PRICING LETTER AGREEMENT
MLC GROUP, INC.
000 XXXXXXX XXXXXXX
XXXXXXX, XXXXXXXX 00000
December 28, 1998
Triple-A One Funding Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Key Corporate Capital, Inc., as Agent
00 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Re: Lease Receivables Purchase Agreement
Ladies and Gentlemen:
Reference is made to that certain Lease Receivables Purchase
Agreement dated as of December 28, 1998 (as the same may thereafter be amended,
supplemented or otherwise modified, the "LRPA") among MLC Group, Inc., as seller
and collection agent (the "Seller"), MLC Holdings, Inc., as guarantor in such
capacity, the "Guarantor"), Triple-A One Funding Corporation ("Triple-A"), and
Key Corporate Capital, Inc., as agent (in such capacity, the "Agent").
This letter agreement constitutes the "Pricing Letter"
referred to in the LRPA. All capitalized terms used herein which are not defined
herein shall have the meanings set forth in the LRPA. The Seller, the Guarantor,
the Purchaser and the Agent agree as follows:
1. For purposes of the LRPA, the following terms shall have
the meanings set forth below:
"Credit Spread" means, with respect to a Lease Receivable, (i)
135 basis points, if the Obligor thereof is assigned a Risk Rating of
1; provided, however, that 125 basis points may be applied as the
Credit Spread for Risk Rating 1 if the Obligor thereof has a public
debt rating greater than or equal to BBB or an equivalent thereof as
given by both S&P and Xxxxx'x and the Purchase Price for the Lease
Receivable of such Obligor having such debt rating on the applicable
Purchase Date equals or exceeds $3,000,000; (ii) 165, if the Obligor
thereof is assigned a Risk Rating of 2; (iii) 175, if the Obligor
thereof is assigned a Risk Rating of 3; and (iv) 200 or higher, at the
discretion of the Agent if the Obligor thereof is assigned a Risk
Rating of 4.
"Discount Rate" for any Purchased Lease Receivable means the
rate equal to the sum of the "T-Note Proxy Rate" (as defined below) at
the time of the Purchase plus the Credit Spread plus the Swap Spread
Difference; "T-Note Proxy Rate" means the yield to maturity as
published in The Wall Street Journal for a specific treasury note
("T-Note"). The selected T-Note will have been recently issued (within
the last fifteen years and non-callable) having a maturity equal to the
greater of: i) twelve (12) months or ii) the remaining average life
tenor of the Lease Receivable purchased or repurchased. If there is no
T-Note with a maturity equal to a particular average life tenor, then
the one maturing closest to the average life tenor will be selected.
The date for determining the T-Note Proxy Rate for Lease Receivables to
be purchased will be the Purchase Date for such Lease Receivables.
"Swap Spread" means the difference between the yield of the
current benchmark two (2) year U.S. Treasury Note and the current ask
price of the two (2) year swap rate each of the foregoing as obtained
from the "US Dollar Swap Curve" as provided by Bloomberg as of the date
of funding.
"Swap Spread Difference" means the portion of the Swap Spread
exceeding 25 basis points.
2. The Seller agrees to pay to the Agent the following unused
fee: if the aggregate Purchase Price of Eligible Lease Receivables Purchased
hereunder prior to December 31, 1999 minus the aggregate original Purchase Price
of all Lease Receivables repurchased pursuant to paragraph 11(a) (such net
amount, the "Used Amount") is less than $10,000,000 (the "Minimum Amount"), the
Seller shall pay to the Agent, no later than thirty (30) days after receipt of a
request for payment, an amount equal to the product of (i) .005 multiplied by
(ii) the difference between (A) the Minimum Amount minus (B) the Used Amount.
This letter agreement may be executed in any number of
counterparts and by any combination of the parties hereto in separate
counterparts, each of which counterparts shall be an original and all of which
taken together shall constitute one and the same agreement.
This letter agreement shall be governed by the laws of the
State of New York.
Sincerely,
MLC GROUP, INC., as Seller
By:________________________________
Title:
MLC HOLDINGS, INC., as Guarantor
By:________________________________
Title:
Agreed and accepted this 28th
day of December, 1998
TRIPLE-A ONE FUNDING CORPORATION,
as Purchaser
By:________________________________
Title:
KEY CORPORATE CAPITAL, INC.
as Agent
By:________________________________
Title:
