notice to Seller, declare
the Facility Termination Date to have occurred.
b) Automatic Termination. Upon the occurrence of a Termination Event
described in Section 12.1.5, the Facility Termination Date shall be deemed
to have occurred automatically upon the occurrence of such event.
c) Additional Remedies. Upon the occurrence of a Termination Event,
the Agent and Purchaser, in addition to all other rights and remedies under
this Agreement or otherwise, shall have all other rights and remedies
provided under the UCC and other applicable laws, which rights shall be
cumulative. Without limiting the foregoing or the general applicability of
Article XII hereof, (i) the occurrence of a Termination Event shall not
deny Purchaser any remedy in addition to termination of the Facility to
which Purchaser may be otherwise appropriately entitled, whether at law or
in equity, and (ii) Purchaser may elect to assign any Participation owned
by Purchaser to an assignee following the occurrence of any Termination
Event.
ARTICLE XIII
THE SERVICER
SECTION 13.1 LINC as Initial Servicer. Initial Servicer. The servicing,
administering and collection of the Contracts shall be conducted by the Person
designated from time to time as Servicer hereunder (the "Servicer"). Until the
Agent gives notice to the Servicer (the "Successor Notice"), which notice may be
given at any time by the Agent after and during the continuation of a Servicer
Termination Event, LINC is hereby designated as, and hereby agrees to perform
the duties and obligations of, the Servicer pursuant to the terms hereof and the
other Transaction Documents.
b) Successor Notice. Upon LINC's receipt of a Successor Notice, LINC agrees
that it will terminate its activities as Servicer hereunder in a manner so as to
facilitate the transition of the performance of such activities to the new
Servicer, and the Agent (or its designee) shall assume each and all of LINC's
obligations hereunder to service and administer the Contracts, on the terms and
subject to the conditions herein set forth and LINC shall use its reasonable
efforts to assist the Agent (or its designee) in assuming such obligations.
c) Subcontracts. Servicer, with the prior consent of the Agent, may
subcontract with any other Person for servicing, administering or collecting the
Collateral, provided that Servicer may, without the consent of the Agent,
subcontract with any Person from whom it acquired a portfolio of Contracts (or
an Affiliate of such Person) for servicing, administering and/or collecting such
Contracts, so long as such Person is required to turn over to Servicer all
Collections received by such Person within two Business Days of receipt;
provided, further that Servicer shall remain liable for the performance of the
duties and obligations of Servicer pursuant to the terms hereof and that such
subcontract may be terminated upon the appointment of any successor Servicer
hereunder.
SECTION 13.2 Duties of Servicer. Appointment; General Duties. Each of
Seller, Purchaser and the Agent hereby appoints as its agent, the Servicer, as
from time to time designated pursuant to Section 13.1, to enforce its rights and
interests in and under the Contracts. The Servicer shall take or cause to be
taken all such actions as may be necessary or advisable to collect each Contract
from time to time, all in accordance in all material respects with applicable
laws, rules and regulations, with reasonable care and diligence, and in
accordance in all material respects with the Credit Policy. The Servicer shall
enforce all claims against the originator or seller of any Contract in a timely
manner, and in accordance with the Credit Policy and with the Servicer's
customary practices.
b) Modification and Early Termination of Contracts. So long as no Servicer
Termination Event shall have occurred and be continuing, LINC, while it is
Servicer, may, in accordance with the Credit Policy, (i) extend the maturity or
adjust the Outstanding Principal Balance of any Defaulted Contract as LINC may
determine to be appropriate to maximize Collections thereof (provided that such
extension or adjustment shall not affect the categorization of such Contract as
a Defaulted Contract); and (ii) adjust the Outstanding Principal Balance of any
Contract to reflect the reductions or cancellations described in the first
clause of Section 4.5. So long as no Servicer Termination Event shall have
occurred and be continuing, Servicer may permit the early termination of any
Contract at the request of the Obligor thereof if Servicer either (i) remits, or
causes Obligor to remit, an amount equal to the Outstanding Principal Balance
thereof to the Collection Amount or (ii) substitutes another Contract that is an
Eligible Contract on the date of such substitution with an Outstanding Principal
Balance at least equal to the Outstanding Principal Balance of such terminated
Contract.
c) Documents and Records. Seller shall deliver to the Servicer, and the
Servicer shall hold in trust, as custodian and bailee, for Seller and Purchaser
in accordance with their respective interests, all documents, instruments and
records (including, without limitation, computer tapes or disks) that evidence
or relate to the Contracts. If any payment due under a Contract is evidenced by
an instrument, Seller and the Servicer agree to promptly deliver the original
thereof, properly endorsed, to the Agent; any payments made thereunder shall be
Collections for all purposes of this Agreement. If requested by the Agent,
Servicer shall deliver all original Contracts and the documents related thereto
to a third-party custodian pursuant to a custodial agreement reasonably
satisfactory in form and substance to the Agent and Seller.
d) Collections. Seller hereby agrees that, after the occurrence and during
the continuance of any Servicer Termination Event, the Agent shall have the
right to instruct the Servicer and the Obligor to deposit all payments in
respect of Collections directly to the Agent on a daily basis.
e) Termination. The Servicer's authorization under this Agreement shall
terminate upon the Final Payoff Date.
SECTION 13.3 Rights of the Agent. At any time that a Servicer Termination
Event has occurred and is continuing, upon at least three (3) Business Days'
prior notice to Seller, the Agent may notify the Obligors, or any of such
Obligors, of the interest of Purchaser.
b) At any time following the designation of a Servicer other than LINC
pursuant to Section 13.1:
(i) The Agent may direct the Obligors or any of them, that payment of
all amounts payable under any Contract be made directly to the Agent
or its designee;
(ii) At the Agent's request and at Seller's expense, (A) Seller shall
give notice of Purchaser's interest to each such Obligor and direct
that payments be made directly to the Agent or its designee and (B)
Seller and the Agent shall appoint a nationally recognized accounting
firm designated by the Agent to allocate, or to verify the Servicer's
allocation of, monies deposited in lock-boxes and accounts into which
Collections are credited or deposited to payments or other proceeds of
Contracts and Contract Assets and to other payments that do not
constitute Collateral;
(iii) At the Agent's request, Seller and Servicer shall (A) assemble
all of the documents, instruments and other records (including,
without limitation, computer programs, tapes and disks) in their
possession which evidence the Contracts, or which are otherwise
necessary or desirable to collect such Contracts, and shall make the
same available to the Agent at a place selected by the Agent or its
designee, and (B) segregate all cash, checks and other instruments
received by it from time to time constituting Collections, in a manner
reasonably acceptable to the Agent and shall remit promptly upon
receipt, all such cash, checks and instruments, duly endorsed or with
duly executed instruments of transfer, to the Agent or its designee;
and
(iv) Each of Seller and Purchaser hereby authorizes the Agent to take
any and all steps in Seller's name and on behalf of Seller and
Purchaser necessary or desirable, in the reasonable determination of
the Agent, to collect all amounts due under any and all Contracts,
including, without limitation, endorsing Seller's name on checks and
other instruments representing Collections and enforcing such
Contracts and disposing of related Equipment.
SECTION 13.4 Responsibilities of Seller. Anything herein to the contrary
notwithstanding:
a) Seller shall perform, or cause to be performed, all of its obligations
under the Contracts and under the other agreements included in, or related to,
the Contract Assets, to the same extent as if an interest had not been conveyed
hereunder and the Agent's exercise of its rights hereunder shall not relieve
Seller from such obligations.
b) Neither the Agent nor Purchaser shall have any obligation or liability
with respect to any Contract, nor shall any of them be obligated to perform any
of the obligations of Seller thereunder.
c) Seller hereby grants to the Servicer an irrevocable power of attorney,
with full power of substitution, coupled with an interest, to take in the name
of Seller all steps necessary or advisable to endorse, negotiate or otherwise
realize on any writing or other right of any kind held or transmitted by Seller
or transmitted or received by Purchaser (whether or not from Seller) in
connection with any Contract.
SECTION 13.5 Further Action. 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 security interest granted
hereunder, or to enable the Purchaser or the Agent to exercise or enforce any of
their respective rights hereunder. Without limiting the generality of the
foregoing, Seller will: (i) upon the request of the Agent, execute and file such
financing or continuation statements, or amendments thereto or assignments
thereof, and such other instruments or notices, as may be necessary or
appropriate; (ii) xxxx conspicuously each Contract with a legend, acceptable to
the Agent, evidencing that such interest has been granted in accordance with
this Agreement; and (iii) xxxx its data processing records evidencing such
Contracts with such legend. Seller hereby authorizes the Agent to file one or
more financing or continuation statements, and amendments thereto and
assignments thereof, relative to all or any of the Contracts now existing or
hereafter arising in the name of Seller. If 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 reasonable expenses of the Agent incurred in connection
therewith shall be payable by Seller.
SECTION 13.6 Application of Collections. Any payment by an Obligor in
respect of any indebtedness (including payments on leases and the Contracts)
owed by it to Seller shall, except as otherwise specified by such Obligor or
otherwise required by contract or law and be applied in accordance with the
Servicer's usual and customary practice.
SECTION 13.7 Servicing Compensation; Costs of Servicing. (a) For its
services hereunder, the Servicer shall be entitled to receive the Servicing Fee
for each Settlement Period, payable on the Settlement Date occurring on the day
immediately following the last day of such Settlement Period in accordance with
Section 4.2. As additional compensation for its services hereunder, the Servicer
shall be entitled to any late fees collected by the Servicer with respect to any
Contract.
(b) All costs of servicing the Contract Assets as required hereunder shall
be borne by the Servicer, provided that the Servicer shall be entitled to
retain, out of any amounts actually recovered by the Servicer with respect to a
Defaulted Contract or any Equipment related thereto, the Servicer's actual
out-of-pocket expenses reasonably incurred in connection therewith.
ARTICLE XIV
THE AGENT
SECTION 14.1 Authorization and Action. Purchaser hereby appoints Fleet as
its Agent for purposes of the Transaction Documents and authorizes Fleet in such
capacity to take such action on its behalf under each Transaction Document and
to exercise such powers hereunder and thereunder as are delegated to Fleet by
the terms hereof and thereof, together with such powers as are reasonably
incidental thereto.
SECTION 14.2 Exculpation. Neither the Agent (acting in such capacity under
the Transaction Documents) nor any of its directors, officers, agents or
employees shall be liable for any action taken or omitted to be taken by it or
them under or in connection with the Transaction Documents, except for its or
their own gross negligence or willful misconduct. Without limiting the
generality of the foregoing, the Agent: (a) may consult with legal counsel
(including counsel for Seller or LINC), independent certified public accountants
and other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (b) makes no warranty or representation to
Purchaser or any other holder of a Participation, and shall not be responsible
to Purchaser or any other holder of a Participation, for any statements,
warranties or representations made by Seller or LINC in or in connection with
any Transaction Document; (c) shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or conditions
of any Transaction Document on the part of Seller, LINC, or Servicer or to
inspect the property (including the books and records) of Seller, LINC, or
Servicer; (d) shall not be responsible to Purchaser or any other holder of a
Participation for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement, any other Transaction
Document or any other instrument or document provided for herein or delivered or
to be delivered hereunder or in connection herewith; and (e) shall incur no
liability under or in respect of any Transaction Document by acting upon any
notice (including notice by telephone), consent, certificate or other instrument
or writing (which may be by facsimile transmission) believed by it to be genuine
and signed or sent by the proper party or parties.
SECTION 14.3 Agent and Affiliates. Fleet and any of its Affiliates may
generally engage in any kind of business with Seller, LINC, Servicer, any
Obligor, any of their respective Affiliates and any Person who may do business
with or own securities of Seller, LINC, Servicer, any Obligor or any of their
respective Affiliates, all as if Fleet were not the Agent and without any duty
to account therefor to Purchaser.
SECTION 14.4 Contract Schedules. The Agent shall at all times maintain a
copy for public inspection during normal business hours of the Contract
Schedules delivered hereunder and under the Purchase and Sale Agreement at its
address set forth on Schedule 18.3 or such other address as it shall notify
Purchaser and Seller of.
ARTICLE XV
ASSIGNMENTS
SECTION 15.1 Restrictions on Assignments. Neither Seller nor Servicer
(except in connection with transactions permitted pursuant to Section 11.2.1)
may assign its rights hereunder or any interest herein without the prior written
consent of the Agent, and Purchaser may not assign its rights hereunder, or any
Participation (or any portion thereof) to any Person without the prior written
consent of Seller (which consent shall not be unreasonably withheld); provided,
however, that Purchaser may assign all or any portion of the Participations (or
a participation therein) to the Liquidity Banks or the Liquidity Agent in
accordance with the Liquidity Agreement and, provided that the Purchaser Rate
shall not increase as a result thereof, to any other commercial paper conduit
administered by Fleet.
Within five Business Days after notice to Seller of any proposed
assignment by Purchaser for which Seller's consent is required, Seller agrees to
advise the Agent of its consent or non-consent thereto. If Seller does not
consent to such assignment, Purchaser may immediately assign the Participations
(or portion thereof) that was subject to such proposal to Fleet, any Liquidity
Bank or any Affiliate of Fleet or any Liquidity Bank. Subject to Section 15.2,
all of the aforementioned assignments shall be upon such terms and conditions as
Purchaser and the assignee may mutually agree.
SECTION 15.2 Documentation. Purchaser shall deliver to each assignee an
assignment, in such form as Purchaser and the related assignee may agree, duly
executed by Purchaser, assigning any such Participation to the assignee, and
Purchaser shall promptly execute and deliver all further instruments and
documents, and take all further action, that the assignee may reasonably
request, in order to perfect, protect or more fully evidence the assignee's
right, title and interest in and to such Participation, and to enable the
assignee to exercise or enforce any rights hereunder.
SECTION 15.3 Rights of Assignee. Upon any assignment of any Participation
from Purchaser pursuant to this Article XV, the respective assignee receiving
such assignment shall have all of the rights of Purchaser hereunder with respect
to such Participation and all references to Purchaser in Article VI shall be
deemed to apply to such assignee.
SECTION 15.4 Notice of Assignment. Purchaser shall provide notice to Seller
of any assignment hereunder by Purchaser to any assignee (other than to a
Liquidity Bank).
ARTICLE XVI
INDEMNIFICATION
SECTION 16.1 General Indemnity of Seller. Without limiting any other rights
which any such Person may have hereunder or under applicable law, Seller hereby
agrees to indemnify the Agent, Purchaser, the Liquidity Banks, the Program
Support Providers, and each of their respective successors, transferees,
participants and assigns and all officers, directors, shareholders, controlling
persons, employees and agents of any of the foregoing (each of the foregoing
Persons being individually called an "Indemnified Party"), forthwith on demand,
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 called "Indemnified Amounts") awarded
against or incurred by any of them arising out of or relating to the failure of
Seller to perform its obligations under any Transaction Document or arising out
of claims asserted against an Indemnified Party relating to the transactions
contemplated thereby or the use of proceeds therefrom, including (without
limitation) in respect of the funding of any Participation or in respect of any
Contract, excluding, however, (a) Indemnified Amounts to the extent resulting
from gross negligence or willful misconduct on the part of any Indemnified
Party, (b) recourse (except as otherwise provided in this Agreement) for credit
losses with respect to the Contracts, (c) any tax based upon or measured by net
income and (d) subject to Section 18.4, normal and customary expenses incurred
in the ordinary course of business in the preparation, execution, delivery and
administration of this Agreement. Without limiting the foregoing, but subject to
the foregoing exclusions, Seller agrees to indemnify each Indemnified Party for
Indemnified Amounts arising out of or relating to:
(i) the sale of any Participation, or the grant of a security interest
to the Purchaser, pursuant to this Agreement;
(ii) the breach of any representation or warranty made by Seller (or
any of its officers) under or in connection with this Agreement or the
other Transaction Documents, any Monthly Report or any other
information, report or certificate delivered by Seller pursuant hereto
or thereto, which shall have been false or incorrect when made or
deemed made;
(iii) the failure by Seller to comply with any applicable law, rule or
regulation with respect to any Contract, or the nonconformity of any
Contract with any such applicable law, rule or regulation, or the
failure by Seller to comply with its obligations hereunder or under
any other Transaction Document;
(iv) the failure to vest and maintain vested in the Purchaser a
first-priority perfected ownership interest in the Portfolio and a
first-priority security interest in all the Collateral, free and clear
of any Adverse Claim, other than an Adverse Claim arising solely as a
result of an act of Purchaser or the Agent, or any assignee of
Purchaser or the Agent, and the failure to vest and maintain vested in
the Seller a first-priority perfected ownership interest in all
Contracts and in the security interests in all related Equipment, free
and clear of any Adverse Claim, other than an Adverse Claim arising
solely as a result of an act of Purchaser or the Agent, or any
assignee thereof;
(v) the failure to file, or any delay in filing, financing statements
or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any
Collateral;
(vi) any dispute, claim, offset or defense of an Obligor to the
payment of any Contract based on such Contract not being a legal,
valid and binding obligation of such Obligor, enforceable against it
in accordance with its terms(other than discharge in bankruptcy or
resulting from credit matters);
(vii) any claim in connection with any Equipment related to the
Contracts; or
(viii) any tax or governmental fee or charge (but not including taxes
upon or measured by net income), all interest and penalties thereon or
with respect thereto, and all out-of-pocket costs and expenses,
including the reasonable fees and expenses of counsel in defending
against the same, which may arise by reason of the making, maintenance
or funding, directly or indirectly, of any Participation, or any other
interest in the Collateral.
SECTION 16.2 Indemnity by Servicer. Without limiting any other rights which
any such Person may have hereunder or under applicable law, Servicer hereby
agrees to indemnify each Indemnified Party, forthwith on demand, from and
against any and all Indemnified Amounts awarded against or incurred by any of
them arising out of or relating to (i) the failure of Servicer to perform its
obligations under any Transaction Document, (ii) the inaccuracy of any
representation or warranty made by Servicer in any Transaction Document, or in
any Monthly Report or any other information, report or certificate delivered by
Servicer pursuant hereto or thereto, (iii) the failure by Servicer to comply
with any applicable law, rule or regulation with respect to any Contract or the
servicing thereof or (iv) the commingling of any Collections.
SECTION 16.3 Contribution. If for any reason (other than the exclusions (a)
and (b) set forth in the first paragraph of Section 16.1) the indemnification
provided above in Section 16.1 or 16.2 is unavailable to an Indemnified Party or
is insufficient to hold an Indemnified Party harmless, then Seller or Servicer,
as the case may be, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect not only the relative benefits received
by such Indemnified Party, on the one hand, and Seller or Servicer, as the case
may be, on the other hand, but also the relative fault of such Indemnified
Party, on the one hand, and Seller or Servicer, as the case may be, on the other
hand, as well as any other relevant equitable considerations.
ARTICLE XVII
SECURITY INTEREST
SECTION 17.1 Grant of Security Interest. Each of the parties hereto
expressly intends that the transfer of the Participation to Purchaser hereunder
is a complete and absolute sale and transfer. In the event that a court shall
determine that, notwithstanding the intent of the parties, such transfer does
not constitute a sale, this Agreement shall be a security agreement, and to
secure the prompt payment and performance of all Obligations of Seller arising
in connection with this Agreement, whether now or hereafter existing, due or to
become due, direct or indirect, or absolute or contingent, including, without
limitation, all Indemnified Amounts, payments on account of Collections received
or deemed to be received and fees, Seller hereby assigns and grants to Purchaser
a first priority security interest in all of Seller's right, title and interest
in, to and under all of the following property, whether now or hereafter
existing (the "Collateral"): (a) all Contracts and other Contract Assets, all
Collections with respect to, and other proceeds of, such Contracts and Contract
Assets; (b) all of Seller's rights, remedies, powers and privileges under, or in
respect of, the Purchase and Sale Agreement; (c) all Lock-box Accounts, the
Collection Account, the Reserve Account, all funds on deposit in each of the
foregoing accounts and all certificates and instruments, if any, from time to
time evidencing such accounts and funds on deposit therein, all investments made
with such funds, all claims thereunder or in connection therewith, and all
interest, dividends, moneys, instruments, securities and other property from
time to time received, receivable or otherwise distributed in respect or in
exchange for any or all of the foregoing; and (d) all proceeds and amounts
received or receivable by Seller under any or all of the foregoing. This
Agreement shall constitute a security agreement under applicable law with regard
to security interest granted pursuant to this Section 17.1.
SECTION 17.2 Further Assurances. 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 Participations purchased by
Purchaser hereunder, or to enable any of Purchaser, any other holder of a
Participation or the Agent to exercise or enforce any of their respective rights
hereunder. Without limiting the generality of the foregoing, Seller will upon
the request of the Agent execute and file such financing or continuation
statements, or amendments thereto or assignments thereof, and such other
instruments or notices, as may be reasonably necessary or appropriate. Seller
hereby authorizes the Agent to file one or more financing or continuation
statements, and amendments thereto and assignments thereof, relative to all or
any of the Contracts and other Collateral now existing or hereafter arising in
the name of Seller. If Seller fails to perform any of its agreements or
obligations under this Section 17.2, 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
Seller as provided in Section 18.4. The provisions of this Section 17.2 shall
apply to the security interest granted under Section 17.1 as well as to the
Purchase and all Participations hereunder.
SECTION 17.3 Remedies. Upon the occurrence of a Termination Event,
Purchaser shall have, with respect to the collateral granted pursuant to Section
17.1, and in addition to all other rights and remedies available to Purchaser or
the Agent under this Agreement or other applicable law, all the rights and
remedies of a secured party upon default under the UCC.
ARTICLE XVIII
MISCELLANEOUS
SECTION 18.1 No Waiver; Remedies. No failure on the part of Purchaser, the
Agent, any Indemnified Party or any Affected Party to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by any of them of any right,
power or remedy hereunder preclude any other or further exercise thereof, or the
exercise of any other right, power or remedy. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law. Without limiting
the foregoing, each of Fleet and the Liquidity Banks is hereby authorized by
Seller at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by Fleet and the Liquidity Banks to or for the credit or the account
of Seller, now or hereafter existing under this Agreement, to the Agent, any
Affected Party, any Indemnified Party or Purchaser or their respective
successors and assigns.
SECTION 18.2 Amendments, Etc. No amendment, modification or waiver of, or
consent with respect to, any provision of this Agreement and any Schedules
hereto shall in any event be effective unless the same shall be in writing and
signed and delivered by (a) Seller, Servicer, the Agent and Purchaser (with
respect to an amendment), or (b) the Agent and Purchaser (with respect to a
waiver or consent by them) or Seller or Servicer (with respect to a waiver or
consent by it), as the case may be, and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
SECTION 18.3 Notices, Etc. All notices and other communications provided
for hereunder shall, unless otherwise stated herein, be in writing (including
facsimile communication) and shall be personally delivered or sent by certified
mail, postage prepaid, or by facsimile, to the intended party at the address or
facsimile number of such party opposite its name on Schedule 18.3, or at such
other address or facsimile number as shall be designated by such party in a
written notice to the other parties hereto. All such notices and communications
shall be effective (a) if personally delivered, when received, (b) if sent by
certified mail, three Business Days after having been deposited in the mail,
postage prepaid, (c) if sent by overnight courier, one Business Day after having
been given to such courier and (d) if transmitted by facsimile, when sent,
receipt confirmed by telephone or electronic means, except that notices and
communications pursuant to Section 2.3 shall not be effective until received.
SECTION 18.4 Costs, Expenses and Taxes. In addition to its obligations
under Section 16.1, Seller agrees to pay on demand:
(a) (i) all reasonable costs and expenses incurred by the Agent, Purchaser,
the Liquidity Banks and the Program Support Providers in connection with the
negotiation, preparation, execution and delivery of this Agreement the other
Transaction Documents (including any amendments or modifications or of
supplements to the Program Documents entered into directly related to this
Agreement) and any amendments, consents or waivers executed in connection
therewith, including, without limitation the reasonable fees and expenses of
counsel to any of such Persons incurred in connection with any of the foregoing
or in advising such Persons as to their respective rights and remedies under any
of the Transaction Documents or (to the extent directly related to this
Agreement) the Program Documents and all reasonable out-of-pocket expenses
(including reasonable fees and expenses of independent accountants) incurred in
connection with any audit of Seller's or Servicer's books and records permitted
hereunder and all costs and expenses incurred by the Agent, Purchaser, the
Liquidity Banks and the Program Support Providers in connection with the
enforcement, or any actual or claimed breach, of this Agreement, the other
Transaction Documents and, to the extent directly related to this Agreement, the
Program Documents (including any amendments or modifications of or supplements
to the Program Documents directly related to this Agreement), including, without
limitation, the reasonable fees and expenses of counsel to any of such Persons
incurred in connection therewith; and
b) all stamp and other taxes and fees payable or determined to be payable
in connection with the execution, delivery, filing and recording of this
Agreement, the other Transaction Documents, or (to the extent directly related
to this Agreement) the Program Documents, and Seller agrees to indemnify each
Indemnified Party against any liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes and fees.
SECTION 18.5 Binding Effect; Survival. This Agreement shall be binding upon
and inure to the benefit of Seller, Purchaser, the Agent and their respective
successors and assigns, and the provisions of Article VI and Article XVI shall
inure to the benefit of the Affected Parties and the Indemnified Parties,
respectively, and their respective successors and assigns; provided, however,
that nothing in the foregoing shall be deemed to authorize any assignment not
permitted by Article XV. 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 such time after the Final Payoff
Date. The rights and remedies with respect to any breach of any representation
and warranty made by Seller or Servicer pursuant hereto and the indemnification
and payment provisions of Article XVI and Article VI, Sections 18.4 and 18.12
shall be continuing and shall survive any termination of this Agreement and any
termination of Servicer's rights to act as Servicer hereunder or under any other
Transaction Document.
SECTION 18.6 Captions and Cross References. The various captions
(including, without limitation, the table of contents) in this Agreement are
provided solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Agreement. Unless otherwise indicated,
references in this Agreement to any Section, Appendix, Schedule or Exhibit are
to such Section of or Appendix, Schedule or Exhibit to this Agreement, as the
case may be, and references in any Section, subsection, or clause to any
subsection, clause or subclause are to such subsection, clause or subclause of
such Section, subsection or clause.
SECTION 18.7 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 18.8 Governing Law. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO ANY
OTHERWISE APPLICABLE CONFLICT OF LAW PRINCIPLES THEREOF.
SECTION 18.9 Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
but all of which shall constitute together but one and the same agreement.
SECTION 18.10 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF SELLER, THE AGENT, PURCHASER OR ANY OTHER AFFECTED PARTY.
EACH OF SERVICER AND SELLER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL
AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF
EACH OTHER TRANSACTION DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION
IS A MATERIAL INDUCEMENT FOR THE AGENT AND PURCHASER ENTERING INTO THIS
AGREEMENT AND EACH SUCH OTHER TRANSACTION DOCUMENT.
SECTION 18.11 Recourse to Directors or Officers; Limited Recourse. The
obligations of Purchaser under this Agreement are solely the obligations of
Purchaser. No recourse shall be had for the payment of any amount owing in
respect to this Agreement or for the payment of any fee hereunder or for any
other obligation or claim arising out of or based upon this Agreement against
any member of the Purchaser. The obligations of Seller under this Agreement are
solely the corporate obligations of Seller. No recourse shall be had for the
payment of any claim against Seller arising out of or based upon this Agreement
against any stockholder of Seller. The parties hereto agree that Purchaser shall
have no obligation to make any payments hereunder (collectively, "Purchaser
Payments"), and that such Purchaser Payments shall not constitute a claim
against the Purchaser as defined in ss.101 of the Bankruptcy Code, unless and
until Purchaser has amounts sufficient to pay such Purchaser Payments and such
amounts are not required to repay Commercial Paper Notes or loans to Purchaser
funded by Commercial Paper Notes.
SECTION 18.12 No Proceedings. (a) Purchaser. Each of Servicer, the Agent
and Seller hereby agree that it will not institute against Purchaser, or join
any other Person in instituting against Purchaser, any insolvency proceeding
(namely, any proceeding of the type referred to in the definition of Event of
Bankruptcy) so long as any Commercial Paper Notes shall be outstanding and there
shall not have elapsed one year plus one day since the last day on which any
such Commercial Paper Notes shall be outstanding.
(b) Seller. LINC hereby agrees that it will not institute against
Seller, or join any other Person in instituting against Seller, any insolvency
proceeding (namely, a proceeding of the type referred to in the definition in
"Event of Bankruptcy") so long as there shall not have elapsed one year plus one
day since the last day on which any Capital was outstanding under the this
Agreement.
SECTION 18.13 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS EXECUTED AND DELIVERED HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
[signature pages begin on next page]
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
LINC RECEIVABLES 1999 CORPORATION,
as Seller
/s/ Xxxxxx X. Xxxxxxxxx
By_________________________________
Xxxxxx X. Xxxxxxxxx
Name:____________________________
Vice President
Title:___________________________
LINC CAPITAL, INC., as initial Servicer
/s/ Xxxxxx X. Xxxxxxxxx
By_________________________________
Xxxxxx X. Xxxxxxxxx
Name:____________________________
Vice President
Title:___________________________
BLUE KEEL FUNDING, LLC, as Purchaser
/s/ Xxxxx X. Xxxxx
By_________________________________
Xxxxx X. Xxxxx
Name:____________________________
Vice President
Title:___________________________
FLEET BANK, N.A., as Agent
/s/ Xxxxxx Xxxxx
By_________________________________
Xxxxxx Xxxxx
Name:____________________________
Vice President
Title:___________________________
