AMENDED AND RESTATED
RECEIVABLES PURCHASE AND SERVICING AGREEMENT
Dated as of September 27, 1996
by and among
MERISEL CAPITAL FUNDING, INC.,
as Seller,
REDWOOD RECEIVABLES CORPORATION,
as Purchaser,
MERISEL AMERICAS, INC.,
as Servicer
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Operating Agent and Collateral Agent
AMENDED AND RESTATED RECEIVABLES PURCHASE AND SERVICING
AGREEMENT, dated as of September 27, 1996 (the "Agreement") by
and among MERISEL CAPITAL FUNDING, INC., a Delaware corporation
(the "Seller"), REDWOOD RECEIVABLES CORPORATION, a Delaware
corporation, as Purchaser (as such, together with its successors
and assigns, the "Purchaser"), GENERAL ELECTRIC CAPITAL
CORPORATION, in its capacity as operating agent hereunder (as
such, together with its successors and assigns, the "Operating
Agent") and in its capacity as Collateral Agent for the Purchaser
Secured Parties (as such, together with its successors and
assigns, the "Collateral Agent"), and MERISEL AMERICAS, INC., a
Delaware corporation, as servicer hereunder (as such, together
with its successors and permitted assigns, the "Servicer").
RECITALS
A. The Seller, the Purchaser, the Operating Agent,
the Collateral Agent and the Servicer entered into a Receivables
Purchase and Servicing Agreement, dated as of October 2, 1995 (
the "Initial Receivables Purchase and Servicing Agreement").
B. The Seller, the Purchaser, the Operating Agent,
the Collateral Agent and the Servicer desire to enter into an
amendment and restatement of the Initial Receivables Purchase
Agreement pursuant to the terms and conditions set forth herein.
C. The Seller is a wholly-owned bankruptcy remote
Subsidiary of the Originator.
D. The Seller has been formed for the sole purpose of
purchasing or otherwise acquiring certain trade receivables
originated by Merisel, Inc., the Originator and/or their
subsidiaries.
E. The Seller intends that such trade receivables
shall be purchased by or contributed to the Seller pursuant to
the Receivables Transfer Agreement, dated as of October 2, 1995,
as amended or restated from time to time (the "Transfer
Agreement"), by and among the Originator and the Seller.
F. The Seller and the Purchaser intend that the
Purchaser purchase the Receivables.
G. The Operating Agent has been requested and is
willing to act as operating agent on behalf of the Purchaser in
connection with the making and financing of such advances.
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H. In order to effectuate the purposes of this
Agreement, the Purchaser and the Operating Agent desire that a
servicer be appointed to perform certain servicing,
administrative and collection functions in respect of the
receivables acquired by the Purchaser under this Agreement.
I. The Originator has been requested and is willing
to act as the Servicer.
NOW, THEREFORE, the parties agree as follows:
ARTICLE
DEFINITIONS AND INTERPRETATION
Section 1.01. Definitions. Except as otherwise expressly
provided herein or unless the context otherwise requires,
capitalized terms not otherwise defined herein shall have the
meanings assigned to such terms in Annex X hereto, which is
incorporated by reference herein. All other capitalized terms
used herein shall have the meanings specified herein.
Section 1.02. Other Terms and Interpretation. All other
terms and the interpretation of this Agreement shall be as set
out in Annex X hereto.
ARTICLE
AMOUNTS AND TERMS OF THE PURCHASES
Section 2.01. Purchases. On the terms and conditions
hereinafter set forth, the Purchaser shall purchase Transferred
Receivables (each, a "Purchase") from the Seller from time to
time during the Revolving Period. Under no circumstances shall
the Purchaser make any Purchase if, after giving effect to such
Purchase, the aggregate outstanding Capital Investment would
exceed the Availability. The aggregate price for each such
Purchase shall consist of the Cash Purchase Price and the
Deferred Purchase Price.
Section 2.02. Optional Changes in Purchase Limit.
(a) The Seller may, not more than twice during each
calendar year, reduce the Maximum Purchase Limit permanently;
provided that (i) the Seller shall give notice of such reduction
to the Purchaser in the form of Exhibit A-2, (ii) any partial
reduction of the Maximum Purchase Limit shall be in an amount
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equal to Five Million Dollars ($5,000,000) or an integral
multiple thereof, and (iii) no such reduction shall reduce the
Maximum Purchase Limit below Capital Investment.
(b) The Seller shall be entitled at its option to
terminate the Maximum Purchase Limit, provided that the Purchaser
shall be given no less than 90 days' prior notice by the Seller
of such termination in the form of Exhibit A-3. Any such
termination shall be permanent and irrevocable.
(c) Each written notice required to be delivered
pursuant to clauses (a) and (b) above shall be irrevocable and
shall be effective only if received by the Purchaser and the
Operating Agent not later than 5:00 p.m., New York City time on
the Business Day prior to the date of the related termination or
reduction. Each such notice of termination or reduction shall
specify the amount thereof.
Section 2.03. Notices Relating to Purchases.
(a) As directed by the Operating Agent, but no later
than 11:00 a.m. each Business Day with respect to the period to
and including the commencement of the prior business Day, the
Seller shall file with the Operating Agent an Investment Base
Certificate and, upon request, copies of all applicable Request
Notices under the Transfer Agreement delivered since the date of
the most recent Investment Base Certificate filed with the
Operating Agent; provided, however, that if, upon six months
from the date hereof, no event has occurred and is continuing
which constitutes a Termination Event or would constitute a
Termination Event but for the requirement that notice be given or
time elapse or both, then the Seller shall file an Investment
Base Certificate with the Operating Agent no later than 11:00
a.m. on the third Business Day of each week with respect to the
period to and including the close of business as of the last
Business Day of the preceding calendar week and, upon request,
copies of all applicable Request Notices under the Transfer
Agreement delivered since the date of the most recent Investment
Base Certificate filed with the Operating Agent. Availability
will be calculated by the Operating Agent based on the most
recent Investment Base Certificate delivered to the Purchaser and
the Operating Agent and such other information as may then be
available to the Operating Agent including, without limitation,
any information from any audit performed pursuant to Section
5.01(f), which information may be used in calculating
Availability in accordance with the definition thereof.
(b) The Seller shall give the Purchaser and the
Operating Agent written notice of each Purchase resulting in an
increase in Capital Investment (in each case, a "Seller Notice").
Each such written notice shall be substantially in the form of
Exhibit A-1, shall be irrevocable and shall be effective only if
received by the Purchaser and the Operating Agent not later than
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2:00 p.m., New York City time on the Business Day prior to the
date of the related Purchase. Each such notice requesting a
Purchase shall specify the amount by which the Seller wishes the
Capital Investment of the Purchaser to be increased and the
Purchase Date (which shall be a Business Day).
Section 2.04. Conveyance of Receivables.
(a) On the Effective Date, the Seller will complete,
execute and deliver a Purchase Assignment in the form of Exhibit
B to the Purchaser.
(b) (i) Following receipt of a Seller Notice, subject
to the satisfaction of the conditions set forth in Section 3.02,
the Purchaser shall make available to or on behalf of the Seller,
in same day funds, in accordance with the Seller's instructions
(after taking into account amounts on deposit in the Collection
Account which may be applied to any Capital Investment pursuant
to Section 6.03(a)(iii)) the lesser of the amount specified in
such Seller Notice and Capital Investment Available.
(ii) On each Business Day during the Revolving
Period, subject to the terms of Section 6.03 hereof, the
Purchaser shall make available to or on behalf of the Seller, in
same day funds, amounts on deposit in the Collection Account
which may be disbursed to the Seller as payment for the
Transferred Receivables.
(c) Effective on the date of each Purchase, the
ownership of all Transferred Receivables (including Transferred
Receivables transferred prior to the Purchase Date) will be
vested in the Purchaser. The Seller shall not take any action
inconsistent with such ownership and shall not claim any
ownership interest in any such Transferred Receivable. The
Seller shall indicate in its Records that ownership of the
Transferred Receivable is held by the Purchaser. In addition,
the Seller shall respond to any inquiries with respect to
ownership of a Transferred Receivable by stating that it is no
longer the owner of such Transferred Receivable and that
ownership of such Transferred Receivable is held by the
Purchaser. Documents relating to the Transferred Receivables
shall be held in trust by the Seller and the Servicer, for the
benefit of the Purchaser as the owner thereof, and possession of
any incident relating to the Transferred Receivables so retained
is for the sole purpose of facilitating the servicing of the
Transferred Receivables. Such retention and possession is at the
will of the Purchaser and in a custodial capacity for the benefit
of the Purchaser only.
(d) If the Originator is required to repurchase
Transferred Receivables from the Seller pursuant to Section
4.04(i) of the Transfer Agreement, the Purchaser shall sell such
Transferred Receivables to the Seller for cash in an amount equal
to the Outstanding Balance of such Transferred Receivables.
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Section 2.05. Facility Termination Date. Notwithstanding
anything to the contrary herein, on and after the Facility
Termination Date, the Purchaser shall have no obligation to
purchase any additional Receivables.
Section 2.06. Daily Yield.
(a) The Seller shall pay to the Purchaser, as set
forth in Sections 6.03, 6.04 and 6.05, Daily Yield on the Capital
Investment of the Purchaser from time to time.
(b) Notwithstanding the foregoing, the Seller shall
pay interest on unpaid Daily Yield and on any other amount
payable by the Seller hereunder (to the extent permitted by law)
that shall not be paid in full when due (whether at stated
maturity, by acceleration or otherwise) for the period commencing
on the due date thereof to (but excluding) the date the same is
paid in full at the applicable Daily Yield Rate.
Section 2.07. Fees.
(a) The Seller shall pay to the Purchaser the fees set
forth in the Fee Letter.
(b) On each Settlement Date, the Seller shall pay to
the Servicer, the Servicing Fee, or to the Successor Servicer,
the Successor Servicing Fees and Expenses.
Section 2.08. Time and Method of Payments. Subject to the
provisions of Sections 6.03, 6.04 and 6.05, all payments of
principal, interest, fees and other amounts payable by the Seller
hereunder shall be made in dollars, in immediately available
funds, to the Purchaser not later than 3:00 p.m., New York City
time, on the date on which such payment shall become due. Any
such payment made on such date but after such time shall be
deemed to have been made on, and Daily Yield shall continue to
accrue and be payable thereon until, the next succeeding Business
Day. If any payment becomes due on a day other than a Business
Day, such payment may be made on the next succeeding Business Day
and such extension shall be included in computing Daily Yield in
connection with such payment. All payments hereunder shall be
made without setoff or counterclaim and in such amounts as may be
necessary in order that all such payments shall not be less than
the amounts otherwise specified to be paid under this Agreement
(after withholding for or on account of any present or future
taxes, levies, imposts, duties or other similar charges of
whatever nature imposed upon an Affected Party by any
Governmental Authority, other than any tax on or measured by the
net income of the Affected Party to which any such payment is due
pursuant to applicable foreign, federal, state and local income
tax laws).
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Section 2.09. Further Action Evidencing Purchases.
(a) The Seller agrees that, from time to time, at its
expense, it will promptly execute and deliver all further
instruments and documents, and take all further action, that may
be necessary or appropriate, in the reasonable opinion of the
Purchaser, or that the Purchaser or the Operating Agent may
reasonably request, in order to perfect, protect or more fully
evidence the transfer of ownership of Transferred Receivables or
to enable the Purchaser to exercise or enforce any of its rights
hereunder or under any Purchase Assignment. Without limiting the
generality of the foregoing, the Seller will, upon the reasonable
request of the Purchaser, (i) 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, or as the Purchaser may request, (ii)
xxxx, or cause the Servicer to xxxx, conspicuously each invoice
evidencing each Transferred Receivable with a legend, acceptable
to the Purchaser, evidencing that the Purchaser has purchased all
right and title thereto and interest therein as provided in the
Transfer Agreement, (iii) send notification to Obligors as to the
transfer of Transferred Receivables, and (iv) xxxx, or cause the
Servicer to xxxx, its master data processing records evidencing
such Transferred Receivables with such legend.
(b) The Seller hereby authorizes the Purchaser to file
one or more financing or continuation statements, and amendments
thereto and assignments thereof, relating to all or any of the
Transferred Receivables and Collections with respect thereto
without the signature of the Seller where permitted by law. A
carbon, photographic or other reproduction of this Agreement or
any notice or financing statement covering the Transferred
Receivables or any part thereof shall be sufficient as a notice
or financing statement where permitted by law. The Purchaser
will promptly send to the Seller after receipt of any
acknowledgment copies from the appropriate governmental agency
any financing or continuation statements thereto which it files
without the signature of the Seller except, in the case of
filings of copies of this Agreement as financing statements, the
Purchaser will promptly send the Seller after receipt from the
appropriate governmental agency the filing or recordation
information with respect thereto.
Section 2.10. Additional Costs; Capital Requirements.
(a) In the event that any existing or future law,
regulation or guideline, or interpretation thereof, by any court
or administrative or governmental authority charged with the
administration thereof, or compliance by any Affected Party with
any request or directive (whether or not having the force of law)
of any such authority shall impose, modify or deem applicable or
result in the application of, any capital maintenance, capital
ratio or similar requirement against commitments made by any
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Affected Party under this Agreement or a Program Document, and
the result of any event referred to above is to impose upon any
Affected Party or increase any capital requirement applicable as
a result of the making or maintenance of, such Affected Party's
commitment (which imposition of capital requirements may be
determined by each Affected Party's reasonable allocation of the
aggregate of such capital increases or impositions), then, upon
demand made by the Operating Agent on behalf of such Affected
Party as promptly as practicable after it obtains knowledge that
such law, regulation, guideline, interpretation, request or
directive exists and determines to make such demand, the Seller
shall immediately pay to the Collateral Agent on behalf of such
Affected Party from time to time as specified by the Operating
Agent, additional amounts which shall be sufficient to compensate
such Affected Party for the Seller's Share of such imposition of
or increase in capital requirements together with interest on
each such amount from the date demanded until payment in full
thereof at the Daily Yield Rate. A certificate setting forth in
reasonable detail the amount necessary to compensate such
Affected Party as a result of an imposition of or increase in
capital requirements submitted by the Operating Agent to the
Seller shall be conclusive, absent manifest error, as to the
amount thereof.
(b) In the event that any Regulatory Change shall:
(i) change the basis of taxation of any amounts payable to any
Affected Party in respect of any Purchases, Capital Investment,
LOC Draws, Liquidity Loans or Transaction Liquidity Loans (other
than taxes imposed on the overall net income of such Affected
Party for any such Purchases, Capital Investment, LOC Draws,
Liquidity Loans or Transaction Liquidity Loans by the United
States of America or the jurisdiction in which such Affected
Party has its principal office); (ii) impose or modify any
reserve, Federal Deposit Insurance Corporation premium or
assessment, special deposit or similar requirements relating to
any extensions of credit or other assets of, or any deposits with
or other liabilities of, such Affected Party; or (iii) impose any
other conditions affecting this Agreement in respect of
Purchases, Capital Investment, LOC Draws, Liquidity Loans, and
Transaction Liquidity Loans (or any of such extensions of credit,
assets, deposits or liabilities); and the result of any event
referred to in clause (i), (ii) or (iii) above shall be to
increase such Affected Party's costs of making or maintaining any
Purchases, Capital Investment, LOC Draws, Liquidity Loans or
Transaction Liquidity Loans or its commitment under a Program
Document, or to reduce any amount receivable by such Affected
Party hereunder in respect of any of its Purchases, Capital
Investment, LOC Draws and Liquidity Loans or its commitment (such
increases in costs and reductions in amounts receivable are
hereinafter referred to as "Additional Costs") then, upon demand
made by the Operating Agent on behalf of such Affected Party, as
promptly as practicable after it obtains knowledge that such a
Regulatory Change exists and determines to make such demand, the
Seller shall pay to the Collateral Agent on behalf of such
Affected Party, from time to time as specified by the Operating
Agent, additional commitment fees or other amounts which shall be
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sufficient to compensate such Affected Party for the Seller's
Share of such increased cost or reduction in amounts receivable
by such Affected Party from the date of such change, together
with interest on each such amount from the date demanded until
payment in full thereof at the Daily Base Yield Rate.
(c) Determinations by any Affected Party for purposes
of this Section 2.10 of the effect of any Regulatory Change on
its costs of making or maintaining Purchases, Capital Investment,
LOC Draws, Liquidity Loans or Transaction Liquidity Loans or on
amounts receivable by it in respect of Purchases, LOC Draws,
Liquidity Loans, Transaction Liquidity Loans and of the
additional amounts required to compensate such Affected Party in
respect of any Additional Costs, shall be set forth in a written
notice to the Seller in reasonable detail and shall be
conclusive, absent manifest error.
Section 2.11. Breakage Costs. The Seller shall pay to the
Collateral Agent for the account of the Purchaser, upon the
request of the Purchaser, such amount or amounts as shall
compensate the Purchaser for any loss (excluding loss of profit),
cost or expense incurred by the Purchaser (as determined by the
Purchaser) as a result of any repayment of a Purchase (and
interest thereon) other than on the maturity date of the
Commercial Paper funding such Purchase, such compensation to
include, without limitation, an amount equal to any loss or
expense suffered by the Purchaser during the period from the date
of receipt of such repayment to (but excluding) the maturity date
of such Commercial Paper, if the rate of interest obtainable by
the Purchaser upon the redeployment of an amount of funds equal
to the amount of such repayment is less than the rate of interest
applicable to such Commercial Paper (such expense to be referred
to as "Breakage Costs"). The determination by the Purchaser of
the amount of any such loss or expense shall be set forth in a
written notice to the Seller in reasonable detail and shall be
conclusive, absent manifest error.
Section 2.12. Purchase Excess. After completion of the
disbursements specified in Subsections 6.03(a), (b) and (c), the
Operating Agent shall notify the Seller of any remaining Purchase
Excess, and the Seller shall deposit the amount of such Purchase
Excess remaining in the Collection Account by 11:30 a.m. on the
following Business Day.
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ARTICLE III
CONDITIONS TO PURCHASE
Section 3.01. Conditions Precedent to Effectiveness of
Agreement. The effectiveness of this Agreement is subject to the
condition precedent that the Purchaser, the Operating Agent and
the Collateral Agent shall each have received on or before the
Effective Date the following, in form and substance satisfactory
to the Operating Agent:
(a) An executed copy of the Transfer Agreement.
(b) A certificate from an officer of the Originator in
the form of Exhibit D (Solvency Certificate as to Seller).
(c) With respect to the Seller:
(i) the certificate or articles of incorporation
of the Seller certified, as of a date no more than ten (10)
days prior to the Effective Date, by the Secretary of State
of its state of incorporation;
(ii) a good standing certificate, dated no more
than ten (10) days prior to the Effective Date, from the
respective Secretary of State of its state of incorporation
and each state in which the Seller is required to qualify,
or represents that it is qualified, to do business;
(iii) a certificate of the Secretary or
Assistant Secretary of the Seller certifying as of the
Effective Date: (A) the names and true signatures of the
officers authorized on its behalf to sign this Agreement,
(B) a copy of the Seller's by-laws, and (C) a copy of the
resolutions of the board of directors of the Seller
approving this Agreement, the Related Documents to which it
is a party and the transactions contemplated hereby and
thereby; and
(iv) an Officer's Certificate in the form of
Exhibit E (Bringdown Certificate).
(d) With respect to the Servicer:
(i) the certificate or articles of incorporation
of the Servicer certified, as of a date no more than ten
(10) days prior to the Effective Date, by the Secretary of
State of its state of incorporation;
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(ii) a good standing certificate, dated no more
than ten (10) days prior to the Effective Date, from the
respective Secretary of State of its state of incorporation
and each state in which the Servicer is required to qualify,
or represents that it is qualified, to do business;
(iii) a certificate of the Secretary or
Assistant Secretary of the Servicer certifying as of the
Effective Date: (A) the names and true signatures of the
officers authorized on its behalf to sign this Agreement,
(B) a copy of the Servicer's by-laws, and (C) a copy of the
resolutions of the board of directors of the Servicer
approving this Agreement, the Related Documents to which it
is a party and the transactions contemplated thereby and
hereby; and
(iv) an Officer's Certificate in the form of
Exhibit F (Servicer's Certificate).
(e) Certified copies of requests for information or
copies on form UCC-11 (or a similar search report certified by a
party acceptable to the Operating Agent), dated a date no more
than fourteen (14) days prior to the Effective Date listing all
effective financing statements and other similar instruments and
documents which name the Originator and the Seller (under their
present names and any previous names) as debtor, together with
copies of such financing statements none of which shall cover any
Transferred Receivables unless termination statements or
statements of release are provided with respect thereto pursuant
to subsection (f) below.
(f) Executed termination statements (form UCC-3), if
any, necessary to release all security interests and other rights
of any Person in Transferred Receivables previously granted by
the Originator including, without limitation, all such releases
specified by the Originator prior to the date hereof.
(g) Any necessary third party consents to the closing
of the transactions contemplated hereby.
(h) Executed financing statements (form UCC-1), in
respect of Transferred Receivables, (i) pursuant to the Transfer
Agreement, naming each Originator as the assignor and the Seller
as the assignee, and (ii) pursuant to Article VIII, naming the
Seller as the debtor/seller, the Purchaser as secured
party/purchaser and the Collateral Agent as the assignee, or
other, similar instruments or documents, as may be necessary or,
in the reasonable opinion of the Operating Agent, desirable under
the UCC of all appropriate jurisdictions or any other applicable
law (including the Assignment of Claims Act) to perfect the
Purchaser's and the Collateral Agent's interests in all
Transferred Receivables in which an interest may be assigned
hereunder.
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(i) Fully executed copies of each Lockbox Agreement
(other than the agreement with Xxxxxx Bank which shall be
delivered no later than 30 days after the Effective Date).
(j) The favorable opinion of counsel to the Seller and
the Originator as to corporate and security interest/perfection
matters and such other matters as the Operating Agent may
require.
(k) The favorable opinion of counsel to the Seller and
the Originator, as to the true sale of the Transferred
Receivables from each Originator to the Seller, the
nonconsolidation of the Seller's assets into the bankruptcy
estate of each Originator and such other matters as the Operating
Agent may require.
(l) Payment of all fees due hereunder or under the Fee
Letter.
(m) (i) Consolidated balance sheets, statements of
income and statements of cash flow of the Parent and its
Subsidiaries for each of the years in the three year period
ended December 31, 1994, audited by a nationally recognized
accounting firm (accompanied by consolidating financial
information and a satisfactory management letter, together
with management's response thereto); and
(ii) Unaudited consolidated and consolidating
balance sheets and statements of income and statements of
cash flow of the Parent and its Subsidiaries for the 6 month
period ended June 30, 1995.
(n) Confirmation of the ratings of the Commercial
Paper as A-1+ by S&P and P-1 by Xxxxx'x.
(o) A copy of the Servicer's Credit and Collection
Policies.
(p) An Investment Base Certificate as of August 31,
1995.
(q) All taxes (other than income taxes) including
without limitation, any stamp duty, imposed on any party hereto
as a result of this transaction, shall have been paid by the
Originator.
(r) An Officer's Certificate certifying the approval
by the Parent's 8.58% privately placed senior note holders in
accordance with the applicable note purchase agreement.
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(s) Such other approvals, consents, opinions,
documents and instruments, as the Operating Agent may reasonably
request.
Section 3.02. Conditions Precedent to All Purchases. Each
Purchase (including the initial Purchase) shall be subject to the
further conditions precedent as follows:
(a) On the related Purchase Date, the Seller shall
have certified in the related Investment Base Certificate that,
except as specifically disclosed in writing to the Purchaser, and
specifically consented to by the Purchaser in its sole
discretion:
(i) the representations and warranties of the
Seller, the Originator and the Servicer set forth in
Sections 4.01 and 4.02 are true and correct in all material
respects (except with respect to those already so qualified
which are true and correct in all respects) on and as of
such date, before and after giving effect to such Purchase
and to the application of the proceeds therefrom, as though
made on and as of such date;
(ii) no event has occurred, or would result from
such Purchase or from the application of the proceeds
therefrom, which is continuing and constitutes a Termination
Event or would constitute a Termination Event but for the
requirement that notice be given or time elapse or both
(other than a Termination Event under Section 9.01(m) which
has not been declared as a Facility Termination Date and in
respect of which Transaction Liquidity Loans have been
provided pursuant to the Transaction Liquidity Agreement);
(iii) the Seller is in compliance with each of
its covenants set forth herein; and
(iv) no event has occurred which constitutes an
Event of Servicer Termination or would constitute an Event
of Servicer Termination but for the requirement that notice
be given or time elapse or both.
(b) The Facility Termination Date has not occurred.
(c) Before and after giving effect to such purchase
and to the application of proceeds therefrom, there exists no
Purchase Excess.
(d) The Originator and Seller shall have taken such
other action, including delivery of approvals, consents,
opinions, documents and instruments to the Purchaser and the
Operating Agent, as the Operating Agent may reasonably request.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the Seller.
The Seller represents and warrants to the Purchaser, the
Operating Agent and the Collateral Agent as of the date hereof,
as of the Effective Date and on each subsequent Purchase Date as
follows:
(a) The Seller is a corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation and is duly qualified to do
business, and is in good standing, in each jurisdiction in which
the nature of its business requires it to be so qualified.
(b) The Seller has the power and authority to own,
pledge, mortgage, operate and convey all of its properties, to
conduct its business as now or proposed to be conducted and to
execute and deliver this Agreement and the Related Documents and
to perform the transactions contemplated hereby and thereby.
(c) The Seller is and has been a wholly-owned
subsidiary of Merisel Americas, Inc.
(d) The Seller is and has been operated in such a
manner that the separate corporate existence of the Seller and
each Originator would not be disregarded in the event of a
bankruptcy or insolvency of any Originator and in such regard:
(i) the Seller is and has been a limited purpose
corporation whose activities are restricted in its
certificate or articles of incorporation;
(ii) except as provided in the Services Agreement,
no Originator nor any Affiliate of the Originator is nor has
been involved in the day-to-day management of the Seller;
(iii) except as provided in the Services
Agreement, other than the purchase and contribution of
Receivables, the incurring and payment of indebtedness and
interest pursuant to the Subordinated Note, the payment of
dividends and the return of capital to the Originator, any
lease or sub-lease of office space or equipment, the payment
of Servicing Fees to the Servicer under this Agreement and
the intercorporate transactions engaged in pursuant to the
XXXXXX Agreement, the Seller engages or has engaged in no
intercorporate transactions with the Originator or any
Affiliate of the Originator;
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(iv) the Seller maintains separate corporate
records and books of account from each Originator, holds
regular corporate meetings and otherwise observes corporate
formalities and has a separate business office from each
Originator;
(v) the financial statements and books and
records of the Seller and each Originator prepared after the
Effective Date reflect the separate corporate existence of
the Seller;
(vi) the Seller maintains its assets separately
from the assets of each Originator and any other Affiliate
of each Originator (including through the maintenance of
separate bank accounts and except for any Records to the
extent necessary for the servicing of the Transferred
Receivables), the Seller's funds and assets, and records
relating thereto, have not been and are not commingled with
those of the Originator or any other Affiliate of the
Originator and the separate creditors of the Seller will be
entitled to be satisfied out of the Seller's assets prior to
any value in the Seller becoming available to the Seller's
equityholders;
(vii) except as provided in the Services
Agreement, this Agreement or the Related Documents, no
Originator nor any Affiliate of the Originator (excluding
the Seller) (A) pays the Seller's expenses; (B) guarantees
the Seller's obligations, or (C) advances funds to the
Seller for the payment of expenses or otherwise;
(viii) all business correspondence of the
Seller and other communications are conducted in the
Seller's own name, on its own stationery and through a
separately-listed telephone number;
(ix) the Seller does not act as agent for the
Originator or any Affiliates of the Originator, but instead
presents itself to the public as a corporation separate from
each Originator, independently engaged in the business of
purchasing and financing Receivables;
(x) the Seller maintains at least two independent
directors each of whom, at all times after the Effective
Date, shall not be a shareholder, director, officer,
employee or associate of the Originator or any Affiliate of
the Originator (other than the Seller) as provided in its
certificate or articles of incorporation; and
(xi) the bylaws or Articles of Incorporation of
the Seller require it to maintain (A) correct and complete
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books and records of account, and (B) minutes of the
meetings and other proceedings of its shareholders and board
of directors.
(e) The Seller has not engaged, and does not presently
engage, in any activity other than the activities undertaken
pursuant to this Agreement, the Related Documents, the Services
Agreement and the XXXXXX Agreement, nor has the Seller entered
into any agreement other than this Agreement, the Related
Documents, the Services Agreement, the XXXXXX Agreement and any
agreement necessary to undertake any activity pursuant to this
Agreement, the Related Documents or the XXXXXX Agreement.
(f) The execution, delivery and performance by the
Seller of this Agreement, the Related Documents and the
transactions contemplated hereby and thereby (i) have been duly
authorized by all necessary corporate or other action on the part
of the Seller, (ii) do not contravene or cause the Seller to be
in default under (A) the Seller's certificate or articles of
incorporation or by-laws, (B) any contractual restriction
contained in any (or, in the case of the Originator only, any
material) indenture, loan or credit agreement, lease, mortgage,
security agreement, bond, note, or other (or,in the case of the
Originator only, any material) agreement or instrument binding on
or affecting the Seller or its property or the Originator or its
property, or (C) any law, rule, regulation, order, license
requirement, writ, judgment, award, injunction, or decree
applicable to, binding on or affecting the Seller or its property
or the Originator or its property, and (iii) do not result in or
require the creation of any Adverse Claim upon or with respect to
any of the property of the Seller or the Originator (other than
in favor of the Purchaser and the Collateral Agent as
contemplated hereunder).
(g) This Agreement and the Related Documents have each
been duly executed and delivered by the Seller.
(h) No consent of, notice to, filing with or permits,
qualifications or other action by any Governmental Authority or
any other party is required (i) for the due execution, delivery
and performance by the Seller of this Agreement or any of the
Related Documents, (ii) for the perfection of or the exercise by
each of the Purchaser, the Operating Agent or the Collateral
Agent of any of its rights or remedies hereunder or thereunder,
(iii) for the grant by the Seller of the security interests
granted under Section 8.01 of this Agreement, (iv) for the
perfection of or the exercise by each of the Purchaser or the
Collateral Agent of its rights and remedies provided for in this
Agreement, or (v) to ensure the legality, validity,
enforceability or admissibility into evidence of this Agreement
in any jurisdiction in which any of the Collateral is located, in
each case other than consents, notices, filings and other actions
which have been obtained or made and complete copies of which
have been provided to the Purchaser, the Operating Agent or
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the Collateral Agent and continuation statements in respect of any
such filings.
(i) No transaction contemplated by this Agreement
requires compliance with any bulk sales act or similar law.
(j) Each of this Agreement and each Related Document
is the legal, valid and binding obligation of the Seller
enforceable against the Seller in accordance with its respective
terms. Each of the Seller Assigned Agreements to which the
Originator or the Seller is a party constitutes the legal, valid
and binding obligation of such Person, enforceable against such
Person in accordance with its terms, subject to any applicable
bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to or affecting
the enforceability of creditors' rights generally and general
equitable principles, whether applied in a proceeding at law or
in equity.
(k) There is no pending or threatened, nor any
reasonable basis for any, action, suit or proceeding against or
affecting the Seller, its officers or directors, or the property
of the Seller, in any court or tribunal, before any arbitrator of
any kind or before or by any Governmental Authority.
(l) No injunction, writ, restraining order or other
order of any nature adverse to the Seller or the conduct of its
business or which is inconsistent with the due consummation of
the transactions contemplated by this Agreement or the Related
Documents has been issued by a Governmental Authority nor been
sought by any Person.
(m) The principal place of business and chief
executive office of the Seller, and the offices where the Seller
keeps its Records and the original copies of the Seller Assigned
Agreements are located at the address of the Seller for notices
under Section 14.01 and as set forth on Schedule 5 and there are
currently no, and during the past four months (or such shorter
time as the Seller has been in existence) there have not been,
any other locations where the Seller is located (as that term is
used in the UCC of the jurisdiction where such principal place of
business is located) or keeps Records.
(n) The Seller does not have and has never conducted
business using tradenames, fictitious names, assumed names or
"doing business as" names and has not changed its name during the
last five years.
(o) The Seller does not have any Subsidiaries.
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(p) The Seller is solvent and will not become
insolvent after giving effect to the transactions contemplated by
this Agreement and the Related Documents. The Seller has no
Debts to any Person other than pursuant to this Agreement, the
Related Documents and the Services Agreement. The Seller, after
giving effect to the transactions contemplated by this Agreement
and the Related Documents, will have an adequate amount of
capital to conduct its business in the foreseeable future.
(q) For federal income tax, reporting and accounting
purposes, the Seller will treat the purchase or assignment of
each Transferred Receivable pursuant to the Transfer Agreement as
a purchase or absolute assignment of each Originator's full
right, title and ownership interest in such Transferred
Receivable to the Seller (and those Receivables contributed to
the Seller by the Originator pursuant to the Transfer Agreement
shall be accounted for as an increase in the stated capital of
the Seller) and the Seller has not in any other manner accounted
for or treated the transactions in Transferred Receivables.
(r) The Seller has complied and will comply in all
respects with all applicable laws, rules, regulations, judgments,
agreements, decrees and orders with respect to its business and
properties and all Collateral.
(s) The Seller has filed on a timely basis all tax
returns (federal, state and local) required to be filed, is not
liable for taxes payable by any other Person (other than
Affiliates of the Seller with whom the Seller files a
consolidated tax return for which the Seller is liable on a
consolidated basis) and has paid or made adequate provisions for
the payment of all taxes, assessments and other governmental
charges due from the Seller (other than taxes, fees, amendments
or governmental charges which the Seller is contesting in good
faith with such taxing authority and in respect of which no final
unappealable order has been made against the Seller). No tax
lien or similar Adverse Claim has been filed, and no claim is
being asserted, with respect to any such tax, assessment or other
governmental charge. Any taxes, fees and other governmental
charges payable by the Originator in connection with the
execution and delivery of this Agreement and the Related
Documents and the transactions contemplated hereby or thereby
have been paid or shall have been paid if and when due at or
prior to such Transfer Date.
(t) Each Investment Base Certificate and Request
Notice is accurate in all material respects and the Investment
Base as of the Effective Date is not materially different than
the Investment Base as reported in the Investment Base
Certificate delivered pursuant to 3.01(p).
(u) Each Transferred Receivable is owned by the Seller
free and clear of any Adverse Claim and the Seller has the full
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right, corporate power and lawful authority to assign, transfer
and pledge the same and interests therein and all substitutions
therefor and additions thereto pursuant to Section 8.01, and upon
making each Purchase, the Purchaser will have acquired a
perfected, first priority and valid ownership interest in such
Transferred Receivables, free and clear of any Adverse Claim. No
effective financing statement or other instrument similar in
effect covering all or any part of the Seller Collateral is on
file in any recording office, except such as may have been filed
in favor of the Purchaser as "Secured Party/Purchaser" and the
Collateral Agent as "Assignee" pursuant to Article VIII of this
Agreement or, with respect to the Transferred Receivables, in
favor of the Seller pursuant to the Transfer Agreement unless
termination statements or statements of release are provided
thereto with respect to Section 3.01(f).
(v) Each Transferred Receivable was purchased by or
contributed to the Seller on the relevant Transfer Date pursuant
to the Transfer Agreement.
(w) Each purchase of Receivables under the Transfer
Agreement will constitute (i) a "current transaction" within the
meaning of Section 3(a)(3) of the Securities Act of 1933, as
amended, and (ii) a purchase or other acquisition of notes,
drafts, acceptances, open accounts receivable or other
obligations representing part or all of the sales price of
merchandise, insurance or services within the meaning of
Section 3(c)(5) of the Investment Company Act of 1940, as
amended.
(x) All information heretofore or hereafter furnished
by or on behalf of the Seller to the Collateral Agent, the
Operating Agent or the Purchaser in connection with this
Agreement or any transaction contemplated hereby is and will be
true and complete in all material respects and does not and will
not omit to state a material fact necessary to make the
statements contained therein not misleading, provided that any
projections, pro forma or preliminary financial information
furnished are based on good faith estimates and assumptions
believed by the Seller to be reasonable at the time made and the
Collateral Agent, the Operating Agent and the Purchaser each
acknowledge that such projections as to future events are not to
be viewed as facts and that actual results for such period may
differ from the projected results.
(y) The Seller is in compliance with ERISA and has not
incurred and does not expect to incur any liabilities (except for
premium payments arising in the ordinary course of business)
payable to the PBGC (or any successor thereto) under ERISA.
(z) (i) The Seller is not a party to any indenture,
loan or credit agreement or any lease or other agreement or
instrument or subject to any charter or corporation restriction
that could have, and no provision of applicable law or
governmental regulation is reasonably likely to have, a material
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adverse effect on the condition (financial or otherwise),
business, operations or properties of the Seller, or could have
such an effect on the ability of the Seller to carry out its
obligations under this Agreement and the other Related Documents
to which the Seller is a party, (ii) the Seller is not in
default under or with respect to any contract, agreement, lease
or other instrument to which the Seller is a party and which is
material to the Seller's condition (financial or otherwise),
business, operations or properties, and the Seller has not
delivered or received any notice of default thereunder, and (iii)
each contract, agreement, lease or other instrument to which the
Seller is a party is listed on Schedule 7.
(aa) The Seller is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended. The making of the
Purchases by the Purchaser, the application of the proceeds and
repayment thereof by the Seller and the consummation of the
transactions contemplated by this Agreement and the other Related
Documents to which the Seller is a party will not violate any
provision of such Act or any rule, regulation or order issued by
the Securities and Exchange Commission thereunder.
(bb) Except as provided in the Services Agreement,
there is not now, nor will there be at any time in the future,
any agreement or understanding between the Originator or any
other Affiliate of the Originator and the Seller (other than as
expressly set forth herein) providing for the allocation or
sharing of obligations to make payments or otherwise in respect
of any taxes, fees, assessments or other governmental charges.
(cc) Each of the representations and warranties of the
Seller contained in the Related Documents (other than this
Agreement) is true and correct in all material respects and the
Seller hereby makes each such representation and warranty to, and
for the benefit of, the Collateral Agent, the Operating Agent and
the Purchaser as if the same were set forth in full herein.
Section 4.02. Representations and Warranties of the
Servicer. The Servicer represents and warrants to the Purchaser,
the Operating Agent and the Collateral Agent as follows as of the
date hereof:
(a) The Servicer is a corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation and is duly qualified to do
business, and is in good standing, in every jurisdiction in which
the nature of its business requires it to be so qualified except
where the failure to be so qualified would not materially and
adversely affect (1) the performance of the Servicer of its
obligations under this Agreement or any of the Related Documents,
(2) the validity or enforceability of this Agreement or any of
the Related Documents, (3) the Transferred Receivables, the
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Contracts or the interests of MCF, Redwood or their assigns
therein, or (4) the business, operations, financial condition or
prospects of the Servicer.
(b) The Servicer has the power and authority to
execute and deliver this Agreement and to perform the
transactions contemplated hereby.
(c) The execution, delivery and performance by the
Servicer of this Agreement, each other Related Document to which
it is a party and the transactions contemplated hereby and
thereby (i) have been duly authorized by all necessary corporate
or other action on the part of the Servicer, (ii) do not
contravene or cause the Servicer to be in default under (A) its
charter or by-laws, (B) any contractual restriction contained in
any or, in the case of the Originator only, any material
indenture, loan or credit agreement, lease, mortgage, security
agreement, bond, note or other or, in the case of the Originator
only, any material agreement or instrument binding on or
affecting it or its property, or (C) any law, rule, regulation,
order, writ, judgment, award, injunction or decree binding on or
affecting it or its property, and (iii) do not result in or
require the creation of any Adverse Claim upon or with respect to
any of its properties (other than in favor of the Seller, Redwood
and the Collateral Agent).
(d) This Agreement and each other Related Document to
which it is a party has been duly executed and delivered by the
Servicer.
(e) No consent of, notice to, filing with or permits,
qualifications or other action by any Governmental Authority or
any other party is required for the due execution, delivery and
performance by the Servicer of this Agreement, any Related
Document to which it is a party other than any consents, notices,
permits, qualifications, filings or other actions which have been
obtained or made and complete copies of which have been provided
to the Purchaser, the Operating Agent and the Collateral Agent.
(f) This Agreement and each other Related Document to
which it is a party is the legal, valid and binding obligation of
the Servicer enforceable against the Servicer in accordance with
its terms subject to any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter
in effect relating to or affecting the enforceability of
creditors' rights generally and general equitable principles,
whether applied in a proceeding at law or in equity.
(g) There is no pending or, to the knowledge of the
Servicer, threatened, nor any reasonable basis for any, action,
suit, investigation or proceeding of a material nature against or
affecting the Servicer, its officers or directors, or the
property of the Servicer, in any court or tribunal, before any
arbitrator of any kind or before or by any Governmental Authority
(i) asserting the invalidity of this Agreement or any Related
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Document, or (ii) seeking any determination or ruling that might
materially and adversely affect (A) the performance by the
Servicer of its obligations under this Agreement or other Related
Document, or (B) the validity or enforceability of this Agreement
or any Related Document.
(h) No injunction, writ, restraining order or other
order of any material nature adverse to the Servicer or the
conduct of its business or which is inconsistent with the due
consummation of the transactions contemplated by this Agreement
and the Related Documents has been issued by a Governmental
Authority or, to the knowledge of the Servicer, has been sought
by any other Person.
(i) The Servicer has filed all tax returns (federal,
state and local) required to be filed by it and has paid or has
made adequate provision for the payment of all taxes, fees,
assessments and other governmental charges due from the Servicer,
no tax lien or other similar Adverse Claim has been filed, and no
claim has been filed, and no claim is being asserted, with
respect to any such tax, fee, assessment or other governmental
charge (other than taxes, fees, amendments or governmental
charges which the Servicer is contesting in good faith with such
taxing authority and in respect of which no final unappealable
order has been made against the Servicer). Any taxes, fees and
other governmental charges payable by the Servicer in connection
with the transactions contemplated by this Agreement and the
Related Documents and the execution and delivery of this
Agreement and the Related Documents have been paid or shall have
been paid at or prior to the Effective Date.
(j) The Servicer is not required to be registered as
an "investment company" under the Investment Company Act of 1940.
The Servicer is not subject to the information reporting
requirements of the Securities Exchange Act of 1934 or the
Securities Act of 1933.
(k) The Parent filed a request for a compliance
statement under the Voluntary Compliance Resolution ("VCR")
Program established by the Internal Revenue Service on or before
January 1, 1996 regarding an operational qualification defect
(the "Defect") caused due to a deficiency in a payroll system
utilized during the Parent's 1993 and 1994 fiscal years which
resulted in salary deferral contributions not being withheld from
the portion of a participant's compensation that was paid in the
form of a supplemental paycheck (i.e., bonuses, commissions,
SPIFFs, retroactive pay or vacation advances). The total amount
that the Parent will have to pay to correct the Defect, including
any required Plan contributions and interest thereon and any VCR
fee payable to the Internal Revenue Service (but excluding legal
fees), does not exceed $200,000.
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(l) Each of the representations and warranties of the
Servicer contained in this Agreement and the Related Documents is
true and correct in all material respects and the Servicer hereby
makes each such representation and warranty contained in the
Related Documents to, and for the benefit of, the Purchaser, the
Operating Agent and the Collateral Agent.
ARTICLE V
GENERAL COVENANTS OF THE SELLER
Section 5.01. Affirmative Covenants of the Seller. The
Seller shall, unless the Operating Agent shall otherwise consent
in writing:
(a) perform each of its obligations under this
Agreement and the Related Documents and comply in all respects
with all of its obligations under this Agreement and the Related
Documents and comply with all material requirements of applicable
law, rules, regulations and orders with respect to this
Agreement, the Related Documents, to its business and properties
and all Transferred Receivables, related Contracts and
Collections with respect thereto;
(b) preserve and maintain its corporate existence,
rights, franchises and privileges in the jurisdiction of its
incorporation and shall conduct its business in accordance with
the terms of its certificate of incorporation and bylaws;
(c) continue to operate its business in the manner set
forth in Sections 4.01(d) and (e);
(d) deposit all Collections it may receive in respect
of Transferred Receivables into the Collection Account within one
Business Day of receipt;
(e) use the proceeds of the Purchases made hereunder
solely for (i) the purchase of Receivables from the Originator,
(ii) payment of dividends to its shareholder, (iii) repayments
and interest under the Subordinated Note, and (iv) payment of
administrative fees or Servicing Fees or expenses to the
Originator or the Parent or routine administrative expenses
pursuant to this Agreement, the Related Documents or the Services
Agreement;
(f) permit the Purchaser, the Operating Agent and the
Collateral Agent to make or cause to be made (and, after the
occurrence of and during the continuance of a Termination Event,
at the Seller's expense) inspections and audits of any books,
records and papers of the Seller and the Servicer and to make
<22>
extracts therefrom and copies thereof, or to make inspections and
examinations of any properties and facilities of the Seller and
the Servicer, on reasonable notice, at all such reasonable times
and as often as reasonably required in order to assure that the
Seller is and will be in compliance with its obligations under
this Agreement and the Related Documents;
(g) pay, perform and discharge all of its obligations
and liabilities, including, without limitation, all taxes,
assessments and governmental charges upon its income and
properties when due, unless and to the extent only that such
obligations, liabilities, taxes, assessments and governmental
charges shall be contested in good faith and by appropriate
proceedings and that, to the extent required by GAAP, proper and
adequate book reserves relating thereto are established by the
Seller and then only to the extent that a bond is filed in cases
where the filing of a bond is necessary to avoid the creation of
an Adverse Claim against any of its properties;
(h) upon request of the Purchaser, the Collateral
Agent or the Operating Agent, xxxx its Records to show the
interests of the Purchaser and Collateral Agent;
(i) pay the Purchaser's reasonable attorney's
disbursements, reasonable travel and entertainment expenses and
rating agency fees (provided that (x) such travel and
entertainment expenses shall only be payable to the extent they
are consistent with the Parent's travel and entertainment policy
and (y) the liability of the Originator with respect to rating
agency fees incurred prior to the Effective Date shall not exceed
$40,000); and
(j) deliver an opinion of counsel to the Seller, the
Originator and the Servicer in form and substance reasonably
satisfactory to the Operating Agent no later than October 11,
1996, it being understood that such counsel may, in giving such
opinion, assume (or may state that it expresses no opinion as to
whether or not) in connection with any "no conflict" opinion with
respect to any agreements of the Originator that, other than the
Daily Yield Rate, the terms of the Purchase Agreement are not
more adverse than the terms of the Initial Receivables Purchase
and Servicing Agreement, as amended prior to the date hereof, and
the Originator shall deliver an Officer's Certificate to the
Operating Agent to the effect of such assumption on the date of
such opinion.
Section 5.02. Reporting Requirements of the Seller. The
Seller shall furnish, or cause to be furnished, to the Purchaser,
the Operating Agent, the Collateral Agent and (in the case of
Section 5.02(f) only) the Rating Agencies:
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(a) weekly, as soon as available, and in any event,
within three Business Days after the end of each week, an
Investment Base Certificate in the form of Exhibit C;
(b) monthly, as soon as available, and in any event,
within 20 days after the end of each fiscal month, a Monthly
Report in the form of Exhibit G;
(c) as soon as available and in any event within 95
days after the end of each fiscal year, a copy of the audited
consolidated financial statements (exclusive of the management
letter) for such year for the Parent and its consolidated
Subsidiaries, certified, in a manner acceptable to the Operating
Agent and the Collateral Agent, by Deloitte & Touche or other
nationally recognized independent public accountants acceptable
to the Operating Agent and the Collateral Agent (followed, within
105 days after the end of each fiscal year, by consolidating
financial information and followed, within 10 days of completion
thereof, a satisfactory management letter, together with
management's response) and each other report or statement sent to
shareholders or publicly filed by the Parent, the Originator or
the Seller;
(d) as soon as available and in any event within 20
days after the end of each fiscal month of the Parent, gross
sales, gross profits, capital expenditure, selling, general and
administrative expenses, and interest expense;
(e) as soon as available and in any event within 50
days after the end of each of the first three quarters of each
fiscal year of the Parent, a consolidated balance sheet of the
Parent and its consolidated Subsidiaries as of the end of such
quarter and including the prior comparable period, and
consolidated statements of income and retained earnings, and of
cash flow, of the Parent and its consolidated Subsidiaries for
such quarter and for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter,
certified by the chief financial officer, chief accounting
officer or treasurer of the Parent identifying such documents as
being the documents described in this paragraph (d) and stating
that the information set forth therein fairly presents the
financial condition of the Parent and its consolidated
Subsidiaries as of and for the periods then ended, subject to
year-end adjustments consisting only of normal, recurring
accruals and confirming that the Servicer is in compliance with
all financial covenants in this Agreement;
(f) as soon as possible and in any event within seven
days after the occurrence of a Termination Event or an Incipient
Event, the statement of the chief executive officer, chief
financial officer or treasurer of the Seller setting forth
complete details of such Termination Event or Incipient Event and
the action which the Seller has taken, is taking and proposes to
take with respect thereto;
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(g) as soon as available and in any event within 105
days after the end of each fiscal year, a statement of the
President of the Seller (upon which statement the Operating Agent
and the Collateral Agent may rely) to the effect that such
officer has reviewed an examination by the internal auditors of
the Parent (the scope of which examination shall be consistent
with the standards for similar examinations conducted by
nationally recognized independent public accountants) of the
Weekly Reports delivered during the period covered by such report
(including the Investment Base Certificates attached thereto) and
such Records relating to the Transferred Receivables as such
officer deems necessary as a basis for the statement contemplated
by this Section 5.02(g) and that, on the basis of such review,
such Weekly Reports have been prepared in compliance with this
Agreement, except for such exceptions as shall be set forth in
such statement;
(h) promptly, from time to time, such other
information, documents, records or reports respecting the
Transferred Receivables or the Contracts or the condition or
operations, financial or otherwise, of the Seller, or the
Originator or any of its Subsidiaries, as the Purchaser, the
Operating Agent or the Collateral Agent may reasonably request
from time to time;
(i) on or before 105 days after the end of each fiscal
year, (i) an Officer's Certificate of the Seller, dated the date
of such delivery, bringing down to such date the matters set
forth in the Officer's Certificate in the form of Exhibit E, and
(ii) an Officer's Certificate of the Servicer, dated the date of
such delivery, bringing down to such date the matters set forth
in the Officer's Certificate in the form of Exhibit F; and
(j) promptly, notification in writing of any
litigation, legal proceeding or dispute, whether or not in the
ordinary course of business, affecting the Seller, whether or not
fully covered by insurance, and regardless of the subject matter
thereof.
Section 5.03. Negative Covenants of the Seller. The Seller
shall not, without the written consent of the Purchaser, the
Operating Agent and the Collateral Agent:
(a) sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Adverse
Claim upon or with respect to, or assign any right to receive
income in respect of, (i) any Transferred Receivable or related
Contract with respect thereto, or upon or with respect to any
Lockbox Account, any Lockbox, the Collection Account, the
Retention Account or other account in which any Collections of
any Transferred Receivable are deposited, or (ii) except as
permitted in the Seller's articles of incorporation, any of the
Seller's property;
(b) extend, amend, forgive, discharge, compromise,
waive, cancel or otherwise modify the terms of the Transfer
Agreement, any Related Document, the Credit and Collection
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Policies or of any Transferred Receivable, or amend, modify or
waive any term or condition of any Contract related thereto
provided that the foregoing shall not prohibit the Seller from
authorizing the Servicer to take such actions to the extent
permitted hereunder, under the Transfer Agreement or by the
Credit and Collection Policy;
(c) make any change in its instructions to Obligors
regarding payments to be made to the Seller or payments to be
deposited to the Lockbox Account or any Lockbox other than (i)
changes of a purely administrative nature which do not alter any
directions to Obligors regarding the method, timing or place of
payment, or (ii) changes to the method or timing of payments
which are in accordance with the Credit and Collections Policy;
(d) amend its articles or certificate of
incorporation, its by-laws or this Agreement, the Transfer
Agreement or the Services Agreement;
(e) merge with or into, consolidate with or into,
convey, transfer, lease or otherwise dispose of all or
substantially all of its assets (whether now owned or hereafter
acquired) to, or acquire all or substantially all of the assets
of, or any capital stock or other ownership interest of, any
Person (whether in one transaction or in a series of
transactions), or own any Subsidiary;
(f) prepare any financial statements which shall
account for the transactions contemplated by the Transfer
Agreement in any manner other than as a true sale or absolute
assignment of the Transferred Receivables to the Seller from the
Originator, or in any other respect account for or treat the
transactions contemplated hereby (including but not limited to,
for accounting, tax and reporting purposes) in any manner other
than as a true sale or absolute assignment of the Transferred
Receivables to the Seller from the Originator;
(g) at any time (i) advance credit to any Person), or
(ii) declare any dividends, repurchase any stock, return any
capital, or otherwise make any distribution of cash or any other
property, if after giving effect to such distribution, there
would be a Purchase Excess;
(h) create, incur, permit to exist or have outstanding
any indebtedness, except:
(i) indebtedness of the Seller to the Purchaser,
any Affected Party, any Indemnified Party, the Servicer,
the Originator or any other Person under the Transfer
Agreement, this Agreement and the Subordinated Note;
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(ii) taxes, assessments and governmental charges;
and
(iii) the endorsement of negotiable
instruments for deposit or collection in the ordinary course
of business;
(i) issue any additional shares or any right or option
to acquire any shares, or any security convertible into any
shares, of the capital stock of the Seller;
(j) enter into, or be a party to, any transaction with
any Person, other than pursuant to this Agreement, the Transfer
Agreement or the Services Agreement; or
(k) make or suffer to exist any purchases of assets or
investments in any Person, including, without limitation, any
shareholder, director, officer or employee of the Seller or any
of the Originator's other Subsidiaries, except (i) Transferred
Receivables, (ii) Permitted Investments, (iii) purchases and
investments in an aggregate amount no greater than $25,000 per
annum, and (iv) investments received in satisfaction of Defaulted
Receivables in connection with any insolvency proceedings related
to the Obligor thereof or out-of-court restructuring related to
the Obligor thereof.
ARTICLE VI
COLLECTIONS AND DISBURSEMENTS
Section 6.01. Establishment of Accounts.
(a) The Lockbox Account.
(i) The Seller has established with a Lockbox
Bank each Lockbox Account, into which the Servicer shall
deposit from time to time all monies, instruments and other
property received by it as Proceeds of the Transferred
Receivables. The Seller agrees that prior to a Termination
Event the Operating Agent, and upon the occurrence and
during the continuation of a Termination Event the
Collateral Agent, shall have exclusive dominion and control
of each Lockbox Account and all monies, instruments and
other property from time to time in each Lockbox Account.
The Seller will not make or cause to be made, or have any
ability to make or cause, any withdrawals from any Lockbox
Account, except as provided in Section 6.01(b)(ii).
(ii) The Seller and the Servicer have instructed
all existing Obligors of Transferred Receivables, and will
instruct all future Obligors, to make payments in respect of
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Transferred Receivables only (A) by check or money order
mailed to one or more lockboxes or post office boxes under
the control of the Operating Agent (each such box being a
"Lockbox"), or (B) by wire transfer or moneygram directly to
a Lockbox Account, or (C) by direct debits from such
Obligor's account to the Lockbox Account. The Lockboxes and
Lockbox Accounts to which mail payments are made as of the
date hereof are listed on the attached Schedule 6. The
Seller and the Servicer shall endorse, to the extent
necessary, all checks or other instruments received in any
Lockbox so that the same can be deposited in the Lockbox
Account, in the form so received (with all necessary
endorsements), on the next Business Day after the Business
Day on which such check or other instruments are received.
In addition, the Seller and Servicer shall deposit or cause
to be deposited in the Lockbox Account all cash, checks,
money orders or other Proceeds of Collateral received other
than in a Lockbox or by wire payments, in the form so
received (with all necessary endorsements), not later than
the close of business on the Business Day following the date
of such receipt, and until so deposited all such items or
other Proceeds shall be held in trust for the Collateral
Agent. Neither the Seller nor the Servicer shall deposit
any moneys not required or permitted under this Agreement or
the Related Documents into the Lockboxes or Lockbox
Accounts.
(iii) If a Lockbox Agreement terminates for
any reason or any Lockbox Bank fails to comply with its
obligations under the related Lockbox Agreement for any
reason, then the Seller shall promptly notify all Obligors
to make all future wire payments to a new Lockbox Account
with another Lockbox Bank. The Seller shall not close the
Lockbox Account unless it shall have (1) received the prior
written consent of the Operating Agent and the Collateral
Agent, (2) established a new account with the same Lockbox
Bank or with a new depositary institution reasonably
satisfactory to the Operating Agent and the Collateral
Agent, (3) entered into an agreement covering such new
account with the Lockbox Bank or with such new depositary
institution substantially in the form of the Lockbox
Agreement or which is otherwise satisfactory in all respects
to the Operating Agent and the Collateral Agent (whereupon,
for all purposes of this Agreement and the Related
Documents, such new account shall become the Lockbox
Account, such new agreement shall become the Lockbox
Agreement and any new depositary institution shall become
the Lockbox Bank), and (4) taken all such action as the
Collateral Agent shall require to grant and perfect a first
priority security interest in such new Lockbox Account to
the Collateral Agent under Section 8.01 of this Agreement.
Other than pursuant to this Section 6.01(a), the Seller or
Servicer shall not open any new Lockbox or Lockbox Account
without the consent of the Operating Agent, the Collateral
Agent and the Purchaser.
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